Forecast of financial results of the Company

The forecast of financial results of JSC Lenenergo is given according to the adjusted business plan of the Company for 2014–2018 (approved by the Board of Directors of JSC Lenenergo, Minutes # 30 of 16.04.2014 of the meetings of the Board of Directors of JSC Lenenergo of 11.04.2014).

Scenario conditions for formation of JSC Lenenergo business plan (pursuant to the scenario conditions for subsidiaries and depended companies approved at the budgetary committee of JSC Rosseti on 27.06.2013, Minutes # 1, with subsequent alterations and supplements) are as follows:

  • Volume of electricity consumption is planned taking into account operating contractual conditions with consumers, forecasted volumes of a gain in power consumption under the implemented contracts on technological connection, and dynamics of power consumption in the region. Cancellation of lease contracts of the power network facilities entering into the uniform national (all-Russian) electric grid (“last mile”) is provided.
  • Losses of electric power are planned taking into account decrease in the size of losses both in absolute and relative expression considering the levels of voltage, taking into account implementation of the program of energy saving and increase of power efficiency.
  • Volume of technological connections is planned proceeding from the list of technological connection contracts under execution and forecasts of the volumes of technological connections on subjects of the Russian Federation.
  • Expenses within the program of maintenance and repairs are planned for 2014 at the level of approved limits of expenses on maintenance and repair approved in the Company’s business plan for 2013. The volume of repair program for 2014–2018 is formed at the level of forecasted tariffs and balance decisions.
  • The volume of investment program for 2014–2018 is formed taking into account execution of present obligations on technological connection of applicants, and increase of reliability and uninterrupted supply of consumers.
  • Tariff models are formed taking into account extension of the first period of regulation till 2019 and in compliance with a forecast of social and economic development of the Russian Federation for 2014–2016 and consider implementation of large investment programs in St. Petersburg and the Leningrad Region that corresponds to the forecast of social and economic development.
  • Revenue from electric power transmission is planned proceeding from the forecasted volumes of services in electric power transmission taking into account the approved long-term parameters of tariff regulation net of the cost of loading losses.
  • Operating expenses for 2014–2018 considering inflation decrease concerning the level of 2012 counting per unit of service of electronetwork equipment according to the strategy of development of the network sector of the Russian Federation approved by the Resolution of the Government of the Russian Federation # 511-r of 03.04.2013. For 2014 controllable operating expenses (except for labor costs) were formed with a condition of non -excess of the level of expenses approved in the business plan for 2013 pursuant to the decision of the Board of Directors of JSC Rosseti (Minutes # 195-pr/1 of 05.09.2013).
Key forecasted financial indicators of JSC Lenenergo under the approved business plan of Company for 2014–2018, RUB mln

Indicator

2013, fact

2014, plan

2015, forecast

2016, forecast

2017, forecast

2018, forecast

Changes
2018 /2013, %
(if other is not specified)

For reference:
formula

Book value of assets

148,483

159,373

174,252

190,159

199,315

207,896

40.0

line 1600 f. 1

Equity

76,341

83,688

89,622

94,662

100,271

107,503

40.8

line 1300 of the balance sheet

Net assets

76,341

82,195

88,130

93,169

98,778

106,011

38.9

Order # 10-N of the Ministry of Finance of RF

Debt at the end of period

33,376

45,600

60,082

71,112

78,661

81,465

144.1

1410 + 1510

Net debt

23,722

43,904

59,440

70,258

78,010

80,830

240.7

1410 + 1510–1240 – 1250 (f. 1)

Revenue, including:

39,902

48,184

57,357

61,367

67,730

74,745

87.3

line 2110 P&L

from services in electric power transmission

33,207

39,834

44,498

51,832

60,123

70,059

111.0

from services in technological connection

6,515

8,183

12,683

9,352

7,415

4,485

– 31.2

from other services

180

168

177

184

192

200

11.2

COGS

36,429

41,370

43,882

47,252

51,198

54,960

50.9

line 2120 P&L

Income on sales

3,473

6,814

13,474

14,115

16,532

19,785

469.7

line 2200 (f. 2)

Income before taxes

1,444

4,454

8,454

8,282

9,833

12,256

748.6

line 2300 (f. 2)

Net income

425

2,763

5,960

5,834

7,067

8,999

2,018.1

line 2400 (f. 2)

EBITDA

11,279

16,862

24,827

26,945

30,833

35,399

213,9

line 2400 f. 2 + depreciation + income tax f. 2 + line 2330 f. 2 – line 2320 f. 2

EBITDA margin

28.3%

35.0%

43.3%

43.9%

45.5%

47.4%

19.1 p.p.

(EBITDA/Revenue (line 2110 f. 2))
x 100%

Net Debt/EBITDA

2.1

2.6

2.4

2.6

2.5

2.3

(line1410 + 1510–0150 –
1240–1250 f. 1)/EBITDA

Debt/EBITDA (relation of Total Debt to EBITDA)

3.0

2.7

2.4

2.6

2.6

2.3

(line 1410 f. 1 + line 1510 f. 1) / EBITDA

ROE (return on equity)

0.6%

3.5%

6.9%

6.3%

7.3%

8.6%

8.1 p.p.

[line 2400 f. 2/((line 1300 f. 1 +
line 1300 f. 1) / 2)] x 100%

Return on Total Assets (ROTA) on income before taxation

1.0%

2.9%

5.1%

4.6%

5.1%

6.0%

5.0 p.p.

[line 2300 f. 2/((line 1600 f. 1 +
line 1600 f. 1) / 2)] x 100%

Absolute liquidity

0.2

0.1

0.03

0.03

0.03

0.04

(line 1240 f. 1 + line 1250 f. 1) / line 1500 f. 1

Quick liquidity

0.5

0.5

0.5

0.5

0.5

0.7

(line 1260 f. 1 + line 1250 f. 1 + page 1240 f. 1 + line 1232 f. 1) / line 1500 f. 1

Current liquidity

0.5

0.6

0.5

0.5

0.6

0.7

line 1200 f. 1/line 1500 f. 1

Equity-assets ratio (financial independence)

0.5

0.5

0.5

0.5

0.5

0.5

line 1300 f. 1/line 1700 f. 1

Ratio of security with own current assets

– 0.9

– 0.8

– 1.0

– 0.9

– 0.7

– 0.3

Current assets – receivables more than 12 months –
short-term obligations) / current assets =
(line 1200 f. 1–line 1231 f. 1–line 1500 f. 1) / line 1200 f. 1

Debt/Equity Ratio

1.1

1.1

1.1

1.0

1.0

1.1

(1300) / (1700) (f. 1)

Ratio of growth rates of receivables and payables

0.8

1.5

1.1

1.0

1.2

1.2

CAR = line 1230 f. 1 /
line 1230 f.1 CAP = line 1520 f. 1/ line 1520 f. 1 CAR / CAP =
(line 1230 f. 1 / line 1230 f. 1) / (line 1520 f. 1/ line 1520 f.1)

Ratio of total receivables and payables

0.3

0.5

0.5

0.5

0.7

0.8

1230/(1520 + 1450)

Ratio of most liquid receivables and payables

0.5

1.0

0.8

0.8

0.9

1.1

(123201 f. 1 + line 123206 f. 1) / (line 1521 f. 1 + line 1528 f. 1)

Leverage

30.4%

35.3%

40.1%

42.9%

44.0%

43.1%

12.7 p.p.

(1410 + 1510) /
(1410 + 1510 + 1300) (f. 1)

Transition of JSC Lenenergo to RAB-regulation of tariffs is the main catalyst of considerable improvement of the Company’s financial and economic condition and growth of its capitalization.

JSC Lenenergo plans to considerably improve its financial condition to what the dynamics of the most of key performance indicators of the Company testifies.

Dynamics of key performance indicators pursuant to the long-term business plan

The revenue gain in 2018 in comparison with 2013 is expected at the level of 87.3% (in 1.9 times) that essentially advances the growth rate of prime cost (50.9%). A significant growth of revenue from services in electric power transmission for 2013–2018 (in 2.1 times) is thus predicted at decrease in revenue from services in technological connection (by 31.2%).

For 2013–2018 the share of services in technological connection in revenue is supposed to decrease from 16.3% in 2013 to 6.0% in 2018. It is due to the fact that RAB regulation ensures passing from unstable income of technological connection to a stable model under which most of income is formed at the expense of electric power transmission.

In the next five years a gradual increase in EBITDA – in 3.1 times concerning 2013 is forecasted at a simultaneous growth of EBITDA margin to 47.4% in 2018 that is characterized positively from the viewpoint of assessment of a the Company’s financial condition.

Thus specific weight of net income in the structure of EBITDA for the end of 2018 increases to 25.4% (versus 3.8% for 2013) that is also a positive characteristic of the Company’s financial condition.

A considerable growth of net income (in 21.2 times) by 2018 is caused by essential growth of the Company’s revenue from services in electric power transmission. Equity of the Company also increases (+ 40.8%), and the indicator of return on equity (ROE) in 2018 reaches 8.66% that is 15.6 times above the level of 2013.

Throughout the considered period the ratio of equity and debt capital (cumulative liabilities) of the Company and financial independence are within the recommended limits.

The ratio of equity and debt capital exceeds 1, and the ratio of financial independence is at the level of 0.5 and above.

The increase in the volumes of the Company’s credit portfolio in 2.4 times by 2018 in comparison with 2013 is caused by the necessity of attraction of considerable credit resources for implementation of the large-scale investment program of the Company. RAB-regulation of electricity transmission tariffs defines long-term debt funds as the main funding source of the investment program.

Thus, decrease in the cumulative debt on operational credits and loans will start yet in 2014, and by 2018 the credit portfolio on operational credits and loans reduces to the level of 2013 more than in 15.4 times.

At the same time in the terms of increase in debt on the investment credits and loans indicators of Debt and Net Debt of the Company during the whole considered period increases.

Dynamics of EBITDA of the Company in 2013–2018 is characterized by a steady growth trend. As a result during the whole considered period the ratio of Debt/EBITDA does not exceed the level of 3.0 and by 2018 decreases by 22.2%, to the level of 2013, reaching the size of 2.3.

Overall it is expected that by 2018 the financial condition of JSC Lenenergo in comparison with 2013 considerably improves, including due to positive financial result from primary activities on electric power transmission (RUB 5,691 mln versus the loss received by results of 2013 from services in electric power transmission in the amount of RUB 6,446 mln).

Growth of the indicator of debt loading (leverage) up to 2017 is associated with considerable attraction of debt funds for the needs of investment activity and advancing growth rate of the sum of credits and loans concerning increase in equity.

At the same time, for 2013–2018 the value of net assets remains within the recommended standard values at the level considerably exceeding the size of the Company’s authorized capital.

Top