Annual Report for 2012 OJSC “” Content

Address by Chairman of the Board of Directors ...... 2. Address by General Director ...... 3. 1. Mosenergo today ...... 5 1 .1 . Company profile ...... 5. 1 .2 . Mosenergo in figures ...... 5. 1 .3 . Major corporate events of 2012 ...... 7. 2. Mosenergo operations ...... 9 2 .1 . Generation ...... 9. 2 .2 . Sales ...... 10. 2 .3 . Fuel supply ...... 13. 2 .4 . Investment and maintenance activities ...... 13. 2 .4 .1 . Investments ...... 13. 2 .4 .2 . Maintenance and repair ...... 14. 2 .5 . Enhancement of production reliability and efficiency ...... 15. 2 .6 . SAP projects ...... 15. 3. Analysis of financial performance ...... 17 4. Human resources management and social responsibility ...... 19 4 .1 . Headcount and structure of personnel ...... 19. 4 .2 . Staff motivation system ...... 20. 4 .3 . Personnel training ...... 20. 4 .4 . Social programs ...... 20. 4 .5 . Labor protection ...... 21. 4 .6 . Environmental protection ...... 25. 5. Corporate governance ...... 29 5 .1 . Main principles ...... 29. 5 .2 . General Meeting of Shareholders ...... 29. 5 .3 . Board of Directors and its Committees ...... 29. 5 .4 . Audit Commission ...... 30. 5 .5 . Executive Board ...... 30. 5 .6 . Remunerations ...... 31. 6. Additional information ...... 33 6 .1 . History of Mosenergo ...... 33. 6 .2 . Risks ...... 34. 6 .3 . Securities ...... 36. 6 .4 . Dividend policy ...... 37. 6 .5 . Investor relations ...... 38. 6 .6 . Information about the Members of the Board of Directors, BoD’s Committees and the Executive Board ...... 38. 6 .7 . Compliance with the Corporate Governance Code of the Federal Financial Markets Service ...... 45. 6 .8 . Information on interested party transactions ...... 55. 6 .9 . Informational policy ...... 59. 6 .10 . Financial Reports in accordance with the Russian Accounting Standards ...... 60. 6 .11 . Financial reports in accordance with the International Financial Accounting Standards ...... 115 6 .12 . Glossary ...... 167 6 .13 . Contact information ...... 168

1 Address by the Chairman of the Board of Directors Address by General Director

plant GTU-65 at TPP-9 . According to the capacity supply agreements, commissioning of new generating capacities at the Company’s subsidiaries has been scheduled for 2013-2014 . The new generating capacities have substantially contributed to Mosenergo’s performance indicators, thus increasing the overall efficiency of the Company’s operations . The revenues from SGU- generated electricity and heat sales have increased by 17% (or up to 23 .7 billion roubles) over the previous year . The share of steam-gas units’ generation in the total output of the Company reached 16 .4% in 2012 (as compared to 14 .8% in 2011) . OJSC “” has declared the year 2013 to be “The Year of Environmental Protection” . For Mosenergo, environmental protection has traditionally been a top priority in its activities . The Company has implemented the Environmental Management System that complies with the international standard ISO 14001:2004 . A computerized environmental monitoring system has been functioning at the Mosenergo’s power plants . In compliance with implementation of its environmental policy, Dear Shareholders, Mosenergo has upgraded the majority of power generating boilers at Dear Shareholders, its power plants . The Company has been implementing actions aimed The Gazprom Group is the largest owner of electrical energy assets at emission reduction and effluents cleanup: low emission burners Throughout 2012, Mosenergo ensured reliable electricity and heat actions of the subsidiaries aimed at improving key performance in and the leader in installed capacity among the national energy and staged combustion systems are being installed in boilers, as well supply to its consumers . According to the Russian Accounting Standards, indicators of their operations and enhancing maintenance processes generating companies . The highest priority for Gazprom in the energy as flue gas recirculation systems, and also waste water treatment and the 2012 revenues of the Company exceeded 155 billion roubles . and investment activities . sector is reliable supply of electricity and heat to our consumers . This cleanup facilities are being built and upgraded . As a result of the actions The Mosenergo’s investment program was carried out successfully As of end of 2012, Mosenergo managed to hold the growth of its objective is being achieved largely thanks to the implementation of undertaken, the volume of emissions from Mosenergo’s power plants during the last year . In the framework of this program, a number of fixed costs at 2 .8%, which is significantly lower than the official inflation major investment programs, upgrading of the existing power units and has remained at a level significantly below the maximum allowable limit major strategic projects are being implemented, such as construction rate in the country in the last year (6 6%). . construction of new power plants . established by the environmental protection authorities . of a 61 .5 MW power unit at TPP-9, a 220 MW power unit at TPP-12, Throughout 2012, Mosenergo was paying special attention to Over 5 GW of state-of-the-art generating capacities has been put In 2012, Mosenergo continued its efforts aimed at reducing its a 420 MW power unit at TPP-16, and a 420 MW power unit at TPP- personnel development and social programs . For Mosenergo, human in operation under capacity supply agreements since Gazprom became operating costs, ensuring financial stability, and improvement of 20 . Commissioning of new generating capacities will make it possible capital investment is one of the most important aspects for achieving its a player in the energy sector of our country . The Gazprom Group has methods and tools for human resources management . for Mosenergo to strengthen its competitive advantages and to create strategic goals and objectives . In the reporting period, in the framework become an absolute leader in the industry in the field of upgrading its Among the key principles of Mosenergo in the field of corporate conditions for further growth of the Company’s equity value . of human capital management system, the Company implemented production facilities . governance has always been observance of shareholders’ interest As always, Mosenergo has placed a great emphasis on the projects a number of projects, including programs for efficient involvement of In 2012, a number of large-scale projects were completed . At the balance for the Company’s further development, improvement of aimed at improvement of equipment reliability . talented young people and retention of best employees . Kirishskaya GRES, a 800 MW steam-gas power unit was commissioned, information transparency, and enhancement of investment potential . The As of end of 2012, the share of new SGU power units in the total In 2013, we will pull our efforts to ensure stable supply of electrical which is the largest in Russia . At Pravoberezhnaya TPP in Saint- Company has been pursuing a dividend policy that governs distribution electricity output went up to 16 .4% over 14 .8% in 2011 . Along with and heat energy to our consumers through reliable operation of our Petersburg, a 450-MW steam-gas power unit was put in operation, thus of the Company’s profits . Mosenergo has been actively interacting with growing efficiency of heat-extraction mode, the new generating generating capacities and efficient management of the Company . making possible to enhance the reliability of power supply to the city . the investment community, stock exchanges and rating agencies . In capacities helped to reduce the fuel consumption rate from 249 to 248 In early 2013, in the city of Sochi we commissioned the Adler thermal March 2013, the international rating services agency Standard & Poor’s g/kWh in the reporting period . power station of 360 MW capacity, so that it could supply electricity and has confirmed the long-term corporate credit rating of Mosenergo at the In 2012, in the framework of its “Lean 2 .0” program Mosenergo heat to the 2014 Winter Olympics’ facilities . BB level and its rating on the national scale at the “ruAA” level . continued its efforts to further improve the Company’s production General Director Mosenergo inside the Gazprom Group is a recognized leader amongst I am confident that joint efforts of the Board of Directors, the system, and the major efforts were focused on supporting of independent of Mosenergo the Russian energy generating companies as regards commissioning of management and shareholders of Mosenergo will further facilitate Vitali G . Yakovlev new capacities . Over the last years, four new steam-gas power units dynamic development of the Company and growth of its performance (SGU) were commissioned with a total capacity of 1 .75 GW . Amongst efficiency . these new generating capacities, the SGU-420 power unit No . 8 at TPP- 26 has a record high efficiency for the Russian power industry – up to Member of Gazprom’s Executive Board, 59% . At present, SGU-420 power units are being built at Mosenergo’s Chairman of the Board of Directors TPP-16 and TPP-20, and also the construction of a SGU-220 power of Mosenergo unit is in progress at TPP-12, as well as building a gas-turbine power Kirill G . Seleznev

2 3 Mosenergo today 1. Mosenergo1 today 1.1. Company profile

– Mosenergo is the largest regional generating company of the Russian – The major existing and potential competitors of Mosenergo on the Federation . wholesale market of electricity and capacity from among the power – Mosenergo includes 15 power plants with electric installed capacity plants of region in 2012 were as follows: State of 12 .3 GW and thermal installed capacity of 35 .1 thousand Gcal/hour . District Power Plant GRES-4 (OGK-1), GRES-5 (OGK-5), and – Mosenergo produces about 6% of the total electrical and thermal Zagorsk pumped storage hydro station (RusHydro) . energy generated in the Russian Federation (including nuclear power – Mosenergo occupies 69% of the heat market of Moscow City . plants) . – The main competitor of Mosenergo in the heat production and sales – Mosenergo is a major supplier of electricity and heat for the Moscow sector is “Moscow Unified Energy Company” OJSC (MOEK) . region which unites two subjects of the Russian Federation – Moscow – The Company has implemented an efficiency improvement City and Moscow region . program based on the Lean Production concept . In 2009 – 2012, – In Moscow region Mosenergo satisfies about 66% of the total the benefit from the Lean Production Program (LPP) exceeded 2 electricity consumption and 43% of heat consumption . billion roubles .

1.2. Mosenergo in figures Key performance highlights 2011 2012 Change Electricity generation, mln kWh 64,649 61,334 –5 1%. Electricity output, mln kWh 59,786 56,604 –5 3%. Electricity sales, mln kWh 70,070 65,797 –6 1%. Heat output, thousand Gcal 66,410 68,353 +2 9%. Electricity generation fuel rate, goe/kWh 248 .9 247 9. –0 4%. Heat generation fuel rate, kg/Gcal 166 .1 166 0. –0 1%.

Financial highlights2, mln roubles 2011 2012 Change Revenues 160,824 155,437 -3 .3% Prime cost 148,888 146,554 -1 .6% Net earnings 11,937 8,884 -25 .6% Sales profit 11,657 8,618 -26 .1% Net profit 10,419 7,783 -25 .3% As of 31 .12 .2011 As of 31 .12 2012. Change Non-current assets 160,222 166,584 +4 0%. Current assets 63,088 61,015 -3 .3% Long-term liabilities 19,351 26,360 +36 2%. Short-termliabilities 24,207 16,577 -31 .5%

1 Hereinafter referred to as the Company 2 According to RAS

5 1.3. Major corporate events of 2012 Mosenergo’s shareholders capital structure3, % Mosenergo’s charter capital amounts to 39,749,359,700 roubles February August CJSC Inter RAO Capital; and is divided among 39,749,359,700 ordinary registered uncertified 24 February. Mosenergo paid the 12th coupon yield on the bonds of 02 1 August. Mosenergo released its financial statements for the first half of 5.05% shares with a face value of 1 (one) rouble each . series (state registration number 4-03-00085-А of 26 January 2006) . 2012 in accordance with RAS . Total amount of payments equaled 182 .47 million roubles (38 .15 roubles 23 August. Mosenergo paid the 13th coupon yield on the bonds of Other legal entities per bond) . 02 series (state registration number 4-03-00085-А of 26 January and individuals; Gazprom Securities 2006) . Total amount of payments equaled 2 .35 million roubles (4 .99 energoholding LLC; March 15.00% Mosenergo shares are listed on Russia’s integrated exchange roubles per bond) . 53.50% 1 March. Mosenergo’s Board of Directors approved the Company’s par- MICEX-RTS in A1 quotation list . 31 August. Mosenergo released its financial statements for the first half ticipation in a number of enterprises on 29 February 2012 . A decision Tickers: of 2012 in accordance with IFRS . Main Market – MSNG was taken on the establishment of four 100% Mosenergo’s subsidiaries: Classica – MSNG “GRES-3 Electrogorsk” LLC, “TPP-6 Orekhovo-Zuyevo” LLC, “TPP-17 September Stupino” LLC, and “TPP-29 Electrostal” LLC . 21 September. The team of Mosenergo’s TPP-25 won the third prize at Government Standard – MSNG 5 March. Release of Mosenergo’s RAS financial statements for 2011 . the All-Russian competition for operating personnel of thermal power of Moscow; Bloomberg MSNG RU plants of 150-300 MW capacity, which was held in Zheleznovodsk, Stav- Depositary receipts of Mosenergo are listed on over-the-counter April 26.45% 4 ropol region . Mikhail Pavkin, employee of TPP-25, was awarded the title (OTC) market of the New York Stock Exchange and in the IOB sector of 10 April. Release of Mosenergo’s IFRS financial statements for 2011 . of the best turbine operator of power unit . the London Stock Exchange . 26 April. In the non-heating period (from 24 April 2012), heating loads 24 September. Mosenergo changed the current ratio of its depositary re- were switched from a number of district and block heating stations of ceipts (ADR) from hundred (100) Mosenergo shares (ADS) represented OJSC “MOEK” to Mosenergo’s TPPs . Depositary receipt programs by one (1) depositary receipt to fifty (50) Mosenergo shares represented May by one (1) depositary receipt of Mosenergo . Level 1 144-А Reg . S 3 May. Release of Mosenergo’s financial statements for the first quarter 26 September. Mosenergo and Alstom signed a contract for servicing of Ratio 1:50 shares 1:50 shares 1:50 shares of 2012 in accordance with RAS . the SGU-420 at TPP-26 . 28 September. Delivery of main and auxiliary equipment for a new SGU- June Brief description Provides for free trading on OTC Intended for private offering in Intended for a wider (compared to 420 at Mosenergo’s TPP-16 was completed . market in the USA and Europe the limited range of institutional 144A) range of private professional 1 June. Mosenergo paid the 5th coupon yield on the bonds of 03 se- investors, primarily in the USA investors beyond the USA ries (state registration number 4-04-00085 of 12 December 2008) . Total October amount of payments equaled 255 .55 million roubles (51 .11 roubles per 2 October. Mr . Alexander S . Osyka (former Deputy Chief Engineer and Date of issue 1997 2008 2008 bond) . Head of Engineering Division of Mosenergo) was appointed Chief Engi- Depository bank The Bank of New York Mellon 19 June. Annual General Meeting of Mosenergo’s Shareholder took neer of Mosenergo . place . 31 October. Mosenergo released its financial statements for nine months 20 June. Mosenergo’s Board of Directors took a decision to elect new of 2012 in accordance with RAS . members to the Executive Board: Anna A . Efimova, Deputy General Di- rector for Legal Issues, and Ivan V . Kosarev, Deputy General Director for November Production . 9 November. Mosenergo received a certificate of readiness for operation during the autumn-and-winter season in 2012-2013 . July November. Transformer, stator and rotor for the SGU-220 power unit 9 July. Mosenergo released its financial statements for the first quarter were shipped to Mosenergo’s TPP-12 . of 2012 in accordance with IFRS . 12 July. Mr . Kirill G . Seleznev, Head of the Department of marketing, gas December and liquid hydrocarbons processing of “Gazprom” OJSC, was elected 7 December. Mosenergo released its financial statements for nine Chairman of the Executive Board . Mr . Petr P . Biryukov, Deputy Mayor of months of 2012 in accordance with IFRS . Moscow in the Government of Moscow, was elected Deputy Chairman 28 December. Mosenergo signed a supply contract with of the Executive Board . “NOVATEK Moscow Region” LLC .

3 As of 1 January 2013 4 International Order Book

6 7 Mosenergo operations 2. Mosenergo operations Heat output, thousand Gcal 2.1. Generation Power plant 2011 2012 Change, % SPP-1 1,944 2,027 +4 3. In 2012, the Company operated without serious incidents and ensured steady power plants operations, as well as reliable supply of GRES-3 607 641 +5 6. heat and electricity to consumers in Moscow and Moscow region . TPP-8 2,117 2,178 +2 9. In 2012, the Company’s power plants generated 61 .3 billion kWh of electricity . In 2011, the generation amounted to 64 .6 billion kWh . The TPP-9 1,360 1,469 +8 0. drop in generation was permanent due to increased net power flow to the free power transfer zone “Moscow”, despite a consumption growth TPP-11 2,373 2,483 +4 6. in Moscow region (+2 .5%) . At the same time, the capacity increased in TPP-12 3,742 3,951 +5 6. maintenance (+291 MW) and standby (+258 MW) . TPP-16 3,684 3,724 +1 1. Electricity generation, mln kWh TPP-17 572 579 +1 3. Power plant 2011 2012 Change, % SPP-1 398 381 –4 .3 TPP-20 4,522 4,691 +3 7. GRES-3 189 174 –7 .8 TPP-21 10,624 10,750 +1 2. TPP-8 2,492 2,278 –8 .6 TPP-22 8,839 8,937 +1 1. TPP-9 1,289 1,234 –4 .3 TPP-23 8,177 8,665 +6 0. TPP-11 1,868 1,773 –5 .1 TPP-25 6,327 6,398 +1 1. TPP-12 2,547 2,522 –1 .0 TPP-26 8,024 7,881 –1 8. TPP-16 2,261 2,156 –4 .6 TPP-27 3,498 3,980 +13 8. TPP-17 523 392 –25 .1 TOTAL 66,410 68,353 +2.9 TPP-20 3,890 3,429 –11 .8

TPP-21 9,190 9,068 –1 .3 In the 2012 heating season the heat supply amounted to 59 .9 TPP-22 8,107 6,913 –14 .7 million Gcal (+3 .3% over 2011), and in the summer season it totaled 8 .5 million Gcal (+0 .1%) . Transfer of heat loads from RHS MOEK to TPP-23 7,454 7,243 –2 .8 Mosenergo’s TPPs continued in the summer of 2012, and the total TPP-25 8,256 7,410 –10 .2 transferred heat amounted to 1110 .1 thousand Gcal (1 .6% of the TPP-26 9,544 10,298 +7 .9 overall heat supply) . TPP-27 6,640 6,064 –8 .7 Ambient air temperature, C° TOTAL 64,648 61,334 –5.1 Period Year In 2012, electricity generation by the new generating capacities Heating Summer (SGU-420 and SGU-450 units of TPPs 21, 26 and 27) increased by 2012 +5 .8 –2 0. +16 7. 4 .95% and equaled 10 .1 billion kWh . The share of the new generating capacities in the total electricity output of the Company reached 16 .4% 2011 +6 7. –1 0. +17 6. at the end of the year . Load factor of the SGU units amounted to 65 .6 % (–5 .5%) in 2012 . In 2012, the following changes occurred in Mosenergo’s installed The drop in the SGU group load factor is attributed to increased planned capacity: shutdown and standby modes . – on 20 .02 .2012, turbine generator set No . 4 was closed down at The amount of heat output of Mosenergo’s TPPs in 2012 reached TPP-6, which is a subdivision of GRES-3 (-6 MW and -47 Gcal/h) . 68 .4 million Gcal, i .e . by 2 .9% more than in 2011 . This increase is As a result, the total installed capacity of Mosenergo’s power plants primarily attributed to lower ambient temperatures during the heating amounted to 12,298 .98 MW and 17,890 .98 Gcal/h bleed heating, as of season . 31 .12 .2012 .

9 Capacity factor, % In 2012, the actual specific consumption of oil equivalent5 for Capacity sales, MW At the same time, the volume of heat sold to consumers at the tariff, electricity supply decreased by 1 .0% to 247 .9 g/kWh, and the actual including generation and transmission of heat, decreased . Capacity factor, electricity Capacity factor, heat specific consumption of oil equivalent for heat supply decreased by 8,052 7,972 This was equivalent to decreased volume of heat transmitted via 2012 2011 Change 2012 2011 Change 0 .1% and amounted to 166 0. kg/Gcal . 8,000 heat networks of OJSC “MTK”, and, consequently, to reduced costs for heat transmission . 56 .8 61 .0 –4 .2 37 .5 38 .6 –1 .1 6,000 Electricity supply fuel rate, Heat supply fuel rate, Thousand Gcal goe/kWh kgoe/Gcal 4,000 The average annual capacity factor of the turbines at Mosenergo’s 2,559 2,813 Change power plants decreased in 2012 over 2011 by 4 .2% and amounted to Indicator 2011 2012 2011 2012 2011 2012 2,000 56 .8% . The main factors that determined the negative dynamics were thous . Gcal % increased net power flow to the free power transfer zone “Moscow” 248 .9 247 .9 166 .1 166 .0 0 Total heat output 66,805 68,663 + 1,858 2.8 (–3 .3%) and growth of the Company’s annual capacity (–0 .9%) . 2011 2012 The average annual heat capacity heat from the turbine taps) was The following factors attributed to the decrease in specific fuel rate Including: 37 .5%, which is 1 .1% lower than in 2011 . The effect of higher average for electricity supply by 1 .0 g/kWh: Regulated sector Free sector Consumers from plant annual heat capacity from the turbine taps played its role, along with – a 1 3%. reduction of summer season modes in the electricity generation headers 5,856 20,961 +15,105 258 increased capacity in maintenance and standby that was caused by the structure (–1 2. g/kWh); The decrease of electricity sales in 2012 over 2011 is attributed rise in net power flow . – higher efficiency of district heating (–1 1. g/kWh); to lower electricity generation in 2012, the main cause for which was Consumers from heat In the reporting year, the use of reference fuel decreased by 2 .0% – increased share of SGU units in the overall electricity generation by increased net power flow to the Moscow energy system that exceeded transmission networks compared to 2011, and it amounted to 25,381 thousand tons of oil 1 .6% (–0 .4 g/kWh); both the allowable limit and the actual value . This situation occurred due of transmission equivalent . – dumping situation at Unit 8 of TPP-26 until 01 .07 2011. (+0 7. g/kWh); to the following factors: companies 60,949 47,702 –13,247 –22 – growth of fuel overfire according to key performance indicators Fuel consumption, toe commissioning of a new reactor unit at Kalinin nuclear power plant (+0 .9 g/kWh) . (NPP) with installed capacity of 1,000 MW (operated by OJSC Due to decreased number of the consumers, who pay both for Станция 2011 2012 Change, % “Concern “”) and a coincident increase in the heat generation and transmission, the revenue mix of heat sales also aggregate capacity of power transmission lines which are used for changed . SPP-1 390,302 394,906 +1 .2 2.2. Sales net power flow from the free power transfer zone “Vostok” to the free Mosenergo’s revenues, without account of heat transmission costs GRES-3 158,283 155,282 –1 .9 The sales of electricity in 2012 decreased by 4,273 thousand MWh, or power transfer zone “Moscow”, including commissioning of a new (consumers’ payments for heat generation) increased by 3,889 million by 6 1%,. compared to the previous reporting period . The capacity sales roubles (9%) compared to 2011 . TPP-8 1,071,766 995,051 –7 .2 transmission line (“Kalinin NPP – Gribovo”, 750 kV); of in 2012 amounted to 10,785 MW, which is by 175 MW (1 .6%) more weather conditions that resulted in a sharp water accumulation (water The revenues from heat transmission services (i .e . consumers’ TPP-9 547,463 551,110 +0 .7 than in 2011 level rise) in the reservoirs of hydro power plants of the Volga-Kama payment for heat transmission) went down by 6,816 million roubles TPP-11 817,626 802,538 –1 .8 Electricity sales, thousand MWh cascade in the fourth quarter of 2012, and, consequently, led to (26%) . It did not affect Mosenergo’s financial results because the increased power output by hydro power plants . revenues from heat transmission services is equivalent to the expenses TPP-12 1,172,497 1,216,731 +3 .8 paid by the company for heat transmission . 58,719 The increased capacity sales in 2012 over 2011 are associated with TPP-16 1,129,355 1,122,635 –0 .6 60,000 53,785 commissioning of a new SGU-420 power unit at TPP-26 on 1 July 2011 . TPP-17 290,463 230,800 –20 .5 50,000 Sales volumes and sales revenues from heat sales TPP-20 1,723,060 1,637,444 –5 .0 40,000 TPP-21 3,671,064 3,662,270 –0 .2 Net heat supply in 2012 increased over 2011 by 1,858 thousand 30,000 TPP-22 3,418,382 3,083,735 –9 .8 Gcal (2 .8%) and totaled 68,663 thousand Gcal . This was caused, in the 20,000 first place, by lower ambient temperature (by 0 .9 °C) during the heating TPP-23 3,037,422 3,110,296 +2 .4 11,350 12,012 season compared to the same period of the previous year . 10,000 TPP-25 3,090,493 2,871,498 –7 .1 In addition, in 2012 the consumers’ structure changed . It concerned both the consumers, who paid for the heat supplied from power plant TPP-26 3,508,733 3,720,467 +6 .0 0 2011 2012 headers (as per the heat generation tariff), and those who paid for TPP-27 1,881,535 1,826,059 –2 .9 the heat at delivery points with additional charges by a heat network Total for TPPs 25,908,444 25,380,822 –2.0 Regulated sector Free sector company . Changes in the consumers’ structure were caused by integration (in – Without account of boilers in Balabanovo city . the form of incorporation) of OJSC “Moscow heat network company” with OJSC “MOEK” . As a result of this integration, OJSC “MOEK” became the owner of the heating mains, and the heat delivery point was transferred to the heat supply headers of the Mosenergo power plants . 5 Calculated according to the physical analysis method

10 11 Million roubles Mosenergo has heat capacity reserves at a number of its power 2.3. Fuel supply Implementation of the investment program in 20126 plants . Due to the energy saving policy and minimization of new con- Change In the 2012 fuel mix, natural gas remained the major kind of fuel . In struction inside the City of Moscow, risks arise associated with reduc- Project category mln roubles net of VAT Indicator 2011 2012 the Company’s fuel mix the share of natural gas equals 97 .89% . Mln roubles % tion/slowdown of heat consumption growth rate (and, consequently, of (0 .99%) and fuel oil (1 .12%) were used by power plants of Mosenergo Strategic 13,946 heat sales) . Mosenergo’s revenues as reserve fuels . (payments for heat In order to mitigate these factors, OJSC Mosenergo is implement- Efficiency 616 ing a project aimed at increasing efficiency of the heat business . This generation) 43,098 46,987 +3,889 9 Fuel mix project outlines several priority directions for the Company’s opera- Mandatory 680 Revenues by heat tions which will lead to both a short-term and a long-term rise in heat Reliability 2,678 transmission sales . 0.59% 1.01% 1.12% 0.99% companies (payments In 2012, the following actions were taken in the framework of this 98.4% 97.89% Other 1,390 for heat transmission) 26,446 19,630 –6,816 25 8. project: Total revenues from Transfer of summer loads from MOEK boilers to Mosenergo’s plants Total 19,310 heat sales 69,544 66,617 –2,927 –4.2 continued; During the 2012-2013 heating season, the loads of the district heating In the framework of the 2012 investment projects of the ‘Strategic’ As a reference: plant “-Khovrino” and KTS-44 were transferred to Mosenergo’s 2011 2012 category, the following major new construction projects were carried Mosenergo’s expenses TPPs; out: for heat transmission The heat supply agreement with OJSC “MOEK” stipulates transfer of TPP-16 . Construction of SGU-420 unit . services 26,465 19,646 –6,819 –25 8. heat loads from the district heating plant “Krasny Stroitel” and the The installed electric capacity is 420 MW, thermal capacity is 220 of the district heating plant “Matveevskaya” the 2013-2014 heating Gcal/hour . The unit is to be commissioned in December 2013 . season; TPP-12 . Construction of a SGU-220 power unit . Mosenergo’s clients base for heating Interactions continued with towns of the Moscow region and with the The installed electric capacity is 220 MW, thermal capacity is 120 The growth contractual heat supply in Moscow and Moscow Region Moscow Regional Government regarding increase of heat supplies to Gas Fuel oil Coal Gcal/h . amounted to 378 Gcal/h (or 1 .1%), which corresponds to annual average the Moscow Region; The unit is scheduled to be commissioned in June 2014 . growth rate . An option for increasing heat supply from TPP-22 to the town of Dzer- TPP-20 . Construction of a SGU-420 power unit . In 2012, Mosenergo’s fuel mix changed compared to 2011 . The zhinsky and adjacent towns (, Oktyabrsky and ) was The installed electric capacity is 420 MW, thermal capacity is 220 As of 31 .12 .2012 As of 31 .12 .2011 shares of natural gas and coal decreased by 0 .51% and 0 .02%, respec- being considered; Gcal/h . tively, while the fuel oil share increased by 0 .53% . Share in Con- Share in Con- The expediency of design and survey activities for the construction of The unit is scheduled to be commissioned in November 2014 . It is associated with over-planned furnace fuel oil burning at sev- Client net heat nected net heat nected heat transit pipeline from TPP-26 to the town of Vidnoye and adjacent TPP-9 . Installation of GTU-65 gas turbine with a waste heat boiler . supply, contrac- supply, contrac- eral Mosenergo’s TPPs in February 2012, when restrictions were intro- (category of client) townships of Bulatnikovo, Izmaylovo and Rastorguyevo was being re- The capacity of the facility is 61 .5 MW . The efficiency of the electric % tual heat % tual heat duced for gas bleed in excess of agreed daily limits with the purpose of viewed; turbine is 35 .2% . load, load, ensuring reliable operation of gas transport system in Moscow Region . Due to the lease of heating network in the township Khimki by the Commissioning is scheduled for June 2013 . Gcal/h Gcal/h Therefore, the fuel oil share significantly rose in the total fuel mix for “TSK Mosenergo” LLC, heat supply from TPP-21 to Khimki was in- MOEK (wholesale 2012 . creased . In the framework of the 2012 ‘Efficiency’ investment projects, ac- reseller) Stability and reliability of fuel supply of all the power plants operated 67 .7% 17,207 68 .1% 17,031 For debt redemption of the municipal unitary enterprise “Kom- tions were performed to install hydraulic clutches on pump drives at by Mosenergo was achieved in 2012 due to the following factors: munalshchik”, in 2012 its property in the township Electrogorsk was thirteen subsidiaries of the Company . Installation of hydraulic clutches Industrial enterprises supplies of gas in the full amount, according to the existing con- purchased . “TSK Mosenergo” LLC started operation of this property on the drives of district-heating and feed-water pumps will provide for (retail) 4 .1% 2,949 4 .1% 3,041 tracts; and sales services for Mosenergo . The Client Serving Center in Elec- reduction of in-house electricity consumption under partial load modes creation of adequate inventories of reserve fuel according to the De- Public sector trogorsk was closed down in order to optimize the expenses for heat of operation . crees and recommendations of RF Ministry of Energy and the Decrees organizations (retail) 6 .3% 3,192 6 .8% 3,149 supply . In the framework of the 2012 investment projects of the ‘Mandatory’ of the Moscow and Moscow Region Governments . In 2012, due to cancellation of SGU power unit construction at the category, actions undertaken were aimed at ensuring reliability of the Other legal entities Vorsino technology park, it was decided to terminate the heat network major equipment, such as: (retail) 2.4. Investment and maintenance activities 15 .4% 9,497 13 .5% 9,304 rental agreement in the town of Balabanovo and to close down the Client 2.4.1. Investments Electrical equipment: Serving Center there . General public, housing replacement of ten 110-220 kV circuit breakers (SPP-1, TPPs-12, 20, partnerships and The underlying principles of the investment program include eco- 21, 23); associations, etc . (retail) 6 .4% 1,666 7 .4% 1,609 nomic efficiency of investment, transparent objectives, as well as com- replacement of 11 electric current transformers (GRES-3, TPPs- Total for Moscow and pliance with targets and the Company’s strategy . 11,12, 21, 22, 23, 26); Moscow region 100% 34,511 100% 34,133 8 voltage transformers (TPPs-21, 26) .

6 Information from Mosenergo’s Management Report

12 13 Thermal and mechanical equipment: 2012 Maintenance Program: At TPP-20, generator No . 1 of ТV-30-2 type was replaced by a new In 2013, Mosenergo will continue developing its production system replacement of steam pipelines on 13 turbines and 16 power boilers In 2012, full-scope maintenance of the relevant thermal and electri- one of ТАP-30-2 type . through implementation of strategic projects aimed at efficiency and (TPPs-8, 9, 11, 12, 16, 20, 21, 22, 26); cal equipment was performed within the scheduled timeframe and allo- On 17 generators, rotor repair was performed with dismantling and reliability improvement . Maintenance management process will be in- replacement of high-temperature heating surfaces on 9 power boilers cated budget, in accordance with the approved maintenance plans . diagnostics of the rotor retaining rings . On five generators the rotor slip tegrated in the equipment maintenance and repair module IUS P GK . (SPP-1, TPPs-8, 20, 21, 25, 26) . rings were replaced, and on five generators the slip rings were grooved . Throughout 2013, support to TORO users will be provided due to trans- A diagnostics inspection of 9 generators was carried out . At TPP-11 a fer to operation of IUS P GK . The “Annual maintenance planning” project Number of equipment repairs in 2012, number of activities In the framework of the 2012 investment projects of the ‘Mandatory’ defect was identified in generator No . 8 of ТVF-110-2Е type, and its rotor will be implemented . category, the following works were carried out: Equipment Major Medium Routine was replaced . Partial rewinding was performed on turbine generator No . Improvement of business processes for management of planning, Installation of gas analyzing complexes (TPPs-12, 16, 17, 21, 23); overhaul repair maintenance 3 of ТVV-320-2 at TPP-26 . A distillate leak was eliminated in two stems financing and logistics is under way for the implementation of the IUS Bringing of peak water boilers operation in compliance with the Rules of turbine generator No . 5 of ТVV-320-2 type at TPP-25 . P GK investment module . Mosenergo employees submitted over 100 Units of gas pipeline operation (TPPs-20, 22, 26); 3 2 15 Technical inspection of 7 transformers with expired lifetime was per- proposals during the testing period of this module . Fire safety improvement at the subsidiaries (GRES-3, SPP-1, TPPs-8, Boilers 22 8 66 formed . 21 transformer bushings of 110, 220 & 500 kV were replaced . 9, 12, 16, 21, 22, 23, 25, 26, 27) . Total duration of maintenance of major equipment of the Company in 2.6. SAP projects Turbines 22 6 57 2012 amounted to 9,432 days (11,085 days in 2011) . In the framework of the 2012 investment projects of the ‘Other’ cat- Gas turbines 0 0 12 In 2009 Mosenergo launched the information technology develop- egory, the following works were carried out: 2.5. Enhancement of production reliability and efficiency ment program aimed at improving management efficiency and imple- Replacement of 5,420 line meters of Mosenergo’s district heating net- Steam and water menting an integrated corporate system . In parallel, business trans- work pipelines; pipelines 7 0 81 In 2012, in the framework of its “Lean 2 .0” program Mosenergo con- formation of the Company was carried out, including optimization and Upgrading of cubicles for connection of consumers (TPPs-9, 11, 16, Boiler (SGU) 2 0 10 tinued its efforts in further improving the production system and focused regulation of business processes, as well as assignment of the owner for 17, 23, 26, 27); on three key areas: each business process with the target KPIs for management efficiency Installation of anti-terrorist protection devices at 12 subsidiaries (met- Gas turbine (SGU) 2 0 9 1 . Support of independent actions of the subsidiaries aimed at im- assessment . al detectors and anti-collision devices); proving key performance indicators (KPI) of their operations . To this end, The implementation of SAP as a management tool for all business Upgrading of security engineering features (GRES-3, TPPs-11, 17, 21, Turbine generator (SGU) 1 0 6 a continuous KPI monitoring system was launched, as well as audits of processes in the Company has been performed on a stage-by-stage ba- 23, 27) . Generators 27 8 85 adherence to standards of establishing the target values, supervision of sis . In 2010, the basic landscape of the system was successfully put Backfitting and upgrading of the equipment at the Company’s sub- their achievement and problem escalation . in production operation . At that time certain results were achieved: a sidiaries will provide for maintaining a high level of safety, reliability and Transformers 7 – 67 2 . Improvement of maintenance activities . In the framework of the unified database of regulatory and reference information was created for economic performance, as well as increasing sales of electricity and 110-500 kV breakers “Maintenance supervision” project launched in 2012, at all Mosen- all the Company’s subsidiaries; electronic document management sys- heat . 12 3 – ergo’s subsidiaries the process of maintenance planning and on-site tem for procurement documents was implemented, including contracts work performance was standardized . Throughout 2012, standardiza- with approval of all responsible departments; the procurement amount 2.4.2. Maintenance and repair Key non-routine repair on thermal and mechanical equipment, tion efforts were carried out in parallel with maintenance management was decreased through the use of information on the stock availability number of activities optimization using the SAP-TORO module as the main tool for plan- at Mosenergo’s warehouses; efficiency of budget control was improved On 21 September 2012, Mosenergo signed a contract with “Alstom” ning, supervision, training and users’ support, and constant monitoring at each cost center . In May 2010, tax accounting was implemented in LLC for maintenance of SGU-420 power unit at TPP-26 . Activity 2011 2012 of adherence to standards . At all Mosenergo’s subsidiaries standard- SAP, thus providing for elimination of other systems for development of The contract will be in force for 15 years and it envisages mainte- Industrial repair of turbine rotors ization of functions and staff number was performed in the depart- financial statements . nance of all equipment at the power unit: gas turbine, steam turbine, 26 36 ments that participated in a given business process . In the framework In 2011, a module for recording heat sales and a module for man- two turbine generator sets, waste-heat boiler, gas booster compres- Replacement of turbine rotor of the “Reduction of defects” project, an initiative was launched for aging interactions with heat consumers were put in production opera- sors and all auxiliary systems and equipment . blades/disks 13 22 re-engineering of defect analysis in combination with improved equip- tion . In the same year, the SAP TORO system (for maintenance and The Executor under the contract guarantees the performance Replacement of components in ment tree in the SAP-TORO module . In 2012, a “Maintenance planning” repair of equipment) was launched on a pilot basis at three Mosen- indicators, such as power output and specific heat rate of the gas the flow-through part of turbine project was launched . One of the key initiatives under this project is ergo’s subsidiaries . Thanks to that pilot project, maintenance manage- turbine, as well as availability factor of the entire power unit . It cylinder 2 5 systematization and unification of work planning for annual planned ment processes were standardized for all the Company’s subsidiaries, will provide for reliability and efficiency of major equipment and maintenance outages . unified equipment directories were created, and KPIs were developed minimization of forced emergency outages . It will also ensure con- Implementation of the forced 3 . Improvement of investment activities . In the framework of the “In- in order to improve maintenance management efficiency . Throughout tinuous generation of electricity and heat and their supply to the steam cooling system for vestments” project, by the end of 2012 the first stage of creating a sys- 2011, the SAP TORO system was being replicated at the remaining 12 consumers . medium-pressure rotors (RSD-1) tem of goal setting and implementation monitoring of 847 investment subsidiaries of Mosenergo . Due to financial responsibility for the results and interactions un- of T-250/300-240 turbines 1 0 titles . It provided for thorough tracking of project planning and imple- In March 2012, implementation of the “Treasury” module was der the contract, the executor is motivated for quality maintenance and Replacement of bearings in the mentation and timely problem escalation to the level of Mosenergo’s successfully completed . As a result, the Company’s employees timely delivery of spare parts . lower support of the regenerating technical management . The upgrading and backfitting department was obtained a tool for managing liquidity and all financial transactions of rotary air heaters 5 2 restructured, technical assignments and their approval process were Mosenergo . standardized in order to enhance the management system and reduce In parallel with development of the financial part of the system, the the duration of project implementation . Company’s efforts in 2012 were aimed at improving the human capital

14 15 management (HCM) processes . As a result of implementation of the SAP HCM module, processes of personnel recruitment, human resources management, planning, analysis, personnel development and career planning were optimized . The implementation of all SAP modules, which has been carried out in Mosenergo in the framework of the “Forsazh” program since 2009, can be considered as one of the most successful Mosenergo’s projects . It is confirmed by the SAP CIS company itself, who invites members of our project team as key experts to take part in various Analysis activities aimed at experience exchange . The success of SAP projects primarily stems from the approach selected . The project team focuses on the transformation of business processes, change management and of financial active involvement of the business both in the system design and sup- port of its further development . In addition, the project team, which is composed of Mosenergo’s staff and contractors’ personnel, is per- ceived as a single whole, with equal distribution of responsibilities . All performance this provides for the maximum effectiveness of SAP implementation, testing and verification .

16 3. Analysis of financial performance7 Other gains and expenses In 2012, the balance of miscellaneous income and expenses de- Revenues creased by 0 .03 billion roubles over 2011 . The total amount of penalties In 2012, the revenues from sales of commodity products (before and fines in 2012 equaled 0 .9 billion roubles, and the interest income VAT) amounted to 155 .4 billion roubles, including 152 .4 billion roubles amounted to 1 .5 billion roubles (+17%) . billion roubles, including, and 3 .0 billion roubles from the sales of other goods, work and services . Net profit Compared to 2011, the revenues from selling marketable prod- Net profit of the Company after profit tax and other compulsory pay- ucts decreased by 3 .3%, and the revenues from electricity sales went ments was 7 .8 billion roubles . Compared to 2011, net profits decreased down by 4% . The revenues decreased due to lower electricity sales by 25% . The main cause of the net profit drop was the 8% growth of (by 6%) and due to lower heat sales tariff (by 7%) . The drop in heat average fuel price, while the average day-ahead market prices almost sales tariff is primarily attributed to renegotiation, since 01 .10 .2012, remained unchanged . of contractual relations with OJSC “MOEK” (after integration with According to Article 8 of the Company’s Charter, the amount of OJSC “Moscow heat network company”), and it did not affect the compulsory annual reserve allocations is 5 0%. of the Company’s net value of gross profits, because the heat transmission tariff also de- profit before it reaches the required amount (5 .0% of the Company’s creased . registered capital) . Prime cost Liquidity and loan portfolio management The prime cost of commodity products of Mosenergo in 2012 was Cash inflow from operations in 2012 was 7 .2% less than in 2011 . 146 .6 billion roubles, including prime cost of energy of 144 .3 billion In 2012, no changes occurred in the structure of borrowed capital roubles and prime cost of other products of 2 .3 billion roubles . The loan portfolio of the Company increased in 2011 by 1,978 million The prime cost of the core products decreased by 1 .6% . The prime roubles, and, as of 31 December 2012, amounted to 17,848 million cost before fixed asset amortization decreased by 2 .04% . roubles . The rise of material expenses in 2012 over 2011 was primarily The weighted interest rate for leverage was 5 54%. in 2012, which is caused by the increased cost of fuel . The expenses for fuel primar- 2 .89% less than in the previous year . ily increased due to the growth of weighted average price by 8% The decrease of the weighted interest rate was caused by stabiliza- accompanied with a decrease of fuel rate for electricity output by tion of the situation on the domestic and international financial market, 1 g/kWh . as well as by lower fluctuations of the currency exchange rates . The Total costs of maintenance of power plants in 2012, including the Company has no defaulted debts and loans . maintenance by own maintenance departments, amounted to 5 .4 billion The Company fully complies with the covenants of the loan agree- roubles, or 3 .7% of the total energy generation cost . In 2012, the volume ments: the ratio of debt to profits before interest, profit tax and deprecia- of equipment maintenance and repair increased due to the growth of tion is less than 1 . installed capacity . Labor costs increased from 8 .1 billion roubles in 2011 to 8 .2 billion Balance structure analysis roubles in 2012 (105 million roubles or 1 .3%) . It is attributed to changes The property, plant and equipment as of 31 December 2012 de- in the remuneration scheme for power plant employees . creased by 12 .5 billion roubles compared to 31 December 2011 (from The decrease of expenses for heat transmission by 26% is caused 132 .1 billion roubles to 119 .6 billion roubles) or by 9 .5% . by exclusion, since 1 October 2012, of the heat purchased by OJSC The structure of current assets is dominated by: accounts receivable “MOEK” from the total volume of heat supplied to the network . It is – 56 .3%, funds available – 19 .6%, short-term financial investments – associated with renegotiation of contractual relations after integration 12%, and inventories – 10% . (in the form of incorporation) of OJSC “MOEK” with OJSC “Moscow In 2012, Mosenergo’s current assets decreased by 127 million rou- heat network company” . bles, primarily due to reduction of funds available . On the whole, the drawdown rate of operational expenses (-1 .6%) The decrease of inventories by 5 5%. was mostly due to lower is lower than the rate of revenue reduction (-3,3%) . Throughout 2012, amount of reserve fuel as of the end of the reporting period . Mosenergo managed to cut down expenses for public utility services The increase of accounts receivable from 29 .1 billion roubles to 35 4. (-28%), consultancy services (-21%), as well as insurance expenses billion roubles (by 6 .4 billion roubles or 21 .9%) was primarily caused (-31%) . by the creation of accounts receivable as a result of equipment sales In 2012, EBITDA was 21 .2 billion roubles, which is 3 .3 billion roubles (4,705 million roubles as of 31 .12 .2012), as well as increased advance less than in 2011 (-13 .7%) . payments, including those for investment .

7 According to RAS

17 The Company is continuously striving to strengthen the financial discipline of the consumers and to collect overdue accounts receivable for the energy supplied . Own capital of Mosenergo increased by 1 .4 billion roubles, primarily due to increased net profit . The accounts payable decreased in comparison with 2011 by 4 billion roubles or by -22 .6%, mostly due to decrease of other accounts payable . The share of payables in the Company’s balance amounted to 6% as of the end of the reporting year (8% in 2011) . All debts are Human resources current, incurred under contractual payment conditions . Analytical indicators the Company’s financial status The current liquidity ratio rose by 1 .25 points over 2011 and equaled management 3 .91 due to decrease of short-term liabilities by 32% . The value of net assets of the Company increased slightly over 2011 (+0 .8%) . and social In 2012, the receivables turnover indicator grew by 15 points compared to the previous year . It is attributed to a higher growth rate of the receivables than the sales revenue rise . Average amount of Mosenergo’s balance currency changed slightly responsibility compared to 2011 (+0 .3%), and the drop of revenue from commodity sales went down by 3 .3% over 2011 . The profit margin decreased, since in 2012 the drawdown rate of revenues exceeded the prime cost reduction rate .

18 4. Human resources management and social Education level of Mosenergo’s employees, as of 31 December 2012 responsibility 39.92% 31.69% 4.1. Headcount and structure of personnel Secondary and complete general As of 31 December 2012, the number of Mosenergo employees education on payroll equaled 7,485 employees (as of 31 .12 .2011, it was 7,503 employees) . Initial and Stuff structure, as of 31 December 31.12.2012 intermediate vocational education 32.26% Higher professional 50.53% 28.39% education Management Educational level of Mosenergo employees is relatively high . 39 92%. Professional staff of the Company employees have higher education, and 28 .39% of the staff are vocational school or college graduates . Office employees Staff age structure, as of 31 December 2012 Workers 6.52% 18.98% 16.90% 22.70% 0.31% Less than 25 years

2,119 out of the total number of Mosenergo’s employees (7,485) are 25 35 years women (28 .31%) . Staff structure by length of employment in Mosenergo, as of 31 35 55 years December 2012 Over 55 years 11.93% 51.90% 28.31% Up to 5 years 8.78% 6 10 years Average age of Mosenergo’s employees was 43 in 2011 and 2012 . Voluntary insurance costs, mln roubles 11 15 years 8.18% Name of parameter 2011 2012 Change 16 20 years Voluntary health insurance 21 25 years (VHI) 99 2. 98 0. -1 .20% Voluntary accident insurance 26 30 years 14.72% 15.39% (VAI) 13 9. 8 .75 -37 .05% 12.69% Over 31 years The drop in VHI and VAI costs in 2012, as compared to 2011, occurred due to a less number of the insured . As of beginning of 2012, Mosenergo’s head count was 7,411 employees, i e. . 1,016 people less than in early 2011 .

19 Staff turnover training was focused on improving leadership and management Breakdown of labor protection costs in 2012, thousand roubles In 2012, the staff turnover in the Company decreased by 0 .17% competencies, and nearly 200 employees received training in these as compared to 2011, and equaled 5 .20% . Over the reporting areas . AI No . Expenditure item Amount period, 623 employees were dismissed for invalid reasons, and In 2012, Mosenergo launched and Accelerated Development namely: Program (ADP) for power plant employees . This program is aimed 1. Maintenance and repair of buildings at their own request – 389 employees; at planned staff turnover in operating shift crews and technology and structures, servicing of systems by agreement between the Parties – 115 employees; management services within one to three years . ADP is open for VHI NSP due to job cuts o r staff reduction – 74 employees; newly hired employees, as well as for experienced operating person- Social benefits 1 .1 . Maintenance and repair of air conditioning other reasons – 45 people . nel . This program is unique, because it allows for achieving promo- and ventilation systems 21,305 tion by two steps in the career within three years . 93 employees are and 4.2. Staff motivation system involved in the ADP; 7 participants reached their target job positions compensation 1 .2 . Maintenance and repair of air conditioning and ventilation systems in the General The existing material incentives system for Mosenergo’s staff is in 2012 and withdrew from the program, while 58 participants have Corporate Directorate and in IT rooms at the Company’s based on meeting the Company’s targets of key performance indicators achieved their first target and are being trained for the second target of MosenergoOlympics (KPI) . The targets indicators are concatenated and measurable . The position . subsidiaries 3,820 material incentives system encompasses all the employees of the Recreation In 2012, a tutorship program was developed in the ADP framework, 1 .3 . Maintenance and repair of carbonation Company . for employees'children and 102 tutors completed this training . tanks 990 By the end of 2012, the major part of Mosenergo’s subsidiaries was In April 2012, Mosenergo launched a Management Develop- transferred to a new grade-based salary system . ment Program (MDP) aimed at employee training for top manage- 1 .4 . Maintenance and repair of buildings, wells, 4.3. Personnel training ment positions in the Company . Participation in the MDP provides Accident insurance. Mosenergo pays a lot of attention to main- anticorrosive coating and painting of an opportunity for accelerated professional and career growth . MDP equipment 61,901 Mosenergo places a great emphasis of personnel development . taining health of its employees, each of whom is insured for occupa- is unique thanks to its training modules, which were developed with tional injuries . Payments on the accident insurance agreements are In 2012, 1,871 workers and 3,153 managers and specialists of account of the current strategic goals and objectives of the Company . 1 .5 . Maintenance and repair using own Mosenergo received off-the-job training and qualification upgrade, in- commensurate with the harm inflicted to the health of the insured and Individual development plans for the trainees were prepared jointly is intended to help him/her and his/her family adapt to reduction of resources 30,449 cluding 1,195 specialists who completed training and subsequent certi- with teachers of the Stockholm School of Economics and tutors from income associated with the accident . By the end of 2012, 7,506 em- 1 .6 . Repair of rooms permanently manned by shift fication at Rostekhnadzor . Mosenergo . The MDP trainees are supposed to prepare and defend ployees were insured . personnel at the Mosenergo subsidiaries, In order to maintain the competence level of operating personnel, their own projects, the topics of which are of vital importance for Recreational activities for employees’ children. Mosenergo orga- under the “Program for work conditions Mosenergo’s team took part in the All-Russian competition for operating Mosenergo . In the future, the successful MDP graduates will occupy personnel of thermal power plants, which was held in Zheleznovodsk, nizes recreation for employees’ children aged 7-15 years in the southern improvement” 28,926 top management positions in the Company . Currently, 22 trainees seaside camps and vicinities of Moscow . In 2012, the Company spon- and won the third place award . take part in the MDP . For managers and specialists who have not received specialized sored rehabilitation and recreation for 182 children . 1 .7 . Integrated maintenance (cleanup and higher education for work in the power industry, the National Research 4.4. Social programs Non-state pension plans. A program of non-state pension plans disinfection) of ventilation and sewage for employees continues to be implemented in Mosenergo . This pro- systems at food facilities (canteens) in the University of the Moscow Energy Institute organized professional re- The Company’s social policy is the responsibility that Mosenergo gram was developed jointly with non-state pension fund “Gazfond” . subsidiaries (is performed by a subcontractor training courses, which were completed by 28 employees of the Com- fulfils as a reliable employer . By the end of 2012, 82 employees of the Company participated in this with the use of own materials, tools and pany in 2012 . In pursuit of its social policy the Company provides the following program . equipment) 4,364 Simulator training for operating personnel was conducted in a benefits and compensation to its employees: Corporate Olympics of Mosenergo. Every year the Company orga- centralized manner at the Simulator Training Center on the following Voluntary health insurance (VHI); nizes corporate sports competitions for its employees in the following 2. Industrial safety topics: Accident insurance (AI); sports: skiing, kettle bell lifting, volley ball, street ball, swimming, cross- operation of electrical equipment; Recreational activities for employees’ children; country racing, football, mini-football, table tennis, and shooting . 720 2 .1 . Activities in the field of licensing and operation of 250/300 MW power units; Non-state pension plans (NSP); employees took part in the sporting events in 2012 . industrial safety 167,013 operation of unit control systems (boiler-turbine); Mosenergo’s Corporate Olympics . operation of steam boilers; 4.5. Labor protection 2 .2 . Insurance of hazardous industrial facilities 14,755 operation of steam turbines; and Voluntary health insurance. VHI program is the main component Financing is provided for measures aimed at improving labor condi- operation of steam-gas installations . of the social package that Mosenergo provides to its employees af- tions and protection, as well as prevention of occupational diseases (for 3. Insurance In 2012, 686 employees of the Company completed simulator ter the probation period . VHI is aimed at providing employees with the whole Company) . training . health care in the scope that exceeds the compulsory medical ser- In 2012, the amount of labor protection costs totaled 762,285 thou- 3 .1 . Voluntary health insurance, insurance In order to familiarize with foreign good practices in operating power vices . sand roubles (0 .5% of the production costs (products, work, and ser- premium 100,057 plants with similar equipment and functions, 22 specialists of Mosenergo When developing insurance programs for 2012, the location of vices) . received training at power plants operated by electric utilities Vattenfall, Mosenergo’s subsidiaries was taken into account . Therefore the VHI 3 .2 . Insurance against industrial accidents, E .ON and ČEZ . program included health care institutions situated not far from the em- insurance premium 8,838 As regards improvement of management skills, 320 Mosenergo ployees’ place of work . By the end of 2012, 7,462 employees were employees were trained on competence upgrading in 2012 . The insured .

20 21 Availability of services and specialists in the field of labor protection of the procedure for workplace labor conditions compliance certifica- and repair of PPE are organized under the contract with “Leda- 4. Supply of potable water, taking into account and industrial safety in the Administration offices and at power plants tion, all workplaces in Mosenergo were assessed as regards labor con- Euroclean” JSC . temporary use of potable water devices affiliated with the Company ditions . In 2012, workplace assessment was carried out at 947 work Employees of Mosenergo are provided with therapeutic and pre- during implementation of subcontracts 6,410 In order to enhance the work on labor protection and health care places . ventive nutrition, milk or other products of equal worth in accordance for employees and in order to mitigate work safety risks, the man- As a result of this assessment, action plans were developed with Article 222 of the Labor Code of the Russian Federation, Order of 5. Workplace assessment 1,231 agement of the Company performed the following restructuring ac- aimed at improving labor conditions, with the following measures the Russian Ministry of Health Care and Social Development No . 46н tivities: a safety, labor protection and ecology block was established, stipulated: dated 16 .02 .2009 (Moscow) “On approval of List of works, professions 6. Healthful and dietary meals (milk) 2,975 which is independent of the plant management . This block comprises hearing protection against noise – purchase of ear muffs and ear and job positions, the employees of which are entitled to free therapeu- a labor protection department (13 employees), a department of indus- plugs, and their use in areas with higher noise level; tic and preventive nutrition due to extremely harmful work conditions, 7. Operation of first-aid rooms, provision trial safety and engineering audit (17 employees), and a department improvement of artificial lighting – replacement of lamps in work rations of therapeutic and preventive nutrition, norms of free vitamins, of medicines and first-aid kits 43,645 of civil defense and fire safety (4 employees) . At each power plant places with low illumination; and on approval of Rules of free issue of therapeutic and preventive 8. Medical examinations 10,642 (subsidiary), one responsible person in charge of labor safety and one purchase of respirators to ensure respiratory protection against nutrition” . specialist in charge of industrial safety were appointed . In addition, harmful substances; Milk or other products of equal worth are provided to the employees independent inspectors were hired on a contractual basis (civil law improvement of microclimate – repair of ventilation equipment and free of charge on the days of their actual work in adverse conditions 9. Personnel training 1,450 contracts) in order to identify violations of labor safety requirements maintaining it in appropriate condition, repair of heat insulation of with harmful factors stipulated in the List of adverse production factors 11. Protective clothing, personal protective by both employees and subcontractors, and therefore the number of equipment, maintaining of water-intake regime and ensuring water where it is required that such employees were provided with milk or equipment, electrical and engineering violations significantly decreased . This also enhanced the employees’ carbonation tanks in proper condition; other products of equal worth and where the level of adverse impact ex- protective devices, etc. 45,783 level of responsibility as regards organization and conduct of various upgrading of electric socket network for reduction of electromagnetic ceeds the allowable limits . Such provision can also be envisaged based job tasks, and adherence to labor protection requirements at the Com- irradiation; on the results of workplace assessment . 12. In-process monitoring 1,960 pany’s affiliates . improvement of overall work conditions – repair of sanitary facilities Milk and other products of equal worth is provide in snack bars, can- and amenities, equipment of relaxation rooms; teens and specially equipped rooms that meet the established sanitary hand cream is provided for employees’ skin protection against and hygienic requirements . Supply and delivery of milk to the Company’s 13. Laundering (dry-cleaning), repair of Status of the conduct of compulsory preliminary, periodic and hazardous substances . subsidiaries is carried out in a centralized manner under a service con- protective clothing 246 extraordinary medical checks (examination) In addition, summary spreadsheets were drawn, measurement pro- tract . Compulsory preliminary, periodic and extraordinary medical checks 14. Technical evaluation 500 tocols were issued and workplace certificates were developed with rec- (examination) in the Company are carried out in accordance with Ar- Sanitary and healthcare services for employees. Availability ommendations on mitigating the impact of occupational hazards . ticle 213 of the Labor Code of the Russian Federation, Order of the Rus- and equipment of sanitary rooms, rooms for having meals, medical aid, The Labor protection department entered into SAP the data of 15. Tagging of dangerous areas 5,444 sian Ministry of Health Care and Social Development No . 302н dated recreation and relaxation 7,500 workplace assessment cards as regards compensation and ben- 12 .04 .2011 “On approval of lists of adverse and(or) hazardous produc- efits for harmful work conditions . It made it possible to computerize In accordance with Article 223 of the Labor Code of the Russian Fed- 16. Development of Standard on personal tion factors and works for which preliminary, periodic and extraordi- work conditions categorization for all employees, the right to addi- eration, each affiliate has equipped sanitary rooms (cloakrooms, change protective equipment 1,250 nary medical checks (examination) are mandatory, and Procedure for tional leave due to harmful work environment, allowance for additional rooms, shower cubicles, wash-rooms, lavatories, rooms for storage and conduct of preliminary, periodic and extraordinary medical checks (ex- 17. Purchase of furniture, office supplies, leave, supply of milk and personal protective equipment, as well as the handout of protective clothing), rooms for having meals, medical aid, amination) of employees engaged in hard work and work under adverse etc. for the Company’s employees 20,514 right to early retirement . An appropriate database was created and is recreation and relaxation . All such rooms are subject to cleaning and air- and(or) hazardous conditions” . being maintained . ing . Relevant occupant space requirements are observed . Work places 18. Cleaning Mandatory preliminary health checks are performed when new are equipped with first-aid kits and water dispensers; hot rooms are employees are hired in the Company . Periodic medical checks are Provision of personal protective equipment, protective clothing and equipped with carbonation tanks . Staff is provided with washing agents 18 .1 . Full-service cleaning of rooms and adjacent carried out based on name lists of the employees who are subject to footwear, therapeutic and preventive nutrition, milk or other products of and detergents . territory at the subsidiaries (is performed by periodic checks . These name lists are submitted to territorial authori- equal worth a subcontractor with the use of own ties of the Federal Service for Consumer Rights and Human Welfare Employees of Mosenergo are provided with personal protec- On-the-job briefings (introductory, initial, repeated materials, tools and equipment) 175,073 Protection (Rospotrebnadzor) . In case employees express complaints tive equipment, protective clothing and footwear in compliance and extraordinary) of health deterioration and request a medical check, these employees with ‘Standard norms of provision of protective clothing, protec- The Company carries out on-the-job briefings (introductory, initial, 18 .2 . Full-service cleaning of rooms and adjacent are sent for an extraordinary medical check . The Company concluded tive footwear and other personal protective equipment (PPE) ac- repeated and extraordinary) in accordance with Article 225 of the Labor territory at the General Directorate a contract for medical checks with ‘Gazprommedservis’, which issues cording to intersectoral rules for provision of protective clothing, Code of the Russian Federation, Decrees issued by Russian Ministry of (is performed by a subcontractor with a medical report on the state of health, restrictions and contraindi- protective footwear and other personal protective equipment (Or- Labor and Ministry of Education on 13 .01 .2003 No . 1/29 “On approval the use of own materials, tools and cations for certain job tasks . These medical reports are taken into der of the Russian Ministry of Health Care and Social Development of the procedure for labor protection training and examinations on labor equipment) 2,744 account when concluding labor agreements, work assignment or re- No . 290н dated 01 .06 .2009)’ and Attachment to Union Contract of protection rules”, state standard GOST 12 .0 004-90. “Safety Standards fusal . Mosenergo . The employees working in adverse and(or) hazardous System . Organization of labor protection training . General provisions” TOTAL: 762,285 conditions, as well as working in special temperature conditions and the Order issued by the Russian Ministry for Energy and Fuel No . 49 Workplace assessment or works associated with pollution, receive the PPE free of charge . dated 19 .02 .2000 “Rules for work with personnel at electric power en- In compliance with the Order of the Russian Ministry of Health All PPE have a certificate of conformity, and they are purchased terprises in the Russian Federation” . Briefing programs were developed, Care and Social Development No . 342н dated 26 .04 .2011 “On approval at leading Russian PPE-producing companies . Centralized laundry and standard logbooks of the performed briefing are kept .

22 23 In the Company, an introductory briefing on labor safety is con- Analysis of industrial accidents in 2012 Quarter I – 3 .97 (the high score is attributed to the adjustment of the Promulgation of safe working methods was carried out, and addi- ducted for all newly hired staff, irrespective of their education level and system for subsidiaries’ assessment); tional posters produced in Artemy Lebedev’s design studio were posted length of career in the given profession or job position . Introductory Name of indicator 2011 2012 Quarter II – 3 .7; at the Company’s subsidiaries, as well as posters with rules for carrying briefings are also carried out for temporary workers, seconded staff, Number of fatal accidents or group ac- Quarter III – 3 .8; heavy weights . students, trainees and visitors . cidents, if there is an injured person with Quarter IV – 3 .9 . All the actions under the strategic occupational safety program In Mosenergo, an initial on-the-job briefing is conducted, prior to the serious outcome 0 0 Actions were taken to supervise the adherence to occupational safe- planned for 2012 were implemented . A ‘Labor Protection Day’ was con- start of work, for the following categories of employees: ty rules on the part of the subcontractors who worked on Mosenergo’s ducted on a regular basis . Management and specialists of the General all newly hired by the organization (subsidiary); those transferred from projects . Directorate were involved in the work of the occupational safety com- Number of industrial accidents 2 38 one department to another; and those who changed the job within the Joint work with the Legal Division (claims activities) was considered mittees at Mosenergo’s power plants . same department; Number of accidents × 1000000 hours/ as good practice . As a result of implementation of the above mentioned average number of staff 4.6. Environmental protection employees performing new job tasks, seconded and temporary NHA = actions 2 million 205 thousand roubles were claimed from a subcontrac- Hours of work as per time sheet 0 .11 0 .18 employees; tor for violation of the occupational safety rules . Mosenergo maintains fruitful cooperation with the Russian orga- construction workers who perform building and installation works in In the framework of the “30 Program” – “List of simple visible initia- nizations, scientific and educational establishments that work suc- an organization in operation; Occupational safety supervision tives for prevention of industrial accidents in 2011” – special actions cessfully in the field of environmental protection and environmental students who undergo on-the-job or production training – prior In 2012, at the Company’s subsidiaries 120 labor occupational safe- were developed and the majority of them were implemented (two ac- safety . to performing any task, as well as before learning any new subject ty audits were performed, including: tions under this Program are scheduled for implementation in the cur- Environmental issues are resolved in close cooperation with public during practical lessons in laboratories, classrooms, workshops, – 60 preliminary audits in the framework of methodological support of rent year) . authorities authorized to regulate environment conservation activities of extracurricular activities in study groups and classes; the subsidiaries’ activities in the field of occupational safety; Other important actions are development and implementation of ap- enterprises in the Moscow Region . Repeated briefing in Mosenergo is conducted by the immediate – 60 assessment audits, the findings of which were used to sum up the pendices to the Union Contract based on the latest occupational safety In 2012, Mosenergo’s expenditure on environmental protection ac- manager on the work place, so that the employee could better learn safe results and to assess the subsidiaries’ occupational safety efforts on standards and standard rules for provision of personal protective equip- tivities amounted to 187 .5 million roubles . methods of work and occupational safety rules, and violations are ana- a collegiate basis . ment, washing agents and detergents . lyzed where appropriate . The audits identified 4 .900 violations, the majority of which were 9 Extraordinary briefing in Mosenergo is held prior to the established corrected . Mosenergo’s expenses for environmental protection, thousand roubles date in the following cases: Consequently, the supervisory actions resulted in the reduction of 2008 2009 2010 2011 2012 changes in the technological process, upgrading or replacement of the number of occupational safety violations . equipment, tools and devices, change of initial materials, etc .; Actions were taken to supervise the adherence to labor protec- Activities of non-capital nature (prime cost) 86,064 58,781 45,628 61,992 44,002 breach of procedures, rules and standards by the employees, as well tion rules on the part of the subcontractors who worked on Mosen- as inappropriate methods and techniques of work that could result in ergo’s enterprises . As a result, 2,707 violation of to labor protection Activities of non-capital nature (non-sale expenses) – – 177 – – an accident or injury; rules were identified . Jointly with the Legal Division 1,300 claims introduction of new rules and procedures for safe work practices, were issued and 13,000 thousand roubles were retained . Waste recycling (prime cost) – 43,192 47,752 50,723 56,242 regulations of safety standards system, information notices Other important actions are development and implementation of ap- Investment activities, including environmental survey 109,264 52,628 72,843 73,611 87,278 and notifications on injuries, as well as orders related to labor pendices to the Union Contract based on the latest occupational safety protection; standards and standard rules for provision of personal protective equip- Total 195,328 154,601 166,400 186,326 187,522 as required by state supervision authorities or administrative bodies ment, washing agents and detergents . of the organization (subsidiary); All the actions of the strategic labor protection program planned for In 2012, the emissions of pollutants from the power plants of the decrease of nitrogen oxides emissions was achieved due to decrease of in case of at least 30-day interruption in work performance – for 2012 were implemented . A Labor Protection Day was conducted on a grid increased to 55 .0 thousand tons compared to 51 .1 thousand tons overall fuel consumption and improved fuel burning regime . The rise in tasks with additional (more strict) occupational safety requirements; regular basis . Management and specialists of the General Directorate in 2011, i .e . by 3 .5 thousand tons (or 6 .8%), including the following sulphur dioxide emissions occurred due to increased consumption of and for other tasks – in the event of a 60-day interruption in work were involved in the work of the labor protection committees at power breakdown by ingredient: fuel oil . The reduction of solid particle emissions was due to decreased performance . plants . – the amount of sulphur dioxide emissions increased from 7 .3 consumption of solid fuel . The supervisory actions resulted in the reduction of the number of thousand tons to 11 .5 thousand tons, i .e . by 4 .2 thousand tons (by Mosenergo is committed to improving environmental culture violations . Average score of the assessment of the affiliates, which was Investigation of industrial accidents (procedure and terms of 1 .6 times); amongst the employees of is subsidiaries . In particular, in 2012 conducted using the corporate methodology for labor protection assess- investigation) – the quantity of solid particle emissions decreased from 0 .918 ecologically-focused posters were created and warning signs with ment, was as follows: In the Company, investigation of industrial accidents is carried out in thousand tons to 0 .871 thousand tons, i .e . by 0 .047 thousand tons the rules for proper use of solid domestic waste were installed . A accordance with Articles 227–231 of the Labor Code of the Russian Fed- (5 .1%); reminder booklet on the environmental management system was de- eration and Decree issued by the Russian Ministry of Labor No . 73 dated 8 On 16 .01 2012at. 10:45, V I. . Gorbunov, inspector of the Clients Support Centre– – the volume of nitrogen oxides emissions went down from 42 .2 veloped . 24 .10 .2002 “On approval of document forms required for investigation Vostok, left the office building and walked on the entry platform partially covered thousand tons to 40 .7 thousand tons, i .e . by 1 .5 thousand tons Responsibilities for housekeeping and cleanliness of the territory and record of industrial accidents, and approval of Regulations on spe- by snow . He slipped and fell face down, hitting his face on the stairs . (3,6 %) . were distributed among the departments and units of the subsidiaries . cific features of industrial accident investigation in individual industries On 24 .02 2012. at 11:50, lead engineer E .V . Kazurova, when going into a corridor The increased amount of emissions is attributed to a greater share The state of the territory is maintained in compliance with environmental and organizations” . from the room, slipped and turned her left ankle . of fuel oil and its increased share in the fuel mix of the Company . The protection requirements . On 03 .07 2012. at 14:30, at TPP-8, V .G . Khmelev, first category engineer-designer, was descending from the foundation plate and turned his ankle . 9 According to Mosenergo management accounting

24 25 In 2012, a mobile environmental laboratory was purchased and put pling and observation of meteorological parameters . The measured data Mosenergo liquid effluents, mln cubic meters in operation for atmospheric air monitoring in the zone of the power are automatically transmitted in the data management and processing plants’ effect . It is a specialized vehicle equipped with instrumentation centre . These activities are aimed at ensuring environmental monitoring 500.0 for measuring of pollutant concentration in the atmospheric air, sam- envisaged by the environmental protection legislation . 463.1 450.0 447.5 Dynamics of Mosenergo’s emissions, thousand tons

60.0 400.0 393.7 54.8 55.3 55.0 371.0 370.8 53.5 356.8 51.5 353.4 354.4 344.4 350.0 328.9 50.0 45.8 43.8 42.5 42.2 40.7 300.0 40.0 250.0

30.0 200.0

20.0 150.0 11.5 9.6 100.0 10.0 6.7 7.6 7.3 2.6 2.1 1.2 0.9 0.9 50.0 0.0 2008 2009 2010 2011 2012 0.0 Total Nitrogen oxides Sulphur dioxide Solid particles 2008 2009 2010 2011 2012

Total Regulatory clean Actual greenhouse gas emissions amounted to 41 .530 million tons regulatory clean effluents and 14 6. million cubic meters of emissions in 2012 . The drop by 0 .602 million tons, compared to 2011, was treated to prescribed standards . The volume of effluents increased by achieved given the lower quantity of the fuel burnt . 49 .3 million cubic meters compared to 2011; In 2012, certification authority “Bureau Veritas Certification Rus” tablished Environmental Policy and environmental objectives, as well as Total volume of liquid effluents into surface water bodies amounted Total amount of wastes decreased by 7 .4 thousand tons to 118 .9 LLC conducted a recertification audit of the Company’s Environmental monitoring of their achievement . to 393 .7 million cubic meters, including 356 .8 million cubic meters of thousand tons . Management System in order to verify its compliance with the interna- No incompliance was identified in the course of the recertification tional standard ISO 14001:2004 . audit . The audit was carried out in the General Directorate and at Mosen- Based on the results of the audit and the demonstrated level of de- ergo’s subsidiaries TPP-11, TPP-12, TPP-21 and TPP-27 . In the course velopment and maturity of Mosenergo’s Environmental Management of the audit the Company demonstrated successful implementation, System, Mosenergo was recommended for recertification for the inter- maintaining and improvement of the Environmental Management Sys- national standard ISO 14001:2004, and Certificate No . RU228411E-U tem . The auditors noted that Mosenergo was efficiently pursuing its es- was granted to Mosenergo .

26 27 Corporate governance 5. Corporate governance meetings of the executive bodies and other corporate events of the Company’s affiliates, non-profit and other organizations where the 5.1. Main principles Company acts as a member; Underlying principles of the Company’s corporate governance are separation of non-core business activities, optimization of the laid out in the OJSC Mosenergo’s Corporate Governance Code and Company structure and the reduction of management costs . are based on the legislative regulations of the Russian Federation, the The management bodies of the Company are the General Meeting Company’s Charter, Corporate Governance Code recommended for of Shareholders and the Board of Directors . The executive bodies of the use by FCSM’s decree No . 421/p dated 4 April 2002, as well as on Company are General Director and the Executive Board . Supervision of the corporate governance principles recognized in the international the Company’s financial and business activities is the responsibility of practice . the Mosenergo’s Audit Committee . The Company corporate governance is based on the following: 5.2. General Meeting of Shareholders BoD’s accountability to shareholders and the accountability of the Company’s executive bodies to the Company’s management bodies, General Meeting of Shareholders is the supreme governing body as well as trust regarding relations between all participants of the of Mosenergo, which makes it possible for shareholders to exercise corporate governance . their right to take part in the Company’s management, as well as safety and efficiency of stock ownership rights and a possibility for gives them access to the information about the Company’s activities, unrestricted and fast carve-out of stock owned by shareholders, as achievements and plans . The procedure for preparation and holding well as providing shareholders with access to effective protection in of general meetings of shareholders complies with legislature of the case of breach of privileges; Russian Federation . This procedure is defined in the Company Charter transparency of activities, disclosure of accurate information on and in the Provisions for the General Shareholder Meeting of Mosen- important facts and the information about the Company’s activities, ergo; it is believed to be an optimal corporate governance practice . The providing required access to the information, as well as maintaining established procedure guarantees equal treatment of all shareholders reasonable balance between the Company’s transparency and pursuit of the Company . of its commercial interests; The General Shareholder Meeting dedicated to the results of the Company’s social responsibility, including adherence to quality Company operations in 2011 was held on 19 June 2012 . The meet- standards, environmental regulations and creating the most advanced ing approved Mosenergo’s Annual Report for 2011 and the financial working conditions; statements, including the profit and loss statement, as well as dis- adherence to ethical norms preventing staff misuse of official tribution of the Company’s profits from 2011 . It was decided to pay positions, which can damage both the Company and third parties, dividends on ordinary shares of the Company for 2011 in the amount including illegal use of confidential and insider information . of 0 .03 roubles per an ordinary inscribed share of the Company in the form of cash . Mosenergo’s Strategy in the area of improvement of the mecha- The shareholders also elected the new Board of Directors and the nisms of corporate governance is to intensify the activities of the com- Audit Commission of the Company, approved the Company’s Auditor; a mittees of the Board of directors, improve the quality of preparation of resolution was adopted on the remuneration to the members of the Au- materials for the Board meetings, including preliminary discussion of the dit Commission, who were elected and approved at the Annual General issues to be discussed by the Board meetings in the committees and by Meeting of Shareholders on 24 June 2011 . means of interaction of the Company departments and subdivisions with The General Meeting of Shareholders approved the revised cor- shareholder representatives . porate Regulations on remunerations for the Audit Commission mem- The most important objectives of the corporate governance in bers . It also approved a number of transactions of interest, which can Mosenergo continue to be the following: be implemented in the future in the process of Mosenergo’s routine maintaining the balance of interests of all shareholders, as well as business . other persons interested in the continuous development of the 5.3. Board of Directors and its Committees Company; The Board of Directors of Mosenergo is the Company’s gov- maintaining the required level of transparency and access to the erning body . According to the Federal Law “On Joint Stock Com- Company information; panies” and the Company’s Charter, the Board of Directors is the organization of operations of the BoD committees with the participation general supervisor of the Company’s activities, with the exclusion of representatives of major shareholders, Company specialists and of resolving issues under the authority of the General Meeting of independent experts; Shareholders . participation of the Company in management of its affiliate structures, the participation of the Company’ representatives in assemblies,

29 On 19 June 2012, an annual General Meeting of Shareholders was approval of Mosenergo Investment Program for 2012 – 2014; Rights and obligations of the General Director and members of the by the Regulations on determination of the amount of remuneration and held, at which a new BoD of the Company was elected . Members of approval of the integrated procurement program of Mosenergo for Executive Board pertaining to managing current operations of the Com- compensations to Members of the BoD of OJSC Mosenergo, approved Board of Directors of Mosenergo OJSC are listed below . 2013; pany are determined by the legislation of the Russian Federation, the by the General Meeting of Shareholders on 30 June 2009 . According to Petr Pavlovich Biryukov preliminary review of the Mosenergo’s financial statements and the Company Charter, the Provisions for the Company’s General Director these Regulations, the remuneration for members of the BoD consists of Valery Alexandrovich Golubev Annual Report for 2011; and the Provisions for the Company’s Executive Board . the basic and additional parts . Alexander Pavlovich Dushko issues regarding the preparation for the General Meeting of At the Board of Directors meetings on 15 .06 .2012 (Minutes No . 16 The basic part of the remuneration constitutes the remuneration Alexey Alexandrovich Mityushov Shareholders, including recommendations to the Meeting of (13) of 19 .06 .2012) and on 10 .10 .2012 (Minutes No . 5 of 12 .10 .2012), paid to members of the Company’s BoD for their participation in the Elena Vladimirovna Mikhailova Shareholders regarding profit allocation and approval of the Mosenergo Board of Directors made the following changes to the Execu- meetings of the BoD . The amount of the remuneration paid is equivalent Konstantin Valerievich Pesotsky Company’s Performance Report for 2011; tive Board composition . The authorities of the Executive Board members to four minimal monthly rates of a first labor grade worker, set by the Vladimir Igorevich Pogrebenko other important corporate issues . S .V . Antonova, V .V . Nikolsky and I .V . Galas were terminated . The BoD industry tariff agreement of the RF power sector . Kirill Gennadievich Seleznev (Chairman) elected new members of the Executive Board: A .A . Efimova – Deputy The additional part of the remuneration is paid to members of the 5.4. Audit Commission Evgeny Viktorovich Sklyarov General Director for Legal Issues; I .V . Kosarev – Deputy General Director Company’s BoD according to the results of the financial year, if such Denis Vladimirovich Fedorov In order to exercise control over the Company’s financial and busi- for Production; and A .S . Osyka – Chief Engineer . results include net profit of the Company . The total amount of the ad- Damir Akhatovich Shavaleev ness activities, the General Meeting of Shareholders elects five members Members of Executive Board of Mosenergo (as of 31 December ditional part of the remuneration based on the Company’s performance Vitaly Georgievich Yakovlev of the Audit Commission . 2012): shall not exceed five per cent of the Company’s net profit earned dur- The Company’s Audit Commission operates according to the legisla- 1 . Vitaly Georgievich Yakovlev (Chairman) ing the fiscal year when the current members of the BoD were elected During 2012 the BoD of Mosenergo held 18 meetings . The most tion of the Russian Federation, the Company Charter and the Regulations 2 . Elena Victorovna Andreeva into office . important issues addressed by the BoD in 2012 were the following: of the Company Audit Commission . 3 . Anna Alexandrovna Efimova The additional part of the remuneration based on the Company’s approval of Mosenergo’s Annual Report for 2011; The Audit Commission performed a documentary inspection 4 . Dmitry Mikhailovich Katiyev performance is not paid to members of the BoD who attended less than approval of Mosenergo Business Plan for 2012 and establishment of (audit) of the Company’s financial and business activities in 2012 . 5 . Ivan Vitalievich Kosarev half of all meetings of the BoD (from the date of the election and until Business Plan target indicators for 2013 – 2014; Based on the findings of this audit, the Audit Commission issued a 6 . Alexander Semenovich Osyka termination of the authority) . approval of Mosenergo Investment Program indicators for 2012– decision that confirms the reliability of data and information con- 7 . Mikhail Leonidovich Khodursky The aggregate amount of the remuneration paid to members of the 2014; tained in the reports and other financial documents of the Company The major objectives of Mosenergo’s Executive Board are as follows: BoD in 2012 totaled 2,748,980 .00 roubles . approval of the annual integrated procurement program of Mosenergo for 2012 . safeguarding rights and legitimate interests of the Company The payment of remuneration and compensation to members of for 2013; shareholders; the Audit Commission is carried out according to the Regulations on approval of the Registrar of non-core and inefficient assets of the Audit Commission Members: developing proposals for the Company development strategy; Payment of Remuneration and Compensations to Members of the Audit Company; Dmitry Alexandrovich Arkhipov, First Deputy to the Head of Executive implementing financial and business policy of the Company, making Commission of Mosenergo, approved at the General Meeting of Share- issues regarding the preparation for the General Meeting of Board Administration – Head of Internal Audit Department of Executive decisions on the most topical issues of the Company’s current holders on 19 June 2012 . Shareholders on the 2011 performance results; Board Administration of “Gazprom” OJSC; business operations and coordinating the work of the Company Members of the Audit Commission receive a one-off payment for approval of Mosenergo Union Contract for 2012; Andrey Viktorovich Belobrov, Deputy Head of Department – Head of divisions; their participation in the audit of financial and business activities of election and early termination of the powers of the Executive Board Organizational Division of the Internal Audit Department of Executive improving the efficiency of the systems of internal control and risk the Company . The amount paid equals twenty-five minimum monthly members; Board Administration of “Gazprom” OJSC; monitoring; wages of a first grade worker; the amount of minimum monthly wages Mosenergo’s membership in other organizations and decision making Evgeny Nikolayevich Zemlyanoy, Head of Department for marketing in ensuring the achievement of a high level of returns on the Company’s is established by an industry-wide tariff agreement in the electric en- on issues pertaining to the competence of management bodies of electric power industry, Division for energy sector development and assets and maximum return on the Company’s operations . ergy complex of the Russian Federation (hereinafter – Agreement) for Mosenergo’s affiliates and subsidiaries; marketing, Department of marketing and processing of gas and other In 2012, the Company’s Executive Board addressed the issues re- the period of inspection (audit), with account of indexing stipulated by approval of plans and reports of cash flow investment subjects in the liquid carbohydrates of “Gazprom” OJSC; lated to current and future operation, including signing a natural gas the Agreement . framework of Mosenergo’s investment projects on construction of Vitaly Anatolievich Kovalev, Deputy Head of Division – Head of supply contract between Mosenergo and “NOVATEK Moscow Region” Members of the Audit Commission are reimbursed for their travel- new power units at the Company’s affiliates; Organizational Management Section, Internal Audit Department of LLC, signing a municipal property lease agreement between Mosenergo ling expenses related to their participation in meetings of the Audit Com- approval of candidates for consultants on transactions for attracting Executive Board Administration of “Gazprom” OJSC; and small business enterprise “Khimki heat network”; procurement of mission related to inspections, according to the Company’s regulations financing on the external loan markets and definition of the Company’s Yury Andreevich Linovitsky, Deputy Head of Internal Audit Division of equipment for the investment projects being implemented by the Com- on business travel expenses reimbursement in force at the moment of credit policy . “Gazprom Energoholding” LLC . pany; and other matters . such meetings or such inspections . In 2012, the most important issues under the authority of the The amount of remuneration of the Company’s General Director is 5.5. Executive Board 5.6. Remunerations Company’s BoD were preliminarily discussed by the BoD’s Committees . determined according to the System of Incentives for the General Direc- Management of Mosenergo’s current operations is carried out by The Company set up the following committees: Audit Committee, According to the Company Charter and the decision of the General tor of OJSC Mosenergo (approved by resolution of the Company’s BoD a single executive body – General Director, and a collegiate executive Strategy and Investment Committee, Staff (HR) and Remuneration Meeting of Shareholders, members of the Company’s BoD are entitled to on 24 December 2010) . This System includes official salary and quar- body – the Executive Board . Committee, and Reliability Committee . remuneration and/or compensation of expenses incurred while perform- terly bonuses based on KPI . General Director is elected by the Board of Directors . Members of Throughout the reporting year, the BoD Committees provided ing their functions of the Company BoD members . The amount of such The amount of remuneration of members of the Company’s Execu- the Executive Board are elected by the BoD; the number of members is to the Board of Directors their recommendations on the following remunerations and compensations is determined by a decision of the tive Board, which is determined by a resolution of the BoD of Mosenergo also determined by the BoD . matters: General Meeting of Shareholders . (Minutes of the Meeting held on 30 January 2006), totaled 2,735,119 .00 According to the Company Charter, General Director performs the approval of Mosenergo Business Plan for 2012 – 2014; Amount, type and procedure for payment of remuneration and com- roubles . functions of Chairman of the Company’s Executive Board . pensations to the Mosenergo Board of Directors’ members are defined

30 31 Additional information Additional information Pursuant to the GOELRO plan, several stations were built in the Moscow region, namely Kashirskaya TPP (now TPP- 4), Shaturskaya 6.1. History of Mosenergo TPP (now TPP-5), Krasnopresnenskaya TPP (now a subsidiary of Mosenergo’s history is closely interrelated with the history of devel- TPP-12), TPP-6 and TPP-8 . One of the key events of the period opment of economics, society and culture of Russia . was the completion of the Russia’s first 110 kV voltage power line The Joint Stock Company of Electric Lighting was founded in 1886 between Kashira and Moscow, as well as two-circuit ring of power by Carl Siemens, a Saint-Petersburg’s merchant of the First Guild, lines and transformers around Moscow with the voltage of 115 kV . who was the Head of the Siemens & Halske Representative Office . Commissioning of the power ring gave Moscow a reliable power The Company was founded in Saint-Petersburg, however at its very supply system . first board meeting an issue was raised to prepare grounds for the In the 1930s, the workers of the Moscow power supply system known company’s operations in Moscow . until 1932 as MOGES (Unified Management of Power Plants of the On 31 July 1887, the executive board of the “1886 Society” approved Moscow Region) started the activities to provide centralized district the contract to set up electric lighting of the Postnikova Passage on heating to the Soviet capital . March 1931 saw the launch of the first Tverskaya street in Moscow . This date is acknowledge as the founding heating mains from MMPS-1-1 and the foundation of a specialized date of the electric power system in the Moscow region . enterprise for maintenance and development of the Moscow district At the end of 1888 the company successfully completed the task heating network . to construct the first centralized power plant: electric power was The development of the power system was put on hold by the start supplied by Georgievskaya power plant . On 28 November 1897 the of the Great Patriotic War . Part of the equipment was destroyed, company hosted a festive celebration for the opening of the Moscow some was evacuated and total capacity of Mosenergo sunk two- Municipal Power Station (MMPS-1) Raushskaya (now SPP-1), and on fold . Nevertheless, Moscow power engineers managed to maintain 15 February 1907 the company launched the second station – MMPS- continuous supply of power to the city’s defense facilities; they 2 Tramvaynaya . constructed high-voltage obstacles for the enemy troops, assembled The next important stage of development of the electric power system power-generating trains for the liberated regions of the country . of Moscow was a decision to construct in the vicinity of Moscow a Restoration of power industry started right after the successful large power plant fired with local fuel . This decision was implemented counteroffensive campaign of the Soviet Army in winter of 1941-1942 . by Robert Klasson, managing director of the Moscow Office of the As early as by 1945, Mosenergo has already managed to achieve pre- “1886 Society” . Construction of the plant intended to use a new type war level of installed capacity . of fuel was a major project involving development of new technologies In 1946, Mosenergo started using a new type of fuel: SPP-1 started and creation of an entire peat extraction industry . burning natural gas . In the same year, Moscow power system was In 1912, the company commenced the construction of the world’s first connected to Ivanovo, Yaroslavl and Gorky power systems, and in peat-fired district power plant in the Bogorodsk district . In April 1913, 1956, the first link of the Unified Power System of the European part a new company, Moscow Joint Stock Society “Elektroperedacha”, of Russia was launched after the installation of a high-voltage power was founded to utilize the capacity generated by the new station . The line from Kuybyshev to Moscow . plant itself started operating in 1914, and in 1915 it started to work in Within the framework of the Unified Power System in 1960, the parallel with the Raushskaya station . country brought into operation first units of TPP-22, and for the first Joint stock companies “Electric Lighting 1886 Society” and time in the USRR a 1,000 mm heat pipeline was installed at TPP-11 . “Elektroperedacha” successfully operated until October 1917 . After On 22 October 1963, Mosenergo launched TPP-21 shortly followed by the October Revolution the stations were nationalized and ceased TPP-23, TPP-25 and TPP-26 . operations under their previous ownership in December 1917 . In the 1970s Mosenergo successfully implemented a 250-MW thermal The management of state power stations was delegated to the Power power generating units with supercritical steam parameters . Such a Department of the Supreme Council of Public Property . At the same unit was first constructed at TPP-22, and it became a base unit for time, in December 1917, Ivan Radchenko and Alexander Vinter other heat and power plants: TPP-21, 23, 25 and 26 . made proposals concerning further development of Moscow power Development of district heating system remained a pending industry . These proposals became the basis for the first State Plan for issue for Mosenergo, especially during mass construction of the Electrification of the whole country, GOELRO . residential apartments in the city when district heating pipelines In December 1920, the GOELRO plan was ratified by the 8th All-Russia with the length of 20-30 kilometers and pipeline diameters of Soviet Congress . According to the plan, the volume of capacity of the 1,200-1,400 mm started to be built from the new powerful TPPs . Moscow power system was intended to increase almost by the factor Simultaneously, intensive grid development was in progress, with of four within 10 to 15 years . Total installed capacity was to increase the power transmission lines of 750 kV voltage being extensively from 93 to 340 thousand kW . constructed . Total length of the high voltage power transmission

33 lines increased drastically . Two high-voltage 220 kV rings were Market risks Risks of losses due to unforeseen fluctuations of fuel prices Tax risks closed around Moscow, soon followed by 500 kV rings . Significant risks related to operations on the wholesale market of The price of purchased fuel might fluctuate quite substantially . It is The Management believes that the Company fully abides by the On 30 December 1987, Mosenergo brought into operation the first electricity: likely that the cost of fuel projected in the business plan can be exceeded taxation law regulating its activities . However, there is a potential hydroelectric generating set of the Zagorsk Pumped-storage Hydro unstable market prices and seasonal fluctuations in demand for and a need to allocate additional funds for fuel supply can arise . risk of difference of opinion with corresponding supervision au- Plant – a unique power unit regulating peak loads in the grid system . electricity and heat; In order to minimize such risks, the Company power plants create thorities regarding issues which allow for ambiguous interpreta- In 1990 the Moscow Grid absorbed Ryazan TPP-24, and in 1992 it controlling influence of the grid operator “SO UES” upon operation reserve supplies of fuel (coal and fuel oil) to cover urgent demands and tion . acquired TPP-28 in Moscow . modes of Mosenergo power plants, which leads to transfer of eliminate the need for one-time purchases of large quantities of fuel . Taxation law of the Russian Federation is subject to frequent chang- In 1993, the production association Mosenergo was transformed into equipment to cold reserve and surplus capacity; The Company also cooperates with Gazprom to ensure signing mutually es and sometimes contains ambiguities and uncertainties . Consequen- an open joint stock company . the risk of introduction of special procedure of price calculation beneficial contracts . tially, there is a possibility of tax risks related to: In 2005 OJSC Mosenergo developed and started the implementation for electricity on the wholesale market, including transition to amendments to legislation on taxes and duties related to an increase of the Program for Development and Technical Upgrade, including state regulation of prices . In order to prevent significant growth Risks of losses from unforeseen fluctuations of currency and interest of tax rates; planning, construction and commissioning of new generating of electricity prices for the ultimate customers, appropriate rates introduction of new taxes; facilities on the sites of operational power plants in the energy- infrastructure organizations perform continuous monitoring of Power industry belongs to capital-intensive spheres of economy, incorrect calculations or payments of taxes due to differences in deficient regions, heat and electricity demand nodes with developed prices on the wholesale market . If the allowable price growth rate and therefore the Company’s operations require substantial investments interpretation of the ambiguous laws and regulations . infrastructure . is exceeded, the wholesale market can be transferred to a special In the second and third quarters of 2009 the Company opened credit In order to minimize tax risks, the Company is continuously monitor- On 22 November 2007, less than two years since the start of pricing procedure, including enforcement of governmental price lines in the following banks: Calyon (on 06 .02 .2010 this bank was re- ing changes of tax legislation, legal and administrative practices in order construction, TPP-27 launched a combined cycle steam-gas regulation, which might result in a considerable downturn in named to the Credit Agricole Corporate and Investment Bank Deutsch- to ensure consistency of the approaches to tax calculation with the cur- power unit with rated electric power of 450 MW and heat output the Company’s revenue and losses from sales of electricity and land) and Nord LB for the amount of up to 415 million Euro and for the rent interpretation of law, evaluating planned transactions from the point of 300 Gcal . In June 2008, a unit of the same type was put into capacity . period of up to 16 .5 years, as well as at the BNP Paribas Bank for the of view of tax risk mitigation, and conducting training and qualification operation at TPP-21, and in December of the same year the In order to avoid the aforementioned risks, Mosenergo takes part amount of up to 186 million euro and for the period of up to 13 .5 years . upgrade courses for the staff responsible for calculation and payment Company installed yet another 450-MW steam-gas power unit at in the development of the regulatory base for the wholesale electricity The interest rates of the aforementioned loan agreements are pegged of taxes . TPP-27 . market, monitors actual situation on the regional level and at the level of to the floating EURIBOR rate . In view of this, the Company is subject On 30 June 2011, a new 420-MWe combined-cycle power unit was put UES, and analyses the actions of the SO UES . to the risk of negative changes in the interest rates on interest-bearing Risks of loss of assets due to damage of property in operation at TPP-26 . This unit has a record high efficiency among liabilities, as well as the risk of cash flow changes due to changes in the These risks include risks of the Company’s facilities being rendered the Russian power plants – up to 59% . The general contractor for Risks on the heat market foreign currency exchange rates . At the same time, the Company’s fi- inoperable or property being damaged as a result of terrorist activity, the construction was Alstom Consortium (France) and “EMAliance” Seasonal fluctuations in demand for heat, correlation of demand to nancial status, its liquidity, sources of financing and performance results misappropriations and theft, or natural disasters in the region . OJSC . climatic conditions . currently do not depend significantly on the exchange rate shift . In order to mitigate these risks, the Company organizes regular Redistribution of Mosenergo’s share on the retail market in favor of Mosenergo responds to these risks in the following way: inspections of anti-terrorist protection of staff and production facili- 6.2. Risks МОЕК and OJSC Moscow Heat Distribution Network Company that are The Company meticulously plans its budget in order to minimize ties, implements protection against various possible after-effects of Risk management implies prevention of risks in production and fi- controlled by the Moscow Government and are actively appropriating demand in loan raising . The Company performs systematic assessment accidents, natural disasters, and catastrophes, conducts emergency nancial activities of Mosenergo, as well as minimizing possible negative the heat loads associated the new construction projects . and monitoring of the risks associated with currency exchange and in- response and fire safety drills for the personnel and insures its prop- outcomes of such risks . In order to mitigate these risks, Mosenergo is taking the following terest rates . In addition, Company is implementing measures to hedge erty . The Company adopted “Regulations on risk management at Mosen- actions: currency and interest rate risks, in order to mitigate the potential losses ergo” . These Regulations contain a Map of Risks, which includes major expands the corporate block for heat sales and heat business resulting from the interest rate growth . Risks of civil liability types of risks that have an impact on Mosenergo’s activities, as well as development in order to enhance competitive advantages; This type of risks includes the risk of liability for polluting the en- a risk management program . undertakes proactive measures for the transfer of heat loads from Liquidity risk vironment in the region, damaging property owned by third parties, li- Risk management is carried out within the Company by functional MOEK boilers to more efficient Mosenergo’s TPPs; Liquidity risk is managed by means of careful planning of financial ability for the quality of goods supplied to the domestic market and to divisions according to the type of activities . actively interacts with municipal units of the near Podmoskovye on flows, taking into account the time schedules of cash inflow and pay- the wholesale market of electricity, as well as risks of the management’s the matters of recruiting new heat consumers . ments . liability for the damage caused to life and health of the Company em- Risks due to regulation of tariffs ployees . The risk of unreasonable state regulation of tariffs, related to a pos- Inflation risk might result in growth of Mosenergo’s costs and de- Credit risk In order to mitigate these risks the Company strives to: sibility of artificial containment or directive lowering of tariffs, or ap- crease in profits . Inflation growth might also result in losses in real terms When working with the clients, Mosenergo exercises an individual- decrease emissions of pollutants into environment; proval of tariffs which are inadequate to the Company’s costs . of the Company’s accounts receivable in case of significant deferred or ized approach, which takes into account the specifics of financial and continuously maintain availability of equipment and reserves of ca- The Company’s experts maintain constant cooperation with the FTS delayed payments . business activities of each of them . pacity; of Russia, Regional Energy Complex of Moscow and Fuel and Energy The effects of inflation on the Company financial stability are ac- For the purpose of credit risk monitoring, business partners are develop an automated system for commercial accounting of power; Committee of the Moscow Region . The purpose of this cooperation is to counted for at the time of developing of the Company financial plans . grouped according to their credit profiles, industry affiliation, and loan conduct regular certification of work places, verify availability of the ensure the approval of a reasonable level of tariffs . In order to mitigate inflation risks, Mosenergo signs long-term fixed structure by date and contractual terms of loan repayment . means of individual and collective protection at the workplaces and to Furthermore, in order to lower this particular risk, the Company annual price contracts for supply and transportation of gas to its power In order to manage credit risks, the Company is setting up a valua- the worker crews; implements projects to help bring down its operational costs, such as plants . tion reserve for the depreciation of receivables, files claims and lawsuits undertake integrated measures to guarantee industrial safety of haz- the Lean Production Project . and uses baking guarantees for repayment of advances . ardous production facilities of the Company;

34 35 insure civil liability for harm inflicted to health, life or property to third Organizational risks Depositary receipts of Mosenergo are listed on over-the-counter parties . Organizational risks include the risk of losses resulting from imper- (OTC) market of the New York Stock Exchange and in the IOB10 sector of fect management procedures in the Company and incorrect selection of the London Stock Exchange . Corporate governance risks the market strategy . Depositary receipt programs Current risks related to the Company’s corporate governance are In order to minimize these risks the Company facilitates improve- as follows: ment of the management structure . This involves implementation of the Level 1 144-А Reg S. the risk of the decisions made by the General Meeting of Share- Lean Production Project and activities related to assessment, analysis holders and/or the Board of Directors being appealed against in the and improvement of business processes . Ratio 1:50 shares 1:50 shares 1:50 shares court; In order to improve the quality of decisions the Company offers Brief description Provides for free trading on OTC Intended for private offering in Intended for a wider (compared the risk of the Company executive and management bodies failing training to the management and specialists in the qualification upgrade market in the USA and Europe the limited range of institutional to 144A) range of private to approve the Company transactions as provided for by the current institutions . investors, primarily in the USA professional investors beyond legislation and consequentially, of such transactions being declared the USA invalid following lawsuits of interested parties; Investment risks risks related to information disclosure procedures of the Com- While implementing its investment program, Mosenergo is Date of issue 1997 2008 2008 pany, according to legislative requirements of the Russian exposed to investment risks, i .e . the risks associated with dete- Depository bank Federation . rioration of key parameters of the project due to changed external The Bank of New York Mellon In order to minimize these risks, the Company ensures strict delinea- factors . tion of responsibilities of the Company managing bodies (in compliance The Company is engaged in investment management optimization Bonds in circulation with the Company Charter), proper work of the committees of the Board for new construction projects through introducing project manage- Corporate bonds in roubles of Directors, improvement of management of the organization and intro- ment systems based on the latest methods and investment controlling State Identification Face value, Maturity term duction of amendments to documents regulating corporate governance . practices . Series Total amount, roubles Date of issue The Company structural subdivisions perform continuous monitoring of Number roubles days, compliance with the legal requirements and constituent documents in all Legal risks 02 4-03-00085-А 1,000 5,000,000,000 (as of 31 .12 .2012, 02 03. 2006. 3,640 business processes of Mosenergo and with the decisions made by the Risks of losses associated with neglect of the existing legislation the issue was repaid in the amount Company executive bodies . or with legislative amendments introduced while a transaction was in 4,785,914,000 roubles) process; risk of improperly produced documentation . 03 4-04-00085-А 1,000 5,000,000,000 04 12. 2009. 1,820 Technical and production risks The legal risks are controlled by the ongoing formalization of docu- The Company mitigates technical and production risks by means of ment production procedures . Minimization of legal risks is underpinned creating reserves of fuel, spare parts and materials, as well as imple- by the use of standard forms of documents and continuous monitoring 6.4. Dividend policy menting activities aimed at increased reliability of the grid system . of changes in the relevant legislation . The Dividend policy of Mosenergo was approved by the Board of The established procedure of calculation of the amount of dividends The Company’s power plants may face a risk of equipment failures Documents supporting business processes in the Company are Directors on 24 December 2010 . allows paying 5% to 35% of the net profit of the company as dividends due to misoperations of staff both in normal and in emergency opera- subject to verification by the legal department, which facilitates mini- The Dividend policy of Mosenergo was developed in compliance under the condition that the reserve fund is fully created as required by tion . mization of legal risks and risks associated with improperly produced with the applicable law of the Russian Federation, Code of the corporate the Company Charter . Advanced staff training is offered in the Company educational cen- documentation . behavior recommended by the FCSM of Russia, Mosenergo Company The following principles are observed while calculating the amount ters and directly at its TPPs . Charter, and internal documents of Mosenergo . The Dividend policy of of dividends: Risks related to bringing new equipment into operation are mitigat- Mosenergo sets forth the principles pursued by the Mosenergo’s Board Part of the net profit is allocated to the reserve fund as required ed through purchasing the equipment made according to the technical 6.3. Securities of Directors in drafting the recommendations to the General Meeting of by the Company Charter . Allocation of the funds from net profit to specifications by suppliers with solid reputation on the market of such Shareholders for decision making on profit distribution options, includ- the reserve fund is discontinued when the reserve fund reaches the equipment, with the declared parameters verified during guarantee tests Mosenergo shares are listed on Russia’s integrated exchange ing payment of dividends . amount required by the Company Charter . and operation in the trial period . MICEX-RTS in A1 quotation list . The amount of dividends is calculated from the net profit of the Part of the net profit in the amount of 5% is used for paying Mitigation of the risks related to shortage of qualified personnel re- Tickers: Company reflected in the annual financial statements produced accord- dividends . quired to operate the equipment is achieved by retaining the employees Main Market – MSNG ing to the requirements of the Russian regulations and legislation . Part of the net profit in the amount of up to 95%, but no less of the Company’s subsidiaries through career planning, monetary incen- Classica – MSNG The following principles are observed while calculating the amount than 35% is reserved to be used for investment projects of the tives and social guarantees . Standard – MSNG of dividends: Company . Mosenergo performs analysis of possible risk situations while Transparency of the mechanism of definition of the amount of The remaining part of the net profit after deductions is evenly implementing its production program . The key organizational instru- Bloomberg MSNG RU dividends . distributed between dividends and reserves to be used for investment ment for risk mitigation and compensation of damages is insurance . Balance between short term (immediate income) and long term projects of the Company . The Company insures property, hazardous production facilities, (development of the Company) interests of shareholders . In order to make decision about payment of dividends, the Board transport vehicles, civil liabilities, risks of occupational injuries and Focus on increasing investment appeal and capitalization of the of Directors submits to the General Meeting of Shareholders its rec- diseases, and also provides general medical insurance to its em- Company . ployees . 10 International Order Book

36 37 ommendations about the amount to be paid . After adoption of the 6.6. Information about the members of the Board of Directors, Commit- Valery Alexandrovich Golubev Ilnar Ilbatyrovich Mirsiyapov decision by the General Meeting of Shareholders, the dividends are tees of the Board of Directors and Executive Board Year of birth: 1952 Year of birth: 1982 to be paid within no more than 60 (sixty) days after adoption of the Education: higher Education: higher Members of the Board of Directors11 decision . Positions held over the last five years and presently Positions held over the last five years and presently Kirill Gennadievich Seleznev 6.5. Investor Relations (Chairman) Period Name of the Period Name of the Position Position Year of birth: 1974 From To Organization From To Organization Throughout 2012, Mosenergo continued its active interactions with Education: higher professional the investment community and positioning itself on the capital markets . 2006 to date “Gazprom” OJSC Deputy Chairman of the 2007 2008 “Nuclear Energy Director of Department of Main areas of activity are described below . Positions held over the last five years and presently Executive Board Industrial Administrative Support Ongoing activities Complex” OJSC Period Name of the Valery A . Golubev has no share in the charter capital of the emitter Interactions with analysts from investment banks and financial Position 2008 2010 State Atomic Deputy Director of Organization and no ordinary shares companies . From To Energy Department of Corporate Interactions with stock exchanges and rating agencies . 2002 to date “Gazprom” OJSC Head of the Department of Alexander Pavlovich Dushko Corporation Governance and Development, Participation in industry-wide and investment conferences, in the Marketing, Gas and Liquid Year of birth: 1964 “Rosatom” Department of Corporate framework of which a great number of ‘face-to-face’ meetings were Hydrocarbons Processing, Education: higher Governance, acting Director of held with representatives of domestic and foreign investment funds . member of the Executive Department, Deputy Director Teleconferences for analysts and investors following release of annual Board Positions held over the last five years and presently of Department of Legal and and quarterly financial statements as per IFRS (International Financial Corporate Activities 2003 to date “Gazprom General Director (part time) Reporting Standards) . Period Name of the mezhregiongaz” Position 2009 to date “INTER RAO Board Member – Head From To Organization Special activities LLC EES” OJSC of Block of Strategy and 2004 to date “Gazprom” OJSC Deputy Head of the Finance Investment, Advisor to the In February 2012, Mosenergo’s management had an annual meeting Kirill G . Seleznev has no share in the charter capital of the emitter and Economics Department Chairman of the Board of the with analysts of the Standard & Poor’s rating services agency . As a and no ordinary shares result of this meeting, on 26 March 2012, the corporate credit rating Board Administration, acting Alexander P . Dushko has no share in the charter capital of the emit- Head of Block of Corporate of Mosenergo was confirmed at the BB- level with a stable forecast . Petr Pavlovich Biryukov ter and no ordinary shares and Property Relations On 16-18 May 2012, the Group of companies “Gazprom Energoholding” Year of birth: 1951 conducted the Analyst and Investor Day in St . Petersburg . In the Education: higher Ilnar I . Mirsiyapov has no share in the charter capital of the emitter framework of this event, the management of the holding made and no ordinary shares presentations, and a panel discussion was held on the perspectives of Positions held over the last five years and presently the heat business of the companies, and on efficiency improvement . Alexey Alexandrovich Mityushov Period Name of the Management of core subsidiaries of Mosenergo took an active part in Position Year of birth: 1975 the Analyst and Investor Day . From To Organization Education: higher On 22 November 2012, “Gazprom” OJSC organized its fourth annual 2007 2010 Moscow Gov- First Deputy Mayor of Energy Day . In the framework of this event, a meeting was held, ernment Moscow in the Moscow Positions held over the last five years and presently where the investors and analysts had an opportunity to put questions Government, Head of the Period of interest to the Management of ‘Gazprom Energoholding’ . Key top Municipal Economy Complex Name of the Organization Position managers of Mosenergo, OGK-2 and TGK-1 made presentations and From To of Moscow participated in panel discussions . After the official part, a field tour 2007 to date “Gazprom energo” LLC General was organized to TPP-16 of Mosenergo . During the field tour, the 2010 to date Moscow Gov- Deputy Mayor of Moscow in Director participants visited the operating part of the station, as well as the ernment the Government of Moscow part under construction (SGU-420) . 2008 01 .11 .2011 “Sixth generating company General Petr P . Biryukov has no share in the charter capital of the emitter of the wholesale electricity Director and no ordinary shares market” 2010 27 .11 .2012 “Second generating General Direc- company of the wholesale tor electricity market” OJSC Alexey A . Mityushov has no share in the charter capital of the emitter and no ordinary shares 11 Elected by the General Meeting of Shareholders on 19 June 2012

38 39 Elena Vladimirovna Mikhailova Vladimir Igorevich Pogrebenko Denis Vladimirovich Fedorov Vitaly Georgievich Yakovlev Year of birth: 1977 Year of birth: 1978 Year of birth: 1978 Year of birth: 1972 Education: higher Education: higher Education: higher Education: higher

Positions held over the last five years and presently Positions held over the last five years and presently Positions held over the last five years and presently Positions held over the last five years and presently Period Name of the Period Name of the Period Name of the Period Name of the Position Position Position Position From To Organization From To Organization From To Organization From To Organization 2007 to date “Gazprom Deputy General Director 2007 2008 “SV Kapital” LLC Director of Department of 2006 2008 “Mezhregionen- General Director 2007 31 .03 . “Mosenergo” Deputy General Director for mezhregiongaz” for Corporate and Property Transactions at the Russian ergosbyt” LLC 2008 OJSC Corporate Policy LLC Relations and International Markets, 2007 to date “Gazprom” OJSC Head of Department of Elec- 01 .04 . to date “Mosenergo” General Director Legal Directorate 2012 to date “Gazprom” OJSC Board Member, Head of tric Energy Sector Develop- 2008 OJSC Department for Property 2008 N/A “Telecominvest” General Director ment and Marketing Vitaly G . Yakovlev has no share in the charter capital of the emitter Management and Corporate OJSC 2009 to date “Gazprom General Director and no ordinary shares Relations 2010 Febru- Department Head of Division of Corpo- energoholding” Elena V . Mikhailova has no share in the charter capital of the emitter ary of Property of rate Relations and Financial LLC 2012 Moscow Assets and no ordinary shares to date “Tsentrenergo- General Director 2012 to date Department Deputy Head holding” OJSC Konstantin Valerievich Pesotsky of Property of Share in the charter capital of the emitter, %: 0 .000637 Year of birth: 1977 Moscow Education: higher Ordinary shares of the emitter, %: 0 .000637 Vladimir I . Pogrebenko has no share in the charter capital of the Positions held over the last five years and presently emitter and no ordinary shares Damir Akhatovich Shavaleev Year of birth: 1975 Period Name of the Position Evgeny Viktorovich Sklyarov Education: higher From To Organization Year of birth: 1978 2009 2010 Ministry of Deputy Head of Department Education: higher Positions held over the last five years and presently Economic of State Regulation of Tariffs Period Name of the Development Positions held over the last five years and presently Position From To Organization of the Russian Period Name of the Federation Position 21 .12 . to date “Gazprom Neft- General Director From To Organization 2005 ekhim Salavat” 2010 2011 Ministry of Acting Director of 2006 Janu- Government Head of Department OJSC Economic Department of State ary of Moscow, Development Regulation of Tariffs 27 .09 . to date “Salavat Oil General Director 2013 Department of of the Russian 2008 and Chemical Fuel and Energy Federation Complex” LLC 2011 28 .09 . Department Deputy Head Evgeny V . Sklyarov has no share in the charter capital of the emitter Share in the charter capital of the emitter, %: 0,00000018 2012 of Property of and no ordinary shares . Ordinary shares of the emitter, %: 0,00000018 Moscow Konstantin V . Pesotsky has no share in the charter capital of the emitter and no ordinary shares

40 41 Executive Board Members12 Anna Alexandrovna Efimova Dmitry Mikhailovich Katiyev Mikhail Leonidovich Khodursky Year of birth: 1975 Year of birth: 1976 Year of birth: 1971 Vitaly Georgievich Yakovlev Education: higher Education: higher Education: higher (Chairman) Year of birth: 1972 Positions held over the last five years and presently Positions held over the last five years and presently Positions held over the last five years and presently Education: higher Period Name of the Period Name of the Period Name of the Position Position Position Positions held over the last five years and presently From To Organization From To Organization From To Organization Period Name of the 2005 2008 “Bureau of legal Chief Legal Counsel, 2007 2009 “Wholesale Financial Director 2006 2010 “Gazenergo- Advisor on Regional Issues Position research” LLC Department of Contractual Generating prombank” to the Chairman of the Board, From To Organization and Corporate Law Company-3” CJSC Deputy Chairman of the 2007 31 .03 . “Mosenergo” Deputy General Director for OJSC Board, Chairman of the Board 2008 2009 “Mosenergo” Chief Specialist of 2008 OJSC Corporate Policy OJSC Department of Contracts, 2009 2010 “Mosenergo” Head of Program Office 2010 to date “Gazprom Deputy General Director for 01 .04 . to date “Mosenergo” General Director Head of Department of OJSC energoholding” Economy and Finance 2008 OJSC Contracts LLC 2010 to date “Mosenergo” Deputy General Director for Vitaly G . Yakovlev has no share in the charter capital of the emitter 2009 2012 “Mosenergo” Deputy Head of Division for OJSC Efficiency and Control 2010 to date “Mosenergo” Deputy General Director for and no ordinary shares OJSC Legal Operations OJSC Finance Ivan Vitalievich Kosarev March to date “Mosenergo” Deputy General Director for Mikhail L . Khodursky has no share in the charter capital of the emit- Elena Victorovna Andreeva Year of birth: 1974 2012 OJSC Legal Issues ter and no ordinary shares Year of birth: 1974 Education: higher Education: higher Anna A . Efimova has no share in the charter capital of the emitter and no ordinary shares Positions held over the last five years and presently Positions held over the last five years and presently Period Name of the Alexander Semenovich Osyka Position Period Name of the Organization Position Year of birth: 1953 From To Organization From To Education: higher 2007 2010 McKinsey & Consultant 2005 2008 “INTER RAO Senior Manager, Head of Company, Inc . EES” CJSC Directorate of Department Positions held over the last five years and presently Russia for Sales on the wholesale Period Name of the 2010 2012 McKinsey & Project Manager electricity and capacity Position From To Organization Company, Inc . market, Deputy Head of Russia Department for Sales on the 2007 2008 GRES-3 named Chief Engineer wholesale electricity and after R E. . Janu- April Mosenergo” Deputy General Director for capacity market Klasson – ary 2012 OJSC Management Mosenergo’s 2012 2008 2008 “Mosenergo” Director for Operations on subsidiary OJSC the wholesale electricity and April to date “Mosenergo” Deputy General Director for capacity market 2008 2012 “Mosenergo” Deputy Chief Engineer for 2012 OJSC Production OJSC Upgrading and Maintenance 2008 to date “Mosenergo” Deputy General Director for Ivan V . Kosarev has no share in the charter capital of the emitter and OJSC Sales 2012 October “Mosenergo” Deputy Chief Engineer, Head no ordinary shares 2012 OJSC of Engineering Division 11 .01 . to date “Gazprom Director for Operations on the 2011 energoholding” Energy Market October to date “Mosenergo” Chief Engineer LLC 2012 OJSC Andreeva Elena Victorovna has no share in the charter capital of the Alexander S . Osyka has no share in the charter capital of the emitter emitter and no ordinary shares and no ordinary shares

12 As of 31 December 2012

42 43 1. Audit Committee Mikhail Leonidovich Khodursky, Deputy General Director of “Mosen- Department of Gas and Liquid Hydrocarbons Processing and Marketing, neering, Division of Energy Sector Development and Marketing, Members of the Committee were approved by the Resolution of the ergo” OJSC for Finance; “Gazprom” OJSC; “Gazprom” OJSC . Board of Directors on 9 July 2012, Minutes of Meeting No . 1 of 12 July Pavel Olegovich Shatsky, First Deputy General Director of “Gazprom Dmitry Ernstovich Rozhkov, Deputy Director for Production, Head of Former composition of the Committee: Chairman – D .N . Bashuk; 2012 . energoholding” LLC . Production and Technology Division of “Gazprom energoholding” LLC; members: P .P . Biryukov, E .V . Sklyarov, T .V . Galas, V .V . Nikolsky, A S. . Chairman of the Committee: Former composition of the Committee: Chairman – V A. . Golubev; Mikhail Vladimirovich Sorokin – Deputy Head of Energy Engi- Osyka, A .V . Rogov, D .E . Rozhkov, and M .V . Sorokin . Alexander Pavlovich Dushko, Deputy Head of Finance and Econom- members: K .V . Pesotsky, V I. . Pogrebenko, I I. . Mirsiyapov, D .V . Fedorov, ics Department of “Gazprom” OJSC, Member of the Board of Directors E .V . Andreeva, S .V . Antonova, S .V . Voronin, I G. . Dubova, I Yu. . Korob- 6.7. Compliance with the Corporate Governance Code of the Federal of Mosenergo . kina, M L. . Khodursky, and P .O . Shatsky . Members of the Committee: Financial Market Service (FFMS) Alexey Alexandrovich Mityushov, Member of the Board of Directors 3. HR and Remuneration Committee of Mosenergo; Compliance Members of the Committee were approved by the Resolution of the No . Item of the Corporate Governance Code Note Elena Vladimirovna Mikhailova, Member of the Board, Head of De- assessment partment for Property Management and Corporate Relations of “Gaz- Board of Directors on 9 July 2012, Minutes of Meeting No . 1 of 12 July prom” OJSC, Member of the Board of Directors of Mosenergo . 2012 . General Meeting of Shareholders Former composition of the Committee: Chairman – О .Р . Pavlova; Chairman of the Committee: members: A .P . Dushko, and A .A . Mityushov . Valery Alexandrovich Golubev – Deputy Chairman of the Execu- 1 . Notification of shareholders about shareholder meetings at Partially complied Company Charter of Mosenergo, article 17, tive Board of “Gazprom” OJSC, Member of the Board of Directors of least 30 days before the meeting date regardless of the item 17 .12 . Notification about the annual gen- Mosenergo . issues on the agenda if the law does not require a longer eral shareholder meeting of the Company or 2. Strategy and Investment Committee Members of the Committee: period . about a general shareholder meeting of the Members of the Committee were approved by the Resolution of the Ilnar Ilbatyrovich Mirsiyapov, Member of the Executive Board, Head Company with the issues of the company re- Board of Directors on 9 July 2012, Minutes of Meeting No . 1 of 12 July of Block of Strategy and Investment “INTER RAO EES” OJSC, Member of organization on the agenda is to be sent (or 2012 . the Board of Directors of Mosenergo; handed personally) to each individual listed Chairman of the Committee: Denis Vladimirovich Fedorov – Head of Department for Devel- among the people having the right to par- Valery Alexandrovich Golubev, Deputy Chairman of the Board of opment of Electricity and Power Sector and Marketing in the Power ticipate in the general shareholder meeting of “Gazprom” OJSC, Member of the Board of Directors of Mosenergo . Industry of “Gazprom” OJSC, Member of the Board of Directors of the Company or published in the newspapers Members of the Committee: Mosenergo . Izvestiya and (or) Rossiyskaya Gazeta and is Vladimir Igorevich Pogrebenko – Head of Division of Corporate Re- Former composition of the Committee: Chairman – V A. . Golubev; published on the web site of the company no lations and Financial Assets of the Department of Property of Moscow, members: I I. . Mirsiyapov, O P. . Pavlova, and D V. . Fedorov . later than 30 days before the date of the meet- Member of the Board of Directors of Mosenergo; ing, and notification about unscheduled share- Ilnar Ilbatyrovich Mirsiyapov, Member of the Executive Board, Head holders’ meeting – no later than 20 days before of Block of Strategy and Investment “INTER RAO EES” OJSC, Member of 4. Reliability Committee the meeting . the Board of Directors of Mosenergo; Members of the Committee were approved by the Resolution of the Board of Directors on 9 July 2012, Minutes of Meeting No . 1 of 12 July Denis Vladimirovich Fedorov – Head of Department for Development 2 . Access of the shareholders to the list of persons entitled to at- Complied According to the existing legislation, the list of 2012 . of Electricity and Power Sector and Marketing in the Power Industry of tend the General Meeting, starting from the date of announce- persons authorized to participate in the general Chairman of the Committee: “Gazprom” OJSC, Member of the Board of Directors of Mosenergo, Dep- ment of the General Meeting until the closing of the General meeting of shareholders shall be made available Denis Nikolaevich Bashuk, Head of Production Department of “Gaz- uty Chairman of the Committee; Meeting held in person, and in the case of a General Meeting by the Company at the request of persons in- prom energoholding” LLC . Elena Victorovna Andreeva – Deputy General Director for Sales, held by correspondence – until the deadline for the collection cluded in such list and having at least 1% of Members of the Committee: Mosenergo; of voting ballots . the votes . Andrey Yurievich Berezin, Head of Division of Corporate Relations Petr Pavlovich Biryukov, Deputy Mayor of Moscow in the Govern- and Financial Assets of Property Department of Moscow; ment of Moscow in charge of Municipal Service and Facilities, Member 3 . Access of the shareholders to information (materials) to Complied Company Charter of Mosenergo, article 17, item Yury Efimovich Dolin, Deputy General Director for Capital Construc- of the Board of Directors of Mosenergo; be provided during the preparation for the General Meeting 17 .16 . tion, “Gazprom energoholding” LLC; Evgeny Viktorovich Sklyarov – Head of Department of Fuel and En- through electronic media, including the Internet . Irina Guennadievna Dubova, Chief Economist of Department of Fi- ergy of Moscow, Member of the Board of Directors of Mosenergo; nancial Plans of Core Business Subsidiaries of “Gazprom” OJSC; Ivan Vitalievich Kosarev, Deputy General Director of Mosenergo for 4 . Possibility for a shareholder to put an issue on the agenda of Complied The procedure for entering an item on the Gen- Anna Alexandrovna Efimova, Deputy General Director for Legal Is- Production; the General Meeting or require a General Meeting to be called eral Meeting agenda, as well as the procedure on sues of Mosenergo, Member of the Executive Board of Mosenergo; Alexander Semenovich Osyka, Deputy Chief Engineer for Upgrading without presenting an extract from the shareholder register holding a General Meeting of Shareholders shall Irina Yurievna Korobkina, Deputy Head of Department for Develop- and Maintenance of Mosenergo; where title to shares is recorded in the shareholder register be established by existing legislation . ment of Electricity and Power Sector and Marketing in the Power Indus- Sergey Valerievich Radchenko, Head of Department of Technical In- system, and by presenting only a statement from the deposit try of “Gazprom” OJSC; spection and Audit of “Gazprom energoholding” LLC; account where the title to shares is recorded in a deposit ac- Konstantin Valerievich Kravchenko, Head of Division for Long-term Alexander Vladimirovich Rogov, Head of Energy Sector Develop- count . Investment, “Gazprom” OJSC; ment Section, Division of Energy Sector Development and Marketing,

44 45 5 . Presence in the Charter or internal documents of the Company Not complied Members of the BoD, the Executive Board, Audit 13 . The Company Charter or by-laws contain a requirement that Not complied General Meeting of Shareholders has not approved of the requirement on mandatory presence of CEO, members Commission, as well as representatives of exter- votes of the members of the Board of Directors who act as any changes to the Company’s Charter or Mosen- of the managing board, members of the BoD, members of the nal auditor are invited to participate in the General the CEO and members of the Executive Board should not be ergo’s by-laws to incorporate these provisions . audit commission and the Company’s auditor at the General Meeting of Shareholders . taken into account when the terms of the contracts with the Meeting of Shareholders . CEO (managing entity, manager) and members of the Execu- tive Board are approved . 6 . Obligatory presence of the nominees for the positions of Not complied Nominees are invited to participate in the members of the Board of Directors, the CEO, members of the General Meeting of Shareholders during con- 14 . The Board of Directors includes at least 3 independent direc- Complied Executive Board, members of the Audit Commission and ex- sideration and discussion of election of BoD tors meeting the requirements of the Code of Corporate Con- ternal auditor during consideration by the General Meeting of members, Audit Commission members, as duct . their election and appointment . well as appointment of external auditor for the Company . 15 . Absence among the members of the Board of Directors of Complied individual convicted of committing offences in the area of 7 . The by-laws of the company establish a registration procedure Complied Mosenergo’s Regulations on General Meeting of economic activity; against the government, against inter- for the participants at the General Meeting . Shareholders, article 8, item 8 .6 .; article 9, item ests of the federal, regional and local government service; 9 .1 ., 9 .2 . or that have been subjected to administrative penalties for offences in the sphere of entrepreneurial activities or Board of Directors in the area of finance, taxes and levies and the security 8 . The company’s Charter provides for the authority of the Board Complied Company Charter of Mosenergo, article 20, item market . of Directors to approve annual financial and business plan of 20 .1 ., para 64): an authority of the Board of Di- 16 . There are no persons on the Board of Directors who serve as Not complied Members of Mosenergo’s BoD the company . rectors is to approve a business plan (or adjusted members, the CEO (manager), members of the management P .P . Biryukov, K .V . Pesotsky, V .I . Pogrebenko business plan), including the program for tech- body or employees of any competitor of the company . and E .V . Sklyarov are members of the Board nical upgrade, reconstruction and development, of Directors of OJSC “Moscow unified energy as well as investment program and performance company” . reports . 17 . The Company Charter should contain a requirement that the Complied Company Charter of Mosenergo, article 18, item 9 . Existence of the Company’s risk management procedure ap- Complied The corporate Provisions for Risk Management Board of Directors be elected by cumulative vote . 18 .1 . proved by the Board of Directors . of Mosenergo were approved by the Company’s Board of Directors; Minutes 9 dated November 18, 18 . The company’s by-laws include the obligation of the mem- Complied Article 8, item 8 .1 . of the Mosenergo Regula- 2004 . bers of the Board of Directors to refrain from the actions tions on information policy requires that the that shall or potentially can result in conflict of interests members of the BoD should notify the Board of 10 . The company’s Charter provides for the right of the Board of Complied Company Charter of Mosenergo, article 20, item between them and the Company, or should such a conflict Directors in writing about real or potential con- Directors to make a decision on suspending the authorities of 20 .1, para 25) . occur – disclose the information about such conflict to the flicts between their interests and the interests the CEO appointed by the General Meeting . Board of Directors . of the Company . 11 . The Charter of the company provides for the right of the Board Partially complied Company Charter of Mosenergo, article 25, item Regulations on the Board of Directors of Mosen- of Directors to establish requirements for the qualifications 25 .6 . The agreement between the Company’s ergo, article 4, item 4 .3 ., para 1-3), and 8) . and the level of compensation of the CEO, members of the General Director and members of the Company’s 19 . The company’s by-laws contain a responsibility of mem- Complied Regulations on the Board of Directors of Mosen- Executive Board, and managers of the key structural divisions Executive Board and the Company is signed by the bers of the Board of Directors to give a written notice to the ergo, article 4, item 4 3. ,. para 4 .3 .10 . of the company . Chairman of the Board of Directors or by a person Board of Directors on their intention to make transactions Mosenergo Regulations for information policy, ar- authorized to do so by the Company Board of Di- with the Company’s securities . These members are also ticle 8, item 8 .2 . rectors . members of the Board of Directors or the Company subsid- 12 . The Company Charter provides for the right of the Board of Complied Company Charter of Mosenergo, article 25, item iaries (affiliated companies) and their responsibilities also Directors to approve the conditions of the contractual agree- 25 .6 . include disclosure of information on their transactions with ments with CEO and Executive Board members . such securities . 20 . The internal documents of the company contain a requirement Partially complied Regulations on the Board of Directors of Mosen- to conduct meetings of the Board of Directors at least once ergo, article 8, item 8 .3 . The BoD meetings are to every six weeks . be held as necessary, but at least once in every quarter of the year .

46 47 21 . Holding of Meetings of the Company Board of Directors in Partially complied In 2012, BoD meetings were arranged as was 33 . There is a risk committee of the Board of Directors or func- Partially complied The obligations of Mosenergo BoD Commit- the course of a year, in which the Company’s annual report is deemed necessary . All in all 18 BoD meetings tions of such committee are assigned to some other commit- tees for reliability and for strategy and invest- prepared with the periodicity of at least once every six weeks . were held in 2012 . tee (other than the Audit Committee or the Nomination and ments include the obligation to timely inform Compensation Committee) . the Board of Directors about the risks the 22 . The by-laws of the company establish a procedure for the Complied Company Charter of Mosenergo, article 22, Regu- Company is exposed to, within their compe- meetings of the Company Board of Directors . lations on the Board of Directors of Mosenergo, tence . articles 8–10 . 34 . There is a committee for the settlement of corporate con- Not complied Company Charter of Mosenergo, article 19, item 23 . The by-laws of the company stipulate the need for approv- Complied Company Charter of Mosenergo, article 20, item flicts of the Board of Directors or functions of such com- 19 .9 . In order to provide for weighted and ef- al by the Board of Directors for the company transactions 20 .1 ,. para 49) . mittee are assigned to some other committee (other than fective decision-making, the Board of Directors amounting to 10% and more of the company asset value, the Audit Committee or the Nomination and Compensation can set up permanent or tentative committees other than transactions performed in the ordinary course of Committee) . (to address specific issues) within the structure business . of the BoD .

24 . The by-laws of the company provide for the right of the Complied Regulations on Mosenergo’s Board of Directors, 35 . There are no executives of the company in the committee for Not complied The Committee has not been organized . See Item members of the Board of Directors to receive information article 4, item 4 .2 ,. para 2 . the settlement of corporate conflicts . 34 . necessary for the performance of their functions from the executive bodies and managers of the key structural divi- 36 . The committee for the settlement of corporate conflicts is Not complied The Committee has not been organized . See Item sions, and liability of the latter for failure to provide such headed by an independent director . 34 . information . 37 . The company has by-laws approved by the Board of Directors Complied 25 . There is a strategic planning committee of the Board of Direc- Complied stipulating the procedure of formation and operation of the tors or functions of such committee are delegated to some committees of the Board of Directors . other committee (other than the Audit Committee or the re- muneration and HR committee) . 38 . The Company Charter provides for a procedure to deter- Partially complied Company Charter of Mosenergo, article 22, item mine the quorum of the Board of Directors that would ensure 22 .9 ., 22 .10 . 26 . There is a committee (Audit Committee) of the Board of Di- Complied obligatory participation of independent directors in the Board The quorum of the Board of Directors is de- rectors that recommends an external auditor to the Board of meetings . fined in the Company Charter and applicable Directors and communicates with the external auditor and the legislation . internal Audit commission . Executive Bodies 27 . Only independent and non-executive directors are members Complied of the audit committee . 39 . There is a collegial executive body (Executive Board) of the Complied Company Charter of Mosenergo, article 25, item company . 25 .1 ., para 27 . 28 . The audit committee is chaired by independent director . Complied 40 . The Charter or internal documents of the company stipulate Partially complied The Company Charter stipulates approval of trans- 29 . The by-laws of the joint stock company provide for the access Complied Regulations of the BoD’s Audit Committee of the need for approval by the Executive Board of real estate actions in such cases that are determined by the of all the members of the Audit Committee to any documents Mosenergo, article 4, item 4 .1, para 2) . transactions and loans received by the company unless such Board of Directors and/or the Company Executive and information of the company conditionally to non-disclo- transactions are major deals or are performed in the ordinary Board . sure of confidential information . course of business . Company Charter of Mosenergo, article 20, item 20 .1 ., para 50-53), 57), article 27, item 27 .4 ., para 30 . There is a committee (Nomination and remuneration Com- Complied 7, 9 . mittee) of the Board of Directors that is responsible for the determination of the criteria for the selection of candidates 41 . The by-laws of the company establish procedures for the ap- Complied to the Board of Directors and development of the company proval of transactions which are outside the scope of the com- remuneration policies . pany’s financial and operational plan .

31 . The Nomination and remuneration Committee is chaired by Complied 42 . There are no persons in the executive bodies who serve Complied independent director . as members, the CEO (manager), members of the man- agement body or employees of any competitor of the 32 . There are no executives of the company in the Nomination and Complied company . Compensation Committee .

48 49 43 . There are no persons in the management bodies convicted of Complied 47 . Executive bodies provide monthly reports on their activities to Partially complied Company Charter of Mosenergo, article 20, item committing crimes in the sphere of economic activities; of- the Board of Directors . 20 .1 ., para 26) . fenses against the government, against interests of the fed- eral, regional and local government authorities; or who have 48 . The contracts made by the company with the CEO (managing Complied been subjected to administrative penalties for offences in the entity, manager) and members of the Executive Board stipu- sphere of entrepreneurial activities or in the sphere of finance, late liability for violation of the provisions on the use of confi- taxes and levies and the securities market . If the functions of dential and insider information . the sole executive body are performed by a managing entity Secretary of the Company or a manager - the CEO and members of the Executive Board of the managing entity or manager meet the requirements es- 49 . There is a special official in the company (company Secretary) Complied Company Charter of Mosenergo, article 20, item tablished for the CEO and members of the Executive Board of whose function is to ensure that the company’s bodies and 20 .1 ., para 14); article 24 . the company . officials comply with procedural requirements guaranteeing Regulations on the Board of Directors of Mosen- the exercise of the legal rights and interests of the company’s ergo, article 7 . 44 . The Charter or by-laws of the company contain a prohibition Partially complied Company Charter of Mosenergo, article 26, item shareholders . for the managing entity (manager) to perform similar func- 26 .7 . tions for a competitor or have any other property relations The decision to delegate responsibilities of the 50 . The Company Charter or by-laws prescribe a procedure for Complied Company Charter of Mosenergo, article 20, item with the company other than the provision of management Company’s CEO to a managing organization or the appointment (election) of the company Secretary and re- 20 .1 ., para 13); article 24 . services . a manager is to be made by a General Meeting sponsibilities of the company Secretary . Regulations on the Board of Directors of Mosen- of Shareholders acting on a proposal from the ergo, article 7 . Company’s Board of Directors . The conditions of the contract shall be approved by the Company’s 51 . The company’s Charter contains requirements to the candi- Partially complied Company Charter of Mosenergo, article 20, item Board of Directors . date for the position of the company Secretary . 20 .1 ., para 13) . Regulations on the Board of Directors of Mosen- 45 . The by-laws of the company include the obligation of the Complied Regulations on information policy of Mosenergo, ergo, article 7, item 7 .2 . members of the executive bodies to refrain from any ac- article 8, item 8 .1 . tions that will or may potentially lead to a conflict of in- Members of the Executive Board, as well as the Major Corporate Actions terests with the company and in the case of such conflict Company’s General Director shall be obliged to 52 . The Charter or internal documents of the company contain a Complied Company Charter of Mosenergo, article 15, – their obligation to inform the Board of Directors on such submit a written notification to the Board of Direc- requirement on approval of any major transaction before it is item 15 .1 ., para 17); Article 20, item 20 .1 ., conflict . tors about a rise of conflict or a possibility of a rise concluded . para 48) . of conflict between their interests and the interests of the Company . 53 . Obligatory engagement of an independent valuator to assess Complied Company Charter of Mosenergo, article 20, item Regulations on the Executive Board of Mosenergo, the market value of any property that is subject to major trans- 20 .1 ., para 37), 48) . article 4, item 4 .2 . actions . When exercising their rights or fulfilling their obligations, the members of the Executive 54 . In the event of acquisition of any large stakes in the com- Not complied General Meeting of Shareholders has not yet con- Board shall pursue the interests of the Com- pany (takeover), the Charter of the company prohibits tak- sidered the issue of introducing such provisions in pany, exercise their rights and fulfill their ob- ing any actions aimed at the protection of interests of the the Company’s Charter . ligations to the Company in a reasonable and executive bodies (members of such bodies) and members honest manner . of the Board of Directors, and also such actions that make the position of shareholders worse than their current posi- 46 . The Charter or by-laws of the company contain criteria for the Partially complied Company Charter of Mosenergo, article 26, item tion (in particular, prohibition of a decision by the Board of selection of the managing entity (manager) . 26 .7 . Directors to issue additional shares, securities convertible The decision to delegate responsibilities of the into shares or securities granting right to acquire shares Company’s CEO to a managing organization or in the company before the end of the expected time of the a manager is to be made by a General Meeting acquisition of shares, even if the right to take such decision of Shareholders acting on a proposal from the is granted by the Charter) . Company’s Board of Directors . The conditions of the contract shall be approved by the Company’s Board of Directors .

50 51 55 . The Company Charter contains a requirement on obligatory Complied Company Charter of Mosenergo, article 20, item 64 . There is an internal document approved by the Board of Di- Complied Mosenergo’s Regulations on information policy engagement of an independent appraiser to determine the 20 .1 ,. para 37) . rectors on the use of significant information on the activity, were approved by the BoD on 01 .11 2004,. Min- current market value of shares and potential changes in their shares and other securities of the company and transactions utes No . 8 . market value as a result of takeover . with such shares and other securities, which is not publicly Mosenergo’s Regulations on access to insid- available and the disclosure of which may have material im- er information were approved by the BoD on 56 . The Charter of the company contains no exemption of the Complied pact on the market value of shares and other securities of the 26 .12 .2011, buyer from the obligation to offer buyout of the company’s company . Minutes No . 6 (3) . ordinary shares (other securities convertible into ordinary shares) to the shareholders upon takeover . Control of financial and business operations

57 . The Charter or by-laws of the company contain a man- Complied Company Charter of Mosenergo, article 20, item 65 . There are internal control procedures over the financial and Complied Mosenergo’s Regulations on internal audits were datory requirement to involve independent valuators for 20 .1 ,. para 37) . operational activities of the company approved by the Board approved by the BoD on 05 .09 2005,. Minutes 7, determining the ratio for conversion of shares in case of of Directors . item 5 . reorganization . 66 . There is a special subdivision of the Company responsible for Complied Information disclosure implementation of the internal control procedures (internal audit department) . 58 . There is an internal document approved by the Board of Direc- Complied Mosenergo’s Regulations on information policy tors determining policies and procedures used by the com- were approved by the BoD on 01/11/2004, Min- 67 . The internal documents of the company contain requirement Partially complied Mosenergo’s Regulations on internal audits were pany for the disclosure of information (Regulation on Informa- utes No . 8 . for the structure and composition of the internal audit depart- approved by the BoD on 05 .09 2005,. Minutes 7, tion Policies) . ment to be defined by the Board of Directors . item 8 .

59 . The by-laws of the company contain a requirement to disclose Not complied The Company shall disclose all required informa- 68 . There are no persons in the internal control service con- Complied purposes of placement of shares, persons that intend to ac- tion in compliance with the legislation of the Rus- victed of committing offences in the sphere of economic quire shares placed, including large stakes, and participation sian Federation, the Charter and by-laws of the activity; against the government, against interests of the of officials of the company in the acquisition of the shares Company . federal, regional and local government service; or that placed . have been subjected to administrative penalties for of- fences in the sphere of entrepreneurial activities or in 60 . The by-laws of the company contain a list of information, doc- Complied Company Charter of Mosenergo, article 17, item the sphere of finance, taxes and levies and the securities uments and materials that should be provided to shareholders 17 .17 . market . for the decision on the issues put for the consideration of the Regulations on information policy of Mosenergo, General Meeting . article 5, item 5 .9 5. . 69 . There are no persons in the internal audit service who Complied serve as members of the executive bodies of the company, 61 . The company has a web site and regularly discloses informa- Complied Regulations on information policy of Mosenergo, as well as members, the CEO (manager), members of the tion about the company on this web site . article 4, item . 4 7. . management bodies or employees of any competitor of the www mosenergo. .ru company . http://www .e-disclosure .ru/portal/company . aspx?id=936 70 . The by-laws of the company establish dates for the Partially complied It shall be included in the inspection plan and com- submission of documents and materials to the internal pliance check procedure according to the Regula- 62 . The by-laws of the company contain a requirement to Complied Regulations on information policy of Mosenergo, control service for the assessment of financial and op- tions on internal audit of OJSC Mosenergo . disclose information on the deals of the company with article 4, item . 4 4,. para 4 4. .4 . erational transactions performed, and liability of officials persons that are senior executives of the company in ac- and employees of the company for failure to provide cordance with the Charter, and deals of the company with them in time . entities where senior executives of the company directly or indirectly hold 20 or more percent of the share capital 71 . The by-laws of the company provide for the obligation of the Complied Regulations on internal audit of Mosenergo, article or on which such persons may otherwise exercise signifi- internal control service to communicate any violations de- 7, item 7 .1 ., para 7 .1 .4 . cant influence . tected to the Audit Committee, and where there is no such committee to the Board of Directors . 63 . The by-laws of the company contain a requirement to disclose Complied Company Charter of Mosenergo, article 32, item information on all transactions that may affect the market 32 .4 . value of the company’s shares .

52 53 6.8. Information on interested party transactions 72 . The company Charter contains a requirement on preliminary Not complied General Meeting of Shareholders has not yet con- assessment of the practicality of transactions not envisaged in sidered the issue of introducing such provisions in List of the interested party transactions for 2012 that were approved by the company’s financial and operational plan (unusual trans- the Company’s Charter . Mosenergo’s management bodies actions) by the internal control service .

73 . The by-laws of the company establish a procedure for the Partially complied Company Charter of Mosenergo, article 20 . BoD Resolution Period of agreement of any unusual transaction with the Board of Di- No . Transaction name Parties Subject of transaction Transaction price on approval of the performance rectors . transaction

74 . There is an internal document, approved by the Board of Di- Partially complied Regulations on the Audit Commission of Mosen- 1 Supply agreement “CRMZ” LLC Supply of equipment to 25,948,200 Until the TRANSACTION rectors, that determines the procedure of audits of the finan- ergo were approved by the General Meeting of of 06 .12 .2011 is the supplier, TPP-21 and TPP-23 roubles inclusive contractual APPROVED by cial and operating activities of the company by the internal Shareholders of Mosenergo, Minutes No . 1 of Mosenergo of VAT obligations of Annual General audit commission . 18 .06 .2010 . is the buyer the parties are Meeting of Shareholders, completely meeting minutes 1 75 . The Audit Committee performs an assessment of the auditor’s Complied Regulations on the BoD Audit Committee of fulfilled of 24 .06 . 2011, report before it is presented to the shareholders in the General Mosenergo, article 3, item 3 .1, para 2) . agenda item 9 .8 . Meeting . 2 Addendum to “Gazpromneft-Center” Supply of oil products in 248,000,000 Until the TRANSACTION Dividends agreement of LLC is the supplier, February 2012 roubles inclusive contractual APPROVED by 06 .02 .2012 Mosenergo of VAT obligations of Board of Directors, 76 . There is an internal document approved by the Board of Direc- Complied Dividend policy of Mosenergo was approved is the buyer the parties are meeting minutes 4 (1) tors used as guidance by the Board of Directors in developing by the decision of the Board of Directors dated completely of 14 .11 .2011, recommendations as to the amount of dividends (Regulation 24 .12 .2010, Minutes No . 10 . fulfilled agenda item 6 .3 . on Dividend Policies) . 3 Addendum to “Gazpromneft-Center” Supply of oil products in 124,000,000 Until the TRANSACTION agreement of LLC is the supplier, February 2012 roubles inclusive contractual APPROVED by 77 . The Regulation on Dividend Policies contains a procedure for Partially complied Mosenergo has not issued any privileged shares . 13 .02 .2012 Mosenergo of VAT obligations of Board of Directors, the determination of the minimum share of the net profit of the is the buyer the parties are meeting minutes 4 (1) company used for the payment of dividends, and conditions completely of 14 .11 .2011, under which dividends are not paid or are not paid in full on fulfilled agenda item 6 .3 . preferred shares for which the size of dividends is determined in the company Charter . 4 Addendum to Mosenergo Transmission of heat and 4,281,274,820 From TRANSACTION agreement of is the customer, coolant via the heating roubles inclusive 01 .04 .2012 till APPROVED by 78 . Publication of information on dividend policies of the com- Partially complied The dividend policy or any changes thereto are 28 .02 .2012 OJSC “Moscow heat network owned by the of VAT 30 .04 .2012 Annual General pany and any amendments thereto in a periodical stipulated posted on the Mosenergo’s web site at www . network company” executor inclusive Meeting of Shareholders, in the company’s charter for publication of announcements mosenergo ru. . OJSC is the executor meeting minutes 2 on General Meetings, and on the web site of the company in of 24 .06 .2011, the Internet . agenda item 9 .6 . 5 Power supply Mosenergo (energy Selling (supply) of heat 4,437,672,801 Until the TRANSACTION agreements supply company) and coolant via the roubles inclusive contractual APPROVED by 1097 transactions Subscribers connected network of of VAT obligations of Annual General in I Quarter of 2012 (consumers) the heat network supply the parties are Meeting of Shareholders, OJSC “Moscow heat company completely meeting minutes 2 network company” fulfilled of 24 .06 .2011, (heat network agenda item 9 .7 . company)

54 55 6 Property insurance OJSC “SOGAZ” Property insurance, 157,841,259 .31 Insurance TRANSACTION 13 Agreement Mosenergo Bringing of gas 43,011,000 Until the TRANSACTION agreement of is the insurer, changes to the list of the roubles agreement is APPROVED by of 16 .07 .2012 is the customer, consumption scheme of roubles inclusive contractual APPROVED by 30 .03 .2012 and Mosenergo insured property signed for the Annual General CJSC “TEKON- EK-3 in compliance with of VAT obligations of Board of Directors, Addenda thereto is the insured period of 1 Meeting of Shareholders, Engineering” “BSGG Rules” for the the parties are meeting minutes 3 3 transactions year meeting minutes 2 is the contractor needs of TPP-21 completely of 17 .08 .2012, of 24 .06 2011,. fulfilled agenda item 5 .6 . agenda item 9 9. . 14 Agreement Mosenergo Bringing of gas 19,175,000 Until the TRANSACTION 7 Addendum to CJSC “SR-DRAGa” Services associated with Not more than Until the TRANSACTION of 16 .07 .2012 is the customer, consumption scheme roubles inclusive contractual APPROVED by agreement of is the registrar, preparation and conduct 20,000,000 contractual APPROVED by CJSC “TEKON- of hot-water boiler No . of VAT obligations of Board of Directors, 21 .05 .2012 Mosenergo is the of the annual General roubles inclusive obligations of Board of Directors, Engineering” 4 of PTVM-100 type in the parties are meeting minutes 3 issuer Meeting of Shareholders of VAT the parties are meeting minutes 14 (11) is the contractor compliance with Safety completely of 17 .08 .2012, completely of 21 .05 2012,. Rules at TPP-21 fulfilled agenda item 5 .4 . fulfilled agenda item 5 . 8 15 Agreement Mosenergo Provision of a loan 551,640,000 Until the TRANSACTION 8 Power supply Subscribers Selling (supply) of heat 2,297,157,566 Until the TRANSACTION of 27 .08 .2012 is the creditor, roubles contractual APPROVED by agreements (consumers) and coolant via the roubles inclusive contractual APPROVED by CJSC “OGK- obligations of Board of Directors, 300 transactions OJSC “Moscow heat connected network of of VAT obligations of Annual General Meeting Investproekt” the parties are meeting minutes 3 in II Quarter of 2012 network company” the heat network supply the parties are of Shareholders, is the debtor completely of 17 .08 .2012, (heat network supply company completely meeting minutes 2 fulfilled agenda item 5 .7 . company) fulfilled of 24 .06 2011,. agenda item 9 7. . 16 Agreement Mosenergo Provision of a loan 1,948,360,000 Until the TRANSACTION of 03 .09 .2012 is the creditor, roubles contractual APPROVED by 9 Addendum to Mosenergo Adjustment of monthly 2,966,618 .66 Until the TRANSACTION CJSC “OGK- obligations of Board of Directors, lease agreement of is the lessor, rental fee roubles inclusive contractual APPROVED by Investproekt” the parties are meeting minutes 3 01 .06 .2012 OJSC “MOESK” of VAT per month obligations of Board of Directors, is the debtor completely of 17 .08 .2012, is the lessee the parties are meeting minutes 4 (1) fulfilled agenda item 5 .7 . completely of 11 .11 2011,. fulfilled agenda item 6 2. . 17 Agreement Mosenergo The seller transfers 4,704,675,340 Until the TRANSACTION of 30 .07 .2012 is the seller, the equipment to the roubles inclusive contractual APPROVED by 10 Addenda to OJSC “SOGAZ” Changes to the list of 1,742,387 59. Until the TRANSACTION agreement for is the insurer, insured persons and the roubles contractual APPROVED by CJSC “OGK- ownership of the buyer of VAT obligations of Board of Directors, voluntary health Mosenergo insurance premium obligations of Board of Directors, Investproekt” at the agreed price the parties are meeting minutes 2 insurance of is the insured the parties are meeting minutes 10 (7) is the buyer completely of 25 .07 .2012, 31 .05 .2012, completely of 07 .03 2012,. fulfilled agenda item 3 .1 . 19 .10 .2012 fulfilled agenda item 4 1. . 18 Agreement Mosenergo Development plan for 25,000,000 Until the TRANSACTION 2 transactions of 10 .09 .2012 is the customer, heat and electricity supply roubles inclusive contractual APPROVED by 11 Accident insurance OJSC “SOGAZ” Workers’ insurance 9,697,526 .13 Until the TRANSACTION OJSC “Gazprom networks in Moscow of VAT obligations of Board of Directors, agreement is the insurer, against accidents and roubles contractual APPROVED by promgaz” in the operating area of the parties are meeting minutes 3 22 .12 .2011, Mosenergo illness, changes to the list obligations of Board of Directors, is the contractor HPS-1 named after P .G . completely of 17 .08 .2012, and Addenda is the insured of insured persons and the parties are meeting minutes 10 (7) Smidovich fulfilled agenda item 5 .3 . to agreement the insurance premium completely of 07 .03 2012,. 19 Mosenergo is the Equity payment 551,640,000 During 6 TRANSACTION of 29 .02 .2012, fulfilled agenda item 4 2. . participant, CJSC roubles inclusive months of APPROVED by Board 30 .04 .2012, “OGK-Investproekt” of VAT the decision of Directors, meeting 01 .06 .2012, making minutes 2 of 25 07. .2012, 29 .06 .2012 agenda item 3 .2 . 5 transactions 20 Mosenergo Equity payment 200,000,000 During 6 TRANSACTION 12 Agreement CJSC “SR-DRAGa” Services associated with Not more than Until the TRANSACTION is the participant, roubles inclusive months of APPROVED by of 03 .07 .2012 is the executor, payment of dividends 20,000,000 contractual APPROVED by “TSK Mosenergo” of VAT the decision Board of Directors, Mosenergo on Mosenergo’s shares, roubles inclusive obligations of Board of Directors, LLC making meeting minutes15 (12) is the customer based on 2011 results of VAT the parties are meeting minutes 16 (13) of 30 .05 .2012, completely 19 .06 .2012, agenda item 10 .3 . fulfilled agenda item 8 3. .

56 57 21 Addendum to Mosenergo Transmission of heat 2,109,577,391 00. Until the TRANSACTION 27 Agreement Mosenergo Services for developing 40,000,000 .00 Until the TRANSACTION agreement of is the customer, and coolant via the roubles inclusive contractual APPROVED by of 12 .10 .2012 is the customer, the “Plan for heat roubles inclusive contractual APPROVED by 29 .06 .2012 OJSC “MTK” heating network owned of VAT obligations of Annual General Meeting OJSC and electricity supply of VAT obligations of Board of Directors, (OJSC “MOEK” by the executor the parties are of Shareholders, “Gazprom promgaz” networks in Moscow the parties are meeting minutes 4 from 01 .10 .2012) completely meeting minutes 1 is the executor in the operating area of completely of 04 .10 .2012, is the executor fulfilled of 22 .06 2012,. HPS-1 named after P .G . fulfilled agenda item 6 .1 . agenda item 9 12. . Smidovich” (affiliate of Mosenergo) taking into 22 Power supply Mosenergo Selling of heat and 657,899,216 .07 Until the TRANSACTION account its upgrading agreements (energy supply coolant via the MTK roubles inclusive contractual APPROVED by or decommissioning in 196 transactions in company) (MOEK) networks of VAT obligations of Annual General Meeting the period from 2012 to III Quarter of 2012 Subscribers the parties are of Shareholders, 2017” (consumers) completely meeting minutes 1 OJSC “Moscow heat fulfilled of 22 .06 2012,. 28 Addendum Mosenergo Transmission of heat and 3,175,060,834 77. Until the TRANSACTION network company” agenda item 9 13. . of 29 .06 .2012 is the customer, OJSC coolant via the heating roubles inclusive contractual APPROVED by (heat network supply “MTK” network owned by the of VAT obligations of Annual General Meeting company) (OJSC “MOEK” executor the parties are of Shareholders, (OJSC “MOEK” from 01 .10 .2012) completely meeting minutes 1 from 01 .10 .2012) is the executor fulfilled of 22 .06 .2012, agenda item 9 .12 . 23 Agreement Mosenergo Selling of heat and Not more than Until the TRANSACTION of 27 .04 .2012 is the buyer, coolant via the MTK 749,300,000 .00 contractual APPROVED by OJSC “Moscow heat (MOEK) networks roubles inclusive obligations of Board of Directors, network company” of VAT the parties are meeting minutes 4 There were no major transactions concluded by the Company during plants in 2012 . The Company published 29 press releases; more (MTK) (OJSC “MOEK” completely of 04 .10 2012,. the reporting year, for which the procedure of approval of large transac- than 500 publications were issued in printed media, and 36 TV from 01 .10 .2012) fulfilled agenda item 6 2. . tion is applicable in accordance with the Charter of the Company . broadcasts were shown on federal and regional channels . Be- sides, Mosenergo participated in major industry exhibitions and is the seller 6.9. Informational policy conferences . 24 Sub-lease Mosenergo Provision of temporary 3,205,570,389 60. Until the TRANSACTION OJSC “Mosenergo” is an open company as regards its informational The key information resource of the Company is Mosenergo’s of- agreement is the lessor, possession and use roubles inclusive contractual APPROVED by policy . The Company’s operations are regulated by principles of corpo- ficial web site (http://www .mosenergo .ru) . This web site provides full of 17 .05 .2012 “TSK Mosenergo” LLC of municipal property of VAT obligations of Board of Directors, rate governance established in civilized business, as well as principles information about the Company’s operations and allows us to respond is the sub-lessee located on the territory of the parties are meeting minutes 16 (13) of social responsibility and reliable partnership with public authorities . promptly to inquiries submitted by shareholders, investors, public Khimki District in Moscow completely of 19 .06 2012,. Informational Policy of Mosenergo is aimed at timely and compre- officials and the media . The web site publishes annual and quarterly Region fulfilled agenda item 8 1. . hensive presentation of credible information about the Company’s ac- Company reports for the benefit of shareholders, quarterly emitter’s 25 Sub-lease Mosenergo Provision of temporary 1,777,562,296 72. Until the TRANSACTION tivities, as well as at providing free access to such information to all reports, RAS and IFRS accounting statements, other information that agreement is the lessor, possession and use roubles inclusive contractual APPROVED by interested parties, such as shareholders, investors, public officials, mass can significantly affect the value of securities . Mosenergo is repre- of 17 .05 .2012 “TSK Mosenergo” LLC of municipal property of VAT obligations of Board of Directors, media, etc . sented in social networks: beginning from July 2011, Mosenergo has is the sub-lessee located on the territory of the parties are meeting minutes 16 (13) Within the framework of Informational policy implementation, got a corporate page on Facebook: http://www .facebook .com/pages/ Khimki District in Moscow completely of 19 .06 2012,. Mosenergo organized 20 press tours to the Company’s power OAO-Mosenergo/122390031176582 . Region fulfilled agenda item 8 1. . 26 Agreement Mosenergo Organization of a bench 26,550,000 Until the TRANSACTION of 12 .11 .2012 is the customer, for field testing and roubles inclusive contractual APPROVED by CJSC “TEKON- certification of burners of VAT obligations of Board of Directors, Engineering” of 5-40 MW capacity at the parties are meeting minutes 3 is the contractor TPP-21 completely of 17 .08 2012,. fulfilled agenda item 5 5. .

58 59 6.10. Financial reporting according to the Russian Accounting Standards

Open Joint Stock Company of Power and Electrification “Mosenergo” Auditor’s Report Auditor’s report on the consolidated financial statements for 2012 To the Shareholders of the Open Joint Stock Company of Power and Electrification “Mosenergo”: We have audited the accompanying consolidated financial statements of Open Joint Stock Company of Energy and Electrification “Mosenergo” (hereinafter referred to as the “Company”), including the Company’s Balance Sheet as of 31 December 2012, Profit and Loss Statement, report on Auditor’s Report changes in equity and cash flow in 2012, the Explanatory Note to the Balance Sheet (hereinafter jointly referred to as “the consolidated financial To the Shareholders of the Open Joint Stock Company of Power and Electrification “Mosenergo”: statements”) . Audited Entity Company’s Responsibility for the Consolidated Financial Statements Management of the Company is responsible for the preparation and fair presentation of these consolidated financial statements in ac- Open Joint Stock Company of Power and Electrification “Mosenergo” (short name – Mosenergo) . cordance with the accounting rules and standards established in the Russian Federation, and the internal control system as management which is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to Certificate of State Registration number 012 .473, issued by the Moscow Registration Chamber on 6 April 1993 . fraud or error . The Certificate of Record in the Unified State Register of Legal Entities regarding the legal entity registered before 1 July 2002, number Auditor’s Responsibility 1027700302420, dated 11 October 2002, was issued by the Moscow Administration of the Ministry of Taxes and Levies of the Russian Our responsibility is to express an opinion on accuracy of the consolidated financial statements based on our audit . We conducted our audit Federation . in accordance with the federal auditing regulations and international standards on auditing . Those standards require that we comply with ethical 101 bld . 3 Vernadskogo prospect, Moscow, 119526, Russian Federation requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement . Auditor The audit included performing procedures to obtain audit evidence about the amounts and information disclosures in the consolidated financial Closed Joined Stock Company “PricewaterhouseCoopers Audit” (PwC Audit CJSC) registered at the address: 10 Butyrsky Val str ., Moscow, statements . The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the con- 125047, Russian Federation . solidated financial statements, whether due to fraud or error . In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to select audit procedures that are appropriate in the Certificate of State Registration the joint stock company number 008 .890 was issued by the Moscow Registration Chamber on 28 February 1992 . circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control . The audit also included evaluating The Certificate of Record in the Unified State Register of Legal Entities regarding the legal entity registered before 1 July 2002, number the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Company Management, as well as 1027700148431, issued by the Inter-district Inspectorate No . 39 for Moscow City of the Russian Ministry of Taxes and Levies on 22 August evaluating the overall presentation of the financial statements . 2002 . We believe that the audit evidence we have obtained during the audit provides a sufficient basis for expressing our opinion on the accuracy of these consolidated financial statements . Member of the non-profit partnership “Audit Chamber of Russia” (NP ACR), which is a self-regulating organization of auditors, registration number 870 in the Registry of Members of NP ACR . Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2012, and The main registration record number (ORNZ) in the Registry of auditors and audit organizations is 10201003683 . its financial performance and its cash flow for 2012 in accordance with the accounting standards of the Russian Federation .

Director of “PricewaterhouseCoopers Audit” CJSC 1 March 2013

Closed Joined Stock Company “PricewaterhouseCoopers Audit” (PwC Audit CJSC), M .E . Timchenko White Square Office Center, 10 Butyrsky Val str ,. Moscow, 125047, Russia Phone: +7(495) 967-6000, Fax: +7 (495) 967-6001, www .pwc .ru

60 61 BALANCE SHEET as of 31 December 2012 V. SHORT-TERM LIABILITIES Codes Form 1 OKUD 0710001 13 Credits and borrowings 1510 1,987,361 5,544,358 5,333,040 Organization Mosenergo OJSC Date (dd/mm/yyyy) 31/ 12/ 2012 16 Accounts payable 1520 14,122,079 18,210,029 17,675,375 Taxpayer identification number OKPO 00102798 Type of business: electric power industry, heat engineering TIN 7705035012 Future period profits 1530 102,912 80,058 74,074 Organizational and legal form/ form of property OKVED 40 .10 .11, 40 .30 11. 25 Contingent liabilities 1540 364,897 372,138 376,796 Open joint stock company/private ownership OKOPF/OKFS 47 / 16 Measurement units: thousand roubles Total for Section V 1500 16,577,249 24,206,583 23,459,285 Address: Vernadskogo 101 bld . 3, Moscow, 119526 OKEI 384 BALANCE 1700 227,598,883 223,310,069 211,708,047

Item of As of 31 December As of 31 December As of 31 December Expl . Name of indicator Line code 2012 2011" 2010 Note General Director V .G . Yakovlev Chief Accountant E .Yu . Novenkova (signature) (full name) (signature) (full name) ASSET I. NON-CURRENT ASSETS 28 March 2013 Intangible assets 1110 36 56 76 2 Fixed assets 1150 146,869,154 148,131,326 138,073,248 Profit and Loss Statement for 2012 3 Financial investments 1170 3,200,448 14,187 15,188 Codes Form 1 OKUD 0710002 17 Deferred tax assets 1180 33,606 94,012 115,897 Organization Mosenergo OJSC Date (dd/mm/yyyy) 31 / 12 / 2012 5,10 Other non-current assets 1190 16,480,696 11,982,532 2,066,560 Taxpayer identification number OKPO 00102798 Type of business: electric power industry, heat engineering TIN 7705035012 Total for Section I 1100 166,583,940 160,222,113 140,270,969 Organizational and legal form/ form of property OKVED 40 .10 .11, 40 .30 .11 Open joint stock company/private ownership OKOPF/OKFS 47 / 16 II. CURRENT ASSETS , Measurement units: thousand roubles 4 Inventories 1210 6,532,539 6,915,264 6,437,799 Address: Vernadskogo 101 bld . 3, Moscow, 119526 OKEI 384 6 Vallue added tax on acquired assets 1220 200,983 235,006 1,194,246 Item of 7 Accounts receivable 1230 35,442,290 29,083,498 34,807,206 Expl . Name of parameter Line code For the reporting period For same period of previous year 8 Financial investments 1240 5,708,549 433,601 50,779 Note Revenues 2110 155,437,250 160,824,379 9,14 Cash and cash equivalents 1250 12,347,459 25,572,082 28,313,816 18 Prime cost of the sold goods, products and services 2120 146,553,722 (148,887,832) 5,10 Other current assets 1260 783,123 848,505 633,232 Gross profit (loss) 2100 8,883,528 11,936,547 Total for Section II 1200 61,014,943 63,087,956 71,437,078 18 Commercial expenses 2210 (265,613) (279,961) BALANCE 1600 227,598,883 223,310,069 211,708,047 Gross profit (loss) from sales 2200 8,617,915 11,656,586 LIABILITIES 22 Income from participation in other organizations 2310 479 1,288 11 III. CAPITAL AND RESERVES Interest receivable 2320 1,485,204 1,269,266 Charter capital 1310 39,749,360 39,749,360 39,749,360 Interest payable 2330 (698,410) (1,286,503) Own shares bought out from shareholders 1320 (870,825) (870,825) (870,825) 20 Other income 2340 12,292,627 7,017,710 2 Revaluation of non-current assets 1340 64,912,868 67,713,995 68,503,409 20 Other losses 2350 (10,856,559) (4,750,975) Premium on capital stock (without revaluation) 1350 54,183,723 54,166,426 54,166,426 Profit (loss) before tax 2300 10,841,256 13,907,372 Reserve capital 1360 1,920,204 1,400,945 1,019,631 17 Profit tax, including: 2405 (1,839,311) 118,108 Undistributed profit (uncovered loss) 1370 24,766,761 17,592,989 7,557,990 current profit tax 2410 (3,295,716) (1,730,603) Total for Section III 1300 184,662,091 179,752,890 170,125,991 profit tax for previous years 2411 1,456,405 1,848,711 IV. LONG-TERM LIABILITIES incl . Lines 2410 and 2411: 2420 – – 13 Credits and borrowings 1410 16,139,184 10,613,536 12,771,736 permanent tax liabilities (assets) 2421 891,483 712,841 17 Deferred tax liabilities 1420 9,286,279 8,126,357 4,536,075 Change of deferred tax liabilities 2430 (1,159,922) (3,590,282) 12 Other liabilities 1450 934,080 610,703 814,960 Change of deferred tax assets 2450 (60,406) (21,884) Total for Section IV 1400 26,359,543 19,350,596 18,122,771 Other 2460 1,539 5,768 Net profit (loss) 2400 7,783,156 10,419,082

62 63 Item of For the reporting For same period Expenses directly related to the decrease Expl . Name of parameter Line code 3223 X X – X – – period of previous year of equity Note FOR REFERENCE Decrease of face value 3224 – – – X – – Result from revaluation of non-current assets 2510 (1,703,334) – Decreaseof number of shares 3225 – – – X – – not included in net profit (loss) of the period Restructuring of legal entity 3226 – – – – – – Result from other operations not included in net profit 2520 – – (loss) of the period Dividends 3227 X X X X (792,183) (792,183) Aggregate financial result for the period 2500 6,079,822 10,419,082 Change of premium on stock 3230 X X (789,414) – 789,414 X 21 Base profit (loss) per share 2900 0 .1965 0 .2630 Change of reserve capital 3240 X X X 381,314 (381,314) X Diluted profit (loss) per share 2910 0 .000000 0 .000000 Equity value as of 31 December 2011 3200 39,749,360 (870,825) 121,880,421 1,400,945 17,592,989 179,752,890 For 2012 General Director V .G . Yakovlev Chief Accountant E .Yu . Novenkova (signature) (full name) (signature) (full name) Total increase of equity, including: 3310 – – 44,975,780 – 7,783,512 52,759,292 28 March 2013 Net profit 3311 X X X X 7,783,156 7,783,156 Revaluation of property 3312 X X 44,958,483 X – 44,958,483 Equity Change Statement for 2012 Income directly related to the increase 3313 X X – X – – Codes of equity Form 1 OKUD 0710003 Organization Mosenergo OJSC Date (dd/mm/yyyy) 31 / 12 / 2012 Additional issue of shares 3314 – – – X X – Taxpayer identification number OKPO 00102798 Type of business: electric power industry, heat engineering TIN 7705035012 Increase of face value 3315 – – – X X – Organizational and legal form/ form of property OKVED 40 .10 .11, 40 .30 .11 Open joint stock company/private ownership OKOPF/OKFS 47 / 16 Restructuring of legal entity 3316 – – – – – – Measurement units: thousand roubles Address: Vernadskogo 101 bld . 3, Moscow, 119526 OKEI 384 Other 3319 – – 17,297 – 356 17,653 1. Equity changes Total decrease of equity, including: 3320 – – (46,661,817) – (1,188,274) (47,850,091) Own shares Undistributed Losses 3321 X X X X – – Charter repurchased Premium Reserve profit Name of indicator Code Total capital from on stock capital (uncompensated Revaluation of property 3322 X X (46,661,817) X – (46,661,817) shareholders losses) Expenses directly related to the decrease 3323 X X – X – – Balance as of 31 December 2010 3100 39,749,360 (870,825) 122,669,835 1,019,631 7,557,990 170,125,991 of equity For 2011 Decrease of face value 3324 – – – X – – Total increase of capital, including: 3210 – – – – 10,419,082 10,419,082 Decreaseof number of shares 3325 – – – X – – Net profit 3211 X X X X 10,419,082 10,419,082 Restructuring of legal entity 3326 – – – – – – Revaluation of property 3212 X X – X – – Dividends 3327 X X X X (1,188,274) (1,188,274) Income directly related to the increase Change of premium on stock 3330 X X (1,097,793) X 1,097,793 X 3213 X X – X – – of equity Change of reserve capital 3340 X X X 519,259 (519,259) X Additional issue of shares 3214 – – – X X – Equity value as of 31 December 2012 3300 39,749,360 (870,825) 119,096,591 1,920,204 24,766,761 184,662,091 Increase of face value 3215 – – – X X – Restructuring of legal entity 3216 – – – – – – Total decrease of equity: 3220 – – – – (792,183) (792,183) including: Losses 3221 X X X X – – Revaluation of property 3222 X X – X – –

64 65 2. Adjustments due to changes in accounting policy and correction of errors Cash Flow Statement for 2012

Equity change for 2011 Codes As of 31 As of 31 Name of indicator Line code Форма по ОКУД 0710004 December 2010 due to net due to other December 2011 Organization Mosenergo OJSC Дата (число, месяц, год) 31 / 12 / 2012 profit (loss) factors Taxpayer identification number по ОКПО 00102798 Equity - total Type of business: electric power industry, heat engineering ИНН 7705035012 Organizational and legal form/ form of property по ОКВЭД 40 .10 .11, 40 .30 .11 before adjustment 3400 174,361,816 10,385,169 (792,183) 183,954,802 Open joint stock company/private ownership по ОКОПФ/ОКФС 47 / 16 adjustment due to: Measurement units: thousand roubles Address: Vernadskogo 101 bld . 3, Moscow, 119526 по ОКЕИ 384 change of accounting policy 3410 (1,620,750) (80,303) – (1,701,053) change of accounting policy 3420 (2,615,075) 114,216 – (2,500,859) Name of parameter Line code For 2012 For 2011 after adjustment, 3500 170,125,991 10,419,082 (792,183) 179,752,890 Cash flow from current operations including: Undistributed profit (uncompensated loss): Total revenues, including: 4110 145,483,765 156,367,284 before adjustment 3401 9,130,217 10,385,169 (384,083) 19,131,303 from sales of products, goods, work and services 4111 140,539,494 149,207,420 adjustment due t: other revenues 4119 4,944,271 7,159,864 change of accounting policy 3411 (722,969) (80,303) – (803,272) change of accounting policy 3421 (849,258) 114,216 – (735,042) Total payments, including: 4120 (132,497,099) (139,678,367) after adjustment 3501 7,557,990 10,419,082 (384,083) 17,592,989 to supplier (contractors) for materials, raw materials, work and services 4121 (116,956,397) (124,334,045) Premiun on stock: related to personnel wages and salaries 4122 (5,662,246) (5,789,987) before adjustment 3402 125,333,433 – (789,414) 124,544,019 for bond service 4123 (702,310) (1,455,465) adjustment due to: change of accounting policy 3412 (897,781) – – (897,781) company profit tax 4124 (1,750,486) (2,799,438) correction of errors 3422 (1,765,817) – – (1,765,817) other payments 4129 (7,425,660) (5,299,432) after adjustment 3502 122,669,835 – (789,414) 121,880,421 Balance of cash flow from current operations 4100 12,986,666 16,688,917 Reserve capital before adjustment 3403 1,019,631 – 381,314 1,400,945 Cash flow from investment operations adjustment due to: Total revenues, including: 4210 2,704,576 2,593,156 change of accounting policy 3413 – – – – from non-current assets sold (except for financial investments) 4211 799,008 1,354,900 correction of errors 3423 – – – – after adjustment 3503 1,019,631 – 381,314 1,400,945 from other organizations’ shares (participation shares) sold 4212 – 5,842 Own shares repurchased from shareholders: from return of loans, from sale of debt securities (bills receivable) to third parties 4213 534,806 – before adjustment 3404 (870,825) – – (870,825) dividends, interest on financial investments and similar revenues 4214 1,356,557 1,136,758 adjustment due to: from participation in other organizations change of accounting policy 3414 – – – – other revenues 4219 14,205 95,656 correction of errors 3424 – – – – Total payments, including: 4220 (29,664,077) (19,117,243) after adjustment 3504 (870,825) – – (870,825) related to acquisition, creation, modernization, renovation and preparation 4221 (11,862,309) (10,358,110) 3. Net assets for use of noncurrent assets due to acquisition of share (participation quota) in other organizations 4222 (751,690) – Name of indicator As of 31 December 2012 As of 31 December 2011 As of 31 December 2010 acquisition of debt securities (money claims to other parties), 4223 (6,338,126) – Net assets 3 600 184,765,003 179,832,948 170,200,065 granting of loans to other parties

interest on debenture, included in the value of investment asset 4224 (199,066) (150,866) General Director V .G . Yakovlev Chief Accountant E .Yu . Novenkova other payments 4229 (10,512,886) (8,608,267) (signature) (full name) (signature) (full name) Balance of cash flow from investment operations 4200 (26,959,501) (16,524,087) 28 March 2013

66 67 Cash flow from financial operations Appendix to the Balance Sheet and the Profit and Loss Statement for 2012 Codes Total revenues, including: 4310 7,571,570 3,020,504 Форма по ОКУД 0710005 Organization Mosenergo OJSC Дата (число, месяц, год) 31 / 12 / 2012 credits and loans 4311 7,568,121 3,020,504 Taxpayer identification number по ОКПО 00102798 Type of business: electric power industry, heat engineering ИНН 7705035012 monetary contributions by owners (stakeholders) 4312 – – Organizational and legal form/ form of property по ОКВЭД 40 .10 .11, 40 .30 .11 Open joint stock company/private ownership по ОКОПФ/ОКФС 47 / 16 issue of shares, increase of participation share 4313 – – Measurement units: thousand roubles Address: Vernadskogo 101 bld . 3, Moscow, 119526 по ОКЕИ 384 issue of securities, promissory notes and other debt securities, etc . 4314 – – other revenues 4319 3,449 – 1. Intangible assets and expenses for research and development (R&D) Total payments, including: 4320 (6,817,688) (5,927,107) 1.1. Intangible assets to owners (stakeholders) due to repurchase their shares (participation) or 4321 – – As of beginning of year Changes over the period As of end of the period cessation of participation Disposed Revaluation for dividends and other payments related to distribution of profit in behalf 4322 (1,167,373) (776,341) Accumulated Accumulated Line Accumulated Name of indicator Period depreciation Amortiza- Impair- Accumu- depreciation of owners (stakeholders) code Initial Re- depreciation Initial and Initial tion ment Initial lated and value ceived and value related to payment (protection) of promissory notes and other debt securities, 4323 (5,582,556) (4,997,443) impairment value accrued loss value deprecia- impairment impairment repayment of credits and loans losses tion losses losses other payments 4329 (67,759) (153,323) Total intangible 5100 2012 147 (91) – – – (20) – – – 147 (111) Balance of cash flow from financial operations 4300 753,882 (2,906,603) Balance of cash flow for the reporting period 4400 (13,218,953) (2,741,773) assets 5110 2011 147 (71) – – – (20) – – – 147 (91)

Balance of cash and cash equivalents as of beginning of the reporting period 4450 25,572,082 28,313,816 including: 5101 2012 147 (91) – – – (20) – – – 147 (111) Balance of cash and cash equivalents as of end of the reporting period 4500 12,347,459 25,572,082 trade mark 5111 2011 147 (71) – – – (20) – – – 147 (91) Effect of currency exchange rate changes 4490 (5,670) 39

General Director V .G . Yakovlev Chief Accountant E .Yu . Novenkova (signature) (full name) (signature) (full name) 28 March 2013

68 69 2. Fixed assets 2.3. Change of fixed asset value due to completion of construction, installation, modernization and partial liquidation 2.1. Changes in fixed assets Name of indicator Line code For 2012 For 2011 As of beginning of year Changes over the period As of end of the period Total for increase of value of fixed assets objects due to completion Disposed Revaluation 5260 3,475,231 3,930,084 Name Line of construction, installation, modernization Period Initial Accumulated Accumu- Amortization Accumu- Initial Accumulated of indicator code Received including: value depreciation Initial lated accued Initial lated value depreciation 5261 781,872 1,425,897 value deprecia- value deprecia- buildings tion tion machinery and equipment 5263 2,690,455 2,488,952 Total fixed assets 5200 2012 338,713,129 (210,749,208) 5,528,666 (3,807,217) 2,422,336 (11,270,099) (206,608) (1,076,698) 340,227,970 (220,673,669) (without interest- vehicles 5264 – – bearing investment 5210 2011 324,226,190 (201,509,161) 16,970,759 (2,483,820) 1,426,983 (10,667,030) – – 338,713,129 (210,749,208) in tangible assets) other 5265 2,904 15,235 5201 2012 168,806,113 (92,623,595) 1,054,811 (2,773,391) 1,494,914 (3,844,800) (14,131,077) 8,511,137 152,956,456 (86,462,344) including: Total for decrease of value of fixed assets objects due to partial buildings 5270 (26,117) (1,556) 5211 2011 164,084,081 (89,529,532) 6,334,226 (1,612,194) 734,633 (3,828,694) – – 168,806,113 (92,623,593) liquidation: 5203 2012 168,624,192 (117,066,159) 4,351,221 (891,578) 792,472 (7,268,459) 14,218,918 (9,865,395) 186,302,753 (133,407,541) including: machinery and 5271 (14,533) (1,239) equipment 5213 2011 158,744,614 (110,850,534) 10,574,843 (695,265) 555,077 (6,770,702) – – 168,624,192 (117,066,159) buildings

5204 2012 882,014 (788,853) 116,591 (116,013) 112,922 (125,655) (257,894) 246,414 624,698 (555,172) machinery and equipment 5273 (11,554) (317) vehicles 5214 2011 962,542 (841,413) 10,082 (90,610) 83,642 (31,084) – – 882,014 (788,855) vehicles 5274 – –

production and 5205 2012 333,982 (232,539) 6,040 (24,095) 20,141 (27,112) (32,335) 27,038 283,592 (212,472) other 5275 (30) – organizational stock 5215 2011 314,329 (216,301) 31,514 (11,861) 9,696 (25,934) – – 333,982 (232,539) 2.4. Other use of fixed assets 5206 2012 66,761 (38,062) 3 (2,140) 1,887 (4,073) (4,239) 4,108 60,385 (36,140) other fixed Line As of 31 As of 31 As of 31 Name of indicator assets 5216 2011 113,964 (71,381) 20,094 (67,297) 43,935 (10,616) – – 66,761 (38,062) code December 2012 December 2011 December 2010

5207 2012 67 – – – – – 19 – 86 – Leased on-balance fixed assets 5280 10,571,462 14,894,884 14,507,864 land plots 5217 2011 6,660 – – (6,593) – – – – 67 – Leased off-balance fixed assets 5281 165 230 534

2.2. Unfinished capital construction Rented on-balance fixed assets 5282 – – –

Changes over the period Rented off-balance fixed assets 5283 42,498,707 43,217,994 43,127,135 As of Accepted for Real estate objects undergoing statutory registration Line As of end 5284 265,775 2,217,360 4,022,960 Name of indicator Period beginning Expenses accounting code Written- Other of the period and actually operated of year over the as fixed assets off changes period or price Fixed assets transferred to conservation mode 5285 19,527 41,421 21,816 increased Other use of fixed assets (collateral, etc .) 5286 – – – Total for unfinished construction and incomplete 5240 2012 20,167,405 23,535,163 – (5,353,657) (11,034,058) 27,314,853 operations for acquisition, upgrading, etc. of fixed assets 5250 2011 15,356,219 24,573,825 – (16,951,153) (2,811,486) 20,167,405

including: 5241 2012 14,850,488 15,236,812 – (5,353,657) (279,891) 24,453,752 unfinished construction 5251 2011 13,369,111 18,433,547 – (16,951,153) (1,017) 14,850,488

5242 2012 5,316,917 8,298,351 – – (10,754,167) 2,861,101 equipment to be installed 5252 2011 1,987,108 6,140,278 – – (2,810,469) 5,316,917

70 71 3. Financial investments 4. Inventories 3.1. Change of financial investments 4.1. Change of inventories As of beginning of period Changes over the period As of end of the period As of beginning of the year Changes over the period As of end of the period Interest Retired (written off) Current выбыло Inventory accrued market Reserve Losses turnover Line Accumu- (including Acuumu- Line Reserve for Name of indicator Period Initial price Initial Name of indicator Period for Earnings and Reserve from amongst code lated Received Accumu- bringing lated code Prime cost Prime cost decrease value Initial (impair- value decrease expenditure for decreased types adjustment lated the initial value adjustment Prime cost of value value ment of value decrease value (catego- adjustment to the losses) of value ries) nominal value) 5301 2012 14,682 (495) 4,049,863 (864,097) – – 495 3,200,448 – 5400 2012 6,915,264 – 361,485,214 (361,867,939) – – – 6,532,539 – Total for long-term investments Total for inventories 5311 2011 18,280 (3,092) 10 (3,608) 2,597 – – 14,682 (495) including: 5420 2011 6,437,799 – 362,132,473 (361,655,008) – – – 6,915,264 – investments, 5302 2012 7,394 (495) 1,432,351 – – – 495 1,439,745 – including: 5312 2011 10,063 (3,092) 10 (2,679) 2,597 – – 7,394 (495) raw material, materials 5401 2012 6,825,131 – 84,061,686 (84,392,109) – – – 6,494,708 – investments in affiliated 53021 2012 2,359 (495) 1,432,351 – – 495 1,434,710 – and other similar assets 5421 2011 6,374,513 – 81,278,965 (80,828,347) – – – 6,825,131 – companies 53121 2011 2,354 (938) 10 (5) 443 – – 2,359 (495) expenses in unfinished 5403 2012 63,032 – 133,053,538 (133,116,570) – – – – – investments in associated 53022 2012 – – – – – – – – – production companies 53122 2011 2,233 (1,713) – (2,233) 1,713 – – – – 5423 2011 63,032 – 133,960,324 (133,960,324) – – – 63,032 –

investments in other 53023 2012 5,035 – – – – – – 5,035 – finished products and 5404 2012 – – 144,267,777 (144,267,777) – – – – – organizations 53123 2011 5,476 (441) – (441) 441 – – 5,035 – goods for resale 5424 2011 254 – 146,858,948 (146,859,202) – – – – – Other long-term financial 5303 2012 7,288 – 2,617,512 (864,097) – – – 1,760,703 – investments, 5405 2012 27,101 – 102,213 (91,483) – – – 37,831 – including: 5313 2011 8,217 – – (929) – – – 7,288 – goods shipped loans given to companies 53031 2012 – – 2,028,906 (517,006) – – – 1,511,900 – 5425 2011 – – 34,236 (7,135) – – – 27,101 – for less than 12 months 53131 2011 – – – – – – – – – 53032 2012 7,288 – 588,606 (347,091) – – – 248,803 – third parties’ promissory notes 53132 2011 8,217 – – (929) – – – 7,288 – 53033 2012 – – – – – – – – – securities 53133 2011 – – – – – – – – – 5305 2012 433,601 – 6,348,258 (804,504) – 165,665 (434,471) 6,143,020 (434,471) Total for short-term investments 53015 2011 50,779 – 21,002,749 (20,619,645) – (282) – 433,601 – including: 5306 2012 – – – – – – – – – loans given to companies for less than 12 months 5316 2011 – – 1,445 (1,445) – – – – – other short-term financial 5307 2012 433,601 – 6,348,258 (804,504) – 165,665 (434,471) 6,143,020 (434,471) investments, including: 5317 2011 50,779 – 21,001,304 (20,618,200) – (282) – 433,601 – 53071 2012 – – 4,677,720 (368,500) – 165,665 – 4,474,885 – short-term deposits 53171 2011 – – 20,498,700 (20,498,418) – (282) – – – 53072 2012 2,090 – 347,091 (1,161) – – – 348,020 – third parties’ promissory notes 53172 2011 1,161 – 929 – – – – 2,090 – 53073 2012 431,511 – 1,323,447 (434,843) – – (434,471) 1,320,115 (434,471) aquired rights of claim 53173 2011 49,618 – 501,675 (119,782) – – – 431,511 – 5300 2012 448,283 (495) 10,398,121 (1,668,601) – 165,665 (433,976) 9,343,468 (434,471) Total for financial investments 5310 2011 69,059 (3,092) 21,002,759 (20,623,253) 2,597 (282) – 448,283 (495)

72 73 5. Accounts receivable and payable 5.3. Change of accounts payable 5.1. Change of accounts receivable Changes over the period As of beginning of the Changes over the period As of end of the period Balance year Received Retired transfer as of Balance as of Transfer of debt Line Accrued from Name of indicator Period beginning as a result of Write- end of the Received Retired based on urgency code interest, longterm of write-down of the business deals down for period Name Line Accounted Reserve Accounted Reserve penalties and Repaid to short- Period Value (debt on financial of indicator code under for as a result Write- under for year term Interest Reserve accounted Reserve other contractual doubtful of business down Recovery Write- contractual doubtful transaction) result accrued, accrued under for accruals overdues conditions debt deals penalties Repaid for of down for conditions debt on doubtful contrac- doubtful (debt on and other financial reserve reserve 5551 2012 610,703 285,393 – (194,035) – 232,019 934,080 debt tual debt transaction) accruals result Total for long-term payables conditions 5571 2011 814,960 183,591 – (160,916) – (226,932) 610,703 5501 2012 11,804,304 – 12,203,276 – – (1,480,243) – – – (291) – 22,527,046 – Total for long- including: 5552 2012 – 148,246 – – – – 148,246 term receivables 5521 2011 2,224,973 – 9,995,146 – – (203,009) – – – (212,806) – 11,804,304 – including: 5502 2012 – – 4,706,208 – – – – – – – – 4,706,208 – buyers and customers 5572 2011 – – – – – – – buyers and customers 5522 2011 – – – – – – – – – – – – – including: 5555 2012 610,703 137,147 – (194,035) – (291,443) 262,372 5503 2012 11,789,852 – 7,497,003 – – (1,477,374) – – – – – 17,809,481 – advances made advances 5575 2011 814,960 183,591 – (160,916) – (226,932) 610,703 made 5523 2011 2,201,983 – 9,995,146 – – (203,009) – – – (204,268) – 11,789,852 – 5556 2012 – – – – – 523,462 523,462 5504 2012 14,452 – 65 – – (2,869) – – – (291) – 11,357 – other other 5576 2011 – – – – – – – debtors 5524 2011 22,990 – – – – – – – – (8,538) – 14,452 – 5510 2012 30,605,015 (1,719,339) 215,655,000 2,750,027 (912,392) (217,486,483) (91,814) (398,263) (168,300) 291 – 31,263,736 (2,065,168) 5560 2012 18,210,029 221,121,660 2,155,547 (227,130,358) (2,780) (232,019) 14,122,079 Total for short- Total for long-term payables term receivables 5530 2011 35,657,775 (1,335,649) 313,704,023 1,270,555 (1,005,965) (320,236,618) (818) (619,567) (2,708) 212,806 – 30,605,015 (1,719,339) 5580 2011 17,675,375 274,495,049 4,006,541 (278,191,546) (2,322) 226,932 18,210,029 including: settlement with 5511 2012 23,454,970 (1,610,165) 185,500,804 334,517 (912,392) (184,270,762) (6,776) (398,263) (98,571) – – 24,914,182 (2,025,723) 5561 2012 11,458,304 169,747,926 – (172,660,653) (2,193) – 8,543,384 buyers and suppliers and contractors customers 5531 2011 17,055,976 (1,226,090) 191,452,874 – (1,005,949) (185,051,222) (619,216) (2,658) – – 23,454,970 (1,610,165) 5581 2011 11,924,933 211,733,665 – (212,199,758) (536) – 11,458,304 5512 2012 2,788,420 – 24,975,001 – – (25,584,165) (2,845) – – – – 2,176,411 – advances 5563 2012 26 6,530,147 – (6,530,147) – – 26 made 5532 2011 15,316,569 – 119,821,719 – – (132,553,559) (577) – – 204,268 – 2,788,420 – employee salaries 5583 2011 14 6,607,907 – (6,607,895) – – 26 5514 2012 4,361,625 (109,174) 5,179,195 2,415,510 – (7,631,556) (82,193) – (69,729) 291 – 4,173,143 (39,445) other debtors 5534 2011 3,285,230 (109,559) 2,429,430 1,270,554 (16) (2,631,836) (241) (351) (50) 8,538 – 4,361,625 (109,174) overdues to state 5564 2012 24,487 1,399,469 11 (1,366,101) – – 57,866 5500 2012 42,409,319 (1,719,339) 227,858,276 2,750,027 (912,392) (218,966,726) (91,814) (398,263) (168,300) x – 53,790,782 (2,065,168) extrabudgetary funds Total for 5584 2011 1,746 1,263,397 21 (1,240,677) – – 24,487 receivables 5520 2011 37,882,748 (1,335,649) 323,699,169 1,270,555 (1,005,965) (320,439,627) (818) (619,567) (2,708) x – 42,409,319 (1,719,339) 5565 2012 296,702 34,993,743 (1,540) (34,295,977) – – 992,928 taxes and levies 5.2. Overdue receivables 5585 2011 2,996,052 31,983,374 (5,787) (34,676,937) – – 296,702 As of 31 December 2012 As of 31 December 2011 As of 31 December 2010 5566 2012 2,604,715 3,497,098 740,019 (4,977,712) (79) 291,443 2,155,484 Line advances received Name of indicator Accounted under Accounted under Accounted under code Balance Balance Balance 5586 2011 2,021,164 18,171,302 3,192,797 (21,006,980) (500) 226,932 2,604,715 contractual contractual contractual value value value conditions conditions conditions profit payments to stakeholders 5567 2012 39,570 – 1,188,274 (1,173,521) (6) – 54,317 Total 5540 9,053,486 6,988,318 7,654,398 5,935,059 10,012,729 8,677,080 (incorporators) 5587 2011 17,528 – 792,183 (769,423) (718) – 39,570 including: 5541 4,778,721 2,752,998 3,392,405 1,782,240 1,926,436 700,346 5568 2012 3,786,225 4,953,277 228,783 (6,126,247) (502) (523,462) 2,318,074 settlement with buyers and customers other creditors advances made 5542 534,660 534,660 561,688 561,688 7,004,574 7,004,574 5588 2011 713,938 4,735,404 27,327 (1,689,876) (568) – 3,786,225 5550 2012 18,820,732 221,407,053 2,155,547 (227,324,393) (2,780) – 15,056,159 other 5543 3,740,105 3,700,660 3,700,305 3,591,131 1,081,719 972,160 Total for payables 5570 2011 18,490,335 274,678,640 4,006,541 (278,352,462) (2,322) – 18,820,732

74 75 5.4. Overdue payables 8. Collaterals Name of indicator Line code As of 31 December 2012 As of 31 December 2011 As of 31 December 2010 Name of indicator Line code As of 31 December 2012 As of 31 December 2011 As of 31 December 2010 Total 5590 – 522,962 522,962 Total for collaterals received 5800 1,258,464 1,008,220 1,616,791 including: including: settlement with suppliers and contractors 5591 – – – property charged (pledged), out of which: 5802 29,162 29,162 35,639 advances received 5593 – – – fixed assets 5803 – 5,753 other settlements 5599 – 522,962 522,962 other 5804 29,162 29,162 29,886

6. Production costs Total for collaterals issued 5810 94,319 148,435 208,249 Name of indicator Line code For 2012 For 2011 property charged (pledged), out of which: 5812 – – – Material costs 5610 111,843,602 113,998,898 fixed assets 5813 – – – Labor costs 5620 6,438,926 6,506,735 other 5815 – – – Deductions for social welfare 5630 1,389,804 1,257,036 9. State assistance Amortization and depreciation 5640 11,119,643 10,632,465 For 2012 For 2011 Other costs 5650 6,090,015 5,929,221 Line As of As of Name of indicator As of end As of end code beginning Received Returned beginning Received Returned Total by cost elements 5660 136,881,990 138,324,355 of year of year of year of year Change of the balance Received from budget – total 5900 – 638,028 – – – 618,769 – – Increase [ – ]: 5670 (134,393,464) (136,015,510) finished products 5671 (134,330,432) (136,015,510) including: 5901 – 638,028 – – – 618,769 – – other accounts (except internal turnover for costs) 5672 (63,032) – current expenses Decrease [ + ]: 5680 144,267,777 146,858,948 sales of finished products 5681 134,330,432 136,015,510 sale of goods purchased for reselling 5682 9,937,345 10,843,438 sale of products shipped 5683 – – Change of the balance of unfinished construction (increase [ - ], decrease [+]) 5690 63,032 – Total for costs of routine activities 5600 146,819,335 149,167,793

7. Contingent liabilities Line Balance as of Balance as of end Name of indicator Accrued Used Recovered code beginning of year of the period Total for contingent liabilities 5700 372,138 670,890 (678,131) – 364,897 including: contingent liability for unused employee vacations 5701 372,138 670,890 (678,131) – 364,897

76 77 The Certificate of State Registration number 012 473. was issued by In 2012, no changes occurred in the structural subdivisions of The Company also has other businesses, including property lease, Explanatory Note to the Consolidated Financial the Moscow Chamber of Registration of the Moscow Government on 6 Mosenergo . services for technical connection, communications services, etc . April 1993 . The Certificate of the record entered into the Unified State Statements of Mosenergo OJSC for the Year 2012 3. Core businesses 4. Company’s management, executive and controlling bodies Registry of Legal Entities regarding the company incorporated before the The core businesses of the Company are as follows: The General Director of Mosenergo is Vitaly Georgievich Yakovlev 1 July 2002 under the number 1027700302420 dated 11 October 2002 generation of electricity and heat; supply (sale) of electricity and elected by the resolution of the Company’s Board of Directors on 31 I. General information was issued by the Moscow Administration of the Ministry of Taxes and heat; procurement (purchasing) of electricity from the wholesale March 2008 (Minutes No . 25) . Levies of the Russian Federation . The legal address of the Company is 1. Overview market of electric power and capacity; operation of heat supply Prior to the annual General Meeting of Shareholders conducted on as follows: 101 bld . 3, Vernadskogo prospect, Moscow, 119526, Russian The Open Joint Stock Company of Power and electrification networks . 19 June 2012, the Company’ management bodies included: Mosenergo (Mosenergo OJSC) is a regional energy company involved Federation . in generation of electric power and capacity, generation of heat, as well The shares of the Company are quoted at the Moscow Interbank as heat distribution services in the city of Moscow and the Moscow Currency Exchange (MICEX) and RTS stock exchange . – Board of Directors region . In April 2009, Gazprom OJSC transferred its 53 470%. share in the The share of the Company’s revenues from the aforementioned core Company to its 100% subsidiary “Gazprom energoholding” LLC . As of businesses amounts to 98 .08% of all revenues from goods, work and Full name Position held at the moment of election to the Board of Directors of Mosenergo 31 December 2012, the shares are distributed as follows: services sold in 2012 (compared to 98 .41% in 2011) . – 53 .498% are owned by “Gazprom energoholding” LLC; Petr Pavlovich Biryukov Deputy Mayor of Moscow in the Government of Moscow in charge of Municipal Service and Facilities Mosenergo OJSC (hereinafter referred to as the Company) was – 26 .446% are owned by the Department of Property of Moscow; registered as a legal entity in the Russian Federation on 6 April 1993 Valery Alexandrovich Golubev Deputy Chairman of the Executive Board, “Gazprom” OJSC – 5 050%. are owned by “INTER RAO EES” OJSC; according to the decree No . 169-R issued by the Property Management – 11 .413% are owned by other legal entities and nominal holders; Committee on 26 March 1993 . As a result of privatization of the Alexander Pavlovich Dushko Deputy Head of the Finance and Economics Department, “Gazprom” OJSC – 3 240%. are owned by individuals; Russian power industry, the state-owned enterprise MPO “Mosenergo” – 0 353%. are own shares repurchased from shareholders . was reorganized into an open joint stock company, and some assets Ilnar Ilbatyrovich Mirsiyapov Board Member, Head of Block of Strategy and Investment, “INTER RAO EES” OJSC and liabilities that had been previously under control of the Russian 2. Subsidiaries (structural subdivisions) Ministry of Fuel and Energy were transferred to the balance of the As of 31 December 2012, the Company included 15 territorially Alexey Alexandrovich Mityushov General Director, “Gazprom energo” LLC, General Director of WGC-2 OJSC Company . segregated subsidiaries, and namely: Olga Petrovna Pavlova Member of the Board, Head of Department of Property Management and Corporate Relations, “Gazprom” OJSC Name of the subsidiary (structural subdivision) Legal address Konstantin Valerievich Pesotsky Deputy Head of Department of Property of Moscow HPS-1 named after P .G . Smidovich Sadovnicheskaya street 11, Moscow, 115035 Vladimir Igorevich Pogrebenko Head of Division of Corporate Relations and Financial Assets, Department of Property of Moscow GRES-3 named after R .E . Klasson Lenina street 11, Electrogorsk, Moscow region, 142530 Kirill Gennadievich Seleznev Chairman of the Board of Directors of Mosenergo; Member of the Board, Head of Department of TPP-8 Ostapovsky drive 1, Moscow, 109316 marketing and processing of gas and other liquid carbohydrates of “Gazprom” OJSC; General Director TPP-9 Avtozavodskaya street 12 bld . 1, Moscow, 115280 of “Gazprom mezhregiongaz” LLC TPP-11 named after M .Ya . Ufaev Shosse Entuziastov 32, Moscow, 111024 Evgeny Viktorovich Sklyarov Head of Department of Fuel and Energy of the Government of Moscow TPP-12 Berezhkovskaya embankment 16, Moscow, 121059 Denis Vladimirovich Fedorov Head of Division of Electricity Sector Development and Marketing, Department of marketing and processing of gas and other liquid carbohydrates of “Gazprom” OJSC; General Director of “Gazprom TPP-16 3rd Khoroshevskaya street 14, Moscow, 123298 energoholding” LLC TPP-17 Frunze street 19, Stupino, Moscow region 142800 Nikolay Grigorievich Shulginov First Deputy Chairman of the Board of “SO UES” OJSC TPP-20 Vavilova street 13, Moscow, 117312 Vitaly Georgievich Yakovlev General Director of Mosenergo TPP-21 Izhorskaya street 9, Moscow, 125412 TPP-22 Energetikov street 5, Dzerzhinsky, Moscow region, 140091 TPP-23 Montazhnaya street 1/4, Moscow, 107497 TPP-25 General Dorokhov street 16, Moscow, 119530 TPP-26 Vostryakovsky drive, house 10, Moscow, 117403 TPP-27 Chelobityevo village, Mytishchii district, Moscow region, 141031

78 79 - Audit Commission - Audit Commission

Full name Position held at the moment of election to the Audit Commission of Mosenergo Full name Position held at the moment of election to the Audit Commission of Mosenergo Dmitry Alexandrovich Arkhipov First Deputy to the Head of Executive Board Administration – Head of Internal Audit Department of Dmitry Alexandrovich Arkhipov First Deputy to the Head of Executive Board Administration – Head of Internal Audit Department of Executive Board Administration of “Gazprom” OJSC Executive Board Administration of “Gazprom” OJSC Andrey Viktorovich Belobrov Deputy Head of Department – Head of Organizational Division of the Internal Audit Department of Andrey Viktorovich Belobrov Deputy Head of Department – Head of Organizational Division of the Internal Audit Department of Executive Board Administration of “Gazprom” OJSC Executive Board Administration of “Gazprom” OJSC Evgeny Nikolayevich Zemlyanoy Head of Department for marketing in electric power industry, Division for energy sector development and Evgeny Nikolayevich Zemlyanoy Head of Department for marketing in electric power industry, Division for energy sector development and marketing, Department of marketing and processing of gas and other liquid carbohydrates of “Gazprom” marketing, Department of marketing and processing of gas and other liquid carbohydrates of “Gazprom” OJSC OJSC Vitaly Anatolievich Kovalev Head of Section, Organizational Division of the Internal Audit Department of Executive Board Vitaly Anatolievich Kovalev Head of Section, Organizational Division of the Internal Audit Department of Executive Board Administration of “Gazprom” OJSC Administration of “Gazprom” OJSC Yury Andreevich Linovitsky Deputy Head of Internal Audit Division of “Gazprom energoholding” LLC Yury Andreevich Linovitsky Deputy Head of Internal Audit Division of “Gazprom energoholding” OJSC

Following the annual General Meeting of Shareholders conducted on 19 June 2012, the Company’ management bodies include: Prior to the BoD decision of 15 July 2012 (Minutes No . 16) and of 12 October 2012 (Minutes No . 5), the Company’s Executive Board included: - Board of Directors

Full name Position held at the moment of election to the Board of Directors of Mosenergo Full name Position held at the moment of election to the Executive Board of Mosenergo Petr Pavlovich Biryukov Deputy Mayor of Moscow in the Government of Moscow in charge of Municipal Service and Facilities, Elena Victorovna Andreeva Deputy General Director for Sales, Mosenergo Government of Moscow Svetlana Vladimirovna Antonova Deputy General Director for Legal Issues, Mosenergo Valery Alexandrovich Golubev Deputy Chairman of the Executive Board, “Gazprom” OJSC Ivan Vasilyevich Galas Director of TPP-20, subsidiary of Mosenergo Alexander Pavlovich Dushko Deputy Head of the Finance and Economics Department, “Gazprom” OJSC Dmitry Mikhailovich Katiyev Deputy General Director for Efficiency and Control, Mosenergo Ilnar Ilbatyrovich Mirsiyapov Board Member, Head of Block of Strategy and Investment, “INTER RAO EES” OJSC Valery Vilorievich Nikolsky Deputy General Director for Production, Mosenergo Alexey Alexandrovich Mityushov General Director, “Gazprom energo” LLC, General Director of open joint stock companies WGC-6 and WGC-2 Mikhail Leonidovich Khodursky Deputy General Director of Mosenergo for Finance Elena Vladimirovna Mikhailova Member of the Board, Head of Department of Property Management and Corporate Relations, “Gazprom” Vitaly Georgievich Yakovlev Chairman of the Executive Board of Mosenergo; General Director of Mosenergo OJSC Konstantin Valerievich Pesotsky Deputy Head of Department of Property of Moscow Following the BoD decision of 14 June 2012 (Minutes No . 16) and of 12 October 2012 (Minutes No . 5), the Company’s Executive Board Vladimir Igorevich Pogrebenko Head of Division of Corporate Relations and Financial Assets, Department of Property of Moscow includes: Kirill Gennadievich Seleznev Chairman of the Board of Directors of Mosenergo; Member of the Board, Head of Department of marketing and processing of gas and other liquid carbohydrates of “Gazprom” OJSC; General Director Full name Position held at the moment of election to the Executive Board of Mosenergo of “Gazprom mezhregiongaz” LLC Elena Victorovna Andreeva Deputy General Director for Sales, Mosenergo Evgeny Viktorovich Sklyarov Head of Department of Fuel and Energy of the Government of Moscow Anna Alexandrovna Efimova Deputy General Director for Legal Issues, Mosenergo Denis Vladimirovich Fedorov Head of Division of Electricity Sector Development and Marketing, Department of marketing and Dmitry Mikhailovich Katiyev Deputy General Director for Efficiency and Control, Mosenergo processing of gas and other liquid carbohydrates of “Gazprom” OJSC; General Director of “Gazprom energoholding” LLC Ivan Vitalievich Kosarev Deputy General Director for Production, Mosenergo Damir Akhatovich Shavaleev General Director of “Gazprom Neftekhim Salavat” OJSC Alexander Semenovich Osyka Chief Engineer of Mosenergo Vitaly Georgievich Yakovlev General Director of Mosenergo Mikhail Leonidovich Khodursky Deputy General Director for Finance, Mosenergo Vitaly Georgievich Yakovlev Chairman of the Executive Board of Mosenergo; General Director of Mosenergo

80 81 5. Staff number The currency exchange differences accumulated over the year amount of price reduction performed in the previous reporting periods Rent / Lease Average number of staff on payroll in the Company in 2012 equaled in the operations with assets and liabilities (except for received and recognized as ‘other expenses’, this exceeding amount is reflected When fixed assets are received under leasing agreement, such facili- 7,366 (7,923 and 9,055 in 2011 and 2010, respectively) . and paid advances, preliminary and advance payments in foreign as ‘premium on capital stock’ . ties are accounted beyond balance (according to the agreement) . The currency), the cost of which is expressed in foreign currencies, The amount of value reduction of an object which increased its leased property is recognized beyond balance in the amount of the lease as well as recalculation of their cost as of the date of reporting, value as a result of revaluations conducted in the previous reporting payments . II. Essential Aspects of Accounting Policy are included in the reporting together with the ‘other income and periods is related to reduction of premium on capital stock which was Rented fixed assets objects, with the exception of land plots, are Accounting practices in the Company are based on the following expenditure’ . formed as a result of surplus revaluation conducted in the previous recognized beyond balance at the contractual cost less VAT . Leased Accounting Policy . reporting periods . If the amount of price reduction of the object ex- land plots and the plots received for unlimited use are recognized at 3. Short-term and-long term assets and liabilities 1. Basis of preparation ceeds the revaluation surplus recognized as ‘additional capital due to cadastral value . In case the leasing agreement (including room rental In the Balance Sheet, financial investments, as well as accounts Accounting in the Company is based on the accounting stan- revaluation’ in the previous reporting periods, it is reflected as ‘other agreements) does not specify the cost of the rented (leased) property, payable and receivable including loans and borrowings, are recognized dards currently in force in the Russian Federation, Regulations on expenses’ . the said property is recognized beyond balance in the amount estimated as short-term assets and liabilities if the period of their circulation accounting and financial reporting in the Russian Federation, as well by the Company . (maturity) does not exceed 12 months after the reporting date . Other Amortization as other applicable regulations constituting the regulatory framework The fixed assets that were leased out, transferred for conservation or such assets and liabilities are recognized as long-term assets and li- Amortization of the fixed assets acquired before the 1st of Janu- of accounting and financial reporting for organizations in the Russian accepted for operation while undergoing the state registration are recog- abilities . ary 2002 is performed according to the unified standards of amortiza- Federation . nized in the Appendix to the Balance Sheet at their residual value . If assets and liabilities are initially classified as long-term ones at tion expenses approved by Decree No .1072 of the USSR Council of The Accounting Policy of the Company was approved by the Com- the beginning of the reporting period, but in the course of the reporting Ministers 22 .10 .1990 “On the unified standards of amortization ex- Other pany decree No . 603 of 20th December 2011 . This Policy is essentially period it becomes certain that the accounts payable or receivable are penses allocated for complete restoration of the fixed assets of the The objects of state social infrastructure are also recognized on the consistent with the accounting policy of “Gazprom” OJSC and its sub- to be repaid, such long-term assets and liabilities are reclassified into USSR industries”, whereas amortization of the fixed assets acquired balance sheets of the Company . These facilities were received by the sidiaries and affiliates, as approved by the “Gazprom” OJSC decree No . short-term ones . after the 1st of January 2002 is performed according to the standards Company during privatization of the Russian power industry without 408 of 30th December 2011 . calculated based on the useful lifetime as determined by the Company . transfer of the property rights and, according to the routine practice of The assets, liabilities and commercial operations are valuated in the 4. Fixed assets Classification of the fixed assets into different amortization groups, that period, were accepted for accounting with creation of the social national currency of the Russian Federation – roubles . Fixed assets are the assets compliant with the requirements of the approved by Decree No .1 of the Government of the Russian Federation fund in the amount of the residual cost of these facilities . As these Assets and liabilities are assessed in the financial statements per Provisions for accounting and financial reporting “Accounting of fixed on 01 .01 .2002, is used as one of the sources of information about the facilities are being transferred to the municipal bodies (or are other- actual expenses incurred for their acquisition . The exceptions are as fol- assets” (PBU 6/01) approved by Decree No . 26n dated 30 .03 2001,. is- useful lifetimes of various assets . The useful lifetime periods adopted wise derecognized), their residual cost is deducted from the above lows: sued by the RF Ministry of Finance . Such assets should be accepted for by the Company for major groups of assets are summarized in the mentioned fund . Recognition of the state-owned social infrastructure - fixed assets; accounting in the established order from the moment of commissioning . table below . facilities among the fixed assets of the Company is a deviation from - financial investments for which current market price can be estab- Real estate object the construction of which was completed and which the current rules and standards, however, in the opinion of the Com- lished; are actually used, though the title of such real estate (property rights) Useful lifetimes of the assets recognized pany’s management this approach ensures credible reflection of the - assets for which impairment reserves are created according to the es- has not been registered in the established order, should be accounted on the balance sheets, years property status of the Company since these facilities are actually used tablished procedure; and separately among the fixed assets . Before 1 After 1 as functionally intended and the Company is responsible for maintain- - estimated liabilities . The Balance Sheet shows the fixed assets at their present value as of January 2002 January 2002 ing them . 31 .12 .2012, less depreciation . 55 years and more 20 years and more 2. Assets and liabilities in foreign currency Buildings The facilities recognizable as fixed assets at the cost of more than 5. Unfinished construction When accounting the commercial operations expressed in foreign 8-50 years 5-30 years 40 thousand rubles (inclusively) per unit and accepted for accounting Structures Investments in non-current assets include real estate objects, the currency (including the transactions payable in roubles), the exchange beginning from 1 January 2011, are recognized among production and construction of which is not complete and which were not commis- rate of the currency in question to rouble established by the Central Bank Machinery and equipment 10-30 years 2-30 years material inventories . Before 1 January 2011, objects of fixed assets at sioned, as well as equipment, which requires assembling and instal- of the Russian Federation as of the date of transaction should be used . the cost of no more than 20 thousand roubles per units were recogniz- Transport vehicles and lation, and other investments in non-current assets which were not The monetary assets in foreign currency in the form of cash and foreign 5-50 years 3-30 years able for accounting . In order to ensure safe-keeping of these facilities other fixed assets accepted as fixed assets . The equipment, which does not require as- currency accounts in banks, financial investments into short-term secu- during operation and production activities, their circulation is being spe- Social infrastructure 5-50 years 5-50 years sembling and is available at the warehouses, is recognized among the rities and accounts payable and receivable, including credits and loans cially monitored . facilities equipment for installation . (excepting received cash, advance payments made and prepayments) are reflected in the financial statements as amounts, calculated based Revaluation Amortization of fixed assets is accrued linearly . 6. Financial investments on the official exchange rates, the dynamics of which is shown in the Revaluation of fixed assets is performed regularly as prescribed by The following assets are not amortized: Financial investments are assessed in the accounting documents table below . the current legislation in order to maintain consistency of the recognized - land plots and land use facilities; per actual expenses incurred for their acquisition . cost of the fixed assets with the current market cost . The results of re- - land improvement facilities and other similar objects acquired before Investment into listed securities, market price of which is properly As of As of As of 1 January 2006; 31 .12 .2012 31 .12 .2011 31 .12 .2010 valuation of the fixed assets are reflected in the balance sheet as of the determined by the organizer of the trade, is reassessed at current market end of the reporting year . - residential property acquired before 1 January 2006 (except for the price as of the end of the reporting year . The difference between the Us dollar 30 .3727 32 .1961 30 .4769 The amount of revaluation surplus of an object, which is equal to objects used for rendering appropriate services, profits from which price of such securities at the current reporting date and their previous the price reduction preformed in the previous reporting periods and are recognized as results of ordinary activities or as other profits); price is recognized as other profits and losses . Euro 40 .2286 41 .6714 40 .3331 recognized as ‘other expense’ in the previous reporting periods, should - state-owned social infrastructure facilities; The financial investments, for which current market price is not be reflected as ‘other income . If the revaluation surplus exceeds the - fully amortized facilities not derecognized from the balance sheets . determined are reflected on the balance sheets in the end of the re-

82 83 porting year at their accounting (balance) price less the reserve for useful lifetime . The cost of special tools, instruments and equipment Information on accounts payable is also presented without exclud- 14. Credits and loans received impairment of the financial investments created for the assets for (special hardware) is amortized linearly based on the useful lifetime of ing the amount repaid (amortized) within one reporting period . Additional expenses incurred due to the loans and credits obtained which at the reporting date there are conditions for substantial per- these objects . against the investment assets are included into ‘Other expenses’ as far 12. Cash equivalents, and presentation of cash flow in the Cash Flow sistent depreciation . The reserve for impairment of financial invest- Special clothing, useful life of which according to the established as they are incurred . Statement ments is created once a year based on the results of stock-taking as norms exceeds 12 months is amortized linearly based on the useful Additional expenses incurred due to the loans and credits ob- Cash equivalents are high liquidity financial investments that which of 31 December of the reporting year . In order to define the amount lifetime of the clothing, footwear or other means of individual protec- tained against the current assets that were partly used for investment can be easily converted to the known amount of cash and that are sub- of the reserve, the Company based on the available information de- tion . purposes are included into the cost of the latter in an appropriate ject to insignificant risk of change in their value . termines the estimated cost of the financial investments showing the proportion . 9. Production and sales costs, unfinished and finished products Short-term bank deposits of up to 3-month maturity are regarded as evidence of persistent depreciation . The reserve for impairment of The interest paid by the Company on the loans and borrowings Unfinished products are assessed at their actual cost of production . cash equivalents by the Company . financial investments is then created in the amount of excess of the used for financing of capital construction (including renovation and Finished products are recognized on the balance sheets at the actual The Company’s cash flows that cannot be unambiguously classified accounting (balance) cost of the liability over the estimated cost . upgrades) are included into the cost of unfinished capital construc- production cost including the expenses associated with the use of fixed either as current or investment or financial operations are included in Total amount of the established reserve is recognized as ‘other ex- tion as they are accrued, in compliance with the requirements of PBU assets, raw materials, other materials, fuel, energy, labor and other re- the ‘Cash flow from current operations’ in the Cash Flow Statement . The penses’ . 15/2008 . sources for manufacturing of the products . amounts paid to the budget or received from the budget as indirect tax The securities (except for individually identified securities including Long-term credits and loans that are expected to be repaid within The commercial expenses include costs directly associated with or- compensations are related to the aforementioned cash flows . promissory notes and certificates of deposit) the market price of which 12 months from the reporting date are reflected in the accounting state- ganization/support of electricity and heat sales on the market . When preparing the Cash Flow Statement, the data on the availability is not determined are reflected in the accounting at withdrawal per their ments as short-term credits and loans . and flow of foreign currency are recalculated using the official exchange types based on FIFO principle . 10. Future period expenses rate established by the Central Bank of Russia for the date of payment 15. Provisions for recognizing interest and discount on debenture bonds Other financial investments including individually identified securi- Expenses incurred by the Company in the reporting year but related or receipt of funds . The expenses (interest or discount) on the debenture bonds are ac- ties (promissory notes) the market price of which is not determined are to future reporting periods (such as expenses for preparation for and The difference from recalculation of cash flows, monetary balance crued according to the decision about issuance of the securities and are reflected in the accounting at withdrawal at the original cost of each unit . mastering of production, one-off payments for software licenses and and their equivalents in foreign currency (at the exchange rates on the reflected among ‘other expenses’ in the periods when such payments Revenues and expenses in the operations with financial investments other costs) are reflected as deferred expenses . Future period (deferred) date of transaction and on the reporting dates) are included in the line were made . are recognized among ‘other incomes and expenses’ . expenses are amortized evenly throughout the period they are related “Influence of exchange rate” of the Statement . The Company does not account upfront the amounts to be paid to to . The duration of the period is determined when the future period ex- 7. Other non-current assets In the Cash Flow Statement, the following information is presented the lender per sold debenture bonds as ‘future period expenses’ . penses are accepted for accounting . Other non-current assets (Line 1190 of the balance sheet) reflect the in compressed form: Future period expenses related to periods that begin following the 16. Contingencies and contingent liabilities following items: – transactions on deposits during one reporting period; end of year next to the reporting year, are reflected on the balance sheet In its accounting process, the Company recognizes contingent li- - amount of paid advance payments associated with capital construction; – VAT amounts within payments from buyers and customers, as long-tem assets under the expenditure item “Other non-current as- abilities for vacation allowance and insurance payments related to staff - deferred expenses, which are expected to be amortized more than 12 payments to suppliers and contractors, payments to the budget and sets” . Future period expenses, related to the period starting after the vacations . months after the reporting date . compensation of VAT paid . reporting period, are reflected on the balance sheet as “Other current The amount of vacation contingencies is calculated based on the The amounts of paid advance payments are shown with VAT in- assets” . 13. Charter, additional and reserve capital average daily salary and the number of days of the main and additional cluded . The charter capital is reflected in the amount of the nominal price vacations, which have been earned but not spent by all employees over 11. Receivables from buyers and customers, suppliers and contractors 8. Inventories of the ordinary shares purchased by the shareholders . The size of the the entire period of their employment with the Company as of the report- The receivables from the buyers and customers are determined Materials are initially assessed for accounting purposes in the charter capital is consistent with the amount established by the Com- ing date . based on the prices established by the agreements between the Com- amount of the actual cost of their acquisition . Inventories of the materi- pany Statute . The aforementioned contingent liability is recognized as of the re- pany and the buyers (customers) taking into account all the discounts als, the market price of which at the end of the year proved lower than According to the current legislation and the Statute, the Company porting date . (markups) offered by the Company and VAT . the actual expenses for their procurement due to persistent (long term) creates a reserve capital in the amount of 5% of the Charter capital . The The contingent liabilities are included in the expenses for routine The debts of the buyers and customers that were not repaid within decrease of the prices that occurred during the reporting year, and which amount of the annual allocations into the reserve fund is determined by activities and in the commercial costs . the timeframe prescribed by the contractual agreements and not covered are used to produce the products, current market price of which at the the decision of the General Meeting of Shareholders, but can be no less A contingent liability is created in such cases when the likelihood of by appropriate guarantees, surety, collateral or otherwise are recognized reporting date turned out to be lower than the actual prime cost, are ac- than 5% of the net profit of the Company . liability is rather high as of the reporting date and it is reflected in the net of the accrued reserve for doubtful debts . This reserve is a conserva- counted at the market price . In accordance with the Company’s Statute, the reserve fund is in- balance sheet as Line 1540 “Contingent liability” . tive estimate by the Company of the part of the receivables that are likely Assessment of the inventories during their withdrawal is performed tended for covering losses of the Company, as well as for bond retire- not to be repaid . The accrued reserves for doubtful debt are recognized 17. Deferred taxes with the aid of average prime cost method . ment and redemption of the Company’s share in case any other financial as ‘other expenses’ . The Company reflects in its accounting and financial reporting The objects attributable to fixed assets with the acquisition cost of resources are unavailable . The debts that cannot realistically be expected to be collected deferred tax assets and deferred tax liabilities, recurring tax as- no more than 40 thousand roubles (inclusively) per unit, including the The additional capital includes the following: are derecognized from the balance as they are acknowledged to be sets and recurring tax liabilities, i .e . the amounts that can affect the items (housewares and accessories) that are not consumed immedi- - increase of the cost of the fixed assets during revaluation; such, with subsequent accounting on the off-balance account for 5 current profit tax during the current and/or subsequent reporting ately in the course of production but serve for a period not exceeding 12 - share premium obtained due to disposal of the Company shares at the years . period(s) . months and are amortized instantaneously, are also accounted among price in excess of their nominal price; In the “Change of accounts receivable” Form, which is included in The amount of the current profit tax is determined based on the ac- the inventory . - property received at no expense up to 1999; the tabular comments on the balance sheet and Profit and Loss State- counting data . The current profit tax corresponds to the amount of the Special tools, instruments and equipment (special hardware) and - accumulation fund obtained as a result of commissioning of fixed ment, the data are disclosed without exclusion of the receivables that calculated profit tax, which is reflected in the tax declaration for profit tax special clothing are also accounted as inventory, regardless of their assets funded from the Company profits . were received and repaid (amortized) within one reporting period . for the reporting taxation period .

84 85 The amounts of the deferred tax assets and liabilities are reflected Company took a decision to change its accounting policy in calculating Line Sum before Adjustment Sum with Name of line Adjustment in the accounting documents in expanded form as a part of non-current the depreciation of its fixed assets that were obtained free of charge code adjustment number adjustmen assets (line 1180 “Deferred tax assets” and of long-term liabilities (line in 1998-1999 . 1420 “Deferred tax liabilities”) . Adjustment of balance as of 31.12.2010 20. Adjustment of data for the previous reporting periods The amount of debt related to profit tax payable to the budget is Some indicators for comparative data in the Balance Sheet, Profit 1150 Fixed assets 142,259,061 1,2 (4,185,813) 138,073,248 included in line 1520 “Accounts payable” . and Loss Statement, and the Equity Change Statement were formed tak- The amounts of profit tax overpaid to budget are reflected on the ing into consideration the following adjustments: 1340 Revaluation of non-current assets 71,167,007 1,2 (2,663,598) 68,503,409 balance sheets in line 1230 “Accounts receivable” . 1 . As for the fixed assets which were received free of charge during 1370 Undistributed profit (uncovered loss) 8,823,343 1,2 (1,265,353) 7,557,990 18. Recognition of revenues 1998-1999, a decision was taken to change the accounting policy in Revenues from products sold and services rendered are recognized the part of calculation of amortization . Due to this fact, the calculated 1420 Deferred tax liabilities 39,178 2 (256,862) 4,536,075 as the products are shipped (or services rendered) to the customers and amortization amount was adjusted, starting from the moment when payment documents are submitted by them . The revenues are reflected these fixed assets were accepted for accounting; 3600 Net assets 174,129,016 1,2 (3,928,951) 170,200,065 in the accounting documents net of the value added tax, excise duties 2 . In the reporting year, some inaccuracies from previous reporting pe- Adjustment of balance as of 31.12.2011 and other similar compulsory payments . riods were detected . The correction of these errors led to changes in The following is recognized among other income: comparative data for 2010 and 2011: 1150 Fixed assets 152,274,747 1,2 (4,143,421) 148,131,326 - income from participation in other organizations (including dividends) based on an independent appraiser’s report, the Company adjusted – as the income is announced; revaluation value of fixed assets’ object which was determined as 1340 Revaluation of non-current assets 70,377,593 1,2 (2,663,598) 67,713,995 - earnings from sales of fixed assets or other assets other than monetary of 1 January 2009; assets (except foreign currency), products and goods; based on the adjustment of useful lifetime of fixed assets, the 1370 Undistributed profit (uncovered loss) 18,824,429 1,2 (1,231,440) 17,592,989 - rental earnings; amount of amortization was recalculated . 1420 Deferred tax liabilities 8,374,740 2 (248,383) 8,126,357 - subsidies obtained from tariff differences during heat sales; Adjustment of the 2010 and 2011 data in the annual financial state- - earnings from fines and penalties from breach of contracts . ments for 2012 (thousand roubles): Adjustment of profit and loss data for 2011

19. Changes in the accounting policy 2120 Prime cost of sales (148,930,224) 1,2 42,392 (148,887,832) So that the commercial activities of the Company could be re- flected more correctly in the accounting and reporting documents, the 2300 Profit (loss) before tax 13,864,980 1,2 42,392 13,907,372

2430 Change of deferred tax liabilities (3,581,803) 1,2 (8,479) (3,590,282)

2900 Base profit (loss) per share 0 .2622 1,2 0 .0008 0 .2630

3600 Net assets 183,727,986 1,2 (3,895,038) 179,832,948

In the “Equity Change Statement for 2012” (Section 2 “Adjustment due adjustments of the annual financial statements implemented in 2011 . to changes in accounting policy and correction of errors”), the data given as Influence of each of the above errors on the items of financial state- of 31 12. 2010. in Line “Adjustment due to correction of errors” include the ments is shown below:

86 87 Nature of error Sum of adjustment Two core business segments can be identified in the Company’s Accounting line to be adjusted No Description of error (as per Item 2 of (+/-), thousand business (thousand roubles): (№Line No . and Line name) PBU 22/2010) roubles Total for the Electricity Heat Other Correction of errors in the 2010 financial statements Company 1 Adjustment of depreciation of fixed assets Inaccurate Line 1150 “Fixed assets” of the balance sheet (1,722,195) For 2012 due to clarification of useful lifetime calculation Line 1340 “Revaluation of non-current assets” of (566,662) Revenues of segment 85,816,075 66,643,244 2,977,931 155,437,250 the balance sheet Profit (loss) of segment (7,699,406) 46,218,339 2,977,931 41,496,864 Line 1370 “Undistributed profit (uncovered loss)” (888,789) Costs undistributed among segments Х Х Х (44,433,918) of the balance sheet For 2011 Line 1420 “Deferred tax liabilities” of the balance (266,744) sheet Revenues of segment 88,715,280 69,543,996 2,565,103 160,824,379 2 Adjustment of revalued price of a fixed Inaccurate Line 1150 “Fixed assets” of the balance sheet (1,149,742) Profit (loss) of segment (1,438,262) 42,346,626 2,565,103 43,473,467 asset object as of 01 01. .2009 calculation Costs undistributed among segments Х Х Х (37,854,359) Line 1340 “Revaluation of non-current assets” of (1,199,155) the balance sheet For 2010 Line 1370 “Undistributed profit (uncovered loss)” 39,531 Revenues of segment 78,861,861 62,307,233 2,587,438 143,756,532 of the balance sheet Profit (loss) of segment 1,092,172 37,155,321 2,587,438 40,834,931 Line 1420 “Deferred tax liabilities” of the balance 9,882 sheet Costs undistributed among segments Х Х Х (36,743,940) As of 31 December 2012 Correction of errors in the 2011 financial statements Assets of segment 163,226,700 24,811,212 18,116,554 206,154,466 3 Adjustment of depreciation of fixed assets Inaccurate Line 1150 “Fixed assets” of the balance sheet (1,624,474) due to clarification of useful lifetime calculation Assets undistributed among segments Х Х Х 21,444,417 Line 1340 “Revaluation of non-current assets” of (566,662) Total assets 163,226,700 24,811,212 18,116,554 227,598,883 the balance sheet Liabilities of segment 28,766,110 136,274 4,473,558 33,375,942 Line 1370 “Undistributed profit (uncovered loss)” (794,552) Liabilities undistributed among segments Х Х Х 9,560,850 of the balance sheet Line 1420 “Deferred tax liabilities” of the balance (263,260) Total liabilities 28,766,110 136,274 4,473,558 42,936,792 sheet As of 31 December 2011 4 Adjustment of revalued price of a fixed Inaccurate Line 1150 “Fixed assets” of the balance sheet (1,124,768) Assets of segment 149,314,218 26,321,217 21,443,622 197,079,057 asset object as of 01 01. .2009 calculation Assets undistributed among segments Х Х Х 26,231,012 Line 1340 “Revaluation of non-current assets” of (1,199,155) the balance sheet Total assets 149,314,218 26,321,217 21,443,622 223,310,069 Line 1370 “Undistributed profit (uncovered loss)” 59,510 Liabilities of segment 28,771,343 130,062 6,390,940 35,292,345 of the balance sheet Liabilities undistributed among segments Х Х Х 8,264,834 Line 1420 “Deferred tax liabilities” of the balance 14,877 sheet Total liabilities 28,771,343 130,062 6,390,940 43,557,179 As of 31 December 2010

III. Disclosure of essential parameters the corrections disclosed in Section II Item 20 “Adjustment of data for Assets of segment 139,787,906 21,960,131 21,408,198 183,156,235 the previous reporting periods” . Assets undistributed among segments Х Х Х 28,551,812 The information presented in this section should be regarded as a supplement to tabular clarifications on the Balance Sheet and the Cash 1. Information by segments Total assets 139,787,906 21,960,131 21,408,198 211,708,047 flow Statement . The information presented in this subsection is disclosed based on Liabilities of segment 28,921,219 4,484,492 2,735,102 36,140,813 The data as of 31 December 2011 and the data as of 31 December PBU 12/2010 “Information by segments” and is included in the assess- 2010 are presented in the Appendix to the Balance Sheet and the Profit ment submitted to the authorized decision-makers of an organization Liabilities undistributed among segments Х Х Х 5,441,243 and Loss Statement”, as well as in this Explanatory Note with account of (according to the data of management accounting) . Total liabilities 28,921,219 4,484,492 2,735,102 41,582,056

88 89 The operational decision-makers assess the results of activities of pany”, and the receivable from this buyer for 2012 amounted to The rented property includes land plots which are registered on the 3. Long-term financial investments the segments judging by profit/loss of the segment (gross profit) that 42,740,780 thousand roubles (46,289,484 thousand roubles in off-balance account and are reflected in the Appendix to the balance The information below is presented as a supplement to Table 3 .1 is calculated as the profit less related direct expenses . The balanced 2011) . sheet at cadastral value . “Availability and flow of financial investments” in the Appendix to the financial result by segments differs from the organization’s profit/ Taking into consideration that the existing accounting system of the The fixed assets that were leased out, transferred for conservation Balance Sheet and the Profit and Loss Statement . loss before tax by the amount of undistributed expenses among the Company does not provide for sufficiently reliable division of ‘payments or are undergoing the state registration are reflected in the Appendix to The financial investment presented in Line 1170 “Financial invest- segments, as well as interest receivable, income from participation in to suppliers and contractors’ and ‘earnings from buyers and customers’ the balance sheet at the depreciated book value . ments” of the balance sheet can be detailed out as follows (thousand other organizations and other expenses related to the Company as a among the segments, the Company does not disclose in its account- roubles): Registration of property rights whole . ing reports (as per item 25 of PBU 23/2011 “Cash Flow Statement”) Balance cost of the fixed assets, property rights for which are Expenses for profit tax and other compulsory payments, interest cash flows from current, investment and financial operations for each subject to mandatory state registration, is as follows (in thousand paid and received, earning from participation in other organizations, as individual reporting segment identified in accordance with 12/2010 “In- roubles): well as other expenses and expenses incurred in emergency situations, formation by segments” . are not included in the calculation of profit (loss) of the segment . Other As of As of As of 2. Fixed assets income and expenses were not distributed among the segments due to 31 .12 .2012 31 .12 .2011 31 .12 .2010 The information supplements Table 2 “Fixed assets” in the Appendix its inexpedience and the lack of necessary basis . Fixed assets, the 57,680,836 67,250,312 64,852,677 to the Balance Sheet and the Profit and Loss Statement” . Assets of the segments primarily include fixed assets, inventories, property rights In 2012, the interest due to be paid to lender (creditor) and subject accounts receivable and other current assets, except for deferred tax for which are to inclusion in the value of investment assets equaled 199,066 thousand assets, financial investments, cash and cash equivalents . registered roubles (198,885 thousand roubles and 135,276 thousand roubles in Liabilities of segments primarily include short-term liabilities, except 2011 and 2010, respectively) . Fixed assets, the 6,255,145 7,197,090 9,402,546 for profit tax liabilities to the budget, deferred tax liabilities, as well as property rights future period expenses . Revaluation for which are not Undistributed assets are not included in the assets of segments An independent appraiser performed revaluation of all groups of registered since they are not directly related to the reporting segments, and the fixed assets as of 31 December 2012 . As a result of this revaluation necessary distribution basis is lacking . the current (recovery) value of fixed assets amounted to 340,227,970 Total 63,935,981 74,447,402 74,255,223 The result of comparison of assets of reporting segments shown as thousand roubles . The results of revaluation are presented in the Balance total for the Company of the line “Assets of segment” with the total as- Sheet as of 31 December 2012 and are reflected as: The fixed assets, property rights for which are not registered, in- sets in the Company’s balance is presented below: – revaluation surplus accounted for as ‘premium on capital stock’ – clude facilities, obtained by the Company free of charge during the period of 1992–1997 (and before), mostly consisting of district heating 2012 2011 2010 9,217,099 thousand roubles; – value reduction related to ‘premium on capital stock’ – 10,920,433 networks with the total length of 154 .147 kilometers and total cost as Assets of 206,154,466 197,079,057 183,156,235 thousand roubles; follows: reporting – revaluation surplus/value reduction accounted for as ‘other income/ – 2012 – 2,048,241 thousand roubles; segments expenses’ – 420,026 thousand roubles . – 2011 – 1,925,561 thousand roubles; Company’s 227,598,883 223,310,069 211,708,047 Revaluation of fixed assets was not carried out as of 31 December – 2010 – 2,181,702 thousand roubles . assets 2011, due to insignificant changes of the current (recovery) value com- (Line 1600) Restriction of rights pared to the value entered at the previous reporting dates . As of 31 December 2012, as of 31 December 2011, and as of 31 The result of comparison of liabilities of reporting segments shown Rent / Lease December 2010, the Company did not have any fixed assets in pawn or as total for the Company of the line “Liabilities of segment” with the total The Company rented fixed assets with a worth of: with otherwise impaired proprietary rights . liabilities of the Company in the balance sheet is given below: – 2012 – 83,246 thousand roubles; Social infrastructure facilities – 2011 – 0 thousand roubles; 2012 2011 2010 The balance cost of the social infrastructure facilities is as follows: – 2010 – 375,241 thousand roubles . – as of 31 December 2012 – 42,366 thousand roubles; Assets of 33,375,942 35,292,345 36,140,813 The Company returned to the lessor the facilities rented earlier with – as of 31 December 2011 – 51,566 thousand roubles; reporting a worth of: – as of 31 December 2010 – 101,146 thousand roubles . segments – 2012 – 0 thousand roubles; In 2012, the Company continued efforts to transfer the social infra- Long-term and 42,936,792 43,557,179 41,582,056 – 2011 – 551 thousand roubles; structure facilities to municipal organizations . Residual book value of the short-term – 2010 – 5,403 thousand roubles . transferred facilities amounted to: liabilities of the Starting from 1 January 2012, the Company has to make 145,350 – 2012 – 49 thousand roubles; Company (Line thousand roubles of lease payments under the lease agreements – 2011 – 47,709 thousand roubles; 1400 + Line (202,518 thousand roubles from 1 January 2011, and 539,314 thousand – 2010 – 0 thousand roubles . 1500) roubles from 1 January 2010), including 67,759 thousand roubles paid In 2010, 2011 and 2012, no facilities were liquidated upon agree- The major buyer with an at least 10% share of the Company’s in 2012 (178,129 thousand roubles and 336,796 thousand roubles in ment with municipal authorities . total revenues from sales is OJSC “Moscow Unified Energy Com- 2011 and 2010, respectively) .

90 91 Line 1210 “Inventories” of the Balance Sheet includes the value of ma- As of 31 December 2012, as of 31 December 2012 and as of 31 As of 31 December 2012 As of 31 December 2011 As of 31 December 2010 terial inventories, unfinished construction and the real estate objects which December 2010, the Company does not possess any collateral material Balance cost Balance cost Balance cost were transferred to the buyer but the property rights were not re-issued . assets . of financial Reserve of financial Reserve of financial Reserve As of 31 December 2012, as of 31 December 2011 and as of 31 investment investment investment 5. Future period expenses December 2010, the Company did not create reserves for the amount of The following expenses are reflected on the balance sheets as future Financial investments, for which current market price is not determined material depreciation cost, as the main volume of goods and commodi- period expense (thousand roubles): Investments into subsidiaries 1,434,710 – 1,864 (495) 1,416 (938) ties without movement as of the above reporting dates was recognized as emergency stock . “CRMZ” LLC 680,771 – 100 – 100 –

“OGK-Investproject” LLC 551,640 – – – – – As of 31 December 2012 As of 31 December 2011 As of 31 December 2010 “Mosenergo heat supply company” LLC 200,010 – 10 – – – Long-term Short-term Long-term Short-term Long-term Short-term part part part part part part “Energoinvest-ME” CJSC 2,249 – 1,754 (495) 1,316 (933) Procurement of computer software 193,678 198,286 371,815 128,835 322,450 109,560 “GRES-3 Electrogorsk” LLC 10 – – – – – Assessment of property – 161,232 – 170,081 – 39,339 “TPP-17 Stupino” LLC 10 – – – – – Settlements with personnel – 1,030 – 3,490 – 5,671 “TPP-29 Electrostal” LLC 10 – – – – – Obtaining licenses for specific types 3,694 327 3,594 752 2,581 72 “TPP-6 Orekhovo-Zuyevo” LLC 10 – – – – – of activities “Energoconsult” CJSC – – – – – (5) Other – 331 641 3,509 1,636 2,485 Investments into dependent companies – – – – 520 (1,713) Total 197,372 361,206 376,050 306,667 326,667 157,127 Investment in other organizations 5,035 – 5,035 – 5,035 (441) The long-term part of the future period expenses that are expected is presented in Section 5 .1 “Change of accounts receivable” of the tabu- Borrowings made 1,511,900 – – – – – to be written-off in more than 12 months from the reporting date is lar format of Appendix to the Balance Sheet and the Profit and Loss Promissory notes 248,803 – 7,288 – 8,217 – recognized within Line 1190 “Other non-current assets” of the Balance Statement . Sheet . The amounts of incoming accounts receivable, as stated in the col- “Alfa-Bank” OJSC 242,444 – – – – – umns “As a result of business deals (debt on transaction)”, “Interest 6. Value added tax for the acquired tangible assets accrued”, “Penalties and other accruals”, “Repaid”, and “Write-down for “Ulyanovskenergo” OJSC 6,359 – 7,288 – 8,217 – Line 1220 “Value added tax for the acquired valuables” of the bal- financial result” of Section 5 .1 of the Appendix to the Balance Sheet and ance sheets reflects the amount of value added tax . the Profit and Loss Statement, are presented without exclusion of the Total: 3,200,448 – 14,187 (495) 15,188 (3,092) For the own construction, the amounts of tax on goods (work, ser- accounts receivable (received and repaid/written-off within one report- vices) purchased for construction and installation works, as well as the ing period) . The Company’s long-term financial investments, in relation to which from pawn charge . Among the retired long-term financial investments amounts of tax when purchasing fixed assets and objects of unfinished The indicator “Advances made” within Line 1230 “Accounts receiv- the evidence of stable decrease of value has been identified, are re- there are no assets transferred under repurchase agreements . construction, were as follows: able” of the Balance Sheet reflects the amount of monetary advances flected in the Balance Sheet with the deduction of the accrued reserve - as of 31 December 2009 – 193,541 thousand roubles; for the upcoming payments for goods, work and services paid to other for possible losses . In the reporting year, no reserve for possible losses 4. Inventories - as of 31 December 2011 – 218,153 thousand roubles; organizations and individual persons under contracts and agreements . was created due to the absence of evidence in relation to such invest- The information below is presented as a supplement to Table 4 “In- - as of 31 December 2010 – 1,168,352 thousand roubles . ments . Additional data on the flow of reserve by groups of long-term ventories” of the Appendix to the Balance Sheet and the Profit and Loss The Company does not have advance payments and/or preliminary pay- financial investments is given in Section 3 “Financial investments” of Statement . 7. Accounts receivable ments made in the form of transfer of assets or the amount of VAT on the tabular format of explanations to the Balance Sheet and the Profit Indicators in the column “Earnings and expenditure” of Table 4 “In- The information on disclosure of the receivables, including long- advances not accepted for settlement . and Loss Statement . ventories” include the Company’s expenses for acquisition of material term advances associated with capital construction, acquisition of fixed Other receivables included into Line 1230 “Accounts receivable” of Based on the decision made by the Board of Directors on 28 January and production stock from suppliers and contractors, as well expenses assets and equipment reflected in Line 1190 “Other non-current assets”, the Balance Sheet are detailed below (thousand roubles): 2011 No .11, the Company terminated its participation in the following for fabrication of material and production stock at own facilities, which affiliated and dependent companies: were incurred in the reporting period . - “Energoconsult” CJSC (by means of selling the shares to “Energoinvest- Indicators in the column “Retired” of this Table include the value of ME” CJSC; inventories retired as a result of their use for production and sale of fin- - “Telecomenergo” CJSC (by means of writing off this investment) . ished products, execution of work and services, sale, write-off or other As of 31 December 2010, as of 31 December 2011 and as of 31 king of retirement (and in particular, inclusion into expenses that form December 2012, the Company’s long-term financial investments are free the value of objects of non-current assets) .

92 93 As of 31 12. .2012 As of 31 12. .2011 As of 31 12. .2010 As of 31 .12 .2012 As of 31 .12 .2011 As of 31 .12 .2010

Long-term accounts receivable 11,357 14,452 22,990 Cash 1,838,459 2,045,982 3,784,975 Housing mortgages for employees 10,953 13,823 18,587 Cash on hand 1,717 1,892 1,236 Other 404 629 4,403 Funds on transaction accounts 1,836,702 2,043,062 3,782,723 Short-term accounts receivable 4,133,698 4,252,451 3,175,671 Funds on foreign currency accounts 40 1,028 1,016 Interest on issued loan 2,629,222 2,617,810 2,617,802 Cash equivalents 10,509,000 23,526,100 24,528,841 Settlement of sanctions and claims 659,812 640,079 200,170 Short-term bank deposits (with 3-month maturity) 10,509,000 23,526,100 24,528,800 Claim assignment agreements – 326,451 – Other cash equivalents – – 41 Collective guarantee agreements 173,535 200,000 – Tax overpaid 154,365 117,139 56,144 Total 12,347,459 25,572,082 28,313,816 Other 516,764 350,972 301,555 10. Other current and non-current assets Total of other accounts receivable 4,145,055 4,266,903 3,198,661 Line 1190 “Other non-current assets” and Line 1260 “Other current assets” of the Balance Sheet reflects the following assets (thousand The major part of debt on the interest in the amount of 2,617,802 The total amount of doubtful debt with the reserves created in the roubles): thousand roubles is related to the loan given to “Gazenergoprom- reporting year is as follows: Invest” CJSC, and this loan was repaid in the fourth quarter of 2010 . – as of 31 December 2012 – 2,065,168 thousand roubles; As of 31 .12 .2012 As of 31 .12 .2011 As of 31 .12 .2010 In compliance with the loan agreement, the borrower was to repay – as of 31 December 2011 – 1,719,339 thousand roubles; Long-term Short-term Long-term Short-term Long-term Short-term the accrued interest simultaneously with the repayment of the loan . – as of 31 December 2010 – 1,335,649 thousand roubles . part part part part part part The management of the Company expects that accrued interest will be 8. Short-term financial investments Advances issued on capital construction 16,283,324 – 11,606,482 – 1,739,893 – repaid in 2013 . The information is presented as supplement to Table 3 .1 “Change There are no receivables from buyers and customers qualified as VAT on advances received against upcoming of financial investments” of the Appendix to the Balance Sheet and the – 334,956 – 465,170 – 404,466 long term as of the end of the previous year and being short term as of delivery of goods (services) Profit and Loss Statement . the end of the reporting period according to the contractual repayment The financial investment presented in Line 1240 “Financial invest- Deficiencies detected through inventory check – 86,961 – 76,668 – 71,639 dates . ments” of the Balance Sheet can be detailed out as follows (thousand The payables from buyers and clients and from other debtors are Future period expenses 197,372 361,206 376,050 306,667 326,667 157,127 roubles): shown net of the doubtful debt provision . Total 16,480,696 783,123 11,982,532 848,505 2,066,560 633,232

11. Capital and reserves All the issued ordinary shares were fully paid for, except for own shares As of 31 12. .2012 As of 31 12. .2011 As of 31 12. .2010 Charter capital bought out from shareholders . No changes of the charter capital oc- Financial investments with undertermined market value As of 31 December 2012, the total number of declared ordinary curred in 2012 . shares was 39,749,359,700 (39,749,359,700 as of 31 December 2011 As of 31 December 2012, the ordinary shares of the Company were Promissory notes 348,020 2,090 1,161 and as of 31 December 2010) with the face value of 1 rouble per share . distributed as follows: Other short-term financial investments Number, Face value, Acquired rights of claim 885,644 431,511 49,618 shares thousand roubles Short-term deposits 4,474,885 – – Legal entities 38,321,308,309 38,321,308 Total 5,708,549 433,601 50,779 “Gazprom energoholding” LLC 21,265,104,840 21,265,105 Reserve for depreciation of short-term financial investments was As of 31 December 2010, as of 31 December 2011 and as of 31 Department of Property of Moscow 10,512,012,316 10,512,012 not created because of lack of evidence of persisting decrease of December 2012, no short-term financial investments were charged or “INTER RAO EES” OJSC 2,007,375,795 2,007,376 their price, except for the reserve on accrued rights of claim, which pawned . Among the retired short-term financial investments there are are reflected in the Balance Sheet with account of the accrued re- no assets transferred under repurchase agreements . Other legal entities 4,536,815,358 4,536,815 serve . Individuals 1,287,821,940 1,287,822 9. Cash and cash equivalents Within the amount of accrued rights of claim, the payables from the Line 1250 “Cash and cash equivalent” of the Balance Sheet reflects the Total, without own shares bought out from shareholders 39,609,130,249 39,609,130 wholesale energy and capacity market are included, which were trans- following assets (thousand roubles): Own shares bought out from shareholders 140,229,451 140,230 ferred to “CFR” CJSC . Total 39,749,359,700 39,749,360

94 95 Own shares bought out from shareholders amount of 0 .03 roubles per one ordinary share, for the total of Accounts payable for credits and loans is reflected in the financial – 2011 – 153,203 thousand roubles; The figure for the own shares bought out from shareholders in 2008 1,188,274 thousand roubles . reporting taking into account the interest payable by the end of the re- – 2010 – 72,402 thousand roubles . reflects the cost of shares owned by the Company . As of 31 December Unpaid dividends are reflected in Line 1520 “Accounts payable” of porting period . Net effect from recalculation of operations on the credits and loans 2012, as of 31 December 2011 and as of 31 December 2010, the Compa- the balance sheet and amount to the following: Total amount of credits received by the Company: in the foreign currency: ny owned 140,229,451 shares for the total of 870,825 thousand roubles . – as of 31 December 2012 – 54,317 thousand roubles; – 2012 – 7,027,119 thousand roubles; – 2012 – 27,947 thousand roubles; Dividends – as of 31 December 2011 – 39,570 thousand roubles; – 2011 – 3,020,504 thousand roubles; – 2011 – 151,000 thousand roubles; In June 2011, the General Meeting of Shareholders decided to pay – as of 31 December 2010 – 17,528 thousand roubles . – 2010 – 231,127 thousand roubles . – 2010 – 231,284 thousand roubles . dividends on ordinary shares of the Company for 2010 in the amount of Premium on capital stock Total amount of repaid credits: Additional expenses associated with the receipt of credits: 0 .2 roubles per share, for the total of 792,183 thousand roubles . The premium on capital stock can be broken down as follows (thou- – 2012 – 770,876 thousand roubles; – 2012 – 258,653 thousand roubles . In June 2012, the General Meeting of Shareholders decided to sand roubles): – 2011 – 368,114 thousand roubles; – 2011 – 368,147 thousand roubles; pay dividends on ordinary shares of the Company for 2011 in the – 2010 – 0 thousand roubles . – 2010 – 109,545 thousand roubles; Total amount of interests on repaid credits: As of 31 .12 .2012 As of 31 .12 2011. As of 31 .12 .2010 – 2012 – 204,326 thousand roubles; Interest rates on credits (%):

Revaluation surplus on non-current assets 64,912,868 67,713,995 68,503,409 2012 2011 2010 Paid-in capital 49,220,000 49,220,000 49,220,000 Long-term credits from 1 .3 to 7 .2 from 2 .4 to 7 2. from 2 .9 to 7 2. Other 4,963,723 4,946,426 4,946,426 Short-term credits from 2 .3 to 7 .2 from 2 .9 to 7 2. from 2 .9 to 7 2. Total 119,096,591 121,880,421 122,669,835 Borrowings Decrease of the premium on capital stock in 2012 by the total Company’s charter capital (1,400,945 thousand roubles or 3 52%. as of Borrowings of the Company are presented as follows (thousand of 1,703,333 thousand roubles (789,414 thousand roubles in 2011 31 December 2011 and 1,019,631 thousand roubles or 2 .57% as of 31 roubles): and 156,534 thousand roubles in 2010) is related to revaluation December 2010) . Currency of non-current assets that was performed by the Company as of Maturity As of As of As of 12. Long-term liabilities of the 31 December 2012; and 1,080,497 thousand roubles is associated period 31 .12 .2012 31 12. .2011 31 12. .2010 Line 1450 “Other liabilities” of the balance sheet reflects the arrears borrowing with retirement of fixed assets and transfer of the revaluation sur- in received advance payments maturing in more than 12 months after plus associated with these objects into undistributed profit of the Long-term borrowings 5,000,000 5,000,000 9,782,914 the reporting date . Out of these sums, the advance payments for con- Company . necting capacities amount to the following: Bonded loan (series 03) 2014 roubles 5,000,000 5,000,000 5,000,000 Reserve capital - as of 31 December 2012 – 262,372 thousand roubles; The Company Statute provides for establishing the reserve fund in Bonded loan (series 02) 2016 roubles – – 4,782,914 - as of 31 December 2011 – 549,013 thousand roubles; the amount of 5% of the charter capital of the Company . According to - as of 31 December 2010 – 702,542 thousand roubles; Short-term borrowings (including current portion of long-term borrowings) 510,018 4,951,963 4,967,196 the decision of the annual General Meeting of Shareholders of 19 June Bonded loan (series 01) 2011 roubles – – 4,800,554 2012, the net profit of 2011 in the amount of 519,259 thousand roubles 13. Credits and loans was allocated for the reserve fund (381,314 thousand roubles in 2011 Credits Bonded loan (series 02) 2013 roubles 473,073 4,911,243 127,327 and 225,450 thousand roubles in 2010) . As of 31 December 2011, the The credit liabilities of the Company are presented as follows (thou- Bonded loan (series 03) 2013 roubles 36,945 40,720 39,315 reserve fund amounted to 1,920,204 thousand roubles or 4 .83% of the sand roubles): Total amount of the loans received by the Company amounted to: The amount of interest repaid on the borrowings was as follows: Maturity Credit As of As of As of – 2012 – 541,002 thousand roubles; – 2012 – 697,050 thousand roubles; period currency 31 .12 .2012 31 .12 2011. 31 .12 .2010 – 2011 – 0 thousand roubles; – 2011 – 1,453,128 thousand roubles; Long-term credits 11,139,184 5,613,536 2,988,822 – 2010 – 0 thousand roubles . – 2010 – 1,681,488 thousand roubles . Total amount of the repaid loans: There were no additional expenses associated with obtaining loans Credit Agricole CIB Deutschland 2026 Euro 5,149,113 2,800,896 127,742 – 2012 – 4,852,484 thousand roubles; in 2012, 2011 and 2010 . Credit Agricole CIB Deutschland 2014 Euro 167,502 525,734 844,557 – 2011 – 4,629,329 thousand roubles; Interest rates on the borrowings (%): BNP “Paribas” 2022 Euro 5,822,569 2,286,906 2,016,523 – 2010 – 2,000,000 thousand roubles . Short-term credits (including current portion 2012 2011 2010 of long-term credits) 1,477,343 592,395 365,844 Credit Agricole CIB Deutschland 2013 Euro 803,695 349,795 171,161 Long-term borrowings from 1 .0 to 10 .3 from 7 .7 to 10 .3 from 7 .7 to 12 .5 BNP “Paribas” - 2013 Euro 673,648 242,600 194,683 Short-term borrowings from 1 .0 to 10 .3 from 7 .7 to 12 .5 from 7 .7 to 12 .5

96 97 As of 31 December 2012, as of 31 December 2011 and as of 31 14. Information related to the use of funds Amount of credit Name of credit organization Type of credit line Restrictions in the use of credited funds Currency December 2010, the Company’s credits and loans were represented by The Company placed deposit accounts in the following banks (thou- line, thousand units liabilities which did not require any collateral, and there were no overdue sand roubles): Bonded loan of 02 series bonded loan restructuring of short-term debt 5,000,000 roubles borrowings as of the respective reporting dates . Bonded loan of BO-01 series bonded loan refinancing of short-term credits and loans 1,000,000 roubles 2012 2011 2010 and financing of investment program “ALFA-BANK” OJSC Bonded loan of BO-03 series bonded loan refinancing of short-term credits and loans 2,000,000 roubles and financing of investment program Placed on deposit accounts 34,416,400 251,000 – Joint Stock Bank “ROSSIYA” revolving line financing of current operations 2,000,000, roubles Returned from deposit accounts 30,174,400 251,000 – of credit (overdraft) Balance of deposit as of end of year 4,242,000 – – “Gazprombank” OJSC revolving line financing of current operations 3,000,000 roubles Return on deposits 139,065 2,762 – of credit (overdraft) “GAZPROMBANK” OJSC As regards the aforementioned credit lines and bonded loans, As of 31 December 2012, the Company had the following open Placed on deposit accounts 45,894,116 53,444,245 12,109,800 there are no requirements for compulsory minimum precautionary amounts of loans (credits) according to the existing loan agreements Returned from deposit accounts 49,310,995 52,391,945 3,841,000 balance . (credit contracts): Balance of deposit as of end of year 5,904,221 9,321,100 8,268,800 Amount Currency Name of credit Reason for non-receiving Type of credit line of loan (credit), of loan Return on deposits 540,271 356,149 61,011 organization thousand units (credit) “SBERBANK OF RUSSIA” OJSC Credit Agricole TEZ-12 funding is performed in accordance with unsecured line of credit, with ECA 21,035 Euro Placed on deposit accounts 13,540,100 15,804,500 10,540,700 EHC supply schedule and credit contract insurance coverage Returned from deposit accounts 8,868,100 15,804,500 10,540,700 Credit Agricole TEZ-16 funding is performed in accordance with unsecured line of credit, with ECA 29,908 Euro Balance of deposit as of end of year 4,672,000 – – EHC supply schedule and credit contract insurance coverage Return on deposits 33,938 28,393 24,309 Credit Agricole TEZ-20 funding is performed in accordance with unsecured line of credit, with ECA 87,690 Euro EHC supply schedule and credit contract insurance coverage VTB BANK OJSC Bonded loan of 02 treasury bonds available for repeated bonded loan 4,528,607 Euro Placed on deposit accounts 52,735,671 40,393,000 15,955,000 series public offering Returned from deposit accounts 66,940,671 39,448,000 2,695,000 15. Guarantee for obligations The Company received third party collaterals for the following assets Balance of deposit as of end of year – 14,205,000 13,260,000 This information supplements Table 8 “Guarantee for obligations” in (thousand roubles): Return on deposits 459,428 239,576 23,341 the comments on the Balance Sheet and the Profit and Loss Statement . CENTRAL BRANCH OF “ROSSIYA” BANK Guarantor Type of assets As of 31 .12 .2012 As of 31 .12 .2011 As of 31 .12 .2010 Placed on deposit accounts 26,875,700 19,955,200 13,679,200 Returned from deposit accounts 26,875,700 22,955,200 10,679,200 Credit Agricole Corporate and Investment Bank advance payment 931,537 416,956 6,841 Balance of deposit as of end of year – – 3,000,000 “Gazprombank” OJSC advance payment 127,014 42,338 – Return on deposits 187,557 563,207 125,471 Commercial Bank “ROSBANK” OJSC advance payment 99,333 – – “ROSSELKHOZBANK” OJSC ING Bank NV advance payment 27,000 16,500 – Placed on deposit accounts 2,619,500 – – Credit Suisse Group AG advance payment – 118,744, 118,744 Returned from deposit accounts 2,619,500 – – “NOMOS-BANK” OJSC advance payment – 152,220 155,462 Balance of deposit as of end of year – – – “Reiffeisenbank” CJSC advance payment – 163,704 – Return on deposits 1,023 – – DEUTSCHE BANK AG NUERNBERG DE advance payment – 48,133 843,138 Commercial Bank “Otkrytiye” CJSC advance payment – – 456,967 As of the reporting date, at the Company there are no unused guar- Additional information on the possibility for the Company to raise HypoVereinsbank advance payment – 20,463 – antees received from third parties for obtaining credit . additional funds as of the reporting date As of 31 December 2012, the Company got the following open but Other 73,580 29,162 35,639 unused credit lines and bonded loans: Total 1,258,464 1,008,220 1,616,791

98 99 Transactions with “Gazprombank” OJSC are related to the transac- The amounts of payables change are reflected in detail in section In compliance with the Provisions for accounting and financial re- tions the Gazprom Group . 5 .3 of the Appendix and take into account the receivables obtained and porting “Accounting of profit tax calculations” (PBU 18/02), the Com- written off within one reporting period . pany disclosed the following indicators/parameters in its accounting 16. Payables Other payables, reflected in Line 1520 “Accounts payable” of procedure, as well as in the Profit and Loss Statement for 2012 (thou- The information below supplements Table 5 .3 “Change of payables” the Balance Sheet, can be detailed out as follows (thousand rou- sand roubles): of the Appendix to the Balance Sheet and the Profit and Loss Statement . bles): Line number in As of 31 .12 .2011 As of 31 .12 2010. As of 31 .12 .2009 No . the Profit and Indicator/Parameter title for 2012 for 2011 Loss Statement Other creditors 2,318,074 3,786,225 713,938 1 2 3 4 5 Settlements on claim assignment agreements – 1,591,229 – 1 2300 Profit before tax 10,841,256 13,907,372 VAT from the advance payments made 2,167,877 1,487,066 44,836 1 .1 Including the income from participation in other organizations 479 1,288 Debt to the Department of Property of Moscow related to the funds 2 Contingent expense (contingent income) on income tax 2,168,156 2,781,217 received for shared construction purposes – 523,461 523,461 (Line 1 - Line 1 .1) x 20% Other 150,197 184,469 145,641 2 .1 Dividend tax deducted at the source of payment 2 2 3 2421 Recurring tax liabilities (assets) 891,483 712,841 In 2012, debt to the Department of Property of Moscow related to For accounting purposes, changes in the consolidated financial (Line 4 - Line 6), including: the funds received for shared construction purposes was transferred to statements, in both the reporting year and the previous years, are made 4 Recurring tax liabilities (Line 5 х 20%) 1,596,427 1,095,001 line 1450 “Other liabilities” of the Balance Sheet . in the statements for the reporting year, in which the accounting data distortions were identified (as per Item 39 of the Provisions for account- 5 Persistent differences increasing taxable profit, 7,982,137 5,475,006 17. Taxes ing and financial reporting in the Russian Federation) . including Profit tax In this connection, the income and expenses for the previous years, 5 .1 differences related to amortization of fixed assets 4,767,435 4,789,829 In order to calculate the profit tax, the revenues are recognized in the which were discovered in the reporting year, are stated in the expendi- 5 .2 expenses unrelated to core businesses 23,289 119,597 same reporting (taxation) period, in which they were gained, irrespective ture items “Other income” and “Other expenditure” of the Profit and Loss of the actual receipt of money, work, services and/or property rights (ac- Statement for the reporting year, as well as in other expenditure items of 5 .3 social expenses 245,329 291,598 crual basis of accounting) . the said statement in the following way (thousand roubles): 5 .4 differences increasing taxable profit 1,990,851 65,975 5 .5 non-taxable losses 511,466 97,792 For 2012 For 2011 5 .6 in excess of the legally established limits 9,296 14,220 Line No . Total in the Total in the Indicator/Parameter title Current Previous Current Previous in Form 2 Profit and Loss Profit and Loss 5 .7 difference in reserves between book-keeping and fiscal accounting 434,471 – year years year years Statement Statement 5 .8 income/expenses stated in the corrected declarations – 95,995 2340 Other income 12,292,627 – 12,292,627 7,017,710 – 7,017,710 6 Recurring tax assets (Line 7 .1+7 .2+7 .3)*20% (704,944) (382,160) 2350 Other expenses (10,856,559) – (10,856,559) (4,750,975) – (4,750,975) 7 Persistent differences decreasing taxable profit (3,524,720) (1,910,799) including: 2300 Profit (loss) before tax 10,841,256 – 10,841,256 13,907,372 – 13,907,372 7 .1 non-taxable (2,666,244) (1,910,799) Contingent income (contingent (2,168,158) – (2,168,158) (2,781,219) – (2,781,219) 7 .2 difference in reserves between book-keeping and fiscal accounting (162,886) – expense) on income tax 7 .3 income/expenses stated in the corrected declarations (695,590) – 2450 Change of deferred tax assets 10,878 (71,284) (60,406) (93,168) 71,284 (21,884) 8 2450 Deferred tax assets (Line 9 х 20%) (60,406) (21,884) 2430 Change of deferred tax liabilities 86,081 (1,246,003) (1,159,922) (1,651,088) (1,939,194) (3,590,282) 9 Deductible temporary differences, including: (302,028) (109,422) 2410 Current profit tax (3,295,716) Х (3,295,716) (1,730,603) Х (1,730,603) 9 .1 losses from assignment of receivables after due payment date 36,403 (76,547) 2411 Previous profit tax Х 1,456,405 1,456,405 Х 1,848,711 1,848,711 9 .2 expenses transferred to future periods 31,089 (377,306) 9 .3 from disposal of amortized property (13,102) (11,987) 2460 Other 1,539 – 1,539 5,768 – 5,768 9 .4 income/expenses stated in the corrected declarations (356,418) 356,418 2400 Net profit (loss) 7,644,038 139,118 7,783,156 10,438,281 (19,199) 10,419,082 10 2430 Deferred tax liabilities (Line 11 х 20%) (1,159,922) (3,590,282) 2421 Recurring tax liabilities (assets) 1,030,601 (139,118) 891,483 693,642 19,199 712,841 11 Taxable temporary differences, including: (5,799,610) (17,951,408)

100 101 1 2 3 4 5 For 2011 Line No 11 .1 differences in amortization of fixed assets (1,217,852) (4,159,474) in the Table Parameter title Stated 11 .2 in indirect expenses – – above Accrued Repaid in Column 4 of the previous Table 11 .3 in the reserve for doubtful debt in the book-keeping and fiscal 1,657,905 (4,094,895) 8 Change of deferred tax assets 89,744 111,628 (21,884) accounting (Line 2х20% for 2012, Line 2х20% for 2011) 11 .4 other taxable difference (9,646) (1,070) 9 Deductible temporary differences, including: 448,721 558,143 (109,422) 11 .5 for procured software licenses – – 9 .1 losses from assignment of receivables after due payment date 76,532 153,079 (76,547) 11 .6 income/expenses stated in the corrected declarations (6,230,017) (9,695,969) 12 Taxable base for profit tax 9,197,036 (589,251) 9 .2 expenses transferred to future periods 15,771 393,077 (377,306) (Line 1+Line 5+ Line 7+ Line 9+ Line 11) 9 .3 from disposal of amortized property – 11,987 (11,987) 13 Profit tax 1,839,311 118,108 9 .4 Income/expenses transferred to the future, as stated in the corrected 356,418 – 356,418 (Line 2+ Line 2 .1+ Line 3+ Line 8+ Line 10), including: declarations 2410 current profit tax (3,295,716) (1,730,603) 10 Change of deferred tax liabilities (Line 4х20% for 2012, Line 4х20% for (3,590,282) (2) (3,590,284) profit tax for previous years 1,456,405 1,848,711 2011) 2411 dividend tax deducted at the source of payment – – 11 Taxable temporary difference, including: (17,952,696) (1,288) (17,951,408) 14 Other expenditure from profit 1,539 5,768 11 .1 differences in amortization of fixed assets (4,159,474) – (4,159,474) 15 2400 Net profit for the reporting period 7,783,156 10,419,082 11 .2 in indirect expenses – – – (Line 1- Line 13- Line 14+ Line 8- Line 10) 11 .3 in the reserve for doubtful debt (4,094,895) (4,094,895) The amount accrued/decreased (repaid) of deductible temporary of taxable temporary differences (see Line 11 of the Table above), which differences (see Line 9 of the Table above), which caused accrual/de- resulted in accrual/decrease (repayment) of the corresponding deferred 11 .4 other taxable differences (2,358) (1,288) (1,070) crease (repayment) of the corresponding deferred tax assets (see Line tax liabilities (see Line 10 in the Table above) in 2012 and 2011 are pre- 11 .5 income/expenses stated in the corrected declarations (9,695,969) – (9,695,969) 8 of the Table above), as well as the sum of accrued/decreased (repaid) sented below:

For 2012 In 2012, the corrected profit tax declarations were submitted being integral element of this system . The tax refund totaled 423,439 Line No . in the thousand roubles . No . Parameter title Stated in Column 4 for 2009-2011 in order to refund tax in the amount of 1,456,405 Table above Accrued Repaid of the Table above thousand roubles . Additional amortization expenses were added to 18. Expenses associated with routine activities 1 8 Change of deferred tax assets (Line 2 х 20%) 14,690 75,096 (60,406) production and sales costs with a multiplying ratio of 2 to the fixed The prime cost of sold goods, products and services (a total of assets operated in harsh environment, as per Item 1, Article 259 of 2 9 Deductible temporary differences, including: 73,451 375,479 (302,028) Lines 2120 and 2210 of the Profit and Loss Statement) is related to the RF Tax Code . the total incurred charges represented in Line 5660 of the “Production 2 .1 9 .1 losses from assignment of receivables after due payment 39,254 2,851 36,403 In a similar way, the corrected property tax declarations were sub- costs” section of the Appendix to the Balance Sheet and Profit and date mitted . In compliance with Item 11, Article 381 of the RF Tax Code and Loss Statement . 2 .2 9 .2 expenses transferred to future periods 34,197 3,108 31,089 the Russian Government Decree No . 504 of 30 .09 .2004, a tax rebate was The business expenses are detailed in the table below (thousand 2 .3 9 .3 from disposal of amortized property – 13,102 (13,102) used for the property involved in the power transmission system and roubles): 2 .4 9 .4 Income/expenses transferred to the future, as stated in the – 356,418 (356,418) corrected declarations 2012 2011 3 10 Change of deferred tax liabilities (Line 4х20% for 2012, Line (1,492,148) (332,226) (1,159,922) 4х20% for 2011) Labor costs, inclusive of taxes 235,015 273,601 4 11 Taxable temporary difference, including: (7,461,207) (1,661,597) (5,799,610) Other business expenses 30,598 6,360 4 .1 11 .1 differences in amortization of fixed assets (1,217,852) – (1,217,852) Total 265,613 279,961 4 .2 11 .2 in indirect expenses – – – 4 .3 11 .3 in the reserve for doubtful debt in the book-keeping and – (1,657,905) 1,657,905 19. Expenses for acquisition (production) and use of energy resources fiscal accounting The Company’s expenses for acquisition (production) and use of 4 .4 11 .4 other taxable differences (13,338) (3,692) (9,646) energy resources are shown in the table below (thousand roubles): 4 .5 11 .5 income/expenses stated in the corrected declarations (6,230,017) – (6,230,017)

102 103 Aggregate costs in 2012 Aggregate costs in 2011 For 2012 For 2011

Use Use Revenues Expenses Revenues Expenses Type of energy resource Acquisition Acquisition for production for production Fixed assets and other tangible assets sold 4,933,171 4,130,303 1,540,140 982,692 (production) external (production) external purposes purposes Revaluation/Price reduction of fixed assets as a result of valuation 2,213,031 1,793,005 – – Energy, including 125,111,835 5,858,743 119,253,092 127,574,658 5,646,864 121,927,794 adjustment electricity 55,264,817 5,421,247 49,843,570 55,381,438 5,267,042 50,114,396 Exchange rate difference 1,909,709 1,661,945 508,698 657,601 Fines, overdue penalties, forfeits payments for violations of the heat 69,847,018 437,496 69,409,522 72,193,220 379,822 71,813,398 931,304 269,185 1,125,886 390,878 contractual agreements Fuel, including 82,643,956 83,158,154 – 79,436,038 79,011,649 256 Profits/losses of the previous years, discovered (recognized) in the 851,251 503,424 1,706,961 91,878 reporting year (see Item 17 of Section III) natural gas 80,608,056 80,608,056 – 77,403,661 77,403,661 – Subsidies for covering financial losses from heat supplied 632,042 – 617,668 – coal 416,754 705,332 – 964,569 667,342 256 Change of assessment reserves 398,758 1,346,863 619,567 1,005,965 fuel oil 1,606,783 1,830,319 – 1,054,954 920,504 – Insurance indemnity for emergency circumstances 152,800 – 4,995 – diesel fuel 12,363 14,447 – 12,854 20,142 – Receivables sold 108,416 186,925 764,355 847,394 Total of resources 207,755,791 89,016,897 119,253,092 207,010,696 84,658,513 121,928,050 Profits/losses from write-down of non-current assets 41,311 397,527 50,267 87,569 Profits/losses related to gratuitous acquisition/transfer of assets 12,653 125 2,778 48,239 20. Other revenues and expenses Movements of financial investments, including third party promis- The breakdown of Line 2340 “Other revenues” and Line 2350 “Other 4,640 1,472 5,322 1,468 expenses” of the Company’s Profit and Loss Statement is given in the sory notes table below (thousand roubles): Surpluses identified during inventory-taking 3,338 – 16,505 – Payables/Receivables expensed 2,780 94,677 2,322 818 Services of credit organizations – 276,500 – 391,862 Social expenses – 149,608 145,910 VAT non-refundable from the budget – 23,400 – 21,226 Other taxes – 9,408 – 13,010 Other 97,423 12,192 52,246 64,465 Total 12,292,627 10,856,559 7,017,710 4,750,975

Revenues and expenses associated with accrual of reserve for the net profit in the reporting year (Line 2400 of the Profit and Loss doubtful debts for 2011 and 2010 respectively are presented in the fi- Statement) . nancial statements of the Company in detailed form for the amount of The weighted average number of outstanding ordinary shares was the recovered (paid) reserve . calculated taking into account the shares of the Company purchased per trust management agreement and disregarding the shares bought 21. Earnings per share out from the shareholders as a result of merger with “Mosenergo Hold- Base earnings per share (EPS) are calculated by dividing the base ing” OJSC and registered on the ledger account of the Company as of profit in the reporting year by the weighted average number of ordinary 31 December 2012, as of 31 December 2011 and as of 31 December shares outstanding during the reporting period . Base profit is equal to 2010 .

104 105 Organizational and legal form, For 2012 For 2011 For 2010 Nature of association (control or significant influence) name of the organization Net profit (undistributed) for the reporting year, thousand roubles 7,783,156 10,419,082 7,574,772 Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, Weighted average number of ordinary shares in circulation over the “Energoinvest-ME” CJSC 39,609,130,249 39,609,130,249 39,609,130,249 contributions) constituting charter capital of this organization accounting year, pieces Basic earnings per share, roubles 0.1965 0.2630 0.1912 “Central Mechanical Maintenance Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, Plant” LLC contributions) constituting charter capital of this organization The Company did not issue any additional ordinary shares in “Mosenergo Heat Supply Company” Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, 2012, 2011 and 2010 . The Company also did not have any securities LLC contributions) constituting charter capital of this organization convertible into additional number of ordinary shares . There were no other events associated with the increase of the number of ordinary Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, “TPP-6 Orekhovo-Zuyevo” LLC shares . Therefore, the Company did not calculate diluted earnings contributions) constituting charter capital of this organization per share . Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, 22. Subsidiaries and affiliated companies “TPP-17 Stupino” LLC contributions) constituting charter capital of this organization Largest affiliated companies of Mosenergo OJSC Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, Net equity, Earnings from “TPP-29 Electrostal” LLC Participation Participation Net profit contributions) constituting charter capital of this organization Name, organizational as of participation interest, as of interest, as of for 2012, and legal form of the Address Core business 31 .12 2012,. in 2011, 31 .12 .2012, 31 .12 .2011, thousand Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, organization thousand thousand “GRES-3 Electrogorsk” LLC % % roubles contributions) constituting charter capital of this organization roubles roubles “Energoinvest-ME” Ryazansky pros- Investment, consulting, Mosenergo has a right to control over 20% of votes attributed to shares (participating stakes, 90 90 2,219 269 – “OGK-Investproject” LLC CJSC pect 10, Moscow broker activities contributions) constituting charter capital of this organization “Central Mechanical Installation, maintenance Ryazansky pros- The products were sold to the associated parties under normal com- The products were purchased from the associated parties under Maintenance Plant” 100 100 and repair of power equip- 342,279 856 459 pect 10, Moscow mercial conditions at the market prices, except for the goods and ser- normal commercial conditions at the market prices, except for the LLC ment vices that are subject to regulation by the tariff legislation . goods and services that are subject to regulation by the tariff leg- Vernadskogo “OGK-Investproject” Architect-engineering and When selling electric energy (capacity), the Company does not islation . 51 - prospect, 101 1,083,727 383 – LLC design services carry out transaction at the prices in excess of the established regu- In 2011 and 2012, the Company did not make any non-monetary bld . 3, Moscow lated tariffs (their limiting values) where they exist, and is acting settlements with the associated parties . Vernadskogo in compliance with the Rules of the wholesale market and with the The services associated with transmission of heat were pro- “Mosenergo Heat Sup- Production, transmission 100 100 prospect, 101 161,830 (38,180) – Decree of the Russian Federation Government of 26 .02 2004 No . 109 cured from “Moscow heating network company” OJSC according to ply Company” LLC and distribution of heat bld . 3, Moscow “On price formation for heat and electric energy in the Russian Fed- the tariffs established by the Decree No . 87 issued by the Regional eration” . Energy Commission of Moscow on 19 .12 .2007 and Minutes No . 17 In 2012, the Company sold electricity on the “day-ahead” market of the Moscow Region Fuel and Energy Commission . On 1 October According to the Minutes No . 8 of the Company’s BoD meeting of 29 of Moscow represented by the Department of Property of Moscow and on the “balancing market” for the amount of 52,342,540 thou- 2012, “Moscow heating network company” OJSC terminated its op- December 2012, a decision was made to increase share in the charter (26 .45% of ordinary shares) . sand roubles (56,241,538 thousand roubles in 2011) . In 2012, capacity eration by means of restructuring and incorporation into “MOEK” capital of “OGK-Investproject” LLC to 90 5%. . In April 2009, Gazprom OJSC transferred its 53 47%. share in the was sold for the amount of 23,310,997 thousand roubles (22,197,168 OJSC . Additional information on the subsidiaries and affiliated companies Company to its 100% subsidiary “Gazprom energoholding” LLC . Thus, thousand roubles in 2011) . Most part of the sales was carried out at Transactions with the member companies of Gazprom Group and its is given in section 3 “Long-term financial investments” . as of 31 December 2012 the Company was controlled by “Gazprom en- the prices determined by means of competitive choice of price quotes affiliated companies ergoholding” LLC and is a part of Gazprom Group consisting of Gazprom of buyers and sellers according to the Decree of the Russian Federa- In the reporting year, the Company sold electricity and heat, ren- 23. Related parties OJSC and all its subsidiaries . tion Government of 27 .12 .2010 No . 1172 “On approval of the rules dered rental services, communications services and sold promissory As of 31 December 2008, the Company was controlled by Gazprom Other associated parties of the Company in 2012 were the members of wholesale market of eclectic energy (generating capacity), and on notes to the following member organizations of the Gazprom Group OJSC owning 53 .47% of the ordinary shares of the Company . The re- of the Board of Directors, members of the Executive Board and the fol- changes to some regulatory documents issued by the RF Government (thousand roubles): maining 46 .53% of the ordinary shares are divided among a large num- lowing legal entities: ber of shareholders, the largest part of them being owned by the City on matters related to operation of the wholesale electricity and capac- ity market” .

106 107 Revenues from sales Cost of goods, work and services received Name of Counterpart Name of Counterpart 2012 2011 2010 2012 2011 2010 “Gazpromneft-MNPZ” OJSC 558,433 489,402 – “Gazprom mezhregiongaz Moscow” LLC 80,418,061 77,229,108 68,754,533 “Yurgazservis” LLC 475,400 – – “Mezhregionenergostroy” OJSC 5,577,444 1,305,206 – “Mezhregionenergosbyt” OJSC 343,903 305,130 – “PPTK” LLC 1,719,086 – – “Gazprom” OJSC 39,333 37,381 29,889 “Mezhregionteplosetenergoremont” OJSC 326,347 113,401 159,626 “TGK-1” OJSC 29,142 55,388 – “Gazpromneft-Center” LLC 314,870 574,915 408,161 “OGK-2” OJSC 22,995 5,312 – “Neftyanoy Dom” OJSC 282,978 267,063 209,649 “Sochigorgaz” OJSC 17,737 17,335 6,067 “Gazprom mezhregiongaz Kaluga” LLC 50,953 27,570 – “Neftyanoy Dom” OJSC 12,795 11,174 – “Gazprom” OJSC 30,204 291 155 “Mezhregionenergostroy” OJSC 12,033 6,449 – “Gazprom promgaz” OJSC 25,424 24,752 – “Gazprombank” OJSC 8,473 3,251 7,370 “Gazproektengineering” OJSC 23,295 8,475 – “Mezhregionteplosetenergoremont” OJSC 6,612 6,364 6,495 Yurgazservis” LLC 20,995 – – Non-state educational establishment “Educational Center of Gazprom OJSC” 3,768 – – “Gazprom energoholding” LLC 19,943 32,327 51,701 “Gazprom mezhregiongaz Moscow” LLC 2,528 2,066 2,024 “Gazprom okhrana” LLC (security company) 7,250 6,891 5,832 “Gazprom promgaz” OJSC 2,105 1,936 2,159 “Gazprom telecom” CJSC 6,366 6,896 10,865 “Gazprom avtomatizatsiya” OJSC 1,101 1,072 1,026 “OGK-2” OJSC 1,157 1,888 – “Gazprom telecom” CJSC 322 234 257 “Gazprombank” OJSC 871 206 1,286 “OGK-6” OJSC – 17,128 – “TGK-1” OJSC 643 2,175 – Total 1,536,680 959,622 55,287 “Druzhba” OJSC 434 357 472 “Gazprom torgservis”LLC 38 184 551 In the reporting year, the below listed members companies of the “Mezhregionenergosbyt” OJSC 28 146 – Gazprom Group supplied gas and other products, as well as rendered 6 6 11 services, to the Company (thousand roubles): “Gazprom svyaz” LLC “Gazprom gazenergoset” OJSC – 74,123 1,794,895 “OGK-6” OJSC – 2,319 – Total 88,826,393 79,678,299 71,397,737

Information about revenues and cost of goods and services is pro- vided net of VAT, excise duties and export duties .

Loans given to the member companies of Gazprom Group (thousand roubles):

108 109 Transactions with the Company’s affiliates 2012 2011 2010 In the reporting year, the Company sold heat and electricity, and Outstanding debt as of 1 January – – – rendered services to the following affiliated companies (thousand Issued in the reporting year, including: 2,028,906 1,445 – roubles): “OGK-Investproject” LLC 2,028,906 – – Revenues from sales/Other income “TGK-1” OJSC – 1,445 – 2012 2011 2010 Repaid in the reporting year, including: 517,006 1,445 – “OGK-Investproject” LLC 4,000,308 – – “OGK-Investproject” LLC 517,006 – – Mosenergo heating and electricity company OJSC 339,625 – 56,898 “TGK-1” OJSC – 1,445 – “Central Mechanical Maintenance Plant” LLC 80,260 94,000 – Outstanding debt as of 31 December 1,511,900 – – Total 4,420,193 94,000 56,898

As of 31 December 2012, the Company’s liabilities related to settle- In the reporting year, the following associated parties performed ments with the members companies of the Gazprom Group were as fol- works and rendered services to the Company (thousand roubles): lows (thousand roubles): Cost of the received goods, work and services Accounts receivable Accounts payable 2012 2011 2010 Name of Counterpart As of As of As of As of As of As of Mosenergo heating and electricity company OJSC 60,343 – 455,019 31 .12 .2012 31 .12 2011. 31 .12 .2010 31 .12 2012. 31 .12 .2011 31 .12 .2010 “Mezhregionenergostroy” OJSC 12,675,948 9,254,877 – 1,366,478 484,429 – “Central Mechanical Maintenance Plant” LLC 25,191 543,013 217,433 “PPTK” LLC 176,343 – – 113,697 – – Total 85,534 543,013 672,452 “Gazprombank” OJSC 128,335 95,529 49,914 500 533 287 “Gazpromneft-MNPZ” OJSC 49,456 25,870 – – – Information about revenues and cost of goods and services is pro- The Company’s debt related to transactions with the other associ- vided net of VAT, excise duties and export duties . ated parties is as follows (thousand roubles): “Mezhregionenergosbyt” OJSC 32,827 28,926 – 4 6 – “Gazprom promgaz” OJSC 14,397 272 – 9,000 – – Accounts receivable Accounts payable “Gazprom” OJSC 10,257 6,985 4,535 29,994 35 534 “TGK-1” OJSC 3,220 5,748 3,249 94 98 – As of 31 .12 .2012 As of 31 .12 .2011 As of 31 .12 .2010 As of 31 .12 .2012 As of 31 .12 .2011 As of 31 .12 .2010 “OGK-2” OJSC 2,978 1,588 17,137 178 169 – “OGK-Investproject” LLC 4,716,095 – – – – – “Gazprom energoholding” LLC 2,272 28,459 18,210 2,655 707 22,878 Mosenergo heating and electricity “Sochigorgaz” OJSC 2,129 1,427 1,625 – – – 226,729 – – 6,747 10 – “Mezhregionteplosetenergoremont” OJSC 1,110 101 18,316 28,274 41,240 53,580 company OJSC “Central Mechanical Maintenance Plant” “Neftyanoy Dom” OJSC 649 85 – – – 35,860 106,817 55,916 45,931 – 126,097 100,285 LLC “Gazprom telecom” CJSC 72 – – 626 724 – “Gazprom avtomatizatsiya” OJSC 9 – 31 – 63 – Total 5,049,641 55,916 45,931 6,747 126,107 100,285 “Gazprom svyaz” LLC 2 2 – 1 1 1 Information on cash flows of the Company with Gazprom Group “Gazprom mezhregiongaz Moscow” LLC – 69,040 – 2,366,533 735,441 2,484,459 members and associated companies (thousand roubles): “OGK-6” OJSC – 482 482 – – – “Gazfond” NPF (non-state pension fund) – – – – 368 349 “Gazprom okhrana” LLC (security company) – – – 713 678 618 “Gazproektengineering” OJSC – – – 24,538 10,000 – “Gazprom mezhregiongaz Kaluga” LLC – – – – 740 – “Gazpromneft-Center” OJSC – – – – 500 – “Gazprom gazenergoset” OJSC – – – – – 72,824 “Gazprom torgservis” LLC – – 12 – – Total 13,100,004 9,519,391 113,511 3,943,285 1,275,732 2,671,390

110 111 Line For the Including inside For the same Including inside 4323 related to payment (protection) of promissory notes and other debt (5,582,556) – (4,997,443) – Name of Line No . reporting period the Group period last year the Group securities, return of credits and loans Cash flow from current operations 4329 other payments and transfers (67,759) – (153,323) – 4110 Revenues - total 145,483,765 1,137,603 156,367,284 627,340 4300 Balance of cash flow from financial operations 753,882 (637,953) (2,906,603) (425,302) 4111 from sales of products, goods, work and services 140,539,494 1,120,766 149,207,420 620,800 4400 Balance of cash flow for the reporting period (13,218,953) (81,219,618) (2,741,773) (79,382,454) 4119 other revenues 4,944,271 16,837 7,159,864 6,540 4450 Balance of cash and cash equivalent as of beginning of the reporting 25,572,082 – 28,313,816 – period 4120 Payments – total (132,497,099) (79,458,481) (139,678,367) (79,585,761) 4500 Balance of cash and cash equivalent as of end of the reporting period 12,347,459 – 25,572,082 – 4121 to suppliers (contractors) for materials, raw materials, (116,956,397) (79,458,449) (124,334,045) (79,560,144) work and services 4490 Effect of currency exchange rate changes (5,670) – 39 – 4122 related to personnel wages (5,662,246) – (5,789,987) – 4123 Debt commitments (702,310) – (1,455,465) – The amounts of money are presented exclusive of indirect tax- tive Board members are presented in the “General information” section es . of the Explanatory Note . 4124 company profit tax (1,750,486) – (2,799,438) – The amount of remuneration paid to the General Director is approved 4129 other payments (7,425,660) (32) (5,299,432) (25,617) Information on transactions with the key management personnel by the Chairman of the Board of Directors of Mosenergo . Key managers of the Company include the members of the Board of The amounts of remunerations paid to the key management person- 4100 Balance of cash flow from current operations ,12,986,666 (78,320,878) 16,688,917 (78,958,421) Directors and the Executive Board . The lists of the Director and Execu- nel are classified as follows (in thousand roubles) Cash flow from investment operations

4210 Revenues – total 2,704,576 519,769 2,593,156 1,269 As of As of As of 2012 2011 2010 4211 from non-current assets sold (except for financial investments) 799,008 421 1,354,900 – 31 .12 .2012 31 12. .2011 31 12. .2010 Short term remunerations (wages, reward 4212 from other organizations’ shares (participation share) sold – – 5,842 – 95,732 146,270 97,914 – – – fees and bonuses 4213 (from return of loans, from sale of debt securities (bills receivable) to 534,806 517,006 – – Total 95,732 146,270 97,914 – – – third parties 4214 dividends, interest on financial investments and similar revenues from 1,356,557 2,342 1,136,758 1,269 The information in the table above is exclusive of the payments to accurately, however, such disputes can significantly affect profits/losses participation in other organizations the extra-budgetary funds . and activities of the Company . 4219 other revenues: 14,205 – 95,656 – Taxation 24. Contingencies, contingent liabilities and economic events The Russian legislation for taxation, foreign currency and customs 4220 Payments – total (29,664,077) (2,780,556) (19,117,243) – Information on contingent liabilities is presented in section 7 of the allows various interpretations and is subject to frequent changes . The 4221 related to acquisition, creation, modernization, renovation and prepa- (11,862,309) – (10,358,110) – tabular form of comments on the balance sheet and the Profit and Loss Company’s management does not rule out the possibility of future ration for use of non-current assets Statement . disputes with the supervisory and regulatory authorities in relation to Changes were introduced in the Russian legislation on trans- 4222 acquisition of shares (participation share) in other organizations (751,690) (751,650) – – some transactions made in the reporting and previous years that can fer pricing, and they came into force on 1 January 2012 . The new result in changes of the results of business activities . According to 4223 acquisition of debt securities (money claims to other parties), granting (6,338,126) (2,028,906) – – rules are more detailed ones, and they to a greater extent comply item 28 of the Provisions for accounting and financial reporting, “Pro- of loans to other parties with the international principles developed by the Organization for visions, Contingent Liabilities and Contingent Assets” PBU 8/2010, 4224 interest on debenture, included in the value of investment asset (199,066) – (150,866) – Economic Cooperation and Development (OECD) . The new legisla- detailed information about such transactions is not to be disclosed in tion makes it possible for tax authorities to charge additional tax 4229 other payments (10,512,886) – (8,608,267) – the report . in relation to controlled transactions (i .e . transactions between Tax authorities can chose a more stringent interpretation of law 4200 Balance of cash flow from investment operations (26,959,501) (2,260,787) (16,524,087) 1,269 interdependent parties and some types of transactions between during audits of tax calculations and possibly challenge the taxation independent entities), when such transaction is not effected under Cash flow from financial operations procedures, which are used by the Company and which were not pre- market conditions . 4310 Revenues – total 7,571,570 – 3,020,504 – viously challenged . As a consequence, substantial additional taxes, The management of the Company believes that the prices used by overdue interests and fines can be imposed . Besides that, tax audits 4311 acquisition of credits and loans 7,568,121 – 3,020,504 – the Company match the market price level . Therefore, the Company has can extend to three calendar years immediately preceding the year of implemented internal control procedures in order to meet the legislative 4319 other revenues 3,449 the audit . requirements to transfer pricing . 4320 Payments – total (6,817,688) (637,953) (5,927,107) (425,302) For the time being, the practice of application of the new rules has 25. Surety granted 4322 for dividends and other payments related to distribution of profit in (1,167,373) (637,953) (776,341) (425,302) not been fully established, and the consequences of any disputes with The Company granted surety to third parties under mortgage agree- behalf of owners (stakeholders) tax authorities as to the applied pricing cannot be assessed reliably and ments for the following total amount:

112 113 – as of 31 December 2012 – 208,249 thousand roubles; 27. Events after the reporting date – as of 31 December 2011 – 148,435 thousand roubles; Dividends – as of 31 December 2010 – 208,249 thousand roubles . The amount of annual dividends per share will be approved by the General Meeting of Shareholders in May-June 2013 . The meeting of the The Company’s management does not expect any considerable li- Company’s Board of Directors that will discuss the amount of dividends abilities to arise from these sureties . for 2012 to be recommended to the General Meeting of Shareholders will take place in April 2013 . 26. Litigations and pre-trial procedures Non-core assets Besides, as of 31 December 2011, the Company is a defendant in According to the decision of the principal shareholder of the Com- Financial reports a few insignificant arbitration proceedings, including those with the tax pany and of the Company’s Board of Directors, Mosenergo OJSC intends authorities . In the opinion of the Company’s management, the results of to dispose of some non-core assets owned by the Company in 2013 . these proceedings will not considerably affect the financial standing of These assets are reflected within Line 1150 “Fixed assets” of the Bal- the Company . in accordance with the ance Sheet . International Financial Chief Executive V .G . Yakovlev Accounting Standards Chief Accountant E . Yu . Novenkova

28 march 2013

114 Independent Auditor’s Report

To the Shareholders and Board of Directors of Open Joint Stock Company Mosenergo

We have audited the accompanying consolidated financial statements of OJSC Mosenergo (OAO MOSENERGO) and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2012 and the consolidated statements of comprehensive income, changes in equity and cash flows for 2012, and notes comprising a summary of significant accounting policies and other explanatory information .

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error . Auditor’s Responsibility Our responsibility is to express an opinion on the fair presentation of these consolidated financial statements based on our audit . We conducted our audit in accordance with Russian Federal Auditing Standards and International Standards on Auditing . Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement . An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements . The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error . In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control . An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements . We believe that the audit evidence we have obtained is sufficient and appropriate to express an opinion on the fair presentation of these consolidated financial statements . Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2012, and its financial performance and its cash flows for 2012 in accordance with International Financial Reporting Standards .

M .E . Timchenko, Director (licence no 01-000267), 28 March 2013 ZAO PricewaterhouseCoopers Audit Moscow, Russian Federation

ZAO PricewaterhouseCoopers Audit, 10 Butyrsky Val, Moscow, Russian Federation, 125047 T: +7 495 967 6000, F: +7 495 967 6001, www .pwc .ru

115 Consolidated Statement of Financial Position (in millions of Russian Roubles) Consolidated Statement of Comprehensive Income (in millions of Russian Roubles)

Note 31 December 2012 31 December 2011 Year ended Year ended Note ASSETS 31 December 2012 31 December 2011 Non-current assets Revenue 21 157,139 161,119 Property, plant and equipment 7 190,387 185,295 Other operating income 26 1,927 1,923 Investment property 8 792 792 Cost of materials 22 (95,542) (91,980) Advances for acquisition of property, plant and equipment 15,728 11,477 Heat transmission (19,647) (26,465) Trade and other receivables 12 1,532 5 Other non-current assets 13 3,721 2,234 Depreciation of property, plant and equipment 7 (13,716) (13,041) Total non-current assets 212,160 199,803 Personnel expenses 24 (8,591) (8,215) Current assets Maintenance and repairs expenses (5,421) (4,840) Cash and cash equivalents 14 12,632 25,572 Other external supplies 23 (3,936) (3,115) Investments 11 4,833 – Taxes other than income tax (1,511) (361) Trade and other receivables 12 29,610 27,147 Inventories 10 6,536 6,880 Impairment loss on property, plant and equipment 7 (575) (7) Income tax receivable 4 3 Other operating expenses 25 (3,593) (4,131) Other current assets 13 393 1,274 Results from operating activities 6,534 10,887 Assets classified as held for sale 9 1,576 1,742 Financial income 27 1,608 1,277 Total current assets 55,584 62,618 Financial expenses 27 (128) (198) Total assets 267,744 262,421 Profit before income tax 8,014 11,966 EQUITY AND LIABILITIES Equity 15 Income tax expense 28 (1,698) (2,074) Share capital 166,124 166,124 Profit for the year 6,316 9,892 Treasury stock (871) (871) Share premium 49,213 49,213 Other comprehensive loss: Reserves 83,781 83,837 Impairment loss on property, plant and equipment 28 (56) (1,069) Accumulated loss (93,142) (98,270) Revaluation of available-for-sale financial assets 28 – (5) Total equity attributable to equity holders of the Group 205,105 200,033 Other comprehensive loss for the year, net of tax (56) (1,074) Non-controlling interest 531 – Total equity 205,636 200,033 Total comprehensive income for the year 6,260 8,818 Non-current liabilities Non-current borrowings 16 16,616 10,223 Profit attributable to: Deferred tax liabilities 28 25,936 26,061 Equity holders of the Group 6,316 9,892 Employee benefits 17 242 221 Non-controling interest – – Trade and other payables 18 1,125 747 Total non-current liabilities 43,919 37,252 Basic and diluted earnings per share (in Russian Roubles) 29 0 .16 0 .25 Current liabilities Trade and other payables 18 14,720 18,936 Income tax payable 116 19 General Director V G. . Yakovlev Other taxes payable 19 1,120 433 Current borrowings and current portion of non-current borrowings 16 1,898 5,354 Chief Accountant E .Y . Novenkova Provisions 20 67 93 28 march 2013 Liabilities classified as held for sale 9 268 301 Total current liabilities 18,189 25,136 Total liabilities 62,108 62,388 Total equity and liabilities 267,744 262,421 General Director V .G . Yakovlev Chief Accountant E Y. . Novenkova 28 march 2013

116 117 Consolidated Statement of Cash Flows (in millions of Russian Roubles) Consolidated Statement of Changes in Equity (in millions of Russian Roubles)

Note Year ended Year ended 31 December 2012 31 December 2011 Attributable to equity holders of the Group Cash flow from operating activities Non- Share Treasury Share Accumu- Note Reserves Total controling Total Equity Profit before income tax 8,014 11,966 capital stock premium lated loss Adjustments for: interest Depreciation of property, plant and equipment 7 13,716 13,041 Balance at 1 January 2011 166,124 (871) 49,213 84,911 (107,370) 192,007 – 192,007 Trade and other receivables impairment loss and derecognition 25 1,153 1,616 Financial income 27 (1,613) (1,277) Profit for the year – – – – 9,892 9,892 – 9,892 Financial expenses 27 128 198 Other comprehensive income Loss on disposal of property, plant and equipment 25 253 74 for the year: Litigations provision charge 20 112 117 Gain from disposal of assets classified as held for sale 26 (501) (537) Revaluation of available-for-sale 28 – – – (5) – (5) – (5) Impairment loss on assets classified as held for sale 25 11 15 financial assets Impairment loss on property, plant and equipment 25 575 7 Impairment loss on property, 28 – – – (1,069) – (1,069) – (1,069) Loss on change in fair value of investment property 25 – 61 plant and equipment Other non-cash items (5) (2) Operating cash flows before changes in working capital and provisions 21,843 25,279 Total comprehensive income – – – (1,074) 9,892 8,818 – 8,818 Change in inventories 299 (470) for the year Change in trade and other receivables (3,715) (7,475) Dividends to shareholders – – – – (792) (792) – (792) Change in other current and non-current assets (92) (430) Change in trade and other payables (4,393) 2,367 Balance at 31 December 2011 166,124 (871) 49,213 83,837 (98,270) 200,033 – 200,033 Change in taxes payables, other than income tax 943 183 Change in employee benefit (2) 3 Change in provisions (138) (95) Balance at 1 January 2012 166,124 (871) 49,213 83,837 (98,270) 200,033 – 200,033 Cash flows from operations before income tax and interest paid 14,745 19,362 Income tax paid (2,002) (2,800) Profit for the year – – – – 6,316 6,316 – 6,316 Cash flows from operating activities 12,743 16,562 Other comprehensive income Cash flows used in investing activities for the year Proceeds from sale of assets classified as held for sale 799 1,361 Proceeds from sale of property, plant and equipment 23 89 Impairment loss on property, 28 – – – (56) – (56) – (56) Proceeds from disposal of available-for-sale financial assets – 6 plant and equipment Interest received 754 1,137 Total comprehensive income – – – (56) 6,316 6,260 – 6,260 Acquisition of property, plant and equipment (22,013) (17,191) for the year Acquisition of investments (4,331) – Dividends to shareholders – – – – (1,188) (1,188) – (1,188) Acquisition of subsidiary, net cash acquired (542) – Interest paid and capitalised (929) (1,606) Non-controling interest arising – – – – – – 531 531 Debt fee (257) (368) from business combination Cash flows used in investing activities (26,496) (16,572) Balance at 31 December 2012 166,124 (871) 49,213 83,781 (93,142) 205,105 531 205,636 Cash flows from/(used in) financing activities Proceeds from borrowings 7,568 3,021 Repayment of borrowings (5,583) (4,997) General Director V .G . Yakovlev Dividends paid (1,167) (776) Chief Accountant E Y. . Novenkova Cash flows from/(used in) financing activities 818 (2,752) Net decrease in cash and cash equivalents (12,935) (2,762) 28 march 2013 Cash and cash equivalents at the beginning of the year 14 25,572 28,334 Exchange loss on cash and cash equivalents (5) – Cash and cash equivalents at the end of the year 14 12,632 25,572 General Director V .G . Yakovlev Chief Accountant E Y. . Novenkova 28 march 2013

118 119 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 1. by RAO UES of Russia . Simultaneously with the spin-off “Mosenergo Transitional period (the “NOREM”), approved by Resolution of the separate tariffs for electricity and capacity . Capacity tariffs are planned The Group and its operations Holding” was merged with the Company and its shares were converted Government of the Russian Federation № 529 dated 31 August 2006, to be established at levels sufficient to maintain generation facilities of into the Company’s shares . were adopted . Under this new framework, electricity and capacity producers . (a) Organisation and operations In February 2009, the Company’s Board of Directors approved a purchase-sales transactions in the regulated market sector are to According to Russian Federation Government Resolution № 1172 The Open Joint Stock Company “Mosenergo” (the “Company”) and program to improve the Company’s organisational structure, which be governed by a regulated bilateral contract system . Starting 1 of 27 December 2010 starting 1 January 2011 the capacity is supplied its subsidiaries (together referred as the “Group” or the “Mosenergo is aimed to concentrate production resources, optimise the labor September 2006 regulated contracts covered all volumes of electricity using the following schemes at the wholesale market: Group”) are primarily involved in generation of heat and electric power capacity and supply chain . Organisational structure optimisation and capacity produced and consumed . – capacity trading at regulated prices (tariffs) based on sales contracts and heat distribution services in the Moscow city and Moscow region . included the merge of several production branches situated Starting 2007, the volumes of electricity and capacity traded in in volume, intended for supply to the population and consumer groups The Group’s power and heat generation base includes 15 power geographically close to each other and reallocation and outsourcing the wholesale market applying regulated prices are to be substantially equivalent to the population; plants with operational capacity equaled approximately 12,299 of non-core functions . reduced pursuant to Russian Federation Government Resolution – supply of capacity at open (unregulated) prices based on competitive megawatts (“MW”) and 35,011 gigacalories/hour (“Gkal/h”) of electricity In April 2009 OJSC “Gazprom” transferred its 53 .49% share in No . 205 dated 7 April 2007 “On amending certain resolutions of selection of capacity: capacity trading by open contracts on capacity and heat capacity . the Company to its 100% subsidiary LLC “Gazprom energoholding” the Russian Federation Government related to the calculation of sale – provided that this capacity is selected on the basis of competitive OJSC “Mosenergo” was registered under the legislation of the (previously – LLС “Gazoenergeticheskaya Kompaniya”) which became electricity volumes sold at free (competitive) prices” . The Resolution selection of capacity; Russian Federation at 6 April 1993 in accordance with State Property the parent company of OJSC “Mosenergo” . states that electricity and capacity supplied at regulated prices will – delivery of capacity according to contracts for provision of facilities: gradually decrease . Management Committee Decree 169-R dated 26 March 1993 following (c) Business environment capacity trading by contracts on sale of capacity produced with the use Electricity volumes produced, not covered by the regulated the privatisation process of electricity and heat power generation, The Russian Federation displays certain characteristics of an of generating supply; contracts, is traded at unregulated prices on the basis of free bilateral transmission and distribution assets formerly under control of the emerging market . The legal, tax and regulatory frameworks continue to – capacity which comes in a forced regime (the generating facilities contracts or on a day-ahead market . Under free bilateral contracts Ministry of Energy of the Russian Federation . develop and are subject varying interpretation (Note 32) . that are not selected as a result of a competitive selection, supporting market participants have the right to choose contracting parties, prices The Company’s registered office is located at 101/3, Prospekt The ongoing uncertainty and volatility of the financial markets, in their further work, which is necessitated by technological and other and volumes . The day-ahead market is based on competitive selection Vernadskogo, Moscow, 119526, Russian Federation . particular in Europe, and other risks could have significant negative reasons) . of bids submitted by suppliers and buyers the day before the electricity effects on the Russian financial and corporate sectors . Management Contract for provision of facilities provided on the one hand the (b) Group formation is supplied . assessed possible impairment of the Group’s property, plant and obligation of suppliers to implement the approved investment program, At 1 April 2005, the Company was reorganised through a spin- Starting 2012 the majority of the contracts for electricity and equipment by considering the current economic environment and on the other hand give a guarantee of payment capacity of the new off following the reorganisation process within the Russian electricity capacity supply engaged at unregulated prices: free bilateral contracts outlook . The future economic and regulatory situation may differ from (upgraded) generating facilities . sector aimed to introduce competition into the electricity market and to or on a day-ahead market . management’s current expectations . enable the companies of electricity sector to maintain and further expand The introduction of the new wholesale market also covered capacity (f) Scope of consolidation production capacity . The Company’s restructuring was approved by (d) Relations with the state and current regulation trading . Before the new market rules launch, suppliers were paid only OJSC “Mosenergo” and its following subsidiaries form the the general shareholder’s meeting at 28 June 2004 . Before the restructuring At the end of the reporting period the Russian Federation owned for 85% of installed capacity at a flat-rate tariff . The new rules result in Mosenergo Group . took place the Company operated as an integrated utility model, which (both direct and indirect ownership) over 50% in OJSC “Gazprom” included generation, transmission and distribution activities . As a result (the previous “Parent”), which held 53 .49% of the Company through Percentage of ownership of the restructuring 13 new entities were separated from the Company its 100% subsidiary LLC “Gazprom energoholding” (immediate parent and each shareholder of the Company received ordinary shares of each company) . Thus the OJSC “Gazprom” is the ultimate parent company of 31 December 2012 31 December 2011 of the separated entities pro rata to Company’s shares held by them prior the Group and the Russian Federation is the ultimate controlling party LLC “TSK Mosenergo” 100% 100% to spin-off . of the Group . A general shareholders’ meeting held at 20 December 2006 The government of the Russian Federation directly affects the LLC “Centralny remontno-mekhanicheskiy zavod” 100% 100% approved a closed subscription for the additional shares issued in Group’s operations through regulations of wholesale and retail sales favour of OJSC “Gazprom” and its affiliates (together referred as the of electricity and heat exercised by the Federal Service on Tariffs (the LLC “OGK-Investproject” 51% – “Gazprom Group”) . As a result, the majority shareholder of OJSC “FST”) and the Regional Energy Commissions of Moscow and Moscow “Mosenergo” changed from RAO UES of Russia to Gazprom Group region (the “RECs”) . JSC “System Operator of the United Power System” holding 53 .49% of ordinary shares . Following the reorganisation (the “SO UES”), which is controlled by the Russian Federation, regulates On 20 September 2012 the Group acquired a 51% interest in LLC process, an extraordinary general shareholder’s meeting of RAO UES operations of generating assets of the Group . “OGK-Investproject” and obtained control over LLC “OGK-Investproject” . of Russia at 26 October 2007 approved the spin-off of several holding The Group’s customer base as well as suppliers’ chain includes a The company carries out construction of the power unit at Cherepovets companies to which shares in electricity generation companies, large number of entities controlled by or related to the state . GRES . including OJSC “Mosenergo”, held by RAO UES of Russia, were As described in Note 6 and Note 32, the government’s economic, transferred . Holdings separated from RAO UES of Russia were merged social and other policies could materially affect operations of the Group . with generation companies by means of shares conversion, which enabled the shareholders of RAO UES of Russia to receive direct (e) Industry restructuring shares in generation companies after reorganisation . Accordingly, Following the restructuring of the Russian electric utility sector upon spin-off from RAO UES of Russia OJSC “Mosenergo Holding” aimed to introduce competition to the electricity (capacity) market, (the “Mosenergo Holding”) received stake in OJSC “Mosenergo” held the New Wholesale Electric Power (capacity) Market Rules of the

120 121 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 2. Note 3. associates, the Group’s share of other comprehensive income is component of cash and cash equivalents for the purpose of the statement Basis of preparation Significant accounting policies recognised in other comprehensive income and presented separately, of cash flows . all other changes in the Group’s share of the carrying value of net Loans and receivables consist of financial assets with fixed or (a) Statement of compliance (a) Basis of consolidation assets of associates are recognised in profit or loss within the share determinable payments that are not quoted in an active market, other These consolidated financial statements have been prepared in (I) Subsidiaries of result of associates . When the Group’s share of losses exceeds its than those that the Group intends to sell immediately or in the near accordance with International Financial Reporting Standards (“IFRSs”) . Subsidiaries are entities controlled by the Group . Control exists when interest in an equity accounted investee, the carrying amount of that term, which shall be classified as held for trading, and those that the the Group has the power to govern the financial and operating policies interest (including any long-term investments) is reduced to nil and Group upon initial recognition designates at fair value through profit (b) Basis of measurement of an entity so as to obtain benefits from its activities . In assessing the recognition of further losses is discontinued except to the extent or loss . The consolidated financial statements are prepared on the control, potential voting rights that currently are exercisable are taken that the Group has an obligation or has made payments on behalf of Held-to-maturity investments historical cost basis except that property, plant and equipment into account . The financial statements of subsidiaries are included in the the investee . If the Group has the positive intent and ability to hold debt securities and investment property are revalued periodically; available-for- consolidated financial statements from the date that control commences to maturity, then they are classified as held-to-maturity . Held-to-maturity sale financial assets are measured at fair value; and the carrying (IV) Transactions eliminated on consolidation until the date that control ceases . The accounting policies of subsidiaries investments are measured at amortised cost using the effective interest amounts of equity items in existence at 31 December 2002 include Intra-group balances and transactions, and any unrealised income have been changed when necessary to align them with the policies method, less any impairment losses . adjustments for the effects of hyperinflation, which were calculated and expenses arising from intra-group transactions, are eliminated adopted by the Group . Available-for-sale financial assets using conversion factors derived from the Russian Federation in preparing the consolidated financial statements . Unrealised The Group measures non-controlling interest that represents present The Group’s investments in equity securities and certain debt Consumer Price Index published by the Russian Statistics Agency, gains arising from transactions with equity accounted investees are ownership interest and entitles the holder to a proportionate share of net securities are classified as available-for-sale financial assets . Subsequent GosKomStat . Russia ceased to be hyperinflationary for IFRS eliminated against the investment to the extent of the Group’s interest assets in the event of liquidation on a transaction by transaction basis to initial recognition, they are measured at fair value and changes purposes at 1 January 2003 . in the investee . Unrealised losses are eliminated in the same way as at: the non-controlling interest’s proportionate share of net assets of therein, other than impairment losses, and foreign exchange gains or The methods used to measure fair values are discussed further in unrealised gains, but only to the extent that there is no evidence of the acquiree . Non-controlling interests that are not present ownership losses on available-for-sale monetary items, are recognised directly in Note 4 . impairment . interests are measured at fair value . other comprehensive income . When an investment is derecognised, the (c) Functional and presentation currency Non-controlling interest is that part of the net results and of the (b) Foreign currency transactions cumulative gain or loss in other comprehensive income is transferred to The national currency of the Russian Federation is the Russian equity of a subsidiary attributable to interests which are not owned, Transactions in foreign currencies are translated to the functional profit or loss . directly or indirectly, by the Company . Non-controlling interest forms a currency of the Company at exchange rates at the dates of transactions . Rouble (RR), which is the Group’s functional currency and the currency (II) Share capital separate component of the Group’s equity . Monetary assets and liabilities denominated in foreign currencies at in which these consolidated financial statements are presented . All Ordinary shares financial information presented in RR has been rounded to the nearest the reporting date are retranslated to the functional currency at the (II) Transfers of subsidiaries from parties under common control Ordinary shares are classified as equity . Incremental costs directly million . exchange rate at the date . The foreign currency gain or loss on monetary Transfers of subsidiaries between parties under common control attributable to issue of ordinary shares and share options are recognised items is the difference between amortised cost in the functional (d) Use of estimates and judgment are accounted for using the predecessor basis of accounting method . as a deduction from equity, net of any tax effects . currency at the beginning of the period, adjusted for effective interest The preparation of financial statements in conformity with IFRS Under this method the assets and liabilities of the subsidiary transferred Repurchase of share capital (treasury stock) and payments during the period, and the amortised cost in foreign requires management to make judgments, estimates and assumptions under common control are recognised at the predecessor entity’s When share capital recognised as equity is repurchased, the currency translated at the exchange rate at the end of the period . Non- that affect the application of accounting policies and the reported carrying amounts . The financial statements incorporate the acquired amount of the consideration paid which includes directly attributable monetary assets and liabilities denominated in foreign currencies that amounts of assets, liabilities, income and expenses . Actual results may entity’s results from the date on which the transaction ocurred . The costs, is net of any tax effects, and is recognised as a deduction from are measured at fair value are translated to the functional currency at differ from these estimates . corresponding figures of the previous year are not restated . The equity . Repurchased shares are classified as treasury shares and are the exchange rate at the date that fair value was determined . Foreign Estimates and underlying assumptions are reviewed on an predecessor entity is considered to be the highest reporting entity in presented as a deduction from total equity . When treasury shares are currency differences arising on retranslation are recognised in profit ongoing basis . Revisions to accounting estimates are recognised which the subsidiary’s IFRS financial information was consolidated . sold or reissued subsequently, the amount received is recognised as an or loss, except for differences arising on the retranslation of available- in the period in which the estimates are revised and in any future Any difference between the carrying amount of net assets, including increase in equity, and the resulting surplus or deficit on the transaction for-sale equity instruments . periods affected . the predecessor entity’s goodwill, and the consideration for the is transferred to / from retained earnings . acquisition is accounted for in these consolidated financial statements (c) Financial instruments In particular, information about significant areas of estimation (d) Property, plant and equipment as an adjustment within equity . (I) Non-derivative financial instruments uncertainty and critical judgments in applying accounting policies that (I) Recognition and measurement have the most significant effect on the amounts recognised in the Non-derivative financial instruments comprise investments in equity (III) Associates (equity accounted investees) Property, plant and equipment are subject to revaluation on financial statements is included in the following notes: and debt securities, trade receivables, cash and cash equivalents, loans Associates are those entities in which the Group has significant a regular basis to ensure that the carrying amount does not differ Note 4 – Fair value determination of property, plant and equipment; and borrowings, and trade and other payables . influence, but not control, over the financial and operating policies . materially from that, which would be determined using fair value at Note 4 – Fair value determination of investment property; Non-derivative financial instruments are recognised initially at Associates are accounted for using the equity method (equity the balance sheet date . Increase in the carrying amount of property, Note 4 – Fair value determination of trade and other receivables, and fair value plus, for instruments not at fair value through profit or accounted investees) and are recognised initially at cost . The Group’s plant and equipment as a result of revaluation is credited directly to Note 33 – Aggregation of operating segments . loss, any directly attributable transaction costs . Subsequent to initial investment includes goodwill identified on acquisition, net of any other comprehensive income under the heading revaluation reserve, recognition non-derivative financial instruments are measured as accumulated impairment losses . Other post-acquisition changes in unless the decrease of the reserve was previously recognised in described below . Group’s share of net assets of an associate are recognised as follows: profit or loss . Decrease in the carrying amount shall be debited to Cash and cash equivalents comprise of cash balances and call the Group’s share of profits or losses of associates is recorded in other comprehensive income to the extent of any credit balance deposits . Bank overdrafts that are repayable on demand and form the consolidated profit or loss for the year as share of result of existing in the revaluation reserve . Any accumulated depreciation an integral part of the Group’s cash management are included as a at the date of revaluation is eliminated against the gross carrying

122 123 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) amount of the asset, and the net amount is restated to the revaluated relating to a specific property, with any remaining loss recognised relates . All other expenditure, including expenditure on internally (j) Impairment amount of the asset . immediately in profit or loss . generated goodwill and brands, is recognised in profit or loss as (I) Financial assets The tax effects from the revaluation of property, plant and incurred . A financial asset is assessed at each reporting date to determine (III) Reclassification to assets held-for-sale equipment are recognised in other comprehensive income and whether there is any objective evidence that it is impaired . A financial Non-current assets (or disposal groups) are classified as assets (III) Amortisation accumulated in equity . asset is considered to be impaired if objective evidence indicates that Amortisation is recognised in profit or loss on a straight-line basis held for sale when their carrying amount is to be recovered principally one or more events have had a negative effect on the estimated future Cost of acquired assets includes expenditure that is directly attributable over the estimated useful lives of intangible assets, other than through a sale transaction and a sale is considered highly probable . cash flows of that asset . to the acquisition of the asset . The cost of self-constructed assets goodwill, from the date that they are available for use . The estimated They are stated at the lower of carrying amount and fair value less An impairment loss in respect of a financial asset measured at includes the cost of materials, direct labor and any other costs directly useful lives of the software for the current and comparative periods costs to sell . Any gain arising on remeasurement is recognised in amortised cost is calculated as the difference between its carrying attributable to bringing the asset to a working condition for its intended equal to 7 years . profit or loss to the extent the gain reverses previous impairment amount, and the present value of the estimated future cash flows use, and the costs of dismantling and removing the items and restoring loss on a specific property, with any remaining gain recognised in (f) Investment property discounted at the original effective interest rate . An impairment loss in the site on which they are located . Purchased software that is integral the revaluation reserve directly in other comprehensive income . Investment property is property or construction in progress held respect of an available-for-sale financial asset is calculated by reference to the functionality of the related equipment is capitalised as part of that Any loss is recognised in the revaluation reserve directly in other or constructed either to earn rental income or for capital appreciation to its fair value . equipment . comprehensive income to the extent that an amount of revaluation or for both, but not for sale in the ordinary course of business, use Individually significant financial assets are tested for impairment Borrowing costs that are directly attributable to the acquisition or is included in other comprehensive income relating to a specific in the production or supply of goods or services or for administrative on an individual basis . The remaining financial assets are assessed construction of an asset that necessarily takes a substantial period of property, with any remaining loss recognised immediately in profit purposes . Investment property is initially recognised at cost, including collectively in groups that share similar credit risk characteristics . time to get ready for its intended use or sale are capitalised as part of or loss . transaction costs, and subsequently remeasured at fair value updated to All impairment losses are recognised in profit or loss . An the cost of that asset . reflect market conditions at the end of the reporting period . Any change impairment loss is reversed if the reversal can be related objectively The commencement date for capitalisation is when (a) the Group (IV) Subsequent costs in fair value is recognised in profit or loss . to an event occurring after the impairment loss was recognised . For incurs expenditures for the qualifying asset; (b) it incurs borrowing The cost of replacing part of an item of property, plant and equipment When the use of a property changes such that it is reclassified as financial assets measured at amortised cost the reversal is recognised costs; and (c) it undertakes activities that are necessary to prepare the is recognised in the carrying amount of the item if it is probable that property, plant and equipment, its fair value at the date of reclassification in profit or loss . asset for its intended use or sale . the future economic benefits embodied within the part will flow to the becomes its cost for subsequent accounting . Impairment losses for available-for-sale financial assets are Capitalisation of borrowing costs continues up to the date when the Group and its cost can be measured reliably . The carrying amount of When the carrying amount of property is to be recovered recognised in profit or loss for the year when incurred as a result of one assets are substantially ready for their use or sale . the replaced part is derecognised . The costs of the day-to-day servicing principally through a sale transaction rather than through continuing or more events (“loss events”) that occurred after the initial recognition The Group capitalises borrowing costs that could have been of property, plant and equipment are recognised in the profit or loss as use the property is remeasured to fair value and reclassified as assets of available-for-sale investments . A significant or prolonged decline in avoided if it had not made capital expenditure on qualifying assets . incurred . held for sale . Any gain or loss on the remeasurement recognised in the fair value of an equity security below its cost is an indicator that Borrowing costs capitalised are calculated at the group’s average (V) Depreciation profit or loss . it is impaired . The cumulative impairment loss – measured as the funding cost (the weighted average interest cost is applied to the Depreciation is recognised in profit or loss on a straight-line basis difference between the acquisition cost and the current fair value, less expenditures on the qualifying assets), except to the extent that funds (g) Leased assets over the estimated useful lives of each part of an item of property, plant any impairment loss on that asset previously recognised in profit or loss are borrowed specifically for the purpose of obtaining a qualifying Leases in terms of which the Group assumes substantially and equipment . Leased assets are depreciated over the shorter of the – is reclassified from other comprehensive income to finance costs in asset . Where this occurs, actual borrowing costs incurred less any all the risks and rewards of ownership are classified as finance lease term and their useful lives unless it is reasonably certain that the profit or loss for the year . Impairment losses on equity instruments are investment income on the temporary investment of those borrowings leases . Upon initial recognition the leased asset is measured at an Group will obtain ownership by the end of lease term . Depreciation of an not reversed through profit or loss . If, in a subsequent period, the fair are capitalised . amount equal to the lower of its fair value and the present value asset begins when it is available for use . value of a debt instrument classified as available for sale increases and When parts of an item of property, plant and equipment have of the minimum lease payments . Subsequent to initial recognition, the increase can be objectively related to an event occurring after the different useful lives, they are accounted for as separate items (major Depreciation methods, useful lives and residual values are reviewed the asset is accounted for in accordance with the accounting policy impairment loss was recognised in profit or loss, the impairment loss is components) of property, plant and equipment . at each reporting date . The estimate useful lives for the year 2011 were applicable to that asset . reversed through current period’s profit or loss . Gains and losses on disposal of an item of property, plant and equipment not changed for the year 2012 and were as follows: (h) Inventories are recognised net in “other operating expenses” in profit or loss . The Buildings and constructions 20-60 years (II) Non-financial assets Inventories are measured at the lower of cost and net realisable revaluation surplus is not transferred from reserve when the assets are Plant and equipment 10-30 years The carrying amounts of the Group’s non-financial assets, other value . The cost of inventories is based on the weighted average disposed . Transmission networks 5-30 years than inventories and deferred tax assets, are reviewed at each reporting cost principle, and includes expenditure incurred in acquiring the Other 1-15 years date to determine whether there is any indication of impairment . If (II) Reclassification to investment property inventories, production or conversion costs and other costs incurred any such indication exists, then the asset’s recoverable amount is When the use of property changes from owner-occupied to in bringing them to their existing location and condition . In the case (e) Intangible assets estimated . investment property, the property is remeasured to fair value of manufactured inventories and work in progress, cost includes an (I) Other intangible assets The recoverable amount of an asset or cash-generating unit is and reclassified as investment property . Any gain arising on appropriate share of production overheads based on normal operating Other intangible assets that are acquired by the Group, which have the greater of its value in use and its fair value less costs to sell . remeasurement is recognised in profit or loss to the extent the gain capacity . finite useful lives, are measured at cost less accumulated amortisation In assessing value in use, the estimated future cash flows are reverses previous impairment loss on a specific property, with any Net realisable value is the estimated selling price in the ordinary and accumulated impairment losses . discounted to their present value using a pre-tax discount rate that remaining gain recognised in the revaluation reserve directly in other course of business, less the estimated costs of completion and selling reflects current market assessments of the time value of money comprehensive income . Any loss is recognised in the revaluation (II) Subsequent expenditure expenses . and the risks specific to the asset . For the purpose of impairment reserve directly in other comprehensive income to the extent that Subsequent expenditure is capitalised only when it increases the testing, assets are grouped together into the smallest group of assets an amount of revaluation is included in other comprehensive income future economic benefits embodied in the specific asset to which it

124 125 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

that generates cash inflows from continuing use that are largely are deducted . The discount rate is the yield at the reporting date on A liability is recognised for the amount expected to be paid under compliance with certain conditions relating to the operating activities independent of the cash inflows of other assets or groups of assets Russian government bonds that have maturity dates approximating short-term cash bonus or profit-sharing plans if the Group has a present of the Company . (the “cash-generating unit”) . The goodwill acquired in a business the terms of the Group’s obligations and that are denominated in the legal or constructive obligation to pay this amount as a result of past Government subsidies are recognised initially as deferred income combination, for the purpose of impairment testing, is allocated to same currency in which the benefits are expected to be paid . The service provided by the employee and the obligation can be estimated when there is reasonable assurance that they will be received and cash-generating units that are expected to benefit from the synergies calculation is performed annually by a qualified actuary using the reliably . that the Company will comply with the conditions associated with the of the combination . projected unit credit method . subsidy . Subsidies that compensate the Company for expenses incurred (l) Provisions An impairment loss is recognised if the carrying amount of an When the benefits of a plan are improved, the portion of the are recognised in profit or loss on a systematic basis in the same periods asset or its cash-generating unit exceeds its estimated recoverable increased benefit relating to past service by employees is recognised A provision is recognised if, as a result of a past event, the Group has in which the expenses are recognised . Government subsidies that amount . Impairment losses are recognised in other comprehensive in profit or loss on a straight-line basis over the average period a present legal or constructive obligation that can be estimated reliably, compensate the Company for the cost of an asset are recognised in the income if revaluation reserve existing to such assets, otherwise in until the benefits become vested . To the extent that the benefits and it is probable that an outflow of economic benefits will be required statement of comprehensive income on a systematic basis over the useful profit or loss . Impairment losses recognised in respect of cash- vest immediately, the expense is recognised immediately in profit to settle the obligation . Provisions are determined by discounting the life of the asset . Unconditional government subsidies are recognised on generating units are allocated first to reduce the carrying amount of or loss . expected future cash flows at a pre-tax rate that reflects current market profit or loss when subsidy becomes receivable . Government subsidies any goodwill allocated to the units and then to reduce the carrying Actuarial gains and losses which arise in the reporting period stay assessments of the time value of money and the risks specific to the for the compensation of the difference between tariffs set to the urban amounts of the other assets in the unit (group of units) on a pro rata unrecognised . The Group recognises a portion of its actuarial gains liability . population and the tariffs of the Company are recognised as income and basis . and losses as income or expense if the net cumulative unrecognised (m) Segment reporting included in other operating income . actuarial gains and losses at the end of the previous reporting period (III) Non-current assets held for sale Operating segments are reported in a manner consistent with the (p) Lease payments exceeded the greater of: Non-current assets that are expected to be recovered primarily internal reporting provided to the Chief operating decision-maker . The Payments made under operating leases are recognised in profit or 10% of the present value of the defined benefit obligation at that date through sale rather than through continuing use are classified as held- Chief operating decision-maker responsible for allocating resources and loss on a straight-line basis over the term of the lease . Lease incentives (before deducting plan assets), and for-sale . Immediately before classification as held-for-sale, the assets assessing performance of the operating segments has been identified received are recognised as an integral part of the total lease expense, 10% of the fair value of any plan assets at that date . are remeasured in accordance with the Group’s accounting policies . as the Board of Directors including Chief Executive Officer who make over the term of the lease . The portion of actuarial gains and losses to be recognised for Thereafter generally the assets are measured at the lower of their carrying strategic decisions . Minimum lease payments made under finance leases are apportioned each defined benefit plan is the excess determined as described amount and fair value less cost to sell . Any impairment loss on a disposal between the finance expense and the reduction of the outstanding above, divided by the expected average remaining working lives of the (n) Revenues group is allocated to remaining assets and liabilities on pro rata basis, liability . The finance expense is allocated to each period during the employees . (I) Goods sold except that no loss is allocated to inventories, financial assets, deferred Revenues from sales of electricity and heat are recognised when lease term so as to produce a constant periodic rate of interest on the tax assets, investment property and biological assets, which continue (III) Other long-term employee benefits electricity and heat are supplied to customers . remaining balance of the liability . to be measured in accordance with the Group’s accounting policies . The Group’s net obligation in respect of long-term employee Revenue from the sale of goods other than electricity and heat is (q) Financial income and expenses Impairment losses on initial recognition as held-for-sale and subsequent benefits other than pension plans is the amount of future benefit that measured at the fair value of the consideration received or receivable, net Financial income comprises interest income on funds invested gains or losses on remeasurement are recognised in profit or loss . Gains employees have earned in return for their service in the current and of returns, trade discounts and volume rebates . Revenue is recognised (including available-for-sale financial assets), dividend income and gains are not recognised in excess of any cumulative impairment loss . prior periods; that benefit is discounted to determine its present value, when the significant risks and rewards of ownership have been on the disposal of available-for-sale financial assets . Interest income is Liabilities directly associated with the disposal group that will be and the fair value of any related assets is deducted . The discount rate is transferred to the buyer, recovery of the consideration is probable, the recognised as it accrues in profit or loss, using the effective interest transferred in the disposal transaction are reclassified and presented the yield at the reporting date on Russian government bonds that have associated costs and possible return of goods can be estimated reliably, method . Dividend income is recognised in profit or loss on the date that separately in the consolidated statement of financial position . maturity dates approximating the terms of the Group’s obligations . The there is no continuing management involvement with the goods, and the Group’s right to receive payment is established, which in the case of calculation is performed using the projected unit credit method . Any (k) Employee benefits the amount of revenue can be measured reliably . Transfers of risks and quoted securities is the ex-dividend date . actuarial gains or losses are recognised in profit or loss in the period in (I) Defined contribution plans rewards vary depending on the individual terms of the contract of sale . Financial expenses comprise interest expense on borrowings, which they arise . A defined contribution plan is a post-employment benefit plan unwinding of the discount on provisions and impairment losses (II) Services under which the Group pays fixed contributions into a separate entity (IV) Termination benefits recognised on financial assets . All borrowing costs are recognised in Revenue from services rendered is recognised in profit or loss in and will have no legal or constructive obligation to pay further amounts . Termination benefits are recognised as an expense when the Group profit or loss using the effective interest method except for those which proportion to the stage of completion of the transaction at the reporting Obligations for contributions to defined contribution pension plans are is demonstrably committed, without realistic possibility of withdrawal, are capitalised . date . The stage of completion is assessed by reference to surveys of recognised as an employee benefit expense in profit or loss when they to a formal detailed plan to either terminate employment before the Foreign currency gains and losses are reported on gross basis . work performed . are due . normal retirement date, or to provide termination benefits as a result (r) Income tax expense of an offer made to encourage voluntary redundancy . Termination (III) Rental income (II) Defined benefit plans Income tax expense comprises current and deferred tax . Income tax benefits for voluntary redundancies are recognised as an expense if Rental income from investment property is recognised in profit or A defined benefit plan is a post-employment benefit plan other expense is recognised in profit or loss except to the extent that it relates the Group has made an offer of voluntary redundancy, it is probable loss on a straight-line basis over the term of the lease . Lease incentives than a defined contribution plan . The Group’s net obligation in to items recognised in other comprehensive income, in which case it is that the offer will be accepted, and the number of acceptances can be granted are recognised as an integral part of the total rental income, over respect of defined benefit pension plans is calculated separately for recognised in the consolidated statement of changes in equity . estimated reliably . the term of the lease . each plan by estimating the amount of future benefit that employees Current tax is the expected tax payable on the taxable income have earned in return for their service in the current and prior (V) Short-term benefits (o) Government subsidies for the period, using tax rates enacted or substantively enacted at periods; that benefit is discounted to determine its present value . Any Short-term employee benefit obligations are measured on an Government subsidies are assistance by government in the form the reporting date, and any adjustment to tax payable in respect of unrecognised past service costs and the fair value of any plan assets undiscounted basis and are expensed as the related service is provided . of transfers of resources to the Group in return for past or future previous years .

126 127 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

Deferred tax is recognised using the balance sheet method, (u) New Standards and Interpretations that the revised standard does not have any effect on its financial changes to the recognition and measurement of defined benefit providing for temporary differences between the carrying amounts of statements . pension expense and termination benefits, and to the disclosures (I) Certain new standards and interpretations have been issued that are assets and liabilities for financial reporting purposes and the amounts IFRS 11, Joint Arrangements, (issued in May 2011 and effective for for all employee benefits . The standard requires recognition of all mandatory for the annual periods beginning on or after 1 January 2013 used for taxation purposes . Deferred tax is not recognised for the annual periods beginning on or after 1 January 2013), replaces IAS 31 changes in the net defined benefit liability (asset) when they occur, or later, and which the Group has not early adopted. following temporary differences: the initial recognition of assets “Interests in Joint Ventures” and SIC-13 “Jointly Controlled Entities- as follows: (i) service cost and net interest in profit or loss; and IFRS 9, Financial Instruments: Classification and Measurement . IFRS or liabilities in a transaction that is not a business combination and Non-Monetary Contributions by Ventures” . The Group expected (ii) remeasurements in other comprehensive income . The Group 9, issued in November 2009, replaces those parts of IAS 39 relating that affects neither accounting nor taxable the profit or loss, and that the revised standard does not have any effect on its financial expected that the revised standard does not have significant effect to the classification and measurement of financial assets . IFRS 9 differences relating to investments in subsidiaries and associates to statements . on its financial statements . was further amended in October 2010 to address the classification the extent that it is probable that they will not reverse in the foreseeable IFRS 12, Disclosure of Interest in Other Entities, (issued in May 2011 Amendments to IFRS 7, Financial Instruments: Disclosures (issued and measurement of financial liabilities and in December 2011 to (i) future . In addition, deferred tax is not recognised for taxable temporary and effective for annual periods beginning on or after 1 January 2013) . in December 2011 and effective for annual periods beginning on or change its effective date to annual periods beginning on or after 1 differences arising on the initial recognition of goodwill . Deferred The Group expected that the revised standard does not have any effect after 1 January 2013) require disclosures that will enable users of an January 2015 and (ii) add transition disclosures . Key features of the tax is measured at the tax rates that are expected to be applied to on its financial statements . entity’s financial statements to evaluate the effect or potential effect of standard are as follows: temporary differences when they reverse, based on the laws that have IFRS 13, Fair value measurement, (issued in May 2011 and effective netting arrangements, including rights of set-off . The Group expected Financial assets are required to be classified into two measurement been enacted or substantively enacted by the reporting date . Deferred for annual periods beginning on or after 1 January 2013), aims to that the revised standard does not have any effect on its financial categories: those to be measured subsequently at fair value, tax assets and liabilities are offset if there is a legally enforceable right improve consistency and reduce complexity by providing a revised statements . and those to be measured subsequently at amortised cost . The to offset current tax liabilities and assets, and they relate to income definition of fair value, and a single source of fair value measurement Amendments to IFRS 32, Classification of Rights Issues (issued decision is to be made at initial recognition . The classification taxes levied by the same tax authority on the same taxable entity, or on and disclosure requirements for use across IFRSs . The revised in December 2011 and effective for annual periods beginning on depends on the entity’s business model for managing its financial different tax entities, but they intend to settle current tax liabilities and standard will have an impact on disclosures but will have no effect on or after 1 January 2014) added application guidance to IAS 32 to instruments and the contractual cash flow characteristics of the assets on a net basis or their tax assets and liabilities will be realised measurement across IFRSs . address inconsistencies identified in applying some of the offsetting instrument . criteria . This includes clarifying the meaning of ‘currently has a legally simultaneously . IAS 27, Separate Financial Statements, (revised in May 2011 and – An instrument is subsequently measured at amortised cost only if it enforceable right of set-off’ and that some gross settlement systems A deferred tax asset is recognised to the extent that it is probable effective for annual periods beginning on or after 1 January 2013), is a debt instrument and both (i) the objective of the entity’s business may be considered equivalent to net settlement . The Group expected that future taxable profits will be available against which the temporary was changed and its objective is now to prescribe the accounting and model is to hold the asset to collect the contractual cash flows, that the revised standard does not have any effect on its financial difference can be utilised . Deferred tax assets are reviewed at each disclosure requirements for investments in subsidiaries, joint ventures and (ii) the asset’s contractual cash flows represent payments of statements . reporting date and are reduced to the extent that it is no longer probable and associates when an entity prepares separate financial statements . principal and interest only (that is, it has only “basic loan features”) . Amendments to IFRS 1 “First-time adoption of IFRS”, relating to that the related tax benefit will be realised . The guidance on control and consolidated financial statements was All other debt instruments are to be measured at fair value through severe hyperinflation and eliminating references to fixed dates for replaced by IFRS 10, Consolidated Financial Statements . The Group (s) Uncertain tax positions profit or loss . certain exceptions and exemptions, the amendment to IAS 12 “Income expected that the revised standard does not have any effect on its The Group’s uncertain tax positions are reassessed by management – All equity instruments are to be measured subsequently at fair value . taxes”, which introduces a rebuttable presumption that an investment financial statements . at the end of each reporting period . Liabilities are recorded for income Equity instruments that are held for trading will be measured at fair property carried at fair value is recovered entirely through sale, and IAS 28, Investments in Associates and Joint Ventures, (revised in May tax positions that are determined by management as more likely than value through profit or loss . For all other equity investments, an IFRIC 20, “Stripping Costs in the Production Phase of a Surface Mine”, 2011 and effective for annual periods beginning on or after 1 January not to result in additional taxes being levied if the positions were to irrevocable election can be made at initial recognition, to recognise which considers when and how to account for the benefits arising 2013) . The amendment of IAS 28 resulted from the Board’s project be challenged by the tax authorities . The assessment is based on unrealised and realised fair value gains and losses through other from the stripping activity in mining industry, will not have any impact on joint ventures . When discussing that project, the Board decided to the interpretation of tax laws that have been enacted or substantively comprehensive income rather than profit or loss . There is to be no on these financial statements . incorporate the accounting for joint ventures using the equity method enacted by the end of the reporting period, and any known court or other recycling of fair value gains and losses to profit or loss . This election Disclosures-Offsetting Financial Assets and Financial Liabilities – into IAS 28 because this method is applicable to both joint ventures rulings on such issues . Liabilities for penalties, interest and taxes other may be made on an instrument-by-instrument basis . Dividends are to Amendments to IFRS 7 (issued in December 2011 and effective and associates . With this exception, other guidance remained than on income are recognised based on management’s best estimate be presented in profit or loss, as long as they represent a return on for annual periods beginning on or after 1 January 2013) . The unchanged . The Group expected that the revised standard does not of the expenditure required to settle the obligations at the end of the investment . amendment requires disclosures that will enable users of an entity’s have any effect on its financial statements . reporting period . – Most of the requirements in IAS 39 for classification and measurement financial statements to evaluate the effect or potential effect of netting Аmended IAS 34, Annual Improvements, (revised in 2011 and effective of financial liabilities were carried forward unchanged to IFRS 9 . The arrangements, including rights of set-off . The amendment will have (t) Earnings per share for annual periods beginning on or after 1 January 2013), to align the key change is that an entity will be required to present the effects an impact on disclosures but will have no effect on measurement and The Group presents basic and diluted earnings per share (EPS) data disclosure requirements for segment assets and segment liabilities in of changes in own credit risk of financial liabilities designated at fair recognition of financial instruments . for its ordinary shares . Basic EPS is calculated by dividing the profit interim financial reports with those in IFRS 8 . The amended IAS 34 will value through profit or loss in other comprehensive income . Offsetting Financial Assets and Financial Liabilities – Amendments to or loss attributable to ordinary shareholders of the Company by the now require the disclosure of a measure of total assets and liabilities While adoption of IFRS 9 is mandatory from 1 January 2015, earlier IAS 32 (issued in December 2011 and effective for annual periods weighted average number of ordinary shares outstanding during the for a particular reportable segment . In addition, such disclosure is beginning on or after 1 January 2014) . The amendment added adoption is permitted . The Group expected that the revised standard period . Diluted EPS is determined by adjusting profit or loss attributable only required when: application guidance to IAS 32 to address inconsistencies identified does not have any effect on its financial statements . to ordinary shareholders and the weighted average number of ordinary – The amount is regularly provided to the entity’s chief operating in applying some of the offsetting criteria . This includes clarifying the IFRS 10, Consolidated Financial Statements (issued in May 2011 shares outstanding for the effects of all dilutive potential ordinary decision maker, and meaning of ‘currently has a legally enforceable right of set-off’ and and effective for annual periods beginning on or after 1 January shares, which comprise convertible notes and share options granted – here is a material change from the amount disclosed for that segment that some gross settlement systems may be considered equivalent 2013), replaces all of the guidance on control and consolidation in to employees . There are no dilutive potential ordinary shares as of 31 in the last annual financial statements . to net settlement . The Group is considering the implications of the IAS 27 “Consolidated and separate financial statements” and SIC- December 2012 and 31 December 2011 . Amended IAS 19, Employee Benefits (issued in June 2011, effective amendment, the impact on the Group and the timing of its adoption 12 “Consolidation – special purpose entities” . The Group expected for periods beginning on or after 1 January 2013), makes significant by the Group .

128 129 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Improvements to International Financial Reporting Standards (issued as existing preparers . The Group is currently assessing the impact of Note 4. Note 5. in May 2012 and effective for annual periods beginning 1 January the amended standard on its consolidated financial statements . 2013) . The improvements consist of changes to five standards . IFRS IAmendments to IFRS 10, IFRS 12 and IAS 27 – Investment entities Determination of fair values Financial risk management 1 was amended to (I) clarify that an entity that resumes preparing its (issued on 31 October 2012 and effective for annual periods (a) Overview A number of the Group’s accounting policies and disclosures require IFRS financial statements may either repeatedly apply IFRS 1 or apply beginning 1 January 2014) . The amendment introduced a definition of The Group has exposure to the following risks from its use of the determination of fair value, for both financial and non-financial all IFRSs retrospectively as if it had never stopped applying them, and an investment entity as an entity that (i) obtains funds from investors financial instruments: assets and liabilities . Fair values have been determined for measurement (II) to add an exemption from applying IAS 23 “Borrowing costs”, for the purpose of providing them with investment management credit risk; and / or disclosure purposes based on the methods, described further . retrospectively by first-time adopters . IAS 1 was amended to clarify services, (ii) commits to its investors that its business purpose is to liquidity risk, and When applicable, further information about the assumptions made in that explanatory notes are not required to support the third balance invest funds solely for capital appreciation or investment income and market risk . sheet presented at the beginning of the preceding period when it (III) measures and evaluates its investments on a fair value basis . An determining fair values is disclosed in the notes specific to that asset or liability . is provided because it was materially impacted by a retrospective investment entity will be required to account for its subsidiaries at fair This note presents iformation about the Group’s exposure to each restatement, changes in accounting policies or reclassifications value through profit or loss, and to consolidate only those subsidiaries (a) Property, plant and equipment and investment property of the above risks, the Group’s objectives, policies and processes for presentation purposes, while explanatory notes will be required that provide services that are related to the entity’s investment The fair value of property, plant and equipment and investment for measuring and managing risk, and the Group’s management of when an entity voluntarily decides to provide additional comparative activities . property is determined either using market approach, depreciated capital . Further quantitative disclosures are included throughout these statements . IAS 16 was amended to clarify that servicing equipment IIFRS 12 was amended to introduce new disclosures, including any replacement cost or income approach . consolidated financial statements . that is used for more than one period is classified as property, plant significant judgements made in determining whether an entity is an The market value of property is the estimated amount for which a The General Director has overall responsibility for proper functioning and equipment rather than inventory . IAS 32 was amended to clarify investment entity and information about financial or other support to property could be exchanged on the date of valuation between a willing of the Group’s internal controls system . The Board of Directors that certain tax consequences of distributions to owners should be an unconsolidated subsidiary, whether intended or already provided buyer and a willing seller in an arm’s length transaction after proper establishes and oversights of the Group’s risk management framework accounted for in the income statement as was always required by to the subsidiary . The Group is currently assessing the impact of the marketing wherein the parties had each acted knowledgeably, prudently and control environment mitigating those risks . The Audit Committee IAS 12 . IAS 34 was amended to bring its requirements in line with amendments on its financial statements . and without compulsion . The market value of items of plant, equipment, as part of Board of Directors evaluates the internal controls system IFRS 8 . IAS 34 will require disclosure of a measure of total assets and fixtures and fittings is based on quoted market prices for similar items . effectiveness . The Group’s Audit Committee is assisted in its oversight liabilities for an operating segment only if such information is regularly Unless otherwise described above, the new standards and When no quoted market prices are available, the fair value of role by the Director of Internal Audit, who oversees how management provided to chief operating decision maker and there has been a interpretations are not expected to affect significantly the Group’s property, plant and equipment is primarily determined applying monitors compliance with the Group’s risk management policies and material change in those measures since the last annual consolidated financial statements . depreciated replacement cost method or income approach . The procedures and reviews the adequacy of the risk management framework financial statements . The Group is currently assessing the impact of depreciated replacement cost method considers the cost to reproduce in relation to the risks faced by the Group . The Direction of Internal the amendments on its consolidated financial statements . (II) The following new standards and interpretations became effective or replace the property, plant and equipment, adjusted for physical, Audit undertakes both regular and ad hoc reviews of risk management ITransition Guidance Amendments to IFRS 10, IFRS 11 and IFRS 12 for the Group from 1 January 2012: functional or economical depreciation, and obsolescence . Under the controls and procedures, the results of which are reported to the Audit (issued in June 2012 and effective for annual periods beginning 1 “Disclosures–Transfers of Financial Assets” – Amendments to IFRS 7 income approach, the values of the property are derived from the Committee . January 2013) . The amendments clarify the transition guidance in (issued in October 2010 and effective for annual periods beginning on present value of future cash flows expected to be derived from the use The risk management functions are performed by several IFRS 1 “Consolidated Financial Statements” . Entities adopting IFRS or after 1 July 2011) . The amendment requires additional disclosures and eventual sale of the property . departments of the Company . Credit risk is considered by the Department 10 should assess control at the first day of the annual period in in respect of risk exposures arising from transferred financial assets . on Account and Analysis of Financial Risks . Liquidity risk is addressed which IFRS 10 is adopted, and if the consolidation conclusion under The amendment includes a requirement to disclose by class of asset (b) Investments in equity and debt securities by the Treasury Department and the Department on Budgeting and IFRS 10 differs from IAS 27 and SIC 12, the immediately preceding the nature, carrying amount and a description of the risks and rewards The fair values of available-for-sale financial assets are determined Managerial Accounting . These departments are accountable to the comparative period (that is, year 2012 for a calendar year-end entity of financial assets that have been transferred to another party, yet by reference to their quoted closing bid price at the reporting date . that adopts IFRS 10 in 2013) is restated, unless impracticable . The remain on the entity’s balance sheet . Disclosures are also required to Deputy General Director on Finance and Budgeting who supervises and amendments also provide additional transition relief in IFRS 10, IFRS enable a user to understand the amount of any associated liabilities, (c) Trade and other receivables coordinates the work of the risk management system . 11 “Joint Arrangements” and IFRS 12 “Disclosure of Interests in Other and the relationship between the financial assets and associated The fair value of trade and other receivables is estimated as the The Group’s risk management policies are summarised in the Entities”, by limiting the requirement to provide adjusted comparative liabilities . Where financial assets have been derecognised, but the present value of future cash flows, discounted at the market rate of Company’s Regulations on Risk Management which are established information only for the immediately preceding comparative period . entity is still exposed to certain risks and rewards associated with interest at the reporting date . to identify and analyse the risks faced by the Group, to set appropriate the transferred asset, additional disclosure is required to enable the risk limits and controls, to monitor risks and adherence to limits . Risk Further, the amendments will remove the requirement to present (d) Non-derivative financial liabilities effects of those risks to be understood . This change did not have a management policies and systems are reviewed regularly to reflect comparative information for disclosures related to unconsolidated Fair value, which is determined for disclosure purposes, is calculated material impact on these consolidated financial statements . changes in market conditions and the Group’s activities . The procedures structured entities for periods before IFRS 12 is first applied . The based on the present value of future principal and interest cash flows, Other revised standards and interpretations effective for the current carried out in relation to the Company’s risk analysis include examination Group is currently assessing the impact of the amendments on its discounted at the market rate of interest at the reporting date . For finance period . The amendments to IFRS 1 “First-time adoption of IFRS”, of the customers reliability, analysis of bank guarantees for prepayments consolidated financial statements . leases the market rate of interest is determined by reference to similar relating to severe hyperinflation and eliminating references to fixed given to suppliers, bank currency position analysis, sensitivity analysis IAmendments to IFRS 1 “First-time adoption of International Financial lease agreements . Reporting Standards – Government Loans“ (issued in March 2012 dates for certain exceptions and exemptions, did not have any impact of exchange and interest rates for borrowings, budget implementation and effective for annual periods beginning 1 January 2013) . The on these consolidated financial statements . The amendment to IAS 12 analysis etc . amendments, dealing with loans received from governments at a “Income taxes”, which introduced a rebuttable presumption that an The Group, through its training and management standards and below market rate of interest, give first-time adopters of IFRSs relief investment property carried at fair value is recovered entirely through procedures, aims to develop a disciplined and constructive internal from full retrospective application of IFRSs when accounting for these sale, did not have a material impact on these consolidated financial control environment in which all employees understand their roles and loans on transition . This will give first-time adopters the same relief statements . obligations .

130 131 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

(b) Credit risk (III) Investments variable rates . However, at the time of raising new loans or borrowings shareholders, return capital to shareholders, issue new shares or sell Credit risk is the risk of financial loss to the Group if a customer The Group limits its exposure to credit risk by only investing in management uses its judgment to decide whether it believes that a fixed assets to reduce debt . or counterparty to a financial instrument fails to meet its contractual liquid securities and only with counterparties that have a credit rating or variable rate would be more favorable to the Group over the expected The Board’s policy is to maintain a strong capital base so as to obligations, and arises principally from the Group’s receivables from of at least А3 from Moody’s and Aaa from Moody’s, except for related period until maturity . maintain investor, creditor and market confidence and to sustain future customers and investment securities . parties . Given these high credit ratings, management does not expect The Group constantly analyses dynamics of variable interest rates . development of the business . The Board of Directors monitors the return any counterparty to fail to meet its obligations . To minimise interest rate risk the Group prepares budgets taking into on capital, which the Group defines as net operating profit divided by (I) Trade and other receivables account possible changes of interest rates creates special reserves to total shareholders’ equity . The Board of Directors also monitors the level The Group’s exposure to credit risk is influenced mainly by the (c) Liquidity risk cover contingent expenses and losses . Currently the Group considers of dividends to ordinary shareholders . individual characteristics of each customer . Geographically credit risk Liquidity risk is the risk that the Group will not be able to meet its the possibility of hedging currency risks using corresponding derivatives There were no changes in the Group’s approach to capital is concentrated in the city of Moscow and Moscow Region as most financial obligations as they fall due . The Group’s approach to managing in the future . management during the year . of sales are made in this area . Creditworthiness of existing customers liquidity is to ensure, as far as possible, that it will always have sufficient Consistent with other companies of the industry, the Group monitors is periodically evaluated based on internal and external information liquidity to meet its liabilities when due, under both normal and stressed (e) Capital management capital on the basis of the gearing ratio . The ratio is calculated as net regarding history of settlements with these customers . The Group conditions, without incurring unacceptable losses or risking damage to The Group’s objectives when managing capital are to safeguard the debt divided by total capital . Net debt is calculated as total borrowings, constantly analyses accounts receivable turnover ratios, maturity the Group’s reputation . Group’s ability to continue as a going concern in order to provide returns as shown in the consolidated statement of financial position, less dates and takes appropriate measures on collection of debts due . The liquidity risk management is performed on three different levels . for shareholders and benefits for other stakeholders and to maintain an cash . Total capital is calculated as equity, as shown in the consolidated Approximately 90-95% of the customers are the clients of the Group for Long-term policies are incorporated in the overall financial model of optimal capital structure to reduce the cost of capital . statement of financial position, plus the net debt . a period longer than 2-3 years . the Company . Middle-term monitoring is fulfilled during the quarterly The Group manages its capital structure and makes adjustments to There are standard contract terms for any customer purchasing and monthly planning of the Group’s budgets . Short-term actions it, in light of changes in economic conditions . To maintain or adjust the The gearing ratios at 31 December 2012 and at 31 December 2011 energy under regulated contracts, the day-ahead market or the balancing include planning and control of daily cash receipts and payments of the capital structure, the Group may adjust the amount of dividends paid to were as follows: market . Individual terms can be stipulated in free bilateral contracts for Company . electricity (capacity) . Special conditions are envisaged by the Russian Liquidity management system includes also drawing up monthly, 31 December 2012 31 December 2011 legislation on Power industry for some heat consumers such as state quarterly and yearly cash budgets, comparing actual amounts to planned Borrowings (Note 16) (18,514) (15,577) companies, housing organisations and entities, which may not be and explaining any discrepancies found . limited or refused energy supply because it can lead to casualties or Cash and cash equivalents (Note 14) 12,632 25,572 (d) Market risk other harmful aftermath (hospitals, schools etc .) . Currently no upper Market risk is the risk that changes in market prices, such as Net (debt)/cash (5,882) 9,995 limits for debt due from a single customer are established . Gradually foreign exchange rates, interest rates and equity prices will affect the the Group plans to switch to 100% prepayment approach when the Equity (205,636) (200,033) Group’s income or the value of its holdings of financial instruments . transitional period from regulated to free bilateral selling contracts will Total capital (211,518) (190,038) The objective of market risk management is to manage and control be completed . market risk exposures within acceptable parameters, while optimising Gearing ratio 2.78% – In monitoring customer credit risk, customers are grouped the return . according to the accounts receivable type and maturity dates . Accounts receivable are divided into five major groups, which are (I) Currency risk (I) Loans’ covenants (II) Loans’ covenants current, overdue, long-term, doubtful and irrecoverable accounts The Group is exposed to currency risk on purchases and borrowings In accordance with loan facilities the Group maintains an optimal In accordance with loan facilities the Group maintains an optimal receivable . As early as an account receivable is classified as current that are denominated in a currency other than the respective functional capital structure by tracking certain requirements: capital structure by tracking certain requirements: measures are taken on collection of debt due, which include oral currencies of Group entities . The currencies in which these transactions the maximum level of Net financial Debt/EBITDA; the maximum level of Net financial Debt/EBITDA; and written notices, instituting a claim, putting in a late payment primarily are denominated are Euro . minimum level of EBITDA/Interest expense, and minimum level of EBITDA/Interest expense, and penalty etc . In respect of other monetary assets and liabilities denominated in minimum level of own paid tangible assets . minimum level of own paid tangible assets . The Group establishes an allowance for impairment that foreign currencies, the Group ensures that its net exposure is kept to These ratios are included as covenants into loan agreements (see These ratios are included as covenants into loan agreements (see represents its estimate of incurred losses in respect of trade and an acceptable level by buying or selling foreign currencies at spot rates Note 16) . The Group is in compliance with externally imposed capital Note 16) . The Group is in compliance with externally imposed capital other receivables and investments . The main components of this when necessary to address short-term imbalances . requirements . requirements . allowance are a specific loss component that relates to individually To minimise currency risk the Group prepares budgets taking into significant exposures, and a collective loss component established account possible changes in exchange rates, creates special reserves for groups of similar assets in respect of losses that have been to cover contingent expenses and losses . Currently the Group considers incurred but not yet identified . The collective loss allowance is the possibility of hedging currency risks by means of corresponding determined based on historical data of payment statistics for similar derivatives in the future . financial assets . (II) Interest rate risk (II) Guarantees Changes in interest rates impact primarily loans and borrowings The Group’s policy does not stipulate providing any financial by changing either their fair value (fixed rate debt) or their future cash guarantees for customers . flows (variable rate debt) . Management does not have a formal policy of determining how much of the Group’s exposure should be to fixed or

132 133 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 6. during the year ended 31 December 2012 and the year ended 31 Financial income and expenses December 2011, or had significant balances outstanding at 31 Related party transactions Year ended Year ended December 2012 and at 31 December 2011 are detailed below . OJSC Parties are generally considered to be related if the parties are 31 December 2012 31 December 2011 “Gazprom” is an ultimate Parent Company of OJSC “Mosenergo” under common control or if one party has the ability to control the other during the current and prior reporting periods . The Russian Federation Financial income 368 party or can exercise significant influence or joint control over the other is the ultimate controlling party of the Group during the current and party in making financial and operational decisions . In considering each Financial expense (31) – prior reporting periods . possible related party relationship, attention is directed to the substance Net financial income 555 368 of the relationship, not merely the legal form . (a) Transactions with Gazprom Group and its associates The nature of the related party relationships for those related The Group has the following turnover and balances outstanding with Financial income for the year ended 31 December 2012 and for the parties with whom the Group entered into significant transactions Gazprom Group and its associates (entities under common control) . year ended 31 December 2011 are from OJSС “Gazprombank”, associate of OJSC “Gazprom” . Revenue Year ended Year ended Outstanding balance 31 December 2012 31 December 2011 Outstanding Outstanding balance at balance at Heat 568 532 31 December 2012 31 December 2011 Electricity 396 400 Advances for acquisition of property, plant and equipment 12,676 – Other revenue 39 15 Investments 4,495 – Total 1,003 947 Cash and cash equivalents 1,607 9,546 Trade and other receivables 423 264 Expenses Total assets 19,201 9,810 Year ended Year ended 31 December 2012 31 December 2011 Торговая и прочая кредиторская задолженность (3,943) (750) Fuel expenses (80,469) (77,804) Total liabilities (3,943) (750) Security services (7) (7) Trade and other receivables include an outstanding balance with Investments at 31 December 2012 are deposits from OJSС Purchased electricity (2) (7) OJSС “Gazprombank”, associate of OJSC “Gazprom”, in the amount of “Gazprombank”, associate of OJSC “Gazprom” . Other operating expenses (791) (368) RR 128 million at 31 December 2012 (at 31 December 2011: RR 96 Trade and other payables include an outstanding balance with LLC million) . “Gazprom mezhregiongaz ” associate of OJSC “Gazprom”, in Total (81,269) (78,186) Cash and cash equivalents at 31 December 2012 and at 31 December the amount of RR 2,367 million at 31 December 2012 (at 31 December 2011 are from OJSС “Gazprombank”, associate of OJSC “Gazprom” . 2011: RR 735 million) . Other operating expenses for the year ended 31 December 2012 are from OJSC “Neftyanoi dom”, associate of OJSC “Gazprom”, in the Borrowings amount of RR 283 million (for the year ended 31 December 2011: RR Amount loaned Amount loaned Outstanding Outstanding 267 million) . for the year ended for the year ended balance at balance at 31 December 2012 31 December 2011 31 December 2012 31 December 2011 Non-current borrowings 1,700 – 1,700 – Total borrowings 1,700 – 1,700 –

134 135 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

(b) Transactions with key management Expenses Key management personnel (the members of the Board of Directors Year ended Year ended and Management Committee of the Group) received the following 31 December 2012 31 December 2011 remuneration, which is included in personnel expenses: Heat transmission (19,647) (26,465) Expenses Purchased heat and electricity (9,920) (10,836) Year ended Year ended 31 December 2012 31 December 2011 Electricity market administration fees (1,234) (1,154) Wages and salaries) (96) (146) Water usage expenses (1,197) (1,112) Social taxes and contributions (11) (2) Security services (373) (335) Termination benefits (46) Fuel expenses (130) (144) Total (110) (194) Fire prevention services (60) (75) Other operating expenses (756) (915) There are no outstanding balances at 31 December 2012 and at 31 December 2011 as for transactions with key management . Total (33,317) (41,036) (c) Transactions with other state-controlled entities Financial income and expenses Information below excludes transactions and outstanding balances with Gazprom Group and its associates as disclosed in Note 6(a) . Year ended Year ended In the normal course of business the Group enters into transactions 31 December 2012 31 December 2011 with other entities under control of government of the Russian Federation . Financial income 493 268 Revenue Net financial income 493 268 Year ended Year ended 31 December 2012 31 December 2011 Outstanding balance Electricity 81,658 73,454 Outstanding balance Outstanding balance at 31 December 2012 at 31 December 2011 Heat 54,300 58,927 Trade and other receivables 18,425 17,032 Other revenue 2,116 1,733 Cash and cash equivalents 4,675 14,206 Total 138,074 134,114 Other non-current assets 523 – Other current assets – 523 Total assets 23,623 31,761 Trade and other payables (3,461) (8,341) Total liabilities (3,461) (8,341)

The Group is a party of Capacity Supply Contracts, see Note 32 .

136 137 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 7. Accumulated depreciation (including impairment) Property, plant and equipment Buildings and Plant and Transmission Other Construction in Total Appraised value constructions equipment networks progress Buildings and Plant and Transmission Other Construction in Total Balance at 1 January 2011 (12,423) (7,609) (2,518) (2,136) (253) (24,939) constructions equipment networks progress Depreciation charge (6,233) (4,413) (1,347) (1,048) – (13,041) Balance at 1 January 2011 100,453 65,784 10,894 5,107 20,925 203,163 Disposals 28 17 2 46 – 93 Additions 8 – – 4 23,390 23,402 Elimination of accumulated depreciation on property, plant and Disposals (130) (34) (5) (94) (1) (264) equipment transferred to assets Transfers 6,191 8,879 211 1,889 (17,170) – classified as held for sale 482 22 – 7 – 511 Elimination of accumulated Impairment loss (1,343) – – – – (1,343) depreciation on property, plant and Balance at 31 December 2011 equipment transferred to assets (19,489) (11,983) (3,863) (3,131) (253) (38,719) classified as held for sale (482) (22) – (7) – (511) Transfer to assets classified as held Balance at 1 January 2012 for sale (1,672) (96) – (8) – (1,776) (19,489) (11,983) (3,863) (3,131) (253) (38,719) Depreciation charge Balance at 31 December 2011 104,368 74,511 11,100 6,891 27,144 224,014 (6,333) (4,719) (1,428) (1,236) – (13,716)

Disposals 198 107 42 47 – 394 Elimination of accumulated Balance at 1 January 2012 104,368 74,511 11,100 6,891 27,144 224,014 depreciation on property, plant and Acquisition of subsidiary – 53 – – 1,682 1,735 equipment transferred to assets classified as held for sale 131 1 – – – 132 Additions 46 1 – 365 17,968 18,380 Reversal of impairment loss on Disposals (554) (263) (64) (77) (1) (959) property, plant and equipment – – 16 – – 16 Transfers Impairment loss on property, plant and 471 3,368 632 1,284 (5,755) – equipment (1) (320) – (4) (336) (661) Elimination of accumulated Balance at 31 December 2012 depreciation on property, plant and (25,494) (16,914) (5,233) (4,324) (589) (52,554) equipment transferred to assets classified as held for sale (131) (1) – – – (132) Net book value Transfer to assets classified as held Buildings and Plant and Transmission Other Construction in Total for sale (97) – – – – (97) constructions equipment networks progress Balance at 31 December 2012 104,103 77,669 11,668 8,463 41,038 242,941 At 1 January 2011 88,030 58,175 8,376 2,971 20,672 178,224

At 1 January 2012 84,879 62,528 7,237 3,760 26,891 185,295

At 31 December 2012 78,609 60,755 6,435 4,139 40,449 190,387

138 139 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Net book value had no revaluation taken place Note 8.

Buildings and Plant and Transmission Other Construction in Total Investment property constructions equipment networks progress 2012 2011 At 1 January 2011 32,934 43,522 1,719 1,995 16,383 96,553 Balance at 1 January 792 898 At 1 January 2012 36,467 48,581 1,705 2,610 22,244 111,607 Change in fair value – (61) At 31 December 2012 34,931 48,360 2,053 3,517 33,284 122,145 Transfer to assets classified as held for sale – (45)

Balance at 31 December 792 792 Borrowing costs of RR 926 million and RR 1,675 million for the In 2012 the Group determined that the carrying amount of property, year ended 31 December 2012 and 31 December 2011, respectively, plant and equipment does not differ materially from that which would be are capitalised in additions above . Capitalisation rates of 8 98%. and determined using fair value at the end of reporting period and, therefore, The fair value of the Group’s investment property at 31 December 2012 was determined to be RR 792 million (at 31 December 2011: RR 10 .75% for the year ended 31 December 2012 and 31 December 2011, revaluation was not performed at 31 December 2012 . 792 million) and based on the market trends for the year 2012 (at 31 revenue . were used to determine the amount of borrowing costs eligible for December 2011: on trends for the year 2011) . Where the Group is the lessor, the future minimum lease payments capitalization . The capitalization rate represented the weighted average (b) Impairment test Rental income for the year ended 31 December 2012 and for the receivable under non-cancellable operating leases are as follows: of the borrowing costs applicable to the borrowings of the Group that are The Group assessed at 31 December 2012 and at 31 December year ended 31 December 2011 amounted to RR 80 million and RR outstanding during the period . 2011 whether there were any indicators that the Group assets may 103 million, respectively, was recognised in profit and loss in other There were no properties pledged as security for Company’s bank be impaired . The Company has recognized 661 million of impairment loans at 31 December 2012 and at 31 December 2011 . at the reporting date related to assets which would be taken out of operation . 31 December 2012 31 December 2011 (a) Revaluation The Group changed its accounting policy in respect of property, (c) Leased assets Less than one year 78 108 plant and equipment measurement from cost model to revaluation The Group leases production plant and equipment under a number Between one and five years – – model starting from 1 January 2007 in order to provide users of the of finance lease agreements . All leases provide the Group with the financial statements with more reliable information about the value of option to purchase the buildings and equipment at a beneficial price . More than five years – – the Group’s property, plant and equipment . The leased plant and equipment secures lease obligations (see Note The appraised value of property, plant and equipment presented 31) . At 31 December 2012 the net carrying amount of leased plant Total 78 108 above was estimated as fair value by independent appraiser at 31 and equipment was RR 252 million (at 31 December 2011: RR 230 million) . December 2008 . Note 9. Disposal group classified as held for sale (a) Assets classified as held for sale

31 December 2012 31 December 2011

Property, plant and equipment 1,544 1,700

Investment property 42

Total 1,576 1,742

(b) Liabilities classified as held for sale

31 December 2012 31 December 2011

Deferred tax liabilities 268 301

Total 268 301

140 141 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) During the year ended 31 December 2012 the Group was in the in the amount of RR 268 million (at 31 December 2011: RR 1,742 million Note 12. process of disposing non-core assets which led to transfers to assets and RR 301 million, respectively) . The Group envisages selling its real Trade and other receivables classified as held for sale from property, plant and equipment assets in estate portfolio listed above during 2013 . the amount of RR 97 million and from investment property in the amount During the year ended 31 December 2012 the Company sold assets of RR 0 million (for the year ended 31 December 2011: RR 1,776 million classified as held for sale in the amount of RR 252 million with gain on 31 December 2012 31 December 2011 and RR 45 million, respectively) . disposal recognised in profit and loss in the amount of RR 501 million Trade receivables 23,047 21,380 At 31 December 2012 the Group is in possessing of assets for that is disclosed in Note 26 (for the year ended 31 December 2011: RR disposal in the amount RR 1,576 million and the corresponding liabilities 818 million and RR 537 million, respectively) . Other receivables 3,132 4,021

Note 10. Financial assets 26,179 25,401 Inventories Advances to suppliers and prepaid expenses 2,220 931 VAT recoverable 206 235 31 December 2012 31 December 2011 Taxes other than income tax prepaid 150 115 Fuel 4,478 4,994 Other receivables 2,387 470 Raw materials and consumables 2,058 1,847 Total 31,142 27,152 Other inventories – 39 Current assets 29,610 27,147 Total 6,536 6,880 Non-current assets 1,532 5

Raw materials and consumables are stated net of a provision for Inventories held by the Group are not subject to any retention of title Total 31,142 27,152 obsolete inventory amounting to RR 10 million and RR 12 million at clauses . 31 December 2012 and at 31 December 2011, respectively . The write- downs and reversals are included in other materials expenses . Trade receivables balances are recorded net of provision for impairment in amount of RR 3,508 million and RR 2,516 million at 31 Note 11. December 2012 and at 31 December 2011, respectively . Investments Other receivables balances are recorded net of provision for impairment in amount of RR 109 million and RR 211 million at 31 31 December 2012 31 December 2011 December 2012 and at 31 December 2011, respectively . Deposits OJSC “Gazprombank” The Group’s exposure to credit and currency risks and impairment 4,495 – losses related to trade and other receivables is disclosed in Note 30 . Promissory notes CJSC “Alfa-Bank” 338 – Total 4,833 –

The Group’s exposure to credit, currency and interest risks related to investments is disclosed in Note 30 .

142 143 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 13. Other assets 31 December 2012 31 December 2011 % Balances % Balances 31 December 2012 31 December 2011

Other non-current assets OJSC “Sberbank Rossii” 7 .30 4,672 – – OJSC “Alfa Bank” 7 .60 4,242 – – Constructed assets financed by the government of Moscow city 523 – OJSC “Gazprombank” 4 .40 1,607 7 .78 9,321 Intangible assets 396 503 OJSC “Bank VTB” – – 7 .78 14,205 Investments 223 – Total – 10,521 – 23,526 Available-for-sale financial assets 9 9 Other assets 2,570 1,722 Note 15. Total other non-current assets 3,721 2,234 Equity (a) Share capital and share premium (c) Reserves At 31 December 2012 the authorised share capital comprised At 31 December 2012 reserves composed of the revaluation of Other current assets 39,749,359,700 ordinary shares (at 31 December 2011: 39,749,359,700) available-for-sale financial assets in amount of RR 3 million (at 31 Constructed assets financed by the government of Moscow city of RR 1 .00 par value each . All issued shares are fully paid . December 2011: RR 3 million) and the revaluation reserve relates – 523 The holders of ordinary shares are entitled to receive dividends to the revaluation of property, plant and equipment in amount of Other assets 393 751 as declared from time to time and are entitled to one vote per share RR 83,778 million (for the result of financial year 2011: RR 83,834 at meetings of the Company . In respect of the Company’s shares that million) . Total other current assets 393 1,274 are held by the Group (see below), all rights are suspended until those (d) Dividends shares are reissued . In 19 June 2012 the general shareholders meeting made the Share premium amounted to RR 49,213 million represents excess of Other assets include current and non-current input VAT from Since June 2005 the Group was engaged in the construction decision to pay dividends for the result of financial year 2011 . The the cash proceeds from the issue of share capital over its par value net of advances for acquisition of property, plant and equipment in total of the power plant further to be jointly used by the Group and the amount of declared dividends on the issuer shares was RR 0 .03 per the transaction costs amounted to RR 7 million . amount of RR 2,575 million and RR 1,477 million at 31 December 2012 government of Moscow city . Construction of the distribution unit is share, total amount of dividends is RR 1,188 million (for the result of and at 31 December 2011, respectively . jointly financed and shall be distributed between the parties involved (b) Treasury stock financial year 2010: RR 0 .02 per share, total amount of dividends is Investments as part of other non-current assets include promissory upon completion . Included in other payables and accrued expenses The treasury stock at 31 December 2012 and at 31 December 2011 RR 792 million) . notes of CJSC “Alfa-Bank” in total amount of RR 223 million with a is a liability to the government of Moscow city amounting to RR 523 amounted to RR 871 million . The decision related to dividends distribution for fiscal year 2012 is maturity of first half of 2014 . million . No decisions regarding further operations with treasury stock were scheduled at the general shareholders’ meeting in May-June 2013 . made by the Company’s management . Note 14. Cash and cash equivalents Note 16. 31 December 2012 31 December 2011 Borrowings Call deposits 10,521 23,526 The note provides information about the contractual terms of the Group’s interest-bearing borrowings, which are measured at Bank balances 2,111 2,046 amortised cost .

Total 12,632 25,572

Call deposits are classified as cash equivalents when their original Information in respect of call deposits and applicable interest rates maturity is three month or less . is as follows:

144 145 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

31 December 2012 31 December 2011 Note 17. Employee benefits Non-current borrowings The Group sponsors a post-employment and other long-term benefit with collective bargaining agreement and other documents . The main Unsecured bank loans 9,916 5,223 program that covers the majority of the Group’s employees . The plan benefits provided under this agreement are lump sum upon retirement principally consists of a defined contribution plan enabling employees and material assistance . Unsecured bond issues 5,000 5,000 to contribute a portion of their salary to the plan and equivalent portion A new collective bargaining agreement came into force from of contribution from the Group . The plan is administrated by non-state 1 January 2012 . There were no significant changes in benefits Other loans 1,700 - pension fund . provided via the agreement compared to the version effective in Total 16,616 10,223 To be entitled for participation in this defined contribution pension the prior year . plan an employee should meet certain age and past service requirements . Compensations for redundancies paid by the Group for the Maximum possible amount of employer’s contribution is limited and year ended 31 December 2012 and for the year ended 31 December 2011 amounted to RR 36 million and 108 million, respectively, were Current borrowings and current portion of non-current borrowings depends on employee’s position in the Group . In addition to defined contribution pension plan the Group maintains recognised in profit and loss in personnel expenses . Current portion of unsecured bank loans 1,427 571 several plans of a defined benefit nature which are provided in accordance Current portion of unsecured bond issues 471 4,783 31 December 2012 31 December 2011 Total 1,898 5,354 Present value of unfunded obligations 310 278

(a) Terms and debt repayment schedule Recognised liability for defined benefit obligations 310 278 Terms and conditions of outstanding liabilities are as follows: Unrecognised actuarial (losses)/gains (5) 6 31 December 2012 31 December 2011 Nominal Year of Unrecognised past service cost Currency Carrying Carrying (63) (63) interest rate maturity Face value Face value amount amount Net liability recognised in the consolidated statement of financial position 242 221 Unsecured bank loans 12,379 11,343 6,087 5,794 EURIBOR (a) Movement in the present value of the defined benefit obligations BNP Paribas EURO 2022 6,425 5,782 2,465 2,329 6M+2% 2012 2011 EURIBOR Credit Agricole CIB Deutschland EURO 2024 5,389 5,001 2,691 2,490 6M+1 .95% Defined benefit obligations at 1 January 278 300 Credit Agricole CIB Deutschland EURO 7 .2% 2014 504 500 868 912 Past service cost 25 23 EURIBOR Credit Agricole CIB Deutschland EURO 2026 61 60 63 63 6M+1% Interest on employee benefit obligations 23 21

Unsecured bond issues 5,471 5,471 9,783 9,783 Actuarial losses/(gains) 13 (23) Russian Unsecured bond issue № 3 8 .7% 2014 5,000 5,000 5,000 5,000 Current service cost 8 8 Roubles Benefits paid Russian (32) (41) Unsecured bond issue № 2 1 .00% 2013 471 471 4,783 4,783 Roubles Effect of curtailment and settlement (5) (10) Other loans 1,700 1,700 – – Defined benefit obligations at 31 December 310 278 Russian LLC “Gazprom energoholding” 7 .25% 2022 1,048 1,048 – – Roubles Russian OJSC “OGK-2” 7 .25% 2021 652 652 – – Roubles Total 19,550 18,514 15,870 15,577

146 147 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) (b) Expenses recognised in profit or loss Note 18. Year ended Year ended Trade and other payables 31 December 2012 31 December 2011 31 December 2012 31 December 2011 Termination benefits 36 108 Trade payables Interest on employee benefit obligations 23 21 6,722 9,165 Other payables Amortisation of past service cost 20 18 3,313 4,717 Financial liabilities Current service cost 8 8 10,035 13,882 Advances received Net actuarial losses recognized in period 4 1 2,506 3,235 Past service cost 3 23 Other payable 3,304 2,566 Effect of curtailment and settlement (3) (6) Total 15,845 19,683 Total 91 173 Current liabilities 14,720 18,936 (c) Actuarial assumptions Non-current liabilities 1,125 747 Principal actuarial assumptions (expressed as weighted averages) Total 15,845 19,683 are as follows: (I) Financial assumptions Other payables as part of financial liabilities include accounts payable advances received amounting to RR 2,168 million at 31 December 2012 31 December 2012 31 December 2011 for acquisition of property, plant and equipment amounting to RR 2,571 (at 31 December 2011: RR 1,487 million) . Discount rate 7 .00% 8 .50% million at 31 December 2012 (at 31 December 2011: RR 2,468 million) . The Group’s exposure to currency and liquidity risks related to trade Other payables as part of non-financial liabilities include VAT on and other payables is disclosed in Note 30 . Inflation rate 5 .50% 6 .00% Future salary increases 7 .50% 7 .50% Note 19. Future pension increases 5 .50% 6 .00% Other taxes payable 31 December 2012 31 December 2011 (II) Demographic assumptions Withdrawal rates assumption is as follows: expected staff turnover Retirement ages assumption is as follows: average retirement ages VAT payable 801 279 rates vary depending on employee past service in range from 25% p .a . are 62 years for men and 58 years for women . Very similar retirement Social contributions payable 206 129 for employees with 1 year of past service to around 7% p .a . for those ages were used in previous period . who have 20 or more years of service . Compared to previous period the Mortality table: Russian urban population mortality table 1986-87 . Property tax payable 103 – changes in the assumption are insignificant . Other taxes payable 10 25 (d) Historical information Total 1,120 433 31 December 31 December 31 December 31 December 31 December 2012 2011 2010 2009 2008 Present value of the defined benefit obligation 310 278 300 245 482 Deficit in the plan 310 278 300 245 482

Experience adjustments arising on plan liabilities 1 (10) 18 (3) 42

In 2013 the Group expects to contribute RR 43 million to its defined benefit plans .

148 149 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 20. Note 23. Provisions Other external supplies

2012 2011 Year ended Year ended 31 December 2012 31 December 2011 Balance at 1 January 93 71 Electricity market administration fees 1,234 1,154 Provisions made during the year 120 117 Desalted water supply 972 383 Provisions used during the year (138) (95) Security services 483 441 Provisions recovered during the year (8) – Cleaning services 300 300 Balance at 31 December 67 93 Transport services 260 192 The legal provision balance was made by the Company in amount balance in amount of RR 28 million and RR 30 million was made in Cetification and testing 219 171 of RR 67 million and RR 93 million at 31 December 2012 and at 31 respect of the claims from OJSC “MOEK” and LLC “Prestigniy proect” Communication services December 2011, respectively . At 31 December 2012 the majority of this (at 31 December 2011: RR 74 million and RR 0 million) . 106 90 Fire prevention services Note 21. 69 80 Revenue Other services 293 304 Year ended Year ended Total 3,936 3,115 31 December 2012 31 December 2011 Electricity market administration fees include payments to electricity market and payments to JSC “SO UES” for regulation of Electricity 85,816 88,715 OJSC “Administrator torgovoi sistemy” and CJSC “Centr finansovyh generating assets operation of the Group . Heat 67,694 69,544 raschetov” for arrangement of settlements between parties on Other revenue 3,629 2,860 Note 24. Total 157,139 161,119 Personnel expenses Year ended Year ended 31 December 2012 31 December 2011 Other revenue relates to rent, water usage, repair and maintenance ended 31 December 2012 and for the year ended 31 December 2011, services provided by the Group . respectively, relates to resale of purchased electricity on wholesale Wages and salaries 6,714 6,502 Approximately 5% and 6% of sales of electricity for the year market NOREM . Payroll tax 1,497 1,298 Note 22. Personnel training expenses 107 60 Cost of materials Catering 101 99 Year ended Year ended Voluntary medical insurance expenses 101 98 31 December 2012 31 December 2011 Termination benefits 36 108 Fuel expenses 83,339 78,861 Amortisation of past service cost 20 18 Purchased heat and electricity 10,001 10,843 Current service cost 8 8 Water usage expenses 1,199 1,166 Net actuarial losses recognised in period 4 1 Other materials expenses 1,003 1,110 Past service cost 3 23 Total 95,542 91,980 Total 8,591 8,215

Electricity is purchased mainly on wholesale electricity market . The Group average headcount totaled 8,150 and 8,134 at 31 December 2012 and at 31 December 2011, respectively .

150 151 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 25. Note 27. Other operating expenses Financial income and expenses Year ended Year ended Year ended Year ended 31 December 2012 31 December 2011 31 December 2012 31 December 2011 Trade and other receivables impairment loss and derecognition 1,153 1,616 Financial income Rent payments 826 680 Interest income on bank deposits 1,300 1,190 Legal, consulting and data processing services 762 802 Foreign exchange gain 182 6 Loss on disposal of property, plant and equipment 253 74 Other interest income 126 81 Software expenses 210 168 Total 1,608 1,277 Environmental payments 69 85 Financial expenses Safety arrangement and precautions 69 64 Interest expenses on borrowings (926) (1,675) Insurance expenses 64 244 Lease expenses (26) (19) Cession agreement 50 83 Interest on employee benefit obligations (23) (21) Bank services 21 41 Foreign exchange loss – (158) Impairment loss on assets classified as held for sale 11 15 Other interest expenses (79) – Loss on change in fair value of investment property – 61 Total (1,054) (1,873) Other miscellaneous 105 198 Less capitalised interest expenses on borrowings related to qualifying assets (Note 7) 926 1,675 Total 3,593 4,131 Net financial expenses recognised in profit or loss (128) (198) Note 26. Other operating income Year ended Year ended Year ended Year ended 31 December 2012 31 December 2011 31 December 2012 31 December 2011 Interest income 1,426 1,271 Fines and penalties business contracts 682 704 Interest expenses (105) (19) Subsidies on the difference in tariffs for sales to the urban population 644 619 Net interest 1,321 1,252 Gain from disposal of assets classified as held for sale 501 537 Net interest result by categories of assets and liabilities Income from sales of goods and materials 38 25 Effect of curtailment and settlement 3 6 Year ended Year ended 31 December 2012 31 December 2011 Other miscellaneous 59 32 Cash and cash equivalents 1,310 1,271 Total 1,927 1,923 Investments 116 – Reimbursement from government of Moscow city represents cash Liabilities carried at amortised cost (105) (19) paid to the Group to compensate the difference between tariffs set to the Total urban population and the tariffs of the Group . 1,321 1,252

152 153 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 28. (d) Deferred income tax Income tax Recognised deferred tax assets and liabilities are as follows: Assets Liabilities Net (a) Income tax The applicable tax rate of the Group is the income tax rate of 20% 31 December 31 December 31 December 31 December 31 December 31 December (for the year ended 31 December 2011: 20%) . 2012 2011 2012 2011 2012 2011 Property, plant and equipment – – (25,491) (25,448) (25,491) (25,448) Year ended Year ended 31 December 2012 31 December 2011 Assets classified as held for sale – – (268) (301) (268) (301) Current tax expense Investment property – – (50) (45) (50) (45) Current period (3,297) (1,733) Trade and other receivables – – (223) (584) (223) (584) Over provided in prior periods 1,455 1,854 Trade and other payables 55 154 – – 55 154 Deferred tax expense Employee benefits 49 45 – – 49 45 Origination and reversal of temporary differences 144 (2,195) Provisions 13 18 – – 13 18 Income tax expense (1,698) (2,074) Borrowings – – (207) (59) (207) (59) Other current and non-current assets – – (98) (181) (98) (181) Reconciliation of effective tax rate is as follows: Other 16 39 – – 16 39 Year ended Year ended 31 December 2012 31 December 2011 Total 133 256 (26,337) (26,618) (26,204) (26,362) Profit before income tax 8,014 11,966 Movements in deferred income tax during the year ended 31 Income tax at applicable tax rate (1,603) (2,393) December 2011 and the year ended 31 December 2012 are as follows: Non-deductible / non-taxable items (95) 319 31 December Recognised in Recognised in Reclassification 31 December Income tax expense (1,698) (2,074) 2010 income equity 2011 Property, plant and equipment (24,297) (1,724) 267 306 (25,448) (b) Tax effects of components of other comprehensive income Assets classified as held for sale (117) 124 – (308) (301) Year ended 31 December 2012 Year ended 31 December 2011 Investment property (54) 7 – 2 (45) Before tax Tax charge After tax Before tax Tax charge After tax Trade and other receivables 32 (616) – – (584) Impairment loss on property, plant and equipment (70) 14 (56) (1,336) 267 (1,069) Trade and other payables 128 26 – – 154 Impairment loss of available-for-sale Employee benefits 40 5 – – 45 financial assets – – – (6) 1 (5) Provisions 14 4 – – 18 Total (70) 14 (56) (1,342) 268 (1,074) Borrowings (31) (28) – – (59) Other current and non-current assets (186) 4 1 – (181) Other 36 3 – – 39 Total (24,435) (2,195) 268 – (26,362)

154 155 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 30. 31 December Recognised Recognised Reclassification 31 December 2011 in income in equity 2012 Financial instruments Property, plant and equipment (25,448) (76) 14 19 (24,491) (a) Credit risk Assets classified as held for sale (301) 52 – (19) (268) (I) Exposure to credit risk The carrying amount of financial assets represents the maximum Investment property (45) (5) – – (50) credit exposure . The maximum exposure to credit risk at the reporting Trade and other receivables (584) 361 – – (223) date was: Trade and other payables 154 (99) – – 55 Carrying amount Employee benefits 45 4 – – 49 31 December 2012 31 December 2011 Provisions 18 (5) – – 13 Loans and receivables 26,179 25,401 Borrowings (59) (148) – – (207) Trade and other receivables (Note 12) 26,179 25,401 Other current and non-current assets (181) 83 – – (98) Held-to-maturity investments 5,056 – Other 39 (23) – – 16 Investments (Note 11) 4,833 – Total (26,362) 144 14 – (26,204) Other investments (Note 13) 223 – Available-for-sale financial assets (Note 13) 9 9 Note 29. Cash and cash equivalents (Note 14) 12,632 25,572 Earnings per share The calculation of basic earnings per share was based on the profit Total financial assets 43,876 50,982 attributable to ordinary shareholders and weighted average number of ordinary shares outstanding, calculated as follows: The maximum exposure to credit risk for receivables at the reporting date by type of sales was: Year ended Year ended 31 December 2012 31 December 2011 Carrying amount Issued shares 39,749,360 39,749,360 31 December 2012 31 December 2011 Effect of own shares held (140,229) (140,229) Heat 13,172 14,760 Weighted average number of ordinary shares (thousands) 39,609,131 39,609,131 Electricity 9,224 6,181 Other 3,783 4,460 The following is a reconciliation of the profit attributable to ordinary shareholders: Total 26,179 25,401

Year ended Year ended Debtors within two main classes of accounts receivable – electricity crisis, would suggest that the risk of default from such customers is 31 December 2012 31 December 2011 and heat – are quite homogenous regarding their credit quality and very low . concentration of credit risk . The most important customers of the Group, OJSC “MOEK” and CJSC Weighted average number of ordinary shares issued (thousands) 39,609,131 39,609,131 The account receivables of the Group are primarily comprised of “CFR”, accounts for RR 7,733 million and RR 2,909 million, respectively, Profit for the year 6,316 9,892 a few, large, reputed customers who purchase electricity and heat . for the trade receivables carrying amount at 31 December 2012 (at 31 Historical data, including payment history during the recent credit December 2011: RR 10,684 million and RR 2,317 million, respectively) . Profit per ordinary share (basic and diluted) (in Russian Roubles) 0.16 0.25

There are no dilutive potential ordinary shares as of 31 December 2012 and 31 December 2011 .

156 157 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

(II) Impairment losses (III) Credit risk related to the Group’s cash in banks and call deposits All bank balances and call deposits are neither past due nor The aging of trade and other receivables at the reporting date was: impaired . Analysis by credit quality of bank balances and call deposits are as follows: 31 December 2012 31 December 2011

Gross Impairment Gross Impairment Name of the bank Rating agency Rating 31 December 2012 Rating 31 December 2011 Not past due 11,573 – 16,185 – OJSC “Alfa-Bank” Fitch Ratings AA+(rus) 5,205 AA(rus) 1,663 Past due 0-30 days 8,764 – 6,399 – OJSC “Sberbank Russia” Moody’s Interfax Aaa .ru 4,675 Aaa ru. 1 Past due 31-120 days 3,417 48 776 – OJSC “Gazprombank” Standard & Poor’s ruAAA 1,607 ruAA+ 9,546 Past due 121-365 days 2,047 720 1,850 – OJSC “AB “Russia” Moody’s Interfax A3 .ru 1,143 A3 ru. 154 More than one year 3,995 2,849 2,918 2,727 OJSC Bank “VTB” Fitch Ratings AAA(rus) – AAA(rus) 14,205 Total 29,796 3,617 28,128 2,727 Other – – 2 – 3 Total 12,632 25,572 The movement in the allowance for impairment in respect of trade and other receivables during the period was as follows: The Company pursues the policy of cooperation with a number of the top Russian banks, which is approved by the Board of Direc- 2012 2011 tors . Balance at 1 January 2,727 1,434 (b) Liquidity risk Impairment loss recognised during the period 1,058 1,295 The following are the contractual maturities of financial liabilities, including estimated interest payments at 31 December 2012: Allowance used during the period (168) (2) Carrying Contractual Balance at 31 December 0-6 moths 6-12 moths 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Over 5 yrs 3,617 2,727 amount cash flows Non-derivative financial The impairment allowance at 31 December 2012 of RR 3,617 million the amount owed by the most significant customer of the Group (see liabilities (at 31 December 2011: RR 2,727 million) relates to the customers that above), relates to customers that have a good track record with the Unsecured bank loans were declared bankrupt or had significant liquidity problems during the Group . 11,343 14,377 886 869 1,530 1,337 1,312 1,285 7,158 reporting period . The allowance accounts in respect of trade and other receivables Unsecured bond issues 5,471 6,342 691 217 5,434 – – – – Based on historic default rates, the Group believes that no are used to record impairment losses unless the Group is satisfied that impairment allowance is necessary in respect of trade and other no recovery of the amount owing is possible; at that point the amount Other loans 1,700 2,866 31 61 123 123 123 123 2,282 receivables not past due or past due by up to 120 days; 79 .72 percent is considered irrecoverable and written off against the financial asset Trade and other payables 10,035 10,035 9,853 – 182 – – – – of the balance (at 31 December 2011: 89 .63 percent), which includes directly . Total 28,549 33,620 11,461 1,147 7,269 1,460 1,435 1,408 9,440

The following are the contractual maturities of financial liabilities, including estimated interest payments at 31 December 2011:

158 159 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

Carrying Contractual 0-6 moths 6-12 moths 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Over 5 yrs 31 December 2012 31 December 2011 amount cash flows Non-derivative financial EURO 161 135 liabilities Unsecured bank loans 5,794 7,611 372 366 1,047 828 635 615 3,748 A 2% weakening of the RR against the EUR at 31 December 2012 extremes in the reported period was approximately 9% (at 31 Decem- would have had the equal but opposite effect on the above currencies to ber 2011: 11%) . Unsecured bond issues 9,783 11,498 5,220 256 511 5,511 – – – the amounts shown above, on the basis that all other variables remain (d) Interest rate risk constant . Trade and other payables 13,882 13,882 13,779 – 103 – – – – The actual decrease in the average exchange rates for the period (i) Profile Total 29,459 32,991 19,371 622 1,661 6,339 635 615 3,748 ended 31 December 2012 was approximately 2% for the EURO (at 31 At the reporting date the interest rate profile of the Group’s interest- December 2011: 1%), although the difference between the two actual bearing financial instruments was: All of the Group’s financial liabilities are carried at amortised cost . (c) Currency risk Carrying amount (I) Exposure to currency risk 31 December 2012 31 December 2011 EURO-denominated Fixed rate instruments 31 December 2012 31 December 2011 Financial assets (Note 11, 12, 13, 14) 43,876 50,982 Investments 4,475 – Financial liabilities (Note 16,18) (17,706) (24,577) Cash and cash equivalents 26 – Total 26,170 26,405 Unsecured bank loans (11,343) (5,794) Variable rate instruments Gross balance sheet exposure (6,842) (5,794) Financial liabilities (Note 16) (10,843) (4,882) Estimated forecasted interest income 120 – Total (10,843) (4,882) Estimated forecasted interest expenses (238) (119) Gross exposure (118) (119) (II) Fair value sensitivity analysis for fixed rate instruments (III) Cash flow sensitivity analysis for variable rate instruments The Group does not account for any fixed rate financial assets and A change of 100 basis points in interest rates at the reporting date liabilities at fair value through profit or loss, and the Group does not des- would have increased (decreased) profit or loss by the amounts shown Net exposure (6,960) (5,913) ignate derivatives (interest rate swaps) as hedging instruments under a below . This analysis assumes that all other variables, in particular for- fair value hedge accounting model . Therefore a change in interest rates eign currency rates, remain constant . The analysis is performed on the The following significant exchange rates applied during the period: at the reporting date would not affect profit or loss . same basis for 31 December 2012 and 31 December 2011 . Average rate Reporting date spot rate

31 December 2012 31 December 2011 31 December 2012 31 December 2011 31 December 2012 31 December 2011 EURO 1 39 .9524 40 .8848 40 .2286 41 .6714 100 bp increase 100 bp decrease 100 bp increase 100 bp decrease Variable rate instruments (98 .9) 98 .9 (35 .0) 35 0.

(II) Sensitivity analysis Cash flow sensitivity (net) (98.9) 98.9 (35.0) 35.0 A 2% strengthening of the RR against EUR at 31 December 2012 would have decreased equity and profit or loss by the amounts shown (e) Fair values below . This analysis assumes that all other variables, in particular inter- The management believes that the fair value of the Group’s financial est rates, remain constant . The analysis is performed on the same basis assets and liabilities approximates their carrying amounts: for 31 December 2011 .

160 161 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles)

31 December 2012 31 December 2011 31 December 2012 31 December 2011

Carrying amount Fair value Carrying amount Fair value Present value of Present value of Future minimum Future minimum Interest minimum lease Interest minimum lease Trade and other receivables (Note 12) lease payments lease payments 26,179 26,179 25,401 25,401 payments payments Cash and cash equivalents (Note 14) 12,632 12,632 25,572 25,572 Less than one year 77 38 39 11 2 9 Investments (Note 11) 4,833 4,833 – – Between one and five years 30 6 24 6 1 5 Other investments (Note 13) 223 223 – – More than five years – – – – – – Available-for-sale financial assets (Note 13) 9 9 9 9 Total 107 44 63 17 3 14 Unsecured bank loans (Note 16) (11,343) (11,343) (5,794) (5,794) Trade and other payables (Note 18) (10,035) (10,035) (13,882) (13,882) Note 32. Commitments and contingencies Unsecured bond issues (Note 16) (5,471) (5,496) (9,783) (9,946) (a) Capital commitments Other loans (Note 16) (1,700) (1,700) – – At 31 December 2012 the Group was involved in a number of tential environmental liabilities cannot be estimated reliably but could be contracts for construction and purchase of property, plant and equip- material . However, management believes that under existing legislation The basis for determining fair values is disclosed in Note 4 . ment for RR 50,034 million (at 31 December 2011: RR 23,525 mil- there are no significant unrecorded liabilities or contingencies, which lion) . The amount includes Capacity Supply Contracts capital com- could have a materially adverse effect on the operating results or finan- Note 31. mitments for the amount RR 32,789 million (at 31 December 2011: cial position of the Group . RR 16,694 million) . Leases (d) Insurance (a) Operating leases (b) Taxation environment The insurance industry in the Russian Federation is in a developing Operating leases refer mainly to long-term rental agreements for ended 31 December 2011 operating lease expenses in the amounts of The taxation systems in the Russian Federation are relatively stage and many forms of insurance protection common in other parts land rent where generation facilities of the Group are located . The leases RR 826 million and RR 680 million respectively, were recognised in the new and are characterised by numerous taxes and frequently chang- of the world are not generally available . Management believes that the typically run for periods from 5 to 45 years with an option to renew the consolidated statement of comprehensive income . ing legislation, which is often unclear, contradictory, and subject to Group has adequate property damage coverage for its main production lease . During for the year ended 31 December 2012 and for the year Non-cancellable operating lease rentals are payable as follows: interpretation . Often, differing interpretations exist among different assets . The Group does not have full coverage for business interrup- tax authorities within the same jurisdictions and among taxing au- tion and third party liability . Until the Group obtains adequate insurance 31 December 2012 31 December 2011 thorities in different jurisdictions . Taxes are subject to review and coverage, there is a risk that the loss from business interruption and investigation by a number of authorities, which are enabled by law to third party 0liability could have a material adverse effect on the Group’s Less than one year 481 408 impose severe fines, penalties and interest charges . In the Russian operations and financial position . Federation a tax year remains open for review by the tax authorities Between one and five years (e) Guarantees 1,850 1,626 during the three subsequent calendar years; however, under certain The Group has issued direct guarantees to third parties which re- More than five years 13,573 8,877 circumstances a tax year may remain open longer . Recent events within the Russian Federation suggest that the tax authorities are tak- quire the Group to make contingent payments based on the occurrence Total 15,904 10,911 ing a more assertive position in their interpretation and enforcement of certain events consisting primarily of guarantees for mortgages of of tax legislation . Group employees amounting to RR 94 million at 31 December 2012 (at (b) Finance leases Management believes that it has provided adequately for tax liabili- 31 December 2011: RR 150 million) . Finance lease rentals are payable as follows (see Note 7): ties based on its interpretations of applicable Russian tax legislation, (f) Legal proceedings official pronouncements and court decisions . However, the interpre- The Group is a party in a number of legal proceedings arising in tations of the relevant authorities could differ and the effect on these the ordinary course of business . This in particular includes legal action consolidated financial statements, if the authorities were successful in and proceeding against the Company in connection with the invalidation enforcing their interpretations, could be significant . of the long-term lease contract with MP “Khimkinskaya teploset” for a (c) Environmental liabilities heating property located in Khimki, Moscow Region . Environmental regulations are currently in the process of develop- ment in the Russian Federation . Group evaluates on a regular basis its obligations due to new and amended legislation . As liabilities in respect of environmental obligations can be measured, they are immediately recognised in profit or loss . Currently the likelihood and amount of po-

162 163 Notes to Consolidated Financial Statements (in millions of Russian Roubles) Notes to Consolidated Financial Statements (in millions of Russian Roubles) Note 33. The segment information for the year ended 31 December 2011 and Operating segments at 31 December 2011 is as follows: The chief operating decision-maker has been identified as the Board process, the class of customers, the methods used to distribute their Note Electricity Heat All other segments Total of Directors and Chief Executive Officer . The decision-maker reviews the products and the nature of the regulatory environment . This aggregation Group’s internal reporting in order to assess performance and allocate results from the similar economic characteristics, over the long run, of Revenue from external customers 21 88,715 69,544 2,860 161,119 resources . The Group has determined the operating segments based on these two distinct outputs . Expenses: these reports to be individual power generating units . Other services and products sold by the Group mainly include rent The decision-maker assesses the operating performance of these services, feed water sales and maintenance services . These are not in- Fuel and water usage expenses 22 (80,027) – – (80,027) individual power generating units based on its revenue and directly at- cluded within the reportable operating segments . The results of these Heat transmission tributable costs . Interest income and expenditure are treated as central operations are included in the “all other segments” column . – (26,465) – (26,465) costs of the Group . Other information provided to the decision-maker Taxes balances and available-for-sale financial assets are not con- Purchased electricity 22 (10,111) – – (10,111) is measured in a manner consistent with that in the financial state- sidered to be segment assets but rather are managed by the central Purchased heat ments . function . These are part of the reconciliation to total consolidated state- 22 – (732) – (732) The operating segments are aggregated into two primary reporting ment of financial position assets . segments; electricity and heat . Despite of the fact that there are mod- ernised and unmodernised power generating units amongst operating (a) Segment information Segment result (1,423) 42,347 2,860 43,784 segments which show significantly different gross margins, this aggre- The segment information for year ended 31 December 2012 and at Segment assets gation is premised on the identical nature of their products, production 31 December 2012 is as follows: 208,984 36,827 16,483 262,294

Note Electricity Heat All other segments Total The segment assets include impairment loss recognised for prop- million and RR 2 million to all other segments (at 31 December 2011: erty, plant and equipment for the year ended 31 December 2012 in RR 1,343 million which was allocated to electricity segment) . Revenue from external customers 21 85,816 67,694 3,629 157,139 total amount RR 661 million which was allocated to the electricity seg- A reconciliation of adjusted gross margin to profit before tax is Expenses: ment in amount RR 642 million, to the heat segment in amount RR 17 provided as follows: Year ended Year ended Fuel and water usage expenses 22 (84,343) (195) – (84,538) Note 31 December 2012 31 December 2011 Heat transmission – (19,647) – (19,647) Segment result for reportable segments 39,324 40,924 Purchased electricity (9,137) (41) – (9,178) Other segments gross margin 3,629 2,860 Purchased heat 22 – (823) – (823) Financial income 27 1,608 1,277 Other operating income 26 1,927 1,923 Segment result (7,664) 46,988 3,629 42,953 Depreciation of property, plant and equipment 7 (13,716) (13,041) Segment assets 221,344 31,482 14,755 267,581 Personnel expenses 24 (8,591) (8,215) Maintenance and repairs expenses (5,421) (4,840) Other external supplies 23 (3,936) (3,115) Financial expenses 27 (128) (198) Impairment loss on property, plant and equipment 7 (575) (7) Taxes other than income tax (1,511) (361) Other materials expenses 22 (1,003) (1,110) Other operating expenses 25 (3,593) (4,131) Profit before income tax 8,014 11,966

164 165 Notes to Consolidated Financial Statements (in millions of Russian Roubles)

(b) Reportable segments’ assets 6.12. Glossary The amounts provided to the decision makers with respect to total segment and the physical location of the asset . assets are measured in a manner consistent with that of the financial Reportable segments’ assets are reconciled to total assets as fol- ADP Accelerated Development Program Measurement units statements . These assets are allocated based on the operations of the lows: ADR American depository receipt Gcal – Giga calorie, unit of measurement of heat BoD Board of Directors Gcal/h – Giga calories per hour, unit of measurement of thermal power CDO Central dispatch office kV – kilo Volt, unit of measurement of voltage Note 31 December 2012 31 December 2011 FAS Federal Anti-monopoly Service kWh – kilo Watt hour, unit of measurement of electric energy Segment assets 267,581 262,294 FCCMS Federal Committee for Capital Market and Securities MW – Mega Watt, unit of measurement of electric power FFMS Federal Financial Market Service Unallocated: FTS Federal Tariff Service Taxes other than income tax prepaid 12 150 115 GES Г State-owned hydro power plant GRES State-owned district power plant Income tax receivables 4 3 GTP Group of points of supply GTU Gas turbine unit Available-for-sale financial assets 13 9 9 HCM Human capital management Total assets per consolidated statement of financial position 267,744 262,421 HDN Hest distribution networks IFRS International financial reporting standards (c) Information about major customers KIS Corporate information system During the year ended 31 December 2012 there were certain exter- KIUM Capacity factor nal customers, revenues from transactions with whom exceeded 10% KPD Efficiency of the Group’s revenues: KPI Key performance indicator Revenue from CJSC “ZFR” for the year ended 31 December 2012 MDP Management Development Program amounted to RR 52,343 million . The revenue was obtained from sales MEP Moscow Design Institute for Energy Projects of electricity and capacity relating to the electricity segment . MESR Mosenergospetsremont Revenue from OJSC “MOEK” for the year ended 31 December 2012 MICEX Moscow Interbank Currency Exchange amounted to RR 42,744 million . The revenue was obtained from sales MOEK Moscow United Energy Company of heat relating to the heat segment . MOEK Moscow United Energy Company During the year ended 31 December 2011 there were certain external MRSK Inter-regional Distribution Network Company customers, revenues from transactions with whom exceeded 10% of the NP Non-commercial partnership Group’s revenues: NPP Nuclear power plant Revenue from CJSC “ZFR” for the year ended 31 December 2011 GDR Global depository receipt amounted to RR 56,242 million . The revenue was obtained from sales NSP Non-state pension plans of electricity and capacity relating to the electricity segment . OGK Power generating company of the wholesale market Revenue from OJSC “MOEK” for the year ended 31 December 2011 ORE Wholesale market of energy and capacity amounted to RR 46,290 million . The revenue was obtained from sales PPE Personal protective equipment of heat relating to the heat segment . RAS Russian accounting standards RTS Russian Trade System (stock exchange) SGU Steam-gas unit Note 34. SO UES System operator of the unified energy system Events after the reporting period ST Steam turbine On 29 December 2012 the Board of Directors approved to increase TGC Territorial generating company the Company’s participation in charter capital of its subsidiary LLC TME Thermal and mechanical equipment “OGK-Investprojekt” up to 90 .5% . TPP Thermal power plant VAI Voluntary accident insurance VHI Voluntary health insurance ТА, ТB and ООS Department of engineering audit, industrial safety and environmental protection e/e Electric energy t/e Thermal energy

166 167 6.13. Contact information Investor Relations Department: Mailing address: Ekaterina A . Pavlova 119526, Moscow, Vernadskogo prospekt, 101, bld 3 Head of Department Phone: (495) 957-1-957 (ext . 37-67) Auditor: pavlovaea@mosenergo .ru “PricewaterhouseCoopers Audit” CJSC 52 bldg . 5 Kosmodamianovskaya embankment, Moscow Denis S . Voronchikhin Phone: (495) 967 -60-00, Leading Expert Fax: (495) 967-60-01 Phone: (495) 957-1-957 (ext . 34-57) hotline@ru pwc. .com voronchikhinds@mosenergo .ru www pwc. .com

Contacts for individual shareholders: Registrar: Tatiana F . Sivova “SR-DRAGa” CJSC Leading specialist of Legal Department 71/32 Novocheremushkinskaya street, Moscow Phone: (495) 957-1-957 (ext . 32-10) Phone: (495) 719-40-44, (495) 719-39-29, (495) 719-39-30 E-mail: info@draga ru. Mosenergo’s website: www.mosenergo.ru Web-site: www draga. ru.

© Design INTEMPO ltd 2013