Annual Report 2013 Annual Report 2013 OJSC Enel OGK-5
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Annual Report 2013 Annual Report 2013 OJSC Enel OGK-5 2 OJSC ENEL OGK-5 ANNUAL REPORT 2013 3 Table of contents Address of the Company management to shareholders | 6 Social responsibility | 69 > Address of the Chairman of the Board of Directors | 6 > Environmental protection | 70 > Address of the General Director | 8 > Health and safety | 79 Calendar of events | 10 > Charity and sponsor activities | 80 Tne Company’s background | 12 Financial statements with appendices | 85 The board of directors’ report: > Balance sheet | 86 results of the Company priority activities | 13 > Income statement | 87 > Financial and economic performance of the Company | 13 > Statement on changes in equity | 88 – Analysis of financial performance in comparison > Cash flow statement | 90 with the previous period | 13 > Explanations to balance sheet | 92 – Dividend History | 14 > Audit report | 100 > Characteristic of activity of management The conclusion of the Internal Audit Commission | 102 and control bodies of the Company | 15 Information on observance by the Company – Principles of corporate governance | 15 of the Code of Corporate Conduct | 107 – Information disclosure | 16 Information about major transactions and related party > Management bodies of the Company | 17 transactions executed by the Company in 2013 | 119 > Control bodies of the Company | 26 Structure of generating facilities | 125 Securities of the Company | 29 Glossary | 128 > Data on the share capital of the Company | 30 Contact information | 130 > Market capitalization | 33 > OJSC Enel OGK-5 Bonds | 34 > Circulation of depository receipts of OJSC Enel OGK-5 | 34 Participation of the Company in other organizations | 35 Position of OJSC Enel OGK-5 in the industry | 37 Strategy and priority activities of the Company | 45 Main risk factors related to the Company’s activity | 47 Investment activities | 50 Innovations and IT technologies | 52 HR policy | 55 > HR strategy and policy | 56 > Organizational structure and business processes | 56 > HR structure | 58 > Labor turnover | 63 > Personnel recruitment, training, evaluation and development | 66 > Average salary level | 66 > Social partnership and Social Policy | 67 3 OJSC ENEL OGK-5 ANNUAL REPORT 2013 Report on operations 4 OJSC ENEL OGK-5 ANNUAL REPORT 2013 5 Address of the Company Management to Shareholders Address of the Chairman of the Board of Directors It is my great honor to present you with the Company’s annual report. In 2013, we focused our efforts to improve our financial sustainability, optimize operating expenses and build a positive cash flow while also ensuring the continuity of business processes. That year was marked with numerous events in the company’s life, and first of all I would like to emphasize one of them. Following the completion of the period of intensive capital investments mostly financed by debt instruments, on October 30, 2013 the Board of Directors of OJSC Enel OGK-5 approved the dividend policy. On its basis the Board of Directors will annually recommend the Company’s Annual General Shareholders’ Meeting to approve dividends to the Company’s shareholders in the amount of 40% of the Company net profit in accordance with the IFRS consolidated financial statements. This resolution was adopted despite the challenging market environment, which underscores our commitment to meet the wants of our shareholders and to ensure a fair rate of return. younger generation. Socially responsible business is one of the key priorities of OJSC Enel OGK-5. In 2013, One of the key resolutions adopted by the Board of Directors in 2013 was the approval of the transaction within the charity program the company supported educational institutions, children and youth teams, for natural gas supply with Rosneft. By envisaging gas supply to Konakovskaya, Sredneuralskaya and veteran organizations, sick and disabled people, supported events aimed at the formation of a favorable Nevinnomysskaya GRES over the period from 2014 through 2025, this contract will play a crucial role in social and ecological environment. fuel supply to our power plants. The contract is one of the major transactions in the history of OJSC Enel Summarizing the results of 2013, it should be noted that it is well-coordinated and efficient work of OGK-5 and evidences an effective dialogue and successful cooperation between the company and a the Company Board of Directors, its management and personnel that ensured the achievement of the major player on the Russian and global oil and gas markets. Company’s target indicators and its financial stability. Throughout the year, the activities of the Company’s Board of Directors were aimed at serving shareholders’ interests, improving the Company’s management practices and meeting key performance indicators. In 2013, for the first time in OJSC Enel OGK-5 history, we held the Investor Day. At this event attended by financial analysts and representatives of investment funds, we presented the Company’s Business Plan and answered questions related to the Company’s activities and financial performance. Chairman of the Board of That event was organized to increase openness and transparency of the Company’s operations as well as Directors of OJSC Enel OGK-5 improve the quality of interaction with the investment and financial community. Stephane Zweguintzow In 2013, the Company intensified efforts to strengthen its relations with research institutes and higher educational institutions. Within that activity, in June 2013, OJSC Enel OGK-5 signed two memorandums of understanding on the development of academic and cultural relations with the Russian Academy of Justice and Gubkin Russian State University of Oil and Gas. Regardless of market conditions and economic situation the Company continuously pays special attention to the support of social institutions in its markets, to environmental protection and development of the 6 OJSC ENEL OGK-5 ANNUAL REPORT 2013 7 Address of the General Director optimisation of this management system, comprising continuous improvement of environmental indicators, decrease of the amount of occupational diseases, prevention of industrial accidents. In 2013, OJSC Enel OGK-5 started its “That’s not right” project to create a more efficient tool for detecting and eliminating violations, hazardous situations and near misses. Year 2013 was marked by completion of several important projects in the area of human resource policy and organization of the Company. In particular, the five-year project of O&M restructuring of the production branches was successfully completed, resulting in separation of operation and maintenance functions, transition from shop organization to functional organization, organizational optimization and rightsizing, and implementation of the multiskilling principle. In 2013, OJSC Enel OGK-5 has completed the implementation of One Company Project, which allowed us to implement those policies and procedures of key business areas which are unified at the Enel Group level. During the year, all OJSC Enel OGK-5 employees efficiently performed their duties, the Company’s management executed all of the Board of Directors decisions, striving for constant development of the Company, improvement of its key performance indicators and higher quality of work. In the upcoming period the Company plans to preserve the current priorities and continue to show operational excellence on the Russian energy market. General Director of OJSC Enel OGK-5 Enrico Viale Dear shareholders, We are pleased to present to you the OJSC Enel OGK-5 Y 2013 results. Notwithstanding the more challenging environment than in previous years, showcasing, in particular, slowdown of GDP growth and energy demand, the Company has posted good performance results meeting the targets announced in the previous year. Year 2013 was marked by the growth of financial indicators, such as operating revenues and EBITDA (up by 5% and 14% year-over-year respectively, according to the IFRS). It resulted from the Company’s commitment to operate efficiently on the electricity market, ensure reliable operation and fixed cost containment. In 2013, the Company also succeeded in reducing net debt by 23% versus the 2012 year-end. Along with ensuring its production and financial targets, the Company continued to actively improve its performance in the priority areas, such as occupational safety and environmental protection. In 2013 OJSC Enel OGK-5 renewed its health, safety and environmental policy for the purpose of bringing in international experience and integrating the policy of Enel Group. As before, health and safety of our employees and prevention of incidents are our priority tasks. In 2013, the Company performed a supervisory audit that confirmed the compliance of the management system of OJSC Enel OGK-5 with OHSAS 18001 and ISO 14001 standards. Nevertheless, one of the main areas for us is further 8 OJSC ENEL OGK-5 ANNUAL REPORT 2013 9 32,656 million, having increased by 5% as compared with Calendar of events 1HY of 2012. EBITDA reached RUB 8,311 million in 1 HY of 21 2013, which is RUB 907 million higher than 1HY of 2012 May For the first time OJSC Enel OGK-5 held Supplier’s Day, (+12%). Net profit amounted to RUB 2,005 million for the reporting period, -26% compared with the previous year. organized by Procurement Directorate of OJSC Enel OGK-5, attended by the major suppliers of the Company. Main objective of the event was an open dialogue between OJSC Enel OGK-5 and suppliers. 25 OJSC Enel OGK-5 and OJSC September NK Rosneft concluded the gas purchase agreement for 12 years. The concluded contract also provides for delivery of natural 5 gas by OJSC NK Rosneft, which will cover significant part June OJSC Enel OGK-5 signed a Memorandum of Understanding of demand of OJSC Enel OGK-5 up to 2025 inclusive. This deal became one of the largest deals in the history of OJSC for the development of academic and cultural relations Enel OGK-5 and is another confirmation of long-standing with the Russian Academy of Justice. commitment of Enel Group and successful operation of OJSC Enel OGK-5 on the Russian market.