2015 IFRS Financial Results
22.04.2016
DISCLAIMER 2
The information contained in this presentation has been prepared by the Company and presented on an “as is” and “as
available” basis, and, consequently, you shall bear the risks associated with the use of and reliance upon such information.
The recipient shall not rely upon the information contained herein, or its completeness, accuracy, or objectivity, for any
purposes. The information contained herein shall be verified for authenticity, completeness, and updates.
Some information in this presentation may contain forecasts and assertions concerning future events or financial performance
of ROSSETI (“Company”) and its subsidiaries. Such assertions are based on numerous assumptions related to the current
and future plans of the Company’s business strategy and the conditions in which such strategy will be pursued in the future.
We caution you that such assertions shall not guarantee certain results in the future and are connected with risks, uncertainty,
and assumptions that may not be predicted with full certainty. Consequently, the actual results and outcomes of activities may
be substantially different from the presumptions or forecasts stated in such assertions with respect to any future events. Such
assertions are made as of the date of this presentation and are subject to change without notice. We have no intention of
updating such assertions to bring them into line with any actual results.
This is not a prospectus or advertisement of any securities. This is not an offer or invitation to sell, or a recommendation to
subscribe to or buy any securities. Nothing contained herein shall form the basis for any contract or commitment whatsoever.
ROSSETI AS THE BACKBONE OF RUSSIA'S ELECTRIC GRID SECTOR 3
Regions of presence78
Subsidiaries16
GVAinstalled transformer capacity761
‘000 unitslines length 2 300
‘000 unitselectric substations 490
People Employed with the Group216
KEY FACTS AND RESULTS
Type Description
Distribution lines15 subsidiaries operate electricity lines of 110
kV voltage class and lower
Transmission lines
FGC operates the United National Electrical
Network with a voltage class of 220 kV and
higher
Other
Electricity retail companies and noncore assets
(R&D and design companies, service and
construction organizations, real estate property
holders)
ROSSETI is an electric utility holding company, one of the largest in the world in terms of the length of networks
and installed transformer capacity.
The share held by the Russian Federation in ROSSETI reached 87.81%1.
1 The share includes placed shares of Group’s current issuance.
715
720,5
700
710
720
730
2014 2015
KEY OPERATING RESULTS
ELECTRICITY TRANSMISSION
4
NUMBER OF SUBSTATIONS TRANSFORMER CAPACITY
LENGTH OF POWER LINES
480
490
465
475
485
495
2014 2015
‘000 units
bn kWh
2,292,3
2,1
2,2
2,3
2,4
2014 2015
751
761
735
745
755
765
2014 2015
GVA
mn km
+0.8% +0.4%
+2.1% +1.3%
12
25 December: ROSSETI
uses Government OFZ bonds
(received 22.12.2015)
amounting to RUB 32 bn as
payment for shares in PJSC
Lenenergo.
8 December: Series BO-06
infrastructure bonds placed in the
amount of RUB 6 bn maturing in
30 years and the main investor
being Vnesheconombank.
02 04
2015
10 February: ROSSETI
is ranked among the top
three in procurement
transparency and included
in the Guaranteed
Transparency category.
KEY CORPORATE HIGHLIGHTS 5
05 01
EVENTS SUBSEQUENT
TO THE REPORTING
PERIOD
01 03
10 March: The Board of
Directors approves an Action Plan
(Road Map) to introduce the
Corporate Governance Code into
the Activities of ROSSETI.
06
8 and 22 June: Placement of
two debut exchange-traded bond
issuances amounting to RUB 15 bn.
20 June: Start of the Federal
Testing Centre (FTC) project.
30 June: Annual General
Meeting of Shareholders of
ROSSETI.
0308 09
8 May: Agreement signed with
State Grid Company of China to
form a JV to carry out projects in
the electricity grid sector.
10
6 October:Extraordinary General Meeting
of Shareholders approves
increasing share capital of
ROSSETI.
11
27 November: Series BO-05 bonds placed
in the amount of RUB 10 bn,
maturing in 7 years.
3 November: Corporate bond placement
from 27.10.2015. 22 January: Board of Directors
reviews consolidated investment
programme for 2015 and 2016-
2020.
30 March: ROSSETI signs
memorandum on establishment
of global united energy
systems with companies from
north-east Asia.
02
2016
07
17 July:OJSC ROSSETI is
renamed to PJSC
ROSSETI.
17 February: The Board of
Directors considered high priority
measures to ensure ROSSETI
Group’s financial stability.
KEY FINANCIAL RESULTS 6
1 Adjusted EBITDA is calculated as EBITDA (earnings before interest, tax, depreciation, and amortization for the reporting period) excluding losses from impairment of fixed assets, impairments of financial investments and impairment of
accounts receivable.
2 Adjusted net profit is calculated as net profit for the period excluding losses from impairment of fixed assets, impairment of investments, impairment of accounts receivable and deferred income tax expense related to them.
Indicator2015 2014 Change
bn RUB bn RUB bn RUB %
Revenue 766.8 759.6 7.2 0.9
Operating expenses 652.5 759.8 (107.3) (14.1)
Operating expenses (excl. impairment of fixed assets and
receivables)628.8 659.2 (30.4) (4.6)
EBITDA 248.9 131.8 117.1 88.8
EBITDA margin 32.5% 17.4% - 15.1 p.p.
Adjusted EBITDA1 273.1 249.0 24.1 9.7
Adjusted EBITDA margin 35.6% 32.8% - 2.8 p.p.
Net profit 81.6 (24.3) 105.9 -
Adjusted net profit 2 100.9 69.5 31.4 45.2
Adjusted net profit margin 13.2% 9.1% - 4.1 p.p.
Net cash flow generated from operating activities 156.7 160.7 (4.0) (2.5)
Net debt 487.2 496.1 (8.9) (1.8)
• Growth in consolidated revenue primarily driven by increased revenue from electricity transmission services due to higher
average tariffs for electricity transmission services.
• Implementation of measures to enhance efficiency and reduce costs across the Group resulted in an Adjusted EBITDA margin of
35.6%, which was 2.8 p.p. higher than in 2014.
• Adjusted net profit for 2015 rose by RUB 31.4 bn, or 45.2%.
REVENUE STRUCTURE ANALYSIS 7
Indicator2015 2014 Change
bn RUB bn RUB bn RUB %
Electricity transmission 650.4 620.0 30.4 4.9
Sales of electricity and capacity 55.9 86.5 (30.6) (35.4)
Technological connections to the network 34.2 36.5 (2.3) (6.3)
Other revenue, incl. government subsidies 26.3 16.6 9.7 58.4
TOTAL 766.8 759.6 7.2 0.9
• Higher revenue from electricity transmission driven by tariff indexation from 1 July 2015, the coming into force of the decision of
the Russian Government (dated 11.05.2015, № 458) and the decree of the Russian Government (dated 28.02.2015 № 184)
regarding assignment of owners of transmission facilities to territorial network organizations, as well as the changes to
reciprocal boiler settlement formulas.
• Sales of electricity and capacity were significantly impacted by certain ROSSETI subsidiaries having to transfer the function of
guaranteed supplier to external companies that had won guaranteed supplier tenders, in accordance with the resolution of the
Russian Ministry of Energy.
• The increase in other revenue was primarily thanks to higher revenues of Federal Grid Company as it carried out services in
connection with construction contractor agreements at power grid facilities.
OPEX STRUCTURE ANALYSIS 8
Indicator2015 2014 Change
bn RUB bn RUB bn RUB %
Payroll expenses 162.9 155.2 7.7 5.0
Electricity transmission services 119.3 125.4 (6.1) (4.9)
Electricity purchased to compensate for technological losses 101.2 92.1 9.1 9.9
Depreciation and amortisation 100.5 125.9 (25.4) (20.2)
Electricity purchased for resale 30.7 46.8 (16.1) (34.4)
Impairment of receivables 28.8 18.9 9.9 52.4
(Reversal of impairment)/ impairment of fixed assets (5.1) 81.7 (86.8) -
Provisions 3.9 12.0 (8.1) (67.5)
Other 110.3 101.8 8.5 8.3
Total operating expenses 652.5 759.8 (107.3) (14.1)
Total operating expenses (excl. impairment of fixed assets and
receivables)628.8 659.2 (30.4) (4.6)
• Higher payroll expenses due to salary indexation for industrial personnel in accordance with the Industry Agreement.
• Cost dynamics for electricity transmission services was influenced by changes to reciprocal boiler settlement formulas in certain regions of Russia, as
well as changes to the cost of services of network organisations in certain territories.
• Increased expenses for purchases of electricity to compensate for technological losses occurred as a result of higher costs of purchased electricity.
• Lower amortisation charges due to a review of and subsequent increase in the useful life of certain assets included in the Transmission Lines group.
• Impairment of receivables primarily in connection with the acknowledgment of indebtedness following the disposal of Dagenergoset from the Group.
• Lower provision accruals due to settling of disputes with territorial network organisations and power supply companies.
• Partial reversal of losses from impairment following tariff-balance decisions taken.
• Other expenses grew mainly due to property tax and execution of construction contractor agreements.
249,0
273,1
7,2
7,8 (7,8) 6,1
5,0
8,1(2,9)
(3,6) 4,1
220
230
240
250
260
270
280
290
Adj.EBITDA
2014
Revenueincrease
Net otherincome increase
Personnel costsincrease
Electricitytransmission
costs decrease
Materialexpensesdecrease
Provisionsdecrease
Increase oftaxes other than
income tax
Increase ofother operating
expenses
Net financeincome increaseand decrease ofloss from equity
account.investees
Adj.EBITDA
2015
1
2
1
ADJUSTED EBITDA RECONCILIATION
1 Adjusted EBITDA is calculated as EBITDA (earnings before interest, tax, depreciation, and amortization for the reporting period) excluding losses on impairment of fixed assets, impairment of financial investments,
and impairment of receivables;
2 Material expenses include purchased electricity for compensation of technological losses and for resale, electricity and heat power for own needs and other material costs.
9
bn RUB
ADJUSTED NET PROFIT RECONCILIATION
69,5
100,9
24,1
25,4
(10,7)
(7,4)
0
20
40
60
80
100
120
140
160
180
Adj. Net Profit 2014 EBITDA adj. increase Depreciation and amortizationdecrease
Interest expenses increase Profit tax increase Adj. Net Profit 20151 1
1 Adjusted Net Profit for the reporting period is calculated as the period’s net profit less losses on impairment of fixed assets, impairment of financial investments, and impairment of receivables and related deferred
profit tax liabilities..
2 Includes deferred profit tax liabilities related to adjustments.
2
10
bn RUB
KEY BALANCE SHEET INDICATORS 11
• Increase in fixed assets due to commissioning of new facilities in
connection with investment programme;
• Increase in value of long-term financial assets primarily due to
growth in share price of Inter RAO PJSC shares;
• Increase in long-term receivables due to deferred payments on
contracts for technological connections;
• Increase in value of reserves in connection with higher value of
materials and shift of certain subsidiaries to in-house repair works;
• Growth in other investments and financial assets due to placement
of funds on deposit at banks;
• Increase in cash due to receipt of funds from Government OFZ
bonds.
• Increase in retained earnings due to profit from the reporting period;
• Issuance of additional shares, paid for using OFZ bonds (RUB 32
bn) and cash (RUB 1.5 bn);
• Decrease in long-term loans and borrowings due to long-term
borrowings shifting to short-term borrowings (by payback date),
primarily compensated for by placement of long-term bonds;
• Increased employee compensation liabilities due to changes in
financial actuarial assumptions;
• Decrease in provisions due to settlement of disputes with territorial
network organisations and power supply companies;
• Increase in deferred tax liabilities due to differences in amortisation
of fixed assets and capitalised interest.
1 696,6 1 811,2
287,5334,6
0
500
1000
1500
2000
2500
31.12.2014 31.12.2015
Non-current assets Current assets
1,984.12,145.8
ASSETSbn RUB
LIABILITIES
1 038,8 1 168,9
563,2577,2
382,1399,7
0
500
1000
1500
2000
2500
31.12.2014 31.12.2015
Equity Long-term liabilities Short-term liabilities
1,984.12,145.8
bn RUB
IMPLEMENTATION OF CAPEX PROGRAMME
SOURCES OF FINANCING AREAS OF FINANCING
FINANCING, BILLION RUB, INCLUSIVE OF VAT
12
43%
28%
22%
7%
48%
28%
24%
328313
241211
0
50
100
150
200
250
300
350
2012 2013 2014 2015
Tariffs
Connection
fee and other
sources1
Borrowed funds Retrofitting and
renovation
Network connection
Other
New
construction
1 VAT reclaimed, additionally issued shares, public funding, other.
278 240
301 344
0
100
200
300
400
500
600
700
31.12.2014 31.12.2015Loans and borrowings Public debt offerings (bonds)
GROUP DEBT REPAYMENT SCHEDULE1
ROSSETI GROUP BORROWINGS
GROUP BORROWINGS DEBT BREAKDOWN BY BANK1
579 584
13
bn RUB
1 Principal debt less accrued but unpaid interest
161
3019
98
13
337
Sberbank
GPB
VTB
Alfa Bank
Bank Rossiya
Other creditors
Bond loans
bn RUB
1339 29 31
97
131
236
0
50
100
150
1 КВ 2016 2 КВ 2016 3 КВ 2016 4 КВ 2016 2017 2018 ПОСЛЕ 20181Q2016 2Q2016 3Q2016 4Q2016 2017 2018 AFTER 2018
ROSSETI-4BOMOESK-7BO
FGC-25FGC-21
FGC-11FGC-09
FGC-19FGC-15 FGC-18
FGC-06FGC-08
FGC-07FGC-13
8,59,09,5
10,010,511,011,512,012,513,013,514,014,515,0
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0
Yield, %2
Duration, years
OUTSTANDING BOND ISSUES1
RESULTS IN CAPITAL MARKETS
• In 2015 ROSSETI placed 4 debut bonds issues with total amount of RUB
31 bn, including RUB 6 bn from Vnesheconombank .
• In 2015 Group’s entities placed bonds with total amount of RUB 83 bn,
including RUB 31 bn from inside Group financing and RUB 40 bn from
investing of Vnesheconombank funds.
• Ratings from international rating agencies were assigned to 8 of the
Group’s entities.
• ROSSETI was awarded BB+ credit rating from international agency S&P,
the same as Russian sovereign rating and rating from Moody’s at Ba2
level.
S&P Moody’s Fitch
ВВ+ Ва2 -
FGC UES ВВ+ Ва1 ВВВ-
MOESK ВВ- Ва2 ВВ+
LENENERGO - Ва2 -
IDGC of Centre ВВ- - -
IDGC of Volga - Ва2 -
IDGC of Center and
Volga Region
- Ва2 -
IDGC of Urals - Ва2 -
CREDIT RATINGS OF THE GROUP’S ENTITIES
1 The most liquid issues of ROSSETI group
2 Data as of April 19, 2016
3 As of closing day for order book
14
Zero-coupon federal loan bond yield curve
ROSSETI Bond Issues in 2015
Date of placing Maturity Rate, % Spread to OFZ3
ROSSETI, BO-04 08.06.2015 3 years 11.95% 137 bp
ROSSETI, BO-01 22.06.2015 5 years (2Y call) 11.90% 144 bp
ROSSETI, BO-05 27.11.2015 7 years (4Y call) 11.25% 167 bp
ROSSETI, BO-06 08.12.2015 30 years 10.29% 102 bp
Thank you
15
Appendix
16
12КОНСОЛИДИРОВАННЫЙ ОТЧЕТ О ФИНАНСОВОМ ПОЛОЖЕНИИ (1)Indicators31.12.2015
mn RUB
31.12.2014
mn RUB
Change
mn RUB %
Non-current assets:
Property, plant and equipment 1,734,044 1,643,586 90,458 5.5
Intangible assets 18,532 14,300 4,232 29.6
Investments in associates and joint ventures 1,489 1,627 (138) (8.5)
Non-current accounts receivable 16,572 6,971 9,601 137.7
Other investments and financial assets 31,928 22,952 8,976 39.1
Deferred tax assets 8,579 7,117 1,462 20.5
Total non-current assets 1,811,144 1,696,553 114,591 6.8
Current assets:
Inventories 33,921 26,630 7,291 27.4
Other investments and financial assets 36,777 17,908 18,869 105.4
Current income tax prepayments 4,201 4,636 (435) (9.4)
Trade and other receivables 162,624 155,776 6,848 4.4
Cash and cash equivalents 97,090 82,576 14,514 17.6
Total current assets 334,613 287,526 47,087 16.4
Total assets 2,145,757 1,984,079 161,678 8.1
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (1/2) 17
13КОНСОЛИДИРОВАННЫЙ ОТЧЕТ О ФИНАНСОВОМ ПОЛОЖЕНИИ (2)Indicators31.12.2015
mn RUB
31.12.2014
mn RUB
Change
mn RUB %
Equity:
Share capital 163,154 163,154 - -
Share premium 212,978 212,978 - -
Reserve for issue of shares 33,473 0 33,473 -
Treasury shares (2,713) (2,725) 12 (0.4)
Other reserves (2,100) (3,981) 1,881 (47.2)
Retained earnings 448,120 383,554 64,566 16.8
Total equity attributable to equity holders of the Company 852,912 752,980 99,932 13.3
Non-controlling interest 315,983 285,824 30,159 10.6
Total equity 1,168,895 1,038,804 130,091 12.5
Non-current liabilities:
Loans and borrowings 465,439 485,409 (19,970) (4.1)
Trade and other payables 22,075 17,851 4,224 23.7
Employee benefits 29,473 25,512 3,961 15.5
Deferred tax liabilities 60,155 34,389 25,766 74.9
Total non-current liabilities 577,142 563,161 13,981 2.5
Current liabilities:
Loans and borrowings 118,832 93,227 25,605 27.5
Trade and other payables 267,972 268,469 (497) (0.2)
Provisions 11,421 18,871 (7,450) (39.5)
Current tax liabilities 1,495 1,547 (52) (3.4)
Total current liabilities 399,720 382,114 17,606 4.6
Total liabilities 976,862 945,275 31,587 3.3
Total equity and liabilities 2,145,757 1,984,079 161,678 8.1
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (2/2) 18
14
CONSOLIDATED STATEMENT OF PROFIT OR LOSS 19
Indicators2015,
mn RUB
2014,
mn RUB
Change
mn RUB %
Revenue 766,812 759,608 7,204 0.9
Operating expenses (652,538) (759,805) 107,267 (14.1)
Other income, net 22,069 14,309 7,760 54.2
Results from operating activities 136,343 14,112 122,231 866.1
Finance income 16,238 10,712 5,526 51.6
Finance costs (38,865) (42,863) 3,998 (9.3)
Net finance costs (22,627) (32,151) 9,524 (29.6)
Share of profit of equity accounted investees (net of
income tax)(4) (10) 6 (60.0)
Profit before income tax 113,712 (18,049) 131,761 -
Income tax expense (32,110) (6,208) (25,902) 417.2
Profit for the period 81,602 (24,257) 105,859 -
Profit attributable to:
Owners of the Company 64,036 (15,355) 79,391 -
Non-controlling interest 17,566 (8,902) 26,468 -
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