Federal Grid Company is Russia's largest publicly traded electricity transmission company. It owns over 120,000 km of transmission lines with capacity over 300,000 MVA. The presentation outlines Federal Grid's business model, growth prospects, and key investment projects. It also summarizes the company's financial and operational performance from 2009 to 1H2011, which shows increasing revenue, EBITDA, CAPEX, and electricity transmission despite a global economic downturn. Federal Grid has transitioned to a new RAB regulatory model and maintains a strong balance sheet with investment grade credit ratings.
Cairn has been exploring for hydrocarbons in India for more than 15 years. Today, it has a proven track record of making exploration discoveries and fast tracking them to production. Three out of the seven landmark oil discoveries made in India between 2000 and 2005 were by Cairn and its Joint Venture (JV) partners. The Mangala discovery in Rajasthan in 2004 was the largest onshore discovery in the country in the past two decades.
The Mangala Field commenced production on 29 August 2009 after it was dedicated to the nation by the Honourable Prime Minister of India, Dr. Manmohan Singh at the Mangala Processing Terminal in Barmer, Rajasthan.
For more info log onto www.cairnindia.com
Comparative analysis of power and infrastructure sectorApurv Gourav
This powerpoint presentation is conclusion of my 2 month summer internship at anandrathi shares and stock brokers ltd,pune
Project title:- COMPARATIVE ANALYSIS OF POWER AND INFRASTRUCTURE SECTOR COMPANIES STOCK PRICES FOR THE FY 2007-2008 VIZ A VIZ NIFTY.
2011 and 2012 are two years of uneven recovery. What would the future hold for Project finance in MENA and EMEA remains largely an open question. Is there a war for capital? may be with caution. The presentation focuses on current PF market, explains the past and highlights some of the issues that will be encountered in the near future. Has the PPP model of long term loans secured by income stream from underlying assets been broken? The answer is a likely YES. Are there alternatives, the answer is a Definite YES.
Cairn has been exploring for hydrocarbons in India for more than 15 years. Today, it has a proven track record of making exploration discoveries and fast tracking them to production. Three out of the seven landmark oil discoveries made in India between 2000 and 2005 were by Cairn and its Joint Venture (JV) partners. The Mangala discovery in Rajasthan in 2004 was the largest onshore discovery in the country in the past two decades.
The Mangala Field commenced production on 29 August 2009 after it was dedicated to the nation by the Honourable Prime Minister of India, Dr. Manmohan Singh at the Mangala Processing Terminal in Barmer, Rajasthan.
For more info log onto www.cairnindia.com
Comparative analysis of power and infrastructure sectorApurv Gourav
This powerpoint presentation is conclusion of my 2 month summer internship at anandrathi shares and stock brokers ltd,pune
Project title:- COMPARATIVE ANALYSIS OF POWER AND INFRASTRUCTURE SECTOR COMPANIES STOCK PRICES FOR THE FY 2007-2008 VIZ A VIZ NIFTY.
2011 and 2012 are two years of uneven recovery. What would the future hold for Project finance in MENA and EMEA remains largely an open question. Is there a war for capital? may be with caution. The presentation focuses on current PF market, explains the past and highlights some of the issues that will be encountered in the near future. Has the PPP model of long term loans secured by income stream from underlying assets been broken? The answer is a likely YES. Are there alternatives, the answer is a Definite YES.
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
FIA officials brutally tortured innocent and snatched 200 Bitcoins of worth 4...jamalseoexpert1978
Farman Ayaz Khattak and Ehtesham Matloob are government officials in CTW Counter terrorism wing Islamabad, in Federal Investigation Agency FIA Headquarters. CTW and FIA kidnapped crypto currency owner from Islamabad and snatched 200 Bitcoins those worth of 4 billion rupees in Pakistan currency. There is not Cryptocurrency Regulations in Pakistan & CTW is official dacoit and stealing digital assets from the innocent crypto holders and making fake cases of terrorism to keep them silent.
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Building Your Employer Brand with Social MediaLuanWise
Presented at The Global HR Summit, 6th June 2024
In this keynote, Luan Wise will provide invaluable insights to elevate your employer brand on social media platforms including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok. You'll learn how compelling content can authentically showcase your company culture, values, and employee experiences to support your talent acquisition and retention objectives. Additionally, you'll understand the power of employee advocacy to amplify reach and engagement – helping to position your organization as an employer of choice in today's competitive talent landscape.
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfthesiliconleaders
In the recent edition, The 10 Most Influential Leaders Guiding Corporate Evolution, 2024, The Silicon Leaders magazine gladly features Dejan Štancer, President of the Global Chamber of Business Leaders (GCBL), along with other leaders.
2. The Russian Power Sector
Generation
Transmission Distribution Supply
Electricity and Heat
High Voltage Grids Low Voltage Grids Electricity Trading
Production
Nuclear Power Hydro Power
END CONSUMER
Federal Grid Holding IDGC
Plants Plants Company (MRSK)
Rosatom RusHydro
Thermal Power
Plants
TGKs OGKs
Local IDGCs
(Produce Heat and (Produce
(MRSKs)
Electricity) Electricity)
Share in 50–
6–7% 25–35% 4–8%
Tariff (1) 60%
Source Company data
(1) Company estimates
2
3. Why is Federal Grid a Good Investment Opportunity?
Scale of Business Growth Prospects
Largest publicly traded electricity transmission Anticipated electricity demand 2010 – 2020 CAGR
company in the World (1) with over 120,000 km of of 2.4%
transmission lines with total capacity of over System upgrade focused on improving efficiency and
300,000 MVA reliability of the transmission network; development
Leading Russian blue chip company and the largest of smart grid model
Russian utility company by market capitalization
Unique natural monopoly position in Russia’s high-
voltage electricity transmission market, operating in
73 out of 83 Russian regions
Supportive Regulatory Regime Strong Financials
Business regulation based on 5-year Regulatory Track record of substantial growth (2009 – 2010
Asset Base (RAB) model revenue increased by 29%)
Guaranteed return on new invested capital Rigorous programme of efficiency savings
11% in 2010 – 2012 and 10% in 2013 – 2014 (c. RUR 2.6 Bn of savings in 2010(2))
Low leverage and ability to obtain one of the lowest
debt interest rates among Russian companies
Investment grade credit ratings (S&P - BBB/Stable;
Moody’s - Baa2/Stable)
Source Company data; IFRS financials; Energy Forecasting Agency
(2) By length of transmission lines and transformer capacity
(3) Under RAS according to cost cutting programm
3
4. Commitment to the Best in Class Corporate Governance
Composition of the Board of Directors
Board of Directors consists of 11 members Independent Members of the Board of Directors
Ernesto Ferlenghi, Chairman of the Board of Directors
Elected the Chairman of the Board of Directors on 1 August 2011
First ever foreign Chairman of a Russian State-owned company
Member of the Board of Directors since 2008
Non-independent: Head of the Representative Office of Eni Russia and CIS
7 directors Graduated from the Tor Vergata University of Rome
Igor Khvalin, Deputy Chairman
Member of the Board of Directors since 2010
Independent: General Director of Volga Engineering Group
4 directors Member of the Board of Directors of MRSK Holding
Rashid Shapirov, Director
Member of the Board of Directors since 2008
Deputy General Director of KFK-Consult
Kirill Levin, Director
Member of the Board of Directors since 2010
Deputy Chairman of the Management Board of Russian Agricultural Bank
There are 11 persons in the Company’s Board of Directors, 4 of them are independent directors (at least 6 members of the
Board of Directors must be representatives of Russian state authorities)
On 16 December 2010 Federal Grid Company’s Board of Directors approved a new dividend policy
Dividends equal to at least 10% of net income (based on Russian Accounting Standards) supported by cash flow
In 2011 the Company made its first dividend payments to shareholders since 2008
Source Company data
4
5. Company Development
Federal Grid Company History – Key Milestones
Incorporated in 2002
2008 2009 2010 2011
June 2008 February 2009 January 2010 March 2011
• Federal Grid shares listed • Inclusion of Federal Grid in • Change from “cost plus” to • LSE listing
on RTS and MICEX MSCI Russia and MSCI RAB regulation
Emerging Markets Indices April 2011
August 2008 December 2010 • Approval of RUB 125 Bn
• RTS and MICEX include • New dividend policy bond placement program
FSK in their indices
May 2011
• Deal with InterRAO
Shareholder Structure Share Information
As of January 2012 As of 27 January 2012
Number of shares outstanding: 1,255,948 MM
(1)
Share price (MICEX)
Current: RUR 0.34
12 month low: RUR 0.21
12 month high: RUR 0.48
Market Cap: RUR 427 Bn
Free Float: 20.52%
Approved plan for the privatization of an additional
4.11% stake owned by the government
Source Company data; Bloomberg
(1) Other shareholders include Gazprom, Norilsk Nickel and other
5
6. RAB Regulation
Permitted Revenue Calculation Formula
Required RAB
____________ Net Working
Gross = Year’s Expenses + RAB · [rRAB ] + + CAPEX · [rCAPEX ] + CAPEX Return + Capital · [rCAPEX ] + Adjustments
Revenue Payback Period
Include operating RAB = Initial The payback CAPEX = Cumulative sum If net working Adjustments are
expenses, cost base of invested period on initial Cumulative sum of investments capital is more made based on
of services, etc. capital at the capital equals to investments from made from the than 8% of changes in
beginning of the 21 years the beginning of beginning of the previous years’ amount/quality of
Operating costs year the regulatory regulatory period revenue, WC = services
reduction - 2% period divided by the 8% of revenue is provided,
rRAB = existing payback period used; if less than changes in
capital return rCAPEX = Return of 35 years 4%, WC = 4% of legislation, etc.
on new revenue is used
Both are set by investments (set
the regulator by regulator)
RAB Return Calculation
January 2010 September 2010 April 2011
• Switched to 3-year RAB regulation • Regulation period prolonged to 5 years • Tariff growth for 2011 has been smoothed out to 5%; Other potential changes discussed
2010 2011 2012 2013 2014
Return on initial invested capital 3.9% 5.2% 6.5% 7.8% 9.1%
Return on new invested capital 11% 11% 11% 10% 10%
Source Company data
6
7. Key Investment Projects
Capacity provision of Kalininskaya Electricity supply of East Siberia
NPP generating unit #4 (1,000 MW) Pacific Ocean oil pipeline
Start Date: 2009 Start Date: 2011
Due Date: 2012 Due Date: 2016
Underground cabling in Moscow, Construction of Zeyskaya HPP —
St. Petersburg Russian-Chinese border
Start Date: 2011 transmission line
Due Date: 2015 Start Date: 2010
Due Date: 2013
Infrastructure for Sochi Olympic
Games 2014 Infrastructure for APEC summit in
Start Date: 2008 Vladivostok in 2012
Due Date: 2012 Start Date: 2008
Due Date: 2011
Transition from overhead lines to Capacity provision of
cable and construction of Skolkovo Boguchanskaya HPP start-up Construction of electricity supply
220 KV substation complex (1,000 MW) facilities on Elginskoye coal deposit
Start Date: 2010 Start Date: 2012 Start Date: 2011
Due Date: 2012 Due Date: 2014 Due Date: 2013
Source Company Data
7
8. Update on Key Investment Projects
Sochi Olympic Games 2014 APEC Summit in Vladivostok in 2012
Purpose: to support infrastructure and provide electricity for the 2014 Purpose: to support infrastructure and provide electricity for the APEC
Winter Olympics in Sochi Summit scheduled to take place in the Russian Far East city of
Scope: Vladivostok in 2012
10 substations with overall capacity of New capacity and grids are aimed at strengthening existing
1,762 MVA infrastructure in Vladivostok as well as providing electricity
15 new grids with the total length of 320 km, including to Russkiy island (where the APEC Summit will take place)
105 km of cable lines (10 – 110 kV) Vladivostok’s Airport will also be supported by the newly
Work finished by 2010: built electricity infrastructure
5 substations (782 MVA) Scope:
2 grids (29.4 km) Overall 8 sub-projects including over 160 km of new electric
Work plan for 2011: grids and substation capacity with overall capacity in excess
5 substations (700 MVA) of 420 MVA
Work status as of September 2011:
5 grids (119.3 km)
2 sub-projects are commissioned
Project is on track and should be finished by the end of 2012
4 sub-projects are finished and being tested
Construction is aimed at reducing environmental impact and
preserving the natural landscape by using substations of compact 2 remaining sub-projects are scheduled to be finished by
configurations and other innovative solutions the end of 2011
Source Company data
8
9. Financial Performance (IFRS)
Revenue EBITDA adj. (1) and Margin
RUR MM RUR MM %
29% 90,000 : 59% % 100%
150,000 Growt
h: wt h th: 42
Gro 67,717 Grow
113,330 %
Growth: 26 45,459 75%
100,000 87,580 60,000 42,619 32,019
71,217 63.9%
56,565 59.8% 56.6% 50%
50,000 30,000 48.7% 25%
0 0 0%
2009 2010 1H2010 1H2011 2009 2010 1H2010 1H2011
EBITDA Margin
CAPEX Profit for the period adj. (1) and Margin
RUR MM RUR MM %
6% % 0%
wt h: 5 40,000 : 63 h: 8 22,810 40%
G ro
141,800 wt h Gr owt
150,000 Gro 27,910
th : 34% 30%
90,934 Grow 17,160
12,692 32.0%
100,000
69,581 20,000 24.6% 22.4% 20%
51,994
50,000 19.6% 10%
0 0%
0
2009 2010 1H2010 1H2011 2009 2010 1H2010 1H2011
Net Income Margin
Source Company IFRS financials
(2) Adjusted for non-specific impairment provision of PP&E, impairment of available-for-sale investments and associates, loss on dilution of share in
associates, revaluation loss on PP&E, loss on re-measurement of assets held-for sale, gain on sale available-for-sale investments
9
10. Operational Overview
Total Transformer Capacity Electricity Transmission
Thousand MVA Bn kWh
350 600
328.5 487
467
306 311 17.5 400
300 239 246
311 200
0
250 0
2009 2010 1H2011 2009 2010 1H2010 1H2011
In Operations To be Commissioned by the end of 2011
Transmission Grid Length
Thousand km
130 125.5
121.1 121.7 3.2
120
110 122.3
100
0
2009 2010 1H2011
In Operations To be Commissioned by the end of 2011
Source Company data
10
11. Capital Structure
Federal Grid Ratings
Credit Portfolio
S&P Same as Sovereign: BBB
Outlook Stable Bond issue RUR MM Interest Rate, % Maturity/Put date
Moody’s One Notch Below Sovereign: Baa2 Series 6 10,000 7.15 26 September 2013
Outlook Stable Series 7 5,000 7.50 27 October 2015
Series 8 10,000 7.15 26 September 2013
Debt Profile Evolution
RUR MM Series 9 5,000 7.99 24 October 2017
Series 10 10,000 7.75 24 September 2015
57,497 58,367 Series 11 10,000 7.99 24 October 2017
60,000
Series 13 10,000 8.50 22 June 2021
50,000
Series 15 10,000 8.75 23 October 2014
40,000
50,000 50,815 Series 18 15,000 8,50 09 June 2014
30,000
20,000 13,545 Series 19 20,000 7.95 18 July 2018
10,000 6,000 Credit line RUR MM Maturity date
7,545 7,497 7,552
0 Gazprombank 15,000 October 2014
2009 2010 1H2011
Gazprombank 10,000 November 2014
ST Debt LT Debt
Total 130,000
Key Ratios Average debt maturity of 4.8 years
2009 2010
Weighted average cost of debt financing is 8.3%
Debt/Capital 2% 6%
Total Equity/Total Assets 0.82x 0.81x
Credit Potential
Adjusted EBITDA (1) (RUR MM) 42,619 67,717
Total Debt/Adjusted EBITDA (2) 0.32x 0.85x Total amount of untapped credit lines: RUR 111.5 Bn
Source Company data; IFRS financials; Bond portfolio structure and Credit potential shown as of 27 January 2012
(2) Adjusted for reversal of impairment provision of PP&E, loss on re-measurement of assets held-for sale, revaluation loss on
PP&E and impairment of available-for-sale investments and associates
11
12. Recent Developments
RAB Regulation 28 December 2010: Federal Tariff Service (FTS) approved RAB tariffs for the five year period (2010 - 2014)
13 April 2011: FTS adjusted the tariffs for 2-4Q2011 - 2014 to redistribute gross revenues of regulated
businesses between years within a single regulatory period
Investment Program 16 December 2010: Board of Directors of Federal Grid approved RUR 952.4 Bn investment program for 2010
- 2014
Bond Offerings Federal Grid Company successfully issued bonds totaling RUR 55 Bn in 2011
Average interest rate: 8.35%
Average maturity: 5.4 years
Total demand on average exceeded the nominal volume being issued by 2.5 times
Dividends Federal Grid made the decision to pay out a dividend on the Company’s common stock for the year 2010 in
the amount of 10% of net income (by RAS), excluding financial results from re-valuation of securities and
build-up of unfunded provisions
Listing 28 March 2011: Federal Grid successfully listed its GDRs on the Main Market of the London Stock Exchange
Option Program 8 February 2011: Board of Directors approved the Company’s option program
Assets Transfer All generating assets held by Federal Grid and its subsidiaries were transferred to INTER RAO UES in
exchange for its shares
As a result of the deal Federal Grid holds a 19.95% stake in INTER RAO UES
Source Company data
12
13. Revenue and Cost Structure
Revenue Structure Cost Structure
RUR MM RUR MM
2%
wt h: 1
: 29
% Gro
wth
G ro
6%
h: 2
Gr owt
Growth: 3%
Transmission Fees Electricity Sales D&A Personnel Expenses (2)
Other Revenues Purchased Electricity (1) Repair and Maintenance
Other (3)
Source Company IFRS financials
(2) Federal Grid purchases electricity to cover electricity transmission losses in its grid
(3) Including payroll taxes
(4) Includes change in allowance for doubtful debtors and other items
13
14. Change in EBITDA
RUR MM
13,440
55,000 (+42%)
14,652
719 45,459
1,140 1,030
45,000 (931)
(277)
(2,893)
35,000
32,019
25,000
15,000
EBITDA Revenue Finance Personnel Purchased Repair and Impairments Other EBITDA
1H2010 Increase Income Expenses Electricity Maintenance 1H2011
Source Company IFRS financials
14
15. Free Cash Flow
RUR MM
13,573 Cash and cash equivalents at the beginning of the period
36,275 Net cash generated by operating activities
(31,279) Net cash used in investing activities
(2,102) Net cash used in financing activities
2,894 Net increase in cash and cash equivalents
16,467 Cash and cash equivalents at the end of the period
50,000 45,459 36,275
(1,051) (49) (8,084)
0
(50,000) (69,581) (2,102) (35,408)
(100,000)
EBITDA Reconciliation Changes in Profit tax Operating CF Capex Interest paid FCF
1H2011 adjustments WC
Source Company IFRS financials
15
16. Tariff Calculation (1)
Step 1 Established RAB x Rate of return = Amount of return
Step 2
Established RAB x Period of return
= RAB amortization
Step 3 Amount of RAB Operating Total Required
return + amortization + Expenses + Taxes = Gross Revenue
Declared
Total Required Calculated
Step 4 Gross Revenue ÷ Network = Tariff
Capacity
Source Company Data
(2) Simplified for illustrative purposes
16
17. Prospects for Energy Bridge Development in Russia
Export/import
to/from Norway
Export/import
to/from Finland
West-East Energy
St. Petersburg
Moscow
Bridge
UES of North-West
UES of Center
UES of East
UES of Siberia
UES of UES of Urals
UES of South Volga
Export to
China
Center-Urals
Energy Bridge Integration of Siberia
and East energy
systems
Export/import
Export to to/from Tomsk
Azerbaijan Integration of
Export to Kazakhstan Export to
and Georgia Urals and Siberia
Turkey Export to Mongolia Export
energy systems
China to South
Korea
Existing export/import Under construction
Услуги
17
19. Disclaimer
The materials comprising this Presentation have been prepared by the Company solely for use by the Company’s
management at investor meetings with a limited number of institutional investors who have agreed to attend such
meetings and to be subject to obligations to maintain the confidentiality of this Presentation.
This Presentation does not constitute or form part of and should not be construed as, an offer to sell or issue
or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an
inducement to enter into investment activity. No part of this Presentation, nor the fact of its distribution, should form the
basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This
Presentation does not constitute a recommendation regarding the securities of the Company.
This Presentation is not directed at, or intended for distribution to or use by, any person or entity that is a citizen
or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or
use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.
The forward-looking statements in this Presentation are based upon various assumptions, many of which are based, in
turn, upon further assumptions, including without limitation, management’s examination of historical operating trends,
data contained in the Company’s records and other data available from third parties. These assumptions are inherently
subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control
and it may not achieve or accomplish these expectations, beliefs or projections. In addition, important factors that, in the
view of the Company, could cause actual results to differ materially from those discussed in the forward-looking
statements include the achievement of the anticipated levels of profitability, growth, cost and its recent acquisitions, the
timely development of new projects, the impact of competitive pricing, the ability to obtain necessary regulatory approvals,
and the impact of general business and global economic conditions. Past performance should not be taken as an
indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future
performance.
19
Editor's Notes
In summary, we have delivered a good set of results for the 6 months 2011 and remain the largest electricity transmission company in the world The fact that we have accessed the debt markets repeatedly and quite recently is testament to our business profile and regulatory framework In addition, we believe that the macro environment in Russia is positive and that will have a positive effect on electricity volumes Finally, we have committed ourselves to a rigorous programme of efficiency savings and plan to carry that through; tangible benefits have already been accomplished
Revenue, EBITDA and Profit for the period – see comments to slide 4 CAPEX – represent cash spent on purchase of PPE and intangible assets per Cash-flow statetment
We would like to rationalise our capital structure and use our credit headroom to efficiently finance capex; to that effect we have a target leverage of Total Debt/EBITDA of 2.5-3.0x We have been very successful in accessing the local bond market and have RUB 130 bn of debt, with a low average cost of debt when compared with other Russian corporates
Revenue Main revenue stream are transmission fees that have increased by 28% for the 1H2011 Drop in electricity sales by 45% happened in Nurenrgo and MGTES Operating expenses Depreciation increase between 2009 and 2010 was caused by the revaluation of PPE recorded as at 31 December. However no such revaluation happened in the 1H2011 and only moderate 5% increase in D&A took place. There has been a significant reduction in purchased electricity costs , which explained by changes OREM rules ( see below original comments from ДВКР): Это связано с изменением правил оптового рынка в 2011 году. В частности, с изменением объемов покупки мощности – раньше покупалась мощность по балансу 2008 года (базовый объем мощности) с учетом фактического коэффициента резервирования, с 01.01.2011 года - по балансу текущего года с учетом планового коэффициента резервирования. По объему потерь электрической энергии существенных изменений не было. При этом, 100% электрической энергии и мощности покупается по свободным (нерегулируемым) ценам. Personnel expenses: 2009-2010 change: The Group's employee benefits expenses and payroll taxes expenses increased by RUB 4,210 million, or 26.5%, to RUB 20,114 milli on for the year ended 31 December 2010, from RUB 15,904 million for the year ended 31 December 2009, primarily as a result of an increase in the average number of employees by 12% and an increase in the average salaries due to indexation of remuneration based on inflation and other factors. 1H2010 - 1H2011change: Average number of employees increased by 6%, RAR payroll and related taxes increase by 23 %, IFRS related adjustments ( accrual of unused vacation, employee pension scheme, share option scheme and capitalisation of payroll costs in PPE) increased by 914% mainly related to accrual of share option scheme of 880 RR mln Other expenses changed by -17% due to : - Change in doubtful debtors allowance by -104% ( last year was accrual of provision of 2 987 mln, current period (– 124) accrual of provision - increase in other expenses by 26%
It is once again evident that there has been a significant increase in revenues Finance income has dropped due to decrease from interest income from bank promissory notes and deposits Payroll costs have increased due to: increase in average number of employees by 6%, increase in average salaries and in payroll tax rate from 26% to 34% and introduction of share option scheme Purchased electricity- There have been a reduction in purchased electricity costs , which explained by changes in OREM rules During 1H2010 there was an accrual of specific impairment of intangible assets and advances on PPE, this period no such expenses –thus increase in EBITDA by 1,030 mln. As a result, EBITDA has increased by 42%
Net cash used in investing activities apart from purchase of PPE and intangible assets includes CF related to investments in and redemption of promissory notes, bank deposits and interest received Net cash used in financing activities includes only interest paid Free cash flow bridge Reconciliation adjustments of 1,051 mln represents adjustments to EBITDA for non-cash items (loss on disposal of PPE, share result of associate, reversal of bad debt provision, share option scheme expense) and adjustment to add back finance income to bring EBITDA to operating CF before WC changes and profit tax paid. WC changes represent net change in WC balances Increase in accounts receivable and inventories has been compensated by increase in accounts payable. Profit tax paid for the 1H2011 - 8,084 RR mln Capex includes purchases of PPE and intangible assets FCF ( free cashflow) represents net cash outflow (deficit) after operating cashflows and cash investments in PPE and intangible assets. This deficit as well as interest payment has been financed by net redemption of investments in promissory notes and bank deposits. Therefore net increase in cash and cash equivalent was 2,894 mln at the end of 1H2011.