23 Apr 2013 08:04
Federal Grid Company UES Group Announces 2012 IFRS Financial Results
Moscow, 23 April 2013 - Federal Grid Company of Unified Energy System ("Federal Grid Company"or "the Company") (MICEX-RTS, LSE: FEES), the operator and manager of Russia's unified electricity transmission grid system, today announces its audited consolidated IFRS financial results for the year ended 31 December 2012.
Key 2012 financial and operational highlights:
Financial
·; Revenues of RUB 140,313 million
·; Adj.EBITDA* of RUB 82,133 million
·; Adj. operating profit** of RUB 33,520 million
·; Adj. profit for the period*** of RUB 29,956 million
·; Adj. EPS*** *of RUB 0.024
* Adjusted EBITDA is calculated as EBITDA (profit for the period before income tax, finance income and costs, depreciationand amortisation) under IFRS adjusted to exclude one-off gain on disposal of available-for-sale investments (only in 2011), loss on re-measurement of assets held for sale (only in 2011), non-specific impairment of property, plant and equipment, impairmentof available-for-sale investments, impairment of promissory notes (only in 2012), reversal of impairment of investments in associates (only in 2012), and to include finance income.
** Adjusted operating profit is calculated as operating profit under IFRS adjusted to exclude one-off gain on disposal of available-for-sale investments (only in 2011), loss on re-measurement of assets held for sale (only in 2011), and non-specific impairmentof property, plant and equipment.
** Adjusted profit for the period is calculated as profit for the period under IFRS adjusted to exclude one-off gain on disposalof available-for-sale investments (only in 2011), loss on re-measurement of assets held for sale (only in 2011), non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, impairment of promissory notes (only in 2012), reversal of impairment of investments in associates (only in 2012), and related deferred income tax effects.
*** Adjusted EPS is calculated as adjusted profit for the period divided by the weighted average number of the Company' shares outstanding during the reporting period.
Operational
·; Electricity transmission volume 498 Bn kWh (+3% compared to 2011)
·; Transmission lines length increased up to 132,000 km, in 2012 bringing by 7,000 km
·; 37 new substations were brought online in 2012
·; Total transformer capacity increased up to 335 GVA (+4% compared to 2011)
Key 2012 corporate developments
Tariff decisions:
·; On 21 May 2012, the Federal Tariff Service approved tariffs for electricity transmission onthe Unified National Electricity Grid (UNEG) for 2012-2014 (from 1 July 2012 the tariff increased by 11%, from July 2013-2014 growth of 9.4%)
Investment programme:
·; On 11 May 2012, the Russian Federation Ministry of Energy approved a revised investment program for Federal Grid Company of RUB 505 billion for 2012-2014
·; On 31 October 2012, the Ministry of Energy approved an expanded investment programfor 2013-2017 of RUB 775.5 billion
Development of the electricity grid:
·; On 22 November 2012, the President of Russia signed a decree "On Open Joint Stock Company 'Russian Grids'". The decree stipulates that OJSC "IDGC Holding" be renamed to OJSC "Russian Grids" and that the 79.55% stake in Federal Grid currently owned by the Russian Federation should be transfered to OJSC "Russian Grids".
Capital markets activity:
·; On 27 April 2012, the Board of Directors of Federal Grid Company approved three long-term debt instruments programs in order to diversify the Company's debt financing sources:
Ø Russian bonds issues of up to RUB 125 billion
Ø Stock Exchange authorised rouble bonds issues of up to RUB 100 billion
Ø Eurobonds issues of up to RUB 100 billion
Commenting on the 2012 results, Federal Grid Company Chairman of the Management BoardOleg Budargin said:
The Company's priority during 2012 year, as well as during all recent years, consisted of ensuringthe stable transmission of electric power with upgraded reliability. We coped with this task on the backof the growing fleet of equipment in operation; the number of disturbances decreasedand the transmission networks' emergency rate fell 13%.
During 2012 year, as well as previously, the Company made every effort to fulfill tasks set by the Russian Government related to the modernization and development of power industry infrastructure, to further upgrade the reliability of the power grid complex and to provide the technological basis for Russian economic development.
The Company's 2012 investment program was successfully fulfilled.
In 2012, the Company activated energy production at 75 facilities, including 12 facilities that were energized ahead of schedule. The Company commissioned 3,643.2 km of power transmission linesand 17,827 MVA of transformer capacity. During implementation of the investment program, significant attention was paid to the efficiency of purchasing operations. In 2012, savings related to commissioned facilities exceeded 10%.
The Company has accomplished numerous major projects that are essential for the social and economic development of Russian regions. The Company provided for the timely commissioning of infrastructure power facilities of the Primorsky Region, and also of the first stage of the ESPO pipeline, whichis the Russian Government's top priority infrastructure project. Other accomplishments include the timely commissioning of the 4th power unit at the Kalininskaya NPP. Projects pertaining to the power supplyof the Vankorskaya Group of fields and the 2014 Sochi Olympics, etc. have been implemented in accordance with the schedule.
2012 was a special year for the Company, marking its 10th anniversary. And we'd like to thankthe Company's shareholders, partners, customers and employees for their trust and fruitful cooperation, and for their contribution to Federal Grid Company development.
Commenting on 2012 financial results, Federal Grid Company First Deputy Chairmanof the Management Board Andrey Kazachenkov said:
"Taking into account the tariff adjustment in 2011 and the delayed transition to annual tariff increases from 1 January to 1 July 2012, Federal Grid Company's priorities in 2012 were maintaining a balanced financial policy in order to ensure stable electricity supply and reliability of the unified national electric grid.
Consolidated revenues were RUB 140,313 million. The Group's revenues are derived primarily fromthe provision of electricity transmission services. Changes in this type of revenues are primarily dependent on changes in tariffs set by the Russian Federal Tariff Service. The Group also earns revenues from the sale of electricity generated and sold to third parties by the Group's subsidiaries.
Adjusted operating profit declined by 28.1% y-o-y in 2012 to RUB 33,520 million, primarily due to higher depreciation charges related to newly-commissioned UNEG facilities, combined with slower revenue growth due to delayed tariff increase.
"Consolidated adjusted EBITDA for 2012 was RUB 82,133 billion. Adjusted profit for the periodof RUB 29,956 million".
"The RAB regulation has had a positive impact on the development of the unified national electric grid.As a result, in 2012, total additions to property, plant and equipment amounted to RUB 162.2 billion.
"Federal Grid Company's debt totalled RUB 216,418 million as at 31 December 2012 compared to RUB 132,780 million as at 31 December 2011. The growth was attributed to necessity to finance large-scale investment program. The company used diversified instruments at the Russian market to draw new debt: Russian bonds, including 10-year RUB 10 billion local bond with a CPI-linked coupon issued in August 2012 and bank loans. The Company also successfully placed its debut Eurobonds of RUB 17.5 billion in December 2012, with a coupon of 8.45% and due in 2019.
Federal Grid Company's net debt as at 31 December 2012 stood at RUB 168,002 million, compared with RUB 85,232 million as at 31 December 2011".
"The results of 2012 demonstrate how Federal Grid Company continues to pursue balanced financial policies aimed at facilitating economic growth through the long-term development of the country‟s electricity grid infrastructure."
Operating expenses
(in millions of rubles, except for percentages) | Year ended31 December 2012 | Percentageof total operating expenses | Year ended 31 December 2011 (1) | Percentage of total operating expenses | Percentagechangebetween yearsended 31December2012 and 2011 |
Depreciation of property, plant and equipmentand amortisationof intangible assets | 44,479 | 40.2% | 34,052 | 33.8% | 30.6% |
Employee benefit expenses and payroll taxes | 26,311 | 23.8% | 24,046 | 23.9% | 9.4% |
Purchased electricity | 13,320 | 12.0% | 13,781 | 13.7% | (3.3)% |
Repair and maintenance services | 3,732 | 3.4% | 3,666 | 3.6% | 1.8% |
(Reversal) / accrualof allowance for doubtful debtors | (1,405) | (1.3)% | 4,305 | 4.3% | - |
Other expenses | 24,193 | 21.9% | 20,900 | 20.7% | 15.8% |
Total operating expenses (2) | 66,151 | 100.0% | 66,698 | 100.0% | (0.8)% |
(1) As presented in comparative information in the 2012 audited consolidated financial statements.
(2) Excluding depreciation of property, plant and equipment and amortisation of intangible assets.
Excluding depreciation of property, plant and equipment and amortisation of intangible assets, operating expenses amounted to RUB 66,151 million in 2012, a decline of 0.8%, compared with Russian inflationof 6.6% for the same period. Depreciation and amortisation accounted for 40.2% of the Company's total costs.
Purchases of electricity came to RUB 13,320 million and declined by 3.3% on 2011, which can be explained by a reduction of actual volumes of electricity losses during transmission owing to increased UNEG efficiency as well as a result of decreased wholesale electricity prices.
Staff costs, which accounted for 23.8% of the total, increased by 9.4% to RUB 26,311 million which was primarily explained by an increase in the average number of employees and an increase in average salaries due to indexation of remuneration.
Repairs and maintenance accounted for 3.4% of total costs, and increased by 1.8% to RUB 3,732 million.
Reversal of allowance for doubtful debtors in 2012 amounted to RUB 1,405 million as compared to accrual of allowance in 2011 amounted to RUB 4,305 million.
Other expenses, which were 21.9% of the total, increased by 15.8% to RUB 24,193 million primarily due to loss on disposal of property, plant and equipment as compared to gain on disposal in 2011,65% increase of tax expenses, other on income tax, and 41% increase of expense for electricity transit via foreign countries.
Selected Balance Sheet Items
in millions of rubles | 31 December 2012 | 31 December 2011 |
ASSETS | ||
Non-current assets | 1,163,829 | 1,074,506 |
Property, plant and equipment | 1,096,535 | 980,677 |
Investments in associates | 1,403 | 910 |
Total current assets | 96,412 | 89,171 |
Total assets | 1,260,241 | 1,163,677 |
LIABILITIES AND EQUITY | ||
Non-current liabilities | 278,979 | 216,036 |
Long-term debt | 193,200 | 130,778 |
Current liabilities | 73,466 | 49,534 |
Total liabilities | 352,445 | 265,570 |
Equity attributable to shareholders | 907,063 | 897,314 |
Non-controlling interest | 733 | 793 |
Total equity | 907,796 | 898,107 |
Total liabilities and equity | 1,260,241 | 1,163,677 |
The audited consolidated IFRS financial statements of the FGC UES Group for 2012 are available onthe Company's website, along with the 2012 Management Report, www.federal-grid.com and available following the link http://www.fsk-ees.ru/eng/investors/financial_disclosure/ifrs_financial_reports/.
Conference Call
The Company will host an investor and analyst conference call on Tuesday 23 April 2013at 09:00 UK time (12:00 Moscow time).
Dial in details are as follows:
UK Standard Dial In Russia Dial In (from a landline) | +44(0) 1452 586 506 8108 002 267 2044 |
USA Free Call Dial In | 1877 256 1273 |
Germany Free Call Dial In | 0800 664 8508 |
Switzerland Free Call Dial In | 0800 900 110 |
Sweden Free Call Dial In | 0200 892 579 |
All participants must register for this conference using the URL below | |
http://emea.directeventreg.com/registration/49271874 | |
If you have not registered, you must press *0 when prompted to enter your passcode
Not registering for the call may lead to additional waiting times
A replay of the call will be available until 30 April 2013 using the following details:
UK Free Call Dial In International Dial In | 0800 953 1533 +44 (0) 1452 55 00 00 |
Replay Access Code | 49271874# |
A transcript of the conference call will become available on the Federal Grid website www.federal-grid.com.
Enquiries:
Contacts
| ||
Investors / Analysts | ||
Federal Grid IR team | Work | Mobile |
Alexander Duzhinov | +7 (495) 710 9064 | +7 (916) 041 8053 |
Nadezda Sukhova | +7 (495) 710 9541 | |
Egor Toropov | +7 (495) 710 9333 ext. 2275 | |
Vladimir Baklanov | +7 (495) 710 9333 ext. 2926 | |
International Media | ||
M:Communications | ||
Tom Blackwell | +7 (919) 102 9064 | +7 (495) 663 8009 |
Sam VanDerlip | +44 20 7920 2356 | +44 7725 026 247 |
About Federal Grid Company
Federal Grid Company is the operator and manager of Russia's unified electricity transmission grid system. Company operates over 132,000 km of transmission lines and has over 335 GVA of installed transformer capacity. Based on the length of transmission lines and transformer capacity in place, Federal Grid is the largest publicly traded electricity transmission company in the world.
Federal Grid's business is to provide electricity transmission and technological connection services. It maintains and develops the grid system and supervises grid facilities and infrastructure in 73 regionsof Russia, covering a territory of 13.6 million square kilometres. Its customers are regional distribution companies, electricity suppliers and large industrial enterprises. The Company is a natural monopoly with 79.64% stake controlled by the Government of Russia.
Federal Grid Company was incorporated in June 2002 as part of reorganisation of Russia's electrical power industry.
Federal Grid Company's common shares are included on the MICEX-RTS stock exchange underthe ticker FEES and the Company's GDRs are listed on the London Stock Exchange and traded under the same FEES symbol.
In 2012 the Company's IFRS revenue was RUB 140,313 million, adjusted EBITDAwas RUB 82,133 million, and adjusted profit for the period was RUB 29,956 million.
Further information can be found at www.federal-grid.com