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A meeting of the Company’s Board of Directors was held on 21 December 2017, which approved the Company’s Business Plan for 2018 and forecast indicators for 2019-2022. The Business Plan for 2018 is formed taking into account the draft of the Forecast of socio-economic development of the Russian Federation for 2018 and the planned period of 2019-2020 (hereinafter – the Forecast), prepared by the Ministry of Economic Development of Russia. Scenario conditions for the formation of the Business Plan for 2018 provide for indexation of tariffs for electricity transmission services in accordance with the Forecast, as well as indicators of dividend policy in accordance with Order of the Government of the Russian Federation dated 29.05.2017 № 1094.
Indicators of the Company’s Business Plan for 2018:
Data in bln RUB, unless specified otherwise
|
Indicators |
Expected fact for 2017 |
Planned for 2018 |
Change, % |
|
Revenue (total), including: |
91,4 |
95,6 |
4,6% |
|
Revenue from electric energy transmission |
88,6 |
92,8 |
4,7% |
|
Revenue from grid connection |
1,3 |
1,6 |
23,1% |
|
Other revenue |
1,5 |
1,2 |
- 20,0% |
|
Cost of sales |
79,6 |
83,2 |
4,5% |
|
Sales profit1 |
9,6 |
10,1 |
5,2% |
|
Sales profit margin, % |
10,5% |
10,6% |
0,1 p.p. |
|
EBITDA2 |
19,1 |
19,3 |
1,0% |
|
EBITDA margin, % |
20,9% |
20,2% |
- 0,7 p.p. |
|
Net profit |
1,7 |
2,8 |
64,7% |
|
Net profit margin, % |
1,9% |
2,9% |
1,0 p.p. |
|
Amount of electric energy transmitted, billion kWh |
52,0 |
47,5 |
- 8,7% |
|
Amount of electric energy transmitted, billion kWh (in comparable conditions) |
47,2 |
47,5 |
0,6% |
|
Electric energy losses, % |
10,27% |
11,02% |
0,75 p.p. |
|
Electric energy losses, % (in comparable conditions) |
11,26% |
11,02% |
- 0,24 p.p. |
|
Indicators |
As at 31.12.2017 |
As at 31.12.2018 |
Change, % |
|
Total assets |
120,4 |
120,7 |
0,2% |
|
Net assets |
57,6 |
59,8 |
3,8% |
|
Loans and credits |
42,2 |
41,0 |
- 2,8% |
|
Cash and cash equivalents + Financial investments (short-term) |
0,2 |
0,4 |
100,0% |
|
Net debt3 |
42,0 |
40,6 |
-3,3% |
|
[1] Revenue net of costs, selling and administrative expenses |
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[2] EBITDA is calculated as follows: net profit + profit tax and other similar mandatory payments + interest payable + depreciation charges |
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|
[3] Net debt is calculated as follows: long-term debt + short-term debt – cash and cash equivalents – short-term financial investments |
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Planned revenues for electric energy transmission services in the framework of the Business Plan for 2018 is 4,6% above the expected level by the end of 2017, which is due to an increase of tariffs for electric energy transmission services from 1 July 2018, with termination of "last mile" contracts in the framework of the current legislation as a negative factor for the company’s revenues. Forecast revenues for grid connection services in 2018 are expected in the amount of 1,6 bln RUB, which is 23,1% higher than the expected revenues following the results of 2017. The increase in revenue is due to the planned implementation in 2018 of major grid connection contracts in the Belgorod, Voronezh and Lipetsk regions. In 2018, the Company forecasts revenue from other activities in the amount of 1.2 bln RUB. Other revenues include income from sale of electricity, rental of property, income from maintenance and repair, maintenance of street lighting networks, provision of services to support grid connection and others. The decrease in other revenue following the results of 2018 is due to the receipt in 2017 of additional revenues from the sale of electricity.
The increase of cost of sales relative to the expected fact in 2017 is associated with growth of non-influenceable costs, which account for more than 60% of all expenses of the company. The item "Purchase of electricity for compensation of losses" has the biggest increase in the amount of 1,6 bln RUB or 11,1% of the expected fact in 2017. In 2018, influenceable costs are planned to increase by 0,8 bln RUB or 2.9% of the expected fact in 2017, which is mainly due to a decrease in costs under the item "Losses of past years". As a result, in the approved Business Plan it was possible to fix the forecast growth of the cost price below the revenue growth rate.
Earnings before interest, taxes, depreciation and amortization (EBITDA) is projected above the expected outcome in 2017 and will be 19,3 bln RUB. Implementation of the risk of increasing arrears for services rendered by the company can provide negative impact on the financial result. Positive factors for the company’s financial results can be a decrease in the average weighted borrowing rate, exceeding the marginal tariff growth for a number of branches of the Company to compensate for the termination of "last mile" contracts and optimization of operating costs within the framework of the cost management program. Net profit for 2018 is projected in the amount of 2,8 bln RUB.
The projected value of the volume of electric energy transmission services in comparable conditions, according to the Business Plan for 2018, will increase by 0,6% and will be 47,5 billion kWh. The size of planned relative value of losses in 2018, calculated in comparable conditions of 2017, is lower than the expected fact in 2017 by 0,24 p.p. and will be 11,02%.
The Company’s total assets as at 31 December 2018 are projected at the level of the expected fact in 2017 and will be 120,7 bln RUB. The Company’s net assets following the results of 2018 are forecast at the level of 59,8 bln RUB, which is 3,8% above the expected indicator at the end of 2017. Net debt3 is planned at the level of 40,6 bln RUB, which means the indicator will decrease by 1,4 bln RUB during 2018, mainly due to a reduction of the loan portfolio.
Other IR-news of the Company can be found at: https://www.mrsk-1.ru/en/investors/presentations/ir_news/