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Key Performance Indicators

Alongside the approval of the Long-Term Development Programme the Board of Directors also approved the Key Performance Indicators (KPIs) for 2015-2019. Pursuant to  Russian Government directives Some indicators were added into the KPI Framework for 2016 pursuant to the Russian Government’s instruction of 07 November 2015 NoDM-P36-7563 and Directive No2303p-P13 of 16 April 2015. and Regulations on the Company’s Key Performance Indicators, approved by the Board of Directors on 31 December 2014, the KPI framework comprises economic-financial and industrial indicators, including the following:

  • Investment related KPIs: Total Shareholder Return (TSR) over the past year and Return on the Invested Capital (ROIC).
  • Financial KPIs: Revenue, OIBDA margin, innovation KPI, labour productivity indicator.
  • Industrial KPIs: broadband Internet access subscriber base (including all access technology) + IPTV user base, number of households passed with fibre.
Target values and to what extent the targets are met in 2015 As the Long-Term Development Programme and KPIs were approved for the period 2015-2019, actual KPI values for 2014 are shown for reference only. :
KPI Measurement unit 2014 actual 2015 Conservative 2015 Actual Difference from conservative 2015 baseline Difference from baseline Comment
1 TSR % –5.9 n/a –7 n/a n/a n/a 2015 was marked by high volatility and decreasing interest in emerging markets in general, therefore investors were inclined to increase exposure in instruments offering:
  • higher dividend income
  • exposure in sectors most secured against depreciation (exporters, core financial institutions, utilities, etc.);
  • solid liquidity.
Therefore, raw material exporting companies and core banks, dominate the MICEX list of best performing companies in terms of TSR. Consumer and TMT sector companies posted the worst TSRs.
2 ROIC % 8.7 7.8 8.1 3.8% 9.4 –13.8% The KPI value at the year end was 8.1%, which is better than under a conservative scenario.
3 RevenueAs the Long-Term Development Programme and KPIs were approved for the period 2015-2019, actual KPI values for 2014 are shown for reference only. RUB bln 299 299 297 –0.7% 301 –1.3% In general, the Company achieved its market forecast in terms of revenue. The following factors among others prevented the Company from meeting the upper value of the range:
  • the country’s macroeconomic situation and changing consumer demand;
  • reduced demand for fixed telephony services.
4 OIBDA marginThe mobile business was not taken into account. % 34.3 31.3 33.9 8.3% 33.5 1.2% A high OIBDA margin value is attributed to successful implementation of operational efficiency improvement program.
5 Innovation KPI (Quality of design and survey in 2015)In 2015, the Company completed the implementation of the Innovation Development Programme as approved in 2013. The Innovation Development Programme for the period 2016-2020 has been drafted and is expected to be approved before 1 July 2016. % n/a
6 Labour productivity indicator RUB per employee per hour 1,081 1,097 1,138 –3.6% 1,147 –4.4% The difference of this indicator value from the target is attributed to the revenue amount generated in 2015 (cf. comment on the revenue target).
7 Broadband (B2C+B2B) and IPTV subscribers without audit mln subs 13.9 15.5 14.6 5.9% 15.3 1.1% Given the base clean-up in Q1-Q2 2015, the target is met in all scenarios.
8 Number of households passed with fibre mls HH 25.2 30.7 29.0 5.9% 30.0 2.3% The deployment of Fibre network is ahead of schedule. To maintain Rostelecom’s technological edge in IP network the Company plans to pass with fiber up to 33 mln of Russian households by the end of 2016.