Hotline of power engineering specialists:
Russian Grids financial results for 2012
24 April 2013. Moscow, Russia — JSC Russian Grids (LSE: MRSK) (the «Company»), the largest electricity distribution grid company in Russia, today announces its audited financial results for the year ended 31 December 2012.
Key financial indicators:
1 Including government subsidies
Key corporate highlights:
Commenting on the results, Alexei Demidov, First Deputy Executive Director of JSC Russian Grids, said:
«Russian Grids delivered solid performance in 2012, increasing our EBITDA margin to 18.9% despite continued tariff revisions. We generated significant net cash flow from our operations whilst continuing to optimise our operating expenses.
„Our focus in 2012 was on increasing efficiency through continued modernisation of the grid infrastructure and reduction in electricity distribution losses. We continued to focus on delivering our long-term strategy aimed at ensuring reliable electricity supply to customers and leading the development of the power distribution system in Russia through implementation of innovative technologies.
“2012 was an important year for the Company as the electricity distribution industry was undergoing major reforms. Russian Grids will seek to generate further operational efficiencies to continue to maintain a resilient financial position and maximise cash generation.»
FINANCIAL SUMMARY
| billions, RUB | FY 2012 | FY 2011 | Change % |
|---|---|---|---|
| Revenue | 621.6 | 634.6 | -2.0 |
| EBITDA | 117.2 | 116.5 | 0.6 |
| EBITDA margin | 18.9% | 18,4% | 0.5 ppt |
| Operating profit | 49.7 | 59.3 | -16.2 |
| Operating margin | 8.0% | 9.3% | -1.3 ppt |
| Net profit | 31.7 | 39.0 | -18.7 |
| Net profit margin | 5.1% | 6.1% | -1 ppt |
| Earnings per share (RUB) | 0.35 | 0.53 | -34.0 |
| Net cash flows generated by operating activities | 88.8 | 89.3 | -0.6 |
| Net cash flows used in investing activities | (153.0) | (121.8) | 25.6 |
In 2012, the Company’s revenue decreased by 2.0% y-o-y and amounted to RUB 621.6 bn (FY 2011: RUB 634.6 bn. The decline was due to the decrease of the uniform tariff for electricity distribution related to the revision of long-term regulation parameters (including RAB).
Operating expenses totaled RUB 574.2bn, representing a decline by 0.5% y-o-y (FY 2011: RUB 577.2 bn), mainly due to the decrease in expenses for purchasing electricity to compensate for technological losses and the revision of the unregulated price cap.
EBITDA increased by 0.6% y-o-y to RUB 117.2 bn against RUB 166.5 bn in the previous period, while EBITDA margin increased by 0.5 ppt to 18.9%, compared to 18.4% in 2011.
Operating profit decreased by 16.2% y-o-y to RUB 49.7bn against RUB 59.3 bn in 2011 while the operating margin decreased by 1.3 ppt y-o-y to 8.0% (FY 2011:9.3%).
In 2012, the Company’s net profit totaled RUB 31.7bn, declining by 18.7% y-o-y (FY 2011: RUB 39.0 bn), with net profit margin slightly shrinking by 1 ppt y-o-y to 5.1%, compared to 6.1% in 2011. The decline in net profit was caused by the decrease in revenue.
Net cash flows generated from operating activities in 2012 totaled RUB 88.8 bn (2011: RUB 89.3bn).
As of 31 December 2012, net cash flows used in investing activities amounted to RUB 153.0 bn, a growth of 25.6% y-o-y (FY 2011: RUB 121.8 bn) as a result of continued investments in the development of the distribution grid network including the increase in acquisition of property, plant and equipment, as well as placement of bank deposits. Capital expenditures increased by 1.6% y-o-y totaling RUB 141.6 bn (FY 2011: RUB 139.4 bn).
As of 31 December 2012, total assets of the Company grew by 10.7% y-o-y to RUB 972.7 bn (FY 2011: RUB 879.1 bn) as a result of the increase in property, plant and equipment related to the execution of the investment programme.
Net cash flows received from financing activities decreased by 9.6% to RUB 51.0bn (2011: RUB 56.4 bn).
In 2012, the Company’s total debt was RUB 228.9 bn compared to RUB 197.8 bn in 2011. Net debt totaled RUB 193.2bn compared to RUB148.9bn in 2011, while the net debt / EBITDA ratio amounted to 1,6х (2011: 1,3х). The increase in net debt was due to additional loans and borrowings for financing the investment programme.
In 2012, the Company’s cash balances stood at RUB 35.7 bn (FY 2011: RUB 48.9 bn). The decline was mainly due to the placement of funds on deposits classified as short-term current assets.
* * *
A conference call for investors and analysts will be held today at 2:00PM London / 5:00PM Moscow / 9:00AM New York.
Participant dial-in:
UK dial-in: +44(0)20 3450 9571
Russia dial-in:
USA dial-in:
Confirmation Code: 2425063
The call will be recorded and there will be a replay facility available for 14 days until 8 May 2013 as follows:
UK dial-in: +44 (0)20 3427 0598
Russia dial-in: +7 (495) 705 9453
USA dial-in:
National free phone, UK: 0800 358 7735
National free phone, US: 1866 932 5017
Replay passcode: 2425063
The press release and the presentation will be available on the Company’s website: www. holding-mrsk. ru.
* * *
For further information:
JSC Russian Grids
Julia Martynova, IR +7(495) 995 5333 (ext. 2070)
FTI Consulting
Larisa Millings +44 20 7831 3113
Oleg Leonov / Maria Shiryaevskaya +7 (495) 795 0623
JSC Russian Grids is the largest electricity distribution grid company in Russia and, the Company believes, one of the largest electricity distribution grid companies in the world by length of distribution lines and installed transformer capacity. JSC Russian Grids holds interests in and manages 11 interregional and five regional distribution grid companies in Russia. As at 31 December 2012, JSC Russian Grids together with its subsidiaries owned and operated approximately 2.1 million kilometres of electricity distribution lines with a total installed transformer capacity of approximately 403,7 GVA. Through its subsidiaries, the Company operates in 69 regions of Russia, covering an area of approximately 7.8 million square kilometres occupied by approximately 85 percent of Russia’s total population according to Rosstat. The Company reported revenues of RUB 621.6bn and net profit of RUB 31.7bn for 2012.
Group of companies «Russian Grids»
Consolidated Statement of Comprehensive Income for the year ended 31 December 2012 (in millions of Russian roubles, unless otherwise stated)
| Year ended 31 December 2012 |
Year ended 31 December 2011 |
|
|---|---|---|
| Revenue and government subsidies | 621,633 | 634,608 |
| Operating expenses | (574,197) | (577,214) |
| Other income, net | 2,252 | 1,860 |
| Results from operating activities | 49,688 | 59,254 |
| Finance income | 6,128 | 3,226 |
| Finance costs | (11,769) | (9,069) |
| Net finance costs | (5,641) | (5,843) |
| Share of profit of equity accounted investees (net of income tax) | 70 | 244 |
| Profit before income tax | 44,117 | 53,655 |
| Income tax expense | (12,463) | (14,689) |
| Profit for the year | 31,654 | 38,966 |
| Other comprehensive income | ||
| Net change in fair value of available-for-sale financial assets | (73) | (264) |
| Net change in fair value of available-for-sale financial assets transferred to profit or loss | (44) | (232) |
| Income tax on other comprehensive income | 27 | 105 |
| Other comprehensive income for the year, net of income tax | (90) | (391) |
| Total comprehensive income for the year | 31,564 | 38,575 |
| Profit attributable to: | ||
| Owners of the Company | 17,355 | 23,438 |
| Non-controlling interest | 14,299 | 15,528 |
| Total comprehensive income attributable to: | ||
| Owners of the Company | 17,265 | 23,047 |
| Non-controlling interest | 14,299 | 15,528 |
| Earnings per share | ||
| Basic and diluted earnings per ordinary share | RUB 0.35 | RUB 0.53 |
Group of companies «Russian Grids»
Consolidated Statement of Financial Position as at 31 December 2012 (in millions of Russian roubles, unless otherwise stated)
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 760,857 | 687,489 |
| Intangible assets | 4,609 | 4,368 |
| Investments in equity accounted investees | 104 | 1,280 |
| Non-current accounts receivable | 12,424 | 16,818 |
| Other investments and financial assets | 10,144 | 9,837 |
| Deferred tax assets | 3,711 | 2,599 |
| Total non-current assets | 791,849 | 722,391 |
| Current assets | ||
| Inventories | 13,742 | 12,907 |
| Other investments and financial assets | 35,105 | 8,728 |
| Current tax assets | 3,156 | 4,516 |
| Trade and other receivables | 93,193 | 81,682 |
| Cash and cash equivalents | 35,691 | 48,853 |
| Total current assets | 180,887 | 156,686 |
| Total assets | 972,736 | 879,077 |
Group of companies «Russian Grids»
Consolidated Statement of Financial Position as at 31 December 2012 (in millions of Russian roubles, unless otherwise stated)
| 31 December 2012 | 31 December 2011 | |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Share capital | 49,947 | 45,039 |
| Share premium | 16,244 | 6,036 |
| Treasury shares | (1,786) | (1,786) |
| Reserve for issue of shares | 19,751 | 9,382 |
| Other reserves | 190 | 280 |
| Retained earnings | 225,583 | 207,790 |
| Total equity attributable to equity holders of the Company | 309,929 | 266,741 |
| Non-controlling interest | 184,757 | 177,136 |
| Total equity | 494,686 | 443,877 |
| Non-current liabilities | ||
| Loans and borrowings | 188,763 | 168,831 |
| Trade and other payables | 18,868 | 30,081 |
| Employee benefits | 9,930 | 9,660 |
| Deferred tax liabilities | 36,653 | 32,478 |
| Total non-current liabilities | 254,214 | 241,050 |
| Current liabilities | ||
| Loans and borrowings | 40,098 | 28,965 |
| Trade and other payables | 168,263 | 158,689 |
| Provisions | 14,106 | 5,977 |
| Current tax liabilities | 1,369 | 519 |
| Total current liabilities | 223,836 | 194,150 |
| Total liabilities | 478,050 | 435,200 |
| Total equity and liabilities | 972,736 | 879,077 |
Group of companies «Russian Grids»
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)
| Year ended 31 December 2012 |
Year ended 31 December 2011 |
|
|---|---|---|
| OPERATING ACTIVITIES | ||
| Profit for the year | 31,654 | 38,966 |
| Adjustments for: | ||
| Depreciation and amortization | 61,499 | 54,075 |
| Impairment of property, plant and equipment | 4,626 | - |
| Finance costs | 11,769 | 9,069 |
| Finance income | (6,128) | (3,226) |
| Loss on disposal of property, plant and equipment | 253 | 106 |
| Share of profit of equity accounted investees (net of income tax) | (70) | (244) |
| Gain from disposal of subsidiaries | (56) | - |
| Other non-cash transactions | 274 | 545 |
| Income tax expense | 12,463 | 14,689 |
| Operating profit before working capital changes and reserves | 116,284 | 113,980 |
| Change in trade and other receivables | (10,607) | (6,970) |
| Change in financial assets related to employee benefit fund | (60) | (11) |
| Change in inventories | (847) | (1,565) |
| Change in trade and other payables | 1,723 | 6,285 |
| Change in employee benefit liabilities | 270 | 621 |
| Change in provisions | 8,129 | 2,780 |
| Cash flows from operations before income taxes and interest paid | 114,892 | 115,120 |
| Income taxes paid | (7,972) | (12,186) |
| Interest paid | (18,097) | (13,596) |
| Net cash flows from operating activities | 88,823 | 89,338 |
Group of companies «Russian Grids»
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)
| Year ended 31 December 2012 |
Year ended 31 December 2011 |
|
|---|---|---|
| INVESTING ACTIVITIES | ||
| Acquisition of property, plant and equipment and intangible assets | (131,029) | (124,836) |
| Proceeds from sale of property, plant and equipment | 806 | 1,087 |
| Acquisition of investments and placement of bank deposits | (35,741) | (9,367) |
| Proceeds from disposal of investments and withdrawal of bank deposits | 8,990 | 10,076 |
| Disposal of subsidiaries, net of cash disposed of | 144 | - |
| Disposal of investment in equity accounted investee | 800 | - |
| Dividends received | 13 | 20 |
| Interest received | 3,065 | 1,202 |
| Net cash flows used in investing activities | (152,952) | (121,818) |
| FINANCING ACTIVITIES | ||
| Proceeds from loans and borrowings | 90,296 | 139,724 |
| Repayment of loans and borrowings | (54,255) | (87,002) |
| Proceeds from shares issued | 25,485 | 10,687 |
| Purchase of non-controlling interest in subsidiaries | (5,898) | - |
| Dividends paid | (1,476) | (1,670) |
| Repayment of finance lease liabilities | (3,185) | (5,296) |
| Net cash flows from financing activities | 50,967 | 56,443 |
| Net (decrease)/increase in cash and cash equivalents | (13,162) | 23,963 |
| Cash and cash equivalents at beginning of year | 48,853 | 24,890 |
| Cash and cash equivalents at end of year (Note 18) | 35,691 | 48,853 |
Group of companies «Russian Grids»
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)
| Year ended 31 December 2012 |
Year ended 31 December 2011 |
|
|---|---|---|
| OPERATING ACTIVITIES | ||
| Profit for the year | 31,654 | 38,966 |
| Adjustments for: | ||
| Depreciation and amortization | 61,499 | 54,075 |
| Impairment of property, plant and equipment | 4,626 | - |
| Finance costs | 11,769 | 9,069 |
| Finance income | (6,128) | (3,226) |
| Loss on disposal of property, plant and equipment | 253 | 106 |
| Share of profit of equity accounted investees (net of income tax) | (70) | (244) |
| Gain from disposal of subsidiaries | (56) | - |
| Other non-cash transactions | 274 | 545 |
| Income tax expense | 12,463 | 14,689 |
| Operating profit before working capital changes and reserves | 116,284 | 113,980 |
| Change in trade and other receivables | (10,607) | (6,970) |
| Change in financial assets related to employee benefit fund | (60) | (11) |
| Change in inventories | (847) | (1,565) |
| Change in trade and other payables | 1,723 | 6,285 |
| Change in employee benefit liabilities | 270 | 621 |
| Change in provisions | 8,129 | 2,780 |
| Cash flows from operations before income taxes and interest paid | 114,892/td> | 115,120 |
| Income taxes paid | (7,972) | (12,186) |
| Interest paid | (18,097) | (13,596) |
| Net cash flows from operating activities | 88,823 | 89,338 |
Group of companies «Russian Grids»
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)
| Year ended 31 December 2012 |
Year ended 31 December 2011 |
|
|---|---|---|
| INVESTING ACTIVITIES | ||
| Acquisition of property, plant and equipment and intangible assets | (131,029) | (124,836) |
| Proceeds from sale of property, plant and equipment | 806 | 1,087 |
| Acquisition of investments and placement of bank deposits | (35,741) | (9,367) |
| Proceeds from disposal of investments and withdrawal of bank deposits | 8,990 | 10,076 |
| Disposal of subsidiaries, net of cash disposed of | 144 | - |
| Disposal of investment in equity accounted investee | 800 | - |
| Dividends received | 13 | 20 |
| Interest received | 3,065 | 1,202 |
| Net cash flows used in investing activities | (152,952) | (121,818) |
| FINANCING ACTIVITIES | ||
| Proceeds from loans and borrowings | 90,296 | 139,724 |
| Repayment of loans and borrowings | (54,255) | (87,002) |
| Proceeds from shares issued | 25,485 | 10,687 |
| Purchase of non-controlling interest in subsidiaries | (5,898) | - |
| Dividends paid | (1,476) | (1,670) |
| Repayment of finance lease liabilities | (3,185) | (5,296) |
| Net cash flows from financing activities | 50,967 | 56,443 |
| Net (decrease)/increase in cash and cash equivalents | (13,162) | 3,963 |
| Cash and cash equivalents at beginning of year | 48,853 | 24,890 |
| Cash and cash equivalents at end of year (Note 18) | 35,691 | 48,853 |