22 Apr 2016 11:39
ROSSETI ANNOUNCES FULL YEAR 2015 IFRS RESULTS
22 April 2016, Moscow, Russia - PJSC ROSSETI (LSE: RSTI) ("ROSSETI" or the "Company"), the largest electricity transmission and distribution grid company in Russia, today announces its consolidated IFRS results for the companies of Rosseti Group (the "Group") for the 12 months ended 31 December 2015.
Key financial indicators:
· Revenue: RUB 766.8 bn (2014: RUB 759.6 bn)
· EBITDA: RUB 248.9 bn (2014: RUB 131.8 bn)
· Adjusted EBITDA(1) : RUB 273.1 bn (2014: RUB 249.0 bn)
· Net profit: RUB 81.6 bn (2014: loss of RUB (24.3) bn)
· Adjusted net profit(2) : RUB 100.9 bn (2014: RUB 69.5 bn)
· Net cash flows generated by operating activities: RUB 156.7 bn (2014: RUB 160.7 bn)
· Net debt/EBITDA ratio: 2.0x
Key operational indicators:
· Electricity transmission: 720.5 bn kWh (2014: 715 bn kWh)
· Technological connections: 19.705 MW (2014: 17.771 MW)
· Sales of electricity: 1.541 mn kWh (2014: RUB 13.158 mn kWh)
Key corporate highlights:
· The extraordinary general meeting of shareholders (EGM) approved an increase in the charter capital of PJSC ROSSETI, and on 3 November 2015 a placement of the Company's shares was commenced.
· Successfully placement of four issues of exchange-traded bonds totalling RUB 31 billion.
· Memorandum signed with State Grid Company of China to form a joint venture and to construct a 500 kV transit grid system in the Tomsk region.
· Government OFZ bonds amounting to RUB 32 bn were used as payment for shares in PJSC Lenenergo.
· Creditworthiness of ROSSETI was maintained at a high level, allowing the Group to carry out effective borrowing policies on the capital markets. Changes to the Group's credit rating during the reporting period were connected only to changes in the sovereign rating of the Russian Federation.
· The Board of Directors of ROSSETI approved the Action Plan (Road Map) for introducing the Corporate Governance Code into the activities of ROSSETI.
Events subsequent to the reporting period:
· The Board of Directors reviewed the consolidated capex program for 2016-2020.
Commenting on the 2015 financial results, Oksana Shatokhina, Deputy Director General for Economic Affairs of ROSSETI, said:
"The past year was a challenging one for the Russian economy, due to declining industrial production, high inflation and volatile currency exchange rates. As a result of these conditions, electricity consumption declined and counterparties' ability to meet payments deteriorated. However, thanks to the focus and hard work of the Group to optimise its investment and operational activities, ROSSETI reported robust financial results for 2015. Operational expenses were reduced by 14.1% and EBITDA increased by 88.8%, while EBITDA margins reached a record 32.5% during the reporting period.
"Our priorities for 2016 remain the close monitoring of payment discipline of our counterparties and preservation of financial stability at our key subsidiaries, both of which are necessary to successfully carry out the strategic initiatives of ROSSETI Group."
FINANCIAL PERFORMANCE
Indicators | 2015 | 2014 | Change |
RUB bn | RUB bn | % | |
Revenue, including | 766.8 | 759.6 | 0.9 |
- Electricity transmission | 650.4 | 620.0 | 4.9 |
- Sales of electricity and capacity | 55.9 | 86.5 | (35.4) |
Operating expenses | 652.5 | 759.8 | (14.1) |
EBITDA | 248.9 | 131.8 | 88.8 |
Adjusted EBITDA | 273.1 | 249.0 | 9.7 |
EBITDA margin | 32.5% | 17.4% | 15.1 p.p. |
Adjusted EBITDA margin | 35.6% | 32.8% | 2.8 p.p. |
Net profit / loss | 81.6 | (24.3) | - |
Adjusted net profit | 100.9 | 69.5 | 45.2 |
Net cash flows generated by operating activities | 156.7 | 160.7 | (2.5) |
In 2015, the Group's revenue increased by 0.9% y-o-y to RUB 766.8 bn (2014: RUB 759.6 bn). At the same time, revenue from electricity transmission rose by 4.9% (to RUB 650.4 bn), primarily driven by tariff indexation from 1 July 2015, the coming into force of the decision of the Russian Government (dated 11.05.2015, № 458) and the decree of the Russian Government (dated 28.02.2015 № 184) regarding assignment of owners of transmission facilities to territorial network organizations, as well as the changes to reciprocal boiler settlement formulas.
Group revenues from the sale of electricity decreased by 35.4% and amounted to RUB 55.9 bn as certain ROSSETI subsidiaries transferred the function of guaranteed supplier to external companies that had won guaranteed supplier tenders, in accordance with the resolution of the Russian Ministry of Energy.
The Group reduced operating expenses by 14.1% to RUB 652.5 bn (2014: RUB 759.8 bn), primarily as a result of initiatives to increase efficiency and reduce expenses of Group companies, in addition to lower amortization charges and no impairment losses on fixed assets and a partial reversal of losses on impairments following tariff-balance decisions. Personnel costs increased by 5.0% y-o-y, significantly less than the rate of inflation, and primarily due to salary indexation for industrial personnel in accordance with the Industry Tariff Agreement, but compensated for by strict cost control at the corporate headquarters. Material expenses decreased by RUB 5 bn or 3.0%, mainly as a result of purchasing less electricity for resale, following the transfer of guaranteed supplier status from certain subsidiaries to external companies.
As a result, EBITDA amounted to RUB 248.9 bn, up 88% y-o-y (2014: RUB 131.8 bn). EBITDA margin grew from 17.4% in 2014 to 32.5% in 2015.
The Group's net profit for the year amounted to RUB 81.6 bn compared to a net loss of RUB 24.3 bn in 2014. In addition to initiatives undertaken to enhance operational efficiency and reduce expenses, net profit was positively affected by increased financial income.
As of the end of 2015 the Group's assets increased by 8.1% to RUB 2,145.8 bn (At the end of 2014: RUB 1,984.1 bn), which was primarily due to an increase in fixed assets following the commissioning of new facilities as part of the investment programme.
The Group's net debt declined by 1.8% as at 31 December 2015 and amounted to RUB 487.2 bn (at December 31 2014: RUB 496.1 bn). The decrease in net debt was connected to an increase in cash and cash equivalents of 17.6%. The Group's net debt/EBITDA ratio at the end of 2015 was 2.0x.
Standard and Poor's credit rating of ROSSETI is the same as Russian sovereign rating, which indicates the Group's stable financial position.
Outlook
The Group's Business plans for 2016-2020 have been developed factoring in the difficult current macroeconomic environment, the trend of reduced electricity consumption, a CPI forecast in line with the forecasted socio-economic development of Russia in 2016-2017, limitations on debt financing and higher borrowing costs, deterioration in payment discipline of counterparties, as well as higher costs for imported and domestic equipment and services, and also measures to increase operational efficiency and reduce costs in order to mitigate the effect of negative macroeconomic factors.
Nonetheless, improving the efficiency of the Group remains a key priority for 2016. In order to fulfill this task, the Group's companies have developed a plan of measures to improve the efficiency and financial sustainability of the integrated power grid system under current macroeconomic conditions, while at the same time achieving all of the targets outline in the Development Strategy of Russia's integrated power grid.
* * *
The Company will hold a conference call for investors and analysts on 22 April 2016 at 3:00 PM Moscow (13:00 PM London / 8:00 AM New York).
Participant Dial-in:
United Kingdom: | +44 (0) 20 3427 1906 |
Russia: | +7 (495) 213 0977 |
United States: | +1 (646) 254 3361 |
Confernce ID: | Russian-language call: 4566940 English-language call: 4541860 |
Participants are advised to dial in 5-10 minutes prior to the start time.
A replay facility will be available for 7 days, and can be accessed using the following details:
United Kingdom: | +44 (0) 20 3427 0598 Toll free: 0800 358 77 35 |
Russia: | +7 (495) 705 9453 Toll free: 810 800 2870 1012 |
United States: | +1 (347) 366 9565 Toll free: +1 866 932 5017 |
Replay passcode: | Russian-language call: 4566940 English-language call: 4541860 |
* * *
For further information:
PJSC ROSSETI
Maria Stepanova, Head of IR +7(495) 995 5333 (ext. 3961)
Yulia Martynova, IR +7(495) 995 5333 (ext. 3834)
EM
Thomas Kiehn +7 (495) 363 2846
Irina Logutenkova +7 (495) 363 2846
PJSC ROSSETI holds interests in and manages 15 distribution grid companies and transmission grid company in Russia. The Company together with its subsidiaries owns and operates 2.3 million kilometers of electricity transmission and distribution lines with a total installed transformer capacity of 761 GVA. The Company operates in 78 regions of Russia.
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of PJSC ROSSETI. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industry, as well as many other risks specifically related to PJSC ROSSETI and its operations.
Year ended31 December 2015 | Year ended31 December 2014 | |||
Revenue | 766,812 | 759,608 | ||
Operating expenses | (652,538) | (759,805) | ||
Other income, net | 22,069 | 14,309 | ||
Results from operating activities | 136,343 | 14,112 | ||
Finance income | 16,238 | 10,712 | ||
Finance costs | (38,865) | (42,863) | ||
Net finance costs | (22,627) | (32,151) | ||
Share of loss of associates and joint ventures(net of income tax) | (4) | (10) | ||
Profit/(loss) before income tax | 113,712 | (18,049) | ||
Income tax expense | (32,110) | (6,208) | ||
Profit/(loss) for the year | 81,602 | (24,257) | ||
Other comprehensive income | ||||
Items that may be reclassified subsequently to profit or loss | ||||
Net change in fair value of available-for-sale financial assets | 7,825 | 125 | ||
Allowance for foreign currency translation differences | (151) | 650 | ||
Income tax related to items that may be reclassified subsequently to profit or loss | (1,565) | (22) | ||
Total items that may be reclassified subsequently to profit or loss | 6,109 | 753 | ||
Items that will never be reclassified subsequently to profit or loss | ||||
Remeasurements of the defined benefit liability | (5,186) | 3,023 | ||
Income tax related to items that will never be reclassified subsequently to profit or loss | 998 | (499) | ||
Total items that will not be reclassified subsequently to profit or loss | (4,188) | 2,524 | ||
Other comprehensive income for the year, net of income tax | 1,921 | 3,277 | ||
Total comprehensive income/(loss) for the year | 83,523 | (20,980) | ||
Profit/ (loss) attributable to: | ||||
Owners of the Company | 64,036 | (15,355) | ||
Non-controlling interest | 17,566 | (8,902) | ||
Total comprehensive income/(loss) attributable to: | ||||
Owners of the Company | 65,917 | (13,071) | ||
Non-controlling interest | 17,606 | (7,909) | ||
Earnings /(loss) per share | ||||
Basic and diluted earnings/(loss) per ordinary share (in RUB) | 0.401 | (0.096) |
31 December 2015 | 31 December 2014 | ||||
ASSETS | |||||
Non-current assets | |||||
Property, plant and equipment | 1,734,044 | 1,643,586 | |||
Intangible assets | 18,532 | 14,300 | |||
Investments in associates and joint ventures | 1,489 | 1,627 | |||
Non-current accounts receivable | 16,572 | 6,971 | |||
Other investments and financial assets | 31,928 | 22,952 | |||
Deferred tax assets | 8,579 | 7,117 | |||
Total non-current assets | 1,811,144 | 1,696,553 | |||
Current assets | |||||
Inventories | 33,921 | 26,630 | |||
Other investments and financial assets | 36,777 | 17,908 | |||
Current income tax prepayments | 4,201 | 4,636 | |||
Trade and other receivables | 162,624 | 155,776 | |||
Cash and cash equivalents | 97,090 | 82,576 | |||
Total current assets | 334,613 | 287,526 | |||
Total assets | 2,145,757 | 1,984,079 |
31 December 2015 | 31 December 2014 | |||
EQUITY AND LIABILITIES | ||||
Equity | ||||
Share capital | 163,154 | 163,154 | ||
Share premium | 212,978 | 212,978 | ||
Treasury shares | (2,713) | (2,725) | ||
Reserve for issue of shares | 33,473 | - | ||
Other reserves | (2,100) | (3,981) | ||
Retained earnings | 448,120 | 383,554 | ||
Total equity attributable to equity holders of the Company | 852,912 | 752,980 | ||
Non-controlling interest | 315,983 | 285,824 | ||
Total equity | 1,168,895 | 1,038,804 | ||
Non-current liabilities | ||||
Loans and borrowings | 465,439 | 485,409 | ||
Trade and other payables | 22,075 | 17,851 | ||
Employee benefits | 29,473 | 25,512 | ||
Deferred tax liabilities | 60,155 | 34,389 | ||
Total non-current liabilities | 577,142 | 563,161 | ||
Current liabilities | ||||
Loans and borrowings | 118,832 | 93,227 | ||
Trade and other payables | 267,972 | 268,469 | ||
Provisions | 11,421 | 18,871 | ||
Current income tax liabilities | 1,495 | 1,547 | ||
Total current liabilities | 399,720 | 382,114 | ||
Total liabilities | 976,862 | 945,275 | ||
Total equity and liabilities | 2,145,757 | 1,984,079 |
Year ended31 December 2015 | Year ended 31 December 2014 | |||
OPERATING ACTIVITIES | ||||
Profit/ (loss) for the year | 81,602 | (24,257) | ||
Adjustments for: | ||||
Depreciation and amortization of property, plant and equipment and intangible assets | 100,529 | 125,910 | ||
Impairment of property, plant and equipment | (5,090) | 81,690 | ||
Finance costs | 38,865 | 42,863 | ||
Finance income | (16,238) | (10,712) | ||
Loss on disposal of property, plant and equipment | 2,773 | 148 | ||
Share of loss of associates and joint ventures, net of income tax | 4 | 10 | ||
Impairment of accounts receivable | 28,778 | 18,872 | ||
Proceeds from subsidiary disposal | (12,410) | - | ||
Bad debt write-off | 381 | 200 | ||
Non-cash receipt of property, plant and equipment | (7,687) | (4,427) | ||
Non-cash settlement of technological connection agreements | (954) | (926) | ||
Other non-cash transactions | 177 | 14 | ||
Income tax expense | 32,110 | 6,208 | ||
Operating profit before changes in working capital | 242,840 | 235,593 | ||
Change in trade and other receivables (before impairment) | (25,118) | (30,019) | ||
Change in inventories (before impairment) | (6,414) | (2,151) | ||
Change in trade and other payables | 25,510 | 5,134 | ||
Change in employee benefit liabilities | (3,965) | (2,470) | ||
Change in provisions | (7,136) | 8,381 | ||
Other | (65) | 480 | ||
Cash flows from operating activities before income tax and interest paid | 225,652 | 214,948 | ||
Income tax paid | (6,196) | (7,322) | ||
Interest paid | (62,768) | (46,950) | ||
Net cash flows from operating activities | 156,688 | 160,676 | ||
Year ended31 December 2015 | Year ended 31 December 2014 | |||
INVESTING ACTIVITIES | ||||
Acquisition of property, plant and equipment and intangible assets | (174,052) | (204,193) | ||
Proceeds from the sale of property, plant and equipment | 2,265 | 4,702 | ||
Acquisition of investments and placement of bank deposits | (188,769) | (120,533) | ||
Proceeds from disposal of investments and withdrawal of bank deposits | 169,110 | 144,904 | ||
Dividends received | 44 | 31 | ||
Interest received | 15,662 | 8,799 | ||
Acquisition of subsidiaries | 1,221 | - | ||
Net cash flows used in investing activities | (174,519) | (166,290) | ||
FINANCING ACTIVITIES | ||||
Proceeds from loans and borrowings | 153,716 | 118,482 | ||
Repayment of loans and borrowings | (152,154) | (89,592) | ||
Proceeds from share premium | 33,473 | - | ||
Acquisition of non-controlling interest in subsidiaries | (413) | - | ||
Dividends paid | (2,032) | (2,020) | ||
Repayment of finance lease liabilities | (245) | (597) | ||
Net cash flows from financing activities | 32,345 | 26,273 | ||
Net increase in cash and cash equivalents | 14,514 | 20,659 | ||
Cash and cash equivalents at the beginning of year | 82,576 | 61,917 | ||
Cash and cash equivalents at the end of year | 97,090 | 82,576 |
[1] Adjusted EBITDA is calculated as EBITDA (earnings before interest, tax, depreciation, and amortization for the reporting period) excluding losses from impairment of fixed assets, impairments of financial investments and impairment of accounts receivable.
[2] Adjusted net profit is calculated as net profit for the period excluding losses from impairment of fixed assets, impairment of investments, impairment of accounts receivable and deferred income tax expense related to them.