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Edited Transcript of IRAO.MZ earnings conference call or presentation 28-Feb-20 9:00am GMT

Full Year 2019 Inter RAO EES PAO Earnings Call (IFRS)

Naberezhnaya, 12 Moscow Mar 25, 2020 (Thomson StreetEvents) -- Edited Transcript of Inter RAO EES PAO earnings conference call or presentation Friday, February 28, 2020 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Alexandra Panina

Public Joint Stock Company Inter RAO UES - Interim Head of the Trading Block & Member of Management Board

* Evgeniy Nikolaevich Miroshnichenko

Public Joint Stock Company Inter RAO UES - CFO & Member of the Management Board

* Larisa Sadovnikova

Public Joint Stock Company Inter RAO UES - Head of IR

* Maslov Aleksey

Public Joint Stock Company Inter RAO UES - Member of the Management Board and Head of Strategy & Investment Division

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Conference Call Participants

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* Fedor Kornachev

Sberbank CIB Investment Research - Research Analyst

* Igor Goncharov

Gazprombank (Joint Stock Company), Research Division - Senior Analyst

* Roman Alexeevich Filkin

Prosperity Capital Management Ltd - Director

* Sergey Beiden

Renaissance Capital, Research Division - Research Analyst

* Sergey Garamita

Raiffeisen CENTROBANK AG, Research Division - Analyst

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Presentation

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Larisa Sadovnikova, Public Joint Stock Company Inter RAO UES - Head of IR [1]

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Good afternoon, ladies and gentlemen. Inter RAO is happy to see you, and we are ready to present our consolidated financial and operating results of Inter RAO Group for 2019.

Today's speakers will be Evgeniy Miroshnichenko, Member of the Management Board and our CFO; and Aleksey Maslov, Member of the Management Board and Head of Strategy and Investments. In the Q&A session, we will be happy to take your questions. Alexandra Panina will take part in the Q&A session. She's also a Member of the Management Board and Acting Head of the Trading Business; and [Parina Faroushina], adviser to the CEO.

Now I'm giving the floor to Aleksey Maslov, Head of Strategy and Investment.

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Maslov Aleksey, Public Joint Stock Company Inter RAO UES - Member of the Management Board and Head of Strategy & Investment Division [2]

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Good afternoon. I'm going to present our results for 2019, and I would like to start with the key drivers behind our financial performance in 2019. And let's start with the generation segment. And the key drivers were contribution of the power plants in the Kaliningrad region. You'll remember that Mayakovskaya, Talahovskaya were commissioned in 2018, and Pregolskaya TPP with its 2 power units was contributed -- was commissioned in 2018 in the second and in the fourth quarters.

Also, our Zatonskaya TEC was fully operational, and it generated 440 megawatts of electricity generation. And it was fully operational, and it's reflected in our results. Also, I'm going to remind you that we decommissioned, too, our units at Kashirskaya GRES, and it was also helpful for us in terms of market environment. That is our day-ahead market performance, especially in the first part of the year, first half of the year. Also, we had 10/15 delta for CDA facilities.

In the Supply segment, we saw growth of average selling prices. We also expanded our geographies, and I will explain it a bit later. Also, we continued active development of the additional paid services segment, and annual growth was a 2-digit figure, as we promised to deliver, in the Trading segment.

In Lithuania, we increased our supplies by 42% and reduced exports -- reduced, sorry, imports from Kazakhstan and also increased our trading in Poland.

As to our foreign assets, a substantial driver was increased supplies in the Moldavia segment, also the shutdown of our Trakya Elektrik project in Turkey. As you'll remember, in June, we transferred a power plant to the Turkish company, state-owned company.

So the next slide shows overall picture of electricity generation. As you can see on the upper left chart, supply and demand balance in 2019 was mixed. Consumption reduced -- slightly reduced to 1.221 -- 075.2, and you can see the key contributors. The breakdown is shown on the chart in the -- left chart at the bottom of the page in terms of changes in structure of power plants. New capacity growth was by 3% mainly in southern part and in the central part of Russia, thanks to the upgrade of our facilities. Decommissioning amounted to 1.7%.

Also, one of the key factors affecting electricity and heat consumption in Russia was the temperature factor. It amounted to around 7 billion kilowatt hours of electricity consumption in 2019, but it was slightly offset by increased consumption by some industrial consumers, industrial companies. And you can see the temperature factor at the bottom of the page at the right-hand side.

Next page, please, electricity and heat generation. Electricity supplied to customers was slightly below year-on-year, and the reason is that competition got stronger in the central part in the year also. But also, I would like to show substantial changes in CDA facilities, and the change was 63%, which is much better than in 2018.

As to other our facilities, we saw a decreased load of Permskaya and Kaliningrad GRES-2 due to the factors which I mentioned above, but decrease in generation was slightly offset by increase at Kharanorskaya and Urengoyskaya GRES. Also, we commissioned the highly efficient Zatonskaya TPP. We increased BGC Group regeneration by 11%. TGK-11 and Tomsk Generation company were driven by the loads scheduled by the system operator, and they're also explained by the temperature factor. So there is a slight decline here, too.

As to heat supplied to customers (technical difficulty)

We are ready to continue. And there goes the minor technical issue, so I'll continue.

Page 6 shows the key efficiency improvement initiatives. Our revenue for CDA facilities increased by 11% to RUB 94.9 billion, and the key drivers for CDA were favorable price environment in the electricity market and the payment of 10/15 delta across our CDA facilities. We tried to maximize the load factor of high-efficiency power units, and you can see the picture in the bottom of the page, left-hand side. And it's improved our margins in 2019.

I would also like to note that across our Russian assets, our fuel efficiency rate stands at just slightly more than 295 grams per kilowatt hour, which is among the best indicators in the industry and is explained by the fact that gas accounts for 84% of fuel consumed as we decommission low-efficiency power units gradually.

Next page, foreign trade, foreign business. So the total was around 21 billion kilowatt hours which is below year-on-year, and it was explained by almost 0 commercial supplies of electricity -- imports of electricity from Kazakhstan.

Price in Finland were lower, and you can see that on the page. You can see the price spread, downwards movement of the spread. And we expect that in the first year of -- first quarter of 2012 -- 2020, performance will be improved. And in Finland, prices are growing up to even EUR 8 to EUR 9, and now we see that it's around EUR 25 to EUR 30. So that's the impact on the spread.

And I would also like to note that we tried to maximize our financial performance in this segment, and we keep interacting with the infrastructure operators, infrastructure organizations in the wholesale electricity and capacity markets. So we try to maximize the use of available infrastructure, and we use different hedging tools, hedging instruments. And we plan our supplies in advance. So if you have questions, we'll be happy to explain.

Next page, please. Efficiency of our supply business in 2019. We increased our market share. Now it's 18.3%. The total amount was driven by the northern generation company as a guaranteed supply in the Vologda region. Also, we obtained the status of a guaranteed supplier in the Vladimir region, but we'll fully see the result of this status in 2020.

Also, the customer base and electricity supplied increased in St. Petersburg, mainly thanks to the commissioning of a new residential housing and connection of new industrial consumers. So CDA facilities' marginal profits increased RUB 3 billion, and this 2-digit growth will continue -- is expected to continue in the coming years. Also, I'd like to say that thanks to the initiatives of managing our consumers, the collection rate -- payment collection rate increased and amounted to 99%, even -- and slightly more. So we are leading the industry in terms of this indicator.

The next page is how we are evolving in terms of sustainable development. We have made a lot of efforts in the previous year. We improved our key operating processes, and I would like to highlight a number of measures taken. First, we joined the UN Global Compact. That is, we undertook the obligations to update our business models, and we also launched a number of processes to update our strategy, a long-term strategy of development based on the principles I'll find in this global compact. Also, we assess global climatic risks. We estimated the greenhouse gases emissions. Now we're going to reduce these emissions, and it will reflect in our annual report. So now we're in the Scope 1, and we're going to move to Scope 2 soon. So the key target for 2020 is the verification of annual report in line with the GRI requirements and the development of a number of internal policies for sustainable development and transformation of our business model and steps to improve economic, environmental and operational efficiency. And also, we seek to reduce our environmental footprint, and you can see some indicators on Page 9. And our efforts are already reflected in audits by independent rating agencies where we show improving performance at the very beginning of the path. So we expect to implement many more initiatives in this area.

So that's -- it's on my part, and now Evgeniy will tell you about the financials.

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Evgeniy Nikolaevich Miroshnichenko, Public Joint Stock Company Inter RAO UES - CFO & Member of the Management Board [3]

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Good afternoon, ladies and gentlemen. Thank you. I would like to wish you luck and good health and optimism. And as to 2019, you can see our overall figures on Page 11. So revenue exceeded RUB 1 trillion for the first time. Our EBITDA increased by 16.7% to RUB 141.5 billion. And net income increased by 14%, and it was almost RUB 82 billion. So we'll show you the key reasons for that, the key drivers.

Next page. You can see the historical performance of our financials broken down by segments, and Supply shows the highest contribution in 2019. The revenue was almost RUB 700 billion. It was higher than the previous year. And EBITDA was mainly driven by our generation segment, you see it, by RUB 21.3 billion, and you can see it on the next pages.

Generation revenue increased by almost 7%, and the key contribution was primarily from the following business segments for electricity. It was driven by growth of day-ahead market prices in the first price zone and favorable environment, market environment. Mainly, Kostromskaya GRES was the beneficiary of these changes. In terms of capacity, the key contribution was from our Kaliningrad facilities, which were commissioned in 2018, and they influenced our revenues pretty much. And by the way, our CDA delta payments for Urengoyskaya, Yuzhnouralskaya and Cherepetskaya GRES and also Zatonskaya CHPP and Bashkiria, they brought a 20 -- an increase of 27.5%. As to heat generation, it was driven by higher margins across our CDA facilities. Also, prices grew in the day-ahead market segment.

Next page shows our Supply segment. Revenue increased by 10%, and the key contribution, from the guaranteed suppliers and tariff indexation and new consumers, including PSK and Mosenergosbyt were our new guaranteed suppliers. And Vologda and Vladimir regions is one of your generating suppliers.

Now our EBITDA increased by 3.4%, and the PSK group increased by 1.7% in terms of EBITDA. And price growth was also a positive factor for us. Mosenergosbyt contribution to EBITDA was negative by RUB 0.8 billion. It was also related to 2018 due to the payment discipline of federal consumers mainly controlled by the Ministry of Defense. If we exclude this factor, Mosenergosbyt would increase by RUB 0.5 billion, thanks to additional paid services segment directly related to our electricity supplies.

Next page is dedicated to trading and foreign assets. Revenue in the Trading business increased by 6%, and EBITDA increased by 10%. The key drivers were increased volumes of Trading in Poland, also increased supplies to Lithuania, Ukraine and Georgia.

As to Trading business, there were mixed factors. For Georgia, EBITDA went down slightly because one major consumer moved to the wholesale market. EBITDA in Turkey was almost flat. As you'll remember, we closed the project in Turkey, so the figures went down. And as to Moldova, it grew by RUB 300 million, thanks to growing prices and increasing supplies and some devaluation of currency versus the U.S. dollar.

Next page is the costs. Consolidated revenue growth increased and outpaced the growth of consolidated operating costs. The costs grew by 6.8% and the key contribution was from nonregulated items such as purchased electricity and capacity and electricity transmission fees. And also, price for gas increased. BGK Group increased its cost because of Zatonskaya TEC commissioning. And Trakya Elektrik reduced our costs because of decreased generation in 2019. HR costs increased by 7%. It's indexation of salaries and the scope of our social obligations. And also, we introduced new guaranteed suppliers. And also, there were some other factors that reduced our operating costs.

Next page is our debt and liquidity analysis. Obligations reduced to RUB 3 billion. You can see the figures on the page. With facilities in the Kaliningrad region, net debt is negative. At the end of the year, it stood at RUB 166 billion. Our financial stability is quite high. You can see it from the chart.

We'll be happy to take your questions. Thank you very much for your attention.

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Questions and Answers

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Operator [1]

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The first question comes from Sergey Beiden, Renaissance Capital.

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Sergey Beiden, Renaissance Capital, Research Division - Research Analyst [2]

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I have 2 questions. The first is about coal. We saw a considerable drop in prices for coal and [NGT] coal in the global markets, and there was some decline in the domestic market. Do you expect that your coal contract will reflect the decline somehow and our coal prices will be in line, a little bit following the inflation rate, I suppose? And the second price (sic) [question] is about electricity prices. We saw a substantial decline in the second half of the year and continuing decline from that period. So I would like to understand, how do you assess these processes? Are they related to some fundamental reasons? What were the changes in the electricity balance? Or it was somehow driven by the Federal Antimonopoly Service?

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Operator [3]

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Thank you, ladies and gentlemen. Just wait a little bit because we have a technical issue once again. (technical difficulty)

Our speakers are back.

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Unidentified Company Representative, [4]

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Sergey, could you please repeat your question, because there was an interruption.

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Sergey Beiden, Renaissance Capital, Research Division - Research Analyst [5]

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I have 2 questions. The first is will the decline in the global prices for coal, will these prices be reflected in your coal contract? And the second question was related to negative performance in the electricity market in the second half of the year, and it's continuing. Is it somehow related to some fundamental changes in the electricity balance in the market? Or maybe it was because some influence from the Federal Antimonopoly Service, which affected the events since July 2019?

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Evgeniy Nikolaevich Miroshnichenko, Public Joint Stock Company Inter RAO UES - CFO & Member of the Management Board [6]

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This is Evgeniy Miroshnichenko. I'll take the first question. As to coal, yes indeed, we can see some decline in prices for coal, and we really see a decline by 6% to 10%. But also, there is transportation component in prices. But as to Cherepetskaya GRES and Tomsk Generation company, we see some decrease in brown coal. It was related to these trends by 100%. So we see some growth, but it's up to 3%. So in total, I think coal prices will be more or less flat. And Alexandra Panina will take the second question.

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Alexandra Panina, Public Joint Stock Company Inter RAO UES - Interim Head of the Trading Block & Member of Management Board [7]

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This is Alexandra. I'll take your second question. It was about the second half of the year, declining prices for electricity. Indeed, prices were going down, and it seems to me we discussed it during the previous webcast. There were a number of factors. In the first price down, it was due to changes in the balance because electricity generation structure was changing. There was a low water level. But the situation changed. In the second price zone, indeed day-ahead market prices dropped. The reasons are not clear yet, but it's mainly due to changes in the supply and demand. So in the second price zone, day-ahead market demand decreased. I would put it like this. If we move to the beginning of 2020, the day-ahead market is down compared to the previous year in both price zones, but I think it's due to the market signals. We saw abnormally warm winter. And naturally, it is reflected in the day-ahead market prices. And it's the same for us and for global markets, and the dynamic is almost the same.

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Operator [8]

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Next question, is Sergey Garamita, Raiffeisen Bank.

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Sergey Garamita, Raiffeisen CENTROBANK AG, Research Division - Analyst [9]

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A few questions on my side to discuss prices further. I would like to know your expectations about export spreads, taking into account this virus thing. Also expectations. What is the -- what expectations do you have in terms of M&A given your strategy -- potential strategy changes? Do you expect to buy something when the market is down? And what are your CapEx expectations for this year?

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Alexandra Panina, Public Joint Stock Company Inter RAO UES - Interim Head of the Trading Block & Member of Management Board [10]

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This is Alexandra Panina. I'll start with coronavirus influence on our business. We haven't noticed yet. We supply to China according to the contracts. And so the volume is not changed. And we supply to the Northern China, so it's not related to reduced consumption in other regions which are affected by the coronavirus. And as to the project, we don't discuss this project. We continue to consider it. There could be potential changes in the configuration and Aleksey may provide more detailed comments. As to the expectations of 2020, so the winter was really warm. And so nobody could predict this. So for us, we're looking into this problem. And I cannot say for sure what's going to happen in spring, in autumn and in summer. So we'll update our guidance soon.

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Sergey Garamita, Raiffeisen CENTROBANK AG, Research Division - Analyst [11]

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And I have a follow-up question.

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Maslov Aleksey, Public Joint Stock Company Inter RAO UES - Member of the Management Board and Head of Strategy & Investment Division [12]

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This is Aleksey Maslov speaking. As to your (inaudible) project, the potential of this project is estimated comprehensively, not only considering our exports to China but also in respect of our domestic needs, development of rail infrastructure and so on. So the configuration which was considered by us and our Chinese partners was around 1,000 megawatts. But now together with the Ministry of Energy and Russian Railways and other consumers, we will revise the story. We will look at it once again and maybe there will be some changes potentially. And as to our potential M&A activities and other related matters of long-term development, now we are in an active dialogue with our Board and the federal authorities, executive authorities, to update our strategy, so please hold on. As soon as we finish these discussions, we will present our updated strategy, and our presentation is scheduled for May this year.

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Sergey Garamita, Raiffeisen CENTROBANK AG, Research Division - Analyst [13]

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I have a couple of follow-up questions. Your EBITDA and CapEx guidance for this year, please, if it's possible. And a technical question. In the fourth quarter, there was a depreciation of intangible assets. It should be at the end of the year or it should be even throughout the year because we can see it in the fourth quarter? And your receivables mainly is depreciated at the end of the year. So -- but why is that?

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Unidentified Company Representative, [14]

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Sergey, as to your EBITDA guidance, we can't say it now because there are many unexpected factors and the market environment is changing very quickly, the coronavirus issue. So we expect some growth, but I'm not ready to announce any figures as of yet. As to CapEx, it will be including our projects. As to there was -- the depreciation of receivables, so we don't have a methodology to do it at the end of the year. We just estimate the solvency impairment capacity of our debtors, and we write down debt as soon as we see that something changes in their financial performance. And as to our intangible assets, yes, there were some depreciations, but it's not a rare case for many companies, including our company. And it was related to depreciation of a number of our -- impairment of a number of our investments. One of our investments was impaired, specifically joint venture of -- there's a company joint venture start-up to create an ERP system for the Russian energy market. It was actually implemented until the middle of 2018. But after that, we decided to suspend this project because of our input substitution policy in our country. So that's the main reason for that.

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Operator [15]

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Next question comes from Fedor Kornachev, Sberbank.

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Fedor Kornachev, Sberbank CIB Investment Research - Research Analyst [16]

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I have a -- quite a technical question. I see your financials. It's Note 28, financial instruments and financial risks. It was slightly surprising for me because the cash flows were not discounted for at least -- last year, it was much less than in 2019. But it's -- but you should note that you commissioned power plants in the Kaliningrad region. So did you revise your lease terms? So why was that? Because in 2018, your payables was RUB 378 billion in 2019; in '20, RUB 245.9 billion. Why was that?

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Unidentified Company Representative, [17]

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Look, Fedor -- hello, can you hear us?

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Fedor Kornachev, Sberbank CIB Investment Research - Research Analyst [18]

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Yes.

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Unidentified Company Representative, [19]

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Thanks. We are still connected. We are struggling because -- we're struggling, and our security service disconnects the conference call and somebody tries to disconnect us. Maybe it's just due to hacker attack. All right. As to the lease, we are not going to go deep. Larisa will tell you how that works. But of course, the lease costs grow as the power plants are commissioned. This is how it works. Yes, and it was surprising that the costs would grow, but it turns out that it's vice versa, the costs went down.

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Fedor Kornachev, Sberbank CIB Investment Research - Research Analyst [20]

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Yes, indeed, but it couldn't be RUB 378 billion. It's the amount for 12 years. Yes, and I can see that the obligations are for more than 20 years. So it's not a discounted amount of your obligations for the whole effective period of your lease agreements. That's what surprised me. In 2018, the amount was RUB 378 million, and now you have RUB 246 million. So either the perimeter of your lease agreement changed or the terms of the agreement has changed.

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Unidentified Company Representative, [21]

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We will provide a breakdown later.

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Operator [22]

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Next question comes from Roman Filkin, Prosperity Capital.

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Roman Alexeevich Filkin, Prosperity Capital Management Ltd - Director [23]

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I have a few questions. A follow-up question about your write-off. Am I right understanding that the ERP system start-up is related to your intangible assets write-off in the fourth quarter? And so you showed that your collection rate is growing both for heat and for electricity. And if we can see the note for reserve, your receivables is going down indeed. But in the fourth quarter, we can see a big provision for almost RUB 3 billion for other receivables. So what is the nature of this provision? And one more question is about imports and exports. You mentioned negative Nord Pool prices performance. So what is your expectations concerning the Nord Pool? Is this effect due to abnormal winter in Europe, low gas prices? Or you can see the reason is that -- the water level? So what do you think about that? Do you expect a recovery? And what are your expectations concerning exports to Finland and other countries?

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Unidentified Company Representative, [24]

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Yes. Thank you for your questions. I'll start with the write-offs of intangible assets. Yes, it's RUB 2.5 billion. Indeed, our collection rate is growing. But in Bashkiria, we provisioned considerable amount because we are working with some debtors, some big companies in Bashkiria, and we hope to resolve this situation, but it's not that easy. That's why we have this big provision. And it's triggered by only one region and only one type of debtor in Bashkiria. That's it. And Alexandra will tell you about Nord Pool.

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Alexandra Panina, Public Joint Stock Company Inter RAO UES - Interim Head of the Trading Block & Member of Management Board [25]

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This is Alexandra speaking. The prices are interesting because it's -- these are historical lows, but we can explain it only by the very warm winter. But in Europe, the deviation is even bigger than in Russia, so -- by almost 8 degrees. Europe is highly electrified and the heat supply is electrified. And electricity consumption is reduced because of this factor.

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Operator [26]

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Ladies and gentlemen, we have one more technical issue, one more disconnection. Please hold on the line.

Now we are back.

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Alexandra Panina, Public Joint Stock Company Inter RAO UES - Interim Head of the Trading Block & Member of Management Board [27]

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Okay. This is Alexandra speaking. I'll continue. So again, prices in Europe and in Nord Pool countries, which we're interested in most of all, declined a lot, and the price in January 2020 was at the level of January 2005. But I think it's due to global warming. First was the fact that reduced -- consumption reduced by 10.5% in the Nord Pool countries. That's a very considerable decline. The second factor is abnormally strong winds in Finland and Great Britain, so electricity generation increased by wind turbines. And the third factor is the higher water level in Nord Pool. This is why -- and this was a perfect storm, so to speak: warm winter, strong winds and high water level. And going forward, we are still relatively optimistic because everything will depend how the summer temperatures will behave. And we will closely monitor weather, and we are adjusting our strategy to take into account the environment and so on. So in the first quarter, we'll see the picture better. So we saw very unfavorable factors, but we hope they will be resolved. It was -- okay. So the prices in Nord Pool are restoring.

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Operator [28]

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Next question comes from Igor Goncharov.

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Igor Goncharov, Gazprombank (Joint Stock Company), Research Division - Senior Analyst [29]

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I have a few follow-up questions. First, about CapEx. You said you expect RUB 30 billion. Does it include VAT or no? And you said that -- will the capacity of the power plant increase up to 900 megawatts? And as to the dividends, so the year is over. You announced your results. What should we expect the -- the result is still 25% according to IFRS? Or you have some changes?

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Unidentified Company Representative, [30]

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Thank you for your question, Igor. Yes, it's RUB 30 billion including VAT. As to (inaudible), it includes potential needs, but it's too early to talk about that. And the increase could be inconsiderable. And as to long-term motivation program, this is an indispensable element of our strategy we are going to present in May, and you'll see all the changes at that time. And as to our dividends, Evgeniy will tell you.

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Evgeniy Nikolaevich Miroshnichenko, Public Joint Stock Company Inter RAO UES - CFO & Member of the Management Board [31]

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Thank you. That's a very important question. We stick to our decisions and we follow our dividend policy, which was approved by the Board. So no new decisions were taken.

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Igor Goncharov, Gazprombank (Joint Stock Company), Research Division - Senior Analyst [32]

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Just a follow-up. When will the Board discuss dividends for 2019?

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Evgeniy Nikolaevich Miroshnichenko, Public Joint Stock Company Inter RAO UES - CFO & Member of the Management Board [33]

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It should be, according to the schedule, a few days before the general -- Annual General Meeting of the Shareholders, somewhere in April.

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Operator [34]

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Ladies and gentlemen, for now, we don't have any more questions. (Operator Instructions) And next question comes from Sergey Garamita, Raiffeisen Bank.

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Sergey Garamita, Raiffeisen CENTROBANK AG, Research Division - Analyst [35]

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Yes, a follow-up on CapEx. As far as I remember, during your previous 2 calls, you said that CapEx for 2019 -- for 2020 would be around RUB 25 billion, including VAT, and it would be around RUB 21 billion net of VAT. So you increased your guidance or there was some misunderstanding? And the second question is, what do you expect -- about your, I guess, turbine modernization, what do you expect this year?

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Unidentified Company Representative, [36]

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Yes. Thank you for your question. I think the difference between those 2 figures is related to our advanced payments for our upgraded generating equipment. That's about your first part of the question. And as to your gas turbine project, we expect that it will be rescheduled since the first of July 2020. This is under discussion by the Ministry of Trade and Industry (sic) [Ministry of Industry and Trade]. So discussions are still ongoing. And the potential CapEx per megawatt of installed capacity is being discussed. Now it's around RUB 36,000 per kilowatt, and no projects could be implemented with these parameters. So nobody would take part in these tenders. And now thresholds are being still discussed and are being discussed between the Ministry of Industry and Trade and the Ministry of Energy. Also, some documents will be amended in order to make tenders more competitive and in order to meet the needs of generating companies and consumers, and another to improve the efficiency of our energy system. And we can expect that by the 1st of July, the regulatory documents will be approved.

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Operator [37]

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So there are no more questions. I'm giving it forward to Larisa Sadovnikova.

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Larisa Sadovnikova, Public Joint Stock Company Inter RAO UES - Head of IR [38]

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Ladies and gentlemen, so we are concluding this call today. We're going to meet you on the conference call in May. We hope that the situation on financial markets will stabilize. So good luck to all of you, and (inaudible) to strong performance for Inter RAO Group.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]