JSC TGC-1: 9M 2011 IFRS Results

In 9 months 2011 the consolidated revenue of JSC TGC-1 increased by 19% year-on-year and amounted to RUR 43,708 mn. The increase is associated with the following factors:

        Increase of electricity output by 5%;
        Growth of regulated and non-regulated electricity prices and an increase in tariffs for heat;
        Commissioning of new efficient combined cycle units at Pervomayskaya CHP and Yuzhnaya CHP.

In 9 months 2011 operating expenses increased by 13% year-on-year to RUR 37,915 mn. In particular, variable costs amounted to 63% of the total costs increase, growing by 13% year-on-year. Fixed costs increased by 13% year-on-year.

Major cost changes are reasoned by the following:

·         Higher fuel expenses associated with a growth of electricity generation by the Company’s CHP, as well as increase in fuel prices;

·         Increased costs of repairs and maintenance caused by the following:

       —   Periodic service in the 3d quarter,
       —     Consolidation of the city district networks of SUE TEK, which were incorporated to the structure of OJSC "Heating network of St. Petersburg",

·         Rental expense reduction and increased employee benefits expenses after consolidation of the St. Petersburg city district networks by JSC "Heating network of St. Petersburg";

·         Other operating expenses decrease in 9 months 2011 by the subvention sum (RUR 328 mn), received by JSC “Murmanskaya CHP” in 2nd quarter of 2011.

Operating profit for 9 months 2011 increased by 83% year-on-year, up to RUR 5,793 mn, EBITDA  by 64%, up to RUR 9,215 mn.

According to the financial statements under IFRS for the 9 months ended September 30, 2011, profit increased by 22% and amounted to RUR 2,996 mn.