JSC “MOESK” announces results of 2013: Revenues have increased 5.7% to RUR 124.7 bn, “pool” (uniform tariffs-based) productive supply has grown 2.96% to 71.4 bn kWh

Amount of supply to the grid of JSC “MOESK” in 2013 increased by 1.49% in 2012 and amounted to 88,215 mn kWh. Amount of electricity productive supply increased by 2.02% to 80,133 mn kWh. Compared with the previous year, the “pool” (uniform tariffs-based) productive supply increased by 2.96% to 71,412 mn kWh.

Due to the unusually warm weather in November - December of 2013, the uniform tariffs-based productive supply was lower than the indicators included in the adjusted Business Plan for 2013 by 0.49%.

Electricity losses in the grids of JSC “MOESK” in 2013 decreased by 0.47 percentage points relative to 2012 and amounted to 9.16% of the supply to the grid. The reduction in electricity losses was achieved through the implementation of the energy efficiency program.

Volume of actually connected capacity for 2013 amounted to 1,531 MW (+7.74%). The increase in the connected capacity was due to Moscow mainly, where the figure rose to 401 MW (+16.23%), while in the Moscow Area the volume of actually connected capacity increased to 1,130 MW (+5.02%). The uneven dynamics of changes in the connected capacity volume is associated with the expansion of the territory of the city of Moscow due to “New Moscow”.

Following the results of the year 2013, the number of signed grid connection contracts increased by 88.98% to 70,877 pieces, while the increase in Moscow was 77.17%, and the increase in the Moscow Area was 90.74%.

Significant growth in the number of submitted applications for grid connection and, consequently, number of signed contracts and amount of connected capacity occurred largely due to a group of applicants with the connected maximum capacity of up to 150 kW inclusive (mostly individuals with the capacity of up to 15 kW). The increase was due to the growth of business activity in this group, primarily due to simplification of the grid connection process, implementation of the Road Map activities, for which reason the amount of actually connected capacity of JSC “MOESK” for 2013 exceeded the planned values of the Company by a third.

Table 1. Operating indices for 2013

Index	Unit of measurement	2013	2012	2013/2012	Adjusted plan for 2013 (for reference)
Supply to the grid	mn kWh	88,215	86,916	+1.49%	88,216
“Own” productive supply of electricity	mn kWh	80,133	78,546	+2.02%	80,110
“Pool” (uniform tariffs-based) productive supply	mn kWh	71,412	69,362	+2.96%	71,766
Electricity losses in grids	% of supply to grid	9.16	9.63	-0.47 p.p.	9.19
	mn kWh	8,082	8,370	-3.44%	8,106

Table 2. Operating indices for Moscow for 2013

Index	Unit of measurement	2013	2012	2013/2012
Supply to the grid	mn kWh	46,422	44,779	+3.67%
“Own” productive supply of electricity	mn kWh	42,236	40,550	+4.16%
“Pool” (uniform tariffs-based) productive supply	mn kWh	34,675	32,891	+5.42%
Electricity losses in grids	% of supply to grid	9.02	9.44	-0.42 p.p.
	mn kWh	4,186	4,229	-1.02%

Table 3. Operating indices for the Moscow Area for 2013

Index	Unit of measurement	2013	2012	2013/2012
Supply to the grid	mn kWh	41,793	42,137	-0.82%
“Own” productive supply of electricity	mn kWh	37,897	37,996	-0.26%
“Pool” (uniform tariffs-based) productive supply	mn kWh	36,737	36,470	+0.73%
Electricity losses in grids	% of supply to grid	9.32	9.83	-0.51 p.p.
	mn kWh	3,895	4,140	-5.92%

Table 4. Data on grid connection for 2013

Index	Unit of measurement	2013	2012	2013/2012	Adjusted plan for 2013 (for reference)
Actually connected capacity	MW	1,531	1,421	+7.74%	1,151
- Moscow	MW	401	345	+16.23%	-
- Moscow Area	MW	1,130	1,076	+5.02%	-
Total number of signed GC contracts	pcs.	70,877	37,505	+88.98%	-
- Moscow	pcs.	8,598	4,853	+77.17%	-
- Moscow Area	pcs.	62,279	32,652	+90.74%	-

Despite the suppression of electricity tariffs growth in order to reduce the rates of inflation and stimulate economic development in the country, JSC “MOESK” managed to achieve a sustainable growth in key financial indicators: for 2013, revenue of JSC “MOESK” was RUR 124.7 bn (+5.7% against 2012), while electricity transmission revenues in relation to the previous year increased by 10.7% to RUR 111.0 bn. Grid connection revenue decreased by 23.9% to RUR 13.2 bn.

Electricity transmission revenue for 2013 is lower than the indicators in the adjusted Business Plan by 0.7%. This decrease is due to the unusually warm weather in November - December of 2013, as well as change in the structure of productive supply on voltage levels.

Grid connection revenue is above targets by 3.43% due to capacity connection performed earlier than within the normative time frames as to the priority facilities (connection of subway stations which are in the process of construction), as well as the readiness of energy receivers of applicants, the connection of which was originally planned for 2014-2015.

Increase in the cost of services of JSC “UES FGC” and purchased electricity to compensate losses led to an increase in prime cost in 2013 to RUR 103.0 bn (+ 11.6%). Prime cost of electricity transmission services amounted to RUR 101.9 bn (+14.7%), and that of grid connection services was RUR 1.0 bn (-70.9%). Prime cost based on the year performance is lower than the planned value by RUR 1.5 bn. Savings were achieved through lowering in the expenses on the largest items compared to the target:

- costs of compensation for losses decreased by RUR 1.0 bn due to prices (tariffs) reduction by 10 kopecks against the target, and decline in losses purchases amount under the energy conservation and energy efficiency improvement program;

- costs of services of TGEs (territorial grid entities) and JSC “UES FGC” decreased by RUR 0.5 bn: the saving of RUR 0.4 bn is associated with a decrease in the actual volume of TGEs services with respect to the target ones and deferred liabilities of the company on the contracts which were not signed; saving of RUR 0.1 bn is due to a decrease in the actual volume of the net power flow from JSC “UES FGC” by 598 mn kWh relative to the planned value.

Following the results of the year 2013, the Company net profit was RUR 11.6 bn, which is 5.8% higher than the planned value: JSC “MOESK” achieved such a result through cost savings. At the same time, the net profit for 2013 is lower than that for the year 2012 by 32.3%. The reduction in the index is due not only to growth in the prime cost, but also formation of the allowance for receivables of JSC “Energocomplex” (“One Contact” system) – following the results of the year 2013, the accrual of the allowance for impairment of receivables amounted to RUR 9.0 bn.

Table 5. Financial results for 2013

Index	Unit of measurement	2013	2012	2013/2012	Adjusted plan for 2013 (for reference)
Revenue	RUR mn	124,731	118,008	+5.70%	125,289
- electricity transmission	RUR mn	110,981	100,280	+10.67%	111,808
- grid connection	RUR mn	13,231	17,386	-23.90%	12,792
Prime cost	RUR mn	103,023	92,305	+11.61%	104,560
- electricity transmission	RUR mn	101,891	88,855	+14.67%	-
- grid connection	RUR mn	969	3,334	-70.94%	-
Gross profit	RUR mn	21,708	25,703	-15.54%	-
Gross profit margin	%	17.40	21.78	-4.38 p.p.	-
EBITDA	RUR mn	36,430	41,210	-11.60%	36,335
EBITDA margin	%	29.21	34.92	-5.71 p.p.	-
Net profit	RUR mn	11,641	17,184	-32.26%	11,008
Net profit margin	%	9.33	14.56%	-5.23 p.p.	-

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