Jsc Lenenergo Reliability Efficiency Availability
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RELIABILITY EFFICIENCY AVAILABILITY JSC LENENERGO Annual Report PRESENTATION EDITION 2013 2. About the Company Annual Report 2013 JSC Lenenergo JSC Lenenergo TO OUR SHAREHOLDERS Annual Report 2013 1.1. Address of Chairperson of the Board of Directors 2 of JSC Lenenergo E.V. Prokhorov Online Annual Report 1.2. Address of the Director General 4 of JSC Lenenergo A.V. Sorochinskiy of JSC Lenenergo 1 http://ar2013.lenenergo.ru/en/ APPENDICES 8.1. Reference information ABOUT THE COMPANY STRATEGY PERFORMANCE INDICATORS 208 2.1. General information of the Company 8 3.1. The Company’s position in the industry 22 4.1. Q&A 62 8.2. Basic principles of accounting policies 210 2.2. Corporate structure of the Company 12 3.2. Mission and strategy of the Company 32 4.2. Operating results 74 8.3. RAS accounting reporting of Lenenergo for 2013 213 2.3. Geographic reach of the Company 13 3.3. Business model and competitive environment 38 4.3. Financial results 104 8.4. Dynamics of key indicators of IFRS financial statements 288 2.4. Brief history of Lenenergo 14 3.4. Investment activity 42 4.4. Technical re-equipment, development and innovations 138 of Lenenergo for 2009-2013 2.5. Milestones of the reporting period 16 3.5. Risk management 54 8.5. Observance of the Corporate Codes of Conduct 289 8.6. The list of related party transactions for 2013 301 2 3 4 88.7. Data on electricity transmission tariffs in 2013-2014 302 8.8. Data on grid connection tariffs in 2013-2014 305 8.9. Data on the structure of property complex 323 and its changes in 2013 8.10. Data on land plots 326 8.11. Dynamics of the capital investments structure in 2011-2013 328 8.12. Organization structure of the Company 330 CORPORATE GOVERNANCE SECURITIES SUSTAINABLE DEVELOPMENT 8.13. Information about issued instructions in 2013 332 5.1. Corporate governance principles 152 6.1. Shares. Capitalization 180 7.1. HR policy 194 8.14. Client service centers in St. Petersburg 332 and Leningrad Region 5.2. Management bodies 154 6.2. Profit distribution and dividend policy 189 7.2. Labor protection 199 5.3. Supervisory bodies 168 6.3. Bonds 191 7.3. Social policy and charity 200 8.15. Glossary 333 5.4. Subsidiaries and dependent companies 175 6.4. Interaction with shareholders and investment community 191 7.4. Environmental policy 203 7.5. Sustainable performance in the field of procurements 204 5 6 77.6. External communication 206 DISCLAIMER CONTACTS TO OUR SHAREHOLDERS CONTENTS STRATEGY 1. To our Shareholders Annual Report 2013 JSC Lenenergo 1.1. ADDRESS OF CHAIRPERSON OF THE BOARD OF DIRECTORS OF JSC LENENERGO E.V. PROKHOROV Dear Shareholders! JSC Lenenergo is one of the largest distribution grid companies in the Northwest of Russia. Two main objectives of the Company are reliable and high-quality power supply of consumers of St. Petersburg and the Leningrad Region and prompt non-discriminatory technological connection to networks. The Company’s priorities are attraction of large-scale investments into construction and reconstruction of power grid facilities to provide both reliable power supply and advanced development of the energy sector in relation to economic growth. Last year JSC Lenenergo proceeded with active development and transformation aimed primarily at improving efficiency, cardinal renovation of production facilities, development of customer services and increase of its business reputation. I believe that results of 2013 indicate that the Company is on the right track, and all the decisions were justified. I would like to note that today JSC Lenenergo not only successfully parsed with the cargo of serious system problems which have been accumulated up to 2010, but also implements global innovation projects in the sphere of improving the reliability of power supply, and development of the system of technological connection to networks. Thus many initiatives of the Company were supported at the Federal level. Over the past year the staff of JSC Lenenergo repeatedly received awards from regional and Federal authorities. in 2013 work of power engineers was marked off by the governors of St. Petersburg and the Leningrad Region, Ministry of the Power Industry and management of JSC Rosseti. In the reporting year the Company continued its movement in the framework of the set of priority objectives. The efforts of the personnel of JSC Lenenergo ensured uninterrupted supply of electricity to consumers, increasing the capacity and reconstruction of electric networks of St. Petersburg and the Leningrad Region. Comprehensive work aimed at improvement of financial and business indicators, increase of investment appeal and transparency of activity of the Company was carried out. a significant Two main objectives of the Company attention of the Company was paid to the issues of innovation development are reliable and high-quality power and energy efficiency as well as reliability and quality of services. supply of consumers of St. Petersburg Priority direction of activity is work on increasing the availability of grid infrastructure. The initiatives implemented by Lenenergo in the past are used and the Leningrad Region and prompt today by other regional grid companies. Last year the Company continued its non-discriminatory technological work on improvement of business processes of technological connection. connection to networks. At the end of 2013 Lenenergo reached a new level of rendering of services in connection to networks having launched the project «8-800» in the Leningrad Region which is a technological connection without visits to the grid company. This is an unprecedented step in simplifying access to energy resources. 2 CONTENTS ABOUT THE COMPANY 1. To our Shareholders Annual Report 2013 JSC Lenenergo An important role in realization of the interests of shareholders, including The Company together with its principal shareholders will actively proceed the strategic issues faced by the Company in 2013 was carried out with seeking ways to attract non-tariff sources of financing. Improving by the Board of Directors, which defines the priority areas of development the efficiency of financial and business performance of the enterprise will and sets the Company’s guidelines for the long term. in 2013 interests be carried out including due to more rational use of resources. The issues of shareholders in the Board of Directors were represented by officials of managing the Company’s business reputation, improving its social of such companies as JSC Rosseti and JSC FGC UES, and representatives responsibility, transparency and integrated communications will be of the Ministry of Power Industry of the Russian Federation, Government deduced in a special priority. of St. Petersburg. On behalf of the Board of Directors of JSC Lenenergo I express sincere In 2013 the Board of Directors of JSC Lenenergo regularly considered gratitude to the members of the Board of Directors and the management strategic and production and business issues of the Company’s for coordinated and effective work aimed at comprehensive protection activity. Special attention was paid to approval and control over of interests of the Company. I give the words of special appreciation implementation of key documents for the Company, such as to the administrations of St. Petersburg and the Leningrad Region for the business plan, including the investment program. Reports constructive cooperation and systematic approach to development of grid of the Director General on the basic directions of activity infrastructure in the interests of high-quality and reliable power supply of the Company were considered regularly. of consumers. I sincerely thank all employees of the Company which professional and productive work contributes to stability and reliability In 2013 36 meetings of the Company’s Board of Directors were held, of the electricity grid infrastructure of JSC Lenenergo. of them in absentia – 32, in correspondence – 4; 241 issues were considered at these meetings. Priority directions of the Company’s activity on the near-term outlook are ensuring of reliability and quality of rendered services pursuant to regulatory legal acts, further reduction of the average duration of technological violations liquidation, implementation of programs to expand the slopes of overhead power lines. The Company has to pay considerable attention to such issues as increase in the market share of JSC Lenenergo in the region at the expense of decrease in RGR of third- party network companies and consolidation of grid assets, decrease in volumes of non-contractual electricity consumption by registration of contractual relations of the consumer under contracts of technological connection and power supply. In its relations with shareholders the Company, as before, is committed to adhere to the fundamental principles of corporate governance – accountability, justice, transparency and responsibility. I feel confident that in the long term professionalism of employees and support of shareholders of JSC Lenenergo will continue successfully to ensure reliable electricity supply to consumers in St. Petersburg and the Leningrad Region, modernization of electric grid facilities, increase of investment appeal and transparency on the basis of the growth of income and improvement of corporate governance. In order to ensure break-even activity and maximize profit of the Company development and implementation of measures focused on cutting and growth of income is of particular relevance for JSC Lenenergo. 3 CONTENTS ABOUT THE COMPANY 1. To our Shareholders Annual Report 2013 JSC Lenenergo 1.2. ADDRESS OF THE DIRECTOR GENERAL OF JSC LENENERGO A.V. SOROCHINSKIY Dear Shareholders! The past year can be considered with good reason successful for JSC Lenenergo. It is the year when very serious further steps on reliability strengthening were taken. From year to year we increase the volumes of financing of the repair program for which in 2013 RUB 963 mln were allocated. As in previous periods the Company has developed the program of supplementary technical measures in excess of the repair program which financing made another RUB 509 mln for ensuring reliable power supply of consumers.