OREANDA-NEWS. Federal Grid Company of Unified Energy System ("Federal Grid Company" or "the Company") (Moscow Exchange, LSE: FEES), part of the Russian Grids Group of companies and operator of Russia's Unified National Energy Grid (“UNEG”), announces its audited consolidated IFRS financial results for the year ended 31 December 2013.

Key FY 2013 financial and operational highlights:

Financial

Revenue of RUB 157,970 million

Adj. EBITDA* of RUB 92,551 million

Adj. operating profit** of RUB 30,877 million

Adj. profit for the period*** of RUB 23,405 million

Adj. EPS**** of 0.019 RUB

Adjusted EBITDA is calculated as EBITDA (profit for the period before income tax, finance income and costs, depreciation and amortisation), excluding non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, impairment of promissory notes including finance income.

** Adjusted operating profit is calculated as operating profit, excluding non-specific impairment of property, plant and equipment.

*** Adjusted profit for the period is calculated as profit for the period, excluding non-specific impairment of property, plant

and equipment, impairment of available-for-sale investments, impairment of promissory notes 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's shares outstanding during the reporting period.

Operational

Electricity transmission from UNEG to consumers (net): 519.98 billion kWh

Total transformer capacity: 334 GVA

Transmission grid length in operations: 135 thousand km

Number of substations: 919 substations

Key FY 2013 corporate developments:

On 11 November 2013 Andrey Murov was elected as a Chairman of the Management Board of Federal Grid Company.

On 14 June 2013 the Russian government's stake in Federal Grid Company, previously held through the Federal Property Management Agency, was transferred to Russian Grids. As a result, Russian Grids now holds an 80.13% stake in Federal Grid Company.

The Company successfully provided power supply to facilities related to the Olympic Games

in Sochi and Universiade in Kazan.

Federal Grid Company infrastructure continued to operate smoothly during flooding in Russia's Far East.

In October 2013, Fitch Ratings assigned the Company a "BBB” credit rating (same as Sovereign).

The Company successfully attracted long term financing for its investment programme at attractive rates. Between June and December 2013 Federal Grid Company successfully placed infrastructure bonds in a total amount of RUB 100 billion with maturities of 33 to 35 years and a coupon rate of CPI+1%.

Commenting on the FY 2013 IFRS financial results, Chairman of the Federal Grid Company Management Board Andrey Murov said:

“During 2013 Federal Grid Company continued to fulfil its mission of ensuring a reliable, secure and safe electricity supply to its customers throughout the Russian Federation. With total capital expenditure of RUB 149.7 billion during 2013, we continued to expand and upgrade the Unified National Electricity Grid, with the aim of increasing the reach and efficiency of Russia's backbone grid. We commissioned 28 substations and 3.69 thousand km of new transmission lines.

“In 2013 we achieved strong financial performance while continuing to implement a massive nationwide investment programme in a volatile market environment. Revenue increased by 12.6% to RUB 158 billion, and adjusted EBITDA grew to RUB 93 billion. We maintained a strong adjusted EBITDA margin of 59%.

“With tariff growth frozen for 2014, we are successfully adapting to changes in the regulatory environment and further intensifying our focus on efficiency and cost management. We are also reviewing the parameters of our investment programme to synchronise it with expected income levels while continuing to implement the most important projects.

“Our 2013 results demonstrate that Federal Grid Company was able to adapt to more challenging economic conditions, while continuing to implement a balanced financial policy aimed at facilitating economic growth through the long-term development of Russia's electricity grid infrastructure.”

2013 Financial results

Federal Grid Company's consolidated revenue grew by 12.6% year-on-year in 2013 to RUB 157,970 million, compared to RUB 140,313 million in 2012. Revenue from electricity sales and other items increased by RUB 1,414 million and RUB 372 million, respectively, in 2013 vs. 2012.

Excluding depreciation of property, plant and equipment and amortisation of intangible assets, taxes (other than profit tax), accrual of allowances for doubtful debtors and one-off expenses related to mobile gas turbine generating stations, operating expenses amounted to RUB 68,874 million in 2013, up to 5.83% year-on-year.

Depreciation and amortisation increased by 29.6% year-on-year and amounted to RUB 57,636 million, or 43.1% of the Company's total operating expenses in 2013.

Staff costs, which accounted for 20.9% of total costs in 2013, increased by 8.7% year-on-year to RUB 27,939 million. This growth was primarily due to a 2.7% increase in the average number of employees and an increase in average salaries due to a 6.5% indexation of remuneration.

Purchases of electricity amounted to RUB 14,151 million for the reporting period, an increase of 6.2% compared to 2012.

Following the start of a phase out of property tax exemptions for electricity transmission grids, tax expenses grew significantly in 2013, up to RUB 2,422 million vs. 2012.