Kyivenergo Posts Weak 1H07 Results

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Power output   Sales         EBITDA                    Net Income
TWh   yoy,chg  USD,mln  yoy  USD,mln  yoy,chg  margin  USD,mln  yoy,chg  margin
————-  ————  ————————  ————————
2.53     -12%    456.2  47%  1.37     -12.26%   0.30%  -11.36   -11.64%     -2%
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Alexander Paraschiy: The key reason for the reduction in Kyivenergo’s profits was the tariff for heat production (set by the Kyiv city council), which does not cover production costs. According to the law “On Prices and Pricing,” if the local authorities set tariffs for some service below “an economically justifiable level,” it has to compensate the difference to the service supplier from its own budget. We believe in the end of 2007 the Kyiv authorities will compensate Kyivenergo’s losses from heat production.