Consolidated Interim Balance Sheet as of 30 September 2007:
The RAO UES Group's total assets increased over the nine months ended
30 September 2007 by RUB758.8 million to RUB2,302.2 billion. Of that amount, the Group's
non-current assets amounted to RUB1,705.6 billion, up RUB466.6 billion, while the current
assets stood at RUB339.6 billion, an increase of RUB60 billion compared to the beginning
of the year.
As of 30 September 2007, the Property, Plant, and Equipment (PP&E)
of RAO UES Group stood at RUB1,595 billion, an increase of RUB377.5 million from 1 January
2007 (RUB1,217.5 billion). The increase in the value of the PP&E and construction in
progress was due to the revaluation of these assets** as a result of changes in the IFRS
Accounting Policy and the increase in capital expenditures on the construction of new and
modernization of existing power grid and generation facilities.
The accounts receivable and prepayments increased by RUB17 billion
during the period under review to RUB151.4 billion as at 30 September 2007. The increase
in receivables was chiefly driven by growth in advances to suppliers, repair and
maintenance contractors, and tax prepayments.
The accounts payable amounted to RUB237.6 billion as at 30 September
2007, which represents an increase of RUB125.5 billion from 1 January 2007. As at 31
September 2007, the non-current and current debt amounted to RUB223.2 billion, up RUB13.5
billion on 1 January 2007. The increase in the accounts payable was largely due to the
provision for the repurchase by RAO "UES of Russia" of its shares and the bonds
issued by RAO UES Group companies to finance the construction and modernization of the
As at 30 September 2007, assets and liabilities of certain RAO UES
subsidiaries and dependent companies of RUB257 billion and RUB83 billion, respectively,
were classified as held for sale. ****
In September 2007, RAO "UES of Russia" completed the first
phase of its reorganization which included spin-off of OAO "WGC-5" and OAO
"TGC-5". As a result, the Group's net assets decreased by RUB77.4 billion.
Consolidated Interim Statement of Operations for the Nine Months Ended
on 30 September 2007
For the nine months ended 30 September 2007, the Group's revenues from
continuing operations***** (without taking into account the disposal of subsidiaries and
equity investments of RAO "UES of Russia") amounted to RUB624.7 billion, up
RUB82 billion (15.1%) compared to the same period of 2006. The increase in the Group's
revenues from continuing operations was mostly due to the revenues from sale and
transmission of electricity.
During the reporting period, the Group's continuing operating expenses
reached RUB570 billion, an increase RUB77.7 billion (16%) compared to the same period of
2006. This figure was most significantly affected by the increased expenses on electricity
purchased by RAO UES Group's companies, increased depreciation charges as a result of
PP&E revaluation, as well as an increase in expenses on electricity and heat
transportation through networks owned by the companies that are not part of the Group.
The Group's profit from continuing operations grew in year-on-year
terms by RUB40.6 billion to RUB105.8 billion. The key contributor to this rapid growth was
the sale of the Company's shares in its subsidiaries.
The profit from continuing operations before profit tax and minority
interest amounted to RUB93.3 billion in 9M 2007, an increase of RUB37.7 billion compared
to the same period of 2006. The Group's net profit for 9M 2007 grew year-on-year RUB24
billion to RUB36 billion,
while the net profit for the period attributable to the minority
interest increased by RUB1 billion to RUB9.9 billion year on year.
Consolidated Interim Cash Flow Statement for Nine Months ended on 30
The reporting period saw continued trend towards growth in capital
investments at RAO UES Group. The net cash flow from investing activities from January to
September 2007 totalled RUB160.6 billion, up RUB89.3 billion over the same period of 2006.
The greatest increase in investments was recorded, in particular, at OAO "UES
FGC" (RUB18 billion), OAO "Moscow Regional Electricity Distribution
Company" (RUB8.1 billion), OAO "Lenenergo" (RUB3.2 billion), OAO
"Saratovskaya HPP" (RUB3.2 billion), and OAO "Far Eastern Generation
Company" (RUB.28 billion).
The IFRS Consolidated Interim Financial Statements of RAO UES Group for
the nine months ended 30 September 2007 were audited by ZAO PricewaterhouseCoopers Audit.
* RAO UES Group consists of OAO RAO "UES of Russia" and
related subsidiaries, associates and jointly controlled companies. The Group's IAS/IFRS
financial statements have been prepared since 1997.
** Before 1 January 2007, in accordance with the RAO UES Group's IFRS
Accounting Policy, the Group used the model for recording property, plant and equipment at
original cost less the impairment reserve. After 1 January 2007, the Group changed its
accounting policy and started to state PP&E at the revalued amount. Under this
approach, the PP&E are included in the financial statements at their fair value
determined by independent appraisers, Ernst and Young and Deloitte.
***The RUB61.7 billion profit from sale of the Group's subsidiaries was
received as a result of including in the statements the proceeds from the sale of
shareholdings in seven retail companies of the Group, OAO "Yuzhno-Kuzbasskaya
TPP", OAO "Zapadno-Sibirskaya CHPP", OAO "WGC-3", and the
additional share issues of OAO "WGC-4" and OAO "Mosenergo". In the
Group's IFRS financial statements, this gain was calculated as the difference between the
selling price of the shareholdings and the Group's share of total assets according to the
****The assets and liabilities of OAO "TGC-1", OAO
"TGC-8", OAO "TGC-9", OAO "WGC-4", OAO "MTK", OAO
"Power Machines", OAO "Kurgan Energy Retail Company", OAO "Tver
Energy Retail Company", OAO "Voronezh Energy Retail Company", OAO
"Karelia Energy Retail Company", OAO "Bryansk Energy Retail Company",
OAO "OAO "Kolskaya Energy Retail Company", OAO "Energosbyt
Rostovenergo", OAO "Stavropolenergosbyt", OAO "Bryansk Energy Retail
Company", OAO "Komi Energy Retail Company", OAO
"Khakasenergosbyt", OAO "Udmurt Energy Retail Company", and OAO
"Astrakhan Energy Retail Company" in the amount of RUB257 billion and RUB83,
respectively, were classified as held for sale.
*****The companies listed in footnote ****, and OAO
"Mosenergo", OAO "WGC-3", OAO "TGC-5", OAO
"WGC-5", OAO "Kuban Energy Retail Company", OAO
"Sverdlovenergosbyt", OAO "Nizhny Novgorod Retail Company", OAO
"Kuzbass Energy Retail Company", OAO "Belgorod Retail Company", OAO
"Vologda Retail Company" and OAO "Orenburgenergosbyt" were reported as
discontinued operations. The other companies of the RAO UES Group were reported as