Trading in the Russian Federation and Europe

Revenue in the segment grew by 25% in 2018 primarily on account of the dynamics at companies in the segment. In particular, PJSC Inter RAO, RAO Nordic Oy, and AB INTER RAO Lietuva boosted revenue due to favorable market prices on the Nord Pool electricity exchange in the Lithuania and Finland zones, higher sales in these countries, and an increase in the ruble equivalent of selling prices due to growth in the euro in 2018 compared with 2017, while JSC Eastern Energy Company accomplished this as a result of growth in the ruble equivalent of export prices to China and Mongolia combined with a decrease in the volume of deliveries in 2018 versus 2017. As a result of these factors, in terms of the country breakdown, revenue simultaneously decreased to a greater extent in the Russian Federation and Belarus.

‘Trading in the Russian Federation and Europe’ segment
Indicator 2016 2017 Information was retrospectively restated due to implementation of IFRS 15 “Revenue from Contracts with Customers” and IFRS 16 “Leases”. Information for 2016 was not subject to retrospective restatement. 2018 Change vs. 2017, %
Revenue, including, RUB mln 81,025 58,618 73,495 25
Finland 12,574 11,134 24,824 123
Lithuania 9,570 8,818 18,163 106
Russian Federation 30,039 13,956 12,749 -9
China 10,170 8,315 8,755 5
Latvia 743 861 795 –8
Belarus 8,795 7,557 137 –98
other 9,134 7,977 8,072 1
Share in revenue of the Inter RAO Group, % 9 7 8 1 p.p.
Purchased electricity and capacity, RUB mln (63,928) (44,890) (48,496) 8
Transmission fees, RUB mln (6,006) (5,537) (7,402) 34
EBITDA, RUB mln 10,193 7,445 16,309 119
EBITDA margin, EBITDA margin was calculated excluding intersegment revenue of the ‘Trading in the Russian Federation’ segment in the amount ofRUB2.053 billion for 2018,RUB2.268 billion for 2017, andRUB1.631 billion for 2016. 13 13 23 10 p.p.
Share in EBITDA of the Inter RAO Group, % 10 8 13 5 p.p.

The 8% growth in electricity purchase expenses in the segment was mainly due to an increase in the volume of electricity exports to Finland and Lithuania, which was partially offset by a decrease in import procurements by PJSC Inter RAO from Kazakhstan.

The 34% increase in electricity transmission expenses in the segment was primarily due to higher expenses as expressed in rubles by RAO Nordic Oy and AB INTER RAO Lietuva as a result of increased electricity imports from the Russian Federation.

The 119% growth in EBITDA in the segment was the result of higher marginal profits, particularly in Finland and Lithuania on account of an increase in electricity sales volumes and the ruble equivalent of the selling price of exported electricity in connection with growth in the price of exports in the contract currency and the euro’s appreciation versus the Russian ruble in 2018 compared with 2017.