Energy without borders

JSC Inter RAO — Electric Power Plants Announces RAS Financial Results for the Full Year 2017

JSC Inter RAO – Electric power plants published accounting statements for 2017 in accordance with Russian accounting standards (RAS).

Description* 2017 2016 Variation, %
Revenue 188.7 175.1 7.8
Production cost 148.0 139.0 6.4
Sales income 38.8 34.0 14.0
Net profit 37.5 41.6 -9.8

As of December 31, 2017 As of December 31, 2016 Variation, %
Total assets 310.7 269.0 15.5
Own equity 269.8 239.9 12.5
Loans and borrowings - - -
Net debt** -43.9 -3.6 -

* in billion rubles, unless otherwise stated. Relative deviation (in %) calculated on the basis of data of the accounting reports (in thousand rubles) without rounding

** Net debt is calculated as follows: Short-term loans and borrowings plus Long-term loans and borrowings less Cash and Cash equivalents less Cash on Deposit accounts

Operating performance of the company for 2017 is available at website of JSC Inter RAO – Electric power plants: http://www.irao-generation.ru/press/news/

Profit and loss statement

Revenue of JSC Inter RAO – Electric power plants for 2017 amounted to 188.7 billion rubles, which is 7.8% (or 13.6 billion rubles) higher than in 2016.

Revenue from sale of electricity increased as compared to 2016 by 3.2% (or by 2.9 billion rubles) and amounted to 93.5 billion rubles, mainly due to the growth of sales of electricity by 4.3% (or by 3,515 million kWh), in connection with the increase in electricity generation by the plants of JSC Inter RAO – electric power plants by 4.4%, due to the following but not limited to:

  • Permskaya SDPP – output rose by 35.8% (or by 3,501 million kWh) due to the increase of the scope of the generating equipment put into operation, as well as thanks to the new state-of-the-art unit No. 4 with the capacity of 861 MW commissioned in the summer of 2017 in the framework of the power delivery contract program;

  • Verkhnetagilskaya SDPP - compared to the previous year the growth of production amounted to 46.7% (or 1,508 million kWh), mainly due operation of state-of-the-art steam-gas unit No. 12 with the rated capacity of 447.15 MW commissioned in the framework of the power delivery contract program in June 2017;

  • Kostromskaya SDPP increased production by 8.5% (or 1,213 million kWh) compared to the previous year as a result of the increased scope of the generating equipment put into operation.

Weighted average selling price of electricity on the day ahead market (DAM) decreased by 2.7% as a result of increase of production of electric power of inexpensive generation by HPP and NPP. Negative influence of this factor on the dynamics of the Company's revenue from sales of electricity amounted to minus 0.8 billion rubles, which was partially offset by optimizing the load profile of generation capacity – increasing the scope of the generating equipment of the efficient power plants being put into operation: Permskaya SDPP, Verkhnetagilskaya SDPP, Severo-Zapadnaya (North-Western) TPP, Sochinskaya TPP.

In addition, increase in revenue from sales of electricity was contributed by increase of volume of sales on the balancing market (BM) by Verkhnetagilskaya, Iriklinskaya, Kostromskaya, Permskaya and Gusinoozerskaya SDPP as a result of additional load in excess of the trading schedule in a favorable price situation.

Revenue from sale of power in 2017 has increased compared to the same period of the last year by 9.9% (by 6.1 billion rubles) and amounted to 68.2 billion rubles, mainly due to the increase in revenue under the power delivery contracts (PDC).

In 2017, an ambitious program of construction of the new generating equipment under the power delivery contracts was completed. During the implementation of the program, the new generating equipment with the capacity of 4.9 GW was commissioned, thus, most of power plants of JSC Inter RAO – Electric power plants were upgraded with significant increase of their operating efficiency.

In the summer of 2017 five months ahead of schedule, power unit No. 12 of Verkhnetagilskaya SDPP was commissioned as well as power unit No. 4 of Permskaya SDPP was put into operation which had been constructed within the shortest time period of 23 months.

Revenue under the PDC increased by 6.3 billion (or by 17.1%) reaching 42.8 billion rubles due to oppositely directed impact of the following factors:

  • Increase of the volume of delivered power (revenue growth by 4.9 billion rubles), including due to commissioning of new power units built under the PDC program: At Permskaya SDPP since August 2017 (2.8 billion rubles), at Verkhnetagilskaya SDPP in June 2017 (1.6 billion rubles), and also due to the requalifying of the rated capacity of generating equipment of Kharanorskaya SDPP, Urengoyskaya SDPP, Permskaya SDPP, and Yuzhnouralskaya SDPP-2 based on the results of certification ran in the 4th quarter of 2016 (revenue growth by 0.4 billion rubles).
  • Growth of the power selling prices of some specific PDC facilities (revenue growth by 2.8 billion rubles) caused by:
    • increase the value of the Крсв factor used to determine the share of compensation of investment in the power market having affected the price of the power fed by power unit No. 9 of Cherepetskaya SDPP and power unit No. 2 of Yuzhnouralskaya SDPP-2 (revenue growth by 1.6 billion rubles);
    • billing "Delta PDC 10/15" becoming due from the 7th to the 10th years of power delivery under the PDC, which was reflected in the price calculation for the power of power unit No. 3 of Kashirskaya SDPP and power unit No. 3 of Sochinskaya TPP (revenue growth by 1.2 billion rubles).
  • Reduction of the power selling price of the other PDC facilities (revenue reduction by 1.4 billion rubles) due to the influence of the General factor of rate of return reduction included in the power price of the PDC facilities according to the wholesale market regulatory base following the yield lowering of the long-term government obligations used in the power price calculation.

Revenue from other sales as of 2017 amounted to 23.6 billion rubles against 19.2 billion rubles in the previous period, mainly due to revenue growth from sales of inventory items (goods and materials) to third parties (4.0 billion rubles), and also owing to provision of agency services for construction of Pregolskaya TPP and Primorskaya TPP in the Kaliningrad region.

Production cost of the sold products and provided services as of 2017 increased compared with the year 2016 by 6.4% (or by 8.9 billion rubles) and amounted to 148.0 billion rubles.

Production cost fluctuation was affected by oppositely directed influence of the following key factors:

  • Fuel cost in 2017 increased as compared to 2016 by 4.4% or by 3.2 billion rubles for the following main reasons:
    • total energy generated by the plants of JSC Inter RAO – Electric power plants increased by 4.4%, the amount of thermal send out from the headers increased by 2.1% (increase of fuel cost by 3.0 billion rubles).
    • weighted average price of the reference fuel in comparison to 2016 increased by 2.1% (increase of expenses by 2.0 billion rubles) which was offset by decrease of specific consumption of the reference fuel for electricity generation by 6.8 g/kWh and thermal energy production by 2.6 kg/Gcal (reduction of expenses by 1.9 billion rubles).
  • Growth of the cost of acquisition of inventory items for further resale by 4.1 billion rubles (23.0%).
  • Increase of repair expenses by 1.2 billion rubles (or by 41.2%) is due to carrying out in 2017 of routine inspections of the generation equipment of Yuzhnouralskaya SDPP-2.
  • Positive effect on production cost development restraint was exerted by a package of measures for increase of efficiency of the activities implemented by the Company's management in the framework of the implementation of the operating strategy as a result of which the semi-fixed costs (excluding repairs) increased as compared to the last year level by 1.0% (or by 0.4 billion rubles) with the actual inflation rate of 2.5% (according to the Federal state statistics service). In particular, decommissioning of the inefficient generating equipment of Cherepetskaya SDPP (865 MW) and Verkhetagilskaya SDPP (330 MW) materially affected slowdown in growth rates of conditional-constant expenses (effected amounted to 0.1 billion rubles).

Gross profit as of 2017 amounted to 40.8 billion rubles which is by 13.1% (or by 4.7 billion rubles) higher than in 2016.

Profit from sales as of 2017 increased compared to the previous year to 38.8 billion rubles (an increase of 14.0% or by 4.8 billion rubles).

Balance of other income/expenses as of the reporting period amounted to 6.4 billion rubles (formed mainly due to recognition of the gain received as a result of winding up of the NVGRES HOLDING Limited subsidiary company) vs 15.0 billion rubles in 2016 (was due to the provision recovery in consequence of reduction of the Company's estimated liabilities for joint and several surety).

Net profit as of 2017 amounted to 37.5 billion rubles against 41.6 billion rubles in 2016.

Balance sheet report

Total assets of JSC Inter RAO – Electric power plants in 2017 increased by 15.5% (or by 41.7 billion rubles) and, as of 31 December 2017, amounted to 310.7 billion rubles.

Non-current assets as of the reporting period increased slightly and amounted to 236.5 billion rubles as of the end of the reporting period.

Current assets in 2017 rose 2.3 times (or by 41.9 billion rubles) and amounted to 74.3 billion rubles, mainly due to the joint growth of financial investments and cash equivalents by 40.3 billion (or 12.2 times).

Liabilities of JSC Inter RAO – Electric power plants as of December 31, 2017 increased by 11.7 billion (or by 40.2%) and amounted to 40.9 billion rubles. This dynamics is due to the following oppositely directed factors: accrual of accounts payable on the dividends in the amount of 7.5 billion rubles, accrual of bonus depreciation in connection with the commissioning of new power units of Permskaya and Verkhnetagilskaya SDPP (3.2 billion rubles), recognition of accounts payable on the assignment of right of demand under the PDC (2.5 billion) and settlement of accounts payable to PJSC Inter RAO for the purchase of fixed assets (2.0 billion rubles).

Accounting statements of JSC Nizhnevartovskaya SDPP as per the RAS

Indicator* 2017 2016 Variation, %
Revenue 18.7 17.7 5.3
Production cost 14.1 13.9 1.3
Sales income 4.0 3.3 22.1
Net profit 3.3 2.9 13.3

As of December 31, 2017 As of December 31, 2016 Variation, %
Total assets 26.7 34.6 -22.8
Own equity 22.6 19.3 17.2
Loans and borrowings - 11.2 -100.0
Net debt** -3.1 0.8 -

* in billion rubles, unless otherwise stated. Relative deviation (in %) calculated on the basis of data of the accounting reports (in thousand rubles) without rounding

** Net debt is calculated as follows: Short-term loans and borrowings plus Long-term loans and borrowings less Cash and Cash equivalents less Cash on Deposit accounts

Profit and loss statement

Revenue of JSC Nizhnevartovskaya SDPP as of 2017 increased by 0.9 billion rubles (or by 5.3%) as compared to 2016 and amounted to 18.7 billion rubles.

Revenue from sales of electricity remained at the level of 2016 and amounted to 11.9 billion rubles.

Revenue from sale of power in 2017 has increased compared to the same period of the last year by 15.6% (or by 0.9 billion rubles) and amounted to 6.5 billion rubles, mainly due to increase in revenue under the power delivery contracts (PDC). The change in the indicator resulted from the rise in the capacity sale price following an increase in the Крсв ratio which determines the share of investments in the capacity market to be compensated (revenue was up 0.7 billion rubles) as well as from the increase in the amount of supplied capacity, including as a result of the requalifying of the rated capacity of the third power unit that was carried out in Q4 2017.

The cost of sales was up 1.3% (or 0.2 billion rubles) totaling 4.1 billion rubles. The increase resulted primarily from the added costs of repairs (the following repairs were carried out in 2017: an overhaul of the first power unit, current repairs of the second power unit and mid-life repairs of the third power unit), and the increase in the cost of purchased electricity while power units were taken off-line for repairs.

The gross profit in 2017 was up 0.8 billion rubles (or 19.6%) on last year, totaling 4.6 billion rubles.

The sales revenue in the reporting period was 4.0 billion rubles, growing by 22.1% (or 0.7 billion rubles).

The balance of the other expenses and revenues totaled 0.03 billion rubles vis-a-vis 0.3 billion rubles in 2016.

The net profit of Nizhnevartovsk HPP in the report period was up 13.3% on 2016 (or 0.4 billion rubles), totaling 3.3 billion rubles.

Balance sheet report

The total assets of Nizhnevartovsk HPP were down 22.8% (or 7.9 billion rubles) and at 31 December 2017 totaled 26.7 billion rubles.

The non-current assets increased by 1.5% (0.3 billion rubles), amounting to 20.4 billion rubles. The main reason for the increase in non-current assets was the acquisition of improved spare parts for the third power unit in order to retrofit it.

The current assets were down 8.2 billion rubles (or by a factor of 2.3), falling to 6.3 billion rubles, primarily as a result of a reduction in cash and equivalents by 7.3 billion rubles (70.1% of the total decrease in current assets), down to 3.1 billion rubles as the company completely paid off the loan it had taken within the group for the construction of the third power unit.

The total liabilities at 31 December 2017 were 4.1 billion rubles, having fallen by 11.2 billion rubles (or by a factor of 3.7), primarily as a result of the repayment of the intergroup loan.