OREANDA-NEWS. Federal Grid Company of Unified Energy System ("Federal Grid Company" or "the Company") (MICEX-RTS, LSE: FEES), the operator and manager of Russia's unified electricity transmission grid system, today announces its audited consolidated IFRS financial results for the year ended 31 December 2012.

Key 2012 financial and operational highlights:

Financial

Revenues of RUB 140,313 million

Adj.EBITDA* of RUB 82,133 million

Adj. operating profit** of RUB 33,520 million

Adj. profit for the period*** of RUB 29,956 million

Adj. EPS****of RUB 0.024

* Adjusted EBITDA is calculated as EBITDA (profit for the period before income tax, finance income and costs, depreciation and amortisation) under IFRS adjusted to exclude one-off gain on disposal of available-for-sale investments (only in 2011), loss on re-measurement of assets held for sale (only in 2011), non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, impairment of promissory notes (only in 2012), reversal of impairment of investments in associates (only in 2012), and to include finance income.

** Adjusted operating profit is calculated as operating profit under IFRS adjusted to exclude one-off gain on disposal of available-for-sale investments (only in 2011), loss on re-measurement of assets held for sale (only in 2011), and non-specific impairment of property, plant and equipment.

*** Adjusted profit for the period is calculated as profit for the period under IFRS adjusted to exclude one-off gain on disposal of available-for-sale investments (only in 2011), loss on re-measurement of assets held for sale (only in 2011), non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, impairment of promissory notes (only in 2012), reversal of impairment of investments in associates (only in 2012), and related deferred income tax effects.

**** Adjusted EPS is calculated as adjusted profit for the period divided by the weighted average number of the Company’ shares outstanding during the reporting period.

Operational

Electricity transmission volume 498 Bn kWh (+3% compared to 2011)

Transmission lines length increased up to 131,000 km, in 2012 bringing by 7,000 km

37 new substations were brought online in 2012

Total transformer capacity increased up to 335 GVA (+4% compared to 2011)

Key 2012 corporate developments

Tariff decisions:

On 21 May 2012, the Federal Tariff Service approved tariffs for electricity transmission on the Unified National Electricity Grid (UNEG) for 2012-2014 (from 1 July 2012 the tariff increased by 11%, from July 2013-2014 growth of 9.4%)

Investment programme:

On 11 May 2012, the Russian Federation Ministry of Energy approved a revised investment program for Federal Grid Company of RUB 505 billion for 2012-2014

On 31 October 2012, the Ministry of Energy approved an expanded investment program for 2013-2017 of RUB 775.5 billion

Development of the electricity grid:

On 22 November 2012, the President of Russia signed a decree “On Open Joint Stock Company ‘Russian Grids’”. The decree stipulates that OJSC “IDGC Holding” be renamed to OJSC “Russian Grids” and that the 79.55% stake in Federal Grid currently owned by the Russian Federation should be transfered to OJSC “Russian Grids”.

Capital markets activity:

On 27 April 2012, the Board of Directors of Federal Grid Company approved three long-term debt instruments programs in order to diversify the Company’s debt financing sources:

Russian bonds issues of up to RUB 125 billion

Stock Exchange authorised rouble bonds issues of up to RUB 100 billion

Eurobonds issues of up to RUB 100 billion

Commenting on the 2012 results, Federal Grid Company Chairman of the Management Board Oleg Budargin said:

The Company’s priority during 2012 year, as well as during all recent years, consisted of ensuring the stable transmission of electric power with upgraded reliability. We coped with this task on the back of the growing fleet of equipment in operation; the number of disturbances decreased and the transmission networks’ emergency rate fell 13%.

During 2012 year, as well as previously, the Company made every effort to fulfill tasks set by the Russian Government related to the modernization and development of power industry infrastructure, to further upgrade the reliability of the power grid complex and to provide the technological basis for Russian economic development.

The Company’s 2012 investment program was successfully fulfilled.

In 2012, the Company activated energy production at 75 facilities, including 12 facilities that were energized ahead of schedule. The Company commissioned 3,643.2 km of power transmission lines and 17,827 MVA of transformer capacity. During implementation of the investment program, significant attention was paid to the efficiency of purchasing operations. In 2012, savings related to commissioned facilities exceeded 10%.

The Company has accomplished numerous major projects that are essential for the social and economic development of Russian regions. The Company provided for the timely commissioning of infrastructure power facilities of the Primorsky Region, and also of the first stage of the ESPO pipeline, which is the Russian Government’s top priority infrastructure project. Other accomplishments include the timely commissioning of the 4th power unit at the Kalininskaya NPP. Projects pertaining to the power supply of the Vankorskaya Group of fields and the 2014 Sochi Olympics, etc. have been implemented in accordance with the schedule.

2012 was a special year for the Company, marking its 10th anniversary. And we’d like to thank the Company’s shareholders, partners, customers and employees for their trust and fruitful cooperation, and for their contribution to Federal Grid Company development.

Commenting on 2012 financial results, Federal Grid Company First Deputy Chairman of the Management Board Andrey Kazachenkov said:

“Taking into account the tariff adjustment in 2011 and the delayed transition to annual tariff increases from 1 January to 1 July 2012, Federal Grid Company’s priorities in 2012 were maintaining a balanced financial policy in order to ensure stable electricity supply and reliability of the unified national electric grid.

Consolidated revenues were RUB 140,313 million. The Group's revenues are derived primarily from the provision of electricity transmission services. Changes in this type of revenues are primarily dependent on changes in tariffs set by the Russian Federal Tariff Service. The Group also earns revenues from the sale of electricity generated and sold to third parties by the Group’s subsidiaries.

Adjusted operating profit declined by 28.1% y-o-y in 2012 to RUB 33,520 million, primarily due to higher depreciation charges related to newly-commissioned UNEG facilities, combined with slower revenue growth due to delayed tariff increase.

”Consolidated adjusted EBITDA for 2012 was RUB 82,133 billion. Adjusted profit for the period of RUB 29,956 million”.

“The RAB regulation has had a positive impact on the development of the unified national electric grid. As a result, in 2012, total additions to property, plant and equipment amounted to RUB 162.2 billion.

“Federal Grid Company’s debt totalled RUB 216,418 million as at 31 December 2012 compared to RUB 132,780 million as at 31 December 2011. The growth was attributed to necessity to finance large-scale investment program. The company used diversified instruments at the Russian market to draw new debt: Russian bonds, including 10-year RUB 10 billion local bond with a CPI-linked coupon issued in August 2012 and bank loans. The Company also successfully placed its debut Eurobonds of RUB 17.5 billion in December 2012, with a coupon of 8.45% and due in 2019.

Federal Grid Company's net debt as at 31 December 2012 stood at RUB 168,002 million, compared with RUB 85,232 million as at 31 December 2011”.

“The results of 2012 demonstrate how Federal Grid Company continues to pursue balanced financial policies aimed at facilitating economic growth through the long-term development of the country's electricity grid infrastructure.”