VEB published its consolidated financial statements for 2018 as prepared in accordance with IFRS.
VEB published its consolidated financial statements for 2018 as prepared in accordance with IFRS.
The VEB Group’s key performance indicators for 2018 are as follows:
- The VEB’s Group assets for 2018 remained largely unchanged and as at 31.12.2018 amounted to RUB 3, 361.9 bn. The decrease against the beginning of the year was 0.4% (RUB-14.1 bn).
- Loans to customers account for 46.5% of the Group’s total assets. As compared to 2017 year end loan portfolio less allowance for impairment declined by 12.5% (RUB -222.4 bn) reaching RUB 1,561.6 bn. Major contributing factors to this decrease were assignment of certain loans to other lenders due to VEB’s fulfilment of its task of a development institution, reclassification of some loans at fair value through profit/ loss and corresponding negative revaluation of such loans.
- The amount of loans granted by VEB in 2018 reached RUB 95.3 bn.
VEB’s key focus in 2018 was project finance tools elaboration. The new mechanism of project financing aims at investment growth in the real sector of the Russian economy as well as investors’ risks minimization. The main concept implies syndicated projects lending through commercial banks and other development institutions involving state subsidized rates and state guaranteed bonds. The model envisages VEB’s non-competition with commercial banks.
Legislative framework was laid in 2018, including Russian Government Resolution dated 15.02.2018 №158 on launch of a specialized project finance programme based on syndicated lending principles. State guarantee was received in accordance with Russian Government Resolution dated 06.06.2018 № 654.
First pilot deals in spheres corresponding to the major areas of VEB’s activity were approved and countersigned. These included a project of sulphuric acid production facility construction at the site of Kuibyshevazot and a project of Phase 3 methanol production facility construction at Shchekinoazot site, in Tula region.
The investment portfolio will address national projects (programmes) implementation, as stipulated by the Russian President Executive Order dated 07.05.2018 № 204 “On National Goals and Strategic Objectives of the Russian Federation Through 2024”.
VEB Supervisory board approved another project in March 2019 – construction of Stage 1 of the mining and metallurgical plant at the Udokan copper deposit. The deal became third and largest to date under this project finance programme.
- In the reporting period net investment in leases went up by 16.6% (RUB +28.7 bn) to reach RUB 201.8 bn.
- Total liabilities of the Group as at 31.12.2018 changed insignificantly reaching RUB 3,077.8 bn, increasing by 3.3% (RUB +97.5 bn). It is largely attributable to the increase in amounts due to the Russian Government and the Bank of Russia by 10.9% (RUB +58.2 bn) and rise in the book value of subordinated deposits by 48.4% (RUB +46.3 bn) due to the conversion of NWF foreign currency-denominated deposits to rubles. Additionally under the requirements of the new IFRS 9 standard, allowance for impairment of financial guarantees, recorded in liabilities, was made.
- Amounts due to banks and debt securities issued account for 52.5% of total liabilities (as at 2017 year end this share was 55.2%). In 2018 the share of amounts due to OECD-banks and Eurobond investors in total amounts due to banks and investors in debt securities declined from 32.9% to 26.7%, the amount of the said liabilities decreased by RUB 110.9 bn, inter alia due to the redemption of Eurobond issue for the nominal value of EUR 1.0 bn in February 2018 and redemption of Eurobond issue for the nominal value of USD 850.0 mn in November 2018.
- The financial result of 2018 was RUB -175.8 bn, with a positive trend of loss decrease by 38.9% against the result of 2017. The major factor contributing to the 2018 result was revaluation of loans to customers at fair value, as well as a recognition of non-interest expense from NWF foreign currency-denominated deposits conversion to rubles.
- In 2018 the Group’s equity went down by RUB 111.6 bn (-28.2%) to reach RUB 284.1 bn as at 31.12.2018.
- Equity decrease was largely driven by the 2018 financial result, transition to IFRS 9 and result on investment financial assets at fair value through other comprehensive income, and foreign currency conversion in the total amount of RUB 71.9 bn.
- This negative impact was partly offset by the state support measures. In 2018 VEB received federal budget subsidies for a total amount of RUB 136,1 bn, RUB 125.5 bn of which as compensation of costs related to servicing foreign capital market borrowings.
- VEB’s capital adequacy ratio as at 01.01.2019 was 11.8% (RAS), (10,8% as at 01.01.2018).
- In 2018 for the first time state support measures were codified in law in order to maintain or amend VEB’s authorized capital structure.
- Federal law dated 28.11.2018 № 452-FZ “On Amendments to the Federal Law On the Bank for Development and Certain Legislative Acts of the Russian Federation” provides for the procedure of callable capital allocation to VEB.RF. Under Russian Government Resolution dated 21.12.2018 № 1611 VEB’s authorized capital is to be built inter alia through further asset contributions from the Russian Federation in the amount of RUB 300 bn.
VEB.RF’s strategic role of a development institution and state support measures are confirmed by the leading international rating agencies that assigned VEB with credit ratings at the level of the Russian Federation sovereign rating, as well as by the national rating agency, ACRA, that assigned highest credit rating of AAA to VEB.
During an official visit of Russian President Vladimir Putin to Kyrgyzstan, VEB.RF, Russia’s solar giant Hevel Group and Kyrgyzstan’s largest solar manufacturer Astra LLC signed a memorandum of intent. The signing ceremony took place during the 8th Russian-Kyrgyz Interregional Conference in the presence of the Russian and Kyrgyz heads of state.
The document was signed on behalf of VEB.RF by its First Deputy Chairman – Member of the Management Board Nikolay Tsekhomskiy, on behalf of Hevel Group by its CEO Igor Shakhray and on behalf of Astra LLC by its Chairman of the Board of Directors Yaroslav Kuznetsov.
The parties agreed to expand industrial and financial cooperation in the common economic space of the Eurasian Economic Union, encourage global industrial and financial cooperation with a view to stimulating industrial growth and the manufacture of competitive products both for the Russian and Kyrgyz markets and for export to other countries, and promote the most modern technologies for renewable energy and energy efficiency.
Such cooperation may include creating a new industry cluster to make components for highly efficient solar modules that can be used for the construction of generating facilities in Russia and Kyrgyzstan and exported to foreign markets.
“Astra can carry out its scaling-up projects using VEB.RF’s financial instruments and funds raised from other financial institutions,” Nikolay Tsekhomskiy said.
“With the rapid growth of the solar power industry, high-technology production chains in the neighbouring states enhance product competitiveness in foreign markets and enable our countries to fulfil their great industrial potential,” Hevel Group’s CEO Igor Shakhray said.
Founded in 2009, Hevel Group is now Russia’s largest integrated solar power company. The company’s core activities include the high-technology production of solar modules, the construction and operation of solar power stations and solar power research.
Astra LLC was founded in 2016 as a spin-off from OJSC Kyrgyz Chemical and Metallurgical Plant and has developed into Kyrgyzstan’s and the EAEU’s sole producer of single-crystal rods and N-type wafers for the solar market.
Supervisory Board Considers VEB.RF’s Involvement in Large-scale Projects to Strengthen Russia’s Export Potential
On the agenda: projects for the construction of a mining and smelting facility in the Trans-Baikal Territory and a gas-processing plant in the Amur Region; corporate governance issues.
Opening remarks by Dmitry Medvedev:
At today’s meeting of the Supervisory Board, we will discuss several large-scale projects aimed at developing the Far East, which are strategically significant for the Russian economy and for strengthening Russia’s export potential.
I would like to mention several projects that require substantial investment and are of considerable importance.
The first one is the construction of a mining and smelting facility to develop the Udokan copper deposit in the north of the Trans-Baikal Territory. The Udokan deposit is the largest in Russia. The comprehensive development of the deposit involves building an infrastructure to mine the ore, extract the concentrate and create a high-technology cathode copper production facility. Upon completion of the first project phase, the production capacity is expected to reach 12 million tonnes of ore per year.
The project will be carried out under the Project Financing Factory programme. This is just one of the projects selected for this financing mechanism. A total of about 3 billion US dollars will be invested in the project. Approximately one third of the funds were committed by the project initiator. The rest will come from a syndicate of banks, including VEB.RF.
The project is extremely important for the Trans-Baikal Territory. It will create about 2,000 new jobs. The region is in a very difficult situation, and such ambitious projects are definitely needed to bring in modern job opportunities, change the employment pattern and develop the local economy. It is intended that both infrastructure and service facilities will be constructed. There are plans to use public budget funds to renovate the local airport in addition to the construction of power lines and the implementation of other appropriate measures required for the project’s success.
The second project is the construction of the Amur gas-processing plant in the Svobodny advanced development zone, Amur Region. The new plant is expected to become the world’s largest helium refinery and the world’s second largest gas-processing facility. Its feedstock will be high-quality methane to be supplied from natural gas fields in Eastern Siberia via the Power of Siberia pipeline and converted into added-value gas products. The project will create up to 3,000 new jobs.
The project budget is large, about 19 billion euro. Gazprom’s commitment is one third of the required funds, the rest will be provided by a pool of Russian, Chinese and European lenders. VEB.RF’s commitment is expected to be 1.5 billion euro. Its contribution will help to complete this large-scale project, which is strategically important for the country’s development.
We will also discuss a whole range of corporate issues and several transactions, including a compensation-free transfer by VEB of Sviaz-Bank’s shares to the ownership of the Russian Federation, to the treasury of the Russian Federation.
Established with financial support from VEB, Xelent Data Center has become the first among Saint Petersburg’s commercial data centres to be officially Tier III certified.
The Uptime Institute Tier Standard: Topology is acknowledged worldwide as a benchmark of reliability for data centres and their users. Tier III is an extremely high reliability standard for equipment and infrastructure. Tier III-certified data centres are notable for their concurrently maintainable infrastructure (including the replacement of system components and faulty hardware).
Counting Xelent, only 28 data centres in Russia have Uptime Institute certification. Less than a dozen of them provide services on a commercial basis. Tier III or higher certification is the first thing needed by potential data centre users seeking reliable and uninterrupted operation.
“Developing the digital economy’s nationwide infrastructure is a business priority for us. With a more than 25 per cent market share, Xelent is now the leader in the Saint Petersburg data centre market. This project will help to increase traffic and resource concentration across the country,” VEB.RF’s First Deputy Chairman Nikolay Tsekhomskiy said.
Designed to accommodate more than 70,000 IT equipment units, the data centre ensures smooth IT infrastructure operation for hundreds of Russian companies in such industries as transport, logistics, finance, retail and wholesale, and public institutions. The data centre also houses the equipment of Europe’s largest social media platform. Every day, over 90 million active users send client requests to the company’s servers located at Xelent Data Center.
The project has won numerous awards from reputable expert communities for unique technological solutions, which is indicative of the creation of unique competencies in the country.
Uptime Institute is a world-renowned unbiased certification authority that develops its own reliability standards for data centres. The standards are built on international best practices in the creation and operation of data centres. Unlike other globally recognised certifications, Uptime Institute standards are primarily designed to serve enterprise organisations and protect investment in data centres. This approach makes it possible to set all reliability and security requirements for a future data centre at the design stage and create the optimum operation conditions, thus improving project economics.
VEB.RF issued short-term bonds in additional placements to companies and corporations on 20 and 21 March 2019.
The Bank raised 13.84 billion roubles, including 13.5 billion roubles from bonds with a maturity of 14 days and a coupon of 7.61% p.a. and 0.34 billion roubles from bonds with a maturity of 21 days and a coupon of 7.61% p.a.
The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.
The arrangers of the bond issue are Gazprombank and Svyaz-Bank.
The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.