ANNUAL REPORT • 2013 Annual report 2013

APPROVED BY: Annual general meeting of shareholders JSC “Grid Company” June 27, 2014 Protocol No. 32 of July 1, 2014

PRELIMINARILY APPROVED BY: Board of directors JSC “Grid Company” May 24, 2014 Protocol No.12/05-2014 of May 27, 2014 TABLE OF CONTENTS

Appeal of the chairman of the board of JSC “Grid Company” ...... 4

Appeal of Director General of JSC “Grid Company” ...... 6

1 . Highlight figures and key events of 2013 ...... 8

2 . General Information about the Company...... 16

3 . Analysis of financial state and results of the company’sactivities ...... 28

4 . Production activity...... 40

5 . Investment activity and innovation development...... 56

6 . Corporate management...... 66

7 . Control, audit and risk management system ...... 82

8 . Human resource policies and social responcibility ...... 90

9 . Schedules...... 106

Book-keeping (financlal) statement of jsc “grid сompany” for 2013 according to russian accounting standards ...... 108

Data on compliance with corporate code of conduct...... 116

List of transactions considered according to the federal law “On joint-stock companies” transactions with a self-interest and approved by the Company’s management bodies in 2013...... 124

List of transactions considered according to the federal law “On Joint-Stock Companies” significant transactions and approved by the Company’s management bodies in 2013 ...... 131.

Glossary, abbreviations...... 132 4 I.SH. KHALIKOV TO THE SHAREHOLDERS THE TO KHALIKOV I.SH.

Dear shareholders!

The Republic of is the top performer among the regions of the Federal District according to the total rat- ing of the socioeconomic index . Tatarstan ranks the first among the regions of the for its GRP, per person including, and the industrial output . The persistent and conse- quent resolution of the issues of maintaining and all-round de- APPEAL OF THE CHAIRMAN OF THE BOARD OF JSC“GRID COMPANY” velopment of the real economy, successful implementation of the projects of federal and republic significance are part and parcel of the reliable functioning and dynamic advancement of the network complex of the Republic of Tatarstan . The operating results gained by the JSC “Grid Company” in 2013 are the evidence of the successful solution of the assigned tasks and the progressive development of the Company . In 2013 the Company was implementing the large-scale investment plan oriented to the modernization of the network based on the application of the modern equipment and tech- nologies to favour the development of the network complex of the Republic of Tatarstan and the national task of the en- hancement of energy efficiency and savings . The Company has finished the construction of the largest for the last 50 years network object in the Republic, namely the Shchelokov Substation 500 kV, which will provide the consumers insur- ing the economic well-being of the Republic with the primary – ScienceCityInnopolisandSmartdictatethesolvation jects liketheconstructionofKazan’s satelliteinnovation towns was animportanteventof2013makinghistorynotonlythe rupted powersupply of the Universiade 2013facilities, which ment oftheKazannetworkassured thehigh-qualityuninter FIFA World Cup Republic butthecountryonwhole of thecitydoubled the tie-station providing part with energy the southern autotransformers attheCentralsubstationof220kVwhichis regions which opensthepotentialforlong-termgrowth ofthese kaya, Vysokaya Gorasubstations of110kVwasundertaken sky region thereconstruction ofthePromkomzona, Gorods berezhnye Chelny, partofAlmetievskandVysokogor western to theconsumersofindustrialandmunicipalarea ofNa reliability rating depend ontheteamworkofCompany of newtasks events –16thFINAworldchampionshipin2015and2018 that itisprepared tohostinKazanthecomingglobalscale ists confirmeditshighpublicprofile andthusdemonstrated tarstan, thanksinlargeparttoitspowerengineeringspecial The growth ofpowerconsumptionandlarge-scalepro The actions undertaken in the framework of the develop . Asaresult ofthereconstruction thecapacityof . Thesuccessofthisdevelopmentwilldirectly . To provide reliable high-quality power supply . .

. TheRepublicofTa .

------ficiency advancement and the customer-oriented approach will Republic ofTatarstan, newtechnologiesintroduction, energyef gional SmartEnergyNetworkattheJSC“GridCompany”,were introduction ofinnovationtechnologies, includingtheproject “Re Company for their high performance and efficient skillful activity in Company fortheirhighperformanceandefficient skillfulactivityin pany” Isincerely thanktothemanagementandallteamof pany’s Board ofDirectors andits management,alongwiththe sured bytheefficient collaborationandcooperationoftheCom vation advancementandefficient performanceoftheCompany power network complex of the Republic of Tatarstan and inno- manage the tasks of reliable and high-quality functioning of the 2013 antee thehightempodevelopmentofRepubliceconomics Steadily functioning and growing network infrastructure will guar remain theprioritiesof Companyinthenear-term outlook qualified andfruitfulworkoftheCompany’s staff the prioritiesofCompanyinpastyear Chairman oftheboard ofdirectors ofJSC“GridCompany” On behalfoftheBoard ofDirectors oftheJSC“GridCom The enhancementofthereliability ofthepowersupply The successfulachievementoftheCompany’s goalswasas The enhancementofthecustomer-oriented approach and . I am confident that in 2014 as well the Company staff will Iamconfidentthatin2014aswelltheCompanystaff will Prime MinisteroftheRepublicTatarstan, .

.

I.Sh.Khalikov . .

------.

ANNUAL REPORT 5 2013 6 I. SH. FARDIEV SH. I. THE TO SHAREHOLDERS

Dear shareholders! In recent years the Republic of Tatarstan ranks among the most economically efficient regions of the Russian Fed- The JSC “Grid Company” is one of the largest power net- eration . The Republic’s strategy aimed at its stable develop-

APPEAL OF DIRECTOR GENERAL OF JSC“GRID COMPANY” work companies, functioning in the Volga region and infra- ment is in accord with the Compnay’s Investment program of structural company of the Republic of Tatarstan, presenting 2013-2015, targeting at fulfilling the tasks of the development more than 90% of the power transmission market . of the republican electric power network and the national The hosting of the 2013 Universiade became one of the task to enhance energy efficiency saving . In the framework key events of the Republic . The mission of uninterrupted and of the measures taken by the Company to provide power reliable supply of the Universiade facilities entrusted to the safety and emergency vulnerability reduction of the power Company has succeeded . supply network facilities, to enhance the reliability of the The results gained by the Company in 2013 are the evi- power supply to the consumers of the Republic, prospective dence of its dynamic development and successful realization development of the power network complex of Kazan region of the primary spheres of activity . there is the reconstruction of the Central Substation 220 kV, The scope of power transmission services provided by construction of the cable-overhead line of the Kutlu-Bukash- the Company to the consumers of the Republic of Tatar- Central 220 kV . The company finished the construction of stan was 22,6 billion kW-h, i .e . 180 million kW-h more than the largest project of 2013, Substation Shchelokov 500 kV it was the year before . The Company has received more (named after the prominent power engineering specialist than 23 thousand applications for technological connec- Jury Shchelokov), which provided the residents of the Spe- tion of the power receivers to the power network, with to- cial economic zone of the JSC “Alabuga” with additional 250 tal maximum capacity of 1 456,4 megawatt . The growth of mWt of electric power of the top reliability rating . The Com- the applications reached 13,3% in comparison with 2012 . pany is implementing the global reconstruction of the Kinderi More than 20 thousand contracts of technological connec- substation 500kV which will have been finished in 2016 . The tion were signed to provide a total of 741,2 mWt, which Central, Promkomzona, Vysokaya Gora substations were put is 9,4% more than in 2012, with a total of 17,7 thousand into operation after their reconstruction . Overall reconstruc- contracts fulfilled to provide a total of 580,2 mWt, which is tion of the Bolghar substation 110 kV completed the innova- 8,5% more than in 2012 . tion of power supply facilities of the State Bolghar historical works are plannedtobeimplementedthisyear:substation work oftheRepublicreached more than8billionrubles tribution networks and to converse them to modern tech tribution networksandtoconversethemmodern tion Nizhnekamskaya220kV, substationKutlu-Bulkash220 the Company’s repay itsmedium-termobligations Governing BoarddesGrandsReseaux Governing (ConseilInternational fessional skillsoftheCompany’s staff Rating Agency“ExpertRA”,confirmingthehighprobability of Electriques) 500kV, substationKinderi500kV(stage4),substa Kazan companies andresearch centres from 33countriescameto capital investmentintotheenhancementofpowernet overcome thetearandwearofcapitalequipment,dis- rating ofcreditworthiness assigned totheCompanyby objects were putintooperation in2013 of capitalconstructionandreconstruction more than3000 and architectural conservation area kV, substationKirovskaya 110kV(Kazan),substationYuzh nologies highly praisedtheleveloftheirequipmentstatusandpro nologies into thenetworkcomplexofRepublicTatarstan to The current targets of the Company are innovation tech- The evidenceoftheCompany’s stablepositionistheA++ As for2014ourprimeobjectivesremain theinvestment . Havingsurveyedtherepublican powerfacilitiesthey . . The following construction and reconstruction LastyearKazanhostedthemeetingofCIGRE . Theexecutivesofthelargestelectricpower . Allinalltheframework .

. Onthewhole .

.

- - - - - Tatarstan, aswellenhancementanddevelopment ofthe 2 Toima 2–Distributionpoint-1SEZ“Alabuga”,construc works asconstructionoftheSviyazhsk-InnopolisandIsak- tact-center, servicestationsandcenters,introduction ofthe team willtackletheobjectivesofproviding thehigh-quality tion designoftheShchelokov-CentralHVline220kV Chelny), constructionoftheHVline110kV–network1and CRM-system, staff safetyimprovement customer servicesystemthrough creation oftheunitedcon creation powersupplynetworkofKazan’s oftheexternal in operational functioning, realization of the numberof meas of theNetworkControl Center totheimplementationof ovo- aerial-cableline110kV, reconstruction ofthe and reliable powersupplytothecustomersofRepublic substation Sviyazhsk110kVare interconnected withthe power networkcomplexoftheRepublic professional efficiency andcompetenceoftheCompany’s naya 110kV(Kazan),substationBCE(Naberezhnye novative satellitetownsciencecityInnopolis ures tocutdowntheoperation costs,organizationofthe in terms of professional masteryprojects The Companyis going tofacechallengingand fascinating Among theotherprioritiesofthisyearare theswitching Director GeneralofJSC“GridCompany” .

. . I am convincedthat .

I.Sh.Fardiev . Such - - - -

ANNUAL REPORT 7 2013 BRAVE ENOUGH TO BE THE FIRST– GOOD ENOUGH TO BE THE BEST Highlight01 figures and key events of 2013 10 HIGHLIGHT

FIGURES

HIGHLIGHT FIGURES HIGHLIGHT FIGURES FINANCIAL FIGURES

AND KEY EVENTS OF2013 million rubles 30 000 2011 2012

+35% 2013 883

25 20 000 +19% 159

491

19 18 746

+60% 15 10 000 +81% 194 570

257

+85%

13 12 12 685

9 227 -56% 9 598

7 7 837 7 679 6 905 288 338

094 010

5 5 4 026 4 4 0 Receipt Cost EBITDA Before-tax profit Ned profit Net debt

0,4 0,4 0,4

million rubles +1,1% +50% 0,3 +50% 8 605,5 8 703,2 7 500 0,3 0,3 0,3

0,2 5 000 0,2 0,2 0,2 4 909,7

0,1 -75% 2 500 0,1

0 0 Fixed assets return Net assets return Leverage ratio 2011 2012 2013 Investment (exclusive of VAT) PRODUCTION FIGURES Million kW-h kilometers 10 000 15 000 20 000 10 000 15 000 20 000 thousand thousand 5 000 5 000 30 60 90 0 0 0 ps

2011 and transformer substations and transformer substations 19 484 Total numberofsubstations Total energy transmitted Networks powerloss

Total mileageofpower 71 17 503 transmission lines 1 584 (distribution point)

68 17 565

2012 19 993 1 537 67 -2% 18 142 +3%

2013 20 013 +0,1% kilometers thousand thousand 10 000 15 000 20 000 1 444 -6% 5 000 MVA 0 1 2 0 Transformer capacityofsubstations

Power transmission lines 0,9 16 356,7 10 c.u. 35–500 kV 35–500 kV introduction introduction 0 5

1,4 16 488,3

6,3

Accident ratio Accident ratio 1,7 +21% 18 303,3 +11%

6,4 10 000 2 500 5 000 7 500 1 000 1 500 2 000 500 MVA 5,9 -8% MVA 0 0 Design transformer capacity of Design transformer capacityof Introduction of new capacity Introduction ofnewcapacity substations 6–10/0,4kV 5 672,2

1 000 2 000 104,6 0 ps

1 365,7 5 932,2

1 936 1 818,3 +33% 6 230,5 +5%

Accidents Accidents 2013 2012 2011 1 925

1 831 -5%

ANNUAL REPORT 11 2013 JANUARY

22 01. 2013. – the Company adopted the Program of development and improvement of the system of ecological management in 2013 - 2014; 23 01. 2013. – operational testing of the software and hardware complex “Automated monitoring system” started at the Center of the network control; 30 01. 2013. – the Company’s affiliate, the Kazan held the presentation at of company Qualitrol (the USA), one of the largest global leaders for introduction energy measuring 12 23.01.2013 and testing equipment in the power industry FEBRUARY

01 02. .2013 - The Russian Institute of Directors raised the rating of the corporate man- agement of the JSC “Grid Company” up to level 6 “Developed Practice of the Corporate Management” according to the National Ranking of the Corporate Management; 19 02. .2013 - the Company was presented with the certificate of compliance with the requirements of the ecological management of the international standard 19.02.2013 ISO 14001:2004 .

MARCH HIGHLIGHT FIGURES HIGHLIGHT FIGURES

05 03. .2013 – meeting of the Board of Directors which considered the issues of

AND KEY EVENTS OF2013 tariff regulation, the budget of revenues and expenditures for 2013 and the aspects of providing reliable and stable power supply to sports facilities of the World Summer Universiade 2013; 13 03. .2013 - the ceremony on the ground of the State Kazan University of breaking 26.03.2013 ground for a capsule at the place of the future construction sight of the training and production testing facilities “Substation 110/10 kV” which was the first laboratory to train the experts for the substations not only in the republic of Tatarstan but in 26 03. .2013 – the President of the Republic of Tatarstan Rustam Minnihanov award- ed Director General of the Company llshat Fardiev the diploma of the winner of the Republican Contest “Benefactor 2012” in the nomination “Long-term Partnership” . 31 03. .2013 – 70th anniversary of the establishment of the enterprise “Kazan power network”, at present one of the affiliates of the Company .

31.03.2013 APRIL

03 04. .2013 – a media tour devoted to the 70th anniversary of the Kazan power net- work introducing to the public the power network complex of the Republic of Tatarstan and preparation for the World Summer Universiade 2013; 16 04. .2013 – completion of the reconstruction stage of the Central substation, one of the most important object of the Company’s Investment Program: the second auto- transformer 220 kV (АТ-1) with the capacity of 250 MVA was put into operation) . 17 0. 4 .2013 – The Company took part in the traditional Job Fair organized in the 16.04.2013 Kazan State Power Engineering; 23 04. .2013 – regular session of the regular meeting of the coordinating scientific and technical board of the Company devoted to the realization of the general technical strategy and production alongside with collaboration with the Kazan State Power Engi- neering University in terms of carrying out research and design and experimental works: 25 04. .2013 – the Board of Directors of the Company adopted the report on the administration of the budget of the Company of 2012 and the results of financial and economic activities of the company in 2012; 29 04. .2013 – annual seminar-meeting on the development of means and systems of power metering, in partnership of all the regions of Russia (Moscow, Saint Petersburg, Kazan, nizhny Novgorod, Ekaterinburg, Ivanovo, Novosibirsk, Cheboksary, Vladimir, Stavropol, Arkhangelsk, , etc .

14.05.2013 “PROSETI”; JULY JUNE Auditor for the fiscal year 2013 year fiscal the for Auditor AUGUST year 2012year which was undertaken according to the Company’s Plan of Capital Construction to Construction of Capital Plan to Company’s the according undertaken was which with the state register number 1-02-65007-D-005D; number register state the with the issues of calling and carrying out the annual meeting of the shareholders; of the meeting annual the out carrying and of calling issues the the Universiade the Korshunov, Alexei MPN, Ural of the General Zhuikov, Eugeny Director MPN, Volga the EES”, “SO JSC of the Fardiev, Ayuev, “Rosseti”, Ilshat JSC Chairman the the Boris the Director of the SAC of the JSC “Rosseti” and other official persons participating; participating; persons official other and “Rosseti” JSC SAC of ofthe the Director the Ivanov, Vitali MPN, South of the General Director Solod, Alexander MPN, Ural the Safety 2012” in the nomination “Successful work in the sphere of reliable and high-qual and of reliable sphere the in work “Successful 2012”Safety nomination the in (UAZ, GAZ Eger, Ford, Gazel, KamAZ) were added to provide the emergency crew emergency the to provide added were KamAZ) Eger, Gazel, Ford, GAZ (UAZ, Streltsov, Director General of the Volga MPN, Eugeny Zhuikov, Director General of General Zhuikov, Eugeny Director MPN, Volga of the General Streltsov, Director facilities of the World Summer Universiade 2013 Universiade Summer World of the facilities MAY K Director General of the JSC “Grid Company”, Sergei Streltsov, Director General of General Streltsov, Director Company”, Sergei “Grid JSC of the General Director of the Ministry of Science and Education of the Republic of Tatarstan; Republic of the Education and of Science Ministry of the official persons participating; participating; persons official of the Kazan region Kazan of the reliability of power supply and possible increase of the cross-flow from the substation substation the from cross-flow of the increase possible and supply of power reliability operational meeting for the purpose of studying the experience of power engineering engineering of power experience the of studying purpose the for meeting operational It was carried out by the Company in the framework of a comprehensive program for program of acomprehensive framework the in Company by the out carried was It enhance the reliability of the network equipment and power supply to the consumers to consumers the supply power and equipment network of the reliability the enhance 220 kV, Bukash Nizhnekmskaya-Kutlu 220 kV, substation the Nizhnekamskaya station acting Director of the On-line Inspection and Management Department and other other and Department Management and Inspection On-line of the Director acting on report the including account annual the and report annual the adopted shareholders after the total reconstruction, Almetievsk; Almetievsk; reconstruction, total the after specialists of the Republic of Tatarstan during such a global-scale sports event as as event sports aglobal-scale such of Tatarstan during Republic of the specialists sue of registered ordinary share, placed by closed subscription, the issue was assigned assigned was issue the subscription, by closed placed share, ordinary of registered sue prevention of children’s traumatism which is realized by the Company under the aegis aegis the under Company by the realized is which of children’s traumatism prevention profits and losses and the allocation of profits based on the financial results of the fiscal fiscal of the results financial the on based of profits allocation the and losses and profits ity power supply of consumers”; supply power ity . Bulkash to the substation Central; to substation the Bulkash 14 12 16 27 26 23 20 21 27 25 31 08 ...... 08 05 6 0 07 . 08 08 05 05 07 05 07 6 0 ...... 2013 2013 . . 2013 . 2013 2013 2013 2013 . 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 Th 2013 2013 e meeting elected the Board of Directors, the Auditing Committee and the the and Committee Auditing the of Directors, Board the elected e meeting – The Company won the annual competition “Industrial and ecological ecological and “Industrial competition annual the won Company –The – the Company completed the reconstruction of the HL cell of the Sub of the cell HL of the reconstruction the completed Company –the - is additional an registered Markets Financial for Service Federal – The – Company’s fleet replacement, 306 vehicles of domestic manufacture manufacture of domestic vehicles 306 replacement, fleet – Company’s – Andrei Cherezov, Energy Deputy Minister chaired the Company’s the chaired Minister Deputy Cherezov, Energy – Andrei - the meeting of the headquarters on reliability of power supply to the supply of power reliability on headquarters of the meeting - the – the aerial-cable Kutlu Bulkash Central 220 kV, aimed to enhance the the 220 kV, to enhance Central aimed Bulkash Kutlu aerial-cable – the – grand ceremony of unveiling the substation Gorodskaya 110/10 Gorodskaya substation the of unveiling kV ceremony – grand – the first issue of the JSC “Grid Company” corporate newspaper newspaper corporate Company” “Grid JSC of the issue first – the – The Demarche “Safe Holidays” started in the Republic of Tatarstan Republic the in started Holidays” “Safe Demarche – The – the meeting of the Board of Directors of the Company considered considered Company of the of Directors Board of the meeting – the . – annual meeting of the shareholders of the JSC “Grid company” “Grid JSC of the shareholders of the meeting – annual l shat Fardiev, Director General of the JSC “Grid Company”, Sergei Company”, Sergei “Grid JSC of the General Fardiev,shat Director . .

. Ol eg Budargin, Director General General Director Budargin, eg . Th . e - - .

25.05.2013 20.05.2013 12.08.2013 21.08.2013 27.06.2013 16.07.2013

ANNUAL REPORT 13 2013 SEPTEMBER

09 .09 .2013 – The Russian Institute of Directors confirmed the rating of the Com- pany as “The Developed Practice of the Corporate Management” according to the National Ranking of the Corporate Management; 09 .09 .2013 – the open distribution point got the operational voltage of 500 kV and the autotransformer of the new substation Elabuga 500 kV (substation Shch- elokov 500 kV) was put into action . This event became a milestone in the economic 14 14.09.2013 life of the Republic of Tatarstan in 2013 . The Companies, residents of the Special economic zone of the JSC “Alabuga” are to be provided with additional 250 mWt of electric power of the top reliability rating;

14 .09 .2013 – grand ceremony of unveiling the substation Promkomzona 110 kV after the reconstruction in Naberezhnye Chelny; 20 .09 .2013 – the Company published its financial statement of 2012, the first financial statement made in accordance with the International Financial Reporting Standards; 23-28 .09 .2013 – The capital of the Republic of Tatarstan Kazan hosted the 23–28.09.2013 meeting of the CIGRE Governing Board (Conseil International des Grands Reseaux Electriques) timed to the 90th anniversary of Russia joining the CIGRE, International Council on Large Electric Systems . HIGHLIGHT FIGURES HIGHLIGHT FIGURES OCTOBER AND KEY EVENTS OF2013 09 10. .2013 – the AIMS of the Company’s affiliate Nizhnekamskie power network was registered in the National Register of Measuring Equipment of the Russian Feder- aton; 28.10.2013 25 10. .2013 – the meeting of the board of directors of the Company adopted the al- location of responsibilities within the Company and the Board’s Plan of Action, election of the members of the Audition Committee, Human Recourses and Awards Committee and Innovation Committee of the Board of Directors; 28 10. .2013 – grand ceremony of unveiling the substation Vysokaya Gora 110 kV after the reconstruction .

NOVEMBER

01 11. .2013 – following the decision of the Committee of the Ministry of Energy of the Russian Federation the Company was issued the Certificate of Operational Readiness for the the autumn-winter period of 2013-2014; 23 11. .2013 – the company completed the reconstruction of the power supply net- work on the territory of the Bolghar historical and architectural conservation area . The total reconstruction of the substation Bolghar 110 kV completed the innovation of pow- er supply facilities of the State Bolghar historical and architectural conservation area implemented in the framework of the complex project “Cultural Heritage of Tatarstan”; 28 11. .2013 – the Company took part in the integrated exhibition of the Republic at 01.11.2013 the Second International Forum ENES-2013 in Moscow .

DECEMBER

09 12. .2013 – the open distribution point Kutlu Bukash 220 kV mounted anew has been connected according to the new circuitry; 11 12. .2013 – the Company and Electro Trade Union of the Russian Federation signed an agreement of 2013 in addition to the tariff agreement applicable to labour, salary and social safety net and its prolongation for 2014-2015; 28.11.2013 12 12. .2013 – at the Kinderi substation 500 kV of the Company’s affiliate Kazan power network four cells of the switchyard 110 kV are put into service after total reconstruction .

23.12.2013 Zarechie 35 kV; 35 Zarechie JSC “Kazan Fair” at the 16th Special International Exhibition “Energy Exhibition International 16th the at Special Fair” “Kazan JSC JANUARY work, devoted to the 80th anniversary of the first Kazan substation put into action into action put substation Kazan first of the anniversary to 80th devoted the work, the actions taken to reduce the cases of sudden outage to provide the reliable power power reliable the to provide outage of sudden cases the to reduce taken actions the of the 2014, budget for 2014 campaign the expenditures and approved revenues tariff the Order “For the Service to Homeland”, II class; to class; II Homeland”, Service the “For Order the the Universiade 2013 facilities; Universiade the great and work decent their for praised are they which of Tatarstan in President the Company, approved the Plan of capital construction of the Company of 2014, Company of the analyzed construction of capital Plan the Company, approved 500 kV); 500 MARCH FEBRUARY Decree of the President of the Russian Federation #18 Federation of 14 Russian of the President of the Decree contribution into providing reliable and effective power supply of the power circuits of circuits power of the supply power effective and reliable into providing contribution Events after reporting date reporting after Events of one of the largest enterprises of smaller capacity of the Power Center ”Maiski” to the ”Maiski” Center Power of the capacity of smaller enterprises largest of the of one of creditworthiness, theof rating highest creditworthiness, of creditworthiness supply and improve the services provided; services the improve and supply anniversary; and 14th International “Energy Symposium and Saving” Resource Efficiency of 6kV level the at of 2013 9months for Company” “Grid JSC of the activity ered the budget performance, as well as the results of the financial and economic economic and financial of the results the as well as performance, budget the ered and the new substation Elabuga 500 kV was put under load (substation Shchelokov Shchelokov (substation load under put was kV 500 Elabuga substation new the and and commencement of work of the city power network in , memorial plaque plaque memorial Chistopol, in network power city of the of work commencement and substation Kutlu Bukash 220 kV was connected according to the new circuitry; to new the according connected was 220 kV Bukash Kutlu substation energy efficienc1y and enhancement of power supply recording in the exhibition centre centre exhibition the in recording supply of power enhancement and efficienc1y energy power network of the Company; the of network power prise; nomic activities of 2013 and set the objectives of 2014; of 2013 objectives the set activities and nomic installed; ing of the Western Distribution Zone of the Company’s affiliate the Kazan power net power Kazan the affiliate Company’s of the Zone Distribution Western of the ing 18 14 18-20 12 29 20 27 24 23 27 30 05 07 04 07 ...... 12 02 01 01 12 03 02 02 12 12 01 01 03 01 ...... 2013 2013 . 2014 2014 2014 2014 2013 2013 2014 2013 2014 2014 2013 2013 2014 2014 03 2014 2014 2014 2014 2014 2014 2014 2014 2014 . 2014 – the Company completed the connection of the generating capacities capacities generating of the connection the completed Company –the – the ceremony in honour of the centenary of the first power station station power first of the centenary of the honour in ceremony –the – The Rating Agency “Expert RA” assigned to the Company A++ rating A++ rating to Company the RA” assigned “Expert Agency Rating –The – operating voltage was applied to the distribution points 110 points to 220 distribution kV the and applied was voltage – operating – a ceremony to unveil the memorial plaque on the façade of the build of the façade the on plaque memorial the to unveil – a ceremony – Ilshat Fardiev, the Company’s Director General was awarded by the by the awarded was General Fardiev, Director Company’s the – Ilshat – 45 years since the establishment of the Buinsk power network enter network power Buinsk of the establishment the since years – 45 – the Company’s meeting to summarize the results of financial and eco and of financial results the to summarize meeting Company’s – the –the affiliated Chistopol power network first time ever tested the action action the tested ever time first network power Chistopol affiliated –the – the meeting of the Board of Directors of the Company which consid which Company of the of Directors Board of the meeting – the – The Company’s team was commended with a Letter of Gratitude from from of Gratitude aLetter with commended was team Company’s – The – the Company’s affiliate, the Kazan power network celebrated its 70th its celebrated network power Kazan the affiliate, Company’s – the – the Board of Directors of the Company summarized the results of the of the results the summarized Company of the of Directors Board – the – in the framework of reconstruction the autotransformer AT-1 autotransformer the the of at reconstruction framework the – in

. – the company presented the projects in the fields of energy saving, saving, of energy fields the in projects the presented company – the .

. . 01 . 201 . 4 with the Medal of Medal the 4 with

Resource Saving” Saving” Resource . - - - - - 18–20.03.2014 05.01.2014 07.03.2014 07.02.2014 18.01.2014 14.01.2014 27.12.2013

ANNUAL REPORT 15 2013 PHILOSOPHY OF VICTORY IS A SYSTEM OF SUCCESS General02 Information about the Company 2.1. THE COMPANY’S STRUCTURE AND ACTIVITY REGION

The Joint Stock Company “Grid Company” is a territo- with the population 3, 84 million people (2,7 % of the total num- rial network providing electrical power supply and consumers’ ber of the population of the Russian Federation) . There are 2 technological connection services on the territory of the Repub- urban districts, 43 municipal regions consisting of 38 towns and lic of Tatarstan . Its area covers 67,8 thousand square meters 891 .

18 Social and Economic Characteristics of the Company’s Activity Region Consumer Price Index January-December 2013 in % to January-December 2012 106,9 January-December 2012 in % to January-December 2011 104,5 Industrial Production Index January-December 2013 in % to January-December 2012 101,2 January-December 2012 in % to January-December 2011 107,1 Real income January-December 2013 in % to January-December 2012 102,2 January-December 2012 in % to January-December 2011 114,2 Foreign Trade Turnover Foreign Trade Turnover, 2013, million US dollars 27 126,3 In % to the same period of the previous year 113,0 Administration of the Consolidated Budget of the Republic of Tatarstan Budget revenues, January-November 2013, million rubles. 185 221,1 Budget costs and expenditures, January-November 2013, million rubles 167 627,2 Fixed Investment January-December 2013, total, million rubles. 520 228,2 GENERAL INFORMATION ABOUT THE COMPANY THE ABOUT INFORMATION GENERAL January-December 2013, in % to the same period of the previous year 105,5 Foreign Investments January-December 2013, million US dollars 893,86 January-December 2013, in % to the same period of the previous year 121,5 Demographic Rate Population, thousands of people, 2013, total 3 838,4 Born, for 1 000 of the population, 2013 in % to 2012 102,1 Died, for 1 000 of the population, 2013 in % to 2012 99,2 The number of officially registered unemployed, at the end of 2013, thousands of people 17,4

The advantageous geographic placement, abundant natu- polyethylene, 43% of the synthetic rubber, 33 % of automobile ral resources, high-skilled labour resources, powerful industri- and agricultural machinery tires . ous and scientific complex, developed transport infrastructure, A package of legislative and regulation measures aimed political stability are the competitive advantages of the Repub- to create favourable environment for all economic entities, lic . enhancement of investment and innovation activity, science- The Republic of Tatarstan is the top performer among the intensive and high-tech manufacturing and fulfilment of social regions of the Volga Federal District according to the total rat- tasks are being realized in the Republic . The efficiency of the ing of the socioeconomic index . The Republic ranks the first investment strategy of the Republic of Tatarstan is confirmed among the regions of the Volga Federal District for its GRP, per by the research of the leading international agencies and com- person including, and the industrial output . panies The. most important strategic directions of develop- The industrial specialisation of the Republic is significantly ment are defined in the Program of the social-economic de- related to the oil and gas complex (oil production, production velopment of the Republic of Tatarstan in 2011-2015 . The of synthetic rubber, tires, polyethylene and a wide range of final objective of the Program is improvement of the quality of petrochemical products), machine-building plants, large me- life of the population on the basis of stable dynamic develop- chanical engineering plants, electrical devises and tool engi- ment of the Republican economics and shaping favourable neering . The Republic of Tatarstan produces more than 6% environment . The prospects of development and activity of the of the national oil, more than 30% of trucks, nearly 50% of Company, as an infrastructural company of the Republic, is di-

The social and economic characteristic of the region of activity of the Company was based on the data of The Ministry of Economics of the Republic of Tatarstan (http://mert.tatarstan.ru), the Ministry of Finance of the Republic of Tatarstan (http://minfin.tatarstan.ru) and the Local Agency of the Federal Statistics Service in the Republic of Tatarstan (http://tatstat.gks.ru). “Further stepsofthereformation oftheelectricalpowerindus The situationandprospects oftheRepublicTatarstan are June 11,2001“AboutReformationoftheelectricalpowerin V 2003 “On peculiar features of power engineering functioning transmission systems: the territoryofRepublic Tatarstan the regions ofthehigh-voltagesubstation try oftheRepublicTatarstan” the frameworkofreformation oftheelectricalpowercom Company’s HistoryandStructure Company MarketCompetitiveness Company’s mainshareholder Company” were StateUnitaryEnterprise“TatEnergo” andthe Property RelationsoftheRepublic ofTatarstan becomesthe Republic ofTatarstan represented bythe MinistryofLandand Each ofthenineaffiliated branchesinvolvessolitarystructural Republic ofTatarstan Federal Tariff ServiceNo cluded into the government regulatedcluded intothegovernment naturalmonopolyreg- regulatory actsoftheRussian Federationceasedtobeinforce requirements oftheFederalLawNo rectly related totheeconomicstateofRussianFederation owner ofthedistributionnetworksinlargestcities on 03 of theverticallyintegratedHoldingJSC“Tatenergo” produc electrical powernetworkaccording totheirterritorydistribution energy ontheterritoryofRepublicTatarstan RegulationNo ernment performing thefunctionsoftransmittingelectricalenergy, tech purposes ofbringingtheCompanyintocompliancewith part andparcel ofthestrategicdevelopmentCompany plex oftheRussianFederationincompliancewithGov due tothenewlyadoptedlaw“OnPowerEngineering” during thetransitionperiodandamendmentofcertainregu dent oftheRepublicTatarstan #PD-673dated08 nological connection, operation and service of the objects of the nological connection, operation and service of the objects of the dustry oftheRussianFederation”andDecree ofthePresi not haveanysubsidiariesorassociationcompanies units: electricalpowerregions, cityelectricalpowerregions, and latory actsoftheRussianFederation to confirm that certain lowing objectsoftheelectricalpowerdistributionnetworkand ing, transmitting,distributingandsellingelectricthermal in theRepublicofTatarstan theCompanywasreorganized in general and theregion ofactivitythe Republic in particular ister ofthefuel-energycomplex whichare subjectedto the . ShashinJSC“TatNeft • • • • • The Company involves nine affiliated branches, each of them The JointStockCompany“GridCompany”wascreated in The companyisthelargestpower networkcompanyon At the moment the JSC “Grid Company” involves the fol- Since themomentofitsfoundationcompanywaspart In order tocreate theunitednetworkdistribution company . 07 17 768 transformersubstations(PTS,DS)withdesign 17 768 18 303,3 MVA; 10 095,4 kmofOHL35-500kV; 48 616,8 kmofOHL0,4-10kV; 374 substations35-500kVwithdesigncapacity 8 724,2 kmofcablelines; capacity 6 230,5MVA . 2006 byaddingJSC“TatElectroset” whichwasthe .

. . 526oftheRussianFederationdated ” . 423-edated08 . . . ThefoundersoftheJSC“Grid . 36-FZ dated26March . . The Company does TheCompanydoes Attheorder ofthe . 09 . 2005 itwasin . . 08 . Inthe . 2011 . ------. .

the marketisinsignificant government regulationgovernment andcontrol other companies,i allied gridcompanyis6,7% allied grid companies on the territory of the Republic providing Structure ofdelivered electricpower through thenetworkof siderable impactontheCompany’s activityastheirshare on power transmissionservices the SSOin2013 ket inthenetworksofRepublicTatarstan, theshare of mission marketoftheRepublicTatarstan don’t haveacon-

Other alliedgridcompanies(42entities) JSC “KazanPlantofCompressor Machinery” JSC “KarpovChemicalPlant” JSC “KAPOIm GZhD ofthebranchJSC“RZhD” JSC “Nizhnekmskneftehim” ОJSC “Tatneft” LLC “Kamaz-Energo” The Companysettleaccountsforpowertransmission with The alliedgridcompaniesfunctioningonthepowertrans The companytakes93,3%ofthepowertransmissionmar . 3 2 Gorbunova” 2 2 10 . e . alliedgridcompanies 19 .

.

.

18 . Furthermore there are 49 . 44 - -

ANNUAL REPORT 19 2013 COMPANY’S BRANCHES 20

PRIVOLZHSK POWER SUPPLY NETWORK 420108, Kazan, Magistralnaya Str ., 23

Arsk REN Vysokogorsky REN Prigorodny REN Atninsky REN Zelenodolsk REN Pestrechinsk REN REN REN REN

KAZAN POWER SUPPLY NETWORK Kazan 420021, Kazan, Tukaya Str ., 109

North REN Central REN West REN South REN East REN GENERAL INFORMATION ABOUT THE COMPANY THE ABOUT INFORMATION GENERAL

BUINSK Chistopol POWER SUPPLY NETWORK 422430, Buinsk, Kosmovskogo Str ., 190

Apastovo REN Buinsk Buinsk REN Verkhny Uslon REN Drozhanovsk REN Kaibitsy REN Kamskoe Ustie REN Tetyushi REN REN

CHISTOPOL POWER SUPPLY NETWORK 422980, Chistopol, К Marx. Street ,. 36

Aksubaevo REN Alekseevsk REN Alkeevsk REN Novoshesminsk REN REN Spasskoe REN Chistopolsk REN Komsomolsk REN Borovetsk REN Pribrezhny REN Avtozavodsky REN 423810, Naberezhnye Chelny, Pr SUPPLYPOWER NETWORK CHELNY NABEREZHNYE . Moscovski,54/24

Naberezhnye Chelny Almetievsk Bugulma SUPPLY POWER NETWORK YELABUGA SUPPLYPOWER NETWORK SUPPLYPOWER NETWORK SUPPLYPOWER NETWORK 423570, Nizhnekamsk, Akhtubinskaya Str 423400, Almetievsk,ShevchenkoStr 423233, Bugulma,Turgeneva Str 423603, Elabuga,ChapaevaStr Tyulyachi REN Sabinsk REN Mendeleevsk REN REN REN Yelabuga HREN Yelabuga REN REN Yutazi REN Cheremshansk REN Leninskogorsk HREN Leninskogorsk REN Bugulma HREN Bugulma REN REN Sarmanovo REN Muslyumovo REN Aznakaevo REN Almetievsk HREN Almetievsk REN Tukaevo REN Nizhnekamsk HREN Nizhnekamsk REN REN REN Aktanysh REN NIZHNEKAMSK BUGULMINSK ALMETIEVSK . . . , 29 , 48 , 13 . ,14

ANNUAL REPORT 21 2013 2.2. MAJOR TENDENCIES OF INDUSTRY DEVELOPMENT AND COMPANY’S POSITION IN THE INDUSTRY

Major tendencies of industry development:

• Healthy increase of demand for electrical power (up In the fall of 2014 the Government of the Russian Fed- to 1% a year). eration adopted the regulation on the tariff freeze of natu- ral monopolies, which could help to control the inflation . It Healthy increase of demand for electrical power is was presumed that the tariff freeze would positively affect 22 one of the major tendencies of the electric power industry the companies involved in construction materials produc- which dictates the development of the network complex tion, woodwork, metal manufacture and chemical industry . and is the result of progressive increase of the efficiency of The share of costs on monopolies’ services in these sectors the customers of the Russian Federation . makes up from 11 to 21% . We can observe significant reallocation of demand for Although such a positive effect can be levelled as the electrical power between human settlements, meaning the monopolies would have to reduce their investments . Mean- decrease of power consuming in the countryside accom- while, the investment programs are demand generators in a panied by the substantial growth in cities . At the same time number of production industries, in particular, in construc- the decrease of power consuming in the industrial areas in tion, metal manufacture and machine industry . the cities is compensated by its growth in the boroughs of The tendencies in Russia couldn’t but influence the ac- construction of office and commercial property and resi- tivity of the JSC “Grid Company” . Therefore in consequence dential areas . of electric power tariff regulation policy of the Government The reallocation causes the demand of supporting unu- of the Russian Federation in spite of the increase of con- tilised capacities of the electric network, new investments sumption and services prices the tariff for the electric power in electric networks in new areas and general increase of transmission will stay up to July 2015 on the level, estab- the tariff, preconditioned by the above factors in the con- lished in the last half of 2013, which result in conservative text of the lack of demand . conduct of business . Although the allocation of demand can result in de- crease of costs both on the local and regional level . As far as the local level is concerned it is the breaking of the • Providing availability of the produce and services for bottlenecks in the region or in the city with high-cost gen- the customer as part of unimpaired and equal-oppor- eration by means of constructing high voltage networks tunity access to the regulated goods and services of around cities or creating new units of power supply . As for the regulated companies. GENERAL INFORMATION ABOUT THE COMPANY THE ABOUT INFORMATION GENERAL the multiregional level it is an infrastructure which connects the zones of free flow which integrates the power system . The Government of the Russian Federation approved the plan of activities (so-called “road-map”) No . 1144-r • The wear of the major facilities (power stations, net- “Enhancement of Availability of the Energetic Infrastruc- works) of energy companies. Construction of new ob- ture” dated June 30, 2012 . Realization of the “roadmap” jects and renovation of the worn out network facilities. is aimed to facilitate the connection of the customers to the Russian energetic infrastructure, i e. . to make the con- At present the share of distribution power networks nection procedure easier, faster, more transparent and less which have worked out their time limit is 50% in Russia . costly . 7% of the power networks have been working for doubled In the framework of the “road map” fulfilment the JSC standard operation time . The wear of the industry facilities “Grid Company” enhanced the efficiency of business pro- makes up 60-70 % . cesses, is improving the process of communication with All in all the wear of network assets in Russia is signifi- consumers, and is taking measures to automatize the cantly higher than in other countries, as their index of wear is business process of technological connection . In particular, 27-44% . Moreover the power network complex lacks mod- the official website of the Company developed the con- ern equipment providing higher reliability and lower operat- sumer’s private office to enable filing and tracing the ap- ing costs . plication online . Construction of new objects and renovation of the old Along with that the Decree of the Government of the ones are essential for the output of the power-production Russian Federation No 95. dated10 02. 2014. amended units under construction, dismantling of the “blocked” ones the Regulations on non-discriminatory access and trans- and for the enhancement of the inter-system connections . mission of the electric power, as well as providing these In recent years the JSC “Grid Company” has been active- services, and the Major Regulations of the electric power ly reconstructing and constructing the network facilities . Thus retail markets . In particular the procedure of technological in 2013 the capital investments reached 8,7 billion rubles . connection was facilitated, namely the consumers will be The Company’s capital expenditures were directed to able to conclude simultaneously a contract about electric the development of the network infrastructure of the Repub- power providing and technological connection, which will lic of Tatarstan in 2013: the growth of efficiency of energy make the process of connection to the power supply sys- production; meeting the demand for electric power for long- tem approximately 30 days and one procedure of techno- and medium-term periods; creating the environment for re- logical connection shorter . liable power supply to consumers; to reduce the adverse environment impact . • Efficiency improvement of regulated companies

• Power transmission tariff control by the Govern- Development strategy of the power network complex of ment of the Russian Federation and disinflation policy. the Russian Federation establishes licensing principles for • Name oftheCompany JSC “Grid Company” JSC “Grid Saratov distributionnetwork JSC “MPSKVolga” Ulianovsk distributionnetwork Mordovenergo Orenburgenergo Penzaenergo Chuvashenergo distributionnetwork Ydmurtenergo JSC “MPSK ofCenterandPrivolzhie” Nizhnovenergo Marienergo Kirovenergo Permenergo Ural” JSC “MPSK Thus theDecree oftheRussianFederationNo 26 with secured measures of quality and reliability, suchasthe with these principles will not be able to get a license, thus with theseprincipleswillnotbeabletogetalicense,thus transmission andproviding suchservices,aswellthe tion ofdisconnectionperiods,aswellintroduction ofthe the regulation systemintheelectricpowerindustryis thousand such organizations, 10% of the network complex thousand suchorganizations,10%ofthenetworkcomplex revenue, by2017 reliability, investmentalongwiththeotherfactors off systems of comparison of the companies based on their systems ofcomparisonthecompaniesbasedontheir ards to the activities of power supply network companies, Improvement oftheregulation systemintheelectric standards ofinformationdisclosure byelectriccompanies enhancement ofavailabilitytheenergeticinfrastructure power industry. number ofdisconnectionsaconsumerperyear, dura network companies ing the non-disciminatory access to the services of power ing thenon-disciminatoryaccesstoservicesofpower inefficient companiesproviding low-qualityservices are cut . . It has been planned to get out of business about 1,5 Ithasbeenplannedtogetoutofbusinessabout1,5 07 One ofthemajordirections oftheimprovement of It hasbeenplannedtointroducestand international . 2013 has changed the legislative regulations defin . . The companies that do not comply Thecompaniesthatdonotcomply Area of service, thousand square kilometers Area thousandsquare ofservice, kilometers . . 630 dated 630 dated .

- - - .

The Company’s placeintheindustry Republic ofTatarstan wascompared withregional gridcompa- High-Voltage Grid”whichworkintheVolga federativedistrict High-Voltage Grid”,theJSC“TheCenterandVolga RegionInter- ga Inter-Regional High-Voltage Grid”, the JSC “Ural Inter-regional only territorialnetworkinRussiawhichownsfacilitieswithvolt of totalmileageoverheadandcablepowertransmissionlines regional High-Voltage Grid”,theJSC“TheCenterInter-regional as well as the number of substations, transformer substations as wellthenumberofsubstations,transformersubstations age profile from 0,4kVto500 and distribution points among the leadersincomparisonwithotherterritorialcompa sia intermsoftransmittedpowercapacity nies oftheInter-regional High-Voltage GridCompany, interms nies, thebranchesofsuchhugegridcompaniesasJSC“Vol The CompanyisamongthetoptenpowernetworksinRus The Company whose market is limited by the territory of the The Companywhosemarketislimitedbytheterritoryof tions madebytheFederalLawNo Code oftheRussianFederationaboutadministrativeviola sponsibility forunauthorisedconnectionstothenetworks networks twofoldandalso enhanced the administrative re have increased thefinesforillegalconnectiontoelectric 101,2 124,0 120,0 160,0 67,8 37,2 26,1 43,3 18,3 53,6 42,1 74,8 23,2 The Amendments of the articles 7 Population,million people . Besides, the Company has become the Besides, the Company has become the 3,84 2,58 1,38 2,11 1,38 1,29 3,17 1,62 3,50 0,70 1,46 2,82 0,9 . Number ofbranches/departments . 316-FZ dated25 . The Company is also TheCompanyisalso . 19 . and 9 . 11 of the 11 of the . 11 . 2011 2011 .

.

9 7 4 4 6 6 3 4 3 9 3 3 8 ------

ANNUAL REPORT 23 2013 Production Potential

Total mileage of power transmission lines, thousand kilometres

70 24 60 50

40 67,4 30 51,5 45,8 20 42,4 37,5 31,7 29,6 24,1 10 21,8 20,7 18,9 12,5 8,3 0

Saratov DS Kirovenergo Samara DS Marienergo Permenergo Penzaenergo Ulianovsk DS Udmurtenergo Mordovenergo Nizhnovenergo Grid Company Orenburgenergo Chuvashenergo

The quantity of substations with capacity 35 and more kV, ps

600

450 GENERAL INFORMATION ABOUT THE COMPANY THE ABOUT INFORMATION GENERAL

300 528 374 360 150 304 267 259 224 220 197 171 124 101 0 88

Saratov DS Samara DS Kirovenergo Marienergo Permenergo Penzaenergo Ulianovsk DS Nizhnovenergo Udmurtenergo Mordovenergo Grid Company Orenburgenergo Chuvashenergo

Total Quantity of DS and TS 6-10 kV, ps

20 000

15 000

10 000 17 768 14 685 12 784 5 000 10 163 9 025 8 969 6 632 5 908 5 439 5 320 4 769 3 897 3 020 0

Saratov DS Kirovenergo Samara DS Marienergo Permenergo Penzaenergo Ulianovsk DS Nizhnovenergo Udmurtenergo Mordovenergo Grid Company Orenburgenergo Chuvashenergo The volumeofelectricpowertransmittedtoconsumers,connectedthenetworksdistributioncompanies, Power transmission losses inpowernetworks,millionkVH Transformer designedCapacityofSSandTS,MVA 15 000 22 500 15 000 22 500 30 000 7 500 7 500 0

Grid Company 0

Samara DS

21 181 533,8 24 20 348 Grid Company 833 Permenergo

20 013 11 000 18 569 Nizhnovenergo 1 444 Saratov DS 9 041,11 9 17 339 Nizhnovenergo 15 720 Orenburgenergo 1 619 8 802 10 800 9 977 Samara DS

823 7 579,4 Saratov DS Orenburgenergo 9 804 9 044 5 729,62 Udmurtenergo 760

Udmurtenergo 8 185

7 494 4 617,42 391 Kirovenergo 5 521 Kirovenergo

5 126 4 527

Ulianovsk DS 394

Penzaenergo losses inthenetworksofdistributioncompanies receipt bythenetworksofdistributioncompanies useful deliverybythenetworksofdistribution companies

4 783 4 060,07 4 323

Penzaenergo 460 Ulianovsk DS

4 458 3 459,36 4 091 Chuvashenergo Chuvashenergo 367

4 332 021,93 3

4 075 Mordovenergo 257 Marienergo 2 048,1 2 2 685 2 496 Marienergo Mordovenergo 190 1 694 2 631 2 402 229

ANNUAL REPORT 25 2013 Efficiency of fixed assets usage

100 .00 1 .20 1,13 1,11

0,91 0,89 26 75 .00 0 .80

Comment: the analysis was based 50 .00 92,95 on the data placed on the official 82,25 web-sites of the companies. 77,67 70,25 0 .40 55,00 25 .00 49,18 Receipts, mln rubles Average annual costs 28,49 25,88 of the fixed assets Yield on capital 0 .00 0 .00 investment Volga IRHV Grid The Center IRHV Grid The Center and Grid Company Volga Region IRHV Grid

2.3. MISSION AND STRATEGY OF COMPANY’S DEVELOPMENT

Mission of the company – to provide reliable and high-quality • long-term uninterrupted, high-quality supply of electric power power supply to customers connected to the power supply net- to the consumers in the region of Company’s activity . work of the Company, creating comfortable and safe living con- • safe and reliable operation of the electric power network GENERAL INFORMATION ABOUT THE COMPANY THE ABOUT INFORMATION GENERAL ditions and implementation of statute purposes by legal entities . complex; The strategy of the Company corresponds to the major • organization of effective and corresponding to the interna- long-term objectives provided in the Strategy of Development tional standards network infrastructure; of the Grid network complex of the Russian Federation, ap- • the tariffs ensuring the acceptable costs on electric power proved by the Decree of the Government of the Russian Fed- and investment potential . eration №511-r dated 03 04. .2013:

2.4. PRIORITY LINES OF COMPANY’S ACTIVITY

The company’s priorities include: • meeting long-term and short-term demands for electrical power; • preventing of depreciation of the electrical network equip- • providing conditions for maintaining long-term production ment, appliance of up-to-date technological methods and consumption balance in the electric power system of the innovation technique; Republic; • achievement of the guaranteed reliability and high-quality • preventing forecast deficit of the electric power in the most ef- standards of services, provided by the Company; ficient ways, all the predicted operating modes of Tatarstan’s • securing development of the power supply network com- power systems with on- and off-peak loads considered; plex to the extent adequate to the purposes and enhanc- • creating the background for reliable power supply to the ing the economic development of the region; consumer; • further enhancement of the Company’s management ef- • enhancement of functioning efficiency and providing stable ficiency, transparency and quality; development of the power supply system of Tatarstan based • human resources and skills development based on the on high technologies; Company’s priorities . • eliminating environmental damage .

Production of new power supply network facilities and Energy Efficiency enhancement renovation of the depreciated ones In pursuance of the Federal Law No 261-FZ. “Energy Con- The capital costs are channeled into the following activities: servation and Efficiency and Introduction of Amendments of Certain Acts of Law of the Russian Federation” dated • Development of the network infrastructure of the Republic 23 11. 2009,. the Program of Energy Conservation and Ef- of Tatarstan; • • • • Ratio name 2.5. BOARD OF DIRECTORS’ REPORT ON THE RESULTS ОF THE DEVELOPMENT FOLLOWING THE THE FOLLOWING DEVELOPMENT THE RESULTS ОF THE ON REPORT DIRECTORS’ OF BOARD 2.5. Index ofaverage duration ofpowertransmission break Index provided ofqualitytheservices bythecompany PRIORITY LINES work facilities,providing reliability ofpowersupplytransmis tion No tors bytheFederalLaw“OnCorporations”in2013Board Guidelines ofdefiningthereliability andqualitystandards of Quality andreliability improvement following: ficiency Enhancementwasworkedoutwiththeaimsat consumers of theFederalGridCompanyandregional powernetworks” reliable andmoney-savingpowersupplyofproper quality to of Directors considered theCompany’s prioritylinesconcern enhancement ofpowerefficiency andinnovativedevelopment sion totheconsumersofRepublicTatarstan: agement functionentrustedtotheCompany’s Board ofDirec provided goodsandservicesforthemanagingorganization quality ofelectricpowersupplyservicesin2013 questions concerning thetechnicalconditionofpowernet questions concerning mance oftheelectricalpowergridRepublicTatarstan, ing infrastructure development and ensuring reliable perfor The Companyreached the plannedfigures ofreliability and The fundamentalpurposeofpowerproduction industryis the Universiade 2013 facilities; the Universiade2013facilities; the questions of fulfilment the complex of actions aimed at Order oftheMinistryEnergyRussianFedera reliable and high quality power supply to external schemes of reliable schemesof andhighqualitypowersupplytoexternal In 2013theBoard ofDirectors considered thefollowing In theframeworkofperformancegeneralman and thetasksfornextperiod; a quarterlyplanexecutionofthecapitalconstruction efficient energyuse minimization ofenergyloss; . 296datedJune29,2010approved “TheMethodical .

. . ------. Ratio • Availability oftheEnergeticInfrastructure” dated06 which defined the procedure ofassessment of powersupply tegrated index andconsistsoftheratioreliability ofthe the DecreeofRussianFederationand oftheGovernment the Board ofDirectors considered themeasures takenbythe ties oftheCompany’s activities tion ofpowertransmissionbreak withregard toconsumer Company whichare aimedtofacilitatetheconnectionof (road map)No Plan ofActivities(“road map”)No Energetic Infrastructure” datedJune30,2012approved by consumer isanintegratedratio,whichconsistsofthein customers totheenergeticinfrastructure aswellmakethe reliability andqualitylevels ritorial networkcompanyisdefinedasanaveragedura services and the ratio of quality of the services provided by achieved levelofserviceinthesphere oftechnologicalcon effectiveness) services overacertainperiod a territorialnetworkcompany procedure oftheconnectionmore efficient and transparent dicators ofquality(anindicatorinformationcapability, nection andworkwiththeconsumersasoneofpriori- indicator ofexecutivecapability, anindicatoroffeedback QR RR The ratio of the quality of the services provided to a The ratioofreliability oftheservicesprovided by ater The reliability and quality level is defined as a generic in- The Board of Directors defined the increase of the 2014 carrying outpreparation for autumn-winterperiodof2013- In theframeworkofrealization ofthePlanActivities . . . Planned figure, 2013 1144-r“EnhancementofAvailability ofthe 0,99505 . 0,0365 . .

.

. 153-r“Enhancementofthe Actual figure, 2013 . 02 0,01203 0,98472 . 2013 . - - - -

ANNUAL REPORT 27 2013 PERFECT DESIGN MEANS OPTIMUM FUNCTIONING Analysis03 of financial state and results of the company’sactivities 30 ANALYSIS OF FINANCIAL STATE AND RESULTS OF THE COMPANY’SACTIVITIES Tariffs for Power Transmission Services Technological norm ofelectricpowerconsumption(losses),% The ratio ofelasticitytheexpenditures undercontrol according thequantityofassets,% to kWt-h 2013, rubles/thousand 2011- in “Population” group tariff for the development tariff Power transmission Efficiency index ofthecosts,% Baseline ofthecostsundercontrol, million rubles Parameter REGULATION TARIFF 3.1. NGP JSC“GridCompany”excluding losses,millionrubles Parameter with cooperatingentitiesaccording totheirindividualtariffs through the networks of the network entities on the territory of the through thenetworksofnetworkentitiesonterritory technological connectionforapplicantsare monopolisticand the networkentitiesofRepublic the StateTariff CommitteeoftheRepublicTatarstan (STCRT) the executiveauthorityofRepublicTatarstan responsible (works, services)onthe territory of the Republic of Tatarstan - for administeringprices(tariffs, additionalcharges)forgoods Republic are annuallysetbytheStateTariff CommitteeoftheRe consecutive periodofregulation are calculatedonthebasisof on theterritoryRepublicofTatarstan whosettlesaccounts annually corrects theessentialgross receipt, setforthe and voltagelevelonthebasisoftotalessentialgross receipt ofall are regulation subjectedtothegovernment according to the electric powertransmissiontoconsumersandtheservicesof subject toagreement withFederalTariff Service(FTSofRussia) applicable legislation sion andpaymentratesfortechnologicalconnectionare setby public of Tatarstan differentiated according to consumer groups next accountingperiod long-term parametersandplannedfigures ofthetariff parameters The majoractivityoftheCompany, namelytheservicesof Essential gross receipt ofanetworkentityforeachyear During the long-tern periodofregulationDuring thelong-tern theSTCRT Flat (boiler) tariffs for the services of power transmission . Thetariffs forelectricpowertransmis . 1 000 1 200 200 400 600 800 . 0 The Company is the “boiler” TheCompanyisthe“boiler” 487,74 2011 . (from 01.01.2012to - - . . 30.06.2012) • • • • • • transmission, establishedwiththemethodoflong-term guidelines onestablishmentofthetariffs forelectricenergy sets thefollowinglong-termparametersofregulation for public ofTatarstan No long-term tariffs: indexation oftherequired gross receipt” dated17 743,33 2012 The ResolutionoftheStateTariff CommitteeoftheRe worst possiblecorrection oftheessentialgross revenue technological normofelectricpowerconsumption(losses); thodical guidelines; the ratioofelasticityexpenditures undercontrol term ofregulation; the regulatory authoritiesattherateof1%to3% ability andservicesquality; subject totheachievementofestablishedlevelreli according tothequantityofassets,estimatedbyme efficiency indexofthecostsundercontrol, estimated by baseline ofthecostsundercontrol, estimatedbytheregu- level ofreliability andquality ofthegoods(services)provided latory authorities; level ofthefiscalyear’s costsundercontrol ofthelong 13 7

262,36 355,08 2012 2012 9,51 (from 01.07.2012to 75 1 30.06.2013) . 974,25 98-e”On adoptionofMethodical 2012 15 8 581,35

316,4 2013 2013 2013 8,89 75 1 (from 01.07.2013to 31.12.2013) 1 010,33 2013 . 15 02 8

581,35 .

2012 267,4 2014 2014 2014 8,26 75 1 . - - - One-part tariff One-part Power transmission tariff development for the tariff group “Other Consumers” in 2011-2013, rubles/thousand kWt-h rubles/thousand 2011-2013, in Consumers” “Other group tariff the for development tariff transmission Power index Tariff group “population” Tariff group “other consumers” 1 2.1 2 2.2

LV MV-2 MV-1 HV consumption (loss)compensation rate forpowertechnological rate forelectricalnetwork 1 000 1 500 2 000 2 500 3 000 500 0 one-part tariff one-part two-part tariff two-part maintenance

MV-1 MV-2 MV-1 MV-2 MV-1 MV-2 471,72 HV HV HV LV LV LV 2011 829,71 1 980,87 1 029885,04 1 634891,39 2 392,67 487,74 295 682,09 422 429,34 2011 1 980,87 2 392,67 471,72 829,71 113,01 184,85 440,93 76,25 (from 01.01.2012to 2011

30.06.2012) 471,72

2012 829,71 01.01.2012 to 01.01.2012 to

1 980,87 30.06.2012) 2012 (from 1 029885,04 1 634891,39 01.01.2012 to 01.01.2012 to 30.06.2012) 295 682,09 422 429,34 743,33

2012 (from 2012 (from 2 392,67 1 980,87 2 392,67 471,72 829,71 113,01 184,85 440,93 76,25 (from 01.07.2012to

31.12.2012) 523,61

2012 920,98 01.07.2012 to 01.07.2012 to 31.12.2012) 1 143172,39 1 814729,44 01.07.2012 to 01.07.2012 to 2 198,77 2012 (from 31.12.2012) 328 207,12 468 896,57 2012 (from 2012 (from 974,25 2 198,77 2 655,86 2 655,86 523,61 920,98 125,44 205,18 489,43 84,64 01.01.2013 to

30.06.2013) 523,61 2013 (from

920,98 01.01.2013 to 1 310212,10 30.06.2013) 01.01.2013 to 01.01.2013 to 2013 (from 30.06.2013) 277 775,09 405 283,19 841 471,83

2013 (from 2013 (from 2 198,77 2 198,77 2 655,86 974,25 523,61 920,98 125,44 205,18 489,43

84,64 2 655,86 rubles/thousand kWt-h

01.07.2013 to 565,5 31.12.2013) 2013 (from 01.07.2013 to 01.07.2013 to 1 355789,93 01.07.2013 to 01.07.2013 to 962,42 31.12.2013) 31.12.2013) 290 423,71 440 450,57 854 100,16 2013 (from 2013 (from 2013 (from 1 010,33 2 334,91 2 693,62 2 334,91 565,50 962,42 131,71 215,44 513,90 88,87 2 693,62

ANNUAL REPORT 31 2013 32 ANALYSIS OF FINANCIAL STATE AND RESULTS OF THE COMPANY’SACTIVITIES А2.5 А3.5 А2.4 А3.4 А2.3 А3.3 А6 А2.2 А3.2 А5 А2.1 А2 6–10 0,4 А3.1 А3 А4 А1 consumers’ power receivers for the events, excluding construction and renovation of the network facilities: network the of renovation and construction excluding of events, the for connection receivers power technological the on consumers’ expenditures the towards connection technological for rates payment Standardized declared is rating reliability III the if applied not is rate * this Company” “Grid JSC the of networks distribution the to connection technological for rates Payment connection rates for technological Payment Voltage level,kV Identifier pacity unitandtheformulasforcalculationofpay ment fortechnologicalconnectiontotheelectricpower Standardized paymentrates,ratespermaximumca- construction ofCTS, RTS ofthevoltagelevelup construction ofCTS, RTS ofthevoltagelevelup construction ofswitchsectioning construction ofswitchsectioning directional drilling(HDD) construction ofcablelinesbyhorizontal- directional drilling(HDD) construction ofcablelinesbyhorizontal- functioning electric power network andensuringits Actual connectionofthedevises construction ofcablelinesintrench construction ofcablelinesintrench devices oftheapplicant official’s oftheconnected supervising Industrial andNuclear Service Supervision Taking intheFederal part Environmental, construction ofairlines construction ofthe “last mile”: onthe of thedesigndocumentation Development by thenetwork organization construction ofairlines related totheconstructionof “the lastmile”: Network entity’s measures undertaking by theapplicant fulfillment ofthetechnicalspecifications Network entity’s inspectionofthe network entity technical specificationsworked outby the Preparation andissuetotheapplicant to 35 to to 35 to Actions

kV kV more than670 from 670 150upto 150 up to more than670 from 670 150upto 150 up to Capacity kWt connected, 150 kWt 22 939 2 361 1 727 3 098 6 199 2 361 up to 178 233 467 114 178 - 25* 46 13 Payment rates peraunitofmaximumcapacityrubles/kWt(net) SCRTT No SCRTT networks of theCompanyvalidin 2013 were set by the from 150 up from 150up to 670kWt to 23 142 3 789 1 742 3 301 7 227 3 789 285 248 544 114 285 46 25 13 . 6-33/tpdated25 Up to 1 Up to more than more than 670 kWt 31 101 4 707 2 341 4 501 7 227 4 707 354 339 544 139 354

46 25 13 kV Standardized paymentrates, rubles/kWt(net) 150 кВт 24 787 . 12 2 361 1 866 5 051 5 909 2 361 up to up to 178 380 445 114 178 25* . 46 13 2012 from 150 up from 150up to 670kWt to . 25 524 3 789 1 921 5 991 8 455 3 789 285 451 636 114 285 46 25 13 more than more than 670 kWt 6-10 33 288 4 736 2 506 6 447 9 161 39,46 34,98 34,98 39,46 34,98 34,98 4 736 357 485 690 139 356

46 25 13 kV 6–10 6–10 6–10 0,4 6–10 0,4 0,4 0,4 Standardized paymentStandardized rates towards the network organization’s expenditures on the of constructions substations: line: the of 1km per drilling, directional of lines horizontal by cable of transmission constructions power the on expenditures organization’s network the towards rates payment Standardized Voltage level,kV line: the of 1km of per lines trench, in cable of transmission constructions power the on expenditures organization’s network the towards rates payment Standardized Voltage level,kV power of line: the lines of 1km air of per constructions transmission, the on expenditures organization’s network the towards rates payment Standardized Voltage level,kV Voltage level,kV more than670 from 670 150upto 150 up to more than670 from 670 150upto 150 up to more than670 from 670 150upto 150 up to more than670 from 670 150upto 150 up to 150 up to more than670 from 670 150upto 150 up to more than670 from 670 150upto 150 up to more than670 from 670 150upto 150 up to more than670 from 670 150upto 150 up to Capacity kWt connected, Capacity kWt connected, Capacity kWt connected, Capacity kWt connected, Standardized paymentrates, rubles/kWt(net) Standardized paymentrates, rubles/kWt(net) Standardized paymentrates, rubles/kWt(net) Standardized paymentrates, rubles/kWt (net) 2 620421,00 2 009281,00 1 951254,00 2 448238,00 1 821712,00 1 805732,00 507 419,00 471 504,00 397 575,00 354 291,00 259 784,00 243 805,00 282 549,00 260 779,00 182 259,00 182 259,00 222 901,00 222 901,00 191 201,00 905,00 724,00 451,00 899,00 724,00 451,00

ANNUAL REPORT 33 2013 34 ANALYSIS OF FINANCIAL STATE AND RESULTS OF THE COMPANY’SACTIVITIES 40% more thanin2011 Revenue, millionrubles, including: • rubles million 2011-2013, in development Revenue indexesBasic financial PERFORMANCE ECONOMIC AND FINANCIAL RESULTS OF MAJOR 3.2. groups, million rubles consumer to 2011-2013 according services of power transmission in the for revenue of Development • • in 2011-2013, million rubles Financial indexes development 20 007,5 million rubles,whatis7,4%more20 007,5 thantheindex 25 883,4 millionrubles,whatis35% more25 883,4 thanin2012and of 2012and20%more than in2011 made up77,3%ofthetotalrevenue oftheCompany, i

Revenue fortheservicesofelectric Revenue fortheservicesofelectric other operations connections fortechnological Services forpowertransmissionservices power transmissiontopopulation power transmissiontoothercon- sumers Regarding theresults of2013theCompany’s revenue was Revenue fortheservicesofelectricpowertransmission Netprofit Cost Revenues .

. Theincrease ofthe 15 000,0 22 500,0 30 000,0 15 000,0 22 500,0 30 000,0 7 500,0 7 500,0 0 0 15 207,6 2011 1 494,1 1 18 16 . 1 e

. 18 490,7 748,6 490,7 701,7

2011 40,4 2011 velopment of the Republic of Tatarstan in general and the 2013 isrelated tothe4%increase ofelectricpowercon- was causedbypositivetendenciesoftheeconomicde- the RepublicofTatarstan incomparisonwith2012which Company’s revenue forpowertransmissionservicesin sumption byindustrialenterprisesandotherconsumersof increase ofpowertransmission tariffs 12 257,4

4 010,0 19 18

504,4 158,6 632,1 2012 22,1 15 884,5 15 2 747,6 2 2012 19 158,6 2012 13 193,7

4 094,3 25 20 5

779,2 883,4 007,5 2013 96,7 .

25 883,4 16 756,1 16 3 251,4 3 2013 2013/2012,% 2013 15 746,2 +1 045,7 +337,6 +35,1

+7,4 7 597,5 11 timesmore thanin2012 whatiscausedbytherealization of technological connection-construction ofthe substation than in2012 Shchelokov of500kV formance oftheCompanyin2013received crease oftherevenue fortechnologicalconnectionismore than also causedbytherealization ofabigindividualproject on ability such important consumers as JSC “OEZ Alabuga”, JSC ability such important consumers as JSC “OEZ Alabuga”, JSC elokov of500kVtoprovide withpoweratthefirstrateofreli a bigindividualproject - construction ofthesubstationShch Structure of revenue for for revenue of Structure technological connection connection technological services in 2011-2013, net profit equal to 7 597,5 millionrubleswhatis86%morenet profit equalto7 597,5 up 22,3%oftotalrevenue in 2013,i million rubles Produce cost structure by cost components components cost by structure cost Produce in 2013,% in

Individual projects Standard tariff Groups entitledtospecialbenefits Other groups ofapplicants Other expenditures Wealth tax Depreciation costs Insurance payments Labor costs Power transmissiontechnologicalconsumption Material costs The Company’s revenue fortechnologicalconnectionmade Regarding theresults ofthefinancialandeconomicper . Thesubstantialincrease oftherevenue was . 1 500,0 3 000,0 4 500,0 6 000,0 . e 0 . 5 779,2 rubles 5 779,2 1 748,6 1 1 423,9 . 226,2 Thein 2011 91,7 6,8 - - - - “TANEKO”, JSC“TAIF-NK” andJSC“Ammony” 15 746,2 millionrublesin2013,whatis19,3%more15 746,2 thanthe 2013 and19%ofthetotalrevenue was more than 150 million rubles in 2013, i technological connectionservicesintheframeworkofthispro Cost control program realization cost oftheproduce costoftheservicesprovided ject madeup84%oftherevenue fortechnologicalconnectionin source fortheCompany’s efficiency enhancement produce costof2012 ic effect ofthemeasures, includedinthecostcontrol program The Company’s produce costoftheservicesmadeup Realization ofthecostcontrol program isoneofthekey 0,72 31,32 15,34 504,4 324,2 156,8 2012 14,8 8,6 . 6,53 5,16 . 16,31 24,62 5 779,2 4 983,1 . e 515,4 269,8 2013 10,9 . 1% of the produce . Therevenue for . . Theeconom - -

ANNUAL REPORT 35 2013 36 ANALYSIS OF FINANCIAL STATE AND RESULTS OF THE COMPANY’SACTIVITIES Analysis of the Company’s assets and liabilities structure structure liabilities of Company’s the and assets Analysis development structure Assets Financial investments Fixed assets Research results Intangible assets Deferred taxassets Other non-current assets Resources Other current assets assetsandmoneyequivalent Monetary Financial investments(excluding moneyequivalent) Accounts receivables Input valueaddedtax of 31 and constructioninprogress makesup79,6% Company’s assets structure,million rubles Structure of the economic effect of the the of effect economic the of Structure realization of cost control program in 2013, % 2013, in program control cost of realization

% ofthebalancecurrency % ofthebalancecurrency % ofthebalancecurrency as of31 as of31 as of31 Other measures Reduction oftechnicalmaintenanceexpenditures Eduction ofenvironmental activityexpenditures Reduction ofexpenditures related tothe Reduction ofadmiistrativeexpences Reduction oflabourcosts Reduction ofrepair expenditures Technological consumptionreduction maintenance ofunexpendedbalance Fixed assetsprevail inthe Company’s capitalstructure . 12 . . . . 12 12 12 2013 itsratiotothetotalbalanceoffixedassets . . . 13 12 11 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 0,0 Fixed assets 65,6

70,8 . 79,6 . As Receivables 8,9 10,2

7,6 as of31.12.2011 19 15 19 087 Investments 3 633 2 440 2 599 357 147 596 8,4 147 28 21 30 8,8 1 7 6,7 10 1 as of31.12.2012 4 Monetary funds Monetary 12,5 4 25 779

5,9 2 126 3 198 3 725 297 694 155 344 22 29 38

3,2 1 40 as of31.12.2013

assets 4,6 Other 4,3

2,9 31 188 1 265 2 630 2 964 298 173 226 354 25 30 39 0 138 millionrublesin2013,whatis18%lessthan2012 development Liabilities structure Company’s liabilities structure, million rubles million rubles development in 2011-2013, Accounts receivables revenues deferred and receivables of accounts Analysis Authorized (share capitalstock capital,authorized fund,contributionofpartners) Net surplus(retained loss) capital Reserve Capital surplus(withoutvalueadjustment) Other liabilities liabilities Estimated Deferred revenues Bill payable Other liabilities Deferred taxliabilities net surplusisnotmore than 82,1% largest ratiointheCompany’s liabilitiesstructure, whereas

% of the balance currency currency balance the % of currency balance the % of currency balance the % of as of 31 of as 31 of as 31 of as The total accounts receivables to theCompanywas 3 The ownfunds,i 1 000 1 500 2 000 2 500 3 000 3 500 4 000 500 . . . 0 12 12 12 . . . 13 12 11

3 148 2011 2 599 . e

549 . authorizedcapital,makeupthe

10,0 20,0 30,0 40,0 50,0 60,0 70,0 3 819 0,0 2012 .

3 725 48,0

Long-term AR Short-term AR Total accountsreceivables/ (AR) (AR) 94 Net surplus 49,6 65,4 3 138 2013 2 964 174 .

21,3 Authorized capital The JSC“Tatenergosbyt” isanimportantcontractor-debt the totalaccountsreceivables or, itsdebtas of31 Deferred revenues structure, %

as of31.12.2011 VAT forobtainedadvances Settlement ofemployees’loans Buyers andcustomers 18,0 16,7 13 952 6 189 3 751 3 154 325 485 423 807 17,37 26,54 0 0 . 12 23,7 Deferred revenues . as of31.12.2012 2013 is1,2billionrublesor38%of 4,37 25,3 2,46 . 10,3 18 044 6 541 8 997 1 088

Other deferred revenues Advanced paymenttosuppli contract terms ers andcontractorsunderthe 327 809 369 231 2 0 49,26 7,0 as of31.12.2013 Other liabilities 7,1 25 642 7,6 6 541 3 812 1 417 327 809 430 214 - 0 0 -

ANNUAL REPORT 37 2013 38 ANALYSIS OF FINANCIAL STATE AND RESULTS OF THE COMPANY’SACTIVITIES The account of the company’s Net Assets Value was made in accordance with the Corporation Net Assets Value Estimation Procedure Procedure Estimation Value Assets Net Corporation the with accordance in made was Value Assets Net company’s the of account The Equity ratio Absolute liquidityratioAbsolute Current liquidityratio The ratio ofownandborrowed assets Net assetvalue,millionrubles Index which wascausedbythedecrease ofadvancedpayment Structure ofdeferred revenues, % Financial ratiosofCompany’s activities Deferred revenues developmentin2011-2013, made up 4 026 millionrubles,i made up4 026 adopted by the Order of the Ministry of finance of the Russian Federation and FCSM #10n/03-b/pz FCSM 29.01.2003 and dated Federation Russian the of finance of Ministry the of Order by the adopted million rubles

Other debtors Deposits payable Taxes andfeespayable Payables tonon-budgetaryfunds Payables toemployees Advances received Buyers andcustomers The totalreferred revenues of theCompany in 2013 10 000 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 0

Long termDR Short-term DR Total deferred revenues 6 905 3 751 3 2011 . e . 56%lessthanin2012, 3 154 3 Regular figure 9 228 0,5 0,2 1,5 – – of 500кkV made bycustomersofthecontractsontechnologicalcon nection duetoputtingintoservicethesubstationElabuga 8 997 2012 22,3 20 952 2011 0,7 1,5 2,1 0,3 3,1 . 0,8 231 2,8 6 1,6 25 721 2012 0,7 0,6 0,4 1 4 026 63,4 33 318 3 813 3 2013 2013 0,9 0,9 1,7 0,1 2013/2012, % 214 +29 +50 +70 +30 -75 - The ratingtestifiestothehighprobability offulfilmentCom Own assets,millionrubles factor Ratio ofownandborrowed assets (R=OA/BA) Borrowed assets,million rubles value increase ofthenetprofit Company in2011-2013, 2013 the Compnay was assigned an extremely high rating 2011-2013 demonstratethehighlevelofcurrent position to repay itsshort-termobligations Credit rating rating Credit Financial Ratios Ratio ofownandborrowed assetsoftheCompany financial viabilityofanenterprise,i cedure organuzedbytheRatingAgency“ExpertRA”in recording intheagreements abouttechnologicalconnectionwith of long-term creditworthiness - level “A++”, stable forecast opment ofthesefigures whichcharacterizethefinancialand and economicactivityofthecompany sets by57%,i and solvencyoftheCompanyCompany’s capability Development ofthe million rubles in 2013 which was preconditioned by the identical million rublesin2013whichwaspreconditioned bytheidentical by 22,7%in2012,i us totheconclusionofitsstabledevelopment million rubles long-term technological cycle long-term technologicalcycle logistics management of the Company in 2010-2013 bring net assetsofthe

Authorized capital Net assetvalue The figures oftheliquidity andfinancialstabilityratioin The ownassetsofthecompanyincreased by29%,i The value of the net assets of the Company increased The valueofthenetassetsCompanyincreased The ratioofownandborrowed assetscharacterizesthe Based ontheresults ofthecreditworthiness ratingpro . e . 5 201 million rubles is related to their peculiar 201millionrublesisrelated totheirpeculiar 5 . e . 4 769 millionrubles,andby29,5%,i 4 769 . Thedecrease oftheborrowed as 10 000 15 000 20 000 25 000 30 000 35 000 5 000 0 . . Theanalysisofthedevel e . thestabilityoffinancial . 20 952 20 2011 . 6 189 6 . e . 7 597,5 7597,5 . e - - - - . .

7 597,5 millionrublesin2013,whichwascausedbytheimple 7 597,5 tial unfavourable changes of macroeconomic and market of theCompany, aswellthelargeamountofinvestments rating agement, risk-managementandinsuranceprotection pany’s obligationsinthemediumtermevenunderessen portance ofthe Company fortheRepublicofTatarstan, its mentation ofalarge-scaleinvestmentprogram oftheCompany indexes into thefixedassetscontributedtohighlevelof information transparency, highlevelofthecorporateman- The high indexesofcommercial viabilityandprofitability . TheRatingagencymadespecialmentionoftheim . 25 721 25 20 6

904,6 951,8 2011 2012 0,3 6 541 6 25 9

227,4 720,8 2012 0,4 33 4 33 318 33

026,4 318,3 2013 0,1 2013 2013/2012, % 6 541 6 . +30 -75 -57 . - - -

ANNUAL REPORT 39 2013 EXCELLENT IDEAS LEAD TO PERFECT FULFILMENT 04Production activity 4.1. CHARACTERISTICS OF THE COMPANY’S POWER FACILITIES

Basic technical specifications

Total length of air power lines(along the route), km, Including : 58 712,2 OL 35-500 kV, km 10 095,4 OL 0,4- 6(10) kV, km 48 616,8 42 Total length of cable power lines, km 8 724,2 Total number of substations of 35-500 kV, piece. 374 Substation transformer capacity of 35-500 kV, MVA 18 303,3 Total number of TS (PTS, RS), piece 17 768 Substation transformer capacity of 6-10/0,4 kV, MVA 6 230,5

Overhead Power Lines structure according to the Cable Power Lines structure according to the voltage, % voltage, % PRODUCTION ACTIVITY PRODUCTION

3,3 0,1 1,5 13,9

44,0 47,4 51,0

38,8

OL 0,38 kV CL 0,38 kV OL 6–10 kV CL 6–10 kV OL 35–110 kV CL 35–110 kV OL 220–500 kV CL 220 kV

High voltage lines and substations

High voltage air lines

Length along the route/along the networks, km Voltage 2011 2012 2013 2013/2012, % OL-500 kV 629,2 / 629,2 629,2 / 629,2 633 /633 +0,6 / +0,6 OL -220 kV 1 280,3 / 1 514,1 1 280,3 / 1 542,4 1 291,6 / 1 558,8 +0,9 / +1,1 OL-110 kV 4 698,6 / 6 475,8 4 694,3 / 6 465,4 4 797,2 / 6 642,5 +2,2 / +2,7 OL -35 kV 3 384,1 / 3 646,6 3 396,1 / 3 652,9 3 373,6 / 3 676,3 -0,7 / +0,6 Total OL 35-500 kV 9 992,2 / 12 265,7 10 000 / 12 289,9 10 095,4 / 12 510,6 +1 / +1,8 Maintenance of the OL 35-500 kV by the Company’s branches (along the route)

AES BES BuES EES KESN NkESN NchES PES ChES OL 35 kV 875,72 465,13 345,30 212,78 4,00 357,11 – 436,26 677,30 OL 110 kV 417,38 632,14 652,20 848,71 149,70 515,66 109,41 857,44 614,57 OL 220 kV 184,84 102,12 219,72 47,52 46,66 301,27 – 272,09 117,34 OL 500 kV 200,60 – – – 158,13 274,26 – – – 43 Total 1 678,54 1 199,39 1 217,22 1 109,01 358,49 1 448,30 109,41 1 565,79 1 409,21

High voltage cable lines 2013 Length, km Voltage 2011 2012 2013 2012/2013, % CL-35 kV 8,8 8,8 9,1 +3,4

CL-35 kV 110,9 119,2 119,2 0 REPORT ANNUAL CL -220 kV – – 6,8 +100 Total 119,7 128,0 135,1 +5,5

Maintenance of the CL 35-500 kV by the Company’s branches , km

AES BES BuES EES KES NkES NchES PES ChES CL 35 kV – – – – – – – 6,97 2,14 CL 110 kV – – – 0,48 48,63 – 68,77 1,32 – CL 220 kV – – – – 6,83 – – – – Total – – – 0,48 55,46 – 68,77 8,29 2,14

High voltage substations

As of the end of the year 2013 there were 374 high voltage substations equipped with 746 transformers (PT) of the total capacity 18 303,3 MVA on the Company’s balance sheet.

Maintenance of the high voltage substations by the Company’s branches , ps

AES BES BuES EES KES NkES NchES PES ChES Total SS 35 kV 30 21 14 11 – 17 1 18 23 135 SS 110 kV 18 28 27 35 24 25 12 33 20 222 SS 220 kV 4 1 1 1 2 2 – 2 1 14 SS 500 kV – 1 – 1 1 – – – – 3 Total 52 51 42 48 27 44 13 53 44 374

Powerdistribution networks

Development of the volume change of the Company’s distribution networks

2011 2012 2013 2013/2012, % OL 6(10) кВ, km. 23 353,0 22 791,5 22 797,9 +0,03 OL 0,4 кВ, km. 28 301,0 26 042,0 25 818,9 -0,9 OL 6(10) кВ, km. 4 263,0 4 242,1 4 456,5 +5 CL-0,4 kV, km. 4 926,0 5 024,9 4 132,6 -18 TS (CTS, DS), ps. 17 130 17 192 17 768 +3,3 OL-0,38 kV with self-supporting insulated wire (SIW) make up 26,43% (6826 km) of the total number of the OL-0,38 kV (25818,9 km).

Distribution networks, maintained by the Company’s branches

AES BES BuES EES KES NkES NchES PES ChES 44 ТП 6-10/0,4 kV, ps. 1 995 1 462 2 197 2 267 1 908 2 134 618 2 767 2 215 РП,шт. 9 12 3 4 96 20 36 24 1 ВЛ-6(10) kV, km * 1 937,6 2 086,1 3 868,7 3 527,1 3 00,7 2 940,9 103,4 4 103,8 3 929,6 ВЛ-0,4 kV, km * 2 743,1 2 100,6 3 968,3 3 810,5 1 276,7 2 838,4 159,9 4 816,0 4 105,4 КЛ-6(10) kV, km 297,7 115,5 65,1 184,9 1 982,7 368,2 1000,8 345,4 96,2 КЛ-0,4 kV, km 279,8 227,0 54,3 323,1 1 448,0 394,7 1 181,8 149,0 74,8 * along the route

Protective relay and automatics PRODUCTION ACTIVITY PRODUCTION As of 01.01.2014 there were installed 57871 devices During reconstruction of the existing protective relay of protective equipment, automatic protective devices and devices and the construction of new substations the emergency control system in the Company’s networks of 6.500kV. microprocessor-based relay protective devices are preferred.

Devices of PRA according to the element base

Total, it. % of total number Protective relay devices 01.01.2012 01.01.2013 01.01.2014 01.01.2012 01.01.2013 01.01.2014

Electromechanical devices 35 851 35 549 35 906 70,67 67,05 62,04

Microelectronic and microprocessor 14 876 17 469 21 965 29,33 32,95 37,96 devices

TOTAL: 50 727 53018 57871 100 100 100

Structure of PRA according to the 40 000 element base at the Company’s facilities, ps 35 000

30 000

25 000

20 000 35 851 35 549 35 906 15 000

10 000 21 965 17 469 14 876 5 000 Electromechanical devices Microelectronic and microprocessor based devices of PRA 0 01.01.2012 01.01.2013 01.01.2014 4.2. ELECTRIC POWER TRANSMISSION

Since 01.05.2009 the settlement of payments for than in 2012 and totals to 20,01 billion rubles. The volume the power transmission services on the territory of the of power transmission services provided to the cooperating Company’s activities have been based on the “boiler” network entities in 2013, made up 3 980 million kW-h which method. The Company is the boiler who settles the payments is equal to 1,32 billion rubles. with all the consumers on the centralized basis according to the In 2013 the delivery of the electric power to the networks established flat tariffs and cooperating network organizations of the Company made up 20 013 million kW-h, as for the 45 according to their special tariffs. consumers’ networks and cooperating entities on the In 2013 the volume of services provided by the Company interface of the balance the Company provided them with was 22 619,5 million kW-h, which is 180,2 million kW-h more electric power worth 8 569 million kW-h. 2013 Development of the volume of electric power transmission services in 2011-2013, million kW-h

2011 2012 2013 2013/2012, % Distribution of electric power to the 21 669 22 439 22 619 +0,8 consumers of the Republic of Tatarstan REPORT ANNUAL Delivery to the Company’s network 19 484 19 993 20 013 +0,1 Net supply of electric power in the network 17 900 18 456 18 569 +0,6

Electric power generated by the network in 2013 according to the voltage level and consumer groups, million kW-h

Population Agricultural Government financed Other consumers Total consumers consumers High voltage (110 kV and more) 12,2 12,1 10,5 13 217,3 13 252,1 Medium voltage (35 kV and more) 1,2 8,4 1,0 1 544,4 1 555,0 Medium voltage (10 kV and more) 305,9 204,1 453,8 2 587,3 3 551,1 Low voltage (0,4 kV and more) 2 958,5 265,4 415,2 622,2 4 261,4 Total 3 277,8 490,0 880,5 17 971,2 22 619,5

Structure of electric power delivered to the consumers Structure of electric power delivered to the consumers of the Republic of Tatarstan in 2013 according to the of the Republic of Tatarstan in 2013 (according to consumers’ (groups), % voltage), %

14,5 18,8 2,2 3,9

15,7 58,6

6,9 79,4

Population High voltage (110 кВ and more) Agricultural consumers Medium voltage 35 кВ and more) Government-financed consumers Medium voltage (10 кВ and more) Other consumers Low voltage (0,4 кВ and more) Since 2012 other power generating organization, besides the concluding agreements about power supply with such entities as Guaranteeing Supplier, have worked on the energy market of the well as the direct consumer who buys electric power for its own Republic of Tatarstan, who acquire electric power on the wholesale use on the wholesale market of electricity and power. and retail markets for the benefit of the consumers of the Republic,

Concluding agreements about power transmission with utility companies and direct service consumer in 2013 46 Name 1 half of 2013 2 half of 2013

Utility companies with whom the Company settles JSC “Tatenergosbyt” JSC “Tatenergosbyt” accounts for power transmission LLC “Rusenergosbyt” LLC “Rusenergosbyt” LLC “Rusenergoresurs” LLC “Rusenergoresurs” LLC “Regionalnaya energosbytovaya compania” LLC “Regionalnaya energosbytovaya compania” LLC “PEST” LLC “PEST” LLC “MagnitEnergo” LLC “MagnitEnergo” LLC “Energosbytservis” LLC “Energosbytservis” LLC “RT-ET” LLC “RegionEnergoKontrakt” PRODUCTION ACTIVITY PRODUCTION LLC “Tatneft-Energosbyt” LLC “Transneftenergo”

The number of direct consumers who concluded JSC “Kazanorgsynthez” JSC “Kazanorgsynthez” an agreement about power transmission with the JSC “Grid Company”

The amount of power transmission services to the of power transmission to the consumers of the Guaranteeing consumers of the Guaranteeing Supplier in 2013 made up 15 Supplier make up 69,16% of the total amount of services 643 million kW-h, consumers of other utility companies and whereas the services of power transmission to other utility JSC “Kazanorgsynthez” – 6 976 million kW-h. The services companies and JSC “Kazanorgsynthez” make up 30,84% .

The shares of other utility companies in the total amount of the services provided by the Company to the consumers of the Republic of Tatarstan in 0,67 2013, % 7,21 11,41

2,56 8,99

69,16 JSC “Tatenergosbyt” LLC “Rusenergosbyt” LLC “Rusenergoresurs” LLC “PEST” JSC “Kazanorgsynthez” Others

There were 49 agreements signed with co-operating The amount of power supply provided to the consumers network companies in 2013. of the Guaranteeing Supplier and other utility companies made up 3 980,76 million kW-h. 4.3. TECHNOLOGICAL CONNECTION

The Company received 23 169 applications for connection 20 749 contracts on technological connection were signed, of the applicants’ energy receivers to the power network with i.e. 9,4% more than in 2012, with total maximum capacity the total maximum capacity of 1 456,386 МW in 2013. In 741,161 МВт, i.e. 1,05% more than in 2012. comparison with 2012 the number of the applications made up 17 744 agreements with the total maximum capacity 13.28%, of the maximum capacity – 49% . 580,186 MW were executed. The number of executed agreements increased by 8,45% in comparison with 2012, 47 maximum capacity increased by 91,09%.

Development of the quantity of applications and signed, executed Development of the quantity of applications and signed, executed

agreements about technological connection, ps agreements about technological connection, MW 2013

25 000 1 600

1 400 20 000 1 200 REPORT ANNUAL

15 000 1 000 800

10 000 23 169

600 1456,39 20 749 20 452 17 744 18 957 16 546 16 362 400 15 089 5 000 975,46 13 313 801,08 741,16 200 733,48 580,19 406,78 321,76 0 0 303,76 2011 2012 2013 2011 2012 2013

Applications Applications Signed agreements Signed agreements Executed agreements Executed agreements

6 000 The quantity of received applications on technological 5 000 connection in 2013 according to the 4 000 branches of the Company, ps 3 000 5 576 2 000 4 113 3 704 1 000 2 077 2 675 1 608 1 113 1 081 1 222 0 AES BuES BES EES KES NkES NchES PES ChES

In 2013 the Company concluded 87 agreements about The company is realizing the Plan of Activities (road map) technological connection of energy receiving devices of No. 1144-r “Enhancement of Availability of the Energetic the total 670 kW and more to the maximum capacity 241 Infrastructure” dated June 30, 2012 approved by the Decree of MW, generating units of small capacity МВт 23,7 MW, dealt the Government of the Russian Federation and Plan of Activities with the applications on technological connection of major (“road map”) No. 153-r “Enhancement of the Availability of applicants. Among them: the Energetic Infrastructure” dated 06.02.2013, aimed at facilitating the terms of customers’ technological connection • Interregional multimodal logic center – 5 MW; to the energetic infrastructure and simplify the procedure of • JSC “Ammony” - 14 MW; technological connection more available, fast, transparent and • Ambulance hospital No. 7, Kazan – 1,5 MW; less expensive. “Customer’s Private Office” was created on • JSC “KZSK Silikon” - 11 MW; the official web-site, which allows submitting an application for • LLC “ Crystal Technology” - 18 MW; technological connection, tracing the documents and arranging • JSC “Innopolis”- 48,5 MW; a meeting with a technological connection expert. There is an • technopolis “Smart-City Kazan” - 40 MW; interactive map of the the Republic of Tatarstan displaying • electric power producing facilities at the Nizhnekamsk the distribution centers, information about the procedure Thermal Plant (JSC “Generating Company”) - 2*110 MW; of technological connection and calculation of the capacity • JSC“TAIF-NK” -82MW; needed. A quick-reference card was developed to inform • JSC “Nizhjekamskneftehim” - 82 MW; applicants about the procedure of technological connection • JSC “Himgrad” -12 MW. which is presented in the “Consumer’s Guideline” at all the application registration offices . 4.4. ENERGY CONSERVATION AND RESOURCE EFFICIENCY

Losses in Company’s electric networks

The amount of electric power acquired by the Company to The reported losses in the distribution network of 10-0,4 kV in compensate the losses in the electric networks 1 444 million 2013 made up 8,96% whereas the established standard is 9,72%. kW-h. Reported losses of electric power in the Company on Economy in comparison with the standard was 77,3 million kW-h. 48 the whole made up 7,22% of the received quantity whereas In comparison with 2012 the losses in the distribution network of the established standard is 8,89%, economy against the 10-0,4 kV decreased by 47,7 million kW-h. established standard was 335 million kW-h. In comparison The power loss reduction was achieved due to with the similar period of the previous year the reported losses realization of the logistical plan in the following directions: decreased by 95 million kW-h, i.e. 6,16% (losses of 2012 were considered as the supply to the network in 2013). • technological loss reduction: switching off in the regime of slack hours of the transformers in the substations with two or more transformers; optimization of the joints Development of electric power losses in the electric networks of double end feed lines; optimization of the working in the Company , % voltage in the subfeeder of star networks; switching off transformers with season-depended load; balanced loads in the electrical networks; • the reduction of business losses: detecting unauthorized PRODUCTION ACTIVITY PRODUCTION 12 and unlicensed energy consumption; • improvement of electric power metering: installment 10 of metering devices at the border line; replacement 8 of power metering devices with multifunctional ones with power profile; introduction of distant monitoring 6 systems; introduction of automated electric power 10,5 accounting systems and automated systems of 9,51 8,89 4 8,13 electrical power technical record-keeping. 7,69 7,22

2 Loss reduction is also achieved due to the construction, reconstruction, major and minor repairs of network units. 0 2011 2012 2013 Maintenance and development of power energy accounting and metering

Standard losses Organization of electric power accounting is conditioned Actual losses by the requirements of the Federal Law No.261-FZ “On Energy Conservation and Efficiency and Introduction of Amendments to Certain Acts of Law of the Russian Federation” dated 23.11.2009. Article 13 specifically indicates that produced, transmitted, consumed energetic resources are subject to mandatory accounting by applicable electric power metering devices. Development of the electric power losses in the distribution network of 10-0,4 kV, %

11

10,5

10

9,5 10,44 10,44 9 9,88 9,72 9,37 8,5 8,96

8 2011 2012 2013

Standard losses Actual losses Automation of electric power measuring in the Company

Data about substations,% Data about DP (TP), %

11 41 (1908 ps.) (153 ps.) 49 2013 59 89 (218 ps.) (15 860 ps.)

Included into ACDPMS and ASPTR ncluded into ACDPMS and ASPTR REPORT ANNUAL Notincluded into ACDPMS and ASPTR Notincluded into ACDPMS and ASPTR

Every year we can observe the growth of automatic 2013 maintenance was carried out on 2350 controllers and 9 measuring of energy at the Company’s facilities. In 2013 328 modems at 206 substations of the Company and 10 156 there was introduced equipment of automatic data measuring units of the distribution network. systems in ACDPMS on 19 substations, including renovation In 2013 in the framework of providing business with on 3 SS, ASPTR are used in 1 711 units. metering devices the Company accomplished planned In 2013 3932 controllers entered the ADMS CMS of actions on metrological service of metering devices (MD) and the Company’s branches at 140 substations. ASPTR was information and measuring systems (IMS) in accordance with installed in 11 957 electric power units (SS – 85 pieces, RS approved schedules of checks-up and calibration of the MD -120 pieces, TS -1380 pieces, etc.). and IMS, extraordinary primary check-up of 36 measuring An integrated corporate system of power measuring transformers of current intensity and voltage of 110-500 kV at ACDPMS is functioning in the Company on the basis of the the SS of 500 kV Elabuga (Shchelokov) during its preparation data acquisition and processing center “Pyramid”. In 2013 for putting into operation in August 2013. In the framework the Company continued its improvement: the functionality of the fulfilment of the validated Program of technical re- and he number of controllers has increased, which enabled equipment of the Company’s substations 1 623 modern the interaction with the consumers of maximum capacity digital panel meters were installed, a complex of actions more than 670 kW-h. The Company’s employees monthly were undertaken on calibration certification, approval and transfer the data in the pattern format 80020 and the figures registration of the ACDPMS branches and the Management of the metering devices installed in the Company’s facilities to of ICC of the JSC “Grid Company” into the State Register of the address of the JSC “Tatenergosbyt” from 1,3 thousand Metering Devices of the Russian federation. metering points of consumers. As a result such consumers Introduction of advanced means and systems of electric can pay to the utility company according to the price bracket power metering is carried out in the Company on the results of hourly settlement for the consumed electric power and voltage without engaging substitution methods. Besides information exchange was introduced between ASPTR of power measuring of the JSC “Grid Compnay” and ACDPMS of the wholesale market participants: - JSC “Tatenergosbyt”, LLC “Rusenergoresurs”, LLC “Rusenergosbyt”, LLC “PEST”, JSC “Kazanorgsynthez”, LLC “Regional Utility Company”, LLC “RT-Energotrading” At present data exchange between participants is carried out through 4,6 thousand. To support the accounting devices and means in proper condition a work package is provided for their maintenance and metrological support. In 2012 as part of maintenance 10 500 metering devices were replaced, 16 600 metering transformers of 0,4 kV, 4 000 external metering boards were installed. Priority is given to distant-reading metering devices. In 2011 the amount of such metering devices was 37%., in 2012 it was 38%, in 2013 – about 44%. Afterwards this proportion will be kept. We accomplish annual maintenance of the equipment of automatic information and measuring systems (ACDPMS). In of their preliminary testing in the Company’s branches, which transformers during switching it on and accomplishment of a allows estimating the efficiency of the project to take a wise pilot project on creation of atomized digital system of electric decision during realization of promising projects. power metering which use fibre optic current and voltage In 2013 the testing of the GSM-modem produced by the converter and metering devices of the new generation. JSC “TELEOFIS” (Moscow) was undertaken. The expanded complex of functions and a spot for 2 SIM-cards allows Consumers’ devices of power metering switching between different operators, and consequently reducing costs of the connection for remote units in a zone of In pursuance of the law about electric power metering 50 unstable cellular system signal receiving, as well as means of in 2013 the Company made 140 thousand checkups of the sealing and labeling of power metering devices produced by metering devices installed at legal entities and more than the LLC “ACPLOMB” (Saint-Petersburg). 600 thousand checkups of the metering devices installed In 2014 It is supposed to undertake the testing of metering in the households to ensure their compliance with technical devices of direct connection of 6-10 kV produced by the CJSC specifications and regulations. ”RiM” (Novosibirsk), which is characterized by its light weight and low operation costs because there is no need to use metering PRODUCTION ACTIVITY PRODUCTION Development of checks-up of metering devices 1 400 000 of legal entities and persons in 2011- 2013, ps 1 200 000

1 000 000

800 000

600 000

400 000 1 152 174 1 152 1 146 042 1 146 248 449 200 000 237 963 664 419 138 386 138

Legal entity 0 Pers ons 2011 2012 2013

During 2013 the Company executed about 21 thousands and provided services for the departments managing united applications from consumers on coding, installation, national All-Russian electric power network and territorial replacement, removal and putting into action of metering networks” dated 14.10.2013: 20452 applications from devices in accordance with the Order of the Ministry of Energy persons, including individual entrepreneurs and small and No. 718 “On approval of Methodological instructions on the medium-sized business entities, 467 applications from calculation of reliability and quality of the delivered produce other consumers.

Development of execution of applications on coding, 25 000 installation, replacement, removal and putting into action of

metering devices in 2011-2013, ps 467 20 000 497 1 160

15 000

10 000 20 452 17 438 16 851 5 000

Other consumers Persons, including individual entrepreneurs and 0 small and medium-sized business entities 2011 2012 2013

To reduce the losses of electric power the employees of unauthorized (off-the-meter or off-the-contract) consumption of the Company regularly take measures aimed at revelation of electric power. Data on the statements about off-the-meter consumption of electric power by the consumers of the JSC “Tatenergosbyt” for 12 months in 2013

Number of statements (ps.) Electric power (thousand kW-h))

Company’s Branch Made Paid Charged Paid 2012 2013 2012 2013 2012 2013 2012 2013 AES 213 371 205 350 687,12 482 655,36 471,57 51 BES 346 279 312 274 630,6 567 630,5 607,29 BuES 163 132 147 128 273,73 253,9 272,79 254,85 EES 123 139 120 138 419,24 530,76 399,48 526,77 2013 KES 32 41 30 43 252,47 364,28 406,14 432,27 NKES 220 214 220 210 686,56 585,19 668,9 521,97 NChES 27 30 26 30 945,81 322,74 984,33 321,77

PES 246 181 231 184 622,32 608,4 615,32 612,55 REPORT ANNUAL ChES 615 324 545 316 1 362,00 721,97 1 237,15 768,22 Total 1 985 1 711 1 836 1 673 5 879,85 4 436,24 5 869,97 4 517,26

In 2013 the losses of electric power were reduced by Federal Law No.261-FZ “Energy Conservation and Efficiency 4,44 million kW-h as a result of revelation 1 700 cases of off- and Introduction of Amendments of Certain Acts of Law of the the-contract consumption of electric power. The information Russian Federation” dated 23.11.2009 in accordance with the about the quantity of all the types of power energy used by the Regulation on public disclosure of the information by the issuer Company in the year under report in physical and monetary of securities, approved by the Order of FFMS of Russia No. 06- terms is shown for the purpose of implementation of the 117/ pz-n dated 10.10.2006.

Data on the statements about off-the-contract consumption of electric power in 2013

Number of statements (ps.) Electric power (thousand kW-h) Sum of money, (thousand rubles)

Com pany’s Made Paid Charged Paid Charged Paid Branch 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 AES 25 40 27 40 106,9 179,69 114,42 179,69 393,67 557,49 441,11 564,82 BES 32 27 33 27 43,9 98,29 48,43 98,29 91,88 302,77 102,85 302,75 BuES 74 56 74 54 73,2 112,14 68,94 110,05 191,21 267,11 176,55 263,95 EES 24 26 28 26 56,96 110,52 67,86 101,71 187,2 256,22 221,37 243,08 KES 288 126 288 127 1 559,19 1 716,73 1 581,89 1 706,63 6 077,71 6 954,74 6 174,25 6 909,2 NKES 116 113 134 115 273,9 562,24 342,17 533,59 941,66 1 580,36 1090,48 1 529,63 NChES 9 7 9 7 238,2 36,42 277,76 36,42 1 048,83 120,57 1 243,21 120,57 PES 323 186 321 190 733,93 740,85 706,63 715,13 2 496,87 2 056,42 2 396,42 1 993,96 ChES 29 13 28 14 117,69 39,52 108,67 41,06 474,32 127,39 433,58 135,96 Total 920 594 942 600 3 203,87 3 596,4 3 316,77 3 522,57 11 903,35 12 223,07 12 279,82 12 063,92

Information about the quantity of all the types of power resources used by the Company during the fiscal year.

The information about the quantity of all the types of power of Law of the Russian Federation” dated 23.11.2009 in energy used by the Company in the year under report in physical accordance with the Regulation on public disclosure of the and monetary terms is shown for the purpose of implementation information by the issuer of securities, approved by the Order of of the Federal Law No.261-FZ “Energy Conservation and FFMS of Russia No. 06-117/pz-n dated 10.10.2006. Efficiency and Introduction of Amendments of Certain Acts Company’s use of power resources in 2013

Name Physical indicators Monetary indicators Unit Quantity million rubles. Thermal energy Thousand Gcal 20,35 23,89 Electric power Million kW-h 38,58 86,65 52 Gasoline Thousand ton 1,55 48,66 Diesel fuel Thousand ton 1,26 38,1 Compressed gas ton 114,31 5,22 ТTechnological consumption of electric power Million kW-h 1 444,26 2 567,72 TOTAL – – 2 770,24

Other kind of power resources, besides those shown in the table, were not used during the fiscal year.

4.5. MAINTENANCE AND REPAIR PRODUCTION ACTIVITY PRODUCTION

The Company carries out the maintenance of the major • thermovision inspection of the equipment of SS – networks, aimed at keeping the equipment of the substations 293 606 spots; and power transmission lines in working condition, protection • survey of the ground loop at 169 SS; it from premature wear. In 2013 the maintenance plan was • integrated survey of transformers - 55 ps.; implemented in its entirety for a total amount 198,5 million rubles. • malfunction diagnostics of transformers,; To reveal defects at early stages, reduction of vulnerability • right-of-way clearing of OL – 210,7 ha; and enhancement of reliability of the equipment of SS and PTL • cutting trees which threaten to fall – 28 505 ps.; of 35-500 kV the following works were contracted: • Installation of bird-protection devices – 2 913 ps. • Integrated survey of OL – 525 km; • survey of the pedestals of concrete and metal towers – The results of the non-invasive diagnostics, conclusions 4 064 ps.; and recommendations of specialized organisations are used • survey of the foundation of support constructions of OL by the branches during planning maintenance and repair along – 5 455 ps.; with the lists of deficiencies made during the survey of OL. • thermovision inspection of OL – 2 519 km, • malfunction diagnostics of supporting insulator of SS - 3852 ps.;

Contracted maintenance works implemented by the Company in in 2013:

At SS of 35-500 kV At OL of 35-500 kV 4 343 testing of switching units and gears during overhaul period regular survey of OL of total length 12 311 km oil refill for 2 827 items of equipment surface survey of 1 149 supports including inspection of wires and ropes of clamps and conductor spaces; replacement of silica gel in 2 097 items of equipment inspection of gross geometry from the wires to the ground, to crosscut constructions at 1 513 spots; analysis of 4 988 samples of transformer oil random inspection of 517 support fundaments and their u-style bolts of the supports on the stays with unsealing maintenance of 78 accumulator batteries replaced 2 607 defected insulator inspection of 4 697 devices of electric heating restoration of signboards and billboards, 6 080 ps condensate drain from 817 items of equipment adaptation of 720 supports refinement and drying of 467,8 tons of transformer oil measuring of slack of a conductor and gzt in 567 spans nspection of the networks of exterior and interior lighting, inspection of inspection of 31 730 metal and concrete supports electric heating systems of the facilities of indoor switch gear, substation control building, complete distribution device of external installation checking of corrosion coating of metal supports, crossbeams and backstay anchors with random ground opening, 483 ps In pursuance of the regulations of the Technical Strategy • as part of introduction of modern equipment at the of the JSC “Grid Company” on application of gas-insulated above substations knee-break horizontal disconnector equipment the following gas-insulated switches and metering and motor-switch disconnector; transformers were introduced during reconstruction and new • reliable rigid bas-bar was introduced at a number of construction of substations in 2013: substations under reconstruction; • as a novelty modern overvoltage limiters 3-4 ER, low- • 9 gas-insulated switches of 500kV (SS 500kV Elabuga); oil transformers, antiresonance, maintenance-free • 22 gas-insulated switches of 220kV (SS 500kV Elabuga, transformers of the voltage like VEOT, VEOS of the SS 220kV Kutlu Bukash,SS Central); voltage 110-220 kV produced by “Siemens”; 53 • 29 gas-insulated switches of 110 kV (SS 500kV Elabuga, • regular diagnostics of the modern cable lines with SS 220kV Kutlu Bukash, SS Central, SS 500kV Kinderi, cross-linked polyethylene of 110 and more kV by SS 110kV Vysokaya Gora); non-invasive procedure, specialized entity possessing • 204 vacuum switches of 6-10 kV (SS 500kV Elabuga, SS modern diagnostic laboratory of high-voltage testing

220kV Kutlu Bukash, SS Central, SS 500kV Kinderi, SS OWTS HV250, produced by the holding company 2013 110kV Vysokaya Gora); “SebaKMT” in Germany was engaged(6 CL belonged • gas-insulated voltage and current transformers (SS 220kV to KES were surveyed). Kutlu Bukash, SS Central, SS 500kV Kinderi, SS 110kV Vysokaya Gora). All the essential maintenance works on SS and

PTL and measures to decrease the operation risks and REPORT ANNUAL In pursuance of the regulations of the Technical strategy and enhancement of reliability of network equipment will be to minimize operation risks the following measures were taken: continued 2014.

Repair activity

Development of repair costs in 2011-2013, million rubles Structure of repair expenditures in 2013, %

700

600 2,5 18,3 500 41,8 400

300 641,9 514,3

200 470,1 406,3 400,2 37,4 315,1 100 59,1 58,8 58,5 219,9 157,1 151,1

0 2011 2012 2013

Backbone network Repair of transmission devices Distribution network Repair of machinery and equipment Buildings and facilities Repair of buildings and facilities Others Repair of transport

In 2013 the volume of contracted works in monetary terms made up 171,4 million rubles, i.e. 14,3% of the total volume of repair financing. Accomplishment of actual volume of overhaul of the Company’s fixed capital assets in 2010-2013

Objects repaired Metric units 2011 2012 2013

BACKBONE NETWORK 54 Integrated repair of substations of 35-500 kV ps 16 10 12 Equipment overhaul of substations of 35-500 Million rubles 102,3 174,9 149,3 kV

Overhaul (medium repair) of power transformers ps 35 12 28 of 35-500 kV

Overhaul of OL 35-500 kV (standard) km 443 1 200,7 1 028,3

Replacement of defective concrete poles of OL ps. 149 77 83

PRODUCTION ACTIVITY PRODUCTION of 35-500 kV Replacement of detective ground wearer of OL of km. 124 178 176 35-500 kV Replacement of defective insulators of OL of Thousand ps. 9,5 12 8 35-500 kV DISTRIBUTION NETWORK

Overhaul of TS (RS) 6-10/0,4 kV ps. 592 198 487

Overhaul of OL of 6-10 kV km 586 6 167 676

Overhaul of OL of ВЛ 0,38 kV km 519 465 586

km 37 36,5 30,5 Overhaul of CL of 0,38-10 kV rep. 816 1 175 1 025

Overhaul of power transformers of I-III ps. 205 198 188 dimensions

FACILITIES Million rubles 157 065 151 067 219 906

4.6. ACQUISITION

The basic principles taken by the Company during The Company’s acquisition is regulated by the Federal Law acquisition of goods, works and services are: No.223-FZ “On acquisition of goods and services by a certain group of entities” dated 18.07.2011, the Federal Law No.94-FZ • transparency of procurement procedures; “On order placement for goods and services for government and • equality, equity, non-discrimination and absence of municipal requirements” dated 21.07.2005, the Regulation on unwarranted competition towards the participants of acquisition of goods and services for the JSC “Grid company”, procurement procedures; approved by the Company’s Board of Directors dated 26.03.2012 • appropriate and cost-efficient expenditures on acquisition (record of proceedings No. 9/2012 dated 28.03.2012), and other of goods, works and services and implementation of regulating documents applied by the Company. measures aimed at Company’s cost-saving. Acqusition procedures

Price of purchased goods, works and services (Vat included) Procurement procedure less then 100 thousand rubles independent acquisition by the company’s branch or entering a direct contract from 100 to 500 thousand rubles purchase through registration of competitive cards 55 from 500 thousand rubles • tender • auction • offers • bid • competitive negotiation 2013 • single sourcing purchasing • purchase through procedures organized by the sellers of the produce ANNUAL REPORT ANNUAL

12 000 Development of procurement procedures in 2011-2013, million rubles 10 000

8 000

6 000 10 930,7 8 945,8 4 000 8 641,1

2 000

0 2011 2012 2013

Information on competitive acquisition procedures from electronic trading platform “B2В-energo”, offering a wide 500 thousand rubles is presented on the website approved choice of tools both for sale and purchase in compliance by the Decree of the Government of the Russian Federation with the principle of transparency and competitiveness of No. 908 dated 10.09.2012 informing about acquisition of the procurement procedures yield the Company savings at goods, works and services by certain legal entities in the a number of bids up to 30%. information and telecommunication network http://zakupki. All in all in 2013 the Company had 2 533 procurement gov.ru, on the official site of the Republic of Tatarstan procedures in the amount of 10,930 billion rubles, including the http://www.gridcom-rt.ru, section “Acquisition”, as well purchases from 500 thousand rubles – 1 221 purchase in the as on the electronic trading platform “B2В-energo”, at the amount of 10,167 billion rubles. Benefit from the undertaken link http://www.b2b-energo.ru. Acquisition in 2013 on the competitive procurement procedures made up 4,2%.

Structure of purchases undertaken in 2013 according to the activity in money terms, % 11 2 5 3 2 48 Repair Information technology 10 Property Maintenance Metering and metrology 7 Other purchases Construction 12 Logistics, transport Purchases less than 500 thousand rubles. GLOBAL STRATEGY IS A GUARANTY OF PERFECTION Investment05 activity and innovation development 5.1. INVESTMENT ACTIVITY

Company’s investment program for 2013-2015 Volumes of Company’s investment program in 2013- 2015, million rubles (VAT including) The basic concept of the Company’s investment activity is providing reliable and high quality power supply to the 7 900 consumer, wherefore it is necessary to take measures for 58 enhancement of the current technical condition of the 7 800 equipment and for network renovation. 7 700 The major directions of renovation policy of the 7 600 company are retention on reliability of the operating network, its modernization and restoration of the worn out 7 500 units, expansion of capacity for new connections. The Company’s investment program for 2013-2015 7 400 7 797,16 was approved by the order No. 324 of the Ministry of 7 300 7 655,45 Energy Ministry of Energy of the Russian Federation 7 200 dated 09.07.2012; considered and approved by the JSC «SO EES»; Branch of the JSC «SO EES» RDO of 7 100 7 210,76 the power system of Tatarstan; Federal service of tariffs 7 000

INVESTMENT ACTIVITY INVESTMENT of the Russian Federation; Federal antimonopoly service of the Russian Federation; The Ministry of Finance of the 6 900 Russian Federation; Economic Development Ministry of 2013 2014 2015 the Russian Federation; Ministry for Industry and Trade of the Russian Federation; Regional Development Ministry of Parameters of the Company’s investments in 2013 AND INNOVATION DEVELOPMENTAND INNOVATION the Russian Federation. The Company’s investment program volume for 2013- The volume of the investment program for 2013 (VAT incl.) 2015 amounted 22 663,37 million rubles (VAT including). made up 7 655,45 million rubles, the funds distributed as follows:

Investment project direction Volume of IP (VAT incl.), million rubles % Reconstruction and construction of SS and OL of 220-500 kV 2 352,45 31 Reconstruction and construction of SS and OL of 35-110 kV 2 008,78 26 Reconstruction and construction of distribution networks 2 225,83 29 of 0,4-10 kV Assembling of automatic system for commercial 158,36 2 measurement of power consumption Reconstruction of protective relaying and automation 117,18 1 Organization of channels of communication and high- 145,73 2 speed digital channel Ready-to-operate equipment 229,39 3 Design and survey work 206,73 3 Other (ecology, network control center and site protection) 211 3 TOTAL: 7 655,45 100

Structure of Company’s investment program in for 2013 according to the major funds, % 8 6 31

29

Reconstruction and construction of SS and OL of 220-500 kV Reconstruction and construction of SS and OL of 35-110 kV 26 Reconstruction and construction of distribution networks of 0,4-10 kV Assembling of ACDPMS, PRA and SCS Other objects (RES facilities, ecology, GCC, SE,ONM, DSW) Major investment projects of 2013

Direction of investment Investment project Providing reliable and non-interrupted power supply of Kazan region and Reconstruction of SS of 500 kV Kinderi erected and reconstructed Universiade 2013 facilities Reconstruction of SS of 220 kV K.Bukash Reconstruction of SS of 220 kV Central Disassembling of the T-connector SS K.Bukash-Kinderi-Central and 59 construction of OL of 220 kV K.Bukash-Central Construction of OL of 220 kV Elabuga 500 – Central Construction and reconstruction of distribution networks of 6-10 kV 2013 Providing reliable power supply to consumers Reconstruction of SS of 110 kV Promkomzona Reconstruction of SS of 110 kV Vysokaya Gora Providing reliable and non-interrupted supply of energy to industrial Construction of SS of 500kV Elabuga (unit TS)

establishment, oil production, petrochemistry and automobile industry REPORT ANNUAL Reconstruction of SS of 220 kV Nizhnekamskaya Reconstruction of SS of 110 kV Gorodckaya (AES) Providing reliable and non-interrupted supply of energy to Technology Reconstruction of SS of 110 kV Sviyazhsk Innovative zones on the territory of the Verchneuclonsky and Laishevsky Reconstruction of DS of 10 kV Isakovo with transition to SS of 110 kV municipal regions of the republic of Tatarstan (Decree of the Russian Isakovo Federation No.1131 dated 01.11.2012)

Providing reliable and non-interrupted of supply energy in the framework of Reconstruction of SS of 110 kV Bolgary cultural heritage preservation of the Republic of Tatarstan (power supply to the Bolghar architecture open-air museum)

Input-output of electric power capacity in 2013

Name of investment project Input of capacity Output of capacity

Reconstruction of SS of 220 kV Central 250 MWA 125 MWA

Reconstruction of SS of 110 kV Gorodskaya (Almetievsk) 80 MWA 32 MWA

Reconstruction of SS of 110 kV Promkomzona 80 MWA 50 MWA

Reconstruction of SS of 110 kV Bysokaya Gora 32 MWA 20 MWA

Reconstruction of SS of 110 kV Bolgary 20 MWA 12,6 MWA

Disassembly of the T-connector SS K.Bukash-Kinderi-Central and 25 km construction of OL of 220 kV K.Bukash-Central

The Company’s investment program of 2012 provides for a supply to consumers and prepare the ground for new number of measures to improve the reliability of power supply connections. to the consumers of the Republic of Tatarstan, aimed to solve Investment program of the Company for 2014-2016 was the complicated problems of electric network complex of the negotiated with the government authorities and approved Republic of Tatarstan functioning. by Order No.967 of the Ministry of Energy of the Russian Taking into consideration condition of the objects of Federation dated 31.12.2013. JSC “Grid Company”, the bulk of capital expenditures amounted to 10 269,7 million rubles including VAT (including Execution of plan of capital construction in 2013 the facilities of TS) in 2013 to technical upgrading and reconstruction of equipment which enabled to enhance The plan of capital construction for 2013, approved by the reliability of the electrical power networks complex and Company’s Board of Directors made up 8 750,0 million rubles. equipment operational specifications, to provide overall Actual execution of the plan of capital construction of 2013 reliability of the networks, to enhance the quality of power was 8 703,2 million rubles, i.e. 99%. (million rubles, VAT net)

TOTAL,including: Number of COL objects (plan) PLAN IN FACT % 8 750,0 8 703,2 99% 60 JSC “Grid Company”, according to the objects of primary activity 1 119 5 377,0 5 426,4 101% President-sponsored objects of SHF 83 199,0 228,0 115% The objects with possible technological connection 4 177 3 122,0 2 989,9 96%

Objects of SUE “Electric Networks” 17 52,0 58,9 113%

Realization of investment projects of 2013 allows enhancing the reliability of power supply, to renovate the main and auxiliary equipment, prepare the ground for unimpeded connection of new consumers. INVESTMENT ACTIVITY INVESTMENT Structure of Company’s capital investments in 2013 Development of capital investments in 2011-2013, according to activities, million rubles million rubles

AND INNOVATION DEVELOPMENTAND INNOVATION 10 000 8 703 9 000 8 606

2 989,9 8 000

58,9 7 000

6 000 5 426 228,0 5 137 4 910 5 000

4 000 3 885 2 906 2 990 3 000

5 426,4 2 000 890 1 000

0 2011 2012 2013 plan of capital construction according to the objects with possible future technological connections TOTAL 4 910 8 606 8 703 plan of capital construction according to the Including power 5 137 5 426 3 885 objects of PAG “ES” transmission plan of capital construction according to the Including TS 890 2 906 2 990 objects of the major network plan according to the objects belonging to the investment program of the SHF

The most important and economically significant projects of 2013:

• reconstruction of ss gorodskaya aes; • reconstruction of ss promkomzona nches; • reconstruction of ss of 500 kv kinderi;; • construction of ss of 500kv elabuga ees; • reconstruction of ss of 220 kv central; • reconstruction of ss of 220 kv kutlu-bukash pes; • construction of ol of 220 kv к.bukash-central (liquidation of • reconstruction of ss vysokaya gora pes; t-connector к.bukash-kinderi-central) kes, pes; • reconstruction of ss bolghar via ol-10-110 kv ches. 5.2. INNOVATION DEVELOPMENT

Innovation Policy of the Company The first period of the pilot project “Digital substation” is creation of the electric power digital metering system at the Innovation policy of the JSC “Grid Company” was connection COL of 110 kV Magisrtralnaya–Kazanka of the SS approved by the Board of Directors of the Company on of 220 kV Magistralnaya equipped with fiber-optic converters 14.02.2012 (minute No.7/2012 dated 17.02.2012). of current and voltage and new generation metering devices. The targets of the Company’s Innovation Strategy are Sets of fiber-optic current transformers (FOCT) and 61 improvement of reliability, quality, efficiency of power supply fiber-optic voltage transformers (FOVT) were assembled at to consumers due to accelerated appliance of innovation the connection of COL of 110 kV Magistralnaya on a single methods and technologies; improvement of usage of supporting frame (instead of the existing support insulators). assets in place due to introduction of international systems The installed equipment is notable because of the fact that

of management and staff training; organization of efficient the major part of it is produced domestically. 2013 management of the innovation activity itself, creating a The metering system is integrated into information- model of innovation growth; development, testing and metering system “Pyramid”. Using the data the staff of introduction of innovations and their replication. the Company can remotely control the mode of power Priority guidelines of innovations strategy of the consumption on the connection in question in a digital format.

Company are: The technology of current and voltage metering based on REPORT ANNUAL optical fiber instead of the copper control cable offers several • advancement of technical and technological development; essential technical, operational and commercial advantages, • acquisition of knowledge, its application for the benefit of which need to be confirmed during full-scale test. the Company and the Republic of Tatarstan; • creation of conditions for enhancement of own designs, Application of special twist grips for high voltage lines and also registration of other intellectual property rights, repair commercialization of the patents and intellectual property; • preparing the proper requirements for improvement the Neither special equipment nor highly knowledgeable quality of research, design, project and submitting them to specialists are needed to assemble the twist grips. Introduction the specialized organizations of the Republic of Tatarstan. of this innovation method can essentially reduce the time and expenditures of the maintenance work. For the first time the The innovation activity of the Company is controlled in twist grip was used at the REPAIR of the special transition of compliance with the following fundamental principles: the PTL of 500 kV NkHEP-Udmurtskaya across the Kama river.

• correspondence to the key purposes and characteristics Application of gas-insulated T-joints of the Company, constant monitoring over the quality of the innovation activity; Gas-insulated T-joints HV-CONNEX produced by “Pfisterer” • integration of innovation activity with investment and (Germany), equipped with a rotary anti-explosive pump, gas economic activity of the Company, coordination of efforts sniffer and remote monitoring sensor unit (6 ps.) were applied and resources; at the object “Reconstruction of OL of 110 kV SS Vostochnaya” • coordinated management of the innovation projects – SS Central with transition to CL of 110 kV, Stage III». portfolio inside the Company and also along the other Pluggable connecting systems CONNEX 5S produced by innovation projects of the Republic; “Pfisterer” (18 ps.) were applied during the assembly, which • documenting and patenting of decisions, technologies allows fast and easy assembling of the components tested and the experience of their creation; in-plant. It is not necessary to open the section of cable • collegial working out of key innovative decisions in the assembly and perform complicated manipulations with gas process of innovation activity planning, including approval or oil system. Pluggable systems CONNEX cut to a minimum by the scientific and technical committee of the company; all possible mistakes of the assembling staff and provide long • creation of the cultural mode of the organization, and uninterrupted operation of the equipment. encouraging creativity, incentive schemes to motivate the Application of this equipment contributed to enhancement staff, taking part in the innovation process. of the technical specifications of the object and helped avoid construction of additional facilities. The equipment was applied Company’s Innovation development for the first time and knows no equals in Russia.

Project “Digital Substation” Testing of transformers with different connection circuit of 160 kWA In the framework of the long-term target program «Energy Saving and the enhancement of energy efficiency in the Decrease of power loss in the distribution transformers of Republic of Tatarstan for 2010–2015 and up to 2020» the 6(10) kV, which are the bulk of all used transformers (the essential Company is realizing an innovative project “Regional Intellectual amount of energy is lost right there) is one of the most important Power Network in the JSC “Grid company”. Creation of digital task nowadays. The electric networks of 0,4 kV with huge ration substation equipped with power fiber-optic converter of current of single-phase consumers don’t allow to distribute the loads and voltage in cooperation with such leading companies of according to the phase as they turn into action independently the Russian Federation as CJSC “Proftek”, LLC SPE “Ekra” , at different moments of time. The basic reason of the increase LLC “EnergoromAvtomatizatsia”, JSC “NTTS EES”, LLC of power losses in such networks is asymmetrical load, which “Energozashchita” is part of the above program. causes power losses in the transformer and deteriorate the output voltage. The increase of such losses and deteriorated 3. About ACR KV L-110 and more kV. quality of the delivered energy extremely depended on the 4. About replacement of supporting insulators of 110 and applied winding connection circuit of the transformer. more kV. To solve this problem the Company had research on the 5. About reconstruction of SS 110/10 kV Vysokaya Gora. transformers with different connection of 160 kWA. The testing 6. About the need to use the ground wearer with installed was accomplished on the functioning transformer substation optical fiber (OPGW) at the OL of 500 kV Kinderi – CTS of 6/0,4 kV No. 37524, situated in the district “Ursala” of ZaiGRES titled as: “Reconstruction of the section of OL of the Almetievsk region. 500 kV Kinderi – ZGRES with replacement of found wearer. 62 Based on the results of the testing it was decided to use the 7. About reconstruction of OL of 110 kV Kinderi-Central 2. transformers with the connection circuit Y/Zн-11 in distribution 8. Suggestions on organizational pattern GCC - UTSC - EC. networks of the Company. Application of the transformer У/Zн 9. Options of design layout, types of equipment for

allowed feeding of powerful single-phase consumers without reconstruction of existing OSG of 220 and 110 kV and deteriorating the quality of transmitted power and threatening an construction the 3,4 sections of the OSG of 220 kV and emergency, as well as considerably reduce electric power losses, 5,6 sections of OSG of 110 kV of SS Nizhnekamskaya. choose the appropriate transformer protection from single-phase 10. Abut incentives for implementation of work under voltage. short circuit, enhance reliability of the electric installation on the 11. Decision on the type of equipment for the planned whole, increase power reserve due to decrease of additional construction and reconstruction of the entities participating losses which are possible in distribution transformers. in the program of enhancement of reliability of power supply to Zakamsky region of the Republic of Tatarstan. Coordinative Science and Technical Committee of the 12. About the need of construction of transfer busbars at SS

INVESTMENT ACTIVITY INVESTMENT Company of 220 kV KAMA.

The Coordinative Science and Technical Committee of the Innovation Committee of the Board of Directors company (CSTC) was created in 2011 in order to control the engineering strategy, coordinate development and enhancement The Innovation Committee of the Board of Directors of AND INNOVATION DEVELOPMENTAND INNOVATION the efficiency of network complex, reduction of its maintenance the Company was created for realization of the Company’s expenditures and improvement of reliability electric network innovation policy. Its major targets and objectives are facilities of the Company’s branches. The CSTC is composed development and presentation to the Board of Directors of engineering managers, heads of structural departments and of recommendations on innovation development of the chief engineers of the Company’s branches: Company, determination of the directions and priority projects The following questions were considered at the meetings of of R&D, and analysis of the result of their realization, working the CSTC JSC “Grid Company” in 2013: out recommendation in the sphere of rational appliance and introduction of pilot projects, advanced innovation 1. About R&D, suggested by FSBI HVE KSEU. technologies and materials on the facilities of the Company to 2. About anti-corrosion coating of supports. guarantee its stable and intensive innovational development.

Research and Development (R&D)

R&D Plan of the JSC “Grid Company” for 2013-2015:

Works Research Development Total for 2013 Proceeding 1 6 7 amount for 2013 thousand rubles (vat net) 419,22 3 368,13 3 787,35 Started anew 7 2 9 amount for 2013 thousand rubles (vat net) 9 943,4 4 900,1 14 843,5 10 362,62 8 268,23 18 630,85

In 2013 the Company completed the following works, Information technology including: Creation of the efficient corporation information control • proceeding works - development of the method of system of the JSC “Grid Company” became the major evaluation of operational indexes of accumulator batteries project realized in the sphere of information technology. For of the systems of uninterrupted power supply totaled to its implementation the development program for the period 147,98 thousand rubles; development of the metering up to 2015 was worked out in 2012. system of control and analysis of partial discharge in the The following measures to improve the IT-infrastructure high voltage ceramic and polymeric insulation to the sum were taken in 2013: of 296,63 thousand rubles; • works started anew – development of remote backup 1. Created consolidated data base ICS “Parus”; protection at the substations of the JSC ”Grid Company” 2. The software product IBM Cognоs TM1 IBM Cognos BI was for the total sum of 3 800,1 thousand rubles. selected and acquired as the basis of the platform to create an automatic budget accounting system; functions in the Private office of the consumer” were developed 3. The program complex “Situation Analytic Centre” based on to inform the applicants about the status of the contracts on MS SharePoint of Situation Analytic Center and geo-information technological connection; system “Gradoservic” was developed and introduced into 7. Software “The Register of control end execution contracts operation; on technological connection” was developed and introduced 4. The Date Base of ISE was created on the contracts about along with the measures of a capital nature on the basis of MS power supply of EDS and contracts of power supply to the SharePoint. consumers of GS. The volume of provided services of other utility companies was defined according to the company’s Organization of communication channels 63 demand; the exchange of data between EDS and PD DMS “Pyramid” was carried out; In 2013 in the framework of capital construction 5. The new version of the PC “Statements of off-the-contract the following works were done: reconstruction of SS of power consumption” was developed and introduced to follow 100 kV Osinovo, construction of SS of 500 kV Elabuga;

the changes to address the law changes and business demands reconstruction of SS of 220 kV Kutlu Bukash. 2013 in terms of changes in calculation of off-the-contract power Geographically dispersed channels were organized and consumption and development of the module “Registration of put into operation (main and back-up) between SS of 220 cases of off-the-contract power consumption”. kV Zelenodolskaya, SS of110 kV Osinovo, SS of 500 kV 6. “Interactive map” was presented on the Company’s external Elabuga, SS of 220 kV Kutlu Bukash and the control center

site to advise on main substations of the Company and new of the RDO of Tatarstan. REPORT ANNUAL

Integrated zone of technological telecom network of the Kazan power district

38,5 KinderiКиндери

ОптикаOptika ОсиновоOsinovo KHEP-3КТЭЦ-3 28,71 на Зеленодольск

To Zelenodolsk To 26,7 9,35 SavinovoСавиново 11,24 4,01 КТЭЦ-KHEP-22 3,78 Magistralnaya 2,0 Магистральная 1,92 GCCЦУС 1,44 RSS.1оп.1 KompressornayaКомпрессорная

ЗаречьеZarechie КрыловкаKrylovka 2,78 1,27 RSS.5оп.5 1,68 ZapadnayaЗападная 0,12 КонстантиновкаKonstantinovka 3,05 1,16 1,77 оптс 292 НоксаNoksa Н.КремлевскаяKremlevskaya GK, TAE 1,25 ГК, ТАЭ 3,54 VostochnayaВосточная 3,56 3,08 2,65 2,74 RSS.55оп.55 PortovayaПортовая KESКЭС АзиноAzino 3,9 RDOРДУ SovetskayaСоветская 2,7 KHEP-1КТЭЦ-1 4,6 ПЭСPES 4,0 GorkiГорки Salmachi RSS.82оп.82 1,8 1,0 Салмачи 0,1 оп.72RSS.72 на Кутлу-Букаш ПриволжскаяPrivolzhskaya 5,13 RSS.36оп.36 Kutlu-Bukash To 1,23 ЦентральнаяCentral 3,7 27,0 2,3 6,54 RSS.1оп.1 YuzhnayaЮжная 6,3 5,0

Digital channel SDH was organized between DCC of In the framework of reconstruction of SS 220 kV the JSC “Grid Company” and CC of the Company’s branch Central communication multiplexer was installed in the Kazan electric networks, which enabled organization of DCC of the Compnay, which enables organization of ring topology of the SDH network and unite DCC of the communication broadband with the zone Zakamskaya, Company, SS of 220 kV Magistralnaya, SS of 500 kV uniting in terms of the project of construction digital and Kinderi, SS of 220 kV Central, SS of 110 kV Yuzhnaya, CC analogous telecom channels with control facilities of the of the Kazan electric networks, CC of the RDO of Tatarstan, JSC “Grid Company”, Elabuga network, Naberezhnye communication center of the LLC “TatAISEnergo” into an Chelny network, Nizhnekamsk network and Almetievsk integrated zone of technological telecom network. network with the Netwrok Control Center. Correlation of analogous and digital telecom channels Analogous TCh according to Company’s branches in 2013, % Digital TCh

100

80 39,37 56,74 59,89 64 67,10 60 75,36 87,93 88,12 99,95 94,65

40

60,63 20 40,11 32,90 43,26 24,64 12,07 0,05 11,88 5,35 0 AES BuES BES EES KES NKES NChES PES ChES INVESTMENT ACTIVITY INVESTMENT

Correlation of FOCL, HF communication and cable lines FOCL AND INNOVATION DEVELOPMENTAND INNOVATION according to Company’s branches in 2013, % HF communication Cable lines

100 11,36 8,52 10,55 26,82 32,65 80 26,05 33,67 0,0 67,71 48,83 73,81 60 82,46 78,75 27,92

40 73,18 63,40 54,97 3,89 14,74 20 42,65 39,43 16,52 17,54 17,36 17,55 0 9,67 AES BuES BES EES KES NKES NChES PES ChES

Length of FOCL 400 according to the Company’s branches in

2013, km 300

200 360,15 288,18 257 241,62 100 174,59 143,26 0 106,6 98,2 0 AES BuES BES EES KES NKES NChES PES ChES Telemechanics

In 2013 in the framework of capital construction and conversion, or unable to grow information capacity, not designed reconstruction of the substations the Company installed digital to work through high speed digital channels and falling short of telecom devices replacing physically and morally deprecated accepted international stand arts of transmission control protocol. equipment which service life is 15 and more years on an average, At the end of 2013 the telecontrol systems grew by 4,6% and the equipment with low accuracy of analog-to-digital signal made up 56,3% of the quantity of all telecontrol devices applied. 65 Correlation of digital and analogous telecontrol devices Analogous TCh according to Company’s branches in 2013, % Digital TCh

100 2013 19,23

80 43,42 43,90 54,34 48,77 53,16

60 75,70 REPORT ANNUAL 94,02 92,19

40 80,77

56,58 51,23 56,10 20 45,66 46,84

5,98 7,81 24,30 0 AES BuES BES EES KES NKES NChES PES ChES

Development of the digital telecom 60 systems in 2011-2013, %

50

40

30 56,3 51,7 20 42,9

10

0 2011 2012 2013

Development of ACDPMS

In the framework of administrative and technical measures kV Magistralnya, SS of 220 kV Central, SS of 110 kV in 2013 to achieve the functioning of the DCC the Company Novokremlevskaya, SS of 110 kV Zapadnaya; fulfilled the following: • after completing operational and verification testing the PTC of ADCS DCC was put into operation; • receipt of telemetric information from 47 objects of • object state signalling was organized in the System of the electrical power complex of the Republic: 38 SS Uninterruptible power system of PTC CC DCC in AW of of the JSC “Grid Company”; 9 generation units (KTPP- the shift supervisor of DCC. 1, KTPP-2, KTPP-3, ZaiGRES, UrGRES, NkTPP-1, NkTPP -2, NChTPP, NkHEP); moreover, telemetric In the framework of construction of SS of 500 kV Elabuga transmission to Almetievsk electric network CC. The main and backup telememechanics digital channels were total volume of teleinformation transmitted to DCC was organized to the Company’s DCC, CC RDO of Tatarstan, 9285 telemetry and 7196 telemetric signals, i.e. twice CC UCC MV. as much as the quantity of TI/TS since the beginning of In the framework of reconstruction of SS of 220 kV Kutlu- operation of ITC ADCS; Bukash telememechanics digital channels were organized • home-channels of telecom connection with 5 SS of the to the Company’s DCC and CC RDO of Tatarstan in the Kazan power district: SS of 500 kV Kinderi, SS of 220 protocol MEK 60870-5-10. THE ENERGY OF PROPULSION LEADS TO SUCCESSFUL ACHIEVEMENT 06Corporate management 68

CORPORATE MANAGEMENT Transparency Justice presented ontheofficialweb-siteof companyhttp://www.gridcom-rt.ru inthesection“Shareholdersandinvestors/Charter andinternaldocuments”). 6.1. PRINCIPLES OF CORPORATE MANAGEMENT 6.1. CORPORATE OF PRINCIPLES ture andmanagementoftheCompany, aswellthefree ac the applicablelegislationanddon’t infringetherightsofother theCompany’stive issuesconcerned activityandisprovided to exercise theirrightsrelated totheirshareholding intheCom- to takebalancedandgrounded decisions,ortotakeother tive authorityoftheequitymarket. the Company. the affiance oftheCompany, itsansweringthenationalpur tivity andregulation oftherelationship betweenthesharehold- tors approved oftheRegulationinformationpolicywhichde Charter oftheCompany. Company’s shareholders andameansofinvestmentrisksmit cess to this information of all concerned. The purpose of such cess to this information of all concerned. company, including its finance situation, business manage- clares principles,rulesandapproaches ofinformationdisclo comprehensiveness, aswellmaintainingreasonable bal considers ittobeatooldefensethelegalinterests ofthe registrar licensedtomaintain theregister bythefederalexecu other rights. of providing the information about the Company, information and reliable informationon allthesubstantive issues of the at theirownjudgment,takeanyactionsiftheydon’t contradict actions whichcanaffect theCompany’s business. aimed atproviding thebalanceofmutualinterests as wellas ers, executivesoftheCompanyandallpersonsconcerned, sure theCompanyanditsactivity. concerned Thusthebasic availability forshareholders itsreliability andallconcerned, and parties, participateintheprofits oftheCompany, therightto pany, andfair andequaltreatment ofallshareholders, regard pany are: potential anditsshareholder value,tomaintainthegoodwillof poses andpublicinterests. providing themanagementofCompany, control ofitsac principle ofinformationdisclosure isregularity andefficiency ment, socialandenvironmental indicators,ownershipstruc be regularly andpromptly informedabouttheCompanyand by theapplicablelegislationoncorporations,aswell disclosure totheextentnecessary istoinformallconcerned ment and development of the corporation management and less howmanyshares theyown. is realized by the shareholders by taking decisions on substan is provided bymaintenance ofashare register byaspecialized igation andoutsidefundscosts,enhancementofinvestment The righttotakepartinthemanagementofCompany The Companyensures timelydisclosure ofcomprehensive The Companyprovides itsshareholders aviablepossibility To realize theprincipleoftransparency theBoard ofDirec The basic principles of corporate management of the Com- The Companyadheres tothepolicyofconstantimprove The CharteroftheCompany, andotherinternaldocuments,regulating thecorporationmanagement,andactivityofmanagementcontrolauthorities are Shareholders havetheright tomakefree useoftheirshares Corporate managementmeanscombinationofprocesses Realizable andefficient observation ofshareholders’ rights ------Auditing Committeeaswellengagementofanindependent Accountability with theCorporateConductCode,recommended bytheFed- which isthesuperiorauthority. the managementofCompanyonsideBoard of tive issues, concerned theprovidingtive issues,concerned offinancialandbusiness tegic managementofitsactivity, takesdecisionsonsubstan the RussianInstituteofDirectors indicatestheefficiency ofthe Responsibility National rating of Corporation management of Corporation rating National Directors and its accountability to the shareholders meeting corporate managementprovides theconfidenceinCompa confidence intheCompany. corporate managementandrateriskleveloftheman 04.04.2002), isshownintheapplicationofthisReport. of theCompanyaimedatprotection oftherightsandlegal eral Committee on theequity market (Order datedNo421/r ensures efficient control overtheIndependentExecutiveand employees, andtocooperatewithsuchpeopleforthepur includingits and accountingtheirrightswithallconcerned, efforts tobuildtherelationship ontheground ofmutualrespect events aimed at enhancement of the practice of corporation events aimedatenhancement ofthepracticecorporation ance betweentheopennessofCompanyandsafeguard- agement isoneofthemostimportantaspectsefficient auditor foraccountinspection. a transparent procedure ensuringthattheBoard ofDirectors awarded tothecompanyon10.07.2011was5,i.e.“Inter agement ofRussianenterprisesforinvestors.Highriskleveland poses ofitsowndevelopmentandensuringfinancialstability. pany onbettertermsandenhancingtheimageofCompany. mediate Practice of corporate management”. Summing up the mediate Practiceofcorporatemanagement”. Summingupthe management oftheCompany. management ofitscurrent practiceandreports totheshare- meets thelegalrequirements andshareholders’ interests. ny onthepartofinvestors,includingthosewhoprovides capital development oftheCompany. Theproper levelofpractice holders meeting. loans, andthusattractinginvestmentsloanstotheCom ified bytheapplicablelawofRussianFederationandtake ing itscommercial interests. interests oftheshareholders isensured bytheactivityof its growth enhance investors’ and shareholders’ and customers’ The systemofcorporatemanagementtheCompany The information concerned theCompany’sThe informationconcerned compliance The Companyrecognizesspec- the rightsofallconcerned, The Board ofDirectors oftheCompanyprovides thestra The electionoftheBoard ofDirectors iscarriedoutthrough The first rating of the quality of the corporate management, The firstratingofthequalitycorporatemanagement, The Rating of the corporate management (RCM) given by The Ratingofthecorporatemanagement(RCM)givenby Efficient control over financial and business management In the modern contextadvancementofthecorporateman In themodern Independent ExecutiveoftheCompanycarriesout ------management the NP “Russian Institution of Directors” raised in February 2013 and conferred in September 2013 the Compa- ny’s rank of the corporate management rating “6” – “Developed Practice of Corporate Management”. The growth of the rating confirms the efficiency of the com- pany improvement of the corporate management and attests to the fact that the company has reached a higher level of the practice of the Company’s corporate management. The rating indicates that the Company complies with the requirements 69 of the Russian legislation regarding corporate management, follows the basic recommendation of the Russian Corporation Conduct Code and certain recommendations of international practice of corporation management.

The Company intends to persist the improvement of the 2013 practice of the corporate management; it has prerequisites to improve the rating, which reflects the level of the practice of corporate management and aspires to its further improvement. ANNUAL REPORT ANNUAL 70

CORPORATE MANAGEMENT • • • “Shareholders andInvestors/Charter internalregulations”). 6.2. COMPANY’S CONTROL AUTHORITIES “Shareholders andInvestors/Charter and internalregulations». viding thegeneralmanagementofCompany, excludingtheis tion ofprofit ofthefiscalyear 2012,electedthenewBoard of the raiseofequitycapitalJSC“GridCompany”bysell the Company. TheactivityoftheBoard ofDirectors isregulated Company’s Board of Directors Board Company’s Shareholders meetingShareholders Directors, AuditingCompany andtheAuditorofCompany. Regulation ontheBoard ofDirectors oftheJSC“GridCompany”. Federal Law“Corporations”andtheCharter(articlesofas Federation, theCharterandRegulationsonshareholders Federal Law “On Corporations”, other legal acts of the Russian control authoritiesoftheCompanyare determined by the and approved of the annual report, annual account, alloca- sociation) oftheCompany. summing upoftheshareholders meetingare determined bythe aspects ofitsactivity. and determines the strategy and the directions of development of and determinesthestrategydirections ofdevelopment sues whichare underthejurisdiction oftheshareholders meeting, pany” thefollowingbodiesofauthorityworkinCompany: body of authority, taking decisions on the most important meeting oftheJSC“GridCompany”. by the legislation of the Russian Federation, the Charter and the by thelegislationofRussianFederation,Charterand ing newshares andapproval oftherelated partytransactions. ing ontheresults of2011, and aspecialshareholders meeting. The Board ofDirectors; The annualshareholders meeting of27.06.2013discussed The Board ofDirectors isanauthoritybodyresponsible forpro The shareholders meetingistheCompany’s superior The structure andcompetenceofthemanagement The principlesofconvocation,preparation, carryingoutand The specialshareholders meeting of02.04.2013discussed The RegulationontheBoardofDirectors oftheJSC“GridCompany”isplacedonofficialsiteCompany The Regulationontheshareholdersmeeting oftheJSC“GridCompany”isplacedonofficialsiteCompany Shareholders meeting; During thefiscalyearCompanyhadashareholders meet- In correspondence withtheCharterofJSC“GridCom Independent Executive(Director General). - - - - - • • • • • • • • tors oftheCompanyare: Directors oftheCompany isguidedbythefollowingprin ciples: of Directors wasrepresented bythree compositions.Charter and internal regulations”).and internal determined bytheCharter, i.e.9people.In2013theBoard The quantitativecompositionof the Board of Directors is To realize theabovepurposesandtasksBoard of The fundamentaltargetsandtasksoftheBoard ofDirec viding control overtheprocess ofrisksmanagement and ensuringthecompletion,trustworthinessandobjec to takepartinCompany’s activity, dividendrightsandthe taking decisionsonthebasisofreliable informationabout trol overthefinancialandbusinessmanagementof tive characterofinformationdisclosure forshareholders Company’s activity; Company andtheactivityofIndependentExecutive. of shareholders andadoption themostimpartialdecision creation ofefficientcontrol mechanismsofinternal and pro- achievement ofthebalancebetweendifferent group access totheinformationaboutCompany; elimination of restrictions oftherights the shareholders and itsmanagementdepartments,providing efficient con estimation oftheresults oftheCompany’s performance and others concerned; and othersconcerned; shareholders oftheCompany, assistanceinthesettle ensuring theexercise andprotection oftherights the egy oftheCompany, aimedattheachievementofmaxi poses of the Company concerned risksmanagement; poses oftheCompanyconcerned by theBoard ofDirectors forthebenefitofallshare holders oftheCompany. pany, enhancementofitsinvestmentappeal; determination ofthedirection control of the internal andpur ment ofcorporateconflicts; mum profit andtheincrease oftheassetsCom determination ofprioritydirections ofactivityandastrat http://www.gridcom-rt.ru inthesection http://www. gridcom-rt.ruinthesection ------Operating composition of the Board of Directors of the company (elected 27.06.2013):

71

KHALIKOV Ildar Shafkatovich 2013 Chairman of Board of Directors Born in: 1967 Education: higher Citizenship: Russia

Career for the last 5 years: REPORT ANNUAL • January 2006 – April 2010 – Head of municipality, Naberezhnye Chelny, mayor; • April 2010 – up to the present – Prime Minister of the Republic of Tatarstan Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

FARDIYEV Ilshat Shaehovich

Deputy Chairman of the Board of Directors Born in: 1960 Education: higher Citizenship: Russia Career for the last 5 years: • February 2002 – April 2010 – Director General of the JSC “Tatenergo”; • April 2005 – April 2010 - Director General of the JSC “Generating Company”; • April 2010 – May 2012 - First Deputy Prime Minister of the Republic of Tatarstan – the Minister of Energy of the Republic of Tatarstan; • May 2012 - up to the present – Director General of the JSC “Grid Company”. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

BAGMANOV Hamza Azalovich

Born in: 1957 Education: higher, Candidate of Economic Science Citizenship: Russia Career for the last 5 years: • October 2005 - June 2012 – Director General of the JSC “TANEKO”; • June 2012 - May 2014 – Deputy Ministry of Industry and Trade of the Republic of Tatarstan; • May 2014 - up to the present – General director Deputy of strategic development of the JSC “Generating Company”. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company. 72

CORPORATE MANAGEMENT YEVSEEV AlexanderYEVSEEV Nikolayevich • • • • • PAHOMOV Alexei Mihailovich NADYRSHIN Marat Gabdulbarovich Career forthelast5years: Citizenship: Russia Career forthelast5years: Citizenship: Russia Career forthelast5years: Citizenship: Russia No familyrelations oftheCompany. withtheofficials andthemembersofAuditingCommittee Doesn’t holdshares intheCompany. Energy Agency. No familyrelations oftheCompany. withtheofficialsandmembersofAuditingCommittee Doesn’t holdshares intheCompany. No familyrelations oftheCompany. withtheofficialsandmembersofAuditingCommittee Doesn’t holdshares intheCompany. International AcademyofEcology,International ManandNature protection SciencesandInternational Education: higher, Candidate ofTechnical Science,corresponding memberofthe Born in:1954 Education: higher, Candidate ofEconomicScience Born in:1945 Education: higher. Born in:1970 “Association andentrepreneurs ofenterprises oftheRepublicTatarstan”. June 2010 – up to thepresentJune 2010–upto –Director General oftheRegional UnitofEmployers June 2005–December2011amemberoftheCouncilFederation oftheFederal June 2009–April2014DeputyExecutive Director ofthenon-profit institution“Presi- Assembly oftheRussianFederation, arepresentative ofthelegislationbodystate the RepublicofTatarstan”; tive officeofthenon-profit institution“Presidential State HousingDevelopmentFund of engineer oftheJSC“TheShashinTatneft”. November 2007 – May 2009 – the head of the department oftheregionalNovember 2007–May2009theheadofdepartment representa- anuary 2002 – up to thepresent 2002–upto anuary –headoftheEnergy –chiefpower Department power oftheRepublicTatarstan; dential State HousingFund oftheRepublicTatarstan” oftheproperty management. FASKHIEV German Nikolaevich 73

Born in: 1962 Education: higher

Citizenship: Russia 2013 Career for the last 5 years: • January 2008 – January 2010 – chief adviser of the Industrial Department of the Cabinet of Ministers of the Republic of Tatarstan • January 2010 – September 2013 – deputy chief of the Industrial Department of the

Cabinet of ministers of the Republic of Tatarstan REPORT ANNUAL • September 2013 – up to the present – chief of the Industrial Department of the Cabinet of ministers of the Republic of Tatarstan. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

HAIRULLIN Airat Rinatovich

Born in: 1981 Education: higher Citizenship: Russia Career for the last 5 years: • March 2008 - April 2010 – chief of the department of inforcomms, information security and inventory and logistics management of the Cabinet of Ministers of the Republic of Tatarstan; • April 2010 – January 2011 – deputy chief of the Cabinet of ministers of the Republic of Tatarstan; • January 2011 – May 2012 - Deputy Chief of the Cabinet of Ministers of the Republic of Tatarstan – Executive officer ; • May 2012 – up to the present – Assistant to the President of the Republic of Tatarstan. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

YURTAYEV Alexander Nikolayevich (positions held as of 31.12.2013)

Born in: 1951 Education: higher, Doctor of Economics Citizenship: Russia Career for the last 5 years: • November 1998 – January 2011 – Head of the Information Analysis Department of the Cabinet of Ministers of the Republic of Tatarstan; • January 2011 - May 2012 – Head of the Information Analysis Department of the Presi- dent of the Republic of Tatarstan; • May 2012 - September 2012 – General director Deputy of information technologies of the JSC “Grid Company”; • September 2012 – August 2013 – Chairman of the Auditing Committee of the Board of Directors of the JSC “Grid Company”. • August 2013 -withdrew from the Board of Directors of the JSC “Grid Company” be- cause of the death. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company. 74

CORPORATE MANAGEMENT • Yurtayev Alexander Nikolayevich Hamayev AzatKiyamovich Pahomov Alexei Mihailovich Nadyrshin Marat Gabdulbarovich Yevseev Alexander Nikolaevich Volodkevich Alexands Petrovich Bagmanov HamzaAzalovich Fardiev IlshatShaehovich Halikov IldarShafkatovich 27.06.2013): to 14.09.2012 from office of (term meeting shareholders annual the to up acting Company the of Directors of Board The Year Fiscal the in of Directors of Board the Composition the in Changes The work forthesecondhalfof2012–first2013wasap the second half of 2013 – first half of 2014 – by the approval Yurtaev Alexander Nikolaevich Hamaev AzatKiyamobich Pahomov Alexei Mihailovich Nadyrshin Marat Gabdulbarovich Yevseev Alexander Nikolaevich Volodkevich Alexander Petrovich Bagmanov HamzaAzalovich Fardiev IlshatShaehovich Halikov IldarShafkatovich on 25.10.2013. ence -6). proved bytheBoard ofDirectors on14.09.2012.Theplanfor proved Plansofworkthe Board ofDirectors. Theplanof ing meetingswithremote presence –7,withphysicalpres Data of the meetings of the Board of Directors in 2013 in of Directors of Board the of meetings the Data Directors of Board the of members the of participation about Information in the meetings of the Board of Directors in 2013: in Directors of Board the of meetings the in “road map”)wascalledone oftheprioritiesCompany’s The followingquestionswere considered: There were 13meetingsoftheBoard ofDirectors (includ The workoftheBoard of Directors isbasedontheap- the availabilityofenergeticinfrastructure (realization ofthe terrupted powersupplytothefacilitiesofWorld Summer tion andcustomeraffairs; Universiade 2013, the Planof Capital Construction, imple riods of 2013-2014, implementation of the events to enhance riods of2013-2014,implementationtheeventstoenhance on production activityofthe Company:reliable andnon-in activity, theenhancement ofthecurrent levelofmaintenance mentation of events to prepare for the autumn and winter pe- in thesphere ofproviding servicesoftechnologicalconnec Chairman of the Auditing Committee oftheBoardChairman oftheAuditingCommittee ofDirectors oftheJSC“GridCompany” ofLandandPropertyThe Minister RelationsoftheRepublicTatarstan Tatarstan” Director General oftheRegionalUnitEmployers“Association andentrepreneurs ofenterprises oftheRepublic Republic ofTatarstan” oftheproperty management Executive Director oftheDeputynon-profit institution“Presidential State HousingDevelopmentFund ofthe Head oftheEnergy -majorpowerengineeringspecialistoftheJSC“TheShashinTatneft” Department the interaction withthegovernmentbodies Assistant Deputy Minister of Industry andTrade ofIndustry Deputy Minister oftheRepublicTatarstan Director General oftheJSC“GridCompany” Deputy ChairmanoftheBoard ofDirectors Prime oftheRepublicTatarstan Minister Chairman oftheBoard ofDirectors

Deputy physical attendance physical attendance

Director Meeting with

General 1 2 2 2 1 2 2 2 2

of ------

the • • • remote attendance

JSC 100 deals in which the Company holds an interest; 100 dealsinwhichtheCompanyholdsaninterest; technological activity of the Company in the corresponding technological activityoftheCompanyincorresponding the results oftariff regulation in 2013, approved the Budget the emissiondocumentsofCompanytoregister andad the shareholders meeting, issues inrelation withpreparation the scheduleandcandidatesforBoard ofDirectors Charter oftheCompany. of Directors by the Federal Law “On Corporations” and the of Directors bytheFederal Law“OnCorporations”andthe other questionsreferred tothecompetenceofBoard on corporationmanagement:theBoard ofDirectors consid of theCompanyfor2013,considered theissuesofcharitable on financial-economicactivityoftheCompany:considered assistance, budget execution and the results of financial and assistance, budgetexecutionandtheresults offinancialand and implementation of shareholders meetings, considered and AuditingCommitteeoftheCompanytobeelectedat ered thesuggestionsof shareholders oftheCompanyon periods of2013; ditional issue of private-trade securities, and approved about

“Kazan Meeting with

Helicopter 3 4 3 4 3 4 4 4 4

plant”

Percentage ofallthemeetings ofattendance of

the

science Period from01.01.2013to26.06.2013

positions heldasof31.12.2013 and

technology

strategy 66,7% 83,3% 66,7%

100% 100% 100% 100% 100% 100% оn

- - Information about participation of the members of the Board of Directors in the meetings of the Board of Directors in 2013: Period from 27.06.2013 to 31.12.2013 Meeting with Meeting with Percentage of attendance of all the meetings physical attendance remote attendance Halikov Ildar Shafkatovich 3 3 100% Fardiev Ilshat Shaehovich 3 3 100% Bagmanov Hamza Azalovich 3 1 66,7% 75 Yevseev Alexander Nikolaevich 3 3 100% Nadyrshin Marat Gabdulbarovich 3 3 100% Pahomov Alexei Mihailovich 3 3 100%

Faskhiev German Nikolaevich 3 3 100% 2013 Hairullin Airat Rinatovich 2 3 83,3% Yurtaev Alexander Nikolaevich * – – –

* withdrew from the Board of Directors of the JSC “Grid Company” in August 2013 because of the death REPORT ANNUAL

Participation of the members of the Board of Directors pany and determining the legal status, targets and aims, rights, du- in the meetings of the Board of Directors made up 92,2% in ties, structure and composition of the Committees. 2013 on the average. Board Audit Committee Committees of the Board of Directors of the Company The Board Audit Committee ensures the real participation For preliminary consideration of the most important issues of the Board of Directors in providing control over the financial and preparation of recommendations to the Board of Directors and business activity of the Company, as well as its coop- on making decisions on these issues there are the committees eration with the Auditing Commission and the Auditor of the of the Board of Directors – consulting–deliberative body, en- Company. suring the efficient performance of its functions by the Board The Board Audit Committee acts in compliance with the of Directors of the Company: Regulation on the Board Audit Committee, approved by the Board of Directors of the Company on 05.07.2007 (record of • Board Audit Committee; proceedings No10 dated 07.07.2007). The Board Audit Com- • Board Staff and Awards Committee; mittee is composed of the members of the Board of Directors. • Board Innovation Committee. The Board Audit Committee was elected by the Board of Directors of the Company on 25.10.2013. The meetings of the The Committees are not command units of the Company and Board Audit Committee are carried out in accordance with the don’t have the right to act on behalf of the Company. The Commit- Plan of Activities approved by the Committee and worked out tees of the Board of Directors act on the basis of the Regulations consistent with the Plan of Activities of the Board of Directors on Committees, approved by the Board of Directors of the Com- for the corresponding period.

The composition of the Board Audit Committee of the Company:

Hairullin Airat Rinatovich The Chairman of the Board Audit Committee of the JSC “Grid Company” Assistant to the President of the Republic of Tatarstan Fardiev Ilshat Shaehovich General Director of the JSC “Grid Company”

Nadyrshin Marat Gabdulbarovich Executive Director of the Deputy non-profit institution “Presidential State Housing Development Fund of the Republic of Tatarstan” of the property management.

There were five meetings of the Board Audit Committee of of internal control system of elimination and prevention pos- the Company, where they considered recommendations of the sible risks of the Company, considered the annual report and Board of Directors on the prices of registered nominal shares annual book-keeping report of the Company for 2012, gave of additional issue, the changes in accounting policy of the recommendations to the Board of directors of the Company company in2013, analyzed of the candidates for the external on the project of profit distribution as of the end of 2012, on auditor of the Company, considered the results of the moni- approval of the candidate for the independent auditor in 2013, toring of the financial and economic activity of the Company, evaluated the candidates for an independent auditor of the analyzed the current budgeting system, management ac- Company and considered the results of the competitive tender counting and recording, as well as organization of the system for the selection of an independent auditing company.

The Regulation on the Board Audit Committee of the JSC “Grid Company” is presented on the official web-site of the Company http://www.gridcom-rt.ru in the section “For Shareholders and investors/the Charter and internal documents”. 76

CORPORATE MANAGEMENT • in the section “For Shareholders and investors/the Charter and internal documents”. internal and Charter investors/the and Shareholders “For section the in in the section “For Shareholders and investors/the Charter and internal documents”. internal and Charter investors/the and Shareholders “For section the in Composition of the Company’s Board Staff and Award Committee Committee Award and Staff Board Company’s the of Composition Board and Staff Awards Committee The Board Innovation committee was elected by the Board of Directors of the Company on 25.10.2013: on Company the of Directors of Board the by elected was committee Innovation Board The Mazitov AzatIlgizovichMazitov Karpenko OlegIvanovich Galeev Eduard Gennadievich Galimzyanov RashatHammatovich Vasiliev Yury Alexandrovich Bagmanov HamzaAzalovich Faskhiev GermanNikolaevich Yevseev Alexander Nikolaevich Pahomov Alexei Mikhailovich the staff trainingproblems inlightofdevelopmenttheeco Committee, where theCommittee evaluatedthecandidates financial situation,aswellthesituationinmarket,etc. for Auditingcommission,analyzedtheemployeeincentivepro cy ofstaff traininginrelation totheListofInstructionsapproved gram, considered the measures on the enhancement of efficien of theCompany implemented thefollowing work during2012: of thepersonnelpolicyCompany, monitoringthebalance on thedirections ofpersonnelpolicy, estimationoftheefficiency relation tothepersonnelpolicyandawards, including references 02.11.2012 basedontheresults oftheRepublicCommitteeon ance withtheRegulationonBoard Staff andAwards Com and givingadvicetotheBoard ofDirectors oftheCompany in suggested by the shareholders for the Board of Directors and mittee, approved bytheBoard ofDirectors oftheCompanyon between thecriteriaofawarding policyoftheCompanyandits by thePresident oftheRepublic ofTatarstan R.Minnihanovon nomics oftheRepublicTatarstan heldon13.10.2012. The Board Staff andAwards Committeeactsincompli The Board InnovationCommitteeoftheBoard ofDirectors There were three meetingsoftheBoard Staff andAwards The Board Staff andAward Committeeensures workingout The Regulation on the Board Innovation Committee of the JSC “Grid Company” is presented on the official web-site of the Company Company the of web-site official the on presented is Company” “Grid JSC the of Committee Innovation Board the on Regulation The The Regulation on the Board Staff and Awards Committee of the JSC “Grid Company” is presented on the official web-site of the Company Company the of web-site official the on presented is Company” “Grid JSC the of Committee Awards and Staff Board the on Regulation The Worked outthelogisticsdocumentationregulating thein- novation activityoftheCompany: Deputy Director General oftheJSC“GridCompany”oninvestment Information System Development Director oftheJSC“GridCompany” Director oftheJSC“SOEES”RDORepublicOfTatarstan oftheaffiliate Deputy Director General oftheJSC“GridCompany”–engineeringDirector innovation development. Deputy ofChiefTechnology OfficeroftheJSC“GridCompany”forpreparation andholdingUniversiade deputy General Director oftheJSC“Generating Company”onstrategic development Chairman oftheInnovationCommittee, Board Staff andAwards oftheJSC“GridCompany” Committee oftheCabinetChief oftheIndustrialDepartment oftheRepublicTatarstan, ofministers memberofthe member oftheBoard Staff andAwards oftheJSC“GridCompany” Committee Head oftheEnergy -majorpowerengineeringspecialistoftheJSC“TheShashinTatneft”, Department Unit ofEmployers“Association andentrepreneurs ofenterprises oftheRepublicTatarstan”. IndependentDirector The ChairmanoftheBoard Staff andAwards oftheBoard Committee ofDirectors Director General oftheRegional - - - - - The meetingsoftheBoard Staff andAwards Committee The Board Staff andAwards Committee is composedofthe 1. 2. the PlanofActivitiesBoard ofDirectors forthecor the RegulationonBoard InnovationCommittee,approved Committee PlanofActivitiesworkedoutconsistentwith cord ofproceedings No22dated20.05.2011). giving references totheBoard ofDirectors oftheCompany responding period. 05.07.2007 (record of proceedings No10 dated 07.07.2007). are carried out in accordance with the approved by the application andintroduction ofpilotprojects, advanced as theresults oftheirrealization, consultingontherational provide itsstableefficient innovationdevelopment. by theBoard ofDirectors oftheCompanyon14.09.2012. members oftheBoard ofDirectors. by theBoard ofDirectors oftheCompanyon19.05.2011(re determining thedirections and priorityprojects ofR&Daswell innovation technologiesandmaterialsintheCompany’s unitsto in relation totheinnovation developmentoftheCompany,

The Board Staff andAwards Committeewaselected The Board InnovationCommittee actsincompliancewith The Board InnovationCommittee ensures workingoutand Policy of Innovation Development of the JSC “Grid Com- Board Innovation Committee Innovation Program for2011–2015oftheJSC“GridCom pany” pany”; http://www.gridcom-rt.ru http://www.gridcom-rt.ru - - -

• Completed the science research “Providing standard flux- • For the purposes of successful work during the winter distribution of reactive power in the energy system of the heating period of 2012–2013, and providing а reliable Republic of Tatarstan on the stages of its production trans- power supply to the facilities of the Universiade 2013 the mission and consumption”; committee developed and introduced the following regu- • Completed the science research “Development of speci- lating technical documents: fications of the object “Digital substation” and started the second stage — “Creation of the model and operating • “Guideline on providing electromagnetic compatibility testing ground” “Digital Substation”; of the secondary equipment and communication sys- • Implemented the work on conclusion a contract “Gen- tems of the facilities of the JSC “Grid Company”; 77 eral Agreement of Partnership and Strategic Coopera- • “Manual on providing electromagnetic compatibility at tion” between the JSC “Grid Company” and the leading the facilities of the electrical network economy of the Russian companies: the JSC “NIIPT” (S.-Petersburg), CC JSC “Grid Company”; “Profotek” (Moscow), LLC RPE “EKRA” (Cheboksary), CC • Manual on providing remote and local backup of the

“EnergoPromAutomatization” (S.-Petersburg), CC “Ener- relay protection in the networks of 6 (10)-500 kV of the 2013 gozaschita” (Kazan); JSC “Grid Company”. • In the framework of the long-term target program “Energy Saving and the enhancement of energy efficiency in the Re- • As assistance to the enterprises owners of the sports facili- public of Tatarstan for 2010–2015 and up to 2020” in the ties of the Universiade 2013 “The Review of power back-

JSC “Grid Company” the Innovation Committee is taking up supply to the customers and recommendations on their REPORT ANNUAL part in the realization of the pilot project “Smart Network”. usage was issued”.

1. Investigation of the situation with the stream of react power Independent Executive of the Company (Director General) and development of measures to compensate the react power in the power networks of the JSC “Grid Company”; The management of the current activity of the Company 2. Creation of the unit “Digital Substation” in the JSC is performed by the independent executive – Director Gen- “Grid Company”; eral, who reports to the shareholders meeting and the Board 3. Development of the project “Smart technologies in the of Directors. distribution power complex JSC “Grid Company”; In compliance with the Charter of the Company the elec- 4. Connection of minor distributed generation to the elec- tion of Director General and early termination of the term of tric Development of an integrated automatic system of office is implemented by the Board of directors. power accounting at the level of business units of the Director General guaranties the achievement of the de- power supply networks; clared targets of the Company and is responsible for the reali- 5. Development of an integrated power metering system zation of the adopted strategy. on the scale of power network plants. Rights and obligations of Director General are determined 6. Introduction of the diagnostic complex of monitoring by the Federal Law “On Corporations”, other legal acts of the and estimation of the technical condition of the energy Russian Federation, the Charter and Regulation on Director equipment; General of the Company, as well as the labour contract con- 7. Creation of the digital metering system. cluded by the Director General and the Company.

Fardiev Ilshat Shaehovich

Born in: 1960 Education: higher Citizenship: Russia Career for the last 5 years: • February 2002 – April 2010 – Director General of the JSC “Tatenergo”; • April 2005 – April 2010 - Director General of the JSC “Generating Company” ; • April 2010 – May 2012 – Deputy Prime Minister of the Republic of Tatarstan – the Minister of Energy of the Republic of Tatarstan ; • May 2012 - up to the present – Director General of the JSC “Grid Company” Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

The Regulation “On Director General” of the JSC “Grid Company” is presented on the official web-site of the Company http://www.gridcom-rt.ru in the section “For Shareholders and Investors/the Charter and internal documents”). 78

CORPORATE MANAGEMENT section “ForShareholdersandinvestors/the Charterandinternaldocuments”. Alexandrovna Valeriya Prozorova with the decision of the shareholders meeting and depends on the with thedecisionofshareholders meetinganddependsonthe the specialshareholders meeting on12.11.2012(record ofpro the Board ofDirectors oftheJSC“GridCompany”,adoptedat to themembersofBoard ofDirectors oftheCompanyare pre the membersofBoard ofDirectors, althoughitisnotinconceiv the periodinquestion. the remuneration totheBoard ofDirectors ispaidinaccordance to article 13 of the Charter of the Company theBoard of Directors Secretary initsstructure meetstherequirements ofthead Estimation criteria and information about premium Corporation Secretary of Company the Secretary Corporation ceedings No28 dated 14.11.2012). In accordance with article 66 ceedings No28dated14.11.2012).Inaccordance witharticle66 cials’ compliancewithcorporationprocedures, established byleg and Independent Executive of Company the Executive Independent and of the members of the members of the Board of directors during results oftheactivityCompany andindividualperformance of theFederalLaw“OnCorporations”andaboveRegulation payments to the members of the Board of Directors of Directors of Board the to members the payments sented in the Regulation on costs, awards and compensations to sented intheRegulationoncosts,awards andcompensations to able thatsuchpaymentswillbepaidinthefuture. elected theCorporationSecretary oftheCompany. sure andaccesstotheinformationaboutCompanyaccording ers meetings,theactivityofBoard ofDirectors, keeping disclo premium payment during 2013 for management activity was the premium payment during 2013 for management activity was the including those concerned preparationincluding thoseconcerned andcarryingoutsharehold documentsoftheCompany,islation, theCharterandotherinternal The criteria determining the remuneration and compensations The criteriadeterminingtheremuneration andcompensations The only member of the management body who was paid the The onlymemberofthemanagementbodywhowaspaid The fact that the Company has a position of Corporation The fact that the Company has a position of Corporation At present theCompanydoesn’t paypremium paymentsto The Regulation on the Corporation Secretary oftheJSC“Grid Company”ispresentedintheofficialweb-siteofCompany The RegulationontheCorporationSecretary For thepurposesofCompany’s executivebodiesandoffi • • • Career forthelast5years: Citizenship: Russia No familyrelations withtheofficialsandmembersofAuditingCommitteeCompany. Doesn’t holdshares intheCompany. Education: higher Born in: 1974 April 2009 - up to thepresentApril 2009-upto –headoftheCorporation oftheJSC“GridCompany”; RelationshipsDepartment Elected: 23.11.2012(recordElected: ofproceedings oftheBoard ofDirectors 26.11.2012). No5/2012dated November 2006–March 2009–headoftheCorporation RelationshipsSectionoftheJSC“GridCompany”; ------The information about the deals of interest and big deals big and of interest deals the about information The JSC “Grid Company” - Fardiev Ilshat Shaehovich. JSC “GridCompany”-Fardiev IlshatShaehovich. vanced practice of corporation management, and attributes vanced practiceofcorporationmanagement,andattributes tached asaScheduletothisReport. the FederalLaw“OnCorporations”dealsofinterest ap to thegrowth oftrustonpartshareholders andothers con financial indexesoftheperformanceCompany. Law “OnCorporations”bigdealswere notcompletedin2013. Director Generalanddepends onthemajortechnicaland centives oftheIndependentExecutiveCompanyare Board ofDirectors andreports totheBoard onhis/heractivity. Board ofDirectors oftheCompanyon23.11.2012 (record of cerned. regulated byvalidregulations onmaterialincentivesofthe Independent ExecutiveoftheCompany, Director Generalofthe employment contract.Besidestheissuesofmaterialin- of the Russian Federation, the Charter and the internal docu of theRussianFederation,Charterandinternal ration Secretary oftheJSC“GridCompany”,approved bythe eral Law“OnCorporations”andotherregulatory andlegalacts proved bythemanagement oftheCompanyin2013isat proceedings No5/2012dated26.11.2012). ments oftheCompany, aswelltheRegulationonCorpo- in compliance with the legislation concerning personaldata. in compliancewiththelegislationconcerning is afixedamount(monthlysalary)inaccordance withthe The informationinthissectionoftheannualreport ispresented The premium paymentto theIndependentExecutive The deals acknowledged in the compliance with the Federal The dealsacknowledgedinthecompliancewithFederal The listofdealsacknowledgedinthecompliancewith The Corporation Secretary of the Company follows the Fed- The CorporationSecretary oftheCompanyiselectedby http://www.gridcom-rt.ru inthe - - - - Company’s Capital Stock

The Company’s authorized capital as of 31.12.2013 totals eighty thousand seven hundred seventy eight) common reg- 6 540 732 309 (six billion five hundred forty million seven hun- istered shares with the nominal value of 0.5 rubles. dred thirty two thousand three hundred and nine) rubles. In virtue of the decision of the extraordinary general meet- The Company has placed 13 081 464 618 (thirteen billion ing of shareholders of the Company dated 02.04.2013 to in- eighty one million four hundred sixty four thousand six hun- crease the authorized capital the Federal Service for Financial dred eighteen) common registered uncertified shares with the Markets registered an additional issue of common registered nominal value of 0.5 rubles. undocumented equities placed through private offering. The 79 The number of authorized shares totals 1 323 880 778 issue dated 27.06.2013 was registered under the national (one billion three hundred twenty three million eight hundred registration number 1-02-65007-D-005D.

Distribution of common registered shares of the Company as of 31.12.2013 2013

Name of the Shareholder Number of shares % ANNUAL REPORT ANNUAL The Republic of Tatarstan represented by Ministry of Land and Property 10 722 583 224 81,97 Relations of the Republic of Tatarstan

Presidential State Housing Development Fund of the Republic of Tatarstan 1 240 097 292 9,48

Other legal persons with less than 5% of shares each 1 118 784 102 8,55

Total: 13 081 464 618 100

9,48

8,55

81,97 The Republic of Tatarstan represented by Ministry of Land and Property Relations of the Republic of Tatarstan Presidential State Housing Development Fund of the Repub- lic of Tatarstan Other legal persons

The Company didn’t place the preferred stock. The struc- ture of the authorized capital of the JSC “Grid Company” is characterized by the absence of cross shareholding.

The information about the structure of the authorized capital of the JSC “Grid Company” is presented in the official web-site of the Company http://www.gridcom-rt.ru in the section “For Shareholders and investors/Authorized capital”). 80

CORPORATE MANAGEMENT * thenumberofshareslistedincludesplacedfromadditionalofferings, Information about Company’s Securities nvestors/Capital Stock”). Stock”). nvestors/Capital No.11-46/pz-n. Act by FFMS 04.10.2011 approved dated at found be Securities can Issued of Issuers for Statute of Registration State Registration NumberandDate 1-02-65007-D dated 03.08.2004 1-02-65007-D dated Second offering ofcommonregistered shares 1-02-65007-D-005D dated 27.06.2013 1-02-65007-D-005D dated 17.03.2011 1-02-65007-D-004D** dated 28.05.2009 1-02-65007-D-003D*** dated 29.01.2008 1-02-65007-D-002D** dated 25.05.2006 1-02-65007-D-001D** dated The following additional offerings ofsecuritieswere registeredby thestate: 1-01-65007-D dated 26.02.2002 1-01-65007-D dated Initial offering ofcommonregisteredshares * individual numbers(codes)ofwhichhavebeencancelled To find out more about the Company’s securities you can also visit the Company’s official page page official Company’s the visit also can you securities Company’s the about more out To find Documents containing registered decisions about stock offerings (additional offerings) of the Company according to the requirements of section 8.6 of the Disclosure Disclosure the 8.6 of section of requirements to the according Company the of offerings) (additional offerings stock about decisions registered containing Documents Method ofplacement Conversion (splits) Private offering Private offering Conversion (assimilation) Private offering Conversion (assimilation) Founders Distribution among Number ofplacedshares, ** individualnumber(code)oftheadditionalofferingwascancelleddueto expiration ofathree-monthperiodsincethedatestateregistration additional offeringplacementreport 21 4 9 1 1

681

515 702 777 641 055 276 745600

464 618*

463 918 828 383 778 000 365 000 180 239 pc. http://www.e-disclosure.ru/portal/ company.aspx?id=1830. http:// www.gridcom-rt.ru (section “Shareholders and http:// www.gridcom-rt.ru Nominal value, rubles 0,5 0,5 0,5 0,5 0,5 0,5 1 Is beingplaced Cancelled placed placed placed placed placed Status Company’s Dividend Policy • the principles include the following the key factor for taking the decision about dividend payment (non-distribution of dividend) The Company’s dividend policy is based on accommo- is a balance of the Company’s and its shareholders’ interests as dating both the Company’s and the shareholders’ interests well as the necessity to provide reliable and stable power sup- while making the decision about dividend payment (non- ply to consumers connected to the Company’s electric lines; distribution of dividend) and its value; as well as respecting • the key factor for taking the decision about dividend pay- shareholders’ rights envisioned by the existing legislation ment (nondistribution of dividend) is a balance of the of the Russian Federation and the Company’s Regulations. Company's and its shareholders' interests as well as the The policy is designed to make the Company more appeal- necessity to provide reliable and stable power supply to 81 ing to investors and to capitalize the Company. consumers connected to the Company's electric lines; Statute about the dividend policy of JSC “Grid Com- • the Company's Board of Directors can give general meeting pany” (version approved by the Board of Directors as of of the Company's shareholders recommendations if it has 16.05.2011; report No.21 dated 17.05.2011) defines the enough resources for implementation of investment pro-

main principles and approaches for the Company’s Board grams and large-scale projects for technological connection 2013 of Directors for recommendations to general meeting of of consumers to the Company's transmission facilities; shareholders on dividend payments; ensures transparency • as a rule, the dividend payment recommended by the Com- of the mechanism for determining dividend values and their pany's Board of Directors should not exceed the standard ap- payment and information distribution to the Company’s proved while defining power supply rates for the current year.

shareholders and other interested parties about the Com- REPORT ANNUAL pany’s dividend policy. The Board of Directors for the most part gave recommen- The Company’s dividend policy is based on principles dations for nondistribution of dividend to the annual general that are conditioned by the specific character of the Com- meeting of shareholders at the end of the fiscal year since the pany’s activities that consists mainly in state regulations of Company needs resources for implementation of investment rates for power transmission and technological connection, projects aimed at renovation of key assets and ensuring a reli- as well as the necessity for development, modernization, able performance of the republic’s power grid, as well as creat- reconstruction and construction of new power grid facilities: ing conditions for technological connection of consumers.

Dividend History

Period Event

2002–2005 No dividends were paid at the end of the fiscal years according to the recommendations of the Company's Board of Directors; the profit was allocated for developing production.

2006 At the end of 2006 the Company's annual general meeting of shareholders (for the first time since the beginning of the Company's activities) took the decision to pay dividend for common shares at the rate of 10% of the Company's net profit for 2006. The total amount allocated for dividend payment for the Company's common shares was 6 789,6 thousand rubles.

2007–2012 Annual general meetings of shareholders took the decision not to pay dividend (not to declare) at the end of the corresponding fiscal year according to the recommendations of the Company's Board of Directors.

The document containing the Statute about the dividend policy of JSC “Grid Company” can be found on the Company’s official web-page http://www.gridcom-rt.ru (Section “Shareholders and Investors/Regulations and Internal Documents”). NEW PEAKS DEFEAT STEREOTYPES Control, 07audit and risk management system 7.1. ORGANIZATION OF INTERNAL CONTROL AND AUDIT SYSTEM

Organization of internal control system • participation of each employee in the risk management and risk management process.

The system of internal control functioning in the Company, To ensure the functioning of the internal control system its efficiency and constant enhancement is one of priority and risk management the Company has developed and ap- 84 guidelines of the Company’s activity. proved the following internal regulatory acts: The principal goals of the internal control system are to en- sure investors’ trust for the Company and its management, to • Statute about internal control system that defines

protect the shareholders’ investments and the Company’s as- terms and objectives of the internal control system, sets, to achieve the Company’s strategic development objec- its organization and principles of its functioning, in- tives in the most effective fashion, to manage the Company’s ternal control procedures regulating the Company’s financial and economic risks, to effectively manage the Com- activities, as well as responsibility of internal control pany’s financial and economic activities and its assets, to as- subjects to comply with internal control procedures sist the Company’s management in its administrative functions. (approved by the Company’s Board of Directors as of The Company’s internal control system is designed to ful- 14.09.2012, protocol No.1/2012 dated 17.09.2012);

CONTROL, AUDIT AUDIT CONTROL, fill the following tasks: • Management risk policy that defines main objec- tives, risk management tasks in the Company and the • ensuring the execution of the financial and economic principles of its functioning (approved by the Com- plan; pany’s Board of Directors as of 27.12.2012, protocol • establishing and enforcing effective internal control No.6/2012 dated 28.12.2012) procedures; • ensuring an effective and transparent management sys- Organization of thematic and target check-ups of the

AND RISK MANAGEMENT SYSTEM tem including prevention and suppressing misuse on the financial and economic activity of the Company is vested part of the Company’s executive bodies and officials; in the Auditing department wish estimates and sums up • ensuring comprehensiveness, reliability and trustwor- the results of control measures undertaken in the Com- thiness of the Company’s financial, bookkeeping, sta- pany, supervises elimination of the violations discovered tistic and managerial data and accounts; by the check-ups and internal investigations and take pre- • revealing and mobilizing in-house possibilities and prof- ventive measures in relation such violations. it reserve; During 2013 the Company’s auditing management • ensuring compliance with regulatory acts of the Rus- carried out thematic and target auditing check-ups sian Federation, internal documents and the Compa- of the Company branches on nearly all aspects of the ny’s management bodies; Company’s activity. Following the results of the check-us • ensuring safety of assets and effective use of the Com- the Company develops the measures aimed to eliminate pany’s resources; detected violations, which implementation is being con- • prevention, early recognition, analysis and reduction of trolled by the Auditing Committee. financial, operational and technological risks that can Along with its auditing activities the Auditing Manage- negatively affect achievement of the Society’s goals re- ment also performs methodological activities that are lated to financial and economic activities. designed to improve effectiveness of the internal control system, reduce probability of external and internal risks, The Company’s activities are influenced by internal and and expedite the adaptation process of operational activi- external factors. To define the degree of their influence one ties to new economic conditions. needs to perform a complex analysis of probability of the oc- currence of the event and its consequences. The Company Auditing Committee is aware of the importance of risk management as part of corporate management system that helps promptly identify To provide the control on financial and business activity and estimate risks in the Company’s financial and economic of the Company the shareholders meeting elects the Audit- activities and also minimize their negative consequences. ing committee on an annual basis. The Auditing committee The main directions in risk management sphere are risk is a continuing body of internal control of the Company, identification, assessment and ranking; risk manipulation with providing regular control on the financial and business ac- the purpose of ensuring achievement of the Company’s strate- tivity of the Company in respect to the correspondence gic goals, conservation of assets and maintaining business ef- between the applicable law of the Russian Federation, the fectiveness, as well as guaranteeing stable power transmission. Charter and internal documents of the Company. Important elements of risk management process include: The activity of the Auditing Committee is regulated by the Federal Law «On Corporations”, the charter of the • integration of risk management process with the Com- Company and the Regulation on the Auditing Committee pany’s principal activities and its business processes; of the JSC «Grid Company». • analysis of objectives with the purpose of identifying The Auditing committee (the quantitative composition risks and minimizing (elimination) of their consequences; – 5 people) is elected at the shareholders meeting for the • improving management efficiency of key risks; term to the next annual shareholders meeting. Operation Composition of the Auditing Committee of the Company (elected on 27.06.2013):

DAMINOVA ENGE NURIAZDANOVNA LEUHINA TATIANA NIKOLAEVNA Born in: 1972 Born in: 1959 Education: higher Education: higher Career for the last 5 years: Career for the last 5 years: • October 2007 - June 2008 – the Head of the section of cooperation • January 2008 - August 2009 – Head of Planning and Economic De- 85 with CMI and land preservation of the Ministry of land and Property partment of the branch of the JSC “Grid Company”, Kazan Electric Relations of the Republic of Tatarstan; Power Networks; • June 2008 - November 2009 – head of Department of Reformation and • August 2009 – August 2012 – Deputy Director of Economic and Finance Privatization the Ministry of Land and Property Regulation of the Republic Affairs of the branch of the JSC “Grid Company”, Volga Region Electric Power Networks; of Tatarstan; 2013 • November 2009 – December 2012 - head of Office of Privatization and • August 2012 – up to present – Head of the Auditing Committee – Head of Strategy Planning of the Ministry of Land and Property Regulation of the the Methodology Department of the JSC “Grid Company”. Republic of Tatarstan. Doesn’t hold shares in the Company. • December 2012 – up to present - Head of Department of economics, TAMOSHEVA Nailya Halafovna

privatization and corporate management of the Department of Land and Born in: 1963 REPORT ANNUAL Property Relations of the Republic of Tatarstan Education: higher Doesn’t hold shares in the Company. Career for the last 5 years: • October 2007 – up to present – Deputy Director of Economic and Fi- UREZOV DMITRY NIKOLAEVICH nance Affairs of the branch of the JSC “Grid Company”, Naberezhnye Born in: 1978 Chelny Electric Power Networks. Education: higher Doesn’t hold shares in the Company. Career for the last 5 years: BURGANOVA ALMIRA MAGSUMZYANOVNA • January 2005 – May 2013 Chief advisor on economic analysis of the Born in: 1963 Ministry of Finance of the Republic of Tatarstan; Education: higher • May 2013 – up to the present – Head of economics department of gov- Career for the last 5 years: ernment procurement and payment managing of the Ministry of Forestry. • June 2007 – up to present – Chief Accountant of SUE RT Doesn’t hold shares in the Company. «Electric Networks». Doesn’t hold shares in the Company

Amendments in the composition of the Auditing Committee

The Auditing Committee, working up to the annual sharehold- ers meeting (term of office from 14.09.2012 to 27.06.2013):

Valeeva Farida Faridovna Chief Accountant of the JSC «Grid Company»

Daminova Enge Nuriazdanovna Head of Department of Privatization and Strategy Planning of the Ministry of Land and Property Regulation of the Republic of Tatarstan

Urezov Dmitry Nikolaevich Head of Department of economics, government procurement and payment administering of the Ministry of Forestry of the Republic of Tatarstan

Gilyazutdinova Alsu Ravilevna Chief Expert of the Department of Inner Audit of the Auditing Committee of the JSC “Grid Company”

Shakirova Natalia Ivanovna Deputy Chief of the Financial Planning and Analysis Department, the JSC “Grid Company”

The Regulation on the Auditing Committee of the JSC “Grid Company” is presented on the official web-site of the Company http://www.gridcom-rt.ru in the section “For Shareholders and investors/the Charter and internal documents». Premium Payments to the members of the Auditing Committee Abbreviated company name: LLC “FBK Volga Region” In accordance with article 8 of the Regulation on Auditing Committee adopted by the general shareholders meeting of the Legal address: Company dated 29.06,2007 (protocol No. 14 dated 13.07.2007) 10 Yamasheva Str., Kazan, Republic of Tatarstan, 420080. the remuneration to the Board of Directors is paidin accordance with the decision of the general shareholders meeting. Registration number in the register of auditors and audit The decisions on payment any remunerations and/or com- organizations of self-regulating non-profit organization “Insti- 86 pensations to the members of the Auditing Committee during tute of Professional Auditors”: their performance in 2013 were not taken. No.10202014708 dated 04.12.2009.

Company’s Auditor Contact: Mailing address: 10 Yamasheva Str., Kazan, Republic of The Company annually approves an auditor in compli- Tatarstan, 420080 ance with the requirement of the Russian Federation leg- Phone: (843) 564-53-74, 564-54-84. islation on performing independent audits and approval E-mail: [email protected]. of the annual accounting statement. The general meeting of shareholders of 27.06.2013 appointed the winner of a The service payment for LLC “FBK Volga Region” was

CONTROL, AUDIT AUDIT CONTROL, competitive selection, LLC “FBK Volga Region” the auditor determined by the Company’s Board of Directors accord- for the Company in 2013. ing to the results of the contest. The fee paid for the inde- The selection of the auditing company for the compulsory pendent audit of the book-keeping (financial) account of audit of the financial account of the Company for 2013 was the Company for the period from January 1 to December based on a bidding in the form of an open contest as envis- 31, 2012 prepared in compliance with the Russian Federa- aged by the Federal law No. 94-FZ dated 21.07.2005 №94- tion legislation, amounted to 448 800 (four hundred forty ФЗ “On placing orders for delivery of goods, execution of ac- eight thousand eight hundred) rubles.

AND RISK MANAGEMENT SYSTEM tivities, providing services for state and municipal purposes”. The limited liability company “FBK Volga Region” has been a member of the International Association PKF since 1997. Full company name: LLC “FBK Volga Region” did not provide services unre- Limited liability company “FBK Volga Region” lated to auditing in 2013.

7.2. MAJOR RISK FACTORS RELATED TO THE COMPANY’S ACTIVITIES

Map of Company’s risks

Operational risks for the Deficiency of reliability and quality of power supply to consumers (including the loss of transmission on the AL 500 kV power transmission lines of because of the tear and wear of capital fund (SS and PTL) 35 and more kV

Penalties and limitation of equipment operation of SS and PTL by regulatory authorities in case of their unsafe operation

Operational risks Threat of inadequate fulfilment of contract obligations of power transmission services (including the risks of late Deprecation of operational and economic indexes of network equipment performance of repair and technical maintenance) Unfavourable ecological consequences Threat of emergencies resulted in partial or complete defective delivery of electric power accompanied by unfavourable social consequences (consumers’ complains) Penalties imposed by regulatory authorities, limitation of equipment operation at normal mode operation Operational and System disturbances related to providing safe operation of manufacturing entities and reliability of power transmission technological risks Potential transition to the operation with forced (acceptable emergency situation) flow Risk of simultaneous critical load increase in case of a disaster Investment risks (risks of non-implementation of investment projects) Financial risks Currency risks Interest risks Inflation risks Risks related to non-fulfilment of obligations by contractors Map of Company’s risks

Compliance risks Changes in tax legislation

Changes in judicial practice

Ecological risks Environmental-ecological risks caused by the changes in natural environment Risks of disasters related to the changes in natural environment cause by man-triggered disasters, emergencies and accidents 87 Social-ecological risks caused by the defensive reaction of the government and society on the environmental stress Ecological standardising risks related to introduction of ecological regulations and laws or their reinforcement Economic-ecological risks caused by financial economic activity 2013

Major Operational Risks PTL 35 and more kV the Company make use of a huge amount

Operational (industrial) risks are related to physical depre- of electric machinery and power transmission lines, which have REPORT ANNUAL cation, operations disturbance and crucial change of operat- worked out their regulatory time limit, and the equipment which ing conditions of essential equipment of substations (SS) and is no longer in production and demands modernization or re- power transmission line (PTL). placement, which is preconditioned by the fact that the majority In spite of annual progress of construction pace, reconstruc- of substations and power transmission lines of 35-500 kV were tion and modernization of the essential equipment of SS and constructed and introduced in the 60s, i.e. 50 years ago.

50 Standard operation time of SS and PTL 35-500 kV, used in the Company, years 40

30

43 20 39 29 25 24 26 26 24 10 20 16 17 11 Switchers 6-500 kV, % 0 Transformers of 35-500 kV, % up to 20 from 20 up to 30 from 30 up to 40 from 40 and more AL 35-500 kV, %

About 40% of air lines and (AL) of 35-500 kV have 1. The Company fulfills the complete package of scheduled worked out their operation time and demand planned re- works on technical maintenance of transmission facilities construction. and equipment. In 2013 the Company prepared and Operational risks (including the risks of late implemen- implemented a plan of measures aimed at enhancement of tation of repair and technical maintenance programs ) are technical maintenance of the distribution networks of the JSC related to physical deprecation, operations disturbance and “Grid Company”, including the technical maintenance works crucial change of operating conditions of essential. under contract for a total amount of 115 million rubles; 2. It introduces modern diagnostic techniques without switching The measures taken by the Company to minimize the off the equipment – creation of special crews to work under probability of these risks: voltage without switching off electrical equipment;

Major measures РС (ТО) Units Actual volume 2011 Actual volume 2012 Actual volume 2013 Clearance of AL 0,38-10 kV ha 1 015 870,3 477,54 Technical maintenance of PTS, CTS ps 74 32 21 Fireproofing of cable lines m2 9 632 10 115,1 5 300 Renewal of lines to apartment houses ps 14 313 11 833 22 543 Maintenance of electrical distribution panels in apartment houses ps 3 286 3 286 3 286 3. In order to enhance the quality of services provided to the Interest risks Company, responsibility of contractors and the cutback of costs per unit the Company selected the contractors by tender. Since the Company does not own borrowed funds inter- est risks do not have a significant impact on its financial and Operational and mechanical risks economic activities. As part of risk management policy the Company plans The activity of the Company potentially involves breaches to launch a program to reduce expenses and overall prime of operation conditions and crucial changes of equipment cost of its product in case of a fluctuation in foreign ex- 88 functioning as well as a possibility of emergencies at the change or interest rate. facilities of the power transmission complex. Inflation risks

In order to minimize the probability of risks in question the Company undertakes the following measures: Russian economy is characterized by a high inflation level. The impact of inflation on the Company’s activities 1. Situation analysis with the purpose of foreseeing risks is quite significant since part of the expenses depends on during the implementation of the operational program the average prices level in Russia. In conditions of infla- and taking measures that could protect from its impact; tion escalation special emphasis is given to the turnover 2. Developing a maintenance and repair program to of working assets, including account receivables. The

CONTROL, AUDIT AUDIT CONTROL, address the reconstruction of operating network current inflation doesn’t influence the financial status of facilities; the Company significantly. On the whole the impact of 3. Activities aimed at improving the power grid reliability inflation factors on the financial stability of the Company including purchase control and quality inspection of the is forecasted at the stage of financial plans development. delivered equipment and material; The negative impact of inflation can manifest itself as 4. Technical reequipping, use of modern reliable equipment following: that does not require repair services throughout the

AND RISK MANAGEMENT SYSTEM whole product life; • in the potential risk of receivables increase; 5. Development of networks with the purpose of increasing • in the loss risk related to a decrease in the effective reserve possibilities in emergency situations; cost of receivables in case of substantial respite or 6. Constant monitoring of the equipment condition and delay of payment; compliance with rules of operating power facilities, • in the risk of cost increase caused by escalation of inflation; equipment, buildings and constructions; • the risk of a decrease in the effective cost of invest- 7. Analysis of reasons and preconditions of risk events; ment resources. professional development and certification of employees; 8. A comprehensive preventive program aimed at Particularly vulnerable as a result of the world economic cri- injury prevention of third parties (media publications sis are the following financial indicators: of preventive nature, games and safety lectures in educational institutions, video spots on prevention of • receivables - an increase in turnover time; power-related traumatism of children and third parties, • and payables – an increase in turnover time; distribution of visual campaign materials about the life • cash assets – a decrease in free funds; hazards of unauthorized meddling with electric power • profit from the Company’s principal activities - its de- facilities, etc.). crease.

Financial risks Credit risks. Risks related to failure of contractors to fulfill their Foreign exchange risks Among risk factors that could affect the Company’s ability The Company’s financial state, market liquidity, funding re- to fulfill its obligations are changes in fiscal legislation and the sources and performance are not significantly influenced by political situation in the country. The current level of market the changes in foreign exchange rates since the Company op- liquidity suggests that the risk of the Company’s failure to carry erates only on the territory of the Russian Federation, does not out its obligations in a comprehensive and timely manner is have investments in foreign companies whose net wealth cost insignificant. depends on foreign exchange rate fluctuations, does not have Deterioration of the contractors’ financial state and their income or expenses in foreign currency. Foreign exchange risk failure to meet contract requirements will lead to a delay in for the Company is limited to the general dependency of the meeting deadlines for the Company’s investment programs. national and foreign currency rates, which affects the econo- To hedge risks related to the failure of contractors to fulfill their my of Russia overall and the Company’s financial state due obligations and return the advances they received, the Com- to the Company’s interconnection with various structures of pany forces the contractors to provide adequate financial pro- Russian economy. Thus foreign exchange rate increase risks vision. are and their potential impact on the state of the Company are considered insignificant. Compliance risks In respect of significant fluctuations of foreign currency rates it may be noted that they affect the economy of Russia Compliance risks of the Company are related to unstable overall and therefore the Company’s financial state due to the Tax System, ambiguous interpretation of judiciary practice and Company’s interconnection with various structures of Russian frequent changes of legislation under the government control economy. of electric power industry. Change in Fiscal Legislation Ecological risks

The tax system of the Russian Federation is character- Another potential risk for the Company is an ecological risk ized by frequent changes of regulatory documents, which which can be classified based on the scale of its occurrence, often contain gaps and contradictions subjected to ambig- admissibility, possibility of prevention, prediction and insurance. uous interpretation of tax authorities. Among the principal In order to develop coordination measures aimed at pre- factors of tax risks are potential introduction of new taxes vention and localization of ecological risks the Company de- and fees, increase in the current tax and fees rates, exten- veloped a unified procedure of ecological risk management sion of taxable base, change of payment deadlines or regu- that would be applicable in any situation. 89 lations on tax payments and tax reporting. Processes of threat identification, assessment and risk To minimize negative impact of this group of risks the management include the following: Company monitors and promptly reacts on the changes in tax legislation, plans financial and economic activity taking • identification of threats;

into consideration the novelties in current taxation. In order • assessment of risks including listing existing (suggested) 2013 to minimize fiscal risks the Company controls procedures of on-site risk control measures with regard to impact of tax base calculation, applying tax rates as well as timely and special hazards, probability of control failure and potential full payments of all taxes and fees envisioned by the fiscal serious nature of the consequences; legislation. It being the case that tax payments are taken • qualification assessment of residual risks;

into consideration during calculation of the tariff for electric • identification of risk control measures and assessment of REPORT ANNUAL power transmission the risks related to the change of tax whether the measures taken are sufficient for reducing legislation are estimated as insignificant. risks to an acceptable level; • applicable legislative and other regulatory legal requirements; Change in Judiciary Practice • role and powers of the staff responsible for the execution of processes; Judiciary practice plays an important role in the modern • staff proficiency requirements and the need to train em- system of law enforcement in the Russian Federation and ployees; inevitably influences the Company’s activity. Being part and • hazards related to the used material, plants and equip- parcel of getting more and more complicated legal system ment, technical characteristics of which deteriorate with judiciary practice is constantly extended and subjected to time if they are stored. alternations. In the circumstances of constantly developing law and potential contradictions between federal regional Analysis of activities, processes and operations fulfilling by the and local legislation there are risks of violation its consist- Company is based on the information about emergencies hap- ency or absence of interpretation and application of some pened in the affiliates of the Company, results of monitoring and statutes of the law. measurements, internal and external audits as well as on the enu- To minimize the risks mentioned above the Company meration of activities, processes and ecological aspects related to studies the tendencies of the judiciary practice of the judicial them. The quantitative risk analysis is undertaken by the Company bodies and monitors on a regular basis the supreme judicial for each emergency and its reason with FMEA method (analysis of authorities influencing its activity. Probability of changes in types, consequences and significance of discrepancies according judiciary practice in regard to issues related to the Company’s to which the ecological risk is estimated by the prioritized number activities is insignificant. of risks (PNR), to consequently estimate the risk level. TEAM SPIRIT AND ONE PURPOSE Human resource08 policies and social responcibility 8.1. PRINCIPLES OF SOCIALRESPONSIBILITY

Being aware of its role in the development of all the • responsibility to the personnel to create adequate work- economic sectors of the Republic of Tatarstan the Com- ing conditions and opportunities for personal and pro- pany adheres to principals of social responsibility and fessional growth; compliance with its environmental, social and economic • responsibility to suppliers and contractors to create a 92 obligations to the parties concerned. The Company takes transparent competitive environment and market pricing these obligations upon itself voluntarily and fulfills them mechanism; in cooperation with the interested parties with a focus on • transparency with regard to disclosure of trustworthy infor-

continuous development and implementation of the Com- mation in media and creating a communication with inter- pany's strategic goals. ested parties. The Company’s internal social policy is oriented to- wards the solvation of the most urgent problems in terms Among the principals of social responsibilities are: of social development of the personnel, enhancement of working conditions of each employee, advance of the per- • create more jobs with proper remuneration and social ben- sonnel’s social protection through implementation of social efits for the population; events and programs, support and development of its hu- • tax payment, creating the budgets of different levels; man resources keeping in mind the Company’s directions • ecological and industrial safety; of growth and social and economic development of the • realization of the projects contributing to social and eco- Republic of Tatarstan. nomic development of the Republic of Tatarstan; Among the most important aspects of the Company's • providing safe working conditions; HUMAN RESOURCE POLICIES AND SOCIAL RESPONCIBILITY SOCIAL AND corporate social responsibility are the following: • supporting versatile professional development of the em- ployees; • responsibility to the society to reduce negative impact on • fulfilment of an employer’s obligations, specified in Trade the environment; Union Contract and industrial tariff agreement.

8.2. HUMAN RESOURCE MANAGEMENT

Human Resource Policies fulfillment of the Company's obligations in the sphere of so- cial protection, life and health protection; and investment into The Company's human resource policies aim to fully and personnel development. promptly satisfy the Company's efficient personnel manage- In 2013 the Company’s realized its purposes and princi- ment system, engagement highly knowledgeable specialists, ples of human resource policies through retention and de- competence development, providing proper working condi- velopment of highly knowledgeable employees, cooperation tions, professional training, supporting business culture and with educational institutions, wage increase, optimization of preservation business values. the structure of the management and branches according to Major principles of the Company’s human resource poli- business activities, as well as improvement of internal regu- cies: latory documents concerned personnel management, labor management and incentive program. 1. Attraction and retention highly knowledgeable specialists The recruitment policy was based both on engaging col- for Company’s business purposes, improvement of lege graduates and specialists from outside and growth and incentive program and efficient use of the Company’s rotation of internal human resources. personnel potential, adherence to social partnership; 2. Development of business culture, maintenance of Personnel Numbers and Structure psychological and moral ecology in the company; 3. Youth outreach, improvement of the system of social As of 01.01.2014 the accountable number of employees protection and benefits, support of the institution of was 6 992 people. family and childhood. The decrease of accountable number of employees made up 3,2% and was caused by optimization of the organizational The main principles of the human resource policies are structure of the Company and involvement of outsourcing. long-term partner relationship with employees, unconditional Accountable number and structure of the personnel of the Average age of Company’s employees, years Company, people

8 000 40,4

7 000 40,2

6 000 40 3 870 3 951 3 675 93 5 000

39,8 4 000 40,2 3 000 39,6 40 2013

2 000 2 191 2 293 2 338 39,4 39,6

1 000 ANNUAL REPORT ANNUAL 951 980 979 39,2 0 01.01.2012 01.01.2013 01.01.2014 01.01.2012 01.01.2013 01.01.2014

Workers Experts and office workers Managers

The structure of the personnel is characterised by high quali- As of 01.01.2014 the average age of the Company's fication standards, 50,3% of the employees have one and more employees is 39,6 years. An outlined stable tendency of higher educations, which is 4,6% more in comparison with 2012. rejuvenation of the Company’s employees evidences the inflow and anchoring of young employees in the Company.

Development of educational level of the personnel, people Staff rotation in 2013, people

8 000 800 7 000 1 207 1 136 885 700 6 000 1 153 600 1 272 1 273 5 000 500

4 000 1 514 1 439 1 518 400 755 3 000 300 546 2 000 3 181 200 2 829 3 053 254 251 1 000 100 334 186 248 88 0 0 62 01.01.2012 01.01.2013 01.01.2014 Workers Managers Experts and office workers

Employed Elementary education Laid-off Compulsory education General secondary education Basic vocational education All in all during the fiscal year 862 people were employed, Intermediate vocational education 1094 people were laid-off. Personnel training

Company’s principles of personnel training and 4. Proactivity of executives and specialists training: the development Company’s strategic goals and priority guidelines of its business development by all means are take into Modern concept of personnel development is based on consideration during training organization. the principles of regular, goal-oriented, continuous develop- 5. The assessment of training efficiency is obligatory and ment of the employees, aimed at timely handling long and complex. 94 short-range objectives. Consistency and continuity of person- 6. Continuity of educational chain according to its specialty nel training imply integration of the knowledge acquired by the occupation (college - higher education institution – graduates in college and in the Company during professional Company).

training, retraining and advanced training. The Company’s personnel training is based on the follow- The Company shaped a complex model of training sys- ing principles: tem, covering all the key aspects of training for workers, experts and managers: adaptation of professional skills 1. Continuity of training and development. according to the changes of task implementation, flexibility 2. Goal orientation. of professional and qualification structure of the personnel 3. Preference of “closed” educational system: if there is a in coordination with the change of work specifics, long- choice between internal and external training the priority term potential of development, enhancement of the benefit will be with the internal one, as it is adjusted to the from training, proper budgeting. Company’s conditions and routine. HUMAN RESOURCE POLICIES AND SOCIAL RESPONCIBILITY SOCIAL AND

Structure of Company’s personnel at- Changes in the amount of money spent per person on person- tending training in 2013, % nel training in 2011-2013, thousand rubles.

8,00

7,00

23 6,00

5,00

4,00 50 7,57 6,82 3,00 6,23

27 2,00 1,00

0,00 2011 2012 2013

Managers The Company’s expenditures on personnel training made up Experts and office workers 52 898 thousand rubles in 2013. Workers

Advanced professional training of Company’s personnel in 2013

Programs of advanced On the basis of the FSBEI HPE “Kazan State Power Engineering University” in the framework of Presidential program of professional training for advanced professional training of engineering specialists for 2012-2014 according to the specialities: engineering categories of the personnel • Cable with cross-linked polyethylene insulation” – on the basis of NSEI APE “Learning and Teaching Engineering- Technical Center” (Saint Petersburg); • “Control and electric power quality maintenance” – on the basis of ANPO APE “Learning and Teaching Center Energo- Technika” (Penza) • “Computer systems for automation and control” - on the basis of LLC “Energopromavtomatizatsia” (Saint Petersburg). 60 employees attended the trainings, 42 of them participated in training on probation at Russian and foreign enterprises (Dusseldorf, International Academy of Management and technologies INTAMT) including visiting manufacturing facilities for the purpose of sharing the colleagues’ experience. Advanced professional training of Company’s personnel in 2013

Training programs for Privolzhsky Federal University : managers and supervisors • Presidential Management Training Program for National Economy Organizations of the Russian Federation (3 employees); • MBA program (10 employees).

Russian Presidential Academy of National Economy and Public Administration: • MBA program (2 employees). 95

6003 employees of the Company participated in various ed- The candidates pool is formed based on the following

ucational programs, 5 570 employees attended advanced train- criteria: 2013 ing courses. There were 4 in-house seminars in the Company. The Company place high emphasis on upbringing of • training and experience level should meet the competence dedicated specialist of energy engineering. The major requirements on the job description for the prospective educational institution of Power Engineering Educational position (or ability to reach the necessary level within three

Cluster of the Republic of Tatarstan is FSBEI HPE Kazan years); REPORT ANNUAL State Power Engineering University. Last year the Compa- • a high level of professional competence in the field; ny launched a pilot project of target preparation of students • a certain range of professional and personal qualities; with their consequent employment in the Company. • an understanding and acceptance of the Company's main strategies, values and management principles; Candidates Pool loyalty to the Company.

The Company pays great attention to the formation and Training program for candidates pool are application- development of its candidates pool as part of its human oriented and are focused on the development of necessary resource policy aimed at building an effective system of in- competences depending on the functions of this or that vestment of personnel development, timely filling of vacant employee and their prospective position. positions, improvement of personnel selection procedures To generate the Company’s management candidate pool and arrangement of senior executives, planning of profes- special programs are being developed, an integrated assess- sional development on an individual basis for employees ment of candidates is being carried out, a transparent can- with competences that are of particular importance for the didates pool is being generated, individual feedback is being Company. To fulfill these tasks the Company generates the given to the candidates, and an individual development plan candidates pool. for the candidate in question is being prepared.

8.3. SOCIAL POLICIES

Social policies constitute one of the most important di- Social policies of the Company are based on the realiza- rections and parts of the Company's internal policies, which tion of the Collective agreement for 2013 - 2015. is aimed at resolving the most relevant issues related to per- sonnel social development.

Objectives of Social policies Directions of Social policies

Social Protection of Employees Social benefits and compensations Organization of health improvement recreation for the employees and their families. Social Protection of Employees Organization of sport and mass cultural events Inspiration of the personnel for efficiency enhancement Non-state pension fund for the Company’s employees

Creation of favourable business environment Youth outreach in the Company Health promotion of the Company’s employees, preventive care of occupational diseases

Productivity enhancement Work with veterans, supporting unemployed pensioners of the Company Directions of social welfare of the Company’s employees

The Company offers its employees a proper social package which characterizes it as an attractive employer and decreases personnel fluctuation.

Directions of social policies Social programs realized by the company if 2013 96 Social Protection of Employees In order to improve the housing conditions of the employees the Company participates in the financing of social mortgage program. The Company annually allocates money for housing construction in the Republic of Tatarstan. The Company's employees receive housing as part of reduced-price social mortgage. In

2013 24 families received housing through the social mortgage system, 44 employee received cheap loans for improvement of housing conditions.

The Company supports young families, mothers and children by providing financial aid to families upon child birth, to women on maternity leave and to families with many children.

The Company also makes one-time bonus payments to employees after they receive an internal, industry- related or state award and bonus payments dedicated to anniversaries.

The Company has fulfilled all of its payment obligations related to remuneration of labor, working time and time off work, social benefits and protection according to the Sectoral tariff agreement and the collective agreements signed in the Company. HUMAN RESOURCE POLICIES AND SOCIAL RESPONCIBILITY SOCIAL AND Recreation and Health Improvement for In 2013 the Company spent 46,9 million rubles on recreation and health improvement of 1903 employees Employees and Families and their families, including: • 1 477 employees and members of their families (including 39 children) improved their health in the health resort “Balkysh”; • 113 pensioners enjoyed recreation and medical treatment in the health resort “Balkysh”; • 135 children of the Company’s employees had recreation in children’s health improvement camp “Pri- azovets” (Anapa) owned by the Ministry of Youth Affairs, Sports and Tourism of the Republic of Tatarstan; • 251 children enjoyed recreation in children’s health improvement camps of the Republic of Tatarstan. Physical Fitness and Sports Promotion In 2013 the Company held the Complex Spartakiad among production leaders of power grid companies of the Republic of Tatarstan and the 11th Spartakiad among bodies of “Power Engineering Trade Union” of the Republic of Tatarstan, organized a rafting tour across the Kama river, a bike tour, a kart race, paintball contests, quiz-type games, etc. In May 2013, the youth team of the company took place in the soccer championship for the prise of the newspaper “Komsomolskaya Pravda”.

With the purpose of development of sportsmanship and promotion of respect to the history and traditions of the native power engineering in November of 2013 the chess team of the Company took part in the Open Chess Competition of power engineers devoted to M. Botvinnik in Moscow. Non-State Pension Fund of Company’s In cooperation with the National Non-State Pension Fund the Company ensures that its employees employees accumulate a non-state pension that they could use after they retire.

Youth outreach In September 2013, the First Republican Youth Forum of Power Engineering trade Union of the Republic of Tatarstan took place. More 100 representatives from 40 enterprises of power industry spent days in Kazan discussing participation of young people in making decisions on urgent problems of industry development. In November 2012 the Company held an annual youth theoretical and practical conference. The best works were redirected to the jury of the annual open youth research and training conference “Dispatching in power engineering: problems and prospects” VIII which took place in KSEU on November 28-30, 2013. The conference was aimed at sharing experience, developing scientific and engineering potential in young people and revealing the students of high educational institutions the ones who possesses exclusive analytic and managerial abilities so that they could join the human resources of the branches of the Transmission System Operator and power engineering companies of the Republic of Tatarstan. On invitation of the Ministry of Industry and Trade of the Republic of Tatarstan youth teams of Kazan, Buinsk power networks and the youth team of Company’s Management, who gained the lead in the Republic of Tatarstan participated in the First Republican Festival of working youth. Directions of social policies Social programs realized by the company if 2013 Health protection of the Company’s personnel, To secure and improve health of the company’s employees the Company takes the following measures: prevention of occupational diseases voluntary health insurance, compulsory insurance against accidents, preventive and periodical medical examinations, workplace assessments, providing the employees with proper clothes and shoes and other means of individual protection, employees’ training on first-aid treatment at occupational accidents. Seniors and veterans of the Company The Company's human resource policies are aimed at retaining the best traditions started by the veterans and strengthening of continuity of generations. Unemployed pensioners take active part in Veterans’ Councils and merit museums. The Company organizes for the veterans tours, shows, newspaper subscriptions and its free delivery and. In compliance with the Collective contract the veterans are 97 provided with financial support and can improve their health in the health improving resort “Balkysh”. 2013 Charity

As a socially-oriented organization, the Company im- and technical resources of educational institutions, devel- plements charity and sponsorship projects. In 2013 the opment of health care system, strengthening of patriotic

Company donated money for the development of physical and moral education of children and young people in the REPORT ANNUAL fitness and sports, formation and development of material Republic of Tatarstan, etc.

8.4. INDUSTRIAL AND OCCUPATIONAL SAFETY

Industrial and Fire Safety • 16 FSU areas, lifting constructions (hazard rating 4) – transpor- tation departments and areas (all the Company's branches The JSC “Grid Company” pperforms its activities in the use cranes, remote manipulators, hoists, overhead cranes, as area of industrial safety in compliance with the requirements of well as bridge crane (at SS Bugulma 500 of BES). the Federal Law No.116-FZ dated 21.07.1997 “On Industrial Safety of Hazardous Production Facilities” and other industrial According to article 4 of the Federal law No.225-FZ safety regulations. dated 16.07.2010 “On Compulsory Civil Liability Insur- In compliance with the amendments of the Federal Law ance for Owners of Hazardous Facilities for Harm Caused No.116-FZ “ On Industrial Safety of Hazardous Produc- as a Result of an Accident at a Hazardous Facility” all of tion Facilities”, dated 21.07.1997 which came into effect on the Company's hazardous facilities are annually insured. In 15.03.2013, the JSC “Grid Company” reregistered hazardous 2012 the Company insured its hazardous facilities with LLC facilities in the state registrar of Fire Safety Unit (FSU). Con- “SG “ASKO”. sequently the number of hazardous industrial facilities operat- In 2013 the Company performed its activities in the ing in the Company decreased from 28 to 18 FSU (certificate area of industrial safety under license No.VP-43-004189 No.А43-04106 dated 16.04.2012 issued by Privolzhsk branch for use of explosive and flammable industrial facilities (use of Rostekhnadzor). The hazardous facilities include: (operation) of equipment operating under pressure of more than 0,07MPa; transportation of explosive, oxidating and • 2 areas using pressure vessels (hazard rating 3) –air col- flammable substances (listed in Appendix 1 to Federal lectors - Zavoskaya SS at NkES branch, SS Bugulma 500 Law No.116-FZ dated 21.07.1997). The license expires on of BES; 18.06.2015.

Principal Indicators of Industrial Control of Compliance with Industrial Safety Requirements: 2012-2013

№ Reporting indicator Overall, in the Company Hazardous Materials Boiler Inspection Lifting Constructions Facilities 1 Number of hazardous facilities, including those 28/28 8/8 3/3 17/17

1.1 insured in compliance with Article 15 of the 28/28 8/8 3/3 17/17 federal law “On Occupational Safety” of FSU Principal Indicators of Industrial Control of Compliance with Industrial Safety Requirements: 2012-2013

№ Reporting indicator Overall, in the Company Hazardous Materials Boiler Inspection Lifting Constructions Facilities 2 Equipment that requires a certificate about its 28/28 8/8 3/3 17/17 compliance with industrial safety requirements, 98 including 2.1 Equipment with a certificate about its 28/28 8/8 3/3 17/17 compliance with industrial safety requirements

3 Number of equipment check-ups and tests 154/158 0/0 7/6 147/152

4 Number of the Company's employees who were 590/542 2/0 13/19 575/523 trained and certified in the area of industrial safety during the last year 5 Number of violations of industrial safety 9/54 0/0 0/2 9/52 requirements discovered by Rostekhnadzor bodies, including: 5.1 Number of eliminated violations 9/54 0/0 0/2 9/52 HUMAN RESOURCE POLICIES AND SOCIAL RESPONCIBILITY SOCIAL AND 6 Number of employees working at hazardous 2359/2480 82/17 38/31 2239/2432 industrial facilities

7 Number of employees performing industrial 48/21 6/5 12/3 30/13 supervision

8 Number of accidents for the past year None/ none None/ none None/ none None/ none

9 Number of incidents for the past year None/ none None/ none None/ none None/ none

10 Number of preventive and monitoring check-ups 264/203 14/19 23/10 227/174 performed by Industrial Safety Control Service

11 Number of violations of industrial safety 371/406 0/9 15/18 356/379 discovered by Industrial Safety Control Service

12 Number of suggestions made by Industrial Safety 33/33 0/2 4/3 29/28 Control Service to the Company managements (branch management) on ensuring industrial safety 13 Number of suspensions of work in hazardous None/ none None/ none None/ none None/ none conditions (as a result of industrial safety control) 14 Number of employees accountable for violations 22/8 0/0 2/0 20/8 of industrial safety requirements (established by industrial safety control)

The Company takes extensive effort to provide fire safety. In 2013 a number of preventing measures was taken for The Company holds annual check-ups and chooses a branch improving fire safety of power grid equipment, buildings and with best fire safety measures in order to make its facilities fire- constructions of the JSC “Grid Company”. Among the most proof and involve a large group of employees in fire-preventive significant fire preventing measures are: activities. In 2013 the personnel had training on fire safety, which in- • clearance of overhead power lines from trees and bushes; cluded instructing on fire safety, teaching to Fire Safety Basics, • fireproofing of cables and constructions; fire service drill. All the personnel of the Company was trained • clearance of vegetation at substations: cutting the grass with the Fire Safety Basics program applying the educational or chemical herbicide treatment; system “Olympox”. • cleaning and check-ups of oil drains and oil-sump devices at substations; • equipping facilities with emergency fire-fighting equip- The following activities are performed in order to comply with ment (including recharging of fire extinguishers); the existing requirements of labor legislation on health protection • maintenance of fire alarm systems and automatic fire sup- of employees: pression systems. • preliminary and regular medical examinations in compli- Occupational Safety ance with the regulations of Procedure for Compulsory 99 Preliminary (at the commencement of employment) and Among important components of the Company's effective per- Regular Medical Examinations of Employees Performing formance are industrial and occupational safety indicators at work- Hard Work or Working in Hazardous or Noxious Working place. The Company's policies on occupational safety are aimed Conditions (approved by Order No. 302n dated 12.04.2011

at providing safe and healthy working conditions and a decrease in of Ministry of Health of the Russian Federation); 2013 the number of industrial traumas and occupational diseases. • industrial control of compliance with sanitary regulations and The Company's activities in the area of occupational safety performance of sanitary antiepidemic (preventive) activities; are based on the following principles: • measurement of physical factors at workplaces with PCs; • registering employees working in noxious, hazardous and

• compliance with the existing legislation in the sphere of hard conditions. REPORT ANNUAL occupational safety for power distribution and transmis- sion, and prevention of any activities that could harm the The Company’s employees including its newly-employed participants' life, health or property; personnel take part in obligatory training and testing on the • ensuring safety and health protection of all employees by pre- requirements of occupational safety. venting accidents and occupational diseases at the facilities; In compliance with Rules of Operation and Rules of Cer- • continuous monitoring and impact assessment of occu- tification of Voluntary Certification of Management Systems pational safety in the Company's activities, making deci- “Register of management systems”, the Company’s existing sions aimed at consistent improvement of occupational occupational safety management system was inspected safety management system with the purpose of adapting with the purpose of checking whether it complied with the to the continuously changing conditions; management system OHSAS-18001-2007. As a result of the • ensuring compatibility or unification of Occupational Safe- inspection the Company’s occupational safety system was ty Management System with other organization manage- found effective, and its license was renewed. ment bodies; To prevent accidents the Company has introduced video • continuous improvement of industrial processes aimed at recording of workspace preparations and admittance of con- replacement of old equipment with their newer and safer tractors to power facilities. versions, use of safe technologies and personal protec- tion techniques to reduce the risks; Security of energy supply • continuous work aimed at training employees and informing them about different aspects of occupational safety related In 2013 the system of internal engineering supervision was to their work including elimination of possible accidents; established in the Company, whose basic tasks are: • encouraging suppliers (contractors) to develop and apply their own occupational safety management systems; • Adhering to a single engineering policy in relation to energy su- • encouraging the Company’s employees to take active pervision and accident prevention in the technical services of part in organization, planning, implementation and im- the branches and management of the JSC “Grid Company”. proving occupational safety management system; • Revelation of hazardous areas, violation of operational • establishing a committee on occupational safety and en- discipline, violation of regulations and requirements relat- suring its effective performance. ed to the electric power engineering, aimed at enhance- ment of electrical equipment reliability and reduction of In 2013 the Company held technical, organizational and edu- risks of emergency situations through: cational events aimed at prevention of traumas and training em- • Constant official engineering supervision and control ployees in the area of occupational safety. of compliancy with requirements of legislative, norma- In 2013 all of the Company’s branches held 12 Safety and tive-technical and corporative regulatory documents, Health at Work Days in compliance with the law of the Republic registration of breaches and deviations, monitoring of of Tatarstan “On Occupational Safety in the Republic of Tatarstan”. operational control systems. As part of these events the branches performed check-ups of • Conditional monitoring of main and auxiliary equip- working conditions and occupational safety in order to discover ment, buildings and facilities. and prevent violations of Intersectoral regulations on occupational • Operation quality surveillance and maintenance of safety and other regulatory documents. electric installments of the branches. The Company pays special attention to protecting its em- • Control over training and admittance of the Compa- ployees from the impact of hazardous and noxious industrial ny’s personnel. factors. In order to eliminate the impact of those factors on • Sampling control over work executed according to the employees during maintenance procedures the Company plan of capital construction and reconstruction. introduces new improved personal protection devices. As of • Monitoring of organization, timing and quality of emer- today all the Company’s employees have a special uniform. All gency investigations. Analysis of accuracy of their re- of the power line operators have uniforms made of nomex, a cording, control over the fulfilment of emergency pre- flame-resistant material. ventive measures. 8.5. RELATIONSHIP WITH CONSUMERS

Work with consumer’s applications

At present the JSC “Grid Company” is on the first stage of “Tatenergosbyt”, to the hot-line, to the Company’s email, by creation a System of Consumer service. One of the first stages postal service or direct submission. of a custom-focused approach is the stage of organization of It can be noted that there is a stable increase of the num- work with consumers. ber of applications to the JSC “Grid Company”: 100 The applications arrive at the Company through various channels: to the web-sites of the JSC “Grid Company”, JSC

Number of submitted applications 600

500

400

300 597 HUMAN RESOURCE POLICIES AND SOCIAL RESPONCIBILITY SOCIAL AND 455 200 402

100 177

0 2010 2011 2012 2013

The company considers all the applications submitted to “Grid Company”. They make up 24 % of the total number the Company and takes measures to eradicate the causes of applications. Besides consumers apply to the Company of application. The main reason of applications in 2013 was when they discover off-the-contract connections to the quality and reliability of power supply. This also category power transmission lines of the JSC “Grid Company”, for involves applications related to the failure to give proper taking out the OL from the properties of consumers, and notice about limited power supply during planned repairs installation of metering devices. of the networks. The share of such applications makes up The applications received from the consumers are con- 40% of the total number of applications. The second group sidered according to the approved Plan of considering of applications is related to the failure to meet the date of and registration of applications and are redirected to the technological connection and the failure to implement the branches of the Company to eradicate the reasons of the stages of technological connection on the part of the JSC applications submitted to the Company.

Structure of consumers’ applications in 2013, %

36 40

Quality and reliability of power supply Technological connection 24 Other reasons Reasons of submitted applications,ps

24 9 30 36 239 101 118

Quality and reliability of power supply

Consulting 2013 Technological connection Off-the-contract consumption 141 Installation of overhead power service line Electric power metering devices

Gratitude REPORT ANNUAL

Number of applications according to the Company’s branches and management, ps

28 125 93

Chistopolskie ES Privolzhskie ES 22 22 Naberezhnochelninskie ES 15 51 Nizhnekamskie ES 29 Kazanskie ES Elabuzhskie ES 16 Buinskie ES Bugilminskie ES Almetievskie ES 196 Management

Consumer Service System • enhancing efficiency of engineering and technical staff.

In compliance with the legislation of the Russian Federa- In 2013 the Company approved of the plan of actions to tion, custom-oriented approach, the major task of the Com- organize the system of Consumer Service System and cre- pany is creation of the Consumer Service System with proper ated the task team for its fulfillment. It was decided to create and comfortable consumer service offices, contact-center the Consumer Service Centers in Kazan, Naberezhnye Chelny, and automatized centralised customer service system – CRM. Almetievsk. The system will allow: The major task of the Consumer Service System cre- ated is enhancement of efficiency of business processes • organizing efficient coordination with consumers assisted of communication with customers, including technologi- by specially designated and trained personnel; cal connection to electric networks through introduction of • minimizing communication between engineering staff internal control and organizing proper feedback with the and consumers; consumers. 8.6. ENVIRONMENT PROTECTION AND RATIONAL USE OF NATURAL RESOURCES.

Environment protection Ecological policies

The JSC “Grid Company” as one of the major elements In order to improve ecological effectiveness and follow- of the power engineering industry providing social and eco- ing the principles of minimization of human impact on en- nomic needs of the Republic of Tatarstan sees as one of its vironment caused by production and economic activities, 102 constant priorities environment protection and ecological the Company has identified its intentions and directions safety of the Company’s facilities. with regard to environmental issues in “Policies of JSC Although striving to improve its industrial and financial “Grid Company” on nature protection” (Ecological Policies).

performance, the Company is aware of the impact of its pro- This document provides the basis for the formation and duction and commercial activities on people’s health and en- implementation of priority ecological goals and tasks, and vironment and thus seeks to minimize any possible negative serves as a control instrument in the effectiveness assess- consequences through rational use of natural resources and ment of Ecological Management System overall as well as introduction of modern technologies, making decisions with its separate components. due regard to views and wishes of the interested parties.

Objectives of ecological policies Directions of environmental activities of the Company in 2013 Control over negative impact on the environment Compliance with the existing legislation in the following areas: preservation of soil and land resources, water supply conversation and rational use of water resources, waste management, atmospheric air HUMAN RESOURCE POLICIES AND SOCIAL RESPONCIBILITY SOCIAL AND Enhancement ecological safety of production protection, forest and biodiversity preservation processes, preservation of favorable environment

biological diversity and natural resources Unification of policies on ecological management by ensuring reliable and ecologically safe power transportation and transmission and a comprehensive approach to rational use of Minimization of ecological risks of the Company’s production activities natural resources Improving effectiveness of techniques used to protect nature and rationally use natural resources.

As of the end of the fiscal year the Company had the fol- lowing ecological indexes:

Aspect Measurement unit Result Deviation

2012 2013 2013–2012

Water consumption thousand cubic meters 132,3 127,2 –5,1

Water disposal thousand cubic meters 124,0 118,2 –5,8

Total Emission of Polluntants into Atmospheric Air ton 30,2 30,2 –

Emission of greenhouse gas ton 10,44 9,42 –1,02

Waste including ton 41 583,0 34 859,8 –6 723,2 • utilized waste • recycled waste 38 196,3 31 452,0 –6 744,3 • buried waste 837,0 518,7 –318,3 2 549,7 2 889,1 339,4

Payments for Negative Environmental Impact, thousand rubles 6 554,2 6 661,0 106,8 including: • tandard payments 6 554,2 106,8 • limit-exceeding payments 6 661,0 0,0 0,0 0,0 The Company’s water consumption totalled 127,21 thou- (38,9%) for production needs and 77,77 thousand cubic me- sand cubic meters, including 49,44 thousand cubic meters. ters (61,1%) for drinking needs.

Water Consumption from Different Sources, 160 thousand cubic meters 140 103 120

100

80 2013

60

40 ANNUAL REPORT ANNUAL

20

0

from artesian well from other plants total

2011 58,57 80,43 139,00 2012 56,10 76,24 132,34 2013 55,51 71,70 127,21

Gross amount of emission into the atmosphere re- nological processes and the number of emission sources mained on the same level in the comparable period a year in the JSC “Grid Company” did not change. earlier, which can be explained by the fact that the tech-

35 Development of gross emission into the atmosphere, ton 30

25

20

15

10

5

0 2011 2012 2013

Emission into the atmos- 30,3 30,2 30,2 phere

The Company also controls its total emissions of green- branches. Most of the gas (92-95%) is emitted during fuel com- house gas into atmospheric air in compliance with the Fed- bustion. eral Law No.128-FZ dated 04.11.2004 “On the Ratification The systematic decrease in emissions of greenhouse of The Kyoto Protocol to the United Nations Framework gas is related to a decrease in fuel consumption, which in Convention on Climate Change”. its turn can be accounted for by a cutdown in the Com- Greenhouse gas is emitted due to fuel combustion of car en- pany’s car fleet. gines and sulfur hexafluoride circuit breakers at the Company’s Emission of Greenhouse Gas into Atmospheric Air, 12 thousand ton 10

8

6

4

104 2

0

2011 2012 2013

Greenhouse gas emission 10,76 10,44 9,42

In 2013 the JSC “Grid Company” produced 34 859,8 tons • passed over to specialized organizations for burying at of production and consumer waste (PCW) as a result of its pro- solid domestic waste landfills (SDWF) – 2 889,1 т (8,3%). duction and economic activities. The number includes waste: The decrease of waste production first and foremost is • re-used in own production – 518,7 т (1,5%); the result of taking measures aimed at optimization of circula- • passed over to specialized organizations for utilization (re- tion pattern and recycling of production and consumer waste. cycling, detoxification, storage)– 31 452,0 т (90,2%); HUMAN RESOURCE POLICIES AND SOCIAL RESPONCIBILITY SOCIAL AND

Development of production and consumer 45 000 waste,ton 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 2011 2012 2013

Waste production 28 376 41 583 34 860

Waste Volume Passed Over for Recycling, Buried or 100,0 Reused in Own Production, % 90,0 80,0 70,0 60,0 50,0 90,9 93,9 91,7 40,0 30,0 20,0 Utilised or reused in own production 8,3 10,0 9,1 Passed over for burying 6,1 0

2011 2012 2013

Along with traditional nature protection activities the The Company’s expenses on nature protection activities Company implements local projects related to repair, recon- aimed at prevention of negative environmental impact reached struction and equipment replacement that help to reduce en- in 2013 41,9 million rubles. vironmental impact. The Company also strives to use mod- ern technologies, equipment and materials. Structure of Expenses on Nature Protection Activities:

Activity Expenses Losses averted, thousand rubles Thousand rubles % Soil and land resources protection 26 668,9 63,6 11 888,8 Waste management 7 647,7 18,3 49 300,1 Rational use of water resources 6 287,4 15,0 670,0 105 Animals and plants protection 735,36 1,8 – Atmospheric Air Protection 563,1 1,3 5,7 2013 As a result of undertaking the environmental protection mental legislation, contributes to the enhancement of eco- measures the amount of prevented ecological damage made logical efficiency and a complex approach to use of natural up 61,8 million rubles. resources, which are the core of the Company’s strategy. In November 2013 the Company was successfully au-

Ecological control dited to confirm that the Company’s system of ecological REPORT ANNUAL management corresponds to the the requirements of the Compliance of the Company’s nature protection activities ISO standard ISO 14001:2004. Assessment and the certifi- with nature protection legislation was assessed in 2013 in the cation audit of the environmental management system were form of an ecological control based on the following criteria: performed by independent auditors of a certification group Cro Cert (Croatia). The auditing is aimed not to control but • quality control of pollutants emitted into the atmosphere to confirm successful functioning and development of the from stationary and moving sources; ecological management system. • atmospheric air quality control at the border of the sanitary As a result the audit group confirmed that the environ- project zone at industrial facilities; mental management system is developing and progress- • quality control of storm water and domestic sewage, con- ing in compliance with the requirements of the international trol of the effectiveness of local waste treatment plants; standard ISO 14001:2004 and therefore the international • quality control of the water taken from underground sourc- certificate IQNet proved valid. es (water-well holes), check-up of water level dynamic in To further improve the system of ecological manage- the holes; ment and enhance the ecological performance of the • control of waste management activities; Company the following measures have been mapped out • control of land resources, their state and management; for 2014: • recordkeeping. 1. To realize the actions of the Program aimed at Industrial ecological control is performed both from development and enhancement of the system of within the Company using the Company’s internal resourc- ecological management. es as well as with the help of specialized organizations 2. To undertake internal auditing for being able to discover certified in compliance with the legislation. and promptly eliminate the defects, to undertake The industrial ecological control of 2013 showed that compliance assessment, as well as getting more no limits were exceeded in terms of emission, disposal detailed information about SEM functioning. and waste production. 3. For the purpose of establishing more distinct interconnection of ecological aspects with legislative Ecological management system and other environmental requirements to implement the work on identification of the above requirements. The Company has developed, introduced and successfully Identification and reassessment of significance of applying a system of ecological management that works well ecological aspects and ecological risks of the Company. with the corporate management structure overall and that serves 4. To inform the employees of the Company about the as an effective means of environmental impact management. basic elements of ecological management and inner Ecological management system of JSC “Grid Company” regulatory documents on environmental protection. is a socially significant structure that helps balance permis- 5. To use media to inform the public about effectiveness sible environmental impact and the Company’s social and of the system of ecological management and major economic needs and also guarantees ecological safety of achievements of the JSC “Grid Company” of environment Company’s industrial activity in compliance with environ- protection.

09Schedules 9.1. BOOK-KEEPING (FINANCLAL) STATEMENT OF JSC “GRID СOMPANY” FOR 2013 ACCORDING TO RUSSIAN ACCOUNTING STANDARDS

Balance sheet for 31.12.2013

Thousand rubles ASSETS Line code for 31.12.2013 for 31.12.2012 for 31.12.2011

108 I. FIXED ASSETS Intangible assets 1110 29 920 29 111 20 628

Results of research and development 1120 25 346 22 158 27 863

Fixed intangible assets 1130 0 0 0 SCHEDULES

Fixed development assets 1140 0 0 0

Fixed assets 1150 31 187 885 25 778 939 19 086 605

Income-bearing investments in 1160 0 0 0 tangible assets

Financial investment 1170 297 579 297 418 357 097

Deferred tax assets 1180 173 381 693 617 146 578

Other fixed assets 1190 225 858 155 458 596 256

TOTAL for Section I: 1100 31 939 969 26 976 701 20 235 027

II. WORKING ASSETS Physical inventory 1210 354 151 344 464 147 221

Valued added tax on acquired assets 1220 2 630 1 002

Accounts receivable 1230 2 964 048 3 724 836 2 599 103

Financial investments (excluding cash 1240 2 630 000 3 198 000 2 440 440 equivalents)

Funds and cash equivalents 1250 1 265 029 2 125 709 3 632 925

Other working assets 1260 38 913 37 937 30 451

TOTAL for Section II: 1200 7 252 143 9 431 576 8 851 142

BALANCE 1600 39 192 112 36 408 277 29 086 169 Thousand rubles LIABILITY Line code For 31.12.2013 For 31.12.2012 For 31.12.2011

III. CAPITAL AND RESERVES Authorised capital (share capital, 1310 6 540 732 6 540 732 6 189 318 capital, partners’contributions)

Treasury stock 1320 (0) (0) (0) 109

Revaluation of capital assets 1340 0 0 0 2013 Capital surplus (without revaluation) 1350 808 684 808 684 485 383

Reserve fund 1360 327 037 327 037 325 019 ANNUAL REPORT ANNUAL

Undistributed profits 1370 25 641 899 18 044 397 13 952 077 (unrecovered loss)

TOTAL for Section III: 1300 33 318 352 25 720 850 20 951 797

IV.LONG-TERM OBLIGATIONS Borrowed funds 1410 0 0 0

Deferred tax liabilities 1420 1 417 517 1 088 301 806 874

Estimated liabilities 1430 0 0 0

Other liabilities 1450 213 596 230 858 3 153 712

TOTAL for Section IV: 1400 1 631 114 1 319 159 3 960 586

V. SHORT-TERM OBLIGATIONS Borrowed funds 1510 0 0 0

Accounts payable 1520 3 812 797 8 996 537 3 750 869

Deferred income 1530 0 0 0

Estimated liabilities 1540 429 761 369 474 422 897

Other liabilities 1550 89 2 258 20

TOTAL for Section V: 1500 4 242 646 9 368 268 4 173 786

BALANCE 1700 39 192 112 36 408 277 29 086 169 Income Statement for January-December 2013

Thousand rubles

Item Line code For January-December 2013 For January-December 2012

Revenue 2110 25 883 418 19 158 622

Cost of sales 2120 (15 746 206) (13 193 687)

110 Gross profit (loss) 2100 10 137 212 5 964 935

Business expenses 2210 (0) (0)

Management expenses 2220 (0) (0)

Sales profit (loss) 2200 10 137 212 5 964 935

Participation capital 2310 2 501 2 595 SCHEDULES

Interest receivable 2320 393 003 330 846

Interest payable 2330 (0) (0)

Other income 2340 1 722 004 186 051

Other expenses 2350 (2 569 286) (1 146 264)

Pre-tax profit (loss) 2300 9 685 434 5 338 163

Current income tax 2410 (1 237 558) (1 510 011)

Including: permanent tax liabilities 2421 154 115 173 426 (assets)

Changes in deferred tax liabilities 2430 (333 886) (281 459)

Changes in deferred tax assets 2450 (519 758) 550 411

Other 2460 3 270 (2 766)

Net profit (loss) 2400 7 597 502 4 094 338

Clarifications

Item Code For January-December 2013 For January-December 2012

FOR REFERENCE

Surplus on revaluation of fixed assets not 2510 0 0 included in net profit (loss) for the period

Surplus on other activities not included in net 2520 0 0 profit (loss) for the period

Aggregate financial result for the period 2500 7 597 502 4 094 338

Basic earnings (losses) per share 2900 0,00058 0,00032

Diluted earning (losses) per share 2910 0 0

For full book-keeping account of the Company for 2013 go to page http://www.e-disclosure.ru/portal/company. in compliance with the requirement of Section 8.3 aspx?id=1830 or the Company’s official website http:// of Disclosure Statute for Issuers of Issued Securities www.gridcom-rt.ru (section “Shareholders and investors/ approved by FFMS Act No.11-46/pz-n. dated 04.10.2011 Information disclosure”) 111 2013 ANNUAL REPORT ANNUAL 112 SCHEDULES 113 2013 ANNUAL REPORT ANNUAL 9.2. SIGNIFICANT ASPECTS OF POLICIES ON INFORMATION DISCLOSURE IN THE BOOK-KEEPING ACCOUNT

Basic approach to compilation of annual book-keeping account RDA expenses are written off in a straight-line method with- in the established period. The period over which RDA expenses The accounting reference period is from January 1 to are to be written off is established by the Society independently December 31. based on the expected time of use of RDA results during which 114 The Company will continue its activities in foreseeable fu- the organization can profit, but not exceeding five years. ture and it has no intentions or necessity to liquidate or signifi- cantly reduce the scale of activities, which is why its obligations Fixed assets will be paid in accordance with the established procedure. Generally valuation of property purchased at a charge is The initial cost of purchased fixed assets is the amount of calculated by adding the actual expenses for the purchase; actual expenses on its acquisition, installation and production. property received free of charge – at market price at the capi- The initial cost of fixed assets received by contracts envisaging talization date; property produced by the Society itself – byad- non-monetary fulfillment of obligations is the cost of delivered

SCHEDULES ding the expenses for its production values or values that are to be delivered by the Society. The An item on the book-keeping account is considered signif- cost of delivered values or values that are to be delivered is icant if failure to disclose it may affect the economic decisions established based on the price that similar items are acquired of interested customers taken based on the account informa- for in comparable circumstances. tion provided by the Company. An amount of money is consid- Fixed asset depreciation is charged through a straightline ered significant if its ratio to the overall sum of corresponding method. Fixed assets with a consumer performance that re- data for the fiscal year is not less than five per cent. mains unchanged with time are not liable to depreciation; these Assets and obligations are presented as short-term if the include real estate, environmental facilities and other similar maturity (redemption) period is shorter than 12 months or items. shorter than the operating cycle if it exceeds 12 months. All the The useful life of an item is established by the Society other assets and obligations are presented as long-term. according to Decree No.1 dated 01.01.2002 of the Russian Federation “On classification of fixed assets included into de- Intangible assets preciation categories”. Fixed assets are not reevaluated. Real estate that no lon- Intangible assets (IA) are shown on the balance sheet at ger receives investments and that is not registered as property their initial cost less the depreciation amount accumulated in compliance with the existing legislation are accounted for during the time of use. The initial cost of IA is formed based as fixed assets on a specialized account 01/007 “Fixed assets on the actual expenses related to their acquisition (production) without state registration of property rights”. Depreciation is The initial cost of IA received through a swap contract is charged for such objects from the first day of the month after calculated based on the cost of the delivered goods or goods the month of accounting the object in the book-keeping record that are to be delivered. If it is impossible to estimate, the initial as fixed asset at the time of its operational readiness. cost of IA is calculated based on the price that the Society ac- Purchased real estate can be accounted as fixed assets quires similar assets for in comparable circumstances. only after the registration of property rights. Prior to the regis- In case IA items are invested into the authorized capital the tration of property rights these real estate objects are account- initial cost is estimated at the amount of monetary value fixed by ed on account No. 08/001 “Purchase of separate objects”. the founder. In case of obtaining IA items free of charge, by way of The initial cost of sold real estate without registered prop- gift, the initial cost is calculated based on the market price at the erty rights is deducted from account 01/001 to account 01/010 date of entry into the books. Cost of IA items (except for IA with an “Fixed assets passed over to the buyer without registration of indefinite useful life) is redeemed by straight-line charging of de- property rights”. Depreciation charged during the period from preciation that is accounted for at account 05 “Depreciation of IA.” the date of acceptance and transfer certificate of the fixed as- Depreciation is charged throughout the useful life of IA. The useful set and state registration is accounted as other expenses due life of IA is defined as a period during which the Society expects to to the fact that the asset is not used for its main purpose. use the IA with the purpose of profiting, and is annually reviewed. Fixed assets are shown on the balance sheet at their Ways of changing depreciation evaluation are not envisaged. initial cost except depreciation charges accumulated during the time of use. Research and development activities (RDA) Inventory Research and development expenses are understood by the Society as all the actual expenses related to these activities. Inventory is evaluated based on the transaction price al- Completed RDA are accounted by the book-keepers based on lowing for ordering costs. If the ordering costs related to cer- the work completion certificate. Expenses on RDA are then tain inventory items can be separated from the overall ordering grouped in the book-keeping account based on the results of costs, such ordering costs are accounted as related to spe- the completed activity. They are considered: cific inventory items. Otherwise ordering costs are account- ed as expenses of the current period. Acquisition (production) • intangible assets if the asset meets IA criteria; of rigging and workwear is accounted as envisaged for other • other expenses if they have a negative result, if they do inventory items. Cost of special rigging and workwear with a not meet asset criteria or if further RDA are deemed useful life exceeding 12 months is charged through a straight- inadvisable; line method. • expenses on RDA if they have a positive result. At the time of inventory release to production (sale) it is eval- and production expenses are distributed between service uated by FIFO method. At release to production (sale), the cost types pro rata with basic pay of factory personnel. of goods is deduced by average cost method. Assets that cost less than 40000 rubles per unit with a use- Settlements with debtors and creditors ful life exceeding 12 months are considered inventory items. Inventory items that have lost its value, partially or fully lost Settlement with debtors and creditors are accounted in its initial quality or the market price of which has decreased, are terms of counterparties, obligations and related time periods. accounted in the book-keeping at the end of the accounting Accounts receivable are presented as short-term on period (quarter, year) less provision for devaluation of assets. the balance sheet if its maturity period envisaged by the 115 contract does not exceed 12 months after the reference Deferred expenses date. If the maturity period envisaged by the contract or an additional agreement exceeds 12 months after the refer- Expenses made during the current accounting period but ence date accounts receivable are presented as long-term.

related to future periods are accounted in the book-keeping Bad debt provisions are made in the Society on an indi- 2013 as deferred expenses. These expenses are deducted evenly vidual basis for each counterparty and contract. during the periods that they are related to. Deferred expenses are shown on the balance sheet as part Estimated liability for carry-over vacation of other current or non-current assets depending on their ma-

turity date. If the expenses are significant the Company lists The Company accepts estimated liability for carry-over REPORT ANNUAL them on the balance sheet on a separate line. vacation at the end of each accounting period (quarter, year) for abortive trials. Financial investments Balance sheet error correction Financial investments current market value of which is not determined, are reflected in the book-keeping and accounting Mistakes made on the balance sheet and their conse- statements as of the accounting date at their historical cost. If quences are subject to compulsory correction. A signif- the impairment test confirms a consistent significant impairment icant mistake for the previous fiscal year found after ap- of financial investment, the Company forms a reserve for the im- proval of the account for that year is corrected by: pairment of financial investments at the difference value between the reported and calculated value of such financial investments. • reflecting it in the corresponding sections of the account Financial investments the market value of which can be es- for the current period. The offset account is the undis- timated are reflected in the book-keeping account at the end tributed profit (uncovered loss) account; of the accounting year at the market value. At the retirement of • recounting comparative figures of the balance sheet for the asset accounted in the book-keeping as a financial invest- accounting periods reflected on the Company’s bal- ment the market value of which cannot be estimated, its cost ance sheet for the current accounting year except for is estimated based on the initial cost of each book-keeping unit case when it is impossible to establish a connection of of financial investments. the mistake in question with a specific period or to de- termine the cumulative impact of this mistake in respect Cash to all the previous accounting periods.

The line “Cash and cash equivalents” of the Society’s Accounting changes balance sheet includes deposits with a period not exceeding three months. The interest accumulated for such deposits is Consequences of accounting changes that affected or reflected on account 76 “Settlements with sundry debtors might significantly affect the financial state of the Society, the and creditors” and is included in line “Accounts receivable” financial results of its activities and (or) cashflow are estimat- of the balance sheet. Cashflow is reflected on the cashflow ed in monetary terms. Consequences of accounting changes statement with a section for cashflow from current invest- caused by changes in the Russian legislation and (or) regula- ment and financial operations. The cashflow statement con- tory acts on accounting are reflected on the balance sheet as cisely reflects indirect taxes (WAT) within payments from envisaged by the corresponding Russian legislation and (or) buyers and customers, payments to suppliers and contrac- regulatory act on accounting. If the above mentioned docu- tors and payments (compensations) to the budget system. ments do not establish a procedure for reflecting consequenc- es of accounting changes, these consequences are reflected Revenue recognition on the balance sheet retrospectively, except for cases when an estimate of these consequences cannot be reliably calculated Revenue and other income (receipts from the sale of in monetary terms for the period preceding the current. products (goods), receipts from execution of activities (providing services), etc.), is recognized at the time of work Accounting changes for 2014 completion, provision of a service, production of goods overall and is reflected in the balance sheet except WAT. From January 1, 2014 the accounting police has changed in the aspects of criteria recognition of fixed Expenses recognition assets – buildings, constructions, transmission devices, power machines and equipment are included into the Expenses related to main activities (full actual factory fixed assets regardless of their prices. The other changes costs), are considered part of the expenses for the current are just verbal alteration and don’t affect the essence of accounting (tax) period in full volume. General business the regulations. 9.3. DATA ON COMPLIANCE WITH CORPORATE CODE OF CONDUCT

№ Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 116 General meeting of shareholders 1 Notifying shareholders about a general meeting of Followed Article 11.6.1. of the Statute, article 14.1. of the Provision shareholders not less than 30 days prior to its holding on the general meeting of shareholders of JSC “Grid irrespective of the business to be transacted unless a Company” establish that shareholders should be notified longer period is stipulated by law. about a general meeting of shareholders not less than 30 days prior to its holding.

SCHEDULES 2 The ability of shareholders to meet the people authorized Followed Article 13.1. of the Provision on the general meeting to participate in the general meeting of shareholders of shareholders of JSC “Grid Company” envisages the starting with the announcement day of a general meeting right of persons included on the list of people, entitled to of shareholders and up to the ending of the actual general participate in the general meeting of shareholders and meeting of shareholders; and in case of an absentee having no less than 1% of the votes, to receive this list if meeting – up to the end of ballot paper acceptance. they request to do so.

3 The ability of shareholders to make themselves familiar with Partially followed The Company does not disclose information that is to be the information (material) that is to be provided as part of provided as part of preparation for the general meeting preparation for the general meeting of shareholders through of shareholders on the web-page. At the same time electronic messaging systems including Internet. information that is to be provided as part of preparation for the general meeting of shareholders can be sent to the Company’s shareholders via e-mail.

4 The ability of a shareholder to bring an issue to the agenda Followed The Company’s Statute and internal documents do of the general meeting of shareholders or request a general not bind shareholders to provide an extract from the meeting of shareholders without providing an extract shareholder register while brining an issue to the agenda from the shareholder register if his or her share rights of the general meeting of shareholders or requesting a are registered in the shareholder register; in case his or general meeting of shareholders. her share rights are registered on the depository account, an extract from the depository account should suffice for exercising these rights. 5 Stipulating in the statue or internal documents of a joint- Followed Article 4.1. of the Provision on the Board of Directors, stock company obligatory attendance of director general, article 2.5. of the Provision on Director General, article members of the board, members of the boards of directors, 1.6 of the Provision on Checkup Committee of JSC “Grid members of the checkup committee and the auditor of the Company” oblige members of the board of directors, JSC. Director General and members of the checkup committee to attend general meeting of shareholders; article 17.4. of the Provision on general meeting of shareholders allows the Company’s auditor to attend general meetings of shareholders. 6 Obligatory attendance of candidates at the general meeting Followed Article 17.4. of the Provision on general meeting of of shareholders dedicated to issues of electing members shareholders establishes the ability to attend meetings of the board of directors, director general, members of for candidates for elections to management and control the board, members of the checkup committee as well as bodies of the Company. appointing the auditor of the JSC.

7 The joint-stock company’s internal documents shall include Followed A registration procedure for participants of the general a registration procedure for the general shareholders’ meeting of shareholders is regulated by Section 23 meeting participants. “Registration procedure for persons entitled to participate in the general meeting of shareholders” of the Provision on general meeting of shareholders of JSC “Grid Company”. № Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 The Board of Directors 8 Provision in the statute of the joint-stock company for the Followed According to article 12.1.2. of the Company’s Statute board of directors’ authority for annual approval of the the Board of Directors has the authority to establish financial and economic plan of the joint-stock company. priority areas of the Company’s activities and approve the Company’s budget. 117 9 Presence of a risk management system approved by the Followed The Company’s Board of Directors approved Risk board of directors. Management Policy of JSC “Grid Company” (protocol No.6/2012 dated 28.12.2012). 2013

10 Availability in the statute of the joint-stock company of N/A Subparagraph 16 of article 12.1.2. of the Statute the right of the board of directors to suspend authorities authorizes the Board of Directors to form an executive of director general appointed by the general meeting of body and prematurely terminate its powers. shareholder. ANNUAL REPORT ANNUAL

11 The statute of the joint-stock company authorizes the Not followed board of directors to set requirements to qualifications and remuneration of the director general, executive board heads of the main structural units of the company.

12 Stipulation in a joint stock company’s Staute of the Followed The Board of Directors receives the approval of terms authority of the board of directors to approve the terms and of contracts from Director General according to conditions of employment contracts with director general subparagraph 16 of article 12.1.2 of the Statute and and members of the executive board. article.1.4 of the Provision on Director General of JSC “Grid Company”. 13 Stipulating in the statute or the internal documents o the Not followed JSC that the votes of director general and members of the board of directors are not taken into account in settling contract terms with director general (management company, manager) or members of the board 14 Presence of at least three independent directors meeting Followed The Board of Directors elected September 14, 2012 the requirement of the Code of Corporate Conduct on the includes four directors that meet independence criteria board of directors. established in the Code of Corporate Conduct.

15 Absence among the members of the board of directors Followed of persons who were found guilty of crimes related to economic activities or crimes against the public order and interests of state service or local government services or persons who were administratively punished for offences related to entrepreneurship, finance, tax and fees, or stock market. 16 Absence among the members of the board of directors Followed of persons who are also participants, director generals (managers), members of the managing bodies or a legal employee with a competing JSC.

17 Stipulating in the statute of the JSC that the board of Followed Article 12.2.5 of the Statute, article 8.2 of the Provision directors should be elected by a cumulative vote. on the Board of Directors of JSC “Grid Company” establish that members of the Company’s board of directors should be elected by a cumulative vote.

18 Stipulating in the internal documents of the JSC that the Followed Article 4.1. of the Statute on the Board of Directors of members of the board of directors should be obliged to JSC “Grid Company” obliges members of the Board of avoid actions that will or could potential lead to a conflict of Directors to avoid actions that will or could potential lead their interests and the interests of the JSC, and in case of to a conflict of their interests and the interests of the JSC, such conflict – to reveal to the board of the and in case of such conflict – to reveal to the board of the directors information about it. directors information about it. № Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 The Board of Directors 19 Stipulating in the internal documents of the JSC that Followed Article 4.1. of the Statute on the Board of Directors obliges the board of directors should be obliged to inform the members of the Board of Directors to inform the Board of board of directors in writing about their intention to make Directors, Checkup Committee and the Company’s auditor 118 a transaction with the shares of the JSC that they are about their intention to make a transaction with the shares shareholders of or its affiliated (dependent) societies as well of the JSC and (or) its affiliated (dependent) societies as as reveal information about completed transactions with well as reveal information about completed transactions such shares with such shares. 20 In the reporting year meetings of the Board of Directors Not followed were held no less than twice per six weeks SCHEDULES

21 Meetings of the Board of Directors of the joint-stock Followed 13 meetings of the Board of Directors of the JSC “Grid company during the year which is the subject of the annual Company” were held in 2013, meetings were at intervals report of the joint-stock company are carried out at least as not exceeding six weeks. often as once every six weeks

22 Regulating in the internal documents of the JSC procedures Followed Procedures of the Board of Directors’ meetings are of the board of directors’ meetings regulated by Section VI “Calling and Holding a Meeting of the Board of Directors, Procedure of Decision- Making” of the Provision on the Board of Directors of JSC “Grid Company”.

23 Stipulating in the internal documents of the JSC that the Partially followed According to subparagraph 25 of article 12.1.2 of the board of directors need to approve transactions of the Statute the Board of Directors is responsible for taking JSC to the amount of 10 or more percent of the society’s decisions on loan-related issues, third-person sureties asset value, except for transactions made as part of regular to the amount from 5 to 50 percent of the balance sheet economic activities value of the Company’s assets established for the last day of the accounting period, transactions related to alienation or potential alienation of property, as well as transactions related to encumbering of real estate if such transactions can lead to its alienation to the amount from 5 to 50 percent of the balance sheet value of the Company’s assets established for the last day of the accounting period. 24 НStipulating in the internal documents of the JSC Partially followed According to article 3.1. of the Provision on the Board of that members of the board of directors are entitled to Directors of JSC “Grid Company” a member of the Board receive form the executive bodies and managers of JSC of Directors is authorized to request and receive from the departments information required for executing Company’s officials any information (documents and their functions, and that the executive bodies and managers materials) related to the Company necessary for of JSC departments should take responsibility in case they performing his or her functions, in addition article 3.2 fail to provide such information obliges Director General to provide any information about the Company’s activities as well as his or her official duties at the request of the Chairman of the Board of Directors. The Company’s internal documents do not envisage administrative measures for failure to provide information. 25 Existence of the Board of Directors’ strategic planning Not followed committee or assignment of the committee’s functions to another committee (other than the audit committee or human resources and remuneration committee)

26 Existence of a committee of the board of directors (auditing Followed The Audit Committee of the Board of Directors operating committee) that suggests to the board of directors an auditor in 2013 was elected at the meeting of the Board of for the JSC and interacts with it and the checkup committee Directors dated 14.09.2012 (protocol No.01/2012 dated of the JSC 17.09.2012). № Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 27 Only independent and non-executive directors may be Followed Members of the Audit Committee of the Board of Directors: members of the Audit Committee. • Alexander Nikolaevich Yurtaev (non-executive director); • Khazma Azalovich Bagmanov (non-executive director); • Marat Gabdulbarovich Nadyrshin (independent director); • Alexei Mikhailovich Pakhomov (independent director). 119 28 The audit committee should be managed by an Not followed independent director. 2013 29 Stipulating in the internal documents of the JSC that all the Followed Article 6.1 of the Provision on the audit committee of the members of the audit committee are entitled to access all Board of Directors of JSC “Grid Company” entitles committee documents and information of the JSC under the condition members to review records of committee and Board of of non-disclosure and confidentiality of information. Directors’ meetings, receive copies thereof,request from

members of the Board of Directors, the Company’s executive REPORT ANNUAL bodies and the Company’s departments performing auditing and accounting functions information and documents related to issues within the committee’s competence established by the Provision on the Board of Directors. 30 Creating a committee of the board of directors (human Followed Human resources and remuneration committee of the resources and remuneration committee) responsible for Board of Directors was elected at the Board of Directors’ establishing criteria of selecting candidates for the board of meeting held on 25.10.2013 (protocol No. 3/10-2013 directors and developing a remuneration policy for the JSC. dated 28.10.2013).

31 The human resources and remuneration committee should Followed The human resources and remuneration committee is led be managed by an independent director. by an independent director Alexei Mikhailovich Pakhomov.

32 Absence among the members of the human resources and Followed Members of the human resources and remuneration remuneration committee of officials of the JSC. committee of the Board of Directors: • Alexander Nikolaevich Yevseev (independent director); • Alexei Mikhailovich Pakhomov (independent director); • German Mikhailovich Fashiev (non-executive director). 33 Creating a risk management committee of the board of Not followed directors or assigning its functions to a different committee (other than the human resources and remuneration committee).

34 Availability of a committee of the Board of Directors for Not followed settlement of corporate conflicts or assigning functions of such a committee to another committee (except for the Audit Committee and HR and Remunerations Committee).

35 Absence among the members of the committee for N/A The Company does not have a Committee for Settlement settlement of corporate conflicts of the JSC officials. of Corporate Conflicts.

36 The Arrangements for Resolving Corporate Conflict N/A The Company does not have a Committee for Settlement Committee shall be governed by an independent director. of Corporate Conflicts.

37 Provision in internal documents of the joint-stock company Followed Provision on the human resourced and remuneration committee of the process of establishment and operation of the Board was approved by the Board of Directors on 05.06.2007 of Directors committees approved by Board of Directors. (protocol No.10 dated 07.06.2007). Provisions on the audit committee was approved by the Board of Directors on 05.06.2007 (protocol No.10 dated 07.06.2007). Provision on Innovation committee was approved by the Board of Directors on 19.05.2011 (protocol No. 22 dated 20.05.2011). № Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 38 The statute of the JSC should establish a procedure Not followed for deciding on a quorum of the board of directors that would guarantee compulsory participation of independent directors in board of directors’ meetings. 120 Executive Bodies 39 Presence of a collegiate executive (management) body in Not followed the JSC.

40 Stipulating in the statute or internal documents of the JSC Partially followed According to subparagraph 25 of article 12.1.2 of the Statute that the management should approve transactions with real the board of directors is responsible for taking decisions on estate and obtaining credit if these transactions are not loan-related issues, third-person sureties to the amount from part of large-scale transactions and they are not related to 5 to 50 percent of the balance sheet value of the Company’s SCHEDULES regular economic activities of the JSC. assets established for the last day of the accounting period, transactions related to alienation or potential alienation of property, as well as transactions related to encumbering of real estate if such transactions can lead to its alienation to the amount from 5 to 50 percent of the balance sheet value of the Company’s assets established for the last day of the accounting period. The Company does not have a collegiate executive (management) body. 41 Regulating in the internal documents of the JSC procedures Not followed of approving operations that are not part of the financial and economic plan of the JSC.

42 Absence among the members of the executive bodies of the JSC Followed of persons who are participants, director generals (managers), members of the managing bodies or legal employees with a competing JSC. 43 Absence among the members of the executive bodies of the Followed JSC of persons who were found guilty of crimes related to economic activities or crimes against the public order and interests of state service or local government services or persons who were administratively punished for offences related to entrepreneurship, finance, tax and fees, or stock market. If the functions of the single executive body are performed by an organization or a manager – that the director general and members of the board of the managing organization or manager should comply with requirements to director general and members of the board of the JSC. 44 Stipulating in the internal documents of the JSC that the N/A The functions of a single executive body were not handed managing organization (manager) should be forbidden to over to a managing company (manager). perform similar functions in a competing society or have any other property relationship with the JSC other than providing services of a managing organization (manager). 45 Stipulating in the internal documents of the JSC that the Followed According to article 2.8. of the Provision on Director members of the executive bodies should be obliged to avoid General of JSC “Grid Company” Director General should actions that will or could potential lead to a conflict of their avoid actions that will or could potential lead to a conflict interests and the interests of the JSC, and in case of such of their interests and the interests of the JSC, and in case conflict – to reveal to the board of the directors information of such conflict – to reveal to the board of the directors about it. information about it. 46 Availability in the statute or by-laws of the joint- stock N/A The functions of a single executive body were not handed company of criteria of selection of a management company over to a managing company (manager). (managing director). 47 The executive bodies of the JSC should present monthly Partially followed The single executive body (director general) of JSC “Grid reports on their activities to the board of directors. Company” presents information about the key components of the Company’s activities to the Chairman of the Board of Directors on a quarterly basis. № Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 48 Regulating responsibility for violations of non-disclosure Followed of confidential and privileged information in contracts signed by the JSC with Director General (managing body, manager) and members of the board . Society’s Secretary 121 49 Presence in the JSC of a special official (the society’s Followed The Company’s corporate secretary was elected by the secretary) who is to ensure that the bodies and officials of Board of Directors on 23.11.2012 (protocol No. 5/2012 the JSC follow procedures that guarantee the realization of dated 23.11.2012. rights and legal interests of the society’s shareholders. 50 Regulating in the statute or internal documents of the Followed Appointment (election) procedures of the Corporate 2013 JSC the procedure for appointing (electing) the Society’s Secretary and his or her duties are established in section secretary and his or her duties. 13 of the Statute of JSC “Grid Company” and the Provisionon the Corporate Secretary.

51 Enumerating in the statute of the JSC a list of qualities Partially followed Qualities required from the Company’s corporate secretary REPORT ANNUAL that a candidate for the position of the society’s secretary are listed in article 3.4 of the Provision on the Corporate should possess. Secretary of JSC “Grid Company”. Significant Corporate Actions 52 Stipulating in the statute or internal documents of the JSC Not followed An independent appraiser is recruited in cases envisaged that a large scale transaction should be approved before its by the Federal Law “On joint-stock companies” and other completion. regulatory acts.The deals acknowledged in the compliance 53 An independent appraiser must be recruited to evaluate Not followed with the Federal Law “On Corporations” big deals were not the market value of real estate that is part of a large-scale completed in 2013. transaction. 54 The statute of the JSC should forbid in cases of large-package Not followed acquisition any actions aimed at defending the interests of the executive bodies (members thereof) and members of the board of directors of the JSC and any actions that could deteriorate the state of the shareholders as compared to the current state (the statute should specifically forbid issuing additional stock before the expected expiration date of the placed stock, issuing securities convertible to shares or securities that entitle the owner to purchase shares even if the board of directors is entitled to do so by the statute). 55 Stipulating in the statute of the JSC that an independent appraiser Not followed should be recruited for evaluation of the current market value of shares and potential changes in their market value as a result of take-over. 56 The statute of the JSC should not free the buyer from the Followed obligation to suggest to shareholders selling the society’s equities (issuance securities convertible to equities) in case of a take-over 57 Stipulating in a joint stock company’s Statute or internal Partially followed The Company’s state and internal documents do documents that an independent assessor must be invited not envisage recruiting an independent appraiser for for determination of the conversion value of shares after the establishing the shares conversion rate in case of reorganization. reorganization. An independent appraiser must be recruited, however, according to paragraph 3 of article 75 of the FZ “On jointstock companies”. Information Disclosure 58 Regulating in the Company’s internal documents rules Followed Provision on Information Policies of JSC “Grid Company” and approaches to information disclosure (Provision on was approved by the Board of Directors on 31.05.2012 Information Policies). (protocol No.13/2012 dated 01.06.2012). 59 The internal documents of the JSC should stipulate Partially followed According to article 3.1.2 of the Provision on Information disclosure of information about purposes of stock Policies the Company discloses information about all placement, people intending to purchase the placed registered issues of securities and the most significant stock including a large package as well as information on events in the Company’s activities including the most whether the highest officials of the JSC will participate in important decisions taken by the management bodies of acquisition of the placed stock. the Company, and places documents on all the registered decisions on issuing stock on the official web-page. № Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 60 Internal documents must contain information, documents and Followed Article 11.6.3 of the Statute and article 15 of the Provision materials that should be provided to shareholders for taking on General Meeting of Shareholders of JSC “Grid decisions brought to the agenda of the general meeting of Company” contain information, documents and materials shareholders. that are to be provided to persons entitled to participate in 122 the general meeting of shareholders. 61 The joint-stock company must have a web-page in the Followed The Company discloses information in compliance with the Internet and regularly disclose information about the JSC on Disclosure Statute for Issuers of Issued Securities approved this website. by FFMS Act No.11-46/pz-n. dated 04.10.2011 on the web-page at http://www.e-disclosure.ru/portal/company. aspx?id=1830. Information about the Company is regularly disclosed at the Company’s web-page: http://www.gridcom- rt.ru.

SCHEDULES 62 Internal documents should stipulate disclosure of Partially followed Information on transactions categorized according to the information on transactions of the JSC with persons that Federal law “on joint-stock companies” as transactions are the company’s highest officials according to its statute, with an involved self-interest is disclosed in the annual as well as transactions with organizations the highest report of the Company including its publication on the officials of which directly or indirectly own 20 or more web-page. percent of the stock capital or transactions that could be significantly affected by such persons. 63 Stipulating in the internal documents disclosure of Not followed information on all transactions that may affect the market value of the JSC shares. 64 Existence of a document approved by the board of directors on Followed The Provision on Information Policies of JSC “Grid use of significant information about the activities of the JSC, Company” has a section dedicated to insider information. its shares and other securities and transactions with them that is not available to the public and the disclosure of which may significantly affect the market value of shares and other securities of the JSC. Control of Financial and Economic Activities 65 Existence of internal control procedures approved by Followed The company has a Provision on Internal Control System of the board of directors and regulating the financial and the JSC “Grid Compnay”. economic activities of the society. 66 Existence of an ad hoc unit of the joint stock company that Followed The Company has a control and revision management ensures compliance with the internal control procedures that ensures compliance with internal control procedures. (control and audit service). Control and revision management have an internal audit and a methodology departments. 67 Stipulating in the internal documents of the JSC that the board Not followed of directors must establish the structure and the composition of the control and revision management of the JSC.

68 The control and revision service should not include persons Followed who were found guilty of crimes related to economic activities or crimes against the public order and interests of state service or local government services or persons who were administratively punished for offences related to entrepreneurship, finance, tax and fees, or stock market. 69 The control and revision service should not include persons Followed who are involved in the executive bodies of the JSC as well as persons who are participants, director generals (managers), members of the managing boards or legal employees with a competing JSC. 70 Stipulating in the internal documents of the JSC deadlines for Partially followed Article 9.5 of the Provision on Internal Control System of the providing to the control and revision service documents and JSC “Grid Company” establishes a deadline for providing materials for assessment of financial and economic activities as information for checkups by there are no measures well as responsibility of officials and employees of the JSC for envisaged for failure on the part of officials and employees failing to provide such information before the given deadline. to provide such information before the give deadline. № Provision of the Corporate Code of Conduct Followed/ Commentary Not followed 1 2 3 4 71 The control and revision service should inform the audit Followed Article 9.8 of the Provision on Internal Control System of committee about the discovered violations, and in case the JSC “Grid Company” obliges the internal audit department JSC does not have an audit committee it should inform the to regularly inform the audit committee of the Company’s board of directors of JSC. board of directors about violations in financial, economic and industrial activities discovered during checkups and suggest measures for eliminating them including failure to 123 comply or effectively comply with the internal documents approved in the Company and the results of elimination/ failed elimination of the discovered violations.

72 Stipulating in the statute of the JSC that the control and Not followed 2013 revision and service should preliminarily assess the viability of operations not envisaged by the financial and economic plan of the JSC (non-standard operations). 73 Internal documents of the Company must contain a procedure Not followed for nonstandard operation approval by the Board of Directors. REPORT ANNUAL

74 Existence of an internal document approved by the board Followed Provision on Revision Committee of JSC “Grid Company” of directors and regulating procedures for checkups of was approved by the annual general meeting of financial and economic activities of the JSC by a revision shareholders of 29.06.2007 (protocol No.14 dated committee. 13.07.2007). 75 The audit committee should assess the auditor’s conclusion Followed The Audit Committee of JSC “Grid Company” is scheduled before presenting it to the shareholders at the general to examine results of financial (book-keeping) audit for meeting of shareholders. 2013 in the first half of 2014. Dividends 76 Existence of an internal document approved by the board Followed Provision on Dividend Policy of JSC “Grid Company” of directors and used by the board of directors for taking was approved by the Board of Directors on 16.05.2011 recommendations on dividend payments (Provision on (Protocol No.21 dated 17.05.2011), in the new issue Dividend Policy). 19.02.2014 (Protocol No. 8/02-2014dated 21.02.2014). 77 Regulating in the Provision on Dividend Policy procedures Partially followed Section 3 of the Provision on Dividend Policy of JSC “Grid for assessing the minimum share of net profit of the JSC Company” established the main principles of setting channeled towards dividend payments and conditions under dividend payment rates.The Company has not placed any which dividends are not paid or paid partially for privileged privileged shares. shares the payment rates of which is established in the Statute. 78 The JSC should publish information on its dividend Followed The Provision on Dividend Policy of JSC “Grid Company” policy and the changes it undergoes in a periodical is published on the Company’s web-page at http://www. edition envisaged in the statute of the JSC and designed gridcom-rt.ru. The Company’s Statute does not envisage a for publishing announcements of general meetings of periodical edition for publishing announcements of general shareholders as well as publishing such information on the meetings of shareholders. web-page of the JSC. List of transactions considered according to the federal law “On joint-stock companies” transactions with a self-interest and approved by the Company’s management bodies in 2013

№ Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 1 An agreement about maintenance and 171 039,00 JSC “Tatenetgosbyt” A.P. Volodkevich, Protocol of the BD providing sanitation and climate conditions for 11 months I.Sh. Halikov No.7/02-2013 124 for the telecommunication equipment. dated 22.02.2013

2 Non-residential Lease Contract. 271 693,73 JSC “Tatenetgosbyt” A.P. Volodkevich, Protocol of the BD for 11 months I.Sh. Halikov No.7/02-2013 dated 22.02.2013

3 Additional agreement about a value 19 446,24 JSC “Tatenetgosbyt” A.P. Volodkevich, Protocol of the BD SCHEDULES increase of cable line maintenance. for a year I.Sh. Halikov No.7/02-2013 dated 22.02.2013

4 Additional agreement about extension of 130 000,00 JSC “Tatenetgosbyt” A.P. Volodkevich, Protocol of the BD validity of non-residential lease contract. for 11 months I.Sh. Halikov No.7/02-2013 dated 22.02.2013

5 Non-residential lease contract (for sections 392 014,81 JSC ”Generation Company” H.A. Bagmanov, Protocol of the BD of buildings). for 11 months A.P. Volodkevich, No.7/02-2013 I.Sh. Halikov dated 22.02.2013

6 Lease contract for a land parcel. 422 963,20 JSC ”Generation Company” H.A. Bagmanov, Protocol of the BD for 11 months A.P. Volodkevich, No.7/02-2013 I.Sh. Halikov dated 22.02.2013

7 Contract for assignments od claims. 276 345,00 JSC ”Generation Company” H.A. Bagmanov, Protocol of the BD (WAT free) A.P. Volodkevich, No.7/02-2013 I.Sh. Halikov dated 22.02.2013

8 Contract for providing employees with 6 112 385,16 JSC ”Generation Company” H.A. Bagmanov, Protocol of the BD sport and health services. A.P. Volodkevich No.7/02-2013 I.Sh. Halikov dated 22.02.2013

9 Additional agreement about extension of 11 863,96 JSC ”Generation Company” H.A. Bagmanov, Protocol of the BD lease contract for sections of land parcel. for 11 months A.P. Volodkevich, No.7/02-2013 I.Sh. Halikov dated 22.02.2013

10 Agreement about line maintenance of the 181 571,58 JSC ”Generation Company” H.A. Bagmanov, Protocol of the BD equipment at SS 35/6 kV Т121. A.P. Volodkevich, No.7/02-2013 I.Sh. Halikov dated 22.02.2013

11 Contract for technical checkup services 48 290,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD of a vehicle with the purpose of ensuring (WAT free) represented by the No.7/02-2013 that it meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 Property Relations 12 Contract for technical checkup services 41 340,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD of a vehicle with the purpose of ensuring (WAT free) represented by the No.7/02-2013 that it meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 Property Relations 13 Contract for technical checkup services 38 000,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD of a vehicle with the purpose of ensuring (WAT free) represented by the No.7/02-2013 that it meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 Property Relations № Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 14 Contract for technical checkup services ofa 49 170,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD vehicle with the purpose of ensuring that (WAT free) represented by the No.7/02-2013 it meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 Property Relations 15 Contract for technical checkup services ofa 61 090,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD vehicle with the purpose of ensuring that it (WAT free) represented by the No.7/02-2013 125 meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 Property Relations 16 Contract for technical checkup services of a 38 460,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD vehicle with the purpose of ensuring that it (WAT free) represented by the No.7/02-2013

meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 2013 Property Relations 17 Contract for technical checkup services of a 17 110,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD vehicle with the purpose of ensuring that it (WAT free) represented by the No.7/02-2013

meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 REPORT ANNUAL Property Relations 18 Contract for technical checkup services of a 68 400,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD vehicle with the purpose of ensuring that it (WAT free) represented by the No.7/02-2013 meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 Property Relations 19 Contract for technical checkup services 53 810,00 JSC “Tattechcontrol” Republic of Tatarstan Protocol of the BD of a vehicle with the purpose of ensuring (WAT free) represented by the No.7/02-2013 that it meets vehicle safety requirements. Ministry of Land and dated 22.02.2013 Property Relations 20 Additional agreement about contract 6 000,00 JSC “Akibank” I.Sh. Fardiev Protocol of the BD extension for equipment placement (cash- for 12 months No.7/02-2013 in ATM). dated 22.02.2013 21 Lease contract for a land parcel. 4 904,00 JSC “KAMAZ” I.Sh. Halikov Protocol of the BD for 11 months No.7/02-2013 dated 22.02.2013 22 Agreement about placement of cable lines 4 016 967,00 JSC “Naberezhnye Chelny A.P. Volodkevich, Protocol of the BD in the straight-way collector. heating system company” I.Sh. Halikov, No.7/02-2013 H.A. Bagmanov dated 22.02.2013 23 Product delivery contract. 13 500,00 JSC “Nizhnekamskneftehim” I.Sh. Fardiev Protocol of the BD No.7/02-2013 dated 22.02.2013 24 Contract for services of storage of waste 121 663,70 JSC «Buinsk МПП ЖКХ Republic of Tatarstan Protocol of the BD at a landfill. (WAT free) (Engineering networks)» represented by the No.7/02-2013 Ministry of Land and dated 22.02.2013 Property Relations

25 Contract for maintenance services at 4 951,16 JSC “ICL-KME CS” A.M. Pahomov Protocol of the BD the package transformer substations No.7/02-2013 No.7860/400 kWA. dated 22.02.2013

26 Contract of sale of sanatorium packages. 46 145 000,00 JSC ”Generation Company” H.A. Bagmanov, Protocol of EMSh (WAT free) A.P. Volodkevich, No.29 dated I.Sh. Halikov 04.04.2013

27 Contract for producing, imposing, 3 878 000,00 JSC “Tatmedia” Republic of Tatarstan Protocol of EMSh placing and distributing commercials and represented by the No.29 dated infomercials in media. Ministry of Land and 04.04.2013 Property Relations

28 Agreement about delivery and expansion of 298 000,00 JSC “ICL-KME CS” A.M. Pahomov Protocol of the BD infrastructure of ultrathin clients and their No.9/04-2013 testing operation. dated 25.04.2013 № Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 29 Sublicense contract for computer software. 77 664,42 JSC “ICL-KME CS” A.M. Pahomov Protocol of the BD (WAT free) No.9/04-2013 dated 25.04.2013

30 Contract for producing, imposing, placing 283 200,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD 126 and distributing commercials, infomercials represented by the No.9/04-2013 and social advertisements in printed Ministry of Land and dated 25.04.2013 media, producing materials and providing Property Relations air time for broadcasting the materials on TV and the radio.

31 Additional agreement for the lease contract 122 430,34 JSC “Tatenergosbyt” A.P. Volodkevich, Protocol of the BD about the change of leasehold. for 11 months I.Sh. Halikov No.9/04-2013 SCHEDULES dated 25.04.2013

32 Contract for maintenance services 292 214,92 JSC “Niznekamskneftehim” I.Sh. Fardiev Protocol of the BD of power equipment of the SS No.9/04-2013 Nizhnekamskaya. dated 25.04.2013

33 Contract for providing consultation services 1 541,33 JSC “Tatteplosbyt” H.A. Bagmanov, Republic Protocol of the BD on organization of heat energy and heat of Tatarstan represented No.9/04-2013 carrier metering station. by the Ministry of Land dated 25.04.2013 and Property Relations

34 Additional agreement about extension 8 195,66 JSC ”Generation Company” H.A. Bagmanov, Protocol of the BD of a lease contract for a section of a land for 11 months A.P. Volodkevich, No.13/06-2013 parcel. I.Sh. Halikov dated 28.06.2013

35 Agreement about maintenance services. 295 420,08 JSC “Tatavtodor” Republic of Tatarstan Protocol of the BD represented by the No.13/06-2013 Ministry of Land and dated 28.06.2013 Property Relations

36 Sub-licensing contract for handing over of 45 000,00 JSC “ICL-KME CS” A.M. Pahomov Protocol of the BD licensed software Spider Project Desktop. (WAT free) No.13/06-2013 dated 28.06.2013

37 Purchase contract for: 71 000,00 JSC V.D. Shashin «Tatneft» A.K. Hamaev Protocol of the BD • land parcel; (WAT free) No.13/06-2013 • air line AL-35 kV. 1 913 487,41 dated 28.06.2013

38 Additional agreement for the contract of 148 752,00 JSC “Television and Radio Republic of Tatarstan Protocol of the BD producing and/or providing air time on the Broadcasting Company represented by the No.13/06-2013 radio “Bolghar” for information placement. “Novy Vek” Ministry of Land and dated 28.06.2013 Property Relations

39 Contract for producing, imposing, placing 2 500,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.13/06-2013 and social advertisements in printed Ministry of Land and dated 28.06.2013 media. Property Relations

40 Contract for producing, imposing, placing 3 750,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.13/06-2013 and social advertisements in printed Ministry of Land and dated 28.06.2013 media. Property Relations № Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 41 Contract for producing, imposing, placing 1 250,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing advertisement in the represented by the No.13/06-2013 newspaper “Volzhskaya Nov”. Ministry of Land and dated 28.06.2013 Property Relations

42 Contract for producing, imposing, placing 2 500,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD 127 and distributing materials in media. represented by the No.13/06-2013 Ministry of Land and dated 28.06.2013 Property Relations

43 Contract for producing, imposing, placing 2 500,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD 2013 and distributing commercials, infomercials represented by the No.13/06-2013 and social advertisements in printed Ministry of Land and dated 28.06.2013 media. Property Relations ANNUAL REPORT ANNUAL 44 Contract for producing, imposing, placing 2 500,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.13/06-2013 and social advertisements in printed Ministry of Land and dated 28.06.2013 media. Property Relations

45 Contract for producing, imposing, placing 2 500,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.13/06-2013 and social advertisements in printed Ministry of Land and dated 28.06.2013 media. Property Relations

46 Contract for producing, imposing, placing 2 500,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.13/06-2013 and social advertisements in printed Ministry of Land and dated 28.06.2013 media. Property Relations

47 Additional agreement about the increase 26 550,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD of contract value for producing, imposing, represented by the No.13/06-2013 placing and distributing commercials, Ministry of Land and dated 28.06.2013 infomercials and social advertisements in Property Relations printed media.

48 Additional agreement for the non- 332 673,22 JSC ”Akibank” I.Sh. Fardiev Protocol of the BD residential lease contract. for 11 months No.13/06-2013 dated 28.06.2013

49 Purchase agreement for the design 1 027 319,03 JSC ”Generation Company” I.Sh. Halikov, Protocol of the BD specifications and estimates of “The H.A. Bagmanov, No.2/09-2013 construction of the SS Elabuga 500 G.N. Faskhiev dated 06.09.2013 kV” to organize HF communication for the emergency automation on the Nizhnekamsk Hydroelectric Power Station.

50 Additional agreement about change of 20 490,92 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD contract value for providing newspaper represented by the No.2/09-2013 space on the pages of the newspaper Ministry of Land and dated 06.09.2013 “Sarman” for publishing industrial Property Relations information.

51 Contract for producing, imposing, 1 856,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD placing and distributing commercials, represented by the No.2/09-2013 infomercials and social advertisements in Ministry of Land and dated 06.09.2013 the newspaper ‘Kamskaya Nov” (“Kama Property Relations Yagy”). № Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 52 Additional agreement about increase of 26 550,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD contract value for producing, imposing, represented by the No.2/09-2013 placing and distributing commercials, Ministry of Land and dated 06.09.2013 infomercials and social advertisements in Property Relations printed media.

128 53 Agreement about providing information 11 800,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD space for publication of an article in the represented by the No.2/09-2013 newspaper “Alkeevskie Novosti”. Ministry of Land and dated 06.09.2013 Property Relations

54 Additional agreement for the equipment 4 033,54 JSC ”Akibank” I.Sh. Fardiev Protocol of the BD placement contract about providing a for 11 months No.2/09-2013 space in the non-residential premises. dated 06.09.2013 SCHEDULES 55 Non-residential lease contract for the 1 760,00 JSC ”Akibank” I.Sh. Fardiev Protocol of the BD placement of a payment terminal. for 11 months No.2/09-2013 dated 06.09.2013

56 Non-residential lease contract for the 1 848,66 JSC ”Akibank” I.Sh. Fardiev Protocol of the BD placement of a payment terminal. for 11 months No.2/09-2013 dated 06.09.2013

57 Agreement about termination of the 45 635,04 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

58 Agreement about termination of the 41 198,30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

59 Agreement about termination of the 41 198,30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

60 Agreement about termination of the 41 198, 30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

61 Agreement about termination of the 41 198,30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

62 Agreement about termination of the 41 198,30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

63 Agreement about termination of the 41 198,30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

64 Agreement about termination of the 41 198,30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”). № Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 65 Agreement about termination of the 41 198,30 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

66 Agreement about termination of the 82 396,60 LLC “Editorial staff of the I.Sh. Fardiev Protocol of the BD subscription contract for the magazine magazine “Energetica No.2/09-2013 129 “Tatarstan’s Power Engineering” Tatarstana” dated 06.09.2013 (“Energetika Tatarstana”).

67 Additional agreement about value change 315 407,07 JSC ”Akibank” I.Sh. Fardiev Protocol of the BD of the non-residential lease contract. for 11 months No.4/11-2013 2013 dated 28.11.2013

68 Additional agreement about establishing Issue of funds JSC “Akibank” I.Sh. Fardiev Protocol of the BD an individual rate for the bank services. 0,8%; for No.4/11-2013 REPORT ANNUAL household dated 28.11.2013 expenses and other payments: • less than 100 000 rubles and more than 100 001 rubles (with supporting documents at hand) - 0,9%; • more than 100 001 rubles without supporting documents - 5%.

69 Additional agreement about extension of a 5 980,7 JSC «Kazan Heating System H.A. Bagmanov, Protocol of the BD lease contract for a land parcel. for 11 months Company» G.N. Faskhiev No.4/11-2013 dated 28.11.2013

70 Plant lease agreement. 554 920,44 Protocol of the BD No.4/11- I.Sh. Halikov, Protocol of the BD for 11 months 2013 dated 28.11.2013 H.A. Bagmanov, No.4/11-2013 G.N. Faskhiev dated 28.11.2013

71 Contract for equipment placement. 100 787,50 JSC ”Generation Company” I.Sh. Halikov, Protocol of the BD for 11 months H.A. Bagmanov, No.4/11-2013 G.N. Faskhiev dated 28.11.2013

72 Contract for equipment placement (carrier 118 257,27 JSC ”Generation Company” I.Sh. Halikov, Protocol of the BD system and telecommunication cabinets). for 11 months H.A. Bagmanov, No.4/11-2013 G.N. Faskhiev dated 28.11.2013

73 Lease contract of sections of the land 205,86 JSC ”Generation Company” I.Sh. Halikov, Protocol of the BD parcel. for 11 months H.A. Bagmanov, No.4/11-2013 G.N. Faskhiev dated 28.11.2013 № Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 74 An agreement about the termination of – JSC ”Generation Company” I.Sh. Halikov, Protocol of the BD lease contract of sections of the land H.A. Bagmanov, No.4/11-2013 parcel. G.N. Faskhiev dated 28.11.2013

75 Additional agreement about prolongation 10 477,71 JSC ”Generation Company” I.Sh. Halikov, Protocol of the BD 130 and value change of the sublease contract for 9 months H.A. Bagmanov, No.4/11-2013 of a land parcel. G.N. Faskhiev dated 28.11.2013

76 Additional agreement about prolongation of 392 014,81 JSC ”Generation Company” I.Sh. Halikov, Protocol of the BD the non-residential lease contract. for 11 months H.A. Bagmanov, No.4/11-2013 G.N. Faskhiev dated 28.11.2013 SCHEDULES

77 Lease contract of sections of the land 4 495,00 JSC “KAMAZ” I.Sh. Halikov Protocol of the BD parcel. for 11 months No.4/11-2013 dated 28.11.2013

78 Sub-licensing contract for PC software use 284 247,36 JSC “ICL-KME CS” A.M. Pahomov Protocol of the BD rights. (WAT free) No.4/11-2013 dated 28.11.2013

79 Sub-licensing contract for PC software use 99 952,00 JSC “ICL-KME CS” A.M. Pahomov Protocol of the BD rights. (WAT free) No.4/11-2013 dated 28.11.2013

80 Supply agreement for equipment and the 1 237 037,98 JSC “ICL-KME CS” A.M. Pahomov Protocol of the BD software. No.4/11-2013 dated 28.11.2013

81 Contract for producing, imposing, placing 17 515,63 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

82 Contract for providing air time on the TV 8 850,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD station "Apas Haberlere". represented by the No.4/11-2013 Ministry of Land and dated 28.11.2013 Property Relations

83 Contract for producing, placement and (or) 14 761,80 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD distributing commercials in the Russian represented by the No.4/11-2013 and/or Tatar languages in the TV program Ministry of Land and dated 28.11.2013 “Bua Dulkynnary”. Property Relations

84 Contract for producing, imposing, placing 26 273,44 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

85 Contract for producing, imposing, placing 8 757,81 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations № Type of transaction/Subject matter Transaction amount.Counterparties Interested parties Approval (WAT included) 86 Contract for producing, imposing, placing 17 515,63 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

87 Contract for producing, imposing, placing 17 515,63 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.4/11-2013 131 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

88 Contract for producing, imposing, placing 17 515,63 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD 2013 and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

89 Contract for producing, imposing, placing 17 515,63 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD REPORT ANNUAL and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

90 Contract for producing, imposing, placing 17 515,63 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

91 Contract for producing, imposing, placing 2 360,00 JSC “Tatmedia” Republic of Tatarstan Protocol of the BD and distributing commercials, infomercials represented by the No.4/11-2013 and social advertisements in printed Ministry of Land and dated 28.11.2013 media. Property Relations

92 An agreement about assignment of claim 15 101 168,45 JSC “Tatageolizing” Republic of Tatarstan Protocol of the BD to the borrower. (WAT free) represented by the No.4/11-2013 Ministry of Land and dated 28.11.2013 Property Relations

93 An agreement about maintenance and 1 051,79 JSC “Tattelekom” A.R. Hairullin Protocol of the BD providing sanitation and climate conditions No.4/11-2013 for the telecommunication equipment. dated 28.11.2013

94 Contract for maintenance services of the 581 672,00 A.R. Hairullin A.R. Hairullin Protocol of the BD Date-center in IT-Park. No.4/11-2013 dated 28.11.2013

95 Charitable donations agreement. 1 000 000,00 RUE “APP RT” A.M. Pahomov Protocol of the BD No.5/12-2013 dated 30.12.2013

List of transactions considered according to the federal law “On joint-stock companies” transactions with a self-interest and approved by the Company’s management bodies in 2013

The Company didn’t have transactions considered according to the Federal Law “On Joint-stock Companies”. GLOSSARY

Abbreviations

FMEA – Failure Mode and Effects Analysis CIGRE – Conseil International des Grands Reseaux Electriques 132 CRM – Customer Relationship Management ACDPMS – Automated Commercial Data Power Measuring System ASPTR – Automated system of electric power technical record-keeping AES – Almetievsk Power Supply Network BuES – Buinsk Power Supply Network BES – Bugulma Power Supply Network

SCHEDULES CITS – Complete integrated Transformer Substation AL – Air Line ALIW – Air Line with Insulated Wire FOCL – Fiber-Optic Communication Line FOPT – Fiber-Optic Potential Transformer FOCT – Fiber-Optic Current Transformer CDZPN – City Distribution Zone of Power Networks FGC – Federal (Russian) Grid Company EES – Elabuga Power Supply Network CL – Cable Line PTSS – Packaged Transforation Substation KES – Kazan Power Supply Network PTL – Power Transmission Line IAS – International Accounting Standards MPTL – Main Power Transmission Line RDW – Research and design work NkES – Nizhnekamsk Power Supply Network IA – Intangible Assets NRCM – National Rating of Corporate Management NChES – Nabarezhnye Chelny Power Supply Network RDC – Research and Development Center PCW – Production and Consumption Waste OSG – Outdoor Switchgear WPM – Wholesale power market EA – Emergency automation SS – Substation PC – Personal computer PES – Volga Region Power Supply Network SSIW – Self-supporting insulated wire RPA – Relay protection and automation RDO – Regional Dispatcher Office DP – Distribution point DZ – Distribution Zone REC – Regional Energy Commission SS – Substation EMS – Environmental Management System SHW – Solid Household waste OC – Ordering Costs TS – Transformer Substation FTS – Federal Tariff Service FFMS – Federal Financial Market Service of Russia 133 ChES – Chistopol Power Supply Network EDS – Expert-Diagnostic System PSN – Power Supply Network 2013 Measuring Unit kV – kilovolt – voltage measuring unit kW-h – Kilowatt-hour – electric power measuring unit

MVA – Megavolt ampere – full transformer capacity measuring unit REPORT ANNUAL mW – Power measuring unit Address: 3 Bondarenko Str., Kazan, 420094 Telephone: +7 (843) 291-85-59 Fax: +7 (843) 291-85-69 Е-mail: [email protected] www.gridcom-rt.ru

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