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Russian Institute of Directors upgrades RusHydro’s corporate governance rating to 8

JSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces that the Russian Institute of Directors (RID), a non-profit partnership of Russian issuers, has upgraded its National Corporate Governance Score (NCGS) for RusHydro from 7+ (Developed Corporate Governance Practices) to 8 (Advanced Corporate Governance Practice) according to the NCGS scale. This score is the highest among the participants of the National Corporate Governance Rating; 9 and 10 scores have not been assigned to any company.

The 8 score is assigned to a company that complies with the requirements of the Russian corporate governance law, follows the guidelines of the Russian Code of Corporate Governance and a considerable number of the guidelines of the international advanced corporate governance practice. Such company bears minor corporate governance risks.

RusHydro’s corporate governance practice has been reviewed from January 2014 till December 2014. Since the affirmation of its rating in October 2013, the Company has improved its corporate governance.

The experts appreciated the Company’s dividend payout practice over three consecutive years. In 2014, the Company’s Board of Directors approved the amended Regulation on the dividend policy. In accordance with the new dividend policy the Company takes into consideration consolidated net profit of the Group calculated under IFRS to determine the amount of dividends. The shareholders resolved to pay dividends for 2013 in the amount of RUB 5.25 bn which equals to 25% of the Company’s net profit calculated under IFRS.

In November 2014, the Board of Directors approved a long-term development program of RusHydro Group which provides for dependence of the management’s remuneration on the program performance.

During 2014 the Board of Directors held 17 meetings. One of the key priorities for the Board was to monitor and regulate the Company’s procurements. In February 2014, the Provision on procurement of goods was amended and the advisory body was set up to control the efficiency of procurements.

On December 26, 2013, the Bank of Russia registered the report on results of additional issue of RusHydro’s shares. Based on this report the Company made the amendments to the Articles of Association in regards to increase in its share capital and decrease in the number of placed shares of additional issue (which amounts to 14% of the Company’s share capital). The decrease in the number of declared shares is positively appreciated as it reduces the risk of minority shareholders’ stakes dilution.

RusHydro started to evaluate the Board of Directors’ work with the assistance of an independent advisor, which provides for improvement of the efficiency and transparency of the Board of Directors’ work as well as the Company’s corporate governance practice.

Besides, the following positive points of RusHydro’s corporate governance practice remained:
  • expanded functions of the Board of Directors in terms of major transactions;
  • minimal amount of net profit that should be distributed as dividends is defined in the Regulation on dividend policy;
  • the independent directors were elected to the Company’s Board of Directors;
  • the Company has a comprehensive conflict of interest regulation for the Board members and executive management;
  • several committees of the Board of Directors were set up: audit, human resources and reimbursement, strategy, investments, reliability, energy efficiency and innovations committee;
  • chairman of the human resources and reimbursement committee is an independent director;
  • the Company has a risk management department;
  • the Company provides free access to its financial statements prepared in accordance with IFRS and RAS;
  • RusHydro prepares sustainability report of RusHydro Group in accordance with GRI guidelines;
  • the Company implements social programs for employees and their families and actively participates in charitable activities.
The information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of RusHydro. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially from these statements. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to RusHydro and its operations.
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