PJSC "MOESK" announces financial results under IFRS for 2017.

16.03.2018

The Moscow United Electric Grid Company (hereinafter referred to as PJSC "MOESK" or the "Company", ticker MSRS on the Moscow Stock Exchange), which is the part of the Group of Companies PJSC “Posseti” which provides electricity transmission services in Moscow and the Moscow Region, publishes audited consolidated financial results under International Financial Reporting Standards (IFRS) for the year ended 31 of December 2017.

Main results:

Financial indicators	Unit	2017	2016	2017/2016
Earnings	million rubles	150 494	140 407	7,18%
Adjusted EBITDA	million rubles	40 415	40 649	-0,6%
Profit for year	million rubles	3 081	9 395	(67,21%)
Adjusted Profit	million rubles	9 411	9 395	0,2%
Change of free cash flow	million rubles	2 246	(1 258)	more 100 %

The Company's earnings amounted to 150.5 billion rubles, including earnings from electricity transmission - 138.4 billion rubles, earnings from technological connection - 7.1 billion rubles. Net profit amounted to 3.1 billion rubles in the reporting period.

The Company's earnings increased by 7.2%, including earnings for electricity transmission by 7.5% for the year 2017 compared to the previous year, due to an increase in the average tariff for services for the transmission of electricity and the volume of "boiler" productive supply.

The growth in operating expenses in relation to 2016 was 14.1%, which was due to an increase in conditionally uncontrolled expenses for neighboring TCO services (16.2%) and an increase in costs for compensation of electric power losses (12.5%). The increase in the abovementioned expenses is due to an increase in the purchase price of electricity losses and an increase in tariffs for TCO services as a result of tariff and balance decisions.

On an ongoing basis, the Company implements activities on operating costs management which allows providing dynamics of managed costs at a level below the CPI.

The net profit of the reporting period amounted to 3.1 billion rubles. The decrease in the indicator relative to the fact of 2016 is due to the decrease in earnings from technical connection due to the continuing decline in business activity in the market for these services and the adjustment of the financial result of the reporting period to a one-time accrual of the reserve for debts of JSC “OEC” arisen during the period of the "front-end" system for technological connection in Moscow (in 2006-2010). In addition, the increase in the Company's expenses was affected by the recognition of a loss on depreciation of the main assets in the amount of 6.3 billion rubles.

The adjusted indicator EBITDA is comparable to the level of the previous year and amounted to 40.4 billion rubles.

In 2017, positive dynamics of free cash flow was achieved. The change in the indicator to the level of the previous year was (+) 2.2 billion rubles.

The Debt indicator / adjusted indicator EBITDA for the year was 2.1 and corresponds to the normative values of the debt burden for companies with a high level of creditworthiness.

Table 1. Summary of financial position

Name of indicator	Unit	2017	2016	2017/2016
Fixed assets	Million rubles	311 884	309 973	0,62%
Current assets	Million rubles	27 169	28 542	(4,81%)
Assets in total	Million rubles	339 053	338 515	0,16%
Net worth	Million rubles	173 543	172 565	0,57%
Long-term liabilities	Million rubles	110 253	93 897	17,42%
Short-term liabilities;	Million rubles	55 257	72 053	(23,31%)
Net worth and liabilities in total	Million rubles	339 053	338 515	0,16%

Table 2. Summary of profit or loss and other comprehensive income

Name of indicator	Unit	2017	2016	2017/2016
Earnings	million rubles	150 494	140 407	7,18%
- electricity transmission	million rubles	138 350	128 642	7,55%
- earnings from the provision of electricity connection services	million rubles	7 122	10 044	(29,09%)
- other earnings	million rubles	5 022	1 721	191,76%
Operational costs	million rubles	(150 064)	(131 567)	14,06%
Other operational costs	million rubles	9 180	7 447	23,28%
Financial income	million rubles.	140	188	(25,79%)
Financial expense	million rubles	(5 803)	(6 205)	(6,48%)
Profit before tax	million rubles	3 947	10 270	(61,57%)
Income tax expense	million rubles	(866)	(875)	(1,05)
Profit for the year	million rubles	3 081	9 395	(67,21%)
Total copmrehensive income	million rubles	2 498	9 650	(74,12%)

Table 3. Operational costs

Name of indicator	Unit	2017 г.	% from total operational costs	2016 г.	% from total operational costs	Change (%)
Expenses for TCO services, FGC UES	million rubles	61 987	41,31%	53 352	40,55%	16,18%
Expenses for purchased energy as loss compensation	million rubles	17 219	11,47%	15 301	11,63%	12,54%
Depreciation	million rubles	20 848	13,89%	21 563	16,39%	(3,32%)
Depreciation of main assets	million rubles	6 331	4,22%	-	-	100%
Personnel costs	million rubles	18 853	12,56%	18 514	14,07%	1,83%
Other expenses including:	million rubles	24 826	16,54%	22 837	17,36%	8,71%
- reserves for doubtful debts	million rubles	3 487	2,32%	2 651	2,01%	31,54%
Total Operational costs	million rubles	150 064	100,0%	131 567	100,0%	14,06%

For reference only. The following subsidiaries are included in the consolidated financial statements of the Group: Moskabel'set’montazh JSC (MKSM), Moskabel’energoremont JSC (MKER), JSC Plant for the repair of electrical equipment (RETO), JSC Energocenter.

The audited consolidated financial statements of JSC FGC UES under IFRS for 2016 are posted on the Company's corporate website and are available at:

Financial results under IFRS for 2017.

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