IR Releases

31.10.2013

JSC Lenenergo announced its financial statements for 9 months of 2013 under RAS

MICEX-RTS: LSNG/LSNGP

Credit rating:
Moody’s Ba2 (Outlook: Stable)
Confirmed: January 2013

Press release

JSC Lenenergo announced its financial statements for 9 months of 2013 under RAS

Indicators

Unit

9M 2012

9M 2013

Change

9M 2013/

9M 2012,

%

Note:

 Business plan 2013 as of 31.12.13*

Operational indicators

Productive supply **

Mln kW*h

21,683

20,195

-6.9%

30,230

Losses

%

10.25

9.91

-0.34 p.p.

10.21

Connected capacity***

MW

237

180

-24.1%

621

Revenues and financial result

Total revenues, including:

RUB mln

24,576

24,343

-0.9%

42,669

- Revenues from electricity transmission

RUB mln

20,751

21,356

2.9%

34,271

- Revenues from grid connection services

RUB mln

3,701

2,868

-22.5%

8,239

- Other revenues

RUB mln

124

119

-3.8%

159

Costs

RUB mln

24,041

24,378

1.4%

38,659

Gross profit (loss)

RUB mln

535

-35

-106.4%

4,010

Profit (loss) befor taxes

RUB mln

-306

-898

193.3%

1,979

Net profit (loss)

RUB mln

-512

-1,293

152.5%

801

EBITDA ****

RUB mln

5,519

6,476

17.4%

13,085

EBITDA margin

%

22.46%

26.60%

4.1 p.p.

30.67

Credit portfolio and debt position

Loans and credits *****

RUB mln

26 301

34,589

31.5%

33,809

Average credit portfolio rate

%

8.06

8.24

0.18 p.p.

10.57

Net Debt

RUB mln

20,103

21,218

5.5%

32,074

Net Debt (Net debt)/EBITDA for the last four quarters)

-

2.6

1.9

-

2.45

Investment program

Investment program (deployment)

RUB mln

8,189

9,880

20.6%

18,499

 * Projections for 2013 are presented in accordance with the Business Plan for 2013 approved by the Board of Directors, Minutes # 29 of April 30, 2013

** The actual amount of productive supply for 9M 2013 is stated excluding the disputed part of the contract on electricity transmission services between JSC Lenenergo and LLC RKS - Energy in the area of ​​networks of JSC LOESK

*** The actual amount of connected capacity is indicated without closing in Q3 2013 of contracts for grid connection of generation facilities in the amount of 382 MW under low individual rates

**** Calculated in accordance with the methodology used in the formation of the Business Plan for 2013: EBITDA = Net Income + Income Taxes + Depreciation + Interest expense - Interest receivable.

***** Amount of outstanding loans and borrowings (debt of the Company), including interest (sum of lines 1410 and 1510 of the balance sheet)

Formation of revenues and financial result

Total revenues from services of the Company totaled RUB 24,343 mln for 9M 2013 compared to the same period of the previous reporting period a decrease in revenues was RUB 223 mln or - 0.9%.

The decrease in revenues was due to the primary business activity – gird connection services. Revenues from electricity transmission at the same time increased. Revenues growth from electricity transmission services totaled RUB 605 mln, or 2.9%, and is caused by the growth in the average transmission tariff by 10.9%. The decrease in revenues from grid connection services compared to the same period of the last year was RUB 833 mln or -22.5% and is due to the impact of large contracts in the Leningrad Region and contracts with a property component of St. Petersburg in the revenue structure for 9M 2012.

Cost of rendered services (including depreciation) for 9M 2013 amounted to RUB 24,378 mln. Growth versus the same period of the previous year totaled RUB 337 mln or 1.4 %.

Gross losses of JSC Lenenergo for 9M 2013 amounted to RUB 35 mln. A decrease of the indicator versus the same period of the previous year totaled RUB 570 mln, or -106.4 %. For the 9 months of 2012, gross profit was obtained in the amount of RUB 535 mln.

Net loss of the Company for 9M 2013 amounted to RUB 1,293 mln. A decline of the financial result compared to the same period of 2012 amounted to RUB 781 mln (for the 9 months of 2012there was a net loss in the amount of RUB 512 mln). The main reason of the financial result decline was the revenues from grid connection services decrease as well as growth of depreciation due to an increase of operational assets caused by commissioning of new assets under the implementation of the Company's investment program and revaluation of fixed assets as at January 31, 2012. 

Initially, during formation of the Business Plan for 2013 there was a loss for the 9 months laid out due to a specific condition of grid connection activities. Most of the contracts for grid connection to electric networks are closed at the end of the year, resulting in a large portion of revenues from grid connections for Q4 is planned, which provides a positive net profit for the year.

EBITDA formation

EBITDA characterizing generation of cash flow before taxes and interest payments by the Company by result of 9M 2013 totaled RUB 6,476 mln, and compared to the same period of 2012 increased by RUB 958 mln, or 17.4%.

                                                                                                                                                                                            RUB mln

Indicators

Formula

9M 2012

9M 2013

Change

9M 2013/

9M 2012,

%

Revenues

1

24,576

24,343

-0.9%

 

Costs excluding amortization

2

19,374

18,200

-6.1%

 

Gross profit + amortization

3 = 1 - 2

5,202

6,143

18.1%

 

Balance of other incomes and cots (excluding interest payable and receivable)

4

317

334

5.4%

 

EBITDA, including:

5 = 3 + 4 = 6 + 7 - 8 + 9 + 10

5,519

6,476

17.4%

 

Amortization of FA and NMA

6

4,667

6,177

32.4%

 

Interest payable

7

1,326

1,626

22.7%

 

Interest receivable

8

168

430

155.5%

 

Income tax

9

206

396

91.9%

 

Net profit

10 = 3 - 6 + 4 - 7 + 8 – 9

-512

-1,293

152.5%

 

EBITDA growth at the end of Q3 2013 relative its value for 9M 2012 was mainly due to higher rates of costs decrease (excluding amortization) in comparison with revenues decline.

Balance of other incomes and expenses excluding interest payable and receivable showed a minor growth by RUB 17 mln, or 5.4%.

EBITDA growth was characterized by increase of it parts: charged amortization, balance of interest payable and receivable, tax profit.

Growth of accrued amortization was due to an increase of operational assets caused by commissioning of new assets under the implementation of the Company's investment program and revaluation of fixed assets at at January 31, 2012. 

Increase in the amount of interest payable is generally caused by the fact that for the reporting period accrual of interest was performed on the greater part of the principal debt.

The growth of interest receivable is caused by short-term financial investments of the Company.

As a whole, the main item in EBITDA structure was amortization both as of September 30, 2012 and as of September 30, 2013.

EBITDA share in revenues (EBITDA margin) in comparison with 9M 2012 increased by 4.1 p.p. and totaled 26.6% (as a result of EBITDA growth under revenues decline). As a whole, similar changes of the indicator are positively characterized from the viewpoint of assessment of the Company’s financial state.

Credit portfolio and debt position

Debt on loans and credits including interest (debt of the Company, sum of lines 1410 and 1510 of the balance sheet) increased by RUB 8,288 mln, or 31.5%. Borrowings were attracted to finance operating and investment activities of the Company, including on renovation of cable lines in St. Petersburg and construction of a distribution network.

The average rate on borrowings as of September 30, 2013 totaled 8.24 % that is higher than the rate for the same period of the previous year by 0.18 p.p. The rate increase for credit resources is associated with deterioration of the situation on financial markets, including rising cost of newly attracted credit resources.

On April 17, 2013 when the situation on the financial market was the most favorable, exchange bonds registered in July 2012 in the amount of RUB 3,000 mln were placed with coupon interest rate of 8.25% per annum. In the future it is also planned to expand public borrowing by placing 02-05 registered exchange bonds issues, which will allow JSC Lenenergo proceeding with its public credit history and diversifying funding sources. At the end of the reporting period, the Company has the Securities Prospectus registered in June 2013 for four issues of exchange bonds totaling RUB 20 bn for 10 years.

The gain in net debt was lower than the growth of loans and credits due to the growth of the most liquid assets at the end of the period (sums of short-term investments and cash; as of September 30, 2012 short-term investments amounted to RUB 3,006 mln).

A greater increase of EBITDA for four quarters as of September 30, 2013 relative the increase in net debt resulted in improvement in the ratio of Net Debt/EBITDA, which constituted 1.9 times as of September 30, 2013.

Investment activity

CAPEX for 9M 2013 amounted to RUB 9,880 mln, that is RUB 1,691 mln, or 21% higher than capital expenses for the same period of 2012 (RUB 8,189 mln).  Taking into account minor adjustments of the investment program by results of 2013, CAPEX deployment is expected to be about RUB 17 bn. 

Investment program

9M 2012

9M 2013

Change

9M 2013/ 9M 2012

%

Deployment, RUB mln (excluding VAT)

8,189

9,880

20.6%

Commissioning of FA, RUB mln

5,948

6,381

7.28 %

Input of capacity, MVA

574

450

-21.6%

Input of capacity, km

899

983

9.3%