For the purpose of financing of the investment program and debt refinancing the Company uses all available instruments of attraction of financial sources – bank credits and bonds (corporate and exchange). Decisions on attraction of additional financial sources are based on the principle of providing a smaller cost of funding at increase in the term of loan.
JSC Lenenergo activities in the field of attraction of credit resources is carried out according to the approved decision of the Board of Directors and the Regulations on credit policy of JSC Lenenergo (Minutes # 8 of 11.10.2013), the limits of cost parameters of loans approved by the Board of Directors and the approved business plan of the Company. The system of limits on the size of credit capital was introduced in the Company to forecast the Company’s solvency. There were established the powers of senior management to approve financial decisions in the field of crediting.
By results of calculation of compliance of JSC Lenenergo debt position defined in the Regulations on credit policy with the limits of debt position a group of solvency (A, B or C) was defined that influences the management powers to approve financial decisions in the field of crediting. The limits of borrowings cost parameters are defined depending on the rate of refinancing, the term of credit and presence of mortgage for the date of attraction of credit resources. Formation of the Company’s credit portfolio is carried out taking into account performance of the indicator Debt/EBITDA not exceeding 3.
In 2011–2013 a steady growth trend both of the Company’s debt (debt on credits and loans), and the sums of net debt was observed. Credits and loans were involved for financing of operating and investment activities of the Company, including for financing of renovation of cable lines in St. Petersburg and construction of a distributive network.
Increase in the credit portfolio in 2013 was due to a growth of the sum of credit resources involved on financing of investment activity, thus the sum of the credit resources involved on operating activities decreased.
The analysis carried out by the rating agency provides rather full complex assessment of the Company’s financial and economic condition.
By results of the reporting year improvement of the indicators of liquidity and solvency of the Company took place, the financial independence remains at a high level, growth of net assets was steady – its essential excess over authorized capital completely meets the requirements of regulations to the size of net assets of the Company and can be regarded as a major factor of stability of financial condition at present time and in the mid-term. The indicator of EBITDA characterizing a cash flow generated by the Company before payment of taxes and interest increased, and EBITDA margin also improved.
JSC Lenenergo on a continuous basis optimizes credit portfolio, the structure of its assets and obligations, including work with receivables and payables: optimization of its size was executed, and active work on arrears minimization that promoted to decrease in the level of delayed accounts payable was carried out in 2013.
High performance following the results of 2013 was provided by rational management of the Company’s liquidity as the result of optimization of the structure of placement of temporarily free cash from the viewpoint of profitability and risks reduction.
By results of refinancing of credits with high borrowing rates, lack of increase in the rates under the concluded credit agreements and conclusions of new contracts under the rates that were lower than the market average, the average borrowing rate on credits attracted by the Company decreased.
The Company managed to successfully proceed with its public credit history, having placed exchange bonds registered in July, 2012 on April 17, 2013 in the volume of RUB 3,000 mln with the interest coupon rate of only 8.25% per annum.
In the future the Company intends to expand public loans by placement of registered exchange bonds of 02–05 reissues that will allow diversifying its funding sources and will have a positive impact on the overall Company’s image in business environment.Top