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IDGC OF CENTRE:RESULTS OF 1 HALF 2010,FORECAST FOR 2010September 8, 2010
Disclaimer    The information in this presentation was received from the sources which, in opinion of IDGC of Centre (“the...
Company‟s storyline                              April „07                       January „09 the first 3 branches         ...
Key indicators    Capitalization                          RUR 47.5 bln    (as of 31.08.2010)                      USD 1.55...
Structure of Group of Companies                                                                IDGC of Center . Key shareh...
Share capital structure                           IDGC of Center has a diversified share capital                          ...
Management bodies structure                                                  High authority:     External bodies responsib...
Strategic vision of the management    Goals of the Company                                                 Target subsyste...
Credit ratingScale                                                 Outlookof international                                ...
National rating of CG                                 History of RCG of IDGC of Center                                 Con...
Stock market                                                               Dynamics of changes in IDGC of Centre          ...
Key indicators of stock market (1)               Capitalization of distribution grid companies as                         ...
Key indicators of stock market (2)                  Average bid-ask spread of MRKC                               Day-avera...
IDGC of Centre     • RAS for 1H 2010, forecast for 2010     • Transit to RAB-based regulation14                           ...
Revenue by activities: results, forecast                                       (RAS)15                           www.mrsk-...
1H2010 performance                                                                               (RAS)RUR bln             ...
1H2010 performance                                                                                                        ...
1H2010 performance                                                                                                 (RAS)EB...
Investment activityRUR bln12                                                                                              ...
Key investment projects in 201018                                                                                         ...
Transition to RAB       Date of       Branch           IRAB,     transition                      RUR bln                  ...
Contact information     JSC “IDGC of Center”     129090 Russia, Moscow, Glukharev per., 4/2     Tel./fax: +7 (495) 747 929...
Appendix23              www.mrsk-1.ru
Appendix 1                                                                       Sales of services (RAS)                  ...
Appendix 2                                             Production results for 1H 2010                                     ...
Appendix 3                                                               Market share in 1H 2010Power transmission share m...
Tariffs                                                                     Average distributional tariffs, kop/kWh     Br...
Tariffs                          Average distributional tariffs w/o TNO, kop/kWh     Branch            2008               ...
Fixed assets                               Fixed assets characteristic (as 0f 31.12.2009)                           Capaci...
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UBS Investment Conference September, 2010

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Transcript of "UBS Investment Conference September, 2010"

  1. 1. IDGC OF CENTRE:RESULTS OF 1 HALF 2010,FORECAST FOR 2010September 8, 2010
  2. 2. Disclaimer The information in this presentation was received from the sources which, in opinion of IDGC of Centre (“the Company”), are reliable. Nevertheless, we do not guarantee accuracy of the given information which may be short or incomplete. All opinions and estimations containing in the present material reflect our opinion at the date of publication and are subject to change without notice. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. The information in this presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods The Company does not bear the responsibility for consequences of use of opinions containing in the present report or applications, or for incompleteness of the information. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you agree to be bound by the foregoing limitations.2 www.mrsk-1.ru
  3. 3. Company‟s storyline April „07 January „09 the first 3 branches The final structure of the transferred to RAB: Belgorodenergo,December „04 Company was approved, Lipetskenergo, Tverenergo―Interregional Distribution the Company now includes April „09 Listing at MICEX. TheGrid Company of Centre‖, 11 regional grid companies Company‘s shares were includedOpen Joint-Stock in Central Russia (decision into ―В‖ quotation list of exchangeCompany, was of the Board of Directors of November „09 the Companyincorporated RAO UES of Russia) obtained the credit rating S&P BB- /B/ruAA- forecast ―Stable‖2004-2005 2006 2007 2008 2009 2010 „06 March „08 Connection January „10 Another 2 Enhancement of DGCs to IDGC of Centre branches transferred to RAB: DGC management May „08 Company‘s shares Kurskenergo, Yarenergo system. Transferring were launched for trading at July „10 Rating Agency S&P of powers of the MICEX (MRKC) and RTS approved the Company‘s DGC sole executive July „08 JSC ―IDGC credit rating ―BB-‖, forecast body to the Company Holding‖ became the ―Stable‖ majority shareholder of the July „10 Applications of Company REC are submitted to FST of October „08 Shares of Russia on the remaining 6 IDGC of Centre were branches included in calculation base of MICEX PWR 3 www.mrsk-1.ru
  4. 4. Key indicators Capitalization RUR 47.5 bln (as of 31.08.2010) USD 1.55 bln Amount of shareholders 15,157 (as of 12.05.2009) Revenue (RAS 2009) RUR 49.1 bln (RAS 1H 2010) RUR 29.4 bln Net profit (RAS 2009) RUR 1.3 bln (RAS 1H 2010) RUR 2.5 bln Net assets RUR 43.8 bln (RAS as of 30.06.2010) Output 53.1 bln kWh (2009 ) 27.77 bln kWh (as of 30.06.2010 Length of power lines (overhead 0.4 — 110 kV power lines 372.4 thousand km as of 30.06.2010) Capacity of substations (as of 30.06.2010) 35 — 110 kV 31.0 GVA 6 — 10/0.4 kV 14.9 GVA Number of personnel 28,088 (as of 30.06.2010)4 www.mrsk-1.ru
  5. 5. Structure of Group of Companies IDGC of Center . Key shareholders JSC “IDGC Holding”* Minority shareholders 50.23% 49.77%** Group of Companies JSC “IDGC of Center” Branches 100% Subsidiaries 51% Belgorodenergo Yarenergo JSC “Energetik” JSC “Yargorelektroset” Брянскэнерго Tverenergo - August 3, 2010 51% JSC “IDGC of Center” signed a Воронежэнерго Tambovenergo contract for the acquisition of a JSC “YarESK” controlling stake in JSC “Yargorelektroset” - one of the Kostromaenergo Smolenskenergo largest TSO in CFD. As a result - November 11, 2009 of the transaction under the Subsidiary company JSC control of JSC “IDGC of Center” Kurskenergo Orelenergo "Energetik" acquired a will be more than 90% of the controlling stake in JSC assets of the power grid complex Lipetskenergo Operational ―YarESK‖- the target of the Yaroslavl region (the deal is on the completion stage) business units company for the consolidation of power grid 11 branches assets in the Yaroslavl region * - the share of the State in JSC “IDGC Holding” – 52.69% ** - taking into account the State‘s share 0.46%5 www.mrsk-1.ru
  6. 6. Share capital structure IDGC of Center has a diversified share capital structure. Free float according to the Company‟s management estimations is about 30%. * - as of 12.05.20106 www.mrsk-1.ru
  7. 7. Management bodies structure High authority: External bodies responsible for monitoring financial and economic activities: General Meeting of Shareholders Auditor Strategic management body: Internal Audit Commission Board of Directors Committees (5): Executive bodies: Committee for Strategy and Management Board Development (1) Chairman of the MB– Reliability Committee Director General (2) Internal control bodies over business activity Committee for Personnel and Remuneration (3) Control bodies over the Company’s Internal Control and Audit business activity Department Committee for Audit(4) Bodies providing recommendations for the Board of Directors over the Company’s strategic development Committee for Technological Connection (5) formed in 20097 www.mrsk-1.ru
  8. 8. Strategic vision of the management Goals of the Company Target subsystems of the management: • Growth and changes Industry • Finance leadership • Consumers • Main business processes • Management system • Personnel Challenges of the top level Growth Finance Consumers Processes Management Personnel Realize efficient and Ensure Ensure safe functioning and development and Enhance long- term Enhance the Ensure innovative efficient efficiency of growth of efficiency of effective sales of development of functioning of humanshareholder business services electricity network management resourcescapital value complex system8 www.mrsk-1.ru
  9. 9. Credit ratingScale Outlookof international (C-Stable)rating (Н-Negative)(in foreigncurrency) History of credit rating In 2009 Standard&Poor‟s Confirmed July „10 assigned credit rating to the Assigned November ‗09 Company «ВВ-/В/ruAA-» forecast «Stable», In July 2010 the rating was confirmed on the same level MUEC IDGC of Centre Mosenergo The level confirms the Company‟s ability to extend credit 9 www.mrsk-1.ru
  10. 10. National rating of CG History of RCG of IDGC of Center Confirmed July‟ 09 Confirmed February‗09 Assigned September ‗08 Developed practice of corporate governance Rating NRCG 7 indicates low risks of corporate governance, compliance with the RF legislation “7” Developed practice of and the Code of corporate governance. Corporate Behavior Leading position among IDGCs10 www.mrsk-1.ru
  11. 11. Stock market Dynamics of changes in IDGC of Centre share price, MicexPWR and Network Index in 2010 Start of trading: 80% May 21, 2008 IDGC of Center МРСК Центра From 31.12.2009 c 31.12.09 MICEX-PWR MicexPWR 70% Index “Network” Индекс Сети Quotation list: 60% «B» MICEX 50% IDGC of Centre shares are 40% included in MICEX PWR 30% index calculation base 20% 10%Ticker symbols 0% -10%MICEX MRKC 31.12.09 21.01.10 03.02.10 16.02.10 02.03.10 16.03.10 29.03.10 09.04.10 22.04.10 05.05.10 18.05.10 31.05.10 11.06.10 24.06.10 07.07.10 20.07.10 02.08.10 13.08.10 26.08.10 03.09.10RTS classic MRKCRTS stock MRKCG11 www.mrsk-1.ru
  12. 12. Key indicators of stock market (1) Capitalization of distribution grid companies as Market multiples on IDGCs and foreign of 31.08.10, RUR bln (MICEX) companies-analogues * 180,0 164,4 160,0 21,0 140,0 120,0 100,0 12,37 80,0 11,2 66,3 10,2 60,0 47,5 40,0 24,1 23,5 23,4 23,2 19,4 18,2 5,19 5,3 20,0 7,7 4,4 2,2 0,0 0,96 0,7 ЛенЭнерго МОЭСК МРСК Волги Холдинг МРСК МРСК Центра IDGC Центра и Приволжья МРСК Урала МРСК Северо-Запада МРСК Сибири IDGCМРСК Юга IDGC Северного Кавказа Lenenergo IDGC Holding IDGC of Volga IDGC of Centre of South IDGC of Siberia MOESK МРСК of Centre and Volga IDGC of North-West IDGC of Urals МРСКof North Caucasus EV/S 2010П EV/EBITDA 2010П P/E 2010П МРСК Центра IDGC of Center Среднее по российским аналогам Average on Russian companies Average on developing countries Среднее по развивающимся странам** * Calculations of the Company, data of investment banks covering the activities of IDGCs** Calculations of the Company, data of investment banks covering the activities of IDGCs (foreign analogues: Eletropaulo, Compania General de Electricidad,Aksu Enerji ve Ticaret, etc.) 12 www.mrsk-1.ru
  13. 13. Key indicators of stock market (2) Average bid-ask spread of MRKC Day-average number of contracts at MICEX (%) , 2009-2010 at MICEX 1000 6,00% 900 5,00% 800 700 4,00% 600 3,00% 500 2,00% 400 300 1,00% 200 0,00% 100 0 янв.09 ноя.09 апр.09 янв.10 мар.09 мар.10 апр.10 май.09 май.10 сен.09 авг.09 окт.09 авг.10 июн.09 дек.09 июн.10 фев.09 июл.09 фев.10 июл.10 сен.09 авг.09 окт.09 авг.10 фев.09 июн.09 фев.10 июн.10 янв.09 ноя.09 дек.09 апр.09 янв.10 апр.10 мар.09 июл.09 май.09 мар.10 май.10 июл.10 Proportion of shares in the nominal holding by Stock turnover at MICEX, Jan- Aug 2010, RUR mln depository exchanges 2009-2010gg: 3 000 40 2 500 35 2 000 30 1 500 25 1 000 20 500 НДЦ (% от УК) 0 15 10 ДКК (% от УК) 5 0 янв.09 ноя.09 апр.09 янв.10 апр.10 мар.09 мар.10 май.09 май.10 сен.09 окт.09 авг.10 июн.09 авг.09 дек.09 июн.10 фев.09 фев.10 июл.09 июл.1013 www.mrsk-1.ru
  14. 14. IDGC of Centre • RAS for 1H 2010, forecast for 2010 • Transit to RAB-based regulation14 www.mrsk-1.ru
  15. 15. Revenue by activities: results, forecast (RAS)15 www.mrsk-1.ru
  16. 16. 1H2010 performance (RAS)RUR bln 30.06.2009 30.06.2010 Change EBITDA, RUR blnRevenue 24.92 29.41 18.0% 0Cost 21.33 25.04 17.4% +20.8% 5.57Gross profit 3.58 4.37 22.0% 4.61Gross profit margin 14.4% 14.9% 0.5 p.p.EBITDA 4.61 5.57 20.8%EBITDA margin 18.5% 18.9% 0.4 p.p.Net profit 1.77 2.49 41.2%Net profit margin 7.1% 8.5% 1.4 p.p. 1H 1H 2009 2010 16 www.mrsk-1.ru
  17. 17. 1H2010 performance (RAS)Capital structureRUR bln 31.12.2009 30.06.2010 ChangeEquity 41.23 43.73 6.1% Average interest rate on credits, 2008 - 2010Long-term liabilities 10.73 11.23 4.7%Short-term liabilities 0.40 - -100%Accounts payable 6.59 8.33 24.4% 12,93%Other 2.1 2.22 5.7% 10,99%Total liabilities 61.05 65.51 7.3% 8,63% 8,58% Liabilities structure 31.12.2009 30.06.2010 3% 3% 11% 13% 1% 0% 18% 17% 31.12.2009 г.31.03.2010 г.30.06.2010 г.31.08.2010 г. 67% 67% Собственный капитал Equity Собственный капитал Accounts payable Short-term liabilities – Долгосрочные обязательства Долгосрочные обязательства Long-term liabilities Краткосрочные обязательства Кредиторская задолженность Short-term liabilities Прочее Other Краткосрочные обязательства Кредиторская задолженность Прочее 0% 17 www.mrsk-1.ru
  18. 18. 1H2010 performance (RAS)EBITDA vs. Net Profit, RUR blnRatio Net Debt/EBITDA RUR bln Ratio 12 1,6 Net debt/Year EBITDA Net Profit Net Debt 1,4 EBITDA 10 1,2 82006 4,74 1,31 3,27 0.69 1,02007 6,83 1,98 6,14 0.90 6 0,8 0,62008 7,49 0,87 9,31 1.24 4 0,42009 7,64 1,33 10,76 1.41 2 0,22010(F) 10,86 3,59 13,61 1.25 0 0,0 2006 2007 2008 2009 20101 H „10 5,57 2,49 8,6 0.64 EBITDA Чистая прибыль Net profit NetDebt/EBITDA 18 www.mrsk-1.ru
  19. 19. Investment activityRUR bln12 Volume of capital Commissioning of fixed Year investments, assets. RUR bln w/o10 RUR bln w/o VAT VAT 2006 4.509 4.3508 2007 7.839 6.372 2008 9.071 7.7396 2009 6.529 7.687 2010F* 10.701 10.797420 Others Прочее Ввод ОФ Ввод ОФ Ввод ОФ Ввод ОФ Ввод ОФ Освоение КВ Освоение КВ Освоение КВ Освоение КВ Освоение КВ CI CI CI CI CI FA FA FA FA FA New construction and expansion Новое строительство и of existing facilities расширение действующих объектов 2006 2007 2008 2009 2010 Техперевооружение и reconstruction Modernization and реконструкция 19 www.mrsk-1.ru
  20. 20. Key investment projects in 201018 50 1,947% 110 132 9 146 8 TOTAL funding 2010: RUR 8.83 bln 7 226 82 6 % 265 9Key 9 IP крупнейших ИП 5 274 Прочее Others 4 Key investment projects 1 – AIIS KUE of retail market 343 2 – Input of transformer capacity of substation 110 kV ―Manezhnaya" (40 3 МVА) 3 – Construction of substation 110/6/6 ―Kotorosl" and construction of HL- 110 kV Frunzenskaya-1 to substation ―Kotorosl‖ (50 МVА/7 km) 4 – Reconstruction of substation ―Sovetskaya‖ 110/6 kV (40 МVА) 402 5 – Reconstruction of substation 110/10/6 kV ―Zapadnaya" – 2nd stage (63 2 МVА) 6 –Modernization of Substation 110/6 kV №45 ―Kalininskaya" with installation of KRUE-110 kV (7 pcs.) 7 –Modernization of substation 110/6-6 kV №10 with installation of KRUE- 110 kV cells (2 pcs.), 6 kV cells (33 pcs.) 8 – Complex of works on reconstruction of substation 35 kV ―Zubtsov‖ (transfer to 110 kV(50 МVА) 9 –substation 110 kV ―Universitetskaya‖ – 2nd stage (40 МVА) 1 Investments (plan), RUR mln 201020 www.mrsk-1.ru
  21. 21. Transition to RAB Date of Branch IRAB, transition RUR bln Belgorodenergo 19.930 From 01.01.2009 350 Lipetskenergo 10.030 300 Tverenergo 14.366 158 RAB planned 250 Филиалы по branches которым From 01.01.2010 Kurskenergo 10.802 200 планируется переход на RAB Yarenergo 8.968 150 RAB филиалы RAB branches 100 184 54 Bryanskenergo 6.687 During 2010 50 64 Orelenergo 6.590 0 Kostromaenergo 7.437 Полная IC full Остаточная IC residual величина ИК величина ИК value value Tambovenergo 6.607 From 01.01.2011 Voronezhenergo 12.810 Expected IRAB on all branches Smolenskenergo 13.785 according to independent estimations – RUR 118 bln forecast21 www.mrsk-1.ru
  22. 22. Contact information JSC “IDGC of Center” 129090 Russia, Moscow, Glukharev per., 4/2 Tel./fax: +7 (495) 747 9292 www.mrsk-1.ru Director on Corporate Relationships Tatiana A. Kulbakina Kulbakina_TA@mrsk-1.ru Head of Department for Shareholders Relationship Tatiana N. Miroshnichenko Miroshnichenko_TN@mrsk-1.ru Tel.: +7 (495) 747 9292, ext. 318122 www.mrsk-1.ru
  23. 23. Appendix23 www.mrsk-1.ru
  24. 24. Appendix 1 Sales of services (RAS) Bln KWh MV 60 600 Volume of Полезный Growth Growth 55 550 technologicalYear отпуск э/э, rate, rate, connection, 50 500 bln kWh % % MV 45 4502006 54.0 - 280.47 - 40 4002007 56.4 4.4% 481.28 71.6% 35 350 30 3002008 56.6 0.4% 479.84 -0.3% 25 2502009 53.1 -6.2% 445.62 -7.1% 20 200 2006 2007 2008 2009 20102010(F) 53.5 0.8% 531.55 19.3% Полезный отпуск э/э, млрд. кВтч Объемы ТП, МВт 24 www.mrsk-1.ru
  25. 25. Appendix 2 Production results for 1H 2010 Useful output, bln kWhIndicator 1H 2009 1H 2010 Change 27.8 +7.0%Output, bln kWh 28.99 31.06 7.1%Useful output, bln kWh 25.98 27.8 7.0% 25.98Losses, bln kWh 3.0 3.3 1%Losses, % 10.4 10.6 0.2 p.p. 1 1H 2009 полугодие 1 1H 2010 полугодие 2009 г. 2010 г. 25 www.mrsk-1.ru
  26. 26. Appendix 3 Market share in 1H 2010Power transmission share market Technological connectionin 2008-2009 share market in 2008-2009(in terms of money) (in terms of money) Company‟s share in the power transmission market in regions, % (2009) Bryanskenergo Voronezhenergo Tambovenergo Yarenergo Lipetskenergo Tverenergo Orelenergo Kurskenergo OWN REVENUE OWN REVENUE Smolenskenergo REVENUE OF TGCs REVENUE OF TGCs Belgorodenergo Kostromaenergo26 www.mrsk-1.ru
  27. 27. Tariffs Average distributional tariffs, kop/kWh Branch 2006 2007 2008* 2009* 2010* Belgorodenergo 48,4 52,4 65,2 80,8 100,1 Bryanskenergo 40,5 74,9* 86,9 106,0 130,5 Voronezhenergo 38,2 45,5 74,0 91,1 102,4 Kostromaenergo 64,3 76,2 91,1 106,4 130,8 Kurskenergo 46,4 47,6 59,1 69,1 98,7 Lipetskenergo 33,5 42,3 64,8 82,2 111,1 Orelenergo 48,3 66,5 105,6 117,0 140,5 Smolenskenergo 65,4 73,0 90,3 110,4 123,8 Tambovenergo 47,0 49,3 87,3 100,3 108,3 Tverenergo 52,7 58,4 103,4 138,3 154,2 Yarenergo 48,4 43,3 59,8 74,0 86,2 * Tariffs are inclusive of the territorial network organizations27 www.mrsk-1.ru
  28. 28. Tariffs Average distributional tariffs w/o TNO, kop/kWh Branch 2008 2009 2010 Belgorodenergo 64,5 79,8 98,9 Bryanskenergo 55,4 70,3 83,8 Voronezhenergo 52,8 62,6 71,5 Kostromaenergo 90,2 104,5 126,7 Kurskenergo 52,0 60,4 65,8 Lipetskenergo 52,9 68,9 91,8 Orelenergo 79,6 91,1 108,2 Smolenskenergo 85,7 105,3 118,0 Tambovenergo 51,8 62,6 70,9 Tverenergo 72,4 102,2 120,5 Yarenergo 42,1 51,2 60,628 www.mrsk-1.ru
  29. 29. Fixed assets Fixed assets characteristic (as 0f 31.12.2009) Capacity Length 35-110 kV, 6-35/0,4 kV, 35-110 kV, 0,4-10 kV, MVA MVA km km IDGC of Center 31013,4 14863,66 51602,5 320744,8 Belgorodenergo 2634,5 2754,95 4206,5 38534,9 Bryanskenergo 2281,8 758,83 3514,2 22048,2 Voronezhenergo 4465,5 1532,04 6788,6 43543,6 Kostromaenergo 1707,0 1420,12 4304,5 20648,0 Kurskenergo 3286,5 1420,1 4715,9 29537,0 Lipetskenergo 2587,2 1020,6 3834,5 22850,4 Orelenergo 1682,0 793,9 3081,4 24688,6 Smolenskenergo 3071,6 1774,9 6330,9 33559,9 Tambovenergo 2452,3 928,73 4970,8 23194,3 Tverenergo 3962,2 1521,62 6718,0 39472,2 Yarenergo 2882,8 937,87 3137,2 22667,729 www.mrsk-1.ru
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