Sales Results

ECONOMY

9.2. Sales Results

The sales revenue of the Holding Company's entities increased in 2004 by 12.9%; whereas the gross profit grew by 23.8% on 2003.

In 2004, the regional energos' sales revenue grew RUB83.8 billion, or 15.0%, compared to 2003, whereas the sales of AO-power plants rose RUB10.6 billion, or 16.3%. The regional energos' electricity sales revenue were up RUB62.0 billion (or 14.2%), and those of AO-power plants grew by RUB8.9 billion (or 15.8%).

A major part of the total sales revenue of the Holding Company's regional energos came from the nine largest energy systems***. For instance, the increase in the sales revenue at regional energos in 2004 compared to 2003 was to a great extent (RUB42.0 billion, or 52.5% of the total increase) ensured by such large energy systems as OAO "Mosenergo" (increase of RUB19.7 billion), OAO "Tyumenenergo" (RUB5.33 billion), OAO "Sverdlovenergo" (RUB5.14 billion), OAO "Lenenergo" (RUB3.6 billion), OAO "Samaraenergo" (RUB3.0 billion), OAO "Permenergo" (RUB2.94 billion), and others.

In 2004, the expenses of regional energos and AO-power plants grew 12.7% on 2003, which was lower than the sales growth (15.1%). The expenses of regional energos grew at a slower rate (12.5%) than those of the AO-power plants (15.0%), which was chiefly due to the increase in fuel prices (especially for natural gas), which account for a greater part of expenses of TPPs.

All companies of RAO "UES of Russia" Holding Company are actively working to reduce production costs. Owing to the costs reduction efforts and increase in revenues, the gross profit of the regional energos and AO-power plants grew in 2004 by RUB21.3 billion to RUB71.9 billion, up 42.1% on 2003, of which amount the regional energos accounted for RUB60.3 billion (or 83.9% of all revenues) and AO-power plants for RUB11.6 billion.

*Sales Results, billion RUB**
Indicators	TOTAL					of which
						Electricity			Heat
	2002	2003			2004	2002	2003	2004	2002			2003	2004
Regional energos of the Holding Company
Revenue from sale of goods, products, works, and services, total	474.0		560.3		644.1	366.3	437.4	499.4	88.2		101.9		116.8
Costs**, total	438.9		519.0		583.8	331.3	394.8	441.9	91.1		107.1		121.5
Gross profit, total	35.1		41.3		60.3	35	42.6	57.5	-2.9		-5.2		-4.7
AO-power plants of the Holding Company
Revenue from sale of goods, products, works, and services, total	45.8		64.9		75.5	39.1	56.2	65.0	1.1		2.95		3.04
Costs**, total	42.2		55.5		63.9	35.7	47.5	54.5	1.2		2.60		2.47
Gross profit, total	3.6		9.4		11.6	3.4	8.7	10.5	-0.1		0.35		0.57
TOTAL for regional energos and AO-power plants of the Holding Company
Revenue from sale of goods, products, works, and services, total	519.8		625.2	719.6		405.4	493.6	564.5	89.3	104.9			119.8
Costs**, total	481.1		574.6	647.7		367	442.4	496.4	92.3	109.7			123.9
Gross profit, total	38.7		50.6	71.9		38.4	51.2	68.0	-3.0	-4.8			-4.1

* total amount according to the Russian Accounting Standards.
** exclusive of administrative and selling expenses

Largest Regional Energos in Terms of Sales Revenues***
Indicators	Total			Electricity			Heat
Indicators	2002	2003	2004	2002	2003	2004	2002	2003	2004
Revenue from sales of goods, products, works, and services, billion RUB	199.1	247.0	289.0	150.8	188.6	223.1	41.6	49.9	55.6
share the of total for regional energos, %	42.0	45.5	46.4	41.2	44.4	46.0	47.2	51.3	50.5
share of the total for regional energos and AO-power plants, %	38.3	39.5	41.4	37.2	38.2	40.6	46.6	49.8	49.1
Total expenses, billion RUB	179.6	223.8	256.4	132.1	165.8	190.8	41.1	51.3	58.0
share of the total for regional energos, %	40.9	44.5	45.4	39.9	43.1	44.4	45.1	50.4	50.4
share of the total for regional energos and AO-power plants, %	37.3	38.9	40.8	36.0	37.5	39.4	44.5	49.1	49.4
Total gross profit, billion RUB	19.5	23.2	32.6	18.7	22.8	32.3	0.5	-1.4	-2.4

*** OAO "Krasnoyarskenergo", OAO "Kuzbassenergo", OAO "Lenenergo", OAO "Mosenergo", OAO "Permenergo", OAO "Samaraenergo", OAO "Sverdlovenergo", OAO "Tyumenenergo", OAO "Chelyabenergo"