OREANDA-NEWS. PJSC RusHydro (MOEX, LSE: HYDR; OTCQX: RSHYY) announces its non-consolidated financial results under Russian accounting standards (RAS) for the six months of 2016.

Key highlights:

  • 2Q 2016 revenue – RUB 30,118 mn (+9%), 1H 2016 revenue – RUB 57,211 mn (+12%);
  • 1H 2016 operating expenses – RUB 26,010 mn (-9%);
  • 2Q 2016 EBITDA – RUB 20,468 mn (+27%), 1H 2016 EBITDA – RUB 38,711 mn (+31%);
  • EBITDA margin in 2Q 2016 – 68% (+9 p.p.), in 1H 2016 – 68% (+10 p.p.);
  • Reported net profit for 1H 2015 – RUB 28,426 mn (+41%), adjusted net profit – RUB 26,444 mn (+36%).

Key financials for 1H 2015/2016 under RAS (in RUB mn)

 

1H’16

1H’15

chg

2Q’16

2Q’15

chg

Revenue

57,211

51,212

12%

30,118

27,509

9%

Operating expenses

(26,010)

(28,727)

-9%

(13,401)

(14,882)

-10%

Operating profit

31,201

22,485

39%

16,717

12,627

32%

EBITDA

38,711

29,458

31%

20,468

16,144

27%

Net profit

28,426

20,176

41%

13,177

11,433

15%

Net profit (adj.)[iii]

26,444

19,426

36%

12,071

11,063

9%

Revenue

In the 1st half of 2016, revenue increased by 12% to RUB 57,211 mn as compared to RUB 51,212 mn for the same period of 2015. The underlying factors behind the change in revenue were:

  • significant increase in production and electricity output by hydropower plants of PJSC RusHydro as a result of: a) higher than normal water inflow to reservoirs of the Volga-Kama cascade in the 1st half of 2016; b) water inflow to reservoirs of Siberia, HPPs of the South and the Far East of Russia – close to long-run average;
  • indexation of electricity and capacity tariffs;
  • increase in capacity sales following ongoing liberalization of hydro capacity market in the second price zone from May 1, 2014.

Revenue breakdown (RUB mn)

 

1H’16

1H’15

chg

2Q’16

2Q’15

chg

Electricity sales

38,933

34,547

13%

21,679

19,699

10%

Capacity sales

17,783

16,031

11%

8,164

7,292

12%

Other sales

495

634

-22%

275

518

-47%

TOTAL

57,211

51,212

12%

30,118

27,509

9%

Operating expenses

Operating expenses in January-June 2016 decreased by 9% to RUB 26,010 mn as compared to the same period of 2015.

Operating expenses breakdown (in RUB mn)

 

1H’16

1H’15

chg

2Q’16

2Q’15

chg

Depreciation

7,510

6,973

8%

3,751

3,517

7%

Labor expenses, taxes and contributions

3,558

3,510

1%

1,744

1,533

14%

Purchased electricity and capacity

3,429

6,415

-47%

1,446

3,297

-56%

Property tax

3,361

3,294

2%

1,683

1,654

2%

Services of System Operator, ATS, CFS

1,405

1,387

1%

707

698

1%

Repairs & maintenance

1,300

1,211

7%

822

722

14%

Other third-party services

1,291

1,245

4%

879

629

40%

Security expenses

879

866

2%

474

471

1%

Insurance expenses

743

587

27%

390

309

26%

Rent

714

587

22%

373

300

24%

Water tax

614

459

34%

340

270

26%

Leasing expenses

104

152

-32%

51

70

-27%

Other

1,102

2,041

-47%

741

1,413

-48%

TOTAL

26,010

28,727

-9%

13,401

14,883

-10%

Major factors of change in operating expenses were (among the highest constituent expenses):

  • decrease in purchased electricity and capacity as a result of: a) decrease in purchased electricity for sale under free bilateral agreements due to lower sales under these contracts; b) decrease in price for purchased electricity;
  • increase in depreciation and property tax as a result of commissioning of new fixed assets as well as reconstruction and modernization of operating assets;
  • reduction of other expenses, including corporate and traveling expenses, utilities and other costs, by 48% as a result of implementation of measures aimed at restraining non-operating costs.

Profit

Operating profit for the period increased by 39% or RUB 8,716 mn to RUB 31,201 mn.

EBITDA increased by 31% as compared to the same period of 2015 and amounted to RUB 38,711 mn.

RusHydro's net profit for the reporting period increased by 41% to RUB 28,426 mn. Net profit adjusted for non-cash items increased by 36% to RUB 26,444 mn as compared to RUB 19,426 mn in the same period of the previous year.

The difference between the reported and adjusted net profit is attributed mainly to the following non-cash effects:

  • gain from mark-to-market revaluation of listed equity stakes in the amount of RUB 2,883 mn;
  • regained reserves on accounts receivable in the amount of RUB 711 mn;
  • expenses (net) on provision for accounts receivable in the amount of RUB 1,697 mn;
  • gain from reserves for impairment of assets in the amount of RUB 3 mn;
  • gain from other reserves in the amount of RUB 82 mn.