JSC OGK-1 Publishes Financial Statements for 1H 2012 under RAS

OREANDA-NEWS. August 7, 2012. Financial performance:

Index *	H1 2012	H1 2011	% Change
Revenue	24.7	35.4	- 30.2
Cost	22.4	31.6	- 29.1
Profit on sales	1.8	3.3	- 45.5
Net profit	1.4	2.5	- 44.0
	June 30, 2012	December 31, 2011
Total assets	67.2	65.2	3.1
Equity	60.4	59.0	2.4
Loans and borrowings	-	-	-
Liquid assets **	9.3	10.8	-13.9

* In billions of rubles unless otherwise stated

** Liquid assets are calculated as: short-term financial investments plus financial resources.

JSC OGK-1 operating results:

Index	H1 2012	H1 2011	% Change
Electricity generation, billion kWh	20.0	21.3	- 6.1
Heat energy from the collectors, million Gcal	0.56	0.60	- 6.7
Installed capacity utilization factor %	55.81	59.43	-

Profit and loss statement

Revenue for JSC OGK-1 for H1 2012 was down 30.2% (10.7 billion rubles) compared to the same period in 2011 totaling 24.7 billion rubles.

The main factors in the reduction of revenue of electricity sales by 10.4 billion rubles were the decline in the volume of buying power in the provision of free bilateral contracts by 6.1% and an increase in sales of electricity on the open market in the face of declining prices for the day ahead market (DAM) in the first pricing zone by 7.3%. Also impacting revenue was reduction in electricity production by 6.1%, due primarily to the major overhaul in 2012 of Unit 1 Permskaya TPP (800 MW) and the current renovation of Unit 3 Permskaya TPP (800 MW).

The decrease in revenue from the sale of power of 0.3 billion rubles is due to the decrease in prices of 5.0% in the competitive selection of capacity in 2012 compared to 2011 for the power sold in the free flow "Center" and free flow "Ural" and the transfer of indexation of prices under the competitive selection of capacity laws from January 1 to July 1, 2012.

Cost of sales in H1 2012 was down 9.2 billion rubles (29.1%) totaling 22.4 billion rubles. The reduced purchase cost of electricity by 8.5 billion rubles (86%) was due mainly to a decrease in the volume of electricity purchased in the provision of free bilateral contracts given the absence of the latter. Fuel costs decreased by 5.6% due to a decline in the volume of coal used by 19.4% and the purchase of gas by 4.5%.

Profits from sales in the reporting period were down by 1.5 billion rubles (45.5%) compared to the same period in 2011 totaling 1.8 billion rubles.

In connection with the repayment of JSK OGK-1’s loan portfolio in 2011 there were no interest expenses in the period under review.

Interest income amounted to 0.3 billion rubles against 0.5 billion rubles in H1 2011. This decrease in interest receivable was due to a decrease of temporarily free funds as a financial investment due to the expenditure of funds in the investment construction program of Urengoyskaya TPP.

As a result of the financial activities for H1 2012, JSC OGK-1 received a net profit of 1.4 billion rubles, 1.1 billion rubles (44.0%) down year on year, which is mainly associated with a reduction in profits from electricity sales due to lower prices in a liberalized market.

Balance sheet

Total assets of JSC OGK-1 in H1 2012 were up 3.1% as of June 30, 2012 totaling 67.2 billion rubles.

Non-current assets in H1 2012 were up 2.6 billion rubles (5.6%) and on June 30, 2012 totaled 49.1 billion rubles. As of June 30, 2012 as a result of the investment program (mainly building the Urengoyskaya TPP), plant and equipment increased by 3.4 billion rubles (9.0%) totaling 41.3 billion rubles.

Long-term receivables decreased by 0.8 billion rubles (35.1%) and as of June 30, 2012 totaled 1.5 billion rubles, which is associated with the performance of obligations under the general contract for the construction of Urengoyskaya TPP.

Current assets in H1 2012 were down 0.6 billion rubles (3.3%) and as of June 30, 2012 amounted to 18.1 billion rubles.

The dynamics of current assets were affected by reduced investments in the form of deposits for a period of 3 to 12 months by 3.6 billion rubles, an increase of temporarily free funds on deposit for up to 3 months, and an increase in cash balances on settlement accounts for 2.1 billion rubles to finance the investment program.

Inventories increased by 17.6% and as of June 30, 2012 totaled 3.2 billion rubles, which is associated with an increase in technological fuel stocks (coal). The trend in the Q2 2012 was due to a strategic decision to use gas at the Kashirskaya TPP instead of coal, as in H1 2012 the price of gas had changed slightly. In addition, in January 2012 at the Verkhnetagilskaya TPP underwent the repair of a failed fuel line, so the coal burned in January 2012 was minimal.

As of June 30, 2012, there was an increase of VAT on goods purchased of 0.4 billion rubles (47.4%), which was due to the increased construction in progress in the implementation of investment programs for the Urengoyskaya TPP.

Shareholders' equity as of June 30, 2012 was up 1.4 billion rubles (2.4%), which is associated with an increase in retained earnings of previous years by 14.2%.

Total liabilities of JSC OGK-1 increased by 0.5 billion rubles (9.2%) and amounted to 6.7 billion rubles, which is primarily associated with an increase in accounts payable of 0.7 billion rubles (15.6%), mainly due to the specific conditions of the contract of the general contractor on the Power delivery contract project (agreement on the granting of capacity) at the Urengoyskaya TPP.

Accounting statements under RAS of CJSC Nizhnevartovskaya GRES (Nizhnevartovskaya thermal power plant)

Index*	H1 2012	H1 2011	% Change
Revenue	5.7	6.4	- 10.9
Cost	- 4.5	- 4.6	- 2.2
Profit on sales	0.9	1.4	- 35.7
Net profit	0.7	1.1	- 36.4
	June 30, 2012	December 31, 2011
Total assets	15.5	13.7	13.1
Total shareholders' equity	10.8	10.1	6.9
Loans and borrowings	3.3	2.5	32.0
Net debt **	2.5	0.8	212.5

* In billions of rubles unless otherwise stated

** Net debt is calculated as: short-term borrowings plus long-term borrowings minus cash and cash equivalents minus cash on deposit accounts.

Operation performance of CJSC Nizhnevartovskaya GRES (Nizhnevartovsk thermal power plant)

Index	H1 2012	H1 2011	% Change
Electricity generation, billion kWh	6.0	6.2	- 3.2
Heat energy from the collectors, million Gcal	0.12	0.13	- 7.7
Installed capacity utilization factor %	86.1	89.9

Revenue of CJSC Nizhnevartovskaya GRES in H1 2012 decreased by 10.9% over the same period in 2011 totaling 5.7 billion rubles. Negative dynamics of revenue were due primarily to lower prices in the day-ahead market by 10.4% and a decrease in sales of electricity by 0.5%.

Cost of sales decreased by 0.1 billion rubles (2.2%) and totaled 4.5 billion rubles.

The balance of other income and expenses (including interest income) increased by 25.9%, reflecting a change in exchange differences affecting the purchase of imported equipment for the construction of power unit № 3.1.

Gross profit decreased by 0.5 billion rubles (27.6%) year on year totaling 1.3 billion rubles. Profit before tax declined by 0.5 billion rubles (36.1%) and amounted to 0.9 billion rubles.

Net profit of CJSC Nizhnevartovskaya GRES in 2012 decreased 0.4 billion rubles (36.4%) compared to the same period in 2011 and amounted to 0.7 billion rubles, which is mainly associated with a reduction in profits from electricity sales due to lower DAM market prices.

The value of total assets of CJSC Nizhnevartovskaya GRES in H1 2012 increased by 1.8 billion rubles (13.1%) and as of June 30, 2012 totaled 15.5 billion rubles.

Non-current assets increased by 28.1% to 13.1 billion rubles, which is associated with the implementation of the investment program to construct a third power station. Current assets decreased 1.0 billion rubles (28.3%) to 2.5 billion rubles primarily due to lower short-term receivables from 1.6 billion rubles as of December 31, 2011 to 1.1 billion as of June 30, 2012, and cash and cash equivalents of 51.1% (by 0.9 billion rubles) to 0.8 billion rubles. The reason was the reduction of cash settlements with contractors in the course of implementing the investment program for the construction of power unit № 3.1.

Total liabilities as of June 30, 2012 increased by 1.2 billion rubles to 4.7 billion rubles. This was due to the involvement of long-term borrowings under intercompany financing from the parent company necessitated by realization of the investment project of construction of the third energy unit.

However, the net debt to highly liquid assets indicator does not exceed the permissible level of 2.9.