RusHydro announces 1Q 2018 IFRS results
June 7, 2018. Moscow, Russia. RusHydro Group (hereinafter referred to as the “Group”, ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces its condensed consolidated interim unaudited financial information prepared in accordance with International Financial Reporting Standards (IFRS) for the 1st quarter of 2018.
Key highlights for the first quarter of 2018:
1Q 2018/2017 highlights (in RUB mn)
In the first quarter of 2018, electricity generation by RusHydro Group has reached 31,835 GWh (+9.3%). Group’s total power production including Boguchanskaya hydropower plant reached 34,637 GWh (+7.2%). Total electricity generation by hydropower and pumped storage plants of RusHydro Group in 1Q 2018 amounted to 22,140 GWh (+8.2%), total output by thermal and geothermal power plants – 9,695 GWh (+5.3%).
Main factors affecting operating results in the first quarter of 2018 were:
In the first quarter of 2018, heat output by thermal plants of RusHydro Group in the Far East increased by 7.7% to 13,038 thousand GCal as compared to the same period of 2017 due to lower air temperatures in most regions of the Far East.
In the first quarter of 2018, total electricity output by RusHydro Group’s electricity retail companies, operating in Chuvashia, Ryazan and Krasnoyarsk regions (ESC RusHydro subgroup), amounted to 6,025 GWh, an increase of 1.3% as compared to the same period of 2017.
Key events of the first quarter of 2018
Revenue breakdown in 1Q 2018/2017 (in RUB mn)
In the first quarter of 2018, total revenue of the Group increased by 6.5% to RUB 110,097 mn as compared to RUB 103,359 in the first quarter of 2017. The change is associated with the following key factors:
Operating expenses in 1Q 2018/2017 (in RUB mn)
Total operating expenses in the first quarter of 2018 compared to the same period last year increased by 7.5% to RUB 84,795 mn due to the following factors:
In the first quarter of 2018, EBITDA increased by 5.9% to RUB 32,022 mn compared to the same period of 2017.
The Group’s net profit increased by 22.0% to RUB 22,951 mn. Adjusted net profit in the reporting period amounted to RUB 20,893 – a 2.5% increase 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:
Key indicators of financial position
As of March 31, 2018, the Group's assets increased by RUB 13,206 mn or 1.3% to RUB 1,041,457 mn against the comparable figure as at December 31, 2017. Change in assets is primarily attributable to:
As at the end of the reporting period, the Group's liabilities decreased by RUB 10,441 mn or 3.1% to RUB 322,246 mn as compared to December 31, 2017. The structure of liabilities has changed accordingly: long-term liabilities increased by RUB 18,043 mn and short-term liabilities decreased by RUB 28,484 mn mainly due to decrease of current debt and current portion of non-current debt.
Structure of the liabilities of the Group underwent the following changes:
The fair value of the non-deliverable forward contract, recognized under the terms of transaction with PJSC VTB Bank, decreased from RUB 20,716 mn (as of December 31, 2017) to RUB 18,854 mn (as of March 31, 2018).
The main reason of the change in fair value of the forward contract is the favorable dynamics in the change of market price of RusHydro’s shares in the first quarter of 2018. Therefore, an increase in the market price of RusHydro’s shares in the forthcoming reporting periods will reduce the fair value of the forward contract further.
Events after the reporting date
 EBITDA is calculated as operating profit/loss excluding depreciation of property, plant and equipment, amortization of intangible assets, income arising from the change in fair value of financial assets measured through profit or loss, impairment of property, plant and equipment, impairment of accounts receivable, profit / loss on disposal of property and subsidiaries and other non-cash items of operating income and expenses.
 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 accounts receivable, profit / loss on disposal of property, plant and equipment, as well as other operating income arising from the change in fair value of financial assets measured through profit or loss.
 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.
 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.
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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