23 Aug 2019 09:29
Federal Grid Company announces H1 2019 IFRS results
Moscow, 23 August 2019 - Federal Grid Company of Unified Energy System ("Federal Grid Company" or "the Company"; Moscow Exchange, LSE: FEES), part of PJSC ROSSETI Group of Companies, and the operator of the Unified National Electricity Grid ("UNEG"), announces its unaudited consolidated financial results for the three and six months ended 30 June 2019 under International Financial Reporting Standards (IFRS).
The financial results relate to Federal Grid Company and its subsidiaries ("the Group of Companies" or "the Group").
Key financial results:
Financial indicator, RUB billion | Six months ended 30 June 2018* | Six months ended 30 June 2019 | Change |
Revenues | 117.5 | 115 | (2.1%) |
Adjusted EBITDA(1) | 69.2 | 73.8 | 6.6% |
Profit for the period | 40.7 | 50.7 | 24.6% |
Total comprehensive income | 54.6 | 55.2 | 1.1% |
(1) Adjusted EBITDA is calculated as EBITDA (earnings before tax, financial income and expenses, depreciation and amortisation) excluding net reversal of impairment of property, plant and equipment, revenue from connection services, accrual of allowance for expected credit losses, gain on disposal of assets (only for 6 months of 2019), loss on disposal of associated company (only for 6M 2019), movement in provision for legal claims and including financial income.
* including retrospective adjustment
Operational performance highlights (2):
Operational indicator | Six months ended 30 June 2018 | Six months ended 30 June 2019 | Change |
Electricity supply from UNEG to consumers, billion kWh | 274.6 | 275.4 | 0.3% |
Total transformer capacity(3), GVA | 347.3 | 351.9 | 1.3% |
Transmission grid length(3), thousand km | 143.6 | 147.4 | 2.6% |
Number of substations (UNEG)(3) | 946 | 944 | (0.2%) |
(2) PJSC Federal Grid Company of Unified Energy System
(3) Including rented transmission lines and substations
Main developments of the first half of 2019 and after the reporting date:
·; In February 2019, Moody's rating agency upgraded Federal Grid Company's credit rating by one notch to investment grade Baa3, with a stable outlook. This rating action was taken following analogous upgrade to the Russian Federation's sovereign rating
·; In March 2019, the Company's debut Eurobond issuance of RUB 17.5 billion was redeemed.
·; In June 2019, at the Annual General Meeting of shareholders, the decision was taken to pay dividends for FY 2018 in the amount of RUB 20.4 billion.
·; As part of an asset exchange agreement, FGC consolidated certain UNEG facilities that had previously belonged to JSC "Far Eastern Energy Management Company"
·; The company fully met its obligations to pay dividends to shareholders for 2018. (4)
(4) As of 20 August 2019, Federal Grid Company has paid dividends in full in the prescribed manner. At the same time, there remain unclaimed dividends on account due to the absence of the required accurate address information for the issuer or the registrar, as well as the absence of banking details for the persons entitled to receive the mentioned above dividends.
Financial results for the six months ended 30 June 2019
The Group's revenue amounted to RUB 115 billion, including:
- revenue from electricity transmission services amounted to RUB 111.3 billion, a 6.1% (RUB 6.4 billion) increase year-on-year as a result of:
·; growth in revenue from electricity transmission following tariff increase by 5.5% from 1 July 2018;
·; growth of income from compensation of losses caused by the increase in the tariff for regulatory and technological losses of electricity, the amount of which is equal to the weighted average rate for the purchase of electricity and power of PJSC ATS in accordance with Decree № 458 of the Government of the Russian Federation, dated 11 May 2015.
- revenue from electricity sales amounted to RUB 0.8 billion (down RUB 5.2 billion year-on-year), due to a decrease in the volume of electricity sold by a Federal Grid Company subsidiary;
- revenue from connection services amounted to RUB 0.8 billion, a RUB 0.7 billion increase year-on-year as a result of service schedules determined by customer orders;
- revenue from grids repair and maintenance services increased by 66.7% (RUB 0.4 billion) and amounted to RUB 1.0 billion. Revenue growth is tied to the increase in the volume of services provided by Federal Grid Company subsidiaries;
- revenue for works on general contractor agreements executed by Federal Grid Company subsidiaries amounted to RUB 0.1 billion, a decrease of RUB 4.2 billion compared to the same period in 2018. The decrease is due to the change in the work completion percentage at various stages of construction projects.
Operating expenses (5)
(RUB billion,or %) | Six months ended 30 June 2018 | % of total operating expenses | Six months ended 30 June 2019 | % of total operating expenses | Change |
Purchased electricity for production needs | 18.3 | 25.9% | 19.0 | 27.0% | 3.8% |
Depreciation and amortisation | 16.1 | 22.8% | 18.2 | 25.9% | 13.0% |
Taxes and fees | 10.5 | 14.8% | 10.3 | 14.6% | (1.9%) |
Fuel for mobile gas-turbine electricity plants | 4.4 | 6.2% | 0.1 | 0.1% | (97.7%) |
Electricity transit | 0.3 | 0.4% | 0.8 | 1.2% | 166.7% |
Materials, repairs and technical maintenance | 2.0 | 2.8% | 2.4 | 3.4% | 20.0% |
Other | 19.2 | 27.1% | 19.6 | 27.8% | 2.1% |
Total operating expenses | 70.8 | 100.0% | 70.4 | 100.0% | (0.6%) |
(5) excluding expenses for general contractor services rendered by subsidiaries
In the first half of 2019, operating expenses amounted to RUB 70.4 billion, a slight decrease of 0.6% year-on-year:
·; An increase in certain expenses (electricity and capacity purchases to compensate for losses, electricity transit) was offset by lower costs on fuel for mobile gas-turbine electricity plants and tax charges;
·; The increase in depreciation by RUB 2.1 billion (+13.0%) is due to new capacities being commissioned;
·; The significant increase in electricity transit costs is associated with an increase in the volume of electricity transit via the Republic of Kazakhstan's grid;
·; The increase in repair and maintenance costs by RUB 0.4 billion (+20.0%) is due to the maintenance of UNEG facilities taken into ownership under the asset exchange agreement with JSC "Far Eastern Energy Management Company", and the implementation of emergency repairs and other necessary maintenance;
·; The increase in other operating expenses by RUB 0.4 billion (+2.1%) is due to the rise in rental costs stemming from the transaction with JSC "Far Eastern Energy Management Company", which rented non-UNEG facilities located in the Krasnodar Territory (Sochi, Adler district) and the Republic of Karelia (Sortavala, Valaam Island) to Federal Grid Company under a short-term lease agreement until they are transferred into operation to the distribution network companies.
For the six months of 2019, the Group's profit amounted to RUB 50.7 billion, a year-on-year increase of RUB 10.0 billion (+24.6%).
Total comprehensive income amounted to RUB 55.2 billion, an increase of RUB 0.6 billion (+1.1%).
Selected balance sheet items
(RUB billions) | 31 Deceber 2018 | 30 June 2019 | Change |
ASSETS |
|
|
|
Non-current assets | 1,057.5 | 1,121.3 | 6.0% |
Current assets | 151.6 | 141.3 | (6.8%) |
Total assets | 1,209.1 | 1,262.6 | 4.4% |
EQUITY AND LIABILITIES |
| ||
Non-current liabilities | 276.0 | 295.0 | 6.9% |
Current liabilities | 93.9 | 93.6 | (0.3%) |
Total liabilities | 369.9 | 388.6 | 5.1% |
Equity attributable to shareholders of PJSC FGC UES | 839.0 | 873.8 | 4.1% |
Non-controlling interest | 0.2 | 0.2 | - |
Total equity | 839.2 | 874.0 | 4.1% |
Total equity and liabilities | 1,209.1 | 1,262.6 | 4.4% |
The liabilities of the Group at the end of the reporting period increased by 5.1% compared to the beginning of the year and amounted to RUB 388.6 billion. The main factors associated with this rise are the increase in deferred tax liabilities (including a result of the asset exchange transaction with JSC "Far Eastern Energy Management Company") and the application of the new IFRS 16 «Leases» as of 1 January 2019, as a result of which the Group's balance sheet recognized liabilities under leases.
Federal Grid Company's condensed consolidated interim IFRS financial statements for the three and six months ended on 30 June 2019 are available on the Company's website:
https://www.fsk-ees.ru/eng/investors/financial_disclosure/ifrs_financial_reports/