KEY PERFORMANCE INDICATORS AND FUNCTIONAL KEY PERFORMANCE INDICATORS
Starting from 2023, the system of key performance indicators of the Rosseti Group is built in accordance with Russian Government Order No. 3579-r dated 28 December 2020 (hereinafter referred to as Order No. 3579-r) based on Russian Government Directives No. 991p-P13 dated 31 January 2023.
In accordance with Order No. 3579-r, the system of key performance indicators is divided into two groups: key performance indicators (hereinafter referred to as KPIs) and functional key performance indicators (hereinafter referred to as FKPIs). Herewith, KPIs are indicators linked to the Company’s strategic documents, which are used to assess the performance of the Company’s entire management team (Head, Deputy Heads, Chief Accountant), while KPIs are individual indicators set for the Company’s officials personally, with due regard to the specifics of the Company’s business lines supervised by them.
The KPI and FKPI system applied in the Company is interrelated with the size of the variable part of management remuneration (50% of incentive payments for KPI achievement, 50% of incentive payments for FKPI achievement): each of the indicators has a specific weight in the volume of bonuses paid, annual bonuses are paid subject to accomplishment of the respective indicators.
No comparison of 2023 indicators with 2022 indicators is made due to significant changes in the mix and calculation procedures of KPIs and FKPIs.
KPIs and FKPIs of the Company and their target values for
- Clause 15.1 of Article 15 of the Company’s Articles of Association
- Resolution of the Board of Directors of the Company dated 29 December 2023 (Minutes No. 557/2023 dated 29 December 2023)
Indicators | Calculation procedure | Weight in the remuneration system for 2023, % | UoM | Target value for 2023 | Achieved value for 2023The expected level of achievement of KPIs and FKPIs is given for 2023, given the timing and procedure of reporting, which is the source of information for calculating the indicators. The final actual values are to be approved by the Board of Directors of PJSC Rosseti South. | Assessment of achievement / reasons for deviation | Achievement, %For KPIs: if the level of achievement is more than 120%, the percentage equal to 120% is reported; if the level of achievement is less than 80%, the percentage of achievement equal to 0% is reported. For FKPIs: if the achievement level is more than 100%, a percentage equal to 100% is reported; if the achievement level is less than 90%, an achievement percentage equal to 0% is reported. | Target value for 2024The composition and target values of the indicators may be adjusted by resolution of the Company’s Board of Directors. | |
|---|---|---|---|---|---|---|---|---|---|
Return on invested capital (ROIC) | Ratio of operating profit adjusted for impairment/(reversal of impairment) of fixed assets, revenue from grid connection services, and accrual/(reversal of) provision for expected credit losses to the sum of average equity and long-term loans and borrowings | 10 | % | 11.1 | 21.0 | ☑ achieved | 120 | 14.1 | |
Operating margin | Ratio of operating profit adjusted for impairment/(reversal of impairment) of fixed assets and revenue from grid connection services to revenue, minus revenue from grid connection services | 20 | % | 5.1 | 10.1 | ☑ achieved | 120 | 5.9 | |
Net profit without impairment and grid connection | Profit/(loss) adjusted for impairment/(reversal of impairment) of fixed assets and revenues from grid connection services (including relevant income tax) | 20 | RUB ‘000 | –343,876 | 2,214,615 | ☑ achieved | 120 | –140,961 | |
Level of electricity losses | Ratio of the volume of electricity losses in the Company's grids (calculated as the difference between electricity delivered to the grid and electricity delivered from the grid and consumption for household needs) increased by the amount of disagreements for previous periods, settled against the Company, to the electricity delivered to the grid for the reporting period | 15 | % | 9.60 | 9.41 | ☑ achieved | 102 | 9.57 | |
Readiness for operation in the heating season | Indicator that estimates the readiness of the Company to work during the heating season, based on monthly monitoring of the Ministry of Energy of Russia | 20 | ea | 1 | 1 | ☑ achieved | 100 | 1 | |
Compliance with the commissioning schedule | Ratio of the total actual volume of commissioning of fixed assets in the reporting year derived from the progress report on the Company's investment programme (in monetary terms, on the basis of the date when the construction completion certificate is signed by the Acceptance Commission) to the planned one in accordance with the approved investment programme and implementation schedule | 15 | % | 92.0 | 118.8 | ☑ achieved | 120 | 93.5 | |
Achievement of the factor “Efficiency of Power Connection Procedures” of the National Investment Climate Rating | The indicator is determined on the basis of the degree of achievement of benchmarks for the factor “Efficiency of Power Connection Procedures” in the National Investment Climate Rating in the constituent entities of the Russian Federation within the Company's operational responsibility zone | Indicative indicator | % | 100.0 | 100.0 | ☑ achieved | 100 | 100.0 | |
Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) | Calculated as profit/(loss) before taxes, depreciation, amortisation and interest expense adjusted for impairment/(reversal of impairment) of fixed assets, and revenue from grid connection services | General Director Deputy General Director for Economics and Finance | RUB ‘000 | 5,139,775 | 7,862,754 | ☑ achieved | 100 | 5,480,844 | |
Achievement of readiness for the heating season | The certificate of readiness for heating season shall be received by the Company in a timely manner by 5 November of the reporting year in accordance with the Rules for Assessing the Readiness of Electric Power Entities for the Heating Season, approved by Resolution No. 543 of the Government of the Russian Federation dated 10 May 2017 | General Director First Deputy General Director — Chief Engineer | unit | 1 | 1 | ☑ achieved | 100 | 1 | |
No significant accidents in power grids investigated by Russian Federal Service for Ecological, Technological and Nuclear Supervision (Rostechnadzor) | The indicator calculation includes accidents in the Company's power grids classified by the Rostechnadzor commission according to clause 4 of the Rules for Investigation of the Causes of Accidents in the Electric Power Industry (approved by Resolution No. 846 of the Government of the Russian Federation dated 28 October 2009) | First Deputy General Director — Chief Engineer | fulfilled / not fulfilled | 0 | 0 | ☑ achieved | 100 | 0 | |
Efficiency of innovations | Integrated index of innovation efficiency evaluates the degree of fulfilment of three constituent indicators: R&D expenditure indicator, innovative products procurement indicator, IDP development (update) quality indicator/ IDP implementation indicator | First Deputy General Director — Chief Engineer | % | 98.0 | 114.0 | ☑ achieved | 100 | 98.0 | |
Year-on-year increase in labour productivity | Ratio of value added by all types of services to the average annual number of employees Comparison with the base year 2022 | Deputy General Director — Head of the Office Deputy General Director for Economics and Finance | % | 4.3 | 19.2 | ☑ achieved | 100 | 11.0 | |
Active staff turnover | Ratio of the total number of the Company's employees resigned voluntarily in accordance with Clause 3 (termination of the employment agreement on the employee's part) and Clause 5 (transfer of an employee at his/her request or with his/her consent to work for another employer, or transfer to an elective job (position)) of Article 77 of the Labour Code of the Russian Federation to the average headcount in the reporting period | Deputy General Director — Head of the Office | % | 6.5 | 6.4 | ☑ achieved | 100 | 6.5 | |
Compliance with grid connection deadlines | Complex index assessing the quality level of grid connection, consisting of two components — the quality of grid connection application review and the quality of execution of grid connection agreements | Deputy General Director for Development and Power Grid Connection Deputy General Director for Investments and Capital Construction | relative units | 1.6 | 1.3 | ☑ achieved | 100 | ≤ value calculated in accordance with clause 3.7 of the Procedure for calculation of KPIs and FKPIs | |
Net attraction of loans and debentures to cover financing gaps of the investment programme | Calculated as the difference between attracted and repaid borrowed funds (loans and debentures) | Deputy General Director for Economics and Finance | RUB ‘000 | 3,084,360 | –16,967 | ☑ achieved | 100 | 402,458 | |
Efficiency of transition to domestic software | Defined as the share (percentage) of installed Russian (domestic) software in the total volume of installed software in the Company, which implements its own plan for transition to all-domestic software approved by the Company's Board of Directors | Deputy General Director for Digitalisation | % | 75.0 | 78.61 | ☑ achieved | 100 | 84.3 | |
Overdue receivables for electricity transmission services | The actual value of overdue receivables (excluding moratorium receivables) at the end of the reporting period did not exceed the target value | Deputy General Director for Sale of Services Deputy General Director for Legal and Corporate Governance | RUB ‘000 | 2,574,184.3 | 1,221,508.3 | ☑ achieved | 100 | 2,769,042.7 | |
Fulfilment of the Comprehensive Security Plan | Calculated as the ratio of timely fulfilled measures of the Comprehensive Security Plan to the total number of measures of the Comprehensive Security Plan | Deputy General Director for Security | % | 100.0 | 100.0 | ☑ achieved | 100 | 100.0 | |
Assurance of insider information protection requirements, | Indicator that assesses the Company's compliance with the requirements of the Insider Law and compliance with the deadlines for submitting the list of the Company's insiders to PJSC Moscow Exchange | Deputy General Director for Security | ea | 0 | 0 | ☑ achieved | 100 | 0 | |
Upholding of share listing and corporate governance rating | Integrated indicator that assesses the level of corporate governance in the Company from two components: upkeep of the share listing and maintenance of the corporate governance rating | Deputy General Director for Legal and Corporate Governance | fulfilled / not fulfilled | achieved | achieved | ☑ achieved | 100 | achieved | |
Share of agreements resulted from electronic procedures | Calculated as a ratio of the number of electronic procurement procedures, which resulted in the conclusion of agreements associated with spending of funds, to the total number of procurement procedures (competitive and non-competitive), which resulted in the conclusion of such agreements | Deputy General Director for Investments and Capital Construction | % | 54.0 | 67.0 | ☑ achieved | 100 | 56.0 | |
Absence of a reservation and/or modified opinion of the Auditor affecting the reliability of the data of the annual accounting (financial) statements | The indicator factors in the presence of unmodified or modified auditor's opinion (qualified opinion, negative opinion, refusal to express an opinion) on the reliability of the indicators of the Company's accounting (financial) statements | Chief | fulfilled / not fulfilled | achieved | achieved | ☑ achieved | 100 | achieved |