1H 2011 Financial results

Federal Grid Company has announced its financial results for the six monthsended 30 June 2011 under RAS

Moscow, 4 August 2011 -Federal Grid Company of Unified Energy System ("Federal Grid" or the "Company", ticker: FEES on MICEX, RTS and LSE), the operator and manager of Russia's unified electricity transmission grid system, today announces its financial results for the six months ended 30 June, 2011 in accordance with RAS.

Key Financials:

·; Revenue of RUR 70,444 million, up 26% on H1 2010

·; EBITDA of RUR 47,977 million, up 27% on H1 2010

·; EBIT of RUR 22,734 million, up 23% on H1 2010

·; Total profit of RUR 31,633 million, up 54% on H1 2010

·; Net profit of RUR 15,252 million, up 16% on H1 2010

Key Developments:

·; On 29 June 2011 the Annual General Meeting approved a dividend for 2010 of RUR 2,577 million for 2010 to be distributed to shareholders. The dividend represents 10% of the Company's net profit in 2010, according to RAS, excluding profit from the revaluation of financial investments, profit from recovery of accruals of allowance for doubtful debtors, and proceeds from the sale of shares and other assets.

·; On 5 July 2011 the Company successfully completed a ten-year domestic Ruble-denominated bond placement for the value of Rub 10 billion. Federal Grid was the first Russian company to successfully place a ten-year domestic bond issue after the financial crisis. 

·; On 21 July 2011 Federal Grid successfully completed a placement of the bond series 19 for the value of RUR 20 billion and a maturity period of 12 years with a 7 year put date.

Andrey Kazachenkov, Chief Financial Officer of Federal Grid, commented:

"This has been a solid six months, as the Company successfully delivered on all its performance targets with strong operational and financial performance and good progress in the execution of our investment programme.

Revenue increased 26%, compared to the same period last year, as a result of the tariff growth and an increase in the provision of the transmission services across all regions. The increase in costs, including administrative costs, was limited to 11% compared to the same period last year, through robust management of costs at all operational and corporate levels with most of the increase arising from the amortisation charges relating to newly constructed capacity.

The growth in the revenue led to a 27% increase in EBITDA to RUR 48 billion. Federal Grid's net profit in H1 2011 was RUR 15.3 bn, a 16% increase over the same period last year.

Balance sheet as on 30 June 2011

During the first six months of 2011 Federal Grid's total assets increased by RUR 19,907.9 million (2.2%) to RUR 922,017.9 million at the end of the reporting period. These include non-current assets of RUR 824,275.6 million and current assets of RUR 97,742.3 million.

The non-current assets of Federal Grid increased by RUR 57,123.8 million (7.4%) mainly as a result of growth in the fixed assets, construction in progress and advance payments towards fixed assets as part of the Company's investment programme.

The current assets of Federal Grid decreased by RUR 37,215.9 million (27.6%) as a result of a decrease in accounts receivable and short-term financial investments including payments of promissory notes.

During the first six months of 2011 Federal Grid's capital increased by RUR 23,867.6 million (3%). This was due to the increase in the undistributed profit and growth in the Company's charter capital following an issue of new shares in 2010.

The Company's long-term liabilities that included borrowing and bond issues were RUR 50,000 million at the end of the reporting period.

Short-term liabilities decreased by 4,958.4 (9%) as at the end of the reporting period. The key reasons for the decrease in the short-term liabilities are as follows: transfer of the liabilities to the main shareholder from debt to the authorised capital stock as a result of a new share issue for RUR 11,193 million in 2010; increase in the liabilities to the shareholders following the decision approved by the AGM to pay dividend for 2010; increase in the accounts payable to the suppliers and contractors as part of the investment programme; and increase in the accounts payable to taxes and dues.

About Federal Grid

Federal Grid is the operator and manager of Russia's unified electricity transmission grid system. With over 121,000 km of transmission lines and over 311 thousand MVA of installed transformer capacity, it is the largest publicly traded electricity transmission company in the world.

Federal Grid's business is to provide transmission and connection services to the Russian wholesale electricity market. It maintains and develops the grid system and supervises grid facilities and infrastructure in 73 regions of Russia, in which it operates. Its customers are regional distribution companies, retail electricity suppliers and large industrial enterprises. The Company operates in an exclusive, competition free environment, and is regulated by the Government of the Russian Federation.

The Company's revenue is mainly driven by the transmission tariff set by the Regulator, the Federal Tariff Service. From 1 January 2010 a new RAB (Regulatory Asset Base) tariff framework, designed to stimulate investmentand operating efficiency, was introduced.

The Company was incorporated in 2002 as part of reorganization of Russia's electrical power industry. The Russian Government is the largest shareholder with a 79.48% stake.

Further information can be found at www.fsk-ees.ru/eng.