Results of the Board of Directors Meeting on October 25, 2018
October 29, 2018. Moscow, Russia. PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces that the Company's Board of Directors held a meeting in absentia on October 25, 2018.
The Board of Directors took into consideration the report on execution of RusHydro Group’s long-term development program (LDP) for the first half of 2018.
The Company successfully carries out the main responsibilities outlined in the document. Results for the first half of the year reflect systematic improvement of the Group’s financial and operating performance.
Financial results for the first half of 2018 are showing positive momentum. The Group’s EBITDA increased by 16.3% against the corresponding period of 2017 and reached RUB 59.95 bn while net income demonstrated growth of 64.5% to RUB 36.69 bn. Total electricity production increased by 6% and reached 67.5 GWh.
RusHydro continued carrying out its key investment projects such as first phase of Sakhalinskaya GRES-2, TPP in city of Sovetskaya Gavan’, Zaramagskaya HPP-1 and Ust-Srednekanskaya HPP. In the first half of 2018 installed capacities of Novosibirskaya HPP, HPPs of the Upper-Volga cascade, Votkinskaya HPP, Zhigulevskaya HPP increased by 5 MW, 10 MW, 15 MW and 10.5 MW, respectively.
Following localization of certain equipment and parts production in the Russian Federation, RusHydro is ramping up the share of domestically manufactured equipment within the scope of fulfillment of the its integrated modernization program.
In the first half of 2018 RusHydro continued to carry out activities aimed at increasing efficiency and transparency. PricewaterhouseCoopers, one of top consulting firms, gave high marks for the Board of Directors’ performance following an independent research. The experts acknowledged RusHydro’s Board of Directors’ compliance with Russian and British corporate governance codes regarding its composition, role and responsibility. Single standards in procurement and loan policy, internal control, risk management, insurance and business planning have been introduced in the Group’s subsidiaries.
The Board of Directors approved revisions to the long-term development program of RusHydro Group for 2018-2011 in accordance with fulfillment of the decree of the President of the Russian Federation dated 07.05.2018 “On the national goals and strategic objectives of the Russian Federation development for the period up to 2024” and amendments of the program’s key performance indicators.
Amendments include additional activities aimed at modernization of the thermal generation in the Far East, improvement of environment protection system, implementation of intelligent systems and digital systems in human resource management.
The Board approved terms of reference to monitor implementation of the long-term development program of RusHydro Group for 2018, 2019 and 2020.
The progress report is conducted by an independent organization on an annual basis since the Group’s LDP has been approved. Recommendations of the Ministry of Economic Development of the Russian Federation and Federal Agency for State Property Management of the Russian Federation have been factored into the terms of reference.
The Board of Directors approved the Program on intellectual rights management of RusHydro Group.
The document is aimed at developing single standards of intellectual property management, fostering conditions for the Group’s sustainable development and achieving key efficiency target metrics in innovation development. The program includes key aspects such as protection of intellectual rights, legal protection and commercial application of intellectual activity results.
The Board of Directors authorized Nikolay Shulginov, Chairman of the Management Board – General Director to take inventory of RusHydro Group’s intellectual rights by 30.11.2018 and to approve an action plan on their legal protection by 31.12.2018.
The Board of Directors acknowledged the long-term program on substitution of obsolete capacities and development of the Far East.
The program is the fundamental document on development of the Far East power system. Its ultimate goal lies in providing consumers with guaranteed electricity through development of the centralized power system. The program encompasses modernization of thermal power plants in accordance with social and economic demand and the decree of the President of the Russian Federation dated 07.05.2018 “On the national goals and strategic objectives of the Russian Federation development for the period up to 2024”.
The program’s main priorities include generating proposals for substitution of obsolete capacity, satisfying potential demand and development of power infrastructure as well as adopting optimal solutions to carry out proposed activities and measure economic effects of the program.
The main projects include construction of Artyomovskaya TPP-2, Khabarovskaya TPP-4, second phase of Yakutskaya GRES-2, TPP in city of Pevek, modernization of Vladivostokskaya TPP-2 and Komsomolskaya TPP-2 and commissioning of fourth hydro unit of Ust-Srednekanskaya HPP. RusHydro is in the discussion phase with Ministry of Energy of the Russian Federation on inclusion the majority of the projects into modernization of thermal generation program.
The Board of Directors approved cancellation of RusHydro’s participation in JSC “Organizator stroitelstva Boguchanskoi GES” and CJSC “Zakazchik stroitelstva Boguchnskoi GES” by means of voluntary liquidation.
The above-mentioned companies were created for construction of Boguchanskaya HPP. Upon construction’s completion, the companies no longer conduct financial and operational activities and only bear maintenance costs. As a result, they were included in the Program of divestment of non-core assets.
The Board of Directors took into consideration information on the status of execution of priority projects on thermal generation construction in the Far East as of 30.06.2018.
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 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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