OREANDA-NEWS. March 25, 2011. JSC RusHydro (ticker symbol: RTS, MICEX, LSE: HYDR; OTCQX: RSHYY) announces today its audited financial results for the year ended December 31, 2010 in accordance with the Russian Accounting Standards.

2010 Financial Highlights:

 

2010, RR, mln

2009, RR, mln

y-o-y, %

Revenue

88,979

78,996

12.6

Cost of goods and services sold

(45,369)

(36,704)

23.6

Gross profit

43,610

42,292

3.1

Other income, including

88,806

32,511

173.2

Profit from revaluation of financial investments marked to market

4,760 

- 

 -

Income from sale of promissory notes

78,903

25,192

213,2

Other expenses, including

(85,537)

(56,880)

50.4

Loss from revaluation of financial investments marked to market

- 

(21,711)

- 

Cost associated with sale of promissory notes

(78,903)

(25,118)

214,1

EBITDA[1]

51,754

50,396

2.7

Net profit

37,963

10,329

267.5

According to the results for 2010, the revenue from the sale of goods and services increased by 12.6% to 88,979 million roubles, compared to 78,996 million roubles in 2009. The main factors behind the revenue growth in 2010 were:

 -  increase in the share of sales at unregulated prices in accordance with the time schedule for liberalization of the wholesale market for electricity and capacity;

 -  increased electricity prices on the free market (day-ahead market and balancing market);

 -  increased volume of electricity sold under free bilateral contracts.

The major part of the Company's revenue is represented by the sales of electricity and capacity:

 

2010, RR, mln

2009, RR, mln

y-o-y, %

Revenue

88,979

78,996

12.6

Revenues from sale of electricity

40,630

27,350

48.6

Revenues from sale of capacity

48,042

51,344

-6.4

Revenues from sale of heat

129

124

4.9

Revenues from other operations

178

178

-

The cost of goods and services sold (COGS) amounted to 45,369 million roubles in 2010, a 23.6% increase compared to 2009.

The main factor behind the increase in COGS was increase in cost of purchased electricity and capacity from 8,578 million to 14,776 million, including purchases of electricity from wholesale market under free bilateral contracts.

As a result of increase in revenue and in COGS in 2010 the Company's gross profit rose by 3.1% y-o-y and amounted to 43,610 million roubles.

RusHydro's other income in 2010 totaled 88,806 million roubles compared to 32,511 in the prior year, other costs amounted to 85,537 million roubles against 56,880 million roubles in 2009. The main factor behind the increase in other income and other costs was novation of debt on promissory notes of RusHydro Group subsidiaries and associates.

The EBITDA in 2010 rose over 2009 by 2.7% to reach 51,754 million roubles. 

EBITDA margin amounted to 58.2% as compared to 63.8 % a year earlier.

RusHydro's net profit in accordance with the Russian Accounting Standards rose y-o-y by 267.5% to 37,963 million roubles.  The main reason for the increase in net profit in 2010 was revaluation of the stake in JSC OGK-1 marked to market, resulting in 4,691 million roubles income, while in 2009 due to negative market trends and sharp decline in the value of JSC OGK-1 shares loss of 21,683 million roubles was booked.

Key indicators of the Company's financial position as of Decemer 31, 2010

As of 31 December 2010, total assets of JSC RusHydro increased by 75,813 million roubles  to 551,323 million roubles. This 15.9 % increase compared to 1 January 2010 was primarily driven by increase in accounts receivable by 67,761 million roubles, primarily due to increase in debt on promissory notes of RusHydro's Group subsidiaries and associates due to interest-free loans, given in 2010 and advances paid to equipment providers and construction contractors.

The total volume of RusHydro's liabilities as of 31 December 2010 amounted to 46,350 million roubles - an increase of 52.7 % since the beginning of the reporting period.

The increase was driven, primarily, by a long-term loan from a special purpose vehicle RusHydro Finance Ltd, received against the Loan Participation Notes placed by RusHydro in 2010 with the volume of the issue of RR 20 billion, a coupon rate of 7.875% per annum maturing in 2015.

Total equity of the JSC RusHydro amounted, as of 31 December 2010, to 504,972 million roubles, compared to 445,163 million roubles on 1 January 2010. The increase of this line by 13.4% is caused by:

 -  increase in the Company's share capital by 19,000 million roubles, through placement of additional shares;

 -  increase in additional capital due to share premium in the amount of 2,850 million roubles resulted from completion of additional share issue;

 -  increase in retained profit by 37,631 million roubles from profit of the current year;

The number of shares, registered in the shareholder registry as of December 31, 2010 is higher by 1,860,000,000 than the number of shares in the share capital of the Company as of December 31, 2010 due to additional share issue registered on December 02, 2010.

The date of completion of the share placement is April 01, 2011 or the date of placement of the last share of the issue, depending on what date comes first. The Federal Service for Financial Markets has also allowed 50% of the issue to be traded outside the Russian Federation.

Subsequent events after the reporting date (31 December 2010)

Share option program

On December 22, 2010 RusHydro's Board of Directors (minutes # 115) has approved share option program. RusHydro's subsidiary JSC Hydroinvest was appointed the stock option plan operator. The total volume of the plan equals to 3,178,775,724 shares.

The source of shares within the stock option plan are shares that were not distributed within JSC RusHydro's first share option program, as well as shares currently held by JSC Hydroinvest. Within the plan, the price for one (1) share is RR 1.4967. The term for implementing the program is 2 years.

Additional share issue of JSC OGK-1

In December 2010 additional share issue of JSC OGK-1 in favor of JSC INTER RAO UES was completed (registered by the Federal Service for Financial Markets on July 15, 2010).

Changes in the charter documents of JSC OGK-1 were introduced on February 03, 2011. As a result of this additional share issue the Company's interest in the share capital of JSC OGK-1 has decreased from 21.71% to 14.81%.

Payment for the upcoming additional share issue of the Company

According to the Decree by the Government of the Russian Federation from December 28, 2010, 40% stake in JSC Irkutskenergo, owned by the Russian Federation should be transferred to JSC INTER RAO UES and then contributed to the share capital of the Company.

According to the Decree by the Government of the Russian Federation from December 29, 2010 the additional share issue of the Company will be paid with the property complex of five dams in Irkutsk region currently under long term rent by JSC Irkutskenergo, as well shares of the following companies: JSC Geotherm, JSC Boguchanskaya HPP, JSC Zaramagskye HPPs, JSC Ust-Srednekanskaya HPP, JSC Kamchatka gas and energy complex, JSC Pavlodolskaya HPP, JSC Hydromontazh Trust.