Moscow, 3 April 2007. RAO "UES of Russia" has prepared its 2006 financial statements under the Russian Accounting Standards. The Company's net profit in 2006 is RUB745,088 million, up RUB724,190 million from RUB20,898 million in 2005.

Such sharp growth in net profit was due to the adjustment made to the value of investments held by RAO "UES of Russia" in its subsidiaries whose shares are traded on the RTS and MICEX Stock Exchanges. The adjustment of RUB717,656.9 million is reflected in the "Other income" line of the Income Statement.

According to paragraph 2 of Accounting Rule 19/02 "Financial Investments Accounting", such financial investments are to be shown in the financial statements as of the end of the reporting year at their market value by adjusting their value as of the previous reporting date. However, no such adjustment was carried out in the previous reporting periods due to the legislative restrictions imposed on the disposal of regional energos' shares acquired by the Company in the course of privatisation and as a result of reorganization, which made it impossible for them to have a current market liquidity.

The resolutions to sell shares in the electricity companies spun off or newly established in 2004-2005 were approved by the Board of Directors of RAO "UES of Russia", most of whose members—10 out of 15—represent the Russian Government. Besides, the number of shares traded on stock exchanges during the previous reporting periods was not sufficiently representative and did not make it possible to adequately determine the market value of all shareholdings owned by RAO "UES of Russia".

In 2006, the reform of RAO "UES of Russia" entered its final stage. On 2 March 2007 the Board approved the distribution among the Company's shareholders of shares in most of the companies whose shares have a market listing in the course of the final (second) phase of RAO UES reorganization, which de facto means that the restrictions imposed on their disposal are lifted. In this connection, RAO "UES of Russia" no longer is bound to depart from the accounting rules governing the valuation of financial investments.

Accordingly, the Company's actual net profit in 2006 (without taking into account the paper profit) was RUB27,431 million.