RusHydro Group reports 28% increase in 2011 adjusted net profit under IFRS
JSC RusHydro (ticker symbol: MICEX-RTS, LSE: HYDR; OTCQX: RSHYY) announces its 2011 audited consolidated financial statements under International Financial Reporting Standards (IFRS).
RusHydro Group's financial results for the reporting period include the results of a number of retail companies[i], which were accounted for until the disposal date - March 28th, 2011, when these companies were contributed to the share capital of JSC Inter RAO UES in the course of the share issue of the latter. In the 2010 financial statements, these assets were classified as the disposal group.
2010 and 2011 results also include the financial results of RAO Energy System of East Group[ii]. RusHydro Group received a controlling interest in OJSC RAO Energy System of East on October 28th, 2011, in the course of RusHydro's additional share issue (registered by the Russian Federal Service for Financial Markets on August 16th, 2011).
2011 Financial Highlights (in RUR mn)
For 2011, the Group's total revenue decreased by 31%, from RUR 534,876 million to RUR 371,696 million. The Group's total expenses decreased by 35% to RUR 313,617 million against RUR 479,119 million in 2010. Reduction in the Group's revenues and expenses as compared to the previous year is connected with the disposal of retail companies in March 2011.
Comparable revenue (total revenue less revenue of disposal group) increased by 14% to RUR 275,911 million. The growth is associated with the following factors:
- acquisition of LLC Energy Supply Company of Bashkortostan on September 12th, 2011, the financial results of which are included in the Group starting from the acquisition date;
- increased sales volumes of electricity on the day-ahead market at unregulated prices following the liberalization of the wholesale market, as well as higher prices on the day-ahead market;
- higher volumes of electricity generation due to the reconstruction of Sayano-Shushenskaya hydropower plant, improving hydrological conditions from the 3rd quarter of 2011 and optimization of water usage in hydropower plants of the Volga-Kama cascade.
Comparable expenses (total expenses less expenses of the disposal group) grew by 14% to RUR 226,448 million. The growth can primarily be attributed to the following factors:
- higher electricity purchases expenses in the Group's retail segment, acquisition of LLC Energy Supply Company of Bashkortostan and increased unregulated prices on the day-ahead market;
- increased employee benefit expenses due to wage indexation and a change of motivational packages in the Group's companies in 2011;
- higher fuel expenses for thermal generation in RAO Energy System of East Group as a result of fuel price growth;
- increased expenses for electricity distribution due to the growth in grid companies' tariffs.
In the reporting period, EBITDA slided by 2% to RUR 76,972 million (compared with RUR 78,624 million for the previous year). Decrease of EBITDA is related to a change in the Group's structure and drop in special investment component in 2011 as compared to 2010.
The Group's 2011 net profit rose by 184% to RUR 29,493 million compared with RUR 10,399 million in 2010. The Group's net profit, adjusted for impairment charges of the Group's fixed assets and those of jointly controlled companies, increased by 28% to RUR 43,382 million.
Key indicators of RusHydro Group's financial position as of December 31st, 2011
As of December 31st, 2011, the Group's assets increased by RUR 66,790 million to RUR 811,783 million, a 9% increase year-on-year. The increase in assets is primarily due to growth in the Group's fixed assets in the amount of RUR 50,153 million.
As at the end of the reporting period, the Group's liabilities rose by RUR 80,699 million or 39% since December 31st, 2010, to RUR 286,124 million. The increase in the liabilities was mainly caused by:
- the Group's accounts payable in respect of the share issue in the amount of RUR 43,604 million as of December 31st, 2011, which will be reflected within the equity upon registration of the share issue results;
- an increase in the Group's long-term loans and borrowings and a simultaneous decrease in short-term loans and borrowings; the net change comprised RUR 41,272 million.
The consolidated financial statements of the Group are available on RusHydro's web site: http://www.eng.rushydro.ru/investors/reports/finreports/iasfinrep
[i] The following companies were acquired in 2010 from JSC RAO Energy System of the East and JSC Lenenergo and were accounted for retrospectively for all reported periods using the predecessor method: JSC Altayenergosbyt, JSC Mosenergosbyt and its subsidiaries, JSC Saint Petersburg Sale Company and its subsidiaries, JSC Saratovenergo, JSC Tambov Energy Retail Company and JSC United Energy Retail Company.
[ii] RAO Energy System of East Group consists of JSC RAO Energy System of East and its subsidiaries, including JSC DEK, JSC DGK, JSC DRSK, JSC Yakutskenergo, JSC Kamchatskenergo, JSC Magadanenergo, JSC Sakhalinenergo and other companies. These companies were accounted for using predecessor values method and retrospectively presented in the Group's financial statements, except for JSC DRSK, which was classified as a subsidiary acquired exclusively with a view for resale and was accounted for prospectively from the acquisition date.
[iii] The Group analyzed current economic situation and indicators of possible impairment of fixed assets and assets under construction. As a result, an impairment loss was recognized due to deterioration in expectations with regard to forecasted prices and volumes for a number of cash generating units (mainly located in the Far East region).
[iv] EBITDA is calculated as operating profit before depreciation of PP&E and non-cash impairment and disposal charges.
[v] Net profit is adjusted for the effects of impairment on the Group's fixed assets and those of jointly controlled companies.
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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