Russian Grids financial results for 2012

24.04.2013

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:

  • • Revenue1: RUB 621.6 bn (FY 2011: RUB 634.6 bn)
  • • EBITDA: RUB 117.2 bn (FY 2011: RUB 116.5 bn)
  • • EBITDA margin: 18.9% (FY 2011: 18.4%)
  • • Net profit: RUB 31.7 bn (FY 2011: RUB 39.0 bn)
  • • Net cash flows generated by operating activities: RUB 88.8bn (FY2011:RUB 89.3bn)

1 Including government subsidies

Key corporate highlights:

  • • Transfer of MRSK Holding’s sole executive body powers to Federal Grid Company
  • • Subsequent presidential decree No. 1567 «On Joint Stock Company Russian Grids»
  • • Increase of authorized capital by RUB 4.9 bn as a result of additional share issue
  • • In December 2012 an additional share issue was registered by the Federal Service for Financial Markets. As at 31 December 2012, advances received for the share issue totaled RUB 19.8bn.
  • • Tariff decisions taken: 44 regions are operating under RAB regulation and 21 regions are operating under the indexation method
  • • Approval of the adjusted consolidated investment programme for 2012 and 2013–2017

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: +7495 213 0981

USA dial-in: +1646 254 3369

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: +1 347 366 9565

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

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