Appendices

• 14.1 Supplemental Information
• 14.2 Key Principles of Accounting Policy
• 14.3 Financial Reporting of the Company for 2010 (Bookkeeping Forms)
• 14.4 Report of the Auditor
• 14.5 Opinion of the Audit Commission
• 14.6 Information on the Company’s Compliance with the Corporate Management Code
• 14.7 Information on the Company’s Compliance with the Corporate Behavior Code
• 14.8 List of Interested Party Transactions of the Company in 2010
• 14.9 Electric Power Losses
• 14.10 Information on Unaccounted and Non-contractual Electric Power Consumption
• 14.11 Information on the Introduction of Partial and Complete Limitation in Electric Power Consumption to Non-paying Customers on the Request of Power Sales Companies
• 14.12 Debts of Consumers towards the Network Company for Electric Power Transmission Services. Debts of the Network Company for Electric Power Purchase to Compensate Electric Losses
• 14.13 Declared and Defined Volumes and Tariffs for Technological Connection for 2010-2011
• 14.14 Information on Land Plots
• 14.15 Organizational Structure of the Company

Key Principles of Accounting Policy

General provisions.

The accounting policy as a set of principles, rules of arrangement and technology of implementation of the methods to maintain accounting records was developed in order to form comprehensive, objective and authentic reporting to the extent possible, as well as timely financial and management information subject to organizational and sector features of "Lenenergo".

The methods to maintain accounting and tax records selected by JSC "Lenenergo" in the process of formation of the Accounting Policy in 2010 were approved by the order of the General Director and have been consistently applied since 1 January 2010.

JSC "Lenenergo" arranges, maintains accounting records and draws up accounting reports according to Federal Law #129-FZ "On Accounting" dated 21 November 1996, Regulation on Maintenance of Accounting Records and Accounting Reports in RF approved by order #67n of the RF Ministry of Finance dated 22 July 2003, current accounting regulations (AR), working Chart of Accounts developed on the basis of the model Chart of Accounts for Book Keeping of Financial and Economic Activity and Guidelines for its Application approved by order #94n of the RF Ministry of Finance dated 31 October 2000.

The forms of the intermediate and annual accounting reports in JSC "Lenenergo" were developed on the basis of the forms recommended by the RF Ministry of Finance subject to the additional indicators introduced by IDGC Holding, OJSC.

JSC "Lenenergo" applies the working chart of accounts for book keeping, which includes the synthetic and analytical accounts, which is developed on the basis of the model chart of accounts.

The working chart of accounts for book keeping enables to implement the scheme of registration and grouping of the data about the facts of economic activities in order to generate the forms of the reporting, as may be necessary (financial, statistical, tax ones) and is intended to unify the book keeping of JSC "Lenenergo".

JSC "Lenenergo" assesses and pays taxes centrally, according to the Russian Federation laws on taxes and tax levies, laws of the Russian Federation constituent entities on taxes and tax levies, normative legal acts of the local government institutions on taxes and tax levies, subject to the software used for accounting records maintenance in JSC "Lenenergo".

The branches of JSC "Lenenergo" draw up the intermediate reporting pursuant to the procedure established by the accounting policy, bear the responsibility for arrangement of accounting records in respect of the segregated property, are guided by the main provisions of the accounting policy of JSC "Lenenergo".

Organizational aspects of the accounting policy.

The structure of JSC "Lenenergo" includes the Executive Administration and 10 branches as at 31 December 2010. Spin-off of the branches was carried out in connection with presence of isolation of industrial, commercial and economic processes.

The heads of the Branches are appointed by General Director of JSC "Lenenergo" and act on the basis of the power of attorney issued by him/her.

Chief Accountant of JSC "Lenenergo" bears the responsibility for formation of the accounting policy, maintenance of accounting and tax records, timely presentation of the comprehensive and authentic accounting and tax reports, and the reporting under the International Financial Reporting Standards (IFRS). Chief Accountant ensures formation of incomes and charges, safety of the capital and performance of the Company liabilities.

Chief Accountant is accountable to General Director.

Organization of accounting.

The accounts departments of the branches headed by chief accountants, together with the accounts department of the Executive Administration, represent the accounts service of JSC "Lenenergo", the main functions of which are maintenance of accounting and tax records and formation of accounting and tax reports. The Tax Accounting Department controls payment of taxes, formation of the taxable base and tax declarations, consolidation of registers (forms) of tax accounting created by the accounts departments of the branches.

Technical aspects of the accounting policy.

The documents registering the economic operations involving money (under the accounts with banks, cash journal documents, under the agreements changing the financial liabilities of JSC "Lenenergo") are signed by General Director of JSC "Lenenergo" and Chief Accountant or the persons authorized thereto.

The right to sign source accounting documents is determined by the order for JSC "Lenenergo". Besides, the heads of the divisions (chiefs of administrations, departments, services, etc.) are entitled to sign the documents according to their official and functional duties under the power of attorney issued by the Company General Director.

In order to register financial and economic operations, to meet the requirements of tax accounting and requirements of AR 18/02, which do not stipulate the model forms of source accounting documents, JSC "Lenenergo" develops the forms of tax ledgers and documents on the basis of AR, methodical instructions and book keeping instructions, and the current forms of source accounting documentation, subject to the needs of the energy system and separate sector peculiarities accepted and shown in the accounting policy.

Depending on the nature of an operation, the requirements of the statutory acts and the technology of processing the accounting information, source documents may incorporate additional details.

Since the Company uses the automated accounting system, unified and other used forms in an electronic form may be implemented with printouts at the request of auditing and tax authorities.

Movement of source documents in JSC "Lenenergo" (creation or obtaining from other enterprises, entities or organizations, movement between branches, entry in accounting records, processing, transfer to archive) is governed by the document management schedule.

The copies of the documents confirming the expenditure of financial assets and serving as a basis for settlement of accounts with various organizations under the liabilities of JSC "Lenenergo" (including structural divisions) are provided to the Treasurer's Office of the Executive Administration with the filled-in form "Orders for Payment"; calculation and entries in the accounting records are made according to the codes inserted in the process of filling-in of a particular form. The originals (copies) of agreements, originals of certificates and invoices under the liabilities of the Executive Administration are provided to the accounts department of the Executive Administration; those under the liabilities of the branches - to the accounts departments of the branches.

The book keeping and tax accounting of property (including fixed assets), liabilities and economic operations is performed in rubles and kopecks. The accounting reports are drawn up in thousands of rubles.

The property (materials, fixed assets, etc.) are transferred from one branch to another under the instruction of the management in the order of redistribution of the property of the uniform legal entity under respective accounts of intra-entity calculations of the working Chart of Accounts.

The asset and liability value expressed in a foreign currency is subject to recalculation into rubles according to the requirements of AR 3/06 in order to be shown in the book keeping and tax accounting.

The information on operational segments is recognized by JSC "Lenenergo" to be source information; the information on geographical segments is recognized by JSC "Lenenergo" to be secondary information.

The facilities, the taxation of which is performed based on the place of their location (real estate, vehicles, etc.), are registered in terms of territorial pertaining for the tax accounting purposes.

The accounting reports of JSC "Lenenergo" are formed by the accounts department of the Executive Administration on the basis of the generalized information on the property, liabilities and performance subject to the information provided by the accounts departments of the branches.

The reports are formed on the basis of the information of the accounting registers. The registers are monthly printed out and signed by the persons, who drew them up in order to ensure individual responsibility of the personnel of the accounting service. These persons are responsible for correctness of registration of the economic operations in the memory registers.

Drawing up of the reports on tax and tax levies ledgers in respect of the taxes and tax levies paid centrally is performed by the Tax Accounting Division on the basis of the data provided by the accounts departments of the branches, other services of JSC "Lenenergo".

Explanation (presentation as a separate item) of an indicator in the reports is performed provided that its amount is material.

An indicator is considered material, if the failure to explain it may affect the economic decisions of interested users taken on the basis of the accounting information. The level of importance is established in the amount of five percent with respect to the total result of the respective section of the accounting form.

A mistake in book keeping records and reports is recognized under clause 3 of AR 22/2010 to be material, if it distorts an indicator of the report item by more than 10% separately or in aggregate with other mistakes for the same reporting period.

The annual accounting reports of JSC "Lenenergo" are examined and approved by the general meeting of shareholders and presented within the time periods and to the addresses determined by Section 15 of Federal Law #129-FZ dated 21 November 1996 "On Accounting".

Inventory of property and liabilities for the purposes of book keeping and tax accounting is held according to the Methodical Instructions in respect of Inventory of Property and Financial Liabilities approved by order #49 of the RF Ministry of Finance dated 13 June 1995.

Inventory shall be obligatory:

• before drawing up of the annual accounting reports (except for the property, the inventory of which was held no earlier than on 1 November of the financial year);
• fixed assets and intangible assets - every three years as at 1 November;
• goods and materials - once a year as at 1 November;
• assets and liabilities registered in off-balance accounts - once a year as at 1 November;
• financial liabilities - once a year as at 1 January;
• cash - monthly as at the last business day of a month;
• in the event of lease-out, repayment, sale;
• in the event of change of individuals responsible for material valuables;
• in the event of discovery of the facts of plunder, abuse or damage of property;
• in the event of an act of nature, fire or other extreme situations caused by extreme conditions;
• in other events stipulated by the Russian Federation laws.

Besides the inventories stipulated for the purpose of drawing up of the accounting reports, JSC "Lenenergo" holds the inventories required for confirmation of the business accounting data and for other purposes.

The internal control over the Company financial and economic activity is carried out by the internal audit department.