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Annual Report 2015

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Credit portfolio and liquidity

Financial and economic indicators of PJSC IDGC of the North-West
Indicator 2011 2012 2013 2014 2015
Liquidity and current financial solvency
Quick liquidity ratio 1.03 1.26 1.31 1.08 0.87
Current liquidity ratio 1.20 1.43 1.42 1.14 0.92
Turnover ratio and business activity performance
Accounts payable turnover coefficient 5.30 5.67 6.29 4.03 2.76
Accounts receivable/accounts payable growth ratio 0.96 1.33 2.07 1.21 1.03
1.03 0.87 1.65 1.62 1.10
0.93 1.54 1.26 0.75 0.94
Total accounts receivable/accounts payable ratio 0.84 1.29 1.62 1.21 1.14
Accounts receivable turnover coefficient 6.80 6.01 4.62 3.26 2.62
Financial stability indicators
Equity ratio 0.66 0.60 0.50 0.44 0.46
Ratio of total debt to  EBITDA The Company’s management resolved that corr. EBITDA indicator may be used instead of EBIDTA indicator. 1.57 2.71 3.17 2.84 2.19
EBITDA / % 12.32 7.74 4.97 4.54 3.75
Business performance indicators
Return on equity (ROE) 1.52 0.23 1.09 –2.27 2.36
Return on Total Assets (ROTA) for profit before taxation 2.42 0.98 1.45 –0.91 1.46
Return on EBITDA 12.90 12.60 12.56 14.66 17.36

Liquidity ratios describe the ability of the Company to timely pay off its current liabilities with its current assets. Significant portion of distribution grid complex entities’ accounts payable is advance payments for grid connection under contracts with consumers.

Liquidity indicators in 2011-2015 tend to decrease which is due to the growth of short-term liabilities which is faster than the increase in current assets, including through the conversion of long-term liabilities into short-term liabilities.

Equity-assets ratio (equity ratio) describes the enterprise’s dependence on external loans. As of December 31, 2015 the portion of equity funds in the assets of PJSC IDGC of the North-West was 46%. Decrease in equity funds in the assets in 2011-2015 was due to the following:

  • the transition to RAB regulation in tariff setting, which affected the funding structure of the investment activities of the Company (the priority is on the raising of long-term loan capital);
  • Increase in the volume of the Investment Programme for 2011-2012;
  • the increase in accounts receivable due to the breach of financial contractual obligations by consumers.

Business activity performance indicators describe the Company’s effectiveness in utilising its funds. In 2015 the accounts receivable growth rate was below the accounts payable growth rate — 1.03 and 1.10, respectively.

Indicators of turnover of receivables and payables in 2011-2015 tend to decrease. The internal reasons for decrease in turnover are the changing consumer structure, poor payment discipline of the Company’s main consumers — regional distribution companies and major LGOs. The external reasons are complex business environment of the banking sector, slowdown in the growth of economy and production in the regions of responsibility of PJSC IDGC of the North-West.

Credit portfolio
Indicator 2011 2012 2013 2014 2015 Change for 2015
Total credits and loans, RUB million 6,228 10,648 16,730 18,452 15,044 — 3,408
Long-term (1-5 years) 6,148 10,629 13,953 14,913 9,940 — 4,973
Short-term (less than 1 year) 80 19 2,777 3,539 5,104 1,565
5 RUB billion a considerable portion of the credit portfolio was refinanced

As a follow-up of analysis of the key financial and economic indicators in 2015, taking into account the low rate of economic growth, a complex situation with liquidity in the banking sector, the complex economic conditions in the regions of operations, the cost reduction policy in the Company, it may be concluded that the Company’s management pursues a balanced policy of financial and economic management aimed to preserve financial stability in the current economic environment.

The Company’s debt load compared to the beginning of the year significantly reduced (by RUB 3,408 million, or 18.5%).

As of year-end 2015, the average weighted rate on the Company’s credit portfolio was at a level lower than the key interest rate of the Central Bank of the Russian Federation (11%).

In order to reduce the Company’s cost of loans, a considerable portion of the credit portfolio was refinanced in the amount of RUB 5,000 million — through the bond issue. Saving achieved through the refinancing was RUB 91 million in 2015.

Credit portfolio as of year-end 2015, RUB million
Amount of credits and loans as of January 01, 2015 (excluding interest) 18,413
Funds raised in 2015 8,200
including for investment activities 0
for refinancing 8,200
for operating activities 0
for energy selling activities 0
Repayment in 2015 11,646
Amount of credits and loans as of December 31, 2015 (excluding interest) 14,967
Accounts receivable/accounts payable ratio, RUB million.