21 Feb 2017 07:43
Federal Grid Company Announces FY 2016 RAS Results
Moscow, 21 February 2017 - Federal Grid Company of Unified Energy System ("Federal Grid Company" or "the Company"; Moscow Exchange, LSE: FEES), owner and operator of the Unified National Electricity Grid, announces its financial results for the year ended 31 December 2016 under Russian Accounting Standards (RAS).
The Company's RAS statements do not consolidate the results of Federal Grid Company's subsidiaries or affiliated companies that operate as independent legal entities.
Key financial results
Item (mln RUB) | 2015 | 2016 | Change, % |
Revenue | 173,266 | 218,366 | +26.0% |
Electricity transmission services | 158,986 | 171,133 | +7.6 % |
Connection services | 12,397 | 45,479 | 3.7x |
Cost of sales | 134,938 | 140,038 | +3.8% |
Cost of sales, excluding purchase of electricity, property tax, depreciation and amortisation | 37,971 | 36,845 | -2.9% |
Management expenses | 7,851 | 8,033 | +2.3% |
Management expenses, excluding property tax, depreciation and amortisation | 5,999 | 6,104 | +1.7% |
Profit from sales | 30,477 | 70,296 | +6.3% |
Adjusted EBITDA* | 103,667 | 119,622 | +15.4% |
Net profit | 17,870 | 106,071 | 5.9x |
* excluding accrual and recovery of provisions for doubtful debts, revaluation of assets and fees from connection services;
Federal Grid Company's performance in 2016 comes as a result of the Company's efforts since 2014 to improve efficiency in all of the key operational areas.
The Company's revenue in 2016 grew by 26% year-on-year, driven by:
· Electricity transmission services rising by RUB 12,147 million (7.6%), while tariff rates rose 7.5%, in view of the capacity growth among direct customers;
· Connection services rising 3.7x (by RUB 33,082 million), due to completion of works on connection of power stations and recognition of revenue for these services.
In addition, Federal Grid Company's other income grew during the reporting period, due to increased claims
settlement income related to penalties and fines for breaches of contractual obligations (RUB 1,734 million).
Adjusted EBITDA (excluding non-cash operations, income from connection services, income tax, depreciation and amortisation) rose by RUB 15,955 million (15.4%) year-on-year, and amounted to RUB 119,622 million.
The Company's net profit for 2016 amounted to RUB 106,071 million, which was 5.9 times higher than in 2015. Net profit was significantly affected by non-cash operations, including:
Item | 2015 | 2016 | Change, % |
Net profit, mln RUB | 17,870 | 106,071 | 5.9x |
Reserve accruals | -8,576 | 8,606 | 2x |
Revaluation of INTER RAO shares | 5,839 | 39,770 | 6.8x |
Write-down of overdue accounts receivable | -24 | -1 | -96.3% |
Revaluation of fixed assets | 261 | -1,476 | -6.6x |
Adjusted net profit**, mln RUB | 20,345 | 59,170 | 2.9x |
** generated by cash flows (adjusted for reserve accruals / recovery of provision of doubtful debts, revaluation of fixed assets and financial investments).
Adjusted net profit (excluding revaluations and reserve accruals) grew by 2.9x.
In 2016, Federal Grid Company continued implementing its cost optimisation policy. While the amount of equipment in operation rose in connection with the large-scale investment programme (8,772 МVА of new capacity and 827.17 kilometres of transmission grid were brought on stream), the Company still managed to reduce headcount by 5.3% and significantly (by 5.2%) reduce expenses on materials and services. At the same time, higher tax payments in 2016 came about as a result of the legislated phased repeal of property tax rebates.
Item (mln RUB, unless otherwise noted) | 2015 | 2016 | Change, % |
Cost of sales and management costs | 142,789 | 148,071 | +3.7% |
Electricity purchases | 14,332 | 14,722 | +2.7% |
Electricity transmission services | 2,740 | 2,495 | -8.9% |
Taxes and duties (including social tax) | 12,257 | 13,999 | +14.2% |
Depreciation and amortisation | 77,217 | 81,490 | +5.5 % |
Personnel-related expenses | 18,237 | 18,288 | +0.2% |
Other costs (materials and services) | 18,006 | 17,077 | -5.2% |
Headcount, number of employees | 23,505 | 22,256 | -5.3% |
Balance Sheet as of 31 December 2016
Assets
Federal Grid Company's total assets at the end of 2016 grew by RUB 97,872 million (7.7%) to RUB 1,366,174 million. Non-current assets accounted for RUB 1,183,264 million, while current assets equalled RUB 182,910 million.
Federal Grid Company's equity increased by RUB 101,614 million (11.5%) during the reporting period. This increase in equity reflects the Company's financial results for 2016.
Liabilities
The Company's gross debt (including accrued interest) as of the end of the reporting period had decreased by RUB 13,007 million (by -4.9%) and amounted to RUB 261,653 million. In 2016, the Company attracted loans altogether totalling RUB 10,165 million and extinguished debt in the amount of RUB 23,172 million.
Andrey Murov, Chairman of the Management Board of Federal Grid Company, commented:
"For the past four years, we have stood firmly on the principles of reliability, cost efficiency, and unconditional fulfilment of our investment programme. And for four years in a row, Federal Grid Company has demonstrated robust results across all key metrics. "The Company's results in 2016 were quite impressive. Record revenues from connection services were achieved, while net profit excluding revaluation of financial investments and reserves grew threefold year-on-year and amounted to over RUB 59 billion. Further progress was made on cost cutting, including efforts to optimise the organisational structure of the Company. "At the same time, we maintained reliable power supplies to our customers, carried out our investment programme and delivered all connection services strictly according to schedule. "2017 will mark the 15-year anniversary of Federal Grid Company. We will meet this milestone as a sustainable, reliable company, consistent in its actions and attractive to investors."
Federal Grid Company's financial statements for 2016 under RAS are available on the Company's website in the Financial Disclosure/RAS Financial Reports section at the link:
http://www.fsk-ees.ru/eng/investors/financial_disclosure/ras_financial_reports/