Quarterly report

1.3. Data on Issuer's Auditor (Auditors)

1.3.1. Full name: “KPMG” Closed Joint –Stock Company

Abbreviated name "KPMG" CJSC

Location: 18/1, Olimpiyskiy Prospect, Moscow, Russian Federation, 129110

Tel: [phone]

Fax: [phone]

e-mail: [e-mail]

Internet site: http://www.kpmg.ru

Data on Auditor's license:

No. of license for auditing: Е003330

Date of issue: 17.01.2003

Period of validity: till 17.01.2008

Authority issuing the license: Ministry of Finance of the Russian Federation

Fiscal year, for which the auditor independently checked the issuer’s accounts and financial (book-keeping) statements: no audit of financial statements has been performed

Factors that may have influence on independence of the auditor on the issuer as well as measures that have been taken by the Issuer and the auditor to reduce the influence of the said factors: no such factors

Information on any essential interests connecting the auditor (auditor’s officials) with the issuer (issuer’s officials):

Share of the auditor’s (auditor’s officials’) participation in the authorized capital of the issuer: none

Granting loans and credits by the issuer to the auditor (auditor’s officials):

no loans or credits have been granted

Any close business relationships (participation in issuer’s products (services) promotion, participation in joint business, etc.):

None

Immediate family members:

None

Data on issuer’s executive officers who are at the same time the auditor’s executive officers:

no such persons

Measures undertaken by the Issuer and the Auditor to reduce the effect of the specified factors: due to absence of factors which may influence the auditor’s independence from the Issuer, the Issuer and the Auditor undertook no such measures. The main action undertaken by the Issuer for non-occurrence of the specified factors was inclusion of conditions of the Auditor’s independence on the Issuer into the conditions of rendering audit services.

Issuer’s auditor selection procedure:

The Auditor shall be appointed by the Annual General Shareholders' Meeting.
Availability of the procedure of the contest for selection of the auditor and main conditions of such contest:

Auditing company to perform obligatory audit of the bookkeeping procedures and financial accounts of "UTK" PJSC compiled in accordance with Russian Accounting Standards (RAS) and International Financial Reporting Standards (IFRS) for the year 2007 was selected at the open Contest held on April 3-4, 2007.

Main conditions of the Contest:

• 
  Subject of the Contest – determination of the auditing company having the right to conclude the agreement to perform audit of the bookkeeping procedures and financial accounts of "UTK" PJSC compiled in accordance with Russian Accounting Standards (RAS) and International Financial Reporting Standards (IFRS) for the year 2007;
  
• 
  Time of presentation of the auditor’s report: compiled in accordance with Russian Accounting Standards (RAS) - not later than on March 30, 2008 and International Financial Reporting Standards (IFRS) – not later than on May 31, 2008.
  
• 
  the audit company shall agree to include the following conditions in the audit services agreement:
  

1. Cost of services:

• 
  Compensation due to the audit company for the Services shall be determined exactly in the agreement and shall consist of professional fees and reimbursement of expenses;
  
• 
  Shall be expressed in Russian rubles.
  

2. Payment of services:

• 
  The first payment of no more than 10% shall be made within 15 business days after signing of the agreement;
  
• 
  The second payment of no more than 20% shall be made within 15 business days after starting the audit interim stage;
  
• 
  The third payment of no more than 20% shall be made within 15 business days after ending the audit interim stage and signing of the act of acceptance;
  
• 
  The fourth payment of no more than 20% shall be made within 15 business days after starting the audit final stage;
  
• 
  The fifth payment of no more than 15% shall be made within 15 business days after presentation of the audit report on financial statements compiled in accordance with Russian Accounting Standards (RAS) and the confidential report for the Client’s management on the RAS audit results as well as execution of the act of acceptance of the Services;
  
• 
  The sixth payment of no more than 15% shall be made within 15 business days after presentation of the audit report on financial statements compiled in accordance with International Financial Reporting Standards (IFRS) and the confidential report for the Client’s management on the IFRS audit results as well as execution of the act of acceptance of the Services.
  

3. RAS audit services shall be rendered to the Client by the audit company in two stages:

- I stage – interim stage: audit of financial statements for the first nine months of 200_ ;

- II stage – final stage –audit of financial statements for the year 200_ .

IFRS audit services shall be rendered in one stage.

4. Liability:

• 
  The auditor shall be liable for direct damages sustained as a result of undue performance of the audit services; the auditor’s liability shall not be less than the auditor’s fee under the agreement;
  
• 
  The auditor shall pay penalty for late presentation of audit reports;
  
• 
  The parties shall incur property liability for disclosure of confidential information.
  

5. Arbitration:

• 
  All the disputes shall be subject to resolution by the Arbitration Court located at the sued party’s whereabouts.
  

Procedure of nominating the candidature of the auditor for its approval by the General Shareholders' Meeting including the governing body which takes the corresponding decision:

The Audit Committee of UTK’s Board of Directors considers the candidature of the auditor and the Board of Directors recommends the candidature of the auditor for its approval by the General Shareholders' Meeting.

The auditor shall be appointed annually at the Annual General Shareholders' Meeting by the majority of votes of the shareholders – owners of voting shares – attending the Meeting. Terms of the Contract with the Auditor shall be approved by the Company’s Board of Directors.

Information on the works performed by the auditor in the framework of special auditor assignments:

Such works have not been performed.

Procedure of determining the auditor’s fee:

Size of the fee to be paid to auditor shall be determined by the Issuer’s Board of Directors.

Actual size of the fee paid by the Issuer to the auditor based on the results of each fiscal year or other accounting period for which the auditor performed independent audit of book keeping procedure and financial statements of the Issuer: price of services under the contract is confidential information.

Any postpones or outstanding payments for services provided by the auditor:

No postpones or outstanding payments for services provided by the auditor.

4.