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Investor's Day ofJSC "IDGC Holding"
JSC "Lenenergo"
Outcomes of 1H 2011 &Plans for 211
MoscowAugust 3, 2011
Disclaimer
This presentation is not an offer or invitation to make offers (advertisement) in respect of purchase or subscription to securities ofJSC "Lenenergo". Neither the presentation, nor any part hereof, nor the fact of its representation or distribution serve as the basisfor entering into any agreement or taking any investment decision; therefore, the presentation should not be relied upon in thisrespect.
This presentation may contain estimates. The estimates are not based on actual circumstances and include statements in respect ofthe intentions, opinions or current expectations of Lenenergo as regards the results of its activity, financial position, liquidity,prospects of growth, strategy and the industry, in which Lenenergo operates. Such estimates by their nature are characterized bypresence of risks and uncertainty factors since they are related to the events and depend on the circumstances, which may fail tohappen in the future.
Lenenergo warns that the estimates are not a guarantee of the future parameters, and the actual results of JSC "Lenenergo"activities, its financial position and liquidity, as well as development of the industry, in which it operates, may significantly differfrom those included in the estimates contained herein. Besides, even if the results of the Company's activities, its financial positionand liquidity, as well as the development of the industry, in which it operates, correspond to the estimates contained herein, suchresults and events are not indicative of the results and events in the future.
This presentation contains the information received from third parties besides the official information on JSC "Lenenergo" activities.This information has been received from the sources which are reliable in JSC "Lenenergo" opinion. Nevertheless, we do notguarantee the accuracy of such information which may be reduced or incomplete. All opinions and estimates contained hereinreflect our opinion as at the date of publication and are subject to change without notice. JSC "Lenenergo" does not bear liability forthe consequences of use of the opinions or estimates contained herein, or information incompleteness.
JSC "Lenenergo" does not undertake obligations in respect of revision or confirmation of the estimates and evaluations, as well as inrespect of updating of the information contained herein.
SudakovaTatiana Gennadyevna
Director on EconomicsJSC "Lenenergo"
Average number of JSC "Lenenergo" personnel as of 30.06.2011 amounted to 6,103persons.
in St.-Petersburg – 74.8%
The Company’s share in electric power transmission as of 30.06.2011
90.85%
9.15%
Ordinary shares928,021,679.004 pcs
Preferred shares93,264,311 pcs
Authorized capital of JSC "Lenenergo" – RUR 1,019,285,990.004 Structure of the Company’s share capital**, % from share capital
Information on JSC "Lenenergo" shares
Quotation lists
MICEX B
RTS А-2
Tickers
Ordinary shares LSNG
Preferred shares LSNGP
Capitalizationas of 30.06.2011, mln USD.*
680
in the Leningrad Region – 60.2%
Service area, thousand sq.km 87.3
Region population, mln. people 6.2
JSC "LENENERGO" is a large distribution grid company (the operator of 0.4-110 kVnetworks), servicing the territory of St.-Petersburg and the Leningrad region.
Main types of activity:services for electricity transmission and distribution over electric power grids;
• technological connection of power receiving facilities (power plants) of businesses and individuals to the power grids
Share of JSC "Lenenergo" in Saint-Petersburg and the Leningrad region in electric power
transmission as of 30.06.2011 – 69,5%
The structure of JSC "Lenenergo" includes 9 production branches in Saint-Petersburg andthe Leningrad region.
General Information on the Company
* The calculation is made on the capitalization weighted averageprice on the MICEX exchange at the rate of the Central Bank onthat date
** As of the closing date of the register11.05.2011
50,31%
25,16%
8,76%
4,09%
2,75%2,47%0,96%
5,51%
I.D.E.ELECTRICITY DISTRIBUTION INVESTMENTS 1 LIMITED (JSC "IES Holding")
ENERGYO SOLUTIONS RUSSIA LIMITED(EOS Russia)
RUSENERGO FUND LIMITED
THE NORTHERN TRUST COMPANY
JP MORGAN
other
The city of St.-Petersburg (CPMC)
JSC "IDGC Holding"
| 1
Major competitors: municipal electric network companies JSC "SPbES" (in St. Petersburg) and JSC "LOESK" (in LO)
28 439 27 672 29 09514 714
12 43425 571 27 372
19 094
20 828 26 088 34 20118 727
15403 258 3 806
1 209
5 566 8 190 10 3564746
Key results of the Company’s performance in 1H 2011
Unit 2008 2009 2010 1H 2011
Installed capacity MVa 19 365,5 19 901,4 20 740,5 21 123,0
OTL 0.38-110 kV by circuits km 39 084,6 39 285,9 39 418,8 39 484,8
OTL 0.38-110 kV on line km 35 966,5 36 148,2 36 273,6 36 283,2
Cable lines 0.38-110 kV km 16 730,9 17 650,7 18 622,3 18 626,5
Substations 35-110 kV pcs (MVa) 368 (12 818) 370 (13 084) 372 (13 466) 373 (13 546)
Transformer substations 6-35 kV pcs (MVa) 13 646 (6 548) 13 909 (6 818) 14 361 (7 275) 14 517 (7 578)
Assets of JSC "Lenenergo"
Capitalization (MICEX), RUR mln
EBITDA, RUR mln
Revenue, RUR mln
Net profit, RUR mln
Productive supply, mln kWh
2008 2009 2010 1H 2011
Dynamics of key indicators of JSC "Lenenergo"
| 2
+ 7.0%
+ 31.1%
+ 26.4%
+ 16.8%
+ 5.1%
228
7956
27 34 29 32 28 225 9
156
77
3819 22 19 19 17 11 4 6
Хо
лд
ин
г МР
СК
МО
ЭС
К
МР
СК
Цен
тра
Лен
эне
рго
МР
СК
Ци
П
МР
СК
Ур
ала
МР
СК
Во
лги
МР
СК
Си
би
ри
МР
СК
С-З
МР
СК
СК
МР
СК
Юга
30.12.2010
30.06.2011
05101520253035404550
-
10 000
20 000
30 000
40 000
50 000
60 000
Суммарная капитализация
АО average АП average
RURRUR mln
0,00
5,00
10,00
15,00
20,00
25,00
30,00
35,00
0,00
500,00
1000,00
1500,00
2000,00
2500,00
3000,00
3500,00
4000,00
MICEX MICEX PWR average АО ЛЭ
22 908 24 060 24 755 28 108 27 416 27 372 28 477 28 332
26 719 24 958
21 881 19 094
июл.10 авг.10 сен.10 окт.10 ноя.10 дек.10 янв.11 фев.11 мар.11 апр.11 май.11 июн.11
Securities of JSC "Lenenergo" in 2010-2011
31.12.2010 30.06.2011 ∆,%
MICEX 1687.99 1666.59 -1.3
MICEX PWR 3435.32 2725.01 -20.7
average OS LE 25.95 16.91 -34.8
Dynamics of JSC "Lenenergo" securities in 2010-2011 Capitalization of JSC "Lenenergo" in 2010-2011, RUR mln*
Dynamics of MICEX, MICEX PWR and ordinary shares of JSC "Lenenergo" in 2010-2011
In 1H 2011 the Company’s shares traded in thegeneral downward trend with DGCs and theindustry index, reflecting investors' lack ofconfidence due to the uncertainty of the tariffregulation
Year Dividends on OS, RUR Dividends on PS, RURAccrued dividends,
RUR thousand
for 2008 no 1,6508 153 962
for 2009 no 3,4933 325 804
for 2010 no 4,0804 380 559
** In accordance with the Charter of JSC "Lenenergo" dividends are accrued on preferredshares of type A in the amount of 10% of net profit for the completed fiscal year
Capitalization*, RUR mln 2008 2009 2010 2010/2009, %
MICEX 12 434 25 571 27 372 +7,0 %
RTS 11 739 25 703 27 516 +7,1%
on MICEX SE Price as of 30.06.2011, RURLSNG (MICEX) 16.91LSNGP (MICEX) 36.79
Dividends of JSC "Lenenergo" for 2008-2010, RUR mln**
Dynamics of DGCs’ capitalization in 1H 2011 (MICEX), RUR mln*
RURp.p.
| 3
Totaled capitalization
Ordinary shares Proffered shares
IDG
C H
old
ing
MO
ESK
IDG
C o
f Cen
ter
IDG
C o
f Cen
ter and
V
olga
IDG
C o
f Vo
lga
IDG
C o
f Urals
Lenen
ergo
IDG
C o
f No
rth-W
est
IDG
C o
f Sou
th
IDG
C o
f Siberia
IDG
C o
f No
rth
Cau
casus
* Calculation is executed by an average price at the MICEX
Average OS LE
Key parameters of RAB regulation of JSC "Lenenergo" in 2011-2015
Key RAB indicators, RUR mln
Saint Petersburg Leningrad Region JSC "Lenenergo"
Total amount of invested capital 106 792 70 931 177 723
Residual value of invested capital as at 01.01.2011 53 290 25 267 78 557
Amount of capital expenditure considered for the purposes of tariff regulation, 2011-2015
52 062 17 331 69 393
Rate of return on invested capital –old capital, %
2011 6% 6% 6%
2012 9% 9% 9%
2013 and further 11% 11% 11%
Rate of return on invested capital – new capital, %
2011-2012 12% 12% 12%
2013 and further 11% 11% 11%
Time period of recovery of invested capital, years 35 35 35
Adjusted tariff decision
Approved long-term parameters
2011 2012 2013 2014 2015 2015/ 2010
In St.-Petersburg 16% 32% 24% 20% 15% 2,2 times
In the Leningrad Region 14% 28% 22% 32% 37% 3,1 times
Gain in electricity transmission tariff* in 2011-2015, %
In compliance with the requirements of the RF Government Decree dated 27.12.2010 No.1172 on the growth limitation of the average one-rate tariffon the subject of the Russian Federation for transmission of electric power by an amount not exceeding 15% relative to the level of 2010. Theregulatory authorities have reviewed previously approved tariffs for JSC "Lenenergo" for 2011 downwards.Currently the issue on the further adjustments in the long-term tariff projections is considered. In the absence of any scenario conditions to determinethe parameters of regulation at present time, forecasts for 2012-2015 have not been formed.
From January 01, 2011 JSC "Lenenergo" transited to long-term system of Regulatory Asset Base (RAB)
| 4
Adjustment parameters of the tariff decision for 2011
Parameters of RGR and average tariffs for electricity transmission for 2011 prior and after adjustment:
Indicator
St.-Petersburg Leningrad region
2010 2011 2011 adjusted
Deviation 2011
adjusted /
2011
2010 2011 2011 adjusted
Deviation 2011
adjusted /
2011
Controllable expenses 2 030 2 723 2 723 - 1 713 2 384 2 384 -
Non-controllable expenses 10 394 12 754 12 348 -406 6 388 9 407 9 459 52
Payment of JSC "FGC UES" 2 928 3 876 3 765 -111 1 900 2 433 2 575 142
Services of ANO 2 689 3 664 3 437 -227 2 763 4 612 4 532 -80
Losses in JSC "Lenenergo" grids 3 321 3 713 3 713 - 1 166 1 903 1 903 -
Lost income 1 189 286 286 - 226 0 0 -
Other non-controllable expenses 268 1 214 1 146 -68 333 459 449 -10
Repatriation of capital 1 638 3 051 3 051 - 1 095 2 027 2 027 -
ROE 614 3 268 3 268 - 270 1 556 1 556 -
Smoothing 0 -2 194 -3 117 -923 0 -3 476 -3 691 -215
Total required gross revenue 14 675 19 601 18 273 -1 329 9 465 11 897 11 734 -163
Productive electricity supply, mln kWh 18 389 18 475 18 475 - 9 809 10 651 10 651 -
Average electricity transmission tariff, cop./kWh 85,6 106,1 98,9 -7,2 96,5 111,7 110,2 -1,5
Gain to the previous year, % 24% 16%* 16% 14%
* Reduction of tariffs in accordance with the RF Government Decree № 1172 dated 27.12.2010 was conducted to provide a level of growth rate for electricity transmission tariffs of 2011to the tariffs of 2010 no higher than 15%. In St.-Petersburg the average tariff of JSC "Lenenergo" exceeds a predetermined level in connection with the use of tariffs from 01.05.2011(taking into account the fact that for 4 months there was acting a tariff, an increase of which significantly exceeds 15%, the average annual growth rate was formed higher than 15%).
IndicatorSt.-Petersburg Leningrad region
2011 2011 adjusted deviation 2011 2011 adjusted deviation
Revenue from transmission 19 688 18 124 -1 597 11 874 11 431 -443
Costs of transmission 19 130 18 809 -485 14 028 13 760 -312
Federal factors 12 580 12 004 -658 9 484 9 108 -417
Own costs 6 550 6 805 174 4 545 4 652 105
Costs of revenue 858 813 -1 924 1 058 110
Profit tax 228 231 3 147 148 1
Net profit -527 -1 729 -1 114 -3 225 -3 535 -242
RUR mln
The expected financial performance on electricity transmission considering the adjustments:
Loss on transmission is associated with thefollowing factors:-application of smoothing mechanism under the RAB procedure, which involves the removal of economically viable revenue of the organization in the current period and its recovery in subsequent years;- incomplete accounting of the fees for reimbursement of costs of regulated organizations in tariffs (service fee of JSC "FGC UES", the cost of electricity losses).
RUR mln
| 5
Overview of planned financial performance of JSC "Lenenergo" for 2011
* Adjusted net profit is used for calculation of ROE** Debt as at the end of the period is calculated as debt under loans and credits (line 510 + line 610 of the balance sheet)
Indicator Unit 2010 2011 Plan adjustedΔ в %
2011 adjusted /2010
Book value of assets RUR mln 88 700 99 631 12,3%
Net assets RUR mln 51 897 51 914 0,03%
Equity RUR mln 51 759 51 785 0,1%
ROE* % 7,8% 1,07% -86,3%
Revenue from sales of products, including: RUR mln 34 201 37 889 10,8%
- from services on electric power transmission RUR mln 23 873 29 555 23,8%
- from services on technological connection RUR mln 10 164 8 161 -19,7%
- from other activities RUR mln 164 174 6,1%
Cost of goods sold RUR mln 27 488 33 994 23,7%
EBITDA RUR mln 10 356 7 572 -26,9%
Profit on sales RUR mln 6 713 3 895 -42,0%
Profit before taxes RUR mln 5 282 1 350 -74,5%
Net profit RUR mln 3 806 555 -85,4%
EBITDA margin % 30,3% 20,0% -34,0%
DEBT/EBITDA ** - 2,13 3,16 48,9%
Debt as at the end of the period*** RUR mln 14 733 28 406 92,8%
Net debt RUR mln 14 405 27 481 90,8%
Ratio of equity and borrowed funds - 1,4 1,08 -22,7%
Leverage % 22,2% 35,4% 59,9%
Ratio of receivables and payables - 0,46 0,56 21,2%
| 6
IMPORTANT: projections are formed in accordance with the adjusted business plan of JSC "Lenenergo" for 2011-2015 (considering the revise of tariffs for 2011 and results of 1H 2011), and may be adjusted by the Company
7 59812 290 9 854
14 050 14 468
7 860
8 661 10 7157 467
2 592
2011E * 2012E* 2013E* 2014E* 2015E*
Новое строительство
ТПиР
Long-term investment program of JSC "Lenenergo" for 2011-2015
RUR mln, net of VAT 2011 2012 2013 2014 2015Investments,
2011-2015
JSC "Lenenergo" 15 633 20 951 20 569 21 517 17 060 95 730
Re-equipment and reconstruction
7 598 12 290 9 854 14 050 14 468 58 260
New construction and expansion
8 035 8 661 10 715 7 467 2 592 37 294
RUR mln, net of VAT 2011 2012 2013 2014 2015Investments,
2011-2015
JSC "Lenenergo", including: 15 633 20 951 20 569 21 517 17 060 95 730
Saint Petersburg 11 206 15 321 15 822 17 244 14 418 74 011
Leningrad Region 4 427 5 630 4 747 4 273 2 642 21 719
Parameters of the Investment program of JSC "Lenenergo" for 2011-2015 (CAPEX)
2011 2012 2013 2014 2015
Power input, MVA 744,4 1 406,4 1 374,8 2 153,8 1 242,5
Power input, km 1 443,7 1 399,1 1 006,4 944,7 738,6
Growth of power, MVA 455,6 754,0 692,8 1 528,4 736,0
Growth of power, km 866,0 568,9 541,5 372,7 244,5
Plans for 2011-2015 are presented in accordance with the adjusted investment program for 2011-2015, which is approved by JSC "IDGC Holding".
| 7
The adjusted IP for 2011-2015 on St.-Petersburg is approved in the executive bodies of St.-PetersburgThe adjusted IP for 2011-2015 on the Leningrad region is on the approval in the executive bodies of the Leningrad region
RUR mln, net of VAT
2011 2012 2013 2014 2015Investments,
total
IP adjusted 15 633 20 951 20 569 21 517 17 060 95 730
IP approved 22 652 20 950 20 569 21 517 15 512 102 796
Deviation, % -40,0% 0,0% 0,0% 0,0% 10,0% -6,9%
Adjustments of the Investment Program of JSC "Lenenergo" in 2011
Following the adjustment , in the Investment Program for 2011 there were:-excluded items of development of the distribution network, not securedby a funding source (provision by funds of the third additional issue ofshares was planned);- reduced the amounts of the property income of applicants on the basis of obligations under technological connection
The adjustment of the Investment Program is not associated with the adjustment of the tariff decision for 2011
Re-equipment and reconstruction
New construction and expansion
0
5 000
10 000
15 000
20 000
25 000
2011 2012 2013 2014 2015
Передача электроэнергии
Плата за технологическое присоединение
Прочие нетарифные источники
Sources of financing JSC "Lenenergo" investments in 2011-2015
Sources of financing the investments in 2011-2015,RUR mln, VAT included
15 633 20 951 20 569 21 517 17 060
20%6%
In the adjusted Investment program for 2011-2015, the main financing sources are formed (94%) at the expense of the electricitytransmission tariff – 74%, and at the expense of payment for technological connection – 20%. The rest 6% will be formed at the expenseof non-tariff sources, including part of proceeds from the planned placement of additional issue of shares will be directed for the financingof investment activity
70 833
19 337
5 509
RUR 95,730 mln
The payment for technological connection is formed taking into account a2 times decrease in the payment rates from 01.01.2011 due toexclusion of the investment component for development of the existing grid infrastructure (clause 23.2 of the Federal Law No.35-FZ dated26.03.2003 "On Electric power industry")
| 8
9 79112 126
15 13318 768
15 065
4 148
5 647
4 800
2 749
1 9941 695
3 178636
2011 2012 2013 2014 2015
Передача электроэнергии
Плата за технологическое присоединение
Прочие нетарифные источники
IMPORTANT: projections are formed in accordance with the adjusted business plan of JSC "Lenenergo" for 2011-2015 (considering the revise of tariffs for 2011 and results of 1H 2011), and may be adjusted by the Company
74%
Electric power transmissionPayment for technological connectionOther non-tariff sources
Electric power transmissionPayment for technological connectionOther non-tariff sources
Overview of financial performance of JSC "Lenenergo" in 1H 2011
Indicator Unit 1H 2010 1H 2011Δ ,
1H 2011/1H 2010
Book value of assets RUR mln 85 586 90 652 5,9%
Net assets RUR mln 49 715 52 420 5,4%
Equity RUR mln 49 574 52 420 5,7%
ROE* % 3,29% 2,24% -31,9%
Revenue from sales of products, including: RUR mln 15 896 18 727 17,8%
- from services on electric power transmission RUR mln 11 292 14 908 32,0%
- from services on technological connection RUR mln 4 525 3 740 -17,4%
- from other activities RUR mln 79 79 1,0%
Cost of goods sold RUR mln 13 276 16 185 21,9%
EBITDA RUR mln 4 696 4 746 1,1%
Profit on sales RUR mln 2 620 2 542 -3,0%
Profit before taxes RUR mln 2 242 1 797 -19,8%
Net profit RUR mln 1 620 1 209 -25,4%
EBITDA margin % 29,5% 25,3% -14,2%
DEBT/EBITDA ** - 2,97 3,35 15,7%
Debt as at the end of the period*** RUR mln 13 954 15 882 13,8%
Net debt RUR mln 12 014 15 344 27,7%
Ratio of equity and borrowed funds - 1,38 1,37 -0,4%
Leverage % 22,0% 23,3% 5,9%
Ratio of receivables and payables - 0,63 0,42 -32,8%
* Adjusted net profit is used for calculation of ROE** Debt as at the end of the period is calculated as debt under loans and credits (line 510 + line 610 of the balance sheet)
| 9
9,9710,33
10,71 10,76 10,459,96 9,87
9,14
2008 2009 2010 2011 2012 2013 2014 2015
16 835
14 493
2 342 1 940
17 126
14 714
2 4131 915
Отпуск в сеть Полезный отпуск Общие потери в сетях Потери в сетях ОАО "Ленэнерго"
1ПГ 2010 1ПГ 2011
Electric power transmission of JSC "Lenenergo" in 1H 2011
Dynamics of indicators of electric power transmission on JSC "Lenenergo" grids in 1H 2010 – 1H 2011, Mln kWh
Indicators
Supply to grid,
Mln kWh
Productive supply,
Mln kWhTotal losses in grids Losses in JSC "Lenenergo "grids
1H 2010 1H 2011 1H 2010 1H 2011
MlnkWh
%MlnkWh
%MlnkWh
%MlnkWh
%
1H 2010 1H 2011 1H 2010 1H 2011
JSC "Lenenergo", including: 16 834,5 17 126,2 14 492,6 14 713,6 2 341,9 13,91 2 412,6 14,09 1 940,4 11,53 1 915,3 11,18
Saint Petersburg 10 577,4 10 885,1 9 244,2 9 422,5 1 333,2 12,60 1 462,6 13,44 1 220,7 11,54 1 256,2 11,54
Leningrad Region 6 257,1 6 241,1 5 248,4 5 291,1 1 008,7 16,12 950,0 15,22 719,7 11,50 659,1 10,56
+1,73% +1,52%
+3,02% -1,29%
28 43927 672
29 095 29 421
2008 2009 2010 2011 план
Dynamics of productive supply, Mln kWh
Dynamics of losses in JSC "Lenenergo" grids, %
The Company is implementing the Program on reduction ofelectricity losses in networks, according to which a target levelof electricity losses in networks of JSC "Lenenergo" in 2015 is9.1%
Losses in JSC "Lenenergo" grids aresignificantly lower the losses in theadjacent network organizations
The growth of the planned level of losses in 2011 compared to 2010 by0.05% is associated with the growth of technological losses of electricity(load loss), which is caused by a significant increase in supply to grid
| 10
Supply to grid Total losses in gridsProductive supply Total losses in JSC "Lenenergo"
grids
1H 2010 1H 2011
Plan
4 441
1 522
6 351
2 471
Заключено договоров Закрыто договоров
1ПГ 2010 1ПГ 2011
Technological connection of JSC "Lenenergo" in 1H 2011
In 1H 2011 the main demand fortechnological connection accounts for theLeningrad region - 77% of the contractsconcluded (in 1H 2010 - 89%).The number of contracts closed in 1H 2011 isdistributed by subjects almost equally,whereas in 1H 2010 69% of closed contractswere in the LR.
Number of fulfilled obligations for 12months of 2010 amounted to 4,173contracts on the power of 645.3 MW andthe amount of RUR 10,164 mln (net ofVAT). Plan of obligations' fulfillment on TCin 2011 is 3,650 contracts for a totalcapacity of 356 MW and for the amountof RUR 8,161 mln (net of VAT). The planfor 2011 is formed taking into account theexpected reduction in entering of theproperty for property contracts.
183,8MW
+ 43%
Outcomes of technological connection of JSC "Lenenergo" in 1H 2010 – 1H 2011, pcs (MW)
4 173
3 650
2010 2011 план
Contracts closed, pcs (MW)
+ 62,4%
224,1MW
155,0MW327,9
MW
Region
Contracts concluded Contracts closed
pcs MW pcs MW pcs MW pcs MW
1H 2010 1H 2011 1H 2010 1H 2011
JSC "Lenenergo" 4 441 224,1 6 351 183,8 1 522 327,9 2 471 155,0
Saint Petersburg 486 71,9 1 437 68,4 472 260,9 1 038 70,6
Leningrad Region 3 955 152,2 4 914 115,3 1 050 66,9 1 433 84,4
645,3MW
356,0MW
RUR mlnshare,
%
Revenue from TC, including 3 740 100%
On existing contracts(term of services after 01.01.2011)
1 898 51%
On overdue contracts(term of services prior to 01.01.2011)
1 842 49%
Revenue from TC, RUR mln
10 164 8 161
Structure of revenue from TC in 1H 2011
Region
Contracts closed
pcs. MW pcs. MW
2010 2011 Plan
JSC "Lenenergo" 4 173 645,3 3 650 356,0
St.-Petersburg 1 356 460,0 938 191
Leningrad region 2 817 185,3 2 712 165
Closure plan of contracts in 2011, pcs (MW)
In 1H 2011 as compared to 1H 2010the volume contracts concluded onthe power of up 15 KW (more than1500 pcs) increased, which resultedin reduction in total power, whileincreasing in the number ofcontracts.
| 11
Contracts concluded1H 2010
1H 2011
Contracts closed
plan
4 696 4 746
1ПГ2010 1ПГ2011
12 50715 578
732
574
1ПГ2010 1ПГ2011
по передаче э/э по ТП
11 29214 908
4 5253 740
1ПГ2010 1ПГ2011
от передачи э/э от ТП
Key financial indicators of JSC "Lenenergo" in 1H 2011
+17,8% +21,9% -3,0 % -25,4%
+1,1%
Generation of profits from sales and net profit, RUR mln EBITDA, RUR mln
EBITDA margin, %
29,5% 25,3%
| 12
15 896 18 727
71,0 %
28,5%20,0%
79,6%
Revenue by types of activity*, RUR mln
+31.1%
COGS by types of activity*, RUR mln
13 276 16 185+32.1%
94,2%
5,5%
96,2%
3,5%
Costs of production and sales
1H 2010 1H 2011 1H 2011/1H 2010
Material expenditures 2 891 3 298* 14,1%
Production work and services
5 476 7 538** 37,7%
Payment for labor 1 099 1 298 18,1%
Depreciation 2 000 2 455 22,8%
Other costs 1 810 1 596 -11,8%
Total 13 276 16 185 21,9%
COGS structure
* Material expenditures 3 298
Purchased electric power for compensation of losses 3 081
Purchased electric power for production andeconomic needs 53
Raw materials 164
15 89613 276
2 620 1 620
18 72716 185
2 542 1 209
Выручка от реализации Себестоимость Прибыль от реализации Чистая прибыль
1ПГ 2010 1ПГ 2011
**Production work and services 7 538
Services of contractors for maintenance and repair of equipment 181
Services of JSC "FGC UES" 3 130
Services of distribution grid companies 4 114
Other production services 113
Revenue growth for 6 months of 2011 compared to the same period of the previous year constituted 17.8%, or RUR2,831 mln. Revenue growth on electric power transmission by 32%, or RUR 3,616 mln was associated with theincreased rates for electrical networks maintenance (an increase of the average tariff for electric power transmissionin 1H 2011 compared to the average rate for 1H 2010 amounted to: in St.-Petersburg - 141%, in the LO - 81%), as wellas with a significant increase in the electric power transmission (220 mln kWh) and power (3,678 MW). At the sametime revenue from technological connection for 6 months of 2011 compared to the same period the previousreporting year, fell by 17.4% (RUR 786 mln), which is associated with the decrease in revenues under propertycontracts.
* Including other activities, the amount of revenue and COGS of which is less than 1% of the total sum
The most significant changes inEBITDA for the reporting periodwith respect to 6 months of2010 is associated with adecline in the structure of theindicator of the unit weight ofnet profit which decreased by25.4%, and with the increase inthe share of depreciation,which increased by 22.8%. Alsothe unit weight of profit taxdecreased, and the share ofaccrued interest has increased.
Sales revenue COGS Gross profit Net profit
1H 2010 1H 2011
1H 2010 1H 2011 1H 2011
1H 2010 1H 2011
from electricity transmission
from TC from electricity transmission
from TC
1H 2010
Loan portfolio and debt position of JSC "Lenenergo" in 1H 2011
1H 2010 1H 2011Δ ,
1H 2011/1H 2010
Equity 49 574 52 420 5,7%
Liabilities, including: 36 013 38 232 6,2%
Long-term liabilities 13 757 12 203 -11,3%
Short-term liabilities 22 255 26 029 17,0%
Ratio of equity and borrowed funds 1,38 1,37 -0,4%
Leverage 22,0% 23,3% 5,9%
1H 2010 1H 2011Δ ,
1H 2011/1H 2010
Long-term credits and loans, including: 12 797 9 710 -24,1%
bonded loan (repayment in 2012) 6 000 -100,0%
Short-term credits and loans*, including: 1 157 6 172 433,3%
bonded loan (repayment in 2012) 6000 -
Accounts payable** 20 852 20 519 -1,6%
Equity structure, RUR mln
Loan portfolio, RUR mln
Key banks – partners of JSC "Lenenergo":
JSC "Sberbank of Russia"JSC "Bank VTB North-West"JSC JSCB "Svyaz-bank"JSC JSB "ROSSIYA"
* Liabilities on bonded loans of series 02 and 03 in the amount of RUR 6,000 mln as of 30.06.2011was transferred in accordance with the requirements of the AS in the short-term liabilities inconnection with the upcoming maturity in 2012.
Debt position, RUR mln
7.9%
Weight average rate of borrowing for 1H 2011
Agency Rating Assigned
Moody’sBa2
(forecast stable)November 2009
Moody’s Interfax Rating Agency(rating on national scale)
Aa2.ru (forecast stable)
November 2009
Credit rating
Confirmed in March 2011
Plan of credit resources flow in 2011, RUR mln
* Debt as at the end of the period is calculated as liabilities on the sum of main debt on loans (line 510 + line 610)
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** The amount of aggregate (long-term and short-term) accounts payable is displayed. The share of short-term account payable (line 620 of balance sheet) amounts to 74.2% of short-term liabilities
14 56216 977
3 325
28 214
Сальдо на 01.01.2011
Привлечение кредитов (выборка)
Погашение кредитов
Сальдо на 31.12.2011
Of these, RUR 7,842 mln - investment loans, RUR 5,610 mln - operating loans, RUR 3,525 mln - loans to refinance
1H 2010 1H 2011Δ ,
1H 2011/1H 2010
Debt / EBITDA 2.97 3.35 15.7%
Debt as at the end of the period** 13,954 15,882 13.8%
Net debt 12,014 15,344 27.7%
Balance as of 01.01.2011
Attraction of credits
(sample)
Repayment on credits
Balance as of 31.12.2011
Implementation of investment program of JSC "Lenenergo" in 1H 2011
The adjusted investment program for 2011 was approved by JSC "IDGC Holding" in the amount of capital investments - RUR 15,633 mln. The actualdisbursement of capital investments 1H 2011 amounted to RUR 4,982 mln.
JSC "Lenenergo" 1H 2010 1H 2011 1H 2011 /
1H 2010, %
TOTAL4 898 4982 2%
Modernization andrenovation
928 1997 115%
New construction3 970 2985 -25%
Volume of capital investments, RUR mln net of VAT
CAPEX, RUR mln
4 898 4 982
Parameters of the investment program, RUR mln
Indicator
St.-Petersburg Leningrad Region JSC "Lenenergo"
1H 2010 1H 2011 1H 2011/
1H 2010 1H 2011 1H 2011/1H
2010, %1H 2010 1H 2011
1H 2011/1H 2010, %1H 2010, %
Disbursement, RUR mln net of VAT
4154 3440 -17% 744 1542 107% 4898 4982 2%
Commissioning of fixed assets, RUR mln
3977 3316 -17% 490 498 2% 4467 3813 -15%
Funding, RUR mln including VAT 5142 4298 -16% 1499 1436 -4% 6641 5734 -14%
Power input , МVА 302 203 -33% 45 52 16% 347 255 -26%
Power input, km 425 367 -14% 178 123 -31% 603 489 -19%
Growth of power, MVA 295 176 -41% 44 39 -12% 339 214 -37%
Growth of power, km 417 336 -19% 76 70 -8% 493 406 -18%
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928 1997
3 970 2985
1ПГ 2010 1ПГ 2011
ТПиР Новое строительство
•205.96 MVA of transformer capacity /planned 160.87 MVA (128% tothe plan),•338.54 km of OTL / planned 305 km (111% to the plan).Commissioning capacity in St.-Petersburg:•161.5 MVA of transformer capacity•254,74 km of OTLCommissioning capacity in the Leningrad region:•44.46 MVA of transformer capacity•83.8 км km of OTL
In the reporting period the volume of commissioning capacity constituted:
New constructionModernization and renovation
1H 2010 1H 2011
Parameters of the additional issue of ordinary shares of JSC "Lenenergo" in 2011-2013
2011 2012 2013 2011-2013
Form of conduct Public offering
Offering price
weighted average price determined on the results of trading on the "MICEX" Stock Exchange
for 3 months
Volume of issue, RUR bln 3.98 4.97 0.99 9.94
Order of payment for shares Funds + property*
At present JSC "Lenenergo" conducts corporate procedures to launch the additional issue of ordinary shares
JSC "IDGC Holding" and the Administration of St.-Petersburg exercise their preemptive right topurchase shares in accordance with the existingproportion in ordinary shares of JSC "Lenenergo"
* St.-Petersburg Government is involved in the additional issue by introducing property
The target designation of funds is the Renovation program of 6-110 kV cablenetwork in St.- Petersburg.
50,31%
25,16%
24,53%
ОАО "Холдинг МРСК" Санкт Петербург Прочие
RUR 2.4 bln
Share of minor shareholders
By achieving the following goals:
The economic effect from implementation of the Renovation program of cable network in St.-Petersburg is the increase inprofitabilityof JSC "Lenenergo"
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- Improving power supply security- Reducing in networks depreciation- reducing in losses in networks
IDGC Holding St.-Petersburg Other
Federal budget for 2011 LENENERGO
RUR 1 bln
RUR 2 bln
Quarter 2-3 Quarter 4 2011
IDGC HOLDING
ST.-PETERSBURGProperty
MINOR SHAREHOLDERS
INVESTORS
LENENERGO
LENENERGO
1
2
3
RUR 2 bln to Share Capital
RUR 975 mln
Monetary funds
Quarter 4 2011
Quarter 4 Quarter 1 2011-20122012
preemptive right public offering
2011
Additional issue of ordinary shares of JSC "Lenenergo" in 2011
After placing the issue
ShareholderVolume of acquisition,
RURVolume of acquisition,
pcsFrom share capital, %
IDGC Holding 2 000 000 009 102 564 103 50.31
St.-Petersburg 999 999 078 51 282 004 25.16
Minor shareholders and investors 975 225 791 50 011 579 4.43
Other shareholders 0 0 20.11
50,31%
25,16%
4,43%
20,11%Холдинг МРСК
Город СПб
Акционеры и инвесторы
Прочие акционеры
Parameters of the additional issue of ordinary shares in 2011
Plan-schedule of placing the additional issue of ordinary shares in 2011
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IDGC Holding
St.-Petersburg
Shareholders and investors
Other shareholders
Low liquidity of the Company's ordinary shares
A large proportion of income from technological connection, which investors prefer to null in the forecasts due to its instability
The unfair dividend policy, entailing redistribution of value from holders of ordinary shares to holders of preferred shares
A low investor interest in the distribution grid complex due to the uncertainty regarding the tariff regulation and prospects for RAB
Concerns and comments
To build a financial model of the Company for a five-year period it is necessary to wait for a policy decision of regulators regarding the rates of growth and the future of RAB-regulation
Following the implementation of the additional issues of ordinary shares in 2011-2013 by public subscription, the amount of shares in free float will increase, thus resulting in the increase of securities' liquidity
In accordance with the approved Business plan of the Company for 2011-2015, the share of revenue from the services of technological connection is reduced, reaching 9% in 2015 (in 2011 the plan is 22%). It is assumed that starting from 2014, profit from electricity transmission services will be positive
Feasibility of financing the Investment program by the funds received from the additional issues of ordinary shares
Funds received from the additional issues of ordinary shares in 2011-2013 will be directed to the implementation of the target program – renovation of the cable network in St.-Petersburg. The program is federal in nature, therefore for its implementation the funds are sent from the federal budget (through the participation of JSC"IDGC Holding"), as well as the funds of the city budget (through participation of the CPMC, SPb). Funding for the target program is carried out by means of additional shares as a direct budget subsidies for a JSC is impossible
Factors, limiting the investment demand Comment of the management of JSC "Lenenergo"
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Key factors to address this issue is the approval by the Russian government of the strategy of JSC "IDGC Holding" and the distribution-grid complex of Russia, as well as achieving by the Company a sufficient level of profits for distribution between shareholders. The Company is planning to decide the issue of the existing imbalance in the dividend policy while respecting the legitimate rights of all shareholders
THANK YOU FOR YOUR ATTENTION!
JSC "Lenenergo"196247, Russia, St.-Petersburg, Constitution Square,1
Head of Department for Corporate GovernanceAndrey S. SmolnikovTel./ fax +7 (812) 595 31 [email protected]
Investor RelationsUlyana E. DavydovaTel. +7 (812) 494 39 06Fax +7 (812) 494 37 [email protected]@nwenergo.com
www.lenenergo.ru
CONTACTS
