JSC “OGK-6” Reports 2008 Consolidated Financial Statements (IFRS)

JSC “OGK-6” (MICEX - OGK6; RTS – OGKF) reports its Audited Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2008.

The company revenues in 2008 grew 20% reaching RUR 42,275 mln. compared to 2007 results. Despite a 20% rise in revenues the Company ended the year in losses amounting to RUR 829 mln.

Key Performance indicators

The on-going electricity and capacity market liberalization process coupled with the rising market prices on electricity throughout most of the year were the key factors contributing to the 20% growth in revenues.

The revenues from electricity and capacity sales at free market prices increased by 165% with their share in the total sales structure reaching almost 30% from 13% a year earlier.

Revenues Structure (in thousand RUR)

	2008	Share in revenues %	2007	Share in Revenues %	Change %
Total Revenues	42,275,050	100	35,333,819	100	20%
Total Revenues from electricity and capacity sales	39,878,613	94	33,145,823	94	20%
Total Revenues from electricity sales at the wholesale market	38,574,575	91	31,943,730	90	21%
Electricity sales at the regulated bilateral agreements sector	16,746,090	39	17,422,047	49	-4%
Capacity sales at the regulated bilateral agreements sector	9,354,169	22	9,821,543	28	-5%
Competitive selection of capacity	929,541	2	-		-
Electricity sales at the day-ahead market	9,790,839	23	3,493,764	10	180%
Electricity sales at the balancing market	1,517,634	4	1,206,376	3	26%
Unregulated bilateral agreements on electricity and capacity supply	236,301	1	-		-
Electricity sales at the retail market	1,304,039	3	1,202,093	3	8%
Heat sales	2,036,637	5	1,884,964	6	8%
Other revenues	359,800	1	303,032	1	19%

However the increase in expenditure has devalued the effect of rise in revenues. There were two major factors which caused the growth in operating expenses:

- increase in fuel prices;

- impairment of property, plant and equipment of RUR 1,971 mln. recognized by revaluations as at 01.01.2008 and as at 31.12.2008.

Alexey Mityushov, the General Director of JSC “OGK-6”, stated: “After facing considerable fuel price increase the Company has concentrated its efforts on reducing its fuel expenditures by negotiating long-term contracts on coal and finding the right cost-effective fuel balance.”

Operating Expenses (in thousand RUR)

	2008	Share in expenses %	2007	Share in expenses %	Change %
Fuel expenses	24,271,556	54%	17,898,648	55%	36%
Purchased heat and electricity	4,619,039	10%	3,362,873	10%	37%
Employee benefit expenses and payroll taxes	3,601,541	8%	2,854,555	9%	26%
Depreciation charge	2,812,159	6%	2,792,665	9%	1%
Impairment of property, plant and equipment	1,970,698	5%	-	-	-
Repairs and maintenance	1,834,597	4%	1,252,532	4%	46%
Other materials	1,572,695	4%	1,328,932	4%	18%
Water usage expenses	1,085,434	2%	916,310	3%	18%
Other expenses	2,919,974	7%	2,395,174	7%	22%
Total	44,687,693	100%	32,801,688	100%	36%

Revaluation

Effective 1 January 2008, the Company changed its accounting policy to revaluing its property, plant and equipment from that date and commissioned an independent appraiser to conduct two revaluations as at 1 January 2008 and as at 31 December 2008.

The first revaluation showed a 123% value increase of property, plant and equipment to RUR 70,431 mln. However the second revaluation conducted to reflect the economic obsolescence of property, plant and equipment resulted from economic downturn recognised a decrease of carrying amount of property, plant and equipment of RUR 24,083 million, which was charged against previously recognised valuation surplus in amount of RUR 17,690 mln. (net of related deferred tax of RUR 4,422 mln.) and to the income statement as impairment loss in amount of RUR 1,971 mln.

As the result of revaluation the value of property, plant and equipment as at 31 December 2008 has become RUR 53,751 mln. (86% increase to 31 December 2007).

As part of the revaluation of property plant and equipment the Company has reviewed the estimated useful lives of property, plant and equipment at 1 January 2008. As a result, the useful lives of certain elements of property, plant and equipment were extended, which had a positive impact on this year's depreciation charge.

Consolidated Balance Sheet as at 31 December 2008

		31 December 2008		31 December 2007
	Notes	’000 RUR		’000 RUR
ASSETS
Non‑current assets
Property, plant and equipment	5	53,751,322		31,567,910
Other non-current assets	6	1,253,464		604,720
Total non‑current assets		55,004,786		32,172,630
Current assets
Inventories	7	4,585,801		3,255,204
Short-term investments	8	3,901,413		14,919,590
Income tax receivable		413,818		400,798
Other current assets		92,490		310,357
Receivables and prepayments	9	3,799,135		1,699,708
Cash and cash equivalents		215,014		648,427
Total current assets		13,007,671		21,234,084
TOTAL ASSETS		68,012,457		53,406,714
EQUITY AND LIABILITIES
Equity
Share capital-ordinary shares	10	15,497,760		15,486,028
Treasury shares		-		(177)
Revaluation reserve		13,401,156		-
Share premium		18,339,193		18,239,259
Retained earnings		5,803,100		6,957,503
Total equity		53,041,209		40,682,613
Non-current liabilities
Deferred income tax liabilities	12	5,755,707		3,743,421
Non-current debt	11	2,923,677		-
Employee benefits	13	722,118		604,002
Other non-current liabilities		34,972		278,304
Total non-current liabilities		9,436,474		4,625,727
Current liabilities
Current debt and current portion of non-current debt	11	-		5,000,000
Accounts payable and accrued charges	14	5,298,648		2,634,944
Other taxes payable		236,126		463,430
Total current accounts payable		5,543,774		8,098,374
Total liabilities		14,971,248		12,724,101
TOTAL LIABILITIES AND EQUITY		68,012,457		53,406,714

Consolidated Income Statement for the year ended 31 December 2008

		2008		2007
	Notes	’000 RUR		’000 RUR
Revenues	15	42,275,050		35,333,819
Operating expenses	16	(44,687,693)		(32,801,688)
Other (expenses)/income		(155,796)		369,058
Operating (loss)/profit		(2,568,439)		2,901,189
Finance income	17	829,010		25,642
Finance expenses	17	(357,907)		(606,935)
(Loss)/profit before income tax		(2,097,336)		2,319,896
Income tax benefit/(expense)	12	1,267,933		(773,293)
(Loss)/profit for the year		(829,403)		1,546,603
(Loss)/earnings per ordinary share - basic and diluted (in Russian Roubles)	18	(0.0257)		0.0578

Consolidated Statement of Cash Flows for the year ended 31 December 2008

		2008		2007
	Notes	’000 RUR		’000 RUR
CASH FLOWS FROM OPERATING ACTIVITIES:
(Loss)/profit before income tax		(2,097,336)		2,319,896
Adjustments to reconcile profit before income tax to net cash provided by operations:
Depreciation	5	2,812,159		2,792,664
Impairment loss of property, plant and equipment	5	1,970,698		-
Loss on disposal of property, plant and equipment		78,586		-
Reversal of tax penalties		-		(313,825)
Financial (income)/expenses	17	(471,103)		571,171
Other		246,136		61,692
Operating cash flows before working capital changes and income tax paid		2,539,140		5,431,598
Working capital changes:
Change in accounts receivable and prepayments		(1,945,930)		(618,855)
Change in inventories		(1,387,080)		(335,722)
Change in other assets		217,868		(101,496)
Change in other non-current assets		(821,830)		(232,921)
Change in accounts payable and accruals		2,741,370		90,101
Change in other non-current liabilities		(101,606)		(3,749)
Change in taxes payable other than income tax		(227,304)		(74,918)
Cash provided by operating activities before interest and taxes		1,014,628		4,154,038
Interest paid		(326,191)		(584,509)
Income tax paid		(224,817)		(1,509,677)
Net cash generated from operating activities		463,620		2,059,852
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment		(10,111,064)		(5,444,970)
Proceeds from/(acquisition of) short-term deposits		11,018,177		(14,919,590)
Interests received	17	829,010		-
Proceeds from disposal of property, plant and equipment		11,949		61,784
Net cash from/(used in) investing activities		1,748,072		(20,302,776)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings		2,282,041		18,570,266
Issue of share capital		-		20,894,377
Repayment of borrowings		(4,358,364)		(20,062,316)
Disposal/(acquisition) of treasury shares		177		(177)
Dividends paid		(568,959)		(654,057)
Net cash (used in)/generated from financing activities		(2,645,105)		18,748,043
Change in cash and cash equivalents		(433,413)		505,169
Cash and cash equivalents at the beginning of the year		648,427		143,258
Cash and cash equivalents at the end of the year		215,014		648,427

Consolidated Statement of Changes in Equity for the year ended 31 December 2008

’000 RUR	Ordinary share capital		Merger reserve		Revaluation reserve		Retained earnings		Share premium		Total equity
As at 1 January 2007	26,731,061		(9,937,275)		-		2,282,917		-		19,076,703
Profit for the year	-		-		-		1,546,603		-		1,546,603
Total recognised income and expense	-		-		-		-		-		1,546,603
Decrease in share capital	(13,900,152)		9,937,275		-		3,845,485		-		(117,392)
Issue of shares	2,655,119		-		-		-		18,239,259		20,894,378
Acquisition of treasury shares	-		-		-		(177)		-		(177)
Dividends	-		-		-		(717,502)		-		(717,502)
As at 31 December 2007	15,486,028		-		-		6,957,326		18,239,259		40,682,613
As at 1 January 2008	15,486,028		-		-		6,957,326		18,239,259		40,682,613
Loss for the year	-		-		-		(829,403)		-		(829,403)
Revaluation of property, plant and equipment	-		-		13,401,156		-		-		13,401,156
Total recognised income and expense	-		-		-		-		-		12,571,753
Dividends to shareholders	-		-		-		(325,000)		-		(325,000)
Disposal of treasury shares			-		-		177		-		177
Acquisition under common control	11,732		-		-		-		99,934		111,666
As at 31 December 2008	15,497,760		-		13,401,156		5,803,100		18,339,193		53,041,209

The Sixth Wholesale Power Market Generating Company JSC (JSC "OGK-6") was founded on March 17, 2005 within the framework of the Russian electric power industry reform. The core business of JSC "OGK-6" is electric and thermal power generation as well as supply&sales to consumers. The primary market for sales of the products of the Companyis the wholesale electric power (output) market.

The total electric installed capacity of JSC “OGK-6” plants amounts to 9,052 MW. This renders JSC “OGK-6” the fourth largest company by installed capacity size among all OGKs and TGKs created as a result of the reform of electric power industry in Russia. In 2008 the JSC “OGK-6” electricity production totaled 38,857 million kWh .

The JSC “OGK-6” shares are traded at Russian MICEX and RTS. In July, 2008 the GDR program under Reg S and Rule 144A of JSC “OGK-6” shares was opened by Deutsche Bank Trust Company Americas. The ISIN for Reg. S GDRs is US 6708472013; ISIN for the Rule 144A GDRs is US 6708471023.

Investor Relations

Ivan Troynikov, Maxim Kochetkov

ir@ogk6.ru

tel. +7(495) 644-23-65

www.ogk6.ru