Risk management

The following risks could significantly affect the operating activity, assets, liquidity, investment activity of the Company. They are determined by the specifics of the industry and activities of the Company, political and economic situation in the country and region.

Some of the risks, that are not significant at the moment, can become materially important in future. In order to minimize risks, the Company is constantly working on their identification and assessment.

Regional risks

The main regional risks do not directly influence on the Company’s activity.

Market risks

Among market risks it is necessary to point out the risk of inflation, which may lead to increased expenditures of the Company and result in decreased profits. In this regard, the business-plans of the Company always take into account the expected inflation rate.

Risks of exchange rate changes

Dynamics of the exchange rate of the national currency is a significant factor defining inflationary processes in the Russian economy. The revenues and expenditures of the Company are denominated in rubles, therefore the currency risks of the Company are reduced to the inflationary risks.

Liquidity risk

The liquidity risk of the Company, associated with possible cash gaps, is leveled by the following means:

  • determination, in the supply contract conditions, of basic goods, works and services postponement of payments at the level not below the average debt payment term by the debtors of the Company;
  • planning of daily payment schedule (dates of receipts and payments);
  • making of overdrafts on current accounts of the Company;
  • creation of a reserve fund (minimum balance) on the accounts of the Company.

Risks connected with possible changes in prices for products and/or services of the Company.

Possible decrease in prices for the Company’s products may negatively affect the output volume of the research-engineering production, result in decreased profits.

Credit risks

Probable losses associated with refusal or inability of the other Party completely or partially fulfill its obligations under the Contract. To minimize such risks the contractual procedures are regulated by the International Standard ISO 9001-2000 of the Company, the contractual relationship is based on competitive procedures. At present the credit risk of the Company is minimum, as all the accounts conditions are defined in the conditions of the Contracts concluded by the Company.

Legal risks

Legal risks, in particular connected with ambiguous interpretations of the legislation, may lead to incorrect calculation and payment of taxes. To reduce the taxes in the Company, the Accounting Department is constantly working on the improvements of the methodology for calculating the tax base for various taxes and control of their compliance with the applicable legislation.

In addition, there are risks of losses associated with legislation changes, as well as incorrect legal document preparation and support of the Company’s activity. To minimize such risks, practically all operations of the Company are subject to mandatory legal verification and legal assessment.

Corporate management risks

For the Company (as well as for all joint stock companies, operating on the territory of the Russian Federation) there is a risk of legislation change (Federal laws and subordinate normative acts) regulating the joint stock and corporative relationships.

Risks, related to the relationships with shareholders of the Company, include, in particular, the risks associated with the taking into account the rights on Company’s shares (the risk of license cancellation of a professional participant of securities market, keeping the Company’s shareholders register; risk of unlawful write-off of shares from shareholders due to the fraudulent actions of third parties, risk of shareholder complaints related to the keeping of the Company’s register).

To minimize these risks, keeping the Company’s shareholders register shall be performed by a professional registrar, which has considerable experience on the Russian stock market and traditionally occupies top lines in the registrars rating.

Social risks

The Company assumes that the solution of social problems is a necessary condition of strategic success, growth and long-term competitiveness of the Company.

As a part to decrease social risks, the Company carries out the retirement income security program, constantly improves the system of staff motivation and professional progress, participates in health and sport programs.

Occupational risks

The main activity of the Company is the provision of scientific, research and technical services not connected with the industrial production. The occupational risks are managed in the framework of the quality management system ISO 9001-2000.

Timely provision of scientific and technical services to the existing and under construction hydropower plants plays the decisive role in the ensuring the reliability and safety of a hydropower plant and the possibility of prompt adoption of the engineering solutions. There is provoked the treat of technological failures and rapid wear due to the intensive operation mode of the laboratory, experimental and measurement equipment.

Wear of fixed assets and communications is also the cause of possible operational risks:

  • failure in carrying out of laboratory-experimental researches;
  • possibility of unique information loss, etc.

The management of the Company’s operational risks is at the heart of the adoption of technical-economic solutions in planning the programs of technical impacts on the equipment (within the framework of the perspective programs for technical re-equipment and modernization; repairs and maintenance).

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