GOGC released strong audited FY17 results. Revenue remained largely flat, standing at US$ 267.7mn, while the reduction in the average gas purchase price contributed to the decline in operating expenses (-7.9% y/y to US$ 188.9mn). As a result, adjusted EBITDA reached US$ 93.7mn, up 17.7% y/y. Higher adjusted EBITDA and the considerable cash balance drove the net-debt-to-adjusted EBITDA ratio to 0.9x as of end-17 compared to 2.2x a year before. With significant capital expenditures planned for 2018-20, we expect this ratio to temporarily deteriorate in 2018 but remain comfortably below the 3.75x Eurobond covenant. The commissioning of the Gardabani II CCPP from 2019 is expected to generate an additional steady cash flow stream for GOGC and bring this ratio close to 1.0x.
FY17 revenue remained flat at US$ 267.7mn. Gas and electricity sales – two major revenue streams accounting for 86.3% of the total revenue – remained relatively stable, growing 2.8% y/y and 2.2% y/y, respectively. Revenue from rent of pipelines was down 17.6% y/y to US$ 23.9mn while crude oil sales rose 27.4% y/y, helped by increased oil prices worldwide.
The cost of gas, the largest expense category accounting for 82.9% of total operating expenses, was down 4.8% y/y to US$ 157.4mn. Other operating expenses were also down (-18.5% y/y). The strengthening of the GEL against the US$ between end-16 and end-17 led to a non-cash FX gain of US$ 2.7mn in the reporting period compared to a US$ 21.3mn loss last year.
Source: G&T
