IR Releases

24.01.2012

Preliminary results of JSC Lenenergo for 2011 and forecasts for 2012

The Board of Directors of JSC Lenenergo at a meeting of January 19, 2012 summed up the results of the Company’s activities for 2011, approved the business plan and based the investment program for 2012.

Forecast of the main indicators of the Company for 2011 is presented in the table below:

Indicator Unit of measure 31.12.2010 (F) 31.12.2011 (E) Δ in %

2011/2010
Productive supply of electric energy mln kWh 29 095 29 094 0,00%
Losses of electric energy % 10,71% 10,56% -0,15 п.п.
Connected capacity kW 645 279 319 594 -50,47%
Revenue from sales of production, including: RUB mln 34 201 37 165 8,67%
- From electric power transmission services RUB mln 23 873 28 711 20,27%
- From grid connection services RUB mln 10 164 8 283 -18,50%
- From other industrial activity RUB mln 164 170 3,88%
Gross profit RUB mln 6 713 5 212 -22,36%
Profit before taxation RUB mln 5 282 2 055 -61,11%
Net profit RUB mln 3 806 1 000 -73,72%
For reference:
ROE % 7,80% 1,83% -
EBITDA RUB mln 10 356 8 294 -19,91%
EBITDA margin % 30,28% 22,32% -
Net debt*/EBITDA - 1,39 2,44 -
Investment program (disbursement) RUB mln 15 813 14 993 -5,18%

* The net debt is calculated as total borrowings (including debt on %), net of cash and short-term financial investments

The overshoot of boiler tariffs for electric energy transmission, conducted by the regulating authorities of the regions from 01.05.2011, in accordance with the requirements of the RF Government Decree № 1172 of 29.12.2010, led to a major reduction in the estimated financial performance of JSC Lenenergo for 2011 in relation to 2010.

Following the 2011 results a decline in gross profit is expected in relation to 2010 by 22.4% to RUB 5,212 mln.

EBITDA in 2011 is expected to reach RUB 8,294 mln that is 19.9% below the indicator of 2010.

Expected net profit for 2011 is RUB 1,000 mln that is 73.7% below the indicator of 2010.

In 2011, the Company implemented its investment program in full in accordance with the adjusted program: capital investment amounted to RUB 14,993 mln.

Key performance indicators of the Company in accordance with the approved business plan for 2012:

Indicator Unit of measure 31.12.2011 (E) 31.12.2012 (P) Δ in %

2011/2010
Productive supply of electric energy mln kWh 29 094 30 060 3,32%
Losses of electric energy % 10,56% 10,29% -0,27 п.п.
Connected capacity kW 319 594 369 659 15,67%
Revenue from sales of production, including: RUB mln 37 165 38 409 3,35%
- From electric power transmission services RUB mln 28 711 30 318 5,60%
- From grid connection services RUB mln 8 283 7 928 -4,29%
- From other industrial activity RUB mln 170 163 -4,20%
Gross profit RUB mln 5 212 4 397 -15,63%
Profit before taxation RUB mln 2 055 2 271 10,52%
Net profit RUB mln 1 000 1 350 35,04%
For reference:
ROE % 1,83% 2,53% -
EBITDA RUB mln 8 294 9 659 16,46%
EBITDA margin % 22,32% 25,15% -
Net debt*/EBITDA - 2,44 2,82 -
Investment program (disbursement) RUB mln 14 993 13 316 -11,18%

* The net debt is calculated as total borrowings (including debt on %), net of cash and short-term financial investments

Business plan of JSC Lenenergo for 2012-2016 is formed on the basis of projected tariff models using the method of return on invested capital (RAB), formed in accordance with the scenario terms of growth of tariffs for electricity transmission and federal factors developed by the Economic Development Ministry of Russia and the FTS of Russia.

In accordance with the Company's plans the quantity of productive supply of electric energy in 2012 will amount to 30,060 mln kWh, which is higher than the productive supply of electric energy expected in 2011 by 966 mln kWh, or 3.3%. The amount of losses of electric energy in 2012 is expected to be 10.29%, which is lower than the indicator expected for 2011, by 0.27 percentage points. The decrease in electric energy losses relative to the indictor expected in 2011 is planned considering the implementation of the "Energy Efficiency Program and Energy Efficiency", developed for 2012 - 2016.

The amount of revenue following the results of 2012 in accordance with the Company business plan will be RUB 38,409 mln that is 3.35% above the level of revenue expected in 2011. In this case, the planned revenue from transmission services for 2012 amounts to RUB 30,318 mln that is RUB 1,607 mln or 5.6% higher than the revenue expected in 2011. Projected revenue from the provision of services for grid connection up to 2012 relative to the expected revenue in 2011 decreases by 4.3% to RUB 7,928 mln due to completion in 2011 of fulfillment of obligations under the grid connection by its largest applicant - LLC Gazprominvestzapad.

The planned value of EBITDA, the indicator of the Company's ability to generate cash without attracting loans and excluding payment of taxes, following 2012 is projected at RUB 9,659 mln that is 16.5% higher than the expected value of the indicator for 2011. The EBITDA growth is accompanied by an increase in its components: net profit, depreciation accrued and the amount of interest payable.

Expected net profit of JSC Lenenergo in 2012 is RUB 1,350 mln and increases relative to the expected value of 2011 by RUB 350 mln, or by 35.0%. The increase in net profit is due to the projected decline in the negative balance of other income and expenses.

The Company's net debt at the end of 2012 is planned at RUB 27,272 mln that is 35.0% higher than the expected value at the end of 2011. Loan funds attracted in 2012 will be used to finance the construction of facilities related to the performance of obligations under the grid connection.

Capital investments in accordance with the investment program project for 2012 will be RUB 13,316 mln that is RUB 1,677 mln or 11.2% below the expected level in 2011 (RUB 14,993 mln). The decrease in the investment program in 2012, compared to the expected volume of 2011 is due to the decrease in funding in line with the forecast of social and economic development of Russia.

The Board of Directors of JSC Lenenergo identified the main priorities for 2012 as follows:

- provision of reliability and safety of the electric grid, improving the quality of services,

- increase in operational and investment efficiency,

- innovative development and implementation of activities within the energy efficiency program,

- expansion and control of the grid services market,

- increase in the investment appeal and market capitalization.


Disclaimer:

This notice is not an offer or a solicitation of an offer to purchase or subscribe for securities of JSC Lenenergo. Neither all the notice nor any part of it nor the fact of its presentation or distribution forms the basis for any contract or investment decision.

This notice can bring forward-looking statements. The forward-looking statements are not based on the facts and include statements regarding the intentions, beliefs or current expectations of JSC Lenenergo regarding the results of its operations, financial condition, liquidity, and prospects of growth, strategies and the industry, which employs JSC Lenenergo.