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dividends independent of write-offs.
In terms of the approval of the updated strategy, despite the news being supportive for sentiment, with the company aiming to increase profits and dividends, along with a focus on ESG, we note that:
· we expect EBITDA to double by 2030 already;
· two out of six modernisation projects in the Russian Far East are still
expected to be coal-fired; and
· a 9% reduction of GHG emissions does not look that ambitious vs.
foreign utilities and some Russian exporters have already committed to carbon neutrality by 2050 (or earlier).
On Friday 30 April, Unipro reported that it would start receiving the DPM payments at Berezovskaya GRES from 1 May. All the requirements were fulfilled and System Operator confirmed the capacity of unit 3 at 800MW. The news is supportive and positive, with Unit 3 having been offline, and faced multiple delays, since the accident in February 2016. This shows that the company could deliver on the RUB20bn dividend guidance in 2021 and the 11.0% dividend yield (we expect the first interim of 3.9% to be announced in May).
ROSSETI South published its 1Q21 IFRS results on 20 May. Revenue increased 6.1% y/y to RUB10.7bn thanks to the 6.3% y/y growth in distribution revenue to RUB10.3bn, while connection fees were up 65.4% y/y to RUB88mn. Resale revenue rose 2.2% y/y to RUB0.2bn, while COGS rose 5.1% y/y to RUB10.3bn. Cash operating costs were up 1.2% y/y to RUB8.6bn, while adjusted EBITDA was up 32.9% y/y to RUB2bn. Although net financial expenses were down 47% y/y to RUB0.3bn, D&A surged 56.4% y/y to RUB1bn. The company paid RUB440.8mn less y/y in income tax in 1Q21. Non-cash costs dropped 85.9% y/y to RUB46mn, and the company’s net income increased 10.6x to RUB0.7bn.
ROSSETI Siberia saw revenue increase 3.7% y/y to RUB17.1bn in 1Q21, as electricity distribution revenue and electricity resale revenue were up 3.4% y/y to RUB15.6bn and 5.1% y/y to RUB1.3bn, respectively. COGS was up 4.1% y/y to RUB14.8bn, while cash operating costs were up 2.1% y/y for the quarter. Adjusted EBITDA rose 8.4% y/y to RUB4.6bn in 1Q21. Net financial expenses fell 5.7% y/y to RUB0.6bn, while D&A rose 1.3% y/y to RUB1.4bn. Other non-cash expenses fell 3.6% y/y to RUB0.5bn during the quarter. As a result, the company’s net income increased 3.2% y/y to RUB1.7bn in 1Q21. The company’s BoD has already recommended not paying out dividends for FY20.
MRSK Center saw revenue grow 10.2% y/y to RUB27.9bn in 1Q21 due to electricity distribution revenue being up 10.6% y/y to RUB27bn and connection fees being up 61.6% y/y to RUB0.2bn. Electricity resale revenue was up 9.8% y/y to RUB0.2bn. COGS increased 9.5% y/y to RUB24.4bn and cash operating costs rose 9.2% y/y during the quarter. Adjusted EBITDA increased 13.4% y/y
159 RUSSIA Country Report June 2021 www.intellinews.com