Annual report 2014

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Key performance indicators

Operating highlights

Productive electricity supply, mln kWh

Productive electricity supply
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1 Electricity losses adjusted on the factors that are not depending on Lenenergo.

The percent of electricity losses in Lenenergo networks in 2014 in comparable conditions, taking into account the transition to metering of supply to the grid according to AIMS CEM, was 0.41 percentage points below the level of 2013 (9.55% in 2014 versus 9.96 % in 2013).

In 2014, due to the implementation of the energy saving Program losses were lowered by 4% to productive supply in the grid in comparable conditions. For comparison, in 2013 and 2012 the indictor dropped by 2.5%. In terms of money, savings for the Company in 2014 totaled RUB 964 mln, exceeding the economic effect of 2013 by RUB 212 mln, or 28%.

The year-on-year decrease in productive supply by 3% was due to the cancellation in 2014 of the so-called “last mile” mechanism on the territory of St. Petersburg and the Leningrad Region, and the transition of some consumers to direct contracts with FGC UES. In 2014, productive supply was up by 487 mln kWh compared to 2013 in comparable conditions (including consumers of the so-called “last mile”).

w/o generating facilities and the facilities connected on temporary schemesConnected capacity

Connected capacity
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In 2014, Lenenergo connected 14,767 applicants, exceeding 2 times the same indicator of 2013. The increase in the number of executed obligations in 2014 was primarily due to the contracts towards applicants within the territory of the Leningrad Region: the growth accounted for 115 %. The volume of connected capacity increased by 43% y-o-y.

Financial highlights

Revenue, RUB mln

Revenue
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The revenue growth in 2014 concerning the fact of 2013 was noted on all types of activity. The revenue growth from electricity transmission services accounted for 9.2% that was mainly caused by the increase in the average tariff by 12.7% compared to the joint-operations tariffs of 2013. Revenue growth from technological connection services was 26.6% caused by implementation of the accumulated obligations towards applicants, and existence in the structure of revenue for 2014 of the contracts with major applicants.

EBITDA is calculated as: EBITDA = Net profit + Profit tax + Depreciation + Interest payable — Interest receivable + Provision for impairment of debt investments.EBITDA

EBITDA
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High margin of EBITDA adjusted for non-cash items demonstrates a consistently high level of operational efficiency of the Company.

Investment program

CAPEX, RUB mln

CAPEX
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Input of transformer capacity, MVA

Input of transformer capacity
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Input of power lines, km

Input of power lines
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In 2014, CAPEX increased by 25% and commissioning of fixed assets in monetary terms was up by 30% mainly due to the performance of work under contracts for technological connection on the accumulated obligations, including towards a preferential category of citizens, and implementation of measures to ensure the renovation of the Company’s grid assets, including the target program of Complex development of the grids of the Petrogradsky District of St. Petersburg financed by the federal budget.

Key performance indicators
Indicator Unit 2010 2011 2012 2013 2014 2014/2013,%,(unless,otherwise,specified)
Operating indicators
Productive electricity supply mln kWh 29,095 28,975 30,007 29,613 28,680 –3.2
Electricity losses % 10.71 10.60 10.37 10.11 11.06 9.4
Connected capacity MW 645 321 523 771 694 –10.0
— generating facilities 0 0 0 400 150 –62.5
— other 645 321 523 371 529 42.6
— connections on temporary schemes of power supply — — — 0 15 —
Financial indicators
Sales revenue, including: RUB mln 34,201 36,958 36,273 39,902 44,722 12.1
from electricity transmission RUB mln 23,873 28,475 28,816 33,207 36,261 9.2
from technological connection RUB mln 10,164 8,311 7,282 6,515 8,249 26.6
from other industrial activity RUB mln 164 172 175 180 212 17.8
Cost RUB mln 27,758 31,758 32,830 36,429 39,257 7.8
Gross profit RUB mln –6,442 –5,201 3,443 3,473 5,466 57.4
Profit before tax RUB mln –5,012 –2,311 1,962 1,444 –8,793 –708.9
Net profit RUB mln –3,535 –1,367 1,042 425 –7,968 —
ROE (return on equity) is calculated according to the methodology recommended by Department of corporate finance of JSC Rosseti at preparation of the annual report for 2014: (Net profit / Equity capital)*100 % = [l. 2400 f.2 / ((l. 1300 f.1 report + l. 1300 d.1 base) / 2))*100%.ROE % 7.08 2.54 1.57 0.56 –10.78 —
EBITDA is calculated as: EBITDA = Net profit + Profit tax + Depreciation + Interest payable — Interest receivable + Provision for impairment of debt investments = l. 2400 f.2 + Depreciation + Profit tax f.2 + l. 2330 f.2 — l. 2320 f.2 + Provision for impairment of debt investments.EBITDA RUB mln 10,022 8,522 9,733 11,279 10,207 –9.5
EBITDA margin % 29.30 23.06 26.83 28.27 22.82 –5.5 p.p.
Debt to equity ratio — 1.39 1.09 1.42 1.06 0.77 –27.4
Net debt is calculated as the sum of long-term and short-term debt funds (lines of balance 1410 and 1510), including debt on interest minus cash and short-term investments.Net debt % 14,405 20,197 22,360 23,722 45,546 92.0
Net debt/EBITDA — 1.44 2.37 2.3 2.1 4.46 —
Market indicators
Market capitalization (on MICEX Stock Exchange) RUB mln 27,372 11,139 7,759 3,742 Capitalization is calculated including the placed shares of additional issue, SRN 1-01-00073-A-003D.3,967 6.0
P/E is calculated as the average cost of one ordinary share as at the end reporting year/profit per share.P/E — 7 7.2 6.8 7 –0.4 —
Investments
The volume of deployment is reflected w/o VATCAPEX RUB mln 15,813 15,061 14,891 18,729 23,411 25,0
Input of capacity MVA 932 996 1,911 907 1,450 59.9
Input of capacity km 1,508 1,713 1,581 1,846 2,490 34.8
Indicators of a sustainable development
Average number of employees people 5,883 5,975 6,007 6,181 6,185 0.1
Active turnover of personnel % 6.0 6.1 6.8 7.3 7.6 0.3 p.p.
Number of people trained people 2,692 2,827 2,732 3,126 2,940 –6.0
Expenses on training RUB mln 21 29 27 33 28 –15.2
Costs of labor protection RUB mln 92 88 98 109 106 –2.8
Costs of health protection of employees (VMI and accident insurance) RUB mln 84 84 89 79 87 9.1
Environmental costs RUB mln 12 26 23 28 21 –22.7
Charitable expenses RUB mln 0 0 11 35 25 –29.4
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Indicators for 2012-2014 are given according to the annual accounting statements for 2014 including retrospective data.