Annual report 2015 Developing the power industry of the Western Siberia This is an abridged version of the 2015 Annual Report of JSC Tyumenenergo. The full version of this report has been disclosed on the official website of the Company at www.te.ru and on the webpage provided by Interfax CJSC at Surgut www.e-disclosure.ru/portal/company.aspx?id=5577. 2016 2 Annual report 2015 JSC Tyumenenergo 3 Table of contents Address from Chairperson of the Board of Directors 4 5. Financial and economic results 64 Address from General Manager 6 5.1. Indicators of the Company’s financial status and sources of funding 66 5.2. The Company’s financial performance 68 5.3. Allocation of net profit 70 1. About the Company 8 5.4. Financial and economic performance of the Company 70 1.1. Market share, energy consumption pattern 10 1.2. Industrial assets 12 6. Corporate governance 74 1.3. Company history 13 6.1. Corporate governance 76 1.4. Company structure 13 6.1.1. Corporate governance system 76 1.5. Key indicators 14 6.1.2. Management and control bodies of the Company 77 1.6. Company position in the industry and the region 16 6.1.3. Data on significant deals 97 1.7. Focus points of the year. Major events 18 6.2. Internal control system 95 6.3. Equity capital, securities, and dividend policy 100 2. Strategy 20 6.3.1. Authorized capital 100 6.3.2. Dividend record 100 2.1. Company’s strategy. Mission. Priorities. Prospects of development. 22 6.3.3. Bonds 101 2.2. Business model 32 2.3. Risk management 34 7. Sustainable development and collaboration 3. Results of production activities 38 with parties concerned 102 7.1. Personnel policy 104 3.1. Electric power transmission 40 7.2. Labor protection 110 3.2. Network connection 42 7.3. Social policy 112 3.3. Tariff policy. Tariff structure 44 7.4. Environmental policy 118 3.4. Investment activities 47 7.5. Emergency prevention 121 7.6. Procurement policy 122 4. Uninterrupted power supply 52 7.7. Customer focus 125 7.8. External engineering networks 126 4.1. Maintenance program implementation 54 4.2. Operational process control 55 4.3. Development of the communications and IT networks 57 Glossary 129 4.4. Scientific, network and innovation development 59 4.5. Energy saving and energy efficiency enhancement 62 Reference information 130 About the Strategy Results of production activities Uninterrupted power supply Financial and economic Corporate Sustainable development and Glossary and Company results governance collaboration with parties concerned Reference information 4 Annual report 2015 JSC Tyumenenergo 5 Address from Chairperson of Board of Directors In the Rosseti group of companies, JSC Tyumenenergo ranks as a leader in terms of reliability and quality of power supply to consumers as well as in terms of key operational and financial perfor- mance indicators. This is clearly demonstrated by the results of the work of the Company in 2015. One of the factors that ensure the efficient operation of the Company is the serious work of the corporate management level. During 2015, the Board of Directors held 24 meetings, during which high-priority issues of development of the Company were reviewed and a number of important strategic decisions were approved. For example, the following instruments were Key objectives of the company remain un- In 2015, the Company reached high levels approved last year: a plan for the development changed: to provide reliable energy supply of quality of utility connection services. Mezhevich Valentin Yefimovich of the company production assets manage- to consumers, to increase the availability of The implementation of the roadmap for im- Chairperson of Board of Directors ment system for 2015-2017, the Regulation the electric grid infrastructure, efficiency, and provement of the accessibility of energy in- of JSC Tyumenenergo for improvement of the operational efficiency transparency of the utility connection proce- frastructure has reduced the time and the and reduction of costs of JSC Tyumenenergo, dures, as well as to improve the quality of work number of procedures that are required for the energy conservation and energy efficiency with consumers. utility connection. increase program, and standards for the qual- ity of customer service as well as a number of Results of the year have demonstrated that JSC Tyumenenergo Innovative Development cooperation as well as for the high results and programs and regulations that govern various the Company continues to move forward Program for the period of 2015-2020 is suc- efficiency in their work. aspects of the activities of the company; more- with confidence in the framework of im- cessfully implemented. The Company primarily over, the term of the collective agreement was posed objectives and successfully imple- works with Russian equipment manufacturers I am confident that JSC Tyumenenergo will extended for three years. ments each of them. and is the customer, and the company’s repre- preserve its financial stability and will ensure a sentatives in some cases are co-authors, of do- positive dynamics in the key areas of operation In the reporting year, a decision on integration Schemes and power development program mestic innovations. of the Company as well as continue its work on of the company into the centralized IT system of the entities of the Russian Federation that development of the energy network distribution of the Unified Treasury of PJSC Rossetti was were approved in 2015 have become the basis During 2015, the Company implemented a set complex of the region and strengthening of the approved; the level of implementation of this for the formation of the investment program of of measures that are aimed at improving the industry as a whole independently of the mac- challenge by JSC Tyumenenergo was one of JSC Tyumenenergo for 2016-2020, inclusive of investment attractiveness and the information roeconomic situation in 2016. the best in the Rossetti group of companies; measures of improvement of equipment relia- transparency of the Company within a single also, in 2015, the company management per- bility. The implementation of this investment communications policy of the Rossetti group formed the order of the Board of Directors pur- program will provide for a timely response to of companies. suant to the Directive of the Government of the the demand for electric energy and power and Russian Federation dated April 16, 2015 on the will create favorable conditions for the stable I would like to give thanks to the members of achievement of indicator values for reduction functioning of the economy in the regions of the Board of Directors and to the managers of of operating costs by at least 2-3% annually. the company. the company for the coordinated teamwork and About the Strategy Results of production activities Uninterrupted power supply Financial and economic Corporate Sustainable development and Glossary and Company results governance collaboration with parties concerned Reference information 6 Annual report 2015 JSC Tyumenenergo 7 Address from General Manager In the reporting year, JSC Tyumenenergo strength- Every year, both in the field of revamping and recon- we have the right to speak not only on the improve- ened its leading position among the companies in struction of existing facilities and in the field of con- ment of our preparedness for the challenges of na- the Russian power grid complex by successfully struction of new generating capacities more than ture but also on a solid margin of safety, which was following its main strategic priority: reliability and 300 events are implemented in the framework of confirmed by the events of January 2016 when the quality increase of power supply of consumers of JSC Tyumenenergo Investment Program. Recon- branch «Northern Electric Networks» had a mass the Tyumen Power System. struction of power networks is performed in all shutdown of overhead power lines due to active three regions; however, each of them has its own formation of rime deposits on the power line cables At the end of 2015, the Russian Federation specificity that must be considered when planning which resulted in damage to the power cables and Ministry of Energy has approved the next five- these activities. to the ground wires. The cause of this phenomenon year investment program of the Company. In was the climatic events that are uncharacteristic of accordance with this program, investment of The Company pays great attention to the preven- the north of the YaNAD and which were recorded Mikheev Pavel Aleksandrovich the Company in the development of the power tion of aging of equipment. Reconstruction and re- for the first time during the observation period since General Manager of JSC Tyumenenergo grid in 2016-2020 will amount to approximate- vamping of power grid facilities are one the most 1961. Through coordination of actions and willing- ly 49 bln rubles. important directions of activities of JSC Tyumene- ness of company employees to solve any problems, nergo. In 2015, 3,616 mln rubles were allocated this issue was eliminated quickly and without seri- The priority directions of activities of the Com- for the repair and maintenance program, which ous consequences for consumers. pany are improvement of reliability, prevention exceeds the corresponding value for the previous According to the results of work in 2015 all key fi- of the growth of the number of accidents, imple- year by 5.5%. The 2015 Repair Program is fulfilled The Company pays much attention to the improve- nancial and operational indicators have been im- mentation of obligations under the development for 101%. In 2015, an amount of 853.9 mln rubles ment of labor conditions of its employees and to proved owing to the well-set priorities for the main programs of Khanty-Mansiysk District, Yama- was allocated to innovative development: five R&D the development of human resources.