Energoatom's financial statement: some 2020 results
Against the backdrop of NNEGC Energoatom’s profit-making operating activity, its net loss reflected in the Company's 2020 financial statement at a rate of UAH 4.8 billion is the result of a confluence of factors beyond the control of the state-owned enterprise.
Energoatom's expenses on the exchange rate difference in foreign currency loans servicing, the Company's losses from the fulfillment of special obligations to supply affordable electricity to the population (PSO), balance restrictions placed on nuclear generation last year as well as huge receivables for NNEGC Energoatom have made for such a financial result.
At year-end 2020, SE NNEGC Energoatom got UAH 45 billion 648 million net sales revenue whereas Energoatom's gross income for 2020 amounted to UAH 6 billion 837.2 million. At the same time the EBITDA indicator, designating the company's income before interest, taxes, and depreciation expenses, was UAH 13.3 at last year-end.
Cost of revenue and price
It should be remembered that Energoatom suffers direct losses due to the mismatch between the cost price of electricity produced by nuclear power plants and the price the Company supplies it to the population within the framework of special obligations (PSO) imposed on it by the government. Last year, these losses reached UAH 1.2 billion.
Electricity sales for PSO fulfillment were effected through the State Enterprise "Guaranteed Buyer" whereas electricity sales in the balancing market - through PJSC NPC "Ukrenergo". Mentioned companies did not settle up with Energoatom for the purchased electricity in time, and keep accumulating debts to it.
Last year, for several months, NNEGC was forced to sell 50% of the amount of electricity produced at the price of 1 kopeck/kWh, actually subsidizing the population for the amount over UAH 40 billion.
Last April, the Ministry of Energy revised and approved a new Forecast Balance sheet, resulting in imposing artificial constraints on nuclear generation. Due to commodity output compulsory reduction in 2020 from 80.6 billion kWh to 73.7 billion kWh, some power units of domestic NPPs were put on standby for a period of one to three months, while others operated with power limitation from 10 to 40%. As a result, Energoatom lost UAH 4.7 billion in revenue.
At the same time, the Company, as usual, covered more than 50% of the country's total electricity needs.
Debts owed to Energoatom
Payments for commodity output released by Energoatom on the market fell sharply in 2020. The Company received an average of 79 kopecks per 1 hryvnia of electricity cost. In particular, the SE "Guaranteed Buyer", to which Energoatom supplied 64.9% of the electricity produced during the year, paid only 33 kopecks per 1 hryvnia of products supplied. Thus, NNEGC Energoatom received only 33% of the payment for its products in monetary terms. For now, the total debt owed to Energoatom has reached an astronomical figure of UAH 22.6 billion, UAH 11.6 billion of which is the debt of the state enterprise «Energorynok» that is not already going concern. Additionally - the debt of the State Enterprise "Guaranteed Buyer" in the amount of UAH 6 billion 528 million and the debt of NPC "Ukrenergo" in the amount of UAH 4 billion 463 million.
Despite such receivables to the Company, it should keep operating. In 2020, Energoatom's expenses for labor remuneration, depreciation, and fixed assets value for carrying out reactor life extension works have increased. NNEGC's social expenditures and its assessments to the budgets of various levels have also increased.
Energoatom serves foreign currency loans, owing to which, in particular, such important projects as the construction of the Centralized Spent Fuel Storage Facility (CSFSF) and the Complex (Consolidated) Safety Upgrade Program of Power Units of Nuclear Power Plants (CCSUP) are being implemented. Due to the significant growth of the euro and the US dollar exchange rate during 2020, Energoatom's losses in foreign currency loans servicing reached UAH 6 billion 601 million.
One more factor affecting Energoatom’s financial result in 2020 is the borrowed funds servicing expenses in the amount of UAH 1 billion 779.7 million. In total, the amount of attracted funds on long-term and short-term loans at the end of last year amounted to UAH 34 billion 880.9 million, almost 60% of which are capital investment and modernization loans. The remaining funds were applied towards ensuring the day-to-day operation of the enterprise.
Timely payment of taxes and charges
During 2020, SE NNEGC Energoatom remained one of the largest taxpayers in Ukraine. Last year, the state budget and budgets of various levels received UAH 16 billion 108.8 million of taxes, charges, and VAT on customs clearance from the company. By the way, for almost 25 years of its existence, Energoatom has brought to the state budget of Ukraine no less than UAH 125 billion!
Therefore, Energoatom's operating activities are profitable whereas the net loss shown in the financial statement is reflected on paper due to several factors beyond the control of the company's activities, namely NNEGC‘s expenses on the exchange rate difference in foreign currency loans servicing, balance restrictions placed on nuclear generation, insufficient funding due to the PSO fulfillment and debts owed by other energy marketeers to the Company.
Additionally, according to the results of 9 months of 2020, the amount of the Company's net loss amounted to UAH 5.3 billion. However, Energoatom managed to streamline the workflow, reorganize the corporate structure and review the contracts concluded by the previous management with contractors in the shortest possible time, which has enabled to save at least UAH 1.2 billion and reduce the amount of net loss by half a billion hryvnias.
Even the first quarter of 2021 is expected to be closed with a net profit, moreover, NNEGC Energoatom confidently forecasts there will not be any losses this year.