TGC-1 Releases the 6M 2014 Results

21.08.2014

JSC TGC-1 releases its abbreviated interim unaudited consolidated Financial Statements for the 6 months period, ended June 30, 2014 prepared in accordance with International Financial Reporting Standards (IFRS).

Consolidated Statement of Comprehensive Income Highlights (mn RUR)

6М 2013

6М 2014

Revenue

36,988

36,637

Total Operating Expenses

(30,051)

(30,716)

Operating Profit

6,937

5,921

EBITDA*

10,259

9,261

Profit for the Period

4,357

3,756

* EBITDA is calculated as Operating profit + Depreciation of PP&E + Amortization of intangible assets and investment property

Consolidated TGC-1 revenue for 6M 2014 decreased by 0.9% year-on-year, down to 36,637 mn RUR. 2Q 2014 results allowed to maintain the revenue almost flat year-on-year.

Revenue structure goes on determined by the early 2014 tendencies:

-      Revenue from electricity sales decreased by 10.1% and totaled 13,794 mn RUR on the back of 17.2% lower sales volume at the “day-ahead” market;

-      Revenue from exports decreased by almost twice to 324 mn RUR on the account of unfavorable market environment at Nord Pool and consequent decrease in operations volume;

-      Revenue from capacity sales decreased by 3.2% to 6,816 mn RUR due to decreased capacity volume, sold at CCO, and lower average capacity price under CSA;

-      Revenue from heat sales totaled 15,451 mn RUR and grew by 6.3%, resulting from heat tariffs, increased since July 1, 2013.

Total operating expenses for the 6 months of 2014 grew by 2.2% year-on-year, up to 30,716 mn RUR.

Variable costs remained flat at 20,645 mn RUR. Increase of variable costs was caused by heat transmission expenses, growing by 352 mn RUR, resulting from transit of heat at Hibiny Heat Company JSC and increased tariff for heat transmission contract with Apatityenergo JSC. However it was compensated by decrease of fuel costs by 419 mn RUR due to lower electricity production at thermal power plants.

Fixed costs grew by 8.7% to 7,293 mn RUR mainly due to the following factors:

-        Increase of repairs and maintenance costs on the back of planned repairs of PP&E;

-        High basis effect of 1Q 2013 on “Loss/(Gain) on Disposal of PP&E” item due to PP&E gain under compensational agreements for indemnification of damages caused during repair and construction works to OJSC “Heating Grid of St. Petersburg”;

-        High basis effect of 1H 2013 on “Provision/(Release) for Impairment of Accounts Receivable”.

Fixed costs, adjusted to “Loss/(Gain) on Disposal of PP&E” and “Provision/(Release) for Impairment of Accounts Receivable”, grew by 4.0%, to 7,188 mn RUR.

Amortization & depreciation decreased by 0.5%, up to 3,340 mn RUR.

Operating profit for 6M 2014 decreased by 14.6% year-on-year totaling 5,921 mn RUR. EBITDA amounted to 9,261 mn RUR, which corresponds to 9.7% decrease year-on-year. The negative EBITDA dynamics is mostly due to decrease in operational highlights on the back of declining electricity demand and warm weather in the reporting period.

According to the Financial Statements the Profit for the period decreased by 13.8%, down to 3,756 mn RUR.

Full OJSC TGC-1 6M 2014 results under IFRS can be found at the corporate website in the “Reports” section.