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      1. 2.3.1 Description of tariff policy
      2. 2.3.2 Analysis of revenues and expenses
      3. 2.3.3 Analysis of receivables and payables
      4. 2.3.4 Credit ratings and bonds

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2.3.2 Analysis of revenues and expenses

The Company’s FY2018 revenues totaled RUBruble 89,625 million (+RUB 18,535 million or 26.1% YoYyear on year), impacted by increased proceeds from electricity sales services (RUBruble 20,537 million) following assignment of the “provider of the last resort” status(51-53). Revenues from electricity transmission amounted to RUBruble 67,897 million (- RUBruble 1,976 million YoYyear on year), the lowering impacted by recognition of the RUBruble 7,665 million network tariff component in revenues from electricity sales. In comparable conditions, a RUBruble 5,689 million rise in revenues from electricity transmission was influenced by the grown 2018 average tariff, changes in the “pie” scheme in Chelyabenergo from 01.07.2018 due to the cancellation of individual tariffs for OOOLimited Liability Company AES Invest, statutory exclusion of load losses from settlements with customers for electricity transmission from 01.08.2017 and changes in consumer structure (voltage classes).

Expenses plus administrative and commercial costs totaled RUBruble 82,165 million (+ RUBruble 17,793 million or 27.6% YoYyear on year), the growth impacted by the arrangements related to electricity sales operations after the PoLRprovider of the last resort status was assigned to the Company. These expenses on the arrangements related to electricity sales operations (plus commercial costs) totaled RUBruble 12,402 million. The increase resulted from the grown non-controllable expenses (payments to PAOPublic Joint-Stock Company FSK UESFederal Grid Company of United Energy System and other RGOs), consequent upon the hike in the use-of-system tariff, statutory exclusion of load losses from 01.08.2017 and changes in the “pie” scheme in Chelyabenergo from 01.07.2018 due to the cancellation of individual tariffs for OOOLimited Liability Company AES Invest.

The Company’s FY2018 net income totaled RUBruble 798 million (- RUBruble 3,772 million YoYyear on year), the lowering impacted by the bad debt reserve created to cover the debt of AOJoint-Stock Company Roskommunenergo, PAOPublic Joint-Stock Company Chelyabenergosbyt and OOOLimited Liability Company NUESKNovouralskaya Energosbytovaya Kompaniya (Novouralsk Energy Sales Company), as they ceased to be providers of the last resort. On 01.07.2018 OOOLimited Liability Company AES Invest, the 2nd “pie” holder of the Chelyabinsk region, ceased its RGO operations(54), thus, our Chelyabenergo branch became the sole “pie” holder in the region. A special provision for unpaid receivables of OOOLimited Liability Company AES Invest was made.

Key financial and economics metrics, RUB million

2018 2017 2016
Total revenues, comprising: 89,625 71,090 65,452
Revenues from electricity transmission 67,897 69,873 63,703
Revenues from connection 744 874 1.336
Revenues from electricity sales 20,537 0 0
Other revenues 447 343 413
Total expenses -80,004 -63,243 -59,338
Gross profit 9,621 7,847 6,114
Administrative costs -1,254 -1,129 -1,050
Commercial costs -907 0 0
Profit (loss) from sales 7,460 6,718 5,064
Interest receivable 127 120 158
Interest payable -887 -859 -969
Income from shareholdings 417 237 314
Other revenues 6,628 5,184 6,461
Other expenses -12,621 -5,687 -6,219
Pre-tax profit 1,124 5,713 4,809
Income tax and other payments -326 -1,143 -1,503
Net income (loss) 798 4,570 3,306
EBITDAearnings before interest, taxes, depreciation and amortization* 7,315 11,495 10,447
*EBITDAearnings before interest, taxes, depreciation and amortization = pre-tax profit — interest payable + depreciation and amortization = line 2300 F2 — line 2330 F2 + line 6514 F2.1+ line  6554 F2.1+ line 6564 F2.1

Visit our IR Portal on the corporate web-site for more disclosures on RASRussian Accounting Standards and IFRSInternational Financial Reporting Standards financial statements — https://www.mrsk-ural.ru/en/ir/.