IBI-Rating has affirmed the credit ratings of PrJSC «EC «ZHYTOMYROBLENERGO» and its bonds

Rating agency IBI-Rating informs on affirming of the long-term credit ratings of PrJSC «EC «ZHYTOMYROBLENERGO» and its interest-bearing В series bonds at uaBBB grade, with a «stable» outlook.

PrJSC «EC «ZHYTOMYROBLENERGO» is engaged in electricity transmission and supply by local power grids to consumers of Zhytomyr region. In order to conduct the above-mentioned activities, the Issuer has the necessary licenses with an unlimited validity period. The Issuer is a natural monopoly on the territory of Zhytomyr region on electricity transmission and supply at regulated tariffs, which ensures stability of sales.

In 2016 , the trend of reduction in the volume of productive electricity supplies to own consumers of PrJSC «EC «ZHYTOMYROBLENERGO» continued, but the rate of their reduction slowed down significantly. The transit of electricity by the Issuer’s grids continued growing, however, the share of revenue generated by this type of activity in the general revenue structure remained insignificant. The increase in electricity tariffs resulted in growth of net revenue in the period under review, – i.e. net revenue in 2016 increased by 34% as compared with the previous year, amounting UAH 2 474.9 m. The financial result was net loss in the amount of UAH 10.6m versus net profit in the amount of UAH 15.6m in 2015.

During 2016, debt liabilities of PrJSC «EC «ZHYTOMYROBLENERGO» increased by 2.3 times to the amount of UAH 488.1m equivalent. A significant increase occurred as a result of obtaining of long-term bank loans, while the amount of liabilities on the placed interest-bearing bonds remained unchanged. As at the end of 2016, the level of debt burden of PrJSC «EC «ZHYTOMYROBLENERGO» increased but was assessed as low.

The Issuer remains susceptible to currency risk due to the existing foreign currency denominated loan. The Issuer’s need in considerable amounts of capital investments in renewal of fixed assets remains, given the need for constant upgrading of fixed assets according to the legislation of Ukraine. The amount of financing of the investment program of PrJSC «EC «ZHYTOMYROBLENERGO» during 2016 amounted to UAH 109.1m. The main direction (75% of the total amount of financing) were the construction, modernization and reconstruction of the electrical grids and equipment.

In order to conduct the analytical research the materials provided by PrJSC «EC «ZHYTOMYROBLENERGO» have been used, including: annual financial statements for 2014-2016 , background information on the enterprise activities, parameters of the series B bonds issue, other necessary internal information, expectations of the Rating agency IBI Rating, as well as the information from the public sources, which the Rating agency considers credible.

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