Inter RAO Group published interim condensed consolidated IFRS financial statements for the first quarter of 2017.
|Indicator, billion rubles||
|Loans and borrowings 1||18.7||17.8||5.2%|
|Free cash flow (FCF)||-2.5||6.0||-|
* Financial indicators are provided according to financial statements in billion rubles rounded to one decimal place. Percentages are calculated using IFRS statement data expressed in million rubles.
1 Including the share of debt in joint ventures.
2 Including deposits maturing in 3 to 12 months.The dynamics of the Group's financial performance was significantly influenced by the following key factors and events:
- An increase in power generation and optimization of capacity utilization in the Electric Power Generation segment;
- Increase in average heat sales prices for end consumers across Russian assets of the Group;
- Increase in average end consumer sales prices in the Supply Segment of the Group;
- Strengthening of the ruble against the U.S. dollar and euro;
- Complete sale of a stake in Electric Networks of Armenia and Razdan Energy Company (Razdan TPP) in December 2016; consequently, these companies did not deliver financial performance in 2017.
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group revenue increased by 2.8% (6.6 billion rubles), to 238.6 billion rubles.
The increase in revenue in the Supply Segment by 14.1 billion rubles (9.5%), to 162.2 billion rubles is related primarily to higher average sales prices of guarantee suppliers for end consumers, and the acquisition of new customers by independent retailers.
Revenue of the Thermal Power Generation Segment3 increased by 0.7 billion rubles (3.2%) to 24.0 billion rubles. Revenue increased mainly due to higher average heat prices in Bashkortostan, the Omsk Region and the Tomsk Region, compared to the previous reporting period. This was partially offset by a reduction in power generation by power plants in the segment given a decline in margin.
The increase in revenue in the Electric Power Generation Segment by 1.3 billion rubles (4.1%) to 32.0 billion rubles is related to higher output, primarily that of Permskaya TPP: in the previous reporting period there were scheduled and unscheduled equipment repairs. An increase in calculated capacity sales price in accordance with CDAs (Capacity Delivery Agreements) for Cherepetskaya TPP, Yuzhnouralskaya TPP, Kashirskaya TP and Sochinskaya TPP was an additional factor behind the increase in revenue. At the same time, scheduled retirement of low-efficiency capacity at Cherepetskaya TPP and Verkhnetagilskaya TPP took place.
Revenue of the Trading Segment decreased by 8.0 billion rubles (41.6%) compared to the previous reporting period and amounted to 11.2 billion rubles against 19.2 billion rubles in the first quarter of 2016. The revenue decreased due the strengthening of the ruble against the main currencies of export contracts (U.S. dollar, euro), as well as to a reduction in supply to China, Georgia, Kazakhstan and Russia in accordance with market conditions.
Revenue of the Foreign Assets Segment by 2.1 billion rubles (21.4%) to 7.6 billion rubles is related primarily to the impact of the strengthening of the rule against the U.S. dollar and the Georgian lari in the first quarter of 2017, which caused a decline in the revenue of foreign companies expressed in rubles.
Operating expenses increased by 6.5 billion rubles (3.1%) to 218.5 billion rubles compared to the previous reporting period.
Electricity transmission costs increased by 5.2 billion rubles (8.6%) to 66.2 billion rubles; this is related primarily to the performance of the Group's supply assets and the increase in electricity consumption and electricity transmission fees.
Cost of purchased electricity and capacity increased by 2.8 billion rubles (3.3%) to 88.6 billion rubles compared to the previous reporting period. This was related primarily to the growth of market prices for purchased electricity and capacity compared to the previous reporting period, as well as to the increase in sales in the Supply Segment partially offset by a decrease in supply forming part of trading.
Fuel costs remained unchanged compared to the previous reporting period and amounted to 34.4 billion rubles. The increase in fuel costs due to higher output in the Electric Power Generation Segment was completely offset by the divestment of Mtkvari Energy of the Group in June 2016, as well as by cost reduction in the Foreign Assets Segment expressed in rubles due to the strengthening of the ruble against the U.S. dollar and euro.
Group EBITDA was 28.9 billion rublers, having decreased by 10.8%.
EBITDA showed a significant reduction mainly in the Foreign Assets Segment. The indicator amounted to 1.1 billion rubles, which is 2.0 billion rubles less than in the previous reporting period. The reduction was caused by the divestment of Electric Networks of Armenia, Razdan Energy Company, and Mtkvari Energy, and by the strengthening of the ruble against the U.S. dollar and euro, which resulted in the reduction of financial indicators of foreign assets expressed in rubles. Additional impact on the reduction of the indicator was related to the classification of the 50% stake in the joint venture JSC Ekibastuzskaya TPP-2, which was included in assets held for sale.
In the Trading Segment, EBITDA decreased by 1.7 billion rubles and amounted to 1.1 billion rubles. This was caused by the strengthening of the ruble and the reduction of supply to Georgia and Kazakhstan in accordance with the current market conditions.
In the Supply Segment, EBITDA decreased by 1.2 billion rubles (25.1%) to 3.7 billion rubles. This was related mainly to the fact that the cost of purchased electricity and its transmission grew stronger than revenue, which is due to the nature of tariff regulation.
In the Thermal Power Generation Segment, EBITDA decreased by 0.1 billion rubles (0,8%) to 7.8 billion rubles. A positive impact of the growth of heat prices was offset by the reduction of power generation as a result of operating a smaller amount of power generation equipment due to the decrease in margins.
In the Electric Power Generation Segment, EBITDA increased by 1.9 billion rubles to 17.0 billion rubles. A positive impact was related to the increase in the amount of generation equipment in operation compared to the previous reporting period, due to scheduled and unscheduled repairs at Permskaya TPP in the first quarter of 2016. In addition, the growth of the indicator was caused by the planned retirement of low-efficiency capacity.
The share of profits in associated entities and joint ventures declined by 0.7 billion rubles amounting to 0.9 billion rubles.
Reduction in profit from participation in associated entities and joint ventures is mostly caused by the absence of profit from participation in joint ventures of Electric Networks of Armenia and Razdan Energy Company, due to the sale of stakes in these companies in December 2016, as well as by classification of the stake in Ekibastuzskaya TPP-2 as assets held for sale starting from December 1, 2016.
Net income for the first quarter of 2017 amounted to 18.8 billion rubles, having increased by 1.7 billion rubles.
This result is related to high operating efficiency of the Group's companies, which allows achieving positive results in the changing external environment.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Total assets increased by 9.1 billion rubles (1.6%), amounting to 580.7 billion rubles.
Total assets of the Group increased due to the seasonal rise in receivables of electric power consumers in the utilities and public sector, and due to the acquisition of rights to claim on CDAs for unit 12 of Verkhnetagilskaya TPP.
Equity increased by 18.0 billion rubles (4.3%), amounting to 437.3 billion rubles.
The increase in equity was related primarily to the growth of retained earnings of the Group for the first quarter of 2017.
Total liabilities amounted to 143.5 billion rubles, having decreased by 8.9 billion rubles (5.8%).
The reduction of total liabilities was mainly caused by the seasonal decline in advances received by the Group's supply companies from electric power consumers.
Total debt including the Group's share of the debt of joint ventures increased by 5.2% to 18.7 billion rubles.
Total loans and borrowings of the Group's subsidiaries, not including the share of the debt of joint ventures, increased by 0.9 billion rubles (5.3%) to 18.6 billion rubles as a result of raising loans for operations, primarily in the supply segment.
The ratio of long-term debt to short-term debt as of March 31, 2017 (not including the share of loans and borrowings of joint ventures) amounted to 32.5% versus 67.5% (on December 31, 2016 - 50.4% versus 49.6%).
The amount of external loans and borrowings of joint ventures in the structure of consolidated debt amounted to 0.1 billion rubles and is represented by the debt of CSJC Kambaratinskaya HPP-1.
3 The Thermal Power Generation Segment includes LLC Bashkir Generation Company and JSC TGK-11 (Omsk), JSC Tomsk Generation, JSC Tomsk RTS and JSC OmskRTS.
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Inter RAO Group is a diversified energy holding serving various segments of Russian and international electric power industry. The Group is the leading exporter and importer of electricity in Russia actively increasing electricity generation and sales, and developing new lines of business.
The corporate strategy of Inter RAO is focused on making Inter RAO a global energy enterprise, a key player in the global energy market, and Russia's leading electric utility by energy efficiency. Inter RAO Group owns and operates approximately 32 GW of installed power generation capacity.