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SAB Finance A.S.

Audit Report / Information Dec 31, 2008

1048_10-k_2008-12-31_91e5821f-ce79-4258-b575-c307cf466316.pdf

Audit Report / Information

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Nom de la Société: PSB Finance SA Siège social: 2, boulevard Konrad Adenauer, L-1115 Luxembourg N° du Registre de Commerce: B 118687

Code d'honneur : 1463

Le Bilan au 31 Décembre 2008 enregistré à Luxembourg, le avec les références a été déposé au Registre de Commerce et des Sociétés.

Pour mention aux fins de publication au Mémorial, Recueil Spécial des Sociétés et Associations.

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PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687

ANNUAL ACCOUNTS AND REPORT OF THE REVISEUR D'ENTREPRISES

DECEMBER 31, 2008

PSB Finance S.A. Société Anonyme

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R.C.S. Luxembourg B 118.687

TABLE OF CONTENTS

Pages
REPORT OF THE REVISEUR D'ENTREPRISES $1 - 2$
ANNUAL ACCOUNTS
- Balance sheet 3
- Profit and loss accounts 4
- Notes to the annual accounts $5 - 9$

$09 - 12 - 2009$

Accounting Auditing Consulting & Outsourcing

To the Shareholders of PSB Finance S.A. Société Anonyme 2, boulevard Konrad Adenauer L-1115 Luxembourg

R.C.S. Luxembourg: B 118.687

REPORT OF THE REVISEUR D'ENTREPRISES

Report on the annual accounts

We have audited the accompanying annual accounts of PSB Finance S.A., Société Anonyme, which comprise the balance sheet as at December 31, 2008 and the profit and loss account for the year ended December 31, 2008, and a summary of significant accounting policies and other explanatory notes.

Board of director's responsibility for the annual accounts

The board of directors is responsible for the preparation and fair presentation of these annual accounts in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual accounts that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Responsibility of the réviseur d'entreprises

Our responsibility is to express an opinion on these annual accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted by the Institut des réviseurs d'entreprises. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts. The procedures selected depend on the judgment of the réviseur d'entreprises, including the assessment of the risks of material misstatement of the annual accounts. whether due to fraud or error. In making those risk assessments, the réviseur d'entreprises considers internal control relevant to the entity's preparation and fair presentation of the annual accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.

AACO Sàrl Réviseur d'Entreprises Expert-comptable

  1. Val Fleuri . L-1526 Luxembourg

Tél. : + 352 45 80 78-1 $Fax : + 352458078 - 55$ Capital social :12.500 EUR RC B 88 833 Fortis IBAN LU18 0030 2530 8546 0000

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the annual accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the annual accounts give a true and fair view of the financial position of PSB Finance S.A., Société Anonyme as of December 31, 2008 and of the results of its operations for the year ended December 31, 2008 in accordance with the Luxembourg legal and regulatory requirements relating to the preparation of the annual accounts.

Report on other legal and regulatory requirements

The annual report, which is the responsibility of the board of directors, is in accordance with the annual accounts.

A.A.C.O. S.à R.L.

Julien DIDIERUEAN

Luxembourg, December 3, 2009

PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687 BALANCE SHEET December 31, 2008

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ASSETS 2008
EUR
2007
EUR
FIXED ASSETS
Financial assets
Other Ioans (note 3) 484.670.413 357.094.273
CURRENT ASSETS
Debtors
Other debtors (note 4)
becoming due and payable within one year 29.117.415 5.366.495
Cash at banks 18.682 63.124
29.136.097 5.429.619
TOTAL ASSETS 513.806.510 362.523.892
LIABILITIES
CAPITAL AND RESERVES
Subscribed capital (note 5) 31.000 31.000
PROVISIONS FOR LIABILITIES AND CHARGES
Provisions for taxation 130.314 62.680
Other provisions 5.000
135.314 62.680
CREDITORS
Bonds
Non-convertible bonds (note 6)
becoming due and payable within one year 15.000.000
becoming due and payable after more than one year
Other creditors
484.670.413 357.094.273
becoming due and payable within one year 13.969.783 5.335.939
513.640.196 362.430.212
TOTAL LIABILITIES 513.806.510 362.523.892

The accompanying notes are integral part of these annual accounts.

PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687 PROFIT AND LOSS ACCOUNT December 31, 2008

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CHARGES 2008
EUR
2007
EUR
Other operating charges 2.238.621 990.324
Other interest payable and similar charges (note 6) 42.064.108 34.380.322
Income tax 76.195 54.157
TOTAL CHARGES 44.378.924 35.424.803
INCOME
Other operating income 2.304.627 4.465.705
Income from loans forming part of the fixed assets (note 3) 42.064.108 30.959.098
Interest receivable and similar income 10.189
TOTAL INCOME 44.378.924 35.424.803

The accompanying notes form an integral part of these annual accounts.

PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687 NOTES TO THE ANNUAL ACCOUNTS December 31, 2008

NOTE 1 - GENERAL INFORMATION

PSB Finance S.A. (hereafter referred to as the « Company ») is a company incorporated under the law of Luxembourg on August 3, 2006 under the legal form of a "Société Anonyme", as a public limited liability company, for an unlimited duration.

The Company's registered office is 2, boulevard Konrad Adenauer, L-1115 Luxembourg and the Company is registered in the Trade Register under number B 118.687 in Luxembourg.

The corporate object of the Company is:

  • the issue of loan participation notes or other debt securities for the purpose of financing loans to JOINT-STOCK COMMERCIAL BANK PROMSVYAZBANK (Closed JOINT STOCK COMPANY);
  • the granting of loans to JOINT-STOCK COMMERCIAL BANK PROMSVYAZBANK (Closed JOINT STOCK COMPANY);
  • the granting of security interests over its assets in relation to the issuance of the loan participation notes or other debt securities; and
  • the making of deposits at banks or with other depositaries.

The Company may carry out any transactions, whether commercial or financial, which are directly or indirectly connected with its corporate object at the exclusion of any banking activity.

In general, the Company may carry out any operation which it may deem useful or necessary in the accomplishment and the development of its corporate purpose.

The accounting year begins on January 1st of each year and ends on December 31st of the subsequent year.

PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687 NOTES TO THE ANNUAL ACCOUNTS December 31, 2008 - continued -

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The Company maintains its books and records in euros (« EUR ») and presents its annual accounts in conformity with generally accepted accounting principles in Luxembourg which include the following significant accounting policies:

Foreign currency translation

Assets, except participations, and liabilities stated in other currencies than EUR are translated at the exchange rate prevailing at the balance sheet date. Transactions denominated in other currencies than EUR are translated at the rate prevailing at the transaction date.

Where there is an economic link between an asset and a liability, theses are valued in total according to the method described above and the net unrealized loss is recorded in the profit and loss account.

Financial assets

Other loans are valued at purchase price. Value adjustments are made in case of durable depreciation in value according to the opinion of the Board of Directors. So they are valued at the lower figure to be attributed to them at the balance sheet date. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.

Debtors

Debtors are valued at their nominal value. They are subject to value adjustments where their recovery is compromised.

Provisions for liabilities and charges

At the end of each financial year, consideration is given to the constitution of provision for taxation. Provisions set up in previous years are reviewed and may be written back as extraordinary income if they no longer prove necessary.

PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687 NOTES TO THE ANNUAL ACCOUNTS December 31, 2008 - continued -

NOTE 3 - OTHER LOANS

2008
EUR
2007
EUR
Gross book value at the beginning of the year 357.094.273 246.473.533
Additions for the year 93.902.592 147.503.223
Foreign exchange differences 33.673.548 (36.882.483)
Gross book value at the end of the year 484.670.413 357.094.273
Net book value at the end of the year 484.670.413 357.094.273

As at December 31, 2008, other loans are as following:

Borrower Principal amount Interest rate Maturity date
PROMSVYAZBANK USD 225,000,000 8.750 % October 20, 2011
PROMSVYAZBANK USD 200,000,000 9,625% May 23, 2012
PROMSVYAZBANK USD 100.000.0001 12.50 % January 31, 2018
PROMSVYAZBANK USD 150,000.000 10,75 % July 15, 2013

1On 31 January 2008, the conditions of the subordinated loan to PROMSVYAZBANK for an amount of USD 100,000,000 accorded on July 20, 2007 have changed with a new interest rate at 12.5% per annum and a maturity date on January 31, 2018.

As at December 31, 2008, the Company accorded several loans to OPEN JOINT STOCK COMPANY PROMSVYAZBANK, a joint stock company established under the laws of the Russian Federation, for a total amount of USD 675.000.000, appreciated for a total amount of EUR 484.670.413. The interest receivable for the year 2008 amounts to EUR 42.064.108.

NOTE 4 - OTHER DEBTORS

2008
EUR
2007
EUR
Loan to PROMSVYAZBANK (Series 1) 15.000.000
Interests on loans 13.969.782 5.248.318
Arrangement fees receivable 147.633 118.177
29.117.415 5.366.495

PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687 NOTES TO THE ANNUAL ACCOUNTS December 31, 2008 - continued -

On July 1. 2008, the Company accorded a new loan to PROMSVYAZBANK for an amount of EUR 15,000,000. The loan bears fixed interest at a rate of 9.625% per annum. The maturity date is April 1, 2009.

As at April 1, 2009, PROMSVYAZBANK totally repaid the principal amounts and the interests of the loan.

NOTE 5 - CAPITAL AND RESERVES

a) Subscribed capital

The subscribed capital amounts to EUR 31.000 and is represented by 310 shares with a nominal value per unit of EUR 100,00.

b) Legal reserve

Luxembourg companies are required to allocate to a legal reserve a minimum of 5% of the annual net income, until this reserve equals 10% of the subscribed share capital. This reserve may not be distributed.

NOTE 6 - NON CONVERTIBLE BONDS

Within one
year
EUR
More than
one year
EUR
Gross book value at the beginning of the year 357.094.273
Additions for the year 15.000.000 161.392.637
Disposals for the year (67.490.045)
Foreign exchange differences 33.673.548
Gross book value at the end of the year 15.000.000 484.670.413
Net book value at the end of the year 15.000.000 484.670.413

PSB Finance S.A. Société Anonyme R.C.S. Luxembourg B 118.687 NOTES TO THE ANNUAL ACCOUNTS December 31, 2008 - continued -

As at December 31, 2008, the non convertible bonds are as following:

Denomination Face value
outstanding
Issue date Interest rate Repayment date
XS0272236489
Senior Loan Participation Notes
USD 225.000.000 October 20, 2006 8,750 % October 20, 2011
XS0272237370
Subordinated Loan Participation
Notes
USD 200,000,000 October 20, 2006 9,625% May 23, 2012
XS0312298713
Floating Rate Loan Participation
Notes
USD 0.00'
Redeemed
January 31, 2008
July 20, 2007 $4.5% + US$
quarterly
LIBOR
January 31, 2018
XS0343690466
Floating Rate Loan
USD 100.000.000' January 31, 2008 12,50 % January 31, 2018
XS0375091757
Loan Participation Notes Series 2
MTN
USD 150,000,000 July 15, 2008 10.75 % July 15, 2013
XS0373509404
Loan Participation Notes Series 1
MTN
EUR 15,000,000 July 1, 2008 9,625 % April 1, 2009

1 As of January 28, 2008, it was decided the issuance of USD 100.000.000,00 12,5 % Loan Participation Notes, due 2018, for the sole purpose of financing the redemption in full of the USD 100.000.000,00 Loan Participation Notes due 2018 to the Company, issued on July 20, 2007.

The interest payable for the year 2008 amounts to EUR 42.064.108.

As at April 1, 2009, the Company redeemed the Loan Participation Notes for an amount of EUR 15.000.000,00 and the relative interests.

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