Moscow, 5 December 2006. RAO "UES of Russia" has released the consolidated interim financial statements of RAO UES Group (the "Group") for the first half of 2006 prepared in accordance with the International Financial Reporting Standards (IFRS).

Consolidated Interim Balance Sheet as of 30 June 2006

The Group's total assets increased over the first six months ended 30 June September 2006 by RUB32.3 billion to RUB1,246.6 billion. Of that amount, the Group's capital assets amounted to RUB1,003.0 billion, up RUB12.1 billion, while its current assets reached RUB241.9 billion, which represents an increase of RUB18.6 billion from the beginning of the year.

As at 30 December 2006, the property, plant and equipment of RAO UES Group stood at RUB947.5 billion, an increase of RUB9.5 billion from RUB938.1 billion on 31 December 2005. The rise in the book value of PP&E was due to the increased capital expenditures in the construction of new and modernization of the existing grid and generating capacity. During the reporting period, the highest capital expenditure was in OAO "UES FGC" (RUB8.5 billion), OAO "Mosenergo" (RUB2 billion), and OAO "Moscow Region Electricity Grid Company" (RUB2 billion).

As at 30 June 2006, the Group's accounts receivable totalled RUB142.3 billion, up RUB12.4 billion from the beginning of the reporting period. In particular, the receivables were influenced by the seasonal growth in advances to suppliers and repair and maintenance contractors, as well as tax prepayments by RAO UES Group entities.

The Group's long-term and short term borrowings as of 30 June 2006 totalled RUB141.1 billion, an increase of RUB13.6 billion from the beginning of the year. The majority of the increase was due to the new loans raised by the Group's entities, and Mosenergo's issue of interest-bearing non-convertible bonds.

As at 30 June 2006, the Group's short-term accounts payable (except for borrowings) totalled RUB154.8 billion, up RUB6.7 billion during the reporting period, following the tax legislation amendments relating to VAT refund.

Consolidated Statement of Operations for H1 2006

The Group's revenues and other operating income in H1 2006 amounted to RU453.3 billion, an increase of RUB62.2 billion compared to the same period of last year. Overall, the increase in the Group's operating revenues during the reporting period was due to the increase in electricity and heat sales along with a 9% increase in electricity tariffs.

Compared to the same period last year, the Group's operating expenses grew RUB55.6 billion to RUB399.9 billion. The operating expenses were most significantly affected by the rise in the materials and supplies costs, mostly fuel (which grew 25%), increase in fuel consumption, and the growing repair and maintenance costs. Simultaneously, there was a 6% increase in the expenses of the Group's entities on electricity purchases, whose price grew 9% over the reporting period.

Another factor contributing to the Group's increased expenses was the increase in electricity and heat transmission tariffs and the volume of electricity and heat transported through the grids not owned by RAO UES entities. In H1 2006, the Group's expenditures on this item rose 79% compared to the same period the year before.

Compared to H1 2005, the Group's H1 2006 operating profit was up RUB6.6 billion, or 14%, to RUB53.4 billion, while the net income before tax amounted to RUB47.2 billion, up RUB8.5 billion.

In January – June 2006, the Group reported a net income of RUB27.2 billion, which represents an increase of RUB5.3 billion, or 24%, compared to H1 2005. This was chiefly due to the increase in net income from operations by RUB6.6 billion and reduction in financial expenses by RUB1.6 billion.

Over the reporting period, the Group's net profit attributable to minority interests grew year-on-year by RUB1.4 billion (25%) to RUB7.1 billion. This was due to the increase in profit at the Group's entities attributable to minority interests.

Consolidated Interim Cash Flow Statement for 6 Months of 2006

The net cash flow from operations in H1 2006 totalled RUB25.3 billion, while the net cash flow from financial activities amounted to RUB14.4 billion.

The reporting period saw a continued upward trend in the Group's fixed asset investments. The Group allocated RUB41.8 billion for investment.

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