EquityStory.RS, LLC-News: OJSC Bashkirenergo / Key word(s): Final
Results
OJSC Bashkirenergo: Bashkirenergo publishes IFRS reporting with a 31%
rise in 2010 net profit
21.04.2011 / 14:55
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Bashkirenergo publishes IFRS reporting with a 31% rise in 2010 net profit
April 21, 2011, Ufa (Russian Federation, Republic of Bashkortostan) – OJSC
–Bashkirenergo– (MICEX, RTS: BEGY) – publishes consolidated financial
statements for the year ended 31 December 2010 prepared in accordance with
IFRS.
Key Financial Results:
– The Company–s revenue up 25% to 62,835 mln RUR (2.1 bln USD) in 2010
compared to 2009 due to increase in volume of electricity and heat
sales, as well as average sale prices.
– Operating expenses up 24% to 58,719 mln RUR. (1.9 bln USD) in 2010 vs
2009 driven by increasing fuel costs and purchased electricity prices.
– Operating profit increased by 35% in 2010 compared to 2009 reaching
4,116 mln RUR (136 mln USD).
– OIBDA for 2010 was 7,613 mln RUR (251 mln USD) or 19% higher than in
2009.
– OIBDA margin was 12% in 2010, or 1 b.p. lower than in 2009.
– Net profit jumped by 31% compared to 2009 results reaching 2,791 mln
RUR. (92 mln USD).
– Loans and borrowings in 2010 decreased by 89% to 160 mln. RUR (5 mln
USD).
Key Operating results:
– OJSC –Bashkirenergo– total power generation in 2010 was 22,612 mln kWh
gaining 14% from 2009 power production.
– The capacity factor of OJSC –Bashkirenergo– power stations reached 61%
(an increase of 11 b.p. compared to 2009) returning to the pre-crisis
levels.
– Heat output of the Company in 2010 was 24,128 thousand Gcal or 1% above
the 2009 results.
– The specific consumption of equivalent fuel for electricity generation
in 2010 reduced by 3,1 g/kWh to 323.2 g/kWh.
– Volumes of electricity transmission in 2010 grew 7% to 38 623 kWh to
2009.
– The transmitted electricity losses both in long-range and local grid
fell 10% as to 2009 to 4,9% or 1,973 kWh.
– Power supply to consumers in 2010 was 2.6% higher than in 2009 and
amounted to 19,083 mln kWh.
Alexey Doronin, the CEO of OJSC –Bashkirenergo–, commenting on the 2010
results, said: –We consider the 2010 financial results as very positive.
With the rising natural gas prices outpacing electricity prices growth the
Company managed to increase its net profit and OIBDA compared to 2009
mostly through permanent cost control. The capacity factor, an important
efficiency indicator, grew to 61% in 2010 returning to the pre-crisis
levels. This important fact demonstrates that both the utilities sector and
the Russian economy as a whole are on the way to full recovery. Moreover we
think that the full engagement of OJSC –Bashkirenergo– at the wholesale
electricity and capacity market in 2011 will contribute to the Company–s
financial success in future–.
2010 RESULTS OVERVIEW
One of the major challenges for the management in 2010 was setting up the
procedures to –unbundle– the Company–s business model. Mostly this means
that generating capacities and the power supply company LLC ESKB needed to
gain separate access to the wholesale electricity and capacity market
(OREM). As the result, OJSC –Bashkirenergo– has transferred its status of
guaranteeing supplier to LLC ESKB, with all of the powerstations with
capacity over 25 MW gaining access to OREM. Moreover practically all of
generating equipment (except 65 MW) passed the competitive capacity
selection procedure for 2011.
In order to comply with the Russian legislation prohibiting from 2011 for
the Company to combine within one price zone electricity transmission with
electricity generation and supply, the Company–s management prepared for
the spin-off from OJSC –Bashkirenergo– of the newly created power grid
company OJSC –Bashkirian power grid– (OJSC –BPG–) composed of long-range
and local power lines. In order to maximize the protection of rights of all
shareholders of the reorganized OJSC –Bashkirenergo– the spin-off was
planned to be made with a mirror-like distribution of shares in the charter
capital of the newly created entity. However at the Extraordinary General
Shareholders Meeting held on December 24, 2010 the decision to make the
spin-off was not supported by the shareholders, controlling the blocking
stake of voting shares. As a result the decision has not been approved and
today OJSC –Bashkirenergo– in legal terms continues to function as a
vertically-integrated company. At the same time operationally it started in
2011 having an unpacked business.
Key Financial Performance Indicators, 2009-2010
Indicator 2010 2009 Change.,%
Financial Indicators in mln RUR
Revenue 62,835 50 295 25%
Operating expenses (58,719) (47 238) 24%
Operating Profit 4,116 3 057 35%
EBIT margin, % 7% 6% 1 b.p.
OIBDA 7,613 6,423 19%
OIBDA margin, % 12% 13% - 1 b.p.
Profit before income tax 4,077 3,068 33%
Profit for the year 2,791 2, 135 31%
Net margin, % 4% 4% 0
CAPEX (financing) 3,289 5,700 - 42%
CAPEX/Sales 5% 11% - 6 b.p.
Key Operating Results, 2009-2010
Operating Indicators 2010 2009 Change
,%
Installed electric capacity, MW 4,248 4,556 -7%
Installed heat capacity, Gcal/h 13,2 15,2 -13%
55 04
Electricity generation, mln kWh 22,6 19,8 14%
12 34
Heat output, thousand Gcal 24,1 23,8 1%
28 89
Electric capacity factor, % 61% 50% 11 b.p.
Specific consumption of equivalent fuel for 323 326 -1%
electricity generation, g/kWh
Specific consumption of equivalent fuel for heat 145 146 -1%
output, kg/Gcal
Electricity supply to final customers, mln kWh 19,0 18,6 3%
83 04
Revenue
Revenues from electricity and capacity, which comprise the major part of
the consolidated revenues (75% of total revenue) saw a 29% growth in 2010
up to 47,365 mln RUR (1,6 bln USD). Heat sales revenues (20% of total
revenue) gained 12% to 12,280 mln RUR (404 mln USD). The total consolidated
revenue from electricity, capacity, and heat sales for 2010 reached 59,645
mln RUR (2 bln USD) exceeding by 25% the 2009 result.
Consolidated revenue structure 2009-2010, mln RUR
2010 Share in 2009 Share in Change,
revenue,% revenue,% %
Revenue 62,8 100% 50,2 100% 25%
35 95
Electricity and 47,3 36,7
capacity 65 75% 9273% 29%
12,2 10,9
Heat energy 80 20% 83 22% 12%
Other revenue 3,190 5% 2,520 5% 27%
The main factors of revenue growth in 2010 compared to 2009 were:
– Increase by 2.57% in power output to final consumers compared to 2009
reaching 19,082.5 mln kWh;
– Growth of electricity sales at the wholesale electricity and capacity
market (OREM);
– A 10.3% increase in average electricity tariffs for final consumers
compared to 2009;
– A 8.5% increase in average heat tariffs for consumers to 2009 rates.
Operating expenses
Consolidated operating expenses of OJSC –Bashkirenergo– grew 24% in 2010 up
to 58,719 mln RUR (2 bln USD). Variable costs represented the major part,
or 68%, of total Operating expenses amounted to 39,640 mln RUR (1,3 bln
USD). They mainly consisted of fuel costs, expenses on purchased
electricity as well as on water usage. Total variable costs hiked 45% in
2010.
Fuel costs which increased by 35% to 23,994 mln RUR (790 mln USD) were
driven by a 15% gas price indexation, as well as by the boost in
electricity output by thermal power stations.
Expenses on purchased electricity showed the biggest increase of 62% up to
15,132 mln RUR (498 mln USD) mostly triggered by the rise in electricity
and capacity prices at OREM. The share of purchased electricity rose up 6
b.p. to 26% in overall operating expenses.
Fixed costs which represented 32% of overall operating expenses totaling
19,079 mln RUR (628 mln USD) lost 4% compared to 2009.
Staff costs being the largest item of fixed costs (15% of total operating
expenses) fell by 2% against 2009 to 8,758 mln RUR (288 mln USD). The
reduction in staff costs can mostly be explained by a shift to a new staff
motivation system –salary + bonus for achieving KPI–.
Repair and maintenance together with costs of materials and spare parts (8%
of operating expenses) rose 3% to 2009 amounting to 4,672 mln RUR (154 mln
USD) mostly due to a 7% increase in expenditure on repairs and maintenance.
Other operating expenses have grown 13% to 1,191 mln RUR (39 mln USD).
Structure of operating expenses 2009-2010, mln RUR
share share,
2010 % 2009 % %
(23,99 (17,75
Fuel 4) 41% 9) 38% 35%
(15,13
Purchase of electricity 2) 26% (9,334) 20% 62%
Water usage (514) 1% (300) 1% 71%
(39,64 (27,39
Variable costs 0) 68% 3) 59% 45%
Staff costs (8,758) 15% (8,903) 19% -2%
Depreciation (3,497) 6% (3,366) 7% 4%
Repair and maintenance (2,965) 5% (2,770) 6% 7%
Materials and spare parts (1,707) 3% (1,780) 4% -4%
Charity (681) 1% (497) 1% 37%
Taxes, other than income tax (399) 1% (403) 1% -1%
Rent (143) 0% (137) 0% 4%
Loss on disposal of property, plant
and equipment (132) 0% (392) 1% -66%
Change in provision for tax and
legal contingencies 363 -1% (223) 0% n.a.
Change in allowance for doubtful
receivables (40) 0% (200) 0% -80%
Impairment of advances paid 71 0% (116) 0% n.a.
Other operating expenses (1,191) 2% (1,058) 2% 13%
(19,07 (19,84
Fixed costs 9) 32% 5) 41% -4%
(58,71 (47,23
Operating expenses9) 100% 8) 100% 24%
Financial position
As of the balance sheet date, the total assets of OJSC –Bashkirenergo–
amounted to 57,806 mln RUR (1,897 mln USD).
The share of non-current assets exceeds 89% in the asset structure and
totalled 51,488 mln RUR (1,689 mln USD), while the share of current assets
has 11% or 6,318 mln RUR (207 mln USD).
Capital and reserves represented 87% of the total equity and liabilities
amounting to 50,119 mln RUR (1,644 mln USD).
Non-current liabilities decreased 27% to 5,473 mln RUR (180 mln USD) due to
a 89% reduction in current loans and borrowings. At the end of 2010 the
share of total current liabilities was 9% or 5,473 mln RUR (180 mln USD)
and non-current liabilities represented 4% of the total equity and
liabilities or 2,214 mln RUR (73 mln USD).
The financial position of OJSC –Bashkirenergo– is stable. External
financing in 2010 was cut down 89% to only 160 mln RUR (5 mln USD),
resulting in a net debt indicator becoming negative -409 mln RUR (- 13 mln/
USD). Such a significant decrease in loans and borrowings compared to last
year was mostly the result of a growing cashflow from operating activities
coupled with the reduction in capital expenditure,
Capital expenditure
2010 capital expenditure, including new construction as well as technical
modernization and reconstruction projects, amounted to 3,289 mln RUR (108
mln USD).
In 2010, implementation of several major and mid-size investment projects
took place. In particular, the construction of a 110 kW cable line
–Ibragimovskaya GPP-1– was brought to an end, the new sub-stations like
–Amet– in the East of the Republic and –Zaton– in Ufa were put in line, the
turbine and generator of steam-gas unit PGU-60 were installed at Ufimskaya
CHP-2. Among the modernization and reconstruction projects the termination
of installation works of a K-45-1,6 turbine can also be singled out.
EVENTS AFTER THE REPORTING DATE
The Board of Directors of OJSC –Bashkirenergo– on March 31, 2011 adopted a
Regulation on dividends policy of OJSC –Bashkirenergo–. In accordance with
the abovementioned Regulation, the Board of Directors, in their
recommendations to the General Shareholders Meeting on the amount of
dividend payment, will take into consideration that the level of dividend
per share should not be below 10% of the amount net profit for the
financial year, as determined in the consolidated financial statements
prepared in accordance in IFRS.
OUTLOOK FOR 2011
According to the management forecast the OJSC –Bashkirenergo– 2011
financial results should be at the level of 2010, and subject to a
noticeable growth of electricity prices at OREM they can even beat last
year–s results.
The spin-off of grid assets is supposed to be completed by the end of 2011.
The management is preparing its proposals for the Board of Directors and
the General Shareholders Meeting.
The amount of investments in 2011 might significantly increase, mostly due
to re-launching of implementation of the PGU CHP-5 project, should the
Board of Directors decide to do so. Additional capital expenditure will be
financed through external borrowings as well as by its own resources.
Full set of the Company–s IFRS consolidated financial statements can be
found at the Company–s web-site at:
http://www.bashkirenergo.ru/investor/financial%20reports/
OJSC –Bashkirenergo– – is a major regional utility company in Russia,
ranked 5 by installed electric capacity and 7 by installed heat capacity
among the Russian territorial generating companies. By the amount of heat
output OJSC –Bashkirenergo– is among the 10 major heat producing companies
in the world. OJSC –Bashkirenergo has a dominating position at the
electricity and heat market of the Republic of Bashkortostan, which is one
of the top-ten developed regions of Russia. The OJSC –Bashkirenergo– owns
companies which produce electricity and heat, conduct their transmission to
consumers and organize sales. The Installed electric capacity is 4 248 MW,
the installed heat capacity is 13 472 Gcal/h.
Contacts :
Head of Investor Relation
OJSC --Bashkirenergo--
Maxim Kochetkov
tel: + 7 (495) 228-07-74
+7 (963) 990-67-66
kochetkov@bashkirenergo.ru
Statements contained in this press release may contain forward-looking
information that reflects management–s current view and estimates of future
economic circumstances, industry conditions, company performance, and
financial results. Any statements, expectations, capabilities, plans and
assumptions contained in this press release that do not describe historical
facts such as statements regarding the declaration or payment of dividends,
the direction of future operations, the implementation of principal
operating and financing strategies and capital expenditure plans, the
factors or trends affecting financial condition, liquidity or results of
operations are forward-looking statements and involve a number of risks and
uncertainties. There is no guarantee that these results will actually
occur. The statements are based on many assumptions and factors, including
general economic and market conditions, industry conditions and operating
factors. Any changes in such assumptions or factors could cause actual
results to differ materially from current expectations.
End of Corporate News
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Language: English
Company: OJSC Bashkirenergo
Kommsomolskaya st,126
450096 Ufa
Russland
Phone: + 7 (347) 269-43-59
E-mail: secr@iap.bashkirenergo.ru
Internet: www.bashkirenergo.ru
ISIN: RU0009044242
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