RusHydro announces 1H 2018 IFRS results
August 28, 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 2nd quarter and 1st half of 2018.
Key highlights for 2Q and 1H of 2018:
2Q and 1H 2018/2017 highlights (in RUB mn)
Total electricity generation by RusHydro Group’s power plants reached 35,357 GWh (+3.2%) in the second quarter of 2018, in 1H – 67,372 (+6.0%). In 2Q of 2018 total electricity generation by RusHydro Group’s hydropower and pumped storage plants increased by 3.5% to 28,481 GWh, by the Group’s thermal power plants – by 2.3% to 6,943 GWh, while electricity generation by renewables decreased by 3.9% to 113 GWh as compared to the same period of 2017. In 1H of 2018 total electricity generation by RusHydro Group’s hydropower and pumped storage plants increased by 5.5% to 50,621 GWh, by the Group’s thermal power plants – by 7.7% to 16,525 GWh, while electricity generation by renewables decreased by 1.8% to 227 GWh as compared to the same period of 2017. Total electricity generation by Boguchanskaya hydropower plant 4 in 2Q 2018 amounted to 3,361 GWh (-5.9%), in 1H – 6,164 (-8.6%).
The underlying factors of the production change in January-June 2018 were:
In the first half of 2018, heat output by thermal plants of RAO ES of East increased by 5.4% to 17,659 thousand GCal as compared to the corresponding period of 2017. The increase came on the back of lower temperatures in all the regions of the Far East with an exception of Chukotka Autonomous Okrug in the first quarter as well as increase in consumption. Decrease in heat output in the second quarter is driven by reduced length of heating season in a number of towns of the region compounded by higher air temperatures.
In the second quarter of 2018, total electricity output by RusHydro’s retail companies (JSC RusHydro, PJSC Krasnoyarskenergosbyt, JSC Chuvashskaya Electricity Sales Company, PJSC Ryazanenergosbyt) amounted to 4,524 GWh, a 1.8% decrease as compared to the same period of 2017, in the first half of 2018 – 10,516 GWh, insignificantly lower as compared to the corresponding period last year. The decrease in output is driven by record low output of PJSC Ryazanenergosbyt in May as well as negative performance of ESC RusHydro after cancelation of service agreement with customers.
Key events of the first half of 2018
Revenue breakdown in 2Q and 1H2018/2017(in RUB mn)
In the first half of 2018, total revenue of the Group increased by 7.0% to RUB 200,877 mn as compared to RUB 187,654 in the first half of 2017. The change is associated with the following key factors:
Following adoption of IFRS 15 standard from January 1, 2018, the Group recognizes revenue from compensation of transmission losses and expenses on power distribution under contracts with grid companies on a net basis (in 1H 2018 – RUB 4,184 mn including RAO ES East subgroup of RUB 1,573 mn and ESC RusHydro subgroup of RUB 2,611 mn).
Operating expenses in 2Q and 1H2018/2017(in RUB mn)
Total operating expenses in the first half of 2018 compared to the same period last year increased by 4.3% to RUB 154,075 mn due to the following factors:
In the first half of 2018, EBITDA increased by 16.3% to RUB 59,949 mn compared to the same period of 2017.
The Group’s net profit increased by 64.5% to RUB 36,688 mn. Adjusted net profit in the reporting period amounted to RUB 38,432 – an increase of 19.0% 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 June 30, 2018, the Group"s assets increased by RUB 32,756 mn or 3.2% to RUB 1,061,007 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 increased by RUB 6,532 mn or 2.0% to RUB 339,219 mn as compared to December 31, 2017. The structure of liabilities has changed accordingly: long-term liabilities increased by RUB 29,602 mn following increase of non-current debt and short-term liabilities decreased by RUB 23,070 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, increased from RUB 20,716 mn (as of December 31, 2017) to RUB 21,536 mn (as of June 30, 2018).
The main reason of the change in fair value of the forward contract is the local dynamics in the change of market price of RusHydro’s shares in the first half of 2018.
Events after the reporting date
The full financial statements are available on the Company’s website at: http://www.eng.rushydro.ru/investors/reports
1 Operating profit is calculated as the difference between revenue, other operating profit and operating expenses.
2 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.
3 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.
4 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.
5 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.
6 Here and hereinafter the operating expenses do not include impairment loss.
Shares / ADR