RusHydro announces half-yearly 2013 IFRS
results
RusHydro Group (Group, ticker symbol:
MICEX-RTS, LSE: HYDR; OTCQX: RSHYY) announces its condensed
consolidated interim unaudited financial information for the first
half of 2013 under International Financial Reporting Standards
(IFRS).
Key highlights for the 1st half of
2013:
-
Strong quarterly and half-yearly results on high
storage levels and affluent water inflows, cost control, favorable
pricing environment (average selling spot power prices in the 1st
price zone ? 1,036 RUB/MWh (+10%), in 2nd price zone ? 731 RUB/MWh
(+15%));
-
Operating costs increased by 1.6%, RusHydro Group
plans to hold the growth of operating costs in FY2013 below
inflation;
-
EBIT ? RUB 27.2 bn (+46.5%), EBITDA ? RUB 38.7 bn
(+22.8%);
-
Net profit ? RUB 10.8 bn compared to net loss of RUB
0.4 bn in the same period of previous year; net profit adjusted for
non-cash items ? RUB 23 bn (+38.0%).
1H 2013/2012 financial highlights (in RUB
mn) [1]
|
1H 2013
|
1H 2012
|
Chg,%
|
2Q13
|
2Q12
|
Chg, %
|
Revenue,
including
|
161,869
|
151,155
|
7.1%
|
73,511
|
65,970
|
11.4%
|
Revenue from
operations
|
156,448
|
145,802
|
7.3%
|
70,866
|
63,193
|
12.1%
|
Government
grants
|
5,421
|
5,353
|
1.3%
|
2,645
|
2,777
|
-4.8%
|
Expenses
|
134,712
|
132,622
|
1.6%
|
64,442
|
61,342
|
5.1%
|
EBIT[2]
|
27,157
|
18,533
|
46.5%
|
9,069
|
4,628
|
96.0%
|
EBITDA[3]
|
38,720
|
31,529
|
22.8%
|
15,598
|
12,213
|
27.7%
|
Net profit
|
10,818
|
(436)
|
-
|
-
|
-
|
-
|
Net profit (adj.) [4]
|
23,001
|
16,663
|
38.0%
|
8,413
|
5,643
|
49.1%
|
Operating
results
In the 2nd quarter of 2013, total
electricity generation by power plants of JSC RusHydro, its
subsidiaries and the Boguchanskaya hydropower plant
(HPP)[5] amounted to 34,630 GWh, a 17% increase as compared to
the 2nd quarter of 2012; total power generation in the
1st half of 2013 amounted to 66,633 GWh (+16%). In the
2nd quarter of 2013, hydropower plants of JSC RusHydro,
its subsidiaries and the Boguchanskaya HPP increased electricity
generation by 23% to 28,005 GWh, generation in the 1st
half of 2013 amounted to 50,303 GWh (+25%).
The underlying factors of the RusHydro Group
production change were:
-
higher than average water resources in reservoirs in
the Far East and Center of Russia;
-
water inflow to reservoirs of the Volga-Kama cascade
higher than long-run average;
-
water inflow to major reservoirs of Siberia slightly
higher or close to long-run average;
Furthermore, in the end of 2012 the first units of
Boguchanskaya hydropower plant were launched into commercial
operation.
In the 1st half of 2013, average
electricity selling price on the ?day-ahead? market, a key segment
of wholesale electricity market, in the 1st price zone
amounted to RUB 1,036/MWh (+10% compared to the same period of
2012), in the 2nd price zone electricity price was RUB
731/MWh (+15% as compared to the same period of 2012). In the
2nd quarter of 2013, the average electricity selling
price on the ?day-ahead? market in the 1st price zone
amounted to RUB 1,026/MWh (+13%), in the 2nd price zone
? RUB 721/MWh (+13%). According to the Market Council, a
significant increase in prices on the ?day-ahead? in 1st
pricing zone in 2013 as compared to 2012 was due to increase in gas
tariffs starting from June 1, 2012, the main fuel for thermal
plants in the European zone of Russia; in the 2nd price
zone ? due to a combination of factors, including price increase in
bids of certain power stations, decrease in volumes of spinning
reserve of thermal plants load as well as decrease in volumes of
price-taking supply in generator?s bids in excess of technological
minimum.
Events in the 1st half of
2013
-
In February 2013, the Group received the following
assets as payment for JSC RusHydro?s shares of additional
issue:
?
9.6% of ordinary shares of JSC RAO Energy System of
East,
?
24.54% of shares of JSC Sakhalin Energy
Company,
?
14.83% of shares of JSC Ust?-Srednekanskaya
HPP,
?
42.53% of shares of JSC Irkutsk electronetwork
company.
As a result of pre-emptive right execution JSC
RusHydro?s ownership of JSC RAO ES of East voting shares increased
to 76.72%; in JSC Sakhalin energy company ? to 44.64%; in JSC
Ust?-Srednekanskaya HPP ? to 100%; in JSC Irkutsk electronetwork
company ? to 42.53%.
During the pre-emptive right period JSC RusHydro
placed 66,995,185,198 additional shares at RUB 1 per share;
66,006,190,950 of shares were placed in favor of the Russian
Federation and the rest in favor of other shareholders exercised
their pre-emptive right.
-
In February 2013, JSC RusHydro successfully placed
10-year non-convertible bonds of series 07 and 08 in total amount
of RUB 20 bn with the coupon rate of 8.5% p.a. The bonds are
subject to put option in 5 years.
-
In April 2013, Standard & Poor's Ratings Services
has revised its outlook on RusHydro Group from ?negative? to
?stable? and affirmed the 'BB+' long-term and 'B' short-term
corporate credit ratings and the 'ruAA+' Russia national scale
rating.
-
In May, the European Investment Bank approved a
12-year loan facility in the amount of RUB 4 bn to JSC RAO ES of
East under a guarantee agreement with JSC RusHydro to finance the
construction of the Vostochnaya combined heat and power plant in
Vladivostok.
-
In June, JSC RusHydro registered four 100%
subsidiaries (SPVs) that will implement the construction of new
fossil-fuel generating facilities in the Far East.
-
In June, the Annual General Meeting of shareholders of
JSC RusHydro approved dividend payment in the amount of RUB
0.00955606 per share, or 25% of net profit under RAS for 2012; the
total dividend payment for 2012 amounted to RUB 3,676 mn, a 47%
increase compared to the previous year.
Revenue
Revenue breakdown for the 1st half of
2013/2012 (in RUB mn)
|
1H13
|
1H12
|
chg
|
2Q13
|
2Q12
|
chg
|
Electricity sales
|
116,231
|
108,908
|
6.7%
|
54,952
|
49,689
|
10.6%
|
Heat and hot water sales
|
19,328
|
18,442
|
4.8%
|
5,812
|
4,817
|
20.7%
|
Capacity sales
|
12,708
|
11,082
|
14.7%
|
5,855
|
5,180
|
13.0%
|
Other sales
|
8,181
|
7,370
|
11.0%
|
4,247
|
3,507
|
21.1%
|
Revenue from operations, total
|
156,448
|
145,802
|
7.3%
|
70,866
|
63,193
|
12.1%
|
Government grants (RAO ES of the East
Group)
|
5,421
|
5,353
|
1.3%
|
2,645
|
2,777
|
-4.8%
|
Total revenue
|
161,869
|
151,155
|
7.1%
|
73,511
|
65,970
|
11.4%
|
In the 1st half of 2013, total revenue of
the Group increased by 7.1% to RUB 161,869 mn. The change is associated with the following
factors:
-
significant increase in electricity generation by
hydropower plants in the 1st half of 2013 as well as
increase in electricity sales volumes and prices on the ?day-ahead?
market;
-
increase in electricity prices on the ?day-ahead?
market in both price zones;
-
increase in capacity prices of the competitive
capacity auctions for the HPP?s of the first pricing zone from
January 2013;
-
increase in heat power and hot water sales in the Far
East due to prolonged heating period in 2013 as a result of low air
temperatures in spring;
-
increase in revenues of general contractor companies
of RAO ES of East Group from construction and repair services to
external companies (SUEK, Alliance Oil Company).
In the 1st half of 2013, the share of
?Generation? segment in total revenue was ca. 30%, ?Retailing? ?
ca. 25%, RAO ES of East Group ? ca. 43%, other segments ? around
2%[6].
Operating expenses
Operating expenses in 1H 2013/2012 (in RUB
mn)
|
1H13
|
1H12
|
chg
|
2Q13
|
2Q12
|
chg
|
Purchased electricity and capacity
|
28,102
|
28,667
|
-2.0%
|
12,704
|
12,705
|
0,0%
|
Employee benefit expenses
|
25,541
|
24,108
|
5.9%
|
13,259
|
11,844
|
11.9%
|
Fuel expenses
|
24,332
|
24,984
|
-2.6%
|
8,813
|
9,415
|
-6.4%
|
Electricity distribution expenses
|
20,236
|
20,467
|
-1.1%
|
8,916
|
8,881
|
0.4%
|
Other third-party services
|
12,300
|
11,033
|
11.5%
|
6,732
|
5,590
|
20.4%
|
Depreciation
|
9,204
|
9,224
|
-0.2%
|
4,609
|
4,257
|
8.3%
|
Taxes other than on income
|
5,322
|
3,587
|
48.4%
|
3,397
|
1,802
|
88.5%
|
Other materials
|
3,872
|
4,089
|
-5.3%
|
2,133
|
2,159
|
-1.2%
|
Water usage expenses
|
1,996
|
3,698
|
-46.0%
|
1,546
|
3,320
|
-53.4%
|
Accrual of impairment of accounts receivable,
net
|
1,406
|
1,299
|
8.2%
|
721
|
669
|
7.8%
|
Social charges
|
836
|
426
|
96.2%
|
694
|
254
|
173.2%
|
(Gain) / loss on disposal of property, plant and
equipment, net
|
363
|
74
|
390.5%
|
374
|
8
|
4575.0%
|
Other expenses
|
1,202
|
966
|
24.4%
|
544
|
438
|
24.2%
|
TOTAL
|
134,712
|
132,622
|
1.6%
|
64,442
|
61,342
|
5.1%
|
Total operating expenses increased by 1.6% from RUB
132,622 mn to RUB 134,712 mn.
Major factors affecting expenses:
-
fuel expenses reduction by 2.6% following the decrease
of heat and power generation by thermal power plants, as well as
decrease in fuel consumption as a result of increase in
cogeneration due to prolonged heating period;
-
reduction in costs for purchased power and capacity,
due to decrease in electricity consumption by pumped storage plant
during repair works, and measures aimed at lowering power purchase
by power plants and optimization of hydropower plants?
load;
-
reduction in costs for electricity distribution by
distribution companies of the Group;
-
growth of labor expenses by 5.9% as a result of
indexation of salaries;
-
increase in costs for third-party services, mainly due to use of
subcontractors by contracting companies of RAO ES of East Group for
construction and repair services to external companies (SUEK,
Alliance Oil Company);
-
growth of tax expenses due to accounting of estimated
property tax liabilities of JSC RusHydro;
-
impairment of accounts receivable, mainly for
households supplied by Kamchatskenergo, a subsidiary of JSC RAO ES
of East, and debts of power retail companies, including those from
now defunct Energostream Group.
Profit
In the reporting period, EBITDA increased by 22.8% to
RUB 38,720 mn compared to RUB
31,529 mn for the same period of
previous year. EBITDA growth is related to increase in electricity
output by hydropower plants, growth in prices on the free market,
decrease in fuel and electricity and capacity purchase
expenses.
In the 1st half of 2013, the Group?s net
profit amounted to RUB 10,818 mn
compared to net loss of RUB 436 mn in the same period last year.
Adjusted net profit in the 1st half of 2013 amounted to
RUB 23,001 mn, a 38.0% increase
as compared to the same period of the previous year. The difference
between the reported and adjusted profit is attributed mainly to
the following non-cash effects (before the income tax):
-
impairment of shares of OJSC Inter RAO UES in the
amount of RUB 6,055 mn due to significant and prolonged decline in
their market value;
-
impairment of core assets of the JSC Boguchanskaya HPP
in the amount of RUB 2,762 mn, as a result of decline in revenue
expectations for 2013-2014;
-
impairment of non-interest-bearing promissory notes of
JSC Boguchansky aluminium plant in the amount of RUB 1,556 mn due
to changes in assessment of their recoverable amount as a result of
prolonged decline in aluminum prices and USD to RUB rate
increase;
-
impairment of accounts receivable in the amount of RUB
1,996 mn resulting from analysis of past due receivables and
estimation of their collectability;
-
curtailment gain in the amount of RUB 1,609 from from
cancellation of pension plan of JSC Far East Generation Company,
part of RAO ES of East Group.
Key indicators of RusHydro Group?s financial
position
As of June
30th, 2012,
the Group's assets increased by RUB 40,390 mn to RUB 894,657 mn
against the comparable figure as at December
31st, 2012.
The increase in assets is primarily attributable to additions to
the Group's fixed assets, investments in associates and joint
ventures after receiving 42.53% of shares of JSC Irkutsk
electronetwork company and shares of JSC Sakhalin energy company as
payment for JSC RusHydro?s shares of additional issue, and other
operating assets due to increase in deposits from funds received
from bonds placement in the amount of RUB 20 bn.
As at the end of the reporting period
the Group's liabilities rose by RUB 43,376 mn from December
31st, 2012, to RUB 357,238 mn. The increase in the liabilities
was mainly a result of funds raised through bonds placement in the
amount of RUB 20 bn and increase in accounts payable for placed
shares of additional issue.
Events after the reporting
date
-
Board of Directors of JSC RusHydro elected Mikhail
Poluboyarinov as Chairman of the Board, Viktor Danilov-Danilyan as
Deputy Chairman of the Board and formed new composition of the
Board?s committees.
-
In July 2013, Moody's Investors Service affirmed the
?Ba1? long-term credit rating assigned to RusHydro Group as well as
the ?Aa1.ru? national scale rating with a ?stable? outlook and also
confirmed the ?Ba1? rating on the Company?s bonds.
-
In July the Board of Directors of JSC RusHydro
approved the disposal of the Company?s 33.54% shareholding in JSC
Trest Gidromontazh in favor of JSC TEK Mosenergo for a total
consideration of RUB 1,663 mn.
-
Since the end of July 2013, the Far East regions where
the Group operates have been hit by the worst flood over the last
years. Some districts declared a state of emergency. Management
continuously performs flood monitoring and takes all measures to
minimise losses and mitigate effects of the natural disaster.
Currently, it is not practicable to assess the ultimate
consequences of this emergency; however, they can have a
significant impact on the Group?s operational results in the
future.
About
RusHydro:
RusHydro Group is one of Russia?s largest generating
companies. RusHydro is the leading producer of renewable energy in
Russia with over 70 generating facilities in Russia and abroad. The
company also manages a number of R&D, engineering and
electricity retail companies. Group?s thermal assets are operated
by subsidiary ? RAO Energy System of East in the Far East of
Russia. Total electricity generation capacity of the Group is 36.5
GW, heat capacity ? 16.2 thousand GCal/h.
Russian Federation owns 67.1% in RusHydro, the rest is
held by other institutional and individual shareholders (over
360,000). The company?s stock is traded on the MICEX and RTS stock
exchanges, and included in MSCI EM ? MSCI Russia indexes. Company?s
GDRs in the IOB section of LSE, ADRs ? in OTCQX.
For more
information:
JSC RusHydro, Investor Relations
Department
Tel. +7 (495) 225-3232 ext. 1319,
1607
ir@rushydro.ru
DISCLAIMER
The information in this press release may contain
projections or other forward-looking statements regarding future
events or the future financial performance of RusHydro. One can
identify forward-looking statements by terms such as "expect,"
"believe," "anticipate," "estimate," "intend," "will," "could,"
"may" or "might," the negative of such terms or other similar
expressions. We wish to caution you that these statements are only
predictions and that actual events or results may differ materially
from these statements.
We do not intend to update these statements to reflect
events and circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events. Many factors could
cause the actual results to differ materially from those contained
in our projections or forward-looking statements, including, among
others, general economic conditions, our competitive environment,
risks associated with operating in Russia and rapid technological
and market changes in our industries, as well as many other risks
specifically related to RusHydro and its
operations.
[2] EBIT is
calculated as total revenue less operating
expenses.
[3]
EBITDA is calculated as EBIT before depreciation and
amortisation and non-cash charges.
[4] Net profit is adjusted for the effects of impairment of the
Group's available-for-sale financial assets, accounts receivable,
promissory notes, property, plant and equipment, investments in
associates, property, plant and equipment of joint ventures, loss
from remeasurement of the net assets of OJSC DRSK, classified as a
discontinued operation to fair value less costs to sell, gain from
cancellation of pension plan of Far East Generation
Company.
[5] The Boguchanskaya hydropower plant is
part of the Boguchanskiy Energy and Metals Complex (BEMA), a 50/50
joint venture (JV) between RusHydro and UC RUSAL, and is not part
of RusHydro Group. According to RusHydro?s shareholding in the JV
(50%), the results of the plant are reported in the official
financial statements in ?Share of results of associates and joint
ventures?.
[6] Revenue
from segments is calculated under RAS excluding revenue from
intersegment transactions.
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