DJ PJSC RusHydro: RusHydro announces 1Q 2019 IFRS results
PJSC RusHydro (HYDR)
PJSC RusHydro: RusHydro announces 1Q 2019 IFRS results
06-Jun-2019 / 12:19 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 1Q 2019 IFRS results
June 6, 2019. 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
1st quarter of 2019.
Key highlights for the first quarter of 2019:
- Financial results reflected certain decrease of output on the back of
lowerwater inflows to the majority of reservoirs of the HPPs in the first
quarter 2019;
- Total revenue - RUB 109,764 mn (+0.8% y-o-y);
- EBITDA - RUB 29,564 mn (-6.8% y-o-y);
- Operating expenses increased by 4.7% y-o-y mainly as a result of fuel
cost and purchased electricity and capacity increase;
- Net profit - RUB 16,512 mn (-31.0% y-o-y); adjusted net profit - RUB
19,146 mn (- 1.2% y-o-y).
1Q 2019/2018 highlights (in RUB mn)
1Q/19 1Q/18 chg.
(restated)
Revenue 109,764 108,909 0.8%
Operating expenses 86,658 82,733 4.7%
Other operating profit 278 2,626 -89.4%
Operating profit* 23,384 28,802 -18.8%
EBITDA** 29,564 31,737 -6.8%
Net profit 16,512 23,917 -31.0%
Net profit (adj.)*** 19,146 21,563 -11.2%
Operating results
In the first quarter of 2019, electricity generation by RusHydro Group
amounted to 28,952 GWh (-9.1%). Group's total power production including
Boguchanskaya hydropower plant**** was 32,694 GWh (-5.6%). Total electricity
generation by hydropower and pumped storage plants of RusHydro Group in 1Q
2019 decreased by 13.6% to 19,127 GWh, total output by thermal and
geothermal power plants in 1Q 2019 increased by 1.5% to 9,722 GWh .
Main factors affecting operating results in in January-March 2019 were:
? decrease of water inflow to the main reservoirs of HPPs of the
Volga-Kama cascade as compared to the corresponding period last year;
? substitution of production at Bureyskaya HPP with electricity production
by thermal power plants in the Far East during the period of restoration
works of hydraulic connection between isolated parts of the reservoir on
the back of decreased water storage at Zeyskoye reservoir;
? decrease of electricity and heat consumption in the Far East driven by
weather conditions;
? decrease in electricity sales to China by 32.9% (to 370.2 GWh) as
compared to the same period last year.
Heat output by thermal plants of RAO ES East Subgroup in the first quarter
of 2019 decreased by 6.7% to 12,172 GCal as compared to the corresponding
period of 2018 due to higher air temperatures in all the regions of the Far
East with an exception of Kamchatka Krai, Magadan region and Chukotka
Autonomous Okrug.
In the first quarter of 2019, total electricity output by RusHydro Group's
retail companies, operating in Chuvashia, Ryazan and Krasnoyarsk regions,
amounted to 5,588 GWh, a decrease of 6.7% as compared to the same period of
2018.
Key events of the first quarter of 2019
? On January 2, 2019, the Cental and Western districts of Yakutia were
connected to the Unified Energy System of Russia. PJSC Yakutskenergo, a
subsidiary of PJSC RusHydro, transferred the supervision and control of
the territory to the System Operator;
? On February 8, 2019, PJSC RusHydro has divested its 40% share in LLC
VolgaHydro, a hydropower equipment manufacturing joint venture in the
Saratov region, to Voith Group for RUB 450 mn;
? On March 29, 2019, PJSC RusHydro and UC RUSAL commissioned the first
stage of Boguchany aluminium smelter (BoAZ), part of Boguchanskiy Energy
and Metals Complex (BEMO). Total funding of the smelter's first phase with
annual operational capacity is estimated at 298 thousand tons of aluminium
amounts to USD 1.69 bn. It is being financed by UC RUSAL's and PJSC
RusHydro's own funds along with project financing from VEB.RF.
Revenue
Revenue breakdown in 1Q 2019/2018 (in RUB mn)
1Q/19 1Q/18 chg.
Electricity sales 70,780 71,070 -0.4%
Incl. grants as per Resolution of the 6,071 6,596 -8.0%
Russian Gov't No. 895*****
Heat and hot water sales 16,991 16,670 1.9%
Capacity sales 12,063 11,172 8.0%
Other sales 5,778 6,195 -6.7%
Other government grants 4,152 3,802 9.2%
Total revenue 109,764 108,909 0.8%
In the first quarter of 2019, total revenue of the Group increased by 0.8%
to RUB 109,764 mn as compared to RUB 108,909 in the first quarter of 2018.
The change is associated with the following key factors:
? increase in revenue from electricity (including government grants*****)
of RAO ES East subgroup by RUB 863 mn on the back of tariff and sales
volume growth;
? decrease in revenue from electricity sales of PJSC RusHydro by RUB 1,550
mn due to decline in production by hydroelectric plants;
? increase in capacity sales revenue by RUB 804 mn on the back of sales
volume growth of PJSC DEK;
? increase in heat and hot water sales revenue by RUB 321 mn following
tariff and production volume growth;
? decrease in other sales revenue by RUB 417 mn is mainly driven by
decrease in revenue from grid connections and electricity distribution
services in PJSC Yakutskenergo and PJSC Magadanenergo.
Operating expenses******
Operating expenses in 1Q 2019/2018 (in RUB mn)
1Q/19 1Q/18 chg.
(restated)
Fuel expenses 23,684 21,239 11.5%
Employee benefit expenses 19,189 19,006 1.0%
Purchased electricity and capacity 13,860 11,617 19.3%
Grid company services on electricity 10,064 10,889 -7.6%
distribution
Third parties services 7,437 7,593 -2.1%
Depreciation 6,384 5,447 16.6%
Taxes other than on income 2,765 3,046 -9.2%
Other materials 1,557 1,499 3.9%
Water usage expenses 992 903 9.9%
Other expenses 726 1,464 -50.4%
TOTAL 86,658 82,733 4.7%
Total operating expenses in the first quarter of 2019 compared to the same
period last year increased by 4.7% to RUB 86,658 mn due to the following
factors:
? increase in fuel expenses mainly in JSC DGK by 1,374 mn or 9.9% as a
result of fuel purchase price increase following procurement results and
in PJSC Kamchatskenergo by RUB 447 mn or 26.9% as a result of purchase
price increase of heating oil and its increased consumption due to
restrictions in consumption of other types of fuel (gas);
? increase in purchased electricity and capacity mostly at RAO ES East
Subgroup following change in volume and tariff increase (covered by
additional revenue);
? increase in depreciation expense following commissioning of CHP
Vostochnaya in the second half of 2018 and off-site construction of
Sakhalinskaya GRES-2.
Profit
In the first quarter of 2019, EBITDA decreased by 6.8% to RUB 29,564 mn
compared to the same period of 2018.
The Group's net profit decreased by 31.0% to RUB 16,512 mn. Adjusted net
profit in the reporting period amounted to RUB 19,146 - an 11.2% decrease 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:
? financial income in the amount of RUB 686 mn as a result of change in
fair value of non-deliverable forward contract following increase of
market price of PJSC RusHydro's shares in the reporting period;
? impairment of financial assets in the amount of RUB 1,471 mn resulting
from measuring expected credit losses of receivables;
? impairment of property, plant & equipment and unfinished construction in
the amount of RUB 1,474 million.
Key indicators of financial position
As of March 31, 2019, the Group's assets increased by RUB 20,357 mn or 2.2%
to RUB 952,288 mn against the comparable figure as at December 31, 2018.
Change in assets is primarily attributable to:
? increase in property, plant & equipment (following execution of the
Group's investment program);
? increase in accounts receivable.
As at the end of the reporting period, the Group's liabilities increased by
RUB 3,940 mn or 1.1% to RUB 349,652 mn as compared to December 31, 2018. The
structure of liabilities has changed accordingly: long-term liabilities
decreased by RUB 5,540 mn and short-term liabilities increased by RUB 9,480
mn mainly due to increase of accounts receivable, current debt and current
portion of non-current debt.
The fair value of the non-deliverable forward contract, recognized under the
terms of transaction with PJSC VTB Bank, decreased from RUB 31,896 mn (as of
December 31, 2018) to RUB 29,986 mn (as of March 31, 2019). The main reason
of the change in fair value of the forward contract is the local dynamics in
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the change of market price of RusHydro's shares for the first quarter of
2019.
Events after the reporting date
? On April 19, 2019, The Board of Directors approved PJSC RusHydro's
dividend policy. The new provision stipulates for a base scenario of
dividend payout ratio at 50% of the company's IFRS net profit. At the same
time, a minimal payout level is set at the average amount of dividends
paid over the last three years. Such measure guarantees shareholders a
minimal dividend amount and improves the company's investment
attractiveness. The changes to the dividend policy will be in effect for
three years;
? On May 24, 2019, The Board of Directors recommended the AGM to approve
dividend in the amount of RUB 0.0367388 per share (50% of the Group's net
profit for 2018 under IFRS, and an increase of 42%******* over 2017) and
recommended dividend record day - July 9, 2019.
The full financial statements are available on the Company's website at:
http://www.eng.rushydro.ru/investors/reports [1]
* Operating profit is calculated as the difference between revenue, other
operating profit and operating expenses.
** EBITDA is calculated as operating profit/loss excluding depreciation of
property, plant and equipment, amortization of intangible assets, income
arising from the change in fair value of financial assets measured through
profit or loss, impairment of property, plant and equipment, impairment of
financial assets, profit / loss on disposal of property, plant and equipment
and other non-cash items of operating income and expenses.
*** Net profit is adjusted for the effects of recognition of financial
income/expense arising from the change in fair value of non-deliverable
forward contract, impairment of fixed assets, impairment of financial
assets, profit / loss on disposal of property, plant and equipment, as well
as other operating income arising from the change in fair value of financial
assets measured through profit or loss.
**** The Boguchanskaya hydropower plant is part of the Boguchanskiy Energy
and Metals Complex (BEMO), a 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 jointly
controlled entities". Operations of the HPP have been put into the
press-release for general reference.
***** 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 of
RUB 4.00 / kWh, from 1 January 2018 to RUB 4.30 / 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.
****** Here and hereinafter the operating expenses do not include impairment
loss.
******* Calculation based on absolute values.
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 39.4 GW, heat
capacity - 18.9 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) 122 0555 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 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.
ISIN: US7821834048, RU000A0JPKH7
Category Code: QRF
TIDM: HYDR
LEI Code: 2534005TJN9DX4YWVT97
OAM Categories: 2.2. Inside information
Sequence No.: 9294
EQS News ID: 820639
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=d8efd81e8add00cb2f690c1ec7caee3b&application_id=820639&site_id=vwd&application_name=news
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