PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces its
non-consolidated financial results under Russian accounting standards
(RAS) for the 1st quarter of 2016[1].
Key highlights:
Strong financial results of PJSC RusHydro on
the back of recovery of generation volumes in the 1st quarter of
2016 as compared to the 1st quarter of 2015, as a result of close or
higher than long-run average water inflow to major reservoirs;
systemic efforts aimed at lowering operating expenses in terms of
implementation of the investment and operating efficiency
improvement and cost reduction program; liberalization of hydro
capacity market in the second price zone;
1Q 2016 revenue – RUB 27,093 mn (+14%);
1Q 2016 operating expenses – RUB 12,609 mn
(-9%);
1Q 2016 EBITDA – RUB 18,243 mn (+47%);
EBITDA margin in 1Q 2016 – 67% (+11 p.p.);
Reported net profit for 1Q 2016 – RUB
15,249 mn (+74%), adjusted net profit – RUB 14,373 mn (+72%).
Key financials for 1Q 2015/2016 under RAS (in RUB
mn)
|
1Q’16
|
1Q’15
|
chg
|
Revenue
|
27,093
|
23,703
|
14%
|
Operating expenses
|
(12,609)
|
(13,844)
|
-9%
|
Operating profit
|
14,484
|
9,859
|
47%
|
EBITDA[2]
|
18,243
|
13,315
|
37%
|
Net profit
|
15,249
|
8,743
|
74%
|
Net profit (adj.)[3]
|
14,373
|
8,363
|
72%
|
Revenue
In the 1st quarter of 2016, revenue
increased by 14% to RUB 27,093 mn as compared to RUB 23,703 mn for
the same period of 2015. The underlying factors behind the change in
revenue were:
significant increase in production and
electricity output by hydropower plants of PJSC RusHydro as a result
of: a) higher than normal water inflow to reservoirs of the
Volga-Kama cascade in the 1st quarter of 2016; b) increased
electricity generation by hydropower plants of the South of Russia
associated with water level close or slightly higher than long-run
average;
increase in capacity sales following partial
liberalization of hydro capacity market in the second price zone
from May 1, 2014[4];
indexation of electricity and capacity
tariffs;
decrease in purchased electricity costs.
Revenue breakdown (RUB mn)
|
1Q’16
|
1Q’15
|
chg
|
Electricity sales
|
17,254
|
14,848
|
16%
|
Capacity sales
|
9,619
|
8,739
|
10%
|
Other sales
|
220
|
116
|
90%
|
TOTAL
|
27,093
|
23,703
|
14%
|
Operating expenses
Operating expenses in the 1st quarter
of 2016 decreased by 9% to RUB 12,609 mn as compared to the same
period of 2015.
Operating expenses breakdown (in RUB mn)
|
1Q’16
|
1Q’15
|
chg
|
Depreciation
|
3,759
|
3,456
|
9%
|
Purchased electricity and capacity
|
1,983
|
3,118
|
-36%
|
Labor expenses, taxes and contributions
|
1,814
|
1,977
|
-8%
|
Property tax
|
1,678
|
1,640
|
2%
|
Services of System Operator, ATS, CFS
|
698
|
689
|
1%
|
Repairs & maintenance
|
478
|
489
|
-2%
|
Other third-party services
|
412
|
616
|
-33%
|
Security expenses
|
405
|
395
|
3%
|
Insurance expenses
|
353
|
278
|
27%
|
Rent
|
341
|
287
|
19%
|
Water tax
|
274
|
189
|
45%
|
Leasing expenses
|
53
|
82
|
-35%
|
Other
|
361
|
628
|
-43%
|
TOTAL
|
12,609
|
13,844
|
-9%
|
Major factors of change in operating expenses were
(among the highest constituent expenses):
decrease in purchased electricity and
capacity as a result of: a) lower consumption of electricity and
capacity for own needs due to decrease in electricity output; b)
lower consumption of electricity for own needs of PSPPs; c) decrease
in purchased electricity for sale under free bilateral agreements
due to lower sales under these contracts[5];
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 labor expenses after headcount
optimization;
decrease in expenses for other third-party
services, mainly in terms of transportation expenses;
reduction of other expenses, including
corporate and traveling expenses, utilities and other costs, by 43%
as a result of implementation of measures aimed at restraining
non-operating costs.
Profit
Operating profit for the period increased by 47%
to RUB 14,484 mn.
EBITDA increased by 37% as compared to the same
period of 2015 and amounted to RUB 18,243 mn.
RusHydro's net profit for the reporting period
increased by 74% to RUB 15,249 mn. Net profit adjusted for non-cash
items increased by 72% to RUB 14,373 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 1,514 mn;
regained reserves on accounts receivable in
the amount of RUB 151 mn;
expenses (net) on provision for accounts
receivable in the amount of RUB 822 mn;
gain from other reserves in the amount of RUB
33 mn.
RusHydro's financial position as of March 31, 2016
The Company's total assets increased by RUB 14,654
mn as of March 31, 2016, or 2% against the similar figure as of
December 31, 2015, reaching RUB 907,285 mn.
As of March 31, 2016, total liabilities stood
almost flat as compared to the similar figure as of December 31,
2015, decreasing slightly from RUB 150,162 mn to RUB 149,565 mn.
The Company's debt portfolio dropped by 1% as
compared to the beginning of the year from RUB 124,010 mn to RUB
123,354 mn; long-term loans make up 85% of total debt portfolio.
The Company's equity for the 1st
quarter of 2016 increased by 2% to RUB 757,720 mn against RUB 742,469
mn as of the beginning of the reporting year.
The full financial statements are available on the
Company’s website at: https://www.rushydro.ru/investors/reports
The Company plans to publish its consolidated
results for the 1st quarter of 2016 under International
financial reporting standards (IFRS) on June 23, 2016.
[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] EBITDA
calculated as gross profit before depreciation.
[3] 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.
[4] According to the
decree of the government of the Russian Federation No. 374 of April
28, 2014, “On amendments to the Regulations of wholesale
electricity and capacity market in terms of special aspects of
participation of gencos, owners of hydropower plants located in the
2nd pricing zone, in the wholesale market” from May 1, 2014 till
December 31, 2015, 35% of capacity of the hydropower plants in the
2nd pricing zone is sold at the regulated tariffs based on the
results of the competitive capacity auctions (KOM). According to the
capacity sales liberalization schedule, in 2016, the amount of
capacity from hydropower plants in Siberia sold at regulated
tariffs, is decreased to 20% of total sales under KOM.
[5] In accordance with
capacity market regulations, in order to fulfill obligations under
bilateral agreement as well as payment liabilities for load losses
and security constraints according to the contract volumes, a
supplier under bilateral agreement is obliged to buy electricity in
the amount equal to registered amount to be supplied under the
agreement. The supplier should sign an agreement with Trading System
Administrator for electricity purchase, which is called “electricity
purchase agreement signed in order to fulfill obligations under
bilateral agreement”.
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