IR Releases

31.10.2012

JSC "LENENERGO" released its 9M 2012 financial statements under Russian Accounting Standards

Indicator Unit of measure ment 9M 2011 9M 2012 ∆ in %

9M 2012/9M 2011
Ref: Q3 2012 Ref: 2012 (E)*
Operating indicators
Productive supply of electric power mln kWh 21 154 21 683 2,5% 6 507 29 942
Losses of electric power % 10,08% 10,25% 0,17 p.p. 8,31% 10,37%
Connected capacity MW 209,0 237,1 13,4% 78,4 388,4
Revenue & financial result
Revenue from sales of production, including: RUB mln 26 910 24 576 -8,7% 7 336 36 834
- From electric power transmission services RUB mln 21 015 20 751 -1,3% 6 610 29 136
- From grid connection services RUB mln 5 774 3 701 -35,9% 685 7 537
- From other industrial activity RUB mln 121 124 2,5% 42 161
Cost RUB mln 23 339 24 041 3,0% 7 980 33 959
Gross profit RUB mln 3 571 535 -85,0% -644 2 875
Profit (loss) before taxation RUB mln 1 913 -306 -116,0% -872 1 252
Net profit (loss) RUB mln 1 192 -512 -143,0% -809 528
For reference:
EBITDA RUB mln 6 416 5 687 -11,4% 1 136 9 300
EBITDA margin % 23,84% 23,14% -0,7 p.p. 15,49% 25,25%
Credit portfolio & debt position
Loans and credits ** RUB mln 18 674 26 301 40,8% 26 301 27 809
Average rate on attracted borrowings % 7,80 8,06 0,26 p.p. 8,06 9,13
Net Debt RUB mln 17 458 20 103 15,2% 20 103 26 664
Net Debt/EBITDA - 1,8 2,5 - 2,5 2,9
Investment program
Investment program (disbursement) RUB mln 8 062 8 214 1,9% 14 100

* Estimated indicators for 2012 in accordance with the adjusted business plan for 2012 approved by the Board of Directors (Minutes #10 of 26.09.2012).

**The sum of debts on credits and loans including interests (line 1410 + line 1510 of the Balance sheet).

Formation of revenue and financial result

Sales revenue by the results of the first 9 months of 2012 amounted to RUB 24 576 million, that is lower than the indicator of the same period of the last year by RUB 2 335 million, or 8.7%.

The reasons for lower revenues by main activities:

Decrease in revenue from electric power transmission by RUB 264 million, or 1.3% for the first 9 months of 2012 relative to nine months of 2011, is mainly caused by the change in the average tariff for the transmission of electrical energy, including:

- In the city of St. Petersburg revenue declined by RUB 1 466 million, or 11%, due to the decrease in the average rate by 13% caused by lower tariff rates for the maintenance of electrical networks and the payment of technological losses since 01.05.2011 (Order of the Committee for Tariffs of St. Petersburg #104-P of 10.06.2011, “About Amendments to Order of the Committee for Tariffs of St. Petersburg of 29.12.2010 #386-p and of 04.02.2011 #10-r”) with an increase in the transmission of electrical energy by 1.6%;

- The Leningrad region revenue increased by RUB 1 202 million, or 15% due to an increase in the average tariff by 10% and increase in transmission of electric energy for the given period by 4%.

The decrease in revenue from grid connection services by RUB 2 073 million, or 35.9% compared to the same period of the last year, was impacted by the close in Q1-Q3 2011 of the contracts for technological connection, signed at a higher rate in the previous periods, including fulfillment in 2011 of commitments to LLC Gazprom Invest West in the amount of RUB 2 308.98 million.

Cost of services rendered for the first 9 months of 2012 amounted to RUB 24 041 million, its growth relative to the 9 months of the previous year amounted to RUB 702 million, or 3% due to an increase in depreciation (RUB 928 mln, or 24.8%).

Gross profit for the first 9 months of 2012 compared to the same period in 2012 decreased by RUB 3 036 million, or 85% to RUB 535 million.

Net loss for the first 9 months of 2012 amounted to RUB 512 million. Deterioration of the financial result compared to the same period in 2011 was RUB 1 704 million. The main impact had reduced revenue from grid connection services.

Formation of EBITDA

EBITDA, which characterizes the Company generated cash flow before taxes and interest for the first 9 months of 2012 amounted to RUB 5 687 million and compared to the same period of the last year decreased by 11.4% or RUB 729 million.

Indicators Formula 9M 2011 9M 2012 ∆ in %

9M 2012/9M 2011
Revenue 1 26 910 24 576 -8,7%
Cost without depreciation 2 19 600 19 374 -1,2%
Gross profit + depreciation 3 = 1-2 7 310 5 202 -28,8%
Balance of other income and expenses (excluding interest payable) 4 -895 485 -
EBITDA including: 5 = 3+4 = 6+7+8+9 6 416 5 687 -11,4%
Depreciation of fixed assets and intangible assets 6 3 739 4 667 24,8%
Accrued interest 7 763 1 326 73,7%
Profit tax 8 721 206 -71,4%
Net profit (loss) 9 1 192 -512 -

The decline in EBITDA as at 30.09.2012 compared to its value for the first 9 months of 2011 was caused by lower gross profit, while the balance of other operations increased and had a positive value.

The growth of balance of other income and expenses was a result of revenue growth from identified unregistered and non-contractual electricity consumption and decline in the cost of allowances for doubtful debts.

The decline in EBITDA was accompanied by a decrease in its following components: profit tax and net profit. In this case, the amount of accrued depreciation and interest payable increased.

The decrease in net profit was associated with increased cost of the Company services and lower revenues compared to the same previous reporting period.

Reduction of accrued profit tax took place in conditions of decrease of profit before tax.

The growth of accrued depreciation is due to the increase of fixed assets by commissioning of objects in the course of implementation of the investment program, and also to the revaluation made as of 31.12.2011.

The increased amount of interest payable is related to the fact that during the reporting period the accrual of interest was made to a large amount of main debt.

Credit portfolio and debt position

Increase of the amount of loans and credits including interests (line 1410 + line 1510 of the balance sheet) amounted to RUB 7 627 million (40.8%). The loans were attracted to finance the Company operating and investment activities, including for funding for the renovation of the cable lines in St. Petersburg and the construction of the distribution network.

The average interest rate on credits for 9 months of 2012 amounted to 8.06%, which is higher than the indicator of the same period of the previous year by 0.26 percentage points. The rate increase for the use of credit resources was associated with the deteriorating situation in the financial markets - the rising cost of newly attracted credit resources, and the risk of increased rates on the current credit agreements. In September 2012, the refinancing rate was also increased.

Increase in net debt is less than the increase in the amount of loans and credits due to the increase in cash balances at the end of the period and the amount of short-term financial investments.

Increase in net debt and lower EBITDA for Q4 (by RUB 1 998 million) led to an increase in the ratio Net debt/EBITDA from 1.8 in 2011 to 2.5 in the current year.

Investment activity

Capital investments of the Company for the first 9 months of 2012 amounted to RUB 8 214 million, that is 1.9% higher than for the same period of the last year.

Indictors 9M 2011 9M 2012 ∆ in %

9M 2012/9M 2011
Deployment, RUB mln without VAT 8 062 8 214 1,9%
Commissioning of fixed assets, RUB mln 7 426 5 948 -19,9%
Funding, RUB mln (VAT included) 9 149 9 570 4,6%
Input of capacity, MVA 381 574 50,7%
Input of capacity, km 880 900 2,3%


For reference:

JSC Lenenergo is the largest distribution grid company (operator of 0.4-110 kV networks), serving the territory of St. Petersburg and the Leningrad region.

The share of Lenenergo in the market of St. Petersburg and Leningrad region in the transmission of electricity as of 30.09.2012 is 68.8%.

The Company assets:

Indicator 31.12.2011 30.09.2012
Installed capacity, MVA 21 427 21 517,4
Overhead transmission lines (OTL) of 0.4-110 kV on circuit, km 39 782,6 39 841,5
Cable lines of 0.4-110 kV, km 19 554,2 19 564
Substations of 35-110 kV, pcs. 373 375
Substations of 6-10 kV, pcs. 14 770 14 876

Accounting statements of JSC Lenenergo for 9M 2012 are available on the Company's website at: link.