Results of the Board of Directors on February 17, 2014
JSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces that the Company's Board of Directors held a meeting in absentia on February 17, 2014.
The Board of Directors resolved to make the additions to Provision on procurement of goods for RusHydro’s needs aimed at further development of transparent control of procurement process. The updated Provision includes an item on creation of advisory body responsible for examination of the procurements efficiency. RusHydro plans to set up the advisory body in 2014.
The Board of Directors approved the agreement between RusHydro and System Operator of Russia (SO UES), qualified as an interested party transaction, and determined the rental rates under this agreement.
According to the agreement RusHydro will provide to SO UES a part of service building located on the territory of the Zhigulevskaya HPP for rent.
The Board of Directors approved the agreement between RusHydro and SO UES, qualified as an interested party transaction, and determined the price of the agreement.
According to the agreement RusHydro will control the reactive capacity without electricity production using generating facilities of the Volzhskaya, Votkinskaya, Kamskaya, Ezminskaya, Gizeldonskaya and Zagorskaya pumped storage plant.
The Board of Directors approved resignation of Maria Tikhonova from the strategy and investments committees of the Company’s Board of Directors, and elected Pavel Snikkars, Director for electric energy development at the Ministry of Energy of Russia, as a new member of these committees.
The Board of Directors approved the Company’s business plan for 2014, including the investment program, annual and quarterly KPIs as well as quarterly funding plans and implementation of capital investments for 2014. The Board of Directors also approved the Company’s business plan for 2015-2018, including the investment program.
The investment program of RusHydro for 2014-2018 provides for:
The investment program of RusHydro for 2014-2018 provides for funding of technical modernization and reconstruction of operating assets aimed to increase technical reliability and safety of generating facilities in the amount of RUB 231,146.2 mn. Technical modernization and reconstruction of operating assets are implemented in accordance with comprehensive modernization program of RusHydro for 2012-2025 approved by the Board of Directors. During 5 years the old equipment will be replaced with modern one, which will result in significant reliability, efficiency and security improvement of RusHydro’s generating facilities and increase in installed capacity (over 300 MW in 2014-2018) of already operational hydropower plants.
As of 2013 the investment program of RusHydro also includes construction of 4 priority projects in the Far East of Russia:
In 2014-2018 the Company plans to fund the construction of the following ongoing projects in total amount of RUB 55,864.6 mn, including:
The Investment program provides for financing of renewable energy projects in the amount of RUB 10,178.61 mn; as well as financing of R&D projects in the amount of RUB 2,679.30 mn.
The Board of Directors approved the report on execution of the Company's KPIs in the 4th quarter of 2013 and full year 2013.
The Board of Directors approved the report on projects implementation in 2013 in accordance with the list of non-core assets of RusHydro; as well as the amendments to the list of non-core assets. The Board of Directors also commissioned the Company’s Management Board to submit for the Board of Directors’ consideration the report on projects implementation in 2014 in accordance with the list of non-core assets no later than February 27, 2015. In 2013, RusHydro signed several lease agreements, as well as initiated gratuitous transfer of 13 real estate units to public ownership.
The amendments to the list of non-core assets should be approved in order to update data in the document.
The Board of Directors approved the report on execution of the Company’s priority objectives in 2013.
Within hydrogenation development the Company’s 2013 priorities include reliability and modernization of operating assets. In order to improve reliability of operating assets the Company continues to implement its comprehensive modernization program (CPM), comprising modernization of generating facilities and automation of major operations. In 2013, as a result of CPM implementation the Company commissioned nine modernized hydropower units with total capacity of 737 MW.
The Company’s development priorities also included operations and maintenance efficiency improvement, increase in installed capacity through implementation of investment projects, corporate consolidation of assets, profitability improvement of energy retail companies and improvement of competitive advantages of project complex, as well as other activities, including human resource development, water resources development, move towards target capital structure and enhancement of sources for investment program implementation.
The priority objectives of RusHydro in 2013 are considered to be gained. Due to high importance and continuation of works, some priorities are still relevant and included in the list of the Company’s priorities for 2014 with new objectives as per the Board of Directors’ decision.
The development priorities are one of the key tools for RusHydro’s strategic plan implementation; they are approved by the Board of Directors on an annual basis and include a number of key objects and activities, considered to be important for the Company in the current year.
The Board of Directors took a note of information on execution of the Board of Directors’ commission and moved the date for approval of the report on execution of calendar plans of commissioning of the investment program projects, as well as the report on carrying out a technological assessment and price audit of the investment projects, including summary results of analysis of completed audits and commissioning based on results of public and expert discussion from February, 2014 to March 28, 2014.
The Company has already received the audit reports on the Kankunskaya HPP, Leningradskaya PSPP and Ussuriyskaya TPP projects, chosen as pilot. In order to provide the transparency of technological assessment and price audit, and in accordance with the Regulations on carrying out public technological assessment and price audit of major investment projects, approved by the Board of Directors, the audit reports should be submitted for NP NTS UES consideration after placement on the Company’s website. The documentation audited in the Internet should be submitted to NP NTS UES no later than 30 days prior to the proceedings. An application for review of audit reports on the Kankunskaya HPP and Leningradskaya PSPP was sent to NP NTS UES on December 30, 2013. On February 3 and 4, 2014, the reports were posted on RusHydro’s website.
The audit of the Ussuriyskaya TPP project was completed in November, 2013. The audit report states that some assumptions admitted in the project documentation should be confirmed or adjusted before public discussion of the investment project.
The audit results will be submitted for NTS UES experts’ consideration within February. After that the progress report will be reviewed by RusHydro’s Board of Directors.
On July 15, 2013, in accordance with the guideline of the government of Russia the Board of Directors of RusHydro considered carrying out a technological assessment and price audit of the investment projects with completed prefeasibility studies and resolved to carry out a technological assessment and price audit of the Kankunskaya HPP, Leningradskaya PSPP and Ussuriyskaya TPP. These projects were chosen as pilot to test the procedure of technological assessment and price audit.
The Board of Directors resolved to move the deadline for consideration of Concept of scientific and technical complex reform to June, 2014.
The Concept of scientific and technical complex reform involves control of activities of scientific and research institutes of RusHydro group (JSC NIIES and JSC Vedeneyev VNIIG). The Concept is connected with innovative development Program of RusHydro, currently being updated. The deadline for consideration of Concept was moved in order to synchronize both documents.
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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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