5. COMPANY RESULTS IN 2006

TGC-1 reforming completed

On November 1, 2006 TGC-1 completed all the legal and corporate formalities to finalize the adjoining of several generating assets: JSC “Petersburg Generating Company”, JSC “Kola Generating Company”, JSC “Karelenergogeneratsiya”,
and JSC “Apatity CHPP”, consolidating TGC-1 as a unified operating company.

Sustainable growth of financial and operational performance

• Company sales totaled RUR 20,502,716 thousand in 2006; net profit under Russian Accounting Standards totaled RUR 598,158 thousand;
• Installed electric capacity increased from 5,733.8 MW to 6,248.4 MW;
• Installed heat capacity increased from 12,636 GCal/h to 14,735 GCal/h;
• In 2006, TGC-1 assigned RUR 1,891.5 million for technological re-equipment and modernization, RUR 1,707 million for new construction, and RUR 1,831.4 million for equipment repairs.

TGC-1 development strategy approvement

• The key goal of implementing the development strategy of JSC “TGC-1” is to increase the Company’s effective sales maximizing the growth of the Company’s market value;
• Company’s strategic objectives are increase of market share, operational effectiveness, and investment attraction;
  TGC-1 investment program, aimed at repairing worn-out and non-efficient equipment and providing constant demand in the long-term perspective is the main tool the company will use in achieving its strategy objectives.

Entering the russian stock market

• On the 27th of December, 2006 ordinary shares of JSC “TGC-1” started trading on the RTS Exchange Market in the Part of the Schedule “Securities Admitted to Trading but Not Listed”;
• On the 9th of January 2007, TGC-1 ordinary shares were admitted to trading at the RTS Classic Stock Exchange in the Part of the Schedule “Securities Admitted to Trading but Not Listed”;
• On the 25th of January, 2007 TGC-1 ordinary shares started trading on Moscow Interbank Currency Exchange (MICEX) as “Securities Admitted to Trading but Not Listed”.
  

Improvements in corporate governance

• Standard & Poor’s awarded to TGC-1 a corporate governance score CGS-5.0 according to the international scale and CGS-5.3 according to the Russian scale. These are the highest CGS for Russian generating companies;
• On May 31, 2006 the Annual General Meeting decided to pay the first in TGC-1 history dividends for 2005;
• TGC-1 prepared its 2006 financial statements according to the International Financial Reporting Standards.

Providing social stability of TGC-1

• In March 2006 the Company signed a Collective Bargaining Agreement with its employees for 2006 – 2007;
• New labor motivation system for employees — quarterly bonus payments for achieving “key indexes of effectiveness” was introduced in 2006;
• Environmental Policy and Implementation Concept ratified by the Managing Board of RAO “UES of Russia”;
  The Company realized over 20 charitable and sponsor programs.