RusHydro announces 1Q 2019 IFRS results
June 6, 2019. 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 2019.
Key highlights for the first quarter of 2019:
1Q 2019/2018 highlights (in RUB mn)
In the first quarter of 2019, electricity generation by RusHydro Group amounted to 28,952 GWh (-9.1%). Group’s total power production including Boguchanskaya hydropower plant was 32,694 GWh (-5.6%). Total electricity generation by hydropower and pumped storage plants of RusHydro Group in 1Q 2019 decreased by 13.6% to 19,127 GWh, total output by thermal and geothermal power plants in 1Q 2019 increased by 1.5% to 9,722 GWh .
Main factors affecting operating results in in January-March 2019 were:
Heat output by thermal plants of RAO ES East Subgroup in the first quarter of 2019 decreased by 6.7% to 12,172 GCal as compared to the corresponding period of 2018 due to higher air temperatures in all the regions of the Far East with an exception of Kamchatka Krai, Magadan region and Chukotka Autonomous Okrug.
In the first quarter of 2019, total electricity output by RusHydro Group’s retail companies, operating in Chuvashia, Ryazan and Krasnoyarsk regions, amounted to 5,588 GWh, a decrease of 6.7% as compared to the same period of 2018.
Key events of the first quarter of 2019
Revenue breakdown in 1Q 2019/2018 (in RUB mn)
In the first quarter of 2019, total revenue of the Group increased by 0.8% to RUB 109,764 mn as compared to RUB 108,909 in the first quarter of 2018. The change is associated with the following key factors:
Operating expenses in 1Q 2019/2018 (in RUB mn)
Total operating expenses in the first quarter of 2019 compared to the same period last year increased by 4.7% to RUB 86,658 mn due to the following factors:
In the first quarter of 2019, EBITDA decreased by 6.8% to RUB 29,564 mn compared to the same period of 2018.
The Group’s net profit decreased by 31.0% to RUB 16,512 mn. Adjusted net profit in the reporting period amounted to RUB 19,146 – an 11.2% decrease 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, 2019, the Group's assets increased by RUB 20,357 mn or 2.2% to RUB 952,288 mn against the comparable figure as at December 31, 2018. Change in assets is primarily attributable to:
As at the end of the reporting period, the Group's liabilities increased by RUB 3,940 mn or 1.1% to RUB 349,652 mn as compared to December 31, 2018. The structure of liabilities has changed accordingly: long-term liabilities decreased by RUB 5,540 mn and short-term liabilities increased by RUB 9,480 mn mainly due to increase of accounts receivable, current debt and current portion of non-current debt.
The fair value of the non-deliverable forward contract, recognized under the terms of transaction with PJSC VTB Bank, decreased from RUB 31,896 mn (as of December 31, 2018) to RUB 29,986 mn (as of March 31, 2019). 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 for the first quarter of 2019.
Events after the reporting date
 Operating profit is calculated as the difference between revenue, other operating profit and operating expenses.
 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 financial assets, profit / loss on disposal of property, plant and equipment 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 financial assets, 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.
 Here and hereinafter the operating expenses do not include impairment loss.
 Calculation based on absolute values
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 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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