OREANDA-NEWS. Federal Grid Company of Unified Energy System (“Federal Grid Company” or “the Company”) (Moscow Exchange, LSE: FEES) announces its financial results for the first nine months of 2013 under Russian Accounting Standards (RAS).

The Company's RAS accounts do not consolidate the results of Federal Grid Company subsidiaries or affiliated companies that operate as independent legal entities.

Key financial performance:

Revenue of RUB 114,673 million

Adjusted EBITDA* of RUB 71,832 million

Gross profit of RUB 24,975 million

Adjusted net profit* of RUB 13,590 million

excluding adjustments to provisions for the impairment of accounts receivable

Federal Grid Company's revenue for 9 months 2013 increased year-on-year by 13.0%, amounting to RUB 114,673 million, driven by an increase in revenue from electricity transmission services on the Unified National Electric Grid (UNEG).

Operating costs including administrative expenses increased year-on-year by 16.7%, reaching RUB 98,410 million, driven by growth of RUB 7,948 million (17.8%) in depreciation charges related to new UNEG facilities commissioned under the Company's investment programme and by a revaluation of fixed assets as of 31 December 2012. Operating costs were also higher due to a 2.9-fold increase in property tax (up RUB 1,809 million) in connection with the phased repeal of the property tax concession for electricity transmission lines that took effect from 1 January 2013, in accordance with Federal Law #202-FZ dated 29 November 2012, on changes to the second part of the Russian Federation tax code.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by RUB 8,154 million (12.1%) year-on-year to RUB 71,832 million, driven primarily by an increase in the Company's operating profit (excluding depreciation costs).

Federal Grid Company's RAS accounts for 9M 2013 recorded a loss of RUB 3,802 million, which was primarily due to marking to market the value of LLC Index Energetiki - FSK UES promissory notes following a decline in the price of OJSC INTER RAO UES shares on Index Energetiki's balance sheet, as well as the creation of provisions on accounts receivable related to a seasonal increase in counterparty indebtedness.

The Company's adjusted net profit supported by operating cash flows (excluding net impairments on accounts receivable) for 9M 2013 was RUB 13,590 million.

Balance sheet as of 30 September 2013

Assets

Federal Grid Company's total assets increased by RUB 31,671 million (2.8%) during 9M 2013, and at the end of the period stood at RUB 1,154,666 million. This included non-current assets of RUB 1,042,840 million, and current assets of RUB 111,826 million.

Non-current assets grew by RUB 31,173 million (3.1%), driven primarily by an increase in construction works in progress of RUB 37,812 million (12.8%), in line with the Company's active implementation of its investment programme, while advances on non-current assets decreased by RUB 7,720 million (down 12%).

Federal Grid Company's current assets increased by RUB 497 million (0.5%) during 9M 2013 due to growth of RUB 14,290 million (60.3%) in short term investments, and a RUB 1,097.8 million (16.5%) rise in reserves, which was balanced by a RUB 12,187 million decline (down 20.1%) in accounts receivable.

Federal Grid Company's capital decreased by RUB 424 million (minus 0.05%) during the period due to the effect of the 9M 2013 loss of RUB 3,801 million, balanced by an increase in registered share capital of RUB 3,377 million following the FFMS registration of a 2012 additional share issue.

The Company's loans and borrowings (excluding accrued interest) increased by RUB 25,850 million in 9M 2013 and amounted to RUB 238,349 million as of 30 September 2013. During the nine month period, Federal Grid Company repaid a loan in the amount of RUB 25,000 million, and placed infrastructure bonds in the amount of RUB 56,000 million in order to finance its investment program.