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24 April 2013. Moscow, Russia– JSC Russian Grids (LSE: MRSK) (the “Company”), the largest electricity distribution grid company in Russia, today announces its audited financial results for the year ended 31 December 2012.
Key financial indicators:

Net cash flows generated by operating activities: RUB 88.8bn (FY2011:RUB 89.3bn)

Increase of authorized capital by RUB 4.9 bn as a result of additional share issue

In December 2012 an additional share issue was registered by the Federal Service for Financial Markets. As at 31 December 2012, advances received for the share issue totaled RUB 19.8bn.

Tariff decisions taken: 44 regions are operating under RAB regulation and 21 regions are operating under the indexation method

Approval of the adjusted consolidated investment programme for 2012 and 2013–2017

Commenting on the results, Alexei Demidov, First Deputy Executive Director of JSC Russian Grids, said:
"Russian Grids delivered solid performance in 2012, increasing our EBITDA margin to 18.9% despite continued tariff revisions. We generated significant net cash flow from our operations whilst continuing to optimise our operating expenses.
"Our focus in 2012 was on increasing efficiency through continued modernisation of the grid infrastructure and reduction in electricity distribution losses. We continued to focus on delivering our long-term strategy aimed at ensuring reliable electricity supply to customers and leading the development of the power distribution system in Russia through implementation of innovative technologies.
"2012 was an important year for the Company as the electricity distribution industry was undergoing major reforms. Russian Grids will seek to generate further operational efficiencies to continue to maintain a resilient financial position and maximise cash generation."
FINANCIAL SUMMARY

billions, RUB	FY 2012	FY 2011	Change %
Revenue	621.6	634.6	-2.0
EBITDA	117.2	116.5	0.6
EBITDA margin	18.9%	18,4%	0.5 ppt
Operating profit	49.7	59.3	-16.2
Operating margin	8.0%	9.3%	-1.3 ppt
Net profit	31.7	39.0	-18.7
Net profit margin	5.1%	6.1%	-1 ppt
Earnings per share (RUB)	0.35	0.53	-34.0
Net cash flows generated by operating activities	88.8	89.3	-0.6
Net cash flows used in investing activities	(153.0)	(121.8)	25.6

In 2012, the Company's revenue decreased by 2.0% y-o-y and amounted to RUB 621.6 bn (FY 2011: RUB 634.6 bn. The decline was due to the decrease of the uniform tariff for electricity distribution related to the revision of long-term regulation parameters (including RAB).
Operating expenses totaled RUB 574.2bn, representing a decline by 0.5% y-o-y (FY 2011: RUB 577.2 bn), mainly due to the decrease in expenses for purchasing electricity to compensate for technological losses and the revision of the unregulated price cap.
EBITDA increased by 0.6% y-o-y to RUB 117.2 bn against RUB 166.5 bn in the previous period, while EBITDA margin increased by 0.5 ppt to 18.9%, compared to 18.4% in 2011.
Operating profit decreased by 16.2% y-o-y to RUB 49.7bn against RUB 59.3 bn in 2011 while the operating margin decreased by 1.3 ppt y-o-y to 8.0% (FY 2011:9.3%).
In 2012, the Company's net profit totaled RUB 31.7bn, declining by 18.7% y-o-y (FY 2011: RUB 39.0 bn), with net profit margin slightly shrinking by 1 ppt y-o-y to 5.1%, compared to 6.1% in 2011. The decline in net profit was caused by the decrease in revenue.
Net cash flows generated from operating activities in 2012 totaled RUB 88.8 bn (2011: RUB 89.3bn).
As of 31 December 2012, net cash flows used in investing activities amounted to RUB 153.0 bn, a growth of 25.6% y-o-y (FY 2011: RUB 121.8 bn) as a result of continued investments in the development of the distribution grid network including the increase in acquisition of property, plant and equipment, as well as placement of bank deposits. Capital expenditures increased by 1.6% y-o-y totaling RUB 141.6 bn (FY 2011: RUB 139.4 bn).
As of 31 December 2012, total assets of the Company grew by 10.7% y-o-y to RUB 972.7 bn (FY 2011: RUB 879.1 bn) as a result of the increase in property, plant and equipment related to the execution of the investment programme.
Net cash flows received from financing activities decreased by 9.6% to RUB 51.0bn (2011: RUB 56.4 bn).
In 2012, the Company's total debt was RUB 228.9 bn compared to RUB 197.8 bn in 2011. Net debt totaled RUB 193.2bn compared to RUB148.9bn in 2011, while the net debt / EBITDA ratio amounted to 1,6õ(2011: 1,3õ). The increase in net debt was due to additional loans and borrowings for financing the investment programme.
In 2012, the Company's cash balances stood at RUB 35.7 bn (FY 2011: RUB 48.9 bn). The decline was mainly due to the placement of funds on deposits classified as short-term current assets.
* * *
A conference call for investors and analysts will be held today at 2:00PM London / 5:00PM Moscow / 9:00AM New York.
Participant dial-in:
UK dial-in: +44(0)20 3450 9571
Russia dial-in: +7495 213 0981
USA dial-in: +1646 254 3369
Confirmation Code: 2425063
The call will be recorded and there will be a replay facility available for 14 days until 8 May 2013 as follows:
UK dial-in: +44 (0)20 3427 0598
Russia dial-in: +7 (495) 705 9453
USA dial-in: +1 347 366 9565
National free phone, UK: 0800 358 7735
National free phone, US: 1866 932 5017
Replay passcode: 2425063
The press release and the presentation will be available on the Company's website: www.holding-mrsk.ru.
* * *
For further information:
JSC Russian Grids
Julia Martynova, IR +7(495) 995 5333 (ext. 2070)
FTI Consulting
Larisa Millings +44 20 7831 3113
Oleg Leonov / Maria Shiryaevskaya +7 (495) 795 0623
JSC Russian Grids is the largest electricity distribution grid company in Russia and, the Company believes, one of the largest electricity distribution grid companies in the world by length of distribution lines and installed transformer capacity. JSC Russian Grids holds interests in and manages 11 interregional and five regional distribution grid companies in Russia. As at 31 December 2012, JSC Russian Grids together with its subsidiaries owned and operated approximately 2.1 million kilometres of electricity distribution lines with a total installed transformer capacity of approximately 403,7 GVA. Through its subsidiaries, the Company operates in 69 regions of Russia, covering an area of approximately 7.8 million square kilometres occupied by approximately 85 percent of Russia's total population according to Rosstat. The Company reported revenues of RUB 621.6bn and net profit of RUB 31.7bn for 2012.

Group of companies "Russian Grids"
Consolidated Statement of Comprehensive Income for the year ended 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

	Year ended 31 December 2012	Year ended 31 December 2011
Revenue and government subsidies	621,633	634,608
Operating expenses	(574,197)	(577,214)
Other income, net	2,252	1,860
Results from operating activities	49,688	59,254
Finance income	6,128	3,226
Finance costs	(11,769)	(9,069)
Net finance costs	(5,641)	(5,843)
Share of profit of equity accounted investees (net of income tax)	70	244
Profit before income tax	44,117	53,655
Income tax expense	(12,463)	(14,689)
Profit for the year	31,654	38,966
Other comprehensive income
Net change in fair value of available-for-sale financial assets	(73)	(264)
Net change in fair value of available-for-sale financial assets transferred to profit or loss	(44)	(232)
Income tax on other comprehensive income	27	105
Other comprehensive income for the year, net of income tax	(90)	(391)
Total comprehensive income for the year	31,564	38,575
Profit attributable to:
Owners of the Company	17,355	23,438
Non-controlling interest	14,299	15,528
Total comprehensive income attributable to:
Owners of the Company	17,265	23,047
Non-controlling interest	14,299	15,528
Earnings per share
Basic and diluted earnings per ordinary share	RUB 0.35	RUB 0.53

Group of companies "Russian Grids"
Consolidated Statement of Financial Position as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

	31 December 2012	31 December 2011
ASSETS
Non-current assets
Property, plant and equipment	760,857	687,489
Intangible assets	4,609	4,368
Investments in equity accounted investees	104	1,280
Non-current accounts receivable	12,424	16,818
Other investments and financial assets	10,144	9,837
Deferred tax assets	3,711	2,599
Total non-current assets	791,849	722,391

Current assets
Inventories	13,742	12,907
Other investments and financial assets	35,105	8,728
Current tax assets	3,156	4,516
Trade and other receivables	93,193	81,682
Cash and cash equivalents	35,691	48,853
Total current assets	180,887	156,686
Total assets	972,736	879,077

Group of companies "Russian Grids"
Consolidated ‍Statement of Financial Position as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

	31 December 2012	31 December 2011
EQUITY AND LIABILITIES
Equity
Share capital	49,947	45,039
Share premium	16,244	6,036
Treasury shares	(1,786)	(1,786)
Reserve for issue of shares	19,751	9,382
Other reserves	190	280
Retained earnings	225,583	207,790
Total equity attributable to equity holders of the Company	309,929	266,741
Non-controlling interest	184,757	177,136
Total equity	494,686	443,877

Non-current liabilities
Loans and borrowings	188,763	168,831
Trade and other payables	18,868	30,081
Employee benefits	9,930	9,660
Deferred tax liabilities	36,653	32,478
Total non-current liabilities	254,214	241,050

Current liabilities
Loans and borrowings	40,098	28,965
Trade and other payables	168,263	158,689
Provisions	14,106	5,977
Current tax liabilities	1,369	519
Total current liabilities	223,836	194,150
Total liabilities	478,050	435,200
Total equity and liabilities	972,736	879,077

Group of companies "Russian Grids"
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

	Year ended 31 December 2012	Year ended 31 December 2011
OPERATING ACTIVITIES
Profit for the year	31,654	38,966
Adjustments for:
Depreciation and amortization	61,499	54,075
Impairment of property, plant and equipment	4,626	-
Finance costs	11,769	9,069
Finance income	(6,128)	(3,226)
Loss on disposal of property, plant and equipment	253	106
Share of profit of equity accounted investees (net of income tax)	(70)	(244)
Gain from disposal of subsidiaries	(56)	-
Other non-cash transactions	274	545
Income tax expense	12,463	14,689
Operating profit before working capital changes and reserves	116,284	113,980
Change in trade and other receivables	(10,607)	(6,970)
Change in financial assets related to employee benefit fund	(60)	(11)
Change in inventories	(847)	(1,565)
Change in trade and other payables	1,723	6,285
Change in employee benefit liabilities	270	621
Change in provisions	8,129	2,780
Cash flows from operations before income taxes and interest paid	114,892	115,120
Income taxes paid	(7,972)	(12,186)
Interest paid	(18,097)	(13,596)
Net cash flows from operating activities	88,823	89,338

Group of companies "Russian Grids"
Consolidated ‍Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

	Year ended 31 December 2012	Year ended 31 December 2011
INVESTING ACTIVITIES
Acquisition of property, plant and equipment and intangible assets	(131,029)	(124,836)
Proceeds from sale of property, plant and equipment	806	1,087
Acquisition of investments and placement of bank deposits	(35,741)	(9,367)
Proceeds from disposal of investments and withdrawal of bank deposits	8,990	10,076
Disposal of subsidiaries, net of cash disposed of	144	-
Disposal of investment in equity accounted investee	800	-
Dividends received	13	20
Interest received	3,065	1,202
Net cash flows used in investing activities	(152,952)	(121,818)
FINANCING ACTIVITIES
Proceeds from loans and borrowings	90,296	139,724
Repayment of loans and borrowings	(54,255)	(87,002)
Proceeds from shares issued	25,485	10,687
Purchase of non-controlling interest in subsidiaries	(5,898)	-
Dividends paid	(1,476)	(1,670)
Repayment of finance lease liabilities	(3,185)	(5,296)
Net cash flows from financing activities	50,967	56,443
Net (decrease)/increase in cash and cash equivalents	(13,162)	23,963
Cash and cash equivalents at beginning of year	48,853	24,890
Cash and cash equivalents at end of year(Note 18)	35,691	48,853

Group of companies "Russian Grids"
Consolidated Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

	Year ended 31 December 2012	Year ended 31 December 2011
OPERATING ACTIVITIES
Profit for the year	31,654	38,966
Adjustments for:
Depreciation and amortization	61,499	54,075
Impairment of property, plant and equipment	4,626	-
Finance costs	11,769	9,069
Finance income	(6,128)	(3,226)
Loss on disposal of property, plant and equipment	253	106
Share of profit of equity accounted investees (net of income tax)	(70)	(244)
Gain from disposal of subsidiaries	(56)	-
Other non-cash transactions	274	545
Income tax expense	12,463	14,689
Operating profit before working capital changes and reserves	116,284	113,980
Change in trade and other receivables	(10,607)	(6,970)
Change in financial assets related to employee benefit fund	(60)	(11)
Change in inventories	(847)	(1,565)
Change in trade and other payables	1,723	6,285
Change in employee benefit liabilities	270	621
Change in provisions	8,129	2,780
Cash flows from operations before income taxes and interest paid	114,892	115,120
Income taxes paid	(7,972)	(12,186)
Interest paid	(18,097)	(13,596)
Net cash flows from operating activities	88,823	89,338

Group of companies "Russian Grids"
Consolidated ‍Statement of Cash Flows as at 31 December 2012
(in millions of Russian roubles, unless otherwise stated)

	Year ended 31 December 2012	Year ended 31 December 2011
INVESTING ACTIVITIES
Acquisition of property, plant and equipment and intangible assets	(131,029)	(124,836)
Proceeds from sale of property, plant and equipment	806	1,087
Acquisition of investments and placement of bank deposits	(35,741)	(9,367)
Proceeds from disposal of investments and withdrawal of bank deposits	8,990	10,076
Disposal of subsidiaries, net of cash disposed of	144	-
Disposal of investment in equity accounted investee	800	-
Dividends received	13	20
Interest received	3,065	1,202
Net cash flows used in investing activities	(152,952)	(121,818)
FINANCING ACTIVITIES
Proceeds from loans and borrowings	90,296	139,724
Repayment of loans and borrowings	(54,255)	(87,002)
Proceeds from shares issued	25,485	10,687
Purchase of non-controlling interest in subsidiaries	(5,898)	-
Dividends paid	(1,476)	(1,670)
Repayment of finance lease liabilities	(3,185)	(5,296)
Net cash flows from financing activities	50,967	56,443
Net (decrease)/increase in cash and cash equivalents	(13,162)	23,963
Cash and cash equivalents at beginning of year	48,853	24,890
Cash and cash equivalents at end of year(Note 18)	35,691	48,853

Press Releases

ROSSETI

Russian Grids financial results for 2012
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