PAO RusHydro
Explanatory Notes to the 2016 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all
matters of interpretation
of information, views
or opinions, the original language version of our report takes precedence over this translation.
58
Entity
2016
2015
HydroOGK Power Company Ltd
8 257
-
AO GVTS Energetiki
698
-
OAO Hydroremont-BKK
191
339
AO Lenhydroproject
114
172
AO NIIES
-
118
Other
187
146
Total income from investments in subsidiaries
9 447
775
In 2016, dividends were received from HydroOGK Power Company Ltd in the amount of RUB
8,257 million in non-monetary form by way of assignment of accounts receivable of the subsidiary
company of HC Boguchanskaya HPP classified as part of other short-term accounts receivable of
the Company as of December 31, 2016 (see paragraph 3.2.2 of the Explanatory Note).
3.12.8 Remuneration to key management personnel
The Company's key management personnel includes members of the Board of directors and
Management Board and also includes heads of the Company's business divisions and their
deputies.
The remuneration to the members of the Board of directors is calculated according to the
Regulations on the payment of remuneration to PAO RusHydro's directors approved by the
Annual General Meeting of Shareholders held on 30 June 2010 (Minutes No. 5).
Remuneration is paid to members of the Management Board and other management personnel of
the Company for their services in management positions and is made up of a contractual salary
and performance bonuses depending on the results for the period calculated based on key
performance indicators approved by the Company's Board of directors.
The list of members of the Company's Board of directors and Management Board is included in
paragraph 1.1 of the Explanatory Notes).
In 2016 and 2015, the Company remuneration to key management personnel within the limits set
out in their employment agreements for the total amount of RUB 666 million and RUB 1,475
million, respectively. The insurance contributions amounted to RUB 146 million for 2016 (2015:
236 million). In addition, in 2016, an appraisal obligation was established for premiums to key
management personnel in the amount of RUB 165 million.
3.12.9 Cash flows between the Company and subsidiaries/associates
Item
Line
code
2016
2015
Cash flows from operating activities
4110
8,896
7,872
Receipts, including:
sales of products, goods, work and services
4111
8,818
7,804
lease payments, licence payments, royalties, commission and
other
payments
4112
62
66
other receipts
4119
16
2
Payments, including:
4120
(6,447)
(7,229)
suppliers (contractors)
– raw materials, work and services
4121
(6,329)
(7,157)
interest on debt liabilities
4123
(17)
-
other payments
4129
(101)
(72)
Net cash flows from operating activities
4100
2,449
643
Cash flows from investing activities
4210
29,886
19,324
Receipts, including:
sale of non-current assets (except for investments)
4211
95
137
sale of shares of other organisations (ownership interest)
4212
-
10
repayment of loans issued, sale of debt securities (rights of
claiming cash to third parties)
4213
22,400
13,674
PAO RusHydro
Explanatory Notes to the 2016 Balance sheet and Statement of Financial Results
(in millions of Russian Roubles unless otherwise stated)
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in
Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation
of information, views or opinions, the original language version of our report takes precedence over this translation.
59
Item
Line
code
2016
2015
dividends, interest on debt investments and similar proceeds
from equity participation in other
organisations
4214
5,351
5,469
other receipts
4219
2,040
34
Payments, including:
4220
(40,108)
(55,731)
acquisition,
creation,
modernisation,
reconstruction
and
preparation for use of non-current assets
4221
(6,256)
(5,983)
purchase of shares (interest) in other entities
4222
(23,829)
(34,665)
acquisition of debt securities (rights of claiming cash from third
parties), issue of loans to third parties
4223
(10,023)
(15,083)
Net cash flows from investing activities
4200
(10,222)
(36,407)
Cash flows from financing activities
Receipts, including:
4310
719
1,970
borrowings and bank loans
4311
719
1,970
Payments, including:
4320
(1,090)
(143)
redemption (buyback) of promissory notes and other debt
securities, loan repayment
4323
(1,090)
(143)
Net cash flows from financing activities
4300
(371)
1,827
Net cash flows for the reporting period
4400
(8,144)
(33,937)
3.13 Segment Information
The Company does not identify any reporting segments in its operations, as the Company's core
business activity is production of electricity and capacity
– their share in the revenue from sales is
99,3%. The individuals credentialed to make the decisions concerning allocation of the resources
within
the Company and assess the results of its performance analyse the Company’s activity as
a whole segment.
3.14 Contingent liabilities
As of 31 December 2016, the Company had outstanding issued guarantees to the third parties'
creditors and pledged assets for the total amount of RUB 101,926 million (31 December 2015:
RUB 92,757 million, 31 December 2014: RUB 104,104 million) (see paragraph 3.6.3 of the
Explanatory Notes). According to the Company's management expectations, no material liabilities
will arise in connection with these guarantees.
Moreover, the prosecutor's office and other oversight bodies examined operations of the
Company, and this also may result in additional claims filed against the Company and its
employees.
The Russian transfer pricing legislation is aligned with the international principles developed by
the Organisation for Economic Cooperation and Development (OECD). The legislation allows tax
authorities to assess additional taxes for controlled transactions (transactions between related
parties and some transactions between unrelated parties) if such transactions are not on an arm's
length basis. The Company's management has implemented internal control procedures to ensure
compliance with transfer pricing law.
Tax liabilities arising as a result of operations between the Company and its subsidiaries are
determined based on the actual transaction price. There is a probability that the prices may be
disputed as practice for application of the transfer rules changes. The effect of such course of
events cannot be estimated reliably but may have a material effect on the Company's financial
results and/or operations.
New provisions aimed at deoffshorisation of Russian economy have been added to the Russian
tax legislation and are effective from 1 January 2015. Specifically, they introduce new rules for
controlled foreign companies, a concept of beneficiary owner of income for the purposes of
application of preferential provisions of taxation treaties of the Russian Federation. Management
of the Company conducts analysis of impact of new rules on Companies' activity and takes
necessary measures to meet new requirements of Russian Tax legislation. Likelihood of claims
from Russian tax authorities (and probability of positive resolution of disputes) can't be reliably