Results of the Board of Directors on December 25, 2014
JSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces that the Company's Board of Directors held a meeting in absentia on December 25, 2014.
The Board of Directors approved electricity sale to last resort providers of the second price zone under free bilateral agreements in 2015. The Board of Directors also approved the pricing procedure for electricity sold by RusHydro.
The Board of Directors approved interim results of 2014 business-plan execution for the 9 months of 2014 (including report on implementation of investment program (including comprehensive modernization program) and annual procurement plan for the 9 months of 2014).
Electricity generation by RusHydro’s power plants in the 3rd quarter and nine months of 2014 totaled 78.8% and 91.9% of the planned volumes respectively. The output amounted to 79.1% and 92.3% of the planned volumes respectively. The slight undershoot was a result of unfavorable hydrological conditions and regimes allowed by the Federal Water Resources Agency.
In the mine months of 2014 the installed capacity increased by 31 MW as a result of completion of technical upgrade and reconstruction works at the Volzhskaya HPP (10.5 MW), Zhigulevskaya HPP (10.5 MW) and at the cascade of Verkhnevolzhskie HPPs (10 MW).
The financing of investment program in the nine months of 2013 amounted to RUB 45 bn (including VAT) or 99% of the plan for the period and 57% of the annual plan.
Financing of rehabilitation and modernization projects in the nine months of 2014 amounted to RUB 51.4 bn or 113% of the plan for the period and 53% of the annual plan. Actual financing of technical rehabilitation and modernization projects in the nine months of 2014 totaled RUB 18.84 bn or 113% of the plan for the nine months of 2014 and 46% of the annual plan of RUB 41.26 bn. The main reason for the deviation from plan was early delivery of the equipment.
The Board of Directors approved the amendments to 2014 business-plan in terms of investment program as well as adjusted quarterly funding and capex plans for 2014.
The amended investment program for 2014 was approved by the Ministry of energy of Russia on December 12, 2014. The amount of the amended investment program for 2014 totals RUB 85.726 mn (including VAT). The program also provides for financing of construction of the Boguchansky aluminum smelter in the amount of RUB 17,472.54 mn (including VAT). The capacity commissioning in 2014 amounts to 379 MW.
The main reasons for the amendments are:
The Board of Directors approved the following insurance companies which may sign the agreements with RusHydro in 2015:
The Board of Directors approved the Insurance Program of RusHydro for 2015.
The insurance coverage expenses for the next year increased by 13.3% according to the document. The increase in insurance expenses is driven by increase in the insurance tariff following tender results and introduction of a new type of insurance in accordance with RusHydro’s insurance Regulation.
The Board of Directors approved an agreement between RusHydro and RAO ES of the East on consulting services in relation to quarterly financial statements prepared in accordance with IFRS, qualified as interested party transaction.
In accordance with the agreement RusHydro will consult RAO ES of the East on preparation of quarterly financial statements in accordance with IFRS. The agreement will be effective from March 1, 2015 to March 30, 2018.
The Board of Directors approved voluntary medical insurance agreement between RusHydro and JSC SOGAZ, qualified as an interested party transaction.
The Board of Directors approved the agreement on voluntary group health and accident insurance between RusHydro and SK Alliance, qualified as an interested party transaction.
These agreements will be effective from January 1 to December 31, 2015.
The Board of Directors approved between RusHydro and Lomonosov Moscow State University, qualified as interested party transaction.
The agreement provides for education of RusHydro’s employee at Lomonosov Moscow State University.
The Board of Directors commissioned RusHydro’s representatives at the AGM of CJSC Sakhalinskaya TPP-2 to approve the following major transactions:
The Sakhalinskaya TPP-2 will be constructed in order to replace the retired capacity of the Sakhalinskaya TPP as well as to increase total capacity of the region.
Sakhalinskaya TPP-2 is one of four new projects of in the Far East of Russia implemented by RAO ES of the East. The project includes the construction of the first stage of the power plant with electric capacity of 120 MW and thermal capacity of 18.2 Gcal/h. Planned annual output is 840 GWh. The plant will use coal from local Sakhalin mines.
The Board of Directors approved the Board’s working plan for the first half of 2015.
The Board of Directors approved measures aimed at improvement of procurement policy of RusHydro, its subsidiaries and affiliates.
The measures were developed in order to execute the government’s guideline of April 24, 2014, and the Board of Directors’ decision of May 23, 2014.
The Board of Directors moved the deadline for execution of Board of Directors’ commissions.
The Board of Directors approved annual procurement plan of RusHydro for 2015.
Earlier the procurement plan was recommended for approval by the management of the Company. The procurement plan was developed in compliance with the latest changes in Russian legislation and is aimed to increase the transparency and control of procurement process.
The Board of Directors approved the price limit for auditing the Company’s accounting statements under Russian accounting standards (RAS) and review of consolidated financial statements of RusHydro Group under International Financial Reporting Standards (IFRS) for 2015, 2016 and 2017 in the amount of RUB 494,763,542.99 (including VAT).
A three-year agreement with auditor allows to reduce costs for tender procedures as well as to optimize costs of audit services.
A tender for selection of the Company’s auditor for 2015-2017 will be announces in the 1st half of 2015.
The Board of Directors approved combining positions of Chairman of the Management Board – General Director of RusHydro and member of Supervisory Board of RusHydro International B.V. by Evgeny Dod.
The Board of Directors also approved combining positions of member of the Management Board, first Deputy General Director of RusHydro and member of the Board of Directors of JSC RusHydro MC and Chairman of Partnership Board of Self-Regulating Organization Non-Commercial Partnership EnergoStroiAllianz by Vladimir Tokarev.
The Board of Directors approved the amendments to the Company’s charitable and sponsor activities plan for 2014 providing for financing of the Russian chess federation and Russian community of martial arts, without increase in the amount of program.
The Board of Directors approved the amendments to the decision on issue of series 09 and 10 bonds in the amount of 20 mn with par value of RUR 1,000 each and total value of RUR 20 bn, and also approved the amendments to the securities Prospectus.
The amendments provide for extension of bonds placement period for one calendar year till December 27, 2015, following changes in the legislation on securities market.
This extension will allow the Company to place bonds timely in case of favorable market conditions in 2015.
Raising debt up to RUR 40 mn through issues of series 07-10 bonds of with par value of RUR 10 bn each and the securities Prospectus were approved by the Board of Directors in October 2012. In February 2013 RusHydro placed series 07 and 08 bonds in total amount of RUR 20 bn to partially repay in November 2013 the RUR 40 bn loan secured from Sberbank of Russia.
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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