DJ PJSC RusHydro: RusHydro announces 9M 2018 IFRS results
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PJSC RusHydro (HYDR)
PJSC RusHydro: RusHydro announces 9M 2018 IFRS results
11-Dec-2018 / 14:32 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer / publisher is solely responsible for the content of this
announcement.
RusHydro announces 9M 2018 IFRS results
December 11, 2018. Moscow, Russia. RusHydro Group (hereinafter referred to
as the "Group", ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces its
condensed consolidated interim unaudited financial information prepared in
accordance with International Financial Reporting Standards (IFRS) for the
3rd quarter and 9 months of 2018.
Key highlights for 3Q and 9M of 2018:
- Financial results for 3Q and 9M of 2018 reflected strong operational
results driven by increased water inflows to major reservoirs of the
Volga-Kama cascade and increase in power demand in the Far Eastern Federal
District;
- Total revenue in 3Q - RUB 87,210 mn (+7.5% y-o-y); in 9M 2018 - RUB
288,087 mn (+7.2% y-o-y);
- EBITDA increased by 5.0% in 3Q to RUB 21,067 mn; in 9M 2018 - RUB 81,016
mn (+13.1% y-o-y);
- Operating expenses increased in 3Q and 9M by 7.6% y-o-y and 5.3% y-o-y,
respectively, mainly as a result of fuel cost increase;
- Net profit - RUB 43,033 mn (+39.7% y-o-y); adjusted net profit - RUB
48,405 mn (+18.5% y-o-y).
3Q and 9M 2018/2017 highlights (in RUB mn)
3Q/18 3Q/17 chg. 9M'18 9M'17 chg.
Revenue 87,210 81,088 7.5% 288,08 268,742 7.2%
7
Operating expenses 73,702 68,482 7.6% 227,77 216,218 5.3%
7
Other operating 444 690 -35.7% 5,340 690 673.9%
profit
Operating profit[1] 13,952 13,296 4.9% 65,650 53,214 23.4%
EBITDA[2] 21,067 20,058 5.0% 81,016 71,605 13.1%
Net profit 6,345 8,501 -25.4% 43,033 30,804 39.7%
Net profit (adj.)[3] 9,973 8,557 16.5% 48,405 40,855 18.5%
Operating results
Total electricity generation by RusHydro Group's power plants reached 32,246
GWh (+3.9%) in the third quarter of 2018, in 9M - 99,618 (+5.3%) vs
electricity consumption increase of only 1.6% in Russia for the same period.
In 3Q of 2018 total electricity generation by RusHydro Group's hydropower
and pumped storage plants increased by 4.3% to 25,961 GWh, by the Group's
thermal power plants - by 2.4% to 6,197 GWh, while electricity generation by
renewables decreased by 8.4% to 87 GWh as compared to the same period of
2017. In nine months of 2018 total electricity generation by RusHydro
Group's hydropower and pumped storage plants increased by 5.1% to 76,582
GWh, by the Group's thermal power plants - by 6.2% to 22,722 GWh, while
electricity generation by renewables decreased by 3.5% to 314 GWh as
compared to the same period of 2017. Total electricity generation by
Boguchanskaya hydropower plant4 in 3Q 2018 amounted to 4,122 GWh (+10.9%),
in 9M - 10,286 (-1.7%).
The underlying factors of the production change in January-September 2018
were:
- total water inflow to reservoirs of the Volga-Kama cascade in the first
quarter of the year was 1.2-2.5x higher than normal, in the second quarter
of 2018 - lower than normal, in the 3rd quarter - at the normal level;
- total water inflow to hydropower plants of Siberia was at the normal
level, to HPPS in the South of Russia - slightly below the normal level;
- growth of electricity generation by thermal power plants in the Far East
by 7.3% (to 24,550 GWh) following increase in consumption in the region by
5.3% as well as increase in electricity sales to China and UES of Siberia by
4.0%.
During the nine months of 2018, heat output by thermal plants and boilers of
RusHydro Group in the Far East increased by 4.6% to 19,574 thousand GCal as
compared to the corresponding period of 2017. The increase came on the back
of lower temperatures in all the regions of the Far East in the first
quarter of the year with an exception of Chukotka Autonomous Okrug. Slight
decrease in heat output in the third quarter is a result of higher air
temperatures.
In the third quarter of 2018, total electricity output by energy retail
companies of ESC RusHydro subgroup - JSC ESC RusHydro, PJSC
Krasnoyarskenergosbyt, JSC Chuvashskaya Electricity Sales Company and PJSC
Ryazanenergosbyt, amounted to 4,191 GWh, a 4.4% decrease as compared to the
same period of 2017, for the nine months of 2018 - 14,706 GWh, a decrease of
1.5% as compared to the corresponding period last year.
Increase in electricity output by PJSC Krasnoyarsenergosbyt and JSC
Chuvashskaya Electricity Sales Company for the nine months of the year is
driven by extension of heating season in the Krasnoyarskiy Krai until May
31, 2018 and climate conditions in Chuvashia. Decrease in output by PJSC
Ryazanenergosbyt came on the back of cancellation of service with glass
production factory in Ryazan. Negative performance of JSC ESC RusHydro was a
result of cancelation of service agreement with OJSC Kaustik (JSC Bashkir
Soda Company Group).
Key events of the first half of 2018
- On February 7, 2018, RusHydro Group's financial debt decreased by RUB 26
bn following exclusion of guarantee obligation between PJSC RusHydro and
State Corporation Vnesheconombank on PJSC Boguchanskaya HPP loan given out
by the bank in 2010. The lending bank supported the termination following
completion of construction and ramp-up of the hydropower plant, and taking
into consideration PJSC Boguchanskaya HPP's stable financial and operational
results and its ability to service the loan independently. As a result, the
Group's total debt load decreased significantly;
- On February 15, 2018, PJSC RusHydro has successfully placed loan
participation notes (LPNs) issued by RusHydro Capital Markets DAC. RusHydro
used the proceeds from the RUB 20 bn Eurobond issue to refinance its current
loan portfolio and for general corporate purposes. The LPNs will mature in
2021 and bear an interest rate of 7.4% per annum. The following ratings have
been assigned to the issue: S&P: "BB+" / Moody's: 'Ba1' / Fitch: 'BB+' /
ACRA 'AAA(RU)';
- On February 27, 2018, Standard & Poor's Global Ratings Services raised
long-term corporate credit ratings on PJSC RusHydro to 'BBB-' with 'Stable'
outlook. Short-term corporate credit was raised to '?-3' respectively;
- On June 27, 2018, AGM of PJSC RusHydro elected new Board of Directors and
approved 2017 dividends of RUB 0.0263335 per share in total amount of RUB
11.2 bn;
- On July 5, 2018, PJSC RusHydro has sold shares held in PJSC Inter RAO in
the total amount of 5,131,669,622.18 representing 4.915% of authorized share
capital of PJSC Inter RAO to JSC Inter RAO Capital;
- On August 1, 2018, Fitch Ratings Ltd. raised PJSC RusHydro's long-term
foreign currency issuer default rating to 'BBB-' from 'BB+' with 'Stable'
outlook. Fitch quoted the Company's solid financial and operational
performance, reduction of debt aided by high level of government support;
- On August 7, 2018, the Board of Directors re-elected Deputy Chairman of
the Government of the Russian Federation - Plenipotentiary Representative of
the President in the Far Eastern Federal District Yury Trutnev as its
Chairman and elected members to the Committees of the Board of Directors;
- On September 10, 2018, RusHydro inaugurated Vostochnaya combined heat and
power plant (CHP) in Vladivostok. The gas-fired power plant with electric
capacity of 139.5 MW and heat output capacity of 432 Gcal/h has annual
output of 791 GWh and 1.38 million Gcal, respectively.
Revenue
Revenue breakdown in 3Q and 9M 2018/2017 (in RUB mn)
3Q'18 3Q'17 chg 9M'18 9M'17 chg
Electricity sales 62,602 58,758 6.5% 199,196 185,466 7.4%
Incl. grants as per 6,598 10,648 -38.0% 19,794 10,648 85.9%
Resolution of the
Russian Gov't No. 895
5
Capacity sales 10,420 9,923 5.0% 31,181 29,763 4.8%
Heat and hot water 2,905 2,786 4.3% 26,998 25,453 6.1%
sales
Other sales 8,290 6,919 19.8% 20,981 18,570 12.5%
Other government 2,993 2,702 10.8% 9,821 9,490 3.5%
grants
Total revenue 87,210 81,088 7.5% 288,087 268,742 7.2%
For the nine months of 2018, total revenue of the Group increased by 7.2% to
RUB 288,087 mn as compared to RUB 268,742 in the corresponding period of
2017. The change is associated with the following key factors:
- increase in revenue from electricity sales (including government grants5)
of RAO ES East subgroup by RUB 11,084 mn on the back of tariff and sales
volume growth;
- increase in revenue from electricity sales of PJSC RusHydro by RUB 4,621
mn as a result of electricity production growth;
- increase in heat and hot water sales revenue by RUB 1,545 mn following
tariff and production volume growth;
- increase in capacity sales revenue by RUB 1,418 mn on the back of sales
volume growth of PJSC "DEK";
- increase in revenue of ESC RusHydro subgroup by RUB 1,411 mn as a result
of production growth and increase in tariffs;
- increase in other sales revenue of RUB 2,321 mn is mainly driven by
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increase in electricity distribution services in RAO ES East subgroup's
companies.
Following adoption of IFRS 15 standard from January 1, 2018, the Group
recognizes revenue from compensation of transmission losses and expenses on
power distribution under contracts with grid companies on a net basis (in 9M
2018 - RUB 5,368 mn including RAO ES East subgroup of RUB 2,036 mn and ESC
RusHydro subgroup of RUB 3,332 mn).
Operating expenses6
Operating expenses in 3Q and 9M 2018/2017 (in RUB mn)
3Q'18 3Q'17 chg 9M'18 9M'17 chg
Employee benefit 18,025 17,040 5.8% 55,183 53,417 3.3%
expenses
Fuel expenses 10,642 9,654 10.2% 44,902 39,623 13.3%
Grid company 9,178 9,630 -4.7% 29,249 30,871 -5.3%
services on
electricity
distribution
Purchased 8,951 9,480 -5.6% 28,553 29,386 -2.8%
electricity and
capacity
Third parties 9,433 8,230 14.6% 25,155 23,453 7.3%
services
Depreciation 6,825 6,967 -2.0% 19,956 18,375 8.6%
Taxes other than on 3,054 2,653 15.1% 9,131 8,062 13.3%
income
Other materials 3,172 2,780 14.1% 7,180 7,090 1.3%
Water usage expenses 1,025 800 28.1% 3,021 2,478 21.9%
Purchase of oil 1,946 483 302.9% 2,306 580 297.6%
products for sale
Other expenses 1,451 765 89.7% 3,141 2,883 8.9%
TOTAL 73,702 68,482 7.6% 227,777 216,218 5.3%
Total operating expenses for the nine months of 2018 compared to the same
period last year increased by 5.3% to RUB 227,777 mn as revenue increased by
7.2%, due to the following factors:
- increase in fuel expenses mostly due to fuel cost increase of JSC DGK as
well as increase in electricity and heat output of JSC DGK (+6.8% and +5.5%,
respectively), increase in price of coal as well as increase in electricity
output of PJSC Kamchatskenergo;
- increase in employee benefit expenses following indexation of salaries in
accordance with existing collective agreements;
- increase in third party services following increase in maintenance costs
in PJSC Yakutskenergo and PJSC Sakhalinenergo as well as increase in coal
production by third-parties;
- increase in depreciation expense due to increase in value of property
plant and equipment after commissioning new facilities (including JSC
Yakutskaya GRES-2 with off-site construction in 2017 - 2018) as well as
planned renovation and modernization of the Company's facilities.
Profit
For the nine months of 2018, EBITDA increased by 13.1% to RUB 81,016 mn
compared to the same period of 2017.
The Group's net profit increased by 39.7% to RUB 43,033 mn. Adjusted net
profit in the reporting period amounted to RUB 48,405 - an increase of 18.5%
as compared to the same period last year.
The difference between the reported and adjusted profit is attributed mainly
to the following non-cash effects (before income tax) and recognition of
change in fair value of the derivative financial instrument:
- gain arising on financial assets at fair value through profit or loss in
the amount of RUB 3,861 mn (mostly PJSC Inter RAO shares);
- financial expense in the amount of RUB 4,161 mn as a result of change in
fair value of non-deliverable forward contract following decrease of market
price of RusHydro's shares in the reporting period;
- impairment of accounts receivable in the amount of RUB 2,782 mn resulting
from analysis of expected losses;
- impairment of property, plant & equipment in the amount of RUB 2,275
million.
Key indicators of financial position
As of September 30, 2018, the Group's assets increased by RUB 35,730 mn or
3.5% to RUB 1,063,981 mn against the comparable figure as at December 31,
2017. Change in assets is primarily attributable to:
- increase in property, plant & equipment (following execution of the
Group's investment program);
- increase in inventory (increase in fuel inventory for autumn-winter
period);
- increase in long-term and short-term accounts receivable.
As at the end of the reporting period, the Group's liabilities increased by
RUB 8,114 mn or 2.4% to RUB 340,801 mn as compared to December 31, 2017. The
structure of liabilities has changed accordingly: long-term liabilities
increased by RUB 64,988 mn following increase of non-current debt and
short-term liabilities decreased by RUB 56,874 mn mainly due to decrease of
current debt and current portion of non-current debt.
Structure of the liabilities of the Group underwent the following changes:
- in February 2018, the Group has placed eurobonds in the amount of RUB
20,000 mn issued by RusHydro Capital Markets DAC with a maturity of 3 years
and a coupon rate of 7.4%. The proceeds of the issue were used to refinance
the Group's current loan portfolio;
- in February 2018, the Group redeemed bonds issued in February 2013 for a
total amount of RUB 20,000 mn;
- in March 2018, the Group has repaid long-term loan from PJSC Sberbank in
the amount of RUB 10,613 mn;
- in July 2018, the Group raised RUB 20,000 in accordance with loan
agreement with VTB Bank for 7 years with an interest rate of 7.5% p.a.;
- in July 2018, the Group redeemed bonds issued in July 2015 for a total
amount of RUB 15,000 mn.
The fair value of the non-deliverable forward contract, recognized under the
terms of transaction with PJSC VTB Bank, increased from RUB 20,716 mn (as of
December 31, 2017) to RUB 22,064 mn (as of September 30, 2018). The main
reason of the change in fair value of the forward contract is the local
dynamics in the change of market price of RusHydro's shares for the nine
months of 2018.
Events after the reporting date
- On October 4, 2018, the Group has adopted the new edition of its
Environmental Policy approved by RusHydro's Board of Directors in August
2018. The policy provides for increase in low-carbon power generation
capacity, reduction of greenhouse gas (GHG) emissions both in absolute terms
and in terms of GHG intensity and protection of biodiversity;
- On November 11, 2018, the Group inaugurated a unique 900 KW wind power
plant in Tiksi village of the Sakha (Yakutia) Republic. Three unique wind
turbines are engineered to operate in extreme weather conditions of the
Polar region;
- On November 21, 2018, PJSC RusHydro has placed loan participation notes
issued by RusHydro Capital Markets DAC in the amount of CNH 1.5 bn. The LPNs
will mature in 2021 and bear an interest of 6.125% p.a. payable twice per
year;
- On November 27, 2018, PJSC RusHydro has placed loan participation notes
issued by RusHydro Capital Markets DAC in the amount of RUB 15 bn. The LPNs
will mature in 2022 and bear an interest of 8.975% p.a. payable twice per
year.
The full financial statements are available on the Company's website at:
http://www.eng.rushydro.ru/investors/reports [1]
About RusHydro
RusHydro Group is one of Russia's largest generating companies. RusHydro is
the leading producer of renewable energy in Russia with over 400 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 39 GW, heat
capacity - 18.5 thousand GCal/h.
Russian Federation owns 60.56% in RusHydro, the rest is held by other
institutional and individual shareholders (over 360,000). The company's
stock is traded on the Moscow stock exchange (MOEX), and included in MSCI EM
- MSCI Russia indexes. Company's GDRs in the IOB section of LSE, ADRs - in
OTCQX.
For more information:
Investor Relations Department
Tel. +7 (495) 225 3232 ext. 1607, 1319, 1304
ir@rushydro.ru
The information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of PJSC "RusHydro" ("RusHydro"). One can identify
forward-looking statements by terms such as "expect", "believe",
"anticipate", "plan", "aim", "target", "forecast", "project", "should",
"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 and political
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.
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[1] Operating profit is calculated as the difference between revenue, other
operating profit and operating expenses.
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