Board of directors’ progress report

Letter to stockholders


А.S. Semerikov

The Chair of the Board of Directors of IDGC of Urals (ОАО)

Dear stockholders,

Just as in previous years, in 2016 IDGC of Urals (OAO) has demonstrated its sustainable significant performance retaining its dominant position on the energy market of the Urals and Kama regions, built on the principles of transparency, efficiency and integrity of business. The Company’s has outperformed its FY2015 financial and economic results: FY2016 revenues exceeded RUB 65.4 billion, with FY2016 net income conquering its historical peak of RUB 3.3 billion (or +34%YoY).

The Company’s opex-reduction program, well-balanced credit policy, sound performance of economic and technical divisions were combined to achieve strategic objectives i) to lower equipment deterioration and revamp it; ii) to make access to network infrastructure easier for consumers; as well as iii) to guarantee reliable operability of the Urals and Kama energy systems. The Company’s personnel secured stable operations of the network infrastructure enhancing key production figures. Operational excellence of the Company’s staff helped reduce line outage rate in the service area 23% YoY. Qualitative execution of the Company’s RUB 1.78 billion repair program became the most important element in the enchainment of technological measures taken to enhance quality and reliability of energy supply.

IDGC of Urals (OAO) also managed to keep its capital expenditures positive to complete its RUB 6.5 billion investment program. The key investment patterns were refurbishment and upgrade of existing facilities and measures enforcing reliability of the grid infrastructure. Connection was also a very important aspect funded by the investment program. In 2016 the Company gave the highest priority to enhanced access to the grid networks, improved connection process and expanded front-end service. Customers were provided with comfortable front-end instruments – online connection fee calculator and user account helping customers conclude connection contracts online (no face-to-face visits required anymore) and watch the progress in real time. Thus, Company’s specialists have connected approx. 30.0 thousand new customers to the networks. Average term for small and medium-size business (used in calculation of the national rating) to be connected to the Company’s networks is 74 days.

Industrial complex of the Urals region is one of the country’s most heavy-duty ones. This is a territory with high growth rates of regional economies, sustainable production infrastructure and high population density. Therefore, evolution of the grid complex and its reliability is the Company’s objective of strategic importance.

The Board of Directors and C-level executives aspire to retain economic stability, sound performance and social responsibility of the Company for the benefit of stockholders and customers. The focus of the Company’s governing bodies lies in implementing import-substitution solutions, cost-cutting, enhancing efficiency and energy saving as well as in arranging innovative activities and improving Company’s HR policy. A particular emphasis will be made on fostering a comprehensive dialogue with Russian higher education institutions to promote training of young professionals and improve retraining of the Company’s personnel.

Kind regards, The Chair of the Board of Directors of IDGC of Urals (ОАО) А.S. Semerikov
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
2.2.7Efficacy 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
3.4.6Allocation of profit
4.1Human resources management
4.2Customer support
4.3Supplier relationship management
4.4Public and goverment relations
4.5Environment protection
5.1Prepared under Russian accounting standards
5.2Prepared under international financial reporting standards
5.3Related-party transaction report
5.4Corporate governance code compliance report
5.6Abbreviations and acronyms