RusHydro announces full year 2012 IFRS results

JSC RusHydro (ticker symbol: MICEX-RTS, LSE: HYDR; OTCQX: RSHYY) announces its 2012 audited consolidated financial statement under International Financial Reporting Standards (IFRS).

Key highlights:

• Revenue decreased 18% to RUR 305,761 mn, comparable revenue was up 16%;
• RUR 62,966 mn of EBITDA, a decrease of 18% year-on-year, or +10% in comparable terms;
• Comparable manageable expenses rose only 5%;
• Net profit of RUR 31,783 mn vs RUR 45,854 mn in FY 2011 on adjusted basis; net profit increased 14% year-on-year in comparable terms;
• Group’s assets rose RUR 42,964 mn to RUR 854,747 mn in FY 2012.

RusHydro Group's financial results for the reporting period include the results of a number of retail companies[1], which were accounted for until the disposal date – March 28^th, 2011, when these companies were contributed to the share capital of OJSC Inter RAO UES in the course of the share issue of the latter.

2012 financial highlights (in RUR mn)

Comparable 2012 financial results (in RUR mn) – excl. investment component and disposal group [4]

For 2012 total revenue decreased by 18% from RUR 371,696 mn to RUR 305,761 mn. The Group's total expenses decreased by 14% to RUR 268,663 mn against RUR 313,617 mn in 2011. Reduction in the Group’s revenue and expenses as compared to the previous year is connected with the disposal of retail companies in late March 2011, and removal of the investment component from RusHydro’s capacity prices in 2012.

Comparable revenue increased by 16% from RUR 263,401 mn to RUR 305,761 mn. The change is associated with the following factors:

• growth of electricity sales following the acquisition of LLC Energy Supply Company of Bashkortostan (LLC ESC Baskortostan) on September 12^th, 2011, the financial results of which are included in the Group starting from the acquisition date;
• increase in electricity output and unregulated power prices.

Comparable expenses rose by 19% from RUR 226,448 mn to RUR 268,663 mn. The growth can primarily be attributed to the following factors:

• higher electricity purchases and power distribution expenses in the Group’s retail segment following the acquisition of LLC ESC Baskortostan and increase in prices for purchased electricity in the 3^rd quarter due to increase in unregulated electricity prices starting from the second half of the year;
• higher fuel expenses for electricity and heat generation by power plants of RAO Energy System of East Group as a result of increased purchases of fuel oil and coal due to disruptions in gas supply together with increased volumes of electricity and heat generation;
• accrual of impairment of accounts receivable resulting from analysis of past due receivables and estimation of their collectability.

In the reporting period, EBITDA decreased by 18% to RUR 62,966 mn compared to RUR 76,972 mn for the previous year. Decrease in EBITDA is related to a change in the Group's structure and removal of the special investment component in capacity prices in 2012. Comparable EBITDA rose 10% on the back of increase in electricity output and unregulated power prices and growth of subsidies in the Far East.

For 2012, the Group received a net loss of RUR 25,539 mn compared to RUR 29,493 mn of net profit in 2011. Net loss occurred due to the following non-cash operations (before income tax charge):

• accrual of impairment of property, plant and equipment in the amount of RUR 19,332 mn;
• accrual of impairment of property, plant and equipment of Krasnoyarskaya HPP and impairment of investment in OJSC Krasnoyarskaya HPP in the total amount of RUR 13,275 mn;
• accrual of impairment of promissory notes of LLC Energo-finance in the amount of RUR 9,363 mn;
• accrual impairment of shares of OJSC INTER RAO UES in the amount of RUR 8,041 mn due to significant and prolonged decline in their fair value;
• accrual of impairment of accounts receivable in the amount of RUR 5,781 mn resulting from analysis of past due receivables and estimation of their collectability;
• loss in the amount of RUR 3,669 mn from remeasurement of the net assets of OJSC DRSK, classified as a discontinued operation to fair value less costs to sell;
• accrual of impairment of goodwill in the amount of RUR 2,084 mn recognised as a result of purchase of LLC ESC Baskortostan in 2011 and impairment related to the customer base of LLC ESC Baskortostan in the amount of RUR 891 mn.

Comparable net profit was up 14% due to higher power sales in unregulated sectors.

Key indicators of RusHydro Group’s financial position as at December 31, 2012

As at December 31^st, 2012, the Group's assets increased by RUR 42,964 mn to RUR 854,747 mn against the comparable figure as at December 31^st, 2011. The increase in assets is primarily due to additions to the Group's fixed assets and construction in progress (mainly Sayano-Shushenskaya HPP and Zagorskaya GAES-2) and placing of short-term deposit in JSC Sberbank of Russia in the amount of RUR 50,000 mn received in the course of additional share issue of the Company.

As at the end of the reporting period the Group's liabilities rose by RUR 30,228 mn since December 31^st, 2011, to RUR 316,352 mn. The increase in the liabilities was mainly caused by new borrowings raised from JSC Sberbank of Russia, European Bank for Reconstruction and Development,JSC Bank of Moscow, UniCredit Bank Austria AG.

The consolidated financial statements of the Group are available at: http://www.eng.rushydro.ru/investors/reports/

The presentation of the results is available at: http://www.eng.rushydro.ru/investors/presentations/results_presentations/

  [1] 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.

  [2] EBITDA is calculated as operating profit before depreciation of property, plant and equipment and non-cash impairment charges.

  [3] Net profit is adjusted for the effects of impairment on the Group's property, plant and equipment, available-for-sale financial assets, investments in associates, long-term promissory notes, goodwill and intangible assets, and for effects of accounts receivable impairment, loss on disposal of property, plant and equipment and remeasurement of net assets of OJSC “DRSK” to fair value less cost to sell.

  [4] Comparable financials are calculated by excluding from 2011 results earnings from an investment component, included in capacity prices of RusHydro’s hydropower plants and discontinued starting from 2012, and the results of a number of retail companies, which were accounted for until the disposal date – March 28th, 2011, when these companies were contributed to the share capital of OJSC Inter RAO UES in the course of the share issue of the latter. These comparable results were calculated using management accounting, were not audited and are presented for general information.