October 31, 2017. Moscow, Russia.
PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces its
non-consolidated financial results under Russian accounting standards
(RAS) for the nine months of 2017[1].
Key highlights:
Introduction of a surcharge (premium) to
capacity prices in I and II price zones to attain base level of
end-user tariffs in the Far East of Russia had a major effect on
PJSC RusHydro indicators in 3Q 2017[2];
3Q 2017 revenue – RUB 45,624 mn (+54%), 9M
2017 revenue – RUB 103,855 mn (+20%);
3Q operating expenses – RUB 28,847 mn
(+113%), 9M 2017– RUB 56,254 mn (+42%);
3Q 2017 EBITDA – RUB 20,944 mn (+6%), 9M
2017 EBITDA – RUB 60,054 mn (+3%);
Reported net profit for 9M 2017 – RUB
33,544 mn (-22%), adjusted net profit for 9M 2017 – RUB 32,193 mn
(-19%).
Key financials for the 9 months of 2017/2016 under
RAS (in RUB mn)
|
9M’17
|
9M’16
|
chg
|
3Q’17
|
3Q’16
|
chg
|
Revenue
|
103,855
|
86,765
|
20%
|
45,624
|
29,554
|
54%
|
Operating expenses
|
(56,254)
|
(39,568)
|
42%
|
(28,847)
|
(13,558)
|
113%
|
Operating profit
|
47,601
|
47,197
|
1%
|
16,777
|
15,996
|
5%
|
EBITDA[3]
|
60,054
|
58,495
|
3%
|
20,945
|
19,784
|
6%
|
Net profit
|
33,544
|
42,806
|
-22%
|
9,773
|
14,380
|
-32%
|
Net profit (adj.)[4]
|
32,193
|
39,710
|
-19%
|
10,011
|
13,266
|
-25%
|
Revenue
In the 9 months of 2017, revenue increased by 20%
to RUB 103,855 mn as compared to RUB 86,765 mn for the same period of
2016. The underlying factors behind the change in revenue were:
introduction of a surcharge (premium) to
capacity prices in I and II price zones to attain base level of
end-user tariffs in the Far East of Russia had a major effect on
PJSC RusHydro indicators in 3Q 2017[2];
increase in revenue from capacity sales under
capacity sales agreements (DPM);
increase in day-ahead prices in the 2nd
price zone;
indexation of regulated electricity and
capacity tariffs.
Revenue breakdown (RUB mn)
|
9M’17
|
9M’16
|
chg
|
3Q’17
|
3Q’16
|
chg
|
Electricity sales
|
59,306
|
59 651
|
-1%
|
21 528
|
20 718
|
4%
|
Capacity sales
|
44,264
|
26 432
|
67%
|
24 010
|
8 649
|
178%
|
Other sales
|
285
|
682
|
-58%
|
86
|
187
|
-54%
|
TOTAL
|
103,855
|
86,765
|
20%
|
45 624
|
29 554
|
54%
|
Operating expenses
Operating expenses in the 9 months of 2017
increased by 42% to RUB 56,254 mn as compared to the same period of
2016.
Operating expenses breakdown (in RUB mn)
|
9M’17
|
9M’16
|
chg
|
3Q’17
|
3Q’16
|
chg
|
Power system services, incl.:
|
16,611
|
2,112
|
687%
|
15,137
|
707
|
2,041%
|
Special purpose contributions to regional budgets
|
14,397
|
-
|
-
|
14,397
|
-
|
-
|
Depreciation
|
12,453
|
11,298
|
10%
|
4,168
|
3,788
|
10%
|
Labor expenses, taxes and contributions
|
5,407
|
5,096
|
6%
|
1,732
|
1,538
|
13%
|
Property tax
|
5,103
|
5,049
|
1%
|
1,687
|
1,688
|
0%
|
Purchased electricity and capacity
|
5,072
|
5,221
|
-3%
|
1,730
|
1,792
|
-3%
|
Other third-party services
|
2,991
|
2,349
|
27%
|
999
|
906
|
10%
|
Repairs & maintenance
|
2,004
|
2,275
|
-12%
|
1,010
|
975
|
4%
|
Security expenses
|
1,287
|
1,307
|
-2%
|
425
|
428
|
-1%
|
Rent
|
1,331
|
1,071
|
24%
|
506
|
357
|
42%
|
Insurance expenses
|
1,143
|
1,200
|
-5%
|
384
|
457
|
-16%
|
Water tax
|
1,102
|
974
|
13%
|
387
|
360
|
8%
|
Leasing expenses
|
58
|
155
|
-63%
|
12
|
51
|
-76%
|
Other
|
1,692
|
1,461
|
16%
|
670
|
509
|
32%
|
TOTAL
|
56,254
|
39,568
|
42%
|
28,847
|
13,558
|
113%
|
Major factors of change in operating expenses were
(among the highest constituent expenses):
obligation to pay special purpose
contributions to budgets of Far Eastern regions in compliance with
federal regulations specifying the use of surcharge (premium) to
capacity prices in I and II price zones to attain base level of
end-user tariffs in the Far East of Russia. The special purpose
contributions in the reporting period amounted to RUB 14,397 mn[2].
increase in depreciation and amortization (by
10%) and property tax (by 1%) as a result of commissioning of new
facilities (including commissioning of Zelenchukskaya HPP-PSHPP) as
well as reconstruction and modernization of operating assets;
increase in labor expenses, taxes and
contributions (by RUB 311 mn or 6%) following indexation of salaries
of operating personnel as of January 1 and July 1 2017, as well as
completion of integration of PJSC RusHydro and PJSC RAO ES East
headquarters.
Profit
Operating profit for the period decreased by 1% to
RUB 47,601 mn.
EBITDA increased by 3% as compared to the same
period of 2016 and amounted to RUB 60,054 mn.
RusHydro's net profit for the reporting period
decreased by 22% to RUB 33,544 mn.
Major factors responsible for decrease of the net
profit were:
RUB 3,728 mn – slight decrease in market
value of PJSC Inter RAO against a significant share price
appreciation in 2016;
RUB 3,243 bn – payments under the
non-deliverable forward contract with VTB Bank.
Adjusted net profit for the period decreased by
19% to RUB 32,193 mn. The difference between the reported and
adjusted net profit is attributed mainly to the following non-cash
effects:
loss on mark-to-market revaluation of
financial investments (RUB 143 mn);
gain on reversal of bad debt reserves in the
amount of RUB 1,329 mn;
gain on reversal of other reserves in the
amount of RUB 165 mn.
RusHydro's financial position as of September 30,
2017
The Company's total assets increased by RUB 85,312
mn as of September 30, 2017, or 9% against the similar figure as of
December 31, 2016, reaching RUB 993,985 mn.
As of September 30, 2017, total liabilities
increased by 23% or 31,591 mn as compared to the similar figure as of
December 31, 2016 and reached RUB 170,865.
The Company's debt portfolio increased by 20% or
RUB 1,624 mn as compared to the beginning of the year from RUB
108,873 mn to RUB 130,363 mn, long-term loans comprise 74% of the
total portfolio. The increase resulted from raising RUB 20 bn from
RUB-denominated Eurobond placement. The proceeds from the placement
were used to refinance outstanding debt, funding of capital
expenditures and operating expenses.
The Company's equity for the 9 months of 2017
increased by 7% to RUB 823,058 mn against RUB 769,336 mn as of the
beginning of the reporting year.
In March 2017, the Company signed agreement with
VTB Bank on purchase of RUB 55 bn shares and a 5-year non-deliverable
forward contract in respect of these shares. In accordance with the
agreement, the Bank purchased 40 bn newly issued shares of the
Company and 15 bn quasi-treasury shares from RusHydro Group at RUB 1
per share for total amount of RUB 55 bn.
The funds received from VTB Bank were fully used
to refinance loans of subsidiaries of PJSC RAO ES East.
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 9 months of
2017 under International financial reporting standards (IFRS) on
November 29, 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] In July 2017, the
Resolution of the Russian Government No. 895 “On reaching basic
rates (tariffs) for electric power (capacity) in the territories of
the Far East Federal region (the “Far East”)” became
effective, under which rates for consumers in the territories of the
Far East should be reduced starting from 1 January 2017 to the basic
level (RUB 4.00 / kWh). According to the Resolution of the Russian
Government No. 1614-r of 28 July 2017, PJSC RusHydro was appointed
as the recipient of a premium to the price for capacity provided by
the Company in the price zones of the wholesale market under CCS
agreements. The premium to the price for capacity is set in order to
achieve the basic level of rates (tariffs) for electricity
(capacity) planned for the next regulation period in the Far East
constituent regions. Within the amounts defined by Resolution No.
1615-r of the Russian Government dated 28 July 2017, the Company
translates the collected amounts of margin in the form of
free-of-charge targeted contributions to the budgets of the
respective regions. The Group companies being guaranteeing suppliers
will receive compensation for the shortage of income related to the
reduction of rates, through subsidies from the Far East constituent
regions.
[3] EBITDA calculated as
gross profit before depreciation.
[4] Net profit adjusted
for the mark-to-market revaluation of listed equity stakes, reserves
for financial investment impairment, assets and potentially
uncollectible accounts receivable, contingencies This indicator is
not reported in the official financial statements under RAS and has
been calculated and put into the press release for reference.
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