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18 August 2008

ОАО «IDGC OF URALS»: 1H 2008 FINANCIAL RESULTS

August 18, 2008 (Ekaterinburg) - ОАО «IDGC of Urals» (RTS and MICEX: MRKU), united operating company of the Urals region exercising control over distributive grid complexes in Sverdlovsk, Chelyabinsk and Perm regions, Russia reports on 1H 2008 financial results under Russian Accounting Standards (RAS).

Gross indicators are calculated under IDGC's financial statements under RAS including results of distributive grid companies that merged into ОАО «IDGC of Urals» on April 30, 2008.

Table 1. 1H 2008 Consolidated financial result of the merged company, USD thous.*

Item

1H 2008

Revenues, total

751 889.0

Expenses, total

724 206.5

Gross profit

27 682.4

Operating profit

27 682.4

Operating margin

3,7%

EBITDA

53 377.3

EBITDA margin

7,1%

Pre-tax profit

6 436.4

Net profit

644.4

Net margin

0,09%

* Here and henceforth currency conversions are based on average exchange rates: 1H 2008 - RUR 23.9

1H 2008 key Company events:

January

Affiliated companies (OAO "Sverdlovenergo", OAO "Chelyabenergo" and OAO "Permenergo") held AGMs which made a decision on restructuring by merging into managing company OAO "IDGC of Urals".

April

Statements on restructuring of OAO "IDGC of Urals" and termination of affiliated businesses were introduced to the Official Single Register of Legal Entities.

Agreements on transition to a new tariff system were signed between the Company and the Administration of Perm region and Regional Energetic Commission (REC).

May

An agreement on transition to new tariff model was signed between the Company and United Tariff Body (UTB) of Chelyabinsk region.

June

Trading on IDGC's shares started in Russian Trade System (RTS) and on Moscow Interbank Stock Exhange (MICEX).

July

REC of Perm region agreed on long-term parameters of tariff regulation.

A meeting chaired by the head of Federal Tariff Service (FTS) on launching pilot RAB projects was held.

REVENUE AND EXPENSE REVIEW

On the whole, total Company revenues as of 1H 2008 reached USD 781.8 mln.

April 30, 2008 saw termination of the Company restructuring process by merger of affiliated businesses (ОАО "Sverdlovenergo", ОАО "Chelyabenergo" and ОАО "Permenergo" into managing company ОАО "IDGC of Urals".

Represented financial results include Company results as well as merged distributive grid companies (DGCs) since January 01, 2008.

General revenue structure of merged operating company as of 1H 2008 is as follows:

Table 2. Company revenue structure as of 1H 2008, USD thous.

Item

1H 2008

Share, %

Revenues, including:

751 889.0

96.2%

Revenues from energy transmission

718 712.9

91.9%

Revenues from technological connection

13 176.2

1.7%

Other revenues from main activities

19 734.0

2.5%

Non-core revenues

265.9

0.03%

Other revenues (operating, non-operating)

29 927.1

3.8%

TOTAL REVENUES

781 816.1

100.0%

Revenues from energy transmission make a large contribution to the revenue structure of the Company. As of 1H 2008 the revenues totaled USD 718.7 mln. (91.9% от total revenues).

Revenues from technological connection in 1H 2008 reached USD 13.2 mln. comprising 1.7% of overall revenues.

Other revenues from main activities reached USD 19.7 mln.(2.5%), non-core revenues totaled USD 265.9 thous.

Other revenues as of 1H 2008 reached USD 29.9 mln.

Operating expenses in 1H 2008 totaled USD 724.2 mln. Overall expense structure of the merged Company is as follows:

Table 3. Company's expense structure as of 1H 2008, USD thous.

Item

1H 2008

Share, %

Purchased energy for loss compensation

162 885.7

22.5%

Payments to ОАО "FSK UES"

142 863.1

19.7%

Payments to other distributive companies

171 039.5

23.6%

Wages and other social benefits

84 844.7

11.7%

Depreciation and amortization (fixed and intangible assets)

38 740.9

5.3%

Taxes and dues

2 141.3

0.3%

Repair expenses

18 941.6

2.6%

Other expenses

102 749.7

14.2%

TOTAL EXPENSES

724 206.6

100.0%

Large items are as follows:

  • Payments to other distributive companies which, as of 1H 2008, totaled USD 171.0 mln. (23.6% of overall expenses);
  • Payments to ОАО «FSK UES» which reached USD 142.9 mln. (19.7% from total expenses);
  • Wages and other social benefits which reached USD 84.8 mln. (11.7%);
  • Purchased energy for loss compensation which totaled USD 162.9 mln. (22.5%).

Other revenues equaled USD 102.7 mln. (14.2%) and comprise repair expenses, transport services, rental lease and maintenance services.

LIQUIDITY

Тable 5. Liquidity ratios as of 1H 2008.

Item

1H 2008

Absolute liquidity ratio

0.2

Acid test ratio

1.5

Current liquidity ratio

1.6

The Company has a high liquidity rate. All items characterizing the Company's ability to timely fulfill its liabilities are within regulation values.

1H 2008 FINANCIAL RESULTS


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