Moscow, 21 August 2006. RAO "UES of Russia" has released the consolidated financial statements of RAO UES Group* prepared in accordance with the International Financial Reporting Standards (IFRS) for year 2005 ().

Consolidated Balance Sheet as at 31 December 2005:

Over the year, the Group's total assets increased by RUB87,237 million to RUB1,214,235 million as of 31 December 2005. Of that amount, the Group's non-current assets amounted to RUB990,877 million, up RUB51,590 million, while the current assets made RUB223,358 million, an increase of RUB35,647 million compared to 31 December 2004.

As at 31 December 2005, the property, plant and equipment of RAO UES Group stood at RUB938,087 million, an increase of RUB45,206 million from RUB892,881 million on 31 December 2004. The increase in the book value of PP&E was due to the construction of new and modernization of the existing grid and generating assets (OAO "UES FGC", OAO "Mosenergo", OAO "Bureyskaya HPP", etc.) as well as acquisition by the companies of RAO UES Group of stakes in ZAO "Moldavskaya TPP" and ZAO "Armenian Electricity Grids".

The Group's accounts receivable grew RUB25,594 million to RUB129,958 million as of 31 December 2005. The increase in receivables was chiefly due to the growth of debts owed by customers, reclaimable VAT, tax prepayments, and advances to suppliers and contractors.

As at 31 December 2005, the long- and short-term borrowings amounted to RUB127,493 million, up RUB41,497 million on 31 December 2004. Much of that increase is accounted for by new loans raised by the Group's companies and issuance by OAO "UES FGC" of long-term bonds to finance construction and modernization of projects.

As at 31 December 2005, the short-term payables (except for borrowings) made RUB161,493 million, which represents an increase of RUB34,901 million compared to end-2004. The increase in payables was largely driven by the increase in debts owed to supplies and contractors and tax liabilities.

Consolidated Statement of Operations for year 2005:

The Group's revenues in 2005 made RUB764,655 million, an increase of RUB84,998 million (or 12.6%) compared to 2004.

The Group's operating costs in 2005 grew by RUB96,141 million, or 16%, to RUB695,704 million.

The expenses grew at a faster rate than revenues, which is why the operating profit of RAO UES Group over the reporting period declined by RUB8,893 million (or 11.1%) compared to 2004, reaching RUB71,201 million. The slower pace of revenue growth is mostly explained by the tariff regulations (in 2004, 2005 and 2006, the electricity tariffs grew at a slower rate than the fuel rates and prices of other goods and services used by RAO UES Group entities).

The pre-tax profit declined by RUB9,815 million (or 15.6%) to RUB53,132 million. In 2005, the profit (less corporate income tax) decreased by RUB18,876 million (or 44.1%) to RUB23,974 million.

The net profit for 2005 distributable to RAO UES shareholders amounted to RUB18,316 million, which represents a decrease of RUB13,633 million (or 42.7%) compared to 2004 (RUB31,949 million).

Consolidated Cash Flow Statement for 2005:

The net cash from operations in 2005 amounted to RUB90,775 million, an increase of RUB9,419 million yoy.

Throughout 2005, there was a continued trend towards increase in investments in fixed assets made by the Group's enterprises. In 2005, the Group allocated RUB106,180 million for investments, an increase of RUB22,196 million compared to 2004.

The financial statements were audited by ZAO "PricewaterhouseCoopers Audit", approved as the Group's external auditors by the AGM of RAO "UES of Russia".

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