DJ 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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DJ PJSC RusHydro: RusHydro announces 2019 IFRS -2-
Yakutskenergo and decrease of claims from fuel purchasers at JSC VOSTEK
· increase in revenue from electricity of RAO ES East subgroup (incl.
government subsidies) by RUB 2,361 mn on the back of tariff and sales
volume growth;
· increase in revenue from electricity sales in ESC Rushydro subgroup by
RUB 1,072 mn following new supply agreements, increase of tariffs on
electricity sales as well as electricity sales volume growth on the
wholesale market;
· increase in heat and hot water sales revenue by RUB 495 mn following
tariff growth.
Operating expenses7
Operating expenses in 4Q and FY 2019/2018 (in RUB mn)
4Q'19 4Q'18 chg 2019 2018 chg
Employee benefit 22,993 20,693 11.1% 80,376 75,876 5.9%
expenses
Fuel expenses 21,528 19,889 8.2% 71,433 64,791 10.3%
Purchased electricity 12,353 12,675 -2.5% 46,310 41,811 10.8%
and capacity
Third parties 15,948 9,933 60.6% 40,991 35,088 16.8%
services
Grid company services 9,407 10,214 -7.9% 36,955 39,463 -6.4%
on electricity
distribution
Depreciation 6,792 5,553 22.3% 25,686 22,310 15.1%
Taxes other than on 3,446 3,111 10.8% 12,133 12,242 -0.9%
income
Other materials 3,472 3,725 -6.8% 11,260 10,905 3.3%
Water usage expenses 1,168 997 17.2% 4,333 4,018 7.8%
Other expenses 2,847 3,055 -6.8% 7,098 8,346 -15.0%
TOTAL 99,954 89,845 11.3% 336,575 314,850 6.9%
Total operating expenses in the 2019 amounted to RUB 336,575 mn as compared
314,850 mn in the 2018 due to the following factors:
· increase of third party expenses by RUB 5,903 mn mainly in RAO ES East
Subgroup as a result of technical connection expenses in the amount of RUB
7,010 mn (supported by revenue) as well as repairs and maintenance;
· increase in employee benefit expenses by RUB 4,500 in accordance with
existing collective agreements;
· increase in purchased electricity and capacity by RUB 4,499 mn partially
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 3,800 mn as a result
of fuel purchase price increase following procurement results and in PJSC
Kamchatskenergo by RUB 1,099 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 ofSakhalinskaya GRES-2 and Nizhne-Bureyskaya HPP in
2H'19, and adoption of IFRS 16, Leases since 01.01.2019.
Profit
In the 2019, EBITDA decreased by 11.1% to RUB 97,544 mn as compared to RUB
109,673 mn in the same period of 2018.
The Group's net profit decreased by 98.0% to RUB 643 mn. Adjusted net profit
in the reporting period amounted to RUB 51,547 - a 27.1% 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:
· impairment of property, plant & equipment and unfinished construction in
the amount of RUB 53,532 million following commissioning in
Nizhne-Bureysklaya HPP and Sakhalinskaya GRES-2 in 2019;
· impairment of financial assets in the amount of RUB 4,491 mn resulting
from measuring expected credit losses of receivables;
· impairment of other assets in the amount of RUB 2,045 mn.
Key indicators of financial position
As of December 31, 2019, the Group's assets decreased by RUB 6,812 mn or
0.7% to RUB 925,119 mn against RUB 931,931 as of December 31, 2018. Change
in assets is primarily attributable to:
· decrease of accounts receivable;
· 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 9,532 mn or 2.8% to RUB 355,244 mn as compared to RUB 345,712 as of
December 31, 2018. The structure of liabilities has changed accordingly:
long-term liabilities increased by RUB 3,025 mn and short-term liabilities
increased by RUB 6,507 mn mainly due to increase of accounts payable on
issued shares, current debt and current portion of non-current debt.
Total liabilities under current and non-current debt increased by RUB 5,116
mn in 2019 or 2.6% following increase of debt on bank loans at RAO ES East
Subgroup (primarily JSC DGK) as well as inclusion of operational leases
since 01.01 2019 in accordance with the adoption of IFRS 16. (As of December
31, 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 28,510 mn (as of December 31, 2019) following
increase of market price of RusHydro's shares in 2019.
Events after the reporting date
· On February 11, 2020, for the first time in Russia a power purchase
agreement was signed in an isolated price zone. PJSC Kolymaenergo, a
subsidiary of PJSC RusHydro and JSC Polyus Magadan (PJSC Polyus Group)
have signed a five-year bilateral power purchase agreement for 5 years.
Electricity supply will start in 2020 for a total of 310 GWh.
The full financial statements are available on the Company's website at:
http://www.eng.rushydro.ru/investors/reports [1]
Total net debt at the end of reporting period is calculated as the
difference between financial debt and cash & cash equivalents (including
bank deposits maturing in one year). Financial debt includes current debt,
non-current debt (excluding interest payable), non-deliverable forward
contract and cross-currency and interest rate swap.
2 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
3 Operating profit is calculated as the difference between revenue, other
operating profit and operating expenses
4 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.
5 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
6 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
7 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 among the top-5 in the world with
over 400 generating facilities in Russia and abroad. The Group's total
electricity generation capacity including Boguchanskaya HPP is 40.0 GW.
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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
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.: 50623
EQS News ID: 990383
End of Announcement EQS News Service
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