Board of directors’ progress report
2.3.1

Analysis of revenues and expenses

FY2016 revenues totaled 65,452 million (+ RUB 4,917 million or 8% YoY), with transmission revenues amounting to RUB 63,703 million (+ RUB 5,476 million YoY). Revenues gained due to grown average tariff, reduced load loss prices and changes in consumer structure (voltage classes). Expenses plus administrative costs reached RUB 60,388 million (+ RUB 4,319 million or 8% YoY). The hike is mainly driven by grown non-controllable expenses (payments to other grid operators and FSK), increased expenses on loss compensations and depreciation and amortization. Pre-tax profit totaled RUB 4,809 million (+ RUB 1,604 million YoY). FY2016 net income of the Company amounted to RUB 3,306 million (+ RUB 840 million YoY). The rise of net income is accounted for by increased transmission revenues and additional financial asset revaluation surplus.

To improve its performance during 2016 the Company implemented a package of measures to stabilize operations of its Chelyabenergo branch. Setting of uniform (“pie”) economically justified tariffs for electricity transmission and individual tariff for settlements between two holders of the regional tariff “pie” (AES Invest and Chelyabenergo branch) provided Chelyabenergo’s breakeven in electricity transmission.

Key financial and economic metrics, RUB million:

FY 2016 FY 2015 FY 2014
Total revenues, comprising: 65,452 60,535 59,608
Revenues from electricity transmission 63,703 58,227 57,481
Revenues from connection 1,336 1,862 1,720
Revenues from electricity sales 0 0 0
Other revenues 413 446 407
Total expenses -59,338 -55,115 -54,499
Gross profit 6,114 5,421 5,109
Administrative costs -1,050 -955 -854
Commercial costs 0 0 0
Profit (loss) from sales 5,064 4,466 4,255
Interest receivable 158 291 174
Interest payable -969 -870 -942
Income from shareholdings 314 161 96
Other revenues 6,461 5,864 5,888
Other expenses -6,219 -6,707 -7,120
Pre-tax profit 4,809 3,205 2,351
Income tax and other payments -1,503 -739 -344
Net income (loss) 3,306 2,466 2,007
EBITDA* 10,447 8,453 7,409
* EBITDA = pre-tax profit – interest payable + depreciation and amortization

FY2016 expenses (plus administrative and commercial costs) totaled RUB:

60,388
mln
4,319 million or 8% YoY
The hike is mainly driven by grown non-controllable expenses (payments to other grid operators and FSK), increased expenses on loss compensations and depreciation and amortization.

FY2016 expenses on loss compensation amounted to RUB:

9,711
mln
contributed 16% to total expenses
bsolute YoY increase of RUB 976 million was impacted by grown unregulated loss compensation price.

Payments to FSK totaled RUB:

14,805
mln
contributed 25% to total expenses
Absolute YoY gain of RUB 901 million was driven by grown use-of-system charge and reduced load loss costs.

FY2016 payments to other grid operators reached RUB:

15,638
mln
contributed 26% to total expenses
YoY upsurge of RUB 1,235 million was primarily affected by increase in tariffs since 01.07.2016.

FY2016 expense breakdown (plus administrative and commercial expenses)

26% 25% 25% 16% 8% 8% 17% Wages and social benefits,RUB 10,417 million Other operating expenses(incl. repair),RUB 5,148 million Payments to FSK,RUB 14,805 million Payments to other grid operators, RUB 15,638 million Operating expenses (incl. payroll and repair),RUB 15,565 million Depreciation and amortization,RUB 4,669 million LosscompensationRUB9,711 million 17% 8%

Depreciation and amortization of property, plant and equipment and intangible assets grew RUB

292
mln
on 2015 due to commissioning of new facilities and completion of the Company’s investment program.

FY2016 personnel expenses totaled RUB

10,417
mln
contributed 17% to total expenses
(+6% or RUB 586 million YoY). The hike was driven by indexation of production personnel wages impacted by the grown minimal monthly tariff rate.

Other expenses totaled RUB:

5,148
mln
contributed 17% to total expenses
8% of total expenses) consisting of tangible costs, production-related works and services, property rentals and insurance, third-party services and other expenses. Absolute YoY increase of RUB 330 million (7%) was due to grown property tax affected by rate revisions and grown expenses on grid rentals affected by new rental contracts.
ЦЕНТР ЗАГРУЗКИ
Здесь вы можете скачать полный отчет 2016, отдельные главы в формате PDF и наиболее важные таблицы в формате Excel.
1About company
1.1Mission and strategic goals
1.2Market share
1.3Key 2016 events
2Board of directors’ progress report
2.1Letter to stockholders
2.2Production capital formation
2.2.1Network exploitation
2.2.2Electricity transmission
2.2.3Technological connection
2.2.4Development of telecommunications and IT systems
2.2.5Investments
2.2.6Innovations
2.2.7Efficacy enhancement
2.3Financial capital formation
2.3.1Analysis of revenues and expenses
2.3.2Analysis of financial standing
2.3.3Analysis of receivables and payables
2.3.4Analysis of credit portfolio
2.3.5Description of tariff policy
3Corporate governance
3.1Corporate governance practices
3.2Corporate governance system
3.2.1General meeting of stockholders
3.2.2Board of Directors
3.2.3Board of directors’ committees
3.2.4General director and executive board
3.2.5Remuneration and compensation policy
3.3Oversight system
3.3.1Board of internal auditors
3.3.2Independent auditor
3.3.3Internal control
3.3.4Risk management
3.3.5Security and anti-corruption
3.4Investor and stockholder relations
3.4.1Shareholder capital structure
3.4.2 Shareholder rights
3.4.3The company and stock market
3.4.4Communications with market participants
3.4.5FAQ
3.4.6Allocation of profit
4Stakeholder
4.1Human resources management
4.2Customer support
4.3Supplier relationship management
4.4Public and goverment relations
4.5Environment protection
5Appendices
5.1Prepared under Russian accounting standards
5.2Prepared under international financial reporting standards
5.3Related-party transaction report
5.4Corporate governance code compliance report
5.5References
5.6Abbreviations and acronyms