Company Announcements

Federal Grid Company Announces H1 2019 RAS Results

Moscow, 26 July 2019 - Federal Grid Company of Unified Energy System ("Federal Grid Company" or "the Company"; Moscow Exchange, LSE: FEES), part of PJSC ROSSETI Group of Companies, owner and operator of the Unified National Electricity Grid ("UNEG"), announces its financial results for the first half of 2019 under Russian Accounting Standards (RAS).

The Company's RAS statements are prepared on a standalone basis and do not include the results of Federal Grid Company's subsidiaries or affiliated companies that operate as independent legal entities.

Key financial results

* excluding accrual and reversal of allowance for doubtful debts, revaluation of quoted financial assets and revenue from connection services;

Federal Grid Company's performance in the first half of 2019 reflects management's efforts to facilitate financial stability and enhanced operational efficiency for the Company.

The Company's revenue in the first half of 2019 increased by RUB 7,144 million or 6.7% year-on-year, impacted by the following factors:

-       Electricity transmission services revenue increased by RUB 6,817 million or 6.5% year-on-year, driven by:

·    revenue from electricity transmission rising by RUB 5,036 million or 5.9% following tariff increases as of 1 July 2018;

·    higher income from compensation for electricity losses in the amount of RUB 1,781 million or by 9.1% in connection with tariff increases for regulatory electricity losses, the rate of which is equal to the weighted average rate for PJSC ATS electricity purchases and capacity according to Russian Government decree №458 (dated 11 May 2018);

-       Revenue from connection services increased by RUB 343 million or sixfold due to changes in the service provision schedule in accordance with customer orders.

Adjusted EBITDA amounted to RUB 73,452 million, an increase of RUB 4,219 million or 6.1% year-on-year.

For the first half of 2019, Federal Grid Company recorded a net profit in the amount of RUB 28,668 million, which was practically at the same level as in the first half of 2018. Net profit was significantly impacted by certain non-cash operations, including:

** generated by cash flows (excluding accruals and reversal of allowance of doubtful debts, revaluation of quoted financial assets).

Adjusted net profit (excluding revenue from connection services) grew by RUB 2,591 million, or 12.7%, year-on-year.

In the first half of 2019, there was a notable increase in expenses primarily due to expense items that were beyond the control of the company, in particular, rental of power grid facilities, electricity and capacity purchases to compensate for losses and costs for cross-border electricity transit services.

Balance Sheet as of 30 June 2019

Federal Grid Company's total assets at the end of the reporting period amounted to RUB 1,497,055 million, which was RUB 9,993 million (0.7%) greater than at the beginning of the year. Non-current assets accounted for RUB 1,279,489 million, while current assets equalled RUB 217,566 million.

Federal Grid Company's total equity at the end of the reporting period increased by RUB 8,218 million (0.8%) as a result of the Company reporting a net profit for the period (RUB 28,668 million) and distribution profit for 2018 as dividends in the amount of RUB 20,449 million in accordance with the decision of the general meeting of shareholders of Federal Grid Company (minutes №22 dated June 28, 2019).

Company's gross debt as of the end of the reporting period decreased to RUB 228,987 million (by RUB 17,722 million, or 7.2% year-on-year).

Federal Grid Company's financial statements for the first half of 2019 under RAS are available on the Company's website in the Financial Disclosure/RAS Financial Reports section at the link:

http://www.fsk-ees.ru/eng/investors/financial_disclosure/ras_financial_reports/