2010 CIS Consolidated Financial Statement Template With Convenience Translation Non-Banking

This template has been prepared to assist KPMG personnel in understanding the requirements oI
International Financial Reporting Standards (IFRSs). It is not a comprehensive study oI the

application and interpretation oI all IFRSs. As such, this template Iocuses on general requirements,
rather than industry/entity speciIic issues such as in relation to investment property, biological
assets, share-based payments or exploration and evaluation assets. Whilst every care has been taken
in its preparation, reIerence to IFRSs, Interpretations issued by the International Financial
Reporting Interpretations Committee oI the International Accounting Standards Board and other
authoritative literature should be made, and speciIic advice sought, where necessary. No
responsibility Ior loss occasioned to any person acting or reIraining Irom action as a result oI any
material in this template can be accepted by ZAO KPMG or KPMG Limited.
This template may be provided to clients; however, it should be accompanied by a covering letter
available via the Iollowing link:
http://cisnet.ru.kworld.kpmg.com/dpp/content/ATG/Completion/completion.htm

OAO Client Name

Consolidated Financial Statements
for the year ended 31 December 2010

OAO Client Aame

Contents

Independent Auditors` Report 3
Consolidated Statement oI Financial Position 4
Consolidated Statement oI Comprehensive Income 7
Consolidated Statement oI Changes in Equity 10
Consolidated Statement oI Cash Flows 18
Notes to the Consolidated Financial Statements 21

694.;;1English (U.S.)

ndependent Auditors` Report

The audit report is printed on letterhead paper

See Practice Statement 2009/05 for auditor`s report templates]

OAO Client Aame
Consolidated Statement of Financial Position as at 31 December 2010

4
The consolidated statement oI Iinancial position is to be read in conjunction with the notes to, and Iorming
part oI, the consolidated Iinancial statements set out on pages 21 to 147.
The USD equivalent figures are provided for information purposes only and do not form part of the
audited consolidated financial statements refer to note 2(d).
2010 2009 2010 2009
Note `000 RUB `000 RUB `000 USD` `000 USD`

ASSETS
Non-current assets
Property, plant and equipment 18
Intangible assets 19
Investments in equity accounted
investees 20
Other investments 21
DeIerred tax assets 22
Total non-current assets

Current assets
Inventories 23
Other investments 21
Current tax assets
Trade and other receivables 24
Prepayments
Cash and cash equivalents 25
Assets classiIied as held Ior sale 7
Total current assets
Total assets

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2010 2009 2010 2009

EQUTY AND LABLTES
Equity 26
Share capital
Share premium
Reserves
Retained earnings
Total equity attributable to
equity holders of the
Company
Non-controlling interests
Total equity

Non-current liabilities
Loans and borrowings 28
Employee beneIits 29
Provisions 31
DeIerred tax liabilities 22
Total non-current liabilities

Current liabilities
Bank overdraIts 25
Loans and borrowings 28
Trade and other payables 32
DeIerred income/revenue 30
Provisions 31
Current tax liabilities
Liabilities classiIied as held Ior
sale 7
Total current liabilities
Total liabilities
Total equity and liabilities
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Note: f the entity has changed an accounting policy, corrected an error or reclassified items in the
consolidated financial statements, an additional statement of financial position should be presented
together with all related notes. For guidance, see discussion in nsights 2.1.35 and the example in the
llustrative 2010 Financial Statements (pp. 11 and 31) published by the FRG and available on the DPP
site on CS net.]
OAO Client Aame
Consolidated Statement of Comprehensive Income for the year ended 31 December 2010

7
The consolidated statement oI comprehensive income is to be read in conjunction with the notes to, and
Iorming part oI, the consolidated Iinancial statements set out on pages 21 to 147.
2010 2009 2010 2009
Continuing operations
Revenue 9
Cost oI sales 10
Gross profit
Other income 11
Distribution expenses 12
Administrative expenses 13
Research and development
expenses
Other expenses 14
Results from operating
activities
Finance income 16
Finance costs 16
Net finance costs
Share oI proIit oI equity
accounted investees (net oI
income tax) 20
Profit/(loss) before income tax
Income tax expense 17
Profit from continuing
operations

Discontinued operation
ProIit/(loss) Irom discontinued
operation (net oI income tax) 6
Profit/(loss) for the year

Other comprehensive income
Foreign currency translation
diIIerences Ior Ioreign
operations
Net change in Iair value oI
available-Ior-sale Iinancial
assets 16
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2010 2009 2010 2009
Net change in Iair value oI
available-Ior-sale Iinancial
assets transIerred to proIit or
loss 16
Revaluation oI property, plant
and equipment 18
DeIined beneIit plan actuarial
gains (losses) 29
Income tax on other
comprehensive income 17
for the year, net of income tax
Total comprehensive income
for the year

Profit attributable to:
Owners oI the Company

attributable to:
Owners oI the Company
for the year

Earnings per share
Basic earnings per share 27 RUB xx RUB xx USD* xx USD* xx
Diluted earnings per share 27 RUB xx RUB xx USD* xx USD* xx

Continuing operations
Basic earnings per share 27 RUB xx RUB xx USD* xx USD* xx
Diluted earnings per share 27 RUB xx RUB xx USD* xx USD* xx

Note: An entity may present either a single statement: ~Consolidated statement of
comprehensive income (as above) or two statements; ~Consolidated income statement and
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~Consolidated statement of comprehensive income (see the illustrative 2010 FRS Financial
Statements published by the FRG and available on the DPP site on CS net).]
Note: The cost analysis may be presented either by function (See example above in the
statement of comprehensive income) or by nature (see example in AS 1 mplementation
Guidance).]
Note: Components of ~other comprehensive income may be presented either net of related
tax effects or before related tax effects (as in this template) with an aggregate amount
presented for income tax (AS 1.91).]
These consolidated Iinancial statements were approved by management on |date| and were signed
on its behalI by:
President ChieI Financial OIIicer
(signed) (signed)
OAO Client Aame
Consolidated Statement of Changes in Equity for the year ended 31 December 2010

10
The consolidated statement oI changes in equity is to be read in conjunction with the notes to, and Iorming part oI, the consolidated Iinancial statements set out on pages 21 to 147.
The USD equivalent figures are provided for information purposes only and do not form part of the audited consolidated financial statements refer to note 2(d).
`000 RUB Attributable to equity holders of the Company

Share
capital
Share
premium
Reserve
for own
shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity

Balance at 1 January 2009, as previously reported
Impact oI change in accounting policy
Balance at 1 January 2009 (restated)
Total comprehensive income for the year
ProIit/(loss) Ior the year
Foreign currency translation diIIerences
Net change in Iair value oI available-Ior-sale
Iinancial assets
Iinancial assets transIerred to proIit or loss
Revaluation oI property, plant and equipment
DeIined beneIit plan actuarial gains/(losses)
Income tax on other comprehensive income
Total other comprehensive income

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Share
capital
Share
premium
Reserve
for own
shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity

Transactions with owners, recorded directly in
equity
Contributions by and distributions to owners
Dividends to equity holders
Shares issued
Own shares acquired
Own shares sold
Other contributions by and distributions to
owners
Total contributions by and distributions to owners
Changes in ownership interests in subsidiaries
that do not result in a loss of control
Acquisition oI non-controlling interest
Total transactions with owners
Balance at 31 December 2009

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Share
capital
Share
premium
Reserve
for own
shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity

Balance at 1 January 2010
Iinancial assets

OAO Client Aame

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Share
capital
Share
premium
Reserve
for own
shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity

Transactions with owners, recorded directly
in equity
Shares issued
Own shares acquired
Own shares sold
owners
Total contributions by and distributions to
owners
Changes in ownership interests in
subsidiaries that do not result in a loss of
control

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`000 USD` Attributable to equity holders of the Company

Share
capital
Share
premium
Reserve for
own shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity

Balance at 1 January 2009, as previously
reported
Impact oI change in accounting policy
Balance at 1 January 2009 (restated)
Iinancial assets

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Share
capital
Share
premium
Reserve for
own shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity

in equity
Contributions by and distributions to
owners
Shares issued
Own shares acquired
Own shares sold
owners
owners
control

OAO Client Aame

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Share
capital
Share
premium
Reserve
for own
shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity

Iinancial assets

OAO Client Aame

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Share
capital
Share
premium
Reserve
for own
shares
Translation
reserve
Property,
plant and
equipment
revaluation
reserve
Fair value
reserve for
available-
for-sale
investments
Retained
earnings Total
Non-
controlling
interests
Total
equity
in equity
Shares issued
Own shares acquired
Own shares sold
owners
owners
control
Note: Alternatively, an entity may early-adopt the amendment to AS 1 arising from the mprovements to FRSs 2010 that results in entities being allowed
to show the disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income in either the
statement of changes in equity or in the notes (see the illustrative 2010 FRS Financial Statements (pp.15, 149) published by the FRG and available on the
DPP site on CS net).]
OAO Client Aame
Consolidated Statement of Cash Flows for the year ended 31 December 2010

18
The consolidated statement oI cash Ilows is to be read in conjunction with the notes to, and Iorming part oI,
the consolidated Iinancial statements set out on pages 21 to 147.
2010 2009 2010 2009

Cash flows from operating
activities
dfustments for.
Depreciation and amortisation 18, 19
Impairment losses/(reversal oI
impairment losses) on property,
plant and equipment
18, 19,
23
Loss/(gain) on disposal oI
property, plant and equipment 11
Loss/(gain) on disposal oI
intangible assets
Loss/(gain) on sale oI
discontinued operation, net oI
income tax
Net Iinance costs 16
Share oI proIit oI equity
accounted investees (net oI
income tax) 20
Cash from/(used in) operating
activities before changes in
working capital and
provisions
Change in inventories
Change in trade and other
receivables
Change in prepayments Ior
current assets
Change in trade and other
payables
Change in provisions and
employee beneIits
Change in deIerred income,
including government grants

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2010 2009 2010 2009

Cash flows from/(used in)
operations before income
taxes and interest paid
Income tax paid
Interest paid
Net cash from/(used in)
operating activities

Cash flows from investing
activities
Proceeds Irom sale oI property,
plant and equipment 18
Proceeds Irom sale oI
investments
Disposal oI subsidiaries, net oI
cash disposed oI
Interest received
Dividends received
Acquisition oI property, plant
and equipment
Acquisition oI intangible assets 19
Acquisition oI other
investments 21
Acquisition oI subsidiaries, net
oI cash acquired
Development expenditure
investing activities

Cash flows from financing
activities
Proceeds Irom issue oI share
capital
Proceeds Irom borrowings
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2010 2009 2010 2009

Acquisition oI non-controlling
interests
Repayment oI borrowings
Payment oI Iinance lease
liabilities
Dividends paid
financing activities

Net increase/(decrease) in
cash and cash equivalents
Cash and cash equivalents at 1
January
EIIect oI exchange rate
Iluctuations on cash and cash
equivalents
Cash and cash equivalents at
31 December 25

Note: The cash flow statement above applies the indirect method. An example based on the
direct method can be found in the illustrative 2010 Financial Statements published by the
FRG and available on the DPP site on CS net]

Note: mprovements to FRSs 2009 clarify that cash outflows should be presented as
investment cash flows in the statement of cash flows only if those costs are capitalised.
Therefore, cash flows that relate to a business combination should be classified as follows:
- Cash flows arising from changes in ownership interests in a subsidiary that do not result
in a loss of control are classified as cash flows from 1inancing activities (AS 7.42)
- Cash flows arising from obtaining or losing control of subsidiaries or other businesses are
presented separately and classified as investing activities (AS 7.39)
- Transaction costs related to acquisition are classified as 45erating activities in the
consolidated financial statements (nsights 2.3.20.15)
Similarly, if an entity incurs exploration and evaluation costs, these cash outflows can be
presented in the statement of cash flows as investing activities only if those costs are
capitalised.]

OAO Client Aame
otes to the Consolidated Financial Statements for the year ended 31 December 2010
21
1 Background
(a) Business environment
Russian business environment
The Group`s operations are primarily located in the Russian Federation. Consequently, the Group
is exposed to the economic and Iinancial markets oI the Russian Federation which display
characteristics oI an emerging market. The legal, tax and regulatory Irameworks continue
development, but are subject to varying interpretations and Irequent changes which together with
other legal and Iiscal impediments contribute to the challenges Iaced by entities operating in the
Russian Federation. The consolidated Iinancial statements reIlect management`s assessment oI the
impact oI the Russian business environment on the operations and the Iinancial position oI the
Group. The Iuture business environment may diIIer Irom management`s assessment.
azakhstan business environment
The Group`s operations are primarily located in Kazakhstan. Consequently, the Group is exposed
to the economic and Iinancial markets oI Kazakhstan which display characteristics oI an emerging
market. The legal, tax and regulatory Irameworks continue development, but are subject to varying
interpretations and Irequent changes which together with other legal and Iiscal impediments
contribute to the challenges Iaced by entities operating in Kazakhstan. The consolidated Iinancial
statements reIlect management`s assessment oI the impact oI the Kazakhstan business environment
on the operations and the Iinancial position oI the Group. The Iuture business environment may
diIIer Irom management`s assessment.
Ukrainian business environment
Ukraine is experiencing political and economic change that has aIIected, and may continue to
aIIect, the activities oI enterprises operating in this environment. Consequently, operations in the
Ukraine involve risks that typically do not exist in other markets. In addition, the contraction in the
capital and credit markets and its impact on the economy oI the Ukraine have Iurther increased the
level oI economic uncertainty in the environment. These consolidated Iinancial statements reIlect
management`s current assessment oI the impact oI the Ukrainian business environment on the
operations and the Iinancial position oI the Group. The Iuture business environment may diIIer
Irom management`s assessment.
Armenian business environment
The Group`s operations are primarily located in Armenia. Consequently, the Group is exposed to
the economic and Iinancial markets oI Armenia which display characteristics oI an emerging
contribute to the challenges Iaced by entities operating in the Armenia. The consolidated Iinancial
statements reIlect management`s assessment oI the impact oI the Armenian business environment
on the operations and the Iinancial position oI the Group. The Iuture business environment may
diIIer Irom management`s assessment.
Georgian business environment
The Group`s operations are primarily located in Georgia. Consequently, the Group is exposed to
the economic and Iinancial markets oI Georgia which display characteristics oI an emerging
market. The conIlict between Georgia and the Russian Federation has created additional
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uncertainty in the environment. The legal, tax and regulatory Irameworks continue development,
but are subject to varying interpretations and Irequent changes which together with other legal and
Iiscal impediments contribute to the challenges Iaced by entities operating in the Georgia. The
consolidated Iinancial statements reIlect management`s assessment oI the impact oI the Georgian
business environment on the operations and the Iinancial position oI the Group. The Iuture business
environment may diIIer Irom management`s assessment.
yrgyzstan business environment
The Group`s operations are primarily located in Kyrgyzstan. Consequently, the Group is exposed
to the economic and Iinancial markets oI Kyrgyzstan which display characteristics oI an emerging
contribute to the challenges Iaced by entities operating in the Kyrgyzstan. The consolidated
Iinancial statements reIlect management`s assessment oI the impact oI the Kyrgyzstan business
environment on the operations and the Iinancial position oI the Group. The Iuture business
environment may diIIer Irom management`s assessment.
(b) Organisation and operations
|OAO Russian Example Company| (the 'Company) and its subsidiaries (the 'Group) comprise
Russian open joint stock companies as deIined in the Civil Code oI the Russian Federation and
companies located abroad. The Company was established as a state-owned enterprise in |year|. It
was privatised as an open joint stock company on |date|, as part oI the Russian Federation`s
privatisation program. The Company`s shares are traded on the |name oI the Stock Exchange|.
The Company`s registered oIIice is |insert address|.
The Group`s principal activity is |describe| at plants located in the cities oI |names oI cities|. The
Group`s products are sold in the Russian Federation and abroad.
Delete or amend the next paragraph as appropriate.]
The Group is wholly owned by |name|. The majority oI the Group`s Iunding is Irom, and credit
exposures are to, other entities within the group headed by |entity name|. As a result the Group is
economically dependent upon the Group headed by |entity name|. In addition, the activities oI the
Group are closely linked with the requirements oI the Group headed by |entity name| and
determination oI the pricing oI the Group`s services to the Group headed by |entity name| is
undertaken in conjunction with other companies in the Group headed by |entity name|. Related
party transactions are disclosed in note 37.
Delete or amend the next paragraph as appropriate.]
The Group is ultimately controlled by a single individual, |name|, who has the power to direct the
transactions oI the Group at his own discretion and Ior his own beneIit. He also has a number oI
other business interests outside the Group.
2 Basis of preparation
(a) Statement of compliance
These consolidated Iinancial statements have been prepared in accordance with International
Financial Reporting Standards ('IFRSs).
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(b) Basis of measurement
Amend the next paragraph as appropriate.]
The consolidated Iinancial statements are prepared on the historical cost basis except:
O derivative Iinancial instruments, investments at Iair value through proIit or loss and Iinancial
investments classiIied as available-Ior-sale are stated at Iair value;
O deIined beneIit plan asset is recognised as the net total oI the plan assets, plus unrecognised
past service cost and unrecognised actuarial losses, less unrecognised actuarial gains and the
present value oI the deIined beneIit obligation; and
O land is remeasured at Iair value on a regular basis.
(c) Functional and presentation currency
The national currency oI the Russian Federation is the Russian Rouble ('RUB), which is the
Company`s Iunctional currency and the currency in which these consolidated Iinancial statements
are presented. All Iinancial inIormation presented in RUB has been rounded to the nearest
thousand.
(d) Convenience translation
In addition to presenting the consolidated Iinancial statements in RUB, supplementary inIormation
in USD has been presented Ior the convenience oI users oI the consolidated Iinancial statements.
All amounts in the consolidated Iinancial statements, including comparatives, are translated Irom
RUB to USD at the closing exchange rate at 31 December 2010 oI RUB xx to USD xx.
(e) Going concern
Note: This note should be included if, but only if, there any indicators that the Group might
not be a going concern, e.g. current liabilities greater than current assets. The requirements
of SA 570 should be followed, including the factors that indicate that there may be a going
concern issue and management`s plans and other mitigating factors such as the existence of a
letter of support.]
Note: Consider also requirements arising from FRS 7.18. See example on p. 25 of the
llustrative 2010 Financial Statements published by the FRG and available on the DPP site
on CS net.]
(f) Use of estimates and judgments
The preparation oI consolidated Iinancial statements in conIormity with IFRSs requires
management to make judgments, estimates and assumptions that aIIect the application oI
accounting policies and the reported amounts oI assets, liabilities, income and expenses. Actual
results may diIIer Irom those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised and in any Iuture periods
aIIected.
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InIormation about critical judgments in applying accounting policies that have the most signiIicant
eIIect on the amounts recognised in the consolidated Iinancial statements is included in the
Iollowing notes:
Note: Update as appropriate, the following list of examples that may require critical
judgements.]
O Note 18 useIul lives oI property, plant and equipment
O Note 22 deIerred tax assets
O Note 23 inventory obsolescence provisions
O Note 31 provision Ior site restoration
O Note 33 allowances Ior trade receivables
O Note 33 Iair values oI Iinancial instruments not traded on an active market (e.g. by
choosing a certain valuation method); and
O Note 34 lease classiIication
InIormation about assumptions and estimation uncertainties that have a signiIicant risk oI resulting
in a material adjustment within the next Iinancial year is included in the Iollowing notes:
Note: Update as appropriate, the following list of examples that may include significant
estimation uncertainties.]
O Note 9 revenue recognition (e.g. percentage oI completion method)
O Note 19 key assumptions used in discounted cash Ilow projections
O Note 19 recoverability oI development costs
O Note 19 goodwill impairment
O Note 33 Iair values oI Iinancial instruments classiIied as level 3 in the Iair value hierarchy
O Note 36 contingencies.
(g) Changes in accounting policies and presentation
With eIIect Irom 1 January 2010, the Group changed its accounting policies in the Iollowing areas:
O accounting Ior business combinations
O accounting Ior acquisitions oI non-controlling interests
O distribution oI non-cash assets to owners oI the Company
i) Acc4:nting 14r b:siness c4mbinati4ns
From 1 January 2010 the Group has applied IFRS 3 usiness Combinations (2008) in accounting
Ior business combinations. The change in accounting policy has been applied prospectively and
has had no material impact on earnings per share.
Business combinations are accounted Ior using the acquisition method as at the acquisition date,
which is the date on which control is transIerred to the Group. Control is the power to govern the
Iinancial and operating policies oI an entity so as to obtain beneIits Irom its activities. In assessing
control, the Group takes into consideration potential voting rights that currently are exercisable.
OAO Client Aame
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cquisitions on or after 1 January 2010
For acquisitions on or aIter 1 January 2010, the Group measures goodwill at the acquisition date as:
O the Iair value oI the consideration transIerred; plus
the recognised amount oI any non-controlling interests in the acquiree; plus, iI the business
combination is achieved in stages, the Iair value oI the existing equity interest in the acquiree;
less
O the net recognised amount (generally Iair value) oI the identiIiable assets acquired and
liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in proIit or loss.
The consideration transIerred does not include amounts related to the settlement oI pre-existing
relationships. Such amounts are generally recognised in proIit or loss.
Costs related to the acquisition, other than those associated with the issue oI debt or equity
securities, that the Group incurs in connection with a business combination, are expensed as
incurred.
Any contingent consideration payable is recognised at Iair value at the acquisition date. II the
contingent consideration is classiIied as equity, it is not remeasured and settlement is accounted Ior
within equity. Otherwise, subsequent changes to the Iair value oI the contingent consideration
are recognised in proIit or loss.
For the measurement oI goodwill prior to 1 January 2010, see note 3(e)(i).
ii) Acc4:nting 14r acq:isiti4ns 41 n4n-c4ntr4lling interests
From 1 January 2010 the Group has applied IAS 27 Consolidated and Separate Financial
Statements (2008) in accounting Ior acquisitions oI non-controlling interests. The change in
accounting policy has been applied prospectively and has had no impact on earnings per share.
Under the new accounting policy, acquisitions oI non-controlling interests are accounted Ior as
transactions with owners in their capacity as owners and thereIore no goodwill is recognised as a
result oI such transactions. The adjustments to non-controlling interests are based on a
proportionate amount oI the net assets oI the subsidiary.
Previously, goodwill was recognised on the acquisition oI non-controlling interests in a subsidiary,
which represented the excess oI the cost oI the additional investment over the carrying amount oI
the interest in the net assets acquired at the date oI the transaction.
iii) Acc4:nting 14r leases 41 land
The amendment to IAS 17 eases regarding the leases oI land became eIIective Irom 1 January
2010. The amendment removed the earlier exemption which allowed leases oI land to be classiIied
as operating leases regardless oI the length oI the lease term. The amended guidance requires all
existing leases oI land to be reassessed and reclassiIied iI necessary as Iinance leases iI the Iinance
lease classiIication criteria are met. At 1 January 2010, the Group reassessed all existing land lease
contracts and as a result
Option 1: it was assessed that existing land lease contracts do not qualiIy as Iinance lease contracts
and thereIore, the classiIication was not changed (see note 34).
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Option 2: it was assessed that |number oI contracts| existing land lease contracts qualiIied as
Iinance leases and were thereIore reclassiIied |retrospectively/ as at 1 January 2010|. The eIIect oI
the reclassiIication is discussed in note 28(c).
Note: Other changes may be applicable depending on the Group`s operating activities or if a
new standard, interpretation or amendement has been adopted early.]
Note: f a change in accounting policy is applied retrospectively, or the financial statements
contain a retrospective restatement or reclassification, then a statement of financial position
as at the beginning of the earliest period is presented (AS 1.10f).]
Note: Application of an accounting policy for transactions or events that did not occur
previously or that were immaterial, is not a change in accounting policy (AS 8.16).]
(h) Accounting policies for new transactions and events
Distributions oI non-cash assets to owners oI the Company
From 1 January 2010 the Group has applied IFRIC 17 Distributions of on-cash ssets to Owners
in accounting Ior distributions oI non-cash assets to owners oI the Company. The new accounting
policy has been applied prospectively.
The Group measures a liability to distribute non-cash assets as a dividend to the owners oI the
Company at the Iair value oI the assets to be distributed. The carrying amount oI the dividend is
remeasured at each reporting date and at the settlement date, with any changes recognised directly
in equity as adjustments to the amount oI the distribution. On settlement oI the transaction, the
Group recognises the diIIerence, iI any, between the carrying amount oI the assets distributed
and the carrying amount oI the liability in proIit or loss.
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in
these consolidated Iinancial statements, and have been applied consistently by Group entities,
except as explained in note 2(g), which addresses changes in accounting policies.
Certain comparative amounts have been reclassiIied to conIorm with the current years presentation
(see note |insert reIerence|).
(a) Basis of consolidation
i) B:siness c4mbinati4ns
The Group has changed its accounting policy with respect to accounting Ior business combinations.
See note 2(g)(i) Ior Iurther details.
ii) $:bsidiaries
Subsidiaries are entities controlled by the Group. The Iinancial statements oI subsidiaries are
included in the consolidated Iinancial statements Irom the date that control commences until the
date that control ceases. The accounting policies oI subsidiaries have been changed when necessary
to align them with the policies adopted by the Group. Losses applicable to the non-controlling
interests in a subsidiary are allocated to the non-controlling interests even iI doing so causes the
non-controlling interests to have a deIicit balance.
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iii) $5ecial 5:r54se entities
The Group has established a number oI special purpose entities ('SPEs) Ior trading and
investment purposes. The Group does not have any direct or indirect shareholdings in these entities.
A SPE is consolidated iI, based on an evaluation oI the substance oI its relationship with the Group
and the SPE`s risks and rewards, the Group concludes that it controls the SPE. SPEs controlled by
the Group were established under terms that impose strict limitations on the decision-making
powers oI the SPEs` management and that result in the Group receiving the majority oI the beneIits
related to the SPEs` operations and net assets, being exposed to majority oI risks incident to the
SPEs` activities, and retaining the majority oI the residual or ownership risks related to the SPEs or
their assets.
iv) Acq:isiti4ns 1r4m entities :nder c4mm4n c4ntr4l
Business combinations arising Irom transIers oI interests in entities that are under the control oI the
shareholder that controls the Group are accounted Ior as iI the acquisition had occurred at the
beginning oI the earliest comparative period presented or, iI later, at the date that common control
was established; Ior this purpose comparatives are revised. The assets and liabilities acquired are
recognised at the carrying amounts recognised previously in the Group`s controlling shareholder`s
consolidated Iinancial statements. The components oI equity oI the acquired entities are added to
the same components within Group equity except that any share capital oI the acquired entities is
recognised as part oI share premium. Any cash paid Ior the acquisition is recognised directly in
equity.
Note: The 2010/11 edition of nsights into FRS, section 5.13.40, describes other approaches
that an entity may elect as its accounting policy for common control transactions.]
v) L4ss 41 c4ntr4l
Upon the loss oI control, the Group derecognises the assets and liabilities oI the subsidiary, any
non-controlling interests and the other components oI equity related to the subsidiary. Any surplus
or deIicit arising on the loss oI control is recognised in proIit or loss. II the Group retains any
interest in the previous subsidiary, then such interest is measured at Iair value at the date that
control is lost. Subsequently it is accounted Ior as an equity-accounted investee or as an available-
Ior-sale Iinancial asset depending on the level oI inIluence retained.
vi) nvestments in ass4ciates eq:ity acc4:nted investees)
Associates are those entities in which the Group has signiIicant inIluence, but not control, over the
Iinancial and operating policies. SigniIicant inIluence is presumed to exist when the Group holds
between 20 and 50 oI the voting power oI another entity. Joint ventures are those entities over
whose activities the Group has joint control, established by contractual agreement and requiring
unanimous consent Ior strategic Iinancial and operating decisions.
Investments in associates are accounted Ior using the equity method and are recognised initially at
cost. The cost oI the investment includes transaction costs.
The consolidated Iinancial statements include the Group`s share oI the income and expenses and
equity movements oI equity accounted investees, aIter adjustments to align the accounting policies
with those oI the Group, Irom the date that signiIicant inIluence commences until the date that
signiIicant inIluence ceases.
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When the Group`s share oI losses exceeds its interest in an equity accounted investee, the carrying
amount oI that interest including any long-term investments, is reduced to zero, and the recognition
oI Iurther losses is discontinued, except to the extent that the Group has an obligation or has made
payments on behalI oI the investee.
vii) 14intly c4ntr4lled 45erati4ns
A jointly controlled operation is a joint venture carried on by each venturer using its own assets in
pursuit oI the joint operations. The consolidated Iinancial statements include the assets that the
Group controls and the liabilities that it incurs in the course oI pursuing the joint operation, and the
expenses that the Group incurs and its share oI the income that it earns Irom the joint operation.
viii) %ransacti4ns eliminated 4n c4ns4lidati4n
Intra-group balances and transactions, and any unrealised income and expenses arising Irom intra-
group transactions, are eliminated in preparing the consolidated Iinancial statements. Unrealised
gains arising Irom transactions with equity-accounted investees are eliminated against the
investment to the extent oI the Group`s interest in the investee. Unrealised losses are eliminated in
the same way as unrealised gains, but only to the extent that there is no evidence oI impairment.
(b) Foreign currency
i) F4reign c:rrency transacti4ns
Transactions in Ioreign currencies are translated to the respective Iunctional currencies oI Group
entities at exchange rates at the dates oI the transactions. Monetary assets and liabilities
denominated in Ioreign currencies at the reporting date are retranslated to the Iunctional currency at
the exchange rate at that date. The Ioreign currency gain or loss on monetary items is the diIIerence
between amortised cost in the Iunctional currency at the beginning oI the period, adjusted Ior
eIIective interest and payments during the period, and the amortised cost in Ioreign currency
translated at the exchange rate at the end oI the reporting period.
Non-monetary assets and liabilities denominated in Ioreign currencies that are measured at Iair
value are retranslated to the Iunctional currency at the exchange rate at the date that the Iair value
was determined. Non-monetary items in a Ioreign currency that are measured in terms oI historical
cost are translated using the exchange rate at the date oI the transaction. Foreign currency
diIIerences arising in retranslation are recognised in proIit or loss, except Ior diIIerences arising on
the retranslation oI available-Ior-sale equity instruments which are recognised in other
comprehensive income.
ii) F4reign 45erati4ns
The assets and liabilities oI Ioreign operations, including goodwill and Iair value adjustments
arising on acquisition, are translated to RUB at the exchange rates at the reporting date. The income
and expenses oI Ioreign operations are translated to RUB at exchange rates at the dates oI the
transactions.
Foreign currency diIIerences are recognised in other comprehensive income, and presented in the
Ioreign currency translation reserve in equity. However, iI the operation is a non-wholly-owned
subsidiary, then the relevant proportionate share oI the translation diIIerence is allocated to the
non-controlling interests. When a Ioreign operation is disposed oI such that control, signiIicant
inIluence or joint control is lost, the cumulative amount in the translation reserve related to that
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Ioreign operation is reclassiIied to proIit or loss as part oI the gain or loss on disposal. When the
Group disposes oI only part oI its interest in a subsidiary that includes a Ioreign operation while
retaining control, the relevant proportion oI the cumulative amount is reattributed to non-
controlling interests. When the Group disposes oI only part oI its investment in an associate or joint
venture that includes a Ioreign operation while retaining signiIicant inIluence or joint control, the
relevant proportion oI the cumulative amount is reclassiIied to proIit or loss.
When the settlement oI a monetary item receivable Irom or payable to a Ioreign operation is neither
planned nor likely in the Ioreseeable Iuture, Ioreign exchange gains and losses arising Irom such a
monetary item are considered to Iorm part oI a net investment in a Ioreign operation and are
recognised in other comprehensive income, and presented in the translation reserve in equity.
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(c) Financial instruments
i) A4n-derivative 1inancial instr:ments
Non-derivative Iinancial instruments comprise investments in equity and debt securities, trade and
other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
The Group initially recognises loans and receivables and deposits on the date that they are
originated. All other Iinancial assets (including assets designated at Iair value through proIit or
loss) are recognised initially on the trade date at which the Group becomes a party to the
contractual provisions oI the instrument.
The Group derecognises a Iinancial asset when the contractual rights to the cash Ilows Irom the
asset expire, or it transIers the rights to receive the contractual cash Ilows on the Iinancial asset in a
transaction in which substantially all the risks and rewards oI ownership oI the Iinancial asset are
transIerred. Any interest in transIerred Iinancial assets that is created or retained by the Group is
recognised as a separate asset or liability.
Financial assets and liabilities are oIIset and the net amount presented in the statement oI Iinancial
position when, and only when, the Group has a legal right to oIIset the amounts and intends either
to settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group classiIies non-derivative Iinancial assets into the Iollowing categories: Iinancial assets
at Iair value through proIit or loss, held-to-maturity Iinancial assets, loans and receivables and
available-Ior-sale Iinancial assets.
Financial assets at 1air val:e thr4:gh 5r41it 4r l4ss
A Iinancial asset is classiIied at Iair value through proIit or loss -category iI it is classiIied as held
Ior trading or is designated as such upon initial recognition. Financial assets are designated at Iair
value through proIit or loss iI the Group manages such investments and makes purchase and sale
decisions based on their Iair value in accordance with the Group`s documented risk management or
investment strategy. Upon initial recognition attributable transaction costs are recognised in proIit
or loss as incurred. Financial assets at Iair value through proIit or loss are measured at Iair value,
and changes therein are recognised in proIit or loss.
Note: Amend the wording below as appropriate by disclosing which assets (if any) the entity
has classified into this category.]
Financial assets designated at Iair value through proIit or loss comprise equity securities that
otherwise would have been classiIied as available Ior sale.
eld-t4-mat:rity 1inancial assets
II the Group has the positive intent and ability to hold to maturity debt securities that are quoted in
an active market, then such Iinancial assets are classiIied to held-to-maturity -category. Held-to-
maturity Iinancial assets are recognised initially at Iair value plus any directly attributable
transaction costs. Subsequent to initial recognition held-to-maturity Iinancial assets are measured at
amortised cost using the eIIective interest method, less any impairment losses. Any sale or
reclassiIication oI a more than insigniIicant amount oI held-to-maturity investments not close to
their maturity would result in the reclassiIication oI all held-to-maturity investments as available-
Ior-sale, and prevent the Group Irom classiIying investment securities as held-to-maturity Ior the
current and the Iollowing two Iinancial years.
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Held-to-maturity Iinancial assets comprise debentures.
L4ans and receivables
Loans and receivables are a category oI Iinancial assets with Iixed or determinable payments that
are not quoted in an active market. Such assets are recognised initially at Iair value plus any
directly attributable transaction costs. Subsequent to initial recognition loans and receivables are
measured at amortised cost using the eIIective interest method, less any impairment losses.
Note: Amend the wording below as appropriate by disclosing which assets the entity has
classified into this category.]
Loans and receivables category comprise the Iollowing classes oI assets: trade and other
receivables as presented in note 24 and cash and cash equivalents as presented in note 25.
Cash and cash eq:ivalents
Cash and cash equivalents comprise cash balances, call deposits and highly liquid investments with
maturities at initial recognition oI three months or less.
Available-14r-sale 1inancial assets
Available-Ior-sale Iinancial assets are non-derivative Iinancial assets that are designated as
available-Ior-sale or are not classiIied in any oI the above categories oI Iinancial assets. Such assets
are recognised initially at Iair value plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at Iair value and changes therein, other than impairment
losses (see note 3(h)(i)) and Ioreign currency diIIerences on available-Ior-sale debt instruments (see
note 3(b)(i)), are recognised in other comprehensive income and presented within equity in the Iair
value reserve. When an investment is derecognised or impaired, the cumulative gain or loss in
equity is reclassiIied to proIit or loss. Unquoted equity instruments whose Iair value cannot reliably
be measured are carried at cost.
Available-Ior-sale Iinancial assets comprise equity securities and debt securities.
ii) A4n-derivative 1inancial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that
they are originated. All other Iinancial liabilities (including liabilities designated at Iair value
through proIit or loss) are recognised initially on the trade date at which the Group becomes a party
to the contractual provisions oI the instrument.
The Group derecognises a Iinancial liability when its contractual obligations are discharged or
cancelled or expire.
Financial assets and liabilities are oIIset and the net amount presented in the statement oI Iinancial
position when, and only when, the Group has a legal right to oIIset the amounts and intends either
to settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group classiIies non-derivative Iinancial liabilities into the other Iinancial liabilities category.
Such Iinancial liabilities are recognised initially at Iair value less any directly attributable
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transaction costs. Subsequent to initial recognition, these Iinancial liabilities are measured at
amortised cost using the eIIective interest method.
has designated into this category.]
Other Iinancial liabilities comprise loans and borrowings, bank overdraIts, and trade and other
payables.
Bank overdraIts that are repayable on demand and Iorm an integral part oI the Group`s cash
management are included as a component oI cash and cash equivalents Ior the purpose oI the
statement oI cash Ilows.
iii) Derivative 1inancial instr:ments
Note: Describe briefly which derivative instruments entity uses and for what purpose e.g.
hedging/trading.]
The Group holds |describe which instruments| derivative Iinancial instruments to |describe why|.
Derivatives are recognised initially at Iair value; attributable transaction costs are recognised in
proIit or loss as incurred. Subsequent to initial recognition, derivatives are measured at Iair value,
and changes therein are recognised immediately in the proIit or loss.
Embedded derivatives are separated Irom the host contract and accounted Ior separately iI the
economic characteristics and risks oI the host contract and the embedded derivative are not closely
related, a separate instrument with the same terms as the embedded derivative would meet the
deIinition oI a derivative, and the combined instrument is not measured at Iair value through proIit
or loss. Changes in the Iair value oI separable embedded derivatives are recognised immediately in
proIit or loss.
Note: Policy to be amended if hedge accounting applies or if the Group has issued compound
financial instruments. See llustrative 2010 FRS Financial Statements published by the
FRG and available on the DPP site on CS net.]
iv) $hare ca5ital
Ordinary shares
Ordinary shares are classiIied as equity. Incremental costs directly attributable to issue oI ordinary
shares and share options are recognised as a deduction Irom equity, net oI any tax eIIects.
Preference share capital
PreIerence share capital is classiIied as equity iI it is non-redeemable, or redeemable only at the
Company`s option, and any dividends are discretionary. Dividends thereon are recognised as
distributions within equity upon approval by the Company`s shareholders.
PreIerence share capital is classiIied as a liability iI it is redeemable on a speciIic date or at the
option oI the shareholders, or iI dividend payments are not discretionary. Dividends thereon are
recognised as interest expense in proIit or loss as accrued.
Repurchase, disposal and reissue of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount oI the consideration paid,
which includes directly attributable costs, net oI any tax eIIects, is recognised as a deduction Irom
equity. Repurchased shares are classiIied as treasury shares and are presented in the reserve Ior
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own shares. When treasury shares are sold or reissued subsequently, the amount received is
recognised as an increase in equity, and the resulting surplus or deIicit on the transaction is
presented in share premium.
(d) Property, plant and equipment
i) Rec4gniti4n and meas:rement
Items oI property, plant and equipment, except Ior land, are measured at cost less accumulated
depreciation and impairment losses. The cost oI property, plant and equipment at 1 January 2005,
the date oI transition to IFRSs, was determined by reIerence to its Iair value at that date.
Cost includes expenditure that is directly attributable to the acquisition oI the asset. The cost oI
selI-constructed assets includes the cost oI materials and direct labour, any other costs directly
attributable to bringing the asset to a working condition Ior their intended use, the costs oI
dismantling and removing the items and restoring the site on which they are located, and
capitalised borrowing costs. Cost also may include transIers Irom equity oI any gain or loss on
qualiIying cash Ilow hedges oI Ioreign currency purchases oI property, plant and equipment.
Purchased soItware that is integral to the Iunctionality oI the related equipment is capitalised as
part oI that equipment.
When parts oI an item oI property, plant and equipment have diIIerent useIul lives, they are
accounted Ior as separate items (major components) oI property, plant and equipment.
The gain or loss on disposal oI an item oI property, plant and equipment is determined by
comparing the proceeds Irom disposal with the carrying amount oI property, plant and equipment,
and is recognised net within other income/other expenses in proIit or loss. When revalued assets are
sold, any related amount included in the revaluation reserve is transIerred to retained earnings.
ii) $:bseq:ent c4sts
The cost oI replacing a component oI an item oI property, plant and equipment is recognised in the
carrying amount oI the item iI it is probable that the Iuture economic beneIits embodied within the
component will Ilow to the Group, and its cost can be measured reliably. The carrying amount oI
the replaced component is derecognised. The costs oI the day-to-day servicing oI property, plant
and equipment are recognised in proIit or loss as incurred.
iii) Reval:ati4n 41 land
Land is measured at Iair value, based on periodic valuation by external independent valuers. A
revaluation increase on land is recognised directly in the revaluation reserve in other
comprehensive income except to the extent that it reverses a previous revaluation decrease
recognised in proIit or loss, in which case it is recognised in proIit or loss. A revaluation decrease
on land is recognised in proIit or loss except to the extent that it reverses a previous revaluation
increase recognised directly in other comprehensive income, in which case the reversing amount is
recognised directly in other comprehensive income. When a revalued asset is sold, the amount
included in the revaluation reserve is transIerred to retained earnings.
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iv) De5reciati4n
Depreciation is based on the cost oI an asset less its residual value. SigniIicant components oI
individual assets are assessed and iI a component has a useIul liIe that is diIIerent Irom the
remainder oI that asset, that component is depreciated separately.
Depreciation is recognised in proIit or loss on a straight-line basis over the estimated useIul lives oI
each part oI an item oI property, plant and equipment, since this most closely reIlects the expected
pattern oI consumption oI the Iuture economic beneIits embodied in the asset. Leased assets are
depreciated over the shorter oI the lease term and their useIul lives unless it is reasonably certain
that the Group will obtain ownership by the end oI the lease term. Land is not depreciated.
The estimated useIul lives Ior the current and comparative periods are as Iollows:
O buildings 40 years
O plant and equipment 5-12 years
O Iixtures and Iittings 5-10 years
O major components 3-5 years
Depreciation methods, useIul lives and residual values are reviewed at each Iinancial year end and
adjusted iI appropriate. Estimates in respect oI certain items oI plant and equipment were revised in
2010 (see note 18(I)).
(e) ntangible assets
i) C44dwill
Goodwill (negative goodwill) that arises on the acquisition oI subsidiaries is included in intangible
assets. For the measurement oI goodwill at initial recognition, see note 2(g)(i).
cquisitions prior to 1 January 2005
As part oI its transition to IFRSs, the Group elected to restate only those business combinations that
occurred on or aIter 1 January 2005. In respect oI acquisitions prior to 1 January 2005, goodwill
represents the diIIerence between the Company`s interest in a subsidiary`s net identiIiable assets on
the date oI transition and the cost oI that interest.
cquisitions between 1 January 2005 and 1 January 2010
For acquisitions between 1 January 2005 and 1 January 2010, goodwill represents the excess oI the
cost oI the acquisition over the Group`s interest in the net Iair value oI the identiIiable assets,
liabilities and contingent liabilities oI the acquiree. When the excess is negative (negative
goodwill), it is recognised immediately in proIit or loss.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect oI equity accounted
investees, the carrying amount oI goodwill is included in the carrying amount oI the investment,
and an impairment loss on such an investment is not allocated to any asset, including goodwill, that
Iorms part oI the carrying amount oI the equity-accounted investee.
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ii) Research and devel45ment
Expenditure on research activities, undertaken with the prospect oI gaining new scientiIic or
technical knowledge and understanding, is recognised in proIit or loss as incurred.
Development activities involve a plan or design Ior the production oI new or substantially
improved products and processes. Development expenditure is capitalised only iI development
costs can be measured reliably, the product or process is technically and commercially Ieasible,
Iuture economic beneIits are probable, and the Group intends to and has suIIicient resources to
complete development and to use or sell the asset. The capitalised expenditure includes the cost oI
materials, direct labour and overhead costs that are directly attributable to preparing the asset Ior its
intended use, and capitalised borrowing costs. Other development expenditure is recognised in the
proIit or loss as incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and
accumulated impairment losses.
iii) Other intangible assets
Other intangible assets that are acquired by the Group, which have Iinite useIul lives, are measured
at cost less accumulated amortisation and accumulated impairment losses.
iv) $:bseq:ent ex5endit:re
Subsequent expenditure is capitalised only when it increases the Iuture economic beneIits
embodied in the speciIic asset to which it relates. All other expenditure, including expenditure on
internally generated goodwill and brands, is recognised in the proIit or loss as incurred.
v) Am4rtisati4n
Amortisation is calculated over the cost oI the asset, or other amount substituted Ior cost, less its
residual value.
Amortisation is recognised in proIit or loss on a straight-line basis over the estimated useIul lives oI
intangible assets, other than goodwill, Irom the date that they are available Ior use since this most
closely reIlects the expected pattern oI consumption oI Iuture economic beneIits embodied in the
asset. The estimated useIul lives Ior the current and comparative periods are as Iollows:
O patents and trademarks 10-20 years
O soItware 3-10 years
O capitalised development costs 5-7 years
Amortisation methods, useIul lives and residual values are reviewed at each Iinancial year end and
adjusted iI appropriate.
(f) Leased assets
Leases in terms oI which the Group assumes substantially all the risks and rewards oI ownership
are classiIied as Iinance leases. Upon initial recognition the leased asset is measured at an amount
equal to the lower oI its Iair value and the present value oI the minimum lease payments.
Subsequent to initial recognition, the asset is accounted Ior in accordance with the accounting
policy applicable to that asset.
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Other leases are operating leases and the leased assets are not recognised on the Group`s statement
oI Iinancial position.
(g) nventories
Inventories are measured at the lower oI cost and net realisable value. The cost oI inventories is
based on the Iirst-in Iirst-out principle, and includes expenditure incurred in acquiring the
inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition. In the case oI manuIactured inventories and work in progress, cost
includes an appropriate share oI production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course oI business, less the
estimated costs oI completion and selling expenses.
(h) mpairment
i) A4n-derivative 1inancial assets
A Iinancial asset not carried at Iair value through proIit or loss is assessed at each reporting date to
determine whether there is any objective evidence that it is impaired. A Iinancial asset is impaired
iI objective evidence indicates that a loss event has occurred aIter the initial recognition oI the
asset, and that the loss event had a negative eIIect on the estimated Iuture cash Ilows oI that asset
that can be estimated reliably.
Objective evidence that Iinancial assets (including equity securities) are impaired can include
deIault or delinquency by a debtor, restructuring oI an amount due to the Group on terms that the
Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy,
adverse changes in the payment status oI borrowers or issuers in the Group, economic conditions
that correlate with deIaults or the disappearance oI an active market Ior a security. In addition, Ior
an investment in an equity security, a signiIicant or prolonged decline in its Iair value below its cost
is objective evidence oI impairment.
oans and receivables and held-to-maturity investment securities
The Group considers evidence oI impairment Ior loans and receivables and held-to-maturity
investment securities at both a speciIic asset and collective level. All individually signiIicant loans
and receivables and held-to-maturity investment securities are assessed Ior speciIic impairment. All
individually signiIicant loans and receivables and held-to-maturity investment securities Iound not
to be speciIically impaired are then collectively assessed Ior any impairment that has been incurred
but not yet identiIied. Loans and receivables and held-to-maturity investment securities that are not
individually signiIicant are collectively assessed Ior impairment by grouping together loans and
receivables and held-to-maturity investment securities with similar risk characteristics.
In assessing collective impairment the Group uses historical trends oI the probability oI deIault,
timing oI recoveries and the amount oI loss incurred, adjusted Ior management`s judgement as to
whether current economic and credit conditions are such that the actual losses are likely to be
greater or less than suggested by historical trends.
An impairment loss in respect oI a Iinancial asset measured at amortised cost is calculated as the
diIIerence between its carrying amount, and the present value oI the estimated Iuture cash Ilows
discounted at the asset`s original eIIective interest rate. Losses are recognised in proIit or loss and
reIlected in an allowance account against loans and receivables or held-to-maturity investment
securities. Interest on the impaired asset continues to be recognised through the unwinding oI the
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discount. When a subsequent event causes the amount oI impairment loss to decrease, the decrease
in impairment loss is reversed through proIit or loss.
vailable-for-sale financial assets
Impairment losses on available-Ior-sale Iinancial assets are recognised by reclassiIying the losses
accumulated in the Iair value reserve in equity, to proIit or loss. The cumulative loss that is
reclassiIied Irom equity to proIit or loss is the diIIerence between the acquisition cost, net oI any
principal repayment and amortisation, and the current Iair value, less any impairment loss
previously recognised in proIit or loss. Changes in impairment provisions attributable to
application oI the eIIective interest method are reIlected as a component oI interest income. II, in a
subsequent period, the Iair value oI an impaired available-Ior-sale debt security increases and the
increase can be related objectively to an event occurring aIter the impairment loss was recognised
in proIit or loss, then the impairment loss is reversed, with the amount oI the reversal recognised in
proIit or loss. However, any subsequent recovery in the Iair value oI an impaired available-Ior-sale
equity security is recognised in other comprehensive income.
ii) A4n-1inancial assets
The carrying amounts oI the Group`s non-Iinancial assets, other than inventories and deIerred tax
assets are reviewed at each reporting date to determine whether there is any indication oI
impairment. II any such indication exists, then the asset`s recoverable amount is estimated. For
goodwill and intangible assets that have indeIinite lives or that are not yet available Ior use, the
recoverable amount is estimated each year at the same time. An impairment loss is recognised iI
the carrying amount oI an asset or its related cash-generating unit (CGU) exceeds its estimated
recoverable amount.
The recoverable amount oI an asset or CGU is the greater oI its value in use and its Iair value less
costs to sell. In assessing value in use, the estimated Iuture cash Ilows are discounted to their
present value using a pre-tax discount rate that reIlects current market assessments oI the time
value oI money and the risks speciIic to the asset or CGU. For the purpose oI impairment testing,
assets that cannot be tested individually are grouped together into the smallest group oI assets that
generates cash inIlows Irom continuing use that are largely independent oI the cash inIlows oI
other assets or CGU. Subject to an operating segment ceiling test, Ior the purposes oI goodwill
impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at
which impairment testing is perIormed reIlects the lowest level at which goodwill is monitored Ior
internal reporting purposes. Goodwill acquired in a business combination is allocated to groups oI
CGUs that are expected to beneIit Irom the synergies oI the combination.
The Group`s corporate assets do not generate separate cash inIlows and are utilised by more than
one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested
Ior impairment as part oI the testing oI the CGU to which the corporate asset is allocated.
Impairment losses are recognised in proIit or loss. Impairment losses recognised in respect oI
CGUs are allocated Iirst to reduce the carrying amount oI any goodwill allocated to the CGU
(group oI CGUs), and then to reduce the carrying amounts oI the other assets in the CGU (group oI
CGUs) on a pro rata basis.
An impairment loss in respect oI goodwill is not reversed. In respect oI other assets, impairment
losses recognised in prior periods are assessed at each reporting date Ior any indications that the
loss has decreased or no longer exists. An impairment loss is reversed iI there has been a change in
the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
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extent that the asset`s carrying amount does not exceed the carrying amount that would have been
determined, net oI depreciation or amortisation, iI no impairment loss had been recognised.
(i) Non-current assets held for sale or distribution
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be
recovered primarily through sale or distribution rather than through continuing use, are classiIied as
held Ior sale or distribution. Immediately beIore classiIication as held Ior sale, the assets, or
components oI a disposal group, are remeasured in accordance with the Group`s accounting
policies. ThereaIter generally the assets, or disposal group, are measured at the lower oI their
carrying amount and Iair value less cost to sell. Any impairment loss on a disposal group Iirst is
allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no
loss is allocated to inventories, Iinancial assets, deIerred tax assets or employee beneIit assets,
which continue to be measured in accordance with the Group`s accounting policies. Impairment
losses on initial classiIication as held Ior sale or distribution and subsequent gains or losses on
remeasurement are recognised in proIit or loss. Gains are not recognised in excess oI any
cumulative impairment loss.
Intangible assets and property, plant and equipment once classiIied as held Ior sale or distribution
are not amortised or depreciated. In addition, equity accounting oI equity-accounted investees
ceases once classiIied as held Ior sale or distribution.
(j) Employee benefits
i) De1ined c4ntrib:ti4n 5lans
A deIined contribution plan is a post-employment beneIit plan under which an entity pays Iixed
contributions into a separate entity and will have no legal or constructive obligation to pay Iurther
amounts. Obligations Ior contributions to deIined contribution pension plans, including Russia`s
State pension Iund, are recognised as an employee beneIit expense in proIit or loss in the periods
during which services are rendered by employees. Prepaid contributions are recognised as an asset
to the extent that a cash reIund or a reduction in Iuture payments is available. Contributions to a
deIined contribution plan that are due more than 12 months aIter the end oI the period in which the
employees render the service are discounted to their present value.
ii) De1ined bene1it 5lans
A deIined beneIit plan is a post-employment beneIit plan other than a deIined contribution plan.
The Group`s net obligation in respect oI deIined beneIit pension plans is calculated separately Ior
each plan by estimating the amount oI Iuture beneIit that employees have earned in return Ior their
service in the current and prior periods; that beneIit is discounted to determine its present value,
and any unrecognised past service costs and the Iair value oI any plan assets are deducted. The
discount rate is the yield at the reporting date on investment grade bonds that have maturity dates
approximating the terms oI the Group`s obligations and that are denominated in the same currency
in which the beneIits are expected to be paid.
The calculation is perIormed annually by a qualiIied actuary using the projected unit credit method.
When the calculation results in a beneIit to the Group, the recognised asset is limited to the net total
oI any unrecognised past service costs and the present value oI economic beneIits available in the
Iorm oI any Iuture reIunds Irom the plan or reductions in Iuture contributions to the plan. In order
to calculate the present value oI economic beneIits, consideration is given to any minimum Iunding
OAO Client Aame
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requirements that apply to any plan in the Group. An economic beneIit is available to the Group iI
it is realisable during the liIe oI the plan, or on settlement oI the plan liabilities.
When the beneIits oI a plan are improved, the portion oI the increased beneIit relating to past
service by employees is recognised in proIit or loss on a straight-line basis over the average period
until the beneIits become vested. To the extent that the beneIits vest immediately, the expense is
recognised immediately in proIit or loss.
The Group recognises all actuarial gains and losses arising Irom deIined beneIit plans in other
comprehensive income and all expenses related to deIined beneIit plans in personnel expenses in
proIit or loss.
Note: Alternatively the Group may adopt a systematic method to recognise actuarial gains
and losses in profit or loss (AS 19.92-93).]
The Group recognises gains and losses on the curtailment or settlement oI a deIined beneIit plan
when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting
change in the Iair value oI plan assets, change in the present value oI deIined beneIit obligation and
any related actuarial gains and losses and past service cost that had not previously been recognised.
iii) Other l4ng-term em5l4yee bene1its
The Group`s net obligation in respect oI long-term employee beneIits other than pension plans is
the amount oI Iuture beneIit that employees have earned in return Ior their service in the current
and prior periods; that beneIit is discounted to determine its present value, and the Iair value oI any
related assets is deducted. The discount rate is the yield at the reporting date on high quality credit-
rated bonds that have maturity dates approximating the terms oI the Group`s obligations and that
are denominated in the same currency in which the beneIits are expected to be paid. The
calculation is perIormed using the projected unit credit method. Any actuarial gains or losses are
recognised in proIit or loss in the period in which they arise.
iv) %erminati4n bene1its
Termination beneIits are recognised as an expense when the Group is committed demonstrably,
without realistic possibility oI withdrawal, to a Iormal detailed plan to either terminate employment
beIore the normal retirement date, or to provide termination beneIits as a result oI an oIIer made to
encourage voluntary redundancy. Termination beneIits Ior voluntary redundancies are recognised
as an expense iI the Group has made an oIIer oI voluntary redundancy, it is probable that the oIIer
will be accepted, and the number oI acceptances can be estimated reliably. II beneIits are payable
more than 12 months aIter the reporting date, then they are discounted to their present value.
v) $h4rt-term bene1its
Short-term employee beneIit obligations are measured on an undiscounted basis and are expensed
as the related service is provided. A liability is recognised Ior the amount expected to be paid under
short-term cash bonus or proIit-sharing plans iI the Group has a present legal or constructive
obligation to pay this amount as a result oI past service provided by the employee, and the
obligation can be estimated reliably.
Note: Policy to be amended if other remuneration schemes exist as, for example, termination
benefits or share-based payment arrangements. See lllustrative 2010 FRS Financial
Statements published by the FRG and available on the DPP site on CS net.]
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(k) Provisions
A provision is recognised iI, as a result oI a past event, the Group has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outIlow oI
economic beneIits will be required to settle the obligation. Provisions are determined by
discounting the expected Iuture cash Ilows at a pre-tax rate that reIlects current market assessments
oI the time value oI money and the risks speciIic to the liability. The unwinding oI the discount is
recognised as Iinance cost.
i) arranties
A provision Ior warranties is recognised when the underlying products or services are sold. The
provision is based on historical warranty data and a weighting oI all possible outcomes against their
associated probabilities.
ii) Restr:ct:ring
A provision Ior restructuring is recognised when the Group has approved a detailed and Iormal
restructuring plan, and the restructuring either has commenced or has been announced publicly.
Future operating costs are not provided Ior.
iii) $ite rest4rati4n
In accordance with the Group`s published environmental policy and applicable legal requirements,
a provision Ior site restoration in respect oI contaminated land, and the related expense, is
recognised when the land is contaminated.
iv) Oner4:s c4ntracts
A provision Ior onerous contracts is recognised when the expected beneIits to be derived by the
Group Irom a contract are lower than the unavoidable cost oI meeting its obligations under the
contract. The provision is measured at the present value oI the lower oI the expected cost oI
terminating the contract and the expected net cost oI continuing with the contract. BeIore a
provision is established, the Group recognises any impairment loss on the assets associated with
that contract.
(l) Revenue
i) C44ds s4ld
Revenue Irom the sale oI goods in the course oI ordinary activities is measured at the Iair value oI
the consideration received or receivable, net oI returns, trade discounts and volume rebates.
Revenue is recognised when persuasive evidence exists, usually in the Iorm oI an executed sales
agreement, that the signiIicant risks and rewards oI ownership have been transIerred to the
customer, recovery oI the consideration is probable, the associated costs and possible return oI
goods can be estimated reliably, there is no continuing management involvement with the goods,
and the amount oI revenue can be measured reliably. II it is probable that discounts will be granted
and the amount can be measured reliably, then the discount is recognised as a reduction oI revenue
as the sales are recognised.
Note: amend the wording below as appropriate.]
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The timing oI the transIers oI risks and rewards varies depending on the individual terms oI the
sales agreement. For sales oI |product 1 name|, transIer usually occurs when the product is
received at the customer`s warehouse; however, Ior some international shipments transIer occurs
upon loading the goods onto the relevant carrier at the port oI the seller. Generally Ior such
products the buyer has no right oI return. For sales oI |product 2 name|, transIer occurs upon
receipt by the customer.
ii) $ervices
Revenue Irom services rendered is recognised in proIit or loss in proportion to the stage oI
completion oI the transaction at the reporting date. The stage oI completion is assessed by reIerence
to surveys oI work perIormed.
iii) C4mmissi4ns
When the Group acts in the capacity oI an agent rather than as the principal in a transaction, the
revenue recognised is the net amount oI commission made by the Group.
iv) C4vernment grants
Government grants are recognised initially as deIerred income at Iair value when there is
reasonable assurance that they will be received and that the Group will comply with the conditions
associated with the grant and are then recognised in proIit or loss as other income on a systematic
basis over the useIul liIe oI the asset. Grants that compensate the Group Ior expenses incurred are
recognised in proIit or loss as other income on a systematic basis in the same periods in which the
expenses are recognised.
Note: n case the group has revenue e.g. from customer loyalty programs, construction
contracts or leases, see ~FRS llustrative financial statements 2010.]
(m) Other expenses
i) Lease 5ayments
Payments made under operating leases are recognised in proIit or loss on a straight-line basis over
the term oI the lease. Lease incentives received are recognised as an integral part oI the total lease
expense, over the term oI the lease.
Minimum lease payments made under Iinance leases are apportioned between the Iinance expense
and the reduction oI the outstanding liability. The Iinance expense is allocated to each period
during the lease term so as to produce a constant periodic rate oI interest on the remaining balance
oI the liability.
Contingent lease payments are accounted Ior by revising the minimum lease payments over the
remaining term oI the lease when the contingency no longer exists and the lease adjustment is
known.
Determining whether an arrangement contains a lease
At inception oI an arrangement, the Group determines whether such an arrangement is or contains a
lease. A speciIic asset is the subject oI a lease iI IulIilment oI the arrangement is dependent on the
use oI that speciIied asset. An arrangement conveys the right to use the asset iI the arrangement
conveys to the Group the right to control the use oI the underlying asset.
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At inception or upon reassessment oI the arrangement, the Group separates payments and other
consideration required by such an arrangement into those Ior the lease and those Ior other elements
on the basis oI their relative Iair values. II the Group concludes Ior a Iinance lease that it is
impracticable to separate the payments reliably, then an asset and a liability are recognised at an
amount equal to the Iair value oI the underlying asset. Subsequently the liability is reduced as
payments are made and an imputed Iinance charge on the liability is recognised using the Group`s
incremental borrowing rate.
ii) $4cial ex5endit:re
To the extent that the Group`s contributions to social programs beneIit the community at large and
are not restricted to the Group`s employees, they are recognised in proIit or loss as incurred.
(n) Finance income and costs
Finance income comprises interest income on Iunds invested (including available-Ior-sale Iinancial
assets), dividend income, gains on the disposal oI available-Ior-sale Iinancial assets, Iair value
gains on Iinancial assets at Iair value through proIit or loss and gains on the remeasurement to Iair
value oI any pre-existing interest in an acquiree. Interest income is recognised as it accrues in proIit
or loss, using the eIIective interest method. Dividend income is recognised in proIit or loss on the
date that the Group`s right to receive payment is established, which in the case oI quoted securities
is normally the ex-dividend date.
Finance costs comprise interest expense on borrowings, unwinding oI the discount on provisions
and contingent consideration, losses on disposal oI available-Ior-sale Iinancial assets, dividends on
preIerence shares classiIied as liabilities, Iair value losses on Iinancial instruments at Iair value
through proIit or loss and impairment losses recognised on Iinancial assets (other than trade
receivables).
Borrowing costs that are not directly attributable to the acquisition, construction or production oI a
qualiIying asset are recognised in proIit or loss using the eIIective interest method.
Foreign currency gains and losses are reported on a net basis as either Iinance income or Iinance
cost depending on whether Ioreign currency movements are in a net gain or net loss position.
(o) ncome tax
Income tax expense comprises current and deIerred tax. Current tax and deIerred tax are recognised
in proIit or loss except to the extent that it relates to a business combination, or items recognised
directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss Ior the year,
using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect oI previous years. Current tax payable also includes any tax liability arising Irom
the declaration oI dividends.
DeIerred tax is recognised in respect oI temporary diIIerences between the carrying amounts oI
assets and liabilities Ior Iinancial reporting purposes and the amounts used Ior taxation purposes.
DeIerred tax is not recognised Ior:
O temporary diIIerences on the initial recognition oI assets or liabilities in a transaction that is
not a business combination and that aIIects neither accounting nor taxable proIit or loss;
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O temporary diIIerences related to investments in subsidiaries and jointly controlled entities to
the extent that it is probable that they will not reverse in the Ioreseeable Iuture; and
O taxable temporary diIIerences arising on the initial recognition oI goodwill.
DeIerred tax is measured at the tax rates that are expected to be applied to the temporary
diIIerences when they reverse, based on the laws that have been enacted or substantively enacted
by the reporting date.
DeIerred tax assets and liabilities are oIIset iI there is a legally enIorceable right to oIIset current
tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on diIIerent tax entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be realised simultaneously.
In accordance with the tax legislation oI the Russian Federation, tax losses and current tax assets oI
a company in the Group may not be set oII against taxable proIits and current tax liabilities oI other
Group companies. In addition, the tax base is determined separately Ior each oI the Group`s main
activities and, thereIore, tax losses and taxable proIits related to diIIerent activities cannot be oIIset.
Note: The wording above is applicable for Russia, amend as appropriate for other CS
countries.]
A deIerred tax asset is recognised Ior unused tax losses, tax credits and deductible temporary
diIIerences, to the extent that it is probable that Iuture taxable proIits will be available against
which they can be utilised. DeIerred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax beneIit will be realised.
(p) Discontinued operations
A discontinued operation is a component oI the Group`s business that represents a separate major
line oI business or geographical area oI operations that has been disposed oI or is held Ior sale, or is
a subsidiary acquired exclusively with a view to resale. ClassiIication as a discontinued operation
occurs upon disposal or when the operation meets the criteria to be classiIied as held Ior sale, iI
earlier. When an operation is classiIied as a discontinued operation, the comparative statement oI
comprehensive income is re-presented as iI the operation had been discontinued Irom the start oI
the comparative period.
(q) Earnings per share
The Group presents basic and diluted earnings per share ('EPS) data Ior its ordinary shares. Basic
EPS is calculated by dividing the proIit or loss attributable to ordinary shareholders oI the
Company by the weighted average number oI ordinary shares outstanding during the period,
adjusted Ior own shares held. Diluted EPS is determined by adjusting the proIit or loss attributable
to ordinary shareholders and the weighted average number oI ordinary shares outstanding, adjusted
Ior own shares held, Ior the eIIects oI all dilutive potential ordinary shares, which comprise
convertible notes and share options granted to employees.
(r) Segment reporting
An operating segment is a component oI the Group that engages in business activities Irom which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions
with any oI the Group`s other components. All operating segments` operating results are reviewed
regularly by the |Title/Iunction oI the Group`s chieI operating decision maker| to make decisions
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about resources to be allocated to the segment and assess its perIormance, and Ior which discrete
Iinancial inIormation is available.
Segment results that are reported to the |Title/Iunction oI the Group`s chieI operating decision
maker| include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Group`s
headquarters), head oIIice expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and
equipment, and intangible assets other than goodwill.
Inter-segment pricing is determined on an arm`s length basis.
(s) New Standards and nterpretations not yet adopted
Option 1 for introductory paragraph, which means that an exhaustive list will be disclosed]
The Iollowing new Standards, amendments to Standards and Interpretations are not yet eIIective as
at 31 December 2010, and have not been applied in preparing these consolidated Iinancial
statements. The Group plans to adopt these pronouncements when they become eIIective.
Option 2 for introductory paragraph, which means that an exhaustive list will not be
disclosed]
A number oI new Standards, amendments to Standards and Interpretations are not yet eIIective as
at 31 December 2010, and have not been applied in preparing these consolidated Iinancial
statements. OI these pronouncements, potentially the Iollowing will have an impact on the Group`s
operations. The Group plans to adopt these pronouncements when they become eIIective.
Note: The list below was last updated in August 2010. Please refer to the DPP site on CS net
for further updates. After each item a comment is required about the possible impact on the
financial statements when the pronouncement is adopted. The following are example
disclosures:
O The Group has not yet analysed the likely impact of the new Standard on its financial
position or performance;
O The new Standard is not expected to have a significant effect on the consolidated financial
statements of the Group;
O The new Standard will not have any impact on the Group`s financial position or
performance. (This may be appropriate when the pronouncement deals only with
disclosure);
O The new Standard is likely to reduce the Group`s reported profit and increase liabilities;
however, the impact has not yet been quantified.]
O Revised IAS 24 Related Party Disclosures (2010) introduces an exemption Irom the basic
disclosure requirements in relation to related party disclosures and outstanding balances,
including commitments, Ior government-related entities. Additionally, the standard has been
revised to simpliIy some oI the presentation guidance that was previously non-reciprocal. The
revised standard is to be applied retrospectively Ior annual periods beginning on or aIter 1
January 2011. The Group has not yet determined the potential eIIect oI the amendment.
O Amendment to IAS 32 Financial Instruments. Presentation Classification of Rights Issues
clariIies that rights, options or warrants to acquire a Iixed number oI an entity`s own equity
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instruments Ior a Iixed amount are classiIied as equity instruments even iI the Iixed amount is
determined in Ioreign currency. A Iixed amount can be determined in any currency provided
that entity oIIers these instruments pro rata to all oI the existing owners oI the same class oI its
own non-derivative equity instruments. The amendment is applicable Ior annual periods
beginning on or aIter 1 February 2010. The amendment is expected to have no impact on the
Group`s consolidated Iinancial statements.
O Amended IFRS 7 Disclosures Transfers of Financial ssets introduces additional disclosure
requirements Ior transIers oI Iinancial assets in situations where assets are not derecognised in
their entirety or where the assets are derecognised in their entirety but a continuing involvement
in the transIerred assets is retained. The new disclosure requirements are designated to enable
the users oI Iinancial statements to better understand the nature oI the risks and rewards
associated with these assets. The amendment is eIIective Ior annual periods beginning on or
aIter 1 July 2011.
O IFRS 9 Financial Instruments will be eIIective Ior annual periods beginning on or aIter 1
January 2013. The new standard is to be issued in phases and is intended ultimately to replace
International Financial Reporting Standard IAS 39 Financial Instruments. Recognition and
Measurement. The Iirst phase oI IFRS 9 was issued in November 2009 and relates to the
classiIication and measurement oI Iinancial assets. The second phase regarding classiIication
and measurement oI Iinancial liabilities was published in October 2010. The remaining parts oI
the standard are expected to be issued during the Iirst halI oI 2011. The Group recognises that
the new standard introduces many changes to the accounting Ior Iinancial instruments and is
likely to have a signiIicant impact on Group`s consolidated Iinancial statements. The impact oI
these changes will be analysed during the course oI the project as Iurther phases oI the standard
are issued. The Group does not intend to adopt this standard early.
O Amendment to IAS 12 Income taxes Deferred Tax. Recovery of Underlying ssets. The
amendment introduces an exception to the current measurement principles Ior deIerred tax
assets and liabilities arising Irom investment property measured using the Iair value model in
accordance with IAS 40 Investment Property. The exception also applies to investment
property acquired in a business combination accounted Ior in accordance with IFRS 3 usiness
Combinations provided the acquirer subsequently measures the assets using the Iair value
model. In these speciIied circumstances the measurement oI deIerred tax liabilities and deIerred
tax assets should reIlect a rebuttable presumption that the carrying amount oI the underlying
asset will be recovered entirely by sale unless the asset is depreciated or the business model is
to consume substantially all the asset. The amendment is eIIective Ior periods beginning on or
aIter 1 January 2012 and is applied retrospectively.
O Amendments to IFRIC 14. IS 19 The limit on a Defined enefit sset, Minimum Funding
Requirements and their Interaction clariIies the accounting treatment Ior prepayments made
when there also is a minimum Iunding requirement. The amendment becomes eIIective Ior
annual periods beginning on or after 1 January 2011 and is applied retrospectively.
O IFRIC 19 Extinguishing Financial iabilities with Equity Instruments provides guidance on
accounting for debt Ior equity swaps by the debtor. The interpretation clariIies that an entity`s
equity instruments qualiIy as 'consideration paid in accordance with paragraph 41 oI
International Financial Reporting Standards IAS 39 Financial Instruments. Recognition and
Measurement. Additionally, the interpretation clariIies how to account Ior the initial
measurement oI own equity instruments issued to extinguish a Iinancial liability and how to
account Ior the diIIerence between the carrying amount oI the Iinancial liability extinguished
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and the initial measurement amount oI the equity instruments issued. IFRIC 19 is applicable Ior
annual periods beginning on or aIter 1 July 2010.
O 'arious Improvements to IFRSs have been dealt with on a standard-by-standard basis. All
amendments, which result in accounting changes Ior presentation, recognition or measurement
purposes, will come into eIIect not earlier than 1 January 2011. The Group has not yet analysed
the likely impact oI the improvements on its Iinancial position or perIormance.
4 Determination of fair values
Amend the next paragraph as appropriate.]
A number oI the Group`s accounting policies and disclosures require the determination oI Iair
value, Ior both Iinancial and non-Iinancial assets and liabilities. Fair values have been determined
Ior measurement and Ior disclosure purposes based on the Iollowing methods. When applicable,
Iurther inIormation about the assumptions made in determining Iair values is disclosed in the notes
speciIic to that asset or liability.

(a) Property, plant and equipment
The Iair value oI property, plant and equipment recognised as a result oI a business combination is
based on market values. The market value oI property is the estimated amount Ior which a property
could be exchanged on the date oI valuation between a willing buyer and a willing seller in an
arm`s length transaction aIter proper marketing wherein the parties had each acted knowledgeably
and willingly. The Iair value oI items oI plant, equipment, Iixtures and Iittings is based on market
approach and cost approaches using quoted market prices Ior similar items when available.
When no quoted market prices are available, the Iair value oI property, plant and equipment is
primarily determined using depreciated replacement cost. This method considers the cost to
reproduce or replace the property, plant and equipment, adjusted Ior physical, Iunctional or
economical depreciation, and obsolescence.
(b) ntangible assets
The Iair value oI patents and trademarks acquired in a business combination is based on the
discounted estimated royalty payments that have been avoided as a result oI the patent or trademark
being owned. The Iair value oI customer relationships acquired in a business combination is
determined using the multi-period excess earnings method, whereby the subject asset is valued
aIter deducting a Iair return on all other assets that are part oI creating the related cash Ilows.
The Iair value oI other intangible assets is based on the discounted cash Ilows expected to be
derived Irom the use and eventual sale oI the assets.
(c) nventories
The Iair value oI inventories acquired in a business combination is determined based on its
estimated selling price in the ordinary course oI business less the estimated costs oI completion and
sale, and a reasonable proIit margin based on the eIIort required to complete and sell the
inventories.
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(d) Equity and debt securities
The Iair value oI equity and debt securities is determined by reIerence to their quoted closing bid
price at the reporting date, or iI unquoted, determined using a valuation technique. 'aluation
techniques employed include market multiples and discounted cash Ilow analysis using expected
Iuture cash Ilows and a market-related discount rate. The Iair value oI held-to-maturity investments
is determined Ior disclosure purposes only.
(e) Trade and other receivables
The Iair value oI trade and other receivables, excluding construction work in progress, is estimated
as the present value oI Iuture cash Ilows, discounted at the market rate oI interest at the reporting
date. This Iair value is determined Ior disclosure purposes or when acquired in a business
combination.
(f) Derivatives
The Iair value oI Iorward exchange contracts is based on their quoted market price, iI available. II a
quoted market price is not available, then Iair value is estimated by discounting the diIIerence
between the contractual Iorward price and the current Iorward price Ior the residual maturity oI the
contract using a risk-Iree interest rate (based on government bonds).
The Iair value oI interest rate swaps is based on broker quotes. Those quotes are tested Ior
reasonableness by discounting estimated Iuture cash Ilows based on the terms and maturity oI each
contract and using market interest rates Ior a similar instrument at the measurement date. Fair
values reIlect the credit risk oI the instrument and include adjustments to take account oI the credit
risk oI the Group entity and counterparty when appropriate.
(g) Non-derivative financial liabilities
Fair value, which is determined Ior disclosure purposes, is calculated based on the present value oI
Iuture principal and interest cash Ilows, discounted at the market rate oI interest at the reporting
date. In respect oI the liability component oI convertible notes, the market rate oI interest is
determined by reIerence to similar liabilities that do not have a conversion option. For Iinance
leases the market rate oI interest is determined by reIerence to similar lease agreements.
(h) Contingent consideration
The Iair value oI contingent consideration is calculated using the income approach based on the
expected payment amounts and their associated probabilities (i.e. probability-weighted). Since the
contingent consideration is long-term nature, it is discounted to present value.
5 Operating segments
Note: The following is an example of the disclosure required by FRS 8.20-22.]
The Group has six reportable segments, as described below, which are the Group`s strategic
business units. The strategic business units oIIer diIIerent products and services, and are managed
separately because they require diIIerent technology and marketing strategies. For each oI the
strategic business units, the |ChieI operating decision maker| reviews internal management reports
on at least a quarterly basis. The Iollowing summary describes the operations in each oI the
Group`s reportable segments:
OAO Client Aame
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O Standard Papers. Includes purchasing, manuIacturing and distributing pulp and paper.
O Recycled Papers. Includes purchasing, recycling and distributing pulp and paper.
O Packaging. Includes designing and manuIacturing packaging materials; this segment was sold
in May 2010.
O Forestry. Includes cultivating and managing Iorest resources as well as related services.
O Timber Products. Includes manuIacturing and distributing soItwood lumber, plywood, veneer,
composite panels, engineered lumber, raw materials and building materials.
O Research and Development. Includes research and development activities.
Other operations include the construction oI storage units and the manuIacture oI Iurniture and
related parts. None oI these segments meets any oI the quantitative thresholds Ior determining
reportable segments in 2010 or 2009.
There are varying levels oI integration between the Forestry and Timber Products reportable
segments, and the Standard Papers and Recycled Papers reportable segments. This integration
includes transIers oI raw materials and shared distribution services, respectively. Inter-segment
pricing is determined on an arm`s length basis.
InIormation regarding the results oI each reportable segment is included below. PerIormance is
measured based on segment proIit beIore income tax, as included in the internal management
reports that are reviewed by the Group`s CEO. Segment proIit is used to measure perIormance as
management believes that such inIormation is the most relevant in evaluating the results oI certain
segments relative to other entities that operate within these industries.
Note: f the segment profit is reviewed on an after tax basis by the chief operating decision
maker, then income tax expense or income should be included in the following table (See
FRS 8.23).]
Note: n the following table, capital expenditure includes amounts of additions to non-
current assets other than financial instruments, deferred tax assets, post-employment benefits
or rights arising from insurance contracts (See FRS 8.24b).]
Note: The mprovement to FRSs 2009 amended FRS 8 so that effective from 1 1anuary
2010 a measure of segment assets (in the following table) is disclosed only if the amounts are
regularly provided to the chief operating decision maker, consistent with the equivalent
requirement related to the presentation of segment liabilities.]

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i) n14rmati4n ab4:t re54rtable segments

Standard
papers
Recycled
papers
Packaging
(discontinued) Forestry
Timber
products
Research and
development Other Total
`000 RUB 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

External revenues

Inter-segment revenue
Interest revenue
Interest expense
Depreciation and amortisation

Reportable segment proIit beIore income
tax

Share oI proIit oI equity method investees
Other material non-cash items:
Impairment on property, plant and
equipment and intangible assets
Reversed impairment losses on
property, plant and equipment and
intangible assets
Reportable segment assets
Investment in associates
Capital expenditure
Reportable segment liabilities

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Standard
papers
Recycled
papers
Packaging
(discontinued) Forestry
Timber
products
Research and
development Other Total
`000 USD` 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

External revenues

Inter-segment revenue
Interest revenue
Interest expense

Reportable segment proIit beIore income
tax

Share oI proIit oI equity method investees
Other material non-cash items:
Impairment on property, plant and
equipment and intangible assets
Reversed impairment losses on
property, plant and equipment and
intangible assets
Reportable segment assets
Investment in associates
Capital expenditure
Reportable segment liabilities

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Note: n the example above reportable segments are the same as the products that the entity
produces. Where this is not the case, additional disclosure regarding revenues from external
customers for each product and service or group of similar products and services is required
unless the information is not available and the cost to develop it would be excessive (for
guidance see FRS 8.32).]

2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Revenues
Total revenue Ior reportable segments
Other revenue
Elimination oI inter-segment revenue
Elimination oI discontinued operations
Consolidated revenue

Profit or loss
Total proIit or loss Ior reportable
segments
Other proIit or loss

Elimination oI inter-segment proIits
Elimination oI discontinued operations
Unallocated amounts
Other corporate expenses
Share oI proIit oI equity-accounted
investees
Consolidated proIit Irom continuing
operations beIore income tax

Assets
Total assets Ior reportable segments
Other assets
Investments in equity accounted
investees
Other unallocated amounts
Consolidated total assets

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2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Liabilities
Total liabilities Ior reportable segments
Other liabilities
Other unallocated amounts
Consolidated total liabilities
ii) Rec4nciliati4ns 41 re54rtable segment reven:es, 5r41it 4r l4ss, assets and liabilities and 4ther
material items
iii) Other material items 21

Reportable
segment
totals Adjustments
Consolidated
totals
Reportable
segment
totals Adjustments
Consolidated
totals
`000 RUB `000 RUB `000 RUB `000 USD` `000 USD` `000 USD`
Interest revenue
Interest expense
Capital expenditure
Depreciation and
amortisation
Impairment on
intangible assets
Impairment losses on
property, plant and
equipment and
intangible assets
reversed
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iv) Other material items 29

Reportable
segment
totals Adjustments
Consolidated
totals
Reportable
segment
totals Adjustments
Consolidated
totals
`000 RUB `000 RUB `000 RUB `000 USD` `000 USD` `000 USD`
Interest revenue
Interest expense
Capital expenditure
Depreciation and
amortisation
Impairment on
intangible assets
Impairment losses on
property, plant and
equipment and
intangible assets
reversed
v) Ce4gra5hical in14rmati4n
Note: The following is an example of the disclosure required by FRS 8.33.]
The Standard Papers, Recycled Papers and Forestry segments are managed on a worldwide basis,
but operate in two principal geographical areas, Europe and America. In Europe manuIacturing
Iacilities and sales oIIices are operated in France, The Netherlands, Germany and the United States
oI America.
In presenting inIormation on the basis oI geographical inIormation, revenue is based on the
geographical location oI customers.
Revenues Non-current assets
`000 RUB 2010 2009 2010 2009

France
The Netherlands
Germany
United States oI America
United Kingdom
Other countries
Investments in equity accounted investees
Packaging (discontinued)

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Revenues Non-current assets
`000 USD` 2010 2009 2010 2009

France
The Netherlands
Germany
United States oI America
United Kingdom
Other countries
Investments in equity accounted investees
Packaging (discontinued)

vi) Maj4r c:st4mer
Note: The following is an example of the disclosure required by FRS 8.34.]
In 2010 no customer represented more than 10 oI the Group`s total revenue. In 2009, revenue
Irom one customer oI the Group`s |segment name| represented approximately 12 (RUB xx/USD*
xx) oI the Group`s total revenue.
6 Discontinued operation
Amend or delete as appropriate.] On |date| the Group sold its |name and segment| which was
not a discontinued operation or classiIied as held Ior sale as at 31 December 2009 and the
comparative statement oI comprehensive income has been re-presented to show the discontinued
operation separately Irom continuing operations. Management committed to a plan to sell this
entity |explain when and why|
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Note 2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Results of discontinued
operation
Revenue
Expenses
activities
activities, net of income tax
Gain on sale oI discontinued
operation
Income tax on gain on sale oI
discontinued operation 17

Basic earnings/(loss) per share
(RUB)
Diluted earnings/(loss) per share
(RUB)
The proIit Irom discontinued operation oI RUB xx/USD*xx (2009: RUB xx/USD*xx) is
attributable to the owners oI the Group. OI the proIit Irom continuing operations oI RUB xx/USD*
xx (2009: RUB xx/USD* xx), an amount oI RUB xx/USD* xx is attributable to the owners oI the
Group (2009: RUB xx/USD* xx).
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Cash flows from/(used in) discontinued
operation
Net cash used in operating activities
Net cash Irom investing activities
Net cash Irom Iinancing activities
Net cash Irom/(used in) discontinued
operation

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Effect of disposal on the financial position of the Group
2010
Note `000 RUB `000 USD`
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
DeIerred tax liabilities
Trade and other payables
Net assets and liabilities

Consideration received, satisIied in cash
Cash and cash equivalents disposed oI
Net cash inIlow
7 Non-current assets held for sale
Amend or delete as appropriate.] On |date| the Group`s management committed to sell |name|
due to a signiIicant decrease in the demand Ior |name| products. EIIorts to sell the disposal group
have commenced, and a sale is expected by |date|. At 31 December 2010 the disposal group
comprised assets oI RUB xx/USD* xx less liabilities oI RUB xx/USD* xx.
An impairment loss oI RUB xx/USD* xx on the remeasurement oI the disposal group to the lower
oI its carrying amount and its Iair value less costs to sell has been recognised in other expenses (see
note 14).
2010
Assets classified as held for sale
Property, plant and equipment 18
Inventories 23
Trade and other receivables 24

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2010
Liabilities classified as held for sale
Trade and other payables 32

8 Acquisitions and disposals of subsidiary and non-controlling interests
Note: Consider also the disclosure requirements for individually immaterial business
combinations (FRS 3.B65) and business combinations with acquisition date after the
reporting date but before the financial statements are authorized for issue (FRS 3.B66).
These requirements are not addressed below.]
(a) Acquisition of subsidiary
Note: The paragraph below includes the disclosure requirement of FRS 3.B64a-c. Amend as
appropriate.]
On |acquisition date| the Group obtained control oI |name and description oI the acquiree| by
acquiring |percentage oI voting interest acquired| oI the shares and voting interests in the company.
As a result, the Group`s equity interest in |name| increased Irom xx to xx.
Note: Describe the primary reasons for the business combination (FRS 3.B64(d).]
Example: Taking control oI |name| will enable the Group to modernize its production process
through access to |name|`s patented technology. The acquisition is expected to provide the Group
with an increased share oI the | | market through access to the acquiree`s customer base. The Group
also expects to reduce costs through economies oI scale.
Note: Disclose the amounts of revenue and profit or loss of the acquiree since the acquisition
date and from the beginning of the period as though the acquisition had occurred then (FRS
3.B64q).]
Example: From the date oI acquisition to 31 December 2010 |name| contributed revenue oI
RUB xx/USD* xx and proIit oI RUB xx/USD* xx. II the acquisition had occurred on 1 January
2010, management estimates that consolidated revenue would have been RUB xx/USD* xx, and
consolidated proIit Ior the year would have been RUB xx/USD* xx. In determining these amounts,
management has assumed that the Iair value adjustments that arose on the date oI acquisition would
have been the same iI the acquisition had occurred on 1 January 2010.
Note: f it is not practicable for the entity to provide the information above required by
FRS 3.B64(q), disclose that fact and explain the reason for not providing this disclosure.]
The Iollowing summarizes the major classes oI consideration transIerred, and the recognised
amounts oI assets acquired and liabilities assumed at the acquisition date.
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i) C4nsiderati4n trans1erred
Cash
Equity instruments (xx ordinary shares) 26
Contingent consideration
Settlement oI pre-existing relationship

The Iair value oI the ordinary shares issued was based on the listed share price oI the |name| at
|date| oI RUB xx/USD* xx per share.
Note: f the consideration transferred includes contingent consideration, describe the
arrangement, basis for determining the amount of the payment and an estimate of the range
of outcomes or, if not practicable, the reason why a range cannot be estimated. f the
maximum amount is unlimited, this fact should be disclosed. Also note that the settlement of
a pre-existing relationship is a negative adjustment to the total consideration. See examples in
FRS illustrative financial statements p.100-101 published by FRG and available on DPP site
on CS net.]
Example: The Group has agreed to pay the selling shareholders additional consideration oI RUB
xx iI the acquiree`s cumulative EBITDA over the next three Iiscal years exceeds RUB xx. The
Group has included RUB xx as contingent consideration related to the additional consideration,
which represents its Iair value at the acquisition date, based on a discount rate oI 11. At 31
December 2010 the contingent consideration had increased to RUB xx, reIlecting the unwind oI the
discount since acquisition.
ii) denti1iable assets acq:ired and liabilities ass:med
The identiIiable assets acquired and the liabilities assumed were as Iollows:
Note Recognised fair values on acquisition
`000 RUB `000 USD`
Non-current assets
Intangible assets
Investments
DeIerred tax assets
Current assets
Investments
Inventories
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Note Recognised fair values on acquisition
`000 RUB `000 USD`
Income tax receivable
Loans and borrowings
Provisions
Current liabilities
Bank overdraIt
Income tax payable
Provisions
Contingent liabilities
Net identifiable assets, liabilities and
contingent liabilities

Note: Provide a description of amounts that have been determined on a provisional basis
including why the initial accounting for the business combination is incomplete, for which
assets, liabilities and equity interests the initial accounting is incomplete and the nature and
amount of any measurement period adjustments recognised during the period (FRS 3.67a).
An example of this disclosure can be found on p.101 of the 2010 illustrative financial
statements published by FRG and available on DPP site on CS net.]
Note: A contingent liability assumed in a business combination is recognised at the
acquisition date even if it is not probable that an outflow of resources is required to settle the
obligation provided that it is a present obligation arising from past events and can be
measured reliably (FRS 3.23).]
Note: The wording below regarding trade receivables is a requirement of FRS 3.B64(h).]
The trade receivables comprise gross contractual amounts due oI RUB xx/USD* xx, oI which RUB
xx/USD* xx was expected to be uncollectable at the acquisition date.

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iii) C44dwill
Goodwill was recognised as a result oI the acquisition as Iollows:
`000 RUB `000 USD`

Total consideration transIerred
Non-controlling interests, based on their
proportionate interest in the recognised amounts
oI the asset and liabilities oI the acquiree
Fair value oI existing interest in the acquiree
Fair value oI identiIiable net assets
Goodwill
Note: f the amount of the non-controlling interest is measured at fair value, disclose the
valuation technique and key model inputs used in the valuation (FRS 3.B64(o)ii).]
Note: f the business combination is achieved in stages, disclose the acquisition date fair
value of the equity interest in the acquiree held by the acquirer immediately before the
acquisition date, the amount of any gain or loss recognised as a result of remeasuring to fair
value and the line item in the statement of comprehensive income in which the gain or loss is
recognised (FRS 3.B64(p).]
Example: The remeasurement to Iair value oI the Group`s existing xx interest in the acquire
resulted in a gain oI RUB xx/USD* xx (RUB yy/USD* yy less RUB zz/USD* zz carrying value oI
equity-accounted investee at acquisition date plus RUB xy/USD* xy oI translation reserve
transIerred to proIit or loss), which has been recognised in Iinance income in the statement oI
Note: Describe the factors that make up the goodwill recognised and the total amount of
goodwill that is expected to be deductible for tax purposes (FRS 3.B64e).]
Example: The goodwill is attributable mainly to the skills and technical talent oI acquiree`s work
Iorce and the synergies expected to be achieved Irom integrating the company into the Group`s
existing business. None oI the goodwill recognised is expected to be deductible Ior income tax
purposes.
Note: f an acquirer makes a bargain purchase (resulting in negative goodwill), disclose the
amount of gain recognised, the line item in the statement of comprehensive income in which
the gain is presented, and a description of the reasons why the transaction resulted a gain
(FRS 3.B64(n).]
(b) Acquisition-related costs
The Group incurred acquisition-related costs oI RUB xx/USD* xx related to external legal Iees and
due diligence costs. The legal Iees and due diligence costs have been included in administrative
expenses in the Group`s consolidated statement oI comprehensive income.
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(c) Acquisition of non-controlling interests
On |date| the Group acquired an additional xx interest in |name| Ior RUB xx/USD* xx,
increasing its ownership Irom xx to yy. The carrying amount oI |name|`s net assets in the
consolidated Iinancial statements on the date oI acquisition was RUB xx/USD* xx. The Group
recognised a decrease in non-controlling interests oI RUB xx/USD* xx and a decrease in retained
earnings oI RUB xx/USD* xx.
Note: When non-controlling interests were initially measured as the proportionate interest in
the identifiable net assets of a subsidiary and, therefore, no goodwill was initially attributed
to non-controlling interests, there are several acceptable approaches to determining the
adjustment to non-controlling interests. See 2010 llustrative financial statements p. 102,
published by the FRG and available on the DPP site on CS net.]
The Iollowing summarises the eIIect oI changes in the Company`s ownership interest in |name oI
subsidiary| that do not result in a loss oI control on the equity attributable to the parent:
`000 RUB `000 USD`

Company`s ownership interest at the beginning
oI the year
EIIect oI increase in Company`s ownership
interest
Share oI comprehensive income
Company`s ownership interest at the end oI the
year
(d) Disposal of subsidiary
On |date| the Group disposed oI its investment in |name|. The subsidiary contributed RUB
xx/USD* xx to the net proIit Ior the year, including the gain on disposal oI RUB xx/USD* xx.
The disposal oI the subsidiary had the Iollowing eIIect on the Group`s assets and liabilities at the
date oI disposal:
Carrying amount at date of disposal
`000 RUB `000 USD`

Non-current assets
Intangible assets
Investments
DeIerred tax assets
Current assets
Investments
Inventories
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Carrying amount at date of disposal
`000 RUB `000 USD`

Income tax receivable
Provisions
Current liabilities
Bank overdraIt
Income tax payable
Provisions
Net identifiable assets and liabilities
Consideration received, satisIied in cash
Cash disposed oI
Net cash outIlow/(inIlow)
9 Revenue
Option 1: Entity has no discontinued operation(s).]
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Sales oI goods
Commissions
Revenue Irom services provided
Other revenue
Total revenues

Option 2: Entity has discontinued operation(s).]
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Continuing operations Discontinued operation Consolidated
`000 RUB 2010 2009 2010 2009 2010 2009
Sales oI goods
Commissions
Revenue Irom services
provided
Other revenue
Total revenues

Continuing operations Discontinued operation Consolidated
`000 USD` 2010 2009 2010 2009 2010 2009
Sales oI goods
Commissions
Revenue Irom services
provided
Other revenue
Total revenues

Note: The following is an example of the disclosure required by AS 1.122.]
Commissions relate to the sale oI |explain| in which the Group acts as an agent in the transaction
rather than as the principal. Management considered the Iollowing Iactors in distinguishing
between an agent and a principal:
O The Group does not take title oI the goods and has no responsibility in respect oI the goods
sold.
O Although the Group collects the revenue Irom the Iinal customer, all credit risk is borne by the
supplier oI the goods.
O The Group cannot vary the selling prices set by the supplier by more than one percent.
Note: The following are examples of the disclosure required by AS 1.125 when estimation
uncertainty exists. nformation tailored to the specific circumstances should be disclosed,
when relevant.]
Example 1: The Group has recognised revenue oI RUB xx/USD* xx Ior the sale oI goods in
the normal course oI business. Customers have the right to return the goods up to one month aIter
goods are delivered. Based on past experience, management believes that approximately 2 oI
goods will be returned. The Group has, thereIore, recognised revenue together with a provision
against revenue Ior estimated returns. Should the actual returns be at a level oI 1 or (3),
revenue Ior the year ended 31 December 2010 would be increased/(decreased) by RUB xx/USD*
xx, respectively.
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Example 2: The Group carried out a large maintenance project during 2010 Ior a domestic
customer operating in the utilities sector. The work included replacing machinery and maintenance.
AIter maintenance work was completed in October, the customer notiIied the Group that it had
identiIied errors and deIects in the work carried out. Management investigated the deIects and
agreed with the customer to correct them. Management estimated that the extra work required will
be completed by February 2010. Management also considered whether revenue Irom this project
should be recognized in 2010. Because the delivered goods were not operational as intended in
2010 and its customer had not approved the work carried out, management concluded that the
signiIicant risks and rewards oI ownership oI the goods had not been transIerred as at 31 December
2010 and, accordingly, revenue should be recognized only in 2010.
10 Cost of sales
Note: The following is not mandatory and should be discussed with the client before
including.]
2010 2009 2010 2009
Materials
Labour and wages

11 Other income
2010 2009 2010 2009
Net gain on disposal oI
property, plant and equipment
Negative goodwill
Government grants
Other

12 Distribution expenses
Note: The following is not mandatory and should be discussed with client before including.]
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2010 2009 2010 2009
Wages and salaries
Transportation expenses
Storage expenses
Advertising expenses

13 Administrative expenses
Note: The following is not mandatory and should be discussed with client before including.]
2010 2009 2010 2009
Wages and salaries
Contributions to deIined
contribution plans
Increase in liability Ior deIined
beneIit plans
Social expenditure
Rent
Overheads
Other administrative expenses

14 Other expenses
2010 2009 2010 2009
Research and development
Net loss on disposal oI
property, plant and equipment 7
Impairment losses on property,
plant and equipment 18

Note: Whenever possible expenses should be allocated to the relevant function.]
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15 Personnel costs
2010 2009 2010 2009
Wages and salaries
Compulsory social security
contributions
Contributions to State pension
Iund 29
Expenses related to deIined
beneIit plans 29
Expenses related to long-term
service beneIit plans 29
16 Finance income and finance costs
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Recognised in profit or loss
Interest income on unimpaired held-to-
maturity investments
Interest income on impaired held-to-
maturity investments
Interest income on available-Ior-sale
Iinancial assets
Interest income on loans and receivables
Interest income on bank deposits
Dividend income on available-Ior-sale
Iinancial assets
Remeasurement to Iair value oI pre-
existing interest in acquiree
Net gain on disposal oI available-Ior-sale
Iinancial assets transIerred Irom equity
Net change in Iair value oI Iinancial
assets at Iair value through proIit or loss
Finance income

Interest expense on Iinancial liabilities
measured at amortised cost
Net Ioreign exchange loss
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2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Net change in Iair value oI Iinancial
assets at Iair value through proIit or loss
Unwind oI discount on site restoration
provision
Impairment loss on trade receivables
Impairment loss on held-to-maturity
investments
Finance costs
Net Iinance costs recognised in proIit or
loss

The above Iinancial income and costs
include the Iollowing in respect oI
assets/(liabilities) not at Iair value
through proIit and loss:
Total interest income on Iinancial assets
Total interest expense on Iinancial
liabilities
Note: FRSs are silent as to the presentation of impairment losses on trade accounts
receivable: Such losses may also be presented within operating expenses (usually
administrative expenses).]
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Recognised in other comprehensive
income
Ior Ioreign operations
Net change in Iair value oI available-Ior-
sale Iinancial assets
Net change in Iair value oI available-Ior-
sale Iinancial assets transIerred to proIit
or loss
Income tax on income and expense
recognised in other comprehensive
income
Finance income recognised in other
comprehensive income, net oI tax

Attributable to:
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2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Equity holders oI the Company
Non-controlling interest
Finance income recognised in other
comprehensive income, net oI tax
Note: Describe any impairment losses and subsequent reversals.]
17 ncome tax expense
The Group`s applicable tax rate is the income tax rate oI 20 Ior Russian companies.
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Current tax expense
Current year
Adjustment Ior prior years

Deferred tax expense
Origination and reversal oI temporary
diIIerences
Reduction in tax rate
Recognition oI previously unrecognised
tax losses
Change in unrecognised deductible
temporary diIIerences

Income tax expense excluding tax on sale
oI discontinued operation and share oI
income tax oI equity accounted investees

Income tax expense Irom continuing
operations
Income tax Irom discontinued operation
(excluding gain on sale)

Income tax on gain on sale oI
discontinued operation
Share oI income tax oI equity accounted
investees
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2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
Total income tax expense
(a) ncome tax recognised in other comprehensive income
`000 RUB 2010 2009
Before tax Tax Net of tax Before tax Tax Net of tax
diIIerences Ior Ioreign operations
Revaluation oI property, plant and
equipment
Available-Ior-sale Iinancial assets
gains (losses)

`000 USD` 2010 2009
diIIerences Ior Ioreign operations
Revaluation oI property, plant and
equipment
Available-Ior-sale Iinancial assets
gains (losses)

(b) ncome tax recognised directly in equity
`000 RUB 2010 2009
Discount oI a low-interest loan
Irom a related party

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`000 USD` 2010 2009
Discount oI a low-interest loan
Irom a related party

Reconciliation of effective tax rate:
2010 2009
`000 RUB `000 RUB
ProIit/(loss) excluding income tax
Income tax at applicable tax rate
EIIect oI income taxed at (lower)/higher rates
Non-deductible expenses
Non-taxable income
Recognition oI previously unrecognised tax
losses
Change in unrecognised temporary
diIIerences
Current year losses Ior which no deIerred tax
asset was recognised
Under/(over) provided in prior years

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2010 2009
`000 USD` `000 USD`
ProIit/(loss) excluding income tax
Income tax at applicable tax rate
EIIect oI income taxed at (lower)/higher rates
Non-deductible expenses
Non-taxable income
Recognition oI previously unrecognised tax
losses
Change in unrecognised temporary
diIIerences
Current year losses Ior which no deIerred tax
asset was recognised
Under/(over) provided in prior years

18 Property, plant and equipment
`000 RUB Note
Land and
buildings
Plant and
equipment
Fixtures
and fittings
Under
construction Total
C4st 4r deemed
c4st/Reval:ed am4:nt
Acquisitions through
business combinations
Additions
Disposals
Revaluation
TransIers
EIIect oI movements in
exchange rates
Balance at 31 December
2009

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`000 RUB Note
Land and
buildings
Plant and
equipment
Fixtures
and fittings
Under
construction Total
Additions
Disposals
Revaluation
TransIers
exchange rates
2010
De5reciati4n and
im5airment l4sses
Depreciation Ior the year
Impairment loss
Disposals
exchange rates
2009

Impairment loss
Disposals
exchange rates
2010

Carrying am4:nts
At 1 January 2009
At 31 December 2009
At 31 December 2010
OAO Client Aame
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`000 RUB Note
Land and
buildings
Plant and
equipment
Fixtures
and fittings
Under
construction Total
Aet b44 val:e had n4
reval:ati4ns taen 5lace
At 1 January 2009
At 31 December 2009
At 31 December 2010

`000 USD` Note
Land and
buildings
Plant and
equipment
Fixtures
and fittings
Under
construction Total
C4st 4r deemed
c4st/Reval:ed am4:nt
Additions
Disposals
Revaluation
TransIers
exchange rates
2009

Additions
Disposals
Revaluation
TransIers
exchange rates
2010
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`000 USD` Note
Land and
buildings
Plant and
equipment
Fixtures
and fittings
Under
construction Total
De5reciati4n and
im5airment l4sses
Impairment loss
Disposals
exchange rates
2009

Impairment loss
Disposals
exchange rates
2010

Carrying am4:nts
At 1 January 2009
At 31 December 2009
At 31 December 2010
Carrying am4:nts had n4
reval:ati4ns taen 5lace
At 1 January 2009
At 31 December 2009
At 31 December 2010
Depreciation expense oI RUB xx/USD* xx has been charged to cost oI goods sold, RUB xx/USD*
xx to distribution expenses and RUB xx/USD* xx to administrative expenses.
(a) mpairment loss and subsequent reversal
Note: Describe all material impairment losses and any subsequent reversals. See example in
the illustrative 2010 financial statements published by the FRG and available on the DPP
site on CS net.]
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(b) Revaluation of land
In 2010 management commissioned |name| to independently appraise land as at
31 December 2010 which, in accordance with the Group`s accounting policy, is measured at Iair
value. The Iair value oI land was determined to be RUB xx/USD* xx and reIlects market prices in
recent transactions.
Note: Further disclosures such as sensitivity analyses may be necessary if no market prices
exist for land.]
(c) Revaluation of property, plant and equipment
Note: The following text may be relevant if property, plant and equipment (other than land)
is revalued (or on first-time adoption of FRSs).]
In 200X, management commissioned |name| to independently appraise property, plant and
equipment as at 1 January 200X. The Iair value oI property, plant and equipment was determined to
be RUB xx/USD* xx.
The majority oI the Group`s property, plant and equipment is specialised in nature and is rarely
sold on the open market other than as part oI a continuing business. Except Ior land, which was
appraised on the basis oI recent market transactions, the market Ior similar property, plant and
equipment is not active in the Russian Federation and does not provide a suIIicient number oI sales
oI comparable property, plant and equipment Ior using a market-based approach Ior determining
Iair value.
Consequently the Iair value oI property, plant and equipment was primarily determined using
depreciated replacement cost. This method considers the cost to reproduce or replace the property,
plant and equipment, adjusted Ior physical, Iunctional or economical depreciation, and
obsolescence.
Depreciated replacement cost was estimated based on internal sources and analysis oI the Russian
and international markets Ior similar property, plant and equipment. 'arious market data were
collected Irom published inIormation, catalogues, statistical data etc, and industry experts and
suppliers oI property, plant and equipment were contacted both in the Russian Federation and
abroad.
In addition to the determination oI the depreciated replacement cost, cash Ilow testing was
conducted in order to assess the reasonableness oI those values, which resulted in depreciated
replacement cost values being decreased by RUB xx/USD* xx in arriving at the above value.
The Iollowing key assumptions were used in perIorming the cash Ilow testing:
O Cash Ilows were projected based on past experience, actual operating results and the Group`s
Iive-year business plan.
O Total production at the plants was projected at about xx units in the Iirst year oI the business
plan. The anticipated annual production growth included in the cash Ilow projections was x
Ior the years 2011 to 2015. Management plans to achieve production volume oI xx by the IiIth
year oI the business plan.
O Sales prices are projected not to increase in 2011, reIlecting current economic conditions, and
by x annually thereaIter.
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O Unit production costs are expected to increase by x in 2011 and by y annually thereaIter.
Other costs are projected to increase in line with inIlation.
O Cash Ilows Ior a Iurther ten years were extrapolated assuming no Iurther growth in production,
and revenue and expenses increasing in line with inIlation.
O A discount rate oI x was applied in determining the recoverable amount oI the plants. The
discount rate was estimated based on an industry average weighted average cost oI capital,
which was based on a possible range oI debt leveraging oI x at a market interest rate oI x.
O A terminal value was derived at the end oI a 15-year interim period. A terminal rate oI x was
considered in estimating the terminal value Ior the plants.
The estimated recoverable amount oI the property, plant and equipment exceeds its carrying
amount by approximately RUB xx/USD* xx (2009: RUB yy/USD* yy). Management has
identiIied two key assumptions Ior which there could be a reasonably possible change that could
cause the carrying amount to exceed the recoverable amount. The above estimates are particularly
sensitive in the Iollowing areas:
O An increase oI XX in the discount rate used would have caused the recoverable amount to
equal the carrying amount.
O A xx decrease in Iuture production volumes would have caused the recoverable amount to
equal the carrying amount.
(d) Security
Note: The following is an example of the disclosure required by AS 16.74(a).]
At 31 December 2010 properties with a carrying amount oI RUB xx/USD* xx (2009: RUB
xx/USD* xx) are subject to a registered debenture to secure bank loans (see note 28).
(e) Leased plant and machinery
Note: The following is an example of the disclosure required by AS 17.31.]
The Group leases production equipment under a number oI Iinance lease agreements.
Certain leases provide the Group with the option to purchase the equipment at a beneIicial price.
One oI the leases is an arrangement that is not in the legal Iorm oI a lease, but is accounted Ior as
such based on its terms and conditions. The leased equipment secures lease obligations. At
31 December 2010 the net carrying amount oI leased plant and machinery was RUB xx/USD* xx
(2009: RUB xx/USD* xx).
Note: Describe the existence and terms of renewal or purchase options and escalation
clauses. Disclose also if the lease arrangement imposes restrictions for example on dividends
or additional debt or lease obligations (AS 17.31(e)).]
(f) Property, plant and equipment under construction
Note: The following is an example of the disclosure required by AS 16.74(b).]
During the year ended 31 December 2010 the Group acquired land with the intention oI
constructing a new Iactory on the site. The cost oI acquisition was RUB xx/USD* xx. The Group
commenced construction oI the new Iactory; costs incurred up to the reporting date totalled RUB
xx/USD* xx (2009: nil).
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Capitalised borrowing costs related to the acquisition oI the land and the construction oI the new
Iactory amounted to RUB xx/USD* xx (2009: RUB yy/USD* yy), with a capitalisation rate oI xx
(2009 yy).
(g) Change in estimates
Note: The following is an example of the disclosure required by AS 16.76 when accounting
estimate changes, amend or delete as appropriate.]
During the year ended 31 December 2010, the Group conducted an operational eIIiciency review at
one oI its plants, which resulted in changes in the expected usage oI certain items oI property, plant
and equipment. Certain | | equipment, which management previously intended to sell aIter Iive
years oI use, is now expected to remain in production Ior 12 years Irom the date oI purchase.
As a result, the expected useIul lives oI these assets increased and their estimated residual values
decreased. The eIIect oI these changes on depreciation expense, recognised in cost oI sales, in
current and Iuture periods is as Iollows:
`000 RUB 2010 2011 2012 2013 Later

(Decrease)/increase in
depreciation expense

`000 USD` 2010 2011 2012 2013 Later

(Decrease)/increase in
depreciation expense
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19 ntangible assets
`000 RUB Note Goodwill
Patents and
trademarks
Development
costs Total
C4st
Other acquisitions
internally developed
Other acquisitions
separately acquired
Disposals
EIIect oI movement in
exchange rates
2009

Other acquisitions
Other acquisitions
separately acquired
Disposals
exchange rates
2010

Am4rtisati4n and
im5airment l4sses
Amortisation Ior the year
Impairment losses
Disposals
exchange rates
2009
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`000 RUB Note Goodwill
Patents and
trademarks
Development
costs Total

Impairment losses
Disposals
exchange rates
2010

Carrying am4:nts
At 1 January 2009
At 31 December 2009
At 31 December 2010

OAO Client Aame
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`000 USD` Note Goodwill
Patents and
trademarks
Development
costs Total
C4st
Other acquisitions
Other acquisitions
separately acquired
Disposals
exchange rates
2009

Other acquisitions
Other acquisitions
separately acquired
Disposals
exchange rates
2010

Am4rtisati4n and
im5airment l4sses
Impairment losses
Disposals
exchange rates
2009
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`000 USD` Note Goodwill
Patents and
trademarks
Development
costs Total

Impairment losses
Disposals
exchange rates
2010

Carrying am4:nts
At 1 January 2009
At 31 December 2009
At 31 December 2010
(a) Amortisation and impairment charge
Note: Following text is an example, amend as appropriate.]
Amortisation oI patents, trademarks and development costs is allocated to the cost oI inventory and
is recognised in cost oI sales as inventory is sold; the amortisation oI other intangible assets is
included in cost oI sales. The impairment loss is recognised in cost oI sales in the statement oI
(b) Recoverability of development costs
The carrying amount oI an intangible asset representing a development project Ior a new process in
one oI the Group`s Iactories in |country| is RUB xx/USD* xx. An impairment test was triggered
during the year because the regulation that would allow this new process to be implemented was
delayed, such that the beneIit oI the new process would not be realised as soon as previously
expected. The recoverable amount oI the cash-generating unit (the Iactory using the process) was
estimated based on its value in use, assuming that the regulation would be passed by July 2011 and
using a pre-tax discount rate oI xx and a growth rate oI yy Irom 2016. The recoverable amount
was estimated to be higher than the carrying amount oI the unit, and no impairment was required.
Should this regulation be delayed beyond July 2011, then an impairment might arise and this could
have a signiIicant eIIect in 2011 on the carrying amount oI the Iactory.
Management considers it reasonably possible that the new regulation will be delayed a Iurther year
to July 2012. Revenue Irom the unmodiIied process continues to decline and the eIIect oI the
Iurther delay oI a year would be an impairment oI approximately RUB xx/USD* xx in the carrying
amount oI the Iactory.
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(c) mpairment and subsequent reversal
During 2009, due to regulatory restrictions imposed on the manuIacture oI a new product in the
|name oI segment| the Group assessed the recoverable amount oI the related product line. The
product line relates to a cutting edge new product that was expected to be available Ior sale in
2010. However, a regulatory inspection in 2009 revealed that the product did not meet certain
environmental standards, necessitating substantial changes to the manuIacturing process. As a
result, production was deIerred and the expected launch date was delayed.
The recoverable amount oI the CGU (the production line that will produce the product) was
estimated based on its value in use, assuming that the production line would go live in 2012. Based
on the assessment in 2009, the carrying amount oI the product line was determined to be
RUB xx/USD* xx higher than its recoverable amount, and an impairment loss was recognised (see
below). In 2010, Iollowing certain changes to the recovery plan, the Group reassessed its estimates
and RUB xx/USD* xx oI the initially recognised impairment has been reversed.
The estimate oI value in use was determined using a pre-tax discount rate oI xx (2009: yy)
`000 RUB
Original carrying
amount Loss in 2009 Reversal in 2010

Plant and equipment
Capitalised development costs
Total

`000 USD`
Original carrying
amount Loss in 2009 Reversal in 2010

Plant and equipment
Capitalised development costs
Total
The impairment loss and subsequent reversal were recognised in cost oI sales.
(d) mpairment testing for cash generating units containing goodwill
For the purpose oI impairment testing, goodwill is allocated to the Group`s production plants which
represent the lowest level within the Group at which the goodwill is monitored Ior internal
management purposes, which is not higher than the Group`s operating segments as reported in
note 5.
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The aggregate carrying amounts oI goodwill allocated to each plant and the related impairment
losses recognised are as Iollows:
`000 RUB Goodwill mpairment Goodwill mpairment
2010 2010 2009 2009
Plant xx
Plant xx
Plant xx
Plants without signiIicant goodwill

`000 USD` Goodwill mpairment Goodwill mpairment
2010 2010 2009 2009
Plant xx
Plant xx
Plant xx
Plants without signiIicant goodwill

Note: The following text is an example of cash-generating unit`s impairment test based on
fair value less cost to sell.]
The | | plant`s impairment test was based on Iair value less cost to sell. In the past year businesses
in the same sector and oI generally similar size were bought and sold by companies in the industry
as part oI the ongoing industry consolidation. The sales prices Ior these businesses were used to
derive a price to earnings ratio that was applied to the earnings oI the | | plant to determine
recoverable amount. Enterprise to EBITDA ratios in the industry ranged Irom 6 to 10; the Group
used a lower range estimate oI 6 to estimate the recoverable amount oI the | | plant. Earnings were
determined Ior purposes oI this calculation to be RUB xx/USD* xx, based on the | | plant`s actual
operating results, adjusted Ior income tax expense.
Note: The following text is an example of a cash-generating unit`s impairment test based on
value in use. (See also S Alert: 2009/81: m5airment testing 14r n4n-1inancial assets: val:e in
:se ($ Alert 28/9)).]
The recoverable amount oI each plant was based on its value in use and was determined with the
assistance oI independent valuers. The carrying amount oI the plants was determined to be higher
than its recoverable amount and an impairment loss oI RUB xx/USD* xx (2009:
RUB xx/USD* xx) was recognised. The impairment loss was allocated Iully to goodwill, and is
included in cost oI sales.
'alue in use was determined by discounting the Iuture cash Ilows generated Irom the continuing
use oI the plants. Unless indicated otherwise, value in use in 2010 was determined similarly as in
2009.
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(e) ey assumptions used in discounted cash flow projections
Note: Each key assumption should be described and a separate list of assumptions may need
to be presented for each plant.]
Note: Amend the following as appropriate.]
Key assumptions used in the calculation oI recoverable amounts are discount rates, terminal value
growth rates and EBITDA margins. These assumptions are as Iollows:
Discount rate
Terminal value
growth rate
Budgeted EBTDA
growth
2010 2009 2010 2009 2010 2009
Plant XX
Plant YY
Plant ZZ
i) Disc4:nt rate
Example 1] The discount rate applied is a pre-tax measure based on the risk-Iree rate Ior a 10-year
government bonds in the relevant market, adjusted Ior a risk premium to reIlect both the increased
risk oI investing in equities and the systemic risk oI the speciIic Group division.
Example 2] A pre-tax discount rate oI x (2009: x) was applied in determining the recoverable
amount oI the plants. The discount rate was estimated based on past experience, and industry
average weighted average cost oI capital, which was based on a possible range oI debt leveraging
oI x at a market interest rate oI x.
ii) %erminal val:e gr4wth rate
Example 1] Cash Ilows have been projected up to Iive years in the discounted cash Ilow model. A
long-term growth rate into perpetuity has been determined as the lower oI the nominal GDP rates
Ior the country in which the division is based and the long-term compound annual growth rate in
EBITDA estimated by the management.
Example 2] Cash Ilows were projected based on past experience, actual operating results and the
Iive-year business plan in both 2011 and 2012. Cash Ilows Ior a Iurther 10-year period were
extrapolated using a constant growth rate oI x (2009: x), which does not exceed the long-term
average growth rate Ior the industry.
Example 3] A terminal value was derived at the end oI the 15-year interim period. A terminal rate
oI x was considered in estimating the terminal value Ior the plants.
iii) B:dgeted EB%DA gr4wth
Budgeted EBITDA is expressed as the compound annual growth rates in the initial Iive years oI the
plans used Ior impairment testing and has been based on past experience adjusted Ior the Iollowing:
O Example 1] In the Iirst year oI the business plan sales volume was projected using the same
rate oI growth experienced in 2010. The anticipated annual sales volume growth included in the
cash Ilow projections Ior the years 2012 to 2015 has been based on average growth levels
experienced in the three years prior to 2010, reIlecting an expectation oI a recovery in the
economy at the end oI 2011.
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O Example 2] Sales volume was assumed to grow Irom 2011 to 2015 by X which is in line
with the Iorecasts included in the industry reports.
O Example 3] Sales price growth was assumed to be a constant small margin above inIlation in
the Iirst Iive years in line with inIormation obtained Irom industry analysts.
O Example 4] Production costs are expected to increase by x in 2011 and by y annually
thereaIter. Other costs are projected to increase in line with inIlation.
(f) Sensitivity to changes in assumptions
Example] The estimated recoverable amount oI the |name oI unit| exceeds its carrying amount by
approximately RUB xx/USD* xx (2009: RUB yy/USD* yy). Management has identiIied three key
assumptions Ior which there could be a reasonably possible change that could cause the carrying
amount to exceed the recoverable amount. The table below shows the amount that these three
assumptions are required to change individually in order Ior the estimated recoverable amount to be
equal to the carrying amount.
n 5ercent
Change required for carrying amount to
equal the recoverable amount
2010 2009
Pre-tax discount rate
Budgeted EBITDA growth
Sales volume
The values assigned to the key assumptions represent management`s assessment oI Iuture trends in
the xx production industry and are based on both external sources and internal sources.
Note: The following is relevant only in respect of CGU Groups where no impairment loss is
recognised.]
Although no impairment loss was recognised in respect oI goodwill allocated to the xx plant, the
determination oI recoverable amount is sensitive to the rate at which the plant achieves its planned
growth in production.
In determining a value in use oI RUB xx/USD* xx (compared to a carrying amount oI
RUB xx/USD* xx), management has assumed that production volume will reach xx by the end oI
2011 and xx by the end oI 2012. II actual production volume were to be below estimated
production volume by x in 2011 and subsequent years, the value in use would equal the carrying
amount oI the plant.
(g) Development costs
Included in capitalised development costs is an amount oI RUB xx/USD* xx (2009:
RUB yy/USD* yy), which represents capitalised borrowing costs during the year using a
capitalisation rate oI xx (2009: yy).
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20 Equity accounted investees
The Group`s share oI proIit in its equity accounted investees Ior the year was RUB xx/USD* xx
(2009: RUB xx/USD* xx). The Group has not recognised losses relating to |Associate name|
totalling RUB xx/USD* xx in 2010, since the Group has no obligation in respect oI those losses.
The ordinary shares oI |associate name| are traded on the |stock exchange|. The share price at
31 December 2010 was RUB xx/USD* xx.
In 2010 and 2009 the Group did not receive dividends Irom any oI its investments in equity
accounted investees.
Whilst the Group has 20 ownership oI |associate name|, it has less than 20 oI the voting
interest oI |associate name|. However, the Group is considered to have signiIicant inIluence over
this entity due to the Iact that it has Board representation.
The Iollowing is summarised Iinancial inIormation Ior equity accounted investees, not adjusted Ior
the percentage ownership held by the Group:
`000 RUB Ownership Total assets Total liabilities Revenues Profit/loss

2009
Associate A
Associate B
Associate C

2010
Associate A
Associate B
Associate C

`000 USD` Ownership Total assets Total liabilities Revenues Profit/loss

2009
Associate A
Associate B
Associate C

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`000 USD` Ownership Total assets Total liabilities Revenues Profit/loss

2010
Associate A
Associate B
Associate C

The reporting date Ior all associates listed above is 31 December.
Note: n case the reporting date of an equity accounted investee differs from the reporting
date or period of an investor and/or there are restrictions over the ability of the investee to
transfer funds to the entity, disclose the reporting date and the reason for it being different
(AS 28.37(e).]
Note: n case the entity is equity accounting joint ventures, additional disclosures are
required. See example in the 2010 FRS llustrative financial statements (p.131) published by
FRG and available on DPP site on CS net.]
21 Other investments
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

A4n-c:rrent
Financial assets designated at Iair
value through proIit and loss
Available-Ior-sale investments:
Measured at cost
Measured at Iair value
Held-to-maturity investments:
Government bonds
Other debt securities

C:rrent
Financial assets designated at Iair
value through proIit and loss
Available-Ior-sale investments:
Measured at cost
Measured at Iair value
Held-to-maturity investments:
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2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Government bonds
Other debt securities

Interest-bearing available-Ior-sale assets, with a carrying amount oI RUB xx/USD* xx at
31 December 2010 (2009: RUB xx/USD* xx), have stated interest rates oI x to y (2009: x to
y) and mature in x to y years. Held-to-maturity investments have interest rates oI x to y
(2009: x to y) and mature in x to y years.
The Iair value oI investments designated at Iair value through proIit and loss, including trading
investments and derivatives, and available-Ior-sale equity investments with a carrying amount oI
RUB xx/USD* xx, was determined by reIerence to their quoted market prices; these investments
are listed on the |exchange|.
Note: Unquoted available-for-sale investments should be measured using valuation
techniques and measuring the available-for-sale investment at cost should be rare in practice.
The text below is appropriate when it can be demonstrated that no reliable estimate of fair
value can be made.]
Available-Ior-sale investments comprise equity instruments that are mainly listed either on the RTS
or The London Stock Exchange. The Iinancial assets designated at Iair value through proIit or loss
are equity securities that otherwise would have been classiIied as available-Ior-sale.
Available-Ior-sale investments stated at cost comprise unquoted equity securities in the xx industry.
There is no market Ior these investments and there have not been any recent transactions that
provide evidence oI Iair value. In addition, discounted cash Ilow techniques yield a wide range oI
Iair values due to the uncertainty oI Iuture cash Ilows in this industry. However, investments with a
carrying amount oI RUB xx/USD* xx were acquired during the current year and management
believes that the Iair value at the end oI year is likely not to diIIer signiIicantly Irom that carrying
amount.
During the year the Group sold available-Ior-sale investments stated at cost that had a carrying
amount oI RUB xx/USD* xx, which resulted in a gain oI RUB xx/USD* xx.
The Group`s exposure to credit, currency and interest rate risks related to other investments is
disclosed in note 33.
22 Deferred tax assets and liabilities
(a) Unrecognised deferred tax liabilities
Note: amend or delete the following text as appropriate.]
At 31 December 2010 a deIerred tax liability oI RUB xx/USD* xx (2009: RUB yy/USD* yy) Ior
temporary diIIerences oI RUB xx/USD* xx (2009: RUB yy/USD* yy) related to an investment in a
subsidiary was not recognised because the Company controls whether the liability will be incurred
and it is satisIied that it will not be incurred in the Ioreseeable Iuture.
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In some countries in which the Group operates, local tax laws provide that gains on the disposal oI
certain assets are tax exempt, provided that the gains are not distributed. At 31 December 2010 the
total tax exempt reserves amounted to RUB xx/USD* xx (2009: RUB yy/USD* yy) which would
result in a tax liability oI RUB xx (2009: yy) should the subsidiaries pay dividends Irom these
reserves.
(b) Unrecognised deferred tax assets
Note: amend or delete the following text as appropriate.]
DeIerred tax assets have not been recognised in respect oI the Iollowing items:
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Deductible temporary diIIerences
Tax losses

The tax losses expire in |year|. The deductible temporary diIIerences do not expire under current
tax legislation. DeIerred tax assets have not been recognised in respect oI these items because it is
not probable that Iuture taxable proIit will be available against which the Group can utilise the
beneIits thereIrom.
In |year| RUB xx/USD* xx oI previously unrecognised tax losses were recognised as management
considered it probable that Iuture taxable proIits would be available against which they can be
utilised. Management revised its estimates Iollowing the |describe the reason|.
Note: Delete (c) if all temporary differences are recognised as income or expense. Or replace
with a simple paragraph if all temporary differences except for one or two are recognised as
income or expense.]
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(c) Recognised deferred tax assets and liabilities
DeIerred tax assets and liabilities are attributable to the Iollowing:
Assets Liabilities Net
`000 RUB 2010 2009 2010 2009 2010 2009
Intangible assets
Investments
Inventories
Provisions
Employee beneIits
Tax loss carry-Iorwards
Tax assets/(liabilities)
Set oII oI tax
Net tax assets/(liabilities)

Assets Liabilities Net
`000 USD` 2010 2009 2010 2009 2010 2009
Intangible assets
Investments
Inventories
Provisions
Employee beneIits
Tax loss carry-Iorwards
Tax assets/(liabilities)
Set oII oI tax
Net tax assets/(liabilities)
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(d) Movement in temporary differences during the year
`000 RUB
1 1anuary
2010
Recognised
in profit or
loss
Recognised in
other
comprehensive
income

Recognised
directly in
equity
Acquired/
disposed of
31 December
2010

Property, plant and
equipment
Intangible assets
Investments
Inventories
Trade and other
receivables
Loans and
borrowings
Provisions
Other items
Tax loss carry-
Iorwards

`000 USD`
1 1anuary
2010
Recognised
in profit or
loss
Recognised in
other
comprehensive
income

Recognised
directly in
equity
Acquired/
disposed of
31 December
2010

Property, plant and
equipment
Intangible assets
Investments
Inventories
Trade and other
receivables
Loans and
borrowings
Provisions
Other items
Tax loss carry-
Iorwards

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`000 RUB
1 1anuary
2009
Recognised
in profit or
loss
Recognised in
other
comprehensive
income
Recognised
directly in
equity

Acquired/
disposed of
31 December
2009

Property, plant and
equipment
Intangible assets
Investments
Inventories
Trade and other
receivables
Loans and
borrowings
Provisions
Other items
Tax loss carry-
Iorwards

`000 USD`
1 1anuary
2009
Recognised
in profit or
loss
Recognised in
other
comprehensive
income
Recognised
directly in
equity

Acquired/
disposed of
31 December
2009

Property, plant and
equipment
Intangible assets
Investments
Inventories
Trade and other
receivables
Loans and
borrowings
Provisions
Other items
Tax loss carry-
Iorwards

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23 nventories
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Raw materials and consumables
Work in progress
Finished goods and goods Ior resale

Write-down oI inventories in the
current year
Reversal oI previous write-down oI
inventories
In 2010 raw materials, consumables and changes in Iinished goods and work in progress
recognised as cost oI sales amounted to RUB xx/USD* xx (2009: RUB yy/USD* yy). In 2010 the
write-down oI inventories to net realisable value amounted to RUB xx/USD* xx (2009:
RUB yy/USD* yy). The reversal oI write-downs amounted to RUB xx/USD* xx (2009:
RUB yy/USD* yy). The write-down and reversal are included in cost oI sales.
Note: The following text is an example of the disclosure required by AS 2.36.]
Due to regulatory restrictions imposed on a new product in the American paper manuIacturing
division in 2009, the Group tested the related product line Ior impairment and also wrote down the
related inventories to their net realisable value, which resulted in a loss oI RUB xx/USD* xx. In
2010, Iollowing a change in estimates, RUB xx/USD* xx oI the write-down was reversed. The
write-down and reversal are included in cost oI sales.
Note: Following text is an example for requirement of AS 2.36(h) regarding the inventories
pledged as security for liabilities. Retention of title means that inventory is not fully paid and
therefore in ownership of the seller.]
Inventories with a carrying amount oI RUB xx/USD* xx are pledged as security Ior borrowings
and inventory with a carrying amount oI RUB xx/USD* xx is subject to retention oI title clauses.
24 Trade and other receivables
Note: Describe the items included in ~Other receivables if the amount is significant and
present financial and non-financial instruments on separate lines to enable reconciliation to
note 33.]
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2010 2009 2010 2009

Trade receivables due Irom
related parties 37
Other trade receivables
Loans to directors 37
Other receivables
included in loans and
receivables category

Non-current
Current

Note: Advances for which the related work has not started, and billings in excess of costs
incurred and recognised profits, are presented as deferred income. For further guidance see
nsights 4.2.260.40.]
The Group`s exposure to credit and currency risks and impairment losses related to trade and other
receivables are disclosed in note 33.
25 Cash and cash equivalents
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Petty cash
Bank balances
Call deposits
Cash and cash equivalents in the
statement oI Iinancial position
Bank overdraIts used Ior cash
management purposes
Cash and cash equivalents in the
statement oI cash Ilows
The Group`s exposure to interest rate risk and a sensitivity analysis Ior Iinancial assets and
liabilities are disclosed in note 33.
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26 Capital and reserves
(a) Share capital and share premium
umber of shares unless otherwise
stated
Ordinary shares Preference shares
2010 2009 2010 2009
Authorised shares
Par value RUB xx RUB xx RUB xx RUB xx
Par value USD*xx USD*xx USD*xx USD*xx
On issue at 1 January
Issued Ior cash
On issue at 31 December, Iully paid
Ordinary shares
All shares rank equally with regard to the Company`s residual assets, except that preIerence
shareholders participate only to the extent oI the Iace value oI the shares.
The holders oI ordinary shares are entitled to receive dividends as declared Irom time to time, and
are entitled to one vote per share at meetings oI the Company. In respect oI the Company`s shares
that are held by the Group, all rights are suspended until those shares are reissued.
In |month| 2010 a general meeting oI shareholders decided on the issue oI xx thousand ordinary
shares at an exercise price oI RUB xx/USD* xx per share (2009: nil).
Non-redeemable preference shares
Holders oI preIerence shares have no right oI conversion or redemption, but are entitled to an
annual dividend equal to the greater oI 10 oI net statutory proIit and the dividend attributable to
ordinary shareholders. II the dividend is not paid, preIerence shares carry the right to vote until the
Iollowing Annual Shareholders` Meeting. However, the dividend is not cumulative. The preIerence
shares also carry the right to vote in respect oI issues that aIIect the interests oI preIerence
shareholders, including reorganisation and liquidation oI the company.
In the event oI liquidation preIerence shareholders Iirst receive any declared unpaid dividends and
the par value oI the preIerence shares. ThereaIter all shareholders, ordinary and preIerence,
participate equally in the distribution oI the remaining assets.
(b) Reserve for own shares
The reserve Ior the Company`s own shares comprises the cost oI the Company`s shares held by the
Group. At the reporting date the Company held xx (2009: xx) oI its own shares.
(c) Dividends
Note: The following disclosure regarding distributable reserves is optional. n case the
disclosure is included, the amounts do not necessarily correspond with the amounts presented
in the retained earnings and it should be considered whether this information should be
labelled as ~unaudited.]
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In accordance with Russian legislation the Company`s distributable reserves are limited to the
balance oI retained earnings as recorded in the Company`s statutory Iinancial statements prepared
in accordance with Russian Accounting Principles. As at 31 December 2010 the Company had
retained earnings, including the proIit Ior the current year, oI RUB xx/USD* xx (2009: RUB
xx/USD* xx).
At the reporting date the Iollowing dividends have been recommended by the directors, but have
not been approved and, thereIore, have not been provided Ior:
Note: t is required by AS 1.107 to disclose both the amount of dividend by share and the
total amount of dividends.]
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`
xx per ordinary share
xx per preIerence share

(d) Translation reserve
The translation reserve comprises all Ioreign currency diIIerences arising Irom the translation oI
the Iinancial statements oI Ioreign operations.
(e) Fair value reserve
The Iair value reserve comprises the cumulative net change in the Iair value oI available-Ior-sale
Iinancial assets until the investments are derecognised or impaired.
(f) Revaluation reserve
The revaluation reserve relates to the revaluation oI property, plant and equipment.
27 Earnings per share
Option 1: There is only one class of ordinary shares.]
The calculation oI basic earnings per share at 31 December 2010 was based on the proIit
attributable to ordinary shareholders oI RUB xx/USD* xx (2009: RUB xx/USD* xx), and a
weighted average number oI ordinary shares outstanding oI xx (2009: xx), calculated as shown
below. The Company has no dilutive potential ordinary shares.
In thousands of shares 2010 2009
Issued shares at 1 January
EIIect oI own shares held
EIIect oI shares issued in July
EIIect oI shares issued in October
Weighted average number oI shares Ior the year ended
31 December
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Option 2: When preference shares represent a second category of ordinary shares.]
Basic earnings per share is calculated by dividing the proIit attributable to ordinary and to
preIerence shareholders by the weighted average number oI ordinary and preIerence shares
outstanding respectively during the year. The Company has no dilutive potential ordinary shares.
The Iollowing is a reconciliation oI the weighted average number oI shares:
In thousands of shares
Preference
shares Ordinary shares
Preference
shares Ordinary shares
2010 2010 2009 2009
Issued shares at 1 January
EIIect oI own shares held
EIIect oI shares issued in July
EIIect oI shares issued in
October
Weighted average number oI
shares Ior the year ended
31 December

The Iollowing is a reconciliation oI the proIit attributable to ordinary and preIerence shareholders:
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Dividends declared during the year:
PreIerence shares
Ordinary shares
ProIit/(loss) remaining undistributed:
PreIerence shares
Ordinary shares
ProIit/(loss) Ior the year:
Attributable to preIerence
shareholders
Attributable to ordinary shareholders

Note: f an entity has dilutive potential ordinary shares, such as convertible bonds, refer to
the 2010 llustrative FRS Financial Statements (p.151) published by FRG and available on
the DPP site on CS net for a disclosure example.]
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28 Loans and borrowings
This note provides inIormation about the contractual terms oI the Group`s interest-bearing loans
and borrowings, which are measured at amortised cost. For more inIormation about the Group`s
exposure to interest rate, Ioreign currency and liquidity risk, see note 33.
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

A4n-c:rrent liabilities
Secured bank loans
Unsecured bond issues
Loan Irom equity accounted investee
Loan Irom other related parties
Redeemable preIerence shares
Finance lease liabilities

C:rrent liabilities
Current portion oI secured bank loans
Unsecured bank loans
Current portion oI Iinance lease
liabilities

Note: Following texts are examples for disclosures related to pledges given for loans.]
During 2010, the Group entered into credit agreement oI RUB xx/USD* xx maturing in 20XX.
Group has collateralized the credit Iacility by pledging real estate with a value oI approximately
RUB xx/USD* xx.
During 2010, the Group entered into a long-term loan oI RUB xx/USD* xx maturing in 20XX. The
loan was collateralized by pledging 5 oI the shares oI a subsidiary |name|. The shares are quoted
on an active market and Iair value oI the pledge given at 31 December 2010 was RUB xx/
USD* xx.
During 2010, the Group entered into a long-term loan oI RUB xx/USD* xx maturing in 20XX. The
loan was collateralized by pledging 100 oI the shares oI a subsidiary |name|. The pledged shares
are not quoted on an active market. At 31 December 2010, the net assets oI |name oI subsidiary|
amounted to RUB xx/USD* xx.
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(a) Terms and debt repayment schedule
Terms and conditions oI outstanding loans were as Iollows:
31 December 2010 31 December 2009
`000 RUB Currency
Nominal
interest
rate
Year of
maturity
Face
value
Carrying
amount
Face
value
Carrying
amount
Secured bank loan
Unsecured bank Iacility
Loan Irom associate
Total interest-bearing
liabilities

31 December 2010 31 December 2009
`000 USD` Currency
Nominal
interest
rate
Year of
maturity
Face
value
Carrying
amount
Face
value
Carrying
amount
Secured bank loan
Loan Irom associate
Total interest-bearing
liabilities
Bank loans are secured by the Iollowing:
O land and buildings with a carrying amount oI RUB xx/USD* xx, see note 18.
O inventory with a carrying amount oI RUB xx/USD* xx, see note 23.
O Iinance lease liabilities are secured by the leased assets, see note 18.
O shares oI the Iollowing subsidiaries which have an aggregate value oI net assets oI RUB
xx/USD* xx, see note 38.
O subsidiary X
O subsidiary Y
O subsidiary Z
(b) Breach of loan covenant
Note: Following text is an example of the disclosure required by FRS 7.18 in case the entity
has a breach of loan covenant (See also DPP News Flash of 19 1une 2010).]
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The Group has a secured bank loan that amounts to RUB xx/USD* xx at 31 December 2010.
According to the terms oI the agreement, this loan is repayable in|x| years. However, the loan
contains a debt covenant stating that at the end oI each quarter the Group`s debt (in the covenant
deIined as the Group`s loans and borrowings and trade and other payables) cannot exceed |xx|
times the Group`s quarterly revenue Irom continuing operations.
The Group has experienced a Iurther decrease in demand in a number oI operating segments
especially in the second halI oI 2010, and as such the Group exceeded its maximum leverage
threshold in the third quarter oI 2010. Management has been in a process oI continuous
negotiations with the bank and obtained a waiver in October 2010, so that the bank loan is not
payable upon demand as at 31 December 2010.
With respect to another loan amounting to RUB xx/USD* xx at 31 December 2010 and repayable
in x years, the Group has breached a loan covenant relating to Group`s equity ratio. As a result, the
lender can request repayment on demand and Group has classiIied the loan as short-term
borrowings. The Group is currently in the process oI renegotiating the covenants with the lender.
(c) Finance lease liabilities are payable as follows:
2010 2009
`000 RUB
Future
minimum
lease
payments nterest
Present
value of
minimum
lease
payments
Future
minimum
lease
payments nterest
Present
value of
minimum
lease
payments
Less than one year
Between one and Iive years
More than Iive years

2010 2009
`000 USD`
Future
minimum
lease
payments nterest
Present
value of
minimum
lease
payments
Future
minimum
lease
payments nterest
Present
value of
minimum
lease
payments
Less than one year

Note: in case the entity has reclassified operating land leases to finance leases due to
amendment in AS 17 (see note 2(g)(iii)), describe the reclassification and its effect to finance
lease liabilities. Amend or delete the following example wording as appropriate.]
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The Group has entered into a long-term land lease several years ago. The leased land covers the
area surrounding the Group`s production plant in |name oI the place|. The lease was initially
classiIied as an operating lease because the lease agreement does not pass the title and the Group
does not participate in the residual value oI the land. Due to the amendment in IAS 17 (see note
2(g)(iii)), the Group reassessed the lease classiIication as at 1 January 2010 and based on the ratio
between the present value oI minimum lease payments and the Iair value oI the leased land, the
lease was reclassiIied Irom an operating to a Iinance lease. The lease was reclassiIied based on the
value at 1 January 2010 as it was not possible to obtain retrospective inIormation regarding the land
value. The eIIect on Iinance lease liabilities was an increase oI RUB xx/USD* xx.
Note: the following text is an example of disclosure requirements related to contingent lease
payments required by AS17.31(c).]
Certain leases provide Ior additional payments that are contingent upon changes in the market
rental rate. Contingent rents recognised in proIit or loss under Iinance leases amounted to
RUB xx/USD* xx (2009: RUB xx/USD* xx).
29 Employee benefits
Note: Amend the following as appropriate.]
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Fair value oI plan assets
Present value oI obligations
(Surplus) deIicit in the plan

Liability Ior long-service leave
Total employee beneIit liabilities
The Group makes contributions to a deIined beneIit plan that provides pension and medical
beneIits Ior employees upon retirement. The plan entitles a retired employee to receive an annual
payment equal to 1/60 oI Iinal salary Ior each year oI service that the employee provided, and to
the reimbursement oI certain medical costs.
The Group has determined that, in accordance with the terms and conditions oI the deIined beneIit
plans, and in accordance with statutory requirements (such as minimum Iunding requirements) oI
the plans oI the respective jurisdictions, the present value oI reIunds or reductions in Iuture
contributions is not lower than the balance oI the total Iair value oI the plan assets less the total
present value oI obligations. This determination is made on a plan-by-plan basis. As such, no
decrease in the deIined beneIit asset is necessary at 31 December 2010 (31 December 2009: no
decrease in deIined beneIit asset).
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(a) Composition of plan assets
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Equity securities
Government bonds
Property occupied by the group
Company`s own ordinary shares

(b) Movements in the present value of the defined benefit obligations
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

DeIined beneIit obligations at
1 January
BeneIits paid by the plan
Current service costs and interest
Curtailment gain
Actuarial gains and losses recognised
in other comprehensive income
DeIined beneIit obligations at
31 December
(c) Movement in the fair value of plan assets
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Fair value oI plan assets at 1 January
Contributions paid into the plan
BeneIits paid by the plan
Expected return on plan assets
Actuarial gains and losses recognised
Fair value oI plan assets at
31 December
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(d) Expense recognised in profit or loss
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Current service costs
Interest on obligation
Curtailment gain
Expected return on plan assets

As a result oI a curtailment in the pension arrangement Ior a number oI employees in France, the
Group`s deIined beneIit pension obligation decreased by RUB xx/USD* xx (2009: nil). A
corresponding curtailment gain is included in the Group`s statement oI comprehensive income Ior
the year ended 31 December 2010.
The expense is recognised in the Iollowing line items in the statement oI comprehensive income:
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Cost oI sales
Distribution expenses
Administrative expenses

Actual return on plan assets
(e) Actuarial gains and losses recognised in other comprehensive income
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Cumulative amount at 1 January
Recognised during the year
Cumulative amount at 31 December
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(f) Actuarial assumptions
Principal actuarial assumptions at the reporting date (expressed as weighted averages):
2010/ 2009/
Discount rate at 31 December
Expected return on plan assets at 1 January
Future salary increases
Medical cost trend rate
Future pension increases
Assumptions regarding Iuture mortality are based on published statistics and mortality tables. The
retirement age in Russia is currently 60 Ior men and 55 Ior women. The current longetivities
underlying the values oI the liabilities in the deIined beneIit plans are as Iollows:
31 December 2010
Russia
Longevity at the time oI retirement Ior current
pensioners:
Males
Females
member aged 45:
Males
Females

31 December 2009
Russia
pensioners:
Males
Females
member aged 45:
Males
Females
The calculation oI the deIined beneIit obligation is sensitive to the mortality assumptions set out
above. As the actuarial estimates oI mortality continue to be reIined, an increase oI one year in the
lives shown above is considered reasonably possible in the next Iinancial year. The eIIect oI this
change would be an increase in the employee beneIit liability oI RUB xx/USD* xx.
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The overall expected long-term rate oI return on assets is x. The expected long-term rate oI return
is based on the portIolio as a whole and not on the sum oI the returns on individual asset categories.
The return is based exclusively on historical returns, without adjustments.
(g) Historical information
`000 RUB 2010 2009 2008 2007 2006

Present value oI the deIined beneIit
obligation
DeIicit/(surplus) in the plan

Experience adjustments arising on plan
liabilities
assets

`000 USD` 2010 2009 2008 2007 2006

Present value oI the deIined beneIit
obligation
DeIicit/(surplus) in the plan

liabilities
assets
The Group expects RUB xx/USD* xx in contributions to be paid to its deIined beneIit plans in
2010.

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30 Deferred income/revenue
2010 2009 2010 2009

Government grants
Customer advances
Billing in advance oI work
completed

Non-current
Current

Note: in case the Group has been awarded government grants or government assistance,
describe the nature and extent of these arrangements.]
31 Provisions
`000 RUB

Warranties Restructuring
Site
restoration
Onerous
contracts Total
Balance at 1 January
Assumed in a business combination
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Unwind oI discount

Non-current
Current

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`000 USD`

Warranties Restructuring
Site
restoration
Onerous
contracts Total
Balance at 1 January
Assumed in a business combination
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Unwind oI discount

Non-current
Current

Note: amend or delete the following paragraphs as appropriate.]
(a) Warranties
The provision Ior warranties relates mainly to |name oI product| sold during the last year. The
provision is based on estimates made Irom historical warranty data associated with similar products
and services. The Group expects to incur most oI the liability over the next year. An expected
reimbursement oI warranty expense incurred oI RUB xx/USD* xx has been recognised in other
trade receivables Iollowing a supplier accepting responsibility Ior the deIective products.
(b) Restructuring
During the year ended 31 December 2010 the Group committed to a plan to restructure |name| due
to a decrease in demand as a result oI deteriorated economic circumstances. Following the
announcement oI the plan the Group recognised a provision oI RUB xx/USD* xx Ior expected
restructuring costs, including contract termination costs, consulting Iees and employee termination
beneIits. Estimated costs were based on the terms oI the relevant contracts. An amount oI RUB
xx/USD* xx was charged against the provision in 2010. The restructuring is expected to be
complete by March 2010.
(c) Site restoration
A provision oI RUB xx/USD* xx was made in 2009 in respect oI the Group`s obligation to rectiIy
environmental damage in Siberia. The required work was completed during 2010 at a cost oI
RUB xx/USD* xx. The unused provision oI RUB xx/USD* xx was reversed.
In accordance with Russian environmental legislation, land contaminated by the Group in the Altai
region must be restored to its original condition beIore the end oI 2014. During 2010 the Group
provided RUB xx/USD* xx Ior this purpose. The provision was estimated by considering risks
related to amount and timing oI restoration costs based on the known level oI damage. The present
value oI restoration costs was determined by discounting the estimated restoration cost using a risk-
Iree rate Ior the respective period (XX). Because oI the long-term nature oI the liability, the
greatest uncertainty in estimating the provision is the costs that will be incurred. Environmental
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legislation in the Russian Federation continues to evolve and it is diIIicult to determine the exact
standards required by the current legislation in restoring sites such as this. Generally the standard oI
restoration is determined based on discussions with Government oIIicials at the time that
restoration commences.
In providing Ior the cost oI site restoration management has assumed that it will be required to
perIorm a similar standard oI restoration as was required Ior its xx site, which was closed and
restored between 2002 and 2004. In making this assumption management has consulted with its in-
house engineers who have considered Governmental requirements in respect oI similar sites that
have closed recently.
(d) Onerous contracts
In 2009 the Group entered into a non-cancellable lease Ior oIIice space which, due to changes in its
activities, the Group had ceased to use by 31 December 2010. The lease expires in 2013. The
Iacilities have been sublet Ior the remaining lease term, but changes in market conditions have
meant that the rental income is lower than the rental expense. The obligation Ior the discounted
Iuture payments, net oI expected rental income, has been provided Ior.
Note: For contingent liabilities recognised at fair value as a result of a business combination,
disclose the same information as is required for provisions.]
Note: See DPP News Flash 27 April 2009 for further guidance on discount rates applied in
calculating provisions under AS 37.]
32 Trade and other payables
Note: Describe what items included in ~Other payables if the amount is significant and
present financial and non-financial instruments on separate lines to enable reconciliation to
note 33.]
2010 2009 2010 2009

Trade payables
Payables to equity accounted
investees
Dividends payable
Other taxes payable
Other payables and accrued
expenses

The Group`s exposure to currency and liquidity risk related to trade and other payables is disclosed
in note 33.
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33 Financial instruments and risk management
Note: The contents of this note are completely client specific and therefore not directly
transferable to other financial statements.]
(a) Overview
The Group has exposure to the Iollowing risks Irom its use oI Iinancial instruments:
O credit risk
O liquidity risk
O market risk
This note presents inIormation about the Group`s exposure to each oI the above risks, the Group`s
objectives, policies and processes Ior measuring and managing risk, and the Group`s management
oI capital. Further quantitative disclosures are included throughout these consolidated Iinancial
statements.
Risk management framework
The Board oI Directors has overall responsibility Ior the establishment and oversight oI the
Group`s risk management Iramework. The Board has established a Risk Management Committee,
which is responsible Ior developing and monitoring the Group`s risk management policies. The
committee reports regularly to the Board oI Directors on its activities.
The Group`s risk management policies are established to identiIy and analyse the risks Iaced by the
Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reIlect changes in market conditions
and the Group`s activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment in which all
employees understand their roles and obligations.
The Group`s Audit Committee oversees how management monitors compliance with the Group`s
risk management policies and procedures and reviews the adequacy oI the risk management
Iramework in relation to the risks Iaced by the Group. The Group`s Audit Committee is assisted in
its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews oI
risk management controls and procedures, the results oI which are reported to the Audit
Committee.
Note: n case the Group has no policy or processes for managing financial risks, it should be
disclosed. This may be the case for example when financial instruments are not significant in
Group`s operations. n such a case, describe the major financial risks, how they are managed
and who is taking decisions for financial risk management.]
(b) Credit risk
Credit risk is the risk oI Iinancial loss to the Group iI a customer or counterparty to a Iinancial
instrument Iails to meet its contractual obligations, and arises principally Irom the Group`s
receivables Irom customers and investment securities.
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i) %rade and 4ther receivables
The Group`s exposure to credit risk is inIluenced mainly by the individual characteristics oI each
customer. However, management also considers the demographics oI the Group`s customer base,
including the deIault risk oI the industry and country, in which customers operate, as these Iactors
may have an inIluence on credit risk, particularly in the currently deteriorating economic
circumstances. Approximately xx (2009: xx) oI the Group`s revenue is attributable to sales
transactions with a single customer. However, geographically there is no concentration oI credit
risk.
The Risk Management Committee has established a credit policy under which each new customer
is analysed individually Ior creditworthiness beIore the Group`s standard payment and delivery
terms and conditions are oIIered. The Group`s review includes external ratings, when available,
and in some cases bank reIerences. Purchase limits are established Ior each customer, and represent
the maximum open amount without requiring approval Irom the Risk Management Committee;
these limits are reviewed quarterly. Customers that Iail to meet the Group`s benchmark
creditworthiness may transact with the Group only on a prepayment basis.
More than xx oI the Group`s customers have been transacting with the Group Ior over Iour years,
and losses have occurred inIrequently. In monitoring customer credit risk, customers are grouped
according to their credit characteristics, including whether they are an individual or legal entity,
whether they are a wholesale, retail or end-user customer, geographic location, industry, aging
proIile, maturity and existence oI previous Iinancial diIIiculties. Trade and other receivables relate
mainly to the Group`s wholesale customers. Customers that are graded as 'high risk are placed on
a restricted customer list and monitored by the Risk Management Committee, and Iuture sales are
made on a prepayment basis with approval oI the Risk Management Committee.
As a result oI the deteriorating economic circumstances in 2009 and 2010, certain purchase limits
have been redeIined, particularly Ior customers operating in the |name| and |name| segments, since
the Group`s experience is that the economic downturn has had a greater impact in these business
segments than in the Group`s other business segments.
Goods are sold subject to retention oI title clauses, so that in the event oI non-payment the Group
may have a secured claim. The Group does not require collateral in respect oI trade and
other receivables.
The Group establishes an allowance Ior impairment that represents its estimate oI incurred losses in
respect oI trade and other receivables and investments. The main components oI this allowance are
a speciIic loss component that relates to individually signiIicant exposures, and a collective loss
component established Ior groups oI similar assets in respect oI losses that have been incurred but
not yet identiIied. The collective loss allowance is determined based on historical data oI payment
statistics Ior similar Iinancial assets.
ii) nvestments
The Group limits its exposure to credit risk by only investing in liquid securities and only with
counterparties that have a credit rating oI at least A1 Irom Standard & Poor`s and A Irom Moody`s.
Management actively monitors credit ratings and given that the Group only has invested in
securities with high credit ratings, management does not expect any counterparty to Iail to meet its
obligations.
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iii) C:arantees
Note: please refer to nsights 3.6.35 for determining if the text below is applicable.]
The Group considers that Iinancial guarantee contracts entered into by the Group to guarantee the
indebtedness oI other parties are insurance arrangements, and accounts Ior them as such. In this
respect, the Group treats the guarantee contract as a contingent liability until such time as it
becomes probable that the Group will be required to make a payment under the guarantee.
The Group`s policy is to provide Iinancial guarantees only to wholly-owned subsidiaries. At
31 December 2010 no guarantees were outstanding (2009: none).
Note: FRG's view on accounting for financial guarantee contracts has changed. Previously,
incurred loss was interpreted narrowly to include only actual loss that is realised by the entity
(nsights 3.6.36.60). Under the revised interpretation, the definition of financial guarantee is
met provided that the contract holder cannot be compensated for an amount which is more
than the actual loss. This requirement can be achieved, for example, if the contract requires
the holder of the guarantee to transfer to the guarantor any amounts received from the
debtor after the guarantor compensated the holder for the debtor's failure to pay. For
additional information, see the DPP News Flash of 27 April 2010.]
iv) Ex54s:re t4 credit ris
The carrying amount oI Iinancial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was:
Carrying amount
`000 RUB Note 2010 2009

Debt securities 21
Equity securities 21
Debentures 21
Financial assets designated at Iair value through
proIit or loss 21
Financial assets classiIied as held-Ior-trading 21
Loans and receivables 24
Forward exchange contracts 21

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Carrying amount
`000 USD` Note 2010 2009

Debt securities 21
Debentures 21
proIit or loss 21
Financial assets classiIied as held-Ior-trading 21
Forward exchange contracts 21

The maximum exposure to credit risk Ior trade receivables at the reporting date by geographic
region was:
Carrying amount
`000 RUB 2010 2009
Domestic
Other CIS countries
Euro-zone countries
Other European countries
United States
Other regions

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Carrying amount
`000 USD` 2010 2009
Domestic
Other CIS countries
Euro-zone countries
Other European countries
United States
Other regions

The maximum exposure to credit risk Ior trade receivables at the reporting date by type oI customer
was:
Carrying amount
`000 RUB 2010 2009
Wholesale customers
Retail customers
End-user customer

Carrying amount
`000 USD` 2010 2009
Wholesale customers
Retail customers
End-user customer

Note: Additional information regarding the credit exposure may include for example:]
Example 1] The Group`s most signiIicant customer, a European wholesaler, accounts Ior RUB
xx/USD* xx oI the trade receivables carrying amount at 31 December 2010 (2009: RUB xx/USD*
xx).
Example 2] The xx most signiIicant customers oI the Group account Ior RUB xx/USD* xx oI the
trade receivables carrying amount at 31 December 2010 (2009: RUB xx/USD* xx).
Example 3] At 31 December 2010, the Group had xx customers (2009: yy customers) owing to
the Group more than RUB xx/USD* xx each and amounting to xx (2009: yy) oI the total trade
receivables outstanding.
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mpairment losses
The aging oI trade receivables at the reporting date was:
`000 RUB
Gross
2010
mpairment
2010
Gross
2009
mpairment
2009
Not past due
Past due 0- 30 days
Past due 31-120 days
Past due more than one year

`000 USD`
Gross
2010
mpairment
2010
Gross
2009
mpairment
2009
Not past due
Past due 0- 30 days
Past due more than one year

Note: f the entity applies allowance account instead of directly deducting the impaired
amount from the assets, the following disclosure is required.]
The movement in the allowance Ior impairment in respect oI trade receivables during the year was
as Iollows:
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Balance at beginning oI the year
Increase during the year
Amounts written oII against trade
receivables
Decrease due to reversal
Balance at end oI the year
At 31 December 2010, an impairment loss oI RUB xx/USD* xx relates to a customer that was declared
bankrupt during the year. Although the goods sold to the customer were subject to retention oI title
clause, the Group has no indication that the customer is still in possession oI the goods. The
remainder oI the impairment loss at 31 December 2010 relates to several customers that have
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indicated that they are not expecting to be able to pay their outstanding balances, mainly due to
economic circumstances. The Group believes that the unimpaired amounts that are past due by more
than 30 days are still collectible, based on historic payment behaviour and analyses on the
underlying customers` credit ratings.
Based on historic deIault rates, the Group believes that, apart Irom the above, no impairment
allowance is necessary in respect oI trade receivables not past due or past due by up to 30 days;
xx oI the balance, which includes the amount owed by the Group`s most signiIicant customer
(see above), relates to customers that have a good track record with the Group.
During 2009 the Group renegotiated the terms oI a trade receivable oI RUB xx/USD* xx Irom a
long-standing customer. II it had not been Ior this renegotiation, the receivable would have been
overdue by 60 days. No impairment loss was recognised (2009: no instances).
The movement in the allowance Ior impairment in respect oI held-to-maturity investments during
the year was as Iollows:
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Balance at beginning oI the year
Increase during the year
Amounts written oII against Iinancial
assets
Decrease due to reversal
Balance at end oI the year
An impairment loss oI RUB xx/USD* xx in respect oI held-to-maturity investments was recognised
during the current year owing to signiIicant Iinancial diIIiculties being experienced by the issuer oI
some oI these securities. The Group has no collateral in respect oI this investment.
The allowance accounts in respect oI trade receivables and held-to-maturity investments are used to
record impairment losses unless the Group is satisIied that no recovery oI the amount owing is
possible; at that point the amounts are considered irrecoverable and are written oII against the
Iinancial asset directly. At 31 December 2010 the Group does not have any collective impairments
on its trade receivables or its held-to-maturity investments (2009: nil).
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter diIIiculty in meeting the obligations
associated with its Iinancial liabilities that are settled by delivering cash or another Iinancial asset.
The Group`s approach to managing liquidity is to ensure, as Iar as possible, that it will always have
suIIicient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group`s reputation.
The Group uses activity-based costing to cost its products and services, which assists it in
monitoring cash Ilow requirements and optimising its cash return on investments. Typically the
Group ensures that it has suIIicient cash on demand to meet expected operational expenses Ior a
period oI 60 days, including the servicing oI Iinancial obligations; this excludes the potential
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impact oI extreme circumstances that cannot reasonably be predicted, such as natural disasters. In
addition, the Group maintains the Iollowing lines oI credit:
O EUR 5 million overdraIt Iacility that is unsecured. Interest would be payable at the rate oI
Euribor plus 150 basis points.
O EUR 10 million that can be drawn down to meet short-term Iinancing needs. The Iacility has a
30-day maturity that renews automatically at the option oI the Group. Interest would be payable
at a rate oI Euribor plus 100 basis points.
The Iollowing are the contractual maturities oI Iinancial liabilities, including estimated interest
payments and excluding the impact oI netting agreements. It is not expected that the cash Ilows
included in the maturity analysis could occur signiIicantly earlier, or at signiIicantly diIIerent
amounts.
Note: PMG`s current view is that liquidity risk analysis should include both the principal
and interest payments so the previous optionality to exclude interests has been removed. For
further guidance, see nsights 5.6.390.70.]
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Note: Financial guarantees issued are presented as full guaranteed amounts in the earliest possible time band when a payment may be required.]
2010
`000 RUB
Carrying
amount
Contractual
cash flows 0-6 mths 6-12 mths 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Over 5 yrs
Non-derivative financial liabilities
Secured bank loans
Convertible notes
Bank overdraIts

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2010
`000 USD`
Carrying
amount
Contractual
Secured bank loans
Convertible notes
Bank overdraIts

2010
`000 RUB
Carrying
amount
Contractual
Derivative financial liabilities
Interest rate swaps used Ior hedging:
Forward exchange contracts used Ior
hedging:
OutIlow
InIlow
Trading derivatives

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2010
`000 USD`
Carrying
amount
Contractual
hedging:
OutIlow
InIlow
Trading derivatives

Note: Derivative cash flows that are contractually settled net such as interest rate swaps are presented net in the maturity analysis and the derivatives that
are contractually settled gross such as forwards are presented gross i.e. cash outflows and inflows separately.]
Note: Derivatives that are managed based on their contractual cash flows such as derivatives held for hedging purposes are presented in the maturity
analysis according to their contractual cash flows. The derivatives that are not managed based on their contractual cash flows such as derivatives that held
for trading purposes should be presented in the earliest possible time band or other way according to which they are being managed.]
Note: When counterparty has a choice of timing of payment as with loan commitments, these amounts are presented in the earliest possible time band and
in full committed amounts.]
Note: f relevant for understanding the liquidity risk exposure, entity should also disclose assets that are held for meeting the liquidity requirements.]
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2009
`000 RUB
Carrying
amount
Contractual
Secured bank loans
Convertible notes
Bank overdraIts

2009
`000 USD`
Carrying
amount
Contractual
Secured bank loans
Convertible notes
Bank overdraIts

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2009
`000 RUB
Carrying
amount
Contractual
hedging:
OutIlow
InIlow
Trading derivatives

2009
`000 USD`
Carrying
amount
Contractual
hedging:
OutIlow
InIlow
Trading derivatives

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audited financial statements refer to note 2(d).
(d) Market risk
Market risk is the risk that changes in market prices, such as Ioreign exchange rates, interest rates
and equity prices will aIIect the Group`s income or the value oI its holdings oI Iinancial
instruments. The objective oI market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
The Group buys and sells derivatives, and also incurs Iinancial liabilities, in order to manage
market risks. All such transactions are carried out within the guidelines set by the Risk
Management Committee. The Group does not apply hedge accounting in order to manage volatility
in proIit or loss.
i) C:rrency ris
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in
a currency other than the respective Iunctional currencies oI Group entities, primarily the Russian
Rouble (RUB), but also Euro, U.S. Dollars (USD) and Sterling (GBP). The currencies in which
these transactions primarily are denominated are euro and USD.
Interest on borrowings is denominated in the currency oI the borrowing. Generally, borrowings are
denominated in currencies that match the cash Ilows generated by the underlying operations oI the
Group, primarily RUB, but also euro and USD. This provides an economic hedge without a need to
enter into derivatives contracts.
In respect oI other monetary assets and liabilities denominated in Ioreign currencies, the Group`s
policy is to ensure that its net exposure is kept to an acceptable level by buying or selling Ioreign
currencies at spot rates when necessary to address short-term imbalances.
Exposure to currency risk
The Group`s exposure to Ioreign currency risk was as Iollows based on notional amounts:
`000 RUB
USD-
denominated
Euro-
denominated
USD-
denominated
Euro-
denominated
2010 2010 2009 2009
Trade receivables
Secured bank loans
Trade payables
Gross exposure

Forward exchange contracts
Net exposure

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`000 USD`
USD-
denominated
Euro-
denominated
USD-
denominated
Euro-
denominated
2010 2010 2009 2009
Trade receivables
Secured bank loans
Trade payables
Gross exposure

Forward exchange contracts
Net exposure
The Iollowing signiIicant exchange rates applied during the year:
in RUB Average rate Reporting date spot rate
2010 2009 2010 2009
USD 1
EUR 1
Sensitivity analysis
A strengthening oI the RUB, as indicated below, against the Iollowing currencies at 31 December
would have increased (decreased) equity and proIit or loss |beIore taxes/net oI taxes| by the
amounts shown below. This analysis is based on Ioreign currency exchange rate variances that the
Group considered to be reasonably possible at the end oI the reporting period. The analysis
assumes that all other variables, in particular interest rates, remain constant. The analysis is
perIormed on the same basis Ior 2009, albeit that the reasonably possible Ioreign exchange changes
rate variances were diIIerent, as indicated below.
`000 RUB Strengthening Weakening
Equity Profit or loss Equity Profit or loss

31 December 2010
USD (X movement)
EUR (Y movement)

31 December 2009
USD (X movement)
EUR (Y movement)

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`000 USD` Strengthening Weakening
Equity Profit or loss Equity Profit or loss

31 December 2010
USD (X movement)
EUR (Y movement)

31 December 2009
USD (X movement)
EUR (Y movement)
Note: Changes in exchange rates will have a direct impact on equity only if the item is an
equity instrument designated as available for sale or if the item is subject to cash flow hedge
accounting.]
ii) nterest rate ris
The Group adopts a policy oI ensuring that between xx and yy oI its exposure to changes in
interest rates on borrowings is on a Iixed rate basis. This is achieved by entering into interest rate
swaps.
Note: The following text provides an example of the situation where the Group has no
formal policy to limit its exposure to changes in interest rate]
Changes in interest rates impact primarily loans and borrowings by changing either their Iair value
(Iixed rate debt) or their Iuture cash Ilows (variable rate debt). Management does not have a Iormal
policy oI determining how much oI the Group`s exposure should be to Iixed or variable rates.
However, at the time oI raising new loans or borrowings management uses its judgment to decide
whether it believes that a Iixed or variable rate would be more Iavourable to the Group over the
expected period until maturity.
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Profile
At the reporting date the interest rate proIile oI the Group`s interest-bearing Iinancial instruments
was:
Carrying amount
`000 RUB 2010 2009
Fixed rate instruments
Financial assets
Financial liabilities

Variable rate instruments
Financial assets

Carrying amount
`000 USD` 2010 2009
Fixed rate instruments
Financial assets

Variable rate instruments
Financial assets

Fair value sensitivity analysis for fixed rate instruments
Example 1]
The Group does not account Ior any Iixed rate Iinancial instruments as Iair value through proIit or
loss or as available-Ior-sale. ThereIore a change in interest rates at the reporting date would not
have an eIIect in proIit or loss or in equity.
Example 2]
|The Group has classiIied some oI the Iixed rate Iinancial assets as Iair value through proIit or loss
and available-Ior-sale. The Iair value oI these assets at reporting date was RUB xx/USD* xx and
RUB yy/USD* yy respectively.
An increase oI 100 basis points in interest rates would have increased proIit or loss by
RUB xx/USD* xx and equity by RUB yy/USD* yy (2009: RUB yy/USD* yy) |net oI taxes/beIore
taxes|. A decrease oI 100 basis points would have had an equal but opposite eIIect.
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Note: Fair value changes of a fixed rate instrument affect profit or loss if the instrument is
designated at fair value through profit and loss. f a fixed rate instrument is designated as
available-for-sale, the fair value changes affect equity. For more information, see FRS Letter
of February 2009 on CS net found at CS DPP Publications > Other Publications.]
Cash flow sensitivity analysis for variable rate instruments
A change oI 100 basis points in interest rates at the reporting date would have increased
(decreased) equity and proIit or loss |net oI taxes/beIore taxes| by the amounts shown below. This
analysis assumes that all other variables, in particular Ioreign currency rates, remain constant. The
analysis is perIormed on the same basis Ior 2009.
Profit or loss Equity
`000 RUB
100 bp
increase
100 bp
decrease
100 bp
increase
100 bp
decrease
2010
'ariable rate instruments
Interest rate swap
Cash Ilow sensitivity (net)
2009
Interest rate swap

Profit or loss Equity
`000 USD`
100 bp
increase
100 bp
decrease
100 bp
increase
100 bp
decrease
2010
Interest rate swap
2009
Interest rate swap
iii) Other maret 5rice ris
Equity price risk arises Irom available-Ior-sale equity securities as well as investments at Iair value
through proIit or loss. Management oI the Group monitors the mix oI debt and equity securities in
its investment portIolio based on market indices. Material investments within the portIolio are
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managed on an individual basis and all buy and sell decisions are approved by the Risk
Management Committee.
The primary goal oI the Group`s investment strategy is to maximise investment returns in order to
meet partially the Group`s unIunded deIined beneIit obligations; management is assisted by
external advisors in this regard. In accordance with this strategy certain investments are designated
at Iair value through proIit or loss because their perIormance is actively monitored and they are
managed on a Iair value basis.
The Group does not enter into commodity contracts other than to meet the Group`s expected usage
and sale requirements; such contracts are not settled net.
The majority oI the Group`s equity investments are listed either on the RTS or The London Stock
Exchange. For such investments classiIied as available-Ior-sale, a 3 increase in the RTS Index
plus a 2 increase in The London Stock Exchange at the reporting date would have increased
equity by RUB xx/USD* xx aIter tax (2009: an increase oI RUB xx/USD* xx); an equal change in
the opposite direction would have decreased equity by RUB xx/USD* xx aIter tax (2009: a
decrease oI RUB xx/USD* xx). For such investments classiIied as Iair value through proIit or loss,
the impact on proIit or loss would have been an increase or decrease oI RUB xx/USD* xx aIter tax
(2009: RUB xx/USD* xx). The determined sensitivity in the Iair value reIlects each equity
instrument`s sensitivity to the related market index. The beta Iactors Ior Group`s equity
investments listed on the RTS vary Irom xx to yy and on The London Stock Exchange Irom xx to
yy. The analysis is perIormed on the same basis Ior 2009.
Note: t is preferred that the sensitivity analysis incorporates the beta factor that measures
individual stock`s volatility. For example, if a share is listed in RTS and has a beta of 1.5, it
means that when the RTS index changes by 1, the fair value of the share on average
changes by 1.5. nformation on betas of Russian entities can be found for example from:
ft.com/marketsdata]
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The USD equivalent figures are provided for information purposes only and do not form part of the audited financial statements refer to note 2(d).
(e) Accounting classifications and fair values
i) Fair val:es vers:s carrying am4:nts
The Iair values oI Iinancial assets and liabilities, together with the carrying amounts shown in the statement oI Iinancial position, are as Iollows:
`000 RUB Note Trading
Designated
at fair value
Held-to-
maturity
Loans and
receivables
Available-for-
sale
Other
financial
liabilities
Total
carrying
amount Fair value

31 December 2010
Investment securities:
Debt securities 21
proIit or loss 21
Financial assets classiIied as held Ior trading 21

Secured bank loans 28
Unsecured bond issues 28
Finance lease liabilities 28
Trade payables 32
Contingent consideration 32
Bank overdraIts 25

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`000 USD` Note Trading
Designated
at fair value
Held-to-
maturity
Loans and
receivables
Available-for-
sale
Other
financial
liabilities
Total
carrying
amount Fair value

31 December 2010
Debt securities 21
proIit or loss 21

Trade payables 32
Bank overdraIts 25

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`000 RUB Note Trading
Designated
at fair value
Held-to-
maturity
Loans and
receivables
Available-for-
sale
Other
financial
liabilities
Total
carrying
amount Fair value

31 December 2009
Debt securities 21
proIit or loss 21

Trade payables 32
Bank overdraIts 25

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`000 USD` Note Trading
Designated
at fair value
Held-to-
maturity
Loans and
receivables
Available-for-
sale
Other
financial
liabilities
Total
carrying
amount Fair value

31 December 2009
Debt securities 21
proIit or loss 21

Trade payables 32
Bank overdraIts 25

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nterest rates used for determining fair value
The interest rates used to discount estimated cash Ilows, where applicable, are based on the
government yield curve at the reporting date plus an adequate credit spread, and were as Iollows:
2010 2009

Derivatives xx - yy xx - yy
Loans and borrowings xx - yy xx - yy
Leases xx - yy xx - yy
(f) Fair value hierarchy
The table below analyses Iinancial instruments carried at Iair value, by valuation method. The
diIIerent levels have been deIined as Iollows:
O Level 1: quoted prices (unadjusted) in active markets Ior identical assets or liabilities
O Level 2: inputs other than quoted prices included within Level 1 that are observable Ior the
asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived Irom prices)
O Level 3: inputs Ior the asset or liability that are not based on observable market data
(unobservable inputs)
`000 RUB Level 1 Level 2 Level 3 Total
31 December 2010
Investment securities
Derivative assets

Derivative liabilities

31 December 2009
Derivative assets


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`000 USD` Level 1 Level 2 Level 3 Total
31 December 2010
Derivative assets


31 December 2009
Derivative assets


Note: According to FRS 7.27B the fair value hierarchy is presented by class of asset and not
by AS 39 categories. Classes of assets are defined by the entity.]
During the year ended 31 December 2010 available-Ior-sale Iinancial assets with a carrying amount
oI RUB xx/USD* xx were transIerred Irom Level 1 to Level 2 because quoted prices in the market
Ior such debt securities became no longer regularly available. In order to determine the Iair value oI
such debt securities, management used a valuation technique in which all signiIicant inputs were
based on observable market data. There have been no transIers Irom Level 2 to Level 1 in 2010
(2009: no transIers in either direction).
The Iollowing table shows a reconciliation Irom the beginning balances to the ending balances Ior
Iair value measurements in Level 3 oI the Iair value hierarchy:
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2010 Level 3
`000 RUB
nvestment
securities
Contingent
consideration
Derivative
financial
liabilities

Total gains or losses recognised in proIit or loss
From level 3 instruments held at year end
From level 3 instruments not held at year end
Total gains or losses recognised in other
comprehensive income
Purchases
Sales
Issues
Settlements
TransIers into level 3
TransIers out oI level 3

2010 Level 3
`000 USD`
nvestment
securities
Contingent
consideration
Derivative
financial
liabilities

Purchases
Sales
Issues
Settlements
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2009 Level 3
`000 RUB
nvestment
securities
Contingent
consideration
Derivative
financial
liabilities

Purchases
Sales
Issues
Settlements

2009 Level 3
`000 USD`
nvestment
securities
Contingent
consideration
Derivative
financial
liabilities

Purchases
Sales
Issues
Settlements
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Note: Disclose where the profit or loss from level 3 instruments is presented in the statement
of comprehensive income or in a separate income statement (if presented).]
Note: f an entity has no level 3 instruments, the table above can be deleted but the reason
should be disclosed.]
Note: f changing one or more of the inputs to reasonably possible alternative assumptions
would change fair value significantly, that fact and the effect of those changes should be
disclosed.]
Example: The entity has a 14 ownership in non-listed Company A and the investment is
recognised at Iair value as an available-Ior-sale investment. Because oI limited market activity in
the shares, the valuation is not benchmarked against observed transaction prices. Instead, the entity
applies a discounted cash Ilow model where some oI the inputs are non-observable. As a
consequence, the investment is classiIied as a level 3 asset. The discount rate applied in the
valuation was xx and is based on management`s assessment oI the risks related to Company A.
The cash Ilow analysis is based on the current year`s budget and the assumption oI an annual
growth oI xx Ior next 5 years. The assumed growth rate is based on average growth Ior the
previous 3 years and no increase in gross margin is assumed.
Although the Group believes that its estimates oI Iair value are appropriate, the use oI diIIerent
methodologies or assumptions could lead to diIIerent measurements oI Iair value. For Iair value
measurements in Level 3, changing one or more oI the assumptions used to reasonably possible
alternative assumptions would have the Iollowing eIIects:
`000 RUB Effect in profit or loss
Effect
Favourable Unfavourable Favourable Unfavourable

Derivative assets

`000 USD` Effect in profit or loss
Effect
Favourable Unfavourable Favourable Unfavourable

Derivative assets
The Iavourable and unIavourable eIIects oI using reasonably possible alternative assumptions have
been calculated by recalibrating the model values using expected cash Ilows and risk-adjusted
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discount rates based on the probability-weighted average oI the Group`s ranges oI possible
outcomes. Key inputs and assumptions used in the models at 31 December include:
Note: Describe the key inputs used in the models]
(g) Capital management
The Board`s policy is to maintain a strong capital base so as to maintain investor, creditor and
market conIidence and to sustain Iuture development oI the business. The Board oI Directors
monitors the return on capital, which the Group deIines as result Irom operating activities divided
by total shareholders` equity, excluding non-redeemable preIerence shares and non-controlling
interests. The Board oI Directors also monitors the level oI dividends to ordinary shareholders.
The Board seeks to maintain a balance between the higher returns that might be possible with
higher levels oI borrowings and the advantages and security aIIorded by a sound capital position.
The Group`s target is to achieve a return on capital oI between 23 and 28; in 2010 the return
was 25 (2009: 24.9). In comparison the weighted average interest expense on interest-bearing
borrowings (excluding liabilities with imputed interest) was 5.1 (2009: 5.3).
The Group`s debt to capital ratio at the end oI the reporting period was as Iollows:
`000 RUB 2010 2009
Total liabilities
Less: cash and cash equivalents
Net debt

Total equity
Debt to capital ratio at 31 December

`000 USD` 2010 2009
Total liabilities
Less: cash and cash equivalents
Net debt

Total equity
Debt to capital ratio at 31 December
From time to time the Company purchases its own shares on the market; the timing oI these
purchases depends on market prices. Buy and sell decisions are made on a speciIic transaction basis
by the Risk Management Committee; the Group does not have a deIined share buy-back plan.
There were no changes in the Group`s approach to capital management during the year.
Neither the Company nor any oI its subsidiaries are subject to externally imposed capital
requirements.
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Note: The following text provides an example in case the Group has no formal policy for
capital management:]
The Group has no Iormal policy Ior capital management but management seeks to maintain a
suIIicient capital base Ior meeting the Group`s operational and strategic needs, and to maintain
conIidence oI market participants. This is achieved with eIIicient cash management, constant
monitoring oI Group`s revenues and proIit, and long-term investment plans mainly Iinanced by the
Group`s operating cash Ilows. With these measures the Group aims Ior steady proIits growth.
34 Operating leases
Non-cancellable operating lease rentals are payable as Iollows:
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Less than one year

The Group leases a number oI warehouse and Iactory Iacilities under operating leases. The leases
typically run Ior an initial period oI Iive to ten years, with an option to renew the lease aIter that
date. Lease payments are usually increased annually to reIlect market rentals.
During the year ended 31 December 2010 an amount oI RUB xx/USD* xx was recognised as an
expense in proIit or loss in respect oI operating leases (2009: RUB xx/USD* xx). Contingent rent
recognised as an expense amounted to RUB xx/USD* xx (2009: RUB xx/USD* xx). An amount oI
RUB xx/USD* xx was recognised as other income in respect oI subleases (2009: RUB xx/USD*
xx).
Note: The following is an example of wording regarding the amendment in AS 17 regarding
land lease contracts]
The warehouse and Iactory leases were entered into many years ago as combined leases oI land and
buildings. Since the land title does not pass, the Group determined that the land lease is an
operating lease. The rent paid to the landlord oI the building is increased to market rent at regular
intervals, and the Group does not participate in the residual value oI the building, it was determined
that substantially all the risks and rewards oI the building are with the landlord. As such, the Group
determined that the leases are operating leases.
Note: in case the Group also operates as lessor, see an example of additional wording in the
2010 FRS llustrative financial statements (p.201) published by the FRG and available on
DPP site on CS net.]
35 Capital commitments
During the year ended 31 December 2010 the Group entered into a contract to purchase plant and
equipment in the Altai region Ior RUB xx/USD* xx (2009: RUB xx/USD* xx).
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36 Contingencies
(a) nsurance
The insurance industry in the Russian Federation is in a developing state and many Iorms oI
insurance protection common in other parts oI the world are not yet generally available. The Group
does not have Iull coverage Ior its plant Iacilities, business interruption, or third party liability in
respect oI property or environmental damage arising Irom accidents on Group property or relating
to Group operations. Until the Group obtains adequate insurance coverage, there is a risk that the
loss or destruction oI certain assets could have a material adverse eIIect on the Group`s operations
and Iinancial position.
(b) Litigation
The Group is proceeding with litigation against a competitor Ior breach oI intellectual property
rights and is seeking damages oI RUB xx/USD* xx. At this time, the outcome oI the litigation and
the amount oI damages that may be awarded cannot be predicted with any certainty.
The Group is deIending a prosecution Irom an environmental agency in Europe. While liability is
not admitted, iI deIence oI the prosecution is unsuccessIul, Iines and legal costs could amount to
RUB xx/USD* xx. In the opinion oI management, aIter taking appropriate legal advice, the
prosecution is expected to have no material eIIect on the Group`s Iinancial position.
(c) Taxation contingencies
Taxation contingencies in the Russian Federation
The taxation system in the Russian Federation continues to evolve and is characterised by Irequent
changes in legislation, oIIicial pronouncements and court decisions, which are sometimes
contradictory and subject to varying interpretation by diIIerent tax authorities. Taxes are subject to
review and investigation by a number oI authorities, which have the authority to impose severe
Iines, penalties and interest charges. A tax year remains open Ior review by the tax authorities
during the three subsequent calendar years; however, under certain circumstances a tax year may
remain open longer. Recent events within the Russian Federation suggest that the tax authorities
are taking a more assertive and substance-based position in their interpretation and enIorcement oI
tax legislation.
These circumstances may create tax risks in the Russian Federation that are substantially more
signiIicant than in other countries. Management believes that it has provided adequately Ior tax
liabilities based on its interpretations oI applicable Russian tax legislation, oIIicial pronouncements
and court decisions. However, the interpretations oI the relevant authorities could diIIer and the
eIIect on these consolidated Iinancial statements, iI the authorities were successIul in enIorcing
their interpretations, could be signiIicant.
Taxation contingencies in azakhstan
The taxation system in Kazakhstan is relatively new and is characterised by Irequent changes in
legislation, oIIicial pronouncements and court decisions, which are oIten unclear, contradictory and
subject to varying interpretation by diIIerent tax authorities. Taxes are subject to review and
investigation by various levels oI authorities, which have the authority to impose severe Iines and
interest charges. A tax year generally remains open Ior review by the tax authorities Ior Iive
subsequent calendar years; however, under certain circumstances a tax year may remain open
longer.
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These circumstances may create tax risks in Kazakhstan that are more signiIicant than in other
countries. Management believes that it has provided adequately Ior tax liabilities based on its
interpretations oI applicable tax legislation, oIIicial pronouncements and court decisions. However,
the interpretations oI the relevant authorities could diIIer and the eIIect on these consolidated
Iinancial statements, iI the authorities were successIul in enIorcing their interpretations, could be
signiIicant.
Taxation contingencies in the Ukraine
The Group perIorms most oI its operations in the Ukraine and thereIore within the jurisdiction oI
the Ukrainian tax authorities. The Ukrainian tax system can be characterized by numerous taxes
and Irequently changing legislation which may be applied retroactively, open to wide interpretation
and in some cases are conIlicting. Instances oI inconsistent opinions between local, regional, and
national tax authorities and between the Ministry oI Finance and other state authorities are not
unusual. Tax declarations are subject to review and investigation by a number oI authorities that are
enacted by law to impose severe Iines, penalties and interest charges. A tax year remains open Ior
review by the tax authorities during the three subsequent calendar years, however under certain
circumstances a tax year may remain open longer.
These Iacts create tax risks substantially more signiIicant than typically Iound in countries with
more developed systems. Management believes that it has adequately provided Ior tax liabilities
based on its interpretation oI tax legislation, oIIicial pronouncements and court decisions.
However, the interpretations oI the relevant authorities could diIIer and the eIIect on these
consolidated Iinancial statements, iI the authorities were successIul in enIorcing their
interpretations, could be signiIicant.
Taxation contingencies in Armenia
The taxation system in Armenia is relatively new and is characterised by Irequent changes in
legislation, oIIicial pronouncements and court decisions, which are sometimes unclear,
contradictory and subject to varying interpretation. Taxes are subject to review and investigation by
tax authorities, which have the authority to impose Iines and penalties. In the event oI a breach oI
tax legislation, no liabilities Ior additional taxes, Iines or penalties may be imposed by tax
authorities once three years have elapsed Irom the date oI the breach.
These circumstances may create tax risks in Armenia that are more signiIicant than in other
interpretations oI applicable Armenian tax legislation, oIIicial pronouncements and court decisions.
Taxation contingencies in Georgia
The taxation system in Georgia is relatively new and is characterised by Irequent changes in
legislation, oIIicial pronouncements and court decisions, which are sometimes unclear,
contradictory and subject to varying interpretation. In the event oI a breach oI tax legislation, no
liabilities Ior additional taxes, Iines or penalties may be imposed by the tax authorities aIter six
years have passed since the end oI the year in which the breach occurred.
These circumstances may create tax risks in Georgia that are more signiIicant than in other
interpretations oI applicable Georgian tax legislation, oIIicial pronouncements and court decisions.
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Taxation contingencies in the yrgyz Republic
The taxation system in the Kyrgyz Republic is relatively new and is characterised by Irequent
changes in legislation, oIIicial pronouncements and court decisions, which are oIten unclear,
contradictory and subject to varying interpretation by diIIerent tax authorities. Taxes are subject to
review and investigation by a number oI authorities, which have the authority to impose severe
Iines, penalties and interest charges. A tax year remains open Ior review by the tax authorities
during the three subsequent calendar years; however, under certain circumstances a tax year may
remain open till six calendar years.
These circumstances may create tax risks in the Kyrgyz Republic that are substantially more
signiIicant than in other countries. Management believes that it has provided adequately Ior tax
liabilities based on its interpretations oI applicable Kyrgyz tax legislation, oIIicial pronouncements
oI court decisions. However, the interpretations oI the relevant authorities could diIIer and the
eIIect on Iinancial position oI the Group, iI the authorities were successIul in enIorcing their
Please refer to the DPP News Flashes of 7 1uly and 22 December 2006 and 13 March 2007
for guidance on accounting for and disclosure of tax exposures. The News Flash of 7 1uly
2006 includes an example of wording for a tax contingency disclosure.]
37 Related party transactions
(a) Control relationships
The Company`s immediate parent company is |name|. The Company`s ultimate parent company is
|name| and the Company`s ultimate controlling party is |name|.
Note: f ultimate parent or ultimate controlling party is not known, disclose the fact]
Option 1 for next paragraph: No public financial statements]
No publicly available Iinancial statements are produced by the Company`s ultimate parent
company or any other intermediate parent company.
Option 2 for next paragraph: Public financial statements produced]
No publicly available Iinancial statements are produced by the Company`s parent company or
ultimate controlling party. The next highest parent company that does so is |name|.
(b) Transactions with management and close family members
Key management and their close Iamily members control 12 oI the voting shares oI the
Company.
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i) Management rem:nerati4n
Key management received the Iollowing remuneration during the year, which is included in
personnel costs (see note 15):
2010 2009 2010 2009
`000 RUB `000 RUB `000 USD` `000 USD`

Salaries and bonuses
Contributions to State pension Iund
Contributions to deIined beneIit plan
Other long-term service beneIits
provided
Termination beneIits

ii) Other transacti4ns
Loans to directors amounting to RUB xx/USD* xx are included in 'other receivables (see
note 24). No interest is payable on these loans. The loans are repayable on demand, and are
expected to be repaid in the next Iinancial year.
(c) Transactions with other related parties
Note: For State-controlled entities, all transactions with other State-controlled entities
should be disclosed.]
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The Group`s other related party transactions are disclosed below.
i) Reven:e
`000 RUB
Transaction
value
Transaction
value
Outstanding
balance
Outstanding
balance
2010 2009 2010 2009
Sale oI goods:
Parent company
Entities with signiIicant inIluence
Fellow subsidiaries
Equity accounted investees
Other |speciIy|
Services provided:
Parent company
Fellow subsidiaries
Other |speciIy|
Other revenue |speciIy|

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`000 USD`
Transaction
value
Transaction
value
Outstanding
balance
Outstanding
balance
2010 2009 2010 2009
Sale oI goods:
Parent company
Fellow subsidiaries
Other |speciIy|
Services provided:
Parent company
Fellow subsidiaries
Other |speciIy|
Other revenue |speciIy|

All outstanding balances with related parties are to be settled in cash within six months oI the
reporting date. None oI the balances are secured.
ii) Ex5enses
`000 RUB
Transaction
value
Transaction
value
Outstanding
balance
Outstanding
balance
2010 2009 2010 2009
Purchase oI goods:
Parent company
Fellow subsidiaries
Other |speciIy|
Services received:
Parent company
Fellow subsidiaries
Other |speciIy|
Other expenses |speciIy|

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`000 USD`
Transaction
value
Transaction
value
Outstanding
balance
Outstanding
balance
2010 2009 2010 2009
Purchase oI goods:
Parent company
Fellow subsidiaries
Other |speciIy|
Services received:
Parent company
Fellow subsidiaries
Other |speciIy|
Other expenses |speciIy|

All outstanding balances with related parties are to be settled in cash within six months oI the
reporting date. None oI the balances are secured.
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iii) L4ans
`000 RUB
Amount
loaned
Amount
loaned
Outstanding
balance
Outstanding
balance
2010 2009 2010 2009
Loans received:
Parent Company
Fellow subsidiaries
Other |speciIy|
Loans given:
Parent Company
Fellow subsidiaries
Other |speciIy|

`000 USD`
Amount
loaned
Amount
loaned
Outstanding
balance
Outstanding
balance
2010 2009 2010 2009
Loans received:
Parent Company
Fellow subsidiaries
Other |speciIy|
Loans given:
Parent Company
Fellow subsidiaries
Other |speciIy|

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The loan Irom the Company`s parent company is interest Iree and is repayable in 2011. Upon
initial recognition the loan was discounted using a market rate oI interest oI x. The discount was
initially recognised in share premium, net oI deIerred taxation.
The loan Irom a Iellow subsidiary bears interest at x per annum and is repayable upon demand.
38 Significant subsidiaries
2010 2009
Subsidiary Country of incorporation Ownership/voting Ownership/voting
Baguette S.A. France 100 100
Mermaid A/S Denmark 100 100
Big Paper United States 100 100
Stora Forest AS Sweden 85 70
Oy Kossu* Finland - -
Windmill* Netherlands - -
* These are special purpose entities (see note 3(a)(iii)) in which the Group has no direct ownership
or voting interest.
The Group has pledged xx oI its interest in |subsidiary name| as collateral Ior a long-term loan
(see note 28).
39 Events subsequent to the reporting date
At the end oI January 2010 the Group announced its intention to implement a cost-reduction
programme and to take Iurther measures to reduce costs. Additionally, to enable the Group to adapt
its size to today`s market conditions and the eIIects oI the global recession, it is intended to reduce
the Group`s workIorce by 400 positions worldwide by the end oI 2011, by means oI non-
replacement wherever possible.

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