Development Strategy

Annually, the Company carries out comprehensive measures on retrofitting, upgrade and renovation of existing power grid facilities to achieve the following key objectives:

• To increase reliability of power supply to consumers
• To provide a safe working environment for the personnel
• To constrain the equipment physical deterioration growth rate
• To reduce the share of equipment that reached their rated service life
• To improve the equipment performance
• To ensure compliance with environmental protection and ecological safety requirements and regulations
• To cut down operating costs in the longer term
• To support the production activities during the operation of power grid facilities, in particular those related to preventing and removing emergencies

For more details, please see Reliable and Efficient Operation of the Energy System section.

System average interruption duration index per point of supply (I_ѕaidi) — 3.3403 h — 1.3099 interruptions In the reporting year, the indicators were achieved with an allowable deviation. The number of accidents in the 110 kV and above power grid went up by 18.1% year‑on‑year, but the number of accidents in the 0.4 kV and above power grid went down by 3.2% year‑on‑year

• Completion of production programmes in full.
• Timely and complete implementation of the repair programme.
• Preparation for the 2024/2025 heating season. Achievement of readiness for heating season.
• Strict compliance with Rostechnadzor and Ministry of Energy regulations.
• Promotion of the safety culture of the Company’s personnel.

In terms of quality of service to consumers:

The Company complied with the requirements of the Uniform Service Quality Standards for consumers of grid companies’ services approved by Order of the Ministry of Energy of Russia No. 186 dated 15 April 2014 (hereinafter referred to as the Uniform Standards), including the requirements for timely, complete and accurate disclosure of information.

The quality indicator of the Company’s compliance with the Uniform Quality Standards (Kqa3), calculated in accordance with the Methodological Guidelines for Calculating the Level of Reliability and Quality of Goods Supplied and Services Provided to the Organisation for the Management of the Unified National (All‑Russian) Power Grid, approved by Order of the Ministry of Energy of Russia No. 1256 dated 29 November 2016, was achieved in the reporting period (Kqa3 = 0).

In terms of the quality of grid connection:

The grid connection quality indicator (I_GC) is 1.044; it is within the planned value established by the REC — the Price and Tariff Department of the Krasnodar Territory for the reporting year, taking into account the allowed deviation

In terms of customer service quality: fulfilment of the requirements of the Unified Standards.

In terms of the quality of grid connection: maintaining the quality level of the grid connection within the planned value of the reporting year, set by the Regional Energy Commission — Department of Prices and Tariffs of the Krasnodar Region ( subject to acceptable deviation) with a trend towards its improvement

The primary goal of the long‑term development of the Company’s power grid is to determine the optimal course for grid modernisation and expansion in order to fill up any gaps in generating capacity and meet any anticipated long‑term demand for generating capacity.

In 2023, the Company contributed to the development of the scheme and programme for the development of Russia’s power systems for 2024–2029 Approved by Order No. 1095 of the Ministry of Energy of Russia dated 30 November 2023. . According to these documents, the Company will have to focus on the development of the most troubled South‑Western and Central energy districts of the Kuban energy system, which are in need of power infrastructure improvement.

During the reporting year, innovative technologies were introduced in the following key areas of the innovation development programme:

• Transition to smart grids with a distributed intellectual automation and control system
• Transition to integrated business process efficiency and automation of control systems
• Application of advanced technology solutions and materials in power engineering
• Promotion of an innovative development management system and shaping of an innovative infrastructure

For more details, please see the Innovative Activities subsection in the Operational Results

Innovative development of the Company to achieve the target innovation implementation and R&D performance volumes, as well as other performance indicators of the Innovative Development Programme

The Board of Directors of the Company approved the Operational Efficiency Improvement and Cost Reduction Programme of Rosseti Kuban for 2023–2027 (Minutes No. 506/2022 dated 30 December 2022); the Programme includes a list of measures to ensure that the Company achieves its strategic objectives and improves its internal efficiency. The performance indicators of the Programme take into account the Company’s performance targets.

Revenue in 2023 — RUB 74,557.5 mln, up RUB 10,818.6 mln year‑on‑year

EBITDA in 2023 — RUB 17,574 mln, up 9% year‑on‑year

The reporting year saw a profit of RUB 6,166.5 mln, up RUB 922 mln year‑on‑year due to an increase in revenue from electricity transmission and revenue from grid connections.

Year‑end net asset value — RUB 54,950 mln.

The increase in net assets for the year totalled RUB 9,147 mln due to an increase in equity attributable to year‑end profit, as well as an year‑on‑year increase in cash balance.

The Company’s market capitalisation almost quadrupled in the reporting year and as of 31 December 2023 amounted to approximately RUB 108 billion, including additional shares placed

Further implementation of the Programme for Improving Operating Efficiency and Reducing Expenses of Rosseti Kuban, PJSC for 2024–2028 approved by the decision of the Company’s Board of Directors (Minutes No. 544/2023 dated 29 December 2023)