Financial review

Tariff policy and tariffs for the Company’s services

Electricity transmission tariffs

In accordance with Decree of the Government of the Russian Federation No. 1159 dated 28 August 2024 “On approval of criteria for classifying territorial grid organisations as systemic territorial grid organisations and rules for the definition of systemic territorial grid organisations”, branches of PJSC Rosseti South have been defined as systemic important territorial grid organisations in the regions of their presence since 1 January 2025.

In 2025, unified (common-pot) tariffs for electricity transmission services were in effect in all constituent entities of the Russian Federation within the catchment area of PJSC Rosseti South. The distinctive feature of this pricing scheme is that for all consumers of the same voltage class, electricity transmission is charged at a single tariff regardless of which organisation’s grids they are connected to. In 2025, the “Pot at the Top” model applies in all regions of the presence of PJSC Rosseti South.

Tariff regulation of branches of PJSC Rosseti South follows the method of long-term indexing of the required gross revenue and on the basis of agreements on the terms of regulated activities concluded with executive authorities in charge of state regulation of tariffs (hereinafter referred to as Regulatory Agreements).

Grid connection fee

Grid connection fee is calculated when newly commissioned and earlier connected consumer terminals with increased maximum capacity are connected and also if the power supply reliability category, connection points, type of production activities of already connected consumer terminals are changed without revising the maximum capacity, but involving the change of the external power supply scheme of such terminals.

Key financial and economic indicators under the RASThe information in this section is based on the performance results of the Kubanenergo branch of PJSC Rosseti South for December 2025.

Revenue

Revenue from sales of products (services) in 2025 is RUB 38,951 million (76.0%) higher than in 2024, including revenue from electricity transmission by RUB 36,955 million (76.9%) higher than in 2024. The positive behaviour is related to an increase in the average tariff by 69.20% (mainly due to the Company’s performance of the SGO functions from 1 January 2025), as well as an increase in the volume of services provided, amounting 1,025.55 million kWh, or 4.05%, due to the reorganisation of PJSC Rosseti South through the merger of JSC Rosseti Kuban from 1 December 2025.

• The increase in revenue from grid connection amounts to RUB 1,292 million, or 129.0%, due to the availability of executed grid connection contracts in 2025 with a relatively high cost compared to the same period in 2024, as well as the reorganisation of PJSC Rosseti South through the merger with JSC Rosseti Kuban from 1 December 2025.
• Revenue from the sale of electricity increased by RUB 254 million. This growth is caused by a rise in net delivery by 18.32 million kWh and a rise in the weighted average price by 15.0%.
• Revenue from the provision of services for other activities increased by RUB 450 million, due to escalated efforts by the Company to develop additional (non-tariff) activities and promote competitive construction, installation, repair and maintenance services, as well as the reorganisation of PJSC Rosseti South through the merger with JSC Rosseti Kuban from 1 December 2025.

Expenses

The cost of sales is 80.2% higher than in 2024. The upward trend is driven:

• Mainly by an increase in the cost of purchased electricity to compensate for losses by RUB 3,605 million, which was due to an increase in the weighted average purchase price for electric losses by 15.3%, as well as an increase in the volume of paid electric losses by 18.6%, mainly due to the reorganisation of PJSC Rosseti South;
• By the growth of expenses for services of PJSC Rosseti by RUB 4,026 million, which is also mainly due to the reorganisation of PJSC Rosseti South;
• By an increase in expenses for TGO services by RUB 21,918 million, due to a rise in the average tariff and volume of TGO services provided, mainly attributable to changes in the settlement scheme with JSC VMES, JSC Volgogragoblektro and JSC Donenergo in connection with the Company’s performance of the SGO functions from 1 January 2025, as well as due to the reorganisation of PJSC Rosseti South;
• By the increase in personnel costs due to the indexation of salaries to the Company’s personnel and the reorganisation of the Company.

Other expenses of the reporting year were RUB 744 million higher than in 2024, mainly due to the need to implement the top-priority repair programme, as well as an increase in other revenue and the reorganisation of PJSC Rosseti South.

Financial results

Compared to the performance results for 2024, the financial results dropped by RUB 4,478 million. This deviation is caused to a decrease in other income from the reversal of property impairment. Based on the performance results for 2024, changes in the book value of the Volgogradenergo branch’s power grid assets were recorded in accordance with FAS 6/2020 “Fixed Assets”.

Liabilities

According to the performance results in 2025, there was an increase in accounts receivable and accounts payable in connection with the merger of JSC Rosseti Kuban into the Company.

The total amount of accounts receivable of PJSC Rosseti South at the end of the reporting period amounted to RUB 17,247 million, as of 31 December 2024 – RUB 6,930 million. The increase amounted to RUB 10,317 million and was mainly due to the reorganisation and merger of the Kubanenergo branch (the branch’s debt amounted to RUB 7,373 million).

Analysis of accounts receivable for electricity transmission services

The total amount of accounts receivable from PJSC Rosseti South for electricity transmission services as of 31 December 2025 is RUB 13,827 million, including restructured amounts – RUB 507 million, overdue amounts – RUB 3,225 million. In comparison with the result of 2024, accounts receivable as of 31 December 2025 increased by RUB 8,555 million, or 162.3%, due to an increase in accounts receivable from the Kubanenergo branch (+RUB 7,069 million), Astrakhanenergo (+RUB 148 million), Volgogradenergo (+RUB 494 million), and Rostovenergo (+RUB 889 million). The Kubanenergo branch’s debt growth by RUB 7,069 million is driven by the formation of debt on the branch due to the reorganisation of PJSC Rosseti South through the merger with JSC Rosseti Kuban.

The rise in debt for the remaining branches is mainly connected to a significant increase in charges due to SGO functions started on 1 January 2025, as well as a violation of payment discipline on the part of consumers engaged in regulated water supply and disposal activities in the Rostov Region: SUE Water Supply System Development Department (increase in accounts receivable – RUB 404 million) and Azovvodokanal municipal enterprise (increase in accounts receivable – RUB 48 million).

Most of overdue accounts receivable accrue to energy retail companies (RUB 1,520.0 million, or 47%) and other direct consumers, mostly bankrupt (RUB 1,420.8 million, or 44%). The debts of bankrupt consumers are collected through bankruptcy proceedings, and at the same time they are fully included in the bad debt provision. The remaining debt incurred due to the violation by the counterparties of the terms of the contracts regarding the terms of payment for services rendered is recovered through judicial and enforcement proceedings.

Analysis of accounts receivable from electricity buyers

Accounts receivable from electricity buyers within the framework of the Company’s functions as a guaranteeing supplier as of 31 December 2025 amounted to RUB 426.83 million, which is RUB 66.08 million (13.41%) lower than the level of accounts receivable as of 31 December 2024.

Accounts payable

Accounts payable at the end of the reporting period were RUB 43,136 million higher compared to the beginning of the year and amounted to RUB 54,454 million as of 31 December 2025. The growth was mainly driven by the reorganisation and merger with the Kubanenergo branch (the branch’s debt amounted to RUB 42,018 million).

Bonds

No credit ratings were assigned to the Company in the reporting year.