Combined and Consolidated Balance Sheet

RusHydro Group total assets as of December 31st , 2008 amounted to RUR 426,371 million compared to RUR 313,546 million as of December 31st,  2007 (a 36% increase).

Property plant and end equipment as of December 31st, 2008 amounted to RUR 337,117 million against  RUR 271,579 million as of December 31st,  2007 (a 24% increase). Increase in property, plant and equipment is due to revaluation for IFRS purposes as of December 31st, 2008 and increase in construction in progress in a number of  the Group’s companies...

Short-term liabilities of the Group as of December 31st, 2008 amounted to RUR 25,189 million, compared to RUR 19,853 million as of December 31st,  2007 (a 27% increase).

Increase in short term-liabilities is primarily due to increase of accounts payable in line with overall increase of the Group’s expenses and receipt of cash as payment for future issue of shares of OJSC RusHydro in favor of the Russian Federation.

Long-term liabilities of the Group changed insignificantly during the reporting year and amounted to RUR 57,570 million as of December 31st, 2008 against RUR 55,514 million as of December 31st,  2007 (a 4% increase).

Total equity of the Group as of December 31st, 2008 amounted to RUR 343,612 million against RUR 238,180 million at the beginning of the reporting period (a 44% increase).

The increase in the Group’s equity can primarily be explained by additional share issue through conversion of shares of entities merged into OJSC Rushydro as a result of legal reorganization. Minority interests were converted into common shares of  OJSC RusHydro.

Combined and Consolidated Income Statement

Group revenue for the reporting period was RUR 107,670 million compared to RUR 80,756 million for the previous year (a 33% increase).  Increase of revenue is primarily due to a higher special investment component, included in the tariff and an increase of share of sales in the liberalized energy market.

Segment revenue, out of total revenue RUR 64,261 million ( or 60% of total revenue) is attributable to generation, RUR 40,017 million (or 37% of total revenue) to retail and revenue attributable to unallocated business is RUR 5,363 million (or 5% of total revenue).

Before the Group acquired three retail companies (OJSC Chuvashskaya energy retail company,  OJSC Ryazanskaya energy retail company and OJSC Krasnoyarskenergosbyt), all of the Group’s activities related to generation segment. After acquiring in 2008 of retail companies, which operate independently from generating companies, it was necessary to create a separate retail segment.

EBITDA* for the reporting period was RUR 32,204 million compared to RUR 19,102 million for the previous year (a 69% increase).

Operating expenses for the reporting period were RUR 84,658 million compared to RUR 70,392 million in the previous year (a 17% increase), including RUR 34,661  million for electricity purchases against RUR 26,574 in 2007 (a 30% increase). Increase in purchase of electricity for observing obligations under regulated contracts is primarily explained by higher purchase price.

During the reporting period, the Group made an operating loss of RUR 9,541 million against RUR 10,365 million operating profit in the previous year.

Operating profit adjusted for “non-cash items” (decline in value of financial assets and impairment loss related to property, plant and equipment) for the year 2008 was RUR 23,012 million and RUR 10,365 million for the year 2007.

Net loss for the reporting period was RUR 19,480 million (profit adjusted for “non-cash items” was RUR 19,537 million). In 2007 the Group net profit was RUR 5,471 million .

Group’s net loss for the reporting period was heavily affected by non-cash items: impairment loss related to property, plant and equipment and impairment loss of tradable financial investments die to decline in the market price.

Revaluation of property, plant and equipment

Starting in 2007, the Group changed its accounting policy for property, plant and equipment (except for construction in progress, office buildings and land), which are stated at the revalued cost. An independent appraiser was hired to perform revaluation.

To reflect changed external conditions the Company’s Management carried out cash flow testing to calculate the fair value of property, plant and the equipment as of December 31st, 2008.

Key assumptions used in the test were: the weighted average cost of capital was 13.80%, expected achievable sales prices and volumes in conditions of financial and economic crisis, forecasting period was 12 years.

The performed test indicated that for a number of Hydroelectric Power Plants, fair value of property, plant and equipment was lower than their net book value. Consequently, the Group recognised impairment loss to the value of property, plant and equipment in the amount of RUR 32,553 million for the reporting period.

Impairment of financial assets

The Group’s net loss was also affected by an impairment of financial assets,  which was calculated based on published price quotations as of December 31st, 2008, in amount of  RUR 6,464 million.

Cashflow from operating activities

Net cash generated by the Group’s operating activity was RUR 27,621 million compared to RUR 17,034 million for the previous year (a 62% increase).

The Group Combined and Consolidated Financial Statements for the three years ended 31 December 2008, 2007 and 2006, prepared in accordance with IFRS are available at the group site at: https://www.eng.rushydro.ru/investors/reports/finreports/iasfinrep