3.1.3 Key Performance Indicators

The KPIkey performance indicators system is divided into two groups of indicators: key performance indicators and functional key performance indicators. KPIskey performance indicators are indicators, based on Company’s strategic documents used to evaluate the efficiency of Company’s executives (General Director, General Director Deputies, Chief Accountant), FKPIfunctional key performance indicatorss are individual indicators set for the Company’s officials individually, tailored to the their field of concern. The KPIkey performance indicators and FKPIfunctional key performance indicators system is coupled with the variable management’s remuneration (50% for KPIkey performance indicators and 50% for FKPIfunctional key performance indicators): each indicator has its own weight in bonuses, annual remunerations are paid, provided that the relevant KPIskey performance indicators are completed. 2023 and 2022 indicators cannot be compared due to significant revision of the KPIkey performance indicators and FKPIfunctional key performance indicators composition and calculation methodologies. KPIskey performance indicators and FKPIfunctional key performance indicatorss as well as 2023-2025 targets are set in line with the Charter^[3] and Board of Directors’ resolution^[4].

Indicator	Calculation methodology	Weight (2023), %	Meas. unit	Feature related to indicator calculation	2023 target	Lowest value	Threshold value	2023 actual value *	Evaluation of accomplishment / factors of variance	Achievement, %	2024 target	2025 target
FINANCIAL AND ECONOMIC KEY PERFORMANCE INDICATORS
ROICreturn on invested capital	Operating income, adjusted for PP&E impairment (reversal of impairment), revenues from connection and ECL provision (ECL provision recovery) / sum of average equity and long-term loans and borrowings	10	%	Multiplying factor	10.0	8.0	12.0	13.4	Accomplished	134%	8.8	9.5
Operating margin	Operating income, adjusted for PP&E impairment (reversal of impairment) and revenues from connection / revenues, net of revenues from connection	20	%	Multiplying factor	8.5	6.8	10.2	11.0	Accomplished	129%	8.2	8.0
Net profit, net of impairment and connection	Profit / (loss), adjusted for PP&E impairment (reversal of impairment) and revenues from connection (incl. income tax)	20	RUBruble thousand	Multiplying factor	6,264,556	5,011,645	7,517,467	9,514,023	Accomplished	152%	6,092,890	6,354,408
SPECIFIC INDUSTRY KEY PERFORMANCE INDICATORS
Loss level	Electricity losses in the Company’s networks (difference between total supply and net supply and consumption for own needs), multiplied by amount of discrepancies for previous periods, settled against the Company / total supply for the reported period	15	%	Multiplying factor	6.54	The indicator is not set **	The indicator is not set**	6.40	Accomplished	102%	6.61	6.59
Preparedness for winter seasons	Indicator evaluating Company’s preparedness to work during winter seasons, based on the Ministry of Energy’s monthly monitoring	20	pcs	Multiplying factor	1	1	1	1	Accomplished	100%	1	1
Compliance with the facility launch schedule	Total actual fixed assets, commissioned during the reported period, determined by the investment program completion report / target fixed assets pursuant to the adopted investment program and launch schedule	15	%	Multiplying factor	92.0	73.6	110.4	96.2	Accomplished	105%	93.5	95.0
INDICATIVE INDICATORS
Achievement of the National Investment Climate Rating’s factor “Efficiency of connection procedures”	Indicator is determined due to the degree of achievement of the benchmarks related to the National Investment Climate Rating’s factor “Efficiency of connection procedures” in regions of the Company’s footprint	Indicative indicator	%	Multiplying factor	100.0	х	х	100	Accomplished	100%	100.0	100.0
FUNCTIONAL KEY PERFORMANCE INDICATORS
EBITDAearnings before interest, taxes, depreciation and amortization	Income / (loss) prior to taxation, depreciation and amortization and interest payable, adjusted for PP&E impairment (reversal of impairment) and revenues from connection	General Director — 20%; First Deputy General Director –Chief Operating Officer — 25%; Deputy General Director for Economics and Finance — 25%	RUBruble thousand	Multiplying factor	18,547,751	16,692,976	18,547,751	21,777,102	Accomplished	117%	19,343,386	20,223,542
Obtainment of certificate for autumn/winter operations	Timely obtainment of certificate for autumn/winter operations prior to 05 November of the reported period, pursuant to the Rules on the evaluation of preparedness for autumn/winter operations^[5]	General Director — 20%; First Deputy General Director –Chief Operating Officer — 25%	pcs	Multiplying factor	1	1	1	1	Accomplished	100%	1	1
Lack of large-scale incidents in the networks, investigated by Rostekhnadzor	Calculation of the indicator includes incidents in the Company’s networks classified by a Rostekhnadzor’s commission in line with clause 4 of the Rules for investigation of power sector incidents^[6]	First Deputy General Director –Chief Operating Officer — 25%	Accomp./unaccomp.	Reduction factor	0	0	0	0	Accomplished	100%	0	0
Efficiency of innovative activities	Integral indicator of efficiency of innovative activities evaluates the accomplishment of 3 indicators: R&Dresearch and development expenses, procurements of innovative products, quality of development (update) of the IDP / execution of the IDP	First Deputy General Director –Chief Operating Officer — 25%	%	Multiplying factor	98.0	88.2	98.0	100.3	Accomplished	102%	98.0	98.0
Increase in labor productivity against 2022 figures	Added value on all services / annual average headcount (Comparison to 2022 base figures)	Deputy General Director for Economics and Finance — 25%; Deputy General Director – Head of Office — 50%	%	Multiplying factor	6.0	5.4	6.0	33.7	Accomplished	562%	11.0	16.0
Active staff turnover	Total employees, resigned in line with clauses 3 (termination of a labor contract upon employee’s initiative) and 5 (transfer of an employee upon his request or consent to another employer or transfer to an elected position) of Article 77 of the Russian Labor Code / average headcount as of the reported period	Deputy General Director – Head of Office — 50%	%	Reduction factor	6.5	7.1	6.5	6.0	Accomplished	107%	6.5	6.5
Compliance with connection terms	Integral indicator, evaluating the quality of connection, comprising two components: quality of connection request processing, quality of connection contracts execution	Deputy General Director for Investments -50%; Deputy General Director for Connection and development of Additional Services — 100%	Rel.unit	Reduction factor	1.1	1.2	1.1	1.0	Accomplished	105%	1.1	1.1
Net attraction of loans and bonds to cover the deficit of the investment program funding	Calculated as difference between attracted and redeemed borrowings (loans and bonds)	Deputy General Director for Economics and Finance — 25%; Deputy General Director for Investments -50%	RUBruble thousand	Reduction factor	5,694,171	6,263,588	5,694,171	957,346	Accomplished	183%	3,304,385	850,186
Efficiency of the transition to domestic software	Calculated as a share of installed Made-in-Russia software in the total volume of installed software of the Company that implements its BoDBoard of Directors-approved schedule on the transition to the preferential use of domestic software	General Director — 20%	%	Multiplying factor	75.0	67.5	75.0	75.8	Accomplished	101%	84.3	88.9
Overdue electricity transmission receivables	Non-exceedance of actual value of overdue receivables (net of moratorial debt) as of the reported period over target value	Deputy General Director for Sales — 50%; Deputy General Director for Legal Affairs and Corporate Governance – 33.33%; Deputy General Director for Security — 50%	RUBruble thousand	Reduction factor	854,489.0	939,937.9	854,489.0	493,675.0	Accomplished	142%	562,264.3	465,643.8
Company’s credit rating assigned by a national rating agency	Determined by a rating analysis by a Russian rating agency, accredited by the Bank of Russia, with a concluded contract on rating activities	General Director — 20%; Deputy General Director for Economics and Finance — 25%; Deputy General Director for Sales — 50%; Deputy General Director for Legal Affairs and Corporate Governance – 33.33%	Rating scale	Multiplying factor	Value of the national scale credit rating at or above ruAA+	Value of the national scale credit rating at or above ruAA+	Value of the national scale credit rating at or above ruAA+	ruAA+	Accomplished	100%	Value of the national scale credit rating at or above ruAA+	Value of the national scale credit rating at or above ruAA+
Execution of a comprehensive security plan	Calculated as: timely executed activities enlisted in the comprehensive security plan / total activities of the comprehensive security plan	Deputy General Director for Security — 50%	%	Multiplying factor	100.0	90.0	100.0	100.0	Accomplished	100%	100.0	100.0
Enforcement of protection of insider information and maintenance of listing for Company’s shares	Integral indicator to evaluate the level of corporate governance, comprised of 2 components: enforcement of protection of insider information and maintenance of listing for Company’s shares	Deputy General Director for Legal Affairs and Corporate Governance – 33.33%	Accomp./unaccomp.	Multiplying factor	Accomplished	Accomplished	Accomplished	Accomplished	Accomplished	100%	Accomplished	Accomplished
Share of contracts concluded upon conducted electronic tenders	Calculated as: amount of electronic tenders ended in conclusion of contracts associated with the spending of funds / total tenders (competitive and non-competitive) ended in conclusion of contracts associated with the spending of funds	General Director — 20%	%	Multiplying factor	54.0	48.6	54.0	71.7	Accomplished	133%	56.0	60.0
Absence of qualified and/or modified audit opinion impacting the authenticity of the annual accounting (financial) statements	Calculation takes into account unmodified or modified audit opinion (qualified opinion, negative opinion, disclaimer of opinion) on the authenticity of the Company’s accounting (financial) statements	Chief Accountant — 100%	Accomp./unaccomp.	Reduction factor	Accomplished	Accomplished	Accomplished	Accomplished	Accomplished	100%	Accomplished	Accomplished

* 2023 value is expected value of KPIs and FKPIs accomplishment, with due regard to the timeline of the reports used for their calculation. Actual values are to be approved by the Board of Directors

** Lowest and threshold values for the “Loss Level” KPI are not set^[4]