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the parties plan to close the deal. On the surface, the terms of the deal might not look that appealing, especially given Qiwi's cumulative net loss of RUB 7.5bn since the start of the project and through 1Q20. Nevertheless, we tend to treat the deal as a maximum value recovery effort amid Qiwi's strategic decision to unwind the project.
9.2.10 ​Utilities corporate news
Federal Grid Company​ (FSK) reported its 1Q20 IFRS results on 1 June. They showed revenues improving 2% y/y, supported by electricity transmission revenues (flat y/y), the grid connection revenue of RUB328mn (vs. RUB134mn in 1Q19 due to the volume of applications and size of the contracts) and construction revenues of RUB981mn (vs. none in 1Q19). Costs were up 3% y/y, leading to adjusted EBITDA of RUB33,650 (on our calculations), a 26% y/y reduction, with the key underlying reason being the one-off income from the DVEUK deal in 1Q19 of RUB10.4bn. Net income was also down, dropping 28% y/y to RUB19,666mn due to the same reasons. Adjusting for this, net oncome would be up 1% y/y. FCF printed 32% higher y/y, with the support of working capital, despite the capex growth of 27% y/y.
InterRAO is willing to include its two 225 MW coal-fired units at Cherepetskaya GRES in the Tulsk region ​into the DPM2 modernisation programme, with the goal of switching them from coal to gas (thus, the company is asking to increase the auction volume cap for 2026 from 2GW to 2.5GW), Kommersant reports. Currently, the power plant has two coal-fired DPM blocks operating with the rest of the units having been decommissioned in 2017. The company believes the units might become loss making after DPM and therefore could require decommissioning. The company could be willing to apply localised GE gas turbines to change the coal-fired units currently.
Along with its largest subsidiary, FSK,​ ​Rosseti​ (Russian Grid) released its 1Q20 IFRS numbers on 1 June​. Revenues were down 1% y/y, despite being supported by electricity distribution and grid connection services revenues, on the back of the 33% y/y slide in retail revenues due to certain subsidiaries ending its status of guaranteed supplier. Adjusted EBITDA was down 5% y/y due to the RUB8bn of additional income from the DVEUK deal in 1Q20. Net income was down 8% y/y for the same reasons (while, adjusting for it, net income increased 14% y/y).
Russian state hydropower major RusHydro reported 5% year on year growth in revenues under IFRS in 1Q20​, with Ebitda up by 24% y/y and net profit jumping 57% y/y, all beating analysts expectations. As reproted by bne IntelliNews, RusHydro was helped by warm weather in the beginning of 2020, achieved the biggest share price gain in the sector, and had its investment case re-rated upwards by analysts. BCS Global Markets on June 4 welcomed the strong growth numbers on the top line and earnings, as well as solid operating results in 1Q20, but still maintained a Sell recommendation on the name. The strong financial performance was underpinned by hydropower plant (HPP) output growth of 30% y/y, as well as DPM contract for newly launched Zaramagskaya HPPs and expectedly good profitability in Far East generation segment (mainly due to estimated 25%y/y fall on coal prices in the region), BCS GM commented. Notably, the company does not see downside risks to dividends from coronavirus pandemic (50% of IFRS net profit), Reuters reported on June 4 citing the conference call of the management.
118​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com