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RusHydro

April 28, 2017

RusHydro announces 1Q 2017 RAS results

April 28, 2017. Moscow, Russia. PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces its non-consolidated financial results under Russian accounting standards (RAS) for the 1st quarter of 2017[1].

Key highlights:

  • 1Q 2017 revenue RUB 27,678 mn (+2%);

  • 1Q 2017 operating expenses RUB 13,212 mn (+5%);

  • 1Q 2017 EBITDA RUB 18,609 mn (+2%);

  • EBITDA margin in 1Q 2017 67% (+0p.p.);

  • Reported net profit for 1Q 2017 RUB 13,529 mn (-11%), adjusted net profit RUB 11,189 mn (-22%).

Key financials for 1Q 2016/2017 under RAS (in RUB mn)




1Q17

1Q16

chg

Revenue

27,678

27,093

2%

Operating expenses

(13,212)

(12,609)

5%

Operating profit

14,466

14,484

0%

EBITDA

18,609

18,243

2%

Net profit

13,529

15,249

-11%

Net profit (adj.)[2]

11,189

14,373

-22%

Revenue

In the 1st quarter of 2017, revenue increased by 2% to RUB 27,678 mn as compared to RUB 27,093 mn for the same period of 2016. The underlying factors behind the change in revenue were:

  • increase in capacity sales via capacity auctions (KOM) and increase in hydro capacity price due to redistribution of volumes of capacity supplied between KOM and free bilateral capacity supply agreements, as well as full liberalization of hydro capacity in the second price zone as of May 1, 2016[3];

  • increase in electricity spot prices in the second price zone;

  • indexation of electricity and capacity tariffs;

  • lower electricity production from the company's hydropower plants as compared to 2016.

Revenue breakdown (RUB mn)




1Q17

1Q16

chg

Electricity sales

16,530

17,254

-4%

Capacity sales

11,036

9,619

15%

Other sales

112

220

-49%

TOTAL

27,678

27,093

2%

Operating expenses

Operating expenses in the 1st quarter of 2017 increased by 5% to RUB 13,212 mn as compared to the same period of 2016.

Operating expenses breakdown (in RUB mn)




1Q17

1Q16

chg

Depreciation

4,142

3,759

10%

Purchased electricity and capacity

1,927

1,983

-3%

Labor expenses, taxes and contributions

1,843

1,814

2%

Property tax

1,719

1,678

2%

Services of System Operator, ATS, CFS

732

698

5%

Other third-party services

719

412

75%

Security expenses

410

405

1%

Repairs & maintenance

373

478

-22%

Rent

398

341

17%

Insurance expenses

342

353

-3%

Water tax

309

274

13%

Leasing expenses

26

53

-51%

Other

272

361

-25%

TOTAL

13,212

12,609

5%

Major factors of change in operating expenses were (among the highest constituent expenses):

  • increase in depreciation and property tax as a result of commissioning of new fixed assets as well as reconstruction and modernization of operating assets;

  • decrease in purchased electricity and capacity as a result of: a) decrease in purchased electricity due to absence of free bilateral agreements in the price zone of wholesale market of electricity and capacity and b) lower cost of purchased electricity;

  • increase in expenses for other third-party services, mainly due to more even redistribution of these expenses between quarterly reporting periods in 2017.

  • reduction of other expenses, including corporate and traveling expenses, utilities and other costs, by 25% as a result of implementation of measures aimed at restraining non-operating costs.

Profit

Operating profit for the period totaled RUB 14,466 mn against 14,484 mn for the same period of previous year.

EBITDA increased by 2% as compared to the same period of 2016 and amounted to RUB 18,609 mn.

RusHydro's net profit for the reporting period decreased by 11% to RUB 13,529 mn. Net profit adjusted for non-cash items decreased by 22% to RUB 11,189 mn as compared to RUB 8,363 mn in the same period of the previous year.

The difference between the reported and adjusted net profit is attributed mainly to the following non-cash effects:

  • gain from mark-to-market revaluation of listed equity stakes in the amount of RUB 531 mn;

  • reversal of reserves on accounts receivable in the amount of RUB 1,783 mn;

  • gain from other reserves in the amount of RUB 26 mn.

RusHydro's financial position as of March 31, 2017

The Company's total assets increased by RUB 55,555 mn as of March 31, 2017, or 6% against the similar figure as of December 31, 2016, reaching RUB 964,228 mn. The increase in assets is explained by a conclusion of a transaction between PJSC RusHydro and VTB Bank (PJSC) to purchase 55 bn shares of RusHydro and a non-deliverable forward contract. The deal was aimed at restructuring the debt portfolio of PJSC RAO ES East Subgroup and its subsidiaries.

As of March 31, 2017, total liabilities increased RUB 42,006 mn or 30% against similar figure as of December 31, 2016 and totaled RUB 181,279 mn.

The Company's debt portfolio decreased by 1% as compared to the beginning of the year from RUB 108,873 mn to RUB 107,873 mn; long-term loans make up 87% of total debt portfolio.

The Company's equity for the 1st quarter of 2017 increased by 2% to RUB 782,887 mn against RUB 769,336 mn as of beginning of the year.

The full financial statements are available on the Companys website at: http://www.rushydro.ru/investors/reports
The Company plans to publish its consolidated results for the 1
st quarter of 2017 under International financial reporting standards (IFRS) on June 7, 2017.



[1] PJSC RusHydro, the parent company of RusHydro Group, includes 19 branches registered in the Russian Federation, including: branch Bureyskaya GES, branch Volzhskaya GES, branch Votkinskaya GES, Dagestan branch, branch Zhigulevskaya GES, branch Zagorskaya GAES, branch Zeiskaya GES, Kabardino-Balkarsky branch, branch Kamskaya GES, Karachaevo-Cherkessky branch, branch Cascade of Verkhne-Volzhsky GES, branch Cascade of Kuban GES, branch Corporate Energy University, branch Nizhegorodskaya GES, branch Novosibirskaya GES, branch Saratovskaya GES, branch Sayano-Shushenskaya GES named after P.S. Neporozhny, Severo-Osetinsky branch, branch Cheboksarskaya GES.

[2] Net profit adjusted for the mark-to-market revaluation of listed equity stakes, provisions for financial investments and other assets impairment, provisions for potentially uncollectible accounts receivable and other, estimated liabilities. This indicator is not reported in the official financial statements under RAS and has been calculated and put into the press release for reference.

[3] According to decree of the government of the Russian Federation No. 379 of April 30, 2016, all limitations on sale of hydro capacity located in the 2nd price zone at unregulated prices have been lifted. Thus, all volume of hydro capacity in the 2nd price zones less volumes sold under regulated tariffs will be sold at unregulated prices.




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