TGC-1: 9M 2012 IFRS Results

05.12.2012

TGC-1 releases its interim abbreviated unaudited consolidated Financial Statements for the 9 months period, ended September 30, 2012 prepared in accordance with International Financial Reporting Standards (IFRS).

Consolidated Statement of Comprehensive Income Figures (mn RUR)

9М 2011

9М 2012

Revenue

43,173

42,419

Operating expenses

(37,380)

(36,226)

Operating profit

5,793

6,193

EBITDA*

9,215

10,281

Profit

3,699

3,384

* For business planning purposes EBITDA is calculated as Operating profit + Depreciation of PP&E and intangible assets.

In the 9M 2012 the consolidated revenue of OJSC TGC-1 amounted to RUR 42,419 mn (-1.7% year-on-year). Reduction in the revenue for the 9 months of 2012 was caused by unfavorable market environment in the 1H 2012:

· decrease in electricity prices dynamics on the day-ahead market and balancing market resulted in revenue from electricity sales downfall by 3.2%;

· reduction in the volume of exported electricity led to corresponding  revenue decrease by 66.1%;

· high outdoor temperatures led to heat sales revenue decrease by 2.1%.

Total revenue was positively affected by capacity sales, increased by 17.9% year-on-year.

The 3Q 2012 revenue structure reflects the market stabilization:

· total revenue growth amounted to 17.4% in 3Q 2012;

· revenue growth from electricity sales amounted to 23.1%, comparing to 3Q 2011, as far as electricity prices on the day-ahead market increased by 6.5%;

· revenue from capacity sales grew on 21.8%, reflecting the CSA commissioning effect;

· revenue from heat sales increased by 23.4%, largely due to Murmanskaya CHP revenue growth.

In the 9M 2012 operating expenses decreased by 3.1% year-on-year and amounted to RUR 36,226 mn RUR. The main causes of the operating expenses change are the following:

· increase in fuel prices by 2.6%, caused by gas prices indexation;

· depreciation growth by 19.4%, reasoned by new capacities commissioning;

· lowered spending on electricity and heat purchases by 18.9%, on the account of lower prices at the day-ahead market and balancing market, as well as substantial reduction of purchases volume for the electricity export supply.

Operating expenses in 3Q 2012 decreased by 8.8% year-on-year, largely due to lower expenses on purchased energy (-4.5%) and repairs and maintenance (-20.7%).

Operating profit for 9M 2012 increased by 6.9% year-on-year, to RUR 6,193mn, profit decreased by 8,5% year-on-year and amounted to RUR 3,384 mn. However, reported profit for the 3Q 2012 amounted to RUR 205 mn.

According to the financial statements under IFRS for the 9 months, ended September 30, 2012, EBITDA increased by 11.6%, to RUR 10,281 mn. EBITDA for the 3Q 2012 amounted 2,659 bln RUR and increased more than 30 times. Costs optimization, including repairs expenses, revenue and depreciation growth stimulated EBITDA increase in 3Q 2012.

Michael Tuznikov, Director for economy and finance of TGC-1 commented on the results of 9 months of 2012– “The first half year wasn’t easy for us. Unfavorable environment – relatively low water content, price volatility at the day-ahead market – didn’t let us fully unlock the potential of the new energy-efficient capacity, commissioned in 2011. The third quarter resulted to be more favorable and the effects of the new units are already visible. We managed to reach almost the level of the previous year’s main financial highlights: revenue and profit, and operating profit surpassed the previous year’s result. The growth of the water content in the third quarter provides not only one-off effect but also the basis for the fourth quarter. In the late November at Pravoberezhnaya CHP another new CCGT unit was commissioned, which effects we’ll be able to see in the next, 2013 year”.

Full TGC-1 9M 2012 results under IFRS can be found on the corporate website in theReports” section.