INTER RAO EES : JSC Inter RAO Announces RAS Financial Results for the First Six Months of 2014

JSC Inter RAO today announced financial results prepared to Russian Accounting Standards (RAS) for the first six months of 2014. JSC Inter RAO discontinued power generation and heat production operations as the head company of the holding on September 30, 2013, when the generation assets of Ivanovskiye CPP were transferred to JSC Inter RAO - Electric Power Plants subsidiary. Therefore the reports of JSC Inter RAO for the first six months of 2013 include the performance of Ivanovskiye CPP subsidiary, while the reports for the first six months of 2014 no longer include power generation or heat production results.

* Billion rubles unless indicated otherwise

** Short-term loans and borrowings plus Long-term loans and borrowings less Cash and cash equivalents less Short-term financial investments

Revenue of JSC Inter RAO for the first six months of 2014 was 14.7 billion rubles, down 8.4 billion rubles (36.4%) year-on-year.

Revenue from electricity export was 8.3 billion rubles, down 4.7 billion rubles (36.2%) from the first six months of 2013. Reduction of revenue from electricity export reflects lower export volumes and lower Nord Pool prices. The strongest reduction of electricity export by volume is attributable to Finland, Belarus and Lithuania (50.9%, 52.9% and 36.8% respectively). Other traditional export markets performed as expected, with minor changes attributable to market volatility and appreciation of US dollar versus Russian ruble.

Revenue from WECM electricity and capacity sales in the first six months of 2014 was 4.1 billion rubles, down 4.4 billion rubles (51.8%) from the same period a year ago. This change reflects discontinued internal power generation and heat production, reduced domestic sales of electricity due to reduced imports, and reduced transit flow between different WECM price zones.

Revenue from other sales in the first six months of 2014 was 2.3 billion rubles compared to 1.7 billion rubles in the same period a year ago. Increase in revenue from other sales mostly reflects increased sales of gas turbines to Venezuela.

Cost of goods sold in the first six months of 2014 was 12.2 billion rubles, down 7.1 billion rubles (36.8%) from the same period of 2013. Change in cost of goods sold is primarily attributable to 6.3 billion ruble (42.9%) reduction in the cost of electricity and capacity purchased on WECM due to reduced electricity export, and to 1.0 billion ruble reduction in the cost of internally generated electricity and capacity.

Gross profit in the first six months of 2014 was 2.5 billion rubles compared to 3.8 billion rubles in the same period a year ago.

Selling costs in the first six months of 2014 were 1.3 billion rubles, down 0.8 billion rubles (38.1%) from the same period a year ago. The key driver of selling cost reduction was the lower cost of electricity transmission due to reduced electricity exports.

Administrative costs in the first six months of 2014 did not change significantly year-on-year and were 2.1 billion rubles.

Sales loss in the first six months of 2014 was 0.9 billion rubles compared to sales loss of 0.4 billion rubles in the first six months of 2013.

Interest receivable was 2.0 billion rubles. The 0.8 billion ruble (66.7%) increase in interest income year-on-year reflects the receipt of installment fees for property sale payments and the receipt of interest on loans extended to Group subsidiaries.

Balance of other income/expenses did not change significantly year-on-year and was (-0.1) billion rubles.

As the result, net profit for the first six months of 2014 was 2.1 billion rubles, compared to 4.1 billion rubles in the same period a year ago.

Balance Sheet

Total assets of JSC Inter RAO as of June 30, 2014 increased by 1.5 billion RUB (0.4%) to 347.8 billion rubles. This change is attributable to increase in current assets partially offset by decrease in non-current assets.

Non-current assets reduced by 12.7 billion rubles (4.1%) in the first six months of 2014 and accounted for 300.0 billion rubles at the end of the reported period. This change in non-current assets primarily reflects the reduction of long-term accounts receivable due to their reclassification in short-term accounts receivable.

Current assets increased by 14.3 billion rubles (42.6%) in the first six months of 2014 and were 47.9 billion rubles as of June 30, 2014. This change mostly reflects the 12.3 billion ruble (103.4%) increase in short-term accounts receivable to 24.2 billion rubles due to partial reclassification of long-term accounts receivable into short-term accounts receivable; 1.0 billion ruble (23.8%) reduction of short-term financial investments to 3.2 billion rubles due to repayment of loans extended to subsidiaries, and 3.0 billion ruble (18.0%) increase in cash and cash equivalents to 19.7 billion rubles, mostly due to loan repayments.

Debt did not change significantly in the first six months of 2014 and was 5.5 billion rubles at the end of the reporting period. Debt portfolio consists exclusively of long-term loans.

Total liabilities (excluding loans and borrowings) reduced by 0.8 billion rubles (7.5%) from the beginning of the year and were 9.9 billion rubles at the end of the reporting period. This change is mostly attributable to revaluation of contingent liabilities and reduction of other accounts payable.

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INTER RAO UES Group is a persified energy holding working in various segments of Russian and international electric power industry. The Group is the leading exporter and importer of electricity in Russia actively increasing electricity generation and sales, and developing new lines of business. Its corporate strategy is focused on making INTER RAO UES a global energy enterprise and a key player in the global energy market. INTER RAO UES Group owns and operates over 34.3 GW of installed power generation capacity.