TGC-1 releases 1Q 2010 IFRS results

The increase is associated with a number of factors:
- increase of heat generation (+11%) and, consequently, revenue from heat sales (+28%) as a result of colder months than in the 1Q 2009;
-  expansion of the unregulated market as of January 1, 2010 (from 50% to 60% of sales) and higher spot prices (in average +56% to 1Q 2009);
-  effective operations on the market, namely, the conclusion of unregulated electricity+capacity contracts.
Operating expenses were also up 33% - to RUR 13,646 mn, in particular, as a result of:
-  higher fuel expenses associated with the increase of electricity and heat generation and one-off (and not quarterly like in 2009) gas price hike, as well as due to more expensive fuel oil prices which is the main fuel of Murmanskaya CHPP;
-  increase of electricity and capacity purchases on the wholesale market in order to fulfill the obligations of unregulated contracts and export sales;
Furthermore, 1Q 2010 saw a decrease of maintenance and repairs expenses. This is associated with the schedule of maintenance for 2010 – the major part of expenses is due in 2nd and 3rd quarters, whereby the total maintenance budget will remain at 2009 level.  
Operating profit was up 31% to RUR 3,802 mn. Profit for the period was RUR 2,948 mn, which is 24.6% more than last year.
Boris Vainzikher, General Director of TGC-1, Chairman of the Management Board: “I consider the results of the first three months quite strong, due to climatic factors as well as due to a unique generation mix of TGC-1, which include cogenerating thermal powerplants and hydropower plants. However, the high-base effect of the 1st quarter 2009 is the factor to be considered while comparing 1st quarters of 2009 and 2010. The result of 2009 was driven by quarterly gas prices hike and higher water levels in branches “Nevsky” and “Karelsky”. This led to somewhat lower margins in 1st quarter of 2010”.
Kirill Lykov, CFO, member of Management Board: “We started to prepare and release IFRS results on a quarterly basis in order to be more transparent and open to our shareholders, investors and other stakeholders. The IFRS financials consolidate the results of subsidiaries, which is important, in particular, in the light of spin-off of heating grids in St. Petersburg to a subsidiary which is due already this year”.