DJ RusHydro announces 9M 2019 IFRS results
PJSC RusHydro (HYDR)
RusHydro announces 9M 2019 IFRS results
12-Dec-2019 / 11:13 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 2019 IFRS results
December 12, 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
3rd quarter and 9 months of 2019.
Key highlights for the 3Q and 9M of 2019:
- Total revenue in 9M'19 was flat to 9M'18 and came in at RUB 287,620 mn
(-0.4%), in 3Q'19 - RUB 87,486 (+0.1%);
- EBITDA in 9M'19 - RUB 70,429 mn (-13.1% y-o-y); in 3Q'19 - RUB 19,659 mn
(-6.7% y-o-y);
- Operating expenses increased in 9M and 3Q by 5.2% y-o-y and 1.9% y-o-y,
respectively, mostly as a result of fuel cost increase and growth of
purchased electricity and capacity costs;
- Adjusted net profit in 9M'19 - RUB 39,842 mn (-22.1% y-o-y); net profit
in 9M'19 - RUB 35,157 mn (-23.5 % y-o-y).
- Financial results reflected decrease of electricity production in 9M'19
on the back of reduced water inflows to the majority of reservoirs of the
HPPs in the first half of the year. In 3Q 2019 production increased on the
back of rainfall flooding and increased water inflow to the following
reservoirs.
3Q and 9M 2019/2018 highlights (in RUB mn)
3Q/19 3Q/18* chg. 9M'19 9M'18* chg.
Revenue 87,486 87,385 0.1% 287,620 288,670 -0.4%
Operating expenses 74,218 72,807 1.9% 236,621 225,005 5.2%
Other operating 144 444 -67.6% 614 5,340 -88.5%
profit
Operating profit** 13,412 15,022 -10.7% 51,613 69,005 -25.2%
EBITDA*** 19,659 21,067 -6.7% 70,429 81,016 -13.1%
Net profit 5,772 7,405 -22.1% 35,157 45,985 -23.5%
Net profit 8,733 10,937 -20.2% 39,842 51,151 -22.1%
(adj.)****
Operating results
Total electricity generation by RusHydro Group's power plants amounted to
33,295 GWh in 3Q'19, an increase of 3.3% as compared to the corresponding
period last year, in 9M'19 - 91,888 (-7.7%). In 3Q'19 total electricity
generation by RusHydro Group's hydropower and pumped storage plants
increased by 4.6% to 27,168 GWh, electricity generation by the Group's
thermal power plants decreased by 2.6% to 6,036 GWh, and electricity
generation by renewables increased by 4.5% to 91 GWh as compared to the
corresponding period of 2018. Consequently, in 9M'19 of the year total
electricity generation by RusHydro Group's hydropower and pumped storage
plants decreased by 10.1% to 68,824 GWh, by renewables - by 2.0% to 308 GWh,
while electricity generation by the Group's thermal power plants increased
by 0.1% to 22,755 GWh as compared to the same period of 2018. Total
electricity generation by Boguchanskaya hydropower plant***** in 3Q'19
amounted to 4,426 GWh, an increase of 7.4% as compared to 3Q 2018, in 9M -
11,785 (+14.6%).
Heat output by RusHydro Group's thermal plants in the Far Eastern Federal
Districtin 3Q'19 increased by 13.2% to 2,168 GCal as compared to the
corresponding period last year. In 9M'19, heat output decreased by 3.1%
against 9M'18 to 18,967 GCal.
Total electricity output by RusHydro's retail companies, operating in
Chuvashia, Ryazan and Krasnoyarsk regions in the 3Q'19 decreased by 1.6% to
4,127 GWh as compared to 3Q'18. In 9M'19, total output decreased by 4.5% as
compared to the corresponding period last year and amounted to 14,051 GWh.
Key events in January - September 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 own funds of partners in
BEMO project along with project financing from VEB.RF (formerly -
Vnesheconombank);
? On April 19, 2019, The Board of Directors approved PJSC RusHydro's
dividend policy, which 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 April 29, 2019, the first phase of placement of RusHydro's additional
share issue for the construction of Pevek-Bilibino 110 kV high-voltage
overhead lines in light of upcoming reconstruction of the Chaun-Bilibino
power system following decommissioning of the Bilibinskaya nuclear power
plant took place. PJSC RusHydro has placed 7,000,092,298 shares including
7,000,000,000 shares in favor of the Russian Federation represented by the
Federal Agency for State Property Management (Rosimushchestvo) at one
ruble per share;
? On June 28, 2019, AGM of PJSC RusHydro elected new Board of Directors
and approved 2018 dividends of RUB 0.0367388 per share in total amount of
RUB 15.9 bn (50% of the Group's net profit for 2018 under IFRS, and an
increase of 42% over the amount distributed in dividends for 2017);
? On July 17, 2019, the government of the Russian Federation approved all
projects submitted by RusHydro for construction and modernization of
thermal power plants in the Far East: construction of Artyomovskaya CHP-2,
Khabarovskaya CHP-4, second phase of Yakutskaya GRES-2 and modernization
of Vladivostokskaya CHP-2. Return on the projects will be guaranteed by
the mechanism stipulated in the government's program on thermal power
modernization;
? On September 7, 2019, RusHydro put into commission Nizhe-Bureyskaya HPP
in the Amur region. The facility's installed capacity and average annual
electricity output stands at 320 MW and 1.67 TWh, respectively. It will
supply power to customers in unified energy system of the East.
Revenue
Revenue breakdown in 3Q and 9M 2019/2018 (in RUB mn)
3Q'19 3Q'18 chg 9M'19 9M'18 chg
Electricity sales 60,260 62,526 -3.6% 194,309 198,869 -2.3%
Incl. grants as per 6,087 6,598 -7.7% 18,263 19,794 -7.7%
Resolution of the
Russian Gov't No. 895
(premium to the price
translated to the
budgets of the regions
of Russian Federation)
******
Capacity sales 11,556 10,670 8.3% 34,997 32,090 9.1%
Heat and hot water 3,082 2,905 6.1% 27,113 26,998 0.4%
sales
Other sales 8,583 8,291 3.5% 20,128 20,892 -3.7%
Other government 4,005 2,993 33.8% 11,073 9,821 12.7%
grants
Total revenue 87,486 87,385 0.1% 287,620 288,670 -0.4%
In 9M'19, total revenue of the Group amounted to RUB 287,620 mn as compared
to RUB 288,670 in the 9M'18. The change is associated with the following key
factors:
? decrease in revenue from electricity sales of PJSC RusHydro by RUB 7,652
mn due to decline in production of hydropower plants by 11%;
? increase in revenue from electricity of RAO ES East subgroup (incl.
government subsidies) by RUB 2,014 mn on the back of tariff and sales
volume growth;
? increase in revenue from electricity sales in ESC Rushydro subgroup by
RUB 969 mn following new supply agreements, increase of tariffs on
electricity sales as well as electricity sales volume growth on the
wholesale market;
? increase in capacity sales revenue by RUB 2,907 mn on the back of sales
volume growth of PJSC DEK;
? increase in heat and hot water sales revenue by RUB 115 mn following
tariff growth;
? decrease in other sales revenue by RUB 764 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 3Q and 9M 2019/2018 (in RUB mn)
3Q'19 3Q'18* chg 9M'19 9M'18* chg
Employee benefit 18,308 18,025 1.6% 57,383 55,183 4.0%
expenses
Fuel expenses 11,871 10,642 11.5% 49,905 44,902 11.1%
Purchased 9,385 9,126 2.8% 33,957 29,136 16.5%
electricity and
capacity
Grid company 8,725 9,178 -4.9% 27,548 29,249 -5.8%
services on
electricity
distribution
Third parties 10,149 9,433 7.6% 25,043 25,155 -0.4%
services
Depreciation 6,434 5,824 10.5% 18,894 16,757 12.8%
Taxes other than on 2,942 3,054 -3.7% 8,687 9,131 -4.9%
income
Other materials 3,626 3,172 14.3% 7,788 7,180 8.5%
Water usage expenses 1,124 1,025 9.7% 3,165 3,021 4.8%
Other expenses 1,654 3,328 -50.3% 4,251 5,291 -19.7%
TOTAL 74,218 72,807 1.9% 236,621 225,005 5.2%
Total operating expenses in the 9M'19 amounted to RUB 236,621 mn as compared
225,005 mn in the 9M'18 due to the following factors:
? increase in purchased electricity and capacity by RUB 4,821 mn partially
(MORE TO FOLLOW) Dow Jones Newswires
December 12, 2019 05:13 ET (10:13 GMT)
DJ RusHydro announces 9M 2019 IFRS results -2-
covered by additional revenue mostly at RAO ES East Subgroup following
change in volume and tariff increase;
? increase in fuel expenses mainly in JSC DGK by RUB 2,938 mn as a result
of fuel purchase price increase following procurement results and in PJSC
Kamchatskenergo by RUB 674 mn or 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, coal);
? increase in depreciation expense following commissioning of CHP
Vostochnaya and off-site construction of Sakhalinskaya GRES-2 in the
2H'18, commissioning of Nizhne-Bureyskaya HPP in 2H'19, and adoption of
IFRS 16, Leases since 01.01.2019;
? increase in employee benefit expenses by RUB 2,200 in accordance with
existing collective agreements.
Profit
In the 9M'19, EBITDA decreased by 13.1% to RUB 70,429 mn as compared to RUB
81,016 mn in the same period of 2018.
The Group's net profit decreased by 23.5% to RUB 35,157 mn. Adjusted net
profit in the reporting period amounted to RUB 39,842 - a 22.1% 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 995 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 1,503 mn resulting
from measuring expected credit losses of receivables;
? impairment of property, plant & equipment and unfinished construction in
the amount of RUB 2,414 million;
? impairment of other assets in the amount of RUB 2,045 mn.
Key indicators of financial position
As of September 30, 2019, the Group's assets increased by RUB 25,417 mn or
2.7% to RUB 957,348 mn against RUB 931,931 as of 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 inventories.
As at the end of the reporting period, the Group's liabilities increased by
RUB 7,077 mn or 2.0% to RUB 352,789 mn as compared to RUB 345,712 as of
December 31, 2018. The structure of liabilities has changed accordingly:
long-term liabilities decreased by RUB 11,151 mn and short-term liabilities
increased by RUB 18,228 mn mainly due to increase of accounts payable,
current debt and current portion of non-current debt.
As of September 30, 2019 the liability on issued shares in the amount of RUB
7,000 mn is reflected, as additional share issue in the course of
implementation of preemptive right, under which PJSC RusHydro placed
7,000,092,298 shares among shareholders, was not completed.
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 27,170 mn (as of September 30, 2019) following
increase of market price of RusHydro's shares in 9M'19.
Events after the reporting date
? On November 18, 2019, 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 2024 and bear an interest of 6.8% p.a. payable twice
per year;
? On November 21, 2019, PJSC RusHydro and PJSC VTB Bank signed a
supplementary agreement to improve the terms of the forward contract. The
supplemental agreement provides for lowering the forward rate by 0.5% p.a.
and extension of the agreement for three years through 2025 allowing
sourcing a strategic investor and jointly working on increasing RusHydro's
share price;
? On November 22, 2019, PJSC RusHydro inaugurated Sakhalinskaya GRES-2 in
the Sakhalin region of the Far East to replace the obsolete Sakhalinskaya
GRES. The power plant's installed capacity and long run electricity output
stands at 120 MW and 0.84 TWh, respectively;
? On November 28, 2019, PJSC RusHydro commissioned of 300 GCal peaking
boiler plant at Yakutskaya GRES. The new facility will increase the
reliability of heat supply in the capital of Yakutia and partially
substitute the capacity of Yakutskaya GRES which will be gradually phased
out.
? On December 5, 2019, JSC Hydroinvest, a 100% subsidiary of PJSC
RusHydro, entered into a share sale agreement with PJSC Hrazdan Energy
Company (HrazTES, Tashir Group), to divest CJSC MEK, a company operating
Sevan-Hrazdan cascade of hydropower plants in Armenia for RUB 172.96 mn.
The full financial statements are available on the Company's website at:
http://www.eng.rushydro.ru/investors/reports [1]
* As of January 1, 2018 the Group has changed its accounting policy to
reflect the initial cost of property plant and equipment excluding
accumulated depreciation and impairments. As a result accumulated
depreciation for the 9 months of 2018 has been restated.
** 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, gains on changes in the carrying value of
financial assets at fair value through profit or loss, impairment of
property, plant and equipment, impairment of other assets, impairment of
financial assets, loss on disposal of property, plant and equipment, loss on
disposal of other non-current assets and other non-monetary 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 other assets,
impairment of financial assets, profit / loss on disposal of property, plant
and equipment, loss on disposal of other non-current assets 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.
About RusHydro
RusHydro Group is the leading producer of renewable energy in Russia. It is
Russia's largest generating company and is the fourth in the world with over
400 generating facilities in Russia and Armenia. The Group's total
electricity generation capacity including Boguchanskaya HPP is 39.8 GW.
Russian Federation owns 61.20% 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. 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
(MORE TO FOLLOW) Dow Jones Newswires
December 12, 2019 05:13 ET (10:13 GMT)
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: MSCM
TIDM: HYDR
LEI Code: 2534005TJN9DX4YWVT97
OAM Categories: 2.2. Inside information
Sequence No.: 35000
EQS News ID: 934559
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=d8efd81e8add00cb2f690c1ec7caee3b&application_id=934559&site_id=vwd&application_name=news
(END) Dow Jones Newswires
December 12, 2019 05:13 ET (10:13 GMT)
