28th Aug 2014 08:38
Federal Grid Company Announces 1H 2014 IFRS Results
Moscow, 28 August 2014 - Federal Grid Company of Unified Energy System ("Federal Grid Company" or "the Company") (Moscow Exchange, LSE: FEES), part of the Russian Grids Group of companies and operator of Russia's Unified National Energy Grid ("UNEG"), today announces its consolidated interim IFRS financial results for the six months ended 30 June 2014.
Key 1H 2014 financial and operational highlights: Financial:
• Revenue of RUB 85,360 million
• Adj. EBITDA* of RUB 49,892 million
• Adj. operating profit** of RUB 25,458 million
• Adj. profit for the period*** of RUB 19,379 million
• Adj. EPS**** of 0.015 RUB
• Gross debt ***** of RUB 273,015 million
* Adjusted EBITDA is calculated as EBITDA (profit for the period before income tax, finance income and costs, depreciation and amortisation), excluding non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, including finance income.
** Adjusted operating profit is calculated as operating profit, excluding non-specific impairment of property, plant and equipment.
*** Adjusted profit for the period is calculated as profit for the period, excluding non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, and related deferred income tax effects.
**** Adjusted EPS is calculated as adjusted profit for the period divided by the weighted average number of the Company's shares outstanding during the reporting period.
***** Gross debt is calculated as the sum of non-current debt, current debt and the current portion of non-current debt.
Operational:
• Electricity transmission from UNEG to consumers (net): 253 billion kWh
• Total transformer capacity: 331.7 GVA
• Transmission grid length in operations: 135.7 thousand km
• Number of substations******: 916
****** including leased / rented
Key 1H 2014 corporate developments:
• Federal Grid Company completed all required electricity infrastructure preparations for the Sochi Winter Olympics, built or renovated 36 electricity grid facilities, including 326.6 km of transmission lines as well as 14 substations with a total capacity of 1,715 MVA
• On 20 February 2014 the Company issued new shares and consequently raised the equity by RUB 3,762,153,533.5 with a view to finance its investment programme. The total number of Federal Grid Company shares in issue increased by 0.59% to 1,274,665,323,063 shares
• Moody's and Fitch Ratings confirmed Federal Grid Company's ratings at Baa3 and BBB, respectively. Standard & Poor's downgraded the Company's rating by one notch to BBB-. The Company keeps strong its position with the investment category by all three international rating agencies. Two agencies rank the Federal Grid Company at the country's level.
• The Russian Institute of Directors assigned Federal Grid Company a 7+ corporate governance rating, noting that the Company's corporate governance practices meet Russian requirements and correspond to international best practice
• Starting from 9 June 2014, Federal Grid Company shares have been listed at Moscow Exchange Level 1 section.
• On 27 June 2014 the General Meeting of Shareholders approved the dividend payment for the period of 1Q 2014 totalling RUB 436.8 million and elected new Board of Directors
• In August 2014 the Russian Federation Ministry of Energy approved Federal Grid Company's 2014 investment programme totalling RUB 115.94 billion
Commenting on the 1H 2014 IFRS financial results, Chairman of the Federal Grid Company Management Board Andrey Murov said:
"During the first half of 2014, Federal Grid Company successfully balanced between providing reliable and safe electricity supply to consumers while improving its financial performance.
For the considered period the Company did not experience any major accidents and fully completed all work required for the Sochi Olympics preparations.
"At the same time, we achieved significant year-on-year improvements in our financial results. Federal Grid Company's revenue increased by almost 13% year-on-year to RUB 85.4 billion, while adjusted EBITDA and adjusted profit for the period grew by 23% and 146%, respectively. I would highlight two key factors: an increase in revenue from electricity transmission and further success in cutting controllable costs, such as personnel as well as repair, maintenance & materials expenses and consulting services.
"Federal Grid Company also reduced its debt leverage: gross debt declined by 5%. This decrease is explained by the successful execution of put option of the Company's rouble bonds that came due during the reporting period.
"The positive financial performance confirms the Company's solvency and encourages its ranking position within the investment category upon the international rating agencies' scales."
1H 2014 Financial results
Federal Grid Company's consolidated revenue grew by 12.6% year-on-year in 1H 2014 to RUB 85,360 million, compared to RUB 75,826 million in 1H 2013. Revenue from electricity transmission increased by RUB 5,552 million, or 7.5% year-on-year (as a result of the 9.4% tariff increase from 1 July 2013). Revenue from electricity sales grew 56% year-on-year, or by RUB 760 million that is mostly explained by the tariff growth for electricity sales and increase in actual volume of electricity sales. Other revenue grew year-on-year by RUB 3,222 million, by almost seven times greater, primarily due to increase in tariffs for connection services.
Operating expenses
(RUB mln or %) | 1H 2014 | % of total operating expenses | 1H 2013 | % of total operating expenses | y-o-y change, % |
Personnel-related expenses | 13,651 | 24.4% | 14,656 | 23.4% | -6.9% |
Electricity purchases | 7,125 | 12.7% | 7,009 | 11.2% | 1.7% |
Repair, maintenance & materials | 1,973 | 3.5% | 2,189 | 3.5% | -9.9% |
Other | 7,875 | 14.1% | 8,528 | 13.7% | -7.7% |
Operating expenses excl. D&A, taxes, other than on income* | 30,624 | 54.7% | 32,382 | 51.8 | -5.4% |
D&A | 21,907 | 39.2% | 27,844 | 44.5% | -21.3% |
Taxes, other than on income | 3,417 | 6.1% | 2,287 | 3.7% | 49.4% |
Total operating expenses* | 55,948 | 100% | 62,513 | 100% | -10.5% |
* excluding allowance for doubtful debtors and provision for legal claims
Federal Grid Company's operating expenses, excluding allowance for doubtful debtors and provision for legal claims, amounted to RUB 55,948 million in 1H 2014, a decline of 10.5% year-on-year. This decrease was primarily due to the Company's on-going cost management programmes. In 1H 2014 Federal Grid Company successfully lowered controllable costs: personnel-related expenses declined by 6.9% year-on-year to RUB 13,651 million, while repair, maintenance & materials costs were down by 9.9% to RUB 1,973 million.
Depreciation and amortisation decreased by 21.3% year-on-year and amounted to RUB 21,907 million for the first half of 2014, primarily due to the impairment of fixed assets recognised in 2013.
Tax expenses (other than income tax) grew significantly in 1H 2014, up RUB 1,130 million, or 49.4%, year-on-year due to higher property tax expenses.
Purchases of electricity amounted to RUB 7,125 million for the reporting period, an increase of 1.7% compared to 1H 2013.
Other costs, which amounted to 14.1% of total operating expenses, reduced by 7.7% to RUB 7,875 million as a result of the Company's cost cutting policy.
Federal Grid Company's adjusted operating profit for 1H 2014 increased by 139.7% to RUB 25,458 million as a result of these changes. Adjusted net profit for the first half of 2014 was RUB 19,379 million, 146.0% higher year-on-year. Adjusted earnings per share for the reporting period amounted to RUB 0.015, vs. 0.006 in 1H 2013
Select balance sheet items
RUB mln | 30 June 2014 | 31 December 2013 |
ASSETS | ||
Non-current assets | 809,329 | 796,150 |
Property, plant and equipment | 771,779 | 749,710 |
Investments in associates | 1,450 | 1,440 |
Total current assets | 117,264 | 122,352 |
Total assets | 926,593 | 918,502 |
LIABILITIES AND EQUITY | ||
Non-current liabilities | 256,055 | 266,388 |
Non-current debt | 247,917 | 257,964 |
Current liabilities | 100,371 | 103,817 |
Total liabilities | 356,426 | 370,205 |
Equity attributable to shareholders | 571,364 | 549,239 |
Non-controlling interest | (1,197) | (942) |
Total equity | 570,167 | 548,297 |
Total liabilities and equity | 926,593 | 918,502 |
Federal Grid Company's gross debt decreased by 5.1% during the first six months of the year, amounting to RUB 273,015 million as of 30 June 2014.
During 1H 2014, the Company's total long-term (non-current) debt decreased by 3.9% to RUB 247,917 million, while short-term (current) debt declined 15.3% to RUB 25,098 million.
Federal Grid Company's condensed consolidated interim IFRS financial statements for 1H 2014 are available on the Company's website at the following link: http://www.fsk- ees.ru/eng/investors/financial_disclosure/ifrs_financial_reports/
Conference Call
The Company will host an investor and analyst conference call on Thursday, 28 April 2014 at 12:00 UK time (15:00 Moscow time).
Dial in details are as follows:
English call ID | 92992054 |
UK Standard | +44 (0) 1452 589 328 |
Russia (from a landline) | +7 499 922 8667 |
USA | +1 347 772 8942 |
Germany | +49 692 222 2573 |
Switzerland | +41 44 580 7125 |
Sweden | +46 85 061 9661 |
A replay of the call will be available until 3 September 2014 using the following details:
Replay ID | 92992054 |
International | +44(0) 1452 55 00 00 |
US | +1 866 247 4222 |
Materials for the call and webcast will be available at the following link: http://www.fsk-ees.ru/eng/investors/financial_disclosure/ifrs_financial_reports/
About Federal Grid Company
Federal Grid Company is part of OJSC Russian Grids is the operator and manager of Russia's unified electricity transmission grid system. The company operates over 135.7 thousand km of transmission lines and has over 331.7 GVA of installed transformer capacity. Based on the length of transmission lines and transformer capacity in place, Federal Grid is the largest publicly traded electricity transmission company in the world.
Federal Grid's business is to provide electricity transmission and technological connection services. It maintains and develops the grid system and supervises grid facilities and infrastructure in 75 regions of Russia, covering a territory of 14.8 million square kilometres. Its customers are regional distribution companies, electricity suppliers and large industrial enterprises. The Company is a natural monopoly with 80.13% stake controlled by Russian Grids.
Federal Grid Company was incorporated in June 2002 as part of reorganisation of Russia's electrical power industry.
Federal Grid Company's common shares are included on Moscow Exchange under the ticker FEES and the Company's GDRs are listed on the London Stock Exchange and traded under the same FEES symbol.
In 2013 the Company's IFRS consolidated revenue was RUB 157,970 million, while adjusted EBITDA was RUB 92,551 million, and adjusted profit for the period was RUB 23,405 million.
Further information can be found at www.federal-grid.com
Further information about Russian Grids can be found at www.rugrids.ru/eng
Related Shares:
FEES.L