JSC “OGK-6” Reports 2008 Nine Months Financial Results (IFRS)

MOSCOW--(BUSINESS WIRE)--JSC “OGK-6” (MICEX - OGK6; RTS – OGKF) reports its Unaudited Interim Consolidated Financial Results for the nine-month period ended 30 September 2008 in accordance with International Financial Reporting Standards (IFRS).

The company revenues for the first nine months of 2008 grew 24,7% reaching RUR 31,904 mln. compared to the nine months of 2007. Net profit fell 75,8% (to RUR 281.3 mln.) versus the same period of 2007.

Structure of sales (in thousand RUR)

		Nine months 2008		Share in revenues %		Nine months 2007		Share in Revenues %
Total Revenue		31,903,902		100		25,583,812		100
Total Revenues from electricity and capacity sales		30,172,487		95		24,047,252		94
Total Revenues from electricity sales at the wholesale market		28,698,043		90		23,143,119		90
Electricity sales at the regulated bilateral agreements sector		12,390,047		39		12,783,889		50
Capacity sales at the regulated bilateral agreements sector		7,143,529		22		7,359,220		29
Competitive selection of capacity		462,844		1		-
Electricity sales at the day-ahead market		8,102,019		25		2,219,011		9
Electricity sales at the balancing market		1,062,449		3		780,999		3
Unregulated bilateral agreements on electricity and capacity supply		37,853		0,1		-
Electricity sales at the retail market		974,017		3		928,314		4
Heat sales		1,458,344		5		1,311,046		5
Other revenues		273,071		1		225,514		1

The rising prices coupled with the growing volume of electricity sold at the day-ahead market mostly contributed to the revenue growth, proving the importance of the electricity market liberalization process. The revenues from electricity and capacity sales at market prices increased by 159% (its share in the total sales structure rose to 34% from 16% a year earlier), while electricity and capacity sales at the regulated bilateral agreements sector decreased 0,7% in first three quarters of 2008.

Alexey Mityushov, the General Director of JSC “OGK-6”, stated: “The Company has significantly increased its production of electricity with the company share in the total Russian electricity output rising to 3,97% (+0,62 %) in the reported period.

“However, the Company showed weak financial results in the second and the third quarters in accordance with IFRS. The growing fuel prices (on gas and coal) exceeding the increase of tariffs set up for 2008 had a negative impact on the Company’s financials. Moreover the unprecedented production growth in 2008 has resulted in an increase of maintenance expenditure.”

Key Performance indicators

		Period				Change (% or b.p.)
		Nine months 2008		Nine months 2007
Financial performance indicators
EBITDA margin %		5,6%		17,0%		-11,4 b.p.
Operating margin %		-0,9%		10,7%		-11,6 b.p.
Net margin %		0,9%		4,5%		-3,7 b.p.
ROE (annualized) %		0,9%		8,1%		-7,1 b.p.
ROA (annualized) %		0,7%		4,4%		-3,7 b.p.
Debt control indicators
Net debt (thousand RUR)		(3,663,336)		9,654,676		n/a
Debt/EBITDA		1,5		1,7
Share of short-term debt in the total financial debt		21,3%		46,9%		-25,7 b.p.
Current liquidity ratio		2,5		0,9		n/a
Production indicators
Electricity production, mln.kWh		29,419		23,407		25,7%
Heat production, Gcal		3,059,559		2,959,794		3,4%
Capacity Factor		49%		39%		10 b.p.

Interim Consolidated Statement of Income for the nine-month period ended September 30, 2008

(in thousand of Russian Roubles)

(Unaudited)

				Three Months ended September 30				Nine Months ended September 30
		Note		2008		2007		2008		2007
Revenues		19		11,541,520		9,108,880		31,903,902		25,583,812
Operating expenses		20		(11,511,357)		(8,615,518)		(32,090,485)		(23,301,271)
Other operating income/(losses)		21		(65,251)		44,555		(90,737)		464,043
Operating profit				(35,088)		537,917		(277,320)		2,746,584
Finance costs, net		22		83,127		(155,378)		490,449		(385,411)
Profit before income tax				48,039		382,539		213,129		2,361,173
Income tax benefit/(expenses)		13		(148,608)		(175,628)		68,121		(1,198,646)
Net profit for the period				(100,569)		206,911		281,250		1,162,527
Attributable to:
Minorities of the Group						-				-
Shareholders of the Group				(100,569)		206,911		281,250		1,162,527
Earnings per ordinary share related to the profit attributable to the shareholders of the Group - basic and diluted (in Russian Roubles)		23		(0,0031)		0,0077		0,0087		0,0435

Interim Consolidated Balance Sheet as at September 30, 2008

(in thousand of Russian Roubles)

(Unaudited)

		Note		September 30, 2008		December 31, 2007
ASSETS
Non-current assets
Property, plant and equipment		5		37,001,122		31,567,910
Other non-current assets		6		857,972		604,720
Total non-current assets				37,859,094		32,172,630
Current assets
Cash and cash equivalents		7		207,401		648,427
Receivables and prepayments		8		4,548,307		1,699,708
Inventory		9		4,010,416		3,255,204
Other current assets		10		8,127,300		15,630,745
Total current assets				16,893,424		21,234,084
TOTAL ASSETS				54,752,518		53,406,714
EQUITY AND LIABILITIES
Equity
Share capital-ordinary shares		11		15,497,761		15,486,028
Treasury shares				-		(177)
Other reserves				58,291		-
Share premium				18,239,259		18,239,259
Retained earnings				6,913,753		6,957,503
Total equity				40,709,064		40,682,613
Non-current liabilities
Deferred income tax liabilities		13		3,657,962		3,743,421
Long-term debt		12		2,917,615		-
Pension liabilities		14		604,002		604,002
Other non-current liabilities		15		47,585		278,304
Total non-current liabilities				7,227,164		4,625,727
Current liabilities
Current debt and current portion of non-current debt		16		788,500		5,000,000
Accounts payable and accrued charges		17		5,638,357		2,634,944
Income tax payable				56		-
Other taxes payable		18		389,377		463,430
Total current accounts payable				6,816,290		8,098,374
Total liabilities				14,043,454		12,724,101
TOTAL LIABILITIES AND EQUITY				54,752,518		53,406,714

The Sixth Wholesale Power Market Generating Company JSC (JSC "OGK-6") was founded on March 17, 2005 within the framework of the Russian electric power industry reform. The core business of JSC "OGK-6" is electric and thermal power generation as well as supply&sales to consumers. The primary market for sales of the products of the Company is the wholesale electric power (output) market.

The total electric installed capacity of JSC “OGK-6” plants amounts to 9,052 MW. This renders JSC “OGK-6” the fourth largest company by installed capacity size among all OGKs and TGKs created as a result of the reform of electric power industry in Russia. In 2007 the JSC “OGK-6” electricity production totaled 34,065 mln. kWh.

The Company`s Revenues according to IFRS in 2007 totaled RUR 35,333,819,000, Net profit – RUR 1,546,603,000, Earnings per ordinary share – RUR 0.0578.

The JSC “OGK-6” shares are traded at Russian MICEX and RTS. In July, 2008 the GDR program under Reg S and Rule 144A of JSC “OGK-6” shares was opened by Deutsche Bank Trust Company Americas. The ISIN for Reg. S GDRs is US 6708472013; ISIN for the Rule 144A GDRs is US 6708471023.