Rusneftegaz hosted our annual general meeting electronically on 29 May, seven weeks later than the original scheduled date of 10 April due to the ongoing coronavirus outbreak that is causing plight around the world. During the video conference, the board discussed the results disclosed in the 2019 financial statements, which were unanimously approved alongside both the director’s report and the pandemic mitigation plan. These accounts were prepared in accordance with International Financial Reporting Standards, otherwise known as IFRS, and have been audited pursuant to all applicable laws. All the other proposed resolutions were passed, including the re-election of the board of directors and a motion to reappoint our independent auditor. Moreover, it has also been resolved that there will not be any alterations to the composition of our audit committee, and in lieu of the current situation, no dividend will be paid for last year. In response to the disclosure of our fiscal data for the past twelve months, our Deputy Chief Executive Officer, Aleksandr Filyurin, issued this statement:
“I would like to once again put on record our thanks to our staff who have worked so hard over the last few months despite everything that is going on at the moment. As I think everyone can appreciate right now, we are in a completely unprecedented situation, and we are doing everything that we possibly can to manage this situation as best we can. That said, we obviously have done really well over the past year, and I am incredibly proud of our achievements. I mean, not only did we manage to open a trading office in New York, but we also managed to complete our first five-year investment plan on time and on budget. To be honest, I don’t know if we are going to manage to complete the next one that we published last week in the same amount of time, but we will try our best. I just hope that everyone who works for us understands that we are in a really strong position right now; we aren’t going to need any government loans to pay wages like a lot of other companies are. I am confident that whatever happens, everything is going to be okay for this company in the end.”
Whilst we are undoubtedly going to face great challenges ahead due to the ongoing health crisis, we can report profoundly successful results for last year, achieving the highest revenues in our corporate history and an excellent pre-tax profit. This is largely as a result of oil sales derived from international sources, with global commodity transactions set to become a key tenet of our future growth strategy. This includes turnover from the newly established office in New York, which began multinational trading in the weeks prior to the publication of these financial statements. Such actions are a major element of a plan to lessen our exposure to the volatility of the Russian ruble, which has fluctuated considerably over the previous decade to the detriment of our enterprise. It has, however, been asserted that the primary objective of the board should be to continue to invest and pool both monetary and intellectual resources into the expansion of our electricity generation division, as it forecasted that this will yield the greatest economic benefits for our organization. Overall, we predict that our currency conversion costs will climb significantly following the collapse in its value during the first months of 2020. Such declines, which happened as a consequence of the coronavirus pandemic, are expected to be replicated throughout our reporting for this present year.
Our management also expects material cost increases arising from the mitigation procedures that were introduced in March 2020, including minimizing the numbers of personnel operating within the vicinity of others, postponing the annual general meeting and enforcing the non-working period for administrative staff as mandated by the government. Rusneftegaz has additionally been greatly afflicted by the worldwide collapse in the value of oil, with our most pessimistic forecasts suggesting that the market for refined products may not rise above $20.00 per barrel for the remainder of the year. Veritably, our board estimates that there shall be sufficient storage for unsold petroleum reserves until at least the fourth quarter of the year and thus may elect to write off the fiscal results for this year entirely rather than sell at below-cost price. Our company is also actively monitoring the geopolitical situation between Russia and Saudi Arabia, who may opt to increase production to further reduce commodity prices to undermine the shale oil industry in the Americas. Internal economists forecast that the impact of the ongoing crisis will be monumental, and while the Russian crude oil sector is more resilient than other global competitors, it is projected that 2020 could yield the largest losses in our history. As a comparatively small supplier, our leadership still does not expect that any authority will demand any cuts in extraction rates, but we may do so voluntarily.
It is commendable that we have adequate technical expertise in order to manage our resources intelligently, and in doing so, we have accrued vast volumes of cash reserves that can be utilized in this time of need. Similarly, our firm has no outstanding loans or borrowings and is therefore able to withdraw lines of credit with ease if necessary. Needless to say, a dividend will not be paid this year in the current market conditions, but neither is it anticipated that any equity investments will be required to continue trading. As such, our organization is currently enacting our international expansion plans and shall pursue this regardless, but more gradually than initially proposed due to circumstances beyond our control. Although the immediate outlook is bleak, our management is optimistic about the likelihood of expanding power generation capacity in the near future. Despite the forthcoming challenges, Rusneftegaz can look forward to more prosperous times ahead. Any queries in relation to our annual general meeting or regarding our business on the whole may be submitted via the conventional channels, albeit a response may be delayed by the present events. We require your cooperation and understanding at this critical time.