Annual Report JSC “Quadra – Power Generation”

2012

Preliminarily approved by the Board of Directors of JSC “Quadra – Power Generation” Minutes #19 / 160 dated 29.04.2013

Approved by resolution of Annual General Shareholders Meeting of JSC “Quadra – Power Generation” “26” June 2013 Minutes #1 / 16 dated 27/06/2013

General Director of JSC “Quadra - Power Generation” V.V. Shelkov

Chief Accountant of JSC “Quadra - Power Generation” I.A. Lapitskaya

Contents: Disclaimer 5

Address by the Chairperson of the Board of Directors to shareholders 6 Address by the General Director to shareholders 8 Introduction: TGC in the structure of sector 10 SECTION 1. JSC “Quadra – Power Generation” on the electricity and heat market 14

1. 1 Market position 14 1.2 Competitive environment and competitive advantages 16 1.3 Strategic areas of business 18 1.4 Risk map 21 1.5 Macroeconomic situation 27 1.6 JSC “Quadra – Power Generation” – 5 years of stable energy supplies 28

SECTION 2. Corporate governance 33

2.1 Corporate governance principles 33 2.2 General Meeting of Shareholders 34 2.3 Board of Directors 34 2.4 General Director. Management Board. 38 2.5 Committees under the Board of Directors 40 2.6 Internal Audit Commission 40 2.7 Remuneration 42 2.8 Internal control and audit 43

SECTION 3. For shareholders and investors 44

3.1 Joint-stock capital 44 3.2 Securities 44 3.3 Dividend history 48 3.4 Trading in securities 48 3.5 Compliance with the law on insider information 50

SECTION 4. Production activities 51

4.1 Main production indicators 54 4.2 Current sales indicators in terms of market segments 56 4.3 Energy saving and operational efficiency improvement 57 SECTION 5. Review of financial performance 59

5.1 Balance sheet structure of JSC “Quadra – Power Generation” 59 5.2 Profit and loss statement 60 5.3 Financial indicators 63 5.4 Indicators of the Company’s liquidity and solvency 65 5.5 Financial stability indicators 65 3

5.6 Business efficiency indicators 66 5.7 Receivables, payables 66

SECTION 6. Investment activities 68

6.1 Priority investment projects (PIPs) 68 6.2 Retooling, reconstruction and development program 72 6.3 Repair activities 74

SECTION 7. Social responsibility. 76

7.1 Human resources policy 76 7.2 Social policy 80 7.3 Charities 80 7.4 Occupational safety 81

SECTION 8. Ecological policy 85

8.1 Environmental protection 85 8.2 Use of energy resources 89

SECTION 9. Contact information 90

Schedules : Schedule #1. Opinion by the Internal Audit Commission which includes the information on reliability of the data contained in the annual report 92

Schedule #2. Report on observance by JSC “Quadra - Power Generation” of the Corporate Conduct Code recommended by order #421/r of the Russian Federation FCSM dated 04.04.2002 for application 94

Schedule #3. List of transactions accomplished by JSC “Quadra - Power Generation” in the reporting year, which are recognized interested-party transactions according to the Federal Law “On Joint Stock Companies” 112 Schedule #4. Information on dynamics of prices (tariffs) 120 Schedule #5. Audited accounting reports of JSC “Quadra - Power Generation” for 2012 123

Schedule #6. Participation of JSC “Quadra - Power Generation” in commercial and non- commercial entities 172

Glossary 174

Disclaimer

This Annual Report of JSC “Quadra - Power Generation” (the Company) contains the information which was available for the Company at the date of its drawing up.

This Annual Report contains forward-looking statements as regards the economic activities of the Company, including economic indicators, financial position, plans and prospective results of economic and industrial activities of the Company, projects and expected results, estimations of probability and time of events occurrence, economic forecasts concerning the sector and markets, and prospects of development as regards expected investment and industrial activity.

The words “intends”, “aspires”, “predicts”, “considers”, “assumes”, “may”, “will succeed in”, “must”, “will”, “will continue” and other expressions similar to them usually imply the forward- looking nature of the statement.

The statements by virtue of their specificity are related with an inherent risk and uncertainty of both general and private nature, and there is a hazard that assumptions, statements concerning future events, and other forward-looking statements will not be put into action. In the light of the specified risks, uncertainties and assumptions the Company warns that the actual results may differ essentially from the expressed ones, directly or indirectly, in the specified forward-looking statements and valid only at the moment of drawing up of this Annual Report.

The Company does not assert and does not guarantee that the results of activity designated in the forward-looking statements will be achieved. Such forward-looking statements in each specific case represent only one of many variants of succession of events and should not be considered as the most probable.

In particular, the following may be distinguished as other factors which are capable of influencing the date of the beginning and time of implementation of projects, volumes of production and sale, and other industrial and economic indicators: influence of exchange rates; activity of the state bodies of the Russian Federation, including change of tax, ecological and other laws; activity of bodies of municipal management in regions of the Company presence, including as regards change of tariff and other regulation. The specified list of essential factors is not comprehensive. When taking into account forward-looking statements, the designated and other factors should be considered carefully, in particular, economic, social and legal conditions of the Company activity.

Except for the events directly stipulated by the laws, the Company does not take up obligations in respect of publication of updating and changes in forward-looking statements, based on both new information, and on subsequent events.

Reliability of the data contained herein is confirmed by the Internal Audit Commission of the Company (Schedule #1).

Address by the Chairperson of the Board of Directors to shareholders

Dear Shareholders!

We would like to bring to your attention the annual report on the activities of JSC “Quadra – Power Generation” for the year 2012. The past year was extremely difficult for development of the sector. Its trends and solutions had an adverse impact on the results of the work of many Russian energy companies. Imperfection of the regulatory environment, repeated change of the tariff policy, strict regulation of the electricity and capacity market affected significantly the efficiency of thermal energy enterprises operating in cogeneration mode.

Despite the unfavorable external conditions, JSC “Quadra – Power Generation” made every effort to reduce the impact of negative factors on the Company’s operations. The past year for JSC “Quadra – Power Generation” was characterized by several significant events and achievements that enabled the Company to maintain economic stability and laid the foundation for further successful development.

The company was active in continuing to fulfill its obligations to the state in the field of construction of new capacities and modernization of old capacities. In 2012, construction of GSU-190 MW at the Novomoskovskaya SDPS in the Tula Region and GTU-30 MW at the Livenskaya TPP in the Orel Region was completed. New energy units are preparing to be put into operation.

In 2012, the Company started implementation of the remaining four investment projects for construction of new gas steam units. Implementation of the investment projects will not only enhance production efficiency of the Company itself and competitiveness in the market, but also economic development of attended regions and improvement in the quality of heat supply to their residents.

Consolidation of inter-regional branches, formation of heating grid companies and repairer enterprise are implemented as part of the approved strategy. Performance of these projects will optimize manageability, improve efficiency and transparency of production processes.

In 2012, the Company took active part in the work of sector and inter-ministerial associations, committees and commissions to promote generators’ interests in cooperation with authorities at all levels. Special attention in external work was paid to the issues of heat supply regulation and amendments to the existing legislation.

The sector entered the year 2013 having a number of unresolved issues. However, the Company must achieve the potential to the full extent, which was stipulated for the previous period, and overcome negative trends in the market. Modernization of the sector, development and customer service of high quality – this is our absolute priority today. Therefore, in 2013, JSC “Quadra – Power Generation” will continue an open dialogue with shareholders, investors,

6 public authorities and our customers for effective collaboration, improvement of operational and financial results.

Sincerely yours, Chairperson of the Board of Directors of JSC “Quadra – Power Generation” Yulia Basova

Address by the General Director to shareholders

Dear shareholders!

The year 2012 for JSC “Quadra – Power Generation” was not easy. In conditions of strengthening of the government regulation of the sector and complicated political and economic background, the Company continued implementation of pre-existing strategic tasks and did its best to adequately respond to all challenges, not to reduce efficiency of production and to achieve high performance in the developed circumstances.

Active renewal of production facilities, management of accounts receivable in the heat market, optimization of the structure of the Company’s assets, organization of a new scheme of settlement of accounts with consumers allowed the customers of JSC “Quadra – Power Generation” to maintain a stable position in the market.

Based on the results of 2012, production figures of JSC “Quadra – Power Generation” remained at the same level. Electricity generation by the Company’s plants amounted to 11.2 bn kWh. The heat output from the collectors of JSC “Quadra – Power Generation” (including 100% of heat grid SAA of the company “Quadra – Power Generation”) totaled 24.6 mn Gcal.

In line with the development strategy, the Company continued to implement the investment program. Priority investment projects within the framework of capacity supply agreements near their completion: construction of GSU-190 MW at the Novomoskovskaya SDPS, the Tula Region, and GTU-30 MW at the Livenskaya TPP, the Orel Region. Moreover, JSC “Quadra – Power Generation” launched the remaining four projects of the CSC program - construction of GSU-115 MW at the Dyagilevskaya TPP in Ryazan, Alexinskaya TPP in the Tula Region, Kursk TPP-1 in Kursk and GSU-223 MW at the Voronezh TPP-1 in Voronezh.

Today all thermal power engineers of the country see the task of development of the heat distribution complex requiring large-scale modernization and significant investments as an especially important one. In 2012, to address this problem, the Company carried out reconstruction of the heating mains in regional centers, particularly in Ryazan and Lipetsk, through an increase in reliability and quality of heat supply for their customers. This work helps to reduce heat loss in heating grids, reduce level of accidents, and improve reliability of energy supply.

The year 2012 was a landmark in the issues of working with customers. As part of implementation of the concept of JSC “Quadra – Power Generation” on spinning off the heat business, 100% subsidiaries LLC “Smolensk HGC”, LLC “Ryazan HGC”, LLC “Tambov HGC” and LLC “Voronezh HGC” started their operations on 1 January 2012.

Within the framework of reducing accounts receivable and establishment of payment discipline in the regions of its presence, the Company commenced active participation in arrangement of direct payments for heat with population. In order to ensure better cooperation with customers, own customer service centers were established in Kursk and Smolensk. The Company switched to a new payment scheme with end users in the Lipetsk and Tula Regions as well. Thanks to the work done, the Company managed to increase significantly the collectability rate for heat in several regions.

In 2013, JSC “Quadra – Power Generation” will continue active cooperation with the investment community and transparency level improvement. The Company makes use of the accumulated potential and re-emerged possibilities to perform the tasks set forth by the shareholders, and to ensure further stable development.

Sincerely yours,

General Director of JSC “Quadra – Power Generation” V.V. Shelkov

TGC in the structure of sector Sector structure after the reform:

Joint Stock Company “Quadra – Power Generation” (JSC “Quadra - Power Generation”) was established on 20 April 2005 during the reform of JSC RAO “UES of Russia” and is one of the largest territorial generating companies (TGCs).

The main lines of the Company’s activities: - production of electricity and thermal energy; - operations in the wholesale market for electricity and capacity; - transmission and sale of thermal energy in the retail market.

The production assets of JSC “Quadra - Power Generation” are located in the Belgorod, Bryansk, Voronezh, Kaluga, Kursk, Lipetsk, Orel, Ryazan, Smolensk, Tambov and Tula Regions.

Physical chain of electricity supply: WGCs, TGCs, RusHydro, UES FGC Distribution grids End users etc.

High-voltage grids (220-750 Electric plant Grids (0.4 - 110 kW) Population (retail) kW) and substations

Large industrial consumers Industrial and commercial (directly connected to the grid consumers of UES FGC)

Physical chain of thermal energy supply:

Mainly TGCs Distribution grids End users

Electric plant/ Population (retail) Boiler house

Industrial and commercial consumers

Markets and their price formation mechanisms: JSC “Quadra - Power Generation” carries out its activity on the liberalized electricity and capacity market and on the 100%-regulated thermal energy market.

Capacity market

CAPACITY MARKET

COMPETITIVE CAPACITY REGULATED CONTRACTS CAPACITY SUPPLY OUTTAKE MARKET CONTRACT

FMC

Depending on the price formation mechanism, the following concepts are distinguished on the capacity market: 11

Competitive capacity outtake (CCO) - a market mechanism ensuring outtake of sufficient amount of capacity on the wholesale market which has necessary technical parameters to cover projected consumption and provision of required amount of reserve.

Regulated contracts market. Regulated contracts are concluded between a generator and consumer (population) on the wholesale market for a year ahead with an hourly breakdown of supply volumes at a price equal to the tariff established for a specific generator. Performance of the contract is binding.

Capacity supply contract (CSC) – an obligation to construct a new generation, commission it and put it to the wholesale market in the future. The list of generating units, using which enables supply of capacity under capacity supply contracts was approved by order #1334-r of the Russian Federation Government of 11 August 2010. Timing and amount of work performed, compliance with stated specifications and technical requirements of the wholesale market are systematically controlled by the regulator. According to the methods of the Rules of Determining the Price of Capacity Sold under CSC, payback of investment in respect of commissioning the generating facility is implemented through a tariff for capacity within the reference values for construction.

Capacity supply contracts in respect of the capacity produced using the facilities which supply capacity in the forced mode (FMC) – capacity which was not admitted through specifications or price parameters of CCO, but is necessary for operation of the energy system and/or heating of population. Capacity is paid at the price fixed by FTS of Russia.

Electricity market

ELECTRICITY MARKET

NON-REGULATED REGULATED DAY-AHEAD CONTRACTS BALANCING MARKET CONTRACTS MARKET SECTOR MARKET

Depending on the sector of accomplishment of a transaction, the following concepts are distinguished on the electricity market:

Non-regulated contracts sector - involves sale of electricity and/or capacity for free (non- regulated) prices on the basis of electricity and/or capacity sale and purchase contracts. Within the framework of non-regulated contracts, market participants themselves determine their contractors, prices and supply volumes.

Day-ahead market (DAM) - competitive outtake of suppliers and buyers’ price bids held by a commercial operator a day before actual supply of electricity, accompanied by definition of prices and supply volumes for each hour of the day. The price is determined by way of balancing the supply and demand and applies to all market participants. In case of deviation from the supply volumes planned a day ahead, participants buy or sell them on the balancing market.

Balancing market (BM) - trade in deviations of actual hourly production and consumption of electricity from the planned trading schedule that allows to ensure a balance of production and consumption volumes on a real time basis. Price of BM is formed on the basis of

competitive outtake of suppliers’ applications. Participation in the balancing market is obligatory for everyone, but financial obligations/requirements within the framework of the balancing market arise only for the participants who actually deviated from the planned schedule which had been formed on the “day ahead” market.

Regulated contracts market. Regulated contracts are concluded between a generator and consumer (population) on the wholesale market a year ahead with an hourly breakdown of supply volumes as to the price equal to the tariff established for a particular generator. Performance of the contract is binding.

Thermal energy market

Thermal energy market is 100% regulated by the state. Tariffs for generation and distribution of heat are fixed by Regional Energy Commissions (RECs) subject to the fact that the average increase in tariffs in respect of each region must not exceed the limit set forth by the Federal Tariff Service (FTS). Heat tariffs are established through the system of “cost plus”. Main regulators: Presidential Commission for Fuel and Energy Complex (Chairperson: V.V. Putin, Executive Secretary: I.I. Sechin) Governmental Commission for Fuel and Energy Complex (Chairperson: A.V. Dvorkovich)

Federal Tariff Service (FTS of Russia) RF Energy Industry Ministry . Responsible for regulatory framework of the electric power industry

. Coordinates investments programs of electric power companies . Sets the limiting level of growth of

electricity tariffs for the end NP Market Council System Operator consumer, including regulated electricity tariffs (for population . Manages process parameters of electric and equated consumers) and facilities operation and energy receiving units limiting maximum/ minimum . Develops rules of of consumers within the limits of the Unified tariffs for heat energy, limiting wholesale electricity and Energy System of Russia and technologically growth of housing and public capacity market and isolated regional electric power systems utilities tariffs procedure of functioning . Ensures reliable power supply and quality of . Sets electricity transmission of the retail electricity electricity tariffs for FGC and maximum/ markets . Holds competitive capacity outtake with minimum tariffs for electricity . Monitors commercial and regards to technical parameters transmission for IDGCs and technological . Coordinates construction of new electric TGEs infrastructure power industry assets (electric grids, generation capacities) and decommissioning of old assets

Trading System Administrator Regional energy commissions (RECs) (TSA) . Approve electricity tariffs for . Provides a trading population and equated platform for electricity consumers commercial exchange . Approve electricity tariffs for the . Ensures settlement of branches of IDGCs and TGEs, accounts between for thermal energy for end users, producers and buyers of for thermal energy transmission electricity in the RF constituent entities

SECTION 1. JSC “Quadra - Power Generation” on the electricity and heat market

1.1 Market position

Electricity and capacity market

At 31 December 2012, JSC “Quadra - Power Generation” includes 24 electric power plants of 3,474.5 MW in total installed capacity. The largest buyers of electricity and capacity of JSC “Quadra - Power Generation” under regulated contracts (in descending order as to liabilities):

• JSC “Tulaenergosbyt”; • LLC “City Energy Sales Company”, Lipetsk; • JSC “TEK”, Tula; • JSC “Lipetsk Energy Sales Company”; • JSC “Voronezh Energy Sales Company”; • JSC “Kurskregionenergosbyt”; • JSC “Smolenskenergosbyt”; • LLC “INTER RAO - Orel Energosbyt”; • JSC “Tambov Energy Sales Company”; • JSC “TOSK”, Tambov.

The largest buyers of capacity of JSC “Quadra - Power Generation” under competitive capacity outtake contracts (in descending order as to liabilities):

• JSC “Mosenergosbyt”; • JSC “Tyumen Energy Sales Company”; • JSC “FGC UES” • LLC “RUSENERGOSBYT” • JSC “Petersburg Sales Company”; • JSC “Samaraenergo”; • JSC “Sverdlovenergosbyt”; • LLC “RN-Energo”, Moscow; • JSC “Permenergosbyt”; • JSC “INTER RAO UES”.

The largest buyers of capacity of JSC “Quadra - Power Generation” under capacity sale and purchase contracts in respect of the capacity produced using the generating facilities which supply capacity in the forced mode (in descending order as to liabilities):

JSC “Tulaenergosbyt”; LLC “EuroChem-Energo”; JSC “TEK”, Tula;

The largest buyers of capacity of JSC “Quadra - Power Generation” under capacity supply contracts (in descending order as to liabilities):

• JSC “Mosenergosbyt”; 14

• JSC “Tyumen Energy Sales Company”; • LLC “RUSENERGOSBYT”; • JSC “Petersburg Sales Company”; • LLC “Energy Sales Company of Bashkortostan”; • JSC “Tatenergosbyt”; • JSC “Samaraenergo”; • JSC “Sverdlovenergosbyt”; • LLC “RN-Energo”; • JSC “Permenergosbyt”.

The main buyers of electricity and capacity under WMEC contracts are energy sales companies that have the status of guaranteeing suppliers in their regions. Since 01.02.2013, due to the unsatisfactory payment discipline, JSC “Omskenergosbyt”, JSC “Ivenergosbyt”, JSC “Penzaenergosbyt”, JSC “Kurskregionenergosbyt”, JSC “Bryanskenergosbyt”, JSC “Orelenergosbyt” have been deprived of the status of the guaranteeing supplier on WMEC under the decision of the supervisory board of NP “Market Council”; the same happened with JSC “Tulaenergosbyt” and JSC “Kolenergosbyt” since 01.03.2013. According to the rules of the wholesale market for electricity and capacity, territorial grid entities in the respective regions were vested with the functions of guaranteeing suppliers.

Heat market

JSC “Quadra - Power Generation” is the largest heat producer in 11 regions of the Central Federal District. In 2012, the share of JSC “Quadra - Power Generation” (including SDEs) in generation of thermal power in the attended regions was nearby 30.4%. Installed thermal capacity of the plants of JSC “Quadra - Power Generation” at 31 December 2012 equals 14,383 Gcal/h. The installed thermal capacity of the Company taking into account the spun-off HGCs equals 15,231.8 Gcal/h. The main volume of thermal power is sold by JSC “Quadra - Power Generation” under thermal power supply (delivery) contracts (as steam or hot water). The largest share of consumption in the structure of thermal energy productive supply pertains to industrial consumers and heat supply entities (wholesale resellers of thermal power). The Company is currently operating on the historically formed heat markets that are characterized by the following: - a significant share of coverage of consumers with centralized heating; - strong presence of participants of the centralized heating market;

- presence of generating capacities of other owners in the attended regions, which ensure centralized heating of consumers owing to combined heat and power generation; - a number of large potential customers have own heat sources.

The share of the Company (including SDEs) on the corresponding segment of the market in terms of main kinds of activities has not changed essentially for the last 3 years.

1.2 Competitive environment and competitive advantages

Electricity and capacity market

The share of the wholesale market for electricity and capacity in the attended regions (free power transfer zone #25) pertaining to JSC “Quadra - Power Generation” is 9.1%.

Major competitors of JSC “Quadra - Power Generation” on the electricity market:

Majority shareholder Generating Share in the Plants Installed capacity, MW company total installed plant-by-plant total capacity in FPTZ “Center” JSC “Atomenergoprom”, JSC “Concern Kurskaya APP 4,000 State Corporation “Rosenergoatom” Novovoronezhskaya “Rosatom” 1,834 34% APP 12,834 Smolenskaya APP 3,000 Kalininskaya APP 4,000 JSC “INTER RAO UES” JSC “WGC-3” Cherepetskaya SDPS 1,499 14% 5,099 Kostromskaya SDPS 3,600 Onexim Holdings Limited JSC “Quadra - Power 9% Data are presented in Section 4: “Production 3,475 Generation” activities” LLC “Gazprom JSC “WGC-2” Ryazanskaya SDPS 2,650 8% 3,070 energoholding” SDPS-24 GSU-420 420 Enel JSC “Enel WGC-5” 7% Konakovskaya SDPS 2,475 2,475 CJSC “IES” JSC “TGC-6” Vladimirskaya TPP-2 407 Ivanovskaya TPP-1 12 Ivanovskaya TPP-2 200 Ivanovskaya TPP-3 330 6% 2,313 Novogorkovskaya TPP 305 Nizhegorodskaya SDPS 144 Sormovskaya TPP 350 Dzerzhinskaya TPP 565 Federal Agency for State JSC “RusHydro” Zagorskaya HPSPP 1,200 Property Management Nizhegorodskaya HPP 520 6% 2,176 Rybinskaya HPP 346 Uglichskaya HPP 110 E.ON JSC “E.ON Russia” 2% Smolenskaya SDPS 630 630 JSC “INTER RAO UES” JSC “WGC-1” 2% Kashirskaya SDPS 630 630 JSC “Group “Sintez” JSC “TGC-2” Kostromskaya TPP-1 33 Kostromskaya TPP-2 170 Tverskaya TPP-1 17 Tverskaya TPP-3 170 3% Tverskaya TPP-4 88 1,300 Sharyinskaya TPP 21 Yaroslavskaya TPP-1 131 Yaroslavskaya TPP-2 325 Yaroslavskaya TPP-3 345

JSC “EuroSibEnergo” LLC “Avtozavodskaya 2% Avtozavodskaya TPP 580 580 TPP” JSC “INTER RAO 2% Ivanovskie GSUs 650 650 UES” LLC “Novo- 1% Novo-Ryazanskaya TPP 425 425 Ryazanskaya TPP” Energomash (UK) Ltd. JSC “GT-TPP GT TPP “Michurinskaya” 36 ENERGO” GT TPP “Orlovskaya” 18 0.3% GT TPP “Sasovskaya” 18 108 GT TPP “Tambovskaya” 18 GT TPP “Kasimovskaya” 18 Other producers of electric 5% - - 1,706.5 power on retail market 100% TOTAL: 37,471.5

The main component of electricity generation in the attended regions of JSC “Quadra - Power Generation” is carried out by atomic power plants, since they have priority load and low electricity tariff. Semi-peak and a part of peak loads of regions are carried by electric power plants of WGCs.

Factors of competitiveness of JSC “Quadra - Power Generation” on the electricity market: - formation of the efficient strategy of conduct of the plants of JSC “Quadra - Power Generation” on electricity and capacity markets by the uniform competence center in the executive office; - definition of optimal load of production assets which ensures generation of the maximum electricity sales profit, with the unconditional adherence to the schedule of generation and supply of heat to consumers with such fuel consumption which is minimum for this mode. - implementation of modern IT solutions to automate collection and analysis of current information, including: - from internal information sources (structure of equipment, production indices, generation and consumption of electricity, fuel consumption and fuel balance, etc.) - from external information sources about the state of the market (information on major competitors, current balance of supply and demand, structure of supply, control of capacity flows in sections, price signals, etc.)

Heat market

The Company’s main competitors in the thermal energy market are sources of centralized heating of various forms of ownership, private boilers, co-generators, GTU-TPP and own thermal generation capacities of large industrial enterprises in the attended regions of JSC “Quadra - Power Generation”. These enterprises include wholesale resellers of thermal energy of various legal structures and major industrial enterprises. Industrial consumers and housing and public utilities enterprises represent the largest consumption share in the structure of thermal energy productive supply.

Factors of competitiveness of JSC “Quadra - Power Generation” on the thermal energy market: - obtaining of control over independent generation and grid assets (acquisition, lease, free use, etc.); - reducing own costs; 17

- diversification of the business compared with the lines which are traditional for generating companies, including switch to direct settlement of accounts with population living in regions; - improvement of the RF legislation in the field of heat supply; - accomplishment of thermal energy supply and/or transportation contracts with end users; - transparency in implementation of direct settlement of accounts with final consumers; - transparency of tariff formation of spun-off HGCs; - signing of agreements on participation of the Company in development of centralized heating systems in regions, tariff policy with local government; - flexible marketing, financial and sales policy of the Company.

1.3 Strategic areas of business

The development strategy of JSC “Quadra - Power Generation” is aimed to build a high- performance energy company which ensures reliable electricity and heat supply for consumers, investment and innovation renovation of production assets, and stable growth of the shareholder value.

The strategic areas of JSC “Quadra - Power Generation” development: - improvement of the Company’s competitiveness on the electricity and thermal energy market; - construction of new high-performance generation capacities, modernization and renewal of assets; - ensuring reliability and high quality of heat and electricity supply for consumers; - improvement of the Company’s operating performance; - engineering and technical leadership, ensuring of a high level of industrial safety; - improvement of corporate governance and shareholder value enhancement; - development of labor potential and creativity of the Company’s employees, formation of corporate solidarity and commitment to the Company’s principles; - ensuring the highest standards of environmental protection, energy efficiency enhancement and implementation of energy saving policy.

Performance of JSC “Quadra - Power Generation” in strategic areas:

Question: How is the Company’s investment program implemented? What are investment priorities for 2013?

Answer: In 2012, as part of the investment program in the field of renovation of generating capacities, construction of the gas turbine unit of 30 MW at the Livenskaya TPP in the Orel Region and gas steam unit (GSU) of 190 MW at the Novomoskovskaya SDPS in the Tula Region was completed. Supply of capacity to the Livenskaya TPP began on 1 February 2013; supply of capacity to the Novomoskovskaya SDPS is expected on 1 May 2013. At present, we have started to implement the remaining 4 investment projects. Completion of construction of gas steam units of 115 MW in capacity at the Alexinskaya TPP in the Tula Region, Dyagilevskaya TPP in the Ryazan Region is planned for the next year. Today, contracts for facility designing and main equipment supply have been signed in respect of the two plants; preparations of the construction site for their handover to the general contractor have been made. In 2015, we plan to put into operation GSU-115 MW at the Kurskaya TPP-1 in the city of Kursk and GSU-223 MW at the Voronezh TPP-1 in the city of Voronezh. Today, contracts for facility designing and equipment supply have been signed; construction sites are being prepared. Vladimir Vitalievich Shelkov General Director of JSC “Quadra – Power Generation”

Question: In the middle of 2011, the management of JSC “Quadra - Power Generation” decided to spin off heat grid business as a separate line to “improve transparency of the heat grid complex economy and improve conditions for attracting investments”. What has been achieved for this 1.5 year?

Answer: By now, heat grid companies have been established almost in all regions of the Chernozemie, with the exception of Lipetsk. One of the main constraining factors there for today is the current scheme of cross-subsidization between thermal energy and electricity. Now we discuss with regional authorities how this factor can be eliminated without creating a strong burden on consumers. We plan that all these issues will be settled in 2013.

Of course, when the heat grid business spun off, it became more controllable. Now these heat grid companies can already be structured into a separate holding company to attract investors. We have done the respective preliminary work. However, the issue of attractiveness of the sector for investors is still quite topical. The main problem in this field is tariff formation. Both investors and banks that will be sources of financial funds are interested in capital payback. Now no long-term tariff formation (RAB) is available, so the issue remains open.

In this regard, the western business management option is very interesting. They think that this line can be made of interest by way of modernization of facilities, loss reduction and new technologies application, provided that the saving as a result of these activities remains the Company’s property. We have not settled the issue of the source of funds payback yet, so, accordingly, attraction of investors is a vague prospect.

Question: How is the sales policy of the Company implemented, namely, how is the situation with accounts receivable solved?

Answer: In each region, the situation related with receivables is different. Today we have a special concern about the debt situation in Kursk, Orel, Lipetsk, Tambov and Smolensk. In particular, the receivables in Smolensk are nearby one billion rubles. The situation is similar in Kursk. We managed to stop the growth of this index in Kursk by way of leasing out property of MUE “Gorteploset”. Now we think of how to return the debt of the past years. The situation 19 with payments is recovered in those regions where they switched to settlement of accounts with end users. There are some problems in Lipetsk. Despite the fact that this is one of our best regions in terms of the engineering infrastructure, accounts receivable there are gradually increasing. This is due to switch of our main consumer JSC “LGEK” to direct settlement of accounts, as well as due to changes in regulations and rejection of budget funding. I think that all problems are solvable in the end, especially since we feel great support of local authorities there.

1.4 Risk map

JSC “Quadra - Power Generation” attaches great importance to influence of various risks on the Company’s operations and identifies, evaluates and minimizes consequences of potential impact of risks. Such systematic work helps identify new sector, regional, financial, legal and other risks that may affect the interests of the Company and the parties which are interested in its activities. Country risks The markets of developing countries, which include the Russian Federation, are influenced by economic, political, social, legal and regulatory risks. In 2012, international rating agencies confirmed Russia’s sovereign credit rating, noting the high financial stability of the country, thanks to the restrained budget policy, and strong position as an external net lender on total and government debt. At the same time, the structural weakness of the Russian economy is preserved, as well as vulnerability to sudden adverse changes in oil prices. International rating agencies noted the weakness of political and economic institutions that reduce the competitiveness of the country. In 2012, the Russian financial market was subject to changing conditions of foreign trade and financial markets, fluctuations in energy prices and financial instability in the euro area countries. Compared with 2011, the volume of ruble liquidity funds of Russian banks in 2012 decreased, and the average level of interest rates on the money market increased. Due to the high investment needs of JSC “Quadra - Power Generation”, the financial risks of the country have a significant impact on access to sources of funding and borrowing parameters of the Company.

Market risks Degree Risk Risk description of Company’s actions to mitigate the risk impact - Assignment and acknowledgement of the status of the “forced” - Restrictions of access to competitive Revision of technical requirements of mode; capacity outtake; the system operator to generating high - Implementation of the program of efficiency improvement at - Absence of compensation of economically equipment facilities; sound constant charges. - Putting of facilities out of operation.

- Advancing growth of gas price in relation - Implementation of the investment program with application of heat Growth of fuel price to growth of electricity and thermal energy high and energy saving technologies, which helps to lower risks related prices. with increase in prices for fuel resources.

Decrease in generation as a result of - Decrease in economy growth rates. low - Entering into long-term bilateral agreements. deceleration of economic growth - Increase in operational efficiency by way of implementation of the Refusal of large industrial consumers programs aimed at production costs reduction and saving; to purchase thermal energy because of - Decrease in volume of thermal energy - Holding of work in the field of signing long-term thermal energy reduction of production volumes, production; supply contracts; change of production methods, - Possible subsequent decrease in volume low - Further implementation of the Company’s strategy in the field of construction of own sources of heat and/or growth of cost of electricity keeping main clients and expansion of the thermal energy sales supply, switch to own sources and production performed in co-generation, market through heat grid assets spinning off; performance of a complex of energy and, accordingly, revenue reduction. - Diversification of business on the thermal energy markets; saving actions

- Absence of an opportunity of long-term - Participation of the Company’s representatives in the structure of forecasting of the Company’s performance; committees and interdepartmental groups under NP “Council of - Absence of sources of fixed assets Energy Producers”, NP “Market Council” in the process of Absence of the normative and legal retooling; medium development of by-laws of the Russian Federation Government and base on heat supply - Occurrence of disagreements with the Federal Enforcement Authorities, developed within the consumers on essential conditions of heat framework of implementation of Federal Law #190-FZ “On heat supply agreements, mainly in respect of supply” dated 27.07.2010. quantity of supplied thermal energy

- Deterioration, violation of conditions of - Performance of repair work; Occurrence of man-made accidents operation and critical change of parameters medium - Implementation of the retooling and reconstruction program. of equipment operation. - Holding of regular inspections for antiterrorist security of the - Putting of equipment out of operable personnel and production; condition and damage of property as a - Organization of protection against possible consequences of Loss of assets as a result of property failures, accidents and acts of nature, emergency prevention and low damage result of acts of terrorism, plunders and fire prevention trainings of personnel; acts of nature in the regions of presence. - Organization of trainings and actions related with prevention of plunders; - Insurance of property.

Regulatory risks Degree Risk Risk description of Company’s actions to mitigate the risk impact

- Lag of indexation of tariffs (prices) for electricity sold under regulated contracts - Active cooperation with regulating bodies in the field of provision, behind actual fuel price; substantiation and protection of economically sound tariffs for - Limitation of growth rates of thermal electricity and thermal energy; Limitation of regulated tariffs for energy tariffs is lower than the growth rates - Holding of the procedure of settlement of disagreements with electricity and thermal energy by the of costs of thermal energy production; high regional regulating authorities based on the results of tariff-balance government - Partial compensation of amounts of cross- decisions; subsidization between thermal energy and - Holding of systematic monitoring, analysis and assessment of electricity in the electricity tariffs (prices); current prices and tariffs, their structural components; - Restriction of growth of tariff for the end user. Cooperation with legislative and governing authorities in order to obtain relevant information on possible changes in the current Change of the market model - Revision of the existing market model. high market model

Financial risks Degree Risk Risk description of Company’s actions to mitigate the risk impact - Currency of the main volume of revenue, loans and expenditure Currency risks - Fluctuation of exchange rates. low obligations is the ruble. - Loss in real value of accounts receivable in the event of essential deferral or delay in payment; - Monitoring, analysis and accounting of macroeconomic factors in - Increase in interest payable, increase in Inflation risks low the event of business planning; cost of goods, products, works, services - Switch to direct settlement of accounts with consumers. due to indexation of tariffs for fuel, purchased electricity, wages; - Devaluation of assets placed in money. - Application of penalties by governing - Control and audit of performance of the investment program; Low/ Delay in CSC launch authorities; - Recovery of losses from contractors, who broke contract medium - Failure to receive payment for capacity. obligations. - Switch to direct agreements (settlement of accounts) with end - Deficiency of money for comprehensive users; implementation of repair and investment - Constant monitoring of the payment discipline of thermal energy programs of JSC “Quadra – Power consumers in order to take timely measures preventing receivables Growth of receivables Generation”; medium growth; default on own obligations to creditors in - Signing of agreements in respect of participation of JSC “Quadra – respect of payment for gas and other Power Generation” in development of the centralized heat supply resources systems of regions, tariff policy with local authorities;

Credit risks Degree Risk Risk description of Company’s actions to mitigate the risk impact - Increase in reserves for doubtful debts; - Switch to direct settlement of accounts for heat with end users; - Continuous monitoring of payment discipline of thermal energy consumers in order to take timely measures to prevent an increase in accounts receivable; Deficiency of money for comprehensive - Signing of the agreements on participation of JSC “Quadra – implementation of repair and investment Power Generation” in development of centralized heating of regions, programs; Contractors’ insolvency medium tariff policy with local government; default on own obligations to creditors in - Participation of the Company’s representatives in the structure of respect of payment for gas and other committees and interdepartmental groups under NP “Council of resources. Energy Producers”, NP “Market Council” in the process of development of by-laws of the Russian Federation Government and the Federal Enforcement Authorities, developed within the framework of implementation of Federal Law #190-FZ “On heat supply” dated 27.07.2010. - Decline in the share of credits and loans in working capital of the issuer; - Raising of credits and loans at a fixed rate upon the condition of Change of interest rates - Growth of borrowings value. medium impossibility of revision of borrowing rates by banks unilaterally in order to avoid negative impact of short-term fluctuations in interest rates; - Diversification of the sources and methods of borrowing.

Legal risks Degree Risk Risk description of Company’s actions to mitigate the risk impact - Change of tax rates; - Introduction of new kinds of taxes; - Monitoring of changes of tax laws; - Incorrect computation and payment of - Monitoring of judicial and administrative practice; Change of tax laws low taxes, caused by disparate treatment of - Improvement of professional skills of employees engaged in norms of the laws, which implies varying computation and payment of taxes. interpretations. Change of currency regulation, rules of - Changes affecting the Company’s - Monitoring of changes of currency regulation, rules of customs low customs regulation and duties. activities, economic operations regulation and duties Change of requirements to licensing - Inclusion of the main kind of the low - Monitoring of requirements to licensing

Company’s activities in the licensed kinds of activities on the legislative level.

Operational risks Degree Risk Risk description of Company’s actions to mitigate the risk impact - One-time drastic increase in load over the planned one on the basis of consumers’ applications; - Technical risks related with maintenance of equipment and caused by such factors - Insurance of property, dangerous industrial facilities, vehicles, civil as maintenance of equipment with liability, insurance of personnel; Production risks maximum deviations from normative and low - Renewal of stocks of fuel, spare parts, materials; technical requirements; - Holding of actions aimed to increase the energy system reliability. - One-time drastic decrease in load; - Making mistakes by operational personnel; - Breaking of the dispatching schedule and discipline. - Interruptions in deliveries of materials and equipment required for new construction, - Diversification and careful selection of suppliers; retooling and repairs; Default on obligations by suppliers low - Recovery of losses from contractors who violated agreement - Default by contracting organizations on obligations. agreement obligations as regards time- lines and quality of performed works.

Human resources risks Degree Risk Risk description of Company’s actions to mitigate the risk impact - Intense competition on the labor market in - Timely wage indexation; the regions attended by the Company; - Implementation of the programs adopted by the Company and Deficit of skilled employees and - Inability to involve highly qualified financial and non-financial motivation of staff, provision of social professionals at the CSC facilities specialists from other regions at the CSC high benefits and guarantees to employees in accordance with labor law, which are put into operation facilities which are put into operation due to Collective Agreement and other local regulations of JSC “Quadra – lack of financing of purchase of housing in Power Generation”; the tariff regulation. - Development of the program of attraction of highly qualified 25

specialists from other regions of Russia.

- Implementation of measures for career guidance in schools, - Mass departure of young people from the primary and secondary vocational and higher education institutions Reduction in share of young specialists regions of the Company’s production units in the regions where the Company operates; and increase in share of employees high presence to the capital and major regional - Development of the program of attraction of young professionals - who reached retirement age centers. graduates from educational institutions located outside the regions attended by the Company.

1.5 Macroeconomic situation

In 2012, development of Russian economy was characterized by slowdown in both investment and consumer demand against the background of strengthening of negative trends in the global economy and weakening of external demand. At the same time, domestic demand for goods and services supported by growth of real wages and bank lending remained the main factor of economic growth in 2012. Since the beginning of 2012, inflation on consumer market rose to 6.6% against 6.1% a year earlier. It should be noted that inflation declined in the first half of the year; however, unlike traditional dynamics, inflation rates were higher in July and September of the last year due to rescheduling of regulated tariffs and prices for services of entities pertaining to the infrastructure sector (electricity, gas and tariffs which are synchronized with them – public utilities and other administrative fees). Speaking about production, the positive dynamics of GDP in 2012 was due to high dynamics of the financial sector (15% in 2012 against 3.6% in 2011) and trade (6.5% in 2012 against 3.3% in 2011). At the same time, GDP growth in 2012 as a whole was 3.4% against 4.3% in 2011. A slowdown in agriculture (season nature is excluded) had the main negative impact on GDP dynamics. The dynamics of the majority of economic indicators started to slow down in the second half of 2012, which was also related with the negative impact of the high base of the second half of 2011 explained by extremely high crops of a number of cultivated plants and sharp increase in investment demand.

The index of production and distribution of electricity, gas and water in 2012 to the level of 2011 was 101.2%, including in December 2012 - 104.7%. For 2012, 1,064.1 bn kW/h of electricity and 1,048.1 bn kW/h were produced, which is 1.1% more than in 2011. The main load in ensuring electricity demand in 2012 was carried by thermal power plants (TPPs); electricity generation by them was 721.3 bn kW/h, which is 1% more than in 2011. Input of new capacity in 2012, according to the data provided by JSC “UES FGC”, was 6,270.1 MW, decommissioning equaled 1,921.4 MW.

Share of JSC “Quadra - Power Generation” in electricity generation: Electricity generation in Russia for 2012 1,064.1 bn kWh Electricity generation by TPPs in Russia for 2012 721.3 bn kWh Electricity generation by JSC “Quadra - Power Generation” for 2012 11.2 bn kWh

Electricity production by JSC “Quadra - Power Generation” for the year 2012 amounted to 1.05% of the total production in Russia and 1.55% of generation by TPPs in Russia.

1.6 JSC “Quadra – Power Generation” – 5 years of stable energy supplies

2008 In the process of the reform and completion of activity, JSC RAO “UES of Russia” sold the “governmental stake” in the share capital of JSC “TGC-4” to ONEXIM HOLDINGS LIMITED. 2009 A gas steam unit of 52 MW based on the Eletskaya TPP was commissioned in the city of Elets, the Lipetsk Region. The project was implemented in accordance with the priority investment program of JSC “Quadra - Power Generation” within the framework of the capacity supply contracts (CSCs). 2010 JSC “TGC-4” was renamed into Joint Stock Company “Quadra - Power Generation” (its abbreviated name is JSC “Quadra - Power Generation”). JSC “Quadra - Power Generation” acted as an arranger and system integrator of the line “Energy Efficiency and Resources Saving” at All-Russia Youth Educational Forum “Seliger- 2010”, which was attended by over 300 young energy employees of the energy company, students of energy specialties of Russian regional universities, as well as partners of JSC “Quadra - Power Generation” – Russia’s leading energy companies. JSC “Quadra - Power Generation” held large-scale reconstruction of the central heating main of 2.5 km in length in Karla Marxa Street in the city of Tambov. The investments amounted to RUR 230.9 mn. On 21 October, a new 115 MW gas steam unit was officially started up at the Voronezhskaya TPP-2. The project was implemented within the framework of CSCs. The RF Government approved composition of the generating facilities in respect of which capacity supply contracts (CSCs) can be signed. JSC “Quadra - Power Generation” confirmed its commitments in the field of implementation of the investment program. The investment program of JSC “Quadra - Power Generation” under CSCs includes construction of 10 plants of 1,092 MW in total capacity. 2011 As part of the cooperation agreement for development of the heat supply system of Orel city and modernization of its thermal power complex, JSC “Quadra - Power Generation” launched the project of switch to RAB-based method of tariff regulation in the Orel thermal power complex. Official ceremonies devoted to completion of construction of GTU-30 MW TPP at the Kaluzhskaya TPP and GSU-115 MW at the boiler house of the North-Western District of Kursk were held; the projects were implemented within the framework of CSCs.

The Board of Directors of JSC “Quadra - Power Generation” approved the concept of spinning off the heat grid business of the Company. The concept stipulates gradual implementation of measures to create heat grid enterprises in the regions attended by the Company. As part of consolidation of the regional branches, JSC “Quadra - Power Generation” renamed branches “Tula Regional Generation” into “Central Generation”, “Smolensk Regional Generation” into “Western Generation”. The structure of the branch “Central Generation” included production units of JSC “Quadra - Power Generation” in the Tula and Kaluga Regions. The branch “Western Generation” united production units in the Smolensk and Bryansk Regions. 2012

January JSC “Quadra - Power Generation”, based on the results of the competition, conducted by the specialized organization “Property Fund of the Kursk Region”, acquired the right to lease the property of MUE “Gorteploset”. According to the contract, since 1 January 2012 JSC “Quadra - Power Generation” has been providing heat supply to subscribers of MUE “Gorteploset”. This helped the branch “Kursk Regional Generation” switch to settlement of accounts for thermal energy directly with consumers of MUE “Gorteploset”, stop the growth of consumer receivables and raise the level of payments for delivered energy resources.

Within the framework of implementation of the concept of JSC “Quadra - Power Generation” in the field of spinning off heat grid business, 100% subsidiaries of JSC “Quadra - Power Generation” – LLC “Smolensk HGC”, LLC “Ryazan HGC”, LLC “Tambov HGC” and LLC “Voronezh HGC” have started their operations since 1 January 2012.

On 12 January, the official ceremony of opening of the return pipeline of the heat grid from the Micro District Bratislavsky in the Zheleznodorozhny District of the city of Ryazan was held. The total investments of the Company in the project exceeded RUR 40 mn. The project was implemented within the framework of the thermal grid complex modernization program of JSC “Quadra - Power Generation”.

February The branch of JSC “Quadra - Power Generation” – “Eastern Generation” launched a modern energy complex of 40 MW in capacity in the city of Gryazi, the Lipetsk Region. The energy complex consists of the modular boiler house of 34.4 Gcal/h (or 40 MW) in heat capacity and electricity generation part; it is equipped with modern tools.

The branch of JSC “Quadra - Power Generation” – “Eastern Generation” in Lipetsk established the center for arrangement of direct settlement of accounts with consumers.

March JSC “Quadra - Power Generation” launched a new version of its corporate website designed to meet modern requirements to functionality of the official portal of the energy company. As part of the project for modernization of the corporate website, its concept, design and structure were changed. The website is presented in the Russian and English versions.

April The branch of JSC “Quadra - Power Generation” – “Kursk Regional Generation” created a special sales office for customer relations, where the residents of the city can get advice on settlement of accounts for heat, as well as enter into heat 29

supply contracts.

On 28 April 2012, the name of the branch of JSC “Quadra - Power Generation” – “Belgorod Regional Generation” was changed. Its name became the branch of JSC “Quadra - Power Generation” – “South Generation”.

May The official ceremony of opening of the Customer Service Centre (CSC) of the branch of JSC “Quadra - Power Generation” – “Kursk Regional Generation” was held in Kursk. The event was attended by Alexander Demin, Deputy Governor of the Kursk Region; Yulia Basova, Chairperson of the Board of Directors of JSC “Quadra - Power Generation”; Nikolay Ovcharov, Mayor of the city of Kursk; Grigory Bakaev, General Director of JSC “Quadra - Power Generation”.

On 22 May 2012, the annual General Meeting of Shareholders (AGMS) of JSC “Quadra - Power Generation” was held.

JSC “Quadra - Power Generation” switched to a new scheme of settlement of accounts with consumers in Sovetsk city of the Tula Region.

June Within the framework of the concept of spinning off the heat grid business, JSC “Quadra - Power Generation” took the decision to reorganize 100-percent subsidiary Joint Stock Company “Smolensk Heat Grid Company” in the form of its transformation into Limited Liability Company “Bryansk Heat Grid Company” (LLC “Bryansk HGC”). LLC “Bryansk HGC” supplies heat and hot water to 100% of consumers in the city of Klintsy and residential settlement Belye Berega in the Bryansk Region.

Yulia Basova was elected Chairperson of the Board of Directors of JSC “Quadra - Power Generation”; Ekaterina Salnikova (Deputy Financial Director of LLC “Group ONEXIM”) was elected as Deputy Chairperson of the Board of Directors.

The Scientific and Engineering Council (SEC) was established in JSC “Quadra - Power Generation”. The scope of SEC responsibility includes technical evaluation and decision-making on the issues related with operation, repairs, modernization and reconstruction of energy equipment, improvement of energy efficiency and enhancement of economic performance of the Company.

LLC “Smolensk HGC” (100-percent subsidiary of JSC “Quadra - Power Generation”) has started to collect payments for thermal energy from consumers in the city of Smolensk since 1 August 2012.

th July JSC “Quadra - Power Generation” took part in the 9 International Exhibition of Scientific and Engineering Creativity of Youth “Expo-sciences Europe 2012” (ESE 2012) in the city of Tula within the framework of the International Youth Scientific and Education Project “Europe. Russia. Tula”.

JSC “Quadra - Power Generation” for the first time used the innovative method of recovery to restore the worn-out section of the pipeline of over 160 meters in length and 820 mm in diameter in the city of Ryazan. This method allows carrying out repairs at heating grids without digging up the territory, which is very important in restrained urban conditions.

According to the decision of the annual General Meeting of Shareholders, JSC “Quadra - Power Generation” paid dividends on preferred shares of the Company in the amount of RUR 14,060 mn.

August The first meeting of the Scientific and Engineering Council (SEC) of the Company was held, which addressed the issue of equipment operation efficiency improvement using various types of technologies enabling to save electricity for own consumption.

September As part of the large-scale investment program for renovation of generating capacities, implementation of priority investment projects for construction of gas steam units of 115 MW in capacity (GSU-115 MW) at the Alexinskaya TPP in the Tula Region, Dyagilevskaya TPP in the Ryazan Region, Kursk TPP-1 in the city of Kursk and GSU-223 MW at the Voronezhskaya TPP-1 in Voronezh was commenced.

LLC “Ryazan HGC” (100-percent subsidiary of JSC “Quadra - Power Generation”) started construction of a new heat main to the apartment complex built in the city of Ryazan. The energy company’s investments in building of the new line of thermal grids will exceed RUR 25 mn.

Warm start of the gas turbine GTU-30 MW at the Livenskaya TPP was held successfully, during which main and auxiliary gas turbine equipment was tested, and measurements of main parameters of its operation were implemented.

JSC “Belgorod Heat Grid Company” (100-percent subsidiary of JSC “Quadra - Power Generation”) took the third place in the regional round of All-Russia Contest “Russian Entity of High Social Efficiency” in the nomination “For reduction in occupational accidents and occupational diseases in production sector organizations”.

Vladimir Shelkov, previously occupying the position of the First Deputy General Director of the Company, was elected as General Director of JSC “Quadra - Power Generation”.

JSC “Quadra - Power Generation” switched to a new scheme of settlement of accounts with consumers in the city of Dankov, the Lipetsk Region. Payment for thermal energy services is made directly at the expense of resource supplying entities, leaving out the intermediary - LLC “District Management Company”, and this allows for reduction in accounts receivable.

October The branch of JSC “Quadra - Power Generation” – “Eastern Generation” started the second phase of reconstruction of the heat grid in the city of Lipetsk. Under the project, 3.4 km of worn-out pipelines are planned to be replaced; more than 2 km have been already replaced. The preliminary cost of the project is RUR 166 mn.

The branch of JSC “Quadra - Power Generation” – “Ryazan Regional Generation” held the official ceremony of beginning of construction of a modern gas steam unit of 115 MW in capacity at the Dyagilevskaya TPP. The managers of the regional administration and energy company laid the first cubic meter of concrete as the foundation of the future gas steam unit. 31

Within the framework of the energy equipment retooling and reconstruction program, the branch of JSC “Quadra - Power Generation” – “Kursk Regional Generation” completed the first stage of reconstruction of the fuel feed line of the Kurskaya TPP-1.

JSC “Belgorod Heat Grid Company” (100-percent subsidiary of JSC “Quadra - Power Generation”) implemented the heat grid monitoring system in the central part of the city of Belgorod. The system covers district and transmission heating grids and is designed to control parameters of the heat grid at key points, as well as for rapid detection of pipelines damage.

JSC “Quadra - Power Generation” switched to a new scheme of settlement of accounts with consumers in Elets, the Lipetsk Region. The need to adopt a new system of settlements with population was caused by growth of debt of the city management companies for delivered energy.

November JSC “Quadra - Power Generation” received a Certificate of Readiness for the Heating Season. The document confirmed that all main and additional conditions to ensure reliable operation of energy equipment during the heating season had been complied with.

The system “Center of collection and processing of technological information” (CCPTI) was put into operation. It was developed by the company “Sum of Technologies” in cooperation with the specialists of JSC “Quadra - Power Generation”. The system allows to obtain accurate data timely and in a convenient manner on functioning of equipment and operating parameters of power plants, optimize functioning of production units of the energy company, and carry out operations in electricity markets effectively.

December The city of Kursk hosted the interregional board of JSC “Quadra - Power Generation”. The board participants discussed the current problems of heat supply in the regions attended by the Company, the issues of tariff regulation of thermal energy obtained through co-generation, and the effect of the rules of wholesale electricity (capacity) market on the heat supply market.

SECTION 2. Corporate governance

The Company follows strictly the principles and procedures of corporate governance defined by the Corporate Governance Code, which was approved by the Board of Directors of JSC “Quadra - Power Generation”. The Company undertakes to follow strictly the requirements of this document and to improve constantly the corporate governance standards according to the best international experience.

2.1 Corporate governance principles

The corporate governance of JSC “Quadra – Power Generation” is based on the fundamental principles, such as fairness, transparency, responsibility, which enable implementation of the whole spectrum of the actions aimed at: - provision of protection of the rights and interests of all shareholders, including the rights of shareholders to participate in the Company’s management; - equal treatment of all shareholders, including minority and foreign shareholders; - full and duly disclosure of information on the Company, including on its financial position, economic parameters, structure of the property and structure of management; - effective control over the Company’s financial and economic activity; - implementation of the uniform corporate policy in respect of the subsidiaries and dependent entities and other legal entities, the participant of which is JSC “Quadra - Power Generation”; - implementation of the information openness and transparency policy with observance of the norms of business ethics in business; - performance by the Company’s management bodies of their duties in the interests of the Company and all shareholders with observance of the requirements of the Russian Federation laws and international standards of corporate governance. Information on observance by JSC “Quadra – Power Generation” of the Corporate Conduct Code recommended for application by Order #421/r of the Federal Commission for Securities of the Russian Federation dated 04.04.2002 are provided in Schedule #2 to the annual report.

Information on the Company’s management bodies and bodies controlling its financial and economic activities:

The General Meeting of Shareholders is the supreme body of JSC “Quadra – Power Generation” management through which shareholders exercise the right to participate in the management of the Company. Elaboration of the Company development strategy, its general management and control over activity of executive bodies are carried out by the Board of Directors. The work of the Board of Directors is organized by the Chairperson of the Board of Directors who is elected by the members of the Board of Director from among their number by the majority of votes from among the total number of the members of the Board of Directors. The executive bodies of JSC “Quadra – Power Generation” are Management Board and General Director. The Management Board, which is a joint executive body, carries out its activity in the interests of the Company, is guided by the decisions of the General Meeting of Shareholders and Board of Directors. The Management Board and General Director are responsible for practical implementation of the goals, development strategy and policy of the Company and carry out management of current activity.

2.2 General Meeting of Shareholders

Shareholders participate in management of the Company through discussion and decision-making on the agenda items put to the vote at the General Meeting of Shareholders. A shareholder owning voting shares of JSC “Quadra - Power Generation” participates in the work of the General Meeting of Shareholders personally or through a representative. On 22 May 2012, the annual General Meeting of Shareholders was held (Minutes #1/15, date of the minutes drawing up 24.05.2012.), which covered the following items: 1. On approval of the annual report, annual financial statements, including profit and loss statement for 2011. 2. On distribution of profit (including payment (announcement) of dividends) and loss of the Company for the financial year 2011. 3. On approval of the Charter in a new version. 4. On election of members to the Company’s Board of Directors. 5. On election of the members to the Company’s Internal Audit Commission. 6. On approval of the Company’s Auditor. 7. On definition of the cost (maximum amount of insurance premiums) under the interested party transaction (contract of insuring liabilities of directors, officials and the company, which is planned to be concluded between JSC “Quadra - Power Generation” (Insurer) and LLC “Soglasie” (Insured)). 8. On approval of the interested-party transaction (contract of insuring liabilities of directors, officials and the company, which is planned to be concluded between JSC “Quadra - Power Generation” (Insurer) and LLC “Soglasie” (Insured)). No extraordinary General Meetings of Shareholders were held in 2012.

2.3 Board of Directors

The Company believes that the professional Board of Directors is an essential element of efficient corporate governance. The Board of Directors influences the performance of JSC “Quadra - Power Generation”, exercising general strategic management and control over the work of the executive bodies in the interests of the Company and its shareholders. The competence of the Board of Directors includes the following key issues: - definition of priority lines of activity and strategy of the Company; - formation of executive bodies of the Company and termination of their powers; - recommendations on the amount of dividends and procedure of their payment;

- approval of internal documents; - approval of the business plan, including retooling, reconstruction and development program, investment program and approval of reports on their implementation; - approval of major transactions and interested party transactions; - establishment of committees under the Board of Directors, election of committees members and early termination of their powers, approval of regulations on committees of the Board of Directors. The Board of Directors consists of 9 (nine) people (number of members of the Board of Directors changed from 11 people to 9 people in accordance with the Charter of JSC “Quadra - Power Generation” (version #6) approved by the annual General Meeting of Shareholders of JSC “Quadra - Power Generation” held on 22.05.2012). The persons elected to the Board of Directors may be re-elected an unlimited number of times.

The Board of Directors activity in 2012.

In 2012, 6 meetings (joint presence) and 13 absentee votings of the Board of Directors were held. The main decisions taken by the Board of Directors of JSC “Quadra - Power Generation” in 2012: - approval of the Business Plan, Investment Program, Annual Comprehensive Procurement Program and Retooling, Reconstruction and Development Program for 2012, and reports on their implementation; - approval of a new form of the Business Plan, which includes sections “Investment Program” and “Retooling, Reconstruction and Development Program”; - Definition of priority activities, including approval of the sole participation of JSC “Quadra - Power Generation” in a subsidiary, the main activity of which will be energy supply business; - decisions related with formation of the Company’s Management Board; - election of committees in a new membership; - approval of the Action Plan of the Board of Directors for the period before the AGMS held in 2013; - approval of the Insurance Program of JSC “Quadra - Power Generation” for 2013; - approval of the Company’s internal documents in new versions, such as the Regulation on Control and Inspections Administration, Insurance Coverage Regulation.

Current membership of the Board of Directors: The current membership of the Board of Directors was elected by the annual General Meeting of Shareholders on 22 May 2012.

Chairperson of the Board of Directors

Yulia Vasilievna Basova 1964 Executive Director of LLC “Group ONEXIM”

In 1986, she graduated from Moscow Institute of Management named after S. Ordzhonikidze majoring in “Engineer-Economist for Automatic Management Systems in the Energy Sector”. During 1993 - 2000, she was Deputy Chairperson of the Management Board of JSC “ONEXIM Bank”. During 2000 – 2002, she was Chief Economic Advisor to President of JSC JSCB “Rosbank”. During 2002 - 2007, she occupied the position of Deputy General Director of JSC “MMC “Norilsk Nickel”. Since 2008, she has been Executive Director of LLC “Group ONEXIM”, Chairperson of the Board of Directors of JSC “TGC-4” (since 18.05.2010 - JSC “Quadra - Power Generation”). Since December 2010, she has been President of JSC “Quadra - Power Generation”.

She owns 0.008496% of ordinary shares of JSC “Quadra - Power Generation”.

Members of the Board of Directors Grigory Nikolaevich Bakaev Daniel Lesin Wolfe Vyacheslav Victorovich Pivovarov Sergey Sergeyevich Podsypanin

1968 1965 1972 1970 Director for investor relations General Director of Director of the Law Directorate of

of JSC “Quadra - Power Generation” LLC “Altera Capital” LLC “Group ONEXIM”

In 1994, he graduated from Krasnoyarsk He graduated from Dartmouth College in 1987, and in He graduated from the faculty of international In 1992, he graduated from Moscow State Institute of Commerce, then - Finance Academy 1991 he received a JD degree (doctor of economic relations of Moscow Institute of University named after Lomonosov majoring in under the Government of the Russian jurisprudence) at Columbia University, NY, USA. Since Management and American University of Paris. “jurisprudence”. In 1993, he received a Master Federation. From 2005 to 2006, he was Director 1994, he has been holding senior positions in Russian He has an MBA from Stanford University. From of Law at Moscow International University. In for finance and economy, First Deputy General investment companies. Since 1997, he has been 2006 through 2008, he ran the international 2002, he was awarded the degree of Candidate Director of JSC “Irkutskenergo”. In 2007, he was Executive Director of the investment company “Troika investment team of Old Lane, USA. During of Legal Sciences of Russian Academy of appointed First Deputy General Director, then - Dialog”, he was also a member of the trade committee 2008 - 2009, he was Managing Director of Citi Public Administration under the President of the General Director of JSC “Taimyrgas” (Norilsk). of JSC “RTS” and a member of the Board of Directors Group. From 2009 through 2011, he served as Russian Federation. From 1998 through 2007, Since 2008, he has been Deputy General of IC “Troika Dialog”; later, he was Acting President of adviser to the Minister of the RF Economic he held the position of General Director of Director of JSC “Quadra - Power Generation”, the management company “Troika Dialog”. During Development. Since 2011, he has been CJSC “Monetary Financial Company”. In from 22 September 2010 through 21 September 2004 - 2008, he was Senior Managing Director of Alfa running LLC “Altera Capital”. addition, from 2004 through 2006, he was 2012, he was General Director of JSC “Quadra - Capital Partners; since 2009, he has been Head of Director of the Law Directorate of JSC “Bank Power Generation”. Wolfeworks Limited. Since December 2010, he has Pervoe OVK”. From 2006 through 2008, he been Director for investor relations of JSC “Quadra - was Deputy General Director of CJSC “APK Power Generation”. On 23 May 2011, he was elected “Agros”. Since 2008, he has been Director of

as a member of the Board of Directors of JSC “Quadra the Law Directorate of LLC “Group ONEXIM”. - Power Generation”. On 21 April 2011, he was elected as a member of the Management Board of JSC “Quadra - Power Generation”.

He has no shares in the Company He has no shares in the Company He has no shares in the Company He has no shares in the Company

Ekaterina Mikhailovna Salnikova Mikhail Alexandrovich Sosnovsky David Alexander Hurn Christophe François Charlier

1957 1975 1971 1972 Managing Director of the Representative Deputy Financial Director Deputy General Director Deputy General Director Office of the Limited Liability Company of LLC “Group ONEXIM” of LLC “Group ONEXIM” of LLC “Group ONEXIM” SPRING

In 1979, she graduated from Moscow Institute of In 1997, he graduated from the faculty of international He graduated from Harvard University in 1993. In 1994, he graduated from University of Management named after Sergo Ordzhonikidze law Moscow State University of Foreign Affairs From 2003 through 2010, he was Director of the Pennsylvania, besides he received a majoring in “Engineer-Economist for majoring in jurisprudence. From 2004 through 2006, representative office “Halcyon International Bachelor’s Degree in Engineering Sciences in management arrangement”. PhD in Economics. he was Corporate Secretary, Vice-President, Advisor Limited”. Since 2010, he has been Managing Economics with a concentration in Finances at In 1997, she graduated from the Academy of to General Director of JSC “MMC “Norilsk Nickel”. Director of the Representative Office of the Wharton School, as well as Bachelor’s Degree Public Administration under the President of the From 2005 through 2006, he was a non-executive Limited Liability Company SPRING (Specialsed in International Relations at the College of Arts Russian Federation with a major in member of the Board of Directors of the company Gold Research and Investment Group). & Sciences. From 2002 through 2004, he held “Jurisprudence”. From 1998 through 2007, she Field Limited (South Africa). From 2006 through 2007, the position of Director for strategic was Director for corporate structures, Deputy he was Executive Director of LLC “Media Plaza”. From development, mergers & acquisitions at JSC Finance Director for corporate governance 2007 to date, he is Deputy General Director of LLC “MMC “Norilsk Nickel”. From 2008 through (corporate governance director) of CJSC “Group ONEXIM”. 2009, he was Deputy General Director of “Holding Company INTERROS” and General Onexim Group Management Limited (BVI). Director of CJSC “Universalinvest”. From 2007 From 2009 to date, he is Deputy General to date, she has been Deputy Financial Director Director of LLC “Group ONEXIM”. of LLC “Group ONEXIM”. She has no shares in the Company He has no shares in the Company He has no shares in the Company He has no shares in the Company

The members of the Board of Directors, with the exception of D.L. Wolfe and G.N. Bakaev, as well as Chairperson of the Board of Directors Y.V. Basova are independent. The membership of the Board of Directors of JSC “Quadra - Power Generation”, which worked before 22.05.2012, was elected at the annual General Meeting of Shareholders on 23 May 2011: Yulia Vasilievna Basova – Chairperson of the Board of Directors Members of the Board of Directors: Grigory Nikolaevich Bakaev, Daniel Lesin Wolfe, Boris Mikhailovich Kalashnikov, Denis Evgenievich Lisitsky, Sergey Sergeyevich Podsypanin, Ekaterina Mikhailovna Salnikova, Mikhail Alexandrovich Sosnovsky, Dmitry Alexandrovich Usanov, Christophe Francois Charlier, David Alexander Hurn.

2.4 General Director. Management Board. Management by current activities is carried out by the sole executive body – the General Director and collegial executive body - the Management Board. The General Director is accountable to the General Meeting of Shareholders and the Board of Directors. The General Director’s competence includes all issues of the Company’s current operations, except for the issues within the competence of the General Meeting of Shareholders, Board of Directors and Management Board. Vladimir Vitalievich Shelkov has been General Director of JSC “Quadra - Power Generation” and Chairperson of the Management Board since 22 September 2012; he succeeded Grigory Nikolaevich Bakaev in this position. The main tasks of the Management Board: - ensuring of achievement of a high level of return on assets and maximum profit from the activities of the Company; - implementation of financial and economic policy of the Company, elaboration of decisions on major issues of its current business activities and coordination of work of its subdivisions; - development of proposals in respect of the development strategy of the Company; - ensuring that the rights and legitimate interests of the Company’s shareholders are protected.

The current membership of the Management Board (at 31.12.2011): Chairperson of the Management Board. Vladimir Vitalievich Shelkov In 1986, he graduated from the economics faculty of Moscow State University named after M.V. Lomonosov. In 2004, he was awarded the academic degree of Doctor in Economics and Commerce by the Academy of Economic Sciences and Entrepreneur Activity of Moscow (AESEA). Previously, he held managing positions at LLC “SIBUR”, JSC “Norilskgazprom”, served as adviser for JSC “MMC “Norilsk Nickel”. Prior to that, he was Deputy Chairperson of the Management Board of MCB “Impulsbank”. In February 2011, he was appointed First Deputy General Director of JSC “Quadra - Power Generation”. On 21 April 2011, he was elected as a member of the Management Board of JSC “Quadra - Power Generation”. On 22 September 2012, he was elected as General Director of JSC “Quadra - Power Generation”; he is Chairperson of the Management Board of JSC “Quadra - Power Generation”.

1964 General Director of JSC “Quadra - Power Generation”

On 11 February 2013, the following person became a member of the Management Board of JSC “Quadra - Power Generation” Members of the Management Board Daniel Lesin Wolfe Evgeniya Yurievna Mironenko Victor Valentinovich Tikhonov Eduard Vladimirovich Shpakovsky

1965 1979 1965 1967 Director for investor relations Director for Economy and Finances Director for corporate governance and legal First Deputy General Director of JSC “Quadra - Power Generation” of JSC “Quadra - Power Generation” work of JSC “Quadra - Power Generation” of JSC “Quadra - Power Generation”

He graduated from Dartmouth College in 1987, She graduated in 2001 from Murmansk State In 1989, he graduated from Moscow Finance In 1991, he graduated from Moscow Order of and in 1991 he received a JD degree (doctor Technical University majoring in “Finances and Institute. Victor Valentinovich has 9 years of Peoples Friendship State Linguistic University of jurisprudence) at Columbia University, NY, Credit”, and Murmansk State Pedagogical experience in the metals industry. He joined the majoring in “Foreign Languages”; in 1997, he USA. Since 1994, he has been holding senior University majoring in “Philology”, in 2003, she team of managers of JSC “Quadra - Power graduated from the International Business School positions in Russian investment companies. graduated from Murmansk State Technical Generation” in 2008 as Deputy Director General Maastricht School of Management under the Since 1997, he has been Executive Director of University majoring in “Jurisprudence”. She has a for corporate governance. Program MBA majoring in “Accounting & Finance”. the investment company “Troika Dialog”, he long experience in financial and economic work in On 30 August 2011, he was elected as a During 1997 - 2000, he was Financial Director of was also a member of the trade committee of the structure of assets of JSC “MMC Norilsk member of the Management Board of JSC Moscow Office of “McKinsey & Company”, project JSC “RTS” and a member of the Board of Nickel”. During 2008 – 2009, she served as acting “Quadra - Power Generation”. manager at the company's headquarters in New Directors of IC “Troika Dialog”; later, he was head of the Finance Department, Minister of York. From 2000 through 2002, he was Director for Acting President of the management company Finance of the Murmansk Region. In February economy and finance, then - General Director of “Troika Dialog”. During 2004 - 2008, he was 2011, Evgeniya Yurievna joined the management JSC “Ulyanovsk Automobile Plant”. From 2002 Senior Managing Director of Alfa Capital team of JSC “Quadra - Power Generation” as the through 2007, he was Director of the Financial Partners; since 2009, he has been Head of Director for Economy and Finance. Directorate of JSC “Russian Public Utilities Wolfeworks Limited. Since December 2010, he On 30 August 2011, she was elected as a member Systems”, Deputy General Director of JSC has been Director for investor relations of JSC of the Management Board of JSC “Quadra - Power “Atomenergostroy”, Executive Director of CJSC “Quadra - Power Generation”. On 23 May Generation”. “Management Company “Bryansk Machine 2011, he was elected as a member of the Building Plant”. From 2007 through 2012, he was Board of Directors of JSC “Quadra - Power General Director of JSC “Sibur-Volzhsky”. Since 12 Generation”. On 21 April 2011, he was elected November 2012, he has been First Deputy General as a member of the Management Board of Director JSC “Quadra - Power Generation”. JSC “Quadra - Power Generation”. He has no shares in the Company She has no shares in the Company He has no shares in the Company He has no shares in the Company

2.5 Committees under the Board of Directors

The committees under the Board of Directors provide preliminary consideration and preparation of recommendations on the issues within their competence, which are submitted to the Board of Directors. The members of the Committee are elected for a period before election of a new Board of Directors. In 2012, the Company had the Audit Committee and Human Resources and Remunerations Committee.

Human Resources and Remunerations Committee of the Board of Directors of JSC “Quadra - Power Generation” The tasks of the Committee are preliminary consideration and preparation of recommendations for the Board of Directors for decision-making on the issues in the field of formation of the Company’s priority lines of activity with regard to personnel and remuneration of members of the management bodies and Internal Audit Commission of the Company. The current membership of the Committee was elected by the Board of Directors on 05.06.2012. Yulia Vasilievna Basova Chairperson of the Committee Executive Director of LLC “Group ONEXIM” Ekaterina Mikhailovna Salnikova Deputy Financial Director of LLC “Group ONEXIM” Mikhail Alexandrovich Sosnovsky Deputy General Director of LLC “Group ONEXIM” The Regulation on the Human Resources and Remunerations Committee of the Board of Directors of JSC “Quadra - Power Generation” was approved by Minutes #02/106 of the Board of Directors dated 23.06.2010.

Audit Committee of the Board of Directors of JSC “Quadra - Power Generation” The tasks of the Committee - to assist the Board of Directors in implementing control over the Company’s financial and economic activities by means of preliminary consideration and preparation of recommendations for the Board of Directors. The current membership of the Committee was elected by the Board of Directors on 05.06.2012. Chairperson of the Committee Christophe François Charlier Deputy General Director of LLC “Group ONEXIM” Vyacheslav Victorovich Pivovarov General Director of LLC “Altera Capital” Ekaterina Mikhailovna Salnikova Deputy Financial Director of LLC “Group ONEXIM” The Regulation on the Audit Committee of the Board of Directors of JSC “Quadra - Power Generation” was approved by Minutes #02/106 of the Board of Directors dated 23.06.2010.

2.6 Internal Audit Commission

Internal Audit Commission In order to exercise control over financial and economic activity of the Company, the annual General Meeting of Shareholders elects the Internal Audit Commission for the period before the next annual General Meeting of Shareholders. The Internal Audit Commission acts in the interests of the Company’s shareholders and is accountable to the General Meeting of Shareholders in its activities. When carrying out its activities, the Internal Audit Commission is independent of the Company’s officials. The main tasks of the Internal Audit Commission are as follows: - implementation of control over financial and economic activities of the Company; - ensuring of observance of compliance of the financial and business operations performed by the Company with the laws of the Russian Federation and the Charter; - implementation of independent assessment of information on the financial condition of the Company. The number of members of the Internal Audit Commission is 5 people. The membership of the Internal Audit Commission of JSC “Quadra - Power Generation”, which was elected on 22.05.2012 by the decision of the annual General Meeting of Shareholders includes: 1. Anastasiya Vladimirovna Chairperson of the Internal Audit Commission. Oksimets Born: 1978. Higher education. Position occupied: Deputy Chief of the Corporate Structures Administration of LLC Group ONEXIM. Stake in the charter capital: none. 2. Alexander Valentinovich Born: 1957. Bulanov Higher education. Position occupied: Chief of the Control and Inspection Administration of JSC “Quadra - Power Generation”. Stake in the charter capital: none. 3. Andrey Alexandrovich Born: 1979. Revva Higher education. Position occupied: Chief of the Planning and Economic Administration of JSC “Quadra - Power Generation”. Stake in the charter capital: none. 4. Alexandra Born: 1973. Konstantinovna Higher education. Filippenko Position occupied: Main Specialist of the Book Keeping and Reporting Administration of LLC “Group ONEXIM”. Stake in the charter capital: none. 5 Irina Nikolaevna Yushina Born: 1964. Higher education. Position occupied: Main Specialists of the Book Keeping and Reporting Administration of LLC “Group ONEXIM”. Stake in the charter capital: none.

The Internal Audit Commission carried out its activities during the reporting period in accordance with the current legislation of the Russian Federation, regulatory documents of the Ministry of Finance of the Russian Federation, Charter of JSC “Quadra - Power Generation”, Regulation on the Internal Audit Commission and approved action plan. No significant deviations were found in the course of inspection of the Company’s financial and economic activities for the year 2012 held by the Internal Audit Commission. During the period from 28.10.2011 to 22.05.2012, the Internal Audit Commission of JSC “Quadra - Power Generation” worked in the following membership: Anastasia Vladimirovna Oksimets, Irina Anatolievna Karpenko, Evgeny Vasilievich Potanin, Alexandra Konstantinovna

Filippenko, Irina Nikolaevna Yushina, which was elected at the annual General Meeting of Shareholders on 23.05.2011.

2.7 Remuneration

The issues of remuneration of the Board of Directors members are referred to the competence of the General Meeting of Shareholders. Besides, in accordance with the Regulation on the Company’s Board of Directors, the costs associated with performance by the members of the Board of Directors of their duties shall be subject to compensation. No decision to pay remuneration or compensation of costs to the members of the Board of Directors was taken by the General Meeting of Shareholders.

In 2012, RUR 77,791.2 thousand were paid to the members of the Management Board.

Index name, RUR 2012 Remuneration for participation in the work of the management body - Wages 38,506,378 Bonuses 32,400,000 Commission fees - Privileges - Compensation of costs - Other types of remuneration 6,884,789 TOTAL 77,791,167

In 2012, RUR 4,672.8 thousand were paid to the members of the Internal Audit Commission.

Index name, RUR 2012 Remuneration for participation in the work of the issuer’s body controlling - financial and economic activity Wages 3,001,325 Bonuses 1,261,378 Commission fees - Privileges - Compensation of costs - Other types of remuneration 410,064 TOTAL 4,672,767

2.8 Internal control and audit Internal control and audit in the Company are implemented by a set of bodies: - Internal Audit Commission; - Board of Director - through the Audit Committee; - Control and Inspection Administration. In order to ensure systematic nature of control over financial and economic activities of the Company, internal control procedures are carried out by the listed structures in collaboration with other bodies and structural subdivisions of the Company. Functions, rights and duties, responsibilities of subdivisions of the Company are provided for in executive documents of the Company. Internal control procedures conducted in JSC “Quadra - Power Generation” in 2012, as well as those planned and implemented in 2013 are aimed to protect the Company’s assets, shareholders’ capital investments, to exercise effective control over the financial and economic activities of the Company, including performance of the approved Business Plan. In accordance with Article 19 of Federal Law #402-FZ dated 06.12.2011, which came into effect on 01.01.2012, “On Book Keeping”, the Company shall organize and carry out internal control over occurring economic events, internal control over accounting records keeping and accounting (financial) reports composition. In accordance with the Regulation on the Control and Inspection Administration, approved by the Board of Directors of JSC “Quadra - Power Generation” (minutes #13/154 dated 26.12.2012), implementation of internal control over occurring economic events, internal control over accounting records keeping and accounting (financial) reports composition in the Company is assigned to the Control and Inspection Administration of JSC “Quadra - Power Generation”. The system of internal control in the Company fully complies with the current laws and approved Code of Corporate Governance.

Data on large transactions accomplished by the Company in 2012. In 2012, the Company entered into a transaction recognized in accordance with the Federal Law “On Joint Stock Companies” to be a major transaction (credit line agreement between JSC “Quadra - Power Generation” and “Gazprombank” (Joint Stock Company) - a transaction which together with previously accomplished transactions equals 25 percent and more of the Company’s asset book value. It was approved by the Board of Directors on 10.10.2012 (minutes #08/149 dated 10.10.2012)). In 2012, the Company did not enter into other transactions, accomplishment of which is covered by the order of approval of major transactions, due to absence of relevant requirements in the Charter of JSC “Quadra - Power Generation”.

Data on interested party transactions accomplished by the Company in 2012. In 2012, the Company entered into a transaction which is recognized in accordance with the Federal Law “On Joint Stock Companies” to be an interested party transaction, and which is subject to approval by the General Meeting of Shareholders (contract of insuring liabilities of directors, officials and the company between JSC “Quadra - Power Generation” (Insurer) and LLC “Soglasie” (Insured)). In 2012, the Company entered into 96 (ninety-six) transactions which are recognized in accordance with the Federal Law “On Joint Stock Companies” to be interested party transactions, they are listed in Schedule #4 to the annual report. These transactions were preliminarily approved by the Board of Directors.

SECTION 3. For shareholders and investors

Being aware of the importance of timely and adequate presentation of information about the Company’s activities, as well as taking into account peculiarities of the energy industry, JSC “Quadra - Power Generation” makes necessary efforts to ensure effective cooperation and development of relations with shareholders, investors, representatives of the analytical community, and representatives of federal and regional authorities and other interested parties. The Company works actively on collaboration with analysts, investment banks, stock market and credit rating agencies; the management participates in sector-specific conferences and non deal road-show, which include “face-to-face” meetings with representatives of Russian and foreign investment funds, meetings based on operational and financial performance of JSC “Quadra - Power Generation” for a reporting period with analysts and investors, and other events within the framework of mandatory and voluntary disclosure of information in order to improve openness and transparency of the Company.

3.1 Joint-stock capital

At 31.12.2012, the charter capital of JSC “Quadra - Power Generation” equals RUR 19,877,785,165.97 and is divided into 1,987,778,516,597 shares with equal par value of RUR 0.01 each. The structure of the holders of ordinary and preferred shares of JSC “Quadra - Power Generation”.

* Stake in federal ownership - 0.1433%. No special right for participation of the Russian Federation, Russian Federation constituent entities and municipal formations in management of the Company is stipulated (“golden share”). At 31 December 2012, Onexim Holdings Limited owns 49.99% of the Company’s voting shares. On 10 April 2013, according to the notice on the right to dispose of a certain number of the issuer’s votes obtained by JSC “Quadra - Power Generation”, JOULE ENERGY LIMITED acquired the right to dispose of 49.999995% of the Company’s voting shares. Onexim Holdings Limited terminated the right to dispose of a certain number of votes on the voting shares in the charter capital of JSC “Quadra - Power Generation”.

3.2 Securities 44

Type of securities Shares ordinary registered preferred registered Form and/or other identifiers of securities uncertificated uncertificated Total number of securities, pcs. 1,912,505,577,759 75,272,938,838 Number of securities outstanding at the date of 1,912,505,577,759 75,272,938,838 composition of the report, pcs. Par value, RUR 0.01 0.01 State registration number 1-01-43069-A 2-01-43069-A Date of state registration number of securities 20.06.2005 09.11.2006 issue Information on quotation list of stock CJSC “MICEX SE” exchanges, on which securities are traded “A2” beyond the list Name of the entity keeping records of rights to CJSC “Computershare Registrar” securities

In 2012, the Company did not issue securities.

Information of changes in the list of shareholders owning at least 2 percent of the Company’s shares, for the year 2012

At 1.01.2012:

Stake in Ordinary shares Preferred shares Total of shares CC Joint Stock Commercial Bank “ROSBANK” (joint 988,197,163,875 2,543,888 988,199,707,763 49.7138% stock company). Nominal holder. Closed Joint Stock Company “Depositary Clearing 467,859,522,281 5,315,528,738 473,175,051,019 23.8042% Company”. Nominal holder. “Deutsche Bank” Limited Liability Company. 269,263,983,872 - 269,263,983,872 13.5460% Nominal holder.

At 31.12.2012:

Stake in Ordinary shares Preferred shares Total of shares CC Non-bank Credit Entity Closed Joint Stock Company 1,777,122,166,352 17,962,767,921 1,795,084,934,273 90.3061% “National Settlement Depositary”

Bonds

. Redeemed in 2012 On 31 May 2012, JSC “Quadra - Power Generation” redeemed the issue of certificated non-convertible interest-bearing bonds to bearer of series 01 stipulating obligatory centralized custody, with the par value of RUR 1,000 (one thousand). The issue volume amounted to RUR 5 bn. The state registration number of the issue: 4-01-43069-A dated 11.05.2007. The bonds were placed by way of public subscription.

Payment on coupons: amount of #of Date of number of coupon rate, PIT 13%, Amount payable, coupon, total, coupon payment bonds, pcs. RUR RUR RUR RUR

1st 06.12.2007 5,000,000 37.90 189,500,000.00 0.00 189,500,000.00

2nd* 05.06.2008 2,624,495 37.90 168,215,475.20 3,942.00 168,211,533.20

3rd 04.12.2008 2,624,495 37.90 99,468,360.50 15,048.00 99,453,312.50

4th 04.06.2009 2,624,495 37.90 99,468,360.50 5,174.00 99,463,186.50

5th** 03.12.2009 30,018 37.90 4,380,778.45 847.00 4,379,931.45

6th 03.06.2010 30,018 37.90 1,137,682.20 503.00 1,137,179.20

7th*** 02.12.2010 11,918 39.89 499,301.02 529.00 498,772.02

8th 02.06.2011 11,918 39.89 475,409.02 529.00 474,880.02

9th 01.12.2011 11,918 39.89 475,409.02 2,100.00 473,309.02 10th 31.05.2012 11,918 39.89 475,409.02 2,173.00 473,236.02 TOTAL: 564,096,184.93 30,845.00 564,065,339.93 * On 23.04.08, JSC “Quadra - Power Generation” redeemed 2,375,505 pieces of Bonds presented by creditors - owners, for a total of RUR 2,375,505,000. Payment of the amount of accumulated coupon yield on redeemed Bonds in the amount of RUR 68,747,114.70 was made as well.

** On 10.06.2009, JSC “Quadra - Power Generation” carried out acquisition of bonds presented by creditors - owners, in the number of 2,594,477 pieces for a total amount of RUR 2,594,477,000, and the accumulated coupon yield on acquired bonds was paid in the amount of RUR 3,243,096.25.

*** On 09.06.2010, JSC “Quadra - Power Generation” carried out acquisition of bonds presented by creditors - owners, in the number of 18,100 pieces for a total amount of RUR 18,100,000.00, and the accumulated coupon yield on acquired bonds was paid in the amount of RUR 23,892.00.

. Registered in 2012

Non-convertible interest-bearing Non-convertible interest-bearing certificated commercial bonds to bearer of certificated bonds to bearer of Type of securities series BO-01, BO-02, BO-03, BO-04 series 02 stipulating compulsory stipulating compulsory centralized centralized custody custody

RUR 5 bn/ 5,000,000 pcs. Series BO-01: RUR 3 bn; Issue volume Series BO-02: 4 bn;

Series BO-03: 5 bn; Series BO-04: 5 bn

Par value RUR 1,000 RUR 1,000

Circulation period 10 years / 3,640 days 3 years /1,092 days

Number of issue Individual identification number of issue: Series BO-01: 4B02-01-43069-A; State registration number of issue: Series BO-02: 4B02-02-43069-A; 4-02-43069-А Series BO-03: 4B02-03-43069-A; Series BO-04: 4B02-04-43069-A.

Registration Date of state registration of issue: Admitted to trading on CJSC “MICEX Stock Exchange” in the process of placement: 11.10.2012 03.09.2012

Authority which implemented FFMS of Russia CJSC “MICEX Stock Exchange” registration of issue

Definition of the rate a. Book building (upon completion of formation of the bid book); of the first coupon b. Holding of tender at the rate of the coupon on CJSC “MICEX SE” (option)

Coupon period 182 days

Status of securities of Placement has not started issue

Type of placement Public subscription, CJSC “MICEX SE”

Arrangers GPB (JSC) and CJSC IC “Troika Dialog”

Price of placement 100% of the par value

Depositary receipts

In 2008, the Company entered into the Depositary Agreement with the Bank of New York Mellon (hereinafter referred to as the “Depositary Bank”), which stipulates issuance of global depositary receipts (GDRs) for the shares of the Company in accordance with the plan of the final stage of reorganization of RAO “UES of Russia”. GDRs of the Company were issued by the Depositary Bank pursuant to Rule 144A and Regulation S on sponsored basis in the number of RUR 1,674,923 pieces and 563,552 pieces, respectively. Distribution of GDRs of JSC “Quadra - Power Generation” among holders of receipts of RAO “UES of Russia” was completed at the beginning of June 2008. The cost of the GDRs of the Company during the year 2012 (average monthly closing) according to the information provided by the Bank of New York Mellon was:

Month Jan. Feb. March Apr. May June July Aug. Sept. Oct. Nov. Dec. Cost, USD 1.17 1.31 1.24 0.99 0.67 0.69 0.67 0.74 0.69 0.64 0.62 0.64 47

3.3 Dividend history

Indices For the year 2009 For the year 2010 For the year 2011

Name of the management body which took annual General Meeting annual General Meeting annual General Meeting the decision on payment of dividends of Shareholders of Shareholders of Shareholders Date of decision-taking 27.04.2010 23.05.2011 22.05.2012

Date of drawing-up the minutes and its 29.04.2010, 24.05.2011, 24.05.2012, number #1/13 #1/14 #1/15

Profit distributed to dividends, RUR ths. 32,302 24,248 14,060

Amount of dividend per one ordinary - - - share, RUR Amount of dividend per one preferred 0.0004291301 0.000322136 0.0001867824 share, RUR

Funds for payment of dividends for 2011 in time and in full by the Company were transferred by the Company to the personal account of CJSC “Computershare Registrar”, which has been the registrar of JSC “Quadra - Power Generation” since 14 January 2011. At 31 December 2012, 95% of the total amount of dividends accrued for the year 2011 were paid. The reasons for incomplete fulfillment of obligations on payment of dividends to shareholders:

- non-attendance of shareholders, who chose payment in cash resources (through a cash office) as the way to receive dividends; - incorrect/incomplete or outdated data on details of a shareholder’s bank account, which were provided by him/her in the questionnaire of a registered person in order to receive dividends via bank remittance; - incorrect/incomplete or outdated data on a shareholder’s postal address, which were provided by him/her in the questionnaire of a registered person in order to receive dividends via postal remittance.

3.4 Trading in securities

The dynamics of trading in securities in the energy industry during 2012 was negative and generally much worse than the market. Based on the results of the year 2012, the industry index – “MICEX Power” - decreased by 16%, while the consolidated index MICEX rose by 6%. Capitalization at 31 December 2012 amounted to RUR 7,713 bn.

Ordinary shares Preferred shares min max min max Opening price, RUR 0.00348 0.0083 0.0044 0.00625 min max min max Closing price, RUR 0.00357 0.0082 0.0043 0.00622 Closing price at the end of the year, RUR for 0.00386 0.00505 1 piece Number of transactions, pieces of securities 75,673,400,000 7,696,300,000

Dynamics of ordinary shares of JSC “Quadra - Power Generation” in 2012 48

Dynamics of preferred shares of JSC “Quadra - Power Generation” in 2012

The year 2012 is characterized by the energy industry representatives as unstable, unpredictable and volatile. Repeated changes in the tariff policy, government’s undefined strategy before the elections and needless drastic changes after them could not but had a negative impact on the quotes of the companies in the sector, as well as investor sentiment. The new management team of the Ministry continued the practice of manual control of the market, while the market expected new system reforms. The main reason was that it was the first time when the annual indexation of tariffs for electricity was held as from 1 July, rather than as from 1 January; as well as overall unstable state of the sector in anticipation of key decisions. The key factors that had a negative impact on operation of thermal generation in 2012 was limitation of prices on DAM in the first half of 2012, transfer of annual indexation of tariffs for electricity from 1 January 2012 to 1 July 2012 and lack of a clear mechanism for forced generators in 2012. The industry entered the year 2013 with unresolved issues regarding implementation of the mechanism of return on investments in modernization beyond the CSC facilities, implementation of long-term mechanism of regulation in heat grids, fair compensation or decommissioning of forced facilities. At the same time, the problems of growth of non- payment at WMEC and heat market acquired particular relevance.

Several significant events of the past year had an impact on significant fluctuations in the rates of ordinary and preferred shares of JSC “Quadra - Power Generation Company” on MICEX in 2012: - Publication of financial results for 2011 in accordance with RAS; - Publication of financial results for 2011 in accordance with IFRS; 49

- Publication of financial results for the first half of 2012 in accordance with IFRS.

3.5 Compliance with the law on insider information

In order to comply with the Federal Law dated 27.07.2010 “On Prevention of Unlawful Use of Insider Information and Market Manipulation and on Amendments to Certain Legislative Acts of the Russian Federation”, elaborated to ensure the established procedure for functioning of the securities market and pricing on the securities market, protection of rights and legitimate interests of the persons entering into transactions with securities, and control over activities of insiders on the securities market on the basis of establishment of restrictions on use and disposal of insider information and responsibility for violation of such restrictions, the Company developed and adopted the Insider Information Policy of JSC “Quadra - Power Generation”, Insider Information Regulation of JSC “Quadra - Power Generation”, as well as the List of Insider Information of JSC “Quadra - Power Generation”.

Insider Information Policy of JSC “Quadra - Power Generation”

The Policy defines the list of requirements to implementation by the Company of the above mentioned law, procedure for access to insider information, list of restrictions to use of insider information and (or) market manipulation, as well as responsibility for failure to comply with the legislation of the Russian Federation in the field of regulation of circulation and protection of insider information and market manipulation.

Insider Information Regulation of JSC “Quadra - Power Generation”

The Regulation governs formation of the list of insider information, procedure for formation of List of Insiders of the Company and presentation of the List of Insiders of the Company to interested parties, rules of notifying by the Company of insiders, rules of notifying by insiders of the Company, procedure for access to insider information and presentation of insider information to interested parties, rules of protection of confidentiality of insider information, rules of insiders’ transactions with financial instruments and (or) products of the Company, rules of monitoring compliance with the legislation of the Russian Federation in the field of regulation of circulation and protection of insider information and market manipulation, tasks and functions of a unit responsible for execution of the requirements of the legislation and regulatory legal acts of the Russian Federation in the field of protection and circulation of insider information and market manipulation, as well as internal regulations of the Company and the Regulation developed and approved on their basis, other issues related with circulation and protection of insider information.

List of Insider Information of JSC “Quadra - Power Generation”

The list sets exhaustive enumeration of information related with insider information of JSC “Quadra - Power Generation”, acting as issuer, the equity securities of which are admitted to trading by an organizer of trade on the securities market.

During the year 2012, no violations of the Federal Law dated 27.07.2010 “On Prevention of Unlawful Use of Insider Information and Market Manipulation and on Amendments to Certain Legislative Acts of the Russian Federation” were established

SECTION 4. Production activities

The principal activities of the Company are as follows: - production of electricity and thermal energy; - procurement (purchase) of electricity (capacity) on the wholesale market for electricity (capacity); - transmission and sale of thermal energy on the retail market. The total installed capacity of power plants and boiler houses of JSC “Quadra - Power Generation” at 31 December 2012 is as follows: - installed electric capacity – 3,474.5 MW; - installed thermal capacity – 14,382.9 Gcal/h The total length of heat grids is 2,370.8 km.

Change in installed capacity at 31 December 2010-2012

Installed electric capacity, MW Installed thermal capacity, Gcal/h 3,523 3,530 3,475 16,297 15,025 14,383

2010 2011 2012 2010 2011 2012

Change in structure of assets of JSC “Quadra - Power Generation” at 31 December 2010-2012 2010 2011 2012 TPPs 25 25 24 Installed electric capacity, MW 3,522.8 3,529.5 3,474.5 Installed thermal capacity, Gcal/h 12,653.3 12,021.4 11,768.5 Boiler houses, pcs. 215 206 189 including in lease 200 193 138 Installed thermal capacity, Gcal/h 3,643.9 3,003.1 2,614.5 Heat grids, km 3,389.9 3,305.9 2,370.8 including in lease 1,006.7 945.4 1,403.7 Note: Production capacity is provided taking into account renting out of the property complex of the Bryanskaya SDPS belonging to LLC “Bryansk HGC”.

Change in structure of assets at 31 December 2010-2012 of HGCs which span off. 2010 2011 2012* HGC: Boiler houses 156 149 166 including boiler houses in lease 3 1 11 Installed heat capacity, Gcal/h 580.8 473.8 848.8 Heat grids, km 1,262 1,269.4 2,766.8 51 including heat grids in lease - 2.4 381.7

In comparison with the actual values in 2011, installed electric capacity of TPPs in 2012 decreased by 55 MW to 3,474.5 MW. The change in the installed electric capacity was due to the following factors: • renting out of the property complex of the Bryanskaya SDPS belonging to LLC “Bryansk HGC”; • decommissioning of turbine unit #3 at the Gubkinskaya TPP.

Installed thermal capacity of TPPs fell by 252.9 ths. Gcal/h to 11,768.5 ths. Gcal/h. The change in the installed thermal capacity was due to the following factors: • renting out of the property complex of the Bryanskaya SDPS belonging to LLC “Bryansk HGC”; • decommissioning of turbine unit #3 at the Gubkinskaya TPP; • decommissioning of two steam boilers #7-8 at the Orlovskaya TPP.

Installed thermal capacity of boilers of JSC “Quadra - Power Generation” in 2012 decreased against the year 2011 by 388.6 Gcal/h as a result of HGCs spinning-off.

Description of power plants of JSC “Quadra - Power Generation” at 31.12.2012.

Installed capacity Branch name Electricity generation name electric thermal capacity, capacity, MW Gcal/h Southern Generation Belgorod Region Belgorodskaya TPP 60 360.4 GT TPP “Luch” 60 62.4 Gubkinskaya TPP 29 148 Kursk Region Kursk TPP-1 202 1,097 Kursk TPP-4 4.8 395 TPP of NWD of Kursk 116.9 710 Western Generation Bryansk Region Klintsovskaya TPP 12 165.8 Smolensk Region Smolenskaya TPP-2 275 774 Dorogobuzhskaya TPP 128 282.2 Voronezh RG Voronezhskaya TPP-1 168 1,269 Voronezhskaya TPP-2 127 785 Eastern Generation Lipetsk Region Lipetskaya TPP-2 515 1,002 Eletskaya TPP 70 289.5 Dankovskaya TPP 10 152 Tambov Region Tambovskaya TPP 235 947 Kotovskaya TPP 80 198 Orel RG Orlovskaya TPP 330 725 Livenskaya TPP 12 240 52

Ryazan RG Dyagilevskaya TPP 110 423 Central Generation Kaluga Region Kaluzhskaya TPP 41.8 110.1 Tula Region Shchyokinskaya SDPS 400 - Alexinskaya TPP 102 215 Efremovskaya TPP 160 720 Novomoskovskaya SDPS 226 698 TOTAL 3,474.5 11,768.5

Description of boiler houses of JSC “Quadra - Power Generation” at 31.12.2012.

Number of boiler houses, pcs. Installed capacity, Gcal/h Branch name total on books leased total on books leased Southern Generation 3 3 0 610.0 610.0 0.0 Western Generation 1 1 0 191.3 191.3 0.0 Voronezh RG 0 0 0 0.0 0.0 0.0 Eastern Generation 138 5 133 1,505.5 1,078.5 427.0 Kursk RG 44 40 4 175.1 169.9 5.2 Central Generation 3 2 1 132.6 72.6 60.0 Orel RG 0 0 0 0.0 0.0 0.0 Ryazan RG 0 0 0 0.0 0.0 0.0 TOTAL 189 51 138 2,614.5 2,122.3 492.2

Description of heat grids of JSC “Quadra - Power Generation” at 31.12.2012.

Length of heat grids in terms of one-pipe length equivalent, km Branch name total on books leased Southern Generation 0 0 0.0 Western Generation 0.0 0.0 0.0 Voronezh RG 0.0 0.0 0.0 Eastern Generation 1,002.8 609.9 392.9 Kursk RG 1,246.8 236 1,010.8 Central Generation 120.6 120.6 0.0 Orel RG 0.0 0.0 0.0 Ryazan RG 0.6 0.6 0.0 TOTAL 2,370.8 967.1 1,403.7

Fuel supply

In 2012, fuel supply was characterized by a reduction in consumption of all types of fuel compared with 2011. The main reason for this fuel consumption change is reduction in thermal energy supply in connection with renting out a number of boiler houses to heat grid subsidiaries.

Structure of fuel balance in 2010 – 2012

2010 2011 2012 Natural gas, ths. m3 6,271.5 5,890.8 5,742.4 Black oil fuel, ths. tons 11.2 33.2 9.7 53

Coal, ths. tons 55.4 58.4 23.6 Blast-furnace gas, ths. m3 402 402.7 375.4

Natural gas accounts for 99% of total fuel consumption in 2012. The remainder of the fuel balance structure is represented by black oil fuel, coal and blast-furnace gas.

A ton of fuel has increased by 6.91%, mainly due to increase in gas prices, the indexation of which from 1 July 2012 amounted to an average of 15% to the price of 2011.

4.1 Main production indicators

Dynamics of production indicators of JSC “Quadra - Power Generation” (without taking into account HGCs) in 2010-2012

2010 2011 2012 Generation of electricity, mn kWh 11,146.2 11,206.7 11,213.7 ICUF, % 37.3 37 36.5 SRFC, g/kWh 346.4 333.6 323.4 Supply thermal energy from collectors, 26,397.5 24,201.9 23,469.1 ths. Gcal ICUF, % 18.4 18.36 18.4 SRFC, kg/Gcal 151.5 152.2 152.3

For reference: Consolidated production indicators of JSC “Quadra - Power Generation” taking into account HGCs in 2010-2012

2010 2011 2012 Generation of electricity, mn kWh 11,146 11,207 11,214 ICUF, % 37.3 37 36.5 SRFC, g/kWh 346.4 333.6 323.4 Supply thermal energy from collectors, 27,086 24,828 24,634 ths. Gcal ICUF, % 18.3 18.2 18.4 SRFC, kg/Gcal 151.8 152.5 152.8

Electricity generation, mn Kwh Supply of thermal energy from collectors, ths. Gcal 11,146 11,207 11,214 26,398 24,202 23,469

2010 2011 2012 2010 2011 2012

One of the main factors affecting the Company’s production activities are strongly marked seasonality and dependence on weather factors that determine the level of heat load of consumers, which determines the amount of combined heat and power generation. Fluctuation of electricity price during a day on the DAM and BM has significant impact on the equipment load as well. The structure of electricity generation by thermal power plants: - in condensing cycle - 38.2%; - in co-generation cycle - 61.8%.

Indicators of electricity generation and heat supply by branches of JSC “Quadra - Power Generation” in 2012. Heat supply, Branch name Electricity generation, mn kWh ths. Gcal Southern Generation 668.2 2,431.2 Western Generation 1,523.5 2,694.7 Voronezh RG 1,229.6 3,877.3 Eastern Generation 2,837.5 6,292.5 Central Generation 1,932.4 3,134.4 Kursk RG 1,371.5 2,854 Orel RG 1,160.9 1,582 Ryazan RG 490.1 603 TOTAL 11,213.7 23,469.1

Distribution of electricity generation between the branches of JSC “Quadra - Power Generation”. 5% 6% 10% 14% Southern Generation 12% Western Generation Voronezh RG

11% Eastern Generation Central Generation Kursk RG 17% Orel RG Ryazan RG

25%

Distribution of heat between the branches of JSC “Quadra - Power Generation”.

7% 3% 10%

12% 12% Southern Generation Western Generation Voronezh RG Eastern Generation 13% 16% Central Generation Kursk RG Orel RG Ryazan RG

27%

4.2 Current indicators of sales in terms of market segments

Structure of productive supply of thermal energy in 2012.

Structure of consumers of thermal energy of JSC “Quadra - Power Generation” in 2012. 2012 Groups of consumers productive charged, supply, mn RUR (VAT ths. Gcal included) 13,429 9,610 Heat supply entities (including SDEs) Industrial consumers 4,472 4,131 Housing entities 3,439 3,610 Budget-dependant consumers 673 824 Other consumers 133 166 56

Main factors and conditions affecting the heat sales activity The main factors and conditions affecting the Company’s heat sales activity are as follows: - permanent monitoring of payment discipline of thermal energy consumers in order to take timely measures to prevent growth of accounts receivable; - imperfection of legislation in the field of heat supplies and housing; - technological peculiarities of heating systems on heat energy markets; - public nature of a heat supply contract; - state regulation relating to establishment of thermal energy tariffs; - compliance with antitrust laws of the Russian Federation; - consumers’ failure to use energy-saving technologies, as well as switch to independent heat sources. These factors will have significant impact on the Company in the medium term.

Structure of electricity sales markets (revenue).

2011 2012 Sale on markets purchase sale purchase sale Total electricity, mn RUR 2,538.96 12,317.61 2,540.82 12,055.18 Regulated contracts - 1,716.23 - 1,825.51 Day ahead market 2,010.78 9,742.77 1,946.26 9,517.08 Balancing market 528.18 651.68 594.56 611.27 Free bilateral contracts - 183.23 - 96.72 - 23.7 - 4.61 Electricity supplied to retail market

Total capacity, mn RUR 92.18 8,149.16 77.26 7,567.05 Regulated contracts - 1,810.55 - 1,633.19 Competitive capacity outtake 83.08 4,600.71 67.37 3,620.50 Free electricity and capacity sale and purchase - - - 2.16 contract Capacity supply contracts (CSCs) 8.96 1,549.93 8.73 2,208.67

Capacity supply contracts in respect of the capacity 0.14 187.97 1.16 101.86 produced using the facilities which supply capacity in the forced mode (FMC)

Capacity supplied to retail market - - - 0.67

4.3 Energy saving and operational efficiency improvement

In accordance with the requirements of Federal Law #261-FZ “On Energy Saving and Energy Efficiency Improvement and on Amendments to Certain Legislative Acts of the Russian Federation” dated 23.11.2009, the Company has developed and approved the “Energy Saving and Energy Efficiency Improvement Program of JSC “Quadra - Power Generation” for the period 2010-2012. Performance indicators of JSC “Quadra - Power Generation” for 2010-2012 in the field of energy efficiency improvement are determined by the results of the annual energy saving measures which are planned by electric power plants’ branches. 57

Energy saving measures performed in 2010-2012 included: - routine maintenance activities using modern energy-saving technologies (adjustable frequency drives, energy-saving lamps), activities related with sealing of furnaces, gas pipes of boilers and turbine vacuum systems, cleaning of tube bundles of condensers and heaters, preservation of equipment; - activities related with optimization of equipment load at power plants and modes of its operation; - activities carried out following the results of tests of main and auxiliary equipment with the aim to improve efficiency; - maintenance and repairs associated with implementation of the production program of JSC “Quadra - Power Generation”; - installation of a hydraulic clutch at block #1 of the Orlovskaya TPP.

Indicators of performance of the energy saving program for 2010-2012:

Saving of fuel and energy resources through implementation of the energy saving program was RUR 107,400 ths.

The most important component of the energy saving policy is holding of energy audits, the results of which discover the potential of energy efficiency of power plants. In 2012, JSC “Quadra – Power Generation” performed energy audits of all production units and issued the Energy Certificate in accordance with the requirements of Federal Law #261-FZ “On Energy Saving and Energy Efficiency Improvement and on Amendments to Certain Legislative Acts of the Russian Federation” dated 23.11.2009. Taking into account the costs of holding energy audits, the annual total costs amounted to RUR 20,159 ths.

SECTION 5. Review of financial performance 5.1 Balance sheet structure of JSC “Quadra - Power Generation” Share in Share in balance Indicator name, mn RUR At 31.12.2011 At 31.12.2012 balance sheet total, sheet total, % % ASSET

I. NONCURRENT ASSETS Fixed assets 26,016 56% 26,362 49% Financial investments 2,028 5% 1,945 4% Deferred tax assets 509 1% 719 2% Other noncurrent assets 9,218 20% 14,552 27%

, , , ,

Total on section I 37,771 82% 43,578 82%

, , , ,

II. WORKING CAPITAL Stocks 1,747 4% 1,770 3% Value added tax on purchased values 46 - 218 1% Receivables 6,117 13% 7,679 14% Financial investments 90 - 64 - Money and money equivalents 307 1% 106 - Other working capital 128 - 108 -

, , , ,

Total on section II 8,435 18% 9,945 18%

, , , ,

BALANCE 46,206 100% 53,523 100%

, , , ,

LIABILITY

III. CAPITAL AND RESERVES Charter capital 19,878 43% 19,878 37% Additional capital 12,172 27% 12,172 23% Reserve capital 236 - 283 - Undistributed profit 4,993 11% 4,313 8%

, , , ,

Total on section III 37,279 81% 36,646 68%

IV. LONG-TERM LIABILITIES Credits and loans 1,403 3% 8,326 16% Deferred tax liabilities 1,346 3% 1,575 3%

, , , ,

Total on section IV 2,749 6% 9,901 19%

, , , ,

V. SHORT-TERM LIABILITIES Credits and loans 3,501 8% 3,399 6% Receivables 1,909 4% 3,099 6% Deferred income - - - - 59

Share in Share in balance Indicator name, mn RUR At 31.12.2011 At 31.12.2012 balance sheet total, sheet total, % % Estimated liabilities 764 1% 474 1% Other liabilities 4 - 4 -

Total on section V 6,178 13% 6,976 13% BALANCE 46,206 100% 53,523 100% 5.2 Profit and loss statement

Change Indicator name, mn RUR 2010 2011 2012 2012/2011, % Revenue, total 33,988 38,437 36,290 -6% Cost, total -30,294 -34,325 -34,964 2% Gross profit 3,695 4,112 1,326 -68% Management expenses -1,403 -1,569 -1,690 8% Sales profit (loss) 2,291 2,543 -364 -114% Other income and expenses Interest receivable 32 39 17 -56% Interest payable -39 -186 -263 41% Income obtained as a result of participation in - 1 2 100% other entities Other operational incomes 1,948 1,368 2,062 51% Other operational expenses -2,062 -2,396 -2,056 -14% Profit (loss) before taxes 2,171 1,368 -602 -144% Profit tax and other similar obligatory -598 -440 -18 -96% payments Net profit 1,573 928 -620 -167%

Revenue

Products sale revenue for 2012 against 2011 reduced by 5.6 % to RUR 36,290 mn. The growth against the year 2010 indices was RUR 2,302 mn (6.8%).

Share in Share in Indicator name, mn RUR revenue, revenue, Share in 2010 % 2011 % 2012 revenue, % Electricity (productive supply): 16,957.7 49.9% 20,466.8 53.3% 19,622.2 54.1% - Electricity (capacity) supplied to the 16,936.2 49.8% 20,443.1 53.2% 19,616.9 54.1% wholesale market Electricity 10,376.2 30.5% 12,293.9 32% 12,050.5 33.3% Capacity 6,560 19.3% 8,149.2 21.2% 7,566.4 20.8% - Electricity (capacity) supplied to the 21.5 0.1% 23.7 0.1% 5.3 - retail market Sale of thermal energy 15,758.5 46.4% 16,729.4 43.5% 15,543.1 42.8% Thermal energy transmission services 388.2 1.1% 394.6 1.0% 0.0 -

Services of technological connection, as well as delivery and coordination of 23.5 0.1% 76.3 0.2% 26.5 0.1% specifications Revenue obtained as a result of sale of other industrial goods, products, works, 858.1 2.5% 768.1 2.0% 1,095.4 3.0% services Revenue obtained as a result of sale of other non-industrial goods, products, 2.4 - 2.1 - 3.3 - works, services TOTAL 33,988.4 38,437.3 36,290.5

Revenue structure in terms of activity types in 2012:

Electricity and capacity sale revenue amounted to RUR 19,622 mn, a decrease by RUR 845 mn (or 4%) was due to: - decrease in capacity sales volume in respect of the plants which did not pass CCO due to price parameters and which were not admitted to CCO due to technical parameters; - decrease in electricity sales volumes by 43 mn kWh and prices on the DAM market. Thermal energy sales revenue was RUR 15,543 mn, a decrease by RUR 1,186 mn (or 7%) compared with the actual indicator of 2011 was due to a reduction in average sale tariff for heat energy by RUR 56.1/Gcal (or 7%) in connection with changes in the scheme of the thermal energy sales, as well as transfer of functions of thermal energy selling for end users to heat grid subsidiaries.

Thermal energy transmission revenue decreased by RUR 394 mn (100%) compared to the actual index in 2011 as a result of spinning-off of the heat grid business into heat grid subsidiaries of the company.

Other products sales revenue increased by RUR 279 mn (or 33%) compared with the actual indicator of 2011. The growth of the indicator was due to: - increase in revenue from leasing out industrial premises and other fixed assets to newly established heat grid subsidiaries; - increase in revenue from sale of chemically treated water.

Structure of distribution of actual products (services) sale revenue of JSC “Quadra - Power Generation” for 2012:

Cost:

Cost of sold products, taking into account management expenses for 2012 amounted to RUR 36,654 mn, including: – cost of electricity (capacity) – RUR 17,279 mn, – cost of production of thermal energy – RUR 18,293 mn, – cost of other products RUR 1,082 mn.

Increase in cost of sold products as compared to the year 2011 by RUR 760 mn (or 2%) was due to: – increase in fuel price; – change in fixed costs according to inflation rates, commissioning of CSC facilities, structural changes due to spinning-off of heat grid subsidiaries.

Structure of products cost for 2012:

Share in Share in Share in Indicator name, mn RUR 2010 2011 2012 cost, % cost, % cost, %

Fuel 19,128 60% 20,778 58% 21,563 59% Purchased energy 2,088 7% 3,225 9% 3,150 9% Water for technological needs 524 2% 534 1% 470 1% Raw products and materials 1,192 4% 1,294 4% 999 3%

Repairs with materials (without expenses 1,652 5% 1,816 5% 1,713 5% for labor payment and contributions) Production works and services 182 1% 202 1% 206 1% Expenses for labor payment, including 3,678 12% 4,133 12% 4,156 11% contributions to non-budgetary funds Depreciation of fixed and intangible 1,418 4% 1,964 5% 2,313 6% assets Payment for market operators’ services 273 1% 325 1% 345 1% Taxes and levies, land lease, payment for 336 1% 467 1% 455 1% water facilities Other (services of outside entities, 1,226 4% 1,156 3% 1,284 3% services of EB, leasing) 31,697 35,894 36,654 TOTAL

Sales profit (loss)

Sales loss based on the results of 2012 amounted to RUR 364 mn. Deterioration of the result compared with the actual indicator of 2011 was due to reduction in revenues of plants that did not pass CCO due to price parameters and which were not admitted to CCO due to technical parameters, partial inclusion of cross-subsidization in the capacity price, absence of indexation of tariffs for RCs for electricity and capacity.

Other incomes and expenses

Balance of other incomes and expenses amounted to RUR (-) 238 mn. The growth of the balance of other income and expenses compared to the actual index of 2011 amounted to RUR 936 mn. Change in the net operating incomes, expenses was due mainly to inclusion of reserves (including those for doubtful debts, reserves for devaluation of commodities and materials, other reserves) in books.

Net profit

The net loss in 2012 amounted to RUR 620 mn. Deterioration of the financial result compared to the 2011 actual index was by RUR 1,548 mn.

5.3 Financial indicators

Unit of Profitability measurement 2010 2011 2012 Net profit margin % 4.63% 2.41% -1.71%

Return on equity (ROE) % 4.32% 2.49% -1.69% Return on assets % 3.61% 2% -1.16% Return on sales % 6.74% 6.62% -1%

Based on the results of the year 2012, decline in net profit margin was: • in relation to the actual figure of the year 2011 - 4.12%; • in relation to the actual figure of the year 2010 - 6.34%.

Return on equity based on the results of the year 2012 amounted to (-) 1.69%, which is 4.18 percentage points lower than the actual data for 2011, and 6.01% lower than the actual figure of 2010.

Return on assets was (-) 1.16%, and it decreased by 3.16% as compared to 2011 and by 4.77% relative to 2010.

Return on sales based on the results of the year 2012 amounted to (-) 1%, which is 7.62 percentage points lower than the actual figure in 2011, and 7.74 lower than the actual figure of 2010.

The deterioration of these indicators relative to previous years was due to a decrease in net profit for the reporting period.

Unit of Indicator name measurement 2010 2011 2012 Equity mn RUR 36,375 37,279 36,646 mn RUR Net assets 36,375 37,279 36,646 mn RUR Charter capital 19,878 19,878 19,878

The amount of equity based on the results of the year 2012 amounted to RUR 36,646 mn, which is RUR 633 mn (1.7%) lower than the actual figure of 2011. The reduction in this indicator was due to the loss of RUR 619.5 mn based on the results of the year 2012.

5.4 Indicators of the Company’s liquidity and solvency

Recommended Indicators of liquidity and solvency value 2010 2011 2012

Net fixed assets index <=0.9 0.91 1.01 1.19 Current liquidity ratio 2 1.87 1.37 1.43 Quick asset ratio 0.8 1.55 1.08 1.14

The indicator “net fixed assets index” grew by 0.18 compared with 2011, and by 0.28 in comparison with 2010. Its increase was due to growth of the amount of the Company’s noncurrent assets (mainly due to implementation of CSCs investment projects). The value of the indicator “net fixed assets index” for the year 2012 is close to the recommended interval (<= 0.9).

5.5 Financial stability indicators

Recommended Financial stability indicators 2010 2011 2012 value

Equity-assets ratio 0.5< 0.84 0.81 0.68

Financial leverage <1 0.18 0.24 0.46

The equity-assets ratio decreased in 2012 by 0.12 in comparison with 2011, and by 0.16 in comparison with 2010. At the end of the year 2012, the value of the index is 0.68 – it corresponds to the recommended level. A decrease in equity by 1.7% compared with 2011 and its increase by 0.7% compared with 2010, with simultaneous decrease in the amount of noncurrent assets by 15.8% compared to 2011 and by 24.2% compared with 2010 had the main impact on the index equity-assets ratio of the Company. The financial leverage increased in 2012 by 0.22 in comparison with 2011, and by 0.28 in comparison with 2010. The index value in 2012 was 0.46 and is within the standard value (<1). The index was mainly influenced by an increase in the amount of long-term and short- term liabilities by 89.1% against the year 2011 and by 151.8% against the year 2010, with a

65 simultaneous decrease in the equity by 1.7% compared with 2011 and its increase by 0.7% compared with 2010.

5.6 Business efficiency indicators

Business efficiency indicators 2010 2011 2012

Receivables turnover 7,34 5,58 4,53 Payables turnover 15,38 20,14 11,71

The index Receivables Turnover reduced by 1.05 in 2012 in comparison with 2011, and by 2.8 in comparison with 2010. The following factors mainly influenced the receivables turnover: - decrease in revenue in 2012 by 5.6% compared with 2011, with simultaneous growth of receivables (including long-term ones) by 16.3% in 2012; - revenue growth in 2012 by 6.8% compared with 2010, with simultaneous growth of receivables (including long-term ones) by 72.8% in 2012 compared with 2010.

The index Payables Turnover decreased in 2012 by 8.43 in comparison with 2011, and by 3.67 in comparison with 2010. The following factors mainly influenced the payables turnover: - decrease in revenue in 2012 by 5.6% compared with 2011, with simultaneous increase in receivables by 62.3% in 2012; - revenue growth by 6.8% in 2012 compared with 2010, with simultaneous growth of receivables by 40.2% in 2012 compared with 2010.

5.7 Receivables, payables

Receivables: Book value, Change for Indicator name mn RUR period, at 31.12.2012 at 31.12.2011 mn RUR Receivables (payments on which are expected in more 323.7 766.3 (442.6) than 12 months after the reporting date) - purchasers and customers 316.4 757.8 (441.4) - advances provided 3.9 3.9 - - other debtors 3.4 4.6 (1.2) Receivables (payments on which are expected during 12 7,679.3 6,116.6 1,562.7 months after the reporting date) - purchasers and customers 6,874.5 5,360 1,514.5 - advances provided 279.4 465.7 (186.3) - other debtors 525.4 290.9 234.5 TOTAL 8,003 6,882.9 1,120.1

The receivables are presented net of the reserve for doubtful debts and reimbursed VAT on advances provided. In order to minimize the risk of non-payment, reserve for doubtful debts at 31 December 2012 incorporated the buyers and suppliers’ receivables unsecured by guarantees (suretyships), which are unlikely to be repaid during the year 2013 according to the management’s assessments. The amount of the reserve for doubtful debts at 31 December 2012 amounted to RUR 555.1 mn in respect of long-term debts, and RUR 1,765.2 mn in respect of short-term debts (31 December 2011: RUR 611.7 mn and RUR 1,582.2 respectively).

Total growth of receivables by RUR 1,120.1 mn (16.3%) is mainly determined by an increase in buyers’ receivables by RUR 1,073.1 mn. The most significant change in the value of buyers’ receivables is related to subsidiary heat grid companies - LLC “Smolensk HGC” and LLC “Tambov HGC” (the value of receivables at 31 December 2012 is RUR 570.5 mn and RUR 472.7 mn respectively). The growth of other receivables by RUR 233.3 mn is mainly due to occurrence of receivables of the subsidiary heat grid company LLC “Ryazan HGC” for sold heat grid facilities in the amount of RUR 234.5 mn. The receivables grew also as a result of depriving six sales companies controlled by the founders of the largest private energy sales Holding LLC “Energostream” of the status of a guaranteeing electricity supplier. Its total debt to JSC “Quadra - Power Generation” at 31 December 2012 amounted to RUR 377.6 mn, RUR 224.3 mn of which are included in the reserve for doubtful debts. At the end of January 2013, repayment of receivables in respect of the group of companies of LLC “Energostream” was RUR 9.6 mn.

Payables: Indicator name Book value, mn RUR Changes at 31.12.2012 at 31.12.2011 Debt to suppliers and contractors 2,200.6 1,106.3 1,094.3 - electricity and thermal energy suppliers 270 146.7 123.3 - fuel suppliers 726.6 38.7 687.9 - construction contractors 1,054.6 691.2 363.4 - repair contractors 47.8 101.7 (53.9) - others 101.6 128 (26.4) Debt on labor payment to personnel 146.3 152 (5.7) Debt to state and non-budgetary funds 74.4 78.6 (4.2) Debt on taxes and levies 471.2 235.2 236 Advances received 182 306.9 (124.9) - from electricity and thermal energy consumers 90.8 114 (23.2) - other received advances 91.2 192.9 (101.7) Other creditors 24.6 29.9 (5.3) TOTAL 3,099.1 1,908.9 1,190.2

The increase in short-term receivables at 31 December 2012 by RUR 1,190.2 mn or by 62.4% was due to an increase in payables to suppliers and contractors by RUR 1,094.3 (including to fuel suppliers - by RUR 687.9 mn, to construction contractors - by RUR 363.4 mn), payables on taxes and levies - by RUR 236 mn.

The audited financial statements of JSC “Quadra’ – Power Generation” for the year 2012 is presented in Schedule #5 to the annual report.

SECTION 6. Investment activities

Successful implementation of the investment program as regards commissioning of new efficient capacities and provision of reliability and operability of the existing equipment are among priority lines of activities of JSC “Quadra - Power Generation”. The main purposes of the Investment Program: - expansion and renovation of equipment of the Company’s power plants with application of the effective technologies corresponding to modern technical and ecological requirements; - increase in reliability and stability of production and supply of energy to consumers of regions, improvement of quality of products and services delivered by the Company; - increase in supply of electricity and thermal energy to meet the growing demand, creation of the basis for social and economic development of regions, in the territory of which the Company carries out its activities; - reduction of specific charges of fuel for production of thermal energy and electricity, implementation of the energy efficiency and energy saving policy; - strengthening of competitive positions of the Company in the electricity industry market during the period of its liberalization, increase in profitability of the Company.

Structure of capital investments into the Investment Program of 2012.

Commissioned Amount of Capital investments fixed assets, mn funding, mn RUR spent, mn RUR RUR (without (VAT included)* (without VAT)* VAT) Priority investment projects: CSCs facilities 7,879.7 3,592.5 1,503.9 Facilities beyond CSCs 29.2 19.7 - RRDP facilities 1,566.9 1,133.8 1,411.4 Investment program TOTAL: 9,475.8 4,746 2,915.3 * Amount of funding is specified taking into account capitalized interest on credits accrued for the reporting period, commission fees for opening of the letter of credit in the amount of RUR 421.7 mn, as well as funding of capital investments otherwise than in money, in particular, through offset of reciprocal claims. 6.1 Priority investment projects (PIPs)

Investment projects implemented in JSC “Quadra - Power Generation” are aimed to renovate production capacity and meet growing demand for electricity in the regions attended by the Company. Financing of the investment program for PIPs in 2012 increased by 46% compared to 2011 and amounted to RUR 7,908.9 mn (VAT included). The predominant amount of capital investments is represented by construction of GTU 30 MW at the Livenskaya TPP and GSU 190 MW at the Novomoskovskaya SDPS. On 26 December 2012, GTU 30 MW was commissioned at the Livenskaya TPP. Commissioning of GSU-190 of the Novomoskovskaya SDPS was postponed till 2013. Reasons for the delay in commissioning: - delay in gas supply due to extended time-limits for construction of the supply pipeline of JSC “Tulaobolgaz”; - change in specifications requirements to TC, which demanded additional redesign and replacement of current transformers in the existing OS; - delays in execution of start-up works due to troubleshooting and corrective actions in respect of various identified technical shortcomings in equipment.

Indicators 2010 2011 2012 68

Funding, mn RUR (VAT included)* 5,226 5,445.7 7,908.9 Spending of capital investments, mn RUR (without 3,936.1 5 674.6 3,612.2 VAT)* Commissioning of fixed assets, mn RUR (without VAT) 3,518 5,422.6 1,503.9 Capacity input, MW 115 145 30 Capacity input, Gcal / h 90 80 36.4 * taking into account interest on bank credits

7,909 Funding, mn RUR 5,675 5,446 5,423 5,226 Spending of capital 3,936 3,612 investments, 3,518 mn RUR without VAT Commissioning of fixed 1,504 assets, mn RUR without VAT

2010 2011 2012 Structure of capital investments into priority investment projects in 2012 Commissioned Amount of funding, Capital investments fixed assets, mn Facility name mn RUR (VAT spent, mn RUR RUR (without included)* (without VAT) VAT) CSCs facilities: 7,879.7 3,592.5 Eletskaya TPP 65 - Voronezhskaya TPP-2 65.3 - Boiler of the North-Western 30 - District of Kursk Kaluzhskaya TPP - 9.0 9.0 Livenskaya TPP 315.8 770.8 1,494.9 Novomoskovskaya SDPS 1,598.6 2,403.7 Dyagilevskaya TPP 1,601.1 136.1 Alexinskaya TPP 1,936.8 170.4 Voronezhskaya TPP-1 1,854.3 78.1 Kursk TPP-1 412.8 24.4 Facilities beyond CSCs: 29.2 19.7 Dyagilevskaya TPP 29.2 19.7 (construction of boiler KVGM- 100) Priority investment projects 7,908.9 3,612.2 1,503.9 TOTAL: * taking into account interest on bank credits

CSCs facilities In December of 2010, JSC “Quadra - Power Generation” signed capacity supply contracts (CSCs), according to which the Company undertakes to build 1,100 MW of new capacity by 2015. At 1 April 2013, five plants with a total installed capacity of 342 MW were put into operation and supply capacity to the market under CSCs. Delivery of capacity by GSU-190 MW of the Novomoskovskaya SDPS in the Tula Region starts in 2013. The heat generation facility, 69

which is put into operation under the capacity supply contract, obtains a guarantee of payment for capacity for 10 years, ensuring return of capital expenditures, as well as operating costs stipulated in the methodology of calculation of return on CSCs. Amounts of operating and capital costs used in calculating the cost of capacity under CSCs are specified in order #238 of the Russian Federation Government dated 13.04.2010.

Reference values of Capacity, Beginning of CSCs facilities investments, MW/Gcal/h capacity supply mn RUR (VAT included) Eletskaya TPP 52 / 69.6 2,525 1 July 2009 Voronezhskaya TPP-2 115 / 90 5,584 1 January 2011 Boiler of the North-Western District of Kursk 115 / 82 5,584 1 July 2011 Kaluzhskaya TPP 30 / 40,1 1,457 1 August 2011 Livenskaya TPP 30 / 36.4 1,457 1 February 2013 Novomoskovskaya SDPS 190 / 130 7,592 1 May 2013 Dyagilevskaya TPP 115 / 90 5,584 30 June 2014 30 September Alexinskaya TPP 115 / 90 5,584 2014 30 September Voronezhskaya TPP-1 223 / 199.2 8,911 2015

Kursk TPP-1 115 / 90 5,584 31 December 2015

TOTAL: 1,100 / 917.3 49,862

*Without considering the seasonality coefficient

Putting of CSCs facilities in 2012

Livenskaya TPP GTU-30 MW (Orel Region)

Equipment configuration - gas turbine LM-2500+G4 made by General Electric, - waste heat boiler of type KGT-42-4.0-440 made by the plant CJSC “Energomash” (Belgorod). Value of investment RUR 1.9 bn project Commissioning 4 quarter of 2012 General contractor CJSC “Energoproekt”

CSCs facilities scheduled for commissioning in 2013-2015

2013

Novomoskovskaya SDPS GSU-190 mw (Tula Region)

Equipment configuration - gas turbine unit PG 9171 E made by General Electric, 126 MW in capacity, - steam turbine plant SST PAC 600 made by Siemens, 64 MW in capacity, - waste heat boiler P-142 made by JSC “Machine Building Plant ZiO-Podolsk” Value of investment RUR 7.6 bn project Commissioning 2013 General contractor CJSC “Energokaskad”

In 2012, JSC “Quadra - Power Generation” launched projects of gas steam units to be commissioned at the Diagilevskaya TPP (Ryazan Region), Alexinskaya TPP (Tula Region), Voronezhskaya TPP-1, (Voronezh Region) and Kurskaya TPP-1 (Kursk Region) in 2014 - 2015.

2014 Facility Alexinskaya TPP GSU-115 MW (Tula Region) Equipment configuration - 2 gas turbine units SGT-800 made by Siemens Industrial Turbomachinery AB, 45 MW in capacity, - steam turbine-generator plant SST-400 made by Siemens, sro, odstepny zavod Industrial Turbomachinery Siemens, 38.5 MW in capacity; - 2 waste heat boilers PK-83 mad by JSC “Podolsk Machine-Building Plant" - 3 booster compressor stations and gas treatment unit made by Eltacon. Reference value of RUR 5.6 bn investment project Commissioning 2014 General contractor CJSC “Energoproekt”

Contracts for the facility designing and delivery of main equipment (gas turbines, steam turbine, gas compressor stations, gas treatment unit, waste heat boilers) were concluded. The measures to prepare the construction site for its transfer of the general contractor were implemented.

2014 Facility Dyagilevskaya TPP GSU-115 MW (Ryazan Region) Equipment configuration - 2 gas turbine units SGT-800 made by Siemens Industrial Turbomachinery AB, 45 MW in capacity, - steam turbine-generator plant SST-400 made by Siemens, sro, odstepny zavod Industrial Turbomachinery Siemens, 38.5 MW in capacity; - 2 waste heat boilers PK-83 made by JSC “Podolsk Machine-Building Plant” - 3 booster compressor stations and gas treatment unit made by Eltacon, - 3 booster compressor stations and gas treatment unit made by Eltacon. Reference value of RUR 5.6 bn investment project Commissioning 2014 General contractor JSC “Energy construction corporation “SOYUZ” 71

Contracts for the facility designing (engineering surveys were made) and delivery of main equipment: gas turbines, waste heat boilers, steam turbine, gas compressor stations, gas treatment unit) were concluded. The measures to prepare the construction site for its transfer of the general contractor were implemented.

2015 Facility Kurskaya TPP-1 GSU-115 MW (Kursk Region) Equipment configuration - 2 gas turbines SGT-800 made by Siemens Industrial Turbomachinery AB, 45 MW in capacity, - steam turbine-generator plant SST-400 made by Siemens, sro, odstepny zavod Industrial Turbomachinery Siemens, 38.5 MW in capacity; - 2 waste heat boilers PK-83 made by JSC “Podolsk Machine-Building Plant”. - 3 booster compressor stations and gas treatment unit made by Eltacon. Reference value of RUR 5.6 bn investment project Commissioning 2015 General contractor Tender procedures are held.

2015 Facility Voronezhskaya TPP-1 GSU-223 MW (Voronezh Region) Equipment configuration - 4 gas-turbine units LM6000 PD Sprint made by General Electric, 45.297 MW in capacity - 2 steam turbine plants, - 4 waste heat boilers PK-95 made by JSC “Podolsk Machine-Building Plant”. Reference value of RUR 8.9 bn investment project Commissioning 2015 General contractor Tender procedures are held.

Topographical surveys of the construction site were held. Works of clearing the construction area were carried out. The contract for development of the Design and Engineering Documentation was signed with the General Designer. Main Conceptual Solutions on the project were developed; the Engineering Documentation is in the process of preparation to pass the state examination of the project. The contract for delivery of 4 gas turbine units and 4 waste heat boilers was concluded.

6.2 Retooling, reconstruction and development program

The retooling, reconstruction and development program (RRDP) of JSC “Quadra - Power Generation” is aimed to improve reliability of energy equipment, ensure security and efficiency of production, improve quality of power supply for consumers, increase heat and electricity supply, improve working conditions for personnel. As to the Company’s generating facilities, the main actions of the retooling and reconstruction program are related with prolongation of the resource of the existing competitive 72 plants, removal of technological constraints as to delivery of electricity and capacity, decrease in specific charges of fuel, decrease in consumption for own needs. The thermal grid facilities go through the program of modernization of old boilers, provision of the necessary reserve of capacities and re-laying of thermal grids for qualitative change of isolation systems, transmission capacity change and enhancement of heat supply reliability. Besides, the Company implements the program of construction of new transportable boiler units replacing inefficient thermal sources. In 2012, within the framework of the RRDP, JSC “Quadra – Power Generation” held the work related with implementation of energy efficient technologies and carried out actions related with reduction in harmful influence on the environment. RUR 1,566.9 mn (VAT included, taking into account interest on credits) were assigned for these purposes last year. Nearby 35% of investments within the framework of the investment program of branches were assigned to reconstruction of the thermal grid complex of the Company. According to RRDP of branches and SDEs, 47.3 km of thermal grids in one-pipe length equivalent were replaced. Major projects include reconstruction of the gas facilities of boilers in the branches “Central Generation”, “Voronezh Regional Generation” and “Western Generation”, construction of the heating system to the residential microdistrict Kanishchevo in the city of Ryazan, installation of the hydraulic coupling on the feeding pump of energy unit #1 at the Orlovskaya TPP, construction cooling tower #4 at the Lipetskaya TPP-2, replacement of circuit breakers in CS-100 kV by gas-insulated ones in the branch “Eastern Generation”, reconstruction of heating grids in Nedelina Street and Pobedy Street of the Lipetsk branch of “Eastern Generation”, reconstruction of the fuel conveying system at the Kurskaya TPP-1 . Construction of a number of facilities was completed within the framework of the program as well, which enabled the Company raise reliability of the heat power complex operation in the attended regions.

Indicators 2010 2011 2012 Funding, mn RUR (VAT included)* 1,705.7 1,754 1,566.9 Spending of capital investments, mn RUR (without 1,452.8 1,522 1,133.8 VAT) Commissioning of fixed assets, mn RUR (without 1,333.7 1,707.3 1,411.4 VAT) *taking into account interest 1,706 1,754 1,707 1,567 1,453 1,522 1,334 1,411 1,134

2010 2011 2012 Funding Spending Commissioning

95.8% of capital investments targets were spent in 2012. Financing of the RRDP facilities in 2012 compared to 2011 decreased by 10.7%, spending of capital investments decreased by 25.5%, commissioning of fixed assets fell by 17.3%. The decline in funding, spending and commissioning compared to 2011 was primarily due to a decrease in the targets approved in the investment program in 2012.

Structure of capital investments in RRDP in 2012:

Spent capital Amount of funding, mn investments, Commissioned fixed assets, Name RUR (VAT included)* mn RUR (without mn RUR (without VAT) VAT)* New construction 153 136.7 99 Purchase of heat grids 25.1 21.6 21.6 IT investments 59.2 92.9 72.1 Metering stations 15.8 9.2 10.1 RRDP facilities 1,313.8 873.4 1,208.6 TOTAL: 1,566.9 1,133.8 1,411.4 *taking into account interest

6.3 Repair activities

The repair activities of JSC “Quadra - Power Generation” are governed by the “Regulation on organization of works to maintain reliability and efficiency of energy production” approved by the decision of the Company’s Board of Directors (Minutes #07/25 dated 31.08.2006). The target task in the field of provision of reliability and efficiency of energy production is creation of an effective system of maintenance and repairs. Timely and qualitative annual planning of capital, medium and routine repairs of equipment, buildings and structures, formation of the nomenclature and volumes of repair work, financing of the planned volumes are organized for this purpose.

Costs of repairs for the period from 2010 to 2012, ths. RUR, VAT excluded:

Subdivisions 2010 2011 2012 Southern Generation 147,875.9 164,059.7 167,014.1 Kursk RG 130,631.7 176,409.3 241,377.7 Voronezh RG 284,617.2 326,298.5 244,433.7 Eastern Generation 493,567.6 573,830.6 569,549.1 Orel RG 120,705.6 121,600.4 120,529.9 Ryazan RG 95,878.2 99,229 57,843.1 Western Generation 365,611.7 429,081.3 319,092.9 Central Generation 445,070 373,446.4 377,448.8 Executive Office of JSC “Quadra - Power 0 2,100.5 0 Generation” TOTAL: 2,083,957.9 2,266,055.7 2,097,289.3

In 2012, according to the plan, the following scope of repair work was implemented: - 21 major (medium) repairs of steam boiler units with total capacity of 4,950 t/h. The costs of repairs of boiler units were RUR 130.3 mn; - 10 capital (medium) repairs of turbine units of 580 MW in capacity. The cost of repairs amounted to RUR 138.5 mn, including RUR 66.4 mn – medium repairs of GTU #1 at the Belgorodskaya TPP; - 11 major repairs of water hating boilers of 1,040 Gcal/h in heating capacity in the amount of RUR 31.3 mn;

- 93 maintenance repairs of boiler units with total capacity of RUR 15,747.5 t/h and value of RUR 128.8 mn and 67 routine repairs of turbine units with capacity of 2,863.8 MW and value of RUR 136.7 mn; - 64 routine repairs of water heating boilers with thermal capacity of 4,793 Gcal/hour and value of repairs equal to RUR 29.7 mn; - full repair of auxiliary thermal mechanical equipment for the amount of RUR 648.2 mn, electrical equipment for the amount of RUR 323.5 mn; - repair of equipment of thermal grid enterprises for the amount of RUR 150.8 mn; - 44.6 km of heat pipelines in one-pipe length equivalent were replaced against the target of 41.6 km. Above-plan replacement of heating systems was performed based on the results of hydraulic testing and proceeding from technical condition of pipelines. RUR 195.2 mn were spent on replacement and repair of heating systems, as well as troubleshooting after hydraulic testing; - repair of buildings and structures was performed for a total of RUR 184.3 mn, including 23 waste stacks, 6 cooling towers.

SECTION 7. Social responsibility.

7.1 Human resources policy.

Main lines in the human resources policy. The human resources policy of the Company is aimed to provide the enterprise with qualified personnel timely, and to create conditions for effective development and use of human resources. JSC “Quadra – Power Generation” is focused on establishment of long labor relations with each employee, which are based on observance of requirements of labor legislation and enable the employee completely to put into practice the available level of professional competence. One of the main tasks in the work with the personnel is to increase the level of professionalism of employees. For this purpose, the Company, first of all, applies the system of continuous training of the employee throughout the period of his/her labor activities. The work in this line is carried out according to the Regulation on Vocational Training of Personnel approved in the Company. Secondly, competitions for professional skills of operations personnel of power plants of JSC “Quadra - Power Generation” are held. They are held not only to define the professional level, but also check up readiness of energy specialists for elimination of emergencies. In 2012, the most mass actions included the competition for the title “The best subdivision in the field of fire safety”. All employees of the branch “Southern Generation” of JSC “Quadra – Power Generation” took part in it. Another event is competitions of brigades of operating personnel of production units of the Belgorodskaya TPP and Gubkinskaya TPP of the branch of JSC “Quadra – Power Generation” – “Southern Generation”, with participation of 90 people. The priority line in training of the personnel is work with young specialists which includes development of individual plans of training for the purpose of faster adaptation at the enterprise and involvement of young promising specialists in the production process. To implement this, the branches allocate places to pass industrial and pre-degree practice by the students of local higher educational institutions and colleges. More than 330 students of higher educational and secondary educational institutions passed practice in the production process in the reporting year. Active profession-orientation work is held with pupils of colleges, pupils of schools, students and includes acquaintance with production units of the Company. 1,477 people took part in the excursions to the production units of the Company. As one of kinds of the personnel motivation, the Company widely uses granting of departmental awards to employees for professionalism, conscientious attitude to work and devotion to the profession they have chosen. In 2012, more than 1,000 employees were given various awards, including 59 people were awarded by the Energy Industry Ministry of the Russian Federation, including two employees were granted the title “Honored Energy Specialist”, 166 employees received internal awards of the Company – the honorary title “Deserved Employee of JSC “Quadra - Power Generation”, placement of names on the Board of Honor of JSC “Quadra - Power Generation”, Certificate of Honor and Gratitude of JSC “Quadra - Power Generation”. The rest of employees received awards of the constituent entities of the Russian Federation at the place of branches seat, as well as branches’ awards.

Number of personnel.

In 2012, as part of work to improve operational efficiency and optimize organizational structure of the Company, measures for amalgamation according to the territorial features were held in respect of the branches “Central Generation” and “Southern Generation”, spinning-off of the heat grid business from the branches “Western Generation”, “Kursk Regional Generation”

76 and “Ryazan Regional Generation” into subsidiaries was held, which reduced the number of employees in the Kursk, Ryazan and Bryansk Regions. As a result of the measures held in respect of structural transformations of the Company and optimization of working places, the number of personnel of JSC “Quadra - Power Generation” for 2012 fell from 9,750 people to 8,503 people (including dismissal of employees of the branch Kursk Regional Generation of JSC “Quadra - Power Generation” on 31 December 2012 in order to transfer them to LLC “Kursk HGC”). 3,426 3,209

1,704 1,687 1,328 1,336

803 807 802 788 483 471

215 205

Orel RG Orel

Central Central

Western Western

Generation Generation

Voronezh RG Voronezh Eastern Generation Eastern Regular staff number Payroll number Generation Southern

Staff turnover.

Staff turnover in the Company for the reporting period increased from 4.1% to 6.7% due to implementation of measures to transfer the staff to subsidiary heat grid companies. It is a natural level of turnover which contributes to renovation of the team and does not cause significant economic losses related with selection of candidates and occupation of vacant positions.

2,884 2,652 2,610

1,666

2011 2012 employed (people) dismissed (people)

Structure of personnel by categories.

The personnel structure by categories underwent minor changes associated with processes of personnel optimization and harmonization of organizational structure and staffing of branches held by the Company: percentage of managers fell (from 19.0% to 18.3%) and percentage of specialists grew (from 17.8% to 18.2%), as well as percentage of workers (from

63.2% to 63.5%). 63.2% 63.5%

19.0% 17.8% 18.3% 18.2%

2011 2012 managers specialists workers

Age composition of personnel.

In the reporting year, JSC “Quadra - Power Generation” employed young people aged 26-30 years old (the number of employees in this age group increased from 8.1% to 8.8%). At the same time, the proportion of employees aged under 25 years old and aged 31-50 years old decreased slightly, while percentage of employees over the age of 50 years old grew (from 36.1% to 37.5%). The average age of employees of the Company increased from 43.6 years old to 44 years old. The number of working pensioners for the year increased from 10.6% to 14.5%.

36.1% 37.5%

16.1% 15.5% 14.5% 11.9% 12.6% 12.6% 11.1% 10.6% 8.1% 8.8% 8.7% 8.2% 6.5% 6.3%

0.0% 0.0%

40 40

years old years

25 years oldyears 25 oldyears 30 oldyears 35 oldyears 45 oldyears 50

- - - - -

pensioners

18 26 31 41 46 including working including 2011 2012 oldyears 50 over under 18 years oldyears 18 under

Composition of personnel in respect of education.

A steady tendency of improvement of the level of qualitative structure of employees is observed in JSC “Quadra - Power Generation”. In the reporting year, the number of employees with higher education increased (34.7% out of the total number), 22 people has scientific degrees, 222 specialists have two and more higher educations. The number of employees with specialized education increases.

34.0% 34.7% 26.6% 26.2%

16.8% 16.2%

2011 2012 Higher Secondary vocational Initial vocational

The Company formed the reserve of personnel for management positions in the number of 1,014 people. Among them, 745 people have higher education, 269 – secondary vocational education. Candidates with secondary vocational education were selected to the reserve owing to their extensive practical experience and technical expertise in the energy sector.

Training and improvement of skills.

In 2012, 1,731 employees improved their skills, received training or re-training (18% of the average staff number of the Company), including 921 managers (51% of the average staff number of managers), 311 (19%) specialists and 499 (8%) workers. RUR 13.64 mn (without VAT) were spent on training of personnel of JSC “Quadra - Power Generation”. The following forms of training were held in the reporting year: - compulsory training of the personnel stipulated by the Rules of Work with Personnel in Electricity Industry Organizations of the Russian Federation (Order #49 of the Ministry of Fuel and Energy Industry of the Russian Federation dated 19.02.2000) and Order #37 of Rostekhnadzor “On the order of training and performance evaluation of personnel of the organizations supervised by the Federal Service for Ecological, Technological and Nuclear Inspection” dated 29.01.2007; - additional vocational training of specialists and managers. The priority line of the personnel training is engineering and manufacturing training of operations personnel in the following lines: - provision of reliability of operation of power plants electrical equipment; - gas turbine and gas steam technologies in the energy industry; - prevention of failures of steam turbines and units; - implementation of new scientific and technical lines on separate issues of reliability and safety in the energy industry; - prevention of injuries and occupational safety management (International Standard OHSAS 18001:1999 “Industrial safety and personnel health management”).

Personnel motivation.

The personnel motivation system is focused on achievement of the Company’s strategic goals, ensuring of objectivity and priority of the indicators used in the process of definition of the amount of bonuses and compensations, accounting of conditions for awarding, individual contribution of employees, structural divisions and branches of the Company. The employees motivation system existing in JSC “Quadra - Power Generation” ensures: - objective estimation of the performance of each employee, stimulation of labor following the results of compliance with main productive and economic indicators of the activities of structural, production units, branches and the Company as a whole; - mechanism of revision of official salaries following the employees’ performance; - stimulation of labor of the personnel of key categories and positions; - lump sum awarding of employees for participation in solution of strategic tasks of the Company. 79

The following additional benefits, guarantees and compensations are stipulated in JSC “Quadra - Power Generation” (except for those envisaged by the Russian Federation laws): - lump sum allowances, one-time financial assistance (including RUR 2,311 ths. were paid in 2012 in the event of child birth, RUR 259 ths. were paid in the event of marriage registration, RUR 89,084 were paid for social needs of an employee beyond the employment activities, etc.) - monthly donations (including RUR 4,194 ths. were paid to employees on paid child care in 2012, etc.) - additional payments (including to the retirement pension, disability pension, etc.); - partial reimbursement of documented expenses of employees. RUR 1,183 ths. were spent to purchase holiday packages to children summer camps in the territory of the Russian Federation for children (disabled children) of employees. Partial compensation for purchase of holiday packages for treatment, rehabilitation and recreation to employees in 2012 amounted to RUR 4,398 ths. Payment of lump-sum remuneration (bonuses) to employees of the Company who were awarded the state, departmental and other types of awards and honorary titles for the year 2012 amounted to RUR 9,239 ths.

7.2 Social policy

JSC “Quadra - Power Generation” is a socially-oriented company, which, being a large and faithful taxpayer to the budgets of all levels, directly contributes to successful social and economic development of the regions where it operates. The following principle forms the basis for the social policy of JSC “Quadra - Power Generation”: “the economical efficiency of the Company is the key to sound social protection of its employees.” The Company strives to provide each employee with worthy wage levels. In order to increase efficiency of labor, ensure transparency of organization of labor and wages, the Company applies a uniform Collective Agreement that regulates social and labor relations, as well as sets forth benefits and guarantees aimed at financial support of the Company’s employees. The Company attaches a lot of importance to organization of recreation of employees, health-improving and cultural events. Besides social benefits stipulated in the Collective Agreement, the Company also applies the regulation “Payment of benefits, guarantees and compensation to employees and their families” since January 2012, which forms payments within the framework of social and material support of the Company’s Employees and their families. JSC “Quadra - Power Generation” partially compensates cost of purchase of trip tickets for treatment, rehabilitation and recreation of Employees, as well as purchase of holiday packages to children’s holiday camps for Employees’ children. Additional financial support of Employees on child care leave is also provided – this concerns children under the age of 3 years old. The Company applies the Regulation on Private Pension Coverage and Voluntary Pension Insurance of Employees. Employees who as a result of the reform of public pension coverage do not get a funded part of the pension at all, or have a limited possibility to form it, they obtain the right to receive the occupational pension upon occurrence of pension grounds. 7.3 Charities

In 2012, JSC “Quadra - Power Generation” continued the activities aimed to strengthen the reputation as the Company with a high level of social responsibility, bringing a powerful contribution to the economic and social development of the regions of its presence. The main lines of the charities in the reporting year: - assistance to activity in the sphere of physical training and mass sports; - support of socially unprotected groups of citizens; - protection and due maintenance of the buildings having historical value;

- assistance to activity in the sphere of culture, art, spiritual development of an individual; - assistance to activity in the sphere of preventive maintenance and health protection of citizens.

One of the main areas of charity of JSC “Quadra - Power Generation” is socially-targeted support in the area of preventive measures and protection of children’s health. In 2012, information and medical equipment, specialized equipment, appliances and home decorations were acquired on a grant basis for the amount of RUR 467.3 ths. for the Children's Hospital named after Morozov. Charity care was provided to socially unprotected and disadvantaged groups of citizens, pensioners, disabled people, orphans, sports, including youth clubs. RUR 18.1 mn in total were assigned for these purposes.

7.4 Occupational safety

Occupational safety, industrial traumatism and professional disease rate. The Company’s policy in the field of the occupational safety is aimed to improve working conditions, prevent industrial traumatism and occupational diseases. The work in this sphere is held according to the state normative requirements of occupational safety, labor legislation and normative legal acts containing the norms of the labor law. The total charges of the Company to ensure safe conditions and occupational safety in 2012 were RUR 97.3 mn. In addition, in accordance with the applicable rules and regulations, a set of measures for labor protection and human resources relations is systematically implemented. It does not require funding (costs), but, in its turn, produces a good result in the field of prevention of occupational injuries.

Dynamics of occupational safety charges, mn RUR:

93.0 97.3 75.8 84.7

2009 2010 2011 2012

The increase in the labor protection charges in 2012 compared to 2011 is mainly due to changes in government regulations on labor protection (Order #340 of the Ministry of Health and Social Development of the Russian Federation dated 25.04.2011 “On approval of the Model Regulation of Free Provision of Special Clothing, Footwear and Other Personal Protective Equipment to Employees of the Electric Power Industry Organizations Involved in Works Associated with Harmful and (or) Hazardous Working Conditions, as well as in Works Carried out in Special Temperature Conditions or Pollution-Related Ones”, Order #302n of the Ministry of Health and Social Development of the Russian Federation dated 12.04.2011 “On approval of the lists of harmful and (or) hazardous workplace factors and works, performance of which requires mandatory preliminary and periodic medical examinations (surveys), and the Order of Holding Mandatory Preliminary and Periodic Medical Examinations (Inspections) of Employees Engaged in Heavy Work and Work in Harmful and (or) Hazardous Working Conditions”). The main constant lines of the Company’s activity in the field of maintenance of safe conditions and labor safety are: 1. Provision of safety of employees when maintaining buildings, structures, equipment, implementation of industrial (technological) processes, and tools and materials applied in the production process, including:

- implementation of inspections (internal control) of production units as regards condition of occupational safety, fire and industrial safety (holding of OS and FS Days, visiting rounds and surveys of workplaces, etc.); - cooperation with the governmental supervising authorities concerning observance of the labor legislation and occupational safety, fire safety, safe operation of equipment, buildings and structures (performance of instructions, scheduled work (registration, survey, permits to commission), etc.); - cooperation with contracting organizations as regards maintenance of safe conditions of performance of works in new construction, retooling and reconstruction, modernization, repair and maintenance service; - development and revision of industrial instructions, instructions on occupational safety and fire safety, holding of all kinds of instructing, emergency prevention and fire-prevention trainings; - organization of holding tests of tools and devices, protection equipment; - purchase of posters and safety signs, traffic signs, plans (posters) of evacuation and agitation products. 2. Training and performance appraisal of personnel, including: - training of employees in safe methods and ways of performance of works, first-aid treatment of an industrial victim; - holding of onsite training, training in substitutability; - special training (study of reviews of accidents and technological breaks, study of the changes made to technological schemes and equipment, acquaintance with executive documents, analysis of deviations of a technological process, training with use of simulators); - additional vocational training and improvement of professional skills; - examination of requirements of instructions, effective standards and rules. 3. Provision of employees with protection equipment, tools and facilities, including: - special clothes, special footwear and other individual protection equipment, including protection against thermal risks of electric arc; - electrical safety devices, special tools and facilities, equipment of collective protection; - provision with washing agents and detergents. 4. Holding of sanitary and hygienic actions, including: - holding of preliminary and periodic medical surveys; - purchase of first-aid sets and medicines for such sets; - maintenance of first-aid posts, holding of vaccination of personnel; - holding of pre-trip physical examinations; - provision of respective personnel with treatment and prophylactic food. 5. Improvement of the general working conditions, including: - holding of performance appraisal of workplaces; - holding of repairs of amenities, premises of catering places, premises of workplaces of operations personnel; - equipment of workplaces with climatic equipment; - purchase of electrical household appliances (refrigerators, teapots, stoves, etc.); - provision of personnel with potable water.

Structure of occupational protection charges in 2012, mn RUR:

38.1

19.6 19.6 20

Provision of employees with Accidents prevention actions Sanitary and hygienic General improvement of personal protective actions labor conditions equipment

Provision of personnel with protective equipment, tools and devices.

The Company’s employees are fully provided with modern means of protection, necessary tools and devices in accordance with the applicable rules and regulations. When protection tools are selected, not only their protective properties against hazards are taken into account, but also operating convenience; in this connection priority is given to the latest developments in this field. The Company pays special attention to provision of respective personnel with detergents and disinfectants (soap and liquid detergents, cleaning, restoring and protecting creams, etc.). Fire safety actions.

In 2012, like in previous years, JSC “Quadra - Power Generation” implemented the following major tasks and measures in the field of fire safety: - appropriate organizational and administrative documentation was additionally issued for branches’ preparation for the spring-summer fire season and personnel’s actions in the period of abnormally high temperature of outside air; - all production divisions of branches held fire and tactical exercises jointly with EMERCOM subdivisions in accordance with the approved and agreed schedules; - work to improve the level of fire prevention, timely detection and correction of violations of fire safety requirements, development of fire safety measures and established fire prevention mode is constantly held. The complex of performed fire prevention measures will help to prevent occurrence of fires in the production divisions of the Company’s branches in 2012.

Production control system.

Production control is carried out in accordance with the requirements of federal laws in the field of industrial safety and Regulation on Production Control over Compliance with Industrial Safety Requirements at Hazardous Production Facilities of JSC “Quadra - Power Generation”, which was approved by Order #101 dated 10.08.2012. Based on the requirements of the above Regulation, the Company’s branches arranged production control over compliance with industrial safety of hazardous production facilities, issued orders for appointment of persons responsible for implementation of production control and compliance with the requirements of industrial safety at hazardous production facilities. Each branch developed and approved the “Regulation on Production Control and Safety Services”.

Information of workplaces certification

As at 01.01.2013, more than 99% of the Company’s workplaces were certified according to working conditions; less than 1% are newly created workplaces, certification of which will be held in 2013. Measures outlined based on the results of the certification are held within the established periods of time. There no measures with expired time for their implementation.

SECTION 8. Ecological policy

8.1 Environmental protection

JSC “Quadra - Power Generation” carries out electricity and thermal energy production activities. In this connection the primary goals of the Company in the sphere of ecological policy are: - minimization of negative influence of CHPPs on the environment; - observance of the nature protection laws; - performance of the nature protection actions stipulated by the requirements of improvement notices of supervising authorities: - Territorial Administration of Rosprirodnadzor (Federal Service for Supervision of Natural Resource Use) of the Russian Federation; - Territorial Administration of Rostekhnadzor (Federal Service for Ecological, Technological and Nuclear Inspection) of the Russian Federation; - Territorial Administration of Rospotrebnadzor (Federal Service for Supervision of Consumer Rights Protection and Human Welfare) of the Russian Federation; - Authorities of the environmental prosecutor's office. In order to meet the assigned tasks, each branch and production unit issued an order to appoint the persons from among the first managers to take responsibility for observance of the laws in the field of the environment preservation. The structure of branches have services, sectors on the environment preservation, where ecological engineers work, who arrange the nature protection activities, carry out control over the influence of industrial sites of the branches on the environment and keep respective reporting. The production units of the branches of JSC “Quadra - Power Generation” have permits to emissions, permits to water use, permits to pollutant discharge to water facilities and permits to production and consumption waste disposal in the nature habitat. The Company elaborated and approved norms of influence on the environment. The “Plans of performance of the actions ensuring compliance with the requirements of legislative acts and normative acts on the environment preservation” were developed to decrease the influence of the production units of the branches of JSC “Quadra - Power Generation” on the environment, the main actions of which are: - technological retooling and gradual decommissioning of out-of-date equipment, implementation of modern existing technologies in the process of production and delivery of thermal energy and electricity; - holding of monitoring of the influence of CHPPs of JSC “Quadra - Power Generation” on the environment; - holding of repairs of nature protection facilities and equipment to ensure observance by the Company of the nature protection legislation; - rational use of water resources by thermal power plants; - obtaining and prolongation of permits to nature management. In 2012, the expenses of JSC “Quadra - Power Generation” for performance of the action plan on the environment preservation were RUR 24.8 mn. The expenses planned by JSC “Quadra - Power Generation” for these purposes in 2013 are RUR 28 mn.

Within the framework of the environment preservation actions in 2012, performance of the following works may be noted:

Action name Actual expenses, ths. Goals, ecological efficiency RUR Branch of JSC “Quadra - Power Generation” – “Eastern Generation” 85

Cleaning of the intake mouth and fish Prevention of drift of the intake protection nets at the production unit 262 mouth and destruction of nets “Lipetskaya TPP-2” Inspection, repairs and engineering Prevention of drift of the intake maintenance of the intake mouth and fish mouth and destruction of nets 73 protection boxes at the production unit “Eletskaya TPP” Routine repairs of the drainage channel of Prevention of ingress of polluted the chemical shop with the hydraulic wastewater into earth 35.5 insulation device at the production unit “Eletskaya TPP” Hydraulic cleaning of wastewater drain at Prevention of ingress of polluted 105.3 the production unit “Eletskaya TPP” wastewater into earth Cleaning of wells of salted drains from Prevention of ingress of sludge into sludge, cleaning of cell, lime whitewash discharge water mixers from incompletely burned lime 122 carbonate at the production subdivision “Dankovskaya TPP” Repair of the sulfuric acid storage site at Prevention of possibility of soil the Tambovskaya TPP pollution with sulfuric acid, reduction 984 in concentration of sulfates in soil by 30 mg/kg Routine repairs of cooling towers #1, 2 at Reduction in losses of river water in the Kotovskaya TPP 788 the process of carry-over and evaporation by 12.0 ths. m3/year Cleaning of turbine condensers at the Reduction in river water carry-over 150 Kotovskaya TPP by 6 ths. m3/year Replacement of filter loading at mechanical Reduction in concentration of oil filter #1 of the chemical shop at the 52 products in drain water by 0.005 Kotovskaya TPP mg/l Branch of JSC “Quadra - Power Generation” – “Orel Regional Regeneration” Examination of the supercharger dam, Observation of nature protection 1,021 repair of nature protection equipment laws Purchase of gas-analyzers Ensuring of control over concentration of polluting 210 substances discharged to the atmospheric air Branch of JSC “Quadra - Power Generation” – “Kursk Regional Regeneration” Cleaning of the catch water drain Prevention of ingress of polluting 194 substances into the Seim river Cleaning of the drainage channel of the Prevention of ingress of polluting protecting dam of the ash disposal area at 560 substances into the surface the Kurskaya TPP-1 impoundment Branch of JSC “Quadra - Power Generation” - “Western Generation” Diver inspection of water area and intake Definition of condition of the fish chambers of UPS (unit pumping station) protection structure and CPS (circulating pumping station) at 100 fish protection structures at the Smolenskaya TPP-2 Replacement of filtering materials in Reduction in discharge of polluting mechanical and coal filters of cleaning 273 substances to the atmospheric air structures at the Smolenskaya TPP-2 Repair of the water disposal of the water Safe waste water discharge 440 cooling pond Repair of gas-analyzers Ensuring of control over concentration of polluting 720 substances emitted to the atmospheric air Repair and tests of gas treatment units Cleaning of smoky fumes from solid 154 (GTUs) at the Dorogobuzhskaya TPP substances (0.878 t) Transfer of bottom ash waste of the - Reduction in volumes of placed 86

Dorogobuzhskaya TPP to outside entities bottom ash waste by 61,070.5 tons for further use In respect of all branches Laboratory researches of the atmospheric Control over the condition of the air, physical influence on the atmospheric atmospheric air in SPZ (sanitary air (noise, vibration, EMI (electromagnetic protection zones) influence)) on the border of the sanitary 990 protective zone of the industrial sites of the branches of JSC “Quadra - Power Generation” Quality control in respect of the discharge Detection and tracking of water removed from the industrial sites of consequences of economic activities the branches to the surface impoundments 2,924 with the further development of recommendations to take effective measures Transfer of industrial waste to the disposal Decrease in influence of waste on place and its recycling by specialized 4,928 the environment enterprises Hydrological regime supervision of Detection and tracking of underground waters via the stationary consequences of influence of ash observation network of chinks at the and slug dumps and sludge dumps facilities of the final disposal of waste – ash 622 on the quality of underground waters and slag dumps, sludge dumps with the further development of recommendations to take effective measures Monitoring of near placement of sludge Detection and tracking of dumps and ash disposal areas, black oil consequences of influence of ash storage tanks and slag dumps and sludge dumps 1,419 on the environment with the further development of recommendations to take effective measures Development of individual norms of water Observance of nature protection 800 consumption and water discharge laws Development of draft admissible Observance of nature protection discharges norms (ADN) in surface water 232 laws bodies Development of draft waste generation Observance of nature protection norms and limits for their placement for 708 laws branches’ production units Development of draft norms of maximum Observance of nature protection allowable emission (MAE) of polluting 695 laws substances for branches’ production units Definition of hazard class for wastes for 400 Observance of nature protection branches’ production units laws

Current expenses for the environment protection:

Indicator name, 2010 2011 2012 ths. RUR Current expenses for the 99,403.7 96,165 107,174 environment protection, including: - for protection and rational use of 82,673 75,368.5 78,016.9 water resources including paid to other enterprises (organizations) for receipt and 51,977.3 45,738.5 54,260.9 treatment of waste water - for protection of the atmospheric air 7,782.5 11 925 15,011.7 - for the environment protection (land resources) against production and 8,948.2 8,871.4 14,145.4 consumption wastes 87 including paid to other enterprises (organizations) for receipt, storage 7,209.4 432.1 8,177.3 and recycling of waste

As a result of the nature protection activity of JSC “Quadra - Power Generation” in 2012:

Payment for negative impact on the environment in JSC “Quadra - Power Generation” as a whole in 2012 grew from RUR 15.3 mn to RUR 17.71 mn against the year 2011 at the expense of the increased waste formation volume of hazard class V.

Dynamics of payments for negative impact, ths. RUR:

17,710 15,321 13,844 11,331 7,943 7,910 5,305 3,356 3,832 2,545 2,105 2,547

2010 2011 2012

Payment total To water bodies To atmospheric air For waste placement

Total waste in 2012 against 2011 increased from RUR 34.8 ths. tons to RUR 39.97 ths. tons.

Dynamics of volumes of production and consumption waste formation in terms of quantity:

Waste hazard classes 2010 2011 2012 class I 3.6 3.3 4.9 class II 2.7 2 2.8 class III 225.5 251.1 328.8 class IV 18,900 14,842.2 11,704.1 class V 22,900.1 17,357.2 27,933.7 TOTAL: 42,031.9 32,455.8 39,974.3

The bulk of waste hazard class IV consists of the following waste: ash as a result of coal firing and solid household waste (SHW). A reduction in the volume of hazard waste of classes I - IV was due to a reduction in the volume of bottom ash waste (BAW), which is proportional to a reduction in the volume of fuel consumption in 2012 against 2011. An increase in the volume of hazard waste of class V was due to implementation of unplanned work to prepare the construction site for the 223 MW gas steam unit (GSU) at the Voronezhskaya TPP-1.

Main indicators of influence on the environment:

Indicators 2011 2012 Gross emission of polluting substances to the atmosphere, ths. t 22.6 18.9 including ash of solid fuel 1.5 0.5 sulfur dioxide 2.6 0.9 carbonic oxide 2.6 2.2

nitrogen dioxide 14 13.8 others 1.9 1.5 Use of water, mn m3 155 147.5 Volume of recycling water, mn m3 900 1 Discharge of polluted waste water, mn m3 8.6 9.2

Pollutant emissions from power plants of the energy system declined from 22.6 ths. tons to 18.86 ths. tons as a whole in 2012 against 2011, including by ingredients: - emissions of sulfur dioxide decreased from 2.6 ths. tons to 0.9 ths. tons; - emissions of solid substances decreased from 1.5 ths. tons to 0.5 ths. tons.

Sulfur dioxide emissions reduction was associated with reduced consumption of black oil. Reduction in solid substances emissions occurred due to lower coal consumption.

Information on holding of environmental trainings in JSC “Quadra - Power Generation”. 2010 2011 2012 Number of employees who passed training, people. 16 16 35 Costs of training personnel in the environment issues, ths. 110 115.4 492.5 RUR

8.2 Use of energy resources for 2012

Indicator name (consumption) Number, ths. tef Price, RUR/tef Value, mn RUR Black oil 13.2 3,492.9 46.1 Coal 15.5 2,569.3 39.9 Blast-furnace gas 53.6 1,619.4 86.8 Natural gas 6,638.8 3,221.8 21,389.2 Boiler and furnace fuels 0.03 8,183.7 0.3

SECTION 9. Contact information Full name: Joint Stock Company “Quadra - Power Generation”

Shortened name: JSC “Quadra - Power Generation”

Seat and postal address: Timiryazeva Street, 99v, Tula, Tula Region, Russian Federation, 300012

Reception room in Tula: Tel.: +7 (4872) 25-44-59, 25-43-59 Fax: +7 (4872) 25-44-44 E-mail: [email protected]

Office in Moscow: Moscow Region, Odintsovsky District, 11th km of Rublyovo-Uspenskoe Avenue, settlement Usovo, 100, bldg. D Tel.: +7 (495) 739-73-33 E-mail: [email protected]

Press center: Director for information policy and public relations Elmira Ilyasovna Bobryakova Tel.: (495) 739-73-33 (ext.44-24) E-mail: [email protected]

Corporate governance division: Chief of the division Maya Vladimirovna Yashukhina Tel.: +7 (495) 739-73-33 (ext. 44-11)

Investor relations Chief of the administration administration: Anna Vladimirovna Krylova Tel.: +7 (495) 739-73-33 (ext. 44-44) Cell phone.:+7 (909) 934-2008 E-mail: [email protected]

http://www.quadra.ru/investor/index.html

Bank details: Address: Timiryazeva Street, 99v, Tula, Tula Region, Russian Federation, 300012 Tel./fax: 7397333 TIN (taxpayer’s identification number)/RRC (registration reason code) 6829012680/997450001 settlement account #40702810000040002000 Branch of GPB (JSC) in Tula correspondent account #30101810700000000716 RCBIC (Russian Central Bank identification code) 047003716

Corporate website: www.quadra.ru

Registrar (register-keeper) Full name: Closed Joint-Stock Company “Computershare Registrar” Shortened name: CJSC “Computershare Registrar” Information on license: #10-000-1-00252 issued on: 06 September 2002, without limitation of the period of validity Seat: Ivana Franko Street, 8, Russian Federation, Moscow, 121108 Postal address: Ivana Franko Street, 8, Russian Federation, Moscow, 121108 Bank details: TIN 7705038503, RRC 773101001 Settlement account 40701810200101101653 in HSBC Bank (RR) (Limited Liability Company) in Moscow, Correspondent account 30101810400000000351 RCBIC 044525351 Contact tel./fax: Tel.: +7 (495) 926-81-60 Fax: +7 (495) 926-81-78 Corporate website: http://www.nrcreg.ru

Information on the depositary performing centralized storage of certificated securities of the issue with obligatory centralized storage (bonds)

Full name: Nonbank Credit Organization Closed Joint-Stock Company “National Settlement Depositary”) Shortened name: NCO CJSC NSD Seat: Sredny Kislovsky Lane, 1/13, bldg. 8, Russian Federation, Moscow, 125009 Contact tel./fax: Tel.: +7 (495) 234-42-80 Fax: +7 (495) 956-09-38 Information on license: #177-03431-000100 issued on: 4 December 2000, without limitation of the period of validity Authority which issued the RF FCSM license: Corporate website: http://www.nsd.ru E-mail: [email protected]

Schedules

Schedule #1. Opinion by the Internal Audit Commission based on the results of inspection of the financial and economic operations of JSC “Quadra – Power Generation” for the year 2012.

Tula 10 April 2013

The Internal Audit Commission, elected by the General Meeting of Shareholders of JSC “Quadra - Power Generation” (Minutes #1/15 dated 22.05.2012), in accordance with the approved action plan, inspected the financial and economic operations of JSC “Quadra - Power Generation” for the year 2012. The inspection goal: - analysis of the financial and economic operations of the Company; - monitoring of compliance of the financial and economic transactions accomplished by the Company with the Russian Federation laws and the Company’s Charter; - control over compliance with the legal and engineering regulations and standards; - independent assessment of public information about the Company’s financial standing. The inspection was carried out with the consent of the officials who are responsible for financial and economic operations in the Company. The inspection was carried out during the period from 18.03.2013 through 22.03.2013 using the sampling method. The specialists from the Company’s executive office were involved to participate in the inspection. During the inspection, the following documents were considered: Annual Report of JSC “Quadra - Power Generation” for the year 2012, balance sheet at 31.12.2012 and appendices thereto, income statement, cash flow statement, report by the auditor ZAO “Deloitte & Touche” dated 13.03.2013, regulatory and other documents of the Company governing its financial and economic activities. The Certificate of the Financial and Economic Operations Inspection of JSC “Quadra - Power Generation” for the year 2012 was prepared based on the results of the inspection and approved by the Internal Audit Commission on 27.03.2013. The balance sheet for 2012 was prepared in accordance with the requirements of Federal Law #402-FZ “On Book Keeping” dated 06.12.2011, order #34n of the RF Ministry of Finance “On Approval of the Regulation on Book Keeping and Accounting Statements in the Russian Federation” dated 29.07.1998, order #66n of the RF Ministry of Finance “On the Forms of Accounting Statements of Organizations” dated 02.07.2010 and other regulations governing book keeping and statements in the Russian Federation. Book keeping in the Company was carried out on the basis of orders #209 of JSC “Quadra - Power Generation” “On Approval of the Accounting Policy when Arranging Book Keeping and Tax Accounting in JSC “Quadra - Power Generation” for the year 2012” dated 29.12.2011, #99 “On Incorporation of Changes to Order #209 of JSC “Quadra - Power Generation” Dated 29.12.2011” dated 08.08.2012. The Company’s management is responsible for the accuracy of the accounting statements in the inspected period.

Analysis of the structure of assets and liabilities of the Company’s balance sheet shows a strong financial position of the Company in the considered period. The Company has the control and inspections administration, which ensures internal control over the events of performed financial and economic activities, their compliance with regulatory and legal acts. On 13.03.2013, ZAO “Deloitte & Touche” provided the auditor’s report on the Company’s accounting statements for the year 2012, which were prepared in accordance with Russian Accounting Standards. According to the auditors, the Company’s accounting statements present fairly, in all material respects, the financial standing of Joint Stock Company “Quadra - Power Generation” at 31 December 2012, its financial performance and its cash flows for the year 2012 in accordance with Russian Accounting and Statements Standards. Based on the inspection and analysis of the financial and economic activity of JSC “Quadra - Power Generation”, the Internal Audit Commission confirms that: - annual accounting statements of the Company were prepared in accordance with the Russian Federation laws and represent fairly its financial standing at 31.12.2012, in all material respects; - financial information contained in the Annual Report of the Company for 2012 is accurate and corresponds to the data included in accounting statements.

Chairman of the Internal Audit Commission of JSC “Quadra - Power Generation” A.V. Oksimets

Members of the Internal Audit Commission A.V. Bulanov

A.A. Revva

A.K. Filippenko

I.N. Yushina

Read and understood by:

General Director of JSC “Quadra - Power Generation” V.V. Shelkov

Chief Accountant of JSC “Quadra - Power Generation” I.A. Lapitskaya

Schedule #2. Information on observance by JSC “Quadra - Power Generation” of the Corporate Conduct Code recommended by order #421/r of the Russian Federation FCSM dated 04.04.2002 for application

Observed #of Provision of the Corporate Conduct Code or not Note item observed 1. Notification of shareholders on carrying out of Observed According to item 11.5 art.11 of the Charter (approved by a decision of the General general shareholders meeting not less than 30 partially Shareholders Meeting – Minutes #1/15 as of 24.05.2012) a notice on conduct of the days prior to the date of its carrying out General Shareholders Meeting is published by the Company in newspaper “Izvestiya”, irrespective of the items included in its and is also placed on the Company’s Web-page on the Internet no later than 20 (Twenty) agenda, unless a larger term stipulated by the days before the date of its conduct, and a notice on conduct of an annual General laws Shareholders Meeting or of the General Shareholders Meeting, the agenda of which contains an issue on the Company’s reorganization, is published no later than 30 (Thirty) days before the date of conduct of the General Shareholders Meeting. In cases, stipulated by items 2 and 8 of art. 53 of Federal law “On Joint Stock Companies”, a notice on conduct of an extraordinary General Shareholders Meeting is published no later than 70 (Seventy) days before the date of its conduct. The Company has a right to inform additionally the persons, stated in the list of persons, having a right to take part in the General Shareholders Meeting, on conduct of the General Shareholders Meeting by way of sending a notice to them on conduct of the General Shareholders Meeting, and by way of additional publication of a notice on conduct of the General Shareholders Meeting in other printed matter. 2. Shareholders' opportunity to examine the list Observed According to item 4 art. 51 of FL “On Joint Stock Companies”: “List of persons having a of the persons who have the right to right to take part in the General Shareholders Meeting, is presented by the Company for participation in general shareholders meeting, examination, at a request of the persons, included in this list and possessing of at least starting from the day of notification on carrying 1 percent of the votes”. out of general shareholders meeting and up to closing the internal general shareholders meeting, and in case of correspondence general shareholders meeting - up to the date of voting bulletins obtaining termination 3. Shareholders' opportunity to examine the Observed The stated information (materials) is placed at the Company’s web page on the Internet no information (data) which is subject to later than 10 (Ten) days before the date of conduct of the General Shareholders Meeting. submission at preparation for carrying out of general shareholders meeting, by means of electronic communication facility, including by means of the Internet 4. Shareholder's opportunity to submit an item to Observed Upon acceptance of the offers in an agenda of the General Shareholders Meeting, the agenda of general shareholders meeting or including that on candidates for members of the Board of Directors, the Company is ready to demand convocation of general shareholders to inquire on its own a confirmation in the register of shareholders. Observed #of Provision of the Corporate Conduct Code or not Note item observed meeting without giving an extract from the register of shareholders if the account of his rights to shares is carried out in the system of conducting the register of shareholders and in case his rights to shares are considered on the custody account, sufficiency of an extract from the account of deposit in order to exercise the above-stated rights

5. Requirement on obligatory presence of general Observed According to subitem 5.2.2 of item 5.2 of section 5 of the Corporate Governance Code director, members of the management board, (approved by the decision of the Board of Directors – Minutes #11/29 as of 01.11.2006), the members of the board of directors, members of Company if possible ensures presence of members of the Board of Directors, executive the internal audit commission and the auditor of bodies, Internal Audit Commission and Auditor of the Company at the General the joint-stock company at the general Shareholders Meeting and gives them powers to answer questions of the shareholders. shareholders meeting, containing in the charter Also, according to the established practice, the General Director and a part of members of or internal documents of the joint-stock the Board of Directors are present at the conducted General Shareholders Meetings of the company Company. According to item 7.2 section 7 of the Regulation on Order of Preparation and Conduct of the General Shareholders Meeting (approved by the decision of the General Shareholders Meeting – Minutes #1/13 as of 24.07.2010) – the functions of a Chairperson at a General Shareholders Meeting are discharged by the Board of Directors’ Chairperson. If a Chairperson of the Board of Directors is absent at the General Shareholders Meeting, the functions of a Chairperson at the General Shareholders Meeting are discharged by a Deputy Chairperson of the Board of Directors or one of the members of the Board of Directors upon a decision of the Board of Directors. 6. Candidates' obligatory presence at Not observed Establishment of the Company’s executive bodies and their powers termination is related to consideration of the items on election of competence of the Board of Directors according to subitem 12) of item 14.1 art. 14 of the members of the board of directors, general Company’s Charter. director, members of the management board, Candidates’ presence is not stipulated by the Company’s internal documents. members of the internal audit commission, as well as the item on approval of the auditor of the joint-stock company at the general shareholders meeting 7. Registration procedure of participants of general Observed The stated procedure is determined in item 5.1 section 5 of the Regulation on Order of meeting of shareholder in internal documents of Preparation and Conduct of the General Shareholders Meeting of the Company. the joint-stock company 8. Board of directors authority for annual approval Observed According to subitem 20) of item 14.1 art. 14 of the Company’s Charter, the Board of of the financial and economic plan of the joint- Directors’ competence includes the Company’s business plan approval.

Observed #of Provision of the Corporate Conduct Code or not Note item observed stock company in the charter of the joint-stock company 9. The procedure of risks management approved Observed Management system by non-financial risks is determined by the Regulation on Non- by board of directors in the joint-stock company partially financial Risks Management (approved by a decision of the Board of Directors – Minutes #02/20 as of 28.06.2006). 10. Provision of the right of the board of directors to Not According to subitem 12) of item 14.1 art. 14 of the Charter, the election and termination of make a decision on abeyance of the powers of applicable the General Director’s powers is related to the Board of Directors’ competence. general director appointed by general According to item 19.7 art. 19 of the Charter, the Board of Directors has a right to take a shareholders meeting in the charter of the joint- decision at any time on termination of the powers of the General Director, members of the stock company Management Board and establishment of new executive bodies of the Company.

11. Provision of the right of the board of directors to Observed According to subitem 12) item 14.1 art. 14 of the Charter, formation of the Company’s establish requirements to professional skill and partially executive bodies and termination of their powers is related to the Board of Directors’ amount of remuneration of general director, competence, including: members of management board, heads of the - election and termination of authorities of the General Director, definition of the amount main structural divisions of the joint-stock of remunerations and compensations paid to him/her, approval and amendment of the company by the charter of the joint-stock contract’s clause defining his/her rights and duties and such contract termination; company - definition of the Management Board’s number of members, election and termination of authorities of the Management Board’s members (as advised by the General Director), definition of amounts of remunerations and compensations paid to the Management Board’s members, approval and amendment of the contracts’ clauses, determining their rights and duties and such contracts termination ; - submission of an issue to be approached by the General Shareholders Meeting - on delegation of authorities of the Company’s sole executive body to a managing organization or to a managing director and early termination of the authorities of a managing organization (manager). 12. Provision by the charter of the joint-stock Observed Subitem 12) of item 14.1 art. 14 of the Charter stipulates this right. company of the right of the board of directors to approve terms of agreements with general director and members of management board 13. Provision by the charter or internal documents Not - of the joint-stock company of the requirement observed that votes of members of the board of directors, being general director and members of management board, are not taken into account at calculation of votes at approval of agreement terms with general director (managing organization, managing director) and members 96

Observed #of Provision of the Corporate Conduct Code or not Note item observed of the management board

14. Presence of at least 3 independent directors Observed According to subitem 4.1.2 of item 4.1 section 4 of the Corporate Governance Code: who meet requirements of the Corporate “To provide objectivity of the decisions taken and preserve a balance of interests of the Conduct Code, in the structure of the board of different groups of shareholders, the Company strives to have at least 3 (three) directors of the joint-stock company independent directors in the Board of Directors’ membership. For this Code’s goals, those directors are believed to be independent according to the Company’s definition, who meet the following requirements of independence: who are not officers or employees of the Company as of election moment and within 3 years, preceding the election; who are not officers of another business company, in which any officer of the Company is a member of the Board of Directors’ Human Resources and Remunerations Committee; who are not spouses, parents, children, brothers and sisters of the Company’s officers; who are not affiliated persons of the Company, except for a member of the Company’s Board of Directors; who are not parties under commitments with the issuer, according to the clauses of which they can acquire property (get money means), the cost of which amounts to 10 and more percent of the total annual revenue of the stated persons, except for a remuneration receipt for participation in activities of the Company’s Board of Directors; who are not representatives of the state and/or local government bodies, i.e. persons who must vote on the basis of written directives (instructions etc.) of the authorized federal bodies of the state power, governmental authorities of the constituent entities of the Russian Federation or local government bodies”. Members of the Company’s Board of Directors meet the stated requirements: Yulia Vasilievna Basova Christophe François Charlier Sergey Sergeevich Podsypanin Vyacheslav Victorovich Pivovarov Ekaterina Mikhailovna Salnikova Mikhail Alexandrovich Sosnovsky David Alexander Hurn

15. Absence in the structure of the board of Observed - directors of the joint-stock company of persons who were accused of crimes in the sphere of economic activities or crimes against the government, interests of public service and service in institutions of local government or

Observed #of Provision of the Corporate Conduct Code or not Note item observed who experienced administrative punishments for violations of law in the field of the enterprise activity or in the field of the finance, taxes and tax levies, the securities market 16. Absence in structure of the joint-stock Observed - company’s board of directors of persons, being a participant, general director (managing director), member of regulatory body or employee of the legal entity competing with the joint-stock company

17. Requirement to election of the board of Observed The stated requirement is defined by item 10.8. of art. 10 of the Company’s Charter. directors by cumulative voting containing in the charter of the joint-stock company

18. Provision by internal documents of the joint- Observed The stated duty is defined by item 14.3 of art. 14 of the Charter and by subitem 4.1.6 of stock company of obligation of members of the item 4.1 of section 4 of the Company’s Corporate Governance Code. board of directors to abstain from actions which will lead or are potentially capable to lead to occurrence of the conflict between their interests and interests of the joint-stock company; obligation of disclosing the information on this conflict to the board of directors in case of occurrence of such a conflict

19. Provision by internal documents of the joint- Observed According to item 9.1 section 9 of the Regulation on the Board of Directors stock company of the board of directors of Joint Stock Company “Quadra-Power Generation” (approved by Minutes #1/13 of the members' duty to notify the board of directors in annual General Shareholders Meeting as of 27 April 2010) the Board of Directors’ members writing on intention to make transactions with must inform the Board of Directors in writing, via a Corporate Secretary, on an intention to securities of the joint-stock company, if they are complete transactions on the Company’s securities before such transactions completion. members of the board of directors of this JSC, According to item 5.6 section 5 of the Insider Information Policy (approved by the decision or its subsidiaries (dependent) entities, as well of the Board of Directors – Minutes #10/135 as of 26.12.2011), the Company Board of as to disclose the information on the Directors’ members, members of the Company Collegial Executive Body, person transactions with such securities accomplished discharging the functions of the Sole Executive Body, including managing organization and by them its officers, must disclose the information on possession of the Company’s securities before the Audit Committee under the Company’s Board of Directors. According to item 8.1 section 8 of the Insider Information Regulations (approved by Order #212 of JSC “Quadra-Power Generation” as of 30.12.2011), the persons included in the

Observed #of Provision of the Corporate Conduct Code or not Note item observed List of the Company’s insiders, and other persons, possessing the Company’s insider information, submit a notice (according to Appendix 2 to the Regulations) to the federal executive body for financial markets and to the Company, on transactions with securities accomplished by them and (or) on conclusion by them of contracts being derivative financial instruments, the price of which depends on the Company’s securities. The notification is submitted within 10 (ten) business days after accomplishment of a respective transaction with securities and (or) goods of the Company by them, unless other period of time stipulated by the Russian Federation’s legislation.

20. Provision by the internal documents of joint- Not - stock company of the requirement to carrying observed out meetings of the board of directors at least every six weeks 21. Meetings of the board of directors of the joint- Observed In 2012, 6 meetings (compresence) and 13 absent votings of the Board of Directors took stock company during the year which is object place. of the annual report of the joint-stock company, are carried out with periodicity of at least every six weeks

22. Provision by the internal documents of the joint- Observed Procedure of the meetings conduct of the Board of Directors is determined by the stock company of the order of carrying out Regulation on the Company’s Board of Directors (approved by a decision of the General meetings of the board of directors Shareholders Meeting – Minutes #1/13 as of 27.04.2010). 23. Provision by internal documents of the joint- Observed Subitem 22) of item 14.1 of art. 14 of the Company’s Charter stipulates the transactions stock company of regulations about necessity of preliminary approval by the Board of Directors (including several interrelated transactions), approval by the joint-stock company’s board of the subject of which is property, works and/or services, the cost (pecuniary valuation) of directors of transactions for the sum of 10 and which amounts to over 2 (Two) percent of the balance sheet value of the Company’s more percent of the Company asset value, assets, determined on the data of its accounting reports as of the last reporting date, except except for the transactions made during every for transactions, completed in the course of the Company’s ordinary business. day economic activities 24. Provision by internal documents of the joint- Observed The stated rights of the Board of Directors’ members are secured by items 3.1-3.2 of stock company of the right of members of the partially section 3 of the Regulation on the Company’s Board of Directors and by item 8.1 of Board of Directors to receive the information section 8 of the Insider Information Policy of the Company. from executive bodies and heads of the main structural divisions of the joint-stock company , which is necessary for implementation of their functions, as well as responsibility for failure to provide such information

Observed #of Provision of the Corporate Conduct Code or not Note item observed 25. The committee of the board of directors for Observed Committee on strategy, development, investments, reforming and corporate governance strategic planning or giving functions of the partially was established by a decision of the Company’s Board of Directors as of 14.08.2005 specified committee to another committee (Minutes #6/06 as of 15.08.2005). It has not been formed as of today. (except for audit committee and human resources and remunerations committee)

26. The committee of the board of directors (audit Observed According to a decision of the Company’s Board of Directors (Minutes #01/34 as committee) which recommends the auditor to of 01.02.2007) the Audit Committee was established. board of directors of the joint-stock company The stated functions of the Audit Committee are determined in the Regulation on the Audit and cooperates with it and with the internal Committee of the Company’s Board of Directors (approved by decision #02/106 of the audit commission of the joint-stock company Board of Directors as of 23.06.2010). Membership of the Audit Committee, effective as of the reporting year’s end was elected by the Company’s Board of Directors (Minutes #01/142 as of 05.06.2012): Christophe François Charlier (Chairperson of the Committee) Vyacheslav Victorovich Pivovarov Ekaterina Mikhailovna Salnikova

27. Presence of only independent and non- Observed One member of the Audit Committee is a member of the Human Resources and executive directors in the audit committee partially Remunerations Committee of the other Company. 28. The audit committee management by Observed Chairperson of the Audit Committee Christophe François Charlier is an independent independent director member of the Board of Directors. 29. Provision by in internal documents of the joint- Observed Subitem 2) of item 4.1 of section 4 of the Regulation on the Audit Committee stipulates this stock company of access right of all members of requirement. the audit committee to any documents and information of the joint-stock company under the condition of nondisclosure of the confidential information by them 30. Creation of a committee of the board of Observed According to the decision of the Company’s Board of Directors (Minutes #10/10 as directors (the human resources and of 01.11.2005) the Human Resources and Remunerations Committee was established. remunerations committee), the function of which The stated functions of the Human Resources and Remunerations Committee are is definition of criteria of candidates choosing for determined in the Regulation on the Human Resources and Remunerations Committee of members to board of directors and development the Company’s Board of Directors (approved by decision #02/106 of the Board of Directors of the joint-stock company policy in the field of as of 23.06.2010). remuneration Membership of the Human Resources and Remunerations Committee effective as of the reporting year’s end was elected by the Company’s Board of Directors on 05.06.2012 (Minutes #01/142 as of 05.06.2012): Yulia Vasilievna Basova (Chairperson of the Committee) Ekaterina Mikhailovna Salnikova 100

Observed #of Provision of the Corporate Conduct Code or not Note item observed Mikhail Alexandrovich Sosnovsky 31. The human resources and remunerations Observed Chairperson of the Human Resources and Remunerations Committee Yulia Vasilievna committee management by independent Basova is an independent member of the Board of Directors. director 32. Absence of officials of the joint-stock company Observed - in the structure of human resources and remunerations committee

33. Creation of risks committee of the board of Not - directors or giving functions of the specified observed committee to another committee (except for the audit committee and the human resources and remunerations committee)

34. Creation of corporate conflicts settlement Not - committee of the board of directors or giving observed functions of the specified committee to another committee (except for the audit committee and the human resources and remunerations committee) 35. Absence of the joint-stock company officials in Not - the structure of corporate conflicts settlement observed committee 36. Management by corporate conflicts settlement Not - committee performed by an independent observed director 37. Internal documents of the joint-stock company Observed Subitem 40) of item 14.1 of art. 14 of the Company’s Charter stipulates the provisions providing the order of formation and work of the approval on the Board of Directors’ committees. board of directors committees approved by Regulation on the Human Resources and Remunerations Committee (approved by board of directors decision of the Board of Directors – Minutes #02/106 as of 23.06.2010). Regulation on the Audit Committee was approved by the decision of the Board of Directors – Minutes #02/106 as of 23.06.2010. 38. Provision by the charter of the joint-stock Not - company of the order of definition of quorum of observed the board of directors, allowing to provide obligatory participation of independent directors in meetings of board of directors 39. The joint executive body (management board) Observed Item 9.1. art. 9 of the Company’s Charter. 101

Observed #of Provision of the Corporate Conduct Code or not Note item observed of the joint-stock company 40. Provision by the charter or internal documents Observed According to subitem 2) of item 20.2 of art. 20 of the Charter, the Management Board’s of the joint-stock company of the regulations competence includes the decisions taking on the transactions completion by the Company about necessity of approval of transactions with (including several interrelated transactions), the subject of which is property, goods, the real estate, obtaining of credits by the joint- property rights, works, services, the value of which according to the Company’s book stock company, if the specified transactions are keeping data at the last reporting date or the price of the transaction (pecuniary value) not referred to large transactions and their amounts to 1 (One) and more percent of the Company’s book value of assets, determined fulfillment is not referred to usual economic on the data of its accounting reports as of the last reporting date, except for transactions activities of the joint-stock company the approval of which is related to the Board of Directors’ competence or that of the General Shareholders Meeting of the Company, according to the Federal Law "On Joint Stock Companies" or this Charter; those tied with the Company’s ordinary shares placement by way of a subscription (sale); those tied with the equity securities placement, convertible into the Company’s ordinary shares; on purchase and sale or other alienation of electricity and capacity, heat; on acquisition of electricity and capacity as a security for electricity and capacity deliveries by the Company on the wholesale market for electricity and capacity; transactions the completion of which is obligatory for the Company according to the legal acts of the Russian Federation and/or settlements on which are made at fixed prices and tariffs, established by the bodies authorized in the area of the state regulation of prices and tariffs; those tied with taking on lease the land plots, where the items of the Company’s immovable property are situated, in the procedure of the rights re-registration for land plots, according to the current legislation; Besides, according to item 3, 4, 5, 6, 7 item 20.2 art. 20 of the Charter, preliminary approval of the transactions is related to the Management Board’s competence - the transactions are tied with letting or taking on lease (sub-lease) of immovable property (among them facilities of construction-in-process) in other time-fixed or permanent use, mortgage of immovable property, the value of which according to the Company’s book keeping data at the last reporting date or market or cadastral value (as relevant) exceeds RUR 500 ths, except for transactions, tied with taking on lease of the land plots, where the items of the Company’s immovable property are situated, in the procedure of the rights re-registration for land plots, according to the current legislation; preliminary approval of transactions, tied with acquisition or alienation of immovable property, among them the facilities of construction-in- process and land plots, the value of which according to the Company’s book keeping data at the last reporting date or the price of transaction (price of purchase or alienation) of such property amounts to from RUR 500 ths to RUR 50 mn, inclusive; preliminary approval of transactions, tied with the property acquisition or a possibility to acquire, alienation or a possibility to alienate of the property (fixed assets, intangible assets, construction-in- process), the goal of use of which is production, transmission, distribution and/or sale of electricity and/or heat, provision of services related with operations-and-engineering

102

Observed #of Provision of the Corporate Conduct Code or not Note item observed (dispatching) control in the electric power industry, the value of which according to the book keeping data at the last reporting date or the price of the transaction (price of purchase or price of alienation) with such property is from RUR 500 ths. to RUR 30 mn inclusive; preliminary approval of transactions related with letting (subletting), other time-fixed or permanent use, trust, inclusion of the Company’s property (fixed assets, intangible assets, construction-in-process) into joint activity under the simple partnership agreement, the goal of use of which is generation, transmission, distribution, and/or sale of electricity and/or heat, provision of services on operations-and-engineering (dispatching) control in the electric power industry, the value of which according to the Company’s book keeping data at the last reporting date or market value of which is from RUR 500 ths. to RUR 30 mn inclusive; preliminary approval of transactions related with taking on lease (sublease), other time-fixed or permanent use, in trust administration of property (fixed assets, intangible assets, construction-in-process), the goal of use of which is generation, transmission, distribution, and/or sale of electricity and/or heat, provision of services on operations-and- engineering (dispatching) control in the electric power industry, the value of which according to the Company’s book keeping data at the last reporting date or market value or the price of transaction with such property is from RUR 500 ths. to RUR 30 mn, inclusive. Subitems 22, 23, 24, 26 of item 14.1 Article 14 of the Charter stipulate approval of such transactions by the Board of Directors as well. 41. Coordination procedure of operations in internal Not observed - documents of the joint-stock company which are beyond the financial and economic plan of the joint-stock company 42. Absence in structure of executive bodies of Observed - persons, being participant, general director (managing director), member of managing body or employee of the legal entity competing with the joint-stock company

43. Absence of persons in the structure of executive Observed - bodies of the joint-stock company who were found guilty in fulfillment of crimes in the sphere of economic activities or crimes against the government, interests of public service and service in institutions of local government, or who experienced administrative punishments for violations in the field of enterprise activity or in the field of the finance, taxes and tax levies,

103

Observed #of Provision of the Corporate Conduct Code or not Note item observed the securities market. If functions of the sole executive body are carried out by managing organization or managing director, conformity of general director and members of board of the managing organization or managing director to the requirements made to general director and members of management board of the joint- stock company

44. Provision by the charter or internal documents Not observed of the joint-stock company of the prohibition for the managing organization (managing director) to carry out similar functions in the competing company, as well as to be in any other property relations with the joint-stock company, besides rendering services of the managing organization (managing director) 45. Provision by internal documents of the joint- Observed The stated duties are determined by item 19.10 art. 19 of the Charter and by subitem 4.2.7 stock company of executive bodies of the duties of item 4.2 of section 4 of the Company’s Corporate Governance Code. to abstain from actions which will lead or are potentially capable to lead to occurrence of the conflict between their interests and interests of the joint-stock company, and duties to inform board of directors on this in case of such conflict occurrence

46. Provision in the charter or internal documents of Not observed - the joint-stock company of criteria for election of the managing organization (managing director)

47. The joint-stock company executive bodies' Observed According to subitem 20 of item 14.1 of art. 14 of the Company’s Charter, consideration of presentation of monthly reports on their work to partially the report on results of implementation of the Company’s Business Plan, approval of the board of directors form of such report are related to the Board of Directors’ competence. The Company’s internal documents stipulate consideration of the reports by the Board of Directors, on certain lines of the Company’s activities. No periodicity is stipulated. 48. Determination of the responsibility for Observed - infringements of provisions about the use of 104

Observed #of Provision of the Corporate Conduct Code or not Note item observed confidential and service information stated in the agreements concluded by the joint-stock company with general director (managing organization, managing director) and members of the managing board

49. Presence of special official (secretary of the Observed Corporate Secretary election is stipulated by art. 18 of the Charter. company) in the joint-stock company whose Maya Vladimirovna Yashukhina was elected the Company’s Corporate Secretary by a task is maintenance of observance by bodies decision of the Board of Directors (Minutes #01/142 as of 05.06.2012). and officials of the joint-stock company of the procedural requirements guaranteeing implementation of the rights and legitimate interests of the company shareholders

50. The order of appointment (election) of the Observed The stated order is determined by art. 18 of the Company’s Charter and by item 4.2 of secretary of the company and duties of the section 4 of the Regulation on the Company’s Board of Directors. secretary of the company stipulated by the Duties of the Corporate Secretary are determined in section 2 of the Regulation on the charter or internal documents of the joint-stock Company’s Corporate Secretary, approved by the decision of the Board of Directors company (Minutes #11/29 as of 01.11.2006 as amended as of 17.08.2007, minutes #06/49 as of 20.08.2007). 51. Requirements to a candidate of the company Not observed - secretary stipulated in the charter of the joint- stock company

52. Requirement to approval of the large Observed Approval of large transactions in cases, stipulated by chapter X of Federal Law “On Joint transaction before its fulfillment in the charter or Stock Companies” is stipulated by subitem 31) of item 14.1 of art. 14 of the Company’s internal documents of the joint-stock company Charter.

53. Obligatory involving of the independent Observed - appraiser for estimation of the market value of the property which is a subject matter of the large transaction 54. Presence in the joint-stock company’s charter of Not observed - the interdiction for taking any measures in the event of purchase of large share holdings of the joint-stock company (absorption), which are aimed to protect the interests of executive bodies (members of these bodies) and 105

Observed #of Provision of the Corporate Conduct Code or not Note item observed members of the board of directors of the joint- stock company, as well as measures worsening shareholders' position in comparison with the existing position (in particular, the interdiction for taking the decision by the board of directors before termination of prospective term of purchase, which concerns issue of additional shares, issue of the securities convertible into shares, or the securities giving the right to purchase shares of the Company even if the right of such decision-making is given to it by the charter) 55. Requirement in the charter of the joint-stock Not observed - company to obligatory involvement of an independent appraiser for estimation of the current market value of shares and possible changes of their market value as a result of absorption

56. Absence in the joint-stock company’s charter of Observed - the purchaser’s release from the duty of proposing to shareholders to sell ordinary shares of the Company belonging to them (the equity securities convertible into ordinary shares) at absorption

57. Presence in the charter or internal documents of Observed According to subitem 9 of item 14.1 art.14 of the Charter, the price definition (pecuniary the joint-stock company of the requirement to valuation) of the property, price of placement and buyback of equity securities takes place obligatory involvement of an independent in cases, stipulated by the Federal Law “On Joint Stock Companies"; thereby under the appraiser for definition of shares converting Company reorganization an obligation is created for it to buy back shares from the ratio at reorganization shareholders (art. 75 FL “On Joint Stock Companies”). In such a case buyback of shares by the Company is made at a price, determined by the Company’s Board of Directors (Supervisory Board), but no lower than the market value, which must be determined by an independent appraiser.

58. Presence of the internal document approved by Observed The stated internal documents of the Company: the Corporate Governance Code the board of directors which defines rules and (approved by a decision of the Board of Directors – Minutes #11/29 as of 01.11.2006), the

106

Observed #of Provision of the Corporate Conduct Code or not Note item observed approaches of the joint-stock company to Regulation on the Company’s Information Policy (approved by a decision of the Board of information disclosure (Information Policy Directors – Minutes #11/29 as of 01.11.2006), Policy in the area of the Company’s insider Regulation) information (approved by a decision of the Board of Directors – Minutes #10/135 as of 26.12.2011).

59. Presence in internal documents of the joint- Not observed - stock company of the requirement to information disclosure on the purposes of shares placement, on persons who are going to purchase the placed shares, including a large share holding, and on the fact whether the top officials of the joint-stock company will participate in purchase of placed shares of the company

60. Presence of the list of the information, Observed According to the Company’s Charter a list of information being compulsory for the documents and data in internal documents of presentation to the shareholders, under conduct of the General Shareholders Meetings, is the joint-stock company which should be given established by the Company’s Board of Directors. When defining this list, the Board of to shareholders for solution of the issues Directors is guided by the Federal Law “On Joint Stock Companies” and by the Regulation submitted to the general shareholders meeting on additional requirements to the order of preparation, convocation and conduct of a General Shareholders Meeting, approved by Decree #12-6/pz-n as of 02.02.2012 of FCSM (Federal Commission for the Securities Market). 61. Presence of the joint-stock company website on Observed Company discloses regularly the information on its official website on the Internet: the Internet and regular disclosure of www.quadra.ru and on the webpage provided by one of distributors of information on the information on the joint-stock company on this securities market in the information and telecommunication network Internet at: website http://www.e-disclosure.ru/portal/company.aspx?id=6196.

62. Presence in internal documents of the joint- Observed The stated requirement is stipulated by the Regulation on the Company’s Information stock company of the requirement to disclose Policy. the information on transactions of the joint-stock company concluded with the persons referred according to the charter to the top officials of the joint-stock company, as well as on transactions of the joint-stock company concluded with the organizations, in which the top officials of the joint-stock company directly or indirectly own 20 and more percent of the charter capital of the

107

Observed #of Provision of the Corporate Conduct Code or not Note item observed joint-stock company or which may be essentially influenced by such persons.

63. Presence in internal documents of the joint- Observed The stated requirement is stipulated by the Regulation on the Company’s Information stock company of the requirement to disclose Policy. the information on all transactions which may influence the market value of the joint-stock company shares

64. Presence of the internal document approved by Observed The Insider Information Policy (approved by a decision of the Board of Directors – Minutes board of directors on use of the essential #10/135 as of 26.12.2011). information on activity of the joint-stock company, shares and other securities of the company and transactions with them, which is not available to all and disclosure of which may essentially influence the market value of shares and other securities of the joint-stock company.

65. Presence of the procedures of the internal Observed The stated procedures are contained in the Regulation on the Control and Inspection control over financial and economic activity of Administration of JSC “Quadra – Power Generation” (approved by the decision of the the joint-stock company approved by the board Company’s Board of Directors – minutes #13/154 dated 24.12.2012). of directors 66. Presence of a special division of the joint-stock Observed The Control and Inspection Administration is responsible for internal control company providing observance of procedures of implementation. the internal control (the control-and-inspection service)

67. Requirement to definition of structure and Not observed - membership of control-and-inspection service of the joint-stock company by the board of directors stipulated in internal documents of the joint-stock company

68. Absence in the structure of control-and- Observed - inspection service of persons who were found guilty in commitment of crimes in the sphere of 108

Observed #of Provision of the Corporate Conduct Code or not Note item observed economic activity or crimes against the government, interests of public service and service in institutions of local government, or who experienced administrative punishments for infringements in the field of enterprise activity or in the field of the finance, taxes and tax levies, the securities market

69. Absence in structure of the control-and- Observed - inspection service of the persons who are part of executive bodies of the joint-stock company, and the persons who are participants, general director (managing director), members of managing bodies or employees of the legal entity competing to the joint-stock company 70. Presence in internal documents of the joint- Not observed stock company of the term of submission of documents and data to control-and-inspection service for estimation of the financial and economic operation held, and responsibility of officials and employees of the joint-stock company for their failure to submit them within the specified term

71. Presence in the internal documents of the joint- Observed The stated duty is stipulated by the Regulation on the Control and Inspection Administration stock company of the duty of the control-and- of JSC “Quadra – Power Generation”. inspection service to inform the audit committee on the discovered infringements, and in case of its absence, presence of the duty to inform the board of directors of the joint-stock company on this

72. Presence in the joint-stock company’s charter of Not observed - the requirement to preliminary estimation by the control-and-inspection service of expediency of fulfillment of the operations which are not stipulated by the financial and economic plan of

109

Observed #of Provision of the Corporate Conduct Code or not Note item observed the joint-stock company (non-standard operations)

73. Presence in the joint-stock company’s internal Not observed - documents of the order of coordination of a non- standard operation with the board of directors

74. Presence of the internal document approved by Not Procedure of carrying put inspections by the auditor is determined by the Regulation on the the board of directors defining the order of applicable Company’s Internal Audit Commission (approved by a decision of the General carrying out inspection of financial and Shareholders Meeting – Minutes #1/13 as of 27.04.2010). economic activity of the joint-stock company by the internal audit commission

75. Implementation of the auditor opinion Observed Stipulated by item 3.4. of section 3 of the Regulation on the Company’s Audit Committee. assessment by the audit committee before its presentation to shareholders at the general shareholders meeting

76. Presence of the internal document approved by Not observed - the board of directors, which the board of directors is guided by at taking recommendations about the amount of dividends (Dividend Policy Regulation)

77. Presence in the Dividend Policy Regulation of - - the order of definition of the minimum net profit share of the joint-stock company assigned for dividends payment, and conditions of non- payment or incomplete payment of dividends per the preference shares, the amount of dividends per which is defined in the charter of the joint-stock company

78. Publication of the data about the dividend policy - - of the joint-stock company and changes made to it in the periodical edition stipulated by the 110

Observed #of Provision of the Corporate Conduct Code or not Note item observed charter of the joint-stock company for publication of statements on holding the general meetings of shareholders, as well as placement of the specified data on the website of the joint- stock company on the Internet

111

Schedule #3 List of transactions recognized interested-party transactions according to the Federal Law “On Joint Stock Companies”, approved by the Company’s Board of Directors and accomplished in 2012. Minutes Amount # Transaction parties Transaction (agreement) type number and Interested parties (ths. RUR) date 1 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 400,000.0 BD, ONEXIM HOLDINGS Generation” Generation” - lender) #11/136, LIMITED LLC “Voronezh HGC” 06.02.2012 2 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 400,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “Ryazan HGC” 3 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 400,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “Smolensk HGC” 4 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 400,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “Tambov HGC” 5 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 400,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “OHGC” 6 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 400,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED JSC “Belgorod Heat Grid Company” 7 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 300,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED JSC “Smolensk Heat Grid Company” 8 JSC “Quadra - Power Immovable Property Lease Agreement (JSC 38,859.6 ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - lessor) (without VAT) LIMITED LLC “Voronezh HGC” for 11 months 9 JSC “Quadra - Power Movable Property Lease Agreement (JSC “Quadra - 14,939.4 ONEXIM HOLDINGS Generation” Power Generation” - lessor) (without VAT) LIMITED LLC “Voronezh HGC” for 11 months 10 JSC “Quadra - Power Agreement in respect of lease of vehicles without 1,855.8 ONEXIM HOLDINGS Generation” crew and maintenance (JSC “Quadra - Power (without VAT) LIMITED LLC “Voronezh HGC” Generation” - lessor) for 11 months 11 JSC “Quadra - Power Side Letter to Lease Agreement #310-381/311- 1,918.6 ONEXIM HOLDINGS Generation” 4138 dated 29.11.2010 (JSC “Quadra - Power (including VAT) LIMITED JSC “Belgorod Heat Grid Generation” - lessor) monthly Company” 12 JSC “Quadra - Power Side Letter to Lease Agreement #31-5609/311- 2,368.6 ONEXIM HOLDINGS Generation” 3369 dated 30.04.2010 (JSC “Quadra - Power (including VAT) LIMITED JSC “Belgorod Heat Grid Generation” - lessor) monthly Company” 13 JSC “Quadra - Power Agreement on Termination of Immovable Property not applicable ONEXIM HOLDINGS Generation” Short-Term Lease Contract dated 15.12.2010 (JSC LIMITED LLC “Kursk Energiya” “Quadra - Power Generation” - lessor) 14 JSC “Quadra - Power Agreement on Termination of Immovable Property not applicable ONEXIM HOLDINGS Generation” Sale and Purchase Agreement dated 15.12.2010 LIMITED LLC “Kursk Energiya” (JSC “Quadra - Power Generation” - seller) 15 JSC “Quadra - Power Side Letter #3 to Contract #01-113/2011 dated 6,159.5 BD member – E.M. Salnikova Generation” 25.01.2011 in respect of provision of services of LLC “IC Soglasie” obligatory insurance of civil liability of vehicles owners (JSC “Quadra - Power Generation” – insured party) 16 JSC “Quadra - Power Side Letter #2 to Vehicles Insurance Agreement 408.3 E.M. Salnikova Generation” #1710000-1000390/11 TSU dated 18.01.2011 (JSC LLC “IC Soglasie” “Quadra - Power Generation” - insured party) 17 JSC “Quadra - Power General Agreement #0002104-0163820/11 OPO 46,170.5 E.M. Salnikova Generation” dated 30.12.2011 in respect of provision of services (for a year) LLC “IC Soglasie” of insuring civil liability of hazardous facility owner (JSC “Quadra - Power Generation” - insured party) 18 JSC “Quadra - Power Side Letter #7 to Property Insurance Agreement 63,984.6 E.M. Salnikova Generation” #08111-10214/08 (JSC “Quadra - Power (for a year) LLC “IC Soglasie” Generation” - insured party) 19 JSC “Quadra - Power Side Letter #2 dated 13.01.2012 to Agreement of 15,300.0 E.M. Salnikova Generation” Insurance of Responsibility of Directors and Other (for 3 years) LLC “IC Soglasie” Managers of Executive Bodies #08121- 08122/08 DR dated 15.07.2008 (JSC “Quadra - Power Generation” - insured party) 20 JSC “Quadra - Power Agreement of Insurance of Responsibility of 3,138.0 GMS, General Director, Generation” Directors, Officials and the Company (JSC “Quadra (for 1 year) #1/15, All BD and Management LLC “IC Soglasie” - Power Generation” - insured party) 24.05.2012 Board members of JSC “Quadra - Power Generation” 21 JSC “Quadra - Power Immovable Property Lease Agreement (JSC 5,280.0 BD, ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - lessee) (including VAT) #14/139, LIMITED CJSC “Kraus-M” for 11 months 04.04.2012 22 JSC “Quadra - Power Movable Property Sale and Purchase Agreement 3,268.3 ONEXIM HOLDINGS Generation” (JSC “Quadra - Power Generation” - seller) (without VAT) LIMITED LLC “Tambov HGC” 23 JSC “Quadra - Power Commodities and Materials Sale and Purchase 10,946.5 ONEXIM HOLDINGS Generation” Agreement (JSC “Quadra - Power Generation” - (without VAT) LIMITED LLC “Smolensk HGC” seller) 24 JSC “Quadra - Power Voluntary Medical Insurance Agreement (JSC 12,000.0 E.M. Salnikova Generation” “Quadra - Power Generation” - insured party) (for a year) LLC “IC Soglasie” 25 JSC “Quadra - Power Side Letter #1 to General Agreement #0002104- 46,170.5 BD, E.M. Salnikova Generation” 0163820/11 OPO dated 30.12.2011 in respect of #16/141, LLC “IC Soglasie” provision of services of insuring civil liability of 17.05.2012 hazardous facility owner (JSC “Quadra - Power Generation” - insured party) 113

26 JSC “Quadra - Power Commodities and Materials Sale and Purchase 8,355.9 ONEXIM HOLDINGS Generation” Agreement (JSC “Quadra - Power Generation” - (without VAT) LIMITED LLC “Ryazan HGC” seller) 27 JSC “Quadra - Power Immovable Property Sublease Agreement (JSC 53.9 ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - sublessor) (without VAT) LIMITED LLC “Smolensk HGC” for 11 months 28 JSC “Quadra - Power Auto Transportation Services Agreement (JSC 18 600,1 ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - contractor) (without VAT) LIMITED LLC “Tambov HGC” a year 29 JSC “Quadra - Power Side Letter #8 to Property Insurance Agreement 63,977.7 BD, E.M. Salnikova Generation” #08111-10214/08 KVS dated 15.07.2008 (JSC #01/142, LLC “IC Soglasie” “Quadra - Power Generation” - insured party) 05.06.2012 30 JSC “Quadra - Power Side Letter #9to Property Insurance Agreement 64,077.1 E.M. Salnikova Generation” #08111-10214/08 KVS dated 15.07.2008 (JSC LLC “IC Soglasie” “Quadra - Power Generation” - insured party) 31 JSC “Quadra - Power Suretyship Agreement in respect of Obligations of 400,000.0 ONEXIM HOLDINGS Generation” JSC “Belgorod Heat Grid Company” (JSC “Quadra - LIMITED “Gazprombank” (JSC) Power Generation” - provider of surety) 32 JSC “Quadra - Power Side Letter #2 to General Agreement #0002104- 36,813.6 BD, E.M. Salnikova Generation” 0163820/11 OPO in respect of insurance of civil (for a year) #02/143, LLC “IC Soglasie” liability of hazardous facility owner for causing harm 13.06.2012 as a result of accident at hazardous facility dated 30.12.2011 (JSC “Quadra - Power Generation” - insured party) 33 JSC “Quadra - Power Materials and Equipment Sale and Purchase 14,241.8 BD, ONEXIM HOLDINGS Generation” Agreement (JSC “Quadra - Power Generation” - (without VAT) #04/145, LIMITED LLC “Voronezh HGC” seller) 26.07.2012 34 JSC “Quadra - Power Property Lease Agreement (JSC “Quadra - Power BD, ONEXIM HOLDINGS Generation” Generation” - lessor) #04/145, LIMITED JSC “Smolensk Heat Grid 26.07.2012 Company” 10,219.9 (without VAT) 35 JSC “Quadra - Power Side Letter to Property Lease Agreement #01- for 11 months BD, ONEXIM HOLDINGS Generation” 313/2012 dated 28.06.2012 (#3/32-12 dated #09/150, LIMITED LLC “Bryansk HGC” 27.06.2012); JSC “Quadra - Power Generation” – 05.11.2012 lessor 36 JSC “Quadra - Power Immovable Property Lease Agreement (JSC BD, ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - lessor) #04/145, LIMITED JSC “Smolensk Heat Grid 26.07.2012 Company” 24,708.0 (without VAT) 37 JSC “Quadra - Power Side Letter to Immovable Property Lease for 11 months BD, ONEXIM HOLDINGS Generation” Agreement #01-314/2012 dated 28.06.2012 (#4/32- #09/150, LIMITED LLC “Bryansk HGC” 12 dated 27.06.2012), JSC “Quadra - Power 05.11.2012 Generation” - lessor 38 JSC “Quadra - Power Property Sale and Purchase Agreement (JSC BD, ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - seller) 65,984 #04/145, LIMITED JSC “Smolensk Heat Grid (without VAT) 26.07.2012 Company” 114

39 JSC “Quadra - Power Side Letter to Property Sale and Purchase BD, ONEXIM HOLDINGS Generation” Agreement #01-387/2012 dated 27.07.2012 #09/150, LIMITED LLC “Bryansk HGC” (#527/61 dated 10.07.2012); JSC “Quadra - Power 05.11.2012 Generation” - seller 40 JSC “Quadra - Power Side Letter #2 to Property Sale and Purchase BD, ONEXIM HOLDINGS Generation” Agreement #01-387/2012 dated 27.07.2012 #11/152, LIMITED LLC “Bryansk HGC” (#527/61 dated 10.07.2012); JSC “Quadra - Power 10.12.2012 Generation” - seller 41 JSC “Quadra - Power Immovable Property Sale and Purchase Agreement BD, ONEXIM HOLDINGS Generation” (JSC “Quadra - Power Generation” - seller) #04/145, LIMITED JSC “Smolensk Heat Grid 26.07.2012 Company” 299,497.3 42 JSC “Quadra - Power Side Letter to Immovable Property Sale and (without VAT) BD, ONEXIM HOLDINGS Generation” Purchase Agreement #01-388/2012 dated #09/150, LIMITED LLC “Bryansk HGC” 27.07.2012 (#528/61 dated 10.07.2012); JSC 05.11.2012 “Quadra - Power Generation” - seller 43 JSC “Quadra - Power Agreement for Provision of Auto Transportation 2,992.9 BD, ONEXIM HOLDINGS Generation” Services for Repairs Performance (JSC “Quadra - (including VAT) #04/145, LIMITED LLC “Tambov HGC” Power Generation” - contractor) a year 26.07.2012 44 JSC “Quadra - Power Side Letter to Immovable Property Lease 44,193.0 ONEXIM HOLDINGS Generation” Agreement #4 dated 25.11.2011 (JSC “Quadra - (without VAT) LIMITED LLC “Tambov HGC” Power Generation” - lessor) for 11 months

45 JSC “Quadra - Power Side Letter to Movable Property Lease Agreement 440.4 ONEXIM HOLDINGS Generation” #5 dated 25.11.2011 (JSC “Quadra - Power (without VAT) LIMITED LLC “Tambov HGC” Generation” - lessor) for 11 months 46 JSC “Quadra - Power Suretyship Agreement in respect of Obligations of 400,000.0 BD, ONEXIM HOLDINGS Generation” JSC “Belgorod Heat Grid Company” (JSC “Quadra - #06/147, LIMITED JSC “Sberbank of Russia” Power Generation” - provider of surety) 10.08.2012 47 JSC “Quadra - Power Suretyship Agreement in respect of Obligations of 400,000.0 ONEXIM HOLDINGS Generation” LLC “Voronezh HGC” (JSC “Quadra - Power LIMITED JSC “Sberbank of Russia” Generation” - provider of surety) 48 JSC “Quadra - Power Suretyship Agreement in respect of Obligations of 400,000.0 ONEXIM HOLDINGS Generation” LLC “OHGC” (JSC “Quadra - Power Generation” - LIMITED JSC “Sberbank of Russia” provider of surety) 49 JSC “Quadra - Power Suretyship Agreement in respect of Obligations of 400,000.0 ONEXIM HOLDINGS Generation” LLC “Ryazan HGC” (JSC “Quadra - Power LIMITED JSC “Sberbank of Russia” Generation” - provider of surety) 50 JSC “Quadra - Power Suretyship Agreement in respect of Obligations of 400,000.0 ONEXIM HOLDINGS Generation” LLC “Voronezh HGC” (JSC “Quadra - Power LIMITED JSC “Sberbank of Russia” Generation” - provider of surety) 51 JSC “Quadra - Power Suretyship Agreement in respect of Obligations of 400,000.0 ONEXIM HOLDINGS Generation” LLC “Tambov HGC” (JSC “Quadra - Power LIMITED JSC “Sberbank of Russia” Generation” - provider of surety)

115

52 JSC “Quadra - Power Side Letter #1 to Agreement #01-1124/2011 for 468,110.2 ONEXIM HOLDINGS Generation” Performance of Comprehensive Repairs and (including VAT) LIMITED JSC “Quadra – R” Maintenance of Main and Auxiliary Equipment dated 30.12.2011 (JSC “Quadra - Power Generation” - customer) 53 JSC “Quadra - Power Agreement of Lease of Vehicles without Crew (JSC 132.0 ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - lessor) (including VAT) LIMITED JSC “Quadra – R” for 12 months 54 JSC “Quadra - Power Immovable Lease Agreement in respect of the 4,101.2 ONEXIM HOLDINGS Generation” Property located in Kursk (JSC “Quadra - Power (including VAT) LIMITED JSC “Quadra – R” Generation” - lessor) for 11 months 55 JSC “Quadra - Power Immovable Lease Agreement in respect of the 128.7 ONEXIM HOLDINGS Generation” Property located in Orel (JSC “Quadra - Power (without VAT) LIMITED JSC “Quadra – R” Generation” - lessor) for 11 months 56 JSC “Quadra - Power Side Letter #10 to Property Insurance Agreement 64,207.3 BD, E.M. Salnikova Generation” #08111-10214/08 KVS dated 15.07.2008 (JSC #07/148, LLC “IC Soglasie” “Quadra - Power Generation” - insured party) 24.09.2012 57 JSC “Quadra - Power Side Letter #3 to Vehicles Insurance Agreement 501.8 E.M. Salnikova Generation” #1710000-1000390/11 TSU dated 18.01.2011 (JSC LLC “IC Soglasie” “Quadra - Power Generation” - insured party) 58 JSC “Quadra - Power Side Letter #3 to General Agreement #0002104- 36,969.3 E.M. Salnikova Generation” 0163820/11 OPO in respect of insurance of civil (for a year) LLC “IC Soglasie” liability of hazardous facility owner for causing harm as a result of accident at hazardous facility dated 30.12.2011 (JSC “Quadra - Power Generation” - insured party) 59 JSC “Quadra - Power Side Letter to Suretyship Agreement #0411-093-P not applicable ONEXIM HOLDINGS Generation” dated 30.12.2011 in respect of Obligations of JSC LIMITED “Gazprombank” (JSC) “Smolensk Heat Grid Company” (JSC “Quadra - Power Generation” - provider of surety) 60 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 50,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “Bryansk HGC” 61 JSC “Quadra - Power Movable Property Lease Agreement (JSC “Quadra - 13,988.8 ONEXIM HOLDINGS Generation” Power Generation” - lessor) (without VAT) LIMITED LLC “Kursk HGC” for 11 months 62 JSC “Quadra - Power Immovable Property Lease Agreement (JSC ONEXIM HOLDINGS Generation” “Quadra - Power Generation” - lessor) 46,956.7 LIMITED LLC “Kursk HGC” (without VAT) for 11 months 63 JSC “Quadra - Power Side Letter to Lease Agreement #46.4.3418 dated BD, ONEXIM HOLDINGS Generation” 26.09.2012 (JSC “Quadra - Power Generation” - #10/151, LIMITED LLC “Kursk HGC” lessor) 30.11.2012 64 JSC “Quadra - Power Side Letter to Target Loan Agreement #01- 11,788.0 BD, ONEXIM HOLDINGS Generation” 127/2012 dated 12.03.2012 (JSC “Quadra - Power #07/148, LIMITED LLC “Bryansk HGC” Generation” - lender) 24.09.2012

116

65 JSC “Quadra - Power Side Letter to Movable Property Lease Agreement 37,521.9 BD, ONEXIM HOLDINGS Generation” #718/61 dated 22.11.2011 (JSC “Quadra - Power (including VAT) #09/150, LIMITED LLC “Smolensk HGC” Generation” - lessor) a year 05.11.2012

66 JSC “Quadra - Power Side Letter to Immovable Property Lease 45,327.8 ONEXIM HOLDINGS Generation” Agreement #716/61 dated 22.11.2011 (JSC (including VAT) LIMITED LLC “Smolensk HGC” “Quadra - Power Generation” - lessor) a year

67 JSC “Quadra - Power Side Letter to Agreement for Lease of Auto Vehicles from 01.01 to ONEXIM HOLDINGS Generation” without Crew and Maintenance #717/61 dated 01.07 LIMITED LLC “Smolensk HGC” 22.11.2011 (JSC “Quadra - Power Generation” - - 432.6 lessor) from 01.07 to 31.012 - 720.1 (including VAT) 68 JSC “Quadra - Power Agreement in respect of lease of vehicles without 301.8 ONEXIM HOLDINGS Generation” crew and maintenance (JSC “Quadra - Power (without VAT) LIMITED LLC “Bryansk HGC” Generation” - lessor) for 11 months 69 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 400,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “Kursk HGC” 70 JSC “Quadra - Power Side Letter #2 to Agreement #01-1124/2011 dated 507,275.0 BD, ONEXIM HOLDINGS Generation” 30.12.2011 for Performance of Comprehensive (including VAT) #10/151, LIMITED JSC “Quadra – R” Repairs and Maintenance of Main and Auxiliary 30.11.2012 Equipment, Buildings and Structures (JSC “Quadra - Power Generation” - customer) 71 JSC “Quadra - Power Side Letter #4 to General Agreement #0002104- 36,906.6 E.M. Salnikova Generation” 0163820/11 OPO in respect of insurance of civil (for a year) LLC “IC Soglasie” liability of hazardous facility owner for causing harm as a result of accident at hazardous facility dated 30.12.2011 (JSC “Quadra - Power Generation” - insured party) 72 JSC “Quadra - Power Side Letter to Suretyship Agreement #0411-092-P 400,000.0 ONEXIM HOLDINGS Generation” dated 30.12.2011 in respect of obligations of LLC LIMITED “Gazprombank” (JSC) “Voronezh HGC” (JSC “Quadra - Power Generation” - provider of surety) 73 JSC “Quadra - Power Side Letter to Suretyship Agreement #0411-094-P 300,000.0 ONEXIM HOLDINGS Generation” dated 30.12.2011 in respect of obligations of LLC LIMITED “Gazprombank” (JSC) “Kursk HGC” (JSC “Quadra - Power Generation” - provider of surety) 74 JSC “Quadra - Power Side Letter to Suretyship Agreement #0411-088-P 400,000.0 ONEXIM HOLDINGS Generation” dated 30.12.2011 in respect of obligations of LLC LIMITED “Gazprombank” (JSC) “OHGC” (JSC “Quadra - Power Generation” - provider of surety) 75 JSC “Quadra - Power Side Letter to Suretyship Agreement #0411-090-P 400,000.0 ONEXIM HOLDINGS Generation” dated 30.12.2011 in respect of obligations of LLC LIMITED “Gazprombank” (JSC) “Ryazan HGC” (JSC “Quadra - Power Generation” - provider of surety) 117

76 JSC “Quadra - Power Side Letter to Suretyship Agreement #0411-091-P 400,000.0 ONEXIM HOLDINGS Generation” dated 30.12.2011 in respect of obligations of LLC LIMITED “Gazprombank” (JSC) “Smolensk HGC” (JSC “Quadra - Power Generation” - provider of surety) 77 JSC “Quadra - Power Side Letter to Suretyship Agreement #0411-089-P 400,000.0 ONEXIM HOLDINGS Generation” dated 30.12.2011 in respect of obligations of LLC LIMITED “Gazprombank” (JSC) “Tambov HGC” (JSC “Quadra - Power Generation” - provider of surety) 78 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 5,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “Tula HGC” 79 JSC “Quadra - Power Target Loan Agreement (JSC “Quadra - Power 5,000.0 ONEXIM HOLDINGS Generation” Generation” - lender) LIMITED LLC “Novomoskovsk HGC” 80 JSC “Quadra - Power Agreement for Performance of Reconstruction of 129.8 ONEXIM HOLDINGS Generation” Forced-Draught Fan at the Dyagilevskaya TPP (including VAT) LIMITED JSC “Quadra – R” st.#5А (JSC “Quadra - Power Generation” - customer) 81 JSC “Quadra - Power Side Letter to Movable Property Lease Agreement 2,157.7 ONEXIM HOLDINGS Generation” #5 dated 25.11.2011 (JSC “Quadra - Power (including VAT) LIMITED LLC “Tambov HGC” Generation” - lessor) for 5 months

82 JSC “Quadra - Power Side Letter to Immovable Property Lease 25,095.5 ONEXIM HOLDINGS Generation” Agreement #4 dated 25.11.2011 (JSC “Quadra - (including VAT) LIMITED LLC “Tambov HGC” Power Generation” - lessor) for 11 months

83 JSC “Quadra - Power Agreement on Termination of Immovable Property not applicable ONEXIM HOLDINGS Generation” Lease Contract #01-11/AN dated 01.08.2011 (JSC LIMITED LLC “Bryansk HGC” “Quadra - Power Generation” - lessor) 84 JSC “Quadra - Power Immovable Property Sale and Purchase Agreement 198,706.5 BD, ONEXIM HOLDINGS Generation” (JSC “Quadra - Power Generation” - seller) (without VAT) #11/152, LIMITED LLC “Ryazan HGC” 10.12.2012

85 JSC “Quadra - Power Side Letter #5 to General Agreement #0002104- 36,906.6 BD, E.M. Salnikova Generation” 0163820/11 OPO in respect of insurance of civil (for the year #13/154, LLC “IC Soglasie” liability of hazardous facility owner for causing harm 2012) 26.12.2012 as a result of accident at hazardous facility dated 35,439.7 30.12.2011 (JSC “Quadra - Power Generation” - (for the year insured party) 2013)

86 JSC “Quadra - Power Commodities and Materials Sale and Purchase 17,119.1 ONEXIM HOLDINGS Generation” Agreement (JSC “Quadra - Power Generation” - (including VAT) LIMITED LLC “Bryansk HGC” seller) 87 JSC “Quadra - Power Commodities and Materials Sale and Purchase 17,960.7 ONEXIM HOLDINGS Generation” Agreement (JSC “Quadra - Power Generation” - (including VAT) LIMITED LLC “Kursk HGC” seller)

118

88 JSC “Quadra - Power Property Lease Agreement (JSC “Quadra - Power 79,406.5 ONEXIM HOLDINGS Generation” Generation” - lessor) (including VAT) LIMITED LLC “Tambov HGC” for 11 months

89 JSC “Quadra - Power Property Lease Agreement (JSC “Quadra - Power 6,370.805 ONEXIM HOLDINGS Generation” Generation” - lessor) (including VAT) LIMITED JSC “Quadra – R” for 11 months 90 JSC “Quadra - Power Side Letter to Immovable Property Lease 61,319.9 ONEXIM HOLDINGS Generation” Agreement #261/11 dated 08.11.2011 (JSC (including VAT) LIMITED LLC “Ryazan HGC” “Quadra - Power Generation” - lessor) 91 JSC “Quadra - Power Agreement in respect of provision of services of 8,076.7 E.M. Salnikova Generation” obligatory insurance of civil liability of vehicles LLC “IC Soglasie” owners (OSAGO); JSC “Quadra - Power Generation” - insured party 92 JSC “Quadra - Power Property Insurance Agreement (JSC “Quadra - 86,758.4 E.M. Salnikova Generation” Power Generation” - insured party) LLC “IC Soglasie” 93 JSC “Quadra - Power Agreement in respect of Insurance of CSCs 30,202.3 E.M. Salnikova Generation” Facilities Property (JSC “Quadra - Power LLC “IC Soglasie” Generation” - insured party) 94 JSC “Quadra - Power Agreement in respect of Performance of 693,271.1 ONEXIM HOLDINGS Generation” Comprehensive Repairs and Maintenance of Main (including VAT) LIMITED JSC “Quadra – R” and Auxiliary Equipment, Buildings and Structures (JSC “Quadra - Power Generation” - customer) 95 JSC “Quadra - Power Change of conditions of the agreement with the 0 V.V. Shelkov Generation” Company’s General Director General Director 96 JSC “Quadra - Power Agreement #9i/10 dated 01.12.2010 0 Y.V. Basova Generation” President

119

Schedule #4

Tariffs for electricity and capacity for the power plants of the branches of JSC “Quadra - Power Generation” for the purpose of delivery to the population and (or) equated categories of consumers (under regulated agreements) for 2011 - 2012 (without VAT) approved by FTS of Russia.

Growth against

2011 2012 2011

Branch name %

RUR/MW

RUR/MWh RUR/MWh

capacity,

capacity,RUR/ capacity,

Electricitytariff rate, Electricitytariff rate, Electricitytariff rate,

Tariffrate for available Tariffrate for available Tariffrate for available

Belgorodskaya TPP 837.8 1,296,726.2 791.3 1,296,726.2 -5.5% 0.0% Gubkinskaya TPP 1,288.8 4,519,533.6 х х х х GT TPP Luch 785.5 1,412,814.1 728.7 1,412,814.1 -7.2% 0.0% Bryanskaya SDPS 1,793.5 354,251.8 1,840.5 359,012.0 2.6% 1.3% Klintsovskaya TPP 1,499.1 913,667.9 1,496.2 917,745.0 -0.2% 0.4% Voronezhskaya TPP-1 1,234.6 155,979.6 1,229.0 155,979.6 -0.5% 0.0% Voronezhskaya TPP-2 х 155,979.6 х 155,979.6 х 0.0% Voronezhskaya TPP-2 CSC х х 798.2 х х х Kaluzhskaya TPP 2,099.2 636,518.4 2,049.3 636,518.4 -2.4% 0.0% Kaluzhskaya TPP CSC х х 965.8 х х х Kursk TPP-1 1,024.9 84,327.6 1,023.1 84,327.6 -0.2% 0.0% Kursk TPP-4 1,364.9 259,605.0 1,346.8 267,270.3 -1.3% 3.0% NWD TPP CSC х х 834.1 х х х Lipetskaya TPP-2 983.8 202,192.5 995.2 202,188.9 1.2% 0.0% Eletskaya TPP 1,674.3 498,111.0 1,668.3 505,021.9 -0.4% 1.4% Eletskaya TPP GSU-52 CSC 1,121.4 х 1,043.5 х -6.9% х Dankovskaya TPP 1,587.4 280,524.6 1,581.4 280,519.5 -0.4% 0.0% Orlovskaya TPP 864.6 71,579.6 864.7 71,579.6 0.0% 0.0% Livenskaya TPP 1,533.9 68,569.5 1,533.7 75,122.3 0.0% 9.6% Dyagilevskaya TPP 921.3 132,056.7 910.0 132,056.3 -1.2% 0.0% Smolenskaya TPP-2 846.1 114,777.7 878.5 119,609.4 3.8% 4.2% Dorogobuzhskaya TPP 1,146.4 130,021.0 1,154.2 130,021.0 0.7% 0.0% Branch name Growth against 2011 2012 2011 Tambovskaya TPP 989.8 110,392.7 1,013.6 113,629.6 2.4% 2.9% Kotovskaya TPP 1,294.9 95,841.8 1,326.3 95,841.5 2.4% 0.0% Shchyokinskaya SDPS 1,127.3 126,024.3 1,136.9 126,024.3 0.9% 0.0% Novomoskovskaya SDPS 1,348.7 137,563.8 х х х х Alexinskaya TPP 1,519.7 139,849.9 х х х х Efremovskaya TPP 1,174.9 221,464.6 1,153.7 221,464.6 -1.8% 0.0%

Prices for electric capacity for the power plants of the branches of JSC “Quadra - Power Generation” for the year 2012 (without VAT) (defined as a result of the competitive capacity outtake (CCO)).

2012

Branch name Plant status Price of available capacity, RUR/MW Belgorodskaya TPP 744,830.57 expensive Gubkinskaya TPP х х GT TPP Luch 930,358.33 expensive Bryanskaya SDPS 437,748.71 expensive Klintsovskaya TPP 862,652.55 expensive Voronezhskaya TPP-1 200,077.19 expensive Voronezhskaya TPP-2 118,100.00 competitive Voronezhskaya TPP-2 CSC* CSC Kaluzhskaya TPP 701,278.07 expensive Kaluzhskaya TPP CSC* CSC Kursk TPP-1 117,734.00 expensive Kursk TPP-4 397,231.21 expensive NWD TPP CSC CSC Lipetskaya TPP-2 191,039.78 expensive Eletskaya TPP 1,559,201.34 expensive Eletskaya TPP GSU-52 CSC* CSC Dankovskaya TPP 716,994.06 expensive Orlovskaya TPP 118,100.00 competitive Livenskaya TPP 255,829.34 expensive Livenskaya GTU CSC* CSC Dyagilevskaya TPP 118,100.00 competitive Smolenskaya TPP-2 118,100.00 competitive Dorogobuzhskaya TPP 128,279.88 expensive Tambovskaya TPP 114,369.01 expensive Kotovskaya TPP 171,067.00 expensive 121

Branch name 2012 Shchyokinskaya SDPS 134,962.61 expensive Novomoskovskaya SDPS 135,698.15 forced Novomoskovskaya GSU CSC* CSC Alexinskaya TPP 127,796.16 forced Efremovskaya TPP 185,406.43 expensive *- price for available capacity of CSC facilities – from 600,000 to 850,000, RUR/MW

Tariffs for thermal energy, Branch name RUR/Gcal 2011 2012 Growth, % Southern Generation (Belgorod) 331.8 342.85 3.3% Western Generation (Bryansk) 671.0 692.43 3.2% Voronezh RG* 861.6 695.84 -19.2% Central Generation (Kaluga) 1,084.3 1,157.36 6.7% Southern Generation (Kursk) 871.4 1,051.46 20.7% Eastern Generation (Lipetsk) 903.1 937.77 3.8% Orel RG 510.1 533.11 4.5% Central Generation (Ryazan) 610.7 639.59 4.7% Western Generation (Smolensk)* 887.9 629.84 -29.1% Eastern RG (Tambov)* 825.6 554.41 -32.8% Central Generation (Tula) 668.4 683.58 2.3%

*- reduction in tariff is explained by change of the TC scheme (spinning-off of subsidiary heat grid companies since 2012). In 2011, JSC “Quadra - Power Generation” sold thermal energy to end user, and since 2012– to subsidiary heat grid company under tariff from collectors

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Schedule #5 Audited accounting reports of JSC “Quadra - Power Generation” for 2012.

Joint Stock Company “Quadra – Power Generation”

Accounting reports for 2012 and auditor’s report

AUDITOR’S REPORT

Deloitte ZAO “Deloitte & Touche CIS” Lesnaya Street, 5

Moscow, 125047 Russia

Tel. +7 (495) 787 06 00 Fax: +7 (495) 787 06 01

For shareholders of Joint Stock Company “Quadra - Power Generation” We have audited the attached accounting reports of JSC “Quadra - Power Generation” (hereinafter referred to as the “Company”), which consist of: - Balance sheet at 31 December 2012; - Income statement for 2012; - Appendices to balance sheet and income statement: - Statement of changes in equity for 2012; - Statement of cash flow for 2012; - Explanatory notes to accounting reports for 2012.

Responsibility of audited entity for accounting reports The Company’s management is responsible for preparation and reliable presentation of these accounting reports in accordance with Russian accounting and reporting standards, and for the internal control system which is relevant for preparation of accounting reports that do not contain material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on reliability of the accounting reports based on our audit. We conducted our audit in accordance with federal standards on audit activities. Those standards require that we comply with applicable ethical requirements and plan and perform the audit to obtain reasonable assurance whether the accounting reports are free from material misstatement. The audit involved performing audit procedures to obtain audit evidence about the amounts and disclosures in the accounting reports. The audit procedures selected depend on our judgment, which is based on assessment of the 123 risk of material misstatement, whether due to fraud or error. In making those risk assessments, we considered internal control system ensuring preparation and fair presentation of the accounting reports in order to select respective audit procedures, rather than for the purpose of expressing an opinion on the effectiveness of the internal control system. The audit also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the audited entity’s management, as well as evaluating the overall presentation of the accounting reports. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for the opinion on reliability of accounting reports.

Opinion In our opinion, the accounting reports of the Company present fairly, in all material respects, the financial position of Joint Stock Company “Quadra – Power Generation” at 31 December 2012, its financial and economic performance and cash flow for the year 2012 in accordance with Russian accounting and reporting standards.

Nataliya Valerievna Golovkina, partner [signed] (qualification certificate #01-001193 dated 14 January 2013) ZAO “Deloitte & Touche” 13 March 2013 [sealed]

The name “Deloitte” is referred to one or any number of legal entities included in “Deloitte and Touche Tohmatsu Limited”, a public company with participants’ responsibility within the frameworks guaranteed by them, registered in accordance with the Great Britain laws; each of such legal entities is a separate and independent legal entity. Detailed information on the legal structure of “Deloitte and Touche Tohmatsu Limited” and the legal entities included in it is presented on the website www.deloitte.com/about. Detailed information on the legal structure of “Deloitte” in the CIS is presented on the website www.deloitte.com/ru/about.

Member of Deloitte Touche Tohmatsu Limited

Audited entity: Joint Stock Company “Quadra – Power Independent auditor: ZAO “Deloitte & Touche” Generation”

Certificate #018.482 for State Registration. Certificate #1056882304489 for State Registration and Entering a Record in USRLE. Issued by Moscow Registration Chamber on 30.10.1992. Issued on 20.04.2005 by the Inspectorate of the Federal Tax Service for Tambov. Certificate #1027700425444 for Entering a Record in USRLE, issued on 13.11.2002 by the Interregional Inspectorate of Russian Ministry of Taxes and Levies #39 Seat: Timiryazeva Street, 99v, Tula, Tula Region, Russian for Moscow. Federation, 300012

Certificate #3026 for Membership in SRE (self-regulated entity) of auditors “NP Audit Chamber of Russia” dated 20.05.2009, PNRE (principal number of registration entry) 10201017407.

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BALANCE SHEET as at 31.12.2012 C O D E S Form under ARCMD (All- Russian Classifier of 0710001 Management Documentation) Date (day, month, year) 31.12.2012 Entity Under ARCEO (All- Russian Classifier of 71259492 Enterprises and JSC “Quadra – Power Generation” Organizations) Taxpayer’s identification number TIN 6829012680 Type of economic activity Production of vapor and hot water Under ARCEA (All- 40.30.11, (thermal power), production of electric Russian Classifier of 40.11.1 power by thermal power plants Economic Activities) Legal form of organization/ Under ARCLSB (All- pattern of ownership Russian Classifier of Legal Structures of 47/31 Businesses)/ARKFO joint stock company / joint federal and (All-Russia Classifier of foreign ownership Forms of Ownership) Measurement unit Under ARCMU (All- Russia Classifier of 384 ths. RUR Measurement Units) Address (address) 300012, Tula city, Timiryazeva str., 99v

Code Explanat ion 31/12/2012 31/12/2011 31/12/2010

ASSET

I. NONCURRENT ASSETS Fixed assets 1150 3.1 26,361,390 26,016,320 21,064,765 Financial investments 1170 3.2 1,944,904 2,028,468 1,847,102 Deferred tax assets 1180 3.13 719,204 508,910 309,427 Miscellaneous noncurrent assets 1190 3.3, 3.6 14,552,364 9,217,707 9,897,518

Totally on section I 1100 43,577,862 37,771,405 33,118,812

II. CURRENT ASSETS Inventory stocks 1210 3.4 1,770,279 1,747,201 1,650,366 Value added tax in respect to acquired valuables 1220 218,359 46,053 30,516 Receivables 1230 3.6 7,679,152 6,116,464 4,500,531 Financial investments 1240 3.7 63,945 89,950 − Monetary assets and cash-equivalent items 1250 106,353 307,407 3,637,748 Miscellaneous current assets 1260 3.5 107,443 127,935 138,724

Totally on section II 1200 9,945,531 8,435,010 9,957,885

BALANCE 1600 53,523,393 46,206,415 43,076,697 LIABILITY

III. CAPITAL AND RESERVES Charter capital 1310 3.8 19,877,785 19,877,785 19,877,785 Added capital 1350 12,172,025 12,172,025 12,172,025 Reserve capital 1360 3.9 282,645 236,234 156,192 Unallocated profit 1370 4,313,206 4,993,060 4,168,730

Totally on section III 1300 36,645,661 37,279,104 36,374,732

IV. LONG-TERM LIABILITIES Credits and loans 1410 3.11 8,326,718 1,403,258 627,313 Deferred tax liabilities 1420 3.13 1,574,842 1,346,324 744,692

Totally on section IV 1400 9,901,560 2,749,582 1,372,005

V. SHORT-TERM LIABILITIES Credits and loans 1510 3.11 3,399,385 3,500,872 2,058,263 Payables 1520 3.12 3,099,091 1,908,854 2,210,478 Deferred revenues 1530 74 79 83 Estimated liabilities 1540 3.15 473,387 763,716 1,058,236 Miscellaneous liabilities 1550 4,235 4,208 2,900

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Totally on section V 1500 6,976,172 6,177,729 5,329,960

BALANCE 1700 53,523,393 46,206,415 43,076,697

Director General Chief Accountant

______V.V. Shelkov ______I.A. Lapitskaya

13.03.2013 13.03.2013

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INCOME STATEMENT for 2012 C O D E S Form under ARCMD (All- Russian Classifier of 0710002 Management Documentation) Date (day, month, year) 31.12.2012 Entity Under ARCEO (All- Russian Classifier of 71259492 Enterprises and JSC “Quadra – Power Generation” Organizations) Taxpayer’s identification number TIN 6829012680 Type of economic activity Production of vapor and hot water Under ARCEA (All- (thermal power), production of electric Russian Classifier of 40.30.11, 40.11.1 power by thermal power plants Economic Activities) Legal form of organization/ Under ARCLSB (All- pattern of ownership Russian Classifier of Legal Structures of 47/31 Businesses)/ARKFO joint stock company/ joint federal and (All-Russia Classifier of foreign ownership Forms of Ownership) Measurement unit Under ARCMU (All- Russia Classifier of 384 ths. RUR Measurement Units)

Explanati Code on 2012 2011

Revenue 2110 3.14 36,290,511 38,437,354 Prime cost of sales 2120 3.14 (34,964,142) (34,325,264)

Gross profit 2100 1,326,369 4,112,090 Managerial expenditures 2220 3.14 (1,690,163) (1,569,197)

(Loss) profit from sales 2200 (363,794) 2,542,893

Income from participation in other entities 2310 1,984 720 Interest receivable 2320 17,370 39,216 Interest payable 2330 3.11 (262,815) (186,305) Miscellaneous revenues 2340 3.16 2,061,791 1,367,837 Miscellaneous expenditures 2350 3.16 (2,056,559) (2,396,105)

Pre-tax profit (loss) 2300 (602,023) 1,368,256

Current profit tax 2410 3.13 − − including permanent tax liabilities 2421 (142,858) (168,647) Change of deferred tax liabilities 2430 3.13 (228,518) (601,740) Change of deferred tax assets 2450 3.13 206,065 159,442 Miscellaneous 2460 4,965 2,247

Net (loss) profit 2400 (619,511) 928,205

FOR REFERENCE ONLY

Base (loss) profit per share, RUR 2900 3.10 (0.0003) 0.0005

Director General Chief Accountant

______V.V. Shelkov ______I.A. Lapitskaya

13.03.2013 13.03.2013

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STATEMENT OF CHANGES IN EQUITY for 2012 C O D E S Form under ARCMD (All- Russian Classifier of 0710003 Management Documentation) Date (day, month, year) 31.12.2012 Entity Under ARCEO (All- Russian Classifier of 71259492 Enterprises and JSC “Quadra – Power Generation” Organizations) Taxpayer’s identification number TIN 6829012680 Type of economic activity Production of vapor and hot water Under ARCEA (All- (thermal power), production of electric Russian Classifier of 40.30.11, 40.11.1 power by thermal power plants Economic Activities) Legal form of organization/ Under ARCLSB (All- pattern of ownership Russian Classifier of Legal Structures of 47/31 Businesses)/ARKFO (All- joint stock company / joint federal and Russia Classifier of foreign ownership Forms of Ownership) Measurement unit Under ARCMU (All- Russia Classifier of 384 ths. RUR Measurement Units)

Charter Added Reserve Unallocate Code capital capital capital d profit Totally

Capital amount as at 31.12.2010 3100 19,877,785 12,172,025 156,192 4,168,730 36,374,732 Net profit 3211 − − − 928,205 928,205 Dividends 3227 − − − (24,248) (24,248) Unclaimed indebtedness recovery in respect to dividends declared earlier 3328 − − − 415 415 Reserve capital’s change 3240 − − 80,042 (80,042) −

Capital amount as at 31.12.2011 3200 19,877,785 12,172,025 236,234 4,993,060 37,279,104 Net loss 3321 − − − (619,511) (619,511) Dividends 3327 − − − (14,058) (14,058) Unclaimed indebtedness recovery in respect to dividends declared earlier 3328 − − − 126 126 Reserve capital change 3340 − − 46,411 (46,411) −

Capital amount as at 31.12.2012 3300 19,877,785 12,172,025 282,645 4,313,206 36,645,661

NET ASSETS Code 31/12/2012 31/12/2011 31/12/2010

NET ASSETS 3600 36,645,735 37,279,183 36,374,815

Director General Chief Accountant

______V.V. Shelkov ______I.A. Lapitskaya

13.03.2013 13.03.2013

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CASH FLOW STATEMENT for 2012 C O D E S Form under ARCMD (All- Russian Classifier of 0710004 Management Documentation) Date (day, month, year) 31.12.2012 Entity Under ARCEO (All- Russian Classifier of 71259492 Enterprises and JSC “Quadra – Power Generation” Organizations) Taxpayer’s identification number TIN 6829012680 Type of economic activity Production of vapor and hot water Under ARCEA (All- (thermal power), production of electric Russian Classifier of 40.30.11, 40.11.1 power by thermal power plants Economic Activities) Legal form of organization/ Under ARCLSB (All- pattern of ownership Russian Classifier of Legal Structures of 47/31 Businesses)/ARKFO (All- joint stock company /joint federal and Russia Classifier of foreign ownership Forms of Ownership) Measurement unit Under ARCMU (All- Russia Classifier of 384 ths. RUR Measurement Units)

Code 2012 2011

CASH FLOW IN RESPECT TO CURRENT ACTIVITIES

Receipts - totally 4110 35,770,491 36,372,797 including: Sale of products, goods, works and services 4111 34,800,802 35,748,577 VAT from difference of receipts and payments 4112 410,492 308,792 Rental payments, commissions and other similar payments 4113 268,204 80,981 Advances received from buyers 4114 85,645 93,017 Penal sanctions and compensation of losses 4115 76,115 55,784 Profit tax refund 4116 47,247 Interest received 4117 211 35,519 Miscellaneous receipts 4118 81,775 50,127

Payments - totally 4120 (34,317,552) (35,841,575) including: to suppliers/(contractors) for raw material, materials, works, services 4121 (28,609,759) (29,348,338) Labor payment to employees 4122 (2,999,778) (2,899,563) Miscellaneous taxes 4123 (911,393) (817,307) Contributions into non-budgetary funds 4124 (848,205) (868,647) VAT 4125 (354,909) (901,985) Interest on debt liabilities 4126 (272,737) (167,061) Penal sanctions and compensation of losses 4127 (52,185) (139,512) Profit tax of entities 4128 − (407,946) Miscellaneous payments 4129 (268,586) (291,216)

Net balance of cash flows from current activities 4100 1,452,939 531,222

CASH FLOW IN RESPECT TO INVESTMENT ACTIVITIES

Receipts – totally 4210 607,182 17,517 including: Refund of granted loans, sales of debt securities 4211 576,092 − Dividends, interest on debt financial investments and similar receipts from participation interest in other entities 4212 17,808 4,050 Sale of noncurrent assets 4213 13,282 13,467

Payments – totally 4220 (8,995,205) (5,976,909) including: Acquisition, creation, renovation, reconstruction and preparation of noncurrent assets to use 4221 (8,077,018) (5,863,068) Acquisition of debt securities (rights of claim of monetary assets to other persons), loans granting to other persons 4222 (557,037) (89,950) Interest on debt liabilities, included in an investment asset cost 4224 (361,080) (23,851) 129

Acquisition of other entities’ shares (stakes) 4222 (70) (40)

Net balance of cash flows from investment activities 4200 (8,388,023) (5,959,392)

130

Code 2012 2011

CASH FLOW IN RESPECT TO FINANCIAL ACTIVITIES

Receipts - totally 4310 35,560,519 31,874,859 including: Receipt of credits and loans 4311 35,560,519 31,874,859

Payments - totally (28,824,423) (29,774,906) including: 4320 Repayment (buy-back) of bills and other debt securities, refund of credits and loans 4321 (28,773,385) (29,701,448) Repayment of liabilities in respect to financial lease 4322 (38,385) (50,893) Payment of dividends and other payments regarding profit distribution in favor of owners 4323 (12,653) (22,565)

Net balance of cash flows from financial activities 4300 6,736,096 2,099,953

Net balance of cash flows for reporting period 4400 (198,988) (3,328,217)

Balance of monetary assets and cash-equivalent items as at reporting period beginning 4450 307,382 3,637,724

Balance of monetary assets and cash-equivalent items as at reporting period end 4500 106,328 307,382

Effect of exchange rate changes in relation to ruble 4490 (2,066) (2,125)

Director General Chief Accountant

______V.V. Shelkov ______I.A. Lapitskaya

13.03.201 13.03.2013

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EXPLANATIONS TO THE ANNUAL ACCOUNTING REPORTS Of JSC “Quadra – Power Generation” for 2012

1. GENERAL INFORMATION

Joint Stock Company “Quadra – Power Generation” (hereinafter referred to as JSC “Quadra – Power Generation” or “Company”) was founded on 18.04.2005 as a subsidiary company of Joint Stock Company RAO “UES of Russia” within the framework of the electric energy sector reforming in the Russian Federation. Before 18.05.2010, the Company had the name Joint Stock Company “Territorial Generating Company #4”. JSC “Quadra – Power Generation” carries out activities of electric and thermal power production and thermal power transportation.

The Company is registered at the address: 99v Timiryazeva str., Tula, Tula Region, the Russian Federation, 300012. Eight branches constitute the Company in the following cities: Belgorod, Voronezh, Kursk, Lipetsk, Orel, Ryazan, Smolensk and Tula.

As at 31.12.2012 the number of the Company’s employees amounted to 9,753 people (as at 31.12.2011: 9,750 people; as at 31.12.2010: 11,007 people).

The Company’s shares are quoted at the Stock Exchange “MICEX”.

1.1. Risks associated with change in foreign currency exchange rate

Main part of the financial assets and liabilities of JSC “Quadra – Power Generation” is expressed in rubles. An increase in the rate of foreign currency exchange in relation to ruble may exert a negative influence on the Company’s financial standing. An increase in the liabilities’ amount will take place in respect to the settlements in the foreign currency with foreign suppliers of equipment owing to their revaluation, which will finally result in reduction in the Company’s profit.

1.2. Risks associated with consumer prices growth (inflation)

High level of inflation can become a reason for a decrease in the real cost of the Company’s receivables in terms of material delay of payment or deferred payment. Inflation growth can also become a reason for the Company’s increase in expenses for interest payment on credits and loans, increase in prime cost of goods, products, works, services, due to tariffs indexation for fuel, purchased electric power, salary, and finally can tell negatively on the Company’s financial standing.

In 2012, inflation amounted to 6.6%, in 2011 - 6.1%, in 2010 – 8.8% (http://www.cbr.ru – section “Statistics”). The inflation level on the level of 25-30% is critical in the Company’s opinion. So, the given risk is not essential for the Company for the time being.

1.3. Risks associated with the interest rates change in respect to borrowed funds

Contracts on short-term and long-term credit resources extension are concluded between credit organizations and JSC “Quadra – Power Generation” (Explanation #3.11) According to the clauses of the credit contracts in force, the interest rate amount in respect to the due indebtedness can be revised upward by the bank unilaterally, including due to change in the refinance rate of the Central Bank of Russia (“CBR”).

The Company assesses a probability of the interest rates increase in respect to the bank credits in the nearest time as low.

132

1.4. Credit risks

Credit risk represents a risk of non-payment by the counterparts of their full indebtedness amount towards the Company in the event of maturity on indebtedness.

Credit risk arises in respect to the monetary assets and their equivalents, deposits in banks, in respect to outstanding receivables of buyers and customers and under contractual liabilities.

Credit risk in respect to receivables of buyers and customers and in respect to other receivables is estimated systematically and taken into consideration in the event of accrual of reserve for doubtful debts (Explanation #3.6). Amounts of receivables of buyers and customers and other receivables, net of the reserve for doubtful debts, represent the maximal amount of a credit risk associated with the receivables.

In spite of the fact that cash receipt is exposed to different economic factors impact, the Company’s Executive Body believes that no any essential risk of losses which exceeds the established reserve for doubtful debts is available.

1.5. Liquidity risk

Adequate management by a liquidity risk presupposes maintenance of a sufficient level of the monetary assets and marketable securities, provision of financing availability by way of the necessary credit means raising and a possibility of pre-term withdrawal of the monetary assets, placed temporarily with deposit accounts in highly reliable banks.

The Company’s management sticks to a balanced model of the working capital financing through use of both short- term and long-term resources. Idle monetary assets are placed in form of short-term financial instruments, mainly in form of deposit accounts.

The Company’s management strives to maintain flexibility in financing of production and economic activities by way of a cash position monitoring (budgeting), while preserving a possibility of borrowed funds raising.

2. ESSENTIAL ASPECTS OF ACCOUNTING POLICY AND REPRESENTATION OF INFORMATION IN ACCOUNTING REPORTS

The Company’s accounting reports have been prepared on the basis of the following accounting policy.

2.1. Principles of accounting reports preparation

Bookkeeping was maintained in the Company relying on the rules of bookkeeping and reporting which were effective in the Russian Federation in 2012, in particular relying on Federal Law #129-FZ “On bookkeeping” dd. 21.11.1996, Russian Accounting Standard (hereinafter referred to as the “RAS”) 1/2008 “Accounting policy of an organization”, approved by order #106n dd. 06.10.2008 of the Ministry of Finance of RF, Regulation on maintenance of bookkeeping and reporting in the Russian Federation, approved by order #34n dd. 29.07.1998 of the RF Ministry of Finance.

When preparing the accounting reports for 2012, the Company took into consideration Federal Law #402–FZ “On bookkeeping” dd. 06.12.2011, which came into force on 01.01.2013 as to explanations of the RF Ministry of Finance in Information #PZ-10/2012.

Assets and liabilities are entered in books at the actual cost, except for financial investments in respect to which the current market value is determined and except for assets in respect to which the reserves for their cost reduction are formed according to the established order.

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2.2. Assets and liabilities expressed in foreign currency

In the process of accounting of economic operations settled in a foreign currency, the official foreign currency exchange rate to ruble which is effective at the day of the operation settlement is applied. Monetary assets with currency and special-purpose accounts, as well as resources in settlements, expressed in a foreign currency, are entered in books in the accounting reports in the amounts, calculated on the basis of the following official rates:

31/12/2012 31/12/2011 31/12/2010

RUR for 1 US dollar 30.3727 32.1961 30.4769 RUR for 1 Euro 40.2286 41.6714 40.3331

Cost of the resources in settlements (except for advances paid and advances received), expressed in a foreign currency including payable ones based on the contracts clauses in RUR, is entered in books in the accounting reports at a foreign currency exchange rate, which is determined based on the rate established by the CBR as at a reporting date.

Currency exchange rate differences which occur within a year in respect to the operations on assets and liabilities expressed in a foreign currency, as well as under their recalculation as at a reporting date, are posted to financial results and entered in books as part of miscellaneous incomes and expenses.

2.3. Short-term and long-term assets and liabilities

Assets, which are entered in books in the accounting reports as part of current assets, are assumed to be used (received) in the industrial and other activities within 12 months after the reporting date. Liabilities entered in books in the accounting reports as part of short-term liabilities, are assumed to be repaid within 12 months after a reporting date. All the rest assets and liabilities are presented as long-term ones.

2.4. Fixed assets

Land plots, buildings, machinery, equipment, transport facilities and other respective facilities with a useful life of over 12 months are entered in books as part of the fixed assets.

Assets, in relation to which the conditions are fulfilled for their recognition as the fixed assets items, with the initial cost of less than RUR 40 ths. (without VAT) per unit, are accounted as part of the inventory stocks.

Items of the fixed assets are entered in the accounting records based on actual expenses for acquisition (or construction) net of VAT and other indemnifiable taxes.

Items of the fixed assets received in accordance with a legal succession procedure as a result of reorganization in form of accession are included for accounting purposes at an initial cost, which is equal to the residual value in a company being acceded as of the accession date.

Items of immovable property being actually operated, in respect to which the capital investments are completed, respective primary accounting documents on delivery - take-over are drawn up and documents are submitted for the state registration, are entered in books separately in the bookkeeping as part of the fixed assets.

In reports, the fixed assets are entered in books at the initial cost net of the depreciation amount, accrued for the whole time of operation.

Fixed assets depreciation accrual is made by a straight-line method according to the norms, calculated premised on the established useful life, determined according to the Classification of the Fixed Assets Included into Depreciation Groups. The Classification is approved by Government Decree #1 of the Russian Federation dd. 01.01.2002. Depreciation in respect to the group “Lorry transport” is accrued depending on a travel distance for a reporting period.

Useful life adopted by the Company specified on the fixed assets groups are stated below:

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Useful life (number of years) of facilities put in operation

Buildings 8 − 118 Structures and transfer devices 5 − 110 Machinery and equipment 3 − 83 Transport facilities 2 − 34 Production stock and household equipment 2 − 52 Other types of fixed assets 1 − 8

No depreciation is accrued in respect to the following facilities:

land plots; housing facilities acquired before 01.01.2006 (depreciation is accrued according to the standard procedure in respect to facilities acquired beginning from 01.01.2006); fully depreciated facilities, which have not been written off from the balance sheet; facilities being on standby for over 3 months upon a decision of the Company’s management.

Revenues and expenditures from the fixed assets’ retirement are entered in books in the financial results report as part of miscellaneous revenues and expenditures.

Interest on credits accrued before the fixed assets items were entered in the accounting records, which are raised to finance acquisition (construction) of the investment facilities, is included into their initial cost. Interest accrued after entering such fixed assets facilities in the accounting records is entered in books in the income statement as part of miscellaneous expenditures.

2.5. Financial investments

Financial investments are included for accounting purposes on the basis of actual expenditures for acquisition.

Financial investments in respect to which no current market value is determined, are entered in books in the balance sheet as of a reporting year’s end, on their accounting (book) value net of a reserve for possible losses. The reserve for possible losses of financial investments is posted to miscellaneous expenditures’ increase. The reserve for possible losses of financial investments is determined as a difference between their accounting value and estimated value, calculated premised on the net assets’ amount of those companies, the shares of which are owned by the Company (proportionate to the ownership stake) as of the last reporting date, preceding the date of the reporting preparation.

Financial investments in respect to which the current market value can be determined, are entered in books in the accounting reports as of a reporting year’s end at the current market value. Value adjustment of such financial investments is made quarterly by the Company and posted to the financial results as part of other revenues and expenditures.

When paying the charter capital (acquiring shares of subsidiary companies) by the fixed assets, the financial investments initial cost is recognized to be equal to the residual value of the fixed assets items, transferred as a contribution into the charter capital, and VAT amount recovered and payable to the budget by a transferring party, according to the current tax laws.

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Under retirement, the financial investments cost in respect to which no current market value is determined, is determined on each group (type) of financial investments (securities, contributions into charter capitals, loans granted, others) at the initial cost of each accounting unit of financial investments. Revenues and expenditures from the financial investments’ retirement are entered in books as part of miscellaneous revenues and expenditures.

2.6. Inventory stocks

Inventory stocks (“IS”) are estimated in the amount of the actual expenses for acquisition. IS which can’t be used according to their direct purpose as of the date of the reports preparation (in the process of production, capital construction etc.) due to the qualitative characteristics loss and are subject to a further use according to another purpose (which differs from the initial one) or subject to selling outside, are entered in books in the reports at the value which is the smallest among the market and initial ones. Reserve for devaluation of material valuables is formed owing to the Company’s financial results as the amount of difference between the current market value and actual value of the inventory stocks, if the latter one is larger than the current market value.

IS being retired on group “Fuel” are estimated according to the average prime cost method; in respect to the rest groups – on each unit’s prime cost.

Purchased electric power and thermal power, acquired for sale as well as commodity stocks and supplies acquired with the goal of a further sale, received as a result of the fixed assets liquidation or discovered as an inventory taking result, are accounted by the Company as part of goods.

2.7. Deferred expenses

Expenses made by the Company in the reporting year in order to obtain income in the next periods, such as non- exclusive rights to use software products, insurance payments, licenses, leasing payments under the financial lease contracts and others, are shown in the balance sheet on item “Miscellaneous current assets”. These expenses are written off evenly to expenditures, within the periods they are related to.

Deferred expenses which are subject to writing off after the end of the year, which follows the reporting year, are shown in the balance sheet on item “Miscellaneous noncurrent assets”.

2.8. Buyers’ and customers’ indebtedness

Buyers’ and customers’ indebtedness is determined premised on the prices established by the contracts between the Company and buyers (customers), subject to a value added tax.

Receivables unreal to collect are written off from the balance sheet as far as it’s recognized to be such, to miscellaneous expenditures or due to the reserve for doubtful debt established earlier.

Counterparts’ indebtedness not repaid within the time periods established by the contracts and not secured by the respective guarantees or by other ways, is entered in books net of the reserve for doubtful debts. This allowance represents an estimation of that part of indebtedness which shall not be repaid in the opinion of the Company’s management.

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2.9. Charter, added and reserve capital

Charter capital is entered in books in the amount of nominal value of ordinary and preferred shares, acquired by the shareholders. The charter capital amount corresponds to the amount determined by the Company’s Charter.

Added capital of the Company includes the excess amount of the net asset value of the acceded generating companies over the charter capital amount. The excess amount is stipulated by a accession contract as of the date of the Company’s reorganization completion.

Besides, the added capital includes the amount of the seigniorage revenues, representing a difference between the monetary assets’ amount, received in payment for the shares being placed and their nominal value as of a placement date.

According to the RF laws, the Company creates the reserve fund in the amount of 5% of the charter capital.

2.10. Credits and loans received

Additional expenditures tied with a receipt and service of loans, are included into miscellaneous expenditures in that reporting period in which they were made.

Long-term credits and loans (including interest on them) are transferred into short-term ones provided that 365 days and less are left before their repayment date.

2.11. Estimated liabilities

Bookkeeping and reporting of the Company show liabilities regarding payout of remunerations following the work results for a year in respect to all the employee categories. The amount as of a reporting year’s end is determined premised on a calculation of an expected remuneration individually for each employee, according to the criteria determined in the Regulations on material incentive, effective in the Company. The amount of liabilities is increased by the amount of insurance contributions assumed to be accrued.

Liabilities in respect to payment of carry-over vacations are accrued as well. The amount as of a reporting year’s end is determined premised on the number of unused days of the basic and additional leaves multiplied by an average daily salary of each employee. The amount of liabilities is increased by the amount of insurance contributions assumed to be accrued.

Besides, the following types of liabilities are entered in books in the Company’s bookkeeping and reporting:

on the amount of claims brought against the Company as regards legal proceedings existing as of a reporting date, subject to a probability of an unfavorable outcome of these or those events, which in the future can bring about a reduction in the Company’s economic benefits; on the penal sanctions amount, which will be presented inevitably to the Company due to the concluded contracts’ conditions non-fulfillment as of a reporting date, calculated according to these contracts’ clauses, which will result in a reduction in the Company’ s economic benefits in the future.

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2.12. Recognition of revenues

Products sales and services provision revenues are recognized as far as products are shipped to buyers (or services are rendered) and settlement documents are presented to them. The revenues are entered in books in the reports net of value added tax.

The following items are recognized as part of the Company’s miscellaneous revenues:

receipts from sale of the fixed assets and other assets, different from monetary assets – as far as sale items are shipped (transfer of ownership); interest received on deposit contracts and loans granted by the Company for each expired month according to the contracts clauses; funds received from the Federal Budget for compensation of a part of expenses for interest payment in respect to credits, got in credit entities for the seasonal procurement of fuel so far as payment is effected; fines, penalties, forfeits for breach of the contract (agreement) clauses – as far as a debtor is recognized or a decision rendering by the court on collection; excess of assets revealed as a result of an inventory taking – as far as revelation (formation) is made; recovery of reserve for doubtful debts – in case of redundancy of reserves amounts recognized earlier; recovery of amounts in respect to the estimated liabilities - in case of amounts’ redundancy which were recognized earlier or in the event of termination of the conditions for recognition, if such liabilities are not homogeneous; dividends received – as far as they are declared; miscellaneous revenues discovered in a reporting period, but related to past periods - as far as they are discovered, provided that the amount is insignificant.

2.13. Recognition of expenses

Expenses are recognized in that reporting period in which they had place regardless of the actual payout of the monetary assets.

Expenses in respect to all the types of activities are grouped on the following main elements:

material expenses, including technological fuel, purchased electric and thermal, raw material, materials, complementary articles, services of external agencies and others; depreciation of the fixed assets, including those leased out in operating lease; expenses for labor payment, lump-amount incentive and other payments, miscellaneous stimulating and compensatory payments, insurance contributions.

Expenses of the shops taking part directly in generation of only one type of power are posted to the prime cost of a respective type of power. Allocation of the shops’ charges taking part in production of two types of power specified by types of power is made pro rata, based on intensity of use of conventional fuel per unit of products.

General production costs are distributed by types of activities in proportion to the permanent expenses amount.

The following items are recognized as part of the Company’s miscellaneous expenses:

expenses for fixed assets and other assets retirement, different from the monetary assets – as far as sale items are shipped (transfer of ownership); interest accrued in respect to loans and credits received by the Company for each expired month according to the contracts’ clauses; penalties, fines and forfeits for breach of the contract clauses – as far as a decision on collection is rendered by the court or the Company recognized them as such; discovery of a shortage of assets as a result of inventory taking – as far as discovered (formed); estimated liability accrual in respect to legal proceedings accrual of reserve for doubtful debts; accrual of a reserve for possible losses of financial investments; miscellaneous expenses discovered in the reporting period but relating to past periods – as far as they are revealed, if the amount is insignificant.

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2.14. Changes in the accounting policy and reclassification of introductory data

In 2012, the Company provided a consecutive application of the previous periods accounting policy.

2.14.1. Entering in books of VAT regarding advances paid and received

Reports show retrospectively the amounts of receivables in respect to advances paid to suppliers, amounts of miscellaneous noncurrent assets in respect advances granted to construction contractors, and the amounts of payables in respect to advances received from the buyers and customers, net of a value added tax (VAT).

As a consequence, as at 31.12.2010 and 31.12.2011, the receivables (miscellaneous noncurrent assets) in respect to advances paid to the suppliers (construction contractors) are entered in books net of VAT, indemnified from the budget from the paid advances amounts (before 01.01.2012 VAT was entered in books as part of miscellaneous payables); and payables in respect to advances received from the buyers and customers are entered in books net of VAT, accrued and payable to the budget from the amounts of the received advances (01.01.2012 VAT was entered in books as part of miscellaneous receivables).

Comparable data of the balance sheet for the previous periods are presented by the following way subject to the amendment specified above:

ths. RUR 31/12/2011 31/12/2011

(before (after adjustment in adjustment in respect to VAT) Adjustment respect to VAT)

Miscellaneous noncurrent assets 8,592,504 (141,115) 8,451,389 Advances paid to construction contractors 1,993,393 (141,115) 1,852,278 Receivables 6,959,767 (76,985) 6,882,782 in respect to advances paid, the execution in respect to which is expected in over 12 months after a reporting date 4,590 (700) 3,890 in respect to advance paid, the execution in respect to which is expected within 12 months after a reporting date 505,757 (40,010) 465,747 other indebtedness, payments in respect to which are expected within 12 months after a reporting date 327,010 (36,275) 290,735

Payables 2,126,954 (218,100) 1,908,854 advances received 343,142 (36,275) 306,867 miscellaneous creditors 211,673 (181,825) 29,848

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ths. RUR 31/12/2010 31/12/2010

(before (after adjustment in adjustment in respect to VAT) Adjustment respect to VAT)

Miscellaneous noncurrent assets 10,213,079 (445,958) 9,767,121 Advances paid to construction contractors 3,423,211 (445,958) 2,977,253 Receivables 4,686,547 (55 619) 4,630,928 in respect to advance paid, the execution in respect to which is expected in over 12 months after a reporting date 4,629 (700) 3,929 in respect to advance paid, the execution in respect to which is expected within 12 months after a reporting date 105,539 (6,063) 99,476 other indebtedness, payments in respect to which are expected within 12 months after a reporting date 243,427 (48,856) 194,571

Payables 2,712,055 (501,577) 2,210,478 advances received 321,098 (48,856) 272,242 miscellaneous creditors 477,769 (452,721) 25,048

2.14.2. Entering of overdue receivables with an expected repayment period of over 12 months in books

Overdue receivables with an expected repayment period of over 12 months are shown as part miscellaneous noncurrent assets as at 31.12.2012. For conformity with the presentation adopted for the current year, the amount shown in the line “Receivables” was decreased by RUR 766,318 ths. as at 31.12.2011 (as at 31.12.2010: RUR 130,397 ths.) with the respective increase in the amount under the line “Miscellaneous noncurrent assets”.

3. DISCLOSURE OF SEPARATE ITEMS OF ACCOUNTING REPORTS

3.1. Fixed assets

Fixed assets flow on initial cost ths. RUR Received in 2012 Retired in 2012 Including sales to Initial cost including subsidiary Initial cost as at constructio companies as at 31/12/2011 Totally n Totally * 31/12/2012

Buildings 7,611,623 292,054 284,471 (44,609) (37,081) 7,859,068 Structures 9,933,020 554,991 542,921 (314,413) (309,000) 10,173,598 Machinery and equipment 16,499,528 2,359,675 1,989,365 (133,835) (66,663) 18,725,368 Transport facilities 143,588 24,847 132 (2,386) (46) 166,049 Miscellaneous 56,894 1,134 (844) (111) 57,184 Land plots 33,361 1,896 35,257

Totally 34,278,014 3,234,597 2,816,889 (496,087) (412,901) 37,016,524 ______* In December of 2012, JSC “Quadra – Power Generation” sold the facilities of thermal economy to subsidiary companies LLC “Ryazan HGC" and LLC “Bryansk HGC" for them to carry out the charter-based activities.

ths. RUR Received in 2011 Retired in 2011 Including a transfer Initial cost including into Initial cost as at constructio current as at 31/12/2010 Totally n Totally assets* 31/12/2011

Buildings 6,984,484 629,690 627,465 (2,551) 7,611,623 140

Structures 8,785,831 1,349,465 1,256,046 (202,276) (195 170) 9,933,020 Machinery and equipment 11,401,449 5,126,187 5,073,299 (28,108) 16,499,528 Transport facilities 134,896 14,523 (5,831) 143,588 Miscellaneous 45,167 12,496 1,427 (769) 56,894 Land plots 33,361 − 33,361

Totally 27,385,188 7,132,361 6,958,237 (239,535) (195,170) 34,278,014 ______* In December of 2011 the Company transferred into current assets a series of the items of immovable property, which had been transferred under a transfer and acceptance certificate to the buyer, before the date of the state registration of the transfer of ownership to these items by the buyer (Explanation #3.4).

Initial cost of the items of immovable property, put into operation and used actually, the ownership right whereupon was not registered as at 31.12.2012, amounted to RUR 701,322 ths. (31.12.2011: RUR 1,382,799 ths; 31.12.2010: RUR 1,014,169 ths.).

The change in the initial cost of the fixed asset items as a result of a further construction, further equipping, reconstruct and partial liquidation amounted to RUR 734,934 ths. in 2012 (2011: RUR 909,216 ths.).

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Depreciation ths. RUR Received in 2012 Retired in 2012 Accumulat Including Accumulat ed transfer ed depreciatio into depreciatio n as at Taken on current n as at 31/12/2011 Accrued charge* Totally assets 31/12/2012

Buildings 910,732 221,215 (15,958) (13,848) 1,115,989 Structures 2,600,693 691,732 (162,255) (159,894) 3,130,170 Machinery and equipment 4,634,098 1,381,496 319,266 (59,745) (30,614) 6,275,115 Transport facilities 89,159 14,450 (2,030) (39) 101,579 Miscellaneous 27,012 6,063 (794) (87) 32,281

Totally 8,261,694 2,314,956 319,266 (240,782) (204,482) 10,655,134

ths. RUR Received in 2011 Retired in 2011 Accumulat including a Accumulat ed transfer ed depreciatio into depreciatio n as at Taken on current n as at 31/12/2010 Accrued charge* Totally assets 31/12/2011

Buildings 707,450 204,111 (829) 910,732 Structures 2,010,480 595,938 (5,725) (3 541) 2,600,693 Machinery and equipment 3,500,175 1,146,476 1,835 (14,388) 4,634,098 Transport facilities 80,378 13,645 (4,864) 89,159 Miscellaneous 21,940 5,533 (461) 27,012

Totally 6,320,423 1,965,703 1,835 (26,267) (3,541) 8,261,694 ______* It’s entered in books in the reports due to taking on charge of the fixed assets obtained within the framework of the financial lease contracts.

As at 31.12.2012, the cost of the leased fixed assets amounted to RUR 20,200,045 ths. (31.12.2011: RUR 19,631,045 ths; 31.12.2010: RUR 19,903,345 ths).

Leased fixed assets ths. RUR 31/12/2012 31/12/2011 31/12/2010

Land plots (are accounted on the cadastral value)* 19,679,075 18,523,483 18,764,025 Thermal economy facilities (incl. thermal grids and municipal boiler houses) 460,763 704,646 739,752 Facilities obtained under financial lease (leasing)** contracts 319,266 322,299 Miscellaneous leased property 60,207 83,650 77,269

Totally 20,200,045 19,631,045 19,903,345 ______* Beside land plots used under the lease contracts and being in the ownership, the Company has land plots on the basis of the right of permanent (termless) use. The total area of such plots amounted to 680.4 ha as at 31.12.2012 (as at 31.12.2011: RUR 1,099.8 ha; as at 31.12.2010: RUR 1,262.4 ha).

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** Items of the fixed assets obtained under financial lease (leasing) contracts ths. RUR Transferre Transferre d into fixed d into fixed 31/12/2010 assets 31/12/2011 assets 31/12/2012

Waste heat boilers 123,722 123,722 (123,722) Booster compressor plants 69,724 69,724 (69,724) Power transformer TDTN 68,320 68,320 (68,320) Software and hardware complex ASUTP (automated system of technological process control) 57,500 57,500 (57,500) Miscellaneous 3,033 (3 033)

Totally 322,299 (3,033) 319,266 (319,266) −

Leased out fixed assets

Residual value of the fixed assets leased out amounted to RUR 2,210,106 ths. as at 31.12.2012 (31.12.2011: RUR 295,340 ths.; 31.12.2010: RUR 314,221 ths.).

3.2. Long-term financial investments

Long-term financial investments are shared by their nature and represent contributions to other entities’ charter capitals.

Contributions to the charter capitals of subsidiary companies as at 31.12.2012 ths. RUR Initial cost of Participaton Name and legal form of financial Reserve for interest, organization Type of activities investments devaluation %

JSC “Belgorod Thermal Grid Company” 1,742,242 − 100.0 LLC “OHGC” Services in respect to 231,825 (75,008) 100.0 LLC “Bryansk HGC” transmission and 1,000 (1,000) 100.0 LLC “Voronezh HGC” distribution of thermal 10 − 100.0 LLC “Kursk HGC” power, 1,000 − 100.0 LLC “Novomoskovsk HGC” connection to thermal 10 − 100.0 LLC “Ryazan HGC" grids; production of 10 − 100.0 LLC “Smolensk HGC” thermal and electric 10 − 100.0 LLC “Tambov HGC power 10 − 100.0 LLC “Tula HGC 10 − 100.0 LLC “Tambov Heat Company” 50 − 50.0 JSC “Quadra – R”* Repair, renovation and reconstruction of equipment of electric power stations and industrial enterprises 1,000 (1,000) 100.0 JSC “Energetik HIC” Services rendering in the field of family rest provision, health improvement of children 11,507 − 49.0 JSC “Tulenergocomplect” Services in respect to material resources delivery, storage services, freight transportation services 71,114 (71,114) 50.0

Totally 2,059,798 (148,122) ______*On 23.07.2012, the amendments were registered in the Charter of JSC “Quadra – Repairs” in respect to the Company’s renaming to JSC “Quadra – R”.

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In 2012, spinning-off of the thermal grid business into a separate line of activity was continued on the basis of the resolution of the Board of Directors dd. 27.06.2011. On 14.06.2012, LLC “Novomoskovsk HGC” and LLC “Tula HGC” were registered. On 29.11.2012, LLC “Tambov Heat Company” was registered.

On 23.08.2012, the following subsidiary company ceased its activities by way of reorganization in the form of transformation: JSC “Smolensk Heat Grid Company” into LLC “Bryansk HGC” and subsidiary company JSC “Kursk Heat Grid Company” into LLC “Kursk HGC”.

On 13.06.2012, the subsidiary company LLC “Orel HGC” ceased to carry out its activities by way of reorganization in the form of accession to another subsidiary LLC “OHGC”.

On 26.07.2012, the subsidiary company JSC “Quadra – R” acquired 51% shares of JSC “Energetik HIC”. Starting with the specified date, JSC “Quadra – Power Generation” accounts these investments into JSC “Energetik HIC” as investments into a subsidiary company.

On 22.01.2013, JSC “Tulenergocomplect” was excluded from the Unified State Register of Legal Entities on the basis of the decision of the Arbitration Court of Tula Region dd. 03.12.2012 on the bankruptcy proceedings completion with regard to the case on recognizing JSC “Tulenergocomplect” as a bankrupt.

Investments into dependent companies as at 31.12.2012 ths. RUR Inital cost of Participatio Name and legal form financial n interest, of organization Seat Type of activities investments %

JSC “Technotest - Installation and repair works, Energo” including facilities controlled by the bodies of the State 5, Voznesenkogo City Technical Inspection of Street,Tula, 300026 RF 49 49.0

Totally 49

On 03.08.2012, the dependent company LLC “Kursk Energiya” (the ownership interest of “Quadra – Power Generation” is 49%) was excluded from the Unified State Register of Legal Entities owing to a voluntary liquidation on the basis of the resolution of the extraordinary participants’ meeting dd. 14.02.2012. The cost of the financial investments in LLC “Kursk Energiya” in the amount of RUR 2,450 ths. was written off to miscellaneous expenses.

Investments into other companies as at 31.12.2012 ths. RUR Name and legal Initial cost of form of financial Reserve for organization Seat Type of activities investments devaluation

JSC “RusHydro”* 51, Respubliki Street, Electric power production Krasnoyarsk, 660099

73,449 − JSC “Corporation 32/32, Consulting Novomoskovsk- Komsomolskaya services invest” Street, Novomoskovsk, Tula Region, 301650

1,312 (1,312)

Totally 74,761 (1,312) ______* As at 31.12.2012, the financial investments into the shares of JSC “RusHydro” are entered in books at the current market value in the amount of RUR 33,179 ths. (31.12.2011: RUR 43,640 ths; 31.12.2010: RUR 74,128 ths.).

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3.3. Miscellaneous noncurrent assets

Structure of other noncurrent assets ths. RUR 31/12/2012 31/12/2011 31/12/2010

Capital construction-in-process* 9,247,920 6,307,652 6,288,021 Advances paid to construction contractors and suppliers of equipment ** 4,765,749 1,852,278 2,977,253 Long-term deferred expenses*** 214,987 291,459 280,033 Long-term receivables (Explanation # 3.6) 323,708 766,318 130,397 Settlements as regards to the property contribution into the charter capital of LLC “OHGC” 221,814

Totally 14,552,364 9,217,707 9,897,518

** Advances paid to construction contractors and suppliers of equipment are presented net of indemnified VAT.

* Capital construction-in-process ths. RUR 2012 2011

Net balance as at reporting period beginning 6,307,652 6,288,021

Receipts

Capital investments for period 5,864,491 7,180,123 Miscellaneous receipts 778 725

5,865,269 7,180,848

Retirements

Putting of fixed asset facilities in operation (2,915,285) (7,129,848) Writing off of worn-out and obsolete facilities (7,000) (24,446) Sales of facilities of construction-in-process (1,046) (4,180) Other retirement (1,670) (2,743)

(2,925,001) (7,161,217)

Net balance as of reporting period end 9,247,920 6,307,652

The most significant facilities of construction-in-process put into operation in the years 2012 and 2011 are as follows: ths. RUR 31/12/2012 31/12/2011

Reconstruction of the Livenskaya TPP with application of 30 MW GTU 1,493,505 − Boost pumping station #3, Smolensk 217,022 − Reconstruction of the North-Western Boiler of Kursk with application of GSU − 4,128,871 Reconstruction of the Kaluzhskaya TPP with application of GTU − 1,293,649

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List of the main facilities of construction-in-process ths. RUR 31/12/2012 31/12/2011 31/12/2010

Expansion of the Novomoskovsk SDPS with application of GSU 6,326,774 3,919,615 1,309,314 Reconstruction of the Voronezhskaya TPP -1. Construction of GSU-223 MW 1,153,809 − − Expansion of the Dyagilevskaya TPP. Construction of boiler KVGM-100 295,214 275,513 224,247 Reconstruction of the Dyagilevskaya TPP. Construction of GSU-115 MW 292,692 − − Gas turbine LM 6000 PD 246,074 − − Reconstruction of the Alexinskaya TPP. Construction of GSU-115 MW 200,956 − − Miscellaneous 732,401 2,112,524 4,754,460

Totally 9,247,920 6,307,652 6,288,021

** Main construction contractors and suppliers of equipment as at 31.12.2012 ths. RUR 31/12/2012 31/12/2011 31/12/2010

Siemens lndustrial Turbomachinery AB 2,291,064 499,655 − JSC “Podolsk Machine-Building Plant” 558,580 − − Siemens, s.r.o., odstepny zavod Industrial Turbomachinery 558,328 − − OJSC “Zarubezhenergoproekt” 485,417 326,963 132,946 GE PACKAGED POWER, Inc 426,370 − 18,105 CJSC “Energoproekt” 250,000 − 80,558 LLC “Instar Logistics” 149,000 − 540 Miscellaneous* 46,990 1,025,660 2,745,104

Totally 4,765,749 1,852,278 2,977,253 ______* As at 31.12.2012 and 31.12.2011, the amount of the advances paid to other construction contractors and suppliers of equipment is entered in books net of the reserve for doubtful debts in the amount of RUR 75, 068 ths. (as at 31.12.2010 no reserve for doubtful debts was created).

*** Long-term deferred expenses ths. RUR 31/12/2012 31/12/2011 31/12/2010

Settlements under leasing contracts 91,290 149,139 227,238 Expenditures for the technological connection of the generating equipment to the electric grids 90,351 97,726 − Software products 20,937 28,199 31,382 Right to access electronic databases 8,571 9,485 10,400 Miscellaneous deferred expenses 3,838 6,910 11,013

Totally 214,987 291,459 280,033

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3.4. Inventory stocks ths. RUR 31/12/2012 31/12/2011 31/12/2010 Reserve Reserve Reserve for decline for decline for decline Cost in value Cost in value Cost in value

Raw material, materials and other similar valuables, including:

Fuel – black oil fuel 1,090,641 − 962,972 (10,882) 1,032,008 − Fuel – coal 177,846 − 213,296 − 181,943 − Fuel – miscellaneous 353 − 355 − 358 − Spare parts 203,658 (940) 184,659 (676) 129,066 (687) Raw material and materials 307,396 (11,210) 319,709 (16,006) 304,389 (1,907)

1,779,894 (12,150) 1,680,991 (27,564) 1,647,764 (2,594)

Goods to be resold 2,535 − 5,197 − 5,196 − Goods shipped* − - 191,629 (103,052) − −

1,782,429 (12,150) 1,877,817 (130,616) 1,652,960 (2,594) ______* In December of 2011, JSC “Quadra – Power Generation” concluded a purchase and sale agreement of bulk thermal wires and transferred them to the buyer under a transfer and acceptance certificate. According to the current rules of the bookkeeping, the Company shown incomes and expenditures in respect to the facilities which retired in 2012 as at the date of transfer of the ownership right to the facilities to the buyer. Before the specified date, the Company entered in books the facilities as part of the goods shipped at the residual value of RUR 191,629 ths, net of the reserve for decline in value in the amount of RUR 103,052 ths. The amount of the reserve is determined as a difference between the sales price without VAT and balance sheet value of the retired facilities.

Commodity stocks and supplies (“CSS”) under custody

ths. RUR 31/12/2012 31/12/2011 31/12/2010

Technological fuel 236,665 169,807 153,817 Mobilization CSS 619 774 1,706 Miscellaneous 21 4,649 4,653

Totally 237,305 175,230 160,176

3.5. Miscellaneous current assets ths. RUR 31/12/2012 31/12/2011 31/12/2010

Settlements under leasing contracts 66,262 86,218 100,285 Software products 18,171 24,518 17,982 Expenditures for technological connection of generating equipment to electric grids 7,376 7,376 − Expenditures as regards insurance contracts 6,125 3,993 3,321 Right to access electronic databases 914 915 914 Miscellaneous deferred expenses 3,517 4,438 15,389 Miscellaneous current assets 5,078 477 833

Totally 107,443 127,935 138,724

147

3.6. Receivables

Receivables of the buyers are entered in books in the balance sheet net of the reserve for doubtful debts. To reduce maximally the non-payments risk, the receivables of buyers and suppliers which are not secured by any guarantees (suretyships) were included into the reserve for doubtful debts as at 31.12.2012; at the executive board's estimation these receivables will not be repaid within the year 2013 with a high probability degree.

As at 31.12.2012, 31.12.2011 and 31.12.2010, the receivables net of the reserve for doubtful debts were presented in the following way:

ths. RUR Long-term receivables* Short-term receivables 31/12/2012 31/12/2011 31/12/2010 31/12/2012 31/12/2011 31/12/2010

Buyers and customers 316,411 757,806 120,117 6,874,457 5,359,982 4,206,484 Advances paid 3,890 3,890 3,929 279,387 465,747 99,476 Miscellaneous debtors 3,407 4,622 6,351 525,308 290,735 194,571

Totally 323,708 766,318 130,397 7,679,152 6,116,464 4,500,531 ______* Long-term receivables are presented by the overdue receivables with an expected repayment period of over 12 months.

Flow of the reserve for doubtful debts ths. RUR Long-term receivables Short-term receivables 2012 2011 2012 2011

Net balance as at reporting period beginning 611,733 196 1,582,152 1,547,630 Accrual of reserve within period − 611,733 849,256 696,221 Use of reserve − (196) (17,764) (30,868) Recovery of reserve (56,590) − (648,458) (630,831)

Net balance as at reporting period end 555,143 611,733 1,765,186 1,582,152

148

Flow of long-term receivables ths. RUR 31/12/2011 Retired 31/12/2012 Amount Amount before the Reserve for before the Reserve for reserve doubtful Balance Reserve Reclassific reserve doubtful Balance creation debts sheet value Entered Repayment Writing off change ation creation debts sheet value

Buyers and customers* 1,369,539 (611,733) 757,806 − (143,032) − 56,590 (354,953) 871,554 (555,143) 316,411 Advances paid 3,890 − 3,890 − − − − − 3,890 − 3,890 Miscellaneous debtors 4,622 − 4,622 − (162) − − (1,053) 3,407 − 3,407

Totally 1,378,051 (611,733) 766,318 − (143,194) − 56,590 (356,006) 878,851 (555,143) 323,708

Ths. RUR 31/12/2010 Retired 31/12/2011 Amount Amount before the Reserve for before the Reserve for reserve doubtful Balance Reserve Reclassific reserve doubtful Balance creation debts sheet value Entered Repayment Writing off change ation creation debts sheet value

Buyers and customers* 120,313 (196) 120,117 (196,512) (196) (611,537) 1,445,934 1,369,539 (611,733) 757,806 Advances paid 3,929 3,929 (39) 3,890 − 3,890 Miscellaneous debtors 6,351 6,351 (114) (1,615) 4,622 − 4,622

Totally 130,593 (196) 130,397 (196,626) (196) (611,537) 1,444,280 1,378,051 (611,733) 766,318

* Buyers and customers having the biggest indebtedness amount ths. RUR 31/12/2012 31/12/2011 31/12/2010

Municipal Unitary Enterprise “Gorteploset”, Kursk 869,836 1,069,521 120,117 Municipal Unitary Enterprise “Smolenskteploset” − 300,000 −

Totally 869,836 1,369,521 120,117

Flow of short-term receivables of buyers and customers ths. RUR 31/12/2011 Retired 31/12/2012 Amount Amount before the Reserve for before the Reserve for reserve doubtful Balance Reserve Reclassific reserve doubtful Balance creation debts sheet value Entered Repayment Writing off change ation creation debts sheet value

Buyers of thermal power* 4,537,241 (843,825) 3,693,416 19,135,122 (18,318,314) (15,469) 79,361 356,670 5,695,250 (764,464) 4,930,786 Buyers of electric power and capacity** 2,224,251 (600,728) 1,623,523 23,154,240 (22,708,859) (1,912) (210,754) (1,717) 2,666,003 (811,482) 1,854,521 Miscellaneous buyers 130,409 (87,366) 43,043 502,537 (470,394) (323) 14,287 − 162,229 (73,079) 89,150

Totally 6,891,901 (1,531,919) 5,359,982 42,791,899 (41,497,567) (17,704) (117,106) 354,953 8,523,482 (1,649,025) 6,874,457

ths. RUR 31/12/2010 Retired 31/12/2011 Amount Amount before the Reserve for before the Reserve for reserve doubtful Balance Reserve Reclassific reserve doubtful Balance creation debts sheet value Entered Repayment Writing off change ation creation debts sheet value

Buyers of thermal power* 4,439,125 (861,979) 3,577,146 20,858,352 (19,284,788) (29,749) 18,154 (1,445,699) 4,537,241 (843,825) 3,693,416 Buyers of electric power and capacity** 1,194,279 (593,051) 601,228 24,150,802 (23,120,830) (7,677) 2,224,251 (600,728) 1,623,523 Miscellaneous buyers 100,818 (72,708) 28,110 270,256 (240,431) (14,658) (234) 130,409 (87,366) 43,043

Totally 5,734,222 (1,527,738) 4,206,484 45,279,410 (42,646,049) (29,749) (4,181) (1,445,933) 6,891,901 (1,531,919) 5,359,982

150

* Buyers of thermal power having the biggest amount of indebtedness ** Buyers of electric power and capacity having the biggest amount of indebtedness

ths. RUR ths. RUR

31/12/2012 31/12/2011 31/12/2010 31/12/2012 31/12/2011 31/12/2010

JSC “Lipetsk City Energy Company” 804,582 461,394 333,274 JSC “Financial Settlements Center” 719,636 458,880 799,997 LLC “Smolensk HGC” 556,275 – – JSC “Nurenergo” 252,091 223,101 115,381 LLC “Tambov HGC” 463,406 – – JSC “Tulaenergosbyt" 184,008 48,367 – Municipal Unitary Enterprise “Smolenskteploset” 420,582 221,117 351,604 JSC “Kurskregionenergosbyt” 140,481 18,290 – LLC “OHGC” / LLC “Orel HGC” 208,030 274,785 351,667 JSC “Nizhnovatomenergosbyt” 132,762 86,327 33,273 Municipal Unitary Enterprise “Ryazan ME of thermal grids” 160,421 303,602 336,329 JSC “Smolenskenergosbyt” 85,477 24,023 – LLC “State Management Company JSC “Dagestan Energy Selling “Levoberezhnaya” 139,709 90,594 62,869 Company” 62,284 242,694 118,270 LLC “Voronezh HGC” 96,323 – – Municipal Unitary Enterprise “Gorteploset” 96,146 114,357 452,394 Totally 1,576,739 1,101,682 1,066,921 JSC “Belgorod Heat Grid Company” 90,244 214,699 194,052 Municipal Unitary Enterprise “Tambovinvestservice” 84,822 489,498 338,880

Totally 3,120,540 2,170,046 2,421,069

151

Flow of advances paid to suppliers ths. RUR 31/12/2011 Retired 31/12/2012 Amount Amount before the Reserve for before the Reserve for reserve doubtful Balance Reserve Reclassific reserve doubtful Balance creation debts sheet value Entered Repayment Writing off change ation* creation debts sheet value

Suppliers of fuel** 369,813 (212) 369,601 32,811 (363,168) − − − 39,456 (212) 39,244 Miscellaneous*** 96,223 (77) 96,146 121,081 (86,427) (330) − 109,673 240,220 (77) 240,143

Totally 466,036 (289) 465,747 153,892 (449,595) (330) − 109,673 279,676 (289) 279,387 ______* In 2012, due to putting into operation of the facilities of construction-in-process “Reconstruction of the Livenskaya TPP with application of GTU 30 MW” in December of 2012 and “Reconstruction of the Kaluzhskaya TPP with application of GTU” in 2011, the advances paid to IDGC of Center, JSC – Branch of “Orelenergo” and IDGC of Center and Volga Region, JSC - Branch "Kalugaenergo” as regards the services of technological connection of generating equipment of the stated above facilities of construction-in-process are reclassified from the noncurrent assets into advances paid to suppliers of the services in the amounts of RUR 36,365 ths. and RUR 73,392 ths. accordingly. ths. RUR 31/12/2010 Retired 31/12/2011 Amount Reserve Amount Reserve before the for Balance before the for Balance reserve doubtful sheet Repaymen Reserve Reclassifi reserve doubtful sheet creation debts value Entered t Writing off change cation* creation debts value

Suppliers of fuel** 29,032 − 29,032 403,883 (63,102) − (212) − 369,813 (212) 369,601 Miscellaneous*** 70,444 − 70,444 80,028 (163,791) (60) (77) 109,602 96,223 (77) 96,146

Totally 99,476 − 99,476 483,911 (226,893) (60) (289) 109,602 466,036 (289) 465,747 ______In 2011, due to putting into operation of the facility “Reconstruction of the Voronezhskaya TPP-2 with application of GSU” in December of 2010, the advances paid to IDGC of Center and Volga Region, JSC - Branch “Voronezhenergo” and JSC “VEKS Voronezhskiy Ekskavator” as regards the services of technological connection of generating equipment are reclassified from the noncurrent assets into advances paid to suppliers of the services in the amounts of RUR 104,986 ths. and RUR 4,577 ths. accordingly.

152

Flow of other short-term receivables ths. RUR 31/12/2011 Retired 31/12/2012 Amount Amount before the Allowance before the Allowance reserve for doubtful Balance Reserve Reclassific reserve for doubtful Balance creation accounts sheet value Entered Repayment Writing off change ation creation accounts sheet value

Overpayment in respect to taxes and contributions 161,789 − 161,789 − (42,858) − − − 118,931 − 118,931 Penalties, fines, forfeits under contracts 35,970 (26,602) 9,368 136,623 (90,333) (351) (16,478) 48 81,957 (43,080) 38,877 Settlements in respect to reclamations 25,116 (22,796) 2,320 54,109 (53,781) − 24 (2,320) 23,124 (22,772) 352 Advances under leasing contracts 11,837 − 11,837 45,295 (57,132) − − − − − − Settlements for sold fixed assets 10,048 − 10,048 429,234 (116,899) − (29,547) (350) 322,033 (29,547) 292,486 Settlements for sold CSS 1,510 (45) 1,465 335,489 (286,231) (43) (16,792) − 50,725 (16,837) 33,888 Settlements in respect to interest receivable 542 − 542 17,370 (17,205) − − − 707 − 707 Miscellaneous debtors 93,867 (501) 93,366 69,763 (121,224) (58) (3,135) 1,355 43,703 (3,636) 40,067

Totally 340,679 (49,944) 290,735 1,087,883 (785,663) (452) (65,928) (1,267) 641,180 (115,872) 525,308

ths. RUR 31/12/2010 Retired 31/12/2011 Amount Amount before the Allowance before the Reserve for reserve for doubtful Balance Reserve Reclassific reserve doubtful Balance creation accounts sheet value Entered Repayment Writing off change ation creation debts sheet value

Overpayment in respect to taxes and contributions 39,030 − 39,030 122,759 − − − − 161,789 − 161,789 Penalties, fines, forfeits under contracts 80,263 (19,835) 60,428 222,991 (265,639) (1,138) (6,767) (507) 35,970 (26,602) 9,368 Settlements in respect to pretensions 25,116 − 25,116 81 (81) − (22,796) − 25,116 (22,796) 2,320 Advances under leasing contracts 19,318 − 19,318 60,054 (67,535) − − − 11,837 − 11,837 Settlements for sold fixed assets 9,366 − 9,366 29,136 (28,460) − − 6 10,048 − 10,048 Settlements for sold CSS 1,977 (57) 1,920 36,464 (36,913) (12) 12 (6) 1,510 (45) 1,465 Settlements in respect to interest receivable 241 − 241 39,216 (38,915) − − − 542 − 542 153

Miscellaneous debtors 39,152 − 39,152 135,800 (81,154) (2,052) (501) 2,121 93,867 (501) 93,366

Totally 214,463 (19,892) 194,571 646,501 (518,697) (3,202) (30,052) 1,614 340,679 (49,944) 290,735

154

Overdue receivables ths. RUR 31/12/2012 31/12/2011 31/12/12010 Reserve for Reserve for Reserve for doubtful doubtful doubtful Cost debts Cost debts Cost debts

Buyers and customers 4,322,475 (2,136,078) 3,175,300 (2,143,651) 1,786,809 (1,504,763) Advances paid 90,972 (289) 14,783 − 11,882 − Miscellaneous debtors 92,075 (65,652) 33,398 (17,320) 42,265 (19,455)

4,505,522 (2,202,019) 3,223,481 (2,160,971) 1,840,956 (1,524,218)

Reserve for doubtful debts as to the overdue receivables is not created in the event the Company has an arrangement of the schedule with the debtors and ways of the existing indebtedness repayment, as well as a sufficient surety in a possibility of its indemnification.

3.7. Short-term financial investments ths. RUR 31/12/2012 31/12/2011 31/12/2010

Loans granted* 63,945 89,950 − Right to claim debt under assignment agreement ** 1,309 1,636 1,636

Totally 65,254 91,586 1,636 ______* Loans granted as at 31.12.2012 and 31.12.2011 represent the indebtedness of subsidiary companies JSC “Quadra – Power Generation” under target loan contracts (Explanation #6). ** As at 31.12.2012 the right to claim debt is entered in books in the balance sheet net of the reserve for possible losses in the amount of RUR 1,309 ths. (31.12.2011 and 31.12.2010: RUR 1,636 ths.).

3.8. Charter capital

As at 31.12.2012, 2011 and 31.12.2010, the Company’s charter capital was represented by the following way:

Nominal value Total number of of Charter capital, shares, pcs. 1 share, RUR ths. RUR

Ordinary shares 1,912,505,577,759 0.01 19,125,056 Preferred shares 75,272,938,838 0.01 752,729

Totally 1,987,778,516,597 19,877,785

As at 31.12.2012 and 31.12.2011, no ordinary shares were owned by the members of the Company’s Management Board (31.12.2010: 0.004474%).

3.9. Reserve capital

According to the Company’s Charter, in 2012 the Annual General Meeting of Shareholders passed a resolution to assign a part of the net profit of 2011 (in the amount which doesn’t exceed 5% of the charter capital amount as at the date of holding the Annual General Shareholders’ Meeting) in the amount of RUR 46,411 ths. to the reserve fund. As at 31.12.2012, the reserve fund amount was RUR 282,645 ths. (31.12.2011: RUR 236,234 ths.; 31.12.2010: RUR 156,192 ths.). 3.10. (Loss) earnings per share

2012 2011

Base (loss) earnings, ths. RUR (619,511) 914,145 Average weighted number of the circulating ordinary shares, ths. shares 1,912,505,578 1,912,505,578 Base (loss) earnings per share, RUR (0.0003) 0.0005

Base earnings (loss) per share are calculated according to the Methodological Recommendations on the order of formation of the accounting reports indicators, approved by Order #29n dd. 21.03.2000 of the RF Ministry of Finance.

Since the Company had issued no bonds in the reporting year, the terms of issue of which stipulated conversion into an additional number of shares, and no other events occurred, which were related to increase in the number of the placed ordinary shares, no diluted earnings (loss) per share were calculated.

3.11. Credits and loans

Long-term credits and loans ths. RUR 31/12/2012 31/12/2011 31/12/2010

Tula department #8604 of JSC “Sberbank of Russia” 5,278,597 920,316 − Branch of JSC “Gazprombank”, Tula 3,048,121 − 158,241 CJSC The Royal Bank of Scotland (credit in $ US) − 482,942 457,154 Bonded loan − − 11,918

Totally 8,326,718 1,403,258 627,313

In the reporting period, the Company raised the following long-term credits to finance the investment programs: ths. RUR Amount of Interest rate Contract monetary assets (range in respect duration expiry raised in to trenches) date 2012

Tula department #8604 September of of JSC “Sberbank of Russia” 8.05 2015 3,179,684 Tula department #8604 from 10.11 to September of of JSC “Sberbank of Russia” 11.98 2019 1,178,597 from 10.50 to Branch of JSC “Gazprombank”, Tula 12.00 April of 2019 3,048,121

Totally 7,406,402

In November of 2012, JSC “Quadra – Power Generation” repaid early the credit amount under the credit contract dd. 08.11.2010 with CJSC The Royal Bank of Scotland in the amount of USD 15,000 ths. The contract didn’t stipulate any forfeits tied with the credit early repayment.

156

Short-term credits and loans ths. RUR 31/12/2012 31/12/2011 31/12/2010 Principle Principle Principle debt debt debt amount amount amount with including with including with including interest interest* interest interest * interest interest *

Tula department #8604 of JSC “Sberbank of Russia” 2,287,585 40,585 898,679 10,179 1,173,912 1,163 Branch of JSC “Gazprombank”, Tula 1,111,800 33,652 2,588,669 11,659 882,741 1,317 Bonded loan − − 11,996 78 76 76 CJSC The Royal Bank of Scotland − − 1,528 1,528 1,534 1,534

Totally 3,399,385 74,237 3,500,872 23,444 2,058,263 4,090 ______* Amount of interest payable as at 31.12.2012, 31.12.2011 and 31.12.2010 includes interest in respect to the long-term credits and loans.

In the reporting period, interest on the credits was accrued in the amount of RUR 681,581 ths. (2011: RUR 209,203 ths.), on the bonds – in the amount of RUR 397 ths. (2011: RUR 953 ths.). Interest in the amount of RUR 419,163 ths. (2011: RUR 23,851 ths.) is posted to the cost increase of the fixed assets, interest in the amount of RUR 262,815 ths. (2011: RUR 186,305 ths.) is entered in books in the income statement in the line “Interest payable”.

As at 31.12.2012, the Company had an opportunity to raise additional monetary assets in respect to the lines of credit opened as at the reporting period end. ths. RUR Free limit Contract amount in duration expiry respect to the date line of credit

Branch of JSC “Gazprombank”, Tula August of 2013 2,064,472 Branch of JSC “Gazprombank”, Tula August of 2014 407,380 Branch of JSC “Gazprombank”, Tula September of 2017 1,450,000 Branch of JSC “Gazprombank”, Tula April of 2019 3,951,879 Branch of JSC “Gazprombank”, Tula October of 2019 3,000,000 Tula department #8604 of JSC “Sberbank of Russia” August of 2013 183,000 Tula department #8604 of JSC “Sberbank of Russia” September of 2019 1,791,403

Totally 12,848,134

Limitations stipulated by credit agreements

Significant part of the credit agreements with the banks contains certain limitations which must be observed by the Company, including:

supporting of separate financial coefficients at the established levels (for example a ratio of EBITDA indicator to the net indebtedness amount); limitations for pledges and retirements of separate assets and investments into subsidiary enterprises; limitations for restructuring and other forms of reorganization and liquidation without a receipt of a bank’s approval; support of a certain minimal volume of the monetary receipts, processed through settlement accounts of a bank within a reporting period (month, quarter, as well as year); and also receipt of approval by a bank for the additional credits and loans receipt and guarantees assignment by the Company.

Banks are entitled to claim early repayment of the credits assigned, if the Company violates the limitations established in the respective credit agreements.

157

3.12. Payables ths. RUR Received in 2012 Retired in 2012 As a result of economic operations (amount of Interest, other debt on penalties, Written-off to 31/12/2011 transaction) accruals due Repayment financial result 31/12/2012

Suppliers and contractors

Construction entities* 691,205 5,809,821 − (5,446,203) (230) 1,054,593 Gas suppliers** 38,736 25,241,710 − (24,554,098) − 726,348 Suppliers of electricity and capacity on WMEC*** 111,583 3,169,586 − (3,109,436) − 171,733 Other suppliers of electricity and heat energy 35,142 1,179,861 − (1,116,691) − 98,312 Repair entities 101,692 1,584,214 − (1,638,037) (102) 47,767 Services providers 90,780 1,463,952 − (1,498,977) (212) 55,543 Materials suppliers 33,599 1,676,941 − (1,669,109) − 41,431 Suppliers of black oil, coal − 189,431 − (189,178) − 253 Suppliers of other fuel − 102,845 − (102,845) − − Other settlements with suppliers 3,661 90,303 − (89,290) − 4,674

1,106,398 40,508,664 − (39,413,864) (544) 2,200,654

Debt on labor remuneration to entity’s personnel 152,025 3,488,148 − (3,493,862) − 146,311

Debt to budget and non-budgetary funds 313,716 2,399,414 1,923 (2,169,477) − 545,576

Advanced received

Consumers of electricity and heat energy 113,964 89,013 − (111,135) (1,021) 90,821 Indemnity payment on preliminary sale and purchase agreement 104,520 − − (104,520) − − For services of connection to heat grid of LLC “SU-5” trust “Lipetskstroy-M” (concession of JSC “NLMK”) 85,548 − − − − 85,548 Others 2,835 4,327 − (1,544) (7) 5,611

306,867 93,340 − (217,199) (1,028) 181,980

Other creditors 29,848 805,856 12,812 (823,930) (16) 24,570

Total 1,908,854 47,295,422 14,735 (46,118,332) (1,588) 3,099,091

ths. RUR. Received in 2011 Retired in 2011 As a result of economic operations (amount of Interest, other Written-off to debt on penalties, financial 31/12/2010 transaction) accruals due Repayment result 31/12/2011

Suppliers and contractors

Construction entities* 544,017 8,254,481 − (8,107,261) (32) 691,205 Gas suppliers** 219,550 24,189,653 − (24,370,467) − 38,736 Suppliers of electricity and capacity on WMEC*** 82,723 3,196,847 − (3,167,987) − 111,583 Other suppliers of electricity and heat energy 123,239 1,634,801 − (1,722,898) − 35,142 Repair entities 118,308 1,537,795 − (1,554,411) − 101,692 Services providers 81,104 1,616,325 − (1,606,638) (11) 90,780 Materials suppliers 52,065 1,846,390 − (1,864,851) (5) 33,599 Suppliers of other fuel 1,785 367,460 − (367,460) (1,785) − Other settlements with suppliers 94 59,629 − (56,062) − 3,661

1,222,885 42,703,381 − (42,818,035) (1,833) 1,106,398

Debt on labor remuneration to entity’s personnel 140,841 3,384,864 − (3,373,680) − 152,025

Debt to budget and non-budgetary funds 549,462 2,703,484 819 (2,940,049) − 313,716

Advanced received

Consumers of electricity and heat energy 98,596 97,919 − (82,493) (58) 113,964 Indemnity payment on preliminary sale and purchase agreement 84,746 33,254 − (13,480) − 104,520 For services of connection o JSC “NLMK” 85,543 5 − − − 85,548 Others 3,357 963 − (1,485) − 2,835

272,242 132,141 − (97,458) (58) 306,867

Other creditors 25,048 543,223 137,687 (675,840) (270) 29,848

Total 2,210,478 49,467,093 138,506 (49,905,062) (2,161) 1,908,854

159

Overdue payables ths. RUR 31/12/2012 31/12/2011 31/12/2010

Suppliers and contractors 144,882 82,378 91,781 Advances received 3,573 4,740 15,629 Other creditors 131 11 1,171

Total 148,586 87,129 108,581

Explanation of debt of the largest creditors ths. RUR 31/12/2012

* Main contractors – construction entities

CJSC “Energokaskad” 344,891 JSC “Group 4” 275,900 GE PACKAGED POWER, Inc 208,174 CJSC “Energoproekt” 86,940

** Main gas suppliers

LLC “Gazprom mezhregion Orel” 379,625 LLC “Gazprom mezhregion Lipetsk” 80,642 LLC “Gazprom mezhregion Belgorod” 66,486 LLC “Gazprom mezhregion Kursk” 52,001

*** Main suppliers of electricity and capacity on WMEC

JSC “Financial Settlements Center” 165,227

3.13. Profit tax

JSC “Quadra - Power Generation” defines the value of the current tax based on the book keeping data.

Reconcilement of contingent expense on profit tax and current profit tax, which is shown in the financial results statement according to RAS 18/02 for the years 2012 and 2011, is presented below: ths. RUR 2012 2011

Contingent income (expense) on profit tax 120,405 (273,651)

Permanent tax liabilities

In respect of depreciation of fixed assets, the results of reassessment of which are not considered for taxation purposes (69,338) (40,980) In respect of the expense which is not considered for taxation purposes (101,226) (139,907)

(170,564) (180,887)

Constant tax assets

In respect of the income which is not considered for taxation purposes 27,706 12,240

27,706 12,240

2012 2011

Increase /(reduction) in deferred tax assets

In respect of the loss of the current year 223,524 191,345 In respect of fixed assets, including due to: 9,808 16,887 non-coincidence of time frames and ways of depreciation accrual in book keeping and tax accounting 1,510 (2,845) loss as a result of sale of fixed assets, obtained according to the data of tax accounting under tax accounting data 8,298 19,732 In respect of the reserve for doubtful debts 27,250 3,185 In respect of liabilities on legal actions (66,835) (60,359) In respect of liabilities on vacations and other remuneration (24,324) 8,282 In respect of estimated liabilities (fines of WMEC) 32,270 − Others 4,372 102

206,065 159,442

Increase in deferred tax liabilities

In respect of fixed assets, due to non-coincidence of time frames and ways of depreciation accrual in book keeping and tax accounting (142,460) (596,798) In respect of capitalized interest on credits (84,358) (4,770) Others (1,700) (172)

(228,518) (601,740)

Total profit tax − −

161

Flow of deferred tax assets and liabilities ths. RUR Clarification Clarification of past of past Reclassificati periods’ tax, Reclassificati periods’ tax, 31/12/2010 Accrued on write-off 31/12/2011 Accrued on write-off 31/12/2012

Deferred tax assets

Loss of current year on tax accounting data − 191,345 − − 191,345 223,524 − 4,333 419,202 Liabilities on legal actions 128,877 (60,359) − − 68,518 (66,835) − − 1,683 Liabilities on fines of WMEC 32,270 − 32,270 Fixed assets depreciation 46,083 (2,845) − − 43,238 1,510 − − 44,748 Reserve for doubtful debts 37,077 3,185 − 40,041 80,303 27,250 − (104) 107,449 Liabilities on vocations, remunerations 75,366 8,282 − − 83,648 (24,324) − − 59,324 Exchange difference on advances provided to construction contractors in foreign currency 20,709 − − 20,709 − − − 20,709 Other differences 1,315 19,834 − − 21,149 12,670 − − 33,819

Total 309,427 159,442 − 40,041 508,910 206,065 − 4,229 719,204

Deferred tax liabilities

Fixed assets depreciation 693,993 596,798 14,654 − 1,305,445 142,460 13,048 − 1,460,953 Capitalized interest on credits 24,144 4,770 (14,654) (108) 14,152 84,358 (13,048) − 85,462 Assessment of financial investments 25,112 − − − 25,112 − − − 25,112 Other differences 1,443 172 − − 1,615 1,700 − − 3,315

Total 744,692 601,740 − (108) 1,346,324 228,518 − − 1,574,842 3.14. Income and expense on ordinary activities ths. RUR Revenue from sale of goods, Cost of sold goods, products, products, works, services works, services 2012 2011 2012 2011

Electricity sale 12,055,184 12,317,616 (12,611,284) (12,192,170) Sale of electric capacity 7,567,054 8,149,165 (3,893,885) (3,849,190) Sale of heat energy and its transportation 15,543,144 17,123,999 (17,491,338) (17,596,585) Sale of other goods, products, works, services 1,125,129 846,574 (967,635) (687,319)

Total 36,290,511 38,437,354 (34,964,142) (34,325,264)

Explanation of production costs (taking into account management expenses) ths. RUR 2012 2011

Material inputs 26,585,429 26,375,791 Labor payment costs 3,260,897 3,176,296 Depreciation 2,313,033 1,964,123 Deductions for social needs 888,055 956,949 Other costs 3,606,891 3,421,302

Total* 36,654,305 35,894,461 ______* In the total amount of costs, the expenses on ecological actions were RUR 145,325 in 2012 (2011: RUR 91,243 ths.).

According to the requirements of the laws on energy saving and energy efficiency improvement, information on total costs of payment for energy resources used by the Company are provided below. ths. RUR 2012 2011

Money assigned for payment to electricity suppliers 618,370 1,075,659

Purchased electricity (subject to VAT), including:

for production needs 620,670 1,011,916 for economic needs 11,044 12,780

Total 631,714 1,024,696

Money assigned for payment to heat energy suppliers 4,231 929

Purchased heat energy (subject to VAT), including:

for production needs − 206,531 for economic needs 5,008 3,047

Total 5,008 209,578

3.15. Estimated liabilities ths. RUR Change in 2012 31/12/2011 Accrued Used Recovered 31/12/2012

Liabilities on legal actions * 345,474 4,117 (44,205) (289,971) 15,415 Liabilities on payment of year-end bonuses 268,079 45,108 (96,476) (64,441) 152,270 Liabilities on payment of non- used vacations 150,163 351,771 (357,583) − 144,351 Liabilities on penal sanctions on WMEC** − 161,351 − − 161,351

Total 763,716 562,347 (498,264) (354,412) 473,387 ______* In March of 2012, the Company recognized income as a result of recovery of liability on legal actions in the amount of RUR 289,971 ths. based on the arbitration court’s judgment passed in favor of the Company. ** In connection with putting-off the dates of beginning of capacity supply due to untimely putting in operation of new construction facilities, namely: from 1 December 2012 to the expected one - 1 February 2013 in respect of the facility “Reconstruction of the Livenskaya TPP applying GTU 30 MW”, and from 1 December 2012 to the expected one - 1 April 2013 in respect of the facility “Expansion of the Novomoskovskaya SDPS applying GSU”, and according to the conditions of the completed capacity supply contracts, the Company recognized liabilities on the amount of penal sanctions, which it will be obliged to pay to WMEC purchasers for the period from 1 December 2012 to the actual date of capacity supply beginning.

ths. RUR Change in 2011 31/12/2010 Accrued Used Recovered 31/12/2011

Liabilities on legal actions 644,385 24,854 − (323,765) 345,474 Liabilities on payment of year-end bonuses 287,298 189,510 (192,837) (15,892) 268,079 Liabilities on payment of non- used vacations 126,553 369,386 (342,389) (3,387) 150,163

Total 1,058,236 583,750 (535,226) (343,044) 763,716

3.16. Other income and expense ths. RUR 2012 2011

Other income

Income from recovery of non-used part of the reserve for doubtful debts 705,048 630,831 Revenue from sale of fixed assets, stocks and other assets, except foreign currency 505,136 63,251 Income from recovery of non-used part of liability on legal actions 289,971 323,765 Fines, penalties, indemnities 136,623 222,991 Income from recovery of non-used part of reserve for devaluation of material and production stocks 119,481 1,997 Property entered in books in the process of dismantlement of FA and construction-in-process 82,776 31,232 Income from recovery of non-used part of liability on remuneration payment 64,441 15,892 Income from compensation of expenses, recovery of loss 54,122 193 Property in surplus based on results of stock taking 27,356 1,235 Insurance payments receivable 24,312 2,739 Currency difference (payment in the foreign currency) 17,200 − Profit of past years, discovered in reporting year 8,768 58,480 Others 26,557 15,231

Total 2,061,791 1,367,837

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2012 2011

Other expenses

Reserve for doubtful debts 849,256 1,383,021 Expenses on sale of fixed assets, stocks and other assets, except foreign currency 535,035 52,743 Liabilities on fines on WMEC 161,351 − Welfare assistance and other payments to employees and pensioners 121,347 174,637 Reserve for devaluation of financial investments 70,723 10,000 Taxes at the expense of own funds 69,940 71,278 Expenses on retirement of assets in the process of writing-off, liquidation, etc. 64,141 30,163 Losses of past years discovered in the reporting year 38,476 131,385 Expenses in the event of purchase of foreign currency (exchange rate difference) 16,396 2,275 Change of market value of financial investments 10,461 30,488 Others 119,433 510,115

Total 2,056,559 2,396,105

The management believes that the amount of the past years’ loss identified in the reporting period is not material for accounting reports as a whole. On this basis, the adjustments relating to prior periods were shown in the structure of other incomes and expenses in the income statements for the year 2012.

3.17. Securities received ths. RUR 31/12/2012 31/12/2011 31/12/2010

Guarantees of the Company “Siemens Financial Services GmbH” as security for liabilities of “Siemens Industrial Turbomachinery AB” under the contract for delivery of GTU for the Dyagilevskaya TPP and under return of advance payments within the framework of contracts for delivery of GTU for the Dyagilevskaya TPP, Alexinskaya TPP, Kurskaya TPP-1 704,863 499,655 − Guarantees of the Company “Siemens Financial Services GmbH” as security for liabilities of Siemens, s.r.o., odštěpný závod Industrial Turbomachinery under return of advance payments within the framework of contracts for delivery of gas turbines for the Dyagilevskaya TPP, Alexinskaya TPP, Kurskaya TPP-1 155,466 − − Irrevocable stand-by letter of credit of Svenska Handelsbanken, New York Branch as security for performance of liabilities of GE Packaged Power Inc. Under the contract for delivery of GTU for the Voronezhskaya TPP-1 260,218 − − Bank guarantee received from JSC “MOSCOW CREDIT BANK” as security for liabilities of CJSC “Energoproekt” under the contract of construction of the energy unit GSU-115 at the Alexinskaya TPP 147,500 − − Other bank guarantees and suretyship 20,457 60,010 69,602

Total 1,288,504 559,665 69,602

The property taken in pledge is not used by the Company and is shown in the amount of actual debt of contractors at the reporting date.

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3.18. Security provided, property pledged ths. RUR Item of obligation 31/12/2012

Suretyship to Tula Division #8604 Security for responsibility of compliance of JSC “Sberbank of Russia” with credit agreements of subsidiaries of JSC “Quadra - Power Generation” 1,233,925 Suretyship to the Branch of JSC Security for responsibility of compliance “Gazprombank”, Tula with credit agreements of subsidiaries of JSC “Quadra - Power Generation” 630,356

Total 1,864,281

Securities issued by JSC “Quadra - Power Generation” in the form of suretyships to third parties are shown as the amount of debts of subsidiaries under relevant loan agreements.

At 31 December 2011 and 31 December 2010, the Company had no securities issued to third parties.

4. SEGMENT INFORMATION

The Company’s main operations are concentrated in one segment - production and sale of thermal energy and electricity (capacity) providing for 97% of the goods (works, services) sale revenue. The operations and results of the Company’s other segments are not significant and are not shown as separate operating segments in the statements.

5. CONTINGENT LIABILITIES

5.1. Court proceedings

In the management’s opinion, the currently existing legal proceedings or claims against the Company and final judgments passed in their respect do not include those which could have material adverse effect on the financial position of the Company.

5.2. Taxation

Russian tax legislation admits varying interpretations and is subject to frequent changes. Accordingly, interpretation of tax legislation in respect of the Company’s economic activities by tax authorities can differ from that of the management, so tax authorities may trace violations of tax legislation in implementation of certain operations by the Company. In this regard, the Company runs the risk of additional tax assessment, recovery of fines and penalties, the amount and degree of probability of which cannot be assessed with a sufficient degree of reliability.

In the opinion of the Company’s management, at 31 December 2012 the relevant legislation provisions were interpreted for them correctly, and the Company’s position from the point of view of tax laws will be stable.

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6. RELATED PARTIES

ONEXIM HOLDINGS LIMITED which owns 49.99999472% ordinary shares of the Company is a controlling party of JSC “Quadra - Power Generation”.

List of affiliated persons is presented on the website of the Company: http://www.quadra.ru/shareholders/disclosure_of_information/list_of_affiliates/

The following organizations are related parties of the Company, besides those specified on the website:

Non-state Pension Fund of the Electric Power Industry (non-commercial entity) of Moscow. It renders the services of non-state pension coverage of the Company’s employees; LLC IC “Soglasie”.

Material operations and balances on settlement of accounts with related parties

Related parties’ receivables ths. RUR 31/12/2012 31/12/2011 31/12/2010

LLC “Smolensk HGC” 583,441 − − LLC “Tambov HGC” 472,707 − − LLC “Ryazan HGC” 319,121 − − LLC “OHGC” (considering accession of LLC Orel HGC)* 208,031 390,519 351,667 LLC “Voronezh HGC” 119,098 − − LLC “Bryansk HGC” (earlier called JSC “Smolensk Heat Grid Company”)** 101,797 14,245 − JSC “Quadra - Q” 96,471 585 − JSC “Belgorod Heat Grid Company” 92,163 214,699 194,052 LLC “Kursk Energiya” − 16 −

Total 1,992,829 620,064 545,719 ______* At 31 December 2012, receivables of LLC “OHGC” were shown in the balance sheet net of the reserve for doubtful debts in the amount of RUR 70,954 ths. (31 December 2011: RUR 274,785 ths.). ** At 31 December 2012, receivables of LLC “Bryansk HGC” are shown in the balance sheet net of the reserve for doubtful debts in the amount of RUR 49,972 ths. (31 December 2011 and 2010, the reserve was not established).

The entire amount of receivables in respect of related parties is short-term receivables, payable in accordance with the terms of contracts within one year after the reporting date. All receivables are payable in cash.

Payables to related parties

Payables of the Company’s related parties amounted to RUR 2,314 ths. at 31 December 2012 (31 December 2011: RUR 5,879 ths.; 31 December 2010: RUR 2,229 ths.).

The entire amount of payables to related parties are short-term and will be payable in cash.

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Revenue from operations with related parties ths. RUR Heat energy sale revenue Other product sale revenue 2012 2011 2012 2011

LLC “Voronezh HGC” 1,675,147 − 82,384 − LLC “Smolensk HGC” 1,510,383 − 50,937 − LLC “Tambov HGC” 863,175 − 107,734 − JSC “Belgorod Heat Grid Company” 839,441 838,739 44,130 58,787 LLC “OHGC” 690,541 662,185 − 86 LLC “Ryazan HGC” 368,832 − 287,102 − LLC “Bryansk HGC” 114,840 38,035 94,950 416 JSC “Quadra – R” − − 2,074 3,991 LLC “Kursk Energiya” − − − 170

Total 6,062,359 1,538,959 669,311 63,450

During 2012, the amount of insurance indemnity received from LLC “IC “Soglasie” was RUR 24,204 ths. (2011: RUR 2,546 ths.).

Sales of products to related parties were performed on ordinary commercial terms, except the prices for the services to be regulated by tariff law. The cost of thermal energy sold was determined according to the rate established for each of the Company’s plant.

Purchases from related parties ths. RUR Insurance services Other types of purchases 2012 2011 2012 2011

LLC IC “Soglasie”* 107,570 62,189 − − JSC “Quadra – R” − − 427,642 87,093 JSC “Technotest-Energo” − − 6,874 9,099 LLC “OHGC” − − 2,449 72 LLC “Ryazan HGC” − 391 − JSC “Belgorod Heat Grid Company” − − 36 36

Total 107,570 62,189 437,392 96,300 ______* In December of 2012, the Company and IC “Soglasie” entered into property voluntary insurance contracts for the insurance period from 1 January 2013 to 31 December 2015.

Purchase of goods, works and services from related parties were performed on ordinary commercial terms, except for the prices of goods and services to be regulated by tariff law.

Transactions with the Non-state Pension Fund of the Electric Power Industry are made in the Company in accordance with the Regulation on Private Pension Coverage of Employees of JSC “Quadra - Power Generation”. In 2012, the Company transferred pension contributions to employees in the amount of RUR 30,965 ths. (2011: RUR 29,426 ths.), targeted contributions equaled RUR 1,548 ths. (2011: RUR 1,471 ths.).

In 2012, the Non-state Pension Fund of the Electric Power Industry paid pensions to the employees of JSC “Quadra - Power Generation” in the amount of RUR 44,907 ths. (2011: RUR 40,155 ths.), the balance of money with pension accounts at 31 December 2012 amounted to RUR 148,581 ths. (31 December 2011: RUR 163,281 ths.; 31 December 2010: RUR 162,274 ths.).

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Loans granted to related parties

In June - August of 2011, the Company granted a loan to LLC “OHGC” for a total of RUR 83,000 ths. on the terms of 8.4% per annum and maturity date of 31 May 2012. The amount of accrued interest for the year 2011 was RUR 3,396 ths.

In January – March of 2011, the Company granted a loan to LLC “Kursk Energiya” in the amount of RUR 6,950 ths. on the terms of 9.117% per annum and maturity date of 31 December 2011. The loan was not repaid in December of 2011. The amount of accrued interest for 2011 equaled RUR 542 ths. In 2012, the Company assigned the claim in respect of the loan of LLSC “Kursk Energiya”, the concession loss was RUR 6,800 ths.

In 2012, the Company provided short-term loans to subsidiaries. The interest rates on the granted loans were 9.65% to 10.00% per annum. The total amount of the interest accrued in 2012 under the loan contracts was RUR 17,153 ths. The amount of the interest repaid in 2012 was RUR 16,993 ths.

ths. RUR Change in 2012 31/12/2011 Granted Repaid 31/12/2012

LLC “Ryazan HGC” − 161,417 (107,660) 53,757 LLC “Bryansk HGC” − 18,650 (8,462) 10,188 LLC “Voronezh HGC” − 30,000 (30,000) − LLC “Smolensk HGC” − 222,900 (222,900) − LLC “OHGC” 83,000 111,000 (194,000) − LLC “Tambov HGC” − 13,070 (13,070) − LLC “Kursk Energiya” 6,950 − (6,950) −

Total 89,950 557,037 (583,042) 63,945

Fixed assets leased out to related parties (at residual value)

ths. RUR 31/12/2012 31/12/2011 31/12/2010

LLC “Tambov HGC” 484,535 − − LLC “Voronezh HGC” 446,547 − − LLC “Smolensk HGC” 392,609 − − LLC “Bryansk HGC” 189,732 − − LLC “Ryazan HGC” 146,395 − − JSC “Belgorod Heat Grid Company” 74,185 84,763 95,808 JSC “Quadra – R” 10,063 8,764 −

Total 1,744,066 93,527 95,808

Board of Directors

The Company’s Board of Directors consisted of 9 people at 31 December 2012, 11 people at 31 December 2011. The Board of Directors carries out strategic management of the Company’s activities, controls the activities of the executive body and is accountable to the Company’s shareholders.

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Membership of the Board of Directors approved on 22 May 2012:

Full name Position

Yulia Vasilievna Basova Executive Director of LLC “Group ONEXIM” Grigory Nikolaevich Bakaev — Daniel Lesin Wolfe Deputy General Director of JSC “Quadra - Power Generation” Christophe François Charlier Deputy General Director of LLC “Group ONEXIM” Vyacheslav Victorovich General Director of LLC “Altera Capital” Pivovarov Sergey Sergeevich Podsypanin Director of the Legal Administration of LLC “Group ONEXIM” Ekaterina Mikhailovna Salnikova Deputy Financial Director of LLC “Group ONEXIM” Mikhail Alexandrovich Deputy General Director of LLC “Group ONEXIM” Sosnovsky David Alexander Hurn Managing Director of the Representative Office of the limited liability company “Specialized Research Limited”

Information on the membership of the Board of Directors at 31 December 2011: Full name Position

Yulia Vasilievna Basova Executive Director of LLC “Group ONEXIM” Grigory Nikolaevich Bakaev General Directors of JSC “Quadra - Power Generation” Daniel Lesin Wolfe Deputy General Directors of JSC “Quadra - Power Generation” Boris Mikhailovich Kalalshnikov Managing Director of LLC “Sameta – Corporate Consulting” Christophe François Charlier Deputy General Directors of LLC “Group ONEXIM” Denis Evgenievich Lisitsky Chief of the Division for Coordination of Investor Relations in the Corporate Governance Department of JSC “UES SO” Sergey Sergeevich Podsypanin Director of the Legal Administration of LLC “Group ONEXIM” Ekaterina Mikhailovna Salnikova Deputy Financial Director of LLC “Group ONEXIM” Mikhail Alexandrovich Deputy General Director of LLC “Group ONEXIM” Sosnovsky Dmitry Alexandrovich Usanov Director for capital markets of JSC “Magnitogorsk Metallurgical Plant” David Alexander Hurn Managing Director of the Representative Office of the limited liability company “Specialized Research Limited”

No remuneration was paid to the members of the Board of Directors in 2011 and 2012.

General Director and Management Board

The Company’s current activities are managed by the Director General, election of whom is within the competence of the Company’s Board of Directors. The General Director is elected by the majority of votes of the Board of Directors participating in the meeting.

Vladimir Vitalievich Shelkov is the Company’s General Director as at 31 December 2012; Grigory Nikolaevich Bakaev was General Director at 31 December 2011 (powers of attorney were terminated on 22 September 2012).

The Company’s Management Board included the following officials of JSC “Quadra - Power Generation” at 31 December 2012:

Full name Position

Daniel Lesin Wolfe Director for investor relations of JSC “Quadra - Power Generation” Director for economy and finances of JSC “Quadra - Power Evgeniya Yurievna Mironenko Generation” Director for corporate governance and legal work of JSC “Quadra - Victor Valentinovich Tikhonov Power Generation” Vladimir Vitalievich Shelkov General Director of JSC “Quadra - Power Generation”

The amount of remuneration to key management personnel of the Company consists of the labor remuneration and bonuses stipulated by agreements. The total amount of short-term remuneration to key management personnel, including the General Director for the year 2012 amounted to RUR 245,692 ths. (2011: RUR 136,818 ths.), including personal income tax and insurance contributions.

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In October - November 2012, the Company entered into supplementary agreements to the employment agreements with key management personnel. These agreements establish the procedure, time frames and conditions for payment of dismissal compensations to the members of the Company’s senior management. The amount of such payments depends on the cause and date of termination by an employee of his/her activities in JSC “Quadra - Power Generation”. According to the above agreements, dismissal compensations are paid only if termination of activity occurs within one year as from the date when the stake of the companies that make up one group of persons with the company ONEXIM HOLDINGS LIMITED (according to the definition of such a group by Federal Law 135-FZ “On protection of competition” 26 July 2006) in the charter capital of the Company has become less than 25% of the Company’s charter capital. The amount of dismissal compensations to be paid by the Company varies from zero to RUR 98,490 ths.

No payments (contributions) of the Company under private pension coverage contracts ensuring payment of pensions were made in 2012 and 2011 to the members of the Board of Director in the event of pension triggers.

General Director V.V. Shelkov

Chief Accountant I.A. Lapitskaya

13 March 2013

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Schedule #6. Information on participation of JSC “Quadra - Power Generation” in commercial and non-commercial entities.

At 31.12.2012, JSC “Quadra - Power Generation” participates in 17 commercial entities (business companies):

Company name Type of Stake in CC % / number Par value of Actual value, Amount of reserve Actual value net investment of shares (stakes) pcs. investments, RUR for investments of reserve, RUR RUR devaluation, RUR 100% / 3,084,430,400 JSC “Belgorod Heat Grid Company” shares 2,899,364,576 1,742,242,033 - 1,742,242,033 pcs. JSC “Quadra – R” shares 100 % / 1,000,000 pcs. 1,000,000 1,000,000 - 1,000,000 - JSC “Tulenergocomplect” shares 50 % / 416,665 pcs. 41,666,500 71,114,055 - 71,114,055 - JSC “Energetic HIC” shares 49 % / 11,880,540 pcs. 11,880,540 11,507,009 - 11,507,009 LLC “Bryansk HGC” stakes 100 % 490,000 1,000,000 - 1,000,000 - LLC “Voronezh HGC” stakes 100 % 10,000 10,000 - 10,000 LLC “Kursk HGC” stakes 100 % 1,000,000 1,000,000 - 1,000,000 LLC “Novomoskovsk HGC” stakes 100 % 10,000 10,000 - 10,000 LLC “OHGC” stakes 100 % 390,576,080 231,824,291 - 75,007,588 156,816,704 LLC “Ryazan HGC” stakes 100 % 10,000 10,000 - 10,000 LLC “Smolensk HGC” stakes 100 % 10,000 10,000 - 10,000 LLC “Tambov HGC” stakes 100 % 10,000 10,000 - 10,000 LLC “Tula HGC” stakes 100 % 10,000 10,000 - 10,000 LLC “THC” stakes 50 % 50,000 50,000 - 50,000 JSC “Technotest-Energo” shares 49 % / 490 pcs. 49,000 49,000 - 49,000 JSC “Corporation Novomoskovskinvest” shares 0.1747 % / 1,312 pcs. 3,936 1,312,000 - 1,312,000 - 0.0142 % / 45,277,455 JSC “RusHydro” shares 45,227,455 33,178,861 - 33,178,861 pcs. TOTAL: 1,944,903,606

In 2012, the following changes occurred in the structure and value of investments: 1) On 13.06.2012, LLC “Orel HGC” was reorganized in the form of accession to LLC “OHGC”. The actual value of the investments at 31.12.2011 amounted to: in LLC “Orel HGC” RUR 10,000,000, in LLC “OHGC” RUR 221,824,291; 2) On 03.08.2012, activity of the subsidiary LLC “Kursk Energiya” was terminated as a result of voluntary liquidation. The actual value of the investments at 31.12.2011 amounted to RUR 2,450,000; 3) On 23.08.2012, JSC “Kursk Heat Grid Company” was reorganized in the form of transformation into LLC “Kursk HGC”. The actual value of the investments in JSC “Kursk Heat Grid Company” at 31.12.2011 amounted to RUR 1,000,000; 4) On 23.08.2012, JSC “Smolensk Heat Grid Company” was reorganized in the form of transformation into LLC “Bryansk HGC”. The actual value of the investments in JSC “Smolensk Heat Grid Company at 31.12.2011 amounted to RUR 1,000,000; 5) In 2012, the subsidiaries LLC “Tula HGC” and LLC “Novomoskovsk HGC” were established; 6) In 2012, Limited Liability Company “Tambov Heat Company” (LLC “THC”) with the stake of JSC “Quadra - Power Generation” equal to 50% was established; 7) On 31.12.2012, due to the increase in the charter capital of JSC “RusHydro”, the stake of JSC “Quadra - Power Generation” decreased from 0.0156 (at 31.12.2011) to 0.0142%. At 31.12.2012, JSC “Quadra - Power Generation” is a member of the following non-profit organizations: - NP “Market Council”; - NP “Council of Energy Producers”; - Interregional Sector Association “RaPe” (Russian Association of Electric Tools Manufacturers).

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Glossary

Company JSC “Quadra - Power Generation”, including branches and representative offices Dividend Part of the joint stock company’s profit distributed between shareholders according to the number and type of shares owned by them. Consumer Individual or legal entity which carry out use of electricity (capacity) and (or) thermal energy (capacity). Market capitalization Total market value of issued shares of a company; number of issued shares multiplied by their market price. Productive supply of Thermal energy supplied to the consumer (consumers) of thermal energy on the thermal energy border of the operational responsibility (balance sheet attribution).

Abbreviations AGSM Annual General Shareholders Meeting APP Atomic power plant AWP Autumn and winter period BM Balancing market BU Boiler unit CCPTI Center of collection and processing of technological information” CCO Competitive capacity outtake CFD Central federal district CHPP Combined heat and power plant CHS Central heating station CIW Construction and installation works CSC Capacity supply contracts CSS Capacity supply scheme DAM “Day-ahead” market FAEC Free agreement for electricity and capacity sale and purchase FBA Free bilateral agreement FCSM Federal Commission for Securities Market EDM Economic Development Ministry FFMS Federal Financial Markets Service FMC Capacity supply contracts in respect of the capacity produced using the facilities which supply capacity in the forced mode FPTZ Free power transfer zone FTS Federal Tariffs Service GNP Gross national product GMS General Meeting of Shareholders GOELRO Russia’s State Electrification Commission GSM General Shareholders Meeting GSU Gas steam unit GTU (GTUP, GT) Gas turbine unit (gas turbine power plant) HPP Hydroelectricity plant ICUF Installed capacity utilization factor IFRS International Financial Reporting Standards KPI Key performance indicators LGEK Lipetsk City Energy Company MICEX Moscow Interbank Currency Exchange NP Non-commercial partnership WGC Generating companies of the wholesale market OS Open switchgear PIP Priority investment projects PL Power line RA Regulated agreement for electricity (capacity) sale and purchase RAB Regulatory Asset Base (tariff regulation using the method of economically sound return on invested capital) RAS Russian Accounting Standards RBA Regulated bilateral agreements RDA Regional dispatching administrations RDC Research and development center RECs Regional energy commissions RG Regional generation (branch of the Company) RRD Retooling, reconstruction and development RS Regulated sector RS WME Regulated sector of the wholesale electricity (capacity) market SDE Subsidiary and dependent entities SDPS State district power station (thermal power plants) SEC Scientific and Engineering Council SFEC Specific fuel equivalent consumption SJSC Subsidiary joint-stock companies SO System operator STD Scientific and technical documentation TGC Thermal grid company TGC Territorial generating companies TPP Thermal power plant TS Turbine-generating set TSA Trading System Administrator of the Wholesale Electricity Market UDA United dispatching administrations UES United energy systems WME (WMEC) Wholesale market for electricity (capacity)

Units of measurement Gcal — gigacalorie — unit of thermal energy measurement Gcal/h — gigacalorie per hour — unit of thermal energy measurement kWh — kilowatt-hour — unit of electric energy amount measurement kW — kilowatt — unit of electric capacity measurement

Names of branches of JSC “Quadra - Power Generation” Southern Generation Branch of JSC “Quadra – Power Generation” - “Southern Generation” Voronezh RG Branch of JSC “Quadra – Power Generation” - “Voronezh Regional Generation” Eastern Generation Branch of JSC “Quadra – Power Generation” - “Eastern Generation” Western Generation Branch of JSC “Quadra – Power Generation” - “Western Generation” Kursk RG Branch of JSC “Quadra – Power Generation” - “Kursk Regional Generation” Orel RG Branch of JSC “Quadra – Power Generation” - “Orel Regional Generation” Ryazan RG Branch of JSC “Quadra – Power Generation” - “Ryazan Regional Generation” Central Generation Branch of JSC “Quadra – Power Generation” - “Central Generation”

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