OAO “IDGC OF URALS”: 3Q 2008 RESULTS

13 November 2008

ОАО «IDGC of Urals» (RTS and MICEX: MRKU), united operating company of the Urals region exercising control over distributive grid complexes in Sverdlovsk, Chelyabinsk and Perm regions, Russia reports on 9M 2008 financial results under Russian Accounting Standards (RAS).

Table 1. 9M 2008 Consolidated financial result of the merged company, USD thous.* [1]

Item

9M 2008

Revenues, total

587 147.8

Expenses, total

538 859.8

Gross profit

48 288.0

Operating profit

48 288.0

Operating margin

8.2%

EBITDA[2]

80 398.6

EBITDA margin

13.7%

Pre-tax profit

31 201.3

Net profit

25 266.5

Net margin

4.3%

* Here and henceforth currency conversions are based on average exchange rates: 9M 2008 – RUR 24.04.

[1] Here and henceforth financial and economic indicators of the company is calculated under RAS financial statements since the merger (May 01, 2008)

[2] EBITDA is calculated as follows: Operating profit + depreciation and amortization.

 

 

Table 2. 9M 2008 Operating results:

Item

9M 2008

Aerial lines, thous. km

120.1

Cable lines, thous. km

4.9

Quantity of transformer substations PS-35/110-220 kW

986

Installed capacity of transformer substations PS-35/110-220 kW, MVA

19 690.9

Quantity of transformer substations TP-6-20/0.4 kW

28 049

Installed capacity of transformer substations TP-6-20/0.4 kW, MVA

7 164

Electric supply, mln. kWh

20 516.2

Productive supply, mln. kWh

19 434.1

Energy loss, mln. kWh

1 082.1

9M key events:

January

Affiliated companies (OAO “Sverdlovenergo”, OAO “Chelyabenergo” and OAO “Permenergo”) held AGMs which made a decision on restructuring by merging into managing company OAO “IDGC of Urals”.

April

Statements on restructuring of OAO “IDGC of Urals” and termination of affiliated businesses were introduced to the Official State Register of Legal Entities.

Agreements on transition to a new tariff system were signed between the Company and the Administration of Perm region and Regional Energetic Commission (REC).

May

Merged company OAO “IDGC of Urals” begins to work.

An agreement on transition to new tariff model was signed between the Company and United Tariff Body (UTB) of Chelyabinsk region.

June

Trading on IDGC’s shares started in Russian Trade System (RTS) and on Moscow Interbank Stock Exchange (MICEX).

July

A meeting of the Regional President Plenipotentiary Council on regional energy security.

A meeting chaired by the head of Federal Tariff Service (FTS) on launching pilot RAB projects was held.

August

A program for provision of energy supply to objects used for the summit of the Shanghai Cooperation Organization.

September

The merger of the Company’s additional share issues on leading Russian trading exchanges (RTS and MICEX).

A meeting with Perm Administration and Government on investment program of Permenergo (Company’s subsidiary).

October

Launch of the transformer substation PS-110kW «Petrischevskaya» which will supply energy to future micro district «Academicheskiy» (Ekaterinburg).

Management Board of Russian Federal Tariff Service made a decision on RAB-regulation implementation in Permenergo (the Company’s subsidiary).

Full version of accounting statements can be found on our corporate web-site at “Financials” section (www.mrsk-ural.ru).

For additional information on the Company, please, use Company’s corporate web-site (www.mrsk-ural.ru) as well as Complex Information Disclosure System (www.skrin.ru), Interfax (www.interfax.ru) and AKM (www.akm.ru).


FINANCIAL REVIEW

Revenue and Expenses review

On the whole, total Company revenues as of 3Q 2008 reached US$ 601.9 mln. Overall revenue structure of the Company as of 3Q 2008 is as follows:

Table 2. 9M 2008 Revenue structure, US$ thous.

Item

9M 2008

Share, %

Revenues, including:

587 147.8

97.5 %

Revenues from energy transmission

554 792.8

92.2 %

Revenues on technological connection

13 316.2

2.2 %

Other revenues from main activities

18 886.1

3.1 %

Non-core revenues

152.7

0.03 %

Other revenues (operating, non-operating)

14 756.0

2.5 %

TOTAL REVENUES

601 903.8

100.0 %

Revenues from energy transmission make a large contribution to the revenues structure of the Company. As of 3Q 2008, the revenues totaled US$ 554.8 mln. (92.2% of the revenues).

Revenues from technological connection, as of 9M 2008, reached US$ 13.3 comprising 2.2% of the total revenues.

Other revenues from main activities reached US$ 18.9 mln. (3.1%), non-core revenues being US$ 152.7 thous.

Other revenues as of 9M 2008 totaled US$ 152.7 thous (2.5%).

Operating expenses of the Company, as of 3Q 2008, totaled US$ 538.9 mln. Overall structure of the merged Company is as follows:

 

Table 3. Company’s expense structure as of 9M 2008, US$ thous.

Item

9M 2008

Share, %

Purchased energy for loss compensation

82 510.1

15.3%

Payments to OAO “FSK UES”

116 783.6

21.7%

Payments to other distributive companies

130 608.3

24.2%

Wages and other social benefits

70 927.3

13.2%

Depreciation and amortization (fixed and intangible assets)

32 110.7

6.0%

Taxes and dues

1 375.2

0.3%

Repair expenses

15 436.3

2.9%

Other expenses

89 108.4

16.5%

TOTAL EXPENSES

538 859.8

100.0%

Large items are as follows:

  • Payments to other distributive companies which, as of 9M 2008, totaled US$ 130.6 mln. (24.2% of overall expenses);
  • Payments to ОАО “FSK UES” which reached US$ 116.8 mln (21.7% of overall expenses);
  • Purchased energy for loss compensation which totaled US$ 82.5 (15.3%);
  • Wages and other social benefits which reached US$ 70.9 (13.2%).

Other expenses equaled US$ 89.1 mln. (16.5%) and comprise transport services, rental lease and maintenance services.

Debt review

Table 4. Credit Portfolio of the Company as of 3Q 2008,US$ thous.

Item

3Q 2008

Total credit portfolio

222 632.9

Short-term loans and borrowings

35 235.4

Long-term loans and borrowings

187 397.5

Including bond issues

41 597.3

Table 5. Company’s debt as of 3Q 2008.

Item

3Q 2008

Debt/Equity

20%

Equity/Assets

68%

The Company’s net debt, as of the reported period, increased by 16.5% and totaled US$ 127.7 mln., which characterizes traditional increase for utilities in 3Q investment financing.

On the whole, the Company has a moderate debt level: as of 3Q 2008 13.6% of assets were financed by loans and borrowings, all liabilities contributed 32% to total balance.


OPERATING REVIEW

Total length of aerial lines (in chains) which are in the balance of ОАО “IDGC of Urals”, as of October 01, 2008 totaled US$ 120 129 km. Aerial line structure (on voltage class) by the Company’s subsidiaries is as follows:

 

Table 5. Total length of the aerial lines (in chains), km. (as of 01.10.2008).

Subsidiary

220 kW

110 kW

35 kW

10 kW

6 kW

0,4 kW

Permenergo

0

7 508

4 163

17 544

2 939

15 397

Sverdlovenergo

5

7 962

1 750

12 623

1 100

11 715

Chelyabenergo

0

5 367

2 732

15 084

935

13 305

Total

5

20 837

8 645

45 251

4 974

40 417

 

Overall length of the cable lines, as of 01.10.2008, totaled 4 892 km. Voltage class structure by our subsidiaries is as follows:

 

Table 6. Overall length of cable lines, km (as of 01.10.2008).

Subsidiary

110 kW

35 kW

10 kW

6 kW

0,4 kW

Permenergo

10

78

464

1 113

736

Sverdlovenergo

0

0

71

109

183

Chelyabenergo

0

12

687

503

926

Total

10

90

1 222

1 725

1 845

 

The quantity of transformer substation PS-35/110-220 kW, as of 01.10.2008, reached 986, installed capacity of the transformer equals 19 690.9 MVA. The quantity and installed capacity structure by our subsidiaries is as follows:

 

Table 7. The quantity and installed capacity of transformer substations PS-35/110-220 kW (as of 01.10.2008).

PS-35 kW

PS-110-220 kW

Subsidiary

Quantity

Installed capacity, MVA

Quantity

Installed capacity, MVA

Permenergo

176

1 618

167

5 639

Sverdlovenergo

88

548.9

259

6 067

Chelyabenergo

118

941

178

4 877

Total

382

3 107.9

604

16 583

Overall quantity of transformer substations TP-6-20/0,4 kW, as of 01.10.2008, totaled 28 049, installed capacity equaled 7 164 MVA. The quantity and installed capacity structure by our subsidiaries is as follows:

 

Table 8. Quantity and installed capacity of the transformer substations TP-6-20/0.4 kW (as of 01.10.2008)

Subsidiary

Количество, шт.

Мощность, МВА

Permenergo

11 974

2 797

Sverdlovenergo

7 308

1 846

Chelyabenergo

8 767

2 521

Total

28 049

7 164

Total productive supply of the Company, as of 3Q 2008, reached 19 434.1 mln. kWh. Energy losses in 3Q 2008 totaled 1 082.1 mln. kWh which equals 5.3% of overall electric supply.

Table 9. Energy supply and losses as of 3Q 2008, thous. kWh.

Subsidiaries

Electric supply

Productive supply

Energy losses

Permenergo

4 767 857.30

4 399 878.71

367 978.60

Sverdlovenergo

9 695 083.23

9 259 092.56

435 990.66

Chelyabenergo

6 053 273.50

5 775 169.13

278 104.37

Total

20 516 214.03

19 434 140.40

1 082 073.63

 


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