For the purpose of financing of the investment program and debt refinancing the Company uses all available instruments of attraction of financial sources – bank credits and bonds (corporate and exchange). Decisions on attraction of additional financial sources are based on the principle of providing a smaller cost of funding at increase in the term of loan.
JSC Lenenergo activities in the field of attraction of credit resources is carried out according to the approved decision of the Board of Directors and the Regulations on credit policy of JSC Lenenergo (Minutes # 8 of 11.10.2013), the limits of cost parameters of loans approved by the Board of Directors and the approved business plan of the Company. The system of limits on the size of credit capital was introduced in the Company to forecast the Company’s solvency. There were established the powers of senior management to approve financial decisions in the field of crediting.
By results of calculation of compliance of JSC Lenenergo debt position defined in the Regulations on credit policy with the limits of debt position a group of solvency (A, B or C) was defined that influences the management powers to approve financial decisions in the field of crediting. The limits of borrowings cost parameters are defined depending on the rate of refinancing, the term of credit and presence of mortgage for the date of attraction of credit resources. Formation of the Company’s credit portfolio is carried out taking into account performance of the indicator Debt/EBITDA not exceeding 3.
|
Indicator |
2011 |
2012 |
2013 |
Change, 2013/2012, % |
For information:formula |
|---|---|---|---|---|---|
|
Equity, RUB mln |
56,144 |
76,225 |
76,341 |
0.2 |
line 1300 f. 1 |
|
Borrowed capital, RUB mln, including |
51,583 |
55,323 |
72,142 |
30.4 |
line 1400 + line 1500 f. 1 |
|
loans and credits |
26,993 |
27,789 |
33,376 |
20.1 |
line 1410 + line 1510 f. 1 |
|
accounts payable |
22,216 |
24,484 |
35,187 |
43.7 |
line 1450 + line 1520 f. 1 |
|
Equity to Borrowings |
1.1 |
1.4 |
1.1 |
– |
1300/(1400 + 1500) f. 1 |
|
Debt/EBITDA |
3.17 |
2.86 |
2.96 |
– |
(1410 + 1510) f. 1/EBITDA |
|
Net debt, RUB mln |
20,197 |
22,360 |
23,722 |
6.1 |
1410 + 1510–1240 – 1250 f. 1 |
|
Net debt/EBITDA |
2.37 |
2.3 |
2.10 |
– |
(1410 + 1510–1240 – 1250 f. 1)/EBITDA |
|
Interest payable, RUB mln |
1,167 |
1,788 |
2,217 |
24.0 |
P&L line 2330 |
|
EBITDA/interest payable |
7.3 |
5.4 |
5.1 |
– |
EBITDA/line 2330 OPU |
|
For reference: |
|||||
|
EBITDA, RUB mln |
8,522 |
9,733 |
11,279 |
15.9 |
line 2400 f. 2 + line 2330 f. 2 + depreciation + profit tax f. 2– line 2320 f. 2 |
In 2011–2013 a steady growth trend both of the Company’s debt (debt on credits and loans), and the sums of net debt was observed. Credits and loans were involved for financing of operating and investment activities of the Company, including for financing of renovation of cable lines in St. Petersburg and construction of a distributive network.
Following the results of 2013 Debt/EBITDA did not exceed 3, the growth of indicator 0.1 p.p. concerning the level of 2012 was connected with advancing growth rate of debt on credits and loans concerning the growth rate of EBITDA. At the same time decrease in Net debt/EBITDA in comparison with the beginning of fiscal year was caused by a smaller growth rate of net debt (at the expense of essential growth of the most liquid assets at the end of the reporting period (the sums of short-term financial investments and cash) concerning the growth rate of EBITDA.
|
Indicator |
2011 |
2012 |
2013 |
Change, 2013/2012, p.p. |
|---|---|---|---|---|
|
The average borrowing rate on total funds |
7.71 |
8.26 |
8.14 |
– 0.12 p.p. |
|
The average borrowing rate on bank credits |
7.55 |
8.23 |
8.09 |
– 0.14 p.p. |
|
Refinancing rate of the Central bank RF |
8.00 |
8.25 |
8.25 |
0.00 |
|
Type of debt |
Credit portfolio on 01.01.2013 |
Involved in 2013 |
Repaid in 2013 |
Credit portfolio on 31.12.2013 |
|---|---|---|---|---|
|
Credits, RUB mln |
27,645 |
18,843 |
13,269 |
33,219 |
|
Interest payments, RUB mln |
144 |
2,619 |
2,606 |
157 |
|
Total |
27,789 |
21,462 |
15,876 |
33,376 |
Increase in the credit portfolio in 2013 was due to a growth of the sum of credit resources involved on financing of investment activity, thus the sum of the credit resources involved on operating activities decreased.
|
Agency |
Value |
Outlook |
Assignment |
Confirmed |
|---|---|---|---|---|
|
Moody’s |
Ba2 |
Stable |
November 2009 |
March 2011 February 2012 January 2013 February 2014 |
|
Moody’s Interfax Rating Agency |
Aa2.ru |
Stable |
November 2009 |
In November, 2009 the Moody’s Investors Service agency assigned JSC Lenenergo with a credit rating at level Ba2, outlook – stable. At the same time Moody’s Interfax Rating Agency which major shareholder is Moody’s, assigned JSC Lenenergo with a rating on a national scale at level Aa2.ru. For 2009–2014 the rating agency annually confirmed the assigned ratings.
The analysis carried out by the rating agency provides rather full complex assessment of the Company’s financial and economic condition.
By results of the reporting year improvement of the indicators of liquidity and solvency of the Company took place, the financial independence remains at a high level, growth of net assets was steady – its essential excess over authorized capital completely meets the requirements of regulations to the size of net assets of the Company and can be regarded as a major factor of stability of financial condition at present time and in the mid-term. The indicator of EBITDA characterizing a cash flow generated by the Company before payment of taxes and interest increased, and EBITDA margin also improved.
JSC Lenenergo on a continuous basis optimizes credit portfolio, the structure of its assets and obligations, including work with receivables and payables: optimization of its size was executed, and active work on arrears minimization that promoted to decrease in the level of delayed accounts payable was carried out in 2013.
High performance following the results of 2013 was provided by rational management of the Company’s liquidity as the result of optimization of the structure of placement of temporarily free cash from the viewpoint of profitability and risks reduction.
By results of refinancing of credits with high borrowing rates, lack of increase in the rates under the concluded credit agreements and conclusions of new contracts under the rates that were lower than the market average, the average borrowing rate on credits attracted by the Company decreased.
The Company managed to successfully proceed with its public credit history, having placed exchange bonds registered in July, 2012 on April 17, 2013 in the volume of RUB 3,000 mln with the interest coupon rate of only 8.25% per annum.
In the future the Company intends to expand public loans by placement of registered exchange bonds of 02–05 reissues that will allow diversifying its funding sources and will have a positive impact on the overall Company’s image in business environment.
At the same time in comparison with 2012 a number of financial indicators declined. Hence, profitability indicators (except for EBITDA margin) decreased that was closely linked to negative dynamics of net profit. In the terms of growth of the Company’s liabilities a decrease in the level of its financial independence takes is noted.
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