27.04.2018
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RusHydro announces first quarter 2018 RAS results

April 27, 2018. Moscow, Russia. PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces non-consolidated financial results under Russian accounting standards (RAS) for the first quarter ended March 31, 2018.


Key highlights:

  • Introduction of a surcharge (premium) to capacity prices in I and II price zones to attain base level of end-user tariffs in the Far East of Russia had a major effect on PJSC RusHydro indicators[1];
  • Revenue – RUB 40,006 mn (+45%);
  • Operating expenses – RUB 23,454 mn (+77%);
  • EBITDA – RUB 20,701 mn (+11%);
  • Reported net profit – RUB 12,006 mn (-11%), adjusted net profit – RUB 11,838 mn (+6%).

Key financials for 1Q 2018 under RAS (in RUB mn)



1Q’18

1Q’17

chg

Revenue

40,006

27,678

45%

Operating expenses

(23,454)

(13,212)

77%

Operating profit

16,552

14,466

14%

EBITDA[2]

20,701

18,609

11%

Net profit

12,006

13,529

-11%

Net profit (adj.)[3]

11,838

11,189

6%

Revenue


In the first quarter of 2018, revenue increased by 45% or RUB 12,238 mn to RUB 40,006 mn as compared to the corresponding period last year. The underlying factors behind the change in revenue were:

  • introduction of a surcharge (premium) to capacity prices in I and II price zones to attain base level of end-user tariffs in the Far East of Russia2 in the amount of RUB 9,554 mn (revenue increase of 34.5%);
  • strong operational results as electricity production by PJSC RusHydro’s HPPs increased by 7.4% following increase of water inflow to the reservoirs of the Group’s hydropower plants, primarily on the Volga-Kama cascade.

Revenue breakdown (RUB mn)



1Q’18

1Q’17

chg

Electricity sales

19,055

16,530

15%

Capacity sales

20,817

11,035

89%

Other sales

134

113

20%

TOTAL

40,006

27,678

45%

Operating expenses


Operating expenses in the first quarter of 2018 increased by 77% to RUB 23,454 mn as compared to the same period of 2017, including an increase of 72% as a result of special contribution payment into the regional budgets under the Resolution of the Russian Government No. 895. The special purpose contributions in the reporting period amounted to RUB 9,554 mn.


Excluding special purpose contributions to the budgets of Far Eastern regions operating expenses increased by 5% as a result of the following factors:

  • decrease in tax allowance on movable assets;
  • water tax rate increase;
  • rent increase following an agreement with Zaragizhskaya small HPP in the second quarter of 2017 and additional rent increase of Gotsaltinskaya GES in second half of 2017.

Operating expenses breakdown (in RUB mn)



1Q’18

1Q’17

chg

Power system services, incl.:

10,289

732

-

Special purpose contributions to regional budgets

9,554

-

-

Depreciation

4,149

4,142

0%

Purchased electricity and capacity

2,042

1,927

6%

Property tax

1,842

1,719

7%

Labor expenses, taxes and contributions

1,671

1,619

3%

Other third-party services

814

719

13%

Rent

487

398

22%

Repairs & maintenance

458

373

23%

Security expenses

433

410

6%

Insurance expenses

403

342

18%

Water tax

399

309

29%

Leasing expenses

0

26

-

Other

467

496

-6%

TOTAL

23,454

13,212

77%

Profit


Operating profit for the first quarter of 2018 increased by 14% as compared to the same period last year and amounted to RUB 16,552 mn.


EBITDA increased by 11% - from RUB 18,609 mn to RUB 20,701 mn.


RusHydro's net profit for the reporting period decreased by 11% to RUB 12,006 mn.


Net profit adjusted for non-cash items increased by 6% and reached RUB 11,838 mn. The difference between the reported and adjusted net profit is attributed mainly to the following non-cash effects:

  • gain on mark-to-market revaluation of financial investments in the amount of RUB 924 mn;
  • loss (net) on reversal of bad debt reserves in the amount of RUB 784 mn;
  • gain from other reserves in the amount of RUB 28 mn.

RusHydro's financial position as of March 31, 2018


The Company's total assets increased by RUB 7,537 mn as of March 31, 2018, or 1% against the similar figure as of December 31, 2017, reaching RUB 990,716 mn.


As of March 31, 2018, total liabilities decreased by 3% or RUB 4,467 mn as compared to the similar figure as of December 31, 2017 and amounted RUB 152,966 mn.


The Company's debt portfolio decreased by 8% as compared to the beginning of the reporting year from RUB 121,956 mn to RUB 112,425 mn. Long-term loans comprise 83% of the total portfolio.


The Company's equity in the first quarter of 2018 increased by 1% to RUB 837,690 mn against RUB 825,684 mn as of the beginning of the reporting year.


The full financial statements are available on the Company’s website at: http://www.eng.rushydro.ru/investors/reports


[1] 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 (RUB 4.00 / 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. In November 2017, according to the Resolution of the Russian Government No. 2527-r of 15 November 2017 the rate for consumers in the territories of the Far East basic was set at RUB 4.30 / kWh.

[2] EBITDA calculated as gross profit before depreciation.

[3] Net profit adjusted for the mark-to-market revaluation of listed equity stakes, reserves for financial investment impairment, assets and potentially uncollectible accounts receivable, contingencies This indicator is not reported in the official financial statements under RAS and has been calculated and put into the press release for reference.

The information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of RusHydro. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "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 conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to RusHydro and its operations.
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