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ROSSETI

April 24, 2013

Russian Grids financial results for 2012

24 April 2013. Moscow, Russia– JSC Russian Grids (LSE: MRSK) (the “Company”), the largest electricity distribution grid company in Russia, today announces its audited financial results for the year ended 31 December 2012.
Key financial indicators:

Revenue[1]: RUB 621.6 bn (FY 2011: RUB 634.6 bn) 

EBITDA: RUB 117.2 bn (FY 2011: RUB 116.5 bn)

EBITDA margin: 18.9% (FY 2011: 18.4%)

Net profit: RUB 31.7 bn (FY 2011: RUB 39.0 bn)

Net cash flows generated by operating activities: RUB 88.8bn (FY2011:RUB 89.3bn)

[1] Including government subsidies 

Key corporate highlights:

Transfer of MRSK Holding’s sole executive body powers to Federal Grid Company 

Subsequent presidential decree No. 1567 "On Joint Stock Company Russian Grids" 

Increase of authorized capital by RUB 4.9 bn as a result of additional share issue 

In December 2012 an additional share issue was registered by the Federal Service for Financial Markets. As at 31 December 2012, advances received for the share issue totaled RUB 19.8bn. 

Tariff decisions taken: 44 regions are operating under RAB regulation and 21 regions are operating under the indexation method 

Approval of the adjusted consolidated investment programme for 2012 and 2013–2017

Commenting on the results, Alexei Demidov, First Deputy Executive Director of JSC Russian Grids, said:
"Russian Grids delivered solid performance in 2012, increasing our EBITDA margin to 18.9% despite continued tariff revisions. We generated significant net cash flow from our operations whilst continuing to optimise our operating expenses.
"Our focus in 2012 was on increasing efficiency through continued modernisation of the grid infrastructure and reduction in electricity distribution losses. We continued to focus on delivering our long-term strategy aimed at ensuring reliable electricity supply to customers and leading the development of the power distribution system in Russia through implementation of innovative technologies.
"2012 was an important year for the Company as the electricity distribution industry was undergoing major reforms. Russian Grids will seek to generate further operational efficiencies to continue to maintain a resilient financial position and maximise cash generation."
FINANCIAL SUMMARY 

billions, RUB

FY 2012

FY 2011

Change %

Revenue

621.6

634.6

-2.0

EBITDA

117.2

116.5

0.6

EBITDA margin

18.9%

18,4%

0.5 ppt

Operating profit

49.7

59.3

-16.2

Operating margin

8.0%

9.3%

-1.3 ppt

Net profit

31.7

39.0

-18.7

Net profit margin

5.1%

6.1%

-1 ppt

Earnings per share (RUB)

0.35

0.53

-34.0

Net cash flows generated by operating activities

88.8

89.3

-0.6

Net cash flows used in investing activities

(153.0)

(121.8)

25.6

In 2012, the Company's revenue decreased by 2.0% y-o-y and amounted to RUB 621.6 bn (FY 2011: RUB 634.6 bn. The decline was due to the decrease of the uniform tariff for electricity distribution related to the revision of long-term regulation parameters (including RAB).
Operating expenses totaled RUB 574.2bn, representing a decline by 0.5% y-o-y (FY 2011: RUB 577.2 bn), mainly due to the decrease in expenses for purchasing electricity to compensate for technological losses and the revision of the unregulated price cap.
EBITDA increased by 0.6% y-o-y to RUB 117.2 bn against RUB 166.5 bn in the previous period, while EBITDA margin increased by 0.5 ppt to 18.9%, compared to 18.4% in 2011.
Operating profit decreased by 16.2% y-o-y to RUB 49.7bn against RUB 59.3 bn in 2011 while the operating margin decreased by 1.3 ppt y-o-y to 8.0% (FY 2011:9.3%).
In 2012, the Company's net profit totaled RUB 31.7bn, declining by 18.7% y-o-y (FY 2011: RUB 39.0 bn), with net profit margin slightly shrinking by 1 ppt y-o-y to 5.1%, compared to 6.1% in 2011. The decline in net profit was caused by the decrease in revenue.
Net cash flows generated from operating activities in 2012 totaled RUB 88.8 bn (2011: RUB 89.3bn).
As of 31 December 2012, net cash flows used in investing activities amounted to RUB 153.0 bn, a growth of 25.6% y-o-y (FY 2011: RUB 121.8 bn) as a result of continued investments in the development of the distribution grid network including the increase in acquisition of property, plant and equipment, as well as placement of bank deposits. Capital expenditures increased by 1.6% y-o-y totaling RUB 141.6 bn (FY 2011: RUB 139.4 bn).
As of 31 December 2012, total assets of the Company grew by 10.7% y-o-y to RUB 972.7 bn (FY 2011: RUB 879.1 bn) as a result of the increase in property, plant and equipment related to the execution of the investment programme.
Net cash flows received from financing activities decreased by 9.6% to RUB 51.0bn (2011: RUB 56.4 bn).
In 2012, the Company's total debt was RUB 228.9 bn compared to RUB 197.8 bn in 2011. Net debt totaled RUB 193.2bn compared to RUB148.9bn in 2011, while the net debt / EBITDA ratio amounted to 1,6ő(2011: 1,3ő). The increase in net debt was due to additional loans and borrowings for financing the investment programme.
In 2012, the Company's cash balances stood at RUB 35.7 bn (FY 2011: RUB 48.9 bn). The decline was mainly due to the placement of funds on deposits classified as short-term current assets.
* * *
A conference call for investors and analysts will be held today at 2:00PM London / 5:00PM Moscow / 9:00AM New York.
Participant dial-in:
UK dial-in: +44(0)20 3450 9571
Russia dial-in: +7495 213 0981
USA dial-in: +1646 254 3369
Confirmation Code: 2425063
The call will be recorded and there will be a replay facility available for 14 days until 8 May 2013 as follows:
UK dial-in: +44 (0)20 3427 0598
Russia dial-in: +7 (495) 705 9453
USA dial-in: +1 347 366 9565
National free phone, UK: 0800 358 7735
National free phone, US: 1866 932 5017
Replay passcode: 2425063
The press release and the presentation will be available on the Company's website: www.holding-mrsk.ru.
* * *
For further information:
JSC Russian Grids
Julia Martynova, IR +7(495) 995 5333 (ext. 2070)
FTI Consulting
Larisa Millings +44 20 7831 3113
Oleg Leonov / Maria Shiryaevskaya +7 (495) 795 0623
JSC Russian Grids is the largest electricity distribution grid company in Russia and, the Company believes, one of the largest electricity distribution grid companies in the world by length of distribution lines and installed transformer capacity. JSC Russian Grids holds interests in and manages 11 interregional and five regional distribution grid companies in Russia. As at 31 December 2012, JSC Russian Grids together with its subsidiaries owned and operated approximately 2.1 million kilometres of electricity distribution lines with a total installed transformer capacity of approximately 403,7 GVA. Through its subsidiaries, the Company operates in 69 regions of Russia, covering an area of approximately 7.8 million square kilometres occupied by approximately 85 percent of Russia's total population according to Rosstat. The Company reported revenues of RUB 621.6bn and net profit of RUB 31.7bn for 2012. 

Group of companies "Russian Grids"
Consolidated Statement of Comprehensive Income for the year ended 31 December 2012
(in millions of Russian roubles, unless otherwise stated) 

 

Year ended
31 December 2012

Year ended
31 December 2011

Revenue and government subsidies

621,633

634,608

Operating expenses

(574,197)

(577,214)

Other income, net

2,252

1,860

Results from operating activities

49,688

59,254

Finance income

6,128

3,226

Finance costs

(11,769)

(9,069)

Net finance costs

(5,641)

(5,843)

Share of profit of equity accounted investees (net of income tax)

70

244

Profit before income tax

44,117

53,655

Income tax expense

(12,463)

(14,689)

Profit for the year

31,654

38,966

Other comprehensive income

 

 

Net change in fair value of available-for-sale financial assets

(73)

(264)

Net change in fair value of available-for-sale financial assets transferred to profit or loss

(44)

(232)

Income tax on other comprehensive income

27

105

Other comprehensive income for the year, net of income tax

(90)

(391)

Total comprehensive income for the year

31,564

38,575

Profit attributable to:

 

 

Owners of the Company

17,355

23,438

Non-controlling interest

14,299

15,528

Total comprehensive income attributable to:

 

 

Owners of the Company

17,265

23,047

Non-controlling interest

14,299

15,528

Earnings per share

 

 

Basic and diluted earnings per ordinary share

RUB 0.35

RUB 0.53

Group of companies "Russian Grids"
Consolidated Statement of Financial Position as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

 

31 December 2012

31 December 2011

ASSETS

 

 

Non-current assets

 

 

Property, plant and equipment

760,857

687,489

Intangible assets

4,609

4,368

Investments in equity accounted investees

104

1,280

Non-current accounts receivable

12,424

16,818

Other investments and financial assets

10,144

9,837

Deferred tax assets

3,711

2,599

Total non-current assets

791,849

722,391

 

 

 

Current assets

 

 

Inventories

13,742

12,907

Other investments and financial assets

35,105

8,728

Current tax assets

3,156

4,516

Trade and other receivables

93,193

81,682

Cash and cash equivalents

35,691

48,853

Total current assets

180,887

156,686

Total assets

972,736

879,077

Group of companies "Russian Grids"
Consolidated ‍Statement of Financial Position as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

 

31 December 2012

31 December 2011

EQUITY AND LIABILITIES

 

 

Equity

 

 

Share capital

49,947

45,039

Share premium

16,244

6,036

Treasury shares

(1,786)

(1,786)

Reserve for issue of shares

19,751

9,382

Other reserves

190

280

Retained earnings

225,583

207,790

Total equity attributable to equity holders of the Company

309,929

266,741

Non-controlling  interest

184,757

177,136

Total equity

494,686

443,877

 

 

 

Non-current liabilities

 

 

Loans and borrowings

188,763

168,831

Trade and other payables

18,868

30,081

Employee benefits

9,930

9,660

Deferred tax liabilities

36,653

32,478

Total non-current liabilities

254,214

241,050

 

 

 

Current liabilities

 

 

Loans and borrowings

40,098

28,965

Trade and other payables

168,263

158,689

Provisions

14,106

5,977

Current tax liabilities

1,369

519

Total current liabilities

223,836

194,150

Total liabilities

478,050

435,200

Total equity and liabilities

972,736

879,077

Group of companies "Russian Grids"
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

 

Year ended
31 December 2012

Year ended
31 December 2011

OPERATING ACTIVITIES

 

 

 

Profit for the year

31,654

38,966

Adjustments for:

 

 

Depreciation and amortization

61,499

54,075

Impairment of property, plant and equipment

4,626

-

Finance costs

11,769

9,069

Finance income

(6,128)

(3,226)

Loss on disposal of  property, plant and equipment

253

106

Share of profit of equity accounted investees (net of income tax)

(70)

(244)

Gain from disposal of subsidiaries

(56)

-

Other non-cash transactions

274

545

Income tax expense

12,463

14,689

Operating profit before working capital changes and reserves

116,284

113,980

Change in trade and other receivables

(10,607)

(6,970)

Change in financial assets related to employee benefit fund

(60)

(11)

Change in inventories

(847)

(1,565)

Change in trade and other payables

1,723

6,285

Change in employee benefit liabilities

270

621

Change in provisions

8,129

2,780

Cash flows from operations before income taxes and interest paid

114,892

115,120

Income taxes paid

(7,972)

(12,186)

Interest paid

(18,097)

(13,596)

Net cash flows from operating activities

88,823

89,338

Group of companies "Russian Grids"
Consolidated ‍Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

 

Year ended
31 December 2012

Year ended
31 December 2011

INVESTING ACTIVITIES

 

 

Acquisition of property, plant and equipment and intangible assets

(131,029)

(124,836)

Proceeds from sale of  property, plant and equipment

806

1,087

Acquisition of investments and placement of bank deposits

(35,741)

(9,367)

Proceeds from disposal of investments and withdrawal of bank deposits

8,990

10,076

Disposal of subsidiaries, net of cash disposed of

144

-

Disposal of investment in equity accounted investee

800

-

Dividends received

13

20

Interest received

3,065

1,202

Net cash flows used in investing activities

(152,952)

(121,818)

FINANCING ACTIVITIES

 

 

Proceeds from loans and borrowings

90,296

139,724

Repayment of loans and borrowings

(54,255)

(87,002)

Proceeds from shares issued

25,485

10,687

Purchase of non-controlling interest in subsidiaries

(5,898)

-

Dividends paid

(1,476)

(1,670)

Repayment of finance lease liabilities

(3,185)

(5,296)

Net cash flows from financing activities

50,967

56,443

Net (decrease)/increase in cash and cash equivalents

(13,162)

23,963

Cash and cash equivalents at beginning of year

48,853

24,890

Cash and cash equivalents at end of year(Note 18)

35,691

48,853

Group of companies "Russian Grids"
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

 

Year ended
31 December 2012

Year ended
31 December 2011

OPERATING ACTIVITIES

 

 

 

Profit for the year

31,654

38,966

Adjustments for:

 

 

Depreciation and amortization

61,499

54,075

Impairment of property, plant and equipment

4,626

-

Finance costs

11,769

9,069

Finance income

(6,128)

(3,226)

Loss on disposal of  property, plant and equipment

253

106

Share of profit of equity accounted investees (net of income tax)

(70)

(244)

Gain from disposal of subsidiaries

(56)

-

Other non-cash transactions

274

545

Income tax expense

12,463

14,689

Operating profit before working capital changes and reserves

116,284

113,980

Change in trade and other receivables

(10,607)

(6,970)

Change in financial assets related to employee benefit fund

(60)

(11)

Change in inventories

(847)

(1,565)

Change in trade and other payables

1,723

6,285

Change in employee benefit liabilities

270

621

Change in provisions

8,129

2,780

Cash flows from operations before income taxes and interest paid

114,892

115,120

Income taxes paid

(7,972)

(12,186)

Interest paid

(18,097)

(13,596)

Net cash flows from operating activities

88,823

89,338

Group of companies "Russian Grids"
Consolidated ‍Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

 

Year ended
31 December 2012

Year ended
31 December 2011

INVESTING ACTIVITIES

 

 

Acquisition of property, plant and equipment and intangible assets

(131,029)

(124,836)

Proceeds from sale of  property, plant and equipment

806

1,087

Acquisition of investments and placement of bank deposits

(35,741)

(9,367)

Proceeds from disposal of investments and withdrawal of bank deposits

8,990

10,076

Disposal of subsidiaries, net of cash disposed of

144

-

Disposal of investment in equity accounted investee

800

-

Dividends received

13

20

Interest received

3,065

1,202

Net cash flows used in investing activities

(152,952)

(121,818)

FINANCING ACTIVITIES

 

 

Proceeds from loans and borrowings

90,296

139,724

Repayment of loans and borrowings

(54,255)

(87,002)

Proceeds from shares issued

25,485

10,687

Purchase of non-controlling interest in subsidiaries

(5,898)

-

Dividends paid

(1,476)

(1,670)

Repayment of finance lease liabilities

(3,185)

(5,296)

Net cash flows from financing activities

50,967

56,443

Net (decrease)/increase in cash and cash equivalents

(13,162)

23,963

Cash and cash equivalents at beginning of year

48,853

24,890

Cash and cash equivalents at end of year(Note 18)

35,691

48,853

 

 

 

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