RusHydro announces 1Q 2013 IFRS
results
JSC RusHydro (ticker symbol: MICEX-RTS, LSE: HYDR; OTCQX: RSHYY) announces its condensed consolidated interim
unaudited financial statements for January-March of 2013 under
International Financial Reporting Standards (IFRS).
Key
highlights:
-
Strong
quarterly results on high storage levels and affluent water
inflows, cost control, favorable pricing
environment;
-
EBIT ? RUR
18.1 bn (+30% y-o-y), EBITDA ? RUR 23.1 bn (+ 20%
y-o-y);
-
Net profit
? RUR 10.7 bn (+0.4%), adjusted for non-cash items ? RUR 14.6 bn
(+32%);
-
Non-manageable costs decreased 1.8%, manageable costs were
down 0.3% ? on restrained fuel consumption and implementation of
cost control program;
-
Average
spot power prices in European Russia in 1Q ? 1,051 RUR/MWh (+6%),
in Siberia ? 744 RUR/MWh (+18%);
-
RusHydro
plans increase in OPEX in FY2013 below consumer price index (CPI);
-
1H 2013
IFRS results to be announced August 29, 2013.
1Q
2013/2012 financial highlights (in RUR mn)
|
1Q 2013
|
1Q 2012
|
Change,%
|
Revenue, including
|
88,358
|
85,185
|
3.7%
|
Revenue from operations
|
85,582
|
82,609
|
3.6%
|
Government
grants
|
2,776
|
2,576
|
7.8%
|
Expenses
|
70,270
|
71,280
|
-1.4%
|
EBIT[1]
|
18,088
|
13,905
|
30.1%
|
EBITDA[2]
|
23,122
|
19,316
|
19.7%
|
Net profit
|
10,698
|
10,652
|
0.4%
|
Net profit (adjusted)[3]
|
14,588
|
11,020
|
32.4%
|
Operating results
In the 1st quarter of 2013, total
electricity generation by power plants of RusHydro,its subsidiaries
and Boguchanskaya hydropower plant[4] amounted to 31,962 GWh, a 15%
increase as compared to the 1st quarter of 2012. In the
reporting period hydropower plants of RusHydro, including
Boguchanskaya hydropower plant, increased electricity generation by
27% as compared to the same period of 2012. In the 1st
quarter of 2013, generating assets of RAO ES of East Group
generated 9,657 GWh of electricity, a 4.8% decrease as compared to
the 1st quarter of 2012. In the reporting period, heat
output by thermal plants of RAO ES of the East Group decreased by
1% to 14,042 thousand GCal.
The underlying factors of the production change in
1st quarter of 2013 were:
-
higher than average water resources in reservoirs in
the Far East and Center of Russia in the beginning of the year
following the heavy floods in late 2012;
-
water inflow to reservoirs of the Volga-Kama cascade
higher than long-run average;
-
water inflow to major reservoirs of Siberia slightly
higher or close to long-run average;
-
launch of the Boguchanskaya hydropower plant into
commercial operation in the end of 2012.
In January-March 2013, average electricity selling
price on the ?day-ahead? market, a key segment of wholesale
electricity market, in the 1st pricing zone amounted to
RUR 1,051/MWh (a 6% increase as compared to the 1st
quarter of 2012), in the 2nd pricing zone electricity
price was RUR 744/MWh (a 17.7% increase as compared to the
1st quarter of 2012). According to the Market Council, a
significant increase in prices on the ?day-ahead? in Siberia in
2013 as compared to 2012 was due to planned and emergency outages
of major fossil-fuel power stations, decrease in volumes of
price-taking supply in generator?s bids in excess of technological
minimum, price increase in bids of certain power
stations.
Key events in January-March
-
On January 16, 2013, the Group sold a 25% plus 1 share
interest in a general contractor, JSC Bureyagesstroy, for the cash
consideration in the amount of RUR 250 mn.
-
In February 2013, the Group received the following
assets as payment for RusHydro?s shares of additional
issue:
?
9.6% of ordinary shares of JSC RAO Energy System of
East,
?
24.54% of shares of JSC Sakhalin Energy
Company,
?
14.83% of shares of JSC Ust?-Srednekanskaya
HPP,
?
42.53% of shares of JSC Irkutsk electronetwork
company.
-
As a result of pre-emptive right execution RusHydro?s
ownership of RAO ES of East voting shares increased to 76.72%; in
Sakhalin energy company ? to 44.64%; in Ust?-Srednekanskaya HPP ?
to 100%; in Irkutsk electronetwork company ? to 42.53%.
During the pre-emptive right period RusHydro placed
66,995,185,198 additional shares at RUR 1 per share; 66,006,190,951
of shares were placed in favor of the Russian Federation and the
rest in favor of other shareholders exercised their pre-emptive
right.
-
In February 2013, the Company successfully placed
10-year non-convertible bonds of series 07 and 08 in total amount
of RUR 20 bn with the coupon rate of 8.5% p.a. The bonds are
subject to put option in 5 years.
-
In January 2013, the forth 333 MW hydropower unit of
the Boguchanskaya HPP was put into commercial operation; in March
2013, new 640 MW hydropower unit with installed at the
Sayano-Shushenskaya HPP.
Revenue
Revenue breakdown for the 1st quarter of
2013/2012 (in RUR mn)
|
1Q 2013
|
1Q 2012
|
chg
|
Electricity sales
|
61,279
|
59,219
|
3.5%
|
Heat and hot water
sales
|
13,516
|
13,625
|
-0.8%
|
Capacity sales
|
6,853
|
5,902
|
16.1%
|
Other sales
|
3,934
|
3,863
|
1.8%
|
Government grants (RAO ES of the East
Group)
|
2,776
|
2,576
|
7.8%
|
TOTAL
|
88,358
|
85,185
|
3.7%
|
In the 1st quarter of 2013, total revenue
of the Group increased by 3.7% to RUR 88,358 mn.
The change is associated with the following
factors:
-
increase in electricity output and electricity prices
on the ?day-ahead? market;
-
increase in capacity prices of the competitive
capacity auctions in the 1st quarter of 2013 due to
capacity price indexation for consumer price index (CPI) in
2013;
-
decrease in revenue from RAO ES of East Group due to
reduction in electricity output as a result of high generation
volumes by the hydropower plants in the Far East;
-
decrease in total revenue from power retail operations
due to decrease in non-tariff revenues after changes in regulation
of the power retail sector effective starting from the
2nd quarter of 2012.
In the 1st quarter of 2013, the share of
?Generation? segment in total revenue was ca. 26%, ?Retailing? ?
ca. 25%, ?RAO ES of East Group? ? ca. 47%, other segments ? around 2%[5].
Operating expenses
Operating expenses in 1Q 2013/2012 (in RUR
mn)
|
1Q 2013
|
1Q 2012
|
change
|
Fuel expenses
|
15,519
|
15,569
|
-0.3%
|
Purchased electricity and
capacity
|
15,398
|
15,962
|
-3.5%
|
Employee benefit
expenses
|
12,282
|
12,264
|
0,1%
|
Electricity distribution
expenses
|
11,320
|
11,586
|
-2.3%
|
Other third-party
services
|
5,568
|
5,443
|
2.3%
|
Depreciation
|
4,595
|
4,967
|
-7.5%
|
Taxes, excl. income
tax
|
1,925
|
1,785
|
7.8%
|
Other materials
|
1,739
|
1,930
|
-9.9%
|
Water usage expenses
|
685
|
630
|
8.7%
|
Accrual of impairment of accounts
receivable, net
|
450
|
378
|
19%
|
Social charges
|
142
|
172
|
-17.4%
|
(Gain) / loss on disposal of property,
plant and equipment, net
|
-11
|
66
|
n/a
|
Other expenses
|
658
|
528
|
24.6%
|
TOTAL
|
70,270
|
71,280
|
-1.4%
|
Total operating expenses decreased by 1.4% from RUR
71,280 mn to RUR 70,270 mn. Non-manageable costs of the Group
decreased by 1.8%, manageable costs decreased by 0.3%.
Major factors affecting expenses:
-
fuel expenses reduction by 0.3% due to decrease in
electricity production and output by thermal power plants of RAO ES
of East by 5%, as well as restrained fuel prices growth
rate;
-
reduction in costs for purchased power and capacity
and electricity distribution by 3.5% and 2.3% respectively, due to
decrease in electricity output by retail companies of the Group and
measures aimed at lowering power purchase by power plants and
optimization of hydropower plants? load;
-
almost flat growth of labor expenses after
optimization of the Group?s organizational structure and business
processes;
-
decrease in depreciation as a result of impairment of
PP&E booked as of December 31, 2012.
Profit
In the reporting period, EBITDA increased by almost
20% to RUR 23,122 mn compared to RUR 19,316 mn for the same period of previous
year. EBITDA growth is related to increase in electricity output
and growth in electricity prices on the ?day-ahead? market and
capacity prices.
In the 1st quarter of 2013, the Group
received a net profit in the amount of RUR 10,698 mn compared to
RUR 10,652 mn in the same period of previous year. Adjusted net
profit in the 1st quarter of 2013 amounted to RUR 14,588
mn, a 32% increase as compared to the same period of the previous
year. The difference between the reported and adjusted profit is
attributed to:
-
accrual of impairment of shares of OJSC Inter RAO UES
in the amount of RUR 3,541 mn due to significant and prolonged
decline in their market value;
-
accrual of impairment of accounts receivable in the
amount of RUR 360 mn resulting from analysis of past due
receivables and estimation of their collectability;
-
accrual of gain from disposal of fixed assets in the
amount of RUR 11 mn.
Key indicators of RusHydro Group?s financial
position
As of March 31st, 2012, the Group's assets
increased by RUR 37,939 mn to RUR 892,686 mn against the comparable
figure as at December 31st, 2012. The increase in assets
is primarily attributable to additions to the Group's fixed assets,
construction in progress, investments in associates and jointly
controlled entities after receiving a number of assets as payment
for shares of additional issue of RusHydro, as well as increase in
deposits from funds received from bonds placement.
As at the end of the reporting period the Group's
liabilities rose by RUR 36,160 mn
from December 31st, 2012, to RUR 352,512 mn. The
increase in the liabilities was mainly a result of funds raised
through domestic bonds placement and increase in accounts payable
for placed shares of additional issue.
Significant events after the reporting
period
-
In April 2013, Standard & Poor's Ratings Services
has revised its outlook on RusHydro from ?negative? to ?stable? and
affirmed the 'BB+' long-term and 'B' short-term corporate credit
ratings and the 'ruAA+' Russia national scale rating.
-
In April-May, a number of Management Board members
increased their shareholdings in the Company?s share capital
through acquisition of RusHydro?s shares on the open
market.
-
In May, the European Investment Bank approved a
12-year loan facility in the amount of RUR 4 bn to RAO ES of East
under a guarantee agreement with RusHydro to finance the
construction of the Vostochnaya thermal power plants in
Vladivostok.
-
In May, RusHydro provided the guarantee under a $25 million loan signed
by Asian Development Bank (ADB) and International Power
Corporation, subsidiary of RusHydro, for rehabilitation of the
Sevan-Hrazdan cascade of hydropower plants in
Armenia.
-
In May, RusHydro International A.G. received a first
payment under agreement with Mainstream Energy Solutions Ltd for
management services in regards to two hydropower plants in Nigeria
with total installed capacity of 1,338 MW.
-
In June, RusHydro registered four 100% subsidiaries
that will implement the construction of new fossil-fuel generating
facilities in the Far East.
-
In June, the Annual General Meeting of shareholders of
RusHydro approved dividend payment in the amount of RUR
0.00955606 per share, or 25% of net profit under RAS for the
previous year; the total dividend payment for 2012 amounted to RUR
3,676 mn, a 47% increase compared to the previous year.
Evgeny Dod, Chairman of the Management of RusHydro,
commented:
?The Group?s financial results in the 1st
quarter of 2013 reflected favorable weather conditions, high
storage levels and strong water inflows to major hydropower plants
and beneficial pricing environment on the market, as well as
management?s efforts in cost optimization and improvement of
operational efficiency of the Group.
In 2012, we developed and launched a comprehensive
cost control program, which already delivered its first results in
2012, but its effects will be even more visible this year. The cost
optimization measures include: improvement in quality of
maintenance works and enforcing shorter planned outages; decrease
in works implemented by contracting parties in cases when enrolled
personnel is available; lowering power consumption of generating
facilities; rationing/decrease in expenses for transportation,
telecommunications, security, banking, utility, audit, consulting,
legal and information services; sale of inefficient non-core
assets.
I am confident that in 2013 we will not only
substantially increase revenue from our core businesses, but also
will keep low operating costs. I think, we will manage to keep the
growth of our operating expenses below inflation, despite the
inevitable increase in the Company?s needs in the onset of
challenging construction projects in the Far East and launch of new
hydropower facilities?.
The consolidated financial statements of the Group are
available at: http://www.eng.rushydro.ru/investors/reports/
The presentation of the results is available
at: http://www.eng.rushydro.ru/investors/presentations/results_presentations/
The announcement of 2Q 2013 IFRS results is scheduled
on August 29, 2013.
About RusHydro:
RusHydro Group is one of Russia?s
largest generating companies. RusHydro is the leading producer of
renewable energy in Russia with over 70 generating facilities in
Russia and abroad. The company also manages a number of R&D,
engineering and electricity retail companies. Group?s thermal
assets are operated by subsidiary ? RAO Energy System of East in
the Far East of Russia. Total electricity generation capacity of
the Group is 36.5 GW, heat capacity ? 16.2 thousand
GCal/h.
Russian Federation owns 67.1% in
RusHydro, the rest is held by other institutional and individual
shareholders (over 360,000). The company?s stock is traded on the
MICEX and RTS stock exchanges, and included in MSCI EM ? MSCI
Russia indexes. Company?s GDRs in the IOB section of LSE, ADRs ? in
OTCQX.
For more information:
JSC RusHydro, Investor Relations Department
Tel. +7 (495) 225-3232 ext. 1319, 1607
ir@rushydro.ru
DISCLAIMER
The information in this press release may contain
projections or other forward-looking statements regarding future
events or the future financial performance of RusHydro. One can
identify forward-looking statements by terms such as "expect,"
"believe," "anticipate," "estimate," "intend," "will," "could,"
"may" or "might," the negative of such terms or other similar
expressions. We wish to caution you that these statements are only
predictions and that actual events or results may differ materially
from these statements.
We do not intend to update these statements to reflect
events and circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events. Many factors could
cause the actual results to differ materially from those contained
in our projections or forward-looking statements, including, among
others, general economic conditions, our competitive environment,
risks associated with operating in Russia and rapid technological
and market changes in our industries, as well as many other risks
specifically related to RusHydro and its
operation
[1] EBIT is
calculated excluding loss from impairment of available-for-sale
financial assets.
[2] EBITDA is calculated as operating profit before
depreciation of property, plant and equipment and non-cash
impairment charges.
[3] Net profit is adjusted for the effects of impairment
of the Group's available-for-sale financial assets, effects of
accounts receivable impairment.
[4] The Boguchanskaya HPP is part of the Boguchanskiy
Energy and Metals Complex (BEMO), a 50/50 joint venture (JV)
between RusHydro and UC RUSAL, and is not part of RusHydro Group.
According to RusHydro?s shareholding in the JV (50%), the results
of the plant are reported in the official financial statements in
?Share of results of associates and jointly controlled entities?.
Operations of the HPP have been put into the press-release for
general reference.
[5] Revenue from segments is calculated under RAS
excluding revenue from intersegment transactions.
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