APPENDICES
TO 2017 ANNUAL REPORT
Contents
APPENDIX NO 1. INFORMATION ON COMPLIANCE WITH THE RUSSIAN CORPORATE GOVERNANCE CODE ...................... 3
APPENDIX NO 2. INFORMATION ON MAJOR TRANSACTIONS AND INTERESTED PARTY TRANSACTION IN 2016 WITH AN
INDICATION OF THE PARTIES CONCERNED, DATE AND PROTOCOL NUMBER OF THE MANAGEMENT BODY MEETING
APPROVING THE TRANSACTION, AND DESCRIPTION OF THE TRANSACTION (INCLUDING ITS SUBJECT, AGREEMENT PRICE AND
TERM), OF THE INTERESTED PARTY(IES), AND OF THE PERSON(S), TREATED AS A NON-INDEPENDENT DIRECTOR ................... 41
APPENDIX NO 3. INFORMATION ON PARTICIPATION IN OTHER ORGANIZATIONS ......................................................... 44
3.1 INFORMATION CONCERNING ALL FORMS OF THE COMPANY'S PARTICIPATION IN COMMERCIAL ENTITIES
INCLUDING ITS OBJECTIVES, FORM AND FINANCIAL INVOLVEMENT, BASIC DATA ON THE ENTITIES (MAIN STATUTORY
ACTIVITIES, EARNINGS, PROFIT), AND EFFICIENCY INDICATORS, IN PARTICULAR, THE AMOUNT OF DIVIDENDS RECEIVED FOR
THE OWNED SHARES IN THE REPORTED PERIOD ...................................................................................................................... 44
3.2 INFORMATION CONCERNING ALL FORMS OF THE COMPANY'S PARTICIPATION IN NON-COMMERCIAL ENTITIES,
INCLUDING THE ENTITY NAME, DATE OF JOINING, SUBSCRIPTION FEE IN RUB/ OTHER CURRENCY, AREA OF THE ENTITY'S
ACTIVITIES ........................................................................................................................................................... ............50
3.3 INFORMATION CONCERNING SHARES / STAKES PURCHASE CONTRACTS MADE BY PJSC RUSHYDRO IN 2017,
INDICATING THE PARTIES TO THE CONTRACTS, THEIR SUBJECT, PRICE AND OTHER TERMS ..................................................... 53
APPENDIX NO 4. INFORMATION ON THE MEETINGS OF THE BOARD OF DIRECTORS ..................................................... 55
APPENDIX NO 5. INFORMATION ON THE MEETINGS OF THE COMMITTEES UNDER THE BOARD OF DIRECTORS ........... 59
APPENDIX NO 6. INFORMATION ABOUT THE SALES OF NON-CORE ASSETS ................................................................... 68
APPENDIX NO 7. INFORMATION ON PENDING COURT PROCEEDINGS ........................................................................... 73
APPENDIX NO 8. INFORMATION CONCERNING THE STATE SUPPORT FUNDS RECEIVED BY THE COMPANY IN THE
REPORTING YEAR, INCLUDING THE AMOUNT OF GRANTED SUBSIDIES (RUBLES), THEIR USE, AND DRAWDOWN BY THE END OF
THE YEAR ................................................................................................................................................................................73
APPENDIX NO 9. REPORT ON THE LONG TERM DEVELOPMENT PROGRAM IMPLEMENTATION OF THE RUSHYDRO
GROUP FOR THE YEAR OF 2017 ................................................................................................................................................ 74
APPENDIX NO 10. THE AUDITOR'S REPORT ON THE LONG-TERM DEVELOPMENT PROGRAM IMPLEMENTATION IN 2017
OF RUSHYDRO GROUP FOR THE PERIOD 2016-2020 ................................................................................................................. 99
APPENDIX NO 11. INFORMATION CONCERNING ESTABLISHMENT OF UNIFIED TREASURIES IN THE HEAD COMPANIES,
SUBSIDIARIES AND AFFILIATES ............................................................................................................................................... 102
APPENDIX NO 12. INFORMATION ON THE RESULTS OF IMPLEMENTATION OF EXECUTIVE ORDERS AND INSTRUCTIONS
ISSUED BY THE PRESIDENT OF THE RUSSIAN FEDERATION, AND INSTRUCTIONS ISSUED BY THE GOVERNMENT OF THE RUSSIAN
FEDERATION IN 2017 .............................................................................................................................................................. 103
APPENDIX NO 13. INFORMATION ON COMPANIES CONTROLLED BY THE PJSC “RUSHYDRO” THAT ARE SIGNIFICANT
IMPORTANT ........................................................................................................................................................................... 108
APPENDIX NO 14. LIST OF THE MOST SIGNIFICANT TRANSACTIONS EXECUTED BY THE COMPANY AND OTHER
SIGNIFICANT CONTROLLED ENTITIES DURING THE LAST YEAR ................................................................................................ 111
APPENDIX NO 15. ACCOUNTING STATEMENTS AND THE INDEPENDENT AUDITOR'S AUDIT REPORT AS OF DECEMBER
31, 2017 (IN ACCORDANCE WITH RAS) ................................................................................................................................... 113
APPENDIX NO 16. CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS AND AN AUDIT
OPINION FOR THE YEAR ENDED DECEMBER 31, 2017 AND AS OF THAT DATE ........................................................................ 179
AUDIT OF FINANCIAL AND ECONOMIC ACTIVITIES FOR 2017
APPENDIX NO 17. INTERNAL AUDIT COMMITTEE CONCLUSION OF THE PJSC RUSHYDRO BASED ON THE RESULTS OF THE
.................................................................................................. 249
APPENDIX NO 18. INDEPENDENT LIMITED ASSURANCE REPORT, PROVIDING LIMITED CONFIDENCE IN THE QUALITATIVE
AND QUANTITATIVE INFORMATION IN THE PJSC RUSHYDRO’S ANNUAL REPORT FOR 2017 .................................................. 252
APPENDIX NO 19. СONSIDERATION OF STAKEHOLDERS’ RECOMMENDATIONS GIVEN AT THE PUBLIC HEARINGS IN 2017
............................................................................................................................................................................255
APPENDIX NO 20. СONSIDERATION OF STAKEHOLDERS’ RECOMMENDATIONS GIVEN AT THE PUBLIC HEARINGS IN 2018
(REPORT FOR 2017 DRAFT) ..................................................................................................................................................... 257
APPENDIX NO 21. CERTIFICATE OF PUBLIC CERTIFICATION OF THE REPORT BY THE RUIE COUNCIL ON NON-FINANCIAL
REPORTING ............................................................................................................................................................................ 259
APPENDIX NO 22. ORGANIZATIONAL STRUCTURE OF PJSC RUSHYDRO ....................................................................... 263
2
Appendix No 1. Information on compliance with the Russian Corporate Governance Code
Hereby the Board of Directors of PJSC RusHydro announces the observance of the principles of corporate governance enshrined in the corporate
governance Code and the reasons of partially observance and non-observance the particular principles of the Russian Corporate governance Code.
PJSC RusHydro partially observe the following principles of the Corporate Governance Code
1.1.6 The procedure established by the company for the conduct of the general meeting provides an equal opportunity for all persons present at the meeting to
express their opinion and ask questions of interest to them regarding the presence of all candidates for the company's management and control bodies at the
meeting of shareholders of the company.
1.2.4. The Company shall strive to exclude the use by shareholders of other ways of generating profit (income) at the expense of the company, in addition to
dividends and liquidation value in relation to the establishment of control mechanisms in internal documents that ensure the timely identification and procedure
for approving transactions with persons affiliated with significant shareholders (persons who have the right to dispose of votes falling on voting shares), in
cases where the law does not formally recognize such transactions as interested party transaction.
2.3.1 Only persons having an impeccable business and personal reputation and possessing the knowledge, skills and experience necessary for making decisions
within the competence of the Board of Directors and required for the effective performance of its functions are elected by the members of the Board of
Directors in the evaluation of candidates to the Board of Directors from the point of view of having the necessary experience, knowledge, business reputation,
lack of conflict of interests.
2.3.2 Members of the Board of Directors of the company are elected through a transparent procedure that allows shareholders to obtain information about
candidates sufficient to form a view of their personal and professional qualities regarding the provision to shareholders of the results of the evaluation of
candidates for the Board of Directors.
2.3.3. The composition of the Board of Directors is balanced, including by the qualifications of its members, their experience, knowledge and business
qualities, and enjoys the trust of shareholders in evaluating the work of the Board of Directors, including an analysis of the Board's needs in terms of
professional qualifications, experience and business skills.
2.3.4 The quantitative composition of the Board of Directors of the company enables to organize the activity of the Board of Directors in the most efficient
manner, including the possibility of forming committees of the Board of Directors, and also provides for significant minority shareholders of the company the
opportunity to elect a candidate to the Board of Directors for which they vote in terms of evaluating the work of the Board of Directors and consideration by the
Board of Directors of the issue of compliance of the quantitative composition of the Board of Directors with the needs of the company and the interests of
shareholders.
2.5.2 The Chairman of the Board of Directors ensures a constructive atmosphere for holding meetings, free discussion of issues on the agenda of the meeting,
monitoring the implementation of decisions taken by the Board of Directors in assessing the work of the Chairman of the Board of Directors.
2.6.1 The members of the Board of Directors make decisions taking into account all available information, in the absence of a conflict of interest, taking into
account the equal treatment of the shareholders of the company, within the usual business risk in terms of fixing in internal documents the obligation to abstain
from voting on any issue in which a member The Board of Directors has a conflict of interest.
3
2.6.3 The members of the Board of Directors have sufficient time to fulfill their duties in terms of evaluating the work of the Board of Directors (which took
into account the individual attendance of meetings of the Board and committees, as well as the time devoted to preparing for participation in meetings).
2.6.4 All members of the Board of Directors equally have access to documents and information of the company. The newly elected members of the Board of
Directors shall be provided, as soon as possible, with sufficient information about the company and the work of the Board of Directors regarding the right of
access of members of the Board of Directors to the documents of the controlled companies and the program of familiarization activities for the newly elected
members of the Board of Directors.
2.8.5 The composition of the committees is defined in such a way that it allows for a comprehensive discussion of the pre-examined issues, taking into account
the different views regarding the chairmanship of the committees by independent directors.
2.9.1 The evaluation of the quality of the work of the Board of Directors is aimed at determining the degree of effectiveness of the work of the Board of
Directors, committees and members of the Board of Directors, their work compliance with the needs of the company's development, revitalization of the work
of the Board of Directors and identification of areas in which their activities can be improved in terms of performance evaluation The Board of Directors and its
committees, as well as reviewing the results of the evaluation at a full-time meeting.
6.3.1 The provision of information and documents by the company at the request of shareholders is carried out in accordance with the principles of fairness and
ease in the part of providing shareholders with access to information on entities controlled by the company.
7.1.1 Significant corporate actions include the reorganization of the company, the acquisition of 30 percent or more of the company's voting shares
7.1.2 The Board of Directors plays a key role in making decisions or recommending significant corporate actions, the Board of Directors relies on the position
of independent directors of the company regarding statements by independent directors about their position on significant corporate actions prior to their
approval.
7.1.3 In the event of substantial corporate actions affecting the rights and legitimate interests of shareholders, equal conditions are provided for all shareholders
of the company, and in the event that the mechanisms provided for by law are not sufficient to protect the rights of shareholders, additional measures that
protect the rights and legitimate interests of the shareholders of the company. At the same time, the company is guided not only by compliance with the formal
requirements of the legislation, but also by the principles of corporate governance set out in the Code in terms of establishing in the Charter minimum criteria
for classifying transactions of the company to significant corporate actions.
7.2.1 Information on the performance of material corporate actions is disclosed with an explanation of the reasons, conditions and consequences of the
commission of such actions in terms of disclosure of information on significant corporate actions of the company, including the grounds and timing of such
actions.
7.2.2 The rules and procedures related to the implementation by the company of significant corporate actions are fixed in the internal documents of the
company with regard to fixing in the internal documents a rule on engaging an appraiser to determine the value of property alienated or acquired under a major
transaction or interested party transaction and for the acquisition cost estimation and redemption of the company's shares, as well as expanding the list of
grounds on which members of the Board of Directors of the company and other persons provided by law recognize as being interested in transactions of the
Company.
PJSC “RusHydro” does not observed the following principles of the Corporate Governance Code
4
2.4.3. Independent directors comprise not less than one third of the elected members of the Board of Directors in terms of the composition of the Board of
Directors.
2.4.4. Independent directors play a key role in preventing internal conflicts in Company and in committing to the company significant corporate actions
regarding the evaluation by independent directors of significant corporate actions related to a possible conflict of interest and providing the Board of Directors
with the results of such an assessment.
2.7.4 Decisions on the most important issues of the company's activities are taken at a meeting of the Board of Directors by a qualified majority or by a majority
of all elected members of the Board of Directors regarding the decision on the most important issues set forth in Recommendation 170 of the Code, by a
qualified majority, at least three quarters , or by a majority vote of all elected members of the Board of Directors.
Detailed information on the compliance of PJSC “RusHydro” with the principles and recommendations of the Corporate Governance Code recommended for
use by the Bank of Russia is provided in the table on "Compliance with the principles and recommendations of the Corporate Governance Code".
A brief description of the most significant aspects of the model and practice of corporate governance in the Company, a description of the methodology by
which the Company assessed the compliance with corporate governance principles enshrined in the Corporate Governance Code recommended by the Bank of
Russia, as well as planned (proposed) actions and activities of the Company to improve the model and practice corporate governance with an indication of the
timing of the implementation of such actions and activities is provided in Chapter 3 of this Annual Report .
The Company issues internal documents and corporate governance practices of the Company in accordance with the provisions of the Code of the Company.
Thus, the Company respects the fundamental principles and recommendations of the Code.
The reasons for the difference in some provisions of the Company's Corporate Governance Code from the principles of the recommendations of the Corporate
Governance Code recommended by the Bank of Russia: the inapplicability of a number of provisions of the Code to the Company (for example, the absence of
preferred shares). In addition, a significant amount of the novels introduced by the Code of Corporate Governance recommended by the Bank of Russia does
not allow to implement and ensure their high-quality implementation in a short time. The Company is constantly working to improve corporate governance.
Key reasons explanation, factors and (or) the circumstances due to which the Company has not complied with or complied not in full the principles of corporate
governance, set out the Corporate Governance Code and description of the mechanisms and governance tools that are used by the Company in place of
(substitute) recommended by the Corporate Governance Code are given below in column 7 of the table of the Report on compliance with the principles and
recommendations of the Code of Corporate Governance recommended by the Bank of Russia.
The Company complies with all recommendations of the Corporate Governance Code, which are reflected in the requirements of the Moscow Stock Exchange
Listing Rules, which are mandatory for issuers whose shares are in the First level of the list of securities.
5
Information on compliance with the Russian Corporate Governance Code
The Board of Directors confirms that the data contained in this report contains complete and reliable information on the company's compliance with the
principles and recommendations of the Corporate Governance Code for 2017.
N
Corporate governance Code
principles
Criteria used to evaluate whether the principle is
observed
The status of
compliance with the
principle of
corporate
governance in 2017
Explanations of deviations from the evaluation criteria
compliance with the principle of corporate governance in
2017
1.1 The company should ensure the equal and fair treatment of all its shareholders in the course of their exercising their rights to participate in the management of the company.
1.1.1
The company should create the
most favorable conditions possible
for its shareholders, enabling them
to participate
the general
in
meetings and to develop informed
positions on the issues forming its
agenda, as well as providing them
with the opportunity to coordinate
their actions and express their
opinions
issues
under discussion.
regarding
the
observed
partially observed
not observed
1. The internal document of the company which regulates
the procedure of convening, preparing and holding general
shareholders meetings, and which was approved by the
general shareholders meeting, should be available within
the public domain.
2. During the period of preparation for the meeting, the
company shall establish the necessary organizational and
technical conditions to ensure that shareholders may pose
questions to members of the company’s executive bodies
and Board of directors, as well as to publicly express their
opinions on the meeting’s agenda items. To this end, a
company with a
is
recommended to support a special telephone line (hotline)
for communication with shareholders, to establish a special
email address, and to provide a forum for discussion of the
meeting agenda on its website
large number of shareholders
1.1.2
Procedures for notification of the
general meeting and provision of
materials for it should enable the
shareholders to properly prepare
themselves
participation
for
therein.
1. A notice announcing a general shareholders meeting
should be published on the website of the company at least
30 days before the date of the meeting.
observed
2. In the message of the meeting provided the meeting
venue and documents required for admission to the
premises.
partially observed
not observed
to
3. The shareholders were provided with access
information about what the proposed issues on the agenda
and who have been nominated to the Board of Directors
and the auditing Commission of the company.
6
1.1.3 During the preparation for and
holding of the general meeting,
the shareholders should be able to
freely and in a timely manner
receive
the
meeting and its materials, to pose
questions
the
company’s executive bodies and
to
and
Board of directors,
communicate with each other.
information about
to members of
1. During the relevant reporting period shareholders should
be provided with an opportunity to pose questions to
members of the company’s executive bodies and Board
members before and during the annual general meeting.
observed
partially observed
not observed
2. The materials set out the positions of the Board of
Directors regarding the general meeting’s agenda, as well
as dissenting opinions of Board members on each item
therein. Such materials are recommended for inclusion into
the minutes of a meeting of the Board of Directors where
such opinions have been expressed.
3. The company
those
is recommended
shareholders who are entitled to review the list of persons
authorized
the
in
opportunity to review it starting from the date when the
company receives such information.
the meeting with
to participate
to provide
1.1.4 There should be no unjustified
difficulties
preventing
shareholders from exercising their
right to demand that a general
meeting be convened, nominate
candidates
the company’s
governing bodies, and to place
proposals on its agenda.
to
1.1.5 Each shareholder should be able
to freely exercise his right to vote
in a straightforward and most
convenient way.
1. The shareholders have the opportunity to propose items
to be included in the agenda of its annual general meeting
within a 60-day period following the end-date of the
respective calendar year.
observed
partially observed
not observed
2. If there are typos and other insignificant flaws in
shareholder proposals, it is not recommended that the
company refuse to include these proposals on the agenda or
refuse to allow the proposed candidate to claim his/her
place on the list of nominees for election as long as the
contents of the proposal as a whole are sufficient to
determine the will of the shareholder and to confirm his
right to submit the proposal.
1. To rule out any abuse, the company should include in its
internal documents a provision whereby a person filling out
a voting ballot may, until the end of the general meeting,
request that a copy of the ballot filled out thereby be
certified by the company’s counting commission (or
representatives of the registrar who carry out the functions
of such counting commission).
observed
partially observed
not observed
7
1.1.6 Procedures for holding a general
meeting set by
the company
should provide equal opportunity
the
to all persons present at
general meeting to express their
opinions and ask questions that
might be of interest to them.
1. The general meeting should be conducted in such a way
as to enable the shareholders to make informed and
reasoned decisions on all matters on the agenda. In order to
do so, a sufficient time for reports on the agenda should be
provided and there should be sufficient time to discuss
these issues.
observed
partially observed
not observed
2. The company should invite candidates nominated to its
Board of directors and internal audit commission to attend
the respective general meeting (and such candidates are
recommended to attend the same) so that shareholders will
be able to ask them questions and make their judgments
about such candidates.
3. The Board of Directors considered
the use of
telecommunication systems to provide the shareholders
with remote access to their general meetings (for example,
by broadcasting its proceedings via the company's website
or by using video conferencing).
P.1 is fully observed.
P.2 and p.3 are partially observed.
With regard to paragraphs 2, the Company provides the
following explanations:
P.2.7. The Regulation on the procedure for convening and
holding the General Meeting of Shareholders of the Company
provides for the right to attend the meeting of persons included
in the list of candidates for election to the management and
control bodies of the Company.
In practice, at the annual general meeting of shareholders in
2017, there were individual members of the Board of Directors,
including the Chairman of the Board of Directors, individual
members of the Audit Commission.
In addition, invitations to participate in the Assembly were sent
to all candidates for administrative and control bodies.
Deviation from compliance with this recommendation is due to
the fact that the Company can not provide the mandatory
attendance at each shareholders' meeting of all candidates for
administration and control without exception for various
reasons (production, organizational, personal circumstances of
each candidate). In practice, holding a meeting of shareholders
of the Company, candidates to the Board of Directors who were
not previously elected to the Board of Directors are usually
present at the shareholders' meetings, and shareholders have an
actual opportunity to ask them questions.
The Company intends to strive in the future to
maximum full compliance with this recommendation of the
Code.
With respect to paragraphs 3, the Company provides the
following explanations:
The Board of Directors, while taking decisions related to the
preparation and conduct of general meetings of shareholders,
has not yet considered the issue of using telecommunications to
provide shareholders
remote access to participate in general meetings. However,
during the annual general meeting of shareholders held on
26.07.2017, the Company conducted a live video broadcast of
this meeting on a corporate website on the Internet.
In this regard, non-compliance with this rule has a formal
procedural nature in which the achievement of the goal to
8
1.2
Shareholders should have equal and fair opportunities to participate in the profits of the company by means of receiving dividends.
which the norm is directed is achieved.
When preparing the annual general meeting of shareholders in
2018, the Board of Directors of the Company will consider the
issue of using telecommunications to provide remote access to
shareholders for participation in the meeting.
1. The company has developed and disclosed its dividend
policy approved by the Board of Directors.
observed
2. If the dividend policy of the company utilizes indicators
from the financial statements of the company to determine
the size of the dividend, the relevant provisions of the
dividend policy should include the consolidated indicators
of financial statements.
1. The dividend policy of the company should contain clear
indications of financial/economic circumstances which
prohibit the company from paying dividends.
1.2.1 The company should develop and
put in place a transparent and clear
mechanism for determining the
amount of dividends and their
payment.
such
1.2.2 The company should not make a
the payment of
decision on
dividends
decision,
if
without formally violating limits
is nevertheless
set by
the economic
unjustified from
point of view and might lead to
the formation of false assumptions
about the company’s activity.
law,
1.2.3 The company should not allow
deterioration of dividend rights of
its existing shareholders.
1. The company has not taken any actions which would
allow for the deterioration of dividend rights of existing
shareholders in the reporting period.
1.2.4 The company should strive to rule
out any means through which its
shareholders can obtain profit or
gain at the company’s expense
and
other
distributions of
liquidation
value.
dividends
than
its
1. The company has established appropriate control
mechanisms in its internal documents to prevent its
controlling persons from deriving a profit (income) from
the company in ways other than dividends or liquidation
value. Internal documents of
the company contain
provisions establishing control mechanisms for timely
identification and approval of transactions with affiliated
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
During the year 2017, the Company had three significant
shareholders:
- Russian Federation (controlling shareholder);
- Gazprombank (Joint Stock Company) and VTB Bank (PJSC)
are shareholders owning over 5% of the Company's shares.
9
parties and major shareholders (persons entitled to control
votes attached to voting shares) in cases when the law does
not formally recognize these transactions as interested-
party transactions.
At the same time, in April 2017, Gazprombank reduced its
shareholding below 5% and ceased to be a significant
shareholder.
In the Company, there are practices of identifying conflicts of
interest when concluding contracts. Also, there are mechanisms
for disclosing the beneficiaries of counterparties established by
the Company's LNA when concluding contracts.
In addition, the conclusion of contracts by both the Company
and the controlled companies is carried out in accordance with
the regulated procurement procedures.
Despite the fact that the Company considers current practices
and regulatory documents sufficient to exclude the facts of
providing "to other shareholders" other ways of obtaining profit
(income) at the expense of the company ", the Company plans
to consider the issue of introducing additional norms into
internal documents in 2018.
1.3 The system and practices of corporate governance should ensure equal terms and conditions for all shareholders owning shares of the same class (category) in a company, including
minority and foreign shareholders. Equal treatment should be unilateral and beyond dispute.
1.3.1 The Company has created the
conditions for a fair treatment to
every shareholder on the part of
and
management
controlling
the
persons
company, including conditions to
ensure
large
that abuses by
against minority
shareholders
shareholders.
bodies
of
1. During the reporting period the procedures adopted for
management of potential
conflict between major
shareholders were effective, and the Board of Directors
paid sufficient attention to conflicts, if any, between
shareholders.
observed
partially observed
not observed
1.3.2 The Company should not perform
any acts which would or could
result in artificial reallocation of
corporate control therein.
1. There were no quasi-treasury shares or they did not
participate in voting during the course of the reporting
period.
observed
partially observed
not observed
1.4 The shareholders should be provided with reliable and efficient means of recording their rights in shares as well as with the opportunity to freely dispose of such shares in a non-onerous
manner.
1.4 The
shareholders
should
be 1. The quality and reliability of the work performed by the observed
10
reliable
provided with
and
efficient means of recording their
rights in shares as well as with the
opportunity to freely dispose of
such shares
in a non-onerous
manner.
registrar of the company answers the requirements of the
company and its shareholders.
partially observed
not observed
2.1 The Board of Directors shall be in charge of strategic management of the company, determine major principles of and approaches to creation of a risk management and internal control
system within the company, monitor the activity of the company’s executive bodies, and carry out other key functions.
for
decisions
2.1.1 The Board of Directors should be
responsible
to
appoint and remove members of
executive bodies, including taking
action in response to failure of the
latter to properly perform their
duties. The Board of Directors
should also guarantee that the
company’s executive bodies act in
accordance with an approved
the
development strategy and
the
main business goals of
company.
the
2.1.2 The Board of Directors should
establish basic long-term targets
activity,
of
company’s
its key
evaluate and approve
performance
and
principal business goals, as well as
evaluate and approve its strategy
and business plans in respect of its
principal areas of operations.
indicators
1. According to the charter of the company, the Board of
Directors has the authority
to appoint, dismiss and
determine the terms and conditions of contracts with
members of executive bodies of the company.
observed
partially observed
not observed
2. During the reporting period the Board heard reports of
the one-person executive body and members of the
collective executive body on the implementation of the
strategy, with particular attention to conformity with the
company’s performance in targeting indicators set forth by
the company’s strategy.
With regard to paragraph 1, the Company provides the
following explanations:
In accordance with the Company's Charter, the terms of the
contract of the sole executive body are determined by the Board
of Directors or by a person authorized by the Board of
Directors to sign an employment contract. At the same time, the
competence of the Board of Directors includes the authority to
approve the Policy on Remuneration and Compensation of
Members of the Executive Bodies.
Terms of contracts with members of the Management Board
are determined by the sole executive body on the basis of the
policy on compensation and reimbursement of expenses
(compensation) of members of executive bodies approved by
the Board of Directors.
1. During the reporting period the Board of Directors has
reviewed matters related to the status of execution of the
strategy of the company, approval of its financial plan
(budget) and the review of criteria and indicators (including
interim) pertaining to the execution of the strategy and
business plans of the company.
observed
partially observed
not observed
2.1.3 The Board of Directors should
determine
and
approaches to creation of the risk
management and internal control
principles of
1. The Board of Directors has determined the principles
and approaches to creation of the risk management and
internal control system in the company.
observed
partially observed
not observed
11
system in the company.
2.1.4 The Board of Directors should
determine the company’s policy
on remuneration due to and/or
reimbursement of costs incurred
by its Board members, members
of its executive bodies and other
key managers.
2. The Board of Directors has evaluated
management and
reporting period.
internal control system during
the risk
the
1. The company has developed and implemented a policy
(policies) on remuneration and/or reimbursement of costs
incurred by its Board members, members of executive
bodies and other key managers. This policy (policies) was
approved by the Board of Directors.
observed
partially observed
not observed
With regard to items 1,2, the Company provides the
following explanations:
As the category of "key executives" has not been determined
and approved by the Board of Directors, the Board of Directors
did not approve the Policy on compensation and reimbursement
of expenses (compensation) by the Board of Directors.
2. During the reporting period the Board of Directors
reviewed matters related to the indicated policy (policies).
The policy on remuneration and reimbursement of expenses
(compensation) of all employees of the Company is determined
taking
the policy on
compensation and reimbursement of expenses (compensation)
to members of the executive bodies of the company, approved
by the Board of Directors.
the principles of
into account
2.1.5 The Board of Directors should
play a key role in prevention,
of
resolution
and
detection
internal conflicts between
the
company’s bodies, shareholders
and employees.
1. The Board of Directors plays a key role in prevention,
detection and resolution of internal conflicts
observed
partially observed
not observed
2. The company has created a system of identification of
transactions related to a conflict of interest and a system of
measures intended to resolve such conflicts.
2.1.6 The Board of Directors should
play a key role in ensuring that the
company is transparent, discloses
information in full and in due
its
course,
shareholders with
unhindered
access to its documents.
provides
and
1. The Board of Directors has approved a regulation on
information policy.
observed
2. The company has appointed persons in charge of the
implementation (enforcement) of the information policy.
partially observed
not observed
2.1.7 The Board of Directors should
monitor the company’s corporate
governance practices and play a
1. During the reporting period the Board of Directors
reviewed
the
the corporate governance practices
company.
in
observed
partially observed
12
key role in its material corporate
events.
not observed
2.2 The Board of Directors should be accountable to the company’s shareholders.
2.2.1 Information about the Board of
be
the
Directors’ work
disclosed and provided
shareholders.
should
to
1. The annual report of the company for the reporting
period contains
the directors’
information regarding
attendance at Board and committee meetings.
observed
partially observed
not observed
2. The annual report contains information about the key
results of the evaluation of the work of the Board of
Directors in the reporting period.
2.2.2 The chairman of the Board of
Directors must be available to
communicate with the company’s
shareholders.
1. In the company there is a transparent procedure that
provides the shareholders the opportunity to send the
Chairman of the Board of Directors issues and their
position on them.
observed
partially observed
not observed
2.3 The Board of Directors should be an efficient and professional governing body of the company which is able to make objective and independent judgments and pass resolutions in the
best interests of the company and its shareholders.
2.3.1 Only persons with
impeccable
business and personal reputation
should be elected to the Board of
Directors; such persons should
also have knowledge, skills, and
to make
experience necessary
fall within
decisions
the
that
jurisdiction of
the Board of
Directors and to perform all such
functions efficiently.
1. The performance assessment procedure for the Board of
Directors adopted in the company includes the evaluation
of professional qualifications of Board members.
observed
partially observed
not observed
2. In the reporting period, the Board of Directors (or its
nominations committee) evaluated candidates nominated to
the Board in terms of their experience, knowledge, business
and personal reputation, absence of conflicts of interest etc.
the Personnel and Remuneration Committee
P. 1 is fully observed.
P. 2 is partially observed.
With regard to paragraph 2, the Company provides the
following explanations:
In 2017,
(nominations) was
assessment of candidates to the Board of Directors from the
point of view of their
independence.
The evaluation of the candidates to the Board of Directors in
terms of having the necessary experience, knowledge, business
reputation, and lack of conflict of interest was not conducted
due to the fact that the list of candidates to the Board of
Directors for the annual General Meeting of Shareholders in
2017 fully corresponded to the one in effect in 2016-2017
corporate year to the composition of the Board of Directors,
which was known to the shareholders of the Company.
In order to implement the recommendations of the Code in
2018, the Committee on
staff and
the
candidates to the Board of Directors in terms of having the
(nominations) will assess
remunerations
13
a
enabling
2.3.2 Board members should be elected
pursuant
transparent
to
the
procedure
shareholders to obtain information
about
candidates
sufficient for them to get an idea
of the candidates’ personal and
professional qualities.
respective
in
2.3.3 The composition of the Board of
Directors should be balanced, in
particular
of
qualifications, expertise, and the
business skills of its members.
The Board of Directors should
the
the confidence of
enjoy
shareholders.
terms
1. Biographical data on all candidates nominated to the
Board of Directors, and the results of the evaluation of such
candidates conducted by the Board of Directors (or its
the
nominations committee),
candidate’s conformity with
in
accordance with recommendations 102-107 of the Code,
and the candidates’ written consent to be elected to the
Board, were provided to shareholders in preparation for all
meetings where the election of Board members was on the
agenda.
independence criteria
information
regarding
observed
partially observed
not observed
necessary
experience, professional qualifications, knowledge, business
reputation and the results of such an assessment will be
presented to shareholders as part of the materials of the annual
general meeting of shareholders.
With regard to paragraph 1, the Company provides the
following explanations:
When electing the members of the Board of Directors at the
General Meeting, the Company provided biographical data to
the shareholders,
information on compliance with their independence criteria and
information
on the written consent of candidates for election to the Board of
Directors.
Information on the evaluation of candidates from other points
of view was not provided, since such an assessment was not
carried out separately for each of the candidates in 2016 for the
reasons indicated in p. 2.3.1. of this report.
Information on the evaluation of candidates in terms of having
qualifications,
necessary
the
knowledge, business
reputation will be provided to shareholders in preparation for
the Annual General Meeting of Shareholders in 2018.
professional
experience,
1. During the procedure of assessment of the work of the
Board of Directors conducted in the reporting period, the
Board analyzed its composition in terms of qualifications
and expertise of its members.
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
In the reporting period, the work of the Board The external
evaluation of the work of the Board of Directors was not
carried out in the reporting period, due to the fact that the
composition of the Board of Directors elected in 2017 fully
corresponds to the previous composition of the Board of
Directors elected in 2016.
At the same time in March 2018. an independent consultant
14
the
component of
(PricewaterhouseCoopers Advisory) was selected, including for
an external evaluation of the work of the Board of Directors for
2017. The subject of this evaluation includes the evaluation of
the members of the Board of Directors.
In addition, the Russian Institute of Directors (NP RID),
attracted by the Company on a regular basis, in assigning the
corporate governance rating in 2017, assessed the practice of
corporate governance within
the
"Management and Control Activities" component - one of the
four key components being evaluated in rating evaluation.
More information is available on the Company's website
(http://www.rushydro.ru/corporate/rating/national_rating/2017/)
Also, in 2017, the procedure for evaluating the activities of the
Board of Directors was carried out
the
contribution of representatives of the Russian Federation to the
activities of the Company, taking into account its development
strategy. The valuation was conducted in accordance with the
methodology approved by Federal Property Management
Agency for the individual evaluation of members of the Board
of Directors of joint-stock companies with state participation.
to determine
1. During the procedure of assessment of the work of the
Board of Directors conducted in the reporting period, the
its
Board of Directors analyzed
membership
its
the needs of
to
shareholders.
the conformity of
the company and
observed
partially observed
not observed
2.3.4 The membership of the Board of
Directors of the company must
enable the Board to organize its
activities in the most efficient way
possible, in particular, to create
committees of
the Board of
Directors, as well as to enable
substantial minority shareholders
of the company to put forth a
the Board of
candidate
Directors for whom they would
vote.
to
The report on the results of the independent external evaluation
is planned for consideration by the Board of Directors in the
2nd quarter of 2018.
With regard to paragraph 1, the Company provides the
following explanations:
The external evaluation of the work of the Board of Directors
was not carried out in the reporting period, due to the fact that
the composition of the Board of Directors elected in 2017 fully
corresponds to the previous composition of the Board of
Directors elected in 2016.
At the same time in March 2018. an independent consultant
(PricewaterhouseCoopers Advisory) was selected, including for
an external evaluation of the work of the Board of Directors for
2017. The subject of this evaluation includes the evaluation of
the members of the Board of Directors.
In addition, the Russian Institute of Directors (NP RID),
attracted by the Company on a regular basis, in assigning the
corporate governance rating in 2017, assessed the practice of
corporate governance within
the
"Management and Control Activities" component - one of the
component of
the
15
four key components being evaluated in rating evaluation.
More information is available on the Company's website
(http://www.rushydro.ru/corporate/rating/national_rating/2017/)
Also, in 2017, the procedure for evaluating the activities of the
Board of Directors was carried out
the
contribution of representatives of the Russian Federation to the
activities of the Company, taking into account its development
strategy. The valuation was conducted in accordance with the
methodology approved by Federal Property Management
Agency for the individual evaluation of members of the Board
of Directors of joint-stock companies with state participation.
to determine
The report on the results of the independent external evaluation
is planned for consideration by the Board of Directors in the
2nd quarter of 2018.
16
2.4 The Board of Directors should include a sufficient number of independent directors.
1. During the reporting period all independent Board
members answered all requirements of recommendations
102-107 of the Code or were deemed independent pursuant
to a decision of the Board of Directors.
observed
partially observed
not observed
the
2.4.1 An independent director should
mean any person who has the
required professional skills and
expertise and is sufficiently able
to have his/her own position and
make objective and bona fide
judgments, free from the influence
of
executive
company’s
bodies, any individual group of its
shareholders or other stakeholders.
It should be noted that, under
normal circumstances, a candidate
(or an elected director) may not be
if
deemed
he/she
the
company, any of its substantial
trading
shareholders, material
partners or competitors, or the
government.
to be
is associated with
independent,
2.4.2 It is recommended to evaluate
whether candidates nominated to
the Board of Directors meet the
independence criteria as well as to
review, on a
regular basis,
whether or not independent Board
members meet the independence
criteria. When carrying out such
evaluation, substance should take
precedence over form.
1. During the reporting period the Board of Directors
(or its nominations committee) issued an opinion
regarding
independence of each candidate
nominated to the Board and provided the shareholders
with the appropriate conclusion.
the
observed
partially observed
not observed
2. At least once in the reporting period the Board of
Directors (or its nominations committee) evaluated the
independence of current members of the Board of Directors
indicated by
the annual report as
independent directors.
the company
in
2.4.3 Independent
directors
should
account for at least one-third of all
directors elected to the Board of
Directors.
3. The company has developed procedures indicating the
actions which must be taken by a Board member once
he/she ceases to be independent including their obligation
to inform the Board of Directors of these circumstances in
a timely fashion
1. Independent directors should account for at least one-
third of all directors elected to the Board of Directors.
observed
partially observed
not observed
With regard to paragraphs 1, the Company provides the
following explanations:
The number of independent members of the Board of Directors
during the reporting period was less than 1/3 of the composition
of the Board of Directors, due to the fact that the Company
does not influence the formation of the Board of Directors since
Members of the Board of Directors are elected by shareholders
at the General Meeting of Shareholders.
However,
the Personnel and Remunerations Committee
(nominations) considered nominees for members of the Board
of Directors for independence and this information was
submitted to shareholders in the composition of the Meeting.
At the end of the reporting period, the Company had 4
independent directors (2 of which were fully independent and 2
were recognized as independent by the Board of Directors1),
which corresponds to the requirements of the Listing Rules of
the Moscow Stock Exchange in terms of the number of
independent directors on the board of directors.
1 The recognition of directors as independent meets the requirements set by the Moscow Stock Exchange Listing Rules, meets the requirements of the Company's Corporate Governance Code,
but partially does not comply with the requirements of the Corporate Governance Code recommended by the Bank of Russia in terms of the rule that does not provide for the recognition of an
independent director who has a formal relationship with the state.
17
2.4.4 Independent directors should play
a key role in prevention of internal
the company and
conflicts
performance by
latter of
material corporate actions.
the
in
1. Independent directors (with no conflict of interest)
should preliminarily review material corporate actions
related to a potential conflict of interest and a document
setting out the results of such evaluation should be made
available as part of materials to be provided in connection
with a Board meeting where a respective matter is to be
considered.
observed
partially observed
not observed
In order to comply with this requirement in 2018, the Company
will inform shareholders about the presence of independent
candidates in the Board of Directors.
In the event that a sufficient number of independent directors
are not elected to the AGM in 2018, the Company will consider
the possibility of recognizing certain directors by independent
directors by decision of the Board of Directors.
With regard to paragraph 1, the Company provides the
following explanations:
The internal documents of the Company do not fix the
procedure according to which independent directors (for whom
there is no conflict of interest) preliminarily assess the
significant corporate actions associated with a possible conflict
interests.
the
issues before
the
However, a significant part of
consideration for consideration by the Board of Directors is
considered on the Committees under the Board of Directors.
The Committees include independent directors who have the
opportunity to express their position regarding these issues.
Decisions of committees under the Board of Directors of the
Company shall be notified to the Board of Directors until the
voting is started.
During 2018, the Company will consider the possibility of
consolidating all issues that meet the criteria for significant
corporate actions of the Code of Corporate Governance to the
competence of the Audit Committee for the purpose of forming
independent directors' opinions on such actions related to a
possible conflict of interests.
2.5 The chairperson of the Board of Directors should help it carry out the functions imposed thereon in a most efficient manner.
2.5.1 It is recommended to either elect
an independent director to the
position of chairperson of
the
Board of Directors or identify the
senior independent director among
the
independent
directors who would coordinate
work of the independent directors
company’s
1. The chairperson of the Board of Directors is an
independent director or a senior independent director who
was appointed from among the independent directors.
observed
partially observed
not observed
2. The role, rights and responsibilities of the chairperson of
the Board (and, if applicable, of the senior independent
director) are clearly determined in the internal documents
of the Company/
The Company has chosen an approach to elect a senior
independent director due to the fact that the Deputy Chairman
of the Government of the Russian Federation - Plenipotentiary
Representative of the President of the Russian Federation in the
Far Eastern Federal District Yu.P. Trutnev, who is the
representative of the Russian Federation in the Board of
Directors of the Company.
18
and liaise with the chairperson of
the Board of Directors.
2.5.2 The Board chairperson should
ensure that Board meetings are
held in a constructive atmosphere
and that any items on the meeting
agenda are discussed freely. The
chairperson should also monitor
fulfillment of decisions made by
the Board of Directors.
1. The performance of the chairperson of the Board of
Directors was evaluated within the framework of the Board
performance assessment procedure in the reporting period.
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
The external evaluation of the work of the Board of Directors
was not carried out in the reporting period, due to the fact that
the composition of the Board of Directors elected in 2017 fully
corresponds to the previous composition of the Board of
Directors elected in 2016.
At the same time in March 2018. an independent consultant
(PricewaterhouseCoopers Advisory) was selected, including for
an external evaluation of the work of the Board of Directors for
2017. The subject of this evaluation includes the evaluation of
the members of the Board of Directors.
In addition, the Russian Institute of Directors (NP RID),
attracted by the Company on a regular basis, in assigning the
corporate governance rating in 2017, assessed the practice of
corporate governance within
the
"Management and Control Activities" component - one of the
four key components being evaluated in rating evaluation.
More information is available on the Company's website
(http://www.rushydro.ru/corporate/rating/national_rating/2017/)
Also, in 2017, the procedure for evaluating the activities of the
the
Board of Directors was carried out
contribution of representatives of the Russian Federation to the
activities of the Company, taking into account its development
strategy. The valuation was conducted in accordance with the
methodology approved by Federal Property Management
Agency for the individual evaluation of members of the Board
of Directors of joint-stock companies with state participation.
component of
to determine
the
The report on the results of the independent external evaluation
is planned for consideration by the Board of Directors in the
2nd quarter of 2018.
19
2.5.3 The chairperson of the Board of
Directors should take any and all
measures as may be required to
provide the Board members in a
timely fashion with information
required to make decisions on
issues on the agenda.
1. The obligation of the chairperson of the Board of
Directors to take any and all measures to provide the Board
members in a timely fashion with information required to
make decisions is stipulated in the internal documents of
the company.
observed
partially observed
not observed
2.6 Board members must act reasonably and in good faith in the best interests of the company and its shareholders, being sufficiently informed, with due care and diligence.
make
all
2.6.1 Acting reasonably and in good
faith means that Board members
decisions
should
considering
available
information, in the absence of a
conflict
treating
the company
shareholders of
equally, and assuming normal
business risks.
interest,
of
observed
partially observed
not observed
1. Internal documents of the company should stipulate that
if a Board member has a conflict of interest, he/ she should
promptly inform the Board of Directors (through its
chairman or the company’s corporate secretary) both of the
existence of and grounds for such conflict of interest. In
any case, such notification shall be made before the issue is
discussed at a meeting of the Board of Directors or by any
of its committees at which such Board member is present.
2. According to internal documents of the company, if a
Board member has a conflict of interest, he/she may not
take part in decision-making. He/ she should abstain from
voting on any issues in which he/she has a conflict of
interest.
3. The company should provide for a procedure (and a
related budget) enabling Board members to receive, at the
expense of the company, professional advice on issues
relating to the jurisdiction of the Board of Directors.
2.6.2 Rights and duties of Board
members should be clearly stated
1. The company adopted and published an internal
document whereby the rights and duties of Board members
observed
P.1 is fully observed.
P 2 is partially observed.
P.3 is fully observed.
With regard to paragraph 2, the Company provides the
following explanations:
Internal documents of the Company do not provide for a
specific duty of a member of the Board of Directors not to vote
on any issue in which he has a conflict of interest.
However, the Code of Corporate Ethics of the Company
provides for the obligation of the members of the Board of
Directors to notify the Company through the Board of Directors
about the existence of a conflict of interest.
In practice, the members of the Board of Directors refrain from
any actions that entail a conflict of interest.
However, the conflict of interest is an extremely rare event. In
2017 The members of the Board of Directors did not state that
they had a conflict of interest. In 2016, one case of a conflict of
interest was declared in which the corresponding member of the
Board of Directors abstained from voting.
The Board of Directors (the date of the Board of Directors on
December 28, 2017) decided to approve the introduction of
appropriate amendments and to include this provision in the
Regulations on the procedure for convening and holding
meetings of the Board of Directors with subsequent approval of
this Regulation at the AGM in 2018.
Thus, after (and in the event of) approval by the annual general
meeting of shareholders of the Regulations on the procedure for
convening and holding meetings of the Board of Directors in a
new edition, this rule will be implemented.
20
and documented in the company’s
internal documents.
are clearly stated.
partially observed
not observed
2.6.3 Board members
should have
sufficient time to perform their
duties.
1. Individual attendance at Board and committee
meetings and time devoted to the preparation for the
participation in meetings was considered during the
procedure of assessment of the Board of Directors in
the reporting period.
observed
partially observed
not observed
2. In accordance with internal documents of the company,
Board members should notify the company’s Board of
directors of
in
management bodies of other entities and, immediately after
their election (appointment) to the management bodies of
such other entities, of such election (appointment).
take a position
intention
their
to
P. 1 is partially observed.
P.2 fully observed.
With regard to paragraph 1, the Company provides the
following explanations:
The external evaluation of the work of the Board of Directors
was not carried out in the reporting period, due to the fact that
the composition of the Board of Directors elected in 2017 fully
corresponds to the previous composition of the Board of
Directors elected in 2016.
At the same time in March 2018. an independent consultant
(PricewaterhouseCoopers Advisory) was selected, including for
an external evaluation of the work of the Board of Directors for
2017. The subject of this evaluation includes the evaluation of
the members of the Board of Directors.
In addition, the Russian Institute of Directors (NP RID),
attracted by the Company on a regular basis, in assigning the
corporate governance rating in 2017, assessed the practice of
corporate governance within
the
"Management and Control Activities" component - one of the
four key components being evaluated in rating evaluation.
More information is available on the Company's website
(http://www.rushydro.ru/corporate/rating/national_rating/2017/)
Also, in 2017, the procedure for evaluating the activities of the
Board of Directors was carried out
the
contribution of representatives of the Russian Federation to the
activities of the Company, taking into account its development
strategy. The valuation was conducted in accordance with the
methodology approved by Federal Property Management
Agency for the individual evaluation of members of the Board
of Directors of joint-stock companies with state participation.
component of
to determine
the
The report on the results of the independent external evaluation
is planned for consideration by the Board of Directors in the
2nd quarter of 2018.
21
documents
2.6.4 All Board members should have
equal opportunity to access the
company’s
and
information. Newly elected Board
members should be provided with
sufficient information about the
company and work of its Board of
directors as soon as possible.
1. In accordance with internal documents of the company,
Board members are given an opportunity to obtain any and
all information required to perform their duties, including
information on legal entities controlled by the company.
The duty of the company’s officials to provide the Board
members with such information is set forth by the
company’s internal documents.
observed
partially observed
not observed
2. The company has a formal induction program for newly
elected Board members.
P.1 and P.2 are partially observed.
With regard to paragraph 1, the Company provides the
following explanations:
This right is not formalized in internal documents.
The Regulations on the Procedure for Convening and Holding
Meetings of the Board of Directors of the Company stipulate
the right of the members of the Board of Directors to request
any information and documents that are necessary for making
decisions on the competence of the Board of Directors. There is
also a time limit of 5 working days for providing such
information to a member of the Board of Directors.
The Company plans to include this provision in the Regulations
on the Procedure for Convening and Holding Meetings of the
Board of Directors of the Company and submit this Regulation
for approval by the AGM in 2018.
Thus, after (and in the case of) approval at the AGM in 2018.
Regulations on the procedure for convening and holding
meetings of the Board of Directors in a new edition, this
provision will be implemented.
With regard to paragraph 2, the Company provides the
following explanations:
There is no formalized program of familiarization measures for
newly elected members of the Board of Directors in the
Company.
Due to the fact that the list of candidates to the Board of
Directors for the annual General Meeting of Shareholders in
2017 fully corresponded to the composition of the Board of
Directors operating in 2016-2017, the risks associated with the
lack of a program of fact-finding activities were absent.
At the same time, the Company organizes interaction between
the management and the Board of Directors, whose level allows
to promptly respond and provide the necessary information to
newly elected members of the Board of Directors for quick and
informative acquaintance with the Company's activities.
The procedure for the inauguration of the newly elected
members of the Board of Directors was reviewed and approved
by the decision of the Board of Directors (Minutes No. 263 of
December 28, 2017).
The draft Regulation on the procedure for convening and
holding meetings of the Board of Directors of the Company
(including this rule) will be submitted for preliminary approval
22
2.7 Meetings of the Board of Directors, preparation for them, and participation of Board members therein should ensure efficient work of the Board.
by the Board of Directors of the Company and subsequent
approval by the annual General Meeting of Shareholders of the
Company following the results of 2017.
Thus, after (and in the case of) approval at the AGM in 2018.
Regulations on the procedure for convening and holding
meetings of the Board of Directors of the Company in a new
edition, this provision will be implemented.
In addition, after the new Board of Directors was elected in
2018, the Company will send an introductory course program to
newly elected members of the Board of Directors.
2.7.1 It
is
recommended
to hold
meetings of the Board of Directors
as needed, with due account of the
company’s scope of activities and
its then current goals.
2.7.2 It is recommended to develop a
procedure for preparing for and
holding meetings of the Board of
Directors and setting it out in the
internal documents.
company’s
The above procedure
should
enable the shareholders to prepare
themselves properly
such
meetings.
for
2.7.3 The form of a meeting of the
Board of Directors should be
determined with due account of
the importance of the issues on the
the meeting. Most
agenda of
be
issues
important
decided at the meetings held in
person.
should
1. The Board of Directors held at least 6 meetings in the
reporting period.
observed
partially observed
not observed
1. The company has an internal document in place
regulating the procedure of preparation and holding of
Board meetings which, inter alia, requires that the notice of
a meeting must be made, as a rule, at least 5 days before
the date of the meeting.
observed
partially observed
not observed
1. According to the charter or an internal document of the
company, the most important issues (in accordance with
the list provided in recommendation 168 of the Code) must
be considered and decided at meetings held in person.
observed
partially observed
not observed
2.7.4 Decisions on most
important
issues relating to the company’s
business should be made at a
meeting of the Board of Directors
1. According to the charter of the company, the most
important issues as described by recommendation 170 of
the Code must be decided by a qualified majority vote of at
least three quarters of the votes or by a majority vote of all
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
Paragraph 15.6 of the Charter of PJSC "RusHydro", providing
for the adoption of items n. 23-25, 31 items 12.1. Art. 12 of the
23
by a qualified majority vote or by
a majority vote of all elected
Board members.
elected Board members.
Articles of Association by a two-thirds majority of the members
of the Board of Directors participating in the meeting, allows to
ensure the maximum consideration of the opinions of the
members of the Board of Directors.
The introduction of this rule into the Charter can lead to the risk
of not taking individual decisions in individual situations, for
example, when considering issues with a minimum quorum of 7
people and having at least one vote against.
In spite of the fact that the turnout of the Board of Directors
members is usually high, and the voting as a whole is close to
unanimity, it is inexpedient to create legal prerequisites for the
impossibility of the Board of Directors making separate
decisions. Including due to the fact that in corporate practice
such changes are, as a rule, irreversible.
In this connection, the Company does not introduce this norm
into the Charter of the company in the previous periods, but is
going to do that in 2019.
2.8 The Board of Directors should form committees for preliminary consideration of the most important issues of the company’s business.
over
2.8.1 For the purpose of preliminary
consideration of any matters of
control
company’s
financial and business activities, it
is recommended to form an audit
of
committee
independent directors.
comprised
the
observed
partially observed
not observed
A member of
the Board of Directors, Pivovarov VV,
corresponds to the requirement specified in clause 3 of clause
2.8.1, since he has experience in the analysis of accounting
(financial) statements.
1. The Board of Directors formed an audit committee
comprised exclusively of independent directors.
2. The objectives of the audit committee, including the
objectives listed in recommendation 172 of the Code, are
determined in the internal documents of the company.
3. At least one member of the audit committee, who is an
independent director, has experience and knowledge of
preparation, analysis, evaluation and audit of accounting
(financial) statements.
4. Meetings of the audit committee were held at least once
every quarter during the reporting period.
2.8.2 For the purpose of preliminary
consideration of any matters of
development of efficient and
remuneration
transparent
practices, it is recommended to
form a remuneration committee
independent
of
comprised
1. The Board of Directors formed a remuneration
committee comprised exclusively of independent directors.
observed
partially observed
not observed
2. The committee is chaired by an independent director
who is not the Board chairperson at the same time.
3. The objectives of the remuneration committee, including
24
directors and chaired by an
independent director who should
not concurrently be the Board
chairperson.
the objectives listed in recommendation 180 of the Code,
are determined in the internal documents of the company.
2.8.3 For the purpose of preliminary
consideration of any matters
relating
resources
to human
planning (making plans regarding
successor directors), professional
composition and efficiency of the
is
Board
of Directors,
a
recommended
nominating
(a
nominations,
committee
appointments
human
resources) with a majority of its
members
independent
directors.
it
form
committee
being
and
on
to
2.8.4 Taking account of its scope of
activities and levels of related
risks, the company should form
other committees with its Board of
directors, in particular, a strategy
corporate
a
committee,
governance committee, an ethics
committee, a risk management
committee, a budget committee or
a committee on health, security
and environment, etc.
2.8.5 The
composition
the
committees should be determined
in such a way that it would allow a
of
1. The Board of Directors formed a nominations committee
(or its objectives indicated in recommendation 186 of the
Code are implemented by a different committee), with a
majority of its members being independent directors.
observed
partially observed
not observed
2. The objectives of the nominations committee (or the
relevant committee performing these functions) including
the objectives indicated in recommendation 186 of the
Code are determined in the internal documents of the
company
1. In the reporting period the Board of Directors considered
the conformity of the composition of its committees to the
objectives of the Board of Directors and of the company.
Additional committees were either formed or were deemed
unnecessary.
observed
partially observed
not observed
to
With regard to paragraph 1, the Company provides the
following explanations:
In addition
the audit and staffing committees and
remunerations (nominations), the Company has the following
committees:
- on strategy;
- on investments;
- Reliability, energy efficiency and innovation;
- on the development of energy in the Far East.
In spite of the fact that in the text of the decisions of the Board
of Directors there was not separately noted the opinion of the
Board of Directors on the compliance of the composition of its
committees with the tasks of the Board of Directors and the
objectives of the company's activity, this opinion was assumed
in the formation of the composition of committees.
1. Board committees are chaired by independent directors.
2. Given the specific nature of issues considered by the
observed
partially observed
not observed
P.1 is partially observed.
P.2 is fully observed.
With regard to paragraph 1, the Company provides the
25
discussion
comprehensive
of
issues being considered on a
due
preliminary
differing
consideration
opinions.
basis with
of
audit committee,
the nominating committee and the
remuneration committee, persons who are not members of
the above committees can attend their meetings only at the
invitation of their chairpersons.
the requirements of
following explanations:
In accordance with
the Company's
Corporate Governance Code, committees should be headed by
independent directors. The Audit Committee, the Personnel and
Remuneration Committee (nominations) and the Investment
Committee are headed by independent directors.
energy
policies,
conservation
The Committee
for Reliability, Energy Efficiency and
Innovation and the Committee for the Development of Energy
in the Far East are narrow-profile committees, which address
issues of territorial development and issues related to technical
policy, reliable and safe operation of the Company's production
innovative,
facilities,
environmental policies.
Taking into account the specifics of the issues being considered
by these committees, it is more important for the Chairman of
the Committee to have more professional skills, experience in
the work of the relevant Committee and other specialized
knowledge.
In connection with the above-mentioned chairmen of the
respective committees, the members of the committees were
elected on the basis of their professional skills and experience
in the relevant field of committees in the field of activity.
The Company plans, if it is possible, to consider the possibility
of electing, in 2018, the Chairman of the Strategy Committee of
an independent director.
2.8.6 Committee chairpersons should
inform the Board of Directors and
its chairperson of the work of their
committees on a regular basis.
1. During the reporting period chairpersons of Board
committees presented regular reports to the Board of
Directors on their activities.
observed
partially observed
not observed
2.9 The Board of Directors should make an exhaustive evaluation of the quality of its work and that of its committees and Board members.
at
determining
2.9.1 Evaluation of quality of the Board
of Directors’ work should be
aimed
how
efficiently the Board of Directors,
and Board
its
members work and whether their
work meets the company’s needs,
as well as at making their work
committees
1. Self-evaluation or external evaluation of the work of the
Board of Directors in the reporting period included the
evaluation of the work of the Board committees, separate
members of the Board of Directors and of the Board of
Directors as a whole.
observed
partially observed
not observed
2. The results of the self-evaluation or external evaluation
of the Board of Directors in the reporting period were
With regard to paragraph 1.2, the Company provides the
following explanations:
The external evaluation of the work of the Board of Directors
was not carried out in the reporting period, due to the fact that
the composition of the Board of Directors elected in 2017 fully
corresponds to the previous composition of the Board of
Directors elected in 2016.
At the same time in March 2018. an independent consultant
26
more
intensive and
areas of improvement.
identifying
reviewed by the Board of Directors at meetings held in
person
(PricewaterhouseCoopers Advisory) was selected, including for
an external evaluation of the work of the Board of Directors for
2017. The subject of this evaluation includes the evaluation of
the members of the Board of Directors.
the
However, In addition, the Russian Institute of Directors (NP
RID), attracted by the Company on a regular basis, in assigning
a corporate governance rating in 2017, assessed the practice of
corporate governance within the component "Management and
Control Activities" - one of
the four key appraisable
components in rating evaluation. More information is available
on
website
(http://www.rushydro.ru/corporate/rating/national_rating/2017/)
Also, in 2017, the procedure for evaluating the activities of the
Board of Directors was carried out
the
contribution of representatives of the Russian Federation to the
activities of the Company, taking into account its development
strategy. The valuation was conducted in accordance with the
methodology approved by Federal Property Management
Agency for the individual evaluation of members of the Board
of Directors of joint-stock companies with state participation.
to determine
Company's
1. An external organization (consultant) was retained to
evaluate the work of the Board of Directors at least once in
the last three reporting periods.
observed
partially observed
not observed
The report on the results of the independent external evaluation
is planned for consideration by the Board of Directors in the
2nd quarter of 2018.
should
2.9.2 Quality of work of the Board of
its committees and
Directors,
Board members
be
evaluated on a regular basis, at
least once a year. To carry out an
independent evaluation of
the
quality of the Board of Directors’
work, it is recommended to retain
a third party entity (consultant) on
a regular basis, at least once every
three years
3.1 The company’s corporate secretary shall be responsible for efficient interaction with its shareholders, coordination of the company’s actions designed to protect the rights and interests of
its shareholders, and support of efficient work of its Board of directors.
3.1.1 The corporate secretary should 1. The company has adopted and disclosed an internal observed
27
sufficient
have knowledge, experience, and
qualifications
for
performance of his/her duties, as
well as an impeccable reputation
and should enjoy the trust of the
shareholders.
document – regulation on the corporate secretary.
partially observed
not observed
2. The company disclosed on its website and in its annual
report information on the corporate secretary which is as
detailed as that required to be disclosed in relation to Board
members and members of the executive bodies of the
company.
independent of
3.1.2 The corporate secretary should be
sufficiently
the
company’s executive bodies and
be vested with powers and
to perform
resources
his/her tasks.
required
1. The Board of Directors approves the appointment,
termination of appointment, and additional remuneration of
the corporate secretary.
observed
partially observed
not observed
4.1 The level of remuneration paid by the company should be sufficient to enable it to attract, motivate, and retain persons having required skills and qualifications. Remuneration due to
Board members, the executive bodies, and other key managers of the company should be paid in accordance with a remuneration policy approved by the company
1. The company has adopted an internal document
(documents) – a remuneration policy (policies) in relation
to its Board members, members of executive bodies and
other key managers whereby the approaches to the
remuneration of
indicated persons are clearly
determined.
the
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
As the category of "other key employees" is not defined and not
approved by the Board of Directors, the Policy on remuneration
was not approved in relation to this category of employees
4.1.1 It is recommended that the level of
remuneration paid by the company
to its Board members, executive
bodies, and other key managers
should be sufficient to motivate
them
to work efficiently and
enable the company to attract and
retain knowledgeable, skilled, and
duly
persons. The
company should avoid setting the
level of remuneration any higher
than necessary, nor allowing for
an excessively large gap between
the level of remuneration of any of
the above persons and that of the
company’s employees.
qualified
4.1.2 The
company’s
remuneration
policy should be developed by its
committee
remuneration
and
the Board of
approved by
Directors. With the help of its
remuneration
the
Board of Directors should monitor
committee,
the remuneration policy (policies) and
1. During the reporting period the remuneration committee
reviewed
the
practice of its (their) implementation and, when necessary,
the relevant
provided
recommendations.
the Board of Directors with
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
The company's remuneration policy was worked out by the
remuneration committee and approved by the Board of
Directors of the Company in 2016, it was introduced during the
reporting period. During the reporting period, the remuneration
28
implementation of and compliance
with the remuneration policy by
the company and, should this be
necessary, review and amend the
same.
4.1.3 The
company’s
should
remuneration
policy
for
provide
transparent mechanisms to be used
to determine
the amount of
remuneration due to members of
the Board of Directors,
the
executive bodies, and other key
managers of the company, as well
as to regulate any and all types of
payments, benefits, and privileges
provided to any of the above
persons.
a
list
policy
contain
4.1.4 The company is recommended to
develop
on
a
reimbursement of expenses which
of
would
reimbursable expenses and specify
to
service
members
of
Directors, the executive bodies,
and other key managers of the
company. Such policy can form
part of the company’s policy on
compensations.
provided
the Board
levels
of
1. The remuneration policy (policies) of the company
contains (contain) transparent mechanisms to be used to
determine the amount of remuneration due to members of
the Board of Directors, executive bodies and other key
managers of the company and regulates (regulate) all types
of payments, benefits and privileges provided to any of the
indicated persons.
observed
partially observed
not observed
1. The remuneration policy (policies) of the company or
other internal documents of the company set forth the rules
of reimbursement of expenses of Board members, members
of executive bodies and other key managers of the
company.
observed
partially observed
not observed
committee presented appropriate recommendations to the Board
of Directors.
With regard to paragraph 1, the Company provides the
following explanations:
The category of "key executives" is not defined and approved
by the Board of Directors. In relation to this category of
employees, the policy on compensation and reimbursement of
expenses (compensations) was not approved by the Board of
Directors.
The policy on remuneration and reimbursement of expenses
(compensation) for all employees of
is
determined taking into account the principles of the policy on
compensation and reimbursement of expenses (compensation)
to members of the executive bodies of the company approved
by the Board of Directors and contains transparent mechanisms
for determining the amount of remuneration, and regulates all
types of payments and benefits.
the Company
With regard to paragraph 1, the Company provides the
following explanations:
The category of "key executives" is not defined and approved
by the Board of Directors, the Board of Directors did not
approve the Policy on compensation and reimbursement of
expenses (compensations) by the Board of Directors.
The policy on remuneration and reimbursement of expenses
(compensation) of all employees of the Company is determined
taking
the policy on
compensation and reimbursement of expenses (compensation)
to members of the executive bodies of the company, approved
by the Board of Directors.
the principles of
into account
4.2 The system of remuneration of Board members should ensure harmony between the financial interests of the directors and the long-term financial interests of the shareholders.
4.2.1 A fixed annual fee shall be a
of monetary
form
preferred
remuneration
the Board
of
members. It is not advisable to
pay a fee for participation in
1. A fixed annual fee has been the only form of monetary
remuneration of Board members for their services on the
Board in the reporting period.
observed
partially observed
not observed
29
individual meetings of the Board
of Directors or its committees. It
is not advisable to use any form of
short-term incentives or additional
financial incentives in respect of
Board members.
4.2.2 Long-term ownership of shares in
the company contributes most to
aligning the financial interests of
Board members with the long-
term interests of the company’s
shareholders. However, it is not
recommended to make the right to
dispose of shares dependent on the
achievement by the company of
certain performance results; nor
should Board members take part
in the company’s option plans.
4.2.3 It is not recommended to provide
for any additional allowance or
compensation in the event of early
dismissal of Board members in
connection with a change of
control over the company or other
circumstances.
1. If the company has a practice (policy) of paying
remuneration to the Board members in the form of its
shares, its policy (internal document) of remuneration
payable to the Board members should set out clear and
transparent rules regulating the ownership of shares by the
Board members. These rules should encourage them to
increase their shareholdings and own the shares on a long-
term basis.
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
Not applicable. The Company does not provide for the practice
of remuneration in securities.
1. The company does not provide for any additional
allowance of compensation in the event of early dismissal
of Board members in connection with a change of control
over the company or other circumstances.
observed
partially observed
not observed
4.3 The system of remuneration due to the executive bodies and other key managers of the company should provide that their remuneration is dependent on the company’s performance
results and their personal contributions to the achievement thereof.
4.3.1 Remuneration due to the executive
bodies and other key managers of
the company should be set in such
a way as to procure a reasonable
and justified ratio between its
fixed portion and
its variable
portion that is dependent on the
results
company’s performance
and
personal
(individual) contributions to the
achievement thereof.
employees’
1. In
the reporting period annual key performance
indicators approved by the Board of Directors were used to
determine the amount of variable remuneration of members
of executive bodies and other key managers of the
company.
observed
partially observed
not observed
2. During the last evaluation of the system of remuneration
of members of executive bodies and other key managers of
the company
the Board of Directors (remuneration
committee) made sure that the company used an effective
ratio between the fixed and variable remuneration.
With regard to paragraphs 1 to 3, the Company provides
the following explanations:
The category of "other key executives" is not defined and
approved by the Board of Directors, the Board of Directors did
not approve the Policy on remuneration and reimbursement of
expenses (compensation) by the Board of Directors.
Annual performance indicators established by the Board of
Directors, members of the executive bodies of the company, are
used in determining the amount of variable remuneration for all
employees of the Company.
30
3. The company has a procedure ensuring that any
award/bonus funds wrongfully obtained by members of
executive bodies or managers are repaid to the company
1. The company has put in place a long-term incentive
program for the company’s executive bodies and other key
managers of the company involving the company’s shares
(financial instruments for which the company’s shares are
the underlying assets).
observed
partially observed
not observed
2. The long-term incentive program should provide that the
right to dispose of shares or exercise options shall arise no
earlier than in three years from the date when such shares
were provided. In addition, the right to dispose of the same,
upon the expiration of a respective period, should be made
conditional on the achievement of certain targets by the
company, including nonfinancial targets, if applicable.
1. The amount of severance pay (golden parachute) payable
by the company in the event of early dismissal of an
executive or other key manager at the initiative of the
company, provided that there have been no bad faith
actions on the part of such persons did not exceed double
the fixed portion of his/her annual remuneration.
4.3.2 Companies whose
for
shares are
admitted to trading at organized
markets are recommended to put
in place a long-term incentive
program
company’s
executive bodies and other key
managers involving the company's
(or options or other
shares
derivative
instruments
financial
the underlying assets for which
are the company’s shares).
the
4.3.3 The amount of severance pay (so-
parachute")
called
"golden
payable by the company in the
event of early dismissal of an
executive body or other key
manager at the initiative of the
company, provided that there have
been no bad faith actions on the
part of such person, should not
exceed double the fixed portion of
his/her annual remuneration.
With regard to paragraph 3, the Company provides the
following explanations:
All bonus payments to members of the executive bodies are
made in accordance with the policy on remuneration approved
by the Board of Directors of the Company.
With regard to paragraph 1, the Company provides the
following explanations:
The category of "other key executives" is not defined and
approved by the Board of Directors, the Board of Directors did
not approve the Policy on remuneration and reimbursement of
expenses (compensations) by the Board of Directors.
The management of the company may be included in the
membership of the Program by a separate resolution of the
Board of Directors, taking into account the recommendations of
the Personnel and Remuneration Committee.
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
The category of "other key executives" is not defined and
approved by the Board of Directors, the Board of Directors did
not approve the Policy on remuneration and reimbursement of
expenses (compensations) by the Board of Directors.
"Golden parachutes" in Company are not provided for all
categories of workers.
5.1 The company should have in place an efficient risk management and internal control system designed to provide reasonable confidence that the company’s goals will be achieved.
5.1.1 The Board of Directors should
determine the principles of and
approaches to creation of the risk
management and internal control
system in the company
1. The functions of various governance bodies and
divisions of the company in the risk management and
internal control system are clearly determined in the
internal documents of the company/policy of the company
approved by the Board of Directors.
observed
partially observed
not observed
5.1.2 The company’s executive bodies
should ensure the establishment
1. The company’s executive bodies ensured the distribution
of functions and authority in relation to risk management
observed
partially observed
31
and continuing operation of the
efficient risk management and
internal control system
the
company.
in
and internal control among managers (heads) of divisions
and departments subordinate to them.
not observed
5.1.3 The company’s risk management
and internal control system should
enable all concerned to obtain an
objective, fair and clear view of
and
the
prospects
company,
integrity and transparency of its
and
accounts
reasonableness and acceptability
of risks being assumed by the
company
condition
the
current
of
reports,
and
1. The company has a corruption prevention policy in
place.
observed
partially observed
not observed
2. The company has developed a procedure of informing
the Board of Directors or the audit committee of violations
of the law, internal procedures and the ethics code of the
company.
5.1.4
The Board of Directors is
recommended to take required and
sufficient measures to guarantee
that the existing risk management
and internal control system of the
company is consistent with the
principles of and approaches to its
creation as set forth by the Board
of Directors and that it operates
efficiently.
1. During the reporting period the Board of Directors
reviewed the organization, operation, and efficiency of the
risk management and internal control system and, if
necessary, made
its
improvement. The results of such review of the system’s
efficiency were communicated to the shareholders as part
of the annual report of the company.
recommendations
toward
observed
partially observed
not observed
5.2 To independently evaluate, on a regular basis, the reliability and efficiency of the risk management and internal control system and corporate governance practices, the company should
arrange for internal audits.
5.2.1 It is recommended that internal
audits be carried out by a separate
structural division (internal audit
department) to be created by the
company or through retaining an
independent third-party entity. To
ensure the independence of the
it
internal
should have separate
lines of
administrative
functional
the
reporting.
and
Functionally,
audit department,
1. A separate structural division (internal audit department)
that reports directly to the Board of Directors or the audit
committee was created in the company; an external
independent organization with the same status was retained
to conduct the audit.
observed
partially observed
not observed
32
from
internal audit department should
report to the Board of Directors,
the administrative
while
report
it
standpoint,
directly to the company’s one-
person executive body.
should
is
recommended
the efficiency of
5.2.2 When carrying out an internal
to
it
audit,
evaluate
the
internal control system and the
risk management system, as well
corporate
evaluate
as
governance and apply generally
accepted standards of
internal
auditing.
to
1. In the reporting period, within the framework of internal
audit procedures, the efficiency of the internal control
system and the risk management system was evaluated.
observed
partially observed
not observed
2. The company uses generally accepted approaches to
internal control and risk management.
6.1 The company and its activities should be transparent to its shareholders, investors, and other stakeholders.
6.1.1 The company should develop and
implement an information policy
to
enabling
efficiently exchange information
with its shareholders, investors,
and other stakeholders.
company
the
its
6.1.2 The company should disclose
information on
corporate
governance system and practices,
including detailed information on
the principles
compliance with
and
this
Code.
recommendations of
1. The Board of Directors approved an information policy
developed in compliance with the recommendations of the
Code.
observed
partially observed
not observed
2. The Board of Directors (or one of its committees)
reviewed the company’s compliance with the information
policy at least once in the reporting period.
1. The company discloses information on its corporate
governance system and the corporate governance principles
applied in the company on its official website.
observed
partially observed
not observed
2. The company discloses information regarding the
composition of its executive bodies and the Board of
Directors, independence of Board members and their
membership in Board committees (in compliance with the
Code).
3. If there is a person who controls the company, that
person sets its plans with respect to the company in a
special memorandum which is then disclosed.
6.2 The company should disclose, on a timely basis, full, updated and reliable information about itself so as to enable its shareholders and investors to make informed decisions.
33
principles
6.2.1 The company should disclose
information in accordance with
of
the
regularity,
timeliness, as
consistency and
well as accessibility, reliability,
completeness and comparability
of disclosed data.
1. The information policy of the company determines the
approaches and criteria of identifying information which
may substantially affect the standing of the company and
the value of its securities and the procedures which ensure
that such information is disclosed in a timely fashion.
observed
partially observed
not observed
2. If the company’s securities are traded on international
organized markets, material information is disclosed both
in the Russian Federation and on such markets in the same
amount and at the same time or within the reporting period.
3. If foreign shareholders own a substantial number of
shares in the company, the company discloses information
not only in Russian, but in one of the most commonly-used
foreign languages as well.
6.2.2 The company is advised against
using a formalistic approach to
information disclosure; it should
disclose material information on
its activities, even if disclosure of
such information is not required
by law.
1. During the course of the reporting period the company
disclosed annual and semiannual financial statements
prepared in compliance with IFRS. The annual report of the
company for the reporting period contains annual financial
IFRS statements and the relevant audit report.
observed
partially observed
not observed
2. The company discloses full information about the
structure of the capital of the company in compliance with
Recommendation 290 of the Code in the annual report and
on the website of the Company on the Internet.
6.2.3 The company’s annual report, as
one of the most important tools of
its information exchange with its
other
shareholders
contain
stakeholders,
to
enabling one
information
evaluate
company’s
the
performance results for the year.
and
should
1. The annual report of the company contains information
about the key aspects of the company’s operational
activities and financial results.
observed
partially observed
not observed
2. The annual report of the company contains information
about
the
the environmental and social aspects of
company’s activities.
6.3 The company should provide information and documents requested by its shareholders in accordance with the principle of equal and unhindered accessibility.
6.3.1 Exercise by the shareholders of
their right to access the company’s
documents and information should
1. The procedure of information provision to shareholders
(including information about the organizational controlled
by the company) upon their request is not unreasonably
observed
partially observed
not observed
With regard to paragraph 1, the Company provides the
following explanations:
At present, the Company's Information Policy does not contain
34
not be unreasonably burdensome. burdensome.
the controlled
information on
a norm on the Company's obligations to provide information on
entities controlled by the Company
at the request of shareholders.
The company has a significant number of controlled
companies.
In part, these companies independently disclose information
about themselves.
The Company discloses
information
- in the Financial Consolidated Financial Statements for IFRS
and as part of the Corporate and Social Responsibility and
Sustainable Development Report, which is compiled by the
Group (the most significant controlled companies).
- in the Quarterly reports of the Company;
- on
http://www.rushydro.ru/company/structure/
At the moment, the decision to fix this provision in the
Information
The Company's policy is not adopted, therefore the Company
does not plan to make any changes in the Information Policy in
2018 in terms of providing shareholders with access to
information on entities controlled by the company, at the
request of shareholders.
At the same time, this does not exclude the possibility of
introducing this norm in the longer term.
the Company's corporate website at
link
the
6.3.2 When providing information to its
shareholders, the company should
maintain a reasonable balance
between the interests of individual
shareholders and its own interests
related
the
company is interested in keeping
confidential
sensitive business
information that might have a
material
its
impact
competitiveness.
that
fact
the
on
to
1. During the reporting period the company did not deny
shareholders’ requests to provide information or such
refusals were justified.
observed
partially observed
not observed
2. In cases specified in the information policy of the
company shareholders are warned of the confidential
nature of the information and undertake to protect its
confidentiality.
7.1 Any actions which will or may materially affect the company’s share capital structure and its financial position and, accordingly, the position of its shareholders (“material corporate
actions”) should be taken on fair terms and conditions ensuring that the rights and interests of the shareholders as well as other stakeholders are observed.
7.1.1 Material corporate actions shall be 1. The company’s articles of association (charter) include a observed
P.1 and P.2 are partially observed.
35
into
increasing
deemed to include reorganization
of the company, acquisition of 30
or more percent of its voting
shares (takeover), entering by the
any material
company
transactions,
or
decreasing its share capital, listing
and delisting of its shares, as well
as other actions which might
result in material changes in the
rights of
its shareholders or
violation of their interests. It is
recommended to include in the
company’s articles of association
a list of (criteria for identifying)
transactions or other
actions
the category of
falling within
material corporate actions and
provide therein that decisions on
any such actions should fall within
the jurisdiction of the company’s
Board of directors.
partially observed
not observed
list of (criteria for identifying) transactions or other actions
falling within the category of material corporate actions
and provide therein that decisions on any such actions fall
within the jurisdiction of the company’s Board of directors.
In cases when the indicated actions are within the purview
of the general shareholders meeting in compliance with the
requirements of the law, the Board of Directors issues
recommendations to the shareholders.
2. The charter of the company determines the following (as
a minimum) as material corporate actions: reorganization
of the company, acquisition of 30% and more of voting
shares (takeover), major transactions, increase or reduction
of the charter capital of the company as well as the listing
or delisting of the company’s shares.
that constitutes fixed assets,
With regard to items 1,2, the Company provides the
following explanations:
The Charter of the Company refers to the competence of the
Board of Directors including the following additional issues,
which in their essence, reflect approaches to significant
transactions:
- taking decisions on participation and on termination of the
Company's participation in other organizations (with the
exception of organizations specified in clauses 16, clause 10.2
of Article 10 of this Charter);
- preliminary approval of decisions on the commission of the
Company:
a) transactions, the subject of which are non-current assets of
the Company in the amount of more than 10 (Ten) percent of
the book value of these assets of the Company as of the date of
the decision to conclude such a transaction;
b) transactions (several interrelated transactions) related to the
alienation or the possibility of alienation of the Company's
property
intangible assets,
construction in GRES facilities, in cases (amounts) and
procedure determined by separate decisions of the Board of
Directors of the Company;
c) transactions with shares and stakes of organizations in which
the Company participates in cases (amounts) and in the manner
determined by the Board of Directors of the Company, or in all
other cases when the procedure for the adoption of such
decisions by the Board of Directors of the Company is not
defined.
- taking decisions on the Company's transactions related to the
gratuitous transfer of the Company's property or property rights
(claims) to itself or to a third party; transactions related to
exemption from property obligations to themselves or to a third
party; transactions related to gratuitous provision of services
(performance of work) to third parties in cases (sizes)
determined by separate decisions of the Board of Directors;
- approval of major transactions in cases provided for by the
Federal Law "On Joint Stock Companies";
- approval of transactions provided for by the Federal Law "On
Joint Stock Companies";
- recommendations regarding the voluntary or mandatory
proposal received by the Company for the acquisition of
Company shares, as well as other equity securities convertible
36
into shares of the Company;
- determination of the position of the Company (representatives
of the Company), including the instruction to accept or not to
take part in voting on the agenda items, to vote on the draft
decisions "for", "against" or "abstained" on the following
agenda items of the management bodies of subsidiaries , unless
otherwise specified by separate decisions of the Board of
Directors of the Company:
a) on reorganization, liquidation of a subsidiary company;
b) determination of the quantity, par value, category (type) of
the declared shares in the subsidiary company and the rights
granted by these shares;
c) to increase the authorized capital of the subsidiary by
increasing the nominal value of shares or by placing additional
shares;
d) on placement of securities of the subsidiary, convertible into
ordinary shares;
e) on the fragmentation, consolidation of the shares of the
subsidiary;
e) on the acquisition by the subsidiary of shares (stakes in the
authorized capital) of other business entities, including when
establishing companies, if the price of such a transaction is 15
or more percent of the book value of the subsidiary's assets
determined by its accounting (financial) reporting on the last
reporting date;
g) consent to the completion or subsequent approval of major
transactions by the subsidiary;
h) on the completion by the subsidiary company of transactions
(including several interrelated transactions) connected with the
alienation or the possibility of alienation of the property of the
subsidiary that constitutes fixed assets, intangible assets,
construction in GRESs, the purpose of which is the production,
transmission, dispatching, distribution of electric and thermal
energy , in cases (amounts) determined by separate decisions of
the Board of Directors of the Company;
i) on the completion by the subsidiary company of transactions
involving
to pledge or other
the commission of one or more
encumbrance (through
interests of
interrelated
subsidiaries with respect to the subsidiary engaged in the
production, transmission, dispatching, distribution and sale of
electric and thermal energy ;
transactions) of shares and
the alienation,
transfer
the
37
1. The company has a procedure in place whereby
independent directors state
their position/opinion on
material corporate actions prior to their approval.
observed
partially observed
not observed
- increase of the Company's charter capital by placing
additional shares within the number of announced shares,
taking into account the restrictions established by the Federal
Law "On Joint-Stock Companies" and this Charter;
- decision-making on application for listing of the Company's
shares and (or) equity securities of the Company convertible
into shares of the Company, in cases provided for by the
Federal Law "On Joint-Stock Companies" and other legal acts
of the Russian Federation.
In cases where the implementation of these corporate actions is
directly attributed by the legislation to the competence of the
general meeting of shareholders, the Board of Directors
provides shareholders with appropriate recommendations.
These transactions and actions are considered by the Board of
Directors or the AGM on the proposal of the Board of
Directors.
Thus, despite the absence of a formal definition of material
transactions in the Charter, the Company fulfills the objectives
of this norm - to increase the involvement of the Board of
Directors
the
Company for shareholders.
In addition, at the AGM in 2018, the Company plans to amend
the Charter and determine the list of transactions or other
actions that are significant corporate actions.
in significant actions and
transactions of
With regard to paragraph 1, the Company provides the
following explanations:
The Company does not provide for a procedure in accordance
with which independent directors declare their position on
significant corporate
actions before their approval.
However, a significant part of
the
consideration for consideration by the Board of Directors is
considered on the Committees under the Board of Directors.
The Committees include independent directors who have the
opportunity to express their position regarding these issues.
Decisions of committees under the Board of Directors of the
Company shall be notified to the Board of Directors until the
voting is completed.
issues before
the
During 2018, the Company will consider the possibility of
consolidating all issues that meet the criteria for material
38
role
or
7.1.2 The Board of Directors should
in passing
play a key
making
resolutions
recommendations
to
material corporate actions; for that
purpose, it should rely on the
opinions
company’s
the
independent directors
relating
of
7.1.3 When
of
taking
the rights or
any material
corporate actions which would
legitimate
affect
company’s
the
interests
shareholders, equal
terms and
conditions should be ensured for
all of the shareholders; if statutory
mechanisms designed to protect
the shareholder rights prove to be
insufficient
that purpose,
additional measures should be
taken with a view to protecting the
rights and legitimate interests of
the company’s shareholders. In
such
the company
should not only seek to comply
with the formal requirements of
law but should also be guided by
the
corporate
governance set out in this Code.
principles
instances,
for
of
1. The company’s articles of association (charter) establish
lower criteria than those specified under the law for the
categorization of the company’s transactions as material
corporate actions.
observed
partially observed
not observed
2. During the reporting period all material corporate actions
were subject to approval prior to their execution.
transactions of the Corporate Governance Code within the
competence of the Audit Committee for the purpose of forming
independent opinions by such independent directors before
such approval.
P.1 and P.2 are partially observed.
With regard to paragraph 1, the Company provides the
following explanations:
The Charter of the Company provides for lower and more
detailed criteria for referring transactions to the competence of
the Board of Directors. Their list is given in the explanations to
paragraph 7.1.1. of this report.
Despite the absence of a formal definition of material
transactions in the Charter, the Company fulfills the objectives
of this norm - to increase the involvement of the Board of
Directors
the
Company for shareholders.
in significant actions and
transactions of
With regard to paragraph 2, the Company provides the
following explanations:
The Charter of the Company refers to the competence of the
Board of Directors additional issues that in their essence reflect
the approaches to significant transactions. Their list is given in
the explanations to paragraph 7.1.1. of this report.
These transactions were approved in the reporting period prior
to their implementation.
7.2 The company should have in place such a procedure for taking any material corporate actions that would enable its shareholders to receive full information about such actions in due
course and thus be in a position to influence them, and which would also guarantee that the shareholders’ rights are observed and duly protected in the event of taking such actions.
1. The company should have in place such a procedure for
taking any material corporate actions that would enable its
shareholders to receive full information about such actions
in due course and thus be in a position to influence them,
and which would also guarantee that the shareholders’
rights are observed and duly protected in the event of
taking such actions.
observed
partially observed
not observed
full
7.2.1 The company should have in place
such a procedure for taking any
material corporate actions
that
would enable its shareholders to
information about
receive
such actions in due course and
thus be in a position to influence
them, and which would also
guarantee that the shareholders’
rights are observed and duly
protected in the event of taking
such actions.
With regard to paragraph 1, the Company provides the
following explanations:
During the reporting period, there were no extraordinary
significant corporate actions requiring, in the Company's
opinion, additional disclosure, except for the completion of a
forward transaction within the framework of refinancing of the
debt of the Company's Far Eastern companies and additional
issue of the Company. These events were comprehensively
disclosed and covered. Other corporate actions were disclosed
in the usual way.
39
7.2.2 Rules and procedures in relation
to material corporate actions taken
by the company should be set out
in its internal documents.
1. The company’s internal documents specify a procedure
for the retention of the services of an independent appraiser
to determine the value of the property being transferred or
acquired under a major transaction or an interested-party
transaction.
observed
partially observed
not observed
2. The company’s internal documents specify a procedure
for the retention of the services of an independent appraiser
to determine the purchase or buyback value of the shares of
the company.
3. Internal documents of the company provide an extended
list of grounds on which members of the Board of Directors
and other stipulated by the legislation the parties are
considered interested in the transactions of the Company.
Paragraphs 1-3 are partially observed.
With regard to paragraphs 1-2, the Company provides the
following explanations:
Internal documents of the Company do not provide for the
procedure for attracting an independent appraiser to determine
the value of property alienated or purchased under a major
transaction or interested party transaction, as well as when
purchasing and redeeming shares of the Company.
However, in practice, the Company attracts independent
appraisers to determine the value of alienating shares in
subsidiaries.
With regard to paragraph 3, the Company provides the
following explanations:
In relation to transactions in which there is an interest from
01.01.2017, amendments to the legislation have been made that
completely revise the approaches to approving transactions in
which there is an interest. These changes tend to liberalize the
regulation of transactions in which there is interest.
The Company does not plan to expand the requirements of the
legislation with respect to transactions in which there is an
interest.
These Data on compliance with Russian Code of corporate governance prepared using Central Bank of the Russian Federation from 17.08.2016, the number IN-06-52/8.
Description of the most significant aspects of the model and practices of corporate governance in Societies given in the Annual report in Chapter 3 (Corporate governance),
Section 1.5 (a Company in the securities market) and Section 1.3 (Risk Management).
40
Appendix No 2. Information on major transactions and interested party transaction in 2016 with an indication
of the Parties concerned, date and Protocol number of the management body meeting approving the transaction,
and description of the transaction (including its subject, Agreement price and term), of the Interested Party(ies),
and of the Person(s), treated as a non-independent Director
1. The company did not perform major transactions in 2017.
Description of the transaction (subject, price, and term of the Agreement)
List
of
transactions with
indication of
an
the
Parties
concerned
2. Information about interested party transactions in 2017:
№
and
Number
the
of
date
Protocol of the
management
body approving
the transaction
The consent for
the
transaction
was given by the
General Meeting
Shareholders
of
(Minutes No. 16
of June 27, 2017)
agreement
The
between
PJSC
RusHydro and JSC
“PJSC ES of the
East”
1.
Parties:
JSC "RAO ES of the East" - Borrower;
PJSC RusHydro is the Lender.
Subject of the Agreement:
The Lender transfers money to the Borrower (the Loan Amount), and the Borrower
undertakes to return the Loan Amount to the Lender.
Size of the transaction in monetary terms:
the maximum loan amount: 25,700,000,000 rubles 00 kopecks;
The size of the transaction as a percentage of the value of assets as of June 30, 2017: 2.63%.
The book value of assets as of June 30, 2017 is 976,762 million rubles.
Targeted use of the loan:
replenishment of working capital to ensure financing of the investment program and
refinancing of bank loans.
Interest rate for using the loan:
0% per annum.
Loan repayment period:
on demand, but not later than 10 (Ten) years from the date of conclusion of the loan
agreement.
Date of transaction: July 31, 2017.
Interested Party(ies) and Person(s)
non-independent
treated
Director
transaction
the
approval date)
a
as
(as of
Interested in:
- member of the Management Board,
First Deputy Director General of PJSC
RusHydro Kazachenkov AV, who is
the Board of
also a member of
Directors of JSC RAO ES of the East;
- all members of the Board of Directors
and all members of the Management
Board of PJSC RusHydro, which is the
managing organization of JSC RAO ES
of the East (Shulginov NG, Bogush BB
(stake of stakeholder participation in
the authorized capital (stake owned by
the person concerned) Of the Company
-0.003843%), Kirov SA, Markin VI,
Rizhinashvili DI (stake of stakeholder
participation in the authorized capital
(share of the Company's owned shares)
- 0.012860%), Trutnev Yu
.P.,
Avetisyan AD, Bystrov MS, Grachev
PS, Ivanov SN, Kravchenko VM,
Pivovarov VV, Podguzov NR, Rogalev
ND, Chekunkov AO, Shishin SV,
Shishkin AN)..
Interested in:
41
2.
Loan
agreement The
agreement Parties:
JSC
between
"RusHydro"
and
JSC "RAO ES of
the East"
was not approved.
In
accordance
with 1.1 Article
81 of the Federal
of
Law
26.12.1995
No. 208-FL "On
Joint-Stock
Companies",
the
members of
Board
of
Directors and the
Management
Board
the
of
Company were
notified of
this
transaction. The
to
requirement
obtain consent for
the
transaction
was not received.
JSC "RAO ES of the East" - Borrower;
PJSC RusHydro is the Lender.
Subject of the Agreement:
The Lender transfers a sum of money to the Borrower, and the Borrower undertakes to repay
the loan amount to the Lender, as well as to pay interest for using the loan in the manner and
under the conditions established by the Agreement.
Loan amount:
in the amount of 8,522,514,171 (eight billion five hundred twenty two million five hundred
fourteen thousand one hundred and seventy one) rubles 85 kopecks.
Targeted use of the loan:
to repay the Borrower's debt to creditor banks under concluded loan agreements.
Interest rate for using the loan:
For the use of the loan, the Borrower shall pay to the Lender interest at a rate determined as
follows:
- Chairman of the Management Board -
General Director of PJSC RusHydro
Shulginov NG, who is also a member
of the Board of Directors of JSC RAO
ES of the East;
- Member of the Management Board,
First Deputy Director General of PJSC
RusHydro Kazachenkov AV, who is
the Board of
also a member of
Directors of JSC RAO ES of the East.
Period
1
2, 3 …,
n
Calenda
r period
From the
of
date
issue of
the
loan
until
12/31/20
17
Since
January 1
to
Decembe
r 31 of
the
correspo
nding
year,
starting
from
2018
The formula for calculating interest
𝑫𝒊𝒗п (𝒏)
𝟓𝟓 𝟎𝟎𝟎 𝟎𝟎𝟎 𝟎𝟎𝟎
∗ 𝟏𝟎𝟎%, where
𝑲(𝒏) = 𝑲𝑪𝑩 + 𝟏, 𝟓% −
К(n) – interest rate on loans in year n; is calculated in percent per
annum with rounding of its value according to the rules of
mathematical rounding up to the second decimal place.
КCB – the interest rate of the Central Bank of Russia;
Divп(n)– planned amount of dividend payments of the Lender
in the current year with respect to the Shareholding Package, net
of tax on dividend income provided for by the approved business
plan of the Lender.
For the purpose of calculating the interest rate of Period 1
Divп(n) is taken to be 2 805 750 000 (Two billion eight hundred
and five million seven hundred and fifty thousand) rubles.
𝑫𝒊𝒗п (𝒏)− 𝑫𝒊𝒗п( 𝒏−𝟏)+𝑫𝒊𝒗 fact(𝒏−𝟏)
𝑲(𝒏) = 𝑲𝑪𝑪𝑩 + 𝟏, 𝟓% −
𝟏𝟎𝟎%, where
Div fact(n-1) – actual amount paid by the Lender in the previous
year of dividend payments in respect of the Shareholding
Package, net of tax on dividend income;
𝑫𝒊𝒗п(𝒏 − 𝟏) – the planned volume of dividend payments of the
Lender in the previous year in respect of the Shareholding
Package, net of tax on dividend income, recorded in calculating
the interest rate for Period n-1.
𝟓𝟓 𝟎𝟎𝟎 𝟎𝟎𝟎 𝟎𝟎𝟎
∗
The Lender shall notify the Borrower of the value of the interest rate
42
for the relevant period:
• on the date of conclusion of the Agreement;
• annually up to the 15th day of the first month of each calendar year;
within 5 (five) business days from the date of the change in the key rate of the Central Bank
of the Russian Federation.
Loan repayment period: until March 30, 2022 (5 years from the date of conclusion of the
Agreement).
43
Appendix No 3. Information on participation in other organizations
3.1 Information Concerning All Forms of the Company's Participation in Commercial Entities Including its
Objectives, Form and Financial Involvement, Basic Data on the Entities (Main Statutory Activities, Earnings,
Profit), and Efficiency Indicators, in Particular, the Amount of Dividends Received for the Owned Shares in
the Reported Period
Company Name
Objectives of the
Involvement
Form of the Involvement
JSC
"HydroEngineerin
g Siberia"
JSC
named
Vedeneev"
"VEIIG
BE
Geotherm JSC
JSC
"Zaramagskiye
HPP"
the
the
of
Maintaining
development
Company's core business
Subsidiary support of the
main activities of the
Company
the
the
of
Maintaining
development
Company's core business
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
JSC
"Hydroinvest"
"Leningrad
JSC
PSP"
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Financial Indicators
Book Value of the
Contribution,
RUB
2,291,979,300.00
RusHydro
PLC' share of
the Statutory
Capital, %
Earnings,
thou.
RUB.
Net Profit,
thou. RUB
Dividends,
Received by
RusHydro
PLC (in
2015), thou.
RUB
100
-
(1,870,577),
0.00
8,160,200.00
984,097,918
17,933,142,000.00
9,550,150,000.00
5,763,565,938.00
100
955,245
67,300
74,394,000.0
0
99.65
980,937
(4,628)
0.00
99.75
263,992
(24,166)
0.00
100
13,876,354
101,481
0.00
JSC "NIIES"
Subsidiary support of the
main activities of the
Participation in the
company’s statutory
649,,970,985.00
100
100
-
(4,019,029)
400,434
(38,428)
0.00
0.00
Main Activities
design
works
and
survey
production of research
and development
work in the field of
electric power
industry
power generation
of
power
electricity
construction
Zaramagh
hydroelectric
station,
generation
operations with
securities
Re-design of pilot
industrial
Northern
PES, construction of
PSPP,
Leningrad
electricity generation
production of research
development
and
44
JSC "ESCO UES" Maintaining the
JSC "OP
Verkhne-
Mutnovskaya
GeoPP"
JSC UK
HydroOGK
JSC "Construction
organizer
Boguchanskaya
HPP"
CJSC "Customer
of the construction
of Boguchanskaya
HPP"
CJSC
"The
Organizer of the
Construction
of
the Boguchansky
Aluminum Plant"
JSC "Customer of
the construction of
the Boguchansky
aluminum plant"
JSC
"Nizhne-
Bureyskaya HPP"
JSC
Zeyskaya HPP"
"Nizhne-
JSC "Zagorskaya
PSHPP-2"
JSC
RusHydro"
"TK
Company
capital
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Subsidiary support of the
main activities of the
Company
development of the
Company's core business
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Development of a new
type of business
Participation in the
company’s statutory
capital
Development of a new
type of business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Subsidiary support of the
main activities of the
Company
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
133,364,156.00
150,000.00
15,000,000.00
5,100.00
4,900.00
4,900.00
5,100.00
14,610,989,509.00
349,715,990.00
53,681,508,646.00
18,057,693.00
48.04
29,178
965
0.00
100
687,349
26,784
0.00
100
20,576
(47,037)
0.00
51
135,164
273
0.00
49
51,368
116
0.00
49
499,296
109
0.00
51
82,453
31
0.00
100
90,352
31,584
0.00
100
100
-
(1,438)
0.00
3,554
(586,758)
0.00
100
1,661,280
53,420
0.00
work in the field of
electric
power
industry
power generation
managing
organization
construction works
construction
Boguchanskaya HPP
of
construction of
Boguchanskaya HPP
construction of
Boguchansky
aluminum plant
the
construction of the
Boguchansky
aluminum plant
the
construction of
Nizhne-Bureyskaya
HPP
the
construction of
Nizhne-Zeiskaya HPP
construction
of
Zagorskaya PSHPP-2
provision
of
transportation services
45
JSC "Engineering
Center
for
Renewable
Energy"
JSC
Yakutsky GEK"
"Yuzhno-
JSC
HydroCascade"
"Sulaksky
JSC
SSHGES"
"CSO
JSC
repair-VKK"
"Hydro-
JSC
"Karachay-
Cherkess hydro-
generating
company"
HydroOGK
Aluminum
Company Limited
HydroOGK Power
Company Limited
JSC
"Lenhydroproject"
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Subsidiary support of the
main activities of the
Company
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Subsidiary support of the
main activities of the
Company
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Financial investments
Financial investments
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
PJSC
"Kolymaenergo"
JSC
Energetiki"
"GVC
Maintaining the
development of the
Company's core business
Supporting maintenance
of main activity
ChirkeyGESstroy
JSC
Subsidiary support of the
main activities of
the
Company
Participation in the
company’s statutory
capital
694,072,210.00
3,255,023,323.00
8,961,493,852.00
482,153,947.00
535,040.00
6,582,581.00
34,200.00 euro
33,317,311.68 euro
174,451.00
12,063,052,613.00
325,580
249,690,071.50
100
100
-
,-,
(2)
0.00
(12,267),
0.00
100
537,705
(85,755)
0.00
100
88,552
(5,120)
0.00
100
6,922,833
344,860
154,313,026.
56
100
100
100
-
-
-
(59,443)
0.00
(1,769)
0.00
468,028
0.00
100
1,129,192
27,970
101,180,000.
00
98.76
2,882,334
104,180
0.00
100
1,237
(3,595)
3,996,000.00
74.99
4,040,711
(54,923)
0.00
construction of
experimental
power unit
an
binary
the
Yakutia
the
hydropower
construction of
South
hydropower complex
construction of
Sulak
cascade
Educational-
production
information-
innovation center
repair
power facilities
electric
of
building
holding company
holding company
production of research
and development
work in the field of
electric power
industry
power generation
and
of
design
development
information
technology
construction works
46
JSC "Ust-
Srednekanskaya
hydroelectric
power station
named after AF
Dyakov"
JSC
RusHydro"
"ESC
JSC "Far Eastern
Wind Farm"
JSC
Dmitrovka"
"Malaya
JSC "Small HPPs
of Altai"
JSC "MHPP of
Dagestan"
RusHydro
International B.V.
PJSC
"Yakutskenergo"
Maintaining
development
Company's core business
of
the
the
Subsidiary support of the
main activities of the
Company
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
PJSC
"Boguchanskaya
HPP"
PJSC "KamGEK" Maintaining the
Maintaining the
development of the
Company's core business
JSC "RGS"
JSC "RAO ES of
the East"
JSC "SEC"
development of the
Company's core business
Subsidiary support of the
main activities of the
Company
Maintaining the
development of the
Company's core business
Strategic, financial
investments
Participation in the
company’s statutory
capital
18,809,586,927.00
construction of the
Ust-Srednekanskaya
HPP
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
11,981,227,367.00
224,088,473.00
4,819,782,000.00
500,000.00
161,500,000.00
5,800,000.00 euro
2,769,811,893.00
163,578,869.00
1,187,917,534.00
3,809,000.00,,,
19,171,124,235.50
3,507,568,000.00
67.82
858,565
(7,590)
0.00
99.99
6,593,941
(69,647)
0.00
100
-
(2,236)
0.00
100
582,204
74,186
0.00
100
100
100
-
(180,518),
0.00
-
1,342
(thousand
euro)
(1,472),
(1,704)
(thousand
euro)
0.00
0.00
29.8
29,017,873
11,915
0.00
2.9
15,733,286
4,643,545
0.00
96.58
257,930
(27,125)
0.00
100
476,653
92,560
35,122,998.5
0
84.39
26.94
950,820
(1,502,238)
604,946
(18,821)
0.00
0.00
trade
in
thermal
wholesale
electric and
energy
construction of a wind
farm
property management
construction of small
HPPs in Altai
construction of small
hydro power stations
in Dagestan
investment activities
production,
transmission
distribution
electricity
power generation
and
of
power generation
provision
of
consulting services in
procurement
activity
management
holding companies
power generation
on
of
47
"Verkhne-
CJSC
Naryn
hydroelectric
power stations"
OJSC IESK
Blagoveschenskay
a TPP JSC
JSC
"Sakhalinskaya
GRES-2"
JSC
GRES-2"
"Yakutsk
"Thermal
in
JSC
Power Plant
Sovetskaya
Gavan"
JSC
company BoAZ"
"Holding
"Holding
JSC
company
BogHES"
LLC
IT Service"
"RusHydro
LLC
"Verkhnebalkarsk
aya MHPP"
LLC
"Fiagdonskaya
MHPP"
LLC
Stavropol
KCHR"
LLC
"MHPP
and
capital
Maintaining the
development of the
Company's core business
Participation in the
company’s statutory
capital
Strategic, financial
investments
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Strategic, financial
investments
Strategic, financial
investments
Subsidiary support of the
main activities of the
Company
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Maintaining the
development of the
Company's core business
Development of a new
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
2,500,000 KGS
8,861,928,328.00
6,301,500,000.00
12,995,500,000.00
16,861,500,000.00
7,345,260,000.00
500,000.00
500,000.00
500,000.00
581,256,768.00
63,400,000.00
47,694,908.51
102
(thousand
KGS)
10,692
(thousand
KGS)
0.00
50
42.75
20,632,298
(993,729)
0.00
100
399,472
(65,850)
176,412,999.
99
100
-
185,290
0.00
100
240,955
120,540
0.00
100
100
100
-
-
-
510,820
0.00
(802)
0.00
(980)
0.00
100
567,314
62,933
39,464,000.0
0
100
100
100
40
828
(138,484)
0.00
-
(38,585)
0.00
1,754
(9,379)
989,159
140,496
0.00
0.00
construction of
the
Upper Naryn cascade
of HPPs
power transmission
CHP construction
construction of GRES
construction of GRES
CHP construction
investment activities
investment activities
provision
of
consulting services in
the field of IT
construction of
the
Upper Balkarian small
hydropower plant
construction of the
Fiagdon small
hydropower plant
Construction of Small
HPPs in Karachaevo-
Cherkessia
production
of
48
"VolgaGidro"
type of business
JSC "Technopark
Rumyantsevo"
PJSC "Inter RAO"
*
Subsidiary support of the
main activities of the
Company
Strategic, financial
investments
PJSC "DEK"
Strategic, financial
investments
"Index of
-
LLC
Energy
HydroOGK"
Bank of Cyprus
Public Company
Ltd *
"NPF
JSC
Electric
Industry" *
of
Power
Subsidiary support of the
main activities of the
Company
the shares came into the
possession upon
liquidation of
RusSUNHydro Limited
Strategic, financial
investments
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
Participation in the
company’s statutory
capital
449,814,356.00
10.00
5,701,572,102.90
178,714,322.00
10,000,000.00
-
730,906.14
0.000005
18,142
10,781
0.00
1.94
-
-
297,926,617.
85
1.04
83,525,223
(3,718,751)
0.00
0.11
494,580
(1,363,166)
0.00
0.000186
0.609
-
-
-
-
0.00
0.00
hydraulic equipment
construction
installation works
and
includes
holding,
diversified
which
the
generation and sale of
electricity in domestic
and foreign markets
purchase and sale of
electricity (power)
investment activities
banking activities
investment activities
* Information on revenue and net profit is not provided, because PJSC Inter RAO, Bank of Cyprus Public Company Ltd, NPF Electricity JSC are not associated and / or joint companies of RusHydro Group, nor are they part of it.
PJSC RusHydro does not have the accounting statements of these companies.
49
3.2 Information Concerning All Forms of the Company's Participation in Non-Commercial Entities, Including
the Entity Name, Date of Joining, Subscription Fee in RUB/ other currency, Area of the Entity's Activities
№
p/p
Name of the Entity
Area of Activities
Year of Joining and
Relevant Resolution Details
Yearly Membership
Subscription
Note
Non-Residents
1
2
International
Association, IHA
Hydropower
Support and dissemination of hydro power industry knowledge
under the auspices of UNESCO International Hydrological
Program
Global
Partnership, GSEP
Sustainable Energy
Elaboration of joint policy platforms and implementation of
relevant
and
internationally
initiatives, both on domestic markets
Russian Residents
TOTAL
3
Association NP Market Council Arrangement of electric power trade in the Wholesale market
4
Association
of
property owners and investors.
land
and
The partnership serves a discussion panel used by PJSC
RusHydro to promote its interests and dialogue with the
government authorities concerning improvement of the legal
environment in the area of land and property ownership.
2006
Extract from the RAO UES
Board Resolution Protocol
No. 47 dated 21.12.2006
2008
Extract from the PJSC
RusHydro Board Resolution
Protocol No. 59 dated
18.07.2008
2008
Extract from the HydroOGK
OJSC Board Resolution
Protocol No. 48 dated
03.03.2008
2012
Extract from the PJSC
RusHydro Board Resolution
Protocol No. 168 dated
30.11.2012
12,000 GBP
150,000 CAD
12,000 GBP
150,000 CAD
5,207,000.0
300,000.0
50
Hydro Energy of Russia
5
Association
Improvement of efficiency of hydro power facilities and hydro
resources
6
All-Russian Association
of
Employers "Russian Union of
and
Industrialists
Entrepreneurs" (AAE RUIE)
Protection of the members' social and economic interests and
legal rights necessary for their companies' and economy's
sustainable development
7
Council of Energy
Veterans NP
Industry
Promotion of the members' activities in comprehensive support
of the energy industry veterans
2008
Protocol of Supervisory Board
meeting of Hydro Energy of
Russia NP No. 4 dated
18.02.2008
2006
Extract from the HydroOGK
OJSC Board Resolution
Protocol No. 4 dated
18.02.2008
2008
Extract from the HydroOGK
OJSC Board Resolution
Protocol No. 50 dated
04.04.2008
8
Russian-Chinese
Council NP
Business
The Russian-Chinese Business Council was established to
promote joint business projects of Russia and China, protection
of mutual investment, settlement of corporate disputes and
facilitation of cooperation between the Russian and Chinese
business communities.
2015
Extract from the PJSC
RusHydro Board Resolution
Protocol No. 13 dated
26.07.2015
9
Directors'
Innovations Club NP
Research
and
The Club is a communications forum for the professionals in
research, development and implementation of innovations
10
Energostroiallians NP
Promotion of favorable business conditions for companies
operating in construction, refurbishment and rehabilitation of
permanent facilities and protection of the power industry
against unreliable foreign and domestic entities
2013
Extract from the RusHydro
OJSC Board Resolution
Protocol No. 183 dated
19.06.2013
2010
Extract from the PJSC
RusHydro Board Resolution
Protocol No. 102 dated
29.06.2008
6,775,000.0
500,000.0
15,000,000.0
750,000,0
330,000.0
444,000.0
PJSC RusHydro
ceased participation in
NP Energostroyalians
in 2017 (Article 55.6
of the Civil Code of
the Russian
Federation)
51
11
"Self-Regulating
Association
Corporation of Builders of the
Krasnoyarsk Region"
Prevention of damage to life or health of individuals, property
of individuals or legal entities, state or municipal property, the
environment, life or health of animals and plants, objects of
cultural heritage (historical and cultural monuments) of the
peoples of the Russian Federation due to lack of construction
work influence on the safety of capital construction facilities
and are carried out by individual entrepreneurs and (or) legal
entities - members of the Association.
12
Research
Council of UES NP
&
Technology
Support to the Partnership members in the efforts to formulate
the Research & Technology and Economic Policy of the
Unified Energy System of Russia
2017
Extract from the minutes of
the meeting of the
Management Board of PJSC
RusHydro of July 28, 2017
No. 1055pr / 6
2008
Extract from the HydroOGK
OJSC Board Resolution
Protocol No. 50 dated
04.04.2008
13
RAEL NP
Support of business cooperation in the power industry through
the protection of employers' interests in the social, labor,
economic and other areas, their relationships with trade unions,
government authorities, municipal bodies, and
through
development and
implementation of an agreed socially
responsible policy of the members.
2006
Extract from the HydroOGK
OJSC Board Resolution
Protocol No. 18 dated
10.04.2006
320,000.0
2,000,000/0
2,450,000.0
14 UES CONS NP
Promotion of professional knowledge and improvement of
entrepreneurship and professional qualifications of the power
industry specialists and specialists in supporting industries
(training); development and improvement of professional
training system in the energy industry
2008
Extract from the HydroOGK
OJSC Board Resolution
Protocol No. 47 dated
18.02.2008
2,500,000.0
TOTAL, RUB
36,576,000.0
PJSC "RusHydro"
joined the Association
"Self-Regulating
Corporation of
Builders of the
Krasnoyarsk Territory"
in 2017 (Article 55.6
of the Civil Code of
the Russian
Federation)
PJSC "RusHydro"
ceased participation in
UES CONS NP in
2017
52
3.3 Information Concerning Shares / Stakes Purchase Contracts made by
PJSC RusHydro in 2017, Indicating the Parties to the Contracts, their
Subject, Price and other Terms
1) Date of the contract: 06/27/2017.
Parties:
Purchaser - OOO "Telmamskaya HPP"
The applicant is PJSC RusHydro
Subject:
Alienation of securities by adopting a mandatory offer.
The name of the Issuer
Public Joint-Stock Company Irkutskenergo
The number of shares
Type, category (type) of securities
4,297,368 (four million two hundred ninety seven thousand three
hundred and sixty-eight) pieces
Registered ordinary uncertificated shares
The nominal value of 1 share
1 (One) ruble
The placement price of 1 share
17.42 (Seventeen rubles forty-two kopecks)
Registration number of additional issue
1-01-00041-А
The term of payment, the procedure for payment, the procedure for filing an application for the sale of
securities and the procedure for transferring rights to sold securities are provided for by a mandatory offer
to purchase equity securities.
Price:
The price of transferred securities was 74,860,150 (Seventy-four million eight hundred sixty thousand
one hundred and fifty) rubles 56 kopecks.
2) Date of the contract: 11/27/2017
Parties:
The acquirer - Dmitry Dmitrievich Romanov, is determined by the protocol on the outcome of the
auction for the sale of shares of OJSC Zharki from November 7, 2017, under procedure No.
COM26091700313
Seller - PJSC RusHydro
Subject:
The Seller undertakes to transfer the following securities to the ownership of the Acquiror (hereinafter
"Shares"):
The name of the Issuer
Opened Public Joint-Stock Company Zharki (OJSC Zharki)
The number of shares
25,940 (Twenty five thousand nine hundred and forty) pieces
Type, category (type) of securities
Registered ordinary uncertificated shares
The nominal value of 1 share
235 (Two hundred thirty five) rubles
Registration number of additional issue
1-05-40392-F of 22.12.2011
The Purchaser undertakes to accept the Shares and pay them in accordance with the terms of the
Agreement.
The Shares are sold by the Seller on the basis of the Protocol, according to which the Acquirer is
recognized as the winner of the procedure for selling the Shares through a public offering (hereinafter referred
to as the "Trades").
Price:
53
According to the Protocol, the price of the Shares is 6,000,000 (six million) rubles 00 kopecks, VAT is
not charged.
3) Date of the contract: 12/12/2017
Parties:
The issuer is JSC Leningradskaya PSP
Acquirer - PJSC RusHydro
Subject:
The Issuer undertakes to transfer into the ownership of the Acquirer the following shares placed by
private subscription issued in accordance with the Resolution on the additional issue of the Issuer's securities
registered by the Bank of Russia on December 31, 2014 (hereinafter – “Shares”):
The name of the Issuer
Public Joint-Stock Company Leningradskaya PSP
The number of shares
900 000 000 (Nine hundred million) pcs.
Type, category (type) of securities
Registered ordinary uncertificated shares
The nominal value of 1 share
The placement price of 1 share
1 (One) ruble
1 (One) ruble
Registration number of additional issue
1-01-03655-D-004D
The Acquirer shall purchase and pay for the Shares no later than 4 (four) business days before the end
date of the Shares placement determined in accordance with the Decision on the additional issue of Shares.
Price:
The price of the transferred securities was 900,000,000 (Nine hundred million) rubles.
In 2017 the Company did not conclude contracts for the sale and purchase of shares and units of
economic partnerships and companies.
54
Appendix No 4. Information on the Meetings of the Board of Directors
Protocol Date and
Number
01/19/2017 № 247
Item Number and Title
02/27/2017 № 248
04/07/2017 № 249
04/07/2017 № 250
1. About the head of the Internal Audit Service of the Company.
2. On the formation of the management bodies of PJSC "RusHydro".
1. On approval of internal documents of the Company.
2. On approval of transactions carried out by the Company.
3. On the position of JSC "RusHydro" (representatives of JSC "RusHydro") in the management bodies of subsidiaries.
4. On consideration of reports on the results of the activity of Committees under the Board of Directors of PJSC "RusHydro" for 2016.
5. On priority directions of the Company's activity.
6. On approval of the Report on the sale of non-core assets for 2016.
7. About the Charity and Sponsorship Program of the Company.
1. On the draft consolidated investment program of the RusHydro Group for 2018-2022 and for 2017 (adjustment), and on the draft investment program
of PJSC RusHydro for 2018-2027 and for 2017 (adjustment).
2. On the approval of the list of investment projects for the conduct of a public technological and price audit in 2017-2018.
3. On the status of the implementation of priority projects for the construction of 4 facilities in the Far East (Yakutskaya GRES-2 (1st stage), Phase 2 of
Blagoveshchenskaya TPP, TPP in Sovetskaya Gavan, Sakhalinskaya GRES-2 (1st stage) .
4. On the review of the results of the field inspections of the Ministry of Energy of Russia on the implementation of investment projects "Construction
of the second stage of Blagoveshchenskaya CHPP", "Construction of a CHP plant in Sovetskaya Gavan", "Construction of Yakutsk GRES-2 (1st
stage)," Construction of Sakhalinskaya GRES-2 (1st stage) "and consideration of action plans for elimination of identified remarks taken by JSC"
RusHydro ", which ensure the commissioning of facilities.
5. On approval of the adjusted Charity and Sponsorship Program of the Company for 2017.
1. On consideration of proposals of the Company's shareholders on nominating candidates for election to the management and control bodies of PJSC
RusHydro.
2. On consideration of proposals of the Company's shareholders on inclusion of issues in the agenda of the annual General Meeting of Shareholders of
PJSC RusHydro.
04/18/2017 № 251
3. On the GRESs of development and implementation of import substitution plans.
1. On approval of reports on the results of the activities of committees of the Board of Directors for the second half of 2016.
2. On approval of the report on the implementation of a public technological and price audit of investment projects for 2016, containing the results of a
consolidated analysis of audits and conclusions on the results of public and expert discussion.
3. On making changes to the Long-term Development Program of RusHydro Group.
4. On the execution of the decision of the Board of Directors of the Company: "On proposals to improve the methodology for calculating and
evaluating key performance indicators in terms of the implementation of capacity schedules and a plan for financing and development."
5. On the coordination of the combination of a physical person performing the functions of a sole executive body and members of the Management
Board in management bodies of other organizations, as well as other paid posts in other organizations.
6. On priority directions of the Company's activity.
7. On termination of the Company's participation in other organizations.
8. On the position of JSC "RusHydro" (representatives of JSC "RusHydro") in the management bodies of subsidiaries.
9. On approval of the Report on the organization of insurance protection of PJSC "RusHydro" in 2016.
1. On approval of the report on the implementation of the Business Plan for the Company for 2016 (including reports on the implementation of the
Investment Program (including the Program for the comprehensive modernization of generating facilities), the Annual Comprehensive Program of
04/20/2017 № 252
55
05/23/2017 № 253
Purchases for 2016 and the GRESs Report on the implementation of a set of measures (list of measures) to reduce operating expenses (expenses) for
2016).
2. On consideration of the report on the implementation of the consolidated business plan (including the consolidated Investment Program) of the
RusHydro Group for 2016.
3. On performance of key performance indicators of PJSC "RusHydro" for the 4th quarter of 2016 and 2016.
4. On consideration of the consolidated business plan (including the consolidated Investment Program) of the RusHydro Group for 2017-2021 and
approval of the Target values for the annual key performance indicators of the Management Board members of PJSC RusHydro for 2017 and the
Target values of key performance indicators of the Long-Term Motivation Program of PJSC RusHydro "Of the first cycle for 2017-2019.
5. On priority directions of the Company's activity
1. On approval of the agenda of the annual General Meeting of Shareholders of the Company.
2. On the preliminary approval of the Company's Annual Report for 2016.
3. On approval of the report on transactions concluded by the Company in 2016, in which there is an interest.
4. On consideration of the annual accounting (financial) statements of the Company following the results of 2016.
5. On recommendations to the annual General meeting of shareholders of the Company on the issue: Approval of the distribution of the Company's
profit based on the results of 2016.
6. On recommendations to the Annual General Meeting of Shareholders of the Company on the issue: On the amount of dividends, the terms and form
of their payment based on the results of work for 2016 and the establishment of a date for which persons entitled to receive dividends are determined
7. On recommendations to the Annual General Meeting of Shareholders on the issue: On payment of remuneration for work in the Board of Directors
to members of the Board of Directors of the Company who are not government employees in the amount established by the Company's internal
documents.
8. On recommendations to the annual General meeting of shareholders of the Company on the issue: On payment of remuneration for work in the Audit
Commission to the members of the Company's Audit Commission that are not state employees in the amount established by the Company's internal
documents.
9. On recommendations to the annual General Meeting of Shareholders of the Company on the candidacy of the Company's Auditor.
10. On recommendations to the annual General Meeting of Shareholders of the Company on the issue: Approval of the new version of the Company's
Charter.
11. On recommendations to the annual General Meeting of Shareholders of the Company on the issue: Approval of the Regulations on the Procedure for
Convening and Holding the General Meeting of Shareholders of the Company in a new version.
12. On recommendations to the annual General Meeting of Shareholders of the Company on the issue: Approval of the Provision on the procedure for
convening and holding meetings of the Board of Directors of the Company in a new version.
13. On recommendations to the annual General Meeting of Shareholders of the Company on the issue: Approval of the new version of the Regulations
on the Management Board of the Company.
14. On recommendations to the annual General meeting of shareholders of the Company on the issue: Approval of the new version of the Regulations on
payment of remuneration and compensation to members of the Board of Directors of the Company.
15. On recommendations to the annual General Meeting of Shareholders of the Company on the issue: Approval of the Regulations on Remuneration
and Compensation to the members of the Company's Audit Commission in a new version.
16. On recommendations to the Annual General Meeting of Shareholders of the Company on the issue: On termination of participation of JSC
"RusHydro" in NP "Konts EES".
17. On the price of a loan agreement between PJSC RusHydro and PJSC RAO ES Of the East, which is a deal the Parties are interested in.
18. On recommendations to the annual General Meeting of Shareholders of the Company on the issue: On agreement to conclude a loan agreement
between JSC "RusHydro" and PJSC "RAO ES Of the East", which is a deal the Parties are interested in.
19. On issues related to the convening, preparation and holding of the annual General Meeting of Shareholders of the Company..
56
06.22.2017 №. 254
11.08.2017 № 255
1. On consideration of the consolidated business plan (including the consolidated Investment Program) of the RusHydro Group for 2017-2021 and
approval of the Target values for the annual key performance indicators of the Management Board members of PJSC RusHydro for 2017 and the
Target values of key performance indicators of the Long-Term Motivation Program of PJSC RusHydro "Of the first cycle for 2017-2019.
2. On the interim results of the implementation of the Company's Business Plan for 2017, taking into account the fact for the 1st quarter of 2017
(including reports on the implementation of the Investment Program (including the Program for the comprehensive modernization of generating
facilities) and the Annual Comprehensive Program of Purchases for the 1st quarter of 2017).
3. On priority directions of the Company's activity.
4. On approval of reports on the results of the Committee's activities under the Board of Directors of PJSC "RusHydro" for the 2016-2017 corporate
year.
5. On approval of the report on the functioning of the corporate internal control and risk management system of the Company.
6. On consideration of the report on the GRESs of the implementation of the set of measures (list of measures) for the introduction of professional
standards in the activities of the Company.
7. On approval of the report on the implementation of the Innovative Development Program of the RusHydro Group for 2016-2020. with a perspective
up to 2025 for 2016 year.
8. On approval of the Report on the implementation of the Action Plan for the sale of non-core assets of the Company for the I quarter of 2017.
9. On determining the amount of payment for the services of the Company's Auditor
10. On determining the position of the Company (representatives of the Company) on the agenda of the management bodies of subsidiary economic
entities.
11. On the recognition of independent candidates to the Board of Directors of the Company (members of the Board of Directors of the Company).
1. On election of the Chairman of the Board of Directors of the Company.
2. On election of the Deputy Chairman of the Board of Directors of the Company.
3. On the formation of committees under the Board of Directors of the Company.
4. On the definition of priority areas of the Company.
5. On determining the position of the Company (representatives of the Company) on the agendas of the management bodies of subsidiary economic
entities.
09/01/2017 №. 256
01.09.2017 № 257
1. On approval of the Work Plan of the Board of Directors of PJSC "RusHydro" for the second half of 2017.
2. On participation and termination of participation of PJSC RusHydro in other organizations
3. On approval of the Report on the implementation of the Action Plan for the sale of non-core assets of the Company for the first half of 2017.
4. On approval of transactions carried out by the Company
5. On priority directions of the Company's activity
1. On the priority activities of the Company: On the construction of the Taishet aluminum plant.
2. On the priority areas of the Company's activities: On the implementation of certain orders of the President of the Russian Federation and the
Government of the Russian Federation on the refinancing of loan debts of the group of PJSC "RAO ES of the East".
10/13/2017 № 258
1. On the provision in the Ministry of Economic Development of Russia of information on the possession of assets located on the territory of the
10/30/2017 № 259
10/30/2017 № 260
Russian Federation through foreign legal entities.
2. On approval of the Supplementary Agreement to the Standard Collective Agreement of the branch of PJSC "RusHydro" for 2017-2019.
3. On the implementation of the Long-term development program of the RusHydro Group for the first half of 2017.
4. On the definition of priority areas of the Company.
1. On priority directions of the Company's activity
2. On approval of the Charity and Sponsorship Program of the Company in 2017 in a new edition.
1. On determining the position of the Company (representatives of the Company) on the issue of the agenda of the General Meeting of Shareholders of
JSC "Yakutsk GRES-2": On the agreement for a major transaction - the conclusion of JSC "Yakutsk GRES-2" of the Supplementary Agreement to
57
11/27/2017 № 261
the General Contract for the construction of the Yakutsk GRES-2 (1st stage) of February 24, 2014 No. 01 / ZRUH / 13-121293.
1. On the determination of the amount of payment for the services of the auditor: On the determination of the maximum cost of services for the audit of
the Company's financial statements prepared in accordance with Russian Accounting Standards (RAS) and the audit (review) of the consolidated
financial statements of the RusHydro Group prepared in accordance with International Financial Reporting Standards (IFRS), for the period from
2018 to 2020.
2. On approval of the report on the implementation of the plan of measures for the sale of non-core assets of the Company for 9 months of 2017.
3. On priority directions of the Company's activity: On approval of transactions carried out by the Company:
4. On approval of transactions related to the gratuitous transfer of the Company's property.
5. On participation and termination of the Company's participation in other organizations
6. On determining the position of the Company (representatives of the Company) in the management bodies of subsidiaries: On determining the
position of the Company (representatives of the Company) on the agenda of the management bodies of JSC Hydroinvest
12/14/2017 № 262
1. On the definition of priority activities of the Company.
12/28/2017 № 263
12/28/2017 № 264
1. On corporate governance issues of PJSC RusHydro.
2. On non-core assets of PJSC RusHydro.
3. On the completion of a transaction related to the gratuitous transfer of property of PJSC RusHydro.
4. About priority directions of activity of PJSC "RusHydro"
5. On approval of internal documents of PJSC "RusHydro"
6. On the interim results of the implementation of the Business Plan of PJSC RusHydro for 2017, taking into account the fact for 9 months of 2017
(including reports on the implementation of the Investment Program (including the Program for the comprehensive modernization of generating
facilities) and the Annual Comprehensive Program of Purchases for the 9 months of 2017) .
7. On approval of the Insurance Coverage Program of PJSC "RusHydro" for 2018.
8. Determination of the position of PJSC RusHydro (representatives of PJSC RusHydro) in the management bodies of subsidiaries
1. On the business plan of PJSC "RusHydro" for 2018 - 2022 years.
2. On approval of the list of annual key performance indicators of the members of the Management Board of PJSC RusHydro for 2018 and the target
values of the annual key performance indicators of the members of the Management Board of PJSC RusHydro for 2018.
3. On approval of the annual comprehensive procurement program of PJSC "RusHydro" for 2018.
Resolutions of the meetings could be found under the link: http://www.eng.rushydro.ru/governance/board/minutes/2017/
58
Appendix No 5. Information on the Meetings of the Committees under the Board of Directors
Far East energy development Committee under the Board of Directors
Protocol Date and
Number
04/03/2017 № 3
04/03/2017 № 3
04/03/2017 № 3
04/18/2017 № 4
10/10/2017 № 6
10/10/2017 № 6
10/10/2017 № 6
10/10/2017 № 6
10/10/2017 № 6
10/27/2017 № 7
10/27/2017 № 7
10/27/2017 № 7
12/11/2017 No. 8
12/11/2017 No. 8
12/11/2017 No. 8
12/11/2017 No. 8
12/11/2017 No. 8
12/25/2017 № 9
Item Number and Title
On the preliminary approval of the report on the results of the activities of the Far Eastern Energy Development Committee under the Board of Directors for the first
half of 2016-2017 of the corporate year.
On the recommendations to the Board of Directors of the Company on the status of implementation of priority projects for the construction of 4 facilities in the Far East
(Yakutsk GRES-2 (1st stage), Phase 2 of Blagoveshchenskaya TPP, TPP in Sovetskaya Gavan, Sakhalinskaya GRES -2 (1st turn).
On the recommendations to the Board of Directors of the Company on the issue: Determination of the position of PJSC RusHydro (representatives of PJSC RusHydro)
on the agenda of the management bodies of Blagoveshchenskaya CHPP JSC: On the agreement for a conclusion between Blagoveshchenskaya CHPP and PJSC Power
Machines additional agreement No. 11 to the general contract for the construction of the second stage of Blagoveshchenskaya CHP Plant No. 1-KS-2013-BTEC-2 /
12A dated December 26, 2013, which is a major transaction.
On recommendations to the Board of Directors of the Company on the issue: On the Program for Development of RES in the Far East.
On the election of the Deputy Chairman of the Far Eastern Energy Development Committee under the Board of Directors of PJSC RusHydro.
On the election of the Secretary of the Committee for the Development of Energy in the Far East under the Board of Directors of PJSC RusHydro.
On approval of the Work Plan of the Committee for the Development of Energy in the Far East under the Board of Directors of PJSC RusHydro for 2017 -2018.
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: On securing financing for the project "Expansion of the 220 kV Maya substation and
construction of the Megino-Kangalas rayon power transmission lines in the Republic of Sakha (Yakutia)".
On recommendations to the Board of Directors of PJSC RusHydro on the issue: Status of the implementation of priority projects for the construction of 3 facilities in
the Far East (Yakutskaya GRES-2 (1st stage), TPP in Sovetskaya Gavan, Sakhalinskaya GRES-2 (1 line) as of June 30, 2017.
On recommendations to the Board of Directors of PJSC RusHydro on the issue: Determination of the position of the Company (representatives of the Company) on the
issue of the agenda of the General Meeting of Shareholders of JSC Yakutskaya GRES-2: On the agreement for a major transaction - the conclusion of JSC Yakutskaya
GRES-2 Additional of the agreement to the General Contract for the construction of the Yakutsk GRES-2 (1st stage) of February 24, 2014 No. 01 / ZRUH / 13-121293.
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: On securing financing for measures to implement the technological connection of the
220 kV Orotukan-Palatka-Centralnaya line.
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: On securing financing for the project "Construction of two single-circuit HVL 110
kV Pevek-Bilibino".
On the recommendations to the Board of Directors of PJSC RusHydro on the issue: On the definition of priority activities of the Company: On the status of
implementation of priority projects for the construction of 4 facilities in the Far East (Yakutsk GRES-2 (1st stage), Phase 2 of Blagoveschenskaya TPP , TPP in
Sovetskaya Gavan, Sakhalinskaya GRES-2 (1st stage).
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: On the definition of priority activities of the Company: On the GRESs of the
technological connection of the BJI 220kV Orotukan-Palatka-Tsentralnaya.
On recommendations to the Board of Directors of PJSC RusHydro on the issue: On the definition of priority activities of the Company: On the implementation of the
Action Plan ("Roadmap") "On ensuring the power supply of the Chukotka Autonomous Okrug while replacing the outgoing generation facilities", approved by the
Government of the Russian Federation on 12.12.2016 № 9519п-П9.
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: On the definition of priority activities of the Company: On the status of the
implementation of the project for construction of approaches to the 220 kV "Maya".
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: On the definition of priority activities of the Company: On the construction of the
Ust-Srednekanskaya HPP.
On recommendations to the Board of Directors of PJSC RusHydro on the issue: Determination of the position of PJSC RusHydro (representatives of PJSC RusHydro)
59
on the agenda of the General Meeting of Shareholders of JSC Yakutskaya GRES-2: Approval of a major transaction - Supplementary Agreement No. 1 dated
12/01/2017 to the Property Lease Agreement No. YAGRES-2/2016/19 of April 29, 2016.
Strategy Committee under the Board of Directors
Protocol Date and
Number
№96 02/14/2017
№97 04/07/2017
№98 04/17/2017
№99 06/06/2017
№100 06/16/2017
№101 08/28/2017
№102 09/27/2017
№103 10/10/2017
№104 10/24/2017
№105 11/14/2017
Item Number and Title
1. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On the priority areas of the Company's activities: on disposal of shares of PJSC"
RusHydro "owned by its subsidiary".
2. On approval of the Work Plan of the Strategy Committee under the Board of Directors of PJSC "RusHydro" for the first half of 2017.
1. On recommendations to the Board of Directors of the Company on the issue: "On introducing changes to the Long-term Development Program of RusHydro Group".
2. On the implementation of the Long-term development program of the RusHydro Group for 2016.
1. On recommendations to the Board of Directors of the Company on the issue: "On termination of participation of PJSC" RusHydro "in other organizations".
2. On recommendations to the Board of Directors of the Company on the issue: "On the position of PJSC RusHydro (representatives of PJSC RusHydro) on the agenda
of the management bodies of PJSC RAO ES Of the East, JSC RBEF and JSC ESC RusHydro: acquisition of subordinated bonds of the Joint-Stock Commercial Bank
for the Promotion of Charity and Spiritual Development of the Fatherland "PERESVET" (Joint Stock Company) ".
1. On the execution of the instruction of the Board of Directors of the Company on the issue "On the approval of the Strategy for the development of the RusHydro
Group for the period up to 2020 with the prospect of up to 2025" (item 4.2 of the Protocol dated June 8, 2016 No. 238) ".
2. On recommendations to the Board of Directors of the Company on the issue: "On approval of the report on the results of the Strategy Committee under the Board of
Directors of PJSC" RusHydro "for 2016-2017 corporate year".
1. On recommendations to the Board of Directors of the Company on the issue "On the priority areas of the Company's activities: About the Taishet aluminum plant
construction project".
1. On election of the Deputy Chairman of the Strategy Committee.
2. On approval of the Work Plan of the Strategy Committee for the second half of 2017.
3. Recommendations to the Board of Directors regarding:. "On the execution of individual orders of the President of the Russian Federation and the Russian
Government on refinancing of loans Group PJSC" RAO ES of the East ","
4. Recommendations to the Board of Directors on the "Determination of the position of PJSC" RusHydro "(representatives of the PSC" RusHydro ") on the agendas of
its subsidiaries controls:
1. On the reorganization of Geotherm JSC in the form of merger with it
JSC "Pauzhetskaya GeoPP" and JSC "OP Verkhne-Mutnovskaya GeoPP";
2. Increasing the authorized capital of Geotherm JSC;
3. On the reorganization of JSC "Verkhne-Mutnovskaya OP GeoPP" in the form of a merger with Geotherm JSC.
5. Recommendations to the Board of Directors on the issue: "On participation and termination of participation of PJSC" RusHydro "in other organizations."
6. On election of the Secretary of the Strategy Committee.
1. On recommendations to the Board of Directors of the Company on the issue: "On the implementation of the Long-term development program of the RusHydro Group
for the first half of 2017".
1. On recommendations to the Board of Directors of the Company on the issue: "On the definition of priority activities of the Company: On joining the Company to the
UN Global Compact and preparing to join the Association" National Network of the Global Compact ".
1. On recommendations to the Board of Directors of the Company on the issue "On priority areas of the Company's activities: Consideration of the RusHydro Group's
Value Increase Plan for the period up to 2021".
1. On recommendations to the Board of Directors of the Company on the issue: "On participation (change in the participation share) of the Company in other
60
organizations".
2. On recommendations to the Board of Directors of the Company on the issue: "On termination of the Company's participation in other organizations".
3. On recommendations to the Board of Directors of the Company on the issue: "On determining the position of the Company (representatives of the Company) on the
agenda of the management bodies of JSC" Hydroinvest ".
1. On recommendations to the Board of Directors of the Company on the issue: "On transactions with shares of organizations in which the Company participates".
№106 11/22/2017
Audit Committee under the Board of Directors
Item Number and Title
Protocol Date and
Number
02/20/2017 (Minutes
No. 93)
03/17/2017 (Minutes
No. 94)
04/20/2017 (Minutes
No. 95)
May
2017
18,
(Minutes No. 62-96)
Joint meeting with
for
the Committee
Personnel
and
Remuneration
05/19/2017 (Minutes
No. 97)
1. On recommendations to the Board of Directors of the Company on the issue: "On approval of the new version of the Regulations on the Information Policy of PJSC
RusHydro"
2. On the Report on compliance by the Company with the requirements of the legislation of the Russian Federation in the field of countering the misuse of insider
information and market manipulation and the Regulations on Insider Information of PJSC RusHydro for the 4th quarter of 2016.
3. On the instruction of the Chairman of the Board of Directors of PJSC RusHydro Trutneva Yu.P. in accordance with the Protocol of the Board of Directors of PJSC
RusHydro of December 26, 2016 No. 245.
4. On the implementation of the schedule of control activities of PJSC "RusHydro" for the 4th quarter of 2016.
1. Approval of the Work Plan of the Audit Committee under the Board of Directors of PJSC RusHydro for the first half of 2017.
2. On recommendations to the Board of Directors of the Company on the issue: "On approval of the Report on the organization of insurance protection of PJSC"
RusHydro "in 2016".
3. On approval of the report of the Chairman of the Audit Committee under the Company's Board of Directors on the results of activities for the second half of 2016.
4. On the Report of PwC Audit JSC (the Company's Auditor) based on the results of the interim audit of the Company's accounting statements under RAS for 9 months
of 2016.
1. About the Report of PwC Audit JSC (the Company's Auditor) based on the audit of the Company's financial statements prepared in accordance with Russian
Accounting Standards for 2016.
2. On the report of PwC Audit JSC (the Company's Auditor) following the audit of the consolidated financial statements of RusHydro Group in accordance with IFRS
for the year ended December 31, 2016.
3. On the audit opinion of the Company's Auditor based on the audit of the Company's financial statements prepared in accordance with Russian Accounting Standards
for 2016.
4. On the Opinion of the Audit Commission of the Company based on the audit results of the Company for 2016.
5. On recommendations to the Board of Directors of the Company on the issue of annual financial statements prepared in accordance with Russian Accounting
Standards for 2016.
6. On recommendations to the Board of Directors of the Company on the candidature of the Company's Auditor.
7. On recommendations to the Board of Directors of the Company on determining the amount of payment for the services of the Company's Auditor for 2017.
8. On the preliminary approval of the Company's Annual Report for 2016.
1. On recommendations to the Board of Directors of the Company on the issue: "Consideration of the consolidated business plan (including the consolidated
Investment Program) of the RusHydro Group for 2017-2021 and the approval of the target values of the annual key performance indicators of the members of the
Management Board of PJSC RusHydro for 2017 and Target values of key performance indicators of the long-term motivation program of PJSC "RusHydro" for the
first cycle for 2017 - 2019 ".
1. On the Report on compliance by the Company with the requirements of the legislation of the Russian Federation in the field of countering the misuse of insider
information and market manipulation and the Regulations on Insider Information of PJSC RusHydro for the 1st quarter of 2017.
61
2. On consideration of the report on the implementation of the Action Plan for the implementation of the Comprehensive Anti-Corruption Program of PJSC RusHydro
in 2016.
3. On consideration of the Methodology for evaluating the effectiveness of the internal control and risk management system of the internal audit division.
4. On the execution of the schedule of control measures of PJSC "RusHydro" for the 1 st quarter of 2017.
1. On preliminary approval of the report of the Chairman of the Audit Committee under the Company's Board of Directors on the results of activities for the 2016-2017
corporate year.
2. On preliminary consideration of the results of the assessment of corporate governance practices.
3. On preliminary consideration of the report on the functioning of the corporate system of internal control and risk management, taking into account the assessment of
internal audit.
4. On the instruction of the Chairman of the Board of Directors of PJSC RusHydro Trutneva Yu.P. in accordance with the Protocol of the Board of Directors of PJSC
"RusHydro" dated 20.04.2017 No. 252.
1. On amending the Regulations on the Audit Committee under the Board of Directors, approved by the decision of the Board of Directors of PJSC RusHydro (Minutes
No. 239 of 23.06.2016).
2. Consideration of proposals to increase the effectiveness of the Company's activities based on the results of the audit of the implementation of the DDA in 2016
05/31/2017 (Minutes
No. 98)
06/16/2017 (Minutes
No. 99)
08/02/2017 (Minutes
No. 100)
1. On introducing changes to the schedule of control activities of the Internal Audit Service of PJSC RusHydro for 2017, approved by the decision of the Audit
Committee under the Board of Directors of PJSC RusHydro (Minutes No. 92 of December 14, 2016).
2. On the Report on compliance by the Company with the requirements of the legislation of the Russian Federation in the field of countering the misuse of insider
information and market manipulation and the Regulations on Insider Information of PJSC RusHydro for the 2nd quarter of 2017.
08/28/2017 (Minutes
No. 101)
09/29/2017 (Minutes
No. 102)
11/31/2017 (Minutes
No. 103)
1. On election of the Deputy Chairman of the Audit Committee.
2. Appointment of the Secretary of the Audit Committee.
3. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue "On approval of the Report on Corporate Social Responsibility and Sustainable
Development of the RusHydro Group for 2016".
4. On recommendations to the Board of Directors of the Company on the issue: "On preliminary approval of decisions on the commission of the Company: On the
completion of a transaction related to the gratuitous transfer of the Company's property that constitutes fixed assets".
5. On recommendations to the Board of Directors of the Company on the issue: "On the Company's transactions related to the free transfer of the Company's property
to third parties".
1. On approval of the Work Plan of the Audit Committee under the Board of Directors of PJSC RusHydro for the second half of 2017.
2. On the execution of the schedule of control measures of PJSC "RusHydro" for the 2 nd quarter of 2017.
1. "On consideration of information on the implementation of action plans approved by the order of JSC" RusHydro "dated June 15, 2017 No. 384 on the results of on-
site inspections of the implementation of investment projects" Construction of a CHP plant in Sovetskaya Gavan "," Construction of the Yakutsk GRES-2 (1 ),
"Construction of Sakhalinskaya GRES-2 (1st stage)"
2. "On consideration of information on the implementation of the action plan following the results of the field inspection of the Ministry of Energy of Russia on the
implementation of the investment project of PJSC" RusHydro "Ust-Srednekanskaya HPP (including an analysis of the fulfillment of measures necessary to fill the Ust-
Srednekansk reservoir to the design mark; conclusion of the Ust-Srednekanskaya HPP to the designed capacity) "
3. "On consideration of information on the implementation of the action plan approved by the order of JSC" RusHydro "dated January 19, 2016 No. 24 (as amended by
Order No. 22 of January 20, 2017) as a result of on-site inspection of the implementation of the project activities for design, construction and commissioning operation
of the Boguchanskaya HPP, stipulated by the investment program of PJSC "RusHydro" for 2014 - 2016 "
4. "On consideration of the results of the on-site inspection of the Ministry of Energy of Russia on the implementation of the investment project" Supply and
replacement of six hydro turbines of the Novosibirsk HPP "on a turn-key basis" and a draft Action Plan for the elimination of violations and deficiencies identified by
the Ministry of Energy of Russia. "
62
11/15/2017 (Minutes
No. 104)
11/30/2017 (Minutes
No. 105)
12/22/2017 (Minutes
No. 106)
12/28/2017 (Minutes
№ 107)
1. On the Report of PwC Audit JSC (the Company's Auditor) following the results of the review of the consolidated interim condensed financial information of
RusHydro Group under IFRS for the six months ended June 30, 2017.
2. On the Plan of JSC PwC Audit (Auditor of the Company) for audits of the RusHydro Group for 2017.
3. On the Report of PwC Audit JSC (the Company's Auditor) based on the results of the interim audit of the Company's accounting reports under RAS for 6 months of
2017.
4. On recommendation to the Board of Directors of the Company on the issue: "On determining the maximum cost of services for auditing the Company's financial
statements prepared in accordance with Russian accounting standards and auditing (reviewing) the consolidated financial statements of the RusHydro Group prepared
in accordance with international financial standards reporting, for the period from 2018 to 2020 "
5. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On the approval of the Policy in the field of internal audit of PJSC" RusHydro "in
a new edition.
6. On optimization of the functions and structure of the Internal Audit Service of PJSC "RusHydro".
1. On consideration of the Report on compliance by the Company with the requirements of the legislation of the Russian Federation in the field of countering the
misuse of insider information and market manipulation and the Regulations on Insider Information
PJSC "RusHydro" for the third quarter of 2017.
2. On recommendations to the Board of Directors of the Company on the issue: "On approval of the Insurance Coverage Program of PJSC" RusHydro "for 2018".
3. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue "On the approval of the Anti-Corruption Policy of PJSC" RusHydro "in a new
version."
1. On recommendations to the Board of Directors of the Company on the issue: "On consideration of the Report on Observance of the Information Policy of PJSC"
RusHydro ".
2. On recommendations to the Board of Directors of the Company on the item: "On corporate governance issues: On approval of internal documents of the Company".
1. On recommendations to the Board of Directors of the Company on the issue: "On non-core assets of the Company".
2. On recommendations to the Board of Directors of the Company on the issue: "On the preliminary approval of decisions on the commission of the Company: On the
transaction related to the gratuitous transfer of the Company's property that constitutes fixed assets".
3. On the execution of the schedule of control measures of PJSC "RusHydro" for the 3rd quarter of 2017.
4. On approval of the schedule of control activities of the Internal Audit Service of PJSC "RusHydro" for 2018.
1. On approval of the Program for ensuring and improving the quality of internal audit.
Nominations and Compensations Committee under the Board of Directors
Protocol Date and
Number/item
01/16/2017, 58/1
01/16/2017, 58/2
03/14/2017, 59/1
11/04/2017, 60/1
11/04/2017, 60/2
04/26/2017, 61/1
Item Number and Title
On recommendations to the Board of Directors of PJSC RusHydro on the issue "Determining the quantitative composition of the Management Board of PJSC"
RusHydro "
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue "On election of a member of the Management Board of PJSC" RusHydro "
On the preliminary approval of the report on the results of the activities of the Personnel and Remuneration Committee (nominations) under the Board of Directors of
PJSC "RusHydro" for the period from 18.06.2016 to 31.12.2016.
On recommendations to the Board of Directors of the Company on the issue: "On the execution of a resolution of the Board of Directors of the Company".
On the recommendations to the Board of Directors of the Company on the issue: "On agreeing the combination of positions in the management bodies of other
organizations by an individual acting as the sole executive body and members of the Management Board, as well as other paid posts in other organizations".
On recommendations to the Board of Directors of the Company on the issue: "On recommendations to the annual General Meeting of Shareholders of the Company on
the issue:" On payment of remuneration for work on the Board of Directors to members of the Board of Directors who are not state employees in the amount established
63
05/18/2017, 62/1
05/22/2017, 63/1
05/22/2017, 63/2
05/22/2017, 63/3
05/22/2017, 63/4
06/01/2017, 64/1
06/01/197, 64/2
06/01/2017, 64/3
06/19/2017, 65/1
06/19/2017, 65/2
09.28.2017, 66/1
28.09.2017, 66/2
28.09.2017, 66/3
10.10.2017, 67/1
12/07/2017, 68/1
12/21/2017, 69/1
12/21/2017, 69/2
12/21/2017, 69/3
by the Company's internal documents ".
On recommendations to the Board of Directors of PJSC RusHydro on the issue: "Consideration of the consolidated business plan (including the consolidated
Investment Program) of the RusHydro Group for 2017-2021 and the approval of the target values of the annual key performance indicators of the members of the
Management Board of PJSC RusHydro for 2017 and Target values of key performance indicators of the long-term motivation program of PJSC "RusHydro" for the first
cycle for 2017 - 2019. "
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On recommendations to the Annual General Meeting of Shareholders of PJSC"
RusHydro "on the issue:" Approval of the Regulations on payment of remuneration and compensation to members of the Board of Directors of the Company in a new
version ".
On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: On recommendations to the Annual General Meeting of Shareholders of PJSC
"RusHydro" on the issue: "On termination of participation of PJSC RusHydro in the Non-Profit Partnership" Corporate Educational and Scientific Center of the Unified
Energy System ".
On the compliance of candidates for the Board of Directors of PJSC RusHydro with the criteria of independence.
On recommendations to the Board of Directors of PJSC RusHydro on the issue: "Recognition of a member of the Board of Directors of the Company as an independent
director".
The question contains confidential information
The question contains confidential information
On recommendations to the Board of Directors of the Company on the issue: "On consideration of the report on the implementation of the Plan of measures (the list of
measures) for the introduction of professional standards in the activities of the Company."
On the preliminary approval of the report on the results of the activities of the Personnel and Remuneration Committee (nominations) under the Board of Directors of
PJSC "RusHydro" for 2016-2017 corporate year
On recommendations to the Board of Directors of the Company on the issue: "On amendments to the Regulations on the Personnel and Remuneration Committee
(nominations) attached to the Board of Directors of PJSC RusHydro, approved by the decision of the Board of Directors of PJSC RusHydro (Minutes No. 239 of
23.06.2016)."
On election of the Secretary of the Personnel and Remuneration Committee (nominations) under the Company's Board of Directors.
On election of the Deputy Chairman of the Personnel and Remuneration Committee (nominations) under the Company's Board of Directors.
On recommendations to the Board of Directors of the Company on the issue: "On approval of the Supplementary Agreement to the Model Collective Agreement of the
Branch of PJSC" RusHydro for 2017-2019 ".
On recommendations to the Board of Directors of the Company on the issue "On the performance of key performance indicators of the Company for 2016".
On recommendations to the Board of Directors of the Company on the issue: "On consideration of the report on the implementation of the Plan of measures (the list of
measures) for the introduction of professional standards in the activities of the Company."
On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On approval of the list of annual key performance indicators of the members of the
Management Board of PJSC" RusHydro "for 2018 and target values of the annual key performance indicators of the members of the Management Board of PJSC"
RusHydro "for 2018".
On recommendations to the Board of Directors of the Company on the issue: "On the recognition of independent members of the Board of Directors of the Company".
On the election of the senior independent director of the Company.
Investment Committee under the Board of Directors
Protocol Date and
Number
Item Number and Title
64
No. 88 of February
20, 2017
No. 89 of April 3,
2017
No. 90 of April 13,
2017
No. 91 of April 17,
2017
No. 92 of May 22,
2017
No. 93 of June 20,
2017
1. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On ensuring the preparation of project and estimate documentation of investment
projects included in the investment program of PJSC" RusHydro ".
2. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On approval of the Report on the sale of non-core assets for 2016".
3. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "Determination of the position of PJSC RusHydro (representatives of PJSC
RusHydro) on the issue of the agenda of the management body of JSC Karachaevo-Cherkess hydrogenerating company:" On approval of the conclusion of a loan
agreement between PJSC " RusHydro "and JSC" Karachay-Cherkess hydro-generating company ", which is a major transaction".
1. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On the draft consolidated investment program of the RusHydro Group for 2018-
2022 and 2017 (adjustment), and the draft investment program of PJSC" RusHydro "for 2018-2027 and for 2017 (adjustment). "
2. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On approval of the report on the public technological and price audit of
investment projects for 2016, containing the results of the consolidated analysis of audits and conclusions on the results of public and expert discussion."
3. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On approval of the list of investment projects for conducting a public
technological and price audit in 2017-2018".
Question number 4. On approval of the work plan of the Investments Committee under the Board of Directors of PJSC RusHydro for the first half of 2017.
1. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "Implementation of key performance indicators of PJSC" RusHydro "for the 4th
quarter of 2016 and 2016".
2. On the recommendation to the Board of Directors of PJSC RusHydro on the issue: "On approval of the report on the implementation of the Company's Business
Plan for 2016 (including reports on the implementation of the Investment Program (including the Program for the comprehensive modernization of generating
facilities), the Annual Comprehensive Program of Purchases for 2016 and Report on the implementation of a set of measures (list of measures) to reduce operating
expenses (costs) for 2016 ".
3. On recommendations to the Board of Directors of PJSC RusHydro on the issue "Consideration of the report on the implementation of the consolidated business
plan (including the consolidated Investment Program) of the RusHydro Group for 2016".
4. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "Consideration of the consolidated business plan (including the consolidated
Investment Program) of the RusHydro Group for 2017-2021 and the approval of the target values of the annual key performance indicators of the members of the
Management Board of PJSC RusHydro for 2017 and Target values of the key performance indicators of the long-term motivation program of PJSC "RusHydro" for
the first cycle for 2017 - 2019 ".
1. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On postponing the execution of the instruction on item 2 of the agenda of the
meeting of the Board of Directors of the Company on February 19, 2016" On the GRESs of construction of Zagorskaya PSHPP-2 "(Minutes No. 231 of 20.02.2016,
Minutes No. 10.10 .2016 No. 242). "
1. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On recommendations to the Annual General Meeting of Shareholders of the
Company on the issue: On the amount of dividends, the terms and form of their payment based on the results of work for 2016 and the date on which persons entitled
to receive dividends ".
2. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On recommendations to the Annual General Meeting of Shareholders of the
Company on the issue: Approval of the distribution of the Company's profit based on 2016 results".
1. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On the interim results of the implementation of the Company's Business Plan for
the year 2017, taking into account the fact for the 1st quarter of 2017 (including reports on the implementation of the Investment Program (including the Integrated
Modernization Program) and Annual complex procurement program for the 1st quarter of 2017) "
2. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On approval of the procedure for agreeing with the Ministry of the Russian
Federation for the development of the Far East of investment programs and other plans for the development of infrastructure implemented by the Company in the Far
Eastern Federal District."
3. On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On approval of the Report on the implementation of the Action Plan for the sale of
non-core assets of the Company for the I quarter of 2017".
65
No. 94 of August
29, 2017
No.
95
06.10.2017
dd.
No. 96 of November
22, 2017
№97 of December
12, 2017
4. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On approval of the report on the results of the Committee for Investments under
the Board of Directors of PJSC" RusHydro "for 2016-2017 corporate year".
1. On election of the Deputy Chairman of the Investments Committee under the Board of Directors of PJSC RusHydro.
2. Election of the Secretary of the Investments Committee under the Board of Directors of PJSC RusHydro.
3. Recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On approval of the Report on the implementation of the Action Plan for the sale of
non-core assets of the Company for the first half of 2017".
1. On approval of the work plan of the Investments Committee under the Board of Directors of PJSC RusHydro for the second half of 2017.
2. On recommendation to the Board of Directors of PJSC "RusHydro" on the issue: "On the interim results of the implementation of the Company's Business Plan for
2017, taking into account the fact for the first half of 2017 (including reports on the implementation of the Investment Program (including the Program for the
Integrated Modernization of Generating objects) and the Annual comprehensive procurement program for the first half of 2017) ".
3. On recommendations to the Board of Directors on the issue: "On the adjustment of the Company's business plan for 2017".
4. On recommendations to the Board of Directors of the Company on the issue: "On priority areas of the Company's activities: On approval of Supplementary
Agreement No. 4 to the Agreement on the Provision of Budget Investments No. 01-08 / 827 of December 18, 2012".
1. Recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On approval of the Report on the implementation of the Action Plan for the sale of
non-core assets of the Company for 9 months of 2017".
2. Recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On the priority areas of the Company's activities: On the modification of
previously adopted decisions on approving the BEMO project financing scheme".
3. On recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On approval of transactions related to the gratuitous transfer of the Company's
property".
1. Recommendations to the Board of Directors of PJSC RusHydro on the issue: "On the intermediate results of the implementation of the Company's Business Plan
for 2017, taking into account the fact for 9 months of 2017 (including reports on the implementation of the Investment Program (including the Program for the
Integrated Modernization of Generating objects) and the Annual complex program of purchases for 9 months of 2017) ».
2. Recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On the GRESs of construction of Zagorskaya PSHPP-2".
No. 98 of December
22, 2017
1. Recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On the business plan of PJSC" RusHydro "for 2018 - 2022 years".
2. Recommendations to the Board of Directors of PJSC "RusHydro" on the issue: "On approval of the annual comprehensive procurement program of PJSC"
RusHydro for 2018 ".
Reliability, Energy Efficiency and Innovations Committee under the Board of Directors
Protocol Date
Number
№45 of May 29, 2017
and
№ 46 of June 13, 2017
Item Number and Title
1: On recommendations to the Board of Directors of PJSC RusHydro on the issue: "On approval of the report on the implementation of the Innovative Development
Program of the RusHydro Group for 2016-2020. with a prospect up to 2025 for 2016 ".
2: Approval of the report on the results of the activities of the Committee for Reliability, Energy Efficiency and Innovation under the Board of Directors of PJSC
"RusHydro" for the 2016-2017 corporate year.
1: On recommendations to the Board of Directors of the Company on the issue: "On determining the Company's (Company's representatives) position on the agenda
of the Board of Directors of JSC Zagorskaya PSHPP-2:" On approval of the contract for the supply of equipment that is a transaction related to alienation or possible
alienation property constituting fixed assets, the purpose of which is the production, transmission, dispatching, distribution of electric and thermal energy. "
66
№ 47 of December 12,
2017
№ 48 of December 21,
2017
№ 49 of December 28,
2017
1: on election of the Deputy Chairman of the Committee for Reliability, Energy Efficiency and Innovation under the Board of Directors of the Company.
2: on the election of the Secretary of the Committee on Reliability, Energy Efficiency and Innovation under the Board of Directors of the Company.
3: on recommendations to the Board of Directors of the Company on the issue:
"On the GRESs of construction of Zagorskaya PSHPP-2".
1. On recommendations to the Board of Directors of the Company on the issue: "On consideration of proposals for improving the quality of preparation and
implementation of the Innovative Development Program of the RusHydro Group for 2016-2020. with a prospect up to 2025 ".
1. On recommendations to the Board of Directors of the Company on the issue: "On measures to improve reliability, conducted at power facilities of RusHydro
Group".
67
Appendix No 6. Information about the sales of non-core assets
The program of alienation of non-core assets of PJSC RusHydro (hereinafter - Program) approved by the Board of Directors (Minutes No. 263 of December 28, 2017)2, determines the general
principles and procedure for the Company's actions to dispose of non-core assets of the Company.
The goal of the Program is to formulate a methodology for managing the Company's non-core assets.
The main directions of the Program:
- formation and maintenance of the Register of non-core assets and the Plan of measures for the sale of non-core assets;
- ways and procedures for the sale of non-core assets;
- information support for the process of selling non-core assets;
- provision of reports on the sale of non-core assets.
The plan of measures for the sale of non-core assets of PJSC "RusHydro" for 2016 (4 quarter) - 2017. and the adjusted Register of non-core assets of PJSC RusHydro in a new wording were
approved by the Board of Directors (Minutes No. 246 of December 27, 2016).
The register of non-core assets contains the main information about non-core assets, their book value, the type of the proposed action with respect to non-core assets and other necessary
information.
The Action Plan for the sale of non-core assets includes non-core assets planned for sale in 2017, indicating the timing of the sale of non-core assets and their market value, as determined by
the appraisal organization.
№
Assets
Registration No.
Balance Sheet
item reflecting the
assets as of the
reporting date
immediately
preceding the sale
date
Accounts (including
analytical accounts)
reflecting the income and
expenditure associated
with the retirement of the
assets (91.1xxx/91.2xxx)
Book value
of the
assets, thou.
RUB
Actual sales
value of the
assets, thou.
RUB
excluding
VAT
Deviation of the actual
sales value of the assets
from their book value ,
thou. RUB
1
PJSC
"Irkutskenergo"3
JSC “Zharki”4
-
-
1,170
1,170
9101040101/
9102040101
9101040101/
9102040101
74,353
74,860
+507
0
6,000
+ 6,000
Reasons for the
variance between
the actual sales
value and the
book value if the
assets, thou. RUB
Sale by acceptance
of the Obligatory
offer of LLC
"Telmamskaya
HPP"
Sale by the results
of competitive
procedures
2 Previously, the Regulation on the procedure for disposing of non-core assets of PJSC RusHydro, approved by the Board of Directors (Minutes No. 106 of 01.09.2010 and No. 239 of
23.06.2016), and the Alienation Program for Non-core Assets approved by the Board of Directors (Minutes No. 242 of 10.10.2016) .
3 Participation terminated in the 3rd quarter of 2017
4 Sold on 12/06/2017
68
2
99 apartments in the
village Talakan
Amur region
1004_54
10527
10526
1861
1004_38
1004_36
1004_34
10301010000002710000
10301010000002740000
10301010000002830000
10301010000002940000
10301010000003000000
10301010000003110000
10301010000003120000
10301010000003220000
10301010000003260000
10301010000003300000
10301010000003330000
10301010000003370000
10301010000003390000
10301010000003400000
10301010000003420000
10301010000003430000
10301010000003440000
10301010000003470000
10301010000003490000
10301010000003500000
10301010000003520000
10301010000003530000
10301010000003540000
10301010000003550000
10301010000003570000
10301010000003590000
10301010000003600000
10301010000003610000
10301010000003620000
10301010000003630000
10301010000003640000
10301010000003650000
10301010000003660000
10301010000003670000
10301010000003690000
10301010000003700000
1151.1
9101010101/
9102010101
76,881
36,374
- 40,507
Sale at market
value determined
by the appraisal
organization,
employees of the
branch of PJSC
"RusHydro" -
"Bureyskaya HPP"
69
10301010000003710000
10301010000003720000
10301010000003730000
10301010000003740000
10301010000003760000
10301010000003770000
10301010000003780000
10301010000003790000
10301010000003800000
10301010000003810000
10301010000003830000
10301010000003840000
10301010000003850000
10301010000003860000
10301010000003870000
10301010000003880000
10301010000003890000
10301010000003900000
10301010000003910000
10301010000003920000
10301010000003930000
10301010000003940000
10301010000003960000
10301010000003970000
10301010000003980000
10301010000004000000
10301010000004010000
10301010000004020000
10301010000004030000
10301010000004060000
10301010000004070000
10301010000004080000
10301010000004090000
10301010000004100000
10301010000004110000
10301010000004120000
10301010000004130000
10301010000004140000
10301010000004150000
10301010000004160000
10301010000004170000
10301010000004180000
10301010000004200000
70
10301010000004210000
10301010000004220000
10301010000004230000
10301010000004240000
10301010000004250000
10301010000004260000
10301010000004270000
10301010000004280000
10301010000004290000
10301010000004300000
10301010000003680000
10301010000005960000
10301010000005980000
3
Apartment in
Moscow region
4
5
6
7
Road tunnel in the
Karachay-Cherkess
Republic
Apartment in the
Nizhny Novgorod
region
5 apartments in the
village Talakan
Amur region
2 apartments in the
Republic of
Khakassia
ЗГ10300
1,151.1
9101010101,/
9102010101
1,690
2,753
+1,063
22
1,151.3
910101011/,-
0
85
+85
НЖ0000068
1,151.1
9101010101/
9102010101
1,983,000
2,052,009
+69,009
1003_24
1003_3
1004_48
10301010000002
880000
10301010000003060000
1,151.1
-,/9102051100
1,195
0.00
- 1,195
2700000150
2700000170
1,213
9001180101/
9002180101
5,850
4,452
-1,398
Sale at the market
value determined
by the appraisal
organization,
employee of the
branch of PJSC
"RusHydro" -
"Zagorskaya PSPP"
Sale by the results
of competitive
procedures
Sale by the results
of competitive
procedures
The transfer of
property to
employees of the
branch of PJSC
"RusHydro" -
"Bureyskaya HPP"
Sale at the market
value determined
by the appraisal
organization
71
8 Laboratory building
in the Krasnoyarsk
Territory
9
External
communication
networks of Borus
Hotel in the
Republic of
Khakassia
112
1,151.1
-/9102010701
17,777
7559
1,151.3
-/9102010701
12
-
-
-17,777
-12
The object was in a
dilapidated state.
The object is
liquidated and
decommissioned
The object was in a
dilapidated state.
The object is
liquidated and
decommissioned
Total
179 741
126 576
-,53,165
72
Appendix No 7. Information on pending court proceedings
Claimant: PJSC RusHydro
Defendant: PJSC RusHydro
Number of pending court
proceedings
48
18
The total sum of claims, RUB
1,478,852,193.50
78,467,515.05
Appendix No 8. Information concerning the State support funds received by
the Company in the reporting year, including the amount of granted
subsidies (Rubles), their use, and drawdown by the end of the year
In 2017, PJSC RusHydro did not raise funds from the federal budget for the implementation of investment
program projects.
For the year 2017 the Company used previously received budgetary funds under Presidential Decree No.
1564 of 11/22/12 for the construction of heat generation facilities in the Far East in the amount of 4,978.7
million rubles, including:
- CHP in Sovetskaya Gavan – 1,940.2 million rubles (taking into account the return of part of the
advance payment by the general contractor),
- Sakhalin GRES -2 (1st stage) – 3,038.5 million rubles,
- Yakutsk GRES-2 (1st stage) - 0.0 million rubles (the facility was introduced on October 31, 2017),
- Blagoveshchenskaya CHP (2nd stage) - 0.0 million rubles (the facility was introduced on December
22, 2016).
As of 01.01.2018, the balance of the budgetary appropriations previously received by the Company in the
sale of the Russian Federation of additional shares of PJSC RusHydro is – 5,027.2 million rubles, including:
- for the further construction of a combined heat and power plant in Sovetskaya Gavan (Khabarovsk
Territory) - 4,127.9 million rubles;
- the balance of unused saved budget investments - 899.3 million rubles (476.9 million rubles
allocated for the completion of the coastal spillway of the Sayano-Shushenskaya hydroelectric power station
- construction completed), 422.4 million rubles for the design of the Kankunskaya HPP - design completed.
73
Appendix No 9. Report on the Long Term Development program
implementation of the RusHydro Group for the year of 2017
OVERVIEW
The long-term development program of the RusHydro Group for the period 2016-2020 (hereinafter referred
to as "the LTDP") was approved by the decision of the Board of Directors of PJSC RusHydro (hereinafter
also the Company) as of 11/23/2016 (Minutes No. 244).
In accordance with the decision of the Board of Directors of the Company of December 26, 2016 (Minutes
No. 245), and in order to ensure the relationship between the achievement of KPI of DWR and the
remuneration of management by the decision of the Board of Directors of the Company of April 18, 2017
(Minutes No. 251), changes were made to the DDP in the part of the list and KPI LTDP methodology in
accordance with the KPI approved by the members of the Company's Management Board and KPI of the
Long-Term Motivation Program of PJSC RusHydro.
The LTDP defines the main principles and directions that ensure the effective dynamic development of the
RusHydro Group for the effective use of hydro resources, the creation of conditions for ensuring the
reliability of the Unified Energy System of Russia, and the creation of conditions for the social and
economic development of the regions of the Far East by ensuring the availability of energy infrastructure for
existing and promising consumers.
Pursuant to the directives of the Government of the Russian Federation No. 4955p-P13 of 17.07.2014, an
audit of the implementation of the LTDP is carried out annually in accordance with the Standard for
carrying out an audit of the implementation of the LTDP5 and the Terms of Reference for carrying out an
audit of the implementation of the LTDP 6, developed taking into account the recommendations of the
Government of the Russian Federation7.
PERFORMANCE VERSUS PLANNED AND ESTIMATED TARGETS BASED ON
CONSOLIDATED BUSINESS PLAN OF THE RUSHYDRO GROUP
The main element of economic planning in the RusHydro Group is the Business Plan, which is formed for
the medium term. By the decision of the Board of Directors of the Company, the Regulation on the business
planning system was approved (Minutes No. 233 of 01.04.2016), in accordance with which the Consolidated
Business Plan of RusHydro Group is formed in accordance with IFRS8.
The Consolidated RusHydro Group Business Plan for 2017-2021, reviewed by the Board of Directors of the
Company (Minutes No. 254 of June 22, 2017), was formed on the basis of the Business plans of the
RusHydro Group companies (PJSC RusHydro and its controlled companies (hereinafter referred to as the
"CC"), transformational and consolidation amendments used to bring information in compliance with the
requirements of IFRS.
The LTDP9 reflects the values of the planned and forecasted performance of the RusHydro Group, formed
on the basis of the RusHydro Group Consolidated Business Plan project for 2017-2021. For the period after
the approval of the LTDP, the project of the Consolidated Business Plan of RusHydro Group (the values of
planned and forecasted indicators) was adjusted based on current conditions. For the purposes of this Report,
the planned data for 2017 are presented on the basis of the Consolidated Business Plan of the RusHydro
Group, reviewed by the Board of Directors on June 21, 2017 (Minutes No. 254 of June 22, 2017), and, in
addition, take into account the increase in revenue from the sale of electricity (capacity) 2017 in the amount
of 2,000 million rubles, which is determined in the target KPI values approved by the above decision of the
Board of Directors of the Company.
5 Minutes of the Board of Directors of the Company No. 206 of November 21, 2014.
6 Minutes of the Board of Directors of the Company No. 206 of November 21, 2014....
7 Order of the Government of the Russian Federation of 04.15.2014 No. ISH-P13-2583.
8Hereinafter in the text - International Financial Reporting Standards.
9 Approved by the resolution of the Board of Directors of the Company of November 23, 2016 (Minutes No. 244) as amended by
the resolution of the Board of Directors of the Company dated April 18, 2017 (Minutes No. 251).
74
The actual data of the report on the implementation of the LTDP for 2017 was formed on the basis of the
audited Consolidated Financial Statements of the RusHydro Group prepared in accordance with IFRS for
the year ended December 31, 2017 and as of that date.
According to the consolidated financial statements of RusHydro Group under IFRS, the authorized capital of
the Company as of December 31, 2017 is 426 289 million rubles.
Revenues
Analysis of data on the RusHydro Group in 2017 shows a decrease in actual revenues in relation to the plan
by 14,862 million rubles (or -3.7%).
In the structure of revenues of the RusHydro Group, the largest share is generated from the sale of electricity
(capacity) - 74% of the total revenue.
In the actual data flow, the main share of revenues from the sale of electricity (capacity) is provided by the
RusHydro Group (PJSC RusHydro, sales companies and other generating companies), without taking into
account the revenues of the RAO ES subgroups of the East. The Subgroup RAO ES of the East provides
revenues from the sale of heat energy (99% of the total revenue from the sale of heat), government subsidies
(almost 100% of the total volume) and other revenues (74% of the total volume in fact and 61% according to
plan).
Current operating revenue structure for 2017, million rubles.
Item
2017 planned
2017 actual
Variation
(planned/actual)
Absolute
relative
Sale of electricity (energy)
292,477
282,290
-10,187
-3.5%
Sale of heat
State subsidies
Other income
Other operating income
Total Revenues from current operations and State
subsidies
Including revenues of PJSC RusHydro, with share in
total revenues
Including revenues of the Holding subgroup “RAO ES
of the East”, with share in total revenues
36,226
16,103
51,610
0
396,416
115,109
29.0%
206,435
52.1%
38,907
32,745
26,922
690
2,681
16,642
-24,688
690
7.4%
103.3%
-47.8%
-
381,554
-14,862
-3.7%
120,752
31.6%
201,281
52.8%
5,643
4.9%
-5,154
-2.5%
The analysis of deviations of the actual indicators from the planned ones shows an increase relative to the
revenue plan:
- from the sale of thermal energy (including hot water) by 7.4%;
- from receiving state subsidies by 103.3%.
The overall decrease in revenues, relative to the planned level, was affected by a decrease in revenue from
the sale of electricity (capacity) by 3.5% and other revenue by 47.8%.
The decrease in revenues from the sale of electricity and capacity by the companies of the segment The sub-
group of RAO ES of the East is due to the introduction from 01.07.2017 of the mechanism for bringing
tariffs to basic levels in the territory of the Far East (Federal Law No. 508-FL of December 28, 2016 "On
Amending the Federal Law" On electric power industry"), which leads to the redistribution of revenues
under the items" Sale of electricity (capacity) and Government subsidies, "namely, the reduction of revenues
from electricity sales and the growth of government subsidy revenues.
According to PJSC RusHydro, revenue from electricity and capacity sales is growing, due to the growth in
electricity sales volumes on the day-ahead market due to the growth in output and net supply.
A significant decrease in income under the item "Other revenue" relative to the planned volumes is observed
in the segment "Other" and "Subgroup of RAO ES of the East". The deviation in the "Other" segment in the
amount of 13,720 million rubles was due to the sale of the treasury stake in PJSC "RusHydro" from the
balance of JSC "Hydroinvest" as part of the deal on the capitalization of PJSC "RusHydro" with a view to
refinancing the external debt of the subsidiaries of RAO ES East ".
Other revenues received by the RusHydro Group in 2017 in the amount of 690 million rubles are dividends
received by PJSC RusHydro and other companies from PJSC Inter RAO and PJSC Rosseti.
75
Expenses
According to the RusHydro Group, actual expenses for 2017 decreased by 32,997 million rubles (or -9.8%)
relative to the planned values.
Expense structure for 2016, million rubles..
Item
2017 planned
20167
actual
Variation (planned/actual)
Absolute
relative
Fuel consumption
Depreciation of equipment and non-tangible assets
Salaries, payments to staff and taxes, related to salary,
investments to pension saving fund
Taxes, except income tax
Outsourced services
Water consumption expenses
Unclassified stores acquisition costs 10
Infrastructure payments, related to sale of electricity
and heat 11
Purchased electricity (energy)
Other expenses (balance) 12
TOTAL Current operation expenses
Including revenues of PJSC RusHydro, with share in
total revenues
50,702
28,418
73,891
12,500
29,057
3,577
17,359
49,031
44,872
27,395
336,802
66,670
20%
58,098
25,023
74,591
10,681
25,485
3,370
10,812
50,634
40,747
4,363
303,805
62,628
21%
7,396
-3,395
700
-1,819
-3,572
-207
-6,546
1,603
-4,125
-23,033
-32,997
-4,042
-
14.6%
-11.9%
0.9%
-14.6%
-12.3%
-5.8%
-37.7%
3.3%
-9.2%
-84.1%
-9.8%
-6.1%
-
2.0%
-
3,968
-
195,593
58%
199,561
Including revenues of the Holding subgroup “RAO ES
of the East”, with share in total revenues
66%
The overall cost reduction for the plan was affected by the following costs:
- Other expenses (balance) - decrease by 23,033 million rubles (or -84.1%);
- expenses for the acquisition of other materials - a decrease of RUB 6,546 million (or -37.7%);
- purchased energy (capacity) - a decrease of 4,125 million rubles (or -9.2%);
- services of outside organizations - a decrease of 3 572 million rubles (or -12.3%);
- depreciation of fixed assets and NMA - a decrease of 3,395 million rubles (or -11.9%);
- purchase of fuel - an increase of 7,396 million rubles (or + 14.6%).
The decrease in expenses under the item "Other expenses (balances)" is provided mainly by the effect of
selling the treasury stake in PJSC "RusHydro" from the balance of JSC "Hydroinvest" as part of the
transaction for the capitalization of PJSC "RusHydro" in order to refinance the external debt of the
subsidiaries of RAO ES of the East ".
The expenses under the item "Expenses for the acquisition of other materials" are influenced by the
Subgroup of RAO ES of the East. The deviation based on the results of 2017 is due to differences in the
methods of reflecting the planned and actual costs for fuel and materials (intragroup costs are excluded from
the revenues of Vostek JSC and the related fuel costs of operating companies).
Reducing the cost of purchased electricity is observed in the segment "Subgroup of ESC RusHydro" (PJSC
"Krasnoyarskenergosbyt", JSC "ESC RusHydro"). The increase in the cost of purchased electricity is due to
the increase in purchase prices on the DAM.
10 The fact for the item is the amount of expenses for items: "Other materials" in the amount of 10,170 million rubles and "Expenses for
the purchase of oil products for resale" in the amount of 642 million rubles, in accordance with Note 25 to the Consolidated Financial
Statements of RusHydro Group prepared in accordance with with IFRS for the year ended December 31, 2017 and at that date.
11 In fact, the item includes expenses for items: "Expenses for the distribution of electricity" in the amount of 43,482 million rubles,
"Expenses for ensuring the functioning of the electricity and capacity market" in the amount of 3,639 million rubles, "Expenses for the
acquisition and transportation of thermal energy" in the amount of 3 513 million rubles, in accordance with Note 25 to the Consolidated
Financial Statements of RusHydro Group prepared in accordance with IFRS for the year ended December 31, 2017 and at that date.
12 In fact, the item includes expenses for social expenditures in the amount of 1 098 million rubles, business trip expenses of 843 million
rubles, loss on disposal of fixed assets in the amount of 1,006 million rubles and other expenses in the amount of 1,617 million rubles in
accordance with Note 25 "Operating expenses" to the consolidated financial statements of PJSC "RusHydro" prepared in accordance
with IFRS for the year 2017 and as of this date, less the cost of contributions to APF in the amount of 201 million rubles, recorded in the
article Salary, payments employees and taxes associated with salaries, contributions to APFs.
76
The decrease in expenses under the item "Services of third-party organizations" for the year 2017 is due to
the effective conduct of procurement procedures, support of the asset life-cycle management system, and the
implementation of measures to optimize the organizational structure and business processes.
The decrease in expenses under the item "Depreciation of fixed assets and intangible assets" by 11.9% is due
to the transfer of commissioning of facilities, the entries of which were planned in accordance with the
investment program included in the business plan (mainly Nizhne-Bureyskaya HPP). Also, this factor has an
effect on reducing expenses under the articles Taxes other than income tax, Third Party Services, Water
Consumption Expenditure and Expenses for Purchasing Other Materials.
The increase in expenses under the item "Fuel Acquisition" by 14.6% is provided by the RAO ES Subgroup
of the East due to the increase in electricity production (JSC "DGK"), heat supply from the collectors (JSC
"DGK"), the increase in fuel prices, including on coal in connection with the additional generation of
electricity from the stations of JSC "DGK" (a change in the structure of the loading of equipment).
The overall cost reduction was influenced by measures to optimize expenses and improve the efficiency of
the RusHydro Group's activities conducted by management.
Financial results
Profit and Loss Report of RusHydro Group, RUB mln.
Item
2017 planned
2017 actual
Current operating revenues
State subsidies
Other operating income
Current operating expenses
Fixed assets Impairment loss
Receivables impairment loss, net
Financial assets Impairment loss
Loans issued Impairment loss
Current operations income
Financial revenues / (expenses), net
Income related to associated companies and JV
Income before tax
380,312
16,103
0
-336,802
0
0
59,614
-8,990
3,315
53,940
-15,787
38,152
Variation
(planned/actual)
Absolute
-32,193
16,642
690
32,997
-24,000
-5,957
-11,822
-3,700
relative
-8.5%
103.3%
-
-9.8%
-
-
-19.8%
41.2%
348,119
32,745
690
-303,805
-24,000
-5,957
47,792
-12,690
417
-2,898
-87.4%
35,519
-13,068
22,451
-18,421
2,719
-34.2%
-17.2%
-15,701
-41.2%
-22.1%
-32,235
145,547
113,312
Managed semi-fixed costs, indexed by CPI 13
The analysis of the profit and loss statement shows that the actual profit of the RusHydro Group is below the
plan values, which is due to the fact that non-planned impairment losses of property, plant and equipment
were reflected in the amount of RUB 24,000 million (primarily in respect of Yakutskaya GRES-2 and
Yakutskenergo) and an impairment loss of receivables of RR 5,957 million (as a result of an analysis of
overdue accounts receivable and an estimation of the probability of its repayment).
Also, the decrease in profit was influenced by the recognition of a financial expense as a result of a change
in the fair value of a non-deliverable forward for shares. It should be noted that the approach to determining
the fair value of the forward contract is to predict the future value of the share at the end of the forward
contract. In this case, the calculation is made using the mathematical model "Monte Carlo", taking into
account the volatility of shares of PJSC "RusHydro" and current market quotes. In this connection, in the
event of a subsequent increase in the value of the Company's shares, the already reflected costs will be
restored.
In addition, it should be borne in mind that the implemented scheme for attracting financing is much more
effective than credit mechanisms. The forward rate is tied to the level of the CBR's key rate and will be
reduced by dividends paid in favor of VTB Bank. The effective forward rate (excluding the cost of selling
the stake in PJSC RusHydro) is 5.42%, and taking into account the sale of shares (with the current level of
13 Managed conditional-permanent expenses are expenses for which the Group influences and has an internal mechanism for their
management. Do not take into account the costs that are regulated by the electricity market, the legislation of the Russian
Federation and not subject to internal control mechanisms (costs for: purchased energy (capacity), infrastructure payments related
to the sale of electricity, water use, taxes, depreciation, insurance).
77
market quotes remaining), the effective forward rate will be negative (-11%). This means that the aggregate
payments on the instrument are less than the amount of funds raised (55 billion rubles).
Long-term borrowed funds as of December 31, 2017 amounted to 90,912 million rubles. Short-term
borrowed funds and short-term part of long-term borrowed funds amounted to 78,613 million rubles.
Based on the Regulation on the dividend policy approved by the resolution of the Board of Directors of the
Company (Minutes No. 195 of March 28, 2014) and the Resolution of the Government of the Russian
Federation No. 944-r of May 18, 2017, following the results of 2016, the dividends paid by JSC "RusHydro"
amounted to 50% the result of RusHydro Group, determined in the consolidated financial statements
prepared in accordance with IFRS, or 19,876 million rubles.
In 2017, the Company implemented the activities of the Cost Optimization Plan based on the results of an
external independent audit of the costs of PJSC RusHydro, taking into account the subsidiaries approved by
the decision of the Board of Directors of the Company, in 3 key areas with the greatest potential to reduce
costs:
1. Operating expenses: optimization of costs for maintenance of production personnel; optimization of unit
costs for maintenance and repair; optimization of unit costs for fuel; optimization of transport costs;
optimization and development of a centralized supply system. The economic effect of the initiatives was
5,304 million rubles.
2. Management model and operating costs: smooth increase of the manageability standards to the level of
the best practices in the Company; standardization of the number of AUP in the Company's branches to the
level of the best domestic practice; liquidation of representative offices of PJSC "DEK", JSC "DGK", JSC
"DRSK", PJSC "Yakutskenergo" and JSC "Chukotenergo" in Moscow; transfer of some of the functions of
the administrative and managerial staff of the branches to the level of PJSC "DEK", JSC "DGK", JSC
"DRSK", optimization of the functions of branches and executive offices of PJSC "DEK", JSC "DGK", JSC
"DRSK"; standardization of the number of AUP in production units of JSC "RAO ES of the East";
integration of the executive units of PJSC RusHydro and JSC RAO ES of the East, reduction of
management levels and improvement of manageability standards in JSC RAO ES of the East. The economic
effect from the implementation of initiatives amounted to 1382 million rubles.
3. Investment activity: reduction of costs for other TP & R facilities. In the course of the
implementation of the Production Program for Technical Upgrade and Reconstruction (hereinafter referred
to as the TPiR Program), an additional reduction in costs for the implementation of IT and SB projects in the
amount of RR 1,715 million was achieved.
At the same time, measures are implemented to postpone the replacement of hydraulic units in good
condition and reduce costs by optimizing the structure and costs of the contract. During the implementation
of the TPiR program, balancing of financing schedules of projects for the modernization of hydroelectric
unit equipment in 2017-2021.
POLICY MEASURES OF RUSHYDRO GROUP
Investment program of PJSC RusHydro
The approved LTDP reflects the financing of the Company's investment projects for the period 2016-2020
in the amount of 276 753.97 million rubles, of which in 2017 - 90 221.06 million rubles 14.
These parameters for 2017 include: the volume of financing for investment projects implemented by the
Company - in the amount of 57,891.64 million rubles 15; the volume of financing for investment projects
implemented by the CC - in the amount of 32,329.43 million rubles.
The financing of the program is reflected in the DTP in the amount of 140,133.8 million rubles, of which in
2017 - 26,254.46 million rubles.
By the decision of the Board of Directors of the Company, the draft of the Consolidated Investment Program
of the RusHydro Group for 2018-2022 has been taken into account, taking into account the adjustment for
14The draft investment program of JSC "RusHydro" for 2016-2020 includes the activities of the Company's Investment Program
for 2016-2020, sent to the Ministry of Energy of Russia on August 15, 2016 (letter 3649.NSH).
15 Volumes of financing are given in accordance with the Investment Program of PJSC "RusHydro" approved by Order of the
Ministry of Energy of Russia No. 1458 of December 30,.
78
Technical re-equipment and reconstruction: for the period 2016-2020 in the amount of
201716, that was included in the Consolidated Business Plan of the RusHydro Group for 2017-202217 and
was approved by the decision of the Board of Directors of the Company on June 21, 2017..
In accordance with this investment program, the specified amount of financing for the period 2016-2020
(taking into account the actual financing that was established in 2016) amounted to 277,986.16 million
rubles, of which for 2017 - 78,560.37 million rubles: including for investment projects implemented by the
Company amounted to 46,912.51 million rubles; for investment projects implemented by the CC - 31,647.86
million rubles.
The adjusted amount of financing for the program of technical and financial support for the period 2016-
2020 (taking into account actual financing that was established in 2016) amounted to 130,292.27 million
rubles, of which 2014 for the year 2014 was 24,499.20 million rubles.
By the decision of the Board of Directors of the Company within the framework of the next adjustment of
the business plan, the adjustment of the Investment Program of JSCo RusHydro for 201718 was approved,
according to which the specified amount of financing of PJSC RusHydro, including CC for 2017, is
66,695.81 million rubles, including in the part of PJSC "RusHydro" - 45 664.18 million rubles.
By the decision of the Board of Directors of the Company on December 26, 2017, the business plan of PJSC
"RusHydro" for 2018-202219 was approved, according to which the parameters of the Investment Program
2018-2020
Taking into account the above, the adjusted volume of the Investment Program of PJSC "RusHydro" for
2016-2020 is 266 411.15 million rubles, including:
1.
123,201.15 million rubles, of which 2017 for the year is 24,499.20 million rubles.
2.
million rubles, of which 2017 for the year - 150 million rubles.
3.
rubles, of which 2017 for 207.77 million rubles.
4.
which 2017 for the year -20,929.64 million rubles:
4.1
of which 201.02 - 19 022.50 million rubles.
4.2
which 2017 for 1 907.14 million rubles.
5.
the year 984.21 million rubles
It should be noted that in accordance with the changes introduced by the Resolution of the Government of
the Russian Federation No. 132 of 16.02.2015 "On Amending Certain Acts of the Government of the
Russian Federation on Approval of Investment Programs of Electric Power Subjects and Control over their
Implementation" and taking into account the decisions taken at the meeting in the Ministry of Energy of
Russia (Minutes No. 09-563-pr of 03.04.2015), the parameters of the Investment Program approved by the
Ministry of Energy of Russia do not include indicators for projects implemented by the CC20.
In accordance with the instructions of the Chairman of the Government of the Russian Federation DA.
Medvedev from 20.06.2017 DM-P13-3944p within the adjustment of the investment program of PJSC
Renewable energy projects: for the period 2016-2020 in the amount of 14,767.72 million rubles, of
The objects under construction: for the period 2016 - 2020 in the amount of 70 725.75 million rubles,
Comprehensive recovery of SSHPP: for the period 2016-2020 in the amount of 1,022.11
Priority projects in the Far East: for the period 2016-2020 in the amount of 51,541.87 million
New construction: for the period 2016 - 2020 in the amount of 85,493.47 million rubles, of
Other: for the period 2016-2020 in the amount of 5,152.55 million rubles, of which 2017 for
16 Protocol of 24.04.2017 No. 249.
17 Minutes No. 254 of June 22, 2017.
18 Minutes of 13.10.2017 No. 258.
19 Minutes dated 28.12.2017 No. 264.
20 JSC "Ust-Srednekanskaya HPP them. A.F. Dyakova, PJSC Boguchanskaya HPP, JSC Sulaksky HydroCascade, JSC
Zaramagskiye HPPs, JSC Zagorskaya PSPP-2, JSC Nizhne-Bureyskaya HPP, JSC Leningradskaya PSPP, JSC Small HPPs of
Kabardino-Balkaria ", LLC" Small HPP of Stavropol and Karachaevo-Cherkessia ","Verkhne-Balkarskaya MHPP".
79
"RusHydro"21 provides for postponing the completion date of the construction and commissioning of the
CHP capacity in the city of Sovetskaya Gavan for 2019.
The commissioning of additional capacity for 2017 amounted to 237.24 MW and 469.60 Gcal / h, including:
Yakutsk GRES-2 - 193.48 MW and 469.60 Gcal / h, as part of the implementation of TpiR projects - 42.5
MW and MHPP B. Zelenchuk (KChR) - 1.26 MW. As of 01.01.2018, 100% of the planned capacity for
2017 was introduced.
In the reporting year, in accordance with the investment program of PJSC "RusHydro", 97.25% of the
planned volume was financed, taking into account investment projects implemented by the CC.
The program of retrofitting and upgrading for 2017 was implemented in terms of financing by 96.79%, in
terms of development by 99.28%.
Funding stream
Retrofitting and upgrading
Complex recovery SSHHPP
Priority projects in the Far East
Projects under construction
Other
Total
Investment structure in 2017
Financing plan for
2017, billion rubles
Real financing for
2017, billion rubles
Execution,
%
24,499.,20
150.,00
20,132.,76
20,929.,64
984.,21
66,695.,81
23,713.18
104.,49
19,853.71
20,513.,66
,676.,88
96.79%
69.66%
98.61%
98.01%
68.77%
64,861.,92
97.25%
The reasons for the deviation from planned values in 2017 are as follows:
1. Retrofitting and upgrading: increase in the deadlines for performance of work and failure to fulfill contractual
obligations by contracting organizations for projects, long-term procurement procedures for choosing contractors,
long-term coordination and adjustment of project documentation, lack of working documentation for the fault of the
general designer, cancellation of procurement procedures on projects, postponement of work performance.
2. Complex restoration of the Sayano-Shushenskaya HPP: the reason for the deviation is caused by the existing
savings based on the completion of the construction.
3. Other: The technical and economic assessment of the completion of the construction of the Cheboksary HPP at the
level of the NPP is 63 meters - deviation from the approved volume is due to the postponement of the design work for
the 1st quarter of 2018 and amounted to (-) 110.73 million rubles.
Investment program of «RAO ES of the East» Holding
The LTDP for 2016-2020 reflects the financing of the investment program activities of the companies that are part of
the RAO ES Holding East holding in the amount of 123,316.67 million rubles22 (including 34,619.06 million rubles in
2017), including in joint-stock companies "RAO ES of the East" - 23 522.88 million rubles (of which in 2017 - 11
437.7 million rubles).
The LTDP reflects the financing of the retrofitting and upgrading program for the period 2016-2020 23 in the amount
of 47,414.2 million rubles, of which in 2017 - 9,548.7 million rubles.
The Board of Directors of the Company, as part of the RusHydro Group Consolidated Business Plan, reviewed
RusHydro's Consolidated Investment Program for 2017-202224 according to which the specified amount of funding
for the investment programs of the companies of RAO ES East Holding for the period 2016-2020, taking into account
the established fact of financing in 2016, is 135,635.59 million rubles25 (of which in 2017 - 39,607.76 million rubles),
including JSC "RAO ES of the East" - 30,251.41 million rubles (of which in 2017 - 16,198 , 95 million rubles).
21 Correction of the Investment Program of JSCo RusHydro for 2017 is approved by Order No. 34 @ of the Ministry of Energy of
Russia of December 29, 2017.
22 Data is presented without taking into account non-core CC whose investment programs are approved in accordance with the procedure
set forth in Government Decree No. 977 of 01.12.2009. The total amount of financing in accordance with the draft investment program
for the period 2016-2020, including non-core CC, is 123 955 , 86 million rubles (of which in 2017 - 34 854.96 million rubles).
23 The program of TP & R Holding of RAO ES of the East was considered within the framework of the project of the Investment
Program of RAO ES East Holding Company approved by the decision of the Company's Management Board dated March 24, 2016
(Minutes No. 968pr).
24 Minutes of June 22, 2017 No. 254.
25 Data are given only for energy companies whose investment programs are approved in the manner prescribed by RF Government
Decree No. 977 of 01.12.2009 and included in the approved DDA. The total amount of financing in accordance with the investment
80
The adjusted volume of financing of the program of technical and technical GRESs for the period 2016-202026
amounted to 46,254.22 million rubles, of which 2017 for 8,619.91 million rubles.
In the second half of 2017, the Boards of Directors of the companies of RAO ES East Holding approved business
plans for the period 2018-202227 and an adjustment for 201728, according to which the specified amount of financing
of investment programs for the period 2016-2020 is 167,376.08 million rubles29 (of which in 2017 - 30 887.69 million
rubles), including JSC "RAO ES of the East" - 28,576.90 million rubles (of which in 2017 - 7,697.56 million rubles).
The specified amount of financing of the program of technical and technical GRESs for the period 2016-2020
amounted to 54,603.97 million rubles, of which 2014 - 9,412.68 million rubles.
The actual amount of financing of the investment projects of the RAO ES East Holding in 2017 in accordance with the
Investment Programs of the companies of the RAO ES East Holding Company amounted to 25,780.0 million rubles or
83.46% of the annual plan, including the investment program of JSC RAO ES Of the East - 7,571.74 million rubles or
98.37% of the annual plan.
Financing of the program of TPiR Holding of RAO ES of the East in 2017 actually amounts to 8,499.82 million
rubles. The program of TPiR for 2017 was implemented in terms of financing by 90.30%.
The program of TPiR Holding of RAO ES of the East for 2017 in terms of development was fulfilled by 86.08%: with
the plan 7,114.72 million rubles, the fact amounted to 6,124.58 million rubles.
Below is the structure of investments of RAO ES Holding companies:
Funding stream
Retrofitting and upgrading
Complex recovery SSHHPP
Priority projects in the Far East
Projects under construction
Other
Investment structure in 2017
Financing plan for
2017, billion rubles
Real financing for
2017, billion rubles
Execution, %
9,412.68
9,279.75
9,186.12
3,009.13
30,887.69
8,499.82
8,984.67
6,520.17
1,775.34
25,780.0
90.30%
96.82%
70.98%
59.00%
83.46%
For the year 2017, RAO ES Holding generation facilities were commissioned for generation: 3.04 MW and
5.74 Gcal / h, for network facilities: 1 393 669 km, 455.79 MVA 30.
The reasons for the deviation from planned values in 2017 are as follows:
1.
The main deviation is formed by the "Technological connection", including the objects of
TOSER PJSC "Kamchatskenergo", JSC DRSK (-) 1 518.18 million rubles .:" Tourist cluster "," Zelenovskie
ozerki "," Mikhailovsky " "Big Stone". The reasons for rejection are land issues, changes in project
documentation, the problem of timeliness in resolving the issues by the Applicant, the Development
Corporation of the Far East, and the residents' lack of readiness for power consumption.
program of the RAO ES East Holding for the period 2016-2020, taking into account actual financing, including non-core CC of JSC
RAO ES Of the East, is 138,553.62 million rubles (of which in 2017 - 40,466, 91 million rubles).
26 The CC and CC development programs for core CC of the RAO ES Holding East Holding in accordance with the IP were considered
as part of the business plans of the CC and approved by decisions of the Boards of Directors.
27 Business plans for 2018-2022 were approved by the Boards of CC Directors: PJSC Kamchatskenergo (Minutes No. 13 dated
09.08.2018), PJSC Magadanenergo (Minutes No. 2-18 of 20.02.2018), Teploenregoservis JSC (Minutes No. 09.02 .2018 No. 2),
Chukotenergo JSC (Minutes No. 3-18 of 21.02.2018), JSC "YUESK" (Minutes No. 15 dated 22.02.2018), PJSC "Yakutskenergo"
(Minutes No. 3 dated 20.02.2018), JSC "DRSK" (Minutes No. 4 dated 02.03.2018), PJSC "Sakhalinenergo" (Minutes No. 10 dated
February 22, 2018).
28Adjustments to business plans for 2017 were approved by the Boards of CC Directors: PJSC "Kamchatskenergo" (Minutes No.
5 of 14.08.2017), PJSC "Mobile Energy" (Minutes No. 8 of August 14, 2017); PJSC "Magadanenergo" (Minutes No. 16-17 of
August 17, 2017); PJSC "Yakutskenergo" (Minutes No. 18 of 18.08.2017), JSC "Sakhaenergo" (Minutes No. 11 of 18.08.2017),
Teploenergoservis JSC (Minutes No. 10 dated 18.08.2017), Chukotenergo JSC (Minutes of 18.08 .2017 No. 11-17), JSC
"YUESK" (Minutes No. 3 of August 18, 2017), PJSC "Sakhalinenergo" (protocol No. 2 of August 22, 2017), JSC "DRSK"
(Minutes No. 11 of August 22, 2017), JSC "DGK" (Minutes No. 4 of August 22, 2017).
29 Data are given only for energy companies whose investment programs are approved in the manner prescribed by RF
Government Decree No. 977 of 01.12.2009 and included in the approved DDA. The total amount of financing in accordance with
the investment program of the RAO ES East Holding for the period 2016-2020, taking into account actual financing, including
non-core CC of JSC RAO ES Of the East, amounts to 170,363.40 million rubles (of which in 2017 - 31,593, 94 million rubles).
30 Megavolt-ampere of transformer power.
81
2.
Reduction in the physical volumes of construction for connection of applicants with power
categories up to 15 kW, from 15 to 150 kW in accordance with the applications for technological connection
(-) 366.54 million rubles. (JSC DRSK, PJSC Yakutskenergo), as well as connection to heating networks, in
connection with the dissolution of previously concluded contracts for the provision of technological
connection services (-) 155.10 million rubles.
3.
Violation of obligations on the part of design and contracting organizations for a number of
projects of the Company (-) 1 134.6 million rubles. (JSC DRSK, PJSC Yakutskenergo, PJSC
Magadanenergo, JSC DGK).
4.
"DGK").
5.
purchase agreements were not executed, barter (-) 97.70 million rubles. (PJSC "Yakutskenergo").
6.
In connection with the change in the source of financing for the project "Completion of the
second phase of the project" Expansion of the 220 kV Maya substation and construction of the power lines
of the Megino-Kangalas District of the Republic of Sakha (Yakutia) for connection to the electricity grids of
PJSC "FGC UES" electrical installations of PJSC Yakutskenergo of the Republic of Sakha (Yakutia) - the
purchase of materials in the planned volume was not financed: deviation (-) 104.89 million rubles.
Savings based on the results of procurement procedures (-) 371.9 million rubles. (JSC
Due to the unavailability of third-party participants, transactions with assets under sales and
Production program of PJSC "RusHydro"
As a result of the implementation of the Production Program in 2017, the additional capacity increase
amounted to 42.5 MW, including due to the increase in the capacity of the Volga HPP (10.5 MW), the
Zhigulevskaya HPP (21.0 MW), the Saratov HPP (6.0 MW) , Novosibirsk HPP (5.0 MW).
Main results for 2017:
After modernization, 3 hydraulic units were put into operation (Bureyskaya HPP - 1 g / a,
Cheboksarskaya HPP - 2 g / a).
7 hydroturbines have been replaced (Volzhskaya HPP - 2 GT, Zhigulevskaya HPP - 2 GT,
Votkinskaya HPP, Novosibirsk HPP, Saratov HPP) and 3 sets of mechanical parts of generators
(Volzhskaya HPP - 2 GG, Votkinskaya HPP).
The approved DDA reflects:
- The cost of the production program of repairs 31 for the period 2016-2020 in the amount of 15,896.3
million rubles, of which in 2017 - 3 033.6 million rubles.
- The volume of costs for the Production Maintenance Program (TOT) for the period 2016-2020 in the
amount of 5,909.5 million rubles, of which in 2017 - 1,114.8 million rubles.
- The volume of costs for the Production Research Program (R & D) for the period 2016-2020 in the amount
of 3,761.3 million rubles, of which in 2017 - 758.3 million rubles.
In 2017, changes were made in the planned volumes by program:
- Repair program32 for the period 2016-2020, the specified volume of expenses is 15,810.4 million rubles, of
which 2017 for 2 919.8 million rubles.
- The maintenance program for the period 2016-2020, the specified amount of costs is 5,802.2 million
rubles, of which 2014 - 1 054.7 million rubles.
31 Production programs for repairs, maintenance and research for 2016-2021. approved by the decision of the Company's
Management Board (Minutes No. 969pr of 30.03.2016). The decision of the Company's Management Board is based not on the
volume of financing, but on the amount of expenses. Recalculation of costs in the forecast prices was carried out in accordance
with the target version of the indices of the Single Scenario Conditions of PJSC "RusHydro" approved by the Company's order
No. 92 of February 8, 2016.
32 Production programs for repairs, maintenance and research for 2017-2022. approved by the decision of the Company's
Management Board (Minutes No. 1034pr of March 31, 2017). Recalculation of costs in the forecast prices was carried out in
accordance with the target version of the indices of the Unified Scenario Conditions of PJSC RusHydro, approved by the
Company's order of January 16, 2017 No. 9.
82
- The program of research works for the period 2016-2020, the specified volume of costs is 3 470.4 million
rubles, of which 2017 for 698.8 million rubles.
Program execution 33
Financing plan for 2017,
billion rubles
Real financing for 2017,
billion rubles
Execution, %
Implementation of program in 2017
Repair program
Maintenance program
Research program
2,919.8
1,054.7
698.8
2,736.8
994.7
608.3
94 %
94 %
87 %
The repair program for PJSC RusHydro for 2017 was implemented in terms of development by 94%: with a
plan of 2,919.8 million rubles, the fact is 2,736.8 million rubles.
The reasons for the deviation from the planned values in 2017 are as follows:
1. Optimization of technical solutions for the amount of 52.6 million rubles.
2. Violation of the terms of performance of work by the Counterparty to the amount of 51.2 million rubles.
3. Saving on the fact of holding trades and performance of works under concluded contracts in the amount
of 43.2 million rubles.
4. Unsuccessful procurement procedures due to the lack of participants who met the procurement
requirements, amounting to 11.7 million rubles.
5. Adjustment of the calendar schedule with the transfer of work for future periods in the amount of 9.4
million rubles.
The maintenance program for basic, auxiliary equipment and systems of hydroelectric power plants for 2017
was fulfilled in the part of development by 94%: with a plan of 1,054.7 million rubles, the fact is 994.7
million rubles.
The reasons for the deviation from the planned values in 2017 are as follows:
1. Saving on the fact of holding trades and performance of works under contracts to the amount of 47.2
million rubles.
2. Adjustment of the calendar schedule with the transfer of work for future periods in the amount of 6.5
million rubles.
The R & D program for 2017 was implemented in terms of development by 87%: under the plan 698.8
million rubles, the fact is 608.3 million rubles.
The reasons for the deviation from the planned values in 2017 are as follows:
1. Saving on the fact of conducting tenders and performance of works under concluded contracts for the
amount of 64.3 million rubles.
2. Adjustment of the calendar schedule with the transfer of work for future periods in the amount of 40.2
million rubles.
Taking into account the fact that the main objects of generation of RusHydro are hydroelectric power
stations that convert water energy into electric energy, the account and use of water availability forecasts
and the influence of climate change on the hydrometeorological situation in river basins in the current work
is an inalienable requirement.
In accordance with the business plans for 2017 34 - PJSC RusHydro35 and CC - the planned amount of
electricity generation to the generating facilities of PJSC RusHydro and the CC is set at 104.43 billion
kWh36. Based on the results of 2017, the actual generation of electricity to the generating facilities of PJSC
"RusHydro", taking into account the CC, is 107.46 billion kWh37.
33 Data on the implementation of the program of TURP for 2016 - 2021. are presented in the section "Investment program of
PJSC" RusHydro ".
34 The predicted values for the generation of electrical energy are calculated on the basis of the average annual production values,
taking into account the evolving hydrological situation, water reserves in the HPP reservoirs, the draft annual maintenance plan
and the available water availability forecast.
35 Approved by the decision of the Board of Directors of the Company (Minutes No. 258 of October 13, 2017).
36 Including the output plan for the PJSC "Boguchanskaya HPP" is 14.53 billion kWh (owned by PJSC RusHydro and UC
RUSAL).
37 The data are presented as of 01.01.2018, taking into account the output: PJSC Boguchanskaya HPP (owned by PJSC RusHydro
and UC RUSAL, the actual output is 13.29 billion kWh), JSC Geoterm, PJSC Kamchatka Gas and Energy Complex as part of
83
Reconstruction of heating networks for the purpose of preparation for the heating season.
The reconstruction of substations and transmission lines to ensure reliable power supply to
Modernization of the turbine unit st. No. 2 of Vladiof the East CHPP-2.
Gasified by the seventh boiler plant, st. No. 15 of Khabarovsk CHPP-1 of JSC "DGK".
Works have been performed to modernize gas turbine engines of the type "DC 59" in the branches
Exceeding the planned values is due to the rational use of hydro resources and effective interaction of
RusHydro with JSC "SO UES" and Rosvodresursami, which allowed minimizing idle discharges of water
and ensuring the operation of HPP equipment with optimal pressures and high efficiency.
Production program of RAO ES East Holding Company
The main results of the implementation of the Production Program of the Holding of RAO ES of the East for
2017 under the program of retrofitting and upgrading:
Reconstruction of seven boiler units of JSC "DGK": No. 9 and No. 11 of Vladiof the Eastskaya
CHPP-2, No. 9 and No. 13 of Artemovskaya CHPP, No. 4 of Partizanskaya GRES, No. 5 and No. 7 of
Komsomolskaya CHPP-2.
of PES "Kazym" and PES "Urengoy".
consumers and the accession of new applicants.
According to the repair program:
In the reporting year, major and medium repairs were performed: turbine units of 28 units. (with a plan of 27
units); Boiler units 35 units. (with a plan of 35 units); generators 22 units. (with a plan of 22 units);
transformers 51 units. (with a plan of 47 units), including:
3, Station No. 1 of Komsomolskaya CHPP-3, Station No. 2 of Neryungrinskaya GRES of JSC "DGK";
overhaul of turbine units: st. Nos. 2,6 of Khabarovsk cogeneration station-1, st. No. 2 of Vladiof
the Eastskaya CHPP-2, station No. 2 of Partizanskaya GRES, station No. 1 of Blagoveshchenskaya CHPP of
JSC "DGK"; Station No. 2 of Kamchatka CHPP-2 of PJSC "Kamchatskenergo"; Art. No. 8 of Magadan
Thermal Power Plant, Art. No. 5 of Arcagalinskaya GRES of PJSC "Magadanenergo"; Art. No. 2 of the
Yuzhno-Sakhalinskaya CHP Plant, Art. No. 5 of Sakhalinskaya GRES of PJSC "Sakhalinenergo"; Station
No. 5 of Chaunskaya CHPP of Chukotenergo;
overhaul of boiler units: st. No. 4 of Blagoveshchenskaya Thermal Power Plant, Station No. 4 of
Partizanskaya GRES, Station No. 11 of Artemovskaya CHP Plant, Station No. 3 of Nikolaevskaya CHPP of
JSC "DGK"; Art. № 6 of Magadanskaya TPP of PJSC "Magadanenergo"; Station No. 4.1 of Yuzhno-
Sakhalinskaya CHP Plant, Station No. 2 of Sakhalinskaya GRES PJSC "Sakhalinenergo"; Station No. 3 of
Chaunskaya CHP Plant, Station No. 3 of Egvekinotskaya GRES of Chukotenergo JSC.
In 2017, 4 086 km of electric and 57 km of heating networks were repaired.
The LTDP reflects the cost of the production program of repairs 38 for the period 2016-2020 in the amount
of 63,196.84 million rubles, of which in 2017 - 12,361.14 million rubles.
In 2017, changes were made to the planned volumes under the Repair Program for the period 2016-2020, the
specified volume of expenses amounted to 64,207.89 million rubles, of which 2018 for the year was
13,030.41 million rubles39.
overhaul of power units: st. No. 8 of Primorskaya GRES, art. No. 1 of Khabarovsk CHP Plant No.
HPP-2), PJSC "Kolymaenergo", JSC "OP Verkhne-Mutnovskaya GeoPP", JSC "Pauzhetskaya GeoPP", ZAO "IEC". Data on
RAO ES Of the East Holding are presented in a separate section.
38 Reviewed and approved in accordance with the established procedure by the management bodies of PO RAO ES of the East
JSC.
39 The production program of repairs was reviewed and approved in accordance with the established procedure by the
management bodies of the CC of JSC "RAO ES of the East", including the production programs for repairs in 2017 agreed by the
minutes of meetings to protect the production CC programs for 2017: PJSC "Kamchatskenergo" (Minutes dated August 14, 2017
No. 5), PJSC "Mobile Energy" (Minutes No. 8 of August 14, 2017); PJSC "Magadanenergo" (Minutes No. 16-17 of August 17,
2017); PJSC "Yakutskenergo" (Minutes No. 18 of 18.08.2017), JSC "Sakhaenergo" (Minutes No. 11 of 18.08.2017),
Teploenergoservis JSC (Minutes No. 10 dated 18.08.2017), Chukotenergo JSC (Minutes of 18.08 .2017 No. 11-17), JSC
84
Program fulfillment in 2017
Execution targets 40
Target for 2017,
million rubles
Actual for 2016,
million rubles.
Target
execution, %
Repair program
13,030.41
12,693.39
97.4%
The repair program of the RAO ES of the East for 2017 in terms of development is 97.4%.
In accordance with the approved business plans for 2017, the planned generation of electricity by the
generating facilities of the RAO ES of the East Holding Company is set at 32.1 billion kWh, including 8.0
billion kWh over isolated power systems. In fact, generating assets of the RAO ES Holding East in 2017
generated electricity in the amount of 32.8 billion kWh, including 8.1 billion kWh for isolated power
systems.
In accordance with the approved business plans for 2017, the planned heat generation by the generating
facilities of the RAO ES of the East Holding Company is set at 31.0 million Gcal, including 9.3 million Gcal
for isolated power systems. In fact, the generating facilities of the RAO ES of the East Holding in 2017
released thermal energy in the amount of 29.9 million Gcal, including 8.9 million Gcal through isolated
power systems. The deviation from planned targets in 2017 is due to higher outdoor temperatures, as well as
a reduction in the heating season in a number of large settlements of the Far Eastern Federal District.
Activities in the field of implementation of innovative projects in the amount of 423.2 million
Innovative Development Program of RusHydro Group
The approved DDA reflects the financing of the activities of the Innovative Development Program of the
RusHydro Group for the period 2016-2020 in the amount of 11,390.0 million rubles (in forecast prices
including VAT), including: for PJSC RusHydro - 2,655.9 million rubles and for Holding RAO ES of the
East - 8 734.1 million rubles, of which in 2017 - 1 981.3 million rubles, including for PJSC RusHydro -
407.1 million rubles and for Holding RAO ES of the East - 1,574, 2 million rubles.
The specified volumes are included in the LTDP in accordance with the Innovative Development Program
of the RusHydro Group for the period 2016-2020 with a prospect up to 2025 (hereinafter referred to as IDP
RusHydro) approved by the resolution of the Board of Directors of the Company of November 23, 2016
(Minutes No. 244).
The medium-term plan for the implementation of the activities of the innovative development program of
PJSC "RusHydro" for 2017-2019, approved by the decision of the Board of Directors of the Company of
June 22, 2017 (Minutes No. 254), set the volume of financing activities for 2017 - 742.5 million rubles,
areas:
rubles, including R & D in the amount of 273.2 million rubles.
well as interaction with external organizations in the amount of 319.3 million rubles.
The actual amount of funding for the medium-term plan of PJSC RusHydro RusHydro in 2017 amounted to
586.7 million rubles, or 79% of the annual plan, including in the directions:
Activities in the implementation of innovative projects in the amount of 332.3 million rubles, or
78.5% of the annual plan, including R & D in the amount of 235.5 million rubles or 86.2% of the annual
plan.
Activities in the field of innovation management and innovation infrastructure development, as
well as interaction with outside organizations in the amount of 254.4 million rubles or 79.7% of the annual
plan.
The reasons for the deviations from planned values in 2017 are as follows:
contractors;
Activities in the field of innovation management and innovation infrastructure development, as
transfer of delivery of stages of a number of works for 2018 due to violation of work schedules by
"YUESK" (Minutes No. 3 of August 18, 2017); PJSC "Sakhalinenergo" (Minutes No. 2 of August 22, 2017), JSC "DRSK"
(Minutes No. 11 of August 22, 2017), JSC "DGK" (Minutes No. 4 of August 22, 2017).
40 The data on the implementation of the TPiR program is in the section "Investment Program of RAO ES Holding of the East".
85
Adjustment of the volume of financing following the results of procurement procedures.
removal from R & D: "Development of technology for the use of orthogonal turbines in
hydropower. Optimization of the design of a typical power unit with the use of innovative materials "and"
Investigation of the possibility of development of power in the Kamchatka Krai based on local energy
resources "due to the adjustment of the investment program;
The most significant projects implemented by PJSC RusHydro during 2017:
Development of a hardware and software complex for monitoring and forecasting the reliability of
hydraulic structures of hydroelectric power plants (HPSPs) in complex engineering and geological
conditions. During the year 2017, the second stage of the work was completed - engineering surveys and the
project of additional placement of a complex of measuring equipment.
Research of new technologies on repair and restoration of HS elements with increasing service
life and reliability, development of implementation manual. During 2017, the development of TK, the
preparation of tender documentation, the conclusion of a contract, an advance payment was carried out.
Comprehensive assessment of the actual strength of hydraulic turbine components operated by
HPP by methods of numerical analysis of stress-strain state. During the year 2017, the second stage of the
work was carried out - a methodology was developed for determining the actual strength and residual life of
the blades of hydro turbines at the Volzhsko-Kama cascade, as well as recommendations for the operation
and design of high-pressure HPPs / PSPs.
Activities in the field of innovative projects in the amount of 1 638.5 million rubles, including R
Activities in the field of innovation management and innovation infrastructure development, as
Innovative Development Program of RAO ES East Holding Company
In accordance with the Program for Innovative Development of the Holding RAO ES of the East for 2016-
2020 with a perspective up to 2025 (hereinafter referred to as IDP RAO ES of the East) approved by the
decision of the Board of Directors of RAO ES Of the East JSC dated 01.07.2016 (Minutes No. 145),
financing activities for the period 2016 - 2020 is 8,734.1 million rubles (in forecast prices with VAT), of
which in 2017 - 1,574.2 million rubles.
The medium-term plan for the implementation of the RID ESE East activities for 2017-2019, approved by
the decision of the Board of Directors of PJSC RusHydro of June 22, 2017 (Minutes No. 254), established a
plan to finance the activities of the RAO ES Of the East Project for 2017 in the amount of 1,654.7 million
rubles, including in the directions:
& D in the amount of 204.3 million rubles.
well as interaction with outside organizations in the amount of 16.2 million rubles.
The actual amount of funding for the activities of the IDP RAO ES of the East in 2017 amounted to 1 602.7
million rubles, or 96.9% of the plan, including:
Activities in the area of implementation of innovative projects in the amount of 1 567.1 million
rubles or 95.6% of the annual plan, including R & D - in the amount of 166.9 million rubles or 81.7% of the
annual plan.
Activities in the field of innovation management and innovation infrastructure development, as
well as interaction with outside organizations in the amount of 35.6 million rubles, which is 2 times higher
than the annual plan.
The deviation from the planned indicators for financing R & D in 2017 is due to the cancellation of two R &
D projects of JSC "RAO ES Of the East" in connection with the adjustment of the investment program.
The most significant projects implemented by the Holding within the framework of the IDP RAO ES of the
East during 2017:
technologies for fuel preparation and supply (power boilers).
Reconstruction of Khabarovsk CHPP-1 for use as natural gas fuel with the use of innovative
86
Research and development of technological solutions to reduce erosion wear and improve the
reliability of working blades of the last stages of modern steam turbines due to the formation of
multifunctional nanocomposite coatings.
EFFECTIVENESS OF FAR EASTERN ASSETS ACTIVITIES
Tariff regulation
In 2017, the introduction of a mechanism for reducing tariffs.
As part of the introduction of the mechanism for bringing tariffs to a basic level, the State Duma of the
Russian Federation adopted federal laws No. 508-FL of December 28, 2016 "On Amendments to the
Federal Law" On Electric Power Industry "and on June 30, 2017 No. 129-FL" On Amending the Federal the
law "On Electricity", which introduced an additional premium to the price for capacity in the I and II price
zones, due to which tariffs in the Far East were reduced to the base level determined by the Government of
the Russian Federation, and a scheme for transferring funds to the sub- OBJECTS Far Eastern Federal
District (hereinafter referred to as FED).
Decree of the Government of the Russian Federation of 28.07.2017 No. 895 "On the achievement of basic
levels of prices (tariffs) for electricity (capacity) in the Far Eastern Federal District" approved:
Rules for the determination and application of a surcharge to the price for capacity supplied in
wholesale market price zones by wholesale market actors - electricity (capacity) producers, in order to
achieve the base levels of electricity prices (tariffs) planned for the next period in the Far Eastern Federal
District (power);
Rules for bringing prices (tariffs) for electricity (capacity) in the territories of the Far Eastern
Federal District to the planned for the next period regulation of basic levels of prices (tariffs) for electricity
(capacity);
Rules for the purposeful use of funds received from the application of a surcharge to the price
for capacity supplied in the price zones of the wholesale market by wholesale market actors - electricity
(capacity) producers, to achieve the base levels of prices (tariffs) planned for the next period in the Far
Eastern Federal District, for electric power (power), control over the targeted use of such funds, transfer of
free-of-charge targeted contributions to the budgets of the subjects of the Russian Federation EDERATION
members of the Far Eastern Federal District, an agreement (contract) for the donation earmarked
contributions.
Decree of the Russian Federation from 7.28.2017 number 1614 p PJSC "RusHydro" specified beneficiary
premium to the price of power supplied at the price zones of the wholesale market, is installed in order to
reach the territories of the Far Eastern federal district planned for the next period of regulation of prices
(tariffs baselines ) for electric energy (power).
Decree of the Russian Federation from 7.28.2017 number 1615-p on 2017 set the base level of prices
(tariffs) for electric energy (power) to the Russian Federation, members of the Far Eastern Federal District,
in the amount of 4 rubles per kilowatt-hour (excluding value added tax). Also approved by the size of assets
(23 995 million rubles.), Taken into account when determining the markup on the power supplied in the
price zones of the wholesale market of the wholesale market - electricity producers (capacity) installed in
order to achieve in the subjects of the Far Eastern Federal District of base price levels (tariffs) for electric
energy (power) and the formula for calculating the above premium to the price for capacity is defined.
By the Federal Government on 11/15/2017 number 2527-p 2018 set the base level of prices (tariffs) for
electric energy (power) to the Russian Federation, members of the Far Eastern Federal District, in the
amount of 4.3 rubles per kilowatt-hour (without value added tax). Also, the size of the funds was approved
(35,032 million rubles, growth by 1467 by 2017), taken into account when determining the surcharge to the
price for capacity supplied in wholesale market price zones by the wholesale market participants - electricity
(capacity) producers established in order to achieve in the subjects of the Far Eastern Federal District basic
levels of prices (tariffs) for electricity (capacity), and a formula for calculating the above premium to the
price of capacity.
In 2017, work was carried out to introduce long-term tariff regulation. As part of the decisions of the
meeting held on November 14, 2017 by the President of the Russian Federation V.V. Putin, as well as taking
87
into account the instructions of the joint meeting of the Deputy Prime Minister of the Russian Federation
A.V. Dvorkovich and Yu.P. Trutnev on 09.19.2017 (Minutes № AD-P9-96pr), worked out the options and
implications of the Far Eastern Federal District mechanisms of investment (ROI) in the construction and
modernization of power facilities, and in the Ministry of Energy of Russia sent a letter of 24.11.2017 №
6843 . NS with relevant proposals.
At present, PJSC RusHydro participates in the work on the formation of a technical task on the topic
"Evaluation of the cost of measures for the reconstruction of thermal power plants in Russia", which should
form the basis for the development of a new version of the DPM mechanism, including for facilities in the
Far East. The Association "NP Market Council", the Ministry of Energy and the Association "Council of
Energy Producers" sent comments on the text of the terms of reference.
Completion of work on preparation and submission to the federal executive bodies of draft normative legal
acts ensuring the introduction of long-term methods is planned for 2018.
Accounts receivable management
Accounts receivable from consumers for electricity to the CC on the territory of the Far Eastern Federal
District41 as of 31.12.2017 - 15 306.6 million rubles 42 (the growth of the debt of the reporting period
amounted to 1 489.8 million rubles).
The main growth occurred in the following groups: for enterprises financed from the federal budget -
due to non-payment of the enterprises of the FGBU "CZKU"43, JSC "SU HOUSING"44, subordinated to the
Ministry of Defense of the Russian Federation; population; on management companies and HOAs; on
network organizations that purchase electricity in order to compensate for losses.
The most troubled debtors are OJSC Amurmetal (Khabarovsk Territory) - bankruptcy, Sakhalinugol-
6 LLC (Sakhalin Region), Dalnegorsky GOK (Primorsky Krai) - bankruptcy, Primteploenergo (Primorsky
Krai).
The main share in the structure of receivables is occupied by consumer groups: the population is
25.2%, utilities 22.0%, management companies and HOAs 10.7%45 – OPP 10.3%, industry 8.9%. The share
of these groups makes up 77.1% of the total amount of accounts receivable.
The accounts receivable of consumers for thermal energy before the CC on the territory of the Far
Eastern Federal District as of December 31, 2017 - 17 399.7 million rubles46 (the growth of the debt of the
reporting period amounted to 1,450.8 million rubles).
The main growth occurred in groups: the population; for enterprises financed from the federal budget
- due to non-payment of the FGBU "CZKKU" enterprise, subordinated to the Ministry of Defense of Russia;
on management companies and HOAs. The main share in the structure of accounts receivable - 76.8% of
total debt - is occupied by consumer groups: the population, management companies and HOAs.
By results of 2017 the main reasons for the formation of accounts receivable are:
Excessive list of "unconnected" consumers for electricity (up to 57% of consumers that have
receivables). Enterprises and organizations of the federal budget - the Ministry of Defense of Russia,
EMERCOM of Russia, UFSIN; management companies, HOAs, companies that have emergency
reservation; non-excludable by decision of the court initiated by the actions of the prosecutor's office -
wholesale enterprises resellers of electricity and heat, utilities and utilities (organizations responsible for
water supply, as well as heat supply to settlements outside the district heating system), "socially significant"
consumers.
Impossibility of a complete cut-off of heat energy to utilities and socially significant consumers,
impossibility of any restriction of heat supply to natural persons (90-95% of consumers having receivables).
41 The management structure includes: PJSC "DEK", JSC "DGK", PJSC "Yakutskenergo", PJSC "Kamchatskenergo", PJSC
"Magadanenergo", PJSC "Sakhalinenergo", JSC "Chukotenergo", JSC "YUESK", JSC "Sakhaenergo" JSC "Teploenergoservis",
PJSC "Mobile power engineering".
42 According to summary data of marketing departments of CC on the territory of the Far Eastern Federal District.
43 FGBU "Central Housing and Communal Services" of the Ministry of Defense of the Russian Federation.
44 JSC "Main Department of Housing and Communal Services".
45 Wholesale enterprises resellers.
46 According to summary data of marketing departments of CC on the territory of the Far Eastern Federal District.
88
Changes in the regulatory legal acts of the Russian Federation.
Bilateral agreements in the non-price zone of the Far East of the wholesale electricity and
Bankruptcy of enterprises - consumers in the sphere of housing and communal services, resellers
of thermal energy, managing organizations.
As for thermal and electric energy, the main non-payers belong to consumer groups for which there are
legislative or technical difficulties in applying measures to introduce restrictions on the consumption regime
or to stop the supply of a resource.
In order to ensure the receipt of cash in the account of current payments and repayment of the CC
receivables of the CC in the territory of the Far Eastern Federal District, all measures stipulated by the
legislation in force are applied.
On the most problem groups of consumers and individual companies, work is carried out at the level of the
subjects of the Federation, heads of municipal entities with a view to jointly influencing debtors on payment
of arrears.
Activities to improve the efficiency of energy sales activities
1.
capacity market.
As part of the implementation of measures to increase the revenues of JSC "DGK" in 2017, bilateral
contracts for the sale and purchase of electricity. The volume of electricity sales under bilateral agreements
amounted to 1 034.8 million kWh. The sale price of electric energy under bilateral contracts amounted to
2,062.7 rubles / MWh, which allowed receiving additional revenues of 748.8 million rubles.
Under the cost optimization program, in order to reduce the cost of purchased energy from the wholesale
market by marketing companies, in 2017 bilateral agreements were concluded between PJSC "DEK" and
JSC "RusHydro". The volume of purchase of electric energy amounted to 488.5 million kWh at a price
equal to the doubled established tariff for HPPs, which allowed PJSC "DEK" to get an additional economic
effect of 417.9 million rubles.
2.
As part of the improvement of the regulatory and legal framework of the Russian Federation in the energy
sector of the Far Eastern Federal District, the task of preserving the penalty coefficients for capacity for
suppliers of OREMs in non-price zones was solved.
Decree of the Government of the Russian Federation No. 1664 of December 27, 2017 amended the Rules of
the wholesale market approved by Government Decree No. 1172 of 27.12.2010 providing for increasing the
penalty coefficients for suppliers in the price zones of the Wholesale Electric Energy Market by the amount
of the differentiation coefficient, which is a function of the accident rate and the load of generating
equipment in past periods. For suppliers of non-price zones, the differentiation coefficient is set equal to
one, while the values of the penalty coefficients themselves are kept at the current level. Thus, in terms of
power fines, the conditions for suppliers of non-price zones did not change.
Decrease in the cost of the fuel component
In 2017 the RAO ES Holding Company continued work on optimization of the fuel supply system, planned
activities were carried out, including:
1) Demonopolization of the fuel and energy resources market of the Far Eastern Federal District, expansion
of competition and diversification of fuel supplies through the use of non-design coal brands.
In 2017, in accordance with the program for organizing and conducting pilot combustion of non-projected
coals, the experimental coal combustion of the grade "Zh" of the Fandyushkinskoye field produced by OOO
"Behringpromugol" at the Chukotenergo branch of Chaunskaya CHPP was carried out. Based on the results
of pilot combustion, a technical certificate has been drawn up, the results are assessed as satisfactory and
confirm the practical possibility of using this coal when performing a number of technical conditions.
2) Conclusion of long-term contracts for the supply of coal for a period of at least three years, including
provisions on pricing rules for each subsequent calendar year, including market conditions, in their
conditions.
In 2017, based on the results of open competitive procedures, a long-term coal supply contract was
concluded with Gornyak-1 LLC for the period 2018-2020 for the needs of the power plants of PJSC
Sakhalinenergo (Yuzhno-Sakhalinskaya CHPP-1, Sakhalinskaya GRES, Sakhalinskaya GRES- 2). The
agreement fixes coal prices that do not exceed the indices-deflators established by the Ministry of Economic
Development of the Russian Federation for the period under review.
3) Unification of the terms of fuel supply contracts and application of special payment terms.
89
Due to the inclusion in coal supply contracts of conditions for a reduction in the price of coal products,
depending on its quality characteristics (humidity, ash content, heat of combustion), savings in payment for
current coal supplies for 2017 are estimated at 564.1 million rubles.
4) Conclusion of framework agreements for the supply of fuel.
For the purposes of purchasing fuel in the spot market, based on the lowest bid price of participants, in 2017
framework agreements were concluded: for the supply of coal for the off-balance requirement of the stations
of JSC "DGK" - 20 contracts; for the supply of petroleum products (diesel fuel, gasoline, fuel oil) - 23
contracts.
5) Carrying out joint work with the Ministry of Energy of Russia to create a mechanism to contain the
growth rates of purchase prices for coal for generating companies in the territory of the Far Eastern Federal
District is not higher than the growth of the domestic energy coal price index, including through the
introduction of tariff regulation for coal suppliers.
The Ministry of Energy of Russia sent an appeal for the introduction of export duties on energy coals (out of
reference No. 5963. NS of December 20, 2016 "On the initiative to introduce export duties on energy
coals").
Following the results of 2017 a meeting was held under the leadership of Deputy Minister of Energy of the
Russian Federation A.B. Yanovsky on the issue of a sharp rise in prices for coal products for the energy
sector. Based on the results of this meeting, it was decided to hold joint consultations between the Ministry
of Energy of Russia, the Ministry of Economic Development of Russia and the FAS Russia to find a solution
to this problem.
Implementation of measures for import substitution
Holding RAO ES of the East actively cooperates with Russian suppliers and manufacturers of equipment
and components (PJSC "Power Machines", CJSC "Ural Turbine Plant", CJSC "Energomash-
Uralelectrotyazhmash", LLC "Prosoft-Systems", LLC "Unitel-Engineering" LLC "Togliatti Transformer",
CJSC "ChEAZ", LLC "MoselectroShield", CJSC "Group of Companies Electroshield", etc.).
On the already implemented and ongoing projects of the Holding Company, such as: Vostochnaya CHPP,
Blagoveschenskaya CHPP (2nd stage), Sakhalinskaya GRES-2 (1st stage), Yakutsk GRES-2 (1st stage),
TPP in Sovetskaya The harbor is mainly used equipment produced in the Russian Federation.
Within the framework of production activities, during technical re-equipment and reconstruction in the
Holding's energy companies, priority is given to procurement of equipment from domestic manufacturers.
According to the results of the consolidated analysis of the Holding's purchases47 for 2017, the value of
purchased domestic equipment is 85%48. The increase in the share of imported equipment by 5% compared
to 2016 was influenced by the purchase of a 220 kV switchgear assembly for the implementation of an
investment project for the construction of a 220 kV OTTU "Orotukan-Palatka-Tsentralnaya"49.
Reducing the level of depreciation of production assets
Thermal networks: RAO ES of the East Holding operates 3,079 km of heat networks (hereinafter referred to
as "TS"), while the wear of TC equipment remained at the same level in 2017 and is 49%.
The 57 km long vehicle with a service life of more than 25 years as of 31.12.2017 is 990 km (32% of the
total length).
Electric networks: RAO ES of the East Holding operates more than 21 518 pcs. transformer substations 0,4-
220 kV and over 104,220 km of power transmission lines, depreciation as of December 31, 2017 is as
follows: power transmission lines 49.5% (in 2016 50.3%), transformer substations 62.5% (in 2016 year year
63.5%).
Generating objects: Holding RAO ES of the East operates: turbine units - 141 units50, depreciation as of
December 31, 2017 is 78.8% (in 2016 - 77%); Boiler units - 234 units51, depreciation as of 31.12.2017 in
47 Based on the analysis of purchases worth more than 250 thousand rubles.
48 From the total cost of purchases in the amount of 3,998.0 million rubles.
49The cost of purchased equipment is 317.8 million rubles. KRUE 220 kV refers to equipment, the manufacture of which in the
Russian Federation is not well established. Based on the results of consideration of applications of the tender participants, the
offer of the domestic supplier (JSC VO Elektroapparat) was rejected as inadequate to the technical requirements specified in the
bidding documents. Link to the tender documentation for the purchase: https://energybase.ru/tender/31705393503.
50 The preliminary data.
51 The preliminary data.
90
2017 is 66.1% (in 2016 65%).
Refinancing of loan debts of companies of RAO ES Of the East Holding
In March 2017, as part of the fulfillment of the instructions of the President of the Russian Federation and
the Government of the Russian Federation, measures were successfully implemented to refinance loan debts
of the enterprises of RAO ES Holding East. The mechanism of the transaction is unique for the Russian
market in terms of its structure and the volume of the attracted capital.
In accordance with the decisions of the Board of Directors of the Company (Minutes No. 244 of 23.11.2016,
No. 246 of 27.12.2016, No. 248 of 27.02.2017), due to the sale of 40 billion pcs. In favor of Bank VTB
(PJSC) of shares of the additional issue and 15 billion shares of treasury shares of PJSC RusHydro, equity
financing in the amount of 55 billion rubles was raised. VTB Bank (PJSC) purchased 55 billion shares of the
Company's shares, which is 12.9% of the authorized capital. The state's share in the charter capital of the
Company following the deal amounted to 60.56%, which ensures compliance with the requirements of
Presidential Decree No. 362 of May 23, 2014.
Also between PJSC RusHydro and Bank VTB (PJSC), a non-contracted forward contract was signed, the
final settlement of which is expected to take place at the end of a 5-year period. The forward rate is formed
as a key rate of the Central Bank plus a margin of 1.5%. At the same time, forward payments are reduced by
the amount of dividends paid to the Bank during the term of the forward contract.
At the end of the forward contract one of the parties to the transaction pays to the other party the difference
between the cost of selling the stake in RusHydro and the face value of the forward. At the same time, PJSC
RusHydro has no obligation to VTB Bank (PJSC) to redeem its shares (put option). In case of not selling the
block of shares of the Company during the term of the forward contract (5 years), the obligations of the
parties are determined based on an independent valuation of the shareholding.
An important aspect of the transaction is the condition that the additional income received from the sale of
RusHydro's shares at a price higher than the face value of the forward is fully RusHydro's income.
From the point of view of the efficiency of the transaction for RusHydro, the proposed scheme for attracting
financing in terms of the effective interest rate is more effective than the existing credit mechanisms. The
current value of the forward rate (excluding the cost of selling a block of shares) due to its reduction for paid
and planned dividends, as well as a result of a decrease in the Bank of Russia's key rate is 5.42%.
For the organization of corporate governance and control over the further disposal of the Company's shares,
a shareholder agreement was concluded between VTB Bank and Federal Property Management Agency.
Renaissance funds in the amount of 55 billion rubles attracted from VTB Bank were fully transferred to
operating companies of RAO ES East Holding in accordance with loan agreements and sent in March 2017
to repay bank loans. The interest rate for intra-group loans is floating and equal to the forward rate, reduced
by the amount of dividends in favor of VTB Bank for shares of the Company acquired in the framework of
the transaction. There is also a grace period for interest payments during the first two years from the date of
entering into intra-group loans. Savings from lowering the percentage load and the action of the two-year
grace period are used to finance repair programs and measures for the technical re-equipment and
reconstruction of the core companies of RAO ES East Holding.
In order to improve the management of Far Eastern assets of the RusHydro Group and ensure control over
the targeted use of raised funds, measures were taken to consolidate 100% of RAO ES Of the East shares in
the ownership of RusHydro Group and to integrate the executive units of PJSC RusHydro and JSC RAO ES
Of the East . 05/02/2017, an agreement was concluded to fulfill the functions (execution of rights and duties)
of the sole executive body of RAO ES of the East JSC by PJSC RusHydro.
Renewable power generation development in the Far Eastern federal region
A promising direction of the RusHydro Group's activity in the Far East is to increase the share of generation
based on renewable energy sources (hereinafter referred to as RES).
In accordance with the program for the development of renewable energy in 2017, the following projects of
solar power plants (hereinafter - SES) in the Republic of Sakha (Yakutia):
91
The share of revenues from foreign customers by the end of 2017 was 7%53 (for the same period last
SES with a capacity of 50 kW in the village of Sebyan-Kuel of Kobiai district. The cost of
construction is 9 390, 07 thousand rubles (excluding VAT). The planned annual saving of diesel fuel is
700.0 thousand rubles 52.
SES with a capacity of 50 kW in the village of Orto-Balagan, Oymyakonsky district. The cost of
construction is 7 403, 60 thousand rubles (excluding VAT). The planned annual saving of diesel fuel is
770.0 thousand rubles.
SES with a capacity of 40 kW in the village of Kystatyam, Zhigansky district. The cost of
construction is 6,817, 41 thousand rubles (excluding VAT). The planned annual saving of diesel fuel is
465.0 thousand rubles.
Currently, work is under way to update the program for the development of renewable energy resources of
PJSC RusHydro in the Far Eastern Federal District for the period 2018-2023.
DEVELOPMENT OF SCIENTIFIC-DESIGN COMPLEX
The scientific design complex (hereinafter SDC) is an asset of PJSC RusHydro, which produces high-end
products (providing services) for high-tech industries in Russia and is currently made up of five institutes:
JSC Institute Hydroproject, JSC Lengidroproekt, JSC Mosoblgidroproekt, JSC "VNIIG them. B.E.
Vedeneev and JSC NIIES.
As a result of 2017, the results of financial and economic activities for the scientific and design complex are:
The volume of CDD's revenues as of December 31, 2017 amounted to 4,759.8 million rubles, which
is 6% lower than in the same period last year.
year - 6%).
amounted to 4,259.3 million rubles.
from 20% in 2016 to 26% in 2017.
2017.
IMPROVEMENT OF THE CORPORATE GOVERNANCE SYSTEM
In order to improve the corporate governance system, the Board of Directors of the Company on June 19,
2015 (Minutes No. 218 of June 22, 2015) approved the Corporate Governance Code of PJSC RusHydro (as
amended by the decisions of the Board of Directors of PJSC RusHydro - Minutes No. 239 dated June 23,
from December 28, 2017 No. 263, hereinafter - the Code).
Throughout 2017, the Company continued to implement Code norms aimed at improving the level of
corporate governance by bringing internal documents in line with it, as well as applying norms in everyday
practice.
Following the results of the work done, the following key actions were implemented:
- The shares held by the CC did not participate in the voting during the reporting period. In 2017, a
significant portion of these shares was sold to VTB Bank (PJSC). At the moment, the companies of
RusHydro Group own 0.9% of the Company's voting shares.
- The Board of Directors of the Company has evaluated the effectiveness of the Company's risk management
and internal control system, and the issue of corporate governance practice in the Company.
- A senior independent director was elected among independent directors.
- The Board of Directors approved the Regulation on the Information Policy of the Company in a new
version, and at the end of 2017 reviewed the report on its implementation.
The share of other customers that are not general contractors of PJSC RusHydro increased in revenue
Costs were reduced by 137.0 million rubles, or 3% compared to the same period last year and
The share of works performed by subcontractors decreased in revenue from 18% in 2016 to 17% in
52 Hereinafter: the data are given in the prices of 2017.
53 It is calculated on the volume of proceeds from scientific and design CC: JSC "Institute Hydroproject", JSC "Lengidroproekt",
JSC "Mosoblgidroproekt", JSC "VNIIG im. B.E. Vedeneyev and JSC NIIES.
92
- The Personnel and Remuneration Committee (nominations) before the annual General Meeting of
Shareholders considered the independence of candidates to the Board of Directors for the purpose of
providing information to the Company's shareholders.
- The list of materials provided to shareholders for the Annual General Meeting of Shareholders has been
expanded.
As a result of these activities, the share of the principles of the Code fully complied with in PJSC RusHydro
has increased.
External evaluation of both individual aspects and corporate governance in 2017 was carried out by the
Working Group on the establishment in the Russian Federation of an International Financial Center in
conjunction with the Expert Council under the Government of the Russian Federation, the Russian Union of
Industrialists and Entrepreneurs (RSPP) and the Russian Institute of Directors (NP RID).
In November 2017, the Working Group on the Establishment of the International Financial Center in the
Russian Federation, in conjunction with the Expert Council under the Government of the Russian
Federation, published the results of a study of the practice of introducing companies' priority
recommendations of the Code and the quality of corporate governance. PJSC RusHydro took the fourth
place in the said study (it shares with Rosneft PJSC).
Following the results of 2017, the Company became one of the leaders on the RSPP index in the field of
sustainable development - "Responsibility and Openness". The "Responsibility and Openness" index reflects
the situation in the sphere of disclosure of corporate information on sustainable development and corporate
responsibility.
In May 2017, the Company attracted the Company on an ongoing basis, the Russian Institute of Directors
conducted an annual assessment of the corporate management practices of PJSC RusHydro in accordance
with the updated methodology of the National Corporate Governance Rating (NRKU). As a result of the
assessment, PJSC RusHydro was assigned a corporate governance rating of 7 ++ "Advanced Corporate
Governance Practices" on the NRMU scale.
The Company's corporate governance practice was assessed on four components, each of which identified
key positive aspects and aspects that require further improvement.
This assessment confirms that the Company complies with the requirements of the Russian legislation in the
field of corporate governance and follows a significant number of recommendations of the Russian
Corporate Governance Code.
IMPROVEMENT OF THE HUMAN RESOURCES SYSTEM
In 2017, the following measures were taken to improve the system of staffing in the framework of the
implementation of the system of "Corporate Lifts":
"Corporate elevator - New School"
Implementation of measures of early professionalization:
Within the framework of the current Program for advanced development of human resources of
PJSC RusHydro, "From the New School to the Workplace", systematic work is conducted with students and
students in the regions where RusHydro Group is present. Priority direction of the school stage of training
future personnel for the company is the creation of specialized school classes (Energoclasses) and centers of
technical creativity (Technoclasses) in 9 regions of the company's presence, where 908 schoolchildren of
grades 7-11 received training in the past year. 2017 was marked by the opening of two more Energoclasses
in the village of Novobureisk and Rybinsk.
in the online testing format.
For the best students of vocational guidance projects that have passed the competitive selection,
a corporate scientific camp is organized - Summer Energy School. In 2017 the school was held on the basis
of the Cheboksary HPP and 34 schoolchildren from 15 regions of the Russian Federation took part in it.
Experts of the company participate annually in the All-Russian Festival of Energy Saving #
Together, as well as in profile modules and project changes in children's educational centers "Sirius",
Every year the Industry Olympiad "Energy of Education" is held. In 2017, the Olympics started
93
16 people (4 bachelor students and 12 master's students) were enrolled in the targeted places
"Ocean", "Eaglet", "Smena". In total for 2016-2017, more than 250 schoolchildren of grades 5-11 took part
in them.
Implementation of the activities of the Program of social and professional adaptation of orphanage pupils:
In 2017, 450 orphans took part in the "Young Energy" program aimed at the socialization and
professionalization of orphans and children left without parental care, more than 20 of them entered the
specialized areas of training.
"Corporate elevator - Higher educational institution".
Organization of strategic partnership with specialized educational organizations of secondary and higher
vocational education:
In 2017, the first graduates of young specialists - bachelors in the field of "Electrical Power
Engineering and Electrical Engineering" (the profile of "Hydroelectric Power Station") of the Volzhsky
Branch of the MPEI took place.
Within the framework of cooperation agreements between PJSC RusHydro and specialized
universities, more than 250 students are practicing at the company's facilities every year, more than 100
students of higher education institutions regularly participate in industry conferences and forums: the XIX
World Festival of Youth and Students, the Youth Day of the Russian Energy Week, the International
Engineering championship "Case-in".
allocated for the application of PJSC RusHydro.
In the Spring Energy Student School for students of profile universities in 2017, 37 students of
the Research Institute "MEI", the Branch of the Research Institute "MEI" in the city of Volzhsky, the SFS
SFU, the Bauman MSTU took part. N.E. Bauman. The VSEC took place at the Moscow Power Engineering
University.
"Corporate Lift - Company".
Training of Company employees:
devices, which will improve the competence of the staff of the STSU.
All-Russian competitions of operational personnel of the HPP:
In 2017, internal professional competences of operational staff of HPPs / PSPs at RusHydro
Group sites were held in accordance with the new model regulation on the conduct of competitions and with
the use of a corporate switching simulator.
In 2017, in accordance with the instructions of the Government of the Russian Federation and
the letter of the Federal Agency for Property Management, an agreement was signed between PJSC
RusHydro and the Union of the Development of Professional Communities and Workers, Worldwide
Russia, on the basis of which in October 2018, on the basis of the Volzhskaya HPP and the Volga
educational center CorUnG will be held Branch corporate championship in the competence "Operational
and technological management of hydraulic units and auxiliary equipment" according to the standards of
Worldsills.
Implementation of the Program for the Preservation and Enhancement of Operational Sta- tus of Station
Operators:
Activities to preserve and improve the operability of operational personnel were introduced in 9
branches of the Company - Bureyskaya HPP, Volzhskaya HPP, Votkinskaya HPP, Dagestan branch,
Zeyskaya HPP, Zhigulevskaya HPP, Kamskaya HPP, Novosibirsk HPP, Sayano-Shushenskaya HPP named
after PS. Empty. A total of 249 operative workers participated.
IMPROVEMENT OF THE SYSTEM OF ANTI-TERRORISM, ECONOMIC AND INFORMATION
SECURITY
In total for the year of 2017 the company's employees were trained on 23 332 training programs.
In 2017, a training and training ground was put into operation to train workers serving RPA
94
In 2017, the following activities were carried out::
In the direction of antiterrorist security.
1.
Based on the analysis of the practice of the security services of branches, corporate scientific and
practical seminars and antiterrorist exercises conducted at the Company's facilities, the proposals have been
sent to the State Duma of the Federal Assembly of the Russian Federation and the Ministry of Energy of the
Russian Federation to improve the legislation of the Russian Federation in the sphere of ensuring the safety
of energy facilities. The proposals of PJSC RusHydro received a positive assessment of the National Anti-
Terrorist Committee of the Russian Federation and were taken into account when drafting the relevant draft
laws.
2.
In order to improve the security and vulnerability assessment of energy facilities in accordance with
the requirements of the legislation of the Russian Federation, surveys of the objects of PJSC RusHydro by
interdepartmental commissions (MVK) were conducted.
3.
Based on the decisions of the MVK, the antiterrorist protection and protection of the power facilities
of the Company's branches have been modernized. Agreements for the provision of services for the
protection of the facilities of JSC "RusHydro" in 2018.
In the direction of economic security.
1.
For the implementation of strategic goals by the security units, in carrying out tasks to protect the
economic and other interests of the RusHydro Group, activities were carried out to identify and localize
risks and threats to economic security, and prevent damage to the RusHydro Group.
The main measures to ensure economic security were aimed at preventing unfair contractors from
performing work and rendering services related to the implementation of investment projects of the
RusHydro Group for the construction, reconstruction and modernization of energy facilities, as well as to
identify and prevent risks of the implementation of these projects at an early stage.
2.
In order to improve the efficiency of the RusHydro Group's security units, measures have been
implemented to improve the procedure for conducting internal service checks and investigations into
potential and occurred risks of economic security.
In the direction of information security.
1.
implemented in practice:
the functioning of critical information systems of the Company;
personal data of PJSC RusHydro;
information that is a commercial secret of PJSC" RusHydro.
In terms of legal, organizational, administrative and regulatory measures, developed, approved and
Order of PJSC RusHydro dated 29.12.2017 No. 942 "On organization of work to protect
Order of PJSC RusHydro dated June 26, 2017 No. 407 On approval of the Policy for processing
Order of PJSC RusHydro dated February 15, 2017 No. 77 On the system of measures to control
2. As part of the import substitution policy, the list of technical solutions in the field of
information security was revised, at the moment 90% of decisions are implemented using
information protection tools of Russian production.
3. As part of the FSTEC Order No. 31 dated March 14, 2014 On Approving Requirements to
Ensure Information Protection in Automated Control Systems of Production and Technological
Processes at Critical Facilities, Potentially Hazardous Objects, and Objects of Increased Danger to
Life and Health of People and for the environment, the subsystems providing information security
for the automated process control system at the following branches were put into operation:
Dagestan, Karachaevo-Cherkessky, Kabardino-Balkaria, and North Ro-Ossetian, Cascade Kuban
GES, Nizhegorodskaya HPP, Saratov HPP, Cheboksary HPP, Zhiguli hydropower plant, Kama
HPP. Work on other branches is scheduled to be completed in 2018.
RISK MANAGEMENT OF RUSHYDRO GROUP
95
Within the framework of improving the corporate system of internal control and risk management in 2017,
the following activities:
Corporate level
1.
As part of the implementation of the Internal Control and Risk Management Policy of PJSC
RusHydro, the Company's Management Board approved the Strategic Risk Management Plan of RusHydro
Group for 2017 - 201854. When approving the above plan, the:
- the register of strategic risks of RusHydro Group,
- a system of indicators for the implementation of strategic risks of RusHydro Group,
- list of strategic risk management activities of RusHydro Group.
2.
The RusHydro Group's risk management framework has been significantly expanded: internal
control and risk management policies have been approved in 18 RusHydro Group companies, including 14
companies operating in the Far East
3.
In 30 key controlled companies approved risk management plans for 2017-2018, including in 15
companies operating in the Far East. In the 1st quarter of 2018, the CC data were submitted to the Board of
Directors for approval of risk management reports for 2017.
4.
In order to synchronize the processes of strategic management and risk management, a new version
of the Regulation on the interaction of the Risk Management Department of the DKiUR with the structural
subdivisions of PJSC RusHydro within the framework of strategic risk management was developed. The
updated version of the regulation was approved by the order of PJSC RusHydro of December 27, 2017 No.
921.
5.
The report on the functioning of the corporate system of internal control and risk management was
reviewed by the Audit Committee under the Board of Directors of PJSC RusHydro in May 201755 and
approved by the Board of Directors of PJSC RusHydro in June 201756.
6.
The report on the implementation of the Action Plan for the management of strategic risks of the
RusHydro Group for the year 2017 was approved by the Management Board of PJSC RusHydro on
February 5, 201357.
Business and operational level
1.
Branches of the Company and its CC are evaluated and prioritized according to the level of risk and
the status of implementation of risk management procedures in order to form a risk-oriented plan of internal
audit controls for PJSC RusHydro for 2018.
2.
management", within which:
- analysis and assessment of business process risks,
- the level of maturity of the system of internal control of the business process,
- a system of key indicators of business process risks.
A survey was conducted of the internal control system of the business process "property
3. Launched:
- work on the examination of the internal control system of the business process of interaction of JSC RGS
with RusHydro Group companies within the framework of procurement activities.
- development of a system of quantitative indicators for testing the operational efficiency of the Company's
previously surveyed business processes.
4.
Approbation of the methodology is planned for 2018.
5.
business processes of PJSC RusHydro.
A draft methodology for assessing information security risks of the Company was developed.
Regular monitoring of the implementation of measures to improve the internal control system of key
54 Minutes dated 10.10.2017 No. 1070pr.
55 Minutes of the Audit Committee under the Board of Directors of PJSC RusHydro of May 31, 2017 No. 98.
56 Minutes of the Board of Directors of PJSC RusHydro of July 22, 2017 No. 254.
57 Minutes of the Management Board of PJSC RusHydro of 05.02.2018 No. 1086pr.
96
IMPLEMENTATION OF ACTIVITIES OF THE LONG-TERM DEVELOPMENT PROGRAM OF
THE RUSHYDRO GROUP PROVIDED BY DIRECTIVES OF THE GOVERNMENT OF THE
RUSSIAN FEDERATION
On increasing labor productivity in the Company (from October 31, 2014 No. 7389p-P13).
In pursuance of the directive of the Government of the Russian Federation No. 7389p-P13 dated October 31,
2014, the DDP approved by the Board of Directors of PJSC RusHydro (protocol No. 244 of 23.11.2016, as
amended by protocol No. 251 as of 18/04/2017) included a key performance indicator " Labor productivity
"58, calculated according to Rosstat's methodology59.
Achievement of target values for the indicator "Labor productivity"
(revenue thousand rubles / worked person / hours)
Labor efficiency (revenue, thousand rubles/man-hours)
Indicator Definition
Planned for 2017
4,72
Actual for 2017
5,20
On the need for labor resources, including engineering and technical specialties,
necessary for the implementation of the main activities of the program (from
05.11.2014 No. 7439p-P13).
The main parameters of the need for manpower resources of PJSC RusHydro (executive body and branches)
are determined taking into account the terms of achievement of retirement age employees, as well as the
possibility of internal relocation of employees, if there are appropriate recommendations based on the results
of certification, formed personnel reserves, and candidate databases.
In calculating the need for engineering and technical specialists are accepted, including working vacancies
that require a level of professional training not lower than the bachelor of a technical educational
organization. This approach is conditioned by the requirements of the technological process of operation,
repair and maintenance of the main equipment of HPPs / PSPs.
Implementation of the basic parameters of the need for labor resources, including engineering and technical specialties of
PJSC RusHydro for 2017
Indicator Definition
Total vacancies number:
Including engineering occupations
Planned for 2017
119
84
Actual for 2017
105
91
On the planned and phased replacement of the purchase of foreign products (works, services) by the
purchase of Russian products (works, services), equivalent in technical characteristics and consumer
properties, used in the implementation of investment projects and current activities (No. 1346p-P13 of
05.03.2015).
As part of the Program for the comprehensive modernization of generating facilities, PJSC RusHydro is
increasing volumes of deliveries of domestic machine-building products, which is ensured, in part, by
localizing production of certain types of equipment and components in Russia.
In 2017, the share of imported imported equipment was reduced in the framework of production activities in
order to implement the phased replacement of purchases of foreign products (works, services) by purchase,
equivalent in technical characteristics and consumer properties of Russian products (works, services).
Imported equipment share, %
Share of imported equipment
Planned for 2017
52
Actual for 2017
22
As part of the import substitution, in accordance with Federal Law No. 223-FL of 18.07.2011 "On the
Procurement of Goods, Works, Services by Individual Types of Legal Entities", and in pursuance of the
Directive of the Government of the Russian Federation No. 1659p-P1360 of March 15, on the procedure for
58 List of legal entities accepted for the calculation of the indicator: PJSC RusHydro, PJSC DEK, PJSC Yakutskenergo, PJSC
Kamchatskenergo, JSC SENK, PJSC Magadanenergo, PJSC Sakhalinenergo, JSC DGK, JSC DRSK, PJSC Peredvizhnaya
Energetika, Chukotenergo JSC, Sakhaenergo JSC, Teploenergoservis JSC, ESC RusHydro JSC, Krasnoyarskenergosbyt PJSC,
PJSC RESK, Chuvashskaya Energy Retail Company JSC, JSC Geotherm, PJSC Kolymaenergo , JSC Pauzhetskaya GeoPP, PJSC
KamGEK , PJSC Boguchanskaya HPP.
59 The Order of the Federal State Statistics Service of September 23, 2014 No. 576.
60 On approval of the procedure for accounting for investment projects included in the list of investment projects
97
accounting for investment projects included in the list of investment projects of the RusHydro Group61,
which establishes a set of rules, rules and requirements in the process of selecting investment projects and
obtaining a decision on the inclusion of investment projects in the Register, Government Commission on
import substitution62. The standard provision on the accounting of investment projects in the subsidiaries of
PJSC RusHydro included in the list of investment projects of RusHydro Group was approved by the
decision of the Company's Management Board63.
EXECUTION OF THE KEY PERFORMANCE INDICATORS OF THE LONG-TERM DEVELOPMENT
PROGRAM OF RUSHYDRO GROUP IN 2017
1. Avoiding a more extreme number of accidents:
Indicator
- Number of accidents at work, pcs.
- Number of major accidents, pcs.
Equity capital profitability (ROE), %
Earnings before interest, taxes and depreciation (EBITDA), million
rubles.
2.
3.
4.
5.
Proportion of purchases from small and medium-sized enterprises,
including the results of purchases only among SMEs 65, %
Implementation of capacity schedules and a plan for financing and
development, %66
Productivity of labor
(revenue, thousand rubles / man-hours)
7. Decrease in operating expenses (expenses),%
8.
Integral innovative KPI,%
6.
Profitability of investments of shareholders (TSR),%
9.
10. Free cash flow (FCF), million rubles.
2017
planned
0
≤ 5 yaers
average
0
5.8%64
18%
10%
85%
4,7266
2%
85%
100%
2017
actual
0
Execution
estimate
14
Done
0
10.13%
85%
38%
99%
5,20
2.26*
91%
Done
Done
Done
Done
Done
Done
Done
<100%
Not done**
- 39,875
- 29,722
Done
95,99366
110,323
* * In accordance with the decision taken at a meeting of the Board of Directors of PJSC RusHydro
dated 04/24/2018 (Minutes No. 269)
** The TSR value in 2017 was -11.7%, while the value of the Moscow Exchange index was -3.6%. The
negative dynamics of shares in PJSC RusHydro is due primarily to the general decline in the market,
which was exerted by geopolitical risks, as well as a decrease in interest in Russian companies by
global investors. For most of the year, the dynamics of shares of PJSC RusHydro corresponded to the
average market. At the end of the year, the main factors in the decline in the value of the shares were:
the decision of the Board of Directors of the Company on temporary conservation of the construction
project of Zagorskaya PSHPP-2, confirmation of information on the additional issue of the company's
shares for financing the Pevek-Bilibino power transmission line project
61 Decision of the Board of Directors of the Company of May 31, 2016 (Minutes No. 237).
62 Formed by the Government of the Russian Federation from 04.08.2015 № 785 "On the Governmental Commission for Import
Substitution".
63 Minutes of the Board of the Company No. 980pr of 05/20/2016.
64 By the protocol of the Board of Directors of the Company dated 22.06.2017 No. 254 within the framework of the
consolidated business plan of the RusHydro Group for 2017-2021, the estimated target values for the following KPIs established
for the members of the Company's Management Board were approved: KPI "Return on Equity (ROE),%" - target the value is
6.1%; KPI "Earnings before interest, taxes and depreciation (EBITDA), million rubles" - target value 97,993; KPI "Labor
productivity (revenue, thousand rubles / person-hours)" - target value 4.74.
65 According to PJSC RusHydro.
66 The schedule for the commissioning of capacities and the plan for financing and development are determined on the basis of
planned data on the Company's investment objects and new construction sites of the DO approved in the composition of the
adjusted Business Plan of the Company by the decision of the Board of Directors of the Company of 11.10.2017 (Minutes No.
258 of October 13, 2017).
98
Appendix No 10. The auditor's report on the Long-term development
program implementation in 2017 of RusHydro Group for the period 2016-
2020
Section 1. Brief information on the auditor
Name: LLC HLB Vneshaudit.
Primary state registration number: 1027739314448 (certificate of registration in the Unified state register of
legal entities series 77 No. 007858681 dated 4 October 2002 issued by the Interdistrict Inspectorate of
Ministry of Russia No. 39 for Moscow).
Location: 119180, Russia, Moscow, Bolshaya Yakimanka str., 25-27/2.
Membership in self-regulatory auditors organization: self-regulating organization of auditors Association
«Sodruzhestvo». Main registration record number (ORNZ) in the Register of auditors and audit
organizations – 11606046557.
Section 2. Brief information about the Group
Name: Public joint stock company Federal Hydrogeneration company RusHydro (PJSC RusHydro).
Primary state registration number: 1042401810494.
Location: 660017, Russia, Krasnoyarsk Krai, Krasnoyarsk, ul. Dubrovinskogo, d. 43, korp. 1.
The group consists of RusHydro, RusHydro PJSC's branches and subsidiaries, the ownership interest in
which the PJSC RusHydro of over 50 %. Of PJSC RusHydro participates in the Charter capital of
subsidiaries engaged in the design, construction, repair and maintenance, technical re-equipment and
reconstruction of energy facilities, production and sale of electricity.
According to the results of the meeting of the Board of Directors of PJSC RusHydro from 22.11.2016
approved Long-term development program (hereinafter LTDP) for the period 2016-2020.
The efficiency performance of the LTDP is evaluated by means of a system of key performance indicators
of the LTDP (hereinafter - KPI LTDP). The KPI system is intended for planning and monitoring
performance purposes and objectives of the LTDP.
Section 3. Brief description of the methodological principles
Audit methodology is based on the customer's needs defined in the specifications, on the one hand, and
professional judgment based on the application of professional knowledge of auditor. The tasks described in
the terms of reference are implemented in the framework of the verification steps with the specified in them
with a methodological approach.
The direct object of an audit of the LTDP are the processes and activities to achieve key performance
indicators of the Group, certain of the LTDP. Systematic and consistent approach to validation consists in
the following set of verification procedures:
• assessment of risks and opportunities associated with the implementation of the LTDP and the
achievement of its results (KPIs);
• analysis of the management processes of the LTDP and components of the program activities aimed at
achieving the KPIs;
• verify achievement of key performance indicators of the LTDP during the year.
Our approach to the audit of the LTDP is to review and analyze program activities of the LTDP in
99
conjunction with the system of internal control and Group risk management, functioning of business
processes of the Group and overall corporate governance of the Group.
Section 4. Expert evaluation of the auditor
We have tested the implementation of Long-term development program of RusHydro Group for the year
2017 in accordance with the terms of reference are in Annex 1 to the contract № OG-206-94-2015/3351
from 3 December 2015, and our methodology for conducting the audit of LTDP.
Our responsibility is to Express an opinion (expert evaluation) on the basis of our examination concerning
the following matters:
• the reliability of the actual performance indicators of the Group RusHydro at the end of the audited period
and the achievement of the target values;
• the efficiency of the targeted usage Group of funds of the respective budgets during the audit period;
• causes of deviations of actual indicators of the performance of the planned LTDP.
For 2017 the Group has calculated the following actual performance results and determined the degree of
achievement of the target values.
Indicator (KPI)
Unit
Plan for 2017
Fact in 2017
Performance
№
1
Preventing accidents in production and
limit the number of accidents in the
Group RusHydro
1.1 The number of accidents in industry
1.2 The number of accidents
2 Return of equity (ROE)
3
4
Income before
depreciation (EBITDA)
interest,
taxes
and
The share of purchases from small and
medium-sized enterprise
4.1
- including the results of purchases only
among SMEs
to PJSC
RusHydro)
(according
5
The schedule of commissioning of the
main objects of the new construction
%
%
%
6 Labor productivity (Revenue, thousand
rubles/person-hours)
thousand rubles
/ person-hours
7 The reduction
(costs)
in operating expenses
8
Integral innovation KPIs
9 Total shareholder returns (TSR)
%
%
%
-
Pcs
Pcs
%
0
≤ average for
5 years
0
0
14
0
5.8
10.13
mln rub.
95,993
110,323
18
10
85
4.7
2
85
100
85
38
99
5.20
2.26
91
<100
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Not completed
Completed
10 Free cash flow (FCF)
mln rub.
-39,875
-29,722
The calculated actual results of the Group's operations for 2017 confirm the fulfillment of the KPI of the
DDA for 2017: all indicators are met, except for KPI "Return on investment of shareholders (TSR)".
The TSR value in 2017 was -11.7%, while the value of the Moscow Stock Exchange index was -3.6%. The
negative dynamics of the Company's shares is primarily due to a general decline in the market, which was
exerted by geopolitical risks, as well as a decrease in interest in Russian companies by global investors. For
most of the year, the dynamics of the Company's shares corresponded to the average market. At the end of
100
the year, the main factors in the reduction of the share price were: the decision of the Board of Directors of
the Company on temporary conservation of the construction project of Zagorskaya PSHPP-2, confirmation
of information on the additional issue of the company's shares for financing the Pevek-Bilibino power
transmission line project and others.
During the inspection, our attention was drawn to any facts that would give us reason to believe that these
actual performance of the Group for the year 2017 and the degree of achievement of the target values
calculated incorrect; there are any other major causes of deviations of actual indicators of the results of
operations of the planned LTDP; the intended use by the Group for 2017 respective budgets was carried out
inefficiently.
Mitrofanov LM
Executive Director
HLB Vneshaudit JSC
March, 30, 2018
101
Appendix No 11. Information Concerning Establishment of Unified
Treasuries in the Head Companies, Subsidiaries and Affiliates
As part of the implementation of the Directives of the Government of the Russian Federation of 08.08.2014
No. 5110 p-P13, of March 26, 2015 № 1796p-P13, the Board of Directors of PJSC "RusHydro" (hereinafter
- the Company) made a decision "On the establishment of a single Treasury of PJSC RusHydro, its
subsidiaries (Minutes No. 203 dated September 15, 2014) and issued an order (Minutes No. 215 dated
05.05.2015) to conduct an annual analysis of the results of the creation of a single Treasury of RusHydro
Group.
The Unified Treasury (hereinafter - UT) functions as a methodological and information center from June 30,
2015, whose activities are aimed at regulating the work of the UT, optimizing cash flows and centralizing
the management of financial risks of RusHydro Group.
The UT represents a vertically integrated three-tier system of treasury organization of RusHydro Group:
UT - at the top level of management,
Treasury of Subgroups - at the middle management level
Treasury subsidiaries - at the lower management level.
On an annual basis, an inventory of the settlement and payment system of the RusHydro Group is
conducted, following which a report on the annual analysis of the results of the creation of the RusHydro
Group's UT is sent to the Ministry of Finance of the Russian Federation and the Federal Financial
Monitoring Service.
For the expired period in 2017, as part of the optimization of the RusHydro Group's management structure
and operating expenses, the following was made in the reporting period:
Consolidation of treasuries of the RusHydro Subgroups and RAO ES of the East, caused by
the merger of the executive offices of PJSC RusHydro and RAO ES Of the East and the
transfer of functions of the sole executive body of RAO ES of the East to PJSC RusHydro;
Pilot implementation of the standard development of the Unified Accounting System of RAO
ES of the East JSC in the framework of automation of treasury functions in subsidiaries;
Reducing the number of used settlement accounts and optimizing the terms of service (tariffs)
under contracts with banks.
During the reporting period, the UT also continued to work on the unification of approaches to centralizing
risk management and optimizing the cash flows of RusHydro Group companies:
established typical business processes for procedures for obtaining / providing intra-group
loans, including the procedure for determining the cost of borrowing, and optimized the
structure and cost of servicing the portfolio of intra-group borrowings;
the requirements to the level of reliability and financial stability of partner banks have been
raised based on the results of additional analysis of the selection of credit institutions operating
in the RusHydro Group for the placement of funds and pursuant to the instruction of the Audit
Committee under the Board of Directors of PJSC RusHydro (Minutes No. 98 dated May 31,
2017 ).
Based on the results of the measures taken and in order to ensure financial stability, transparency and
efficiency of the activities of the RusHydro Group companies, a new Regulation on the single Treasury of
RusHydro Group and documents regulating its activities were approved (Minutes No. 1078 of the
Company's Management Board of November 27, 2012).
102
Appendix No 12. Information on the results of implementation of Executive Orders and Instructions issued by
the President of the Russian Federation, and Instructions issued by the Government of the Russian Federation in
2017
N
Registration number
№
The Body that issued Executive
Orders/ Instructions
Brief contents of the Executive Orders/ Instructions
1.
Вх-00005.НШ
Office of the Government of the
Russian Federation
On consideration of the message of the Kyrgyz Party and
submission of proposals.
Date of issue of the
Executive Orders/
Instructions
01/09/2017
Date of completion
of the Executive
Orders/Instructions
02/14/2017
2.
Вх-00006.НШ
Office of the Government of the
Russian Federation
About participation in the St. Petersburg International Economic
Forum in the status of the company - Partner
01/09/2017
01/12/2017
3.
Вх-920.НШ
4.
Вх-1355.НШ
-
Deputy Prime Minister of the Russian
Federation
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
Deputy Prime Minister of the Russian
Federation
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
-
On providing information on the main results of activities in 2016
in time until 01.03.2017
08/06/2017
03/01/2017
On the direction of the minutes of the meeting on the GRESs in
the preparation of regulatory legal acts of the Government of the
Russian Federation of 09.02.2017
02/15/2017
02/17/2017
5.
Вх-1409.НШ
6.
Вх-2001.НШ
-
Deputy Prime Minister of the Russian
Federation
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
Administration of the President of the
Russian Federation
On the direction of the protocol on the development of the
territory of the advanced social and economic development
"Bolshoi Kamen"
02/16/2017
03/24/2017
About the All-Russian Climate Week - 2017
03/06/2017
03/20/2017
7.
Вх-2323.НШ
Office of the Government of the
Russian Federation
On providing information during the 19th meeting of the
Intergovernmental Russian-Kyrgyz Commission
03/15/2017
06/09/2017
103
8.
Вх-2369.НШ
of
the
Office
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
On consideration of the appeal of the general director of JSC
"Zyryansky coal mine" Tsivki Yu.V.
03/16/2017
03/21/2017
9.
Вх-1483.НШ
Office of the Government of the
Russian Federation
On sending information on measures taken to increase the
effectiveness of counteracting corruption until 15.03.2017
02/17/2017
03/14/2017
10.
Вх-1829.НШ
11.
Вх-1951.НШ
Office of the Government of the
Russian Federation
Office of the Government of the
Russian Federation
On the provision of information in time to 24.03.2017
03/03/2017
03/23/2017
On sending information on additional measures to improve the
effectiveness of countering corruption
03/03/2017
03/14/2017
13.
Вх-2514.НШ
Office of the Government of the
Russian Federation
14.
Вх-2558.НШ
15./.
Вх-2561.НШ
16.
Вх-2681.НШ
17.
Вх-2902.НШ
18.
Вх-3524.НШ
of
the
Office
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
Office of the Government of the
Russian Federation
-
Deputy Prime Minister of the Russian
Federation
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
Office
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
Office of the Government of the
Russian Federation
the
of
On sending information about employees of HR departments and
units for the prevention of corruption and other offenses on or
before 03.04.2017
On sending information on the work done to reduce the cost of
natural gas supplied by the Sakhalin-1 consortium
03/20/2017
04/03/2017
03/21/2017
03/27/2017
On the definition of quotas for the sixth stream of participants in
the federal program "Training and retraining of the reserve of
management personnel (2010-2018)"
03/21/2017
03/31/2017
On the direction of the minutes of the meeting on the GRESs in
the preparation of regulatory acts of the Government of the
Russian Federation pursuant to Federal Law No. 508-FL of
December 28, 2016 "On Amending the Federal Law" On Electric
Power Industry "
On the provision of information on management companies and
other executors of public services in arrears to housing and
communal services enterprises before 03.04.2017 (Order of the
President of the Russian Federation No. Pr-1479 of 06.07.2013)
On the provision of proposals for candidates of the management
reserve, as well as information on the topics of the final design
works in the period up to April 24, 2017
03/23/2017
03/31/2017
03/29/2017
04/12/2017
04/12/2017
04.24.2017
104
19.
Вх-3526.НШ
20.
Вх-4137.НШ
of
the
Office
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
Office of the Government of the
Russian Federation
21.
Вх-4241.НШ
Office of the Government of the
Russian Federation
22.
Вх-5187.НШ
Office of the Government of the
Russian Federation
23.
Вх-5363.НШ
Office of the Government of the
Russian Federation
On the development of options for renewing the power supply of
the plant and providing information in time to 14.04.2017
04/12/2017
04/04/2017
On the implementation of the instruction of the President of the
Russian Federation of April 19, 2017 No. Pr-729
04/25/2017
05/19/2017
On the provision of information on the implementation of
paragraph 3 of the Directive of the Government of the Russian
Federation of 30.05.2013 No. 2988p-P13 in time to 27.04.2017
On the direction of the list of instructions on the results of the
meeting on investment projects of the Republic of Khakassia and
the Krasnoyarsk Territory within the Krasnoyarsk Economic
Forum in Krasnoyarsk in the period from 21.04.2017
to
22.04.2017
On consideration and provision of requested information (Letter
of the Eurasian Economic Commission No. СС-1044/11 of
12.05.2017)
04/26/2017
04/27/2017
05/18/2017
10/30/2017
05/22/2017
05/25/2017
24.
Вх-8072.НШ
Office of the Government of the
Russian Federation
On providing information on the issue of inspection before July
17, 2017
7/10/2017
07/17/2017
25.
Вх-9242.НШ
of
the
Office
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
On the provision of a position on the implementation of the state
program of import substitution through the introduction of gas
turbine power plants
07/22/2017
08/24/2017
26.
Вх-9357.НШ
Administration of the President of the
Russian Federation
About summing up the results of the All-Russian climatic week -
2017
07/31/2017
08/04/2017
27.
Вх-8189.НШ
28.
Вх-.8286.НШ
of
the
Office
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
Deputy Prime Minister of the Russian
Federation
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
-
On providing information on the implementation of the minutes of
the meeting of 28.04.2017 No. YuT-P9-38pr
07/12/2017
07/18/2017
On the presentation by the partner of the 5th All-Russian Forum
"Future Intellectual Leaders of Russia" and about participation in
the events 01.09.2017
07/13/2017
07/25/2017
105
29.
Вх-9992.НШ
Office of the Government of the
Russian Federation
30.
Вх-9993.НШ
Office of the Government of the
Russian Federation
On consideration of the appeal of the Head of the Republic of
Sakha (Yakutia) on replenishment of the Endowment Fund of the
North-Eastern Federal University
On consideration of the appeal of the governor of the Volgograd
region
08/10/2017
08/29/2017
08/10/2017
09/01/2017
31.
Вх-12273.НШ
of
the
Office
Plenipotentiary
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
On the appeal of the Chairman of the Board of Directors of LLC
"Biotec" on the implementation of investment projects in the Far
East
9/19/2017
10/03/2017
32.
Вх-13661.НШ
Government
Federation
of
the
Russian
(from 29.06.17 No. 1706-292)
10/12/2017
10/16/2017
33.
Вх-13987.НШ
Office of the Government of the
Russian Federation
On the financing of works on the preparation of the bed of the
reservoir of the Ust-Srednekanskaya HPP.
10/18/2017
01/30/2017
34.
Вх-14330.НШ
Office of the Government of the
Russian Federation
About providing information
10/25/2017
11/01/2017
35.
Вх-14458.НШ
Office of the Government of the
Russian Federation
On strengthening control over the implementation of electricity
projects in the Far East, as well as for the implementation by RF
subjects of measures to fully load the facilities under construction.
10/26/2017
11/24/2017
36.
Вх-14644.НШ
Office of the Government of the
Russian Federation
On the elimination of the comments of the Accounts Chamber of
the Russian Federation
10/30/2017
11/07/2017
106
37.
Вх-14714.НШ
Office of the Government of the
Russian Federation
On the possible involvement of JSC "DVEUK" as the customer-
builder and the budget recipient for the project "construction of
two single-circuit HVL 110 kV" (Government order from
09.09.2017 No.№ AD-P9-96pr (item 5 of Section IV))
10/31/2017
11/24/2017
38.
Вх-15072.НШ
Office of the Government of the
Russian Federation
39.
Вх-15170.НШ
Office of the Government of the
Russian Federation
40.
Вх-15400.НШ
Office of the Government of the
Russian Federation
41.
Вх-16230.НШ
Office of the Government of the
Russian Federation
42.
Вх-17409.НШ
Office of the Government of the
Russian Federation
43.
Вх-17497.НШ
Office of the Government of the
Russian Federation
44.
Вх-17498.НШ
Office of the Government of the
Russian Federation
45.
Вх-17755.НШ
of
the
Plenipotentiary
Office
Representative of the President of the
Russian Federation in the Far Eastern
Federal District
46.
Вх-18247.НШ
Office of the Government of the
Russian Federation
the Government of
On the direction of the list of instructions of the President of the
Russian Federation and
the Russian
Federation, data in fulfillment of assignments contained in the
materials of the Accounts Chamber of the Russian Federation.
On the results of the 14th meeting of the Intergovernmental
Russian-Slovenian Commission
and
Scientific-Technical Cooperation.
for Trade-Economic
On attracting investments in the modernization of decentralized
generation sources, including using renewable energy sources in
the Far Eastern Federal District
On the appeal of the director of OOO "Transenergo" Samokhin
SM. with a request to conduct an analysis of the activities of PJSC
"DEK" (Letter of September 18, 2017 No. 236/1)
On the construction of power facilities in the Far East (Order of
the Government of the Russian Federation of 24.10.2017 No. UT-
P9-7092)
On the financing of works for the preparation of the bed of the
the
reservoir of
Government of the Russian Federation No. AD-P9-5684 of
August 29,
the Ust-Srednekanskaya HPP (Order of
On attracting investments in the modernization (replacement) of
decentralized sources of generation, including using renewable
energy sources in the territory of the Far Eastern Federal District
(item 5 of the RF Government order No.AD-P9-7383 of 07.11.17)
On the direction of the report of the Government of the Russian
Federation dated 05.12.2017. No. 8942p-P9 on the course of
implementation of the instruction of the President of the Russian
Federation of 13.11.2017. No. Pr-2376 on support of the appeal of
the Governor of the Chukotka Autonomous Okrug RV. Kopina on
the financing of measures for the district's energy supply
On the Source of Compensation for Falling Income of JSC
"DGK" on Gas for 2016
11/07/2017
02/09/2018
11/08/2017
12/18/2017
11/13/2017
01/30/2018
11/23/2017
01/10/2018
12/14/2017
01/12/2018
12/15/2017
12/27/2017
12/15/2017
01/16/2018
12/20/2017
12/26/2017
12/28/2017
12/29/2017
107
Appendix No 13. Information on companies controlled by the PJSC “RusHydro” that are significant important
Controlled company
The role for RusHydro Group and key
activities
Mechanisms that ensure accountability and
control within the Group
1. Joint Stock Company
"RAO Energy Systems of the
East" (JSC "RAO ES of the
East")
Public
2.
Company
Energy Company"
"DEK")
"Far
Joint-Stock
Eastern
(PJSC
stakes
The company owns
in energy
companies operating in the United Energy
System of the East (Primorye, the Khabarovsk
Territory, the Amur Region, the JAP and the
south of Yakutia), as well as in isolated power
systems (Yakutia, Sakhalin Oblast, Magadan
also
Oblast, Kamchatka Gray),
implements
the
RusHydro group in the Far Eastern Federal
District (Vostochnaya cogeneration station,
off-site
of Yakutsk-GRES-2,
Sakhalinskaya GRES-2, TPP in Sovetskaya
Gavan and others).
investment projects of
facilities
and
The share of PJSC "DEK" in the consolidated
revenue of RusHydro Group is 20.56%.
is
The company
the main Guaranteeing
electric power supplier for the population and
enterprises of the 2nd non-price zone of the
wholesale electricity market, and also has the
status of the Single Purchaser performing the
function of buying and selling electricity
(capacity) to participants in the wholesale
market of the second non-price zone.
PJSC RusHydro owns 84.39% of the
voting shares of RAO ES Of the
East, 99.98% of the voting shares
are in the possession of the
RusHydro Group;
the authority of the sole executive
body of JSC RAO ES of the East is
exercised by PJSC RusHydro;
the board of directors of JSC "RAO
ES of the East" is fully formed from
representatives of
the RusHydro
group.
PJSC RusHydro controls PJSC "
DEK " through an affiliated
organization - JSC "RAO ES of the
East".
JSC "RAO ES of the East" owns
51.03% of the voting shares of PJSC
"DEK", in the possession of the
RusHydro Group, 52.16% of the
voting shares are consolidated.
The authority of the sole executive
body of the Company is exercised
by JSC ESС RusHydro, 100% of the
voting shares of which belong to the
RusHydro group.
9 members of the Board of Directors
of PJSC " DEK " out of 15 were
elected by the votes of RusHydro
Group.
Additional Information
In the IFRS of RusHydro,
the Company is classified
as "Subgroup of RAO ES
of the East".
Information on the
functional relationships
between the key companies
of the Group
In its activities, RAO ES of
the East, JSC interacts with
PJSC RusHydro, with PJSC
Management
RusHydro
Company
renders
(which
JSC RAO ES of the East
the
agency
services
implementation
of
investment projects), energy
companies of the group in the
Far Eastern Federal District.
for
In its activities, PJSC " DEK"
the energy
interacts with
companies of the group in the
Far Eastern Federal District.
In the IFRS of RusHydro,
the Company is classified
as "Subgroup of RAO ES
of the East".
3. Joint Stock Company "Far
Eastern
Generating
Company" (JSC "FGC")
The share of JSC " FGC " in the consolidated
revenues of the RusHydro Group is 7.64%.
The company produces heat and electric
PJSC RusHydro controls JSC FGC
through an affiliated organization -
PJSC " DEK".
PJSC " DEK" owns 100% minus
In its activities, JSC " FGC"
interacts
energy
with
companies of the group in the
Far Eastern Federal District.
In the IFRS of RusHydro,
the Company is classified
as "Subgroup of RAO ES
of the East".
108
Joint
Public
4.
Company
(PJSC "Yakutskenergo")
Stock
"Yakutskenergo"
Joint-Stock
Public
5.
Company
"Krasnoyarskenergosbyt"
(PJSC
"Krasnoyarskenergosbyt")
in
located
energy, and also provides centralized heat
supply to consumers in the areas of power
plants
the Khabarovsk and
Primorsky Krais, the Amur Region, the Jewish
Autonomous Region and the southern region
of the Republic of Sakha (Yakutia). JSC "
FGC" also has the function of selling thermal
energy to end users
The share of PJSC "Yakutskenergo" in the
consolidated revenues of RusHydro Group is
7.08%.
The company carries out the production of
electric and heat energy and provides the
functions of a guaranteeing supplier of electric
power in the Republic of Sakha (Yakutia).
The share of PJSC "Krasnoyarskenergosbyt"
in the consolidated revenues of the RusHydro
Group is 9.15%.
is
The company
the main Guaranteeing
electricity supplier for the population and
enterprises in the territory of the Krasnoyarsk
Territory.
Also, PJSC "Krasnoyarskenergosbyt" provides
services for the sale, maintenance and repair
of electricity metering devices, high-voltage
testing of electrical equipment; energy audit of
services under agency
objects;
contracts.
Starting from December 1, 2009, the company
renders services for the management of multi-
apartment buildings.
renders
one share of voting shares of JSC "
FGC", 100% of voting shares are
consolidated in the ownership of
RusHydro Group.
The Board of Directors of JSC "
the
the RusHydro
is fully formed from
FGC"
representatives of
group.
JSC "RAO ES of the East" owns
49.37% of the voting shares of PJSC
"Yakutskenergo".
PJSC RusHydro owns 27.80% of the
voting shares of PJSC
Yakutskenergo.
77.17% of the voting shares are in
the possession of the RusHydro
Group.
The Board of Directors of PJSC
"Yakutskenergo" is fully formed
from representatives of the
RusHydro group.
PJSC RusHydro controls PJSC
Krasnoyarskenergosbyt through its
affiliated companies - JSC ESC
RusHydro and JSC Hydroinvest.
JSC ESC RusHydro holds 51.75%
of the voting shares of PJSC
Krasnoyarskenergosbyt, 65.81% of
the voting shares in the holding of
the RusHydro Group are
consolidated.
The authority of the sole executive
body of the Company is exercised
by JSC ESK RusHydro, 100% of the
voting shares of which belong to the
RusHydro group.
7 members of the Board of Directors
of PJSC "Krasnoyarskenergosbyt"
out of 9 are elected by the votes of
RusHydro Group.
In the IFRS of RusHydro,
the Company is classified
as "Subgroup of RAO ES
of the East".
In the IFRS of RusHydro,
the Company is classified
as JSC “ESС RusHydro”.
its
activity,
In
PJSC
"Yakutskenergo" cooperates
with the energy companies of
the group in the Far Eastern
Federal District.
activities,
In
its
Krasnoyarskenergosbyt
energy
cooperates with
the group,
companies of
including
ESC
RusHydro, which organizes
energy sales business in the
RusHydro group.
JSC
6.
Joint-stock
company The share of JSC Zagorsk HPSPP-2 from the
PJSC "RusHydro" owns 100% of
In its activities JSC Zagorsk
In
the
IFRS
of
109
"Zagorsk HPSPP-2"
"Zagorsk HPSPP-2")
(JSC
value of the consolidated assets of RusHydro
Group is 6.13%.
The company carries out measures to organize
the construction of the Zagorsk HPSPP-2.
the voting shares of JSC "Zagorsk
HPSPP-2";
authority of the sole executive body
is exercised by JSC “RusHydro
MC”, 100% of voting shares of
which belongs to PJSC RusHydro;
The Board of Directors of JSC
Zagorsk HPSPP-2 is fully formed
from representatives of the
RusHydro Group.
HPSPP-2 interacts with JSC
“RusHydro MC”, which
performs the functions of the
sole executive bodies of the
of RusHydro's
majority
controlled companies that are
customers of construction, as
the project
well as with
the
organizations
RusHydro group.
of
RusHydro's JSC Zagorsk
HPSPP-2 is classified as
"Other segments".
110
Appendix No 14. List of the most significant transactions executed by the
Company and other significant controlled entities during the last year
The Statute of PJSC RusHydro does not determine criteria for significance of transactions of controlled
entities.
At the same time there are regulations on disclosure by issuers in quarterly reports of major transactions,
transactions in fulfillment of which there is an interest, as well as significant transactions - transactions, the
amount of obligations under which is 10 and more percent of the balance value of the stock company assets.
As the most significant transactions carried out in 2017 by controlled entities that have significant
significance for PJSC RusHydro, the review (excluding intragroup transactions) of major transactions,
interested party transactions and approval of which is taken by the General Meeting of Shareholders of the
relevant controlled organization, as well as transactions, the amount of obligations for which is 10 or more
percent of the book value of the assets of the respective controlled entity and.
Major transactions, transactions, the amount of obligations for which is 10 or more percent of the book value
of assets, were not committed by PJSC RusHydro.
Controlled by the PJSC RusHydro of the organization, having substantial significance for it as of
31.12.2017
1. Full corporate name: Stock company «Zagorsk Hydroelectric Pumped Storage Power Plant-2»
Abbreviated company name: SC «Zagorsk HPSPP-2»
2. Full corporate name: Public Joint-Stock Company «RAO Energy Systems of the East»
Abbreviated company name: PJSC «RAO ES of the East»
3. Full corporate name: Public Joint-Stock Company «Far Eastern Energy Company»
Abbreviated company name: PJSC «DEK»
4. Full corporate name: Stock company «Far Eastern Generating Company»
Abbreviated company name: SC «DGK»
5. Full corporate name: Public Joint-Stock Company «Krasnoyarskenergosbyt»
Abbreviated company name: PJSC «Krasnoyarskenergosbyt»
6. Full corporate name: Public Joint-Stock Company «Yakutskenergo»
Abbreviated company name: PJSC «Yakutskenergo»
111
No.
Type and subject of a
transaction
Transactio
n Parties
of
Content
transaction,
including
rights
obligations,
establishment,
modification
termination
which
transaction
directed
a
civil
and
on
or
of
a
is
the
Deadline
for
fulfillment of
the
obligation under the
transaction, parties
beneficiaries
and
the
under
the
transaction,
amount
the
transaction in money
in
and
terms
percentage of
the
value of the issuer's
assets
of
1
1
Supplementary
agreement No. 3 to the
Free Sale and Purchase
Agreement
No.
KP-BOGUCHAN-
KRASNOEN-S-
SDEMO-ATS15
12/30./2015
1224164230170-
dd.
The seller -
PJSC
"Boguchans
kaya HPP",
the buyer -
PJSC
"Krasnoyar
sk-
energosbyt"
from
Period of execution
obligations
00:00 hours.
01/01/2016 to 24:00
hours.
12/31/2017;
Transaction size
6 656 715 120 rubles
00 kopecks, which is
the book
131% of
value of assets as of
December 31, 2016.
of
and
By agreement of
the Parties: 1) The
the
Seller
the
Buyer extend
the
validity
Agreement
until
31.12.2017.
2)
a
Establish
contractual volume
supplied
of
capacity:
for 2016 - 16,200
MW,
for 2017 - 15 850
MW.
3) Provide for the
for
procedure
settlements
under
the Agreement in a
new version.
of
Date
taking
decision
about
transactio
n
approval
Regulator
y body of
a
controlle
entity
d
that has
substanti
al
significan
ce
PJSC
RusHydr
o, having
taken
decision
about
transactio
n
approval
for
The
Board of
Directors
05/16/201
6
of
the
value
The
assets
of
controlled
that
company
substantial
has
significance
for
PJSC RusHydro
as at the end date
of
accounting
period (quarter,
year),
that
preceded making
the
transaction
(date of contract)
and concerning
which
book-
keeping
(financial) report
is composed
in
accordance with
legislation of the
Russian
Federation
5,094,485
thousand
rubles.
as of December
31, 2016.
Transacti
on closing
date (date
of
contract)
on
Data
transaction
approval
PJSC
RusHydro
of
in
to a
Category
transaction
relation
controlled
entity that has
substantial
significance for
PJSC
RusHydro
05/26/201
6
-
is
A
significant
transaction, the
of
subject
the
which
and
purchase
sale of capacity,
the value of
which exceeds
10%
the
of
book value of
the assets of the
controlled
company
of
that
Date
composing
and
number of
Minutes of
Meeting
(proceeding
s)
of
authorized
regulatory
body of a
controlled
entity
has
substantial
significance
for PJSC
RusHydro,
where
the
decision
about
transaction
approval
was taken
05/25/2017
Minutes
No. 146
112
Appendix No 15. Accounting statements and the Independent Auditor's
audit report as of December 31, 2017 (in accordance with RAS)
PJSC «RusHydro»
Financial statements and
Independent Auditor’s report
31 December 2017
Translation from Russian original
113
Content
INDEPENDENT AUDITOR’S REPORT
FINANCIAL STATEMENTS
BALANCE SHEET ............................................................................................................................ 1
STATEMENT OF FINANCIAL RESULTS ........................................................................................ 3
STATEMENT OF CHANGES IN EQUITY ........................................................................................ 4
STATEMENT OF CASH FLOWS ..................................................................................................... 5
I.
General information ................................................................................................................. 7
1.1
Information about the Company .......................................................................................... 7
1.2 The Company's operating environment ............................................................................... 8
II. Accounting policies ................................................................................................................ 11
2.1 Basis of presentation ......................................................................................................... 11
2.2 Assets and liabilities denominated in foreign currency ...................................................... 11
2.3 Accounting for assets and liabilities ................................................................................... 11
2.4 Property, plant and equipment, construction-in-progress and income-bearing investments
in tangible assets ............................................................................................................... 12
2.5
Investments ........................................................................................................................ 13
2.6
Inventories ......................................................................................................................... 14
2.7 Expenses of future periods ................................................................................................ 14
2.8 Accounts receivable ........................................................................................................... 14
2.9 Cash equivalents and presentation of cash flows in the statement of cash flows ............. 15
2.10 Share capital, additional and reserve capital ..................................................................... 15
2.11 Loans and bank credits received ....................................................................................... 15
2.12 Estimated liabilities, contingent liabilities and contingent assets ....................................... 15
2.13 Revenue recognition .......................................................................................................... 16
2.14 Recognition of expenses ................................................................................................... 16
2.15 Changes in the accounting policies ................................................................................... 17
III. Disclosure of material indicators ............................................................................................ 18
3.1 Non-current assets (Section I of the balance sheet) ......................................................... 18
3.1.1
3.1.2
3.1.3
Property, plant and equipment (line 1151 of the balance sheet), construction-in-
progress (line 1152 of the balance sheet), income-bearing investments in tangible
assets (line 1160 of the balance sheet) ................................................................... 18
Long-term investments (line 1170 of the balance sheet) ........................................ 22
Other non-current assets (line 1190 of the balance sheet) ..................................... 28
3.2 Current assets (Section II of the balance sheet) ............................................................... 28
3.2.1
3.2.2
3.2.3
3.2.4
Inventories (line 1210 the balance sheet) ............................................................... 28
Accounts receivable (line 1230 of the balance sheet) ............................................. 28
Short-term investments (Line 1240 of the balance sheet) ...................................... 33
Cash and cash equivalents (line 1250 of the balance sheet) .................................. 35
3.3. Equity and reserves (Section III of the balance sheet) ...................................................... 37
3.3.1
3.3.2
3.3.3
3.3.4
Share capital (line 1310 of the balance sheet) ........................................................ 37
Revaluation of non-current assets (line 1340 of the balance sheet) ....................... 38
Additional paid-in capital (line 1350 of the balance sheet) ...................................... 38
Reserve capital (line 1360 of the balance sheet) .................................................... 38
3.4. Non-current liabilities (Section IV of the balance sheet) .................................................... 38
3.4.1
3.4.2
Long-term borrowings (line 1410 of the balance sheet) .......................................... 38
Other non-current liabilities (line 1450 of the balance sheet) .................................. 40
3.5. Current liabilities (Section V of the balance sheet) ............................................................ 40
3.5.1
3.5.2
3.5.3
Short-term borrowings (line 1510 of the Balance sheet) ......................................... 40
Accounts payable (line 1520 of the balance sheet) ................................................ 41
Estimated liabilities (line 1540 of the balance sheet) .............................................. 41
3.6. Off-balance-sheet valuables .............................................................................................. 42
3.6.1
3.6.2
3.6.3
3.6.4
Leased property, plant and equipment .................................................................... 42
Collateral for liabilities and payments received ....................................................... 42
Collateral for liabilities and payments issued .......................................................... 43
Non-deliverable forward contract for shares ........................................................... 44
3.7
Income and expenses on operating activities (statement of financial results) .................. 45
3.7.1
3.7.2
Revenue (line 2110 of the statement of financial results) ....................................... 45
Cost of sales (line 2120 of the statement of financial results) ................................. 45
3.8 Other income and expenses (line 2340 and line 2350 of the statement of financial
results) ............................................................................................................................... 46
3.9 Taxes ................................................................................................................................. 46
3.10 Dividends ........................................................................................................................... 49
3.11 Earnings per share ............................................................................................................ 49
3.12 Related Parties .................................................................................................................. 49
3.12.1 Controlling entity ...................................................................................................... 50
3.12.2 Sales to related parties ............................................................................................ 50
3.12.3 Purchases from related parties ............................................................................... 50
3.12.4 Settlements with non-state pension fund ................................................................ 51
3.12.5 Settlements with related parties .............................................................................. 51
3.12.6 Related parties' debt within investments ................................................................. 51
3.12.7
Income from investments in other companies (related parties) .............................. 52
3.12.8 Remuneration to key management personnel ........................................................ 52
3.12.9 Cash flows between the Company and subsidiaries/associates ............................. 53
3.13 Segment Information ......................................................................................................... 54
3.14 Contingent liabilities ........................................................................................................... 54
3.15 Financial risk management ................................................................................................ 54
3.16 Subsequent events ............................................................................................................ 57
Independent Auditor’s Report
To the Shareholders and Board of Directors of Public Joint Stock Company Federal
Hydro-Generating Company – RusHydro:
Our opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
PJSC RusHydro (the “Company”) as at 31 December 2017, and its financial performance and its cash
flows for the year then ended in accordance with the reporting rules established in the Russian
Federation.
What we have audited
The Company’s financial statements comprise:
•
•
•
•
•
the balance sheet as at 31 December 2017;
the statement of financial results for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
the notes to the balance sheet and statement of financial results.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical
requirements of the Auditor’s Professional Ethics Code and Auditor’s Independence Rules that are
relevant to our audit of the financial statements in the Russian Federation. We have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Emphasis of matter
We draw attention to Note 3.1.2 Long-term investments (balance sheet line 1170) to the balance sheet
and statement of financial results which describes the reasons for non-revaluation of quoted financial
investments in shares of AO RAO ES of East which previously had current market value, at their last
available market value, PAO Yakutskenergo and PAO Far East Energy Company at their current
market values. As of 31 December 2017 the amount of unrecognised decrease in the market value as
compared to the carrying value of these investments is RUB 6,702 million, as of 31 December 2016 –
RUB 6,614 million. Our opinion is not modified in respect of this matter.
AO PricewaterhouseCoopers Audit
White Square Office Center 10 Butyrsky Val Moscow, Russia, 125047
T: +7 (495) 967-6000, F:+7 (495) 967-6001, www.pwc.ru
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian.
All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information,
views or opinions, the original language version of our report takes precedence over this translation.
Our audit approach
Overview
Materiality
• Overall materiality: Russian Roubles (“RUB”) 2,390 million, which
represents 5% of the average profit before tax for the last three years.
Key audit matters
•
Impairment assessment of financial investments and accounts
receivable from subsidiaries and other related parties
We designed our audit by determining materiality and assessing the risks of material misstatement in
the financial statements. In particular, we considered where management made subjective
judgements; for example, in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. We also addressed the risk of
management override of internal controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Company, the
accounting processes and controls, and the industry in which the Company operates.
Materiality
The scope of our audit was influenced by our application of the concept of materiality. An audit is
designed to obtain reasonable assurance whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Company materiality for the financial statements as a whole as set out in the table
below. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
if any, both individually and in aggregate on the financial statements as a whole.
Overall materiality
RUB 2,390 million
How we determined it
5% of the average profit before tax for the last three years
Rationale for the
materiality benchmark
applied
We chose profit before tax as the benchmark because, in our
view, it is the benchmark against which the performance of
the Company is most commonly measured by users, and is a
generally accepted benchmark. We chose 5% which is
consistent with quantitative materiality thresholds used for
profit-oriented companies in this sector.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the accompanying financial statements. These matters were addressed in the context of
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian.
All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information,
views or opinions, the original language version of our report takes precedence over this translation.
ii
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter
How our audit addressed the Key audit
matter
Impairment assessment of financial
investments and accounts receivable
from subsidiaries and other related
parties
See paras 2.5, 2.8, 3.1.2, 3.2.2 и 3.2.3 of the
explanatory notes to the balance sheet and
income statement.
At 31 December 2017, the Company’s aggregate
carrying amount of investments was RUB
324,599 million (net of the impairment
provision of RUB 27,725 million), or 33% of
the total value of Company’s assets.
Investments primarily include investments of
the Company in equity and debt securities of
its subsidiaries and other related parties.
At 31 December 2017, the carrying amount of
accounts receivable from related parties was
RUB 140,726 million (net of the doubtful debt
provision of RUB 4,123 million), or 14% of the
total value of Company’s assets.
As part of the annual reporting process the
Company performs a comprehensive analysis
of all investments that are not carried at their
current market value and of accounts
receivable from related parties (primarily in
the form of interest-free loans and bills) as at
the reporting date, to identify any indications
of impairment and its amount.
The Company decides on the need to recognise
impairment of the above assets following the
results of the comprehensive analysis of the
current and expected financial position of the
issuer taking into account impairment criteria
established in PBU 19/02, and the assessment
of the debtor’s solvency, individual specifics,
payment dynamics and other factors.
We focused on the impairment assessment of
investments in and receivables from related
parties due to significance of their carrying
value and because the assessment process is
complicated and requires significant
Our audit procedures aimed at analysing the
impairment testing by the management of
Company’s investments in equity and debt
securities of related parties and accounts
receivable from related parties, included:
• understanding of how impairment estimates
were calculated;
• review of the methodology used by
Company's management for the impairment
test purposes;
• review of reasonableness of accounting
estimates made by the management and
management’s position on whether there are
indicators of assets’ potential impairment;
• review on a test basis of key assumptions and
source data used in the impairment tests and
their compliance with the approved budgets
and business plans, external available and
reliable information and our expert
knowledge of industry specifics;
• review of the collectability analysis
performed by management taking into
account the solvency analysis of contractors
as at the reporting date, any intention to
allow payment by instalments and other
factors considered by management;
• review on a test basis of the calculation
accuracy and appropriateness of
presentation in the financial statements of
impairment provisions for investments and
doubtful debts;
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian.
All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information,
views or opinions, the original language version of our report takes precedence over this translation.
iii
Key audit matter
management’s judgements, and impairment
provisions for investments and doubtful debts
can be significant.
How our audit addressed the Key audit
matter
• receipt and analysis of management’s written
representations related to performed
impairment testing of these assets.
Following the results of our procedures, we
believe that estimates and judgements made by
management with regard to the impairment of
investments and accounts receivable of related
parties are relevant for the purposes of the
attached financial statements.
Acceptability of the current estimates made by
the Company management for the purpose of
the financial statements for the year ended
31 December 2017 does not guarantee that
future events that are inherently uncertain
would not lead to a significant change in these
estimates.
In addition, we verified compliance of
disclosures in paras 2.5, 2.8, 3.1.2, 3.2.2 и 3.2.3
of the explanatory notes to the balance sheet and
income statement, with the disclosure
requirements as per PBU 1/2008, PBU 19/02.
Our procedures have not identified any findings
that evidence that there is a need for any
significant adjustments to these financial
statements.
Other information
Management is responsible for the other information. Other information includes PJSC RusHydro’s
Annual Report for 2017 and Issuer’s Report of PJSC RusHydro for Q1 2018, but does not include the
financial statements and our auditor’s report thereon. PJSC RusHydro’s Annual Report for 2017 and
Issuer’s Report of PJSC RusHydro for Q1 2018 are expected to be made available to us after the date of
this auditor’s report.
Our opinion on the financial statements does not cover the other information and we will not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above, when it is made available to us, and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian.
All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information,
views or opinions, the original language version of our report takes precedence over this translation.
iv
Responsibilities of management and those charged with governance for the
financial statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with the reporting rules established in the Russian Federation, and for such internal
control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian.
All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information,
views or opinions, the original language version of our report takes precedence over this translation.
v
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the accompanying financial statements and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
The certified auditor responsible for the audit resulting in this independent auditor’s report, is
Alexey Sergeevich Ivanov.
26 March 2018
Moscow, Russian Federation
A. S. Ivanov, certified auditor (licence no. 01-000531), AO PricewaterhouseCoopers Audit
Audited entity: PJSC RusHydro
Independent auditor:
AO PricewaterhouseCoopers Audit
Certificate of inclusion in the Unified State Register of Legal Entities
issued on 26 December 2004 under registration № 1042401810494
Krasnoyarsk, Krasnoyarsk Region, Russian Federation, 660017
State registration certificate No. 008.890,
issued by Moscow Registration Chamber on 28 February 1992
Certificate of inclusion in the Unified State Register of Legal Entities
issued on 22 August 2002 under registration № 1027700148431
Member of Self-regulated organization of auditors «Russian Union of
auditors» (Association)
ORNZ 11603050547 in the register of auditors and audit
organizations
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian.
All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information,
views or opinions, the original language version of our report takes precedence over this translation.
vi
BALANCE SHEET
as at 31 December 2017
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PAO RusHydro)
Taxpayer identification number
Type of activity Electricity generation by hydroelectric power plants
Form of incorporation/form of ownership
Public joint-stock company/mixed Russian ownership with a federal ownership share
Measurement unit: RUB mln
Address: Krasnoyarsk, the Krasnoyarsk Territory, Russia, 660017
Form on OKUD
Date (year, month, day)
OKPO
CODES
0710001
2017/12/31
75782411
INN 2460066195
OKVED
35.11.2
OKOPF/OKFC
12247 / 41
OKEI
385
As at
31 December
2017
4
As at
31 December
2016
5
As at
31 December
2015
6
Note
1
Narrative
2
ASSETS
I. NON-CURRENT ASSETS
Intangible assets
Results of research and development
3.1.1 Property, plant and equipment, incl.:
fixed assets
construction in process
Income-bearing investments in tangible assets
3.1.1
3.1.2 Financial investments, incl.:
investments in subsidiaries, associates and other
entities
loans issued
promissory notes
3.1.3 Other non-current assets
Total Section I
II. CURRENT ASSETS
Inventories
Value added tax on goods purchased
3.2.1
3.9
3.2.2 Accounts receivable, incl.:
accounts receivable (payments expected later
than 12 months after the reporting date), incl.:
buyers and customers
advances issued
promissory notes
loans issued
other debtors
accounts
within 12 months after the reporting date), incl.:
(payments
receivable
expected
buyers and customers
advances issued
promissory notes
loans issued
other debtors
Financial investments (excl. cash equivalents),
incl.:
3.2.3
bank deposits
loans issued
promissory notes
3.2.4 Cash and cash equivalents
Other current assets
Total Section II
TOTAL
Line
code
3
1110
1120
1150
1151
1152
1160
1170
1171
1172
1173
1190
1100
1210
1220
1230
1231
1231.1
1231.2
1231.3
1231.4
1231.5
1232
1232.1
1232.2
1232.3
1232.4
1232.5
1240
1241
1242
1243
1250
1260
1200
1600
1,267
920
419,635
382,007
37,628
-
312,149
256,730
55,419
-
4,222
738,193
4,258
30
177,308
54,713
34
19,819
29,931
2,600
2,329
122,595
6,726
4,276
2,385
64,331
44,877
12,450
163
11,686
601
50,929
11
244,986
983,179
1,324
1,077
409,109
372,514
36,595
-
292,273
264,587
27,085
601
4,703
708,486
4,252
51
149,614
62,615
178
20,004
29,312
11,258
1,863
86,999
7,120
10,206
5,459
30,792
33,422
5,305
4,075
1,230
-
40,954
11
200,187
908,673
893
1,091
392,723
344,986
47,737
7,065
320,097
267,664
51,832
601
3,287
725,156
4,115
40
129,291
62,549
976
28,524
28,578
3,447
1,024
66,742
6,741
14,495
20,809
12,925
11,772
15,879
10,609
5,270
-
18,139
11
167,475
892,631
1
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
Note
1
Narrative
2
EQUITY AND LIABILITIES
III. CAPITAL AND RESERVES
3.3.1 Charter capital
3.3.2 Revaluation of non-current assets
3.3.3 Additional capital (excl. revaluation)
3.3.4 Reserve capital
Retained earnings (loss), incl.:
undistributed profit of previous years
undistributed profit of the current year
Total Section III
IV. LONG-TERM LIABILITIES
3.4.1 Borrowings and bank loans
3.9
3.4.2 Other liabilities
Deferred tax liabilities
Total Section IV
V. SHORT-TERM LIABILITIES
3.5.1 Borrowings and bank loans
3.5.2 Accounts payable, incl.:
suppliers and contractors
payables to employees
payables to state non-budgetary funds
taxes payable
dividends payable
payables in respect of shares issued
other creditors
Income of future periods
3.5.3 Estimated liabilities
Other liabilities
Total Section V
TOTAL
Form 0710001 p. 2
As at
31 December
2017
4
As at
31 December
2016
5
As at
31 December
2015
6
426,289
52,606
58,424
13,371
274,994
238,845
36,149
825,684
71,698
17,113
4,264
93,075
50,258
10,563
4,040
244
134
5,242
141
-
762
67
2,976
556
64,420
983,179
386,255
52,705
58,424
11,278
260,674
218,797
41,877
769,336
94,848
13,676
3,746
112,270
14,025
9,681
4,190
24
14
4,697
122
33
601
73
2,447
841
27,067
908,673
386,255
52,928
58,424
9,776
235,086
205,064
30,022
742,469
105,070
12,402
2,195
119,667
18,940
9,822
5,492
669
135
3,103
67
-
356
70
601
1,062
30,495
892,631
Line
code
3
1310
1340
1350
1360
1370
1371
1372
1300
1410
1420
1450
1400
1510
1520
1521
1522
1523
1524
1525
1526
1527
1530
1540
1550
1500
1700
Chairman of Management Board – General Director
____________________
N. G. Shulginov
(clarification of signature)
Chief accountant
26 March 2018
___________________
Y. G. Medvedeva
(clarification of signature)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
2
STATEMENT OF FINANCIAL RESULTS
for the year ended 31 December 2017
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PAO RusHydro)
Taxpayer identification number
Type of activity Electricity generation by hydroelectric power plants
Form of incorporation/form of ownership
Public joint-stock company/mixed Russian ownership with a federal ownership
share
Measurement unit: RUB mln
Form on OKUD
Date (year, month, day)
OKPO
INN
OKVED
CODES
0710002
2017/12/31
75782411
2460066195
35.11.2
OKOPF/OKFC
12247 / 41
OKEI
385
Note
1
Narrative
2
3.12.7
3.7.1 Revenue
3.7.2 Cost of sales
Gross profit
Profit from sales
Income from participation in other companies
Interest income
Interest expense
Other income
Other expense
Profit before tax
Current income tax, incl.:
permanent tax liabilities
3.8
3.8
3.9
Change in deferred tax liabilities
Change in deferred tax assets
Other
Net profit
REFERENCE
Gain or loss from other operations not included in the net profit of
the period
Total financial result for the period
Basic earnings per share, RR
3.11
Line
code
3
2110
2120
2100
2200
2310
2320
2330
2340
2350
2300
2410
2421
2430
2450
2460
2400
2520
2500
2900
Year ended
31 December
2017
4
144,697
(83,807)
60,890
60,890
2,563
8,759
(8,280)
7,895
(22,349)
49,478
(9,868)
3,088
(3,232)
(205)
(24)
36,149
-
36,149
0,08898
Year ended
31 December 2016
5
115,033
(56,356)
58,677
58,677
9,481
8,777
(7,592)
23,754
(38,336)
54,761
(11,188)
1,776
(2,658)
1,384
(422)
41,877
-
41,877
0,10842
Chairman of Management Board – General Director
____________________
N. G. Shulginov
(clarification of signature)
Chief accountant
26 March 2018
___________________
Y. G. Medvedeva
(clarification of signature)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
3
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2017
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PAO RusHydro)
Taxpayer identification number
Type of activity Electricity generation by hydroelectric power plants
Form of incorporation/form of ownership
Public joint-stock company/mixed Russian ownership with a federal ownership share
Measurement unit: RUB mln
Form on OKUD
Date (year, month, day)
OKPO
CODES
0710003
2017/12/31
75782411
INN 2460066195
OKVED
35.11.2
OKOPF/OKFC
12247 / 41
OKEI
385
Narrative
1
Line
code
2
Share capital
Additional capital
3
4
Reserve
capital
5
Retained earnings
Total
6
7
I.
Changes in equity
3100
386,255
111,352
9,776
235,086
742,469
Equity as of
31 December 2015
for 2016
Increase of equity,
including:
net profit
additional shares
issue
Decrease of equity,
including:
Dividends
Other
3210
3211
3214
3220
3227
3228
Additional capital
change
3230
Reserve capital change 3240
Equity as of
31 December 2016
3200
for 2017
Increase of equity,
including:
net profit
additional shares
issue
Decrease of equity,
including:
Dividends
Other
3310
3311
3314
3320
3327
3328
Additional capital
3330
change
Reserve capital change 3340
Equity as of
31 December 2017
3300
Narrative
1
Net assets
-
x
-
-
x
-
x
x
-
x
-
-
x
-
-
x
x
-
x
x
(223)
x
x
1,502
41,877
41,877
x
(15,010)
(15,010)
-
223
(1,502)
41,877
41,877
-
(15,010)
(15,010)
-
x
x
386,255
111,129
11,278
260,674
769,336
40,034
-
40,034
-
x
-
x
x
-
-
-
-
x
-
-
-
x
-
x
x
(99)
x
x
2,093
36,149
36,149
x
(19,835)
(19,835)
-
99
(2,093)
76,183
36,149
40,034
(19,835)
(19,835)
-
x
x
426,289
111,030
13,371
274,994
825,684
III. Net assets
Line code
2
3600
As at 31
December 2017
3
825,745
As at 31
December 2016
4
769,399
As at 31
December 2015
5
742,536
Chairman of Management Board – General Director
____________________
Chief accountant
26 March 2018
___________________
N. G. Shulginov
(clarification of signature)
Y. G. Medvedeva
(clarification of signature)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
4
STATEMENT OF CASH FLOWS
for the year ended 31 December 2017
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PAO RusHydro)
Taxpayer identification number
Type of activity Electricity generation by hydroelectric power plants
Form of incorporation/form of ownership
Public joint-stock company/mixed Russian ownership with a federal ownership share
Measurement unit: RUB mln
Form on OKUD
Date (year, month, day)
OKPO
CODES
0710004
2017/12/31
75782411
INN 2460066195
OKVED
35.11.2
OKOPF/OKFC
12247 / 41
OKEI
385
Narrative
2
Line code
For 2017
For 2016
3
4
5
Note
1
3.2.4
3.2.4
Cash flows from operating activities
Receipts, including:
sales of products, goods, work and services
lease payments, license payments, royalties, commissions and
other payments
other receipts
Payments including:
to suppliers (contractors) – raw materials, works and services
wages and salaries
interest on debt liabilities
corporate income tax
other payments
Net cash flows from operating activities
Cash flows from investing activities
Receipts, including:
sale of non-current assets (except for investments)
sale of shares of other organisations (ownership interest)
from return of loans, sales of debt securities (chose of possession
of cash from third parties)
dividends, interests from long term financial investments and
receipts from participation in other entities
3.2.4
other receipts
Payments, including:
purchase, construction, modernisation, reconstruction and
preparation for the use of non-current assets
related to purchase of shares of other organisations (ownership
interest)
purchase of debt securities (chose of possession of cash from
third parties), loans issued
borrowing costs included in the cost of the investment assets
Net cash flows from investing activities
4110
4111
4112
4119
4120
4121
4122
4123
4124
4129
4100
4210
4211
4212
4213
4214
4219
4220
4221
4222
4223
4224
4200
145,899
143,005
680
2,214
(91,517)
(47,352)
(6,855)
(7,890)
(12,521)
(16,899)
54,382
39,893
267
90
118,301
113,249
843
4,209
(59,326)
(22,137)
(6,471)
(7,788)
(10,864)
(12,066)
58,975
49,554
9,382
44
27,396
22,459
8,206
3,934
(117,042)
9,091
8,578
(58,435)
(21,679)
(20,580)
(7,591)
(23,951)
(85,860)
(1,912)
(77,149)
(10,893)
(3,011)
(8,881)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
5
Note
1
Narrative
2
Cash flows from financing activities
Receipts, including:
borrowings and bank loans
issue of shares, increase in ownership interest
issue of bonds, promissory notes and other debt securities, etc.
Payments, including:
dividends and other distributions to owners
redemption (buyback) of promissory notes and other debt securities,
loan repayment
other payments
3.2.4
Net cash flows from financing activities
Net cash flows for the reporting period
Cash and cash equivalents at the beginning of the reporting
period
3.2.4
3.2.4 Cash and cash equivalents at the end of the reporting period
Foreign exchange rate difference
Line
code
3
4310
4311
4313
4314
4320
4322
4323
4329
4300
4400
4450
4500
4490
Form No. 0710004, p 2.
For 2017
For 2016
4
5
70,675
20,676
40,000
9,999
(37,912)
(19,771)
(18,135)
(6)
32,763
9,996
40,954
50,929
(21)
15,750
719
33
14,998
(42,934)
(14,977)
(27,949)
(8)
(27,184)
22,910
18,139
40,954
(95)
Chairman of Management Board – General Director
____________________
N. G. Shulginov
(clarification of signature)
Chief accountant
26 March 2018
___________________
Y. G. Medvedeva
(clarification of signature)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
6
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
I.
General information
1.1 Information about the Company
Principal activities of public joint stock company Federal Hydro Generating Company - RusHydro
(PAO RusHydro, hereinafter - the Company) are the generation of electricity (power). The Federal
Agency for State Property Management is the Company's major shareholder.
The Company’s registered address is: 43, Dubrovinskogo str., bld. 1, Krasnoyarsk, Krasnoyarsk
Territory, Russian Federation, 660017. The Company’s postal address: 7, Malaya Dmitrovka str.,
Moscow, Russian Federation, 127006.
As of 31 December 2017 the Company employed 5,547 people (as of 31 December 2016 –
5,499 people).
The Company's shares are traded on MOEX stock exchange (http://moex.com). American
depositary receipts, each of which corresponds to 100 ordinary shares of the Company are traded
on the Main Market of London Stock Exchange and over-the-counter market of the USA.
As of 31 December 2017 the ownership share of the Russian Federation in the Company's share
capital amounted to 60.56% (as of 31 December 2016 – 66.84%).
As of 31 December 2017 the Company has 19 branches registered in the Russian Federation,
including: branch Bureyskaya GES, branch Volzhskaya GES, branch Votkinskaya GES, Dagestan
branch, branch Zhigulevskaya GES, branch Zagorskaya GAES, branch Zeiskaya GES, Kabardino-
Balkarsky branch, branch Kamskaya GES, Karachaevo-Cherkessky branch, branch Cascade of
Verkhne-Volzhsky GES, branch Cascade of Kuban GES, branch Corporate Energy University,
branch Nizhegorodskaya GES, branch Novosibirskaya GES, branch Saratovskaya GES, branch
Sayano-Shushenskaya GES named after P.S. Neporozhny, Severo-Osetinsky branch, branch
Cheboksarskaya GES.
Membership of the Company’s Board of directors as of 31 December 2017 is as follows:
− Trutnev Yury Petrovich, Chairman of the Board of Directors, Deputy Prime Minister -
−
Plenipotentiary Representative of RF President in the Far Eastern Federal District;
Ivanov Sergey Nikolaevich, Deputy chairman of the Board of Directors, Managing director,
Member of the board of directors of LLC Energetic Russian Company;
− Avetisyan Artem Davidovich, head of “New business” stream of autonomous non-profit
organization “Agency of strategic initiatives for promotion of new projects”;
− Bystrov Maxim Sergeevich, Chairman of the Management Board NP Market Council
responsible for organization of effective system of energy power and capacity wholesale
and retail;
− Grachev Pavel Sergeevich, Director General of PJSC “Polyus”;
− Kravchenko Vyacheslav Mikhailovich, Deputy Minister of Energy of the Russian Federation;
− Pivovarov Vyacheslav Victorovich, Chief Executive Officer, LLC Altera Capital;
− Podguzov Nikolay Radievich, Director General of FGUP “Russian Post;
− Rogalev Nikolay Dmitrievich, rector of the Federal State Budget Educational Institution of
Higher Education "National Research University “MEI”;
− Chekunkov Aleksey Olegovich, CEO of AO “Fund of development of Far East and Baikal
region”;
− Shishin Sergey Vladimirovich, Senior Vice-President, PJSC VTB Bank;
− Shishkin Andrey Nikolaevich, Vice President for power and localisation PJSC Rosneft;
− Shulginov Nikolay Grigoryevich, Chairman of Management Board, General Director,
PAO RusHydro.
In 2017 there was no change in the composition of the Company’s Board of directors.
As of 31 December 2017 the Company's Management Board includes:
− Shulginov Nikolay Grigoryevich, Chairman of the Management Board, General director,
− Bogush Boris Borisovich, First Deputy General Director, Chief engineer,
− Kazachenkov Andrey Valentinovich, First Deputy General Director,
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
7
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
− Kirov Sergey Anatolyevich, First Deputy General Director,
− Markin Vladimir Ivanovich, First Deputy General Director
− Rizhinashvili George Ilyich, First Deputy General Director.
By the decision of the Company’s Board of Directors dated 18 January 2017 (protocol No.247),
Markin Vladimir Ivanovich was elected member of the Management Board.
As of 31 December 2017 members of the Company's Internal Audit Commission included:
− Annikova Natalia Nikolaevna, First deputy of General Director on economics and finance
JSC “Stroitelnoe upravlenie №308”,
− Zobkova Tatiana Valentinovna, Department Division Head, Russian Ministry of Energy,
− Kostina Marina Alexandrovna, Department Deputy Director, Russian Ministry of Economic
Development
− Repin Igor Nikolaevich, Deputy Executive Director, Investor protection association,
− Simochkin Dmitry Igorevich, Depute of head of Department of Federal Property
Management Agency
The above members of the Revision Group were elected by the decision of the General Meeting of
Shareholders dated 26 June 2017 (protocol No.16).
1.2 The Company's operating environment
The Russian economy displays certain characteristics of an emerging market. It is particularly
sensitive to oil and gas price fluctuations. The legal, tax and customs frameworks continue to
develop and are subject varying interpretation.
The Russian economy was growing in 2017, after overcoming the economic recession of 2015 and
2016. However, the economy is negatively impacted by low oil prices, ongoing political tension in
the region and international sanctions against certain Russian companies and individuals. The
financial markets continue to be volatile.Such economic environment has considerable influence on
Company’s operations and financial position. Future economic and regulatory situation, internal and
external business environment are hard to forecast and may differ from Company management’s
current expectations.
Management is taking necessary measures to ensure sustainability of the Company’s operations.
However, the future impact of the current economic situation is difficult to predict, and the current
expectations and assessments by management may differ from any actual results.
Developing capacity and power wholesale and retail markets possess higher level of risks than
developed markets of other products and services. The Company’s operations are exposed to
financial, legal, country, regional, reputation and other risks.
The Company's risk management policy specifies the continuous efforts to identify risks, assess
them and control and also develop and implement actions for addressing the risks, business
continuity management in accordance with international and national standards of risk management
(COSO ERM 2004, ISO 31000, GOST R ISO 31000-2010, etc.), Code of corporate governance
Central Bank of RF, methodological recommendations of the Federal Property Management
Agency and the Ministry of Finance of the Russian Federation in the field of risk management and
internal control.
Financial risks
Financial risk includes market risk (currency risk, interest rate risk and other price risks), credit risk
and liquidity risk.
Information about the Company's exposure to financial risks, their reasons and risk management
tools is presented in paragraph 3.15 of the Explanatory Notes.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
8
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Legal risks
The reasons for legal risks are associated with potential changes in legal and regulatory base
including currency and customs regulations, tax legislation and others.
Legal risks in domestic market related to regulation of electricity generation and its sale/purchase,
which represent the Company's principal activities, can significantly impact the Company's position
by decreasing its net profit.
Legal risks in external market related to currency and customs regulation are insignificant due to
insignificant volume of foreign trade transactions the Company participates in, which are managed
through legal support and control of these transactions and liability insurance.
The Company manages its industry risks by developing a Company-friendly legal framework for
operations on the electricity and capacity market.
To manage the industry risks the Company actively participates as expert in development of energy
legislation made by Ministry of Energy of Russian Federation, NP “Market council” and Federal
Antimonopoly Service; monitors legislation and makes amendments in the regulatory base.
Country and regional risks
The reasons for country and regional risks are associated with political and economic situation, the
geographic features of the country or the region where the entity operates and (or) is registered as
a taxpayer.
Exposure to the country risk can be indirectly assessed, subject to some assumptions, based on
the credit rating (the business exposure to political risks is not taken into account). At the end of
2017, Russia’s foreign currency obligations were rates as follows: ВВ+ (Standard & Poor’s), Ba1
(Moody’s) и ВВВ- (Fitch). At the same time these three international agencies improved the outlook
for Russia’s sovereign rating to: stable (Moody’s) and positive (Standard & Poor’s and Fitch).
According to analysts, ‘external risks’ to Russia have decreased and the Russian economy
continuous adjustment to lower feedstock prices.
Also in 2017 international rating agencies raised the long-term credit rating of the Company as
follows: Moody’s improved the rating to Ва1 with stable outlook, Standard & Poor’s – to ВВ+ with
positive outlook, Fitch confirmed the rating at ВВ+ and revised the outlook from negative to stable.
Russian economy is vulnerable to market downturns and global economic slowdown.
At the moment investor’s’ comprehension of the country risks reduces the net volume of foreign
investment in Russia and has a negative influence on the Russian economy. As well as Russia
produces and exports large amounts of gas and oil, the Russian economy is especially vulnerable
to the changes of international prices of energy resources; the reduction of gas and oil prices
significantly affects the Russian economy development. These events may restrict the access of
the Company to the capital and have an adverse impact on consumer purchasing power.
In the crisis environment experienced by the financial market and reduction of manufacturing output
there is a risk of decrease in electricity demand that may result in reduction of sales and decrease
in the Company's revenue and also a risk of increase in accounts receivable due to non-payments
by the consumers of electricity.
The management believes that it has been taking all necessary measures to mitigate the impact of
these events on its activities: optimization of leverage, optimisation of the obtained borrowed funds,
increase turnover of current assets, assessment of the buyers' solvency, diversification of resources
use and others.
Due to enhancement of the state control over energy industry the Company pays considerable
attention to transparency and confidence of control procedures relating to budget funds expenditure
within the Company’s and subsidiaries’ investment programmes and also develops and improves
the corporate internal control system and risk management.
The Russian regions where the Company performs its operations are characterised by peaceful
political situation. Probability of war conflicts, strikes, introduction of the state of emergency in these
regions is low except for entities located in North-Caucasus Federal District.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
9
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
However, changes in the Company's business environment in Russia and in the regions of the
Company's presence, the nature and frequency of such changes and related risks are hard to
predict and so are their effects on the Company's operations in the future. Such risks are largely
beyond the Company's control due to their global scale. If the situation is destabilised in Russia or
in any Russian regions, the Company will implement crisis management strategies to minimise the
risk of the negative effect of the situation on the Company to the fullest extent possible.
To manage the risks the Company is implementing a complex action plan to enhance safety of the
Company's facilities under which the existing plan on ensuring safety at the power plants, including
those under construction is amended.
Reputation risks
Reputation risks are associated with negative perception of the quality of products, works, services
sold, the ability to meet the deadlines for payment discipline, work performance, etc.
The Company assesses its exposure to these risks as low due to the fact that the Company sells
electricity and capacity in the wholesale market and has high and sustainable reputation in the
market.
To manage these risks the Company analyses key indicators of reputation risks based on the
forecast of changes in the share of positive references in mass media, control over compliance with
production discipline, cooperating actively with all stakeholders to maintain high reputation. The
company organizes public events jointly with interested parties; special events for mass media,
analytics and investors. Also, the Company regularly updates information on official Internet sources
and prepares official comments on key activities questions.
Besides the Company takes measures to prevent corruption. Anti-corruption policy, the code of
conduct, regulations on the procedure of the employer’s notification about inducement of personnel
to unlawful acts, gifts, conflict of interests arrangement procedures etc. are adopted by the
Company. The “Trust line” acts on an on-going basis.
The Company works closely with Ministry of energy, Federal tax service, Federal financial
monitoring service within the anti-corruption and control of fraud activities.
Other risks
To manage the risks the Company focuses on other operating risks including risk of capital
construction, industry risk, production risk, risk of hydraulicity, risks associated with compliance with
legislation on labour safety, risks of industrial safety, environmental risks and risks associated with
the third parties' activities and others.
The reasons for these risks are associated with the industry-specific factors that are relevant to the
operations, condition of property, plant and equipment. There is an exposure to these risks, degree
of possibility of events is at statistically average or low levels. On a permanent basis, the Company
implements actions for monitoring the risks and decreasing the probability of their occurrence and
severity of the potential adverse consequences including assignment of responsibility, control,
diversification and insurance.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
10
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
II.
Accounting policies
These statutory financial statements have been prepared on the basis of the following accounting
policies:
2.1 Basis of presentation
The Company's statutory financial statements are prepared in accordance with the accounting and
reporting rules currently effective in the Russian Federation provided for by the Federal Law "On
Accounting" and "Regulation on Accounting and Reporting in the Russian Federation" as well as
other accounting regulations approved by the Russian Ministry of Finance.
Assets are valued at actual costs, excluding fixed assets of subsidiaries and dependent companies
(hereinafter referred to as "SDCs") received in 2008 in connection with the merger of SDCs into the
Company; Financial investments, for which the current market value is determined; assets, for
which, in accordance with established procedure, reserves were created to reduce their value
(impairment).
2.2 Assets and liabilities denominated in foreign currency
Business transactions in foreign currencies were recorded using the official Rouble exchange rate
as of the date of the relevant transaction. Cash on hand and in bank accounts (bank deposits), cash
and payment documents, accounts receivable (except for advances received and issued and
prepayments) including loans receivable and payable, denominated in foreign currencies are
recorded in the financial statements in the amounts calculated based on the official currency
exchange rates effective as of the reporting date. The exchange rates were as follows: USD 1 =
RUB 57.6002 as of 31 December 2017 (31 December 2016: USD 1 = RUB 60.6569, 31 December
2015: USD 1 = 72.8827), EUR 1 = RUB 68.8668 as of 31 December 2017 (31 December 2016:
EUR 1 = RUB 63.8111, 31 December 2015: EUR 1 = RUB 79.6972).
Exchange differences arising during the year from translation (including those as of the reporting
date) of foreign currency-denominated assets and liabilities payable in foreign currencies or Russian
roubles were reported in the statement of financial results as other income or expenses.
2.3 Accounting for assets and liabilities
In the balance sheet investments, accounts receivable and accounts payable, including bank credits
and estimated liabilities, are treated as short-term if the term of their circulation (maturity) does not
exceed 12 months after the reporting date. Other assets and liabilities are recognised as long-term.
Interest on loans issued and other investments are recorded in the balance sheet line 1230
"Accounts receivable"; interest on bank credits and loans received are recorded in the balance sheet
line 1510 "Borrowings".
Advances to the suppliers of equipment and capital construction contractors are recognised in line
1230 "Accounts receivable".
Advances issued and received are recorded in the balance sheet including VAT. VAT on advances
issued and received is recognised on a gross basis in the balance sheet line 1260 "Other current
assets", 1450 "Other liabilities" and 1550 "Other liabilities", respectively.
Deferred tax asset and deferred tax liability are recognized on the balance sheet on a net basis.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
11
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
2.4 Property, plant and equipment, construction-in-progress and income-bearing
investments in tangible assets
Property, plant and equipment are accounted for in accordance with the Russian Accounting
Regulation "Accounting for property, plant and equipment" (RAR 6/01).
Property, plant and equipment include land, buildings, facilities, machinery, equipment, transport
vehicles and other assets whose useful lives are over 12 months.
Property, plant and equipment are recognised at their historical cost equal to actual acquisition
(construction, production) cost. At the same time, fixed assets received in 2008 in connection with
the merger of subsidiaries and affiliates to the Company, are accounted for at their market value
determined by an independent appraiser.
The acquired property, plant and equipment with historical cost of below RUB 40 thousand per unit
which were initially recognised after 1 January 2011 are accounted for within inventories; property,
plant and equipment which were initially recognised before 1 January 2011 were accounted for
within inventories, if their historical cost did not exceed RUB 20 thousand per unit.
Real property assets which have been constructed, put into operation and are actually used but the
title to which was not registered under the procedure established by the effective legislation are
accounted for within property, plant and equipment in a separate line.
Property, plant and equipment are recognised on the balance sheet at cost less depreciation
accumulated from the date of their independent valuation for merging subsidiaries and associates
into the Company in 2008 or over the whole period of their operation, if they were put into operation
after merging subsidiaries and associates into the Company.
The Company does not perform the revaluation of property, plant and equipment items.
Useful lives of the acquired property, plant and equipment including those which had been in
operation before the acquisition, received as a contribution to the share capital or under legal
succession in connection with restructuring, are established by the review committee for
commissioning of a facility based on the Classification of the Company's property, plant and
equipment when PP&E item is initially recognised. Useful lives of assets which were in use in prior
periods are determined with consideration to the number of years (months) they were used by the
previous owner.
The adopted standard useful lives by groups of property, plant and equipment in accordance with
the Classification of the Company's property, plant and equipment are presented below.
Property, plant and equipment group
Facilities and transmission equipment
Machinery and equipment
Buildings
Other
Useful lives of property, plant and
equipment (years)
on the balance sheet
3 to 100
1 to 40
7 to 75
1 to 20
Depreciation of property, plant and equipment is accrued on a straight-line basis proceeding from
their historical values and depreciation rates calculated based on their useful lives.
Depreciation is not accrued on:
−
−
−
land plots and natural resources;
fully depreciated assets that are still on the balance sheet.
assets that are temporarily shutdown for more than three months and during the restoration
period which exceeds twelve months.
Gains and losses on disposal of property, plant and equipment are recorded in the statement of
financial results within other income and expenses.
Construction-in-progress includes real estate assets under construction, which have not been put
into operation, equipment to be installed and other investments in non-current assets which are not
included in PP&E. Equipment which does not require installation, stored in the warehouse and
intended for assets under construction are recorded within construction-in-progress in a separate
line.
These items are recognised in the balance sheet line 1150 "Property, plant and equipment".
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
12
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Interest on borrowings raised for the purposes directly related to acquisition, construction and/or
manufacture of investment assets, accrued prior to initial recognition of the assets is included in
their historical cost; that accrued after the initial recognition of the assets are recognised in the
statement of financial results within other expenses.
Interest on borrowings raised for the purposes not related to acquisition, construction and/or
manufacture of investment assets, but actually used to purchase the investment assets are included
in the cost of investment assets in proportion to the share of the above borrowings in total amount
of borrowings raised for the purposes not related to acquisition, construction, manufacture of
investment assets.
Income-bearing investments in tangible assets represent PP&E items acquired for leasing out to
generate income.
These assets are recognised at their historical cost determined under the procedure used for
general PP&E items.
Leased PP&E items are recognised in off-balance-sheet accounts at cost specified in the lease
agreement/determined based on the acceptance certificate. If the lease agreement and acceptance
certificate do not specify the cost of these assets, property, plant and equipment are recorded in the
off-balance-sheet accounts at the following values:
−
−
land plots having the cadastral value - at their cadastral value;
other PP&E items - in the amount of lease payments inclusive of VAT under lease
agreement including the repurchase price of the leasing item.
2.5 Investments
Investments are accounted for in accordance with the Russian Accounting Regulation "Accounting
for investments" (RAR 19/02).
Investments include:
−
−
−
−
−
contributions to the share capital of other entities (including subsidiaries);
debt securities (including bonds, promissory notes);
deposits in credit institutions except for short-term deposits classified as cash equivalents
(paragraph 2.9 of the Explanatory Notes);
interest-bearing loans issued to other entities;
government and municipal securities and other investments.
Investments are initially recognised at their actual cost of acquisition.
The Company's actual costs to purchase investments represent the historical cost of investments
purchased at a charge.
The historical cost of investments in the Company's share capital is presented by their monetary
value agreed by the Company's founders, if not specified otherwise by the Russian legislation.
Investments, the current market value of which can be determined under the established procedure,
are recognised on the balance sheet at their current market value as of the end of each reporting
period (on a quarterly basis). The difference between the value of these investments as of the
current reporting date and their prior value is recorded within other income and expenses.
At the same time, contributions to the charter capitals of subsidiaries and associates (irrespective
of the availability of current exchange quotations on them) refer to financial investments for which
revaluation at current market value is not made.
Current market value of the securities which are traded by the institutors of trading is determined at
market prices established at MOEX stock exchange (http://moex.com).
Investments for which no current market value is determinable are recorded on the balance sheet
at their carrying (book) value, except for investments for which there are indications that the decline
in their value (impairment) is significant and non-temporary as of the reporting date.
Investments are tested for their impairment once a year as of 31 December of the reporting year, if
there are indications of impairment.
The Company accrues the impairment provision for the amount of difference between carrying
(book) value and estimated value of the investments with regard to investments for which significant
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
13
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
and constant impairment indicators are proved by impairment test. The estimated value of
investments is determined based on the data about net assets, revenue, composition of expenses,
schedule of projects financing and other factors.
Despite of the fact that well-grounded judgements are applied to determine the estimated value of
investments, there are unavoidable limitations as in any valuation technique. Therefore, the
estimated value represents the Company management’s best estimate based on all the information
available as of the reporting date. Future events will also have impact on determining the estimated
value and impact of such events can be significant for the Company's financial statements.
Difference between the historical cost and nominal value of debt securities for which current market
value is not determinable, is recorded on a straight-line basis during the period of their circulation
and is recognised in the Company's financial results within other income (expenses). When
investments for which current market value is not determinable are disposed, they are carried at
book value of each unit of these investments except for issuance securities (shares, bonds) which
are disposed under FIFO; when investments for which current market value is determinable under
the established procedure are disposed - based on the latest valuation.
The Company discloses information about measurement at discounted value, the amount of the
discounted value of debt securities of other related parties and loans issued to them.
Income and expenses associated with investments are reported within other income or expenses.
Interest on loans issued and other income from investments are recognised in the balance sheet
line 1230 "Accounts receivable".
2.6 Inventories
Inventories are accounted for in accordance with the Russian Accounting Regulation "Accounting
for inventories" (RAR 5/01).
Inventories are accounted for at their actual cost of acquisition (production).
If market value of inventories as of the end of the reporting year is below their historical cost
including due to on-going (long-term) price reduction, Company makes a provision in the amount of
inventory impairment which is charged against increase in other expenses. Such inventories are
recognised on the balance sheet net of the inventories' impairment provision.
The average cost method is applied to determine the material expenses when writing-off inventories
used to produce goods (provide services).
2.7 Expenses of future periods
Expenses incurred by the Company in the reporting period but related to future reporting periods
(payments under voluntary and mandatory insurance of property and employees, one-off payments
to purchase licenses and other expenses) are recorded as expenses of future periods. These
expenses are written-off for the purpose intended on a straight-line basis during the periods which
they relate to.
Expenses of future periods to be written-off during the period exceeding twelve months are
recognised on the balance sheet as non-current assets in line 1190 "Other non-current assets";
those to be written-off during twelve months - in line 1210 "Inventories".
2.8 Accounts receivable
Trade receivables are accounted for in the amount of services provided, works performed, good
dispatched at justified prices and established tariffs. Settlements with other debtors are recognised
for accounting and reporting purposes based on the contractual prices. Accounts receivable include
non-interest-bearing promissory notes and non-interest-bearing loans issued.
Accounts receivable which are overdue or unlikely to be repaid by the contractual deadlines and
are not secured by guarantees, pledges or otherwise, are recognised on the balance sheet net of
doubtful debt provision. The provision is based on the conservative assessment made by the
Company’s management with regard to the portion of receivables which is unlikely to be repaid.
The provision amount is separately determined based on the unbiased information about solvency
of the specific debtor and assessment of probability of receivables repayment in full or partially.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
14
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Accrual (release) of doubtful debts provision increases other expenses (income).
Uncollectable receivables are written-off when recognized as such. These receivables are recorded
in off-balance-sheet accounts over five years after the debt is written off for monitoring whether
there is a possibility of their collection in case of any changes in the debtor’s property status.
2.9 Cash equivalents and presentation of cash flows in the statement of cash flows
Cash equivalents comprise current highly liquid investments, which are readily convertible into a
predictable amount of cash and are exposed to an insignificant risk of changes in value.
The Company recognises short-term bank deposits with a maturity of up to three months (not longer
than 91 days) within cash equivalents if they are treated as funds used for settlements and
repayment of liabilities, not intended for investment and other purposes.
The Company’s cash flows which cannot be clearly attributed to cash flows from operating, investing
or financing activities are included in the cash flows from operating activities in the statement of
cash flows. Such cash flows include receipts and payments related to financial instruments of
forward deals.
The following items are presented on a net basis in the statement of cash flows:
−
−
indirect taxes within receipts from buyers and customers and payments to suppliers and
contractors;
cash flows used for investing activities and received on repayment of short-term bank
deposits (with a maturity of more than three months) within the same reporting period.
Cash receipts and payments do not include cash flows changing the structure of cash equivalents,
but not changing their total amount.
2.10 Share capital, additional and reserve capital
The Company’s share capital has been recorded in the amount of the nominal value of ordinary
shares purchased by shareholders. The share capital is equal to the amount specified in the
Company’s Charter.
When the share capital is increased through placement of additional shares, transactions
associated with the formation of the share capital are accounted for when the respective changes
made in the Company's constituent documents are registered.
The Company's additional capital includes share premium resulted from placement of the
Company's shares at price exceeding their nominal value and total of additional capital of
subsidiaries, associates merged into the Company during the 2008 reorganisation.
In accordance with legislation the Company forms a reserve fund in the amount of 5% of the share
capital. The amount of mandatory annual deductions to reserve fund is 5% of the Company's net
profit until it reaches the specified level.
2.11 Loans and bank credits received
Loans and bank credits are accounted for in accordance with the Russian Accounting Regulation
"Accounting for loans and bank credits" (RAR 15/2008).
Loans payable are stated inclusive of interest payable as of the end of the reporting period according
to the loan agreements.
Interest is accrued on a monthly basis at the end of each reporting period. If a lender provides for
interest calculation attributable to different reporting periods, the amount of interest shall be
allocated and included in the amount payable separately for each month.
Additional expenses incurred in connection with borrowings are charged to expenses of future
periods with subsequent straight-line inclusion in other expenses over the repayment period.
2.12 Estimated liabilities, contingent liabilities and contingent assets
Estimated liabilities
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
15
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
The Company recognises estimated liability, which meets the recognition criteria established in the
Russian Accounting Regulation "Estimated liabilities, contingent liabilities and contingent assets"
(RAR 8/2010).
The Company recognises an estimated liability:
- for earned but unused employee vacations, which is determined as of the end of the reporting year
with reference to the number of unused vacation days of each employee at the reporting date and
employee's average salary, inclusive of insurance contributions;
- on payment of bonuses for the results of work for the fourth quarter and year, the value of which
at the end of the reporting year is determined based on the forecast of performance of internal
corporate key performance indicators, taking into account insurance premiums;
- in other cases provided by RAR 8/2010.
Contingent liabilities and contingent assets
Contingent liabilities and contingent assets are not recorded on the balance sheet, but instead are
disclosed in the Explanatory Notes to the balance sheet and statement of financial results.
Contingent liability (contingent asset) arises as a result of past business events when existence of
a liability (asset) of the Company at the reporting date depends on occurrence (non-occurrence) of
future uncertain events, which are beyond the Company's control.
Contingent liability is disclosed in the Explanatory Notes to financial statements, except where the
likelihood of a decrease in economic benefits associated therewith is remote. Contingent asset is
disclosed in the Explanatory Notes when the inflows associated therewith are probable. There is a
need to disclose its estimated amount or a range of estimated amounts, if such values are
identifiable.
2.13 Revenue recognition
Revenue from sales of products (provision of services) is recognized on an accrual basis (as the
products/services are delivered/provided and relevant settlement documents presented to buyers).
Revenue is presented net of value added tax.
Other revenues of the Company include:
−
−
−
−
−
−
−
proceeds from sale of property, plant and equipment, investments and other assets;
interest received in connection with providing the Company's cash for use, interest for the
bank’s use of cash sitting on the Company’s bank accounts in the bank, interest for the
commodity credit and interest on the acquired interest-bearing notes of the third parties - in
accordance with interest provision in the note when presenting it for payment. The
Company recognises the above income in the statement of financial results in line 2320
"Interest income";
income from participation in share capital of other entities (dividends) is recognised by
Company when announced and included in the statement of financial results in line 2310
"Income from participation in other entities";
income from transactions with derivatives when the respective trading positions are closed;
fines, penalties and interest for breaching contractual terms;
prior year profit identified in the reporting year (considering the requirements of the Russian
Accounting Regulation "Correction of errors in accounting and reporting" (RAR 22/2010);
other proceeds (income) according to the Russian Accounting Regulation "Income of an
organisation" (RAR 9/99) (including income in the form of insurance indemnity).
2.14 Recognition of expenses
Accounting for expenses is regulated by the Russian Accounting Regulation "Expenses of an
organisation" (RAR 10/99) under which the Company's expenses are divided into general expenses
and other expenses.
Administrative expenses are written-off against the cost of goods produced (services provided).
General expenses are recognised in the reporting period wherein they were incurred irrespective of
the actual closure of accounts payable.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
16
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Expenses shall be accounted for irrespective of the intention to generate revenue or other income
and their form.
Other expenses include:
− expenses incurred in disposal and other write-off of property, plant and equipment,
−
investments and other assets;
interest paid by the Company for provided cash (bank credit, loans); the Company
recognises these expenses in the statement of financial results in line 2330 "Interest
expense";
− expenses incurred in payment of services provided by credit institutions;
− doubtful debts provision calculated on the basis of the reporting period results in
accordance with the Company's accounting policies (see paragraph 2.8 of the Explanatory
Notes);
− expenses from transactions with derivatives;
−
fines, penalties and interest for breaching contractual terms, compensation of losses
caused by the Company;
− prior year losses identified in the reporting period (considering the requirements of the
Russian Accounting Regulation "Correction of errors in accounting and reporting" (RAR
22/2010);
charity and social security;
−
− expenses incurred as a result of extraordinary events in business operations (natural
disaster, fire, accident, etc.)
− other expenses according to RAR 10/99.
2.15 Changes in the accounting policies
There are no significant changes in the Company's accounting policies for 2017 and 2018.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
17
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
III.
Disclosure of material indicators
3.1 Non-current assets (Section I of the balance sheet)
3.1.1 Property, plant and equipment (line 1151 of the balance sheet), construction-in-
progress (line 1152 of the balance sheet), income-bearing investments in tangible
assets (line 1160 of the balance sheet)
PP&E group
31 December
2017
Net book value
31 December
2016
31 December
2015
Line 1151 Property, plant and equipment, including:
Facilities and transmission equipment
Machinery and equipment
Buildings
Motor vehicles
Production and maintenance tools
Land plots
Other types of property, plant and equipment
Total line 1151 "Property, plant and equipment"
Line 1160 Income-bearing investments in tangible assets, including:
Facilities and transmission equipment
Total in line 1160 "Income-bearing investments
in tangible assets"
189,107
153,576
38,903
6
220
4
191
382,007
-
-
192,240
140,215
39,539
6
293
4
217
372,514
-
-
189,819
120,251
34,274
23
412
4
203
344,986
7,065
7,065
As of 31 December 2017 there are no income-bearing investments in tangible assets (as of 31
December 2016 – no, as of 31 December 2015 – RUB 7,065 million). In November 2016, the
complex of dams of the Angarsk cascade in the Irkutsk region was sold under the contract of sale
of OOO "Telmamskaya HPP" at a price 9, 280 mln RUB without VAT.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
18
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Availability and movement of property, plant and equipment and income-bearing tangible assets
At the beginning of the year
Narrative
Period
Cost
Accumulated
depreciation
Additions*
Changes for the period
Disposals
Cost
Accumulated
depreciation
At the end of the year
Depreciation
accrued*
Cost
Accumulated
depreciation
Property, plant and
equipment
including:
Facilities and transmission
equipment
Machinery and equipment
Buildings
Motor vehicles
Production and maintenance
tools
Land plots
Other types of property, plant
and equipment
Income-bearing investments
in tangible assets
including:
Facilities and transmission
equipment
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
428,500
470,944
219,357
226,077
168,408
198,113
39,234
45,244
50
13
1,066
1,075
4
4
381
418
7,592
-
7,592
-
(83,514)
(98,430)
(29,538)
(33,837)
(48,157)
(57,898)
(4,960)
(5,705)
(27)
(7)
(654)
(782)
-
-
(178)
(201)
(527)
-
(527)
-
43,735
27,220
6,783
1,428
30,786
25,391
6,106
366
-
-
18
31
-
-
42
4
-
-
-
-
(1,291)
(1,075)
(63)
(59)
(1,081)
(841)
(96)
(141)
(37)
-
(9)
(22)
-
-
(5)
(12)
(7,592)
-
(7,592)
-
890
743
11
47
824
652
20
20
21
-
9
12
-
-
5
12
641
-
641
-
(15,806)
(17,395)
(4,310)
(4,549)
(10,565)
(11,841)
(765)
(881)
(1)
-
(137)
(94)
-
-
(28)
(30)
(114)
-
(114)
-
470,944
497,089
226,077
227,446
198,113
222,663
45,244
45,469
13
13
1,075
1,084
4
4
418
410
-
-
-
-
(98,430)
(115,082)
(33,837)
(38,339)
(57,898)
(69,087)
(5,705)
(6,566)
(7)
(7)
(782)
(864)
-
-
(201)
(219)
-
-
-
-
* Cost of property, plant and equipment received in 2017 and depreciation for the period includes cost of property, plant and equipment repurchased at the expiration of the lease
agreements of RUB 1,150 million (for 2016: RUB 1,063 million) and accumulated depreciation of RUB 998 million (for 2016: RUB 1,063 million). Exposure of leased property, plant
and equipment is described in paragraph 3.6.1 of the Explanatory Notes.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of
the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
19
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Changes in the cost of property, plant and equipment as a result of further construction,
re-equipping, reconstruction or partial liquidation
Narrative
2017
2016
Increase in the cost of property, plant and equipment as a
result of further construction, re-equipping, reconstruction
including:
Machinery and equipment
Facilities and transmission equipment
Buildings
Decrease in value of property, plant and equipment as a result
of partial liquidation
including:
Machinery and equipment
Other types of property, plant and equipment
14,885
13,472
1,099
314
85
77
8
23,345
15,969
1,784
5,592
160
151
9
Other use of property, plant and equipment
Narrative
Leased out PP&E recognised on the balance sheet
Leased PP&E recognised in the off-balance-sheet
accounts
Real estate assets which were put into operation and
actually used but are in the process of state
registration
PP&E that have been temporarily shut down
31 December
2017
31 December
2016
31 December
2015
1,308
1,451
1,604
35,760
33,862
38,490
1,178
71
5,924
80
2,552
89
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
20
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Construction-in-progress and purchase of property, plant and equipment and income-bearing investments in tangible assets
Narrative
Period
At the
beginning of
the year
Changes for the period
Costs for the
period
Written off
Other
movement*
Recognised as
PP&E or uplifted
At the end of
the year
Construction-in-progress and purchase of
property, plant and equipment and income-
bearing investments in tangible assets,
including:
Construction-in-progress
Incomplete transactions on purchasing property,
plant and equipment and income-bearing
investments in tangible assets
Equipment for installation
2016
2017
2016
2017
2016
2017
2016
2017
47,737
36,595
42,928
33,238
45
24
4,764
3,333
31,778
27,209
15,900
13,171
282
471
15,596
13,567
(252)
(58)
(234)
(58)
(17)
-
(1)
-
4
29
16,997
11,539
33
(2)
(17,026)
(11,508)
(42,672)
(26,147)
(42,353)
(25,676)
(319)
(471)
-
-
36,595
37,628
33,238
32,214
24
22
3,333
5,392
* Transfer of equipment for installation, reclassification of equipment to be installed to construction-in-progress and other movement not related to transfer of assets to property,
plant and equipment
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of
the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
21
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
3.1.2 Long-term investments (line 1170 of the balance sheet)
Line 1170 "Financial investments" includes contributions to share capital of subsidiaries, associates
and other entities, debt securities and long-term loans issued to subsidiaries and associates:
Narrative
Investments in subsidiaries
Investments in associates
Investments in other entities
Long-term loans issued
Debt securities
Total line 1170 "Financial investments"
31 December
2017
31 December
2016
31 December
2015
237,257
11,110
8,363
55,419
-
312,149
244,104
11,110
9,373
27,085
601
292,273
252,713
11,110
3,841
51,832
601
320,097
Exposure of long-term investments to financial risks is described in paragraph 3.15 of the
Explanatory Notes.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
22
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Availability and movement of long-term investments
At the beginning of the
year
Narrative
Period
Cost
Accumulated
adjustment*
Additions
Changes for the period
Changes in
current
market value
Disposed (settled)
Cost
Accumu-
lated
adjustment*
At the end of reporting
period
Other
movements**
Cost
Accumulated
adjustment*
Long-term investments
including:
Investments in
subsidiaries
Investments in
associates
Investments in other
entities
Long-term loans issued
Debt securities
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
338,881
(18,784)
11,239
5,532
(29,207)
320,913
255,163
261,933
11,126
11,126
13,260
13,269
51,832
27,085
7,500
7,500
(28,640)
(2,450)
(17,829)
(16)
(16)
(9,419)
(3,896)
-
-
(6,899)
(6,899)
56,192
8,787
900
-
-
9
-
2,443
55,292
-
-
(893)
-
-
-
-
5,532
(893)
-
-
-
-
(27,692)
(2,017)
-
-
(16)
-
(117)
(27,190)
(26,958)
-
(601)
-
16
-
-
-
16
-
-
-
-
-
-
(15,388)
320,913
(28,640)
(7,747)
(15,379)
(7,747)
-
-
(9)
-
-
-
-
-
349,412
261,933
262,833
11,126
11,110
13,269
13,151
27,085
55,419
7,500
6,899
(37,263)
(17,829)
(25,576)
(16)
-
(3,896)
(4,788)
-
-
(6,899)
(6,899)
* Accumulated adjustment includes difference between original and current market value of investments for which current market value can be determined; difference between
original and current market value of investments for which current market value is not determinable; provision for impairment of investments.
** Other movements include changes in provision for impairment of investments, accrual of discount on debt securities and reclassification within the balance sheet line 1170
"Investments".
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of
the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
23
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
(a) Investments in subsidiaries, associates and other entities
The balance sheet line 1170 "Investments" includes the below investments in subsidiaries,
associates and other organisations:
Subsidiaries and associates and
other entities
Subsidiaries
AO Zagorskaya GAES-2
AO Ust-Srednekanskaya GES
AO RAO ES of East
AO Zaramagskie GES
AO Yakutskaya GRES-2
AO Sakhalinskaya GRES-2
AO Nizhne-Bureiskaya GES
AO CCGT in the City of Sovetskaya
Gavan
PAO Kolymaenergo
AO Sulakskiy Hydrocascade
AO Malaya Dmitrovka
AO Blagoveschenskaya TEС
AO ESK RusHydro
AO Lenhydroproject
AO Gidroinvest
AO Yuzhno-Yakutskiy GEK
AO Geoterm
AO Leningradskaya GAES
PAO Yakutskenergo*
AO NIIES
OOO Verkhnebalkarskaya MGES
OJSC P. S. Neporozhny Sayano-
Shushenskaya HPP
PAO Kamchatsky gas and energy
complex
АО “Vedeneev VNIIG”
AO Hydro-Engineering Siberia
AO GVTS Energetiki
HydroOGK Power Company Ltd
AO Renewable Energy Engineering
Centre
Other
Associates:
OAO Irkutsk Electric Grid Company
ОАО Sakhalin energy company
Other entities:
PAO Inter RAO
PAO Boguchanskaya GES
Other
Total:
31 December 2017
31 December 2016
31 December 2015
Carrying
amount
Share, %
Carrying
amount
Share, %
Carrying
amount
Share, %
237,257
60,691
23,111
18,495
17,216
16,862
15,012
14,611
13,844
13,187
10,094
6,394
4,285
3,358
3,260
3,255
2,993
2,425
1,987
1,671
1,067
937
100.00%
67.82%
84.39%
84.39%
100.00%
100.00%
100.00%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00% -
1 share
100.00%
100.00%
100.00%
99.65%
100.00%
29.80%
100.00%
100.00%
244,104
60,691
23,111
18,495
17,216
16,862
15,012
14,611
13,844
13,187
10,094
6,394
4,285
3,420
3,260
5,422
3,005
2,425
4,994
1,671
1,067
937
100.00%
67.82%
84.39%
99.75%
100.00%
100.00%
100.00%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00% -
1 share
100.00%
100.00%
100.00%
99.65%
100.00%
29.80%
100.00%
100.00%
252,713
60,691
23,111
18,495
17,216
16,862
12,996
14,611
7,345
13,187
10,094
6,394
6,302
11,832
3,260
9,550
3,255
2,425
4,994
1,671
983
937
100.00%
67.82%
84.39%
99.75%
100.00%
100.00%
100.00%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00% -
1 share
100.00%
100.00%
100.00%
99.65%
100.00%
29.80%
100.00%
100.00%
589
100.00%
589
100.00%
589
100.00%
96.58%
100.00%
100.00%
100.00%
100.00%
100.00%
531
448
108
21
-
-
805
11,110
8,543
2,567
8,363
6,809
1,081
473
256,730
42.75%
26,94%
1.94%
2.88%
531
448
256
74
1,171
-
1,032
11,110
8,543
2,567
9,373
7,709
1,081
583
96.58%
100.00%
100.00%
100.00%
100.00%
100.00%
42.75%
28.09%
1.94%
2.88%
531
448
990
653
1,171
694
1,425
11,110
8,543
2,567
3,841
2,217
1,081
543
96.58%
100.00%
100.00%
100.00%
100.00%
100.00%
42.75%
28.09%
1.94%
2.88%
264,587
267,664
* Investment in PAO Yakutskenergo (29.80%) is recorded within subsidiaries as the Company has control over
these entities indirectly via other subsidiaries.
Key factors affected changes in the value of investments in subsidiaries, associates and other
entities in 2017 are as follows:
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
24
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
−
−
creating an investment impairment provision of RUB 7,747 million, including RUB 3,907
million for AO Leningradskaya GAES, RUB 2,168 million for AO Gidroinvest, RUB 1,171
million for Power Company Limited and RUB 501 million for other companies;
valuation of investments which have a current market value and related recording of a
loss for the total of RUB 893 million (see paragraph 3.15 of the Notes), including the loss
of RUB 900 million on the shares of OAO Inter RAO UES.
Investments in subsidiaries that have current market value as of reporting date or formerly
In accordance with para 20 of the Accounting Regulation “Accounting for Investments” (PBU 19/02),
investments for which the fair market value is determinable under the established procedure are
recorded in financial statements as at the year end at their current market value by adjusting their
value at the prior reporting date. In accordance with para 24 of PBU 19/02, if no current market
value is determinable at the reporting date for investments that were earlier carried at market value,
such investments should be recorded at their latest value.
As of 31 December 2017, 31 December 2016 and 31 December 2015, investments included shares
of the Company's subsidiaries, i.e. AO RAO ES of East, PАО Yakutskenergo and PАО DEK,
received in 2011–2013 as a result of the additional issue of the Company's shares which are
recognised on the Company's balance sheet. These investments are recorded at the value agreed
with the founders and determined on the basis of the market valuation performed by an independent
appraiser totalling 20,204 million as of 31 December 2017 (as of 31 December 2016: 20,204 million;
as of 31 December 2015: 20,204 million). This valuation exceeds the current market value of the
shares (for АО RAO ES of East - the cost of the last valuation at the current market value) as of 31
December 2017, 31 December 2016 and 31 December 2015 by RUB 6,702 million, RUB 6,614
million and RUB 5,047 million, respectively.
The Company's management plans to get benefits from investments in AO RAO ES of East, PАО
Yakutskenergo and PАО DEK by controlling their business operations rather than as a result of
fluctuations in their market value. Thus, according to the Company's management, current market
quotes do not fairly reflect the fair value of the controlling shareholdings in these companies as the
number of shares traded in the market is not representative; not more than 1% of total shares issued
are in circulation on a daily basis.
Also since the end of the 2015 year the process of AO RAO ES of East shares’ consolidation in
RusHydro Group (RusHydro Group includes the Company and subsidiaries which are controlled by
the Company directly or indirectly via other subsidiaries) by buying from minority and bringing the
stake to 100% has started. In 2016, as part of the voluntary offer and then the forced repurchase of
shares of AO RAO ES of East, carried out by one of the subsidiaries of the RusHydro Group,
RusHydro's stake in AO RAO ES of East grew from 86.20% to 99.98%. From the middle of
September 2016 the current market value of the shares of PAO RAO ES of East is not determined.
As of 31 December 2017, and to date, delisting of shares from the Moscow stock exchange took
place, the shares were excluded from the quotation lists, also the indication of the public status was
excluded from the name of the company.
In view of these circumstances and considering that the Company has no plans to sell these
investments, in accordance with paragraph 6 of the Russian Accounting Regulation "Accounting
reports of an organisation" (RAR 4/99), approved by order No. 43n of the Russian Ministry of
Finance of 6 July 1999, the Company decided against performing revaluation of its investments in
shares of AO RAO ES of East, PАО Yakutskenergo and PАО DEK at the current market value from
acquisition date.
The Company’s management analysed the models of expected cash flows and factors that may
show that there are indications of impairment of investments and came to a decision that these
assets are not impaired as of 31 December 2017.
Therefore, the valuation approach to these investments applied by the Company allows avoiding
inappropriate presentation of the Company’s financial position, financial performance and cash
flows.
The amount of unrecognised change in the market value as compared to the carrying amount as of
31 December 2017 is RUB 6,702 million (as of 31 December 2016: RUB 6,614 million; as of
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
25
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
31 December 2015: RUB 5,047 million). With account of the above unrecorded value change the
figures in these financial statements would have been as follows:
− net assets – RUB 819,046 million (as of 31 December 2016: RUB 762,785 million, as of 31
December 2015: RUB 737,489 million);
−
−
financial investments – RUB 305,447 million (as of 31.12.2016: RUB 285,659 million, as of
31.12.2015: RUB 315,050 million) and retained earnings – RUB 268,292 million (as of
31.12.2016: RUB 254,060 million, as of 31.12.2015: RUB 230,039 million);
other expense – RUB 22,437 million (as of 31.12.2016 – RUB 39,903 million), net profit –
RUB 36,061 million (as of 31.12.2016 – RUB 40,310 million) and basic earnings per share
– RUB 0,08876 (as of 31.12.2016 – RUB 0,10436).
Impairment of investments in subsidiaries, associates and other entities for which current
market value is not determinable
The Company's management analysed the negative trends related to a number of subsidiaries,
which is presented below. The management performed the analysis of investments to the share
capital of the entities listed below for possible signs of impairment, and also analysed possible
impairment of other assets related to these subsidiaries, including those recorded within accounts
receivable (see paragraph 3.2.2 of the Explanatory Notes).
As a result of the analysis, a number of subsidiaries and other organizations were impaired and a
provision was made in the total amount RUB 7,747 million.
The amount of provision for impairment of investments for which the current market value is not
determined as of 31 December 2017 is RUB 25,576 million (as of 31.12.2016 – RUB 17,855 million,
as of 31.12.2015 – RUB 2,466 million). The initial value of long-term financial investments in respect
of which a provision for impairment of financial investments was created is RUB 37,166 million as
of 31.12.2017 (as of 31.12.2016 – RUB 35,096 million, as of 31.12.2015 – RUB 8,453 million).
AO Zagorskaya GAES-2. In September 2013, Zagorskaya GAES-2 which is currently under
construction suffered from the flooding of a section of the GAES building from the lower reservoir.
Due to the technical complexity of identifying the losses as a result of the accident, management
are not able to estimate the amount of expenses needed to rectify the accident consequences and
write off the damaged items of construction in progress.
Assets in relation to AO Zagorskaya GAES-2 on the balance sheet of the Company as of
31 December 2017 are as follows:
− within long-term investments: shares of AO Zagorskaya GAES-2 for the amount of RUB
60,691 million;
− within other accounts receivable: receivable, incurred from the partial payment of stock as
part of additional issue of shares of AO Zagorskaya GAES-2, but before the passing of
Company ownership of issue shares for the amount of RUB 6 647 million.
The analysis of recoverability of these assets performed by the Company as of 31 December 2017
was based on the following key factors:
− Construction works and the assets are insured. As at 31 December 2017 all insurance
companies PIJSC Ingosstrakh, JSC AlfaStrakhovanie and JSC SOGAZ have recognized
the technical incident at Zagorskaya GAES-2 as an insured event and paid insurance
indemnity.
− Management plans
to perform
recovery work and complete construction of
Zagorskaya GAES-2. As of 31 December 2017 there is significant uncertainty in terms of
the expenses to be incurred on recovery of damage caused by the flooding at
Zagorskaya GAES-2. However, these expenses can be significant. Capacity supply
contracts were concluded in respect of Zagorskaya GAES-2. There are specific rules for
the price setting in respect of new HPPs (including pumped-storage power plants) being
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
26
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
constructed: the price is set in a manner that guarantees payback period of 20 years for all
CAPEX invested in construction.
− Following the decision of the regulatory body NP Market Council of 22 November 2016 the
commissioning of the first stage of the Zagorskaya PSPP-2 and the first date of the
beginning of the fulfillment of the obligations for the delivery of capacity were postponed
until 1 January 2019, with respect to the second stage - until 1 January 2020. As a result of
the adjustment of the terms, AO Zagorskaya PSPP-2 has no penalties for the shortage of
capacity to the market under the said contracts.
Based on the analysis of factors that might indicate impairment of assets related to
Zagorskaya GAES-2 construction project, the Company's management concluded that there were
no such indicators as of 31 December 2017.
No negative trends which may result in impairment of other shareholdings were observed.
(b) Long-term loans issued
Loan recipient's name
31 December
2017
31 December
2016
31 December
2015
Annual rate,%
Long-term loans issued to related parties, including:
AO Far East Generating
Company
AO RAO ES Vostoka
PAO Yakutsenrgo
PAO Kamchatskenrgo
AO Sakhaenergo
PAO Magadanenergo
PAO Sakhalinenergo
PAO Chukotenergo
AO Teploenergoservice
AO ESK RusHydro
AO Hydroinvest
AO Far East Distribution Grid
Company
AO Zagorskaya GAES-2
AO Nizhne-Bureiskaya GES
AO Ust-Srednekanskaya GES
Other
Total long-term loans issued
35,608
8,523
2,400
2,004
1,950
1,618
1,345
965
588
120
-
-
-
-
-
298
55,419
4,538
-
-
-
3,476
-
-
-
929
1,030
12,137
4,846
-
-
-
129
27,085
11,838
-
-
-
3,476
-
-
-
929
3,305
14,181
5,023
5,562
4,653
2,111
754
51,832
4,15%-6,40%
4,15%-6,40%
4,15%-6,40%
4,15%-6,40%
4,15%-6,40%
4,15%-6,40%
4,15%-6,40%
4,15%-6,40%
4,15%-6,40%
9,55%-10,095%
As of 31 December 2017 the balance sheet line 1170 "Investments" includes the following long-
term loans issued:
−
−
−
−
−
−
the loan of RUB 35,608 million provided to AO DGK for refinancing its debt, with maturity
on 27 March 2022;
the loan of RUB 8,523 million provided to AO RAO ES Vostoka for refinancing its debt, with
maturity on 20 March 2022;
the loan of RUB 2,400 million provided to PAO Yakutsenrgo for refinancing its debt, with
maturity on 31 March 2022;
the loan of RUB 2,004 million provided to PAO Kamchatskenrgo for refinancing its debt,
with maturity on 20 March 2022;
the loan of RUB 1,950 million provided to AO Sakhaenergo for refinancing its debt, with
maturity on 22 March 2022;
the loan of RUB 1,618 million provided to PAO Magadanenergo for refinancing its debt,
with maturity on 28 March 2022;
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
27
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
−
the loan of RUB 1,345 million provided to PAO Sakhalinenergo for refinancing its debt, with
maturity on 29 March 2022;
There are no indicators of a prolonged decline in the value of the above investments.
3.1.3 Other non-current assets (line 1190 of the balance sheet)
Line 1190 "Other non-current assets" includes expenses of future periods to be written-off from
expense account during the period beyond 12 months of the reporting date.
Breakdown of total expenses of future periods by types is presented in the table below:
Narrative
Zelenchukskaya GAES connections to the grid
Project documentation on the construction of Cheboksarskaya
GES related to uplifting water reservoir level
Software and licenses
Borrowing costs
Other
Total expenses of future periods, including:
Long-term expenses of future periods which are subject to
writing-off from expense account during the period beyond 12
months of the reporting date (within the balance sheet line 1190)
Short-term expenses of future periods which are subject to
writing-off from expense account during 12 months of the
reporting date (within the balance sheet line 1210)
31 December
2017
31 December
2016
31 December
2015
1,817
1,931
-
1,620
734
232
431
4,834
1,620
984
891
150
5,576
1,620
1,153
1,083
476
4,332
4,222
4,703
3,287
612
873
1,045
As a result of works performed to uplift the level of Cheboksary water reservoir it is planned to
increase the production capacity of Cheboksary GES and eliminate the increased depreciation of
equipment and hydraulic engineering installations. If the Company becomes aware that it won't
obtain the expected additional economic benefits, the above expenses of future periods will be
written-off against other expenses.
3.2 Current assets (Section II of the balance sheet)
3.2.1
Inventories (line 1210 the balance sheet)
Narrative
Spare parts, materials and other inventories
Short-term expenses of future periods which are subject
to writing-off from expense account during 12 months of
the reporting date (see paragraph 3.1.3 of the
Explanatory Notes)
Other
Total line 1210 "Inventories"
31 December
2017
31 December
2016
31 December
2015
3,614
3,328
3,046
612
32
4,258
873
51
4,252
1,045
24
4,115
Spare parts, materials and other inventories are measured at actual cost of acquisition. As of
to RUB 155 million
31 December 2017
(31 December 2016: RUB 157 million, 31 December 2015: RUB 156 million).
impairment amounted
the provision
their
for
3.2.2 Accounts receivable (line 1230 of the balance sheet)
(a) Long-term accounts receivable (payments expected beyond 12 months of the reporting
date)
Total long-term accounts receivable were RUB 54,713 million, 62,615 million and 62,549 million as
of 31 December 2017, 2016 and 2015, respectively.
Breakdown by types of long-term accounts receivable is as follows:
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
28
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Type of long-term accounts receivable
Interest-free promissory notes received
Advances issued to suppliers of equipment and capital
construction contractors
Interest-free loans issued
Buyers and customers
Lease receivables
Other long-term accounts receivable
Total line 1231 “Long-term accounts receivable
(payments expected beyond 12 months of the reporting
date)”
31 December
2017
31 December
2016
31 December
2015
29,931
29,312
28,578
19,697
2,600
34
-
2,451
19,676
11,258
178
152
2,039
28,176
3,447
976
241
1,131
54,713
62,615
62,549
Long-term accounts receivable include advances issued to the following suppliers of equipment
and capital construction contractors:
Counterparty
31 December
2017
31 December
2016
31 December
2015
Subsidiaries, including:
АО Hydroremont-VKK
Other
Other related parties, including:
ООО VolgaHydro
Total advances issued to related parties
Voith Hydro GmbH & Co KG
PAO Silovye Mashiny
ООО Siemens
ООО Corporation «Spechydroproject»
Other
Total advances issued to other counterparties
Total advances issued to suppliers of equipment
and capital construction contractors
782
747
35
-
-
782
10,537
7,990
266
-
122
18,915
645
616
29
325
325
970
9,371
9,220
-
-
115
18,706
2,897
2,859
38
-
-
2,897
5,289
14,271
-
5,491
228
25,279
19,697
19,676
28,176
Advances issued to suppliers of equipment and capital construction contractors relating to the
equipment (work) with expected supply during 2018 are included within short-term advances issued.
Long-term accounts receivable include interest-free promissory notes issued by the following
issuers:
Issuer
31 December
2017
31 December
2016
31 December
2015
Other related parties, including:
PAO Boguchanskaya GES
ZAO Boguchansky Aluminium Plant
Total interest-free promissory notes received from
related parties
PAO «ROSBANK»
АО «Аlfa-Bank»
Bank VTB (PAO)
ОАО Ulyanovskenergo
Total interest-free promissory notes received from
other counterparties
Total long-term interest-free promissory notes
receivable
25,689
21,027
4,662
25,689
1,491
1,280
1,361
110
4,242
25,689
21,027
4,662
25,689
1,491
1,280
742
110
3,623
25,689
21,027
4,662
25,689
1,491
1,298
-
100
2,889
29,931
29,312
28,578
As of 31 December 2017, the Company's long-term accounts receivable represented by other
related parties' long-term interest-free promissory notes purchased for financing investment
program consist of the following promissory notes:
− PAO Boguchanskaya GES: promissory notes for RUB 21,027 million payable on demand
after 31 December 2029 (the present value of the promissory notes reflecting time value of
money as of 31 December 2017 is RUB 6,880 million);
− ZAO Boguchansky Aluminium Plant: promissory notes for RUB 4,662 million payable on
demand after 31 December 2024 (the present value of the promissory notes reflecting time
value of money as of 31 December 2017 is RUB 2,390 million);
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
29
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Long-term accounts receivable include interest-free loans issued to the following counterparties:
Counterparty
31 December
2017
31 December
2016
31 December
2015
Subsidiaries, including:
AO Nizhne-Bureiskaya GES
AO ESK RusHydro
AO CCGT in the City of Sovetskaya Gavan
AO Ust-Srednekanskaya GES
AO MGES Kabardino-Balkarii
AO Sakhalinskaya GRES-2
AO Yakutskaya GRES-2
Other
Other related parties
Total interest-free loans issued to related parties
Other
Total interest-free loans issued to other
counterparties
Total long-term interest-free loans issued
2,232
1,198
1,034
-
-
-
-
-
-
2
2,234
366
366
2,600
10,890
4,653
1,034
2,355
2,111
407
330
-
-
7
10,897
361
361
11,258
3,078
-
1,034
631
-
-
330
1,003
80
21
3,099
348
348
3,447
Other long-term accounts receivable include the following types of receivables
Counterparty
31 December
2017
31 December
2016
31 December
2015
Interest receivable accrued on loans issued and
promissory notes received, including:
Subsidiaries
Other accounts receivable
Total other long-term accounts receivable
2,243
2,243
208
2,451
1,702
1,702
337
2,039
690
690
441
1,131
Amount and movements in the impairment provision for long-term accounts receivable
Type
Period
At the
beginning of
the year
Provision
creation
Recovery
of
provision
Write-off
against a
provision
Impairment
provision
for long-
term
accounts
receivable,
including:
Trade
receivables
Other
2016
3,023
2017
2016
2017
2016
2017
2,879
288
144
2,735
2,735
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Transfer to
provision for
short-term
receivables
At the end
of the year
(144)
2,879
(144)
(144)
(144)
-
-
2,735
144
-
2,735
2,735
(b) Short-term accounts receivable (payments expected within 12 months of the reporting
date)
Total short-term accounts receivable less doubtful debt provision were RUB 122,595 million,
RUB 86,999 million and RUB 66,742 million as of 31 December 2017, 2016 and 2015, respectively.
Type of short-term accounts receivable
Buyers and Customers, including:
Accounts receivable for electricity and capacity
Other
Advances issued, including:
31 December
2017
31 December
2016
31 December
2015
6,726
6,649
77
4,276
7,120
6,214
906
10,206
6,741
5,752
989
14,495
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
30
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Type of short-term accounts receivable
Advances issued to suppliers of equipment and capital
construction contractors
Other advances issued
Other debtors, including:
Interest-free promissory notes received
Interest-free loans issued
Accounts receivable from subsidiaries as part of
additional issues before title for the shares issued is
transferred to the Company
Indebtedness under assignment agreement (paragraph
3.12.7 of the Explanatory Notes)
Taxes receivable
Lease receivables
Other
Total line 1232 “Accounts receivable’’ (payments
expected within 12 months of the reporting date)
31 December
2017
31 December
2016
31 December
2015
3,754
522
111,593
2,385
64,331
9,641
565
69,673
5,459
30,792
29,621
22,997
9,962
3,322
-
1,972
8,257
676
95
1,397
13,286
1,209
45,506
20,809
12,925
7,951
-
1,322
220
2,279
122,595
86,999
66,742
Short-term accounts receivable include advances issued to the following suppliers of equipment
and capital construction contractors relating to the equipment (work) with expected supply within12
months of the reporting date.
Counterparty
31 December
2017
31 December
2016
31 December
2015
Subsidiaries, including:
АО Hydroremont – VKK
АО Lenhydroproject
АО Zagorskaya GAES-2
АО ChirkeiGESstroy
Other
Other related parties, including:
ООО VolgaHydro
Total advances issued to related parties
Voith Hydro GmbH & Co KG
PАО Silovye Mashiny
АО VNIIR Hydroelectroautomatics
ZАО «Technoserv А/С»
ООО Corporation «Spechydroproject»
Other
Total advances issued to other counterparties
Total advances issued to suppliers of equipment
and capital construction contractors
1,013
582
211
117
17
86
3
3
1,016
1,118
903
420
16
-
281
2,738
3,754
1,207
838
171
77
-
121
475
475
1,682
22
6,538
111
3
-
1,285
7,959
9,641
1,764
1,017
170
98
418
61
-
-
1,764
739
6,817
167
821
986
1,992
11,522
13,286
Short-term accounts receivable include interest-free promissory notes issued by the following
issuers:
Issuer
31 December
2017
31 December
2016
31 December
2015
Subsidiaries, including:
AO MGES Kabardino-Balkarii
AO Zaramagskie GES
AO Karachaeve-Cherkesskaya Hydrogenerating
Company
OOO Index energetiki – HydroOGK
HydroOGK Aluminium Company Ltd
AO Hydroinvest
Other
Total interest-free promissory notes from related
parties
Other
Total interest-free promissory notes from other
counterparties
2,142
2,142
-
-
-
-
-
-
2,142
243
243
5,457
2,142
3,090
84
-
-
-
141
5,457
2
2
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
20,767
1,839
2,524
244
13,621
2,142
256
141
20,767
42
42
31
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Issuer
31 December
2017
31 December
2016
31 December
2015
Total short-term interest-free promissory notes
received
2,385
5,459
20,809
As of 31 December 2017, short-term receivables from subsidiaries on short-term interest-free
promissory notes acquired by the Company are represented by promissory notes payable on
demand.
Short-term accounts receivable include interest-free loans issued to the following counterparties:
Counterparty
31 December
2017
31 December
2016
31 December
2015
Subsidiaries, including:
OOO Index energetiki – HydroOGK
AO Ust-Srednekanskaya GES
AO Zaramagskie GES
AO RAO ES Vostoka
AO Yakutskaya GRES-2
AO Nizhne-Bureyskaya GES
AO CCGT in the City of Sovetskaya Gavan
OOO Vostok-finans
AO Sakhalinskaya GRES-2
АО Hydroinvest
AO MGES Kabardino-Balkarii
ООО Malye GES Stavropolya and KChR
OOO Verkhnebalkarskaya MGES
AO Sulaksky Hydrocascade
AO ChirkeiGESstroi
AO Tekhnopark Rumyantsevo
АО Holding company BoGES
AO MGES Altaya
OOO EZOP
AO Leningradskaya GAES
AO Blagoveschenskaya TEC
Other
Other related parties, including:
Loans issued to the Company's key management
Total interest-free loans issued to related parties
Total short-term interest-free loans issued to other
counterparties
Total short-term interest-free loans issued
64,253
13,014
11,551
8,769
7,745
6,463
3,779
2,355
2,246
2,020
1,896
1,444
816
641
538
436
176
167
78
-
-
-
119
4
4
64,257
74
64,331
30,700
13,521
6,303
-
-
1,353
-
-
2,337
-
-
851
31
165
1,559
450
183
3
251
2,902
377
370
44
7
7
30,707
85
30,792
12,858
-
3,300
-
-
-
-
-
-
-
-
780
2
165
1,166
-
183
2
248
5,265
189
1,473
85
21
21
12,879
46
12,925
As of 31 December 2017, short-term interest-free loans issued include:
−
−
−
−
the loan of RUB 13,014 million payable on demand, provided to OOO Index Energetiki –
GidroOGK to novate the obligation to settle interest-free bills presented for payment;
at call loans of RUB 11,551 million provided to OAO Ust-Srednekanskaya GES to finance
expenditures under the investment project Ust-Srednekanskaya GES;
at call loans of RUB 8,769 million provided to AO Zaramagskie GES to finance expenditures
under the investment project Zaramagskie GES and to replenish its working capital to be
used for refinancing payables incurred earlier (payables related to promissory notes issued
by the Company);
at call loans of RUB 7,745 million provided to AO RAO ES Vostoka to finance its investment
program and other projects as well as to refinance bank loans payable.
In addition, short-term accounts receivable include receivables from the following subsidiaries,
arising after partial payment for shares of additional issues but before the title to the issued shares
is transferred to the Company:
Counterparty
AO Nizhne-Bureyskaya GES
AO Zagorskaya GAES-2
31 December
2017
31 December
2016
31 December
2015
21,279
6,647
16,128
5,473
6,416
-
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
32
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Counterparty
AO Sulaksky Hydrocascade
AO CCGT in the City of Sovetskaya Gavan
Other
Total accounts receivable from the following
subsidiaries, arising after partial payment for shares of
additional issues but before the title to the issued
shares is transferred to the Company
31 December
2017
31 December
2016
31 December
2015
1,386
-
309
1,386
-
10
863
400
272
29,621
22,997
7,951
Short-term accounts receivable includes the following types of tax receivables:
Item
Income tax
Other taxes and levies
Total tax receivables
31 December
2017
31 December
2016
31 December
2015
2,905
417
3,322
438
238
676
945
377
1,322
Amount and movements in the impairment provision for short-term accounts receivable
Type
Period
At the
beginning of
the year
Provision
creation
Recovery of
provision
Write-off
against a
provision
Transfer*
At the end of
the year
Provision
for short-
term
accounts
receivable,
including
Trade
receivables
Advances
issued
Other
2016
6,539
8,283
(2,368)
(179)
854
13,129
2017
2016
2017
2016
2017
2016
2017
13,129
4,801
5,539
109
87
1,629
7,503
3,508
2,464
1,970
9
307
5,811
1,231
(3,965)
(1,707)
(1,141)
(26)
(1)
(635)
(2,823)
(97)
(162)
(23)
(5)
(54)
(12)
(20)
144
144
144
-
-
710
-
12,719
5,539
6,489
87
339
7,503
5,891
* Includes transfer from provision for long-term accounts receivable and financial investments.
Overdue accounts receivable
31 December 2017
31 December 2016
31 December 2015
Item
Recognised
under contract
Carrying
amount
Recognised
under contract
Carrying
amount
Recognised
under
contract
Carrying
amount
Total, including:
Buyers and
customers
Advances issued
Other debtors
9,098
6,127
556
2,415
810
126
217
467
8,594
1,721
7,819
1,387
5,423
1,332
1,839
320
1,246
155
4,978
1,232
1,609
258
1,124
5
3.2.3 Short-term investments (Line 1240 of the balance sheet)
The structure of the Company's short-term investments is represented by the following assets:
Type of investment
Bank deposits
Loans issued
Promissory notes
Total line 1240 “Investments” (excluding cash
equivalents)
31 December
2017
31 December
2016
31 December
2015
163
11,686
601
4,075
1,230
-
10,609
5,270
-
12,450
5,305
15,879
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
33
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Short-term investments and their movements
Item
Period
Historical cost
Accumulated
adjustment
Additions*
Opening balance
Changes for the period*
Disposal (repayment)
Historical cost*
Accumulated
adjustment
Accrual of
impairment
provision
Closing balance
Historical cost
Accumulated
adjustment
Short-term
investments,
including:
Bank deposits
lLoans issued
Promissory notes
2016
2017
2016
2017
2016
2017
2016
2017
16,589
7,561
10,609
4,075
5,980
3,486
-
-
(710)
(2,256)
-
-
(710)
(2,256)
-
-
58,168
50,589
40,792
21,966
17,376
28,022
-
601
(67,196)
(43,551)
(47,326)
(25,878)
(19,870)
(17,673)
-
-
710
-
-
-
710
-
-
-
(2,256)
107
-
-
(2,256)
107
-
-
7,561
14,599
4,075
163
3,486
13,835
-
601
(2,256)
(2,149)
-
-
(2,256)
(2,149)
-
-
* Movements of short-term investments received and disposed of (repaid) in the same reporting period are presented on a gross basis.
Exposure of short-term investments to financial risks is described in paragraph 3.15 of the Explanatory Notes.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of
the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
34
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
(а) Bank deposits
As of 31 December 2017, bank deposits include a short-term deposit of RUB 163 million placed
with PAO Sberbank of Russia maturing from 15.01.2018 (as of 31 December 2016 – RUB 4,075
million maturing from 23.01.2017 till 01.03.2017 ). These funds represent interest income from the
placement of funds that were received by the Company in 2013 during an additional issue and are
intended to finance the construction of four thermal stations in the Far East.
(b) Short-term loans issued
Loan recipient's name
31 December
2017
31 December
2016
31 December
2015
Annual rate,%
Short-term loans issued to related parties, including:
AO Far East Distribution Company
АО Sakhaenergo
АО Hydroinvest
AO Teploenergoservice
AO Yakutskaya GRES-2
AO ESK RusHydro
AO Transport company RusHydro
AO Far East Distribution Grid
Company
ZAO Verkhne-Narynskie GES
AO Nizhne-Bureyskaya GES
Other
Total short-term loans issued
4,538
3,476
1,748
929
495
420
-
-
-
-
80
11,686
8,00%
8,00%
9,55%-10,08%
8,00%
10,139%
10,095%
-
-
-
231
446
369
177
-
-
7
1,230
200
-
-
-
-
72
1,607
2,711
509
171
5,270
As of 31 December 2017 there was provision for impairment of short-term loans issued in the total
amount of RUB 2,149 million (31 December 2016: RUB 2,256 million; 31 December 2015:
RUB 710 million). As of 31 December 2017 provision was made RUB 2,149 million for ZAO
Verkhne-Narynskie GES. There are no indicators of a prolonged decline in the value of investments.
3.2.4 Cash and cash equivalents (line 1250 of the balance sheet)
Item
Cash in bank
Cash equivalents
Cash at accounts in the Office of the Federal
Treasury
Total line 1250 “Cash and cash equivalents”
31 December
2017
31 December
2016
31 December
2015
2,194
47,836
899
50,929
7,206
32,849
899
40,954
898
17,241
-
18,139
As of 31 December 2017, 2016 and 2015, there is no restricted cash.
The balance of the target cash in the amount of RUB 899 million, received by the Company within
the framework of an additional issue in previous periods for the implementation of investment
projects for the construction of electric power facilities, as of 31 December 2017 is placed on special
accounts in the Office of the Federal Treasury for Moscow. These funds can be used by the
Company only after passing the approval procedure by the Federal Treasury on the basis of the
established procedure for authorizing the expenses of organizations by Order No. 213n of the
Ministry of Finance of the Russian Federation of 25 December 2015.
As of 31 December 2017, 2016 and 2015, cash equivalents included short-term bank deposits with
original maturities of three months or less.
As of 31 December 2017 there were cash balances denominated in US dollars equivalent to RUB
477 million (31 December 2016: RUB 312 million; 31 December 2015: RUB 0 million).
As of 31 December 2017, interest rates on Rouble deposits were 5.55% – 7.50% p.a. (31 December
2016: 9.55% – 10.41%, 31 December 2015: 8.64% – 11.65%).
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
35
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
The Company holds cash and cash equivalents in the following credit institutions:
Credit institution
Bank deposits, including:
Bank VTB (PAO)
Bank GPB (AO)
PAO Sberbank
PAO Bank FK Otkrytie
PAO AKB Svyaz-Bank
AO SMP Bank
AO Globeksbank
Total cash equivalents
Cash in banks, including:
АО «АB Russia»
PAO Sberbank
Bank VTB (PAO)
Bank GPB (AO)
Other
Total cash in bank
Rating on
31 December
2017
Rating agency
31 December
2017
31 December
2016
31 December
2015
BB+
Ba2
Ba1
Standard &
Poor’s
Moody’s
Moody’s
ruAA
Ba1
BB+
Ba2
RAEX
Moody’s
Standard &
Poor’s
Moody’s
32,034
20,430
2,277
15,329
472
-
-
-
-
47,835
1,811
313
47
20
3
2,194
12,107
312
-
-
-
-
32,849
4
479
1,803
4,918
2
7,206
-
1,728
7,644
2,718
1,874
1,000
17,241
22
581
8
245
42
898
Notes to the statement of cash flows
Cash flows required for the purposes of supporting the existing scope of the Company's operations
are presented within current operations. Cash flows related to expansion of the Company's business
are included in investing activities.
Cash flows spent on investments and received on repayment of cash equivalents (excluding
accrued interest) are not included in the cash flow statement.
Cash flows spent on investments and received on repayment of short-term bank deposits (with a
maturity of more than three months) within the same reporting period, are recorded on a net basis
in line 4219 “Other receipts “or line 4229 “Other payments” of the cash flow statement.
Breakdown for lines “Other receipts” and “Other payments” of the statement of cash flows is
presented below:
Item
2017
2016
Other receipts from operating activities (line 4119),
including:
Value added tax
Penalties, interest and fines recognised or for which court rulings on
collection have been received
GDR
Other receipts from operating activities
Other payments related to operating activities (line 4129),
including:
Taxes and levies
Non-budget funds
Charity payments
Business trip expenses
Water usage expenses
Payments of non-deliverable forward contract for shares
Payment of corporate expenses
Other payments related to operating activities
Other payments related to investing activities (line 4219),
including:
2,214
1,625
237
219
133
(16,899)
(7,831)
(1,783)
(1,726)
(225)
(1,401)
(3,243)
-
(690)
4,209
3,508
385
277
39
(12,066)
(7,821)
(1,717)
(434)
(175)
(1,183)
-
(194)
(542)
3,934
8,578
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
36
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Item
Cash placement on a short-term deposit other than cash equivalent
Proceeds from the conversion of shares of the subsidiary by reducing
the nominal value
Other payments related to investing activities
Other payments related to financing activities (line 4329),
including:
Settlement of finance lease obligations (payments under lease
contracts)
Other payments related to financing activities
2017
3,918
-
16
(6)
(2)
(4)
2016
6,537
2,017
24
(8)
(5)
(3)
3.3. Equity and reserves (Section III of the balance sheet)
3.3.1 Share capital (line 1310 of the balance sheet)
As of 31 December 2017, 2016 and 2015, the Company’s share capital is registered according to
the established procedure and fully paid:
Share capital composition
Ordinary shares with nominal value of
RUB 1 per share
Number of shares at
31 December 2017
Number of shares at
31 December 2016
Number of shares at
31 December 2015
426,288,813,551
386,255,464,890
386,255,464,890
As of 31 December 2017, the following shareholders are registered in the register of shareholders:
Shareholder
Russian Federation represented by the Federal
Agency for State Property Management
Non-Banking Credit Organisation AO National
Settlement Depository
Other
Total
Type of
shareholder
Number of shares
Ownership
share, %
beneficial owner
258,161,535,606
60.56%
nominee holder
157,755,858,118
10,371,419,827
37.01%
2.43%
426,288,813,551
100.00%
The members of the Management Board of the Company hold 71 million shares of the total number
of ordinary shares as of 31 December 2017 (as of 31.12.2016 - 71 million units, as of 31.12.2015 -
71 million units). Subsidiaries and associates own 3,852 million shares of the Company (as of
31.12.2016 - 18,852 million shares, as of 31.12.2015 - 21,787 million shares).
Additional issue in 2016-2017
The Company's extraordinary general meeting of shareholders held on 22 November 2016 (Minutes
No. 244 on 23.11.2016) made the decision to increase the Company's share capital by placing
40,429,000,000 additional ordinary registered shares with the nominal value of RUB 1 each through
public offering with payment in cash and non-monetary assets.
On 7 December 2016, the The Central Bank of the Russian Federation registered the additional
issue of the Company's 40,429,000,000 ordinary registered shares No. 1-01-55038-Е-042D.
In January 2017 the Company resumed the results of execution of pre-emptive right by eligible
shareholders to acquire Company’s shares of additional issue, registered by Bank of Russia on 7
December 2016. During the pre-emptive right period the Company placed 33,348,661 additional
shares.
In March 2017, the Company and PJSC Bank VTB signed agreements related to a purchase of 55
billion ordinary shares of the Company (40 billion shares of the new issue and 15 billion shares of
quasy-treasury stock) and conclusion of a 5-year non-deliverable forward contract in respect of
these shares. In accordance with these agreements PJSC Bank VTB bought 40,000,000,000
shares of the Company during the current share issue. (Note 3.6.4)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
37
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
The 6 March 2017 is the date of actual end of share placement. The statement of results of
additional shares placement was registered by Bank of Russia at 5 June 2017. The changes in
Articles was registered at 4 April 2017.
By the results of emission 40 033 348 661 shares were actually placed. That takes 99,02% of the
additional issue.
3.3.2 Revaluation of non-current assets (line 1340 of the balance sheet)
As of 31 December 2017, the amount of accumulated revaluation of non-current assets is RUB
52,606 million (31 December 2016: RUB 52,705 million, 31 December 2015: RUB 52,928 million).
This metric consists of the amounts of revaluation accumulated by subsidiaries and associate which
the Company acquired as part of the 2008 restructuring process.
The amount of accumulated revaluation was decreased by RUB 99 million in 2017 due to disposal
of items of property, plant and equipment revalued earlier (2016: RUB 223 million,).
3.3.3 Additional paid-in capital (line 1350 of the balance sheet)
As of 31 December 2017, 2016 and 2015, the Company's additional paid capital was RUB
58,424 million, RUB 58,424 million and RUB 58,424 million, respectively, and consisted of share
premium of the Company and subsidiaries and associates which the Company acquired as part of
the 2008 restructuring process.
3.3.4 Reserve capital (line 1360 of the balance sheet)
As of 31 December 2017, 2016 and 2015, the Company's reserve capital was RUB 13,371 million,
RUB 11,278 million and RUB 9,776 million, respectively.
In accordance with the decision of the Company's annual general meeting of shareholders of
26.06.2017 (Minutes No. 16), the Company allocated 5% of its net profit for 2016 in the amount of
RUB 2,093 million to the reserve capital.
3.4. Non-current liabilities (Section IV of the balance sheet)
3.4.1 Long-term borrowings (line 1410 of the balance sheet)
Balance sheet line 1410 “Borrowings” includes long-term loans payable:
Lender / creditor
PAO Sberbank
Eurobonds (RusHydro Capital Markets DAC) issued in
September 2017
Russian bonds issued in April 2016
Russian bonds issued in June 2017
UniCredit Bank Austria AG
AO Malaya Dmitrovka
Russian bonds issued in April 2015
Russian bonds issued in April 2011
Russian bonds issued in February 2013
Russian bonds issued in July 2015
Crédit Agricole Corporate and Investment Bank
Deutschland
AO GVTS Energetiki
European Bank for Reconstruction and Development
Bayerische Landesbank (BayernLB)
Total line 1410 “Borrowings”
31 December
2017
31 December
2016
31 December
2015
20,000
33,389
33,389
20 000
15,000
10.000
4,749
932
767
250
-
-
-
-
-
-
71,698
-
15 000
-
4,951
652
-
250
20,000
15,000
5,552
54
-
-
94,848
-
-
-
6,871
-
10,000
-
20,000
15,000
6,933
1,099
10,653
1,125
105,070
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
38
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
In June 2017 the Company placed non-convertible interest bearing market bonds of series BO-P05
with a nominal amount of RUB 10,000 million. The term of the offer is 3 years, coupon rate is 8,20%
per annum.
Also October 2017, holders of Russian bonds issued in April 2015 partially presented securities for
early repayment under the offer, as a result of which the Company purchased bonds with a nominal
value of RUB 9,233 million. Bonds that were not presented by the holders for early redemption, with
a nominal value of RUB 767 million will apply until maturity in 2023 with a coupon rate of 7.50%.
In 2017 the Company prepaid in full the credits of RUB 2,776 million received from PAO Sberbank
and the credits of Euro 87 million received from Crédit Agricole Corporate and Investment Bank
Deutschland.
28 September 2017 the Company finalized the placement of eurobonds issued by RusHydro Capital
Markets DAC, a special purpose vehicle. Proceeds from the eurobonds were used to finance a loan
to PAO RusHydro that will be used to refinance its debt liabilities, to finance the investment
programme and operating expenses of the Issuer. The issue totalled RUB 20 billion. The eurobonds
are maturing in 2022 and have a coupon of 8.125% p.a. paid twice a year.
As of 31 December 2017 terms of material received long-term borrowings were the following:
Lender / creditor
UniCredit Bank Austria AG
Eurobonds (RusHydro
Capital Markets DAC)
issued in September 2017
Russian bonds issued in
April 2016
Russian bonds issued in
June 2017
PAO Sberbank
Agreement
effective
year
Redemption
year
Amount in
million units (in
the currency of
the loan)
Currency Loan interest rate
2011
2026
78 Euro
3,35%
2017
2016
2017
2011
2022
2019
2020
2020
20,000 RUB
8,13%
15,000 RUB
10,35%
10.000 RUB
20,000 RUB
8,20%
8,30% / 9,30%*
* Variable quarterly interest rate determined due to agreement’s conditions.
As of 31 December 2017, the total amount of long-term loans to be repaid within 12 months of the
reporting date and reclassified to short-term category was RUB 45.683 million (31 December 2016:
RUB 10,619 million) (see paragraph 3.5.1 of the Explanatory Notes).
As of 31 December 2017, the Company has opportunity to raise funds in the total amount 96 000
million RUB on credit agreements with Bank VTB (PAO) in the amount of RUB 30 000 million
maturing at 2020 and with PAO Sberbank in the amount of RUB 40,000 million maturing at 2026,
with Bank GPB (AO) in the amount of RUB 20,000 maturing at 2026 and with AB Rossia (AO) in
the amount up to RUB 6,000 million maturing at 2019.
Ageing analysis:
Due for repayment
From 1 to 2 years
From 2 to 3 years
From 3 to 4 years
From 4 to 5 years
Over five years
Total line 1410 “Borrowings”
31 December
2017
31 December
2016
31 December
2015
16,526
30,594
844
20,594
3,140
71,698
46,495
16,480
21,105
1,355
9,413
94,848
11,396
48,455
1,743
22,090
21,386
105,070
Interest on borrowings included into the cost of investment assets
In 2017, the amount of interest on borrowings included into the cost of investment assets was RUB
1,699 million (2016: RUB 3,262 million), of which RUB 1,476 million was the interest accrued on
borrowings where the agreement does not specify that the funds are provided for special investment
purpose (2016: RUB 2,900 million).
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
39
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
3.4.2 Other non-current liabilities (line 1450 of the balance sheet)
Line 1450 “Other liabilities” includes long-term VAT on advances issued in the amount of RUB 1,153
million as of 31 December 2017 (31 December 2016: RUB 1,289 million, 31 December 2015: RUB
1,827 million) and trade payables in the amount of RUB 3,111 million as of 31 December 2017 (31
December 2016: RUB 2,457 million, 31 December 2015: RUB 368 million).
3.5. Current liabilities (Section V of the balance sheet)
3.5.1 Short-term borrowings (line 1510 of the Balance sheet)
Lender / creditor
Period
Opening
balance
Received /
accrued
Paid /
settled
Closing
balance
Borrowings, including:
Russian bonds issued in April
2015
OOO AlstomRusHydroEnergy
UniCredit Bank Austria AG
Russian bonds issued in
February 2013
Russian bonds issued in July
2015
Russian bonds issued in April
2011
Credit Agricole Corporate and
Investment Bank Deutschland
before
European Bank for
Reconstruction and Development
(EBRD)
AO Leningradskaya GAES
PAO Sberbank
Other
Interest on borrowings,
including:
Russian bonds issued in July
2015
Russian bonds issued in
February 2013
PAO Sberbank
Russian bonds issued in April
2016
Russian bonds issued in June
2017
Russian bonds issued in April
2015
Russian bonds issued in April
2011
European Bank for
Reconstruction and Development
(EBRD)
Eurobonds (RusHydro Capital
Markets DAC), issued in
September 2017
Other
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
16,250
11,367
-
10,000
750
750
-
550
-
-
-
15,000
-
-
-
377
-
-
-
-
-
123
67
2,690
2,658
858
867
652
661
528
522
-
371
-
-
227
234
240
-
180
-
-
-
5
23,371
54,948
10,000
-
-
-
550
611
-
20,000
-
15,000
-
-
-
5 552
10,653
-
-
396
-
13,389
2,168
-
10,779
9,863
1,782
1,778
1,704
1,700
2,882
2,633
1,157
1,553
-
445
1,279
1,055
374
29
1,338
-
-
423
263
(28,254)
(18,903)
-
(10 000)
-
-
-
(568)
-
-
-
(15,000)
-
-
(5 552)
(11,030)
-
-
(7)
-
(2,776)
(2,224)
-
(10,811)
(9,675)
(1,773)
(1,773)
(1,695)
(1,695)
(2,888)
(2,708)
(786)
(1,554)
-
(409)
(1,272)
(1,278)
(614)
(24)
(1,518)
-
-
-
(265)
11,367
47,412
10,000
-
750
750
550
593
-
20,000
-
15,000
-
-
-
-
-
-
-
389
-
10,613
67
67
2,658
2,846
867
872
661
666
522
447
371
370
-
36
234
11
-
5
-
-
-
423
3
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
40
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Lender / creditor
Period
Total line 1510 “Borrowings”
2017
2016
2017
Opening
balance
Received /
accrued
Paid /
settled
Closing
balance
3
18,940
14,025
247
34,150
64,811
(234)
(39,065)
(28,578)
16
14,025
50,258
3.5.2 Accounts payable (line 1520 of the balance sheet)
Total short-term accounts receivable were RUB 10,563 million, RUB 9,681 million and
RUB 9,822 million as of 31 December 2017, 2016 and 2015, respectively:
Type of payables
31 December
2017
31 December
2016
31 December
2015
Trade payables
Settlements with personnel
Payables to state off-budget funds
Tax payables
Settlements with participants (founders) in payment of income
Settlements for the payment of own shares before the change
of the charter capital in the constituent documents
Other
Total line 1520 “Accounts payable”
4,040
244
134
5,242
141
-
762
10,563
4,190
24
14
4,697
122
33
601
9,681
5,492
669
135
3,103
67
-
356
9,822
The balance sheet line 1521 “Trade accounts payable” includes the following types of payables:
Type of payables
31 December
2017
31 December
2016
31 December
2015
Payables to capital construction contractors
Payables to suppliers of equipment and other non-current
assets
Payables for purchase of electricity and capacity
Payables to suppliers of repair and maintenance services
Other
Total line 1521 “Trade accounts payable”
705
1,842
427
381
685
4,040
773
1,801
432
322
862
4,190
1,499
2,071
774
405
743
5,492
The balance sheet line 1524 “Taxes payable” includes current payables on the following taxes:
Tax
Property tax payable
VAT payable
Income tax payable
Other taxes payable
Total line 1524 “Taxes payable”
31 December
2017
31 December
2016
31 December
2015
1,291
3,902
-
49
5,242
1,338
3,113
239
7
4,697
1,494
1,480
-
129
3,103
3.5.3 Estimated liabilities (line 1540 of the balance sheet)
As of 31 December 2017 the total estimated liabilities are RUB 2,976 million (31 December 2016:
RUB 2,447 million, 31 December 2015: RUB 601 million).
The estimated liabilities have a short-term nature.
Item
Period
Opening
balance
Recognised Settled
Written off as
surplus
Closing
balance
Estimated liabilities,
including:
for remuneration
payments
for litigation
for forthcoming
payment of earned but
2016
2017
2016
2017
2016
2017
2016
601
2,447
-
1,364
61
627
3,057
3,201
1,364
1,876
627
181
(958)
(2,381)
-
(1,321)
(61)
(125)
(253)
(291)
-
(43)
-
-
2,447
2,976
1,364
1,876
627
683
540
1,066
(897)
(253)
456
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
41
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Item
Period
Opening
balance
Recognised Settled
Written off as
surplus
Closing
balance
unused employee
vacations
2017
456
1,144
(935)
(248)
417
3.6.1 Leased property, plant and equipment
3.6. Off-balance-sheet valuables
As of 31 December 2017, the total rented property, plant and equipment are RUB 35 760 million
(31 December 2016: RUB 33,862 million, 31 December 2015: RUB 38,490 million). In 2017, the
Company did not receive any property, plant and equipment under lease contracts.
The Company rented and received items of property, plant and equipment under lease contracts
from the following entities:
Lessor
31 December
2017
31 December
2016
31 December
2015
AO Sulakskiy HydroKaskad
Ministry of Property Relations of Moscow region
AO Zaramagskie GES
AO Malyye GES Kabardino-Balkarii
AO Malaya Dmitrovka
Territorial Office of Federal Property Management
Agency (Rosimyschestvo) in the Stavropol Territory
Novosibirsk Department of Land and Property Relations
Territorial Office of Federal Property Management
Agency in the Volgograd region
Territorial Office of Federal Property Management
Agency in the Nizhny Novgorod region
Perm Department of Land and Property Relations
Other
Total rent of property, plant and equipment
OOO Leasefinance
ZAO Business Alliance
OOO RB-Leasing
Other
Total lease of property, plant and equipment under
lease contracts
Total rent and lease of property, plant and equipment
10 478
4 956
4 927
3 567
3 394
2 771
777
604
569
502
3,215
35,760
-
-
-
-
-
35,760
9,463
4,956
4,927
-
3,381
3,185
777
604
569
1,307
4,659
32,671
1,022
169
-
-
1,191
33,862
9,721
4,956
5,042
-
3,391
2,549
779
260
569
1,350
4,703
36,221
1,022
321
829
97
2,269
38,490
3.6.2 Collateral for liabilities and payments received
Counterparty
PAO Silovye Mashiny
Voith Hydro GmbH & Co KG
OOO EZOP
OOO Vostok-finans
AO VNIIR Hydroelectroavtomatika
AO Hydroelectromontazh
OOO «Simens»
AO TEK Mosenergo
AO Trest Hydromontazh
ZAO A-security
AO Hydroinvest
AO Transport company RusHydro
Other
31 December
2017
31 December
2016
31 December
2015
7,878
4,809
3,214
2,106
857
453
364
272
121
56
-
-
1,545
8,780
5,433
5,428
2,106
429
453
-
392
390
194
984
511
1,953
8,655
7,041
5,428
-
424
453
-
405
-
294
3,919
511
2,488
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
42
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Counterparty
31 December
2017
31 December
2016
31 December
2015
Total collateral for liabilities and payments
received
21,675
27,053
29,618
For a number of agreements for delivery of equipment and capital construction with Voith Hydro
GmbH & Co KG, PAO Silovye Mashiny, AO Hydroelectromontazh, AO VNIIR
Hydroelectroavtomatica, AO TEK Mosenergo and others the Company received bank guarantees
for return, in full or in part, of the advances issued to these entities or due fulfilment of the contractual
scope of work by these entities.
3.6.3 Collateral for liabilities and payments issued
The Company issued the following collaterals and guarantees:
Creditor
Debtor
31 December
2017
31 December
2016
31 December
2015
46,962
47,777
48,426
GC Vnesheconombank
PAO Sberbank
PAO Sberbank
PAO Sberbank
GC Vnesheconombank
PAO VTB Bank
Rosbank AKB PAO
European Bank for
Reconstruction and
Development (EBRD)
Asian Development Bank,
ADB
PAO Sberbank
PAO Sberbank
ZAO International Energy
Corporation
PAO VTB Bank
IFTS №4 Russia in
Moscow
PAO Boguchanskaya GES
PАО Far East Energy
Company
PAO Far East Generating
Company
PAO Kamchatskenergo
ZAO Boguchansky
Aluminium Smelter
AO Far East Generating
Company
AO Far East Generating
Company
ZAO International Energy
Corporation
ZAO International Energy
Corporation
PAO Magadanenergo
PAO Sakhalinenergo
RusHydro International AG
PAO Magadanenergo
PАО Far East Energy
Company
PАО Far East Energy
Company
Rosbank AKB PAO
European Bank for
Reconstruction and
Development (EBRD)
PAO Sberbank
PAO VTB Bank
Bank GPB (AO)
Bank GPB (AO)
AO Russian Regional
Development Bank
PAO Sberbank
European Investment Bank AO RAO ES of East
AO RAO ES of East
AO RAO ES of East
AO RAO ES of East
AO RAO ES of East
AO Magadanenergo
AO Magadanenergo
AO Chukotenergo
Bank GPB (AO)
Bank GPB (AO)
Other
AO Far East Generating
Company
PАО Far East Energy
Company
Other
7,460
5,400
4,768
4,615
-
10,760
3,978
4,615
4,521
11,556
2,395
2,704
1,367
1,367
1,248
651
523
492
335
-
-
-
-
-
-
-
-
-
-
812
1,538
1,538
500
651
-
-
-
3,313
3,276
2,878
1,831
1,323
1,012
900
860
-
-
-
916
5,531
7,102
3,978
4,615
4,522
851
1,845
1,845
-
651
-
-
-
-
3,695
2,095
-
-
401
-
-
4,012
1,002
762
1,424
92,757
Total collateral for liabilities and payments issued
82,916
101,926
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
43
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
In 2017 the Company issued guarantees:
− Guarantees provided for liabilities of AO DGK under its loan agreements with PAO
Sberbank and PAO ROSBANK cover the principle amount and interest. The guarantees
expire in 2019.
− Guarantees provided for liabilities of PAO DEK under its loan agreements with PAO
Sberbank cover the principle amount and interest. The guarantees expire in 2019, 2021
and 2022.
− Guarantees provided for liabilities of PAO Kamchatskenergo under its loan agreements with
PAO Sberbank and Bank VTB (PAO) cover the principle amount and interest. The
guarantees expire in 2021 and 2022.
− Guarantees provided for liabilities of PAO Magadanenergo under its loan agreements with
PAO Sberbank and Bank VTB (PAO) cover the principle amount and interest. The
guarantees expire in 2021 and 2022.
Guarantees issued by the Company for liabilities of PAO Boguchanskaya GES under its loan
agreement with GC Vnesheconombank include:
−
−
total liabilities of PAO Boguchanskaya GES under the loan agreement, including
accumulated interest in the amount of RUB 25 935 million as of 31 December 2017
(31 December 2016: RUB 26 750 million);
pledge of PAO Boguchanskaya GES's interest-free promissory notes for the total of RUB
21,027 million (see Note 3.2.2 of the Explanatory Notes) and pledge of shares for the total
of RUB 14 thousand.
RUSAL Group undertakes to reimburse the Company for 50 percent of liabilities settled under this
guarantee by the Company for PAO Boguchanskaya GES. In February 2018, an agreement on the
termination of the guarantee contract was signed. The parties agreed to terminate the guarantee
contract starting from the date of signing.
3.6.4 Non-deliverable forward contract for shares
In March 2017 the Company signed a contract with Bank VTB (PAO) (hereinafter the “Bank”) under
which the Bank is to acquire 55 billion ordinary shares of the Company and a non-deliverable equity
forward for these shares for a 5-year period. Under the contract the Bank bought 40 000 000 000
shares of the Company from the current additional issue of the Company shares (see para 3.3.1 of
the Notes) and 15 000 000 000 shares of the Company from subsidiaries at the price of RUB 1 per
share for the total amount of RUB 55 billion.
Cash received from the Bank was used to provide long-term special purpose loans to AO RAO ES
Vostoka and its subsidiaries to refinance their current liabilities to banks (see para 3.1.2 of the
Notes).
According to the forward contract, the forward value is determined as the purchase consideration
paid by the Bank plus the amount of prepayment that the Company pays to the Bank on a quarterly
basis. The prepayment amount is calculated using a special formula that reduces the prepayment
amount by the amount of dividends received by the Bank in the effective period of the forward
contract.
The Bank is assumed to sell the Company’s shares at the time of final settlement under the forward
contract. The difference between the proceeds that the Bank will receive from the sale of these
shares and their forward value is subject to cash settlement between the Company and the Bank.
Thus, if the forward value is higher than the purchase consideration paid for the shares sold, the
Company will reimburse the difference, net of the prepaid amount, to the Bank and, vice versa, if
the proceeds from the sale of shares are in excess of the forward value, the difference will be paid
by the Bank to the Company. If, for any reason, the Bank does not sell the shares, they will continue
to be held by the Bank. If this is the case, the amount of additional payment to be made when
closing the forward transaction is calculated based on the quoted market price of the Company's
shares.
Thus, the payments will be made upon expiry of the forward contract or earlier, if the Bank sells the
shares held. The payment can be made both by the Company to the Bank or by the Bank to the
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
44
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Company, depending on the level of the market value of the Company’s shares at the time of sale
/ expiry of the transaction term and their forward value.
Management of the Company analysed terms of the contract with the Bank and concluded that the
Bank acts a full-fledged shareholder as it receives the right to take part in the Company’s
governance and the right to receive dividends while the Company does not have any obligations to
buy the shares back from the Bank or any other binding arrangements. According to the
management, decreasing a prepaid amount of forward value by the amounts of dividends received
by the Bank does not directly represent a return of dividends, and, therefore, does not limit the Bank
in terms of receiving benefits from the share ownership.
As at 31 December 2017 the fair value of the liability under the non-deliverable equity forward
calculates in accordance with IFRS was RUB 20,716 million.
As at 31 December 2017 the Company’s management believe that there will be no return of prepaid
amounts to the Company upon expiry of the five year period at the time of the forward contract
closure. Given the above and following the prudence, principle prepayments of RUB 3,243 million
made under the non-deliverable forward contract in 2017 are recognised within other expenses (see
paragraph 3.3 of the Explanatory Notes).
3.7 Income and expenses on operating activities (statement of financial results)
3.7.1 Revenue (line 2110 of the statement of financial results)
Revenue from sales of electricity and capacity has the largest percentage in the Company's revenue
structure (99,7%).
Item
2017
2016
Sale of electricity
Sale of capacity
Sale of heat
Other
Total line 2110 “Revenue”
78,900
65,393
157
247
144,697
77,338
36,833
168
694
115,033
The Company sells a major part of its produced electricity and capacity (99,9%) on the wholesale
electricity and capacity market, where sales are made at non-regulated prices (except for sales at
regulated tariffs in the RF Far East non-pricing zone and volumes produced for selling to households
or equivalent consumer categories).
3.7.2 Cost of sales (line 2120 of the statement of financial results)
Item
Fees for administering the wholesale market of electricity and capacity
(AO SO UES, AO ARS, AO CFR), incl.:
Earmarked contributions to the budget of constituent entities of the
Russian Federation
Depreciation and amortisation
Wages and social insurance contributions
Purchased electricity and capacity
Property tax
Third party services
Repairs and maintenance
Lease expenses
Fire and other security services
Insurance expenses
Water usage expenses, water tax
Lease of power equipment
Other expenses
Total line 2120 “Cost of sales”
2017
2016
26,947
2,813
23,995
16,680
10,444
7,015
6,744
4,286
3,729
1,933
1,712
1,660
1,464
58
1,135
83,807
-
15,213
9,408
7,023
6,771
3,720
3,724
1,579
1,730
1,710
1,267
186
1,212
56,356
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
45
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
The cost of sales include administrative expenses. In 2017, administrative expenses totalled
RUB 7,567 million (2016: RUB 6,004 million). Administrative expenses include expenses on the
maintenance of subdivisions and premises of the Executive Body and the branch “Corporative
University of the Hydro Power Industry” (including payroll and social expenses, PP&E depreciation
charge, lease expenses, security costs etc.), insurance, legal, advisory, information, audit and other
similar services, representation and other expenses.
Electricity and capacity market administration expenses include RUB 23,995 million of special-
purpose contributions to the budgets of Russian constituent regions in the Far Eastern Territory in
accordance with the Rules of targeted use of funds received from applying a mark-up on the cost
of capacity sold in the price ranges of the wholesale power and capacity market.
Operating expenses broken down by cost elements are as follows:
Item
2017
2016
Material expenses
Payroll expenses
Social contributions
Depreciation and amortisation
Other costs
Total for elements of costs
Change in balances of work in progress, finished goods, etc. (increase [-
] / decrease [+])
Total expenses incurred on operating activities
17,389
8,422
2,318
16,680
38,998
83,807
-
83,807
17,122
7,570
2,142
15,213
14,309
56,356
-
56,356
3.8 Other income and expenses (line 2340 and line 2350 of the statement of financial
results)
Item
Doubtful debt provision
Foreign exchange differences from
remeasurement of assets and liabilities
denominated in foreign currencies
Income and expenses from sales, write-
off and other transactions with assets
Gains / (losses) from revaluation of
investments measured at current market
value
Income and expenses due to sale or
other disposal of securities (exception
promissory notes)
Provision for impairment of investments
Charity donations
Expenses for social events
Expenses on operations with derivatives
Other income and expenses
Total line 2340 “Other income” and
2350 “Other expenses”
2017
2016
Income
3,965
Expenses
(3,508)
Income
Expenses
2,368
(8,283)
1,661
(2,080)
540
(754)
4,789
9,847
(2,306)
(7,987)
531
(1,424)
5,544
(12)
125
16
-
-
-
1,057
(133)
(7,755)
(1,667)
(425)
(3,243)
(1,360)
-
14
-
-
-
1,192
-
(17,658)
(462)
(457)
-
(1,171)
7,895
(22,349)
23,754
(38,336)
Value Added Tax
3.9 Taxes
Total VAT calculated with due account of recovered tax amounts was RUB 38,350 million in the
reporting year (2016: RUB 35,173 million), including:
− VAT calculated on sales of goods (work, services) is RUB 26,053 million (2016: RUB
22,396 million);
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
46
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
− VAT calculated on the amounts of received payment or partial payment for goods (work,
services) to be delivered in the future is RUB 10,501 million (2016: RUB 10,652 million);
recoverable amount of tax is RUB 1,796 million (2016: RUB 2,125 million).
−
Total VAT recoverable in the reporting period was RUB 20,393 million (2016: RUB 21,383 million),
including:
− VAT recoverable invoiced to the taxpayer on acquisition of goods (work, services), property
rights in Russia was RUB 7,917 million (2016: RUB 8,839 million);
− VAT calculated on the amounts of received payment or partial payment for goods (work,
services) to be deducted from their delivery date was RUB 10,501 million (2016: RUB
10,652 million);
− VAT calculated on the amounts of payment or partial payment for goods (work, services) to
be delivered in the future was RUB 1,372 million (2016: RUB 1,352 million);
− VAT recovered in 2017 which was paid earlier when the goods were imported to the
Russian customs territory was RUB 565 million (2016: RUB 539 million);
other recoverable VAT was RUB 38 million (2016: RUB 1 million).
−
The Company decreases the calculated VAT by the amount invoiced on purchase of goods (work,
services) in Russia, according to tax legislation.
Corporate income tax
Income tax calculated on the basis of the accounting profit (theoretical income tax charge) for the
reporting year was RUB 9,921 million (2016: RUB 10,877 million).
The Company applied tax rate of 20% in the calculation of income tax based on accounting profit
received by the Company's branches (excluding profits received by branches Kamsksya GES and
Votkinskaya GES that apply 17% rate).
According to the tax accounting data, the taxable profit for 2017 was RUB 49,399 million (2016:
RUB 56,327 million).
In the reporting year, the amount of non-temporary differences which affected the theoretical income
tax charge adjustment for the purposes of income tax calculated for tax accounting purposes
(current income tax) was RUB 15,458 million (2016: RUB 8,949 million).
The above non-temporary differences arise from differences in recognising certain income and
expenses for accounting and income tax purposes.
Non-temporary differences resulted in permanent tax assets amounted to RUB 3,190 million for
2017 (2016: 15,124 million), including:
−
−
income from participation in other entities (dividends) in the amount of RUB 2,563 for 2017
(2016: RUB 9,367 million);
increase in value of financial placements determined in fair value in the amount of RUB 531
million (2016: RUB 5,532 million);
other non-temporary differences in the amount of RUB 96 million (2016: RUB 225 million).
Non-temporary differences resulted in the permanent tax liability amounted to RUB 18,648 million
for 2017 (2016: 24,073 million), including:
−
− depreciation of RUB 3,209 million (2016: RUB 3,254 million);
−
−
− expenses related to sale, disposal or other transactions with assets in the amount of RUB
charges to doubtful debt provision in the amount of RUB 31 million (2016: RUB 894 million);
charity donations in the amount of RUB 1,644 million (2016: RUB 462 million);
−
−
−
253 million (2016: RUB 531 million);
provision for impairment of financial investments in the amount of RUB 7,755 million (2016:
RUB 17,658 million);
loss on transactions in derivative financial instruments not traded on the organized financial
market, RUB 3,230 million (2016: RUB 0 million);
decrease in the value of financial investments, which determine the current market value,
in the amount of RUB 1,424 million (2016: RUB 12 million);
− other non-temporary differences in the amount of RUB 1,102 million (2016: RUB 1,274
million).
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
47
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
The total amount of deductible temporary differences, which affected the adjustment of the
theoretical income tax charge for the purpose of the current income tax calculated for tax accounting
purposes, was RUB 1,041 million (2016: RUB 6,934 million), including those originated – RUB
11,981 million (2016: RUB 11,724 million) and settled – RUB 13,022 million (2016: RUB 4,790
million).
Total amount of taxable temporary differences that affected the theoretical income tax expense
adjustment for the purpose of the income tax calculation for tax accounting purposes, was RUB
15,585 million (2016: RUB 13,080 million), including those originated – RUB 22,011 million (2016:
RUB 21,776 million) and settled – RUB 6,426 million (2016: RUB 8,696 million).
In 2017, movement in deductible and taxable temporary differences was mainly due to:
−
−
−
−
−
different useful lives of property, plant and equipment for accounting and income tax
purposes;
recognition of depreciation premium on items of property, plant and equipment for income
tax purposes;
application of multiplying factor for accrual of depreciation charges on property, plant and
equipment used in operations in a hostile environment with a high turnover for tax
accounting purposes in prior periods;
capitalisation of interest on borrowings in the cost of investment assets for accounting
purposes;
including the costs of insurance in the value of investment assets in the accounting records
of the Company.
Deferred tax assets and deferred tax liabilities were:
Item
Deferred income tax assets
Deferred tax liabilities
Total line 1420 “Deferred tax liabilities”
31 December
2017
31 December
2016
31 December
2015
(3,043)
20,156
17,113
(3,248)
16,924
13,676
(1,864)
14,266
12,402
Line 2430 “Change in deferred tax liabilities” includes increase of deferred tax liabilities in amount
of RUB 125 million with no effect on current income tax. Line 2450 “Change in deferred tax assets”
includes decrease of deferred tax assets in amount of RUB 211 million with no effect on current
income tax.
Other taxes and levies
In 2017, operating expenses include other taxes and levies in the amount of RUB 8,457 million
(2016: RUB 8,384 million), including:
−
−
−
property tax in the amount of RUB 6,744 million (2016: RUB 6,771 million);
insurance contributions to the Pension Fund of the Russian Federation, Social Insurance
Fund of the Russian Federation and obligatory medical insurance funds in the amount of
RUB 1,704 million (2016: RUB 1,596 million), including contributions related to estimated
liabilities on future payment of employee vacations earned but not used;
other taxes and levies in the amount of RUB 9 million (2016: RUB 17 million).
Relations with tax authorities
Russian tax legislation active or effective as of the end of the reporting period allows varying
interpretation of the separate facts of the Company’s economic life. As a consequence, the position
of the Company’s management in terms of taxes and documents substantiateв this position may be
challenged by tax authorities. The tax control in Russian Federation gets stringent resulting in
increase of tax inspections risk. These inspections may cover 3 calendar years preceding the year
when the decision about inspection was made. In some cases the earlier periods may be examined.
As of 31 December 2017, the Company's management believe that their interpretation of the
relevant legislation was appropriate, tax liabilities are recorded in full and the Company's tax and
currency positions will be sustained.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
48
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
In 2016, the tax authorities conducted an on-site tax audit for 2012-2014, according to which the
Company was presented claims, part of which were successfully challenged by the Company. For
the rest of the claims, the Company will file an appeal with the higher tax authority and, if necessary,
intend to appeal the claims in court in the future.
3.10 Dividends
The Company's annual general meeting of shareholders held on 27 June 2017 (Minutes No. 16)
made the decision to pay dividends on the Company's ordinary shares for 2016 in the amount of
RUB 0,0466245 per 1 share for the total of RUB 19,876 million
The Company's annual general meeting of shareholders held on 27 June 2016 (Minutes No. 15)
made the decision to pay dividends on the Company's ordinary shares for 2015 in the amount of
RUB 0,038863 per 1 share for the total of RUB 15,011 million.
3.11 Earnings per share
Basic earnings per share reflect a portion of reporting period’s profit that may be potentially
distributed between the shareholders – owners of ordinary shares. It is calculated by dividing basic
profit of the reporting year by the weighted average number of ordinary shares outstanding during
the year. Basic profit is equal to net profit of the reporting year (Line 2400 of the statement of
financial results).
Item
Basic profit for the reporting year (RUB million)
Weighted average number of ordinary shares, outstanding
during the reporting year (shares)
Basic earnings per share (RUB)
2017
2016
36,149
41,877
406,272,139,221 386,255,464,890
0,10842
0,08898
Weighted average number of ordinary shares, outstanding during the reporting year was calculated
as follows:
Item
Number of ordinary shares outstanding as of 1 January 2017 (shares)
Number of additional shares outstanding in 2017, registered 07.12.2016, paid by
shareholders (see paragraph 3.3.1 Explanatory Notes) (pieces of shares)
Number of ordinary shares outstanding as of 1 December 2017 (shares)
Number of ordinary shares outstanding as of 31 December 2017 (shares)
Weighted average number of ordinary shares, outstanding in 2017 (shares)
(386,255,464,890 * 6 months + 426,288,813,551 * 6 months) / 12 months
Item
Number of ordinary shares outstanding as of 1 January 2016 (shares)
Number of ordinary shares outstanding as of 1 December 2016 (shares)
Number of ordinary shares outstanding as of 31 December 2016 (shares)
Weighted average number of ordinary shares, outstanding in 2016 (shares)
(386,255,464,890 * 12 month) / 12 months
2017
386,255,464,890
40,033,348,661
426,288,813,551
426,288,813,551
406,272,139,221
2016
386,255,464,890
386,255,464,890
386,255,464,890
386,255,464,890
In 2017 and 2016, the Company had no debt securities potentially convertible to shares.
The Company’s related parties are its subsidiaries and associates and other entities where the
Company has indirect control or significant influence through its subsidiaries and associates.
3.12 Related Parties
list
The
related
www.rushydro.ru/investors/disclosure/affiliated
the Company’s
of
parties
is
given
on
the web-site
–
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
49
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
3.12.1 Controlling entity
As of 31 December 2017 the Company is controlled by the Russian Government (represented by
the Federal Agency for Federal Property Management) which owns, 60,56% of the Company's
ordinary shares (see paragraph 3.3.1 of the Explanatory Notes).
3.12.2 Sales to related parties
Total revenue from sales to related parties was:
Name of the buyer
2017
2016
Revenue from sales to subsidiaries, including:
PАО Far East Energy Company
PAO Krasnoyarskenergosbyt
AO Chuvashskaya Energy Sales Company
AO ESK RusHydro
PАО Ryazanskaya Energy Sales Company
ООО ESK Bashkortostana*
Other subsidiaries
Revenue from sales to related parties, including:
PAO Boguchanskaya GES
ZAO Boguchanskiy Alluminievy zavod
Total sales to related parties
6,557
919
742
583
249
-
106
112
54
9,322
6,148
854
634
197
234
2,018
117
110
668
10,980
* ООО ESK Bashkortostana was the related party until 01 December 2016
Sales to related parties include, among others, sales of electricity and capacity in the regulated
sector of WEM at tariffs determined by the Federal Tariff Service and in the competitive sector at
commercial prices established in accordance with the Wholesale Market Rules and Regulation of
the Russian Government No. 109 of 26 February 2004, On Pricing of Electric and Heating Energy
in the Russian Federation, and Regulation on the Company's sales policy for operating generation
assets in the price zones of the wholesale electricity (capacity) market (minutes of the meeting of
the Management Board No. 528 of 17 September 2010).
3.12.3 Purchases from related parties
The cost of services provided by related parties was:
Name of the supplier
2017
2016
1 559
309
240
228
192
28
107
Construction-and-assembling operations, survey and design works, research and development,
including:
Subsidiaries
AO Hydroremont-VKK
AO Institut Hydroproject
AO Lenhydroproject
АО Mosoblhydroproject
AO VNIIG im. B.E.Vedeneyeva
AO ChirkeyGESStroy
Other
Other related parties
OOO VolgaHydro
Total construction-and-assembling operations,
survey and design works, research and development:
Services rendered by related parties, including:
Subsidiary company:
AO Hydroremont-VKK
AO Transport company Rushydro
AO Sulaksky HydroKaskad
AO Malaya Dmitrovka
OOO RusHydro IT Servis
ООО SNRG
2 925
1 433
527
514
416
260
2 663
-
2 194
388
538
400
110
602
148
900
5 280
2 863
1 563
428
514
316
248
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
50
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Name of the supplier
2017
2016
АО Zaramagskiye GES
AO VNIIG im. B.E.Vedeneyeva
AO Malyye GES Kabardino-Balkarskoy Respubliki
Other
Other related parties
Services rendered by related parties, total
Purchased electricity
Total purchases from related parties
249
182
181
279
7
6 973
2
9 638
253
250
-
198
30
6 663
1
11,944
3.12.4 Settlements with non-state pension fund
Non-state Pension Fund of Electrical Energy Industry is the non-state pension fund for
implementation of the non-governmental pension security program for the Company's employees.
The total amount of contributions to the pension fund was RUB 265 million and RUB 275 million for
2017 and 2016, respectively.
3.12.5 Settlements with related parties
As of 31 December 2017, 2016 and 2015, accounts receivable from related parties to the Company
less doubtful debt provision were (see paragraph 3.2.2 of the Explanatory Notes):
31 December
2016
31 December
2017
31 December
2015
Type of accounts receivable
Short-term interest-free promissory notes received
Short-term interest-free loans issued
Long-term interest-free promissory notes received
Accounts receivable from subsidiaries as part of
additional issues before title for the shares issued is
transferred to the Company
Indebtedness under the assignment agreement
Long-term interest-free loans issued
Accounts receivable related to other sales
Other settlements with related parties
Total accounts receivable from related parties
2,142
64,257
25,689
29,621
9,962
2,234
952
5,869
140,726
5,457
30,700
25,689
22,997
8,257
10,897
1,217
5,673
110,887
20,767
12,879
25,689
7,951
-
3,099
1,574
8,213
80,172
Terms and conditions of settlements with related parties provide for the Company to make advance
payments on transactions with individual related parties. As of 31 December 2017 balances include
advances issued for the amount of RUB 2 240 million (31 December 2016: RUB 3,334 million, 31
December 2015: RUB 5,926 million).
Doubtful debt provision for related parties' accounts receivables as of 31 December 2017 was RUB
4 123 million (31 December 2016: RUB 5,904 million; 31 December 2015: RUB 291 million).
As of 31 December 2017, 2016 and 2015, the Company's accounts payable to the related parties
were:
Subsidiaries
Other related parties
Total accounts payable to related parties
31 December
2017
31 December
2016
31 December
2015
1,001
18
1,019
1,164
81
1,245
2,707
750
3,457
The whole amount accounts payable to related parties is payable in cash.
3.12.6 Related parties' debt within investments
As of 31 December 2017, 2016 and 2015, The Company's investments include the following
amounts due from related parties (see paragraphs 3.1.2 and 3.2.3 of the Explanatory Notes):
Type of financial investments
Loans issued to related parties
31 December
2017
31 December
2016
31 December
2015
67,105
28,315
57,102
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
51
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Type of financial investments
31 December
2017
31 December
2016
31 December
2015
Other investments
Total related parties' debt within investments
Total debt within long-term investments (Line 1170
of the Balance sheet)
Total debt within short-term investments (Line 1240
of the Balance sheet)
601
67,706
55,419
12,287
601
28,916
27,686
1,230
601
57,703
52,433
5,270
Interest income on loans issued to related parties and promissory notes received from related
parties:
Entity
2017
2016
Subsidiaries, including:
AO Far East Generating Company
АО Sakhaenergo
AO RAO Energy Systems of the East
AO Hydroinvest
AO Far East Distribution Grid Company
AO Teploenergoservis
PAO Yakutskenergo
AO ESK RusHydro
AO Nizhne-Bureyskaya GES
AO Zagorskaya GAES-2
АО Sakhaenergo
AO Ust-Srednekanskaya GES
Other
Other subsidiaries
Total interest income
3,689
1,797
358
339
312
212
98
97
80
-
-
-
-
396
63
3,752
4,986
1,372
278
-
1,031
697
74
-
315
424
355
278
163
277
61
5,047
3.12.7
Income from investments in other companies (related parties)
Income from investments in other companies includes income from investments in subsidiaries in
the amount of RUB 2,303 million for 2017 (2016: RUB 9,447 million):
Entity
2017
2016
HydroOGK Power Company Ltd
АО Blagoveschenskaya TETS
AO Hydroremont-VKK
AO Lenhydroproject
AO GVTS Energetiki
Other
Total income from investments in subsidiaries
1,706
176
154
101
4
162
2,303
8 257
-
191
114
698
187
9,447
In 2017 and 2016, dividends were received from HydroOGK Power Company Ltd in the amount of
RUB 1,706 million and 8,257 million in non-monetary form by way of assignment of accounts
receivable of the subsidiary company of HC Boguchanskaya HPP classified as part of other short-
term accounts receivable of the Company as of December 31, 2017 (see paragraph 3.2.2 of the
Explanatory Note).
3.12.8 Remuneration to key management personnel
The Company's key management personnel includes members of the Board of directors and
Management Board and also includes heads of the Company's business divisions and their
deputies.
The remuneration to the members of the Board of directors is calculated according to the
Regulations on the payment of remuneration to PAO RusHydro's directors approved by the Annual
General Meeting of Shareholders held on 27 June 2017 (Minutes No. 16).
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
52
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Remuneration is paid to members of the Management Board and other management personnel of
the Company for their services in management positions and is made up of a contractual salary and
performance bonuses depending on the results for the period calculated based on key performance
indicators approved by the Company's Board of directors.
The list of members of the Company's Board of directors and Management Board is included in
paragraph 1.1 of the Explanatory Notes.
In 2017 and 2016, the Company remuneration to key management personnel within the limits set
out in their employment agreements for the total amount of RUB 1,141 million and RUB 666 million,
respectively. The insurance contributions amounted to RUB 190 million for 2017 (2016: RUB 146
million). In addition, in 2017, an appraisal obligation was established for premiums to key
management personnel in the amount of RUB 400 million (2016: RUB 165 million). In calculation of
the estimated liability for remuneration payments includes the expected remuneration for 2017 as
part of the Long-Term Motivation Program of the Company's key management.
3.12.9 Cash flows between the Company and subsidiaries/associates
Item
Line
code
2017
2016
Cash flows from operating activities
Receipts, including:
sales of products, goods, work and services
lease payments, licence payments, royalties, commission and
other payments
other receipts
Payments, including:
suppliers (contractors) – raw materials, work and services
interest on debt liabilities
other payments
Net cash flows from operating activities
Cash flows from investing activities
Receipts, including:
sale of non-current assets (except for investments)
sale of shares of other organisations (ownership interest)
repayment of loans issued, sale of debt securities (rights of
claiming cash to third parties)
dividends, interest on debt investments and similar proceeds from
equity participation in other organisations
other receipts
Payments, including:
acquisition,
creation, modernisation,
preparation for use of non-current assets
reconstruction and
purchase of shares (interest) in other entities
acquisition of debt securities (rights of claiming cash from third
parties), issue of loans to third parties
Net cash flows from investing activities
Cash flows from financing activities
Receipts, including:
borrowings and bank loans
Payments, including:
dividends and other payments on distribution of profit in favor of
owners (participants)
redemption (buyback) of promissory notes and other debt
securities, loan repayment
Net cash flows from financing activities
Net cash flows for the reporting period
4110
4111
4112
4119
4120
4121
4123
4129
4100
4210
4211
4212
4213
4214
4219
4220
4221
4222
4223
4200
4310
4311
4320
4322
4323
4300
4400
8,126
8,026
67
33
(7,237)
(7,095)
(39)
(103)
889
30,667
241
9
8,896
8,818
62
16
(6,447)
(6,329)
(17)
(101)
2,449
29,886
95
-
27,384
22,400
3,017
16
(96,487)
(3,103)
(7,524)
(85,860)
(65,821)
676
676
(22)
(15)
(7)
654
(64,277)
5,351
2,040
(40,108)
(6,256)
(23,829)
(10,023)
(10,222)
719
719
(1,090)
-
(1,090)
(371)
(8,144)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
53
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
3.13 Segment Information
The Company does not identify any reporting segments in its operations, as the Company's core
business activity is production of electricity and capacity – their share in the revenue from sales is
99,7%. The individuals credentialed to make the decisions concerning allocation of the resources
within the Company and assess the results of its performance analyse the Company’s activity as a
whole segment.
3.14 Contingent liabilities
As of 31 December 2017, the Company had outstanding issued guarantees to the third parties'
creditors and pledged assets for the total amount of RUB 82,916 million (31 December 2016: RUB
101,926 million, 31 December 2015: RUB 92,757 million) (see paragraph 3.6.3 of the Explanatory
Notes). According to the Company's management expectations, no material liabilities will arise in
connection with these guarantees.
Moreover, the prosecutor's office and other oversight bodies examined operations of the Company,
and this also may result in additional claims filed against the Company and its employees.
The Russian transfer pricing legislation is aligned with the international principles developed by the
Organisation for Economic Cooperation and Development (OECD). The legislation allows tax
authorities to assess additional taxes for controlled transactions (transactions between related
parties and some transactions between unrelated parties) if such transactions are not on an arm's
length basis. The Company's management has implemented internal control procedures to ensure
compliance with transfer pricing law.
Tax liabilities arising as a result of operations between the Company and its subsidiaries are
determined based on the actual transaction price. There is a probability that the prices may be
disputed as practice for application of the transfer rules changes. The effect of such course of events
cannot be estimated reliably but may have a material effect on the Company's financial results
and/or operations.
New provisions aimed at deoffshorisation of Russian economy have been added to the Russian tax
legislation and are effective from 1 January 2015. Specifically, they introduce new rules for
controlled foreign companies, a concept of beneficiary owner of income for the purposes of
application of preferential provisions of taxation treaties of the Russian Federation. Management of
the Company conducts analysis of impact of new rules on Companies' activity and takes necessary
measures to meet new requirements of Russian Tax legislation. Likelihood of claims from Russian
tax authorities (and probability of positive resolution of disputes) can't be reliably measured because
there's no practice of new tax rules. Financial statements of the Company can be affected if tax
disputes arise.
3.15 Financial risk management
The primary objectives of the financial risk management function are to provide reasonable
assurance of achieving the Company's goals by developing a methodology of risk identification,
analysis and assessment, as well as to establish risk limits, and then ensure that exposure to risks
stays within these limits and if the limits are exceeded – to treat this risk accordingly.
Market risks
Market risks include currency risk, interest rate and price risks.
Currency risk. The Company sells its produced electricity and capacity in the Russian domestic
market at prices denominated in national currency, settlements with resources suppliers, charge
and acceptance of payments from the customers are made specifically in Russian roubles.
Liabilities of the Company are denominated in national currency. As a result effect of changes in
currency exchange rates on the Company’s financial position and activities is estimated as
insignificant. The Company's operations are planned and carried out in such a way that all its assets
and liabilities are denominated in the national currency.
Information on the Company's exposure to currency risk is presented in line with its use for the
preparation of RusHydro Group's IFRS financial statements as defined in IFRS 7:
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
54
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
31 December 2017
US Dollars
Euro
Total
31 December 2016
US Dollars
Euro
Total
31 December 2015
US Dollars
Euro
Total
Monetary
financial assets
Monetary
financial
liabilities
Net balance
sheet position
704
-
704
547
-
547
3,096
-
3,096
-
(6,112)
(6,112)
-
(11,716)
(11,716)
-
(15,426)
(15,426)
704
(6,112)
(5,408)
547
(11,716)
(11,169)
3,096
(15,426)
(12,330)
The above analysis includes only monetary assets and liabilities. Investments in shares and non-
monetary assets are not considered to give rise to significant currency risk.
Changes in exchange rates have no significant influence on the Company's financial position.
Interest rate risk. The Company’s operating profits and cash flows from operating activity are
substantially independent of the changes in market interest rates.
The effect of changes in the average market interest rates on the value of the Company's
investments is insignificant as the rates of return on the Company's investments are fixed.
The Company also receives loans with floating interest rates based on MOSPRIME, Euribor rates,
which leads to risk of changes in interest rates. At the same time, the share of borrowed funds with
a fixed interest rate is 91% of the Company's loan portfolio. The influence of changes in these rates
on the Company's profit is insignificant.
The Company monitors interest rate risk for its financial instruments. Effective interest rates as of
the end of the period are presented in paragraph 3.4.1 of the Explanatory Notes.
Price risk. The Company sales power and capacity, mainly, in the wholesale market. The price risk
at the wholesale market is connected with possible volatility of the prices, and also with reduction
of prices of the corresponding goods.
Electricity at the wholesale market is realized by Company mainly at the market for the days ahead.
Weighted average price of sale of electricity for the days ahead for the Company in 2017 didn't
change significantly in comparison with an indicator of 2016.
As the key instrument for trading capacity in the wholesale market is the contracts for purchase and
sale of capacity by results of competitive selection of capacity. The price of capacity, based on
which liabilities under such contracts are calculated, after the transition in 2015 to long-term model
of competitive selection of capacity, is determined by results of competitive selections of capacity
for four years ahead. The price differences on capacity created following the results of competitive
selections of capacity for 2016-2020, make no more than 5% for each price zone.
At the liberalised market of the electric power the price of goods directly depends on demand
amount. For the purpose of increase in a financial result of economic activity Company considers
the seasonal, week and daily changes in demand on the electric power in case of sales planning of
the electric power.
The price risk determines the possible changes / fluctuations in the fair value or future cash flows
due to changes in market prices (excluding changes leading to interest rate or currency risk).
The table below includes the Company's investments exposed to the price risk.
Category of investments
31 December
2017
31 December
2016
31 December
2015
Equity investments for which current market value can be
determined, including:
PAO Inter RAO
PAO Irkutskenergo
6,809
6,809
-
7,818
7,709
65
2,286
2,217
36
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
55
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
Category of investments
PAO Krasnoyarskaya GES
Equity investments to subsidiaries measured at current
market value but not revalued as of the reporting date
Equity investments for which current market value cannot
be determined
Total equity investments (see paragraph 3.1.2 of the
Explanatory Notes)
31 December
2017
31 December
2016
31 December
2015
-
44
33
1 709
20,204
20,204
248,212
236,565
245,174
256,730
264,587
267,664
* As of 31.12.2017, the financial investment in JSC RAO ES of the East in the amount of RUB 18,495 million
was included in the line "Equity investments for which the current market value is not determined", as in 2017
the company's shares were delisted from the Moscow exchange. As at 31.12.2016 and 31.12.2015 the financial
investments were included in the line "Equity investments in subsidiaries subject to fair value, but revaluation
at the reporting date was not made».
Current market value of quoted securities is determined by market prices established on the stock
exchange PАО MICEX-RTS (http://moex.com), according to the 'Procedure for determining market
value of securities, estimated price of securities and the threshold for the fluctuations of securities'
market price for the purpose of Chapter 23 of the Russian Tax Code approved by Order of the
Federal Service for Financial Markets No. 10-65/pz-n of 9 November 2010.
Credit risk
Credit risk is the possibility of the Company's losses resulting from the counterparty’s inability to
meet its obligations under the contract. Exposure to credit risk arises as a result of the Company’s
sales of products on credit terms and other transactions with counterparties giving rise to financial
assets.
Although collectability of receivables can be influenced by economic factors, management believe
that there is no significant risk of loss to the Company beyond the provision for impairment of
receivables already recorded. The Company regularly monitors existing receivables and undertakes
actions to collect them and minimize losses.
Cash has been placed in financial institutions, which are considered at the time of deposit to have
minimal risk of default. The Company approves deposit banks as well as rules for making cash
deposits. The Company performs regular review of financial institutions, monitors their ratings
assigned by independent agencies as well as other performance indicators of these financial
institutions.
Summary information on cash deposits and their equivalents including names of banks and other
financial institutions and their ratings as of the end of the reporting period is provided in paragraph
3.2.4 of the Explanatory Notes.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated
with financial liabilities.
Efficient liquidity risk management implies maintaining sufficient cash and marketable securities,
and ensuring the availability of additional funding through an adequate amount of committed credit
facilities. The Group follows the balanced model of working capital financing when both long-term
and short-term sources of finance are used. The Company places available cash to short-term
financial instruments, mainly, bank deposits and short-term bank promissory notes. Short-term
liabilities are represented mainly by trade accounts payable.
The Company has implemented controls over the contracting process by using standard financial
procedures that include standard payment structure, standard payment time, standard correlation
between the advance and final settlement amounts, etc. This way the Company controls the
maturity structure of capital.
The ageing analysis for long term borrowings is presented is paragraph 3.4.1 of the Explanatory
Notes.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
56
PAO RusHydro
Explanatory Notes to the 2017 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
3.16 Subsequent events
In February 2018, the Group signed an agreement on the termination of the surety agreement with
SC Vnesheconombank with regard to performance by PAO Boguchanskaya GES of its obligations
under the credit agreement (see paragraph 3.6.3 of the Explanatory Note).
Chairman of Management Board - General Director
of PAO RusHydro
N.G.Shulginov
Chief Accountant of PAO RusHydro
Y. G. Medvedeva
26 March 2018
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
57
in
Appendix No 16. Consolidated financial statements prepared
accordance with IFRS and an audit opinion for the year ended December
31, 2017 and as of that date
RUSHYDRO GROUP
Consolidated Financial Statements
prepared in accordance with IFRS
with independent auditor’s report
As at and for the year ended 31 December 2017
CONTENTS
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements
Consolidated Statement of Financial Position ............................................................................................................. 1
Consolidated Income Statement ................................................................................................................................. 2
Consolidated Statement of Comprehensive Income ................................................................................................... 3
Consolidated Statement of Cash Flows ...................................................................................................................... 4
Consolidated Statement of Changes in Equity ............................................................................................................ 6
Notes to the Consolidated Financial Statements
Note 1. The Group and its operations ...................................................................................................................... 8
Note 2. Summary of significant accounting policies ................................................................................................. 9
Note 3. New accounting pronouncements ............................................................................................................. 19
Note 4. Principal subsidiaries................................................................................................................................. 23
Note 5. Segment information ................................................................................................................................. 25
Note 6. Related party transactions ......................................................................................................................... 29
Note 7. Property, plant and equipment .................................................................................................................. 31
Note 8.
Investments in associates and joint ventures ............................................................................................ 35
Note 9. Available-for-sale financial assets ............................................................................................................. 38
Note 10. Other non-current assets .......................................................................................................................... 38
Note 11. Cash and cash equivalents ....................................................................................................................... 39
Note 12. Accounts receivable and prepayments ..................................................................................................... 40
Note 13. Inventories ................................................................................................................................................ 41
Note 14. Other current assets .................................................................................................................................. 41
Note 15. Equity ........................................................................................................................................................ 41
Note 16. Income tax ................................................................................................................................................ 43
Note 17. Pension benefit obligations ....................................................................................................................... 44
Note 18. Current and non-current debt .................................................................................................................... 46
Note 19. Non-deliverable forward contract for shares .............................................................................................. 48
Note 20. Other non-current liabilities ........................................................................................................................ 49
Note 21. Accounts payable and accruals................................................................................................................. 49
Note 22. Other taxes payable .................................................................................................................................. 49
Note 23. Revenue ................................................................................................................................................... 49
Note 24. Government grants ................................................................................................................................... 49
Note 25. Operating expenses (excluding impairment losses) .................................................................................. 50
Note 26. Finance income, costs .............................................................................................................................. 50
Note 27. Earnings per share .................................................................................................................................... 51
Note 28. Capital commitments ................................................................................................................................ 51
Note 29. Contingencies ........................................................................................................................................... 51
Note 30. Financial risk management ....................................................................................................................... 52
Note 31. Management of capital .............................................................................................................................. 55
Note 32. Fair value of assets and liabilities .............................................................................................................. 55
Note 33. Presentation of financial instruments by measurement category ............................................................... 57
Note 34. Subsequent events ................................................................................................................................... 58
Independent Auditor’s Report
To the Shareholders and Board of Directors of Public Joint Stock Company Federal
Hydro-Generating Company – RusHydro:
Our opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of PJSC RusHydro and its subsidiaries (together – the “Group”) as at
31 December 2017, and its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards (IFRS).
What we have audited
The Group’s consolidated financial statements comprise:
•
•
•
•
•
•
the consolidated statement of financial position as at 31 December 2017;
the consolidated income statement for the year then ended;
the consolidated statement of comprehensive income for the year then ended;
the consolidated statement of cash flows for the year then ended;
the consolidated statement of changes in equity for the year then ended; and
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical
requirements of the Auditor’s Professional Ethics Code and Auditor’s Independence Rules that are
relevant to our audit of the consolidated financial statements in the Russian Federation. We have
fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
AO PricewaterhouseCoopers Audit
White Square Office Center 10 Butyrsky Val Moscow, Russia, 125047
T: +7 (495) 967-6000, F:+7 (495) 967-6001, www.pwc.ru
Our audit approach
Overview
PJSC RusHydro’s shares are listed on the Moscow Exchange. The Group’s principal business
operations are generation and sales of electricity, capacity and heat energy in the Russian wholesale
and retail markets. The Group companies are also involved in other operations, including electricity
transmission and distribution, construction, repairs and provision of other services.
• Overall group materiality: Russian Roubles (“RUB”) 3,800 million,
which represents 1% of total revenues and government grants.
• We conducted audit procedures in respect of those companies of the
Group that were considered significant components based on their
individual share in the Group’s revenue, which exceeds 15%: PJSC
RusHydro, PJSC DEK, JSC DGK.
• Our audit scope covered inter alia 74% of the Group’s revenues and
81% of the Group’s total carrying value of property, plant and
equipment.
Key audit matters
• Assessment of impairment of property, plant and equipment
• Assessment of impairment of accounts receivable
• Recognition of the non-deliverable forward contract for shares
We designed our audit by determining materiality and assessing the risks of material misstatement in
the consolidated financial statements. In particular, we considered where management made
subjective judgements; for example, in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. We also addressed
the risk of management override of internal controls, including among other matters consideration of
whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of the concept of materiality. An audit is
designed to obtain reasonable assurance whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall group materiality for the consolidated financial statements as a whole as set out
in the table below. These, together with qualitative considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, if any, both individually and in aggregate on the consolidated financial statements as a
whole.
ii
Overall group materiality
RUB 3,800 million
How we determined it
1% of total revenues and government grants
Rationale for the
materiality benchmark
applied
We chose total revenues and government grants as the
benchmark because, in our view, it is the benchmark which
best represents the Group’s performance. We chose 1% as the
materiality level, which falls within the range of quantitative
materiality thresholds used for companies in this sector.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the accompanying consolidated financial statements. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the Key audit
matter
Assessment of impairment of property,
plant and equipment
For matters requiring disclosure and related
significant accounting policies, judgements
and accounting estimates see Notes 2, 7 and
32 to the consolidated financial statements.
At 31 December 2017, the Group’s aggregate
carrying amount of property, plant and
equipment was RUB 799,855 million. This is
the most significant asset on the Group’s
balance sheet, accounting for 78% of the total
assets.
The Group management performed an analysis
of the business performance, industry outlook
and operational plans and then assessed the
recoverable value of property, plant and
equipment by cash generating unit for the
purpose of impairment testing. Impairment
arises when the recoverable amount, which is
determined as the higher of the fair value less
costs of disposal and its value in use, is below
the carrying amount of the analysed assets.
Management’s testing identified impairment of
a number of cash generating units, and the
Group accrued an impairment loss of
RUB 24,000 million in the consolidated
income statement for the year ended
31 December 2017.
We obtained and examined the financial models
that management used for assessing impairment
of property, plant and equipment. We engaged
our valuation experts to form our conclusion on
the assumptions and methodology that were
used in the impairment assessment.
Our audit procedures related to the
management’s assessment of impairment of
property, plant and equipment, included the
following:
• assessment of the methodology used by the
Group management for the impairment test;
• examination, on a test basis, of key
assumptions used in financial models and
whether they are in line with the approved
budgets and business plans, available
reliable external sources (including
macroeconomic forecasts, information on
regulated and market electricity and capacity
prices, etc.) and our industry-specific
expertise;
• assessment of competence, skills, experience
and objectivity of the management’s experts;
• examination, on a test basis, of accuracy and
relevance of inputs that management
incorporated in the financial models for
iii
Key audit matter
The recognition of additional loss also led to a
decrease of RUB 1,043 million (net of tax) in
the property, plant and equipment revaluation
reserve in the consolidated statement of
comprehensive income. There was no basis for
accrual of impairment loss for those cash
generating units for which management
concluded, based on its assessment, that their
recoverable amount is higher than or equals
their carrying amount.
We focused on the property, plant and
equipment impairment assessment as this
process is complicated, requires significant
management’s judgements and is based on
assumptions that are affected by the projected
future market and economic conditions that
are inherently uncertain.
The impairment test is sensitive to reasonably
possible changes in assumptions. The most
significant judgements are related to the
applied discount rate together with the
assumptions supporting the relevant forecast
cash flows, in particular those concerning the
electricity and capacity tariff rates and volumes
of investments.
How our audit addressed the Key audit
matter
assessing the impairment of property, plant
and equipment;
• examination, on a test basis, of mathematical
accuracy of financial models used by
management to assess the impairment of
property, plant and equipment ;
• consideration of potential impact of
reasonably possible changes in key
assumptions;
• obtaining and reviewing management’s
written representations related to their
property, plant and equipment impairment
test.
As a result of the above procedures, we believe
that the key assumptions used by the
management are acceptable for the purposes of
preparing the accompanying consolidated
financial statements.
Acceptability of management’s current estimates
regarding the property, plant and equipment
impairment for the purpose of preparing the
financial statements for the year ended
31 December 2017 does not guarantee that
future events that are inherently uncertain
would not lead to a significant change in these
estimates.
We note that the management’s financial models
are to a significant extent sensitive to the
changes in key assumptions. It could reasonably
be expected, that if actual results differ from
assumptions made, accordingly, there could
arise either additional losses from impairment in
the future or gains from the release of previously
recognised impairment charges.
We also assessed the compliance of disclosures
in Notes 2, 7 and 32 to the consolidated financial
statements with the disclosure requirements of
IAS 36 ‘Impairment of Assets’.
As a result of our procedures, we have not
identified any evidence that would require
significant adjustments to the recorded amount
of impairment of property, plant and equipment
or to the respective disclosures in the
consolidated financial statements.
iv
Key audit matter
How our audit addressed the Key audit
matter
Assessment of impairment of accounts
receivable
For matters requiring disclosure, and related
significant accounting policies, judgements
and accounting estimates see Notes 2, 12 and
32 to the consolidated financial statements.
At 31 December 2017, the carrying amount of
the Group’s trade receivables was RUB 34,708
million (RUB 61,279 million less an
impairment provision of RUB 26,571 million).
Thus, the receivables that are assessed by the
Group management as doubtful, account for a
significant portion within the structure of trade
receivables (at 31 December 2017, the Group
accrued an impairment provision amounting
to 43% of the total trade receivables).
The Group management establishes a
provision for doubtful debts based on the
assessment of deterioration of the specific
customer’s solvency position, their individual
specifics, payment dynamics, subsequent
payments after the end of the reporting period
as well as future cash inflow forecast analysis
by reference to the conditions existing at the
reporting date. The degree of accuracy of the
management’s estimate will be confirmed or
rebutted depending on the future
developments that are inherently uncertain.
We focused on receivables impairment
assessment as this process is complicated and
requires significant management’s judgements,
and the amount of impairment is significant.
Our audit procedures related to management’s
assessment of trade receivables impairment
included:
• review of management’s collectability
analysis taking into account counterparty
solvency analysis and its deterioration as of
the reporting date, intention, if any, to allow
payment by instalments, subsequent
payments after the end of the reporting
period, existence of security and its quality,
as well as other factors considered by
management;
• analysis of the receivables turnover the
results of which were used inter alia to
examine the management’s collectability
analysis;
• sample testing of past due but not impaired
trade receivables for assessing the
management’s conclusion that there is no
impairment considering the prospects and
timing of collection of such receivables;
• sample testing of underlying documents for
management’s assessment of the probability
of collection of receivables, such as payment
orders supporting payments received in
2018;
• review of external information from the
regulators of the wholesale electricity
(capacity) market, including the Supervisory
Board of NP Market Council, which regularly
takes decisions on excluding companies from
the register of participants in the wholesale
electricity (capacity) market; among those
there are the Group’s customers of its
electricity (capacity) , with deteriorated
solvency as expected;
• obtaining and reviewing management’s
written representations related to receivables
impairment test.
v
Key audit matter
How our audit addressed the Key audit
matter
We also assessed the compliance of disclosures
in Notes 2, 12 and 32 to the consolidated
financial statements with the disclosure
requirements of IFRS 7 ‘Financial Instruments:
Disclosures’.
Acceptability of management’s current estimates
regarding the receivables impairment for the
purpose of preparing the consolidated financial
statements for the year ended 31 December 2017
does not guarantee that future events that are
inherently uncertain would not lead to
significant changes in these estimates.
As a result of our procedures, we have not
identified any evidence that would require
significant adjustments to the amount of
impairment of accounts receivable or to the
respective disclosures in the accompanying
consolidated financial statements.
Recognition of the non-deliverable
forward contract for shares
For matters requiring disclosure, and related
significant accounting policies, judgements
and accounting estimates see Notes 2, 19 and
32 to the consolidated financial statements.
In March 2017, PAO RusHydro simultaneously
signed a contract with Bank VTB (PAO) under
which the Bank acquired 55 billion ordinary
shares of PAO RusHydro, and a non-
deliverable forward contract for these shares
for a five-year period.
Following the analysis performed, the Group
management decided to treat the above
transactions separately and to recognise the
sale of shares in equity and a derivative
financial instrument.
We obtained and reviewed the models that were
used to measure the fair value of the non-
deliverable forward contract at its initial
recognition date and at 31 December 2017. We
engaged valuation experts in order to form our
conclusion on the assumptions and the
methodology used in the fair value assessment.
Our audit procedures in respect of the
recognition of the non-deliverable forward
contract for shares included:
•
assessing reasonableness of the assumptions
that the Group management applied to
determine the treatment of the non-
deliverable forward contract in the
consolidated financial statements;
As at 31 December 2017, the liability under the
forward contract of RUB 20,716 million is
recorded as a long-term derivative financial
instrument at fair value through profit or loss.
At the initial recognition date (3 March 2017)
the fair value of this non-deliverable forward
contract amounted to RUB 10,013 million and
was recorded within equity as it arose on the
transaction with shareholders.
•
•
assessing validity and appropriateness of the
methodology used by the Group
management to develop fair value models for
the non-deliverable forward contract;
testing accuracy and relevance of the key
assumptions and source data used in the
models, and their consistency with other
information obtained during the audit, with
vi
Key audit matter
We focused on the treatment of this non-
deliverable forward contract in the
consolidated financial statements of the Group
due to the complexity of its accounting
treatment and of the assessment of the
instrument’s fair value, which requires
management to exercise professional
judgement, and because the liability
recognised under the forward contract and the
corresponding effects on the consolidated
statement of profits and losses and on equity
are material.
How our audit addressed the Key audit
matter
•
•
•
available reliable external information and
our expert knowledge of industry specifics;
assessing competence, skills, experience and
objectivity of the management’s experts;
testing the mathematical accuracy of
financial instrument’s fair value calculation;
considering and assessing potential impact of
reasonably possible changes in key
assumptions;
• obtaining and analysing management’s
written representations related to the
treatment of the non-deliverable forward
contract.
Following the results of our procedures, we
believe that the estimates and judgements made
by management with regard to the recognition of
the non-deliverable forward contract are
appropriate for the purposes of preparation of
the accompanying consolidated financial
statements.
In addition we assessed compliance of the
disclosures in Notes 2, 19 and 32 to the
consolidated financial statements with the
presentation and disclosure requirements of IAS
39 ‘Financial Instruments: Recognition and
Measurements’, IFRS 7 ‘Financial Instruments:
Disclosures’ and IFRS 13 ‘Fair Value
Measurement”.
As a result of our procedures, we have not
identified any evidence that would require
significant adjustments in respect of recognition
of the non-deliverable forward contract or the
respective disclosures in the accompanying
consolidated financial statements.
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to be able to give an opinion on
the consolidated financial statements as a whole, taking into account the geographic and management
structure of the Group, the accounting processes and controls as well as the specific nature of the
industry in which the Group operates.
vii
The Group’s consolidated financial statements are prepared based on the financial information of its
components, i.e. individual companies of the Group. If we considered a component to be significant,
we audited its financial information based on the materiality level established for each such
component.
Similar to the determination of the overall materiality, significance of components was assessed based
on the component’s individual share in the Group’s revenue. We determined the following significant
components, which individually account for more than 15% of the Group’s total revenue:
PJSC RusHydro, PJSC DEK, JSC DGK.
If we did not consider that the procedures performed at the level of significant components provided
adequate audit evidence for expressing our opinion on the consolidated financial statements as a
whole, we performed analytical procedures at the Group level and audit procedures in respect of
individual balances and types of operations for other components of the Group.
We chose other components of the Group for audit procedures in respect of individual balances and
types of operations separately for each financial statement line item included in the scope of our audit,
and our choice depended inter alia on the following factors: level of audit evidence obtained from the
audit of significant components and level of concentration of balances and types of operations in the
Group’s structure. We also change our selection of a number of other components on a rotation basis.
On the whole, our audit procedures that were performed at the level of significant and other
components of the Group and included, in particular, detailed testing and testing of controls on a
sample basis, in our opinion, provided adequate coverage of individual line items in the consolidated
financial statements. Thus, for example, our procedures covered 74% of the Group’s revenue and 81%
of the total carrying value of the Group’s property, plant and equipment.
When performing the audit procedures the audit team engaged specialists in taxation, IFRS
methodology, as well as experts in valuation of property, plant and equipment and pension liabilities.
We believe that the results of procedures performed on a sample basis at the level of the Group’s
components, analytical procedures at the Group’s level and procedures over the consolidated financial
reporting have provided sufficient and appropriate audit evidence for expressing our opinion on the
Group’s consolidated financial statements as a whole.
Other information
Management is responsible for the other information. Other information includes PJSC RusHydro’s
Annual Report for 2017 and Issuer’s Report of PJSC RusHydro for Q1 2018, but does not include the
consolidated financial statements and our auditor’s report thereon. PJSC RusHydro’s Annual Report
for 2017 and Issuer’s Report of PJSC RusHydro for Q1 2018 are expected to be made available to us
after the date of this auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and we will
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above, when it is made available to us, and, in doing so, consider whether
the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
viii
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
ix
RusHydro Group
Consolidated Income Statement
(in millions of Russian Rubles unless noted otherwise)
Revenue
Government grants
Other operating income
Operating expenses (excluding impairment losses)
Operating profit excluding impairment losses
Impairment of property, plant and equipment
Impairment of accounts receivable, net
Impairment of financial assets
Impairment of loans issued
Operating profit
Finance income
Finance costs
Share of results of associates and joint ventures
Profit before income tax
Income tax expense
Profit for the year
Attributable to:
Shareholders of PJSC RusHydro
Non-controlling interest
Earnings per ordinary share for profit attributable to the
shareholders of PJSC RusHydro – basic and diluted
(in Russian Rubles per share)
Weighted average number of shares outstanding –
basic and diluted (thousands of shares)
Note
23
24
4, 7, 9, 10
25
7
10
14
26
26
8
16
27
27
Year ended
31 December 2017
Year ended
31 December 2016
348,119
32,745
690
(303,805)
77,749
(24,000)
(5,957)
-
-
47,792
8,443
(21,133)
417
35,519
(13,068)
22,451
24,013
(1,562)
374,072
17,250
12,422
(315,705)
88,039
(26,525)
(7,133)
(4,464)
(2,378)
47,539
9,943
(9,041)
6,682
55,123
(15,372)
39,751
40,205
(454)
0.0596
0.1095
402,655,108
367,138,482
The accompanying notes are an integral part of these Consolidated Financial Statements
2
RusHydro Group
Consolidated Statement of Comprehensive Income
(in millions of Russian Rubles unless noted otherwise)
Profit for the year
22,451
39,751
Note
Year ended
31 December 2017
Year ended
31 December 2016
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Impairment of revalued property, plant and equipment
Remeasurement of pension benefit obligations
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
(Loss) / profit arising on available-for-sale financial assets
Reclassification of accumulated loss on available-for-sale financial
assets to profit or loss
Other comprehensive (loss) / income
Total items that may be reclassified subsequently to
profit or loss
Other comprehensive (loss) / income
Total comprehensive income for the year
7
17
9
9
Attributable to:
Shareholders of PJSC RusHydro
Non-controlling interest
(1,043)
344
(699)
(4,920)
(274)
(5,194)
(2,561)
15,050
(19)
(8)
(2,588)
(3,287)
19,164
20,809
(1,645)
-
5
15,055
9,861
49,612
50,082
(470)
The accompanying notes are an integral part of these Consolidated Financial Statements
3
RusHydro Group
Consolidated Statement of Cash Flows
(in millions of Russian Rubles unless noted otherwise)
Note
Year ended
31 December 2017
Year ended
31 December 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Рrofit before income tax
Depreciation of property, plant and equipment and amortisation of
intangible assets
Loss on disposal of property, plant and equipment, net
Share of results of associates and joint ventures
Other operating income
Finance income
Finance costs
Impairment of property, plant and equipment
Impairment of accounts receivable, net
Impairment of financial assets
Impairment of loans issued
Other loss / (income)
7, 25
25
8
4, 7, 9, 10
26
26
7
35,519
25,023
1,006
(417)
(690)
(8,443)
21,133
24,000
5,957
-
-
468
55,123
24,130
555
(6,682)
(12,422)
(9,943)
9,041
26,525
7,133
4,464
2,378
(758)
Operating cash flows before working capital changes, income tax
paid and changes in other assets and liabilities
103,556
99,544
Working capital changes:
Increase in accounts receivable and prepayments
Decrease / (increase) in other current assets
Increase in inventories
(Decrease) / increase in accounts payable and accruals
Increase / (decrease) in other taxes payable
Increase in other non-current assets
Increase in other non-current liabilities
Income tax paid
Net cash generated by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Investment in bank deposits and purchase of other investments
Redemption of bank deposits and proceeds from sale of other
investments
Proceeds from sale of subsidiaries, net of disposed cash
Proceeds from sale of dams of Bratskaya, Ust’-Ilimskaya and
Irkutskaya HPPs
Placement of special funds on special accounts
Return of special funds from special accounts
Purchase of shares of subsidiary
Interest and dividends received
Net cash used in investing activities
(13,483)
859
(1,604)
(2,236)
891
(1,592)
7,674
(15,940)
78,125
(71,693)
213
(19,837)
23,428
28
-
-
-
-
7,848
(60,013)
(9,243)
(3,403)
(28)
1,013
(199)
(7,083)
3,549
(12,777)
71,373
(60,957)
266
(9,993)
25,477
3,559
10,950
(6,998)
6,098
(414)
7,094
(24,918)
The accompanying notes are an integral part of these Consolidated Financial Statements
4
RusHydro Group
Consolidated Statement of Cash Flows
(in millions of Russian Rubles unless noted otherwise)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from share issue
Proceeds from sale of treasury shares
Payments for non-deliverable forward for shares
Proceeds from current debt
Proceeds from non-current debt
Repayment of debt
Interest paid
Dividends paid to the shareholders of PJSC RusHydro
Dividends paid by subsidiaries to non-controlling interest holders
Finance lease payments
Net cash used in financing activities
Effect of foreign exchange differences on cash and cash equivalents
balances
Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11
Note
Year ended
31 December 2017
Year ended
31 December 2016
15
15
19
18
18
18
40,000
15,000
(3,243)
55,773
63,499
(149,976)
(15,794)
(19,673)
(127)
(523)
(15,064)
(246)
2,802
67,354
70,156
33
-
-
64,855
71,829
(128,291)
(20,271)
(14,228)
(234)
(530)
(26,837)
(289)
19,329
48,025
67,354
The accompanying notes are an integral part of these Consolidated Financial Statements
5
RusHydro Group
Consolidated Statement of Changes in Equity
(in millions of Russian Rubles unless noted otherwise)
As at 1 January 2016
Profit for the year
Profit arising on available-for-sale
financial assets
Remeasurement of pension
benefit obligations
Impairment of revalued property,
plant and equipment
Other comprehensive income
Total other comprehensive income
Total comprehensive income
Dividends
Offer for shares of
JSC RAO ES East
Transfer of revaluation reserve to
retained earnings
Effect of changes in non-
controlling interest
Other movements
As at 31 December 2016
Note
Share
capital
386,255
-
Treasury
shares
(26,092)
-
Share
premium
39,202
-
Merger
reserve
(135,075)
-
9
17
7
15
15
15
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,514
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
386,255
-
-
(22,578)
-
-
39,202
-
-
(135,075)
Foreign
currency
translation
reserve
Revaluation
reserve on
property,
plant and
equipment
(474)
-
188,552
-
-
-
-
(64)
(64)
(64)
-
-
-
-
-
(538)
-
-
(4,822)
34
(4,788)
(4,788)
-
-
(796)
-
-
182,968
Revaluation
reserve on
available-
for-sale
financial
assets
Reserve for
remeasu-
rement of
pension
benefit
obligation
1,952
-
14,957
689
-
-
-
(230)
-
-
14,957
14,957
-
-
-
-
-
16,909
-
-
(230)
(230)
-
-
-
-
-
459
Equity
attributable to
shareholders of
PJSC RusHydro
Non-
controlling
interest
602,479
40,205
11,440
(454)
Retained
earnings
147,470
40,205
Total
equity
613,919
39,751
-
-
-
2
2
40,207
(14,278)
4,872
796
-
-
179,067
14,957
93
15,050
(230)
(44)
(274)
(4,822)
(28)
9,877
50,082
(14,278)
(98)
33
(16)
(470)
(234)
(4,920)
5
9,861
49,612
(14,512)
8,386
(6,694)
1,692
-
-
-
-
-
646,669
213
8
4,263
213
8
650,932
The accompanying notes are an integral part of these Consolidated Financial Statements
6
RusHydro Group
Consolidated Statement of Changes in Equity
(in millions of Russian Rubles unless noted otherwise)
Note
Share
capital
386,255
-
Treasury
shares
(22,578)
-
Share
premium
39,202
-
Merger
reserve
(135,075)
-
Foreign
currency
translation
reserve
Revaluation
reserve on
property,
plant and
equipment
(538)
-
182,968
-
Revaluation
reserve on
available-
for-sale
financial
assets
Reserve for
remeasu-
rement of
pension
benefit
obligation
Equity
attributable to
shareholders of
PJSC RusHydro
Non-
controlling
interest
Retained
earnings
459
-
179,067
24,013
646,669
24,013
4,263
(1,562)
Total
equity
650,932
22,451
As at 1 January 2017
Profit for the year
Loss arising on available-for-sale
financial assets
Accumulated loss on available for-
sale financial assets recycled to
the Income Statement
Remeasurement of pension
benefit obligations
Impairment of revalued property,
plant and equipment
Other comprehensive loss
Total other comprehensive loss
Total comprehensive income
Share issue
Sale of treasury shares
Dividends
Non-deliverable forward contract
for shares
Transfer of revaluation reserve to
retained earnings
Effect of changes in non-
controlling interest
Other movements
As at 31 December 2017
9
9
17
15
15
15
19
15
-
-
-
-
-
-
-
40,034
-
-
-
-
-
-
-
-
-
-
-
-
17,965
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9)
(9)
(9)
-
-
-
-
-
-
-
-
(831)
-
(831)
(831)
-
-
-
-
(974)
16,909
-
(2,534)
(19)
-
-
-
(2,553)
(2,553)
-
-
-
-
-
-
-
426,289
-
-
(4,613)
-
-
39,202
-
-
(135,075)
-
-
(547)
-
-
181,163
-
-
14,356
The accompanying notes are an integral part of these Consolidated Financial Statements
7
-
-
188
-
-
188
188
-
-
-
-
-
-
-
647
-
-
-
-
1
1
24,014
-
(2,965)
(19,696)
(2,534)
(27)
(2,561)
(19)
188
(831)
(8)
(3,204)
20,809
40,034
15,000
(19,696)
-
156
(212)
-
(83)
(1,645)
-
-
(127)
-
-
(19)
344
(1,043)
(8)
(3,287)
19,164
40,034
15,000
(19,823)
(10,013)
-
(10,013)
(10,013)
974
-
-
42
171,423
-
42
692,845
228
-
2,719
228
42
695,564
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 1.
The Group and its operations
PJSC RusHydro (hereinafter referred to as “the Company”) was incorporated and is domiciled in the Russian
Federation. The Company is a joint stock company limited by value of shares and was set up in accordance
with Russian regulations.
The primary activities of the Company and its subsidiaries (hereinafter together referred to as “the Group”)
are generation and sale of electricity and capacity on the Russian wholesale and retail markets, as well as
generation and sale of heat energy.
Economic environment
in the Russian Federation. The Russian Federation displays certain
characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The tax,
currency and customs legislation continue to develop and are subject to frequent changes and varying
interpretations. The Russian economy showed signs of recovery in 2017, after the economic downturn of
2015 and 2016. The economy is negatively impacted by low oil prices, ongoing political tension in the region
and continuing international sanctions against certain Russian companies and individuals. The financial
markets continue to be volatile.
This economic environment has a significant impact on the Group’s operations and financial position.
Management is taking necessary measures to ensure sustainability of the Group’s operations. However, the
future effects of the current economic situation are difficult to predict and management’s current expectations
and estimates could differ from actual results.
Relations with the Government and current regulation. As at 31 December 2017 the Russian Federation
owned 60.56 percent of the total voting ordinary shares of the Company (31 December 2016: 66.84 percent).
The Russian Federation’s participatory interest in the Company’s equity decreased following the additional
issue of shares in favour of PJSC Bank VTB that is also controlled by the Russian Federation (Note 15). As
at 31 December 2017, PJSC Bank VTB owned 13.34 percent of the Company’s shares.
The Group’s major customer base includes a large number of entities controlled by, or related to the
Government. Furthermore, the Government controls contractors and suppliers, which provide the Group with
electricity dispatch, transmission and distribution services, and a number of the Group’s fuel and other
suppliers (Note 6).
In addition, the Government influences the Group’s operations through:
participation of its representatives in the Company’s Board of Directors;
regulation of tariffs for electricity, capacity and heating;
approval and monitoring of the Group’s investment programme, including volume and sources of
financing.
Economic, social and other policies of the Russian Government could have a material effect on operations of
the Group.
Overview of the electricity and capacity market. In 2017 the following significant changes were made to
the rules of electricity and capacity wholesale and retail markets, their operation procedures and pricing
mechanisms:
Russian Government Resolution No. 895 “On achievement of basic rates (tariffs) for electric power
(capacity) in the territories of the Far East Federal region” provides for a premium to the price of
capacity sold by the Company in the price zones for the wholesale electricity and capacity market, with
subsequent transfer of the amounts collected to the constituent budgets of the Far East Federal region
in the form of free-of-charge targeted contributions (Note 2).
Federal Law No.451-FZ of 29 December 2017 establishes the obligation to carry out electricity sales
activity only on the basis of relevant licenses, and the administrative responsibility for violating license
terms or performing electricity sales without a license.
Russian Government Resolution No. 624 of 24 May 2017 introduced changes to the Rules for full and
(or) partial limitation of electricity consumption that make implementation of power supply limitation
much easier and provide an option of imposing a full limitation of power consumption on so called ‘non-
disconnectable’ consumers.
Russian Government Resolution No. 863 of 21 July 2017 establishes the regulator’s duty to set up sales
mark-ups for guaranteeing suppliers using a method of compared analogues (the method of standard
costs). The Guidelines for Calculating Guaranteeing Suppliers' Sales Markup were approved by FAS
Order No.1554/17 of 21 November 2017.
8
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Under Russian Government Resolution No.1365 of 11 November 2017, a guaranteeing supplier can be
deprived of this status because of its debts to grid companies.
Federal Law No. 279-FZ of 29 July 2017 introduces changes to the Federal Law “On Heat Supply”.
These changes allow to include cities and districts into heat supply price zones in which prices for heat
(capacity) provided to consumers by a single heat supplier are capped by the maximum level of heat
(capacity) prices for consumers (the Law “On Alternative Boiler Plant“). In the maximum price level
framework, a single heat supplier provides heat energy (capacity) to its consumers at prices agreed by
the parties.
The Rules of establishing maximum price levels for heat (capacity) in these price zones were approved
on 15 December 2017 under Russian Government Resolution No.1562.
Note 2.
Summary of significant accounting policies
Basis of preparation. These consolidated financial statements have been prepared in accordance with
IFRS under the historical cost convention, as modified by the financial instruments initially recognised at fair
value, revaluation of property, plant and equipment and available-for-sale financial assets. The principal
accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated.
Each company of the Group individually maintains its own books of accounts and prepares its statutory
financial statements in accordance with Russian standards of accounting (hereinafter referred to as “RSA”).
These consolidated financial statements are based on the statutory records with adjustments and
reclassifications made for the purpose of fair presentation in accordance with IFRS.
Functional and presentation currency. The functional currency of the Company and its subsidiaries, and
the presentation currency for these consolidated financial statements is the national currency of the Russian
Federation, the Russian Ruble.
Foreign currency translation. Monetary assets and liabilities, which are held by the Group’s entities and
denominated in foreign currencies at the end of the reporting period, are translated into Russian Rubles at
the exchange rates prevailing at that date. Foreign currency transactions are accounted for at the exchange
rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such
transactions and translation of monetary assets and liabilities denominated in foreign currencies are
recognised in the consolidated income statement.
As at 31 December 2017, the official rate of exchange, as determined by the Central Bank of the Russian
Federation, between Russian Ruble and US Dollar (hereinafter referred to as “USD”) was RR 57.60:
USD 1.00 (31 December 2016: RR 60.66: USD 1.00), between Russian Ruble and Euro was RR 68.87:
EUR 1.00 (31 December 2016: RR 63.81: EUR 1.00).
Consolidated financial statements. Subsidiaries are those investees, including structured entities, that the
Group controls because the Group (i) has power to direct relevant activities of the investees that significantly
affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees,
and (iii) has the ability to use its power over the investees to affect the amount of investor’s returns.
The existence and effect of substantive rights, including substantive potential voting rights, are considered
when assessing whether the Group has power over another entity. For a right to be substantive, the holder
must have practical ability to exercise that right when decisions about the direction of the relevant activities of
the investee need to be made. The Group may have power over an investee even when it holds less than
majority of voting power in an investee. In such a case, the Group assesses the size of its voting rights
relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power
over the investee. Protective rights of other investors, such as those that relate to fundamental changes of
investee’s activities or apply only in exceptional circumstances, do not prevent the Group from controlling an
investee. Subsidiaries are consolidated from the date on which control is transferred to the Group
(acquisition date) and are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries other than those
acquired from parties under common control. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest.
The Group measures non-controlling interest that represents present ownership interest and entitles the
holder to a proportionate share of net assets in the event of liquidation on a transaction by transaction basis,
either at: (a) fair value, or (b) the non-controlling interest's proportionate share of net assets of the acquiree.
9
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration
transferred for the acquiree, the amount of non-controlling interest in the acquiree and the fair value of an
interest in the acquiree held immediately before the acquisition date. Any negative amount (“negative
goodwill” or a “bargain purchase”) is recognised in profit or loss, after management reassesses whether it
identified all the assets acquired and all the liabilities and contingent liabilities assumed and reviews the
appropriateness of their measurement.
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity
instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from
contingent consideration arrangements but excludes acquisition related costs such as advisory, legal,
valuation and similar professional services. Transaction costs related to the acquisition and incurred for
issuing equity instruments are deducted from equity; transaction costs incurred for issuing debt as part of the
business combination are deducted from the carrying amount of the debt and all other transaction costs
associated with the acquisition are expensed.
Intercompany transactions, balances and unrealised gains on transactions between the Group’s entities are
eliminated; unrealised losses are also eliminated unless the cost cannot be recovered. The Company and all
of its subsidiaries use uniform accounting policies consistent with the Group’s policies.
Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests
which are not owned, directly or indirectly, by the Company. Non-controlling interest forms a separate
component of the Group’s equity.
Purchases and sales of non-controlling interests. The Group applies the economic entity model to
account for transactions with owners of non-controlling interest, that do not result in a loss of control. Any
difference between the purchase consideration and the carrying amount of non-controlling interest acquired
is recorded as a capital transaction directly in equity. The Group recognises the difference between sales
consideration and the carrying amount of non-controlling interest sold as a capital transaction in the
statement of changes in equity.
Acquisition of subsidiaries from parties under common control. Acquisitions of subsidiaries from parties
under common control are accounted for using the predecessor values method. Under this method the
consolidated financial statements of the combined entity are presented as if the businesses had been
combined from the beginning of the earliest period presented or the date when the combining entities were
first brought under common control if later. The assets and liabilities of the subsidiary transferred under
common control are at the predecessor entity’s carrying amounts. The predecessor entity is considered to be
the highest reporting entity in which the subsidiary’s IFRS financial information was consolidated. Related
goodwill inherent in the predecessor entity’s original acquisitions is also recorded in these consolidated
financial statements. Any difference between the carrying amount of net assets, including the predecessor
entity’s goodwill, and the consideration for the acquisition is accounted for in these consolidated financial
statements as an adjustment to merger reserve within equity. Under this method the consolidated financial
statements of the combined entity are presented as if the businesses had been combined from the beginning
of the earliest period presented, i.e. retrospectively except for acquisition of subsidiaries acquired exclusively
with a view for resale which are accounted for using predecessor values method prospectively from the
acquisition date.
Investments in associates and joint ventures. Investments in associates and joint ventures are accounted
for using the equity method of accounting, based upon the percentage of ownership held by the Group.
Associates are entities over which the Company has significant influence but not control, generally
accompanying a shareholding of between 20 and 50 percent of the voting rights. Investments in associates
are accounted for using the equity method of accounting and are initially recognised at cost. Dividends
received from associates reduce the carrying value of the investment in associates. Other post-acquisition
changes in the Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share
of profits or losses of associates is recorded in the consolidated profit or loss for the year as profit or loss in
respect of associates and joint ventures, (ii) the Group’s share of other comprehensive income is recognised
in other comprehensive income and presented separately, and (iii) all other changes in the Group’s share of
the carrying value of net assets of associates are recognised in profit or loss within the profit or loss in
respect of associates and joint ventures.
However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.
10
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. Joint control is defined by the making of decisions about the
relevant activities requiring the unanimous consent of the parties sharing control.
The Group discontinues the use of the equity method from the date on which it ceases to have joint control
over, or have significant influence on joint ventures and associates.
Unrealised gains on transactions with associates and joint ventures are eliminated to the extent of the
Group’s interest in the entity, unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred.
Disposals of subsidiaries, associates or joint ventures. When the Group ceases to have control or
significant influence, any retained interest in the entity is remeasured to its fair value, with the change in the
carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition,
any amounts previously recognised in other comprehensive income in respect of that entity are accounted
for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are recycled to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate
share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss
where appropriate.
Property, plant and equipment. Property, plant and equipment in the statement of financial position
includes assets under construction for future use as property, plant and equipment. Property, plant and
equipment except for office buildings, land and assets under construction are stated at revalued amounts
less accumulated depreciation and provision for impairment (where required). Office buildings owned by the
Group are stated at historical cost less accumulated depreciation and accumulated impairment; land and
assets under construction are stated at historical cost less accumulated impairment.
Property, plant and equipment except for office buildings, land and assets under construction are subject to
revaluation with sufficient regularity to ensure that the carrying amount does not differ materially from that
which would be determined using fair value at the end of the reporting period. Increases in the carrying
amount arising on revaluation are credited to other comprehensive income and increase the revaluation
surplus in equity. Decreases that offset previous increases of the same asset are recognised in other
comprehensive income and decrease the previously recognised revaluation surplus in equity; all other
decreases are charged to profit or loss for the year. Any accumulated depreciation at the date of revaluation
is eliminated against the gross amount of the asset.
The revaluation surplus included in equity is transferred directly to retained earnings when the revaluation
surplus is realised on disposal of the asset.
The Group charges deferred tax liabilities in respect of revaluation of property, plant and equipment directly
to other comprehensive income.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is highly probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. Costs of minor repairs and day-to-day
maintenance are expensed when incurred. Cost of replacing major parts or components of property, plant
and equipment items are capitalised and the replaced part is retired.
Social assets are not capitalised if they are not expected to result in future economic benefits to the Group.
Costs associated with fulfilling the Group’s social responsibilities are expensed as incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised in profit or loss for the year.
Depreciation. Depreciation on items of property, plant and equipment (except for land and assets under
construction) is calculated using the straight-line method over their estimated useful lives.
The useful lives of property, plant and equipment are subject to annual assessment by management and if
expectations differ from previous estimates, the changes of useful lives are accounted for as a change in an
accounting estimate prospectively.
11
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
The average useful lives of property, plant and equipment by type of facility, in years, were as follows:
Type of facility
Production buildings
Facilities
Plant and equipment
Other
Average useful lives
25–80
10–100
5–40
3–30
Depreciation is charged once an asset is available for use. Land and assets under construction are not
depreciated.
Impairment of property, plant and equipment. Impairment reviews for property, plant and equipment are
carried out when there is an indication that impairment may have occurred, or where it is otherwise required
to ensure that property, plant and equipment are not carried above their estimated recoverable amounts
(Note 7). If such indication exists, management estimates the recoverable amount which is determined as
the higher of an asset’s fair value less costs of disposal and its value in use. Fair value less costs of disposal
represents the amount that can be generated through the sale of assets. Value in use represents the present
value of expected future cash flows discounted on a pre-tax basis, using the estimated cost of capital of the
cash-generating unit.
The carrying amount of the asset is reduced to the recoverable amount and the impairment loss is
recognised in profit or loss for the year to the extent it exceeds the previous revaluation surplus in equity. An
impairment loss recognised for an asset in prior years is reversed where appropriate if there has been a
positive change in the estimates used to determine the asset’s value in use or fair value less costs of
disposal.
Intangible assets and goodwill. The Group’s intangible assets other than goodwill have definite useful lives
and primarily include capitalised computer software. Intangible assets are amortised using the straight-line
method over their useful lives. If impaired, the carrying amount of intangible assets is written down to the
higher of value in use and fair value less costs of disposal. Goodwill is carried at cost less accumulated
impairment losses, if any. The Group tests goodwill for impairment at least annually and whenever there are
indications that goodwill may be impaired. Goodwill is allocated to the cash-generating units, or groups of
cash-generating units, that are expected to benefit from the synergies of the business combination. Such
units or groups of units represent the lowest level at which the Group monitors goodwill and are not larger
than an operating segment.
Gains or losses on disposal of an operation within a cash generating unit to which goodwill has been
allocated include the carrying amount of goodwill associated with the operation disposed of, generally
measured on the basis of the relative values of the operation disposed of and the portion of the cash-
generating unit which is retained.
Financial instruments – key measurement terms. Depending on their classification financial instruments
are carried at fair value or amortised cost as described below.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The best evidence of fair value is price in
an active market. An active market is one in which transactions for the asset or liability take place with
sufficient frequency and volume to provide pricing information on an ongoing basis.
Valuation techniques such as discounted cash flow models or models based on recent arm’s length
transactions or consideration of financial data of the investees are used to measure fair value of certain
financial instruments for which external market pricing information is not available. The Group uses such
valuation techniques of fair value which are the most acceptable in the circumstances and as much as
possible use the observable basic data.
Fair value measurements are analysed by level in the fair value hierarchy as follows:
level 1 are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities;
level 2 measurements are valuations techniques with all material inputs observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices);
level 3 measurements are valuations not based on solely observable market data (that is, the
measurement requires significant unobservable inputs).
For disclosure of information on fair value the Group classified assets and liabilities on the basis of an
appropriate level of hierarchy of fair value as it is stated above (Note 32).
12
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a
financial instrument. An incremental cost is one that would not have been incurred if the transaction had not
taken place. Transaction costs include fees and commissions paid to agents, advisors, brokers and dealers,
levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do
not include debt premiums or discounts, financing costs or internal administrative or holding costs.
Amortised cost is the amount at which the financial instrument was recognised at initial recognition less any
principal repayments, plus accrued interest, and for financial assets less any write-down for incurred
impairment losses. Accrued interest includes amortisation of transaction costs deferred at initial recognition
and of any premium or discount to maturity amount using the effective interest method. Accrued interest
income and accrued interest expense, including both accrued coupon and amortised discount or premium
(including fees deferred at origination, if any), are not presented separately and are included in the carrying
values of related items in the statement of financial position.
The effective interest method is a method of allocating interest income or interest expense over the relevant
period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
(excluding future credit losses) through the expected life of the financial instrument or a shorter period, if
appropriate, to the net carrying amount of the financial instrument. The effective interest rate discounts cash
flows of variable interest instruments to the next interest repricing date, except for the premium or discount
which reflects the credit spread over the floating rate specified in the instrument, or other variables that are
not reset to market rates. Such premiums or discounts are amortised over the whole expected life of the
instrument. The present value calculation includes all fees paid or received between parties to the contract
that are an integral part of the effective interest rate.
Classification of financial assets. Financial assets have the following categories: (i) loans and receivables;
(ii) available-for-sale financial assets; (iii) financial assets held to maturity and (iv) financial assets at fair
value through profit or loss. The description of categories of financial assets of the Group is given below.
Loans and receivables are unquoted non-derivative financial assets with fixed or determinable payments.
Financial assets at fair value through profit or loss. This category is presented by derivative financial
instruments which are carried at their fair value. All derivative instruments are carried as assets when fair
value is positive and as liabilities when fair value is negative. Changes in the fair value of derivative
instruments are included in profit or loss for the year. The Group does not apply hedge accounting.
All other financial assets are included in the available-for-sale category, which includes investment securities
which the Group intends to hold for an indefinite period of time and which may be sold in response to needs
for liquidity or changes in interest rates, exchange rates or equity prices.
Classification of financial liabilities. Financial liabilities have the following measurement categories:
(i) financial liabilities at fair value through profit or loss and (ii) other financial liabilities. All financial liabilities
of the Group including loans are categorised as other and carried at amortized cost.
Initial recognition of financial instruments. Trading investments, derivatives and other financial
instruments at fair value through profit or loss are initially recorded at fair value. All other financial
instruments are initially recorded at fair value plus transaction costs. Fair value at initial recognition is best
evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference
between fair value and transaction price which can be evidenced by other observable current market
transactions in the same instrument or by a valuation technique whose inputs include only data from
observable markets.
Derecognition of financial assets. The Group derecognises financial assets when (a) the assets are
redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the
rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement whilst
(i) also transferring substantially all the risks and rewards of ownership of the assets or (ii) neither
transferring nor retaining substantially all the risks and rewards of ownership but not retaining control.
Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an
unrelated third party without needing to impose additional restrictions on the sale.
Available-for-sale financial assets. Available-for-sale financial assets are carried at fair value. Interest
income on available-for-sale debt securities is calculated using the effective interest method and recognised
in profit or loss for the year as finance income. Dividends on available-for-sale equity instruments are
recognised in profit or loss for the year as finance income when the Group’s right to receive payment is
13
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
established and it is probable that the dividends will be collected. All other elements of changes in the fair
value are recognised in other comprehensive income until the investment is derecognised or impaired at
which time the cumulative gain or loss is reclassified from other comprehensive income to finance income in
profit or loss for the year.
Impairment losses on available-for-sale investments are recognised in profit or loss for the year when
incurred as a result of one or more events (“loss events”) that occurred after the initial recognition of
available-for-sale financial assets. A significant or prolonged decline in the fair value of an equity security
below its cost is an indicator that it is impaired. The cumulative impairment loss – measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that asset previously
recognised in profit or loss – is reclassified from other comprehensive income to finance costs in profit or loss
for the year.
Impairment losses on equity instruments are not reversed and any subsequent gains are recognised in other
comprehensive income. If, in a subsequent period, the fair value of a debt instrument classified as available
for sale increases and the increase can be objectively related to an event occurring after the impairment loss
was recognised in profit or loss, the impairment loss is reversed through current period’s profit or loss.
Cash and cash equivalents. Cash and cash equivalents include cash in hand, deposits held at call with
banks, and other short-term highly liquid investments with original maturities of three months or less. Cash
and cash equivalents are carried at amortised cost using the effective interest method.
Trade and other receivables. Trade and other receivables are carried at amortised cost using the effective
interest method.
Impairment of financial assets carried at amortised cost. Impairment losses are recognised in profit or
loss when incurred as a result of one or more events (“loss events”) that occurred after the initial recognition
of the financial asset and which have an impact on the amount or timing of the estimated future cash flows of
the financial asset or group of financial assets that can be reliably estimated. If the Group determines that no
objective evidence exists that impairment was incurred for an individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. The primary factors that the Group considers in determining
whether a financial asset is impaired are its overdue status and realisability of related collateral, if any. The
following other principal criteria are also used to determine whether there is objective evidence that an
impairment loss has occurred: (i) any portion or instalment is overdue and the late payment cannot be
attributed to a delay caused by the settlement systems; (ii) the counterparty experiences a significant
financial difficulty as evidenced by its financial information that the Group obtains; (iii) the counterparty
considers bankruptcy or a financial reorganisation; (iv) there is adverse change in the payment status of the
counterparty as a result of changes in the national or local economic conditions that impact the counterparty;
or (v) the value of collateral, if any, significantly decreases as a result of deteriorating market conditions.
If the terms of an impaired financial asset held at amortised cost are renegotiated or otherwise modified
because of financial difficulties of the counterparty, impairment is measured using the original effective
interest rate before the modification of terms. The renegotiated asset is then derecognised and a new asset
is recognised at its fair value only if the risks and rewards of the asset substantially changed. This is normally
evidenced by a substantial difference between the present values of the original cash flows and the new
expected cash flows.
Impairment losses are always recognised through an allowance account to write down the asset’s carrying
amount to the present value of expected cash flows (which exclude future credit losses that have not been
incurred) discounted at the original effective interest rate of the asset. If, in a subsequent period, the amount
of the impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised
impairment loss is reversed by adjusting the allowance account through profit or loss for the year.
Uncollectible assets are written off against the related impairment loss provision after all the necessary
procedures to recover the asset have been completed and the amount of the loss has been determined.
Subsequent recoveries of amounts previously written off are credited to the impairment loss account within
the profit or loss for the year.
Prepayments. Prepayments are carried at cost less provision for impairment. A prepayment is classified as
non-current when the goods or services relating to the prepayment are expected to be obtained after one
year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial
recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the
14
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Group has obtained control of the asset and it is highly probable that future economic benefits associated
with the asset will flow to the Group. Other prepayments are written off to profit or loss when the goods or
services relating to the prepayments are received. If there is an indication that the assets, goods or services
relating to a prepayment will not be received, the carrying value of the prepayment is written down
accordingly and a corresponding impairment loss is recognised in profit or loss for the year.
Inventories. Inventories are recorded at the lower of cost and net realisable value. Net realisable value is
the estimated selling price in the ordinary course of business, less selling expenses. Cost of inventory that is
expensed is determined on the weighted average basis.
Income taxes. Income taxes have been provided for in the financial statements in accordance with
legislation enacted or substantively enacted by the end of the reporting period. The income tax charge
comprises current tax and deferred tax and is recognised in profit or loss for the year except if it is
recognised in other comprehensive income or directly in equity because it relates to transactions that are
also recognised, in the same or a different period, in other comprehensive income or directly in equity.
Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of
taxable profits or losses for the current and prior periods. Taxes other than on income are recorded within
operating expenses. Taxable profits or losses are based on estimates if financial statements are authorised
prior to filing relevant tax returns.
Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and
temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not
recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a
business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit.
Deferred tax liabilities are not recorded for temporary differences on initial recognition of goodwill and
subsequently for goodwill which is not deductible for tax purposes. Deferred tax balances are measured at
tax rates enacted or substantially enacted at the end of the reporting period which are expected to apply to
the period when the temporary differences will reverse or the tax loss carry forwards will be utilised.
Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the
extent that it is highly probable that the temporary difference will reverse in the future and there is sufficient
future taxable profit available against which the deductions can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis. Deferred tax assets and liabilities
are netted only within the individual companies of the Group.
The Group controls the reversal of temporary differences relating to taxes chargeable on dividends from
subsidiaries or on gains upon their disposal. The Group does not recognise deferred tax liabilities on such
temporary differences except to the extent that management expects the temporary differences to reverse in
the foreseeable future.
Uncertain tax positions. The Group's uncertain tax positions are reassessed by management at the end of
each reporting period. Liabilities are recorded for income tax positions that are determined by management as
more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax
authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively
enacted by the end of the reporting period, and any known court or other rulings on such issues. Liabilities for
penalties, interest and taxes other than on income are recognised based on management’s best estimate of the
expenditure required to settle the obligations at the end of the reporting period. Adjustments for uncertain
income tax positions are recorded within the income tax charge.
Debt. Debt is recognised initially at its fair value, less transaction costs. Fair value is determined using the
prevailing market rate of interest for a similar instrument, if significantly different from the transaction price. In
subsequent periods, debt is stated at amortised cost using the effective interest method; any difference
between the fair value of the proceeds (net of transaction costs) and the redemption amount is recognised in
the consolidated income statement as an interest expense over the period of the debt obligation.
Capitalisation of borrowing costs. Borrowing costs directly attributable to the acquisition, construction or
production of assets that necessarily take a substantial time to get ready for intended use or sale (qualifying
assets) are capitalised as part of the costs of those assets, if the commencement date for capitalisation is on
or after 1 January 2009.
15
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
The commencement date for capitalisation is when (i) the Group incurs expenditures for the qualifying asset;
(ii) it incurs borrowing costs; and (iii) it undertakes activities that are necessary to prepare the asset for its
intended use or sale.
Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their
use or sale. The Group capitalises borrowing costs that could have been avoided if it had not made capital
expenditure on qualifying assets. Borrowing costs capitalised are calculated at the group’s average funding
cost (the weighted average interest cost is applied to the expenditures on the qualifying assets), except to
the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset. Where this
occurs, actual borrowing costs incurred less any investment income on the temporary investment of those
borrowings are capitalised.
Interest payments capitalised as part of the cost of an assets are classified as cash outflows from financing
activities in Consolidated Statement of Cash Flows.
Employee benefits. Wages, salaries, contributions to the Russian Federation state pension and social
insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits (such as health
services) are accrued in the year in which the associated services are rendered by the employees of the
Group.
Defined benefit plans. The Group operates defined benefit plans that cover the majority of its employees.
Defined benefit plans define the amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service, minimum tariff rate of remuneration
and others.
The net liability recognised in the statement of financial position in respect of defined benefit pension plans
operated by the Group is the present value of the defined benefit obligation at the end of the reporting period
less fair value of plan assets.
The defined benefit obligations are calculated by independent actuary using the projected unit credit method.
The present value of the defined benefit obligations are determined by discounting the estimated future cash
outflows using interest rates of government bonds that are denominated in the currency in which the benefits
will be paid associated with the operation of the plans, and that have terms to maturity approximating the
terms of the related pension liabilities.
Actuarial gains and losses arising from remeasurement of pension benefit obligations are recognised in other
comprehensive income. Past service cost is immediately recognised in profit or loss within operating
expenses.
Defined contribution plans. For defined contribution plans, the Group pays contributions and has no further
payment obligations once the contributions have been paid. The contributions are recognised as employee
benefit expense when they are due. In the normal course of business the Group contributes to the Russian
Federation defined contribution state pension scheme on behalf of its employees. Mandatory contributions to
the governmental pension scheme are expensed when incurred and included in employee benefit expenses
and payroll taxes in the consolidated income statement.
Other post-employment benefit obligations. The Group pays a one-off financial aid on occasion of an
employee's jubilee. The amount of the benefit depends on one or more factors, such as the age, length of
service in the company, salary and others.
For the purpose of calculating benefit obligations of these types, actuarial gains and losses arising as a result
of adjustments or changes in actuarial assumptions are recognised within profit or loss in the consolidated
statement of income in the period when they arise. All other aspects of accounting for these obligations are
similar to those of accounting for defined benefit obligations.
Finance lease liabilities. Where the Group is a lessee in a lease which transferred substantially all the risks
and rewards incidental to ownership to the Group, the assets leased are capitalised in property, plant and
equipment at the commencement of the lease at the lower of the fair value of the leased asset and the
present value of the minimum lease payments. Each lease payment is allocated between the liability and
finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding
rental obligations, net of future finance charges, are included in borrowings. The interest cost is charged to
profit or loss over the lease period using the effective interest method. The assets acquired under finance
leases are depreciated over their useful life or the shorter lease term if the Group is not reasonably certain
that it will obtain ownership by the end of the lease term.
16
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Operating leases. Where the Group is a lessee in a lease which does not transfer substantially all the risks
and rewards incidental to ownership from the lessor to the Group, the total lease payments are charged to
profit or loss for the year on a straight-line basis over the lease term. The lease term is the non-cancellable
period for which the lessee has contracted to lease the asset together with any further terms for which the
lessee has the option to continue to lease the asset, with or without further payment, when at the inception of
the lease it is reasonably certain that the lessee will exercise the option.
When assets are leased out under an operating lease, the lease payments receivable are recognised as
rental income on a straight-line basis over the lease term.
Environmental liabilities. Liabilities for environmental remediation are recorded where there is a present
obligation, the payment is highly probable and reliable estimates exist.
Revenue recognition. Revenue is recognised on the delivery of electricity and heat, provision of capacity,
supply of services and on the dispatch of goods during the period. Revenue from retail operations is
recognised on delivery of electricity and heat to the customer. Revenue amounts are presented exclusive of
value added tax.
Revenue transactions under free bilateral contracts are shown net of related purchases of equivalent
electricity volumes which the market participant is obliged to make in accordance with the industry
regulations. For the year ended 31 December 2017 additional resale turnover in the amount of RR 244
million was shown net for presentation purposes to reflect the economic substance of transactions. For the
year ended 31 December 2016 there was no additional turnover.
Government grants. Grants from the government are recognised at their fair value where there is a
reasonable assurance that the grant will be received and the Group will comply with all attached conditions.
Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and are credited to profit or loss on a straight line basis over the expected lives
of the related assets. Government grants are included in cash flows from operating activities.
Earnings per share. The earnings per share are determined by dividing the profit attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares outstanding during the
reporting period, excluding the average number of treasury shares held by the Group.
Share capital. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds. Any excess of the placement value over the par value of
shares issued is recorded as share premium in equity.
Treasury shares. Where the Company or its subsidiaries purchase the Company’s equity instruments, the
consideration paid, including any directly attributable incremental costs, net of income taxes, is deducted
from equity attributable to the Company’s owners until the equity instruments are reissued, disposed of or
cancelled. In case the consideration paid is non-cash asset, the treasury shares received are recognised at
the fair value of this asset. Where such shares are subsequently sold or reissued, any consideration
received, net of any directly attributable incremental transaction costs and the related income tax effects, is
included in equity attributable to the Company’s owners.
Dividends. Dividends are recorded as a liability and deducted from equity in the period in which they are
declared and approved. Any dividends declared after the reporting period and before the financial
statements are authorised for issue are disclosed in the subsequent events note.
Provisions for liabilities and charges. Provisions for liabilities and charges are non-financial liabilities of
uncertain timing of amount. They are accrued when the Group has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to passage of time is recognised as an
interest expense.
Levies and charges, such as taxes other than income tax or regulatory fees based on information related to a
period before the obligation to pay arises, are recognised as liabilities when the obligating event that gives
rise to pay a levy occurs, as identified by the legislation that triggers the obligation to pay the levy. If a levy is
paid before the obligating event, it is recognised as a prepayment.
Social expenditure. To the extent that the Group’s contributions to social programmes benefit the
community at large without creating constructive obligations to provide such benefits in the future and are not
restricted to the Group’s employees, they are recognised in the income statement as incurred.
17
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Financial guarantees. Financial guarantees are irrevocable contracts that require the Group to make
specified payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor
fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantees are
initially recognised at their fair value, which is normally evidenced by the amount of fees received. This
amount is amortised on a straight-line basis over the life of the guarantee. At the end of each reporting
period, the guarantees are measured at the higher of (i) the remaining unamortised balance of the amount at
initial recognition, and (ii) the best estimate of expenditure required to settle the obligation at the end of the
reporting period.
Segment reporting. Segments are reported in a manner consistent with the internal reporting provided to
the Group’s chief operating decision maker. Segments whose revenue, result or assets are ten percent or
more of all the segments are reported separately.
Critical accounting estimates and judgments in applying accounting policies
The Group makes estimates and assumptions that affect the amounts recognised in the Consolidated
Financial Statements and the carrying amounts of assets and liabilities within the next financial year.
Estimates and judgments are continually evaluated and are based on management’s experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
Management also makes certain judgments, apart from those involving estimations, in the process of
applying the accounting policies. Judgments that have the most significant effect on the amounts recognised
in the Consolidated Financial Statements and estimates that can cause a significant adjustment to the
carrying amount of assets and liabilities within the next financial year include:
Sale of shares subject to entering into a non-deliverable forward contract for the shares. The
management treats the transaction on acquisition by PJSC Bank VTB (the “Bank”) of 55 billion of the
Company’s ordinary shares – 40 billion of additionally issued shares and 15 billion of treasury shares carried
on the Group subsidiaries’ balance sheet (Note 15) and entering into a non-deliverable forward contract for
these shares (Note 19) in March 2017 as two separate transactions. The sale of shares is recorded in equity
and a derivative financial instrument is recognised.
The terms and conditions of the share sale imply transfer of risks and rewards in connection with these
shares, such as dividend payments received by the Bank and participation in the Company’s management.
No obligations for their repurchase and conversion into a different financial instrument, guarantees or binding
agreements arise for the Company. Given the above and the fact that the international financial reporting
standards do not prescribe accounting treatment for the risks and rewards transfer procedure for treasury
shares, the Group management concluded that the transaction should be presented on the basis that the
Bank is the beneficial owner of the Company’s shares.
In the Group management’s opinion, the decrease in the prepaid forward value by the amounts equivalent to
dividends received by the Bank does not directly represent return of dividends, and, therefore, does not limit
the Bank in terms of obtaining rewards from share ownership. According to the forward contract, there will be
significant delays in the offset of cash flows (for a period exceeding three months from the date when
dividends are received by the Bank), and the Bank will be able to place the received dividends not only in
cash and cash equivalents but other instruments for the period exceeding three months as well, and it will be
able to receive income and subsequently reinvest it multiple times.
As the issue of shares is recorded in equity and also as both the issue of shares and the conclusion of the
non-deliverable forward contract are carried out by decision and in the interests of the state as the ultimate
controlling party, the initial recognition of the non-deliverable forward contract for these shares is also
recorded in equity as a shareholder transaction.
Recognition of a premium to the price of capacity with subsequent transfer of the collected amounts
to the budgets of the respective regions. In July 2017 the Resolution of the Russian Government No. 895
“On achievement of basic rates (tariffs) for electric power (capacity) in the territories of the Far East Federal
region” became effective. This Resolution stipulates the application of a premium to the price of capacity
provided by the Company in the price zones of the wholesale electricity and capacity market with subsequent
transfer of the amounts collected to the constituent budgets of the Far East Federal region in the form of
free-of-charge targeted contributions.
Constituent regions are obliged to use these contributions to compensate the guaranteeing suppliers of the
Far East Federal region for the reduction in tariffs which were made consistent with the basic level.
According to the Resolution tariffs were reduced retrospectively starting from 1 January 2017.
18
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
The amount of the premium that should be transferred to the budgets of the Far East Federal region in the
form of free-of-charge targeted contributions is stipulated by the Resolution of the Russian Government and
for the year ended 31 December 2017 was RR 23 995 million. Taking into account that the Group collects
the premium and subsequently transfers it to the respective budgets on behalf of the Russian Government,
the management of the Group concluded that revenue from the sales of capacity in the amount of the
premium should be presented in the consolidated income statement net of related free-of-charge targeted
contributions.
Government subsidies receivable by the Group’s companies – guaranteeing suppliers under the rules of the
Resolution of the Russian Government No. 895 are recognised in government grants (Note 24). Government
grants are recognised when there is a reasonable assurance that the grant will be received and the Group
will be able to comply with all attached conditions (Note 12).
Impairment of non-financial assets. Accounting for impairment of non-financial assets includes impairment
of property, plant and equipment and impairment of investments in associates.
The effect of these critical accounting estimates and assumptions is disclosed in Notes 7 and 8.
Recognition of deferred tax assets. At each reporting date management assesses recoverability of
deferred tax assets arising from operating losses and asset impairments in the context of the current
economic environment, particularly when current and expected future profits have been adversely affected
by market conditions. Management considers first the future reversal of existing deferred tax liabilities and
then considers future taxable profits when evaluating deferred tax assets. The assessment is made on a
taxpayer basis. The future taxable profits and the amount of tax benefits that are probable in the future are
based on the medium term business plans of the Group companies prepared by management and
extrapolated results thereafter.
Management considered the recoverability of recognised deferred tax assets, including those on tax losses
carried forward, as probable due to existence of taxable temporary differences which recoverability is
expected in future and of high probability of deferred tax assets being recoverable by the future taxable
profits (Note 16).
Useful life of property, plant and equipment. The estimation of the useful life of an item of property, plant
and equipment is a matter of management judgment based upon experience with similar assets and other
factors. In determining the useful life of an asset, management considers the expected usage, estimated
technical obsolescence, physical wear and tear, warranty terms as well as the environment in which the
asset is operated. Changes in any of these conditions or estimates may result in adjustments for future
depreciation rates which can affect the reported income.
Reclassifications. Certain reclassifications have been made to prior year data to conform to the current
year presentation. These reclassifications are not material.
Adoption of New or Revised Standards and Interpretations
The following new standards and interpretations became effective from 1 January 2017 but did not have any
material impact on the Group’s consolidated financial statements:
Disclosure Initiative – Amendments to IAS 7 (issued on 29 January 2016 and effective for annual
periods beginning on or after 1 January 2017). The new disclosures are included in Note 18.
Recognition of Deferred Tax Assets for Unrealised Losses – Amendment to IAS 12 (issued on 19
January 2016 and effective for annual periods beginning on or after 1 January 2017).
Amendments to IFRS 12 included in Annual Improvements to IFRSs 2014-2016 Cycle (issued on 8
December 2016 and effective for annual periods beginning on or after 1 January 2017).
Note 3.
New accounting pronouncements
Certain new standards and interpretations have been issued that are mandatory for the annual periods
beginning on or after 1 January 2018 or later, and which the Group has not early adopted. These standards
and interpretations have been approved for adoption in the Russian Federation unless noted otherwise.
IFRS 9, Financial Instruments: Classification and Measurement (amended in July 2014 and effective for
annual periods beginning on or after 1 January 2018). Key features of the new standard are:
Financial assets are required to be classified into three measurement categories: those to be measured
subsequently at amortised cost, those to be measured subsequently at fair value through other
comprehensive income (FVOCI) and those to be measured subsequently at fair value through profit or
loss (FVPL).
19
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Classification for debt instruments is driven by the entity’s business model for managing the financial
assets and whether the contractual cash flows represent solely payments of principal and interest
(SPPI). If a debt instrument is held to collect, it may be carried at amortised cost if it also meets the
SPPI requirement. Debt instruments that meet the SPPI requirement that are held in a portfolio where
an entity both holds to collect assets’ cash flows and sells assets may be classified as FVOCI. Financial
assets that do not contain cash flows that are SPPI must be measured at FVPL (for example,
derivatives). Embedded derivatives are no longer separated from financial assets but will be included in
assessing the SPPI condition.
Investments in equity instruments are always measured at fair value. However, management can make
an irrevocable election to present changes in fair value in other comprehensive income, provided the
instrument is not held for trading. If the equity instrument is held for trading, changes in fair value are
presented in profit or loss.
Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried
forward unchanged to IFRS 9. The key change is that an entity will be required to present the effects of
changes in own credit risk of financial liabilities designated at fair value through profit or loss in other
comprehensive income.
IFRS 9 introduces a new model for the recognition of impairment losses – the expected credit losses
(ECL) model. There is a ”three stage” approach which is based on the change in credit quality of
financial assets since initial recognition. In practice, the new rules mean that entities will have to record
an immediate loss equal to the 12-month ECL on initial recognition of financial assets that are not credit
impaired (or lifetime ECL for trade receivables). Where there has been a significant increase in credit
risk, impairment is measured using lifetime ECL rather than 12-month ECL. The model includes
operational simplifications for lease and trade receivables.
Hedge accounting requirements were amended to align accounting more closely with risk management.
The standard provides entities with an accounting policy choice between applying the hedge accounting
requirements of IFRS 9 and continuing to apply IAS 39 to all hedges because the standard currently
does not address accounting for macro hedging.
Based on an analysis of the Group’s financial assets and financial liabilities as at 31 December 2017 and on
the basis of the facts and circumstances that exist at that date, the management of the Group expects the
adoption of the new standard will not have a significant impact on the consolidated financial statements from
the adoption of the new standard on 1 January 2018 and will result in the following changes in the
consolidated financial statements for the year ending 31 December 2018:.
As a result of the recalculation of the provision for impairment of the Group’s accounts receivable in
accordance with the expected credit losses (ECL) model, the provision for impairment of accounts
receivable as at January 1, 2018 will be reduced by RR 705 million according to preliminary estimates
and, accordingly, accounts receivable will increase by the same amount.
No significant changes are expected for financial liabilities, other than changes in the fair value of
financial liabilities designated at FVTPL in the consolidated financial statements for the year ending
31 December 2018 that are attributable to changes in the instrument’s credit risk, which will be
presented in other comprehensive income.
IFRS 15, Revenue from Contracts with Customers (amended in April 2016 and effective for the periods
beginning on or after 1 January 2018). The new standard replaces all existing IFRS requirements for
revenue recognition. IFRS 15 introduces the core principle that revenue must be recognised when the goods
or services are transferred to the customer, at the transaction price. Any bundled goods or services that are
distinct must be separately recognised, and any discounts or rebates on the contract price must generally be
allocated to the separate elements. When the consideration varies for any reason, minimum amounts must
be recognised if they are not at significant risk of reversal. Costs incurred to secure contracts with customers
have to be capitalised and amortised over the period when the benefits of the contract are consumed.
In accordance with the transition provisions in IFRS 15 the Group management intends to apply the
simplified transition method with the effect of the transition to be recognised as at 1 January 2018 in the
consolidated financial statements for the year ending 31 December 2018 which will be the first year when the
Group will apply IFRS 15.
The Group plans to apply the practical expedient available for the simplified transition method. IFRS 15 will
be applied retrospectively only to contracts that are outstanding at the date of initial recognition
(1 January 2018).
20
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
In accordance with the current accounting policies, the Group recognises revenue upon delivery of electricity,
heat and provision of capacity and upon sale of other goods and provision of services during the period.
Revenue is recognised at the fair value of the consideration receivable. A provision for impairment of
accounts receivable is established when there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms. In accordance with IFRS 15, revenue is recognised in an
amount that reflects the consideration to which the Group is expected to be entitled in exchange for the
transfer of goods or services promised to the customer.
Based on the analysis of the Group’s recurrent inflows for the year ended 31 December 2017, terms of
individual contracts, and facts and circumstances that exist at that date, the Group expects that adoption of
IFRS 15 will not have a significant impact on its consolidated financial statements as at 1 January 2018 and
will result in the following changes in the accounting policies and the following adjustments in the
consolidated financial statements for the year ending 31 December 2018:
Received compensation of losses in grids. The Group currently recognises revenue from compensation
of transmission losses and expenses on power distribution under contracts with grid companies on a gross
basis. Compensation of transmission losses that the Group receives from grid companies are not treated as
separate performance obligations in accordance with IFRS 15. Therefore, this compensation cannot be
recognised within revenues as the contract on compensation of losses is not a contract with customers in the
context of IFRS 15 and is beyond the scope of IFRS 15.
The compensation of transmission losses that entities of the Group received in the year ended 31 December
2017 amounted to RR 4,237 million. Expenses on power distribution under contracts with grid companies
totalled RR 47,719 million for the year ended 31 December 2017.
Purchase of electricity for own needs. The wholesale electricity and capacity market (WEM) has a number
of sectors varying in their contractual terms and conditions and delivery timeframes: sector of regulated
contracts, day-ahead market, sector of unregulated bilateral contracts and the balancing market.
Under the WEM rules, the Group does not have direct contracts with final customers in the day-ahead and
balancing markets and sells electricity under contracts with JSC Centre of Financial Settlements (CFS), who
further sells it to final customers. At the same time, the Group has contracts with CFS for the purchase of
electricity based on the results of the competitive selection of price bids on the day-ahead market and for the
purposes of balancing the system.
The Group treats electricity supply contracts with CFS as contracts with a customer (represented by the
whole market) covered by IFRS 15. Therefore, an electricity supply contract with CFS and an electricity
purchase contract with CFS are treated as contracts signed with one customer - the wholesale electricity and
capacity market.
The Group is unable to function normally without ensuring power supply to its production facilities. This
indicates direct interrelation between the purchased volume of electricity and its generation and delivery to
WEM. The fact that the Group buys electricity at WEM does not mean that the Group is a customer in the
context of IFRS 15. Consequently, the cost of electricity that the Group buys at WEM to support the work
process and for own needs, in accordance with IFRS 15 represents compensation to be paid to the
customer. This compensation should be recognised as a reduction of the transaction price and, therefore, of
revenue, unless the payment to the customer is in exchange for distinct goods or services that the customer
transfers to the entity.
The cost of electricity purchased to support the work process and for other own needs totalled
RR 583 million for the year ended 31 December 2017.
Given that management of the Group has not finalised its analysis of the impact of the adoption of IFRS 15,
the above disclosure is preliminary and it is possible that the impact on the consolidated financial statements
may differ from the above. The Group expects to finalise the IFRS 15 adoption by the date of issue of the
condensed consolidated interim financial information for the three months ended 31 March 2018.
IFRS 16, Leases (issued in January 2016 and effective for annual periods beginning on or after 1 January
2019). The new standard sets out the principles for the recognition, measurement, presentation and
disclosure of leases. All leases result in the lessee obtaining the right to use an asset at the start of the lease
and, if lease payments are made over time, also obtaining financing. Accordingly, IFRS 16 eliminates the
classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead,
introduces a single lessee accounting model. Lessees will be required to recognise: (a) assets and liabilities
for all leases with a term of more than 12 months, unless the underlying asset is of low value; and (b)
depreciation of lease assets separately from interest on lease liabilities in the income statement. IFRS 16
21
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to
classify its leases as operating leases or finance leases, and to account for those two types of leases
differently. The Group is currently assessing the impact of the new standard on its consolidated financial
statements.
IFRS 17, Insurance Contracts (issued in May 2017 and effective for annual periods beginning on or after
1 January 2021). IFRS 17 replaces IFRS 4, which has given companies dispensation to carry on accounting
for insurance contracts using existing practices. As a consequence, it was difficult for investors to compare
and contrast the financial performance of otherwise similar insurance companies. IFRS 17 is a single
principle-based standard to account for all types of insurance contracts, including reinsurance contracts that
an insurer holds. The standard requires recognition and measurement of groups of insurance contracts at: (i)
a risk-adjusted present value of the future cash flows (the fulfilment cash flows) that incorporates all of the
available information about the fulfilment cash flows in a way that is consistent with observable market
information; plus (if this value is a liability) or minus (if this value is an asset) (ii) an amount representing the
unearned profit in the group of contracts (the contractual service margin). Insurers will be recognising the
profit from a group of insurance contracts over the period they provide insurance coverage, and as they are
released from risk. If a group of contracts is or becomes loss-making, an entity will be recognising the loss
immediately. The Group is currently assessing the impact of the new standard on its consolidated financial
statements.
IFRIC 22, Foreign currency transactions and advance consideration (issued on 8 December 2016 and
effective for annual periods beginning on or after 1 January 2018). The Interpretation addresses how to
determine the date of the transaction for the purpose of determining the exchange rate to use on initial
recognition of the related asset, expense or income (or part thereof) on derecognition of a non-monetary
asset or non-monetary liability arising from an advance consideration in foreign currency. Under IAS 21, the
date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the
related asset, expense or income (or part thereof) is the date on which an entity initially recognises the non-
monetary asset or non-monetary liability arising from advance consideration in foreign currency. If there are
multiple payments or receipts in advance, the entity shall determine a date of the transaction for each
payment or receipt of advance consideration. IFRIC 22 only applies in circumstances where an entity
recognises the non-monetary asset or non-monetary liability arising from an advance consideration in foreign
currency. IFRIC 22 does not contain any practical guidance on identifying an accounting item as monetary or
non-monetary. Generally, a payment or receipt of consideration made as advance payment would result in
recognition of a non-monetary asset or non-monetary liability. However, they can also give rise to a monetary
asset or liability. An entity may require professional judgement to determine if a specific accounting item is
monetary or non-monetary. The Group is currently assessing the impact of the Interpretation on its
consolidated financial statements.
IFRIC 23, Uncertainty over Income Tax Treatments (issued in June 2017 and effective for annual periods
beginning on or after 1 January 2019). IAS 12 specifies how to account for current and deferred tax, but not
how to reflect the effects of uncertainty. The interpretation clarifies how to apply the recognition and
measurement requirements in IAS 12 when there is uncertainty over income tax treatments. An entity should
determine whether to consider each uncertain tax treatment separately or together with one or more other
uncertain tax treatments based on which approach better predicts the resolution of the uncertainty. An entity
should assume that a taxation authority will examine amounts it has a right to examine and have full
knowledge of all related information when making those examinations. If an entity concludes it is not
probable that the taxation authority will accept an uncertain tax treatment, the effect of uncertainty will be
reflected in determining the related taxable profit or loss, tax bases, unused tax losses, unused tax credits or
tax rates, by using either the most likely amount or the expected value, depending on which method the
entity expects to better predict the resolution of the uncertainty. An entity will reflect the effect of a change in
facts and circumstances or of new information that affects the judgments or estimates required by the
interpretation as a change in accounting estimate. Examples of changes in facts and circumstances or new
information that can result in the reassessment of a judgment or estimate include, but are not limited to,
examinations or actions by a taxation authority, changes in rules established by a taxation authority or the
expiry of a taxation authority’s right to examine or re-examine a tax treatment. The absence of agreement or
disagreement by a taxation authority with a tax treatment, in isolation, is unlikely to constitute a change in
facts and circumstances or new information that affects the judgments and estimates required by the
Interpretation. The Group is currently assessing the impact of the interpretation on its consolidated financial
statements.
22
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
The following other new pronouncements are not expected to have any material impact on the Group when
adopted:
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture –
Amendments to IFRS 10 and IAS 28 (issued on 11 September 2014 and effective for annual periods
beginning on or after a date to be determined by the IASB).
Amendments to IFRS 2, Share-based Payment (issued on 20 June 2016 and effective for annual
periods beginning on or after 1 January 2018).
Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts – Amendments to IFRS 4
(issued on 12 September 2016 and effective, depending on the approach, for annual periods
beginning on or after 1 January 2018 for entities that choose to apply temporary exemption option, or
when the entity first applies IFRS 9 for entities that choose to apply the overlay approach).
Transfers of Investment Property – Amendments to IAS 40 (issued on 8 December 2016 and
effective for annual periods beginning on or after 1 January 2018).
Annual Improvements to IFRSs 2014-2016 cycle ‒ Amendments to IFRS 1 an IAS 28 (issued on
8 December 2016 and effective for annual periods beginning on or after 1 January 2018).
Prepayment Features with Negative Compensation – Amendments to IFRS 9 (issued on 12 October
2017 and effective for annual periods beginning on or after 1 January 2019).
Long-term Interests in Associates and Joint Ventures – Amendments to IAS 28 (issued on
12 October 2017 and effective for annual periods beginning on or after 1 January 2019.
Annual Improvements to IFRSs 2015-2017 cycle - Amendments to IFRS 3, IFRS 11, IAS 12 and IAS
23 (issued on 12 December 2017 and effective for annual periods beginning on or after 1 January
2019).
Plan Amendment, Curtailment or Settlement - Amendments to IAS 19 (issued on 7 February 2018
and effective for annual periods beginning on or after 1 January 2019).
Unless otherwise described above, the new standards and interpretations are not expected to affect
significantly the Group’s consolidated financial statements.
Note 4.
Principal subsidiaries
All principal subsidiaries are incorporated and operate in the Russian Federation. Differences between the
ownership interest and voting interest held by some subsidiaries represent the effect of preference shares
and / or effects of indirect ownership, or shares of limited liability companies (LLC).
The Group operates in the three main reportable segments one of which is represented by the Group’s
parent company – PJSC RusHydro (Note 5). The principal subsidiaries are presented below according to
their allocation to the reportable segments as at 31 December 2017 and 31 December 2016.
ESС RusHydro subgroup segment
ESС RusHydro subgroup segment includes the Group’s subsidiaries which sell electricity to final customers.
All the entities included in this segment with the exception of JSC ESC RusHydro have the guaranteeing
supplier status and are obliged to sign contracts on supplies with all final consumers of their region upon
their request.
JSC ESС RusHydro
PJSC Krasnoyarskenergosbyt
PJSC Ryazanenergosbyt
JSC Chuvashskaya Electricity Sales Company
31 December 2017
31 December 2016
% of
ownership
100.00%
65.81%
90.52%
100.00%
% of
voting
100.00%
69.40%
90.52%
100.00%
% of
ownership
100.00%
65.81%
90.52%
100.00%
% of
voting
100.00%
69.40%
90.52%
100.00%
In December 2016 the Group completed the sale transaction of 100 percent shares of LLC ESC
Bashkortostan (electricity sales company, guaranteeing supplier of electricity in the Republic of
Bashkortostan) to Inter RAO Group. Profit from the sale of LLC ESC Bashkortostan in the amount of RR
3,048 million is included in other operating income for the year ended 31 December 2016.
23
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
RAO ES East subgroup segment
RAO ES East subgroup segment consists of JSC RAO ES East and its subsidiaries that generate distribute
and sell electricity and heat in the Far East region of the Russian Federation and render transportation,
construction, repair and other services.
Principal subsidiaries of this segment are presented below:
JSC RAO ES East*
PJSC DEK
JSC DGK
JSC DRSK
PJSC Kamchatskenergo
PJSC Magadanenergo**
PJSC Sakhalinenergo
PJSC Yakutskenergo
31 December 2017
31 December 2016
% of
ownership
99.98%
52.11%
52.11%
52.11%
98.72%
48.99%
57.80%
79.15%
% of
voting
99.98%
52.17%
100.00%
100.00%
98.74%
49.00%
57.82%
79.16%
% of
ownership
99.98%
52.11%
52.11%
52.11%
98.72%
48.99%
57.80%
79.15%
% of
voting
99.98%
52.17%
100.00%
100.00%
98.74%
49.00%
57.82%
79.16%
* In October 2017 shares of RAO Energy Systems of the East were de-listed on the Moscow Exchange. In December 2017 changes to
the Charter were registered that eliminated indication of the company’s public status in the company’s name. Voting and ownership
percent interests in JSC RAO ES East as at 31 December 2016 include 15.59 percent interest held by the Group’s subsidiary LLC
Vostok-Finance.
** Control over PJSC Magadanenergo is achieved by the majority of votes on the shareholders meeting because the remaining part of
the shares not owned by the Group are distributed among a large number of shareholders the individual stakes of which are
insignificant.
Other segments
Other segments include:
the Group’s subsidiaries engaged in production and sale of electricity and capacity;
the Group’s subsidiaries primarily engaged in research and development related to the utilities industry
and construction of hydropower facilities;
the Group’s subsidiaries engaged in repair, upgrade and reconstruction of equipment and hydropower
facilities;
the Group’s subsidiaries engaged primarily in hydropower plants construction;
minor segments which do not have similar economic characteristics.
Principal subsidiaries included in other segments are presented below:
Institute Hydroproject
JSC Blagovesсhensk TРP
JSC VNIIG named after B. E. Vedeneev
JSC Geotherm
JSC Gidroremont-VKK
JSC Zagorskaya GAES-2
JSC Zaramag HS
JSC
PJSC Kolimaenergo
JSC Lenhydroproject
JSC NIIES
JSC Nizhne-Bureiskaya HPP
JSC Sakhalin GRES-2
JSC Sulak GidroKaskad
JSС TPP in Sovetskaya Gavan
JSC Ust’-Srednekangesstroy
JSC Ust’-Srednekanskaya HPP named after A. F. Dyakov
JSC Chirkeigesstroy
JSC Yakutskaya GRES-2
24
31 December 2017
31 December 2016
% of
ownership
100.00%
100.00%
99.65%
100.00%
100.00%
99.75%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
98.76%
99.63%
100.00%
100.00%
% of
voting
100.00%
100.00%
99.65%
100.00%
100.00%
99.75%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
% of
ownership
100.00%
100.00%
99.65%
100.00%
100.00%
99.75%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
98.76%
99.63%
100.00%
100.00%
% of
voting
100.00%
100.00%
99.65%
100.00%
100.00%
99.75%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Non-controlling interest
Summarised financial information related to subsidiaries with significant amount of non-controlling interest
before elimination of operations between the Group’s subsidiaries is presented below:
Financial position
Share of non-controlling interest
Share of voting rights, attributable to
non-controlling interest
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets / (liabilities)
Carrying value of non-controlling interest
Financial results
Revenue
(Loss) / profit for the year
Total comprehensive (loss) / income
for the year
(Loss)/ profit for the year, attributable to
non-controlling interest
Changes in other comprehensive income /
(loss), attributable to non-controlling
interest
Cash flows
Cash generated by operating activities
Cash used in investing activities
Cash generated by / (used in) financing
activities
Increase / (decrease) in cash and cash
equivalents
RAO ES East subgroup
including DEK subgroup
31 December
2017
0.02%
31 December
2016
0.02%
31 December
2017
47.89%
31 December
2016
47.89%
0.02%
121,463
64,971
(89,872)
(89,500)
7,062
5,778
0.02%
114,628
57,587
(87,668)
(74,421)
10,126
3,014
47.83%
69,998
28,470
(63,069)
(40,998)
(5,599)
1,686
47.83%
65,407
25,645
(61,392)
(33,433)
(3,773)
(421)
Year ended
31 December
2017
168,714
(13,403)
Year ended
31 December
2016
175,545
(6,184)
Year ended
31 December
2017
123,406
(7,491)
Year ended
31 December
2016
119,179
1,573
(14,149)
(6,397)
(1,690)
(221)
(7,297)
(1,576)
1,744
1,641
56
(110)
3,459
114
13,815
(18,904)
7,922
2,833
12,982
(17,632)
(355)
(5,005)
6,844
(8,077)
2,579
1,346
11,397
(6,093)
(4,980)
324
The rights of the non-controlling shareholders of the presented subgroups are determined by the Federal Law
“On Joint Stock Companies” and the charter documents of JSC RAO ES East and PJSC DEK.
Segment information
Note 5.
Operating segments are components of the Group engaged in operations from which they may earn revenue
and incur expenses, including revenue and expenses relating to transactions with other components of the
Group. The individual financial information of the operating segments, which based on the same principles
as the present consolidated financial statements, is available and is regularly reviewed by the chief operating
decision maker (CODM) to make operating decisions about resources to be allocated to the segments and
the performance of the segments’ operating activities.
The CODM analyses the information concerning the Group by the groups of operations which are
aggregated in operating segments presented by the following separate reportable segments: PJSC
RusHydro (the Group’s parent company), ESС RusHydro subgroup, RAO ES East subgroup and other
segments (Note 4). Transactions of other segments are not disclosed as reportable segments based on
quantitative indicators for the periods presented.
Management of operating activities of segments is performed with direct participation of individual segment
managers accountable to the CODM. Segment managers on a regular basis submit for approval to the
CODM results of operating activities and financial performance of segments. The CODM approves the
annual business plan at the level of reportable segments as well as analyses actual financial performance of
segments. Management bears responsibility for execution of approved plan and management of operating
activities at the level of segments.
25
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
The segments’ operational results are assessed on the basis of EBITDA, which is calculated as operating
profit / loss excluding insurance compensation, depreciation of property, plant and equipment and
amortisation of intangible assets, impairment of property, plant and equipment, impairment of financial
assets, impairment of loans issued and accounts receivable, gain / loss on disposal of property, plant and
equipment, gain / loss on disposal of subsidiaries and associates, profit on disposal of other non-current
assets and other non-monetary items of operating expenses. This method of definition of EBITDA may differ
from the methods applied by other companies. CODM believes that EBITDA represents the most useful
means of assessing the performance of ongoing operating activities of the Company and the Group’s
subsidiaries, as it reflects the earnings trends without showing the impact of the above charges.
Segment information also contains capital expenditures and the amount of debt as these indicators are
analysed by the CODM. Intersegment debt’s balances are excluded.
Other information provided to the CODM complies with the information presented in the consolidated
financial statements.
Intersegment sales are carried out at market prices.
Segment information for the years ended 31 December 2017 and 31 December 2016 and as at
31 December 2017 and 31 December 2016 is presented below:
26
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Year ended 31 December 2017
Revenue
including:
from external companies
sales of electricity
sales of heat and hot water sales
sales of capacity
other revenue
from intercompany operations
Government grants
Other operating income (excluding non-monetary items)
Operating expenses (excluding depreciation and other non-monetary items)
EBITDA
Depreciation of property, plant and equipment and amortisation of intangible assets
Other non-monetary items of operating income and expenses
including:
impairment of property, plant and equipment
impairment of accounts receivable, net
loss on disposal of property, plant and equipment, net
gain / (loss) on disposal of subsidiaries and associates
Operating profit / (loss)
Finance income
Finance costs
Share of results of associates and joint ventures
Profit before income tax
Income tax expense
Profit for the year
Capital expenditure
31 December 2017
Non-current and current debt
PJSC RusHydro
ESС RusHydro
subgroup
RAO ES East
subgroup
Other
segments
Total
segments
Unallocated
adjustments
and
intercompany
operations
TOTAL
120,493
61,817
168,714
29,039
380,063
(31,944)
348,119
111,091
77,059
158
33,723
151
9,402
-
259
(44,026)
76,726
(14,656)
(3,946)
(2,394)
(1,324)
(268)
40
58,124
61,799
60,657
-
-
1,142
18
-
-
(60,239)
1,578
(221)
(1,017)
-
(1,011)
(6)
-
340
168,398
102,867
38,747
6,856
19,928
316
32,567
-
(177,959)
23,322
(7,964)
(13,293)
(8,950)
(3,385)
(647)
(311)
2,065
6,831
826
2
302
5,701
22,208
178
431
(27,174)
2,474
(2,393)
(12,961)
(12,656)
(237)
(79)
11
(12,880)
348,119
241,409
38,907
40,881
26,922
31,944
32,745
690
(309,398)
104,100
(25,234)
(31,217)
(24,000)
(5,957)
(1,000)
(260)
47,649
-
-
-
-
-
(31,944)
-
-
31,882
(62)
211
(6)
-
-
(6)
-
143
348,119
241,409
38,907
40,881
26,922
-
32,745
690
(277,516)
104,038
(25,023)
(31,223)
(24,000)
(5,957)
(1,006)
(260)
47,792
8,443
(21,133)
417
35,519
(13,068)
22,451
25,661
156
23,133
38,492
87,442
(175)
87,267
120,070
1,268
43,348
4,839
169,525
-
169,525
27
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Year ended 31 December 2016
Revenue
including:
from external companies
sales of electricity
sales of heat and hot water sales
sales of capacity
other revenue
from intercompany operations
Government grants
Other operating income (excluding non-monetary items)
Operating expenses (excluding depreciation and other non-monetary items)
EBITDA
Insurance indemnity
Depreciation of property, plant and equipment and amortisation of intangible assets
Other non-monetary items of operating income and expenses
including:
impairment of property, plant and equipment
profit on disposal of other non-current assets
impairment of financial assets
impairment of loans issued
impairment of accounts receivable, net
loss on disposal of property, plant and equipment, net
gain on disposal of subsidiaries and associates
Operating profit / (loss)
Finance income
Finance costs
Share of results of associates and joint ventures
Profit before income tax
Income tax expense
Profit for the year
Capital expenditure
31 December 2016
Non-current and current debt
PJSC RusHydro
ESС RusHydro
subgroup
RAO ES East
subgroup
Other
segments
Total
segments
Unallocated
adjustments
and
intercompany
operations
TOTAL
115,037
88,748
175,545
29,502
408,832
(34,760)
374,072
104,441
74,802
168
28,881
590
10,596
-
29
(41,857)
73,209
-
(13,641)
(3,078)
(6,743)
7,202
-
(2,378)
(1,014)
(145)
-
56,490
88,715
87,595
-
-
1,120
33
-
1
(85,869)
2,880
-
(752)
881
-
-
(243)
-
(1,911)
(13)
3,048
3,009
174,716
109,586
38,681
7,795
18,654
829
17,184
82
(168,917)
23,894
-
(7,747)
(12,501)
(5,581)
-
(3,120)
-
(3,968)
(228)
396
3,646
6,200
599
-
392
5,209
23,302
66
340
(29,788)
120
1,737
(2,247)
(15,711)
(14,201)
-
(1,101)
-
(240)
(169)
-
(16,101)
374,072
272,582
38,849
37,068
25,573
34,760
17,250
452
(326,431)
100,103
1,737
(24,387)
(30,409)
(26,525)
7,202
(4,464)
(2,378)
(7,133)
(555)
3,444
47,044
-
-
-
-
-
(34,760)
-
(17)
35,015
238
-
257
-
-
-
-
-
-
-
-
495
374,072
272,582
38,849
37,068
25,573
-
17,250
435
(291,416)
100,341
1,737
(24,130)
(30,409)
(26,525)
7,202
(4,464)
(2,378)
(7,133)
(555)
3,444
47,539
9,943
(9,041)
6,682
55,123
(15,372)
39,751
29,987
210
20,809
30,132
81,138
(73)
81,065
107,274
550
86,912
5,067
199,803
-
199,803
28
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 6.
Related party transactions
Parties are generally considered to be related if the parties are under common control or if one party has the
ability to control the other party or can exercise significant influence or joint control over the other party in
making financial and operational decisions. In considering each possible related party relationship, attention
is directed to the substance of the relationship, not merely the legal form.
The Group’s principal related parties for the years ended 31 December 2017 and 31 December 2016 were
joint ventures, associates of the Group (Note 8) and government-related entities.
Joint ventures
The Group had the following balances with its joint ventures:
Promissory notes
Advances to suppliers
Loans issued
Loans received
Note
10
31 December 2017 31 December 2016
6,269
800
15
750
6,880
172
8
750
The Group had the following transactions with its joint ventures:
Sales of electricity and capacity
Other revenue
Purchased electricity and capacity
Associates
The Group had the following balances with its associates:
Trade and other receivables
Accounts payable
The Group had the following transactions with its associates:
Sales of electricity and capacity
Other revenue
Rent
Purchased electricity and capacity
Government-related entities
Year ended
31 December 2017
337
622
2,835
Year ended
31 December 2016
931
648
2,811
31 December 2017
456
1,277
31 December 2016
491
781
Year ended
31 December 2017
2,673
153
605
15
Year ended
31 December 2016
2,679
137
521
17
In the normal course of business the Group enters into transactions with the entities related to the
Government.
The Group had transactions during the years ended 31 December 2017 and 31 December 2016 and
balances outstanding as at 31 December 2017 and 31 December 2016 with the following government-
related banks: SC Vnesheconombank, PJSC Sberbank, JSC Rosselkhozbank, Bank GPB (JSC), PJSC VTB
Bank, PJSC VTB24 (Notes 10, 11, 14, 18). All transactions are carried out at market rates. The Company
had an additional issue of shares and sold treasury shares of its subsidiaries (Note 15). The Company also
entered into a non-deliverable forward transaction of its treasury shares with PJSC VTB Bank (Note 19).
The Group’s sales of electricity, capacity and heat to government-related entities comprised approximately
30 percent of total sales of electricity, capacity and heat for the year ended 31 December 2017 (for the year
ended 31 December 2016: approximately 30 percent). Sales of electricity and capacity under the regulated
contracts are conducted directly to the consumers, within the day-ahead market (DAM) – through
commission agreements with JSC Centre of Financial Settlements (CFS). Electricity and capacity supply
tariffs under the regulated contracts and electricity and heating supply tariffs in non-pricing zone of the Far
East are approved by FTS and by regional regulatory authorities of the Russian Federation. On DAM the
price is determined by balancing the demand and supply and such price is applied to all market participants.
29
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
During the period the Group received government subsidies in amount of RR 32,745 million (in 2016 in the
amount of RR 17,250 million) (Note 24).
Government subsidies receivable comprised RR 3,401 million as at 31 December 2017 (31 December 2016:
RR 2,108 million) (Note 12). There were no accounts payable on free-of-charge targeted contributions of the
Group as at 31 December 2017 and 31 December 2016.
The Group’s purchases of electricity, capacity and fuel from government-related entities comprised
approximately 30 percent of total expenses on purchased electricity, capacity and fuel for the year ended
31 December 2017 (for the year ended 31 December 2016: approximately 20 percent).
Electricity distribution services provided
the Group by government-related entities comprised
approximately 80 percent of total electricity distribution expenses for the year ended 31 December 2017 (for
the year ended 31 December 2016: approximately 70 percent). The distribution of electricity is subject to
tariff regulations.
to
Key management of the Group. Key management of the Group includes members of the Board of
Directors of the Company, members of the Management Board of the Company, heads of the business
subdivisions of the Company and their deputies, key management of subsidiaries of RAO ES East subgroup
segment.
Remuneration to the members of the Board of Directors of the Company for their services in their capacity
and for attending Board meetings is paid depending on the results for the year and is calculated based on
specific remuneration policy approved by the Annual General Shareholders Meeting of the Company.
Remuneration to the members of the Management Board and to other key management of the Group is paid
for their services in full time management positions and is made up of a contractual salary and performance
bonuses depending on the results of the work for the period based on key performance indicators approved
by the Board of Directors of the Company.
Main compensation for Key management of the Group generally is short-term excluding future payments
under pension plans with defined benefits. Pension benefits for key management of the Group are provided
on the same terms as for the rest of employees.
Short-term remuneration paid to the key management of the Group for the year ended 31 December 2017
comprised RR 1,877 million including an accrual for bonuses in the amount of RR 400 million (for the year
ended 31 December 2016: RR 1,419 million including accrual for bonuses in the amount of RR 165 million).
The accrual for bonuses for the year ended 31 December 2017 includes remuneration under the Company’s
key management long-term motivation Program as expected based on the 2017 results.
30
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 7.
Property, plant and equipment
Buildings
91,324
Facilities
407,267
Plant and
equipment
311,929
Assets
under
construction
292,889
Revalued amount / cost
Balance as at 31 December 2016
Impairment of revalued property, plant and
equipment
Reclassification
Additions
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2017
(136)
539
112
10,221
(272)
(312)
101,476
Accumulated depreciation (including impairment)
Balance as at 31 December 2016
Impairment charge
Reversal of impairment
Depreciation charge
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2017
(35,459)
(4,068)
-
(2,041)
(430)
267
136
(41,595)
(1,034)
4,782
17
23,011
(87)
(1,432)
432,524
(143,461)
(7,877)
-
(8,770)
(3,524)
86
676
(162,870)
(137)
(5,458)
1,326
47,445
(176)
(1,635)
353,294
(133,736)
(8,699)
-
(13,393)
673
167
1,266
(153,722)
-
245
84,849
(80,755)
(27)
(639)
296,562
(32,224)
(3,830)
597
-
3,416
6
479
(31,556)
Total
Other
14,286 1,117,695
-
(108)
963
78
(127)
(615)
(1,307)
-
87,267
-
(689)
(4,633)
14,477 1,198,333
(7,768)
(109)
-
(1,148)
(135)
85
340
(8,735)
(352,648)
(24,583)
597
(25,352)
-
611
2,897
(398,478)
Net book value as at
31 December 2017
Net book value as at
31 December 2016
Revalued amount / cost
Balance as at 31 December 2015
Impairment of revalued property, plant and
equipment
Reclassification
Additions
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2016
Accumulated depreciation (including impairment)
Balance as at 31 December 2015
Impairment charge
Reversal of impairment
Depreciation charge
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2016
(31,803)
(1,729)
786
(2,018)
(794)
47
52
(35,459)
59,881
269,654
199,572
265,006
5,742
799,855
55,865
263,806
178,193
260,665
6,518
765,047
Buildings
Facilities
Plant and
equipment
Assets under
construction
Other
Total
83,887
398,693
268,513
285,292
13,646 1,050,031
(262)
(105)
71
8,247
(352)
(162)
91,324
(4,941)
(313)
1,307
13,218
(129)
(568)
407,267
(131,656)
(6,227)
3,284
(8,294)
(719)
53
98
(143,461)
(943)
(2,240)
1,591
49,052
(452)
(3,592)
311,929
(105,881)
(13,317)
2,433
(12,621)
(6,554)
343
1,861
(133,736)
-
2,790
76,876
(70,675)
(34)
(1,360)
292,889
(29,192)
(11,692)
70
-
8,065
28
497
(32,224)
(4)
(132)
1,220
158
(125)
(477)
(6,150)
-
81,065
-
(1,092)
(6,159)
14,286 1,117,695
(6,914)
(134)
9
(1,191)
2
95
365
(7,768)
(305,446)
(33,099)
6,582
(24,124)
-
566
2,873
(352,648)
Net book value as at
31 December 2016
Net book value as at
31 December 2015
55,865
263,806
178,193
260,665
6,518
765,047
52,084
267,037
162,632
256,100
6,732
744,585
As at 31 December 2017, included in the net book value of the property, plant and equipment are office
buildings and plots of land owned by the Group in the amount of RR 7,486 million (31 December 2016:
RR 7,745 million) which are stated at cost.
Assets under construction represent the expenditures for property, plant and equipment that are being
constructed, including hydropower plants under construction, and advances to construction companies and
suppliers of property, plant and equipment. As at 31 December 2017 such advances amounted to
RR 36,577 million (31 December 2016: RR 47,105 million).
31
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
to assets under construction
Additions
the amount of
RR 11,584 million, the capitalisation rate was 9.50 percent (for the year ended 31 December 2016:
RR 14,276 million, the capitalisation rate was 10.55 percent).
included capitalised borrowing costs
in
Additions to assets under construction included capitalised depreciation in the amount of RR 732 million (for
the year ended 31 December 2016: RR 1,042 million).
Other property, plant and equipment include motor vehicles, land, office fixtures and other equipment.
Management of the Group considers that the carrying amount of property, plant and equipment as at
31 December 2017 and 31 December 2016 does not differ materially from their fair value at the end of the
reporting period.
Assessment of fair value of property, plant and equipment
Management of the Group determines the fair value of property, plant and equipment as follows.
The Group's property, plant and equipment are mainly represented by specialised property: the Group's key
assets are represented by unique hydro engineering structures and power equipment manufactured under
certain technical specifications for each power plant; such equipment is rarely sold in the market.
The Group management determines the value of the specialised property on a regular basis, using the cost
approach. The cost approach is based on the economic concept which implies that a buyer will pay no more
for an asset than it would cost to develop or obtain another asset with the same functionality. The total costs
of replacement or reproduction of the analysed asset resulting from such measurement are decreased by the
amount of physical, functional and economic depreciation.
The replacement costs are determined based on specialised reference books, regulatory documents,
construction rates, manufacturer’s prices in effect as of the valuation date; physical and functional
depreciation is measured based on the age of the assets, their actual condition and operating mode, etc.
To determine the economic depreciation of specialised assets, the Group management calculates the
recoverable amount using the income approach. It is based on discounted cash flow method, and the Group
uses certain assumptions when building the cash flow forecast. In particular, these assumptions are used to
determine the expected cash flows, capital expenditures and discount rates for each cash generating unit.
The Group management determines the forecast horizon, and net cash inflows from the asset's operation
are calculated for each period of this horizon. The recoverable amount of the cash generating unit is
determined by recalculating the discounted net cash flows. The Group management believes that the Group
subsidiaries and Company's branches are separate cash generating units.
If the recoverable amount of the cash generating unit is higher than the replacement cost less physical and
functional depreciation of property, plant and equipment included in this cash generating unit, it is concluded
that there is no economic depreciation. If this is not the case and if the recoverable amount is less than the
carrying amount of cash generating unit, the economic impairment is determined as the difference between
the recoverable amount and the carrying amount.
32
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Impairment of property, plant and equipment as at 31 December 2017 and 31 December 2016
The following key assumptions were used in the impairment testing for the years ended 31 December 2017
and 31 December 2016:
Key assumptions used in the
impairment testing
Year ended
31 December 2017
Year ended
31 December 2016
Information used
Forecast period*
Forecasted growth rates in terminal
period
Discount rate before tax (based on
weighted average cost of capital)
Forecast of electricity and capacity
tariffs in the isolated energy systems
and in non-pricing zone of the Far East
Actual operating results for 2017 and
business plans for 2018–2023
Actual operating results for 2016 and
business plans for 2017–2022
For existing plants 10 years (2018–2027)
For plants under construction - 20 years
after commissioning and before the
completion of capacity sale contracts
(2018–2041)
For cash-generating units of the Far East -
11-25 years (2018–2042)
For existing plants 10 years (2017–
2026)
For plants under construction - 20
years after commissioning and before
the completion of capacity sale
contracts (2017–2040)
For cash-generating units of the Far
East - 11-25 years (2017–2041)
4.22 percent
3.83 percent
12.7–15.4 percent (RR)
14.45–17.4 percent (RR)
Based on methodology of tariffs calculation adopted by regulatory authority
Forecast of electricity and capacity
prices in competitive market
Based on the forecast of JSC TSA and forecast rates on energy prices growth
prepared by the Ministry of Economic Development of RF
Forecast of capacity prices related to
competitive capacity selection
Forecast of electricity and capacity
volumes
Forecast of capital expenditures
For 2018–2021 – based on the results of
competitive capacity selection, except for
stations, where regulated tariffs are used
For 2017–2020 – based on the results of
competitive capacity selection, except for
stations, where regulated tariffs are used
For 2022 and after – adjusted on consumer
index price and forecasts of JSC TSA
For 2021 and after – adjusted on
consumer index price and forecasts of
JSC TSA
Based on the Company’s management assessment of future trends in the business
Based on the management valuation of capital expenditures on
modernisation and reconstruction programme
* Management considers that a forecast period greater than five years is appropriate as the wholesale electricity and capacity market is
expected to change significantly over the forecast period and cash flow projections will not be stabilised within five years. However a
forecast period of cash flows was mainly defined by remaining useful life of assets tested. For hydroelectric power plants this period
may amount up to 100 years due to the fact that key asset is a dam. In this regard the recoverable amount of assets was defined based
on cash flows during the forecast period and terminal values.
The values assigned to the key assumptions represent management’s assessment of future trends in the
business and are based on both external and internal sources.
Management of the Group analysed the current economic situation, in which the Group operates, in order to
detect the indicators of impairment of property, plant and equipment or indicators that an impairment loss
recognised in prior periods no longer exists or decreased.
As a result of the impairment analysis of property, plant and equipment of the Group as at 31 December
2017 their carrying amount decreased by RR 25,890 million. As a result an impairment loss in the amount of
RR 24,583 million was recognised in the Consolidated Income Statement and decrease of previously
recognised revaluation reserve in the amount of RR 1,307 million (before income tax of RR 261 million) – in
other comprehensive loss, the effects relate mainly to the following cash-generating units:
Yakutskaya GRES-2 – impairment loss in the amount of RR 13,057 million;
Yakutskenergo – impairment loss in the amount of RR 7,888 million and decrease of previous
revaluation reserve in the amount of RR 1,277 million.
The sensitivity analysis of the recoverable amounts of cash-generating units for the key assumptions is
presented in Note 32.
33
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
As a result of the impairment analysis of property, plant and equipment as at 31 December 2016 their
carrying amount decreased by RR 32,667 million. As a result, impairment loss in the amount of
RR 26,517 million was recognised in the Consolidated Income Statement and a decrease of previous
revaluation reserve in the amount of RR 6,150 million (before income tax of RR 1,230 million) – in other
comprehensive loss.
The carrying amount of each class of property, plant and equipment that would have been recognised had
the assets been carried under the cost model is as follows:
Net book value as at
31 December 2017
Net book value as at
31 December 2016
Production
buildings
Facilities
Plant and
equipment
Assets under
construction
Other
Total
38,900
120,494
191,705
268,986
2,150
622,235
34,278
111,189
169,428
264,645
2,134
581,674
Events at Zagorskaya GAES-2. On 17 September 2013 there was a partial flooding at Zagorskaya GAES-2
which is under construction in the Moscow Region. The flooding originated from the lower reservoir via
functional joints of the station block and a newly formed cavity in the right junction of the GAES-2 building
foundation. Construction and assembly works as well as property, including equipment, were insured by
PIJSC Ingosstrakh, JSC AlfaStrakhovanie and JSC SOGAZ. As at 31 December 2016 all insurance
companies had made all payments on the insured event.
Other operating income for the year ended 31 December 2016 include insurance indemnity received from
JSC SOGAZ and JSC AlfaStrakhovanie in the amount of RR 1,737 million.
For the year ended 31 December 2017 a loss on disposal of damaged equipment and assets under
construction which are not recoverable and, as well as expenses on recovery works, were recognised in
Operating expenses in the amount of RR 902 million (for the year ended 31 December 2016:
RR 1,600 million).
At the consolidated financial statements signing date management of the Group cannot reliably estimate
future expenses that may be necessary to eliminate consequences of the technical incident. However, these
expenses may be material for the Group.
Management of the Group believes that property, plant and equipment at Zagorskaya GAES-2 is not
impaired as at 31 December 2017 as there were capacity supply contracts concluded in respect of new
power generation facilities of Zagorskaya GAES-2, that guarantee the payback period of 20 years for the
total cost of construction for the period. The carrying amount of Zagorskaya GAES-2 property, plant and
equipment is RR 61,235 million.
Leased equipment. As at 31 December 2017 the net book value of assets held under finance lease and
included in property, plant and equipment was RR 1,372 million (31 December 2016: RR 1,964 million).
Assets held under finance lease were mainly represented by plant and equipment.
Operating lease. The Group leases a number of land areas owned by local governments and production
buildings under non-cancellable operating lease agreements. Land lease payments are determined by lease
agreements. The land areas leased by the Group are the territories on which the Group’s hydropower plants
and other assets are located. According to the Land Code of the Russian Federation such land areas are
limited in their alienability and cannot become private property. The Group’s operating leases typically run for
an initial period of 5–49 years with an option to renew the lease after that date. Lease payments are
reviewed regularly.
The future payments under non-cancellable operating leases in accordance with rates as at the reporting
period end are as follows:
Less than one year
Between one and five years
After five years
Total operating lease
31 December 2017
31 December 2016
2,115
7,774
32,582
42,471
2,175
7,404
30,524
40,103
Pledged assets. As at 31 December 2017 RR and 31 December 2016 no property, plant and equipment
have been pledged as collateral for borrowings.
34
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 8.
Investments in associates and joint ventures
The Group’s interests in associates and joint ventures and its carrying value were as follows:
Associates
OJSC Irkutsk Electronetwork
Company (OJSC IENC)
OJSC Sakhalin Energy
Company (OJSC SEC)
Other
Total associates
Joint ventures
BoGES Group
BALP Group
Other
Total joint ventures
Total investments in
associates and joint ventures
% held
Carrying value
31 December 2017 31 December 2016 31 December 2017 31 December 2016
Place of
business
Russia
Russia
42.75%
42.75%
34.62%
36.09%
Russia
Russia
50.00%
50.00%
50.00%
50.00%
7,656
1,928
145
9,729
8,990
-
1,378
10,368
20,097
7,528
1,982
193
9,703
9,230
-
1,345
10,575
20,278
The amounts in respect of associates and joint ventures recognised in the Income Statement are as follows:
Year ended
31 December 2016
Year ended
31 December 2017
Associates
OJSC IENC
OJSC SEC
Other
Total associates
Joint ventures
BoGES Group
BALP Group
Other
Total joint ventures
Share of results of associates and joint ventures
Associates
129
(53)
(50)
26
357
-
34
391
417
(249)
(1,447)
24
(1,672)
8,546
-
(192)
8,354
6,682
OJSC Irkutsk Electronetwork Company (OJSC IENC)
OJSC IENC maintains electric power transmission grids with voltage of 220-500 kV and distribution grids
with voltage of 0.4-110 kV in the Irkutsk region. The total length of overhead and cable power lines is over
40,000 km. OJSC IENC also maintains and ensures operation of over 10,000 transforming substations of 6-
500 kV in voltage and over 28,000 MVA in total capacity. The core activities of OJSC IENC include provision
of services in the area of electric power transmission and distribution, technological connection of consumers
to power grids and maintenance of power grids’ operating capacity. OJSC IENC’s controlling shareholder is
EN+ Group.
The Group’s investment in OJSC IENC is non-core and considered for sale.
OJSC Sakhalin Energy Company (OJSC SEC)
OJSC SEC is a special project developer company involved in construction of a number of new power sector
assets in the Sakhalin region to be financed from the federal and regional budgets. OJSC SEC's major
project was construction of Power Generating Unit No. 4 (with total capacity of 139 MWt) at Yuzhno-
Sakhalinsk Thermal Power Plant-1 (that was put into operation in the fourth quarter of 2013). OJSC SEC
also built a number of power supply network facilities. The above units of generation and power supply
network are operated by PJSC Sakhalinenergo, the Group’s subsidiary, under a lease agreement. Other
OJSC SEC’s shareholders, in addition to the Group, are the Russian Government represented by the
Federal Agency for State Property Management, and the Sakhalin region represented by the Ministry of
Land and Property Affairs of the Sakhalin region. As at 31 December 2017 the Group’s participatory interest
in the equity of OJSC SEC is 34.62 percent (31 December 2016: 36.09 percent).
35
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
The Group’s investments in OJSC SEC are of strategic nature and are considered to be used in the project
aimed at consolidating key energy assets of the Sakhalin region on the basis of the core vertically integrated
entity PJSC Sakhalinenergo.
Summarised financial information for significant associates for the years ended 31 December 2017 and
31 December 2016 and as at 31 December 2017 and 31 December 2016:
As at 31 December
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
For the year ended 31 December
Revenue
Impairment of property, plant and equipment
Profit / (loss) for the year
Total comprehensive income / (loss)
for the year
OJSC SEC
2017
7,058
1,540
-
(59)
8,539
2017
605
-
79
2016
7,407
1,066
-
(543)
7,930
2016
535
(4,921)
(4,007)
OJSC IENC
2017
22,960
1,151
(2,580)
(5,835)
15,696
2017
20,632
-
301
2016
24,169
1,151
(1,814)
(8,111)
15,395
2016
18,809
-
(583)
79
(4,007)
301
(583)
Reconciliation of the summarised financial information presented to the carrying value of interest in
associates:
Net assets as at 31 December 2015
(Loss) / profit for the year
Net assets as at 31 December 2016
Interest in associates
Goodwill
Additional share issues
Carrying value as at 31 December 2016
Net assets as at 31 December 2016
Profit / (loss) for the year
Additional share issues
Net assets as at 31 December 2017
Interest in associates
Goodwill
Additional share issues
Carrying value as at 31 December 2017
Joint ventures
BoGES Group and BALP Group
OJSC SEC
11,937
(4,007)
7,930
2,861
-
(879)
1,982
7,930
79
530
8,539
2,956
-
(1,028)
1,928
OJSC IENC
15,978
(583)
15,395
6,582
946
-
7,528
15,395
301
-
15,696
6,710
946
-
7,656
Others
Total
611
90
701
193
-
-
193
701
(202)
-
499
145
-
-
145
28,526
(4,500)
24,026
9,636
946
(879)
9,703
24,026
178
530
24,734
9,811
946
(1,028)
9,729
Starting from 2006 the Company and RUSAL Group have been jointly implementing the BEMA project based
on an agreement for mutual financing, completion and subsequent operation of Boguchanskaya HPP and
Boguchansky aluminium plant. Within the BEMA project on parity basis joint ventures BoGES Ltd (Cyprus)
and BALP Ltd (Cyprus) were formed, which have controlling interests in PJSC Boguchanskaya HPP and
CJSC Boguchansky Aluminium Plant.
BoGES Ltd and PJSC Boguchanskaya HPP
CJSC Boguchansky Aluminium Plant together form BALP Group.
together
form BoGES Group. BALP Ltd and
BoGES Ltd and BALP Ltd provide corporate governance of Boguchanskaya HPP and Boguchansky
Aluminium Plant in line with the parity of interests of the investors and are not engaged in other operations.
Starting from November 2012 Boguchanskaya HPP sells electricity and capacity to large consumers and
utilities companies. An installed capacity of Boguchanskaya HPP is 2,997 MW, long-term average project
production – 17 600 million kWh.
Project capacity of Boguchansky Aluminium Plant is almost 600 thousand tonnes of aluminium per annum.
Manufacturing plant complex consists of two series with a capacity of 296 thousand tonnes each. The
36
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
construction of 1-st series of Boguchansky Aluminium Plant is ongoing. The decision about construction of 2-
nd series of the plant is not made by Investors. Boguchansky Aluminium Plant will become the key consumer
of energy generated by Boguchanskaya HPP.
Summarised financial information for significant joint ventures for the years ended 31 December 2017 and
31 December 2016 and as at 31 December 2017 and 31 December 2016:
As at 31 December
Non-current assets
Current assets including:
Cash and cash equivalents
Non-current liabilities including:
Non-current financial liabilities (excluding trade
payables)
Current liabilities including:
Current financial liabilities (excluding trade
payables)
Net assets
For the year ended 31 December
Revenue
Depreciation of property, plant and equipment
Impairment on financing of CJSC Boguchansky
Aluminium Plant
Interest income
Interest expense
Foreign exchange differences
Reversal of property, plant and equipment
(Loss) / profit before income tax
Income tax expense
(Loss) / profit for the year
Total comprehensive (loss) / income for the
year
BoGES Group
2017
65,961
3,393
815
(43,932)
2016
66,472
3,140
898
(43,932)
BALP Group
2017
34,411
7,796
1,260
(103,832)
(38,147)
(7,459)
(38,021)
(7,236)
(103,827)
(2,258)
(1,110)
17,963
2017
15,724
(1,855)
(5,180)
134
(2,893)
(4)
-
(400)
(81)
(481)
(835)
18,444
2016
16,141
(1,192)
(11,000)
877
(3,412)
(2)
25,390
19,484
(3,467)
16,017
(17)
(63,883)
2017
17,081
(1,191)
-
19
(6,230)
3,951
-
(1,489)
-
(1,489)
2016
27,476
6,208
1,141
(93,907)
(93,907)
(2,172)
(16)
(62,395)
2016
23,155
(1,717)
-
-
(7,901)
14,713
23,402
30,564
-
30,564
(481)
16,017
(1,489)
30,564
Reconciliation of the summarised financial information presented to the carrying value of interest in joint
ventures:
Net assets as at 31 December 2015
Profit for the year
Net assets as at 31 December 2016
Interest in joint ventures
Non-controlling interest
Accumulated losses
Carrying value as at 31 December 2016
Net assets as at 31 December 2016
(Loss) / profit for the year
Net assets as at 31 December 2017
Interest in joint ventures
Non-controlling interest
Accumulated losses
Carrying value as at 31 December 2017
BoGES Group
2,427
16,017
18,444
BALP Group
(92,959)
30,564
(62,395)
9,222
8
-
9,230
18,444
(481)
17,963
8,982
8
-
8,990
(31,198)
-
31,198
-
(62,395)
(1,489)
(63,884)
(31,942)
-
31,942
-
Others
Total
2,485
44
2,529
1,146
-
199
1,345
2,529
102
2,631
1,173
-
205
1,378
(88,047)
46,625
(41,422)
(20,830)
8
31,397
10,575
(41,422)
(1,868)
(43,290)
(21,787)
8
32,147
10,368
The Group has issued guarantees for PJSC Boguchanskaya HPP for the loan facility in favour of the State
Corporation Vnesheconombank (Note 29, 34).
37
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 9.
Available-for-sale financial assets
PJSC Inter RAO
PJSC Russian Grids
PJSC Boguchanskaya HPP
PJSC FGC UES
Other
Total available-for-sale financial assets
31 December 2017
31 December 2016
% of ownership
4.92%
0.23%
2.89%
0.13%
-
Fair value
17,219
462
461
269
84
18,495
% of ownership
4.92%
0.23%
2.89%
0.13%
-
Fair value
19,495
638
505
338
205
21,181
The fair values of available-for-sale financial assets were calculated based on quoted market prices; for
those which are not publicly traded, fair values were estimated by reference to the discounted cash flows of
the investees (Note 32).
Loss arising on available-for-sale financial assets for the year ended 31 December 2017 totalled
RR 2,580 million (net of tax), including revaluation of PJSC Inter RAO – RR 2,276 million, was recorded
within other comprehensive income (for the year ended 31 December 2016 profit arising on available-for-sale
financial assets totaled RR 15,050 million).
For the year ended 31 December 2017, the Group received dividends from PJSC Inter RAO and PJSC
Russian Grids in the amount of RR 690 million and recognised them as other operating income (for the year
ended 31 December 2016: RR 95 million).
Note 10. Other non-current assets
Long-term promissory notes
Discount
Impairment provision
Long-term promissory notes, net
Long-term advances to suppliers
VAT recoverable
Goodwill
Other non-current assets
Total other non-current assets
31 December 2017 31 December 2016
38,931
(16,415)
(14,025)
8,491
3,173
2,036
481
7,666
21,847
39,549
(15,662)
(14,025)
9,862
5,024
2,957
481
7,007
25,331
Other non-current assets in the amount of RR 7,007 million (31 December 2016: RR 7,666 million) mainly
include intangible assets, research and development costs and long-term accounts receivable.
Rating Rating agency
interest rate Maturity date
Effective
31 December
2017
31 December
2016
Interest-free long-term
promissory notes
PJSC Boguchanskaya HPP
PJSC Bank VTB
PJSC ROSBANK
JSC Alfa Bank
Other
Total long-term promissory notes
-
Вa1
Вa1
ВВ+
9.75%
2029
-
Moody’s
Moody’s
9.74–11.82% 2019–2021
10.90–14.58% 2020–2022
Fitch Ratings 11.90–16.35% 2020–2022
6,880
1,044
1,005
860
73
9,862
6,269
511
888
761
62
8,491
Promissory notes of PJSC Boguchanskaya HPP. As at 31 December 2017 the amortised cost of interest-
free long-term promissory notes of PJSC Boguchanskaya HPP (payable not earlier than 31 December 2029
with total nominal value of RR 21,027 million) pledged as collateral to the SC Vnesheconombank amounted
to RR 6,880 million (31 December 2016: RR 6,269 million) (Note 8).
38
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Goodwill of JSC Institute Hydroproject. As at 31 December 2017 and 31 December 2016, the Group
tested goodwill related to JSC Institute Hydroproject for its potential impairment. As a result the recoverable
amount of JSC Institute Hydroproject as a cash generating asset was higher than the carrying amount - there
is no economic impairment.
Dams of Bratskaya, Ust’-Ilimskaya and Irkutskaya HPPs. In November 2016 the Group completed the
transaction to sell dams of Bratskaya, Ust’-Ilimskaya and Irkutskaya HPPs to EuroSibEnergo Group. These
dams are part of technological complex of EuroSibEnergo’s cascade of hydropower plants located on the
Angara river.). Profit from the dams’ sale in the amount of RR 7 202 million is included in other operating
income for the year ended 31 December 2016.
Peresvet Bank. As at 31 December 2017 the other non-current assets included the amortised value of
subordinated bonds of Peresvet Bank of RR 254 million. As at 31 December 2016 the other non-current
assets included the amortised value of cash and deposits placed with Peresvet Bank of RR 217 million The
amortised value of these assets was determined using the discounted cash flows with recognition of income
on discounting in the amount of RR 37 million for the year ended 31 December 2017 and impairment of
financial assets in the amount of RR 4,464 million for the year ended 31 December 2016.
Note 11. Cash and cash equivalents
Cash equivalents (contractual interest rate: 4.75-8.37%)
Cash at bank
Cash in hand
Total cash and cash equivalents
31 December 2017 31 December 2016
59,029
11,106
21
70,156
52,594
14,738
22
67,354
Cash equivalents held as at 31 December 2017 and 31 December 2016 comprised short-term bank deposits
with original maturities of three months or less.
Cash and cash equivalents balances denominated in US Dollars as at 31 December 2017 were
RR 576 million (31 December 2016: RR 736 million). Cash and cash equivalents balances denominated in
Euros as at 31 December 2017 were RR 63 million (31 December 2016: RR 67 million).
Cash and cash equivalents are deposited in several institutions as follows:
Rating
Rating agency
31 December
2017
31 December
2016
Cash at banks
PJSC Sberbank
Bank GPB (JSC)
BANK ROSSIYA
PJSC ROSBANK
PJSC Bank VTB
PJSC VTB24
CJSC ARDSHINBANK
PJSC Bank FK Otkritie
Other
Total cash at banks
Bank deposits
PJSC Bank VTB
Bank GPB (JSC)
PJSC Sberbank
JSC Rosselkhozbank
PJSC VTB24
PJSC Promsvyazbank
PJSC Bank FK Otkritie
Other
Total cash equivalents
4,372
3,347
1,888
1,011
190
160
15
-
123
11,106
35,394
16,720
6,025
760
127
-
-
3
59,029
4,281
7,255
17
387
2,047
67
157
169
358
14,738
23,152
13,922
13,283
838
322
536
525
16
52,594
Ba1
BB+
ruAA
Ba1
Ba1
Ba1
B+
-
-
Ba1
BB+
Ba1
BB+
Ba1
-
-
-
Moody’s
Fitch Ratings
Эксперт РА
Moody’s
Moody’s
Moody’s
Fitch Ratings
-
-
Moody’s
Fitch Ratings
Moody’s
Fitch Ratings
Moody’s
-
-
-
39
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 12. Accounts receivable and prepayments
Trade receivables
Provision for impairment of trade receivables
Trade receivables, net
VAT recoverable
Advances to suppliers and other prepayments
Provision for impairment of advances to suppliers and other
prepayments
Advances to suppliers and other prepayments, net
Other receivables
Provision for impairment of other receivables
Other receivables, net
Government grants receivables
Total accounts receivable and prepayments
31 December 2017
31 December 2016
61,279
(26,571)
34,708
7,841
2,944
(837)
2,107
7,959
(4,815)
3,144
3,401
51,201
56,647
(23,900)
32,747
7,329
2,617
(629)
1,988
6,666
(3,762)
2,904
2,108
47,076
Included in accounts receivable are government subsidies receivable from the constituent budgets of the Far
East Federal region including those for compensation of the tariffs reduction under Resolution of the Russian
Government No. 895 as at 31 December 2017 (Note 2).
The provision for impairment of accounts receivable has been determined based on specific customer
identification, customer payment trends, subsequent receipts and settlements and the analysis of expected
future cash flows (Note 2). Management believes that the Group’s subsidiaries will be able to realise the net
receivable amount through direct collections and other non-cash settlements, and the carrying value
approximates their fair value.
Movements in the impairment provision for trade and other accounts receivables are as follows:
As at 1 January
Charge for the year
Reversal of impairment
Trade receivables written-off as uncollectible
Disposal of impairment provision due to disposal of subsidiaries
As at 31 December
Year ended
31 December 2017
27,662
7,261
(1,626)
(1,902)
(9)
31,386
Year ended
31 December 2016
23,352
8,541
(1,304)
(1,678)
(1,249)
27,662
The ageing analysis of trade and other finance accounts receivable is as follows:
Not past due
Past due for less than 3 months
Past due for 3 months to 1 year
Past due for more than 1 year
Total
Provision as at
31 December 2017
26,802
8,410
10,326
23,213
68,751
31 December 2017 31 December 2016
27,557
5,980
9,343
20,052
62,932
(1,215)
(2,112)
(5,271)
(22,788)
(31,386)
Provision as at
31 December 2016
(1,652)
(1,378)
(5,228)
(19,404)
(27,662)
The majority of trade debtors which are neither past due nor impaired could be aggregated in several
groups based on similarities in their credit quality: large industrial consumers – participants of the wholesale
and retail electricity and capacity market as well as public sector entities and population.
The Group does not hold any accounts receivable pledged as collateral.
40
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 13.
Inventories
Fuel
Materials and supplies
Spare parts
Other materials
Total inventories before provision for impairment
Provision for impairment of inventories
Total inventories
31 December 2017 31 December 2016
16,162
6,782
2,466
386
25,796
(273)
25,523
14,825
6,402
2,539
565
24,331
(294)
24,037
There are no inventories pledged as collateral for borrowings as at 31 December 2017 and as at 31 December 2016.
Note 14. Other current assets
Special funds
Deposits
Restricted cash
Loans issued
Provision for loans issued
Loans issued, net
Other short-term investments
Total other current assets
31 December 2017 31 December 2016
3,429
790
-
2,472
(2,447)
25
156
4,400
3,507
4,292
826
2,808
(2,498)
310
162
9,097
As at 31 December 2017 the balance of special funds in the amount of RR 3,429 million received by the
Group to fund construction of generating facilities, is placed to the special accounts of the Federal Treasury
of Russia (as at 31 December 2016: RR 3,507 million). These special funds may be used by the Group only
upon approval by the Federal Treasury of Russia according to the procedure prescribed by the Order of the
Ministry of Finance of the Russian Federation No. 213n dated 25 December 2015.
Provision for loans issued includes provision on loans issued to ZAO Verkhne-Narynskye HPPs in the
amount of RR 2,328 million as at 31 December 2017 (as at 31 December 2016: RR 2,378 million) due to
denouncement of agreements between Russian Government and Kyrgyzstan Republic on construction of
upper Naryn cascade of hydropower plants.
Deposits
PJSC Sberbank
Other
Total deposits
Note 15. Equity
As at 31 December 2017
As at 31 December 2016
As at 31 December 2015
Rating Rating agency
Effective
interest rate
31 December 2017
31 December 2016
Ba1
-
Moody’s
-
4.94–8.78%
-
642
148
790
4,140
152
4,292
Number of issued and fully paid
ordinary shares (Par value of RR 1.00)
426,288,813,551
386,255,464,890
386,255,464,890
Additional share issue 2016–2017. On 22 November 2016 the Board of Directors of the Company adopted
a resolution to make a placement of 40,429,000,000 ordinary shares by open subscription. The placement
price of the additional shares was determined at RR 1.00 per share. On 7 December 2016 the share issue
was registered with the Bank of Russia.
In January 2017, as a result of certain shareholders exercising their pre-emptive right, the Company placed
33,348,661 additional shares, which were paid in December 2016.
41
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
In March 2017 PJSC Bank VTB purchased 40 billion additional shares under the agreement related to the
purchase of 55 billion ordinary shares of the Company for a total amount of RR 55 billion (Note 2). The other
15 billion shares of quasy-treasury stock were sold to the bank by the Group`s subsidiaries. The full amount
of cash received by the Group was used to repay the debts of RAO ES East subgroup.
On 11 May 2017 the placement of ordinary shares of the Company under the additional share issue 2016–
2017 was completed.
On 5 June 2017 the results of the additional share issue were registered. 40,033,348,661 shares were
placed as a result of the additional issue which represents 99.02 percent of the additional issue's total
number of shares registered. The shares issued were fully paid for in cash.
Treasury shares. Аs at 31 December 2017 treasury shares were represented by 3,852,267,925 ordinary
shares in the amount of RR 4,613 million (31 December 2016: 18,852,353,167 ordinary shares in the
amount of RR 22,578 million).
In March 2017, 15 billion treasury shares were sold to PJSC Bank VTB at the price of RR 1,00 per share in
accordance with the agreement described above. Weighted average cost of these treasury shares was
RR 17,965 million; the loss on disposal of RR 2,965 million was accounted for within equity.
Voluntary and obligatory offers to purchase shares of JSC RAO ES East. During 2016 the shareholders
of JSC RAO ES East that accepted the terms of the voluntary offer, transferred 4,715,738,904 ordinary
shares and 346,195,762 preference shares of JSC RAO ES East to LLC Vostok-Finance for a cash
consideration of RR 34 million and in exchange for 2,934,258,766 shares of the Company in the amount of
RR 3,514 million. Under the obligatory offer to purchase shares, LLC Vostok-Finance repurchased
887,217,472 ordinary shares and 312,687,580 preference shares of JSC RAO ES East for a cash
consideration of RR 380 million.
Effect of changes in non-controlling interest of subsidiaries. During 2016 as a result of the voluntary and
obligatory offers to purchase shares of JSC RAO ES East as described above, non-controlling interest
decreased by RR 6,694 million and retained earnings of the Group increased by RR 4,872 million as a result
of the treasury shares disposal, decrease in non-controlling interest and derecognition of the remaining
obligation to purchase shares after they were partly purchased for cash.
In October 2017 the Group’s share in subsidiaries JSC SK Agroenergo was sold, as a result non-controlling
interest increased by RR 228 million..
During 2016 Group’s subsidiaries LLC Dom-21 century and JSC HRSK went bankrupt, also in December 2016
JSC SO UPS was liquidated. As a result non-controlling interest increased by RR 213 million due to decrease of
share in losses of these subsidiaries previously absorbed by shareholders of the Group.
Dividends. On 26 June 2017 the Company declared dividends for the year ended 31 December 2016
of RR 0.0466 per share in the total amount of RR 19,876 million (RR 19,696 million excluding dividends to
subsidiaries).
On 27 June 2016 the Company declared dividends for the year ended 31 December 2015 of RR 0.0389
per share in the total amount of RR 15,011 million (RR 14,278 million excluding dividends to subsidiaries).
Declared dividends of the Group’s subsidiaries in favour of non-controlling interest holders amounted to
RR 127 million for the year ended 31 December 2017 (for the year ended 31 December 2016:
RR 234 million).
42
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 16.
Income tax
Income tax expense is as follows:
Current income tax expense
Deferred income tax expense
Total income tax expense
Year ended
31 December 2017
12,985
83
13,068
Year ended
31 December 2016
13,258
2,114
15,372
The income tax rate applicable to the majority of the Group’s entities for the year ended 31 December 2017
is 20 percent (for the year ended 31 December 2016: 20 percent).
A reconciliation between the expected and actual income tax expense is provided below:
Profit before income tax
Theoretical tax expense at a statutory rate of 20 percent
Tax effect of items which are not deductible or assessable for taxation
purposes
Increase in other unrecognised deferred tax assets
Change in unrecognised deferred tax assets in respect of associates and
joint ventures
Tax effects of previous periods
Other
Total income tax expense
Year ended
31 December 2017
35,519
(7,104)
Year ended
31 December 2016
55,123
(11,025)
(2,344)
(3,227)
83
(737)
261
(13,068)
(1,827)
(4,003)
1,336
-
147
(15,372)
The total amount of deductible temporary differences for which deferred income tax assets have not been
recognised by the Group as at 31 December 2017 was RR 97,127 million (31 December 2016:
RR 80,055 million). These temporary differences mainly relate to accumulated impairment of property, plant
and equipment, assets under construction, changes in the fair value of the non-deliverable forward contract
for shares and pension liabilities of several Group’s subsidiaries.
Deferred income tax. Differences between IFRS and statutory taxation regulations in the Russian
Federation give rise to temporary differences between the carrying amount of certain assets and liabilities for
financial reporting purposes and their tax bases. The tax effect of the movements in these temporary
differences is detailed below and is recorded at the rate of 20 percent (for the year ended 31 December
2016: 20 percent).
Deferred income tax assets
Property, plant and equipment
Accounts receivable
Losses carried forward
Other
Deferred tax offset
Deferred income tax liabilities
Property, plant and equipment
Accounts receivable
Loans and borrowings
Other
Deferred tax offset
31 December 2016
6,640
4,697
6,444
980
3,177
(8,658)
(39,086)
(47,210)
(57)
(351)
(126)
8,658
Income tax charge
2,761
1,882
(85)
44
464
456
(2,844)
(2,306)
(58)
26
(50)
(456)
Charged directly
to other
comprehensive
income
(47)
-
-
-
(47)
-
235
261
-
-
(26)
-
31 December 2017
9,354
6,579
6,359
1,024
3,594
(8,202)
(41,695)
(49,255)
(115)
(325)
(202)
8,202
43
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Charged
directly to
other
comprehensive
income
53
-
-
-
53
-
1,189
1,212
-
-
(23)
-
Reclassification of
discontinued
operations and
disposal of
subsidiaries
(43)
-
(8)
-
(35)
-
17
17
-
-
-
-
Income tax
charge
1,144
1,181
(57)
(370)
(636)
1,026
(3,258)
(2,398)
2
27
137
(1,026)
31 December
2016
6,640
4,697
6,444
980
3,177
(8,658)
(39,086)
(47,210)
(57)
(351)
(126)
8,658
31 December
2015
5,486
3,516
6,509
1,350
3,795
(9,684)
(37,034)
(46,041)
(59)
(378)
(240)
9,684
Deferred income tax assets
Property, plant and equipment
Accounts receivable
Losses carried forward
Other
Deferred tax offset
Deferred income tax liabilities
Property, plant and equipment
Accounts receivable
Loans and borrowings
Other
Deferred tax offset
Under the existing Group structure tax losses and current income tax assets of different Group entities may not
be offset against current income tax liabilities and taxable profits of other Group entities and, accordingly, taxes
may be accrued even where there is a consolidated tax loss. Therefore, deferred income tax assets and
liabilities are offset only when they relate to the same taxable entity and the entity has legal rights to offset it.
Note 17. Pension benefit obligations
The tables below provide information about the benefit obligations and actuarial assumptions used for the
years ended 31 December 2017 and 31 December 2016.
Amounts recognised in the Group’s Consolidated Statement of Financial Position among other non-current
liabilities (Note 20):
Fair value of plan assets
Present value of defined benefit obligations
Net liability
31 December 2017 31 December 2016
(1,090)
9,894
8,804
(1,111)
9,745
8,634
The movements in the defined benefit liability for the years ended 31 December 2017 and 31 December 2016
are presented in the tables below:
At 1 January 2017
Current service cost
Interest expense / (income)
Past service cost
Remeasurement effects (for other long-term benefits):
Actuarial loss - changes in actuarial assumptions
Actuarial loss - experience adjustment
Recognised in profit or loss for the year ended
31 December 2017
Remeasurements (for post-employment benefits):
Actuarial gain - change in demographic
assumptions
Actuarial gain - change in financial assumptions
Actuarial (gain) / loss - experience adjustments
Recognised other comprehensive income for the
year ended 31 December 2017 before income tax
charge of RR 86 million
Employer contributions for funded pension plan
Benefit payments (Funding NSPF pensions)
Benefit payments (Non-funded pension plan)
At 31 December 2017
Present value of
defined benefit
obligations
9,894
428
788
(167)
Fair value of plan
assets
(1,090)
-
(89)
-
18
1
1,068
(36)
(289)
(124)
(449)
-
(489)
(279)
9,745
-
-
(89)
-
-
19
19
(233)
282
-
(1,111)
Total
8,804
428
699
(167)
18
1
979
(36)
(289)
(105)
(430)
(233)
(207)
(279)
8,634
44
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
At 1 January 2016
Decrease in liabilities related to LLC ESC
Bashkortostan sale (Note 4)
Change in liabilities as a result of changes in the scope
of valuation
Current service cost
Interest expense / (income)
Past service cost
Decrease in liabilities as a result of curtailments
Remeasurement effects (for other long-term benefits):
Actuarial gain - changes in actuarial assumptions
Actuarial gain - experience adjustment
Recognised in profit or loss for the year ended
31 December 2016
Remeasurements (for post-employment benefits):
Actuarial loss - change in demographic
assumptions
Actuarial loss - change in financial assumptions
Actuarial (gain) / loss - experience adjustments
Recognised other comprehensive income for the
year ended 31 December 2016 before income tax
charge of RR 69 million
Employer contributions for funded pension plan
Benefit payments (Funding NSPF pensions)
Benefit payments (Non-funded pension plan)
At 31 December 2016
Present value of
defined benefit
obligations
9,470
Fair value of plan
assets
(1,084)
(181)
17
403
875
(143)
(101)
(4)
(29)
1,001
18
459
(196)
281
-
(439)
(255)
9,894
10
-
-
(106)
-
-
-
-
(106)
-
-
62
62
(236)
264
-
(1,090)
Total
8,386
(171)
17
403
769
(143)
(101)
(4)
(29)
895
18
459
(134)
343
(236)
(175)
(255)
8,804
Principal actuarial assumptions for the Group are as follows:
Nominal discount rate
Inflation rate
Wage growth rate
Staff turnover
Mortality table
7.50%
4.00%
5.50%
31 December 2017 31 December 2016
8.20%
5.00%
6.50%
Depending on length of service based on
statistical data
Russia-2014*
Russia-2014*
* Taking into account the pull down adjustment calculated based on statistical data of mortality for employees of the Group of age till
60 years old for years 2012–2017 (31 December 2016: 2012–2016)
The sensitivity of the defined benefit obligation to changes in the principal actuarial assumptions as at
31 December 2016 is presented below:
Nominal discount rate
Inflation rate
Wage growth rate
Staff turnover
Mortality Rates
Change in
assumption
+ 1%
- 1%
+ 1%
- 1%
+ 1%
- 1%
+ 3%
- 3%
+ 10%
- 10%
Effect on net liability Effect on net liability, %
(781)
921
491
(429)
461
(389)
(960)
1,418
(142)
154
-8%
9%
5%
-4%
5%
-4%
-10%
15%
-1%
2%
The Group expects to contribute RR 637 million to the defined benefit plans in 2018.
The weighted average duration of the defined benefit obligation of the Group is 9 years.
45
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Retirement benefit plan parameters and related risks. The Group has liabilities under retirement benefit
plans in Russia. The retirement benefit plan includes benefits of the following types: lump sum payment upon
retirement, jubilee benefits paid at certain age or upon completion of a certain number of years of service,
financial aid and compensation to cover funeral expenses in the event of an employee’s or pensioner's
death, financial aid provided to pensioners, pension benefits paid to former employees through the non-state
pension fund (hereinafter referred to as the “NPF”).
The amount of benefits depends on the period of the employees' service (years of service), salary level over
the recent years preceding retirement, predetermined fixed amount or minimum tariff rate of remuneration or
salary or a combination of these factors.
As a rule, the above benefits are indexed according to the inflation rate and salary growth for benefits that depend
on the salary level, excluding the retirement benefits paid through NPF, which are not indexed for the inflation rate
at the time the payment is made (following the retirement of employees, all risks are borne by NPF).
In addition to the inflation risk, all retirement benefit plans of the Group are exposed to mortality and survival risks.
Plan assets held on NPF's accounts are governed in accordance with the local legislation and regulatory practices.
The Group and NPF are severally liable for plans management, including investments decisions and the
contribution schedule.
NPF invests the Group's funds in a diversified portfolio. When investing pension savings and placing the
pension reserves, NPF is guided by the Russian legislation that provides a strict regulation with respect to
the possible list of financial instruments and restricts their utilisation, which also leads to diversification and
reduces investment risks.
The Group transfers the obligation to pay lifelong non-state pension benefits to the Group's former
employees to NPF and funds these obligations when awarding the pension. Therefore, the Group insures
the risks related to payment of non-state pensions (investment risks and survival risks).
Note 18. Current and non-current debt
Non-current debt
PJSC Sberbank
Russian bonds (PJSC RusHydro) issued
in February 2013
Eurobonds (RusHydro Capital Markets
DAC), issued in September 2017
Russian bonds (PJSC RusHydro) issued
in July 2015
Russian bonds (PJSC RusHydro) issued
in April 2016
Russian bonds (PJSC RusHydro)
issued in June 2017
UniCredit Bank Austria AG
PJSC Bank VTB
PJSC ROSBANK
Bank GPB (JSC)
Municipal authority of Kamchatka region
EBRD
ASIAN Development bank
Russian bonds (PJSC RusHydro) issued
in April 2015
Russian bonds (PJSC RusHydro) issued
in April 2011
Crédit Agricole Corporate and Investment
Bank Deutschland
Other long-term debt
Finance lease liabilities
Total
Less current portion of non-current
Less current portion of finance lease liabilities
Total non-current debt
Effective
interest rate
7.99–10.75%
Due date
2018–2028
31 December
2017
54,790
31 December
2016
56,491
8.50%
8.13%
11.85%
10.35%
8.20%
3.35%
8.39–9.77%
8.24–9.72%
8.50–9.50%
8.57%
LIBOR 6M+3.45%
LIBOR 6M+3.45%
7.50%
9.50%
-
-
-
2018*
20,650
20,645
2022
2018
2019
2020
2018–2026
2018–2019
2018–2019
2018–2027
2018–2034
2018–2027
2018–2026
2025**
2021
-
-
-
20,235
-
15,868
15,857
15,357
15,347
10,016
5,113
5,046
4,520
1,794
1,560
1,350
1,310
767
250
-
836
1,586
161,048
(69,877)
(259)
90,912
-
5,242
29,516
8,136
6,171
1,561
4,791
1,474
10,222
250
4,920
1,776
1,973
184,372
(25,758)
(568)
158,046
* The bonds mature in 10 years with a put option to redeem them in 2018.
** In October 2017 holders of the bonds issued in April 2015 partly redeemed the bonds under the put option. The rest of the bonds with
nominal amount of RR 767 million will mature in 2025 year.
46
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Bonds issue. In June 2017 the Group placed non-convertible interest bearing market bonds of series
BO-P05 with a nominal amount of RR 10,000 million. The term of the bonds is 3 years, the coupon rate is
8.2 percent per annum.
Eurobond issue. In September 2017 the Group placed Eurobonds, issued by the special purpose company
RusHydro Capital Markets DAC. The volume of the issue was RR 20,000 million. The term of the bonds is
5 years, the coupon rate is 8.125 percent per annum. VTB Capital, JP Morgan, Gazprombank and Sberbank
CIB acted as joint lead managers of the issue. The placement and listing of the Eurobonds took place on the
Irish Stock Exchange under Reg S rule. Eurobonds could have been partly purchased by government-
related entities.
Current debt
PJSC Sberbank
PJSC ROSBANK
LLC AlstomRusHydroEnergy
Bank GPB (JSC)
Current portion of non-current debt
Current portion of finance lease liabilities
Other current debt
Total current debt and current portion of non-current debt
Reference:
Interest payable
Effective
interest rate
7.75–10%
8.21–8.51%
-*
8.50–10.19%
-
-
-
31 December 2017 31 December 2016
5,428
930
750
334
69,877
259
1,035
78,613
5,854
4,755
750
3,031
25,758
568
1,041
41,757
3,012
3,044
* The loan received from a related party, the joint venture of the Group (Note 6), the interest rate on this loan - 0.00 percent per annum.
Compliance with covenants. The Group is subject to certain covenants related primarily to its debt. As at
31 December 2017 and 31 December 2016 and during the reporting period the Group met all required
covenant clauses of the credit agreements.
Finance lease liabilities. Minimum lease payments under finance leases and their present values are as
follows:
Due in 1 year
Due between
1 and 5 years
Due after
5 years
Minimum lease payments as at 31 December 2017
Less future finance charges
Present value of minimum lease payments
as at 31 December 2017
Minimum lease payments as at 31 December 2016
Less future finance charges
Present value of minimum lease payments
as at 31 December 2016
275
(16)
259
601
(33)
568
797
(316)
481
855
(373)
4,154
(3,308)
Total
5,226
(3,640)
846
1,586
4,287
(3,364)
5,743
(3,770)
482
923
1,973
Reconciliation of liabilities from financing activities. The table below sets out an analysis of movements
in the Group’s liabilities from financing activities for the year ended 31 December 2017:
Current and
non-current
debt
Non-deliverable
forward contract
for shares
Finance lease
liabilities
Total
Liabilities from financing activities as at
31 December 2016
Cash flows
Interest accrued
Recognition and change in fair value of non-
deliverable forward contract for shares
Other changes
Liabilities from financing activities as at
31 December 2017
197,830
(46,498)
15,405
-
1,202
167,939
47
-
(3,243)
-
23,959
-
20,716
1,973
(523)
221
-
(85)
199,803
(50,264)
15,626
23,959
1,117
1,586
190,241
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 19. Non-deliverable forward contract for shares
In March 2017 the Company entered into a non-deliverable forward transaction for 55 billion shares with
PJSC Bank VTB for 5 years.
According to the forward contract, the forward value is determined as the purchase consideration paid by the
Bank for the shares plus the amount of quarterly payments made by the Company to the Bank. The amounts
of these interim payments are determined using a certain formula that inter alia reduces the payments by the
amounts equivalent to the dividends received by the Bank over the period of the forward contract.
The Bank is assumed to sell the Company’s shares at the time of final settlement under the forward contract.
The difference between the proceeds that the Bank will receive from the sale of these shares, and their
forward value is subject to cash settlement between the Company and the Bank. Thus, if the forward value is
higher than the consideration received for the shares by the Bank, the Company will reimburse the difference
to the Bank and, vice versa, if the proceeds from the sale of shares exceed the forward value, the difference
will be paid by the Bank to the Company. If, for any reason, the shares will not be sold by the Bank, they will
continue to be held by the Bank. If this is the case, the amount of additional payment to be made when
closing the forward transaction is calculated based on the quoted market price of the Company's shares.
Thus, the payments will be made upon expiry of the forward contract or earlier, if the Bank sells the shares
held. The payment can be made both by the Company to the Bank or by the Bank to the Company,
depending on the level of the market value of the Company’s shares at the time of sale / expiry of the
transaction term and their forward value.
Note 2 describes the key estimates and judgements made by the Group management in respect of
recognition and recording of this derivative financial instrument.
At 31 December 2017, the liability under the forward contract is recorded as a long-term derivative financial
instrument at fair value through profit or loss in the amount of RR 20,716 million. The fair value of the forward
contract at the initial recognition of the instrument was RR 10,013 million and it was recorded within equity as
the result of a shareholder transaction. Deferred tax asset was not recognised based on management’s
probability estimate of its recoverability. Subsequent changes in the fair value of the non-deliverable forward
contract is recorded within profit or loss.
A reconciliation of movements in the fair value of forward contract for the year ended 31 December 2017 is
as follows:
As at the initial recognition date (as at 03 March 2017)
Increase in the fair value of the non-deliverable forward contract (Note 26)
Interim payments
As at 31 December 2017
The fair value of the
forward contract
10,013
13,946
(3,243)
20,716
The table below includes key assumptions made to determine the forward contract’s fair value using the
Monte-Carlo model:
Key assumptions made
to assess the forward contract’s
fair value
Expected term of the forward
transaction
Market value of the share
CB RF key refinancing rate
Volatility of shares
Risk-free rate
Discount rate
Expected dividend yield
As at 31 December 2017
At the instrument’s
initial recognition date
(as at 03 March 2017)
4.17 years
RR 0.7264
7.75 percent
34.85 percent
7.01 percent
7.84 percent
5.10 percent
5 years
RR 0.9752
10.00 percent
35.25 percent
8.39 percent
12.11 percent
5.10 percent
The sensitivity analysis of the fair value of the forward contract to the key assumptions is presented in
Note 32.
48
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 20. Other non-current liabilities
Non-current advances received
Other non-current liabilities
Pension benefit obligations (Note 17)
Total other non-current liabilities
Note 21. Accounts payable and accruals
Trade payables
Advances received
Settlements with personnel
Accounts payable under factoring agreements
Dividends payable
Other accounts payable
Total accounts payable and accruals
31 December 2017 31 December 2016
4,176
5,746
8,804
18,726
10,766
8,716
8,634
28,116
31 December 2017 31 December 2016
31,451
9,712
8,245
2,957
136
6,283
58,784
30,949
11,664
8,880
258
159
3,714
55,624
All accounts payable and accruals are denominated in Russian Rubles.
Note 22. Other taxes payable
VAT
Insurance contributions
Property tax
Other taxes
Total other taxes payable
Note 23. Revenue
Sales of electricity
Sales of capacity
Sales of heat and hot water
Other revenue
Total revenue
31 December 2017 31 December 2016
9,833
2,925
1,941
558
15,257
10,236
3,160
2,038
600
16,034
Year ended
31 December 2017
Year ended
31 December 2016
241,409
40,881
38,907
26,922
348,119
272,582
37,068
38,849
25,573
374,072
Other revenue includes revenue earned from transportation of electricity and heat, connections to the grid,
rendering of construction, repairs and other services.
Note 24. Government grants
In accordance with legislation of the Russian Federation, several companies of the Group are entitled to
government subsidies for compensation of the difference between approved economically viable electricity
and heat tariffs and actual reduced tariffs and for compensation of losses on purchased fuel, purchased
electricity and capacity.
During the year ended 31 December 2017, the Group received government subsidies of RR 32,745 million
(for the year ended 31 December 2016: RR 17,250 million). The subsidies were received in the following
territories: Kamchatsky territory, Sakha Republic (Yakutia), Magadan Region, Chukotka Autonomous Area
and other Far East regions.
The total amount of government grants received by the Group’s companies – guaranteeing suppliers, under
the Resolution of the Russian Government No. 895 “On achievement of basic rates (tariffs) for electric power
(capacity) in the territories of the Far East Federal region” (Note 2), for the year ended 31 December 2017
amounted to RR 17,254 million.
49
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 25. Operating expenses (excluding impairment losses)
Year ended
31 December 2017
Year ended
31 December 2016
74,390
58,098
43,482
40,747
25,023
10,681
10,170
4,634
3,639
3,513
3,391
2,222
2,081
1,982
1,940
1,185
8,051
3,370
1,098
843
642
1,006
1,617
303,805
71,768
54,561
46,722
57,610
24,130
10,233
9,115
4,507
3,642
3,442
3,369
1,911
2,155
2,465
1,983
1,213
8,052
3,202
1,319
804
1,065
555
1,882
315,705
Year ended
31 December 2017
Year ended
31 December 2016
7,150
599
389
305
8,443
(13,946)
(4,019)
(1,218)
(363)
(221)
(1,366)
(21,133)
6,779
2,782
118
264
9,943
-
(6,813)
(454)
(407)
(295)
(1,072)
(9,041)
Employee benefit expenses (including payroll taxes
and pension benefit expenses)
Fuel expenses
Electricity distribution expenses
Purchased electricity and capacity
Depreciation of property, plant and equipment and amortisation of intangible
assets
Taxes other than on income
Other materials
Third parties services, including:
Repairs and maintenance
Provision of functioning of electricity and capacity market
Purchase and transportation of heat power
Security expenses
Consulting, legal and information expenses
Rent
Services of subcontracting companies
Insurance cost
Transportation expenses
Other third parties services
Water usage expenses
Social charges
Travel expenses
Purchase of oil products for sale
Loss on disposal of property, plant and equipment, net
Other expenses
Total operating expenses (excluding impairment losses)
Note 26. Finance income, costs
Finance income
Interest income
Foreign exchange gain
Income on discounting
Other income
Total finance income
Finance costs
Change of fair value of non-deliverable
forward contract for shares (Note 19)
Interest expense
Foreign exchange loss
Expense on discounting
Finance lease expense
Other costs
Total finance costs
50
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Note 27. Earnings per share
Weighted average number of ordinary shares issued (thousands of shares)
Profit for the period attributable to the shareholders of PJSC RusHydro
Earnings per share attributable to the shareholders of
PJSC RusHydro – basic and diluted
(in Russian Rubles per share)
Note 28. Capital commitments
Year ended
31 December 2017
Year ended
31 December 2016
402,655,108
24,013
367,138,482
40,205
0.0596
0.1095
In accordance with investment programme of the Company and separate investment programmes of the
subsidiaries, the Group has to invest RR 209,820 million in the period 2018-2020 for reconstruction of the
existing and construction of new power plants, including RR 106,676 million for 2018, RR 60,059 million for
2019, RR 43,085 for 2020 (31 December 2016: RR 243,975 million for the period 2017-2019).
Future capital expenditures are mainly related to reconstruction of equipment of power plants: Volzhskaya
HPP in the amount of RR 9,965 million, Saratovskaya HPP in the amount of RR 8,681 million, Votkinskaya
HPP in the amount of RR 8,643 million; and to construction of power plants: Zaramagskie HPP in the amount
of RR 17,223 million, Sakhalin GRES-2 in the amount of RR 13,824 million, Ust’-Srednekanskaya HPP in the
amount of RR 6,954 million, Nizhne-Bureiskaya HPP in the amount of RR 6,642 million.
Note 29. Contingencies
Social commitments. The Group contributes to the maintenance and upkeep of the local infrastructure and
the welfare of its employees, including contributions toward the development and maintenance of housing,
hospitals, transport services and other social needs in the geographical areas in which it operates.
Insurance. The Group holds limited insurance policies in relation to its assets, operations, public liability or
other insurable risks. Accordingly, the Group is exposed to those risks for which it does not have insurance.
Legal proceedings. The Group’s subsidiaries are parties to certain legal proceedings arising in the ordinary
course of business. In the opinion of management, there are no current legal proceedings or other claims
outstanding, which, upon final disposition, will have a material adverse effect on the financial position and
results of the Group.
Tax contingencies. Russian tax legislation which was enacted or substantively enacted at the end of the
reporting period, is subject to varying interpretations when being applied to the transactions and activities of
the Group. Consequently, tax positions taken by management may be challenged by tax authorities, in
particular, the way of accounting for tax purposes of some income and expenses of the Group as well as
deductibility of input VAT from suppliers and contractors. The impact of this course of events cannot be
assessed with sufficient reliability, but it can be significant in terms of the financial situation and / or the
business of the Group. Russian tax administration is gradually strengthening, including the fact that there is a
higher risk of review of tax transactions without a clear business purpose or with tax incompliant
counterparties. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar
years preceding the year when decisions about the review was made. Under certain circumstances reviews
may cover longer periods.
The Russian transfer pricing legislation is generally aligned with the international transfer pricing principles
developed by the Organisation for Economic Cooperation and Development (OECD), although it has specific
features. This legislation provides for the possibility of additional tax assessments for controlled transactions
(transactions with related parties and certain transactions between unrelated parties) if such transactions are
not on an arm's length basis.
During the year ended 31 December 2017, the Group’s subsidiaries had controlled transactions and
transactions which highly probably will be considered by tax authorities to be controlled based on the results
of the period. Management has implemented internal controls to be in compliance with this transfer pricing
legislation. In case of receipt of a request from tax authorities, the management of the Group will provide
documentation meeting the requirements of Art. 105.15 of the Tax Code.
Tax liabilities arising from controlled transactions are determined based on their actual transaction prices. It
is possible, with the evolution of the interpretation of the transfer pricing rules, that such transfer prices could
be challenged. The impact of any such challenge cannot be reliably estimated; however, it may be significant
to the financial position and/or the overall operations of the Group.
51
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
New provisions aimed at deoffshorisation of Russian economy have been added to the Russian tax
legislation and are effective from 1 January 2015. Specifically, they introduce new rules for controlled foreign
companies, a concept of beneficiary owner of income for the purposes of application of preferential
provisions of taxation treaties of the Russian Federation, a concept of tax residency for foreign persons and
taxation of indirect sale of Russian real estate assets.
The Group is currently assessing the effects of new tax rules on the Group’s operations and takes necessary
steps to comply with the new requirements of the Russian tax legislation. However, in view of the recent
introduction of the above provisions and insufficient related administrative and court practice, at present the
probability of claims from Russian tax authorities and probability of favourable outcome of tax disputes (if
they arise) cannot be reliably estimated. Tax disputes (if any) may have an impact on the Group's financial
position and results.
Management believes that as at 31 December 2017, its interpretation of the relevant legislation was
appropriate and the Group’s tax positions would be sustained.
Environmental matters. The Group’s subsidiaries and their predecessor entities have operated in the
utilities industry in the Russian Federation for many years. The enforcement of environmental regulation in
the Russian Federation is evolving and the enforcement posture of government authorities is continually
being reconsidered. The Group’s subsidiaries periodically evaluate their obligations under environmental
regulations. Group accrued assets retirement obligation for ash damps used by the Group which is included
in other non-current liabilities and other accounts payable and comprised RR 1 348 million as at
31 December 2017 (31 December 2016: RR 1 048 million).
Potential liabilities might arise as a result of changes in legislation and regulation or civil litigation. The impact
of these potential changes cannot be estimated but could be material. In the current enforcement climate
under existing legislation, management believes that there are no significant liabilities for environmental
damage.
Guarantees. The Group has issued guarantees for CJSC Boguchansky Aluminium Plant in favour of its
suppliers for future equipment deliveries and for PJSC Boguchanskaya HPP in favour of the State
Corporation Vnesheconombank for the loan facility:
Counterparty
for PJSC Boguchanskaya HPP:
State Corporation Vnesheconombank
for CJSC Boguchansky Aluminium Plant:
ALSTOM Grid SAS
Total guarantees issued
31 December 2017 31 December 2016
25,935
-
25,935
26,749
31
26,780
On February 2018 the guarantee was terminated (Note 34).
Note 30. Financial risk management
The risk management function within the Group is carried out in respect of financial and operational risks.
Financial risk comprise market risk (including currency risk, interest rate risk), credit risk and liquidity risk.
The primary objectives of the financial risk management function are to provide reasonable assurance for
achievement of the Group’s objectives by establishing Group’s overall framework, identifying, analyzing and
evaluating risks, establishing risk limits, and then ensuring that exposure to risks stays within these limits and
in case of exceeding these limits to impact on the risks.
In order to optimise the Group’s exposure to risks, the Company constantly works on their identification,
assessment and monitoring, as well as the development and implementation of activities which impact on the
risks, business continuity management and insurance, seeks to comply with international and national
standards of advanced risk management (COSO ERM 2004, ISO 31000 and others), increases the culture of
risk management and continuously improves risk management.
Credit risk. Credit risk is the risk of financial loss for the Group in the case of non-fulfillment by the
Contractor of the obligations on the financial instrument under the proper contract. Exposure to credit risk
arises as a result of the Group’s sales of products on credit terms and other transactions with counterparties
giving rise to financial assets.
The Group’s maximum exposure to credit risk by class of assets is reflected in the carrying amounts of
financial assets in the Note 32.
52
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Although collection of receivables could be influenced by economic factors, management believes that there
is no significant risk of loss to the Group beyond the provision for impairment of receivables already
recorded.
There is no independent rating for the Group’s customers and therefore the Group considers the credit
quality of customers at the contract execution stage. The Group considers their financial position and credit
history. The Group monitors the existing receivables on a continuous basis and takes actions regularly to
ensure collection or to minimise losses.
To reduce the credit risk in the wholesale electricity and capacity markets the Group has introduced
marketing policy and procedure to calculate internal ratings of counterparties in the unregulated market,
based on the frequency of default, and to establish limits based on the rating of the customers’ portfolio.
The Group management reviews ageing analysis of outstanding trade receivables and follows up on past
due balances. Management therefore considers it appropriate to provide past due accounts receivable and
other information about credit risk as disclosed in Note 12.
Cash has been deposited in the financial institutions with no more than minimal exposure to the default risk
at the time of account opening. Management of the Group approved the list of banks for deposits, as well as
rules for their placement. Moreover, management constantly evaluates the financial condition, ratings
assigned by independent agencies, background and other factors of such banks.
The tables in Notes 10, 11 and 14 show deposits with banks and other financial institutions and their ratings
at the end of the reporting period.
Credit risk for financial guarantees is defined as the possibility of sustaining a loss as a result of another
party to a financial instrument failing to perform in accordance with the terms of the contract. The Group uses
the same credit policies in assuming conditional obligations as it does for other financial instruments, through
established credit approvals, risk control limits and monitoring procedures.
The Group’s maximum exposure to credit risk for financial guarantees was RR 25,935 million as at
31 December 2017 (31 December 2016: RR 26,780 million) (Note 29).
Market risk. The Group takes on exposure to market risks. Market risks arise from open positions in
(i) foreign currencies, (ii) interest bearing assets and liabilities, all of which are exposed to general and
specific market movements. Management sets limits on the value of risk that may be accepted, which is
monitored on a regular basis. However, the use of this approach does not prevent losses outside of these
limits in the event of more significant market movements.
Sensitivities to market risks included below are based on a change in a factor while holding all other factors
constant. In practice this is unlikely to occur and changes in some of the factors may be correlated.
Currency risk. Electricity and capacity produced by the Group is sold on the domestic market of the Russian
Federation at the prices fixed in Russian Rubles. Hence, the Group does not have significant foreign
currency exchange risk. The financial condition of the Group, its liquidity, financing sources and the results of
operations do not considerably depend on currency rates as the Group operations are planned to be
performed in such a way that its assets and liabilities are to be denominated in the national currency.
The table below summarises the Group’s monetary financial assets and liabilities exposed to foreign
currency exchange rate risk:
31 December 2017
Monetary
financial
liabilities
Monetary
financial assets
Net balance
sheet position
Monetary
financial assets
31 December 2016
Monetary
financial
liabilities
Net balance
sheet position
USD
EUR
Other
Total
663
63
8
734
(2,748)
(5,482)
-
(8,230)
(2,085)
(5,419)
8
(7,496)
840
67
31
938
(3,088)
(10,477)
-
(2,248)
(10,410)
31
(13,565)
(12,627)
The above analysis includes only monetary assets and liabilities. Equity investments and non-monetary
assets are not considered to give rise to any material currency risk.
There is no significant effect of the changes of foreign currency rates on the Group’s financial position.
Interest rate risk. The Group’s operating profits and cash flows from operating activities are not dependent
largely on the changes in the market interest rates. Borrowings issued at variable rates (Note 18) slightly
expose the Group to cash flow interest rate risk.
53
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
As at 31 December 2017 the Group has debt financing with floating rates, which are established on the basis
of the Libor rates (31 December 2017: debt financing with floating rates, which are established on the basis
of the Libor, Euribor, MOSPRIME rates).
If as at 31 December 2017 and 31 December 2016 had interest rates at that date been 2 percent higher with
all other variables held constant profit for the year ended 31 December 2017 and the amount of capital that
the Group managed as at 31 December 2017 would have been RR 58 million (31 December 2016: RR 327
million) lower mainly as a result of higher interest expense.
The Group monitors interest rates for its financial instruments. Effective interest rates are disclosed in Note 18.
For the purpose of interest risk reduction the Group makes the following arrangements:
credit market monitoring to identify favourable credit conditions,
diversification of credit portfolio by raising of borrowings with fixed rates and, if necessary, floating rates.
Liquidity risk. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated
with financial liabilities.
Prudent liquidity risk management includes maintaining sufficient cash and marketable securities and the
availability of funding from an adequate amount of committed credit facilities. The Group adheres to the
balanced model of financing of working capital – both at the expense of short-term sources and long-term
sources. Temporarily free funds are placed into short-term financial instruments, mainly bank deposits and
short-term bank promissory notes. Current liabilities are represented mainly by the accounts payable to
suppliers and contractors.
The Group has implemented a control system under its contract conclusion process by introducing and
applying typical financial arrangements which include standardised payment structure, payment deadlines,
percentage ratio between advance and final settlement, etc. In such a manner the Group controls capital
maturity.
The table below shows liabilities as at 31 December 2017 by their remaining contractual maturity. The
amounts disclosed in the maturity table are the contractual undiscounted cash flows, including gross finance
lease obligations (before deducting future finance charges). Such undiscounted cash flows differ from the
amount included in the Consolidated Statement of Financial Position because this amount is based on the
discounted cash flows.
The maturity analysis of financial liabilities as at 31 December 2017 is as follows:
2018 year 2019 year
2020 year
2021 year 2022 year
Starting
from year
2023
Liabilities
Current and non-current debt
Trade payables (Note 21)
Accounts payable under factoring
agreements (Note 21)
Financial guarantees (Note 29)
Obligation to JSC RAO ES East shares
purchase
Dividends payable (Note 21)
Non-deliverable forward contract for
shares
Finance lease liabilities (Note 18)
Total future payments, including
principal and interest payments
85,762
30,949
36,103
-
258
747
3
159
-
977
-
-
34,882
-
-
1,230
-
-
3,234
-
-
1,489
-
-
22,555
-
9,407
-
-
1,737
-
19,755
-
-
-
-
2,874
275
2,795
199
2,362
199
1,615
199
10,516
199
-
4,154
121,027
40,074
38,673
6,537
35,008
33,316
During 2018 the maturity date for loans and borrowings totaling RR 85,762 million (Note 18). The Group's
management plans to repay these borrowings both from the Group's own funds and through new financing.
The group has a positive credit history, works with large credit institutions, including those controlled by the
state, and also has access to public borrowings in the capital market
54
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
The maturity analysis of financial liabilities as at 31 December 2016 is as follows:
2017 year 2018 year
2019 year
2020 year 2021 year
Starting
from year
2022
55,373
31,451
102,732
-
28,490
-
24,992
-
3,600
-
20,210
-
2,957
-
-
-
-
-
3
800
136
601
9
-
1,008
-
267
8
-
1,269
-
196
5
-
1,536
-
196
2
-
1,791
-
196
-
-
20,376
-
4,287
-
91,330
104,015
29,960
26,726
5,587
44,873
Liabilities
Current and non-current debt
Trade payables (Note 21)
Accounts payable under factoring
agreements (Note 21)
Obligation to JSC RAO ES East shares
purchase
Financial guarantees (Note 29)
Dividends payable (Note 21)
Finance lease liabilities (Note 18)
Net settled derivatives
Total future payments, including
principal and interest payments
Note 31. Management of capital
Compliance with Russian legislation requirements and capital cost reduction are key objectives of the
Group’s capital risk management.
As at 31 December 2017 and 31 December 2016 the Company was in compliance with the share capital
requirements as established under legislation.
The Group’s objectives in respect of capital management are to safeguard the Group’s ability to continue as
a going concern in order to provide returns for shareholders and benefits for other stakeholders. The amount
of capital that the Group managed as at 31 December 2017 was RR 695,564 million (31 December 2016:
RR 650,932million).
Consistent with others in the energy industry, the Group monitors the gearing ratio, that is calculated as the
total debt divided by the total capital. Debt is calculated as a sum of non-current and current debt, as shown
in the Consolidated Statement of Financial Position. Total capital is equal to the total equity, as shown in the
Consolidated Statement of Financial Position. The gearing ratio was 0.24 as at 31 December 2017
(31 December 2016: 0.31).
Note 32. Fair value of assets and liabilities
Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) Level 1 are
measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) Level 2
measurements are valuations techniques with all material inputs observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) Level 3 measurements are
valuations not based on observable market data (that is, unobservable inputs).
a) Recurring fair value measurements
Recurring fair value measurements are those that the accounting standards require or permit in the
statement of financial position at the end of each reporting period.
The level in the fair value hierarchy into which the recurring fair value measurements are categorised are as follows:
31 December 2017
Financial assets
Available-for-sale financial assets
Non-financial assets
Property, plant and equipment (except for construction in
progress, office buildings and land)
Total assets recurring fair value measurements
Financial liabilities
Non-deliverable forward contract for shares
Total liabilities recurring fair value measurements
Level 1
Level 2
Level 3
Total
18,022
-
18,022
-
-
55
-
-
-
-
-
473
18,495
527,363
527,836
527,363
545,858
20,716
20,716
20,716
20,716
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
31 December 2016
Financial assets
Available-for-sale financial assets
Non-financial assets
Property, plant and equipment (except for construction in
progress, office buildings and land)
Total assets recurring fair value measurements
Level 1
Level 2
Level 3
Total
20,619
-
20,619
-
-
-
562
21,181
496,637
497,199
496,637
517,818
There were no changes in the valuation techniques, inputs and assumptions for recurring fair value
measurements during the year ended 31 December 2017.
Fair value of available-for-sale financial assets mainly consists of the market value of PJSC Inter RAO
shares. Profit or loss arising on available-for-sale financial assets recorded within other comprehensive
income was mainly affected by the change in market quotes of this company’s shares (Note 9).
At 31 December 2017 the fair value of the forward contract in line “Non-deliverable forward contract for
shares” is determined based on the Monte-Carlo model, taking into account adjustments and using
unobservable inputs, and included in Level 3 of fair value hierarchy (Note 19).
The valuation of the Level 3 financial liability and the related sensitivity to reasonably possible changes in
unobservable inputs are as follows at 31 December 2017:
Fair
value
Valuation
technique
Significant
unobservable inputs
Reasonable
change
Sensitivity of fair
value measurement
Non-financial assets
Property, plant and equipment
(except for construction in
progress, office buildings and
land)
527,363
Discounted
cash flows
Electricity and
capacity prices
Discount rate
Capital expenditures
-10%
+1%
+10%
(30,405)
(21,734)
(15,549)
The above tables discloses sensitivity to valuation inputs for property, plant and equipment as changing one
or more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair
value significantly.
The valuation of the Level 3 financial liability and the related sensitivity to reasonably possible changes in
unobservable inputs are as follows at 31 December 2017:
Valuati
on
techniq
ue
Significant
unobservable
/observable
inputs
Fair value
Reasonable
possible
change
Reasonable
possible values
Sensitivity of
fair value
measurement
Financial liability
Non-deliverable
forward contract for
shares
20,716
Monte-
Carlo
model
Dividend yield
Market value of the
share
-2%
+2%
-20%
+20%
3.10 percent
7.10 percent
RR 0.5811
RR 0.8717
(472)
618
7,502
(7,504)
Based on management's estimate, the possible changes of unobservable inputs do not have a significant
impact on the fair value of the non-deliverable forward contract.
The fair value estimate of the non-deliverable forward contract is significantly influenced by observable
inputs, in particular, by the market value of the shares which was RR 0.7264 as at 31 December 2017
(Note 19).
(b) Assets and liabilities not measured at fair value but for which fair value is disclosed
Financial assets carried at amortised cost. The Group considers that the fair value of cash (Level 1 of the
fair value hierarchy), cash equivalents and short-term deposits (Level 2 of the fair value hierarchy), short-
term accounts receivable (Level 3 of the fair value hierarchy) approximates their carrying value. The fair
value of long-term accounts receivable, other non-current and current assets is estimated based on future
cash flows expected to be received including expected losses (Level 3 of the fair value hierarchy); the fair
value of these assets approximates their carrying value.
56
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
Liabilities carried at amortised cost. The fair value of floating rate liabilities approximates their carrying
value. The fair value of bonds is based on quoted market prices (Level 1 of the fair value hierarchy). Fair
value of the fixed rate liabilities is estimated based on expected cash flows discounted at current interest
rates for new instruments with similar credit risk and remaining maturity (Level 3 of the fair value hierarchy).
The fair value of current liabilities carried at amortised cost approximates their carrying value.
As at 31 December 2017 fair value of bonds exceeded their carrying value by RR 1,073 million. As at 31
December 2016 fair value of bonds exceeded their carrying value by RR 92 million.
As at 31 December 2017 the carrying value of non-current fixed rate debt was RR 39,396 million and
exceeded their fair value by RR 925 million. As at 31 December 2016 the carrying value of non-current fixed
rate debt was RR 103,817 million and exceeded their fair value by RR 4,705 million.
Note 33. Presentation of financial instruments by measurement category
The following table provides a reconciliation of classes of financial assets with the measurement categories
of IAS 39 Financial instruments: Recognition and Measurement and information about the rest of special
funds on the accounts of the Federal Treasury as at 31 December 2017 and 31 December 2016:
As at 31 December 2017
Assets
Other non-current assets (Note 10)
Promissory notes
Long-term loans issued
Available-for-sale financial assets
Trade and other receivables (Note 12)
Trade receivables
Other financial receivables
Other current assets (Note 14)
Special funds
Deposits
Short-term loans issued
Cash and cash equivalents (Note 11)
Total financial assets
Non-financial assets
Total assets
As at 31 December 2016
Assets
Other non-current assets (Note 10)
Promissory notes
Long-term loans issued
Net settled derivatives
Available-for-sale financial assets
Trade and other receivables (Note 12)
Trade receivables
Other financial receivables
Other current assets (Note 14)
Special funds
Deposits and promissory notes
Short-term loans issued
Net settled derivatives
Cash and cash equivalents (Note 11)
Total financial assets
Non-financial assets
Total assets
Loans and
receivables
Available-for-sale
financial assets
10,392
9,860
532
-
37,369
34,707
2,662
4,244
3,429
790
25
70,156
122,161
-
-
-
-
-
18,495
-
-
-
-
-
-
-
-
18,495
-
-
Loans and
receivables
Available-for-sale
financial assets
8,838
8,491
332
15
-
35,268
32,747
2,521
8,118
3,507
4,292
310
9
67,354
119,578
-
-
57
-
-
-
-
21,181
-
-
-
-
-
-
-
-
-
21,181
-
-
Total
10,392
9,860
532
18,495
37,369
34,707
2,662
4,244
3,429
790
25
70,156
140,656
887,595
1,028,251
Total
8,838
8,491
332
15
21,181
35,268
37,747
2,521
8,118
3,507
4,292
310
9
67,354
140,759
842,687
983,446
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2017
(in millions of Russian Rubles unless noted otherwise)
As at 31 December 2017 financial liabilities of the Group valued at fair value are represented by the non-
deliverable forward contract for shares in the amount of RR 20,716 million (Note 19) (31 December 2016:
there were no liabilities represented by a non-deliverable forward).
All other financial liabilities of the Group are carried at amortised cost and are represented mainly by the
current and non-current debt (Note 18), trade payables, accounts payable under factoring agreements and
other accounts payable (Note 21).
Note 34. Subsequent events
Eurobond issue. In February 2018 the Group placed Eurobonds, issued by the special purpose company
RusHydro Capital Markets DAC. The volume of the issue was RR 20,000 million. The term of the bonds is
3 years, the coupon rate is 7.4 percent per annum. VTB Capital, JP Morgan, Gazprombank and Sberbank
CIB acted as joint lead managers of the issue. The placement and listing of the Eurobonds took place on the
Irish Stock Exchange under Reg S rule. Eurobonds could have been partly purchased by government-
related entities.
Termination of guarantees. In February 2018 the Group signed an agreement on the termination of the
surety agreement with SC Vnesheconombank with regard to performance by PJSC Boguchanskaya HPP of
its obligations under the loan agreement (Note 29).
58
Appendix No 17. Internal Audit Committee conclusion of the PJSC
RusHydro based on the results of the audit of financial and economic
activities for 2017
Moscow April, 14, 2018
In accordance with the PJSC RusHydro Audit Commission decision (minutes of the meeting of the Audit
Commission No. 1 dated August 16, 2017) financial and economic activities audit PJSC RusHydro
(hereinafter - the Company) for the period from January 1, 2017 to December 31, 2017 has carried out.
The audit was carried out by the members of the Audit Committee of PJSC RusHydro exercising their
powers on the basis of the decision of the General Meeting of Shareholders from June 26, 2017, consisting
of:
1. Repin Igor Nikolayevich (Chairman),
2. Annikova Natalia Nikolaevna,
3. Zobkova Tatyana Valentinovna,
4. Kostina Marina Alexandrovna,
5. Simochkin Dmitry Igorevich. (secretary).
The Commission carries out its activities in accordance with the Russia legislation norms, PJSC RusHydro
Charter and Audit Commission Regulation. PJSC RusHydro Audit Commission Members do not own shares
in the Company, they do not hold positions in the Company's management bodies.
The main objectives of the audit were to obtain reasonable assurance that:
- the data contained in the reports and other financial documents of the Company are reliable;
- accounting and presentation of financial statements were carried out in compliance with the requirements
of the current legislation and local regulations of the Company;
- financial and economic activities were conducted in compliance with the interests of the Company and its
shareholders (participants).
Executive body of the Company is responsible for compliance with the Russian Federation legislation in the
conduct of financial and business operations, conduct of activities taking into account the interests of the
Company and its shareholders and the presentation of reliable financial statements.
The audit was carried out on a selective basis and included the examination on the basis of testing of
evidence supporting the importance and disclosure in the financial statements of information on the financial
and economic activities of the Company in order to obtain reasonable assurance that the annual report and
accounting (financial) statements for 2017 does not contain significant distortion.
During the audit, the following issues were also analyzed.
I. SHAREHOLDER CONTROL TASKS
Audit of the Company's Annual Report for 2017
The Group’s Annual report contains all the main points required in the resolutions of the Government of the
Russian Federation on this document and recommended by the Code of Corporate Governance.
The disclosure of information in the Group's Annual Report for 2017 is much more than required by Russian
regulations and recommendations. For example, the Annual Report includes such sections as the system of
prevention and liquidation of natural disasters and emergencies, social and environmental responsibility,
interaction with stakeholders.
The analysis of the Annual report is given in the Act of the Audit Commission.
1. Verification of the fulfillment of instructions of the President and the Government of the Russian
Federation on the issue of import substitution in the procurement of the Company
• The Directive of the Government of the Russian Federation No. 1346-P13 of 05.03.2015 on the
development of a corporate import substitution plan (the Roadmap for import substitution under the Long-
Term Development Program) for the period 2015-2020 is basically implemented by the Company. However,
the Company has not developed a set of measures aimed at a planned and phased replacement of purchases
249
of foreign products (works, services), purchase of Russian products (works, services) equivalent for
technical characteristics and consumer properties for the period from 2016 to 2017.
• The actual value of the share of purchases of imported equipment in the total volume of purchases for 2017
(22%) is well below the target level (52%) and 14% less than the same indicator for 2016 (36%). Moreover,
the target level of the purchase share was sustained for all equipment groups (maximum value of 35.3% for
hydro turbine, hydromechanical, auxiliary equipment), except for software (93%).
• The breakdown of the actual share of the purchase of imported equipment into two components (the
Company itself - a legal entity and its subsidiaries and affiliated companies) is not provided for checking the
volumes of imported equipment purchased by the Company.
• In the activities of the Group on import substitution, the Ministry's recommendations are mainly taken into
account. However, the Strategic Risk Management Plan of the Company for 2016-2017 does not consider
the risk of dependence on foreign products, implemented in the event of the adoption of appropriate
sanctions against the Russian Federation. The Coordination Body that manages the process of import
substitution is absent in the Company. The integral indicator of the evaluation of the results of the
implementation of the activities of the Import-Substitution Plan is not applied. The Company's website does
not separately publish a list of imported products (works, services) recommended to Russian companies for
development.
The analysis of import substitution in procurement of the Company is given in the Act of the Audit
Commission.
2. Verification of the implementation of the directives of the Government of the Russian Federation,
instructions of the President and the Government of the Russian Federation
Based on the analysis of the materials submitted during the audit, the Audit Commission concluded that, in
general, the Company developed measures aimed at the implementation of the directives of the Government
of the Russian Federation, instructions of the President of the Russian Federation and the Government of the
Russian Federation, and work was carried out properly to implement them.
A selective analysis of the implementation of the directives of the Government of the Russian Federation,
instructions of the President and the Government of the Russian Federation by the Company is given in the
Act of the Audit Commission.
3. Verification of the report on transactions with interest
In our opinion, the data contained in the Report on PJSC RusHydro in 2017 in terms of interested
transactions are reliable.
4. Accounts receivable and payable of the Company
The Audit Commission verified the dynamics of accounts receivable and accounts payable. Violations and
facts of providing false information were not revealed. The study of accounts receivable and payable is
considered in more detail in the Act of the Audit Commission.
5. Implementation of corporate governance principles (implementation of the Corporate Governance
Program)
The Audit Commission examined the Report on Observance of the Principles and Recommendations of the
Corporate Governance Code and internal documents of the Company for their compliance with the best
practices of corporate governance and the provisions of the Corporate Governance Code (hereinafter - the
Code) recommended by the Bank of Russia.
It can be stated that, in practice, the recommendations of the Code recommended by the Central Bank of
Russia are largely implemented. In comparison with 2016 the level of implementation of recommendations
has increased.
A number of criteria with an assessment of implementation are "not respected", "partially observed" has
passed into the category of "respected".
The Company plans to conduct corporate actions that will increase the level of implementation of the Code's
recommendations, in particular, the Company's internal documents will be amended.
The introduction of the principles of corporate governance is considered in more detail in the Act of the
Audit Commission.
party
II. VERIFY FINANCIALLY-ECONOMIC ACTIVITIES OF THE COMPANY AND ITS
ANNUAL ACCOUNTS FOR 2017
250
Report on financial and economic activities
The results of the Company's activity for the year 2017 demonstrate a decrease in the efficiency of the
management's work to reduce costs from conventional activities, compared to the previous year. Thus, with
revenue growth of 26%, the cost price increased by 49%, which led to an increase in gross profit by 4%, to
60.9 billion rubles. At the same time, profitability on gross profit was 42% (in 2016 this figure was 51%).
Revenues from sales of electricity increased by 2% (to 78.9 billion rubles), capacity - by 78% (to 65.4
billion rubles), thermal energy decreased by -7% (to 0.015 billion rubles).
The total amount of management costs in 2017 amounted to 7,567 million rubles. (in 2016 - 6,004 million
rubles). Those. growth was 26%.
Net profit in 2017 amounted to 36,149 million rubles, which is 13.7% less than in the previous year.
Profitability for net profit was 25%. In 2016, this figure was 36%.
Conclusions/Recommendations
Violations of regulatory acts of the Russian Federation of an order of conducting accounting and submission
of financial statements, and also legal acts of the Russian Federation when conducting financial and
economic activities, which could materially affect the results of activities of PJSC RusHydro for 2017, is not
revealed.
In our opinion, the Annual report and Annual accounting (financial) statements for 2017 in the Report of
PJSC RusHydro for 2017, as well as interested party transactions, the financial position and results of
financial-economic activities of the company for the period from 01/01/2017 to 12/31/2017 are reliable.
However, the Company is advised, according to Accounting Rule 10/99, to disclose information on
administrative costs in public statements.
The Audit Commission analyzed other aspects of the Company's activities, in particular, the Audit
Commission examined the relationship between PJSC RusHydro and JSC TC RusHydro (100% subsidiary
of the Company). The cost of services rendered to the Company amounted to 1,433 million rubles. (2017).
Contracts concluded between PJSC RusHydro and PJSC RusHydro were checked, the prices for services
were compared with the ones on the market. The competitive documentation of competitions on rendering
of services was studied. Conversations were held with contest participants who lost the contest, in order to
identify shortcomings and violations. There are no violations, at present the terms of cooperation can be
recognized as market and profitable for the Company.
The Audit Commission is recommended to the new composition of the Audit Commission of PJSC
RusHydro approved by the annual general meeting of shareholders PJSC RusHydro following the results of
2017, during the audit of financial and economic activities of PJSC RusHydro, including an analysis of the
fulfillment of the requirements of the Audit Commission of PJSC RusHydro, internal and external auditors,
analysis of the implementation of the alienation plan for non-core assets of PJSC RusHydro.
Member of the Audit Commission
PJSC RusHydro Kostina M.A.
Member of the Audit Commission
PJSC RusHydro Annikova N.N.
Member of the Audit Commission
PJSC RusHydro Zobkova T.V.
Secretary of the Audit Commission
PJSC RusHydro Simochkin D. I.
Chairman of the Audit Commission
PJSC RusHydro Repin I.N.
251
Appendix No 18. Independent Limited Assurance Report, providing
limited confidence in the qualitative and quantitative information in the
PJSC RusHydro’s Annual report for 2017
Independent Limited Assurance Report to the Directors of
Public Joint Stock Company Federal Hydro-Generating
Company – RusHydro (PJSC RusHydro)
Introduction
We have been engaged by management of PJSC RusHydro to provide limited assurance on the selected
information described below and included in the Annual report (including information on Sustainable
Development) of PJSC RusHydro (“Report”) for the year ended 31 December 2017.
The selected subsidiaries (“RusHydro Group”i) are listed in the Group structure section of the Report.
Selected Information
We assessed the qualitative and quantitative information that is included in the «GRI Standards
Compliance Table» for standard disclosures in environmental, workforce, safety and socio-economic
areas in the reporting scope (the “Selected Information”). The scope of our limited assurance
procedures was limited to Selected Information for the year ended 31 December 2017.
Reporting Criteria
We assessed the Selected Information using Sustainability Reporting Guidelines of the Global
Reporting Initiative (GRI) and GRI Electric Utilities Sector Supplement (collectively, GRI Standards).
We believe that these criteria are appropriate given the purpose of our limited assurance engagement.
PJSC RusHydro responsibilities
Management of PJSC RusHydro is responsible for:
designing, implementing and maintaining internal systems, processes and controls over
information relevant to the preparation of the Selected Information that is free from material
misstatement, whether due to fraud or error;
establishing objective reporting criteria for preparing the Selected Information;
measuring and reporting the Selected Information based on the reporting criteria; and
the accuracy, completeness and presentation of the Selected Information.
i The term “RusHydro Group” in this Report relates only to PJSC RusHydro and its selected subsidiaries included in the Report and is not
equivalent to the similar term used in the Consolidated IFRS financial statements.
AO PricewaterhouseCoopers Audit
White Square Office Center 10 Butyrsky Val Moscow, Russia, 125047
T: +7 (495) 967-6000, F:+7 (495) 967-6001, www.pwc.ru
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
Our responsibilities
We are responsible for:
planning and performing the engagement to obtain limited assurance about whether the
Selected Information is free from material misstatement, whether due to fraud or error;
forming an independent conclusion, based on the procedures we have performed and the
evidence we have obtained; and
reporting our conclusion to the management of PJSC RusHydro.
This report, including our conclusions, has been prepared solely for management of PJSC RusHydro in
accordance with the agreement between us, to assist management in reporting on RusHydro Group
sustainability performance and activities. We permit this report to be disclosed in the Report for the
year ended 31 December 2017, to assist management in responding to their government
responsibilities by obtaining an independent limited assurance report in connection with the Selected
Information. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than management of PJSC RusHydro for our work or this report except where terms are
expressly agreed in writing and our prior consent in writing is obtained.
Professional standards applied and level of assurance
We performed a limited assurance engagement in accordance with International Standard on
Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of
Historical Financial Information’, issued by the International Auditing and Assurance Standards
Board. A limited assurance engagement is substantially less in scope than a reasonable assurance
engagement in relation to both the risk assessment procedures, including an understanding of internal
control, and the procedures performed in response to the assessed risks.
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of Ethics for
Professional Accountants issued by the International Ethics Standards Board for Accountants, which is
founded on fundamental principles of integrity, objectivity, professional competence and due care,
confidentiality and professional behaviour, together with the ethical requirements of the Auditor’s
Professional Ethics Code and Auditor’s Independence Rules that are relevant to our assurance
procedures in the Russian Federation.
Our firm applies International Standard on Quality Control 1 and accordingly maintains a
comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
Work done
We are required to plan and perform our work in order to consider the risk of material misstatement of
the Selected Information. In doing so, we:
made enquiries of RusHydro Group management;
conducted interviews of personnel responsible for sustainability reporting and data collection
(interviews were held in Moscow);
performed analysis of the relevant policies and basic reporting principles and gaining an
understanding of the design of the key structures, systems, processes and controls for managing,
recording and reporting the Selected Information;
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
2
performed limited substantive testing of the selected information on a selective basis of the
Selected Information to check that data had been appropriately measured, recorded, collated
and reported; and
reviewed the Selected Information for compliance of the disclosures with the requirements of
GRI Standards.
Reporting and measurement methodologies
There are no globally recognised and established practices for evaluating and measuring the Selected
Information. The range of different, but acceptable, techniques can result in materially different
reporting outcomes that may affect comparability with other organisations. The reporting criteria used
as a basis of RusHydro Group sustainability reporting should therefore be read in conjunction with the
Selected Information and associated statements reported on PJSC RusHydro’s websiteii.
Limited assurance conclusion
Based on the procedures we have performed and the evidence we have obtained:
nothing has come to our attention that causes us to believe that the Selected Information for the
year ended 31 December 2017 has not been prepared, in all material respects, in accordance
with the requirements of GRI Standards; and
nothing has come to our attention that causes us to believe that the Selected Information does
not meet the Core requirements in accordance with the Guidelines of GRI Standards.
28 April 2018
Moscow, Russian Federation
A. S. Ivanov, certified auditor (licence no. 01-000531),
AO PricewaterhouseCoopers Audit
Audited entity: PJSC RusHydro
Independent auditor: AO PricewaterhouseCoopers Audit
Certificate of inclusion in the Unified State Register of Legal Entities
issued on 26 December 2004 under registration № 1042401810494
State registration certificate № 008.890, issued by the Moscow
Registration Chamber on 28 February 1992
660017, Krasnoyarsk Region, Krasnoyarsk, Dubrovinskogo str., 43,
bld. 1
Certificate of inclusion in the Unified State Register of Legal Entities
issued on 22 August 2002 under registration № 1027700148431
Member of Self-regulated organization of auditors «Russian Union of
auditors» (Association)
ORNZ 11603050547 in the register of auditors and audit
organizations
ii The maintenance and integrity of the PJSC RusHydro website is the responsibility of the directors; the work carried out by us does not involve
consideration of these matters and, accordingly, we accept no responsibility for any differences between the selected information on which the
assurance report was issued or the assurance report that was issued and the information presented on the PJSC RusHydro website.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or
opinions, the original language version of our report takes precedence over this translation.
3
Appendix No 19. Сonsideration of stakeholders’ recommendations given at the Public Hearings in 2017
№
Stakeholders’ recommendations
PJSC RusHydro’s response
1
2
3
4
5
6
7
8
9
Disclose information on RusHydro's interaction with trade union organizations in more
detail.
Supplement the Report with information on RusHydro's participation in the sectoral
electricity tariff agreement, including the conduct of a social dialogue with the
Company's employees on the implementation of the agreement, as well as the impact of
this dialogue on social policy in the Group.
To disclose information on RusHydro participation in the national qualification system
reform and in the development of professional standards in the electric power industry.
To disclose information on the PJSC RusHydro participation in supporting the
WorldSkills professional championship taking into account the upcoming WorldSkills
World Cup in Kazan in 2019.
Consider the issue of conducting a public (stakeholder) assurance report in the next
reporting cycle.
Disclose information about the charitable activities and projects of RusHydro in more
detail, in particular, the support of the Charitable Foundation Vera, as well as
RusHydro's plans for charity for 2017.
Describe the Company's activities aimed at reducing greenhouse gas emissions within
the overall strategy in more detail, including in the Far East, in the Report, and to
indicate which measures are used to reduce emissions (for example, installation of solar
panels, switching from coal to gas and so on).
Link the Company's investment plans and projects and the results of reducing
greenhouse gas emissions.
Provide a brief overview of RusHydro's plans to implement an overall strategy for
reducing greenhouse gases.
10 Add information about RusHydro's key investment projects, especially those being
implemented in the Far Eastern region.
It is considered in section Personnel policy.
It is considered in section Collective agreements.
Due to the fact that the Company participated in the development of professional standards
from 2013 to 2016 inclusive, the inclusion of information on this in the text of this Report
seems inadvisable.
It is considered in section Plans for the development of the personnel management system for
2018.
The issue of holding a public (stakeholder) assurance will be considered when developing the
report for 2018 concept.
It is partially considered. Within the charitable activities, the Company implements more
than a hundred different charity projects with charitable foundations and non-commercial
organisrtions. Allocate one of the funds is inappropriate.
In the report for 2018 the Company plans to disclose plans for charity for the next reporting
period.
It is considered in section Emissions.
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
It is considered in section Construction of production facilities, Investment activity.
11 Disclose information on investment plans and the expected impact of RusHydro's key
It is considered in section Construction of production facilities.
investment projects on regions of presence (taxes, new jobs, etc.).
12 Disclose information on the environmental impact and investment activities of the
It is considered in section Investment activity, Environmental impact.
13
14
Company in more detail.
Identify the reasons for the reduction in the number of personnel in the Company, to
clarify whether there are programmes for conversion (retraining, employment) for the
released workers who were affected by the optimization program.
Provide information on RusHydro's long-term plans to develop alternative renewable
energy and increase the share of RES in the overall electricity production structure of the
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
It is considered in section Renewable energy sources.
255
Group.
15 Consider the issue of preparing a video for the preparation of the report, which provides
basic information on the Sustainable Development Report.
16 Disclose information about the results and activities on the anti-corruption activities of
17
RusHydro in more detail.
Identify the link between general corporate KPIs and KPIs of the CEO and top
management of RusHydro.
18 Add an external auditor's opinion on the Report.
19 Disclose information on plans for the corporate governance system development and to
increase the evaluation within the corporate governance rating.
It is not considered. The company additionally prepares an interactive (electronic) version of
the report, so, preparation of the video is superfluous.
It is considered in section Anti-Corruption Efforts.
It is considered. For the KPI system of the Company, the term general corporate KPIs is not
applicable. Earlier in 2017, the KPI system provided for the existence of KPIs of the
Company, which extended to all employees, including the Chairman of the Management
Board - CEO and members of the Management Board of the Company. Since 2017, KPIs of
the Long-term Development Program and KPI of top management have been linked (the
information is disclosed in the section Key Performance Indicators).
It is considered – the Report includes the conclusion of an independent auditor of JSC
PricewaterhouseCoopers Audit.
It is considered in section Corporate governance.
20 Disclose information on the Company's planned activities for the development of
It is considered in section Improvement of internal control and risk management system.
internal audit and risk management systems.
21 Describe in the Report how cost reduction affects the key risks and performance of the
Company.
22 Describe the impact of R & D development and R & D on the Company's key risks.
23
24
Specify the goals of RusHydro's activities in the field of labour protection and industrial
safety, charitable activities.
Specify the payback period for projects in the field of energy efficiency.
25 Describe the effects in terms of sustainable development that the implementation of the
Company's innovative projects (for example, projects on the use of ash-and-slag
disposal) brings.
26 To specify international conventions, standards, international regulatory requirements in
the field of environmental protection, which are guided by the Company in its activities.
Including, how the development of the Environmental Policy of PJSC RusHydro was
taken into account the recommendations of the EBRD on hydropower, issued in 2016.
27 Explain the Company's impact on the environment not only through the indication of the
impact of reservoirs, but also dams. Including, pay attention to the problems of
transformation of the water regime, temperature pollution, generation of greenhouse gas
emissions (including methane). Provide information on the assessment of this impact
and measures to reduce it.
28 Describe the results of the work of the RusHydro Working Group on Global Climate
Change.
29 To display in the report plans for the further development of energy in the Republic of
Sakha (Yakutia).
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
It is considered at the beginning of the relevant sections
It is not considered. There is no methodology for separate cost accounting and evaluation of
the recoupment of energy efficiency program activities with an indirect effect. The issue will
be considered when developing the report for 2018 concept.
It is considered in sections Construction of production facilities, Investment activities,
Environmental measures.
It is partially considered in section Environmental responsibility. Information on the EBRD
recommendations consideration will be disclosed in the report for 2018.
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
It is partially considered in sections Investment activity, Renewable energy sources.
256
30 Give more details about the Company's activities in the fight against terrorism.
31
Specify data on the ecological footprint of the HPP, as well as on the change in the
ecological footprint based on the results of increasing the HPP's productivity.
Provide additional quantitative and qualitative indicators of the Company's performance
in a number of areas that are included in the detailed table on environmental costs:
sewage treatment, rehabilitation of lands, surface and groundwater, noise and vibration
effects.
Provide information on the ratio of the negative impact of RusHydro on biodiversity and
measures for replenishing biodiversity, as well as on the ratio of invested funds and the
effectiveness of biodiversity conservation project.
32
33
34 Clearly formulate long-term goals for each area of charitable activity, calculate the
effectiveness of charitable activities of RusHydro.
35
Indicate whether minority shareholders / representatives of minority shareholders are
involved in sustainable development and CSR activities and whether the Company
receives feedback from them in this part.
37
36 Take into account the recommendations on corporate governance, including information
disclosure, from the study of the Association of Professional Investors Evaluation of
corporate governance in public joint-stock companies with participation of the Russian
Federation, whose shares are traded on the organized securities market, issued in 2017.
To provide more complete information about the impact of charitable projects on the
support of educational institutions on the development of the staff potential of the Group
(for example, the share of graduates of partner universities and departments employed in
RusHydro).
Provide more complete information on the Company's participation in the projects of the
Association of Hydropower of Russia, including projects in ecology and environmental
protection field.
38
It is considered in section Risks and opportunities.
This recommendation will be possibly taken into account when preparing reports in the next
reporting periods.
It is partially considered in section Environmental measures.
It is considered in section Biodiversity conservation activities.
It is not considered. The purposes of charitable activities in the report are shown. In some
areas of charitable activities, goals are not set. There is no recognized methodology for
calculating the effectiveness of charitable activities.
It is partially considered. Feedback to shareholders is carried out by interviewing their
opinions on the report when it is disclosed on the website on the Internet.
Since the Annual Report is subject to approval at the Annual General Meeting of
Shareholders, feedback will be additionally received during the AGM.
It is partially considered in section Corporate governance.
It is partially considered in section Social responsibility. The full information will be
disclosed in the report for 2018.
This will be fully considered when preparing report for 2018.
Appendix No 20. Сonsideration of stakeholders’ recommendations given at the Public Hearings in 2018
(Report for 2017 Draft)
№
1
Eliminate information on corporate governance duplication.
Stakeholders’ recommendations
2
In the next reports, for even better disclosure of the topic of remuneration of management bodies, it makes sense to
focus on global research on this topic and directives, in particular - the second directive on the rights of shareholders
PJSC RusHydro’s response
It is partially considered in Chapter 3 "Corporate Governance".
In preparing the report for 2018, the structure and volume of
the section on corporate governance will be analyzed in order
to disclose only the essential information and information
required by regulators.
This recommendation will be possibly taken into account when
preparing reports in the next reporting periods.
257
in the European Union.
In the next reports it is proposed to disclose in details information on procedures for recognizing the Board of
Directors members independence (independent directors).
To disclose in the next reports information on utility connection of small and medium-sized businesses, including
the cost of utility connection and the prospects for reducing this cost.
Give more detailed description of the plan for the development of renewable energy in the Far Eastern Federal
District.
Show the connection between the Group's ongoing activities with the universities and the Company’s staffing.
Add to the Report information on professional standards development in the power industry and RusHydro Group’s
participation in this activity.
Give more details on the work with RES, including within the framework of the R & D programmes, and also - how
this affects the specialised training of personnel.
Include in the report information on the conclusion of agreements between employers and trade unions, as well as on
the qualification centers establishment and operation.
Add to the report information on social partnership and work on the implementation of collective agreements.
Add information about the ongoing scientific and technological developments in the Group for the development of
the grid infrastructure of the Far East, related to the specific climate of this region.
Give the report an interpretation of understanding human rights in the Company's activities framework.
In prospect, when disclosing the theme of sustainable development, the Company should also focus on the
methodology for disclosing indicators of sustainable development, which Federal State Statistics Service began to
develop to describe Russia's progress in achieving the UN Sustainable Development Goals.
Include in the report information on an independent evaluation of the Board of Directors results.
Show in the report information on the amendment of the Regulation on the payment of members of the Board of
Directors remuneration, which was adopted in view of the independent expert evaluation.
To provide more information on cooperation with international organizations - the international hydropower
association, etc.
In more detail, in the next report, the information on the Value Growth Plan, including the results of its
implementation.
Provide information on the LDP implementation.
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
It will be considered when preparing the report for 2018.
It will be considered when preparing the report for 2018.
This recommendation will be possibly taken into account when
preparing reports in the next reporting periods.
It will be considered when preparing the report for 2018.
Regarding to the fact that the Company participated in
standards development from 2013 to 2016 inclusive, inclusion
information on this in the Annual report for 2017 seems to be
inexpedient.
It will be considered when preparing the report for 2018.
It is partially considered in Chapter 2.4.3 "Social policy" and
will be fully considered when preparing the report for 2018.
It is considered in Chapter 2.4.3 "Social policy".
It will be considered when preparing the report for 2018.
This recommendation will be possibly taken into account when
preparing reports in the next reporting periods.
This recommendation will be possibly taken into account when
preparing reports in the next reporting periods. (after the
development of these indicators by Federal State Statistics
Service).
It is considered in Chapter 3 "Corporate Governance".
It is considered in Chapter 3 "Corporate Governance".
It will be considered when preparing the report for 2018.
It will be considered when preparing the report for 2018.
It is considered. The information is provided in Appendix 9 to
the LDP
this Annual
implementation in 2017 is provided in Appendix 10.
the audit assurance of
report,
258
Appendix No 21. Certificate of Public Certification of the Report by the
RUIE Council on Non-Financial Reporting
259
The Conclusion of RSPP Non-Financial Reporting Council on the results of consideration of
PJSC RusHydro Annual Report for 2017 with a view to public certification
Non-financial Reporting Council of the Russian Union of Industrialists and Entrepreneurs (RUIE) (hereinafter – the
Council), established in accordance with the resolution of the Administrative Office (Resolution dated 06/28/2007),
considered upon an initiative of PJSC RusHydro (hereinafter - the Company, RusHydro Group, RusHydro) PJSC
Federal hydrogenerating company – RusHydro Annual Report for 2017 (hereinafter - Report).
The Company appealed to the RUIE with a request to organize the Council’s public endorsement, which forms an
opinion on the relevance and completeness of the disclosure statement in the non-financial information about the
Company’s achievements from the perspective of the Social Charter of the Russian business, containing the principles
of responsible business practices and comply with the UN Global Compact provisions, Russian and international
standards of social responsibility.
During the period from May, 4 to May, 21, 2018 the Council members studied the Report’s content presented by
PJSC RusHydro and made the present Judgment, in accordance with the Regulations of public certification of
corporate non-financial reports, approved by the Council.
The Council members have the necessary competence in the field of corporate responsibility, sustainable development
and non-financial reporting, they work in compliance with the ethical requirements of independence and objectivity of
the evaluations, express their personal expert’s opinion and not the opinion of organizations they represent.
The Report was assessed based on the following criteria for completeness and relevance of the information contained
therein:
Information is considered relevant as it reflects the activity of RusHydro Group as for the principles of responsible
business practices implementation disclosed in the Social Charter of Russian Business (http://eng.rspp.ru/ ).
Completeness implies that the company specifies its operations in the Report- values and strategic guidelines,
underlying systems and management structure, key achievements and results of operations, principles of interaction
with stakeholders.
The Company’s use of international reporting system is taken into consideration in the framework of public
certification proceedings. However, confirmation of compliance with the reports of international reporting systems is
beyond the scope of this Conclusion.
RusHydro shall be liable for the information and statements contained in the Report. The reliability of the evidence
contained in the report is not a matter of public endorsement.
This Conclusion is made for PJSC RusHydro, the Company may use this Opinion as for its internal purposes and for
the purpose of communications with stakeholders by publishing it without any changes.
Conclusions
In terms of the analysis of the Report, as well as public information on the official corporate website of the Company,
and collective discussion of the results of an independent Report assessment, drawn by the RUIE members of Non-
Financial Reporting Council, the Council confirms the following:
PJSC Federal hydrogenerating company – RusHydro Annual Report for 2017 contains essential information,
covers key areas of responsible business practices in accordance with the principles of the Social Charter of the
Russian business, and completely enough discloses information about the Company’s activities in these areas.
The RUIE Council’s recommendations on the basis of public certification of the Corporate social responsibility
and sustainability report by RusHydro Group for 2016 are reflected in the Report for 2017. The Report
includes a brief description of the KPI management system, which contains a number of indicators for
sustainable development, as well as information on the results of its implementation. The content and results of
the Company's interaction with organizations, including international ones, on issues of sustainable
development are more fully covered, information on the Company's purchases with the participation of SMEs
has been supplemented.
The Company’s Report for 2017 contains important information regarding the following aspects of responsible
business practices:
As for economic freedom and responsibility. The Report covers the RusHydro Group Strategy, the mechanisms and
main results of its implementation, including key financial and operating performance indicators. It is reported the
completion of significant projects and the commissioning of generating facilities, the construction of power plants in
the Far East, the implementation of measures to reduce costs and improve operational efficiency. The mission,
corporate values and business model are reflected. The implementation of production, investment and innovation
programs is described, as part of the Company's Long-Term Development Program implementation in the reporting
year. RusHydro's corporate governance system was characterized and measures for its improvement in the reporting
year included information on an external assessment of compliance with the principles of the Corporate Governance
Code, as well as the Board of Directors activities. It is reported on the formation of a unified anti-corruption policy
and approval of the new edition of the Trust Line rules. The information on the risk management system and its
260
regulatory documents is presented. The KPI management system is described in detail. The approach of management
to the issues of safety, reliability and safety of hydraulic structures is highlighted, the key projects in this area and
plans for 2018 are listed. A measures system for the prevention and elimination of emergency situations is also
described. Information on the directions of sustainable development is presented, information is provided on the
participation of the Board of Directors and the Management Board of the Company in the consideration of key issues
in this area. There are listed UN Sustainable Development Goals-2030, which are especially significant for the
Company's activities. The main goals, objectives, corporate programs and activities of the Group to achieve these
goals are reported.
As for business partnership. The Report reflects the mechanisms of interaction with interested parties, a map of its
main stakeholders, updated on the basis of a survey of the Company's management, is presented. Within the
framework of interaction with the investment community and participants of the stock market to improve disclosure of
information the activities are described. Interaction with federal executive bodies, including development of normative
acts, participation of Company specialists in parliamentary hearings and other events on topics related to the activities
and prospects of the Company development is covered. It is noted that interaction with regional authorities was carried
out on the basis of agreements and memorandums. The main agreements with potential energy-intensive industrial
consumers are listed. It is reported on the formation on the corporate site of a special section for potential consumers.
Information on interaction with suppliers on the basis of the partnership program between RusHydro and SMEs in
procurement activities is presented. It is stated that the provisions of the Company's Environmental Policy are
included in the system of business relations with partners. International cooperation and partnership with electric
power companies and power equipment manufacturers are covered. Information on the Company's membership in
Russian and international industry organizations, as well as participation in the work of international governmental
and public organizations on topics related to the Company's activities are presented. Information on the current system
of continuous training of personnel, on programs for employees in the field of voluntary medical insurance, non-state
pension provision, improvement of housing conditions, health maintenance, sanatorium treatment and recreation for
employees and their children. Channels of information exchange within the organization, including the Trust Line, are
described, statistics of the receipt and consideration of applications for it are presented. It is reported that, as part of
the preparation of the Report, public hearings on the draft report with the participation of major stakeholder groups
representatives were reported.
As for human rights. The Report informs about the Company's strivings to the principles of the UN Global Compact
in the field of human rights, labour relations, environmental protection and combating corruption. It is reported on
compliance with the requirements of Russian legislation with regard to the social and economic rights of workers,
ensuring their material stability and social guarantees. Issues of observance of labour rights, including ensuring decent
wages of employees at a level higher than the average by regions of presence, are covered. It is reported on the
possibilities of exercising the right to freedom of association, the trade unions operating at most enterprises and
collective agreements that cover practically all employees of the Company.
As for environmental conservation. The Report shows that environmental responsibility is the most important
priority for the RusHydro Group. Information is provided on the development of a new version of the Environmental
Policy and organization of public hearings by the Company for its discussion with stakeholders. The management of
environmental impact on the environment, key environmental measures implemented within the framework of the
Technical Rehabilitation and Modernisation Programme are described. Data on total expenditures on environmental
protection are given. Environmental performance indicators for water use and impacts on water bodies, emissions and
wastes are included. Some of the activities of the Biodiversity Conservation Group are highlighted. It is reported on
the update of the Programme in the field of energy conservation and energy efficiency improvement for 2016-2020.
The results of energy saving measures are presented, energy saving by types of energy resources and plans for
increasing energy efficiency are shown. The Company's activities in the field of wind, solar and geothermal energy are
covered. The projects in the field of renewable energy sources of low power are listed, the costs for their
implementation are indicated. The indicators of the volume of own consumption by types of energy resources,
including non-renewable and renewable sources, are presented. Information is provided on RusHydro's cooperation
with international organizations on environmental protection and biodiversity conservation, supporting sectoral and
international initiatives to reduce the anthropogenic load on the environment. It reports on the Company's efforts in
shaping the lean model of consumer behaviour and projects implemented for this purpose.
As for the Company’s participation in local community development. The Report highlights RusHydro's
contribution to the development of presence regions through the construction and social infrastructure facilities
financing, the cities modernisation, and participation in solving the problems of finding employment for the local
population. Data on the payment of taxes to budgets of different levels in the dynamics are given. The indirect positive
influence of the Company's energy infrastructure on the growth of the population's welfare due to the new consumers
connected to the grids is also shown. It is reported on the existing agreements signed with the authorities of 12
regions. It is reported that the Company carries out charitable activities, guided by the Company's policy in this field.
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Named the main charitable projects in various areas, including the long-term charitable programme — Clean Energy.
It is reported on the development of corporate volunteering, the Company's support for the individual participation of
employees in various social projects. Information on expenses for charitable activities is also included.
Final provisions
In general, the 2017 Report of the RusHydro Group reflects the scale and strategy of the Company's operations, its
contribution to the development of the country's electric power and economy, management system, including
sustainable development, priorities in the field of corporate social responsibility. There is implemented an integrated
approach to the disclosure of information on economic, environmental and social aspects of activities. The practice of
interaction with stakeholders is presented, including one during the preparation of the Report.
The report is prepared using the standards of Russian and international practice of reporting in the field of sustainable
development (GRI Standards), as well as the energy industry protocol GRI, which ensures continuity of data and
comparability with other companies in the country and abroad. The disclosed material topics are identified using the
procedures described in the report.
The inclusion of expanded information on sustainable development key aspects in the PJSC RusHydro Annual Report
for 2017 reflects the Company's commitment to the principles of openness and transparency.
There are used various forms of independent evaluation of the Report (professional audit and public certification),
which demonstrates RusHydro's responsible attitude to the quality of the disclosed information.
Recommendations
Noting the advantages of PJSC Federal hydrogenerating company – RusHydro Annual Report for 2017, the Council
draw the Company’s attention to a number of significant stakeholder issues and the importance of full disclosure of
information and recommend considering them in the next reporting cycle. The Council notes that the
recommendations made on the analysis of previous reports RusHydro may be used in the further practice of the
Company’s financial statements.
The report includes a comparison of the Company's activities with the UN Sustainable Development Goals until 2030.
It is recommended to further develop this topic and more fully describe the relationship of the Group results to
progress towards global goals. In particular, this refers to the coverage of the Company's participation in the
development of local communities.
The RUIE Non-Financial Reporting Council’s assesses the report positively, supporting the Company’s commitment
to the principles of responsible business practices and noting the sequence in the development of the reporting process,
and hereby confirms that the RusHydro Group’s Corporate Social Responsibility and Sustainability Report for 2016
has successfully completed public certification.
The report contains the indicators presented in the dynamics, which characterize the financial and operational results
of the Company. It is recommended that this approach be more consistently applied to staff-related indicators. It
should also pay attention to the importance of including clear comments on the dynamics of indicators, especially in
the case of significant changes, including indicators reflecting issues of reducing the environmental burden.
Noting a significant amount of information in the Environmental Performance Report of the Company, it is
recommended to pay attention also to the specifics of the environmental impacts of hydropower and the assessment of
the energy efficiency of hydropower plants generating energy from the water flow.
The Report contains information on the procedures used by the Company in the process of identifying significant
topics, including taking into account the opinions of stakeholders on the results of the questionnaire during the
preparation of the Report. It is recommended to further describe these procedures in full in order to better understand
the approaches to the selection of participants in the process, and to expand the range of tools used to identify
significant topics and include relevant information in the reports. In particular, this may include issues and topics
identified in the course of regular interaction with stakeholders in various areas during the reporting period. It is also
useful to use as a guideline the basic documents in the field of sustainable development and social responsibility (the
Social Charter of Russian Business, the UN Global Compact, ISO 26000), as well as the priority themes of the
national and global agenda (for example, climate change and environment, increase in labour productivity,
development of human potential, etc.). This will ensure greater objectivity in selecting the material topics and priority
issues covered in the reports.
The Report provides information on the implementation of projects in various areas of the Company's activities within
the annual Charity and Sponsorship Programme. In the following reports, it is recommended to pay attention also to
the issues of the effectiveness of the projects being implemented, to evaluate their effectiveness and contribution to the
presence regions development.
Further attention should be paid to ensuring that the financial and non-financial aspects and the results of the Group's
activities are balanced in the reports, reflecting the key aspects of responsible business practices with sufficient
completeness.
RUIE Non-Financial Reporting Council
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Appendix No 22. Organizational structure of PJSC RusHydro
Chairman of the Board - CEO
The audit
Committee at the
Board of Directors
Economic planning
and
investments
unit
Member of
the
management
Board, first
Deputy
General
Director
productio
n
activities
unit
Member of
the
management
Board, first
Deputy
General
Director -
chief engineer
Capital
construction
engineering activities unit
and
Member of
the
management
Board, first
Deputy
General
Director
Interaction with
and
authorities
the
public,
administrative
support
international
cooperation unit
and
Strategy
and
innovation
unit
Member of
the
management
Board, first
Deputy
General
Director
Financial
and
corporate management
unit
Antiterrorist, economic,
information security unit
Internal Control and
Risk Management
unit
Personnel
managem
ent unit
Direct subordinate units
Deputy
General
Director for
economy,
investment
and
procurement
Deputy
General
Director for
scientific and
project
activities
Deputy
General
Director for
capital
construction
First Deputy
General
Director, state
Secretary
First Deputy
General
Director
Deputy
General
Director for
corporate and
legal Affairs*
Deputy
General
Director for
anti-terrorism
and economic
activities
Deputy
General
Director for
security*
Deputy
General
Director for
the Far East
The
Department of
corporate
accounting
and reporting
The
Department of
economic
planning,
investment
programs and
controlling.
The
operations
Department
The
Department of
design and
survey
complex
UK Hydro
The
Department of
capital
construction,
Alexander
Romanov
The
Department of
innovative
development
The
Department of
vzaimodeistviy
u with
authorities
and
international
activities
The Department
for work on the
wholesale
market of
electricity and
capacity, and
market analysis
The
Department of
procurement,
marketing and
pricing
The
Department of
development
and
standardizatio
n of
operational
processes
AO-
institutes
The
Department of
strategy and
IR
The corporate
Finance
Department
The corporate
Finance
Department
The
Department of
economic
security,
regime,
specific types
of works and
protection of
information
The center of
monitoring the
state of
protection and
operation of
installations
The internal
control and
risk
management
The internal
audit service
The
Department of
personnel
management
and
organizational
development
RAO ES of
the East
The Office Of
The Chairman
Of The Board -
General
Director
(Department)
*
The
Department of
information
technology
The
Department of
modernization
of equipment
Department of
industrial
safety and
labor
protection
SNRG
The Department
for corporate
governance and
property
management
The
Department of
public
relations
Legal
Department
126
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