The Company and the Stock Market

At present our common shares are traded on MICEX, ZAO in Quotation List A2 (ticker MRKU). During 2011 our shares were also traded in RTS in Section “Stock admitted for trading without listing”**.

Foreign and Russian stock indices (FUTSEE 100, DAX, NAS DAQ 100, N225JAP and MICEX index) in dynamics during January-December 2011(exchange data)

Foreign and Russian stock indices (FUTSEE 100, DAX, NAS DAQ 100, N225JAP and MICEX index) in
dynamics during January-December 2011(exchange data)

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During the 1st half of 2011 quote behavior was characterized by alternating significant growth and decreases. In January – 1st decade of April, 2011 the MICEX index mainly grew and by the end of the period it was near precritical maximum evidenced in the middle of May 2008. Then there was an abrupt price reduction, when decreasing global oil prices and enhanced capital export influenced the decrease of the MICEX index to the level evidenced at the beginning of 2011. During the 2nd quarter of 2011 there was a lot of uncertainty on price expectations and increased fluctuations of quotes influenced by instable external commodity and financial markets as well as actions of foreign and Russian stock jobbers who dominated on the internal share market. At the same time positive internal environment for the Russian market was created by the following factors – gradual improvements in the Russian economy, large resources retained by Russian credit institutions and high global oil prices. These factors supported major qualitative indicators of the stock market. Repeated declines of global capital markets during the strengthening of global economic, political and technogenic risks resulted in declining risk appetite among global investors and increase of capital export from the most risky segments of the market, including Russia.

Our shares and the MICEX/MICEX-Power indices in dynamics during 2011:

Our shares and the MICEX/MICEX-Power indices in dynamics during 2011:

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2011 was a critical year for all energy companies, since they were under the constant pressure by regulator tariff decisions. Distributive business was one of the most affected energy businesses, since the regulator placed responsibility for rapid tariff growth on the distributive sector. Thus, during 1st half of 2011, despite the increased MICEX index, dynamics of our shares and the MICEX-Power index was negative due to a number of reasons (plans of the Government to control 2011 tariffs, uncertainty with regard to tariffs, etc.). At the beginning of the 2nd half of 2011, news on the transition of tariff indexation from January 2012 to the mid-2012 appeared, quotes of energy companies continued to decrease, interest of investors to the segment died out, sector liquidity deteriorated. In the middle of the 2nd half of 2011 the situation improved on the background of the news on transferring several gridcos to trust management and possible sector privatization. However, at the end of 2011 our quotes failed to restore the level demonstrated at the beginning of 2011.

Our trading results:

Trading results* As of 31.12.2011 As of 31.12.2010 Change, %
* MICEX data
Average weighted price per 1 share, RUR 0,1995 0,3363 -40,68
Capitalization, RUR thous. 17 442 381,9 29 402 872,3 -40,68
Overall trading volume, RUR thous. 928 134,2 1 105 827,8 -16,07

According to the MICEX data the trading volume in money terms totaled RUR 928.1 mln, in quantitative terms it totaled 3 855.6 mln shares. The market capitalization, as of 30.12.2011, totaled RUR 17.442 bln.

** Information on RTS trading volumes is not represented in the report due to low volumes as well as due to the merger of RTS and MICEX, ended at the end of 2011, and dissolution of RTS as an independent stock exchange. The information can be found on the following web-site www.rts.micex.ru