Key Results in the Reporting Period

millions of Russian rubles unless otherwise stated

Notes:

EBITDA is net of the reserve balance for impairment of financial investments.
EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization, less Reserve Balance for Impairment of Financial Investments. 

�gAmid warm winter weather and the COVID-19 pandemic, the Company�fs management takes every effort to minimize their adverse impact on the supply reliability and financial stability of the Company. Net profit earned in the 1st quarter of 2020 is comparable to the year-ago period.�h
- Aleksey Polinov
Deputy CEO, Economic Affairs and Finance
Rosseti Lenenergo

Notes to the Operating Results

Net electricity supply decreased by 3.4% in the 1st quarter of 2020 from the 1st quarter of 2019, largely due to:

�¡      extremely high ambient temperatures unusual for the winter in the region;

�¡      lower electricity consumption by certain businesses due to a decline in production in the economic downturn.

The decrease of 0.25 percentage points in electricity losses is due to carrying out the electricity loss reduction program, which includes measures to modernize the electricity metering system and detect unbilled and noncontractual electricity consumption.

Notes to the Financial Results

Rosseti Lenenergo posted revenue of 21,613 million rubles in the 1st quarter of 2020, including:

20,947 million rubles of electricity distribution revenue or an increase of 3.3% (672 million rubles) year on year due to higher tariffs, however below the target due to lower electricity consumption resulting from warm winter weather and the pandemic.

579 million rubles of network connection revenue in the 1st quarter of 2020, or 19.2% (138 million rubles) lower than in the prior year, due to the settlement of accrued liabilities of Petrodvorets Electric Company and Saint Petersburg Power Grid, which were transferred to Rosseti Lenenergo as part of the grid asset consolidation in the 1st quarter of 2019.

87 million rubles of other revenue in the 1st quarter of 2020, or 32.4% higher than in 2019, due to revenues from grid equipment lease contracts.

Rosseti Lenenergo�fs cost of sales totaled 15,333 million rubles in the reporting period, or 1.6% up year on year, largely due to higher prices of electricity distribution services provided by grid companies, increases in depreciation and amortization, and equipment repair expenses alongside lower expenses associated with electricity purchased for compensation for electricity losses and grid equipment leases.

Rosseti Lenenergo earned a net profit of 4,318 million rubles in the reporting period, about the same as in the prior year, or 0.3% up year on year.

Rosseti Lenenergo posted EBITDA of 8,785 million rubles in the reporting period, which is a decrease of 0.4% from the year-earlier period, primarily due to estimated reserves in other expenses.

Principal Balance Sheet Figures

millions of Russian rubles unless otherwise stated

Notes:
2019 figures are based on the audited accounting statements for 2019.
Net debt is calculated as long-term and short-term loans and borrowings with interest payable, less cash and cash equivalents and less short-term financial investments.
ROE is calculated as (Net Profit [for 4 quarters] / Equity) * 100.

Rosseti Lenenergo�fs assets totaled 226,983 million rubles as at March 31, 2020, or 0.1% higher than at year end 2019. Assets changed, largely due to the Company implementing the capex program. Net assets grew by 816 million rubles, or 0.5%, in the 1st quarter of 2020.

Rosseti Lenenergo posted ROE of 8.4%, about the same as in the prior year. A minor year-on-year decrease (0.04 percentage point) is due to a 0.5% growth in equity with only a 0.3% growth in the Group�fs net profit in the 1st quarter of 2020.

Rosseti Lenenergo�fs net debt/EBITDA was below 1.0 as at March 31, 2020.

Investment

millions of Russian rubles unless otherwise stated

Notes:
The 1Q2020 actual figures are based on available information.

Capital investment totaled 5,974 million rubles in the reporting period, or 193% higher than a year earlier. The value of commissioned fixed assets reached 3,206 million rubles in the reporting period, or 222% higher than in 2019.

Capital investment and commissioned fixed assets in the 1st quarter of 2020 went up year on year due to increased obligations under existing network connection contracts, the early completion of facilities included in the regional development scheme and program, and early commissioning under the capex project to modernize Rosseti Lenenergo�fs information security system.