Five Oblenergos Announce Strong 1H07 Results.

Alexander Paraschiy: Sales growth at POON, VIEN and ZOEN was lower than the increase in the wholesale electricity price (+23% yoy). This decrease in their revenues is related to their non-core business. For POON, moderate sales growth is due to the less than usual heat output at Kremenchuk CHPP last winter. The companies’ improvement in profitability is mainly related to decrease of electricity losses in their power grids and to the increase of tariffs during 1H07. Sevastopolenergo, an oblenergo privatized in 2001, enjoys preferential tariff policy, which is reflected in high but decreasing net margins. Since 2008, SMEN’s profitability is likely to decrease due to end of preferential tariff period.