IR Releases

30.07.2012

JSC "LENENERGO" released its 1H 2012 financial statements under Russian Accounting Standards

Key indicators of Lenenergo performance for H1 2012:

Indicator Unit of measurement H1 2011 H1 2012 Δ in %

H1 2012/H1 2011
Ref:
Q2 2012
Ref:
2012 (E)*
Productive supply of electric power mln kWh 14 714 15 176 3,14% 7 002 30 060
Losses of electric power % 11,18 11,05 -0,13 п.п. 6,61 10,29
Connected capacity kW 154 966 181 286 17,0% 128 922 369 569
Revenue from sales of production, including: RUB mln 18 727 17 240 -7,9% 8 860 38 409
- From electric power transmission services RUB mln 14 908 14 141 -5,1% 6 607 30 318
- From grid connection services RUB mln 3 740 3 017 -19,3% 2 206 7 928
- From other industrial activity RUB mln 79 82 3,5% 47 163
Cost RUB mln 16 185 16 060 -0,8% 7 387 34 017
Gross profit RUB mln 2 542 1 179 -53,6% 1 473 4 932
Profit before taxation RUB mln 1 797 566 -68,5% 1 188 2 266
Net profit RUB mln 1 209 297 -75,4% 896 1 350
For reference:
EBITDA RUB mln 4 746 4 551 -4,1% 3 161 9 654
EBITDA margin % 25,3% 26,4% 1,1 п.п. 35,7% 25,1%
Investment program (disbursement) RUB mln 4 982 5 100 2,4% 3 439 13 316

* Estimated indicators for 2012 in accordance with the Business plan for 2012 approved by the Board of Directors (Minutes #17 of 20.04.2012). The Business plan can be adjusted following H1 2012 results.

In H1 2012, revenue from sales of production totaled RUB 17 240 mln, and decreased year-on-year (y-o-y) by RUB 1 487 mln, or 7.9%. Revenue from electric power transmission decreased by RUB 767 mln, or 5.1%, and revenue from grid connection services decreased by RUB 723 mln, or 19.3%.

The decrease in revenue from electric power transmission by RUB 767 mln, or 5.1% in H1 2012 compared to H1 2011, is primarily due to the change in the average tariff for electric power transmission:

- in the city of St. Petersburg revenue decreased by RUB 1 612 mln, or 17%, due to a decrease in the average tariff rate by 18%, driven by lower tariff rates for the maintenance of electrical networks and payment of technological losses starting from 01.05.2011 (Order of the Committee for Tariffs of St. Petersburg #104-P of 10.06.2011, “About Amendments to Order of the Committee for Tariffs of St. Petersburg of 29.12.2010 #386-p and of 04.02.2011 #10-r”) in line with an increase in the volume of electric power transmission by 1.35%;

- in the Leningrad region revenue increased by RUB 845 mln, or 15% due to an increase in the average tariff rate by 11%, and an increase in the volume of electric power transmission by 4% in the given period.

The decrease in revenue from grid connection services compared to H1 2011 was driven by the close in Q1 2011 of the contracts for technological connection, concluded at higher rates in the previous periods (including under the contracts with LLC Gazprom Invest West concluded at individual rates).

In H1 2012, cost of services rendered amounted to RUB 16 060 mln, and its decrease compared to the corresponding period of 2011 constituted RUB 124 mln, or 0.8%.

Gross profit of JSC Lenenergo in H1 2012 decreased by RUB 1 363 mln, or 53.6% compared to H1 2011 and reached RUB 1 179 mln.

Net profit of the Company in H1 2012 totaled RUB 297 mln. The decrease in net profit compared to H1 2011 amounted to RUB 912 mln, or 75.4%, and was primarily due to reduced revenue from sales of production.

EBITDA, which characterizes the Company generated cash flow before taxes and interest in H1 2012 totaled RUB 4 551 mln, and decreased by 4.1%, or RUB 195 mln compared to the corresponding period of 2011.

RUB thousand
Indicators H1 2011 H1 2012 H1 2012/H1 2011
Absolute Relative
EBITDA
including:
4 745 906 4 550 624 -195 282 -4,1%
Depreciation of fixed assets
and intangible assets
2 455 264 3 096 465 641 201 26,1%
Accrued interest 493 327 887 973 394 646 80,0%
Profit tax 588 601 269 130 -319 471 -54,3%
Net profit 1 208 715 297 056 -911 658 -75,4%

The decrease in EBITDA as at 30.06.2012 compared to H1 2011 was driven by lower gross profit, while the balance of other operations increased and had a positive value - primarily due to revenue from the identified non-contractual and non-metered consumption.

The decrease in EBITDA was accompanied by a decrease in its components: profit tax and net profit. In this case, the amount of depreciation accrued and the sum of interest payable increased.

The decrease in net profit was caused by a smaller decrease in the Company's cost of services, compared to y-o-y decrease in revenue.

Reduction of accrued profit tax (by RUB 319 mln, or 54.3%) occurred in the conditions of declining profit before tax.

The growth of accrued depreciation is associated with the increase in fixed assets by commissioning of objects in the course of implementation of the Company investment program, and the revaluation produced as at 31.12.2011.

The increase in the amount of interest payable is related to the fact that during the reporting period the accrual of interest was produced to a large amount of main debt.

In H1 2012, the value of EBITDA declined slightly (by 4.1%) at a greater decrease in the Company gross revenue (by 7.9%). As a result, the share of EBITDA in revenue (EBITDA margin) increased by 1.1 percentage points to reach 26.4%. In general, such a change of the indicator is positively characterized from the viewpoint of estimation of the Company financial condition.

In H1 2012, capital investments of the Company totaled RUB 5 100 mln and increased y-o-y by 2.4%.