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.
Connected capacity is permanent electricity connections less generation.

“Amid the COVID-19 pandemic, the Company’s management takes every effort to minimize its adverse impact on the supply reliability and financial stability of the Company and keep the Company’s financial performance comparable to the year-ago period.
The significant events in the 1st half of 2020 include the consolidation of electricity grid assets completed by the Company in Saint Petersburg through Rosseti Lenenergo’s takeover of its subsidiaries Kurortenergo, Tsarskoye Selo Energy Company, Saint Petersburg Power Grid, and Petrodvorets Electric Company.”
- Aleksey Polinov
Deputy CEO, Economic Affairs and Finance
Rosseti Lenenergo 

Notes to the Operating Results

Net electricity supply decreased by 4.0% in the 1st half of 2020 from the 1st half of 2019 because of lower electricity consumption by certain businesses due to a decline in production in the economic downturn.

Electricity losses decreased by 84 million kWh, or 4.4%, due to lower load loss driven by an overall decrease in electricity consumption across the regions and 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 39,454 million rubles in the 6 months of 2020, including:

37,441 million rubles of electricity distribution revenue in the 6 months of 2020, or an increase of 0.4% (134 million rubles) year on year due to higher tariffs.

1,846 million rubles of network connection revenue in the 6 months of 2020, or 19.5% (446 million rubles) lower than in the prior year, due to large contracts completed in the 1st half of 2019 and previously signed by Petrodvorets Electric Company and Saint Petersburg Power Grid, the rights and obligations under which were transferred to Rosseti Lenenergo as part of the reorganization.

167 million rubles of other revenue in the 6 months of 2020, or 16.6% (33 million rubles) lower than in 2019, due to lower revenues from grid equipment lease contracts.

Rosseti Lenenergo’s cost of sales totaled 28,673 million rubles in the reporting period, or 2.0% (575 million rubles) 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.

Rosseti Lenenergo earned a net profit of 7,611 million rubles in the reporting period, or 2.4% (184 million rubles) down from the prior year, primarily due to lower revenue.

Rosseti Lenenergo posted EBITDA of 16,464 million rubles in the reporting period, which is a decrease of 1.8% (298 million rubles) from the year-earlier period, primarily due to estimated reserves in other expenses alongside lower sales profit (net of amortization and depreciation).

Principal Balance Sheet Figures

millions of Russian rubles unless otherwise stated

* based on the accounting figures including retrospective adjustments in the 2019 accounting figures due to the adoption of a new version of Regulations for Accounting 18/02 “Profit Tax Accounting.”

Notes:
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’s assets totaled 245,489 million rubles as at June 30, 2020, or 8.2% higher than at year end 2019. Assets grew, largely due to the Company implementing the capex program and completing Rosseti Lenenergo’s reorganization on May 14, 2020, through its takeover of Saint Petersburg Power Grid, Petrodvorets Electric Company, Kurortenergo, and Tsarskoye Selo Energy Company.

Rosseti Lenenergo’s net assets grew by 18,145 million rubles, or 12.3% in the 1st half of 2020.

Rosseti Lenenergo posted ROE of 7.5%, or 1.1 percentage points lower than in 2019. ROE decreased because of a growth in the Company’s equity after the consolidation with its subsidiaries.

Rosseti Lenenergo’s non-current liabilities totaled 39,868 million rubles, or up 21.1% (6,957 million rubles) as at the end of the reporting period, due to the growing share of long-term debts in the loan portfolio (alongside an overall decrease in debt value) and because of a rise in deferred tax liabilities.

Rosseti Lenenergo’s short-term and long-term loans and borrowings totaled 25,756 million rubles as at June 30, 2020. Rosseti Lenenergo’s net debt/EBITDA was below 1.0 as at the end of the 1st half of 2020.

Investment

millions of Russian rubles unless otherwise stated

Notes:
The 1H2020 actual figures are based on available information.

Capital investment totaled 11,884 million rubles in the reporting period, or 149% higher than a year earlier. The value of commissioned fixed assets reached 7,910 million rubles in the reporting period, or 171% higher than in 2019.

Capital investment and commissioned fixed assets in the 1st half of 2020 went up year on year due to increased obligations under existing network connection contracts and early commissioning under the capex project to modernize Rosseti Lenenergo’s information security system.