APPENDICES
to 2018 Annual report
Content
Appendix No.1. Information on compliance with the Russian Corporate
Governance Code....................................................................................................1
Appendix No.10. Independent Assurance Report on
the Fulfilment of the Long-Term Development
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
Appendix No.11. Information Concerning Establishment of Unified
Treasuries in the Head Companies, Subsidiaries, and Affiliates. ...................179
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 ...........................................26
Appendix No.12. Information on the Results of the Implementation of
Executive Orders and Instructions issued by the President of the Russian
Programme of RusHydro Group for 2018 ......................................................176
Appendix No. 3. Information on participation in other organizations .......31
3.1 Information Concerning All Forms of the Company’s
Shareholding in Commercial Entities, including its Objectives,
Form and Financial Involvement, Basic Data on the Entities (Main
Statutory Activities, Earnings, Profit), and Efficiency Indicators, in
Federation, and Instructions issued by the Government of the Russian
Federation in 2018 ...................................................................................................180
Appendix No.13. Information about Legal Entities Controlled by the
Company that are of Material Significance ........................................................186
Particular, the Amount of Dividends Received for the Owned Shares
in the Reported Period .......................................................................................31
Appendix No.14. Information on Significant Transactions of the Company
and other Major Controlled Legal Entities .........................................................191
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 ............................................................................................36
Appendix No.15. Accounting statements and the Independent
Auditor’s audit report as of December 31, 2018
(in accordance with RAS) ........................................................................................197
3.3. Information Concerning Shares/Stakes Purchase Contracts made
by PJSC RusHydro in 2018, Indicating the Parties to the Contracts, their
Subject, Price, and other Terms .......................................................................37
Appendix No. 4. Information on the Decisions Adopted by RusHydro’s
Board of Directors in 2018 .....................................................................................39
Appendix No.5. Information on the Meetings of the Committees
under the Board of Directors .................................................................................87
Appendix No.6. Information on the Sale of Non-core Assets
of PJSC RusHydro for 2018....................................................................................132
Appendix No.7. Information on Pending Legal Proceedings
that may have a Significant Impact on the Activities
of RusHydro Group’s Companies.........................................................................135
Appendix No.8. Information Concerning the State Support Funds
Received by the Company in the Reporting Year, Including the
Amount of Subsidies Granted (in Rubles), Planned and Actual
Destinations of Funds as of the End of the Year ...............................................135
Appendix No.9. Report on the Long-term Development program
implementation of the RusHydro Group for the year of 2018 ......................136
Appendix No.16. 16 Consolidated financial statements prepared
in accordance with IFRS and an audit opinion for the year ended
December 31, 2018 and as of that date .............................................................263
Appendix No.17. Internal Audit Committee conclusion of the PJSC
RusHydro based on the results of the audit of financial and economic
activities for 2018 ......................................................................................................340
Appendix No.18. Сonsideration of stakeholders’ recommendations
given at the Public Hearings in 2018 (Report for 2017 Draft).........................346
Appendix No.19. Сonsideration of stakeholders’ recommendations
given at the Public Hearings in 2019 (Report for 2018 Draft) ........................347
Appendix No.20. Certificate of Public Certification of the Report
by the RUIE Council on Non-Financial Reporting ............................................348
Appendix No.21. Organizational structure of PJSC RusHydro ....................353
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.
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.
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.
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 extension of 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.
PJSC RusHydro does not observed the following principles of the Corporate Governance Code:
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 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.
1
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.
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
2018
Explanations of deviations from
the evaluation criteria
compliance with the principle of
corporate governance in 2018
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
for
the most
The company should create
favorable
its
possible
conditions
shareholders, enabling them to participate in
the general 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
under
discussion.
regarding
issues
the
1.1.2
Procedures for notification of the general
meeting and provision of materials for it
should enable the shareholders to properly
prepare themselves for participation therein.
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
large number of shareholders is recommended to support a
special
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
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.
2. In the message of the meeting provided the meeting venue
and documents required for admission to the premises.
3. The shareholders were provided with access to information
telephone
observed
partially observed
not observed
observed
partially observed
not observed
2
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
information about
its
materials, to pose questions to members of
the company’s executive bodies and Board of
directors, and to communicate with each
other.
the meeting and
1.1.4 There should be no unjustified difficulties
preventing shareholders from exercising their
right to demand that a general meeting be
the
convened, nominate candidates
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.
1.1.6 Procedures for holding a general meeting set
by
the company should provide equal
opportunity to all persons present at the
general meeting to express their opinions and
ask questions that might be of interest to
them.
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.
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.
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 is recommended to provide those shareholders
who are entitled to review the list of persons authorized to
participate in the meeting with the opportunity to review it
starting from the date when the company receives such
information.
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.
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).
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.
2. The company should invite candidates nominated to its Board
of directors and internal audit commission to attend the
such candidates are
respective general meeting
recommended to attend the same) so that shareholders will be
(and
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
shall provide
Paras. 1 and 3 are fully observed.
Para. 2 is partially observed.
With regard to paragraph 2, the
Company
the
following explanations:
Para. 2.7. The Regulation on the
procedure
and
holding the General Meeting of
the Company
Shareholders of
convening
for
3
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).
in
of
the
this
the fact
In
to participate
recommendation
that
the Chairman of
and
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, the Annual General
Meeting of Shareholders in 2018
was attended by the majority of
members of the Board of Directors,
the
including
the
Board of Directors
Audit
Chairman
addition,
Commission.
invitations
the
Meeting were sent to all candidates
for management and control bodies.
The deviation from the compliance
is
with
triggered by
the
Company, due to various reasons
(production,
organizational,
personal circumstances of each
candidate), cannot provide
the
mandatory presence of each and
every one candidate to management
each
and
shareholders' meeting. 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
and
shareholders'
shareholders
actual
opportunity to ask them questions.
In the future, the Company intends
to strive for the fullest possible
observance of this recommendation
of the Code.
meetings,
an
control
bodies
have
at
Shareholders should have equal and fair opportunities to participate in the profits of the company by means of receiving dividends.
1.2.
1.2.1 The company should develop and put in place
a
for
transparent and clear mechanism
determining the amount of dividends and
their payment.
1. The company has developed and disclosed its dividend policy
approved by the Board of Directors.
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
observed
partially observed
not observed
4
1.2.2 The company should not make a decision on
the payment of dividends if such decision,
without formally violating limits set by law,
is nevertheless unjustified from the economic
point of view and might lead to the formation
of false assumptions about the company’s
activity.
1.2.3 The company should not allow deterioration
of dividend rights of its existing shareholders.
1.2.4 The company should strive to rule out any
means through which its shareholders can
the company’s
obtain profit or gain at
and
dividends
other
expense
distributions of its liquidation value.
than
include
the consolidated
should
statements.
1. The dividend policy of the company should contain clear
indications of financial/economic circumstances which prohibit
the company from paying dividends.
indicators of
financial
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. 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 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.
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
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 management bodies and controlling
persons of the company, including conditions
to ensure that abuses by large shareholders
against minority shareholders.
1.3.2 The Company should not perform any acts
which would or could result in artificial
reallocation of corporate control therein.
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. 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.
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.
The shareholders should be provided with
reliable and efficient means of recording their
rights
the
opportunity to freely dispose of such shares in
a non-onerous manner.
1. The quality and reliability of the work performed by the
registrar of the company answers the requirements of the
company and its shareholders.
observed
partially observed
not observed
in shares as well as with
5
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.
observed
partially observed
not observed
2.1.1 The Board of Directors should be responsible
for decisions 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 development strategy and the main
business goals of the company.
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.
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
the company’s
performance in targeting indicators set forth by the company’s
strategy.
to conformity with
the
Policy
the
the
Regarding paragraph 1,
shall provide
Company
following explanations:
In accordance with the Charter of
the Company, the terms of the
contract of the sole executive body
shall be determined by the Board of
Directors or a person authorized by
the Board of Directors to sign an
employment contract. Besides, the
the Board of
competence of
Directors includes the authority to
approve
on
Remuneration and Compensation of
members of the Executive Bodies.
terms of contracts with
The
members of the Management Board
shall be determined by the sole
executive body based on the Policy
and
Remuneration
on
Reimbursement
Expenses
(Compensation) of members of
Executive Bodies approved by the
Board of Directors.
In accordance with the Regulations
on the Management Board, the
procedure
of
remuneration and compensation to
the Chairman of the Management
the
Board
and members of
Management Board
be
shall
determined by
the Board of
Directors of the Company.
payment
for
of
2.1.2 The Board of Directors should establish basic
long-term targets of the company’s activity,
evaluate and approve its key performance
indicators and principal business goals, as
well as evaluate and approve its strategy and
business plans in respect of its principal areas
of operations.
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
principles of and approaches to creation of the
1. The Board of Directors has determined the principles and
approaches to creation of the risk management and internal
observed
partially observed
6
risk management and internal control system
in the company.
control system in the company.
not observed
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 the risk management
and internal control system during the reporting period.
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.
2. During the reporting period the Board of Directors reviewed
matters related to the indicated policy (policies).
observed
partially observed
not observed
2.1.5 The Board of Directors should play a key role
in prevention, detection and resolution of
internal conflicts between the company’s
bodies, shareholders and employees.
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
course, and provides its shareholders with
unhindered access to its documents.
2.1.7 The Board of Directors should monitor the
company’s corporate governance practices
and play a key role in its material corporate
events.
1. The Board of Directors plays a key role in prevention,
detection and resolution of internal conflicts.
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.
1. The Board of Directors has approved a regulation on
information policy.
2. The company has appointed persons in charge of the
implementation (enforcement) of the information policy.
observed
partially observed
not observed
observed
partially observed
not observed
1. During the reporting period the Board of Directors reviewed
the corporate governance practices in the company.
observed
partially observed
not observed
2.2.
2.2.1
The Board of Directors should be accountable to the company’s shareholders.
Information about the Board of Directors’
work should be disclosed and provided to the
shareholders.
1. The annual report of the company for the reporting period
contains information regarding the directors’ attendance at
Board and committee meetings.
observed
partially observed
not observed
the
category of
shall provide
Regarding paragraph 1,2, the
Company
the
following explanations:
“key
Since
executives” was not defined and not
approved by the Board of Directors,
the
and
Remuneration
Compensation Policy was not
approved by the Board of Directors
for this category of employees.
of
Remuneration
Policy
The
and
all
Compensation
employees of the Company has
been determined with due account
to
the
principles
Remuneration and Compensation
the
for members
Policy
Company’s
bodies
executive
approved by the Board of Directors.
the
of
of
7
2.2.2 The chairman of the Board of Directors must
the
to communicate with
be available
company’s shareholders.
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.
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 experience
necessary to make decisions that fall within
the 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.
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.
transparent
2.3.2 Board members should be elected pursuant to
enabling
the
a
shareholders
information about
respective candidates sufficient for them to
get an idea of the candidates’ personal and
professional qualities.
to obtain
procedure
2.3.3 The composition of the Board of Directors
should be balanced, in particular in terms of
qualifications, expertise, and the business
skills of its members. The Board of Directors
should
the
shareholders.
confidence of
enjoy
the
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 nominations
committee), information regarding the candidate’s conformity
with independence criteria 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.
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.
in particular,
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,
to create
committees of the Board of Directors, as well
as to enable substantial minority shareholders
of the company to put forth a candidate to the
Board of Directors for whom they would
vote.
The Board of Directors should include a sufficient number of independent directors.
1. During the procedure of assessment of the work of the Board
of Directors conducted in the reporting period, the Board of
Directors analyzed the conformity of its membership to the
needs of the company and its shareholders
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
2.4.
2.4.1 An independent director should mean any
person who has the required professional
skills and expertise and is sufficiently able to
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
observed
partially observed
not observed
8
have his/her own position and make objective
and bona fide judgments, free from the
influence of the company’s executive 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 deemed to be
independent, if he/she is associated with the
company, any of its substantial shareholders,
material trading partners or competitors, or
the government.
to evaluate whether
It
is recommended
the Board of
candidates nominated
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
take
such evaluation, substance should
precedence over form.
to
2.4.2
2.4.3
Independent directors should account for at
least one-third of all directors elected to the
Board of Directors.
Board of Directors.
1. During the reporting period the Board of Directors (or its
nominations committee) issued an opinion regarding the
independence of each candidate nominated to the Board and
provided the shareholders with the appropriate conclusion.
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
company in the annual report as independent 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
observed
partially observed
not observed
of
number
the
the
Regarding paragraph 1,
Company
shall provide
following explanations:
The
independent
members of the Board of Directors
during the reporting period was less
than 1/3 of the number of the Board
of Directors, due to the fact that the
Company does not affect
the
composition of
the Board of
Directors, since members of the
Board of Directors are elected by
shareholders at the General Meeting
of Shareholders.
the Nomination and
However,
Committee
Compensation
considered candidates for members
of the Board of Directors in terms
this
of
independence and
information was presented
to
shareholders as part of the Meeting
materials.
their
9
to comply with
At the end of the reporting period,
the Company had four independent
directors
(two of which were
completely independent and two
were recognized as independent by
the Board of
the decision of
Directors1), which meets
the
requirements
the Moscow
of
Exchange Listing Rules for the
number of independent directors on
the board of directors.
In order
this
requirement in 2019, the Company
will inform shareholders of the
presence of independent candidates
among candidates to the Board of
Directors.
If the Company fails to elect the
sufficient number of independent
directors for the Annual General
Meeting of Shareholders in 2019,
the
the Company will consider
possibility
recognizing
of
individual directors as independent
directors by a decision of the Board
of Directors.
Regarding paragraph 1,
Company
shall provide
following explanations:
the
the
the
internal documents of
The
the
Company do not stipulate
procedure, according
to which
independent directors (who do not
interests)
conflict of
have
significant
preliminarily
corporate actions
to a
related
possible conflict of interests.
assess
a
2.4.4
Independent directors should play a key role
in prevention of internal conflicts in the
company and performance by the latter of
material corporate actions.
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
1 The recognition of directors as independent meets the requirements established by the Listing Rules of the Moscow Exchange, with the requirements of the Corporate Governance Code of the Company, but partially does not comply with
the requirements of the Corporate Governance Code recommended by the Bank of Russia in respect of a provision that does not allow for the recognition of a director as independent if he/she has a formal connection with the State (Sergey
Ivanov). However, the formal connection of Mr. Ivanov with the State is expected to cease on February 5, 2019 - after one year from the date Mr. Ivanov’s work in LLC RT –Capital was terminated.
10
consideration.
shall
However, most
issues shall be
considered by the Committees of
the Board of Directors before
bringing them for the Board of
The
Directors’
Committees
include
independent directors who can
declare
these
their position on
issues.
The decisions of the Committees of
the Company's Board of Directors
shall be communicated to the Board
of Directors prior to the start of
voting.
During 2019, the Company will
consider the possibility of fixing all
the issues that meet the criteria for
significant corporate actions of the
Corporate Governance Code among
the competence of
the Audit
Committee to allow forming by
independent directors an opinion on
such actions related to a possible
conflict of interest.
The Company chose an approach
for electing a senior independent
director, in view of the fact that
during the reporting period Deputy
Chairman of the Government of the
Russian Federation - Presidential
Plenipotentiary
Presidential
Representative in the Far Eastern
Federal District, Yu. Trutnev,
representing the Russian Federation
the Company’s Board of
on
Directors, was elected as
the
Chairman of the Board of Directors.
2.5.
2.5.1
is
The chairperson of the Board of Directors should help it carry out the functions imposed thereon in a most efficient manner.
to either elect an
It
recommended
independent director
the position of
to
chairperson of the Board of Directors or
identify
independent director
among the company’s independent directors
who would
the
independent directors and liaise with the
chairperson of the Board of Directors.
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.
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/
coordinate work of
the senior
observed
partially observed
not observed
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
11
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.
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.
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.
2.6.1 Acting reasonably and in good faith means
that Board members should make decisions
considering all available information, in the
absence of a conflict of interest, treating
shareholders of the company equally, and
assuming normal business risks.
2.6.2 Rights and duties of Board members should
be clearly stated and documented in the
company’s internal documents.
2.6.3 Board members should have sufficient time to
perform their duties.
to
2.6.4 All Board members should have equal
opportunity
company’s
access
documents 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.
the
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.
1. The company adopted and published an internal document
whereby the rights and duties of Board members are clearly
stated.
and,
entities
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.
2. In accordance with internal documents of the company,
Board members should notify the company’s Board of directors
of their intention to take a position in management bodies of
other
election
immediately
(appointment) to the management bodies of such other entities,
of such election (appointment).
1. In accordance with internal documents of the company,
Board members are given an opportunity to obtain any and all
including
information
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.
2. The company has a formal induction program for newly
elected Board members.
their duties,
to perform
required
their
after
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
observed
partially observed
not observed
12
2.7. Meetings of the Board of Directors, preparation for them, and participation of Board members therein should ensure efficient work of the Board.
2.7.1
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
2.7.2
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.
It is recommended to develop a procedure for
preparing for and holding meetings of the
Board of Directors and setting it out in the
company’s internal documents. The above
procedure should enable the shareholders to
prepare
such
meetings.
themselves properly
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
agenda of the meeting. Most important issues
should be decided at the meetings held in
person.
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 by a
qualified majority vote or by a majority vote
of all elected Board members.
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
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 elected Board members.
observed
partially observed
not observed
the
the
the
adoption
Regarding paragraph 1,
Company
shall provide
following explanations:
Clause 15.6 of RusHydro’s Charter
stipulating
of
paragraphs 23-25, 31 of Clause
12.1. of Art. 12 of the Charter by a
two-thirds majority of the Board of
Directors’ members participating in
the meeting allows considering the
maximum number of opinions of
the Board of Directors’ members.
The introduction of this criterion in
the Charter might lead to the risk of
not making individual decisions in
certain situations,
for example,
when considering issues with a
minimum quorum of 7 people and
having at least one negative vote.
Through the turnout of members of
the Board of Directors is usually
high, and the voting is generally
is not
close
advisable
legal
prerequisites for the impossibility
of making individual decisions by
the Board of Directors, specifically
to unanimity,
to
it
create
13
2.8.
The Board of Directors should form committees for preliminary consideration of the most important issues of the company’s business.
are
changes
to the fast that in corporate practice
such
generally
irreversible.
In this regard, the Company did not
the
this criterion
introduce
Charter in previous periods but
plans to consider the introduction of
a qualified majority in 2019.
in
2.8.1 For the purpose of preliminary consideration
of any matters of control over the company’s
is
financial and business activities,
recommended to form an audit committee
comprised of independent directors.
it
2.8.2 For the purpose of preliminary consideration
of any matters of development of efficient
and transparent remuneration practices, it is
remuneration
recommended
independent
committee
directors and chaired by an independent
director who should not concurrently be the
Board chairperson.
form a
of
comprised
to
2.8.3 For the purpose of preliminary consideration
of any matters relating to human resources
planning (making plans regarding successor
directors), professional composition and
efficiency of the Board of Directors, it is
recommended
nominating
committee (a committee on nominations,
appointments and human resources) with a
majority of its members being independent
directors.
form
to
a
the Board
The requirement specified in Clause
3 of para. 2.8.1 is met by a member
of Directors,
of
V. Pivovarov,
has
he
experience in analyzing accounting
(financial) statements.
since
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.
1. The Board of Directors formed a remuneration committee
comprised exclusively of independent directors.
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 the
objectives listed in recommendation 180 of the Code, are
determined in the internal documents of the company.
observed
partially observed
not observed
observed
partially observed
not observed
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.
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
observed
partially observed
not observed
2.8.4 For the purpose of preliminary consideration
of any matters relating to human resources
planning (making plans regarding successor
directors), professional composition and
efficiency of the Board of Directors, it is
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.
2. The objectives of the nominations committee (or the relevant
observed
partially observed
not observed
14
a
to
form
recommended
nominating
committee (a committee on nominations,
appointments and human resources) with a
majority of its members being independent
directors.
committee performing these functions) including the objectives
indicated in recommendation 186 of the Code are determined in
the internal documents of the company
2.8.5 The composition of the committees should be
determined in such a way that it would allow
a comprehensive discussion of issues being
considered on a preliminary basis with due
consideration of differing opinions.
1. Board committees are chaired by independent directors.
2. Given the specific nature of issues considered by the 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.
observed
partially observed
not observed
Para. 1 is partially observed.
Para. 2 is fully observed.
with
the
the
Regarding paragraph 1,
Company
shall provide
following explanations:
the
In
accordance
the Company's
requirements of
Corporate Governance Code, the
Committees should be headed by
independent directors. The Audit
Committee, the Nomination and
Compensation Committee, and the
Investment Committee are headed
by independent directors.
and
safe
The Reliability, Energy Efficiency,
and Innovations Committee and the
Committee on Energy Development
of the Far East are narrow-focused
committees that consider issues of
territorial development and issues
related to technical policy, reliable
of
and
the
operation
Company's production
facilities,
energy conservation policy, and
innovative
environmental
policy.
Given the specific features of the
these
issues
Committees, the Chairman of the
Committee shall primarily possess
professional skills, experience in
the operative sphere of the relevant
Committee
special
knowledge.
Having regard to the above, the
members of the Committees were
the
elected
respective Committees based on
as Chairmen of
addressed
other
and
by
15
2.8.6 Committee chairpersons should inform the
Board of Directors and its chairperson of the
work of their committees on a regular basis.
the
reporting period chairpersons of Board
1. During
committees presented regular reports to the Board of Directors
on their activities.
observed
partially observed
not observed
skills
professional
their
and
experience in the relevant operative
sphere of the Committees.
If possible, in 2019 the Company
plans to consider the possibility of
electing an independent director as
the Chairman of
the Strategy
Committee.
2.9.
2.9.1 Evaluation of quality of
The Board of Directors should make an exhaustive evaluation of the quality of its work and that of its committees and Board members.
the Board of
Directors’ work
should be aimed at
determining how efficiently the Board of
Directors, its committees and Board members
work and whether their work meets the
company’s needs, as well as at making their
work more intensive and identifying areas of
improvement.
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.
2. The results of the self-evaluation or external evaluation of the
Board of Directors in the reporting period were reviewed by the
Board of Directors at meetings held in person
observed
partially observed
not observed
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.
2.9.2 Quality of work of the Board of Directors, its
committees and Board members should 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
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.
observed
partially observed
not observed
3.1.
3.1.1 The
should
corporate
have
secretary
knowledge, experience, and qualifications
sufficient for performance of his/her duties, as
well as an impeccable reputation and should
enjoy the trust of the shareholders.
1. The company has adopted and disclosed an internal document
– regulation on the corporate secretary.
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.
the appointment,
1. The Board of Directors approves
termination of appointment, and additional remuneration of the
corporate secretary.
observed
partially observed
not observed
3.1.2 The corporate secretary should be sufficiently
independent of
the company’s executive
bodies and be vested with powers and
resources required to perform his/her tasks.
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
level of 1. The company has adopted an internal document (documents) observed
It
observed
partially observed
not observed
Regarding paragraph 1,
recommended
4.1.1
that
4.1.
the
the
is
16
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 qualified 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.
4.1.2 The company’s remuneration policy should
be developed by its remuneration committee
and approved by the Board of Directors. With
the help of its remuneration committee, the
Board of Directors should monitor
– 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 the indicated
persons are clearly determined.
partially observed
not observed
1. During the reporting period the remuneration committee
reviewed the remuneration policy (policies) and the practice of
its (their) implementation and, when necessary, provided the
Board of Directors with the relevant recommendations.
observed
partially observed
not observed
4.1.3 The company’s remuneration policy should
provide for 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.
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
the
shall provide
Company
following explanations:
Since the category of “other key
executives” was not defined and not
approved by the Board of Directors,
the
and
Remuneration
Compensation Policy was not
approved by the Board of Directors
for this category of employees.
the
the
period. During
Regarding paragraph 1,
shall provide
Company
following explanations:
The Company's Remuneration
policy was developed by
the
and Compensation
Nomination
Committee and approved by the
Company's Board of Directors in
2016 and implemented during the
the
reporting
reporting period, the Nomination
and Compensation Committee
relevant
submitted
recommendations to the Board of
Directors.
Regarding paragraph 1,
shall provide
Company
following explanations:
Since the category of “other key
executives” was not defined and not
approved by the Board of Directors,
and
Remuneration
the
Compensation Policy was not
approved by the Board of Directors
for this category of employees.
and
The
Compensation
all
employees of the Company has
been determined with due account
the
principles
to
Remuneration and Compensation
the
for members
Policy
Remuneration
Policy
the
the
the
of
of
of
17
4.1.4 The company is recommended to develop a
policy on reimbursement of expenses which
would contain a list of reimbursable expenses
and specify service
to
members of the Board of Directors, the
executive bodies, and other key managers of
the company. Such policy can form part of
the company’s policy on compensations.
levels provided
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
contains
executive
Company’s
bodies
approved by the Board of Directors,
and
transparent
mechanisms for determining the
amount of remuneration, and also
regulates all types of payments and
benefits.
Regarding paragraph 1,
the
the
shall provide
Company
following explanations: Since the
category of “key executives” was
not defined and not approved by the
the
Board
Remuneration and Compensation
Policy was not approved by the
Board of Directors for this category
of employees.
and
The
Compensation
all
employees of the Company has
been determined with due account
the
principles
to
Remuneration and Compensation
the
for members
Policy
Company’s
bodies
executive
approved by the Board of Directors.
Remuneration
Policy
Directors,
the
of
of
of
of
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.
4.2.1 A fixed annual fee shall be a preferred form
of monetary remuneration of
the Board
members. It is not advisable to pay a fee for
participation in 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
company’s
interests of
long-term
shareholders.
not
However,
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
the
it
is
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
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
the
the
Regarding paragraph 1,
Company
shall provide
following explanations:
Non applicable. The Company does
not
equity
for
stipulate
compensation.
the
18
4.2.3
4.3.
company’s option plans.
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.
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.
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
4.3.1 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
results and
the company’s performance
employees’
(individual)
contributions to the achievement thereof.
personal
observed
partially observed
not observed
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.
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.
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
shall provide
Regarding paragraphs 1-3, the
Company
the
following explanations:
Since the category of “other key
executives” was not defined and not
approved by the Board of Directors,
the
and
Remuneration
Compensation Policy was not
approved by the Board of Directors
for this category of employees.
indicators
Annual
the Board of
established by
Directors
the
Company’s executive bodies are
used in determining the size of the
variable
all
remuneration
Company’s employees.
for members of
performance
of
the
the
Regarding paragraph 3,
Company
shall provide
following explanations:
All bonus payments to members of
in
executive bodies are made
accordance with the Remuneration
Policy approved by the Company’s
Board of Directors.
The Regulations on Remuneration
the
and Labor Contracts of
contain
Executive
the
provisions
losses
possibility
incurred by the Company.
Moreover, in the context of the
existing provisions of the labor
legislation,
the establishment of
formal mechanisms for the return of
bonus payments illegally received
Bodies
stipulating
the
to offset
19
at
organized markets
4.3.2 Companies whose shares are admitted to
trading
are
recommended to put in place a long-term
incentive program
company’s
executive bodies and other key managers
involving the company's shares (or options or
other derivative financial instruments the
underlying
the
assets
company’s shares).
for which
the
are
for
observed
partially observed
not observed
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).
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.
4.3.3 The amount of severance pay (so-called
"golden parachute") 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.
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.
observed
partially observed
not observed
the
the
by members of the executive bodies
is difficult to implement.
Regarding paragraph 1,
shall provide
Company
following explanations:
Since the category of “other key
executives” was not defined and not
approved by the Board of Directors,
and
Remuneration
the
Compensation Policy was not
approved by the Board of Directors
for this category of employees.
be
Company managers may
included into this Program by a
separate decision of the Board of
the
Directors
regarding
recommendations
the
of
and Compensation
Nomination
Committee.
Regarding paragraph 1,
Company
shall provide
following explanations:
Since the category of “other key
executives” was not defined and not
approved by the Board of Directors,
and
Remuneration
the
Compensation Policy was not
approved by the Board of Directors
for this category of employees.
There are no "Golden parachutes"
in Company for any category of
workers.
the
the
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.
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
5.1.2 The company’s executive bodies should
ensure
the establishment and continuing
operation of the efficient 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.
1. The company’s executive bodies ensured the distribution of
functions and authority in relation to risk management and
internal control among managers (heads) of divisions and
departments subordinate to them.
observed
partially observed
not observed
observed
partially observed
not observed
5.1.3 The company’s risk management and internal
control system should enable all concerned to
1. The company has a corruption prevention policy in place.
2. The company has developed a procedure of informing the
observed
partially observed
20
obtain an objective, fair and clear view of the
current condition and prospects of
the
company, integrity and transparency of its
accounts and reports, and reasonableness and
acceptability of risks being assumed by 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.
Board of Directors or the audit committee of violations of the
law, internal procedures and the ethics code of the company.
not observed
1. During the reporting period the Board of Directors reviewed
risk
the organization, operation, and efficiency of
management and internal control system and, if necessary, made
recommendations toward 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.
the
observed
partially observed
not observed
5.2.
5.2.1
through
1. A separate structural division (internal audit department) that
reports directly to the Board of Directors or the audit committee
was created
independent
organization with the same status was retained to conduct the
audit.
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.
It is recommended that internal audits be
carried out by a separate structural division
(internal audit department) to be created by
retaining an
the company or
independent third-party entity. To ensure the
independence
audit
department, it should have separate lines of
reporting.
functional and administrative
Functionally, the internal audit department
should report to the Board of Directors, while
from the administrative standpoint, it should
report directly to the company’s one-person
executive body.
observed
partially observed
not observed
the company; an external
internal
the
of
in
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.
2. The company uses generally accepted approaches to internal
control and risk management.
5.2.2 When carrying out an internal audit, it is
recommended to evaluate the efficiency of
the internal control system and the risk
management system, as well as to evaluate
corporate governance and apply generally
accepted standards of internal auditing.
The company and its activities should be transparent to its shareholders, investors, and other stakeholders.
1. The Board of Directors approved an information policy
developed in compliance with the recommendations of the
Code.
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.
6.1.
6.1.1 The company should develop and implement
an information policy enabling the company
to efficiently exchange information with its
shareholders,
other
investors,
stakeholders.
and
observed
partially observed
not observed
observed
partially observed
not observed
6.1.2 The company should disclose information on 1. The company discloses information on its corporate
observed
Regarding paragraph 3, the
21
corporate
its
and
governance
practices, including detailed information on
compliance with
and
the
recommendations of this Code.
principles
system
governance system and the corporate governance principles
applied in the company on its official website.
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.
partially observed
not observed
Company shall provide the
following explanations:
According to the information
provided by the Federal Agency for
State Property Management
(Rosimushchestvo), the Company's
controlling entity, the Russian
Federation represented by the
Federal Agency for State Property
Management (Rosimushchestvo),
did not prepare a separate
memorandum on plans for the
Company.
Information about this, along with
information about the inclusion of
the Company in certain program
documents of the Russian
Federation, shall be disclosed on
the Company's website at
http://www.rushydro.ru/investors/st
ockmarket/capital/svedeniya-o-
nalichii-memoranduma-o- planakh-
kontroliruyushchegogo-
obshchestvo-litsa-v-otnoshenie-
obshch /
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.
6.2.
6.2.1 The company should disclose information in
accordance with the principles of regularity,
consistency and
timeliness, as well as
accessibility, reliability, completeness and
comparability of disclosed data.
6.2.2 The company is advised against using a
information
approach
should disclose material
formalistic
disclosure;
to
it
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.
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.
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
observed
partially observed
not observed
observed
partially observed
not observed
22
information on
if
disclosure of such information is not required
by law.
its activities, even
the reporting period contains annual financial IFRS statements
and the relevant audit report.
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.
1. The annual report of the company contains information about
the key aspects of the company’s operational activities and
financial results.
2. The annual report of the company contains information about
the environmental and social aspects of
the company’s
activities.
important
6.2.3 The company’s annual report, as one of the
most
information
tools of
exchange with its shareholders and other
stakeholders, should contain
information
enabling one to evaluate the company’s
performance results for the year.
The company should provide information and documents requested by its shareholders in accordance with the principle of equal and unhindered accessibility.
observed
partially observed
not observed
its
6.3.
6.3.1 Exercise by the shareholders of their right to
access
and
information should not be unreasonably
burdensome.
company’s documents
the
6.3.2 When
to
providing
information
its
shareholders, the company should maintain a
reasonable balance between the interests of
individual shareholders and its own interests
related to the fact that the company is
interested in keeping confidential sensitive
business
that might have a
material impact on its competitiveness.
information
their
request
1. The procedure of information provision to shareholders
(including information about the organizational controlled by
the company) upon
is not unreasonably
burdensome.
1. During the reporting period the company did not deny
shareholders’ requests to provide information or such refusals
were justified.
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.
observed
partially observed
not observed
observed
partially observed
not observed
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 deemed to
include
the company,
reorganization of
acquisition of 30 or more percent of its voting
shares (takeover), entering by the company
into any material transactions, increasing or
decreasing
listing and
its share capital,
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 falling within the category of material
corporate actions and provide therein that
decisions on any such actions should fall
within the jurisdiction of the company’s
Board of directors.
1. The company’s articles of association (charter) include a 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.
observed
partially observed
not observed
7.1.2 The Board of Directors should play a key role 1. The company has a procedure in place whereby independent observed
23
resolutions
relating
or making
in
passing
recommendations
to material
corporate actions; for that purpose, it should
rely on
the company’s
independent directors
the opinions of
directors state their position/opinion on material corporate
actions prior to their approval.
partially observed
not observed
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.
2. During the reporting period all material corporate actions
were subject to approval prior to their execution.
7.1.3 When taking any material corporate actions
which would affect the rights or legitimate
interests of the company’s 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 for that purpose,
additional measures should be taken with a
view to protecting the rights and legitimate
interests of the company’s shareholders. In
such instances, the company should not only
seek to comply with the formal requirements
of law but should also be guided by the
principles of corporate governance set out in
this Code.
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
7.2.
7.2.1 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.
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 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
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.
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
observed
partially observed
not observed
the
the
Regarding paragraph 1,
Company
shall provide
following explanations:
During the reporting period, there
were no extraordinary significant
corporate actions that required, in
the opinion of
the Company,
additional disclosure, except for the
decision to increase the authorized
events were
capital.
These
comprehensively
and
disclosed
covered. Other corporate actions
were disclosed in running order.
Paras. 1 and 2 are fully observed.
Para. 3 is partially observed.
Regarding paragraph 3,
shall provide
Company
following explanations:
Since January 1, 2017, amendments
to the legislation regarding related
party transactions have come into
amendments
force,
completely revise the approaches to
the
the
these
24
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.
the approval of
related party
transactions and tend to liberalize
the regulation of interested-party
transactions.
The Company does not plan to
expand the requirements of the
legislation in relation to related
party transactions.
25
Appendix No.2 Information on major transactions and interested party transaction in 2018 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
Ser.
No.
1
List of
Transactions with
an Indication of the
Parties Concerned
The Loan Agreement
between VTB Bank
(PJSC) and
RusHydro with the
Addendum hereto.
No. and Date of
Minutes
Management Body
Approving the
Transaction
accordance with
In
Clause 1.1 of Article 81
Law
of
Federal
No. 208-FZ
dated
December 26, 1995 “On
Joint-Stock
Companies”,
the
members of the Board
of Directors and
the
Management Board of
the Company were
this
notified
transaction.
The
to
obtain
consent
the
(approval)
transaction has not been
received.
The Addendum to the
Loan Agreement did not
change
the material
terms. At the time of the
the
of
conclusion
additional
agreement
there was no interest.
requirement
for
of
Material Terms of a Transaction
Interested Party
Parties:
VTB Bank, PJSC (Lender);
RusHydro, PJSC (Borrower).
Subject of the Agreement:
The Lender provides loans to the Borrower through loan
applications in line with the procedure established by the
Agreement, and the Borrower undertakes to repay loans within the
established time limits, pay interest on loans, and fulfill other
obligations stipulated by the Agreement.
is a
N. Podguzov, who
member
of RusHydro’s
Board of Directors and also
holding a position
the
in
the
management body of
legal entity that is a related
party to the transaction (a
member of the supervisory
of VTB Bank).
board
VTB Bank opens a line of credit to RusHydro with a debt limit of
RUB 30,000,000,000.00 (thirty billion) for a period of 15 years
from the date the Agreement becomes effective.
The maximum interest rate on Loans is the Bank of Russia Key
Rate increased by 3% per annum. Within the Credit Line, loans
with a Term from 365 (three hundred and sixty five) calendar days
to 3,650 (three thousand six hundred fifty) calendar days
(inclusive) can be granted, given that the Loan repayment date
comes earlier or on the end date of the Credit Line.
Transaction Size in Money Terms:
The maximum size of
RUB 76,125,000,000.00.
transaction shall not exceed
the
Maturity Date: The Borrower undertakes to make the final
repayment (refund) of all Loans received under the Agreement on
the date commencing 5,475 (five thousand four hundred seventy-
five) calendar days from the effective date of the Agreement.
stake
According to the information
available to RusHydro, the
interested person did not hold
a
in RusHydro’s
authorized capital (shares) at
the time of the transaction.
According to the information
available to RusHydro, the
interested person did not hold
a stake
in VTB Bank’s
authorized capital (shares) at
the time of the transaction.
26
2
The Loan Agreement
between JSC Far East
and Baikal Region
Development Fund
and RusHydro with
the
Addendum
hereto.
to
The consent
the
transaction was given
by
of
the Board
(Minutes
Directors
No. 265 dated February
6,
The
2018).
Addendum to the Loan
Agreement
not
change the conditions,
on which the Board of
to
Directors
conclude
Loan
Agreement. At the time
of the conclusion of the
agreement
additional
there was no interest.
agreed
the
did
A. Chekunkov, who
is a
member of the Company's
Board of Directors and also
holding a position
the
management body of a legal
entity that is a related party to
the transaction (the General
Director of the Fund).
in
to
the
repay
Parties to the Loan Agreement:
Far East and Baikal Region Development Fund, JSC (Lender);
RusHydro, PJSC (Borrower).
Subject of the Loan Agreement:
The Lender provides a loan to the Borrower, and the Borrower
undertakes to return the outstanding loan to the Lender and to pay
interest on it.
Loan amount:
RUB 5,000,000,000 (five billion) 00 kopecks maximum, which
may be received by the Company from the Fund within one or
several drawdowns.
Loan Interest:
5 (five)% per annum.
Loan Agreement Price:
the price of the Agreement is defined as the aggregate of the
following obligations of the Company under the Loan Agreement:
− obligations
amount of
RUB 5,000,000,000 (five billion) 00 kopecks maximum;
− obligation to pay interest for the loan(s) at the rate of 5 (five)%
per annum in the amount of RUB 2,000,000,000 (two billion) 00
kopecks maximum.
The Loan Agreement price does not exceed RUB 7,000,000,000
(seven billion) 00 kopecks.
Loan Maturity:
- the first down-payment: December 31, 2019;
- then - quarterly in equal installments;
- last payment: no later than 25 June, 2026.
Purpose of the Loan(s):
financing in favor of Joint-Stock Company RAO ES East
(OGRN 1087760000052) (hereinafter referred to as the Design
Company) for
the
implementation of
construction of off-site infrastructure facilities to operate the
Sakhalinskaya GRES-2:
- construction, installation and supervision of works, works and
commissioning services, supervised
installation of off-site
infrastructure facilities to operate the Sakhalin SDPP-2 (namely:
electrical power distribution schemes, ash and slag removal
the project for
loan
the
the
in
27
systems, drinking water and industrial water supply systems,
access roads (including the road to the ash dump) and the access
railway), as well as equipment, machinery and other fixed assets
for equipping off-site infrastructure facilities, and/or for the
purposes of co-investment in the design, construction and
commissioning of off-site infrastructure facilities, and/or for the
purpose of the refundable acquisition by the Design Company of
ownership of third-party off-site infrastructure facilities under the
project (always provided that the Design Company acquires (upon
completion of construction and/or completion of the relevant
transaction) ownership of the relevant off-site infrastructure
facilities), and/or for the purpose of repaying the cost of utility
connection of off-site infrastructure facilities (including value
added tax payable to contractors and/or suppliers under relevant
contracts),
- purchase of equipment, vehicles, and other fixed assets for
equipping off-site
including design,
infrastructure facilities,
manufacturing, supply, insurance, and other related expenses,
including those included in the price of the relevant agreement
(including value-added tax payable under relevant contracts to
contractors and/or to suppliers), and
- payment of taxes, customs duties and fees payable against the
importation into the Russian Federation and customs clearance of
imported off-site
in above
paragraphs 1 and 2;
- reimbursement of expenses actually incurred by the Design
Company for the purposes specified in the paragraphs above, after
the date the Fund’s Board of Directors made the decision on the
Loan Agreement (Minutes No. 57 dated December 29, 2017);
- other purposes related to the work at the off-site infrastructure
facilities agreed in writing by the Parties.
Parties to Addenda:
NPF LUKOIL-GARANT, JSC (Party 1);
RusHydro, PJSC (Party 2).
Beneficiaries are current employees of the Company, in whose
favor pension savings are formed, and former employees of the
Company - participants of pension programs who receive a non-
infrastructure
facilities
listed
A. Kazachenkov, who is a
member of the Management
and First Deputy
Board
General
of
RusHydro, and also holding a
position in the management
Director
to Non-
Pension
3 Addenda
state
Provision
Agreements between
JSC NPF LUKOIL-
and
GARANT
In
accordance with
Clause 1.1 of Article 81
Law
of
Federal
No. 208-FZ
dated
December 26, 1995 “On
Joint-Stock
28 RusHydro (executive
office and branches)
(Addenda to 49 Non-
Pension
state
Provision
Agreements out of 51
ones,
planned
the
considered by
Company
as
interrelated
transactions)
Companies”,
the
members of the Board
of Directors and
the
Management Board of
the Company were
these
notified
The
transactions.
requirement
to obtain
consent (approval) for
the transaction has not
been received.
of
state pension or are entitled to receive a non-state pension upon
reaching the pension qualification under the Non-state Pension
Provision Agreements in accordance with the local regulatory
documents (acts) of the Company.
Subject of Addenda:
from October 1, 2018, reduction in the cost of non-state pension
coverage services of NPF LUKOIL-GARANT from 2% to 1% of
the transferred pension contributions.
Exclusion of fixed parity ratios from parity-based Non-state
Pension Provision Agreements.
Price of Addenda:
related party
body of the legal entity that is
a
the
transaction (a member of the
Board of Directors of NPF
LUKOIL-GARANT).
to
1% of the total pension contributions to be transferred from
October 1, 2018 under 51 Non-state Pension Provision
Agreements, not exceeding the amounts approved by the Board of
Directors of the Company as part of the Company's Business Plan.
The total amount of obligations fulfilled by the Company from
2010 till September 30, 2018 under 51 Non-state Pension
Provision Agreements does not change due to the planned
conclusion of Addenda and amounts to RUB 3,759,217,075 (three
billion seven hundred fifty nine million two hundred seventeen
thousand seventy five) 51 kopecks.
Duration of Non-state Pension Agreements: until the Fund fully
fulfills its obligations to pay pensions to all participants under the
Agreement.
Parties to Addenda:
TK RusHydro, PJSC (Party 1);
RusHydro, PJSC (Party 2).
Subject of Addenda:
- change in the list of vehicles and transport facilities (including
but not limited to: inland vessels and floating facilities and/or
hovercraft and/or specialty vehicles and/or fire vehicles and/or
railway transport and machinery and/or automobile cargo vehicles
and/or passenger cars and/or buses and/or minibuses and/or trams
and/or lifting structures) for leasing and provision of integrated
transport services;
S. Kirov, who is a member of
the Management Board, First
Deputy General Director of
RusHydro, whose brother
occupies a position in the
governing body of the related
transaction
the
party
(A. Kirov, General Director
of JSC TK RusHydro).
to
4 Addenda to transport
services and transport
agreements
leasing
between RusHydro
and
TK
JSC
RusHydro
In
accordance with
Clause 1.1 of Article 81
Law
Federal
of
No. 208-FZ
dated
December 26, 1995 “On
Joint-Stock
the
Companies”,
members of the Board
of Directors and
the
Management Board of
the Company were
29
of
these
notified
The
transactions.
requirement
to obtain
consent (approval) for
the transaction has not
been received.
- change in the price of transactions, including price components,
within the aggregate price of six agreements for transport services
and leasing;
- change in schedules and/or shift timetables for provision of
vehicles and machinery within the terms of the validity of
agreements and terms of services, change of the planned mileage
and operating time;
- change of obligation execution schedules within the terms of
validity of agreements and terms of services.
The Ceiling Price of Addenda:
ceiling aggregate price of six agreements for transport services and
leasing,
thereto,
the
and Addenda thereto, which are related party transactions,
amounts to RUB 5,088,759,252.51, inclusive of VAT.
including
Addenda
In 2018, RusHydro did not make transactions recognized as major in accordance with Federal Law No. 208-FZ of the Russian Federation dated December 26,
1995 On Joint-Stock Companies.
30
Appendix No.3 Information on participation in other organizations
3.1 Information Concerning All Forms of the Company's Shareholding 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
Financial Indicators
Book Value of
the
Contribution,
RUB
PJSC
RusHydro's
stake in the
Authorized
Capital, %
Earnings in
2018,
thou. RUB
Net Profit in
2018,
thou. RUB
Dividends/Profit
Received by PJSC
RusHydro in 2018 for
Owned Shares
(reporting period -
2017), thou. RUB
Company Name
Objectives of the
Involvement
Form of the
Involvement
JSC HydroEngineering
Siberia
JSC Vedeneyev VNIIG
JSC Geotherm
JSC Zaramagskiye HPPs
JSC Hydroinvest
JSC Leningradskaya
PSHPP
Ensuring the
development of the
Company's core
business
Supporting the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
2,291,979,300.00
100
0
(2,645)
8,160,200.00
100
1,143,072
68,672
1,323,065,148
99.74
1,268,856
43,073
17,933,142,000.00
99.75
262,940
(120,915)
9,553,493,704.00
66.81
238,785
(3,431,010)
6,663,565,938.00
100
-
(1,230,198)
JSC NIIES
Supporting the
Company's core
business
Shareholding in the
Company’s
authorized capital
649,970,985.00
100
186,692
(62,359)
Main Activities
design and survey work
research and
development activities in
the field of electric power
industry
power generation
construction of
Zaramagskiye HPPs,
power generation
securities transactions
redesign of the pilot
Northern MPP,
construction of the
Leningradskaya PSPP
research and
development activities in
the field of electric power
industry
-
-
-
-
-
-
-
31
JSC MC HydroOGK
JSC ESCO UES
JSC Boguchanskaya
HPP Construction
Organizer
CJSC Boguchanskaya
HPP Construction
Customer
CJSC Boguchanskiy
Aluminum Smelter
Construction Organizer
JSC Boguchanskiy
Aluminum Smelter
Construction Customer
JSC Nizhne-Bureyskaya
HPP
JSC Zagorskaya PSHPP-
2
JSC Transport Company
RusHydro
JSC Engineering Center
for Renewable Energy
JSC RusHydro CAC
JSC Sulaksky
HydroCascade
JSC SSHPP SC
Supporting the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Developing new type
of business
Developing new type
of business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Supporting the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Supporting the
Company's core
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
150,000.00
100
735,169
21,055
26,784
managing organization
15,000,000.00
100
-
(10,198)
5,100.00
4,900.00
4,900.00
5,100.00
51
49
49
51
38,630
1,684
23,776
1,077
461,225
85,077
113
29
38,392,689,509.00
100
46,534
30,154
62,681,508,646.00
100
4,513
(764,293)
18,057,693.00
100
1,744,388
48,874
694,072,210.00
100
3,255,023,323.00
100
-
-
-
(2,951,515)
10,347,673,015.00
100
530,774
91,304
482,153,947.00
100
95,471
(12,871)
-
-
-
-
-
-
-
-
-
-
-
-
construction works
construction of the
Boguchanskaya HPP
construction of the
Boguchanskaya HPP
construction of the
Boguchanskiy aluminum
smelter
construction of the
Boguchanskiy aluminum
smelter
construction of the
Nizhne-Bureyskaya HPP
construction of the
Zagorskaya PSHPP-2
provision of
transportation services
construction of an
experimental binary
power unit
an independent
assessment of
qualifications in the form
of a professional exam
for applicants in the field
of electric power industry
construction of the
Sulaksky hydropower
cascade
Training and Production
Information and
32
JSC Hydroremont –
VCC
JSC Karachay-
Cherkessia
Hydrogeneration
Company
business
Supporting the
Company's core
business
Ensuring the
development of the
Company's core
business
HydroOGK Aluminium
Company Limited
Financial investments
HydroOGK Power
Company Limited
Financial investments
JSC Lenhydroproject
PJSC Kolymaenergo
JSC ChirkeiHPPstroy
JSC Dyakov Ust-
Srednekanskaya HPP
JSC ESC RusHydro
JSC Malaya Dmitrovka
JSC Small HHPs of Altai
JSC SHPP of Dagestan
RusHydro International
B.V.
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Supporting the
Company's core
business
Ensuring the
development of the
Company's core
business
Supporting the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
535,040.00
6,582,581.00
34,200.00 EUR
99.37 EUR
100
100
100
100
8,040,224
105,835
344,860
0
-
-
1,783
490
(829)
-
-
-
174,451.00
100
1,360,760
53,752
15,604
12,063,052,613.00
98.76
3,500,722
(69,641)
249,690,071.50
74.99
6,195,224
(810,596)
18,809,586,927.00
67.82
898,123
(4,928)
11,981,227,367.00
99.99
5,349,527
(24,748)
-
-
-
-
Innovation Center
repair of electric power
facilities
construction
holding company
holding company
research and
development activities in
the field of electric power
industry
power generation
construction works
construction of the Ust-
Srednekanskaya HPP
wholesale trade in
electric and thermal
energy
4,819,782,000.00
100
582,671
76,961
70,477
property management
500,000.00
100
161,500,000.00
100
-
-
5,800,000.00 EUR
100
306 (000 EUR)
(7,882)
(21,462)
(844)
(000 EUR)
-
-
-
construction of small
HPPs in Altai
construction of small
HPP in Dagestan
investment activities
33
PJSC Yakutskenergo
PJSC Boguchanskaya
HPP
PJSC KamHEC
JSC RHS
JSC RAO ES East
JSC CEK
JSC Verkhne-Naryn
HPPs
JSC IEGC
JSC Blagoveshchenskaya
CHPP
JSC Sakhalinskaya
SDPP-2
JSC Yakutskaya SDPP-2
JSC CHPP at Sovetskaya
Gavan
JSC BoAZ Holding
Company
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Supporting the
Company’s core
business
Ensuring the
development of the
Company's core
business
Strategic, financial
investments
Ensuring the
development of the
Company's core
business
Strategic, financial
investments
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Strategic, financial
investments
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
2,769,811,893.00
29.8
34,605,440
29,750
163,578,869.00
2.9
16,878,587
5,349,547
1,187,917,534.00
96.58
307,795
5,134
-
-
-
power generation,
transmission, and
distribution
power generation
power generation
3,809,000.00
100
481,925
61,674
92,560
provision of consulting
services in procurement
19,171,124,235.50
84.39
1,211,076
3,092,511
3,507,568,000.00
26.94
614,877
(67,326)
2,500,000 som
50
4
(28,738)
8,861,928,328.00
42.75
20,919,626
(1,231,473)
6,301,500,000.00
100
460,974
186,236
15,011,980,000.00
100
-
23,038
16,861,500,000.00
100
1,912,322
(68,176)
13,843,500,000.00
100
500,000.00
100
-
0
374,666
(759)
-
-
-
-
-
-
-
management of holding
companies
power generation
construction of the
Verkhne-Naryn cascade
of HPPs
power transmission
CHPP construction
construction of GRES
construction of GRES
CHPP construction
investment activities
34
JSC BoHPP Holding
Company
Strategic, financial
investments
LLC RusHydro IT
Service
LLC
Verkhnebalkarskaya
SHPP
LLC SHPPs of Stavropol
Krai and Karachay-
Cherkessia
LLC VolgaHydro
JSC Technopark
Rumyantsevo
Supporting the
Company’s core
business
Ensuring the
development of the
Company's core
business
Ensuring the
development of the
Company's core
business
Developing new type
of business
Supporting the
Company's core
business
PJSC Far-Eastern Energy
Company (FEEC)
Strategic, financial
investments
Bank of Cyprus Public
Company Ltd 2
shares entered into
ownership upon
liquidation of
RusSUNHydro
Limited
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
Shareholding in the
Company’s
authorized capital
100
100
100
100
40
500,000.00
500,000.00
581,256,768.00
47,694,908.51
449,814,356.00
10.00
0
(552)
-
investment activities
782,786
111,283
48,226
provision of consulting
services in the field of IT
2.555
23,455
13,764
(860)
648,155
15,766
-
-
-
-
-
construction of the
Verkhnebalkarskaya
SHPP
construction of small
HPPs in Karachay-
Cherkessia
production of hydraulic
equipment
construction and
installation works
purchase and sale of
electricity (power)
0.000005
9,071
179,099
178,714,322.00
1.04
86,056,216
1,110,337
-
0.000186
banking operations
2 Information on revenue and net profit is not provided, since Bank of Cyprus Public Company Ltd is not an associate and/or a joint company of the RusHydro Group and is also not a part of it. PJSC RusHydro does not have the
accounting statements of the said company.
35
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
RusHydro Group is a member of several Russian industry associations and non-commercial
partnerships. Some of these organizations are given below. RusHydro Group considers its participation in
few of them as strategic. (102-13)
No. Name of the Entity
Area of Activities
Membership Subscription in 2018
1.
2.
3.
4.
International Hydropower
Association, IHA
Global Sustainable
Energy Partnership,
GSEP
Market Council
Association
Association of Land and
Real Estate Owners and
Investors
5.
Hydropower of Russia
Association
6.
Russian Union of
Industrialists and
Entrepreneurs
7.
Council of Energy
Industry Veterans
8.
National Network of the
Global Compact
Association
9.
Club of Directors for
Science and Innovation
10.
Scientific and Technical
Council of the Unified
Energy System
the
International
facilities and
dialogue with
the performance of
the use of
Support and dissemination of hydro power
industry knowledge under the auspices of
Hydrological
UNESCO
Program
Elaboration of joint policy platforms and
implementation of relevant initiatives, both
on domestic and international markets
Arrangement of electric power trade in the
wholesale market
The Group considers its participation as
strategic.
The partnership serves a discussion panel
used by RusHydro to promote its interests
and
government
authorities concerning improvement of the
legal environment in the area of land and
property ownership.
Improvement of
hydropower
hydropower resources in Russia
The Group considers its participation as
strategic.
Protection of economic and social interests
and legal rights common for members and
necessary for the sustainable development of
companies and the market economy as a
whole
The Group considers its participation as
strategic.
Promotion of the members' activities in
comprehensive
the energy
industry veterans
The Group considers its participation as
strategic.
the
Representation and protection of
the Association’s
common
and
members
into business
consistently
practice
responsible
business conduct based on cooperation with
all interested parties in accordance with the
provisions of the Global Compact - the
largest UN
sustainable
development.
The Club is a communications forum for the
professionals in research, development, and
implementation of innovations
Support to the Partnership’s members in the
efforts
the Research &
Technology and Economic Policy of the
introducing
the principles of
interests of
at
support of
observing
formulate
initiative
aimed
for
to
USD 19,345.69 (RUB 1,190,802.67 at the
exchange rate on the date of payment)
USD 118,521.54 (RUB 7,389,782.46 at the
exchange rate on the date of payment)
RUB 5,347,000 per year
RUB 300,000 per year
RUB 7,140,000 per year
RUB 600,000 per year
RUB 15,000,000 per year
8,000 - entrance subscription fee
RUB 250,000 - regular membership
subscription fee
USD 15,000 - fee to the Foundation for the
Global Impact (stipulated by the terms of
membership)
RUB 330,000 per year
RUB 2,000,000 per year
36
11.
All-Russian Industry
Association of Employers
of the Power Sector
(RaEl Association)
12.
Self-regulatory
Organizations (SRO)
Unified Energy System of Russia
Representation of the interests of employers
in the electric power industry, protection of
their rights in government bodies, local
governments, in relations with trade unions
and their associations; representation of the
industry employers when
interests of
entering
tariff
agreements and other agreements governing
social & labor and associated relations.
of
interests
of
Representation
organizations
the
in
specializing
construction, reconstruction, and overhaul of
These
capital
construction
organizations include:
industry-specific
projects.
into
the
− EnergoStroyAlyans Association;
− SRO Union of Builders of the
Amur Region;
− Self-Regulating Corporation of
Builders of the Krasnoyarsk
Territory;
− And other SROs at the location of
RusHydro
− Self-Regulating Corporation of
Builders of the Krasnoyarsk
Territory
− Engineering Surveys in
Construction Association.
RUB 2,450,000 per year
EnergoStroyAlyans Association - no
participation;
SRO Union of Builders of the Amur Region
- no participation;
Self-Regulating Corporation of Builders of
the Krasnoyarsk Territory - RUB 320,000
per year;
and other SROs at the location of RusHydro
- none
Self-Regulating Corporation of Builders of
the Krasnoyarsk Territory - ditto, see above
Engineering Surveys in Construction
Association - no participation.
Charters, Principles, and Initiatives Supported by the Company (102-12)
Name
Year of Joining
Declaration on Reservoirs for Sustainable Development (ICOLD)
Russian Business Social Charter (RSPP)
Anti-Corruption Charter of Russian Business (RSPP)
Concept of Long-term Socio-economic Development of Russia until 2020
Methodology for Assessing the Compliance of Hydropower Projects with
Sustainable Development Criteria (International Hydropower Association
(IHA-MAG)
Sectoral Tariff Agreement in the Electric Power Industry of the Russian
Federation for 2016-2018
United Nations Global Compact
2012
2013
2013
2008
2011
2016
2017
Document Scope
International document
Russian Federation
Russian Federation
Russian Federation
International Document
Russian Federation
International Document
3.3 Information Concerning Shares/Stakes Purchase Contracts made by
PJSC RusHydro in 2018, Indicating the Parties to the Contracts, their Subject, Price,
and other Terms
1) Alienation of shares as part of their redemption by the issuer in accordance with Art. 75 of
the Federal Law "On Joint-Stock Companies".
Date of the contract (date of the request for the redemption of shares): April 11, 2018
Parties:
Seller - PJSC RusHydro
Acquirer - JSC NPF of Electric Power Industry (issuer)
Subject:
37
Alienation of shares as part of their redemption by the issuer in accordance with Art. 75 of
the Federal Law "On Joint-Stock Companies".
Issuer
Number of shares
Type, category (type) of securities
The nominal value of 1 share
Joint-Stock Company NPF of Electric Power Industry
73,090,614 (seventy-three million ninety thousand six hundred and fourteen)
Registered ordinary uncertificated shares
RUB 0.01
Acquisition price of 1 share
issue state registration number
RUB 1,01
1-01-50170-А, Issue registration date: May 20, 2014
Price of alienated shares
RUB 73,821,520 (seventy three million eight hundred twenty one thousand five
hundred twenty) 14 kopecks
2) The alienation of shares under the contract of sale.
Date of the Agreement: July 5, 2018
Parties:
Seller - PJSC RusHydro
Acquirer - JSC Inter RAO Capital
Subject:
The Seller shall transfer into the ownership of the Acquirer the securities (hereinafter - the Shares),
and the Acquirer shall pay and accept the following Shares:
Issuer
Number of shares
Type, category (type) of securities
The nominal value of 1 share
Acquisition price of 1 share
Issue state registration number
Price of alienated shares
Public Joint-Stock Company Inter RAO UES, OGRN 1022302933630, location:
Russian Federation, Moscow (hereinafter - PJSC Inter RAO, the company)
2,029,197,475.41 (two billion twenty nine million one hundred ninety seven thousand
four hundred seventy five point and forty one hundredth)
Registered ordinary uncertificated shares
RUB 2.809767 (two point eight hundred nine thousand seven hundred sixty seven
millionth)
RUB 3.3463 (three point and
thousandths)
1-04-33498-Е, Issue registration date: December 23, 2014
thousand four hundred sixty-three
three
ten
RUB 6,790,303,511 (six billion seven hundred ninety million three hundred three
thousand five hundred eleven) 96 kopecks
3) Acquisition of shares under additional issue.
Date of the Agreement: July 6, 2018
Parties:
Issuer - JSC BoHPP Holding Company
Acquirer - PJSC RusHydro
Subject:
The Issuer shall place additional shares (hereinafter - the Shares) by private offering in favor of the
Acquirer, and the Acquirer shall pay for and accept the following Shares:
Issuer
Maximum number of shares
Joint-Stock Company BoHPP Holding Company
10,113,689,287 (ten billion one hundred thirteen million six hundred eighty nine
thousand two hundred eighty seven)
Registered ordinary uncertificated shares
RUB 1 (one)
Type, category (type) of securities
The nominal value of 1 share
Share offering price of 1 share
Additional issue state registration
number
Price of shares aquired
RUB 1 (one)
1-01-81906-Н-001D, Issue registration date: April 16, 2018
10,113,689,287 (ten billion one hundred thirteen million six hundred eighty nine
thousand two hundred eighty seven)
The Company in 2018 did not conclude contracts for the sale of shares and equity interests of
economic partnerships and companies.
38
Appendix No.4 Information on the Decisions Adopted by RusHydro’s Board of Directors in 2018
Date and No. of
Minutes
Minutes No. 265 dtd
February 6, 2018
Issue Discussed
Decisions Taken
1. About the Charity and
Sponsorship Program of the
Company.
Issue 1.1: On approval of the Progress Report on the Company's Charity and Sponsorship Program in 2017.
Decision Taken: Approve the Progress Report on the Company's Charity and Sponsorship Program in 2017 (Annex No. 1
to the Minutes of Meeting).
Issue 1.2: On approval of the Company's Charity and Sponsorship Program for 2018.
Decision Taken: Approve the Company's Charity and Sponsorship Program for 2018 (Annex No. 2 to the Minutes of
Meeting).
2. On making RusHydro’s
Procurement Policy: On approval of
the revised Regulation on the
Procurement of Products for
RusHydro’s needs.
Decision Taken:
1. Approve the revised Regulation on the Procurement of Products for RusHydro’s Needs (Annex No. 3 to the Minutes of
Meeting).
2. Invalidate the Regulation on the Procurement of Products for RusHydro’s Needs approved by the decision of the
Company’s Board of Directors (Minutes No. 239 dated June 23, 2016) as amended (Minutes No. 240, No. 242, No. 243,
No. 246, No. 250, and No. 254 dated August 11, 2016, October 10, 2016, November 14, 2016, December 27, 2016, April
7, 2017, and June 22, 2017, respectively).
3. On measures to enhance the
reliability at RusHydro Group’s
power facilities.
Decision Taken:
Take due note of the information on measures to enhance the reliability at RusHydro Group’s power facilities (Annex
No. 4 to the Minutes of Meeting).
4. On contributions to the authorized
capital of JSC Chukotenergo.
Decision Taken:
Pursuant to the adoption of the Federal Law “On the Federal Budget for 2018 and for the Planning Period of 2019 and
2020”, which envisages the allocation of budgetary investments to the Company, as well as in accordance with the
requirements of Decree No. 1692 of the Government of the Russian Federation dated December 29, 2017 On the
Procedure for Making Decisions on Providing Budgetary Investments to Legal Entities that are not State or Municipal
Institutions and State or Municipal Unitary Enterprises as a Contribution to Authorized (share) Capital of Subsidiaries of
these Legal Entities for Capital Investments in Capital Construction Projects owned by such Subsidiaries, and (or) for the
Acquisition of Real Properties by these Subsidiaries from Federal Budget Resources", it shall be considered appropriate
for the Company to provide contributions to the authorized capital of JSC Chukotenergo in order to make capital
investments in capital construction projects as part of the investment project “Construction of Two Single-Circuit 110 kV
Pevek-Bilibino Overhead Lines” (construction stage No. 1) in the amount of not more than RUB 18 bn - including from
the Company’s funds in the amount of not more than RUB 5 bn, as well as from funds allocated to the authorized capital
of the Company (if relevant decisions are taken by the Government of the Russian Federation):
- budget investments in the amount of RUB 10 bn, - including RUB 1 bn in 2018, RUB 3 bn in 2019 and RUB 6 bn in
2020;
- budget allocations from the Reserve Fund of the Government of the Russian Federation in the amount of RUB 3 bn.
5. On the Taishet Aluminum Smelter
Construction Project.
Decision Taken:
1. Take due note of the information on the status of fulfillment of the conditions of RusHydro's participation in the
39
6.On the agreement of concurrent
employment of the Management
Board’s members in the
management bodies of other
organizations.
7.On consent to conclude a loan
agreement between the Company
and JSC Far East and Baikal
Region Development Fund as a
related-party transaction.
construction of the Taishet Aluminum Smelter approved by the Company’s Board of Directors (Minutes No. 257 dated
September 1, 2017) (Annex No. 5 to the Minutes of Meeting).
2. Defer to Q1 2018 the deadline for execution of the assignment stipulated by paragraph 2 of the decision of the
Company’s Board of Directors (Minutes No. 257 of September 1, 2017) on issue No. 1 On the Priority Areas of the
Company's Activities: On the Taishet Aluminum Smelter construction project as to the submission of the material
conditions for the Company's participation in the Taishet Aluminum Smelter construction project for approval to the
Board of Directors.
Decision Taken:
1. Agree the concurrent employment of the following people:
1.1. Nikolay Shulginov, Chairman of the Management Board - General Director of the Company and a member of the
Board of Directors of JSC Institute Hydroproject.
1.2. Boris Bogush, a member of the Management Board, First Deputy General Director - Chief Engineer of the Company
and a member of the Board of Directors of JSC Institute Hydroproject.
1.3. George Rizhinashvili, a member of the Management Board, First Deputy General Director of the Company and a
member of the Board of Directors of JSC Institute Hydroproject.
1.4. Andrey Kazachenkov, a member of the Management Board, First Deputy General Director of the Company and a
member of the Board of Directors of JSC Institute Hydroproject.
1.5. Sergey Kirov, a member of the Management Board, First Deputy General Director of the Company and a member of
the Board of Directors of JSC Institute Hydroproject.
2. Agree the concurrent employment of the Chairman of the Management Board - General Director of the Company and
members of the Management Board of the Company at the positions in the management bodies of RusHydro’s controlled
entities.
Decision Taken3:
1. Determine the price of the Loan Agreement between the Company and Far East and Baikal Region Development Fund
(hereinafter referred to as the “Loan Agreement”), which is a related party transaction, as a pool of the following debt
obligations of the Company under the Loan Agreement:
− obligations to repay the loan in the amount of RUB 7,000,000,000 (seven billion) 00 kopecks maximum;
− obligation to pay interest on loan(s) at the rate of 5 (five)% per annum in the amount of RUB 3,150,000,000 (three
billion one hundred fifty million) 00 kopecks maximum.
The price of the Loan Agreement does not exceed RUB 10,150,000,000 (ten billion one hundred fifty million)
00 kopecks.
2. Agree to the conclusion of a loan agreement by the Company in a related party transaction (with due regard to sub-
clause 25, clause 12.1 of Art. 12 and clause 15.3 of Art. 15 of the Company's Charter) on the following material terms:
Parties to the Loan Agreement:
- Lender - Far East and Baikal Region Development Fund (OGRN 1112721010995);
- Borrower - RusHydro (Company).
Subject of the Loan Agreement:
3The loan agreement concluded between RusHydro and Far East and Baikal Region Development Fund shall be deemed, in accordance with Article 81 of the Federal Law “On Joint-Stock Companies”, to be a related-party
transaction, in which there is an interest of a member of RusHydro’s Board of Directors, A. Chekunkov, who is also the General Director of the Far East and Baikal Region Development Fund, the lender of the transaction.
In line with Art. 83 of the Federal Law “On Joint-Stock Companies”, the decision on this issue shall be taken by the Board of Directors of the company by a majority vote of independent directors who are not interested therein.
When summarizing the voting results on this issue, the votes of A. Chekunkov, a member of RusHydro’s Board of Directors, who shall be deemed, in accordance with Art. 81 of the Federal Law “On Joint-Stock Companies”, to
be a person interested in making the transaction, as well as N. Shulginov, who shall be deemed, in accordance with Art. 83 of the Federal Law "On Joint-Stock Companies", to be a dependent director.
40
The Lender provides a loan to the Borrower, and the Borrower undertakes to return the outstanding loan to the Lender and
to pay interest on it.
Loan amount:
RUB 7,000,000,000 (seven billion) 00 kopecks maximum, which may be received by the Company from the Fund within
one or several drawdowns.
Loan Interest:
5 (five)% per annum.
Loan Agreement Price:
Determined according to paragraph 1 of this decision.
Loan Maturity:
- the first down-payment: December 31, 2019;
- then - quarterly in equal installments;
- last payment: no later than June 30, 2026.
Purpose of the Loan(s):
Financing in favor of Joint-Stock Company RAO ES East (OGRN 1087760000052) (hereinafter referred to as the Design
Company) for the implementation of the project for the construction of off-site infrastructure facilities to operate the
Sakhalin GRES-2:
- construction, installation and supervision of works, works and commissioning services, supervised installation of off-
site infrastructure facilities to operate the Sakhalin GRES-2 (namely: electrical power distribution schemes, ash and slag
removal systems, drinking water and industrial water supply systems, access roads (including the road to the ash dump)
and the access railway), as well as equipment, machinery and other fixed assets for equipping off-site infrastructure
facilities, and/or for the purposes of co-investment in the design, construction and commissioning of off-site infrastructure
facilities, and/or for the purpose of the refundable acquisition by the Design Company of ownership of third-party off-site
infrastructure facilities under the project (always provided that the Design Company acquires (upon completion of
construction and/or completion of the relevant transaction) ownership of the relevant off-site infrastructure facilities),
and/or for the purpose of repaying the cost of utility connection of off-site infrastructure facilities (including value added
tax payable to contractors and/or suppliers under relevant contracts),
- purchase of equipment, vehicles, and other fixed assets for equipping off-site infrastructure facilities, including design,
manufacturing, supply, insurance, and other related expenses, including those included in the price of the relevant
agreement (including value-added tax payable under relevant contracts to contractors and/or to suppliers), and
- payment of taxes, customs duties and fees payable against the importation into the Russian Federation and customs
clearance of imported off-site infrastructure facilities listed in above paragraphs 1 and 2;
reimbursement of expenses actually incurred by the Design Company for the purposes specified in the paragraphs
-
above, after the date the Fund’s Board of Directors made the decision on the Loan Agreement (Minutes No. 57 dated
December 29, 2017);
- other purposes related to the work at the off-site infrastructure facilities agreed in writing by the Parties.
The person who has an interest in the transaction and the standing:
A. Chekunkov, who is a member of the Company's Board of Directors and also holding a position in the management
bodies of a legal entity that is a related party to the transaction (the Director General of the Fund).
State that the decision referred to in paragraph 2 is valid until June 30, 2019.
Decision Taken:
Assign the Company's representatives at the General Meeting of Shareholders of the Sakhalin GRES-2 on the issue: On
consent for a major transaction involving the lease of the Sakhalin GRES-2’s assets to vote in favor of the following
decision:
8.On determination of the stand of
the Company (representatives of the
Company) on the agenda item of
the General Meeting of
41 Shareholders of JSC Sakhalin
GRES-2: On consent for a major
transaction involving the lease of
the Sakhalin GRES-2’s assets.
9. On approval of the progress
report on the Action Plan for the
Disposal of Non-core Assets of the
Company.
10. On approval of the performance
reports of the Committees of the
Company’s Board of Directors.
Consent to a major transaction - the conclusion of the Property Lease Agreement (hereinafter referred to as the
Agreement), which is a major transaction with the value exceeding 50% of the Sakhalin GRES-2’s book value, on the
following material terms:
Parties to the Agreement:
Lessor - JSC Sakhalin GRES-2;
Lessee - PJSC Sakhalinenergo.
Subject of the Agreement:
In accordance with the terms of this Agreement, the Lessor shall deliver, and Lessee shall accept, for a consideration, the
leasehold of the assets that obtained permission to put the facility into operation, created as part of the investment project
"Construction of the Sakhalin GRES-2 (1st stage) "(hereinafter - the Facility), directly used in the process of production
and transmission of electric and thermal energy and fully owned by the Lessor, with an address at: Sakhalin Region,
Tomarinsky Urban Okrug Municipality, close to Ilinskoe settlement.
The list of leased assets is specified in Annex No. 6 to the Minutes of Meeting.
Rental margin (marginal price of the Agreement):
RUB 2,437,022,412 (two billion four hundred thirty seven million twenty two thousand four hundred and twelve)
04 kopecks with VAT (18%).
The rent amount shall be determined in accordance with the Rent Calculation Procedure (Annex No. 7 to the Minutes of
Meeting) and shall be updated against the total value of the facilities included in the assets complex determined after the
commissioning based on the acceptance certificate of the completed construction of the facility by the Acceptance
Committee (KS-14), by signing an addendum to the Agreement.
Lease Term:
364 days from the date of transfer of the Facility under the Certificate of Transfer and Acceptance.
If 30 (thirty) calendar days before the expiration of the lease term none of the Parties to the Agreement expresses a written
intention to terminate it, the Agreement shall be considered renewed on the same conditions and for the same term.
Decision Taken:
Approve the progress report on the Action Plan for the Disposal of Non-core Assets of the Company for Q4 2016-2017.
(Annex No. 8 to the Minutes of Meeting).
Issue 10.1: On approval of the performance reports of the Audit Committee of the Company’s Board of Directors for H1
2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Audit Committee of the Company’s Board of Directors for H1 2017-2018 corporate
year (Annex No. 9 to the Minutes of Meeting).
Issue 10.2: On approval of the performance reports of the Nomination and Compensation Committee of the Company’s Board of
Directors for H1 2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Nomination and Compensation Committee of the Company’s Board of Directors for H1
2017-2018 corporate year (Annex No. 10 to the Minutes of Meeting).
Issue 10.3: On approval of the performance reports of the Strategy Committee of the Company’s Board of Directors for H1 2017-
2018 corporate year.
Decision Taken:
42
Approve the performance reports of the Strategy Committee of the Company’s Board of Directors for H1 2017-2018 corporate year
(Annex No. 11 to the Minutes of Meeting).
Issue 10.4: On approval of the performance reports of the Investment Committee of the Company’s Board of Directors for
H1 2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Investment Committee of the Company’s Board of Directors for H1 2017-2018
corporate year (Annex No. 12 to the Minutes of Meeting).
Issue 10.5: On approval of the performance reports of the Committee on Energy Development of the Far East of the
Company’s Board of Directors for H1 2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Committee on Energy Development of the Far East of the Company’s Board of
Directors for H1 2017-2018 corporate year (Annex No. 13 to the Minutes of Meeting).
Issue 10.6: On approval of the performance reports of the Committee on Reliability, Energy Efficiency, and Innovation of
the Company’s Board of Directors for H1 2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Committee on Reliability, Energy Efficiency, and Innovations of the Company’s
Board of Directors for H1 2017-2018 corporate year (Annex No. 14 to the Minutes of Meeting).
Include the following candidates in the nominee voting list for election to the Board of Directors of the
1.
Company at the Annual General Meeting of Shareholders of the Company following the results of 2017:
No. A candidate proposed by
shareholder(s) to include
in the voting list for
elections to the Board of
Directors of the
Company
Position, place of work of the candidate 4proposed
by shareholder(s) to include in the voting list for
elections to the Board of Directors of the Company
Name of the
shareholder(s)
who proposed the
candidate for
inclusion in the
voting list for
elections to the
Board of Directors
of the Company
Number of
the
Company’s
voting shares
owned by
shareholder(s
)5
(as a
percentage of
the
authorized
capital)
60.56
1.
2.
3.
4.
Artem Avetisyan
Vyacheslav Kravchenko
Pavel Livinsky
Mikhail Rasstrigin
Director of New business division, Agency for
Strategic Initiatives for New Projects Promotion
Deputy Minister of Energy of the Russian
Federation
General Director of Public Joint-Stock Company
Rossiyskiye Seti (Russian Networks)
Deputy Minister of Economic Development of the
Russian Federation
Russian
Federation
represented by
the Federal
Agency for State
Property
Management
4Position, place of work of the candidate on the date of nomination according to the request of the shareholder.
5Number of the Company’s voting shares owned by shareholder(s), on the date of nomination.
Minutes No. 266 dtd April
4, 2018
1. On the consideration of proposals
of the Company's shareholders for
the nomination of candidates for
election to RusHydro’s management
and control bodies.
43
5.
Nikolay Rogalev
6.
Yury Trutnev
7.
Nikolay Shulginov
8.
Maxim Bystrov
9.
Pavel Grachev
10.
Sergey Ivanov
Rector of the Federal State Budgetary Educational
Institution of Higher Education National Research
University, MPEI
Deputy Chairman of the Government of the
Russian Federation - envoy from the President of
the Russian Federation in the Far Eastern Federal
District
Chairman of the Management Board - General
Director of the Public Joint-Stock Company
Federal Hydrogeneration Company - RusHydro
Chairman of the Management Board of the
Association "Non-commercial Partnership Market
Council on the organization of an effective system
of wholesale and retail trade in electric energy and
power"
President of Public Joint-Stock Company Polyus
General Director of Limited Liability Company
RT-Capital
11. Vyacheslav Pivovarov
General Director of Limited Liability Company
Altera Capital
12. Alexey Chekunkov
General Director of Joint-Stock Company Far East
and Baikal Region Development Fund
13.
Sergey Shishin
Senior Vice President of VTB Bank (Public Joint-
Stock Company)
14. Mikhail Voevodin
Andrey Shishkin
15.
General Director of Public Joint-Stock Company
VSMPO-AVISMA Corporation
Vice President for Energy, Localization, and
Innovation of Public Joint-Stock Company
Rosneft;
President, Chairman of the Management Board of
Public Joint-Stock Company “Joint Stock Oil
Company Bashneft”
Limited Liability
Company
Avitrans
2.9
2. Include the following candidates in the nominee voting list for election to the Internal Audit Commission of the
Company at the Annual General Meeting of Shareholders of the Company following the results of 2017:
44
No.
A candidate proposed by
shareholder(s) to include in
the voting list for elections to
the Internal Audit
Commission of the Company
Position, place of work of the
candidate6 proposed by
shareholder(s) to include in the
voting list for elections to the
Internal Audit Commission of the
Company
Number of the
Company’s voting shares
owned by shareholder(s)7
(as a percentage of the
authorized capital)
Name of the
shareholder(s)
who proposed the
candidate for
inclusion in the
voting list for
elections to the
Internal Audit
Commission of
the Company
1.
Natalia Annikova
2.
Tatyana Zobkova
3.
4.
Igor Repin
Marina Kostina
5.
Dmitry Simochkin
First Deputy General Director of
Open Joint-Stock Company
Construction Department
No. 308
Chief of Branch of Department
of the Ministry of Energy of
Russia
Deputy Executive Director of the
Professional Investors
Association
Deputy Director of the Ministry
of Economic Development of
Russia
Deputy Chief of the Department
of Management of the Federal
Agency for State Property
Management
Russian
Federation
represented by
the Federal
Agency for State
Property
Management
60.56
2. On consideration of the proposals
of the Company's shareholders on the
inclusion of issues on the agenda of
RusHydro’s annual General
Shareholders Meeting.
Decision Taken:
Accept the proposal of the Company’s shareholder - the Russian Federation represented by the Federal Agency for State
Property Management8, which owns 60.56% of the Company's voting shares, to include the following issues in the agenda
of the annual General Shareholders Meeting for 2017:
Issue wording proposed by the shareholder
No
.
Decision wording proposed by the
shareholder
1. Approval of the Company's annual report.
Not presented
2.
Approval of the annual accounting (financial) statements of the
Company.
Not presented
6Position, place of work of the candidate on the date of nomination according to the request of the shareholder.
7Number of the Company’s voting shares owned by shareholder(s), on the date of nomination.
8Number of the voting shares owned by shareholder(s), on the date of nomination.
45
3.
4.
5.
6.
Approval of the distribution of the Company's profit based on the
results of 2017.
Not presented
On the amount of dividends, time and form of dividend payout
based on their performance in 2017 and the establishment of the
date to determine the persons entitled to receive dividends.
On the payment of remuneration for work on the Board of
Directors to members of the Board of Directors, who are not
public servants, in the amount established by the Company's
internal documents.
On the payment of remuneration for work on the Internal Audit
Commission to the Commission members, who are not public
servants, in the amount established by the Company's internal
documents.
Not presented
Not presented
Not presented
7. Election of members of the Board of Directors of the Company.
Not presented
8.
Election of members of the Internal Audit Commission of the
Company.
9. Approval of the Company's auditor.
Not presented
Not presented
3. On the creation of committees
under RusHydro’s Board of
Directors.
4. On approval of the Action Plan of
RusHydro’s Board of Directors for
H1 2018.
5. On termination of RusHydro’s
membership in other organizations.
3.1. On the composition of the Committee on Reliability, Energy Efficiency, and Innovations at the Company's
Board of Directors.
Decision Taken:
1. Prematurely terminate the powers of the members of the Committee on Reliability, Energy Efficiency, and Innovations at
the Board of Directors of the Company:
- Roman Gromov;
- Sergey Tolstoguzov.
2. Elect the following people to the Committee on Reliability, Energy Efficiency, and Innovations at the Company's Board
of Directors:
- Oleg Barkin, Deputy Chairman of the Management Board of Market Council Association;
- Viktor Gvozdev, Deputy Director of the Far East Division for production of RusHydro.
3.2. On the composition of the Committee on Energy Development of the Far East at RusHydro’s Board of Directors.
Decision Taken:
1. Prematurely terminate the powers of Sergey Tolstoguzov, a member of the Committee on Energy Development of the
Far East at RusHydro’s Board of Directors.
2. Elect Sergey Vasilyev to the Committee on Energy Development of the Far East at the Company’s Board of Directors,
First Deputy Director of the Far East Division of the Company.
Decision Taken:
Approve the Action Plan of RusHydro’s Board of Directors for H1 2018 (Annex No. 1 to the Minutes of Meeting).
Decision Taken:
Terminate RusHydro’s membership in JSC SHPP of Dagestan.
46
6. On the determination of the
position of RusHydro (RusHydro’s
representatives) in the management
bodies of subsidiaries.
Issue 6: On determination of the position of RusHydro (RusHydro’s representatives) in the management bodies of
subsidiaries: on determination of the position of RusHydro (the Company’s representatives) on the agenda issues of
the meeting of SHPP of Dagestan’s management bodies on the liquidation of the latter.
Decision Taken:
1. Assign RusHydro’s representatives in the management bodies of SHPP of Dagestan on the issue On liquidation of JSC
SHPP of Dagestan to vote FOR the decision to liquidate JSC SHPP of Dagestan.
2. Assign RusHydro’s representatives in the management bodies of SHPP of Dagestan to vote FOR the decisions related
to the liquidation of JSC SHPP of Dagestan reviewed in line with Articles 61-64 of the Civil Code of the Russian
Federation and Articles 21-24 of the Federal Law No. 208-FZ On Joint-Stock Companies dated December 26, 1995.
7. On approval of the Report on
RusHydro’s Insurance Coverage in
2017.
8. On RusHydro Group’s draft
Consolidated Investment Program
for 2019–2023 and for 2018
(amended), and on RusHydro’s draft
Investment Program for 2019-2028
and for 2018 (amended).
9. On approval of the report on the
public process and pricing audit of
RusHydro’s investment projects for
2017 containing the results of the
summary analysis of the audits
conducted and the conclusions of the
public and expert hearings.
10. On approval of the list of
RusHydro’s investment projects for
public process and pricing audit in
2018-2019.
Decision Taken:
Approve the Report on RusHydro’s Insurance Coverage in 2017 (Annex No. 2 to the Minutes of Meeting).
Decision Taken:
1. Take due note of RusHydro Group’s draft Consolidated Investment Program for 2019–2023 and for 2018 (amended)
(Annexes Nos. 3, 4, and 5 to the Minutes of Meeting) and their financing sources (Annex No.6 to the Minutes of Meeting).
2. Pre-approve RusHydro’s draft Investment Program for 2019-2028 and the draft amendments thereto for 2018-2027
approved by order No. 34 @ of the Ministry of Energy of Russia dated December 29, 2017 On Approval of RusHydro’s
Investment Program for 2018-2027 and the Amendments thereto approved by order No. 1458 of the Ministry of Energy of
Russia dated December 30, 2016 (Annexes Nos. 7, 8, and 9 to the Minutes of Meeting) in order to disclose information in
line with Decree No. 24 of the Government of the Russian Federation dated January 21, 2004 On Approval of Information
Disclosure Standards of the Wholesale and Retail Electricity Markets.
3. Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, shall ensure:
3.1. that the approved draft RusHydro’s Investment Program for 2019-2028 and the draft amendments thereto for 2018-
2027 approved by order No. 34 @ of the Ministry of Energy of Russia dated December 29, 2017 On Approval of
RusHydro’s Investment Program for 2018–2027 and the amendments thereto, approved by order No. 1458 of the Ministry
of Energy of Russia dated December 30, 2016 is forwarded to the Ministry of Energy of Russia in the manner established
by Decree No. 977 of the Government of the Russian Federation dated December 1, 2009 On Investment Programs of
Electric Power Engineering Entities.
3.2. that RusHydro’s business plan is revised against the parameters of the Investment Program in accordance with
paragraphs 1 and 2 of this decision.
Decision Taken:
Approve the report on the public process and pricing audit of the Company’s investment projects for 2017 containing the
results of the summary analysis of the audits conducted and the conclusions of the public and expert hearings (Annexes
Nos. 10, 11 to the Minutes of Meeting).
Decision Taken:
Approve the list of investment projects implemented and planned to be implemented under RusHydro’s Investment Program
for conducting a public process and pricing audit in 2018-2019 (Annex No. 12 to the Minutes of Meeting).
47
11. On RusHydro’s priority
activities.
11.1. On the implementation of recommendations on the management of Intellectual Property Rights at RusHydro.
Decision Taken:
In order to implement the provisions of Directive No. 9177p-P13 of the Government of the Russian Federation dated
December 12, 2017, the Chairman of the Management Board - the General Director shall ensure:
1. conducting an analysis of the management of Intellectual Property Rights at the Company in accordance with the
provisions of the Recommendations on the Management of Intellectual Property Rights in Organizations approved by
order No. ISh-P8-5594 of the Government of the Russian Federation dated August 25, 2017 (hereinafter referred to as
Recommendations), before June 30, 2018.
2. drafting an internal document - the Program on Management of Intellectual Property Rights at the Company (hereinafter
referred to as the Program) in accordance with the Recommendations and its approval by the Company’s Board of
Directors before October 31, 2018
3. posting and subsequent updating the information on the progress of the Program at the Company on the
Interdepartmental Portal on State Property Management.
11.2: On the progress status of the priority projects for the construction of four facilities in the Far East: (Yakutsk
GRES-2 (1st stage), the Blagoveshchenskaya CHPP (2nd stage), CHPP in Sovetskaya Gavan, Sakhalin GRES-2
(1st stage).
Decision Taken:
Take due note of the information on the progress status of the priority projects for the construction of four facilities in the
Far East: (Yakutsk GRES-2 (1st stage), the Blagoveshchenskaya CHPP (2nd stage), CHPP in Sovetskaya Gavan, Sakhalin
GRES-2 (1st stage) as of December 31, 2017 (Annex No. 13 to the Minutes of Meeting).
11.3: On the construction progress of the Ust-Srednekanskaya HPP
Decision Taken:
Take due note of the information On the construction progress of the Ust-Srednekanskaya HPP (Annex No. 14 to the
Minutes of Meeting).
11.4: On reviewing the results of inspections by the Ministry of Energy of Russia, on reviewing draft action plans
for rectifying violations found, and on the progress in rectifying violations found:
11.4.1. On the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy
of Russia following the results of the field check on the progress of design, construction, and commissioning
activities at the Boguchanskaya HPP stipulated by the Company's Investment Program for 2014–2016.
Decision Taken:
Take due note of the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy of
Russia following the results of the field check on the progress of design, construction, and commissioning activities at the
Boguchanskaya HPP stipulated by the Company's Investment Program for 2014–2016 (Annex No. 15 to the Minutes of
Meeting).
11.4.2. On the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy of
Russia following the results of the field check on the progress of the investment project Supply and Replacement of Six
Hydro Turbines at the Novosibirsk HPP on a turnkey basis
Decision Taken:
Take due note of the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy of
48
Russia following the results of the field check on the progress of the investment project Supply and Replacement of Six Hydro
Turbines at the Novosibirsk HPP on a turnkey basis (Annex No. 16 to the Minutes of Meeting).
11.4.3. On the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy
of Russia following the results of the field check on the progress of the Ust-Srednekanskaya HPP investment
project (including the analysis of the measures necessary to fill the Ust-Srednekansky reservoir to the design level
and to drive the Srednekanskaya HPP up to the design capacity.
Decision Taken:
Take due note of the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy of
Russia following the results of the field check on the progress of the Ust-Srednekanskaya HPP investment project
(including the analysis of the measures necessary to fill the Ust-Srednekansky reservoir to the design level and to drive the
Srednekanskaya HPP up to the design capacity (Annex No. 17 to the Minutes of Meeting).
11.4.4. On the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy of
Russia following the results of the field check on the progress of the following investment projects in 2016: construction
of the Yakutsk GRES-2 (1st stage), construction of CHPP in Sovetskaya Gavan, and construction of the Sakhalin
GRES-2 (1st stage).
Decision Taken:
Take due note of the results of the action plan to rectify violations and shortcomings recorded by the Ministry of Energy of
Russia following the results of the field check on the progress of the following investment projects in 2016: construction of the
Yakutsk GRES-2 (1st stage), construction of CHPP in Sovetskaya Gavan, and construction of the Sakhalin GRES-2 (1st stage)
(Annex No. 18 to the Minutes of Meeting).
11.4.5. On the results of the field inspection by the Ministry of Energy of Russia on the progress of the investment
project Facility No. 1- HPP of the 2nd Stage, Zaramagskiye HPPs and the results of the action plan to rectify violations
and shortcomings recorded by the Ministry of Energy of Russia following the above-said field inspection.
Decision Taken:
Take due note of the results of the field inspection by the Ministry of Energy of Russia on the progress of the investment
project Facility No. 1- HPP of the 2nd Stage, Zaramagskiye HPPs and the results of the action plan to rectify violations
and shortcomings recorded by the Ministry of Energy of Russia following the above-said field inspection (Annex No. 19
to the Minutes of Meeting).
11.4.6. On reviewing the results of the field inspections by the Ministry of Energy of Russia on the progress the
following investment projects in 2017: construction of the Yakutsk GRES-2 (1st stage), construction of CHPP in
Sovetskaya Gavan, and construction of the Sakhalin GRES-2 (1st stage).
Decision Taken:
Take due note of the results of the field inspections by the Ministry of Energy of Russia on the progress the following
investment projects in 2017: construction of the Yakutsk GRES-2 (1st stage), construction of CHPP in Sovetskaya Gavan,
and construction of the Sakhalin GRES-2 (1st stage) (Annex No. 20 to the Minutes of Meeting).
11.5. On appointment of an independent consultant to assess the performance of the Company’s Board of
Directors.
Decision Taken:
1. Approve the engagement of an independent consultant (PricewaterhouseCoopers Consulting LLC) to evaluating the
49
Minutes No. 267 dtd
April 4, 2018
1.On the consideration of
RusHydro Group’s Consolidated
Business Plan (including the
Consolidated Investment Program)
for 2018–2022 and approval of the
Targets of annual Key Performance
Indicators (hereinafter - KPI) for
members of RusHydro’s
Management Board for 2018 and
the KPI Targets of under Cycle-two
of RusHydro’s Long-term
Motivation Program for 2018 -
2020.
2. On RusHydro’s priority activities:
2.1. On the Taishet Aluminum
Smelter Construction Project.
performance of the Company's Board of Directors.
2. Recommend to members of the Company’s Board of Directors to take part in the questionnaire survey and
interviewing conducted by the independent consultant.
3. Assign the Company to ensure that the Company's Board of Directors performance appraisal results are presented at
the meeting of the Company’s Board of Directors with a preliminary consideration of the issue at the meeting of the
Nomination and Compensation Committee of the Company.
Decision Taken:
1.1. Approve the Consolidated Business Plan (including the Consolidated Investment Program) of the RusHydro Group
for 2018-2022 (Annex No. 1 to the Minutes of Meeting).
1.2. Defer the approval of the annual KPI Targets for members of RusHydro’s Management Board for 2018 and the KPI
Targets under Cycle-two of RusHydro’s Long-term Motivation Program for 2018 - 2020 (hereinafter - KPI) to the regular
meeting of the Company’s Board of Directors.
Decision Taken:
1. Approve RusHydro’s participation in the construction project of the Taishet Aluminum Smelter (hereinafter referred to
as TaAS) subject to conditions previously determined by the Company’s Board of Directors (Minutes No. 257 dated
September 1, 2017).
2. Define the following additional conditions for the Company's participation in the TaAS project:
2.1. RusHydro’s liability limit for sponsorship obligations assumed as part of project financing attracted for the
implementation of the TaAS project shall not exceed 7.5% (USD 60 bn) of the TaAS further construction cost.
2.2. The cost of RusHydro’s entry into the TaAS project (hereinafter referred to as the Entry Cost) is no more
than USD 319.5 mn (RusHydro’s stake in the project is 50%), while the cost of a 50% share in the authorized capital of
RUSAL Tayshet LLC (hereinafter - the Joint Venture) shall not exceed USD 169.5 mn, which shall be confirmed on the
basis of an independent appraiser's report, and shall be paid as follows:
−
UC RUSAL shall accept, as a partial payment, 42.75% of shares of JSC Irkutsk Electric Grid Company (JSC IEGC),
owned by RusHydro, at a value of USD 150 mn;
−
referred to Reaching Design Capacity)) shall be provided free of charge; subsequently, interest shall be charged at the
average weighted rate as part of the Project Financing raised for the TaAS Project).
The remaining part of the Entry Cost (USD 150 mn) is paid by the Joint Venture by repaying the debt to UC RUSAL
Group companies under a loan agreement from the cash flow after the Smelter reaches its design capacity.
2.3. In case the design capacity will fail to be reached by January 1, 2035, the Parties shall jointly implement the
procedure for RusHydro's exit from the Project without deterioration of the financial situation of the Company.
installment payment in the amount of USD 19.5 mn (within 3 years after TaAS reached its design capacity (hereinafter
2.4. If RusHydro does not resolve to expand the TaAS’s design capacity (within a year after reaching the design capacity,
but not later than December 31, 2024), the Entry Cost shall be reduced by USD 50 mn as follows:
−
through a decline in value of a 50% stake in the Joint Venture by USD 19.5 mn.
50
In this case, RusHydro's obligations to UC RUSAL to pay for the stake in the specified amount shall be terminated;
−
through the implementation of the procedure for reducing the Joint Venture's debt to the UC RUSAL Group
companies by USD 61 mn without deterioration of the conditions of RusHydro's participation and the financial position of
the Joint Venture and without increasing the stake of UC RUSAL in the Joint Venture (taking into account the need to
transfer to UC RUSAL the facilities and rights that were defined following the due diligence as facilities and rights
necessary for the implementation of the TaAS Project).
2.5. The possibility of increasing the amount of the TaAS Project Financing (subject to approval of such resolution by
creditor banks) to improve the financial sustainability of the Project and ensure the possibility of changing the
nomenclature of finished products with a higher yield, subject to the confirmation by independent auditors of the
improvement of the economic efficiency indicators of the TaAS Project through these measures. At the same time, the
limit of RusHydro's liability for the sponsorship obligations assumed as part of the TaAS project financing shall not
exceed the limit specified in Clause 2.1 of this decision (USD 60 mn).
2.6. No restrictions for the exercise of the RusHydro's right to alienate the stake (part of the stake) in the authorized capital
of the Joint Venture after the Joint Venture has repaid the debt on the loan raised as part of the Project Financing of the
construction of the TaAS first start-up facilities, while preserving the Parties ’preferential right to repurchase the stakes.
2.7. The expediency of granting privileges and advantages to the Joint Venture in connection with its conclusion of a
special investment contract in accordance with Federal Law No. 488-FZ dated December 31, 2014 On Industrial Policy in
the Russian Federation (SPIC).
2.8. Protection of RusHydro against the risks and negative effects of the implementation of the TaAS Project arising from
the activities of the Joint Venture and/or actions of its participants with respect to the Joint Venture committed before the
closing date of the stake acquisition transaction (including, but not limited to, tax risks, claims of equipment suppliers,
failure to comply with mandatory instructions of state bodies, etc.) by incorporating in the legally binding documentation
the provisions on compensation by UC RUSAL for RusHydro's damages or property losses suffered as a result of the
materialization of such risks.
2.9. Transfer of facilities (equipment) that are not related to the TaAS Project from the balance sheet of the Joint Venture
without deterioration of its financial position (taking into account the possible expansion of the TaAS’s design capacity).
2.10. Provision of guarantees and obligations for financing the additional capital costs of the TaAS Project (an overrun of
the TaAS further construction cost by over 15%) by making a contribution to the assets of the Joint Venture or using
another procedure to be agreed upon by RusHydro and UC RUSAL that does not entail the deterioration of the financial
situation of the Joint Venture or an increase in UC RUSAL's stake in the Joint Venture.
2.11. A resolution documented in a legally binding form that the acquisition of RusHydro's stake in the Joint Venture
envisages that the Parties may withdraw from the joint completion of the Boguchanskiy Aluminum Smelter to the
contracted design capacity (construction of the third and fourth start-up facilities).
2.12. Provision of a conclusion on the Project economic efficiency based on the results of sensitivity analysis to the Board
of Directors of the Company.
3. After the fulfillment of the conditions of participation in the TaAS Project stipulated by this decision and the
resolution of the Board of Directors of the Company dated August 30, 2017 (Minutes No. 257 dated September 1, 2017),
and after reconciliation of draft legally binding documentation with UC RUSAL, assign the Management Board of the
Company to ensure the submission of the documentation to the Federal Agency for State Property Management in order to
obtain the necessary decisions of state authorities (including the consent of the Government of the Russian Federation to
the alienation of JSC IEGC’s shares and a directives to representatives of the Russian Federation in the Board of Directors
of the Company) for the purpose of the subsequent submission of the issue on the Company's participation in LLC
RUSAL Tayshet and the issue on termination of the Company's participation in JSC IEGC for consideration to the Board
of Directors of the Company.
51
Minutes No. 268 dtd
April 12, 2018
On termination of RusHydro’s
membership in other organizations.
Minutes No. 269 dtd April
25, 2018
1. On fulfillment of the Business
Plan of the Company for 2017
(including progress reports of the
Investment Program (including the
Program for Comprehensive
Upgrading of Generating Facilities)
and the Annual Comprehensive
Procurement Program for 2017).
2. On consideration of the report on
the implementation of the
Consolidated Business Plan
(including the Consolidated
Investment Program) of RusHydro
Group for 2017.
3. Approval of the report on the
achievement of key performance
indicators of the Company
(members of the Management
Board).
Decision Taken:
Approve the termination of Company's participation in the authorized capital of JSC NPF Elektroenergetiki by way of
disposing 73,090,614 (seventy three million ninety thousand six hundred and fourteen) uncertificated registered ordinary
shares of NPF JSC Elektroenergetiki owned by the Company at a price of RUB one (1) 01 kopeck each by calling for
redemption of NPF Elektroenergetiki’s shares in pursuance of Article 75 of Federal Law No. 208-FZ dated December 26,
1995 On Joint-Stock Companies.
Decision Taken:
Approve the report on the fulfillment of the Business Plan of the Company for 2017 (including progress reports of the
Investment Program (including the Program for Comprehensive Upgrading of Generating Facilities) and the Annual
Comprehensive Procurement Program for 2017) (Annex No. 1 to the Minutes of Meeting).
Take due note of the report on the fulfillment of the Consolidated Business Plan (including the Consolidated Investment
Program and the cost optimization plan based on the results of the RusHydro’s external independent cost audit, including
subsidiaries) of RusHydro Group for 2017 (Annex No. 2 to Minutes of Meeting).
3.1. On the achievement of annual key performance indicators by members of the Company’s Management Board
for 2017.
Decision Taken:
3.1.1. Deem the KPI "Reduction of Operating Expenses (costs), %" for 2017 calculated with regard to factors that are
beyond the control of the Company’s management, to have been achieved.
3.1.2. Approve the Report on the Achievement of Annual Key Performance Indicators by the Company’s Management
Board Members for 2017 (Annex No. 3 to the Minutes of Meeting).
3.1.3. Confidentially
3.2. On approval of amendments to the Methodology for the Calculation and Evaluation of the Annual KPIs of
RusHydro's Management Board Members.
Decision Taken:
3.2.1. Approve amendments to the Methodology for the Calculation and Evaluation of the Annual KPIs of RusHydro's
Management Board Members (Annex No. 4 to the Minutes of Meeting).
3.2.2. Establish that the amendments specified in Clause 3.2.1 hereof shall apply from January 1, 2018.
3.3. On approval of the annual KPI Targets for members of RusHydro’s Management Board for 2018 and the KPI
Targets under Cycle Two of RusHydro’s Long-term Motivation Program for 2018 - 2020.
Decision Taken:
3.3.1. Approve:
3.3.1.1. Targets of the Annual KPIs of the Company's Management Board Members for 2018 (KPI "Return on Equity
(ROE), %," "Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA), RUB mn," "Labor productivity,
RUB thousand/man-hours") (Annex No. 5 to the Minutes of Meeting).
3.3.1.2. Target KPIs under Cycle Two of RusHydro's Long-Term Motivation Program for 2018–2020 (KPI "Free Cash
52
Flow (FCF), RUB mn") (Annex No. 6 to the Minutes of Meeting).
3.3.2. Based on the results of an evaluation of RusHydro's financial and economic activity for H1 2018, bring the issue of
approval of the Target Values of the Annual KPIs of RusHydro's Management Board Members for 2018 to the
consideration of the Board of Directors no later than July 31, 2018, if adjustment is needed.
3.4. On approval of adjusted target KPI values under Cycle One of RusHydro's Long-Term Motivation Program
for 2017–2019.
Decision Taken:
3.4.1. Approve amendments to the Target KPI Values under Cycle One of the Company's Long-Term Motivation Program
for 2017–2019 (for the KPI "Free cash flows (FCF), RUB mn") (Annex No. 7 to the Minutes of Meeting).
Furthermore, during the discussion of the last agenda item, the Chairman of the Board of Directors Yu. Trutnev assigned
the Company’s management to submit to him within a month an analytical memo on import substitution of production
equipment used in the operating activities of RusHydro Group.
Decision Taken:
Approve the agenda of the Annual General Meeting of Shareholders held based on the results of 2017:
1. Approval of the Company's Annual Report for 2017.
2. Approval of the annual accounting (financial) statements of the Company based on the results of 2017.
3. Approval of the distribution of the Company's profit based on the results of 2017.
4. On the amount of dividends, time and form of dividend payout based on their performance in 2017 and the
establishment of the date to determine the persons entitled to receive dividends.
5. On the payment of remuneration for work on the Board of Directors to members of the Company’s Board of Directors,
who are not public servants, in the amount established by the Company's internal documents.
6. On the payment of remuneration for work on the Internal Audit Commission to the Company's Commission members,
who are not public servants, in the amount established by the Company's internal documents.
7. Election of members of the Board of Directors of the Company.
8. Election of members of the Internal Audit Commission of the Company.
9. Approval of the Company's auditor.
10. Participation of RusHydro in the Association National Network of the Global Compact.
11. On participation of RusHydro in the self-regulatory organization Self-Regulatory Corporation of Builders of the
Krasnoyarsk Territory Association.
12. On the participation of RusHydro in the self-regulatory organization ENERGOPROEKT Association.
13. On the participation of RusHydro in the Engineering Surveys in Construction Association.
14. On the termination of participation of RusHydro in the noncommercial partnership Russian-Chinese Business Council.
15. Approval of the new version of the Company’s Charter.
16. Approval of the new version of the Regulation on the Procedure for Convening and Holding the Company's General
Meeting of Shareholders.
17. Approval of the new version of the Regulation on the Procedure for Convening and Holding the Meetings of the
Company's Board of Directors.
18. Approval of the new version of the Regulation on the Company's Management Board.
Decision Taken:
Pre-approve the Company's Annual Report for 2017 (Annex No. 1 to the Minutes of Meeting) and submit the same for the
approval at the Company's Annual General Meeting of Shareholders.
Decision Taken:
Minutes No. 270 dtd May
28, 2018.
1. On Approval of the agenda of the
Company's Annual General Meeting
of Shareholders.
2. On preapproval of the Company's
annual report for 2017.
3. On approval of the report on
53
related party transactions made by
the Company in 2017.
Approve the report on related party transactions made by the Company in 2017 (Annex No. 2 to
the Minutes of Meeting).
4. On approval of the annual
accounting (financial) statements of
the Company based on the results of
2017.
5. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: Approval of the
distribution of the Company's profit
based on the results of 2017.
Decision Taken:
Pre-approve the Company's annual accounting (financial) statements for 2017 (Annex No. 3 to the Minutes of Meeting) and
submit the same for approval at the Company's Annual General Meeting of Shareholders.
Decision Taken:
Pre-approve and recommend that the Annual General Meeting of Shareholders of the Company approve the following
distribution of profits (losses) of the Company based on the results of 2017:
Retained earnings (loss) of the reporting period
Distribute to: Reserve fund
Development of the Company
Dividends
Recovery of losses of previous years
(RUB)
36,148,608,891.19
1,807,430,444.56
23,115,501,974.98
11,225,676,471.65
0.00
6. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: On the amount of
dividends, time and form of dividend
payout based on their performance in
2017 and the establishment of the
date to determine the persons entitled
to receive dividends.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Pay dividends on ordinary shares of the Company based on the results of 2017 in the amount of RUB 0.0263335 per one share.
Form of payment of dividends: monetary.
Establish the 10th day from the date when the resolution to pay dividends was taken as the date, on which the persons entitled
to receive dividends shall be determined.
The term of dividend payment to a nominal holder and a professional securities market participant to a trustee manager who is
registered in the shareholder register of the Company shall not exceed 10 business days, and to other persons registered in the
shareholder register of the Company shall be 25 business days from the date, on which the persons entitled to receive dividends
shall be determined.
7. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: On the payment of
remuneration for work on the Board
of Directors to members of the
Company’s Board of Directors,
who are not public servants, in the
amount established by the
Company's internal documents.
8. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: On the payment of
remuneration for work on the
Internal Audit Commission to the
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Pay remuneration to the members of the Board of Directors based on their performance in the Board of Directors during the
period from June 26, 2017 to June 27, 2018, in the amount, manner, and time specified by the Resolution on the Payment of
Remunerations and Compensations to the Members of RusHydro’s Board of Directors approved by the resolution of the
Annual General Meeting of Shareholders of the Company dated June 26, 2017 (Minutes No. 16 dated June 27, 2017).
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Pay remuneration to the members of the Internal Audit Commission based on their performance in the Commission during
the period from June 26, 2017 to June 27, 2018, in the amount, manner, and time specified by the Resolution on the Payment
of Remunerations and Compensations to the Members of RusHydro’s Internal Audit Commission approved by the resolution
of the Annual General Meeting of Shareholders of the Company (Minutes No. 16 dated June 27, 2017).
54
Company's Commission members,
who are not public servants, 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 candidate for a Company's
Auditor.
10. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: Approval of the new
version of the Company’s Charter.
11. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: Approval of the new
version of the Regulation on the
Procedure for Convening and
Holding the Company's General
Meeting of Shareholders.
12. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: Approval of the new
version of the Regulation on the
Procedure for Convening and
Holding the Meetings of the
Company's Board of Directors.
13. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: Approval of the new
version of the Regulation on the
Company's Management Board.
14. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: Participation of
RusHydro in the Association
National Network of the Global
Compact.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Approve Joint-Stock Company PricewaterhouseCoopers Audit (OGRN 1027700148431) as RusHydro’s auditor.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to approve the new version of the Company’s
Charter.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to approve the new version of the Regulation
on the Procedure for Convening and Holding the General Meeting of Shareholders of the Company.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to approve the new version of the Regulation
on the Procedure for Convening and Holding the Meetings of the Company's Board of Directors.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to approve the new version of the Regulation
on the Company's Management Board.
Decision Taken:
Promote the main principles of the United Nations Global Compact on the protection of the environment, human rights,
combating corruption, and fair labor relations and in pursuance of the resolution of the Board of Directors of the Company
dated October 27, 2017 (Clause 2.1 of Minutes No. 259 dated October 30, 2017), recommend to RusHydro’s Annual
General Meeting of Shareholders to adopt the following resolution:
Approve the entry of RusHydro into the Association National Network of the Global Compact on the terms determined by
internal documents and decisions of the management bodies of the Association National Network of the Global Compact,
including those regulating the amount, frequency, and procedure for payment of membership fees.
55
15. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: On participation of
RusHydro in the self-regulatory
organization Self-Regulatory
Corporation of Builders of the
Krasnoyarsk Territory Association.
16. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: On the participation of
RusHydro in the self-regulatory
organization ENERGOPROEKT
Association.
17. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: On the participation of
RusHydro in the Engineering
Surveys in Construction
Association.
18. On recommendations for the
Annual General Meeting of
Shareholders of the Company
concerning: On the termination of
participation of RusHydro in the
noncommercial partnership
Russian-Chinese Business Council.
19. On matters related to the
convening, preparation, and
conduct of the Annual General
Meeting of Shareholders of the
Company.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders to adopt the following resolution:
Approve the entry of RusHydro into the self-regulatory organization Self-Regulatory Corporation of Builders of the
Krasnoyarsk Territory Association (OGRN 1082400002156) (hereinafter - the Association) on the terms determined by
the internal documents and decisions of the authorized management bodies of the Association, including those regulating
the amount, frequency, and procedure for payment of membership fees at the time of entry.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Approve the entry of RusHydro into the self-regulatory organization Association of Organizations engaged in the design
of energy facilities ENERGOPROEKT (OGRN 1097799022903) (hereinafter - the ENERGOPROEKT Association) on
the terms determined by the internal documents and decisions of the authorized management bodies of the
ENERGOPROEKT Association, including those regulating the amount, frequency, and procedure for payment of
membership fees.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Approve the entry of RusHydro into the Association Engineering Surveys in Construction (OGRN 1067799027977)
(hereinafter - SRO AESC) on the terms determined by the internal documents and decisions of the authorized management
bodies of SRO AESC, including those regulating the amount, frequency, and procedure for payment of membership fees.
Decision Taken:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Terminate RusHydro’s participation in the non-commercial partnership Russian-Chinese Business Council.
Decision Taken:
1. Convene the Annual General Meeting of Shareholders of RusHydro (hereinafter - the Company) as a meeting (joint
presence) (hereinafter - the General Meeting of Shareholders or the Meeting).
Determine the date of the Annual General Meeting of Shareholders of the Company: June 27, 2018.
2. Determine the time of the Meeting: the beginning of the Meeting shall be at 10:30 a.m. (MSK).
3. Determine the start time of registration of the Meeting participants: 9:00 a.m. (MSK).
4. Determine the venue of the Meeting: 12 Krasnopresnenskaya Naberezhnaya, Congress Hall, Floor 2, Congress Center,
Entrance No. 4, World Trade Center (WTC), Moscow, Russia.
5. Approve the date, on which the persons entitled to participate in the Meeting shall be determined (fixed): June 5, 2018.
6. Video broadcast the Meeting on the corporate website of the Company.
7. Determine that the information (materials) to be made available to the persons entitled to participate in the Meeting
shall be as follows:
The Annual Report of the Company for 2017 and the opinion of the Internal Audit Commission based on its audit
findings;
56
The annual accounting (financial) statements on the results of 2017, including the auditor's report and the opinion of the
Company's Internal Audit Commission based on its audit findings;
A justification of the proposed distribution of net profit and an assessment of its compliance with the Dividend Policy
adopted in the Company, including for dividend payment and the Company's own needs, with explanations and economic
justification for the need to allocate a certain part of the net profit for the Company's own needs;
Information on shareholder's agreements concluded during the year before June 27, 2018;
A report on related party transactions made by the Company in 2017;
Recommendations of the Board of Directors of the Company on agenda items of the Annual General Meeting of
Shareholders of the Company, as well as minority reports of members of the Board of Directors on each agenda item;
Information on proposals to include items in the agenda of the Annual General Meeting of Shareholders, including
information on who proposed each of the items included in the agenda of the Meeting;
Extracts from the Minutes of the Audit Committee under the Company's Board of Directors, the Investments Committee
under the Company's Board of Directors, and the HR and Remuneration (Nominations) Committee under the Company's
Board of Directors on the respective items to be considered at the Meeting;
Details of candidates to the Board of Directors of the Company, including who nominated them, and information on their
compliance with independence criteria;
Details of candidates to the Internal Audit Commission of the Company, including who nominated them
Information regarding the presence or absence of the written consent of candidates nominated to the Board of Directors
and the Internal Audit Commission to be elected to the respective body of the Company;
Details of the candidate for the Company's ;
The Company’s Charter (amended and revised);
The draft of the new version of the Company’s Charter;
A comparative table of changes to the Company's Charter with the justification for the need to adopt the respective
resolutions;
The current version and the draft of a new version of the Regulation on Convening and Holding the annual Meeting of
Shareholders of the Company;
A comparative table of amendments to the Regulation on the Procedure for Convening and Holding the General Meeting
of Shareholders of the Company with the justification for the need to adopt the respective resolutions;
The current version and the draft of a new version of the Regulation on Convening and Holding the Meetings of the
Company's Board of Directors;
A comparative table of amendments to the Regulation on the Procedure for Convening and Holding the Meetings of the
Board of Directors of the Company with the justification for the need to adopt the respective resolutions;
The current version and the draft of a new version of the Regulation on the Management Board of the Company;
A comparative table of amendments to the Regulation on the Management Board of the Company with the justification for
the need to adopt the respective resolutions;
An explanation of the consequences that may occur for the Company and its shareholders in the case of the adoption of
amendments to the Charter of the Company and internal documents;
Information on corporate actions that entailed the deterioration of shareholders' dividend rights and/or dilution of their
shares and information on the court decisions that established the cases when the shareholders used different methods,
apart from dividends and liquidation value, for obtaining income at the expense of the Company;
Draft resolutions of the Meeting on the agenda items.
8. Determine that persons entitled to participate in the Meeting may familiarize themselves with the information
(materials) for the Meeting at the location of the Meeting (on the date of the Meeting) and within 30 days before the date
of the Meeting at the following addresses:
57 Malaya Dmitrovka St., Moscow (on business days from 10:00 a.m. to 5:00 p.m. local time), tel. 8-800-333-80-00 /(495)
225-32-32 ext. 4215; 4256; 1824; acceptance/delivery of correspondence: ext. 1832, 4185;
23/10 Pravdy St., JSC VTB Registrar (on business days from 10.00 a.m. to 5.00 p.m. local time), tel. (495) 787-44-83;
- 43/1 Dubrovinskogo St., Krasnoyarsk (on business days from 10:00 a.m. to 5:00 p.m. local time), tel. 8-913-031-71-04
and
on the Company's website: www.rushydro.ru.
9. Approve the form and text of the notice on the holding of the Meeting (Annex No. 4 to the Minutes of Meeting).
10. Publish the notice on the holding of the Meeting on the Company's website, www.rushydro.ru, at least 30 days before
the date of the Meeting.
11. Approve the form and text of the ballots for voting at the Annual General Meeting of Shareholders of the Company
(Annex No. 5 to the Minutes of Meeting).
12. Determine that ballots for voting on the Meeting's agenda items shall be sent by registered mail or be delivered against
signature to each person registered in the Company's shareholder registers and entitled to participate in the Meeting not
later than June 6, 2018 (inclusive).
13. Approve the wording of resolutions on the agenda items of the General Meeting of Shareholders, which shall be sent
electronically (in the form of electronic documents) to nominal holders of shares registered in the Company's shareholder
register (Annex No. 6 to the Minutes of Meeting).
14. Determine that when determining the quorum and summing up the voting results, votes represented by voting ballots
and declarations of will received not later than two days prior to the date of the Annual General Meeting of Shareholders,
namely, not later than June 24, 2018 (inclusive), shall be counted.
15. Determine that filled-in voting ballots may be sent to the following postal address:
- JSC VTB Registrar, PO Box 54, Moscow 127137.
16. Elect Natalia Kovalyova as the Secretary of the Meeting.
Decision Taken:
In line with the recommendations of the Nomination and Compensation Committee under the Company's Board of
Directors adopted on May 18, 2018 (Minutes No. 74 dated May 18, 2018):
1. Take due note of the information on the results of evaluation of the compliance of a member of the Board of Directors (a
candidate nominated for election to the Company’s Board of Directors at the Annual General Meeting of Shareholders in
2018), Maksim Bystrov, with the independence criteria stipulated in Annex 4.1 to the Listing Rules of the Moscow
Exchange.
There is no connection between Maksim Bystrov and the Company, a substantial shareholder, competitors, the State, or a
municipal entity.
Maksim Bystrov meets the formal criteria of connection with the Company's significant counterparties - JSC ATS, JSC
SO UES, JSC FSC9, and ANO Market Council Training Center10, as the scope of obligations between the Company and
each of the said counterparties performed during the last year exceeds 2% of the book value of assets and 2% of the
revenue of each counterparty.
Note that the connection between Maksim Bystrov and significant counterparties of the Company –
JSC ATS, JSC SO UES, JSC FSC, and ANO Market Council Training Center – is formal in nature and does not affect Mr.
Bystrov’s ability to act as a member of the Board of Directors in the interests of the Company and its shareholders for the
Minutes No. 271 dtd June
1, 2018
1. On recognizing candidates to the
Company's Board of Directors
(members of the Company's Board
of Directors) as independent.
9The scope of obligations between the Company and JSC FSC performed during the last year exceeds 2% of the book value of assets and 2% of the revenue of JSC FSC.
10M. Bystrov is a member of the Boards of Directors of JSC ATS, JSC SO UES. JSC FSC (through JSC ATS) and ANO Market Council Training Center are controlled by the Association NP Market Council, the Supervisory
Board of which includes M. Bystrov, who is also the Chairman of the Management Board of Association NP Market Council.
58
following reasons:
- JSC ATS11 (Joint-Stock Company Administrator of the Trade System of the Wholesale Electricity Market) renders the
services of a commercial operator of the wholesale electricity and capacity market (hereinafter - the wholesale market) to
the Company in the manner stipulated in Clause 7 of Article 33 of Federal Law No. 35-FZ dated March 26, 2003 On the
Electric Power Industry (the Law on the Electric Power Industry) under an Agreement for Integration into the trade system
of the wholesale market. Commercial relations between the Company and JSC ATS are based on the principle of
nondiscriminatory access to the services of commercial infrastructure organizations of the wholesale market (Article 20 of
the Federal Law on the Electric Power Industry, Regulation No. 861 of the Government dated December 27, 2004) and on
the principle of state regulation of tariffs for the services of a commercial operator of the wholesale market (Article 23.1 of
the Federal Law on the Electric Power Industry);
- JSC SO UES (Joint-Stock Company System Operator of the Unified Energy System) provides the Company with
operational dispatch management services in the electric power industry due to its status as a system operator established
by Clause 1 of Article 12 of the Federal Law on the Electric Power Industry and under the Agreement for Integration into
the trade system of the wholesale market. Commercial relations between the Company and JSC SO UES are based on the
principle of nondiscriminatory access to operational dispatch management services in the electric power industry (Clause 6
of Article 20 of the Federal Law on the Electric Power Industry, Government Decree No. 861 dated December 27, 2004)
and on the principle of state regulation of tariffs for operational dispatch management services (Article 23.1 of the Federal
Law on the Electric Power Industry).
- JSC FSC (Joint-Stock Company Financial Settlement Center) is classified among the commercial infrastructure
organizations of the wholesale electricity and capacity market of the Russian Federation; it ensures the functioning of the
contractual structure of the wholesale market and the system of financial settlements between its participants and renders
services to the Company under the Agreement for Integration into the trade system of the wholesale market. The
Agreement was concluded in accordance with Clause 1 of Article 32 of the Federal Law on the Electric Power Industry
and Clause 40 of the Rules for the Wholesale Electricity and Capacity Market approved by Regulation No. 1172 of the
Government of the RF dated December 27, 2010.
Commercial relations between the Company and JSC FSC are based on the principle of nondiscriminatory access to the
services of commercial infrastructure organizations of the wholesale market (Article 20 of the Federal Law on the Electric
Power Industry, Regulation No. 861 of the Government of the RF dated December 27, 2004). The uniform charge for the
service package provided by JSC FSC (for all counterparties) is approved by the Supervisory Board of the Association NP
Market Council.
- ANO Market Council Training Center (Autonomous Noncommercial Organization of Continuing Professional
Education NP Market Council Training Center), established under the Association NP Market Council, is an infrastructure
organization of wholesale and retail trade in electricity and capacity; it renders services to the Company in the field of
education and training of specialists in organizing an effective system of wholesale and retail trade in electricity and
capacity.
Considering that the wholesale market regulations adopted by the Supervisory Board of the Association NP Market
Council are amended monthly, to maintain a high level of knowledge in the field of wholesale market procedures and to
obtain information on current and planned changes in the wholesale market, the employees of the Company need to
undergo training at the primary source, ANO Market Council Training Center. The training contracts between the
Company and ANO Market Council Training Center are concluded on arm's length terms.
Mr. Bystrov’s track record in the Company’s Board of Directors proves his ability to make independent, unbiased, and
11By decision of the Supervisory Board of the Association NP Market Council (the previous name is NP ATS) dated November 30, 2007, starting from April 1, 2018 ATS JSC has been assigned the functions of a commercial
operator of the wholesale market referred to in paragraph 1 of Art. 33 Federal Law on Electric Power Industry to the organizations of the commercial infrastructure of the wholesale market.
59 conscientious judgments, since Mr. Bystrov’s stand on agenda items of meetings of the Board of Directors and committees
under the Board of Directors is based on his expertise and experience, is autonomous and independent, and the decisions
made by Mr. Bystrov bring us to the conclusion that his formal connection with significant counterparties of the
Company—JSC ATS, JSC SO UES,
JSC FSC, and ANO Market Council Training Center—does not influence his decision making, as Mr. Bystrov acts in the
interests of the Company and all its shareholders.
Based on Clause 2 of Section 2.18 of Annex 2 and on Annex 4.1 to the Listing Rules of the Moscow Exchange, recognize
Maksim Bystrov as an independent director.
2. Take due note of the information on the results of the compliance of a member of the Board of Directors (a candidate
nominated for election to the Company’s Board of Directors at the Annual General Meeting of Shareholders in 2018),
Sergey Ivanov, with the independence criteria stipulated in Annex 4.1 to the Listing Rules of the Moscow Exchange.
There is no connection between S. Ivanov and the Company, a substantial shareholder, competitors, the State, or a
municipal entity.
Sergey Ivanov meets the formal criteria of connection with the State, since during the year preceding his election to the
Company’s Board of Directors Mr. Ivanov acted as General Director of LLC RT-Capital, an entity controlled by the
Russian Federation.
Note that the connection between Mr. Ivanov and the State is formal in nature and does not affect his ability to act as a
member of the Board of Directors in the interests of the Company and all its shareholders for the following reasons:
- In accordance with order No. 405-r of the Government of the Russian Federation dated March 9, 2018, Mr. Ivanov has
been nominated by the Russian Federation as an independent director; therefore, Mr. Ivanov has no obligation to vote on
the instructions of the Government of the Russian Federation (Clause 16 of Regulation No. 738 of the Government of the
RF dated December 3, 2004).
- Mr. Ivanov's connection with the state is formal due to the fact that the employment relations with RT-Capital, which
were terminated in February 2018, did not and will not influence the making of unbiased and independent decisions by
Mr. Ivanov, since the control of the Russian Federation over RT-Capital is indirect and is carried out through the State
Corporation for the Promotion of the Development, Production, and Export of High-Tech Industrial Products Rostek,
which is operated through management bodies typical of a commercial organization.
- Mr. Ivanov's track record in the Company Board of Directors proves his ability to make independent, unbiased, and
conscientious judgments , since Mr. Ivanov's stand on agenda items of meetings of the Board of Directors and committees
under the Board of Directors is based on his expertise and experience and is autonomous and independent, and the
decisions made by Mr. Ivanov bring us to the conclusion that his formal connection with the State does not influence his
decision making as Mr. Ivanov acts in the interests of the Company and all its shareholders.
Based on Clause 2 of Section 2.18 of Annex 2 and on Annex 4.1 to the Listing Rules of the Moscow Exchange, recognize
Sergey Ivanov as an independent director.
Decision Taken:
1. Approve the progress report on the Action Plan for the Disposal of Non-core Assets of the Company for Q1 2018
(Annex No. 1 to the Minutes of Meeting).
2. Make the following amendments to the Register of Non-core Assets of the Company approved by the decision of the
Company’s Board of Directors dated December 28, 2017 (Minutes No. 263):
- Change the planned disposition of the facilities "Road No. 1-2 of the 4th cat." and "Road No. 2-3 of the 4th cat."
(Clauses 6 and 8 of the "Gratuitous Transfer" section) from "gratuitous transfer" to "liquidation"
- Change the planned disposition of the facility LLC VolgaHydro (Clause 4 of the "Retention of noncore assets" section)
from "holding" to "sale"
- Exclude the facility JSC Yuzhno-Yakutskiy HPC (Clause 4 of the "Liquidation" section).
2. On approval of the progress report
on the Action Plan for the Disposal
of Non-core Assets of the Company
for Q1 2018.
60 3. On the performance of
transactions by RusHydro related to
the gratuitous transfer of the
Company's property to a third party.
4. On RusHydro’s priority activities.
Decision Taken:
Approve the conclusion of a Property Donation Agreement on the following material terms:
Parties to the Agreement:
The Donor is the Company;
The Donee is a federal subject of the Russian Federation, the Karachay-Cherkess Republic.
Subject of the Agreement:
The Donor shall gratuitously transfer, and the Donee shall take into possession the following fixed properties for use as
public transportation facilities:
- The overpass (bridge) over the Kardonikskiy inverted siphon, cadastral number 09:06:0000009:114, located at:
Karachay-Cherkess Republic, Zelenchukskiy District, Zelenchukskaya Stanitsa, facilities of the Zelenchukskiye HPPs
power complex.
- The bridge on PK-26 + 81.8 channel B. Zelenchuk—Husa-Kardonikskaya, cadastral number 09:06:0000009:109,
located at: Karachay-Cherkess Republic, Zelenchukskiy District, facilities of the Zelenchukskiye HPPs power complex.
The book value of the transferred property as of March 31, 2018 is:
RUB 6,297,418 (six million two hundred ninety-seven thousand four hundred and eighteen).
4.1. On consideration of the progress report on the Action Plan (the list of measures) for the implementation of
occupational standards in the Company's operations.
Decision Taken:
Approve the progress report on the Action Plan (the list of measures) for the implementation of occupational standards in
RusHydro’s operations in Q4 2017 and Q1 2018 (Annex No. 2 to the Minutes of Meeting).
4.2. On progress in executing individual assignments of the President of the Russian Federation and the Government of
the Russian Federation regarding the refinancing of the loan debt of the Holding Company RAO ES East.
Decision Taken:
Take due note of the report on the completion of measures related to the refinancing of the debt of the Holding Company
RAO ES East (Annex No. 3 to the Minutes of Meeting).
4.3. On approval of the progress report on RusHydro Group’s Innovative Development Program for 2016–2020 with
an outlook till 2025 in 2017.
Decision Taken:
1. Approve the progress report on RusHydro Group’s Innovative Development Program for 2016–2020 with an outlook till
2025 in 2017 (Annex No. 4 to the Minutes of Meeting).
2. For the purpose of implementing the provisions of Directives No. 3262p-P13 of the Government of the Russian
Federation dated April 27, 2018, reword the resolution of the Company Board of Directors (Minutes No. 263 dated
December 28, 2017) on agenda item 4.4 "On Consideration of Proposals for Improving the Quality of the Preparation and
Implementation of RusHydro Group’s Innovative Development Program for 2016–2020 with an outlook till 2025" as
follows:
Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to ensure:
1. that the Company benchmarked its level of technological development and current KPIs against the level of
development and indicators of leading peer companies, including foreign ones, in accordance with the Methodological
Recommendations for comparing the level of technological development and KPIs of partially government-owned joint-
stock companies, state corporations, state companies, and federal state unitary enterprises with the level of development
and indicators of leading peer companies approved by the Interagency Working Group on the Implementation of Priorities
for Innovative Development at the Presidium of the Presidential Council for the Modernization of the Economy and the
61
5. On determining the stands of
RusHydro (the Company’s
representatives) on the agenda items
of meetings of the Boards of
Directors and general meetings of
shareholders of subsidiaries.
Innovative Development of Russia (hereinafter - the IWG) (Minutes No. 2 dated September 19, 2017) with the
involvement of an external consultant in accordance with the established procedure by July 30, 2018.
2. that the Company submitted the following for consideration of the Board of Directors no later than October 15, 2018
and send the same to the Ministry of Economic Development and Trade of the Russian Federation and the federal
executive body coordinating the Company’s operations no later than November 1, 2018:
- The results of the comparison of the level of technological development;
- Proposals for adjusting the innovative development program and the long-term development program;
- Proposals concerning the composition and values of the integral key performance indicator (hereinafter - IKPI) for
2019.
4.4. On updating RusHydro Group’s Long-Term Development Program for 2018–2022.
Decision Taken:
Approve the updated RusHydro Group’s Long-Term Development Program for 2018–2022 (Annex No. 5 to the Minutes
of Meeting).
5.1. On determination of the stand of the Company (representatives of the Company) on the agenda item of the
management bodies of RAO ES East.
Decision Taken:
Assign the Company's representative in the management bodies of JSC RAO ES East to vote FOR the following
resolution on the item "On the Company’s related transactions associated with the disposal of property constituting fixed
assets whose target use is the generation, transmission, and distribution of electricity and thermal energy":
Approve the Company’s related transactions associated with the disposal of property constituting fixed assets whose target
use is the generation, transmission, and distribution of electricity and thermal energy" on the following material terms:
Parties to the Transaction:
The Alienator is JSC RAO ES East.
The Acquirer is PJSC Sakhalinenergo.
Subject of the Transaction:
The Alienator shall transfer the title to the property of the 5th power unit of Yuzhno-Sakhalinskaya CHPP-1 and the
network property in accordance with Annex No. 6 to the Minutes (hereinafter - the Property) to the Acquirer, and the
Acquirer shall offer additional publicly-traded ordinary shares in favor of the Alienator (state registration number of the
additional issue of securities: 1-03-00272-А-001D dated December 7, 2017) (hereinafter - the Shares) in an amount
determined based on the Property Price and the offering price of the Shares, which is RUB 10 00 kopecks per 1 (one)
share.
Property Price:
To be determined based on an asset valuation report prepared by a qualified appraiser.
5.2. On determination of the stand of the Company (representatives of the Company) on the agenda item of the
General Meeting of Shareholders of JSC Sakhalin GRES-2: On consent to perform a major transaction - the
conclusion by JSC Sakhalin GRES-2 of an Addendum to the General Contractor Agreement for the construction of the
facility Construction of the Sakhalin GRES-2. Main production complex. On-site facilities (1st stage) dated January 23,
2015, No. SGRES-15/0002.
Decision Taken:
Assign the Company's representatives at the General Meeting of Shareholders of the Sakhalin GRES-2 on the issue: On
consent to perform a major transaction - the conclusion by JSC Sakhalin GRES-2 of an Addendum to the General
Contractor Agreement for the construction of the facility Construction of the Sakhalin GRES-2. Main production
62
Minutes No. 272 dtd June
22, 2018
6. On the review of the results of
the assessment of the Company’s
corporate governance practices.
1. On matters related to the
investment project of the
Construction of two single-circuit
110 kV Pevek-Bilibino OHLs
(construction stage No. 1).
complex. On-site facilities (1st stage) dated January 23, 2015,
No. SGRES-15/0002 to vote FOR the following decision:
Consent to perform a major transaction - the conclusion an Addendum to the General Contractor Agreement for the
construction of the facility Construction of the Sakhalin GRES-2. Main production complex. On-site facilities (1st stage)
dated January 23, 2015, No. SGRES-15/0002 (hereinafter - the Agreement), which is a major transaction with the value
exceeding 50% of the Sakhalin GRES-2’s book value, on the following material terms:
Parties to the Transaction:
Customer - JSC Sakhalinskaya SDPP-2;
General Contractor - JSC TEK Mosenergo.
Subject of the Transaction:
1. Alteration of the terms previously approved by the general meeting of shareholders of JSC Sakhalin GRES-2 (resolution
No.03/2014-SGRES of the trustee of JSC RAO ES East dated December 29, 2014) with regard to the terms of deadlines:
Scheduled date of readiness for commissioning: October 26, 2018.
Scheduled actual completion date: December 1, 2018.
2. Preservation of the Customer’s right to present claims to the General Contractor related to violations of the terms of the
Agreement committed prior to the conclusion hereof.
Price of the Transaction:
The ceiling price of the Agreement shall not change as a result of the conclusion of the Addendum and amounts to
RUB 30,236,000,000 (thirty billion two hundred thirty-six million) 00 kopecks, including VAT (18%).
Decision Taken:
Take due note of the results of the assessment of the Company’s corporate governance practices and the recommendations
for improving corporate governance.
1.1. On the progress of the investment project of the Construction of two single-circuit 110 kV Pevek-Bilibino
OHLs (construction stage No. 1).
Decision Taken:
1. Take due note of the information on the progress the investment project of the Construction of two single-circuit 110 kV
Pevek-Bilibino OHLs (construction stage No. 1) (hereinafter - Project), and on the progress of financing the Project from
the federal budget resources (RUB 13 bn), and partially from the Company's own funds (up to RUB 5 bn) (Annex No. 1 of
the Minutes of Meeting).
2. Assign the Chairman of the Management Board and General Director of the Company, N. Shulginov, to keep the
Project name unchanged in the design documentation.
1.2. On determining the offering price of additional shares of the Company.
Decision Taken:
Set the offering price of additional shares of the Company (inter alia, upon exercising the preemptive right to acquire
additional shares) in the amount of RUB 1 (one) for 1 (one) additional registered ordinary uncertified share.
1.3. On increasing the authorized capital of the Company by placing additional shares within the number of
declared shares.
Decision Taken:
Increase the authorized capital of RusHydro by placing additional registered ordinary uncertified shares in the amount of
14,013,888,828 shares with a par value of RUB 1 each, for a total amount (at par value) of RUB 14,013,888,828 on the
following conditions:
63
Placement method: open subscription.
The offering price of additional shares of RusHydro (inter alia, upon exercising the preemptive right to acquire additional
shares): 1 (one) ruble 00 kopecks for 1 (one) additional registered ordinary uncertified share;
Form and procedure of payment for additional shares: shares shall be paid in Russian Rubles in non-cash form.
1.4. On the approval of the Decision on the additional issue of securities.
Decision Taken:
Approve the Decision on the additional issue of RusHydro’s securities (registered ordinary uncertified shares) in
accordance with Annex No. 2 to the Minutes of Meeting.
1.5. On the approval of the Securities Prospectus.
Decision Taken:
Approve the Prospectus for RusHydro’s Securities (registered ordinary uncertified shares) in accordance with Annex
No. 3 to the Minutes of Meeting.
Decision Taken:
Postpone consideration of the item to a later date.
Decision Taken:
Approve the report on the functioning and results of the internal assessment of the corporate system of internal control and
risk management.
Decision Taken:
Take due note of the results of an independent evaluation of the performance of RusHydro’s Board of Directors (Annex
No. 4 to the Minutes of Meeting).
Decision Taken:
Approve the report on the interim results of the Business Plan of the Company for 2018 with actual data for Q1 2018
(including progress reports of the Investment Program (including the Program for Comprehensive Upgrading of
Generating for Q1 2018) (Annex No. 1 to the Minutes of Meeting).
Decision Taken:
Approve the report on the fulfillment of RusHydro’s Annual Comprehensive Procurement Program for Q1 2018 (Annex
No. 2 to the Minutes of Meeting).
3.1. On approval of the performance reports of the Committee on Reliability, Energy Efficiency, and Innovation of the
Company’s Board of Directors for 2017-2018 corporate year.
2. On participation in other
organizations: Participation of the
Company in the authorized capital
of JSC Chukotenergo through the
acquisition of Chukotenergo’s
additional registered ordinary
uncertified shares.
3. On the approval of the report on
the functioning and results of the
internal assessment of the corporate
system of internal control and risk
management.
4. On the results of an independent
evaluation of the performance of
RusHydro’s Board of Directors.
1.On interim results of the Business
Plan of the Company for 2018 with
actual data for Q1 2018 (including
progress reports of the Investment
Program (including the Program for
Comprehensive Upgrading of
Generating Facilities).
2.On approval of the report on the
fulfillment of RusHydro’s Annual
Comprehensive Procurement
Program for Q1 2018.
3.On approval of the performance
reports of the Committees of
Minutes No. 273 dtd June
27, 2018
64
RusHydro’s Board of Directors for
2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Committee on Reliability, Energy Efficiency, and Innovations of the Company’s
Board of Directors for 2017-2018 corporate year (Annex No. 3 to the Minutes of Meeting).
3.2. On approval of the performance reports of the Strategy Committee of the Company’s Board of Directors for 2017-
2018 corporate year.
Decision Taken:
Approve the performance reports of the Strategy Committee of the Company’s Board of Directors for 2017-2018 corporate
year (Annex No. 4 to the Minutes of Meeting).
3.3. On approval of the performance reports of the Investment Committee of the Company’s Board of Directors for
2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Investment Committee of the Company’s Board of Directors for 2017-2018 corporate
year (Annex No. 5 to the Minutes of Meeting).
3.4. On approval of the performance reports of the Committee on Energy Development of the Far East of the
Company’s Board of Directors for 2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Committee on Energy Development of the Far East of the Company’s Board of
Directors for 2017-2018 corporate year (Annex No. 6 to the Minutes of Meeting).
3.5. On approval of the performance reports of the Nomination and Compensation Committee of the Company’s Board
of Directors for 2017-2018 corporate year.
Decision Taken:
Approve the performance reports of the Nomination and Compensation Committee of the Company’s Board of Directors for
2017-2018 corporate year (Annex No. 7 to the Minutes of Meeting).
3.6. On approval of the performance reports of the Audit Committee of the Company’s Board of Directors for 2017-
2018 corporate year.
Decision Taken:
Approve the performance reports of the Audit Committee of the Company’s Board of Directors for 2017-2018 corporate year
(Annex No. 8 to the Minutes of Meeting).
Decision Taken:
Take due note of the performance report on the Company’s Management Board for 2017 (Annex No. 9 to the Minutes of
Meeting).
5.1. On the progress status of the priority projects for the construction of three facilities in the Far East: (Yakutsk
GRES-2 (1st stage), CHPP at Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) as of March 31, 2018.
Decision Taken:
Take due note of the information on the progress status of the priority projects for the construction of three facilities in the
Far East: (Yakutsk GRES-2 (1st stage), CHPP at Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) as of March 31, 2018
(Annex No. 10 to the Minutes of Meeting).
Decision Taken:
4.On the consideration of the
performance report on the
Company’s Management Board for
2017.
5.On the Company’s priority
activities:
6. On the Company’s transaction
65
with the gratuitous transfer of the
Company's property to third parties
(a bridge in the Karachay-Cherkess
Republic, Zelenchuksky District).
7.On approval of the Company's
internal documents.
Minutes No. 274 dtd June
28, 2018
1.On termination of the Company’s
membership in other organizations.
Approve the conclusion of an Agreement on the Gratuitous Transfer (Donation) of Property under the following material
terms:
Parties to the Agreement:
The Donor is the Company;
The Donee is the Zelenchuk Municipal District, a municipal entity in the Karachay-Cherkess Republic.
Subject of the Agreement:
The Donor shall transfer on a gratis basis, and the Donee shall accept for use pro bono publico (as a public transportation
facility) the motor road bridge across the river Khusa with an area of 298 sq. m registered under cadastral number
09:06:0000009:106 and located at: the facilities of the Zelenchukskiye HPPs power complex, Zelenchukskaya Stanitsa,
Zelenchuk District, the Karachay-Cherkess Republic.
The book value of the transferred property as of May 31, 2018 is:
RUB 1,386,221 (one million three hundred eighty-six thousand two hundred twenty-one) 63 kopecks.
7.1. On approval of the Regulation on RusHydro’s Business Planning System.
Decision Taken:
1. Approve the new version of the Regulation on RusHydro’s Business Planning System according to Annnex No. 11 to
the Minutes of Meeting.
2. Consider the Regulation on RusHydro’s Business Planning System approved by the decision of the Board of Directors
of the Company (Minutes No. 233 dated April 1, 2016) to be outdated.
Decision Taken:
1. Determine that the price (monetary value) of 5,131,669,622.18 (five billion one hundred thirty-one million six hundred
sixty-nine thousand six hundred twenty-two and 18/100) registered ordinary uncertificated shares of PJSC Inter RAO with
a par value of RUB 2.809767 (two point eight hundred nine thousand seven hundred sixty seven million) each to be
alienated by RusHydro and its controlled entities, the state registration number of the share issue 1-04-33498-E
(hereinafter - the Shares) shall be RUB 3.3463 per share, which is not lower than the market price determined on the basis
of the report of an independent appraiser.
2. Approve the termination of the Company's participation in the authorized capital of Public Joint-Stock Company Inter
RAO UES (PJSC Inter RAO, location: Russian Federation, Moscow, OGRN 1022302933630, INN 2320109650) through
the sale to JSC Inter RAO Capital of 2,029,197,475.41 (two billion twenty-nine million one hundred ninety-seven
thousand four hundred seventy-five and 41/100) registered ordinary shares of PJSC Inter RAO owned by the Company,
which is 1.944% of its authorized capital, at the alienation price of RUB 3.3463 per share, which is not lower than the
market price determined on the basis of the report of an appraiser, on material terms (stipulated by the laws on share
purchase agreements), including the procedure for payment of shares by installment (the payment schedule), as per Annex
No. 1 to the Minutes of Meeting.
3. Approve the termination of the Company's controlled entities participation in the authorized capital of Public Joint-
Stock Company Inter RAO UES (PJSC Inter RAO, location: Russian Federation, Moscow, OGRN 1022302933630, INN
2320109650) through the conclusion of contracts with Inter RAO Capital for the sale of 3,102,472,146.77 (three billion
one hundred two million four hundred seventy-two thousand one hundred forty-six and 77/100) registered ordinary
uncertified shares of PJSC Inter RAO, which is 2.972% of the authorized capital of PJSC Inter RAO, at the alienation
price of RUB 3.3463 per share, which is not lower than the market price determined on the basis of the report of an
appraiser, on material conditions (stipulated by the laws on share purchase agreements), including the procedure for
payment of shares by installment (the payment schedule), as per Annexes 2–4 to the Minutes of Meeting.
4. RusHydro Group’s stake in the authorized capital of Inter RAO is:
Before the alienation of the Shares: 4.915%
66
Minutes No. 275 to the
August 9, 2018
1. On the election of the Chairman
of the Company’s Board of
Directors.
2. On the election of the Deputy
Chairman of the Company’s Board
of Directors.
3. On the creation of committees
under the Company’s Board of
Directors.
After the alienation of the Shares: 0%
5. Consider the resolution on item 2 to be an approval in accordance with Sub-clause 24 c) of Clause 12.1 of the
Company’s Charter.
Decision Taken:
Elect Yury Trutnev as the Chairman of RusHydro’s Board of Directors.
Decision Taken:
Elect Sergey Ivanov as the Deputy Chairman of RusHydro’s Board of Directors.
3.1. On the creation of the Audit Committee under the Company's Board of Directors.
Decision Taken:
1. Elect the following people to the Audit Committee of the Company’s Board of Directors:
1.
Maxim Bystrov
2.
Sergey Ivanov
3.
Vyacheslav Pivovarov
member of RusHydro’s Board of Directors,
the Chairman of the Management Board of NP Market Council
Association
member of RusHydro’s Board of Directors
member of RusHydro’s Board of Directors,
President of LLC Altera Capital
2. Take due note of the information that all members of the Audit Committee of RusHydro’s Board of Directors have
experience and knowledge relating to preparation, analysis, evaluation, and audit of accounting (financial) statements.
3. Elect Sergey Ivanov as the Chairman of the Audit Committee of the Company’s Board of Directors.
3.2. On the creation of the Nomination and Compensation Committee under the Company's Board of Directors.
Decision Taken:
1. Elect the following people to the Nomination and Compensation Committee under RusHydro’s Board of Directors:
member of RusHydro’s Board of Directors, President of LLC Altera
Capital
member of RusHydro’s Board of Directors
Vyacheslav Pivovarov
1.
2.
3.
Sergey Ivanov
Maxim Bystrov
member of RusHydro’s Board of Directors,
the Chairman of the Management Board of NP Market Council
Association
2. Elect Vyacheslav Pivovarov as the Chairman of the Nomination and Compensation Committee at RusHydro’s Board of
Directors
3.3. On the creation of the Strategy Committee under the Company's Board of Directors.
Decision Taken:
1. Determine the numerical composition of the Strategy Committee of the Company’s Board of Directors – 14 people.
2. Elect the following people to the Strategy Committee of the Company’s Board of Directors:
1.
Pavel Grachev
Member of RusHydro’s Board of Directors, President of PJSC Polyus
67
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Sergey Ivanov
Vyacheslav Pivovarov
Nikolay Rogalev
Sergey Shishin
member of RusHydro’s Board of Directors
Member of RusHydro’s Board of Directors, President of LLC Altera
Capital
Member of RusHydro’s Board of Directors, rector of the National
Research University Moscow Power Engineering Institute
Member of RusHydro’s Board of Directors, Senior Vice President of VTB
Bank
Alexander Bogashov
Director of the Department of Corporate Governance, Pricing, and Audit
in the Fuel and Energy Sectors of the Ministry of Energy of Russia
Dmitry Denisov
Igor Zadvornov
Advisor to the Minister of Economic Development of the Russian
Federation
Head of the Secretariat of the Deputy Chairman of the Government of the
Russian Federation - envoy from the President of the Russian Federation
in the Far Eastern Federal District of Yu. Trutnev
Andrey Kazachenkov
Member of the Management Board, RusHydro’s First Deputy General
Director
Boris Livshits
Vasily Nikonov
Yevgeny Olkhovich
Deputy Head of the Competitive Pricing Development Department of the
NP Market Council Association
Director of Rosneft’s Energy Department
Rosseti’s Deputy General Director for Strategic Development
13. George Rizhinashvili
Member of the Management Board, RusHydro’s First Deputy General
Director
14.
Pavel Snikkars
Director of the Department of Electric Power Industry Development at the
Ministry of Energy of Russia
3. Elect Igor Zadvornov as the Chairman of the Strategy Committee of the Company’s Board of Directors.
3.4. On the creation of the Investment Committee under the Company's Board of Directors.
Decision Taken:
1. Elect the following people to the Investment Committee of RusHydro’s Board of Directors:
1. Maxim Bystrov
member of RusHydro’s Board of Directors,
the Chairman of the Management Board of NP Market Council
Association
68
2.
3.
4.
Sergey Ivanov
Vyacheslav Pivovarov
Nikolay Rogalev
5. Mikhail Bychko
6.
7.
8.
9.
10.
11.
12.
Andrey Gabov
Sergey Zhuravleva
Denis Milyutina
Pavel Snikkars
Andrey Kazachenkov
Sergey Kirov
Viktor Khmarin
member of RusHydro’s Board of Directors
member of RusHydro’s Board of Directors,
President of LLC Altera Capital
member of RusHydro’s Board of Directors,
Rector of the National Research University Moscow Power
Engineering Institute
Director of Rosseti’s Capital Construction Department
Acting Deputy Director of the Department for State Regulation of
Tariffs, Infrastructure Reforms, and Energy Efficiency of the
Ministry of Economic Development of Russia
Vice President for Government Relations, LLC UK Polyus
Head of the Department for Fuel & Energy Resources Cost Control
of Rosneft’s Energy Department
Director of the Department of Electric Power Industry Development
at the Ministry of Energy of Russia
Member of the Management Board, RusHydro’s First Deputy
General Director
Member of the Management Board, RusHydro’s First Deputy
General Director
Deputy General Director for Resource Support and Prospective
Development
2. Elect Maxim Bystrov as the Chairman of the Investment Committee of the Company’s Board of Directors.
3.5. On the creation of the Committee on Energy Development of the Far East at RusHydro’s Board of Directors.
Decision Taken:
1. Elect the following people to the Committee on Energy Development of the Far East at RusHydro’s Board of Directors:
1.
2.
Yury Trutnev
, a member of RusHydro’s Board of
Directors
Pavel Grachev
3. Vyacheslav Kravchenko
4.
5.
Sergey Vasiliev
Igor Zadvornov
Deputy Chairman of the Government of the Russian Federation
- envoy from the President of the Russian Federation in the Far
Eastern Federal District
Member of RusHydro’s Board of Directors, President of PJSC
Polyus
Member of RusHydro’s Board of Directors, Deputy Minister of
Energy of the Russian Federation
Deputy General Director - Director of the Far East Division
Head of the Secretariat of the Deputy Chairman of the
Government of the Russian Federation - envoy from the
President of the Russian Federation in the Far Eastern Federal
69
Andrey Kazachenkov
Denis Konstantinov
6.
7.
8.
Denis Pilenieks
9. Alexander Pyatigor
10.
11.
12.
13.
Alexey Molsky
Vladimir Tupikin
Sergey Tyrtsev
Alexey Chekunkov
District of Yu. Trutnev
Member of the Management Board, RusHydro’s First Deputy
General Director
Acting Head of the Department for the Development of the
Electric Power Industry and Energy Efficiency of the
Department for State Regulation of Tariffs, Infrastructure
Reforms, and Energy Efficiency of the Ministry of Economic
Development of the Russian Federation
Deputy Director for Control of Development of the Unified
Energy System, JSC SO UES
Rosseti’s Acting Deputy General Director for Service
Development and Sales
Deputy Chairman of the Management Board of PJSC FGC UES
Deputy Chairman of the Management Board of NP Market
Council Association
First Deputy Minister for the Development of the Far East
General Director of Far East and Baikal Region Development
Fund
2. Elect Yury Trutnev as the Chairman of the Committee on Energy Development of the Far East at RusHydro’s Board of
Directors.
3.6. On the creation of the Committee on Reliability, Energy Efficiency, and Innovations at the Company's Board of
Directors.
Decision Taken:
1. Determine the numerical composition of the Committee on Reliability, Energy Efficiency, and Innovations of the
Company's Board of Directors – 11 people.
2. Elect the following people to the Committee on Reliability, Energy Efficiency, and Innovations of the Company's Board
of Directors:
1.
2.
3.
4.
5.
Nikolay Rogalev
Vyacheslav Kravchenko
Oleg Barkin
Boris Bogush
member of RusHydro’s Board of Directors,
Rector of the National Research University Moscow Power Engineering
Institute
member of RusHydro’s Board of Directors,
Deputy Minister of Energy of the Russian Federation
Member of the Management Board - the Deputy Chairman of the
Management Board of NP Market Council Association
Member of the Management Board, RusHydro’s First Deputy General
Director - RusHydro‘s Chief Engineer
Deputy Director for Mode Management of the Unified Energy System,
70
Yuri Vishnevsky
Viktor Gvozdev
JSC SO UES
RusHydro‘s Deputy Chief Engineer
6.
7.
8.
9.
10.
Dmitriy Gvozdev
Sergey Zhuravleva
George Rizhinashvili
Mikhail Fedorov
11. Kirill Frolov
Rosseti’s Chief Engineer
Vice President for Government Relations, LLC UK Polyus
Member of the Management Board, RusHydro’s First Deputy General
Director
President of the Peter the Great St.Petersburg Polytechnic University, the
Chairman of RusHydro’s Scientific and Technical Council Bureau
Deputy General Director for RusHydro’s Research and Design Activities
4. On approval of the Action Plan
of RusHydro’s Board of Directors
for H2 2018.
5. On approval of the Company's
internal documents.
6. On review of material issues for
the Company.
3. Elect Nikolay Rogalev as the Chairman of the Committee on the Reliability, Energy Efficiency, and Innovations at
RusHydro’s Board of Directors.
4. Recognize the compliance of the composition of the committees with the tasks of the Board of Directors and the
objectives of the Company's activities and the absence of the need to create new committees.
Decision Taken:
Approve the Action Plan of RusHydro’s Board of Directors for H2 2018 (Annex No. 1 to the Minutes of Meeting).
5.1. On approval of RusHydro Group’s Environmental Policy.
Decision Taken:
1. Approve RusHydro Group’s Environmental Policy (Annex No. 2 to the Minutes of Meeting).
2. Consider RusHydro’s Environmental Policy approved by RusHydro’s Board of Directors dated April 7, 2016 (Minutes
No. 235 dated April 8, 2016) to be outdated.
5.2. On approval of RusHydro’s Auditor Rotation Policy.
Decision Taken:
Approve RusHydro’s Auditor Rotation Policy (Annex No. 3 to the Minutes of Meeting).
6.1. On approval of Addendum No. 5 to Agreement No. 01-08/827 on the Provision of Budget Investments dated
December 18, 2012.
Decision Taken:
Approve the conclusion of Addendum No. 5 (hereinafter - the Addendum) to Agreement No. 01-08/827 on the provision
of budget investments dated December 18, 2012 (hereinafter - the Agreement) on the following material terms:
Parties to the Addendum:
Ministry of Energy of the Russian Federation, Federal Agency for State Property Management, the Comapany.
Subject of the Addendum:
Incorporation of the following amendments to the Agreement:
1. The increase in the marginal estimated cost of construction of CHPP at Sovetskaya Gavan in Q3 2013 and Q3 2017
prices, which, as reported by FAA Glavgosexpertiza of Russia dated December 22, 2017 No. 287-17/HGE-2257/04,
amounts to RUB 33,536 032,140 (thirty-three billion five hundred thirty-six million thirty-two thousand one hundred
forty) 00 kopecks, including VAT.
2. Change in the input power ratings of the CHPP at Sovetskaya Gavan from 120 MW to 126 MW.
71
3. The increase in the cost of construction of the Sakhalin GRES-2 (1st stage) for the cost of additional work at the current
price level of the respective years of Q3 2014 - Q4 2017, which, as reported by FAA Glavgosexpertiza of Russia dated
May 5, 2018 No. 485- 18/GGE-9164/10, amounts to RUB 9,280,200,570 (nine billion two hundred and eighty million two
hundred thousand five hundred seventy) 00 kopecks, including VAT.
4. Change in the input power ratings of the 1st construction stage of the Sakhalin GRES-2 from 60 MW, 18.2 Gcal/h to
60 MW.
6.2. On the development and implementation of import substitution plans.
Decision Taken:
1.
(works, services) with the purchase of Russian products (works, services) equivalent in technical characteristics and
consumer properties and used in the investment projects and current activities (Annex No. 4 to the Minutes of Meeting).
2. Approve the Roadmap on import substitution for the period up to 2025 (Annex No. 5 to the Minutes of Meeting).
Approve a set of measures aimed at the planned and phased replacement of purchases of foreign products
6.3. On the agreement of concurrent employment of the Management Board’s member in the management bodies
of other organizations.
Decision Taken:
Agree on the concurrent employment of a member of the Management Board, First Deputy General Director of the Company,
Kazachenkov Andrey, in the position of a member of the Board of Directors of JSC Far Eastern Energy Management Company
and JSC NPF LUKOIL-GARANT.
Decision Taken:
Approve the report on the interim results of the Business Plan of the Company for 2018 with actual data for H1 2018
(including progress reports of the Investment Program (including the Program for Comprehensive Upgrading of
Generating for H1 2018) (Annex No. 1 to the Minutes of Meeting).
Decision Taken:
1. Approve the revised Business Plan of the Company for 2018 (Annex No. 2 to the Minutes of Meeting).
2. Approve RusHydro’s revised Investment Program for 2018 (Annex No. 2 to the revised Business Plan of the Company
for 2018).
3. Approve the targets on RusHydro’s investment objects and new construction facilities of subsidiaries included in
calculating the performance indicator of the members of RusHydro’s Management Board "Meeting the Capacity
Commissioning Schedules and Plan for Financing and Absorption,%" for 2018 (Annex No. 2a to the revised Business
Plan of the Company for 2018).
Decision Taken:
1. Approve RusHydro Group’s revised Consolidated Business Plan (including the Consolidated Investment Program) for
2018 (Annex No. 3 to the Minutes of Meeting).
2. Approve the adjusted Target values of the Annual KPIs of the Company's Management Board members for 2018 (KPI
"Return on Equity (ROE), %," "Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA), RUB mn,"
"Labor productivity, RUB thousand/man-hours") (Annex No. 4 to the Minutes of Meeting).
Minutes No. 276 dtd
October 4, 2018
1. On approval of the interim
results of the Business Plan of the
Company for 2018 with actual data
for H1 2018 (including progress
reports of the Investment Program
(including the Program for
Comprehensive Upgrading of
Generating Facilities, for H1 2018).
2. On the revision of the Business
Plan (including the Investment
Program) of the Company for 2018.
3. On the revision of RusHydro
Group’s Consolidated Business
Plan (including the Consolidated
Investment Program) for 2018 and
approval of the adjusted Target
Values of the annual KPIs of the
Company's Management Board
members for 2018.
72
4. On incorporation of amendments
to the Methodology for the
Calculation and Evaluation of the
Annual KPIs of the Company’s
Management Board Members.
Decision Taken:
Assign the Management Board of the Company, with due allowance for the negotiations held, finalize proposals for
revising the Methodology of Calculating Annual KPIs and submit them for reconsideration to the Board of Directors of
the Company.
Minutes No. 277 dtd
October 4, 2018
1. On approval of the Company's
internal documents: On approval of
the Unified Regulation on the
Procurement of Products for
RusHydro’s needs.
2. On approval of the report on the
fulfillment of RusHydro’s Annual
Comprehensive Procurement
Program for H1 2018.
3. On the approval of the revised
list of investment projects
implemented and planned to be
implemented under RusHydro’s
Investment Program for conducting
a public process and pricing audit in
2018-2019.
4. On of RusHydro’s membership
in other organizations.
In addition, as part of the discussion of agenda issues, Chairman of the Board of Directors, Yu. Trutnev, assigned the
Company's Management Board before November 15, 2018 to submit the effectiveness review of the non-deliverable share
forward contract signed with the VTB Bank (PJSC), as well as a report on the activities already taken and planned to be
taken under Group RusHydro’s Value Appreciation Plan, for the consideration of the Strategy Committee at the
Company's Board of Directors.
Decision Taken:
1. Approve the Unified Regulation on the Procurement of Products for RusHydro’s Needs (Annex No. 1 to the Minutes of
Meeting).
2. Effective date of the Unified Regulation on the Procurement of Products for RusHydro’s needs shall be November 1,
2018.
3. From the moment the Unified Regulation on Procurement of Products for RusHydro’s needs comes into force (Clause
2), the Regulation on Procurement of Products for RusHydro’s needs approved by the decision of the Board of Directors
of the Company (Minutes No. 265 dated February 6, 2018) shall be deemed to be invalid
Decision Taken:
Approve the report on the fulfillment of RusHydro’s Annual Comprehensive Procurement Program for H1 2018 (Annex
No. 2 to the Minutes of Meeting).
Decision Taken:
Approve the revised list of investment projects implemented and planned to be implemented under RusHydro’s
Investment Program for conducting a public process and pricing audit in 2018-2019 (Annex No. 3 to the Minutes of
Meeting).
Decision Taken:
Approve the termination of the Company's participation in the authorized capital of LLC VolgaHydro through a Stake sale
transaction (hereinafter - the Transaction) on the following terms:
Parties to the Transaction:
Buyer - VHG AUSLANDSBETEILIGUNGEN GmbH;
Seller - PJSC RusHydro.
Subject of the Transaction:
The Seller shall sells the Stake to the Buyer, and the Buyer shall accept and pay for the Share in accordance with the terms
of the Transaction.
The size of the Stake held by the Seller is 40% (forty percent), with a nominal value of RUB 449,814,356 (four hundred
forty-nine million eight hundred fourteen thousand three hundred fifty-six).
The size of the alienated Stake is 40% (forty percent), with a nominal value of RUB 449,814,356 (four hundred forty-nine
million eight hundred fourteen thousand three hundred fifty-six).
After the alienation of the Stake in VolgaHydro’s authorized capital, there will be no shares belonging to the Seller in
VolgaHydro’s authorized capital.
73
Minutes No. 278 dtd
October 26, 2018
1. On the priority areas of the
Company's activities: on reviewing
the results of benchmarking the
level of technological development
and the KPI values of RusHydro
Group’s innovation activities
against the level of development
and indicators of the leading peer
companies.
2. On approval of the progress
report on the Action Plan for the
Disposal of Non-core Assets of the
Company for Q2 and Q3 2018.
Price of the Transaction:
The value of the stake shall be determined on the basis of evaluation report No. 2842/18/1 dated August 20, 2018 at the
amount of RUB 450,000,000 (four hundred fifty million).
Decision Taken:
1. Take due note of the Report on benchmarking the level of technological development and the KPI values of RusHydro
Group’s innovation activities against the level of development and indicators of the leading peer companies (Annex No. 1
to the Minutes of Meeting).
2. Deem the following to meet target date:
- Clause 1 of the decision of the Board of Directors of the Company on issue 4.4 (Minutes No. 263 dated December 28,
2017 as amended by Minutes No. 271 dated June 1, 2017, hereinafter - the Decision) in terms of benchmarking the level
of technological development and the KPI values of RusHydro Group’s innovation activities against the level of
development and indicators of the leading peer companies;
- Clause 2 of the decision regarding the submission to the Ministry of Economic Development of Russia and the Ministry
of Energy of Russia of the results of benchmarking the level of technological development, proposals for the revision of
the Innovative Development Program and the Long-term Development Program, proposals for the composition and values
of the integral KPI for 2019.
3. Defer the due date of Clause 2 of the decision regarding the results of benchmarking the level of technological
development for the consideration of the Company’s Board of Directors to the period after receiving the approval of the
same results by the Interdepartmental Commission for Technological Development of the Presidium of the Presidential
Council for Economic Modernization and Innovative Development of Russia, but no later than March 31, 2019.
In addition, as part of the discussion of issues on the agenda, Chairman of the Board of Directors, Yu. Trutnev, assign to
the Board of the Company to do as follows:
1. Within a month, submit to the Chairman of the Board of Directors a list of problematic issues of RusHydro’s activities
(creating payback conditions for a PSPP, integrating the mechanisms for guaranteed return on investment, and
establishing long-term tariffs in the Far Eastern Federal District, etc.) requiring the participation of the Russian
Government.
2. By the end of 2018,submit proposals on the formation of RusHydro’s Competence Center on Russky Island.
Decision Taken:
1. Take due note of the efforts made by the Company on the disposal of non-core assets and optimization of RusHydro
Group’s structure for 3 years.
2. Approve the progress report on the Action Plan for the Disposal of Non-core Assets of the Company for Q2 and Q3
2018 (Annexes Nos. 2 and 3 to the Minutes of Meeting).
3. Make the following amendments to the Register of Non-core Assets of the Company approved by the decision of the
Company’s Board of Directors dated December 28, 2017 (Minutes No. 263):
- include the object of CJSC Verkhne-Naryn HPPs with the disposal method - sale;
- change the planned disposal method of JSC Rumyantsevo Technopark object from holding to liquidation.
4. Make the following amendments to the Action Plan on the Disposal of RusHydro’s Non-core assets for Q4 2017 - 2018
approved by the decision of the Board of Directors of the Company dated December 28, 2017 (minutes No. 263):
- change the sale period of JSC IEGC for Q4 2019;
- change the liquidation period of JSC HydroEngineering Siberia for Q1 2019;
- change the period of gratuitous transfer (donation) of railway infrastructure of the Izvestkovaya-Chegdomyn line (1/6 of
the stake for 78 objects) for Q1 2019.
74
Minutes No. 279 dtd
October 26, 2018
3. On review of material issues for
the Company.
3.1. On the execution of assignment
received at the Annual General
Meeting of Shareholders of the
Company on June 6, 2018.
1. On participation in other
organizations.
2. On review of material issues for
the Company.
5. The Board of the Company shall initiate measures to revise Directives No. 7601p-P13 of the Government of the Russian
Federation dated October 7, 2016 in terms of payment for the authorized capital of LLC ServisNedvizhimost RusHydro
(SNRG) only with shares of JSC Malaya Dmitrovka.
Decision Taken:
Take due note of the progress of the assignment received at the Annual General Meeting of Shareholders of the Company
on June 6, 2018. (Annex No. 4 to the Minutes of Meeting).
Decision Taken:
Terminate the Company's participation in JSC Boguchanskaya HPP Construction Organizer and CJSC Boguchanskaya
HPP Construction Customer against their voluntary liquidation.
2.1. On Management of Intellectual Property Rights:
2.1.1. On the inventory of intellectual property rights for the purpose of subsequent organization
2.1.2. On the Approval of the Program on the Management of Intellectual Property Rights at RusHydro Group.
Decision Taken:
1. Approve the Program on the Management of Intellectual Property Rights at RusHydro Group (hereinafter - the
Program) (Annex No. 1 to the Minutes of Meeting).
2. Assign to Chairman of the Management Board - RusHydro’s General Director, N. Shulginov to post and subsequently
update the information on the progress of the Program on the Interdepartmental Portal on State Property Management.
measures to ensure the legal protection of identified results, the rights to which belong to RusHydro Group’s companies, entry
of these rights to the books as intangible assets for their subsequent introduction into economic circulation and, if necessary,
assessment of the value of rights to the said results.
Decision Taken:
Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to do as follows:
1. to inventory the intellectual property rights owned by RusHydro Group’s companies before November 30, 2018.
2. to develop and approve by RusHydro’s order before December 31, 2018 the Action Plan to ensure the legal protection
of identified intellectual results, the rights to which belong to RusHydro Group’s companies, entry of these rights to the
books as intangible assets for their subsequent introduction into economic circulation and, if necessary, assessment of the
value of rights to the said results.
2.2. On the progress status of the priority projects for the construction of three facilities in the Far East: (Yakutsk
GRES-2 (1st stage), CHPP at Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) as of June 30, 2018.
Decision Taken:
Take due note of the information on the progress status of the priority projects for the construction of three facilities in the
Far East: (Yakutsk GRES-2 (1st stage), CHPP at Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) as of June 30, 2018
(Annex No. 2 to the Minutes of Meeting).
2.3. Confidentially
The decision is taken
3. On RusHydro Group’s Long-
Term Development Program.
3.1. On the progress of RusHydro Group’s Long-Term Development Program for H1 2018.
Decision Taken:
Take due note of the information on the progress of RusHydro Group’s Long-Term Development Program for H1 2018
75
(Annex No. 3 to the Minutes of Meeting).
3.2. On approval of the Terms of Reference to check on the progress of RusHydro Group's Long-Term
Development Program for 2018, 2019, and 2020.
Decision Taken:
Approve the Terms of Reference to check on the progress of RusHydro Group's Long-Term Development Program for
2018, 2019, and 2020. (Annex No. 4 to the Minutes of Meeting).
3.3. On the consideration of the Long-Term Program for Replacement of Retired Capacities and the Development
of Far East Energy Systems.
Decision Taken:
Take due note of the Long-Term Program for Replacement of Retired Capacities and the Development of Far East Energy
Systems (Annex No. 5 to the Minutes of Meeting).
3.4. On amendments to RusHydro Group's Long-Term Development Program.
Decision Taken:
1. Supplement RusHydro Group's Long-Term Development Program for the period of 2018 - 2022 with activities pursuant
to Decree No. 204 of the President of the Russian Federation dated May 7, 2018 On the National Goals and Strategic
Objectives of the Development of the Russian Federation for the period until 2024 (Annex No. 6 to the Minutes).
2. Approve changes in KPIs of RusHydro Group's Long-term Development Program for 2018 (KPI “Return on Equity
(ROE)”, “Earnings before Interest, Tax and Depreciation Expenses (EBITDA)”, “Labor productivity, thousand
rubles/man-hour” in accordance with the updated annual KPIs of the members of the Company's Management Board
(Annex No. 7 to the Minutes of Meeting).
4.1. Confidentially
Decision taken
5.1. On determination of the stand of the Company (representatives of the Company) on the agenda items of the
management bodies of subsidiary economic entities: On the liquidation of JSC Boguchanskaya HPP Construction
Organizer.
Decision Taken:
Assign to the representatives of the Company in the management bodies of JSC Boguchanskaya HPP Construction
Organizer with regard to the item related to the liquidation of the same to vote FOR:
− adoption of a desicion on the liquidation of JSC Boguchanskaya HPP Construction Organizer;
− adoption of the decisions related to the liquidation of JSC Boguchanskaya HPP Construction Organizer reviewed in line
with Articles 61-64 of the Civil Code of the Russian Federation and Articles 21-24 of the Federal Law No. 208-FZ On
Joint-Stock Companies dated December 26, 1995.
1.1. On termination of the Company’s membership in JSC Small HPPs of Altai.
Decision Taken:
Terminate the Company's participation in the authorized capital of JSC Small HPPs of Altai in accordance with the
Program for the Disposal of Non-Core Assets of RusHydro.
1.2. On termination of the Company’s membership in CJSC Verkhne-Narynskie HPPs.
Decision Taken:
Approve the termination of the Company's participation in CJSC Verkhne-Narynskie HPPs by selling 2,500,000 ordinary
registered shares of the said joint-stock company, constituting 50% of its authorized capital, to OJSC Electric Power Plants
4. On transactions.
5. On determination of the stand of
the Company (representatives of the
Company) on the agenda items of
the management bodies of
subsidiary economic entities.
Minutes No. 280 dtd
December 7, 2018
1. On participation in other
organizations.
76
2. On transactions.
(Kyrgyz Republic) in accordance with the terms of the agreement concluded between the Government of the Russian
Federation and the Government of the Kyrgyz Republic on the construction and operation of the Verkhne-Narynsky
cascade of hydroelectric power plants, at a price determined by the Board of Directors of the Company on the basis of the
report of an appraiser.
1.3. On termination of the Company’s membership in LLC VolgaHydro.
Decision Taken:
Supplement the resolution of the Board of Directors of the Company dated October 3, 2018 on item No. 4 On participation
of RusHydro in other organizations: On termination of participation in VolgaHydro (Minutes No. 277 dated October 4,
2018) with clause 2 worded as follows:
2. Determine that if VH Auslandsbeteiligungen GmbH (a participant of VolgaHydro) declines to purchase the Stake
(including under the preemptive right), the Company shall have the right to sell the Stake to VHG Auslandsbeteiligungen
GmbH on the same conditions.
2.1. On preliminary approval of transactions with shares of organizations the Company participates in.
Decision Taken:
Approve the transaction for the sale of shares of CJSC Verkhne-Narynskie HPPs (hereinafter - the Agreement) on the
following terms:
Parties to the Agreement:
Seller - PJSC RusHydro;
The Buyer is OJSC Electric Power Plants.
Subject of the Agreement:
The Seller shall transfer ordinary registered shares of Verkhne-Narynskie HPPs with a nominal value of 1 (one)
Kyrgyzstani som each in the amount of 2,500,000 (two million five hundred thousand) shares (hereinafter - the Shares) to
the Buyer, and the Buyer shall accept and pay for the Shares in the manner, time and on terms specified by the Agreement.
The size of the stake in the authorized capital of Verkhne-Narynskie HPPs owned by the Seller is 50 (fifty)%, with a
nominal value of 2,500,000 (two million five hundred thousand) Kyrgyzstani soms.
The size of the stake in the authorized capital of Verkhne-Narynskie HPPs to be alienated by the Seller is 50 (fifty)%, with
a nominal value of 2,500,000 (two million five hundred thousand) Kyrgyzstani soms.
The size of the stake in the authorized capital of Verkhne-Narynskie HPPs owned by the Seller after the alienation of the
Shares in accordance with this decision is 0 (zero)%.
Agreement Price:
The value of the Shares shall be determined based on valuation report No. 18-22027 dated September 10, 2018 prepared
by LLC Swiss Appraisal Russia and amounts to the equivalent of 2,500,000 (two million five hundred thousand)
Kyrgyzstani soms in Russian rubles at the exchange rate set by the Central Bank of the Russian Federation on the date of
payment.
2.2. On preliminary approval of transactions with shares of organizations the Company participates in.
Decision Taken:
In order to optimize the corporate governance process of the Company's controlled organizations, where RusHydro Group
holds 100% of the authorized capital, preliminarily approve the conclusion of trust management agreements (hereinafter -
the Agreements) by the Company under the following material terms:
Parties to the Agreements:
The Trustee Manager is the Company;
The Trustors are JSC ESC RusHydro, JSC RAO ES East, JSC Hydroinvest, and PJSC Kolymaenergo.
77
Subject of the Agreements:
The Trustors shall transfer the rights certified by the following shares belonging to them on the basis of the right of
ownership to the Company in trust management:
− 3,036,387,330 ordinary shares of JSC Hydroinvest (state registration number of the issue: 1-01-04339-D-003D);
− 1,709,801,779 ordinary shares of JSC Hydroinvest (state registration number of the issue: 1-01-04339-D-004D);
− 1 ordinary share of JSC ESC RusHydro (state registration number of the issue: 1-01-55437-E);
− 166,460,049 ordinary shares of JSC ChirkeyGESstroy (state registration number of the issue: 1-01-35249-Е);
− 8,923,739,178 ordinary shares of Ust-Srednekanskaya HPP named after A.F. Dyakov (state registration number of the
issue: 1-01-55315-E).
The Trustee Manager shall, for a remuneration, manage the rights attached to the shares transferred in trust management in
the interests of the Trustors during the term of the Agreements.
The scope of transferred rights attached to the shares:
The entire set of rights attached to the shares, except for the right to receive dividends.
The amount of remuneration of the Trustee Manager:
RUB 1,000 per year (including VAT) under each trust management agreement.
Effective Term of the Agreements:
5 years.
2.3. On approval of a transaction for the gratuitous transfer of the Company's property to third parties.
Decision Taken:
1. Approve the conclusion of an Agreement on the Gratuitous Transfer (Donation) of Property (hereinafter - the
Agreement) under the following material terms:
Parties to the Agreement:
The Donor is the Company;
The Donee is the municipal formation of the workers' settlement (urban settlement) of Talakan, the Bureysky District, the
Amur Region, represented by the Municipal Public Institution of the administration of the workers' settlement of Talakan,
the Bureysky District, the Amur Region.
Subject of the Agreement:
The Donor shall gratuitously transfer, and the Donee shall accept in ownership for use as an object of public transport
infrastructure, the Access road to the solid waste landfill, cadastral number: 28:11:000000:2663, 3,173 m length, address:
Talakan, the Bureysky District, the Amur Region (entry for the right in the Unified State Register of Real Estate
No. 28:11:000000:2663-28/012/2018-1 dated January 24, 2018) (hereinafter - the Property).
Price (book value) of the transferred Property (as of October 31, 2018):
RUB 66,104,713 (sixty-six million one hundred four thousand seven hundred thirteen) 37 kopecks.
2. Amend the Register of Non-core assets of the Company approved by the decision of the Board of Directors of the
Company dated December 28, 2017 (Minutes No. 263) to include the item of immovable property “Access road to the
solid waste landfill”, with a length of 3,173 m, located at: Talakan, the Bureysky District, the Amur Region, with the
disposal method of gratuitous transfer.
2.4. On approval of a transaction for the gratuitous transfer of the Company's property to third parties.
Decision Taken:
Approve the conclusion of an Agreement on the Gratuitous Transfer (Donation) of Property under the following material
terms:
Parties to the Agreement:
78
3. On determination of the stand of
the Company (representatives of the
Company) on the agenda items of
the management bodies of
subsidiary economic entities.
The Donor is the Company;
The Donee is the Russian Federation represented by the Interregional Territorial Administration of the Federal Agency for
State Property Management in the Krasnoyarsk Territory, the Republic of Khakassia, and the Republic of Tyva.
Subject of the Agreement:
The Donor shall gratuitously transfer, and the Donee shall take into possession non-residential buildings in accordance
with Annex No. 1 to the Minutes of Meeting (hereinafter - the Property).
The purpose of the transferred Property is to accommodate the Federal State Autonomous Educational Institution of
Higher Education “Siberian Federal University”.
Price (book value) of the transferred Property (as of September 30, 2018):
RUB 1,276,053 (one million two hundred seventy-six thousand fifty-three) 88 kopecks.
3.1. On determination of the stand of the Company (representatives of the Company) on the agenda item of the
management bodies of JSC Sulaksky HydroCascade: On consent to a transaction, being a major one, related to the
alienation of the property of a subsidiary company constituting fixed assets whose purpose is the production,
transmission, dispatching, and distribution of electrical power.
Decision Taken:
Assign to RusHydro’s representatives at the General Meeting of Shareholders of JSC Sulaksky HydroCascade with regard
to the item: On consent to a transaction, being a major one, related to the alienation of the property of a subsidiary
company constituting fixed assets whose purpose is the production, transmission, dispatching, and distribution of electrical
power to vote FOR the following decision:
Coordinate the conclusion of a contract for the sale and purchase of the property complex of the Gotsatlinskaya HPP
owned by JSC Sulaksky HydroCascade on the following material terms:
Parties to the Agreement:
The Seller - JSC Sulaksky HydroCascade;
The Buyer is RusHydro.
Subject of the Agreement:
The Seller shall transfer the property complex of the Gotsatlinskaya HPP (hereinafter - the Property) specified in Annex
No. 2 to the Minutes of Meeting to the Buyer's ownership, and the Buyer shall accept and pay for the Property.
Property Price:
RUB 10,100,000,000 (ten billion one hundred million) without VAT; furthermore, VAT shall be calculated additionally at
the rate established by Art. 164 of the Tax Code of the Russian Federation.
3.2. On determination of the stand of the Company (representatives of the Company) on the agenda item of the
management bodies of JSC Small HHPs of Altai: On the liquidation of JSC Small HHPs of Altai.
Decision Taken:
1. Assign the Company's representatives in the management bodies of JSC Small HHPs of Altai on the issue On
liquidation of JSC Small HHPs of Altai to vote FOR the decision to liquidate the same.
2. Assign the Company's representatives in the management bodies of JSC Small HHPs of Altai to vote FOR the decisions
related to the liquidation of JSC Small HHPs of Altai reviewed in line with Articles 61-64 of the Civil Code of the Russian
Federation and Articles 21-24 of the Federal Law No. 208-FZ On Joint-Stock Companies dated December 26, 1995.
3.3. On determination of the stand of the Company (representatives of the Company) on the agenda item of the
General Meeting of Shareholders of JSC Sakhalin GRES-2: On the consent to perform a major transaction - the
conclusion an Addendum to the General Contractor Agreement for the construction of the facility Construction of
79
the Sakhalin GRES-2. Main production complex. On-site facilities (1st stage) dated January 23, 2015, No. SGRES-
15/0002.
Decision Taken:
Assign the Company's representatives at the General Meeting of Shareholders of the Sakhalin GRES-2 on the issue: On
the consent to perform a major transaction - the conclusion an Addendum to the General Contractor Agreement for the
construction of the facility Construction of the Sakhalin GRES-2. Main production complex. On-site facilities (1st stage)
dated January 23, 2015, No. SGRES-15/0002 to vote FOR the following decision:
Consent to perform a major transaction - the conclusion an Addendum to the General Contractor Agreement for the
construction of the facility Construction of the Sakhalin GRES-2. Main production complex. On-site facilities (1st stage)
dated January 23, 2015, No. SGRES-15/0002 (hereinafter - the Addendum, Agreement), which is a major transaction with
the value exceeding 50% of the Sakhalin GRES-2’s book value, on the following material terms:
Parties to the Addendum:
Customer - JSC Sakhalinskaya SDPP-2;
General Contractor - JSC TEK Mosenergo.
Subject of the Addendum:
increase in the price of the Agreement by RUB 3,512,170,090 (three billion five hundred twelve million one hundred
seventy thousand ninety) 00 kopecks, including VAT (18%).
The maximum price of the Agreement (including Addenda):
RUB 33,511,170,090 (thirty three billion five hundred eleven million one hundred seventy thousand ninety rubles)
00 kopecks, including VAT (18%).
Decision Taken:
Approve the report on the interim results of the Business Plan of the Company for 2018 with actual data for nine months
of 2018 (including progress reports of the Investment Program (including the Program for Comprehensive Upgrading of
Generating for nine months of 2018) (Annex No. 3 to the Minutes of Meeting).
5.1. On approval of the report on the fulfillment of RusHydro’s Annual Comprehensive Procurement Program for
nine months of 2018.
Decision Taken:
Approve the report on the fulfillment of RusHydro’s Annual Comprehensive Procurement Program for nine months of
2018 (Annex No. 4 to the Minutes of Meeting).
5.2. On approval of the revised Company's Charity and Sponsorship Policy.
Decision Taken:
Approve the revised Company's Charity and Sponsorship Policy (Annex No. 5 to the Minutes of Meeting).
5.3. On the progress of the investment project of the Construction of two single-circuit 110 kV Pevek-Bilibino
OHLs (construction stage No. 1).
Decision Taken:
Take due note on the information of the progress of the investment project of the Construction of two single-circuit
110 kV Pevek-Bilibino OHLs (construction stage No. 1) (Annex No. 6 to the Minutes of Meeting).
4. On approval of the interim
results of the Business Plan of the
Company for 2018 with actual data
for nine months of 2018 (including
progress reports of the Investment
Program (including the Program for
Comprehensive Upgrading of
Generating Facilities, for nine
months of 2018).
5. On review of material issues for
the Company.
80
Minutes No. 281 dtd
December 27, 2018
On approval of the Company's
internal documents.
5.4. On consideration of the progress report on the Action Plan (the list of measures) for the implementation of
occupational standards in the Company's operations.
Decision Taken:
Approve the progress report on the Action Plan (the list of measures) for the implementation of occupational standards in
the Company’s operations in Q2 and Q3 2018 (Annex No. 7 to the Minutes of Meeting).
5.5. On the Committee on Energy Development of the Far East at RusHydro’s Board of Directors.
Decision Taken:
1. Reword paragraph 6.1. of Article 6 of the Regulation on the Committee on Energy Development of the Far East at
RusHydro’s Board of Directors as follows: The numerical composition of the Committee shall be determined by the decision
of the Board of Directors in the amount of not less than 3 (three) people and not more than 14 (fourteen) people.
2. Determine the numerical composition of the Committee on Energy Development of the Far East at RusHydro’s Board of
Directors – 14 people.
3. Prematurely terminate the powers of Vladimir Tupikin, a member of the Committee on Energy Development of the Far
East at RusHydro’s Board of Directors.
4. Elect the following people to the Committee on Energy Development of the Far East at RusHydro’s Board of Directors:
- Sergey Lebedev, Deputy Chairman of the Management Board of NP Market Council Association;
- Leonid Petukhov, General Director of ANCO Agency of the Far East for Attracting Investments and Supporting Exports.
5.6. Confidentially
Decision taken
1.1. On internal documents in the field of the Company's corporate governance
Decision Taken:
1. Take due note of the report on the compliance with the Regulation on the Information Policy of the Company as per
Annex No. 1 to the Minutes of Meeting.
2. Approve the new version of the Regulation on the Information Policy of the Company as per Annex No. 2 to the
Minutes of Meeting.
3. Approve the Policy for Shareholding by Members of the Board of Directors and Members of the Management Board in
RusHydro and in Entities Controlled by RusHydro as per Annex No. 3 to the Minutes of Meeting.
4. Amend the RusHydro’s Code of Corporate Ethics approved by the decision of the Company's Board of Directors dated
April 7, 2016 (Minutes No. 235 dated April 8, 2016) as per Annex No. 4 to the Minutes of Meeting.
1.2. On the approval of the Standard for Checking on the Progress of RusHydro Group’s Long-Term Development
Program.
Decision Taken:
Approve the Standard for Checking on the Progress of RusHydro Group’s Long-Term Development Program (Annex
No. 5 to the Minutes of Meeting).
2. On the Company's non-core assets Decision Taken:
1. Approve a new version of the Register of RusHydro's Non-core Assets (Annex No. 6 to the Minutes of Meeting).
2. Approve the Action Plan for the Disposal of RusHydro’s Non-core Assets for 2018 (Q4)–2019 (Annex No. 7 to the
Minutes of Meeting).
3. On the revision of the
Decision Taken:
81
Comapany’s Business Plan for
2018 - 2022 as to RusHydro’s
Investment Program for 2018.
1. Take due note of the information on the incident at Sakhalin GRES-2 (Annex No. 8 to the Minutes of Meeting).
2. Note the absence of additional financial burden on the Company due to the need to eliminate the consequences of the
incident thanks to the presence of a mechanism to translate financial responsibility for meeting the commissioning
deadlines to the General Contractor.
4. On approval of RusHydro’s
Annual Comprehensive Procurement
Program for 2019.
5. On the approval of the Insurance
Coverage Program of the Company
for 2019.
6. On review of material issues for
the Company.
3. Approve the Company's revised Business Plan for 2018 in terms of changing the parameters of RusHydro’s Investment
Program for 2018 considering their influence on the KPI "Compliance with the Capacity Commissioning Schedules and
Financing and Absorbtion Plan, %" for 2018 (Annexes Nos. 9 and 10 to the Minutes of Meeting).
Decision Taken:
Approve RusHydro’s Annual Comprehensive Procurement Program for 2019 (Annex No. 11 to the Minutes of Meeting).
Decision Taken:
Approve RusHydro’s Insurance Coverage Program for 2019 (Annex No. 12 to the Minutes of Meeting).
6.1 On forming RusHydro's management bodies:
6.1.1 On determining the number of members of RusHydro's Management Board.
Decision Taken:
Determine the numerical composition of the Company’s Management Board - 7 people.
6.1.2. On election of a member of RusHydro's Management Board.
Decision Taken:
1. Elect Viktor Khmarin as a member of the Company's Management Board starting from January 16, 2019.
2. Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to determine the terms
and conditions of an agreement with a member of the Management Board, Viktor Khmarin, and to issue and sign the
documents needed to perform Clause 1 of this resolution in accordance with the labor laws of the Russian Federation.
6.2. On execution of Decree No. 232 of the Government of the Russian Federation dated March 6, 2018 concerning
approval of planning and targeted program documents that are to be implemented by the Company in the territory of
the Far Eastern Federal District by the Ministry of the Russian Federation for Far East Development.
Decision Taken:
On execution of Decree No. 232 of the Government of the Russian Federation dated March 6, 2018 concerning approval of
planning and targeted program documents that are to be implemented by the Company in the territory of the Far Eastern
Federal District by the Ministry of the Russian Federation for Far East Development, the following decision shall be taken:
1. Approve the Regulation on the procedure for approval by the Ministry of the Russian Federation for Far East Development
of planning and targeted program documents that are to be implemented by RusHydro Group in the territory of Far Eastern
Federal District as per Annex No. 13 to the Minutes of Meeting.
2. Assign to the Chairman of the Management Board and General Director, N. Shulginov, to publish the Regulation in the
Company's account on the Interdepartmental Portal for the State Property Management by December 29, 2018.
3. Deem the Regulation on the procedure for approval by the Ministry of the Russian Federation for Far East Development of
investment programs and other infrastructure development plans that are to be implemented by RusHydro in the territory of Far
Eastern Federal District approved by Resolution No. 254 the Company's Board of Directors dated June 21, 2017 to be
outdated.
6.3. On amendments to the Regulation on the Audit Committee of RusHydro’s Board of Directors
82
Decision Taken:
Incorporate amendments to the Regulation on the Audit Committee of RusHydro’s Board of Directors approved by
Resolution of the Company's Board of Directors (Minutes No. 239 dated June 26, 2016, No. 254 dated June 21, 2017)
(Annex No. 14 to the Minutes of Meeting).
6.4. On the progress status of the priority projects for the construction of four facilities in the Far East: (Yakutsk
GRES-2 (1st stage), CHPP in Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) for nine months of 2018.
Decision Taken:
Take due note of the information on the progress status of the priority projects for the construction of three facilities in the
Far East: (Yakutsk GRES-2 (1st stage), CHPP in Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) as of September 30,
2018 (Annex No. 15 to the Minutes of Meeting).
6.5. On the consideration of the progress report on the Action Plan at Zagorskaya PSPP-2.
Decision Taken:
1. Take due note of the interim progress report on the further action plan at Zagorskaya PSPP-2 (Annex No. 16 to the
Minutes of Meeting).
2. Take due note of the information on the completed preparations for the alignment of the plant assembly building at the
Zagorskaya PSPP-2.
3. Approve the proposal of the Company's Management Board to start with the actions for alignment of the plant assembly
building at the Zagorskaya PSPP-2.
6.6. On contributions to the authorized capital of JSC CHPP at Sovetskaya Gavan.
Decision Taken:
If the respective resolutions are adopted by the Government of the Russian Federation, the following shall be deemed
reasonable and expedient:
1. The Company’s contributions to the authorized capital of CHPP in Sovetskaya Gavan for the purpose of capital
investments in capital construction projects under the investment project "Construction of the CHPP at Sovetskaya Gavan,
the Khabarovsk Territory. Revision of 2017" in the amount of RUB 899,304,159.70 (eight hundred ninety-nine million
three hundred four thousand one hundred fifty-nine) according to Article 21 of Federal Law No. 459-FZ dated November
29, 2018 "On the Federal Budget for 2019 and for the Planning Period of 2020 and 2021" using unspent contributions to
the Company's authorized capital (hereinafter - the balance of target funds) received by the Company:
1.1.
In accordance with Part 6 of Article 25 of Federal Law 204-FZ dated November 24, 2008 "On the Federal Budget for 2009
and for the Planning Period of 2010 and 2011" for completing construction of the shore spillway at Sayano-Shushenskaya
HPP in the amount of RUB 476,934,684 (four hundred seventy six million nine hundred thirty four thousand six hundred
and eighty-four) 55 kopecks
1.2. In accordance with Part 1 of Clause 2 of Article 12 of Federal Law No. 204-FZ dated November 24, 2008, "On the
Federal Budget for 2009 and for the Planning Period of 2010 and 2011" for the implementation of the comprehensive
investment project "Development of Design Documentation for the Investment Project of Comprehensive development of
South Yakutia in the amount of RUB 422,369,475 (four hundred twenty-two million three hundred sixty-nine thousand
four hundred seventy-five) 15 kopecks through a transaction for the purchase of additional shares of JSC CHPP in
Sovetskaya Gavan.
83
2. Conclusion of addenda stipulating the possibility of allocating the balance of target funds for the investment project of
Construction of the CHPP in Sovetskaya Gavan, Khabarovsk Territory. Revision of 2017" to:
− Budget Investment Contract No. 01-08/827 dated December 18, 2012;
− Budget Investment Agreement for financing the construction of Electrical Power Facilities in the Far East No. S-718-
AB/D07 dated December 14, 2012;
− Budget Investment Contract No. 01-13/307 dated June 24, 2009;
− Budget Investment Contract No. 09/0412.3400200.082/08/392 dated December 14, 2009.
6.7. On financing of the investment project of the Construction of two single-circuit 110 kV Pevek-Bilibino OHLs
(construction stage No. 1).
Decision Taken:
For the purpose of timely implementation and financing of the investment project of the Construction of Two Single-
Circuit 110 kV Pevek-Bilibino OHLs (construction stage No. 1) (hereinafter - the Project), assign the Chairman of the
Management Board - RusHydro’s General Director, N. Shulginov, to ensure as follows:
1. Making of contributions to the authorized capital of JSC Chukotenergo in 2019 and 2020 in an amount not exceeding
RUB 13.0 billion (if the corresponding resolutions are adopted by the Government of the Russian Federation) from the
following funds allocated to the Company's authorized capital:
− Budget investments in the amount of RUB 10.0 billion, including RUB 4.0 billion in 2019 and RUB 6.0 billion in 2020
in accordance with Article 9 of Federal Law No. 459-FZ dated November 29, 2018 On the Federal Budget for 2019 and
for the Planning Period of 2020 and 2021;
− budget allocations from the Reserve Fund of the Government of the Russian Federation in the amount of RUB 3,0 bn in
2019.
2. Financing of the first stage of the Project, including costs for the development of design & estimate documentation,
using the Company's own funds in an amount not exceeding RUB 6.294 billion.
3. An increase in the loan amount by RUB 1.294 billion by concluding Addendum No. 1 (hereinafter - the Addendum) to
Loan Agreement No. 1010-235-59-2017 dated December 28, 2017 (hereinafter - the Loan Agreement) concluded by the
Company and Chukotenergo in pursuance of the decision of the Company's Board of Directors dated October 27, 2017
(Minutes No. 259 dated October 30, 2017), on the following material terms:
Parties to the Addendum:
The Borrower - Chukotenergo;
The Lender - the Company.
Subject of the Addendum:
Clause 1.1 of the Loan Agreement shall be amended to read as follows:
1.1. Under this Agreement, the Lender shall transfer into the Borrower's ownership an amount of money not exceeding
RUB 6,294,000,000 (six billion two hundred ninety four million) 00 kopecks, and the Borrower shall repay the amount of
the loan to the Lender in the manner and on the conditions established by the Agreement.
6.8. On the transition of the Company to the predominant use of domestic software.
Decision Taken:
Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to do as follows:
1. Ensure that RusHydro’s Board of Directors by agreement with the Center of Competences for Import Substitution in the
Field of Information and Communications Technology prepares and approves, within 2 months, an action plan for 2018–
2021 for the transition to predominant use of domestic software in the Company (hereinafter - the Plan), including the
determination of the following:
84
- An authorized officer ranked not lower than deputy head of the sole executive body of the Company responsible for the
implementation of measures for the transition to predominant use of domestic software in the Company;
- Organizational and technical measures aimed at ensuring the transition to predominant use of domestic software in the
Company within the prescribed time limits;
- Financial resources, indicating the time frames, amounts, and sources of financing, to ensure the transition to
predominant use of domestic software in the Company; and
Key performance indicators for the transition to predominant use of domestic software.
2. Incorporation the Plan’s activities that envisage the Company's transition to the predominant use of domestic software
as part of import substitution measures into the Long-Term Development Program of the RusHydro Group for the period
2018-2022 during the regular planned revision.
3. Implementation of the above said approach in subsidiary companies, where the Company holds, directly and/or
indirectly, 50% stake and larger.
4. Presentation of reports on the execution of directives No. 10068p-P13 of the Government of the Russian Federation
dated December 6, 2018 (hereinafter - the Directives and on the implementation of the Plan in the scope as per the
schedule to the Directive to the Ministry of Digital Development, Telecom, and Mass Communications of the Russian
Federation on a quarterly basis, on or before the 10 day of the month following the reporting quarter, by publishing them
on the Interdepartmental Portal for State Property Management.
Decision Taken:
1. Approve RusHydro’s Business Plan for 2019 (Annex No. 1 to the Minutes of Meeting).
2. Approve RusHydro’s Investment Program for 2019 (Annex No. 2 to the RusHydro’s Business Plan for 2019–2023).
3. Approve the targets on RusHydro’s investment objects and new construction facilities of subsidiaries included in
calculating the performance indicator of the members of RusHydro’s Management Board "Meeting the Capacity
Commissioning Schedules and Plan for Financing and Absorption,%" for 2019 (Annex No. 2a to the Business Plan of the
Company for 2019 - 2023).
4. Take due note of RusHydro’s Business Plan for 2020–2023 (Annex No. 1 to the Minutes of Meeting), including
RusHydro’s Investment Program for 2020–2023 (Annex No. 2 to RusHydro’s Business Plan for 2019–2023).
Decision Taken:
1. Approve the Consolidated Business Plan (including the Consolidated Investment Program) of the RusHydro Group for
2019-2023 (Annex No. 2 to the Minutes of Meeting).
2. Based on the results of an evaluation of RusHydro's financial and economic activity for H1 2019, bring the issue of
approval of RusHydro's revised Consolidated Business Plan for 2019 to the consideration of the Board of Directors no
later than September 30, 2019, if needed.
In addition, Chairman of the Board of Directors, Yu. Trutnev, assigned the Management Board to conduct a factor
analysis of changes in the financial and economic indicators and to prepare proposals for a set of measures aimed at
improving the financial and economic indicators of the consolidated Business Plan of RusHydro Group.
Decision Taken:
1. Approve the list of annual key performance indicators of RusHydro’s Management Board Members for 2019
(hereinafter - the annual KPIs) (Annex No. 3 to the Minutes of Meeting) and put them into effect starting from January 1,
2019.
2. When calculating and assessing the annual KPIs, follow the Methodology for the Calculation and Assessment of the
Annual KPIs of RusHydro’s Management Board Members approved by the resolution of the Board of Directors of the
Company (Minutes No. 245 dated December 26, 2016, No. 251 dated April 18, 2017, and No. 269 dated April 25, 2018).
Decision Taken:
Minutes No. 282 dtd
December 27, 2018
1. On the consideration of the
Business Plan (including the
Investment Program) of the
Company for 2019-2023.
2. On consideration of the
Consolidated Business Plan
(including the Consolidated
Investment Program) of RusHydro
Group for 2019 - 2023.
3. On the approval of annual key
performance indicators for
members of RusHydro’s
Management Board for 2019.
4. On review of material issues for
85
the Company. On the approval of
target values of key performance
indicators for members of
RusHydro’s Management Board for
2019.
1. Approve:
- Target values of annual key performance indicators for members of RusHydro’s Management Board for 2019 (Annex
No. 4 to the Minutes of Meeting).
- Target KPI values under Cycle Three of RusHydro's Long-Term Motivation Program for 2019–2021. (Annex No. 5 to
the Minutes of Meeting);
- Changes in the adjusted target KPI values under Cycle One of RusHydro's Long-Term Motivation Program for 2017–
2019. (Annex No. 6 to the Minutes of Meeting);
- Changes in the adjusted target KPI values under Cycle Two of RusHydro's Long-Term Motivation Program for 2018–
2020. (Annex No. 7 to the Minutes of Meeting).
2. When calculating and evaluating the key performance indicators under Cycle Three of RusHydro’s Long-term
Motivation Program for 2019-2021 (hyphen 2 of Clause 1 of this decision), follow the Methodology for calculating and
evaluating key performance indicators of RusHydro’s Long-Term Motivation Program approved by a decision of the
Company's Board of Directors dated December 26, 2017 (Minutes No. 264 dated December 28, 2017).
In addition, as part of the discussion of issues on the agenda, Chairman of the Board of Directors, Yu. Trutnev, assign to
the Board of the Company to do as follows before February 15, 2019:
1. Submit materials to the Chairman of the Board of Directors of the Company for initiating a meeting with the
participation of representatives of federal executive bodies on the following items:
1.1. Development and adoption of legal acts on the introduction of a mechanism of guaranteed return on
investment to implement the long-term program for replacement of retired capacities in the Far Eastern
Federal District;
1.2. Accelerated adoption of legal acts providing for a change in the tariff setting system in the Far Eastern
Federal District with the introduction of a mechanism for setting long-term tariffs covering economically
reasonable expenses and rate of return;
1.3. Taking measures to regulate fuel (coal) prices on the domestic market of the Russian Federation,
including through the conclusion of long-term contracts for the supply of fuel to energy facilities in the Far
Eastern Federal District.
2. Promptly provide information on the performance of RusHydro Group for 2018.
86
Appendix No.5 Information on the Meetings of the Committees under the Board of Directors
The Audit Committee of the Company’s Board of Directors
of
Items on the Agenda
Decisions Taken
and No.
Date
Minutes
January
(Minutes No. 108)
22,
2018
February
(Minutes No. 109)
1,
2018
February
(Minutes No. 110)
26,
2018
March
(Minutes No. 111)
23,
2018
Pre-Approve the performance reports of the Audit Committee of the Company’s Board of Directors for H1 2017-2018
corporate year.
Recommend to the Company’s Board of Directors to make the following decision:
Approve the progress report on the Action Plan for the Disposal of Non-core Assets of the Company for Q4 2016-
2017 in line with the Annex to the present decision.
Approve the Report on the Company's compliance with the requirements of the legislation of the Russian
Federation in the field of countering the unlawful use of insider information and market manipulation and
RusHydro’s Regulation on Insider Information for Q4 2017 (Annex No. 1).
Recommend to the Company’s Board of Directors to approve the Report on RusHydro’s Insurance Coverage in
2017 in line with the Annex to the present decision.
Agree on the open tender documentation for the right to conclude a contract for services to audit RusHydro's
accounting reports prepared in accordance with Russian accounting and auditing (review) standards of RusHydro
Group’s consolidated financial statements prepared in accordance with International Financial Reporting Standards
for 2018, 2019, and 2020 (attached).
Recommend to the Company’s Board of Directors to take due note of the results of the Action Plan to rectify
violations and shortcomings recorded by the Ministry of Energy of Russia following the results of the field check
on the progress of the investment project Supply and Replacement of Six Hydro Turbines at the Novosibirsk HPP
on a turnkey basis in line with the Annex to the present decision.
1.On approval of the performance reports of
the Chairman of the Audit Committee of the
Company’s Board of Directors for H1 2017-
2018 corporate year.
1. On recommendations to the Board of
Directors of the Company on the item:
On approval of the progress report on the
Action Plan for the Disposal of Non-core
Assets of the Company for Q4 2016-2017.
2. On consideration of the Report on the
Company's compliance with the
requirements of the legislation of the
Russian Federation in the field of countering
the unlawful use of insider information and
market manipulation and RusHydro’s
Regulation on Insider Information for Q4
2017.
1.On recommendations to the Board of
Directors of the Company on the item: On
approval of the Report on RusHydro’s
Insurance Coverage in 2017.
2. On determination of the procedure for
selecting the Company's Auditor for 2018-
2020.
1. On recommendations to the Board of
Directors of the Company on the item: On
the Company’s priority activities: on
considering the results of the Action Plan to
rectify violations and shortcomings recorded
by the Ministry of Energy of Russia
following the results of the field check on
the progress of the investment project
Supply and Replacement of Six Hydro
Turbines at the Novosibirsk HPP on a
turnkey basis
87
of
project
2. On recommendations to the Board of
Directors of the Company on the item: On
the Company’s priority activities: on
considering the results of the Action Plan to
rectify violations and shortcomings recorded
by the Ministry of Energy of Russia
following the results of the field check on
the progress of design, construction, and
commissioning activities at the
Boguchanskaya HPP stipulated by the
Company's Investment Program for 2014–
2016.
3. On recommendations to the Board of
Directors of the Company on the item:
On the Company’s priority activities: on
considering the results of the Action Plan to
rectify violations and shortcomings recorded
by
the Ministry of Energy of Russia
following the results of the field check on
the progress of the Ust-Srednekanskaya HPP
investment
the Company
(including the analysis of the measures
necessary
the Ust-Srednekansky
reservoir to the design level and to drive the
Srednekanskaya HPP up
the design
capacity).
4. On recommendations to the Board of
Directors of the Company on the item: On
the Company’s priority activities: on
considering the results of the field
inspection by the Ministry of Energy of
Russia on the progress of the investment
project Facility No. 1- HPP of the 2nd
Stage, Zaramagskiye HPPs and the results
of the action plan to rectify violations and
shortcomings recorded by the Ministry of
Energy of Russia following the above-said
field inspection.
5. On recommendations to the Board of
Directors of the Company on the item: On
the Company’s priority activities: on
considering the results of the action plan to
rectify violations and shortcomings recorded
by the Ministry of Energy of Russia
fill
to
to
Recommend to the Company’s Board of Directors to take due note of the results of the action plan to rectify
violations and shortcomings recorded by the Ministry of Energy of Russia following the results of the field check
on the progress of design, construction, and commissioning activities at the Boguchanskaya HPP stipulated by the
Company's Investment Program for 2014–2016 in line with the Annex to the present decision.
Recommend to the Company’s Board of Directors to take due note of the results of the action plan to rectify
violations and shortcomings recorded by the Ministry of Energy of Russia following the results of the field check
on the progress of the Ust-Srednekanskaya HPP investment project of the Company (including the analysis of the
measures necessary to fill the Ust-Srednekansky reservoir to the design level and to drive the Srednekanskaya HPP
up to the design capacity), in line with the Annex to the present decision.
Recommend to the Company’s Board of Directors to take due note of the results of the field inspection by the
Ministry of Energy of Russia on the progress of the investment project Facility No. 1- HPP of the 2nd Stage,
Zaramagskiye HPPs and the results of the action plan to rectify violations and shortcomings recorded by the
Ministry of Energy of Russia following the above-said field inspection in line with the Annex to the present
decision.
Recommend to RusHydro’s Board of Directors to take due note of the results of the action plan to rectify violations
and shortcomings recorded by the Ministry of Energy of Russia following the results of the field check on the
progress of the following investment projects in 2016: construction of the Yakutsk GRES-2 (1st stage),
construction of CHPP in Sovetskaya Gavan, and construction of the Sakhalin GRES-2 (1st stage) in line with the
Annex to the present decision.
88 April 24, 2018
(Minutes No. 112)
the
(1st
the progress
the results of
following the results of the field check on
the progress of the following investment
projects in 2016: construction of the
Yakutsk GRES-2 (1st stage), construction of
CHPP in Sovetskaya Gavan, and
construction of the Sakhalin GRES-2 (1st
stage).
6. On recommendations to the Board of
Directors of the Company on the item:
On reviewing
the field
inspections by the Ministry of Energy of
Russia on
following
investment projects in 2017: construction of
the Yakutsk GRES-2
stage),
construction of CHPP in Sovetskaya Gavan,
and construction of the Sakhalin GRES-2
(1st stage).
1. On approval of the Action Plan of the
Audit Committee of RusHydro’s Board of
Directors for H1 2018.
2. On the Report of JSC PwC Audit (the
Company’s Auditor) on the results of the
interim audit of RusHydro’s accounting
reports under RAS and a review of
RusHydro Group’s consolidated interim
condensed financial information under IFRS
for nine months ended September 30, 2017.
3.
On recommendations to the
Company’s Board of Directors on the item
“On recommendations for the Annual
General Meeting of Shareholders of the
Company concerning”: Approval of the
Company's auditor.
4. On the implementation of RusHydro’s
Control Activities Schedule for Q4 2017.
5. On the assessment of the current status
of RusHydro’s Internal Audit Function for
2017.
6. On amendments to the Control Activities
Schedule of RusHydro’s Internal Audit
Service for 2018.
7. On recommendations to the Board of
Directors of the Company on the item: On
Recommend to the Company’s Board of Directors to take due note of the results of the field inspections by the
Ministry of Energy of Russia on the progress the following investment projects in 2017: construction of the
Yakutsk GRES-2 (1st stage), construction of CHPP in Sovetskaya Gavan, and construction of the Sakhalin GRES-
2 (1st stage) in line with the Annex to the present decision.
Approve the Action Plan of the Audit Committee of RusHydro’s Board of Directors for H1 2018 (Annex No. 1).
Take due note of PwC Audit’s Report on the results of the interim audit of RusHydro’s accounting reports under
RAS and a review of RusHydro Group’s consolidated interim condensed financial information under IFRS for nine
months ended September 30, 2017 (attached).
Recommend to the Company’s Board of Directors to make the following decision:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following decision
concerning the approval of the Company's auditor:
Approve Joint-Stock Company PricewaterhouseCoopers Audit (OGRN 1027700148431) as RusHydro’s auditor.
Approve the Report of the Head of the Internal Audit Service on the implementation of RusHydro’s Control
Activities Schedule for 2017, for Q4 2017 (Annex 4).
Approve the results of the assessment of the current status of RusHydro’s Internal Audit Function for 2017 in line
with the Annex No. 5.
Amend the Control Activities Schedule of RusHydro’s Internal Audit Service for 2018, approving the same as
amended in Annex No. 5.
Recommend to the Company’s Board of Directors to make the following decisions:
1. Approve the progress report on the Action Plan for the Disposal of Non-core Assets of the Company for Q1
89 the Company's non-core assets.
1. On consideration of the Report on the
Company's compliance with the
requirements of the legislation of the
Russian Federation in the field of countering
the unlawful use of insider information and
market manipulation and RusHydro’s
Regulation on Insider Information for Q1
2018.
2. On consideration of the Report on the
Action Plan for RusHydro’s Comprehensive
Program of Anti-corruption Activities in
2017
3. On recommendations to RusHydro’s
Board of Directors concerning the
performance of transactions related to the
gratuitous transfer of the Company's
property to a third party.
4. On the preview of the assessment results
of the corporate governance practices.
1.On recommendations to the Board of
Directors of the Company on the item: On
pre-approval of the Company's Annual Report
(including sustainable development) for 2017.
2018 in line with the Annex to the present decision.
2. Make the following amendments to the Register of Non-core Assets of the Company approved by the decision
of the Company’s Board of Directors dated December 28, 2017 (Minutes No. 263):
- Change the planned disposition of the facilities "Road No. 1-2 of the 4th cat." and "Road No. 2-3 of the 4th
cat." (Clauses 6 and 8 of the "Gratuitous Transfer" section) from "gratuitous transfer" to "liquidation"
- Change the planned disposition of the facility LLC VolgaHydro (Clause 4 of the Retention of noncore assets
section) from “holding” to “sale”
- Exclude the facility JSC Yuzhno-Yakutskiy HPC (Clause 4 of the "Liquidation" section).
Approve the Report on the Company's compliance with the requirements of the legislation of the Russian
Federation in the field of countering the unlawful use of insider information and market manipulation and
RusHydro’s Regulation on Insider Information for Q1 2018 (Annex No. 1).
Take due note of the Report on the Action Plan for RusHydro’s Comprehensive Program of Anti-corruption
Activities in 2017.
Recommend to the Company’s Board of Directors to make the following decision:
Approve the conclusion of a Property Donation Agreement on the following material terms:
Parties to the Agreement:
The Donor is the Company;
The Donee is a federal subject of the Russian Federation, the Karachay-Cherkess Republic.
Subject of the Agreement:
The Donor shall gratuitously transfer, and the Donee shall take into possession the following fixed properties for
use as public transportation facilities:
- The overpass (bridge) over the Kardonikskiy inverted siphon, cadastral number 09:06:0000009:114, located at:
Karachay-Cherkess Republic, Zelenchukskiy District, Zelenchukskaya Stanitsa, facilities of the Zelenchukskiye
HPPs power complex.
- The bridge on PK-26 + 81.8 channel B. Zelenchuk—Husa-Kardonikskaya, cadastral number 09:06:0000009:109,
located at: Karachay-Cherkess Republic, Zelenchukskiy District, facilities of the Zelenchukskiye HPPs power
complex.
The book value of the transferred property as of March 31, 2018 is:
RUB 6,297,418 (six million two hundred ninety-seven thousand four hundred and eighteen).
Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the results of the assessment of the Company’s corporate governance practices and the
recommendations for improving corporate governance.
Recommend to the Company’s Board of Directors to make the following decision:
Pre-approve the Company's Annual Report (including sustainable development) for 2017 in line with the Annex to
the present decision and submit it for approval at the Annual General Meeting of Shareholders of the Company.
May
(Minutes No. 113)
17,
2018
May
(Minutes No. 114)
18,
2018
90 2. On recommendations to the Board of
Directors of the Company on the item: On
recommendations for the Annual General
Meeting of Shareholders of the Company
concerning: Approval of the annual
accounting reports (financial statements) of
the Company.
3.On the opinion of the Internal Audit
Commission based on its audit findings of
the Company for 2017.
4.On the Report of JSC PwC Audit (the
Company’s Auditor) on the audit results of
RusHydro’s accounting reports prepared
under Russian Accounting Standards for
2017.
5.On the opinion of the Company’s Auditor
following the audit of its accounting reports
prepared under Russian Accounting
Standards for 2017.
6. On the estimation of the external audit
process efficiency in 2017.
1. On recommendations to the Board of
Directors of the Company on the item:
On the approval of the report on the
functioning and results of
internal
assessment of
the corporate system of
internal control and risk management.
the
1. On the Report of JSC PwC Audit (the
Company's Auditor) on the audit results of
RusHydro Group’s consolidated financial
statements under IFRS for the year ended
December 31, 2017.
2. On pre-approval of the performance
reports of the Audit Committee of the
Company’s Board of Directors for 2017-
2018 corporate year.
On
Directors of the Company on the item:
On
the Company’s
decisions to made as follows: On approval of
the pre-approval of
recommendations
the Board of
to
Recommend to the Company’s Board of Directors to make the following decision:
Recommend to the Annual General Meeting of Shareholders of the Company to approve the annual accounting
reports (financial statements) for 2017 (Annex No. 2).
Take due note of the opinion of the Internal Audit Commission based on its audit findings of the Company for 2017
(attached).
Take due note of the report of JSC PwC Audit (the Company’s Auditor) on the audit results of RusHydro’s
accounting reports prepared under Russian Accounting Standards for 2017 (Annex No. 4).
1. Take due note of the opinion of Joint-Stock Company PricewaterhouseCoopers Audit (hereinafter- the Auditor)
following the audit of its accounting reports prepared under RAS for 2017 (Annex No. 5).
2. Recommend to the Company’s Board of Directors to submit the Auditor’s opinion based on the audit results of the
Company’s accounting reports for 2017 at the Annual General Meeting of Shareholders of the Company.
Given the estimation conducted, recognize the external audit process in 2017 to be efficient.
1. Take due note of the report on the functioning and results of the internal assessment of the corporate system of
internal control and risk management.
2. Recommend to the Company’s Board of Directors to make the following decision: Approve the report on the
functioning and results of the internal assessment of the corporate system of internal control and risk management.
Take due note of the Report of JSC PwC Audit (the Company's Auditor) on the audit results of RusHydro Group’s
consolidated financial statements under IFRS for the year ended December 31, 2017 (attached).
Pre-Approve the performance reports of the Audit Committee of the Company’s Board of Directors for 2017-2018
corporate year.
Recommend to the Company’s Board of Directors to make the following decision:
Approve the conclusion of an Agreement on the Gratuitous Transfer (Donation) of Property under the following
material terms:
Parties to the Agreement:
June
(Minutes No. 115)
13,
2018
June
Minutes No. 116)
20,
2018
June
(Minutes No. 117)12
26,
2018
12An extraordinary meeting held to approve the performance reports of the Audit Committee of the Company’s Board of Directors for 2017-2018 corporate year.
91 a transaction related to the gratuitous transfer
of the Company's property to third parties.
1. On the implementation of RusHydro’s
Control Activities Schedule for Q1 2018.
2. On reviewing the proposals to improve the
Company's performance following the check
on the Long-term Development Program
results in 2017.
1. On the appointment of the Secretary of
the Audit Committee.
2. On recommendations to the Company’s
Board of Directors concerning the approval
of the Company's internal documents:
On approval of RusHydro’s Auditor Rotation
Policy.
1. On the election of the Deputy Chairman of
the Audit Committee.
2. On approval of the Action Plan of the
Audit Committee of RusHydro’s Board of
Directors for H2 2018.
3. On consideration of the Report on the
Company's compliance with the requirements
of the legislation of the Russian Federation in
the field of countering the unlawful use of
insider information and market manipulation
Insider
and RusHydro’s Regulation on
Information for Q2 2018.
1. On the report on meeting the RusHydro
Group auditing plan by PwC Audit (the
Company’s Auditor) in 2018.
2. On PwC Audit Report on the results of
the review of RusHydro Group’s
consolidated interim condensed financial
information under IFRS for three and six
The Donor is the Company;
The Donee is the Zelenchuk Municipal District, a municipal entity in the Karachay-Cherkess Republic.
Subject of the Agreement:
The Donor shall transfer on a gratis basis, and the Donee shall accept for use pro bono publico (as a public
transportation facility) the motor road bridge across the river Khusa with an area of 298 sq. m registered under
cadastral number 09:06:0000009:106 and located at: the facilities of the Zelenchukskiye HPPs power complex,
Zelenchukskaya Stanitsa, Zelenchuk District, the Karachay-Cherkess Republic.
The book value of the transferred property as of May 31, 2018 is:
RUB 1,386,221 (one million three hundred eighty-six thousand two hundred twenty-one) 63 kopecks.
Approve the Report of the Head of the Internal Audit Service on the implementation of RusHydro’s Control Activities
Schedule for 2018, for Q1 2018.
1. Approve the proposals to improve the Company's performance following the check on the Long-term
Development Program results in 2017.
2. The Director for Internal Control and Risk Management - Chief Auditor should inform the Audit Committee of the
Board of Directors of the progress results of the submitted proposals.
Appoint A. Pyatova as the secretary of the Audit Committee of the Company’s Board of Directors, the chief expert of
RusHydro’s Internal Audit Service.
Recommend to the Company’s Board of Directors to make the following decision:
Approve RusHydro’s Auditor Rotation Policy.
Elect V. Pivovarov as the Deputy Chairman of the Audit Committee at RusHydro’s Board of Directors.
Approve the Action Plan of the Audit Committee of RusHydro’s Board of Directors for H2 2018.
Approve the Report on the Company's compliance with the requirements of the legislation of the Russian Federation
in the field of countering the unlawful use of insider information and market manipulation and RusHydro’s Regulation
on Insider Information for Q2 2018.
Take due note of the report on meeting the RusHydro Group auditing plan by PwC Audit in 2018.
Take due note of PwC Audit Report on the results of the review of RusHydro Group’s consolidated interim condensed
financial information under IFRS for three and six months ended June 30, 2018.
June
(Minutes No. 118)13
6,
2018
August
(Minutes No. 119)14
6,
2018
September 14, 2018
(Minutes No. 120)
September 27, 2018
(Minutes No. 121)
13The meeting not included in the reporting period. Held in accordance with clause 6.8 of the Regulation on the Audit Committee of RusHydro’s Board of Directors.
14The meeting not included in the reporting period. Held in accordance with clause 6.8 of the Regulation on the Audit Committee of RusHydro’s Board of Directors.
92 October
(Minutes No. 122)
2,
2018
months ended June 30, 2018.
3. On PwC Audit’s Report on the results of
the interim audit of RusHydro’s accounting
reports under RAS for H1 2018.
1. On the implementation of RusHydro’s
Control Activities Schedule for Q2 2018.
2. On amendments to the Control Activities
Schedule of RusHydro’s Internal Audit
Service for 2018.
3.On recommendations to the Board of
Directors of the Company on the item:
On termination of RusHydro’s membership in
other organizations.
October
(Minutes No. 123)
22,
2018
4.On recommendations to the Board of
Directors of the Company on the item:
On approval of the Terms of Reference to
check on the progress of RusHydro Group's
Long-Term Development Program for 2018,
2019, and 2020.
1.On consideration of the Report on the
Company's compliance with the requirements
of the legislation of the Russian Federation in
the field of countering the unlawful use of
insider information and market manipulation
and RusHydro’s Regulation on Insider
Information for Q3 2018.
2.On pre-approval of the Methodology for
assessing RusHydro’s corporate governance
Take due note of PwC Audit’s Report on the results of the interim audit of RusHydro’s accounting reports under RAS
for H1 2018.
Approve the Report of the Head of the Internal Audit Service on the implementation of RusHydro’s Control Activities
Schedule for 2018, for Q2 2018.
Amend and approve the Control Activities Schedule of RusHydro’s Internal Audit Service for 2018.
Recommend to the Company’s Board of Directors to make the following decision:
1. Determine the price (monetary value) of the stake in LLC VolgaHydro’s authorized capital alienated by the
Company (hereinafter - the Stake) in the amount of RUB 450,000,000 (four hundred fifty million).
2. Approve the termination of the Company's participation in the authorized capital of LLC VolgaHydro through a
Stake sale transaction (hereinafter - the Transaction) on the following terms:
Parties to the Transaction:
Buyer - VHG AUSLANDSBETEILIGUNGEN GmbH;
Seller - PJSC RusHydro.
Subject of the Transaction:
The Seller shall sell the Stake to the Buyer, and the Buyer shall accept and pay for the Share in accordance with the
terms of the Transaction.
The size of the Stake held by the Seller is 40% (forty percent), with a nominal value of RUB 449,814,356 (four
hundred forty-nine million eight hundred fourteen thousand three hundred fifty-six).
The size of the alienated Stake is 40% (forty percent), with a nominal value of RUB 449,814,356 (four hundred forty-
nine million eight hundred fourteen thousand three hundred fifty-six).
After the alienation of the Stake in VolgaHydro’s authorized capital, there will be no shares belonging to the Seller in
VolgaHydro’s authorized capital.
Price of the Transaction:
Determined in paragraph 1 of this decision.
Recommend to the Company’s Board of Directors to make the following decision:
Approve the Terms of Reference to check on the progress of RusHydro Group's Long-Term Development Program
for 2018, 2019, and 2020.
Approve the Report on the Company's compliance with the requirements of the legislation of the Russian Federation
in the field of countering the unlawful use of insider information and market manipulation and RusHydro’s Regulation
on Insider Information for Q3 2018.
1. Pre-approve the Methodology for assessing RusHydro’s corporate governance system as revised.
2. Recommend to the Chairman of the Management Board, the Company's General Director, to approve the
93 system.
3.On recommendations to the Board of
Directors of the Company on the item: On
approval of the progress report on the Action
Plan for the Disposal of Non-core Assets of
the Company for Q2 and Q3 2018.
November 23, 2018
(Minutes No. 124)
1. On recommendations to the Company’s
Board of Directors concerning the approval of
transactions related to the gratuitous transfer
of the Company's property to third parties.
2. On recommendations to the Board of
Directors of the Company on the item: On
incorporating amendments to the Regulation
on the Audit Committee of RusHydro’s
Board of Directors approved by Resolution
of RusHydro’s Board of Directors (Minutes
No. 239 dated June 23, 2016, as revised
No. 254 dated June 21, 2017).
3. On recommendations to the Company’s
Board of Directors concerning the approval
Methodology for assessing RusHydro’s corporate governance system.
Recommend to the Company’s Board of Directors to make the following decision:
1. Take due note of the efforts made by the Company on the disposal of non-core assets and optimization of RusHydro
Group’s structure for 3 years.
5. Approve the progress report on the Action Plan for the Disposal of Non-core Assets of the Company for Q2 and Q3
2018.
6. Make the following amendments to the Register of Non-core Assets of the Company approved by the decision of
the Company’s Board of Directors dated December 28, 2017 (Minutes No. 263):
- include the object of CJSC Verkhne-Naryn HPPs with the disposal method - sale;
- change the planned disposal method of JSC Rumyantsevo Technopark object from holding to liquidation.
7. Make the following amendments to the Action Plan on the Disposal of RusHydro’s Non-core assets for Q4 2017 -
2018 approved by the decision of the Board of Directors of the Company dated December 28, 2017 (minutes
No. 263):
- change the sale period of JSC IEGC for Q4 2019;
- change the liquidation period of JSC HydroEngineering Siberia for Q1 2019;
- change the period of gratuitous transfer (donation) of railway infrastructure of the Izvestkovaya-Chegdomyn line
(1/6 of the stake for 78 facilities) for Q1 2019.
5. The Board of the Company shall initiate measures to revise Directives No. 7601p-P13 of the Government of the
Russian Federation dated October 7, 2016 in terms of payment for the authorized capital of LLC ServisNedvizhimost
RusHydro (SNRG) only with shares of JSC Malaya Dmitrovka.
Recommend to the Company’s Board of Directors to make the following decision:
Approve the conclusion of an Agreement on the Gratuitous Transfer (Donation) of Property under the following
material terms:
Parties to the Agreement:
The Donor is the Company;
The Donee is the Russian Federation represented by the Interregional Territorial Administration of the Federal Agency
for State Property Management in the Krasnoyarsk Territory, the Republic of Khakassia, and the Republic of Tyva.
Subject of the Agreement:
The Donor shall gratuitously transfer, and the Donee shall take into possession non-residential buildings in line with
the Annex (hereinafter - the Property).
The purpose of the transferred Property is to accommodate the Federal State Autonomous Educational Institution of
Higher Education “Siberian Federal University”.
Price (book value) of the transferred Property (as of September 30, 2018):
RUB 1,276,053 (one million two hundred seventy-six thousand fifty-three) 88 kopecks.
Recommend to the Company’s Board of Directors to make the following decision:
Incorporate amendments to the Regulation on the Audit Committee of RusHydro’s Board of Directors approved by
Resolution of the Company's Board of Directors (Minutes No. 239 dated June 26, 2016, No. 254 dated June 21, 2017).
Recommend to the Company’s Board of Directors to make the following decisions:
1. Approve the conclusion of an Agreement on the Gratuitous Transfer (Donation) of Property (hereinafter - the
94 of transactions related to the gratuitous
transfer of the Company's property to third
parties.
December 21, 2018
(Minutes No. 125)
1. On recommendations to the Company’s
Board of Directors concerning:
On internal documents in the field of the
Company's corporate governance
2. On recommendations to the Board of
Directors of the Company on the item:
On the approval of the Standard for Checking
on the Progress of RusHydro Group’s Long-
Term Development Program.
3. On recommendations to the Board of
Directors of the Company on the item:
On the Company's non-core assets
Agreement) under the following material terms:
Parties to the Agreement:
The Donor is the Company;
The Donee is the municipal formation of the workers' settlement (urban settlement) of Talakan, the Bureysky District,
the Amur Region, represented by the Municipal Public Institution of the administration of the workers' settlement of
Talakan, the Bureysky District, the Amur Region.
Subject of the Agreement:
The Donor shall gratuitously transfer, and the Donee shall accept in ownership for use as an object of public transport
infrastructure, the Access road to the solid waste landfill, cadastral number: 28:11:000000:2663, 3,173 m length,
address: Talakan, the Bureysky District, the Amur Region (entry for the right in the Unified State Register of Real
Estate No. 28:11:000000:2663-28/012/2018-1 dated January 24, 2018) (hereinafter - the Property).
Price (book value) of the transferred Property (as of October 31, 2018):
RUB 66,104,713 (sixty-six million one hundred four thousand seven hundred thirteen) 37 kopecks.
2. Amend the Register of Non-core assets of the Company approved by the decision of the Board of Directors of the
Company dated December 28, 2017 (Minutes No. 263) to include the item of immovable property “Access road to the
solid waste landfill”, with a length of 3,173 m, located at: Talakan, the Bureysky District, the Amur Region, with the
disposal method of gratuitous transfer.
Recommend to the Company’s Board of Directors to make the following decision:
1.1. Take due note of the report on the compliance with the Regulation on the Information Policy of the Company.
1.2. Approve the new version of the Regulation on the Information Policy of the Company.
1.3. Approve the Policy for Shareholding by Members of the Board of Directors and Members of the Management
Board in RusHydro and in Entities Controlled by RusHydro.
Amend the RusHydro’s Code of Corporate Ethics approved by the decision of the Company's Board of Directors
dated April 7, 2016 (Minutes No. 235 dated April 8, 2016).
Recommend to the Company’s Board of Directors to make the following decision:
Approve the Standard for Checking on the Progress of RusHydro Group’s Long-Term Development Program.
Recommend to the Company’s Board of Directors to make the following decisions:
1. Approve a new version of the Register of RusHydro's Non-core Assets.
2. Approve the Action Plan for the Disposal of RusHydro’s Non-core Assets for 2018 (Q4)–2019.
4. On recommendations to the Board of
Directors of the Company on the item: On the
approval of RusHydro’s Insurance Coverage
Program for 2019.
1. On approval of the Control Activities
Schedule of RusHydro’s Internal Audit
December 21, 2018
(Minutes No. 126)
Recommend to the Company’s Board of Directors to make the following decision:
Approve RusHydro’s Insurance Coverage Program for 2019.
Approve the Control Activities Schedule of RusHydro’s Internal Audit Service for 2019.
95 Service for 2019.
2. On the implementation of RusHydro’s
Control Activities Schedule for Q3 2018.
Approve the Report of the Head of the Internal Audit Service on the implementation of RusHydro’s Control Activities
Schedule for 2018, for Q3 2018.
The Nomination and Compensation Committee of RusHydro’s Board of Directors
Item
Decision taken
Date and No. of
Minutes/No. of Item
Minutes No. 70/1 dtd
January 18, 2018
Minutes No. 71/1 dtd
January 30, 2018
On pre-approval of the performance reports
of the Nomination and Compensation
Committee of the Company’s Board of
Directors for H1 2017-2018 corporate year.
On recommendations to the Board of
Directors of the Company on the item “On
the agreement of concurrent employment of
the Management Board’s members in the
management bodies of other organizations”.
Minutes No. 72/1 dtd
March 23, 2018
On the assessment of the performance of
RusHydro’s Board of Directors.
Minutes No. 103/73/1
dtd April 23, 2018
On recommendations to RusHydro’s Board
of Directors on the item: On the
1. Pre-approve the performance reports of the Nomination and Compensation Committee of RusHydro’s Board of
Directors for H1 2017-2018 corporate year (Annex No. 1 to the Minutes of Meeting).
2. Recommend to the Company’s Board of Directors to approve the performance reports of the Nomination and
Compensation Committee of the Company’s Board of Directors for H1 2017-2018 corporate year.
1. Recommend to the Company’s Board of Directors to make the following decision:
1.1. Agree the concurrent employment of the following people:
1.1.1. Nikolay Shulginov, the Chairman of the Management Board - General Director of the Company and a
member of the Board of Directors of JSC Institute Hydroproject.
1.1.2. Boris Bogush, a member of the Management Board, First Deputy General Director - Chief Engineer of the
Company and a member of the Board of Directors of JSC Institute Hydroproject.
1.1.3. George Rizhinashvili, a member of the Management Board, First Deputy General Director of the Company
and a member of the Board of Directors of JSC Institute Hydroproject.
1.1.4. Andrey Kazachenkov, a member of the Management Board, First Deputy General Director of the Company
and a member of the Board of Directors of JSC Institute Hydroproject.
1.1.5. Sergey Kirov, a member of the Management Board, First Deputy General Director of the Company and a
member of the Board of Directors of JSC Institute Hydroproject.
1.2. Agree the concurrent employment of the Chairman of the Management Board - General Director of the
Company and members of the Management Board of the Company at the positions in the management bodies of
RusHydro’s controlled entities.
1. Assess the performance of the Company’s Board of Directors by engaging an independent consultant in
accordance with the assessment methodology proposed by LLC PricewaterhouseCoopers Consulting.
2. Recommend to RusHydro’s Board of Directors to make the following decision:
1. Approve the engagement of an independent consultant (LLC PricewaterhouseCoopers Consulting) to
evaluating the performance of the Company's Board of Directors.
2. Recommend to members of the Company’s Board of Directors to take part in the questionnaire survey and
interviewing conducted by the independent consultant.
3. Assign the Company to ensure that the Company's Board of Directors performance appraisal results are
presented at the meeting of the Company’s Board of Directors with a preliminary consideration of the issue at the
meeting of the Nomination and Compensation Committee of the Company.
1. Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Deem the KPI “Reduction of Operating Expenses (costs), %” for 2017 calculated with regard to factors that are
96
(joint meeting)
achievement of annual key performance
indicators by members of the Company’s
Management Board for 2017.
Minutes No. 103/73/2
dtd April 23, 2018
(joint meeting)
On recommendations to RusHydro’s Board
of Directors on the item: On approval of
amendments to the Methodology for the
Calculation and Evaluation of the annual
KPIs of RusHydro's Management Board
Members.
Minutes No. 103/73/3
dtd April 23, 2018
(joint meeting)
Minutes No. 103/73/4
dtd April 23, 2018
(joint meeting)
Minutes No. 74/1 dtd
May 18, 2018
On recommendations to RusHydro’s Board
of Directors on the item: On approval of the
annual KPI Targets
for members of
RusHydro’s Management Board for 2018
and the KPI Targets under Cycle Two of
RusHydro’s Long-term Motivation Program
for 2018 - 2020.
On recommendations to RusHydro’s Board
of Directors on the item: On approval of
adjusted target KPI values under Cycle One
of RusHydro's Long-Term Motivation
Program for 2017–2019.
On
the Board of
Directors of the Company on the item: On
recommendations for the Annual General
Meeting of Shareholders of the Company
concerning: On the payment of remuneration
for work on the Board of Directors to
members of the Board of Directors, who are
amount
not public
established by
internal
documents.
the
in
the Company's
recommendations
servants,
to
beyond the control of the management, to have been achieved.
1.2. Approve the Report on the Achievement of Annual Key Performance Indicators by RusHydro’s Management
Board Members for 2017 (Annex No. 1 to the present decision).
1.3. The decision taken contains confidential information.
2. Approve the payment of the annual bonus to the members of RusHydro’s Management Board with reference to
the achieved annual KPIs of the members of RusHydro’s Management Board for 2017 after the Company’s Board
of Directors approves the report on the achievement of the annual KPIs of RusHydro’s Management Board
members for 2017.
1. Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Amend the Methodology for the Calculation and Evaluation of the annual KPIs of RusHydro's Management
Board Members (without effect of fuel costs).
- according to clause 2.1.1 as for KPI “Return on Equity (ROE), %”;
- according to clause 2.2.1 as for KPI “Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA),
RUB mn”;
- according to clause 2.5.1 as for KPI “Reduction of Operating Expenses (costs), %”
in line with Annex No. 2 to the present decision.
1.2. Include clause 1.5. of Section 1. “General Provisions” of the Methodology for the Calculation and Evaluation
of the annual KPIs of RusHydro's Management Board Members reworded as follows: 1.5. If there are objective
reasons for the non-achievement of any KPI, the Company’s Board of Directors may decide to recognize this
indicator as achieved and to pay the full amount of material incentives attributable to it.
1.3. Establish that the changes indicated in para. 1.1 and 1.2 of this decision shall apply from January 1, 2018.
1. Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Approve the Target values of the Annual KPIs of RusHydro's Management Board members for 2018 (KPI
"Return on Equity (ROE), %," "Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA), RUB
mn," "Labor productivity, RUB thousand/man-hours") in line with Annex No. 3.1 to the present decision.
1.2. Target KPIs under Cycle Two of RusHydro's Long-Term Motivation Program for 2018–2020 (KPI “Free Cash
Flow (FCF), RUB mn”) in line with Annex No. 3.2 to this decision).
1. Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Approve the adjusted target values of the performance indicator under Cycle One of RusHydro's Long-Term
Motivation Program for 2017-2019. (KPI "Free Cash Flow (FCF), RUB mn") (Annex No. 4 to this decision).
Recommend to the Company’s Board of Directors to make the following decision:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Pay remuneration to the members of the Board of Directors based on their performance in the Board of Directors
during the period from June 26, 2017 to June 27, 2018, in the amount, manner, and time specified by the
Resolution on the Payment of Remunerations and Compensations to the Members of RusHydro’s Board of
Directors approved by the resolution of the Annual General Meeting of Shareholders of the Company dated June
26, 2017 (Minutes No. 16 dated June 27, 2017).
97
Minutes No. 74/2 dtd
May 18, 2018
On the analysis of professional qualifications
of candidates to the Board of Directors of
the Company, the presence or absence of a
conflict of interest with the Company, and
on the recommendations for the Company’s
shareholders regarding voting on the issue of
electing candidates to the Board of Directors
of the Company.
Minutes No. 74/3 dtd
May 18, 2018
Minutes No. 74/4 dtd
May 18, 2018
recommendations
On compliance of candidates to RusHydro’s
Board of Directors with
independence
criteria.
the Board of
On
Directors of the Company on the item: On
recognizing candidates to the Company's
the
Board of Directors
Company's Board
as
independent.
(members of
of Directors)
to
The Nomination and Compensation Committee of the Company’s Board of Directors based on the results of
preliminary assessment of candidates to the Company’s Board of Directors with reference to the information provided
by candidates to the Board of Directors for compliance with the criteria/recommendations defined by the Corporate
Governance Code recommended for use by the Bank of Russia and Corporate Governance Code of the Company
approved by the decision of the Company’s Board of Directors (Minutes No. 218 dated June 22, 2015) made the
following decisions:
1. All candidates nominated to the Board of Directors of the Company have a higher professional education and have
high professionalism and qualifications:
- are acknowledged experts in the field of energy, finance, law, strategic and corporate management, audit, risk
management, personnel management, innovation and investment, as well as in the industrial and scientific fields
(details are given in the Annex to this decision);
- have experience of working in boards of directors or in senior positions of other joint-stock companies, whose shares
are included in quotation lists of organized trading facilities (stock exchanges);
- have an impeccable business and personal reputation and have the knowledge, skills, and experience necessary for
making decisions related to the competence of the Board of Directors and required for the effective performance of its
functions.
2. As of the date of nomination, all candidates to the Board of Directors of the Company have no conflict of interests.
3. Shareholders of the Company on the issue of electing members of the Board of Directors of the Company at the
Annual General Meeting of Shareholders following the results of 2017 are recommended to vote in such a way as to
balance the composition of the Board of Directors in terms of experience, knowledge, and business proficiency.
Approve the results of assessing the compliance of candidates to RusHydro’s Board of Directors with independence
criteria in line with Annex No. 2.
Recommend to the Board of Directors to take the following decision concerning the recognition of candidates to
the Company's Board of Directors (members of the Company's Board of Directors) as independent
1. Take due note of the information on the results of evaluation of the compliance of a member of the Board of
Directors (a candidate nominated for election to the Company’s Board of Directors at the Annual General Meeting
of Shareholders in 2018), Maksim Bystrov, with the independence criteria stipulated in Annex 4.1 to the Listing
Rules of the Moscow Exchange.
There is no connection between Maksim Bystrov and the Company, a substantial shareholder, competitors, the
State, or a municipal entity.
Maksim Bystrov meets the formal criteria of connection with the Company's significant counterparties - JSC ATS,
JSC SO UES, JSC FSC, and ANO Market Council Training Center, as the scope of obligations between the
Company and each of the said counterparties performed during the last year exceeds 2% of the book value of assets
and 2% of the revenue of each counterparty.
Note that the connection between Maksim Bystrov and significant counterparties of the Company – JSC ATS, JSC
SO UES, JSC FSC, and ANO Market Council Training Center – is formal in nature and does not affect
Mr. Bystrov’s ability to act as a member of the Board of Directors in the interests of the Company and its
shareholders for the following reasons:
- JSC ATS 3 (Joint-Stock Company Administrator of the Trade System of the Wholesale Electricity Market)
renders the services of a commercial operator of the wholesale electricity and capacity market (hereinafter - the
wholesale market) to the Company in the manner stipulated in Clause 7 of Article 33 of Federal Law No. 35-FZ
dated March 26, 2003 On the Electric Power Industry (the Law on the Electric Power Industry) under an
Agreement for Integration into the trade system of the wholesale market. Commercial relations between the
98 Company and JSC ATS are based on the principle of nondiscriminatory access to the services of commercial
infrastructure organizations of the wholesale market (Article 20 of the Federal Law on the Electric Power Industry,
Regulation No. 861 of the Government dated December 27, 2004) and on the principle of state regulation of tariffs
for the services of a commercial operator of the wholesale market (Article 23.1 of the Federal Law on the Electric
Power Industry);
JSC SO UES (Joint-Stock Company System Operator of the Unified Energy System) provides the Company with
operational dispatch management services in the electric power industry due to its status as a system operator
established by Clause 1 of Article 12 of the Federal Law on the Electric Power Industry and under the Agreement
for Integration into the trade system of the wholesale market. Commercial relations between the Company and
JSC SO UES are based on the principle of nondiscriminatory access to operational dispatch management services
in the electric power industry (Clause 6 of Article 20 of the Federal Law on the Electric Power Industry,
Government Decree No. 861 dated December 27, 2004) and on the principle of state regulation of tariffs for
operational dispatch management services (Article 23.1 of the Federal Law on the Electric Power Industry).
JSC FSC (Joint-Stock Company Financial Settlement Center) is classified among the commercial infrastructure
organizations of the wholesale electricity and capacity market of the Russian Federation; it ensures the functioning
of the contractual structure of the wholesale market and the system of financial settlements between its participants
and renders services to the Company under the Agreement for Integration into the trade system of the wholesale
market. The Agreement was concluded in accordance with Clause 1 of Article 32 of the Federal Law on the
Electric Power Industry and Clause 40 of the Rules for the Wholesale Electricity and Capacity Market approved by
Regulation No. 1172 of the Government of the RF dated December 27, 2010.
Commercial relations between the Company and JSC FSC are based on the principle of nondiscriminatory access
to the services of commercial infrastructure organizations of the wholesale market (Article 20 of the Federal Law
on the Electric Power Industry, Regulation No. 861 of the Government of the RF dated December 27, 2004). The
uniform charge for the service package provided by JSC FSC (for all counterparties) is approved by the
Supervisory Board of the Association NP Market Council.
- ANO Market Council Training Center (Autonomous Noncommercial Organization of Continuing Professional
Education NP Market Council Training Center), established under the Association NP Market Council, is an
infrastructure organization of wholesale and retail trade in electricity and capacity; it renders services to the
Company in the field of education and training of specialists in organizing an effective system of wholesale and
retail trade in electricity and capacity.
Considering that the wholesale market regulations adopted by the Supervisory Board of the Association NP Market
Council are amended monthly, to maintain a high level of knowledge in the field of wholesale market procedures
and to obtain information on current and planned changes in the wholesale market, the employees of the Company
need to undergo training at the primary source, ANO Market Council Training Center. The training contracts
between the Company and ANO Market Council Training Center are concluded on arm's length terms.
Mr. Bystrov’s track record in the Company’s Board of Directors proves his ability to make independent, unbiased,
and conscientious judgments, since Mr. Bystrov’s stand on agenda items of meetings of the Board of Directors and
committees under the Board of Directors is based on his expertise and experience, is autonomous and independent,
and the decisions made by Mr. Bystrov bring us to the conclusion that his formal connection with significant
counterparties of the Company—JSC ATS, JSC SO UES, JSC FSC, and ANO Market Council Training Center—
does not influence his decision making, as Mr. Bystrov acts in the interests of the Company and all its
shareholders.
Based on Clause 2 of Section 2.18 of Annex 2 and on Annex 4.1 to the Listing Rules of the Moscow Exchange,
recognize Maksim Bystrov as an independent director.
99 2.
Take due note of the information on the results of the compliance of a member of the Board of Directors (a
candidate nominated for election to the Company’s Board of Directors at the Annual General Meeting of
Shareholders in 2018), Sergey Ivanov, with the independence criteria stipulated in Annex 4.1 to the Listing Rules
of the Moscow Exchange.
There is no connection between S. Ivanov and the Company, a substantial shareholder, competitors, the State, or a
municipal entity.
Sergey Ivanov meets the formal criteria of connection with the State, since during the year preceding his election to
the Company’s Board of Directors Mr. Ivanov acted as General Director of LLC RT-Capital, an entity controlled
by the Russian Federation.
Note that the connection between Mr. Ivanov and the State is formal in nature and does not affect his ability to act
as a member of the Board of Directors in the interests of the Company and all its shareholders for the following
reasons:
- In accordance with order No. 405-r of the Government of the Russian Federation dated March 9, 2018, Mr.
Ivanov has been nominated by the Russian Federation as an independent director; therefore, Mr. Ivanov has no
obligation to vote on the instructions of the Government of the Russian Federation (Clause 16 of Regulation
No. 738 of the Government of the RF dated December 3, 2004).
- Mr. Ivanov's connection with the state is formal due to the fact that the employment relations with RT-Capital,
which were terminated in February 2018, did not and will not influence the making of unbiased and independent
decisions by Mr. Ivanov, since the control of the Russian Federation over RT-Capital is indirect and is carried out
through the State Corporation for the Promotion of the Development, Production, and Export of High-Tech
Industrial Products Rostek, which is operated through management bodies typical of a commercial organization.
- Mr. Ivanov's track record in the Company Board of Directors proves his ability to make independent, unbiased,
and conscientious judgments , since Mr. Ivanov's stand on agenda items of meetings of the Board of Directors and
committees under the Board of Directors is based on his expertise and experience and is autonomous and
independent, and the decisions made by Mr. Ivanov bring us to the conclusion that his formal connection with the
State does not influence his decision making as Mr. Ivanov acts in the interests of the Company and all its
shareholders.
Based on Clause 2 of Section 2.18 of Annex 2 and on Annex 4.1 to the Listing Rules of the Moscow Exchange,
recognize Sergey Ivanov as an independent director.
-
-
Recommend to the Company’s Board of Directors to make the following decision:
Approve the progress report on the Action Plan (the list of measures) for the implementation of occupational
standards in RusHydro’s operations in Q4 2017 and Q1 2018.
Recommend to the Company’s Board of Directors to make the following decision: Take due note of the results of an
independent evaluation of the performance of
RusHydro’s Board of Directors.
Minutes No. 74/5 dtd
May 18, 2018
Minutes No. 74/6 dtd
May 18, 2018
Minutes No. 74/7 dtd
May 18, 2018
Minutes No. 75/1 dtd
June 21, 2018
to
item
item
taken
taken
contains
contains
confidential
confidential
recommendations
The
information.
The
information.
On
the Board of
Directors of the Company on the item: On
consideration of the progress report on the
Action Plan (the list of measures) for the
implementation of occupational standards in
the Company's operations.
On
the Board of
to
recommendations
Directors of the Company on the item: On
the results of an independent evaluation of
the performance of RusHydro’s Board of
Directors.
100
Minutes No. 75/2 dtd
June 21, 2018
Minutes No. 76/1 dtd
August 3, 2018
Minutes No. 76/2 dtd
August 3, 2018
Minutes No. 77/1 dtd
August 13, 2018
Minutes No. 78/1 dtd
September 27, 2018
Minutes No. 78/2 dtd
September 27, 2018
Minutes No. 79/1 dtd
December 4, 2018
Minutes No. 79/2 dtd
December 4, 2018
recommendations
the Secretary of
On pre-approval of the performance reports of
the Nomination and Compensation Committee
of RusHydro’s Board of Directors for 2017-
2018 corporate year.
On election of
the
Nomination and Compensation Committee
of the Company's Board of Directors.
On
the Board of
Directors of the Company on the item “On
the agreement of concurrent employment of
the Management Board’s member in the
management bodies of other organizations”.
On the election of a senior independent
director of the Company.
On the assessment of the performance of
RusHydro’s Board of Directors in 2018-
2019 corporate year.
to
to
recommendations
On
the Board of
Directors of the Company on the item: On
the
amendments
incorporation of
Methodology
the Calculation and
for
Evaluation of the Annual KPIs of the
Company’s Management Board Members.
to
of
analysis
On
of
the
independent members of the Company’s
independence
Board of Directors with
criteria.
compliance
recommendations
the Board of
On
Directors of the Company on the item: On
to
1. Approve the performance reports of the Nomination and Compensation Committee of the Company’s Board of
Directors for 2017-2018 corporate year (Annex No. 1 to the Minutes of Meeting).
2. Recommend to the Company’s Board of Directors to approve the performance reports of the Nomination and
Compensation Committee of the Company’s Board of Directors for 2017-2018 corporate year.
Elect Margarita Budkova as the Secretary of the Nomination and Compensation Committee of the Company's Board
of Directors.
Recommend to the Company’s Board of Directors to make the following decision:
Agree on the concurrent employment of a member of the Management Board, First Deputy General Director of the
Company, Andrey Kazachenkov, in the position of a member of the Board of Directors of JSC Far Eastern Energy
Management Company and JSC NPF LUKOIL-GARANT.
Elect Sergey Ivanov, a member of the Company’s Board of Directors, an independent director, as a senior
independent director.
1. Given the assessment of the performance of the Company's Board of Directors in 2018 by engaging an external
independent consultant, PricewaterhouseCoopers Consulting LLC (external independent assessment), determine
that the assessment of the Board of Directors elected at the annual General Shareholders Meeting of the Company
on June 27, 2018 (Minutes No. 17 dated June 28, 2018), according to their performance in the 2018-2019 corporate
year, is carried out through self-assessment.
2. The Company’s Corporate Secretary, N. Kovaleva, shall submit for consideration by the Nomination and
Compensation Committee of the Company’s Board of Directors no later than December 31, 2018:
2.1. draft local regulatory document (act) regulating the assessment of the performance of the Company’s Board of
Directors;
2.2. proposals on the timing of the self-assessment of the Board of Directors elected at the Annual General
Meeting of Shareholders of the Company held on June 27, 2018 (Minutes No. 17 dated June 28, 2018), based on the
results of the 2018-2019 corporate year.
1.
Item “On recommendations to the Board of Directors of the Company concerning”: the incorporation of
amendments to the Methodology for the Calculation and Evaluation of the Annual KPIs of the Company’s
Management Board Members has been reviewed and taken note of.
2. Recommend negotiating the issue of initiating the cancellation or recognition of Directive No. 2303p-P13 of
the Government of the Russian Federation dated April 16, 2015 as performed.
3. Recognize as reasonable the approach to calculating the KPI “Reduction of Operating Expenses (costs),%”
based on a comparison of the planned and actual indicators of RusHydro Group’s consolidated Business Plan, with
due account to the improved quality of planning.
Following the conducted analysis of the compliance of independent members of the Company’s Board of Directors
with independence criteria:
Take due note of the information on compliance of P. Grachev, V. Pivovarova, M. Bystrov, and S. Ivanova with
independence criteria stipulated by Annex No. 4.1 to the Listing Rules of PJSC Moscow Exchange, including the
recommendations of the Nomination and Compensation Committee dated May 18, 2018 (Minutes No. 74 dated
May 18, 2018) and the decision of the Company's Board of Directors dated May 31, 2018 (Minutes No. 271 dated
June 1, 2018), in line with Annex No. 1 to this decision.
Recommend to the Company’s Board of Directors to make the following decision:
Approve the progress report on the Action Plan (the list of measures) for the implementation of occupational
101 for
issues
material
the Company: On
consideration of the progress report on the
Action Plan (the list of measures) for the
implementation of occupational standards in
the Company's operations.
On election of the Deputy Chairman of the
Nomination and Compensation Committee
of the Company's Board of Directors.
On recommendations to RusHydro’s Board
of Directors on the item: On the approval of
for
annual key performance
members of RusHydro’s Management Board
for 2019.
indicators
to
to
of
the
the Company's
recommendations
recommendations
the Board of
On
Directors of the Company on the item: On
approval
internal
documents: On approval of the Regulation
on the assessment of the performance of
RusHydro’ Board of Directors, committees
of the Board of Directors.
On
time frames for assessment of
RusHydro’s Board of Directors performance
in 2018-2019 corporate year.
On
the Board of
recommendations
Directors of the Company on the item: On
forming RusHydro's management bodies.
the Board of
On
Directors of the Company on the item: On
determining the number of members of
RusHydro's Management Board.
the Board of
On
Directors of the Company on the item: On
forming RusHydro's management bodies.
On
the Board of
Directors of the Company on the item: On
election of a member of RusHydro's
Management Board.
On recommendations to RusHydro’s Board
of Directors on the item: On review of
material issues for the Company: On the
approval of target values of key performance
recommendations
recommendations
to
to
to
standards in the Company’s operations in Q2 and Q3 2018.
Elect Sergey Ivanov the Deputy Chairman of the Nomination and Compensation Committee of the Company's
Board of Directors.
1. Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Approve the list of annual key performance indicators of RusHydro’s Management Board Members for
(hereinafter - annual KPIs) and put it into effect starting from January 1, 2019.
1.2. When calculating and assessing the annual KPIs, follow the Methodology for the Calculation and Assessment
of the Annual KPIs of RusHydro’s Management Board Members approved by the resolution of the Board of
Directors of the Company (Minutes No. 245 dated December 26, 2016, No. 251 dated April 18, 2017, and No. 269
dated April 25, 2018).
Recommend to the Board of Directors to make the following decision: Approve the Regulation on the assessment of
the performance of RusHydro’ Board of Directors, committees of the Board of Directors \.
The Company’s Corporate Secretary, N. Kovaleva, shall ensure the conduct of self-assessment of the Company’s
Board of Directors performance in the 2018-2019 corporate year no later than April 30, 2019.
Recommend to the Company’s Board of Directors to make the following decision: Determine the numerical
composition of the Company’s Management Board - 7 people.
Recommend to the Company’s Board of Directors to make the following decision:
1. Elect Viktor Khmarin as a member of the Company's Management Board starting from January 16, 2019.
2. Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to determine the
terms and conditions of an agreement with a member of the Management Board, Viktor Khmarin, and to issue and
sign the documents needed to perform Clause 1 of this resolution in accordance with the labor laws of the Russian
Federation.
Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Approve:
- Target KPI values under Cycle Three of RusHydro's Long-Term Motivation Program for 2019–2021;
- Changes in target KPI values under Cycle One of RusHydro's Long-Term Motivation Program for 2017–2019;
Minutes No. 79/3 dtd
December 4, 2018
Minutes No. 80/1 dtd
December 14, 2018
Minutes No. 80/2 dtd
December 14, 2018
Minutes No. 80/3 dtd
December 14, 2018
Minutes No. 80/4.1 dtd
December 14, 2018
Minutes No. 80/4.2 dtd
December 14, 2018
Minutes No. 81/1 dtd
December 21, 2018
102 indicators
Management Board for 2019.
for members of RusHydro’s
- Changes in the target KPI values under Cycle Two of RusHydro's Long-Term Motivation Program for 2018–
2020/
1.2. When calculating and evaluating the key performance indicators under Cycle Three of RusHydro’s Long-term
Motivation Program for 2019-2021 (hyphen 1 of para.1 of this decision), follow the Methodology for calculating
and evaluating key performance indicators of RusHydro’s Long-Term Motivation Program approved by a decision
of the Company's Board of Directors dated December 26, 2017 (Minutes No. 264 dated December 28, 2017).
The Strategy Committee of RusHydro’s Board of Directors
Date and No. of
Minutes
Minutes No. 107 dtd
January 22, 2018
Minutes No. 108 dtd
March 19, 2018
Minutes No. 109 dtd
March 30, 2018
Item
Decision taken
1. On recommendations to the Board of
Directors of the Company on the item: On
approval of the performance reports of the
the Company’s
Strategy Committee of
Board of Directors for H1 2017-2018
corporate year.
2. On approval of the Action Plan of the
Strategy Committee of RusHydro’s Board of
Directors for H1 2018.
1. On recommendations to the Board of
Directors of the Company on the item: “On
termination of RusHydro’s participation in
of
other
RusHydro’s participation in JSC SHPP of
Dagestan”.
2. On recommendations to the Board of
Directors of the Company on the item: On
the determination of
the position of
RusHydro (RusHydro’s representatives) in
the management bodies of subsidiaries:
taking decisions related to the liquidation of
JSC SHPP of Dagestan
1. On recommendations to the Board of
Directors of the Company concerning the
Company’s priority activities: On the Taishet
Aluminum Smelter Construction Project.
organizations:
termination
Recommend to the Company’s Board of Directors to make the following decision: Approve the performance
reports of the Strategy Committee of the Company’s Board of Directors for H1 2017-2018 corporate year (Annex
No. 1).
Approve the Action Plan of the Strategy Committee of RusHydro’s Board of Directors for H1 2018 (Annex No. 2).
Recommend to RusHydro’s Board of Directors to make the following decision: Terminate RusHydro’s
participation in JSC SHPP of Dagestan.
Recommend to RusHydro’s Board of Directors to make the following decision: 1. Assign RusHydro’s
representatives in the management bodies of SHPP of Dagestan on the issue concerning the liquidation of JSC
SHPP of Dagestan to vote FOR the decision to liquidate JSC SHPP of Dagestan.
2. Assign to RusHydro’s representatives in the management bodies of the SHPP of Dagestan to vote FOR the
decisions related to the liquidation of JSC SHPP of Dagestan reviewed in line with Articles 61-64 of the Civil Code
of the Russian Federation and Articles 21-24 of the Federal Law No. 208-FZ On Joint-Stock Companies dated
December 26, 1995.
1. Recommend to the Company’s Board of Directors to make the following decision:
1. Take due note of the information on the status of fulfillment of the preliminary conditions of RusHydro's
participation in the Taishet Aluminum Smelter (hereinafter - TaAS) construction project approved by the
Company’s Board of Directors (Minutes No. 257 dated September 1, 2017).
2. Define the following additional conditions for the Company's participation in the TaAS project:
2.1. RusHydro’s liability limit for sponsorship obligations assumed as part of project financing attracted for the
implementation of the TaAS project shall not exceed 7.5% (USD 60 bn) of the TaAS further construction cost.
2.2. The cost of RusHydro’s entry into the TaAS project (hereinafter referred to as the Entry Cost) is no more
than USD 319.5 mn (RusHydro’s stake in the project is 50%), while the cost of a 50% share in the authorized
capital of RUSAL Tayshet LLC (hereinafter - the Joint Venture) shall not exceed USD 169.5 mn, which shall be
103
confirmed on the basis of an independent appraiser's report, and shall be paid as follows:
- UC RUSAL shall accept, as a partial payment, 42.75% of JSC Irkutsk Electric Grid Company (JSC IEGC)’s
shares owned by RusHydro at a value of USD 150 mn;
- installment payment in the amount of USD 19.5 mn (within 3 years after TaAS reached its design capacity
(hereinafter - Reaching Design Capacity)) shall be provided free of charge; subsequently, interest shall be charged
at the average weighted rate as part of the Project Financing raised for the TaAS Project).
The remaining part of the Entry Cost (USD 150 mn) is paid by the Joint Venture by repaying the debt to UC
RUSAL Group companies under a loan agreement from the cash flow after the Smelter reaches its design capacity.
2.3. In case the design capacity will fail to be reached by January 1, 2035, the Parties shall jointly implement the
procedure for RusHydro's exit from the Project without deterioration of the financial situation of the Company.
2.4. If RusHydro does not resolve to expand the TaAS’s design capacity (within a year after reaching the design
capacity, but not later than December 31, 2024), the Entry Cost shall be reduced by USD 50 mn as follows:
- through a decline in value of a 50% stake in the Joint Venture by USD 19.5 mn. In this case, RusHydro's
obligations to UC RUSAL to pay for the stake in the specified amount shall be terminated;
- through the implementation of the procedure for reducing the Joint Venture's debt to the UC RUSAL Group
companies by USD 61 mn without deterioration of the conditions of RusHydro's participation and the financial
position of the Joint Venture and without increasing the stake of UC RUSAL in the Joint Venture (taking into
account the need to transfer to UC RUSAL the facilities and rights that were defined following the due diligence as
facilities and rights necessary for the implementation of the TaAS Project).
2.5. The possibility of increasing the amount of the TaAS Project Financing (subject to approval of such resolution
by creditor banks) to improve the financial sustainability of the Project and ensure the possibility of changing the
nomenclature of finished products with a higher yield, subject to the confirmation by independent auditors of the
improvement of the economic efficiency indicators of the TaAS Project through these measures. At the same time,
the limit of RusHydro's liability for the sponsorship obligations assumed as part of the TaAS project financing shall
not exceed the limit specified in Clause 2.1 of this decision (USD 60 mn).
2.6. No restrictions for the exercise of the RusHydro's right to alienate the stake (part of the stake) in the authorized
capital of the Joint Venture after the Joint Venture has repaid the debt on the loan raised as part of the Project
Financing of the construction of the TaAS first start-up facilities, while preserving the Parties ’preferential right to
repurchase the stakes.
2.7. The expediency of granting privileges and advantages to the Joint Venture in connection with its conclusion of
a special investment contract in accordance with Federal Law No. 488-FZ dated December 31, 2014 On Industrial
Policy in the Russian Federation (SPIC).
2.8. Protection of RusHydro against the risks and negative effects of the implementation of the TaAS Project
arising from the activities of the Joint Venture and/or actions of its participants with respect to the Joint Venture
committed before the closing date of the stake acquisition transaction (including, but not limited to, tax risks,
claims of equipment suppliers, failure to comply with mandatory instructions of state bodies, etc.) by incorporating
in the legally binding documentation the provisions on compensation by UC RUSAL for RusHydro's damages or
property losses suffered as a result of the materialization of such risks.
2.9. Transfer of facilities (equipment) that are not related to the TaAS Project from the balance sheet of the Joint
Venture without deterioration of its financial position (taking into account the possible expansion of the TaAS’s
design capacity).
2.10. Provision of guarantees and obligations for financing the additional capital costs of the TaAS Project (an
overrun of the TaAS further construction cost by over 15%) by making a contribution to the assets of the Joint
104
Venture or using another procedure to be agreed upon by RusHydro and UC RUSAL that does not entail the
deterioration of the financial situation of the Joint Venture or an increase in UC RUSAL's stake in the Joint
Venture.
2.11. A resolution documented in a legally binding form that the acquisition of RusHydro's stake in the Joint
Venture envisages that the Parties may withdraw from the joint completion of the Boguchanskiy Aluminum
Smelter to the contracted design capacity (construction of the third and fourth start-up facilities).
3. After the fulfillment of the conditions of participation in the TaAS Project stipulated by this decision and the
resolution of the Board of Directors of the Company dated August 30, 2017 (Minutes No. 257 dated September 1,
2017), and after reconciliation of draft legally binding documentation with UC RUSAL, assign the Management
Board of the Company to ensure the submission of the documentation to the Federal Agency for State Property
Management in order to obtain the necessary decisions of state authorities (including the consent of the
Government of the Russian Federation to the alienation of JSC IEGC’s shares and a directives to representatives of
the Russian Federation in the Company’s Board of Directors) for the purpose of the subsequent submission of the
issue on the Company's participation in LLC RUSAL Tayshet and the issue on termination of the Company's
participation in JSC IEGC for consideration to the Board of Directors of the Company.
2. Assign as follows to the Company's Management:
1. Before considering the issue of RusHydro’s participation in RUSAL Taishet at the Company’s Board of
Directors, supplement the presented materials with an estimation of the efficiency in delivering the Boguchanskiy
Aluminum Smelter construction project, a benchmarking study of the effectiveness of the Taishet Aluminum
Smelter construction project and the Boguchansky Aluminum Smelter further construction project (construction of
the third and fourth start-up facilities), as well as a sensitivity analysis of the integral effect for RusHydro from the
participation in the TaAS project to the variation in the main parameters of the project.
2. Familiarize the members of the Strategy Committee with the financial and economic model of the TaAS project,
which was used as the basis to calculate the integral effect for RusHydro from participating in this investment
project.
3. Submit for consideration to the Federal Agency for State Property Management the material terms for the
distribution of rights and obligations between the Parties under the TaAS project agreed upon when drafting the
legally-binding transaction documentation.
1. Take due note of the progress report on RusHydro Group’s Long-term Development Program for 2017 in line
with Annex No. 1 to this decision (hereinafter - the Report).
2. Recommend to the Company’s Executive Office to include the Progress Report in the Company's Annual Report
for consideration at the Annual General Meeting of Shareholders of the Company on the results of 2017.
Recommend to the Company’s Board of Directors to make the following decision: Take due note of the report on
the completion of measures related to the refinancing of the debt of the Holding Company RAO ES East (Annex
No. 2 to this decision).
Recommend to the Company’s Board of Directors to make the following decision: Assign the Company's
representative in the management bodies of JSC RAO ES East to vote FOR the following resolution on the item
Minutes No. 110 dtd
May 10, 2018
1. On RusHydro Group’s Long-Term
Development Program for 2017.
in
executing
2. On recommendations to the Board of
Directors of the Company on the item: “On
determined the Company’s priority activities”
individual
“On progress
assignments of the President of the Russian
Federation and
the
Russian Federation regarding the refinancing
of the loan debt of the Holding Company
RAO ES East”.
3. On recommendations to the Board of
Directors of the Company on the item:
the Government of
105
the stand of
On determination of
the
Company (representatives of the Company)
on the agenda item of the management bodies
of RAO ES East.
Minutes No. 111 dtd
May 17, 2018
1. On recommendations to the Board of
Directors of the Company on the item: On
termination of the Company’s membership
in PJSC Inter RAO.
Minutes No. 112 dtd
May 25, 2018
Minutes No. 113 dtd
June 20, 2018
1. On recommendations to the Board of
Directors of the Company on the item: On
approval of RusHydro Group’s Long-Term
Development Program for 2018–2022.
1. On recommendations to the Board of
Directors of the Company on the items
project
related
“Construction of two single-circuit Pevek-
lines”
Bilibino
investment
overhead
110 kV
the
to
"On the Company’s related transactions associated with the disposal of property constituting fixed assets whose target
use is the generation, transmission, and distribution of electricity and thermal energy":
Approve the Company’s related transactions associated with the disposal of property constituting fixed assets whose
target use is the generation, transmission, and distribution of electricity and thermal energy" on the following material
terms:
Parties to the Transaction:
The Alienator is JSC RAO ES East.
The Acquirer is PJSC Sakhalinenergo.
Subject of the Transaction:
The Alienator shall transfer the title to the property of the 5th power unit of Yuzhno-Sakhalinskaya CHPP-1 and
the network property in accordance with Annex No. 3 to this decision (hereinafter - the Property) to the Acquirer,
and the Acquirer shall offer additional publicly-traded ordinary shares in favor of the Alienator (state registration
number of the additional issue of securities: 1-03-00272-А-001D dated December 7, 2017) (hereinafter - the
Shares) in an amount determined based on the Property Price and the offering price of the Shares, which is RUB 10
00 kopecks per 1 (one) share.
Property Price: To be determined based on an asset valuation report prepared by a qualified appraiser.
1. Recommend to the Company’s Board of Directors to make the following decision:
Approve the termination of the Company's participation in Inter RAO’s authorized capital by concluding a contract
of sale of Inter RAO’s shares (hereinafter - the Contract) on the following material terms:
Parties to the Agreement:
Seller - PJSC RusHydro;
Buyer - JSC Inter RAO Capital.
Subject of the Agreement:
The Seller shall transfer to the Buyer InterRAO’s ordinary shares in the amount of 2,029,197,475.41 (two billion
twenty nine million one hundred ninety seven thousand four hundred seventy five point and forty one hundredth)
shares with a nominal value of 2.809767 (two point eight hundred nine thousand seven hundred and sixty-seven
millionths) each (hereinafter - the Shares), and the Buyer shall accept and pay for them.
Share price and payment procedure:
- RUB 3.3463 (three point and three thousand four hundred sixty-three ten thousandths) for one ordinary share;
- Payment for Shares shall be made in cash by installments for 18 months.
The Company's stake in Inter RAO before the alienation of shares is 1.944%, after the alienation is 0.00%.
2. Assign as follows to the Company's Management:
Before considering the issue of terminating the Company's participation in Inter RAO at the Company’s Board of
Directors, supplement the submitted materials with information based on the positions set forth by members of the
Committee.
Recommend to the Company’s Board of Directors to make the following decision: Approve the updated RusHydro
Group’s Long-Term Development Program for 2018–2022 in line with Annex No. 1 to this decision.
106
(construction stage No. 1):
1.1. On determining the offering price of
additional shares of the Company.
1.2. On increasing the authorized capital of
the Company by placing additional shares
within the number of declared shares.
the Securities
1.3. On the approval of the Decision on the
additional issue of securities.
1.4. On
the approval of
Prospectus.
2. On recommendations to the Board of
Directors of the Company on the item: On
approval of the performance reports of the
Strategy Committee of RusHydro’s Board of
Directors for 2017-2018 corporate year.
1. On the election of the Deputy Chairman
of the Strategy Committee.
2. On approval of the Action Plan of the
Strategy Committee for H2 2018.
3. On the election of the Secretary of the
Strategy Committee.
the
1. On recommendations
•
Board of Directors of the Company on the
item: On the progress of RusHydro Group’s
Long-Term Development Program for H1
2018.
1. On recommendations to the Board of
Directors of the Company on the item: On
amendments to RusHydro Group's Long-
Term Development Program15.
to
Recommend to the Company’s Board of Directors to make the following decision: Set the offering price of
additional shares of the Company (inter alia, upon exercising the preemptive right to acquire additional shares) in
the amount of RUB 1 (one) for 1 (one) additional registered ordinary uncertified share.
Recommend to the Company’s Board of Directors to make the following decision: 1. Increase the authorized
capital of RusHydro by placing additional registered ordinary uncertified shares in the amount of 14,013,888,828
shares with a par value of RUB 1 each, for a total amount (at par value) of RUB 14,013,888,828 on the following
conditions:
Placement method: open subscription.
The offering price of additional shares of RusHydro (inter alia, upon exercising the preemptive right to acquire
additional shares): 1 (one) ruble 00 kopecks for 1 (one) additional registered ordinary uncertified share;
Form and procedure of payment for additional shares: shares shall be paid in Russian Rubles in non-cash form.
Recommend to the Company’s Board of Directors to make the following decision: Approve the Decision on the
additional issue of RusHydro’s securities (registered ordinary uncertified shares) in line with Annex No. 1.
Recommend to the Company’s Board of Directors to make the following decision: Approve the Prospectus for
RusHydro’s Securities (registered ordinary uncertified shares) in line with Annex No. 2.
Approve the performance report for the Strategy Committee of RusHydro’s Board of Directors for the 2017-2018
corporate year and recommend to the Company’s Board of Directors to consider this report (Annex No. 3).
Elect D. Rizhinashvili, the member of the Management Board, RusHydro’s First Deputy General Director, as
Deputy Chairman of the Strategy Committee at RusHydro’s Board of Directors.
Approve the Action Plan of the Strategy Committee for H2 2018 (Annex No. 1).
Elect P. Krasovskaya, the chief expert of the Strategy and IR Department, as the Secretary of the Strategy
Committee of RusHydro’s Board of Directors.
Recommend to the Company’s Board of Directors to make the following decision: Take due note of the
information on the progress of RusHydro Group’s Long-Term Development Program for H1 2018 in line with
Annex No. 1 to this decision.
RusHydro
Recommend to the Company’s Board of Directors to make the following decision: 1. Supplement
Group's Long-Term Development Program for the period of 2018 - 2022 with activities pursuant to Decree No. 204
of the President of the Russian Federation dated May 7, 2018 On the National Goals and Strategic Objectives of the
Development of the Russian Federation for the period until 2024 (Annex No. 1 to this decision).
2. Approve changes in KPIs of RusHydro Group's Long-term Development Program for 2018 (KPI “Return on
Equity (ROE)”, “Earnings before Interest, Tax and Depreciation Expenses (EBITDA)”, “Labor productivity,
thousand rubles/man-hour” in accordance with the updated annual KPIs of the members of the Company's
Management Board (Annex No. 2 to the present decision).
Minutes No. 114 dtd
August 20, 2018
Minutes No. 115 dtd
September 27, 2018
Minutes No. 116 dtd
October 11, 2018
2. On recommendations to the Company’s Recommend to the Company’s Board of Directors to make the following decision: 1. Specify that the price of
15The Long-Term Development Program for the period of 2018-2022 approved by Minutes No. 271 of the Company’s Board of Directors dated June 1, 2018.
107
Board of Directors concerning: On approval
of transactions with shares of organizations
the Company participates in.
concerning:
of Directors
3. On recommendations to the Company’s
Board
the
determination of the stand of the Company
(representatives of the Company) on the
agenda items of the management body of
HYDROOGK ALUMINIUM COMPANY
LIMITED:
−
the determination of the quantity and
nominal value of a declared share of
HYDROOGK ALUMINUM COMPANY
LIMITED;
−
the increase in the authorized capital of
HYDROOGK ALUMINUM COMPANY
LIMITED.
On recommendations
the Board of
Directors of the Company on the item: “On
the Company’s priority activities: on
reviewing the results of benchmarking the
level of technological development and the
KPI values of RusHydro Group’s innovation
activities against the level of development
leading peer
and
companies.”
indicators of
the
to
HYDROOGK ALUMINUM COMPANY LIMITED shares (Republic of Cyprus) acquired by the Company is not
more than RUB 2,918,002,000.00 (two billion nine hundred and eighteen million two thousand 00/100) per share,
the nominal value of which is EUR 1.71 (one 71/100).
2. Approve the acquisition of the HYDROOGK ALUMINUM COMPANY LIMITED shares by the Company on
the following material terms and conditions:
Parties to the Transaction:
Issuer - HydroOGK Aluminum Company Limited
Acquirer is PJSC RusHydro.
Subject of the Transaction: The Issuer shall transfer to the ownership of the Acquirer 1 (one) share placed in
accordance with the decision of the Issuer.
Price of the Transaction: The aquisition price of the Issuer's shares is not more than RUB 2,918,002,000.00 (two
billion nine hundred and eighteen million two thousand 00/100).
Payment is allowed by offsetting (capitalizing) the outstanding debt of HYDROOGK ALUMINUM COMPANY
LIMITED to the Company in line with Annex No. 3.
The Stake of the Acquirer in the authorized capital of the Issuer will not change and will be 100%.
Recommend to the Company’s Board of Directors to make the following decision: Assign the Company's
representatives at the General Meeting of HYDROOGK ALUMINUM COMPANY LIMITED (Republic of
Cyprus) to vote FOR the following decisions:
− Specify the number of declared shares of HYDROOGK ALUMINUM COMPANY LIMITED is increasing by 1
(one) ordinary share with a nominal value of EUR 1.71 (one 71/100);
− Increase the authorized capital of HYDROOGK ALUMINUM COMPANY LIMITED by placing in favor of the
Company 1 (one) share with a nominal value of EUR 1.71 (one 71/100) with the amount equal to
RUB 2,918,002,000.00 (two billion nine hundred and eighteen million two thousand 00/100) paid by RusHydro in
favor of HYDROOGK ALUMINUM COMPANY LIMITED. Payment is allowed by offsetting (capitalizing) the
outstanding debt of HYDROOGK ALUMINUM COMPANY LIMITED to the Company in line with Annex No. 3
to this decision.
•
1. Recommend to the Company’s Board of Directors to make the following decision: 1. Take due note of
the Report on benchmarking the level of technological development and the KPI values of RusHydro Group’s
innovation activities against the level of development and indicators of the leading peer companies (Annex to this
decision).
2. Deem the following to meet target date:
− Clause 1 of the decision of the Board of Directors of the Company on issue 4.4 (Minutes No. 263 dated
December 28, 2017 as amended by Minutes No. 271 dated June 1, 2017, hereinafter - the Decision) in terms of
benchmarking the level of technological development and the KPI values of RusHydro Group’s innovation
activities against the level of development and indicators of the leading peer companies;
− Clause 2 of the decision regarding the submission to the Ministry of Economic Development of Russia and the
Ministry of Energy of Russia of the results of benchmarking the level of technological development, proposals for
the revision of the Innovative Development Program and the Long-term Development Program, proposals for the
composition and values of the integral KPI for 2019.
3. Defer the due date of Clause 2 of the decision regarding the results of benchmarking the level of technological
Minutes
dtd October 23, 2018
No. 54/117
108
development for the consideration of the Company’s Board of Directors to the period after receiving the approval
of the same results by the Interdepartmental Commission for Technological Development of the Presidium of the
Presidential Council for Economic Modernization and Innovative Development of Russia, but no later than March
31, 2019.
2. Assign as follows to the Company's Management:
When further negotiating the results of benchmarking the level of technological development and the KPI values of
RusHydro Group’s innovation activities against the level of development and indicators of the leading peer
companies (hereinafter - Benchmarking) before bringing the benchmarking results for consideration by the Board
of Directors of the Company before March 31, 2019, consider the following recommendations:
2.1. When benchmarking the indicator “Installed Capacity of Renewables”, take into account both the total power
of renewables, including the HPP capacities, and separately - SPPs and WPPs.
2.2. Benchmark the state of technological development in the areas of the network complex and operational
dispatch management.
2.3. When analyzing the prospects for applying the PSPP technology, take into account promising technological
aspects, such as the use of asynchronous generators, as well as carry out a feasibility study to compare with existing
regulatory gas capacities.
2.4. If a decision is made to merge the Innovative Development Programs (IDP) of RusHydro and the RAO ES
East Holding Company, prepare, as part of the consolidated IDP, selected sections on technologies taking into
account the specifics of various generation types.
2.5. Prepare conclusions and recommendations on the use of the technologies considered at RusHydro Group,
determine the list of priority technologies to be developed within RusHydro Group.
2.6. In case of refusal from the IDP indicator “Fuel Utilization Factor”, consider the possibility of replacing it with
the “Specific Fuel Consumption” indicator or with another indicator reflecting the efficiency of innovation
activities.
1. Take due note of the information on the effectiveness of the forward contract and on the progress on the Plan to
increase the value of RusHydro Group for the period until 2021 in line with Annex No. 1 to this decision.
2. The Company’s Management Board should finalize the reviewed materials on this issue in line with Annex 2
and submit them for consideration by the Company’s Board of Directors.
Recommend to the Company’s Board of Directors to make the following decision: Terminate the Company's
participation in JSC Boguchanskaya HPP Construction Organizer and CJSC Boguchanskaya HPP Construction
Customer against their voluntary liquidation.
Recommend to the Company’s Board of Directors to make the following decision: Assign to the representatives of
the Company in the management bodies of JSC Boguchanskaya HPP Construction Organizer with regard to the
item related to the liquidation of the same to vote FOR:
adoption of a desicion on the liquidation of JSC Boguchanskaya HPP Construction Organizer;
adoption of the decisions related to the liquidation of JSC Boguchanskaya HPP Construction Organizer reviewed in
line with Articles 61-64 of the Civil Code of the Russian Federation and Articles 21-24 of the Federal Law
No. 208-FZ On Joint-Stock Companies dated December 26, 1995.
Minutes No. 118 dtd
October 23, 2018
Minutes No. 119 dtd
October 24, 2018
the effectiveness of
1. On
the forward
contract and on the progress on the Plan to
increase the value of RusHydro Group for
the period until 2021
1. On recommendations to the Board of
Directors of the Company on the item: On
termination of the Company’s membership
in other organizations.
2. On recommendations to the Board of
Directors of the Company on the item: On
determination of the stand of the Company
(representatives of the Company) on the
agenda items of the management bodies of
subsidiary economic entities: On
the
liquidation of JSC Boguchanskaya HPP
Construction Organizer.
Minutes No. 120 dtd 1.
On recommendations to the Board Recommend
to
the Company’s Board
of Directors
to make
the
following
decision:
1.
109
November 16, 2018
of Directors of the Company on the item: On
determination of the stand of the Company
(representatives of the Company) on the
agenda item of the management bodies of
JSC Small HHPs of Altai concerning the
liquidation of the same.
2.
On recommendations to the Board of
Directors of the Company on the item: On
termination of the Company’s membership in
JSC Small HPPs of Altai.
3.
On recommendations to the Board
of Directors of the Company on the item: On
determination of the stand of the Company
(representatives of the Company) on the
agenda item of the management bodies of
the subsidiary: On consent to a transaction,
being a major one, related to the alienation
of the property of a subsidiary company
constituting fixed assets whose purpose is
the production, transmission, dispatching,
and distribution of electrical power.
Minutes No. 121 dtd
November 23, 2018
1. On recommendations to the Board of
Directors on
item: On preliminary
approval of transactions with shares of
organizations the Company participates in.
the
Assign the Company's representatives in the management bodies of JSC Small HHPs of Altai on the issue On
liquidation of JSC Small HHPs of Altai to vote FOR the decision to liquidate the same.
2.
Assign the Company's representatives in the management bodies of JSC Small HHPs of Altai to vote FOR the
decisions related to the liquidation of JSC Small HHPs of Altai reviewed in line with Articles 61-64 of the Civil Code
of the Russian Federation and Articles 21-24 of the Federal Law No. 208-FZ On Joint-Stock Companies dated
December 26, 1995.
Recommend to the Company’s Board of Directors to make the following decision: Terminate the Company's
participation in JSC Small HPPs of Altai in accordance with the Program for the Disposal of Non-Core Assets of
the Company against against the voluntary liquidation of Small HPPs of Altai.
Recommend to the Company’s Board of Directors to make the following decision: Assign to the RusHydro’s
representatives at the General Meeting of Shareholders of JSC Sulaksky HydroCascade on the item concerning the
consent to a transaction, being a major one, related to the alienation of the property of a subsidiary company
constituting fixed assets whose purpose is the production, transmission, dispatching, and distribution of electrical
power to vote FOR the following decision:
Coordinate the conclusion of a contract for the sale and purchase of the property complex of the Gotsatlinskaya
HPP owned by JSC Sulaksky HydroCascade on the following material terms:
Parties to the Agreement:
The Seller - JSC Sulaksky HydroCascade;
The Buyer is RusHydro.
Subject of the Agreement: The Seller shall transfer the property complex of the Gotsatlinskaya HPP (hereinafter -
the Property) specified in Annex No. 1 to this decision to the Buyer's ownership, and the Buyer shall accept and
pay for the Property.
Property Price: RUB 10,100,000,000 (ten billion one hundred million) without VAT; furthermore, VAT shall be
calculated additionally at the rate established by Art. 164 of the Tax Code of the Russian Federation.
Recommend to the Company’s Board of Directors to make the following decision: In order to optimize the
corporate governance process of the Company's controlled organizations, where RusHydro Group holds 100% of
the authorized capital, preliminarily approve the conclusion of trust management agreements (hereinafter - the
Agreements) by the Company under the following material terms:
Parties to the Agreements:
The Trustee Manager is the Company;
The Trustors are JSC ESC RusHydro, JSC RAO ES East, JSC Hydroinvest, and PJSC Kolymaenergo.
Subject of the Agreements: The Trustors shall transfer the rights certified by the following shares belonging to
them on the basis of the right of ownership to the Company in trust management:
− 3,036,387,330 ordinary shares of JSC Hydroinvest (state registration number of the issue: 1-01-04339-D-003D);
− 1,709,801,779 ordinary shares of JSC Hydroinvest (state registration number of the issue: 1-01-04339-D-004D);
− 1 ordinary share of JSC ESC RusHydro (state registration number of the issue: 1-01-55437-E);
− 166,460,049 ordinary shares of JSC ChirkeyGESstroy (state registration number of the issue: 1-01-35249-Е);
− 8,923,739,178 ordinary shares of Ust-Srednekanskaya HPP named after A.F. Dyakov (state registration number
of the issue: 1-01-55315-E).
The Trustee Manager shall, for a remuneration, manage the rights attached to the shares transferred in trust
management in the interests of the Trustors during the term of the Agreements.
110
Minutes No. 122 dtd
December 4, 2018
1. On recommendations to the Board of
Directors of the Company on the item: On
material issues for the Company: On the
effectiveness of the forward contract and on
the progress on the Plan to increase the value
of RusHydro Group for the period until
2021.
2. On recommendations to the Board of
Directors of the Company on the item: On
termination of the Company’s membership in
other organizations.
3. On recommendations to the Board of
Directors of the Company on the item: On
preliminary approval of transactions with
shares of organizations
the Company
participates in.
Minutes No. 123 dtd
December 5, 2018
1. On recommendations to the Board of
Directors of the Company on the item: On
other
participation
RusHydro’s
the
organizations: On
LLC
Company’s
termination of
membership
in
in
The scope of transferred rights attached to the shares: The entire set of rights attached to the shares, except for the
right to receive dividends.
The amount of remuneration of the Trustee Manager: RUB 1,000 per year (including VAT) under each trust
management agreement.
Recommend to the Company’s Board of Directors to make the following decision: Take due note of the
information on the effectiveness of the forward contract and on the progress on the Plan to increase the value of
RusHydro Group for the period until 2021 in line with Annex No. 1 to this decision.
Recommend to the Company’s Board of Directors to make the following decision: Approve the termination of the
Company's participation in CJSC Verkhne-Narynskie HPPs by selling 2,500,000 ordinary registered shares of the
said joint-stock company, constituting 50% of its authorized capital, to OJSC Electric Power Plants (Kyrgyz
Republic) in accordance with the terms of the agreement concluded between the Government of the Russian
Federation and the Government of the Kyrgyz Republic on the construction and operation of the Verkhne-
Narynsky cascade of hydroelectric power plants, at a price determined by the Board of Directors of the Company
on the basis of the report of an appraiser.
Recommend to the Company’s Board of Directors to make the following decision:
Approve the transaction for the sale of shares of CJSC Verkhne-Narynskie HPPs (hereinafter - the Agreement) on
the following terms:
Parties to the Agreement:
Seller - PJSC RusHydro;
The Buyer is OJSC Electric Power Plants.
Subject of the Agreement:
The Seller shall transfer ordinary registered shares of Verkhne-Narynskie HPPs with a nominal value of 1 (one)
Kyrgyzstani som each in the amount of 2,500,000 (two million five hundred thousand) shares (hereinafter - the
Shares) to the Buyer, and the Buyer shall accept and pay for the Shares in the manner, time and on terms specified
by the Agreement.
The size of the stake in the authorized capital of Verkhne-Narynskie HPPs owned by the Seller is 50 (fifty)%, with
a nominal value of 2,500,000 (two million five hundred thousand) Kyrgyzstani soms.
The size of the stake in the authorized capital of Verkhne-Narynskie HPPs to be alienated by the Seller is 50
(fifty)%, with a nominal value of 2,500,000 (two million five hundred thousand) Kyrgyzstani soms.
The size of the stake in the authorized capital of Verkhne-Narynskie HPPs owned by the Seller after the alienation
of the Shares in accordance with this decision is 0 (zero)%.
Agreement Price: The value of the Shares shall be determined based on valuation report No. 18-22027 dated
September 10, 2018 prepared by LLC Swiss Appraisal Russia and amounts to the equivalent of 2,500,000 (two
million five hundred thousand) Kyrgyzstani soms in Russian rubles at the exchange rate set by the Central Bank of
the Russian Federation on the date of payment.
Recommend to the Company’s Board of Directors to make the following decision: Supplement the resolution of the
Board of Directors of the Company dated October 3, 2018 on item No. 4 On participation of RusHydro in other
organizations: On termination of participation in VolgaHydro (Minutes No. 277 dated October 4, 2018) with clause
2 worded as follows:
2. Determine that if VH Auslandsbeteiligungen GmbH (a participant of VolgaHydro) declines to purchase the
111
VolgaHydro.
Stake (including under the preemptive right), the Company shall have the right to sell the Stake to VHG
Auslandsbeteiligungen GmbH on the same conditions.
The Committee on Reliability, Energy Efficiency, and Innovations of the Company's Board of Directors
Date and No. of
Minutes
Minutes No. 50 dtd
January 30, 2018
Minutes No. 51 dtd
May 18, 2018
Minutes No. 52 dtd
May 30, 2018
Item
Decision taken
Issue: On approval of the performance
reports of the Committee on Reliability,
Energy Efficiency, and Innovation of the
Company’s Board of Directors for H1 2017-
2018 corporate year.
Decision Taken: Approve the performance reports of the Committee on Reliability, Energy Efficiency, and
Innovations of the Company’s Board of Directors for H1 2017-2018 corporate year.
the
the
indicators of
to benchmark
Issue: On approval of draft Terms of
Reference
level of
technological development and the KPI
values of RusHydro Group’s innovation
activities against the level of development
and
leading peer
companies and to make proposals for
updating the KPIs of innovation activities
and the Innovation Development Program
of RusHydro Group for 2016-2020 with an
outlook until 2025.
Issue 1: On recommendations to the Board
of Directors of the Company on the item:
On the Company’s priority activities: On
report on
approval of
the progress
RusHydro
Innovative
Group’s
Development Program for 2016–2020 with
an outlook until 2025 in 2017.
Decision Taken: Approve draft Terms of Reference to benchmark the level of technological development and the
KPI values of RusHydro Group’s innovation activities against the level of development and indicators of the leading
peer companies and to make proposals for updating the KPIs of innovation activities and the Innovation
Development Program of RusHydro Group for 2016-2020 with an outlook until 2025 in lune with Annex No. 1.
Decision Taken: Recommend to the Company’s Board of Directors to make the following decision:
1. Approve the progress report on RusHydro Group’s Innovative Development Program for 2016–2020 with an
outlook till 2025 in 2017 (Annex No. 1 to this decision).
2. For the purpose of implementing the provisions of Directives No. 3262p-P13 of the Government of the Russian
Federation dated April 27, 2018, reword the resolution of the Company Board of Directors (Minutes No. 263 dated
December 28, 2017) on agenda item 4.4 "On Consideration of Proposals for Improving the Quality of the
Preparation and Implementation of RusHydro Group’s Innovative Development Program for 2016–2020 with an
outlook till 2025" as follows:
Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to ensure:
1. that the Company benchmarked its level of technological development and current KPIs against the level of
development and indicators of leading peer companies, including foreign ones, in accordance with the
Methodological Recommendations for comparing the level of technological development and KPIs of partially
government-owned joint-stock companies, state corporations, state companies, and federal state unitary enterprises
with the level of development and indicators of leading peer companies approved by the Interagency Working Group
on the Implementation of Priorities for Innovative Development at the Presidium of the Presidential Council for the
Modernization of the Economy and the Innovative Development of Russia (hereinafter - the IWG) (Minutes No. 2
dated September 19, 2017) with the involvement of an external consultant in accordance with the established
procedure by July 30, 2018.
112
2.
that the Company submitted the following for consideration of the Board of Directors no later than October
15, 2018 and send the same to the Ministry of Economic Development and Trade of the Russian Federation and the
federal executive body coordinating the Company’s operations no later than November 1, 2018:
- The results of the comparison of the level of technological development;
- Proposals for adjusting the innovative development program and the long-term development program;
- Proposals concerning the composition and values of the integral key performance indicator (hereinafter - IKPI) for
2019.
Decision Taken: Approve the performance reports of the Committee on Reliability, Energy Efficiency, and
Innovations of the Company’s Board of Directors for 2017-2018 corporate year (Annex No. 2 to this decision).
Decision Taken: Elect Boris Bogush, a member of the Management Board, First Deputy General Director - Chief
Engineer of RusHydro, as Deputy Chairman of the Committee on Reliability, Energy Efficiency, and Innovations at
the Company's Board of Directors.
Decision Taken: Elect Mikhail Lunatsi, the Deputy Director of the Development and Standardization of Production
Processes Department for the Scientific and Technical Development of RusHydro to be the Secretary of the
Committee on Reliability, Energy Efficiency and Innovations at the Company's Board of Directors.
Decision Taken: 1. Recommend to the Company’s Board of Directors to make the following decision:
Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to ensure:
3. to inventory the intellectual property rights owned by RusHydro Group’s companies before November 30, 2018.
4. to develop and approve by RusHydro’s order before December 31, 2018 the Action Plan to ensure the legal
protection of identified intellectual results, the rights to which belong to RusHydro Group’s companies, entry of
these rights to the books as intangible assets for their subsequent introduction into economic circulation and, if
necessary, assessment of the value of rights to the said results.
2. If the Company's Board of Directors takes a positive decision on this issue, the following people shall be
appointed responsible executives:
- under para. 1: D. Rizhinashvili, Member of the Management Board, First Deputy General Director, and B. Bogush,
Member of the Management Board, First Deputy Director General - Chief Engineer.
- under para. 2: D. Rizhinashvili, Member of the Management Board, First Deputy General Director
Minutes No. 53 dtd
October 19, 2018
Issue 2: On approval of the performance
reports of the Committee on Reliability,
Energy Efficiency, and Innovation of the
Company’s Board of Directors for 2017-
2018 corporate year.
Issue 1: On the election of the Deputy
Chairman of the Committee on Reliability,
Energy Efficiency, and Innovations at the
Company's Board of Directors.
Issue 2: On the election of the Secretary of
the Committee on Reliability, Energy
Efficiency,
the
and
Company's Board of Directors.
Innovations
at
the
issues for
Issue 3: On recommendations to the Board
of Directors of the Company on the item:
the
On review of material
Company. On Management of Intellectual
Property Rights: On
inventory of
intellectual property rights for the purpose
of subsequent organization of measures to
ensure the legal protection of identified
intellectual results, the rights to which
belong to RusHydro Group’s companies,
entry of these rights to the books as
their subsequent
for
intangible assets
introduction into economic circulation and,
if necessary, assessment of the value of
rights to the said results.
Issue 4: On recommendations to the Board
of Directors of the Company on the item:
On review of material
the
Company. On Management of Intellectual
the Program of
Property Rights: On
managing the Intellectual Property Rights
at the Company in accordance with the
issues for
Decision Taken: 1. Recommend to the Company’s Board of Directors to make the following decision:
1.1. Approve the Program on the Management of Intellectual Property Rights at RusHydro Group (hereinafter - the
Program) in line with Annex to this decision).
1.2. Assign N. Shulginov, Chairman of the Management Board - RusHydro’s General Director, to post and
subsequently update the information on the progress of the Program on the Interdepartmental Portal on State
Property Management.
2. If the Company’s Board of Directors makes a positive decision referred to in clause 1:
113
Recommendations on the Management of
Intellectual
in
Property
Organizations approved by order No. ISh-
P8-5594 of the Government of the Russian
Federation dated August 25, 2017.
Rights
Minutes
dtd October 23, 2018
No. 54-117
Issue: On recommendations to the Board of
Directors of the Company on the item: “On
the Company’s priority activities: on
reviewing the results of benchmarking the
level of technological development and the
of RusHydro Group’s
KPI
innovation activities against the level of
development and indicators of the leading
peer companies.”
values
2.1. The members of
the Management Board, First Deputies General Director, D. Rizhinashvili and
A. Kazachenkov, member of the Management Board, First Deputy General Director - Chief Engineer, B. Bogush,
Deputy General Director for Personnel Management and Organizational Development, B. Perveeva, shall ensure the
delivery of RusHydro’s Action Plan for the Program (hereinafter - the Action Plan) (Annex No. 1 to the Program).
2.2. Deputy General Director - Director of the Far East Division, S. Vasilyev, Deputy General Director for Research
and Design Activities, K. Frolov, together with a member of the Management Board, First Deputy General Director,
A. Kazachenkov, within 60 calendar days from the date the decision is taken by the Company’s Board of Directors
shall organize the consideration of the following issues by the Boards of Directors of the supervised controlled
entities16:
2.2.1. On joining to the Program on the Management of Intellectual Property Rights at RusHydro Group.
2.2.2. On the Approval of the Action Plans to implement the Program on the Management of Intellectual Property
Rights at RusHydro Group.
2.3. Appoint D. Rizhinashvili, a member of the Management Board, First Deputy General Director, to be responsible
for the execution of the decision referred to in paragraph 1.2.
Decision Taken:
1. Recommend to the Company’s Board of Directors to make the following decision:
1. Take due note of the Report on benchmarking the level of technological development and the KPI values of
RusHydro Group’s innovation activities against the level of development and indicators of the leading peer
companies (Annex to this decision).
2. Deem the following to meet target date:
− Clause 1 of the decision of the Board of Directors of the Company on issue 4.4 (Minutes No. 263 dated December
28, 2017 as amended by Minutes No. 271 dated June 1, 2017, hereinafter - the Decision) in terms of benchmarking
the level of technological development and the KPI values of RusHydro Group’s innovation activities against the
level of development and indicators of the leading peer companies;
− Clause 2 of the decision regarding the submission to the Ministry of Economic Development of Russia and the
Ministry of Energy of Russia of the results of benchmarking the level of technological development, proposals for
the revision of the Innovative Development Program and the Long-term Development Program, proposals for the
composition and values of the integral KPI for 2019.
3. Defer the due date of Clause 2 of the decision regarding the results of benchmarking the level of technological
development for the consideration of the Company’s Board of Directors to the period after receiving the approval of
the same results by the Interdepartmental Commission for Technological Development of the Presidium of the
Presidential Council for Economic Modernization and Innovative Development of Russia, but no later than March
31, 2019.
2. Assign as follows to the Company's Management:
When further negotiating the results of benchmarking the level of technological development and the KPI values of
RusHydro Group’s innovation activities against the level of development and indicators of the leading peer
companies (hereinafter - Benchmarking) before bringing the benchmarking results for consideration by the Board of
Directors of the Company before March 31, 2019, consider the following recommendations:
2.1. When benchmarking the indicator “Installed Capacity of Renewables”, take into account both the total power of
16JSC DGK, JSC DRSK, PJSC Kamchatskenergo, PJSC Magadanenergo, PJSC Mobile Energy (Peredvizhnaya Energetika), PJSC Sakhalinenergo, JSC Sakhaenergo, JSC Chukotenergo, JSC UESK, PJSC Yakutskenergo, JSC
Vedeneyev VNIIG, JSC Institute Hydroproject, JSC Lengidroproekt, JSC Mosoblgidroproekt.
114
renewables, including the HPP capacities, and separately - SPPs and WPPs.
2.2. Benchmark the state of technological development in the areas of the network complex and operational dispatch
management.
2.3. When analyzing the prospects for applying the PSPP technology, take into account promising technological
aspects, such as the use of asynchronous generators, as well as carry out a feasibility study to compare with existing
regulatory gas capacities.
2.4. If a decision is made to merge the Innovative Development Programs (IDP) of RusHydro and the RAO ES East
Holding Company, prepare, as part of the consolidated IDP, selected sections on technologies taking into account the
specifics of various generation types.
2.5. Prepare conclusions and recommendations on the use of the technologies considered at RusHydro Group,
determine the list of priority technologies to be developed within RusHydro Group.
2.6. In case of refusal from the IDP indicator “Fuel Utilization Factor”, consider the possibility of replacing it with
the “Specific Fuel Consumption” indicator or with another indicator reflecting the efficiency of innovation activities.
Decision Taken: Approve the performance reports of the Committee on Reliability, Energy Efficiency, and
Innovations of the Company’s Board of Directors for H1 2018-2019 corporate year.
Decision Taken: Recommend to the Company’s Board of Directors to make the following decisions:
1. Take due note of the interim progress report on the further action plan at Zagorskaya PSPP-2 (Annex No. 1 to this
decision).
2. Take due note of the information on the completed preparations for the alignment of the plant assembly building
at the Zagorskaya PSPP-2.
3. Approve the proposal of the Company's Management Board to start with the actions for alignment of the plant
assembly building at the Zagorskaya PSPP-2.
Minutes No. 55 dtd
December 4, 2018
Minutes No. 56 dtd
December 21, 2018
Issue: On approval of the performance
reports of the Committee on Reliability,
Energy Efficiency, and Innovations of the
Company’s Board of Directors for H1 2018-
2019 corporate year.
Issue: On recommendations to the Board of
Directors of the Company on the item: On
the Company’s priority activities: On the
implementation of the Action Plan for
rescue, recovery, and conservation of the
Zagorskaya PSPP-2.
The Committee on Energy Development of the Far East at RusHydro’s Board of Directors
Date and No. of
Minutes
Minutes No. 10
dtd
February 5, 2018
Minutes No. 10
dtd
February 5, 2018
Item
Decision taken
On pre-approval of the performance
reports of the Committee on Energy
Development of the Far East of the
Company’s Board of Directors for H1
2017-2108 corporate year.
On determination of the stand of the
Company (representatives of the
Company) on the agenda item of the
General Meeting of Shareholders of JSC
Sakhalin GRES-2: On consent for a major
transaction involving the lease of the
Pre-approve the performance report of the Committee on Energy Development of the Far East of the Company’s
Board of Directors for H1 2017-2018 corporate year.
Recommend to the Company’s Board of Directors to make the following decision:
Assign the Company's representatives at the General Meeting of Shareholders of the Sakhalin GRES-2 on the issue:
On consent for a major transaction involving the lease of the Sakhalin GRES-2’s assets to vote in favor of the
following decision:
115
Sakhalin GRES-2’s assets.
Consent to a major transaction - the conclusion of the Property Lease Agreement (hereinafter referred to as the
Agreement), which is a major transaction with the value exceeding 50% of the Sakhalin GRES-2’s book value, on
the following material terms:
Parties to the Agreement:
Lessor - JSC Sakhalin GRES-2;
Lessee - PJSC Sakhalinenergo.
Subject of the Agreement:
In accordance with the terms of this Agreement, the Lessor shall deliver, and Lessee shall accept, for a
consideration, the leasehold of the assets that obtained permission to put the facility into operation, created as part of
the investment project "Construction of the Sakhalin GRES-2 (1st stage) "(hereinafter - the Facility), directly used in
the process of production and transmission of electric and thermal energy and fully owned by the Lessor, with an
address at: Sakhalin Region, Tomarinsky Urban Okrug Municipality, close to Ilinskoe settlement.
The list of leased assets is specified in Annex No. 2 to the Minutes of Meeting.
Rental margin (marginal price of the Agreement):
RUB 2,437,022,412 (two billion four hundred thirty-seven million twenty-two thousand four hundred and twelve)
04 kopecks with VAT (18%).
The rent amount shall be determined in accordance with the Rent Calculation Procedure (Annex No. 3 to the
Minutes of Meeting) and shall be updated against the total value of the facilities included in the assets complex
determined after the commissioning based on the acceptance certificate of the completed construction of the facility
by the Acceptance Committee (KS-14), by signing an addendum to the Agreement.
Lease Term:
364 days from the date of transfer of the Facility under the Certificate of Transfer and Acceptance.
If 30 (thirty) calendar days before the expiration of the lease term none of the Parties to the Agreement expresses a
written intention to terminate it, the Agreement shall be considered renewed on the same conditions and for the
same term.
Minutes No. 10
dtd
On contributions to the authorized capital
Recommend to the Company’s Board of Directors to make the following decision:
February 5, 2018
of JSC Chukotenergo.
Pursuant to the adoption of the Federal Law “On the Federal Budget for 2018 and for the Planning Period of 2019
and 2020”, which envisages the allocation of budgetary investments to the Company, as well as in accordance with
the requirements of Decree No. 1692 of the Government of the Russian Federation dated December 29, 2017 “On
the Procedure for Making Decisions on Providing Budgetary Investments to Legal Entities that are not State or
Municipal Institutions and State or Municipal Unitary Enterprises as a Contribution to Authorized (share) Capital of
Subsidiaries of these Legal Entities for Capital Investments in Capital Construction Projects owned by such
Subsidiaries, and (or) for the Acquisition of Real Properties by these Subsidiaries from Federal Budget Resources”,
116
Minutes No. 10
dtd
February 5, 2018
On consent to conclude a loan agreement
between the Company and JSC Far East
and Baikal Region Development Fund as
a related-party transaction.
it shall be considered appropriate for the Company to provide contributions to the authorized capital of JSC
Chukotenergo in order to make capital investments in capital construction projects as part of the investment project
“Construction of Two Single-Circuit 110 kV Pevek-Bilibino Overhead Lines” (construction stage No. 1) in the
amount of not more than RUB 18 bn - including from the Company’s funds in the amount of not more than
RUB 5 bn, as well as from funds allocated to the authorized capital of the Company (if relevant decisions are taken
by the Government of the Russian Federation):
- budget investments in the amount of RUB 10 bn, - including RUB 1 bn in 2018, RUB 3 bn in 2019 and RUB 6 bn
in 2020;
- budget allocations from the Reserve Fund of the Government of the Russian Federation in the amount of
RUB 3 bn.
Recommend to the Company’s Board of Directors to make the following decisions:
1. Determine the price of the Loan Agreement between the Company and Far East and Baikal Region Development
Fund (hereinafter referred to as the “Loan Agreement”), which is a related party transaction, as a pool of the
following debt obligations of the Company under the Loan Agreement:
− obligations to repay the loan in the amount of RUB 7,000,000,000 (seven billion) 00 kopecks maximum;
− obligation to pay interest on loan(s) at the rate of 5 (five)% per annum in the amount of RUB 3,150,000,000 (three
billion one hundred fifty million) 00 kopecks maximum.
The price of the Loan Agreement does not exceed RUB 10,150,000,000 (ten billion one hundred fifty million)
00 kopecks.
2. Agree to the conclusion of a loan agreement by the Company in a related party transaction (with due regard to
sub-clause 25, clause 12.1 of Art. 12 and clause 15.3 of Art. 15 of the Company's Charter) on the following material
terms:
Parties to the Loan Agreement:
- Lender - Far East and Baikal Region Development Fund (OGRN 1112721010995);
- Borrower - RusHydro (Company).
Subject of the Loan Agreement:
The Lender provides a loan to the Borrower, and the Borrower undertakes to return the outstanding loan to the
Lender and to pay interest on it.
Loan amount:
RUB 7,000,000,000 (seven billion) 00 kopecks maximum, which may be received by the Company from the Fund
within one or several drawdowns.
Loan Interest:
5 (five)% per annum.
117 Loan Agreement Price:
Determined according to paragraph 1 of this decision.
Loan Maturity:
-
-
-
the first down-payment: January 31, 2019;
then - quarterly in equal installments;
last payment: no later than June 30, 2026.
Purpose of the Loan(s):
Financing in favor of Joint-Stock Company RAO ES East (OGRN 1087760000052) (hereinafter referred to as the
Design Company) for the implementation of the project for the construction of off-site infrastructure facilities to
operate the Sakhalin GRES-2:
- construction, installation and supervision of works, works and commissioning services, supervised installation of
off-site infrastructure facilities to operate the Sakhalin GRES-2 (namely: electrical power distribution schemes, ash
and slag removal systems, drinking water and industrial water supply systems, access roads (including the road to
the ash dump) and the access railway), as well as equipment, machinery and other fixed assets for equipping off-site
infrastructure facilities, and/or for the purposes of co-investment in the design, construction and commissioning of
off-site infrastructure facilities, and/or for the purpose of the refundable acquisition by the Design Company of
ownership of third-party off-site infrastructure facilities under the project (always provided that the Design
Company acquires (upon completion of construction and/or completion of the relevant transaction) ownership of the
relevant off-site infrastructure facilities), and/or for the purpose of repaying the cost of utility connection of off-site
infrastructure facilities (including value added tax payable to contractors and/or suppliers under relevant contracts),
- purchase of equipment, vehicles, and other fixed assets for equipping off-site infrastructure facilities, including
design, manufacturing, supply, insurance, and other related expenses, including those included in the price of the
relevant agreement (including value-added tax payable under relevant contracts to contractors and/or to suppliers),
and
- payment of taxes, customs duties and fees payable against the importation into the Russian Federation and customs
clearance of imported off-site infrastructure facilities listed in above paragraphs 1 and 2;
- reimbursement of expenses actually incurred by the Design Company for the purposes specified in the paragraphs
above, after the date the Fund’s Board of Directors made the decision on the Loan Agreement (Minutes No. 57
dated December 29, 2017);
- other purposes related to the work at the off-site infrastructure facilities agreed in writing by the Parties.
The person who has an interest in the transaction and the standing:
A. Chekunkov, who is a member of the Company's Board of Directors and also holding a position in the
management bodies of a legal entity that is a related party to the transaction (the Director General of the Fund).
118 Minutes No. 11
dtd
March 30, 2018
Minutes No. 11
dtd
March 30, 2018
Minutes No. 12 dtd May
31, 2018
On recommendations to RusHydro’s
Board of Directors on the item: On
RusHydro’s priority activities: On the
progress status of the priority projects for
the construction of four facilities in the Far
East: (Yakutsk GRES-2 (1st stage), the
Blagoveshchenskaya CHPP (2nd stage),
CHPP in Sovetskaya Gavan, Sakhalin
GRES-2 (1st stage) as of December 31,
2017.
On recommendations to RusHydro’s
Board of Directors on the item: On
RusHydro’s priority activities: On the
construction progress of the Ust-
Srednekanskaya HPP
On recommendations to RusHydro’s
Board of Directors on the item:
On determination of the stand of the
Company (representatives of the
Company) on the agenda item of the
General Meeting of Shareholders of JSC
Sakhalin GRES-2: On consent to perform
a major transaction - the conclusion by
JSC Sakhalin GRES-2 of an Addendum to
the General Contractor Agreement for the
construction of the facility Construction
of the Sakhalin GRES-2. Main production
complex. On-site facilities (1st stage)
dated January 23, 2015, No. SGRES-
15/0002.
State that the decision referred to in paragraph 2 is valid until June 30, 2019.
Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the information on the progress status of the priority projects for the construction of four facilities
in the Far East: (Yakutsk GRES-2 (1st stage), the Blagoveshchenskaya CHPP (2nd stage), CHPP in Sovetskaya
Gavan, Sakhalin GRES-2 (1st stage) as of December 31, 2017 (Annex No. 1 to the Minutes of Meeting).
Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the information on the construction progress of the Ust-Srednekanskaya HPP (Annex No. 2 to the
Minutes of Meeting).
Recommend to the Company’s Board of Directors to make the following decision:
Assign the Company's representatives at the General Meeting of Shareholders of the Sakhalin GRES-2 on the issue:
On consent to perform a major transaction - the conclusion by JSC Sakhalin GRES-2 of an Addendum to the
General Contractor Agreement for the construction of the facility Construction of the Sakhalin GRES-2. Main
production complex. On-site facilities (1st stage) dated January 23, 2015, No. SGRES-15/0002 to vote FOR the
following decision:
Consent to perform a major transaction - the conclusion an Addendum to the General Contractor Agreement for the
construction of the facility Construction of the Sakhalin GRES-2. Main production complex. On-site facilities (1st
stage) dated January 23, 2015, No. SGRES-15/0002 (hereinafter - the Agreement), which is a major transaction with
the value exceeding 50% of the Sakhalin GRES-2’s book value, on the following material terms:
Parties to the Transaction:
Customer - JSC Sakhalin GRES-2;
General Contractor - JSC TEK Mosenergo.
Subject of the Transaction:
1. Alteration of the terms previously approved by the general meeting of shareholders of JSC Sakhalin GRES-2
(resolution No.03/2014-SGRES of the trustee of JSC RAO ES East dated December 29, 2014) with regard to the
terms of deadlines:
Scheduled date of readiness for commissioning: October 26, 2018.
Scheduled actual completion date: December 1, 2018.
2. Preservation of the Customer’s right to present claims to the General Contractor related to violations of the terms
of the Agreement committed prior to the conclusion hereof.
119
Minutes No. 13 dtd June
25, 2018
Minutes No. 13 dtd June
25, 2018
Minutes No. 14
dtd
October 24, 2018
Minutes No. 14
dtd
October 24, 2018
Minutes No. 14
dtd
October 24, 2018
Minutes No. 14 dtd
October 24, 2019
Minutes No. 14
dtd
October 24, 2019
On recommendations to the Board of
Directors of the Company on the item:
On approval of the performance reports of
the Committee on Energy Development
of the Far East of the Company’s Board
of Directors for 2017-2018 corporate
year.
On recommendations to RusHydro’s
Board of Directors on the item:
On RusHydro’s priority activities: On the
progress status of the priority projects for
the construction of facilities in the Far
East: (Yakutsk GRES-2 (1st stage), CHPP
at Sovetskaya Gavan, Sakhalin GRES-2
(1st stage) as of March 31, 2018.
On the election of the Deputy Chairman of
the Committee on Energy Development of
the Far East at RusHydro’s Board of
Directors.
On the election of the Secretary of the
Committee on Energy Development of the
Far East at RusHydro’s Board of Directors.
On the approval of the Action Plan of the
Committee on Energy Development of the
Far East at RusHydro’s Board of Directors
for H2 2018.
On recommendations to RusHydro’s
Board of Directors on the item: On the
consideration of the Long-Term Program
for Replacement of Retired Capacities
and the Development of Far East Energy
Systems.
On recommendations to RusHydro’s Board
of Directors on the item: On the progress
status of the priority projects for the
construction of three facilities in the Far
East: (Yakutsk GRES-2 (1st stage), CHPP
at Sovetskaya Gavan, Sakhalin GRES-2
(1st stage).
Price of the Transaction:
The ceiling price of the Agreement shall not change as a result of the conclusion of the Addendum and amounts to
RUB 30,236,000,000 (thirty billion two hundred thirty-six million) 00 kopecks, including VAT (18%).
Approve the performance report of the Committee on Energy Development of the Far East of the Company’s Board
of Directors for 2017-2018 corporate year and recommend to the Company’s Board of Directors to review this
Report (Annex No. 1 to the Minutes of Meeting).
Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the information on the progress status of the priority projects for the construction of facilities in the
Far East: (Yakutsk GRES-2 (1st stage), CHPP in Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) as of March 31,
2018 (Annex No. 2 to the Minutes of Meeting).
Elect I. Zadornov as the Deputy Chairman of the Committee on Energy Development of the Far East at RusHydro’s
Board of Directors.
Elect N. Kovaleva as the Secretary of the Committee on Energy Development of the Far East at RusHydro’s Board
of Directors.
Approve the Action Plan of the Committee on Energy Development of the Far East at RusHydro’s Board of
Directors for H2 2018 Annex No. 1 to the Minutes of Meeting).
Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the Long-Term Program for Replacement of Retired Capacities and the Development of Far East
Energy Systems (Annex No. 2 to the Minutes of Meeting).
Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the information on the progress status of the priority projects for the construction of three facilities
in the Far East: (Yakutsk GRES-2 (1st stage), CHPP in Sovetskaya Gavan, Sakhalin GRES-2 (1st stage)
(Annex No. 3 to the Minutes of Meeting).
120
Minutes No. 15
dtd
December 12, 2018
On recommendations to RusHydro’s Board
of Directors on the item: On determination
of the stand of the Company
(representatives of the Company) on the
agenda item of the General Meeting of
Shareholders of JSC Sakhalin GRES-2: On
the consent to perform a major transaction -
the conclusion an Addendum to the General
Contractor Agreement for the construction
of the facility Construction of the Sakhalin
GRES-2. Main production complex. On-
site facilities (1st stage) dated January 23,
2015, No. SGRES-15/0002.
Minutes No. 15
dtd
December 12, 2018
Minutes No. 16
dtd
December 24, 2018
On recommendations to RusHydro’s Board
of Directors on the item: On the
construction progress of the Ust-
Srednekanskaya HPP
On recommendations to RusHydro’s Board
of Directors on the item: On execution of
Decree No. 232 of the Government of the
Russian Federation dated March 6, 2018
concerning approval of planning and
targeted program documents that are to be
implemented by the Company in the
territory of the Far Eastern Federal District
by the Ministry of the Russian Federation for
Far East Development.
Minutes No. 16
dtd On recommendations to RusHydro’s Board
of Directors on the item: On the progress
Recommend to the Company’s Board of Directors to make the following decision:
Assign the Company's representatives at the General Meeting of Shareholders of the Sakhalin GRES-2 on the issue:
On the consent to perform a major transaction - the conclusion an Addendum to the General Contractor Agreement
for the construction of the facility Construction of the Sakhalin GRES-2. Main production complex. On-site
facilities (1st stage) dated January 23, 2015, No. SGRES-15/0002 to vote FOR the following decision:
Consent to perform a major transaction - the conclusion an Addendum to the General Contractor Agreement for the
construction of the facility Construction of the Sakhalin GRES-2. Main production complex. On-site facilities (1st
stage) dated January 23, 2015, No. SGRES-15/0002 (hereinafter - the Addendum, Agreement), which is a major
transaction with the value exceeding 50% of the Sakhalin GRES-2’s book value, on the following material terms:
Parties to the Addendum:
Customer - JSC Sakhalin GRES-2;
General Contractor - JSC TEK Mosenergo.
Subject of the Addendum:
increase in the price of the Agreement by RUB 3,512,170,090 (three billion five hundred twelve million one
hundred seventy thousand ninety) 00 kopecks, including VAT (18%).
The maximum price of the Agreement (including Addenda):
RUB 33,511,170,090 (thirty three billion five hundred eleven million one hundred seventy thousand ninety rubles)
00 kopecks, including VAT (18%).
Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the information on the construction progress of the Ust-Srednekanskaya HPP (Annex No. 1 to the
Minutes of Meeting).
Recommend to the Company’s Board of Directors to make the following decision:
1.
Approve the Regulation on the procedure for approval by the Ministry of the Russian Federation for Far East
Development of planning and targeted program documents that are to be implemented by RusHydro Group in the
territory of Far Eastern Federal District (hereinafter - the Regulation) (Annex No. 1 to the Minutes of Meeting).
2.
Assign to the Chairman of the Management Board and General Director, N. Shulginov, to publish the
Regulation in the Company's account on the Interdepartmental Portal for the State Property Management by
December 29, 2018.
3.
Deem the Regulation on the procedure for approval by the Ministry of the Russian Federation for Far East
Development of investment programs and other infrastructure development plans that are to be implemented by
RusHydro in the territory of Far Eastern Federal District approved by Resolution No. 254 the Company's Board of
Directors dated June 21, 2017 to be outdated.
Recommend to the Company’s Board of Directors to make the following decision:
121
December 24, 2018
status of the priority projects for the
construction of three facilities in the Far
East: (Yakutsk GRES-2 (1st stage), CHPP in
Sovetskaya Gavan, Sakhalin GRES-2 (1st
stage) for nine months of 2018.
Take due note of the information on the progress status of the priority projects for the construction of three facilities
in the Far East: (Yakutsk GRES-2 (1st stage), CHPP in Sovetskaya Gavan, Sakhalin GRES-2 (1st stage) as of
September 30, 2018 (Annex No. 2 to the Minutes of Meeting).
The Investment Committee of the Company’s Board of Directors
Date and No. of
Minutes
Minutes No. 99 dtd
February 2, 2018
Minutes No. 100 dtd
March 22, 2018
(joint meeting)
Item
Decision taken
of
Products
including
recommendations
recommendations
recommendations
Issue 1: On
to
RusHydro’s Board of Directors on the
item: On approval of the performance
reports of the Investment Committee of
the Company’s Board of Directors for
H1 2017-2018 corporate year.
Issue 2: On
to
RusHydro’s Board of Directors on the
RusHydro’s
item: On making
the
Procurement Policy:
approval of the Regulation on the
Procurement
for
RusHydro’s needs, and adoption of
decisions in line with the Regulation
approved.
Issue 1. On
to
RusHydro’s Board of Directors on the
item: On RusHydro Group’s draft
Consolidated Investment Program for
2019–2023 and for 2018 (amended),
and on RusHydro’s draft Investment
Program for 2019-2028 and for 2018
(amended).
Issue 2. On
to
RusHydro’s Board of Directors on the
item: On approval of the report on the
public process and pricing audit of
RusHydro’s investment projects for
2017 containing the results of the
summary analysis of
the audits
conducted and the conclusions of the
public and expert hearings.
Issue 3. On
to
RusHydro’s Board of Directors on the
recommendations
recommendations
Issue 1: Recommend to RusHydro’s Board of Directors to make the following decision:
Approve the performance report of the Investment Committee of the Company’s Board of Directors for H1
2017-2018 corporate year (Annex No. 1).
Issue 2: Recommend to RusHydro’s Board of Directors to make the following decision:
1. Approve the revised Regulation on the Procurement of Products for RusHydro’s Needs in line with Annex
No. 2 to this decision).
2. Invalidate the Regulation on the Procurement of Products for RusHydro’s Needs approved by the decision
of the Company’s Board of Directors (Minutes No. 239 dated June 23, 2016) as amended (Minutes No. 240,
No. 242, No. 243, No. 246, No. 250, and No. 254 dated August 11, 2016, October 10, 2016, November 14,
2016, December 27, 2016, April 7, 2017, and June 22, 2017, respectively).
Issue 1: Recommend to RusHydro’s Board of Directors to make the following decision:
1. Take due note of RusHydro Group’s draft Consolidated Investment Program for 2019–2023 and for 2018
(amended) (Annexes Nos. 1a, 1b, and 1c to this decision) and their financing sources (Annex No. 1d to this
decision).
2. Pre-approve RusHydro’s draft Investment Program for 2019-2028 and the draft amendments thereto for
2018 approved by order No. 34 @ of the Ministry of Energy of Russia dated December 29, 2017 On Approval
of RusHydro’s Investment Program for 2018-2017 and the Amendments thereto approved by order No. 1458
of the Ministry of Energy of Russia dated December 30, 2016 (Annexes Nos.2a, 2b, and 2c to this decision) in
order to disclose information in line with Decree No. 24 of the Government of the Russian Federation dated
January 21, 2004 On Approval of Information Disclosure Standards of the Wholesale and Retail Electricity
Markets.
3. Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, shall ensure that the
approved draft RusHydro’s Investment Program for 2019-2028 and the draft amendments thereto for 2018-
2027 approved by order No. 34 @ of the Ministry of Energy of Russia dated December 29, 2017 On Approval
of RusHydro’s Investment Program for 2018–2027 and the amendments thereto, approved by order No. 1458
of the Ministry of Energy of Russia dated December 30, 2016 is forwarded to the Ministry of Energy of
Russia in the manner established by Decree No. 977 of the Government of the Russian Federation dated
December 1, 2009 On Investment Programs of Electric Power Engineering Entities and that RusHydro’s
122
Date and No. of
Minutes
Item
list of
item: On approval of
RusHydro’s investment projects for
public process and pricing audit in
2018-2019.
the
Decision taken
business plan is revised against the parameters of the Investment Program in accordance with paragraphs
1 and 2 of this decision.Issue 2. Recommend to the Company’s Board of Directors to make the following
decision:
Approve the report on the public process and pricing audit of the Company’s investment projects for 2017
containing the results of the summary analysis of the audits conducted and the conclusions of the public and
expert hearings (Annexes Nos. 3 and 4 to this decision).
Issue 3: Recommend to RusHydro’s Board of Directors to make the following decision:
Minutes No. 101 dtd
March 29, 2018
(joint meeting)
Minutes No. 102 dtd
April 23, 2018
Minutes No. 103 dated
of
Plan
members
(including
recommendation
the consideration of
Issue 1. On
Consolidated
RusHydro Group’s
Business
the
Consolidated Investment Program) for
2018–2022 and approval of the Targets
of annual Key Performance Indicators
for
RusHydro’s
Management Board for 2018 and the
KPI Targets under Cycle-two of
RusHydro’s Long-term Motivation
Program for 2018 - 2020.
Issue 1. On
to
RusHydro’s Board of Directors on the
item: On the approval of the progress
report on the Business Plan of the
Company for 2017 (including progress
reports of the Investment Program
for
(including
of
Comprehensive
Generating Facilities) and the Annual
Comprehensive Procurement Program
for 2017).
to
Issue 2. On
RusHydro’s Board
of Directors
concerning the consideration of the
report on the implementation of the
Consolidated Business Plan (including
the Consolidated Investment Program)
of RusHydro Group for 2017.
Issue 1. On
Program
Upgrading
recommendations
recommendations
the
to
Approve the list of investment projects implemented under RusHydro’s Investment Program for conducting a
public process and pricing audit in 2018-2019 in line with Annex No. 5 to this decision.
Issue 1: Recommend to the Company’s Board of Directors to make the following decisions:
3. Take due note of the Consolidated Business Plan (including the Consolidated Investment Program) of
RusHydro Group for 2018-2022 in line with Annex No. 1 to this decision).
2. Approve:
2.1.
2018 (KPI "Return on Equity (ROE), %," "Earnings before Interest, Tax, Depreciation, and Amortization
(EBITDA), RUB mn," "Labor productivity, RUB thousand/man-hours") in line with Annex No. 2 to the
present decision).
2.2.
(KPI “Free Cash Flow (FCF), RUB mn”) (Annex No. 3 to the Minutes of Meeting).
Approve Target values of the annual KPIs of the Company's Management Board Members for
Target KPIs under Cycle Two of RusHydro's Long-Term Motivation Program for 2018–2020
Issue 1: Recommend to RusHydro’s Board of Directors to make the following decision:
Approve the report on the fulfillment of the Business Plan of the Company for 2017 (including progress
reports of the Investment Program (including the Program for Comprehensive Upgrading of Generating
Facilities) and the Annual Comprehensive Procurement Program for 2017) (Annex No. 1).
Issue 2: Recommend to the Company’s Board of Directors to make the following decision:
Take due note of the report on the fulfillment of the Consolidated Business Plan (including the Consolidated
Investment Program and the cost optimization plan based on the results of the RusHydro’s external
independent cost audit, including subsidiaries) of RusHydro Group for 2017 (Annex No. 2).
Issue 1: 1. Recommend to the Company’s Board of Directors to make the following decisions:
123
Date and No. of
Minutes
April 23, 2018 (Joint
meeting
the
Investment Committee
the Nomination
and
Compensation
and
Committee)
of
Minutes No. 104 dtd
May 25, 2018
Item
Decision taken
the
indicators
recommendations
RusHydro’s Board of Directors on the
item: On the achievement of annual
performance
key
by
members
Company’s
of
Management Board for 2017.
Issue 2. On
to
RusHydro’s Board of Directors on the
item: On approval of amendments to
the Methodology for the Calculation
and Evaluation of the annual KPIs of
RusHydro's Management
Board
Members.
Issue 3. On
to
RusHydro’s Board of Directors on the
item: On approval of the annual KPI
Targets for members of RusHydro’s
Management Board for 2018 and the
KPI Targets under Cycle Two of
RusHydro’s Long-term Motivation
Program for 2018 - 2020.
Issue 4. On
to
RusHydro’s Board of Directors on the
item: On approval of adjusted target
KPI values under Cycle One of
RusHydro's Long-Term Motivation
Program for 2017–2019.
recommendations
recommendations
recommendations
Issue 1. On
to
RusHydro’s Board of Directors on the
item: On recommendations for the
Annual
of
Company
of
the
Shareholders
the
of
Approval
concerning:
distribution of the Company's profit
based on the results of 2017.
General Meeting
1.1. Deem the KPI “Reduction of Operating Expenses (costs), %” for 2017 calculated with regard to factors
that are beyond the control of the management, to have been achieved.
1.2. Approve the Report on the Achievement of Annual Key Performance Indicators by RusHydro’s
Management Board Members for 2017 (Annex No. 1 to the present decision).
2. Approve the payment of the annual bonus to the members of RusHydro’s Management Board with
reference to the achieved annual KPIs of the members of RusHydro’s Management Board for 2017 after the
Company’s Board of Directors approves the report on the achievement of the annual KPIs of RusHydro’s
Management Board members for 2017.
Issue 2:
1. Recommend to the Company’s Board of Directors to make the following decisions:
according to clause 2.5.1 as for KPI “Reduction of Operating Expenses (costs), %”
1.1. Amend the Methodology for the Calculation and Evaluation of the annual KPIs of RusHydro's
Management Board Members (without effect of fuel costs).
− according to clause 2.1.1 as for KPI “Return on Equity (ROE), %”;
− according to clause 2.2.1 as for KPI “Earnings before Interest, Tax, Depreciation, and Amortization
(EBITDA), RUB mn”;
−
in line with Annex No. 2 to the present decision.
1.2. Include clause 1.5. of Section 1. “General Provisions” of the Methodology for the Calculation and
Evaluation of the annual KPIs of RusHydro's Management Board Members reworded as follows: 1.5. If there
are objective reasons for the non-achievement of any KPI, the Company’s Board of Directors may decide to
recognize this indicator as achieved and to pay the full amount of material incentives attributable to it.
1.3. Establish that the amendments specified in Clauses 1.1 and 1.2 hereof shall apply from January 1, 2018.
Issue 3: 1. Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Approve the Target values of the Annual KPIs of RusHydro's Management Board members for 2018
(KPI "Return on Equity (ROE), %," "Earnings before Interest, Tax, Depreciation, and Amortization
(EBITDA), RUB mn," "Labor productivity, RUB thousand/man-hours") in line with Annex No. 3.1 to the
present decision.
1.2. Target KPIs under Cycle Two of RusHydro's Long-Term Motivation Program for 2018–2020 (KPI “Free
Cash Flow (FCF), RUB mn”) in line with Annex No. 3.2 to this decision).
Issue 4: 1. Recommend to the Company’s Board of Directors to make the following decisions:
1.1. Approve the adjusted target values of the performance indicator under Cycle One of RusHydro's Long-
Term Motivation Program for 2017-2019. (KPI "Free Cash Flow (FCF), RUB mn") (Annex No. 4 to this
decision).
Issue 1: Recommend to RusHydro’s Board of Directors to make the following decision:
Pre-approve and recommend that the Annual General Meeting of Shareholders of the Company approve the
following distribution of profits (losses) of the Company based on the results of 2017:
Retained earnings (loss) of the reporting period
Distribute to: Reserve fund
Development of the Company
Dividends
(RUB)
36,148,608,891.19
1,807,430,444.56
23,115,501,974.98
11,225,676,471.65
124
Date and No. of
Minutes
Item
Decision taken
recommendations
General Meeting
to
Issue 2. On
RusHydro’s Board of Directors on the
item: On recommendations for the
Annual
of
Company
of
Shareholders
concerning: On
amount of
dividends, time and form of dividend
payout based on their performance in
2017 and the establishment of the date
to determine the persons entitled to
receive dividends.
the
the
Minutes No. 105 dtd
June 7, 2018
Minutes No. 106 dtd
June 21, 2018
recommendations
recommendations
Issue 1. On
to
RusHydro’s Board of Directors on the
the Company’s priority
item: On
the
the progress of
activities: On
investment project of the construction
of two single-circuit 110 kV Pevek-
Bilibino OHLs
(construction stage
No. 1).
Issue 2. On
to
RusHydro’s Board of Directors on the
item: On approval of the interim results
of the Business Plan of the Company
for 2018 with actual data for Q1 2018
the
(including progress reports of
Investment Program (including
the
Program
Comprehensive
for
Upgrading of Generating Facilities, for
Q1 2018).
Issue 3. On approval of the Action
Plan of the investment Committee of
RusHydro’s Board of Directors for H1
2018.
Issue 1. On
to
RusHydro’s Board of Directors on the
item: On approval of the report on the
fulfillment of RusHydro’s Annual
Comprehensive Procurement Program
for Q1 2018.
recommendations
Recovery of losses of previous years
0.00
Issue 2: Recommend to RusHydro’s Board of Directors to make the following decision:
Recommend to the Annual General Meeting of Shareholders of the Company to adopt the following resolutions:
Pay dividends on ordinary shares of the Company based on the results of 2017 in the amount of RUB 0.0263335
per one share.
Form of payment of dividends: monetary.
Establish the 10th day from the date when the resolution to pay dividends was taken as the date, on which the
persons entitled to receive dividends shall be determined.
The term of dividend payment to a nominal holder and a professional securities market participant to a trustee
manager who is registered in the shareholder register of the Company shall not exceed 10 business days, and to
other persons registered in the shareholder register of the Company shall be 25 business days from the date, on
which the persons entitled to receive dividends shall be determined.
Moreover, the amount of accrued dividends per each shareholder of the Company is determined with an accuracy
of one kopeck, and figures in the calculation is rounded according to the mathematical rounding rules.
Issue 1: Recommend to RusHydro’s Board of Directors to make the following decision:
1. Take due note of the information of the progress of the investment project of the Construction of two
single-circuit 110 kV Pevek-Bilibino OHLs (construction stage No. 1) (hereinafter - the Project).
2. Ensure the full financing of the Project from the federal budget resources (budget investments - RUB 13
billion) and the Company's own funds (up to RUB 5 billion).
3. Assign the Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to ensure as
follows:
− obtaining a positive consolidated conclusion on the process and pricing audit of the capital construction
project in accordance with the Regulations on the public process and pricing audits of large partially
government-owned investment projects approved by Decree No. 382 of the Government of the Russian
Federation dated April 30, 2013, no later than June 26, 2018;
− non-admission of changes of the Project name in the project documentation.
Issue 2: Recommend to RusHydro’s Board of Directors to make the following decision:
Approve the report on the interim results of the Business Plan of the Company for 2018 with actual data for
Q1 2018 (including progress reports of the Investment Program (including the Program for Comprehensive
Upgrading of Generating for Q1 2018) (Annex No. 1).
Issue 3: Approve the Action Plan of the Investment Committee of RusHydro’s Board of Directors for H1
2018 (Annex No. 2).
Issue 1: Recommend to RusHydro’s Board of Directors to make the following decision:
Approve the report on the fulfillment of RusHydro’s Annual Comprehensive Procurement Program for Q1
2018 (Annex No. 1).
Issue 2: Recommend to RusHydro’s Board of Directors to make the following decision:
1. Approve the new version of the Regulation on RusHydro’s Business Planning System according to Annex
No. 2 to this decision.
125 Date and No. of
Minutes
Item
Decision taken
Minutes No. 107 dtd
September 26, 2018
recommendations
to
Issue 2. On
RusHydro’s Board of Directors on the
item: On approval of
the revised
Regulation on RusHydro’s Business
Planning System.
Issue 3. On the execution of the
assignment of the Chairman of the
Company’s Board of Directors given
following the review of issues 1.3, 1.4
of the agenda of the meeting of the
Company’s Board of Directors held on
October 27, 2017 (Minutes No. 259
dated October 30, 2017).
to
Issue 4. On
RusHydro’s Board of Directors on the
item:
On approval of the performance report
of the Investment Committee of the
Company’s Board of Directors for
2017-2018 corporate year.
recommendations
the election of
Issue 1. On election of the Deputy
Chairman of the Investment Committee
of the Company's Board of Directors.
Issue 2. On
the
Secretary of the Investment Committee
of the Company's Board of Directors.
Issue 3. On approval of the Action
Plan of the investment Committee of
RusHydro’s Board of Directors for H2
2018.
Issue 4. On
to
RusHydro’s Board of Directors on the
item: On approval of the report on the
fulfillment of RusHydro’s Annual
Comprehensive Procurement Program
for H1 2018.
Issue 5. On
to
RusHydro’s Board of Directors on the
the Unified
item: On approval of
Regulation on
the Procurement of
Products for RusHydro’s needs.
recommendations
recommendations
2. Consider the Regulation on RusHydro’s Business Planning System approved by the decision of the Board
of Directors of the Company (Minutes No. 233 dated April 1, 2016) to be outdated.
Issue 3: Take note of the results of the analysis of the impact of investment projects on the second stage of
grid connection of 220 kV Orotukan - Palatka - Tsentralnaya high voltage line, Construction of two single-
circuit 110 kV Pevek - Bilibino OHLs on the level of tariffs in the Magadan Region and the Chukotka
Autonomous District and evaluation of the possibility to include in the tariff the loan service costs in line with
Annex 3 to this decision.
Issue 4: Approve the performance report for the Investment Committee of RusHydro’s Board of Directors for
the 2017-2018 corporate year and recommend to the Company’s Board of Directors to consider this report
(Annex No. 4 to the Minutes of Meeting).
Issue 1: Elect S. Kirov, the member of the Management Board, RusHydro’s First Deputy General Director, as
Deputy Chairman of the Investment Committee at RusHydro’s Board of Directors.
Issue 2: Elect E. Gogotova, the lead specialist of the Office for Monitoring and Evaluating the Efficiency of
Investment Programs of RusHydro’s Economic Planning and Investment Programs Department, as the
Secretary of the Investment Committee at RusHydro’s Board of Directors.
Issue 3: Approve the Action Plan of the Investment Committee of RusHydro’s Board of Directors for H2
2018 (Annex No. 1).
Issue 4: Recommend to RusHydro’s Board of Directors to make the following decision:
Approve the report on the fulfillment of RusHydro’s Annual Comprehensive Procurement Program for H1
2018 (Annex No. 2).
Issue 5: Recommend to RusHydro’s Board of Directors to make the following decision:
1. Approve the Unified Regulation on the Procurement of Products for RusHydro’s Needs (Annex No. 3).
2. Effective date of the Unified Regulation on the Procurement of Products for RusHydro’s needs shall be
October 1, 2018.
3. From the moment the Unified Regulation on Procurement of Products for RusHydro’s needs comes into
force (Clause 2), the Regulation on Procurement of Products for RusHydro’s needs approved by the decision
of the Board of Directors of the Company (Minutes No. 265 dated February 6, 2018) shall be deemed to be
invalid
Issue 6: Recommend to RusHydro’s Board of Directors to make the following decision:
Approve the revised list of investment projects implemented and planned to be implemented under
RusHydro’s Investment Program for conducting a public process and pricing audit in 2018-2019
126
Date and No. of
Minutes
Item
Decision taken
(including
recommendations
recommendations
recommendations
to
Issue 6. On
RusHydro’s Board of Directors on the
item: On the revised list of RusHydro’s
investment projects for public process
and pricing audit in 2018-2019.
Issue 7. On
to
RusHydro’s Board of Directors on the
item: On approval of the interim results
of the Business Plan of the Company
for 2018 with actual data for H1 2018
the
(including progress reports of
Investment Program (including
the
Program
Comprehensive
for
Upgrading of Generating Facilities, for
H1 2018).
Issue 8. On
to
RusHydro’s Board of Directors on the
item: On the revision of the Business
Plan
Investment
Program) of the Company for 2018.
Issue 9. On
to
recommendations
RusHydro’s Board of Directors on the
item: On the revision of RusHydro
Group’s Consolidated Business Plan
(including the Consolidated Investment
Program) for 2018 and approval of the
adjusted Target Values of the annual
KPIs of the Company's Management
Board members for 2018.
Issue 1: On recommendations to the
Board of Directors of the Company on
the
of
amendments to the Methodology for
the Calculation and Evaluation of the
the Company’s
Annual KPIs of
Management Board Members.
The item taken contains confidential
information.
incorporation
item: On
the
(Annex No. 4).
Issue 7: Recommend to RusHydro’s Board of Directors to make the following decision:
Approve the report on the interim results of the Business Plan of the Company for 2018 with actual data for
H1 2018 (including progress reports of the Investment Program (including the Program for Comprehensive
Upgrading of Generating for H1 2018) (Annex No. 5).
Issue 8: Recommend to RusHydro’s Board of Directors to make the following decision:
1. Approve the revised Business Plan of the Company for 2018 (Annex No. 6).
2. Approve RusHydro’s revised Investment Program for 2018 (Annex No. 2 to the revised Business Plan of
the Company for 2018).
3. Approve the targets on RusHydro’s investment objects and new construction facilities of subsidiaries
included in calculating the performance indicator of the members of RusHydro’s Management Board
"Meeting the Capacity Commissioning Schedules and Plan for Financing and Absorption,%" for 2018 (Annex
No. 2a to the revised Business Plan of the Company for 2018).
Issue 9: Recommend to RusHydro’s Board of Directors to make the following decision:
4. Approve RusHydro Group’s revised Consolidated Business Plan (including the Consolidated Investment
Program) for 2018 (Annex No. 7).
5. Approve the adjusted Target values of the Annual KPIs of the Company's Management Board members
for 2018 (KPI "Return on Equity (ROE), %," "Earnings before Interest, Tax, Depreciation, and Amortization
(EBITDA), RUB mn," "Labor productivity, RUB thousand/man-hours") (Annex No. 8).
Issue 1: Recommend to the Company’s Board of Directors to make the following decision:
1. Approve amendments to the Methodology for the Calculation and Evaluation of the Annual KPIs of the
Company’s Management Board Members regarding KPI “Reduction of Operating Expenses (costs), %” in
line with Annex No. 1 to this decision.
2. Approve the target value of the annual KPI of the Company’s Management Board Members for 2018
(KPI “Reduction of Operating Expenses (costs), %”) in line with Annex No. 2 to this decision.
Issue 1. On recommendations to the
Board of Directors of the Company on
the item: On approval of the interim
Issue 1: Recommend to the Company’s Board of Directors to make the following decision:
Approve the report on the interim results of the Business Plan of the Company for 2018 with actual data for
nine months of 2018 (including progress reports of the Investment Program (including the Program for
Minutes No. 108 dtd
September 26, 2018
Minutes No. 109 dtd
October 19, 2018
(joint meeting)
Minutes No. 110 dtd
November 30, 2018
(joint meeting)
127
Date and No. of
Minutes
Item
Decision taken
Minutes No. 111 dtd
December 21, 2018
(joint meeting)
report of
Upgrading
results of the Business Plan of the
Company for 2018 with actual data for
(including
nine months of 2018
progress
the Investment
Program (including the Program for
Comprehensive
of
Generating Facilities, for nine months
of 2018).
Issue 2. On recommendations to the
Board of Directors of the Company on
the item: On approval of the report on
the fulfillment of RusHydro’s Annual
Comprehensive Procurement Program
for none months of 2018.
Issue 3. On recommendations to the
Board of Directors of the Company on
the item: On the progress of the
investment project of the construction
of two single-circuit 110 kV Pevek-
Bilibino OHLs
(construction stage
No. 1).
Issue No. 1. On recommendations to
the Board of Directors of the Company
on the item: On the consideration of
the Business Plan
the
Investment Program) of the Company
for 2019-2023.
Issue No. 2. On recommendations to
the Board of Directors of the Company
on the item: On consideration of the
Consolidated Business Plan (including
the Consolidated Investment Program)
of RusHydro Group for 2019 - 2023.
Issue No. 3. On recommendations to
the Board of Directors of the Company
on the item: On the approval of target
values of key performance indicators
for
RusHydro’s
Management Board for 2019.
Issue No. 4. On recommendations to
the Board of Directors of the Company
on the item: On the revision of the
(including
members
of
Comprehensive Upgrading of Generating for nine months of 2018) (Annex No. 1).
Issue 2: Recommend to the Company’s Board of Directors to make the following decision:
Approve the report on the fulfillment of RusHydro’s Annual Comprehensive Procurement Program for nine
months of 2018 (Annex No. 2).
Issue 3: Recommend to the Company’s Board of Directors to make the following decision:
Take due note on the information of the progress of the investment project of the Construction of two single-
circuit 110 kV Pevek-Bilibino OHLs (construction stage No. 1) (Annex No. 3).
Issue 1: Recommend to the Company’s Board of Directors to make the following decision:
1. Approve RusHydro’s Business Plan for 2019 (Annex No. 1).
2. Approve RusHydro’s Investment Program for 2019 (Annex No. 1.2 to the RusHydro’s Business Plan for
2019–2023).
3. Approve the targets on RusHydro’s investment objects and new construction facilities of subsidiaries
included in calculating the performance indicator of the members of RusHydro’s Management Board
"Meeting the Capacity Commissioning Schedules and Plan for Financing and Absorption,%" for 2019 (Annex
No. 1.2a to the Business Plan of the Company for 2019 - 2023).
4. Take due note of RusHydro’s Business Plan for 2020–2023 (Annex No. 1), including RusHydro’s
Investment Program for 2020–2023 (Annex No. 1.2 to RusHydro’s Business Plan for 2019–2023).
Issue 2: Recommend to the Company’s Board of Directors to make the following decision:
1. Approve the Consolidated Business Plan (including the Consolidated Investment Program) of the
RusHydro Group for 2019-2023 (Annex No. 2).
2. Based on the results of an evaluation of RusHydro's financial and economic activity for H1 2019, bring the
issue of approval of RusHydro's revised Consolidated Business Plan for 2019 to the consideration of the
Board of Directors no later than September 30, 2019, if needed.
Issue 3: Recommend to the Company’s Board of Directors to make the following decisions:
1. Approve:
- Target values of annual key performance indicators for members of RusHydro’s Management Board for
2019 (Annex No. 3.1).
- Target KPI values under Cycle Three of RusHydro's Long-Term Motivation Program for 2019–2021
128
Date and No. of
Minutes
Item
Decision taken
the
item: On
Company’s Business Plan for 2018 -
2022 as to RusHydro’s Investment
Program for 2018.
Issue No. 5. On recommendations to
the Board of Directors of the Company
on
approval of
RusHydro’s Annual Comprehensive
Procurement Program for 2019.
Issue No. 6: On recommendations to
the Board of Directors of the Company
on the item: On the Company’s priority
activities: On
the
investment project of the Construction
of two single-circuit 110 kV Pevek-
Bilibino OHLs
(construction stage
No. 1).
Issue No. 7: On recommendations to
the Board of Directors of the Company
on the item: On contributions to the
authorized capital of JSC CHPP at
Sovetskaya Gavan.
financing of
(Annex 3.2);
- Changes in the adjusted target KPI values under Cycle One of RusHydro's Long-Term Motivation
Program for 2017–2019 (Annex 3.3);
- Changes in the adjusted target KPI values under Cycle Two of RusHydro's Long-Term Motivation
Program for 2018–2020 (Annex 3.4).
2. When calculating and evaluating the key performance indicators under Cycle Three of RusHydro’s Long-
term Motivation Program for 2019-2021 (hyphen 2 of Clause 1 of this decision), follow the Methodology for
calculating and evaluating key performance indicators of RusHydro’s Long-Term Motivation Program
approved by a decision of the Company's Board of Directors dated December 26, 2017 (Minutes No. 264
dated December 28, 2017).
Issue 4: Recommend to the Company’s Board of Directors to make the following decision:
1. Take due note of the information on the incident at Sakhalin GRES-2 (Annex No. 4.1).
2. Recognize as objective the reasons for insufficient technical resources to commission the Sakhalin GRES-
2 within the time limit established by the Budget Investments Agreement No. 01-08/827 dated December 18,
2012 and the Budget Investments Agreement No. C-718-AB/D07 dated December 14, 2012.
3.
Note the absence of additional financial burden on the Company due to the need to eliminate the
consequences of the incident thanks to the presence of a mechanism to translate financial responsibility for
meeting the commissioning deadlines to the General Contractor.
4. Approve the Company's revised Business Plan for 2018 in terms of changing the parameters of
RusHydro’s Investment Program for 2018 considering their influence on the KPI "Compliance with the
Capacity Commissioning Schedules and Financing and Absorption Plan, %" for 2018 (Annexes Nos. 4.2,
4.2a).
Issue 5: Recommend to the Company’s Board of Directors to make the following decision:
Approve RusHydro’s Annual Comprehensive Procurement Program for 2019 (Annex No. 5).
Issue 6: Recommend to the Company’s Board of Directors to make the following decision:
For the purpose of timely implementation and financing of the investment project of the Construction of Two
Single-Circuit 110 kV Pevek-Bilibino OHLs (construction stage No. 1) (hereinafter - the Project), assign the
Chairman of the Management Board - RusHydro’s General Director, N. Shulginov, to ensure as follows:
1. Making of contributions to the authorized capital of JSC Chukotenergo in 2019 and 2020 in an amount not
exceeding RUB 13.0 billion (if the corresponding resolutions are adopted by the Government of the Russian
Federation) from the following funds allocated to the Company's authorized capital:
−
billion in 2020 in accordance with Article 9 of Federal Law No. 459-FZ dated November 29, 2018 On the
Federal Budget for 2019 and for the Planning Period of 2020 and 2021;
−
RUB 3,0 bn in 2019.
2. Financing of the first stage of the Project, including costs for the development of design & estimate
documentation, using the Company's own funds in an amount not exceeding RUB 6.294 billion.
3. An increase in the loan amount by RUB 1.294 billion by concluding Addendum No. 1 (hereinafter - the
Addendum) to Loan Agreement No. 1010-235-59-2017 dated December 28, 2017 (hereinafter - the Loan
budget allocations from the Reserve Fund of the Government of the Russian Federation in the amount of
Budget investments in the amount of RUB 10.0 billion, including RUB 4.0 billion in 2019 and RUB 6.0
129
Date and No. of
Minutes
Item
Decision taken
Agreement) concluded by the Company and Chukotenergo in pursuance of the decision of the Company's
Board of Directors dated October 27, 2017 (Minutes No. 259 dated October 30, 2017), on the following
material terms:
Parties to the Addendum:
The Borrower - Chukotenergo;
The Lender - the Company.
Subject of the Addendum:
•
Clause 1.1 of the Loan Agreement shall be amended to read as follows:1.1. Under this Agreement, the
•
Lender shall transfer into the Borrower's ownership an amount of money not exceeding RUB 6,294,000,000
(six billion two hundred ninety four million) 00 kopecks, and the Borrower shall repay the amount of the loan
to the Lender in the manner and on the conditions established by the Agreement.
Issue 7:
Recommend to the Company’s Board of Directors to make the following decision:
If the respective resolutions are adopted by the Government of the Russian Federation, the following shall be
deemed reasonable and expedient:
3.
The Company’s contributions to the authorized capital of CHPP in Sovetskaya Gavan for the purpose of
capital investments in capital construction projects under the investment project "Construction of the CHPP at
Sovetskaya Gavan, the Khabarovsk Territory. Revision of 2017" in the amount of RUB 899,304,159.70 (eight
hundred ninety-nine million three hundred four thousand one hundred fifty-nine) according to Article 21 of
Federal Law No. 459-FZ dated November 29, 2018 "On the Federal Budget for 2019 and for the Planning
Period of 2020 and 2021" using unspent contributions to the Company's authorized capital (hereinafter - the
balance of target funds) received by the Company:
3.1. In accordance with Part 6 of Article 25 of Federal Law 204-FZ dated November 24, 2008 "On the
Federal Budget for 2009 and for the Planning Period of 2010 and 2011" for completing the construction of the
shore spillway at the Sayano-Shushenskaya HPP in the amount of RUB 476,934,684 (four hundred seventy
six million nine hundred thirty four thousand six hundred and eighty-four) 55 kopecks.
3.2. In accordance with Part 1 of Clause 2 of Article 12 of Federal Law No. 204-FZ dated November 24,
2008, "On the Federal Budget for 2009 and for the Planning Period of 2010 and 2011" for the implementation
of the comprehensive investment project "Development of Design Documentation for the Investment Project
of Comprehensive development of South Yakutia in the amount of RUB 422,369,475 (four hundred twenty-
two million three hundred sixty-nine thousand four hundred seventy-five) 15 kopecks through a transaction
for the purchase of additional shares of JSC CHPP in Sovetskaya Gavan.
4. Conclusion of addenda stipulating the possibility of allocating the balance of target funds for the
investment project of Construction of the CHPP in Sovetskaya Gavan, Khabarovsk Territory. Revision of
2017" to:
−
−
East No. S-718-AB/D07 dated December 14, 2012;
−
Budget Investment Contract No. 01-08/827 dated December 18, 2012;
Budget Investment Agreement for financing the construction of Electrical Power Facilities in the Far
Budget Investment Contract No.
130
Date and No. of
Minutes
Item
Decision taken
01-13/307 dated June 24, 2009.
−
.
Budget Investment Contract No. 09/0412.3400200.082/08/392 dated December 14, 2009
131
Appendix No.6 Information on the Sale of Non-core Assets of PJSC RusHydro for 2018
In order to fulfill the directives of the Government of the Russian Federation, the Company's Board
of Directors (Minutes No. 263 dated December 28, 2017) approved the revised Program for the
Divestment of Non-Core Assets of PJSC RusHydro, updated in line with by the Methodological
Recommendations of the Government of the Russian Federation (hereinafter referred to as the Program).
The Program defines of the Company’s general principles and procedures for disposing its non-core
assets.
The goal of the Program is to formulate a methodology for managing non-core assets of the
Company.
The main directions of the Program:
- formation and maintenance of the Non-core Assets Register and the Action Plan for the Disposal
of Non-core Assets;
- ways and procedures for the disposal of non-core assets;
- information support for the disposal of non-core assets;
- reporting on the disposal of non-core assets.
The updated and revised Non-core Assets Register of PJSC RusHydro and the Action Plan for the
Disposal of Non-core Assets of PJSC RusHydro for 2017 (Q4) - 2018 were approved by the Board of
Directors (Minutes No. 263 dated December 28, 2017).
The Non-core Assets Register contains the basic 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 Disposal of Non-core Assets includes non-core assets planned to be sold in
2018, detailing the timing of the sale of non-core assets and their market value, as determined by an
appraisal organization.
In 2018, the Company planned to sell 25 non-core assets. In fact, 29 non-core assets were sold.
The progress report on the disposal of non-core assets for 2018 was approved by the Board of
Directors (Minutes No. 283 dated February 21, 2019).
Information on the disposal of non-core assets is quarterly reported to the Company’s Board of
Directors and posted on the Interdepartmental Portal of the Federal Agency for State Property
Management.
132
No.
Asset
Asset Inventory No.
(if applicable)
INFORMATION
on the Disposal of Non-core Assets in 2018
PJSC RusHydro
Balance Sheet
Item Containing
an Asset as at
the Reporting
Date prior to
the Asset
Divestment
Items (Analytics
Included)
Containing Gains
and Expenses from
the Disposal of an
Asset
(91.1ххх/91.2ххх)
Book Value
of the
Assets,
thou. RUB
Actual
Realizable
Value,
thou.RUB,
excluding
VAT
Deviation of
Actual
Realizable
Value from the
Book Value,
thou.RUB
1
2
3
4
5
6
7
8
Shareholding of
PJSC Inter RAO
(1.9437%)
Shareholding of
JSC NPF of
Electric Power
Industry (0.609%)
LLC
Fiagdonskaya
SHPP (100%)
JSC Nizhne-
Zeyskaya HPP
(100%)
JSC Far Eastern
WPP (100%)
JSC Power
Industry Head
Data Processing
Center (100%)
JSC SHPP of
Dagestan
13 apartments in
the urban village
of Talakan, the
Amur Region
-
-
-
-
-
-
-
1170
1170
1170
1170
1170
1170
1170
9101040101/
9102040101
9101040101/
9102040101
9101040101/
9102040101
9101040101/
9102040101
9101040101/
9102040101
9101040101/
9102040101
9101040101/
9102040101
8,257,819
6,790,304
-1,467,515
8,925
73,822
+64,897
Reason for Deviation of
Actual Realizable Value
from the Book Value
Direct selling at market
price in favor of JSC Inter
RAO Capital
Selling at market price by
requesting a buyout
741
8,803*
+8,062
The company is dissolved.
25,114
86*
-25,028
The company is dissolved.
0
0
0
The company is dissolved.
21,423
10,679*
-10,744
The company is dissolved.
100,757
94,650*
-6,107
The company is dissolved.
10301010000004190000
10301010000005930000
10301010000005940000
10301010000005950000
10301010000005970000
10301010000005990000
10301010000006000000
10301010000006010000
10301010000006020000
10301010000006030000
10301010000006040000
10301010000006050000
1151
9101010101/
9102010101
125,665
27,533
- 98,132
Direct sale at market price
to employees of PJSC
RusHydro’s branch - the
Bureyskaya HPP
133
No.
Asset
Asset Inventory No.
(if applicable)
10301010000006060000
Balance Sheet
Item Containing
an Asset as at
the Reporting
Date prior to
the Asset
Divestment
Items (Analytics
Included)
Containing Gains
and Expenses from
the Disposal of an
Asset
(91.1ххх/91.2ххх)
Book Value
of the
Assets,
thou. RUB
Actual
Realizable
Value,
thou.RUB,
excluding
VAT
Deviation of
Actual
Realizable
Value from the
Book Value,
thou.RUB
Reason for Deviation of
Actual Realizable Value
from the Book Value
9
10
11
12
13
2 apartments in the
Republic of
Khakassia
2 roads in the
Karachay-
Cherkess Republic
3 bridges in the
Karachay-
Cherkess Republic
The Izvestkovaya-
Chegdomyn
railway
infrastructure line
(1/6 stake at 78
facilities)
Access road to the
solid waste landfill
2700000151
2700000152
1213
9001180101/
9002180101
8,630
6,370
-2,260
Sale by the bidding results
400016
400017
5745
400018
400019
1151.3
-/9102010701
5,747
0
- 5,747
Facilities are written-off
from accounting
1151.3
- /9102051100
7,580
0.00
- 7,580
Gratuitous transfer to the
republican ownership.
БР12123 - БР12200
1151
- /9102051100
564,559
БР12613
1151
- /9102051100
65,682
0
0
- 564,559
Gratuitous transfer to the
federal ownership.
- 65,682
Gratuitous transfer to the
municipal ownership.
Total
9,192,642.00 7,012,247.00
-2,180,395.00
* Amount (value of the property) distributed in favor of PJSC RusHydro following the results of liquidation procedures.
134
Appendix No.7 Information on Pending Legal Proceedings that may have a Significant Impact on
the Activities of RusHydro Group’s Companies
1. Pursuant to the denunciation of the Agreement between the Government of the Kyrgyz Republic and
the Government of the Russian Federation on the construction and operation of the Verkhne-Naryn cascade
of HPPs and the refusal of the Kyrgyz Republic to return the funds spent by RusHydro on the construction of
the Verkhne-Naryn cascade of HPPs, international arbitration proceedings were initiated to recover
USD 37,191,306.61 as compensation for expenses transferred under loan agreements, interest on loan
agreements in the amount of USD 1,628,692.54, the obligation to accept 50% of the joint venture shares, and
recovery of cost of the said shares in the amount of 2,500,000 Kyrgyz soms. The case is governed by the
Permanent Court of Arbitration at the Hague (Netherlands).
2. Due to the violation of by OJSC GlobalElectroService’s obligations for the construction of CHPP at
Sovetskaya Gavan in terms of the quality of work performed and the timing of their fulfillment, JSC CHPP
at
against
OJSC GlobalElectroService for a penalty of RUB 621 mn (case A73-8490 / 2018) and against JSC
Transcapitalbank on recovery of the cost of eliminating identified defects in the amount of RUB 168 mn as
part of a bank guarantee ensuring proper fulfillment of obligations (case A40-15285/2018).
Sovetskaya
lawsuits
Gavan
filed
3.
The prosecutor's office of
force
JSC Sakhaenergo to make changes to the water supply project of the CHPP at Deputatsky settlement and to
build a standby water supply line. Satisfaction of claims entails the risk of expenses for JSC Sakhaenergo
amounting to more than RUB 100 mn (case No. 2-271/2018).
the Ust-Yansky district
filed a
lawsuit
to
4. With reference of the lease of the Sakhalin GRES-2 assets by Sakhalinenergo, a minority
shareholder complained to the court to invalidate the lease agreement concluded between Sakhalinenergo
and Sakhalin GRES-2 (case A59-4791/2018).
Appendix No.8 Information Concerning the State Support Funds Received by
the Company in the Reporting Year, Including the Amount of Subsidies Granted (in Rubles),
Planned and Actual Destinations of Funds as of the End of the Year
In 2018, PJSC RusHydro did not receive any allocations from the federal budget for the Investment
Program projects.
For 2018, the Company used the budget funds received earlier (in the amount of RUB 4,127.9 mn) by
Decree No. 1564 of the President of the Russian Federation dated November 22, 2012 for the construction of
heat generation facilities in the Far East, including:
- CHPP at Sovetskaya Gavan – RUB 4127.9 mn (including the partial refund of the advance payment
by the General Contractor);
- Sakhalinskaya SDPP-2 (1st stage) – RUB 0.0 mn;
- Yakutskaya SDPP-2 (1st stage) - RUB 0.0 mn (the plant was launched on October 31, 2017);
- Blagoveshchenskaya CHPP (2nd stage) - RUB 0.0 mn (the plant was launched on December 22,
2016).
As of January 1, 2019, the balance of budget allocations previously received by the Company against
the sale of PJSC RusHydro’s additional shares to the Russian Federation amounts to
RUB 899.3 mn, including:
- the balance of available budget investments saved - RUB 899.3 mn (allocated for the completion of
the onshore spillway of the Sayano-Shushenskaya HPP - completed) - RUB 476.9 mn; for the design of the
Kankunskaya HPP - completed) - RUB 422.4 mn.
135
Appendix No.9 Report on the Long-term Development program implementation of the RusHydro
Group for the year of 2018
1. GENERAL INFORMATION
RusHydro's Long-term Development Program for 2018–2022 is prepared in accordance with the
instructions of the President of the Russian Federation (No. Pr-3086 dated December 27, 2013) and the
Russian Government (Minutes No. 3 dated January 30, 2014, Decree No. 4955p-P13 of the Government of
the Russian Federation dated July 17, 2014). The Long-term Development Program was approved by the
decision of the Company’s Board of Directors in June 2018 (Minutes No. 271 dated June 1, 2018). In
October 2018, pursuant to Decree No. 204 of the President of the Russian Federation dated May 7, 2018 On
the National Goals and Strategic Objectives of the Development of the Russian Federation for the period
until 2024, amendments were made to the Program as approved by the decision of the Board of Directors
(Minutes No. 279 dated October 26, 2018).
RusHydro Group's Long-term Development Program sets out the main principles and activities for
the Company's rapid growth, seeking to ensure efficient use of water resources, sustainability of Russia’s
Unified Energy System, as well as social and economic development of the Russian regions, including the
Far East, by providing its existing and prospective consumers with access to energy infrastructure.
Pursuant to Decree No. 4955p-P13 of the Government of the Russian Federation dated July 17, 2014,
the progress of the Long-term Development Program is annually audited in accordance with the Audit
Standard approved by the Company’s Board of Directors 17and the Terms of Reference for auditing the
progress on the Long-term Development Program 18developed in line with the recommendations of the
Russian Government19.
2. IMPLEMENTATION OF THE PLANNED AND ESTIMATED INDICATORS BASED ON
RUSGIDRO GROUP’S CONSOLIDATED BUSINESS PLAN
The main element of economic planning at RusHydro Group is a medium-term Business Plan. The
Company’s Board of Directors resolved to approve the Regulation on the Business Planning System
(Minutes No. 273 dated June 27, 2018) to be used to prepare RusHydro Group’s Consolidated Business Plan
in accordance with IFRS20.
The Long-term Development for 2018-2022 is based upon RusHydro Group’s Consolidated Business
Plan approved by the Company’s Board of Directors on April 3, 2018 (Minutes No. 267 dated April 4,
2018)21.
In October 2018, the Company's Board of Directors approved the adjustment of the planned
indicators of RusHydro Group’s Consolidated Business Plan for 2018 (Minutes No. 276 dated October 4,
2018) pertaining to the following factors: changes in RusHydro’s income basis indicators; reduced funding
allocated for the project “Construction of two single-circuit Pelek-Bilibino 110 kV overhead lines”
(construction stage No. 1); change in business plan indicators of RAO ES East Subgroup’s companies in
view of approving the adjustments to the business plans of subsidiaries by the respective Boards of
Directors; changes in the size of financing for the consolidated Investment Program; reduced dividend
payouts by RusHydro in 2017 against the targets; the sale of assets not covered by the approved business
plan. The plan considers additional factors within RusHydro Group’s adjusted Consolidated Business Plan
for 201822, allowing for the adjustment to RusHydro’s Investment Program23.
The actual data of the Long-term Development Program progress report for 2018 is based on
RusHydro Group's audited Consolidated Financial Statements prepared under IFRS for the year ended
December 31, 2018, and as of this date.
17(Minutes No. 281 of the Board of Directors dated December 27, 2018)
18(Minutes No. 279 of the Board of Directors dated October 26, 2018)
19Decree NO. Ish-P13-2583 of the Russian Government dated April 15, 2014.
20 Hereinafter referred to as the International Financial Reporting Standards.
21 RusHydro Group’s Consolidated Business Plan for 2018-2022 was prepared on the basis of business plan forms of RusHydro and companies (directly and
indirectly) owned by RusHydro, as well as transformational and consolidation amendments incorporated to bring the information in compliance with IFRS.
22 The adjustment to RusHydro Group’s Consolidated Business Plan for 2018 was approved by the Company’s Board of Directors (Minutes No. 276 dated October
4, 2018).
23 The Board of Directors resolved to postpone the commissioning of the Sakhalin GRES-2 to 2019 (Minutes No. 281 dated December 27, 2018).
136 The progress report on RusHydro Group’s Consolidated Business Plan for 2018 was approved by the
Company’s Board of Directors on March 26, 2019 (Minutes No. 284 dated March 29, 2019).
According to RusHydro Group’s consolidated financial statements under IFRS, the Company’s
authorized capital as of December 31, 2018 was RUB 426,289 million.
Revenues
RusHydro Group’s actually received operating income for the year 2018 correspond to the targets.
Revenue structure for 2018, RUB million
Item
2018 target
Sales of electricity (power)
Heat and hot water sales24
Government subsidies
Other revenues24
Other operating income
Total operating income and government
subsidies
2018
actual
287,201
40,150
41,648
31,419
5,452
286,869
41,021
39,669
34,716
4,247
406,522
405,870
Deviation
actual/target
Abs.
Rel.
332
-871
1,979
-3,297
1,205
-652
0.1%
-2.1%
5.0%
-9.5%
28.4%
-0.2%
In the revenue structure, proceeds from the sales of electricity (power) hold the largest share (71% of
total revenues).
The increase in revenues from the sale of electricity by RusHydro is associated with an increase in
actual generation and net supply of electricity during the reporting period against RusHydro’s business plan
indicators and is attributable to the efficient planning of water and energy regimes amid the high water
content in the reservoirs of the Volgo-Kama cascade HPP (H1 2018) and in the Siberian rivers (Q1 and Q4
2018).
RAO ES East Subgroup provides revenues from the sales of heat and hot water (almost 100% of the
total for this income item), government subsidies (almost 100% of the total for this income item), and other
revenues (more than 70% of the total on this income item).
A 2.1% decrease in revenues from the sales of heat and hot water against the plan is due to the actual
temperature in the Amur Region and the Republic of Sakha (Yakutia).
As for Government Subsidies item, the increase in electricity consumption and the change in the
relationship between PJSC Kamchatskenergo and energy providers supplying energy within the activity
zone of a guaranteed supplier, Kamchatskenergo, contributed to a 5.0% increase in revenues.
The decrease in revenues under the Other revenues item in the RAO ES East Subgroup’s segment was
conditioned by the change in the share of intragroup proceeds against the targets and the decrease in
revenues from grid connections related to the unavailability of contractors (RUB 524 million), lower
revenues of JSC Far Eastern Electrotechnical Company (DETK) (RUB 824 million), JSC Khabarovsk
Repair and Installation Company (KhRMK)(348 million rubles) and JSC ETS (RUB 136 million).
Revenue growth under the Other Revenues item amounted to RUB 1,205 million, including
RUB 884 million from gains from penalties received, and RUB 133 million from proceeds from the sales of
shares of JSC Non-State Pension Fund of the Electric Power Industry.
Expenses
Within RusHydro Group, actual expenses for 2018 decreased by RUB 16,742 million (–5.0%)
against the targets. Expenses are decreasing across all items, except for such items as Purchase of Fuel,
Water Use Costs, Acquisition Costs of Other Materials.
Cost structure for 2018, RUB million
Item
2018
target
2018
actual
Deviation
actual/target
24 For comparing target and actual data with the plan, revenues from the sales of hot water in the amount of RUB 3,972 million were reclassified from Other
revenues into the Sales of Heat and Hot Water due to the differences in approaches to recognize this type of earnings during planning.
137 Purchase of Fuel
Depreciation of fixed and intangible assets
Payroll, employee benefits and payroll taxes,
contributions to non-state pension provision
Taxes, other than income tax
Outsourced services
Water Use Costs
Acquisition Costs of Other Materials25
Infrastructure payments related to the sales of
electricity and heat26
Purchased energy (power)
Other expenses (balance)27
TOTAL current operating expenses
61,478
30,032
64,791
22,310
Abs.
3,313
-7,722
Rel.
5.4%
-25.7%
76,667
75,876
-791
-1.0%
13,792
37,083
3,591
10,239
12,242
27,745
4,018
13,345
48,398
46,806
43,296
7,017
331,592
41,811
5,906
314,850
-1,550
-9,338
427
3,106
-1,592
-1,485
-1,111
-16,742
-11.2%
-25.2%
11.9%
30.3%
-3.3%
-3.4%
-15.8%
-5.0%
Expenses under Purchase of Fuel item are generated in RAO ES East Subgroup segment. The
increase in actual costs against the planned ones is mainly associated with an increase in the supply of
electricity and heat by JSC DGK’s stations, an increase in coal prices, and an increase in selling prices for
petroleum products in Q2 2018 at PJSC Kamchatskenergo.
The decrease in expenses under the item Depreciation of Fixed and Intangible Assets is due to a
change in the accounting policy for fixed assets, as well as the rescheduled commissioning of facilities. Also,
this factor has a downward impact on expense under the items Taxes, other than Income Tax, Outsourced
Services, Water Use Costs, and Acquisition Costs of Other Materials.
The reduction in expenses under the item Outsourced services according to the results of 2018 is due
to the effective procurement procedures, support for the asset lifecycle management system, and measures to
optimize costs and business processes.
The growth of expenses under the item Acquisition Costs of Other Materials was affected by
deviations prevailing at RAO ES East Subgroup at year-end 2018 due to differences in the methods for
reflecting planned and actual costs for fuel and materials (intragroup transactions in the plan are excluded
from the revenues of JSC VOSTEK and from corresponding fuel costs of operating companies).
The decrease under item Other Expenses (balance) constitutes an insignificant share in the operating
cost structure (about 2%).
RusHydro Group’s Financial Results
Statement of Profit or Loss for 2018, RUB ml
Items
Operating income
Government subsidies
Other operating income
Current operating expenses
2018
2018
target
actual
362,606
39,669
4,247
-331,592
358,770
41,648
5,452
-314,850
Target/actual
deviation
Abs.
-3,836
1,979
1,205
16,742
Rel.
-1.1%
5.0%
28.4%
-5.0%
25. In fact, the item includes costs under items Other Materials in the amount of RUB 10,905 million and Expenses for Purchase of
Petroleum Products for Resale in the amount of RUB 2,440 million, in accordance with Note 26 Operating Expenses (without
impairment losses) to RusHydro Group’s consolidated financial statements under IFRS for the year ended December 31, 2018 and
as of the date.
26 In fact, the item includes costs under items Electricity distribution costs in the amount of RUB 39,463 million, Costs for the
Operation of the Electricity and Capacity Market in the amount of RUB 3,714 million, and Costs for Heat Acquisition and
Transmission in the amount of RUB 3,629 million, in accordance with Note 26 Operating Expenses (without impairment losses) to
RusHydro Group’s consolidated financial statements under IFRS for the year ended December 12, 2018 and as of the date.
27 In fact, the item includes costs under items Social Spending in the amount of RUB 1,083 million, Business Trip Expenses in the
amount of RUB 997 million, Net Loss from Asset Sale in the amount of RUB 1,757 million, and Other Expenses in the amount of
RUB 2,069 million, in accordance with Note 26 Operating Expenses (without impairment losses) to RusHydro Group’s
consolidated financial statements under IFRS for the year ended December 31, 2018 and as of the date.
138 Items
2018
2018
target
actual
Target/actual
deviation
Abs.
Rel.
Loss from economic impairment of fixed
assets
Loss from impairment of accounts
receivable, net
Operating profit
Financial income/(expenses), net
-35,72628
-24,221
11,505
-32.2%
-4,156
35,048
-9,205
-5,379
61,420
-15,421
-1,223
26,372
-6,216
29.4%
75.2%
67.5%
Profits of joint ventures and associates
Profit before tax
Income tax expenses
Profit for the period
4,002
29,845
-15,043
14,803
Analysis of the statement of profit or loss shows that the RusHydro Group profit earned by the results
-53.5%
60.4%
6.5%
-115.1%
1,860
47,859
-16,022
31,837
-2,142
18,014
-979
17,034
of 2018 exceeds the planned values by RUB 17,034 million or 115.1%.
A positive change in financial results was caused by a decrease in operating expenses and a decrease
in the loss from impairment of fixed assets. RusHydro Group’s actually received operating income for the
year 2018 correspond to the 29adjusted targets.
Long-term loans and borrowings as of December 31, 2018 amounted to RUB 157,948 million. As of
December 31, 2018, short-term borrowings and current portion of long-term loans amounted to
RUB 38,899 million.
Pursuant to the Regulation on the Dividend Policy approved by the decision of the Company’s Board
of Directors (Minutes No. 195 dated March 28, 2014) and Decree No. 944-p30 of the Government of the
Russian Federation dated May 18, 2017, according to the results of 2017, the dividends of RusHydro
amounted to 50% of RusHydro Group’s financial performance defined in the consolidated financial
statements under IFRS, or RUB 11,226 million. In fact, from 2016 onwards, the Company has been
allocating 50% of its profits determined in the consolidated financial statements under IFRS for dividend
payment.
3. RUSGIDRO GROUP’S PROGRAM ACTIVITIES
RusHydro Group Investment Program
The approved Long-term Development accommodates financing of RusHydro Group’s investment
projects for the period of 2018-2022 in the amount of RUB 396,344.51 million 31(including in the Far East
in the amount of RUB 228,384.06 million), which in 2018 covers RUB 124,485.64 million (including in the
Far East - RUB 81,980.26 million).
Based on RusHydro Group’s Consolidated Investment Program for 2018-2022, with due
consideration of the updates consistent with the consolidated opinions of Russia’s Ministry of Energy under
the procedure of approving RusHydro Group’s Investment Program for electric power industry facilities by
executive authorities, as well as updating the cost and schedules for the implementation and financing
several investment projects against the updated project documentation and the actual progress of
construction and installation work, the Company’s Board of Directors on October 2, 2018 (Minutes No. 276
dated October 4, 2018) approved the amended RusHydro Group’s Consolidated Investment Program for
28 The planning data include the results of the test for impairment of assets commissioned in 2018, with the exception of the expected impairment of the Sakhalin
GRES-2 in the amount of RUB 32,900 million attributable to the postponed commissioning of the Sakhalin GRES-2 to 2019 (Minutes No. 281 of the Company's
Board of Directors dated December 27, 2018).
29 RusHydro Group’s adjusted Consolidated Business Plan for 2018 was approved by the Company’s Board of Directors (Minutes No. 276 dated October 4, 2018),
in line with the decision of the Company’s Board of Directors (Minutes No. 281 dated December 27, 2018).
30 The said Decree amended Order No. 774-p of the Government of the Russian Federation dated May 29, 2006 stipulating the allocation an amount, for the
payment of dividends, determined on the basis of net profit according to financial statements, including consolidated ones, in line with the International Financial
Reporting Standards if under the existing laws of the Russian Federation the joint-stock company has the obligation to prepare such statements.
31 RusHydro Group’s Consolidated Investment Program for 2018-2022 was approved by the decision of the Company's Board of Directors dated April 3, 2018
(Minutes No. 267 dated April 4, 2018) as part of the Consolidated Business Plan for 2018-2022 and comprises investment projects of RusHydro and its
subsidiaries to be covered by RusHydro Group’s Consolidated Business Plan.
139 2018.32 The updated size of funding for 2018, adjusted for the revised RusHydro’s Business Plan33 and
RusHydro Group’s Consolidated Investment Program34, amount to RUB 90,281.83 million.
In the reporting year, in line with RusHydro Group’s Investment Program, the amount financed was
RUB 82,826.28 million, or 92% of the planned amount, including RUB 51,507.22 million, or 91% of the
planned amount, in the Far East.
RusHydro Group’s investment composition in 201835
Funding stream
core
business
RusHydro Group’s
companies
TR&M
New construction
Grid connection
Others
RusHydro Group’s non-core business
companies
Total Consolidated Investment Program
including in the Far East
Financing plan
for 2018,
RUB million
Actual
Financing for
2018,
RUB million
Delivery
of the
annual
plan, %
88,423.34
29,570.34
43,391.28
10,434.99
5,026.73
1,858.49
90,281.83
56,537.33
81,334.80
25,902.51
43,824.47
7,985.57
3,622.25
1,491.48
82,826.28
51,507.22
92%
88%
101%
77%
72%
80%
92%
91%
The main reasons behind the deviation from the target financing for RusHydro Group’s Consolidated
Investment Program in 2018 were as follows:
Rehabilitation & modernization. The deviation from the planned targets was caused by the updated
timelines for the implementation of TR&M activities, increased duration of contractors works, a decrease in
the cost of projects according to the results of the approved project documentation.
Grid connection. The major deviations were revealed for the following investment projects:
substation, 110/6 Steller
− Construction of a 110 kV overhead line to supply power for 110/6 Chayka substation, 110/6
(PJSC Kamchatskenergo), deviation RUB (-
Bogatyrevka
) 464.86 million on grounds of declaring the trading and procurement procedures for selecting a construction
and installation contractor to be failed. The works on the implementation of this facility were rescheduled for
the following years.
substation
− Modernization of 220 kV Orotukan, Palatka, and Tsentralnaya substations. 2 STAGE. Expansion
(Construction) of 220 kV outdoor switchgear at 220 kV Palatka substation (PJSC Magadanenergo),
deviation of RUB (-) 379.26 million due to an economy based on the results of the tender procedures
(equipment and construction & installation), and also due to default on General Contractor’s contractual
obligations.
− Construction of a 220 kV Omsukchan-PP-Peschanka overhead transmission line to ensure grid
connection of 220 kV Peschanka/Eastern ES /(PJSC Magadanenergo) substation, deviation of RUB (-
) 302.31 million. In accordance with letter No. 01-10(11)/261 dated December 13, 2018, the Applicant (JSC
Dalenergomost) declared its intention to design and construct the facility on its own, and therefore the
obligations of the Grid Operator under Decree of the Russian Government dated December 27, 2004 № 861
were not accrued.
32 Approved as part of RusHydro Group’s Consolidated Business Plan.
33 RusHydro’s revised Business Plan for 2018 in terms of changing the parameters of RusHydro’s Investment Program for 2018 was approved by the Board of
Directors on December 24, 2018 (Minutes No. 281 dated December 27, 2018).
34 RusHydro Group’s Consolidated Investment Program for 2019-2023 was approved by the decision of the Company's Board of Directors on December 25, 2018
(Minutes No. 282 December 27, 2018) as part of the Consolidated Business Plan for 2019-2023.
35 As related to financing.
140
Others. The major deviations were revealed for the following projects:
− R&D, the deviation of RUB (-) 406.71 million was caused by rescheduling the financing for three
R&D projects to 2019-2020.
− Transferring the ownership of assets to PJSC Sakhalinenergo, deviation of RUB (-) 561.04 million
due to the cancellation of the need to repay the payables of Sakhalinenergo to RAO ES East, caused by the
consolidation of energy assets being on the balance of RAO ES East, to the authorized capital of
Sakhalinenergo.
According to the 2018 schedule, RusHydro Group plans to commission the capacity in the amount of
338.04 MW and 442.33 Gcal/h. The actually commissioned capacities in 2018 amounted to 345.20 MW and
442.47 Gcal/h36.
RusHydro’s Production Program
The approved Long-term Development Program accommodates the costs 37for production programs
for 2018-202238:
- According to the program of repairs in the amount of RUB 15,985.83 million37, including in 2018 –
RUB 2,972.98 million.
- According to the maintenance program in the amount of RUB 6,180.87 million37, including in 2018
– RUB 1,082.74 million.
- According to the R&D program in the amount of RUB 3,352.52 million37, including in 2018 –
RUB 620.55 million.
In 2018, the production programs for 2018-2022 were adjusted39 resulting in the following amount of
costs:
- According to the program of repairs – RUB 16,589.49 million39, including in 2018 -
RUB 2,970.83 million.
- According to the maintenance program – RUB 6,381.15 million39, including in 2018 –
RUB 1,083.52 million.
- According
RUB 616.39 million.
to
the R&D program – RUB 3,556.00 million39,
including
in 2018 –
Program progress40
Repairs program
Maintenance program
R&D program
The Progress on the Programs in 2018
Target
Disbursement
in 2018, RUB
ml
2,970.83
1,083.52
616.39
Actual
Disbursement
in 2018
RUB million
2,839.13
1,021.50
516.85
Delivery of
the annual
plan, %
95.6%
94.3%
83.9%
The deviation from the targets for the maintenance program of the main, auxiliary equipment and
systems of hydroelectric power plants is attributable to significant savings exceeding RUB 40 mn achieved
in the bidding procedures for the procurement of services.
The deviation from the targets for the R&D program is attributable to significant savings exceeding
RUB 80 mn achieved in the bidding procedures for the procurement of services.
2018 Key Achievements:
36 As of January 1, 2019.
37 The amounts were aligned with the Company's draft production program for 2018–2023 available at the time of the approval of the Long-term Development
Program, and the scope of costs until 2022. The basis is not the amount of financing, but the scope of costs (excluding VAT). The costs were recalculated in the
forecast prices for 2020-2022 in line with the basic variant of industrial production deflator indices of RusHydro’s Uniform Scenario Conditions.
38. The TR&M Program in terms of financing is presented in the section RusHydro Group's Investment Program.
39 The production programs of repairs, maintenance, and R&D for 2018-2023 were approved by the decision of the Management Board of the Company (see
Minutes below: No. 1099/1pr dated April 26, 2018, No. 1105pr dated June 1, 2018, No. 1108pr dated June 8, 2018, No. 1109pr dated June 14, 2018, No. 1113pr
dated June 22, 2018, No. 1115pr dated June 29, 2018, No. 1119pr dated July 17, 2018, No. 1122pr dated July 26, 2018). The Company's Management Board
resolved to take the amount of costs as a basis, not the amount of financing. The costs were recalculated in the forecast prices in line with the basic variant of
indices of RusHydro’s Uniform Scenario Conditions.
40 Data on the TR&M Program progress in terms of financing is presented in the RusHydro Group’s Investment Program section.
141 − Six hydroturbines were replaced (Volzhskaya HPP, Votkinskaya HPP, Rybinskaya HPP,
Novosibirskskaya HPP, and Saratovskaya HPP - 2 pcs.) and three hydrogenerators (Volzhskaya HPP,
Votkinskaya HPP, and Rybinskaya HPP).
− Two hydroelectric generating units were upgraded (Cheboksarskays HPP, Bureiskaya HPP).
The production program delivered in 2018 resulted in an additional capacity gain amounted to
55.5 MW, including due to the capacity gain of the Votkinskaya HPP (15 MW), the Zhigulevskaya HPP
(10.5 MW), the Saratovskaya HPP (12 MW), the Novosibirskskaya HPP (5 MW), the Rybinskaya HPP
(10 MW), and the Nizhny Novgorod HPP (3 MW).
RAO ES East Holding’s Production Program
The Long-term Development Program reflects the cost of the Production Program of repairs of RAO
ES East Holding for 2018-2022 in the amount of RUB 69,854.11 mn41, of which RUB 12,992.60 mn for
201842.
In 2018, changes were made to the target volumes of the Production Program of repairs of RAO ES
East Holding, the adjusted volume of costs for 2018-2022 is RUB 71,478.31 mn, with RUB 14,616.83 mn
for 201843.
The Progress on the Program in 2018
Delivery, %
99%
Progress on the focus
area44
Repairs program
Target Disbursement
for 2018, RUB mn
14,616.83
The main results of the Production Program of RAO ES East Holding for 2018:
−
Actual Disbursement
for 2018, RUB mn
14,426.39
Under the TR&M program: the boiler unit of 45the Khabarovskaya CHPP-1 of JSC DGK were
updated; the boiler unit of station No. 8 of the Khabarovskaya CHPP-1 of JSC DGK was gasified; the power
unit of station No. 1, as well as hot water boilers of stations46 Nos. 3 and 6 of the Neryungraya GRES of JSC
DGK were modernized; the boiler unit of station No. 10 of the Artyomovskaya CHPP of JSC DGK was
updated; the Anadyrskata CHPP of JSC Chukotenergo were gasified (one boiler unit of 47the nuclear heat
and power plant was converted to combined combustion of coal and natural gas; a 177-meter internal station
gas pipeline, a gas distribution plant were built48); substations and power lines were modernized to ensure
reliable power supply to consumers and connection of new applicants; heating networks were modernized to
prepare the facilities for the heating season.
− According to the program of repairs: in the reporting year, capital and medium repairs of 25
turbine units were completed (vs target of 25); 28 boilers (vs target of 28); 23 generators (vs target of 23); 48
transformers49 (vs target of 43).
− 4,485 km of electric and 59.9 km of heating lines were repaired.
− Additional repair measures were taken to ensure the readiness of the Far Eastern Federal District
subsidiaries to work in the autumn-winter period of 2018/2019 in the amount of RUB 1,476.1 mn: JSC
41 Reviewed and approved by the management bodies of RusHydro’s subsidiary in the prescribed manner. The taken basis is not the amount of financing, but the
scope of costs (excluding VAT).
42 Repair programs for 2018 were agreed upon by Minutes No. 25 dated February 8, 2018 “On Protection of 2018 Production Programs for RusHydro’s
subsidiaries of the Far Eastern Federal District.
43The adjustment of the Production Repair Program for 2018 was agreed upon by Minutes No. 07BC of RusHydro’s Budget Committee “On Consideration of
Adjusted Business Plans for 2018–2022” dated July 18, 2018, reviewed and approved in the prescribed manner by RusHydro’s management bodies, including
adjustments to production repair programs agreed by the Minutes on the protection of subsidiaries’ production programs for 2018: PJSC Sakhalinenergo - dated
August 27, 2018 No. 7, PJSC Yakutskenergo - dated August 28, 2018 No. 19, JSC DGK - dated September 19, 2018 No. 8, JSC DRSK - dated September 28, 2018
No. 14, PJSC Mobile Energy (Peredvizhnaya Energetika) - dated September 28, 2017 No. 10/2018, JSC Sakhaenergo - dated August 27, 2017 No. 15, JSC
Teploenergoservice dated August 17, 2018 No. 15, PJSC Kamchatskenergo - dated August 28, 2018 No. 6, JSC UESK - dated August 31, 2018 No. 5, PJSC
Magadanenergo - dated August 15, 2018 No. 18-18, JSC Chukotenergo - dated August 30, 2018 No. 18-18.
44 Data on the TR&M Program progress in terms of financing is presented in the RusHydro Group’s Investment Program section.
45 BKZ-210-140, station No. 10.
46 КВТК-100-150.
47 BKZ-160-100-20, station No. 2.
48 Modular ready-to-operate gas distribution unit.
49 Only transformers of 35-220 kV class are included.
142 DGK, JSC DRSK, PJSC Yakutskenergo, JSC Sakhaenergo, PJSC Magadanenergo, PJSC Sakhalinenergo,
JSC Chukotenergo.
RusHydro Group’s Innovative Development Program
In accordance with RusHydro Group's Innovative Development Program for 2016–2020 with an
outlook until 202550, financing for 2018–2020 activities amounts to RUB 7,325.7mn51, including: for
RusHydro 52- RUB 1,666.2 mn; for RAO ES East Holding - RUB 5,659.5mn, including RUB 2,197.0 mn for
2018, for RusHydro - RUB 459.3 mn and for RAO ES East Holding - RUB 1,737.7 mn.
2018-2022 medium-term action plan53 approved by the decision of the Company’s Board of
Directors (Minutes No. 271 dated June 1, 2018), as it pertains to RusHydro, adjusted the amount of funding
for 2018-2020 activities to RUB 2,115.6 mn54, with RUB 909.4 mn for 2018, including in the following
areas:
Innovative projects and activities - RUB 886.2 mn, including R&D - RUB 759.7 mn.
−
− Promoting relationships with third-party organizations, applying open innovation principles -
RUB 23.2 mn.
The actual amount of funding for RusHydro’s activities in 2018 was RUB 655.4 mn55, or 72.1% of
the annual target, including the following areas:
−
Innovative projects and activities - RUB 621.2 mn, or 70.1% of the annual target, including
R&D - RUB 494.9 mn, or 65.1% of the annual target.
− Promoting relationships with third-party organizations, applying open innovation principles -
RUB 34.0 mn, or 146.6% of the annual target.
Main reasons behind poor performance versus plan
−
reducing the cost of activities and the adjustment of financing schedules due to procurement
procedures;
− postponing the financing of some works to 2019 due to the failure of contractors to fulfil their
contractual obligations and the need to eliminate gaps and observations to the work results.
The most significant projects of 2018:
−
Measures to implement the project for the development, manufacture and testing of a
commercial prototype of a phase-shifting transformer were taken.
− A hardware-software complex for monitoring and predicting the reliability of hydro-technical
facilities of a hydroelectric power plant (PSPP) under difficult engineering and geological conditions was
developed.
− A study of new technologies for the repair and restoration of elements of hydro-technical
facilities with increased service life and reliability was conducted and a guide for their integration was
developed.
2018-2022 medium-term action plan approved by the decision of the Company’s Board of Directors
on May 31, 2018 (Minutes No.271 dated June 1, 2018), as it pertains to RAO ES East, adjusted the amount
50 Approved by the decision of the Company's Board of Directors on November 22, 2016 (Minutes No. 244 dated November 23, 2016).
51 In line with RusHydro Group’s Innovative Development Program for 2016–2020 with an outlook until 2025, approved by a decision of the Company’s Board of
Directors dated November 22, 2016 (Minutes No. 244
dated November 23, 2016).
52 PJSC RusHydro (subsidiaries and branches), JSC NIIES, JSC Vedeneev VNIIG, JSC Institute Hydroproject, JSC Lengidroproekt, JSC Mosoblgidroproekt.
53 In line with the Methodological materials on the annual reporting on the progress of innovative development programs for partially government-owned joint-
stock companies, government-owned corporations, government-owned companies and federal government-owned unitary enterprises approved on February 27,
2018 by the meeting of the Interdepartmental Working Group on the progress of Innovative Development Priorities of the Presidium of the Presidential Council on
the modernization of the economy and innovative development of Russia, the planning period in preparing medium-term action plan to implement innovative
development programs for the electric power companies should be four to five years. RusHydro’s medium-term action plan to implement innovative development
programs was prepared for a 5-year period to synchronize with RusHydro Group’s Consolidated Investment Program. RusHydro Group’s Innovative
Development Program covers PJSC RusHydro (subsidiaries and branches), JSC NIIES, JSC Vedeneev VNIIG, JSC Institute Hydroproject, JSC Lengidroproekt,
JSC Mosoblgidroproekt.
54 The data on the Innovative Development Program of RAO ES East is presented in a separate section.
55 Preliminary data.
143 of funding for 2018-2020 activities to RUB 5,725.8 mn, with RUB 2,330.3 mn for 2018, including in the
following areas:
−
− Development of innovation management system and innovation infrastructure - RUB 11.0 mn.
− Promoting relationships with third-party organizations, applying open innovation principles -
Innovative projects and activities - RUB 2,260.1 mn, including R&D - RUB 203.5 mn.
RUB 59.2 mn.
The actual amount of funding for RAO ES East’s activities in 2018 was RUB 1,717.5 mn56, or 73.7%
of the annual target, including the following areas:
−
Innovative projects and activities - RUB 1,640.3 mn, or 72.6% of the annual target, including
R&D - RUB 147.8 mn, or 72.6%.
− Development of innovation management system and innovation infrastructure - RUB 5.1 mn, or
46.4% of the annual target.
− Promoting relationships with third-party organizations, applying open innovation principles -
RUB 72.2 mn, or 122.0% of the annual target.
Main reasons behind poor performance versus plan
−
reducing the cost of activities and the adjustment of financing schedules due to procurement
procedures;
− postponing the financing of some works to 2019 due to the failure of contractors to fulfil their
contractual obligations and the need to eliminate gaps and observations to the work results.
The most significant projects of 2018:
− The Khabarovskaya CHPP-1 was modernized to utilize natural gas as a fuel using innovative
technologies for preparing and supplying fuel.
− The wastewater treatment plant of the joint venture Khabarovskaya CHPP-2 with the
introduction of innovative technologies of chemical and biological treatment and disinfection.
4. ON PERFORMANCE OF FAR EASTERN ASSETS
Tariff Regulation
In order to enhance the performance of RusHydro Group’s Far Eastern assets, the Company is
making efforts to introduce long-term tariff regulation methods.
The Company is involved in drafting regulatory legal acts aimed at introducing these methods
through active interaction with federal executive authorities, NP Market Council Association, and other
organizations.
In the reporting year, proposals were prepared and sent to the relevant federal executive authorities
for changing the regulatory legal acts in regard to the implementation of long-term tariff regulation in
relation to existing facilities; the introduction of a mechanism similar to the DPM, which provides for the
return of, and on, capital; criteria for the selection of projects for the modernization of thermal power plants
in the Far Eastern Federal District, and other proposals.
Taking into account RusHydro’s proposals, the specialized federal executive authorities developed
and initiated the introduction of drafts of the following regulatory legal act, as prescribed:
−
draft resolution of the Government of the Russian Federation “On Amendments to Certain
Acts of the Government of the Russian Federation Concerning the Regulation of Prices (Tariffs) for Electric
Power (Capacity) Supplied in Technologically Isolated Territorial Energy Systems and Territories Not
Connected to the Unified Energy System of Russia and Technologically Isolated Territorial Energy
Systems” (Resolution No. 64 of the Government of the Russian Federation dated January 30, 2019);
−
the draft resolution of the Government of the Russian Federation “On Amendments to the
Principles of Pricing in the Field of Regulated Prices (Tariffs) in the Electric Power Industry”.
56 Preliminary data.
144 The mentioned regulatory legal acts drafts ensure the implementation of long-term tariff regulation in
the non-price zone, isolated energy systems and energy systems that are not connected to the UES and
isolated energy systems.
In addition, a draft resolution of the Government of the Russian Federation “On the selection of
projects for the modernization of generating facilities of thermal power plants” was developed and
negotiated as required, which ensures the introduction of a return on investment mechanism similar to DPM
(Resolution No. 43 of the Russian Federation dated January 25, 2019).
The introduction of long-term tariff regulation with respect to the existing generation of the non-price
zone of the wholesale electricity and capacity market will allow revising the base of indexed expenses in the
required gross revenues of energy companies and bringing the revenue and generation tariffs to an
economically viable level.
In 2018, to address the shortage of funds received as part of the tariff revenues to cover economically
justified costs, the following measures were taken:
− Tariff-related decisions for 2019 were adjusted to the price of fuel adopted in 2018 contracts
signed as a result of bidding, using fuel price indices published by the Ministry of Economic Development
of Russia for a regulated period (except for JSC DGK, where tariffs are regulated by indexing method).
− Energy companies signed Agreements on the contribution for lost income to organizations that
render heat supply services to the population at rates (tariffs) that fail to reimburse the costs (including
reimbursing a portion of fuel costs) granted by the Far Eastern Federal District budget.
− RUB 15.4 bn of subsidies were received from the regional budget to offset the difference in
tariffs, which cater for, among other things, the losses incurred by the companies due to actual current fuel
prices for previous periods of regulation.
− Received surcharge funds amounted to RUB 26.5 bn57 to offset the difference in electricity
tariffs between the economic tariff and the tariff brought to the base level set annually by the relevant
Governmental Order of the Russian Federation (for 2018, the base level of prices (tariffs) is set at RUB 4.3
per kilowatt-hour58 (without value added tax).
− The shortfall in revenues generated due to changes in fuel types, volumes, and prices in 2018
will be reported by energy companies as lost income to be covered by tariffs for 2020.
− All Far Eastern Federal District energy companies developed and implemented programs to
improve the fuel utilization efficiency, including measures aimed at reducing the fuel and energy costs of
generating electrical and heat energy during heat transportation through increasing the operating efficiency
of generating equipment, heat supply systems and approximating technical and economic performance
indicators to benchmarks.
Fuel Cost Cutting
In 2018, RAO ES East continued its efforts to optimize the fuel supply system:
1) Within the decisions of the meeting with the Deputy Prime Minister of the Russian Federation -
Plenipotentiary Representative of the President of the Russian Federation in the Far Eastern Federal District
Yu. Trutnev dated May 18, 2018 No. UT-P9-27pr, interested federal executive authorities are working on
options for supplying gas to Petropavlovsk-Kamchatsky and adjacent areas, given the reduction in gas
production at the Sobolevskoye field and plans for an investment project for the construction of the LNG
marine transhipment complex in the Bechevinskaya Bay, the Kamchatka Territory.
Pursuant to Instruction No. Pr-2486 of the President of the Russian Federation dated December 25,
2018 on the gas supply to the region, the Ministry of Energy of Russia, together with PJSC Gazprom, is
working to create a forecast balance for the distribution of Sakhalin gas for the period until 2035, which will
determine the source of gas supply sufficient to cover the total natural gas demand of the Sakhalin Region,
Primorsky and Khabarovsk Territories.
57 Including JSC Pauzhetskaya GeoPP - RUB 0.077 bn and PJSC Kolymaenergo - RUB 0.103 bn.
58 Decree No. 2527-r of the Russian Government dated November 15, 2017.
145 2) The procurement procedures to supply fuel for the needs of RusHydro’s subsidiaries are
exclusively on a competitive basis in accordance with federal law No. 223-FZ “On the procurement of
goods, works, services by certain types of legal entities”.
During the procurement procedures, participants were offered to split the price of coal by
components. Depending on the rail transport price and if there are alternative, less expensive offers for
transportation services, the delivery basis and the lower price of the transport component are selected.
3) Conclusion of long-term (at least three years) coal supply contracts, with the terms of contracts
including the provisions on the pricing procedure for each subsequent calendar year, given the prevailing
market conditions. Coal supply contracts were signed to cater for the needs of the power plants of PJSC
Sakhalinenergo (Yuzhno-Sakhalinskaya CHPP-1, Sakhalinskaya GRES, Sakhalinskaya GRES-2) and for the
needs of JSC UESK.
4) When concluding fuel supply contracts, RAO ES East Holding foresaw the terms for reducing the
price of coal products when making deliveries, depending on its quality (humidity, ash content, heat of
combustion). At the end of 2018, savings in payment for the current coal supplies were estimated at RUB
1,026.8 mn.
5) To purchase fuel in the spot market, based on the lowest bid price of the participants, the following
framework agreements were concluded in 2018: to supply coal for the over-balance demand of JSC DGK
stations - 8 contracts; to supply petroleum products (diesel fuel, gasoline, and fuel oil) - 10 contracts.
Receivables Management
The consumer receivables for electric and thermal energy to RusHydro’s subsidiaries in the Federal
District59 (hereinafter RusHydro’s Far Eastern subsidiaries) as of December 31, 2018 amounted to
RUR 33,808 mn60 (debt growth for 2018 was RUR 1,102 mn, or 3.4%).
Electric Energy
As of December 31, 2018, consumer receivables for electricity to RusHydro’s Far-Eastern
subsidiaries amounted to RUB 15,087 mn60 (a decrease in the debt of the reporting period to RUB 219 mn).
The decrease was across the following groups: wholesalers-resellers; utilities; enterprises financed
from the regional/territory budget; grid operators that purchase electricity to offset losses.
The bulk of accounts receivable is held by the following groups of consumers: households - 26.0%,
utility companies - 20.8%, management companies and housing cooperatives - 11.8%, industry - 10.9%,
federal budget - 9.1%. The share of these groups is 78.6% of the total accounts receivable.
Heat energy
As of December 31, 2018, consumer receivables for electricity to RusHydro’s Far-Eastern
subsidiaries amounted to RUB 18,721 mn60 (a decrease in the debt of the reporting period to
RUB 1,321 mn).
The main growth was across the following groups: households; heat supply organizations;
management companies and housing cooperatives. The share of these consumer groups in the structure of
receivables was 88.0% of total debt.
RusHydro’s Far Eastern subsidiaries take all measures stipulated by the current legislation to ensure
timely receipt of funds for current payments and repayment of receivables:
1. In 2018, 195,520 lawsuits were filed for electricity and heat, totalling RUB 12,091 mn.
For 2018, RUB 7,658 mn were collected through claims and receiving orders for electric and thermal
energy (including previously filed lawsuits).
2. Working with federal, regional level authorities to assist in the payment of debts of subordinate
budget organizations, as well as in the allocation of additional funds to housing and utility enterprises and
heat supply organizations for settlements with resource providers.
2018 year-end showed a positive trend in payments for housing and public utilities in the territories of
PJSC DEK: the debt of housing and utility enterprises/wastewater disposal organizations as of December 31,
2018 decreased by RUB 237 mn, or 7% of debt at the beginning of the year.
59The control covers PJSC DEK, JSC DGK, PJSC Yakutskenergo, PJSC Kamchatskenergo, PJSC Magadanenergo, PJSC Sakhalinenergo, JSC Chukotenergo, JSC
UESK, JSC Sakhaenergo, JSC Teploenergoservis, and PJSC Mobile Energy (Peredvizhnaya Energetika).
60 According to the consolidated data of the sales units of RusHydro’s Far Eastern subsidiaries.
146 3. Control and monitoring of calculations made by suppliers of electrical and hear energy for the
needs of enterprises of the Ministry of Defense of Russia. As of December 31, 2018, the total debt of
consumers subordinated to the Ministry of Defense of Russia WAS RUB 3,156 mn.
4. As part of the efforts to increase the revenues of JSC DGK, bilateral electricity contracts were
concluded with PJSC Inter RAO and LLC Transneftnergo in 2018.
In line with the cost-cutting program, in order to reduce the cost of purchased energy from the
wholesale market by sales companies, PJSC DEK and RusHydro, PJSC Yakutskenergo and RusHydro
signed bilateral agreements in 2018. The volume of electrical energy purchased amounted to 339.2 million
kWh.
Developing generating capacities in the Far Eastern Federal District
Considering the significant deterioration of the main production equipment of power plants, the
Company developed and its Board of Directors reviewed a long-term program for replacing retired facilities
and developing the energy systems of the Far East for the period until 202761, according to which priority
projects are identified.
A list of measures needed to replace the retired facilities and proposals for the introduction of
mechanisms for returning investments in the construction and modernization of electric power facilities in
the Far Eastern Federal District were prepared, including a list of the most critical projects:
1. Construction of Artyomovskaya CHPP-2 to replace the decommissioned Artyomovskaya
CHPP-1;
CHPP-1;
2. Construction of Khabarovskaya CHPP-4 to replace the decommissioned Khabarovskaya
3. Construction of the 2nd stage of the Yakutskaya GRES-2 to replace the decommissioned
Yakutskaya GRES;
4. Modernization of turbine units No. 2, 3 of the Vladivostokskaya CHPP-2;
5. Modernization of turbine units No. 7, 8 of the Komsomolskaya CHPP-2;
6. Construction of a thermal power plant in the town of Pevek (36 MW) to replace the
Chaunskaya CHPP to be decommissioned by 2025;
The first five projects (on the territory of non-price zones) are proposed to be implemented within the
framework of the Russian Government program for the implementation of thermal generation modernization
projects that ensure the target rate of return on investment (analogous to the DPM mechanism). At present,
survey and design contracts have been concluded under these projects, the first design stage - a study of
financiability of the projects - is in the planning stage. In addition, the Company, together with the entities of
the Far Eastern Federal District, where generation facilities are planned to be built and modernized, are
preparing documentation required for submitting the projects to the Government Commission for the
development of the electric power industry in accordance with the requirements of Government Decree
No. 43 dated January 25, 2019.
On the construction of a heat and power plant in Pevek, with reference to the instructions of Minutes
No. DK-P9-250pr of the meeting held at Deputy Prime Minister’s of the Russian Federation, D. Kozak, on
December 12, 2018, RusHydro sent proposals pertaining to budget financing of the project to the Ministry of
Energy of Russia and the Ministry of Finance of Russia.
The long-term program for replacing retired facilities and developing the energy systems of the Far
East implemented by RusHydro Group will help ensure sustainable energy supply to consumers in the Far
East, given the development of the economy of the Far Eastern Federal District aligned with the national
goals and strategic objectives of the Russian Federation, improve the technical and economic generating
indicators in the Far Eastern Federal District, ensure the transition to automated management of electric
power industry-based systems, better working conditions of employees of power plants, and to achieve a
fuel-saving and environmental effect.
Moreover, the construction of the Ust-Srednekanskaya HPP (replacement of impellers on hydraulic
units No. 1, 2; construction of hydraulic unit No. 4) with a design capacity of 570 MW is currently
61 Reviewed by the Company’s Board of Directors on October 25, 2018 (Minutes No. 279 dated October 26, 2018).
147 underway. It should be noted that at present the project is being implemented without attracting budget
financing.
Developing renewable energy in the Far Eastern Federal District
Promising activity of RusHydro Group in the Far East is an increase in the share of generation based
on renewable energy sources.
In 2018, the Company implemented a project for the construction of a 900 kW wind power station in
the village of Tiksi of the Sakha Republic (Yakutia). The cost of construction was RUB 294.96 mn
(including VAT). The project includes the installation of three wind turbines with a unit rating of 300 kW
manufactured by the Japanese company Komaihaltek and designed to operate in harsh climatic conditions
(wind turbines can operate at temperatures up to –50 ºC and can withstand wind speeds of up to 70 m/s).
5. REFINING THE CORPORATE GOVERNANCE SYSTEM
In the reporting year, the following measures were taken to improve the corporate governance
system:
− The Company's internal documents Include the guides aimed at: forming an introductory course
program for members of the Board of Directors elected for the first time; preventing and resolving conflicts
of interest of members of the Board of Directors; creating the possibility for the Board of Directors to
involve external independent experts (consultants) to study the issues that are the subject under
consideration; creating opportunities to improve the performance of members of the Board of Directors
through training and improving their skills; gaining by members of the Board of Directors an access to
documents of the Company’s subsidiaries; making recommendations on significant corporate actions by the
statement of independent directors about their position on significant corporate actions prior to their
approval; gaining by shareholders of the Company an access to documents containing information about the
Company’s subsidiaries.
− The candidates to the Board of Directors were evaluated against the availability of the necessary
experience, knowledge, business reputation, absence of a conflict of interests, the results of this evaluation
were presented to shareholders as part of the materials for the Meeting;
− An independent performance assessment of the Board of Directors was conducted, the results of
this assessment were reviewed at the in-person meeting of the Company's Board of Directors;
− The number of in-person meetings of the Board of Directors of the Company was increased;
− The quality and detail of disclosing information in the Annual Report and on the Company's
website was improved;
− The Regulation on the Information Policy was updated against the best world and Russian
practices;
− The Board of Directors approved the Company’s Auditor Rotation Policy and the Policy for
Shareholding by Members of the Board of Directors and Members of the Management Board in RusHydro
and its subsidiaries.
In September 2018, NP RID conducted a reassessment of RusHydro’s corporate governance system,
taking into account the changes that occurred here during the year, which resulted in a higher corporate
governance rating of 8 Best Corporate Governance Practice according to the NRCU scale.
In January 2019, the Internal Audit Service assessed corporate governance practices for 2018 by
matching its components with the criteria determined by the Methodology of evaluating RusHydro’s
corporate governance system agreed by the Audit Committee of RusHydro’s Board of Directors (Minutes
No. 123 dated October 22, 2018). This Methodology was developed on the basis of the Rosimushchestvo
Methodology approved by order No. 306 dated August 22, 2014.
RusHydro’s overall corporate governance rating was 89% out of 100% (83% by the end of 2017).
According to the results of the assessment of the current state of the corporate governance system
components, the Company's system is recognized as “Effective”. This assessment indicates that the system is
148 functioning properly in all essential aspects, but there are some moderate deficiencies and the potential for
improvement.
In addition, throughout 2018, the Company continued to comply with the norms of the Corporate
Governance Code, among others, a senior independent director was elected, the effectiveness of the
Company's risk management and internal control systems was assessed, the issue of corporate governance
practices at the Company was reviewed, the report on the implementation of the Regulations on Information
Policy of the Company, etc. The implemented Code norms resulted in the significantly increased share of
principles fully complied with at RusHydro, reaching 92% in 2018.
6. IMPROVING THE TALENT POOL
In the reporting year, the following measures were taken to improve the talent pool:
− Active participation in the development of the national qualification system in the Russian
Federation. As part of the integration of professional standards in 2018, RusHydro implemented the first
project in the Russian electricity industry for professional public accreditation of corporate training center
programs based on the requirements of professional standards. RusHydro Group’s Far Eastern Training
Centers in Magadan, Khabarovsk and Artem of the Primorsky Territory received accreditation certificates
for a period of seven years.
−
In June and December 2018, RusHydro’s Board of Directors approved the progress reports on
the Action Plan (the list of measures) for the implementation of occupational standards in RusHydro’s
operations (Minutes No. 271 dated May 31, 2018 and Minutes No. 280 dated December 6, 2018).
− 33 standard training programs for professional development and professional retraining for
production personnel were developed, given the requirements of professional standards for the
implementation of training at the Corporate University of Hydropower.
− A specialized legal entity, JSC RusHydro’s Qualifications Assessment Center, was established
with the authorities to conduct an independent assessment of professional qualifications granted by the
Council on Professional Qualifications in the Electric Power Industry.
− The Eighth All-Russian competition of the operational personnel of hydroelectric power stations
was organized. Under the competition, together with the Ministry of Labor and Social Protection of the
Russian Federation, the All-Russian professional Best in Profession skill competition was organized and
held in the Best Duty Electrician nomination.
−
In October 2018, at the sites of RusHydro’s branch, the Volzhskaya HPP, the Volga training
center of the Corporate University of Hydropower and the Volga branch of the National Research University
Moscow Power Engineering Institute, the corporate professional skills championship was held on the
Operational and technological control of hydraulic units and auxiliary equipment competence according to
WorldSkills standards.
− RusHydro teams took 1st and 3rd places in the “Forecast of technological development of the
fuel and energy complex of Russia on the back of world trends until 2030” competition supported by the
Ministry of Energy of Russia. The winners were presented with diplomas by the Minister of Energy,
A. Novak, and the Minister of Science and Higher Education, M. Kotyukov.
− RusHydro Group’s employees were involved in the All-Russian “New Idea” competition for the
best scientific and technical development among the youth of the fuel and energy enterprises. An employee
of the Nizhny Novgorodskaya HPP took the 1st place.
The following activities in the development of strategic partnerships with relevant higher
professional establishments were undertaken:
− With the support of RusHydro, the Institute of Hydropower and Renewable Energy Sources was
opened at the National Research University Moscow Power Engineering Institute.
149
− Together with the Siberian Federal University (SFU) and the Sayano-Shushensky branch of the
Siberian Federal University, the Company organized and held the V All-Russian Scientific and Practical
Conference of Young Scientists, Specialists, Postgraduates, and Students "Hydroelectric Power Plants in the
XXI Century".
−
In the framework of the III Eastern Economic Forum, a protocol was signed for equipping the
laboratories of the Engineering School of Far Eastern Federal University for 2019-2022.
The early career choice measures aimed at developing the engineering abilities and talents of
schoolchildren and students in RusHydro Group’s presence regions:
−
In 2018, RusHydro acted as a partner for thematic and project shifts at the All-Russian Children's
and Educational Centers (Sirius Educational Center, Okean, Smena, and Orlyonok All-Russian Children's
Centers), which were attended by 462 high school students. The hydropower module of the All-Russian
project “Lessons of the Present” involved senior students in 28 regions of Russia.
− More than seventy RusHydro’s employees in seven regions of its presence joined the
volunteering movement created by RusHydro’s Young Energy program for the social and professional
adaptation of orphans and parentless children. The Young Energy program was mentioned at the Mentor
All-Russian Forum dedicated to the Year of Volunteering in the Russian Federation.
7. IMPROVING ANTI-TERRORISTIC, ECONOMIC, AND INFORMATION SECURITY
SYSTEM
In 2018, a set of measures was taken to improve the safety of the Company:
1.
In order to improve the anti-terrorism security system of RusHydro Group’s facilities, the next
stage of modernization of the security systems at the facilities was delivered in line with the requirements of
the RF Government Decree No. 458 dated May 5, 2012.
2.
In cooperation with federal executive authorities and law enforcement agencies, pursuant to the
requirements of the Federal Law No. 256-FZ dated July 21, 2011 "On Security of Fuel and Energy Complex
Facilities", comprehensive surveys of all power facilities of RusHydro of high and medium hazard
categories were conducted. Their anti-terrorism security and protection system was tried and tested.
3.
In order to improve the anti-terrorism security system of RusHydro Group’s facilities, improve
the quality and effectiveness of interaction with the Russian Federal Security Service, the Ministry of
Internal Affairs of Russia, the Operational Headquarters of the National Anti-Terrorism Committee, Federal
National Guard Troops Service (the Rosgvardia), the EMERCOM of Russia, and FSUE Departmental
Security Service of the Ministry of Energy of Russia conducted as follows:
3.1.
Integrated special tactical training exercises at three facilities of the Company (Bureyskaya,
Volzhskaya, and Zhigulevskaya HPPs) according to the plan of the National Antiterrorism Committee of the
Russian Federation and 124 antiterrorist drills according to RusHydro’s plan.
Five training programs for managers and specialists of RusHydro Group’s security divisions.
3.2.
4. Based on the analysis of the routine activities of RusHydro Group’s security divisions in 2018,
eight proposals were worked out and sent to the federal state authorities to improve legislation as to ensuring
the safety of fuel and energy facilities. The bulk of the proposals were considered in the draft federal law
“On Amending the Federal Law “On Safety and Security of the Fuel and Energy Complex Facilities", in
projects to amend the regulatory legal acts of the Government of the Russian Federation.
8. DEVELOPING INTERNATIONAL ACTIVITIES
Activities taken in 2018:
1.
As part of cooperation with foreign partners, on February 27 in Moscow, a Memorandum of
Cooperation was signed between RusHydro, NEDO (Japan), and the Republic of Sakha (Yakutia), securing
150
Promotion of RusHydro Group’s engineering services in the field of hydropower to foreign markets,
the parties' agreements regarding the construction of a wind-diesel complex. Meanwhile, a joint activity
agreement was signed between JSC Sakhaenergo and Takaoka Toko.
The construction of a WPP in Tiksi was completed. The demonstration period of operation of three wind
turbines of 300 kW each (two for cold climates, one for the Arctic climate) in the isolated power system of
Ust-Kamchatsk village, the Kamchatka Territory. In December, wind turbines were transferred into the
ownership of the Kamchatka Territory.
2.
including consulting and design activities:
JSC Institute Hydroproject: development of working documentation for the Kudankulam NPP project in
India and the Akkuyu NPP project in Turkey; technical audit of the Sekaman-1 HPP and design activities on
the restoration of the Sekaman-3 HPP in Laos; a survey of the Kiteshwar hydropower station in India; design
activities on the Rogun hydropower plant in Tajikistan.
JSC Lengidroproekt: design activities on the Pskem HPP in Uzbekistan; design of the onshore spillway of
the Kambarata HPP in Kyrgyzstan, inspection of the facilities and equipment of the Shikapa HPP in Angola.
JSC Vedeneyev VNIIG: design activities and research for hydrotechnical facilities of ArcelorMittal
Temirtau, Bukhtarma hydropower complex of LLP Kazzinc in the Republic of Kazakhstan, estimations of
dam condition and stability for the construction of the Rogun HPP in Tajikistan.
3.
As part of expanding the range of products and services offered by JSC JSC Vedeneyev VNIIG, the
following activities were made for JSC Atomproekt: physical modeling of filtering devices of emergency
core-cooling zones, physical and mathematical modeling of NPP technical water supply systems, estimation
of the stress-strain state of the footing of NPP buildings, development of concrete production technology
during construction and engineering and technical maintenance (Akkuyu NPP), justification of the cooling
capacity of cooling towers (Ruppur NPP).
JSC Mosoblgidroproekt: a contract was signed with Dansk IngeniørService A/S (Denmark) to provide
consulting services for the construction of the 1st stage of the Adygea WPP.
JSC NIIES signed contracts with Kiel Marketing (India) and Larsen & Toubro Limited (India) to supply
batches of test equipment to the existing and under construction units of the Kudankulam NPP.
4.
The Company takes an active part in projects in the development of HPPs, PSPPs, and renewables in
various international organizations, sites and projects, intergovernmental commissions, and business
associations.
On November 28, in Beijing (China), RusHydro's management took part in the First Russian-Chinese
Energy Forum, a cooperative agreement was signed between RusHydro and the Chinese corporation
PowerChina on cooperation under joint projects.
Within the framework of the First Forum of interregional cooperation between Russia and Uzbekistan
presided over by the heads of the states (October 18-19 in Tashkent (Uzbekistan)), RusHydro and
Uzbekgidroenergo signed an Agreement on mutual understanding and cooperation in hydropower.
As part of participation in the Global Energy Partnership for Sustainable Development (GSEP) in 2018,
RusHydro’s representatives were involved in meetings of the Political, Project, and Governing Committees.
9. IMPROVING THE ENVIRONMENTAL MANAGEMENT SYSTEM
RusHydro Group’s environmental protection and environmental management activities are aligned
with RusHydro Group’s approved Environmental Policy62, which defines a list of key tasks aimed at
improving the environmental management system:
− Increasing the installed capacity of low-carbon generation in RusHydro Group’s energy
balance;
− Reducing direct and specific greenhouse gas emissions at RusHydro Group’s facilities;
− Conserving the biological diversity;
62 Approved by the decision of the Company’s Board of Directors (Minutes No. 275 dated August 9, 2018).
151 − Taking measures aimed at finding and using the best available technical solutions and
technologies to reduce the negative impact on the environment and minimize the environmental risks of
RusHydro Group's activities;
− Reducing the oil content in switching gears at RusHydro Group’s facilities;
− Introducing corporate standards to environmental activities of RusHydro Group.
In order to improve the environmental safety of existing and newly created energy facilities, the
Company takes measures to modernize and replace HPP hydroelectric generating units and repair hydro-
turbine equipment, given the task of reducing environmental pollution. To maintain the proper condition of
the water protection zones, shore/bank protection measures were taken in 2018. In the reporting year,
RusHydro Group replaced the oil-filled electrical equipment with vacuum and gas-insulated equipment.
RusHydro Group is also taking measures to modernize the boiler equipment of TPPs to use natural gas,
which allows reducing emissions of pollutants into the atmosphere, as well as ensuring the efficiency of the
gas cleaning and ash collecting equipment of TPPs.
Moreover, in the reporting year the Company undertook the following activities aimed at reducing
the negative impact on the environment: construction of sites for the accumulation of production and
consumption waste; reconstruction of sewage systems and wastewater treatment plants; collection of floating
debris from water areas and its transfer to waste disposal facilities; landscaping and gardening; repair of ash
and slag waste storage facilities.
10. RUSHYDRO GROUP’S RISK MANAGEMENT
To improve its corporate system of internal control and risk management, RusHydro Group took the
following key measures in 2018:
1. The Company's auditors conducted an independent assessment of the internal control and risk
management system of RusHydro Group. The report outlining the outcomes of the assessment was reviewed
and approved by the Company’s Board of Directors in June 201863.
2. In the reporting year, a new structure of the Internal Control and Risk Management Division was
reorganized and the local normative acts were approved, regulating the work of the structural units of the
Internal Control and Risk Management Division.
3. In order to improve the methodological support to the internal control and risk management
system, the RusHydro Group analyzed the best practices, including international experience in internal
control and risk management. Following the results of this methodological work, the following documents
corresponding best practices of risk management were drafted (including the COSO concept “Organization’s
Risk Management”. Integration with Strategy and Performance”, 2017; ISO 31000: 2018 international
standard “Risk Management - manual”) for further submission to the Company's Board of Directors for
consideration and approval:
− Provisions on RusHydro Group’s risk appetite;
− RusHydro Group’s Internal Control and Risk Management Policies;
− The target model of RusHydro Group’s internal control and risk management system, which
determines the direction of long-term development of the system.
4. Hot lines of RusHydro Group’s companies were integrated into a single “Line of Trust”, a new
“Regulation on the procedure for receiving, reviewing, and preparing responses to appeals received via the
Line of Trust” was approved.
5. Amendments were made to the Corporate Ethics Code regarding the regulation of measures aimed
at preventing unfair actions of shareholders related to concluding transactions with the Company amid
conflict of interests and minimizing the consequences of such actions (Minutes No. 281 of the Board of
Directors dated December 27, 2018).
63Minutes No. 272 of the Board of Directors dated June 22, 2018.
152 6. 47 RusHydro’s subsidiaries approved the Regulations on the Commission for Compliance with
Corporate Ethics and the Settlement of Conflicts of Interest, as well as the membership of ethics committees.
Annually, the Strategic Risk Management Plan of the RusHydro Group is updated and approved by
the Company's Management Board, including planned measures to improve risk management measures at
the business level. Close-out of activities is check through the collection of a plan progress report. The report
on the progress of the action plan for managing strategic risks of RusHydro Group for 2018 was approved by
the Company's Management Board (Minutes No. 1158pr dated February 13, 2019). All key group companies
also approve risk management plans with an annual review of reports at meetings of the boards of directors
of the respective companies.
11. IMPLEMENTING RUSGIDRO GROUP’S LONG-TERM DEVELOPMENT PROGRAM
ACTIVITIES ENVISAGED BY THE DIRECTIVES OF THE GOVERNMENT OF THE
RUSSIAN FEDERATION
On increasing labor productivity (dated October 31, 2014 No. 7389p-P13)
In pursuance of the directives of the Government of the Russian Federation dated October 31, 2014
No. 7389p-P13, the Long-term Development Program includes the key performance indicator “Labor
productivity”64 calculated by the Rosstat methodology65.
Achievement of target values for the Labor productivity indicator
Labor productivity (thousand rubles/man-hours)
Indicator
2018 target
5.30
2018 actual
6.12
On reducing operating expenses (costs) (dated April 16, 2015 No. 2303p-P13)
In pursuance of the directives of the Government of the Russian Federation dated April 16, 2015
No. 2303p-P13, the Long-term Development Program includes the key performance indicator “Reducing
operating expenses (costs)”.
Indicator
Reduction of operating expenses (costs)
On the need for labor resources, including engineering specialties (dated November 5, 2014 No.
2018 target
2%
2018 actual
2.69%66
7439p-P13)
The main parameters of the need for labor resources of RusHydro Group are determined with due
account to the time employees reach retirement age, as well as the possibility of internal relocation of
workers with appropriate recommendations based on the employee rating, formed talent pool, and candidate
databases. The demand for engineering and technical specialists also includes job vacancies that require a
level of professional training not lower than a bachelor of a technical educational establishment. This
approach is stipulated by the requirements of the technological process of operation, repair, and maintenance
of HPP/PSPP main equipment.
Satisfying the main parameters of the labor resources needs of RusHydro Group, including
engineering and technical specialties in 2018
Indicator
Total number of planned vacancies:
including engineering specialties
2018 target
617
395
2018 actual
1,368
672
On the planned and phased replacement of purchases of foreign products (works, services)
with the purchase of Russian products (works, services) equivalent in technical characteristics and
64 The list of legal entities accepted for the calculation of the indicator: RusHydro, PJSC DEK, PJSC Yakutskenergo, PJSC
Kamchatskenergo, JSC UESK, PJSC Magadanenergo, PJSC Sakhalinenergo, JSC DGK, JSC DRSK, Mobile Energy, JSC
Chukotenergo, JSC Sakhaenergo, JSC Teploenergoservis, JSC ESC RusHydro, PJSC Krasnoyarskenergosbyt, PJSC RESK, JSC
Chuvash Energy Retail Company, JSC Geotherm, PJSC Kolymaenergo, Pauzhetskaya GeoPP, PJSC KamGEK, PJSC
Boguchanskaya HPP.
65 Rosstat Order No. 576 dated September 23, 2014.
66 The decision of the Company’s Board of Directors (Minutes No. 286 dated April 5, 2019).
153
consumer properties and used in the investment projects and current activities dated March 5, 2015
No. 1346p-P13.
As part of the Program for Integrated Modernization of the Generating Facilities, RusHydro ramps up
the supplies of products of domestic machine builders, which is also driven by localizing the production of
certain types of equipment and components in Russia.
In 2018, the share of imported equipment purchased as part of production activities was reduced as a
result of measures for the gradual replacement of purchases of foreign products (works, services) with
purchases of Russian products (works, services) equivalent in technical characteristics and consumer
properties:
Share of imported equipment
2018 target
2018 actual
23
Share of imported equipment, %
23
In 2018, the Company finalized and the Board of Directors67 approved the Roadmap for import
substitution for the period until 2025 and the Corporate Plan for import substitution, including measures to
form proposals to stimulate domestic producers (participation in joint projects to localize production of
foreign products, creation and using of testing sites of domestic prototype products, the conclusion of
medium-term and long-term products supply contracts with domestic producers). In line with the approved
Corporate Import Substitution Plan, the Company performs the following activities:
1.
Under the operation of the Digital Range (Nizhegorodskaya HPP), domestic equipment
prototypes were tested.
2.
Long-term products supply contracts were concluded with domestic manufacturers to replace
of hydraulic units of the Mainskaya HPP and the Nizhny Novgorodskaya HPP.
3.
When participating in joint projects to localize the production of analogous foreign products
or projects to create (modernize) the production of domestic products, RusHydro Group made a list of
projects to introduce and commercialize its R&D results.
Import substitution measures taken by RAO ES East
RAO ES East Holding actively cooperates with Russian suppliers and manufacturers of equipment
and components
(PJSC Power Machines; CJSC Ural Turbine Works; CJSC Energomash-
Uralelektrotyazhmash; LLC Prosoft-Systems; LLC Unitel-Engineering; LLC Togliatti Transformer; CJSC
ChEAZ; LLC Moselectroshchit; CJSC Elektroshchit Group of Companies, and others).
Already
the Holding, such as Vostochnaya TPP,
Blagoveshchenskaya TPP (2nd stage), Sakhalinskaya GRES-2 (1st stage), Yakutskaya GRES-2 (1st stage),
CHPP in Sovetskaya Gavan, mainly use equipment produced in the Russian Federation.
implemented and ongoing projects of
Within the production activities, during TR&M in the energy companies of the Holding, priority is
given to the procurement of equipment from domestic manufacturers.
According to the results of the consolidated analysis of Holding’s procurement for 201868, the share
of purchased domestic equipment is 94%69.
12. ACHIEVEMENT OF KEY PERFORMANCE INDICATORS OF RUSGIDRO GROUP’S LONG-
TERM DEVELOPMENT PROGRAM AT 2018 YEAR-END
Indicator
1 Non-admission of more than the limit number of
accidents:
- The number of occupational accidents
- The number of major accidents
Target
2018
0
≤ average for
5 years
0
2018 actual Evaluation
0
≤ average
for 5 years
0
Achieved
67 Minutes No. 275 of the Board of Directors dated August 9, 2018.
68 Based on the analysis of purchases worth over RUB 250,000.
69 From the total cost of purchases in the amount of RUB 3,159.6 mn.
154
15.86%
170,932
23.88%
Achieved
181,526
Achieved
2 Return on Equity (ROE)
3
4
Earnings before Interest, Tax, Depreciation, and
Amortization (EBITDA), RUB mn
The share of purchases from small and medium-sized
businesses, among them, following the results of only
SMEs purchases70
Implementation of capacity commissioning schedules
and financing and development plan71
5
6 Labor productivity (thousand rubles / man-hours)
7 Reduction of operating expenses (costs)
8
Integral Innovative KPI
9 Total shareholder return
18%
15%
85%
5.30
2%
85%
10 Free cash flow to the firm (FCFF), RUB mn
- 66,079
- 41,789
100%
0
76%
46%
Achieved
92.8%
Achieved
6.12
2.69%
96%
Achieved
Achieved
72
Achieved
Not
achieved73
Achieved
70 RusHydro’s subsidiary.
71 The capacity commissioning schedule and the financing and development plan are based on the planned data on the Company's investment objects and new
construction facilities of subsidiaries approved by the Company's Board of Directors in the prescribed manner.
72 In accordance with the decision taken at the meeting of the Company’s Board of Directors (Minutes No. 286 dated April 5, 2019).
73 TSR value in 2018 was -32.8%, while the MOEX Index was + 12.2%. The market value of RusHydro’s shares in 2018 decreased on the back of general decline
in investor interest in shares of electric power industry companies, as evidenced by a decrease in the Electric Power Index. RusHydro’s shares was under
downward pressure of sanctions against UC RUSAL and geopolitical risks, including discussion of the introduction of new sanctions by the United States (DASKA
bill, August 2018). The largest driver behind the fall in quotations was the exclusion of the company from the MSCI Russia index at the end of November 2018.
155
Methodology of KPIs Calculation and Measurement for the Long-Term Development
Programme of RusHydro Group
1. Indicator: “Accident prevention to keep their number within the established limit”
1.1. 1Calculation of the indicator
The list of legal entities included in the calculation of the indicator (generating
assets):
PAO RusHydro (18 generating branches), PАО Far East Energy Company, PАО
Yakutskenergo, PAO Kamchatskenergo, PАО YuESK, PAO Magadanenergo, PAO
Sakhalinenergo, AO DGK, АО DRSK, PАО Peredvizhnaya Energetika, PАО Chukot-
energo, ОАО Sakha-energo, AO Teploenergoservice, AO Geoterm, PAO Kolymaenergo,
АО Paugetskaya GeoES, PAO KamGEK, PAO Boguchanskaya GES.
For calculating the actual values, the following sources of information were used:
statements on industrial accidents (form N-1) generated in accordance with the Resolution of
the Russian Ministry of Labour No. 73 of 24.10.2002 ‘On approval of forms of documents
for investigating and accounting for industrial accidents and regulations on specifics of
investigating industrial accidents in industries and entities’; reports on investigating the
causes of accidents in the utilities sector generated in accordance with Order of the Russian
Ministry of Energy No. 90 of 02.03.2010 ‘On approval of the form of reports on
investigating the causes of accidents in the utilities sector and the procedure for its
completion’; reports on technical investigation of causes of the accidents in hazardous
production sites and hydro engineering structures generated in accordance with order of
Rostekhnadzor No. 480 of 19.08.2011 ‘On approval of the Procedure for technical
investigation of causes of the accidents, incidents and loss of industrial-purpose explosives in
the production sites under the supervision of the Federal service of ecological, technological
and nuclear supervision’; reports on investigation of causes of emergency situations in the
heating supply process generated under order of Rostekhnadzor No. 157 of 25.04.2016 ‘On
approval of the form and procedure for preparing reports on investigating the causes of
emergency situations in the heating supply process’.
The indicator consists of the following parameters:
− Number of industrial accidents
− Number of major accidents
Parameter “Number of industrial accidents” is calculated as the amount of all industrial
accidents that have been investigated, documented and accounted for in accordance with:
− Articles 227, 228, 228.1, 229, 229.1, 229.2, 229.3, 230, 230.1 of the Russian Labour
Code;
− Resolution of the Russian Ministry of Labour No. 73 of 24.10.2002 ‘On approval of
forms of documents for investigating and accounting for industrial accidents and regulations
on specifics of investigating industrial accidents in industries and entities’.
The calculation of the parameter “Number of industrial accidents” includes industrial
accidents where the report on investigation (para 10 of the report in accordance with form N-
1) specifies, among the persons who violated labour safety standards, the CEO74, managers75
74 CEO is the person that directly manages the entity irrespective of the form of ownership (hereinafter in the Rules, the “CEO”) and has the powers,
without a power of attorney, to act on behalf of the entity, represent its interests in any authority, including the court authorities.
156
and heads of business units of the entity76 (paragraphs 2.1, 2.2, 2.4 of the Rules of dealing
with personnel in entities operating in the Russian utilities sector that are approved by the
Russian Ministry of Fuel and Energy No. 49 dated 19.02.2000).
Parameter “Number of major accidents” is calculated as the amount of all accidents in
the utilities sector in the heat supply process, accidents in hazardous production sites or
hydro engineering structures that have been investigated, documented and accounted for by
Rostekhnadzor's commissions in accordance with:
− Para 4 of the Rules for investigating the causes of the accidents in the utilities sector
approved by the Russian Government Resolution No. 846 dated 28.10.2009;
− Para 3 of the Rules for investigating the causes of the emergency situations in the
heat supply process approved by the Russian Government Resolution No. 1114 dated
17.10.2015;
− Order of Rostekhnadzor No. 480 of 19.08.2011 ‘On approval of the Procedure for
technical investigation of causes of the accidents, incidents and loss of industrial-purpose
explosives in the production sites under the supervision of the Federal service of ecological,
technological and nuclear supervision’;
− order of Rostekhnadzor No. 157 of 25.04.2016 ‘On approval of the form and
procedure for preparing reports on investigating the causes of emergency situations in the
heating supply process’;
− Order of the Russian Ministry of Energy No. 90 of 02.03.2010 ‘On approval of the
form of reports on investigating the causes of accidents in the utilities sector and the
procedure for its completion’,
and meet the following criteria:
− Damage of a hydro engineering structure that led to the violation of its safe operation
and caused the decrease in the water level in the reservoir (river) or its increase in the lower
level in excess of allowed limits;
− Failure of structural members of technological buildings, utilities structures,
including those that occurred as a result of an explosion or fire, if such failure led to
introduction of emergency limitation of electric power (capacity) consumption of 100 MW
and above for the term of 25 days and more;
− Destruction or damage of equipment of the heating assets, which led to outage of
heating sources or heating networks for 3 days and more;
− Destruction or damage of structures that house heating assets, which resulted in heat
outage for consumers;
− Damage of a turbine with the nominal capacity of 100 MW and more, with the
destruction of the turbine wheel space, the change in the form and geometric size or shift of
the turbine shell on the foundation, if such damage led to the turbine’s breakdown
maintenance for 25 days or more;
− Damage of a generator with installed capacity of 100 MW and more, with the
destruction of its stationary element, rotor, isolation of the stationary element’s electric
The entity’s owner that directly manages its entity is included into the CEO category.
75 The managers of the entity are those persons who are assigned, in accordance with the established procedure, as the deputy CEOs with certain administrative
functions and responsible for certain areas of operations (chief engineer, vice president, technical director, deputy director, etc.).
76 Head of business units is the person who entered into a labour contract with CEO and assigned by the CEO to manage the operations of the business unit (head,
supervisor, chief, etc.) and their deputies.
157 winding, isolation of the rotor’s electric winding, if such damage led to the generator's
breakdown maintenance for 25 days or more;
− Damage of a supply transformer (autotransformer) with the capacity of 100 MVA
and more, with the destruction, the change in the form and geometric size or shift of the
shell, if such damage led to the transformer’s breakdown maintenance for 25 days or more;
− Damage of a power boiler with steam rate of 100 tonnes per hour and more or hot
water boiler with the rate of 50 gigacalories per hour and with the destruction, change in the
form and geometric size or shift of the boiler’s units (components) or metal case, if such
damage led to the boiler’s breakdown maintenance for 25 days or more;
− Outage of generating equipment or electricity grid infrastructure that leads to lower
reliability of the Unified Energy System of Russia or technologically independent stand-
alone power systems, with application of trip time chart, with the total volume of 100 MW
and more or electric power outage of 25% or more of the total consumption in the dispatch
centre’s operating zone;
− Outage of electric facilities (highest voltage class of 110 kV and higher), generating
equipment with the capacity of 100 MW and more at 2 or more electric facilities that led to
power outage for consumers with the total capacity of consumption of 100 MW and more for
30 minutes and more;
− Malfunction of automatic emergency response or operating system, including due to
personnel error, which resulted in electric outage for consumers with the total capacity of
consumption of 100 MW and more.
The calculation of the parameter “Number of major accidents” includes accidents
where the relevant paragraphs of the reports on investigation of their causes by
Rostekhnadzor’s commission established erroneous or incorrect actions (or omission thereof)
of the managers, excluding the accidents, for which, according to the report of
Rostekhnadzor’s commission, preconditions and reasons were as follows:
− Weaknesses of the design, structure, production, construction and equipment
installation;
− Fault of third parties involved in the technological process (support entities);
− Any illegal or negligent action of third parties;
− Any force majeure event that it was impossible to predict (fall of aircraft or their
components; natural disasters, for which resistance was not calculated for a hydro
technological structure or power equipment, etc.), which is beyond RusHydro Group’s
responsibility.
1.1.2. Measurement of the indicator
KPI: “Accident prevention to keep their number within the established limit” is
deemed met (zero value) – the target value is achieved when all of the following conditions
are met:
− the value of the parameter “Number of industrial accidents” does not exceed the
average number of industrial accidents over the five years preceding the planning period;
− the value of the parameter “Number of major accidents” (zero target value) when the
target value is not exceeded.
158
In all other cases, KPI “Accident prevention to keep their number within the established
limit” is deemed not met.
2. Indicator “Return on Equity (ROE)”
2.1. 1 Calculation of the indicator
The list of legal entities included in the calculation of the indicator:
•
for calculating the planned (target) value
is determined based on the existing Regulations on PAO RusHydro’s business planning
system as part of PAO RusHydro’s consolidated business plan;
for calculating the actual value
•
is determined based on PAO RusHydro’s audited consolidated financial statements
prepared in accordance with the International Financial Reporting Standards (IFRS), Note
“Principal subsidiaries”.
For calculating the planned (target) value RusHydro Group uses its consolidated
business plan data:
ROE = [(Profit for the period + Non-cash expense items - Non-cash income items +
Fuel expense)
/Average annual share capital]*100%, where
Profit for the period is the line item ‘Profit for the period’ of the form “RusHydro
Group’s consolidated statement of income”.
Average
annual
share
capital
is determined using the following formula:
where
TOTAL EQUITY0 is the sum of line items “Equity attributable to RusHydro Group’s
Average annual share capital =
shareholders” and “Minority interest” as of the beginning of the period of the form “RusHydro
Group’s consolidated balance sheet”;
(𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝑇𝑇𝐸𝐸0 +𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝑇𝑇𝐸𝐸1 )
,
2
TOTAL EQUITY1 is the sum of line items “Equity attributable to RusHydro Group’s
shareholders” and “Minority interest” as of the end of the period of the form “RusHydro
Group’s consolidated balance sheet”.
Non-cash expense/income
item “Other non-cash operating
expense/income items (“Explanatory notes to RusHydro Group’s consolidated business
plan, chapters “Financial income and expenses” “Segment reporting analysis”, “Financial
results”) includes:
items –
line
the
Non-cash expenses include:
−
−
−
−
−
−
−
−
Impairment loss on property plant and equipment;
Impairment loss on long-term promissory notes;
Impairment loss on available-for-sale financial assets;
Loss on revaluation of net assets of a subsidiary acquired solely for resale;
Loss on disposal of property, plant and equipment;
Balance of income and expenses from accrual of provisions;
Discounting expense;
Provision for inventory impairment;
159 Foreign exchange losses;
Other non-cash expenses.
−
−
Non-cash income includes:
−
−
−
−
−
Fuel expense is the planned expenses under the line item “Fuel expense” (“Explanatory
notes to RusHydro Group’s consolidated business plan, Chapter “RusHydro Group’s
expenses”).
Income from pension plan curtailment;
Discounting income;
Foreign exchange gains;
Income from revaluation of investments;
Other non-cash income.
The value of the indicator is rounded to one decimal place. Rounding is performed in
accordance with the mathematical rules to the nearest number.
For calculating the actual value
PAO RusHydro uses its audited consolidated financial statements prepared in
accordance with IFRS: Consolidated Statement of Financial Position, Consolidated
Statement of Income, and the Note “Segment information”.
ROE = [(Profit for the period (year) + Non-cash expense items - Non-cash income
items + Fuel expense)
/Average annual share capital]*100%, where
Profit for the period is the line item ‘Profit for the period’ of the form “Consolidated
Statement of Income”.
Average
annual
share
capital
is determined using the following formula:
(TOTAL EQUITY0 +TOTAL EQUITY1 )
TOTAL EQUITY0 is the sum of line items “Equity attributable to RusHydro Group’s
Average annual share capital =
2
shareholders” and “Non-controlling interest” as of the beginning of the period of the form
“Consolidated statement of financial position”;
, where
TOTAL EQUITY1 is the sum of line items “Equity attributable to RusHydro Group’s
shareholders” and “Non-controlling interest” as of the end of the period of the form
“Consolidated statement of financial position”.
items –
item “Other non-cash operating
the
expense/income items” (the Notes “Segment information” and “Financial income and
expenses” to RusHydro Group’s consolidated financial statements prepared in accordance
with IFRS for the reporting period) includes:
Non-cash expense/income
line
Non-cash expenses include:
−
−
−
Impairment loss on property plant and equipment;
Impairment loss on long-term promissory notes;
Impairment loss on available-for-sale financial assets;
160
Loss on revaluation of net assets of a subsidiary acquired solely for resale;
Loss on disposal of property, plant and equipment;
Balance of income and expenses from accrual of provisions;
Discounting expense;
Provision for inventory impairment;
foreign exchange losses;
Other non-cash expenses.
−
−
−
−
−
−
−
Non-cash income includes:
−
−
−
−
−
Fuel expense is the actual expense under the line item “Fuel expense” (Note “Operating
expenses” to RusHydro Group’s consolidated financial statements prepared in accordance
with IFRS for the reporting period).
Income from pension plan curtailment;
Discounting income;
foreign exchange gains;
Income from revaluation of investments;
Other non-cash income.
The value of the indicator is rounded to one decimal place. Rounding is performed in
accordance with the mathematical rules.
2.1.2. Measurement of the indicator
It is deemed that the indicator is met when the actual value achieves 95% of the target
value established for the reporting period. Otherwise, it is deemed that the indicator is not
met.
3. Indicator: “Earnings before interest, tax, depreciation and amortisation (EBITDA)”
The list of legal entities included in the calculation of the indicator:
•
for calculating the planned (target) value
is determined based on the existing Regulations on PAO RusHydro’s business planning
system as part of PAO RusHydro’s consolidated business plan;
•
for calculating the actual value
is determined based on PAO RusHydro’s audited consolidated financial statements
prepared in accordance with the International Financial Reporting Standards (IFRS), Note
“Principal subsidiaries”.
3.1. 1Calculation of the indicator
For calculating the planned (target) value RusHydro Group uses its consolidated
business plan data:
EBITDA = Profit before tax + Depreciation and amortisation + Non-cash expense
items - Non-cash income items + Interest payable + Fuel expense.
161
Profit before tax is the line item ‘Profit before tax’ of the “Consolidated Statement of
Income”.
Depreciation and amortisation is the line item “Depreciation and amortisation” (Table
“Breakdown of operating expenses”).
Non-cash expense/income items are determined in accordance with para 2.2.1 of this
Methodology.
Interest payable – line item “Interest payable” (“Explanatory notes to RusHydro
Group’s consolidated business plan, Chapter “RusHydro Group’s financial results”).
Fuel expense is determined in accordance with para 2.2.1 of this Methodology. For
calculating the actual value
PAO RusHydro uses its audited consolidated financial statements prepared in
accordance with IFRS: Consolidated Statement of Financial Position, Consolidated
Statement of Income, the Note “Segment information” and the Note “Financial income and
expenses”.
EBITDA = Profit before tax + Depreciation and amortisation + Non-cash expense
items - Non-cash income items + Interest payable + Fuel expense.
Profit before tax is the line item ‘Profit before tax’ of the “Consolidated Statement of
Income”.
Depreciation and amortisation is the line item “Depreciation and amortisation” (the
Note “Segment information).
Non-cash expense/income items are determined in accordance with para 2.2.1 of this
Methodology.
Interest payable – the Note “Financial income and expenses”, line item ‘Interest
expense’.
Fuel expense is determined in accordance with para 2.2.1 of this Methodology.
The value of the indicator is calculated without decimals. Rounding is performed in
accordance with the mathematical rules to the nearest integer number.
3.1.2Measurement of the indicator
It is deemed that the indicator is met when the actual value achieves 95% of the target
value established for the reporting period. Otherwise, it is deemed that the indicator is not
met.
4. Indicator: “The share of purchases from small and medium businesses, including
based on the results of purchases only among small and medium businesses”
The list of legal entities included in the calculation of the indicator:
PAO RusHydro.
4.1.1.Calculation of the indicator
The planned (target) value is a statutory value, which is determined in accordance
with Section 1 of the Regulation “On specifics of participation of small and medium
businesses in purchases of goods, work, services by certain types of legal entities, annual
162 volume of such purchases and the procedure for calculating such volume” approved by
Resolution of the Russian Government No. 1352 dated 11.12.2014 “On specifics of
participation of small and medium businesses in purchases of goods, work, services by
certain types of legal entities” (Regulation No. 1352).
For calculating the actual value
the Group uses the data from the Register of contracts entered into based on the results
of the Company's purchases. The actual value is determined as a share (%) of purchases for
which contracts are entered into with small and medium businesses in the total annual
volume of product purchases for the needs of PAO RusHydro where the contracts are entered
into in the reporting period, using the following formulas:
ShSMBTOTAL = (PurcheffSMB + PurchSMB + PurchSMBsub)/ Purchtot × 100
where
CSMB = PurcheffSMB / Purchtot × 100
ShSMBTOTAL is the share of contracts entered into with small and medium businesses
(SMBs) in the total annual volume of contracts entered into based on the results of the
effected purchases, including purchases effected only among SMBs. These contracts include
but are not limited to level 1 subcontractor agreements. Level 1 subcontractor agreements
mean contracts for supply of goods, work, services entered into directly between SMBs and
companies regardless of their organisational and legal form that have entered into direct
contracts with the Company, %;
CSMB is the share of contracts entered into with SMBs based on the results of
purchases effected only among SMBs, in accordance with Regulation No. 1352, in the total
annual volume of contracts, %;
PurcheffSMB is the sum of contracts entered into with SMBs based on the results of
purchases effected only among SMBs, in accordance with Section 2 of Regulation No. 1352,
RUB;
PurchSMBsub is the sum of Level 1 subcontractor agreements entered into directly
between SMBs and companies regardless of their organisational and legal form that have
entered into direct contracts with the Company, RUB;
PurchSMB is the sum of contracts entered into with small and medium businesses
based on the results of purchases effected, excluding purchases made only among SMBs, in
accordance with Section 2 of Regulation No. 1352, RUB;
Purchtot is the sum of contracts entered into based on the results of the effected
purchases, including purchases effected only among SMBs, in accordance with Section 2 of
Regulation No. 1352, RUB.
The calculation of KPIs does not take into account purchases effected in the reporting
period that are listed in para 7 of Regulation No. 1352.
4.1.2.Measurement of the indicator
It is deemed that the indicator is met when the actual value achieves 95% of the target
value established for the reporting period. Otherwise, it is deemed that the indicator is not
met.
163 5. Indicator: “Meeting the capacity commissioning schedule and implementing the
financing and spending plan”
5.1.1.Calculation of the indicator
The indicator is calculated for PAO RusHydro and new construction projects of
subsidiaries that are determined by the Company's business plan approved in
accordance with the established order.
The planned (target) value is taken based on the planned data on the Company’s
investees and new construction projects of subsidiaries approved as part of the Company’s
business plan by the Company’s Board of Directors in accordance with the established order.
For calculating the actual value
the source of information is the actual data on the Company’s investees and new
construction projects of subsidiaries as part of the report on the performance against the
Company’s business plan approved by the Company’s Board of Directors in accordance with
the established order.
The indicator “Meeting the capacity commissioning schedule and implementing the
financing and spending plan, %” is calculated using the formula:
К com fin sp = 0,75· К cap com + 0,25· К vol fin sp year,
where К com fin sp stands for meeting the capacity commissioning schedule and
implementing the financing and spending plan (for the year);
К cap com is the summary (for all types of commissioned capacities) indicator of meeting
the capacity commissioning schedule;
К vol fin sp year stands for the implementation of the annual financing and spending plan.
The summary (for all types of commissioned capacities) indicator of meeting the
capacity-commissioning schedule is calculated for the reporting year, using the formula:
К cap com stands for meeting the capacity-commissioning schedule for the reporting year
𝑽𝑽
𝒄𝒄𝒄𝒄𝒄𝒄 𝒄𝒄𝒄𝒄𝒄𝒄
К
= 100
(for all types of commissioned capacities77);
, where:
𝒄𝒄𝒑𝒑 𝒄𝒄𝒄𝒄𝒄𝒄
𝑽𝑽
𝒄𝒄𝒄𝒄𝒂𝒂 𝒄𝒄𝒄𝒄𝒄𝒄
V pl cap stands for the planned volume of commissioned capacities (MW);
V act cap stands for capacities actually commissioned in the reporting year (MW).
When there is no established capacity-commissioning plan for the reporting year,
indicator К cap com is not calculated, and the respective share is allocated to
year.
К vol fin sp
The calculation does not take into account capacity commissioning related to the
projects that were planned for commissioning in previous periods.
77For KPIs calculation purposes, the Company’s Board of Directors approves the planned indicators for capacity commissioning as part of the
Company’s business plan. The fact of capacity commissioning in the reporting period is recognised when there is a supervisory body’s permission for the start of
permanent operation of the power unit of committed capacity in accordance with the form of Rostekhnadzor's order No. 212 dated 07.04.2008 and the Statement of
the working commission on equipment acceptance following a comprehensive testing.
164
The indicator of the implementation of the annual financing and spending plan is
calculated using the formula:
К vol fin year = 0,5· К vol fin year +0,5· К vol sp year, where:
К vol fin sp year stands for the implementation of the annual financing and spending plan;
К vol fin year stands for the implementation of the annual financing plan.
К vol sp year stands for the implementation of the annual spending plan.
The indicator of the implementation of the annual financing plan is calculated using the
formula:
where:
Fin pl stands for the planned annual volume of financing;
TR&M
Fin pl stands for the planned annual volume of financing for the Company’s
investees;
NC
Fin pl stands for the summary planned annual volume of financing for the new
construction projects;
Fin TR&M
stands for the module of deviation of the actual volume of financing
reporting year
for the Company’s investees78 in the reporting year from the planned volume.
Fin
NC
reporting year
∑
stands for the sum of deviations of the actual volume of financing from
the planned volume for each new construction project in the reporting year. If the actual
summary volume of financing is below 100% of the summary planned volume, then the new
construction element in the calculation formula is taken to be equal to zero in the reporting
year.
The indicator of the implementation of the annual spending plan is calculated using the
formula:
78 The financing and development volume under the technical re-equipping and reconstruction program is taken for calculating the indicator “Meeting the
capacity commissioning schedule and implementing the financing and spending plan, %”using the summary value of the line item “Technical re-equipping and
reconstruction” approved as part of the Company’s business plan by the Company’s Board of Directors.
165
The planned annual volume of financing and spending on each of the Company’s
investees are approved as part of the Company’s business plan by the Company’s Board of
Directors in accordance with the established order.
Adjustment of the planned annual volume of financing and spending and indicators
related to capacity commissioning for each investee is proposed for consideration of the
Company’s Board of Directors for approval as part of the adjusted business plan of the
Company.
5.1.2.Measurement of the indicator
It is deemed that the indicator is met when the actual value achieves 100% of the target
value established for the reporting period. Otherwise, it is deemed that the indicator is not
met.
6. Labor productivity
6.1.
Calculation
Based on results of the following legal entities:
PJSC RusHydro, PJSC Far Eastern Energy Company (DEK), PJSC Yakutskenergo,
PJSC Kamchatskenergo,
PJSC Sakhalinenergo,
JSC DGK, PJSC Far Eastern distribution company (DRSK), PJSC Mobile Energy,
JSC Chukotenergo, JSC Sakha Energy, JSC Teploenergoservis, JSC ESC RusHydro,
PJSC Krasnoyarskenergosbyt, PJSC RESK,
JSC Chuvash Energy Retail Company,
JSC Pauzhetskaya GeoPP, PJSC KamGEK,
JSC Geoterm, PJSС Kolymaenergo,
PJSC Boguchanskaya HPP (PJSC Boguchanskaya HPP is a joint venture of RusHydro Group
and RUSAL Group, not part of RusHydro Group).
PJSC Magadanenergo,
JSC UESK,
Target value is based on the Company’s and its subsidiaries’ Business Plans:
Revenue is based on Total Net Revenue from Sales of Goods and Services, which
reflects the relevant items of the Company’s and its subsidiaries’ approved Business Plan for
the corresponding period;
Man-hours are calculated using the following formula
(Ndays – Nleave)* 8 * Etarget,
166
where:
Ndays is the number of business days in the period according to the business calendar;
Nleave is the number of business days in the paid leaves;
Etarget is the target number of employees as per the Company’s and its subsidiaries’
approved Business Plan for the corresponding period.
Actual value is based on forms of federal statistical observation No. PT (GS) Labor
Productivity in the Sector of Non-financial Corporations At Least Partially Owned by the
Government (Rosstat’s Order No. 576 of September 23, 2014 On Approval of Statistical
Tools for the Federal Agency for State Property Management to Perform Federal Statistical
Observation of Labor Productivity in the Sector of Non-financial Corporations At Least
Partially Owned by the Government).
This is the ratio of the Company’s and its subsidiaries’ aggregate revenue (as per
reports on the implementation of the Company’s and its subsidiaries’ business plans) to man-
hours worked by employees on payroll and external part-timers (as per Form of Federal
Statistical Observation No. P4 Headcount, Payroll and HR Flows) and is calculated using the
following formula
where:
LP = Revenue / Man-hours,
LP is labor productivity, RUB ‘000/man-hour;
Revenue is Revenue from Sales of Goods and Services, RUB ‘000;
Man-hours are man-hours worked by employees on payroll and external part-timers.
The result shall have two decimal digits. The rounding is mathematical.
6.2. Indicator evaluation
The KPI is considered to meet the established target if its actual value is at least 95%
of the target for the reporting period. Otherwise, the indicator is considered not to meet the
established target.
Calculation
7. Decrease in operating expenses (costs)
7.1.
Based on results of the following legal entities:
PJSC RusHydro, PJSC RAO ES East, PJSC Far Eastern Energy Company,
PJSC Yakutskenergo,
PJSC Magadanenergo,
(DRSK),
PJSC Sakhalinenergo, JSC DGK, PJSC Far Eastern distribution company
PJSC Mobile Energy, JSC Chukotenergo, JSC Sakha Energy, JSC Teploenergoservis,
JSC ESC RusHydro, PJSC Krasnoyarskenergosbyt, PJSC RESK, JSC Chuvash Energy
JSC Pauzhetskaya GeoPP,
Retail Company,
PJSC KamGEK, PJSC Boguchanskaya HPP (PJSC Boguchanskaya HPP is a joint venture of
RusHydro Group and RUSAL Group, not part of RusHydro Group).
JSC Geoterm, PJSС Kolymaenergo,
PJSC Kamchatskenergo,
JSC UESK,
• Target value is calculated as per Directive of the Russian Government No. 2303p-
P13 of April 16, 2015.
167
• Actual value is based on the report on the implementation of the Company’s and its
subsidiaries’ Business Plan.
This is the ratio of the reporting year’s operating expenses (costs) discounted to the
base year to the base year’s operating expenses (costs) and is calculated using the following
formula
=
−
1
DC
actual
∑
OE
i
base
⋅
OE
CPI
1
−
i
∑
⋅
100
%
where:
DC is decrease in operating expenses (costs), %;
i is the reporting year;
actual
∑
i OE
reporting year discounted to the base year, RUB ‘000;
is the Company’s and its subsidiaries’ operating expenses (costs) in the
∑
base
i OE 1
−
base year (which is the year preceding the reporting year), RUB ‘000;
is the Company’s and its subsidiaries’ operating expenses (costs) in the
100 is a multiplier used to arrive at a percentage.
The Company’s and its subsidiaries’ operating expenses (costs) in the reporting year
are calculated using the following formula
= ∑
reporting year
OE
i
∆ −
Expenses
i
actual
OE
i
∑
where:
reporting year
i OE
∑
in the reporting year, RUB ‘000;
is the Company’s and its subsidiaries’ operating expenses (costs)
∆
Expenses
indicator calculation;
is the reporting year’s operating expenses (costs) not used in the
CPI is the actual consumer price index for the reporting year.
List of items used for calculating the decrease in operating expenses
(costs)
Cost estimate form of the Business Plan, including business and management
No.
costs
Item
168
1 Raw materials and supplies
2
Production-related work and services
– Power transmission by grid companies
– Commercial power metering
– Cash collection
3 Labor
4 Compulsory social insurance
5
6 Third-party work and services
Private pension plans
except:
except:
– R&D write-off
– Services rendered by state (regulated) bodies (agencies)
7 Travel and hospitality
8 Lease with a breakdown by areas (lessors)
except:
– Power generating and grid assets lease
9 Voluntary health insurance
10 Accident insurance
11 Other costs attributable to the cost of revenue
except:
– Software and licenses
– Remuneration of Board and Internal Audit Commission members
– Estimated liabilities other than labor costs
Other income and expenses form of the Business Plan
No.
Item
12 Other taxes recognized as part of opex
13 Maintenance of mothballed facilities
14 Social
15 Program of housing conditions improvement
16 Social facilities
17 Payroll out of other expenses
18 Voluntary health insurance
19 Annual General Meeting of Shareholders
20 Contributions to non-profit foundations and partnerships
21 Charity
22 Non-capitalized construction costs (impoundment areas, etc.)
23 Miscellaneous
except:
– State duties, reimbursements
– Retiring and written-off assets and materials
– Estimated liabilities, other prepaid expense
– Borrowing and hedging
7.2
The KPI is considered to meet the established target if its actual value is at least 95%
Indicator evaluation
169
of the target for the reporting period. Otherwise, the indicator is considered not to meet the
established target.
8.
Integrated innovative KPI
8.1. Calculation
Based on results of the following legal entities:
PJSC RusHydro, JSC NIIES, JSC Vedeneev VNIIG, JSC Hydroproject Institute,
JSC Lenhydroproject, JSC Institute HYDROPROJECT (Dedovsk), JSC RAO ES East,
JSC DGK, JSC Far Eastern distribution company (DRSK), PJSC Kamchatskenergo,
PJSC Magadanenergo, PJSC Mobile Energy, PJSC Sakhalinenergo, JSC Sakhaenergo,
JSC Chukotenergo, JSC UESK, PJSC Yakutskenergo.
The calculation is based on each of the integrated innovative KPI components:
− R&D expenses, % of revenue;
− increase in IP assets on the balance sheet in the reporting period;
− thermal efficiency in terms of heat generation;
− HPP capacity management efficiency;
− quality of Innovative Development Program design (update) vs innovative
development program implementation.
The target is calculated using the duly approved Innovative Development Program of
RusHydro effective during the reporting period79.
The actual values of R&D expenses as a percentage of revenue, increase in IP assets
on the balance sheet in the reporting period, and thermal efficiency in terms of heat
generation are assumed as per duly approved annual progress report on the Group’s
Innovative Development Program.
The actual values for calculating the efficiency of HPP capacity management are
determined as per the annual progress report on RusHydro’s Business Plan. To this end, the
actual HPP installed capacity is assumed as at the last day of the reporting year.
The actual values of the quality of Innovative Development Program design (update) /
innovative development program implementation are established in accordance with the
Regulations on the Quality Assessment Procedure for the Development, Update, and Annual
Independent Assessment of Innovative Development Programs of Joint-Stock Companies At
Least Partially Owned by the Government, State-Owned Companies and Federal State
Unitary Enterprises (appendix to Russian Government’s Decree No. AD-P36-621 of
February 9, 2016).
8.1.1. R&D expenses, % of revenue (P1)
The indicator is calculated using the following formula
RR&D = (R&D/S)*100%, where
R&D is the annual R&D expenses of the companies used in the indicator calculation,
including:
a) cost of acquiring exclusive intellectual property rights (under contracts for the
alienation of exclusive right under Article 1234 of the Russian Civil Code) or rights to
79 For amendments made by the Interagency Working Group for Implementing the Innovative Development Priorities of the Presidium of the Russian President’s
Council for Modernization of the Economy and Innovative Development of Russia to the target values or methodologies of calculating the components of the
integrated innovative KPI and for the updated program approval, including the program to be approved for a new planning horizon, the integrated innovative KPI
is summarized using the updated data.
170 intellectual property use (pursuant to license contracts under Article 1234 of the Russian
Civil Code) with respect to the following intellectual property types:
•
•
inventions, utility models or industrial designs (as patented objects);
software (as patented objects), databases (as objects of related rights), and
semiconductor topographies;
manufacturing processes (know-how).
•
b) contributions to venture capital funds or private equity funds with a focus on small
innovative and high-tech businesses;
c) investments in high-tech manufacturing projects in cooperation with Russian
universities and government research institutions as part of Russian Government’s
Resolution No. 218 of April 9, 2010;
d) procurement of research equipment for Russian educational institutions;
e) contributions to non-profit organizations supporting priority technology platforms as
per the list approved by the Presidium of the Russian President’s Council for Modernization
of the Economy and Innovative Development of Russia and contributions to specialized
entities managing the operations of regional innovation clusters as per the list set forth in
Appendix 6 to Russian Government’s Resolution No. 316 of April 15, 2014;
f) cost of continuing education (professional development and retraining of staff) and
targeted training of students at universities and vocational schools.
S is the revenue of the companies used in the indicator calculation according to RAS
financial statements for the year less the cost of purchased electricity and heat, cost of power
and heat transmission by grid companies, intercompany operations, including the revenue of
JSC Far Eastern distribution company (DRSK) and the revenue from utility connection.
8.1.2. Increase in IP assets on the balance sheet in the reporting period (P2).
The indicator is calculated using the following formula
𝑃𝑃𝑖𝑖
𝑃𝑃𝑖𝑖−1 − 1� ∙ 100%
Pi is the actual number of IP assets on the balance sheet of the companies used in the
𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 = �
indicator calculation (with the copyright protection available) in the reporting year.
P i-1 is the actual number of IP assets on the balance sheet of the companies used in the
indicator calculation (with the copyright protection available) in the year preceding the
reporting year.
Copyright protection means duly executed (with the copyright protection available)
patents for inventions, patents for utility models, software registration certificates, database
and semiconductor topography (including know-how) registration certificates.
8.1.3. Thermal efficiency in terms of heat generation (P3) (for JSC RAO ES East
only).
The indicator is calculated using the following formula
Teh
=
(
, 0
86
W
supply
+
* 7
Q
B
supply
)*
1000
%, where
171
Wsupply is total electricity supply from the busbars to the companies used in the
indicator calculation during the reporting year, mn kWh;
Qsupply is total heat supply from the boiling stations to the companies used in the
indicator calculation during the reporting year, ‘000 Gcal;
0.86 is a conversion factor for kWh to Gcal;
7 is a ratio of calorific value of equivalent fuel, kcal/kg;
В is total consumption per unit of equivalent fuel for electricity and heat generation
across the companies used in the indicator calculation during the reporting year, tonnes of
equivalent fuel.
8.1.4. HPP capacity management efficiency (P4), number of employees per 100 MW
(for RusHydro only)
The indicator is calculated using the following formula
WHPP = average headcount involved in core operations / HPP installed capacity
*100
The planned (target) values of headcount and installed capacity for a planning horizon
are calculated based on RusHydro’s Business Plan.
HPP capacity management efficiency, number of employees per 100MW (P4)
represents inverse proportion: the lower the value, the higher the efficiency.
8.1.5. Quality of Innovative Development Program design (update) vs Innovative
Development Program implementation (P5),%
The target value of the indicator is set at 90%.
Specific weights are assigned to the components of the quality of Innovative
Development Program design (update) vs the quality of Innovative Development Program
implementation as resolved by the Interagency Working Group for Implementing the
Innovative Development Priorities of the Presidium of the Russian President’s Council for
Modernization of the Economy and Innovative Development of Russia.
If, at the time the indicator is calculated, any of the component values is not available,
its weight is assigned to another component of the indicator.
The evaluation of whether and to what extent the indicator meets the established target
is based on the results of the final assessment of the quality of Innovative Development
Program design (update) vs Innovative Development Program implementation for the
reporting period as provided by the Interdepartmental Commission on Technological
Development of the Presidium of the Council under the President of the Russian Federation
for the modernization of the economy and innovative development of Russia and approved
by the resolution of the Interdepartmental Working Group on the Implementation of
Priorities of Innovative Development of the Presidium of the Council under the President of
the Russian Federation for the Modernization of the Economy and Innovative Development
of Russia.
8.2.
Indicator evaluation
The evaluation of whether and to what extent the integrated innovative KPI meets the
established target is based on the values of its components as shown below:
, %
where:
Pintegrated is the integrated innovative KPI in the reporting year.
0
𝑃𝑃𝑃𝑃𝑁𝑁𝑁𝑁𝑁𝑁𝑃𝑃𝑃𝑃𝑁𝑁𝑁𝑁𝑁𝑁𝑃𝑃 = ∑ 𝑃𝑃𝑖𝑖
∙ 𝑤𝑤𝑁𝑁𝑃𝑃𝑃𝑃ℎ𝑁𝑁𝑖𝑖
5
𝑖𝑖=1
172
о
i P
is the indicator value n(i) characterising the Company's innovation activity in
the reporting year.
is the weight of the indicator in the reporting year.
weight
i
Weights for the calculation of the integrated innovative KPI are provided in the table
below:
No. Component
Weight,
%
1
2
3
4
5
R&D expenses, % of revenue
Increase in IP assets on the balance sheet in the reporting period, %
Thermal efficiency, % (for JSC RAO ES East only)
HPP capacity management efficiency, number of employees per 100 MW
(RusHydro)
Quality of Innovative Development Program design (update) vs Innovative
Development Program implementation, %
15
15
20
20
30
о
P 1
8.2.1. R&D expenses, % of revenue ( ).
The indicator is considered to fully meet the established target if its actual value is not
below the target set in the Innovative Development Program for the reporting year.
Otherwise, it is assessed by the extent to which the target has been met (the ratio of the
indicator's actual value to its target value as provided in the Innovative Development
Program and the relevant progress report).
о P
8.2.2. Increase in IP assets on the balance sheet in the reporting period ( ).
2
The indicator is considered to fully meet the established target if its actual value is not
below the target set in the Innovative Development Program for the reporting year.
Otherwise, it is assessed by the extent to which the target has been met (the ratio of the
indicator's actual value to its target value as provided in the Innovative Development
Program and the relevant progress report).
о P
8.2.3. Thermal efficiency (for JSC RAO ES East only) ( ).
3
The indicator is considered to fully meet the established target if its actual value is not
below the target set in the Innovative Development Program for the reporting year.
Otherwise, it is assessed by the extent to which the target has been met (the ratio of the
indicator's actual value to its target value as provided in the Innovative Development
Program and the relevant progress report).
8.2.4. HPP capacity management efficiency, numbers of employees per 100 MW (for
RusHydro only) ( ).
о P
4
HPP capacity management efficiency, number of employees per 100MW (P4)
represents inverse proportion: the lower the value, the higher the efficiency. The indicator is
considered to fully meet the established target if its actual value is not above the target set in
the Innovative Development Program for the reporting year. Otherwise, it is assessed by the
173
extent to which the target has been met (the ratio of the indicator's actual value to its target
value as provided in the Innovative Development Program and the relevant progress report).
8.2.5. Quality of Innovative Development Program design (update) vs Innovative
о P
Development Program implementation ( ).
5
Whether and to what extent the indicator meets the established target is evaluated as
provided in paragraph 2.8.1.5.
8.2.6. Evaluation of the integrated innovative KPI:
– the indicator is considered to meet the established target if Pintegratedactual ≥ 0.95
Pintegratedplan, where
Pintegratedactual is the actual value of the integrated innovative KPI in the reporting
year.
Pintegratedplan is the established (target) value of the integrated innovative KPI in the
reporting year.
– the indicator is considered not to meet the established target if Pintegratedactual <
0.95·Pintegratedplan.
9. Total shareholder return (TSR)
9.1. Calculation
The target is not calculated since it is a standard value.
The target is calculated for one year using the data about the Company's shares
quotation on the Moscow Exchange and RusHydro Group's consolidated financial statements
prepared in accordance with the International Financial Reporting Standards (IFRS) using
the following formula
, where
is the average price per share in RUB on the Moscow Exchange over 22 trading
�𝑷𝑷𝟏𝟏−𝑷𝑷𝟎𝟎�+𝑫𝑫𝑷𝑷𝑻𝑻
𝑻𝑻𝑻𝑻𝑻𝑻 =
𝑷𝑷𝟎𝟎
days as at the end of the year preceding the reporting year;
is the average price per share in RUB on the Moscow Exchange over 22 trading
days as at the end of the reporting year;
𝑃𝑃1
DPS (dividend per share) is the total amount of dividends or other disbursements
(special dividends, redemption of shares, etc.) in RUB payable to shareholders per share
during the reporting period.
The calculated indicator is rounded to the nearest whole number. The rounding is
mathematical.
9.2. Indicator evaluation
The indicator is evaluated by comparing the Company’s actual TSR against changes in
the key composite index of the Moscow Exchange (the “Index”). The Index change is
calculated as a percentage of changes in the average Index over 22 trading days as at the end
of the year preceding the reporting year and the average Index for 22 trading days as at the
end of the reporting year. The indicator is is considered to fully meet the established target
(the actual value is assumed to be 100%) if the estimated actual indicator grew faster than the
Index in the reporting period.
Otherwise, the indicator is not considered to meet the established target (the actual
value is assumed to be 0%).
𝑃𝑃0
174
10. Free cash flow (FCF)
10.1. Calculation
The list of legal entities to be used in the calculation is established:
•
for the target calculation, based on RusHydro’s effective Regulations on the
Business Planning Framework subject to RusHydro Group’s Consolidated Business Plan;
•
for the actual value calculation, based on RusHydro Group's audited
consolidated financial statements prepared under the International Financial Reporting
Standards (IFRS), note Material subsidiaries.
For the target calculation, RusHydro Group uses the data from its Business Plan duly
approved by the Company.
For the actual value calculation, RusHydro Group uses the data from its audited
consolidated financial statements prepared under the IFRS Consolidated Statement of Cash
Flows.
The indicator for RusHydro Group is calculated as the difference between balanced
operating cash flow adjusted to the sum of interest paid on borrowings, financial lease and
derivatives, and capex. Free Cash Flow (“FCF”) is the consolidated balance of cash obtained
as a result of operating activities, payment of statutory charges, and investment spending
required to maintain and/or expand the existing assets.
FCF calculation is based on RusHydro Group's consolidated annual financial
statements prepared under the IFRS, using the following formula
FCF = CFO – CAPEX – interest paid – financial lease payments
where
CFO is the amount of the line Total cash flows (balance) from operating activities of
the Consolidated Statement of Cash Flows for the reporting period;
CAPEX is the amount of cash outflows in the Investing cash flow section of the
Consolidated Statement of Cash Flows for the reporting period;
Interest paid and financial lease payments80 are the amounts of relevant lines of the
Financing cash flow section of the Consolidated Statement of Cash Flows for the reporting
period.
10.2. Indicator evaluation
The KPI is considered to meet the established target if its actual value is at least 95%
of the target for the reporting period. Otherwise, the indicator is not considered to meet the
established target.
80 Line titles may differ from those published in the IFRS financial statements or business plan, but their meaning and content correspond to those specified in this
Methodology.
175
Appendix No.10 Independent Assurance Report on the Fulfilment
of the Long-Term Development Programme of RusHydro Group
for 2018
Independent Assurance Report on the Fulfilment of the Long-
Term Development Programme of RusHydro Group for 2018
To the Management 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 included in the Report on the Fulfilment of the Long-Term Development Programme of
RusHydro Group for 2018.
Selected Information
The subject matter of our engagement was actual performance indicators of RusHydro Group (the
“Group”) set out in the Long-Term Development Programme (the “LTDP”) and included in the Report
on the Fulfilment of the LTDP for 2018 (the “Selected Information”).
The Group’s actual performance indicators represent information on the Group’s achievement of its
key performance indicators under the Group’s LTDP, included in Section 12 of the Report on the
Fulfilment of the LTDP for 2018.
Reporting Criteria
We assessed the calculation and measurement of the Selected Information using the KPIs Calculation
and Measurement Methodology (the “Methodology”) included in Appendix 4 of the Group’s LTDP for
the period from 2018 to 2022i together with the decision of PJSC RusHydro’s Board of Directors
meeting on 4 April 2019 (Minutes No. 286) that the key performance indicator “Reduction of
operating expenses, %” for 2018, calculated allowing for certain factors beyond PJSC RusHydro’s
management’s control, has been fulfilled. The Methodology is also included in Appendix to the Report
on the Fulfilment of the LTDP for 2018.
Management responsibilities
PJSC RusHydro’s management is responsible for:
•
•
•
•
•
designing, implementing and maintaining internal controls over the preparation of the Selected
Information that is free from material misstatement, whether due to fraud or error;
publishing the Methodology;
preparing the Selected Information in accordance with the legislative requirements, standards
and internal corporate regulations, including the Reporting Criteria;
assessing and presenting the Selected Information based on these requirements; and
ensuring that the Selected Information is accurate, complete and fairly presented.
i Approved by PJSC RusHydro’s Board of Directors on 31 May 2018 (Minutes No. 271) as amended by the resolution of
PJSC RusHydro’s Board of Directors on 25 October 2018 (Minutes No. 279).
176 Our responsibilities
We are responsible for:
•
•
•
planning and performing the engagement to obtain limited assurance about whether the
Selected Information is prepared in accordance with the Reporting Criteria and whether there
are material reasons for deviations of actual indicators from target other than those included in
the Selected Information;
forming an independent conclusion, based on the procedures we have performed and the
evidence we have obtained; and
reporting our conclusion to PJSC RusHydro’s management.
This report, including our conclusions, has been prepared solely for PJSC RusHydro’s management in
accordance with the agreement between us, to assist management in reporting on the Group’s
performance under the LTDP for 2018. We permit this report to be disclosed, in particular in the
Annual Reportii of PJSC RusHydro for 2018 to enable management to confirm that they have obtained
an Independent Limited Assurance Report in connection with the Selected Information for 2018. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
PJSC RusHydro’s management for our work or this report except where the respective terms are
expressly agreed in writing and our prior consent in writing is obtained.
Professional standards applied and level of assurance
We performed the 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 limited assurance
procedures in the Russian Federation.
Our firm applies International Standard on Quality Control 1 and appropriately 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 risks of material misstatement
of the Selected Information. For this purpose, our procedures included:
ii PJSC RusHydro’s management is responsible for placing information on PJSC RusHydro’s web-site and for accuracy of such
information. The scope of our performed work does not include reviewing these matters; consequently, we do not assume any
responsibility for any amendments that might have been made to the Selected Information underlying the Independent Limited
Assurance Report or any differences between the report issued by us and the information presented on PJSC RusHydro’s web-
site.
177 •
•
•
•
•
enquiries of PJSC RusHydro’s management;
interviews of the Group’s officials responsible for the preparation of the Selected Information
and collection of underlying data;
analysis of the Reporting Criteria and gaining an understanding of the design of the key systems,
processes and controls for preparing and reporting the Selected Information;
assessment of the accuracy of the Selected Information and the reasons for deviations of the
Selected Information from target performance indicators in case of non-fulfilment; and
limited substantive testing of the Selected Information on a sample basis to verify that data have
been appropriately measured, recorded, collated and reported in line with the Reporting
Criteria.
We have not performed any audit or review procedures in accordance with International Standards on
Auditing or International Standards on Review Engagements on the underlying data based on which
the Selected Information was prepared.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
limited assurance conclusion.
Reporting and measurement methodologies
The Selected Information and this Independent Limited Assurance Report should be read and
considered together with the Reporting Criteria as the absence of generally accepted and established
practice for measurement and assessment of the Selected Information may lead to the application of
different, but acceptable, techniques to calculate and assess key performance indicators, which may
affect its comparability with other organisations and prior period information.
Limited assurance conclusion
Based on the procedures performed and evidence obtained nothing has come to our attention that
causes us to believe that the Selected Information is not presented in the attached Report on the
Fulfilment of the Group’s LTDP for 2018, in all material respects, in accordance with the Reporting
Criteria and that there are material reasons for deviations of actual indicators from target other than
those included in the Selected Information.
24 April 2019
Moscow, Russian Federation
A. S. Ivanov, certified auditor (licence no. 01-000531),
AO PricewaterhouseCoopers Audit
Engaging party: Public joint stock company Federal Hydro-
Generating Company – RusHydro
Audit organization:
AO PricewaterhouseCoopers Audit
Record made in the Unified State Register of Legal Entities on
26 December 2004 under State Registration Number 1042401810494
Registered by the Government Agency Moscow Registration Chamber on
28 February 1992 under Nо. 008.890
660017, Russian Federation, Krasnoyarsk Region, Krasnoyarsk,
Dubrovinskogo str. 43, bld. 1
Record made in the Unified State Register of Legal Entities on 22 August 2002
under State Registration Number 1027700148431
Member of Self-regulated organization of auditors «Russian Union of auditors»
(Association)
Principal Registration Number of the Record in the Register of Auditors and
Audit Organizations – 11603050547
178
Appendix No.11 Information Concerning Establishment of Unified Treasuries in the Head
Companies, Subsidiaries, and Affiliates
Pursuant to the Directives No. 5110 p-P13 and No. 1796p-P13 of the Government of the Russian
Federation dated August 8, 2014 and March 26, 2015, respectively, the Board of Directors of
PJSC RusHydro (hereinafter- the Company) made a resolution "On the Establishment of a Unified Treasury
of PJSC RusHydro, its Subsidiaries, and Affiliates (Minutes No. 203 dated September 15, 2014) and issued
an order (Minutes No. 215 dated May 5, 2015) to conduct an annual analysis following the establishment of
a Unified Treasury of RusHydro Group. The Unified Treasury (hereinafter - UT) has been functioning as a
methodological and information center since June 30, 2015, whose activities are aimed at regulating the
work of the UT, optimizing cash flows, and centralizing the management of RusHydro Group’s financial
risks.
The UT represents a vertically integrated three-level organizational system of RusHydro Group’s
treasury:
−the UT - at the top level of management;
−a treasury of Subgroups - at the middle management level;
−a treasury of Subsidiaries - at the lower management level.
The settlement and payment system of RusHydro Group is subject to the annual inventory check,
following which a report on the annual outcomes of RusHydro Group’s UT establishment is sent to the
Ministry of Finance of the Russian Federation and the Federal Financial Monitoring Service.
In 2018, the Company continued with its efforts aimed at centralizing risk management and optimizing
the management structure and operating expenses of RusHydro Group, including:
- monitoring the level of reliability and financial stability of partner banks within RusHydro Group’s
system for selecting lenders to place funds and pursuant to the instructions of the Audit Committee of
RusHydro’s Board of Directors (Minutes No. 98 dated May 31, 2017)
- reducing the number of operating accounts used and optimizing the terms of service (tariffs) under
loan contracts;
- optimizing cash flows of RusHydro Group’s companies in financing the investment and operating
expenses;
- introducing standard business processes to secure the obligations of counterparties to Group’s
companies.
In the reporting period, as part of treasury function automation:
- a standard Unified Accounting System of JSC RAO ES East was implemented in the largest
subsidiaries of the Far Eastern Federal District;
- technical requirements for an automated information system of the unified treasury were drafted.
179
Appendix No.12 Information on the Results of the 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 2018
No. Registration
number
The Body that issued
Executive
Orders/Instructions
Brief contents of the Executive
Orders/Instructions
Date of issue
of
the
Executive
Orders/Instruc
tions
January 9, 2018
Date of
execution of
the Executive
Orders/Instruc
tions
January
2018
January
2018
15,
January
2018
10,
15,
29,
31,
On the financing of works on the
preparation of the bed of the reservoir
of the Ust-Srednekanskaya HPP
About revenues for 2017
the
the
the
the
the
the
On proposals to improve RusHydro’s
efficiency
January
2018
19,
January
2018
the
the
On further activities on the Zagorskaya
PSHPP-2
January
2018
22,
January
2018
the
the
On the outstripping development of the
Far Eastern infrastructure
January
2018
24,
January
2018
30,
1.
Вх-12.НШ
2.
Вх-341.НШ
3.
Вх-669.НШ
4.
Вх-733.НШ
5.
Вх-935.НШ
of
Office
Government
of
Russian Federation
Office
of
Government
Russian Federation
of
of
Office
of
Government
Russian Federation
of
Office
of
Government
Russian Federation
of
Office
Government
of
Russian Federation
6.
Вх-993.НШ
7.
Вх-1614.НШ
of
Office
Government
of
Russian Federation
the
the
of
Office
Government
of
Russian Federation
the
the
8.
Вх-1161.НШ
of
Office
of
Government
Russian Federation
the
the
9.
Вх-1647.НШ
10.
Вх-1866.НШ
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
the
the
the
the
in
On the need for timely updating of
information on reservists, as well as on
their exclusion from the federal reserve
of managerial personnel
the
prescribed manner
On holding the meeting on February
13, 2018 at 17.00 on the accession of
the Western and Central regions of the
electric power system of the Republic
of Sakha (Yakutia) to the Unified
Energy System of Russia
On the progress of elaboration of issues
related to the development of the power
complex in the Sakhalin Region in
pursuance of
the
Government of the Russian Federation
from March 18, 2016 No. UT-P9-13pr
(paragraph 2) and from April 24, 2017
No. DM-P9-2593r
(Letter dated December 21, 2017,
No. AN-14307/09)
On holding a strategic session on the
development of export priorities for the
industrial complex of
the Russian
Federation
On holding the II All-Russian Water
Congress
instructions from
January
2018
25,
February
2018
9,
February
2018
5,
February
2018
9,
January
2018
29,
February
2018
12,
February
2018
6,
February
2018
8,
February
2018
12,
February
2018
27,
180
11.
Вх-3370.НШ
of
Office
Government
of
Russian Federation
the
the
On financing sources from the year
2019 of the capital construction project
two single-circuit
"Construction of
110 kV Pevek-Biliino overhead lines"
March 2, 2018 March
12,
2018
13.
Вх-3662.НШ
14.
Вх-4309.НШ
15.
Вх-4909.НШ
16.
Вх-5148.НШ
17.
Вх-5431.НШ
18.
Вх-6434.НШ
19.
Вх-7383.НШ
20.
Вх-7714.НШ
21.
Вх-7985.НШ
of
Office
Government
of
Russian Federation
of
Office
of
Government
Russian Federation
Office
Government
of
Russian Federation
of
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
of
Office
of
Government
Russian Federation
of
Office
of
Government
Russian Federation
the
the
the
the
the
the
the
the
the
the
the
the
the
the
the
the
the
the
22.
Вх-8425.НШ
of
Office
Government
of
Russian Federation
the
the
On considering the appeal of the Fund
"Russian Middle Eastern Society"
March 7, 2018 March
26,
2018
On considering and approving the draft
Decree elaborated in the Government
Office of the Russian Federation
On training of the seventh stream
participants
the federal program
"Training and retraining of the reserve
of management personnel (2018-2018)"
in
About the preparation of a feasibility
study of an option to complete the
construction of the Cheboksary HPP
On the submission of the draft report
on the monitoring of the construction of
electric power facilities in the Far East
On the financing of works on the
preparation of the bed of the reservoir
of the Ust-Srednekanskaya HPP
On permission to conduct an excursion
to
the Sayano-Shushenskaya HPP
named after P. Neporodny on May 23,
2018.
On improving the reliability of the
operation of the electric grid complex
of the Sakhalin Region
On the preparation of materials for the
meeting on May 29, 2018 at 19.00 on
the sale of shares of PJSC Inter RAO
owned by PJSC RusHydro and PJSC
FGC UES
On ensuring the priority nature of
financing the Far East socio-economic
development tasks
March 21, 2018 March
23,
2018
March 30, 2018 April 24, 2018
April 4, 2018
April 28, 2018
April 9, 2018
July 3, 2018
April 26, 2018 May 24, 2018
May 16, 2018
May 18, 2018
May 23, 2018
June 7, 2018
May 29, 2018
May 29, 2018
June 5, 2018
June 9, 2018
23
Вх-8707.НШ
of
Office
Government
of
Russian Federation
the
the
On the use of existing balances of
unused contributions to RusHydro’s
authorized
the
capital
implementation of investment projects
for
June 9, 2018
June 19, 2018
24.
Вх-9409.НШ
25.
Вх-9794.НШ
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
the
the
the
the
On the results of XVI meeting of the
Mixed Russian-Austrian Trade and
Economic Cooperation Commission
June 25, 2018
August
2018
22,
On the execution of orders
June 29, 2018
June 14, 2018
26.
Вх-11150.НШ
of
Office
Government
of
Russian Federation
the
the
On the assistance to the South Ossetian
side
July 23, 2018
August
2018
13,
181 27.
Вх-11327.НШ
of
Office
Government
of
Russian Federation
the
the
28.
Вх-12762.НШ
of
Office
of
Government
Russian Federation
29.
Вх-12763.НШ
30.
Вх-12887.НШ
of
Office
Government
of
Russian Federation
Office
Government
of
Russian Federation
of
31.
Вх-12942.НШ
32.
Вх-13206.НШ
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
the
the
the
the
the
the
the
the
the
the
33.
Вх-13554.НШ
of
Office
Government
of
Russian Federation
the
the
the President of
On the assignment of decree No. 378
of
the Russian
Federation dated June 29, 2018 "On the
National Anti-Corruption Plan
for
2018-2020"
On
the
Comprehensive Plan to Implement the
Climate Doctrine of
the Russian
Federation
the progress
report on
On measures to support and preserve
production at UC RUSAL enterprises
(confidential dupl. No. 17)
About the Minutes of the Meeting at
the First Deputy. Chairman of the
Government of the Russian Federation -
Minister of Finance of the Russian
Federation, A. Siluanov, "On reducing
the negative effects of
restrictive
measures imposed by foreign countries
against the companies
On providing information on financing
the Ust-Srednekanskaya HPP
the
On forwarding Minutes of the Meeting
No. MA-П9-53pr on
logistical
support of the Russian coal products
exports and developing the railway
infrastructure for these purposes dated
August 13, 2018
About forwarding the Minutes of the
Meeting on energy supply of
the
Chukotka Autonomous Region
July 25, 2018
August 2, 2018
August
2018
17,
September 10,
2018
August
2018
17,
August
2018
August
2018
21,
August
2018
22,
22,
August
2018
22,
September
2018
6,
August
2018
27,
October
2018
31,
September
2018
3,
September 11,
2018
34.
Вх-13555.НШ
of
Office
Government
of
Russian Federation
the
the
On the reorganization of JSC Far
Eastern Energy Management Company
in the form of a spin-off
September
2018
3,
September 24,
2018
35.
Вх-14071.НШ
36.
Вх-14072.НШ
of
Office
Government
of
Russian Federation
the
the
of
Office
Government
of
Russian Federation
the
the
-
(2010-2018)
from September 29
On the federal program "Training and
retraining of the managerial personnel
overseas
reserve
internship
to
October 6, 2018 in Malaysia
On forwarding the Minutes of the
Meeting at the Prime Minister’s of the
Russian Federation on the functioning
of the electric grid complex of the
Russian Federation
September 12,
2018
September 18,
2018
September 12,
2018
October
2018
8,
37.
Вх-14135.НШ
of
Office
Government
of
Russian Federation
the
the
On providing
the
preparation of the bed of the reservoir
of the Ust-Srednekanskaya HPP
information on
September 13,
2018
September 13,
2018
182 38.
Вх-14304.НШ
39.
Вх-14574.НШ
40.
Вх-14922.НШ
41.
Вх-15097.НШ
42.
Вх-15806.НШ
43.
Вх-16253.НШ
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
the
the
the
the
the
the
the
the
the
the
of
Office
Government
of
Russian Federation
the
the
On ensuring the priority nature of
financing the Far East socio-economic
development tasks
September 17,
2018
November 29,
2018
About providing the report
September 20,
2018
September 25,
2018
On the submission of the draft report
on the monitoring of the construction of
electric power facilities in the Far East
On forwarding a list of instructions
from the President of the Russian
Federation and the Government of the
Russian Federation
On forwarding the Minutes of the
Meeting No. DK-P9-179pr on
the
expediency of changing the reservoir
water surface of the Cheboksary HPP
from October 1, 2018.
On the marginal levels of tariffs for
electric energy
September 26,
2018
October
2018
September 28,
2018
October
2018
4,
8,
October
2018
11,
October
2018
22,
October
2018
18,
October
2018
22,
44.
Вх-16255.НШ
45.
Вх-16642.НШ
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
46.
Вх-17715.НШ
47.
Вх-18948.НШ
48.
Вх-19084.НШ
of
of
Office
Government
of
Russian Federation
Office
Government
of
Russian Federation
Office
of
Government
Russian Federation
of
the
the
the
the
the
the
the
the
the
the
About providing information
October
2018
18,
October
2018
On the execution of order No. DK-P9-
7007 of the Government of the Russian
Federation dated October 16, 2017
October
2018
25,
October
2018
26,
29,
On addressing violations
On proposals made
information on
On providing
the
financing the preparations of the bed of
the reservoir of the Ust-Srednekanskaya
HPP
November 12,
2018
November 23,
2018
December
2018
December
2018
3,
5,
December 19,
2018
January
2019
9,
49.
Вх-19085.НШ
of
Office
of
Government
Russian Federation
the
the
On considering
Governor of the Amur Region
the appeal of
the
December
2018
5,
December 13,
2018
50.
Вх-19086.НШ
51.
Вх-19175.НШ
52.
Вх-19661.НШ
53.
Вх-19662.НШ
of
Office
of
Government
Russian Federation
Office
Government
of
Russian Federation
of
of
Office
Government
of
Russian Federation
of
Office
Government
of
Russian Federation
the
the
the
the
the
the
the
the
On holding a meeting on proposals for
the delivery of large joint investment
projects in the field of energy
On considering the appeal of the Prime
Minister of the Kyrgyz Republic
December
2018
December
2018
5,
6,
December
2018
6,
December 13,
2018
On proposals made
On proposals made
December 13,
2018
December 28,
2018
December 13,
2018
December 28,
2018
183 54.
Вх-19728.НШ
of
Office
Government
of
Russian Federation
the
the
On forwarding the Minutes of the
Meeting
December 17,
2018
January
2019
15,
55.
Вх-20450.НШ
of
Office
Government
of
Russian Federation
the
the
About providing the draft report
December 27,
2018
December 25,
2018
56.
Вх-14094.НШ
Administration of
the
President of the Russian
Federation
On inviting RusHydro to participate in
the second cycle of the Leaders of
Russia Competition as a partner
September 12,
2018
September 18,
2018
57.
Вх-1509.НШ
58.
Вх-285.НШ
59.
Вх-2686.НШ
60.
Вх-3390.НШ
61.
Вх-3978.НШ
62.
Вх-4493.НШ
the
the
the
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
of
Office
Plenipotentiary
Representative of
the
President of the Russian
the Far
in
Federation
Eastern Federal District
Office
of
Plenipotentiary
the
Representative of
President of the Russian
Federation
the Far
in
Eastern Federal District
of
Office
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
Office
of
Plenipotentiary
Representative of
the
President of the Russian
the Far
Federation
in
Eastern Federal District
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
the
the
the
63.
Вх-4901.НШ
the
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
financing
On
the
preparation of the bed of the reservoir
of the Ust-Srednekanskaya HPP
the works on
February
2018
2,
February
2018
15,
On providing the information on the
proposed reductions in staffing size
January
2018
12,
February
2018
9,
On providing information on the main
results of activities in 2017 in the
territory of the Far Eastern Federal
District
February
2018
20,
March
2018
23,
On considering the appeal
March 2, 2018 March
14,
2018
On the appeal of the Governor of the
Chukotka
Region,
Autonomous
R. Kopina, on energy supply of the
Region
March 15, 2018 March
27,
2018
March 23, 2018 April 16, 2018
March 30, 2018 April 9, 2018
the
and
fulfilling
Federation
information on
On providing
the
measures aimed at
instructions of the President of the
Russian
the
Government of the Russian Federation
regarding the provision of electricity to
gas production, gas transportation, and
gas processing facilities in the Far
Eastern Federal District
On providing the information on the
passage of the energy and utilities
enterprises of the heating period of
2017–2018, as well as on the existing
issues and measures that need to be
taken in preparation for the autumn-
winter period of 2018–2019
184
64.
Вх-6595.НШ
65.
Вх-6694.НШ
66.
Вх-6769.НШ
the
the
Office
of
Plenipotentiary
the
Representative of
President of the Russian
Federation
the Far
in
Eastern Federal District
of
Office
Plenipotentiary
Representative of
the
President of the Russian
the Far
in
Federation
Eastern Federal District
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
the
67.
Вх-7807.НШ
the
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
68.
Вх-7802.НШ
69.
Вх-8360.НШ
70.
Вх-8306.НШ
71.
Вх-8510.НШ
72.
Вх-10569.НШ
the
the
the
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
Office
of
Plenipotentiary
the
Representative of
President of the Russian
Federation
the Far
in
Eastern Federal District
of
Office
Plenipotentiary
Representative of
the
President of the Russian
the Far
in
Federation
Eastern Federal District
Office
of
Plenipotentiary
the
Representative of
President of the Russian
Federation
the Far
in
Eastern Federal District
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
the
the
On the preparation of draft regulatory
legal acts on changing the tariff setting
system for energy facilities in the Far
Eastern Federal District; Long-term
energy development program of the Far
Eastern Federal District.
On forwarding Minutes of the Meeting
No. UT-P44-24pr on the consolidation
of the development of tourism in the
Kamchatka Territory dated April 11,
2018
for
the
the Office of
On forwarding the Minutes of the
Meeting of
the
plenipotentiary representative of the
President of the Russian Federation in
the Far Eastern Federal District dated
April 25, 2018 on the issue of putting
the Nizhne-Bureyskaya HPP
into
operation
On forwarding comments to an expert-
analytical event - monitoring of priority
projects
fuel and energy
complex implemented by PJSC Federal
Hydrogenation Company - RusHydro-
in Eastern Siberia and the Far East
(construction of a CHPP in Sovetskaya
Gavan, construction of Sakhalin GRES-
the
2 (1st stage), construction of
stage),
Yakutsk
GRES-2
construction
the
Blagoveshchenskaya CHPP (2nd stage)
in H2 2017 and H1 2018
On participating in the All-Russian
Youth Educational Forum "Amur"
June 5-27, 2018
(1st
of
April 28, 2018 March 1, 2018
May 3, 2018
May 18, 2018
May 4, 2018
May 15, 2018
May 24, 2018
June 4, 2018
May 24, 2018
June 6, 2018
On forwarding the Minutes of the
Meeting on the investment project of
PJSC NOVATEK LNG transshipment
complex in the Bechevinskaya bay, the
Kamchatka Territory
dated May 18, 2018 No. YuT-P9-27pr
About providing information
June 4, 2018
June 26, 2018
June 4, 2018
June 26, 2018
About providing information
June 6, 2018
June 15, 2018
On providing the information on the
the autumn-winter
preparation
period of 2018-2019
for
July 12, 2018
July 19, 2018
185 73.
Вх-12095.НШ
74.
Вх-14068.НШ
75.
Вх-14202.НШ
76.
Вх-14217.НШ
77.
Вх-16576.НШ
78.
Вх-19935.НШ
the
the
the
Office
of
Plenipotentiary
the
Representative of
President of the Russian
Federation
the Far
in
Eastern Federal District
of
Office
Plenipotentiary
Representative of
the
President of the Russian
the Far
in
Federation
Eastern Federal District
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
Office
of
Plenipotentiary
Representative of
the
President of the Russian
Federation
the Far
in
Eastern Federal District
Office
of
Plenipotentiary
Representative of
the
President of the Russian
the Far
in
Federation
Eastern Federal District
Office
of
Plenipotentiary
the
Representative of
President of the Russian
Federation
the Far
in
Eastern Federal District
the
the
the
On the transfer of the Telman networks
and repayment of debt obligations of
the municipality
August 6, 2018 August
14,
2018
On providing a position (proposal) on
the construction project of the Amur
TPP
September 12,
2018
September 17,
2018
report of
forwarding
On
the
the
Government of the Russian Federation
on projects for the development of the
power industry in Siberia and the Far
East
report of
forwarding
On
the
the
Government of the Russian Federation
on projects for the development of the
power industry in Siberia and the Far
East
September 14,
2018
September 27,
2018
September 14,
2018
September 24,
2018
On the reorganization of PJSC DEK
October
2018
24,
November 12,
2018
On providing the contact information
on
the appointment of responsible
persons
December 19,
2018
December 26,
2018
Appendix No.13 Information about Legal Entities Controlled by
the Company that are of Material Significance81
In the IFRS financial statements of RusHydro Group, information about material subsidiaries is
disclosed by particular segments arranged into groups by activity areas.82 RusHydro Group performs its
activities in three main reporting segments, one of which is represented by the parent company of the Group,
RusHydro.
1. Joint-Stock Company RAO ES East (JSC RAO ES East)
The role performed for RusHydro Group and key activity areas:
The Company owns equity stakes in electricity companies operating in the Integrated Energy System
of the East (Primorye, Khabarovsk Territory, Amur Region, Jewish Autonomous Region, and the south of
Yakutia) and in isolated energy systems (Yakutia, Sakhalin Region, Magadan Region, and Kamchatka
Territory), and implements investment projects of RusHydro Group in the Far Eastern Federal District
(Vostochnaya TPP, off-site facilities of Yakutsk GRES-2, Sakhalin GRES-2, CHPP in Sovetskaya Gavan,
etc.).
Mechanisms ensuring accountability and controllability within the Group:
81There was no change in material control over significant controlled legal entities.
82More details on significant companies is given in the IFRS statements posted in the Reports section at http://www.eng.rushydro.ru/investors/reports/
186
•
RusHydro owns 84.39% of the voting shares of JSC RAO ES East, and 99.98% of voting
shares are consolidated in the ownership of RusHydro Group;
•
•
RusHydro Group.
RusHydro exercises the powers of the sole executive body of JSC RAO ES East;
the Board of Directors of JSC RAO ES East is entirely made up of representatives of
Information about functional relations between key companies of the Group:
in its activity, JSC RAO ES East interacts with RusHydro, JSC MC HydroOGC (which renders
agency services for the investment projects to JSC RAO ES East), and electricity companies of the Group in
the Far Eastern Federal District.
Supplementary information:
In the IFRS financial statements of RusHydro Group, the Company is placed in the segment
"Subgroup of RAO ES East".
2. Public Joint-Stock Company Far East Electricity Company (PJSC FEEC/DEK)
The role performed for RusHydro Group and key activity areas:
The share of PJSC FEEC in the consolidated proceeds of RusHydro Group is 19.17%.
The Company is the main guaranteeing supplier of electricity for the public and enterprises of non-
price zone II of the wholesale electricity market and has the status of a Single Purchaser performing the
function of purchase and sale of electricity (capacity) to participants of the wholesale market of non-price
zone II.
Mechanisms ensuring accountability and controllability within the Group:
•
•
RusHydro controls PJSC FEEC through a controlled organization, JSC RAO ES East.
JSC RAO ES East owns 51.03% of voting shares of PJSC FEEC, and 52.16% of voting
shares are consolidated in the ownership of RusHydro Group.
•
JSC ESC RusHydro, 100% of whose voting shares are owned by RusHydro Group, exercises
the powers of the sole executive body of the Company.
•
RusHydro Group.
Nine members of the Board of Directors of PJSC FEEC out of 15 were elected by the votes of
Information about functional relations between key companies of the Group:
in its activity, PJSC FEEC deals with electricity companies of the Group in the Far Eastern Federal
District.
Supplementary information:
In the IFRS financial statements of RusHydro Group, the Company is placed in the segment
"Subgroup of RAO ES East".83
3. Joint-Stock Company Far East Generating Company (JSC FEGC /DGK)
The role performed for RusHydro Group and key activity areas:
83This segment consists of JSC RAO ES of the East and its subsidiaries that generate, distribute, and market electricity and heat mainly in the Far East, as well as
transport, construction, repair, and other companies rendering serving functions.
187
The share of PJSC FEEC in the consolidated proceeds of RusHydro Group is 6.90%.
The Company produces heat and electricity and provides centralized heat supply for consumers in
areas where power plants are located in the Khabarovsk and Primorsky Territories, Amur Region, Jewish
Autonomous Region, and the southern region of the Republic of Sakha (Yakutia). JSC FEGC is also
assigned the function of heat sales to end consumers.
Mechanisms ensuring accountability and controllability within the Group:
•
•
RusHydro controls PJSC FEGC through a controlled organization, PJSC FEEC.
PJSC FEEC owns 100% – 1 share of voting shares of JSC FEGC, and 100% of voting shares
are consolidated in the ownership of RusHydro Group.
•
The Board of Directors of JSC FEGC is entirely made up of representatives of RusHydro
Group.
Information about functional relations between key companies of the Group:
in its activity, JSC FEGC deals with electricity companies of the Group in the Far Eastern Federal
District.
Supplementary information:
In the IFRS financial statements of RusHydro Group, the Company is placed in the segment
"Subgroup of RAO ES East".
4. Public Joint-Stock Company Yakutskenergo (PJSC Yakutskenergo)
The role performed for RusHydro Group and key activity areas:
The share of PJSC Yakutskenergo in the consolidated proceeds of RusHydro Group is 8.26%.
The Company produces electricity and heat and provides the functions of the guaranteeing supplier
of electricity in the Republic of Sakha (Yakutia).
Mechanisms ensuring accountability and controllability within the Group:
•
•
•
•
RusHydro Group.
JSC RAO ES East owns 49.37% of voting shares of PJSC Yakutskenergo.
RusHydro owns 27.80% of voting shares of PJSC Yakutskenergo.
77.17% of voting shares are consolidated in the ownership of RusHydro Group.
The Board of Directors of PJSC Yakutskenergo is entirely made up of representatives of
Information about functional relations between key companies of the Group:
in its activity, PJSC Yakutskenergo deals with electricity companies of the Group in the Far Eastern
Federal District.
Supplementary information:
In the IFRS financial statements of RusHydro Group, the Company is placed in the segment
"Subgroup of RAO ES East".
5. Public Joint-Stock Company Krasnoyarskenergosbyt (PJSC Krasnoyarskenergosbyt)
188
The role performed for RusHydro Group and key activity areas:
The share of PJSC Krasnoyarskenergosbyt in the consolidated proceeds of RusHydro Group is
8.14%.
The Company is the main guaranteeing supplier of electricity for the public and enterprises on the
territory of the Krasnoyarsk Territory.
PJSC Krasnoyarskenergosbyt also offers services for the sale, maintenance, and repair of energy
accounting meters, high-voltage testing of electrical equipment, and energy audit of facilities, and renders
services under agency contracts.
Starting December 1, 2009, the Company renders services for management of multi-unit residential
buildings.
Mechanisms ensuring accountability and controllability within the Group:
•
RusHydro controls PJSC Krasnoyarskenergosbyt through the controlled companies JSC ESC
RusHydro and JSC Hydroinvest.
JSC
•
of
owns
PJSC Krasnoyarskenergosbyt, and 69.4% of voting shares are consolidated in the ownership of RusHydro
Group.
RusHydro
66.33%
voting
shares
ESC
of
•
JSC ESC RusHydro, 100% of whose voting shares are owned by RusHydro Group, exercises
the powers of the sole executive body of the Company.
•
seven out of nine members of the Board of Directors of Krasnoyarskenergosbyt were elected
by the votes of RusHydro Group.
Information about functional relations between key companies of the Group:
in its activity, PJSC Krasnoyarskenergosbyt interacts with electricity companies of the Group,
including JSC ESC RusHydro, which organizes electricity sales in RusHydro Group.
Supplementary information:
In the IFRS financial statements of RusHydro Group, the Company is placed in the segment
"Subgroup of ESC RusHydro".84
6. Joint-Stock Company Zagorskaya PSHPP-2 (JSC Zagorskaya PSHPP-2)
The role performed for RusHydro Group and key activity areas:
The share of JSC Zagorskaya PSHPP-2 in the value of consolidated assets of RusHydro Group is
6.70%.
The Company implements measures for the organization of construction of the Zagorskaya PSHPP-2.
Mechanisms ensuring accountability and controllability within the Group:
•
•
RusHydro owns 100% of voting shares of JSC Zagorskaya PSHPP-2;
JSC MC HydroOGC, 100% of whose voting shares are owned by RusHydro, exercises the
powers of the sole executive body of the Company.
84 This segment consists of the Group’s subsidiaries selling electricity to end consumers. All companies in this segment, except for JSC ESC RusHydro, have the
status of guaranteed suppliers, that is, suppliers who are obliged to sign contracts for the supply of electricity with all end consumers within their region subject to
an respective application.
189
•
RusHydro Group.
The Board of Directors of JSC Zagorskaya PSHPP-2 is entirely made up of representatives of
Information about functional relations between key companies of the Group:
in its activity, JSC Zagorskaya PSHPP-2 interacts with JSC MC HydroOGC, which performs the
functions of the sole executive bodies of the majority of controlled companies of RusHydro Group that are
customers of construction, and with design organizations of RusHydro Group.
Supplementary information: In the IFRS financial statements of RusHydro Group, JSC Zagorskaya
PSHPP-2 is placed in "Other segments".
7. Joint Stock Company Far-Eastern Grids Company (JSC FEGrC)85
The role performed for RusHydro Group and key activity areas:
The share of PJSC FEGrC in the value of consolidated assets of RusHydro Group is 5.24%.
The company is conducting operations within the United Power System of the East by transmitting
electricity through power distribution networks in the Amur Region, Khabarovsk Territory, Jewish
Autonomous Region, Primorsky Territory, and the southern region of Sahka Republic (Yakutia).
Mechanisms ensuring accountability and controllability within the Group:
•
•
•
RusHydro controls PJSC FEGrC through a controlled organization, PJSC FEEC.
PJSC FEEC owns 100% of voting shares of JSC FEGrC.
The Board of Directors of JSC FEGrC is entirely made up of representatives of RusHydro
Group.
Information about functional relations between key companies of the Group:
in its activity, JSC FEGrC deals with electricity companies of the Group in the Far Eastern Federal District.
Supplementary information:
In the IFRS financial statements of RusHydro Group, the Company is placed in the segment "Subgroup of
RAO ES East".
85 Included in the list of significant entities in 2019.
190
Appendix No.14 Information on Significant Transactions of the Company and other Major Controlled Legal Entities
Significant Transactions of the Company
The criteria for classifying the Company's transactions as significant are defined in sub-clause 8.2 of Article 8 of the Company's Charter. In 2018,
RusHydro committed no significant transactions as specified in sub-clause 8.2. of the Charter.
Significant Transactions of Controlled Legal Entities
The criteria for the “most significant transactions” of major controlled legal entities are not defined in their Charters. Since sub-clause 8.2. of
Article 8 of the Company’s Charter, in relation to significant transactions of the Company, established the criterion of their assignment to
significant category in the amount of 10 (ten) and more percent of the Company's book value, in relation to the controlled legal entities, in order
to disclose these data, the same criterion is applied and the transactions of major controlled legal entities (except for intragroup transactions) are
given as significant, with their price exceeding 10 (ten) or more percent of the book value of the assets of the respective entity on the last
reporting date preceding the date of the transaction.
The entities controlled by RusHydro and significant for it as of December 31, 2018:
1. Full corporate name: Joint-Stock Company RAO ES East
2. Full corporate name: Public Joint-Stock Company Far Eastern Energy Company
3. Full corporate name: Joint-Stock Company Far Eastern Generating Company
4. Full corporate name: Public Joint-Stock Company Yakutskenergo
5. Full corporate name: Public Joint-Stock Company Krasnoyarskenergosbyt
6. Full corporate name: Joint-Stock Company Zagorskaya PSHPP-2
From January 1, 2018 to December 31, 2018, among the controlled organizations significant for RusHydro, such transactions were made by
Krasnoyarskenergosbyt, DGK, and Yakutskenergo:
191
.
o
N
.
r
e
S
Type and
Subject of
the
Transactio
n
Parties to
the
Transactio
n
Content of a
transaction,
including civil
rights and
obligations, the
establishment,
modification of
which or
termination a
transaction is
aimed at
Deadline for the
fulfillment of
obligations under
the transaction,
designated parties
and beneficiaries,
amount of the
transaction in
money terms and
as a percentage of
the value of the
issuer's assets
1
Loan
Agreement
No. 00.19-
3/01-
026/18
-
Lender
JSC
Joint-
Stock Bank
Russia,
Borrower
PJSC
Krasnoyarsk
energosbyt
-
funds
Lending
Russian
in
the
in
rubles
a
of
form
revolving credit
line within the
established
amount at %.
2
Loan
Agreement
No. 4041-
KRS
Bank - JSC
Raiffeisenba
nk,
Borrower
PJSC
-
Lending
funds
within the credit
the
line
on
of
terms
repayment,
of
The
agreement
term is 12 months,
maximum
the
the
amount
transaction
is
RUB 823,125,000
00 kopecks, which
is 18.59% of the
book
company's
of
value
September
30,
2017
The
is
contract
concluded from the
date of Agreement
until December 31,
2018 included, the
as
The value of
assets of a
controlled
entity
significant
for
RusHydro at
the end of the
reporting
period
(quarter,
year)
preceding the
transaction
(date of
contract) and
for which the
accounting
(financial)
statements
were
prepared in
accordance
with the
legislation of
the Russian
Federation
RUB 4,428,25
0 thousand as
of September
30, 2017
Date of
the
transact
ion
(contrac
t)
Informa
tion
about
the
approva
l of the
transact
ion by
RusHyd
ro
Transacti
on
category
with
regard to
a
controlled
entity
significant
for
RusHydro
Date of
the
decisio
n to
appro
ve the
transa
ction
The
managemen
t body of
the
controlled
entity
significant
for
RusHydro,
which made
the decision
to approve
the
transaction
Date and
number of
the Minutes
of Meeting of
the
authorized
management
body of the
controlled
entity
significant
for
RusHydro, at
which the
decision was
made to
approve the
transaction
February
13, 2018
A
transaction
with
the
value
exceeding
10% of the
company's
book value
The Board
of Directors
Decem
ber 29,
2017
Minutes
No. 153
January
2018
dtd
10,
RUB 4,428,25
0 thousand as
of September
30, 2017
February
26, 2018
A
transaction
with
the
value
exceeding
The Board
of Directors
Decem
ber 29,
2017
Minutes
No. 153
January
2018
dtd
10,
192
Krasnoyarsk
energosbyt
serviceability,
maturity,
targeted use.
and
3
Loan
Agreement
JSC DGK
(Borrower)
and
PJSC
ROSBANK
(Lender)
4
Suretyship
contracts to
secure
fulfillment
of
obligations
of
Subsidiary
PJSC
Yakutskene
rgo to JSC
Sakhaenerg
o
(PJSC
Public Joint
Stock
Company
Yakutskener
go
Yakutskener
go)
(Provider of
Surety) and
Public Joint
Stock
Company
Sberbank of
Russia
(PJSC
thousand;
Lender
The
opens
a
revolving credit
line
the
to
to
Borrower
finance current
operating
activities,
investment
activities
and
refinancing of
existing
loans
and borrowings.
Loan amount is
RUB 10,000,00
0
estimated
interest amount:
RUB 7,313,250
thousand
As a security of
Debtor’s
the
obligations
to
the Bank under
Principal
the
the
Agreement,
of
Provider
Surety
undertakes to be
jointly and
in
full liable with
the Debtor
to
the Bank for the
Debtor’s
performance of
any or all of its
maximum amount
of the transaction is
RUB 1,097,700,00
0
00 kopecks,
which is 24.79% of
the
company’s
book value as of
September
30,
2017
June 20, 2025
RUB 80,375,9
72 thousand
June 21,
2018
-
10% of the
company's
book value
It is not a
major
transaction
not
a
related-
party
transaction
-
-
-
From the moment
of signing and is
effective until the
complete
fulfillment
of
obligations by the
parties;
PJSC
Yakutskenergo)
(Provider of Surety)
and PJSC Sberbank
(Lender),
JSC
Sakhaenergo
(Beneficiary);
Cumulative
for
price
interrelated
RUB 38,182,4
86 thousand as
of December
31, 2017
Minutes No. 7
April
dated
27, 2018 (as a
transaction
in
excess of 5%
of
the
company’s
book value).
The
transacti
on was
not
approved
by
RusHydr
o
June 13,
2018 (lot
No. 1)
June 13,
2018 (lot
No. 2)
June 13,
2018 (lot
No. 3)
May 3,
2018 (lot
No. 4)
May 3,
2018 (lot
No. 5)
May 3,
Interrelated
transaction
s, which
are
interested-
party
transaction
s and are
interrelated
with
previously
made
transaction
s
The decision
the
by
General
Meeting of
Shareholders
the
on
to,
consent
or on
the
subsequent
approval of,
related
transactions
was
taken.
Notification
of
not
April
27,
2018
(as
a
transac
tion in
excess
of 5%
of
the
compa
ny’s
book
value
is
approv
ed by
193
Sberbank)
(Lender)
5
Loan
Agreement
JSC DGK
(Borrower),
PJSC VTB
if
obligations
(including these
obligations and
obligations that
may arise in the
arising
future)
out of or
in
connection with
the
Principal
Agreement,
including
but
not limited to,
the obligation to
the
pay
principal,
interest,
any
other payments,
and
fees
refunds,
including,
applicable,
compensation
of
(payment)
any
costs
(including, but
not limited to,
legal expenses),
as well
as
interest, forfeits
(fines,
and
penalties),
losses of
the
Bank arising in
connection with
the
protection
and observance
of the rights of
the Bank under
the
Principal
Agreement
and/or
performance.
Lender
The
the
to
opens
the
Borrower
late
surety
commitments
-
RUB 5,112,185,481
.82
free),
(VAT
which is 13.39% of
the book value of
Yakutskenergo’s
assets
of
December 31, 2017.
as
2018 (lot
No. 6)
May 3,
2018 (lot
No. 7)
June 13,
2018 (lot
No. 8)
June 13,
2018 (lot
No. 9)
the
Board
of
Directo
of
rs
Yakuts
kenerg
o).
forthcoming
interrelated
transactions
in line with
sub-clause
1.1 of article
81 of
the
Federal Law
"On
Joint-
Stock
Companies"
dtd March
30,
2018
was sent to
the members
of the Board
of Directors
the
and
Management
Board of the
Company.
The
Company
has
not
received any
request
for
approval by
the relevant
management
body of the
Company in
accordance
with clause 1
of Article 83
of
the
Federal Law
"On
Joint-
Stock
Companies".
Date:
Maturity
loan
full
The
repayment dates on
RUB 84,564,4
52 thousand
Decembe
11,
r
2018
RusHydr
o’s
manage
is
It
a
neither
major nor
The Board
of Directors
Decem
ber 5,
2018
(Minutes
No. 13 of the
of
Board
194
related-
a
party
transaction
.
ment
bodies
did not
approve
this
transacti
on.
Directors dtd
December 5,
2018)
BANK
(Lender)
Revolving
Aggregate
Credit Limit to
finance current
operating
activities,
investment
activities
and
refinancing
of
loans
existing
and borrowings
for a period up
(two
to 2,555
five
thousand
hundred
fifty
calendar
five)
days from
the
effective date of
the Agreement
with the limit of
RUB 10,000,00
0,000
(ten
billion 00/100).
transactions
credit
concluded within
the Agreement shall
be set to the date,
which is 2,555 (two
thousand
five
hundred fifty five)
calendar days from
the effective date of
Agreement.
the
Under
the
Agreement,
credit
separate
are
transactions
concluded.
The
loan term for any
Credit Transaction
shall not exceed
(one
1,825
thousand
eight
hundred
twenty-
five) calendar days.
and
Parties
Beneficiaries
to
the Transaction:
JSC
DGK
(Borrower), PJSC
VTB
BANK
(Lender)
Amount
of
Transaction:
RUB 10,000,000,00
0
billion
00/100) with loan
interest accrued at
an interest rate, the
maximum amount
of which cannot
exceed the value of
the Bank of Russia
Key Rate increased
by no more than
2.16% per annum.
The amount of the
is
transaction
(ten
a
195
6
Loan
Agreement
No. 8196-
NSK
Bank - JSC
Raiffeisenba
nk,
Borrower
PJSC
Krasnoyarsk
energosbyt
-
funds
Lending
within the credit
the
line
on
terms
of
repayment,
serviceability,
maturity,
targeted use.
and
7
Loan
Agreement
No. 3418-
116-KL
Bank - JSC
Gazpromban
k; Borrower
PJSC
-
Krasnoyarsk
energosbyt
Lending
funds
within the credit
the
line
on
of
terms
repayment,
serviceability,
maturity,
targeted use.
and
11.83% of the value
of the issuer's assets
as of September 30,
2018.
The
is
contract
concluded from the
date of Agreement
until December 31,
2019 included, the
maximum amount
of the transaction is
RUB 1,188,306,38
00 kopecks,
0
which is 24.99% of
the
company’s
book value as of
30,
September
2018
contract
The
is
concluded from the
date of Agreement
until December 31,
2021 included, the
maximum amount
of the transaction is
RUB 1,927,500,00
0
00 kopecks,
which is 40.54% of
company’s
the
book value as of
September
30,
2018
RUB 4,754,28
9 thousand as
of December
30, 2018
Decembe
r
18,
2018
The Board
of Directors
Decem
ber 13,
2018
Minutes
No. 166
January
2018
dtd
17,
A
transaction
with
the
value
exceeding
10% of the
company's
book value
RUB 4,754,28
9 thousand as
of December
30, 2018
Decembe
r
27,
2018
Major
transaction
The Board
of Directors
Decem
ber 13,
2018
Minutes
No. 166
January
2018
dtd
17,
196
Appendix No.15 Accounting statements and the Independent Auditor's audit report as
of December 31, 2018 (in accordance with RAS)
PJSC «RusHydro»
Financial statements and
Independent Auditor’s report
31 December 2018
Translation from Russian original
197 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
2.6
Investments .................................................................................................................................. 13
Inventories .................................................................................................................................... 15
2.7 Expenses of future periods ...................................................................................................... 15
2.8 Accounts receivable .................................................................................................................. 15
2.9 Cash equivalents and presentation of cash flows in the statement of cash flows ... 16
2.10 Share capital, additional and reserve capital ...................................................................... 16
2.11 Loans and bank credits received ........................................................................................... 16
2.12 Estimated liabilities, contingent liabilities and contingent assets ................................ 16
2.13 Revenue recognition .................................................................................................................. 17
2.14 Recognition of expenses .......................................................................................................... 17
2.15 Changes in the accounting policies ...................................................................................... 18
III. Disclosure of material indicators ................................................................................................... 19
3.1 Non-current assets (Section I of the balance sheet) ......................................................... 19
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), ........................................................... 19
Long-term investments (line 1170 of the balance sheet) ...................................... 23
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
Share capital (line 1310 of the balance sheet) ......................................................... 37
198
3.3.2
3.3.3
3.3.4
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 ............................................................................................................. 49
3.12.2 Sales to related parties .................................................................................................. 49
3.12.3 Purchases from related parties ................................................................................... 50
3.12.4 Settlements with non-state pension fund ................................................................. 50
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 ........................ 52
3.13 Segment Information ................................................................................................................. 53
3.14 Contingent liabilities .................................................................................................................. 53
3.15 Financial risk management ...................................................................................................... 54
3.16 Subsequent events .................................................................................................................... 57
199
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 2018, 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 2018;
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 2.5 Investments and Note 3.1.2 Long-term investments (balance sheet line
1170) to the balance sheet and statement of financial results which describe the reasons for departure
from accounting rules in respect of 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
2018 the amount of unrecognised decrease in the market value as compared to the carrying value of
these investments is RUB 6,670 million, as of 31 December 2017 – RUB 6,702 million. Our opinion is
not modified in respect of this matter.
200
Our audit approach
Overview
Materiality
• Overall materiality: Russian Roubles (“RUB”) 2,570 million, which
represents 5% of the average profit before tax for the last three years.
Key audit matter
•
Impairment assessment of financial investments and accounts
receivable from subsidiaries and other related parties
As part of designing our audit, we determined materiality and assessed 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. As in all of our
audits, 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 2,570 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.
201
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
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, 3.2.3, 3.12.5
and 3.12.6 of the explanatory notes to the
balance sheet and income statement.
At 31 December 2018, the aggregate carrying
amount of the Company’s investments in
equity and debt securities of its subsidiaries
and other related parties was RUB
349,789 million (net of the impairment
provision of RUB 33,374 million), or 34% of
the total value of Company’s assets.
At 31 December 2018, the carrying amount of
accounts receivable from subsidiaries and
other related parties was RUB 142,792 million
(net of the doubtful debt provision of RUB
4,946 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.
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
202
Key audit matter
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
management’s judgements, and impairment
provisions for investments and doubtful debts
can be significant.
How our audit addressed the Key audit
matter
impairment provisions for investments and
doubtful debts;
• 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, 3.2.3,
3.12.5 and 3.12.6 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 2018 and Issuer’s Report of PJSC RusHydro for Q1 2019, but does not include the
financial statements and our auditor’s report thereon. PJSC RusHydro’s Annual Report for 2018 and
Issuer’s Report of PJSC RusHydro for Q1 2019 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.
203
When we read PJSC RusHydro’s Annual Report for 2018 and Issuer’s Report of PJSC RusHydro for
Q1 2019, if we conclude that there is a material misstatement therein, we are required to communicate
the matter to those charged with governance.
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
204 the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
• 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.
28 February 2019
Moscow, Russian Federation
A. S. Ivanov, certified auditor (licence no. 01-000531), AO PricewaterhouseCoopers Audit
Audited entity: Public Joint Stock Company Federal Hydro-
Generating Company – RusHydro
Independent auditor:
AO PricewaterhouseCoopers Audit
Record made in the Unified State Register of Legal Entities on
26 December 2004 under State Registration Number 1042401810494
660017, Russian Federation, Krasnoyarsk Region, Krasnoyarsk,
Dubrovinskogo str. 43, bld. 1
Registered by the Government Agency Moscow Registration Chamber
on 28 February 1992 under Nо. 008.890
Record made in the Unified State Register of Legal Entities on
22 August 2002 under State Registration Number 1027700148431
Member of Self-regulated organization of auditors «Russian Union of
auditors» (Association)
Principal Registration Number of the Record in the Register of
Auditors and Audit Organizations – 11603050547
205
BALANCE SHEET
as at 31 December 2018
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PJSC 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
2018/12/31
75782411
INN 2460066195
OKVED
35.11.2
OKOPF/OKFC
12247 / 41
OKEI
385
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
3.1.2 Financial investments, incl.:
in subsidiaries, associates and
investments
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
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
As at
31 December
2018
4
As at
31 December
2017
5
As at
31 December
2016
6
1,070
1,097
419,084
386,401
32,683
343,606
277,478
66,128
-
2,629
767,486
4,765
19
185,770
53,687
41
16,453
30,974
441
5,778
132,083
6,879
7,059
2,343
94,181
21,621
35,770
29,585
5,584
601
42,971
26
269,321
1,036,807
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
206
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
2018
4
As at
31 December
2017
5
As at
31 December
2016
6
426,289
52,437
58,424
15,179
298,877
262,151
36,726
851,206
128,177
19,308
2,840
150,325
19,769
11,703
4,978
211
143
5,408
143
-
820
63
2,863
878
35,276
1,036,807
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
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
28 February 2019
___________________
Y. G. Medvedeva
(clarification of signature)
207
STATEMENT OF FINANCIAL RESULTS
for the year ended 31 December 2018
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PJSC 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
2018/12/31
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
Gain or loss from other operations not included in the net profit of
the period
Total financial result for the period
REFERENCE
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
2018
4
162,813
(96,847)
65,966
65,966
829
8,213
(7,772)
14,840
(31,978)
50,098
(11,044)
3,196
(2,309)
114
(133)
36,726
-
36,726
0,0862
Year ended
31 December 2017
5
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
0,0890
Chairman of Management Board – General Director
____________________
N. G. Shulginov
(clarification of signature)
Chief accountant
28 February 2019
___________________
Y. G. Medvedeva
(clarification of signature)
208
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PJSC 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
2018/12/31
75782411
INN 2460066195
OKVED
35.11.2
OKOPF/OKFC
12247 / 41
OKEI
385
Narrative
1
Line
code
2
Share capital Additional capital Reserve capital Retained earnings
Total
3
4
5
6
7
I. Changes in equity
Equity as of
31 December 2016
for 2017
Increase of equity,
including:
net profit
additional shares
issue
Decrease of equity,
including:
dividends
other
Additional capital
change
Reserve capital change
Equity as of
31 December 2017
for 2018
Increase of equity,
including:
net profit
additional shares
issue
other
Decrease of equity,
including:
dividends
other
Additional capital
change
Reserve capital change
Equity as of
31 December 2018
3100
386,255
111,129
11,278
260,674
769,336
3210
3211
40,034
-
3214
40,034
3220
3227
3228
3230
3240
-
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
3200
426,289
111,030
13,371
274,994
825,684
3310
3311
3314
3317
3320
3327
3328
3330
3340
-
-
-
-
-
х
-
х
х
-
-
-
-
-
х
-
-
-
х
x
-
х
х
(169)
х
х
1,808
36,748
36,726
х
22
(11,226)
(11,226)
-
169
(1,808)
36,748
36,726
-
22
(11,226)
(11,226)
-
х
х
3300
426,289
110,861
15,179
298,877
851,206
Narrative
1
Net assets
III. Net assets
Line code
2
3600
As at 31
December 2018
3
851,265
As at 31
December 2017
4
825,745
As at 31
December 2016
5
769,399
Chairman of Management Board – General Director
____________________
Chief accountant
28 February 2019
___________________
N. G. Shulginov
(clarification of signature)
Y. G. Medvedeva
(clarification of signature)
209
STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
Organisation Public joint stock company Federal Hydro-Generating Company -
RusHydro (PJSC 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
2018/12/31
75782411
INN 2460066195
OKVED
35.11.2
OKOPF/OKFC
12247 / 41
OKEI
385
Narrative
2
Line code
For 2018
For 2017
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
other payments
Net cash flows from investing activities
3.2.4
4110
4111
4112
4119
4120
4121
4122
4123
4124
4129
4100
4210
4211
4212
4213
4214
4219
4220
4221
4222
4223
4224
4229
4200
172,151
161,297
95
10,759
(105,843)
(60,098)
(7,435)
(8,404)
(11,343)
(18,563)
66,308
13,385
20
939
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
6,925
27,396
5,501
-
(102,166)
8,206
3,934
(117,042)
(16,096)
(21,679)
(14,917)
(7,591)
(39,648)
(2,083)
(29,422)
(88,781)
(85,860)
(1,912)
-
(77,149)
210
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 2018
For 2017
4
5
78,436
78,436
-
-
(64,174)
(11,135)
(53,037)
(2)
14,262
(8,211)
50,929
42,971
253
70,675
20,676
40,000
9,999
(37,912)
(19,771)
(18,135)
(6)
32,763
9,996
40,954
50,929
(21)
Chairman of Management Board – General Director
____________________
N. G. Shulginov
(clarification of signature)
Chief accountant
28 February 2019
___________________
Y. G. Medvedeva
(clarification of signature)
211
I.
General information
1.1
Information about the Company
Principal activities of public joint stock company Federal Hydro Generating Company - RusHydro
(PJSC 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 2018 the Company employed 5 538 people (as of 31 December 2017 –
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 2018 the ownership share of the Russian Federation in the Company's share
capital amounted to 60,56% (as of 31 December 2017 – 60.56%, as of 31 December 2016 –
66.84%).
As of 31 December 2018 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 2018 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
−
− 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, General Director of PJSC “Polyus”, General Director of LLC
“Polyus;
− Kravchenko Vyacheslav Mikhailovich
−
Livinskiy Pavel Anatolyevich, Chairman of the Board of Directors and General Director of
PJSC “Rosseti”;
− Pivovarov Vyacheslav Victorovich, Chief Executive Officer, LLC Altera Capital;
− Rasstrigin Mikhail Alekseevich, Depute Minister of Economic Development of the Russian
Federation;
− Rogalev Nikolay Dmitrievich, rector of the Federal State Budget Educational Institution of
Higher Education "National Research University “MEI”;
− Shishin Sergey Vladimirovich, Senior Vice-President, VTB Bank (PJSC);
− Shishkin Andrey Nikolaevich, Vice President for power and localisation PJSC Rosneft;
member of Board of PJSC “NK “Rosneft”, Chief Executive Officer and Chairman of the
Management Board PJSC ANK “Bashneft”, General Director of LLC “RN-Aktiv”;
− Shulginov Nikolay Grigoryevich, Chairman of Management Board, General Director,
PJSC RusHydro.
212
By the decision of the Annual General Meeting of Shareholders dated 28 June 2018 (protocol
No.17) Livinskiy Pavel Anatolyevich were elected members of Board of Directors, Rasstrigin
Mikhail Alekseevich and the authority of Podguzov Nikolay Radievich and Chekunkov Aleksey
Olegovich.
As of 31 December 2018 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,
− Kirov Sergey Anatolyevich, First Deputy General Director,
− Markin Vladimir Ivanovich, First Deputy General Director,
− Rizhinashvili George Ilyich, First Deputy General Director.
In 2018 there was no change in the composition of the Company’s Management Board.
As of 31 December 2018 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 Annual General
Meeting of Shareholders dated 28 June 2018 (protocol No.17).
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 continues to be negatively
impacted by ongoing political tension in the region and international sanctions against certain
Russian companies and individuals. Firm oil prices, low unemployment and rising wages
supported a modest growth of the economy in 2018..
This operating environment has a significant impact on the Company’s operations and financial
position. 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 31000-2018, GOST R ISO 31000-2010, COSO ERM 2017
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.
213
Financial position of the Company, its liquidity, sources of financing, performance results do not
depend significant on changes of rate of exchange and changes of interest rates.
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.
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
financial position.
The Company manages these risks by developing a Company-friendly legal framework for
operations of the electricity and capacity market. To accomplish this task the Company
participates in the processes undertaken by the Russian Ministry of Energy, the NP Market
Council and FTS in the area of developing the electric power industry regulations, and carries out
continuous monitoring of changes in the legislation.
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.
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
2018, Russia’s foreign currency obligations were rates as follows: ВВB- (Standard & Poor’s), Ba1
(Moody’s) and 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 2018 international rating agencies raised the long-term credit rating of the Company as
follows: Moody’s improved the rating to Вa1 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.
214 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.
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 Company’s 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 of the Company 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.
215
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, subject to the rules
and assumptions described in the Company's accounting policies.
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 69.4706 as of 31 December 2018 (31 December 2017: USD 1 = RUB 57.6002,
31 December 2016: USD 1 = 60.6569), EUR 1 = RUB 79.4605 as of 31 December 2018
(31 December 2017: EUR 1 = RUB 68.8668, 31 December 2016: EUR 1 = RUB 63.8111) and
CNY 1 = RUB 10.0997 as of 31 December 2018.
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.
216
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 a number 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 are accounted for within inventories.
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 historical cost less
depreciation, while fixed assets received in 2008 due to the merger of a number of subsidiaries
and affiliates to the Company are depicted at historical cost less depreciation accumulated from
the time of independent valuation in order to merge with the subsidiaries.
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".
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
217 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.
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), taking into account the rules adopted by the Company for reflecting
financial investments in subsidiaries that have a current market value at the reporting date or
earlier.
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.
The initial cost of financial investments purchased at a charge is the sum of the Company's actual
expenses for their 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.
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 claims from investments are recognised in the balance
sheet line 1230 "Accounts receivable".
Investments, the current market value of which can be determined under the established
procedure, with the exception of contributions to the authorized capital of subsidiaries, 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.
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).
218
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 in subsidiaries that have a current market value at the reporting or earlier date
The Company records investments in charter capital of its subsidiaries (irrespective of current
market quotes available for them) within financial investments that are not revalued at current
market value. These financial investments on the Company’s balance sheet include: AO RAO
Energy Systems of the East, PAO Yakutsenrgo and PAO DEK, i.e. entities obtained in 2011-2013
as a result of the Company's additional share issues. These investments are recorded at value
that is agreed with the Company’s shareholders, including the controlling shareholder - the
Russian Federation represented by the Federal Agency for State Property Management. The
value measurement is based on an independent market appraisal.
In accordance with para 20 of PBU 19/02, investments the fair market value of which is
determinable under the established procedure are recorded in year-end financial statements at
their current market value that is derived by adjusting their value as at the prior reporting date. In
accordance with para 24 of PBU 19/02, if no current market value can be determined at the
reporting date for investments that were earlier carried at market value, such investments should
be recorded at their latest value.
Management of the Company does not follow the Accounting Regulation “Accounting for
Investments” (PBU 19/02) in the part related to accounting for investments in subsidiaries that
have a current market value as at the reporting or earlier date and has not performed any market
revaluation of such investments after they were obtained.
Management of the Company believes that market quotes do not fairly present the estimated
value of the Company’s controlling stakes in its subsidiaries at relevant dates because the number
of shares traded in the market is not representative: less than 1% of the total number of
outstanding shares are daily traded in the market.
In 2016 the interest of RusHydro Group (RusHydro Group means the Company and entities that
the Company controls directly or through other subsidiaries) in AO RAO Energy Systems of the
East increased from 86.20% to 99.98% as a result of the consolidation process by buying shares
from minority shareholders. In 2016, shares of AO RAO Energy Systems of the East stopped
being quoted and in 2017 the company was de-listed from the Moscow Exchange and removed
from quotation lists.
The Company's management plans to benefit from investments in OAO RAO Energy Systems of
the East, ОАО Yakutskenergo and ОАО Far East Energy Company by controlling their business
operations rather than from their market value fluctuations. In view of these circumstances and
taking into account the fact that the Company has no plans to sell these investments, in
accordance with para 6 of the Russian Accounting Regulation "Accounting Reports of an Entity"
(PBU 4/99), approved by order No. 43n of the Russian Ministry of Finance of 6 July 1999, the
Company decided not to follow the accounting rules and not to perform any market revaluation of
its investments in OAO RAO Energy Systems of the East, ОАО Yakutskenergo and ОАО Far
East Energy Company after their purchase date.
Therefore, the valuation approach used by the Company to record these investments, i.e. at value
that is agreed with the shareholders and is based on an independent market appraisal, allows to
avoid inappropriate presentation of the Company’s financial position and financial results.
Additionally, the Company’s management reviewed IAS 27 “Separate Financial Statements”,
IFRS 9 “Financial Instruments” and IFRS 13 “Fair Value Measurement”.
IAS 27 sets the rules of recognizing investments in subsidiaries, joint ventures and associates in
the process of preparing separate financial statements. In accordance with para 10 of IAS 27, an
entity can choose to account for such investments at cost or in accordance with IFRS 9 at fair
value. IFRS 13 gives the highest priority in fair value measurement to quoted prices in active
markets for identical assets. The term ‘active market’ is defined as one in which transactions for
the asset take place with sufficient frequency and volume to provide pricing information on an
ongoing basis. The market for investments under review is not deemed active.
The alternative accounting treatment of investments in subsidiaries as per IAS 27, i.e. at cost
without any revaluation at market quotes, complies with the Company’s accounting policies that
219 provide for the departure from the Accounting Regulation “Accounting for Investments” (PBU
19/02).
Impairment of financial investments
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 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.
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.
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
220
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 and
included in the line 4219 “Other receipts” and in the line 4229 “Other payments”.
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
221 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).
222 General expenses are recognised in the reporting period wherein they were incurred irrespective
of the actual closure of accounts payable.
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 2018.
223 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),
PP&E group
31 December
2018
Net book value
31 December
2017
31 December
2016
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"
185,342
162,476
38,193
6
154
4
176
386,401
189,107
153,576
38,903
6
220
4
191
382,007
192,240
140,215
39,539
6
293
4
217
372,514
224
Availability and movement of property, plant and equipment
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
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
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)
27,220
21,584
1,428
1,469
25,391
19,732
366
343
-
1
31
32
-
-
4
7
(1,075)
(2,369)
(59)
(912)
(841)
(1,194)
(141)
(236)
-
-
(22)
(25)
-
-
(12)
(2)
743
1,390
47
308
652
992
20
63
-
-
12
25
-
-
12
1
(17,395)
(16,211)
(4,549)
(4,580)
(11,841)
(10,630)
(881)
(880)
-
(1)
(94)
(98)
-
-
(30)
(22)
497,089
516,304
227,446
228,003
222,663
241,201
45,469
45,576
13
14
1,084
1,091
4
4
410
415
(115,082)
(129,903)
(38,339)
(42,611)
(69,087)
(78,725)
(6,566)
(7,383)
(7)
(8)
(864)
(937)
-
-
(219)
(239)
* 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 and accumulated depreciation of RUB 998 million. Exposure of leased property, plant and equipment is described in paragraph 3.6.1 of the
Explanatory Notes.
225
Changes in the cost of property, plant and equipment as a result of further construction,
re-equipping, reconstruction or partial liquidation
Narrative
2018
2017
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
Business and administrative equipment and stock
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
11,168
10,121
946
89
12
85
80
5
14,885
13,472
1,099
314
-
85
77
8
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
2018
31 December
2017
31 December
2016
1,023
1,308
1,451
36,256
35,760
33,862
856
100
1,178
71
5,924
80
226
Construction-in-progress and purchase of property, plant and equipment
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
2017
2018
2017
2018
2017
2018
2017
2018
36,595
37,628
33,238
32,214
24
22
3,333
5,392
27,209
16,732
13,171
8,979
471
236
13,567
7,517
(58)
(85)
(58)
(80)
-
-
-
(5)
29
(8)
11,539
8,688
(2)
-
(11,508)
8,696
(26,147)
(21,584)
(25,676)
(21,357)
(471)
(227)
-
-
37,628
32,683
32,214
28,444
22
31
5,392
4,208
* 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
227
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
31 December
2018
31 December
2017
31 December
2016
Investments in subsidiaries
Investments in associates
Investments in other entities
Long-term loans issued
Debt securities
Total line 1170 "Financial investments"
264,824
11,110
1,544
66,128
-
343,606
237,257
11,110
8,363
55,419
-
312,149
244,104
11,110
9,373
27,085
601
292,273
Exposure of long-term investments to financial risks is described in paragraph 3.15 of the
Explanatory Notes.
228
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
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
320,913
(28,640)
56,192
(893)
(27,692)
16
(7,747)
349,412
(37,263)
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)
45,455
900
34,247
-
-
-
-
55,292
11,208
-
-
1,448
-
-
-
-
(893)
1,448
-
-
-
-
(13,580)
-
(1,484)
(16)
-
(117)
(11,597)
(26,958)
(499)
(601)
-
3,330
-
-
16
-
-
3,330
-
-
-
-
(5,196)
(7,747)
(5,196)
-
-
-
-
-
-
-
-
381,287
262,833
295,596
11,110
11,110
13,151
1,554
55,419
66,128
6,899
6,899
(37,681)
(25,576)
(30,772)
-
-
(4,788)
(10)
-
-
(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".
229
(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
JSC Zagorskaya GAES-2
JSC Nizhne-Bureiskaya GES
JSC Ust-Srednekanskaya GES
JSC RAO ES of East
JSC Zaramagskie GES
JSC Yakutskaya GRES-2
JSC Sakhalinskaya GRES-2
JSC CCGT in the City of Sovetskaya
Gavan
PJSC Kolymaenergo
JSC Sulakskiy Hydrocascade
JSC Malaya Dmitrovka
JSC Blagoveschenskaya TEС
JSC ESK RusHydro
JSC Lenhydroproject
JSC Geoterm
JSC Leningradskaya GAES
PJSC Yakutskenergo*
JSC NIIES
LLC Verkhnebalkarskaya MGES
OJSC P. S. Neporozhny Sayano-
Shushenskaya HPP
PJSC Kamchatsky gas and energy
complex
JSC Yuzhno-Yakutskiy GEK
JSC Gidroinvest***
HydroOGK Power Company Ltd
Other
Associates:
PJSC Irkutsk Electric Grid Company
PJSC Sakhalin energy company
Other entities:
PJSC Boguchanskaya GES
PJSC Inter RAO
Other
Total:
31 December 2018
31 December 2017
31 December 2016
Carrying
amount
Share, %
Carrying
amount
Share, %
Carrying
amount
Share, %
264,824
69,691
38,393
23,111
18,495
17,216
16,862
15,012
13,844
13,187
11,480
6,394
4,285
3,358
3,260
2,493
1,987
1,671
1,067
937
100.00%
100.00%
67.82%
84.39%
99.75%
100.00%
100.00%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00% -
1 share
100.00%
99.74%
100.00%
29.80%
100.00%
100.00%
237,257
60,691
14,611
23,111
18,495
17,216
16,862
15,012
13,844
13,187
10,094
6,394
4,285
3,358
3,260
2,425
1,987
1,671
1,067
937
100.00%
100.00%
67.82%
84.39%
99.75%
100.00%
100.00%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00% -
1 share
100.00%
99.65%
100.00%
29.80%
100.00%
100.00%
244,104
60,691
14,611
23,111
18,495
17,216
16,862
15,012
13,844
13,187
10,094
6,394
4,285
3,420
3,260
2,425
4,994
1,671
1,067
937
100.00%
100.00%
67.82%
84.39%
99.75%
100.00%
100.00%
100.00%
98.76%
100.00%
100.00%
100.00%
100.00% -
1 share
100.00%
99.65%
100.00%
29.80%
100.00%
100.00%
589
100.00%
589
100.00%
589
100.00%
100.00%
100.00%
66.81%
100.00%
42.75%
26.94%
2.88%
-
531
49
-
-
912
11,110
8,543
2,567
1,544
1,081
-
463
277,478
531
2,993
3,255
-
1,382
11,110
8,543
2,567
8,363
1,081
6,809
473
96.58%
100.00%
100.00%
100.00%
42.75%
26,94%
2.88%
1.94%
531
3,005
5,422
1,171
1,810
11,110
8,543
2,567
9,373
1,081
7,709
583
96.58%
100.00%
100.00%
100.00%
42.75%
28.09%
2.88%
1.94%
256,730
264,587
* Investment in PJSC Yakutskenergo (29.80%) is recorded within subsidiaries as the Company has control
over these entities indirectly via other subsidiaries.
** JSC Yuzhno-Yakutskiy GEK was renamed to JSC TSOK RusHydro in 2018.
*** The ownership percentage of shares changed due to reorganisation through merger LLC Index energetiki
– HydroOGK, LLC EZOP, LLC Vostok-Finans into JSC Gidroinvest.
Key factors affected changes in the value of investments in subsidiaries, associates and other
entities in 2018 are as follows:
− acquisition of additionally issued shares of subsidiaries for the total of RUB 34,246 million,
including AO Nizhne-Bureyskaya GES of RUB 23,782 million, AO Zagorskaya HAEPP-2
230
of RUB 9,000 million, AO Sulaksky Hydrocascade of RUB 1,386 million, other subsidiaries
of RUB 78 million;
− measurement of investments that have current market value and recognition of the
resulting gain of RUB 1,449 million on shares of PAO Inter RAO;
−
−
sale in July 2018 of PAO Inter RAO’s shares with the carrying value of RUB 8,267 million;
AO Inter RAO Capital with the sales cost of 6,790 million (as at 31 December 2018 short-
term receivables contains RAO Inter RAO’s receivables in the amount of RUB 5 936
million (see paragraph 3.2.2 of the Explanatory Notes) in accordance with the terms of
repayment under the sales contract;
creating an investment impairment provision of RUB 6,452 million, including RUB 3,255
million for AO Gidroinvest, RUB 2,943 million for AO TSOK RusHydro and RUB 254
million for other subsidiaries;
Investments in subsidiaries that have current market value as of reporting date or formerly
As of 31 December 2018, 31 December 2017 and 31 December 2016, investments included
shares of the Company's subsidiaries, i.e. JSC RAO ES of East, PJSC Yakutskenergo and
PJSC 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 RUB 20 204 million as of 31 December 2018. This valuation
exceeds the current market value of the shares (for JSC RAO ES of East - the cost of the last
valuation at the current market value) as of 31 December 2018, 31 December 2017 and 31
December 2016 by RUB 6 670 million, RUB 6,702 million and RUB 6,614 million, respectively.
Description of the Company’s accounting policies and explanation of the departure from PBU
19/02 in the accounting treatment of the above investments are provided in para 2.5 of the Notes.
Items of the financial statements that change as a result of the departure from the accounting
rules and the adjustment amount for each such item are presented below:
Items of the financial
statements
Date/period
Item value as if there
were no departure
Adjustment
amount
Items of the
financial
statements
Net assets
Line 1170 "Financial
investments"
Line 1370 "Retained
earnings (loss)"
Line 2340 "Other income"
Line 2350 "Other expense"
Line 2340 "Net income"
Line 2340 "Basic earning
per share, RR"
31.12.2016
31.12.2017
31.12.2018
31.12.2016
31.12.2017
31.12.2018
31.12.2016
31.12.2017
31.12.2018
2017
2018
2017
2018
2017
2018
2017
2018
762 785
819 043
844 595
285 659
305 447
336 936
254 060
268 292
292 207
7 895
14 872
(22 437)
(31 978)
36 061
36 758
0,0888
0,0862
6 614
6 702
6 670
6 614
6 702
6 670
6 614
6 702
6 670
-
(32)
88
-
88
(32)
0,0002
-
769 399
825 745
851 265
292 273
312 149
343 606
260 674
274 994
298 877
7 895
14 840
(22 349)
(31 978)
36 149
36 726
0,0890
0,0862
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 2018.
231
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 6 453 million (for 2017 - RUB 7,747 million).
The initial value of equity financial investments in respect of which a provision for impairment of
financial investments was created is RUB 36 318 million as of 31.12.2018 (as of 31.12.2017 –
RUB 37,166 million, as of 31.12.2016 – RUB 35,096 million).The amount of provision for
impairment of these financial investments as of 31 December 2018 is RUB 30 781 million (as of
31.12.2017 – RUB 25,586 million, as of 31.12.2016 – RUB 17,855 million).
JSC Zagorskaya GAES-2. As of 31 December 2018 the balance sheet includes JSC Zagorskaya
GAES-2 shares as long-term financial investments in the amount of RUB 69,691 million.
The analysis of recoverability of these assets performed by the Company as of 31 December
2018 was based on the following key factors:
− Management plans
to perform
recovery work and complete construction of
Zagorskaya GAES-2. As of 31 December 2018 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 constructed: the price is set in a manner that guarantees payback
period of 20 years for all CAPEX invested in construction.
− By the decision of the Association "NP Market Council" dated April 18, 2018, the date of
commencement of the fulfillment of PJSC RusHydro's obligations for the supply of
capacity to JSC Zagorskaya GAES-2 was postponed in respect of the first and second
stages - on January 1, 2024.
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 2018.
No negative trends which may result in impairment of other shareholdings were observed.
(b) Long-term loans issued
Loan recipient's name
31
December
2018
31 December
2017
31
December
2016
Maturity
date
Annual
rate,%
Long-term loans issued to related parties, including:
JSC Far East Generating
Company
JSC RAO ES Vostoka
JSC Sakhaenergo
PJSC Yakutsenergo
PJSC Kamchatskenergo
JSC Hydroinvest
PJSC Magadanenergo
JSC Teploenergoservice
PJSC Sakhalinenergo
JSC Far East Distribution Grid
Company
40,546
8,523
5,426
2,400
2,004
1,748
1,618
1,517
1,345
35,608
8,523
1,950
2,400
2,004
-
1,618
588
1,345
4,538
-
3,476
-
-
12,137
-
929
-
2021-2023
2022
2021-2022
2022
2022
2021
2022
2021-2022
2022
5,9%-8,0%
5,9% - 6,4%
5,9%-8,0%
5,9% - 6,4%
5,9% - 6,4%
10,1%
5,9% - 6,4%
5,9%-8,0%
5,9% - 6,4%
-
-
4,846
232
Loan recipient's name
Other
Total long-term loans issued
31
December
2018
1,001
66,128
31 December
2017
1,085
55,419
31
December
2016
1,159
27,085
Maturity
date
Annual
rate,%
As of 31 December 2018 the balance sheet line 1170 "Financial investments" includes the target
loan granted to subsidiaries of the Company in the amount of RUB 55 000 million in 2017 for
refinancing their current liabilities (as of JSC Far East Generating Company – RUB 35 608 million,
JSC RAO ES Vostoka – RUB 8 523 million, PJSC Yakutskenergo – RUB 2 400 million, PJSC
Kamchatskenergo – RUB 2 004 million and others in the amount of RUB 6 465 million).
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
31 December
2018
31 December
2017
31 December
2016
Zelenchukskaya GAES connections to the grid
Software and licenses
Borrowing costs
Project documentation on the construction of Cheboksarskaya
GES related to uplifting water reservoir level
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)
1,704
693
540
-
369
3,306
1,817
734
420
1,620
243
4,834
1,931
984
891
1,620
150
5,576
2,629
4,222
4,703
677
612
873
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
2018
31 December
2017
31 December
2016
4,063
3,614
3,328
677
25
4,765
612
32
4,258
873
51
4,252
Spare parts, materials and other inventories are measured at actual cost of acquisition. As of
31 December 2018
to RUB 45 million
(31 December 2017: RUB 155 million, 31 December 2016: RUB 157 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)
233
Total long-term accounts receivable were RUB 53 687 million, 54,713 million and 62,615 million
as of 31 December 2018, 2017 and 2016, respectively.
Breakdown by types of long-term accounts receivable is as follows:
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
2018
31 December
2017
31 December
2016
30,974
29,931
29,312
16,373
441
41
-
5,858
19,697
2,600
34
-
2,451
19,676
11,258
178
152
2,039
53,687
54,713
62,615
Long-term accounts receivable include interest-free promissory notes issued by the following
issuers:
Issuer
31 December
2018
31 December
2017
31 December
2016
Other related parties, including:
PJSC Boguchanskaya GES
CJSC Boguchansky Aluminium Plant
Total interest-free promissory notes received from
related parties
VTB Bank (PJSC)
PJSC Rosbank
JSC Alfa-Bank
PJSC 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
2,307
1,491
1,280
207
5,285
25,689
21,027
4,662
25,689
1,361
1,491
1,280
110
4,242
25,689
21,027
4,662
25,689
742
1,491
1,280
110
3,623
30,974
29,931
29,312
As of 31 December 2018, 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:
− PJSC 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 2018 is RUB 7,551 million);
− CJSC 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 2018 is RUB 2,630 million);
Long-term accounts receivable include advances issued to the following suppliers of equipment
and capital construction contractors:
Counterparty
31 December
2018
31 December
2017
31 December
2016
Subsidiaries, including:
JSC Hydroremont-VKK
Other
Other related parties, including:
LLC VolgaHydro
Total advances issued to related parties
Voith Hydro GmbH & Co KG
PJSC Silovye Mashiny
LLC Siemens
Other
Total advances issued to other counterparties
Total advances issued to suppliers of equipment
and capital construction contractors
89
5
84
-
-
89
8,266
7,404
266
348
16,284
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
16,373
19,697
19,676
234 With respect to a number of advances issued to equipment suppliers and capital construction
contractors, bank guarantees were obtained (see 3.6.2 of the Explanatory Notes).
Advances issued to suppliers of equipment and capital construction contractors relating to the
equipment (work) with expected supply during 2019 are included within short-term advances
issued.
Long-term accounts receivable include interest-free loans issued to the following counterparties:
Counterparty
31 December
2018
31 December
2017
31 December
2016
Subsidiaries, including:
JSC Nizhne-Bureiskaya GES
JSC ESK RusHydro
JSC CCGT in the City of Sovetskaya Gavan
JSC Ust-Srednekanskaya GES
JSC MGES Kabardino-Balkarii
JSC Sakhalinskaya GRES-2
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
148
148
-
-
-
-
-
-
148
293
293
441
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
Other long-term accounts receivable include the following types of receivables:
Counterparty
31 December
2018
31 December
2017
31 December
2016
Interest receivable accrued on loans issued and
promissory notes received, including:
Subsidiaries
Other accounts receivable
Total other long-term accounts receivable
5,766
5,766
92
5,858
2,243
2,243
208
2,451
1,702
1,702
337
2,039
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
2017
2,879
2018
2017
2018
2017
2018
2,735
144
-
2,735
2,735
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Transfer to
provision for
short-term
receivables
At the end
of the year
(144)
2,735
-
(144)
-
-
-
2,735
-
-
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 132,083 million,
RUB 122,595 million and RUB 86,999 million as of 31 December 2018, 2017 and 2016,
respectively.
Type of short-term accounts receivable
31 December
2018
31 December
2017
31 December
2016
235
Type of short-term accounts receivable
Buyers and Customers, including:
Accounts receivable for electricity and capacity
Other
Advances issued, including:
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
Taxes receivable
Lease receivables
PJSC Inter RAO
Other
Total line 1232 “Accounts receivable’’ (payments
expected within 12 months of the reporting date)
31 December
2018
31 December
2017
31 December
2016
6,879
6,822
57
7,059
6,496
563
118,145
2,343
94,181
10,272
-
3,437
-
5,936
1,976
6,726
6,649
77
4,276
3,754
522
111,593
2,385
64,331
29,621
9,962
3,322
-
-
1,972
7,120
6,214
906
10,206
9,641
565
69,673
5,459
30,792
22,997
8,257
676
95
-
1,397
132,083
122,595
86,999
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
2018
31 December
2017
31 December
2016
Subsidiaries, including:
JSC Hydroremont – VKK
Other
Other related parties, including:
LLC VolgaHydro
Total advances issued to related parties
PJSC Silovye Mashiny
Voith Hydro GmbH & Co KG
JSC VNIIR Hydroelectroautomatics
Other
Total advances issued to other counterparties
Total advances issued to suppliers of equipment
and capital construction contractors
1,999
1,303
696
-
-
1,999
2,552
1,127
180
638
4,497
6,496
1,013
582
431
3
3
1,016
1,118
903
420
297
2,738
3,754
1,207
838
369
475
475
1,682
22
6,538
111
1,288
7,959
9,641
With respect to a number of advances issued to equipment suppliers and capital construction
contractors, bank guarantees were obtained (see 3.6.2 of the Explanatory Notes).
Short-term accounts receivable include interest-free promissory notes issued by the following
issuers:
Issuer
31 December
2018
31 December
2017
31 December
2016
Subsidiaries, including:
JSC MGES Kabardino-Balkarii
JSC Zaramagskie GES
Other
Total interest-free promissory notes from related
parties
Other
Total interest-free promissory notes from other
counterparties
Total short-term interest-free promissory notes
received
2,142
2,142
-
-
2,142
201
201
2,142
2,142
-
-
2,142
243
243
5,457
2,142
3,090
225
5,457
2
2
2,343
2,385
5,459
236 As of 31 December 2018, 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
2018
31 December
2017
31 December
2016
Subsidiaries, including:
JSC Zaramagskie GES
JSC Hydroinvest
JSC Ust-Srednekanskaya GES
JSC RAO ES Vostoka
JSC Sakhalinskaya GRES-2
JSC Yakutskaya GRES-2
JSC Nizhne-Bureyskaya GES
JSC CCGT in the City of Sovetskaya Gavan
LLC Malye GES Stavropolya and KChR
LLC Verkhnebalkarskaya MGES
JSC MGES Kabardino-Balkarii
JSC Magadanenergo
JSC Sulaksky Hydrocascade
LLC Index energetiki – HydroOGK
LLC Vostok-finans
LLC EZOP
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
94,113
17,122
16,533
15,463
14,867
9,217
5,912
5,275
2,645
1,833
1,790
1,352
543
35
-
-
-
1,526
-
-
94,113
68
94,181
64,253
8,769
1,896
11,551
7,745
2,020
6,463
3,779
2,355
816
641
1,444
85
538
13,014
2,246
-
891
4
4
64,257
74
64,331
30,700
-
-
6,303
-
-
1,353
-
-
31
165
851
-
1,559
13,521
2,337
2,902
1,678
7
7
30,707
85
30,792
As of 31 December 2018, short-term interest-free loans issued include:
− at call loans of RUB 17,122 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 ;
− at call loans of RUB 16,533 million provided to AO Gidroinvest, including loans of RUB
14,878 million received from OOO Index Energetiki – HydroOGK and OOO Vostok-
Finance as a result of the reorganisation.
− at call loans of RUB 15,463 million provided to AO Ust-Srednekanskaya GES to finance
expenditures under the investment project Ust-Srednekanskaya GES;
− at call loans of RUB 14,867 million provided to АО RAO Energy System of the East to
finance its investment program and other projects as well as to refinance bank loans
payable;
− at call loans of RUB 9,217 million provided to AO Sakhalin GRES-2, including to finance
its investment project “Sakhalin GRES-2 Construction” (1st stage).
Interest-free loans of RUB 94,113 million provided to subsidiaries as at 31 December 2018 are
recorded within short-term accounts receivable in line with effective contract terms.
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
JSC Holding company BoGES
JSC TK RusHydro
JSC Nizhne-Bureyskaya GES
31 December
2018
31 December
2017
31 December
2016
9,963
309
-
-
309
21,279
-
10
16,128
237 JSC Zagorskaya GAES-2
JSC Sulaksky Hydrocascade
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
-
-
10,272
6,647
1,386
29,621
5,473
1,386
22,997
Short-term accounts receivable includes the following types of tax receivables:
Item
Income tax
Other taxes and levies
Total tax receivables
31 December
2018
31 December
2017
31 December
2016
3,039
398
3,437
2,905
417
3,322
438
238
676
Amount and movements in the impairment provision for short-term accounts receivable
Type
Period
At the
Provision
Recovery
Write-off
Transfer*
At the
beginning
creation
of
against a
provision
provision
end of
the year
of the
year
13,129
2017
3,508
(3,965)
(97)
144
12,719
Provision for short-
term accounts
receivable, including
Trade receivables
Advances issued
Other
2018
12,719
4,409
(2,652)
(95)
-
14,381
2017
2018
2017
2018
2017
2018
5,539
6,489
87
339
7,503
5,891
1,970
3,248
307
34
1,231
1,127
(1,141)
(2,604)
(1)
(12)
(2,823)
(36)
(23)
(8)
(54)
(3)
(20)
(84)
144
-
-
-
-
-
6,489
7,125
339
358
5,891
6,898
* Includes transfer from provision for long-term accounts receivable and financial investments.
Overdue accounts receivable
31 December 2018
31 December 2017
31 December 2016
Item
Recognised
under contract
Carrying
amount
Recognised
under contract
Carrying
amount
Total, including:
Buyers and
customers
Advances issued
Other debtors
10,045
6,998
706
2,341
624
169
348
107
9,098
6,127
556
2,415
810
126
217
467
Recognised
under
contract
Carrying
amount
8,594
1,721
5,423
1,332
1,839
320
1,246
155
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
2018
31 December
2017
31 December
2016
29,585
5,584
601
163
11,686
601
35,770
12,450
4,075
1,230
-
5,305
238
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
Loans issued
Promissory notes
2017
2018
2017
2018
2017
2018
2017
2018
7,561
14,599
4,075
163
3,486
13,835
-
601
(2,256)
(2,149)
-
-
(2,256)
(2,149)
-
-
50,589
50,660
21,966
43,738
28,022
6,922
601
-
(43,551)
(26,896)
(25,878)
(14,316)
(17,673)
(12,580)
-
-
-
-
-
-
-
-
-
-
107
(444)
-
-
107
(444)
-
-
14,599
38,363
163
29,585
13,835
8,177
601
601
(2,149)
(2,593)
-
-
(2,149)
(2,593)
-
-
* 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.
239
(a) Bank deposits
As at 31 December 2018, the Company had Rouble deposits with banks of RUB 29,585 million,
due in 2019. As at 31 December 2018, interest rates on Rouble deposits were 5.85% – 8.15%
p.a. (31 December 2017: 5.55%, 31 December 2016: 10.75% – 10.85%).
Credit institution
JSC UniCredit Bank
Bank GPB (JSC)
PJSC Rosbank
VTB Bank (PJSC)
PJSC Sberbank
Total bank deposits
Rating on
31 December
2018
BBB-
BB+
BBB-
BBB-
BBB-
Rating
agency
Fitch
Fitch
Fitch
S&P
Fitch
31
December
2018
31
December
2017
31
December
2016
9 000
6 500
6 000
5 000
3 085
29 585
-
-
-
-
163
163
-
-
-
-
4 075
4 075
(b) Short-term loans issued
Loan recipient's name
31 December
2018
31 December
2017
31 December
2016
Annual rate,%
Short-term loans issued to related parties, including:
PJSC Kamchatskenergo
PJSC Sakhalinenergo
PJSC Yakutsenergo
JSC ESK RusHydro
JSC Yakutskaya GRES-2
JSC Far East Distribution Company
JSC Sakhaenergo
JSC Hydroinvest
JSC Teploenergoservice
Other
Total short-term loans issued
3 975
650
507
197
97
49
-
-
-
109
5,584
-
-
-
420
495
4,538
3,476
1,748
929
80
11,686
7,51%
7,51%
10,14%
10,10%
10,14%
7,25%-7,75%
-
-
-
446
231
-
-
-
553
1,230
As of 31 December 2018 provision was made RUB 2,593 million for CJSC Verkhne-Narynskie
GES (31 December 2017: RUB 2,149 million, 31 December 2016: RUB 2,256 million).
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
2018
31 December
2017
31 December
2016
7,902
34,170
899
42,971
2,194
47,836
899
50,929
7,206
32,849
899
40,954
As of 31 December 2018, 2017 and 2016, 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 2018 is placed on
special accounts in the Office of the Federal Treasury for Moscow (as of 31 December 2017 -
RUB 899 million, as of 31 December 2016 - RUB 899 million). 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.
240
As of 31 December 2018, 2017 and 2016, cash equivalents included short-term bank deposits
with original maturities of three months or less.
As of 31 December 2018 there were cash balances denominated in US dollars equivalent to RUB
0 million (31 December 2017: RUB 477 million; 31 December 2016: RUB 312 million).
As of 31 December 2018, interest rates on Rouble deposits were 7.50% – 8.22% p.a.
(31 December 2017: 5.55% – 7.50%, 31 December 2016: 9.55% – 10.41%).
The Company holds cash and cash equivalents in the following credit institutions:
Credit institution
Bank deposits, including:
VTB Bank (PJSC))
Bank GPB (JSC)
JSC UniCredit Bank
PJSC Sberbank
Total cash equivalents
Cash in banks, including:
Bank GPB (JSC)
JSC Bank «ROSSIYA»
PJSC Sberbank
VTB Bank (PJSC)
Other
Total cash in bank
Rating on
31 December
2018
Rating agency
31 December
2018
31 December
2017
31 December
2016
BBB-
BB+
BBB-
BBB-
BB+
A+
BBB-
BBB-
S&P
Fitch
Fitch
Fitch
Fitch
АКРА
Fitch
S&P
18,497
13,100
2,573
-
34,170
3,827
3,740
205
126
4
7,902
32,034
15,329
-
472
47,835
20
1,811
313
47
3
2,194
20,430
12,107
-
312
32,849
4,918
4
479
1,803
2
7,206
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.
Breakdown for lines “Other receipts” and “Other payments” of the statement of cash flows is
presented below:
Item
2018
2017
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
Income from assignment of rights
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 expenses for raising borrowed capital
Other payments related to operating activities
Other payments related to investing activities (line 4219),
including:
Cash placement on a short-term deposit other than cash equivalent
Other payments related to investing activities
10,759
372
70
223
10,080
14
(18,563)
(8,571)
(2,003)
(1,397)
(335)
(1,824)
(2,813)
(1,207)
(413)
-
-
-
2,214
1,625
237
219
34
99
(16,899)
(7,831)
(1,783)
(1,726)
(225)
(1,401)
(3,243)
(298)
(392)
3,934
3,918
16
241
Other payments related to investing activities (line 4229),
including:
Cash placement on a short-term deposit other than cash equivalent
Other payments related to financing activities (line 4329),
including:
Settlement of finance lease obligations (payments under lease
contracts)
Other payments related to financing activities
(29,422)
(29,244)
(2)
-
(2)
-
-
(6)
(2)
(4)
In 2018 other payments related to operating activities include the payment of assigned
receivables of JSC Holding company BoGES in the amount of RUB 9 962 million (Note 3.2.2),
that were received in payment for dividends from HydroOGK Power Company Ltd. in 2017 and
2016.
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 2018, 2017 and 2016, 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 2018
Number of shares at
31 December 2017
Number of shares at
31 December 2016
426,288,813,551
426,288,813,551
386,255,464,890
As of 31 December 2018, 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 JSC National
Settlement Depository
Other
Total
Type of
shareholder
Number of shares
Ownership
share, %
beneficial owner
258,161,535,606
60.56%
nominee holder
157 874 433 885
10 252 844 060
426,288,813,551
37,03%
2,41%
100.00%
The members of the Management Board of the Company hold 16 million shares of the total
number of ordinary shares as of 31 December 2018 (as of 31.12.2017 - 71 million shares, as of
31.12.2016 - 71 million shares). Subsidiaries and associates own 3,852 million shares of the
Company (as of 31.12.2017 - 3,852 million shares, as of 31.12.2016 - 18,852 million shares).
Additional issue in 2018-2019
On 21 June 2018, the Company's Board of Directors approved (Minutes No.272 of 22 June 2018)
the decision to have an additional issue of the Company's securities in the amount of
14,013,888,828 shares through their public offering with payment in cash, the placing price for the
Company’s additional share issue was set at RUB 1 per share.
On 27 August 2018, the Central Bank of the Russian Federation registered the additional issue of
the Company's 14,013,888,828 ordinary registered shares No. 1-01-55038-E-043D
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.
242
On 7 December 2016, 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, which were paid in December, 2016.
In March 2017, the Company and VTB Bank (PJSC) 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 VTB Bank (PJSC) bought 40,000,000,000
shares of the Company during the current share issue. (Note 3.6.4)
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 August 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 2018, the amount of accumulated revaluation of non-current assets is RUB
52,437 million (31 December 2017: RUB 52,606 million, 31 December 2016: RUB 52,705 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 169 million in 2018 due to
disposal of items of property, plant and equipment revalued earlier (2017: RUB 99 million).
3.3.3 Additional paid-in capital (line 1350 of the balance sheet)
As of 31 December 2018, 2017 and 2016, 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 2018, 2017 and 2016, the Company's reserve capital was RUB 15,179 million,
RUB 13,371 million and RUB 11,278 million, respectively.
In accordance with the decision of the Company's annual general meeting of shareholders of
28 June 2018 (Minutes No. 17), the Company allocated 5% of its net profit for 2017 in the amount
of RUB 1,808 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
PJSC Sberbank
Eurobonds (RusHydro Capital Markets DAC) issued in
September 2017
Eurobonds (RusHydro Capital Markets DAC) issued in
February 2018
VTB Bank (PJSC)
31 December
2018
31 December
2017
31 December
2016
20,000
20,000
33,389
20,000
20 000
20,000
20,000
-
-
-
-
-
243 Lender / creditor
31 December
2018
31 December
2017
31 December
2016
Eurobonds (RusHydro Capital Markets DAC) issued in
November 2018 (CNY)
Eurobonds (RusHydro Capital Markets DAC) issued in
November 2018 (RUB)
Russian bonds issued in June 2017
Far East Development Fund
Russian bonds issued in February 2013
Russian bonds issued in April 2016
UniCredit Bank Austria AG
Russian bonds issued in July 2015
Crédit Agricole Corporate and
Deutschland
Other
Total line 1410 “Borrowings”
Investment Bank
15,150
15,000
10,000
4,814
2,196
-
-
-
-
1,017
128,177
-
-
-
10.000
-
-
15,000
4,749
-
-
1,949
71,698
-
-
-
20,000
15 000
4,951
15,000
5,552
956
94,848
In February 2018, holders of February 2013 Russian bonds called for an early redemption of a
part of these securities in the framework of a corresponding offer. As a result, the Company
obtained bonds of RUB 17,804 million in nominal value. Bonds of RUB 2,196 million in nominal
value that were not presented for an early redemption will remain in circulation until their final
maturity in February 2023 with the coupon yield of 0.10%.
In February 2018, the Company made a placement of Eurobonds of RUB 20 billion due in
February 2021 with the coupon yield of 7.4% p.a. The issuer is RusHydro Capital Markets DAC, a
special purpose entity, who provided financing to the Company in the form of a loan. The
Company used proceeds from the Eurobond issue to finance its current activities and to refinance
the debt.
In April 2018 the Company signed a special purpose financing agreement with AO “Far East and
Baikal Region Development Fund” for RUB 5 billion due in 2019-2026 with the interest rate of 5%
p.a. The received special purpose funds were used to finance the “Sakhalin GRES-2
Construction” project (1st stage).
In July 2018, a drawdown of RUB 20 billion was made under the credit facility of 30 March 2018
with PAO Bank VTB. The proceeds were used to refinance the debt of the Company and its
subsidiaries.
In November 2018, the Company placed two Eurobond issues of CNH 1.5 billion due in
November 2021 with the coupon yield of 6.125% p.a., and of RUB 15 billion due in 2022, with the
coupon rate of 8.975 p.a. The issuer of the two placements is RusHydro Capital Markets DAC, a
special purpose entity, who provided financing to the Company in the form of loans. The Company
used proceeds from the Eurobond issues to finance its current operations and to refinance the
debt.
In November 2018, the Company entered into a cross currency and interest rate swap with PAO
Bank VTB to fix in CNH the Company’s liability related to Eurobonds. The swap is signed for
three years and fixes the nominal amount (CNH 1.5 billion) as at the redemption date (November
2021) at the level of RUB 14,430 million based on the effective market rate at the swap signing
date, as well as interim payments that are set for the Company in Russian Roubles at the floating
rate determined as an arithmetical mean of the values of the key rate of the Central Bank of
Russia plus a spread of 1.5% p. a. from the nominal value set for the Company in roubles.
In November 2018 the loan of Euro 68.97 million dated 12.12.2011 from UniCredit Bank Austria
AG was early repaid in full.
As of 31 December 2018 terms of material received long-term borrowings were the following:
Lender / creditor
Contract
year
Maturity
year
Sum in mln
units of
borrowing
currency
Currency
of
borrowing
Interest rate
of borrowing
Eurobonds (RusHydro Capital
Markets DAC) issued in
September 2017
2017
2022
20 000
RUB
8,13%
244
Eurobonds (RusHydro Capital
Markets DAC) issued in
February 2018
VTB Bank (PJSC))
PJSC Sberbank
Eurobonds (RusHydro Capital
Markets DAC) issued in
November 2018 (CNY)
Eurobonds (RusHydro Capital
Markets DAC) issued in
November 2018 (RUB)
Russian bonds issued in June
2017
2018
2018
2021
2033
2011
2020
20 000
20 000
20 000
RUB
RUB
RUB
7,40%
7,50%
8,30% /
9,30%*
2018
2021
1 500
CNY
6,125%
2018
2022
2017
2020
15 000
10 000
RUB
RUB
8,975%
8,20%
* Variable quarterly interest rate determined due to agreement’s conditions.
Apart from the fully used (as at 31 December 2018) credit facility from PAO Bank VTB of RUB
10,000 million due in 2033, after 31 December 2018 the Company can raise funds under credit
agreements with PAO Bank VTB of up to RUB 30,000 million due in 2020, with PAO Sberbank of
up to RUB 40,000 million due in 2026, with AO Bank GPB of up to RUB 20,000 million due in
2026 and with AO AB Rossia of up to RUB 7,000 million due in 2023, with PAO Rosbank of up to
RUB 8,000 million due in 2025, with AO Alfa-Bank of up to RUB 10,000 million due 2023, for the
total amount of RUB 125,000 million.
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
2018
31 December
2017
31 December
2016
30,741
36,140
35,741
2,936
22,619
128,177
16,526
30,594
844
20,594
3,140
71,698
46,495
16,480
21,105
1,355
9,413
94,848
Interest on borrowings included into the cost of investment assets
In 2018, the amount of interest on borrowings included into the cost of investment assets was
RUB 1,833 million (2017: RUB 1,699 million), of which RUB 1,666 million was the interest accrued
on borrowings where the agreement does not specify that the funds are provided for special
investment purpose (2017: RUB 1,476 million).
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
912 million as of 31 December 2018 (31 December 2017: RUB 1,153 million, 31 December 2016:
RUB 1,289 million) and trade payables in the amount of RUB 1,928 million as of 31 December
2018 (31 December 2017: RUB 3,111 million, 31 December 2016: RUB 2,457 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
Borrowings, including:
Russian bonds issued in April 2016
АО Malaya Dmitrovka
JSC Zagorskaya GAES-2
Russian bonds issued in February 2013
Russian bonds issued in July 2015
PJSC Sberbank
UniCredit Bank Austria AG
Russian bonds issued in April 2015
31
December
2018
31
December
2017
31
December
2016
17 802
15 000
1 107
929
-
-
-
-
-
47 412
-
-
-
20 000
15 000
10 613
593
-
11 367
-
-
-
-
-
-
550
10 000
245 Lender / creditor
Other
Interest on borrowings, including:
Eurobonds (RusHydro Capital Markets DAC) issued in
February 2018
Eurobonds (RusHydro Capital Markets DAC) issued in
September 2017
Russian bonds issued in April 2016
PJSC Sberbank
Russian bonds issued in February 2013
Russian bonds issued in July 2015
Other
Total line 1510 “Borrowings”
31
December
2018
31
December
2017
31
December
2016
766
1 967
557
423
374
296
1
-
316
19 769
1 206
2 846
817
2 658
-
-
423
370
447
666
872
68
50 258
-
371
522
661
867
237
14 025
3.5.2 Accounts payable (line 1520 of the balance sheet)
Total short-term accounts receivable were RUB 11,703 million, RUB 10,563 million and
RUB 9,681 million as of 31 December 2018, 2017 and 2016, respectively:
Type of payables
31 December
2018
31 December
2017
31 December
2016
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”
4,978
211
143
5,408
143
-
820
11,703
4,040
244
134
5,242
141
-
762
10,563
4,190
24
14
4,697
122
33
601
9,681
The balance sheet line 1521 “Trade accounts payable” includes the following types of payables:
Type of payables
31 December
2018
31 December
2017
31 December
2016
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”
723
2,731
480
319
725
4,978
705
1,842
427
381
685
4,040
773
1,801
432
322
862
4,190
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
2018
31 December
2017
31 December
2016
1,316
4,031
2
59
5,408
1,291
3,902
-
49
5,242
1,338
3,113
239
7
4,697
3.5.3 Estimated liabilities (line 1540 of the balance sheet)
As of 31 December 2018 the total estimated liabilities are RUB 2,863 million (31 December 2017:
RUB 2,976 million, 31 December 2016: RUB 2,447 million). The estimated liabilities have a short-
term nature.
246
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
unused employee
vacations
2017
2018
2017
2018
2017
2018
2017
2018
2,447
2,976
1,364
1,876
627
683
456
417
3,201
3,204
1,876
1,990
181
57
(2,381)
(2,953)
(1,321)
(1,762)
(125)
(250)
1,144
(935)
1,157
(941)
(291)
(364)
(43)
(113)
-
-
(248)
(251)
2,976
2,863
1,876
1,991
683
490
417
382
3.6.1 Leased property, plant and equipment
3.6. Off-balance-sheet valuables
As of 31 December 2018, the total rented property, plant and equipment are RUB 36,256 million
(31 December 2017: RUB 35 760 million, 31 December 2016: RUB 33,862 million). In 2018 and
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
2018
31 December
2017
31 December
2016
JSC Sulakskiy HydroKaskad
JSC Zaramagskie GES
Administration of Sergiev Posad Municipal District *
JSC Malyye GES Kabardino-Balkarii
JSC 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
Territorial Department of FA for the management of state.
property in the Republic of Mordovia, the Republic of Mari
El, the Republic of Chuvashia
Perm Department of Land and Property Relations
Other
Total rent of property, plant and equipment
LLC Leasefinance
CJSC Business Alliance
Total lease of property, plant and equipment under
lease contracts
Total rent and lease of property, plant and equipment
10,478
5,138
4,996
3,567
3,395
3,122
777
604
569
451
138
3,021
36,256
-
-
-
36,256
10,478
4,927
4,996
3,567
3,394
2,771
777
604
569
451
502
2,724
35,760
-
-
-
35,760
9,463
4,927
4,996
-
3,381
3,185
777
604
569
451
1,307
3,011
32,671
1,022
169
1,191
33,862
*In 2018 the owner of plot of land was changed from the Ministry of Property Relations of the Moscow Region to the
Administration of the Sergiev Posad Municipal District.
3.6.2 Collateral for liabilities and payments received
Counterparty
Subsidiaries, including:
JSC Gidroinvest
31 December
2018
31 December
2017
31 December
2016
5,530
5,320
5,320
-
9,029
984
247
Counterparty
31 December
2018
31 December
2017
31 December
2016
Subsidiaries, including:
LLC EZOP
LLC Vostok-finans
Others
Other related parties
Total liabilities and payments received from
related parties
Other counterparties, including:
PJSC Silovye Mashiny
Voith Hydro GmbH & Co KG
JSC VNIIR Hydroelectroavtomatika
JSC Hydroelectromontazh
Other
Total collateral for liabilities and payments
received
5,530
-
-
210
8
5,538
18,333
10,014
5,339
870
-
2,110
5,320
3,214
2,106
-
18
5,338
16,337
7,878
4,809
857
453
2,340
9,029
5,428
2,106
511
33
9,062
17,991
8,780
5,433
429
453
2,896
23,871
21,675
27,053
For a number of agreements for delivery of equipment and capital construction with Voith Hydro
GmbH & Co KG, PJSC Silovye Mashiny, JSC VNIIR Hydroelectroavtomatica, 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
Collateral for liabilities and payments issued to subsidiries,
including:
PJSC Far East Generating
Company
JSC Far East Generating Company
PJSC Far East Energy Company
JSC Far East Generating Company
CJSC International Energy
Corporation
CJSC International Energy
Corporation
PJSC Magadanenergo
PJSC Kamchatskenergo
PJSC Far East Energy Company
PJSC Sberbank
PJSC Rosbank
PJSC Sberbank
VTB Bank (PJSC)
European Bank for
Reconstruction and
Development (EBRD)
Asian Development Bank,
ADB
PJSC Sberbank
PJSC Sberbank
PJSC Rosbank
European Bank for
Reconstruction and
Development (EBRD)
PJSC Sberbank
VTB Bank (PJSC)
Bank GPB (JSC)
Bank GPB (JSC)
Others
Collateral for liabilities and payments issued to other related
parties, including:
GC Vnesheconombank
JSC RAO ES of East
JSC RAO ES of East
JSC RAO ES of East
JSC RAO ES of East
PJSC Magadanenergo
Others
GC Vnesheconombank
Others
Total collateral for liabilities and payments issued
PJSC Boguchanskaya GES
CJSC Boguchansky Aluminium
Smelter
Others
31
December
2018
31
December
2017
31
December
2016
28,699
30,688
48,853
7,603
6,295
5,384
3,327
5,400
2,395
7,460
4,521
10,760
2,704
-
11,556
1,533
1,367
1,538
1,533
1,150
200
-
-
-
-
-
-
1,674
25,642
21,027
4,615
-
54,341
1,367
1,248
4,768
-
-
-
-
-
-
2,162
1,538
500
3,978
3,313
3,276
2,878
1,831
1,323
1,012
2,646
52,228
46,962
4,615
651
82,916
53,073
47,777
4,615
681
101,926
248
In 2018 the Company issued guarantees:
− Guarantees provided for liabilities of JSC Far East Generating Company under its loan
agreements with PJSC Sberbank, VTB Bank (PJSC) and PJSC Rosbank cover the
principle amount and interest. The guarantees expire in 2019, 2021, 2022, 2023.
− Guarantees provided for liabilities of PJSC DEK under its loan agreements with PJSC
Sberbank cover the principle amount and interest. The guarantees expire in 2023.
− Guarantees provided for liabilities of PJSC Magadanenergo under its loan agreements
with PJSC Sberbank and VTB Bank (PJSC) cover the principle amount and interest. The
guarantees expire in 2021 and 2023.
As at 31 December 2018, 2017 and 2016, guarantees issued by the Company for liabilities of
PAO Boguchanskaya GES under its loan agreement with GK Vnesheconombank are represented
by the pledge of OAO 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 the pledge of shares for the total of
RUB 14 thousand.
Apart from the above pledges as at 31 December 2017 and 2016 the guarantees included total
liabilities of PAO Boguchanskaya GES under the loan agreement, including accumulated interest,
in the amount of RUB 25,935 million and RUB 26,750 million respectively. In February 2018, the
Company signed an agreement on the termination of the surety agreement with GK
Vnesheconombank with regard to performance by PAO Boguchanskaya GES of its obligations
under the loan agreement.
3.6.4 Non-deliverable forward contract for shares
In March 2017 the Company signed a contract with VTB Bank (PJSC) (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 JSC 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 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
249 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 2018 the fair value of the liability under the non-deliverable equity forward
calculates in accordance with IFRS was RUB 31,896 million (31 December 2017: RUB 20,716
million).
As at 31 December 2018 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
2,813 million made under the non-deliverable forward contract in 2018 (2017: RUB 3,243 million)
are recognised within other expenses (see paragraph 3.8 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 (99.8%).
Item
2018
2017
Sale of electricity
Sale of capacity
Sale of heat
Other
Total line 2110 “Revenue”
85,059
77,359
166
229
162,813
78,900
65,393
157
247
144,697
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).
2018
2017
38,050
26,947
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
(JSC SO UES, JSC ARS, JSC 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
Repairs and maintenance
Third party services
Lease expenses
Water usage expenses, water tax
Insurance expenses
Fire and other security services
Other expenses
Total line 2120 “Cost of sales”
The cost of sales include administrative expenses. In 2018, administrative expenses totalled
RUB 7,337 million (2017: RUB 7,567 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.
35,032
16,532
10,584
8,236
7,140
3,861
3,854
1,938
1,887
1,756
1,748
1,261
96,847
23,995
16,680
10,444
7,015
6,744
3,729
4,286
1,933
1,464
1,660
1,712
1,193
83,807
Electricity and capacity market administration expenses include RUB 35,032 million (2017: RUB
23,995 million) of special-purpose contributions to the budgets of Russian constituent regions in
250 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 in 2018.
Operating expenses broken down by cost elements are as follows:
Item
2018
2017
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
19,327
8,514
2,422
16,532
50,052
96,847
-
96,847
17,389
8,422
2,318
16,680
38,998
83,807
-
83,807
3.8 Other income and expenses (line 2340 and line 2350 of the statement of financial
results)
Item
2018
2017
Income
Expenses
Income
Expenses
Income and expenses due to sale or
other disposal of securities (exception
promissory notes)
Doubtful debt provision
Foreign exchange differences from
remeasurement of assets and liabilities
denominated in foreign currencies
Gains / (losses) from revaluation of
investments measured at current market
value
Income and expenses from sales, write-
off and other transactions with assets
Provision for impairment of investments
Expenses on operations with derivatives
Charity donations
Expenses for social events
OeKV commission for early repayment
of a loan from UniCredit Bank Austria
AG
Other income and expenses
Total line 2340 “Other income” and
2350 “Other expenses”
6,864
2,652
(8,300)
(4,409)
125
3,965
(133)
(3,508)
1,848
(3,187)
1,661
(2,080)
1,449
(1)
682
-
-
-
-
(3 110)
(6,453)
(2,813)
(1,276)
(456)
-
1,345
(746)
(1,227)
14,840
(31,978)
3.9 Taxes
531
540
16
-
-
-
-
1,057
7,895
(1,424)
(754)
(7,755)
(3,243)
(1,667)
(425)
-
(1,360)
(22,349)
Corporate income tax
Income tax calculated on the basis of the accounting profit (theoretical income tax charge) for the
reporting year was RUB 10,020 million (2017: RUB 9,884 million).
The Company applied tax rate of 20% in the calculation of income tax based on accounting profit
received by the Company's branches.
According to the tax accounting data, the taxable profit for 2018 was RUB 55,220 million (2017:
RUB 49,399 million).
251
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 15,959 million (2017: RUB 15,458 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 11,334 million for
2018 (2017: 3,190 million), including:
−
−
−
income from participation in other entities (dividends) in the amount of RUB 859 million for
2018 (2017: RUB 2,563 million);
increase in value of financial placements determined in fair value in the amount of RUB
1,449 million (2017: RUB 531 million);
release of the provision for impairment of investments in the amount of RUB 1,258 million
(2017: RUB 16 million);
− proceeds from the sale of shares taxable at 0%, in the amount of RUB 6,790 million
(2017: RUB 0 million);
− other permanent differences in the amount of RUB 978 million (2017: RUB 80 million).
Non-temporary differences resulted in the permanent tax liability amounted to RUB 27,293 million
for 2018 (2017: 18,648 million), including:
− depreciation of RUB 3,068 million (2017: RUB 3,209 million);
−
− expenses related to sale, disposal or other transactions with assets in the amount of RUB
charity donations in the amount of RUB 1,241 million (2017: RUB 1,644 million);
−
−
−
−
908 million (2017: RUB 253 million);
provision for impairment of financial investments in the amount of RUB 6,453 million
(2017: RUB 7,755 million);
loss on transactions in derivative financial instruments not traded on the organized
financial market, RUB 2,813 million (2017: RUB 3,220 million);
loss on operations with securities not traded on the organized financial market in the
amount of 890 million rubles. (2017: RUB 10 million):
decrease in the value of financial investments, which determine the current market value,
in the amount of RUB 1 million (2017: RUB 1,424 million);
− proceeds from the sale of shares taxable at 0%, in the amount of RUB 8,261 million
(2017: RUB 112 million);
value of written-off assets (RAR) RUB 1,671 million (2017: RUB 0 million)
−
− other non-temporary differences in the amount of RUB 1,987 million (2017: RUB 1,021
million).
As at 31 December 2018, 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 565 million (2017: RUB 1,041 million), including
those originated – RUB 11,331 million (2017: RUB 11,981 million) and settled – RUB 10,766
million (2017: RUB 13,022 million).
As at 31 December 2018, 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 11,408 million (2017: RUB 15,585 million), including those
originated – RUB 18,602 million (2017: RUB 22,011 million) and settled – RUB 7,194 million
(2017: RUB 6,426 million).
In 2018 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;
252
−
−
−
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
2018
31 December
2017
31 December
2016
(3,157)
22,465
19,308
(3,043)
20,156
17,113
(3,248)
16,924
13,676
Line 2430 “Change in deferred tax liabilities” includes increase of deferred tax liabilities in amount
of RUB 136 million (2017: 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 112
million (2017: RUB 211 million) with no effect on current income tax.
Value Added Tax
Total VAT calculated with due account of recovered tax amounts was RUB 41,944 million in the
reporting year (2017: RUB 38,350 million).
Total VAT recoverable in the reporting period was RUB 19,554 million (2017: RUB 20,393 million).
The Company decreases the calculated VAT by the amount invoiced on purchase of goods (work,
services) in Russia, according to tax legislation.
Other taxes and levies
In 2018, operating expenses include other taxes, levies, and also insurance contributions in the
amount of RUB 8,834 million (2017: RUB 8,401 million), including:
−
−
−
property tax in the amount of RUB 7,140 million (2017: RUB 6,744 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 1,684 million (2017: RUB 1,648 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 10 million (2017: RUB 9 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 substantiated this
position may be challenged by tax authorities. The tax control in Russian Federation gets stringent
resulting in increase of tax inspections risk, not having a clear financial and business objectives or
transactions with counterparties not complying with the requirements of tax legislation. 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 2018, 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.
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. At the end of 2018, the tax authorities
settled an on-site tax audit for 2015-2017.
253
3.10 Dividends
The Company's annual general meeting of shareholders held on 28 June 2018 (Minutes No. 17)
made the decision to pay dividends on the Company's ordinary shares for 2017 in the amount of
RUB 0,0263335 per 1 share for the total of RUB 11,226 million.
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.
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)
2018
2017
36,726
36,149
426,288,813,551 406,272,139,221
0,0890
0,0862
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 2018 (shares)
Number of ordinary shares outstanding as of 1 December 2018 (shares)
Number of ordinary shares outstanding as of 31 December 2018 (shares)
Weighted average number of ordinary shares, outstanding in 2018 (shares)
(426 288 813 551 * 12 month) / 12 months
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
2018
426,288,813,551
426,288,813,551
426,288,813,551
426,288,813,551
2017
386,255,464,890
40,033,348,661
426,288,813,551
426,288,813,551
406,272,139,221
In 2018 and 2017, the Company had no debt securities potentially convertible to shares.
3.12 Related Parties
The Company's related parties are its subsidiaries and affiliates, including organizations over
which the Company indirectly controls or has a significant influence, as well as key management
personnel and non-state pension funds acting in the interests of the Company's employees.
The
related
www.rushydro.ru/investors/disclosure/affiliated.
the Company’s
the web-site
parties
given
list
on
of
is
–
3.12.1 Controlling entity
As of 31 December 2018 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
254
Total revenue from sales to related parties was:
Name of the buyer
2018
2017
Revenue from sales to subsidiaries, including:
PJSC Far East Energy Company
PJSC Krasnoyarskenergosbyt
JSC Chuvashskaya Energy Sales Company
JSC ESK RusHydro
PJSC Ryazanskaya Energy Sales Company
Other subsidiaries
Revenue from sales to related parties, including:
PJSC Boguchanskaya GES
CJSC Boguchanskiy Alluminievy zavod
Total sales to related parties
6,990
1,802
847
690
606
91
115
160
11,301
6,557
919
742
583
249
106
112
54
9,322
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
2018
2017
1,259
257
111
89
251
Construction-and-assembling operations, survey and design works, research and development,
including:
Subsidiaries
JSC Hydroremont-VKK
JSC Institut Hydroproject
JSC Mosoblhydroproject
JSC Lenhydroproject
Other
Total construction-and-assembling operations,
survey and design works, research and development:
Services rendered by related parties, including:
Subsidiary company:
JSC Hydroremont-VKK
JSC Transport company Rushydro
JSC Sulaksky HydroKaskad
JSC Malaya Dmitrovka
LLC RusHydro IT Servis
JSC Zaramagskiye GES
LLC SNRG
Other
Other related parties
Services rendered by related parties, total
Purchased electricity
Total purchases from related parties
3,116
1,448
531
514
458
243
234
642
-
7,186
2
9,115
1,967
1,559
309
228
240
327
2,663
2,925
1,433
527
514
416
249
260
642
7
6,973
2
9,638
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.
255
The expenses of the Company's contributions to non-state pension funds are recorded as
expenses for ordinary activities. The total amount of contributions to the pension fund was
RUB 321 million and RUB 265 million for 2018 and 2017, respectively.
3.12.5 Settlements with related parties
As of 31 December 2018, 2017 and 2016, accounts receivable from related parties to the
Company less doubtful debt provision were (see paragraph 3.2.2 of the Explanatory Notes):
Type of accounts receivable
31 December
2018
31 December
2017
31 December
2016
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
Accounts receivable of interest accrued on loans
issued and promissory notes received
Advances
Other settlements with related parties
Total accounts receivable from related parties
2,142
94,113
25,689
10,272
-
148
1,098
6,698
2,560
72
142,792
2,142
64,257
25,689
29,621
9,962
2,234
952
3,488
2,240
141
140,726
5,457
30,707
25,689
22,997
8,257
10,897
1,217
2,219
3,334
113
110,887
Doubtful debt provision for related parties' accounts receivables as of 31 December 2018 was
RUB 4,946 million (31 December 2017: RUB 4,123 million; 31 December 2016: RUB 5,904
million).
As of 31 December 2018, 2017 and 2016, the Company's accounts payable to the related parties
were:
Subsidiaries
Other related parties
Total accounts payable to related parties
31 December
2018
31 December
2017
31 December
2016
978
-
978
1,001
18
1,019
1,164
81
1,245
The whole amount accounts payable to related parties is payable in cash.
3.12.6 Related parties' debt within investments
As of 31 December 2018, 2017 and 2016, 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
31 December
2018
31 December
2017
31 December
2016
Loans issued to related parties
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)
71,712
601
72,313
66,128
6,185
67,105
601
67,706
55,419
12,287
28,315
601
28,916
27,686
1,230
As of December 31, 2018, the total amount of the Company's equity and debt financial
investments in subsidiaries and other related parties amounted to RUB 349,789 million. (2017 -
RUB 317,615 million, 2016 - RUB 285,672 million). The provision for impairment of these financial
investments as of December 31, 2018 amounted to RUB 33,374 million. (2017 - RUB 27,735
million, 2016 - RUB 20,111 million).
256
Interest income on loans issued to related parties and promissory notes received from related
parties:
Entity
2018
2017
Subsidiaries, including:
JSC Far East Generating Company
JSC RAO Energy Systems of the East
JSC Sakhaenergo
JSC Kamchatskenrgo
PJSC Yakutskenergo
JSC Hydroinvest
JSC Teploenergoservis
JSC Far East Distribution Grid Company
Other
Other subsidiaries
Total interest income
4,538
2,527
517
388
248
183
151
108
-
416
91
4,629
3,689
1,797
339
358
82
97
312
98
212
394
63
3,752
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 599 million for 2018 (2017: RUB 2,303 million):
Entity
2018
2017
JSC Hydroremont-VKK
HydroOGK Power Company Ltd
JSC Blagoveschenskaya TETS
Other
Total income from investments in subsidiaries
345
-
-
254
599
154
1,706
176
267
2,303
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 PJSC RusHydro's directors approved by the
Annual General Meeting of Shareholders held on 26 June 2017 (Minutes No. 16).
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 2018 and 2017, the Company remuneration to key management personnel within the limits set
out in their employment agreements for the total amount of RUB 1,145 million and RUB 1,141
million, respectively. The insurance contributions amounted to RUB 189 million for 2018 (2017:
RUB 190 million). In addition, in 2018, an appraisal obligation was established for premiums to
key management personnel in the amount of RUB 398 million (2017: RUB 400 million). In
calculation of
the expected
remuneration for 2018 as part of the Long-Term Motivation Program of the Company's key
management.
for remuneration payments
the estimated
includes
liability
3.12.9 Cash flows between the Company and subsidiaries/associates
257 Item
Line
code
2018
2017
Cash flows from operating activities
Receipts, including:
sales of products, goods, work and services
lease payments, license payments, royalties, commission and
other payments
other receipts, including;
receipts on assignment of the right of claim (see 3.2.4 of the
Explanatory Notes)
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:
creation, modernisation,
acquisition,
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
19,875
9,853
8,126
8,026
59
9,963
9,962
(7,666)
(7,508)
(15)
(143)
12,209
8,548
8
11
67
33
-
(7,237)
(7,095)
(39)
(103)
889
30,667
241
9
6,677
27,384
1,852
-
(57,322)
3,017
16
(96,487)
(2,845)
(14,829)
(3,103)
(7,524)
(39,648)
(48,771)
(85,860)
(65,821)
4,247
4,247
(3,754)
(9)
676
676
(22)
(15)
(3,745)
493
(36,072)
(7)
654
(64,277)
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
99.8%. 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 2018, the Company had outstanding issued guarantees to the third parties'
creditors and pledged assets for the total amount of RUB 54,341 million (31 December 2017: RUB
82,916 million, 31 December 2016: RUB 101,926 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.
258
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. At the same time, there has recently been a certain easing of the
transfer pricing rules, characterized by a decrease in cases in which transactions may be deemed
controlled, which is expected to reduce the possible impact on the Company's financial position.
The management plans to defend with resolve the Company's position on transfer pricing in case
of disputes with tax authorities.
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 and also the
rules for determining the tax residence of foreign legal entities at the place of their actual
management (in case of a foreign company recognition as a Russian tax resident, all income of
such a company will be subject to taxation in 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. The Company carries out systematic work to decrease the number
of its foreign subsidiaries, which should reduce the impact of this factor on the financial position
and results of the Company's business.
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. In November 2018, the
Company placed Eurobonds in Chinese yuan offshore, while the management of currency risk
was eliminated by concluding a hedging transaction (currency swap interest), details of the
transaction are described in paragraph 3.4.1 of the Notes. 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:
259 31 December 2018
US Dollars
Euro
Chinese yuan*
Total
31 December 2017
US Dollars
Euro
Total
31 December 2016
US Dollars
Euro
Total
Monetary
financial assets
Monetary
financial
liabilities
Net balance
sheet position
161
-
-
161
704
-
704
547
-
547
-
(1,237)
(15,254)
(16,491)
-
(6,112)
(6,112)
-
(11,716)
(11,716)
161
(1,237)
(15,254)
(16,330)
704
(6,112)
(5,408)
547
(11,716)
(11,169)
*Management of currency risk on obligations expressed in Chinese yuan offshore is excluded by entering
into a currency-interest swap transaction (Note 3.4.1).
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's loan portfolio as at 31 December 2018, as at 31 December 2017 and as at 31
December 2016 is represented by borrowings with a fixed interest rate. The influence of changes
in these rates on the Company's profit is insignificant.
The Company monitors the loan market in order to identify favorable credit conditions, and also
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 2018
didn't change significantly in comparison with an indicator of 2017.
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.
In general, the risks associated with a possible reduction in the price of sales of electricity and
power in the wholesale market are assessed as insignificant.
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.
260
Category of investments
31 December
2018
31 December
2017
31 December
2016
Equity investments for which current market value can be
determined, including:
PJSC Inter RAO
PJSC Irkutskenergo
PJSC 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)
-
-
-
-
6,809
6,809
-
-
7,818
7,709
65
44
1,709
1,709
20,204
275,769
248,212
236,565
277,478
256,730
264,587
* As of 31.12.2018 and 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
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 PJSC 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 difficulties 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.
261 The ageing analysis for long term borrowings is presented is paragraph 3.4.1 of the Explanatory
Notes.
3.16 Subsequent events
There are no significant events which have affected or could affect the Company’s financial
position, cash flows or its performance in the period between the reporting date and the date of
signing the financial statements for 2018.
Chairman of Management Board - General Director
of PJSC RusHydro
N.G. Shulginov
Chief Accountant of PJSC RusHydro
Y. G. Medvedeva
28 February 2019
262
Appendix No.16 Consolidated financial statements prepared in accordance with IFRS
and an audit opinion for the year ended December 31, 2018 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 2018
263 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.
Note 2.
Note 3.
Note 4.
Note 5.
Note 6.
Note 7.
Note 8.
Note 9.
Note 10. Financial assets at fair value through profit or loss and available-for-sale financial assets
The Group and its operations ............................................................................................................. 8
Summary of significant accounting policies........................................................................................ 8
Changes in accounting policies and adoption of new or revised standards and interpretations ..... 19
New accounting pronouncements .................................................................................................... 23
Principal subsidiaries ........................................................................................................................ 25
Segment information ........................................................................................................................ 28
Related party transactions ................................................................................................................ 31
Property, plant and equipment ......................................................................................................... 33
Investments in associates and joint ventures ................................................................................... 36
(as at 31 December 2017) ................................................................................................................ 40
Note 11. Other non-current assets .................................................................................................................. 40
Note 12. Cash and cash equivalents .............................................................................................................. 41
Note 13. Accounts receivable and prepayments ............................................................................................ 42
Note 14.
Inventories ........................................................................................................................................ 43
Note 15. Other current assets ......................................................................................................................... 43
Note 16. Equity ................................................................................................................................................ 44
Note 17.
Income tax ........................................................................................................................................ 45
Note 18. Pension benefit obligations............................................................................................................... 46
Note 19. Current and non-current debt ........................................................................................................... 49
Note 20. Non-deliverable forward contract for shares .................................................................................... 51
Note 21. Other non-current liabilities............................................................................................................... 51
Note 22. Accounts payable and accruals ........................................................................................................ 52
Note 23. Other taxes payable ......................................................................................................................... 52
Note 24. Revenue ........................................................................................................................................... 52
Note 25. Government grants ........................................................................................................................... 53
Note 26. Operating expenses (excluding impairment losses) ........................................................................ 53
Note 27. Finance income, costs ...................................................................................................................... 54
Note 28. Earnings per share ........................................................................................................................... 54
Note 29. Capital commitments ........................................................................................................................ 54
Note 30. Contingencies ................................................................................................................................... 54
Note 31. Financial risk management............................................................................................................... 56
Note 32. Management of capital ..................................................................................................................... 59
Note 33. Fair value of assets and liabilities ..................................................................................................... 59
Note 34. Presentation of financial instruments by measurement category..................................................... 61
Note 35. Subsequent events ........................................................................................................................... 62
Note 36. Accounting policies before 1 January 2018...................................................................................... 62
264
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 Public joint stock company Federal Hydro-Generating Company
(PJSC RusHydro) and its subsidiaries (together – the “Group”) as at 31 December 2018, 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 2018;
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.
265
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”) 4,000 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 aggregate revenue: PJSC RusHydro,
JSC DGK, and also in respect of individual balances and types of
operations for other components of the Group where necessary.
• Our audit scope covered inter alia 70% of the Group’s revenues and
77% of the Group’s total carrying value of property, plant and
equipment.
Key audit matters
• Transition to the model of accounting for property, plant and
equipment at cost less accumulated depreciation and impairment
losses
• Assessment of impairment of property, plant and equipment
• Assessment of expected credit losses in relation to trade receivables
• Treatment of the non-deliverable forward contract for shares
As part of designing our audit, we determined materiality and assessed 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. As in
all of our audits, 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 consolidated 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.
266
Overall group materiality
RUB 4,000 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
Transition to the model of accounting
for property, plant and equipment at
cost less accumulated depreciation and
impairment losses
For matters requiring disclosure and related
significant accounting policies see Notes 2, 3
and 8 to these consolidated financial
statements.
As of 1 January 2018 the Group changed its
accounting policy and now property, plant and
equipment are reported in the consolidated
financial statements at cost less accumulated
depreciation and impairment losses (where
necessary).
The Group management believes that the
transition from the revaluation model to the
cost model provides more relevant and reliable
information on the financial position and
financial performance of the Group to the
users as it improves comparability of items in
the consolidated financial statements of the
Group between the reporting periods
considering information needs of the users, as
well as against the Group’s industry peers.
The retrospective application of the new
policies led to changes in the comparative
information included in these consolidated
financial statements. The Group’s aggregate
carrying amount of property, plant and
We obtained and analysed the recalculated
registers of the Group’s property, plant and
equipment. We engaged our valuation experts
to form our conclusion on the methodology and
approaches that were used in the recalculation of
the value of property, plant and equipment.
Our audit procedures to address the change in
the accounting policy implemented by the Group
management and recalculation of the historical
cost of property, plant and equipment less
accumulated depreciation and impairment
losses (where necessary) included:
• analysis of management’s judgements made
when changing the accounting policy for
property, plant and equipment, for
reasonableness;
• evaluation of whether the Group
management used reasonable and relevant
methodology for the transition to the new
property, plant and equipment accounting
model;
• assessment of competence, skills, experience
and objectivity of the management’s experts;
267
Key audit matter
equipment was RUB 643,150 million at
31 December 2017 and RUB 604,197 at
1 January 2017 as compared to the initially
recorded amounts (prior to the change in the
accounting policies) of RUB 799,855 million
and RUB 765,047 million at 31 December 2017
and 1 January 2017, respectively. Thus, the
change in the accounting policy for property,
plant and equipment led to a reduction in the
carrying amount of property, plant and
equipment in the statement of financial
position by RUB 156,705 million and RUB
160,850 million at 31 December 2017 and
1 January 2017, respectively.
The impact of the change in the accounting
policy on other items in the Group’s
consolidated financial statements is disclosed
in detail in Note 3 to the consolidated financial
statements.
We focused on the change in the Group’s
accounting policy for property, plant and
equipment as the transition to another model
of accounting for property, plant and
equipment is a complicated process and such
change in accounting policies has a significant
impact on the Group’s consolidated financial
statements.
How our audit addressed the Key audit
matter
• examination, on a sample basis, of the
recalculated registers of property, plant and
equipment for compliance with the chosen
transition methodology, as well as the
mathematical accuracy of the calculations
made;
• obtaining and analysing written
representations from the management with
regard to the change in the accounting policy
for property, plant and equipment and its
impact on the consolidated financial
statements.
Based on the above procedures we believe that
the methodology used by the management to
obtain the recalculation results when
transferring to the model of accounting for
property, plant and equipment at cost less
accumulated depreciation and impairment
losses is appropriate for the purposes of the
accompanying consolidated financial
statements.
In addition, we verified compliance of
disclosures in Notes 2, 3 and 8 to the
consolidated financial statements with the
requirements of IAS 8 ‘Accounting Policies,
Changes in Accounting Estimates and Errors’
and IAS 16 ‘Property, plant and equipment’.
As a result of our procedures, we have not
identified any evidence that would require
significant adjustments to the carrying amounts
of property, plant and equipment and other
recalculated items or related disclosures in the
accompanying consolidated financial
statements.
Assessment of impairment of property,
plant and equipment
For matters requiring disclosure and related
significant accounting policies, judgements
and accounting estimates see Notes 2 and 8 to
the consolidated financial statements.
At 31 December 2018, the Group’s aggregate
carrying amount of property, plant and
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.
268
Key audit matter
How our audit addressed the Key audit
matter
equipment was RUB 669,424 million. This is
the most significant asset on the Group’s
balance sheet, accounting for 72% of the total
assets.
Our audit procedures related to the
management’s assessment of impairment of
property, plant and equipment, included the
following:
The Group management analysed the Group’s
financial performance, industry outlook and
operational plans, and assessed whether there
are indicators of impairment of property, plant
and equipment or potential release of
previously recognised impairment losses, by
cash generating unit. For cash generating units
where such indicators were identified, the
management assessed the recoverable
amounts of property, plant and equipment.
As a result of management’s impairment test,
the Group accrued an impairment loss of
RUB 24,221 million in the consolidated income
statement for the year ended 31 December
2018.
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.
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.
• evaluation of the methodology used by the
Group management for the impairment test;
• examination, on a sample 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 sample basis, of accuracy
and relevance of inputs that management
incorporated in the financial models for
assessing the impairment of property, plant
and equipment;
• examination, on a sample 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 2018 does not guarantee that
269 Key audit matter
How our audit addressed the Key audit
matter
future events that are inherently uncertain
would not lead to a significant change in these
estimates.
We note that 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.
We also assessed the compliance of disclosures
in Notes 2 and 8 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.
Assessment of expected credit losses in
relation to trade receivables
For matters requiring disclosure, and related
significant accounting policies, judgements
and accounting estimates see Notes 2 and 13
to the consolidated financial statements.
At 31 December 2018, the carrying amount of
the Group’s trade receivables was RUB 36,256
million (RUB 65,147 million less the credit loss
allowance of RUB 28,891 million).
Thus, at 31 December 2018, the allowance for
credit losses is significant and accounts for
44% of the total trade receivables.
In accordance with IFRS 9 ‘Financial
Instruments’, starting from 1 January 2018,
the Group management assesses expected
credit losses in relation to trade receivables
prospectively and recognises an allowance for
credit losses at each reporting date. The
estimate of expected credit losses represents
an unbiased and probability weighted amount
Our audit procedures in respect of the
management’s assessment of expected credit
losses in relation to trade receivables included:
• evaluation of the methodology used by the
Group's management to assess expected
credit losses in relation to trade receivables,
including definition of default;
• examination, on a sample basis, of accuracy
of management’s classification of trade
receivables for their further assessment on a
collective or individual basis depending on
the credit risk characteristics and the length
of payment delinquency;
• examination, on a sample basis, of the ageing
of trade receivables to confirm the length of
payment delinquency;
• examination, on a sample basis, of the
models and calculations used for the
270
Key audit matter
that is determined by evaluating a range of
possible outcomes, and reflects all reasonable
and supportable information that is available
at each reporting date about past events,
current conditions and forecasts of future
economic conditions. 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 assessing the allowance for
credit losses in relation to trade receivables as
the estimation process is complicated and
requires significant management’s judgements,
and the amount of allowance is significant.
How our audit addressed the Key audit
matter
assessment of credit losses on a collective or
individual basis;
• examination, on a sample basis, of prior
period payments, if the information on such
payments was used in the calculation of
expected credit losses;
• analysis of external information from the
regulators of the electricity (capacity)
market, including the Supervisory Board of
NP Market Council, which regularly makes
decisions on excluding companies from the
register of participants of the wholesale
electricity (capacity) market; among these
excluded companies there are buyers of the
Group’s electricity (capacity) whose balances
of receivables bear an increased credit risk;
• obtaining and analysing written
representations from the management with
regard to the assessment of the allowance for
credit losses in relation to trade receivables.
In addition, we assessed compliance of the
disclosures in Notes 2, 13 and 31 to the
consolidated financial statements with the
presentation and disclosure requirements of
IFRS 7 ‘Financial Instruments: Disclosures’.
Acceptability of the current estimates of the
Group management regarding the credit losses
on trade receivables for the purpose of preparing
the consolidated financial statements for the
year ended 31 December 2018 does not
guarantee that future events that are inherently
uncertain would not lead to a significant change
in these estimates.
As a result of our procedures, we have not
identified any evidence that would require
significant adjustments to the amount of
allowance for credit losses in relation to trade
receivables or related disclosures in the
accompanying consolidated financial
statements.
271
Key audit matter
How our audit addressed the Key audit
matter
Treatment of the non-deliverable
forward contract for shares
For matters requiring disclosure, and related
significant accounting policies, judgements
and accounting estimates see Notes 2, 20 and
33 to the consolidated financial statements.
In March 2017, PJSC RusHydro
simultaneously signed a contract with Bank
VTB (PJSC) under which the Bank acquired 55
billion ordinary shares of PJSC 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.
As at 31 December 2018, the liability under the
forward contract of RUB 31,896 million is
recorded as a long-term derivative financial
instrument at fair value through profit or loss.
Loss from change of fair value of the non-
deliverable forward contract for shares of RUB
13,993 million was accounted within finance
costs in the consolidated income statement for
the year ended 31 December 2018.
We focused on the treatment of this non-
deliverable forward contract in the
consolidated financial statements due to the
complexity of its accounting 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 income statement are material.
We obtained and reviewed the model that was
used to measure the fair value of the non-
deliverable forward contract at 31 December
2018. We engaged our valuation experts in order
to form a 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:
•
•
•
•
•
•
evaluation of the reasonableness of the
judgements that the Group management
applied to determine the treatment of the
non-deliverable forward contract in the
consolidated financial statements;
evaluation of the validity and
appropriateness of the methodology used by
the Group management to develop the fair
value model for the non-deliverable forward
contract;
testing accuracy and relevance of the key
assumptions and source data used in the
model, and their consistency with available
reliable external information, including
market value of the Company’s shares, and
our expert knowledge of industry specifics;
assessment of competence, skills, experience
and objectivity of the management’s experts;
testing the mathematical accuracy of the
financial instrument fair value calculation;
consideration and assessment of the
potential impact of reasonably possible
changes in the key assumptions;
• obtaining and analysing management’s
written representations related to the
treatment of the non-deliverable forward
contract.
As a result of the above procedures, we believe
that the estimates and judgements made by
management with regard to the treatment of the
non-deliverable forward contract are
appropriate for the purposes of preparation of
272
Key audit matter
How our audit addressed the Key audit
matter
the accompanying consolidated financial
statements.
In addition we assessed compliance of the
disclosures in Notes 2, 20 and 33 to the
consolidated financial statements with the
presentation and disclosure requirements of
IFRS 9 ‘Financial Instruments’, 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 the
treatment 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 enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls and the industry in which the Group operates.
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: PJSC RusHydro and 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 70% of the Group’s revenue and 77%
of the total carrying value of the Group’s property, plant and equipment.
273 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, financial instruments
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 2018 and Issuer’s Report of PJSC RusHydro for Q1 2019, but does not include the
consolidated financial statements and our auditor’s report thereon. PJSC RusHydro’s Annual Report
for 2018 and Issuer’s Report of PJSC RusHydro for Q1 2019 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 becomes available, 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.
When we read PJSC RusHydro’s Annual Report for 2018 and Issuer’s Report of PJSC RusHydro for Q1
2019, if we conclude that there is a material misstatement therein, we are required to communicate the
matter to those charged with governance.
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.
274 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
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.
275
276 277 Revenue
Government grants
Other operating income
Operating expenses (excluding impairment losses)
Operating profit excluding impairment losses
Impairment of property, plant and equipment
Impairment of financial assets, net
Impairment of accounts receivable, net
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)
Year ended
31 December 2018
Year ended
31 December 2017
(restated)
Note
24
25
26
8
27
27
9
17
28
28
358,770
41,648
5,452
(314,850)
91,020
(24,221)
(5,379)
-
61,420
7,667
(23,088)
1,860
47,859
(16,022)
31,837
31,229
608
348,119
32,745
690
(299,662)
81,892
(25,301)
-
(5,957)
50,634
8,443
(21,133)
442
38,386
(13,612)
24,774
26,403
(1,629)
0.0739
0.0656
422,436,552
402,655,108
278
Profit for the year
Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss
Remeasurement of pension benefit obligations
Gain arising on financial assets at fair value through other
comprehensive income
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Loss arising on available-for-sale financial assets
Reclassification of accumulated loss on available-for-sale financial
assets to profit or loss
Other comprehensive income / (loss)
Total items that may be reclassified subsequently to
profit or loss
Total other comprehensive income / (loss)
Total comprehensive income for the year
Attributable to:
Shareholders of PJSC RusHydro
Non-controlling interest
Year ended
31 December 2018
Year ended
31 December 2017
(restated)
Note
31,837
24,774
18
10
10
388
70
458
-
-
71
71
529
32,366
31,556
810
344
-
344
(2,532)
(19)
(8)
(2,559)
(2,215)
22,559
24,059
(1,500)
279
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit 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 financial assets, net
Impairment of accounts receivable, net
Other (income) / loss
Operating cash flows before working capital changes, income tax
paid and changes in other assets and liabilities
Note
8, 26
26
9
27
27
8
Working capital changes:
Increase in accounts receivable and prepayments
(Increase) / decrease in other current assets
Increase in inventories
Increase / (decrease) in accounts payable and accruals
(Decrease) / increase 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 investment in joint venture
Proceeds from sale of shares of PJSC Inter RAO
Interest received
Net cash used in investing activities
Year ended
31 December 2018
Year ended
31 December 2017
(restated)
47,859
22,310
1,757
(1,860)
(5,452)
(7,667)
23,088
24,221
5,379
-
(236)
38,386
21,340
688
(442)
(690)
(8,443)
21,133
25,301
-
5,957
326
109,399
103,556
(10,027)
(13,483)
(299)
(4,848)
5,705
(703)
(1,739)
573
(13,510)
84,551
(67,423)
977
(44,545)
15,374
-
871
2,160
5,545
(87,041)
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)
280
Note
Year ended
31 December 2018
Year ended
31 December 2017
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
16
16
19, 20
19
19
19
Dividends paid to the shareholders of PJSC RusHydro
Dividends paid by subsidiaries to non-controlling interest holders
Other payments
Finance lease payments
Net cash used in financing activities
Effect of foreign exchange differences on cash and cash equivalents
balances
(Decrease) / 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
12
-
-
(2,813)
41,267
127,760
(142,102)
(14,217)
(11,113)
(172)
(746)
(155)
(2,291)
57
(4,724)
70,156
65,432
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
281
Note
Share
capital
386,255
Treasury
shares
(22,578)
Share
premium
39,202
Merger
reserve
(135,075)
Foreign
currency
translation
reserve
(538)
Revaluation
reserve on
property,
plant and
equipment
182,968
Revaluation
reserve on
available-
for-sale
financial
assets
Reserve for
remeasu-
rement of
pension
benefit
obligation
16,909
459
Equity
attributable to
shareholders of
PJSC RusHydro
Non-
controlling
interest
646,669
4,263
Retained
earnings
179,067
Total
equity
650,932
3
-
-
-
-
132
(182,968)
(32)
-
47,275
(135,593)
6,242
(129,351)
386,255
-
(22,578)
-
39,202
-
(135,075)
-
(406)
-
10
10
18
16
16
16
20
16
-
-
-
-
-
-
40,034
-
-
-
-
-
-
-
-
-
-
-
-
17,965
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9)
(9)
(9)
-
-
-
-
-
-
426,289
(4,613)
39,202
(135,075)
(415)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,877
-
(2,505)
(19)
-
-
(2,524)
(2,524)
-
-
-
-
-
-
459
-
226,342
26,403
511,076
26,403
10,505
(1,629)
521,581
24,774
-
-
188
-
188
188
-
-
-
-
-
-
-
-
-
1
1
26,404
-
(2,965)
(19,696)
(2,505)
(27)
(2,532)
(19)
-
(19)
188
(8)
(2,344)
24,059
40,034
15,000
(19,696)
156
-
129
(1,500)
-
-
(127)
344
(8)
(2,215)
22,559
40,034
15,000
(19,823)
(10,013)
(10,013)
-
(10,013)
-
42
-
42
228
-
228
42
14,353
647
220,114
560,502
9,106
569,608
426,289
(4,613)
39,202
(135,075)
(547)
181,163
14,356
647
171,423
692,845
2,719
695,564
3
-
-
-
-
132
(181,163)
(3)
-
48,691
(132,343)
6,387
(125,956)
As at 1 January 2017
Effect of changes in accounting
policy
As at 1 January 2017
(restated)
Profit for the year
Loss arising on available-for-sale
financial assets
Accumulated loss on available for-
sale financial assets recycled to
profit or loss
Remeasurement of pension
benefit obligations
Other comprehensive loss
Total other comprehensive loss
Total comprehensive income
Share issue
Sale of treasury shares
Dividends
Non-deliverable forward contract
for shares
Effect of changes in non-
controlling interest due to disposal
of subsidiaries
Other movements
As at 31 December 2017
(restated)
Reference:
As at 31 December 2017
Effect of changes in accounting
policy
282
Note
3
3,13,16
Share
capital
426,289
-
426,289
-
Treasury
shares
(4,613)
-
(4,613)
-
Share
premium
39,202
-
39,202
-
Merger
reserve
(135,075)
-
(135,075)
-
Foreign
currency
translation
reserve
(415)
-
(415)
-
10
18
-
16
16
-
-
-
-
-
-
-
-
-
-
-
-
426,289
-
-
-
-
-
-
-
(4,613)
-
-
-
-
-
-
-
39,202
-
-
-
-
-
-
-
(135,075)
-
71
71
71
-
-
-
(344)
Revaluation
reserve on
available-
for-sale
financial
assets
Reserve for
remeasu-
rement of
pension
benefit
obligation
14,353
(13,894)
459
-
70
-
-
70
70
-
-
-
529
647
-
647
-
-
186
-
186
186
-
-
-
833
Equity
attributable to
shareholders of
PJSC RusHydro
560,502
668
561,170
31,229
Non-
controlling
interest
9,106
55
9,161
608
Retained
earnings
220,114
14,562
234,676
31,229
Total
equity
569,608
723
570,331
31,837
-
70
-
70
-
-
-
31,229
(11,124)
(5,223)
22
249,580
186
71
327
31,556
(11,124)
(5,223)
22
576,401
202
-
202
810
(172)
-
19
9,818
388
71
529
32,366
(11,296)
(5,223)
41
586,219
As at 1 January 2018 (restated)
Application of IFRS 9
As at 1 January 2018 (restated)
Profit for the year
Gain arising on financial assets at fair value
through other comprehensive income
Remeasurement of pension benefit
obligations
Other comprehensive income
Total other comprehensive income
Total comprehensive income
Dividends
Sale of shares of PJSC Inter RAO
Other movements
As at 31 December 2018
283
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, capacity and heat.
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 continues to be negatively impacted by ongoing political tension in the
region and international sanctions against certain Russian companies and individuals. Firm oil prices, low
unemployment and rising wages supported a modest growth of the economy in 2018.
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 2018 the Russian Federation
owned 60.56 percent of the total voting ordinary shares of the Company (31 December 2017: 60.56 percent).
As at 31 December 2018 PJSC Bank VTB that is controlled by the Russian Federation owned 13.34 percent
of the Company’s shares (31 December 2017: 13.34 percent).
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 7).
In addition, the Government influences the Group’s operations through:
Economic, social and other policies of the Russian Government could have a material effect on operations of
the Group.
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.
Overview of the electricity and capacity market. In 2018 the following significant changes were made to
the rules of electricity and capacity wholesale and retail markets, their operation procedures and pricing
mechanisms:
In order to provide for the connection of Western and Central Regions of Sakha Republic (Yakutia) into
the unified energy system of the Russian Federation, Federal Law No.172-FZ of 29 June 2018
established a special regulation for situations when one energy system gets connected to another.
Russian Government Resolutions No. 1496 of 8 December 2018 and No. 761 of 30 June 2018
introduced the terms and timing of connection of these territories to the unified energy system of the
Russian Federation as well as the specifics of electricity and capacity trading on them. Since 1 January
2019 these territories became a part of non-pricing zone of the Far East.
Federal Law No.254-FZ of 29 July 2018 established the possibility of concluding bilateral electricity
sale-purchase contracts in technologically isolated territorial energy systems at prices determined by the
parties’ agreement but not exceeding the threshold levels approved by regulatory authorities for the
term of not less than five years.
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, financial instruments categorised at fair value through profit or loss and at fair value through other
comprehensive income. The principal accounting policies applied in the preparation of these consolidated
financial statements are set out below. Apart from the accounting policy changes concerning accounting for
property, plant and equipment and those resulting from the adoption of IFRS 9 “Financial Instruments” and
IFRS 15 “Revenue from Contracts with Customers” effective from 1 January 2018 (Note 3), these policies
have been consistently applied to all the periods presented.
284 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 within finance income/costs.
As at 31 December 2018, 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 69.47 : USD 1.00
(31 December 2017: RR 57.60 : USD 1.00), between Russian Ruble and Euro was RR 79.46 : EUR 1.00
(31 December 2017: RR 68.87 : EUR 1.00), between Russian Ruble and China Yuan was RR 10.10 : CNY 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.
Goodwill is measured by deducting the fair value of 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.
285 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
Consolidated 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.
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 (directly or indirectly) 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 share of results 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.
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 are stated at cost, less accumulated
depreciation and provision for impairment, where required.
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. Costs of replacing major parts or components of property, plant
and equipment items are capitalised and the replaced part is written off.
286 Social assets are not capitalised if they are not expected to result in future economic benefits to the Group.
Maintenance costs of social assets are expensed as incurred.
Gains and losses on disposals of property, plant and equipment 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 the Group
management and if expectations differ from previous estimates, the changes of useful lives are accounted
for as a change in an accounting estimate prospectively.
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 testing of property, plant and equipment is
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 8). If any such indication exists, the Group 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 Consolidated Income Statement for the year. 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 recoverable amount.
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.
Key measurement terms for financial instruments. 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 upon sale of the asset or paid to transfer the 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.
287 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 valuation 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 33).
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.
Initial recognition of financial instruments. 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 adjusted for
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.
Classification of financial assets. The Group classifies financial assets in the following measurement
categories: to be measured at fair value through profit or loss (FVPL), to be measured at fair value through
other comprehensive income (FVOCI), and those to be measured at amortised cost. The classification
depends on the Group’s business model for managing the financial assets and the contractual terms of the
cash flows.
For investments in equity instruments that are not held for trading, this will depend on whether the Group has
made an irrevocable election at the time of initial recognition to account for the equity investment at fair value
through other comprehensive income.
There are three measurement categories into which the Group classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest, are measured at amortised cost.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, are measured at
FVOCI.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL.
288 Subsequent measurement of financial assets. The Group subsequently measures all equity investments
at fair value. Where the Group management has elected to present fair value gains and losses on equity
investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss
following the derecognition of such investments. Dividends from such investments continue to be recognised
in profit or loss as other operating income when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised as other operating income or expense.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not
reported separately from other changes in fair value.
All the Group’s debt instruments are measured at amortised cost. Interest income from these financial assets
is included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in
the statement of profit or loss.
Reclassification of financial assets. Financial instruments are reclassified only when the business model
for managing the portfolio as a whole changes. The reclassification has a prospective effect and takes place
from the beginning of the first reporting period that follows after the change in the business model. The
Group did not change its business model during the current period and did not make any reclassifications.
Impairment of financial assets: allowance for expected credit losses (ECL). The Group assesses on a
forward looking basis the expected credit losses associated with its debt instruments carried at amortised
cost. The Group measures ECL and recognises net impairment losses on financial and contract assets at
each reporting date. The measurement of ECL reflects: (a) an unbiased and probability weighted amount
that is determined by evaluating a range of possible outcomes, (b) time value of money and (c) all
reasonable and supportable information that is available without undue cost and effort at the end of each
reporting period about past events, current conditions and forecasts of future conditions.
In accordance with IFRS 9, the Group applied a simplified approach to determining ECL in relation to trade
accounts receivable that requires that full lifetime ECL are to be recognised. For other financial assets the
Group applies a three stage model for impairment, based on changes in credit quality since initial
recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1.
Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that
results from default events possible within the next 12 months or until contractual maturity, if shorter (“12
Months ECL”). If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the
asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until
contractual maturity but considering expected prepayments, if any (“Lifetime ECL”). If the Group determines
that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a
Lifetime ECL. For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL
is always measured as a Lifetime ECL.
Write-off of financial assets. Financial assets are written-off, in whole or in part, when the Group exhausted
all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The
write-off represents a derecognition event. The Group may write-off financial assets that are still subject to
enforcement activity when the Group seeks to recover amounts that are contractually due, however, there is
no reasonable expectation of recovery.
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.
Derivative financial instruments Derivative financial instruments 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 (gains less losses
on derivatives). The Group does not apply hedge accounting.
Certain derivative instruments embedded in financial liabilities and other non-financial contracts are treated
as separate derivative instruments when their risks and characteristics are not closely related to those of the
host contract.
289 Classification of financial liabilities. Financial liabilities are classified as subsequently measured at
amortised costs, except for financial liabilities at FVPL: this classification is applied to derivatives and other
financial liabilities designated as such at initial recognition.
Derecognition of financial liabilities. Financial liabilities are derecognised when they are extinguished (i.e.
when the obligation specified in the contract is discharged, cancelled or expires).
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 because: (a) they are held for collection of contractual
cash flows and those cash flows represent solely payments of principal and interest, and (b) they are not
designated at FVPL.
Trade and other receivables. Trade and other receivables are recognised initially at fair value and are
subsequently carried at amortised cost using the effective interest method.
Trade and other payables. Trade and other payables are accrued when the counterparty performs its
obligations under the contract and are recognised initially at fair value and subsequently carried at amortised
costs using the effective interest method.
Debt. Debt is recognised initially at fair value, net of transaction costs incurred and is subsequently carried at
amortised cost using the effective interest method. Fair value is determined using the prevailing market rate
of interest for a similar instrument, if significantly different from the transaction price.
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.
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.
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
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. Taxable profits or losses are based on estimates if
financial statements are authorised prior to filing relevant tax returns. Taxes other than on income are
recorded within operating expenses.
290 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.
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 Consolidated 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 resulting from changes in the actuarial assumptions in the measurement of
defined benefit plans are recognised in other comprehensive income as they arise within remeasurement of
pension benefit obligations. 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.
291 Other 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.
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, including
payments in relation to expected rent cancellation, 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 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,
when (or as) control is transferred.
The Group defines the following performance obligations: sales of electricity in the wholesale market, sales
of capacity in the wholesale market, sales of electricity and capacity in the retail market, sales of heat and
hot water, rendering services for electricity transportation, rendering services for connections to the grid,
other revenue.
The Group transfers control of a good or service over time and, therefore, satisfies a performance obligation
and recognises revenue over time for the following revenue: sales of electricity and capacity in the retail and
wholesale markets, sales of heat and hot water and rendering services for electricity transportation. Revenue
is recognised in the amount which the Group has the right to invoice, as this amount represents the value the
customer receives upon fulfillment of the contract. Other revenue is recognised at a point in time.
Contracts for all types of revenue do not contain a significant financing component as the terms of payments
agreed by contracting parties do not provide to the customers or to the Group significant benefit of financing.
The Group does not expect to have any contracts where the period between the transfer of the promised
goods or services to the customer and the payment by the customer exceeds one year. As a consequence,
the Group does not adjust any of the transaction prices for the time value of money.
Contract assets are not significant. Accounts receivable are recognised when the Group receives the
unconditional right to get the remuneration under the contract.
Contract liabilities are represented by advances received included in accounts payable and accruals and
other non-current liabilities.
Government grants. Government grants are a compensation for the incurred expenses, losses and reduced
tariffs to the guarantying suppliers – Group companies, in relation to the achievement of basic rates (tariffs).
Government grants are accounted for within operating income and if the there is a reasonable assurance
that the grant will be received and the Group will comply with all attached conditions and are recognised at
fair value. Grants are recognised during the period so as to match costs with respective compensation or, if
grants are compensating for the losses incurred previously, they are recognised when receipt of the grant
becomes probable. Government grants are included in cash flows from operating activities.
292 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 they are
recognised in the income statement as incurred.
Financial guarantees. Financial guarantees 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 original or modified 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 amount of the loss allowance for the guaranteed exposure determined based on the
expected loss model and (ii) the remaining unamortised balance of the amount at initial recognition.
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:
ECL measurement. Measurement of ECLs
involves determination
methodology, models and data inputs. The following components have a major impact on credit loss
allowance: definition of default, significant increase in credit risk, probability of default. The Group regularly
reviews and validates the models and inputs to the models to reduce any differences between expected
credit loss estimates and actual losses on accounts receivable.
is a significant estimate
that
293 In order to determine whether there has been a significant increase in credit risk, the Group compares the
risk of a default occurring over the life of a financial instrument at the reporting date with the risk of default at
the date of initial recognition. The assessment considers relative increase in credit risk rather than achieving
a specific level of credit risk at the reporting date. The Group considers all reasonable and supportable
forward looking information available without undue cost and effort, which includes a range of factors,
including behavioural aspects of particular groups of customers. The Group identifies behavioural indicators
of increases in credit risk prior to delinquency and incorporates appropriate forward looking information into
the credit risk assessment, either for an individual counterparty, or for groups of counterparties.
The ECL rates are based on the payment profiles of sales over a period of 48 months before 31 December
2018 and 36 months before 1 January 2018 respectively and the corresponding historical credit losses
experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the ability of the customers to settle the receivables. The
Group has identified inflation to be the most significant factor, and accordingly adjusts the historical loss
rates based on expected changes in the inflation rate. A change of the inflation rate by +/- 0.5% would result
in the expected level of losses changing by +/- 0.7% respectively.
Method of accounting for and valuation of 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 16) and entering into a non-deliverable forward contract for
these shares (Note 20) in March 2017 as two separate transactions. The sale of shares was recorded in
equity and a derivative financial instrument was 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.
The effect of these critical accounting estimates in respect of a non-deliverable forward contract fair value
and the key assumptions are disclosed in Note 20.
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, 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 Group 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 to the basic levels. According to the Resolution tariffs were
reduced retrospectively starting from 1 January 2017.
294 The amount of the premium that should be transferred to the regional budgets 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 2018 was RR 35,032 million (for the year ended 31 December 2017: RR 23 995 million). Taking
into account that the Group collects the premium and subsequently transfers it to the respective regional
budgets on behalf of the Russian Government, the management of the Group concluded that the Group’s
revenue from the sale 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 25). 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 13).
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 and joint ventures.
The effect of these critical accounting estimates and assumptions is disclosed in Notes 8 and 9.
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 through future taxable
profits (Note 17).
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 judgement 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 to future
depreciation rates which can affect the reported income and the carrying value of property, plant and
equipment.
In 2018, management of the Group reassessed the useful life of some items of property plant and equipment
due to modernisation of these items and actualisation of the expected useful lives. As a result, the
depreciation charge for 2018 decreased by approximately RR 905 million (4 percent) compared to the
depreciation charge that would have been charged if the useful lives were not reassessed.
Note 3.
interpretations
Changes in accounting policies and adoption of new or revised standards and
Changes in accounting policies. With effect from 1 January 2018, the Group changed its accounting policy
to measuring property, plant and equipment at cost less accumulated depreciation and impairment losses
(where required). Management of the Group believes that transition from revaluation model to cost model
results in a more relevant and reliable presentation to the users of the Group’s financial position and financial
performance due to greater comparability of the Group’s consolidated financial statements between reporting
periods considering information needs of the users as well as with other companies in the industry.
Accounting policies in respect of the Group’s office buildings, land and assets under construction did not
change. As before 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.
The changes to the comparative figures in these consolidated financial statements as a result of the
retrospective application of the change in the accounting policy in respect of property, plant and equipment
are presented below.
295
Impact on the Consolidated Statement of Financial Position and Statement of Changes in Equity:
As reported
31 December 2017
Changes in
accounting policies
in respect of
property, plant and
equipment
Property, plant and equipment
Investments in associates and joint ventures
Available-for-sale financial assets
Deferred income tax assets
Total non-current assets
TOTAL ASSETS
Retained earnings and other reserves
Equity attributable to the shareholders of PJSC RusHydro
Non-controlling interest
TOTAL EQUITY
Deferred income tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
799,855
20,097
18,495
9,354
873,132
1,028,251
231,967
692,845
2,719
695,564
41,695
181,439
332,687
1,028,251
(156,705)
(79)
(2)
238
(156,548)
(156,548)
(132,343)
(132,343)
6,387
(125,956)
(30,592)
(30,592)
(30,592)
(156,548)
Restated
As reported
643,150
20,018
18,493
9,592
716,584
871,703
99,624
560,502
9,106
569,608
11,103
150,847
302,095
871,703
765,047
20,278
21,181
6,640
834,993
983,446
243,790
646,669
4,263
650,932
39,086
215,858
332,514
983,446
1 January 2017
Changes in
accounting policies
in respect of
property, plant and
equipment
Restated
(160,850)
(104)
(32)
278
(160,708)
(160,708)
(135,593)
(135,593)
6,242
(129,351)
(31,357)
(31,357)
(31,357)
(160,708)
604,197
20,174
21,149
6,918
674,285
822,738
108,197
511,076
10,505
521,581
7,729
184,501
301,157
822,738
296
Impact on the Consolidated Income Statement, Statement of Comprehensive Income and Statement of Cash
Flows:
Year ended
31 December 2017
(as reported)
Changes in
accounting policies
in respect of
property, plant and
equipment
Year ended
31 December 2017
(restated)
Operating expenses (excluding impairment
losses), including
Depreciation of property, plant and equipment
and amortisation of intangible assets
Loss on disposal of property, plant and
equipment, net
Other loss
Operating profit excluding impairment losses
Impairment of property, plant and equipment
Operating profit
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)
Impairment of revalued property, plant and
equipment
Total items that will not be reclassified to
profit or loss
Loss arising on available-for-sale financial assets
Total items that may be reclassified
subsequently to profit or loss
Other comprehensive loss
Total comprehensive income for the year
Attributable to:
Shareholders of PJSC RusHydro
Non-controlling interest
(303,805)
(25,023)
(1,006)
(468)
77,749
(24,000)
47,792
417
35,519
(13,068)
22,451
24,013
(1,562)
0.0596
(1,043)
(699)
(2,561)
(2,588)
(3,287)
19,164
20,809
(1,645)
4,143
3,683
318
142
4,143
(1,301)
2,842
25
2,867
(544)
2,323
2,390
(67)
0.006
1,043
1,043
29
29
1,072
3,395
3,250
145
(299,662)
(21,340)
(688)
(326)
81,892
(25,301)
50,634
442
38,386
(13,612)
24,774
26,403
(1,629)
0.0656
-
344
(2,532)
(2,559)
(2,215)
22,559
24,059
(1,500)
Adoption of new or revised standards and interpretations
Adoption of IFRS 9, Financial Instruments. The Group adopted IFRS 9, Financial Instruments, from
1 January 2018. The Group elected not to restate comparative figures and recognised any adjustments to
the carrying amounts of financial assets and liabilities in the opening retained earnings as of the date of initial
application of the standards. Consequently, the revised requirements of the IFRS 7, Financial Instruments:
Disclosures, have only been applied to the current period. The comparative period disclosures repeat
disclosures made in the Consolidated financial statements for the year ended 31 December 2017.
297
The table below provides a reconciliation of carrying value of each class of equity financial assets under
IAS 39 with new measurement categories of IFRS 9 Financial instruments, adopted from 1 January 2018:
As at 31 December 2017 – IAS 39
Reclassification of available-for-sale financial
assets to FVPL
As at 1 January 2018 – IFRS 9
Available-for-sale
financial assets /
measured at fair value
through OCI (FVOCI)
Financial assets /
measured at fair
value through PL
(FVPL)
18,493
(17,953)
540
-
17,953
17,953
Total
18,493
-
18,493
Investments in shares of listed companies are reclassified from available-for-sale financial assets which were
included in non-current assets as at 31 December 2017 to financial assets at fair value through profit or loss.
The gains from revaluation at fair value of the shares of listed companies accumulated as at 1 January 2018
in revaluation reserve on available-for-sale financial assets in the amount of RR 13,894 million were
transferred to retained earnings as at 1 January 2018. Subsequent revaluations of the fair value of these
shares after reclassification are reported in profit or loss as “Other operating income/expense”.
Other investments in shares of unquoted companies are reclassified to financial assets at fair value through
other comprehensive income due to the fact that management of the Group treats them as long-term
strategic investments and does not expect to sell them in the short to medium term. The accumulated gain
from their revaluation in the amount of RR 459 million as at 1 January 2018 is recognised in the revaluation
reserve for financial assets.
The total impact of the change of classification and measurement on the Group’s retained earnings as at
1 January 2018:
Retained earnings as at 31 December 2017 (restated)
Non-controlling interest as at 31 December 2017 (restated)
Reclassification of accumulated gains on available-for-sale financial assets to
retained earnings
Reversal of impairment of financial assets measured at amortised cost in accounts
receivable due to transfer to ECL model
Change in deferred taxes relating to impairment provisions of financial assets measured
at amortised cost in accounts receivable due to transfer to ECL model
Total change in retained earnings
Total change in non-controlling interest
Retained earnings as at 1 January 2018
Non-controlling interest as at 1 January 2018
220,114
9,106
13,894
749
(26)
14,562
55
234,676
9,161
Adoption of IFRS 15, Revenue from Contracts with Customers. The Group applied the simplified
method of transition to IFRS 15, and elected to apply the practical expedient available for the simplified
transition method. The Group applies IFRS 15 retrospectively only to contracts that were not completed at
the date of initial application (1 January 2018). The Group analysed the effect of the retrospective application
of the standard in relation to such contracts and concluded that it was immaterial.
Received compensation of losses in grids. From 1 January 2018, the Group recognises revenue from
compensation of transmission losses and expenses on power distribution under contracts with grid
companies on a net basis. Compensation of transmission losses that the Group receives from grid
companies is not treated as a separate performance obligation 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 a customer in the context of IFRS 15 and is outside the scope of IFRS 15. The compensation of
transmission losses that entities of the Group received in the year ended 31 December 2018 amounted to
RR 8,458 million (for the year ended 31 December 2017: RR 8,153 million).
Purchase of electricity for own needs. The cost of electricity that the Group buys at WEM to support the
technological process and for other own needs, in accordance with IFRS 15 represents compensation to be
paid to the customer. From 1 January 2018 this compensation is 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 Group. The cost of electricity purchased to support the
technological process and for other own needs for the year ended 31 December 2018 totalled RR 619 million
(for the year ended 31 December 2017: RR 583 million).
298
The significant new accounting policies applied in the current period are described in Note 2. Accounting
policies applied prior to 1 January 2018 and applicable to the comparative information are disclosed in Note 36.
The following new standards, amendments to standards and interpretations became effective from 1 January
2018 but did not have any material impact on the Group’s consolidated financial statements:
Amendments to IFRS 2, Share-based Payments (issued on 20 June 2016 and effective for annual
periods beginning on or after 1 January 2018).
Amendments to IFRS 4, Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (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).
Annual Improvements to IFRSs 2014-2016 cycle ‒ Amendments to IFRS 1 and IAS 28 (issued on
8 December 2016 and effective for annual periods beginning on or after 1 January 2018).
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).
Amendments to IAS 40, Transfers of Investment Property (issued on 8 December 2016 and effective for
annual periods beginning on or after 1 January 2018).
Reclassifications. In addition to the changes in accounting policies as described above, certain
reclassifications have been made to prior year data to conform to the current year presentation. These
reclassifications are not material.
Note 4.
New accounting pronouncements
Certain new standards and interpretations have been issued that are mandatory for the annual periods
beginning on or after 1 January 2019 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 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
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 decided to apply the standard from its mandatory adoption date of 1 January 2019 using the
modified retrospective method, without restatement of comparatives which presumes recognition of
cumulative effect of initial application at the date of the initial application. According to preliminary estimates
made by the Group, one-off recognition of non-current assets and financial liabilities as at 1 January 2019
will amount to RR 4,200–6,200 million.
IFRIC 23, Uncertainty over Income Tax Treatments (issued on 7 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
299 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 new interpretation will have no significant impact on the Group’s consolidated financial
statements.
Definition of a business – Amendments to IFRS 3 (issued on 22 October 2018 and effective for
acquisitions from the beginning of annual reporting period that starts on or after 1 January 2020).The
amendments revise definition of a business. A business must have inputs and a substantive process that
together significantly contribute to the ability to create outputs. The new guidance provides a framework to
evaluate when an input and a substantive process are present, including for early stage companies that have
not generated outputs. An organized workforce should be present as a condition for classification as a
business if are no outputs. The definition of the term ‘outputs’ is narrowed to focus on goods and services
provided to customers, generating investment income and other income, and it excludes returns in the form
of lower costs and other economic benefits. It is also no longer necessary to assess whether market
participants are capable of replacing missing elements or integrating the acquired activities and assets. An
entity can apply a ‘concentration test’. The assets acquired would not represent a business if substantially all
of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets). The
amendments are prospective and the Group will apply them and assess their impact from 1 January 2020.
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).
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).
Amendments to the Conceptual Framework for Financial Reporting (issued on 29 March 2018 and
effective for annual periods beginning on or after 1 January 2020).
Definition of materiality – Amendments to IAS 1 and IAS 8 (issued on 31 October 2018 and effective
for annual periods beginning on or after 1 January 2020).
IFRS 17, Insurance Contracts (issued on 18 May 2017 and effective for annual periods beginning on
or after 1 January 2021).
Unless otherwise described above, the new standards and interpretations are not expected to affect
significantly the Group’s consolidated financial statements.
300 Note 5.
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 6). The principal subsidiaries are presented below according to
their allocation to the reportable segments as at 31 December 2018 and 31 December 2017.
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
RAO ES East subgroup segment
31 December 2018
31 December 2017
% 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%
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 2018
31 December 2017
% 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%
* 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.
301
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
31 December 2018
31 December 2017
% of
ownership
100.00%
100.00%
99.74%
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%
99.74%
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%
302
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)
Calculated value of non-controlling
interest
Adjustment to non-controlling interest due to
recognition of loan received from the parent
company of the Group at fair value
Carrying value of non-controlling interest
Financial results
Revenue
Loss for the year
Total comprehensive income / (loss) for
the year
Profit / (loss) for the year, attributable to
non-controlling interest
Changes in other comprehensive income,
attributable to non-controlling interest
Cash flows
Cash generated by operating activities
Cash used in investing activities
Cash generated by financing activities
Increase in cash and cash equivalents
RAO ES East subgroup
including DEK subgroup
31 December
2018
0.02%
31 December
2017 (restated)
0.02%
31 December
2018
47.89%
31 December
2017 (restated)
47.89%
0.02%
126,987
83,725
(114,492)
(88,971)
7,249
0.02%
117,525
64,971
(89,604)
(89,500)
3,392
47.83%
63,618
44,565
(70,153)
(50,474)
(12,444)
47.83%
66,170
28,543
(61,946)
(40,998)
(8,231)
13,226
12,354
5,183
6,949
(4,309)
8,917
(4,309)
8,045
(3,438)
1,745
(3,438)
3,511
Year ended
31 December
2018
177,877
(207)
Year ended
31 December
2017 (restated)
168,714
(14,129)
Year ended
31 December
2018
124,929
(4,043)
Year ended
31 December
2017 (restated)
123,406
(3,086)
236
566
202
17,051
(23,643)
11,701
5,109
(13,856)
(3,694)
(2,827)
(1,763)
(1,936)
(1,461)
156
166
124
14,481
(19,208)
7,562
2,835
3,880
(6,070)
6,139
3,949
2,499
(8,052)
6,899
1,346
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.
303
Segment information
Note 6.
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 5). 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.
The segments’ operational results are assessed on the basis of EBITDA, which is calculated as operating
profit / loss excluding depreciation of property, plant and equipment and amortisation of intangible assets,
gains on changes in the carrying value of financial assets at fair value through profit or loss, impairment of
property, plant and equipment, impairment of accounts receivable, gain / loss on disposal of property, plant
and equipment, gain / loss on disposal of subsidiaries and joint ventures, and other non-monetary items of
operating income and expenses. This definition of EBITDA may differ from the methods applied by other
companies. Management believes that EBITDA represents the most useful means of assessing the
performance of ongoing operating activities of the Group’s operating segments, as it reflects the earnings
trends excluding 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 balances are eliminated from these disclosures.
Other information provided to the CODM is consistent with the information presented in the Group’s
consolidated financial statements.
Intersegment sales are carried out at market prices.
Segment information as at and for the years ended 31 December 2018 and 31 December 2017 is presented
below.
304
Year ended 31 December 2018
Revenue
PJSC RusHydro
127,386
ESС RusHydro
subgroup
RAO ES East
subgroup
Other
segments
Total
segments
Unallocated
adjustments
and
intercompany
operations
TOTAL
58,176
177,877
39,228
402,667
(43,897)
358,770
including:
from third parties
sales of electricity
sales of capacity
sales of heat and hot water
other revenue
from intercompany operations
Government grants
Operating expenses (excluding depreciation and other non-monetary items)
EBITDA
Other operating income
Depreciation of property, plant and equipment and amortisation of intangible assets
Other non-monetary items of operating income and expenses
including:
gain / (loss) arising on financial assets at fair value through profit or loss
impairment of property, plant and equipment
impairment of accounts receivable, net
(loss) / profit on disposal of property, plant and equipment, net
profit / (loss) on disposal of subsidiaries and joint venture, net
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 2018
Non-current and current debt
116,131
81,866
33,955
166
144
11,255
-
(45,165)
82,221
601
(12,071)
(7,885)
1,551
(7,430)
(936)
(1,163)
93
62,866
58,124
57,021
-
-
1,103
52
37
(58,091)
122
-
(140)
(581)
-
-
(531)
(19)
(31)
(599)
177,398
103,666
9,306
39,982
24,444
479
41,378
(195,535)
23,720
66
(7,194)
(8,425)
(37)
(4,788)
(3,661)
39
22
8,167
7,117
815
572
2
5,728
32,111
233
(36,224)
3,237
940
(3,080)
(10,684)
2,331
(12,003)
(251)
(639)
(122)
(9,587)
358,770
243,368
43,833
40,150
31,419
43,897
41,648
(335,015)
109,300
1,607
(22,485)
(27,575)
3,845
(24,221)
(5,379)
(1,782)
(38)
60,847
18,016
150
26,845
31,994
77,005
144,751
1,769
44,759
5,568
196,847
-
-
-
-
-
(43,897)
-
44,270
373
-
175
25
-
-
-
25
-
573
-
-
358,770
243,368
43,833
40,150
31,419
-
41,648
(290,745)
109,673
1,607
(22,310)
(27,550)
3,845
(24,221)
(5,379)
(1,757)
(38)
61,420
7,667
(23,088)
1,860
47,859
(16,022)
31,837
77,005
196,847
305
Year ended 31 December 2017 (restated)
Revenue
PJSC RusHydro
120,493
ESС RusHydro
subgroup
RAO ES East
subgroup
Other
segments
Total
segments
Unallocated
adjustments
and
intercompany
operations
TOTAL
61,817
168,714
29,039
380,063
(31,944)
348,119
including:
from third parties
sales of electricity
sales of capacity
sales of heat and hot water
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
profit / (loss) on disposal of property, plant and equipment, net
profit / (loss) on disposal of subsidiaries and associates, net
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
111,091
77,059
33,723
158
151
9,402
-
259
(44,075)
76,677
(11,213)
(3,588)
(2,414)
(1,324)
110
40
61,876
61,799
60,657
-
-
1,142
18
-
-
(60,239)
1,578
(162)
(1,020)
-
(1,011)
(9)
-
396
168,398
102,867
6,856
38,747
19,928
316
32,567
-
(177,768)
23,513
(7,867)
(14,529)
(10,128)
(3,385)
(706)
(310)
1,117
6,831
826
302
2
5,701
22,208
178
431
(27,174)
2,474
(2,308)
(13,064)
(12,759)
(237)
(78)
10
(12,898)
348,119
241,409
40,881
38,907
26,922
31,944
32,745
690
(309,256)
104,242
(21,550)
(32,201)
(25,301)
(5,957)
(683)
(260)
50,491
-
-
-
-
-
(31,944)
-
-
31,882
(62)
210
(5)
-
-
(5)
-
143
348,119
241,409
40,881
38,907
26,922
-
32,745
690
(277,374)
104,180
(21,340)
(32,206)
(25,301)
(5,957)
(688)
(260)
50,634
8,443
(21,133)
442
38,386
(13,612)
24,774
25,559
156
23,332
38,321
87,368
120,070
1,268
43,348
4,839
169,525
-
-
87,368
169,525
306
Note 7.
Related party transactions
Parties are generally considered to be related if they 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 2018 and 31 December 2017 were
joint ventures, associates of the Group (Note 9) and government-related entities.
Joint ventures
The Group had the following balances with its joint ventures:
Promissory notes
Advances to suppliers
Loans received
Note
11
31 December 2018 31 December 2017
6,880
172
750
7,551
8
-
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
Government-related entities
Year ended
31 December 2018
293
468
517
Year ended
31 December 2017
337
622
2,835
31 December 2018
513
1,593
31 December 2017
456
1,277
Year ended
31 December 2018
2,857
111
615
Year ended
31 December 2017
2,673
153
605
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 2018 and 31 December 2017 and
balances outstanding as at 31 December 2018 and 31 December 2017 with the government-related banks
(Notes 11, 12, 15, 19). All transactions with the banks are carried out at market rates. The Company had an
additional issue of shares and sold treasury shares of its subsidiaries (Note 16). The Company also entered
into a non-deliverable forward contract for its treasury shares and cross-currency and interest rate swap
arrangement with PJSC VTB Bank (Notes 11 and 20).
The Group’s sales of electricity, capacity and heat to government-related entities comprised approximately
20 percent of total sales of electricity, capacity and heat for the year ended 31 December 2018 (for the year
ended 31 December 2017: approximately 30 percent). Sales of electricity and capacity under the regulated
contracts are made 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.
307
During the year ended 31 December 2018 the Group received government subsidies of RR 41,648 million (in
2017: RR 32,745 million) (Note 25).
Government subsidies receivable comprised RR 2 539 million as at 31 December 2018 (31 December 2017:
RR 3,401 million) (Note 13). There were no accounts payable on free-of-charge targeted contributions of the
Group as at 31 December 2018 and 31 December 2017.
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 2018 (for the year ended 31 December 2017: approximately 30 percent).
Grid companies services on electricity distribution provided to the Group by government-related entities
comprised approximately 80 percent of total electricity distribution expenses for the year ended 31 December
2018 (for the year ended 31 December 2017: approximately 80 percent). The distribution of electricity is
subject to tariff regulations.
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 2018
comprised RR 1,623 million including an accrual for bonuses in the amount of RR 398 million (for the year
ended 31 December 2017: RR 1,877 million including accrual for bonuses in the amount of RR 400 million).
The accrual for bonuses for the year ended 31 December 2018 includes remuneration under the Company’s
top management long-term motivation program as expected based on the 2018 results.
308
Note 8.
Property, plant and equipment
Buildings
83,938
51
143
3,938
(30)
(572)
87,468
Cost
Balance as at 31 December 2017 (restated)
Reclassification
Additions
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2018
Accumulated depreciation (including impairment)
Balance as at 31 December 2017 (restated)
Reclassification
Impairment charge
Reversal of impairment
Depreciation charge
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2018
Net book value as at
31 December 2018
Net book value as at
31 December 2017 (restated)
(39,986)
(11)
(2,062)
2,470
(1,402)
(307)
18
442
(40,838)
46,630
43,952
Facilities
308,921
(735)
355
14,472
(5)
(780)
322,228
(173,658)
47
(8,743)
4,524
(5,961)
(1,353)
2
598
(184,544)
Plant and
equipment
358,685
153
1,913
38,650
(3)
(2,899)
396,499
(164,391)
67
(16,767)
8,565
(14,253)
(1,157)
3
2,592
(185,341)
Assets
under
construction
296,572
402
73,196
(57,257)
-
(3,914)
308,999
Total
Other
15,100 1,063,216
-
129
77,005
1,398
-
197
(39)
(1)
(1,480)
(9,645)
15,343 1,130,537
(32,609)
2
(13,752)
1,557
-
2,828
-
2,041
(39,933)
(9,422)
(105)
(59)
46
(1,110)
(11)
1
203
(10,457)
(420,066)
-
(41,383)
17,162
(22,726)
-
24
5,876
(461,113)
137,684
211,158
269,066
4,886
669,424
135,263
194,294
263,963
5,678
643,150
Facilities
Plant and
equipment
Assets under
construction
Other
Total
Buildings
Cost
Balance as at 31 December 2016 (restated)
Reclassification
Additions
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2017 (restated)
Accumulated depreciation (including impairment)
Balance as at 31 December 2016 (restated)
Impairment charge
Reversal of impairment
Depreciation charge
Transfers
Disposals of subsidiaries
Disposals and write-offs
Balance as at 31 December 2017 (restated)
Net book value as at
31 December 2017 (restated)
Net book value as at
31 December 2016 (restated)
74,091
68
111
10,221
(272)
(281)
83,938
282,313
4,895
173
23,011
(87)
(1,384)
308,921
(34,266)
(4,349)
-
(1,532)
(226)
267
120
(39,986)
(155,610)
(8,517)
-
(6,326)
(3,929)
86
638
(173,658)
316,881
(5,121)
1,281
47,442
(176)
(1,622)
358,685
(145,496)
(9,128)
-
(12,668)
1,175
167
1,559
(164,391)
292,837
265
84,843
(80,759)
(27)
(587)
296,572
(32,937)
(3,855)
597
-
3,127
6
453
(32,609)
14,875
(107)
960
85
(127)
(586)
980,997
-
87,368
-
(689)
(4,460)
15,100 1,063,216
(8,491)
(49)
-
(1,143)
(147)
85
323
(9,422)
(376,800)
(25,898)
597
(21,669)
-
611
3,093
(420,066)
43,952
135,263
194,294
263,963
5,678
643,150
39,825
126,703
171,385
259,900
6,384
604,197
Assets under construction represent the expenditures for property, plant and equipment that are being
constructed, including power plants under construction, and advances to construction companies and suppliers
of property, plant and equipment. As at 31 December 2018 such advances amounted to RR 33,281 million
(31 December 2017: RR 36,577 million).
Additions to assets under construction included capitalised borrowing costs in the amount of RR 8,370 million,
the capitalisation rate was 8.31 percent (for the year ended 31 December 2017: RR 11,584 million, the
capitalisation rate was 9.50 percent).
Additions to assets under construction included capitalised depreciation in the amount of RR 342 million (for the
year ended 31 December 2017: RR 696 million).
Other property, plant and equipment include motor vehicles, land, office fixtures and other equipment.
309
Impairment of property, plant and equipment as at 31 December 2018 and 31 December 2017
The following key assumptions were used in the impairment testing for the years ended 31 December 2018
and 31 December 2017:
Key assumptions used in the
impairment testing
Year ended
31 December 2018
Year ended
31 December 2017
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 of generating units for the respective
period and business plans for 5 years
(2019–2023)
(2018–2022)
For the generating units operating hydro- and geothermal power plants and for
units dealing with electricity transmission – 10 years
(2018–2027)
(2019–2028)
For the generating units supplying capacity under capacity sale contracts at new
hydropower plants, including hydro-accumulating power plants – until the
completion of the capacity sale contracts
14–17 years (2019–2035)
15–18 years (2018–2035)
For the generating units operating thermal power plants – based on the
remaining useful life of the key equipment
11–35 years (2019–2053)
11–35 years (2018–2052)
4.3 percent
4.2 percent
14.2–16.8 percent
14.4–17.0 percent
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
For 2019–2021 – based on the results of
competitive capacity selection, except for
stations, where regulated tariffs are used
For 2022-2025 - in accordance with the
Decree of the Government of the Russian
Federation from 25.01.2009 №43
For 2026 and after – adjusted on
consumer index price
For 2018–2021 – 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
Forecast of electricity and capacity
volumes
Based on the Company’s management assessment of future trends in the
business
Forecast of capital expenditures
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 it is expected that 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 test of property, plant and equipment as at 31 December 2018 the impairment
loss of RR 41,383 million was recognised in the Consolidated Income Statement, mainly related to the
following cash-generating units:
310
(Ust’-Srednekanskaya HPP and Kolymskaya HPP) –
"Kolymaenergo"
the amount of
RR 14,808 million and "TPP Vostochnaya" in the amount of RR 7,176 million due to the fact that the
economically feasible tariffs being set at the assets commissioning date allow recovering capital
expenditure without required return on investment.
in
"Saratovskaya HPP" – in the amount of RR 12,405 million due to the fact that a significant increase in
the carrying amount of property, plant and equipment, given that the complex modernisation programme
is implemented, is limited to the recoverable amount, which is the present value of the future cash flows
from the operation of this generating unit.
In addition, impairment loss of RR 17,162 million recognised in respect of property, plant and equipment in
previous reporting periods was reversed in the Consolidated Income Statement, mainly related to the
following cash-generating units:
"Zagorskaya GAES", "Novosibirskaya HPP", "Karachaevo-Cherkessky branch" – in the amount of
RR 8,150 million due to the faster growth of the competitive capacity selection price index for 2022-2025
under Resolution of the Russian Government No. 43 dated 25.01.2019 as compared to the earlier
expected one.
"Kamchatskenergo", "Sakhalinenergo", "Sakhaenergo" – in the amount of RR 4,747 million due to the
due to the fact that the maximum growth of economically feasible tariffs is not restricted by the growth
index of fees collected from the population.
"Blagoveshchenskaya CHP" – in the amount of RR 3,619 million due to the update of data on the power
plant loading, taking into account the priority given to loading more efficient power plants when
distributing required production volumes.
The table below shows the sensitivity of the recoverable amount of cash-generating units to key assumptions
as at 31 December 2018:
Recoverable
amount
Valuation
technique
Property, plant and
equipment
669,424
Discounted
cash flows
Significant
unobservable inputs
Electricity and
capacity prices and
electricity tariff
forecast in isolated
power systems and
non-price zone of the
Far East
Discount rate
Capital expenditures
Reasonable
change
Sensitivity of
recoverable amount
-10%
-1%
+1%
+10%
(34,156)
(16,416)
(3,136)
Management of the Group believes that property, plant and equipment at Zagorskaya GAES-2 with carrying
amount of RR 60,552 million is not impaired as at 31 December 2018 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. In April 2018 the date of fulfilment
of obligations as for capacity supply contracts was deferred to 1 January 2024 by decision of NP Council
Market.
As a result of the impairment analysis of property, plant and equipment as at 31 December 2017 their
carrying amount decreased by RR 25,301 million, impairment loss was recognised in the Consolidated
Income Statement.
Leased equipment. As at 31 December 2018 the net book value of assets held under finance lease and
included in property, plant and equipment was RR 272 million (31 December 2017: RR 1,372 million). Assets
held under finance leases were mainly represented by plant and equipment.
Operating leases. The Group leases a number of land plots owned by local governments, and production
buildings under non-cancellable operating lease agreements. Lease payments are determined by the
agreements. The land plots leased by the Group are those where the Group’s hydropower plants and other
assets are located. According to the Land Code of the Russian Federation such land plots are limited in their
alienability and cannot be privatised. 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.
311
The future payments under non-cancellable operating leases in accordance with the rates as at the reporting
date, are as follows:
Less than one year
Between one and five years
After five years
Total operating lease
31 December 2018
31 December 2017
2,223
7,361
27,738
37,322
2,115
7,774
32,582
42,471
Pledged assets. As at 31 December 2018 and 31 December 2017, no property, plant and equipment have
been pledged as collateral for borrowings.
Note 9.
Investments in associates and joint ventures
The Group’s interests in associates and joint ventures and their carrying values were as follows:
% held
Carrying value
Place of
business
31 December
2018
31 December
2017
31 December
2018
31 December
2017
(restated)
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
Russia
Russia
42.75%
42.75%
34.62%
34.62%
Russia
Russia
50.00%
50.00%
50.00%
50.00%
7,465
2,155
110
9,730
10,098
-
-
10,098
7,656
1,895
143
9,694
8,946
-
1,378
10,324
19,828
20,018
The amounts in respect of associates and joint ventures recognised in the Consolidated Income Statement
are as follows:
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
Year ended
31 December 2018
Year ended
31 December 2017
(restated)
(192)
261
(34)
35
1,809
-
16
1,825
1,860
129
(33)
(50)
46
362
-
34
396
442
312
Associates
OJSC Irkutsk Electronetwork Company (OJSC IENC)
OJSC IENC operates 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 is considered one of the priority assets 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 leased to and operated by PJSC Sakhalinenergo, the Group’s subsidiary. 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.
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 2018 and
31 December 2017 and as at 31 December 2018 and 31 December 2017:
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
2018
7,452
1,795
-
(52)
9,195
2018
615
905
754
754
2017
6,960
1,540
-
(59)
8,441
2017
605
-
130
OJSC IENC
2018
23,897
764
(4,057)
(5,356)
15,248
2018
20,998
-
(448)
2017
22,960
1,151
(2,580)
(5,835)
15,696
2017
20,632
-
301
130
(448)
301
313
Reconciliation of the summarised financial information of the associates to the carrying value of the Group’s
investment:
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
Additional share issue
Goodwill
Carrying value as at 31 December 2017
Net assets as at 31 December 2017
Profit / (loss) for the year
Net assets as at 31 December 2018
Interest in associates
Additional share issue
Goodwill
Carrying value as at 31 December 2018
Joint ventures
BoGES Group and BALP Group
OJSC SEC
7,781
130
530
8,441
2,923
(1,028)
-
1,895
8,441
754
9,195
3,183
(1,028)
-
2,155
OJSC IENC
15,395
301
-
15,696
6,710
-
946
7,656
15,696
(448)
15,248
6,519
-
946
7,465
Others
Total
701
(202)
-
499
143
-
-
143
499
(116)
383
110
-
-
110
9,776
(1,028)
946
9,694
9,812
(1,028)
946
9,730
Starting from 2006 the Company and RUSAL Group have been jointly implementing the Boguchansky
Energy-Metallurgical Association (BEMA) project based on an agreement for joint financing, completion and
subsequent operation of Boguchanskaya HPP and Boguchansky aluminium plant. Within the BEMA project,
joint ventures BoGES Ltd (Cyprus) and BALP Ltd (Cyprus) were formed on a parity basis, which have
controlling interests in PJSC Boguchanskaya HPP and CJSC Boguchansky Aluminium Plant, respectively.
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
electricity sales companies. The installed capacity of Boguchanskaya HPP is 2,997 MW, long-term average
project production – 17 600 million kWh.
The capacity of Boguchansky Aluminium Plant is almost 600 thousand tonnes of aluminium per annum. The
plant comprises two series with a capacity of 296 thousand tonnes each. The construction of the 1st series of
Boguchansky Aluminium Plant is ongoing. The decision about the construction of the 2nd series of the plant
has not been made by the investors. Boguchansky Aluminium Plant will become one of the key consumers
of energy generated by Boguchanskaya HPP.
314
Summarised financial information for the significant joint ventures as at and for the years ended
31 December 2018 and 31 December 2017:
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
Profit / (loss) before income tax
Income tax expense
Profit / (loss) for the year
Total comprehensive income / (loss) for the
year
BoGES Group
2018
64,048
7,377
5,405
(43,769)
(38,055)
(7,510)
(1,446)
20,146
2018
16,872
(2,156)
(2,673)
206
(2,420)
(9)
2,782
(478)
2,304
2017
65,851
3,393
815
(43,911)
(38,147)
(7,459)
(1,110)
17,874
2017
15,724
(1,867)
(5,180)
134
(2,893)
(4)
(388)
(83)
(471)
BALP Group
2018
40,891
9,668
1,588
(134,826)
(134,806)
(2,169)
(23)
(86,436)
2018
20,210
(1,325)
-
110
(5,575)
(17,329)
(22,552)
-
(22,552)
2017
34,411
7,796
1,260
(103,833)
(103,827)
(2,258)
(17)
(63,884)
2017
17,081
(1,191)
-
19
(6,230)
3,951
(1,489)
-
(1,489)
2,304
(471)
(22,552)
(1,489)
Reconciliation of the summarised financial information presented to the carrying value of interest in joint
ventures:
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
Net assets as at 31 December 2017
Profit / (loss) for the year
Purchase of treasure shares
Disposal / reclassification to non-current assets
classified as held for sale
Net assets as at 31 December 2018
Interest in joint ventures
Non-controlling interest
Accumulated losses
Carrying value as at 31 December 2018
BoGES Group
18,345
(471)
17,874
8,937
9
-
8,946
17,874
2,304
(32)
-
20,146
10,073
25
-
10,098
BALP Group
Others
Total
(62,395)
(1,489)
(63,884)
(31,942)
-
31,942
-
(63,884)
(22,552)
-
-
(86,436)
(43,218)
-
43,218
-
2,529
102
2,631
1,173
-
205
1,378
2,631
(75)
-
(3,029)
(473)
(237)
-
237
-
(21,832)
9
32,147
10,324
(33,382)
25
43,455
10,098
As at 31 December 2017 the Group had an outstanding guarantee issued for PJSC Boguchanskaya HPP in
respect of its loan facility in favour of State Corporation Vnesheconombank, which was revoked in 2018
(Note 30).
As at 31 December 2018 the investment in LLC VolgaHydro of RR 450 million was classified as a non-
current asset held for sale following the decision made in October 2018 by the Board of Directors of the
Company to sell the Group’s share in LLC VolgaHydro (Note 35).
315
Note 10. Financial assets at fair value through profit or loss and available-for-sale financial
assets (as at 31 December 2017)
Information on the financial assets at fair value through profit or loss is presented below:
As at 1 January 2018 (Note 3)
Gain arising on financial assets at fair value through profit or loss within other operating income
Sale of shares of PJSC Inter RAO
As at 31 December 2018
17,953
3,845
(21,142)
656
Gain arising on financial assets at fair value through profit or loss for the year ended 31 December 2018
totalled RR 3,845 million, including the change in the fair value of PJSC Inter RAO`s shares of RR
3,923 million, and was recorded within other operating income.
In July 2018 the Group completed the transaction to sell shares of PJSC Inter RAO, with the result of the
transaction recorded within equity (Note 16).
Information on the available-for-sale financial assets as at 31 December 2017 is presented below:
PJSC Inter RAO
Other
Total available-for-sale financial assets
31 December 2017
% of ownership
4.915%
-
Fair value
17,219
1,274
18,493
Loss arising on available-for-sale financial assets for the year ended 31 December 2017 (restated) totalled
RR 2,551 million was recorded within other comprehensive income.
Note 11. Other non-current assets
Long-term promissory notes
Discount on long-term promissory notes
Credit loss allowance for long-term promissory notes
Impairment provision for long-term promissory notes
Long-term promissory notes, net
VAT recoverable
Cross-currency and interest rate swap
Goodwill
Long-term advances to suppliers
Other non-current assets
Total other non-current assets
31 December 2018 31 December 2017
39,549
(15,662)
-
(14,025)
9,862
2,957
-
481
5,024
7,007
25,331
40,475
(14,826)
(14,025)
-
11,624
2,115
1,238
481
44
6,526
22,028
Other non-current assets in the amount of RR 6,526 million (31 December 2017: RR 7,007 million) mainly
include intangible assets, research and development costs and long-term accounts receivable.
Information on the credit loss allowance in relation to other non-current financial assets is presented in Note 34.
Rating Rating agency
interest rate Maturity date
Effective
31 December
2018
31 December
2017
Interest-free long-term
promissory notes
PJSC Boguchanskaya HPP
-
ВBB-
PJSC Bank VTB
ВBB-
PJSC ROSBANK
BB+
JSC Alfa Bank
Other
-
Total long-term promissory notes
9.75%
2029
-
Standard &
Poor’s
8.45–10.42% 2020–2021
Fitch Ratings 10.90–14.58% 2020–2022
Fitch Ratings 11.90–16.35% 2020–2022
-
-
7,551
1,884
1,138
961
90
11,624
6,880
1,044
1,005
860
73
9,862
-
Promissory notes of PJSC Boguchanskaya HPP. As at 31 December 2018 the amortised cost of interest-
free long-term promissory notes of PJSC Boguchanskaya HPP (payable on demand but not earlier than
31 December 2029, with the total nominal value of RR 21,027 million) pledged as collateral to SC
Vnesheconombank amounted to RR 7,551 million (31 December 2017: RR 6,880 million) (Note 9).
316
Goodwill. As at 31 December 2018 and 31 December 2017, 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.
Cross-currency and interest rate swap. In November 2018 the Group concluded a cross-currency and
interest rate swap arrangement with PJSC Bank VTB with a view to fix the Group’s liabilities under the
Eurobonds denominated in Chinese Yuan placed in November 2018 maturing in November 2021 (Note 19).
The Eurobond issue amount of CNH 1,500 million is fixed in Russian Rubles at the market exchange rate in
the amount of RR 14,430 million. Interim payments by PJSC Bank VTB are determined in Chinese Yuan at
the fixed interest rate of 6.125 percent per annum based on the nominal amount and are made twice a year.
Interim payments by the Company are set in Russian Rubles at the floating rate defined as an average of
key interest rates of the Bank of Russia for the interest period plus a spread of 1.5 percent per annum based
on the nominal principal in Russian Rubles, also made twice a year.
As at 31 December 2018 the asset for cross-currency and interest rate swap arrangement is recognised as
long-term derivative financial instrument at fair value through profit or loss in the amount of RR 1,238 million.
Note 12. Cash and cash equivalents
Cash equivalents (contractual interest rate: 4.06-8.22%)
Cash at bank
Cash in hand
Total cash and cash equivalents
31 December 2018 31 December 2017
59,029
11,106
21
45,451
19,961
20
65,432
70,156
Cash equivalents held as at 31 December 2018 and 31 December 2017 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 2018 were
RR 34 million (31 December 2017: RR 576 million). Cash and cash equivalents balances denominated in
Euros as at 31 December 2018 were RR 39 million (31 December 2017: RR 63 million).
Cash and cash equivalents are deposited in several institutions as follows:
Rating
Rating agency
31 December
2018
31 December
2017
Cash at banks
Bank GPB (JSC)
PJSC Sberbank
BANK ROSSIYA
PJSC ROSBANK
PJSC Bank VTB
Other
Total cash at banks
Bank deposits
PJSC Bank VTB
Bank GPB (JSC)
JSC UniCredit Bank
PJSC Sberbank
JSC Rosselkhozbank
BANK ROSSIYA
Other
Total cash equivalents
BB+
BBB-
A+(RU)
BBB-
BBB-
-
BBB-
BB+
BBB-
BBB-
BB+
A+(RU)
-
Fitch Ratings
Fitch Ratings
АКРА
Fitch Ratings
Standard & Poor’s
-
Standard & Poor’s
Fitch Ratings
Fitch Ratings
Fitch Ratings
Fitch Ratings
АКРА
-
9,520
3,885
3,804
1,314
1,090
348
19,961
26,137
14,145
2,650
1,111
955
262
191
45,451
3,347
4,372
1,888
1,011
190
298
11,106
35,394
16,720
-
6,025
760
-
130
59,029
317
Note 13. Accounts receivable and prepayments
Trade receivables
Credit loss allowance for 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
Credit loss allowance for other receivables
Provision for impairment of other receivables
Other receivables, net
Government grants receivables
Total accounts receivable and prepayments
31 December 2018
31 December 2017
65,147
(28,891)
-
36,256
8,175
11,400
(834)
10,566
22,720
(5,067)
-
17,653
2,539
75,189
61,279
-
(26,571)
34,708
7,841
2,944
(837)
2,107
7,959
-
(4,815)
3,144
3,401
51,201
As at 1 January 2018 the net amount of trade receivables was restated in accordance with IFRS 9 (Note 3).
Included in accounts receivable are government subsidies receivable from constituent budgets of the Far
East Federal region including those for compensation of the tariffs reduction to guaranteeing suppliers under
Resolution of the Russian Government No. 895 (Note 2).
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables
have been grouped based on shared credit risk characteristics and the days past due (Note 2).
The ageing analysis of trade accounts receivable as at 31 December 2018 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
Expected
credit loss, %
2.81%
18.26%
51.26%
91.72%
31 December 2018
Gross carrying
amount
Credit loss
allowance
(694)
(1,312)
(4,606)
(22,279)
(28,891)
24,686
7,185
8,985
24,291
65,147
Movements in the credit loss allowance for trade accounts receivable for the year ended 31 December 2018
are as follows:
As at 1 January
Recalculation due to adoption of IFRS 9
As at 1 January (restated)
Charge for the year
Reversal of credit loss allowance
Trade receivables written off as uncollectible
As at 31 December
Year ended
31 December 2018
26,571
(749)
25,822
6,914
(2,613)
(1,232)
28,891
Information on the credit loss allowance in relation to other accounts receivable is presented in Note 34.
318
The ageing analysis of trade and other financial accounts receivable as at 31 December 2017 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
31 December 2017
Сarrying amount
26,802
8,410
10,326
23,213
68,751
Provision
(1,215)
(2,112)
(5,271)
(22,788)
(31,386)
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.
Movements in the impairment provision for trade and other accounts receivable for the year ended
31 December 2017 are as follows:
As at 1 January
Charge for the year
Reversal of impairment
Trade receivables written off as uncollectible
Elimination of impairment provision due to disposal of subsidiaries
As at 31 December
The Group does not hold any accounts receivable pledged as collateral.
Year ended
31 December 2017
27,662
7,261
(1,626)
(1,902)
(9)
31,386
Note 14.
Inventories
Fuel
Materials and supplies
Spare parts
Other materials
Total inventories before provision for impairment
Provision for impairment of inventories
Total inventories
31 December 2018 31 December 2017
20,146
7,915
2,438
368
30,867
(146)
30,721
16,162
6,782
2,466
386
25,796
(273)
25,523
There are no inventories pledged as collateral for borrowings as at 31 December 2018 and as at 31 December 2017.
Note 15. Other current assets
Deposits
Special funds
Loans issued
Credit loss allowance for loans issued
Provision for impairment of loans issued
Loans issued, net
Other short-term investments
Total other current assets
31 December 2018 31 December 2017
29,967
3,821
3,072
(3,050)
-
22
63
33,873
790
3,429
2,472
-
(2,447)
25
156
4,400
As at 31 December 2018 the balance of special funds in the amount of RR 3,821 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 2017: RR 3,429 million). These special funds may be used by the Group only
upon approval by the Federal Treasury of Russia according to the authorisation procedure, prescribed by the
Order of the Ministry of Finance of the Russian Federation No. 213n dated 25 December 2015.
Credit loss allowance for loans issued includes credit loss allowance for loans issued to ZAO Verkhne-
Narynskye HPPs in the amount of RR 2,908 million as at 31 December 2018 (provision as at 31 December
2017: RR 2,328 million) due to denouncement of agreements between Russian Government and Kyrgyzstan
Republic on construction of the Upper Naryn cascade of hydropower plants.
319
Deposits
JSC UniCredit Bank
Bank GPB (JSC)
PJSC ROSBANK
PJSC Bank VTB
PJSC Sberbank
Other
Total deposits
Note 16. Equity
As at 31 December 2018
As at 31 December 2017
As at 31 December 2016
Rating Rating agency
Effective
interest rate
31 December 2018
31 December 2017
Fitch Ratings
Fitch Ratings
Fitch Ratings
BBB-
BB+
BBB-
BBB- Standard & Poor’s
BBB-
-
Fitch Ratings
-
7,50%
8,11%
8,15%
7,58–8,00%
4,78–8,10%
-
-
9,000
6,500
6,000
5,100
3,123
244
29,967
-
-
-
-
642
148
790
Number of issued and fully paid
ordinary shares (Par value of RR 1.00)
426,288,813,551
426,288,813,551
386,255,464,890
Changes in the equity as at 1 January 2018 due to changes in accounting policies. The Group
recalculated equity as at 1 January 2018 due to adoption of IFRS 9 (Note 3). The revaluation reserve on
available-for-sale financial assets for those financial assets reclassified to fair value through profit or loss in
the amount of RR 13,894 million as at 1 January 2018 was transferred to retained earnings. As a result of
the recalculation of the provision for impairment of trade receivables, retained earnings as at 1 January 2018
increased by RR 668 million. Non-controlling interest increased by RR 55 million.
Additional share issue 2018. On 21 June 2018, the Board of Directors of the Company adopted a
resolution to make a placement of 14,013,888,828 ordinary shares by open subscription. The placement
price of the additional shares was determined at RR 1.00 per share. On 27 August 2018, the share issue
was registered with the Bank of Russia. As at the date of the issue of these financial statements no shares
are placed under this additional share issue.
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.
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 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. As at 31 December 2018 treasury shares were represented by 3,852,259,680 ordinary
shares in the amount of RR 4,613 million (31 December 2017: 3,852,267,925 ordinary shares in the amount
of RR 4,613 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.
Sale of shares of PJSC Inter RAO. On 5 July 2018, the Group completed the transaction to sell
5,131,669,622 shares of PJSC Inter RAO owned by the Group (4.915 percent of share capital) to JSC Inter
RAO Capital. The value of shares as at disposal date amounted to RR 21,142 million (Note 10). The selling
price was RR 3.3463 per share. The total consideration for all PJSC Inter RAO shares sold was
320
RR 17,172 million. Under the contracts the consideration receivable is settled by instalments, as a result the
Group recognised the discount in the amount of RR 1,253 million. As at 31 December 2018 consideration
receivable is included in other receivables (Note 13). The transaction is under common control, so the result is
recorded within equity.
Effect of changes in non-controlling interest of subsidiaries. In October 2017 the Group’s share in a
subsidiary JSC SK Agroenergo was sold, as a result non-controlling interest increased by RR 228 million.
Dividends. On 27 June 2018, the Company declared dividends for the year ended 31 December 2017
of RR 0.0263 per share in the total amount of RR 11,226 million (RR 11,124 million excluding dividends
payable to the Group’s subsidiaries).
On 26 June 2017,
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).
the Company declared dividends
for
Declared dividends of the Group’s subsidiaries in favour of non-controlling interest holders amounted to
RR 172 million
the year ended 31 December 2017:
RR 127 million).
the year ended 31 December 2018 (for
for
Note 17.
Income tax
Income tax expense is as follows:
Current income tax expense
Deferred income tax expense
Total income tax expense
Year ended
31 December 2018
13,856
2,166
16,022
Year ended
31 December 2017
(restated)
12,985
627
13,612
The income tax rate applicable to the majority of the Group’s entities for the year ended 31 December 2018
was 20 percent (for the year ended 31 December 2017: 20 percent).
A reconciliation between the expected and actual income tax expense is provided below:
Year ended
31 December 2018
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
Effect of applying different tax rates for separate transactions
Change in unrecognised deferred tax assets in respect of associates and
joint ventures
Other
Total income tax expense
47,859
(9,572)
(970)
(5,742)
785
372
(895)
(16,022)
Year ended
31 December 2017
(restated)
38,386
(7,677)
(2,344)
(3,090)
-
88
(589)
(13,612)
The total amount of deductible temporary differences for which deferred income tax assets have not been
recognised by the Group as at 31 December 2018 was RR 122,770 million (31 December 2017 (restated):
RR 96,327 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
2017: 20 percent).
321
31 December
2017
(restated)
Recalculation
due to
adoption of
(IFRS) 9
Income tax
charge
Charged
directly to
other
comprehensive
income
Other
movements
31 December
2018
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
9,592
6,760
6,359
1,024
3,594
(8,145)
(11,103)
(18,606)
(115)
(325)
(202)
8,145
(28)
-
(28)
-
-
-
2
-
-
-
2
-
495
(447)
69
531
595
(253)
(2,661)
(2,341)
(475)
70
(168)
253
(54)
-
-
-
(54)
-
(43)
-
-
(43)
-
-
31 December 2016
(restated)
Income tax charge
(restated)
Charged directly
to other
comprehensive
income (restated)
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
6,918
4,888
6,444
980
3,183
(8,577)
(7,729)
(15,772)
(57)
(351)
(126)
8,577
2,721
1,872
(85)
44
458
432
(3,348)
(2,834)
(58)
26
(50)
(432)
(47)
-
-
-
(47)
-
(26)
-
-
-
(26)
-
(6)
-
-
(6)
-
-
2
2
-
-
-
-
9,999
6,313
6,400
1,549
4,135
(8,398)
(13,803)
(20,945)
(590)
(298)
(368)
8,398
31 December 2017
(restated)
9,592
6,760
6,359
1,024
3,594
(8,145)
(11,103)
(18,606)
(115)
(325)
(202)
8,145
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 18. Pension benefit obligations
The tables below provide information about the benefit obligations and actuarial assumptions used for the
years ended 31 December 2018 and 31 December 2017.
Amounts recognised in the Group’s Consolidated Statement of Financial Position among other non-current
liabilities (Note 21):
Fair value of plan assets
Present value of defined benefit obligations
Net liability
31 December 2018 31 December 2017
(1,111)
9,745
8,634
(1,062)
8,480
7,418
322
The movements in the defined benefit liability for the years ended 31 December 2018 and 31 December 2017
are presented in the tables below:
At 1 January 2018
Current service cost
Interest expense / (income)
Past service cost
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 2018
Remeasurements (for post-employment benefits):
Actuarial loss - 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 2018 (before income tax
charge of RR 97 million)
Employer contributions for funded pension plan
Benefit payments (Funding NSPF pensions)
Benefit payments (Non-funded pension plan)
At 31 December 2018
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
9,745
399
700
(764)
(145)
(73)
117
143
(665)
(52)
(574)
-
(487)
(321)
8,480
Fair value of plan
assets
(1,111)
(83)
6
-
-
Total
8,634
399
617
(758)
(145)
(73)
(77)
40
-
-
89
89
(253)
290
-
(1,062)
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)
143
(665)
37
(485)
(253)
(197)
(321)
7,418
Total
8,804
428
699
(167)
18
1
979
(36)
(289)
(105)
(430)
(233)
(207)
(279)
8,634
323
Principal actuarial assumptions for the Group are as follows:
Nominal discount rate
Inflation rate
Wage growth rate
Staff turnover
8.50%
4.10%
5.60%
31 December 2018 31 December 2017
7.50%
4.00%
5.50%
Depending on length of service based on
statistical data
Russia-2014*
Russia-2016*
Mortality table
* 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 2012–2018 (31 December 2017: 2012–2017)
The sensitivity of the defined benefit obligation to changes in the principal actuarial assumptions as at
31 December 2018 is presented below:
Change in
assumption
Effect on net liability Effect on net liability, %
Nominal discount rate
Inflation rate
Wage growth rate
Staff turnover
Mortality Rates
+ 1%
- 1%
+ 1%
- 1%
+ 1%
- 1%
+ 3%
- 3%
+ 10%
- 10%
(650)
763
476
(409)
320
(277)
(880)
1 278
(109)
117
- 8%
9%
6%
- 5%
4%
- 3%
- 10%
15%
- 1%
1%
The Group expects to contribute RR 582 million to the defined benefit plans in 2019.
The weighted average duration of the defined benefit obligation of the Group is 9 years.
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 jointly and severally liable for the plans management, including investment
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).
324
Note 19. Current and non-current debt
Non-current debt
PJSC Sberbank
PJSC Bank VTB
Eurobonds (RusHydro Capital Markets
DAC), issued in February 2018
Eurobonds (RusHydro Capital Markets
DAC), issued in September 2017
Russian bonds (PJSC RusHydro) issued
in April 2016
Eurobonds in Chinese Yuan
(RusHydro Capital Markets DAC),
issued in November 2018
Eurobonds (RusHydro Capital Markets
DAC), issued in November 2018
Russian bonds (PJSC RusHydro)
issued in June 2017
PJSC ROSBANK
Far East and Baikal Region Development
Fund
Russian bonds (PJSC RusHydro) issued
in February 2013
Municipal authority of Kamchatka region
EBRD
ASIAN Development bank
Bank GPB (JSC)
Russian bonds (PJSC RusHydro) issued
in July 2015
UniCredit Bank Austria AG
Other long-term debt
Finance lease liabilities
Total
Less current portion of non-current debt
Less current portion of finance lease liabilities
Total non-current debt
Effective
interest rate
7.31–9.24%
7.50–9.43%
Due date
2019–2023
2019–2025
31 December
2018
45,487
24,045
31 December
2017
54,790
5,046
7.40%
8.13%
10.35%
6.13%
8.98%
8.20%
7.48–9.84%
5.00%
8.50%
8.57%
LIBOR 6M+3.45%
LIBOR 6M+3.45%
8.20–10.25%
-
-
-
-
2021
2022
2019
2021
2022
2020
2019–2022
2019–2026
2023
2019–2034
2019–2027
2019–2027
2020–2027
-
-
-
-
20,434
-
20,275
20,235
15,191
15,357
15,121
14,993
10,205
9,172
5,004
2,184
1,560
1,509
1,461
1,428
-
-
1,940
729
190,738
(32,688)
(102)
157,948
-
-
10,016
4,520
-
20,650
1,560
1,350
1,310
1,794
15,868
5,113
1,853
1,586
161,048
(69,877)
(259)
90,912
Eurobond issue (February 2018). 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.
PJSC Bank VTB. In July 2018 the Group obtained RR 20,000 million under the loan agreement with
PJSC Bank VTB at a rate of 7.5 percent per annum for a period of 7 years.
Eurobond issue denominated in Chinese Yuan. In November 2018, the Group placed Eurobonds
denominated in Chinese Yuan issued by the special purpose company RusHydro Capital Markets DAC.
The volume of the issue amounted to CNH 1,500 million maturing in November 2021, the coupon rate is
6.125 percent per annum. VTB Capital, JP Morgan and Gazprombank acted as the issue organizers.
The placement of the Eurobonds took place on the Irish Stock Exchange under Reg S rules. The Group`s
liabilities are fixed in Rubles on conditions comparable to conditions, prevailing on the Ruble-denominated
debt market, enabling the Group to mitigate the currency risk (Note 11).
Eurobond issue (November 2018). In November 2018 the Group placed Eurobonds denominated in
Rubles, issued by the special purpose company RusHydro Capital Markets DAC. The volume of the issue
was RR 15,000 million maturing in January 2022, the coupon rate is 8.975 percent per annum. VTB Capital,
JP Morgan, Gazprombank and Sberbank CIB acted as joint lead managers of the issue. The placement of
the Eurobonds took place on the Irish Stock Exchange under Reg S rule.
325
Current debt
PJSC ROSBANK
BANK ROSSIYA
PJSC Sberbank
Other current debt
Current portion of non-current debt
Current portion of finance lease liabilities
Total current debt and current portion of non-current debt
Reference:
Interest payable
Effective
interest rate
7.05–7.92%
7.90–9.50%
9.75%
-
-
-
31 December 2018 31 December 2017
3,899
1,762
21
427
32,688
102
38,899
2,216
930
1,000
5,428
1,119
69,877
259
78,613
3,012
Compliance with covenants. The Group is subject to certain covenants related primarily to its debt. As at
31 December 2018 and 31 December 2017 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 2018
Less future finance charges
Present value of minimum lease payments
as at 31 December 2018
Minimum lease payments as at 31 December 2017
Less future finance charges
Present value of minimum lease payments
as at 31 December 2017
109
(7)
102
275
(16)
259
376
(118)
258
797
(316)
2,256
(1,887)
Total
2,740
(2,011)
369
729
4,154
(3,308)
5,226
(3,640)
481
846
1,586
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 years ended 31 December 2018 and 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 2017
Cash flows
Interest accrued
Change in fair value of non-deliverable forward
contract for shares
Other changes
Liabilities from financing activities as at
31 December 2018
Liabilities from financing activities as at
31 December 2016
Cash flows
Interest accrued
Initial recognition of non-deliverable forward
contract for shares
Change in fair value of non-deliverable forward
contract for shares
Other changes
Liabilities from financing activities as at
31 December 2017
167,939
12,708
13,385
-
2,086
196,118
197,830
(46,498)
15,405
-
-
1,202
167,939
20,716
(2,813)
-
13,993
-
31,896
-
(3,243)
-
10,013
13,946
-
20,716
1,586
(155)
94
-
(796)
190,241
9,740
13,479
13,993
1,290
729
228,743
1,973
(523)
221
199,803
(50,264)
15,626
-
10,013
-
(85)
13,946
1,117
1,586
190,241
326
Note 20. 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 2018, 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 31 896 million (as at 31 December 2017:
RR 20,716). 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 assessment of its recoverability. Subsequent changes in
the fair value of the non-deliverable forward contract are recorded within profit or loss (Note 27).
A reconciliation of movements in the fair value of the forward contract for the year ended 31 December 2018
is presented in Note 19.
The table below includes the key assumptions made to determine the forward contract’s fair value using the
Monte-Carlo model:
Key assumptions madeto 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
31 December 2018 31 December 2017
4.17 years
RR 0.7264
7.75 percent
34.85 percent
7.01 percent
7.84 percent
5.10 percent
3.17 years
RR 0.4871
7.75 percent
28.82 percent
8.06 percent
9.05 percent
7.00 percent
The sensitivity analysis of the fair value of the forward contract to the key assumptions is presented in
Note 33.
Note 21. Other non-current liabilities
Pension benefit obligations (Note 18)
Non-current advances received
Other non-current liabilities
Total other non-current liabilities
31 December 2018 31 December 2017
8,634
10,766
8,716
7,418
6,743
7,826
21,987
28,116
327
Note 22. 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 2018 31 December 2017
30,949
11,664
8,880
258
159
3,715
31,119
17,909
9,156
2,753
170
3,526
64,633
55,625
All accounts payable and accruals are denominated in Russian Rubles.
Advances received are mainly represented by advances under contracts on connections to the grid.
Note 23. Other taxes payable
VAT
Insurance contributions
Property tax
Other taxes
Total other taxes payable
Note 24. Revenue
31 December 2018 31 December 2017
10,236
3,160
2,038
600
16,034
9,185
2,996
2,526
648
15,355
In accordance with IFRS 15 effective from 1 January 2018 the Group’s revenue for the year ended
31 December 2018 by performance obligations is as follows:
Sales of electricity and capacity in the retail market
Sales of electricity in the wholesale market
Sales of capacity in the wholesale market
Sales of heat and hot water
Rendering services for electricity transportation
Rendering services for connections to the grid
Other revenue
Total revenue
Year ended
31 December 2018
149,542
93,826
43,833
40,150
14,668
3,623
13,128
358,770
Other revenue includes revenue earned from rendering of construction, repairs and other services.
For the year ended 31 December 2018 the Group’s revenue recognised over time comprised RR 342,019
million, recognised at a point in time – RR 16,751 million.
The Group’s revenue under the revenue recognition guidance effective prior to 1 January 2018 is presented
below:
Sales of electricity
Sales of capacity
Sales of heat and hot water
Other revenue
Total revenue
Year ended
31 December 2018
Year ended
31 December 2017
243,368
43,833
40,150
31,419
358,770
241,409
40,881
38,907
26,922
348,119
Other revenue includes revenue earned from transportation of electricity and heat, connections to the grid,
rendering of construction, repair and other services.
Short-term advances received as at 31 December 2017 were recognised in revenue for the year ended
31 December 2018.
Management of the Group expects that the full amount of short-term advances received as at
31 December 2018 will be recognised as revenue during the next reporting period, the amount of long-term
advances received – mainly during 2020.
328
Note 25. Government grants
In accordance with the 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 the actual reduced tariffs and for compensation of losses on purchased fuel, purchased
electricity and capacity.
During the year ended 31 December 2018, the Group received government subsidies of RR 41,648 million
(for the year ended 31 December 2017: RR 32,745 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 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 2018
was RR 26,300 million (for the year ended 31 December 2017: RR 17,254 million).
Note 26. Operating expenses (excluding impairment losses)
Year ended
31 December 2018
Year ended
31 December 2017
(restated)
Employee benefit expenses (including payroll taxes
and pension benefit expenses)
Fuel expenses
Purchased electricity and capacity
Grid companies services on electricity distribution
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
Support of electricity and capacity market operation
Purchase and transportation of heat power
Security expenses
Services of subcontracting companies
Insurance cost
Rent
Consulting, legal and information expenses
Transportation expenses
Other third parties services
Water usage expenses
Purchase of oil products for resale
Loss on disposal of property, plant and equipment, net
Social charges
Travel expenses
Other expenses
Total operating expenses (excluding impairment losses)
75,876
64,791
41,811
39,463
22,310
12,242
10,905
5,859
3,714
3,629
3,434
2,254
2,112
1,972
1,754
1,269
9,091
4,018
2,440
1,757
1,083
997
2,069
314,850
74,390
58,098
40,747
43,482
21,340
10,681
10,170
4,634
3,639
3,513
3,391
1,982
1,940
2,081
2,222
1,185
8,051
3,370
642
688
1,098
843
1,475
299,662
329
Note 27. Finance income, costs
Finance income
Interest income
Cross-currency and interest rate swap (Note 11)
Income on discounting
Foreign exchange gain
Other income
Total finance income
Finance costs
Change in fair value of the non-deliverable
forward contract for shares (Note 20)
Interest expense
Foreign exchange loss
Expense on discounting
Finance lease expense
Other costs
Total finance costs
Note 28. 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 29. Capital commitments
Year ended
31 December 2018
Year ended
31 December 2017
4,957
1,238
669
94
709
7,667
(13,993)
(5,185)
(1,424)
(415)
(94)
(1,977)
(23,088)
7,150
-
389
599
305
8,443
(13,946)
(4,019)
(1,218)
(363)
(221)
(1,366)
(21,133)
Year ended
31 December 2018
422,436,552
31,229
Year ended
31 December 2017
402,655,108
26,403
0.0739
0.0656
In accordance with the consolidated investment programme approved as part of the Group’s consolidated
business plan, the Group has to invest RR 378,241 million in the period 2019-2023 for reconstruction of the
existing and construction of new power plants and grids, including RR 122,458 million for 2019,
RR 71,363 million for 2020, RR 69,284 million for 2021, RR 56,418 million for 2022, RR 58,718 million for
2023 (31 December 2017: RR 391,711 million for the period 2018-2022).
Note 30. 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.
Management believes that there are no significant commitments that should be recognised as at reporting
date.
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 transactions and activities of the
Group, at the same time tax control strengthens in relation to certain Group transactions and activities.
Consequently, tax positions taken by management and their supporting documentation 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
330
events cannot be assessed with sufficient reliability, but it can be significant in terms of the financial position
and / or the overall business of the Group. Fiscal periods remain open to review by the authorities in respect
of taxes for three calendar years preceding the year when the decision 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 2018, the Group’s subsidiaries had controlled transactions and
transactions which will probably be considered by tax authorities to be controlled after the end 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.
New provisions aimed at countering tax evasions have been added to the Russian tax legislation and
became effective from 1 January 2015. Specifically, they introduce new rules for controlled foreign
companies and the concept of beneficiary owner of income for the purposes of application of preferential
provisions of taxation treaties of the Russian Federation. Also, the new provisions introduce the rules for
determining tax residency for foreign legal entities at the place of their actual management (if a foreign
company is recognised as a Russian tax resident, the whole amount of such company’s income will be
subject to taxation in Russia).
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, there are no sustainable
practices yet as to how to apply the new rules; therefore, at present, it does not seem practicable to reliably
estimate the probability of claims from Russian tax authorities in relation to the compliance of the Group’s
companies with the new legislation and the probability of positive outcome of tax disputes (if any). Tax
disputes (if any) may have an impact on the Group's overall financial position and results of operations.
Management believes that as at 31 December 2018, its interpretation of the relevant legislation was
appropriate and the Group’s tax positions would be sustained.
Environmental matters. The Group companies 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 companies periodically evaluate their obligations under environmental regulations.
The assets retirement obligation for ash damps used by the Group comprised RR 1 324 million as at
31 December 2018 (31 December 2017: RR 1,348 million).
Potential liabilities may 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. In February 2018 the Group signed an agreement on the termination of the surety agreement
with SC Vnesheconombank with regard to the fulfilment by PJSC Boguchanskaya HPP of its obligations
under the loan agreement, which did not have a significant impact on the Consolidated financial statements
of the Group. The nominal value of of the guarantees issued is shown in the table below:
Counterparty
for PJSC Boguchanskaya HPP:
State Corporation Vnesheconombank
Total guarantees issued
31 December 2018 31 December 2017
-
-
25,935
25,935
331
Note 31. Financial risk management
The risk management function within the Group is carried out in respect of financial and operational risks.
Financial risk comprises 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 the overall framework for identifying, analysing and
evaluating risks to establish risk limits, and then to ensure that exposure to risks stays within these limits and
in case of exceeding these limits to mitigate the impact of the risks.
In order to optimise the Group’s exposure to risks, management 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 processes.
Credit risk. The Group is exposed itself to credit risk, which is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to meet a contractual obligation.
The Group’s maximum exposure to credit risk by class of assets is reflected in the carrying amounts of
financial assets in Note 34.
Although redemption of financial instruments can be influenced by economic factors, the management
believe that there is no significant risk of loss to the Group beyond the provision for expected credit losses
already recorded.
Due to the absence of an independent assessment of debtors' creditworthiness, the Group performs such an
assessment at the contracting stage taking into account the debtor's financial position and credit history. The
Group regularly monitors existing receivables and undertakes actions to collect them and minimise losses.
For reducing the credit risk exposure for its operations on WEM, the Group adopted sales policies and
methodology, which provides for calculation of the counterparty’s internal rating in the sector of non-
regulated contracts based on the frequency of counterparties’ bankruptcies and sets up limitations on the
credit rating for a portfolio of counterparties.
The Group monitors maturity of trade accounts receivable and identifies past due accounts. Information on
past due trade accounts receivable is disclosed in Note 13.
Measurement of expected credit losses. Expected credit losses are measured by discounting future
probability-weighted uncollected cash flows.
The level of expected credit losses depends on whether the debtor's credit risk has increased significantly
since initial recognition. This approach is based on a 3-stage ECL model, as described in Note 2.
The Group determines that the credit risk of a financial instrument has increased significantly, when the
counterparty has defaulted on contractual payment terms, when insolvency signs are identified and the
Group has no reasonable information that rules out the fact of increased credit risk.
For assessing the probability of default on financial instruments, the Group defines default as an event where
the risk exposure meets one or more of the following criteria:
The counterparty is more than 3 months past due on its contractual payments;
International/national rating agencies include the counterparty in the default rating class;
The counterparty is insolvent;
It became probable that the counterparty will enter bankruptcy.
In accordance with IFRS 9, the Group applied a simplified approach to determining expected credit losses in
relation to trade accounts receivable. This approach requires that full lifetime expected credit losses be
recognised at initial recognition of debt. For assessing expected credit losses, trade accounts receivable are
divided into groups based on similar credit risk characteristics for each group and delay periods under similar
contracts. Trade accounts receivable were grouped based on the above principles for each Group company,
and the Group determined the share of expected losses in line with the credit risk for each length of overdue
payment for each group of counterparties. Expected loss levels are disclosed in Note 13.
Cash has been placed in financial institutions, which are considered at the time of deposit to have minimal
risk of default. The Group’s management approves deposit banks as well as rules for making cash deposits.
332 In addition, the Group performs regular reviews of financial position, monitors their ratings assigned by
independent agencies as well as other performance indicators of these financial institutions. Expected credit
losses for cash, cash equivalents and bank promissory notes were insignificant.
Summary information on deposits of cash, cash equivalents and bank promissory notes, including names of
banks and other financial institutions and their ratings as at the end of the reporting period, is provided in
Notes 11, 12 and 15.
Measurement stages for expected credit losses for other financial instruments are disclosed in Note 34.
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 are
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 generated 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 risks. The financial condition of the Group, its liquidity, financing sources and the results of
operations do not considerably depend significantly on exchange 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:
Monetary
financial
assets
31 December 2018
Monetary
financial
liabilities
Net balance
sheet position
31 December 2017
Monetary
financial
liabilities
Monetary
financial assets
Net balance
sheet position
USD
EUR
Chinese Yuan
Other
Total
34
39
-
14
87
(3,069)
(470)
(15,121)
-
(3,035)
(431)
(15,121)
14
(18,660)
(18,573)
663
63
-
8
734
(2,748)
(5,482)
-
-
(8,230)
(2,085)
(5,419)
-
8
(7,496)
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. The Group controls the currency risk in
respect of the liabilities denominated in Chinese Yuan by means of cross currency and interest rate swap
(Note 11).
There is no significant effect of the changes of foreign exchange rates on the Group’s financial position.
Interest rate risk. The Group’s operating profits and cash flows from operating activities are not significantly
dependent on the changes in the market interest rates. Borrowings issued at variable rates based on Libor
(Note 19) as well as cross currency and interest rate swap (Note 11) slightly expose the Group to cash flow
interest rate risk.
The Group monitors interest rates for its financial instruments. Effective interest rates are disclosed in Note 19.
For the purpose of interest rate risk reduction the Group makes the following arrangements:
credit market monitoring to identify favourable credit conditions,
diversification of credit portfolio by raising of borrowings at fixed rates and, if necessary, at 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 volume of committed credit facilities. The Group adheres to a
balanced model of financing of working capital from both short-term 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.
333
The Group has implemented a control system under its contracting process by introducing and applying
typical financial arrangements which include standardised payment structure, payment terms, ratio between
advances and final settlements, etc. In such a manner the Group controls the debt maturity structure.
The table below shows liabilities as at 31 December 2018 by their remaining contractual maturity. The
amounts disclosed in the maturity table are the contractual undiscounted cash flows, including future interest
payments and gross finance lease obligations (before deducting future finance charges). Such undiscounted
cash flows differ from the amounts included in the Consolidated Statement of Financial Position because
those are based on discounted cash flows.
The maturity analysis of financial liabilities as at 31 December 2018 is as follows:
2019 year 2020 year
2021 year
2022 year 2023 year
Starting
from year
2024
Liabilities
Current and non-current debt
Trade payables (Note 22)
Accounts payable under factoring
agreements (Note 22)
Obligation to JSC RAO ES East shares
purchase
Dividends payable (Note 22)
Non-deliverable forward contract for
shares (Note 20)
Finance lease liabilities (Note 19)
Total future payments, including
principal and interest payments
50,729
31,119
2,753
3
170
2,795
109
65,689
-
42,856
-
39,837
-
5,807
-
30,578
-
-
-
-
-
-
-
-
-
-
2,362
94
1,615
94
10,516
94
-
-
-
-
94
-
-
-
-
2,256
87,678
68,145
44,565
50,447
5,901
32,834
Loans and borrowings totalling RR 50,729 million will mature in 2019 (Note 19). The Group 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
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 22)
Accounts payable under factoring
agreements (Note 22)
Obligation to JSC RAO ES East shares
purchase
Financial guarantees (Note 30)
Dividends payable (Note 22)
Non-deliverable forward contract for
shares (Note 20)
Finance lease liabilities (Note 19)
Total future payments, including
principal and interest payments
85,762
30,949
36,103
-
34,882
-
3,234
-
22,555
-
9,407
-
258
3
747
159
-
-
977
-
2,874
275
2,795
199
-
-
-
-
-
1,230
-
2,362
199
-
1,489
-
1,615
199
-
1,737
-
10,516
200
-
19,755
-
-
4,154
121,027
40,074
38,673
6,537
35,008
33,316
As at 31 December 2018 the Group had an available amount of long-term financing under the existing loan
agreements with banks of RR 191,708 million
including
RR 184,708 million in banks included in the approved list of systemically important credit institutions of Bank of
Russia (31 December 2017: RR 91,409 million) which exceeds the Group’s needs for short-term repayment of
debt by 4.9 times (31 December 2017: 1.2 times). As at 31 December 2018 approximately 70 percent of these
funds relate to the government-related banks (PJSC Sberbank, PJSC Bank VTB, Bank GPB (JSC))
(31 December 2017: approximately 90 percent). Furthermore, the Group has a perpetual non-renewable
exchange bonds program in the amount of RR 200,000 million with a maturity of up to 20 years, the unused
limit of which as at 31 December 2018 was RR 160,000 million (31 December 2017: RR 160,000 million).
(31 December 2017: RR 98,359 million),
334
Note 32. Management of capital
Compliance with Russian legislation requirements and capital cost reduction are the key objectives of the
Group’s capital risk management.
As at 31 December 2018 and 31 December 2017 the Company was in compliance with the share capital
requirements as established under legislation.
The Group’s goal in respect of capital management is to guarantee 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 2018 was RR 576,401 million (31 December 2017:
RR 560,502 million).
Consistent with other companies in the industry, the Group monitors the gearing ratio, that is calculated as
the total debt divided by the total capital attributable to the shareholders. Debt is calculated as a sum of non-
current and current debt, as shown in the Consolidated Statement of Financial Position. Total capital
attributable to the shareholders is equal to the equity attributable to the shareholders, as shown in the
Consolidated Statement of Financial Position. The gearing ratio was 0.34 as at 31 December 2018
(31 December 2017: 0.30).
Note 33. 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 2018
Level 1
Level 2
Level 3
Total
Financial assets
Equity investments: Financial assets at fair value through
profit or loss
Equity investments: Financial assets at fair value through
other comprehensive income
Cross currency and interest rate swap
Total assets requiring recurring fair value
measurements
Financial liabilities
Non-deliverable forward contract for shares
Total liabilities requiring recurring fair value
measurements
31 December 2017 (restated)
Financial assets
Available-for-sale financial assets
Total assets requiring recurring fair value
measurements
Financial liabilities
Non-deliverable forward contract for shares
Total liabilities requiring recurring fair value
measurements
656
-
-
656
-
-
-
-
-
-
-
-
-
656
594
1,238
594
1,238
1,832
2,488
31,896
31,896
31,896
31,896
Level 1
Level 2
Level 3
Total
18,020
18,020
-
-
-
-
-
-
473
18,493
473
18,493
20,716
20,716
20,716
20,716
There were no changes in the valuation techniques, inputs and assumptions for recurring fair value
measurements during the year ended 31 December 2018.
335
At 31 December 2018 the fair value of the 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 20).
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 2018 and 31 December 2017:
Fair
value
Valuation
technique
Significant
unobservable
/observable
inputs
Reasonably
possible
change
Reasonably
possible values
Change of fair
value
measurement
Financial liability
As at 31 December 2018
Non-deliverable
forward contract for
shares
31,896
Monte-Carlo
model
As at 31 December 2017
Non-deliverable
forward contract for
shares
20,716
Monte-Carlo
model
Dividend yield
Market value of the
share
Dividend yield
Market value of the
share
-2%
+2%
-20%
+20%
-2%
+2%
-20%
+20%
5.00 percent
9.00 percent
RR 0.3897
RR 0.5845
3.10 percent
7.10 percent
RR 0.5811
RR 0.8717
(157)
254
5,048
(5,040)
(472)
618
7,502
(7,504)
Based on management's assessment, possible changes of unobservable inputs do not have a significant
impact on the fair value of the non-deliverable forward contract.
The estimated fair value of the non-deliverable forward contract is significantly influenced by observable
inputs, in particular, by the market value of the shares which was RR 0.4871 as at 31 December 2018
(RR 0.7264 as at 31 December 2018) (Note 20).
(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.
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 2018 the carrying value of bonds exceeded their fair value by RR 1,243 million. As at
31 December 2017 the fair value of bonds exceeded their carrying value by RR 1,073 million.
As at 31 December 2018 the carrying value of non-current fixed rate debt was RR 69,901 million and
exceeded its fair value by RR 3,263 million. As at 31 December 2017 the carrying value of non-current fixed
rate debt was RR 39,396 million and exceeded its fair value by RR 925 million.
336
Note 34. Presentation of financial instruments by measurement category
The following table provides a reconciliation of classes of financial assets with the measurement categories
of IFRS 9 Financial instruments and information about the balance of special funds held on the accounts at
the Federal Treasury as at 31 December 2018.
As at 31 December 2018
Assets
Other non-current assets (Note 11)
Promissory notes
Cross currency and interest rate swap
Long-term receivables
Long-term loans issued
Financial assets at fair value through profit
or loss (Note 10)
Financial assets at fair value through other
comprehensive income
Trade and other receivables (Note 13)
Trade receivables
Other financial receivables
Other current assets (Note 15)
Special funds
Deposits
Short-term loans issued
Cash and cash equivalents (Note 12)
Total financial assets
Non-financial assets
Non-current assets classified as held for
sale
Total assets
Financial assets
at amortised cost
Financial assets
at fair value
through
profit or loss
Financial assets
at fair value
through other
comprehensive
income
12,370
11,624
-
250
496
-
-
53,426
36,256
17,170
33,810
3,821
29,967
22
65,432
1,238
-
1,238
-
-
656
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
594
-
-
-
-
-
-
-
-
165,038
1,894
594
Total
13,608
11,624
1,238
250
496
656
594
53,426
36,256
17,170
33,810
3,821
29,967
22
65,432
167,526
763,955
450
931,931
Reclassifications of financial assets by measurement categories as at 1 January 2018 are presented in
Note 3.
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:
As at 31 December 2017
Assets
Other non-current assets (Note 11)
Promissory notes
Long-term receivables
Long-term loans issued
Available-for-sale financial assets
Trade and other receivables (Note 13)
Trade receivables
Other financial receivables
Other current assets (Note 15)
Special funds
Deposits
Short-term loans issued
Cash and cash equivalents (Note 12)
Total financial assets
Non-financial assets
Total assets
Loans and
receivables
Available-for-
sale financial
assets
10,646
9,862
252
532
-
37,370
34,708
2,662
4,244
3,429
790
25
70,156
122,416
-
-
-
-
18,493
-
-
-
-
-
-
-
-
18,493
Total
10,646
9,862
252
532
18,493
37,370
34,708
2,662
4,244
3,429
790
25
70,156
140,909
730,794
871,703
337
The table below includes information about gross carrying amounts and credit loss allowance for promissory
notes, loans issued and other financial receivables related to Stage 3 of the 3-stage impairment accounting
model for financial assets (Note 2):
Promissory notes
Loans issued
Other financial receivables
31 December 2018
Gross carrying
amount
14,025
3,050
7,282
Lifetime expected
credit losses
allowance
(14,025)
(3,050)
(5,067)
The movement of credit loss allowance for these financial assets for the year ended 31 December 2018 was
insignificant.
The amount of credit loss allowance for trade receivables is disclosed in Note 13.
All other financial assets largely belong to Stage 1 of the 3-stage impairment accounting model, and the
expected credit losses for these assets are insignificant at both reporting dates.
As at 31 December 2018 financial liabilities of the Group carried at fair value are represented by the non-
deliverable forward contract for shares in the amount of RR 31,896 million (Note 20) (31 December 2017:
RR 20,716 million).
All other financial liabilities of the Group are carried at amortised cost and are represented mainly by the
current and non-current debt (Note 19), trade payables, accounts payable under factoring agreements and
other accounts payable (Note 22).
Note 35. Subsequent events
In February 2019 the Group sold its share in LLC VolgaHydro (40 percent, Note 9) for a cash consideration
in amount of RR 450 million.
Note 36. Accounting policies before 1 January 2018
Accounting policies applicable to the comparative period ended 31 December 2017 in accordance with IAS
18 and IAS 39 are presented below.
Financial instruments – key measurement terms. Depending on their classification financial instruments
are carried at fair value or amortised cost as described below.
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.
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
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.
338
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.
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) the counterparty experiences a significant financial difficulty as evidenced
by its financial information that the Group obtains; (ii) the counterparty considers bankruptcy or a financial
reorganisation; (iii) 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 (iv) 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.
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 amortised 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.
Revenue recognition. 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.
339
Appendix No.17 Opinion of the Internal Audit Commission of Public Joint-Stock
Company Federal Hydro-generating Company RusHydro (PJSC RusHydro)
following RusHydro’s 2018 financial and business performance audit
1
To RusHydro’s General Meeting of
Shareholders
OPINION of
the Internal Audit Commission
of Public Joint-Stock Company Federal Hydro-generating Company RusHydro (PJSC
RusHydro) following RusHydro’s 2018 financial and business performance audit
Moscow
May 17, 2019
As resolved by RusHydro’s Internal Audit Commission (Minutes No. 3 of the RusHydro’s
Internal Audit Commission dated March 18, 2019), the financial and operating activities of
RusHydro (hereinafter - the Company) were audited for the period from January 1, 2018 to
December 31, 2018.
The auditing involved members of RusHydro’s Internal Audit Commission exercising their
authority from June 27, 2018 based on the resolution of RusHydro’s General Meeting of
Shareholders, consisting of:
1. Tatiana Zobkova (Chair);
2. Natalia Annikova;
3. Igor Repin;
4. Dmitry Simochkin (Secretary).
The Internal Audit Commission of the Company conduct its activities as specified by the
laws of the Russian Federation, RusHydro’s Charter and the Regulations on RusHydro’s Internal
Audit Commission.
The members of RusHydro’s Internal Audit Commission do not own shares of the
Company, do not occupy positions in the management bodies of the Company.
The main objective of the audit was to obtain reasonable assurance that:
-
reliable;
the data contained in the reports and other financial documents of the Company are
- accounting and financial reporting complies with the requirements of the current
legislation of the Russian Federation and local regulatory acts of the Company;
-
financial and business activities were conducted in compliance with the interests of the
Company and its shareholders (participants).
The executive body of the Company bears responsibility for complying with the legislation
of the Russian Federation in the performance of financial and business operations, for conducting
activities in the best interests of the Company and its shareholders, and communicating accurate
financial statements.
340 2
The auditing utilized the sampling method, including the examination of (testing-based)
evidence confirming the value and disclosure of information on the Company's financial and
business activities in the financial statements to obtain reasonable assurance that the annual report
and accounting (financial) statements for 2018 do not contain material misstatements.
The auditors also analyzed additional issues listed below.
I.
TASKS OF SHAREHOLDERS’ CONTROL
1 Auditing the Company's 2018 Annual Report
The Company's Annual Report for 2018 reflects all the key aspects required by Decree
No. 1214 of the Government of the Russian Federation dated December 31, 2010 and recommended
by the Bank of Russia’s Corporate Governance Code.
The Company's 2018 Annual Report (hereinafter - the Annual Report) includes RusHydro
Group’s operational performance (with financial and operating results), which are disclosed as
outlined by IFRS consolidated financial statements.
The Annual Report details RusHydro Group’s structure, its footprint, standing in the
industry, development prospects, strategy and its progress in 2018, the key events of the reporting
year, information on the Long-term Development Program, key performance indicators and their
relationship to remuneration of members of the Company's Management Board, and dividend
policy. The Report also specifies the performance results and financial standing, risks and
opportunities of RusHydro Group.
A large section covers procurement, including import substitution, as well as ex-post and ex-
ante investments. A significant portion of the Annual Report is assigned to corporate governance.
Unlike the overwhelming majority of Russian companies, the Annual Report of RusHydro
Group discloses information on the individual remuneration of each member of the Board of
Directors.
Disclosures made in RusHydro Group’s Annual Report for 2018 go beyond the requirements
by Russian standards and recommendations. For example, the Annual Report includes such sections
as the emergency and natural disasters response and prevention system, social and environmental
responsibility, and stakeholder relations.
A more detailed analysis of the Annual Report is given in the Act of the Company's Audit
Commission.
2. Auditing the Performance of the Instructions of the President of the Russian
Federation and the Government of the Russian Federation on the issue of Import Substitution
in the Company’s Procurements
Directives No. 1346-P13 of the Government of the Russian Federation dated March 5, 2015
to prepare a corporate plan for import substitution (the Roadmap of import substitution under the
Long-term Development Program) are mainly followed by the Company. The Import Substitution
Roadmap for the period until 2025 and the Set of import substitution measures for 2018-2020 have
been approved. The import substitution plan correlates to RusHydro Group's Innovative
Development Program.
The actual share of imported equipment purchases in the total volume of purchases for 2018
(23%) corresponds to the target (23%). The two events planned for 2018 are currently underway,
and two more additional activities have been fully completed and five of such activities are ongoing.
for Methodological
recommendations of the Ministry of Economic Development. However, the Company does not have
an integral indicator for measuring the performance on the Import Substitution Plan (the share of
import substitution efforts prevalently cater
The Company’s
341 3
foreign products (works, services) in total purchases), which is recommended to be included in the
list of key performance indicators of an organization.
The Company complied with the following import substitution recommendations of the
Company's Internal Audit Commission as of the end of 2017:
“Include the sanction risk in RusHydro Group’s Risk Register”.
-
When updating RusHydro Group’s Strategic Risk Management Plan in 2018, the “political
and economic isolation of the Russian Federation and Russian companies arising from international
sanctions” was identified as a separate risk factor for the risks related to RusHydro Group's
programs (investment, production, and innovative development programs);
-
“Change RusHydro Group’s management accounting so that to make for setting aside
the volumes of imported equipment purchased separately by the Company (its branches) and its
subsidiaries and affiliates.”
RusHydro Group has a separate line for accounting the actual share of purchases of imported
equipment of the Company as a legal entity and its subsidiaries and affiliates (the share of imported
equipment across RusHydro is 22% and the share of imported equipment in its subsidiaries and
affiliates is 32%).
3. Auditing the Performance of Directives of the Government of the Russian
Federation, Instructions of the President and the Government of the Russian Federation
Based on the analysis of materials presented during the audit, the Internal 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 organized the proper work on their
implementation.
The sampling analysis of the execution of directives of the Government of the Russian
Federation, the instructions of the President and the Government of the Russian Federation by the
Company is given in the Act of the Internal Audit Commission.
4. Auditing the Report on Related-party Transactions
In our opinion, the data contained in the Report on the related-party transactions made by
RusHydro in 2018 are reliable and accurate.
5. Accounts Receivables and Payables of the Company
The Company's Internal Audit Commission audited the dynamics of receivables and
payables. No violations and inaccurate disclosure were not identified. The results of a more detailed
study and analysis of receivables and payables are presented in the Act of the Company's Internal
Audit Commission.
6. Adopting Corporate Governance Principles (implementing the Program for
Adopting Corporate Governance Principles)
The Internal Audit Commission studied the Report on the Compliance with the Principles
and Recommendations of the Corporate Governance Code and the Company's internal documents
with a view to compatibility with the best practices of corporate governance and the provisions of
the Corporate Governance Code recommended by the Bank of Russia.
It can be stated that the above recommendations are largely practiced. As compared to 2017,
342
4
the level of following the recommendations has been improved.
A number of criteria with “partially observed” rate has moved into the “observed” category.
The Company plans to conduct corporate actions that will increase the level of performance
of the Corporate Governance Code recommendations, for instance, making amendments to the
Company's internal regulatory documents.
The status of corporate governance principles adopted is discussed in more detail in the Act
of the Company's Audit Commission.
7. Achievement of the Company’s key performance indicators for 2018
The Company's internal regulatory system applicable to KPIs and its connection with the
motivation of the Company's managers basically corresponds to “Methodological guidelines on the
application of key performance indicators by state corporations, state unitary enterprises, and also
business societies, with the cumulative share of the Russian Federation, a subject of the Russian
Federation in the authorized capital exceeding fifty percent "(hereinafter - Methodological
Guidelines for KPIs).1
Corporate KPIs of the Company include two recommended groups of indicators - financial
& economic and industry ones. The basis for calculating all financial and economic indicators in the
Company, according to the Methodological Guidelines for KPIs, is IFRS consolidated financial
the
statements of RusHydro Group. However,
Methodological Guidelines for KPIs.
the KPI system partially complies with
The procedure for calculating annual bonuses of members of the Management Board
complies with the Methodological Guidelines for KPIs, since the annual bonuses of all members of
the Management Board depend on the achievement of the KPI targets.
The procedure for calculating the indicator for reduction of operating expenses available at
the Company complies with the Methodology for calculating and evaluating annual key
performance indicators of the members of the Management Board of RusHydro approved by a
resolution of the Company's Board of Directors (Minutes No. 245 of the Company's Board of
Directors dated December 26, 2016).
The actual values of corporate KPIs in 2018 exceed the targets (over-performance).
The Methodological guidelines on KPIs regarding the connection between KPIs and
remuneration of members of the Board of Directors are not fulfilled, since the Company adheres to
the recommendations of the Bank of Russia’s Corporate Governance Code and the Corporate
Governance Code of RusHydro, according to which members of the Board of Directors of the
Company shall receive a fixed annual remuneration and using any form of short-term motivation
and additional material incentives are not recommended to be applied to them.
Random checks of the calculation of annual bonuses of a member of the Management Board
- First Deputy General Director and a member of the Board of Directors - Senior Independent
Director for 2018 proved that the calculations of the annual bonuses fully complied with regulatory
documents.
II AUDITING THE COMPANY'S FINANCIAL AND BUSINESS ACTIVITIES AND
2018 ANNUAL REPORT
Report on the Financial and Business Activities of the Company
During the reporting year, the Company managed to significantly increase its revenues (up
to RUB 162.8 bn or 12.5%) and profit from sales (up to RUB 66.0 bn or 8.3%). The growth rate of
total operating expenses was 15.6%. The growth was largely driven by 2018 increase in the amount
of targeted contributions to the budgets of the constituent entities of the Russian Federation being a
1 Approved by the Government of the Russian Federation on March 27, 2014 No. ISH-P13-2043.
343
5
part of the Far Eastern Federal District, without which, and without management expenses, the
supplement in the cost of sales was 4%.
The achieved high performance in the core activity was pulled down through the increasing
differential between other incomes and other expenses (by 39% (RUB 4.5 bn) year-on-year, to
RUB 15.9 bn). The bulk of other expenses is beyond the Company’s control (market factors).
Net profit also rose to RUB 36.7bn (1.6%), however, the high level of net profit margin
decreased from 25% in 2017 to 22.6% in the reporting year. Return on equity was maintained steady
at 4.4%.
Findings of the Company's Internal Audit Commission:
In our opinion, the Annual Report and annual accounting (financial) statements of the
Company for 2018 reflect reliably and accurately, in all material aspects, the financial standing and
financial and economic performance of the Company for the period from January 1, 2018 through
December 31, 2018.
In our opinion, the data contained in the Report on the related-party transactions made by
RusHydro in 2018 are reliable and accurate.
No wrong accounting and financial reporting procedures established by the legal acts of the
Russian Federation, as well as the legal acts of the Russian Federation in conducting financial and
business activities that could significantly affect the performance of RusHydro for 2018, were
identified.
Recommendations of the Company's Internal Audit Commission:
- Recommend to the Nomination and Compensation Committee to consider:
1)
the need to revise the list of corporate KPI in accordance with paragraph 5.1 of the
Methodological guidelines for KPIs;
2)
the expediency of including in the list of corporate KPIs an integral indicator for
measuring the performance on the Import Substitution Plan (the share of foreign products (works,
services) in total purchases), adjusted for the updates of relevant internal regulatory documents.
344
6
- Consider the possibility and necessity of making changes to the Regulation on the payment
of remuneration and compensation to members of RusHydro’s Board of Directors as it pertains to
KPI
the calculation and payment of their remuneration, based on the achievement of corporate targets by
RusHydro Group
- Pay special attention to the analysis of other income and other expenses that reduce the
high positive result achieved in the core activity.
- Ensure the timing of distribution of materials for meetings of the Board of Directors and
committees of the Board of Directors in accordance with the Regulations on the procedure for
convening and holding meetings of the Board of Directors and regulations on committees under the
Board of Directors of the Company.
The conclusion of RusHydro’s Internal Audit Commission on the results of the audit of the
financial and business activities of RusHydro for 2018 was approved by a decision of the Internal
Audit Commission of RusHydro dated May 17, 2019 (Minutes No. 4 of the Internal Audit
Commission dated May 17, 2019).
Chairman of the Internal
Audit Commission
PJSC RusHydro
Member of
RusHydro’s
Audit Commission
Member of
RusHydro’s
Audit Commission
Internal
Internal
Member of
RusHydro’s
Audit Commission
Internal
Tatiana
Zobkova
Dmitry
Simochkin
Natalia
Annikova
Igor Repin
345
Appendix No.18 Сonsideration of stakeholders’ recommendations given at the Public Hearings in
2018 (Report for 2017 Draft)
№
Stakeholders’ recommendations
PJSC RusHydro’s response
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Eliminate information on corporate governance
duplication.
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 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.
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 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.
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.
It is considered. Duplication in the section “Corporate
governance” is minimal.
It is considered. The information on the amount of personal
remuneration to members of the Board of Directors is
disclosed in the section “Corporate governance”.
It is considered. The description of the procedure for
recognizing the independence of members of the Board of
Directors is expanded in the section “Corporate
Governance”.
It is considered. The information is disclosed as part of the
GRI EU23 indicator in the section “Operating performance”.
It is considered in the section “Program for the development
of energy based on renewables”.
It is considered in the section “HR and social policy“.
It is considered. The information is disclosed in the section
“Program for the development of energy based on
renewables”.
There were no significant R&D projects in the RusHydro
Group in the field of renewable energy in 2018.
It is considered. The information is disclosed in the section
“HR and social policy“.
It is considered. The result of R & D on the development of
poles and foundations of 220 kV overhead lines resistant to
the effects of snow avalanches is described in the section
“Innovations, R&D projects”
In the activities of the Company and in the annual report for
2018, the term “Human Rights” is understood in accordance
with the norms of the Russian legislation.
The development of Rosstat indicators in the area of
achieving the Sustainable Development Goals has not yet
been completed, but most of the GRI indicators presented in
the annual report are related to the them.
It is considered in the section “Environmental protection”.
It is considered in the section “Strategy and its
implementation”.
It is considered in Appendix No. 9.
346 Appendix No.19 Сonsideration of stakeholders’ recommendations given at the Public Hearings in
2019 (Report for 2018 Draft)
No.
Expected
Covered in 2018 Report
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Include information on social payments and guarantees under a
collective bargaining agreement.
The possibility of
relevant
information will be reviewed when preparing
reports for subsequent reporting periods.
including
the
Disclose information on the efforts of the Value Increase Plan in
2018.
Covered
Implementation”.
in Section
“Strategy
and
its
Reflect the effects of reducing emissions in the longer term.
information on sustainable development ratings
Add
subsection on interaction with shareholders and investors.
Explain the discrepancies between Innovative Development Program
and R&D volumes in RAO ES East Subgroup and RusHydro
Subgroup.
Expand
information on minority shareholders and provide
information on foreign shareholders, which may be significant for
other investors.
the
in
Add a link to information on previous sustainable development
reports.
Disclose not only internal, but also external programs and HR Policy
results in future reports.
Disclose more detailed information about the active expert work of
RusHydro’s employees with public organizations, such as the
Hydropower of Russia Association, including the example of the
round table on hydropower sustainable development held in 2018.
Describe the systemic effect of supporting social projects by
RusHydro using the example of the Live in the Now Foundation.
the
including
relevant
The possibility of
information will be reviewed when preparing
reports for subsequent reporting periods.
Covered in “Awards and Ratings” Section, in
light of confidentiality restrictions.
The purpose of these programs does not imply a
balance between RusHydro and RAO ES East
Subgroup.
Since the Company did not define the criteria for
the
attributing shareholders as “significant”,
report
about
shareholders - holders of 2% or more of voting
the Annual Report,
to
shares. In addition
anchor
the Company's
information
investors is disclosed in Bloomberg resources.
Covered in Section “Company Profile”.
information
discloses
about
only
including
relevant
The possibility of
information will be reviewed when preparing
reports for subsequent reporting periods.
Covered in Section “Environmental Protection”.
the
The possibility of
relevant
information will be reviewed when preparing
reports for subsequent reporting periods.
including
the
Increase staff development expenses (current share of the net profit
is 1%).
Not required to be covered in the Report. It will
be sent for consideration to the relevant division.
Consider the possibility of designing systems for the redistribution of
water resources from the perspective of managing natural-technical
systems.
More systematically represent objectives in the Environmental
Policy and link them with numerical rating.
Not required to be covered in the Report. It will
be sent for consideration to the relevant division.
Not required to be covered in the Report. It will
be sent for consideration to the relevant division.
Recommendation on the appointment of a senior independent
director, as well as independent directors, by decision of the Board of
Directors, and not just its separate committee.
Continue efforts in developing an industry professional standard for
SPPs and WPPs.
Not required to be covered in the Report. It will
be sent for consideration to the relevant division.
Not required to be covered in the Report. It will
be sent for consideration to the relevant division.
347 Appendix No.20 Certificate of Public Certification of the Report by the RUIE Council on Non-
Financial Reporting
348 Opinion of the Council of the Russian Union of Industrialists and Entrepreneurs on non-financial reporting
on the results of consideration of the Annual Report
of PJSC Federal Hydro-generating Company - RusHydro for 2018
in order to provide public certification of sustainability
The Non-Financial Reporting Council of the Russian Union of Industrialists and Entrepreneurs (hereinafter - the Council)
established on the terms set out in the resolution of the Management Bureau (Resolution dated June 28, 2007) reviewed
on the initiative of PJSC Federal Hydro-generating Company - RusHydro (hereinafter - the Company, RusHydro) 2018
Annual Report of the Company (hereinafter - the Report).
The Company approached the Russian Union of Industrialists and Entrepreneurs with a request to organize a public
certification of sustainable development information by the Council. The Council forms an opinion on the significance
and completeness of the information on the Company's performance disclosed in the Report in line with the principles of
responsible business practices contained in the Social Charter of Russian Business and comply with the provisions of the
UN Global Compact, Russian and international standards on social responsibility.
Through 2 to 20 May 2019, the Council’s members studied the content of the submitted Report and compiled this Opinion
as contemplated in the Regulations on Public Certification of Corporate Non-financial Reports approved by the Council.
The Council’s members have the necessary competence with corporate responsibility, sustainable development and non-
financial reporting, adhere to the ethical requirements of independence and neutrality, express their personal expert
opinion, but not the opinion of the organizations they represent.
The Report was evaluated against the following criteria for the completeness and significance of the information contained
in the Report:
Information is recognized as significant because it reflects the core activities of RusHydro in exercising the principles of
responsible business practices disclosed in the Social Charter of Russian Business (www.rspp.ru).
Completeness implies that the Report comprehensively reflects the Company’s activities - underlying values and strategic
benchmarks, management systems and structures, achievements and key performance results, and stakeholders relations
system.
The Company's application of the international reporting system is factored in for the purpose of the public certification of
the Report. However, confirming the level of compliance of the Report with international reporting systems is beyond this
Opinion.
RusHydro is held accountable for the information and statements contained in the Report. The credibility of the
representations contained in the Report is not subject to public certification.
This Opinion is prepared for PJSC Federal Hydrogeneration Company - RusHydro. The Company may use this Opinion,
publishing it without any changes, both for internal corporate purposes and for communication with stakeholders.
FINDINGS
349
Following the analysis of the Report, using public information posted on the official corporate website of the Company,
and brainstorming the results of an independent evaluation of the Report conducted by members of the Non-financial
reporting Council, the Council confirms as follows:
The 2018 Annual Report of PJSC Federal Hydro-generating Company - RusHydro contains significant
information, covers key areas of responsible business practice in line with the principles of the Social Charter of
Russian business, and discloses information about the Company’s activities in sufficient detail.
The recommendations of the RUIE Council following the public certification of the 2017 Report have been
partially included in the 2018 Report. The Report comprises information on the energy efficiency of hydropower
stations, in particular, on the optimization of water use regimes. The progress on social and charitable projects has
been more detailed, information on the impact of the project performance results on the socio-economic
development of the regions of operations have been covered, and the Company's objectives for achieving the 2030
Sustainable Development Goals have been outlined.
The Company's 2018 Report contains relevant information on the following aspects of responsible business practices:
Economic freedom and responsibility: The Report represents the mission, corporate values and business model, informs
about the key outcomes of the Company's Strategy. It communicates on updating the investment program, approving the
Long-term program for replacing retired capacities and developing the energy systems of the Far East, the program of
comprehensive upgrading, retrofitting and reconstruction, as well as a program for developing renewable energy, and
shows the results achieved in these areas. It represents information on the innovation program. It contains information on
the measures taken to improve business performance efficiency. The Report discloses key financial and operating
performance indicators. It characterizes the system of corporate governance and list the measures on its improvement. It
informs of an independent evaluation of the corporate governance system and the performance of the Board of Directors.
It characterized a system of internal control and risk management and system for managing anti-corruption activities. It
informs of assigning a high scope in the National Corporate Governance Rating to the Company. It describes an integrated
safety management system for production processes, presents emergency response actions. It covers issues on sustainable
development management, including information on how the goals and objectives of the Company correlate with the UN
Sustainable Development Goals for the period until 2030.
Business partnership: The Report contains information on stakeholder engagement, including a stakeholder mapping
template, a description of the mechanisms. It presents the interaction with the investment community, shows shareholders
rights and interests protections. It covers cooperation with federal and regional authorities, including when designing and
delivering on an investment program, implementing agreements on social and economic cooperation with constituent
entities of the Russian Federation, as well as participating in joint working groups on the development of the fuel and
energy complex. It reports on measures taken to improve relations with suppliers, as part of procurement activities, on
purchases from small and medium-sized businesses. It is noted that the procurement regulations include requirements for
suppliers regarding their compliance with the principles of social responsibility and sustainable development. It tells about
working with consumers to reduce debt, developing customer feedback mechanisms, such as lines of trust, consulting on
retailers' websites, and opening personal accounts. It presents information on a wide range of issues on personnel relations
in the implementation of HR and social policies, labor protection, reduction of industrial injuries, employee training and
education, provision of social guarantees for employees, and development of internal communication channels. It contains
information on interaction with trade union organizations. It includes information on cooperation with educational
organizations, professional and business associations. It is noted that in 2018 RusHydro joined the Association “National
Network of the Global Compact”. It reports on holding public hearings on the draft Report involving representatives of
major groups of stakeholders.
Human rights: The Report informs about the Company's protection of the social and economic rights of employees,
including the right to freedom of association. It reports that there are trade union organizations operating at most
enterprises and collective bargaining agreements that cover almost all of the Company's employees. It indicates that to the
extent concerning the observance of human rights, the Company is guided by international and national documents on
social responsibility and sustainable development. It presents the efforts the Company makes to support the rights of
employees to professional development, health care, housing, and pensions.
350
Preservation of the environment: The report tells that in 2018 RusHydro Group introduced its updated Environmental
Policy. It reports on an integrated approach to solving environmental problems, announces the transition to low-carbon
developments with minimal damage to the environment. It discloses the total costs and investments for environmental
protection. It highlights some issues of environmental impact management, as well as the results of activities on water use
and water disposal, biodiversity conservation, greenhouse gas emissions and pollutants into the atmosphere, waste
management. It reports on the approval of targets to reduce greenhouse gas emissions and mechanisms to achieve them. It
informs of ensuring the reliability and safety of production facilities. It describes the Company’s activities under the
program of energy saving and energy efficiency improvement of RusHydro and RAO ES East for the period until 2020. It
presents energy saving measures, shows the savings by type of energy and plans to improve energy efficiency. It reports
on the energy audits conducted at 12 branches of RusHydro. It contains information on the implementation of the program
for the conservation of biodiversity, measures for the restoration of fish resources, the installation of fish protection
devices, and the program for the rational use of water resources. It provides information about the cooperation of
RusHydro with international organizations on protecting environmental, conserving biodiversity, and combating climate
change.
Community development: The Report covers the Company's contribution to the development of the regions of its
operations. It discloses the data on the payment of taxes to budgets of different levels over time, on the creation of new
jobs. It also shows the indirect positive impact of the Company's energy infrastructure on the growth of the welfare of the
population by connecting new consumers to the grids. It reports on ten current agreements signed with the authorities of
the constituent entities of the Russian Federation. It covers the results of activities aimed at supporting education, ecology,
health, sports and culture. It describes the Company’s charity efforts in priority areas with an indication of key projects. It
tell about the approval of the Company's Charity and Sponsorship Policy in the reported year. It provides information on
the costs of charitable activities. It reports on the development of corporate volunteering.
Final provisions
In general, the 2018 Annual Report of RusHydro reflects the scope and strategy of the Company’s operations, its
contribution to the development of the electric power industry and the country's economy, the management system,
including sustainable development, corporate social responsibility priorities. The practice of engagement with
stakeholders, including during the preparation of the Report, is presented.
The Report was aligned with Sustainability Reporting Standards (GRI Standards), the GRI sectoral energy protocol for
energy companies, the International Integrated Reporting Standard (IR), and particular provisions of AA1000 standards
(AA1000AP and AA1000SES), which helps ensure continuity and consistency of information.
The 2018 Annual Report of RusHydro is the fourteenth report that covers the Company's activities pertaining to
sustainable development, which confirms the Company's commitment to the principles of transparency and openness.
Various forms of the Report independent assessment (professional confirmation and public certification) testify
RusHydro’s responsible attitude towards the quality of disclosures.
RECOMMENDATIONS
Noting the strengths of the 2018 Annual Report of PJSC Federal Hydro-generating Company - RusHydro, the Board draws
the Company's attention to a number of aspects of significance and completeness of disclosures that are material for
stakeholders, recommends taking them into account in the following reporting cycles.
The Council also notes that RusHydro can use in further reporting practices the recommendations based on the results of
the examination of previous annual reports.
The Report shows the relationship between RusHydro Group’s activities and the UN Sustainable Development Goals, this
approach is in line with current trends prevailing in reporting. It is recommended to consistently develop this practice, to
further specify the tasks, the solution of which advances towards the 2030 UN SDG being of priority for the Company, to
include in the reports measurable indicators of the Company's contribution to achieving these goals, to highlight in this
351
context the degree of fulfillment of the Company's strategic objectives in the reporting periods, and results attained, as
well as plans for the next period.
The Report contains information on the contribution to the development of the regions of operations, including the impact
of the Company's energy infrastructure on improving the living and working conditions of the population. It is
recommended to give more emphasis to this topic in the future, to give specific examples of the impact on the changing
situation in the regions resulted from the Group's projects delivered.
The Report covers the observance of human rights by the Group, in particular, the Company focuses on labor rights. It
seems appropriate to elaborate on the subject of human rights, including the rights of indigenous minorities. In order to
more fully disclose the topic, it is recommended to use the United Nations Guiding Principles on Business and Human
Rights when preparing reports.
It is recommended to further expand information about the Company's responsibility in the supply chain, which is an
important characteristic of the Company's social responsibility. The information on the improvement of procurement
activities presented in the Report would be more complete if they were accompanied by a description of the Company's
requirements for suppliers and contractors to comply with the principles of business ethics and standards of sustainable
development.
Attention should be paid to the fact that interest in reporting information can be promoted by the inclusion of opinions of
representatives of stakeholders on the substantive topics of the report, focus areas and key results of sustainable
development.
According to the Report, RusHydro provides substantial support to 35 charitable foundations and non-profit
organizations. It is recommended to more fully disclose information on the most significant results achieved using these
funds, on the procedures for the Company's interaction with the recipients of funds on projects implementation, evaluation
of their results, monitoring and control.
In order to further improve the quality of reporting, it would be useful to strengthen the analytical component of the
reports, paying more attention to management issues, more closely disclose the effectiveness of actions across all
components of sustainable development, in addition to describing the Company's activities, expand information about its
impacts, such as environmental impact, including biodiversity conservation.
The Non-Financial Reporting Council of the Russian Union of Industrialists and Entrepreneurs, supporting the Company's
commitment to the principles of responsible business practice, gave positive assessment to its Report and confirms that
the 2018 Annual Report of PJSC Federal Hydro-generating Company - RusHydro has passed public certification.
Non-Financial Reporting Council
352
Appendix No.21 Organizational structure of PJSC RusHydro
353