RAO UES Prepares RAO UES Group's Unaudited Preliminary Consolidated
Financials for 2007 under IFRS
Moscow, 28 May 2008. RAO "UES of Russia" has prepared
for its AGM the RAO UES Group's Preliminary Unaudited Consolidated Financial Statements
for 2007 under the IFRS. The Auditor's Report is expected to be prepared in the second
half of June.
Consolidated Balance Sheet as at 31 December 2007
The Group's total assets increased in 2007 by RUB797 billion to
RUB2,341 billion as at year-end. Of that amount, the Group's non-current assets amounted
to RUB1,739 billion, up RUB480 billion, while the current assets were RUB477 billion, an
increase of RUB197 billion from the beginning of the year.
As of 31 December 2007, the Property, Plant, and Equipment (PP&E)
of RAO UES Group stood at RUB1,562 billion, an increase of RUB345 million from 1 January
2007 (RUB1,218 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 an increase in capital expenditures for the construction of new and
modernization of existing power grid and generation facilities.
The Group's accounts receivable grew in 2007 by RUB118 billion to
RUB253 billion. The increase in the accounts receivable was due to the emergence of debt
owed to RAO "UES of Russia" for the shares in OAO "Mosenergo" and RAO
UES' share repurchase from shareholders.
In 2007, due to the additional share issues of certain companies in RAO
UES Group and the sale of shares in some SDCs of RAO "UES of Russia", the cash
and cash equivalents increased by RUB71 billion to RUB125 billion.
The accounts payable amounted to RUB197 billion at end-2007, which
represents an increase of RUB85 billion from 1 January 2007. This was largely due to the
creation of a provision for the repurchase by RAO "UES of Russia" of its shares.
The non-current and current debt amounted to RUB259 billion, up RUB50,
which was due to the borrowings raised by the RAO UES Group companies to finance the
construction and modernization of energy facilities. As of 31 December 2007, the Company
reclassified RUB45 billion of its long-term debt into short-term debt. As at the reporting
date, the Company's creditors had the right to demand acceleration of these loans because
general shareholder meetings of a number of RAO UES Group companies approved the
In 2007, there were some changes in the RAO UES Group's structure due
to the additional share issues by some companies of RAO UES Group and the sale by RAO
"UES of Russia" of its stakes in some SDCs. Specifically, some subsidiaries were
reclassified as "dependent companies" and certain companies as "assets held
Further to the resolutions of RAO "UES of Russia" to divest
some of its SDCs, on 31 December 2007, these companies' assets worth RUB125 billion were
reclassified as "assets held for sale". ****
In September 2007, RAO "UES of Russia" completed the first
phase of its reorganization which included the spin-off of OAO "WGC-5" and OAO
"TGC-5". As a result, the Group's net assets decreased by RUB77.4 billion.
Consolidated Statement of Operations for year ended 31 December 2007:
In 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 RUB822 billion, up RUB124 billion (17.8%) 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.
The Group's continuing operating costs in 2007 grew by RUB116 billion,
or 18.7%, to RUB739 billion. 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 net profit in 2007 grew yoy RUB16 billion to RUB165
billion. This was largely due to the sale of the stakes held by RAO "UES of
Russia" in its SDCs***.
Consolidated Cash Flow Statement for the year ended 31 December 2007
The reporting period saw continued trend towards growth in capital
investments at RAO UES Group. In 2007, the total amount of funds allocated for capital
investment grew almost twofold to RUB234 billion
* RAO UES Group consists of RAO "UES of Russia" (the Parent
Company) and its subsidiaries and dependent 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 a consortium of independent appraisers headed by Ernst and Young and
Deloitte & Touche.
***The RUB195 billion profit from the sale of the Group's subsidiaries
and dependent companies was received as a result of including in the statements the
proceeds from the sale of shareholdings in seven retail and generation companies of the
Group, and the additional share issues of the Group's companies. 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 IFRS.
****The assets and liabilities of OAO "TGC-1", OAO
"TGC-8", OAO "TGC-9", OAO "WGC-4", OAO 'TGC-11", OAO
"MTK", OAO "Novomoskovskaya TPP", OAO "Murmanskaya CHPP",
OAO " Kuban Generation Company", OAO "Kostroma Energy Retail Company",
OAO "Novgorod Energy Retail Company", OAO "Oryol 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
"Astrakhan Energy Retail Company", OAO "Khakasenergosbyt", OAO
"Udmurt Energy Retail Company", OAO "Marienergosbyt", OAO
"Buryatenergo", OAO "Tomsk Energy Retail Companies", OAO
"Vladimir Energy retail Company", OAO "Tula Energy Retail Company",
OAO "Perm Energy Retail Company", and OAO "Kirov energy Retail
Company" were classified as assets held for sale.
*****The companies listed in footnote ****, and OAO
"Mosenergo", OAO "TGC-9", OAO "WGC-4", OAO
"WGC-3", OAO "TGC-5", OAO "WGC-5", OAO
"Kuzbasenergo" (TGC-12), 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", OAO "Orenburgenergosbyt", OAO "Kurgan
Energy Retail Company", OAO "Tver Energy Retail Company", OAO
"Voronezh Energy Retail Company", OAO "Karelia Energy Retail Company",
OAO "Omsk Energy Retail Company", and OAO "Lipetsk Energy Retail
Company" were reported as discontinued operations. The other companies of the RAO UES
Group were reported as continuing operations.