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 consolidated interim IFRS financial results for the six months ended 30 June 2014.

Key 1H 2014 financial and operational highlights:

Financial:

Revenue of RUB 85,360 million

Adj. EBITDA* of RUB 49,892 million

Adj. operating profit** of RUB 25,458 million

Adj. profit for the period*** of RUB 19,379 million

Adj. EPS**** of 0.015 RUB

Gross debt ***** of RUB 273,015 million

Adjusted EBITDA is calculated as EBITDA (profit for the period before income tax, finance income and costs, depreciation and amortisation), excluding non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, including finance income.

** Adjusted operating profit is calculated as operating profit, excluding non-specific impairment of property, plant and equipment.

*** Adjusted profit for the period is calculated as profit for the period, excluding non-specific impairment of property, plant and equipment, impairment of available-for-sale investments, and related deferred income tax effects.

**** Adjusted EPS is calculated as adjusted profit for the period divided by the weighted average number of the Company's shares outstanding during the reporting period.

***** Gross debt is calculated as the sum of non-current debt, current debt and the current portion of non-current debt.

Operational:

Electricity transmission from UNEG to consumers (net): 253 billion kWh

Total transformer capacity: 331.7 GVA

Transmission grid length in operations: 135.7 thousand km

Number of substations******: 916

****** including leased / rented

Key 1H 2014 corporate developments:

Federal Grid Company completed all required electricity infrastructure preparations for the Sochi Winter Olympics, built or renovated 36 electricity grid facilities, including 326.6 km of transmission lines as well as 14 substations with a total capacity of 1,715 MVA

On 20 February 2014 the Company issued new shares and consequently raised the equity by RUB 3,762,153,533.5 with a view to finance its investment programme. The total number of Federal Grid Company shares in issue increased by 0.59% to 1,274,665,323,063 shares

Moody's and Fitch Ratings confirmed Federal Grid Company's ratings at Baa3 and BBB, respectively. Standard & Poor's downgraded the Company's rating by one notch to BBB-. The Company keeps strong its position with the investment category by all three international rating agencies. Two agencies rank the Federal Grid Company at the country's level.

The Russian Institute of Directors assigned Federal Grid Company a 7+ corporate governance rating, noting that the Company's corporate governance practices meet Russian requirements and correspond to international best practice

Starting from 9 June 2014, Federal Grid Company shares have been listed at Moscow Exchange Level 1 section.

On 27 June 2014 the General Meeting of Shareholders approved the dividend payment for the period of 1Q 2014 totalling RUB 436.8 million and elected new Board of Directors

In August 2014 the Russian Federation Ministry of Energy approved Federal Grid Company's 2014 investment programme totalling RUB 115.94 billion

Commenting on the 1H 2014 IFRS financial results, Chairman of the Federal Grid Company Management Board Andrey Murov said:

“During the first half of 2014, Federal Grid Company successfully balanced between providing reliable and safe electricity supply to consumers while improving its financial performance.

For the considered period the Company did not experience any major accidents and fully completed all work required for the Sochi Olympics preparations.

“At the same time, we achieved significant year-on-year improvements in our financial results. Federal Grid Company's revenue increased by almost 13% year-on-year to RUB 85.4 billion, while adjusted EBITDA and adjusted profit for the period grew by 23% and 146%, respectively. I would highlight two key factors: an increase in revenue from electricity transmission and further success in cutting controllable costs, such as personnel as well as repair, maintenance & materials expenses and consulting services.

“Federal Grid Company also reduced its debt leverage: gross debt declined by 5%. This decrease is explained by the successful execution of put option of the Company's rouble bonds that came due during the reporting period.

“The positive financial performance confirms the Company's solvency and encourages its ranking position within the investment category upon the international rating agencies' scales.”