RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2015
(in millions of Russian Rubles unless noted otherwise)
61
The table below summarises the Group’s exposure to foreign currency exchange rate risk:
31 December 2015
31 December 2014
Monetary
financial assets
Monetary
financial
liabilities
Net balance
sheet position
Monetary
financial assets
Monetary
financial
liabilities
Net balance
sheet position
USD
6,409
(3,735)
2,674
3,300
(5,464)
(2,164)
EUR
61
(14,335)
(14,274)
2,310
(12,292)
(9,982)
Other
114
-
114
25
-
25
Total
6,584
(18,070)
(11,486)
5,635
(17,756)
(12,121)
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.
There is no significant effect of the changes of foreign currency rates on the Group’s financial position.
Interest rate risk. The Group’s operating profits and cash flows from operating activities are not dependent
largely on the changes in the market interest rates. Borrowings issued at variable rates (Note 18) expose the
Group to cash flow interest rate risk.
The Group obtains debt financing with floating rates, which are established on the basis of the MOSPRIME,
Euribor, Libor rates.
As at 31 December 2015, had interest rates at that date been 3 percent higher (31 December 2014:
6 percent higher), with all other variables held constant, profit for the year ended 31 December 2015 and the
amount of capital that the Group managed as at 31 December 2015 would have been RR 889 million
(31 December 2014: RR 2 093 million) lower, mainly as a result of higher interest expense on variable
interest liabilities.
The Group monitors interest rates for its financial instruments. Effective interest rates are disclosed in Note 18.
For the purpose of interest risk reduction the Group makes the following arrangements:
credit market monitoring to identify favourable credit conditions,
diversification of credit portfolio by raising of borrowings with fixed rates and 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 amount of committed credit facilities. The Group adheres to the
balanced model of financing of working capital – both at the expense of short-term sources 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.
The Group has implemented a control system under its contract conclusion process by introducing and
applying typical financial arrangements which include standardised payment structure, payment deadlines,
percentage ratio between advance and final settlement, etc. In such a manner the Group controls capital
maturity.
The table below shows liabilities as at 31 December 2015 by their remaining contractual maturity. The
amounts disclosed in the maturity table are the contractual undiscounted cash flows, including gross finance
lease obligations (before deducting future finance charges). Such undiscounted cash flows differ from the
amount included in the Consolidated Statement of Financial Position because this amount is based on the
discounted cash flows.
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2015
(in millions of Russian Rubles unless noted otherwise)
62
The maturity analysis of financial liabilities as at 31 December 2015 is as follows:
2016 year 2017 year
2018 year
2019 year 2020 year
Starting
from year
2021
Liabilities
Current and non-current debt
74,633
33,577
65,664
8,313
28,242
38,978
Trade payables (Note 20)
33,475
-
-
-
-
-
Accounts payable under factoring
agreements (Note 20)
4,071
-
-
-
-
-
Obligation to PJSC RAO ES East shares
purchase (Note 20)
2,108
-
-
-
-
-
Financial guarantees (Note 28)
712
771
1,008
1,269
1,537
22,178
Dividends payable (Note 20)
86
-
-
-
-
-
Finance lease liabilities (Note 18)
706
442
267
203
204
4,546
Net settled derivatives
32
26
17
10
4
-
Total future payments, including
principal and interest payments
115,823
34,816
66,956
9,795
29,987
65,702
The maturity analysis of financial liabilities as at 31 December 2014 is as follows:
2015 year 2016 year
2017 year
2018 year 2019 year
Starting
from year
2020
Liabilities
Current and non-current debt
67,650
30,036
10,676
44,154
12,325
64,984
Trade payables (Note 20)
31,914
-
-
-
-
-
Accounts payable under factoring
agreements (Note 20)
1,376
-
-
-
-
-
Financial guarantees (Note 28)
842
636
771
1,008
1,269
23,714
Dividends payable (Note 20)
88
-
-
-
-
-
Finance lease liabilities (Note 18)
979
449
367
192
127
3,169
Net settled derivatives
103
118
65
36
20
7
Total future payments, including
principal and interest payments
102,952
31,239
11,879
45,390
13,741
91,874
Liabilities of disposal group
496
-
-
-
-
-
Note 30.
Management of capital
Compliance with Russian legislation requirements and capital cost reduction are key objectives of the
Group’s capital risk management.
The following capital requirements have been established for joint stock companies by the legislation of the
Russian Federation:
share capital cannot be lower than 1,000 minimum shares on the date of the company’s registration;
if the share capital of the entity is more than the statutory net assets of the entity, such entity must
decrease its share capital to the value not exceeding its net assets;
if the minimum allowed share capital is more than the statutory net assets of the entity, such entity is
subject to liquidation.
As at 31 December 2015 and 31 December 2014 the Company was in compliance with the above share
capital requirements.
The Group’s objectives in respect of capital management are to safeguard 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 2015 was RR 613,919 million (31 December 2014:
RR 595,151 million).
Consistent with others in the energy industry, the Group monitors the gearing ratio, that is calculated as the
total debt divided by the total capital. Debt is calculated as a sum of non-current and current debt, as shown
in the Consolidated Statement of Financial Position. Total capital is equal to the total equity, as shown in the
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2015
(in millions of Russian Rubles unless noted otherwise)
63
Consolidated Statement of Financial Position. The gearing ratio was 0.32 as at 31 December 2015
(31 December 2014: 0.30).
Note 31.
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 2015
Level 1
Level 2
Level 3
Total
Financial assets
Available-for-sale financial assets
6,057
-
37
6,094
Non-financial assets
Property, plant and equipment (except for construction in
progress, office buildings and land)
-
-
480,692
480,692
Total assets recurring fair value measurements
6,057
-
480,729
486,786
31 December 2014
Financial assets
Available-for-sale financial assets
4,055
-
77
4,132
Non-financial assets
Property, plant and equipment (except for construction in
progress, office buildings and land)
-
-
451,262
451,262
Total assets recurring fair value measurements
4,055
-
451,339
455,394
As at 31 December 2015 and 31 December 2014 the Group’s liabilities measured at fair value are not
significant.
The valuation technique, inputs used in the fair value measurement for significant Level 3 measurements
and related sensitivity to reasonably possible changes in those inputs are as follows at 31 December 2015:
Fair
value
Valuation
technique
Significant
unobservable inputs
Reasonable
change
Sensitivity of fair
value measurement
Non-financial assets
Property, plant and equipment
(except for construction in
progress, office buildings and
land)
480,692
Discounted
cash flows
Electricity and
capacity prices
-10%
(21,696)
Discount rate
+1%
(14,628)
Capital expenditures
+10%
(3,914)
Total recurring fair value
measurements at Level 3
480,692
(40,238)
The above tables discloses sensitivity to valuation inputs for property, plant and equipment as changing one
or more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair
value significantly.
There were no changes in valuation technique for Level 3 recurring fair value measurements during the
years ended 31 December 2015 and 31 December 2014.
(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, short term
deposits (Level 1 of the fair value hierarchy) and 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.
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2015
(in millions of Russian Rubles unless noted otherwise)
64
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 2015 the carrying value of bonds exceeded their fair value by RR 763 million. As at 31
December 2014 the carrying value of bonds exceeded their fair value by RR 2,527 million.
As at 31 December 2015 the carrying value of non-current fixed rate debt exceeded their fair value by
RR 7,121 million. As at 31 December 2014 the carrying value of non-current fixed rate debt exceeded their
fair value by RR 7,319 million.
Note 32.
Presentation of financial instruments by measurement category
The following table provides a reconciliation of classes of financial assets with the measurement categories
of IAS 39, Financial Instruments: Recognition and Measurement as at 31 December 2015:
Loans and receivables
Available-for-sale
financial assets
Total
Assets
Other non-current assets (Note 10)
7,896
-
7,896
Promissory notes
7,218
-
7,218
Long-term loans issued
633
-
633
Net settled derivatives
45
-
45
Available-for-sale financial assets (Note 9)
-
6,094
6,094
Trade and other receivables (Note 12)
38,383
-
38,383
Trade receivables
34,917
-
34,917
Promissory notes receivable
9
-
9
Other financial receivables
3,457
-
3,457
Other current assets (Note 14)
22,291
-
22,291
Deposits and promissory notes
19,532
-
19,532
Short-term loans issued
2,728
-
2,728
Net settled derivatives
31
-
31
Cash and cash equivalents (Note 11)
48,025
-
48,025
Total financial assets
116,595
6,094
122,689
Non-financial assets
814,660
Non-current assets and assets of disposal group
classified as held for sale
788
Total assets
938,137
All of the Group’s financial liabilities are carried at amortised cost. Financial liabilities are represented mainly
by the current and non-current debt (Note 18), trade payables and other account payable (Note 20).
RusHydro Group
Notes to the Consolidated Financial Statements as at and for the year ended
31 December 2015
(in millions of Russian Rubles unless noted otherwise)
65
The following table provides a reconciliation of financial assets with the measurement categories as at
31 December 2014:
Loans and receivables
Available-for-sale
financial assets
Total
Assets
Other non-current assets (Note 10)
7,297
-
7,297
Promissory notes
6,158
-
6,158
Deposits
585
-
585
Long-term loans issued
373
-
373
Net settled derivatives
181
-
181
Available-for-sale financial assets (Note 9)
-
4,132
4,132
Trade and other receivables (Note 12)
35,113
-
35,113
Trade receivables
32,288
-
32,288
Promissory notes receivable
13
-
13
Other financial receivables
2,812
-
2,812
Other current assets (Note 14)
41,703
-
41,703
Deposits and promissory notes
40,122
-
40,122
Short-term loans issued
1,484
-
1,484
Net settled derivatives
97
-
97
Cash and cash equivalents (Note 11)
34,394
-
34,394
Total financial assets
118,507
4,132
122,639
Non-financial assets
760,467
Non-current assets and assets of disposal group
classified as held for sale
664
Total assets
883,770
Note 33.
Subsequent events
As at 28 January 2016 the Group subsidiary - PJSC RAO ES East accounted for the shares repurchased
from shareholders who voted against decision on approval of large-scale deals or who did not participate in
voting
within
the
extraordinary General Shareholders
meeting
held
at
12 November 2015.
22,282,264 ordinary nominal uncertified shares and 3,608,736 preference nominal uncertified shares were
repurchased.
Shareholders accepted terms of the voluntary offer up to 18 January 2016 transferred PJSC RAO ES East
shares to the account of LLC Vostok-Finance during the period from 19 January 2016 to
2 February 2016. Based on the voluntary offer LLC Vostok-Finance bought 4,707,066,939 ordinary shares
and 341,828,698 preference shares of PJSC RAO ES East which amount to 11.11 percent of voting shares.
PJSC RAO ES East shareholders received 2,934,258,766 shares of the Company and RR 30 million as a
compensation for purchased shares.
The voluntary offer resulted to the Group share in PJSC RAO ES East capital exceeding 95 percent.
According to legislation share in share capital of more than 95 percent entitles squeeze out
to increase the Group share up to 100 percent, which right the Group is going to exercise.
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