PJSC RusHydro: RusHydro announces 2019 IFRS results

PJSC RusHydro (HYDR) 
PJSC RusHydro: RusHydro announces 2019 IFRS results 
 
05-March-2020 / 12:11 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 is solely responsible for the content of this announcement. 
 
      RusHydro announces 2019 IFRS results 
 
   March 5, 2019. Moscow, Russia. RusHydro Group (hereinafter referred to as 
    the "Group", ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces its 
   audited consolidated financial statements for the year ended December 31, 
         2019, prepared in accordance with International Financial Reporting 
            Standards (IFRS). 
 
            Key highlights for 2019: 
 
  · Consolidated financial results reflected decrease of electricity 
  production on the back of reduced water inflows to the majority of 
  reservoirs of the HPPs in the first half of the year, decrease of sport 
  prices in Siberia in the second half of the year and peak impairments of 
  property, plant and equipment following commissioning of generating 
  facilities in the Far East; 
 
  · RUB 406,625 mn - total revenue (+1.6% as compared to 2018); 
 
  · RUB 97,544 mn - EBITDA (-11.1% as compared to 2018); 
 
  · 24% - EBITDA margin (-3.4 p.p. as compared to 2018); 
 
  · 3.8% - increase of manageable cash costs; 
 
  · RUB 51,547 mn - adjusted net profit (-27.1% y-o-y) net profit in 2019 - 
  RUB 643 mn (-98.0% y-o-y) mostly as a result of impairment of property, 
  plant & equipment. 
 
  · RUB 88,718 mn - total capital expenditures (+15.2% y-o-y); 
 
  · RUB 925,119 mn - RusHydro Group's total assets (-0.7% y-o-y); 
 
  · RUB 144,596 mn - RusHydro Group's total net debt (+7.9% as compared to 
  2018)¹; 
 
  · 1.48x - net debt/EBITDA (1.2x in 2018). 
 
            Key highlights for 4Q 2019: 
 
  · RUB 119,005 mn - total revenue (+6.5% as compared to 4Q 2018); 
 
  · RUB 27,115 mn - EBITDA (-5.4% as compared to 4Q 2018); 
 
  · RUB 11,705 - adjusted net profit (-40.3% as compared to 4Q 2018). 
 
            Key highlights of 2019 operational results: 
 
  · 142,840 GWh - total electricity production (-1.0% as compared to 2018) 
  including Boguchanskaya hydropower plant2; 
 
  · 94,525 GWh - electricity output from hydro and pumped storage plants 
  (-4.0% as compared to 2018); 
 
  · 31,779 GWh - electricity output from thermal power plants (+0.1% y-o-y); 
 
  · 29,771 thousand GCal - heat output from thermal power plants (+0.4% 
  y-o-y) driven by lower air temperatures in most Far Eastern Federal 
  District's regions; 
 
  · 19,490 GWh - sales by Group's electricity retail companies in 2019 
  (-3.9% y-o-y). 
 
            2020 forecast: 
 
  · Dividend payout for 2019 will be at the average amount paid over 2017 - 
  2019 in accordance with the new dividend policy; 
 
  · EBITDA growth expected following commissioning of new generating 
  facilities; 
 
  · Net debt/EBITDA not to exceed 2.0x; 
 
  · Decrease of impairment of property, plant & equipment following 
  commissioning of major generating facilities in the Far East in 2019. 
 
            4Q and FY 2019/2018 highlights (in RUB mn) 
 
                       4Q/19  4Q/183   chg.   2019   2018   chg. 
Revenue              119,005 111,748   6.5% 406,62 400,41   1.6% 
                                                 5      8 
Operating expenses    99,954  89,845  11.3% 336,57 314,85   6.9% 
                                                 5      0 
Other operating          560     112 400.0%  1,174  5,452 -78.5% 
profit 
Operating profit3     19,611  22,015 -10.9% 71,224 91,020 -21.7% 
EBITDA4               27,115  28,657  -5.4% 97,544 109,67 -11.3% 
                                                        3 
Net profit                 -       -      -    643 31,837 -98.0% 
Net profit (adj.)5    11,705  19,606 -40.3% 51,547 70,757 -27.1% 
 
            Key events in 2019 
 
· 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. 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 15, 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; 
 
· 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 turbines 1, 2 and 3 and boilers 1-8 at Vladivostokskaya CHP-2. Return 
on the projects will be guaranteed by the mechanism stipulated in the 
government's program on thermal power modernization; 
 
· 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 December 5, 2019, a share sale agreement was signed with PJSC Hrazdan 
Energy Company (HrazTES), to divest 90% of CJSC MEK shares for RUB 173 mn. 
According to the agreement the shares will be transferred in the first 
half of 2020 upon fulfillment of CJSC MEK's obligations before European 
Bank for Reconstruction and Development and Asian Development Bank and 
cancellation of RusHydro's guarantees on the loans before the above 
mentioned banks; 
 
· On December 13, 2019, in North Ossetia RusHydro has completed 
construction of Zaramagskaya HPP-1 and received authorization to 
commission the facility. It is the largest hydropower plant in the region 
and the third most powerful in Northern Caucasus with installed capacity 
of 346 MW and annual average electricity output is 0.84 TWh. The facility 
is built under Capacity Supply Agreement (DPM). 
 
            Revenue 
 
            Revenue breakdown in 4Q and FY 2019/2018 (in RUB mn) 
 
                      4Q'19   4Q'18    chg   FY'19   FY'18   chg 
Electricity sales    72,404  70,799   2.3% 266,713 269,668 -1.1% 
Incl. grants as per   5,531   6,506 -15.0%  23,794  26,300 -9.5% 
Resolution of the 
Russian Gov't No. 
895 (premium to the 
price translated to 
the budgets of the 
regions of Far 
Eastern Federal 
Distict) 6 
Capacity sales       13,180  11,743  12.2%  48,177  43,833  9.9% 
Heat and hot water   13,532  13,152   2.9%  40,645  40,150  1.2% 
sales 
Other sales          14,773  10,527  40.3%  34,901  31,419 11.1% 
Other government      5,116   5,527  -7.4%  16,189  15,348  5.5% 
grants 
Total revenue       119,005 111,748   6.5% 406,625 400,418  1.6% 
 
  In 2019, total revenue of the Group amounted to RUB 406,625 mn as compared 
 to RUB 400,418 in the 2018. The change is associated with the following key 
            factors: 
 
· decrease in revenue from electricity sales of PJSC RusHydro by RUB 6,485 
mn on the back of record-high production growth in 2018 compounded by 
lower water inflows to the reservoirs of the Volga-Kama cascade in the 
first half of the year( production decline of 4.4%) as well as decrease of 
spot market prices in the second price zone; 
 
· increase in capacity sales revenue by RUB 4,344 mn mainly on the back of 
sales volume growth of PJSC DEK; 
 
· increase in other sales revenue by RUB 3,482 mn is mainly driven by 
increase in revenue in JSC DGK (by RUB 6,882 mn) from grid connection 
services to PJSC Gazprom's facilities and LLC Albinsky Rudnik, compounded 
by by decrease in revenue from electricity distribution services in PJSC 

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March 05, 2020 06:11 ET (11:11 GMT)