14.03.2013
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RusHydro announces FY2012 RAS results

JSC RusHydro (ticker symbol: MICEX-RTS, LSE: HYDR; OTCQX: RSHYY) announces its non-consolidated financial results under Russian accounting standards (RAS) for the full year ended December 31, 2012.


Key highlights:

  • FY revenue up 2% to RUR 94,207 mn; 4Q revenue up 13% to RUR 25,931 mn;
  • FY EBITDA down 15% to RUR 49,030 mn due to removal of investment component in 2012;
  • Comparable FY EBITDA up 9%; comparable 4Q EBITDA – RUR 13,816 mn (+161%);
  • FY net profit – RUR 14,702 mn adjusted for non-cash items – RUR 29,405 mn;
  • Operating costs rose 27% mainly on the back of increase in power purchases.

Key financials for the FY 2012 under RAS (in RUR mn)[1]

2012

2011

chg

4Q 2012

4Q 2011

chg

Revenue

94,207

92,504

2%

25,931

23,044

13%

Operating costs

(55,987)

(44,016)

27%

(14,926)

(13,675)

9%

Operating profit

38,220

48,488

-21%

11,005

9,369

17%

Other revenue

18,084

23,805

-24%

14,802

21,346

-31%

Other expenses

(35,167)

(32,219)

9%

(29,296)

(29,977)

-2%

EBITDA[2]

49,030

57,556

-15%

13,816

8,089

71%

Net profit

14,702

30,622

-52%

5,261

5,625

-6%

For reference:

Net profit (adj.)[3]

29,405

36,502

-19%

11,963

6,521

83%

Comparable key financials under RAS (in RUR mn) – excluding 2011 investment component in tariffs[4]

2012

2011

chg

4Q 2012

4Q 2011

chg

Revenue

94,207

79,994

18%

25,931

20,257

28%

EBITDA

49,030

45,047

9%

13,816

5,302

161%

Net profit (adj)

29,405

23,992

23%

11,963

3,734

220%

In 2012, revenue increased by 2% to RUR 94,207 mn as compared to RUR 92,504 mn in 2011. The underlying factors behind the change in revenue were:

  • Increase in electricity prices on the day-ahead market as of the 3rd quarter of 2012 following indexation of gas prices;
  • significant increase in electricity generation by the Volga-Kama cascade in the fourth quarter of 2012;
  • growth in electricity sale prices under free bilateral agreements during the whole year;
  • decrease in revenue from capacity sales as of 2012 after liquidation of special investment component in the capacity prices of RusHydro’s hydropower plants, as well as implementation of tariff regulation for hydro capacity in Siberian price zone instead of competitive capacity prices.

As illustrated in the table below (RUR mn), the dominant share of revenues comes from electricity and capacity sales:

2012

2011

chg

Electricity sales, incl.

65,553

53,646

22%

Sales of electricity under unregulated bilateral contracts

9,213

3,421

169%

Capacity sales

28,155

38,490

-27%

Heat sales

141

129

9%

Other sales

358

239

50%

TOTAL

94,207

92,504

2%

Operating costs increased 27% year-on-year to RUR 55,987 mn as compared to 2011.


Operating costs (in RUR mn)


2012

2011

chg

Purchased power

16,489

9,150

80%

Depreciation

10,810

9,068

19%

Labor expenses

6,003

5,863

2%

Property tax

5,246

4,747

11%

Repairs & maintenance

3,515

3,403

3%

Services of SO UES, ATS, CFS

2,425

2,293

6%

Other services

1,646

1,506

9%

Insurance expenses

1,505

1,327

13%

Security expenses

1,311

1,139

15%

Leasing expenses

1,298

1,367

-5%

Other taxes and social security contributions

1,139

847

34%

Water tax

817

779

5%

Other

3,783

2,527

50%

TOTAL

55,987

44,016

27%

Major factors for change in operating costs were:

  • growth in expenses for purchased power in connection with free bilateral agreements for the sale of electricity to optimize the company’s cash flow[5];
  • higher depreciation due to commissioning of a number of facilities into operation.

As a result, operating profit for the reporting period decreased by 21% as compared to last year to RUR 38,220 mn.


Other revenue for 2012 was RUR 18,084 mn, other expenses stood at RUR 35,167 mn. The largest portion of other expenses was expenses for setting reserves for financial investment impairment in the amount of RUR 7,873.


EBITDA fell by 15% to RUR 49,030 mn. This was mainly due to the removal of the investment component in tariffs since 2012.


RusHydro's net profit for the reporting period decreased by 52% to RUR 14,702 mn.


RusHydro's key financial position indicators as of December 31st, 2012

The Company's total assets increased to RUR 93,487 mn as of December 31st, 2012, or 14% against the similar figure as of December 31st, 2011, reaching RUR 753,779 mn.


The growth in assets in 2012 was mainly caused by the following factors:

  • receipt of federal funds in the amount of RUR 50,000 mn during additional issue of the Company’s shares, that were placed into deposit accounts. These funds are aimed to finance construction of power units in the Far East;
  • commissioning of a number of facilities into operation, including restoration of the Sayano-Shushenskaya hydropower plant and the Baksanskaya HPP.

As of December 31st, 2012, total obligations stood at RUR 161,005 mn compared with RUR 124,815 mn as of the beginning of the reporting period. The increase was attributed primarily to raising loans from Sberbank of Russia and European Bank for reconstruction and development (EBRD) in the amount of RUR 24,480 mn. The Company's credit portfolio rose 37% to RUR 94,772 mn; long-term loans make up 53% of the total debt portfolio.


The Company's equity for 2012 increased by 11% to RUR 592,699 mn against RUR 535,402 mn as of the beginning of the reporting year. This was primarily due to increase in the Company’s share capital as a result of additional share issue in the amount of RUR 27,335 mn of August 16, 2011, and share premium received in the amount of RUR 17,768 mn (changes to the Articles of Association registered on October 1, 2012).


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


The Company plans to publish its consolidated results for the year ended December 31, 2012, under International financial reporting standards (IFRS) on Monday, April 1, 2013.



[1] The quarterly figures are not reported in the official financial statements under RAS, they have been calculated and put into the press release for reference.

[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. This indicator is not reported in the official financial statements under RAS and has been calculated and put into the press release for reference.

[4] Until January 1, 2012 RusHydro’s tariffs received by hydropower plants included special investment component to ensure the safe operation of hydropower plants and pumped storage plants as well as financing their investments needs. For 2011 the total amount of this tariff mark-up was set at RUR 12.9 bn. The actual amount of the tariff mark-up totaled RUR 12.5 bn. As of 2012, the investment component for RusHydro was cancelled.

[5] According to the regulations of the Russian wholesale power market, the supplier of electricity intending to enter into bilateral contracts must purchase the same amount of electricity from the market to fulfill its contractual obligations. In IFRS statements these costs are netted against corresponding revenue.

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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