Finance and Economics Statements

In 2020, the region experienced a decline in business activity due to the introduction of restrictive measures to prevent the spread of new coronavirus infection (COVID-19), which also affected the economy of the largest power grid company of the Krasnodar Territory and the Republic of Adygea - Rosseti Kuban. Thus, at the end of 2020, the Company had a loss of RUB 1,501 mln due to the decrease in power consumption in the region and, as a result, a drop in revenue concerning the main activity of Rosseti Kuban – power transmission. Nevertheless, the Company’s main liabilities to the Company’s staff, budget, counterparties, and lending banks have been fulfilled to the fullest extent. The Company’s management took comprehensive measures to control the growth of expenditures and debt portfolio, optimize interest expenditures, improve the efficiency of the procurement management system, reduce the in-grid electricity losses, reduce the power loss in the grids and increase power efficiency. At the end of the reporting period, the target programs were implemented including those for year-on-year reduction of the operational costs in line with the Decree of the Russian Federation No.2303p-P13 dated April 16, 2015 for 2020. In 2020, the Company did not receive financial state assistance (subsidies)”.

Deputy General Director for Economics and Finance Olga Ocheredko

Financial and Economic Results

The service revenue of the Company at the end of 2020 was RUB 49,369.6 mn, down RUB 1,634.1 mln (3.2%) year-on-year, including:

• revenue from power transmission was RUB 48,101.9 mln, up RUB 1,586.2 mln year-on-year (the increase is caused by the growth of the provided power transmission services by 234 mln kWh and the growth of weighted average tariff for power transmission services by 2%);
• revenue from grid connection services was RUB 731.3 mln, down RUB 3,474.9 mln year-on-year (the decrease is caused by the implementation of grid connection contracts with large consumers in 2019: Rostransmodernization FSI and Taman Federal Highway Administration of the Federal Road Agency FSI).

The net costs (including administrative expenses) at the end of 2020 was RUB 46,975.3 mln, up RUB 3,039.3 mln (6.9%) year-on-year. The growth is caused by increase of costs for electricity purchased for loss compensation, services of the distribution grid companies, expenses for the staff, depreciation of fixed assets and intangible assets.

The profit before tax amounted to “minus” RUB 1,384.3 mln representing year-on-year decrease of RUB 4,909.0 mln.

The net profit of the Company at the end of 2020 was RUB 1,501.3 mln, which is RUB 4,005 mln more than in 2019.

Accounts Receivable, Operation with Debtors

The main portion of accounts receivable (86.4%) of the Company was accumulated from the payments for the power transmission services rendered.

During the reporting period, the accounts receivable that were deemed impossible to collect amounted to RUB 0.4 mln.

To reduce the accounts receivable, the Company is undertaking the following actions:

• laim-related works are carried out including the collection of fines for untimely payments;
• reciprocal liabilities are offset;
• energy saving regime for consumers is restricted including upon requests from energy suppliers;
• claims are settled under the pre-action protocol and in court.

The coverage of overdue accounts receivable for the power transmission services with actions aimed at their reduction is persistently high and as of December 31, 2020 is was 99.98%.

Accounts Payable

The short-term accounts payable for 2020 increased by RUB 2,005.83 mln, including:

• the debt to the suppliers and contractors – by RUB 800.67 mln due to the increase of electricity transit services debts by RUB 148.0 mln, the debt for the power purchased to compensate the losses – by RUB 22.94 mln, the debt due to the investment activities – by RUB 556.57 mln;
• the advances received debt – by RUB 764.24 mln including advances for grid connection by RUB 656.13 mln (the major part of the advances received debt consists of the grid connection advances – RUB 2,483.07 mln);
• the personnel salary and wage debt – by RUB 43.4 mln;
• the taxes and fees debt – by RUB 128.16 mln;
• the amounts payable to other creditors – RUB 290.96 mln.

According to the results of the operations for 2020, the overdue accounts payable at Rosseti Kuban amounts to RUB 3,734.45 mln.

The long term accounts payable at the end of 2020 amounted to RUB 1,514.46 mln.

Bonded Loans of the Company

The Program for Exchange Bonds series 002P of Kubanenergo PJSC was approved by the resolution of the Company’s Board of Directors on September 20, 2016 (Minutes No. 251/2016); ID number 4–00063-А-002Р-02Е was assigned to it on October 24, 2016. The Program provides for the possibility of exchange bonds placement to the total par value of up to and including RUB 25 bn for up to 30 years. In the reporting year, the bonds under this program were not placed.

At the beginning of the reporting year, non-convertible interest-bearing certificated exchange bonds in bearer form eligible for collective safe custody of series 001P-01 placed in 2015 within the Program for Exchange Bonds with ID number 4–00063-А-001Р-02Е dated August 26, 2015 in the amount of RUB 3.6 bn were outstanding. In accordance with the resolution of the Board of Directors (Minutes No. 371/2019 dated December 30, 2019), the Company purchased all of these bonds ahead of the schedule on January 31, 2020.