Centerenergo

The overall deceleration of the Ukrainian economy affected the level of electricity
consumption as well, primarily, the energy consumption by industrial enterprises.
Yet, the sectoral risks in the power industry are not high in the mid-term, since
this sector is a systemic one for the entire infrastructure.

Centerenergo is the second-largest thermal power generating company in Ukraine. Its aggregate capacity is 7,575 MW, while 5 in 18 of its power units use natural gas and fuel oil for energy production.

The critical situation with accumulating of coal in the warehouses of generating
companies on the eve of the heating season forced Centerenergo to launch the idle gas and fuel oil capacities, which had a negative impact on the company’s profit margins in the quarter.

Despite sales growth in January-September 2008 versus the comparable period
last year by almost 60%, the operating profit dropped 29%, and EBITDA – 16%.
Meanwhile, the company net profit surged 76%, whereas the net profit margin for
three quarters increased insignificantly – from 2.4% to 2.6%.