90 th ANNIVERSARY of the All-russia electrification plan business report
Samokhvalov A. EKATERINBURG, 2011 The Soviets and electrification are the basis of the new world 1 KEY FINANCIAL INDICATORS Contents
2010 (US$ 2010 (RUR 2009 (RUR 20082 (RUR thous.) thous.) thous.) thous.) 1. SHAREHOLDER LETTER ...... 4
Total revenues, including 1 637 624.9 49 783 796 41 297 636 35 964 707 2. ABOUT US ...... 6 Transmission revenues 1 571 160.9 47 763 291 40 001 176 34 437 161 2.1. Our service area...... 6 Connection fee 55 451.5 1 685 727 973 985 895 581 2.2. Our regional market share ...... 8 Expenses 1 475 089.6 44 842 725 36 623 611 33 947 171 2.3. Our key events ...... 10 Operating profit 162 535.3 4 941 072 4 674 025 2 017 536
Operating margin, % 9.9% 9,9% 11,3% 5,6% 3. OUR PRIORITIES ...... 14 EBITDA3 168 566.0 5 124 407 4 191 790 3 576 138
EBITDA margin, % 10.3% 10,3% 10,2% 9,9% 4. OUR RESULTS ...... 20 Pre-tax profit 78 637.7 2 390 587 1 392 972 1 288 425 4.1. Network and Equipment ...... 20 Net profit 55 420.2 1 684 773 1 053 267 862 085 4.2. Connection ...... 23 2010 business report Net margin, % 3.4% 3,4% 2,6% 2,4% 4.3. Energy transmission ...... 29
Earnings per share 0.0007 0,02 0,01 0,02 4.4. Our Investments ...... 33 4.5. Our Tariffs ...... 37 Short-term loans and borrowings 0 0 0 1 200 000
Long-term loans and borrowings 182 159.0 5 537 633 5 583 562 5 161 534 5. FINANCES ...... 42 Including bonds 7.2 219 1 638 1 000 000
Debt/ Equity, % 19% 19% 20% 23% 6. INTERNAL CONTROL AND RISK MANAGEMENT ...... 48 Equity/ Assets, % 67% 67% 66% 66%
7. SHAREHOLDER EQUITY AND SECURITIES ...... 52 7.1. Shareholder Equity ...... 52 Energy sales 2010 2009 Change 7.2. The Company and the Stock Market ...... 53 Energy supply, thous. kW/h 78 381 628 73 168 742 +7,12%
Productive supply, thous, kW/h 72 048 385 66 712 119 +8% 8. CORPORATE GOVERNANCE ...... 56
Losses, thous. kW/h 6 333 243 6 456 624 -0,74% 9. SOCIAL RESPONSIBILITY ...... 68 9.1. HR policy...... 68 9.2. Welfare and Charity ...... 70 Operating figures 2010 9.3. PR and GR ...... 71 Aerial lines (in chains), km 123 255 9.4. Ecology policy ...... 73 Aerial lines (in lines), km. 114 348
Cable lines, km. 4 944 10. OUR CONTACTS ...... 76 Transformer substations (35/110-220 kV) 1024
Capacity of transformer substations (35/110-220 kV), MVA 20 813 11. ABBREVIATIONS ...... 78 Transformer substations (6-20/0.4 kV) 28 046
Capacity of transformer substations (6-20/0.4 kV), MVA 7 622 12. APPENDICES ...... 80 12.1. Interested-party transactions ...... 80 12.2. Information on the observance of the Corporate Behavior Code requirements . . . . . 83 12.3. 2010 Accounting Statements under RAS ...... 91 Key performance indicators, 2010 actual target 12.4. 2010 Accounting Statements under IAS ...... 94 Return on Equity (ROE), % 4,27 4,25
Overall losses/ Overall supply, % 8,08 8,17
Current investment efficiency (terms and costs), % 109 over 95
Prevention of incidents over ultimate limits 0 0
Supply interruption indicator under 1 under 1
Average length of supply interruption under 1 under 1 IDGC of Urals, ОАО
1 Key financial indicators are represented on the basis of 2008-2010 audited financial statements (under RAS). 2010 indicators are shown in US$ just for information (average rate in 2010 is US$ 1=RUR 30.4). 2 Here and henceforth 2008 indicators are shown as the sum of the operating results demonstrated by IDGC of Urals, OAO as a managing company and Permenergo, Sverdlovenergo and Chelyabenergo in January-April 2008 (prior to the merger) and operating results demonstrated by the united operating company in May-December 2008 (following the merger). 3 EBITDA is calculated according to the formula: net profit + income tax and other obligatory payments + interest payable + depreciation and amortization. Dear shareholders
The elapsed year became the year when post-crisis recovery of the Urals economy has triggered again. After serious meltdown in 2009 energy consumption commenced to grow again on our service area. Our 2010 b usiness report management model, efficiently established and crisis-tested, enabled us to fully exploit our advantages against the backdrop of energy demand boom and to reach high results at the year-end.
Generally, our 2010 energy consumption grew by 8.73% on 2009. During the reported year the volume The Chairperson of the Board of The General Director of transmitted energy totaled 70 887 mln. kW/h, thus exceeding 2009 results by 4.71%. In addition, our Directors V. N. Rodin net profit also grew up to RUR 1 684 773 thous. (+ RUR 613.5 mln. on 2009). These results allow us А. V. Demidov to contemplate a dividend pay-out for the first time since 2007.
During the year the Company’s Board of Directors worked hard to increase governance efficiency. Generally, there were 16 regularly arranged sessions of the Board of Directors. The BoD reviewed and increased – 273.67 MW against 212.2 MW in 2009. Repair targets, determined by our 2010 repair approved our business plan, insurance coverage program as well as collective labor contract. Besides, the program, were accomplished by 112%. In 2010 special attention was given to buildings renovated according BoD approved the Regulations on Risk Management, Internal Control Policy and the Regulations on to defects detected during exploitation. Dividend Policy. According to a BoD resolution, IDGC of Urals joined a non-profit partnership (Union for Energy Auditors and Energy Service Companies) as well as incorporated a 100% subsidiary (Energy With a view to implement our HR policy, on June 23, 2010 the BoD approved the Program on the Service Company of the Urals, OAO). HR Endorsement and Development. The Program is focused on the preservation of staff potential and improvement of personnel training, retraining and development system. In 2010 the company implemented We commemorated the 90th anniversary of the all-Russia electrification plan by commissioning new the new Regulations on personnel training that regulate and encourage the unified approach to training objects and updating grids. In 2010 overall investments totaled RUR 4.6 bln. In the Sverdlovsk region system for all structural subdivisions. Our corporate training center obtained a new status – since we completed the reconstruction of 110/35/6 kV “Krasnouralsk” substation. This enabled us to increase September 2010 it works as Training Center of IDGC of Urals, NCHOU. supply reliability for industrial and residential consumers in Krasnouralsk and for a large copper plant Summarizing our 2010 results we can state that the Board of Directors, management team and personnel belonging to Svyatogor, OAO. In Ekaterinburg we commissioned a new substation (“90th anniversary successfully dealt with lingering signs of economy crisis that negatively affected our operations. Our of the GOELRO plan”) portraying successful implementation of the investment program by Urals course for increasing governance efficiency was fruitful: market capitalization grows, social programs subdivisions of IDGC Holding. In the Chelyabinsk region we commissioned 110/10 kV “Granitnaya” are implemented. We started 2011 with large-scale investment plans and assurance that we are able to substation designed to increase supply reliability for consumers in the Lenin district of Chelyabinsk. fulfill the plans. Grids development, quality and reliability increase, work on behalf of our shareholders In the Perm region we completed the reconstruction of 110 kV “Chusovaya – Lysva” aerial line. This will continue to be our key principles in future. modernized line considerably increased supply reliability for plants in Chusovoy and Lysva as well as facilitated energy supply for public utilities and industrial consumers.
In 2011 overall investments will total RUR 7.78 bln., exceeding 2010 investments by 1.6 times. Such large- scale investments are possible due to the transition of our all branches to RAB tariffs: Sverdlovenergo and Chelyabenergo transited to RAB since January 01, 2011, Permenergo transited to RAB in 2009. We worked over the transition during the whole year.
In 2010, as a result of our integration strategy (conclusion of rental contracts or purchase of grids) the company significantly increased its local communal market share. Thus, in 2010 we concluded 9 new grid rental contracts with various municipalities and administrations. Generally, on our service area we IDGC of Urals, ОАО concluded 33 rental contracts (service volume exceeding 36.9 thous. c.u.). More than 4.7 thous. c.u. were taken into possession during 2010.
In 2010 we connected about 11.5 thous. new consumers (+21% on 2009). Connected capacity also considerably
4 5 2.1. Our service area.
IDGC of Urals, ОАО is an electric grid company providing energy transmission using 0.4-220 kV lines and connection to grids in the Sverdlovsk, Chelyabinsk and Perm regions. 2010 business report The Sverdlovsk region The Chelyabinsk region
Established on January 17, 1934. Administrative center - Ekaterinburg. Time difference: Moscow (+2 hours), London (+5 hours), New York (+10 hours). Established on January 17, 1934. Administrative center - Chelyabinsk. Time difference: Moscow (+2 Geography hours), London (+5 hours), New York (+10 hours). Borders with the Perm region in the west, the Komi Republic and Hanty-Mansiisk autonomous region in the north, the Tyumen region in the east, the Kurgan Chelyabinsk regions and the Republic of Geography Bashkortostan in the south. Borders with the Sverdlovsk region in the north, the Kurgan region in the east, the Orenburg region in the south, Bashkiria in the west and Kazakhstan in the south east. The large settlements: Ekaterinburg, Nizhni Tagil, Kamensk-Uralski, Pervouralsk, Serov. The largest settlements: Chelyabinsk, Magnitogorsk, Zlatoust, Miass, Kyshtym.
Population Population Highly urbanized region – urban population totals 83%. The size of the population is about 4.4 mln. Highly urbanized region – urban population totals 81.4%. The size of the population is about 3.6 mln. Ethnic composition: Russians (89.2%), Tartars (3.8%), Ukrainians (1.2%), Bashkirs (0.8%) and other (5.0%). Ethnic composition: Russians (82.3%), Tartars (5.7%), Bashkirs (4.6%), Ukrainians (2.1%) and others (5.3%).
Economy Economy Ferrous and non-ferrous metallurgy, uranium enrichment, iron ore concentration and machine-building The backbone of the regional economy is machine-building, metalworking, ferrous and non –ferrous dominate in the industrial complex. Military industrial complex (armored vehicles and tank ammunition) metallurgy. Chemical, textile and food-processing industry are highly developed, electronics and and industrial machine-building (equipment for primary, energy and chemical sectors) prevail in machine- measurement equipment are produced by the region. building. The largest enterprises: MMK, ChMK, Chelyabinsk zinc plant, ChTPZ, Chelyabinsk Coal company, Largest enterprises: Nizhni Tagil Metallurgy Plant, Kachkanar Mining and Processing Complex, VSMPO Chelyabinsk chemical and pharmaceutical plant, ChTZ, Makfa, OAO, Soyuz Pischeprom, ОАО, Avisma, Uralmash, Bogoslovsky and Uralsky aluminum plants, Kamensk-Uralsky Metallurgy plant, Elektromachina Holding. Uralvagonzavod, UGMK-Holding.
Regional advantages Regional advantages 1) Advantageous geographical position between Europe and Asia. 1) Advantageous geographical position between Europe and Asia. 2) Developed transport system and telecommunications. 2) Abundance and diversity of mineral resources. 3) Diverse resource base. 3) Developed transport infrastructure and telecommunications. 4) Developed oil and energy complex, industry and agricultural sector. 5) Tourist and recreation cluster (national parks Taganai, Zyuratkul, Lake region, ski resort).
IDGC of Urals, ОАО 4) Industrial juggernaut and developed banking sector. 5) High scientific potential and highly-skilled workers. 6) Possibility for establishing special economic zone. 6) Implementation of large projects (Titanic valley, the Industrial Urals the Polar Urals, OAO, 7) Implementation of large foreign projects (Rexam, Henkel and Omia plants). construction of international logistic center).
6 7 The Perm region The Company’s market share in terms of productive supply to end-user is 70%. In terms of CU we occupy 50% of the market share.
In terms of conventional units the market share of Permenergo is 53%, of Sverdlovenergo - 42%, Chelyabenergo - 59%. The market share in terms of productive supply of Permenergo - 82%, of Established on December 01, 2005. Administrative center - Perm. Time difference: Moscow (+2 hours), Sverdlovenergo - 65%, Chelyabenergo - 66%. London (+5 hours), New York (+10 hours). 2010 business report
Main regional gridcos operating in the services area of IDGC of Urals, OAO are: Geography Borders with the Komi Republic, the Kirov region, Udmurtia, Bashkortostan and the Sverdlovsk region. Name Required gross revenues The volume of grid The largest settlements: Perm, Berezniki, Solikamsk, Chaikovsky, Kungur. (RGR) in 2010 facilities belonging to regional gridcos in 2010
Population RUR, thous Share in CU Share in The size of the population is about 2.7 mln. Ethnic composition: Russians (85.2%), Komis (5.7%), Tartars regional regional (4.9%), Bashkirs (1.5%), Ukrainians (0.9%) and others (1.8%). RGR, % CU,% Lukoil Energoseti, ООО 688 356,66 5,61 35 516,00 9,70
Communal systems – Prikamye, ОАО 624 970,00 5,10 14 203,70 3,88 Economy The backbone of the regional economy is highly developed industrial complex. Oil, chemical and Novogor-Prikamye, ООО (branch in Berezniki) 146 881,24 1,20 5 792,65 1,58 petrochemical industries, ferrous and non-ferrous metallurgy, machine-building, lumber complex as well RZHD, OAO (Sverdlovsk railroad) 155 067,29 1,26 19 747,00 5,39 as food-processing industry predominate in manufacturing sector. SC Contact, ООО 48 965,64 0,40 5 511,60 1,51
The largest enterprises: Lukoil Perm, ООО, Lukoil Permnefteorgsintez, ООО, Uralkali, ОАО, Silvinit, Oblkommunenergo, GUP SO (Ekaterinburg) 555 900,00 2,49 20 000,00 4,75 ОАО, Azot, OАО, Sibur Khimprom, ZАО, Chusovskoy Metallurgy plant, ОАО, Gubakhinsky Koks, ОАО, Regional grid company, ОАО (Ekaterinburg) 612 030,00 2,74 43 000,00 10,21 Perm Non-ferrous Metals, ОАО, Motovilikhinskye Zavody, ОАО. Russian Railroads, ОАО, Sverdlovsk 496 550,00 2,22 60 000,00 14,25 railroad – branch of RZHD, OAO (Ekaterinburg)
Regional advantages Tagilenergoseti, ZAO (Nizhni Tagil) 389 170,00 1,74 16 000,00 3,80 1) Advantageous geographical position between Europe and Asia. Gorelektroset, ОАО (Pervouralsk) 155 440,00 0,70 7 500,00 1,78 2) Diverse resource base. 3) Developed transport system and telecommunications. Regional grid company, ООО 565 039,00 5,82 19 875,00 6,94 4) Significant scientific and technical potential. South Urals Railroad – branch of RZHD, OAO 55 271,00 0,57 16 404,00 5,73 5) Developed industry, oil and energy complex, lumber complex. 6) Large foreign affiliates (Henkel-Pemos, Gypsopolimer, SAN InBev, Nestle RUS). Korkinskaya grid company, ООО 78 818,00 0,81 11 758,00 4,11 Chelyabinskaya grid company, OАО 107 569,22 1,11 6 635,00 2,32 2.2. Our regional market share Elektroseti, ООО 77 718,00 0,80 5 896,00 2,06
IDGC of Urals, ОАО provides energy transmission services to wholesale and retail subjects as well as connection of equipment belonging to legal entities and natural persons to the grids in the Sverdlovsk, Chelyabinsk and Perm regions. The main line of activities is monopolistic and it is regulated by the state in terms of the transmission and connection tariffs. Energy transmission services are provided to the providers of last resort, independent retail supplier and direct consumers-participants of the wholesale energy market.
IDGC of Urals, ОАО occupies a dominant position on energy transmission market in the service area. This market is constantly expanding due to the growth of energy consumption and connection of new consumers. Our competitors, in terms of energy transmission, are allied municipal and private grid
IDGC of Urals, ОАО companies, mainly, grids operating in low-voltage class. Thus, in our service area there are 286 allied grid companies (including industrial companies providing transmission services for sub-consumers), about 30 being large ones. Smaller competitors directly depend upon IDGC of Urals, OAO that adheres to the policy of consolidating all grids in its service area.
1 Conventional unit of equipment (CU) that characterizes property complex used for energy transmission
8 9 2.3. Our key events IDGC of Urals, ОАО and Russian German Energy Agency signed cooperation agreements on energy- 2010 efficient technologies.
Chelyabenergo branch put into beta testing new telemetric equipment. 2010 business report
The Company participated in the conference “Russian grids: current status, problems and roadmaps”. A new mimic diagram board was launched IDGC of Urals, ОАО ОАО “IDGC of Urals” in our Sverdlovenergo branch (Kirovgrad). created Operations Situation received a letter of Room for exchange of data thanks from the Governor on technological accidents, and Government of the Permenergo management and emergencies and natural Sverdlovsk region for social representatives from ZM discussed disasters. and charity activities in 2009 opportunities of new-age wire application. DGC of Urals, OAO presented its long-term energy efficiency program at INNOPROM-2010.
January March May July February April June August
The Government of the Perm region approved the completion of Permenergo investment program.
Annual General Shareholder Meeting took place.
IDGC of Urals, ОАО presented its projects during energy-saving meeting.
The Company demonstrated its energy The Government of the Sverdlovsk region
IDGC of Urals, ОАО saving laboratory at the exhibition signed an agreement with IDGC of Urals, dedicated to energy saving and efficiency. ОАО on cooperation in social, economic and ecological spheres within strategic regional Permenergo branch completed development. repair process on 4 large substations in Perm.
10 11 2011 2010 business report
The Government of the Perm region and IDGC of Urals, OAO signed agreement of cooperation within regional strategic All branches obtained 2010-2011 autumn - Chelyabenergo branch tests new incident A new mimic diagram board was launched development. winter certificates. indicators. in Permenergo branch.
Top management met with IDGC of Urals, ОАО began investors within a UBS Registrar Company Status, to implement automatic investment conference ZAO approved as the system of grid maintenance IDGC of Urals, ОАО (Moscow). Company’s registrar. and repair. successfully passed Quality Management System audit.
September November January March October December February
Permenergo and Perm State Technical University talked over mutual partnership within the context of the elaboration of Permenergo Innovative Development Program.
A new mimic diagram board was launched A new substation (90th anniversary of in Chelyabenergo (Chelyabinsk). GOELRO plan) was commissioned into operation.
Тop management met with investors within a VTB Capital investment conference (Moscow).
Top management met with investors within a Troika
IDGC of Urals, ОАО investment conference (Moscow).
IDGC of Urals, OAO was awarded with Energopromexpo-2010 gold medal.
A new PS 110 kV (Granitnaya) was put into operation in Chelyabinsk. 12 13 We implement our strategy of united energy area concluding rental contracts, acquiring grids and accepting into ownership, maintenance and exploitation no-man’s grids located on municipal territories. According to the strategy, in 2010 we significantly increased our local market share: we concluded 9 new rental contracts with municipal institutions and administrations. Generally, we concluded 33 rental contracts (over 36 964 c.u.) and took over 4 731.87 c.u. into possession in compliance with 22 contracts. In 2011 we plan to take over 6 000 c.u. into maintenance and exploitation.
Developing grids In our service area there are several agreements, concluded between RAO UES and local administrations, on the construction and update of electric network capacities till 2011 - the Sverdlovsk region: agreement #38 dd. 14.12.06, updated on 20.06.2008; the Chelyabinsk region: agreement #45 dd. 25.12.2006; the Perm region: agreement #30 dd. 21.09.2007. During the reported period, according to the agreements, we have IDGC of Urals, being one of the largest energy companies in the completed the following: Urals region, arranges the functioning of the grid complex in the Sverdlovsk, Chelyabinsk and Perm regions. According to the aims of energy sector reform our goals are: • Implementation of national policy on electric grid services, 2010 business report including energy saving and efficiency; The Perm region • Creation of conditions for efficient operations of local grid complex; Construction of 110 kV cable line “TES-13-Dolina” • Efficient exploitation and centralized grid management; Accomplishments: Design and survey work. Spent: RUR 8 • Implementation of united strategy in the sphere of investments and fund raising for reaching general 800 thous. goals of grid development; Aim: capacity increase due to the construction of perinatal • Elaboration and implementation of scientific and technical policy as well as implementation of new and cardio-centers as well as substation “Bereg” and 110 kV cutting-edge equipment and technologies; line “Soboli-Danilikha-TES-13”. • Trouble-free and reliable energy supply all over the service area and profit-making.
Construction of 110/35/6 kV substation “Plekhanova” Accomplishments: the purchase of high-voltage equipment (transformers, 110 kV switches), arrangement of pile field and foundation frame. Spent: RUR 163 214 thous. Aim: provision of consumer’s capacity demand (Perm, microdistict Danilikha), load redistribution from Therefore, our grid complex evolves in the following spheres: loaded substations “Yuzhnaya” and “Zapadnaya”
1 Connection of new consumers Construction of 110/6 kV substation “Sviyazeva” and 110 kV aerial line Aim: we facilitate the development of our local economy Spent: RUR 178 thous. (land lease). The contracts are currently cancelled; there is no construction on and transmission run-up. the site.
2 Construction of grid objects Aim: we liquidate power deficit zones (110-220 kV grid operating modes) and ensure reliable and trouble-free The Sverdlovsk region operations. Reconstruction of 35 kV cable line “Severka-Khrustalnaya” 3 Creation of united grid area Accomplishments: reconstruction of existing 35 kV aerial line, Aim: we ensure reliable supply and enable efficient mast and wire replacement. Commissioned: 7.26 km. regional grid development. Aim: Improvement of supply reliability in Severka and traction substation servicing the Sverdlovsk railroad and Severka ballast 4 Development of the Company’s industrial complex quarry. Aim: we support federal programs, national projects, regional programs and development plans. Construction of 110 kV substation “Belogorye” and 110 kV aerial line Commissioned: 20 MVA and 27.9 km. Spent: RUR 200 614 thous. Aim: Improvement of supply reliability and provision of possibilities for connection of “Gora Belaya” ski resort, industrial and agricultural consumers, boiler-houses in Uralets, Visim and Ust-Utka. Consolidating networks Objects: 110 kV aerial line “Yuzhnaya - Polevskaya”, overhangs Creation of united grid area using our industrial base gives the following advantages: to substation “Gvozdika” (Polevskoi), 110 kV aerial line • Liquidation of unfair regional gridcos ensuring more transparency to a regional tariff model and “Serov – Serovskaya GRES”, 110 kV aerial line “Serovskaya reducing tariff burden for consumers. GRES - Ferrosplav” (Serov) • Optimization of operations. Accomplishments: design and estimate documentation prepared, IDGC of Urals, ОАО • Reduction of operating expenses and tariffs of the Company. object reconstruction in progress. • Facilitation of isochronal preparation and approval of plans for developing energy system and public utilities. • Provision of a more detailed control over public load upsurge and timeliness of measures taken to reconfigure networks and to commission new capacities.
14 15 The Chelyabinsk region • Decrease of energy losses: voltage regulation in 6-10 kV networks, outcommission of underloaded Reconstruction of 110 kV aerial line “Shagol-Sosnovskaya-Isakovo” transformers, discharge of overloaded line segments, Accomplishments: creplacement of wire and overhead protection cable. Reconstructed: 14 km. and capacity enhancement due to reactive power Aim: enhancement of aerial line capacity totaling 31 MW. management. • Quality improvement of repair and maintenance Reconstruction of 110/6 kV substation “Zarechnaya” services, decrease of quantity and continuity of Accomplishments: replacement of a 10 MVA transformer with a 16 MVA one. shutdowns using modern technologies. Aim: provision of possibilities for connection of new consumers (Chelyabinsk). • Monitoring the performance of existing power equipment and implementation of modern methods Construction of 110 kV substation “Khamadullin” (Kazachya). and appliances for testing and diagnostics: thermal Accomplishments: project update, construction-assembly work are planned for 2011-2012. image control, burn-free methods for cable isolation control. Construction of 110/10 kV substation “Granitnaya”, overhangs of 110 kV aerial line. • Update and modernization of substations: enhancement Commissioned: 80 MVA and 0.5 km of a 110 kV aerial line. of installed transformer capacity. Aim: provision of alternative supply to consumers and connection of new consumers (Chelyabinsk). • Implementation of new-generation coupler devices and telematics, development of IT-technologies. • Renewal of special-purpose vehicle pool. • Usage of new information technologies in grid management (SAP 6.0). 2010 business report Capex on objects stipulated by the agreements and included in 2010 investment program:
2010 Target, RUR mln. 2010 Actual, RUR mln. Accomplished, % Permenergo 191,5 172,2 90 The following key principles are posited into our strategy of perspective grid evolution: Sverdlovenergo 154,2 206,3 134 1 Satisfaction of demand and creation of capacity reserve outstripping regional economy progress. Chelyabenergo 291,5 298,6 102 IDGC of Urals 637,2 677,1 106 2 Provision of high-quality and reliable energy supply.
3 Construction of new feed units. Object completion: 4 Discharge of current transits. Commissioned objects in Commissioned, km Commissioned, MVA 2010 5 Network spoke-ring structure. target actual target actual target actual 6 Limitations of 35 kV voltage application and transition of networks onto high voltage classes. Permenergo 3 0 31 0 75 0
Sverdlovenergo 2 2 19 35 42 20 7 Development of 220 kV grids for transmission and distribution of power from main 220(500) kV substations and power plants. Chelyabenergo 4 4 8 22 160 99 IDGC of Urals 9 6 58 57 277 119 8 Implementation of new modern equipment.
At present the Russian Ministry of Energy and local administrations approve our long-term RAB-based investment program for 2011-2016. According to the program, to construct and update 5 949 MVA and 15 204 km of various voltage classes during 2011-2016 we plan to spend RUR 80 676 mln., including RUR 53 487 mln. or 66% (technical update and reconstruction), RUR 16 699 mln. (new construction), RUR 6 922 mln. (discharge of liabilities according to connection contracts) and RUR 3 496 mln. (acquisition of grids).
Enhancing energy supply reliability Since current construction and update tempo is low, grids are ageing both physically and morally. Average depreciation of substations, cable and aerial lines is around 67%. To ensure reliable and sustainable grid performance we acknowledge the following measures as high-priority ones: • Overcome of fixed asset ageing tendency: replacement of morally and physically obsolete equipment and implementation of new cutting-edge technologies, equipment
IDGC of Urals, ОАО and materials with advanced durability and reliability.
16 17 Enhancing energy efficiency and providing innovation development Within the framework of federal program “Count, Save and Pay”, elaborated by the President commission for modernization and technological development of the Russian economy, we commenced to implement a pilot project on intellectual metering installation. One of the key aims is to work out measures for stimulating energy efficient consumption. The pilot project will generate united technical requirements to intellectual metering devices as well as determine efficiency and payback period for projects, similar to Smart Metering projects. The project will also provide an opportunity to update business processes related to commercial metering in gridcos and retail suppliers. Financing of the Smart Metering project is rolled into the Permenergo investment program (2011 – RUR 197 mln., 2012 – RUR 163 mln.)
In January 2010 Sverdlovenergo launched an energy-saving laboratory. It is aimed at elaboration and implementation of new energy-saving technologies. In May, 2010 Russian- German Energy Agency and IDGC of Urals signed a range of cooperation contracts. According to the contracts, foreign specialists will thoroughly examine our production units in terms of energy saving efficiency. The audit will end in a range of explicit arrangement and investment proposals aimed at energy efficiency boost. In 2011 we plan to work out and implement a program on innovation development covering scientific and R&D works as well as implementation of ready-to-use innovative products. The results of the program will be elaboration and preparation for subsequent mass usage of new equipment as well as cutting-edge and most efficient technologies.
Developing our personnel Taking into account targets set forth for gridcos and segment update finding solution to providing gridcos with highly-skilled workers will be a pivotal factor. Our HR policy is a perspective system of goals and aims based on basic values and aimed at long-term development. Keeping in mind our current HR policy the BoD approved the Program of Personnel Endorsement and Development worked out with a view to the current situation, sector and regional evolution and aimed at preservation, compensation and development of personnel potential. IDGC of Urals, ОАО
A power line on Glavny Prospekt 18 (Ekaterinburg, 1910) Overall quantity of 6-20/0.4 kV transformer substations, as of 01.01.2011, totals 28 046, installed capacity reaches 7 622 MVA.
TP 6-20/0.4 kV Total
Pole-mounted Package Indoor Quantity Capacity, МVА
Permenergo 157 9 395 1 600 11 152 2 990
Sverdlovenergo 2 021 4 914 888 7 823 1 996 4.1. Network and Equipment Chelyabenergo 1 743 5 355 1 973 9 071 2 636 IDGC of Urals 3 921 19 664 4 461 28 046 7 622 As of 01.01.2011 overall length of aerial lines (in lines) totals 114 348 km (in chains - 123 255 km), including: Equipment is repaired with regard to its real technical status following preliminary inspections, expert evaluations, technical diagnostics and control. Primary aim of the repairs is the restitution of equipment 2010 business report Voltage class 220 kV 110 kV 35 kV 10 kV 6 kV 0.4 kV TOTAL life by replacing aerials fuses for over-voltage limiter, oil-filled incoming lines of transformers and 110 Permenergo - 4 839 3 510 17 495 2 115 13 925 41 885 kV switchers for incoming lines with RIP-isolation and stick-pedestal insulator of disconnect switches, defect porcelain isolator for polymer ones, worn-out overhead protection cables for aluminum-steel Sverdlovenergo 27 7 994 1 921 12 403 1 643 12 055 36 042 conductors, compression and bolted fittings for spiral hooping, defective wood for wood steeped in Chelyabenergo - 5 380 2 714 14 800 1 143 12 385 36 421 pollution-free antiseptic.
IDGC of Urals 27 18 214 8 145 44 697 4 901 38 365 114 348
Overall length of cable lines, as of 01.01.2011, totals 4 944 km, including: During the reported period we laid a special emphasis on building renovation initiated after exploitation- educed defects. Completion of target repair volumes, defined by 2010 repair program, is 112%. Generally, during 2010 we repaired: Voltage class 110 kV 35 kV 10 kV 6 kV 0,4 kV TOTAL
Permenergo 12 81 230 1 209 814 2 345 2009 Actual 2010 Target 2010 Actual Completed, % Sverdlovenergo - 0,5 89 237 285 611 35 – 110 kV substations Chelyabenergo 1,4 12 717 406 850 1 987 PS overhaul, pcs 95 90 91 101%
IDGC of Urals 13 94 1 035 1 853 1 949 4 944 35-110 kV transformers 72 47 51 109% 35-110 kV switches 285 292 359 123%
As of 01.01.2011 the quantity of substations totals 1 024, installed capacity reaches 20 813 MVA. 6-10 kV switches 837 846 952 113%
0.4 – 110 kV lines PS 35 kV PS 110-220 kV Total 110 kV aerials, km 2 976 3 130 3 317 106%
Quantity Capacity, Quantity Capacity, Quantity Capacity, 35 kV aerials, km 1 216 1 321 1 397 106% MVA MVA MVA 6-10 kV aerials, km 2 847 3 026 3 321 110%
Permenergo 181 1 697 168 5 793 349 7 490 0.4 kV aerials, km 1 930 1 779 2 076 117%
Sverdlovenergo 103 719 267 6 467 370 7 186 0.4 – 110 kV cables, km 22,5 17,6 21,3 121%
IDGC of Urals, ОАО Chelyabenergo 124 1 010 181 5 127 305 6 137 Line clearing, ha 5 131 8 664 8 700 100%
IDGC of Urals 408 3 427 616 17 386 1 024 20 813 6-10/0.4 kV TP Transformer substations 2 218 1 765 2 303 130%
6-10 kV transformers 388 445 586 132%
20 21 Target grid repair in 2010 totaled RUR 1 180 821 thous. Real repair volume totaled RUR 1 228 575 4.2. Connection thous. (104%).
Requests submitted Contracts concluded Contracts executed Target Actual Completion, % Year pcs mW pcs mW pcs mW Permenergo 401 307 398 211 99 2008 14 136 2 050,61 10 620 769,47 7 933 152,06 Sverdlovenergo 443 756 482 364 109 2009 16 441 702,42 13 665 509,11 9 496 212,23 Chelyabenergo 334 981 347 044 104 2010 22 235 880,40 18 578 586,41 11 528 273,67 IDGC of Urals 1 180 821 1 228 575 104
Our expenses in terms of equipment breakdown are: Analysis of submitted requests Repair Permenergo 35-220 kV 35-220 kV 0.4-20 kV RS Other Total aerials substations
Year Requests submitted 2010 business report Permenergo 40 310 66 861 127 257 163 783 398 211 pcs MW Sverdlovenergo 61 192 76 609 123 947 220 616 482 364 2008 6 662 652,50 Chelyabenergo 39 916 67 349 119 569 120 210 347 044 2009 8 226 257,23 IDGC of Urals 141 418 210 819 370 773 505 565 1 228 575 2010 11 603 258,21
Our overall expenses in contracted form totaled RUR 501 857 thous. (non-contracted form – RUR 726 718 thous.) During the reported period there were 11 603 requests (+41% on 2009, +74% on 2008) with overall capacity 258.2 MW (+0.03% on 2009, -60.4% on 2008). There was an increase of requests submitted by natural persons with capacity up to 15 kW up 2009 Actual 2010 Target 2010 Actual to 8 619 requests (+36.2% on 2009, +97.84% on 2008) and increase of customer demand up to 76 MW Overall expenses 787 389 1 180 821 1 228 575 (+54.4% and +120.9% correspondingly). The dynamics of the requests submitted by other applicants is Non-contracted form, including: 455 801 713 430 726 718 characterized by request increase (+57% on 2009 and +29.2% on 2008) and customer capacity demand decrease (-12.5% and -76% correspondingly). These oppositely directed tendencies, in comparison to 2008, Wages 67 093 116 203 131 764 can be explained by decreasing number of “large” applicants (capacity demand more 750 kW at 6-110 kV Social tax 17 235 30 513 34 600 voltage). Besides, after the publication of Federal Law #261-FZ dd. 23.11.2009 “On energy saving and energy efficiency increase” many applicants were careful with capacity demand requesting the required Materials and spare parts 261 444 411 317 410 938 capacity without reserves. Other expenses 110 029 155 398 149 415
Contracted form 331 588 467 391 501 857 It should be noted that during the reported period, in comparison to 2009, there were almost no changes in the quantity of requests submitted by legal entities and individual entrepreneurs with capacity up to 15 kW (2 494 applications in 2010, 2 487 in 2009). However, in comparison to 2008 there was an increase of requests by 127.7% (1 095 applications in 2008). At the same time customer capacity demand in 2010 decreased by 0.6% on 2009 г. but it increased by 190% on 2008. The situation can be explained by the changes in legislation on connection: connection fee for legal entities and individual entrepreneurs with capacity up to 15 kW decreased down to RUR 550 including VAT. In 2008 such applicants tried to reduce connected capacity to minimize own connection expenses, in 2009 after changes in legislation these applicants began to demand more capacity within 15 kW.
Sverdlovenergo
Year Requests submitted
pcs MW
2008 3 308 1 059,43
2009 4 373 246,35
2010 6 244 335,00
During 2010 there were 6 244 requests (+43% on 2009, +89% on 2008) with overall capacity 335 MW (+36% and –68% correspondingly). There was an increase of requests submitted by natural persons with capacity up to 15 kW up to 4 993 requests (+61% on 2009, +276% on 2008) and increase of customer capacity demand up to 51.85 MW (+99% and +336% correspondingly). The dynamics of the requests IDGC of Urals, ОАО submitted by other applicants is characterized by request decrease by 2% on 2009 (+1% on 2008), as well as customer capacity demand increase by 29.0% on 2009 (-73% on 2008). It should be noted that during the reported period there was an increase of requests submitted by natural persons and legal entities with capacity up to 15 kW (+49% on 2009 and +182% on 2008).
22 23 Increase of requests from such applicants is mainly due to improvements in economy and priorities for small correspondingly). Overall contract value decreased (-14% and -70.4% correspondingly) and totaled RUR business (reduction of connection fee for legal entities and individual entrepreneurs requesting capacity 749.9 mln. VAT-free (2009 – RUR 855.4 mln. VAT-free, 2008 – RUR 2 534.2 mln. VAT-free). The up to 15 kW). At the same time there was an increase of capacity requested by the applicants (+81% increase in number of concluded contracts can be explained by the increase in requests submitted by on 2009 and +259% on 2008). In 2008 such applicants demanding capacity up to 15 kW. applicants tried to reduce connected capacity Decrease in overall contract value, in comparison to 2009, was caused by changes in consumer structure to minimize own connection expenses, in 2009 due to connection fee for legal entities and individual entrepreneurs requesting capacity up to 15 kW after changes in legislation these applicants totaling RUR 550. In comparison to 2008 the decrease can be explained by large-size individual contracts began to demand more capacity. concluded in 2008 with RZHD, Lukoil – Perm, UralOil and a range of large developers.
Chelyabenergo Sverdlovenergo Year Requests submitted
pcs MW Year Contracts concluded
2008 4 166 338,63 pcs MW
2009 3 842 198,84 2008 1 825 135,70 2010 business report
2010 4 388 287,19 2009 3 567 163,82
2010 5 308 194,44 In 2010 there were 4 388 requests (+14.2% on 2009 and +5.3% on 2008) with overall In 2010 5 308 contracts were concluded capacity 287.19 MW (+44.4% and -15.2% (+48.8% on 2009, +190% on 2008) with correspondingly). There was an increase of overall capacity 194.44 MW (+18% and requests submitted by natural persons with +44% correspondingly). Overall contract capacity up to 15 kW up to 2 682 requests value in 2010 increased on 2009 by 131% (+19.5% on 2009, +19.4% on 2008) and (-76% on 2008) and totaled RUR 506.16 mln. increase of customer demand up to 28.2 MW (2009 – 219.02 mln., 2008 – 2 129.07 mln.). (+70.9% and +80.9% correspondingly). The dynamics of the requests submitted by other Growth of concluded contracts and applicants is characterized by request increase by 6.8% on 2009 (-11.1% on 2008) and customer demand synchronous drop of contract value (in comparison to 2008) can be explained by increase by 42.0% on 2009 (-19.8% on 2008). increase of requests submitted by legal entities and natural persons with connected These oppositely directed tendencies, in comparison to 2008, can be explained by decreasing number of capacity up to 15 KW. “large” applicants (capacity demand more 750 kW at 6-110 kV voltage). Besides, after the publication of Federal Law #261-FZ dd. 23.11.2009 “On energy saving and energy efficiency increase” many applicants were careful with capacity demand requesting the required capacity without reserves. Chelyabenergo
It should be noted that during 2010 there were almost no changes in the quantity of requests submitted Year Contracts concluded by legal entities and individual entrepreneurs with capacity up to 15 kW. At the same time in 2010 pcs MW capacity demanded by such applicants increased (+40.6% on 2009, +83.7% on 2008). The situation can be explained by changes in legislation on connection. 2008 3 369 268,20 2009 3 274 121,58
2010 4 136 193,90
In 2010 4 136 contracts were concluded (+26.3% on 2009 and +22.8% on 2008) with Analysis of concluded contracts overall capacity 193.89 MW (+59.5% and -27.7% correspondingly). Overall contract value decreased (-26.9% and -90.5% correspondingly) and totaled RUR 100.55 mln. (2009 – RUR 137.6 mln., 2008 – RUR Permenergo 1 063.26 mln.). Growth of concluded contracts was caused by increase of requests submitted by applicants demanding Year Contracts concluded capacity up to 15 kW. Decrease of overall contract value is due to the fact that the value of each contract is determined individually according to the Decree of State Committee United Tariff Body of pcs MW the Chelyabinsk region. 2008 5 426 365,57
2009 6 824 223,71
IDGC of Urals, ОАО 2010 9 134 198,07
During the reported period 9 134 contracts were concluded (+33.9% on 2009, +68.3% on 2008) with overall capacity 198.07 MW (-11.5% and -45.8%
24 25 Analysis of executed contracts Industry analysis Permenergo Permenergo In 2010 there was an increase in submitted requests (+41% on 2009, +74% on 2008). The following industries showed an increase (in comparison to 2009 and 2008): agriculture (by 14 times and by 2 times), Year Contracts executed, pcs Contracts executed, MW budget institutions (+74% and +7%), trade industry, catering, storage facilities and logistics (by 5 times 2008 4 792 78,52 and + 8%), other commercial companies (by 6 times and 3 times), other industries (by 8 times and 3 times). 2009 5 780 144,26 At the same time the following industries showed a decrease: residential development (-25% and -78%), machine-building and metal work (-100% and -100%), building material industry (-100% and -100%). 2010 6 919 101,54 Sverdlovenergo In 2010 6 919 contracts were executed (+19.7% on 2009, +44.4% on 2008) with overall capacity 101.5 During 2010 there was an increase in submitted requests (+43% on 2009, +89% on 2008). The following MW (-29.6% and +29.3% correspondingly). Connected capacity volume in 2009 is higher, because in 2009 industries showed an increase (in comparison to 2009 and 2008): commercial companies (+44% and we executed a large-size individual contract with RZHD. In comparison to 2008, during the reported +56%), building material industry (+50% and +67%), trade industry, catering, storage facilities and period there was a significant increase in connected applicants. This growth mainly was caused by increase logistics (67% and +113%), residential development (+153% and +485%), transport (+34% and +105%), of connections for applicants demanding capacity up to 15 kW. budget institutions (+42% and +337%). At the same time the following industries showed a decrease: fuel, chemical and petrochemical industries (-16% and -20%), textile, food-processing, flour-and-cereals and formula feed industries (-40% and -25%), agriculture (-25% and -27%). Sverdlovenergo 2010 business report Chelyabenergo In 2010 there was an increase in submitted requests (+14.2% on 2009, +5.3% on 2008). The following Year Contracts executed, pcs Contracts executed, MW industries demonstrated a decrease of submitted requests (in comparison to 2009 and 2008): textile, food- 2008 1 305 27,67 processing, flour-and-cereals and formula feed industries (-67% and -75%), transport (-37% and -46%), IT and communications (-41% and -59%), public utilities (-25% and -68%), budget institutions (-28% and -5%). 2009 1 974 30,34 At the same time there was an increase in the following industries: building material industry (+900% 2010 2 364 125,82 and +300%), agriculture (0%, +24%), commercial companies (+38% and +27%), other industries (+51% and +22%). In 2010 2 364 contracts were executed (+19.7% on 2009, +81.1% on 2008) with overall capacity 125.82 MW (+314.7% and +354.6%). A considerable growth of connected capacity was caused by the execution of contracts with Terra Group, ОАО (10.1 MW), Urals Pig Complex, ZАО (3 MW and 1.6 MW), NPK Analysis of cancelled contracts Uralvagonzavod, ОАО (6 MW), Sukholozhsktsement, ОАО (34.85 MW), Kamensk-Uralski Metallurgy Plant, ОАО (12.5 MW), Rosenergoatom Beloyarskaya AES, ОАО (12 MW), Pervouralsk Novotrubnyi Permenergo Zavod, ОАО (16 MW), Uralgidromed, ОАО (5 MW). In 2010 applicants cancelled 255 contracts (73.8 MW), contract reimbursement totaled RUR 23 045 thous., including VAT (2009 - 165 25.5 MW contracts, reimbursement – RUR 63 437 thous. including VAT, 2008 - 134 31.5 MW contracts, reimbursement – RUR 7 123 thous. including VAT). Cash inflow: Chelyabenergo 2010 – RUR 746.9 mln. (no VAT), 2009 – RUR 602.1 mln. (no VAT), 2008 – RUR 949.3 mln. (no VAT). Year Contracts executed, pcs Contracts executed, MW
2008 1 836 45,87 Sverdlovenergo During 2010 applicants cancelled 253 contracts, overall value totaling RUR 100.582 mln. including VAT 2009 1 742 37,63 (2009 - 68 contracts, overall value totaling RUR 22.07 mln., 2008 - 2 contracts, overall value totaling 2010 2 245 46,31 RUR 17.85 mln. including VAT). Cash inflow: 2010 – RUR 260.2 mln (no VAT), 2009 – RUR 165.2 mln. (no VAT), 2008 – RUR 1 053.0 mln. (no VAT).
In 2010 2 245 contracts were executed (+28.9% on 2009, +22.3% on 2008) with overall capacity 46.31 Chelyabenergo MW (+23.1% and +1.0% correspondingly). Connected capacity slightly exceeded 2008 results. This shows During 2010 applicants cancelled 188 contracts (85.8 MW), contract reimbursement totaled RUR 5 175.8 that we return to pre-depression connection levels. At the same time the quantity of connected applicants thous., no VAT (2009 - 168 16.5 MW contracts, reimbursement – RUR 7 201.8 thous., no VAT, 2008 grew significantly. This growth is due to the increase in connection of applicants with capacity up to 15 - 48 7.2 MW contracts, reimbursement – RUR 124.7 thous, no VAT). Cash inflow: 2010 – RUR 90.28 kW. mln. (no VAT), 2009 – RUR 132.98 mln. (no VAT), 2008 – RUR 283.6 mln. (no VAT). IDGC of Urals, ОАО
26 27 Connection revenues analysis
Permenergo In 2010 revenues totaled RUR 549.5 mln. (no VAT), revenues decreased by -19.7% on 2009 (RUR 684.4 mln., no VAT), in comparison to 2008 revenues 4.3. Energy trans- increased by +7.2% (RUR 512.3 mln., no VAT). Decrease of revenues is due mission to putting-off of commissioning a large- size individual project for 2011. Transmission revenues Sverdlovenergo During the reported period connection Approved business plan Actual revenues totaled RUR 823.359 mln., no VAT. Revenues increased by 1 216% on 2009 (RUR 62.52 mln., no VAT), +851% on 2008 (RUR 86.5 mln. no VAT). This outstanding growth was due to connection Productive Revenues, Average Productive Revenues, Average of the following large consumers: Terra Group, ОАО (RUR 55 901.93 thous., no VAT), Uralski Pig supply, mln. including tariff (no supply, mln. including tariff (no 2010 business report Complex, ZАО (RUR 72 017.5 thous., no VAT and RUR 12 129.9 thous., no VAT), Sukholozhsktsement, kW/h VAT, RUR VAT), RUR kW/h VAT, RUR VAT), RUR mln. kW/h mln. kW/h ОАО (RUR 600 mln., no VAT), Rosenergoatom Beloyarskaya AES. OAO (RUR 3 394.11 thous., no VAT), Pervouralsk Novotrubnyi Zavod, ОАО (RUR 12 893.745 thous., no VAT), Uralgidromed, ОАО Permenergo 16 749 13 960 0,71 17 164 14 175 0,70 (RUR 5 664.442 thous., no VAT). Sverdlovenergo 33 787 25 834 0,65 33 965 26 670 0,67 Chelyabenergo Chelyabenergo 22 541 17 271 0,65 19 757 15 516 0,67 In 2010 revenues totaled RUR 312.9 mln., no VAT. Revenues increased by 37.7% on 2009 (RUR 227.21 IDGC of Urals 73 077 57 065 0,66 70 887 56 361 0,67 mln., no VAT), revenues decreased by 1.9% on 2008 (RUR 319.15 mln., no VAT). The increase was due to the fact that in 2010 we executed several contracts (commissioning of objects stipulated by the contracts was put off for 2010). Transmission revenues decreased by RUR 705 mln., including VAT (-1.2%) and was caused by the transition of ChEMK, ОАО to FSK UES, ОАО according to the resolution of Moscow Federal Forecasts on connection revenues in 2011-2015 Arbitration Court dd. 29.11.2010 г. on case #А40-86667/08-134-679.
2011 F 2012 F 2013 F 2014 F 2015 F Permenergo, RUR mln. 755 593 490 490 490 2010 Operating results Sverdlovenergo, RUR mln. 288 234 156 365 100
Chelyabenergo, RUR mln. 263 230 256 268 276 Energy supply, mln. Productive supply, mln. Losses kW/h kW/h Mln. kW/h % Permenergo Permenergo 19 893,387 17 679,310 2 214,076 11,13 Bearing in mind that 2011 connection tariff is retained and economy stabilizes, 5-year revenues are Sverdlovenergo 36 871,004 34 673,673 2 197,331 5,96 forecast at RUR 490 mln. per annum. Besides, in 2011 we’ll execute an individual contract with overall value totaling RUR 255 mln. Three large-size individual contracts with overall value RUR 103.3 mln. Chelyabenergo 21 617,237 19 695,402 1 921,835 8,89 (no VAT) will be executed in 2012. IDGC of Urals 78 381,628 72 048,385 6 333,243 8,08 Sverdlovenergo Connection revenues in 2011-2015 are forecast on the basis of connected capacity and contracts concluded Energy transmission, mln. kW/h in 2007-2010. In 2011 we plan to execute 16 large contracts being a part of our investment program. 2009* 2010 Change Chelyabenergo mln. kW/h % Revenue decrease in 2011-2015, in comparison to 2010, is due to changes in Russian legislation on connection (Federal Law #35-fz dd. 26.03.2003 “On Energy Sector”). According to the legislation, since Permenergo 16 221,683 17 164,341 942,659 5,81% January 01, 2011 no investment component, related to current infrastructure development, should be Sverdlovenergo 31 023,830 33 964,940 2 941,110 9,48% included into connection fee. This will lead to the decrease of connection contract value. Chelyabenergo (no energy 17 822,893 19 757,332 1 934,439 10,85% consumption by ChEMK)
IDGC of Urals (no energy 65 068,405 70 886,614 5 818,209 8,94% consumption by ChEMK)
*no energy consumption by ChEMK, OAO.
During the reported period energy transmission totaled 70 887 mln. kW/h (+5 818 mln. kW/h or +8.94% on 2009). IDGC of Urals, ОАО
28 29 Energy losses Our energy-saving program includes energy saving and efficiency program, metering development/ 2009 Actual 2010 Actual Change update program and program stipulating measures to increase industrial and commercial consumption mln. kW/h % mln. kW/h % mln. kW/h % resource efficiency. It should be noted that the program has not included technical and organizational
Permenergo 2 254,166 11,87 2 214,076 11,13 -147,099 -0,74 measures that were taken annually during current operations, their implementation having no influence on losses in comparison to the last reported period. In 2010 we expected the following effects from the Sverdlovenergo 2 305,626 6,68 2 197,331 5,96 -265,929 -0,72 programs: Chelyabenergo 1 896,832 9,65 1 921,835 8,89 -163,256 -0,76
IDGC of Urals 6 456,624 8,82 6 333,243 8,08 -583,381 -0,74 Target Actual
mln. kW/h RUR mln mln. kW/h RUR mln
Actual losses totaled 6 333 mln. kW/h (8.08% of energy supply). In comparison to 2009, energy supply Metering development/ update program 51,62 71,43 51,62 71,44 increased by 7.12% and losses decreased by 583 mln. kW/h (0.74% on 2010). 2010 loss target was 8.17%, actual losses totaled 8.08% (-0.09%). Program stipulating measures to increase industrial and 0,05 0,10 0,05 0,10 commercial consumption resource efficiency
Overall effect 51,68 71,53 51,68 71,54 2010 target 2010 actual Change
mln. kW/h % mln. kW/h % mln. kW/h % 2010 business report As of 2010 the completion of programs totals 100%. Expenses totaled RUR 156.84 mln. (no VAT). Permenergo 2 163,280 12,06 2 214,076 11,13 -185,066 -0,93% Financing sources for energy-saving program were investment program (RUR 101.65 mln.) and repair Sverdlovenergo 2 056,427 5,96 2 197,331 5,96 -1,374 -0,004% program (RUR 55.19 mln.). Chelyabenergo 1 736,326 8,32 1 921,835 8,89* 124,131 0,57%
IDGC of Urals 5 956,034 8,13 6 333,243 8,08* -35,536 -0,05%
It should be noted that 2010 actual figures are given without ChEMK consumption. When tariffs for Energy resources consumed by the Company in 2010 are as 2010 were approved by the regulators, ChEMK consumption was taken into consideration. In case we had follows: “retained” the consumer, the losses would have totaled 7.78% (in Chelyabenergo – 7.8%). This is by 0.35% lower than the losses calculated in tariffs (Chelyabenergo – by 0.52%). Measurement Target 2010 Actual 2010 unit
Losses for 2010, approved by the BoD in our 2010 business plan, totaled RUR 6 477.214 mln. kW/h Energy resources supplied RUR, thous. 332 482,1 312 651,7 according to contracts (8.17%). As of 2010 actual losses were lower than the losses stipulated by the business plan by 73.166 (no VAT) mln. kW/h (0.09%). Electric energy RUR thous. 263 377,2 246 639,3
Thous. 96 162,1 88 081,6 2010 Target 2010 Actual Change kW/h mln. kW/h % mln. kW/h % mln. kW/h % Thermal energy RUR thous. 63 860,9 60 189,0 Permenergo 2 250,745 11,52 2 214,076 11,13 -77,843 -0,39 Gcal 62 868,0 59 618,0 Sverdlovenergo 2 309,957 6,52 2 197,331 5,96 -207,638 -0,56 Cold-water supply RUR thous. 5 067,6 5 660,0 Chelyabenergo 1 916,512 7,89 1 921,835 8,89 216,739 1,00 Thous. m3 198,4 220,1 IDGC of Urals 6 477,214 8,17 6 333,243 8,08 -73,166 -0,09 Hot-water supply RUR thous. 8,4 8,4
Thous. m3 0,7 0,7
Natural gas RUR thous. 168,0 155,0 Energy saving and efficiency Thous. m3 41,0 40,0 Petrol RUR thous. - 6 657,062 In the sphere of energy saving and efficiency, according to energy-saving programs, the following tons - 301,39 indicators are our targets: energy losses, resources for economic needs, metering for economic needs, metering for retail market. As of 2010 the target indicators are: Diesel fuel RUR thous. - 2 932,692 tons - 137,35
Target 2010 Actual 2010 Oils RUR thous. - 4 802,567
Energy losses RUR mln., including VAT 12 956,63 12 736,45 tons - 71,3 Energy losses mln. kW/h 6 477,21 6 333,24 Energy losses % of energy supply 8,17 8,08 As a priority the Company takes measures aimed at optimization (decrease) of energy losses. Due to Resources for economic needs RUR mln., including VAT 332,48 312,65 loss optimizing measures overall effect totaled 583.381 mln. kW/h. Measures aimed at the decrease of non-technical losses have the effect of 116.231 mln. kW/h. Decrease of technical losses by organization Metering for economic needs, % 100 99,7 measures totaled 20.31 mln. kW/h (technical measures – 4.19 mln. kW/h). overall economic effect
IDGC of Urals, ОАО Metering for retail market, % 7,73 7,73 reached RUR 295.846 mln., expenses totaled RUR 94.98 mln. (expenses are disclosed according to the Program on the Perspective Development of Retail Market Metering System). At the same time average pay-back period is 11.5 years. 2010 loss decreasing target was accomplished by 100%. Indicator “Metering for economic needs” was not reached, because overhaul completion date (including reconstruction of heating system and heating metering in a Chelyabenergo office building) was put off to 15.09.2011.
30 31 4.4. Our Investments Loss decrease, mln. kW/h Measures on decreasing technical energy losses, including 69,44 Our Capex in dynamics is positive. 2010 investments exceed 2009 ones by RUR 1 096 mln. (or 32%) Replacement of wires 3,041 due to the necessity for implementing grid update strategy with a view to increase reliability, to provide continuity of service, to increase the quality of energy transmission by changing obsolete equipment. Replacement of overloaded/underloaded transformers 0,8668
Disconnection of transformers at substations with 2 transformers and 0,476 During 2010 we fulfilled a considerable amount of work in terms of constructing new objects, update and transformers with seasonal loading reconstruction of existing grid objects. Phase load balancing in 0.4 kV networks 0,183 Key Capex directions in 2010:
Optimization of load balancing by the construction of substations and lines, 0,1348 including transition to a higher tension level
Subdivision of 0.38-35 kV lines 0,1533
Other organizational measures 19,65
Measures on decreasing non-technical energy losses 116,231
During 2010 non-technical losses were reduced by 116.231 mln. kW/h due to the implementation of 2010 business report Metering Update Program and execution of tasks stipulated by transmission contracts.
As of 31.12.2010 debts under litigation totaled RUR 945 mln. including VAT. The main cause of debts under litigation is disagreements between the Company and a consumer over the amount of capacity and energy presented for payment. We are preparing complaints on SUAL-UAZ debts, in December 2010 we have written off ChEMK debt (RUR 2 855 mln).
Receivables Payables
Consumer debt at the Consumer debt at the Gridco’s debt (loss Gridco’s debt (loss beginning of the year, end of the year, RUR compensation) at the compensation) at the RUR mln, including mln, including VAT beginning of the year, end of the year, RUR VAT RUR mln., including mln., including VAT VAT • Prevention of grid ageing (maintenance of equipment performance characteristics within limits of Total Under Total Under Reflected Non- Reflected Non- permitted values); litigation litigation in reflected in reflected • New construction (removal of restrictions on connection in energy-deficient territories and creation of accounts in accounts in accounts accounts new main substations); • Development of energy transmission services (transmitted energy increase by connecting new consumers); Permenergo 476 109 415 1 86 0 64 0 • Provision of grid reliability (continuity of required energy transmission services). Sverdlovenergo 3 584 394 4 086 944 406 0 533 0
Chelyabenergo 2 409 413 899 0 602 0 486 0 CAPEX, RUR mln. including:
IDGC of Urals 6 470 916 5 400 945 1 093 0 1 082 0 Update and New construction Other (acquisition of reconstruction fixed assets)
target actual % target actual % target actual % target actual % Debts under litigation are settled in judicial proceedings. Main debts under litigation in Sverdlovenergo belong to SUAL UAZ, ОАО (RUR 841 mln.), there are court proceedings on coercion of FSK UES, Sverdlovenergo 1189 1144 96 782 728 93 284 311 109 122 106 87 OAO to conclude transmission contract with SUAL UAZ, OAO. Permenergo 2692 2548 95 1409 1302 92 1 227 1 162 95 57 84 148
Energy transmission services rendered to FSK, debts to FSK, including “last mile” contracts, are as Chelyabenergo 840 862 103 452 447 99 321 328 102 93 114 122 follows: HQ 14 8 57 11 6 54 3 2 66 0 0 -
IDGC of Urals 4735 4562 96 2654 2482 94 1835 1802 98 272 304 112 Total Permenergo Sverdlovenergo Chelyabenergo
Capacity (MW) 9 809 2 110 5 014 2 685
Energy transmitted (mln. kW/h) 1 634 201 414 942 869 644 349 615 Target Actual Completed, % Overall price (RUR mln, including VAT): 12 907 2 834 6 669 3 405 Fixed Capacity Increase Fixed Capacity Increase Fixed Capacity Increase assets assets assets Loss compensation (RUR mln.) 2 024 501 1 078 445 put into installed of capacity put into installed of capacity put into installed of capacity operation, operation, operation, installed installed installed RUR RUR Network maintenance (RUR mln.) 12 204 2 625 6 239 3 340 RUR mln. mln. mln. km MVA km MVA km MVA km MVA km MVA km MVA Load losses (RUR mln.) 1 321 293 648 381 Sverdlovenergo 1491 671 236 604 215 1502 721 248 607 231 101 108 105 100 108
Permenergo 2551 374 28 171 11 2689 411 55 193 36 105 110 200 113 336 FSK services are paid according to the concluded contract, there are no overdue debts, including debts according to “last mile” contracts. Chelyabenergo 987 532 239 494 209 1082 538 366 512 324 110 101 153 104 155 IDGC of Urals, ОАО HQ 11 0 0 0 0 9 0 0 0 0 81 - - - -
IDGC of Urals 5040 1577 503 1270 435 5282 1670 669 1312 591 105 106 133 103 136
32 33 Actual 2010 Capex totaled RUR 4 562 mln. The structure of financing resources for our 2010 investment program is as follows: (96% от targets). Completion of technical update and reconstruction, including connection, was SE PE ChE EO Total 94% (target – RUR 2 654 mln., actual – RUR 2 482 mln.). Deviation from the Investment resources, total, RUR mln, no VAT 1144 2548 862 8 4562 target figures was due to technological limits Depreciation of the reported year 915 839 517 8 2279 and lack of disconnections for update and reconstruction as well as due to decrease of Unused depreciation of the past years 0 0 38 0 38 estimated cost after tenders. Completion of Non-distributed profit of the past years 0 288 26 0 314 new construction and expansion of existing Profit of the reported year used in investment program of 204 367 36 0 567 objects, including connection, was 98% (target the reported year, including – RUR 1 835 mln., actual – RUR 1 802 mln.) caused by decrease of estimated cost Renovation included into tariffs 74 0 0 0 74 after tenders. The completion of other works, Sale of core non-current assets 0 0 0 0 0 including acquisition of fixed assets, totaled Sale of non-core non-current assets 0 0 0 0 0 RUR 304 mln. (112% of target figures). Deviation from target figures was due to Connection fee 90 367 36 0 493 Depreciation of the reported year
disposition of property complexes belonging to Internal resources Other internal resources 66 23 81 0 171 2010 business report other companies to our balance sheet upon a Budget resources (federal, municipal) 0 0 0 0 0 court decision as well as acquisition of grids to consolidate network assets. Borrowed funds (with interest) 0 600 0 0 600 Borrowed funds (additional issue) 0 0 0 0 0 The most important grid objects, built and Connection fee 0 431 163 0 594 External commissioned during 2010, are: resources • 110/10 kV substation “Granitnaya” Other external resources, including participation interest in 0 0 0 0 0 (Chelyabinsk, construction), construction at the expense of other resources • 10 kV cable line (Chelyabinsk, construction), • 110/10/6 kV substation “Zarechnaya” During the creation of this business report our long-term 2011-2015 investment program was updated. (Chelyabinsk, reconstruction), According to Russian Government Decree #977 dd. 01.12.2009 the above-mentioned programs were • 110 kV aerial line “Shagol-Sosnovskaya- submitted for approval to the local executive bodies according to the following parameters: Isakovo” (the Chelyabinsk region, Sosnovsky district, reconstruction), • 110/6 kV substation “Gorod-2” (the Chelyabinsk region, Miass, reconstruction), RUR mln, no VAT • 110/35/6 kV substation “Krasnouralsk” (the Sverdlovsk region, Krasnouralsk, reconstruction), 2010 2011 2012 2013 • 110 kv “Belogorye” and 110 kV aerial line (the Sverdlovsk region, Nizhni Tagil, Uralets village, construction), Sverdlovenergo 1 144 2 845 4 267 5 617 • overhang of 110 kV aerial line “Serovskaya GRES-Krasnoturinsk-SGRES-Serov” (the Sverdlovsk region, Serov). Update and reconstruction 728 1 815 2 982 4 326 New construction 311 486 603 708 During the reported period we commenced to construct the following objects: • 110/6 kV substations “Iva” (Perm, microdistrict “Kostarevo”, commissioning is planned in 2011), Other 106 543 683 583 • 110/35/6 kV substation “Plekhanova” (Perm, commissioning is planned in 2011). Permenergo 2 548 2 942 4 058 5 111
Update and reconstruction 1 302 1 643 2 211 2 533
New construction 1 162 535 1 117 1 844
Other 84 765 730 734
Chelyabenergo 862 1 969 2 716 3 377
Update and reconstruction 447 1 279 1 703 2 324
New construction 328 661 749 886
Other 87 29 264 167
HQ 8 29 186 104
Update and reconstruction 6 9 15 16
New construction 2 15 172 89
Other 0 5 0 0
IDGC of Urals 4 562 7 786 11 228 14 209
Update and reconstruction 2 482 4 747 6 911 9 198 IDGC of Urals, ОАО New construction 1 802 1 697 2 640 3 527
Other 277 1 342 1 676 1 484
34 35 4.5. Our Tariffs
According to the Russian legislation (FST Decree #20-e/2 dd. 06.08.2004) energy transmission tariffs are set forth as united for all consumers of one voltage class, located on the constituent territory of the federation and belonging to the same group (category), irrespective to which grids they are connected to. We are the holder of united (boiler) grid tariffs in the Sverdlovsk, Chelyabinsk and Perm regions. “Boiler” tariffs:
• Are calculated from payments for energy transmission, according to the contracts, forwarded to the only grid company – IDGC of Urals, ОАО; • Enter expenses for energy transmission by FSK and all grids located in the region; • Are applied for the settlement of payments between IDGC of Urals and providers of last resort, utility companies, retail suppliers and other customers, being wholesale market participants or those who concluded purchase-and-sale contracts with generators or other energy suppliers.
2008 2009 2009/ 2010 2010/ 2011 2011/ 2008 2009 2010
Permenergo 2010 business report Average transmission tariff, Copecks KW/h 49.1 58.5 19.2% 76.1 30.1% 92.1 21.0%
Maintenance rate, Copecks KW/h 18.7 25.4 35.6% 34.6 36.3% 41.9 21.1%
Sverdlovenergo
Average transmission tariff, Copecks KW/h 44.7 54.5 21.8% 72.3 32.7% 85.9 18.9%
Maintenance rate, Copecks KW/h 12.6 13.8 9.6% 19.5 41.1% 21.4 9.8% The diagram demonstrates our target Capex in 2011-2013. We forecast the growth of Capex that is due to investment resources increase, including transition to RAB-tariffs. Chelyabenergo Average transmission tariff, Copecks KW/h 40.8 45.9 12.6% 74.0 61.3% 77.5 4.7%
The table contains the key resources of our 2010-2013 investment program (submitted for the approval Maintenance rate,Copecks KW/h 14.1 16.9 19.7% 23.9 41.1% 28.2 18.2% by the local executive bodies. IDGC of Urals
2010 2011 2012* 2013* IDGC Productive supply, Mln kW/h 79 852 82 225 3.0% 69 339 -15.7% 71 973 3.8%
Total: 4 562 7 786 11 228 14 209 4562 Total required gross revenues, RUR mln. 35 571 43 462 22.2% 51 179 17.8% 61 433 20.0%
Depreciation of the reported year 2 279 2 530 2 793 3 148 2279 Average transmission tariff, Copecks KW/h 44.5 52.9 18.7% 73.8 39.6% 85.4 15.6%
Unused depreciation of the past years 38 0 0 0 38 Required gross revenues for maintenance, 11 573 14 360 24.1% 17 278 20.3% 20 669 19.6%
Non-distributed profit of the past years 314 5 0 0 314 RUR mln
Profit of the reported year used in investment program of 567 1 293 5 726 8 130 567 Maintenance rate, Copecks KW/h 14.5 17.5 20.5% 24.9 42.7% 28.7 15.2% the reported year, including
Renovation included into tariffs 74 1 293 5 726 8 130 74 If we view average transmission tariffs in dynamics, we shall see a positive trend. During the reported Sale of core non-current assets 0 0 0 0 0 period average tariff increase was rather high and totaled 39.6% on 2009. This significant growth was
Internal resources due to recession that resulted in the decrease of productive supply (-15.7% on 2009). At the same time Sale of non-core non-current assets 0 0 0 0 0 required gross revenues (RGR) grew by 17.8%. In 2011 transmission tariff grew by 15.6% while RGR Connection fee 493 0 0 0 493 grew by 20% on 2010. Other internal resources 171 0 0 0 171 Our average maintenance rate in 2010 grew by 42.7%, in 2011 – by 15.2% on the previous year. Our total Budget resources (federal, municipal) 0 0 0 0 0 RGR for maintenance in 2011 is calculated and approved by RAB method, the increase on 2010 totaling Borrowed funds (with interest) 600 3 039 1 785 2 168 600 19.6%.
Borrowed funds (additional issue) 0 0 0 0 0
Connection fee 594 918 924 762 594 External resources 2008 2009 2009/ 2010 2010/ 2011 2011/ Other external resources, including participation interest in 0 0 0 0 0 2008 2009 2010 construction at the expense of other resources IDGC of Urals, OAO
*forecast prices RGR for maintenance: , RUR mln. 11 573 14 360 24.1% 17 278 20.3% 20 669 19.6%
Operating expenses, RUR mln. 8 388 9 820 17.1% 11 691 19.1% 13 340 14.1%
Share in maintenance, % 72% 68% -5.7% 68% -1.0% 65% -4.6%
Investment expenses, RUR mln. 3 184 4 540 42.6% 5 587 23.0% 7 328 31.2%
Share in maintenance, % 28% 32% 14.9% 32% 2.3% 35% 9.7% IDGC of Urals, ОАО
36 37 The key factor that determined the increase of RGR for maintenance is investment component growth. If Connection tariffs. investment expenses (depreciation, profit capex) in 2011 increase up to RUR 7 328 mln. (+31.2% on 2010), there is an increase of the share in maintenance by 9.7%. Generally, in 2011 the growth of expenses for Sverdlovenergo maintenance, approved by the regulators, totaled 19.6% on 2010 (in 2010 – 20.3% on 2009). At the same time 2010 average inflation rate totaled 8.8%, 2011 target forecast provided by the Ministry of Economic According to decree of Sverdlovsk REK #16-PK dd. 11.02.2009, we had the following connection fees Development is 7.9%. till April 16, 2010:
RAB-regulation Tariff zones
Permenergo was transited to RAB on 01.01.2009, Sverdlovenergo and Chelyabenergo were transited on Zone 1 Zone 2 Zone 3 01.01.2011. Long-term regulation parameters, approved for our branches prior to 01.01.2011, are presented Voltage class 0.4 kV 6-10 kV 0,4 kV 6–10kV 0,4 kV 6–10 kV below: Connection rates, RUR/kW, no VAT 8 933 12 847 2 792 8 868 1 685 6 143 Permenergo On April 16, 2010 a new decree (#35-PK dd. 07.04.2010) approved the following connection rates: 2009 2010 2011
Basic operating expenses, RUR mln. 3 889 5 028 5 363 Tariff zones 2010 business report Operating cost index, % 1% 1% 1% Zone 1 and 2 Zone 3
iRAB, RUR mln. 21 011 - - Connected capacity, kW 15-100 100–8500 15–100 100–8500
Net capital, RUR mln. 455 455 455 Connection rates, RUR/kW, no VAT 5 471 10 606 1 896 5 731
Rate of return on old capital, % 6% 9% 12%
Rate of return on new capital, % 12% 12% 12% On December 15, 2010 a new decree (#161-PK) approved new connection rates, calculated under recent changes in Federal Law #35-FZ dd. 26.03.2003 “On Energy Sector”, coming into force since January Payback period, years 35 35 35 01, 2011.
Sverdlovenergo Tariff group
Group 1 and 2 Group 3 2011 2012 2013 2014 2015 Connected capacity, kW 15-100 100–4500 15–100 100–4500 Basic operating expenses, RUR mln. 2 816 2 955 3 088 3 236 3 387 Connection rates, RUR/kW, no VAT 3 793 4 585 1 926 1 779 Operating cost index, % 1% 1% 1% 1% 1%
iRAB, RUR mln. 20 779 21903 24321 28 084 33037
Net capital, RUR mln. 1 117 1 447 1 700 1 844 1 986 Permenergo
Rate of return on old capital, % 6% 9% 11% 11% 11% During the reported period the following connection rates, approved by decree of Perm REK #10-e Rate of return on new capital, % 12% 12% 11% 11% 11% dd.28.04.2009, were in effect: Payback period, years 35 35 35 35 35 Voltage class Connected capacity Basic connection rates, RUR/kW (no VAT) Chelyabenergo Supply reliability category III category II category I category
2011 2012 2013 2014 2015 Low voltage (0.4 Over 15 up to 30 kW inclusive 11 257 14 633 16 322 kV) Basic operating expenses, RUR mln. 2 816 2 955 3 088 3 236 3 387 Over 30 kW up to 100 kW inclusive 9 812 12 755 14 226
Operating cost index, % 1% 1% 1% 1% 1% Over 100 kW up to 750 kW inclusive 10 338 13 438 14 990
iRAB, RUR mln. 20 779 21903 24321 28 084 33037 Average voltage II Up to 100 kW inclusive 9 606 12 487 13 928 (6-10 kV) Net capital, RUR mln. 1 117 1 447 1 700 1 844 1 986 Over 100 kW up to 750 kW inclusive 9 000 11 700 13 050
Rate of return on old capital, % 6% 9% 11% 11% 11% Over 750 kW 8 032 10 441 11 646 Rate of return on new capital, % 12% 12% 11% 11% 11% Payback period, years 35 35 35 35 35 There are also multiplying and reduction factors in supply zones (from 0.6 to 1.31).
Our large-scale long-term investment program is approved as follows.
2010 2011 2012 2013 2014 2015
Total investment, RUR mln. 4 440 6 811 10 118 13 342 15 947 17 562
IDGC of Urals, ОАО Growth, % - 53,4 48,56 31,86 19,5 10,13
Investment influx is required for connection and update of worn-out equipment, construction of new objects and reconstruction of obsolete ones.
38 39 January 02, 2011 decree #97-e dd. December 28, 2010 introduced new connection rates:
Voltage class Connected capacity Basic connection rates, RUR/kW (no VAT)
Supply reliability category
III category II category I category
Low voltage (0.4 Over 15 up to 30 kW inclusive 9 812 12 755 14 226 kV) Over 30 kW up to 100 kW inclusive 9 812 12 755 14 226
Over 100 kW up to 750 kW inclusive 10 338 13 438 14 990
Average voltage II Up to 100 kW inclusive 9 606 12 487 13 928 (6-10 kV) Over 100 kW up to 750 kW inclusive 9 000 11 700 13 050
Chelyabenergo
In 2010 we were guided by decree of Chelyabinsk ETO #49/64 dd. December 25, 2009 stipulating a connection rate only for applicants with capacity up to 15 kW (approved by FST decree #201-e1). For all other applicants connection fees were approved individually. Since January 01, 2011 a new decree (#52/71 dd. December 30, 2010) retains individual approach for all applicants with capacity over 15 kW. IDGC of Urals, ОАО
A marble board equipped by Siemens-Shukert, Kushva 40 Substation, 1930. 2010 overall revenues totaled RUR 49 784 mln. (+RUR 8 486 mln. or 20% on 2009).
Revenues from energy transmission are one of the key business lines contributing to the revenues structure. As of 2010 these revenues totaled RUR 47 763 mln. (+19% on 2009) contributing 96% to the overall revenues. In absolute terms, the increase totaled RUR 7 762 mln. and was due to the growth of average transmission tariff and productive supply. The revenues also were affected by a direct contract concluded between ChEMK and FSK in 2010 on “last mile” objects.
Revenues from connection, as of 2010, totaled RUR 1 686 mln. (+73% on 2009) contributing 3.4% to overall revenues. The increase in absolute terms totaled RUR 712 mln. and was due to consumer connection, including commissioning of a large object (“Anna” substation, Sverdlovenergo). Other revenues totaled RUR 335 mln. (-3.8% on 2009) contributing 0.67% to overall revenues.
As of 2010 net profit totaled RUR 1 684 773 thous. (+RUR 631.5 mln. on 2009), including profit from connection RUR 1 223 295 thous. Expense structure
2010 2009 2008 2010 2009 2008
Overall revenues 49 783 796 41 297 636 35 964 707 RUR thous. % RUR thous. % RUR thous. % 2010 business report
Energy transmission 47 763 291 40 001 176 34 437 161 Overall expenses 44 842 725 100 36 623 611 100 33 947 172 100
Connection 1 685 727 973 985 895 581 Loss compensation 10 764 312 24,0 8 237 656 22.5 7 498 977 22.1
Other revenues 334 778 322 475 631 965 Payments to FSK 10 938 484 24,4 8 374 947 22.9 6 765 843 19.9
Expenses 44 842 725 36 623 611 33 947 171 Payments to other local grids 10 512 174 23,4 9 204 054 25.1 8 051 499 23.7
Gross profit 4 941 072 4 674 025 2 017 536 Salary and other social benefits 5 221 321 11,6 4 144 530 11.3 3 874 825 11.4
Commercial expenses 0 0 0 Depreciation 2 341 957 5,2 2 070 197 5.7 1 855 161 5.5
Operating profit 4 941 072 4 674 025 2 017 536 Taxes and levies 112 375 0,3 124 026 0.3 117 467 0.3
Interest receivable 15 715 14 598 14 953 Other expenses 4 952 102 11,1 4 468 201 12.2 5 783 400 17.0
Interest payable 391 864 728 621 435 820 For information: repair 1 228 574 2,7 787 392 2.1 993 845 2.9
Revenues from participation in other companies 118 784 13 242 13 324
Other revenues 5 778 541 3 845 823 1 928 401 Expenses on loss compensation, as of 2010, totaled RUR 10 764 mln. (24% of overall expenses). In absolute terms, the increase on 2009 totaled RUR 2 527 mln. and was due to the increase of losses Other expenses 8 071 661 6 426 100 2 249 970 purchased at free market prices and excess of free market price over the regulated one. Pre-tax profit 2 390 587 1 392 972 1 288 425
Income tax and other payments 705 814 339 705 426 339 Payments to FSK totaled RUR 10 938 mln. (24.4% of overall expenses). The increase on 2009 in absolute terms totaled RUR 2 564 mln. and was due to the increase of FSK maintenance tariff. Payments to other Net profit 1 684 773 1 053 267 862 085 local grids as of 2010 totaled RUR 10 512 mln. (23.4% of overall expenses). In comparison to 2009 the From operations 458 478 391 533 310 754 increase totaled RUR 1 308 mln. and was due to new local grids and tariff growth.
From connection 1 223 295 661 734 551 331 Salaries and other social benefits in 2010 totaled RUR 5 221 mln. (+26% on 2009) contributing 11.6% to overall expenses. The increase was due to: Our 2010 overall revenues totaled RUR 49 784 mln. (+RUR 8 486 mln. or +20% on 2009), including • Increase in personnel caused by the transition of repair and metering services to non-contracted ones revenues from energy transmission – RUR 47 763 mln. (+RUR 7 762 mln. on 2009) and revenues from since July 01, 2009; connection – RUR 1 686 mln. (+RUR 712 mln. on 2009). Overall expenses totaled RUR 44 843 mln. (+ • Staffing; RUR 8 219 mln. or +22% on 2009). This increase is due to the growth of non-controllable expenses (loss • Grid facilities acquisition (for maintenance). compensation, payments to FSK and other regional grids) by RUR 6 398 mln. Gross profit totaled RUR 4 941 mln. (+RUR 267 mln. on 2009). Pre-tax profit increased by RUR 2 391 mln. (+RUR 998 mln. Increase of depreciation (+RUR 272 mln. on 2009) was due to the growth of our fixed assets as a result on 2009) due to additional revenues from participation in other companies (RUR 119 mln.), restoration of our investment program. Other expenses, equaling RUR 4 952 mln. (11% of overall expenses), were of previously created bad-debt reserve and interest payable decrease by RUR 337 mln. (46%) as a result caused by transport services, rental expenses, maintenance and repair, consulting and information services. of credit portfolio decrease. In absolute terms, the increase totaled RUR 484 mln. and was due to repair increase (+RUR 441 mln.), increase of expenses on information and consulting services (+RUR 159 mln.) due to implementation of a new SAP ERP software. Revenues structure
2010 2009 2008
RUR thous. % RUR thous. % RUR thous. %
Overall revenues 49 783 796 100 41 297 636 100 35 964 707 100
Energy transmission 47 763 291 95,94 40 001 176 96.86 34 437 161 95.75 IDGC of Urals, ОАО Connection 1 685 727 3,39 973 985 2.36 895 581 2.49
Other core operations 329 117 0,66 315 290 0.76 621 635 1.73
Non-core operations 5 661 0,01 7 184 0.02 10 329 0.03
42 43 Profit distribution As of 2010, Debt/Capital and Reserves ratio demonstrates insignificant and still positive dynamics. Our debt in 2010 was at the same level, financial stability also retaining. Borrowed funds are long-term As of 2010, IDGC of Urals gained net profit equaling RUR 1 684 773 thous. Net profit is calculated borrowings. Other long-term borrowings were made of advances on connection contracts, execution date according to our financial statements. According to the Charter, our GSM adopts the final resolution on exceeding 12 months. Debt payment coverage demonstrates the ability of the company to discharge its profit distribution. Target net profit distribution, as of 2010, is as follows: liabilities using profit and its equivalents. Receivables turnover increase characterizes improvements in debtor payments.
As of 2010 As of 2009 As of 2008 Due to the increase of net profit and depreciation, income tax and decrease of interest payable EBITDA Net profit 1 684 773 1 053 267 861 352 grew by 22% on 2009. Debt/ EBITDA in 2010 totaled 1.1, being within the generally accepted limits (not more than 4). Liquidity ratios are at the specified level and characterize the ability of the company Reserve fund 84 349 52 553 43 068 to discharge its short-term liabilities. The Company is able to fully discharge its debt liabilities retaining Dividends 245 550 0 0 its financial stability. The Company has a low risk of losing its financial solvency if the debt increases. Financial ratios are among guideline values of key financial indicators. Enterprise development 1 354 874 1 000 714 818 284
According to statements stipulated by article 8 of the Charter and Federal Law “On Joint-Stock Companies”, the reserve fund is created by a GSM resolution. According to the Charter, annual contributions to the Credit portfolio reserve fund total 5% of the net profit. Therefore, as of 2010, a part of the net profit equaling RUR 84 2010 business report 349 thous. is contributed to the reserve fund created for the coverage of company losses, bond redemption 31.12.2008 31.12.2009 31.12.2010 (2010/2009) (2010/2009), % and share buy-back in cases when there are no other resources. A considerable share of the net profit equaling RUR 1 354 874 thous. is planned to be distributed for enterprise development. RUR 245 550 Short-terms credits and loans 1 200 000 - - 0 0% thous. will be forwarded for 2010 dividend payout. Long-term credits and loans 5 161 534 5 583 562 5 537 633 -45 929 -1%
Including bonds 1 000 000 1 638 219 -1 419 -87% Analysis of financial status and operation results Interest payable 42 770 26 503 2 123 -24 380 -92% Total 6 404 304 5 610 065 5 539 756 -70 309 -1% 31.12.09 г.. 31.12.10 г.. Change Net asset value, RUR thous. 28 263 217 29 941 608 +1 678 391 As of 31.12.2010, credits and loans totaled RUR 5 537.6 mln. (-1% or -45.9 mln on 2009). This debt is Debt/ Capital and Reserves, % 49,44 49,19 -0,25 long-term (2-5 years). In 2010 there were 3 credit auctions. After the auctions we concluded 3 contracts (overall value of RUR 4 280 mln.). The key creditor banks are Urals Bank of Russian Savings Bank Debt payment coverage, % 127,81 82,87 -44,9 and Ekaterinburg branch of Gazprombank, OAO. Receivables turnover, times 6,63 7,53 +0,9
Terms Limits, RUR Efficiency ratios thous.
Return on Assets, % 2,5 3,78 +1,28 Bond issue (series 01 May 2012 1 000 000 4-01-32501-D) Return on Capital, % 3,74 5,64 +1,9 Sberbank 2-5 years 3 600 000
Financial stability ratios Gazprombank 2-5 years 6 730 000
Equity autonomy ratio 0,67 0,67 0,00 Total 11 330 000 Equity/Debt 2,04 2,05 +0,01
Receivables/Payables 0,87 0,93 +0,06 In 2010 credit market was characterized as favorable and we took measures to decrease interest rates. As Liquidity ratios a result, we raised capital below our approved debt Current liquidity ratio 1,30 1,23 -0,07 value limits. Average interest rate in 2010 totaled 9.6% per annum, at the same time, as of 31.12.2010, Quick liquidity ratio 1,12 1,06 -0,06 average credit portfolio interest rate totaled 7.7% per annum. As of 2010 the Company ensured the Debt compliance of our debt to the approved limits and Debt 5 583 562 5 537 633 -45 929 retained business solvency rating at Level A.
Net debt 4 542 354 4 365 572 -176 782
Debt/EBITDA 1,3 1,1 -0,2
Debt/Equity 0,20 0,19 -0,01
For information:
EBITDA 4 191 790 5 124 407 +932 617 IDGC of Urals, ОАО
44 45 Analysis of changes in receivables Обеспечение эффективности и постоянное совершенствование системы внутреннего контроля и управле- and payables ния рисками является одним из наиболее приоритетных направлений деятельности ОАО «МРСК Урала». Развитие внутреннего контроля и управления рисками направлено, в первую очередь, на обеспечение разумной уверенности в достижении стратегических целей ОАО «МРСК Урала» наиболее эффективным As of 31.12.2008 As of 31.12.2009 As of 31.12.2010 Change путем, обеспечение сохранности активов и инвестиционной привлекательности, поддержание эффектив- Receivables, including 6 702 273 6 226 469 6 614 285 +387 816 ности управления и обеспечение бесперебойного энергоснабжения потребителей и энергоэффективности.
Receivables (exceeding 12 months) 128 131 99 509 278 410 +178 901 Принципы функционирования, процессы и процедуры Системы внутреннего контроля и управления Including buyers and customers 3 805 8 187 2 716 -5 471 рисками (далее СВКиУР) ОАО «МРСК Урала» регламентируются следующими внутренними докумен- тами: Receivables (less than 12 months) 6 574 142 6 126 960 6 335 875 +208 915 • Положение о процедурах внутреннего контроля Including buyers and customers 3 857 266 4 676 087 4 062 211 -613 876 (утверждено решением Совета директоров, Протокол №49 от 26.12.2008). Payables 3 631 480 6 340 816 6 542 964 +202 148 • Политика управления рисками ОАО «МРСК Урала» (утверждена решением Совета директоров Протокол №70 от 04.06.2010) Including buyers and customers 2 379 927 3 127 653 3543018 +415 695 • Политика внутреннего контроля ОАО «МРСК Урала» (утверждена решением Совета директоров, Протокол №70 от 04.06.2010). At the beginning of the reported period overall receivables have totaled RUR 6 226.5 mln., but, as of • Положение об организации и проведении проверок департаментом внутреннего контроля и аудита 31.12.2010, receivables have reached RUR 6 614.3 mln. During the reported year the receivables increased ОАО «МРСК Урала» (утверждено Приказом ОАО «МРСК Урала» №388 от 26.10.2009). by RUR 387.8 mln., including lines “Advances paid” (+RUR 137.9 mln.) and “Other debtors” (+RUR 812.0 mln.) as well as tax and levy overpayment (+RUR 784.5 mln.). At the same time there was a decrease of lines “Buyers and Customers” (-RUR 619.3 mln.) and “Debts of subsidiaries and associates” Участники СВКиУР и разграничение ответственности (- RUR 127.1 mln.). Besides, every quarter after receivables inventory we formed a bad debt reserve, carefully evaluating information on debtor solvency. As of 31.12.2010, the reserve has totaled RUR 1 В соответствии с утвержденными локальными нормативными актами по совершенствованию СВКиУР 680.1 mln. в процессы управления рисками и внутреннего контроля вовлечены руководители и специалисты всех уровней управления ОАО «МРСК Урала» как на уровне исполнительного аппарата, так и филиалов Об- Payables, as of 2010, have increased by RUR 202.1 mln. on 2009 and, as of 31.12.2010, totaled RUR щества. Совет директоров Общества определяет необходимый уровень и направления развития Системы 6 542.9 mln. There was an increase of line “Suppliers and contractors” (+RUR 415.4 mln.) due to the управления рисками и внутреннего контроля. Комитет по аудиту при Совете Директоров осуществляет increase of debts for electric and heat energy (+RUR 1 094.4 mln.), builders (+RUR 152.57 mln.), repair оценку эффективности СВКиУР, в том числе на основании сообщений и отчетов Департамента внутрен- companies (+RUR 74.9 mln.) and due to the decrease of debts for industrial services, telecom services, него контроля и аудита Общества, проводит анализ финансовой (бухгалтерской) отчетности и участвует office equipment maintenance, transportation (-RUR 911.7 mln.). Debts to subsidiaries increased by RUR в выработке рекомендаций по существенным вопросам финансово-хозяйственной деятельности. Генераль- 230.46 mln, advances received decreased by RUR 108.0 mln. (80% - connection advances). There were ный директор организует эффективное функционирование СВКиУР, обеспечивает реализацию процедур also a decrease of current liabilities to personnel (-RUR 49.9 mln.) and current tax and levy liabilities внутреннего контроля, несет ответственность за их выполнение. Департамент внутреннего контроля и (–RUR 525.7 mln.). There were no overdue payables in 2010. управления рисками производит непосредственную оценку адекватности, достаточности и эффективности процедур внутреннего контроля, осуществляет координацию процессов управления рисками, организует внедрение системы внутреннего контроля по бизнес-процессам и оценивает соответствие совершенных Bonds финансово-хозяйственных операций действующему законодательству и интересам акционеров. Струк- турные подразделения Общества в пределах своей компетенции осуществляют выявление и оценку The Company has issued 2 bond issues with overall value RUR 1.6 bln. The bonds were issued during the рисков, мониторинг, разработку и исполнение мероприятий по их минимизации, а также осуществляют restructuring process on 30.04.2008 by converting Permenergo and Chelyabenergo bonds. As of 31.12.2010, исполнение контрольных процедур. 219 series-01 bonds were in circulation. Series-02 bonds were redeemed on 13.05.2010. As of the redemption date bonds were not in circulation, liabilities equaling RUR 0. The key bond parameters are illustrated below. Совершенствование СВКиУР
С целью совершенствования процессов СВКиУР в 2010 году в Обществе была организована деятель- Issue IDGC of Urals 01 IDGC of Urals 02 ность по развитию СВКиУР, целью которой определена стандартизация контрольной среды и рисков Series 4-01-32501-D 4-02-32501-D ключевых бизнес-процессов Общества, а также совершенствование процессов управления рисками. Ос- новным направлением развития СВКиУР был обозначен переход от исключительно ревизионного (об- Nominal value, RUR 1 000 1 000 наруживающего) характера контрольных процедур к сочетанию трех видов контроля: ревизионного Overall volume, RUR thous. 1 000 000 600 000 (последующего), текущего и превентивного (предварительного). По результатам данной деятельности In circulation, RUR thous. 219 - разработаны Положения о контрольной среде и рисках основных бизнес-процессов Общества, а также реестр ключевых рисков. В дальнейшем планируется продолжение работы в области совершенствования Coupon rate 8,6% 8,4% СВКиУР с переходом от «стандартизированного» к «оптимизированному» уровню зрелости СВКиУР, а Date of state registration 27.03.08 27.03.08 также автоматизации контрольных процедур и процессов управления рисками. Placement date 30.04.08 30.04.08
Redemption date 22.05.12 13.05.10
Offer 27.05.09, 25.05.10 15.05.08 IDGC of Urals, ОАО
Construction of a power line in rural areas, 46 1950-s. discipline. To minimize the risks we aspire to eliminate conflicts with consumers, to decrease receivables on energy transmission as well as to accumulate court practice and positive precedents.
Another important factor is the lack of legal regulation of MRSK-FSK “last mile” relations. Despite the legitimate right to conclude such MRSK-FSK contracts, there are no procedures for contract approval by the Russian Ministry of Energy. Therefore, the appetence of large industrial enterprises to conclude direct transmission contracts with FSK and existing court practice may lead to a possible decrease of the service volume due to cancellation (non-renewal) of “last mile” rental contracts. FSK risk management is aimed at full observance of contract conditions and timely contract prolongation. Court practice is constantly being monitored and analyzed.
At the backdrop of recession, taking into account marginal growth of tariffs in the regions, there is a risk of the increase in economically feasible expenses incurred by allied grids while the growth boiler tariffs is limited. Therefore, under limited growth of final and network tariffs a regional regulator can approve Provision of efficiency and constant perfection of the system of internal control and risk management is increased tariffs for several grids while our revenues are decreased or left unchanged. Key steps for risk one of the Company’s priorities. The development of internal control and risk management is primarily minimization are to submit to regional regulators justifying materials proving required expense gains that aimed at the provision of rational assurance in reaching strategic goals by the most efficient way, asset are not below the average network tariff growth as well as assertion of required expense growth since preservation and investment attractiveness as well as at the maintenance of governance efficiency and at we are a regional backbone grid company. the provision of trouble-free energy supply and energy efficiency. 2010 business report Our principles of functioning, processes and procedures of internal control and risk management system Regulatory risks (hereinafter referred to as the ICRMS) are regulated by the following internal documents: Our key business lines are energy transmission and connection. These business lines are regulated by -The Regulations on the Internal Control Procedures in IDGC of Urals, OAO (approved by a BoD the state (approval of tariffs directly influencing our financial results), and therefore, there is a risk of resolution, Protocol #49 dd. 26.12.2008). tariff regulation. The limitation of tariff growth for end users by the state, equivocating interpretation -The Risk Management Policy in IDGC of Urals, OAO (approved by a BoD resolution, Protocol #70 dd. of regulating and methodical documents on tariffs and other factors may lead to a risk of setting 04.06.2010) tariffs below economically feasible levels. Incorrect planning of energy transmission structure may lead -The Internal Control Policy in IDGC of Urals, OAO (approved by a BoD resolution, Protocol #70 dd. to decreasing revenues or additional expenses. IDGC of Urals constantly works hard over economic 04.06.2010). grounding for tariff-included expenses as well as controls own expenses and tariff completion. We -The Regulations on the Arrangement of Inspections held by Internal Control and Audit Department in prepare and submit justifying materials and information to regional regulators as well as work out and IDGC of Urals, OAO (approved by IDGCU’s Decree #388 dd. 26.10.2009). approve long-term development programs. ICRMS participants and partition of power Antimonopoly regulation leads to risks when the Company may be acknowledged as a violator of According to the approved local regulatory documents on ICRMS perfection, directors and specialists antimonopoly legislation. These risks may be caused by violation of terms for connection or terms of on all management levels (both in our branches and HQ) are involved into risk management and requesting regulator on connection fee. To minimize risks related to prosecution for antimonopoly violation internal control processes. The Board of Directors determines required levels and directions for ICRMS in terms of connection, our branches have installed software enabling successful control over the terms for development. The Audit Committee evaluates ICRMS efficiency, including messages and reports of application completion processes and approved local regulatory documents determining connection steps. Internal Control and Audit Department, analyses financial (accounting) statements and contributes to the preparation of recommendations on significant financial and operating issues. The General Director RAB-tariffs may create risks related to the lack of RAB implementation practices due to the lack of arranges efficient ICRMS functioning, ensures internal control procedure implementation and bears integral regulatory base, including the lack of accumulated practice on tariff component grounding. To responsibility for their completion. Internal Control and Risk Management Department directly evaluates minimize these risks the Company actively works out proposals on the introduction of amendments into the adequacy, sufficiency and efficiency of internal control procedures, coordinates risk management regulatory documents and grounds for these amendments. We interact with regulators during indicator processes, arranges the implementation of internal control system in business processes and evaluates calculation, approval and update. the compliance of accomplished financial operations to the current legislation and shareholder interests. Structural divisions, within their competence, reveal and evaluate risks, monitor, elaborate and implement IDGC of Urals, like other gridcos, purchases energy for loss compensation at free market prices, dependent measures taken to minimize the risks as well as accomplish control procedures. on wholesale market fluctuations. Local regulators approve energy transmission revenues without regard Key risks and measures taken to minimize the risks to the cost of losses purchased at non-regulated prices, and this causes additional expenses. We minimize the risk by negotiating with local regulators on inclusion of these expenses into RGR during the next regulation period. Due to the fact that IDGCU’s operations are influenced by many factors, the key goals of integrated system of risk management and internal control are identification, evaluation and management of Financial risks financial and operating risks and provision of information on risks while adopting managerial resolutions. When the Company purchases foreign equipment and other produce, a risk of foreign currency change Strategic risks (increase) may lead to the upsurge of purchase prices and our expenses. The risks are minimized by increased volume of equipment and materials purchased from Russian producers. At present the share Macroeconomic, political, economic and social changes in Russia may have a negative influence on the of foreign equipment and materials are relatively low, therefore, the risk is minimal. Attracted credit Company’s operations. A possible decrease in demand and prices on key commodities exported by Russia resources are in Russian currency. (oil, gas and metals) due to the recession, possible decrease in demand on goods by internal markets as well as decrease in production rates lead to such strategic risks as significant deviation of real productive Instable financial markets, possible growth of the Russian Central Bank refinancing rate, changes in supply and energy consumption from targeted ones as well as decrease in connections. To minimize the bank policies may determine risks related to interest rate increase that may lead to increasing debt- risks we monitor energy consumption, work hard on forecasts bearing in mind the current dynamics of service expenses. Since the share of credits in our finance structure is insignificant, the risk is viewed as energy consumption, productive supply and connection applications. To improve mutual interaction we insignificant. To minimize the risk we negotiate with banks over the decrease of current interest rates, aspire to disseminate information on connection among consumers. We have arranged several Client conclude agreements to the credit contracts that exclude the unilateral increase of interest rates. Support Centers; information on connection is posted on our web-site. Escalation of inflation has significant effects on our expenses and profitability and may subsequently Climatic peculiarities of the Urals may also have a negative impact on our operations. Emergency lead to income decrease. According to official statistics, 2010 inflation totaled 8.8%. According to official situations related to rapid changes of temperature, natural disasters (fires, floods) may lead to loss of
IDGC of Urals, ОАО forecast made by the Russian Ministry of Economic Development, 2011 inflation will total 7-8%, 2011 supply and material impairment. To minimize the risks we conclude insurance contracts compensating forecast (the Russian government used it in the federal budget), will be 6.5%. Still, it should be noted damages, create emergency supply of material resources and prepare emergency response teams. that a possible growth of consumer prices in the beginning of 2011 will lead to a risk of inflation increase in 2011 compared to the forecast. To reduce inflation impact we work out and implement an expense Ill-run retail market mechanisms may lead to risks related to disagreements among grid companies management program. If inflation increases, we will focus on the optimization of receivables and expense and retail suppliers on consumption volumes, growth of accounts receivable and low consumer payment management as well as on the increase of current asset turnover.
48 49 Mala fide suppliers, specificity of purchased produce and tight working schedule may lead to risks related to defaults on commitments by suppliers and subsequent growth of receivables. Main measures to reduce the risks are aimed at the minimization of advanced payments to suppliers, keeping records of mala fide suppliers, incessant control of terms and cost during purchase planning and arrangement.
Risks, related to defaults to commission objects, are constituent parts of financial risks and may be caused by mistakes in the planning, delays in approval of investment programs by various authorities, long land plot registration and obtainment of a permit for construction as well as refusal of consumers from connection. We take all measures to minimize investment-related risks. The measures are aimed at the observation of investment program approval rules, rules of control over investment program implementation exercised by the Russian Ministry of Energy. We also have a working system of control over investment program implementation and financing, including weekly control. We have worked out local regulatory documents on capital construction and investment program planning. The company implements measures aimed at timely material and technical maintenance and observation of terms and quality of the works done by contractors.
Operating and technological risks 2010 business report Our operations are related to exploitation risks and risks of technological character which are expressed by violations in normal operation mode, incidents, supply disruption, above-level load increase. Main factors for such risks are high depreciation level, impact made by natural disasters and third persons and companies. Erroneous or wrong operations of Company’s or outsourced personnel, violations in dispatcher modes are also sources of the risks. To minimize the risks the Company focuses on network renovation, elaboration and implementation of target programs of energy supply reliability increase. We also permanently monitor and diagnose equipment as well as review and analyze incidents. Our personnel undergo training and attestation. At present we implement automated management system of technical exploitation and repairs enabling optimization of exploitation, repair and maintenance processes.
Operating risks also include HR-related risks. Insufficient training of personnel as well as low educational level of college and university graduates, discrepancy of personnel qualifications to new technologies, high staff turnover (especially technical staff) are main factors of such risks. Main risk-minimization measures are aimed at the monitoring of labor market to show employer’s attractiveness, close cooperation with colleges and universities on the training of students. The personnel is regularly trained and attested. To increase motivation of personnel during the reported period we elaborated and implemented local regulatory documents stipulating social privileges and guarantees on the service area (Collective agreement and the Regulations on remunerations).
Risks, related to purchasing and logistics, may be caused by planning mistakes, specificity of purchased produce, tight delivery and work schedule, ill-prepared purchase documentation and expertise of participants’ offer. The Company controls the preparation of purchase program, and audits timeliness and grounds for purchasing. The market is being monitored with a view to better demand planning.
Operating risks, related to information technologies used by the Company, may be caused by disruptions in server and network operations, information systems and data transmission channels. To minimize the risks we focus on planned preventive repairs, creation of reserved channels, update of computer power, network and technological equipment. Legal risks Legal risks are generic for IDGC of Urals and any other company operating in Russia. Primarily, legal risks are caused by the specificity of the current legislation, its changes, equivocating interpretation of regulatory documents, contradictory court sentences on similar cases. Legal risks, related to equivocating interpretation of legislation on taxes and levies, possible changes in procedure, rates, terms of tax charge and payment, changes in legislation on joint-stock companies as well as corporate governance, are not significant for us. Permanent monitoring of changes in legislation and court practice enables us to plan our financial and economic operations with regard to changes. Accounting and legal departments work together over the methodology of tax base calculation and control their compliance with the current legislation. There is also a legal expertise of corporate procedures, operations and transactions of the Company. IDGC of Urals, ОАО
Construction of a power line Tavda-Uray (1970.) 50 51 7.2. The Company and the Stock Market
At present our common shares are traded on MICEX (Quotation List B) and in RTS (Stock admitted for trading without listing).
Exchange Russian Trading System (RTS), ОАО Moscow Interbank Currency Exchange (MICEX), ZAO
Ticker MRKU (classic market) MRKU MRKUG (exchanging market)
Trading volume* RUR 27 960 894.91 RUR 1 105 827 792.91
Capitalization as of 31.12.2010 RUR 29 376 643 198.9 RUR 29 402 872 344.6 7.1. Shareholder Equity Share price as of 31.12.2010 RUR 0.336 RUR 0.3362
The Charter capital of IDGC of Urals, OAO has not changed during 2010. As of 31.12.2010 it totaled * RTS and MICEX data. RUR 8 743 048 571.1. The Charter capital is represented by 87 430 485 711 common shares with the In 2010 the trends on the Russian stock market were determined by both domestic factors and investor
nominal value of RUR 0.1 per each. 2010 business report expectations regarding post-crisis recovery of the global economy. 1Q 2010 was positive for the market: the rally of 2009 rolled on into the spring of 2010. During the second quarter a range of European countries Shares Quantity Nominal value (RUR) (Greece, Portugal, Ireland and Spain) transpired to be in financial hardship. The moods of international Outstanding common shares 87 430 485 711 0,1 investors changed for the worse, they began to sell risky assets which also included Russian stocks. In 3Q 2010 the capital markets rallied because the US Federal Reserve System announced new monetary Declared common shares 2 475 713 367 0,1 injections weakening US dollar. Investors began to sell dollars and buy shares and primary commodi- ties. Another firm driver for growth was strong quarterly financial statements disclosed by American The overall number of accounts belonging to the shareholders and nominal holders registered in the Com- enterprises. Fairly high oil prices were additional positive factor for oil-dependent Russian stock market. pany’s register, as of 01.01.2010, totaled 17 904 accounts, as of 01.01.2011 – 17 392 accounts. Foreign and Russian stock indices (FTSE, NASDAQ, NIKKEI, MICEX and RTS) in dynamics during January-December, 2010 (exchange data). The structure of the shareholder equity as of 31.12.2010 is as follows:
The largest holder of the Company’s shares is IDGC Holding, OAO (nominal holder – Depositary and Corporate Technologies, ООО). It owns the controlling stock of the voting shares (51.52% of the charter capital). Large stocks are owned by the following nominal shareholders: Depositary Clearing Company, ZAO (34.01%), National Settlement Depositary, NKO ZAO (5.47%).
Holder* Number of common % of overall shares shares During the reported period IDGCU’s quotes moved in opposite directions and generally echoed key trends Depositary and Corporate Technologies, ООО (Nominal holder) 45 041 557 954 51,52% of the Russian stock indices. During 1Q 2010 our shares grew in tandem with the market. However, in Depositary Clearing Company, ZАО (Nominal holder) 29 739 058 453 34,01% 2Q 2010 the quotes began to subside due to overall meltdown and the news negative for energy sector - government plans to suppress tariffs, information on failures in transition to RAB tariffs, etc. During National Settlement Depositary, NKO ZAO (Nominal holder) 4 781 440 735 5,47% 3Q and 4Q 2010 the energy sector quotes improved. Continuation of transition to RAB tariffs as well as * Registrar data market expectations regarding FST resolutions on RAB parameters also played a pivotal role.
IDGC of Urals, ОАО Crossholding According to the data provided by the exchanges, as of December 31, 2010, the trading volume in Russian According to the data from the Company’s register Privatenergostrakh, ZAO (IDGC of Urals owns 19 Trading System, since the start of the year, totaled RUR 28.0 mln. In quantitative terms the trading 974 common shares or 99.87% of its charter capital) is the owner of 84 743 IDGCU’s common shares (or volume totaled 90.7 mln. shares. On Moscow Interbank Currency Exchange the volume totaled RUR 1 0.0000969% of our charter capital). 105.8 mln., in quantitative terms - 3 701.0 mln. shares. Our MICEX capitalization, as of 31.12.2010, totaled RUR 29.4 bln.
52 53 Our shares and MICEX/ MICEX-Power in dynamics during 2010.
Our shares and RTS/ RTSeu in dynamics during 2010.
Dividend policy The dividend policy of IDGC of Urals, OAO is based on the balance of interest between the Company and shareholders at the determination of the dividend amount as well as respect and strict adherence to the observation of shareholder rights stipulated by the Russian legislation, the Charter and our internal docu- ments. It is aimed at increasing our investment attractiveness and market capitalization. According to the approved policy principles dividends are distributed from the net profit (without revaluation of financial investments) following its distribution to obligatory reserves, investment program as well as clearing off of the operating losses shown in previous years. Besides, there are the following new approved conditions which are obligatory for fulfillment while deciding on the dividend payout: - Presence of the net profit without revaluation of financial investments; - Debt/EBITDA ratio as of the year end should not exceed 3; - Achievement of the set reliability and service quality indicators.
To view the Regulations on the Company’s dividend policy (BoD Protocol #73 dd. 03.09.2010), please, visit our corporate web-site at: http://www.mrsk-ural.ru/en/374 (Section Internal Documents). On June 25, 2010 the AGSM decided not to pay 2009 dividends. According to the resolution net profit, equaling RUR 1 053 267 thous., was distributed as follows: profit for further enterprise development – RUR 1 000 714 thous., reserve fund – RUR 52 553 thous. As of 2010 dividends will presumably total RUR 245 550 thous. The amount of dividend per share is RUR 0.0028. IDGC of Urals, ОАО
Our operation and maintenance personnel, the 54 end of 1960-s Board of Directors The BoD administers the Company’s activities, except for the issues referred to the GSM competence by the Federal Law “On Joint-Stock Companies” and the Charter. The BoD ensures control over the executive bodies, efficient interaction among the bodies and observation and protection of rights and legitimate shareholder interests. The BoD competence includes decision-taking on the following key issues: • Determination of priorities and development strategy of the Company; • Convention of AGSMs and EGSMs as well as announcement of a new GSM date instead of a GSM that failed due to the lack of quorum; • Approval of GSM agenda; • Placement of bonds and other equity securities, except for the cases stipulated by the Russian legislation; • Approval of an issue decision, prospectus, issue report, reports on buy-back, reports on share retirement and reports on buy-back demand; IDGC of Urals, ОАО places a special emphasis on corporate governance assuming that high quality of • Determination of price (monetary appraisal) for property, placement and buy-back prices of issued corporate governance system plays a pivotal role in its activities and finally determines its reputation equities in cases stipulated by the Federal Law “On Joint-Stock Companies”; and investment attractiveness. To ensure top-quality corporate governance and understanding between us and our shareholders we have assumed obligations to adhere to the following fundamental principles of • Election of the CEO and pre-term termination of the powers, including resolutions on pre-term corporate governance in our operations: cancellation of the CEO’s labor contract; 2010 business report • fairness (ensuring equal attitude to all shareholders and providing opportunities for efficient protection • Determination of MB membership, election of MB members, remunerations and compensations paid to in case their rights are violated); the MB members, pre-term termination of the powers, including pre-term termination of their labor • management accountability (answering to the shareholders for efficient management and proper control contracts; over the Company’s operations and performance according to the approved decision-taking system); • Approval of business plans (adjusted business plans), including investment program and completion • transparency and timely information disclosure (disclosing reliable information on Company facts, reports as well as approval (adjustment) of target cash flow indicators; including its financial status, social and ecological indicators, performance results, shareholding and • Opening of branches and representative offices, their liquidation as well as introduction of amendments governance structure as well as free access to information required for all interested parties). regarding opening of branches, representative offices (including alteration of their names and residence) and their liquidation into the Charter; The Company observes the requirements set forth by the Russian legislation on corporate governance. We • Determination of policy aimed at increasing reliability of grids and other grid assets, including approval strive to adhere to the recommendations of the Russian Corporate Governance Code (recommended for use by Russian Federal Securities Commission Decree #421/r dd. 04.04.2002) and the principles of corporate of strategic programs on increasing reliability of the grids, grid development and security. governance approved by the best international practices. For detailed information on the observation of our Corporate Governance Code, please, visit Section “Corporate Governance” at our corporate web-site at: http://www.mrsk-ural.ru/en/685. The Board of Directors consists of 11 persons. The BoD that functioned prior to June 25, 2010 was elected To ensure shareholder rights for participation in management and decision-taking on vital operating issues by the AGSM on June 19, 2009 (protocol #1 dd. 25.06.2009). It consisted of 11 members: there are the following internal documents regulating managing bodies:
1 The Charter of IDGC of Urals, OAO (approved by the AGSM on 25.06.2010, protocol #2 dd. 1. Nikolai Nikolayevich SHVETS 30.06.2010). Born in 1956 2 The Regulations on the Procedure for GSM Convention and Arrangement (approved by the GSM The BoD Chairperson resolution, protocol #1829 pr/3 dd. 28.02.2008). Education: Military Academy of General Staff (1997), profession: Military History and Strategy. 3 The Regulations on the Procedure for BoD Convention and Arrangement (approved by the GSM Since 2009 General Director at Holding IDGC, ОАО. resolution, protocol #1829 pr/3 dd. 28.02.2008). 4 The Regulations on the Management Board (approved by the GSM resolution, protocol #1829 pr/3 dd. 28.02.2008). 2. Konstantin Vladimirovich SHEVCHENKO 5 The Regulations on the Audit Commission (approved by the GSM resolution, protocol #1865 Born in 1977 pr/3). Education: Drexel University (USA, 1998), profession: Economy and Management. Since 2006 Director of Moscow representative office of EDM Electricity Distribution Management (Cyprus) Limited. The Charter and other internal documents regulating our management bodies can be found at Section “Internal Documents” at http://www.mrsk-ural.ru/en/374. 3. Svetlana Andreevna MURAVYOVA According to the Charter our management bodies are the General Shareholder Meeting, Board of Directors, Born in 1973 Management Board and General Director. The Audit Commission is a body for controlling financial and Education: Moscow State University (2008), profession: Law. operating activities of the Company. Since 2006 Head of Corporate Section at Moscow representative office of EDM Electricity Distribution Management (Cyprus) Limited.
General Shareholder Meeting The supreme management body of IDGC of Urals, OAO is General Shareholder Meeting. The procedure for GSM convention and arrangement is stipulated by the Charter and the Regulations on the Procedure for GSM Convention and Arrangement. Our regular AGSM held on June 25, 2010 (Protocol #2) adopted resolutions on the approval of the Company’s annual report, annual accounting statements (including profit and loss statement) and 2009 profit distribution; on the approval of the Charter in a new version; IDGC of Urals, ОАО on the election of the BoD and AC members and the auditor. The full version of the AGSM resolution can be found at Section “Corporate Governance” at http://www.mrsk-ural.ru/en/686.
* all BoD positions are as of the election date. All BoD members gave written consent, as stipulated by the Russian legislation, on the use of personal information in the annual report.
56 57 4. Sergey Nikolayevich POPOVSKY 4. Valery Nikolayevich RODIN Born in 1971 Born in 1952 Education: Krasnoyarsk Non-ferrous Metals Institute (1993), profession: Survey and Research, CAD Education: Urals Polytechnics Institute (1974), profession: Thermal Plants. software. Since 2009 up to present General Director at IDGC of Urals, ОАО. Since 2008 Deputy MB Chairperson at Market Council, NP. Share in the charter capital – 0.0081%.
5. Valery Mukhamedovich SHOGENOV 5. Maksim Mikhailovich SAUKH Born in 1981 Born in 1979 Education: International University (Moscow, 2002), profession: Law. Education: Saint Petersburg Humanitarian University of Trade Unions (2001), profession: Law. Since 2008 Deputy Department Director at Russian Ministry for Energy. Since 2008 Deputy Head of Corporate Governance and Shareholder Relations Department at IDGC Holding, OAO. 6. Sergey Nikolayevich IVANOV Share in the charter capital - none. Born in 1961 Education: Moscow Engineer Physical Institute (1984), profession: Theoretical nucleonics. 6. Sergey Sergeevich EZIMOV Since 2008 First Deputy MB Chairperson at FSK UES, ОАО. Born in 1982 Education: Moscow State International Relations Institute (2004). 7. Petr Mikhailovich EROKHIN Since 2006 Portfolio advisor at the branch of Wermuth Asset Management GmbH, OOO. Born in 1946 Share in the charter capital – 0.003%. 2010 business report Education: Urals Polytechnics University (1969), profession: Energy systems and grids. Since 2002 General Director of the Urals ODM branch of SO UES, ОАО. 7. Pavel Vladilenovich GOLUBEV Born in 1962 8. Valery Nikolayevich RODIN Education: Omsk Polytechnic Institute (1984), profession: Electrician. Born in 1952 Since 2008 Head of Exploitation, Repairs and Maintenance Department at IDGC Holding, OAO Education: Urals Polytechnics Institute (1974), profession: Thermal Plants. Share in the charter capital - none. Since 2009 General Director at IDGC of Urals, ОАО. Share in the charter capital – 0.0081%. 8. Mikhail Viktorovich AZOVTSEV Born in 1978 9. Andrei Borisovich LUKIN Education: State University – High School of Economics (2002). Born in 1970 Since 2004 Head of M&A Department at Integrated Energy Systems, ZAO. Education: Saint Petersburg State Technical University (1994), profession: Electromechanics. Electric Share in the charter capital - none. units. Till 2009 Director (Head) of Strategy and Development Center at Holding IDGC, ОАО. 9. Aleksei Veniaminovich BELSKY Born in 1976 10. Yuri Nikolayevich PANKSTYANOV Education: Udmurt State University (1998), profession: Law. Born in 1980 Since 2007 Head of Corporate Secretary Directorate at Integrated Energy Systems, ZAO. Education: State University of Management (2002), profession: Management. Share in the charter capital - none. Since 2008 Head of Tariff Department at Holding IDGC, ОАО. 10. Sergey Vyacheslavovich VASILYEV 11. Aleksey Vladimirovich DEMIDOV Born in 1975 Born in 1976 Education: Lomonosov Moscow State University (1997), profession: Law. Education: Saint Petersburg Institute for Trading and Economics (1998), profession: Accounting and Since 2008 Director for Legal Affairs, Head of Legal Department at IDGC Holding, OAO. Audit. Share in the charter capital - none. Since 2009 Deputy General Director for Economics and Finance at Holding IDGC, ОАО. 11. Konstantin Yuryevich PETUKHOV The AGSM, held on June 25, 2010, elected the following BoD consisting of 11 members: Born in 1971 Education: Altai State Technical University (1997). 1. Aleksey Vladimirovich DEMIDOV Since 2008 Director for Strategy and Development at IDGC Holding, OAO. Born in 1976 Share in the charter capital - none. The BoD Chairperson Education: Saint Petersburg Institute for Trading and Economics (1998), profession: Accounting and The BoD members performed no transactions on share acquisition or alienation during the reported period. Audit. To ensure the objectivity of adopted resolutions and balance of interest expressed by different shareholder Since 2009 Deputy General Director for Economics and Finance at Holding IDGC, ОАО. groups the Company strives to have at least 3 (Three) independent directors. The BoD sessions are Share in the charter capital - none. arranged on a regular basis but no less than once a month.
2. Valery Mukhamedovich SHOGENOV In 2010 there were 16 BoD sessions. Among the most important resolutions adopted by the BoD in 2010 Born in 1981 the following resolutions should be emphasized: Education: International University (Moscow, 2002), profession: Law. • Approval of our 2010 business plan, including investment program (Protocol #67 dd. 07.04.2010); Since 2008 Deputy Department Director at Russian Ministry for Energy. • Approval of the Company’s Insurance Coverage Program for 2010 (Protocol #68 dd. 04.05.2010) Share in the charter capital - none. • Approval of the Company’s collective agreement for 2010-2011 (Protocol #70 dd. 07.06.2010) • Approval of the Risk Management Policy and Internal Control Policy (Protocol #70 dd. 07.06.2010) 3. Petr Mikhailovich EROKHIN • Election of new Committees’ membership (Protocol #72 dd. 03.08.2010); Born in 1946 • Approval of the Regulations on Dividend Policy (Protocol #73 dd. 03.09.2010) Education: Urals Polytechnics University (1969), profession: Energy systems and grids. • Election of a new registrar (Protocol #77 dd. 29.11.2010) IDGC of Urals, ОАО Since 2002 General Director of the Urals ODM branch of SO UES, ОАО. Share in the charter capital - none.
* all BoD positions are as of the election date. All BoD members gave written consent, as stipulated by the Russian legislation, on the use of personal information in the annual report.
58 59 • Approval of participation in the Union of Energy Auditors and Energy Service Companies, NP 5. Sergey Sergeevich EZIMOV (Protocol #75 dd. 22.10.2010) and Market council arranging effective system of energy wholesale and a BoD member of IDGC of Urals, OAO, Portfolio adviser at Wermuth Asset Management GmbH, retail (Protocol #78 dd. 29.12.2010) OOO • Foundation of a 100% subsidiary – Energy Service Company of the Urals, ОАО (Protocol #78 dd. 29.12.2010) Resolutions adopted by the Committee can be found at Section “Corporate Governance”: — http://www.mrsk-ural.ru/en/689. The BoD also regularly reviews CEO’s reports on various issues and the execution of BoD resolutions. The Personnel and Remuneration Committee (the membership was elected on 03.08.2010) In 2010 the BoD approved 47 interested-party transactions. The review of such transactions is disclosed It assists the BoD in solving personnel, social and corporate governance issues. The key goal of the in the Appendix to the report. There were no transactions acknowledged by the Federal Law “On Joint- Committee is to involve highly-skilled workers in governance and create impetus required for best Stock Companies” as major as well as other transactions which are, under the Charter, subject to major performance. The membership of the Committee is determined by a BoD resolution and totals 6 (Six) transaction approval procedure in 2010. persons. In 2010 there were 6 sessions. Criteria determining the amount and payment frequency of the BoD remunerations as well as the The current membership is as follows: amount of BoD-related expense compensation are determined by the Regulations on Remunerations and Compensations paid to the BoD members approved by the AGSM on 30.04.2008. According to the 1. Andrey Valeryevich CHIGRIN Regulations BoD remuneration consists of fixed and variable parts and includes 3 payment categories: The Chairperson, Head of HR Department at IDGC Holding, OAO 2010 business report 1 For each BoD session in which a BoD member participated (individual work). 2. Natalya Ilyinichna ERPSHER Participating in an extramural session, a BoD member earns 8 minimum monthly tariff rates of a Head of Organization Development Directorate at IDGC Holding, OAO 1st grade worker, stipulated by the sector tariff agreement, as of session date (intramural session - 10 tariff rates). The BoD Chairperson remuneration increases by 50%. 3. Aleksey Alekseevich KRASNIKOV Deputy General Director for Security and Controlling at IDGC of Urals, OAO 2 Additional remuneration for net profit according to RAS statements, approved by the AGSM. 4. Maksim Mikhailovich SAUKH 3 Additional remuneration for capitalization increase, occurred during the BoD terms of office. a BoD member of IDGC of Urals, OAO, Deputy Head of Corporate Governance and Shareholder Relations Department at IDGC Holding, OAO Total remunerations, paid to the BoD members in 2010, totaled RUR 4 885 656, including the BoD, active prior to the AGSM, held on June 25, 2010 – RUR 2 451 696 (13% personal income tax – RUR 5. Svetlana Andreevna MURAVYOVA 318 720.48) and the BoD, active after June 25, 2010 – RUR 2 433 960 (13% personal income tax – RUR Head of Corporate Department at AKARI, ООО 316 414.8). BoD Committees 6. Konstantin Mikhailovich YUSHKOV Investment advisor at Wermuth Asset Management GmbH, OOO The Committees are consultative bodies enabling efficient company governance by the BoD. The Committees act according to the Regulations stipulating their status, aims and goals, rights and liabilities, structure Resolutions adopted by the Committee can be found at Section “Corporate Governance”: and membership. In their activities the Committees adhere to federal laws, other Russian regulatory — http://www.mrsk-ural.ru/en/689. documents, the Charter, the Regulations on the Procedure for BoD Convention and Arrangement and BoD resolutions. The Strategy and Development Committee (the membership was elected on 03.08.2010) It plays a leading role in the determination of strategic aims, priorities, evaluation of the Company’s long- As of 31.12.2010 IDGC of Urals, ОАО has the Audit Committee, Personnel and Remuneration Committee, term efficiency and preparation of recommendations on strategy update. The membership of the Committee Strategy and Development Committee, Reliability Committee and Connection Committee. is determined by a BoD resolution and totals 8 (Eight) persons. In 2010 there were 10 sessions. The Audit Committee (the membership was elected on 03.08.2010) The current membership is as follows: It elaborates recommendations and proposals for the BoD that are related to arrangement of audit, revealing and prevention of situations enabling the occurrence of financial and operating risks. The 1. Konstantin Yuryevich PETUKHOV Committee analyses the Company’s financial statements and external audit results for compliance with the The Chairperson, a BoD member of IDGC of Urals, OAO, Director for Strategy and Development at Russian legislation, Russian and international standards. The membership of the Committee is determined IDGC Holding, OAO by a BoD resolution and totals 5 (Five) persons. In 2010 there were 3 sessions. 2. Svetlana Aleksandrovna BALAEVA The current membership is as follows: Head of Investment Department at IDGC Holding, OAO 1. Aleksey Vladimirovich DEMIDOV The Chairperson, a BoD member of IDGC of Urals, OAO, Deputy General Director for Economics 3. Yury Veniaminovich ADLER and Finance at IDGC Holding, OAO Head of Section for Standards and Methodology of Corporate Governance and Shareholder Relations Department at IDGC Holding, OAO 2. Maksim Mikhailovich SAUKH a BoD member of IDGC of Urals, OAO, Deputy Head of Corporate Governance and Shareholder 4. Svetlana Sergeevna SOLOMATINA Relations Department at IDGC Holding, OAO Leading expert of Strategy and Development Center at IDGC Holding, OAO
5. Valery Mukhamedovich SHOGENOV 3. Konstantin Yuryevich PETUKHOV Deputy Department Director at Russian Ministry of Energy a BoD member of IDGC of Urals, OAO, Director for Strategy and Development at IDGC Holding, OAO 6. Valery Nikolayevich RODIN
IDGC of Urals, ОАО General Director at IDGC of Urals, ОАО 4. Mikhail Viktorovich AZOVTSEV a BoD member of IDGC of Urals, OAO, Head of M&A Department at Integrated Energy Systems, 7. Dmitry Sergeevich FEDOROV ZАО Investment analyst at Lider Infrastructura, OOO
8. Nikolai Vladimirovich GORSHKOV
60 61 General Director at Chelyabenergosetremont, OAО Resolutions adopted by the Committee can be found at Section “Corporate Governance”: Resolutions adopted by the Committee can be found at Section “Corporate Governance”: — http://www.mrsk-ural.ru/en/689. — http://www.mrsk-ural.ru/en/689
The Reliability Committee (the membership was elected on 03.08.2010) Management Board It prepares and submits recommendations (conclusions) to the BoD and executive body on the evaluation of The collegiate executive body acts under the Charter and our internal document, approved by a GSM, technical departments, completeness and adequacy of measures taken after incidents and large technological the Regulations on the Management Board which stipulates the terms and procedure for MB convention interruptions as well as control over their execution. The membership of the Committee is determined by and arrangement as well as decision-taking. The Management Board administers the current company a BoD resolution and totals 7 (Seven) persons. In 2010 there were 4 sessions. operations and is responsible to the BoD and GSM. The Management Board consists of the most competent and experienced specialists able to properly perform their duties. The MB Chairperson is the General The current membership is as follows: Director. 1. Sergey Borisovich VASILYEV The Chairperson, Deputy Head of Productive Control and Labor Protection Directorate at IDGC There were no changes in the MB membership during the reported period. Holding, OAO 1. Valery Nikolayevich RODIN 2. Yury Vyacheslavovich LEBEDEV Born in 1952 A MB member, Deputy General Director for Technical Issues - Chief Operating Officer at IDGC of The Chairperson, General Director of IDGC of Urals, OAO. 2010 business report Urals, OAO Education: Urals Polytechnics Institute (1974), profession: Thermal Plants. Share in the charter capital – 0.0081%. 3. Yulia Vladimirovna DOBAKHYANTS Head of Section for Operating and Technological Management Development at Operating and 2. Yury Vyacheslavovich LEBEDEV Technological Management Department at IDGC Holding, OAO Born in 1963 Deputy General Director for Technical Issues - Chief Operating Officer. 4. Aleksandr Mikhailovich ERMAKOV Education: Ivanov Energy Institute (1985), profession: Industrial and Transmission Automation. Head of Section for Grid Construction at Capital Construction Department at IDGC Holding, OAO Share in the charter capital - none.
5. Dmitry Sergeevich FEDOROV 3. Evgeny Gennadyevich POPOV Investment analyst at Lider Infrastructura, OOO Born in 1959 Deputy General Director for Corporate Governance. 6. Dmitry Valeryevich BELOSLUDTSEV Education: Urals Polytechnics Institute (1983), profession: Technical Physics. Engineer for ЕС Documentation Coordination at Gazpromneft-Chelyabinsk, ООО Share in the charter capital - none.
7. Aleksandr Nikolayevich FILINKOV 4. Olga Mikhailovna ABROSIMOVA Mode Management Director - Chief Dispatcher at SO UES ODM of Urals, OAO Born in 1953 Chief Accountant Resolutions adopted by the Committee can be found at Section “Corporate Governance”: Education: Urals Polytechnics Institute (1995), profession: Management and Economics in companies. — http://www.mrsk-ural.ru/en/689. Share in the charter capital – 0.000947%.
5. Aleksey Alekseevich KRASNIKOV The Connection Committee (the membership was elected on 03.08.2010) Born in 1950 Deputy General Director for Security and Controlling. It ensures transparency and non-discriminatory access to connection services. The membership of the Education: Sverdlovsk Law Institute (1972), MVD Academy. Committee is determined by a BoD resolution and totals 7 (Seven) persons. In 2010 there were 2 sessions. Share in the charter capital - none.
The current membership is as follows: 6. Sergey Aleksandrovich SEMERIKOV 1. Sergey Sergeevich EZIMOV Born in 1979 The Chairperson, a BoD member of IDGC of Urals, OAO, Portfolio adviser at Wermuth Asset Deputy General Director for Capital Construction. Management GmbH, OOO Education: UGTU – UPI (2001), profession: Project Management. Share in the charter capital - none. 2. Sergey Mikhailovich ZOLOTAREV Deputy General Director for Development and Sales at IDGC of Urals, OAO 7. Sergey Mikhailovich ZOLOTAREV Born in 1966 3. Aleksey Vladimirovich SANIN Deputy General Director for Development and Sales. Head of Legal Department at IDGC of Urals, OAO Education: Chelyabinsk Polytechnics Institute (1988), profession: Energy supply of industrial companies, settlements and agriculture. 4. Sergey Aleksandrovich SEMERIKOV Share in the charter capital - none. Deputy General Director at IDGC Holding, OAO 8. Oleg Borisovich MOSHINSKY 5. Gennady Feliksovich BINKO Born in 1969 Deputy General Director at IDGC Holding, OAO Deputy General Director – Sverdlovenergo director. Education: Urals Polytechnics Institute (1991), profession: Energy Systems. 6. Dmitry Aleksandrovich IVANOV Share in the charter capital – 0.00000128%. IDGC of Urals, ОАО Director for Technologies Development, Dispatcher Directorate, branch of SO UES ODM of Urals, ОАО
7. Dmitry Sergeevich FEDOROV * All MB members gave written consent, as stipulated by the Russian legislation, on the use of personal information in the annual report. Investment analyst at Lider Infrastructura, OOO
62 63 9. Oleg Mikhailovich ZHDANOV During the reported period the membership of the Audit Commission, elected by the AGSM on June 25, Born in 1959 2010, was as follows: Deputy General Director – Permenergo director. Education: Perm Polytechnics Institute (1981), profession: Chemical and Technological Processes 1. Lyudmila Dmitrievna KORMUSHKINA Automation. Head of Audit Section at Internal Audit Department at IDGC Holding, OAO Share in the charter capital - none. 2. Izumrud Aligadzhievna ALIMURADOVA 10. Igor Vladimirovich BUTAKOV Head of Internal Audit Department at IDGC Holding, OAO Born in 1961 Deputy General Director – Chelyabenergo director. 3. Irina Aleksandrovna PHILIPPOVA Education: Chelyabinsk Institute for Agricultural Automation and Electrification (1983). Leading expert of Audit Section at Internal Audit Department at IDGC Holding, OAO Share in the charter capital - none. 4. Tatyana Aleksandrovna SELIVERSTOVA The MB members performed no transactions on share acquisition or alienation during the reported period. Head of Equity Section at Corporate Governance and Shareholder Relations Department at IDGC According to the Charter, employer’s rights and liabilities, on behalf of the Company, in regard to the Holding, OAO MB members are performed by the BoD or a person authorized by the BoD. Conditions of labor contracts (including remuneration), concluded with the MB members in the name of the Board of Directors, are 5. Vladimir Nikolayevich ARKHIPOV First Deputy Head of Security Department at IDGC Holding, OAO determined by Valery Nikolayevich RODIN. No remuneration is paid to the MB members for MB session 2010 business report participation. The Audit Commission covers the following spheres: • Audit of financial and operating documentation, including initial accounting documents (if required); General Director • Audit of the legality of resolutions and performance of the executive bodies, including concluded Operating control is administered by the sole executive body – the General Director. His competence contracts and completed transactions; includes all current operating issues, except for issues referred to the competence of the GSM, Board of • Audit of the compliance of transactions’ conditions with the conditions of transactions made under the Directors and Management Board. comparable circumstances; • Analysis of the compliance of the accounting policy with the current regulatory documents; Valery Nikolayevich RODIN, the General Director, entered the office on March 30, 2009 on the basis of • Analysis of the financial status and detection of reserves for improving economic situation; the BoD resolution (Protocol #52 dd. 27.03.2009). His powers were prolonged and he was reappointed by • Analysis of timeliness and correctness of payments to contractors, various budgets, shareholders and other creditors; the BoD resolution adopted on 29.03.2010 (Protocol #66 dd. 29.03.2010). • Analysis of payments of debtors, including timeliness and adequacy of measures taken by the executive bodies; The CEO’s remuneration, according to item 18.6. of the Charter, is determined by the contract concluded • Other activities under the AC competence. between him and the Company. The conditions of the labor contract are approved by the BoD. The CEO’s share in the Charter capital totals 0.0081%. There were no transactions on acquisition or alienation of AC remuneration and payment procedure are determined by the Regulations on Remunerations and shares during the reported period. Compensations paid to the AC members, approved by the Company’s GSM. External auditor Audit Commission In 2010 a nominee for an auditor position was selected by the Holding’s audit tender commission. The Financial operations of IDGC of Urals, OAO are controlled by the Audit Commission, according to item commission recommended the following auditor company as our auditor – Fineart-Audit, ООО. Afterwards 24.1 of the Charter. The membership is 5 (Five) persons. it was approved by the AGSM as the auditor for 2010. The cost of 2010 statement audit totaled RUR 1 921 429.4, including 18%VAT.
Control over our subsidiary and associated companies While managing our subsidiary and associated companies, we strive to optimize our assets reducing stakes in non-core and inefficient businesses as well as businesses unable to be consolidated for further enterprise value growth. Thus, in 2010 we completed restructuring of Permenergotrans, OOO (in the form of its transformation into Uralenergotrans, OOO) and subsequent merger of Urals Transport Company, OOO, Chelyabinsk Autotransport Company, OOO and Perm Autotransport Company, OOO into it during the creation of the united autotransport company. Uralenergotrans, OOO in 2011 will develop according to the break-even plans of the merged company. In 2010 we also withdrew from Sverdlovenergozhylstroi, OAO due to its liquidation. Our subsidiary and associated companies are as follows: IDGC of Urals, ОАО
*All AC positions are as of the election date.
64 65 Our subsidiary and associated companies are as follows:
Name Location Main business lines Share in the charter capital
Ekaterinburg Grid Company, ОАО 1 Ulitsa Borisa Eltsyna, Energy transmission and 91,04% (EESK, OAO) Ekaterinburg distribution
Ekaterinburgenergosbyt, ОАО 48 Ulitsa Surikova, Ekaterinburg Energy purchase of sales on 91,04% wholesale and retail markets
Uralenergotrans, ООО 140 Ulitsa Mamina Sibiryaka, Transportation services 100% Ekaterinburg
Security Service Permenergo, ООО 3 Komsomolsky Prospect, Perm Security services 100%
Permelektrosetremont, ОАО 38 Ulitsa Geroev Hasana, Perm Repair of electric equipment 100%
Insurance company Privat- 48 Komsomolsky Prospect, Perm Insurance services 99,87% Energostrakh, ZАО
Kurganenergo, ОАО 40 Ulitsa Lenina, Kurgan Energy transmission and 49% distribution
Managing Company 2 Ulitsa Sibirskaya, Perm Under removal from the United 45% Energofinance, ZAO State Register of Legal Services
Other financial investments are as follows:
Name Location Main business lines Share in the charter capital
OGK-2, ОАО Solnechnodolsk, the Thermal power and energy 0,000567% Stavropol region production
TGK-9, ОАО 48 Komsomolsky Prospect, Thermal power and energy 0,004150 Perm production
Sverdlovenergosbyt, ОАО 92 Ulitsa Kuznechnaya, Energy purchase of sales on 0,01738 Ekaterinburg wholesale and retail markets
FSK UES, ОАО 5a Ulitsa Akademika Chalomeya, Energy transmission and 0,000054 Moscow distribution
Insurance company The Rings of 3 Ulitsa Marshala Zhukova, Inactive 7,4037 the Urals, ООО Ekaterinburg
Perm Airlines, ОАО 47 Ulitsa Kuibysheva, Perm Inactive 10
Uralenergostroi, ОАО 97a Prospect Lenina, Ekaterinburg Inactive, under bankruptcy process 5,73 IDGC of Urals, ОАО
66 Automated control systems, 1980-s. 2008-2010 age structure dynamics shows a sustainable personnel rejuvenation. The share of employees up to 35 years grew by 4%. To retain the trend we regularly take various measures, including elaboration and implementation of schedules on the retirement of personnel with grounds for retirement and working pensioners, involvement of elderly professionals in teaching and implementation of new Regulations on Mentoring
According to the Program of Personnel Endorsement and Development we expect the following measures to be taken to improve qualification features: 9.1. HR policy. • Preparation of 2010 education plan for each employee category, taking into account tactic and strategic Our HR policy is a perspective system of goals and aims corporate objectives; based on basic values and aimed at long-term development. • Determination of the procedure for selecting and assigning young personnel to local education institutions based on
Keeping in mind our current HR policy, on June 23, 2010 the 2010 business report BoD approved the Program of Personnel Endorsement and the Regulations on Targeted Education of Personnel Development for 2010-2014 (protocol #71 dd. 25.06.2010) that graduated from high and technical schools; covers the following spheres: • Enhancement of cooperation between the Company and • Preservation of personnel potential: determination of a education institutions; specific employee group that have a pivotal importance for • Facilitation of mentor system. the Company and perfection of motivation system and social programs, social partnership enhancement; • Replacement of personnel potential: elaboration and implementation of measures taken to rejuvenate personnel, Education structure generally features an equal proportion of employees graduating from high and especially workers in our production units; technical schools. During the reported period we implemented the Regulations on Personnel Education in • Enhancement of personnel potential: arrangement of personnel a new version that stipulates a successful and united approach to education for all structural subdivisions. reserve and development of training and retraining systems. The Company determined the following training lines: • On-site training for operational personnel; • Obligatory external training, including our corporate training center; • Additional educational programs for all personnel categories arranged on the initiative of department heads, HR departments and personnel itself.
Personnel structure Besides training at the corporate center, during the reported period our Changes in personnel structure and headcount senior and middle officers as well as specialists and clerks were trained by mirror general trends of energy sector reforms. educational institutions with licenses in energy industry, industrial, ecological In 2010 we recruited staff due to active and fire safety, labor protection (St. Petersburg, Ivanov and Kazan energy acceptance of grid objects into maintenance universities, UrFU, Perm State Technical University, etc.). Non-core staff and exploitation. is trained by various educational institutions of Ekaterinburg, Perm and Chelyabinsk, Moscow or St. Petersburg.
Personnel availability level is 98%, staff Targeted training of the personnel and students at high and technical schools turnover is stable and low for the last years. as well as scholarship projects are integral and traditional components of personnel training.
As of 2010 our personnel structure consists of 19% senior and middle officers, 37% specialists and clerks and 44% workers. The breakdown has undergone no significant changes and is optimal at the time. At the same time, the Developing personnel reserve share of workers dominates in the personnel structure due to technological processes Arrangement and evolution of personnel reserve is one of the most important HR directions. It is requiring immense labor costs. Age structure aimed at providing the Company with highly-skilled workers. The Program for Personnel Endorsement demonstrates predominance of employees and Development determines as a top priority update and development of engineering and transmission personnel reserve (4 levels that depend upon occupied position). belonging to the categories of up to 35 years and 45-pensioners. In 2010 according to the Program there was a range of trainings for reserve candidates - 2-week energy efficiency courses in Germany as well as other trainings and core courses. As a result of such targeted IDGC of Urals, ОАО involvement of middle and operating managers, 7 managers were appointed to Level 1 positions, including rotation in HQ and branch subdivisions.
68 69
Social policy child care During the reported period the Company supported preschools, educational and social centers for children Our social policy is one of the most important (residential schools in Berezovsky, Bulanash, orphan home in Nizhnyaya Tura, etc.). In the Perm region spheres in our HR policy aimed at securing we support Sodeistvie Charity Fund that promotes social projects aimed at creation of conditions for youth personnel social stability using various social job placement, additional education, healthy life-style promotion. programs. The key objectives of our social program are: • personnel and family care as well as veteran corporate volunteering care; Development of corporate volunteering among our • creation of socially responsible corporate image personnel occupies a special place in our charity with a view to attract and retain highly-skilled practices. During the reported period we arranged workers; several social projects: “IDGC of Urals is a territory • creation of favorable working atmosphere; for the good” (children clothing, hygiene products • provision of decent living for our pensioners. and toys collected for orphan homes), “Donating blood you save someone’s life” (donor event among the personnel), “The brightest New Year’s Tree” (charity event for the Sverdlovsk cancer infant
Our social program stipulates important social projects, their implementation and financial resources. It center, orphan homes and residential schools). 2010 business report includes: IDGC of Urals, OAO received a thank-you letter 1. Voluntary medical insurance. signed by the Governor and Government of the 2. Personal accident and sickness insurance. Sverdlovsk region for social and charity activity during 2010. 3. Medical services at aid posts. 4. Personnel treatment, including health resorts. 5. Health-promotion campaign for children. 6. Non-state pension coverage. 7. Various events for personnel and their families. 8. Veteran and youth care. 9.3. PR and GR 9. Discounts, guarantees and compensations paid to the personnel as is stipulated by the Collective agreement. IDGC of Urals pays a lot of attention to the evolution of its reputation as a key component of strategic management. The Company painstakingly implements its information policy adhering to long-term communications strategy and united reputation policy principles of IDGC Holding, OAO. The key sphere is interaction with mass media with a view to form a positive reputation, increase information influence 9.2. Welfare and Charity and promote the interests of the Company. In 2010 there were 5 240 Company’s messages distributed via mass media (target - 4 500 messages, completion – 116%). 89% of the messages were initiated by our One of the key directions that consolidated our reputation in the eyes of the public and business community PR department. Positive and neutral messages were over 98% of all messages. High portion of messages as socially responsible and efficient company was charity projects. Our branches and subsidiaries participated initiated by our PR department demonstrates that the Company controls its image and it explains low in welfare and charity. During the reported period our plans were focused on: portion of negative messages.
IDGC of Urals occupies leading positions in information activity among energy sector companies: it renaissance of spiritual and historical centers initiated over 80% of all messages. Key topics of the messages in 2010 were investment program Supported by IDGC of Urals Ekaterinburg Eparchy and Revival of the Urals Orthodox Sanctuaries implementation, repair results, operations during complicated natural phenomena (flood, thunder storms, Fund implement a long-term renovation program for Sverdlovsk orthodox temples. In the Perm etc.) as well as post-incident restoration of supply. These topics were disclosed in 70% of all messages. region we continued our close cooperation with Belaya Gora Charity Fund facilitating renovation of 10% covered our social activities and 7% shed light upon our corporate governance and stock market. Krestovozdvizhensk Cathedral being a part of Belogorsk friary. Also we co-financed the restoration of a federal monument (Episcopal metochion of Mitrophan Voronezhsky Krest Temple).
support of education, culture and art The Urals Pearl Charity Fund and we supported Perm Academic Opera and Ballet Theatre. Besides, we co-financed a monument to A.S. Popov, Russian radio inventor (Perm). With our support energy faculty of Perm State Technical University encouraged its prominent students.
support of unprotected population stratum We have long-term programs aimed at supporting less protected population stratums – pensioners, invalids and large families. The Company traditionally IDGC of Urals, ОАО finances Victory Day events all over its service area. In 2010 Sverdlovenergo and Permenergo supported regional veteran organizations during the celebrations devoted to the 65th anniversary of Victory in Great Patriotic War.
70 71 Exhibitions are important parts of developing brand communications, our marketing as a leading service Injury prevention is our separate activity sphere. In 2010 gridco as well as shaping and supporting MRSK Holding’s image. In 2010 we participated in 11 large under PR-program “Caution: Electricity!” our specialists exhibitions, including: Innoprom-2010 (arranged by the Russian Government initiative), International arranged 520 lessons devoted to electrical safety in schools Specialized exhibition “Russian Grids – 2010” (our representatives co-presented the Company as a part of of the Sverdlovsk, Chelyabinsk and Perm regions. In the united delegation of IDGC Holding). During the exhibition we signed contracts with Polimer Apparat, ZAO on voltage suppressor delivery and with Energy+21, ZAO on supporting and rod polymeric insulator. addition, there were electric tests for primary schoolchildren on the rules of electrical safety and special certificates. In 2010 we arranged cooperation with the All-Russia Fund for Small and Medium-sized Businesses There were special lessons and audio-visual aids for teachers (Opora Rossii, OOO). Within the frameworks of the cooperation agreement dd. October 28, 2009, concluded dealing with life safety fundamentals. Mass media published between IDGC Holding and Opora Rossii, our branches concluded similar agreements with regional 453 articles on electric injury prevention and observation of offices of the fund. The key directions for execution of the agreements are cooperation in terms of network protective zone rules. Regional radio stations and TV creation of favorable conditions for the evolution of small and medium-sized businesses; optimization of channels broadcast our audio and video clips on electric injury prevention among relations between gridcos and small and medium-sized businesses during connection processes, facilitation adults and children (587 broadcasts). 2400 visual aids devoted to infant electric of arrangement of united open information area between businesses and gridcos. injury prevention were posted on school stands, 2 500 book-markers on the rules of conduct near transmission lines and household equipment handling rules were The Company pays a lot of attention to building internal communications. In 2010 we produced 12 2010 business report also distributed among schoolchildren. Supported by the Ministry of Education of corporate newspaper issues. Articles were mainly devoted to measures on improvement of working the Chelyabinsk region we arranged 300 stationary electric safety stands in all conditions, acquisition of new equipment and vehicles, management initiatives, activities of the Veterans secondary schools of Chelyabinsk, Zlatoust, Chebarkul, Troitsk and rural areas. Council and Young Professional Council
In 2010 we arranged the celebration of 65th anniversary of the Victory and honoring of our veterans devoted to Power Engineer’s Day and 90th anniversary of GOELRO We pay a lot of attention to the promotion of energy saving and energy-saving technologies. In 2010 plan. For the Victory anniversary the Company printed a book devoted to our veterans IDGC of Urals and Energy-Saving Institute of the Sverdlovsk region reprinted a college textbook on (“These sundry faces...”). The book obtained an award “The Book of the Year” energy-saving fundamentals (edited by N.I.Danilov and Y.M. Schelokov) and a high-school textbook on (established by Ekaterinburg Major Library). resource and energy usage prepared for elective course on energy saving. It was presented on 2nd annual exhibition “Children have the best” (Moscow, central exhibition hall).
The Company is very active in PR and GR. In 2010 we signed an agreement on social and economic cooperation between the Government of the Sverdlovsk region and IDGC of Urals. The subject of the agreement was cooperation for solving social, economic and ecological tasks within the framework of local strategic development, creation of conditions for efficient operations as well as growing contribution 9.4. Ecology policy to social and economic regional development. Similar document was signed by the Perm administration.
During the reported year the Company continued its activities aimed at air and water protection, land GR targeting enables us to obtain support of our initiatives from the regional administrations. Thus, in conservation and decrease in pollutant effects. In 2010 the Perm administration supported our initiative to create a pilot project on complex metering system. 2010 we took the following measures: The Government of the Sverdlovsk region repeatedly declared on supporting our initiative to create united • Air protection (development of emission limit grid area in the region and emphasized drafts, laboratory analysis over air quality and our contribution to social sphere and own level of physical effects); training materials. On our service area • Protection and sound water use (laboratory analysis of ground-water quality, launch of cold- we successfully implement agreements on water metering on artesian wells); grid evolution. Regional executive heads • Protection and sound land use (ecological control regularly attend our object-launching over land near landfills, biochemical waste events. Thus, in 2010 Mikhail Yurevich, analysis). the Chelyabinsk Governor, visited Obligatory payments for negative environmental 110/10/10 kV “Massivnaya” substation impact is the key legislative requirement. and participated in the launch of 110/10 kV “Granitnaya” substation. Aleksandr Misharin, the Sverdlovsk Governor,
IDGC of Urals, ОАО participated in the launch of 110/10/6 kV “90th GOELRO anniversary” substation.
72 73 Payments for negative environmental impact RUR thous.
2007 2008 2009 2010
Permenergo 1 628 1 774 1 698 1 878
Air pollution payments 8 7 7 5
Waste disposal payments 1 620 1 767 1 691 1 873
Chelyabenergo 1 471 2 064 1 495 1 193
Air pollution payments 34 20 15 1
Waste disposal payments 1 437 2 044 1 480 1 192
Sverdlovenergo 376 829 1 368 1 411
Air pollution payments 23 34 10 21
Waste disposal payments 353 629 938 1 150
Waste water disposal 0 166 420 240
IDGC of Urals 3 475 4 667 4 561 4 482
Air pollution payments 65 61 32 27
Waste disposal payments 3 410 4 440 4 109 4 215
Waste water disposal 0 166 420 240
Ecological expenses include various environmental activities, waste and sewage disposal, elaboration of environmental protection projects.
Ecological expenses (direct and indirect), RUR thous.
2007 2008 2009 2010
Permenergo 2 661 2 246 3 843 4 641
Chelyabenergo 1 570 903 3 378 3 072
Sverdlovenergo 7 030 6 307 6 155 9 195
IDGC of Urals 11 261 9 456 13 376 16 908 IDGC of Urals, ОАО
74 Under high voltage, 1980-s Should you have any questions that were not disclosed by the annual report, do not hesitate to contact us Shareholders can obtain detailed information on shareholding at our branches listed below: using information below: Perm Full company name Open joint-Stock Company Interregional Distributive Grid Company Permenergo branch of Urals 2010 business report 48 Komsomolsky Prospect, Perm, 614990 Short company name IDGC of Urals, ОАО Phone: /342/ 243-53-20 Location 140 Ulitsa Mamina Sibiryaka, Ekaterinburg, Russia, 620026 Postal address 140 Ulitsa Mamina Sibiryaka, Ekaterinburg, Russia, 620026 Shareholder relations directorate Phone: /342/ 243-52-54 PSRN 1056604000970 Fax: /342/ 240-73-60 TIN / KPP code 6671163413 / 660850001 Room 327, 48 Komsomolsky Prospect, Perm, 614990 e-mail: [email protected] Web-site: www.mrsk-ural.ru Chelyabinsk Contact phone: (343) 215-26-00, 215-25-51 Our Corporate Secretary Mr. Sergey GUSAK Chelyabenergo branch 5 Ploschad Revolutsii, Chelyabinsk, 454000 Corporate Governance Phone /343/ 215-26-65 /351/ 267-85-20 Deparment Fax /343/ 215-25-84 Shareholder relations directorate Phones: /351/ 267-87-04, /351/ 267-85-20 Our registrar Fax: /351/ 267-80-10
Name Closed Joint-Stock Company Registrar Company STATUS Ekaterinburg (STATUS, ZAO) Sverdlovenergo branch Location 32 building 1 Ulitsa Novorogozhskaya, Moscow, 109544 140 Ulitsa Mamina Sibiryaka, Ekaterinburg, 620026 Postal address 32 building 1 Ulitsa Novorogozhskaya, Moscow, 109544 Contact phones (495) 974-83-45, 974-83-50, fax (495) 678-71-10 e-mail: [email protected] License # 10-000-1-00304 Issued 12.03.2004 г. Maturity termless Issuing authority Federal Service for Financial Markets Registrar branch Ekaterinburg branch 61 Ulitsa Krasnoarmeyskaya, Ekateriburg, 620027, ground floor (STATUS, ZAO), (343) 266-91-30, 266-91-31 e-mail: [email protected]
Perm branch: Office 702, 50 Ulitsa Lenina, Perm, 614990 Telephone: (342) 218-01-66 IDGC of Urals, ОАО
76 77 11. Abbreviations SE Sverdlovenergo
Sverdlovsk REK Regulator in the Sverdlovsk region AC Audit Commission Thous. Thousand AGSM Annual General Shareholder Meeting VAT Value-added tax BoD Board of Directors VMI Voluntary medical insurance Bln Billion ZAO Form of business ownership in Russia (Closed Joint-Stock Company) Capex Capital Expenditures
CBC Corporate Behavior Code
CEO Chief Executive Officer
Chelyabinsk ETO Regulator in the Chelyabinsk region
ChE Chelyabenergo
ChEMK Chelyabinsk Electric Metallurgy Plant 2010 business report COO Chief Operating Officer
CU Conventional unit
EGSM Extraordinary General Shareholder Meeting
ENES United National Energy System
F Forecast
FSC Federal Security Commission
FST Federal Tariff Service
GRES State power station
GOELRO State Russian Electrification Plan
GUP Form of business ownership in Russia (state unitary company)
HQ Head-quarters
IAS International Accounting Standards
IDGC Interregional Distributive Grid Company
kV Kilovolt
kW Kilowatt
kW/h Kilowatt/hour
KTP Package substation
MB Management Board
Mln Million
MVA Megavolt ampere
MW Megawatt
NChOU Form of business ownership in Russia (Non-state private educational institution)
OAO Form of business ownership in Russia (Open Joint-Stock Company)
OOO Form of business ownership in Russia (Limited Liability Company)
Perm REK Regulator in the Perm region
PE Permenergo
PS Substation
RAS Russian Accounting Standards
RGR Required gross revenues
IDGC of Urals, ОАО RUR Russian ruble
RZHD Russian Railroads
SAC Subsidiary and associated company
78 79 12. Appendices Additional agreement #2 to contract on Monthly rental fee The Company alongside with its affiliate transportation rent #324 dd. 01.07.2009 – RUR 786 900.72 (Uralenergotrans, ООО) owns 20% and more of a 12.1. Interested-party transactions concluded with Urals Transport Company, including VAT transactor’s charter capital. Generally, during 2010 the Board of Directors approved 47 interested-party transactions. ООО (Protocol #71 dd. 25.06.2010) Contract on inspection of technical status RUR 480 000 A shareholder (IDGC Holding, ОАО), possessing 20% The subject of a transaction Price Interested party of construction and preparation of expert including VAT and more of the Company’s voting shares, owns 20% and conclusion on projects at 110/35/6 kV more of voting shares of another transactor (ICUES, Additional agreement to #1 to contract - A shareholder (IDGC Holding, ОАО), possessing 20% Belogorye substation concluded with ОАО). #62.2060.09 dd. 15.09.2009, concluded and more of the Company’s voting shares, owns 20% and Engineering Center of the Urals Energy with Engineering Center of the Urals more of voting shares of another transactor (ICUES, Sector, OAO (Protocol #71 dd. 25.06.2010) energy sector, OAO (Protocol #64 dd. ОАО). 19.02.2010) Contract on immovables rent concluded Monthly rental A shareholder (IDGC Holding, ОАО), possessing 20% with Permelektrosetremont, OOO fee RUR 16 225 and more of the Company’s voting shares, owns 20% Contract on transportation services RUR 500 756 600, The Company alongside with its affiliate including VAT and more of voting shares of another transactor concluded with Urals Transport Company, including VAT (Uralenergotrans, ООО) owns 20% and more of a ООО (Protocol #65 dd. 09.03.2010) transactor’s charter capital Contract on immovables rent concluded Monthly rental A shareholder owning 20% and more of the Company’s with FSK UES, OAO (Protocol #72 dd. fee RUR 243 653 voting shares (IDGC Holding, OAO), since its Contract on transportation services RUR 500 756 600, The Company alongside with its affiliate 03.08.2010) including VAT affiliated person (S.I.Shmatko, a BoD member) occupies concluded with Perm Transport Company, including VAT (Uralenergotrans, ООО) owns 20% and more of a management positions in a legal entity being a ООО (Protocol #65 dd. 09.03.2010) transactor’s charter capital transactor (FSK UES, OAO). 2010 business report
Contract on transportation services RUR 475 005 441 The Company alongside with its affiliate Vehicle SPA concluded with Perm RUR 60 000 The Company alongside with its affiliate concluded with Chelyabinsk Transport including VAT (Uralenergotrans, ООО) owns 20% and more of a Transport Company, OOO (Protocol #72 including VAT (Uralenergotrans, ООО) owns 20% and more of a Company, ООО (Protocol #65 dd. transactor’s charter capital dd. 03.08.2010) transactor’s charter capital. 09.03.2010) Vehicle SPA concluded with Perm RUR 45 000 The Company alongside with its affiliate Contract on immovables rent concluded Monthly rental A shareholder (IDGC Holding, ОАО), possessing 20% Transport Company, OOO (Protocol #72 including VAT (Uralenergotrans, ООО) owns 20% and more of a with Security Service Permenergo, OOO fee – RUR 5 662, and more of the Company’s voting shares, owns 20% dd. 03.08.2010) transactor’s charter capital. (Protocol #67 dd. 07.04.2010) including VAT and more of voting shares of another transactor Additional agreement #1 to contract - A shareholder owning 20% and more of the Company’s Contract on onerous services concluded RUR 129 940.2 A shareholder owning 20% and more of the Company’s #607/2008 dd. 17.12.2008 on local voting shares (IDGC Holding, OAO), since its with FSK UES, OAO (Protocol #67 dd. including VAT voting shares (IDGC Holding, OAO), since its telecom services concluded with SO UES, affiliated person (S.I.Shmatko, a BoD member) occupies 07.04.2010) affiliated person (S.I.Shmatko, a BoD member) occupies OAO (Protocol #72 dd. 03.08.2010) management positions in a legal entity being a management positions in a legal entity being a Contract on immovables rent concluded Monthly rental transactor (SO UES, OAO). transactor (FSK UES, OAO). with FSK UES, OAO (Protocol #67 dd. fee RUR 85 783.6 Contract on equipment maintenance RUR 3 327 174.0 A shareholder (IDGC Holding, ОАО), possessing 20% 07.04.2010) including 18%VAT concluded with EESK, OAO (Protocol including VAT and more of the Company’s voting shares, owns 20% Contract on transport repair and RUR 2 456 000 The Company alongside with its affiliate #73 dd. 03.09.2010) and more of voting shares of another transactor maintenance concluded with Perm including VAT (Uralenergotrans, ООО) owns 20% and more of a Additional agreement #6 to contract - The Company alongside with its affiliate Transport Company, OOO (Protocol #67 transactor’s charter capital #16 dd. 01.01.06 concluded with Urals (Uralenergotrans, ООО) owns 20% and more of a dd. 07.04.2010) Transport Company, OOO (Protocol #73 transactor’s charter capital. Contracts on databases (automated RUR 41 300 A shareholder (IDGC Holding, ОАО), possessing 20% dd. 03.09.2010) directory and documentation system) including VAT and more of the Company’s voting shares, owns 20% and Contract on equipment maintenance Monthly fee A shareholder owning 20% and more of the Company’s for metrological services concluded more of voting shares of another transactor (ICUES, concluded with FSK UES, OAO voting shares (IDGC Holding, OAO), since its with Engineering Center of the Urals ОАО). (Protocol #73 dd. 03.09.2010) RUR 5 758.71 affiliated person (S.I.Shmatko, a BoD member) occupies Energy Sector, ОАО (Protocol #67 dd. including VAT management positions in a legal entity being a 07.04.2010) transactor (FSK UES, OAO). Additional agreement #3 to contract Monthly fee - IDGC of Urals, an affiliate of IDGC Holding owning Contract on update of design and estimate RUR 1 180 000 A shareholder (IDGC Holding, ОАО), possessing 20% dd. 05.02.2008 on local telecom services RUR 20% and more of the Company’s voting shares, owns documentation on object 110/35/6 kV including VAT and more of the Company’s voting shares, owns 20% and concluded with Ekaterinburgenergosbyt, 20% and more of voting shares of another transactor “Belogorye” substation and 110 kV more of voting shares of another transactor (ICUES, ОАО (Protocol #67 dd. 07.04.2010) 33 340.9 including (Ekaterinburgenergosbyt, ОАО). VAT aerial line “Chernoistochinsk-Belogorye” ОАО). concluded with Engineering Center of the Contract concluded with Balance Forecast RUR 7 096 584 A shareholder owning 20% and more of the Company’s Urals Energy Sector, OAO (Protocol #73 Agency, ZAO including VAT voting shares (IDGC Holding, OAO), since its dd. 03.09.2010) affiliated person (S.I.Shmatko, a BoD member) occupies (Protocol #69 dd. 11.05.2010) management positions in a legal entity being a Contract on cession concluded with RUR 7 143 214.19 A shareholder (IDGC Holding, ОАО), possessing 20% transactor (FSK UES, OAO). Sverdlovenergozhylstroi, OAO (Protocol and more of the Company’s voting shares, owns 20% #73 dd. 03.09.2010) and more of voting shares of another transactor Contract on grid rent #DI-53 concluded RUR 134 100 A shareholder owning 20% and more of the Company’s Additional agreement #5 to immovables Monthly rental fee: A shareholder (IDGC Holding, ОАО), possessing 20% with FSK, ОАО (Protocol #70 dd. including VAT voting shares (IDGC Holding, OAO), since its rent contract #00/77-08 dd. 01.02.2008 and more of the Company’s voting shares, owns 20% 07.06.2010) affiliated person (S.I.Shmatko, a BoD member) occupies concluded with Ekaterinburgenergosbyt, - since 01.12.2009 and more of voting shares of another transactor management positions in a legal entity being a Contract on grid rent #DI-37 concluded RUR 226 824.8 OAO (Protocol #74 dd. 04.10.2010) to 31.08.2010 – transactor (FSK UES, OAO). with FSK, ОАО (Protocol #70 dd. including VAT RUR 1 309 917.78 07.06.2010) including VAT;
Contract on grid rent #143-898 concluded RUR 100 000 - since 01.09.2010 to with FSK, ОАО (Protocol #70 dd. including VAT 31.10.2010 – RUR 07.06.2010) 1 340 465 including VAT Contract on immovables rent concluded RUR 70 122 The Company alongside with its affiliate IDGC of Urals, ОАО with Chelyabinsk Transport Company, including VAT (Uralenergotrans, ООО) owns 20% and more of a Contract on R&D works concluded with RUR 286 740.0 A shareholder (IDGC Holding, ОАО), possessing 20% OOO (Protocol #71 dd. 25.06.2010) transactor’s charter capital Engineering Center of the Urals Energy including VAT and more of the Company’s voting shares, owns 20% and Sector, OAO (Protocol #75 dd. 22.10.2010) more of voting shares of another transactor (ICUES, Agreement on protection of commercial - A shareholder (IDGC Holding, ОАО), possessing 20% ОАО). information concluded with IDGC and more of the Company’s voting shares, owns 20% Holding, OAO (Protocol #71 dd. and more of voting shares of another transactor. 25.06.2010)
80 81 Contract on pre-project approvals and RUR 824 704.92 A shareholder (IDGC Holding, ОАО), possessing 20% Agreement on technological cooperation - A shareholder owning 20% and more of the Company’s D&E documentation concluded with including VAT and more of the Company’s voting shares, owns 20% and and arrangement of operational reliability voting shares (IDGC Holding, OAO), since its Engineering Center of the Urals Energy more of voting shares of another transactor (ICUES, of UES of Russia concluded with SO affiliated person (S.I.Shmatko, a BoD member) occupies Sector, OAO (Protocol #75 dd. 22.10.2010) ОАО). UES, OAO (Protocol #78 dd. 29.12.2010) management positions in a legal entity being a transactor (SO UES, OAO). Contract on pre-project approvals, RUR 5 610 000 A shareholder (IDGC Holding, ОАО), possessing 20% engineering research (geology, geodesy, including VAT and more of the Company’s voting shares, owns 20% and Contract on immovables rent concluded Monthly rental A shareholder owning 20% and more of the Company’s ecology), land allocation and update more of voting shares of another transactor (ICUES, with FSK UES, OAO fee RUR 29 911.2 voting shares (IDGC Holding, OAO), since its of D&E documentation concluded with ОАО). including VAT affiliated person (S.I.Shmatko, a BoD member) occupies Engineering Center of the Urals Energy management positions in a legal entity being a Sector, OAO (Protocol #75 dd. 22.10.2010) transactor (FSK UES, OAO).
Contract on D&E documentations RUR 2 095 765 A shareholder (IDGC Holding, ОАО), possessing 20% concluded with Engineering Center of the including 18%VAT and more of the Company’s voting shares, owns 20% and Urals Energy Sector, OAO more of voting shares of another transactor (ICUES, 12.2. Information on the observance of the Corporate Behavior Code ОАО). requirements Additional agreement to contract - A shareholder owning 20% and more of the Company’s Prepared according to FSC decree #03-849/r dd. 30.04.2003 on CBC observation annual reports guidelines. #607/2008 dd. 17.12.2008 on local voting shares (IDGC Holding, OAO), since its telecom services concluded with SO UES, affiliated person (S.I.Shmatko, a BoD member) occupies General Shareholder Meeting OAO (Protocol #76 dd. 12.11.2010) management positions in a legal entity being a 2010 business report transactor (SO UES, OAO). Shareholders should be notified on a GSM Observed Stipulated by item 11.5, article 11 of the Charter. Contract on immovables rent concluded RUR 40 468.74 A shareholder owning 20% and more of the Company’s in no less than 30 days prior to the date, with FSK UES, OAO (Protocol #76 dd. including VAT voting shares (IDGC Holding, OAO), since its irrespective of its agenda issues unless the 12.11.2010) affiliated person (S.I.Shmatko, a BoD member) occupies legislation stipulates a larger term. management positions in a legal entity being a transactor (FSK UES, OAO). Shareholders should possess a possibility Observed According to part 4, article 51 of the Federal Law to familiarize with the list of persons on Joint-Stock Companies, the Company provides an Contract on immovables rent concluded RUR 847 400 A shareholder owning 20% and more of the Company’s authorized to participate in a GSM starting opportunity to familiarize with the list of persons with SO UES, OAO (Protocol #76 dd. including VAT voting shares (IDGC Holding, OAO), since its on the date when information on a GSM is authorized to participate in a GSM for shareholders 12.11.2010) affiliated person (S.I.Shmatko, a BoD member) occupies announced and until an intramural GSM owning at least 1% of voting shares. management positions in a legal entity being a is closed (in case of an extramural GSM – transactor (SO UES, OAO). until the deadline for voting papers’ receipt). Contract on immovables rent concluded Monthly rental fee A shareholder (IDGC Holding, ОАО), possessing 20% Shareholders should possess a possibility Observed Stipulated by items 11.5. and 11.7, article 11 of the with Security Service Permenergo, OOO RUR 101 102.4 and more of the Company’s voting shares, owns 20% to familiarize with the materials, subject Charter. According to item 4.1 of the Regulations on (Protocol #76 dd. 12.11.2010) including VAT and more of voting shares of another transactor. to disclosure during a GSM arrangement the Procedure for GSM Convention and Arrangement, Contract on immovables rent (963.1 sq.m.) Monthly rental The Company alongside with its affiliate via electronic means of communications, materials related to GSM agenda issues should be concluded with Chelyabinsk Transport fee RUR 96 883.3 (Uralenergotrans, ООО) owns 20% and more of a including Internet. posted on the corporate web-site within the terms for Company, ООО (Protocol #76 dd. including VAT transactor’s charter capital. shareholder notification on GSM. 12.11.2010) Shareholders should possess a possibility to Observed Stipulated by subitem.2, item 6.2, article 6; item 13.3., Contract on immovables rent (1 335.8 Monthly rental The Company alongside with its affiliate introduce an issue to a GSM agenda or to article 13; item 14.4, article 14 of the Charter. sq.m.) concluded with Chelyabinsk fee RUR140 165.2 (Uralenergotrans, ООО) owns 20% and more of a demand the convention of a GSM without Transport Company, ООО (Protocol #76 including VAT transactor’s charter capital. the submission of a register extract in dd. 12.11.2010) case his share rights are recorded in the shareholder register system (in case his share Contract on immovables rent (845.1 sq.m.) Monthly rental rate The Company alongside with its affiliate rights are registered at a DEPO account concluded with Chelyabinsk Transport RUR 102 652.2 (Uralenergotrans, ООО) owns 20% and more of a – an extract from DEPO account for Company, ООО (Protocol #76 dd. including VAT transactor’s charter capital. executing the above-mentioned rights). 12.11.2010) The Charter or internal documents should Partially Our Charter and other internal documents do not Contract on immovables rent (1 516.3 Monthly rental fee The Company alongside with its affiliate have a requirement on obligatory presence observed contain statements stipulating their obligatory presence sq.m.) concluded with Chelyabinsk RUR 167 948.8 (Uralenergotrans, ООО) owns 20% and more of a of the CEO, MB members, BoD members, at a GSM; however, historically the CEO is present Transport Company, ООО (Protocol #76 including VAT transactor’s charter capital. dd. 12.11.2010) Audit Commission members and Company’s at a GSM. In accordance with item 10.10, article 10 auditor at a GSM. of the Charter, a GSM is presided over by the BoD Contract on immovables rent (1 784.9 Monthly rental fee The Company alongside with its affiliate Chairperson. sq.m.) concluded with Chelyabinsk RUR 126 670.2 (Uralenergotrans, ООО) owns 20% and more of a Transport Company, ООО (Protocol #76 including VAT transactor’s charter capital. In case the BoD Chairperson and his deputy are absent, dd. 12.11.2010) a GSM is presided over by any BoD member according to a resolution adopted by the BoD or BoD members Contract on personnel training and RUR 30 528 700 lodging concluded with Training Center including VAT present at GSM. of IDGC of Urals, NChOU (Protocol #76 Candidates should be obligatory present Partially The Russian legislation does not contain a requirement dd. 12.11.2010) while a GSM reviews issues on the election observed related to obligatory presence of the candidates at Immovables SPA concluded with RUR 8 000 000 IDGC Holding owning 20% and more of the of BoD members, CEO, MB members, Audit a GSM. The Charter does not also contain such Sverdlovenergozhylstroi, OAO (Protocol including VAT Company’s voting shares, alongside with IDGC of Commission members as well as on the requirement. Historically, when a GSM reviews issues #76 dd. 12.11.2010) Urals, owns 20% and more of the a transactor’s shares approval of the Company’s auditor. on the election of BoD members, CEO, MB members, (Sverdlovenergozhylstroi, ОАО). AC members, all candidates receive invitations.
Immovables SPA concluded with RUR 20 300 000 A shareholder (IDGC Holding, ОАО), possessing 20% General director and MB members are elected by the
IDGC of Urals, ОАО Permelektrosetremont, OAO (Protocol including VAT and more of the Company’s voting shares, owns 20% BoD. #78 dd. 29.12.2010) and more of voting shares of another transactor. Internal documents should stipulate the Observed Item 5.1 of the Regulations on the Procedure of GSM participant registration procedure. Convention and Arrangement defines the registration procedure for persons authorized to participate in a GSM.
82 83 Internal documents should stipulate BoD Partially Requirements to disclosing insider information are members’ obligation to notify the BoD observed stipulated by item 4 of our Regulations on Insider in a written form on intention to make Information. Thus, information on all insider Board of Directors transactions with the securities of a joint- transactions with the securities of the Company or stock company in which they are BoD its SACs, according to the Regulations on Insider members or BoD members of its SACs Information, is revealed and controlled by a special as well as disclose information on such subdivision of the Company executing control over transactions. insider information. Besides, according to item 4.2 of the The Charter should stipulate the BoD Observed According to subitem 19, item 15.1, article 15 of the Regulations, insiders are obliged, no later than the 3rd powers to approve a financial plan on an Charter, the BoD competence includes the approval day of the month following the reported one, to submit annual basis. of a business plan (updated business plan), including a written declaration on transactions with the securities an investment program; quarterly completion reports; of the Company or its SACs as of the reported period to approval (update) of target cash flow indicators. a subdivision controlling insider information usage. The BoD should approve risk management Observed The BoD approved the Regulations on Internal Internal documents should stipulate a Partially According to item 18.2, art.18 of the Charter, BoD procedure. Control Procedures (Protocol #49 dd. 26.02.2008), requirement to arrange a BoD session no observed sessions are held on demand but no less than once in 6 Risk Management Policy and Internal Control Policy less than once in 6 weeks. weeks. (Protocol #70 dd. 07.06.2010). BoD sessions should be arranged no less Observed The BoD arranges its sessions onсe in a month. In 2010 The Charter should stipulate a BoD right Observed The CEO is elected by the BoD. According to subitem than once in 6 weeks during the year when there were 16 BoD sessions. to adopt resolution on the suspension of the 12, item15.1, article 15 of the Charter the BoD the annual report is prepared. authority exercised by the CEO appointed by competence contains powers to elect the CEO and a GSM. pre-term termination of his/her authorities, including Internal documents should stipulate the Observed The Regulations on the Procedure for BoD Convention adopting of a resolution on pre-term cancellation of his/ procedure for BoD arrangement. and Arrangement stipulated the procedure of BoD 2010 business report her labor contract. arrangement.
The Charter should stipulate a BoD right Partially In accordance with subitem 13, item 15.1, article 15 Internal documents should stipulate that Partially Stipulated by subitems 24, 38, item 15.1, article 15 of to set requirements to qualifications and observed of the Charter, the BoD competence includes the the BoD should approve transactions with observed the Charter. remuneration of the CEO, MB members and determination of MB membership, election of MB 10% and more of asset value, except for heads of main structural subdivisions. members, setting of remunerations and compensations transactions settled during usual operations. paid to them, pre-term termination of their powers, including pre-term cancellation of their labor contracts. Internal documents should stipulate Observed According to item 3.1.1 of the Regulations on the BoD members’ rights for information Procedure for BoD Convention and Arrangement, BoD The Charter should stipulate a BoD right Observed According to item 21.6, article 21 of the Charter a CEO from executive bodies and heads of main members are authorized to obtain information on the to approve terms of contracts with the CEO labor contract on behalf of the Company is signed by subdivisions that is required for exercising Company’s activities, including commercial secrets, and MB members. the BoD Chairperson or a person authorized by the BoD. their functions as well as responsibility for to get familiarized with constituting, regulatory, Besides, according to item 21.7, art. 21 of the Charter, failures to forward this information. accounting, reporting, contractual and other documents. the BoD or person authorized by the BoD determines the terms of labor contracts with the CEO and MB A BoD Committee, responsible for strategic Observed On 09.09.2008 the Strategy and Development BoD members as well as exercises employer’s rights and planning or entrusting of such functions Committee was created. liabilities in relation to the CEO and MB members. onto another Committee, (except for the Audit Committee and Personnel and The Charter or internal documents should Not observed There is no such requirement in the Charter and other Remunerations Committee) should be created. stipulate a requirement that during the internal documents. approval of terms of contract concluded A BoD Committee (the Audit Committee) Observed On 09.09.2008 the Audit BoD Committee was created. with the CEO (managing company, that recommends an auditor to the BoD and managing director) and MB members interacts both with the auditor and the Audit BoD votes, belonging to the CEO and MB Commission should be created. members, are not counted. The Audit Committee should contain only Observed The Audit Committee membership was elected by the The BoD should contain at least 3 Observed The BoD contains at least 3 (three) independent independent and non-executive directors. BoВ on 30.07.2010. The AC membership totals 5 persons independent directors meeting CBC directors. and consists of independent and non-executive directors requirements. (Protocol #72 dd. 03.08.2010).
The BoD should not contain persons, found Observed There are no such persons in the BoD. The Audit Committee should be headed by Observed The Audit Committee is headed by an independent guilty in committing economic crimes or an independent director. director. crimes against the state, federal or local Internal documents should stipulate a right, Observed Stipulated by item 11.3. of the Regulations on the Audit authorities or underwent penalty under exercised by all Audit Committee members, Committee. administrative law for offences in business for access to any documents and information activities or in the sphere of finance, taxes under condition of confidentiality of data. and levies as well as securities market. A BoD Committee (the Personnel and Observed On 09.09.2008 the BoD adopted a resolution to create The Board of Directors should not contain Observed There are no such persons in the BoD. Remunerations Committee), acting to the Personnel and Remunerations Committee, acting persons being a stockholder, the CEO determine criteria for BoD candidate to determine criteria for BoD candidate selection and (managing director), a member of the selection and elaboration of a remuneration elaborate a remuneration policy. managing body or an employee of its policy, should be created. competitor. The Personnel and Remunerations Not observed The Personnel and Remuneration Committee is headed The Charter should stipulate requirements to Observed Stipulated by item 16.2, article 16; item 10.8., article 10 Committee should be headed by an by a person who is not a BoD member. elect BoD members using cumulative voting. of the Charter. independent director. Internal documents should stipulate BoD Observed According to the Corporate Governance Code (approved There should be no executive persons in the Not observed The Personnel and Remunerations Committee contains members’ obligation to refrain from actions by a BoD resolution, protocol #55 dd. 02.06.2009), a Personnel and Remunerations Committee. the Company’s executive persons – Aleksey Alekseevich that can lead to or are potentially able to BoD member should refrain from actions that can, in KRASNIKOV, a MB member of IDGC of Urals, lead to a conflict of interest and in case his opinion, lead to the conflict of interest as well as Deputy General Director for Security and Controlling at of such conflict – obligation to disclose should immediately inform the BoD on the conflicts. IDGC of Urals. information on the conflict. Besides, the Regulations on the Procedure of BoD Convention and Arrangement (approved by the EGM A BoD Committee on risks should be created Not observed There is no such Committee. – Management Board of RАО UES of Russia, OAO, or such functions should be entrusted onto MB protocol #1829/pr1 dd. 28.02.2008) BoD members, another Committee (except for the Audit while exercising their rights and liabilities, should act in IDGC of Urals, ОАО Committee and Personnel and Remunerations the interests of the Company, exercise their rights and Committee). liabilities conscientiously and reasonably.
84 85 A BoD Committee on corporate conflicts Not observed There is no such Committee. The internal documents should stipulate the Observed Item 4.2.1. of the Corporate Governance Code stipulates regulation should be created or such liability of executive bodies to refrain from that the General Director should refrain from any functions should be entrusted onto another actions that may lead or are potentially able actions that may lead to conflict of his/her interest and Committee (except for the Audit Committee to lead to conflicts of interest (in case of interests of the Company. The CEO should immediately and Personnel and Remunerations such conflicts – liability to inform the BoD inform the BoD on such conflict. Besides, item 21.14, Committee) should be created. about the conflicts). article 21 of the Charter stipulates that the CEO, MN members, while executing their rights and liabilities, A BoD Committee on corporate conflicts Not observed There is no such Committee. should act in the interests of the Company, exercise regulation should not contain executive their rights and liabilities regarding the Company persons of the Company. conscientiously and reasonably.
A BoD Committee on corporate conflicts Not observed There is no such Committee. The Charter or internal documents should Not observed According to subitem 12, item 10.2, article 10 of the regulation should be headed by an stipulate criteria for selection of a managing Charter, decision-taking on transition of the powers independent director. company (a managing director). exercised by the sole executive body, to a managing There should be internal documents Observed The procedure for Committee creation is stipulated company (a managing director) and pre-term termination approved by the BoD that stipulate the by article 19 of the Charter. The procedure for BoD of his powers is referred to the GSM’s competence. procedure of Committees arrangement and Committee arrangement and functioning are regulated Rights and liabilities of a managing company (a functioning. by the following Regulations approved by the BoD managing director) on current operations are determined (protocol #72 dd. 03.08.2010): the Regulations on the by the Russian legislation and contract concluded Audit Committee, the Regulations on the Personnel between such a managing company (a managing and Remunerations Committee, the Regulations on the director) and the Company. Strategy and Development Committee. Executive bodies should submit quarterly Partially According to subitem 36, item 15.1, article 15 of the 2010 business report The Charter should stipulate the procedure Not observed The Charter contains no requirements to the procedure work reports to the BoD. observed Charter, review of CEO’s reports on the Company’s for BoD quorum determination that ensures for BoD quorum determination that ensures obligatory operations (including execution of his duties), on obligatory participation of independent participation of independent directors in BoD session. execution of GSM and BoD resolutions is referred directors in BoD sessions. to the BoD competence. On a regular basis (monthly, The Charter is prepared in compliance to the Russian quarterly, semi-annually, annually) the CEO submits to legislation. According to the legislation, the quorum the BoD the following reports on: for a BoD session is determined by the Charter but should not be less than 50% of elected BoD members. • insurance coverage (every quarter);business plan According to item 18.7. of the Charter, BoD resolutions completion (every quarter/annually); are legitimate if they were adopted by no less than 50% • execution of AGM’s resolutions on dividend payout of BoD members. (annually); • investment program completion (every quarter/ annually); • purchasing program completion (every quarter); • BoD resolution execution (every quarter); • non-core assets sale (every quarter); Executive bodies • execution of the Regulations on Information Policy (every quarter); A joint-stock company should have a Observed According to item 21.1, article 21 of the Charter, • credit policy (every quarter); collegiate executive body (Management the Company has a collegiate executive body – the • KPI completion (every quarter /annually); Board). Management Board (Protocol #39 dd. 18.04.2008) • target cash flow indicators as of a certain period (every quarter); The Charter or internal documents should Observed According to 22.2 of the Charter, the MB competence • the observation of the Corporate Governance Code stipulate the necessity to approve immovable includes decision-taking on transactions on property, (semi-annually); property transactions or obtain a credit goods and services, book value of each totaling 1-25% by the management board, in case these of asset book value determined by the resolution date • the preparation of the Company for autumn and transactions are not large transactions and (except for the cases stipulated by subitem 38, item 15.1 winter activity (annually); are not subject to usual operations. of the Charter). • the measures taken to transit to RAB tariffs (every month); Internal documents should stipulate the Observed According to item 2.4.3. of the Credit Policy • registration of title on immovable property and procedure for the approval of operations that Regulations, the BoD and MB review issues on registration/re-registration of title on land plots go beyond financial and operating plan. operations that go beyond financial and operating plan, since they are subject to be updated in the business plan (annually); and cash flows targets reviewed by the BoD and MB. • residential communal objects management (annually).
Executive bodies should contain no persons Observed There are no such persons in the Company’s executive that are a stock holder, CEO (managing bodies. Contracts concluded between the company Observed The CEO’s and MB members’ contracts stipulate director), a managing body member or and the CEO (a managing company, liabilities on violations of the Regulations on employee of the competitor. managing director) as well as MB members confidential information usage. should stipulate the liability for violations of Executive bodies should contain no persons, Observed There are no such persons in the Company’s executive the Regulations on confidential information found guilty in committing economic crimes bodies. usage. or crimes against the state, federal or local authorities or underwent penalty under administrative law for offences in business activities or in the sphere of finance, taxes and levies as well as securities market. In case the functions of the sole executive body are exercised by a managing company or director, requirements lodged to the CEO and MB members should be met.
The Charter or internal documents should Not observed The Charter and internal documents do not stipulate the stipulate the prohibition for a managing statement.
IDGC of Urals, ОАО company (a managing director) to exercise similar functions for its competitor as well as to be in any other property relations with the Company besides managing services.
86 87 Secretary Information disclosure A joint-stock company should have a special Observed The Company has an elected corporate secretary officer (a secretary) who ensures the (Protocol #72 dd. 03.08.2010). According to the observation of requirements that guarantee Regulations on the Corporate Secretary, the key The BoD should approve an internal Observed Our Regulations on Information Policy were approved realization of shareholder rights and objectives of the secretary are: document determining rules and approaches by a BoD resolution (Protocol #47 dd. 18.11.2008). legitimate interests, by executive bodies and • to convene and arrange a GSM according to to information disclosure (the Regulations on officers. requirements set forth in the current Russian legislation, Information Policy). Charter and other internal documents; • to arrange BoD and BoD committees’ activities; Internal documents should stipulate a Not observed Information is disclosed according to the requirements • to assist BoD members/ BoD Committee members in requirement to disclose information on the of the Russian legislation and the Regulations on their activities; aims of share issue, persons reckoning to Information Policy. • to keep documents and disclose information on the acquire issued shares, including large block Company; of shares as well as information whether top • to arrange interaction between the Company (in the managers participate in share acquisition. name of the BoD and sole executive body) and its Internal documents should stipulate a list of Observed According to the Regulations on the Procedure shareholders. information, documents and materials subject for GSM Convention and Arrangement, a list of The Charter or internal documents should Observed Item 4.2 of the Regulations on the procedure for BoD to distribution among shareholders with a information, documents and materials subject to stipulate the procedure for nomination Convention and Arrangement as well as item 3 of view to solve GSM issues. distribution among shareholders with a view to solve GSM issues is approved by our BoD during GSM
(election) of the secretary and his functions. the Regulations on the Corporate Secretary stipulate 2010 business report the procedure for corporate secretary election. The arrangement. Regulations on the procedure for BoD Convention and A joint-stock company should possess a Observed The Company has a web-site where it discloses its Arrangement and the Regulations on the Corporate corporate web-site and regular information information (http://www.mrsk-ural.ru) . The Secretary determine his duties. disclosure using the web-site. Company ensures timely update of the corporate web- The Charter should stipulate requirements to Partially According to item 20.6, article 20 of the Charter site, including information disclosure according to the a secretary candidate. observed activities regulations, procedure for nomination and requirements of the current Russian legislation and the termination of powers, term of powers, rights and Regulations on Information Policy. liabilities of the corporate secretary are stipulated by Internal documents should stipulate a Observed According to the Regulations on Information Policy, the the Regulations on the Corporate Secretary approved by requirement on disclosure of information Company discloses information on the Company’s shares, the BoD. The Regulations stipulate requirements to a on transactions between the Company and shares of the Company’s SACs owned by managers and candidate for a corporate secretary position. persons, who are top managers according persons affiliated with them (including share quantity to the Charter, as well as transactions and category) as well as information on transactions between the Company and organizations in between the persons and the Company. which the Company’s top managers directly Significant corporate actions or indirectly own 20% and more of the charter capital or which can be significantly influenced by such persons in any way. The Charter or internal documents should Partially According to the Charter, the competence of GSM Internal documents should stipulate a Observed Our Regulations on Information Policy stipulate stipulate a requirement on approval of a observed (subitem 17, item 10.2., article 10) and BoD (subitem requirement on information disclosure on all that the Company discloses information on significant major transaction prior its conclusion. 24, item 15.1, article 15) includes approval of major transactions that can influence share price. transactions. A significant transaction is a transaction transactions in cases set forth by Chapter X of the that can have a significant influence on the Company’s Federal Law on Joint-Stock Companies. activities. An independent appraiser should be Observed Practiced according to requirements stipulated by the The BoD should approve an internal Observed The Company approved the Regulations on Insider obligingly involved for a market value Federal law on Joint-Stock Companies. document on the use of significant Information (approved by a BoD resolution, Protocol appraisal of property being a major information on JSC’s operations, shares and #47 dd. 18.11.2008). transaction. other securities and transactions with them The Charter should stipulate a prohibition Not observed The Charter does not stipulate the requirements. which is not public and disclosure of which to take any measures, while acquiring may have a significant influence on market large blocks of shares (acquisition), aimed price of shares and other securities. at protection of interests of executive bodies (or members) and BoD members and deteriorating shareholder status in comparison to the existing one (in particular, Control over financial and economic operations prohibition to adopt a resolution on issuing additional shares, share-convertible securities or issuing securities providing the right to The BoD should approve internal control Observed Our BoD approved the Regulations on Internal Control acquire shares, even if the right to adopt procedures over financial and operating Procedures (Protocol #49 dd. 26.12.2008). such a resolution is approved by the Charter transactions. prior to the end of desired share acquisition date). A special subdivision ensuring the Observed The Company has a special subdivision – Internal observation of internal control procedures (a Control and Audit Department ensuring observation of The Charter should stipulate a requirement Not observed Practiced according to the requirements set forth by supervision and auditing subdivision) should the internal control procedures. on obligatory involvement of an independent the Federal Law on Joint-Stock Companies. The Charter exist. appraiser for appraising current market does not stipulate the requirements. share value and possible changes of their Internal documents should stipulate a Not observed Internal documents do not stipulate the requirement. market value as a result of a merger. requirement on the determination of the structure and membership of a supervision The Charter should not stipulate a discharge Observed The Charter does not stipulate the requirement. and auditing subdivision by the BoD. of buyer’s duties on offering shareholders to sell their common shares (issue securities There should be no persons found guilty Observed There are no such persons in the subdivision. convertible into common shares) during the in committing economic crimes or crimes merger. against the state, federal or local authorities or underwent penalty under administrative IDGC of Urals, ОАО The Charter or internal documents should Not observed The Charter does not stipulate the requirement. law for offences in business activities or in stipulate a requirement on obligatory the sphere of finance, taxes and levies as involvement of an independent appraiser well as securities market in a supervision for determination of reorganization share and auditing subdivision. conversion rate.
88 89 There should be no persons being Observed There are no such persons in the subdivision. 12.3. 2010 Accounting Statements under RAS stockholders, CEO (a managing director), Codes member of a managing body or employee of its competitor in a supervision and auditing Balance Sheet as of Form#1 according to ARCMD 0710001 subdivision. as of December 31, 2010 Date 31.12.2010 Internal documents should stipulate a Partially According to our Regulations on the Audit Commission, term for submission of documents and observed requested materials and documents should be submitted RNCBO 76507836 materials to a supervision and auditing to AC members within 2 (two) working days since TIN 6671163413 subdivision for appraisal of completed the request. According to our Regulations on Internal Company: Open Joint-Stock company ”Interregional Distributive financial and operating transactions as Control Procedures, documents required for audit grid company of Urals» RNCEA 40.10.2 well as responsibility of executive persons are submitted by heads of subdivisions, branches and Taxpayer identification number and worker for non-submission within the representative offices within 3 days upon request of the ARCFO stipulated terms. subdivision authorized for internal control/ audit. In the Types of activities meantime, executive officers bear no responsibility for Legal organizational form: open joint-stock company ARCMU 384 non-submission. Units of measurement: RUR thous.
Internal documents should stipulate liability Observed Stipulated by our Regulations on Internal Control Location: 140 Mamina Sibiryaka Ulitsa, Ekaterinburg, Russia 620026 exercised by a supervision and auditing Procedures. subdivision to inform the Audit Committee on revealed violations (in case the Committee Assets is absent – to the BoD).
The Charter should stipulate a requirement Not observed This procedure is not stipulated by the Charter. 2010 business report on a preliminary appraisal by a supervision Line As of the As of the end code reported period and auditing subdivision of expediency of of the reported period operations that are not covered by financial and operating plan (non-standard operations). 1 2 3 4
Internal documents should stipulate the Observed Non-standard operations (operations uncovered by I. NON-CURRENT ASSETS procedure for non-standard operation financial and operating plan) are subject to inclusion approval by the BoD. into business plan and cash flow updates. According to Intangible assets 110 30 65 subitem 19, item 15.1, article 15 of the Charter, approval Fixed assets 120 27 500 735 30 337 452 of an updated business plan is referred to the BoD competence. Construction in progress 130 3 568 928 2 706 461
The Board of Directors should approve an Observed A GSM resolution dd. 30.04.2008 (Protocol #1865 pr/3 Investments in valuable property 135 0 0 internal document stipulating the procedure dd. 30.04.2008) approved the Regulations on the Audit for auditing financial and operating Commission. Long-term financial investments 140 2 290 916 2 200 313 activities by the Audit Commission. Deferred tax assets 145 330 326 330 664 The Audit Committee should appraise an Observed According to item 3.1 of the Regulations on the Audit Other non-current assets 150 0 0 auditor report prior to its dissemination Committee, the Committee exercises control over annual among shareholders on a GSM. independent audit of consolidated financial statements TOTAL ON SECTION I 190 33 690 935 35 574 955 and accounting statements of the Company, appraisal of the auditor report. The appraisal of the auditor report is II. CURRENT ASSETS submitted as GSM materials. Inventory 210 1 091 602 1 144 249
Raw material and other similar valuable property 211 841 263 946 190 Dividends Rearers and fatteners 212 0 0 Expenses in uncompleted production 213 0 0
The BoD should approve an internal Observed The Regulations on Dividend Policy were approved by End product and products for sale 214 37 350 33 142 document which is used by the BoD the BoD on 31.08.2010 (Protocol #73 dd. 03.09.2010). when it adopts resolutions on dividend Goods delivered 215 0 0 recommendations (the Regulations on Deferred expenses 216 212 989 164 917 Dividend Policy). Other materials and expenses 217 0 0 The Regulations on Dividend Policy should Partially The Regulations on Dividend Policy stipulates the stipulate a procedure for the determination observed procedure for the determination of minimal net profit Value-added tax on acquired valuable property 220 54 367 39 632 of minimal net profit to be distributed as to be distributed as dividends. The Company has no dividends and conditions when preferred preferred shares. Accounts receivable (payments in more than 12 months 230 99 509 278 410 share dividends, determined by the Charter, following the reported date) are not paid out or partially paid out. Purchasers and customers (62, 76, 82) 231 8 187 2 716 Information on dividend policy and changes Partially The Regulations on Dividend Policy is posted on the Accounts receivable (payments within 12 months following 240 6 126 960 6 335 875 should be published in periodicals stipulated observed corporate web-site. For details, please, follow the link the reported date) by the Charter for publishing information on below: http://www.mrsk-ural.ru/content/files/IR/ GSM arrangement as well as disclosure of dividendpolicyrus.pdf Purchasers and customers (62, 76, 82) 241 4 676 087 4 062 211 this information on the corporate web-site. Short-term financial investments (56,58,82) 250 0 0
Cash 260 1 041 208 1 172 061
Other current assets 270 0 0
TOTAL ON SECTION II 290 8 413 646 8 970 227
ASSETS 300 42 104 581 44 545 182 IDGC of Urals, ОАО
90 91 LIABILITIES Profit and Loss Statement as of 2010. Codes Line As of the As of the end Form# 2 according to ARCMD code reported period of the reported Company: Open Joint-Stock company ”Interregional Date 31.12.2010 period Distributive grid company of Urals» RNCBO 76507836 III. CAPITAL AND RESERVES Taxpayer identification number Charter Capital 410 8 743 049 8 743 049 TIN 6671163413 Own shares purchased from shareholders 411 0 0 Types of activities 40.10.2 Legal organizational form: open joint-stock company ARCFO Added capital 420 17 009 503 17 009 503 Units of measurement: RUR, thous. ARCMU 384 Reserve capital 430 43 568 96 121 Location: 140 Mamina Sibiryaka Ulitsa, Ekaterinburg, Russia 620026 Reserves formed according to legislation 431 0 0
Reserves formed according to the founding documents 432 43 568 96 121
Non-distributed profit of the previous years 468 2 378 072 2 325 519 Indicator Line As of the reported Corresponding period of code period the previous year Non-distributed profit (uncovered loss) 470 0 1 684 773 Revenues and expenses on usual activities TOTAL ON SECTION III 490 28 174 192 29 858 965 2010 business report Revenues from sale of goods, services (except for VAT, 010 49 783 797 41 297 636 IV. LONG-TERM LIABILITIES excise taxes and other obligatory payments)
Loans and borrowings 510 5 583 562 5 537 633 Expenses 020 -44 842 725 -36 623 611
Interest paid 511 0 0 Gross profit 029 4 941 072 4 674 025
Deferred tax liabilities 515 1 069 798 1 408 419 Commercial expenses 030 0 0
Other long-term liabilities 520 798 531 596 933 Administrative expenses 040 0 0
TOTAL ON SECTION IV 590 7 451 891 7 542 985 Sales profit (loss) 050 4 941 072 4 674 025
V. SHORT-TERM LIABILITIES Operating revenues and expenses
Loans and borrowings 610 0 0 Interest receivable 060 15 715 14 598
Interest paid 611 26 503 2 Interest payable 070 -391 864 -728 621
Accounts payable 620 6 340 816 6 542 964 Income from participating in other companies 080 118 784 13 242
Suppliers and contractors 621 3 127 653 3 543 018 Other operating profits 090 5 778 541 3 845 828
Debt to employees 622 118 230 68 304 Other operating expenses 100 -8 071 661 -6 426 100
Debt to state non-budgetary funds 623 40 793 54 632 Pre-tax profit (loss) 140 2 390 587 1 392 972
Debts on taxes and levies 624 569 069 43 337 Pre-tax profit (loss) 141 128 551 119 784
Other creditors 625 2 485 071 2 833 673 Deferred tax liabilities 142 -455 383 -137 574
Debts to founders 630 22 154 0 Current income tax 150 -574 759 -468 806
Deferred revenues 640 89 025 82 641 Other similar obligatory payments 151 195 777 146 891
Reserves for future expenses 650 0 517 625 Net profit (loss) of the reported period 190 1 684 773 1 053 267
Other short-term liabilities 660 0 0 FOR INFORMATION:
TOTAL ON SECTION V 690 6 478 498 7 143 232 Permanent tax liabilities (assets) 200 482 441 231 991
LIABILITIES 700 42 104 581 44 545 182 Basic earnings per share 201 0.02 0.01 INFORMATION ON VALUES STATED IN OFF-BALANCE SHEET ACCOUNTS Diluted earnings per share 202 0 0
Indicators Line As of the start На конец отчет- code of the reported ного периода Indicator Line As of the reported Corresponding period of period code period the previous year
Leased assets 910 3 330 856 3 615 548 profit loss profit loss
Including leasing 911 0 0 Fines, penalties and forfeits acknowledged by court and there 210 153 471 11 636 41 813 267 Inventory for safe custody 920 10 733 1 733 are court resolutions on their collection
Goods taken for commission 930 0 0 Profit (loss) of last years 220 569 881 2 268 044 353 552 844 325
Writing off debt from insolvent debtors 940 797 493 297 405 Reimbursement of loss caused by non-fulfillment or improper 230 7 852 7 772 19 944 5 614 liabilities execution Provision of liabilities and payments received 950 69 225 65 478 Exchange rate difference on foreign exchange operations 240 56 0 322 54
IDGC of Urals, ОАО Provision of liabilities and payments paid out 960 65 65 Contributions to assessed reserves 250 312 607 1 962 349 Housing depreciation 970 16 111 14 564 Writing off of accounts receivable and payable with expired 260 33 556 29 419 12 445 35 081 Depreciation of external amenity objects and other similar objects 980 1 235 1 340 term of legal limitation
Intangible assets obtained for usage 990 0 106 157
Fixed assets transferred to operational administration 991 0 11 315
92 93 12.4. 2010 Accounting Statements under IAS Non-controlling interest 766 084 662 239 Total equity 39 504 500 37 123 555
Consolidated Statement of Comprehensive Income for the year ended 31 December 2010 Non-current liabilities (in thousands of Russian Roubles, unless otherwise stated) Loans and borrowings 20 6 381 317 6 426 350
Long-term advances 21 574 552 618 797 Notes Year ended Year ended 31 December 2010 31 December 2009 Employee benefits 22 330 914 305 741
Revenue 5 57 065 597 48 025 720 Finance lease liabilities 23 89 437 172 901
Operating expenses 6 (51 768 430) (44 896 399) Deferred tax liabilities 10 4 639 881 3 214 034
Other operating (expenses)/ income 8 (1 240 575) 131 083 Other long-term liabilities 10 715 41 536
Result from operating activities 4 056 592 3 260 404 Total non-current liabilities 12 026 816 10 779 359
Finance income 9 30 844 14 912 Current liabilities
Finance costs 9 (539 911) (971 046) Loans and borrowings 20 699 355 1 020 561 Trade and other payables 24 6 789 664 6 982 081
Share of profit of equity accounted investee 13 266 305 100 998 2010 business report
Profit before income tax 3 813 830 2 405 268 Current portion of finance lease liabilities 23 194 577 166 610
Income tax 10 (1 431 647) (446 462) Other taxes payable 25 452 959 710 697
Profit for the year 2 382 183 1 958 806 Income tax payable 113 255 140 617
Profit and total comprehensive income for the year 2 382 183 1 958 806 Total current liabilities 8 249 810 9 020 566
Profit and total comprehensive income attributable to: TOTAL LIABILITIES 20 276 626 19 799 925
Shareholders of the Company 2 277 100 1 917 982 TOTAL EQUITY AND LIABILITIES 59 781 126 56 923 480
Non-controlling interest 105 083 40 824 Consolidated Statement of Cash Flows for the year ended 31 December 2010 Earnings per share
Basic and diluted earnings per share (expressed in RUB) 19 0,0260 0,0219 Notes 31 December 2010 31 December 2009
CASH FLOWS FROM OPERATING ACTIVITIES: Consolidated Statement of Financial Position as at 31 December 2010 Profit before income tax 3 813 830 2 405 268
Notes 31 December 2010 31 December 2009 Adjustments to reconcile profit before income tax and net cash from operating activities: ASSETS Depreciation and amortization 3 790 582 3 371 224 Non current assets Net impairment losses 188 112 1 266 197 Property, plant and equipment 11 48 310 911 46 212 603 Net finance costs 509 067 956 134 Investment property 11 98 317 223 443 Share of profit of equity accounted investee (266 305) (100 998) Intangible assets 12 3 233 73 629 Loss on disposal of property, plant and equipment 218 132 469 237 Investments in equity accounted investee 13 931 375 665 070 Adjustment for other non-cash transactions (25 483) (96 850) Deferred tax assets 10 44 778 87 002 Operating profit before changes in working capital and provisions 8 227 935 8 270 212 Other non-current assets 14 652 880 404 226 Change in trade and other receivables and prepayments (481 167) (2 973 208) Total non current assets 50 041 494 47 665 973 Change in inventories (173 738) (91 384) Current assets Change in trade and other payables 197 159 1 510 573 Inventories 15 969 429 791 787 Change in taxes payable other than income (253 963) 523 504 Income tax receivable 614 589 66 876 Cash flows from operations before income taxes paid 7 516 226 7 239 697 Trade and other receivables 16 5 931 389 6 796 000 Income tax paid (538 650) (410 198) Prepayments for current assets 17 326 848 112 271 Cash flows from operating activities 6 977 576 6 829 499 Cash and cash equivalents 18 1 877 166 1 452 009 CASH FLOWS FROM INVESTING ACTIVITIES: Other current assets 20 211 38 564 Acquisition of property, plant and equipment (5 663 368) (3 512 680) Total current assets 9 739 632 9 257 507 Acquisition of intangible assets (1 361) (5 154) TOTAL ASSETS 59 781 126 56 923 480 Proceeds from disposal of property, plant and equipment 418 526 206 568 EQUITY AND LIABILITIES Proceeds from repayment of loans issued 12 131 18 507
IDGC of Urals, ОАО Equity 19 Loans issued (8 832) - Share capital 8 743 049 8 743 049 Interest received 22 422 14 869 Retained earnings 29 995 367 27 718 267 Cash flows used in investing activities (5 220 482) (3 277 890) Total equity attributable to shareholders of the Company 38 738 416 36 461 316
94 95 CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans and borrowings 5 116 767 13 183 333
Repayment of loans and borrowings (5 483 005) (14 613 685)
Repayment of finance lease liabilities (343 585) (309 713)
Interest paid (597 234) (1 223 936)
Dividends paid (24 880) (1 601)
Cash flows used in financing activities (1 331 937) (2 965 602)
Net increase in cash and cash equivalents 425 157 586 007
Cash and cash equivalents at the beginning of the year 1 452 009 866 002
Cash and cash equivalents at the end of the year 18 1 877 166 1 452 009
To view the details, please, visit our corporate web-site at: http://www.mrsk-ural.ru/en/673 IDGC of Urals, ОАО
96 Kokorekin A. To Motherland more millions kilowatt ДЛЯ ЗАМЕТОК ДЛЯ ЗАМЕТОК
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