IR Releases

09.04.2014

Lenenergo releases FY2013 financial statements in accordance with IFRS

MICEX-RTS: LSNG/LSNGP

Credit rating:
Moodys Ba2 (outlook stable)
Confirmed in February 2014

Press Release
09.04.2014

Lenenergo releases FY2013 financial statements in accordance with IFRS. Revenue was up 12.6%, EBITDA increased by 52.7%, net profit totaled RUB 3,281 mln

In the opinion of the Company’s auditor, Ernst & Young, the consolidated financial statements present fairly, in all materials respects, the financial position of the Group as at 31 December 2013, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.

RUB mln

Indicator

31.12.2011

31.12.2012

31.12.2013

2013/12, %

Assets

96,951

99,393

120,845

21.6%

Total equity

42,503

43,487

49,465

13.7%

Liabilities, including:

54,448

55,905

71,380

27.7%

- non-current liabilities

29,413

25,338

34,700

37.0%

- current liabilities

25,035

30,567

36,679

20.0%

Revenue, including:

32,257

33,135

37,323

12.6%

- from transmission of electricity

22,895

23,521

27,480

16.8%

- from technological connection

8,629

7,580

6,807

-10.2%

- other

732

2,034

3,036

49.2%

Operating expenses

31,503

30,653

31,008

1.2%

Operating profit

754

2,482

6,316

154.5%

EBITDA* 

5,681

6,785

10,358

52.7%

Adjusted EBITDA (after revaluation)

9,937

10,386

10,358

-0.3%

EBITDA margin, % 

17.61%

20.48%

27.75%

7.27 p.p.

Net profit / loss *

-943

238

3,281

1279.0%

Net profit / loss (after revaluation)

2,461

3,119

3,281

5.2%

Net profit margin, % 

-2.92%

0.72%

8.79%

8.07 p.p.

Net debt

           20,469

          24,277

           29,664

22.2%

Net debt/EBITDA

3.60

3.58

2.86

-

ROE, %

-2.0%

1.1%

13.3%

12.2 p.p.

Quick liquidity

0.32

0.18

0.22

-

Current liquidity

0.48

0.37

0.47

-

EBITDA is calculated as profit before tax plus depreciation of fixed assets and intangible assets plus financial expenses minus financial income

Net debt is calculated as long-term and short-term credits and loans minus cash and cash equivalents

* In 2011 and 2012, loss from depreciation of fixed assets in the sum of RUB 4,256 mln and RUB 3,601 mln, respectively, was recognized under operating expenses. In 2013 by results of the impairment test depreciation of fixed assets is absent. In this regard, in the analysis of performance results for FY2013 it is necessary to consider adjusted indicators of EBITDA and net profit for 2012 and 2011.

Revenue

In 2013 electricity transmission revenue net of normal (expected) technological losses of RUB 5,577 mln (2012: RUB 5,031 mln) was RUB 27,480 mln, 17% higher than in 2012.

The main revenue was received from customers, OJSC PSK and LLC Energia-Holding, amounting to RUB 20,673 mln (2012: RUB 18,997 mln) and RUB 4,494 mln (2012: RUB 3,456 mln), respectively, comprising 77% (2012: 79%) of the total revenue from transmission of electricity before technological losses at the normal (expected) level. In 2013 electricity transmission revenue from LLC RKS-Energo amounted to RUB 3,512 mln or 11% (2012: RUB 2,564 mln or 9%) of the total revenue from transmission of electricity before technological losses at the normal (expected) level.

Technological connection revenue in 2013 was down 10.29% compared with 2012 and totaled RUB 6,807 mln driven by prevalence in the structure of revenues in 2012 of a share of large contracts and property contracts.

Other revenue totaled RUB 3,036 mln in 2013, 49% higher than the indicator of the last year resulting from implementation of the program for identifying non-contractual electricity consumption and growth of income received from subsidiaries.

Prime cost

The Group’s operating expenses in the reporting period were RUB 31,088 mln, 1% higher than in the same period last year.

RUB mln

2013

2012

2011

2013/12, %

Transmission fee

13,657

13,381

13,403

2%

Payroll and payroll taxes

4,774

4,154

4,112

15%

Depreciation of property, plant and equipment

3,920

4,216

4,813

-7%

Provision for litigations and claims

2,206

116

-

1,802%

Repairs and maintenance

1,616

1,309

1,041

23%

Taxes other than income tax

687

212

179

223%

Rent

550

467

472

18%

Agency services

465

449

7

4%

Telecommunication and information services

379

348

348

9%

Raw materials and supplies

332

307

261

8%

Provision for impairment and write-off of receivables

257

214

505

20%

Social expenses

226

196

201

15%

Consulting, legal and audit services

190

193

142

-1%

Utilities

119

106

119

12%

Internal security

144

129

120

12%

Amortisation of intangible assets

123

87

115

41%

Loss on impairment/(reversal of impairment) of intangible asset

32

-129

148

-124%

Revaluation of property, plant and equipment

-

3,601

4,256

-100%

Other operating expenses

1,334

1,298

1,261

3%

Total operating expenses

31,008

30,653

31,503

1%

Comments on basic expenses items:

  • Decrease in expenses for depreciation of property, plant and equipment by 7% in 2013 is driven by depreciation of the cost of fixed assets due to revaluation as of 31.12.2012.
  • Essential increase in provision for litigations and claims is caused by possible risks of recognition for 2013 of expenses on large judicial proceedings due to disagreements regarding determination of volumes and cost of services in transmission of electricity of a number of third-party grid organizations. Lenenergo intends to defend legitimacy of its position in a judicial order and bring its contractual relations to the requirements of the legislation of the Russian Federation which has been amended in 2012. Thus disagreements are absent with other territorial grid companies (over 40 companies), and existing contracts were brought into accord to the requirements of the existing legislation of the Russian Federation. 
  • In 2011 and 2012 the Group recognized depreciation of property, plant and equipment in the sum of RUB 4,256 mln and RUB 3,601 mln, respectively. It is connected with introduction in 2011 of restrictions on growth of tariffs for electric power transmission in the Russian legislation, and also that since July, 2012  tariff rates for electric power transmission in the RAB regulation system (in particular, profitability rate on invested capital decreased from 11% to 1%) were changed. In 2013 depreciation of property, plant and equipment was not revealed.

Financial result

By results of 2013 Lenenergo Group of Companies earned operating profit of RUB 6,316 mln (+155% to 2012). Net profit in the reporting period amounted to RUB 3,281 mln, 16 times higher than the similar indicator for 2012 (not adjusted for the sum of recognized depreciation in expenses of 2012).

EBITDA in 2013 totaled RUB 10,358 mln, 53% higher than the similar indicator for 2012 (not adjusted for the sum of recognized depreciation in expenses of 2012).

Debt position

Credit portfolio (the Company’s short-term credits and loans for the end of the reporting period) was RUB 33,384 mln, 20% higher than in the same period last year. Net debt as of 31.12.2013 was RUB 29,664 mln. Net debt/EBITDA for the end of the reporting year did not exceed the recommended limits and totaled 2.86 times. 

For reference:

The structure of the Group of companies Lenenergo

2014pii.jpg

Dynamics of Key IFRS Indicators of Lenenergo for the Five Recent Years:

2009

2010

2011

2012

2013

 

Revenue

22,800

28,574

32,257

33,135

37,323

From transmission of electricity

15,416

17,692

22,895

23,521

27,480

From grid connection

6,638

10,300

8,629

7,580

6,807

Other

746

582

732

2,034

3,036

Operating expenses

18,489

21,441

31,503

-30,653

31,008

Net profit

2,587

4,750

-943

238

3,281

Net profit margin

11.35%

16.63%

-2.92%

0.72%

8.79%

EBITDA

8,185

11,611

5,681

6,785

10,358

EBITDA margin

35.9%

40.6%

17.6%

20.5%

31.3%

Net debt

13,736

15,038

20,469

24,277

29,664

Net debt/EBITDA

1.68

1.30

3.60

3.58

2.86

Dynamics of Key Indicators of the Consolidated Statement of Financial Position for the Five Recent Years:

2008

2009

2010

2011

2012

2013

Long-term assets

73,023

78,962

87,010

84,958

88,157

102,100

Short-term assets

10,331

9,363

6,372

11,993

11,236

18,744

Assets

83,355

88,325

93,382

96,951

99,393

120,845

Long-term borrowings

12,946

10,074

14,125

21,028

20,637

29,402

Non-current liabilities

24,496

16,926

21,924

29,412

25,338

34,700

Short-term borrowings

436

6,611

1,566

6,549

7,153

3,982

Current liabilities

15,618

25,565

21,497

25,035

30,567

36,679

Liabilities

40,114

42,492

43,421

54,448

55,905

71,380

Equity

43,241

45,834

49,961

42,504

43,487

49,465

Dynamics of Key Indicators of the Consolidated Income Statement for the Five Recent Years:

2008

2009

2010

2011

2012

2013

Revenue

17,914

22,800

28,574

32,257

33,135

37,323

Operating expenses

-14,608

-18,489

-21,441

-31,503

-30,653

-31,008

Operating profit

3,306

4,311

7,133

754

2,482

6,316

Financial income

2,292

78

774

61

302

667

Financial expenses

-1,372

-2,084

-1,580

-1,660

-2,175

-2,682

Profit before tax

3,048

2,132

6,257

-845

609

4,301

Income tax expenses

-1,210

455

-1,507

-99

-371

-1,020

Net profit

1,838

2,587

4,750

-943

238

3,281