30.10.2019
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RusHydro announces 9M 2019 RAS results

October 30, 2019. Moscow, Russia. PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces non-consolidated financial results under Russian accounting standards (RAS) for the nine months ended September 30, 2019.


Key highlights:

  • EBITDA – RUB 58,801 mn;
  • Reported net profit – RUB 34,255 mn;
  • Since July 1st 2017, a surcharge to capacity prices in 1 and 2 price zones in order to attain base level of end-user tariffs in the Far East of Russia is reflected in PJSC RusHydro’s revenue and operating expenses[1]. In 9M19, the surcharge totaled RUB 26,245 mn, in the 9M18 – RUB 28,663 mn; Adjusted for the surcharge revenue and expenses (here and below in the text) were:
  • Revenue – RUB 89,386 mn;
  • Operating expenses – RUB 43,211 mn.

Key financials for 3Q and 9M 2019 under RAS (in RUB mn), excluding surcharge



9M'19

9M'18

chg

3Q'19

3Q'18

chg

Revenue (adj. for surcharge)

89,386

96,057

-7%

29,711

32,329

-8%

Operating expenses (adj. for surcharge)

(43,211)

(43,358)

-0.3%

(14, 560)

(15,098)

-4%

Operating profit

46,175

52,699

-12%

15,151

17,231

-12%

EBITDA[2]

58,801

65,103

-10%

19,417

21,362

-9%

Net profit

34,255

37,514

-9%

10,998

10,896

1%

Net profit (adj.)[3]

33,778

37,015

-9%

10,839

10,914

-1%


Revenue


In nine months of 2019, revenue decreased by 7% or RUB 6,671 mn to RUB 89,386.


Revenue breakdown (RUB mn)


 


9M'19

9M'18

chg

3Q'19

3Q'18

chg

Electricity sales

57,330

64,992

-12%

19,438

22,457

-13%

Capacity sales

31,780

30,765

3%

10,179

9,799

4%

Other sales

276

300

-8%

94

73

29%

TOTAL

89,386

96,057

-7%

29,711

32,329

-8%


Operating expenses


Operating expenses in the nine months of 2019 stayed flat to the corresponding period of 2018 and amounted to RUB 43,211 mn.


The main changes were observed in the following items:


  • Purchased electricity and capacity (increase of RUB 337 mn) due to higher day-ahead market prices;
  • Property tax (decrease of RUB 968 mn) due to amendments to the Tax code of the Russian Federation affecting property tax, cancelling tax for movable property effective of Jan 1, 2019;
  • Rent decreased by RUB 467 mn due to purchase of Gotsatlinskaya HPP and Zaragizhskaya HPP from subsidiaries with simultaneous increase in property tax and depreciation by RUB 95 mn and RUB 230 mn, respectively.


Operating expenses breakdown (in RUB mn)


9M'19

9M'18

chg

3Q'19

3Q'18

chg

Depreciation

12,625

12,404

2%

4,266

4,131

3%

Purchased electricity and capacity

6,227

5,890

6%

1,760

2,058

-14%

Labor expenses, taxes and contributions

5,487

5,250

5%

1,818

1,758

3%

Property tax

4,551

5,519

-18%

1,532

1,841

-17%

Other third-party services

2,542

2,567

-1%

923

969

-5%

Repairs and maintenance

2,444

2,191

12%

952

971

-2%

Power system services

2,328

2,253

3%

801

773

4%

Water tax

1,510

1,470

3%

620

536

16%

Security expenses

1,321

1,309

1%

442

475

-7%

Insurance expenses

1,287

1,245

3%

455

443

3%

Rent

989

1,456

-32%

278

477

-42%

Other

1,900

1,804

5%

713

666

7%

TOTAL

43,211

43,358

-0.3%

14.560

15,098

-4%

 

Profit


Operating profit for nine months of 2019 decreased by 12% or RUB 6,524 mn as compared to the same period last year and amounted to RUB 46,175 mn.



Reported net profit for nine months of 2019 decreased by 9% to RUB 34,255 mn. Nonetheless, in the third quarter of 2019 net profit increased by 1% to RUB 10,998 mn as compared to the corresponding period of 2018.



Net profit adjusted for non-cash items decreased by 9% and reached RUB 33,778 mn. The difference between the reported and adjusted net profit is attributed mainly to the following non-cash effects:

  • gain (net) on reversal of bad debt reserves in the amount of RUB 288 mn;
  • gain on reversal of other reserves in the amount of RUB 189 mn.


RusHydro's financial position as of September 30, 2019


The Company's total assets increased by RUB 20,480 mn as of September 30, 2019, or 2% against the similar figure as of December 31, 2018, reaching RUB 1,057,286 mn.


As of September 30, 2019, total liabilities increased by 1% or RUB 2,096 mn as compared to the similar figure as of December 31, 2018 and amounted to RUB 187,640 mn.


The Company's debt portfolio decreased by 6% as compared to the beginning of the reporting year and reached RUB 139,498 mn. Long-term loans comprise 83% of the total portfolio.


The Company's equity in nine months of 2019 increased by 2% to RUB 869,589 mn against RUB 851,206 mn as of the beginning of the reporting year.


The full financial statements are available on the Company's website at: http://www.eng.rushydro.ru/investors/reports

RusHydro Group will announce consolidated 3Q and 9M'19 IFRS results on November 28, 2019.






[1] 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 (RUB 4.00 / 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. In November 2017, according to the Resolution of the Russian Government No. 2527-r of 15 November 2017 the rate for consumers in the territories of the Far East basic was set at RUB 4.30 / kWh.

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

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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