UES Boosts H1 Sales by 13%

The country's former power monopoly, Unified Energy System, on Thursday reported a 13 percent rise in core consolidated revenues in the first six months of 2007 as it sold and transmitted more electricity.

UES will cease to exist by mid-2008, when it will sell all of its power generating and distributing assets to introduce competition in the power sector for the first time. The grid will remain under state control.

UES is 51 percent state-owned while the remainder is split among strategic investors, such as state-controlled Gazprom, which are waiting to swap their UES shares against the stocks of UES's affiliates.

The consolidated results are therefore of little interest to current shareholders as the dividend is paid from the results of the head-office company. Analysts, however, view the results as a guide to cash flows of the country's restructured power sector.

UES said core revenues excluding asset sales rose to 503.4 billion rubles ($20.38 billion) from 446.1 billion in the first half of 2006. Net cash flows from core activities rose by 40.4 percent to 47.2 billion rubles.

Core earnings, or earnings before interest, taxation, depreciation and amortization, rose 15 percent to 96 billion rubles excluding the effect of sales of shares in affiliates.

UES sold big power generators TGK-5 and OGK-3 in the first half of 2007 and more sales followed in the second half.

UES said its net profit fell to 18.7 billion rubles from 27.1 billion in the same period last year, mainly due to deferred taxes on income from asset sales.