OREANDA-NEWS. Federal Grid Company of Unified Energy System (“Federal Grid Company” or “the Company”) (Moscow Exchange, LSE: FEES), part of the Russian Grids Group of companies and operator of Russia's Unified National Energy Grid (“UNEG”), announces its financial results for Q1 2014 under Russian Accounting Standards (RAS).

The Company's RAS accounts do not consolidate the results of Federal Grid Company subsidiaries or affiliated companies that operate as independent legal entities.

Key financial performance:

Revenue of RUB 41,508 million

Cost of sales and SG&A of RUB 34,836 million

Adjusted EBITDA* of RUB 27,522 million

Gross profit of RUB 9,504 million

Net profit of RUB 1,210 million

Adjusted net profit* RUB of 2,645 million

excluding adjustments to provisions for the impairment of accounts receivable

Federal Grid Company's revenue for Q1 2014 increased by 11% year-on year to RUB 41,508 million. This was primarily due to higher revenue from electricity transmission on the UNEG (in connection with the indexation of tariffs by 9.4% from 1 July 2013) and from technical connection services (primarily due to the completion of technical connection services contracts for two large customers: OJSC Kaspiiskiy TK-R and OJSC Pervouralskiy Novotrubniy Zavod)

Federal Grid Company's total costs increased by 10% year-on-year due to higher non-controllable costs (depreciation and property tax), which was compensated for by a decline in controllable costs.

Administrative expenses for 1Q 2014 (excluding an increase in property tax due to the phased repeal of the property tax concession for electricity transmission lines that took effect from 1 January 2013, in accordance with Federal Law #202-FZ dated 29 November 2012, on changes to the second part of the Russian Federation tax code) declined by 8% year-on-year, primarily due to the Company's efforts to control administrative and management costs.

Operating costs excluding administrative expenses also declined by 3% year-on-year (excluding depreciation), despite an increase in the number of UNEG facilities being serviced in connection with implementation of the Company's investment programme throughout 2013.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by RUB 3,173 million, or 13%, year-on-year and amounted to RUB 27,522 million for Q1 2014, primarily as a result of the higher operating profit and Federal Grid Company's successful cost optimisation efforts.

Federal Grid Company's RAS net income for Q1 2014 was RUB 1,210 million. Adjusted net profit supported by cash flows (adjusted for provisions for the impairment of accounts receivable) amounted to RUB 2,645 million for Q1 2014.