MOEX: LSNG/LSNGP Credit rating:
Moody’s Ba2 (outlook - stable)
Confirmed in January 2013 Press Release
29.08.2013 Lenenergo announces IFRS financial statements for the 6 months ended 30 June 2013 The auditor's report of Ernst & Young states that based on the review nothing has come to its attention that causes to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34. Key indicators of IFRS financial statements of JSC Lenenergo, RUB thousand | Indicator | Unit | 30.06.2012 | 31.12.2012* | 30.06.2013 | Change, % 30.06.2013/ 31.12.2012 | Assets | RUB thousand | 99,013,134 | 99,392,607 | 105,992,136 | 6.6% | Total equity | RUB thousand | 46,531,441 | 43,487,351 | 43,760,410 | 0.6% | Liabilities, including: | RUB thousand | 52,481,693 | 55,905,256 | 62,231,726 | 11.3% | - non-current liabilities | RUB thousand | 31,683,008 | 25,337,885 | 27,026,800 | 6.7% | - current liabilities | RUB thousand | 20,798,685 | 30,567,371 | 35,204,926 | 15.2% | | | | | | Change, % 30.06.2013/ 30.06.2012 | Revenues, including: | RUB thousand | 15,364,169 | 33,134,547 | 13,806,216 | -10.1% | - from electricity transmission ** | RUB thousand | 11,483,440 | 23,520,737 | 11,357,013 | -1.1% | - from grid connections | RUB thousand | 3,083,018 | 7,579,648 | 1,328,275 | -56.9% | - other | RUB thousand | 797,711 | 2,034,162 | 1,120,928 | 40.5% | Operating expenses | RUB thousand | (12,814,214) | (30,659,230) | (12,079.509) | -5.7% | Operating profit | RUB thousand | 2,549,955 | 2,475,317 | 1,726,707 | -32.3% | Net profit | RUB thousand | 1,217,469 | 232,867 | 582,007 | -52.2% | Earnings per ordinary share | RUB | 1.15 | 0.12 | 0.47 | -59.1% | For reference: | | | | | | EBITDA | RUB | 4,753,053 | 6,778,716 | 3,707,475 | -22.0% | NET DEBT | - | 18,477,633 | 24,277,378 | 28,087,074 | 15.7%*** | Profitability indicators | EBITDA margin, % | % | 30.9% | 20.46% | 26.85% | - | Net profit margin, % | % | 7.9% | 0.7% | 4.22% | - | Liquidity indicators | Quick ratio | - | 0.40 | 0.18 | 0.19 | - | Current ratio | - | 0.55 | 0.37 | 0.41 | - |
* Some financial indicators for the year 2012 were re-calculated under new IFRS standards that were put into effect ** Revenue from electricity transmission was calculated excl. normative (expected) losses *** Increase in net debt was calculated at the end of 2012 Total revenues of JSC Lenenergo Group of Companies for the six months ended 30 June 2013 made RUB 13,806 mln that is 10.1 % lower than a similar indicator for 6M 2012. Revenues from electricity transmission for the six months ended 30 June 2013 excluding normative grid losses in the amount of RUB 2,680 mln (for the six months ended 30 June 2012 – RUB 2,550 mln) totalled RUB 11,357 mln which is 1.1 % less as compared with 6M 2012. Revenues from grid connections for the six months ended 30 June 2013 decreased by 56.9% in comparison with the similar period of 2012 and made RUB 1,328 mln that is caused by decrease in the volume (power) of connections and decrease in number of new property contracts (in 1H 2013 grid connections services were paid in the form of transfer of fixed assets objects which totalled RUB 31 mln, in 1H 2012 - RUB 70 mln). Other income in 6M2013 totalled RUB 1,121 mln that is 40.5% above the similar period of 2012 (RUB 798 mln). Other income of the Group is primarily created due to income from non-contractual electricity consumption. Prime Cost Operating expenses of the Group for the reporting period totalled RUB 12,080 mln and decreased by 5.7 %, as compared with the similar period of last year. Items of operating expenses | 1H 2013 | 1H 2012 | Change, % 1H 2013/ 1H 2012 | Transmission fee | 5,339,918 | 6,717,791 | -20.5% | Payroll and payroll taxes | 2,300,046 | 1,960,632 | 17.3% | Depreciation | 1,920,871 | 2,063,221 | -6.9% | Repair and service | 476,191 | 385,274 | 23.6% | Accrued taxes, other than income tax | 296,760 | 99,694 | 197.7% | Rental (Capital lease) | 232,349 | 210,545 | 10.4% | Agent services | 217,908 | 205,172 | 6.2% | Telecommunication and information services | 146,550 | 174,629 | -16.1% | Raw materials and supplies | 140,475 | 131,434 | 6.9% | Provision for impairment and write-off of receivables | 82,856 | 14,747 | 461.8% | Social expenses | 73,657 | 84,058 | -12.4% | Private security expenses | 69,748 | 63,724 | 9.5% | Consulting, legal and audit services | 63,277 | 61,784 | 2.4% | Public utilities expenses | 62,781 | 58,172 | 7.9% | Depreciation of intangible assets | 59,897 | 44,047 | 36.0% | Provision for inventory obsolescence | 17,101 | 41,955 | -59.2% | Impairment of assets under financial lease contracts | – | 61,364 | - | Commercial metering services | – | 50,844 | - | Other operating expenses | 579,124 | 385,127 | 50.4% | Total | 12,079,509 | 12,814,214 | -5.7% |
Comments on dynamics of key operating expenses items: • Decrease in the most significant item of expenditures - cost of electricity transmission by 20.5% compared to the same period of 2012 is caused by a high reduction in transmission costs in grids of LOESK, which has signed a direct contract with a guarantee supplier. • Decrease in expenses of fixed assets depreciation by 6.9 % was due to the write-down of fixed assets recognized in prior periods. • Cost of repair and maintenance services increased by 23.6 % due to implementation of the intensive repair program, designed to maintain equipment and electrical networks in proper condition. • Growth of payroll and payroll taxes by 17.3 % is due to increased number of employees by 2%, indexation of wages, rising costs for pension obligations in connection with application of the new IFRS 19. • Growth of taxes, other than income tax, by 197.7 % is caused by increase in the cost of property tax due to changes in the property tax rate and cancelation of tax break on power grid facilities. Financial results For the first half of 2013 the Group of companies Lenenergo got operational profit of RUB 1,727 mln that is lower than the same indicator of last year by 32.3%, net profit for the reporting period totalled RUB 582 mln. EBITDA in 6M 2013 made RUB 3,707 mln that is by 22.0 % below the similar indicator for 6M 2012. For reference: Structure of the Group of companies Lenenergo 
Dynamics of the key indicators of Lenenergo for the 5 recent years (under IFRS): | 2008 | 2009 | 2010 | 2011 | 2012 | Revenues, including: | 17,914 | 22,800 | 28,574 | 32,257 | 33,135 | from electricity transmission | 11,690 | 15,416 | 17,692 | 22,895 | 23,521 | from grid connections | 5,671 | 6,638 | 10,300 | 8,629 | 7,580 | other | 553 | 746 | 582 | 732 | 2,034 | Operating expenses | 14,608 | 18,489 | 21,441 | 31,503 | 30,659 | Net profit | 1,838 | 2,587 | 4.750 | -943 | 233 | Net profit margin | 10.26% | 11.35% | 16.63% | -2.92% | 0.70% | EBITDA | 3,908 | 8,185 | 11,611 | 5,681 | 6,779 | EBITDA margin | 21.8% | 35.9% | 40.6% | 17.6% | 20.46% | Net debt | 10,884 | 13,736 | 15,038 | 20,469 | 24,277 | Net debt/EBITDA | 2.78 | 1.68 | 1.30 | 3.60 | 3.58 |
Dynamics of key indicators of the consolidated statement of financial position for the 5 recent years: Indicator | 2008 | 2009 | 2010 | 2011 | 2012 | Long-term assets | 73,023 | 78,962 | 87,010 | 84,958 | 88,157 | Cash and cash equivalents | 2,499 | 2,949 | 653 | 7,109 | 3,514 | Short-term assets | 10,331 | 9,363 | 6,372 | 11,993 | 11,236 | Assets | 83,355 | 88,325 | 93,382 | 96,951 | 99,393 | Long-term borrowings | 12,946 | 10,074 | 14,125 | 21,028 | 20,637 | Non-current liabilities | 24,496 | 16,926 | 21,924 | 29,381 | 25,284 | Short-term borrowings | 436 | 6,611 | 1,566 | 6,356 | 7,153 | Current liabilities | 15,618 | 25,565 | 21,497 | 25,035 | 30,567 | Liabilities | 40,114 | 42,492 | 43,421 | 54,416 | 55,851 | Equity | 43,241 | 45,834 | 49,961 | 42,535 | 43,542 |
Dynamics of the key indicators of the consolidated income statement for the 5 recent years: Indicator | 2008 | 2009 | 2010 | 2011 | 2012 | Revenues | 17,914 | 22,800 | 28,574 | 32,257 | 33,135 | Operating expenses | -14,608 | -18,489 | -21,441 | -31,503 | -30,659 | Operating profit | 3,306 | 4,311 | 7,133 | 754 | 2,475 | Finance income | 2 292 | 78 | 774 | 61 | 302 | Finance expenses | -1,372 | -2,084 | -1,580 | -1,660 | -2,175 | Other non-operating income (expenses) | -1 178 | -173 | -70 | - | - | Profit before tax | 3,048 | 2,132 | 6,257 | -845 | 602 | Income tax expense | -1,210 | 455 | -1,507 | -99 | -370 | Net profit / loss | 1,838 | 2,587 | 4,750 | -943 | 233 |
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