Service area
Major factors of risk in the activity |
Key figures and facts |
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The Issuer's risk management policy. The Issuer's risk management policy focuses on timely identification and prevention of possible risks to minimize their negative impact on financial and business activities of the Issuer. The Issuer's risk management process includes the following phases: Risk factors identification includes systematization of data on the amount of risks, their interconnection and manageability as well as on the probability of losses associated with these risk factors and measures that could minimize possible losses or decreased income. Risk assessment is based on a comprehensive research of the Issuer's financial and business activities and external environment, on an analysis of internal and external risk factors, on building and analysis of outcomes for each risk factor as well as on establishing mechanisms and models of relationship of risk indicators and risk factors. Risk assessment is performed after all possible preconditions and sources have been identified and put into one of the following three categories: known risks, predictable risks and unpredictable risks. Assessment method selection depends on the category whereto identified risks belong. Thus, for known risks one uses, for example, educated estimate of expected losses, estimate of maximum decrease of controlled indicators values (at a preset confidential probability level) and other methods provided relevant data are available by way of forecast estimates. When considering predictable risks, one focuses on identifying scenarios implementation whereof may result in target indicators critical decrease. In some cases when the Issuer does not have enough statistical data, expert scenario modeling method is used. - risk aversion methods (avoiding unreliable partners and risky projects, business risks insurance, seeking for warrantors and guarantors; Industry risks The projected development dynamics of the industry depends on the overall dynamics of socioeconomic development of the region and industries of the Russian Federation economy. Consumer demand for the Issuer's industry products is steady and is subject to but minor fluctuations. However, due to crisis trends in global and Russian economy having caused stagnation of real sector, there are risks of considerable decrease in power consumption by, primarily, industrial sector, which can lead to lower revenues from distribution grid services sales and, accordingly, poorer financial performance. The Issuer generates most of its income from provision of consumer power supply services within territory of the following 7 regions: Saratov Region, Samara Region, Ulyanovsk Region, Penza Region, Orenburg Region, Republic of Mordovia and Chuvash Republic. Apart from the Issuer, other large grid organizations operate within these regions, each confined to a certain territorial area. The Issuer does not run risks associated with possible changes in industrial raw material prices because the Issuer does not use raw materials for its business activities. Though it is necessary to note high level of rsk in buying of purchased electric power to compensation losses in distribution grids caused by price liberalization on the whilesale market of electric power. Risks of changes in prices for materials, equipment and services used by the Issuer for its business activities are managed by conducting public tenders in accordance to the Regulation on Procedure for Carrying Out Standardized Procurement of Goods, Works and Services for IDGC of Volga, JSC. According to acting legislation, an organization that provides power transmission services is a holder of a natural monopoly under conditions whereof business competition does not exist. Activities of such an organization are subject to state regulation. Tariffs (prices) for services provided by the Issuer are set by regulating authorities of respective entities of the Russian Federation (Regional Energy Commissions of Saratov Region, Samara Region, Ulyanovsk Region, Penza Region, Orenburg Region, Republic of Mordovia and Chuvash Republic) within the powers provided for in Federal Law No. 41-FZ "On State Regulation of Tariffs for Electric and Thermal Energy in the Russian Federation" dated April 14, 1995 according whereto validity period of tariffs cannot be less than 12 months. Proceeding therefrom, one may conclude that the risk of changes in tariffs during a financial year is the minimum. There are no risks associated with changes in prices in foreign markets since the Issuer does not export its services. Country and regional risks As of the report preparation, the country is in conditions of sufficient certainty as to its economic development: the task of switchover to an innovative model of economic development which has been set by President and the Government is being solved. Besides, energy efficiency improvement and implementation of energy-saving technologies has been defined as one of the priorities of further development. On the other hand, the consequences of the global financial crisis have not been completely eliminated yet which sustains the risk of global economy stagnation, in particular – on account of the USA and the European Union. Further slowdown of global economic growth can't but affect Russian economy and power consumption, but, taking into consideration the policy of comprehensive support of real economy of the Russian Federation pursued by the country's Government, the Company expects minimization of risks of considerable decrease in power consumption in the mid-term. In case of possible military conflicts occurrence, announcement of the state of emergency or a strike, the Issuer runs the risk of suspension of its financial and business activities and non-receipt of a part of income from its core business activities. Thus, the Issuer does not forecast a significant impact of country and regional risks on its ability to discharge its obligations under securities. Financial risks: The risks connected with change of interest rates It is necessary to notice that the Emitter is the subject of natural monopoly and carries out selection financially-credit institutions by means of carrying out opened одноэтапного auction on the right of the conclusion of contracts of rendering of financial services regarding granting of credit resources according to requirements of the Federal law № 135-FZ from 26.07.2006г. «About competition protection» and the Federal law № 94-FZ from 21.07.2005г. «About placing of orders for deliveries of the goods, performance of works, rendering of services for the state and municipal needs». According to a part 4.1. Item 9 of the Federal law № 94-FZ from 21.07.2005г. «About placing of orders for deliveries of the goods, performance of works, rendering of services for the state and municipal needs», the price of the state contract is firm and can't change during its execution. Thus, the risk of change of interest rates under credit contracts decreases. Inflation risk During the last years the state of Russian economy as characterized by high rates of inflation. The table gives data on indexes of inflation for the period from 31.12.1999 till 30.09.2011.
* data of Federal service of state statistics of the Russian Federation (Rosstat). Following the results of 9 months of 2011 inflations is 4,7%. For the 9-month period of 2010 inflation was 6,2%. During 2009-2010 the tendency of stabilization of rates of inflation was outlined. In comparison with the similar period of 2010 the trend of decrease in rates of inflation is observed. As a whole influence of inflationary factors on financial stability of the Emitter in the long term isn't represented considerable. In the specified situation probability of default by the Emitter of obligations under securities in real term of money the low. The risks connected with a course change of an exchange of foreign currencies. At realization of investment activity, the Emitter can buy the equipment from the foreign suppliers which cost directly depends on change of the rate of exchange. However, the Emitter conducts financial and economic activity exclusively in home market and carries out calculations in roubles. In this connection susceptibility of a financial condition of the Emitter, liquidity and results of activity of the Emitter to change of the rate of exchange is minimum. Susceptibility of indicators of the financial reporting of the Emitter prepared under the Russian standards of accounting, to influence of the specified financial risks. Following indicators of the financial reporting are most subject to change in result of influence of the specified financial risks: Obligations under securities. Debt receivable – increase in terms оборачиваемости; • Accounts payable – increase in terms оборачиваемости; • Money resources – reduction of free money resources, • Profit on primary activity – reduction. The given risks can be minimized in the next ways: • working out in the Society of uniform strategy of development of various directions of financial activity; • formation of a competent credit policy of the Society, attraction of credit resources for liquidation of cash ruptures; • formation of a budgetary policy and accurate execution of the plan of incomes and expenses; • optimization of financial streams by strengthening of financial discipline; • the analysis of financial activity for the purpose of development of offers on increase in profitableness and increase of profitability, economy of financial resources, increases of financial stability of the Society; • optimization of management by expenses by reduction of expenses; • management of debts receivable and accounts payable; • pretension-claim work with the delayed debt receivable; • observance of corporate control over financial and economic activity of the Emitter.
Information for quarter 2 of 2011 |
