Oblenergos report 9M09 financial results

————————–  —————  —————  —————
                              Net revenue       EBITDA           Net income
                            UAH mln Chg yoy  UAH mln Chg yoy  UAH mln Chg yoy
————————–  —————  —————  —————
Chernivtsioblenergo    CHEN     297      16%     50       14%   30.0       23%
Cherkasyoblenergo     CHON     596      27%     67       -9%   36.3      -11%
Dniprooblenergo         DNON   5,761      -9%    299       26%  143.9       45%
Donetskoblenergo       DOON   2,257       4%     72      -63%  (34.4)    -129%
Kharkivoblenergo        HAON   1,467      12%    171        3%   51.5       12%
Khmelnitskoblenergo   HMON    468       3%     62      -15%   26.0      -27%
Kirovohradoblenergo   KION     414      12%     52      -38%  (19.4)    -154%
Krymenergo               KREN   1,109       9%     67      -30%   12.6      -46%
Lvivoblenergo            LVON     918       9%    129       -8%   63.7      -18%
Mykolaivoblenergo     MYON     587      10%     47       62%   25.5       70%
Odesaoblenergo        ODEN   1,661      20%    156       30%    3.0        4%
Poltavaoblenergo       POON   1,208      30%    138       32%   51.2      121%
Prykarpatoblenergo    PREN     420       9%     99       23%   66.1       52%
Sevastopoblenergo     SMEN     305      25%     45        2%    5.0      -76%
Sumyoblenergo          SOEN     475      17%     75        3%   37.1        1%
Ternopiloblenergo      TOEN     285      16%     30        7%   (7.0)      -9%
Vinnytsyaoblenergo     VIEN     491       8%     55      -19%   20.8      -17%
Volynoblenergo           VOEN     305      11%     35       -5%    2.1       23%
Zaporizhyaoblenergo   ZAON   2,517      -9%     83       56%   28.9       n/m
Zhytomyroblenergo     ZHEN     557      12%     70        9%    7.4      -28%
Zakarpatoblenergo      ZOEN     382      11%     46        7%    7.9        1%
————————–  —————  —————  —————
Aggregate (w/o DOON)        20,224       4%  1,775        7%  593.0        8%

Yegor Samusenko: While electricity consumption in Ukraine decreased by 15% yoy in 9M09, Oblenergos managed to increase their aggregate EBITDA to UAH 1,775 mln (up 7% yoy). The sector decreased commercial losses from electricity transmitted by 0.86 pp, which directly contributed an estimated UAH 264 mln to the sector’s aggregate EBITDA. For Donetskoblenergo (DOON), its negative profitability is fully explained by revaluation of bad receivables by UAH 300 mln. All companies where VS Energy group has a controlling stake (KION, ODEN, SMEN, ZHEN) increased their financial expenses by 2x-3x times, which had a negative impact on their bottom line and indicate bad corporate governance practices, as we believe this interest was paid to related parties.