About the Company Preliminary approved Approved PJSC United Electric Grid Company (MOESK or the Company) is one of the largest electric grid distribution companies in the by the Board of Directors by the Annual General Meeting of Russian market, carrying out services on electric power transmission and technological connection of consumers to the Company’s of PJSC MOESK Shareholders electric grids in Moscow and Moscow Region. of PJSC MOESK April 28, 2020 (Minutes No. 431 dated April The Company structure includes 8 branch offices with a total of over 14.4 thousand employees and 3 subsidiaries. 29, 2020) May 29, 2020 (Minutes No. 23 dated June MOESK is part of the PJSC assets portfolio and holds the leading position in terms of electric power supply reliability and 1, 2020) quality, and technological connections to power grids arranged for its consumers. MOESK maintains 610 HV power supply centers, 41.5 thousand distribution grid stations, 77.25 thousand km of overhead lines, and 81.83 thousand km of cable grids. In 2019, the Company’s revenue as per RAS totaled 160.4 billion rubles, while its net profit amounted to 6.6 billion rubles. The Company’s shares are traded on the .

About the Report The 2019 Annual Report is the fifth integrated report of the Company. It presents financial, operating, and non-financial indicators that give a comprehensive view of the Company’s activities, including those relating to sustainable development, as well as PJSC MOESK’s core activities in Moscow Region in 2019 and its plans for 2020 and mid-term perspectives. The focus is ANNUAL REPORT also on the environmental and social aspects, which form an integral part of the Company’s operations, along with the Company’s contribution to the achievement of the UN’s sustainable development goals. of the Public Joint-Stock Company The Integrated Report has been prepared in line with the Russian law on reports of public joint-stock companies. The financial information is based on the financial accounting statements prepared according to the RAS and 2019 Consolidated Statements as per Moscow United Electric Grid Company IFRS. The full versions of these reports are available at the PJSC MOESK website (www..ru/en). for 2019 This Report was prepared following the principles and methods of the Global Reporting Initiative (hereinafter, the GRI Standards) supplemented by additional industry specific indicators of non-financial reporting as recommended for electric power sector companies. The disclosure level is Core. The reporting boundaries cover the Executive Bodies and 8 branch offices of PJSC MOESK without subsidiaries. The table with the complete list of aspects addressed in the report, as well as the corresponding indicators are presented in the GRI Content Index table. The previous report, containing information about the Company’s activities in the field of sustainable development, was issued in 2019 to demonstrate the results achieved by PJSC MOESK in 2018. Thus, this Integrated Report is a balanced and justified presentation of significant economic, social and environmental aspects, which determine the sustainable development indicators of PJSC MOESK. In the tables and charts, in certain cases minor discrepancy between the total and the sum of its components is explained by data rounding.

Disclaimer The Annual Report of Public Joint-Stock Company Moscow United Electric Grid Company (hereinafter referred to as PJSC MOESK or the Company) for 2019 (hereinafter referred to as the Annual Report) is prepared based on the information available to the Company at the time of preparation hereof. Director General P. A. Sinyutin The Annual Report contains information about the Company’s performance in 2019, forward-looking statements, statements of intentions, opinions or current expectations of the Company concerning its performance, financial position, liquidity, prospects of growth, strategy, and development of the industry where the Company operates. Such forward-looking statements are inherently related to risks and uncertainty because they depend on events and circumstances that may or may not happen in the future. The Company informs the readers that the forward-looking statements are not a guarantee of future performance. The Company’s Head of Accounting – V. V. Vitinsky actual performance, financial position and liquidity, as well as the development of the industry where it operates may considerably differ Director of Department from forward-looking statements contained in the Annual Report. Moreover, even if the performance and events will match forward- looking statements contained in the Annual Report, such performance and events shall not be considered as an indicator of similar performance and events in the future. In addition to the official information about the Company’s performance, the Annual Report contains information received from third parties. Such information is obtained from sources that are considered reliable by the Company. However, the Company does not guarantee the accuracy of information received from third parties that may be summarized or incomplete.

Moscow 2020 ANNUAL REPORT PJSC MOESK 2019 

CONTENTS

Key Reporting Indicators...... 4 3.3.2. Relations with Public Authorities and Organizations...... 99 Message from the Chairman of the Board of Directors...... 6 3.3.3. Public Relations...... 100 Interview with the Director General...... 8 3.3.4. Customer Relations...... 106 Key Events of the Reporting Year and Post-Reporting Events...... 12 3.4. Environmental Policy...... 111 3.4.1. Water...... 112 3.4.2. Biodiversity...... 113 3.4.3. Emissions...... 113 3.4.4. Effluents and Waste...... 114 1. Company Profile...... 16 3.4.5. Environmental Costs...... 115 1.1. Overview...... 18 3.4.6. Environmental Control and Audit...... 115 1.2. Business Model...... 20 3.4.7. Environmental Training...... 116 1.3. Strategic Priorities...... 25 3.5. Energy Efficiency and Power Consumption...... 117 1.3.1. Market Position and Development Prospects...... 25 3.6. Occupational Health and Safety...... 121 1.3.2. Mission and Strategic Goals...... 31 3.7. Personnel and Social Responsibility...... 126 1.4. Key Performance Indicators...... 34 3.7.1. HR Policy...... 126 1.5. Management Systems...... 36 3.7.2. Social Responsibility...... 132

2. Company Performance...... 38 4. Corporate Governance...... 136 2.1. Production Results...... 40 2.1.1. Transmission and Distribution of Electric Power...... 40 4.1. Corporate Governance System...... 138 2.1.2. Technological Connection...... 45 4.2. Management Bodies...... 142 2.1.3. Power Supply Services (Non-Tariff Activities)...... 48 4.2.1. General Meeting of Shareholders...... 142 2.2. Financial Analysis...... 50 4.2.2. Board of Directors...... 142 2.2.1. Financial Results (RAS)...... 51 4.2.3. Committees of the Board of Directors...... 148 2.2.2. Financial Results (IFRS)...... 56 4.2.4. Management Board...... 152 2.3. Information about Credit Ratings and Bonded Loans...... 58 4.2.5. Director General ...... 154 2.4. Tariff Policy...... 60 4.3. External and Internal Audit and Control...... 156 2.5. Improved Reliability...... 62 4.3.1. Internal Control System...... 156 2.6. Investment Activities...... 66 4.3.2. Internal Audit...... 158 2.7. Technology and Innovation...... 73 4.3.3. Risk Management System...... 160 2.8. Procurement...... 79 4.3.4. Auditing Commission...... 166 2.9. Property Management and Consolidation...... 84 4.3.5. Auditor...... 167 4.4. Information for Shareholders and Investors...... 168 4.5. Anti-Corruption Policy and Corporate Ethics...... 174 3. Sustainable Development...... 86 3.1. Company Priorities...... 88 3.2. UN's Sustainable Development Goals and Their Achievement...... 89 GRI Content Index...... 179 3.3. Stakeholder Engagement...... 96 Glossary of Main Terms and Abbreviations...... 184 3.3.1. Investor Engagement...... 98 Contact Information...... 186

2 3 ANNUAL REPORT PJSC MOESK 2019 

KEY REPORTING INDICATORS¹

FINANCIAL INDICATORS

Выручка EBITDA Рентабельность по EBITDA Чистая прибыль REVENUE, MLN RUB EBITDA, MLN RUB EBITDA MARGIN, % NET PROFIT, MLN RUB 2019 160,376160,376 2019 40,496 40,496 2019 25.3 2019 6,607

2018 156,494 2018 37,907 37,907 2018 24.2 2018 4,043

2017 147,372 2017 32,094 32,094 2017 21.7 2017 1,218

OTHER INDICATORS

ELECTRIC POWER OUTPUT FROM THE GRID TO CONSUMERS Установленная мощность ОтпускANDОтпуск ASSOCIATED электрической электрической энергииLGOS энергии WITHIN из из сети сети потребителям THEпотребителям LIMITS OF BALANCE INSTALLED POWER2, MVA иAND исмежным смежным OPERATION ТСО ТСО в вграницах границах RESPONSIBILITY, балансовой балансовой и иэксплуатационной эксплуатационнойMLN KWH ответственности ответственности Потери электроэнергии ELECTRICITY LOSSES, MLN KWH 41,496 2019 79,300.4 2019 84,71184,711 2019 7,037 2018 78,815.8 2018 84,442 2018 7,440 2017 77,805.1 2017 82,800 2017 7,432 LENGTH OF ELECTRICAL TRANSMISSION LINES2 Присоединенная мощность FINANCINGФинансирование OF THEинвестиционной INVESTMENT программы PROGRAM, MLN RUB CONNECTED CAPACITY, MW воздушные кабельные OVERHEAD, KM CABLE, KM 2019 1,958 58,034 2019 34,264 7,037 2019 77,248.6 2019 81,830.7

2018 30,537 2018 2,578 7,440 2018 75,760.3 2018 81,552.2

2017 33,198 2017 3,070 7,432 2017 75,206.4 2017 80,648.6

Подстанции распределительных сетей LOST TIME INJURY FREQUENCY RATE MARKET CAPITALIZATION, Высоковольтные центры питания 2 DISTRIBUTION GRID STATIONS2, PCS. Коэффициент производственного травматизма (LTIFR) Рыночная капитализация HIGH-VOLTAGE POWER SUPPLY CENTERS , PCS. (LTIFR), P.U. MLN RUB 2019 610 2019 41,496 2019 0 2019 58,034 2018 607 2018 40,559 2018 21.2 2018 32,074 2017 612 2017 39,771 2017 51.1 2017 43,934

AVERAGE HEADCOUNT, COSTS OF SOCIAL EVENTS, OCCUPATIONAL SAFETY COSTS, TRAINING COSTS, PERS.Среднесписочная численность работников MLNЗатраты RUB на мероприятия социального характера Расходы на охрану труда Расходы на обучение MLN RUB MLN RUB 2019 14,377 2019 1,606.6 110.2 2019 429.1 34,264 2019 110.2 2018 14,550 2018 1,621.4 2018 419.7 2018 108.6 2017 14,547 2017 2,029.2 2017 468.7 2017 98.1

1 Here and further, technological connection data are given without temporary technological connection. 2 The data is given without technological connection contracts. 4 5 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS

MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS ANNUAL REPORT PJSC MOESK 2019

modernization of the logics behind the technological and In the past year, an intense work started aimed at installing corporate business processes in the Company with modern smart metering devices at the boundaries of power attribution technological capacities taken into account. with consumers. At the end of the year, more than 70,000 residents of Moscow and Moscow Region had smart electric MESSAGE FROM THE As part of the digital transformation, the Digital Electrician meters installed. According to the plan, smart metering will project was implemented, an automated mobile team control be available to 1.4 million consumers by the end of 2030. CHAIRMAN OF THE BOARD system was built engaging over 1,000 teams, 6,900 of OF DIRECTORS operational personnel. As the result of project implementation, 2019 was a year of success for MOESK in terms of its the average electric power supply recovery time decreased financial performance. In this year, the Company's revenue by 14%; work time losses went down 15%, and time spent on saw an increase of over 2.5% year-on-year. Its net profit filing permit and as-built documentation was reduced by 50%. as per RAS grew by more than 63.4% and amounted to 6.6 The Company's billion rubles, and as per IFRS — to 8.1 million rubles. The In the reporting year, PJSC MOESK joined the unified brand amount of dividends paid by the Company to its shareholders achievements were identity standard of PJSC Rosseti. Since June last year, the in 2019 was twice as high as that in 2018. Company works under the Rosseti Moscow Region brand. ” properly noted Work under the unified brand strengthens the interrelations The Company's achievements were properly estimated by the between Rosseti Group's enterprises, increases brand investment community, as PJSC MOESK's capitalization grew by the investment awareness in the country and the industry, and consumer by over 80% in 2019. engagement becomes easier and clearer. community as Reliable and continuous electric power supply to consumers Demand for power capacities in Moscow Region consistently of a strategically important region — Moscow — is the key PJSC MOESK's remains at a high level. In 2019, PJSC MOESK received over and primary task before the Company. To keep a high level of 77,000 applications for connection to power grids, and over reliability, we need to take a comprehensive approach to the capitalization grew 57,000 contracts for technological connection were concluded. solution of production objectives, to ensure continuous quality In relation to the high level of the interactive service control of the services we provide, as well as to be ready for by over 80% in 2019. development in the Company, the bulk of the applications, operational and coordinated activities in any circumstances. over 75%, was submitted online through the Personal Account Given the level of our organization and high quality of electric at the technological connection portal. Thanks to reforms, the grids reconstruction, along with the introduction of digital number of procedures for the connection to power grids in production management processes, no mass power failures Moscow was down from 3 to 2 over 5 years, and the time of occurred in consumers' power grids in 2019. SMEs' connection reduced from 162 to 38 days. This year, we will continue to focus on the digital Last year, for the first time in history, the Russian Federation transformation of power grids of the capital region. The took 7th place in the World Banks' Doing Business ranking Company is not planning to dwell on the results achieved in by the indicator “Connection to the Electric Power Supply terms of increasing the availability of connection to power System.” These were the reforms in the area of technological grids, both for individuals and entrepreneurs. Implementation connection of consumers that helped our country in achieving of the Program for Consolidation of Power Grid Assets of such impressive results. Non-Commercial Gardening and Villa Communities will continue. Furthermore, improving electric power supply The World Bank's experts recognized the success and reliability indicators is still the Company's unchanged priority. efficiency of all the announced reforms that target the simplification of technological connection to the power Operating in the rapidly developing Moscow Region, PJSC Dear shareholders and investors, grid. The shortened time of construction, engineering, and MOESK faces daily challenges requiring immediate solutions. issuance of technological connection contracts, as well as The key to long-term successful work of the Company deep digitalization of connection to the grid were also noted. is competent planning, quality setting of tasks and their The reporting year was full of success for PJSC MOESK. PJSC MOESK gradually increases the quality of services A record-high place on the World Bank's ranking is the proof implementation at the highest level. I am confident that Based on the wise technological policy and each employee's provided and creates comfortable conditions for consumer of the effectiveness of the strategy we have chosen, and the the Company will continue its progress towards improving high responsibility, the Company's main objective was engagement. In 2019, requirements for the transfer of power bank's competent experts see this too. production performance and the efficiency of business accomplished — it managed to provide reliable and grids of gardening and villa communities to the Company's processes. continuous electric power supply for its consumers. balance sheet were significantly eased. The amount of the In addition to the assessment of connection effectiveness, the applications submitted to MOESK grew 3 times and amounted ranking takes into consideration the indicators of power supply In 2019, works on building digital power grid in Moscow to 2,000 pcs, and the number of consolidated gardening and reliability, tariff transparency and electric power pricing. In Region, increasing accessibility of the electric power villa communities who transferred their power grids, grew 8 the Doing Business — 2020 ranking, prepared based on P. A. Livinsky infrastructure, creating conditions for stable work of power times and exceeded 1,500. performance in 2019, the Russian Federation has once again grid equipment; the Company intends to ease requirements confirmed its highest score for the “Index of Electric Power for the transfer of power grid property of gardening In compliance with the resolution by the Board of Supply Reliability” and “Tariff Transparency” indicators — 8 communities — non-commercial partnerships — and villa Directors, PJSC MOESK joined the PJSC Rosseti's concept out of 8. communities to the Company's balance sheet. Digital Transformation 2030 aimed at optimization and

6 7 INTERVIEW WITH THE DIRECTOR GENERAL

INTERVIEW WITH THE DIRECTOR GENERAL ANNUAL REPORT PJSC MOESK 2019

We paid interim dividends for 9M 2019 thanks to the stable financial performance. Importantly, we have reached a level where the principal INTERVIEW WITH ” percentage of dividends to shareholders is paid from funds earned on THE DIRECTOR GENERAL the power supply market rather than from tariff revenues.

2019 was one of the most successful in the Thanks to the professional coordinated work of our team, engagement. Currently, we are putting the Digital ” Company's history. we managed to fulfill all the main financial obligations to Electrician project into industrial operation. our shareholders,” Petr Sinyutin said at the beginning of our conversation. “Stable financial performance enabled The Company has already built a detailed database of us to pay interim dividends for 9M 2019. Importantly, we power grid equipment. It allows us not only to analyze have reached a level where the principal percentage of statistics on operational failures, but also to see the dividends to shareholders is paid from funds earned on impact (modernization, maintenance and repair, etc.). This the power supply market rather than from tariff revenues. database was used as a basis for creating and improving Our financial results were well-received by the market the grid asset management system. We are gradually and had a positive impact on increasing the value of automating processes such as development, control and the Company's shares — by the end of the year, the analysis of the implementation of maintenance and repair capitalization grew almost 80%. programs in respect of the grid equipment. These are the necessary conditions to ensure a reliable operation of the We traditionally demonstrate high quality and reliability power grid. of power supply to consumers in Moscow Region. We managed to reduce the average duration of blackouts In addition, the operational and technological rated 6 kV and above by 12%. The Company's power management system has been transferred to an engineers entered the autumn-winter period 2019/20 electronic operational journal which is based on with the maximum possible availability rate of 1.0. High the unified information model of the grid, created in reliability is confirmed by the absence of complaints compliance with the best world practices and maintained about the Company's work both from the Government of by the Company. The operational journal is integrated into Moscow and the Government of Moscow Region. High the system of calls received on the Light Line. First of all, quality reliability indicators have been positively affected this eliminates the need in dispatchers or operators, and In 2019, PJSC Moscow United Electric Grid Company (provides services under the by the application of digital technologies implemented secondly, this gives us a non-biased and real picture of under the Company's large-scale digital transformation the electric grid complex operation at all management brand Rosseti Moscow Region) demonstrated excellent financial performance. As per program. We are just at the beginning, but we have levels. Thus, it takes us less time to respond to the Russian Accounting Standards, the Company received net profit in the amount of already enjoyed the first results. emergencies, and we reduce the period of emergency blackouts of our consumers. 6.6 billion rubles, having increased the indicators by 63% against the same period last year. Prominent achievements include the technological connection performance and Petr Alekseevich, can you give us more Besides digitalization, we develop robotics. In 2019, we tested three robots which helped us to automate regular implementation of the Company's Digital Transformation Program. detail on your digital projects? operations. By the end of this year, 22 more robots will be introduced to improve productivity. We have talked with Petr Sinyutin, Director General of the Company, about other As part of the Digital Transformation Program, several notable achievements of MOESK in the previous year, as well as the goals and digital projects will be implemented at once by the end of 2023. It is important to note that all of them have What other production areas of the objectives for the short term. a payback period of 7–10 years. And some, such as the automated mobile team control system (Digital Company have been digitalized? Electrician), will pay for themselves in just 3–4 years of operation. The main areas of digitalization: dispatch Pilot projects are being implemented to create Digital grid management, crew and personnel management, Power Grid Regions (PGRs) on the basis of the 8th and and development of interactive services for customer 19th cable grid management areas of the Moscow

8 9 INTERVIEW WITH THE DIRECTOR GENERAL ANNUAL REPORT PJSC MOESK 2019

Cable Grids, branch of PJSC MOESK, and in the Istrinsky connection period lasted 25 days in the end of 2019. solutions. In particular, over 75,000 smart metering One of our main tasks is the District of Moscow Region — the Western Electric Grids In relation to the high level of interactive services devices with remote data collection were installed at branch. The applied technologies have made it possible development in MOESK, the bulk of the applications, over the balance boundary point with consumers in Moscow delivery of a rather ambitious to transform the distribution power grid area into a 75%, was submitted online through the Personal Account Region and New Moscow. The level of losses in the highly automated one. Now, dispatchers can remotely at utp.moesk.ru in the past year. Yet there is so much electricity transmission is one of the key indicators of a ” business plan: the completion monitor and control power equipment, as well as manage room to grow, and we will try to do everything we can to power grid company's efficiency. Savings through loss the Company's operational personnel as efficiently as move the Russian Federation up in the ranking in 2021. reduction measures have been allocated to financing of digital projects planned for possible during scheduled and emergency recovery the investment program, as well as reconstruction and activities. By the way, another digital project has been launched for modernization of power grid facilities in the capital the implementation in 2020. the convenience of our customers — a mobile application region. Following this up, last year the Grid Management with a set of numerous interactive power services, from Work on electricity losses Center was created in as part of the Western filing an e-application for technological connection Electric Grids branch. This is a serious step towards the to sending data from metering devices and receiving What objectives do you have for your reduction will be continued. real improvement and optimization of the operational, information on scheduled and emergency power outages. team for 2020? technical and situational management system, as well as the digitalization of the Company's power grid complex. What is more, we are out to implement our target One of our main tasks is the delivery of a rather ambitious program for the 20 kV grid development, which provides business plan: the completion of digital projects planned for the upgrade of already existing power centers and for for the implementation in 2020; work on electricity losses Unprecedented results have been achieved the construction of new power facilities. This will take a reduction will be continued; but as an infrastructure in the sphere of technological connection lot of time and effort, but our Company really needs this company, we place emphasis on ensuring reliable power program to stay competitive on the power supply market. supply and on providing a high level of service to our of consumers. Largely due to MOESK's customers, which means we need to promptly respond to contribution, ranked 7th by “Getting their requests and create a full range of power services. One of the last year's key tasks was the Whatever natural disasters we encounter, the reliable Electricity” indicator in the World Bank operation of the power grid complex, uninterrupted fight against losses. Have you seen any Group's Doing Business ranking. What are transmission of electricity to subscribers, and strong reduction compared to 2018? customer-oriented approach will always be a priority for your objectives in the field of technological the Rosseti Moscow Region team. connection for 2020? Yes, we have, and it was a significant one. At the end of 2019, our losses amounted to 7.67% of the electricity We have done a great deal of work in improving the output to the grid. A year earlier, this figure stood at technological connection procedure. Over 5 years, the 8.10% of the output to the grid. By volume, these losses number of procedures was down from 3 to 2, and the reduced by more than 400 million kWh, which is almost connection period — from 162 to 38 days. In accordance 2 billion rubles. This was possible thanks to a set of with the SME support program, the average technological measures that included both technical and organizational

Another digital project has been launched for the convenience of our customers — a mobile application with a set of numerous ” interactive power services, from filing an e-application for technological connection to sending data from metering devices and receiving information on scheduled and emergency power outages.

10 11 KEY EVENTS OF THE REPORTING YEAR

KEY EVENTS OF THE REPORTING YEAR ANNUAL REPORT PJSC MOESK 2019

KEY EVENTS OF THE REPORTING YEAR AND POST-REPORTING EVENTS

January May July

16 PJSC MOESK started large-scale modernization of 06 Labor dynasty Moskalenko from PJSC MOESK 01 PJSC MOESK's power engineers provided high-quality five key substations of the . became the best at the Moscow regional competition Best and uninterrupted electricity supply to the facilities of the Labor Dynasty in Energy. Army 2019 international forum. 23 PJSC MOESK completed the large-scale reconstruction of the Lyublino substation 110/10 kV. 11 PJSC MOESK carried out compensation plantings of 05 PJSC MOESK's power engineers started the final trees and shrubs in the Zhukovsky Urban District. stage of reconstruction of the substation February 110 kV.

22 PJSC MOESK completed the next stage of 07 PJSC MOESK and Summer Residents Union in reconstruction of Novobrattsevo, one of the most powerful the Moscow Region held the forum “MOESK Simplifies April substations of the Northern Administrative District in Consolidation of Power Grids of Non-Commercial Moscow. Gardening and Villa Communities.” 01 JSC MOESK Engineering celebrated its 70th 22 PJSC MOESK together with the GPB Bank introduced anniversary. automatic processing system for incoming ruble payments from legal entities and individuals directed in favor of PJSC 19 Aleksey Aleshin, Head of Rostekhnadzor, noted the MOESK for services provided by the Company. quality results of the AWP 2018–2019 achieved by power engineers of PJSC MOESK in the capital region. 27 31 PJSC MOESK took part in the youth forum “I am a Citizen of the Moscow Region.” 29 A new fast charging station for electric cars in June has appeared in the MOESK-EV network.

03 PJSC MOESK presented a play on children's electrical safety “Beware of Electricity!” as part of the #Kind Electricity (#Доброе электричество) campaign for the first time.

March

04 PJSC MOESK was awarded the annual National Award for Effective Internal Control and Audit 2018 in the Best Company in Terms of Reliability of the Internal Control System based on the results of 2018.

17 Andrey Vostroknutov, a PJSC MOESK representative, was among the winners of the Russian Leaders 2018–2019 competition. 06 PJSC MOESK and Sberbank signed a strategic 28 The search unit Vozrozhdenie (Revival) won the Public agreement at SPIEF 2019. Acknowledgement award. 07 Rosseti Group presented a new unified brand 29 PJSC MOESK's power engineers received the architecture of the energy holding, within which PJSC delegation of the World Smart Energy Summit Russia at the MOESK began to operate under the brand Rosseti Moscow Medvedevskaya digital substation. Region at SPIEF 2019.

14 PJSC MOESK held annual General Meeting of Shareholders for 2018.

12 13 KEY EVENTS OF THE REPORTING YEAR ANNUAL REPORT PJSC MOESK 2019

2020

August November January

01 Power engineers of PJSC MOESK began large- 12 The Expert RA rating agency confirmed rating of the 05 PJSC MOESK enhances reliability and quality of scale works on installation of more than 30 thousand management quality of PJSC MOESK as А++.gq. electric power supply of Moscow Central Diameters. “smart” metering devices for consumers in Troitsky and Novomoskovsky Administrative Districts of Moscow. 16 Kolomensky zonal section of power grids celebrates December its 90th anniversary. 02 Power engineers of PJSC MOESK put into operation the renovated section of the 110-kV overhead line 20 For the first time in Moscow, during the construction Khomutovo — N. and Tishkovo — Pakhra of the 110 kV Vernadskaya-Semenovskaya high-voltage with a branch line to ensure the construction of a junction in cable line, the specialists of PJSC MOESK applied Domodedovo Urban District. innovative solutions.

23 PJSC MOESK implemented an art project at 29 PJSC MOESK carried out works on connection to transformer substations in Moscow Region. the grids of two synthetic ice rinks under construction in Southern Administrative District of Moscow.

February

October

16 The Minister of Energy of Russia Alexander Novak, Moscow Mayor Sergei Sobyanin and the Director General of Rosseti Pavel Livinsky launched the new Khovanskaya 220/110/20/10 substation in Troitsky and Novomoskovsky Administrative Districts.

24 For the first time, the Russian Federation climbed up to the 7th place in the World Bank's Doing Business 06 The delegation from the Ministry of Energy of the Ranking by the Getting Electricity indicator. Russian Federation visited the Medvedevskaya substation.

25 The simulated safety drill trainings for the companies 09 The new administrative office building of the PJSC of the Moscow Municipal Services Complex were held at MOESK branch Western Electric Grids was recognized at the premises of PJSC MOESK. the Air Solution Awards in the Best Administrative Building September 2019.

24 The project for redevelopment of the 220 kV 14 Power engineers of PJSC MOESK took part in the Ochakovo — Govorovo 1,2 and Choboty — Yasenevo 1,2 Moscow parade of city utility vehicles. ETL implemented under the technical supervision of the New Moscow branch power engineers at the Kievskoye 08 PJSC MOESK took an active part in the highway enabled to vacate the territory for a two-level #BrighterTogether (#Вместе ярче) festival. junction in Troitsky and Novomoskovsky Administrative 05 PJSC MOESK started to supply power for the largest Districts. housing construction site under the renovation program in 18 PJSC MOESK finished construction of the 220-kV Troitsky and Novomoskovsky Administrative Districts. high-voltage cable line Lesnaya — Khovanskaya. 31 The Extraordinary General Meeting of Shareholders was held in PJSC MOESK. 25 PJSC MOESK started works on connection of the Kommunarskaya metro line to its power grids.

14 15 KEY EVENTS OF THE REPORTING YEAR ANNUAL REPORT PJSC MOESK 2019

16 17 1. Company Profile

1. Company Profile ANNUAL REPORT PJSC MOESK 2019

PJSC MOESK's core activities are electric power transmission and technological connection of consumers to electric power grids in the Moscow area, which is comprised of two constituent entities of the Russian Federation, namely Moscow and Moscow Region. OVERVIEW Non-Commercial Partnerships 5. Association Noncommercial partnership of Territorial power grid organizations (Association NP TPGO); 1.1 As of December 31, 2019, PJSC MOESK is a member of the following national and international sectoral self-regulating 6. Non-Commercial Partnership National Committee SIRED; organizations and non-commercial partnerships in the area of electricity power: 7. Self-Regulatory Organization — Interregional Sectoral Association of Employers Association of Organizations for 1. All-Russian industrial association of employers in energy Construction, Reconstruction, Overhaul and Demolition of sector “Employers Russian Association of Energy”; Power Facilities, Grids and Substations ENERGOSTROY; Public Joint-Stock Company Moscow United Electric Grid The Company's head office is located in Moscow. As of Company (hereinafter referred to as PJSC MOESK or the December 31, 2019, the structure of PJSC MOESK included 2. Association ENERGOPROEKT; 8. Association Self-Regulatory Organization “The central Company) was established as a result of restructuring 8 branch offices, and the Group included 3 subsidiaries. association for engineering surveys CENTRIZYSKANIYA”; through spin-off from OJSC on April 1, 2005. 3. SRO Association EnergoProfAudit; State Registration Certificate Series 77 No. 005900296, 9. Association “Nonprofit Partnership Council for Organizing OGRN 1057746555811 dated April 1, 2005. 4. Non-Commercial Partnership Scientific and Technical Efficient System of Trading at Wholesale and Retail Electricity Council of the Unified Energy System (NTS UES NP); and Capacity Market”.

The Company's branch offices: • Western Electric Grids (32 Transportny Passage, Odintsovo, Odintsovsky District, Moscow Region, 143006)1; Subsidiaries: Joint-Stock Company Electrotechnical • New Moscow (4 Kommunalnaya Zone, 1st Microdistrict, Moskovsky District, Moscow, 142784); Equipment Repair ; Joint-Stock Company MOESK- • Moscow Cable Grids (36 Sadovnicheskaya Str., Bld. 1, Moscow, 115035); Engineering; • Moscow High-Voltage Grids (6 Nizhnyaya Str., Bld. 1, Moscow, 107140); Joint-Stock Company Energotsentr. • Northern Electric Grids (4 Gagarina Str., Korolev, Moscow Region, 141070); • Eastern Electric Grids (13 Radchenko Str., , Moscow Region, 142400);

• Energouchet (13 Str., Bld. 2, Moscow, 115569); The Company has 12 client offices • Southern Electric Grids (65 Kirova Str., , Moscow Region, 142117).

1 From March 27, 2020 to March 27, 2020 the Western Electric Grids branch was located at 17 Molodezhnaya Str., Odintsovo, Odintsovsky District, Moscow Region, 143007.

18 19 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

BUSINESS MODEL EFFICIENT MANAGEMENT OF KEY VALUE PROPOSITION FOR KEY 1.STRATEGIC OBJECTIVES 2 AND GOALS BUSINESS PROCESSES STAKEHOLDERS Development processes Improved reliability of power supply and customer Consumers service quality Strategic and business Investment and development Digital transformation • Economically justified tariffs planning • High quality services • Reliable power supply

Improved investment attractiveness and shareholder value Main business processes Government and Society Technological connection Electric power Power supply • Tax payments to the government transmission services • Creation of jobs Improved power grid complex efficiency (optimization of • New grid facilities for economic operating and investment costs, and of electric power development losses)

Resource management processes Shareholders and Investors • Increase of share price and Business diversification and non-tariff Financial capital Production assets Personnel dividends revenue growth

Material and technical Economically justified consolidation resources of electric grid assets Company Personnel • Professional development • Decent salaries

20 21 1. Company Profile

1. Company Profile ANNUAL REPORT PJSC MOESK 2019

ELECTRIC POWER TRANSMISSION AND DISTRIBUTION PROCESS ELECTRIC POWER OUTPUT FROM THE GRID TO CONSUMERS AND ASSOCIATED LGOS WITHIN THE LIMITS OF BALANCE AND OPERATION RESPONSIBILITY, 2019

Indicator Output to the Output from the grid to consumers and asso- Losses grid Mln kWh ciated LGOs within the limits of balance and Regulatory bodies (PTC of operation responsibility, mln kWh Mln kWh % Generating companies, Electricity Main grids MR, Moscow’s Department associated energy systems ≥ 220 kV for Economic Policy and Moscow 46,266 42,992 3,274 7.08 Development) Moscow Region 45,482 41,719 3,763 8.27

Application for Payment for Payment for electric establishment of PJSC MOESK, total 91,748 84,711 7,037 7.67 electric power power transmissions Power power transmission Electricity services transmissions services payment services rates payment rate Payment for electric power MAIN CONSUMERS OF SERVICES, % SHARE OF POWER TRANSMISSION losses Power sales companies PJSC MOESK SERVICES, % (guaranteed power 0.4–220 kV 1.4 0.2 suppliers) Payment for electric power 2019 75.71 transmissions services Payment for Payment for 2018 75.55 electric power Electricity electric power transmissions services 2017 76.98 74.5

Electricity LGO Consumer 0.4–35 kV SHARE ON THE SERVICE MARKET 98.4 BY REGION, %

82.01 2019 70.16 Electric power flows/information flows Cash flows 82.44 Guaranteed power suppliers 2018 PSC 69.55 Direct consumers 85.99 2017 Electric power transmission energy systems located in nearby constituent entities of 69.39 the Russian Federation, main electric grids – grids rated PJSC MOESK provides electric power transmission services for 220 kV and above (PJSC FGC UES), and transmits this Moscow to guaranteed power suppliers, power sales companies and electricity to terminal points of end consumers or LGOs. Moscow Region direct consumers who are members of the wholesale and retail electric power market under the contracts on electric power transmission services. The contract subject is the Main consumers of services implementation of a set of organizational and technological In 2019, the share of PJSC MOESK on the market of At the same time, the share of electricity transmission actions aimed at ensuring electric power (capacity) For electric power transmission services in 2019, electric power transmission services was up by 0.16 services of PJSC MOESK in Moscow declined. The transmission — the quality and parameters of which must PJSC MOESK made mutual settlements with power p.p. year-over-year. This was thanks to the growth in reason was in the increased scope of electric power comply with technical regulations and other mandatory sales companies, guaranteed power suppliers, direct the number of electricity transmission services provided transmission services rendered by LGOs of the second requirements — through technical devices of electrical consumers and local grid organizations at the tariffs set for by PJSC MOESK in Moscow Region. Given the fact that level in Moscow due to acquisition by the latter of grids owned by PJSC MOESK and other local grid operators electricity transmission services, established by Moscow’s a range of grid companies did not set individual tariffs electric grid facilities of large enterprises and . (LGOs). Department for Economic Policy and Development and the for power transmission services due to non-compliance The consolidation of electrical grid equipment of non- Pricing and Tariffing Committee of Moscow Region. with the LGO criteria, as well as due to the consolidation commercial partnerships by JSC UEC also led to the PJSC MOESK receives electricity from power generating of power grid assets on the part of the Company, PJSC decrease in the PJSC MOESK share in the city. companies (power plants, block stations), associated MOESK increased its net supply share.

22 23 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

ARRANGEMENT OF TECHNOLOGICAL CONNECTION TO ELECTRIC GRIDS OF PJSC MOESK

Regulatory bodies (PTC of Generating companies, main Power sales companies MR, Moscow’s Department grids, associated LGOs (guaranteed power suppliers) for Economic Policy and Development) STRATEGIC TC contract, Meter Certificate, TC application, notice TS Compliance TC application, Application for PRIORITIES power supply of TS execution with Certificate, Meter notice of the establishment of TC contract TC payment rates, documents attached, Certificate, TC meter admission, payment rates and Certificate (electricity individual TC tariffs payment for TC services Meter Certificate, purchase and individual tariff payment TC Certificate sale) amounts 1. 3

Consumer 1 PJSC MOESK 2

Application/permit 1.3.1. MARKET POSITION AND DEVELOPMENT PROSPECTS Notice of readiness for TC application, draft Coordinated TS, for putting electrical commissioning of facilities TS, notice of TS TS Compliance installations into and documents attached execution Certificate operation Macroeconomic situation and its effect consumer price index and industrial producer price index. on the industry Notice of readiness for commissioning These indicators are used to analyze the level of inflation, as of facilities and documents attached The following are the main macroeconomic factors long as they are significant in terms of the assessment of Rostekhnadzor JSC SO UES affecting the power industry's business : possible changes in pricing of resources consumed by power industrial production volume (index); companies, and to compare the inflation level with possible Application/permit for putting electrical changes in prices (tariffs) for services provided by power installations into operation investments to equity; companies.

1 – TC application, notice of TS execution with documents attached, act coordination of emergency and (or) technological reserved quota, payment for TC services. 2 – TC contract, TS compliance certificate, meter certificate, TC certificate, power supply contract (electricity purchase and sale). FACTORS AFFECTING THE RUSSIAN ECONOMY IN GENERAL AND THE POWER SECTOR IN PARTICULAR

Information flows Cash flows Indicator UOM 2017 2018 20191 20202

GDP3 % to last year 101.6 102.3 101.34 101.7

PJSC MOESK ensures technological connection of power Consumer price index as of the end of the period % (to last December) 102.5 104.3 104.5 103.0 receivers on its consumers’ side, power generation Оhe volume of connected facilities, and other power grid facilities owned by grid Industrial production index5 % to last year 102.1 102.9 102.4 102.6 organizations or other persons under TC contracts in capacity in 2019 totaled accordance with the procedure and time periods set by the Investments in equity in comparable prices % to last year 104.8 104.3 100.76 105.8 Rules for Technological Connection of Power Receivers on 1,958 MW. Power Consumers’ Side, Power Generation Facilities, and Other Power Grid Facilities Owned by Grid Organizations or Other Persons to Electric Grids, approved by Decree of the Government of the Russian Federation No. 861 dated technological connection fees for an individual project of 1 Report of the Russian Federal State Statistics Service “Russia's Social and Economic Position in 2019.” December 27, 2004. electricity production facilities, power receivers with a 2 Forecast for the social and economic development of the Russian Federation until 2024 by the Ministry of Economic Development of the Russian Federation as of maximum capacity of at least 8,900 kWh and with voltage September 30, 2019 (basic version). As part of the business process under review, the Company of at least 35 kV. 3 In constant prices. cooperates with the Pricing and Tariffing Committee of 4 First assessment by the Russian Federal State Statistics Service. Moscow Region and Moscow’s Department for Economic In PJSC MOESK, TC consumers are categorized depending 5 Aggregated production index by economic activity: “Mineral Production”, “Manufacturing”, “Power, Gas and Steam Supply; Air Conditioning”, “Water Supply; Water Policy and Development to determine technological on the volume of connected capacity: up to 15 kW, from 15 Discharge, Waste Collection and Utilization, Liquidation of Contamination.” connection payment rates for the regulation period, and to 150 kW, from 150 to 670 kW, and over 670 kW. 6 January–September 2019 and January–September 2018 in % to the corresponding period last year.

24 25 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

In 2018–2019, the main factors that positively affected Market Overview DYNAMICS OF ELECTRIC POWER CONSUMPTION the GDP growth were recovery of consumer demand, BY 2025, THE POWER CONSUMPTION VOLUME IN RUSSIA AND IN THE MOSCOW ENERGY SYSTEM, external demand and increased investments in equity. IN MOSCOW REGION IS ESTIMATED TO BE The Moscow area is the largest urban metropolitan area BLN KWH6 in the Russian Federation and a major center of political, PJSC MOESK carries out its activities in Moscow financial, and R&D activities, nano- and biotechnology, and Moscow Region. The region's energy system, in defense complex industries, mechanical engineering, as accordance with the Unified Energy System Development well as of healthcare, culture, education and tourism. Scheme and Program for 2019–2025, approved by Order 1,039.9 1,055.6 1,059.4 of the Ministry of Energy of the Russian Federation No. It comprises two constituent entities of the Russian 1,013.9 1,026.9 174 dated February 28, 2019, is the largest one in the Federation: Moscow and Moscow Region. 1,008.3 whole unified energy system (UES) of the Center. Its 113.472 share in the total power consumption is estimated to The city of Moscow is an independent constituent entity reach 44.0% by the end of 2025. of the Russian Federation, the capital, the administrative BLN KWH center of the Central Federal District and the center of According to the Unified Energy System Development the of 2.56 thousand sq. km. 108.2 105.3 105.5 107.7 Scheme and Program for 2019–2025, by 2025 the power According to Rosstat, the total population amounted to 103.2 102 consumption volume in Moscow Region is supposed to more than 12.69 million people as of January 1, 2020. 53.4 55 55.1 be around 113.472 billion kWh with an average annual 52.6 51.3 52.6 growth rate of 0.7% in 2019–2025. A significant part of the country's demographic and economic potential is concentrated in its capital: 8.6% of 50.6 50.7 52.7 52 53.2 52.6 total population, 10% of average annual headcount, up to 20–21% of total gross regional product (GRP), 15–16% 2014 2015 2016 2017 2018 2019 of industrial production, up to 15–16% of retail trade POWER CONSUMPTION, BLN KWH turnover, and 11–12% of total investments in equity. Russian Federation Region 20191 2020 2021 2022 2023 2024 2025 Moscow Region is a Russian Federation entity, part of Moscow Region actual the Central Federal District, with a total area of 44.3 Moscow thousand sq. km. According to Rosstat, the population Moscow Region Russian Federation 1,059.36 1,092.15 1,104.09 1,114.96 1,125.62 1,138.95 1,143.05 amounted to more than 7.68 million people as of January 1, 2020. Moscow Region 107.69 109.61 109.61 110.55 111.53 112.84 113.47 Moscow Region produces 5.5% of total Russian industrial output, represented mainly by processing enterprises (7.4% of total Russian output) — 89.5% in the structure According to the Russian Federal State Statistics Service, investment activities at the background of steadfast of total volume of goods shipped accounts for processing electricity consumption in Moscow Region is supported the Moscow industrial production index amounted to financial development of urban infrastructure and enterprises, with 66.5% being Russia's average. Primary by the annual growth of population and investment 105.3%2 in January–December 2019 against January– implementation of the housing renovation program, as industrial enterprises in Moscow Region are engaged attractiveness of Moscow and Moscow Region, the December 2018; and in Moscow Region industrial well as expansion of consumer demand5. in the production of food, metal products, mechanical dynamically developing infrastructure, transport network production index amounted to 112.7%3 in January– engineering, chemistry, and construction materials. and large volumes of construction of residential and December 2019 against the corresponding period in Thus, with economic stabilization (including improvement administrative buildings. 2018. of the overall macroeconomic situation in the regions of presence), the macroeconomic conditions seen in the Dynamics of electric power demand in Russia In 2019, decrease in the volume of annual electricity The economic in Moscow Region is driven by reporting period allow us to suggest a stable demand and in the Moscow Energy System consumption in the Moscow electric power system manufacturing industries, along with retail and for power products. The forecasted increase in demand in 2014–2019 and in total electricity consumption growth rates in the wholesale trade; development of the agro-industrial for electricity will be largely related to the construction Russian UES compared to 2018 is due to the impact of complex, implementation of investment projects, and of housing and infrastructure, development of the Over the period of 2014–2019, the Russian Federation temperature factor. The average annual temperature of infrastructure development4 are prioritized. In 2020– transport system in Moscow Region, and modernization and Moscow Region continued to see the trend of the year 2019 exceeded the normal temperature across 2022, the growth of Moscow's economy will be ensured of manufacturing organizations. growing electricity consumption. An average annual Russia. One of the crucial factors that determined the by the development of the real economy sector, high increase in electricity consumption over the past six prospective dynamics of electricity consumption is the years was about 0.88% in the Russian Federation and introduction of energy-saving technologies and energy about 0.86% in Moscow Region. A stable growth of efficiency improvement.

1 UES of Russia Operation Report 2018. 2 https://mosstat.gks.ru/ 3 https://mosstat.gks.ru/storage/mediabank/12(2).doc 4 Forecast of socio-economic development in Moscow Region for the mid-term 2020–2022 (Decree of the Government of Moscow Region No. 718-36 dated October 15, 2019) (https://mosreg.ru). 5 Forecast of socio-economic development in Moscow for 2020 and the planned period of 2021–2022 (https://www.mos.ru/en/). 6 According to JSC SO UES.

26 27 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

Expected demand for electric power Traditionally, power consumption growth in the Moscow The following documents are being developed in 110 (35) kV and Above in Moscow and Moscow Region for in Moscow Region and the Russian Federation Region is based on the high level of migration gain and compliance with the Rules: 2019–2024 and until 2027 for the needs of PJSC MOESK in 2020–2024 implementation of the following key investment projects: a master plan of location of electric power facilities; which was approved by order of PJSC MOESK No. 1482 Administration and business center in Kommunarka; dated December 26, 2019. In accordance with the Scheme and Program for the the Scheme and Program for the development of the Development of the Unified Energy System of Russia Skolkovo Innovation Center; Unified Energy System of Russia for a 7-year period 1 (hereinafter, Development Scheme and Program of the for 2019–2025 , power demand forecast in the Russian development of the territory of the Moscow State Competitors and competitive advantages UES); Federation and the Moscow Region for 2020–2024, University (MSU); according to the basic version for power consumption, schemes and programs for prospective development PJSC MOESK is one of the largest interregional distribution housing renovation and production area development, demonstrates the following indicators. of the power sector in the constituent entities of the companies in the Russian Federation and the largest including ZIL plant territory; Russian Federation for five years (hereinafter, the distribution company in Moscow Region. increasing consumption of the Moscow International Development Scheme and Program for Moscow and POWER DEMAND FORECAST IN THE RUSSIAN Business Center “Moscow City”; the Development Scheme and Program for Moscow In Electric Power Transmission FEDERATION AND MOSCOW REGION, BLN KWH Region). active improvement of railway transport and subway, The largest company providing similar services in Moscow including the development of the Moscow Central 1,138.95 Traditionally, PJSC MOESK takes part in the development is Joint Stock Company “United Energy Company” (JSC Diameters (MCD-1, 2, 3, and 4); of the Development Scheme and Program of the UES, the “UNECO”); in Moscow Region — JSC Mosoblenergo. 1,125.62 development of special economic zones, technopolises, Development Scheme and Program for Moscow and the 1,114.96 industrial parks, including the park Patriot, industrial Development Scheme and Program for Moscow Region, In Technological Connection submitting raw data and suggestions, participating in 1,104.09 park , a number of industrial clusters in the Domodedovo District, business park in the vicinity of working groups and meetings. Among the largest companies providing similar services 1,092.15 Zherebyatievo, expo-cluster in the vicinity of Lovtsovo, in Moscow are JSC “UNECO” and JSC Energocomplex; in industrial cluster in , etc.; PJSC MOESK also actively participated in the updating of Moscow Region, JSC Mosoblenergo, JSC “Oboronenergo”, the Complex Development Program of Power Grids Rated and CJSC Elektrosetekspluatatsiya. development of large-scale innovative territorial clusters, such as nuclear and physics technology and 112.84 110.55 111.53 nanotechnology cluster in , bio-technology 109.02 109.61 cluster in , cluster Phystech XXI in and cluster of the State Scientific Center PJSC MOESK has been a part of Rosseti Group of Companies of the Russian Federation “Troitsk Institute of Innovative and Thermonuclear Research”; since August 9, 2017. PJSC Rosseti is listed as a strategic joint- creation of new special economic zones, such as SEZ stock company under Decree of the President of the Russian Maksimikha; 2020 2021 2022 2023 2024 development of agricultural production and creation of Federation No. 370 dated August 09, 2017 “On Amendments to the large greenhouse complexes for all-year use; Russian Federation List of Strategic Enterprises and Strategic Joint-Stock Companies construction of additional terminals, infrastructure Moscow Region facilities, such as airports Domodedovo and Approved by Decree of the President of the Russian Federation No. Sheremetyevo, etc. 1009 dated August 4, 2004.” IN 2020–2024, THE FOLLOWING POWER DEMAND Development of the electric grid complex GROWTH IS FORECAST OVER 5 YEARS in Moscow and Moscow Region COMPETITIVE ADVANTAGES OF PJSC MOESK The main document, which sets the basic development planning principles for the electric grid complex of the Strengths Opportunities Russian Federation is the Rules for Development and % % Approval of Schemes and Programs for the Prospective Developed grid infrastructure of 0.4–220 kV. Increase in the market share due to advanced development of 4.3 3.5 Development of the Power Sector, approved by Decree Dominant position in the electric power transmission services the grid infrastructure and takeover of local grid operators of the No. 823 of the Government of the Russian Federation market. second level. IN THE RUSSIAN IN MOSCOW dated October 17, 2009 on Schemes and Programs for the Ability to supply power of any reliability category. Improved reliability and cost-effectiveness of the grids due to introduction of digital technologies. FEDERATION REGION Prospective Development of the Power Sector (hereinafter, Developed structure of operating and technological grid the Rules). The Rules establish the procedure for management. Reduction of losses due to the implementation of complex approaches to energy efficiency. developing and approving schemes and programs for the Developed chain of service centers and remote client service prospective development of the power sector. centers. Generation of additional revenues from power supply services. Improvement of operating efficiency due to the implementation of cost-cutting potential and increased labor output. 1 Approved by order of the Ministry of Energy of the Russian Federation No. 174 dated February 28, 2019.

28 29 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

COMPARISON OF PJSC MOESK WITH RUSSIAN PEER COMPANIES BASED ON THE RESULTS OF THE REPORTING YEAR 1.3.2. MISSION AND STRATEGIC GOALS

Company name Revenue as per RAS Net profit as per Balance sheet Market RAS assets capitalization

mln rub. mln rub. mln rub. mln rub. Commentary by A.G. Kashtanov Director for Digital Transformation PJSC MOESK 160,376 6,607 351,834 58,034 By the resolution of the Board of Directors of PJSC the subsidiaries and affiliates of PJSC Rosseti, including PJSC Kubanenergo 51,004 2,428 76,232 20,883 Rosseti dated December 26, 2019 (Minutes No. 388 dated PJSC MOESK. December 26, 2019), the Development Strategy for PJSC IDGC of Center and Region, PJSC 96,343 5,150 118,272 26,957 Rosseti and its Subsidiaries and Affiliates (Rosseti Group Innovative development based on modern digital of Companies) until 2030 (hereinafter, the Strategy) technologies was one of the Company's strategic IDGC of Centre, PJSC 94,506 215 124,263 12,758 was approved. In addition to the traditional strategic priorities in 2019. The Company's efforts in this regard development priorities such as power supply reliability, are implemented with the consideration of the PJSC PJSC “IDGC of Siberia” 57,491 –736 82,105 29,013 customer service quality, performance improvement, Rosseti's concept — Digital Transformation 2030. the Strategy identifies new directions of development The Company's Board of Directors has developed and IDGC of Volga, PJSC 62,880 2,617 65,830 16,731 — technological and innovative development, digital approved the Digital Transformation Program of PJSC transformation, development of new lines of business MOESK which is being implemented until 2023. IDGC of Urals, JSC 94,042 2,155 77,190 14,356 (non-tariff power services). The Program includes 13 projects that involve PJSC “LENENERGO” 82,371 12,705 226,796 71,617 The Strategy approved key indicators for the implementation of digital solutions in key areas of the implementation of the Strategy until 2030, the road map Company's activities: from technological processes to IDGC of North-West, PJSC 45,131 554 54,461 5,139 for the preparation of program documentation of PJSC interaction with customers. The technologies we use Rosseti, as well as the algorithm for the implementation include artificial intelligence and machine learning, big IDGC of Northern Caucasus, PJSC 18,362 –9,779 33,512 4,655 of the Strategy in PJSC Rosseti and subsidiaries and data processing and analysis, as well as smart grid affiliates of PJSC Rosseti, in compliance with which and smart metering. Most technological solutions were IDGC of South, PJSC 36,966 –3,198 44,263 5,074 the approval of all program documents provided by the not previously implemented in the Russian electric grid Strategy is planned for 2020, as well as the approval of complex. The main criteria for implementing the projects PSC “TDC” 7,182 176 5,595 1,739 scenario-based conditions for achieving its targets for is their technological and economic efficiency.

Prospective Projects/Long-Term Projects of Strategic Importance for the Company In order to improve power supply reliability and quality, in 2019 the PJSC MOESK is implementing the Digital Transformation Program of PJSC MOESK for 2020– team of PJSC MOESK took all planned actions to ensure reliable and 2023 (hereinafter, the Program) which was developed under Decrees of the President of the Russian Federation V.V. Putin No. 203 dated May 9, 2017 “On the Development Strategy uninterrupted electric power supply to consumers in Moscow and of the Information Society in the Russian Federation for 2017–2030”; No. 204 dated May 7, 2018 ”On National Goals and Strategic Objectives for the Development of the Russian the Moscow Region. The 2019 Repair Program has been completed Federation until 2024”; PJSC Rosseti's concept Digital Transformation 2030 approved by the generally. The measures under the Modernization Program Board of Directors of PJSC Rosseti (Minutes No. 336 dated December 21, 2018). (Renovation) of Power Grid Facilities of PJSC MOESK for 2019 were Projects implemented under the Digital Transformation Program of PJSC MOESK are implemented. strategically important for the Company.

More information on the digital transformation projects of PJSC MOESK is given in section 2.7 Technologies and Innovations.

30 31 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

PJSC MOESK's mission is to reach the maximum level of PJSC MOESK are to be implemented. At the same time, In the end of 2019, electricity be continued. Measures have been put on the list to find of reliability and availability of the distribution network increased physical volumes of works are provided under the abandoned electric grid property and to conclude contracts infrastructure using innovative digital technologies along repair program 2020, compared to the 2019 program. losses fell by 0.43 p.p. against with administrations of municipalities on operation of such with modern quality standards for services rendered. facilities. The Company has long been implementing its long-term 2018 (from 8.10% to 7.67% of the The Company’s key mid-term development focus is plan to improve its interaction with clients and customer As for digital transformation of technological and corporate based on the provisions set forth in the Strategy for service quality. In 2019, the Company concentrated its efforts output to the grid). business processes, the Digital Transformation Program of the Development of the Grid Complex of the Russian on improving the current interactive services, as well as on PJSC MOESK until 2023 was launched in 2019. It combined Federation1. Based on this document and the Development developing and implementing mobile customer interaction To fulfill the requirements of Federal Law No. 522-FZ dated different projects aimed at implementing digital solutions in Strategy of PJSC Rosseti and its subsidiaries and affiliates services. December 27, 2018 “On Amending Certain Legislative the Company's technological and business processes. until 2030, the Company identifies the following strategic Acts of the Russian Federation in Connection with the development areas: According to the results of 2019, the share of applications for Development of the Registering System of Electric Energy In the reporting year, the Company paid great attention to improvement of reliability and quality of electric power technological connection submitted via the Personal Account (Power) in the Russian Federation”, certain activities are the development of new business lines (non-tariff power supply in the Moscow Region; at the technological connection portal amounted to 75% (71% scheduled for 2020 to implement the Smart Electricity services). in 2018). Registration Program of PJSC MOESK for 2020–2021, improvement of consumer service quality; approved by the Company's Board of Directors on January In the end of 2019, revenue improvement of the efficiency of the electric grid The Zero Visit program (online connection with no need 30, 2020 (Minutes No. 415 dated January 31, 2020). complex operation in the Moscow area; to visit the Company's office) was effective as part of the from the provision of power service in absentia, while the number of stages (procedures) While improving the reliability of power supply, the economically justified consolidation of electric grid required to gain access to the electric grid in case of Company is also focused on the reduction of costs for services (non-tariff services, assets in the territory of the Company’s operation; in-person visits reduced to 2. maintenance of such level. Given the situation where the digital transformation of technological and corporate increase in tariffs is limited, measures are taken to cut taking into account income from business processes; In order to ensure favorable conditions for small and operating expenses and to drive operating efficiency. medium business and improve the positions at the World agreements on compensation development of new business areas (non-tariff services Bank's Doing Business Ranking by the Getting Electricity DROP IN OPERATING EXPENSES FOR 2019 and power supply services). indicator, the Action Plan was approved by the Order of PJSC of power grid property's losses) Implementation of a set of measures to ensure reliability MOESK No. 1403 of December 17, 2019, which is aimed at YEAR-OVER-YEAR AMOUNTED TO enabled PJSC MOESK to perform planned reliability improvement of energy infrastructure accessibility in 2020. totaled 3,347 million rubles indicators Psaidi and Psaifi approved by the Department Execution of the Action Plan and upcoming adjustment of of Economic Policy and Development of Moscow and the Russian legislation in 2020 in respect of the cancellation and accounted for 2.1% of the Committee on Prices and Tariffs of Moscow Region (taking of signing bilateral technological connection contracts and into account the permissible excess — not more than 30% power supply contracts will make it possible to obtain Company's revenue, whereas of the planned value). regulatory approval to perform a lower number of TC-related procedures (1 procedure), to shorten the period of SMEs' 2.4% in 2018 it stood at 2,091 million In 2019, the Company implemented a set of measures connection to electricity grids to 25 days, as well as to move and provided an uninterrupted electric power supply to the up in the international ranking Doing Business in the Getting IN LINE WITH THE TARGET rubles (1.3% of the Company's facilities when holding events of state importance: Electricity category. International Military-Technical Forum “Army-2019”; total revenue, respectively). With a view to improve the efficiency of customer interaction, The International Aviation and Space Salon MAKS-2019; in the year under review the Mobile Application for For the purpose of consolidating power grid assets, in 2019 Net profit from provision of power services (non- The United Voting Day in September 2019; Customers project was carried out to allow for sharing any PJSC MOESK actively worked to deliver the Program of tariff services, taking into account income from relevant data and information between consumers and PJSC Consolidation of Gardeners' and Cottage Villages' Grids. agreements on compensation of power grid property's The Russian Energy Week International Forum 2019 in MOESK remotely. As part of this program, the requirements to transfer of losses) amounted to 1,567 million rubles in 2019, thus Moscow. gardener associations' and cottage villages' electricity exceeding the actual value of the previous year by 420 The Virtual Dialogue Office project is planned for grids to the Company's ownership were significantly million rubles. To ensure efficient and reliable electrical equipment implementation in 2020, targeting the interaction with simplified. In the end of 2019, over 1.5 thousand of non- operation, successful autumn-winter period and reduction customers in terms of provision of various services and profit gardeners' partnerships were consolidated. A significant increase in revenue and net profit from of the number of technological violations, in 2020, the information in an interactive dialogue mode available on the provision of power services is planned for 2020 by repair program, target production programs, and the mobile and desktop. In 2020, the implementation of the Program of means of development of existing non-tariff services modernization program (renovation) of power grid facilities Consolidation of Gardeners' and Cottage Villages' Grids will and new types of non-tariff services.

1 Approved by Order of the Government of the Russian Federation No. 511-r dated April 3, 2013.

32 33 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

ANNUAL INDICATORS

Scope of indicators Results achieved in 2018 Target indicator in 2019 Results achieved in 2019

Consolidated net cash flow 2,867.0 mln rub. ≥ —3,732.5 mln rub. KPI was satisfied

Reduction in specific operating 2.48% ≥ 2.0% KPI was satisfied KEY PERFORMANCE expenses (costs)

Increase in the electric-grid Satisfied Satisfied KPI was satisfied INDICATORS capacity use factor 1. 4 Electric power loss level 8.10% ≤ 7.85% KPI was satisfied Reduction in specific investment 0.86 ≤ 1.00 KPI was satisfied costs

Improved labor productivity 7.88% KPI was satisfied KPI was satisfied

Achievement of the Company's development priorities is The following scope and targets of the key performance Innovation efficiency Satisfied ≥ 90% The actual value was not estimated using the System of Key Performance Indicators indicators were set for 2019: determined, KPI was not (KPIs) adopted in the Company. estimated2

Compliance with the technological 1.0 ≤ 1.1 KPI was satisfied QUARTER-BASED INDICATORS connection deadlines

Scope of indicators Results achieved in 2018 Target indicator in 2019 Results achieved in 2019 Achievement of the required The actual value was not On the same note: KPI was satisfied service reliability level determined, KPI was not 1) KPI ≤ 1.00 Consolidated profit from operating KPI was satisfied as of the For Q1, H1, and 9 months of the KPI was satisfied as of the estimated3 2) Ki < 1.00 activities (EBITDA) results of Q1, Q2, Q3, Q4 reporting year ≥0; for the year results of Q1, Q2, Q3, Q4 ≥ 3.0%

Consolidated net debt/EBITDA KPI was satisfied as of the Q1, Q2, Q3, Q4 ≤ 3.0 KPI was satisfied as of the The Company’s System of Key Performance Indicators is in the amount of payable bonuses; quarterly and annual results of Q1, Q2, Q3, Q4 results of Q1, Q2, Q3, Q4 associated with the variable portion of the management’s bonuses are paid if specific KPIs are met. remuneration, as each indicator has its own specific weight Progress in the plans to reduce the KPI was satisfied as of the ≥ 100.0% KPI was satisfied as of the accounts receivable results of Q1, Q2, Q3, Q4 results of Q1, Q2, Q3, Q4

No increase in the rates of major KPI was satisfied as of the No increase KPI was satisfied as of the accidents results of Q1, Q2, Q3, Q4 results of Q1, Q2, Q3, Q4 Target in numeric terms: ≤ 1

No increase in the number of KPI was satisfied as of the No increase KPI was satisfied as of the accident victims results of Q1, Q2, Q3, Q4 results of Q1, Q2, Q3; not Target in numeric terms: ≤ satisfied as of the results of Q4 0.0455 1 In accordance with the list of priority facilities implemented in the subsidiaries and affiliates of PJSC Rosseti and other associated entities of PJSC Rosseti (approved by Order of PJSC Rosseti No. 322r dated July 26, 2019), there were no facilities scheduled for commissioning in Q3 2019. 2 KPI results will be summarized in accordance with the Methods of Calculation and Evaluation of Achievement of KPIs of the Director General of PJSC MOESK by a Compliance with the commissioning — ≥ 90% (quarterly estimate KPI was not estimated as of the separate resolution by the Board of Directors of the Company with taking into account the results of KPI “Innovation efficiency” by the Director General of PJSC Rosseti (in schedule introduced from Q3 2019) results of Q31, satisfied as of the accordance with the Regulation on Implementation of development monitoring, program adjustment and implementation regarding innovative development of joint-stock companies with state participation, state corporations, state companies and federal state unitary enterprises, approved by order of the Chairman of the Government of the results of Q4 Russian Federation of No. DM-P36-7563 dated November 7, 2015). 3 Starting from 2018, PJSC MOESK has shifted to a new long-term regulation period and, in accordance with the requirements of Order of the Ministry of Energy of the Russian Federation No. 1256 dated October 29, 2016 “On approval of methodical guidelines for calculation of the level of reliability and quality of provided goods and services for an organization managing the unified national (all-Russian) power grid and local grid operators”, is regulated by the tariff regulation authorities with the reliability indicators “Average duration of the termination of the transmission of electric power to the point of supply (Psaidi)” and “Average frequency of the termination of the transmission of electric power to the point of supply” (Psaifi). Planned values of Psaidi and Psaifi set by the regulation authorities were satisfied.

34 35 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

In PJSC MOESK, as part of implementation of the electric — Requirements with Guidance for Use, was introduced. grid complex environmental policy1, the URS Russia A three-year transition period has been established until certification body conducted a certification audit of the March 11, 2021, during which the organizations that Environmental Management System. It is aimed at have implemented OHSAS 18001:2007 will rebuild their confirming compliance of the Company's Environmental occupational health and safety management system to Management System with the requirements of ISO comply with ISO 45001:2018. In 2019, no certification audit 14001:2015 Environmental Management Systems — of the occupational health and safety management system MANAGEMENT Requirements with Guidance for Use. took place in the Company. The Environmental Management System and the certificate apply to the Executive Bodies and all branches of the The main participants of the management SYSTEMS Company. Based on the audit results of the divisions and systems are: processes of PJSC MOESK, the URS Russia auditors issued Board of Directors of the Company; a statement that the environmental management system 1. 5 complies with the ISO 14001:2015 requirements, and it is executive bodies of the Company (Director General and confirmed by the relevant certificate. Management Board); representative of the Company's management team in charge of the respective management system; Energy Management System structural units responsible for the organization of the The Company has the following management systems As per the statement (report) The Energy Management System is a component of the management systems; in place: Company’s general governance system which has a clear structural units of the Company and its subsidiaries of the certification body, the organizational structure and is aimed at complying with the and affiliates that participate in the functioning of the provisions specified in the energy policy by implementing management systems. Quality Management System (QMS) following strengths (best the energy-saving and energy efficiency programs. The QMS is a component of the Company’s general practices) were noted: integration For more information, see section 3.5. “Energy Efficiency The main positive results of the management governance system and is intended to ensure the high and Power Consumption.” systems operation in 2019 are: quality of services rendered in accordance with the of the Quality Management higher power supply reliability, quality and safety; regulatory requirements, the needs and expectations of consumers, as well as to satisfy all stakeholders System in PJSC MOESK; Occupational Health and Safety Management ensuring occupational health and safety during including the Company’s employees, shareholders, System production operations; investors, and partners. high professional level of higher energy efficiency; The Occupational Health and Safety Management System The compliance of the Company’s QMS with ISA organizing activities on the is a component of the Company's general governance ensuring environmental safety and environmental 9001:2008 was confirmed by the successful system, which provides for risk management and protection; certification (2008 and 2015), as well as by standardization of implementing improved performance with regards to occupational higher technological connection service quality. supervisory audits (2009, 2010, 2012, 2013, 2016) health and safety. In 2018, the new standard, ISO 45001 and a recertification audit (2011) as conducted established legal and regulatory Occupational Health and Safety Management Systems by CJSC Bureau Veritas Certification Rus. A QMS recertification audit for compliance with ISO requirements in PJSC MOESK. 9001:2015 requirements was carried out in 2018.

In 2019, the Company successfully passed the Environmental Management System supervisory audit of the Company's Quality Management System, based on the results of which The Environmental Management System is a component BUREAU VERITAS Certification (certification office of the Company’s general governance system and of JSC Bureau Veritas Certification Rus) has issued is comprised of its own organizational structure, a statement that the Company maintains a quality mechanisms, procedures and resources necessary to management system that meets the requirements of manage environmental aspects of the Company's activities ISO 9001:2015, and is capable of achieving planned by developing and achieving environmental policy goals. results and ongoing improvement.

1 Approved by the Company's Board of Directors, Minutes No. 332 dated November 24, 2017.

36 37 1. Company Profile ANNUAL REPORT PJSC MOESK 2019

38 39 2. COMPANY PERFORMANCE

2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

2019 the average daily temperature was 4.71°С higher development and opening of new metro stations, year-on-year, and power consumption during these two as well as intensive residential development on the months dropped by 192.8 million kWh against 2018. territory of New Moscow and Moscow Region. The Company's business plan for 2020–2024 provides for In 2020, the consumption of power is predicted to a moderate average annual output growth of 0.5%. be higher. This is primarily due to the infrastructure PRODUCTION RESULTS

2.1 POWER BALANCE INDICATORS ACROSS MOSCOW REGION

Category 2017 2018 2019 Increase in 2019, %

Output to the grid, mln kWh 90,231 91,881 91,748 –0.1 2.1.1. TRANSMISSION AND DISTRIBUTION OF ELECTRIC POWER Electric power output from the grid to consumers and 82,800 84,442 84,711 0.3 associated LGOs by PJSC MOESK within the limits of balance and operation responsibility, mln kWh

Electric power loss, % of output to the grid 8.24 8.10 7.67 –0.43 p.p.

Electric power loss, mln kWh 7,432 7,440 7,037 –5.4

For reference:

Scope of services for the transmission of electric power 73,073 74,547 74,217 –0.4 rendered to consumers (“joint” net supply), mln kWh

Data for Moscow and Moscow Region are presented in the electronic annex in section 5.1.

The lower output of electric power across the Company in 2019 against 2018 is caused by the higher average monthly ambient temperature in the reporting year: 8.99°C, which is 1.57°C higher year-on-year.

STRUCTURE OF THE SCOPE OF SERVICES FOR ELECTRIC POWER TRANSMISSION BY GROUP OF END CONSUMERS, %

Group of consumers 2017 2018 2019 Change, p.p.

Industrial consumers 30.90 31.31 31.20 –0.11

Comments of A. V. Petukhov, Deputy Director General for Electric Power Transmission and Metering Non-industrial consumers 20.14 20.13 19.97 –0.16

Household and equivalent consumer groups 31.93 31.38 31.51 0.13

State and municipal organizations and other budget 8.46 8.44 8.50 0.06 In 2019, electricity output to the grid in the Moscow The power system of Moscow and Moscow Region is consumers Region power system amounted to 91.7 billion kWh, characterized by the lack of large production enterprises which is 0.15% less year-on-year. For Moscow and and the share of consumption by residential consumers Transport 7.36 7.50 7.56 0.06 Moscow Region, this indicator was –0.09% and –0.20%, being over 30%. Power consumption is significantly respectively. Despite this decrease, over the past 5 years affected by ambient temperatures, especially in the Agriculture 1.21 1.24 1.26 0.02 the average annual output growth stood at 1.18%. autumn-winter period. Thus, in November–December

40 41 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

A net supply decrease of 0.11 p.p. in the industrial and transport groups and of 0.02 p.p. in the agriculture Consumer Electric power consumption for 2019, consumers group and of 0.16 p.p. in the non- group is due to the improved economic situation in these mln kWh industrial consumers group is due to the introduction consumer categories in Moscow Region. by enterprises and organizations of energy-saving JSC “Research & Production Corporation “Istok” named after A.I. Shokin” 56.7 technologies. Net supply in the household and equivalent consumer groups grew by 0.13 p.p., which is due to the large-scale JSC DANONE RUSSIA 55.4 A net supply increase of 0.06 p.p. in the state and housing construction and commissioning in Moscow municipal organizations and other budget consumers Region. Kerama Marazzi LLC 52.7

Company Metal Profile LLC 51.5

LARGEST ELECTRIC POWER CONSUMERS IN MOSCOW

Consumer Electric power consumption for 2019, STRUCTURE OF SERVICES FOR THE TRANSMISSION OF ELECTRIC POWER BY CONSUMER GROUP mln kWh Group of consumers 2017 2018 2019 Increase in National Research Center “Kurchatov Institute” 113.6 2019, %

State Budgetary Institution GORMOST 102.3 Scope of services, mln kWh (total), including: 73,074 74,547 74,217 –0.4

JSC Technopolis “Moscow” 94.8 power sales companies 954 1,062 1,188 11.9

JSC Chernyshev ММЕ 84.3 guaranteed power suppliers 71,922 73,234 72,781 –0.6

CJSC RENAULT RUSSIA 60.5 direct consumers 198 251 248 –1.2

JSC Ostankino Meat Processing Plant 51.7

JSC MIRS 47.5 STRUCTURE OF PJSC MOESK REVENUE FOR ELECTRIC A drop in power consumption of 0.6% in the POWER TRANSMISSION SERVICES IN 2019 guaranteed power suppliers group is due to lower Grand Service Building LLC 41.5 BY CONSUMER GROUP, % power consumption caused by increase in the number of new power sales companies in 2019. TRANSCONTINENTAL PROPERTIES LIMITED 40.2 A 11.9% growth in electric power consumption by Sintez OJSC 37.2 0.1 0.3 0.2 1.1 the power sales companies consumer group is 1.8 1.4 associated with new contracts concluded in 2019.

98.6 98.4 A 1.2% decrease in consumption by the direct 98.1 consumers group is associated with the reduced LARGEST ELECTRIC POWER CONSUMERS IN MOSCOW REGION electric power consumption in 2019.

Consumer Electric power consumption for 2019, Most of revenue from electric power transmission mln kWh was gained from guaranteed power suppliers (GPS) — 98.4%, while the share of revenue from JSC Sheremetyevo International Airport 173.7 JSC Mosenergosbyt, the largest GPS in the territory 90 of Moscow Region, was 91.4% of the total revenue Domodedovo International Airport LLC 114.5 Moscow Moscow Region PJSC MOESK of the GPS.

LG ELECTRONICS RUS LLC 79.5

JSC Metallurgical Plant “Electrostal” 78.4 Guaranteed power suppliers MEGA Belaya Dacha LLC 66.2 Power supply companies Direct consumers Ingka Centers Rus Property A LLC 58.6

42 43 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

STRUCTURE OF THE SCOPE OF SERVICES FOR ELECTRIC POWER TRANSMISSION BY VOLTAGE LEVEL, % 2.1.2. TECHNOLOGICAL CONNECTION

Voltage level 2017 2018 2019 Change, p.p.

High (110–500 kV), HV 16.8 17.2 17.4 0.2

Medium-1 (35 kV), MV1 1.5 1.5 1.5 0.0

Medium-2 (1–20 kV), MV2 39.5 39.7 39.8

Low (0.4 kV and below), LV 42.2 41.6 41.4 -0.2

Taking into account the structure by consumer at the MV2 voltage level — slight increase in electric group, the redistribution of electric power power consumption caused by the development of transmission services is caused by: SMEs in Moscow and Moscow Region; at the HV voltage level — growth of electrical at the LV voltage level — drop in electric power consumption by large energy-intensive consumption due to the introduction of energy- consumers; saving technologies.

FORECAST OF ELECTRIC POWER BALANCE INDICATORS

Category 2020 2021 2022 2023 2024 Comments of K. V. Lebed, Deputy Director General for Technological Connections and Development of Services

Output to the grid, mln kWh 92,742 93,160 93,630 94,103 94,578

Electric power output from the grid to consumers and associated 85,617 86,373 87,091 87,826 88,561 LGOs by PJSC MOESK within the limits of balance and operation As compared to the year before, there was a The Company is on the point of continuing to responsibility, mln kWh downward trend in technological connection in 2019. introduce self-service services in 2020 that would be However, the Technological Connection Unit together convenient for our customers: e-signature systems, Electric power loss, % of output to the grid 7.68 7.29 6.98 6.67 6.36 with the Capital Construction Unit have made major means of electronic document exchange, and speech efforts to perform the contracts concluded in current synthesis and recognition in industrial operation. Electric power loss, mln kWh 7,125 6,787 6,539 6,278 6,017 and past periods, so the contract performance indicators remained high at more than 100% for the MOESK will still focus on key projects and state For reference: revenue and cash flow. programs such as Health Services in Moscow Area, a targeted program Resettlement of Residents Scope of services for the transmission of electric power rendered to 75,177 75,551 75,839 73,373 76,951 The Company continues to actively work on the from Dilapidated Housing in Moscow Region for consumers (“joint” net supply), mln kWh digitalization of technological connection services. 1/3 2016–2020, and a long-term targeted program called of all applications come to PJSC MOESK via electronic Disposal of Production Waste and Waste Consumption communication channels. For the convenience of in Moscow Region for 2012–2020. applicants, a customer mobile application was created The output to the grid forecast is based on the dynamics The electric power losses forecast is grounded on the and placed in Apple Store and Google Play in the Activities related to technological connection of of actual indicators for the period 2015–2019. The actual losses in 2019, taking into account the increased reporting period, while the services of online payment renovation quarters and large investment facilities demand for electric power will continue to grow until output to the grid, consolidation of power grid facilities for TP contracts were elaborated and SMS notification (industrial parks, agricultural and industrial facilities, 2024 due to new technological connections of consumers, of non-commercial partnerships of gardeners and services expanded. We managed to significantly reduce including the industrial parks Patriot, Pushchino, and as well as infrastructure development in Moscow and villa communities in Moscow Region, introduction of the number of procedures and timing of technological Volokolamsk, and other infrastructure facilities in Moscow Region. new equipment and implementation of the program of connection to power grids in Moscow. Moscow) will keep going. measures intended to reduce electric power losses.

44 45 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

TECHNOLOGICAL CONNECTION RESULTS NUMBER OF TECHNOLOGICAL CONNECTION CONTRACTS BY FEE CALCULATION METHOD

Category 2017 2018 2019 Increase in Category 2017 2018 2019 Increase in 2019, % 2019, %

Total number of TC applications submitted, ea. 97,904 101,085 77,264 –23.6 Total number of contracts, ea. (total), including: 63,310 64,908 57,947 –10.7

individual project 3 4 6 50.0 Total capacity under submitted TC applications, MW 7,163 7,406 6,307 –14.8

standard tariff rates 508 343 297 –13.4 Total number of concluded TC contracts, ea. 63,310 64,908 57,947 –10.7 standard tariff rate per 1 connection (since 2018) - 12,378 10,265 –17.1 Total capacity under concluded TC contracts, MW 2,420 2,613 2,098 -19.7 rate per unit of power 18,898 7,270 6,243 –14.1 Actual connection, ea. 71,992 70,744 52,726 -25.5 reduced tariff rate (550 rubles) 43,901 44,913 41,136 –8.4

Actual connected capacity, MW 3,069 2,578 1,957 -24.1

Data for Moscow and Moscow Region are presented in the electronic annex in section 5.1.

DISTRIBUTION OF ACTUALLY CONNECTED CAPACITIES BY INDUSTRY, MW 3,196 MW 3,111 MW DEMAND IN MOSCOW DEMAND IN MOSCOW REGION

148 245 562 991 2019 11 In 2019, there was a downward trend in demand for of receiving devices of more than 684 MW. In Moscow 110 323 676 1,464 technological connection. In the year under review, more Region, 44,700 facilities were connected with a capacity of 2018 than 77,000 applications were submitted for a total 1,274 MW. 5 capacity of 6,307 MW. 79% of submitted applications were 238 234 696 1,891 registered in Moscow Region (61.1 thousand applications) Compared to 2018, the share of manufacturing and 2017 10 and 21% (16.2 thousand ea.) in Moscow. agriculture sectors in the structure of connected capacity saw growth; facilities of several large agriculture Manufacturing sector Individuals The structure of demand by service region is about the companies operating in Moscow Region were connected, as Agriculture Other same: in 2019, consumers declared 3,196 MW in Moscow well as 3 plants with a total capacity of 8 MW. Public utilities and social sector and 3,111 MW in Moscow Region. According to the winter check measurement, the increase In the reporting year, over 52,000 new consumers were in unused capacity comes from lower load due to connected for a total capacity of 1,958 MW. In the city of abnormally high ambient temperatures in 2019. SUBJECT OF APPLICATIONS FOR TECHNOLOGICAL CONNECTION Moscow, 7,900 applicants were connected with a capacity

Category 2017 2018 2019 Increase in 2019, %

Total number of received applications, ea. (total), including applications 154,139 160,570 135,984 –15.3 DYNAMICS OF UNUSED CAPACITY IN MOSCOW AND MOSCOW REGION for: Indicator 2017 2018 2019 Increase in technological connection 97,904 101,085 77,264 –23.6 2019, %

capacity renewal, redistribution and increase, as well as temporary 9,387 12,953 11,690 –9.8 Unused capacity of PJSC MOESK, MVA 8,254 8,340 9,966 19.5 technological connection Unused capacity of PJSC MOESK taking into account concluded contracts, 5,966 5,629 7,682 36.5 other 46,848 46,532 47,030 1.1 MVA

46 47 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

2.1.3. POWER SUPPLY SERVICES (NON-TARIFF ACTIVITIES) Category 2018 2019 Increase in Target 2020 2019, %

Besides its core activities (technological connection to The most considerable in terms of revenue (income) are Construction and installation works for outdoor lighting power grids 0 0 0.0 30.0 power grids and electricity transmission), PJSC MOESK services related to construction and installation works, arrangement (Organization of outdoor lighting power grids, package intensely develops and expands power supply services and maintenance services (see the table). service) (non-tariff). Construction and installation works, reconstruction and technical 94.4 270.2 186.2 118.0 upgrade of consumers' power grid facilities

1 REVENUE FROM POWER SUPPLY SERVICES, INCOME FROM SPECIALIZED UTILITY PROVIDERS, MLN RUB. Electric power metering (installation/replacement, repair of metering 92.9 100.4 8.1 150.0 devices, installation of the automated measuring and information Category 2018 2019 Increase in Target 2020 system for electric power fiscal metering, etc.) 2019, % Engineering supervision of construction and installation works 104.5 232.8 122.8 335.2 Revenue 2,090.5 3,054.8 46.1 5,210.1 Other construction and engineering works 0 23.7 100.0 90.0 Rental and accommodation services 237.0 241.3 1.8 420.0 Consulting, organizational and technical services 131.9 140.9 6.8 182.0 Rental of buildings, premises, and structures (except power grid 74.3 74.6 0.4 133.3 facilities) Services for granting access to third-party organizations for the 24.5 26.1 6.5 30.0 production of work in security zones or power grid facilities Rental of vehicles 7.3 7.9 8.2 8.9 Expert review and coordination of project documentation 81.1 87.3 7.6 120.0 Services of equipment placement in power grid facilities 121.3 124.1 2.3 232.9 Other consulting, organizational and technical services 26.3 27.5 4.6 32.0 Services of telecommunication equipment placement, including fiber- 121.3 124.1 2.3 130.1 optical communication lines Other services 16.5 19.5 18.2 27.5

– Outdoor lighting services 0 0 0.0 72.8 For reference:

– Services of other structures and equipment placement in power grid 0 0 0.0 30.0 revenues from redevelopment of power grid facilities not included 0.0 292.6 100.0 1,150.0 facilities in additional services revenue (SUP revenues in cash)

Rental of other property 34.1 34.7 1.8 44.9

Maintenance and repair services 705.2 756.6 7.3 2,525.0 The growth in revenue from power supply services Even more than that, PJSC MOESK does market research Line maintenance of consumers' power grids 432.2 470.3 8.8 2,055.0 rendered in 2019 against 2018 was thanks to a set of on a regular basis in respect of other sectors not related measures taken with an aim to improve the efficiency of to its core activities, where the Company could provide Line maintenance of outdoor lighting grids 0 0 0.0 80.0 provision and sales of power supply services. competitive services with the purpose of reinforcing the income part of its budget owing to additional sources. Repair of consumers' power grids 235.5 245.7 4.3 330.0 In 2020, the Company expects to reach higher revenues from power supply services through the development of Tests and diagnostics of electrical equipment, protective equipment and 37.5 40.6 8.3 60.0 the following: devices rental and accommodation services; maintenance and repair services; Construction and installation works 999.9 1,896.5 89.7 2,055.6 construction and installation works. Re-arrangement of the Company's power grid facilities on third-party 348.2 694.7 99.5 350.0 46.1% initiative (package service) REVENUE GROWTH FROM POWER SUPPLY Performance of works assigned to applicants' competence in the 359.9 574.7 59.7 982.3 SERVICES IN 2019 AGAINST 2018 implementation of technological connection (turnkey TC, package service)

1 Revenue from non-tariff activities in 2017 amounted to 1,837.5 million rub. Data breakdown by service is not presented due to changes in PJSC MOESK's reporting structure.

48 49 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

limiting the marginal growth of tariff rates, the Company the level of 2018: thus, net profit for the reporting year ensures the dynamics of managed expenses at the level amounted to 6.6 billion rub. and 8.1 billion rub. under below the CPI. The reduction of operating expenses under RAS and IFRS, respectively, EBITDA under RAS amounted the Directive of the Russian Government No. 2303p-P13 to 40.5 billion rub., EBITDA under IFRS — 39.7 billion dated April 16, 2015 was 2.4% for 2019 in comparison rub. A significant increase in capitalization by the end of with 2018. It matched the target value. 2019, more than 80% testifies to the growth of investor confidence and increase in the investment attractiveness In 2019, adjustment of the Company's investment program of the Company. FINANCIAL was approved with an extension of the implementation period until 2025. The adjustment of the investment As before, in 2020, the Company's economic and financial program provides for the implementation of measures activities are aimed at controlling the increase in operating ANALYSIS to address the key objectives of the Company, including expenses and maintaining the optimal level of debt Digital Transformation projects. The results of financial burden. 2.2 and economic activities showed positive dynamics against

2.2.1. FINANCIAL RESULTS (RAS)

The accounting (financial) statements of PJSC MOESK for of the average tariff for the maintenance of UNEG 2019 are posted on http://www.moesk.ru/en/# in section facilities, as well as by the growth of the average tariff for Shareholders and Investors/Accounting Statements/ the payment of normative electric power losses. Accounting Statements Under RAS. The cost for services of distribution grid companies at the Revenue from sales of products (services) at the end of end of 2019 amounted to 42,754.3 million rub. (30.5% of 2019 amounted to 160,375.5 million rub., which is by total expenses). The cost reduction as compared to 2018 3,881.6 million rub. (2.5%) higher than in 2018, including amounted to 271.8 million rub. (0.6%), which was due to revenue from electric power transmission — 148,566.6 the reduction of the individual tariff of JSC UEC at the rate million rub. (by 3,186.7 million rub., or 2.2%, higher than of grid maintenance. in 2018). The increase in electric power transmission revenue is due to the increase in uniform tariffs. Depreciation of fixed and intangible assets at the end of 2019 amounted to 24,405.6 million rub. (17.4% of total The cost of production and management expenses expenses). The growth by 777.5 million rub. as compared amounted to 140,323.9 million rub., which is 671.6 to 2018 is due to the actually established structure of million rub. more (0.5%) above the 2018 level, in terms of inputs. conditionally uncontrolled expenses — by 1,151.3 million rub. (1,1%). The cost of production increase is mainly due Other operating expenses of the Company for 2019 to an increase in conditionally uncontrollable expenses: amounted to 33,987.4 million rub., which was equal expenses for compensation of electric power losses to 24% of the total expenses. The major share of other (increase by 2.2%), the cost of services of PJSC FGC UES operating expenses was labor expenses, including Comments of V. Yu. Myasnikov, First Deputy Director General for Financial and Economic (increase by 1.2%). insurance contributions. On an ongoing basis, the Activities and Corporate Governance Company implements measures for managing operating Expenses for purchasing electric power to compensate expenses, which allow it to ensure the dynamics of for losses in 2019 amounted to 18,676.1 million rub. managed expenses at a level below the consumer price (13.3% of the total expenses). In absolute terms, the index. In 2019, the national rating agency ACRA confirmed the Standard&Poor’s increased PJSC MOESK's long-term credit increase against 2018 amounted to 401.5 million rub. PJSC MOESK credit rating at AAA (RU) with a stable rating to BB+ Stable. (2.2%) and occurred mainly due to the increase in the The Company's profit before tax amounted to 10,972.5 outlook. This rating level corresponds to the level of purchase price of electric power losses. million rub., net profit at the end of 2019 was 6,607.2 financial obligations of the Government of the Russian The effectiveness of the Company's financial policy is million rub., which is 2,564.5 million rub. more than Federation and is the highest in the rating scale of the confirmed by a significant reduction in the borrowed funds. Expenses for services of PJSC FGC UES amounted to in 2018. The main impact on net profit growth in 2019 agency. The Company maintains high levels of international As before, the key direction in increasing the Company's 20,500 million rub. (14.6% of the total expenses). The compared to the same period of 2018 was the growth credit rating agencies in the international scale — operational efficiency is its cost management measures. In growth as compared to 2018 in absolute terms amounted of revenue from electric power transmission (2.2% Standard&Poor’s, Fitch Ratings, Moody’s. In July 2019, order to develop the Company's economy in the context of to 244.1 million rub. (1.2%) and is caused by the growth growth).

50 51 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

KEY FINANCIAL AND ECONOMIC INDICATORS, MLN RUB. The Company performed a range of activities to boost its operational efficiency:

Indicator 20171 2018 2019 Increase in improved the efficiency of management of maintenance and repair of equipment, buildings, and structures; 2019, % improved the efficiency of working capital management; Revenue from sales of products (services), including: 147,371.9 156,493.9 160,375.5 2.5 improved the efficiency of fixed assets management; transmission of electric power 138,350.5 145,379.9 148,566.6 2.2 improved the efficiency of procurement and supply chain management system; technological connection 7,183.9 9,023.4 8,754.1 –3.0 optimized the personnel motivation and remuneration system; electric power sale - - - - improved the organizational and functional structure, as well as increased labor productivity; other activities 1,837.5 2,090.5 3,054.8 46.1 carried out electric power efficiency activities. Cost of products (services) 136,880.0 139,574.7 139,860.6 0.2

Gross profit 10,491.8 16,919.2 20,514.9 21.3 KEY INDICATORS OF THE BALANCE SHEET

Administrative expenses 437.3 77.6 463.3 >100 Category 2017 2018 2019 Increase in 2019, % Selling expenses - - - -

Assets, mln rub., including: 343,039.7 347,573.4 351,833.8 1.2 Profit (loss) from sales 10,054.5 16,841.5 20,051.7 19.1

non-current assets 315,296.1 321,518.8 329,330.2 2.4 Interests receivable 116.7 197.0 299.4 52.0

current assets 27,743.6 26,054.6 22,503.6 -13.6 Interests payable 5,388.6 5,293.8 5,118.0 -3.3

Liabilities, mln rub., including: 343,039.7 347,573.4 351,833.8 1.2 Shareholding income 0.0 31.5 20.0 -36.5

capital and reserves 188,990.5 191,492.6 193,191.0 0.9 Other income 10,422.7 7,994.3 8,118.1 1.6

long-term liabilities 98,515.4 88,467.1 89,632.0 1.3 Other expenses 12,613.1 10,785.8 12,398.6 15.0

short-term liabilities 55,533.8 67,613.8 69,010.7 2.1 Profit (loss) before tax 2,592.2 8,984.7 10,972.5 22.1

Profit tax and other payments 1,373.9 4,942.0 4,365.3 -11.7 At the end of 2019, the Company's assets grew by 1.2% Net profit (loss) 1,218.2 4,042.7 6,607.2 63.4 to 351,833.8 million rubles. Over the reporting period, the proportion of current assets rose from 93% in 2018 to 94% BY THE END OF 2019, EBITDA2 32,093.9 37,906.6 40,496.1 6.8 in 2019. The increase in non-current assets was due to THE COMPANY'S the increase in fixed assets caused by the commissioning ASSETS GREW BY of equipment and revamp of fixed assets. Fixed assets 1.2% (excluding those under construction) make up for the The program aimed to improve operational efficiency Decrease in the operating largest proportion of non-current assets (86%). Accounts and to reduce expenses of PJSC MOESK for 2019– receivable make up for the largest proportion of current AND AMOUNTED TO 2023 was approved as part of the business plan by the expenses for 2019 amounted assets (59%), of which 2% is made up of long-term Company’s Board of Directors (Minutes No. 384 dated receivables, and 57% is made up of short-term receivables. April 24, 2019). Measures proposed in the program are to 2.4% y-o-y, which is above Below is the detailed analysis of trends in accounts taken into account in the Company's business plan, receivable. investment program, energy saving and energy efficiency the target value. improvement program, and other targeted programs. In 2019, the Company’s liabilities rose to 351,833.8 million 351,833.8 rubles, of which the largest proportion was made up of capital and reserves (55%), while the proportion of long- and short-term liabilities was 25% and 20%, respectively. mln rub. 1 Data for 2017 in compliance with the accounting (financial) statements for 2018. Recalculation was performed using the retrospective method due to changes in the accounting policy. 2 EBITDA is calculated as profit for the reporting period before taxes, interest, amortization and depreciation.

52 53 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

ANALYSIS OF THE CHANGE IN ACCOUNTS PAYABLE, MLN RUB. ACCOUNTS RECEIVABLE OF PARTICIPANTS OF THE SINGLE-WINDOW SYSTEM

Indicator As at As at As at December Category 2017 2018 2019 Increase in December 31, December 31, December 31, 2019/ 2019, % 2017 2018 31, 2019 December 31, 2018, % Accounts receivable of participants of the single-window system 8,319.0 8,288.4 8,018.1 -3.3 (excluding the accumulated reserve for doubtful debts), mln rub., Accounts receivable, including: 19,602.2 10,925.2 13,253.7 21.3 including:

purchasers and customers 11,633.8 7,738.2 10,482.4 35.5 JSC Energocomplex - - - - – electric power transmission 10,580.3 6,837.5 9,248.8 35.3 SUE Moskollektor 4,288.6 4,286.6 4,121.5 –3.9 Notes receivable - - - - JSC “UNECO” 3,387.5 3,375.8 3,279.9 –2.8 Advances paid 3,162.7 1,140.7 1,024.3 -10.2

Other accounts receivable 4,805.5 2,046.3 1,746.9 -14.6 MOSENERGO 642.8 625.9 616.7 -1.5

Reserve for doubtful debts, mln rub., including: 7,676.0 7,975.0 8,018.0 0.5

The amount of PJSC MOESK's accounts receivables at the of December 31, 2019, which is 2,411.3 million rubles JSC Energocomplex - - - - beginning of the reporting period totaled 10,925.2 million or 35.3% more than that as of December 31, 2018. This rubles and 13,253.7 million rubles as of December 31, 2019. is due to the increase of current receivables of JSC SUE Moskollektor 4,288.6 4,286.6 4,121.5 –3.9 Mosenergosbyt. Accounts receivable under the Purchasers and Customers JSC “UNECO” 3,387.5 3,375.8 3,279.9 –2.8 item totaled 10,482.4 million rubles, which is 2,744.2 Accounts receivable under the Advances Paid item million rubles or 35.5% more than that as of December amounted to 1,024.3 million rubles, which is 116.4 million MOSENERGO - 313.0 616.7 97.0 31, 2018. Accounts receivable for the transmission of rubles or 10.2% below the level of debt as of December electric power amounted to 9,248.8 million rubles as 31, 2018. Accounts receivable of the participants of the single-window system 642.8 313.0 - –100.0 (including the accumulated reserve for doubtful debts), mln rub., including:

JSC Energocomplex - - - - STRUCTURE OF ACCOUNTS RECEIVABLE FOR ELECTRIC POWER TRANSMISSION1 SUE Moskollektor - - - -

Indicator As at As at As at December JSC “UNECO” - - - - December 31, December 31, December 31, 2019/ 2017 2018 31, 2019 December 31, JSC Mosenergo 642.8 313.0 - –100.0 2018, %

Accounts receivable for electric power transmission, mln rub., 11,425 8,704 11,685 34.3 including:

current 7,981 5,354 9,071 69.5

overdue 3,444 3,350 2,614 -22.0

For reference: Disputed accounts receivable, mln rub. 1,559 656 388 -40.9

The target indicators of overdue accounts receivable payment 2019. The allowance for doubtful accounts receivable of have been met in full: 1,497 million rubles were paid with a the single-window system's participants amounts to 8,018 target indicator of 1,382 million rubles. million rubles as of December 31, 2019. The allowance for doubtful accounts receivable was adjusted due to accrual of The coverage of overdue accounts receivable by measures the allowance for accounts receivable of MOSENERGO in the aimed at their reduction is at a stable high level and amount of 303.7 million rubles which arose over the period amounted to 96% as of December 31, 2019. when the single-window system for technological connection in Moscow (2006–2010) was in effect. Accounts receivable of the single-window system's participants were reserved in full as of December 31,

1 Including the allowance for doubtful debts.

54 55 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

ANALYSIS OF THE CHANGE IN ACCOUNTS PAYABLE, MLN RUB

Indicator As at As at As at December December 31, December 31, December 31, 2019/ 2017 2018 31, 2019 December 31, 2018, %

Accounts payable, mln rub., including: 54,789.7 49,436.0 49,300.0 –0.3

suppliers and contractors 21,438.2 16,662.5 15,181.3 –8.9

notes payable 0.0 0.0 0.0 0.0

advances received 30,325.4 30,174.6 30,668.4 1.6

taxes and fees 2,036.5 1,950.6 333.3 –82.9

other accounts payable 989.6 648.1 3,117.1 > 100

Accounts payable for 2019 decreased by 136 million rub. (0.3%) against 2018 and amounted to 49,300.0 million rub. as of December 31, 2019.

2.2.2. FINANCIAL RESULTS (IFRS)

KEY FINANCIAL AND ECONOMIC INDICATORS (IFRS), MLN RUB. GENERATED AND DISTRIBUTED ECONOMIC VALUE Indicator 2017 2018 2019 Increase in 2019, % Component 2017 2018 2019 Increase in 2019, % Consolidated statement on the total income Direct economic value generated Revenue from sales of products (services), including: 150,494 159,485 161,463 1.2 Revenues 158,884 166,192 167,294 0.7 transmission of electric power 138,350 145,380 148,567 2.2 Economic value distributed technological connection 7,122 9,023 8,754 –3.0 Operating costs –122,497 –125,209 –128,012 2.2 other activities 5,022 5,081 4,142 –18.5 Employee wages, other payments and benefits –18,853 –19,082 –20,794 9.0 Cost of products (services) –150,511 –149,197 –150,054 0.6 Payments to capital providers –7,323 –7,291 –10,443 43.2 EBITDA, mln rub.1 34,869 39,324 39,741 1.1 Payments to government (by country) –4,015 –5,904 –4,625 –21.7 Profit (loss) 1,957 6,586 8,107 23.1 Investments in local communities –106 –165 –267 62.0 Basic and diluted profit per share, rub. 0.0402 0.1352 0.1664 23.1 Economic value retained

Economic value retained 6,090 8,541 3,153 –63.1 The Group's consolidated reports include the following subsidiaries: JSC MOESK-Engineering, OJSC Moskabelenergoremont (until February 22, 2018), JSC Electrotechnical Equipment Repair Plant, JSC Energotsentr.

1 EBITDA = Earnings Before Tax – Depreciation – Interests.

56 57 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

INFORMATION Category Series ABOUT CREDIT BO-04 BO-05 BO-06 BO-09 BO-10 001R-01 Maturity/offer date September May 26, July 16, February May 6, 2027/ October 18, RATINGS 12, 2024/ 2026/May 30, 2026/July 27, 15, 2027/ May 16, 2022 2022/- September 2024 2020 February 26, AND BONDED 21, 2020 2020 LOANS Coupon yield per 1 bond 41.39 41.88 48.12 45.62 42.63 42.13 Stock exchange MOEX (PJSC Moscow Exchange) 2.3 Quotation list Third level Second level Scope of issue in circulation

as at December 31, 2018 5,000,000 5,000,000 5,000,000 10,000,000 10,000,000 - BONDED LOANS as at December 31, 2019 5,000,000 5,000,000 5,000,000 10,000,000 10,000,000 8,000,000 Current Bonds Receivable As per the results of 2019, in order to optimize its debt portfolio, the Company: placed 001R-01 series bonds with the total nominal value of 8,000 million rub. with the maturity of 3.5 years and a coupon rate of 8.45% per annum on April 23, 2019; As of December 31, 2019, six issues of exchange-traded days from the date of the placement of the exchange- bonds are outstanding: BO-04, BO-05, BO-06, BO-09, traded bond issue within the exchange-traded bond repaid BO-08 series bonds with the total nominal value of 8,000 million rub. with a coupon rate of 10.3% per annum on BO-10, 001R-01 with the total nominal volume of 43,000 program (identification number 4-65116-D-001P-02E) April 25, 2019 early; million rub. amounted to 72,000 million rub. The Company plans to completed the offer for BO-05 series bonds with the total nominal value of 5,000 million rub., the five-year offer and a place the issues by public subscription in a favorable coupon rate of 8.4% per annum on June 6, 2019. As of the end of 2019, the volume of unplaced bond market environment. issues of the 001R series maturing no later than in 10,920

INFORMATION ABOUT THE TRADED BOND ISSUES As of December 31, 2019, 6 issues of exchange-traded bonds with Category Series the total nominal volume of 43,000 million rub. are outstanding. BO-04 BO-05 BO-06 BO-09 BO-10 001R-01

Type of securities Documentary interest-bearing, non-convertible, and exchange-traded bonds payable to bearer CREDIT RATINGS Registration number 4B02-04- 4B02-05- 4B02-06- 4B02-09- 4B02-10- 4В02-01- 65116-D 65116-D 65116-D 65116-D 65116-D 65116-D-001P CREDIT RATINGS ASSIGNED Scope of issue, thousand rub. 5,000,000 5,000,000 5,000,000 10,000,000 10,000,000 8,000,000 Agency name Rating on the Date Currently, PJSC MOESK has been assigned the credit Number, mln ea. 5 5 5 10 10 8 international/national assigned/ ratings of the leading international agencies — Moody's, scale confirmed Standard&Poor's and Fitch Ratings, as well as the national rating agency ACRA (JSC). PAR value, rub. 1,000 1,000 1,000 1,000 1,000 1,000 Value Outlook

Maturity, years 10 10 10 10 10 3.5 The Company's dominant market position (PJSC MOESK is Moody’s Ba1 Stable December 7, one of the main distributional grid companies in Moscow 2017 Coupon rate, % 8.3 8.4 9.65 9.15 8.55 8.45 and Moscow Region), stable cash flows from regulated Standard & BB+ Stable July 22, 2019 power distribution business and favorable, long-term Date of state registration of issue July 9, 2013 July 9, 2013 July 9, 2013 July 9, 2013 July 9, 2013 April 19, 2019 Poor’s nature of borrowings positively affect the ratings. Fitch Ratings BB+ Stable December 2, Placement date September June 7, 2016 July 28, 2016 February 27, May 18, 2017 April 23, 2019 2019 25, 2014 2017 ACRA (JSC) ААА (RU) Stable May 30, 2019

58 59 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

ANALYSIS OF CHANGES IN THE AVERAGE UNIFORM TARIFF OF PJSC MOESK FOR ELECTRIC POWER TRANSMISSION SERVICES WITH A BREAKDOWN BY REGION, KOP./KWH

Category 2017 2018 2019

Moscow 209.61 215.52 216.06 TARIFF Moscow Region 183.24 187.34 194.49 POLICY Total for PJSC MOESK 195.68 200.52 204.36 2.4 Increase, % 7.06 2.48 1.92 ANALYSIS OF CHANGES IN THE AVERAGE TARIFF OF PJSC MOESK FOR ELECTRIC POWER TRANSMISSION SERVICES WITH A BREAKDOWN BY REGION, KOP./KWH

Category 2017 2018 2019

TARIFF RATES OF ELECTRIC POWER TRANSMISSION SERVICES Moscow 115.48 129.17 130.13

Moscow Region 126.87 124.31 132.60 Tariff regulation is applicable to the following activities: of Moscow) and the Pricing and Tariffing Committee of provision of services for the transmission of electric power Moscow Region. Total for PJSC MOESK 120.94 126.75 131.34 and technological connection of consumers to power grids. The state regulation of tariff rates in the regions of the 2019 is the second year of the long-lasting regulatory Increase, % –0.72 4.81 3.62 Company’s operation is the responsibility of the Department period 2018–2022 by means of long-term indexation of the for Economic Policy and Development of Moscow (DEPD required gross revenue (GRR).

PAYMENT FOR TECHNOLOGICAL CONNECTION DYNAMICS OF THE POWER TRANSMISSION GRR STRUCTURE OF PJSC MOESK FOR 2017–2019 The regulatory authorities of Moscow and Moscow DYNAMICS OF THE AVERAGE COST OF TECHNOLOGICAL 69,667 20,688 19,730 43,836 Region have established standard tariff rates for CONNECTION, RUB./KW 2019 153,921 the technological connection of receivers owned by Own GRR consumers of electric power, grid companies or other 67,964 20,309 18,751 43,037 FGC third parties, as well as rates per unit of the maximum 2018 150,061 +21% Losses power at the voltage below 35 kV and the maximum power below 8,900 kW. 61,203 19,543 16,837 44,363 LGO 2017 141,946 Information on approved tariffs for technological +34% connection services is available on the PJSC MOESK website: Customers/Tariffs/Technological Connection/ 4,294 The main factors of changes in the GRR volume in 2019 compared to 2018: Tariffs for Technological Connection/Moscow/Moscow 3,547 growth of tariffs for PJSC FGC UES' services; Region/2019. 2,340 increase/decrease in LGO's required gross revenue; increase in expenses for the payment of electric power losses.

2017 2018 2019 Information about all approved tariffs of services for the transmission of electric power is available The average cost of technological connection of 1 MW on the PJSC MOESK website: Customers/Tariffs/Transmission of Electric Power. under executed TC contracts was up by 21% and reached 4.3 million rubles in 2019.

60 61 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

method in the Company as a whole in regards to activities 2019, “On the scenario conditions for the formation of aimed at improving the reliability of power grid equipment production programs of S&A of PJSC Rosseti for 2020– during the preparation to and operation in the autumn- 2024”: winter period, urgent emergency repairs of power grid full completion of repair works (in physical volumes) equipment, as well as in compliance with the instructions on the main power grid equipment of 0.4–220 kV until of supervisory bodies. October 1, 2020; Maintaining the appropriate condition of all equipment is performance of at least 50% of the annual volume of IMPROVED an effort that mostly manifests itself in timely repairs and repair works in H1. maintenance, in carrying out targeted repair programs as well as retrofitting and revamp programs; this ensures the The Modernization Program (Renovation) of PJSC MOESK RELIABILITY efficiency and reliability of equipment operation while also Power Grid Facilities for 2019 was implemented, namely: enabling successful operation in the autumn and winter 2 power transformers of 35 kV were replaced at Lyshchevo periods and reducing the rate of technological violations. SS, 79 circuit breakers and 145 disconnectors of 35 kV and 2.5 above, 16.9 km of 110 kV OL were reconstructed, 658 km The repair program for 2020 is 6,737.8 mln rub. and was of uninsulated wire were replaced with SSIC 0.4-10 kV OL, formed with mandatory compliance with the requirements 29 reclosers were replaced, 110 km of 0.4–110 kV CL and of Resolution of PJSC Rosseti No. 337 dated August 5, 46 TC of 0.4/6-10 kV were reconstructed.

TECHNICAL POLICY version)1, as well as the Company's Guidelines for the Application of Basic Technical Solutions for Operation, Operation, renovation and construction of power Renovation and Construction of Power Grid Facilities grid facilities is carried out in accordance with the Using Equipment, Materials and Systems Certified requirements of the provision of PJSC Rosseti “On a in Accordance with the Procedure Established in the single technical policy in the electric grid complex” (new Company.

RELIABILITY

DYNAMICS OF RELIABILITY INDICATORS IN THE 6–220 KV GRID

Category UOM 2017 2018 2019 Increase in 2019, %

Number of technological violations (accidents) ea. 6,134 6,544 9,245 41.3

Average frequency of the termination of the transmission of electric ea. 0.02529/ 0.01719/ 0.04477/ 160.5/ power to the point of supply (Psaifi) in 0.4–220 kV grid (Moscow/ 0.24760 0.20060 0.31253 55.8 Moscow Region) Comments of D. B. Gvozdev, Deputy Director General — Chief Engineer Average duration of the termination of the transmission of electric h 0.02849/ 0.01792/ 0.04444/ 148.0/ power to the point of supply (Psaidi) in 0.4–220 kV grid (Moscow/ 0.31088 0.25771 0.37488 45.5 Moscow Region)

All key physical volumes in respect of main power grid maintenance personnel was raised. Cost of the repair Average duration of technological violations h 1.45 1.29 1.11 –14.0 equipment repairs, namely substations (transformer, program implementation in 2019 amounts to 6,746.2 closed, distribution), overhead and cable power million rubles (108% of the target), including: Number of technological violations (accidents)/1,000 c.u. ea. 3.74 3.86 5.32 38.0 transmission lines were achieved, as well as the target in-house method — 3,289.8 million rubles; indicators set for 2019 both in terms of nomenclature and The amount of undersupply mln kWh 1.24 3.62 4.07 12.4 work type. contract method — 3,456.4 million rubles. Total economic loss mln rub. 408.73 281.48 418.15 48.6 The repair program for 2019 was generally implemented, For the purpose of rational use of the repair fund, additional and productivity of the Company's operational and works have been carried out by means of the contract 1 Approved by the Board of Directors of PJSC Rosseti (Minutes No. 378 of November 8, 2019) and the Board of Directors of PJSC MOESK (Minutes No. 412 of December 30, 2019). 62 63 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

MAIN CAUSES OF TECHNOLOGICAL VIOLATIONS IN THE GRID OF 110 KV AND ABOVE Reliability indicators At the same time, PJSC MOESK's target reliability indicators PSAIDI and PSAIFI, approved by Moscow’s Cause 2017 2018 2019 Increase in Throughout 2019, PJSC MOESK actively worked on the Department for Economic Policy and Development and 2019, % ongoing increase of production transparency as well as grid the Pricing and Tariffing Committee of Moscow Region, observability and controllability, including: were achieved at the year end (taking into account the 1 Technological violations, ea. (total) , including: 613 651 548 –15.8 implementation of an electronic log (OZHUR PC) at admissible increase — not more than 30% of the target all operational and technological management levels value) as follows: untimely identification and elimination of defects 149 103 83 –19.4 and in the Svetlaya Liniya (Light Line) call center (the average duration of the termination of electric power Operator of OZHUR Call Center module); transmission to the point of supply (PSAIDI): poor technical condition of the equipment (deterioration of 122 189 157 –16.9 insulation, degradation of the mechanical strength of the wire, implementation of a unified system for processing – in Moscow (including New Moscow), PSAIDI change of material properties, etc.) complaints and appeals of subscribers in the CRM amounted to 0.04444, exceeding the target of information system; 2019 (0.04439) by 0.1%; third-party influence 176 177 159 –10.2 implementation of remote control of distribution grid facilities and power supply centers of 35 kV and above; – in Moscow Region, PSAIDI amounted to 0.37488 influence of animals and birds 59 68 64 –5.9 and did not exceed the target of 2019 (0.64616); installation of smart electric power metering devices. influence of recurring natural phenomena 48 69 41 –40.6 average frequency of the termination of electric power transmission to the point of supply (PSAIFI): These activities, in addition to achieving the target goals design, structural, or manufacturing defects 57 72 56 –22.2 and objectives, led to a significant increase in the level of – in Moscow (including New Moscow), PSAIFI transparency in terms of fixing the primary information amounted to 0.04477, exceeding the target of about current technological violations in distribution grids, 2019 (0.04096) by 9.3%; and of the timing of equipment shutdowns, disconnected supply points and electricity undersupply. As expected, – in Moscow Region, PSAIFI amounted to 0.31253, DYNAMICS OF THE NUMBER OF ACCIDENTS AT FACILITIES MAIN CAUSES OF ACCIDENTS IN 2019, % this caused increase in the number of accidents recorded exceeding the target of 2019 (0.28617) by 9.2%. IN THE GRID OF 110 KV AND ABOVE at the end of 2019 (mainly in the 6–20 kV grid) and, as a result, increase in the values of reliability indicators (PSAIDI, PSAIFI) in Moscow and Moscow Region, relative 10 15 to the values of 2018.

7 216 285 250

12

397 366 298 28

2017 2018 2019

Technological violations, ea. 28

Incl. with successful automatic reclosing Untimely identification and elimination of defects Aging of equipment Third-party influence Influence of animals and birds Influence of recurring natural phenomena Design, structural, or manufacturing defects

1 There may be more than one cause for one technological violation.

64 65 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

domestic technologies and equipment. The equipment was enabling the connection of new consumers; mounted, passed a comprehensive inspection and testing renewal of the equipment necessary to ensure and energized. Khovanskaya 220-kV SS boosts the capacity sufficient, reliable, and uninterrupted power supply to of Troitsky and Novomoskovsky administrative districts' consumers; power infrastructure by 50%. The new power facility uses digital technologies with due regard for modern connection of consumers in a short time. requirements to ensuring the reliability of electricity supply Power engineers of PJSC MOESK ensured the high-quality of consumers, and controllability and observability of the supply of electric power to Moscow Region by constructing INVESTMENT technological process of electricity transmission. and reconstructing dozens of electric power facilities. On a parallel track, a large-scale construction of the In 2019, with the direct participation of PJSC MOESK, the ACTIVITIES Lesnaya – Khovanskaya, Circuit 1, 2 220-kV power line work was continued to develop the Government Decree was completed in 2019. The electrical transmission line of Moscow on Approval of the Procedure for Coordinating was commissioned with a length of 26 km. An eco- the Construction (Reconstruction) on Land Plots Owned 2.6 friendly type of cable with insulation made of cross-linked by Moscow and Land Plots Located on the Territory of polyethylene was used. At intersections of roads and other Moscow with No State Ownership Eliminated, Building communication-saturated areas, trenchless horizontal Permit for the Construction of Electric Grid Facilities drilling was carried out to preserve the natural landscape. or Other Permits for the Construction of Transmission Facilities under a “One-Stop Shop” Principle. Moreover, in 2019 the Company continued to closely cooperate with the authorities in order to implement the targeted investment program of Moscow, as well What are the plans and projections for 2020? as supplied power to residential complexes and social infrastructure facilities, namely: In 2020, the course towards digitalization will be continued residential houses under the renovation program in the as part of the approved five-year large-scale program city of Moscow, residential complexes in the villages of of digital transformation of the electric grid complex of Nekrasovka and Kommunarka, residential complexes Moscow Region, thus laying the basis for the region's Tsaritsyno and Kartmazovo; innovative development. a polyclinic at Yablochkova street, the new building of Also, the work to ensure the reliable supply of electric the Federal Tax Service of Russia, the largest medical power to various facilities of the city (residential buildings, center in Kommunarka, paramedical and obstetrical including as a part of the renovation program, pre-school buildings in Chekhov and Stupino. educational institutions, schools, and primary classes, charging stations for electric vehicles) is being performed. With a view to deliver the national project Ekologiya (Ecology) and the program for the introduction of a In 2020, the Company will continue to connect the Moscow comprehensive waste management system, Russia's Metro facilities and Moscow Central Diameters. largest waste treatment complex Kolomensky MPK was powered up. The work on connection of garbage recycling In accordance with the Company's Order No. 1 dated plants AGK-1 and Egorievsky KPO was performed. January 9, 2020, the program of modernization (renovation) of PJSC MOESK power grid facilities for 2020 is being To improve the reliability of electricity supply in 2019, about implemented. It provides for the replacement of 5 660 km of plain conductor on overhead lines of distribution transformers of 35 kV and above, 68 oil immersed switches grids in Moscow Region and Troitsky and Novomoskovsky of 35 kV and above, and 101 disconnectors of 35 kV and administrative districts was replaced with self-supporting above. Interview with Deputy Director General for Capital Construction Projects insulated conductor (SSIC). O. V. Ivanov It is also planned to build 110-kV approach lines at Svistyagino 110-kV substation to supply electricity What is your personal opinion on these results to AGK-1 LLC, a residential solid waste processing and how do you see them in the context of the (SWP) plant, and to supply power to the grid (70 MW are What do you think are the main achievements MVA of transformer power, constructed and revamped Company’s general activity? generated by the plant during recycling). The approximate and results of the unit you supervise? 4,358 km of electrical transmission lines at all voltage length of the approach lines is 8.35 km. levels. I deem the results of this year satisfactory. The Investment In 2019, the Company's Investment Program was Program of PJSC MOESK is mainly targeted: Capital investments under the Investment Program in 2020 implemented to the following extent: actual expenditure In October 2019, the largest power supply center was at new construction and reconstruction performed to will amount to about 29 billion rubles. We will have to of capital investments totaled 31,007 million rubles, fixed opened in Troitsky and Novomoskovsky administrative cover the load deficient and to increase the capacity of commission 1,554 MVA of transformation power and 3,479 assets were commissioned for 30,229 million rubles, and districts — Khovanskaya 220-kV SS with an installed power supply centers; km of electrical transmission lines. financing amounted to 34,264 million rubles, including VAT. transformation power of 700 MVA. The substation was performing the activities influencing the performance of Speaking of physical quantities, we commissioned 1,070 built in the volume of one Launch Complex using only the targeted program for Moscow;

66 67 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

Priority facilities for 2020: KEY INVESTMENT PROJECTS (CONSTRUCTION COMPLETED IN 2019) construction of Khovanskaya SS (220/110/20/10 kV), 2 of the cable section's capacity, and arrangement of PCs: the substation upgrade to comply with the “digital approach lines to Shelepikha substation; standard” in the second construction architecture; construction of approach lines in a cable version Metro, MCD: renovation of – Khodynka 110-kV ACL: Lesnaya – Letovo 110-kV OL. ; rearrangement of the air section into cable, increase Yugo-Vostochnaya metro station; Reconstruction of 110 kV CL Lianozovo metro station; Stromynka — Sokolniki Slavyanskaya MCD station, RZD No. 1, No. 2 Volokolamskaya MCD station, RZD Design capacity: 7.29 km Ostafyevo MCD station, RZD PJSC MOESK's Investment Program for 2019–20251 was formed on the basis of the Schemes and Programs for the Prospective Development of the Power Sector in Moscow for 2019–2024, and the Schemes and Programs for the Prospective Development of the Power Sector of Moscow Region for 2020–2024. In total, the 2019 Investment Program covered over 29,000 facilities. Reconstruction of 110/10/6 kV Biryulyovo SS with the replacement of 110 kV SWYD and 10 kV ISG INVESTMENT PROGRAM'S MAIN PARAMETERS with SF6 circuit breakers Reconstruction of Design capacity: 100 MVA No. 370 110 MVA Category UOM 2017 2018 2019 Growth in Chertanovo SS 2019, % 220/110/10 kV

Capital investments (implementation) mln rub., excluding VAT 30,801 30,174 31,007 2.8

Commissioning of fixed assets mln rub., excluding VAT 28,842 29,690 30,229 1.8

Financing mln rub., excluding VAT 33,198 30,537 34,264 12.2

Capacities commissioned MVA 987 1,028 1,070 4.0 Reconstruction of No. 482 Dachnya SS, replacement of 35/6 kV 2x6.3 MVA km 4,558 4,268 4,358 2.1 transformers with 2x10 MVA ones Design capacity: 20 MVA

Key highlights of projects for the establishment of digital substations and grids

The project for the establishment of digital substations and grids was carried out at Klin 110-kV substation in 2019: digital protection of all 100-kV connections and bus coupling SF6 load-break switches was activated, as well as voltage-current combined transformers and voltage transformers were mounted on two connections. The facility was commissioned in 2019.

Reconstruction of 110 kV OL -Zapovednik, Zapovednik- Pushchino, Streletskaya-Pushchino, KashiraStreletskaya 1.2 with second circuits formation Design capacity: 13.325 km

Construction of 220 kV CL Khovanskaya–Lesnaya, Circuit I, II; Design capacity: 26.58 km

1 Approved by Order No. 33@ of the Ministry of Energy of the Russian Federation dated December 26, 2019.

68 69 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

STRUCTURE OF CAPITAL INVESTMENTS, MLN RUB., INCLUDING VAT COMPARED TO 2018, FUNDING INCREASED IN 2019 CAPITAL IN THE RENOVATION, Category 2017 2018 2019 Growth in UPGRADE AND 2019, % INVESTMENTS INCREASED BY % RETROFITTING SECTION times Total 33,197.84 30,536.76 34,263.56 12.2 12 ~2

Technological connection 22,654.22 19,477.69 17,135.15 -12.0

Renovation, upgrade and retrofitting 7,174.63 6,083.82 12,051.20 98.1 LONG-TERM INVESTMENT PROGRAM

Investment programs carried out under schemes and programs for 1,396.73 2,502.56 2,091.08 -16.4 the prospective development of power engineering The long-term investment development program of PJSC MOESK1 (hereinafter referred to as IDP) was approved for 2019– 2025. The amount of financing of the investment program for the whole period is 201,270 million rubles.

Other new construction of power grid facilities 627.11 511.03 732.75 43.4 Objectives of the Investment Program: Purchase of land for the purpose of implementing investment 2.36 0.00 0.00 - projects renewal of the equipment necessary to ensure sufficient, reliable, and uninterrupted power supply to consumers; increase in the safety of the equipment, including environmental; Other investment projects 1,342.78 1,961.65 2,253.38 14.9 commissioning new capacities in case of need to cover the shortage of loads or the need to create the reserve for electric power; reduced production expenses (in particular, by improving the efficiency of the equipment, use of more efficient technical In 2019, capital investments increased by 12.2% STRUCTURE OF FINANCING SOURCES FOR CAPITAL solutions, reduction of losses); INVESTMENTS IN 2019, MLN RUB. compared to 2018. This is due to the increased provision of the full technological connection; funding limits for the investment program. modernization and renewal of fixed assets; In the Technological Connection section the decrease 1,081 increase in the Company's capitalization in the long term; in the number of applications for connection to power grids and consumers' unwillingness to connect implementation of socially-oriented projects. resulted in 12.0% decrease. Funding of investment 7,470 projects carried out under schemes and programs for the prospective development of power engineering decreased by 16.4% due to implementation of the facilities in accordance with the terms approved PARAMETERS OF LONG-TERM INVESTMENT ACTIVITIES in the schemes and programs for the prospective development of the regions. Category UOM 2020 2021 2022 2023 2024 2025 Total 2020–2025 Funding of other investment projects (buildings, equipment not included in the construction estimate) Capital investments mln rub., 28,961 25,626 23,822 18,427 19,936 21,964 138,735 25,713 increased by 14.9% as a result of planned purchase (implementation) excluding of ready-to-operate equipment. Funding significantly VAT increased in the Renovation, Upgrade and Retrofitting section (almost doubled). Commissioning of fixed mln rub., 31,594 24,979 32,298 17,391 15,253 28,074 149,590 assets excluding In 2019, PJSC MOESK performed no projects funded VAT wholly or partially from the federal budget. Equity funds (75.0%) Technological connection payment (21.8%) Financing mln rub., 31,799 30,634 29,392 25,553 26,247 25,427 169,052 Other equity funds (3.2%) including VAT

Capacities commissioned MVA 1,554 1,436 812 1,187 1,374 1,679 8,042

km 3,479 2,952 2,717 2,000 2,005 2,369 15,522

1 Approved by Order No. 735 of the Ministry of Energy of the Russian Federation dated October 16, 2014. Changes in the IDP regarding the planning parameters for 2019–2025 were approved by the Order of the Ministry of Energy of the Russian Federation No. 33@ dated December 26, 2019.

70 71 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

In 2020, capital investments in the investment STRUCTURE OF FINANCING FOR THE LONG-TERM program will amount to 28,961 million rubles, PROGRAM FOR 2020–2025, % excluding VAT. The dynamics of capital investments in 2020–2025 has a downward trend. Since 2021, 7.7 a significant decline is will be due to the lack of 0.7 future costs under newly concluded technological connection contracts in the approved IDP for 2015– 2025, in accordance with the planning requirements of the Ministry of Energy of the Russian Federation. 30.7 TECHNOLOGY As part of the investment program, it is planned to 25.3 commission the transformation power of 8,042 MVA and 15,522 km of electrical transmission lines in the AND INNOVATION period from 2020 to 2025. 2.7 The total amount of capital investments 35.6 financing under the TC, including the grid boosting R&R approved investment Development Scheme and Program Other new construction program for 2015–2025 is Other projects 169,052 million rubles for the planned period from FINANCING SOURCES OF THE INVESTMENT PROGRAM, 2020 to 2025. MLN RUB., INCLUDING VAT

1,019 20,386

The Company’s Investment Program for 2020–2025 is expected to result in: reduction of accidents; reduction of the accident rate and 169,052 the improvement of the quality and reliability of services; mln rub. timely performance of obligations under Commentary by A. G. Kashtanov, Director for Digital Transformation the contracts for technological connection; 147,647 release of the reserve capacities at closed power centers; reduction of electric power losses. In 2019, the PJSC MOESK Digital Transformation Program PJSC MOESK took all the measures in the area of digital for 2020–2023 was developed. The program was transformation planned for 2019. The main achievements Equity funds (87.3%) approved by the Company's Board of Directors in January of the year include the results of the Automated Mobile Technological connection payment (12.1%) 2020. The program defines the objectives and goals of Team Control System project implementation, which Other* (0.6%) the Company's digital transformation, directions of digital are significant for the Company. The project involves transformation, as well as measures and projects in the all production teams of PJSC MOESK (more than 1,000 area of digital transformation. teams). As part of the project, the Company's mobile * VAT recoverable, additional issue, other.

72 73 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

teams are provided with mobile devices with special mobile application was developed and launched for the The main guidelines of the digital Company's target model: software, which makes it possible to use automated convenience of the Company's customers. The application minimization of human factor impact on the Company's technological and business processes when using technologies means of planning and control of work performance, give significantly simplifies the interaction between consumers such as digital twins, artificial intelligence, data arrays, machine learning; job assignments remotely via mobile devices, as well as and the Company. With its help, the consumer can provide paperless issuance of the required work permits apply for the technological connection (up to 15 kW for formation of a unified environment of technological and management data, interconnection of all digital information using electronic signatures. individuals), check the application status, apply for non- flows among themselves, including cloud technologies, integration of information (technological and corporate) systems contractual/non-accounting electric power consumption, of PJSC MOESK; For the Company, the implementation of the project pay for services online, as well as enter the metering ensuring data purity for effective and fast management decisions of the Company; resulted in reduction of the average electric power supply device readings. restoration time by 10%, operational safety improvement predictive data analysis; and reduction of work accidents by half, reduction of In 2020, it is planned to further develop the projects convenient infrastructure for easy and efficient interaction with consumers (mobile applications, work-flow working hours losses by 30%, improvement of production successfully launched in 2019 and implement new management, etc.); practices, enhancing the attractiveness of the Electrician projects: introduce the geographic information systems profession. (GIS) and the SCADA/OMS/DMS class operational and interaction with information systems of executive authorities, the System Operator and other energy entities (generating technological management system. In addition, the companies, territorial grid companies, power sales companies) within a unified digital environment. In 2019 the planned scope of works to create digital project to create the Virtual Dialog-Based Office for power grid regions in Moscow and Moscow Region interaction with customers will be launched, which will (Digital Urban and Regional PGR) has been completed. enable consumers to communicate with the Company on Furthermore, in 2019 the Rosseti Moscow Region all the issues in a more convenient way.

MAIN DIRECTIONS OF THE PJSC MOESK DIGITAL TRANSFORMATION PROGRAM

Program area Contents Program projects

Digital power grids Changing the Company's technological – CIM modeling of the grid; processes: – geographic information systems; automated maintenance and repair control system (ACS – modernization of primary power grid INFORMATION TECHNOLOGY – the intelligent electric metering system with a new data M&R); equipment and relay protection devices; collection architecture in Moscow and Moscow Region; AND TELECOMMUNICATIONS – development of automated technological automated information system Integrated Metering and – digital regional PGR; control systems. Calculation of Electric Power Balances in Power Grids – digital transformation of Moscow Cable Grids branch of PJSC MOESK (AIS IMC Balance); office (Urban Digital PGR); In accordance with the main directions of information technology development of PJSC MOESK, the introduction PJSC MOESK personal account. – development and justification of technical solutions for of new corporate information systems and development conversion of 0.4 kV power grid to a high voltage level in private house buildings; of the existing ones continued in 2019. The work on automation of the main and auxiliary business processes of PJSC MOESK will be continued in 2020. – organization of digital remote control of equipment and The following systems have been put into industrial relay protection devices and automation of electrical switchgears of distribution grid stations; operation in 2019: – digital transformation of branches; automated accounting and reporting system for IFRS (AS IFRS); DIGITAL TRANSFORMATION – centralization of dispatch control (operational and technological control system). automated control system for the provision of technological connection services (AS TCC); The goal of digital transformation is to significantly optimize Digital personnel management The following internal corporate business – automated mobile team control system (Digital and change the Company's technological and business processes and labor processes of employees Electrician); mobile application for interaction with Rosseti's of the Company are subject to change: Moscow Region customers. processes, minimizing the impact of human factors and – digital controller: automated data collection system for – implementation of technologies and electric power metering devices. aiming at achieving strategic guidelines of the Company, solutions that minimize or completely A number of systems have been actively developed in such as increasing the electric power supply reliability, exclude human participation in certain 2019 (projects to expand the functionality of systems improving power grid infrastructure availability and operations and procedures. were implemented), including: service delivery quality, increasing operational efficiency, automated CRM system; customer relationship capitalization and investment attractiveness of the Remote interaction with The way of interaction with the environment, – interactive services for consumers (mobile application); management (CRM); Company as well as diversifying the Company's business consumers primarily with the Company's customers, as – virtual dialog-based office. through the development of unregulated activities. well as supervisory authorities is subject to automated mobile team control system (ACS MT); change.

74 75 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

The Company's planned results following the implementation of the Digital Transformation The economic result of project implementation at the Program of PJSC MOESK: end of 2019 amounted to 3.8 mln rub. and is related to INNOVATIVE DEVELOPMENT the decrease in electric power undersupply due to the by the end of 2023, all Moscow power grid districts will have become digital, the share of digital power grid regions in automation of the allocation of the damaged site (taking Moscow Region will be 23% by the end of 2023, and 49% by the end of 2030; into account 50% reduction of recovery time), as well as With respect to the innovative development, PJSC MOESK the share of SS of 35 kV and higher with the possibility of remote control by the end of 2023 will be 100%; reduced operating costs by replacing equipment with low- acts under the Company’s Innovative Development Program (hereinafter the Program). The Program is intended to by the end of 2023 all dispatch control centers will have the SCADA, OMS and DMS functionality; maintenance one. enable and facilitate the transition to new-generation electric power supply reliability indicators (PSAIDI/PSAIFI) in digital RGRs will be improved by 2023 by no less than 10% 5) Digital urban PGR (based on 8 and 19 maintenance electric grids with a whole new level of reliability, in Moscow and by 30% in Moscow Region, by 2030 by no less than 20% in Moscow and by 50% in Moscow Region; and repair regions of cable grids management of the efficiency, availability, controllability, and customer- losses in digital power grid regions will be reduced by no less than 25% from the current level for Moscow Region North-West district Moscow Cable Grids, a branch oriented approach of the Company’s power grid facilities. districts and by no less than 5% for maintenance and repair areas of Moscow; office of PJSC MOESK) Innovative projects and measures were implemented in by 2030, the share of metering points equipped with intelligent metering devices will be 83% for commercial metering The project is a comprehensive solution for automation 2019 within the key innovative development areas under points and 26% for technical metering points. of urban power grids based on a single information space the Program: with the integration of software complexes and information transition to digital active-adaptive grids with bases in a single technology platform based on CIM IEC distributed intelligent automation and control system; 61970-301 standards. The project includes the equipping transformer substations, supplying consumers with the transition to the comprehensive efficiency of business remote control system and smart meters, the design of processes and the automation of management As part of the Digital Transformation Program of PJSC 3) Centralization of operational and technological and software and hardware complex of automated control systems; MOESK, the following projects have been implemented in situational management system at the level of area dispatch control centers use of new power-engineering technologies and 2019: and the central dispatch control centers of operational materials. As part of the centralization of operational and technological and technological and situational management, the 1) Digital Electrician and situational management of PJSC MOESK, the Joint development of the mobile digital platform. The costs of implementation of projects and activities of Central Dispatch Unit has been put into operation in Moscow the Innovative Development Program in 2019 amounted As part of the project, the Company's mobile teams have Cable Grids, the branch office of PJSC MOESK. The economic result of project implementation at the end to 2,186.3 mln rub. compared to planned 2,100.2 mln rub. been provided with mobile devices with special installed of 2019 amounted to 0.4 mln rub. and is related to the cost The R&D activities that provide support for the development software. According to the results of 2019, all production In 2019, as part of the centralization, the dispatch control savings for district heating substation rounds in order to of the key areas of innovative development are performed teams of PJSC MOESK have been involved in the project. centers of the PGRs of New Moscow, the branch office of prevent unauthorized persons from entering district heating under the Program. PJSC MOESK, were merged. substation and in order to identify causes of increased Key results achieved within the project in 2019 are: electric power losses. a 20% increase in labor productivity due to a reduction in Centralization of dispatching control will allow for: the loss of working time; reliable functioning of electric grid facilities and acceptable technological modes of ETL, equipment and a 10% reduction in the time of restoration of electric R&D PERFORMANCE IN 2019 devices of the electric grid complex by creating complex power supply; grid analysis centers — GCS; labor safety increase and a 20% reduce in injuries; R&D description Period Facility where imple- Implementation Actual costs for the liquidation efficiency increase of the consequences mented outcome implementation of a 50% reduction in time for issuing permitting and of accidents at electric grid facilities with the help of R&D in 2019, mln rub. executive documents. effective use of available resources; VAT exclusive reduction in the number of accidents associated with 2) Interactive services for customers of PJSC MOESK erroneous actions of operational personnel. Development of an innovative method of 2019 Power grids of Reduction in 32.06 (mobile application) construction of Moscow Cable Grids cable the Department of distribution-grid 4) Digital regional PGR (based on Istrinsky PGR of lines with voltage of 0.4–20 kV using polymer Capital Construction operating and cable duct and the creation of communication in Zelenograd and of maintenance The project provides for the creation of an interactive PJSC MOESK branch office Western Electric Grids) channels within the framework of digitalization the Moscow Cable expenses platform that ensures the exchange of data and information of distribution substations (application of new Grids branch office between consumers and PJSC MOESK, which increases Digital PGR is a highly automated real-time control power technologies and materials in electric power in general the convenience of interaction with consumers of services grid region that provides observability and controllability industry area) and potential customers of the Company. PJSC MOESK through digital communications systems and equipment, has implemented the first stage of the project in 2019: which supports IEC 61850 protocol. It monitors the Conducting theoretical and experimental studies 2019 Training ground Reduced annual 30.27 the Rosseti Moscow Region mobile application has been parameters and operation modes of all participants in the and developing stands to demonstrate the danger (Gorenki SS) in the staff training created; mobile platform (versions for Android and iOS) has transmission and consumption of electric power, supports of electric shock at the training ground (transition Eastern Electric Grids costs been developed; submission of applications by individuals self-diagnostics and self-recovery functions, ensures to the integrated efficiency of business processes branch office for technological connection up to 15 kW, verification power management, intelligent operation mode adaptation, and automation of control systems area) of the application status, applications for net electric and automatic synchronization with consumer modes power consumption, online payment, transmitting the and distributed generation devices, as well as intelligent measurements of the metering devices. metering of consumed and generated electric power.

76 77 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

R&D description Period Facility where imple- Implementation Actual costs for the mented outcome implementation of R&D in 2019, mln rub. VAT exclusive

Development of protection with improved accuracy 2019–2020 Grids 6–35 kV of PJSC Improving 6.10 and selectivity on methods for determining the MOESK the accuracy, distance to the place of damage for distribution selectivity and grids with the implementation of a prototype reliability of (transition to digital active adaptive grids with protection a distributed intelligent automation and control system area) 2.8 PROCUREMENT

In 2019, 3 protection documents were received equipment (power transformers, current transformers, for RDED results: voltage transformers, current leads, bushings of gas- insulated switchgear, cable line terminations) under patent for invention No. 2676889 of January 11, 2019 operating voltage, the results of R&D Development of “Meteorological Monitoring System for Forecasting the General Technical Requirements and Standard Technical Probability of Damages to the Electrical Equipment and Solutions to the Automated Monitoring and Diagnostics Assessing the Preventive and Remedial Activities”; System of Substation Equipment of PJSC MOESK are patent for invention No. 2683946 of April 3, 2019 applied. “Device for Increasing the Efficiency of the Electrical The installation of devices for fault location Transmission Line with the Voltage of 6 (10) kV, determining is being carried out in accordance with the Consisting of Three Phase-Shielded Single-Core recommendations of the RDED results “Determination Cables” (invention); of the minimum length of ETL of various voltage utility model patent No. 191299 of August 1, 2019, “An classes on which the installation of remote fault aerial cable line transition point with two service sites.” location determining devices is possible”. RDED results on Development and Implementation of Smart Power Grids Technologies for the Needs of In 2019, a license agreement for the right to use the results PJSC MOESK are used as part of the implementation of RDED “Development of a unified transition point 110 kV of complex innovative projects on Creation of a Digital on the support for the connection of OL and CL” was signed. Regional PGR and Creation of a Digital Urban PGR. The Guidelines for the Use of Transition Points for the Conversion of 35–110–220 kV OL and 35–110–220 kV The following RDED results have been ACL Overhead Sections to 35–110–220 kV Aerial Cable implemented: Line (ACL) 35–110–220 kV of PJSC MOESK were put As part of the development of technical specifications into effect. for equipping substation electrical equipment with Stands were implemented to demonstrate the danger of automated monitoring and diagnostic systems, damage from touch and step under various conditions when assessing the technical condition of substation in the training ground at Gorenki Substation in the electrical equipment in partial discharges, and for Eastern Electric Grids branch. Interview with M. L. Budyko, Deputy Director General for Logistics and Procurement organizing diagnostics of 110–220 kV electrical

What do you think are the main achievements Rosseti (Procurement Regulations). PJSC MOESK adhered and results of the unit you supervise? to the Procurement Regulations of PJSC Rosseti by the decision of the Board of Directors (Minutes No. 372 dated The large-scale restructuring of the mechanisms for December 26, 2018). In order to apply the provisions applying the norms of the legislation governing the of the new Procurement Regulations, starting in 2019, Company's procurement activities (223-FZ) occurred in a large-scale revision of the Company's local acts 2018. The changes were taken into account in the new regulating procurement activities was carried out, and new version of the Unified Procurement Standard of PJSC procurement documents were developed.

78 79 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

In 2019, a significant share of procurement was The annual volume of procurements from SME established PROCUREMENT STRUCTURE BY TYPE OF BUSINESS ACTIVITY transferred to the Roseltorg electronic trading platform by the Government Decree was reached (60% of the total (www.roseltorg.ru), which is included in the List of annual value of procurements for 2019, with the demand Category 2017 2018 2019 Increase in 2019, Electronic Platform Operators, approved by the Government of at least 18%). At the same time, 27% of the total annual % of the Russian Federation. Thus, the Logistics and procurement in 2019 could only be covered by SME, while Procurement Unit carried out comprehensive work aimed at the law requires that level to be 15%. Total number, pcs. (total), incl. 3,663 4,5061 4,6211 2.55 the smooth transition of the Company to new procurement rules with the fulfillment of all requirements established by PJSC MOESK is obliged to procure innovative high-tech New construction 1,479 2,024 2,113 4.40 legislation. products from a range of entity categories that includes SME. Government Decree No. 1442 on Procurement of Retrofit and revamp 1,249 1,325 1,454 9.74 The Logistics and Procurement Unit has formed Innovative Products, High-Tech Products by Certain Types a systematic approach to procure directly from Of Legal Entities dated December 25, 2015 established the Maintenance and repair production 517 662 527 -20.39 manufacturers. We are developing procurement-from- annual volume of procurements of innovative and high- manufacturer programs such as the Direct Line program tech products from SME, increased by 5% of the volume IT procurements 20 18 43 138.89 and the One Step From Manufacturer program. Due to of all contracts concluded for 2019. At the end of 2019, implementing these programs, 85% of all procurements the procurement plan targets for innovative and high-tech R&D 1 1 5 400.00 were covered directly by manufacturers or their authorized products were achieved. representatives in 2019. Consulting services 8 13 16 23.08 The following is the task of the Logistics and Procurement Systematic work aimed at expanding the share of Unit for successful implementation of the production Other 389 463 463 0 participation of small and medium-sized enterprises in the program of maintenance and repair in 2019 and increasing 1 1 procurement procedures of the Company is carried out. the reliability of supplying electric power to consumers: Total amount, million rubles with VAT (total), 39,234.76 84,400.97 112,088.84 32.81 The result of such activities is the successful compliance 100% Implementation of the Procurement Plan for Repair including: with the indicators established by the Government Decree Activities. No.1352 on the Peculiarities of Participation of Small and New construction 11,200.41 13,533.54 13,569.92 0.27 Medium-Sized Businesses in the Procurement of Goods, According to the program of Digital Transformation of PJSC Works, and Services by Certain Types of Legal Entities MOESK for 2019–2023, timely execution of the procurement Retrofit and revamp 14,904.63 13,599.62 24,108.21 77.27 dated December 11, 2014. plan is 100% complete. Maintenance and repair production 5,374.21 9,489.47 10,226.72 7.77

IT procurements 1,213.99 776.24 1,319.97 70.05

R&D 76.99 37.83 165.84 338.39

Consulting services 85.86 96.33 610.12 533.37 Methods for performing procurement procedures in procurement from a single supplier (contractor); Other 6,378.66 46,867.94 62,088.05 32.47 2019 were determined in accordance with the Unified procurement by participating in the procedures Procurement Standard of PJSC Rosseti. organized by the sellers of products. The Unified Procurement Standard provides for the The Company procures by means of e-commerce platforms following procurement methods (selected depending on https://www.b2b-energo.ru/?lang=eng and ETP Roseltorg PROCUREMENT STRUCTURE BY PROCUREMENT METHOD the subject of the contract, number of criteria and other (www.roseltorg.ru), which help attract a large number factors) by the degree of preference: of contractors and suppliers, thus creating a competitive Category 2017 2018 2019 Increase in 2019, tenders; procurement environment that enhances procurement % effectiveness. auctions; Total number, pcs. (total), incl. 3,663 4,5061 4,6211 2.55 invitations to tenders; The Company’s procurement activities are based on the principles of openness and transparency. The information Procurement from a single supplier 278 285 303 6.32 request for quotation; transparency of procurement is of special importance, competitive preliminary selection; which is why it is obligatory to publish orders for goods, Procurement from a single supplier (following 5 22 1,088 >100 works, and services via Russia’s Unified Information System: the results of failed open competitive request for quotation based on the results of (www.zakupki.gov.ru). procedures) competitive preliminary selection; preliminary selection; The Company's procurement structure by type of activity and Request for quotation / Request for proposals 2,552 3,171 2,695 -15.01 procurement method following the results of 2017–2019 is following the results of signing the framework request for quotation based on the results of presented in the tables below. agreement preliminary selection; price comparison; 1 Taking into account procurements that are considered regular.

80 81 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

Category 2017 2018 2019 Increase in 2019, In 2019, the economic effect of procurement operations amounted % to 9,102 million rubles including VAT, or 7.7% of the planned and Tender/auction 272 238 169 -28.99 announced spending. Invitation to tender 556 790 353 -55.32

Preliminary selection 0 0 13 -

Total amount, million rubles with VAT (total), 39,234.76 84,400.971 112,088.841 32.81 The following measures were taken in 2019 to expand Major procurement plans for 2020: the range of potential procurement participants and to including: fulfill the Procurement Plan for 2020; cause a greater interest to the Company’s procurements: Procurement from a single supplier 4,539.27 3,190.36 3,870.82 21.33 Welcome Day for suppliers and potential minimize the share of single-supplier procurements; procurement participants; meet the required procurement terms under Procurement from a single supplier (following the 22.19 583.85 18 415,28 >100 technological connection contracts; results of failed open competitive procedures) 2019 Procurement Forum organized by PJSC MOESK, and the Energopartner MOESK contest as ensure a high proportion of procurements from Request for quotation / Request for proposals 15,694.09 15,769.59 15,520.23 -1.58 part of it, intended to incentivize existing suppliers manufacturers or their authorized representatives; following the results of signing the framework and contractors to participate more actively in minimize the share of imported equipment; agreement tendering, to attract small and medium-sized enterprises to participate in procurements, as well maintain a legally stipulated share of SMEs in the Tender/auction 16,225.08 56,994.37 70,469.88 23.64 as the electrical equipment manufacturers and Company’s procurement program; their authorized representatives, to participate in work to create a system to ensure automated Invitation to tender 2,754.14 7,862.79 3,780.58 -51.92 procurements; management of supply processes in PJSC MOESK; participation in the discussion “Procurements and Preliminary selection 0 0 32.04 - SME: collaboration of PJSC Rosseti and partners” of host forums, Welcome Days, and tenders to attract the Electric Grids International Forum; more potential bidders. The Company has established an Advisory Body to EFFICIENCY OF PROCUREMENT PROCEDURES ensure the efficiency of its procurements, including SME procurements. Category 2017 2018 2019 Increase in 2019, %

Economic effect of the procurement procedures, 636.44 2,752.39 9,102.39 230.71 million rubles VAT included

Economic effect of the procurement procedures, % 1.6 3.3 7.7 133.33

In 2019, open procurement During the reporting year, the Company made 4,425 purchases amounting to 109,114 operations made using million rubles including VAT (excluding purchases considered regular), including open e-commerce accounted for 100% procurement methods (tenders, auctions, requests for proposals, price requests, of all procurements in monetary quotation requests, preliminary selections, competitive preliminary selections, purchases terms. from a single bidder based on the results of failed open bid buying), which rates at 4,318 purchases in the amount of 108,218 million rubles including VAT (100% of total purchases in monetary terms).

1 Taking into account procurements that are considered regular.

82 83 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

CONSOLIDATION OF POWER GRID ASSETS

Comments by A.S. Starostin, Deputy Director General for Corporate Governance and Property

One of the key objectives of the Company in 2019 was of municipalities of Moscow Region. This form of consolidation PROPERTY the implementation of the Consolidation of Gardener and applies to municipal property and ownerless property located Cottage Village Grids Program. As part of this Program, the in Moscow Region. MANAGEMENT requirements to transfer of gardener associations' and cottage villages' electricity grids to the Company's ownership were In addition, a pilot lease agreement was concluded in significantly simplified. The Company received more than Moscow with the Moscow City Property Department. The AND CONSOLIDATION 2,000 applications for the gratuitous acceptance of the grid rental payment for the facilities is determined in accordance assets. More than 1.5 thousand non-profit garden partnerships with the Decree of the Government of Moscow No. 660 have been consolidated. The grids of the non-profit garden of August 22, 2000 on the Procedure for Acceptance of 2.9 partnerships are often in poor condition. In order to solve this Engineering and Communal Facilities of Moscow in the problem, including maintenance costs in the tariff and bringing amount of 1 ruble per unit of facility measurement. the consolidated grids to the normative state, an Interaction Agreement was signed between the Company and the In 2020, the implementation of the Consolidation of Government of Moscow Region on December 3, 2019. Gardener and Cottage Village Grids Program was continued; further measures are being taken to identify PROPERTY MANAGEMENT Since 2019, the Company has been applying new methods ownerless electric grid assets and conclude agreements of consolidation. 8 contracts for the free-of-charge use of with municipal administrations for the operation of these electric grid assets were concluded with the administrations facilities. INFORMATION ON THE PARTICIPATION OF PJSC MOESK IN SPECIALIZED AND NON-SPECIALIZED COMPANIES

Name Core business Participatory Company's revenue for interest, (%) 2019, thousand rub.

JSC Energotsentr Investment operations; connection to electric grids; development 100 598,295 of electric grids and other electric grid facilities, including design, PJSC MOESK has developed a Program for Consolidation of Power Grid Assets for each of the regions in which the engineering surveys, construction, reconstruction, retrofit, Company operates. The program is regularly approved and updated in accordance with local regulatory documents. installation and commissioning Priority Consolidation Methods: seeks to standardize and simplify the entire grid asset donation process for the applicant. Applications JSC MOESK — Engineering Construction and installation; geodetic engineering; operation of 100 2,565,386 For local grid operators: long-term leases with and documents can be submitted online on the user urban and rural engineering systems, including maintenance and optional purchase to compensate the Company’s account page. We have a streamlined procedure for major repair of residential and non-residential premises costs at the expense of tariff sources. This is a priority processing such applications and making feasibility consolidation method in the situation where grid decisions on consolidating the assets offered; Joint-Stock Company Installation, commissioning and repair of power facilities, electric 100 436,751 companies cut their investment programs. Electrotechnical Equipment power equipment, heat power equipment and customer power Repair Plant plants For grids owned by other operations: – commercial (for profit) organizations (developers, industrial enterprises, etc.) — repayment of arrears – non-profit organizations and natural persons — free- on operational maintenance and other services to the of-charge transfer (donation) agreements. Company Company.

PJSC MOESK has developed a Program for the Disposal of the procedure for submitting reports on following the Register of Non-Core Assets of PJSC MOESK (hereinafter referred to as Non-Core Assets. As of the end of 2017–2019, 2 acquisition deals and 4 lease deals on the rental of electric grid assets were concluded. The the Program). The program defines the main approaches, total volume of consolidated assets on the free-of-charge basis amounted to 11,548 c.u. principles and procedures for identifying and selling non-core By the decision of the Board of Directors of the Company dated assets, establishes criteria for classifying assets as non-core, December 24, 2019 (Minutes No. 409 dated December 25, MONITORING THE SCOPES OF CONSOLIDATION OF POWER GRID ASSETS the procedure for maintaining the Register of Non-Core Assets, 2019), the current Register of Non-Core Assets, developed approaches to determining the value of non-core assets, the in accordance with the requirements of the Program, was PJSC MOESK Scope of consolidation of power grid assets for the period main provisions for the disposal of non-core assets, as well as approved. 2017 2018 2019

MVA km c.u. MVA km c.u. MVA km c.u. Information on the sale of non-core assets for 2019 is given in the electronic annex in section 5.1. TOTAL 489 1,608 13,644 555 1,589 13,868 554 2,362 15,957

Acquisition of electric grid assets - 8 16 1 7 72 - - -

Lease of electric grid facilities 399 1,003 10,454 399 1,003 10,454 393 1,019 10,427

Other (permanent title and right of use) 71 594 2,676 155 579 3,342 160 1,343 5,530

84 85 2. COMPANY PERFORMANCE ANNUAL REPORT PJSC MOESK 2019

86 87 3. Sustainable Development

3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

THE UN SUSTAINABLE DEVELOPMENT COMPANY GOALS AND THEIR 3.1 PRIORITIES 3.2 ACHIEVEMENT

On September 25, 2015, the UN member states adopted the 2030 Agenda for Sustainable Development. It consists of a number of goals aiming to eliminate poverty, to save resources of our planet and to secure welfare for everyone.

UN goal The contribution of PJSC MOESK to the implementation Details of the goal

Staff training is a priority area of the Company's human Section 3.7 resources and social policy. PJSC MOESK pays great attention to ensuring comfortable working conditions for its employees, as well as the implementation of various support measures: – carrying out activities aimed at the popularization of engineering professions among young people; – employment of graduates of specialized universities and colleges; – compensations and social payments within the framework of the Company's collective agreement, the effect of which applies to all PJSC MOESK employees, including non-working pensioners and mothers on maternity leave as one of the financially vulnerable layers of society; – implementation of the Social Insurance Program; – implementation of the health resort treatment program PJSC MOESK views sustainable development as meeting infrastructural activities impose a great responsibility for employees and disadvantaged groups, and the current needs without compromising the ability of on it in terms of society, as the Company provides for its recreational vacations for children future generations to meet their own needs. It is based existence and sustainable development. When compiling on a balanced consideration of the economic, social and the Integrated Report for 2019, PJSC MOESK identified environmental impacts of the Company's activities on the main aspects of sustainable development in accordance Agricultural consumers of electric power in the area of – The share of electricity consumption in this sector amounted to society, including government structures and business. with the requirements of the GRI Standards. The materials the Company's activity are mainly located in Moscow 1.3% of the total net supply in 2019. Relative to last year, there Region. Representatives of this sector are consumers was an increase in electricity consumption in this industry by from the previous 2018 Integrated Report were taken, such as peasant farms, agro-industrial complexes, and 0.6% — up to 932.79 million kWh; PJSC MOESK, providing services for the electric power as well as generally accepted key aspects of the power state farms transmission in Moscow and Moscow Region, provides industry. Besides, an analysis of the best practices of – As part of the Agriculture of Moscow Region Program for 2014–2020, facilities of the Syrnaya Dolina agricultural park in for public vital activity and development of all economic Russian and foreign power grid companies was used in Dmitrovsky District, a large poultry complex of Agropredpriyatie sectors in Moscow Region. Thus, the Company's determining the content of non-financial reporting. Ptitsefabrika Mozhaiskaya LLC (Mozhaiskaya Poultry Farm), modern organic agricultural meat and dairy complex Shulgino LLC in Volokolamsk District, and the 2nd start-up complex of Lukhovitskie Ovoshchi greenhouse vegetables complex were connected;

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UN goal The contribution of PJSC MOESK to the implementation Details UN goal The contribution of PJSC MOESK to the implementation Details of the goal of the goal

– electric grid construction activities were completed to supply – Sanitation of sewage treatment facilities for car washes and electric power for the construction of a livestock complex (stage storm drainage; 1) for 3,550 heads of Stupinskaya Niva LLC – Maintenance of effective work car washes' treatment facilities (replacement or disposal by specialized Accident and illness insurance contracts, as well as voluntary – 164 hospitals provided medical services to employees organizations of waste generated from operation, health insurance (VHI) contracts concluded with JSC SOGAZ under VHI contracts, including 113 hospitals in Moscow and maintenance, and repair of units and assemblies — floating 51 hospitals in Moscow Region, as well as 68 specialized oil products, sludge from mechanical cleaning, sludge from medical research centers. tank cleaning, etc.); – Section 3.7 – Section 3.4

Corrective activities Psychological counseling aimed at correcting the psychological A set of measures to prevent soil pollution – Contracts were concluded with specialized organizations development licensed for this type of activity, for utilization or disposal (depending on the hazard class and nomenclature) of Health Management Program Since September 2019, a pilot project Health Management production and consumption waste; Program has been implemented. In compliance with the – Necessary conditions for storage and transportation of program, work of “office doctors” was organized in the medical materials, and production and consumption waste are rooms of the Company's Executive Office and branches provided to eliminate environmental pollution; (Moscow Cable Grids and Moscow High-Voltage Grids). An – Containers were purchased for the accumulation of relevant assessment of risk groups was carried out, and results types of waste (used fluorescent lamps and oily rags), and of medical examinations of 1,242 employees for various identification plates of waste accumulation sites, and a diseases were organized and received. An additional medical waterproof coating was installed; examination was performed as part of the VHI program and corresponding treatment was prescribed. With the help of – Section 3.4 telemedicine technology, specialised medical consultations are carried out in healthcare centers along with regular medical Under its partnership agreements, the Company actively In 2019, 570 students were studying under secondary check-ups cooperates with the National Research University “Moscow vocational education and initial vocational training programs Power Engineering Institute”. As part of PJSC MOESK's initiated by institutions of vocational education run by the targeted staff training, cooperation agreements were Company, of whom 49 students received or still receive their Educational activities A course of 12 lectures for PJSC MOESK employees to pass signed with 6 institutions of vocational education in scholarship the exam for the 2nd electrical safety group in the area of Moscow and Moscow Region: Psychology of Occupational Safety, as well as lectures on the prevention of various diseases, weekly newsletters of informational materials on common diseases The Company implements the Interaction Concept with Section 3.7 Moscow state budgetary educational institutions in order to attract schoolchildrens' attention to engineering Flu vaccination was conducted for Company personnel as part 1,253 Company employees professions and to improve the structure and content of of the VHI educational programs

Blood Donor Day under the Otzyvchivoe Serdtse (Warm Heart) 332 people volunteered to donate their blood In 2019, more than 11 MW of capacity was provided for the program needs of educational institutions in Moscow and Moscow Region Long-term targeted programs aimed at preventing industrial Section 3.6 injuries and injuries of third parties at the Company's facilities Educational institutions, which are one of the priority power supply facilities in Moscow Region, are powered according A set of measures aimed at preventing air pollution – When receiving a warning about AWC (adverse weather to the reliability category II with the provision of the grid conditions), measures are taken to reduce emissions for a backup short period of time (during AWC) according to the action plan under AWC; In order to ensure gender equality and empower all Section 3.7.2 – In order to improve the efficiency of dust and gas purification categories of citizens, the Company uses the Collective plants, inspection of technical condition, repair and cleaning Agreement as one of the tools to ensure social stability in of cyclones are carried out; the labor groups, and to avoid social strain and social and – Section 3.4 labor conflicts. The Collective Agreement applies to all employees of the Company A set of measures aimed at preventing water pollution – Ongoing laboratory control of pollutants in surface wastewater discharged into municipal utilities in Moscow;

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UN goal The contribution of PJSC MOESK to the implementation Details UN goal The contribution of PJSC MOESK to the implementation Details of the goal of the goal

The main source of water consumption is centralized water According to the results of laboratory analysis of the quality Adaptation, social support, and employment of young workers The share of Company young employees amounts to 32% of the supply networks, and bottled water is also used for drinking. of surface wastewater discharged to municipal utilities in (graduates of higher educational institutions specializing in total number of personnel Water resources are spent to cover the household needs Moscow, the sample indicators did not exceed the permitted electric power) as well as to feed carwash systems and to water-wash the values in accordance with the allowable discharge standards Company’s facilities. developed for relevant sites of the Company's branch Improved labor productivity To date, work is being done to improve the current management In 2019, the following measures were taken to improve system of PJSC MOESK, as well as to shape a targeted wastewater quality and efficiency of treatment facilities: management model taking into account the action plans within – regular control of pollutants in surface waters discharged business digital transformation into municipal utilities in the city of Moscow (for the Company's branches operating in Moscow). Over 10 The Company's economic growth rests on three components – Section 2.2 indicators of the quality of discharged wastewater of sustainable development: economic, social and – Section 3.4 (including suspended substances, petroleum products, environmental chlorides, sulphates, iron, copper, etc.) are monitored – Section 3.7 annually; – sanitation of sewage treatment facilities for car washes Research, development and experimental design activities Section 2.7 and storm drainage; – maintenance of effective work car washes' treatment facilities (landfill inspection, replacement or disposal by specialized organizations of waste generated from operation, maintenance, and repair of units and assemblies floating oil products, sludge from mechanical cleaning, Ensuring equal employment and wage conditions, and Section 3.7 sludge from tank cleaning, etc.); equal opportunities – garbage removal from the territory of divisions; – timely signing of contracts for automotive equipment cleaning at specialized washing facilities of contractor companies PJSC MOESK covers the entire territory of Moscow – Section 2.1.1 Region. The Company provides technological connection – Section 2.1.2 In accordance with the current legislation, tariffs for electric Section 2.4 and electric power transmission services in Moscow, – Section 3.3.4 power transmission services are set taking into account one of the world's largest metropolitan, the capital of the parameters of the socio-economic development forecast of Russian Federation. the Russian Federation. Increase in the average uniform tariff The availability of services of technological connection for electric power transmission services in 2019 against 2018 to power grids and uninterrupted electric power supply in Moscow Region is lower than the consumer price index of PJSC MOESK ensures sustainable development of the established by the forecast region

Introduction of innovative technologies in electric power Section 2.7 In line with environmental, sanitary and other Section 3.4 transmission activities requirements in the field of environmental protection in the region of presence, as well as in order to prevent the Energy saving and energy efficiency improvement program Section 3.5 harmful impact of solid municipal wastes (hereinafter — SMW) on the environment and to reuse SMW as Expansion of charging infrastructure for electric transport in A cooperation agreement between the Moscow Government secondary raw material, PJSC MOESK took the following Moscow Region and PJSC Rosseti on the development of charging infrastructure measures: for electric buses, cars and two-wheeled electric transport in – separate SMW accumulation by type was provided: paper Moscow was signed and cardboard, plastic and polyethylene, and mixed waste; – SMW accumulation sites were equipped with labeled Decent wages Section 3.7.1 containers according to waste types at the Company's branches; – SMW accumulation sites were arranged in public spaces with the use of trash bins; – SMW transportation and transfer were arranged in accordance with the concluded contracts

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UN goal The contribution of PJSC MOESK to the implementation Details UN goal The contribution of PJSC MOESK to the implementation Details of the goal of the goal

Installation of energy-efficient LED lighting fixtures The total number of LED lighting fixtures in 2019 was up to Water protection measures carried out by the Company are Technical measures to avoid pollution of water ecosystems by 54.3% of the total volume aimed at preventing pollutants from entering groundwater runoff of pollutants from industrial sites: during construction, daily operation and emergency situations – installation of oil receivers and oil collectors made of Measures for the protection and rational use of land – Waste accumulation sites are equipped with identification monolithic reinforced concrete, covered with waterproofing resources plates of temporary accumulation sites at the branches' and designed to receive the full volume of oil from a facilities, as well as waterproof coating is installed; transformer, in order to avoid possible oil leaks and emergency discharges; – 3 separate waste collection points with a volume of 1.1 m3 were arranged to collect secondary waste — waste paper, – the device of waterproof coatings on the roadways and sites; glass, and consumer plastic; – organized surface drainage; – Necessary conditions for storage and transportation of – storage of wastes in specially designated areas within the materials, and production and consumption waste are boundaries of land use, using airtight storage tanks and provided to eliminate environmental pollution; specially equipped sites – Waste management of production and consumption is being recorded; Compensatory planting On October 19, 2019, due to the need to make cuts in the – The data on waste generation were compiled and security zone of the 110 kV TsAGI — Donino high voltage coordinated with the Moscow Department for Environmental electrical transmission line, passing through the territory of Management and Protection with the receipt of registration Ramensky and Zhukovsky urban districts, a compensatory coupons in the consolidated cadastre of wastes of Moscow, planting of 1,012 trees and 750 shrubs was carried out and also the data in the consolidated cadastre of wastes of Moscow Region were compiled and coordinated; PJSC MOESK is a faithful participant in the justice system and Section 4.5 – Administrative and regulatory documents in the field of deals with the issues related to the conduct of its business hazardous waste management have been developed and solely within the legal framework updated; As part of the implementation of the measures aimed at Section 4.5 – Oil spill prevention and response plans have been developed combating corruption, bribery and embezzlement in the and approved at the controlled facilities Company, a set of control and inspection measures was taken in 2019. At the same time, there is also a strong focus on Charging infrastructure development It is planned to install at least 300 charging stations (120 fast prevention, which is the main and crucial factor for success in charging stations for electric cars and 180 stations for electric the prevention of corruption buses) Responsible decision making by the Company's bodies Section 4.1 Annual set of measures to reduce losses in power grids Both technical and organizational solutions are applied. is ensured by strict compliance with the Federal Law No. Energy-efficient equipment, as well as smart metering devices 208-FZ on Joint Stock Companies dated December 26, 1995. are installed. The inspections are planned and implemented to In addition, the Company's Charter provides for an extended identify the facts of off-the-meter consumption and losses of list of issues to be resolved by a qualified majority of the electric power members of the Company's Board of Directors. Members of the Board of Directors make decisions based on the Charging infrastructure expansion Currently, the charging infrastructure of PJSC MOESK recommendations of the Committees of the Board of Directors includes 34 working charging stations. In cooperation with the conducting a thorough preliminary analysis of issues Department for Transport and Road Infrastructure Development of the Moscow City Government, a Program of Installation of Ongoing dialogue with all stakeholders, mobilizing and Section 3.3 New-Format Charging Stations for Cars and Two-Wheeled sharing knowledge, experience, technology and financial Electric Transport is being developed resources. The Company is constantly expanding areas of cooperation with stakeholders, contributing to the exchange Organizational measures on energy saving – Measures for commercial metering of electric power of knowledge, promotion of principles of responsible and (identification of off-the-meter electric power consumption) rational consumption, and technology exchange – Measures aimed at reducing electric power losses – Section 3.5 Building partnerships on principles and values focused on the Section 3.3 interests of humanity and the planet

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Stakeholder group Stakeholder interests Forms of interaction

– Completion of documents – Monthly reporting of meter readings – TC contractual conditions – Reporting of non-metered and non-contracted consumption – Instrumentation checks of metering devices – Organization of open lessons and workshops on Electrical Safety STAKEHOLDER – Interaction via Forum for Technological Connection and Electric Power Supply to Clients ENGAGEMENT – Personal Account (Internet Reception) of the technological connection portal – E-mail [email protected] 3.3 – Client offices – Moscow Region authorities – Moscow authorities – Power grid services portal of PJSC Rosseti – Mobile App services for consumers Stakeholder engagement is a major factor of the Company's sustainability. PJSC MOESK is aware of the necessary continuous engagement with all stakeholders, including shareholders, investors, industry analysts, employees, consumers Suppliers, contractors – Procurement budget – Measures aimed at attracting SMEs to the Company's of products, suppliers of services, representatives of state and public organizations, mass media, as well as local procurement procedures communities. – Purchases from local suppliers – Compliance of all procurements with – Exercising procurement with the use of electronic trading facilities (ETF) In 2019, PJSC MOESK kept to its policy of openness towards all stakeholders. PJSC MOESK identifies ten stakeholder procurement standards groups based on their influence on the Company's operations and the impact they produce on the Company's ability to – Fulfillment of contractual obligations – Contractual relations achieve its strategic goals. PJSC MOESK strives to learn about their needs and interests, as well as to maintain continuous – Meeting with manufacturers of electrical and other dialogue in order to determine stakeholders' attitude towards the Company's operations and prevent misunderstandings equipment between PJSC MOESK and stakeholders. – Participation of PJSC MOESK representatives in specialized forums – Meetings with the suppliers of the leading digital solutions

Shareholders, – Production efficiency – Publication of reports as required by law FORMS OF INTERNAL AND EXTERNAL INTERACTION IN THE COMPANY IN ACCORDANCE WITH STAKEHOLDER NEEDS investors – Cost control – Presentations and conference calls for the investment – Development prospects community Stakeholder group Stakeholder interests Forms of interaction – Compliance with legislation – Press releases on material issues and key corporate events – Situation in the electricity market Personnel – Stable employment – HR and social policy – General Meetings of Shareholders – Corporate governance – Wages and social benefits – Personnel satisfaction studies and surveys – Meetings of the PJSC MOESK management with – Strategy and KPIs – Opportunities for professional and career growth – Internal website the representatives of shareholders and investment – Increased capitalization – Creating opportunities for learning and – Employees’ visits to the Deputy Director General for HR community development Management and Administration – Hotline for Shareholders – Occupational health and safety – Organization of cultural and sports events – Staff meetings Authorities – Full and timely payment of taxes – Information and reporting disclosure as required by law – Meetings of the representatives of the Young Specialists’ – Energy support for implementation of plans – Use of personal communications Council for social and economic development of – Participation in joint working groups territories – Meetings with trade union representatives – Meetings of the Company’s executives with public officials – Participation in important social projects – Occupational health and safety policy – Organization of joint public events – Maintenance of partnerships – Improving staff competencies on digital transformation issues – Participation in public events arranged by authorities

Consumers – Balanced service pricing – Questionnaires – Safety and reliability – Front-office interaction – Production efficiency – Director General’s Internet Reception Office – Compliance with the schedule of technical specifications

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Stakeholder group Stakeholder interests Forms of interaction 3.3.2. RELATIONS WITH PUBLIC AUTHORITIES AND ORGANIZATIONS

Mass media – Reliable power supply – Press events: press tours, briefings, press conferences – Implementation of the investment program – Press releases on material issues and key events – Production efficiency – Interviews with the Company's management – Implementation of innovative solutions – Video and radio materials, publications in mass media – Focus on the client – Responses to media inquiries – Development prospects

Non-profit – Environmental security – Membership in non-profit organizations organizations – Accident aftermath minimization – Participation in working groups – Compliance with legislation – Economic, environmental, and social initiatives – Social programs – Publications in local media – Development and modernization of social – Organization of cultural and sports events infrastructure – Support for cultural actions

Educational – Retraining and advanced training of employees – Welcome Days institutions – Internship and employment opportunities for – Cooperation with educational establishments on the subject of graduates specialist training – Support for specialized educational institutions – Training of managers and specialists on digital transformation and scientific research efforts issues

International rating – Strong operational profile – Press releases on assignment/confirmation of ratings under agencies – High profitability the international scale – Moderate debt load – Annual meetings of the PJSC MOESK management with the representatives of international rating agencies – Sufficient liquidity level

International – Balanced product pricing – Meetings Comment by Director of External Communications and PR Department cooperation – Situation on the electric power market – Questionnaires L. V. Dusheina – Implementation of innovative solutions – Interaction via the mobile app – Focus on the client – Meeting with manufacturers of electrical and other equipment – Development prospects In our work, we prioritize building close communication coverage of changes related to digital transformation and with the local authority leaders; in particular, our modernization of the electric grid complex, provision of – Partnerships synchronized efforts affect consumer satisfaction and efficient complete solutions allowing to ensure quality and ensure the synergy. In addition, in the social media era, reliable power supply, are becoming the key directions in timely and constructive interaction with authorities and our joint efforts. public organization in order to fully inform target audiences on the Company's operations and provide answers to the general public inquiries is more and more needed. Timely cooperated reaction to consumers' inquiries, 3.3.1. INTERACTION WITH INVESTORS

The Company’s interaction with investors is targeted It was attended by the analysts of the largest at making the Company more open, transparent, investment banks and companies ensuring analytical and investment-attractive. Therefore, one of the coverage of power grid companies, as well as mass In 2019, the Company maintained active interaction with communities to the Company's balance sheet. Decision main tasks of the investor relations unit consists media representatives of the federal and industry the authorities and local organizations which contributed on the fundamental easing of the requirements was in complete and timely coverage of the Company’s levels. The Company understands the importance of the to starting large-scale projects playing key role in made by the PJSC MOESK management as part of the performance and projected performance. Up-to-date interaction with investors, and pays great attention to the development of the Moscow Region power grid implementation of the relevant decree by the Governor information can be found on the corporate website in ensuring direct communication between the Company's infrastructure. of Moscow Region. The Company actively worked with the Shareholders and Investors section which contains management and the investment community. The the authorities and public organizations when arranging reports, presentations, and other materials. In addition Company arranges meetings with analysts, provides On February 7, 2019, at the Consolidation Forum and providing information support of the compensatory to placing information on the website, in September fast informational and analytical communication arranged in cooperation with the Summer Residents planting of tree and shrubbery vegetation executed due 2019, a briefing on the results of the publication of channels, participates in investment conferences and Union of Moscow Region, PJSC MOESK started the to the necessity of clearcut in the preserved area of the the IFRS statements for 1H 2019 and the Company's other corporate events. program on significant easing of requirements for the high-voltage electrical transmission line 110 kV TSAGI — strategic goals for the mid term was arranged. transfer of power grids of gardener partnerships and villa Donino in Ramensky and Zhukovsky urban districts

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of Moscow Region. On October 16, 2019, Aleksandr historical interactive play on children's power safety. PR support for consolidating grids of gardener For several years in a row, the Company has held the Novak, Minister of Energy of the Russian Federation, The Prefecture of Zelenogradsky Administrative District, partnerships and villa communities in Moscow Region Honest Kilowatt (Chestny Kilovatt) campaign, under Sergey Sobyanin, Mayor of Moscow, and Pavel Livinsky, Moscow Department of Education, interdistrict Board of which the Company's power engineers together with Director General of Rosseti, opened the new substation Directors of Educational Institutions in the Prefecture 2019 was marked by an unprecedented decision taken the mass media representatives carry out inspections to 220/110/20/10 Khovanskaya which became the largest of Zelenogradsky Administrative District became the by the management of PJSC MOESK on significant identify cases of non-contract and non-metered electric power supply center of the Troitsky and Novomoskovsky Company's partners. easing of requirements for the transfer of power grids power consumption, as well as explanatory work with the Administrative Districts of Moscow (Prefecture of of gardener partnerships and villa communities to the population. Troitsky and Novomoskovsky Administrative Districts). PJSC MOESK hosted multiple comprehensive staff Company's balance sheet. In February 2019, together Constructive interaction with the authorities was part trainings attended by the heads of, and officials from, with the Moscow Regional Duma and the Summer In total, there were 11 TV reports and more than of the promotion #Kind_Electricity (#Доброе элек- Moscow and Moscow Region authorities. These events Residents Union of Russia, the forum “PJSC MOESK 500 publications in print and electronic media on the topic тричество) when organizing the first PJSC MOESK were much appreciated. simplifies the procedure of consolidating power grids of reducing electric power losses in 2019. of non-commercial partnerships of gardeners and villa communities” was organized and held, where it was At the end of the year, mass media together with publicly announced that the procedure of consolidating JSC Mosenergosbyt held the No Debts in the New Year 3.3.3. PUBLIC RELATIONS power grids of non-commercial partnerships of gardeners campaign, aimed at informing residents of the capital and villa communities is to be simplified. region on the necessity to submit readings and pay for consumed electric power until the end of the year. The 1. Social Сommunication by the director general of PJSC MOESK in January 2019. In December 2019, strong information support was video about the campaign was posted in the customer As part of the program implementation, a set of measures provided for signing the Agreement between the service centers, offices of PJSC MOESK, social networks, Technological connection was performed aimed at both informing the public Government of Moscow Region and PJSC MOESK on as well as in the broadcasts of regional TV channels. and mass media on digital projects and promoting the cooperation in the development of the electric grid Printed products with information about the campaign were In 2019, the issue regarding the technological connection digital transformation 2030 concept via intracorporate complex in Moscow Region. As part of the Agreement, also distributed in client offices. (TC) to the PJSC MOESK grids was one of the priorities of communications. the issues have been agreed between power engineers the Company's communication activity. PR support was and the Moscow Region Government in terms of providing Kind Electricity to Children mainly targeted at raising the target audience’s awareness Throughout the year, materials in federal, regional compensation in tariffs of operating and capital expenses of the events related to the improvement of TC procedures and industry mass media were initiated. A large- for maintenance and reconstruction of consolidated electric In 2019, a wide range of activities carried out by the for consumers, to the reforms, to the new interactive scale interview with the Company's Director General grid assets which will allow to repair and reconstruct all Company to prevent children's electrical injuries was services available via the special technological connection P.A. Sinyutin was prepared and released by the improper power grid facilities taken on the Company's enriched with a real interactive performance for the first website. Interfax News Agency, and a press conference with balance sheet in a planned manner. time. For the first time, the Kind Electricity to Children the participation of the PJSC MOESK management was performance was demonstrated as part of the #Kind More than 75 TC events were held with the participation organized in the Interfax News Agency press center for In general, all newsworthy events, which reflect the Electricity campaign organized by PJSC MOESK on the of the Company's specialists over the year, as well as representatives of more than 30 mass media. In total, process of consolidating electric grid assets one way or eve of the summer school holidays and in the honor of 56 Investor Days were initiated and held and 120 press there were 450 publications. another, were actively supported in federal, regional and the 10th anniversary of the Kind Electricity to Children releases were published. Special attention was paid to industry mass media. In total, there were 557 publications charity project. Under the motto “10 good years — 10 good technological connection of socially significant facilities. In 2019, to inform the residents, representatives of and 10 videos devoted to it. deeds!” the Company's specialists conducted 10 lessons public authorities and other stakeholders, the Digital on electrical safety in Moscow schools where they told All significant newsworthy events were posted in the Transformation 2023 section was created on the Under the project of consolidating electric grid assets and children about the necessary safe conduct in the vicinity of Company's official social networks (Facebook, VKontakte, Company's website, where the information on the simplifying this procedure, explanatory printing products for power facilities. Over one thousand children attended the Instagram, Twitter — more than 300 publications), and contents, implementation process and digital technologies non-commercial partnerships of gardeners were developed: classes. were also supported on the websites of specialized applied in 5 most significant projects was placed. Tours over 10,000 information posters and leaflets were issued ministries, agencies, Moscow Region’s municipalities, to the Medvedevskaya pilot digital substation in Skolkovo during the year; a dedicated page “How to transfer your grids” Furthermore, hundreds of Moscow residents attended prefectures, and Moscow Government. were organized, which was attended by the delegations was created on the Company's website. In 2019, the number of the performance as part of the All-Russian Energy of the State Duma Committee on Energy, the Ministry visitors to the page exceeded 53 thousand people. Saving Festival #BrighterTogether in Gorky Park where In July 2019, a webinar for small and medium-sized of Energy of the Russian Federation, Rostekhnadzor, the Company organized a range of activities for children businesses was held for the fifth time. Its topic was delegations from Pyongyang and the Republic of As a result, at the end of 2019, a number of applications devoted to electrical safety. Activities include the Electrical “Support programs for technological connection of small Azerbaijan (“Azenerji” JSC), as well as the delegates of for the transfer of electric grids to the Company's balance Safety Corner informational and entertainment platform and medium-sized businesses to power grids.” More than the World Smart Energy Summit Russia and the BRICS sheet grew 3 times and amounted to 2,011, and a number where all the participants were given school textbooks with 250 users watched this webinar. countries. of consolidated non-commercial partnerships of gardeners colorful depictions of electrical safety rules. and villa communities grew 5 times, exceeding 1,500. PR support of digital transformation The Company's management participated in the On the eve of the holidays and the beginning of the summer Russian Investment Forum in Sochi and St. Petersburg PR support of activities aimed at reducing energy school camps, a webinar on the method of carrying out To provide information support of digital transformation International Economic Forum. Representatives of transmission losses a lesson on the topic “Electrical safety” was organized projects of the Company's electric grid complex, the pr the Company also participated in several dozens of for teachers. About 500 representatives of educational program for information support of PJSC MOESK digital events where technologies and principles of digital In 2019, PR support was provided for such areas as institutions of Moscow Region took part in the webinar. transformation for 2019–2023 was prepared and approved transformation were discussed. instrumental checks of consumer metering devices, inspections to detect electric power embezzlement and installation of new smart metering devices.

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Animated videos were produced and posted on the In July 2019, the Company representatives visited the Company's official social media in the run-up to the Moscow Urban Forum dedicated to the development of summer holidays. In total, they got over 80 thousand views. global mega-cities. Comment by Director of External Communications and PR Department L. V. Dusheina

Traditionally, power engineers gave lessons on electrical On October 2–5, the delegation of PJSC MOESK took an safety in educational institutions and children's health active part in the Russian Energy Week International Forum camps. on Energy Efficiency and Energy Development. 2020 will be marked by two significant dates — the 100th With regard to handling applications, it is planned anniversary of the GOELRO plan and the 75th anniversary of to optimize the processing of applications through Internet communications In November, at the Education and Career Exhibition, the Victory in the Great Patriotic War. Therefore, we plan to further conversion of PJSC MOESK services to an PJSC MOESK acted as an employing company attracting pay great attention to the organization of commemorative electronic form, the development of CRM system — PJSC MOESK constantly updates the content of its talented youth to the Company. events and coverage of the labor feats of our power a single platform for interaction with consumers, profiles on social media. On the Company's accounts engineers who laid the foundation for the reliable operation including consolidation of all applications in CRM one can find not only news, but also historical posts, The year was completed in December with the participation of the domestic electric grid complex on mass and social and re-engineering of the business process for useful information for the consumer, as well as of the Company's delegation in the Power Grids media. processing in-person applications similarly to competitions and quizzes aimed at attracting new International Forum. The management of PJSC MOESK the business process of processing interactive subscribers to the Company's groups. presented the Company's achievements and projects at the This year, in accordance with the general strategy of applications. forum for industry specialists. PJSC Rosseti, the public relations unit will continue to In case of emergency situations, social media become prioritize comprehensive coverage of the PJSC MOESK The Company is on the point of introducing self-service an important and operational channel for informing digitalization program. Our efforts will also be focused on services that would be convenient for our customers: consumers about the progress of emergency and 3. Media Сommunications informing consumers about the further implementation e-signature systems, means of electronic document recovery work (ERW), as well as receiving feedback of the consolidation program of the power grid property exchange, and speech synthesis and recognition in from customers. Active interaction with mass media at all levels (federal, of non-commercial partnerships of gardeners and villa industrial operation. regional, industrial, municipal, etc.) is a priority of communities. Due to the effective and focused work of the Public PJSC MOESK communication policy aimed at ensuring Relations Department, the number of subscribers to transparency of business processes and informing target the official pages of PJSC MOESK on social media audiences about the full range of its activities. doubled in 2019! Now the Company's Facebook, Twitter, Instagram and Vkontakte official accounts have In 2019, special attention was paid to comprehensive over 15 thousand subscribers. media coverage of the Company's activities aimed at implementing digital transformation and consolidation In 2019, the Company continued to develop its website programs for the electric grid complex. The emphasis www.moesk.ru and added new sections on the most when interacting with mass media was also placed relevant projects. In 2019, PJSC MOESK actively on informing customers about the implementation developed its interactive services. New services were of programs aimed at the reliable and uninterrupted introduced in online customer service in 2019. electric power supply to consumers, in particular, the implementation of measures to prepare for the autumn- winter period, the implementation of the investment 2. Congresses and Еxhibitions program, etc. In addition, an important area of media relations was the coverage of the Company's financial In 2019, PJSC MOESK, as in previous years, took policy and the explanation of changes that have occurred an active part in a number of the largest and most in connection with the introduction of the new brand significant congresses and exhibition events in the architecture. country. In 2019, mass media published 15,906 publications about PJSC MOESK started that year with the participation PJSC MOESK and its activities. 9,225 publications were in the Russian Investment Forum in Sochi which focusing on the strategic areas of PJSC MOESK. The is a traditional platform for the presentation of the systematic publication of objective information on the investment and economic potential of Russia. Company to cover its stance on the key issues did help build a positive image and reduce reputation risks. The St. Petersburg International Economic Forum 2019 (SPIEF 2019), which took place from June 6 to 8, was the next event of significance not only for the Company, but for the entire country. At SPIEF, PJSC MOESK and PJSC Sberbank signed an agreement on strategic cooperation in the area of digitalization, innovative IT technologies and financing.

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TRANSITION OF ROSSETI GROUP TO SINGLE BRAND OPPORTUNITIES As of early 2019, the Russian electric grid complex did not have a single recognizable and clear name for identification among the general public. The trust in Rosseti was distributed among direct reporting entities, each of them individually A SINGLE BRAND ARCHITECTURE earning reputation in its segment, among consumers, shareholders and counterparties. However, the current situation with 15 parallel brands led to confusion and low awareness of people not directly related to the power grid industry. The Rosseti brand was severely undervalued as of early 2019. In fact, this was directly reflected in the Company's quotations on the public capital markets and did not increase the income of the Group's shareholders. The strengthening of corporate identity has opened new opportunities for the prospective growth of the investment attractiveness of the In June 2019, at the St. Petersburg International Economic Forum, the Uniform holding. Standard for Brand Identity of PJSC Rosseti and Rosseti Group's organizations was The introduction of a single ideological platform for all subsidiaries and affiliates and, as a result, increased awareness presented, approved by the Board of Directors of PJSC Rosseti on April 29, 2019. of Rosseti Group will help to draw the attention of stakeholders and the general public from anywhere in the world on the activities of the energy holding under the auspices of a single authoritative brand. The large-scale rebranding Since then, all subsidiaries and affiliates of the main and distribution electric grid will provide an opportunity for prospective growth in the investment attractiveness of the Company as a whole, its capitalization and loyalty. The results of the transformation will bring the Company much closer to the stakeholders, and complex have transitioned to the single brand architecture in corporate and marketing the integral brand will symbolize the unified quality standards of Rosseti Group throughout Russia. communications and began using new names, containing the Rosseti trademark and regional or functional binding.

P. A. Livinsky: “Rosseti unites 70% of distribution grids and 90% of main ones, implements unified approaches to management and development of power grid infrastructure of the country, constantly improves the quality of services, expanding their list. Working under the single brand strengthens the interconnection of the Group's enterprises and makes the brand more recognizable in the country and in the industry. It makes the interaction with us easier and more straightforward for the consumer. The transition to a single name is a part of the systematic process of a large-scale transformation concerning all the activities of the The activities for the transition to the single brand architecture were divided into two main stages: holding.”

Stage I. Following the approval of the Uniform Standard for Brand Identity by the Board of Directors of PJSC Rosseti, all subsidiaries and affiliates of the distribution and main complex carried out appropriate corporate procedures. Further replacement of corporate elements is carried out as the depreciation period expires, without The renaming of the subsidiaries and affiliates will not entail any changes in the structure or personnel composition increasing existing budgets and within the framework of approved business plans. of the Companies. Moreover, full-fledged communication based on the single brand, together with Rosseti's initiatives aimed at promoting the electric power industry, will significantly improve the reputation of the power engineer position Stage II. Change of legal names of subsidiaries and affiliates. and attract high potential staff. Due to the transition to the single brand architecture, each Company employee will feel like a part of a large team of 220 thousand people, regardless of their location and will be involved in solving common Since the end of December 2019, the subsidiaries and affiliates of the distribution complex which are part of Rosseti Group tasks for the entire energy holding. A unified team of power engineers united by common goals will be able to achieve started to change their legal names in accordance with the new brand architecture. even more significant results.

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3.3.4. CUSTOMER INTERACTION and availability of services. The in-person service, convenient for all groups of our customers, is organized 2019 was the year in which in compliance with the Uniform Service Quality Standards; PJSC MOESK optimized and availability and efficiency of distance and electronic developed its interactive Comment by Deputy Director General for the Development and Sales of Services (interactive) services. A. Yu. Kadushkin PJSC MOESK provides 24/7 access to telephone services. service and prompt response to customer requests. The Company guarantees convenient and fast access In the year under review, the Company made its first requests, as well as give correct answers. A system of to electronic (interactive) services on the Internet; steps toward the creation of digital platforms and SMS and messenger mailing will be created to notify of the interface and tools of interactive services are New services were introduced in online customer solutions aimed at bringing the customer-focused emergency outages with the ability to instantly set up ergonomic and intuitive; service in 2019: approach to a new level and satisfying demand of the various scenarios of such mailing, thus increasing both services rendered by skilled people. the Rosseti Moscow Region mobile app for today's and tomorrow's consumer. our Company's information transparency and customer Organization of all forms of service ensures a high consumers was developed for iOS and Android; trust. level of qualification and competence of the Company's In 2019, we started implementing our major project the online payment service was improved in service personnel; to automate customer interaction at each stage: from The year 2019 was a genuine triumph, as Russia headed compliance with 54-FZ; applying for connection to power grids to supplying the World Bank's ranking in terms of affordability transparency of business processes of customer the technological connection portal was voltage. The set of technologies embedded as part of of connection to power grids for the first time of its service and objectivity when handling consumer re-designed; this project will reduce the time needed to prepare participation in these measurements made by the complaints. responses to customers' requests, speed up the World Bank on an annual basis. This became possible Customer service business processes are formalized, SMS service informing on the required information provision of up-to-date information, and help us to also thanks to PJSC MOESK's transition to completely described and transparent to ensure the controllability about concluded power supply contracts was switch to paperless document management when interactive means of communication with the Company's and manageability of interaction procedures. PJSC implemented; working with the customer. The artificial neural network customers, including during finalization of the power MOESK provides objective and unbiased consideration the service for transmission of information on the will provide for self-learning based on dialogues and for supply contract. We introduced the so-called Customer of complaints within the prescribed time frame, the concluded power supply contract by the consumer understanding of contextual surrounding of customers' Office Online System. possibility of appealing, the procedure of which is “Specify the details of the power supply contract” communicated to consumers in accordance with the was implemented; principle of sufficiency of information. the service for submitting a Single Application for Customer relations of PJSC MOESK are built upon the the Technological Connection from the portal of principles approved by virtue of the Quality Standard of the Moscow Mayor (https://www.mos.ru/) was Guidelines for Working with Customers Service. improved; The Company's Customer Interaction Policy targets the the service for submitting a Single Application When working with customers, PJSC MOESK is introduction of a customer-centered approach inside for Technological Connection from the Moscow guided by the Strategy of Electric Grid Complex grid companies as well as their enhanced credibility. This Key forms of consumer service Region Government portal (https://mosreg.ru/) was Development and the Long-term Development approach focuses on building the loyalty of customers improved. Program of PJSC Rosseti in the areas of “Customer driven by the affordability and quality of services rendered In-person service Service Improvement and Customer Satisfaction” by the Company and customer satisfaction in the short and Purposefully fitted client offices providing consumer service In 2019, the number of in-person meetings decreased and “Affordability of Infrastructure and Creation of long term. at the customer's location. by 44.9% which proves the successful implementation Conditions for Economic Growth”, which include: of the programs on transfer of customer interactions to improving the affordability of electricity infrastructure Guidelines for interaction with Company customers: Remote service the electronic form in the Company. in terms of technological connection; ensuring quality and affordability of services in line with Telephone (free of charge telephone number of Russian law; the Svetlaya Liniya (Light Line) Contact Center The majority of requests sent to PJSC MOESK are improving the quality of customer service; 8-800-700-40-70). issues on technological connection (TC) comprising sufficient information about the Company and its 52.2%. This is due to the fact that TC is one of the core reducing the number of stages of technological Interactive service via the Internet services. business processes in the Company. 40.8% of requests connection to power grids; (technological connection portal of PJSC MOESK Full and clear disclosure of procedures of interaction were made on the issue of the power supply blackout www.utp.moesk.ru, Power grid services portal of increasing the level of customer satisfaction with the with the grid organization is public and available which is connected to the Svetlaya Liniya Contact PJSC Rosseti and the portals of the Moscow Mayor quality of services rendered; to consumers of Company services. This principle Center operators providing timely information upon eliminates the need of our customers to contact the and the Moscow Region Government). accessibility and comfort of in-person servicing of the customer's call which increases the demand for Company customers; Company for information and advice and, as a result, this service on the customers' side. 3.3% of requests reduces transaction costs of the Company; were comprised of inquiries on power supply service of development and availability of distance and electronic accessibility and comfort of in-person servicing of PJSC MOESK. (interactive) servicing of Company customers; Company customers. Location of the infrastructure transparency and information openness of PJSC elements of offline servicing (customer offices) provides MOESK's activities. for coverage of PJSC MOESK's area of responsibility

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CONSUMER REQUEST STATISTICS conditions for capital construction facilities to the in the ranking, the more favorable conditions are for engineering infrastructure networks in Russia, make opening and operating small and medium enterprises. Category 2017 2018 2019 Increase in the connection to the power grids easier, faster, more 2019, % transparent and less costly. Since 2014, the Russian Federation's ranking under the Getting Electricity indicator was determined by Average time spent per application, min 18.0 16.0 15.7 –1.9 The Doing Business ranking, prepared by the World aggregating the results of the two largest cities — Bank on an annual basis, evaluates 189 countries on 10 Moscow (PJSC MOESK) and St. Petersburg (PJSC Requests by communication channels, pcs (total), including: 1,424,963 1,919,055 1,858,943 –3.1 indicators of business regulation. The higher the position Lenenergo).

In-person visits 399,063 344,345 189,689 –44.9

Via call center 916,271 1,390,383 1,497,853 7.7 2019 DATA ON GETTING ELECTRICITY ACCORDING TO THE REPORT OF THE WORLD BANK Written requests via the office 5,714 6,738 5,683 –15.6

Indicator Russian Europe and OECD (Organization for Economic Service in absentia via the Internet Reception Office / 103,915 177,589 165,718 –6.7 Federation Central Asia Cooperation and Development) Personal Account / Online sessions / e-mail

Procedures (number), pcs. 2.0 5.1 4.4

Period (in days), days 41.0 99.6 74.8

The following activities are planned for 2020 in terms of As part of the digital transformation, the ability to Cost, % of per capita income 5.0 271.9 61.0 improving the customer service system: submit applications/requests via the mobile app will implementation of the project “Receipt of be implemented, the ability to monitor the application Power reliability index and tariff transparency (0–8) 8.0 6.2 7.4 applications via telephone”; status and more without using a stationary computer was arranged. implementation of the program for transferring all applications for TC and additional services in an electronic form; Implementation of the project improvement of the mobile app features; expansion of the applicant's ability to sign all will help increase the quality of DATA ON GETTING ELECTRICITY IN THE CITIES OF THE RUSSIAN FEDERATION IN 2019 ACCORDING TO THE REPORT the documents (including contracts, additional OF THE WORLD BANK agreements, letters, acts) with a simple electronic the customer service, simplify signature under applications with the maximum Indicator Moscow St. Petersburg capacity of 150 kW inclusive; the process of interaction Procedures (number), pcs. 2.0 2.0 providing the applicant with an alternative when with the customers, positively signing with an electronic signature — applicants Period (in days), days 38.0 47.0 can sign the documents with a simple electronic influencing the image of the signature or a qualified electronic signature given Cost, % of per capita income 4.7 5.7 that there is one; Company and the industry in process integration and automation with regards Power reliability index and tariff transparency (0–8) 8.0 8.0 to interaction state and municipal service portals in general. Moscow and Moscow Region; development of the CRM system — a single Simplification of Technological Connection platform for consumer interaction, including the Procedure consolidation of all applications in CRM, transfer of In accordance with the report published by the World Bank in October in-person applications to the business process of the The Government of the Russian Federation developed interactive ones; and approved the Action Plan “Transformation of the 2019, the Russian Federation ranked 7th by the Getting Electricity Business Climate” by Order No. 20-r of January 17, 2019. redesign of the TC portal, its adaptation for mobile This action plan contains key performance indicators indicator in the Doing Business international ranking. devices; for the gradual promotion of the Russian Federation receipt of applications and requests through a touch in the World Bank Doing Business ranking until 2024. information terminal (stationary computer terminal Implementation of measures under the direction used to automate the process when interacting with “Connection (technological connection) to the engineering customers). infrastructure networks” is intended to ease connection

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DYNAMICS OF THE RESULTS UNDER THE GETTING ELECTRICITY INDICATOR IN MOSCOW

Indicator 2018 2019 Result

Number of procedures 2 2 Confirmed the result under the indicator

Period of connection, days 70.0 38.0 The reform was accepted, the period decreased to 38 days ENVIRONMENTAL Cost of connection per capita, % 5.3 4.7 The reform was accepted, the cost decreased POLICY Power reliability index and tariff transparency (0–8) 8.0 8.0 Confirmed the best result under the indicator 3.4 Experts of the World Bank noted the following In accordance with the list of technological connection reforms carried out in PJSC MOESK: measures of PJSC MOESK aimed at the improvement of reducing the number of procedures to two; energy infrastructure accessibility, the key areas of work are decreasing the number of documents and the transfer of application for TC and signing of all all documents issued during technological connection to an documents issued during technological electronic form; reducing the terms of connection. connection in an electronic form; improving financial conditions for Currently, PJSC MOESK works on reducing the number of procedures Interview with the First Deputy Director General — Chief Engineer entrepreneurs; and terms of TC, cooperation with the Government of Moscow and D. B. Gvozdev other executive authorities in order for the Russian Federation to enter reduction of the time to connect the facility to Top 3 countries of the World Bank Doing Business ranking under the the electric grid. Getting Electricity indicator by 2024. For the reporting year, what are the main industrial environmental monitoring; results in the focus area you supervise? development and coordination in the regulatory bodies of the project of the maximum permissible emissions Pursuant to the Minutes of the BD Meeting No. 332 of pollutants into the air. dated November 24, 2017, PJSC MOESK joined the implementation of the Environmental Policy in the In terms of compliance with measures aimed at reducing electric grid complex (hereinafter referred to as the the negative impact on the environment, the following Environmental Policy), approved by the Resolution of measures were taken: the Board of Directors of PJSC Rosseti dated March replacement of oil circuit-breakers by vacuum and 1, 2017 (Minutes No. 254 dated March 3, 2017). gas-insulated ones; The Company also approved the Action Plan for the implementation of the Environmental Policy for 2017– repair (reconstruction) of systems for emergency oil 2019 in PJSC MOESK (hereinafter — the “Plan”). discharge and oil receivers of transformers; construction (reconstruction) of overhead electrical The Plan contains measures aimed at minimizing transmission lines using self-supporting insulated the negative impact of the Company's activities on conductors; the environment and fulfilling the requirements of the Environmental Policy. The implementation of equipping overhead electrical transmission lines environmental measures included in the Plan is and outdoor switchgears of substations with bird stipulated by the requirement of the Federal Law protection devices; No. 7-FZ “On Environmental Protection” dated ensuring the secondary use (regeneration) of January 10, 2002 and other regulatory and legal acts. transformer oil in the amount of no less than 10% of the purchased oil per year. The Environmental Policy implementation program in 2019 was implemented in physical and monetary terms. Regarding the implementation of measures to reduce In terms of compliance with environmental legislation electric power losses, ensure energy saving and energy of the Russian Federation, the following measures were efficiency improvement, metering and control devices have taken: been installed.

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What are the plans for the coming year? 3. To arrange industrial environmental control for 3.4.2. BIODIVERSITY compliance with the environmental laws of Russia. 1. Supervisory audit of the environmental management system for compliance with ISO 14001 4. To take effort to preserve biodiversity. Branches of PJSC MOESK operate in environmentally boundaries of the specially protected natural areas of (GOST R ISO 14001–2016). sensitive areas (ESA) of Moscow and Moscow Region. Moscow are carried out in accordance with the established 5. To give employees advanced training in environmental These areas contain the towers of 10–220 kV high-voltage protection regimes, according to the Law of Moscow No. 48 2. To arrange instrumental control of the pollutant protection. electrical transmission lines as well as transformer (amended February 20, 2019) On Specially Protected emissions from stationary sources of air pollution; control substations of varying power rating. Natural Territories in the City of Moscow dated September of noise and EMF levels. 26, 2001. Within Moscow Region’s ESA, PJSC MOESK According to the orders of the branches “On the operates under the Law of Moscow Region dd. July 23, 2003 organization of environmental protection”, responsible No. 96/2003–OZ (amended December 26, 2018) On Specially officials are appointed for compliance with environmental Protected Natural Territories. legislation in the operation of power grid facilities, including Key Aspects of the Environmental Policy reduction in the share of obsolete equipment used at the territories of ESA. In 2017, the Company took the following measures to protect the facilities of the electric grid complex and containing flora and fauna: hazardous substances; The Environmental Policy of the Company was formulated The power grid facilities are operated within 7 ESAs bird protection along electrical transmission lines; and approved by the decision of the Board of Directors reduction of deforestation during the laying and of Moscow (natural historic parks Bitsevsky Forest, of PJSC Rosseti dated March 1, 2017 (Minutes No. 254 maintenance of clearings during the passage of “Kosinsky”, “Izmailovsky”, “Tsaritsino”, “Kuzminki- preservation of environmentally sensitive areas; of March 3, 2017) and is the basis for setting goals and overhead electrical transmission lines in forests; Lyublino”, Natural Reserve “Setun River Valley”, National reforestation. objectives for the continuous improvement of activities in Park “Elk Island”). the field of environmental safety of the energy sector. reduction of negative environmental impact during the construction of electric grid complex facilities. In accordance with the decision of the Board of Directors dated November 24, 2017 No. 332, PJSC MOESK joined the The Company's management is obliged to comply with the implementation of the Environmental Policy in the electric requirements of ISO 14001: 2015 and constantly improve 3.4.3. EMISSIONS grid complex and approved it as an internal document of the effectiveness of the environmental management the Company. system. PJSC MOESK, adopting the Environmental Policy of the electric grid complex, undertakes to follow its Air On an annual basis, the Company drafts and renews The main challenges facing the electric grid complex provisions when carrying out production activities. permits that stipulate air pollution norms. in the field of environmental protection: The main impact on the state of the atmosphere is caused by emissions of polluting substances from vehicles — The volume of emissions of harmful substances is special equipment used for production and repair work determined by calculation methods in accordance with (cranes, towers, mobile laboratories, etc.), as well as the developed draft MPE standards. equipment designed for cleaning up territories (garbage 3.4.1. WATER trucks, etc.). The volume of gross emissions of pollutants into the air in 2019 did not significantly change due to The Company’s facilities generate noise pollution caused the invariability of the technological process in the

Water SUE Mosvodostok. For the Company’s facilities in Moscow by the operation of substation equipment (transformers, branches. The emission of SF6 in CO2-equivalent Region, discharge limits are imposed by municipal water circuit breakers), which has power-dependent noise amounted to 45,385.4 tons in 2019. The estimated

The total volume of water consumption in 2019 amounted suppliers. characteristics. amount of SF6 emissions has increased due to the to 225.5 thousand m3. The volume of water supply is installation of new gas-insulated equipment. set in accordance with the limit of water consumption, In order to comply with discharge standards, laboratory the volume of wastewater discharged into the sewage control of surface water wastewater pollutants is carried system is set in accordance with the limit of water out annually. PJSC MOESK does not discharge wastewater EMISSIONS OF POLLUTANT SUBSTANCES, TONS EMISSIONS OF SF6 IN CO2-EQUIVALENT, TONS disposal, according to the balance of water consumption into water bodies. and drainage approved by the supplier. The limit of water consumption (water disposal) is set by the local 33.4 1.5 government authorities. Water consumption and discharge 2019 2019 45,385.4 are monitored by means of meters. WATER CONSUMPTION, THOUSAND M³ 34.9 2.0 2018 2018 44,465.1 For the Company's facilities geographically located in 34.6 2.0 Moscow, the standards for the discharge of pollutants 2019 225.5 2017 2017 42,598.6 into household and storm sewer systems are established. 31.0 These limits are imposed by JSC Mosvodokanal and 2018 231.5 Solids Liquids and gases 2017 227 222.0

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COMPONENTS OF EMISSIONS OF HARMFUL SUBSTANCES IN THE ATMOSPHERE FOR 2019, TONS WEIGHT OF WASTE BY DISPOSAL METHOD, TONS

Gross emission of harmful substances into the air Indicators for 2019 Category 2017 2018 2019 Increase in 2019, % Total 34.82 Weight of waste by disposal method (total), including: 23,235.1 23,722.4 14,296.9 -39.7 including: Placement 17,872.1 18,906.6 8,761.6 -53.6 Solids 1.45 Neutralization 1,043.0 1,273.4 1,419.4 11.5 Gaseous and liquid, including: 33.37 Disposal 4,320.0 3,542.4 4,115.9 16.2

sulfur dioxide – SО2 .23

carbon monoxide – СО 21.48 PJSC MOESK does not perform international shipments, including import, export, or waste treatment.

nitrogen oxides (in terms of NO2) 2.08

hydrocarbons (without volatile organic compounds) 0.72 3.4.5. ENVIRONMENTAL COSTS 3.4.6. ENVIRONMENTAL CONTROL volatile organic compounds (VOCs) 8.18 AND AUDIT other substances 0.68

Persistent Organic Pollutants (POPs) - ENVIRONMENTAL COSTS, MLN RUB. VAT EXCLUDED Based on the approved internal audit plan, as well as the standard program, in accordance with the Internal Hazardous air pollutants - EMS Auditing Guidelines approved by PJSC MOESK Order 2019 93.6 No. 192 of February 26, 2019, seven environmental compliance audits and environmental management reviews 2018 117.3 were conducted at the Company’s facilities. 112 production In 2019, in order to control and reduce the emissions checked all the petrol-engine cars for toxicity and all sites were inspected. of air pollutants, including the vehicle-related emissions the diesel cars for smokiness; 2017 104.3 of CO2, the Company: purchased new special vehicles and decommissioned The inspection included monitoring: the obsolete ones. to ensure zero excess of the established norms of ENVIRONMENTAL COSTS STRUCTURE, % environmental impact; air protection measures; 2.7 measures for the protection and rational use of land 3.4.4. EFFLUENTS AND WASTE resources; compliance with the regulations issued during previous Land Resources Changes in the volume of waste generation and removal audits of the Company facilities environmental compliance; are associated with the restriction of limits on the 43.2 The main types of impact of the Company on the reception of waste from the landfills in Moscow Region. measures for the safe disposal of industrial and environmental state of land resources are the operation consumer waste; of oil-filled equipment and the treatment of production and consumption waste resulting from utilities and sanitary condition of designated areas; production at the Company's facilities. Such wastes are 42.7 compliance with the internal regulatory environmental PRODUCTION AND CONSUMPTION WASTE, TONS mostly generated by the construction, revamping, and requirements. repair activities as well as by household activities at the Company’s facilities. Those audits produced 94 comments. Timely corrective 2019 14,296.9 measures are planned with respect to every commented Waste management method (treatment, disposal, factor, as well as corrective actions. Reports with photos neutralization, or placement) depends on the hazard class, 2018 23,722.4 11.4 of the corrective measures are sent to the environmental properties, and characteristics of specific waste. For the protection service. Protection and rational use of water resources purpose of handling production and consumption wastes, 2017 23,235.1 Air protection special licensed organizations are involved. 5,000 Land resource protection Pollution charges

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3.4.7. ENVIRONMENTAL TRAINING

One of the important conditions for the implementation “Environmental safety in disposal of I–IV hazard class of effective environmental protection includes training of waste”; managers and specialists of PJSC MOESK in the field of “Environmental documentation, reporting and payments environmental protection. of the enterprise. Industrial environmental control and state supervision”; The Company’s personnel regularly takes advanced environmental training. In 2019, 128 employees of the “Environmental safety in disposal of I–IV hazard class ENERGY EFFICIENCY AND Company's facilities studied the following areas: waste”; POWER CONSUMPTION “Changes in the environmental laws of Russia”; “List of Environmental Measures.” “Waste management of I–IV hazard classes”; “Environmental safety as a concern of hazardous waste 3.5 disposal”;

Comment by First Deputy Director General — Chief Engineer D. V. Gvozdev

The power losses in PJSC MOESK in the reporting year additional measures to reduce energy consumption decreased to 7.67% of the grid output compared to 8.10% for household and practical needs and reduce energy in 2018 and the target for 2019 (7.85%). losses in the Energy Saving and Energy Efficiency Improvement Program. In 2019, the energy inspection of the PJSC MOESK sites was completed which resulted in the proposals to include

In order to ensure implementation of the PJSC MOESK Numerical values of the Program's targets have been Energy Saving and Energy Efficiency Improvement set for the period 2017–2019. Program for 2019–2023, the Executive Office and the Company's facilities in 2019 carried out works to develop In 2019, the consumption of fuel and power resources the Energy Management System in accordance with the for household and practical needs of buildings and GOST R ISO 50001-2012 national standard. structures dropped by 2% (285.91 toe) as compared to 2018. As per the Program, the approved target indicators include: electric power losses in the process of transmission In terms of loss reduction, the effect from the and distribution over power grids; implementation of the Program for 2019 amounted to 315.3 million kWh of electric power against the target energy consumption for business needs; of 292.0 million kWh. The target for 2019 was executed availability of LED-based energy-saving lighting for 107.9%. devices; In order to reduce energy consumption for business reduction of electric power losses in the process of needs, the effect in physical terms for 2019 was transmission and distribution over power grids; 0.97 mln kWh against the target of 1.02 mln kWh reduction of energy consumption for business needs. (target achievement — 95.1%), the target on saving electric power for 2019 in monetary terms amounted to 3.88 million rubles, the actual for 2019 was 3,78 million rubles (target achievement — 97.4%).

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TARGET AND ACTUAL FOR 2019 Indicator Unit of measurement 2017 2018 2019

Indicator Unit of measurement 2017 2018 2019 Actual Actual Target Actual

Actual Actual Target Actual – by road vehicles thousand l 1,999.80 2,001.01 1,886.71 1,897.51

Electric power losses mln kWh 7,431.65 7,439.52 7,315.00 7,036.51 thousand toe 2.26 2.27 2.14 2.15

mln rub., excluding VAT 17,889.93 18,274.23 19,859.19 18,692.95 mln rub., excluding VAT 60.34 65.40 65.83 67.33

% of output to the grid 8.24 8.10 7.85 7.67 thousand l/100 km 0.02 0.02 0.02 0.02

Substations demand mln kWh 134.80 113.33 124.88 122.87 – by special-purpose vehicles thousand l 2,765.36 2,775.08 2,605.38 2,619.12

% of electric power 1.81 1.52 1.71 1.76 thousand toe 3.13 3.14 2.95 2.97 losses mln rub., excluding VAT 83.59 90.76 91.05 93.09 Energy consumption for business needs mln rub., excluding VAT 323.05 359.71 383.17 391.16 of administrative and production buildings, thousand l/100 km 0.03 0.03 0.02 0.02 total, including: thousand toe 15.09 14.70 15.89 14.41 thousand l/vehicle hour 0.03 0.04 0.03 0.03 electricity mln kWh 58.73 56.69 62.78 60.02 diesel fuel, including: thousand l 7,129.34 7,004.08 7,333.84 7,832.27 thousand toe 7.05 6.80 7.53 7.20 thousand toe 8.79 8.63 9.04 9.65 mln rub., excluding VAT 234.18 270.77 288.14 308.36 mln rub., excluding VAT 220.75 248.75 274.58 300.33 mln kWh/m2 0.00011 0.00011 0.00012 0.00011

heat energy Gcal 54,634.53 53,715.23 57,082.81 49,004.69 thousand l/100 km 0.03 0.03 0.03 0.03 (heating systems in buildings) thousand toe 7.81 7.68 8.16 7.00 – by road vehicles thousand l 2,924.37 2,872.46 3,010.32 3,217.56

mln rub., excluding VAT 87.84 87.86 94.07 81.78 thousand toe 3.60 3.54 3.71 3.97

Gcal/m3 0.04 0.04 0.04 0.03 mln rub., excluding VAT 90.47 102.12 112.70 123.32

natural gas thousand m3 199.05 191.33 173.76 180.41 thousand l/100 km 0.03 0.03 0.02 0.03 (including liquefied) thousand toe 0.23 0.22 0.20 0.21 – by special-purpose vehicles thousand l 4 204.97 4 131.63 4 323.52 4 614.71

mln rub., excluding VAT 1.03 1.08 0.97 1.01 thousand toe 5.18 5.09 5.33 5.69

Natural resources consumption for business mln rub., excluding VAT 10.38 11.55 13.73 13.44 mln rub., excluding VAT 130.28 146.64 161.88 177.01 needs of administrative and production 3 buildings, total, including: thousand m 233.21 253.98 256.78 245.22 thousand l/100 km 0.03 0.03 0.03 0.03

hot water supply thousand m3 8.69 10.80 13.28 12.88 thousand l/vehicle hour 0.02 0.02 0.02 0.02

mln rub., excluding VAT 0.85 0.96 1.63 1.60 Availability of LED-based energy-saving lighting % 12.7 26.5 53.8 54.1 devices for business needs cold water supply thousand m3 227.21 243.19 243.50 235.17 Number of lighting devices used ea. 6,244 10,615 22,717 22,863 mln rub., excluding VAT 9.53 10.59 12.11 11.84

Consumption of motor fuel by road thousand l 11,894.50 11,780.18 11,825.93 12,348.91 and special-purpose vehicles, including: The Company did not use other types of energy resources in the reporting year. thousand toe 14.18 14.04 14.13 14.77

mln rub., excluding VAT 364.68 404.91 431.46 460.75 In terms of measures for the water consumption reduction, The effect from the Program implementation totaled 3 gasoline, including: thousand l 4 765.16 4 776.09 4 492.09 4 516.63 the target result in 2019 was 5.89 thousand m , and the 827.1 million rub. in value terms against the planned actual number for 2019 was 5.87 thousand m3 (99.6% 790.6 million rub. The target for 2019 was executed thousand toe 5.40 5.41 5.09 5.11 compliance with the plan). The 2019 water saving plan by 104.6%. was 0.307 million rub. in monetary terms, and the mln rub., excluding VAT 143.93 156.15 156.88 160.42 actual number for 2019 was 0.314 million rub. (102.3% Actual expenditures incurred in relation to the target thousand l/100 km 0.02 0.02 0.02 0.02 compliance with the plan). activities of the Program amounted to 37.38 million rub. for 2019, VAT excluded.

118 119 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

Measures to Reduce Electric Power Losses

A range of actions are taken as PJSC MOESK top-priority goal to reduce power losses which come as organizational, technical measures and measures to improve the electric power metering systems. Due to the range of measures on loss reduction in 2019, energy savings amounted to 315.3 million kWh (839 million rub.). OCCUPATIONAL

Comment by Deputy Director General for Electric Power Transmission and Metering HEALTH AND SAFETY A. V. Petukhov

The Company complied with the plan to reduce the with remote data collection at 3,981 technical recording 3.6 electricity losses for 2019. In the end of 2019, electricity points on TC/DTC and at 827 points on TC/DTC of Moscow losses fell by 0.43 p.p. against 2018 (from 8.10% to 7.67% Region and New Moscow which is an important measure of the output to the grid). for the balance sheets formation with regard to TC and the feeders supplying power to legal entities. In addition, The electricity losses were mainly reduced through the works on reconstruction of 199 data measurement organizational measures. The Company was actively systems of energy metering were completed at 11 power The Company seeks to prioritize sustaining life and Site-Wise Plan of Action to prevent cases of electric validating meters to identify cases of non-metered supply centers with installation of data acquisition and health of its employees above production performance. injuries among minor third parties at 0.4/6–20 kV consumption (embezzlement). transmission devices with the further data transmission Principal obligations of the Company's senior managers distribution grid facilities until 2020; to the data processing system computing devices of are formalized in the Policy of Rosseti Group in the area Target Program for Road Safety of PJSC MOESK for In 2019, metering devices for consumers were installed at PJSC MOESK. of labor protection. PJSC MOESK gives due consideration 2018–2019. 71,894 metering points — legal entities and individuals — to the occupational health and safety issues, and is fully in Moscow Region and New Moscow at the ownership As a result of events focused on power loss reduction, the compliant with legal requirements in the field of labor The aforementioned program events planned for 2019 demarcation points, 35,725 certificates of metering cases of non-metered and non-contracted consumption of protection. have been implemented in full. device clearance at ownership demarcation points power were revealed. 152.4 million kWh were supplied for were filed with consumers in Moscow Region and New 2019 as part of the non-metered consumption of power. The Company developed and put into effect certain long- Moscow. As part of measures intended for the electricity Non-metered consumption revealing directly affects the term targeted programs of measures aimed at preventing metering systems enhancement, certain measures reduction of electrical power losses. As for non-contracted workplace injuries and injuries of external persons at the were implemented including installation of technical/ consumption for 2019, 162.2 million kWh were paid as per Company's facilities: COST DYNAMICS FOR OCCUPATIONAL HEALTH control metering devices at TC with the automated data 465 certificates. Documentation of non-contracted power Integrated Program on Accident Risk Mitigation among MEASURES, MLN RUB. VAT EXCLUDED collection. They include installation of data collection consumption facilitates elimination of further electric PJSC MOESK Employees for 2018–2020; and transmission devices on the TC inputs and outgoing power embezzlement and reimbursing for any expenses on Integrated program on injury risk reduction in third circuits and transmission of information to the data purchasing power to compensate for the losses, but does 2019 429.1 processing system computing devices of PJSC MOESK. not reduce the actual amount of losses for the period under parties at the facilities of the PJSC MOESK electric grid complex for 2018–2020; Thus, in Moscow 0.4 kV metering devices were installed review. 2018 419.7

2017 468.7 300

COST DYNAMICS FOR OCCUPATIONAL HEALTH PER ONE WORKER

Category 2017 2018 2019 Increase in 2019, %

Costs per employee, rub., VAT excl. (total), incl.: 32,103 28,828 30,215 4.8

providing personal protective equipment (PPE) to workers 20,830 18,299 17,949 -1.9

other occupational safety measures 11,273 10,529 12,266 16.5

120 121 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

STRUCTURE OF COSTS FOR OCCUPATIONAL HEALTH MEASURES IN 2019, % Dynamics of the Industrial Injuries Indicators Within the framework of the Kind 4.4 In 2019, there were 2 fatal industrial accidents at 7.1 PJSC MOESK branches — Southern Electric Grids and Electricity to Children initiative and Moscow Cable Grids. In total, 2 people were affected resulting from the industrial accidents. in cooperation with the education Providing personal protective equipment (PPE) to workers The general analysis of injuries across PJSC MOESK allows Prevention of occupational diseases sector authorities, 115 lessons for the conclusion that the industrial injury rate registered General improvement of labor conditions for 2019 did not change against 2018. on electrical safety in educational 29.1 Accident prevention No occupational diseases were registered at PJSC MOESK institutions were taught, with in 2019. the participation of more than 59.4 2,150 children.

MEASURES TO PREVENT INJURIES TO EXTERNAL PERSONS

OCCUPATIONAL INJURIES Objective Measures

Category 2017 2018 2019 Increase in Prevention of electric injuries to kids PJSC MOESK initiative for preventing electric injuries to kids Kind Electricity to Children was 2019, % approved by Moscow Mayor S. S. Sobyanin and Moscow Region Governor A. Yu. Vorobyev. Management bodies of the education sector from the Moscow and Moscow region are involved Accidents, cases (total), including for reasons of: 4 2 2 0 in the organization and conduction of lessons and seminars for teachers in the field of electrical safety, and for the actual teaching of the lessons, PJSC MOESK's Youth Council representatives By type: are involved. Labor protection divisions personnel of the Company and the Youth Council branches held lessons on electrical safety for underage pupils from social institutions traffic accident 1 2 1 -50 (orphanages, boarding schools, shelters, etc.), general education and preschool institutions. Also, within the framework of the Kind Electricity to Children initiative, tours, open doors days, and infotainment classes were organized. electrical injury 1 0 0 0 Within the framework of the Kind Electricity to Children initiative and in cooperation with the education sector authorities, 115 lessons on electrical safety in educational institutions were exposure to high temperature environments 1 0 0 0 taught, with the participation of more than 2,150 children

fall from height 0 0 0 0 – The methodical film More Than A Lesson about teaching a lesson was prepared for the project of the Moscow Department of Education. falling objects 1 0 1 100 – For the first time, PJSC MOESK offered a show on children's electrical safety. The film was posted on the PJSC MOESK social accounts and on the Fiksiki brand's YouTube channel other 0 0 0 0 Helper (Pomogator). The film has gathered 30 thousand views. A letter of gratitude regarding the initiative was received from the Zelenograd Prefect. By severity: – Handouts were made and distributed at schools and kindergartens warning about the need to comply with electrical safety rules. fatal injury 2 1 2 100 – An animated film about the dangers of unauthorized work in ETL restricted areas was also severe or mild injury 2 1 0 0 produced and publicized through the PJSC MOESK social accounts. – Clips about the dangers of stealing from power equipment, fishing in the ETL restricted area and taking selfies at power facilities were produced; these clips were posted in the PJSC MOESK social accounts and broadcast on TV channel “360”. GENERAL AND FATAL INJURY RATE – All printed products that teachers and parents shall use for their lessons (posters, lesson schedules, coloring books, etc.) are available for download on the Company's website in the Kind Electricity to Children section. Category 2017 2018 2019 Increase in – The lesson and home conversation on electrical safety, which can save the life and health of 2019, % teenagers, can be conducted independently, using the visual propaganda materials available at the PJSC MOESK website. General Injury Rate 0.27 0.14 0.14 0.0

Fatal Injury Rate 0.14 0.07 0.14 100.0

122 123 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

Objective Measures Comment by First Deputy Director General — Chief Engineer Preventing injuries to external persons – Information booklets (reminders) about the danger of fishing nearby electrical transmission D. B. Gvozdev lines, including electrical safety rules that are common among fisheries and specialized fishing tackle stores. – Information sheets are made and distributed among residents of private households In 2019, PJSC MOESK implemented an action plan aimed Priority areas for achieving this objective are: (consumers), indicating the lethal danger of unauthorized connections to power grids, the at preventing industrial injuries, protecting the health and accident prevention measures; procedure for safe connection of consumer power plants, and the danger of approaching working ability of the personnel, improving the production electrical installations and of unauthorized operations within restricted areas of elevated and labor discipline, and enhancing the occupational safety development and implementation of management electrical transmission lines. and health activity. Key aspects of the work carried out and production solutions based on professional risk assessments; – A video about the dangers of fishing in the ETL restricted area has been produced; videos and were the implementation of the Integrated Program for audio clips are broadcast on social networks and mass media. Reducing the PJSC MOESK Personnel Risks of Injuries for systematic improvement of the employees' level the 2018-2020 period (approved through the PJSC MOESK – Planned and unscheduled visits and inspections of 0.4-10 kV overhead power lines and of knowledge and responsibility in the area of 6-10/0.4 kV transforming substations are carried out; grounding devices and electrical Order № 626 of June 4, 2018) and the development of occupational health and safety; installations are checked. practical skills at training grounds, as well as regular revisions of the workplaces. creating conditions and allocating required resources for the implementation of occupational health and Prevention of unauthorized access to – Perimeter fences of Company's branch facilities offices are reconstructed in accordance with safety measures; power facilities approved plans. The year 2020 is meant for the introduction of new principles to the effective labor protection management – Company’s branch facilities offices are equipped with CCTV and alarm systems. providing employees with high-quality protection system, and the implementation of the concept of “zero means; injuries” or Vision Zero. Prevention of injuries to contracting – Compliance with the requirements of the Regulations for the Admission of Organizations internal audits and monitoring of occupational health entities' employees Personnel to Perform Works at the Company's Facilities, ratified by PJSC MOESK on 03.29.2016 and safety conditions; through order № 379 “About the coming into effect of the new version of the Regulations for Objective: Eliminating workplace accidents by avoiding and the Admission of Organizations Personnel to Perform Works at the PJSC MOESK Facilities”, and preventing them. The Company's main values are the life involvement of the Company's entire personnel № 1414 of 12.19.2019, “On the approval of model forms of work contracts and deliveries, new and health of its personnel. in the occupational health and safety measures edition”. implementation. – Injury-themed photographs are part of PJSC MOESK contractor briefings.

Medical Examination of Workers with 122 medical offices for that purpose. A quality control system of these daily medical examinations According to the requirement of Article 213 of the Labor of workers has been developed and implemented. Code of the Russian Federation, and based on the results of the 2019 special working conditions assessment, In 2019, costs of pre-shift, pre-trip, post-shift and periodic medical examinations of 6,519 employees of the post-trip medical examinations at PJSC MOESK amounted Company engaged in harmful and dangerous working to 95.78 million rubles. conditions as well as in the driving of transport vehicles are carried out. 2,642 persons received preliminary PJSC MOESK organizes rehabilitation and prevention medical examinations upon admission to employment. measures aimed at preserving the health of the Company's employees. Total expenses on preliminary and periodic medical examinations in 2019 amounted to 14.55 million rubles. The 100% of the Company's employees subject to preliminary, periodic and daily medical examinations The Company organized the daily medical examination by law underwent medical examinations. of 7,423 people (pre-shift, pre-trip, post-shift, post-trip),

124 125 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

Personnel Headcount and Structure The Company's personnel structure by category has not changed in recent years. The average number of PJSC MOESK personnel in 2019 was 14,377, which is 1.2% lower year-over-year. STAFF STRUCTURE BY CATEGORY, % PERSONNEL HEADCOUNT OF PJSC MOESK EMPLOYEES, 18 AND SOCIAL PEOPLE

RESPONSIBILITY 2019 14,377 3.7 2018 14,550 2017 14,547 46

Changes in the headcount are due to measures to 36 improve the organizational and functional structure 3.7.1. HR POLICY of PJSC MOESK in order to increase the efficiency of production activities, to obtain economically justified tariff and balance solutions, to control the implementation of the investment program. Managers Specialists and officers Comment by Deputy Director General for HR Management and Administration Workers B. A. Rybin AVERAGE HEADCOUNT, % The key objective of PJSC MOESK HR Policy is to The number of appointments to positions in the provide the Company with highly qualified personnel “manager” category from internal candidates, STAFF BREAKDOWN BY AGE, % to perform its short-term and long-term (prospective) including employees in the personnel pool, was 74% 8 11 tasks. in 2019. 10 3.7 65.4 22.5 8.4 This goal is achieved by implementing measures in the A significant result of the work carried out by the Company 2019 following areas: in terms of personnel motivation was to keep the average 13 4.0 65.5 22.7 7.8 staffing and personnel development; salary of employees at a competitive level, which allowed 2018 to retain experienced, qualified specialists, whose work personnel performance management (staff provides high-quality and reliable electric power supply to 4.3 65.2 23.5 7.0 2017 motivation); consumers in Moscow and Moscow Region. social benefits and guarantees; Under 25 years Efforts to create comfortable working conditions and 25–50 years ensuring the safety of personnel and work culture. increase personnel involvement are reflected in the 12 low rate of active staff turnover. In 2019, this figure 50 years — retirement age In 2019, in order to select persons with deep was only 6%. 29 Working pensioners knowledge, skills and ability to professionally perform their duties, a mechanism for holding personnel It should also be noted that in 2019 the Personnel Relations 12 commissions and competitions to fill vacancies in the Unit initiated a project to optimize the Company's business 2 3 The condition of the Company's human resources is “manager” category was successfully implemented. processes and build an optimal management model for quite stable: the average age of employees over the last Over the past few years, special attention has been PJSC MOESK as a modern power grid company. This Executive bodies three years remains at 42 years, and the share of young paid to the selection of candidates for the positions project will be continued in 2020 and result not only in Branch office Moscow High-Voltage Grids specialists under 35 years of age was 32%. of managers and chief engineers of the branches and improved transparency and efficiency of the management Branch office Moscow Cable Grids production units. The Company's personnel pool has system in the Company, but also in higher productivity Branch office New Moscow been formed. indicators. Branch office Energouchet Branch office Eastern Electric Grids Branch office Western Electric Grids Branch office Northern Electric Grids Branch office Southern Electric Grids

126 127 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

STAFFING LEVEL INFORMATION ON STAFF TRAINING, RETRAINING AND PROFESSIONAL DEVELOPMENT

Category 2017 2018 2019 Increase Category 2017 2018 2019 Increase in in 2019, p.p. 2019, %

Production staffing, % 97.1 97.2 97.1 -0.1 p.p. Number of employees who have received training, people (total), including: 9,549 11 ,152 11,827 6.1

management 2,648 3,315 3,680 11.0

ACTIVE STAFF TURNOVER workers 4,195 5,207 5,979 14.8

professionals and office workers 2,706 2,630 2,168 -17.6 Category 2017 2018 2019 Increase in 2019, p.p. Number of employees who have received training, people (total), 9,549 11,152 11,827 6.1 including: Active staff turnover, % 5.3 5.7 6.1 0.4 p.p. number of employees trained at in-house training centers 3,070 4,124 4,493 9.0

Over the past three years, the level of production staffing Ratio of training expenses to payroll fund, % 0.5 0.5 0.7 40.0 across the Company as a whole has been consistently The staff is characterized by high: as of the end of 2019, the figure stood at 97.1%, Total number of training hours 304,321 355,408 376,920 6.1 which corresponds. a fairly high level of qualification of employees — about 83% Average hours of training per employee 30.5 35.6 37.8 6.2 of employees have a professional STAFF BREAKDOWN BY EDUCATIONAL BACKGROUND, % Participation in Competitions by WorldSkills Personnel Pool education and degree Method The Executive Office and branches of PJSC MOESK 32 employees. In 2016, Rosseti Group joined the WorldSkills movement continually form and develop the Company's 17.1 29.9 53.0 in the official status of an associate partner of the Union managerial and youth personnel pools. 2019 “Agency of Development of Professional Communities and 17.6 30.2 52.2 Skilled Workers”, and now open corporate championships The main objectives of forming the Company's 2018 of professional excellence by WorldSkills standards personnel pool: 18.4 30.0 51.6 The analysis of the Company's personnel composition by support the popularization and increase the prestige of reduction in the time and cost of filling key vacant 2017 educational background over the last three years allows working professions among the youth of the country. posts through internally trained candidates; us to draw a conclusion about the stable dynamics Primary/secondary general in reducing the share of people without professional In 2019, the Open Corporate Championship of Professional retention of key employees — the best specialists, providing them with opportunities for career growth; Secondary professional education: from 18.4% in 2017 to 17.1% in 2019. Skills of Rosseti Group “Young Professionals” by the method of WorldSkills was held at several venues: Higher professional improvement of the level of development of July 19 through 26 — competence “Operation of professional and managerial competencies of Electrical Transmission Lines” in JSC Lenenergo, on-the-job employees; settlement Tervolovo, Gatchina Municipal District, Staff Training and Development — Personnel pool maintaining continuity of production technologies and Leningrad Region; corporate culture; July 29 through August 2 — competence Personnel training is one of the priority areas of the Training of personnel both in external educational a rejuvenation course, a smooth change of Company's HR and Social Policy and is regulated by organizations and in the Company's Training “Maintenance and repair of relay protection and generations; the HR Management Rules at Power Enterprises, the Center is conducted in accordance with approved automation” in JSC IDGC of Ural, Ekaterinburg; requirements of Rostekhnadzor, and the Regulations on professional standards. As part of the program increasing the level of motivation and loyalty of September 9 through 13 — competence “Smart employees; Employee Training in the Company. Digital Transformation of PJSC MOESK 2019–2023, system of electric power accounting” in PJSC IDGC of the Company provides training on programs aimed South, Rostov-on-Don. rotation of personnel between branches. In the reporting year, the percentage of employees who at developing digital and project management participated in off-the-job training activities amounted competencies. to 82% (11,827 persons) of the average headcount, In 2019, the specialized units together with the which is 11 p.p. (675 persons) more compared to 2018. Training Center organized training of internal teachers The largest percentage among the trained staff pertains and employees of the Company: 191 key users and to production personnel: 93% (10,968 persons). 6,949 users.

128 129 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

Personnel Pool is Formed for the Following Out of 353 appointments to senior positions at the of the established values of parameters of bonuses. As part of the targeted training of PJSC MOESK personnel, Positions: branch offices and the Executive Office of the Company Motivation of all categories of the Company's employees cooperation agreements were established with six colleges in 2019, 262 positions (74%) were staffed with internal is carried out in accordance with the approved structure in the city of Moscow and Moscow Region, which provide senior managers; candidates, among them 219 were employees (62%) from of key performance indicators (KPI) depending on the training in the professions most in demand in the electric middle management (from the level of department the managerial and youth personnel pools. At the end of achievement of the approved KPI target values, which are grid complex. In 2019, 570 students were enrolled in head); the period under review, the managerial personnel pool set taking into account the functional area of activity. In secondary vocational training programs, 49 of which managers and chief engineers of the branch, PGR; ensured provision of employees for the management order to develop non-tariff lines of business, which are received and continue to receive a supporting scholarship positions at 70%. an additional source of income growth for the Company's (under employer-sponsored education contracts). operational managers. employees, PJSC MOESK has developed and applies 161 students undertook internships at the Company’s special bonus systems. branch offices. Remuneration System The main criteria for including employees in the personnel According to the 2019 working results, the average wage As of December 31, 2019, the Company had pool are as follows: high professional qualification; Remuneration system at PJSC MOESK is arranged in growth for all the Company's employees compared to 4,661 employees under the age of 35, which represents performance in production activities; practical experience compliance with the uniform principles applied in integrated 2018 was 4.9%. 32% of all PJSC MOESK employees. in the relevant field; availability of personal and business power grid companies and developed with regard to potential necessary for professional development and provisions of the Industry Sectoral Tariff Agreement in the For the professional adaptation and social support of career growth. The youth personnel pool is formed at Electric Power Industry, as well as the “Recommendations Company’s Youth Policy former university and college graduates, mentors are the level of branches and the Company as a whole from on the Uniform Remuneration at Tariff Rates (Salaries) for assigned, targeted training programs are implemented, among highly qualified young specialists not older than Power Engineers”, approved by the RaEl Association and the Systematic work with young people is carried out in three these young people get involved in corporate projects and 35 years. All-Russian Electrical Trades Union. key areas: early vocational orientation of schoolchildren; participate in international, sectoral and regional youth practice-oriented training of university and college forums. In 2019, the Company carried out work on updating and The remuneration system provides for the establishment students; and adaptation and development of young additional staffing of its personnel pool: of both a fixed part of wages (salary/tariff rate, additional professional employees of the Company. Each PJSC MOESK branch and Executive Office has Young in order to identify high potential employees payments and allowances) and a variable part — bonuses. Workers Councils. Since April 2012, the Company has a (to be included in the personnel pool), periodic The main element of the wage system is the wage grid, a set In order to attract the attention of schoolchildren towards United Youth Council, which is guided by the PJSC MOESK psychophysiological examinations were carried out: of wage steps and corresponding wage coefficients, which engineering professions, a cooperation agreement with Regulations on the United Youth Council. planned and unplanned — 1,552 people in 2019; allows for a differentiated approach based on professional the Moscow State Budgetary Educational Institution School knowledge, work experience, etc. No. 498 was signed. Under the agreement, a technical Since 2015, PJSC MOESK has operated the Vozrozhdenie management competencies of employees were orientation Engineering Class for 7–11 grade students was (Resurgence) search team, the main staff of which consists assessed — 140 employees in 2019; Employees are assigned to wage levels in accordance with set up at the school. of employees of the Company's branch Moscow Cable in order to determine the level of development of the Classifier of Occupations of Workers and Positions of Grids. Each year, the team participates in more than twenty professionally important qualities of a candidate, Managers, Specialists and Employees of PJSC MOESK. PJSC MOESK took part in the All-Russian Olympiad for expeditions to combat sites of the Great Patriotic War including managerial competencies, motivation and schoolchildren of Rosseti Group, with the goal of identifying of 1941–1945, as well as in trips to restore and repair potential for development in the branches and the In PJSC MOESK two forms of remuneration are used: and developing gifted children with talent for technical monuments to fallen heroes. Executive Office of the Company, commissions for time-bonus; creativity and innovative thinking, as well as motivating formation of the personnel pool were held. schoolchildren to course energy programs at educational The search team actively cooperates with the United piece-work bonus (collective — for electricians who institutions. 398 schoolchildren from 9 and 10 grades from Youth Council and the Coordination Council of War and At the end of 2019, an updated composition of the repair and install cable lines, as well as for mobile Moscow and Moscow Region participated in the Olympiad. Labor Veterans, arranges young people meetings with Company's personnel pool was approved, including teams). veterans of the Great Patriotic War and presentations for 1,016 best and most promising employees. The “Travelling School for Young Power Engineers” in the PJSC MOESK workers' children. The commander of the A wide range of additional payments and increments Moscow and Moscow Region started operating in 2018, Veselov Dmitry team was awarded the medal “For Special In the course of the reporting year, members of the have been approved under the current Regulations on after the signing of the Cooperation Agreement between Merit in Preservation of the Military History of Russia”. youth talent pool represented the Company at industry Remuneration and Motivation of Employees: the Leading Moscow Energy Research Institute and events: the International Forum of Young Power Engineers additional compensation related to the work regime and PJSC MOESK on the basis of 5 schools. In 2019, more than In accordance with the PJSC MOESK United Young Workers and Industrialists “Overdrive 2019”, Youth Day at the working conditions; 70 field lessons were held, with over 1,500 pupils taking Council's main action plan, in 2019 various massive cultural, International Forum “Russian Energy Week”. part. open, fitness, health and sports activities events were held. incentive bonuses related to the employee's personal In 2019, the PJSC MOESK youth took part in 9 youth forums In order to improve the level of training of the performance. In 2019, more than 2,000 people took part in the “Kind and festivals. Company's engineering staff, 67 employees holding Electricity” project for schoolchildren. The main objectives positions of “Head of PGR” took part in the first All- The result-based payment principle is implemented of cooperation with secondary professional and higher Russian Contest “Leaders of Energy”. The competition through a bonus system that takes into account the education organizations are practical training of young is organized by Rosseti Group with the support of the personal contribution and performance of each employee professionals and their orientation towards working in Autonomous Nonprofit Organization “Russia, the country in achieving the set goals and objectives. For the purpose the Company. The Moscow Energy Research Institute is of opportunities” on the basis of the methodology and of material interest of employees in achievement the Company's key partner for training highly qualified standards of the All-Russian Competition of Managers of results, increase of efficiency of production and personnel. “Leaders of Russia”. 20 participants representing quality of work the Company developed the system of PJSC MOESK reached the final of the contest, material encouragement which includes bonuses for 7 employees of the Company were among the 100 best. a month, quarter, year and depends on achievement

130 131 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

3.7.2. SOCIAL RESPONSIBILITY Insurance Protection Programs

Voluntary health insurance of personnel in 2019 was Company's personnel are insured against accidents and arranged under an established contract with JSC SOGAZ. diseases for 24 hours a day (more detailed information Voluntary health insurance programs provide all insured is provided in section 3.2. “Goal 3: Good Health and employees of the Company with timely and high-quality Wellbeing”). medical, therapeutic and preventive care. All of the

Health Resort Treatment for Employees and Disadvantaged Groups, Recreational Vacations for Children

In 2019, health resort treatment for employees and to the Instructions for the Procedure of Acquisition and disadvantaged groups, and recreational vacations for Provision of Permits for the Rehabilitation of PJSC MOESK children of the Company's workers were organized according Employees Children, Employees and Disadvantaged Groups.

Rewards Policy

Type of award Quantity, prs.

Russian Federation state award 1

Commonwealth of Independent States Electric Power Council Award 1

Awards of the Government of Moscow and Moscow Region 114

Industry awards of the Association “ERA of Energy” 103

Comment by Deputy Director General for HR Management and Administration Awards of the Ministry of Energy of the Russian Federation 74 B. A. Rybin

lump sum payment (to the employee at the PJSC Rosseti Awards 122 All tasks planned for 2019 in terms of social policy termination of the employment contract after were accomplished. The Social Policy is aimed at the establishment of a retirement pension, for PJSC MOESK Awards 1,435 ensuring the Company's competitiveness in the labor maintaining children of workers in preschool market, at retaining high-skilled employees by means of institutions, monthly food subsidy for the sum Total: 1,850 additional social security measures, at attracting young 2,000 rubles for workers, masters and senior specialists including power-engineering graduates, at the masters of the Company's branches, benefits and rejuvenation of our personnel, at maintaining the social payments to non-working pensioners and veterans continuity of generations, at ensuring the social security of the Great Patriotic War, labor front, former Charity In 2019, more than 47 charitable long-term and priority of the Company's veterans, as well as at making the underage prisoners of Nazi concentration camps, projects took place within the Company. Key areas for profession more prestigious in general. veterans, participants of military activities for The PJSC MOESK charity program consists of the Energy charity support provision: Veterans Day, Victory Day, Energy Day, March 8th, for Children, Light Beam, Dual Education, Support for promotion of activities in the fields of education, The main document regulating social and labor relations February 23rd and anniversary dates); Sports Institutions, Support for Culture Institutions science, culture, art, enlightenment, and spiritual between PJSC MOESK and employees is the Collective and Religious Organizations, and Responsive Heart development of the individual; Agreement. The Collective Agreement was approved additional paid leave based on average earnings (volunteering) projects and is formed on the basis of in 2018 for a 3-year term. Under the 2018–2020 (on Knowledge Day, to the father at the birth of a long-term, priority and new social projects. in the field of physical culture and massive sports; PJSC MOESK Collective Agreement, employees are child, for the marriage of an employee, etc.); social support and citizen protection, including provided (upon request) the following payments and unpaid leave, in addition to the cases provided for Charity activities are part of the Company's corporate improvement of the financial situation of the poor, benefits: in the Labor Code of the Russian Federation (to the strategy; they help achieve constructive cooperation social rehabilitation of the unemployed, the disabled financial assistance (at the birth of a child, upon father at the birth of a child, for the marriage of with authorities and business circles, and position and others who, because of their physical or registration of marriage, when leaving the army, to a an employee, for the marriage of the employee's PJSC MOESK as a socially responsible company. intellectual characteristics or other circumstances, single parent on September 1, for a burial); children, death of the employee's spouse or family are unable to exercise their rights and legitimate interests on their own; monthly financial assistance (to a parent who is on members, etc.). parental leave until the child is a year and a half old, protection and proper maintenance of buildings, sites etc.); and territories of historical, religious, cultural, or environmental significance, as well as burial sites;

132 133 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

social rehabilitation of orphans, children without of the branches, and the Coordinating Veterans Council parental care, neglected children, children in difficult of the PJSC Rosseti Distribution Electric Grid Complex. life situation; Currently, PJSC MOESK has 5,180 veterans, 12 of prevention and protection of health, as well as which participated in the Great Patriotic War; 63 in promotion of a healthy lifestyle and improvement of the the labor front during the Second World War; 9 are moral and psychological condition of citizens. former underage prisoners of Nazi concentration The total amount of charity assistance provided summed camps, and 2 were residents in the Leningrad blockade. up 266.91 million rubles. The Company's Coordinating War and Labor Veterans Council works closely with the non-commercial In 2019, the Company organized and held more than partnership “Power Energy Veterans Council of 30 volunteer activities. the Ministry of Energy of the Russian Federation”.

The Company provides sponsorship to: Several major military-patriotic projects were joint stock company CSKA Professional Football implemented at the initiative and with the active Club for conducting football competitions (matches), participation of the PJSC MOESK Coordinating Veterans tournaments and other club events; Council. One of the most significant is the construction of the monument to the “Defenders of Moscow, engineering limited liability company Continental New Media in the specialist troops and Mosenergo” in the village of creation of television programs and original audiovisual Nefedyevo, Krasnogorsky District, which became part of works under the working title “Power Engineering”. the “Moscow Defense Line” complex memorial. In 2019, in preparation for the celebration of the 75th anniversary of the Victory in the Great Patriotic War of 1941–1945, Open Cultural Events search work was carried out, resulting in the names of more than 20 Mosenergo workers who took part in the In 2019, in accordance with the PJSC MOESK Open construction of the electric barriers. Every year on the Cultural Events Program, more than 100 events were eve of Victory Day, the PJSC MOESK Coordinating War held, in which more than 8,000 employees took part. and Labor Veterans Council celebrates Veteran's Day in Main cultural and mass events of 2019: intellectual all of the Company's branches. game “Maze of the Mind”, a set of events dedicated to the 74th anniversary of the Victory in the Great Patriotic The Company's Coordinating Veterans Council pays War of 1941–1945, the 78th anniversary of the beginning great attention to museum work. In the PJSC MOESK of the Second World War and the Battle for Moscow, the branches, 7 museums and 4 rooms of labor and military 14th anniversary of the Company, the Day of the Youth, glory were created and are operational, and a virtual the VIII Games of the PJSC MOESK Club of Cheerful museum is in place on the Company's website. and Resourceful Energy Workers with the theme “The whole world is theater, and people in it are fitters!”, the PJSC MOESK Day of the Youth, the Children's Drawing Sports, Fitness and Health Improvement Events Contest dedicated to Energy Day, and a holiday for the participants of this competition, the X PJSC MOESK Youth Physical culture and sports are the most important Forum. components of a healthy lifestyle; therefore, engaging employees and their family members in regular sports Children of the Company’s employees who won the activities while creating all necessary conditions is one of PJSC MOESK children’s drawing competition took the main tasks of the PJSC MOESK Social Policy. part in the contest “Rosseti: children draw!”, which is Non-state pension provision The NPP Regulations include two main pension plans: traditionally held on the PJSC Rosseti Company Day. Each year, an inclusive Sports Festival (Spartakiada) is Corporate (financing is provided from the Company’s held among teams belonging to branches, subsidiaries The non-state pension provision (NPP) is intended to funds) and Parity (financing is carried out jointly by and the Executive Office of the Company. Participants of ensure an adequate standard of living for the employees the employee and the Company). In accordance with Care for Veterans the Sports Festival compete in such sports as skiing, tug- of PJSC MOESK at their retirement age, to create the NPP Regulations, the source of NPP funds is the of-war, volleyball, track and field athletics (cross, sprint, conditions for efficient settlement of employment issues Company. The total amount of funds allocated to NPP is In accordance with the Regulations on the War and relay race), mini-football, chess, swimming, table tennis, related to intaking, retaining and motivating personnel calculated on the basis of the Regulations and approved Labor Veterans Council, councils of veterans are and basketball. for efficient working. by the Board of Directors as part of the Company's in place in all of the Company's branches and the business plan. Executive Office since 2008. The Company has also In 2019, more than 220 sports, health and massive sports established a Coordinating War and Labor Veterans events were held: internal branch-level Sports Festivals, Council, which, in organizational and methodological family sports holidays, Health Days, etc. The events were terms, closely interacts with the organizational attended by about 2,000 workers. The training process of structures for personnel management, the the Company's volleyball, table tennis, hockey, basketball Department of Public Relations, the veterans councils and football teams is also organized on a regular basis.

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136 137 3. Sustainable Development ANNUAL REPORT PJSC MOESK 2019

on the General Meeting of Shareholders and the Board JSC Expert RA with a level of A++.gq. “The highest level of of Directors and the Management Board, new edition. management quality.” Also, in order to increase the involvement of the Board of Directors in the process of developing unregulated types One of the most important events of 2019 for the of activities of the Company, the Annual General Meeting Company was the successful holding of its Extraordinary of Shareholders approved the Regulation on Payment of General Meeting of Shareholders on December 31, 2019, SYSTEM Remunerations and Compensations, new edition, a key on the issue of dividend payment based on the results of change of which was the determination of the source of the 9 months of 2019. OF CORPORATE remuneration of profit from unregulated activities. In 2020, the Company plans to continue working to These events allowed the Company to obtain the score maintain the quality of the corporate governance system GOVERNANCE of “Developed practice”, thanks to the results of the at the highest level, which includes launching projects to internal audit, and confidently confirm in 2019 the rating implement modern information solutions to the business 4.1 of corporate governance, assigned by the rating agency processes of the Company's corporate governance system.

Key aspects of the corporate governance at the highest level, which includes launching projects to system/model implement modern information solutions to the business processes of the Company's corporate governance system. Corporate governance is a comprehensive system of relationships between shareholders, the Board of Directors, PJSC MOESK constantly analyzes the best Russian and executive bodies of the Company and other parties international practices of corporate governance, and concerned, as well as a comprehensive suite of methods/ adheres to a policy of continuously improving its corporate principles of influence, which are intended to promote governance system and bringing it into line with the best the corporate interests and expressed in the corporate international standards. governance relations. In the year under review, the Company continued to bring The Company's corporate governance system is an efficient the current corporate governance standards and models and effective management tool which ensures its long-term at PJSC MOESK into compliance with the provisions of the and sustainable development, transparency and openness Russian Corporate Governance Code and the requirements of information, strengthening its reputation and enhancing of the Listing Rules. The Company's Charter was amended its investment appeal. Fundamental to the construction and to bring it into compliance with the current legislation of operation of the Company's corporate governance system the Russian Federation. The Regulations on the General is a focus on the principles formalized in the Company's Meeting of Shareholders, the Board of Directors and the Corporate Governance Code and on the satisfaction of the Management Board were also updated. interests of all corporate relations parties. In 2019, two members of the Board of Directors were One of the most important events of 2019 for the Company recognized as independent.1 Thus, the current corporate was the successful holding of its Extraordinary General governance system in the Company takes into account the Meeting of Shareholders on December 31, 2019, on the majority of the principles enshrined in the Code,2 which issue of dividend payment based on the results of the resulted in being rated as a “Developed Practice” by the 9 months of 2019. internal auditor.

Comment by Deputy Director General for Corporate Governance and Property In 2020, the Company plans to continue working to A. S. Starostin maintain the quality of the corporate governance system

The year 2019 showed that the Company's corporate Throughout the reporting year, work was carried out on an governance system is efficient and ensures that ongoing basis to bring internal documents of the Company the interests of all stakeholders are respected. The in line with the relevant legislation requirements The transparency of corporate governance and the openness of result of this work included the approval by the General its information continue to be of high importance. Meeting of Shareholders of the Charter, the Regulations 1 On August 30, 2019, the Board of Directors (minutes of No. 397 of September 2, 2019) recognized E. I. Logovinsky and S. A. Nikitin as independent directors. 2 A report on compliance with the principles and recommendations of the Corporate Governance Code is presented in the electronic annex in section 5.4.

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4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

CONTROLLING AND GOVERNING BODIES

Conclusion (report)

Elects Resolution General Meeting Conclusion (report) Auditing Commission of Shareholders (GMS) Resolution

Resolution Conclusion (report)

Directs Elects Recommendations resolutions

Advisory bodies of the Board Resolution Establishment, election of Directors Board of Directors (BD)

Elects 13 members Elects Recommendations, report

Reliability Committee Resolution 9 members

Report Recommendations, report Strategy Committee 11 members

Technological Connections Committee Organizes activities Management Board 8 members 12 members Director General Recommendations Audit Committee Resolution GMS for Subsidiaries 4 members and Affiliates Approves candidates Personnel and Remuneration Committee 5 members

Appoints Report

Branch Directors Subsidiaries

8 branches: 3 subsidiaries: WES, ZES, SES, YuES, MKS, Energotsentr (100%), RETO Plant (100%), Energouchet, New Moscow, MOESK-Engineering (100%) Moscow HV Cable Grids

140 141 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

Aleksey Viktorovich Nuzhdov Deputy Director General for Investments and Relations with Public Authorities of Closed Joint-Stock Company Leader (Pension Fund Assets Management Company)

Evgeny Aleksandrovich Olkhovich Deputy Director General for Strategic Development of PJSC Rosseti

Larisa Anatolyevna Romanovskaya Chief Advisor of PJSC Rosseti

Sergey Vladimirovich Sergeev Deputy Director General for Capital Construction of PJSC Rosseti

Olga Andreevna Sergeeva Member of the Management Board, Deputy Director General — Chief of Staff of PJSC Rosseti MANAGEMENT Petr Alekseevich Sinyutin Director General of PJSC MOESK BODIES 4.2 COMPOSITION OF THE BOARD OF DIRECTORS IN PLACE SINCE JUNE 14, 20191 PAVEL ANATOLYEVICH LIVINSKY (Chairman of the Board of Directors) Position: Director General of PJSC Rosseti, Chairman of the Management Board of PJSC Rosseti Year of birth: 1980 Education background: Lomonosov Moscow State University, major in Economics; 4.2.1. GENERAL MEETING OF SHAREHOLDERS Lomonosov Moscow State University, Master of Management First election to the Board of Directors: June 26, 2013 In 2019, the year under review, two General Meetings of Shareholders were held in the Company: one annual and one Number of elections: 8 extraordinary. The Annual General Meeting of Shareholders took place in the form of joint attendance on June 14, 2019, and Membership in a Board of Directors committee: – the Extraordinary General Meeting of Shareholders — in the form of absentee voting on December 31, 2019. Shares of the Company/subsidiaries and affiliates: 0/0

Information on the GMS resolutions is published on the Company's corporate website: Shareholders and Investors/ ANATOLY ANATOLYEVICH GAVRILENKO Corporate Governance/General Meeting of Shareholders/Solutions. Position: Director General of Closed Joint-Stock Company Leader (Pension Fund Assets Management Company) Year of birth: 1972 Education background: Lomonosov Moscow State University, major in Economic Cybernetics, qualified as Mathematical Economist; Lomonosov Moscow State University, major in Law, qualified 4.2.2. BOARD OF DIRECTORS as Lawyer First election to the Board of Directors: February 28, 2005 The Board of Directors is responsible for the general As per clause 16.1 of the Charter, the Board of Directors Number of elections: 18 governance of the Company except for matters that the comprises 13 members elected by the General Meeting of Membership in a Board of Directors committee: Personnel and Remuneration Committee Federal Law on Joint-Stock Companies and the Charter of Shareholders. In 2019, there were two compositions of the Shares of the Company/subsidiaries and affiliates: 0/0 PJSC MOESK entrust exclusively the General Meeting of Board of Directors. Shareholders with. PAVEL VLADIMIROVICH GREBTSOV Position: Deputy General Director for Economics and Finance of PJSC Rosseti Resolutions of the Board of Directors are published on the Company's corporate website: Shareholders and Investors/ Corporate Governance/Board of Directors/Solutions. Year of birth: 1976 Education background: Moscow State University of Commerce; Plekhanov Russian University of Economics Members of the Board of Directors as of June 7, 2018 through June 14, 20191 First election to the Board of Directors: June 14, 2019 Number of elections: 1 Pavel Anatolyevich Livinsky Director General, Chairman of the Management Board PJSC Rosseti Chairman of the Board of Directors Membership in a Board of Directors committee: Audit Committee Shares of the Company/subsidiaries and affiliates: 0/0 Anatoly Anatolyevich Gavrilenko Director General of Closed Joint-Stock Company Leader (Pension Fund Assets Management Company) Gasan Gizbullagovich Gasangadzhiev Head of Housing and Utilities Moscow Department ANDREY YURYEVICH KORMILITSIN Position: Vice President — Head of Direct Investments Department of GPB Bank (JSC) Sergey Valentinovich Grischenko Deputy Head of Direct Investments Department of GPB Bank (JSC) Year of birth: 1977 Yury Vladimirovich Goncharov Deputy Director General for Corporate Governance of PJSC Rosseti Education background: Institute for Research of International Economic Relations of the Financial University under the Government of the Russian Federation Evgeny Ilyich Logovinsky Vice President — Financial Director of Non-Governmental Pension Fund GAZFOND First election to the Board of Directors: June 14, 2019 Sergey Aleksandrovich Nikitin Deputy Director General — Head of Corporate Control Division of Closed Joint-Stock Company Leader Number of elections: 1 (Pension Fund Assets Management Company) Membership in a Board of Directors committee: Personnel and Remuneration Committee Shares of the Company/subsidiaries and affiliates: 0/0 1 Positions as of the date of nomination. 1 Positions as of the date of nomination.

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EVGENY ILYICH LOGOVINSKY SERGEY VLADIMIROVICH SERGEEV (Independent Director) Position: Deputy Director General for Capital Construction of PJSC Rosseti Position: Vice President — Financial Director of Non-Governmental Pension Fund GAZFOND Year of birth: 1976 Year of birth: 1972 Education background: Novocherkassk State Technical University, major in Industrial and Education background: S. Ordzhonikidze State Academy of Management, qualified as Economic Civil Construction; Advanced Training Institute for Senior Officials and Specialists of Fuel and Analyst of Mathematical and Computer Management. Ph.D. in Economics; Manchester Business Energy Complex, qualification upgrade; Inter-Sectoral Regional Center for Advanced Training and School (U.K.). МВА in Banking and Finance Personnel Development of Irkutsk State Technical University, advanced training division of the First election to the Board of Directors: June 6, 2016 higher education institution; Academy of National Economy under the Government of the Russian Federation, major in Economics, Management, Finance and Legal Fundamentals of Joint-Stock Number of elections: 4 Companies, professional development Audit Committee Membership in a Board of Directors committee: First election to the Board of Directors: June 7, 2018 0/0 Shares of the Company/subsidiaries and affiliates: Number of elections: 1 ANDREY VLADIMIROVICH MAYOROV Membership in a Board of Directors committee: Audit Committee Shares of the Company/subsidiaries and affiliates: 0/0 Position: Deputy General Director — Chief Engineer of PJSC Rosseti Year of birth: 1967 Education background: Moscow Power Engineering Institute (Technical University); OLGA ANDREEVNA SERGEEVA State University of Management; National Research Moscow State University; JSC Scientific and Technical Position: Member of the Management Board, Deputy Director General — Chief of Staff of PJSC Center of FGC UES, Ph.D. in Technical Sciences Rosseti First election to the Board of Directors: June 14, 2019 Year of birth: 1984 Number of elections: 1 Education background: Plekhanov Russian University of Economics, major in Economics and Company Management. Construction Membership in a Board of Directors committee: Personnel and Remuneration Committee, First election to the Board of Directors: June 7, 2018 Reliability Committee 1 Shares of the Company/subsidiaries and affiliates: 0/0 Number of elections: Membership in a Board of Directors committee: Personnel and Remuneration Committee SERGEY ALEKSANDROVICH NIKITIN Shares of the Company/subsidiaries and affiliates: 0/0 (Independent Director) Position: Deputy Director General – Head of Corporate Control Division of Closed Joint-Stock PETR ALEKSEEVICH SINYUTIN Company Leader (Pension Fund Assets Management Company) Position: Director General of PJSC MOESK Year of birth: 1968 Year of birth: 1962 Education background: BMSTU, major in Radio-Electronic Equipment Engineering and Education background: Chelyabinsk Polytechnic Institute, major in Electrical Engineer; Russian Manufacturing, State University — Higher School of Economics, major in Finance and Credit Academy of State Service at the President of RF, major in State and Municipal Management First election to the Board of Directors: June 26, 2013 First election to the Board of Directors: June 26, 2013 Number of elections: 7 Number of elections: 7 Membership in a Board of Directors committee: Audit Committee, Strategy Committee Membership in a Board of Directors committee: Strategy Committee Shares of the Company/subsidiaries and affiliates: 0/0 Shares of the Company/subsidiaries and affiliates: 0/0 ALEKSEY VIKTOROVICH NUZHDOV Position: Deputy Director General for Investments and Relations with Public Authorities of Closed ALEKSANDR ANDREEVICH SOLOVYOV Joint-Stock Company Leader (Pension Fund Assets Management Company) Position: Head of Moscow Housing and Utilities Department Year of birth: 1968 Year of birth: 1984 Education background: Saratov Higher Military Command School of the MVD Interior Troops Education background: Moscow Automobile and Road Construction State Technical University, named after F. E. Dzerzhinsky major in Economics and Management in Enterprise (in Construction) First election to the Board of Directors: June 30, 2010 First election to the Board of Directors: June 14, 2019 Number of elections: 12 Number of elections: 1 Membership in a Board of Directors committee: Strategy Committee Membership in a Board of Directors committee: – Shares of the Company/subsidiaries and affiliates: 0/0 Shares of the Company/subsidiaries and affiliates: 0/0 LARISA ANATOLYEVNA ROMANOVSKAYA Position: Chief Advisor of PJSC Rosseti Year of birth: 1972 Education background: Samara State University of Economics, major in Economics First election to the Board of Directors: June 7, 2018 Detailed information about the members of the Board of Directors is given in the electronic annex, section 5.2. Number of elections: 1 Membership in a Board of Directors committee: Personnel and Remuneration Committee Consent to disclosure information in this Report has been obtained. Shares of the Company/subsidiaries and affiliates: 0/0

144 145 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

AVERAGE PERCENTAGE OF MEETING ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS Item category 2017 2018 2019 Increase in 2019, % (tentative categories) Category 2017 2018 2019 Increase in 2019, % management performance monitoring, including consideration of reports 70 58 49 -15.52 on execution of business plans, investment programs, target KPI values, on Meetings of the Board of Directors held, ea. (total), including: 32 36 40 11.1 credit policy, on production and business activities, on insurance coverage provision in-person 4 3 3 0.0 approval of transactions, including preliminary approval of related party 4 4 7 75 Average attendance percentage, p.p. 92.3 90.6 92.4 1.8 p.p. transactions, major transactions1, securities transactions and other transactions to be supervised by the Board of Directors

Information on participation of members of the Board of Directors in meetings of the Board of Directors is provided in the electronic annex, section 5.3.

Remuneration Information on the training of the Director General is provided in section 4.2.5. Other members of the Board CATEGORIES OF ITEMS REVIEWED BY THE BOARD OF DIRECTORS 14,139,172 rubles were paid to members of the Board of of Directors did not receive training at the expense of the Directors in 2019, which is 91% more year-over-year. The Company. Item category 2017 2018 2019 Increase in 2019, % remuneration was paid for participation in the Board of (tentative categories) Directors. No additional remuneration was paid. Corporate Secretary Items considered, ea. (total), including: 216 194 178 -8.25 The amount of remuneration payable to each member of the Board of Directors is calculated with regard to the basic In 2016, the Company established a Corporate Secretary elaboration of a long-term Company development strategy, decision making 1 3 3 0 part established from the Company's revenue, calculated institute in order to bring the corporate governance on participation in other organizations, placement of bonds, procurement of under RAS for a fiscal year, number of meetings of the system of PJSC MOESK in compliance with requirements external loans Board of Directors (regardless of their form of holding) of the Listing Rules of PJSC MOEX. Aleksey Nikolaevich attended by the member of the Board of Directors, the total Svirin is the Company's Corporate Secretary (pursuant approval/revision of business plans, investment programs, comprehensive 29 32 29 -9.38 number of meetings of the Board of Directors (regardless to Resolution of the Board of Directors of December 30, competitive and regulated non-competitive procurement programs, of their form of holding), premiums for chairmanship of the 2016, Minutes of Meeting No. 306, dd. December 31, KPI values, reference values of cash flow, insurance coverage programs, etc. Board of Directors, chairmanship of and membership in any 2016). A. N. Svirin (year of birth: 1983) graduated from committee at the Board of Directors. Lomonosov Moscow State University in 2005 with a corporate governance, including: 112 97 104 7.22 degree in law. Aleksey Svirin has been working at the The higher remuneration amount is due to increased Company since 2008. In the reporting period, the Board – approval/modification of internal documents of the Company, amendment 15 15 11 -26.67 primary part established on the basis of the Company's of Directors considered the report of the Corporate of the Charter within the competence of the Board of Directors revenue according to which the amount of remuneration Secretary at the meeting on June 27, 2019 (Minutes is calculated, as well as changes in the frequency of No. 393 of June 28, 2019). The Board of Directors has not – preparation and holding of general meetings of shareholders, 23 26 30 15.38 remuneration payment. adopted any resolution on additional remuneration for the consideration of shareholders' proposals on issues regarding agenda of Corporate Secretary. Functions of the Corporate Secretary meetings of shareholders, etc. No loans or credits were issued at the Company's expense to are set forth n clause 4.1 of the Regulations on the members of the Board of Directors in the reporting period. Company's Corporate Secretary as approved by the Board – arranging and holding of meetings of the Board of Directors and 13 16 13 -18.75 of Directors (Minutes No. 298 dd. October 3, 2016). committees of the Board of Directors, election of the Chairman of the Board of Directors, etc. Training of Members of the Board of Directors

– review of items related to activities of the Company's executive bodies, 21 16 16 0 REMUNERATION OF THE BOARD OF DIRECTORS management, internal control bodies, external auditor

2019 14,139,172 – provision of material support to employees and charitable assistance 5 6 9 50 (sponsorship) 2018 7,414,894 – review of items related to monitoring activities of business entities and 35 18 11 -3.89 shares (interest) owned by PJSC MOESK 2017 7,103,344

1 Detailed information on related party transactions is provided in the electronic annex, section 5.6.

146 147 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

4.2.3. COMMITTEES OF THE BOARD OF DIRECTORS All the Committee members have consented to the The Committee’s activities in 2019 did not involve any disclosure of this information in the Annual Report. experts.

Personnel and Remuneration Committee determination of criteria for selecting candidates to the Board of Directors, the collegial executive body, or the COMPOSITION OF THE STRATEGY COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS AS AT DECEMBER 31, 2019 The Personnel and Remuneration Committee of PJSC Company's sole executive body, as well as preliminarily Moscow United Electric Grid Company is mainly tasked assessment of such candidates; Egor Vyacheslavovich Prokhorov Acting Deputy Director General for Strategy of PJSC Rosseti to assist the Company's Board of Directors to efficiently evaluation of activities of the person functioning as Chairman resolve matters within its competence; the Committee also the sole executive body (a managing organization drafts the necessary guidelines for the Board of Directors or a manager), and the members of the Company's Andrey Vladimirovich Ardeev Head of Shareholding Control Department of Closed Joint-Stock Company Leader (Pension Fund and the Company's executive bodies. collegial executive body, as well as submission of Assets Management Company) reappointment proposals to the Board of Directors. The main tasks of the Personnel and Remuneration Ilya Gennadievich Mikhailov Project Manager of the Petrochemistry and Infrastructural Projects Directorate of the Division of Committee: The Committee's resolutions are published on the Company Direct Investments of GPB Bank (JSC) website in the section Shareholders and Investors/ development of recommendations on the remuneration Leonid Valerievich Neganov Deputy Director General for Investment Activities and Capital Construction of PJSC Rosseti amount for the Company's Board of Directors; Corporate Governance/Personnel and Remuneration Committee/Solutions. development of principles and criteria for calculating Sergey Aleksandrovich Nikitin Deputy Director General – Head of Corporate Control Division of Closed Joint-Stock Company the remuneration amount for the Board of Directors, All the Committee members have consented to the Leader (Pension Fund Assets Management Company), Independent Director members of the collegial executive body, and the disclosure of this information in the Annual Report. The person functioning as the Company's sole executive Committee’s activities in 2019 did not involve any experts. Aleksey Viktorovich Nuzhdov Senior Vice President of JSC NPF GAZFOND body, be it a managing organization or a manager; Aleksey Igorevich Pavlov Director of Strategy Department of PJSC Rosseti development of proposals on determining the material Report on the activities of the Committee for the 2018/2019 corporate year was considered by the Personnel and conditions of contracts with the members of the Board Dmitry Dmitrievich Mikheev Director of Service Implementation Department of PJSC Rosseti of Directors, members of the collegial executive body, Remuneration Committee on August 22, 2019 (Minutes No. 124 of August 22, 2019). and the person functioning as the Company's sole Petr Alekseevich Sinyutin Director General of PJSC MOESK executive body; Igor Dmitrievich Alyushenko Director of Situation Analytical Center — Deputy Chief Engineer of PJSC Rosseti

Vitaly Aleksandrovich Nosov First Deputy Minister of Energy of Moscow Region

COMPOSITION OF THE PERSONNEL AND REMUNERATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS AS AT DECEMBER 31, 2019 Audit Committee The following persons were involved in 2019 as experts of the Audit Committee according to the Committee's Larisa Anatolyevna Romanovskaya Acting Deputy Director General for Human Resources, Relations with Government and Mass Media The Audit Committee was established by the Company resolution of August 22, 2019 (Minutes No. 132 dated Chairman of PJSC Rosseti to assist the Board of Directors to efficiently perform August 23, 2019): its functions with respect to the preliminary review of Anatoly Anatolyevich Gavrilenko Director General of CJSC Leader (Pension Fund Assets Management Company) matters associated with control over the Company’s 1) Andrey Vladimirovich Ardeev, Head of Shareholding financial and economic activities. Control Department of CJSC Leader (Pension Fund Assets Andrey Yuryevich Kormilitsin Vice President — Head of Division of Direct Investments of GPB Bank (JSC) Management Company). The Audit Committee is mainly tasked to: Andrey Vladimirovich Mayorov Deputy Director General — Chief Engineer of PJSC Rosseti 2) Marina Alekseevna Lelekova, Director of Control and review the Company's accounting (financial) reporting Revision Department of PJSC Rosseti. and supervise its preparation; Olga Andreevna Sergeeva Chief Advisor of PJSC Rosseti, member of the Management Board of PJSC Rosseti control the reliability and efficiency of the internal 3) Andrey Rudolfovich Markov, Chief Analyst of control system, the risk management system, and the Shareholding Control Department of CJSC Leader (Pension Strategy Committee planning, dividend policy, risk management, evaluation of corporate governance practices; Fund Assets Management Company). efficiency of the Company and its subsidiaries, as well as supervise external audit and the selection of the auditor; The Company established the Strategy Committee to other tasks and areas defined by the Code of Corporate All the Committee members have consented to the ensure efficient work of the Company’s Board of Directors Governance recommended for application by Letter of the ensure the independence and objectivity of internal disclosure of this information in the Annual Report. in settling issues related to the scope of its competence. Bank of Russia No. 06-52/2463 dated April 10, 2014, on the audits; The task of the Strategy Committee of the Company's Board Code of Corporate Governance. monitor the efficiency of the system of combating fraud The Committee's resolutions are published on the Company of Directors is to develop and present recommendations by employees and third parties. website in the section Shareholders and Investors/ (solutions) to the Company's Board of Directors on the The Committee's resolutions are published on the Corporate Governance/Strategy Committee/Solutions. areas of activity of the Board of Directors, which fall within Company website in the section Shareholders and the competence of the committee, in particular: strategic Investors/Corporate Governance/Strategy Committee/ development and priority areas of activity, innovative Solutions. development, organization of business processes, business

148 149 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

COMPOSITION OF THE AUDIT COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS AS AT DECEMBER 31, 2019 Reliability Committee of governance levels, to create/liquidate/regroup production units and power grid regions); Sergey Aleksandrovich Nikitin Deputy Director General – Head of Corporate Control Division of Closed Joint-Stock Company The Committee is tasked to make preliminary reviews, analysis, Chairman Leader (Pension Fund Assets Management Company), Independent Director other matters related to the above as well as matters and conclusions with respect to the following priority matters analyzed upon the Board of Directors' orders. of the Company's Board of Directors related to the priority Evgeny Ilyich Logovinsky Vice President — Financial Director of JSC NPF GAZFOND, Independent Director directions: The Committee's resolutions are published on the Deputy Chairman analysis of production activities; Company website in the section Shareholders and Investors/Corporate Governance/Reliability Committee/ Sergey Vladimirovich Sergeev Director General of PJSC Kubanenergo evaluation of planning quality and analysis of the Solutions. Company's power facilities renovation; Pavel Vladimirovich Grebtsov Acting Deputy Director General for Economic and Finance of PJSC Rosseti evaluation of the performance of the Company-wide/ Committee members gave their consent to disclose this branch-specific technical services and their heads; information in the Annual Report. preliminary analysis of proposals to reorganize the Technological Connections Committee development of principles and criteria for evaluating Company's governance system (to change the number the Company's efficiency in terms of technological The Technological Connections Committee of the Board connections to electric grids; of Directors of PJSC Moscow United Electric Grid evaluation of the Company's efficiency in terms of COMPOSITION OF THE RELIABILITY COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS AS AT DECEMBER 31, 2019 Company is mainly tasked to ensure open activity and technological connections to electric grids; non-discriminatory access to technological connection Andrey Vladimirovich Mayorov Deputy Director General — Chief Engineer of PJSC Rosseti analysis of the Company's current position and to the Company's electric grids. Chairman development of proposals to the Board of Directors The Technological Connections Committee of the Board with respect to technological connections. Vladimir Petrovich Suchkov Head of Technical Supervision Department of PJSC Rosseti branch — Technical Supervision Center of Directors of PJSC Moscow United Electric Grid All the Committee members have consented to the Deputy Chairman Company is mainly tasked to: disclosure of this information in the Annual Report. The Andrey Vladimirovich Ardeev Head of Shareholding Control Department of CJSC Leader (Pension Fund Assets Management development of proposals on improving the anti- Committee’s activities in 2019 did not involve any experts. Company) monopoly legislation and providing customers The Committee's resolutions are published on the with non-discriminatory access to services of Dmitry Borisovich Gvozdev First Deputy Director General — Chief Engineer of PJSC MOESK technological connection to electric grids; Company website in the section Shareholders and Investors/Corporate Governance/Committee on development of proposals on improving the technological connections to electric networks/Solutions. Dmitry Viktorovich Kolesnikov Director for Economics and Tariffs of PJSC MOESK Company's internal anti-monopoly and non- discriminatory access regulations and standards; Aleksandr Aleksandrovich Kondratenko Deputy Head of Housing and Utilities Moscow Department

Ilya Gennadievich Mikhailov Project Manager of the Petrochemistry and Infrastructural Projects Directorate of the Division of Direct Investments of GPB Bank (JSC) COMPOSITION OF THE TECHNOLOGICAL CONNECTIONS COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS AS AT DECEMBER 31, 2019 Leonid Valerievich Neganov Deputy Director General for Investment Activities and Capital Construction of PJSC Rosseti

Aleksandr Mikhailovich Pyatigor Member of the Management Board, Deputy Director General for Service Implementation Roman Alekseevich Semenov Deputy Head of Directorate — Head of Emergency Recovery Division of Operating and Technological Chairman of PJSC Rosseti Management Department of PJSC Rosseti

Aleksandr Yurievich Korneev Director of Technological Connection and Infrastructure Development Department of PJSC Rosseti Deputy Chairman

Andrey Vladimirovich Ardeev Head of Shareholding Control Department of CJSC Leader (Pension Fund Assets Management Company)

Oleg Vladimirovich Ivanov Deputy Director General for Capital Construction of PJSC MOESK

Aleksandr Aleksandrovich Kondratenko Deputy Head of Housing and Utilities Moscow Department

Kirill Vladimirovich Lebed Deputy Director General for Technological Connection and Service Development of PJSC MOESK

Andrey Rudolfovich Markov Chief Analyst of Shareholding Control Department of CJSC Leader (Pension Fund Assets Management Company)

Ilya Gennadievich Mikhailov Project Manager of the Petrochemistry and Infrastructural Projects Directorate of the Division of Direct Investments of GPB Bank (JSC)

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INFORMATION ON THE BOARD COMMITTEES COMPOSITION OF THE MANAGEMENT BOARD AS OF DECEMBER 31, 2019

Category Reliability Technological Strategy Audit Personnel and Petr Alekseevich Sinyutin Director General Committee Connections Committee Committee Committee Remuneration Chairman Committee Mark Leonidovich Budyko Deputy Director General for Logistics and Procurement

Number of the Committee's meetings 12 4 17 15 13 Andrey Viktorovich Vologin Director of Moscow Cable Grids Branch in the reporting year, ea. (total) incl.: Dmitry Borisovich Gvozdev First Deputy Director General — Chief Engineer

in-person 1 0 5 4 0 Oleg Vladimirovich Ivanov Deputy Director General for Capital Construction

Remuneration paid to the committee's 585,736 232,564 1,026,498 401,928 0 Aleksey Yurievich Irzhak Director of Northern Electric Grids Branch members in the reporting year, rub. Kirill Vladimirovich Lebed Deputy Director General for Technological Connections and Development of Services

Vladimir Yurievich Myasnikov First Deputy Director General for Financial & Economic Activities and Corporate Governance

Information on participation of members of the Board of Directors' committees in committee meetings is provided in the Aleksey Vasilievich Petukhov Deputy Director General for Electric Power Transmission and Metering electronic annex, section 5.3. Aleksey Sergeevich Starostin Deputy Director General for Corporate Governance and Property

Aleksandr Valentinovich Filin First Deputy Director General for Corporate Protection and Anti-Corruption Remuneration for Committee Members by the Board of Directors' resolution dated February 24, 2016 (Minutes No. 276 dated February 26, 2016). Oleg Petrovich Chaus Deputy Director General for HR Management and Administration The Company's policy with respect to the remuneration and reimbursement was in 2019 set forth by the In 2019, remuneration for membership in the Regulations on Remuneration and Reimbursement for Board Committees totaled 2,246.7 thousand rubles the Company's Board Committees as approved by the (excluding the remuneration of the Audit Committee's AVERAGE PERCENTAGE OF MEETING ATTENDANCE BY MEMBERS OF THE MANAGEMENT BOARD Board of Directors’ Resolution dated June 11, 2014 expert). (Minutes No. 232 dated June 12, 2014) and amended Category 2017 2018 2019 Change, %

TOTAL meetings held by the Management Board, ea. 58 51 52 2 (total), including 4.2.4. MANAGEMENT BOARD in-person 40 31 36 16

the most important aspects of its current economic Average attendance, % 79 84 87 4 The PJSC MOESK Management Board acts by virtue of activities and coordinate the work of its divisions; the Charter and the Regulation on the Management Board improve the efficiency of internal control and risk approved by the General Meeting of Shareholders, which monitoring systems; establishes the time frame and procedure for convocation More information on meeting attendance by the Management Board's members is provided in the electronic annex, and holding of its meetings as well as the resolution- ensure the achievement of a high level of Company section 5.3. making procedure. The Management Board is mainly assets profitability and maximum return on its tasked to: activities. ensure observance of the rights and legal interests of the Company's shareholders; In 2019, there were three compositions of the Management Board. develop proposals on the Company's development strategy; More detailed information on the Management Board's implement the financial and economic policy of the members is provided in the electronic annex, section 5.2. Company, as well as elaborate solutions related to The Company's Management Board gives its consent to disclose this information in the Annual Report.

152 153 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

Remuneration Paid to Management Board PETR ALEKSEEVICH SINYUTIN Year of birth: 1962 Financial incentives of employees who were on the In 2019, the remuneration Management Board in 2019 were determined by the Educational background: Chelyabinsk Polytechnic Institute, major in Electrical following regulatory documents: Engineering; Russian Presidential Academy of Administration, major in Public paid to members of the and Municipal Administration. PhD in Technical Sciences, Doctor of Economics. Regulations on Financial Incentives of the Director General of PJSC Moscow United Electric Grid Management Board amounted Participation interest in the issuer's authorized capital: Company; Mr. Sinyutin has no participation interest in the issuer’s authorized capital/ ordinary shares. Regulations on Financial Incentives and Employee to 230.6 million rubles. Benefits of Senior Managers of PJSC MOESK; No transactions were made to purchase or dispose of the Company's shares in the reporting year. Regulations on the Remuneration System of Leading Managers, Category II of PJSC MOESK, and on His consent for disclosure of this information in the Annual Report was obtained. Financial Incentives (Bonuses) of Leading Managers, Category II of PJSC MOESK; The growth in expenses compared to the previous period is due to the following factors: Financial Incentives List of Annual KPIs: Regulations on the Remuneration System of the for the Director General Executive Office of PJSC MOESK, and on Financial change in the number of members on the Company's consolidated net cash flow; Management Board; Incentives of the Executive Office of PJSC MOESK. Financial incentives for the Company's Director Genera reduction in specific operating expenses (costs); increase in the amount of bonus payments calculated are provided in accordance with the Regulations on increase in the electric-grid capacity use factor; The senior manager elected as a member of the based on the results of work for the reporting Financial Incentives of the Director General of PJSC Company's Management Board by order of the period, taking into account the achievement of the Moscow United Electric Grid Company, approved by electric power loss level; established targets of key performance indicators. Company's Director General shall be paid an individual the Resolution of the Company's Board of Directors reduction in specific investment costs; allowance of up to 15% of the official wage. (Minutes No. 248 dated December 19, 2014 with all No loans or credits were issued at the Company's amendments and additions). Components of the key improved labor productivity; A Company employee who is not a top manager but expense to members of the Management Board in the performance indicators, specific weight of the indicators innovation efficiency; elected to the Company's Management Board shall reporting period. in the bonus system of the Company's Director be paid an individual allowance determined by the General, as well as target values are determined by meeting technological connection deadlines; Director General (at least 15% of the official wage of the methodology of calculation and assessment of key achievement of the required service reliability level. an employee classified as a top manager of the first performance indicators of the Director General of PJSC category). Moscow United Electric Grid Company, approved by the In the incentives system, the Electric Power Loss Level KPI resolution of the Board of Directors of the Company is a bonus reduction factor — in case of failure to achieve (Minutes No. 314 dated April 17, 2017 as amended by this indicator, a reduction factor is applied to the total the resolutions of the Board of Directors dated June 6, amount of annual payment. 2018, Minutes No. 357 dated December 27, 2019, and Minutes No. 411). Within the framework of the Regulations on Financial 4.2.5. DIRECTOR GENERAL Incentives of the Director General of PJSC MOESK, Bonuses are paid to the Director General depending on additional and special bonuses are paid to the Director the achievement of KPIs for reporting periods (quarterly General for the fulfillment of certain conditions (strategic The Director General performs daily management of the Petr Alekseevich Sinyutin held the position of Acting and yearly) approved by the Board of Directors. priorities) defined by the Company's Board of Directors. Company in compliance with Federal Law No. 208-FZ Director General of the Company from July 4, 2012 and Information on bonuses paid to the sole executive body is of December 26, 1995 on Joint Stock Companies, the July 11, 2012 to February 5, 2013. included in the report on remuneration of the Management Charter, as well as resolutions of the General Meeting of List of Quarterly KPIs: Board. No loans or credits were issued at the Company's Shareholders, the Board of Directors and the Management P. A. Sinyutin was elected the Company's Director General expense to the Director General in the reporting period. consolidated profit from operating activities (EBITDA); Board adopted within the scope of their competence. for three years by the resolution of the Board of Directors dated February 5, 2013. consolidated net debt/EBITDA; The scope of competence of the Director General covers progress in the action plan to reduce accounts Advanced Training of the Director General any matter associated with the daily management of the In accordance with the resolution of the Board of Directors receivable of subsidiaries and affiliates; P. A. Sinyutin Company, excluding matters that are within the scope dated March 3, 2016, P. A. Sinyutin was re-elected as the of competence of the General Meeting of Shareholders, Company’s Director General for the period from February 5, absence of growth in the number of major accidents Information and Technical Center of FAS of Russia, the Board of Directors or the Management Board. The 2016 to February 4, 2019, inclusively. (bonus condition); the Tariff Regulation in 2019 and Tasks of Regulatory competence of the Director General is specified in Article 23 absence of growth in the number of accident victims Authorities for 2020 workshop. of the Company's Charter. In accordance with the resolution of the Board of Directors (bonus condition); dated April 4, 2019, P. A. Sinyutin was re-elected as the The Director General acts in the name of the Company Company’s Director General for the period from February 5, meeting commissioning schedules. without a power of attorney and in line with the limitation 2016 to February 4, 2022. specified by the current legislation, the Charter and resolutions of the Board of Directors.

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The level of organization of the Company's control subsidiaries and affiliates. The best practices were environment was highly appreciated by the independent discussed, as well as the ways to further develop expert and recognized as the best practice across the internal control system of PJSC Rosseti and its Rosseti Group. Findings of the external assessment subsidiaries, where PJSC MOESK demonstrated its in Rosseti Group were reviewed at a meeting with experience in integrating the internal control system, the independent directors — members of the Audit risk management system and quality management EXTERNAL AND Committees of the Boards of Directors of PJSC Rosseti system into the overall management. INTERNAL AUDIT AND CONTROL The internal control system (hereinafter, the ICS) was adherence to legal requirements applicable to integrated in the Company's common governance system. the Company and the Company's local regulatory 4.3 It is aimed to provide reasonable assurance of goal documents, including in facts of economic and financial achievement in the following areas: activities and accounting procedures; efficiency and progress of the Company's activities, ensuring reliability and timely provision of accounting including the achievement of financial and operational (financial) and other statements. indicators and asset safeguarding; 4.3.1. INTERNAL CONTROL SYSTEM

MEMBERS OF THE INTERNAL CONTROL SYSTEM

Auditing Commission Board of Directors Audit Committee, other committees

Executive Bodies

Managers and employees Control and Risks Unit of structural divisions

Commentary of the Audit Director Units of the second A. A. Ulyanov protection line

The Company fulfilled the instruction of the Board In 2019, based on the results of the Strategy of Directors of PJSC Rosseti to implement in 2018 implementation, an external independent assessment the provisions of the Strategy for Development and of Company internal control and risk management Internal Audit Department Improvement of the Internal Control System approved systems' efficiency was conducted, and these systems (third protection line) by the Board of Directors of PJSC Rosseti in 2014 for the were recognized as efficient by an independent Group as a whole. expert.

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Functions of the ICS Members Based on the external independent assessment, a set of measures to maintain the ICS efficiency for the period up The ICS members' functions are regulated by the Internal to 2022 was prepared and approved by resolution of the Control Policy of the Company, approved in accordance Company's Board of Directors (Minutes No. 406 dated with the resolution of the Board of Directors of April 30, November 29, 2019). 2016 (Minutes No. 287), the regulations on structural divisions and job descriptions specified in the electronic In the reporting year, the Company implemented the annex, section 5.1. following key measures to improve the ICS: range of workshops and meetings were held for To ensure that the ICS operates successfully and meets the Company's key employees participating in the objectively changing requirements and conditions, the ICS improvement to involve them in the system Company's internal auditor assesses its efficiency: construction; compliance with the target state and maturity level. regulation of the Company's core business processes The internal auditor's report on the ICS performance was optimized; assessment for 2019 was considered at a Board of control matrices were updated: goals and control Directors meeting with preliminary discussion of the procedures of the Company's business processes were above-mentioned issue by the Board of Directors' Audit described with the preventive response to emerging Committee on April 14, 2020 (Minutes No. 143 dated April risks. 15, 2020). According to the decisions, the ICS maturity level was assessed as Optimal, as well as in the year of Focus of the ICS development in the next year is placed 2018. on maintaining personnel qualification and competence development: training of the Company's management on In the reporting year, an external independent ICS the ICS functioning, ICS assessment and development, assessment was carried out, where it was recognized independent assessment of the Control and Risks as efficient by an independent expert. The results of the Unit personnel qualification for the compliance with ICS external independent assessment were considered professional standards. Commentary of A. E. Kopiev, at a meeting of the Board of Directors on June 27, 2019 Director of the Internal Audit Department (Minutes No. 393) with preliminary discussion of the matter by the Board of Directors' Audit Committee. In 2019, the Internal Audit Department fulfilled the Action Plan designed to develop and improve the internal audit processes of PJSC MOESK for 2017–2019 in full concordance with the set time limit. The plan was approved by the resolution of the Board of Directors of September 19, 2017 (Minutes No. 329). The Program for Quality Assurance and Internal Audit Quality Improvement of PJSC MOESK rated the current internal audit state at 3.97 out of 4 points. 4.3.2. INTERNAL AUDIT

In PJSC MOESK, the division responsible for internal audit participation in the Auditing Commissions of S&A of the functions is the Internal Audit Department (hereinafter Company in accordance with the Plan for 2019 approved by referred to as the IAD). The IAD is functionally accountable the Board of Directors (Minutes No. 373 dated December The index of satisfaction of the Audit Committee of the internal audit management — development of to the Company’s Board of Directors. It means that 29, 2018). Company's Board of Directors with the IAD's work in interaction with Guarantee Suppliers on access to the Board of Directors supervises and manages the 2019 (weighted total points according to questionnaires information about procedures and techniques used in department's workflow, approves its performance plans, Following the results of control activities in 2019, the of the Audit Committee's members who voted against assessing the volume and type of activities performed reports on plan performance and budget. Moreover, the department issued recommendations with an aim to the number of the committee's members who voted) was by the Guarantee Suppliers. Board approves personnel appointment and dismissal, boost the Company's performance by raising the ICS assessed as “generally complying” with the committee's defines remuneration paid to the IAD Director, and reviews efficiency and reducing business-related risks. For the expectations. In 2019, in accordance with the resolution of the results of quality assessment of the internal audit function. Audit Committee, the audit results and information about Company's Board of Directors, for the first time all significant material issues in the fields of internal According to the internal quality assessment of the JSC KPMG's external expert carried out an independent The Regulations on the Internal Audit Policy of PJSC MOESK control, corporate governance and risk management were internal audit's activities in 2019, the following key quality assessment of the internal audit activity, which (new edition), approved by the Resolution of the Board published in quarterly reports, and for the Company's directions were set for its further development and is provided for in the Company's Internal Audit Policy at of Directors dated December 13, 2019 (Minutes No. 407 Board of Directors — in the ICS annual report. progress: least once every five years. dated December 16, 2019), specify goals, objectives, main expertise and professional attitude towards work principles of the organization and operation of the internal The Audit Committee sends its feedback to the IAD Director — work to retain qualified IAD employees, as According to the external auditor's report issued on audit, as well as its functions and powers. via various channels during their interaction, including at well as to improve their knowledge and skills November 12, 2019 on compliance with the International meetings held in person, by means of analyzing resolutions through participation in training, development and Standards for the Professional Practice of Internal In 2019, the IAD performed duties assigned to it through and recommendations of the Audit Committee, as well as implementation of individual development plans, and Auditing and the Code of Ethics: “Based on our work as audits of business processes and functional areas of through questionnaire surveys carried out among the Audit regular evaluation; part of the independent external assessment of internal activity of the Company's structural divisions, as well as Committee's members.

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audit activity, we believe that as of November 2019, Furthermore, the external auditor, based on the best KEY RISK MANAGEMENT PARTICIPANTS IN THE COMPANY the Company and activities of the internal audit of PJSC practices, recommended areas for improvement and MOESK generally comply with the International Standards development of internal auditing, which laid the ground for the Professional Practice of Internal Auditing and for the Action Plan designed to develop and improve the Code of Ethics developed by the Institute of Internal the internal audit processes of PJSC MOESK in 2020– Auditors and the Company's Internal Audit Policy.” 2024. Executive Bodies Control and Risks Unit

4.3.3. RISK MANAGEMENT SYSTEM Risk Owners/Risk Board of Directors Strategy Committee Management Executives Commentary of the Audit Director A. A. Ulyanov

The Company improves the quality and reliability of risk assessment, ensuring the ability to make timely managerial decisions in respect of the impact on negative factors on a regular basis. Internal Audit Audit Committee Department The adopted approaches to risk management allowed the Company to achieve its financial targets set by the Board of Directors for 2019.

RISK MAP (RISK RADAR)

The Company has the Risk Management System the methodological and coordination support of the Risks associated (hereinafter referred to as the RMS) in place to ensure management in risk management, as well as with the with the political Risks associated Risks of increased and economic with potential sustainable and uninterrupted operation and development functions in the field of assessment of risk impact on the property tax situation conflicts and their of the Company through timely identification, assessment Company's key financial and economic indicators. payments and efficient management of risks, which threaten consequences efficient performance of the Company’s business The functions of RMS participants are set out in the Risks of antimonopoly Risks of tariff activities and Company’s reputation, employees’ health, Company's Risk Management Policy1, regulations on regulation regulation environment, and property interests of the shareholders structural units, and job descriptions. Risks associated with and investors. Risk of amendments geographical features of the The Risk Management Policy defines goals, principles in legal practices territory of the Company's The Company has the Control and Risks Unit, which, of operation and elements of the Company's RMS, key presence in accordance with the Risk Management Policy and functions and responsibilities of the RMS participants, the Regulations on the Division, is entrusted with along with the procedure for efficiency assessment. Risk of amendments Risk of decrease in in tax legislation demand for services

Reputation risk Operational risks

Strategic risk Price risks

Credit risk Interest rate risks (expired receivables) Inflation Currency risks risk Assessment of risk significance

1 Approved by the Resolution of the Board of Directors dated April 30, 2016 (Minutes No. 287) (new edition).

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CONNECTION BETWEEN KEY OPERATIONAL RISKS1 AND STRATEGIC PRIORITIES Key performance indicators that correspond to key operational risks, established by the Company for functional areas: OF THE COMPANY

STRATEGIC PRIORITIES OF THE COMPANY Risk No. Risk description Main KPI

KOR-001 Risk of deviation of electric power transmission services balance of income and expenses (revenue from electric power Digital Improvement Economically compared with the value specified in the business plan transmission, expenses for loss balancing, FGC, MUE and LGO Improvement Development transformation of Improvement of of electric justified of the power of new services) technological and the consumer power supply consolidation grid complex business corporate business service quality reliability and of electric grid efficiency lines KOR-002 Risk of deviation of the average tariff for electric power balance of income and expenses (revenue from electric power processes quality assets transmission services compared with the business plan transmission, expenses for loss balancing, FGC, MUE and LGO applied value services);

share of falling out income for preferential TC (recorded in the fast result technology base), generated in accordance with the legislative requirements

KOR-003 Risk of TC deviation compared with the value specified Revenue from TC services Financial KPIs: Service reliability and quality in the business plan KOR-008 — Deviation of Debt/ EBITDA from KOR-013 — Failure to achieve the the target electric power supply reliability indicator KOR-004 Risk of deviation of cost value of loss balancing from the losses occurring from electric power transmission KOR-009 — Deviation of net profit from the KOR-014 — Failure to achieve the TC value specified in the business plan target quality indicator KOR-005 Risk of deviation of independent expenses from the balance of income and expenses (revenue from electric power value specified in the business plan, except for electric transmission, expenses for loss balancing, FGC, MUE and LGO power loss balancing expenses services)

KOR-006 Risk of increase in operating expenses compared with reduction in specific operating expenses (costs); Interest, other expenses the value specified in the business plan KOR-007 — Deviation of overdue accounts cost of production shall not exceed limits; receivable for power transmission services Main parameters of the from the target investment Program staying within the tolerance level of deviation from budget KOR-010 — Non-compliance with targets; Operating expenses parameters of the Investment Program KOR-011 — Deviation of specific KOR-004 — Deviation of power loss share of manufacturers and their official representatives in investment costs from target values compensation costs from the target supplies procurement; KOR-005 — Deviation of other independent costs from the target reducing expenses for supplies by means of cutting initial lot KOR-006 — Deviation of OPEX from the costs and the economic effect of procurement activities target KOR-007 Risk of deviation of overdue accounts receivable progress in the plan to reduce accounts receivable; Revenue from TC services Labor productivity compared with the value specified in the business plan KOR-016 — Deviation of labor KOR-003 — Deviation of TC revenues from the level of accounts receivable as of December 31, 2019 productivity from the target the target (taking into account the accounts receivable generated in 2019) shall not be exceeded;

EP transmission tariffs implementation of legal collection activities; KOR-002 — Deviation of average EP transmission tariff receipt of funds for unauthorized electricity consumption to the PJSC MOESK account

Volume of electric power KOR-008 Risk of debt/EBITDA deviation compared with the value consolidated profit from operating activities (EBITDA); transmission services specified in the business plan KOR-001 — Deviation of EP transmission the level of the loan portfolio specified in the business plan services volume from the target shall not be exceeded; KOR-012 — Insufficient load on capacities consolidated net debt/EBITDA; KEY OPERATIONAL RISKS consolidated net cash flow 1 The Company's Key Operating Risk Registry (QRA) has been approved by the Company's Board of Directors.

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Risk No. Risk description Main KPI Risk No. Risk description Main KPI

KOR-009 Risk of deviation of net profit compared with the value net profit; share of TC contracts up to 15 kV, including own-account specified in the business plan works of the grid organization (Moscow Region); the Company's net profit from the provision of power supply services (additional services), ensured by cash flow; reaching the required capital investment volume according to the investment program for the TC source; the amount of compensation for PJSC MOESK's losses in connection with claims of LGOs and other persons to recover share of procurement activities carried out in due time and debt, interest and penalties by filing recourse claims on behalf related to the selection of contractors for the implementation of the Company against sales businesses of TC contracts

KOR-010 Risk of non-performance of the investment program's meeting commissioning schedules; KOR-015 Risk of accidents due to the Company's fault prevention of injuries multiplication due to accidents main parameters meeting milestones of grid schedules; KOR-016 Risk of deviation of the workforce productivity rate improved labor productivity compared with the value specified in the business plan reaching the required capital investment volume according to the investment program;

transformation power introduced into basic funds; In addition to the key operational risks, the Company at a meeting of the Board of Directors on June 27, 2019 approved the register of operational risks regarding (Minutes No. 393) with preliminary discussion of the matter electrical transmission lines introduced into basic funds its business processes. Operational risks of business by the Board of Directors' Strategy and Development processes are factors of the key operational risks. For the Committee. KOR-011 Risk of deviation of % of lowering specified investment reduction in specific investment costs; most significant risks, action plans were approved and expenses from the value specified for the target period delivered in 2019 with a view to reduce the probability In the year under review, the Company embedded a the actual cost of construction shall not exceed the original of risk occurrence and to minimize the effect of their risk assessment methodology aimed at enhancing and cost specified in the investment program; realization. advancing the RMS: share of imported equipment procured by the Company debt/EBITDA deviation compared with the value To ensure that the RMS works successfully and complies specified in the business plan; with the objectively evolving requirements and conditions, KOR-012 Risk of failure to achieve the capacity utilization rate Increase of capacity utilization of electric power equipment the Company's internal auditor assesses its performance. deviation of net profit compared with the value specified specified for the target period in the business plan. The internal auditor's report on the RMS performance KOR-013 Risk of failure to achieve the reliability level of electric absence of growth in the number of major accidents; power transmission services set in line with the tariff assessment for 2019 was considered at a Board of This methodology has improved the quality and reliability Directors meeting with preliminary discussion of the of risk assessment, thus enabling the Company to make regulation the maximum time of electric power supply recovery shall not be exceeded; above issue by the Board of Directors' Audit Committee timely decisions in respect of the impact on negative on April 14, 2020. According to the decisions, the RMS factors and achieving its financial indicators set by the average duration of the termination of electric power maturity level was assessed as Optimal, as well as in the Board of Directors for 2019. transmission to the point of supply (Psaidi); year of 2018. The main RMS development activities in the coming average frequency of the termination of electric power In the reporting year, an external independent RMS year will include updating of the risk identification and transmission to the point of supply (Psaifi); assessment was carried out, where it was recognized assessment methodology and of the register of risks and as efficient by an independent expert. The results of the key risk indicators. execution of the repair program in physical volumes; RMS external independent assessment were considered

implementation of the scheduled plan to introduce the system of production assets management (SPAM)

KOR-014 Risk of failure to achieve the quality level of TC services meeting TC deadlines; set in line with the tariff regulation share of timely provided TC offer contracts;

share of timely performed TC contracts;

share of timely performed contractor TC contracts within the SME Support Program;

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4.3.4. AUDITING COMMISSION 4.3.5. AUDITOR

The Company's Auditing Commission includes 5 people. In 2019, the mandatory annual reporting audit The accounting statements for 2019 were (IFRS and RAS) was conducted by Ernst & Young audited. According to the auditor, the accounting Limited Liability Company. In order to ensure the statements truthfully present the financial COMPOSITION OF THE AUDITING COMMISSION EFFECTIVE AS AT DECEMBER 31, 2019 independence and objectivity of external audit position of PJSC MOESK in all material regards process, the Company’s external auditor was elected as of December 31, 2019, as well as its financial Full name Job title as at the time of election to the Year of Date of the AC Number of the in 2018 by an open contest without any preliminary and operational results and cash flows for 2019 Auditing Commission birth first election membership Company's/ qualification-based selection. For more details about in compliance with the Russian regulations on to the AC subsidiaries' the auditor selection procedure, please refer to accounting reporting. shares PJSC MOESK's Annual Report for 2018.

Elena Stanislavovna Chief Expert of the Control and Examination 1978 June 6, 2016 4 0/0 Erandina Office of the Control and Audit Department, PJSC KEY INFORMATION ON THE COMPANY'S AUDITOR (RAS/IFRS) Rosseti Category Reporting year Sergey Lead Expert of the Audit Activities Office of the 1966 June 14, 2019 1 0/0 Vladimirovich Control and Audit Department, PJSC Rosseti Full company name Ernst & Young Limited Liability Company Malyshev

Abbreviated company name Ernst & Young LLC Svetlana Head of the Audit Office of the Control and Audit 1981 February 5, 5 0/0 Anatolyevna Kim Department, PJSC Rosseti 2014 Address 77 Sadovnicheskaya Naberezhnaya, Building 1, Moscow, 115035, Russian Federation Artem Nikolaevich Deputy Head of the Audit Office of the Control 1984 February 5, 6 0/0 Kirillov and Audit Department, PJSC Rosseti 2014 Phone/Fax +7 (495) 705-97-00 / +7 (495) 755-97-01 Sergey Acting Deputy Director General – Chief of Staff, 1979 June 14, 2019 1 0/0 Vladimirovich PJSC Rosseti Website https://www.ey.com/en_gl Kiryukhin E-mail: [email protected]

Membership in a self-regulatory organization of auditors Self-regulated organization of auditors Russian Union of Auditors The consent for disclosure of this information in the Annual Report was obtained. (ORNZ 11603050648) (until January 2020)

Detailed information about the members of the Auditing Commission is given in the electronic annex, section 5.2. Information on the auditor’s membership in panels, associations or other Ernst & Young LLC is not involved in any professional unions professional unions (organizations) (organizations) except for SRO RAA Resolutions taken by the Company’s Auditing Commission are published on the Company's website in the Corporate Governance section.

Remuneration

Remuneration is payable to members of the Auditing Commission under the Regulation on Payment of Remuneration and Reimbursement to Members of PJSC MOESK's Auditing Commission1.

Category 2017 2018 2019 Change, %

Remuneration paid to members of the Auditing Commission, 650,672 692,133 686,731 -1 rub.

1 Approved by the Resolution of the Annual General Meeting of Shareholders dated June 7, 2018 (AGMS minutes No. 20 dated June 13, 2018).

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STRUCTURE OF THE EQUITY SHARE (5% AND MORE) AS OF THE DATE OF DRAFTING THE LIST OF PERSONS ENTITLED TO PARTICIPATE IN THE GENERAL MEETING OF SHAREHOLDERS, %

Name/type of the registered person May 15, 2017 May 14, 2018 May 20, 2019 December 6, 2019

INFORMATION Public Joint-Stock Company Rosseti 50.90 50.90 50.90 50.90 FOR SHAREHOLDERS (T. M.) Closed Joint-Stock Company Leader (Pension Fund 17.62 17.62 17.62 17.62 AND INVESTORS Assets Management Company) T. M. NGPF GAZFOND Gazprombank (Joint-Stock Company) 9.77 9.77 9.77 9.77

4.4 (T. M.) Limited Liability Company “Management Company 6.19 6.19 6.19 6.19 “AGANA” T. M. Closed-End Blend Fund Strategic Assets

Open Joint-Stock Company OEK 5.05 5.05 5.05 5.05

The Company’s authorized capital amounts to In accordance with the Company’s Charter, the Company 24,353,545,787 rub. and is divided into 48,707,091,574 may issue 3,718,126 additional ordinary shares with 0.5 Statement of the executive bodies of PJSC MOESK: the companies in the world, owning the majority of the assets ordinary shares with 0.5 rub. par value each. rub. par value each for the total amount of 1,859,063 rub. Company has no information concerning shareholding of the distributional electric power network in Russia, the exceeding 5% apart from those already disclosed. controlling shareholder of which is the Russian Federation.

The state has no share in the authorized capital of PJSC There are no treasury shares on the Company's balance INFORMATION ON THE REGISTERED SHARE ISSUES MOESK as of December 31, 2019. At the same time, 50.9% sheet. Legal entities controlled by the Company (JSC of shares of the authorized capital of PJSC MOESK is owned Energotsentr, JSC MOESK-Engineering, JSC Zavod RETO) do State registration Date of state Placement of PAR value, Method of placement Date of report by PJSC Rosseti, one of the largest electric power supply not have a share in the authorized capital of PJSC MOESK. number of the issue registration of shares, pcs. rub. registration issue of the issue results Memorandum of the controlling shareholder of PJSC Rosseti towards controlled 1-01-65116-D May 31, 2005 28,249,359,700 0.5 Placement of shares of the joint-stock May 31, 2005 electric grid companies company established as part of spin- off of the joint-stock company among PJSC Rosseti is a public holding company with a state PJSC Rosseti owns a controlling stake in 14 distribution shareholders, reorganized through this share in the authorised capital of 88.04%, established in grid companies1 (PJSC Kubanenergo, PJSC Lenenergo, spin-off accordance with Decree of the President of the Russian PJSC Moscow United Electric Grid Company, PJSC IDGC Federation No. 1567 of 22 November 2012; the Company of Volga, PJSC IDGC of North-West, PJSC IDGC of North 1 1-01-65116-D-001D June 30, 2008 20,457,731,874 0.5 Conversion of ordinary shares of the July 31, 2008 aimed at increasing the efficiency and development of the Caucasus, PJSC IDGC of Siberia, PJSC IDGC of Urals, joined Company into additional ordinary electric grid complex of the Russian Federation, as well PJSC IDGC of Center, PJSC IDGC of Center and Privolzhye, shares of the Holding Company as coordinating work on management of this complex PJSC IDGC of South, PJSC TDC, JSC Rosseti Tyumen, through subsidiaries and affiliates. JSC Yantarenergo) and 1 backbone power grid company

EQUITY HOLDING STRUCTURE (5% AND MORE) AT YEAR-END, % 1 PJSC Kubanenergo provides services under the brand name Rosseti Kuban; PJSC Lenenergo provides services under the brand name Rosseti Lenenergo; Name/type of the registered person 2017 2018 2019 PJSC MOESK provides services under the brand name Rosseti Moscow Region; PJSC IDGC of Volga provides services under the brand name Rosseti Volga; Limited Liability Company Depository and Corporate Technologies (nominee 50.90 50.90 50.90 PJSC IDGC of North-West provides services under the brand name Rosseti of North-West; shareholder) PJSC IDGC of North Caucasus provides services under the brand name Rosseti North Caucasus; PJSC IDGC of Siberia provides services under the brand name Rosseti Siberia; JSC IDGC of Urals provides services under the brand name Rosseti Ural; Non-Bank Lending Institution Stock Company National Settlement Depository 45.89 45.93 46.01 PJSC IDGC of Center provides services under the brand name Rosseti Center; (nominee shareholder) PJSC IDGC of Center and Privolzhye provides services under the brand name Rosseti of Center and Privolzhye; PJSC IDGC of South provides services under the brand name Rosseti South; PJSC TDC provides services under the brand name Rosseti Tomsk; 1 Individual code 001D of the state registration number 1-­0165116­-D­-001D assigned to the additional issue of securities, canceled on November 18, 2008 (Order of the JSC Yantarenergo provides services under the brand name Rosseti Yantar; FFMS of Russia No. 08­2788/pz-i). PJSC FGC UES provides services under the brand name Rosseti FGC UES.

168 169 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

(PJSC FGC UES). Disposal of the specified assets is not maintaining a balance of interests for all parties: the MOEX TRADING RESULTS considered. state/consumers/shareholders/investors; Category 2017 2018 2019 Increase in 2019, % development of new areas of activity, such as non-tariff PJSC Rosseti identified the strategic development priorities and consumer services, through digital transformation of the Group companies: Lowest price of shares over the year (absolute minimum), 0.793 0.646 0.6595 2.1 to ensure the Company's resilience to changes in the rub. providing reliable, high-quality and affordable power industry. supply in the new digital environment; PJSC Rosseti manages the companies of the Group in Highest price of shares over the year (absolute maximum), 1.064 0.9 1.208 34.2 ensuring further efficiency increase of the main electric accordance with unified corporate standards aimed at rub. power transmission business; ensuring the efficiency of business processes, controlling Closing price by the last trading day of the year, rub. 0.899 0.6585 1.1915 80.9 promotion of legislative initiatives aimed at developing their quality, minimizing all types of corporate risks, and the industry; maintaining informational and operational transparency. Volume-weighted average price for the year, rub. 0.902 0.732 0.890 21.5

Trading volume over the year

SHARES ON THE STOCK MARKET mln rub. 1,493 591 1,566 165.0

Category Reporting year mln pcs. 1,620 804 1,761 119.0

Stock exchange MOEX (PJSC Moscow Exchange) TRADE VOLUME BY MONTH Trade commencing date February 9, 2006

Unit of Month Quotation list А1 since February 19, 2009 measurement First level since June 9, 2014, Second level since January 31, 2017 1 2 3 4 5 6 7 8 9 10 11 12

mln pcs. 58.0 56.4 69.9 47.8 52.1 184.4 93.1 171.5 297.3 164.4 433.7 132.2 ISIN RU000A0ET7Y7 mln rub. 40.5 39.3 47.6 33.2 37.0 141.3 68.8 129.6 263.6 148.9 466.1 150.5 Ticker MSRS

MARKET CAPITALIZATION CHANGES

PRESENCE IN INDICES Category Last trading day of the Last trading day of the Change, % previous year, mln rub. reporting year, mln rub. Index Code index Date of inclusion Weight of shares in the index, % PJSC MOESK 32,074 58,034 80.9 December 31, December 31, 2018 2019 PJSC Kubanenergo 13,804 20,883 51.3 PJSC IDGC of Center and Volga Region 29,876 26,957 -9.8 Broad market index, rub. MOEXBMI December 30, 2011 0.03 0.04 PJSC IDGC of Center 12,057 12,758 5.8

MICEX PWR index, rub. MOEXEU July 3, 2006 1.49 2.17 PJSC IDGC of Siberia 9,766 29,013 197.1

PJSC IDGC of Volga 18,426 16,731 -9.2 MOEX index of medium and small capitalization MCXSM December 22, 2018 0.56 0.88 OJSC IDGC of Ural 16,087 14,356 -10.8

RTS index of broad market shares, USD RUBMI December 30, 2011 0.03 0.04 PJSC Lenenergo 53,682 71,617 33.4

PJSC IDGC of North-West 5,259 5,139 -2.3 MICEX RTS PWR index, USD RTSeu September 15, 2006 1.5 2.17 PJSC IDGC of North Caucasus 2,158 4,655 115.7 RTS index of medium and small capitalization, USD RTSSM December 22, 2018 0.56 0.88 PJSC Rosseti South 3,745 5,074 35.5

PJSC TDC 1,368 1,739 27.1

170 171 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

CHANGES OF SHARE PRICE OF PJSC MOESK COMPARED TO KEY INDICES AND WITH KEY NEWS INDICATED Dividend Policy statements, developed in accordance with the International Financial Reporting Standards and The Company's Dividend Policy is aimed at the calculated in compliance with the procedure established improvement of the Company's investment attractiveness by the Provision on the PJSC MOESK Dividend Policy; 90% and the increase of its market capitalization. The Policy providing the possibility of paying dividends on a 80% 3 is based on the balance of Company’s and shareholders’ quarterly basis provided that the corresponding interests. The Company’s dividend policy is governed by criteria are met; 70% the Regulations on the Dividend Policy1. ensuring maximum transparency (clarity) of the 60% Key principles of the Company's dividend policy: dividend allocation mechanism and payment order; 50% compliance of the practice of accrual and payment ensuring positive dynamics with regard to the dividend of dividends with the legislation of the Russian payment amounts, provided that there is growth in the 2 40% Federation and the corporate governance standards Company's net profit; (Order of the Government of the Russian Federation 30% No. 1094r); availability of information on the Company's Dividend 1 Policy for shareholders and other stakeholders; 20% optimal alignment of interests of the Company and its shareholders; necessity to maintain the required level of financial and technical state of the Company (implementation 10% determination of the amount of dividends in the of the investment program), as well as ensuring 0% volume of at least 50% of net profit determined as prospects for the Company's development. 01.03.2019 02.17.2019 03.04.2019 05.18.2019 07.02.2019 08.16.2019 09.30.2019 11.14.2019 12.29.2019 per the financial statements, including consolidated

MOESK MOEX MOEXEU

Key Events to influence price behavior Moscow Exchange, which is indicative of a high level of INFORMATION ON DIVIDENDS (INFORMATION ON PROFIT DISTRIBUTION IN ACCORDANCE WITH THE RESOLUTIONS BY THE of shares of PJSC MOESK the Company’s Corporate Governance. MEETINGS OF SHAREHOLDERS)

1 June 14, 2019 — holding the Annual General Meeting 2 2 In 2019, the Company continued following the Category AGMS 2017 AGMS 2018 AGMS 2019 EGSM 2019 of Shareholders of PJSC MOESK. Resolution on profit requirements of the Listing Rules: the Board of (June 8, 2017) (June 7, 2018) (June 14, 2019) (December 31, distribution (including on the payment (declaration) of Directors of PJSC MOESK approved E. I. Logovinsky 2019) dividends) and losses following the results of 2018; and S. A. Nikitin as independent directors despite of on the results of on the results of on the results of on the results of 2 September 12, 2019 — presentation by the PJSC MOESK the presence of formal criteria of relation of Board 2016 2017 2018 9M 2019 management of the Company's strategic goals for the members with the existing shareholder of PJSC MOESK mid term; and the state government, as this relation, with their Amount of declared (accrued) dividends (total), including: 1,520 1,541 2,874 8.96 3 November 25, 2019 — resolution of the Company's professional experience taken into account, specific knowledge and business reputation, evidencing their Board of Directors on the recommendations to the amount of paid dividends 1,520 1,541 2,874 2,064 General Meeting of Shareholders on the amount of ability to establish an independent position on their own, dividends by ordinary shares (interim dividends for does not influence their ability to make independent, Total share of dividend payments of declared dividends 100 100 100 100 9 months). objective and responsible judgements (Minutes No. 397 of September 2, 2019). Moreover, in order to comply with the Listing Rules of PJSC Moscow Exchange, at the Share of dividend payments in net profit, % 25 57.69 71.08 35.70 meeting of the Board of Directors of PJSC MOESK dated Information on the market maker June 24, 2019 a decision was made on the composition Dividend per share, rub. 0.031205 0.03163 0.059 0.04237 of the Audit Committee of the Company's Board of Dividend yield, % 3.60 3.50 8.96 4.87 In 2019, two contracts with market makers were valid: Directors, and S. A. Nikitin was appointed the Chairman Investment Company LLC and JSC Investment Company of this Committee. ITInvest. Term of contracts: January 8, 2019–January 8, 2020. Thus, as of December 31, 2019, PJSC MOESK complies with all the requirements specified by the Listing Rules of the Moscow Exchange for issuers, whose shares are PJSC MOESK shares listing included in the Tier 2 of listing. In case of changes in on Moscow Exchange the Listing Rules, the Company will aim to implement a range of measures to comply with the Listing Rules for Since January 31, 2017, PJSC MOESK shares are included the issuers whose shares are included in the Tier 2 of in the Tier 2 of securities listing eligible for trading on listing. 1 Approved by the Resolution of the Company's Board of Directors of February 5, 2018 (Minutes No. 339 of February 7, 2018) with amendments of August 1, 2018 (Minutes No. 362 of August 2, 2018). 2 AGMS is the annual general meeting of shareholders, EGMS is the extraordinary general meeting of shareholders.

172 173 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

transfer of funds to the account of PJSC MOESK for Policy of the Company, as well as performed the non-contracted electricity consumption in a total necessary activities to prevent, identify and recover amount of 638.8 mln rub. (VAT included); its economic losses. In the year under review, special emphasis was given to the identification of reaching a fostering 7.85% level of electricity losses; unrecorded electric power consumption, procurement compliance with the requirements in terms of security activities, and technological connection of consumers ANTI-CORRUPTION of the Company’s critical information infrastructure to the electric grids of PJSC MOESK, along with and protection of its sensitive data; consolidation of power grid assets. POLICY AND together with the law-enforcement authorities and special services, implementation of measures aimed What are you going to do next and what are CORPORATE ETHICS at the decriminalization of the electric power network your projections for 2020? in Moscow Region. The key goal for 2020 is to further improve the In 2019, the PJSC MOESK economic safety units economic performance of the Company's security 4.5 completed all tasks assigned to the operation unit. units and anti-corruption measures. However, in The level of outstanding accounts receivable was also addition to the traditional reference points of the significantly decreased. With the target level of accounts Security Department's work, a new important receivable of at least 3,984.73 mln rub., this indicator objective is becoming more and more urgent, which slightly exceeded 3 bln rubles as of the end of the is ensuring the Company's safety and protection reporting year. from illegal actions that can negatively impact the operation of significant electric power facilities. We had no incidents with computers at the Company's Successful achievement of the tasks set in this area critical infrastructure facilities recorded in the register will not only protect technological and corporate of categorized facilities. No breaches of confidential processes from the growing danger of cyber threats, (commercial classified) information or personal data took but also will be a key to addressing the issues of place. digitalization and digital transformation.

As of the end of the reporting year, the level of losses in Another most important and recent task is to the PJSC MOESK network did not exceed the target values establish additional institutions for the protection (the actual value is 7.67%). Through the year, cashflow of employees' rights and legitimate interests. to the Company's accounts for the non-contract electric Given this and our key objectives defined at the power consumption were provided. With a target value Strategic Session by the Company's Director of 638.8 mln rub., the actual cash flow amounted to General, the main direction of PJSC MOESK Security 915.5 mln rub. Department's activities for the near future will be ensuring the information safety, especially at the What is your opinion on the 2019 results in the significant facilities of the critical infrastructure, context of the Company’s activity? development of the Security Hotline to protect employees, and introduction of the corresponding From my point of view, in 2019 PJSC MOESK successfully service in the mobile application — Personal complied with all the requirements of the Anti-Сorruption Account of PJSC MOESK Employee.

Interview with the First Deputy Director General for Corporate Protection and Corruption Control A.V. Filin In 2019, PJSC MOESK had in place a unified Anti-Сorruption Policy of PJSC Rosseti and DZO JSC Rosseti1 (this document is available on the official website at www.moesk.ru), as well as other local regulations.

Please, tell us about your key achievements and and corruption risks control, and at protecting PJSC Anti-corruption activities in 2019 and their effect results delivered by your department in 2019. MOESK's finances and assets. To achieve the primary targets of the Anti-Сorruption Policy, In the year of 2019, PJSC MOESK ensured the stable Economic resilience, corruption control and prevention, Key areas of focus for the Security Department were as the Security Department of PJSC MOESK took measures to operation of the specially established channel of as well as identification, prevention and mitigation of any follows: support the most cost-intensive investment projects on capital communication with employees, citizens and organizations in economic risks fall directly within the scope of competence ensuring the amount of overdue accounts receivable construction and the PJSC MOESK repair program. respect of anti-corruption issues (phone number: of the structural divisions of PJSC MOESK Corporate do not exceed 3,984.73 mln rub. as at December 31, +7 (499) 95106­ 49,­ e-mail: [email protected]). Protection and Anti-corruption Unit (Security Department). 2019, taking into consideration the overdue accounts receivable created in 2019; In 2019, the Security Department implemented a set of measures and preventive activities aimed at the damage 1 Approved by the Resolution of PJSC MOESK's Board of Directors of February 1, 2017 (Minutes No. 307 of February 1, 2017).

174 175 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

In 2019, PJSC MOESK received 380 calls via its anti- Procedure Department conducted 33 work audits. Violation 100% of heads and employees are informed about the anti- Ensuring economic security of Company corruption hotline and e-mail ([email protected]), 25 of of Russian legislation regarding electric power industry corruption policies and methods applied in PJSC MOESK. performance them contained information on possible cases of fraud was identified in 29 cases. by Company employees. Conflict of interest declaration campaign for PJSC MOESK Anti-corruption education and instructions The measures to recover and prevent economic damage of employees 2018 was arranged and conducted (declaration PJSC MOESK resulted in: As the result of investigation, the information on campaign is carried out in relation to the previous period). The Company developed the Prevention and Control of prevented damage — 3,239.9 million rub.; violations of the electric power legislation (47 calls) was Corruption in PJSC MOESK training course. New employees In 2019, 4,625 employees of PJSC MOESK were declared, recovered damage — 2,566.7 million rub. confirmed, 15 Company employees were held liable, and and audits to verify their information were carried out. are trained and tested at the Company's training center. In one employment contract was dissolved. 2019, 46 Company employees were trained there. The Anti-Сorruption Compliance Procedure Department To ensure financial stability in 2019, the Security Department In 2019, 3 cases of corruption were revealed, as a result organizes and ensures PJSC MOESK activities in terms of Furthermore, Anti-Corruption Brochure for Rosseti Group focused primarily on activities aimed at the reduction of of which criminal proceedings were initiated against the corporate ethics rules and settling conflicts of interests. of Companies is placed on the corporate electric power losses in PJSC MOESK networks, collection employees of PJSC MOESK. In 2019, 5 meetings of the Commission were held where 9 website http://www.moesk.ru in the Anti-Corruption of overdue debts from the guaranteed supply companies for issues were considered. Efforts section. electric power transmission services, and inspection of validity Key highlights of Company activities related to of the estimated and actual expenditures occurring at different the compliance with anti-corruption procedures Furthermore, regular checks of the data specified in the PJSC MOESK also provides individual advice of employees stages of PJSC MOESK business activities. conflict of interests declarations during recruitment to PJSC on the applying (following) the anti-corruption standards and In the area of corruption risks identification, individual MOESK for the management and administrative positions procedures. To improve the efficiency of procurement activities and business processes were analyzed in PJSC MOESK are carried out to identify pre-conflict situations and/or the prevent unjustifiable financial resources outflow, the Company with a view to recognize risks of corruption. PJSC conflict of interests. applied a method of estimation of objectivity of starting price MOESK monitors corruption risks in all key business Anti-corruption cooperation and partnership assessment, and tightened control over delivering, approval processes of the Company, and, accordingly, in In order to ensure a proper level of competition in and implementation of focused programs for industrial and connection with all divisions and partners involved. In 2015, PJSC MOESK joined the Anti-Сorruption Charter procurement, objectiveness, impartiality and transparency of Russian Business. In 2019, PJSC MOESK confirmed business operations of the Company. As the result of inspection activities, the following of procurement procedures, fair and equal attitude to all its compliance with the Anti-Сorruption Charter of measures were implemented to mitigate corruption risks participants of the regulated procurement procedures, the Russian Business by successfully passing declaring A positive court practice was formed to regulate the and reduce damage to the Company: Security Unit of PJSC MOESK participates in the activities procedure in the Chamber of Commerce and Industry of disagreements with JSC Mosenergosbyt for a total amount of the Central Contest Committee and Permanent Contest Russia. of 4.3 billion rub., as well as the payment for non-contracted – the Commission for Amendments to the Regulation on Committee of PJSC MOESK. electric power consumption and the interest for wrongful use Technological Connection was established in order to Regarding participation in group initiatives on anti- of funds in the amount of 915 million rub. were received. prevent sham transactions; As part of the participation in the activities of procurement corruption and preventive measures, the following bodies, the Anti-Corruption Compliance Procedure measures were taken: Special attention was paid to the work aimed at identifying and – a road map was approved to reduce the number of Department regularly performs compliance checks of the preventing non-agreement and non-registered consumption: interaction with representatives of the Russian business violations of TС agreements; procurement participants' applications. community on implementing provisions of the Anti- to prevent corruptive actions of consumers and PJSC MOESK Corruption Charter of Russian Business approved by personnel, the Security Department staff were directly – requirements to specify power receiving devices 2,898 applications were audited in the reporting period. the Chamber of Commerce and Industry of Russia (CCI involved in inspections along with representatives of the law of applicants when preparing applications for As a result, 425 discrepancies with the regulatory and of Russia) on September 21, 2012, the Russian Union enforcement authorities. In 2019, the Company continued and technological connection to power grids were added to administrative documents of PJSC MOESK were identified. of Industrialists and Entrepreneurs (RSPP), the All- strengthened the practice of holding liable both consumers and the Company's local regulations. 40 procurement applications were declined. Russian Public Organization Business Russia and the employees facilitating electric power embezzlement by their All-Russian Non-Governmental Organization OPORA action or inaction. The Company adopted a number of regulations Communication on anti-corruption policies Russia; in respect of disclosure of the chain of owners of and procedures A separate direction of loss prevention once again was participation of representatives of PJSC MOESK in counterparties, including beneficiaries (including dedicated to prevention and counteraction of consumers using the activities held by the Chamber of Commerce ultimate ones), and prohibited PJSC MOESK and its All resolutions of PJSC MOESK regarding anti-corruption metering instruments readjusted to meter electric power subsidiaries from signing contracts without disclosing and Industry of Russia and the Moscow Chamber of policies and methods and following corporate ethics, are in Commerce and Industry. consumption in favor of the consumer. the aforementioned information. all cases sent for implementation/acknowledgement to all Deputy Directors General, heads of subdivisions of direct 100% of counterparties and partners of PJSC MOESK are Mass media resources were actively used: information about With regard to anti-corruption control of relations with reporting relationship to the Director General, branch office informed that the Company realizes the requirements of hard-hitting cases of unauthorized consumption and fault- counterparties, the information about owners of 4,452 directors, Directors General of subsidiaries, who, in their article 13.3 of Federal Law No. 273-FZ dated December based administrative sanctions and criminal liability measures counterparties under 22,025 expenditure contracts was place, are responsible for implementation/acknowledgement 25, 2008 “On Corruption Control,” takes measures to were published. inspected in the reporting period. All results are provided of their supervised employees in compliance with the prevent corruption, joined the Anti-Corruption Charter of to PJSC Rosseti on a monthly basis. resolutions. Russian Business, implements the Anti-Corruption Policy In 2019, economic safety departments of PJSC MOESK held and develops an anticorruption culture, maintains business 3,876 audits of financial and economic and business activities, In accordance with the Procedure for Receiving, Besides, the Anti-Сorruption Policy section is available at the relationships with counterparties who guarantee good and 633 illegal actions taken by personnel and third parties Reviewing and Processing Calls from Company internal corporate website where the Anti-Сorruption Policy business practices of their partners and support anti- were identified. employees, counterparties and other individuals or legal of PJSC Rosseti and its Subsidiaries, main anti-corruption corruption business standards by introducing the Anti- entities about possible corruption, PJSC MOESK reviews regulatory acts and other anti-corruption information are Corruption Clause in the text of their agreements. The identified damage to the Company amounted to 2,875.7 and processes such calls on a regular basis. Thus, in placed. million rub. (against 183.16 million rub. in 2018). the reporting period, the Anti-Corruption Compliance

176 177 4. Corporate Governance ANNUAL REPORT PJSC MOESK 2019

Upon the results of the conducted audits, 521 Company prevention of illegal interference with the technological GRI CONTENT INDEX employees were subject to disciplinary actions, including 45 and corporate network of the Company; employees who were then dismissed. establishment of a Security Service hotline for Indicator Description Disclosure Reference to Section of the Report protecting Company employees. Creation of the level As part of measures against unauthorized consumption of corresponding service in the Mobile App, PJSC MOESK electric power, 946 reports on unauthorized consumption Employee Profile section; Organization Profile for 504.1 mln rub., as well as 322 reports of non-contracted consumption of 2,432.6 mln rub. were drafted. ensuring counter-terrorist protection of electric grid 102-1 Name of organization Full 1.1. Overview facilities of the Company as part of the preparation and 102-2 Description of activities, major brands, types of Full 1.1. Overview Due to the increased quality of material treatment, the selling conducting socio-political and socially significant events products and services company accepted the whole volume of reports of non- (including the national vote on changing the Constitution contracted consumption to the net supply — 123,822.5 kWh of the Russian Federation, celebration of the 75th 102-3 Location of organization’s headquarters Full 1.1. Overview in the amount of 2,621.5 mln rub., and 915.5 mln rub. were anniversary of the Victory Day dedicated to the Great 102-4 Countries of operation Full 1.1. Overview redeemed for non-contracted consumption. Patriotic War, Russian Energy Week-2020); 102-5 Nature of ownership and legal form Full 1.1. Overview ensuring the implementation of measures aimed at Upon the acts of non-contracted consumption of electric recovering damages inflicted by third parties. Achieving 102-6 Markets served Full 1.1. Overview power, 1,268 applications were made to law enforcement the recovery level of no less than 50%of the incurred 102-7 Scale of the reporting organization Full 1.1. Overview authorities (100% of the total volume of reports drafted), as a damage with 100% of recovered damage inflicted to the result of which 195 cases on administrative violations and 3 Company in 2019; 102-8 Information about employees and workers Full 3.7.1. HR Policy criminal cases were filed. as part of counteracting electric power losses, drafting 102-9 Organization’s supply chain Full 1.2. Business model Due to this, as of the end of 2019, upon the Company's and providing applications to the law enforcement authorities for 100% of identified acts of non-contracted 102-10 Significant changes in the reporting organization and Full 1.1. Overview applications, 265 orders to dismiss criminal complaint its supply chain or administrative violation were issued, 804 applications consumption of electric power. Identification as part remain unconsidered and have no decision to them or were of the work audits and prosecution of the Company's 102-11 Precautionary Principle or approach Full 3.4. Environmental Policy employees who create by either action or inaction cancelled as a result of disputed decision.criminal complaint 102-12 External initiatives Full 3.7.2. Social Responsibility or administrative violation were issued, 804 applications conditions for electric power embezzlement; 4.5. Anti-Сorruption Policy and Corporate Ethics remain unconsidered and have no decision to them or were prevention of damages to the Company's interests cancelled as a result of disputed decision. 102-13 Membership of associations Full 3.4. Environmental Policy in the consolidation process of electric power grid 3.7. Personnel and Social Responsibility assets of horticultural and gated non-commercial As part of the countermeasures against the non-contracted communities; Strategy and Analysis consumption, 194 work audits were conducted, and 182 Company employees were held liable, including 2 held liable identification of relocation (redesign) of the 102-14 Statement from senior decision-maker Full Message from the Chairman of the Board of Directors Interview with the Director General for criminal offence. Company's power grids without the Agreements on Reimbursement of Losses; 102-15 Key impacts, risks, and opportunities Full 4.3.3. Risk Management System identification and prevention of corruption in key Key objectives of PJSC MOESK for 2020 Ethics and Integrity regarding the identification and anti-corruption business processes, implementation of measures to measures mitigate corruption risks; 102-16 Values, principles, standards and norms of behavior Full 4.1. Corporate Governance System 4.5. Anti-Сorruption Policy and Corporate Ethics eliminating the non-responsiveness to the inquiries The key objectives of PJSC MOESK for 2020 regarding coming through the anti-corruption hotline and Corporate Governance the identification and anti-corruption measures are as containing information on corruption activities in follows: the Company's operations or other illegal activities, 102-18 Governance structure Full 4.1. Corporate Governance System ensuring the overdue accounts receivable do not including repeated inquiries caused by their inadequate Stakeholder Engagement exceed 3 bln rub. as at December 31, 2020, with due previous consideration. consideration of the overdue accounts receivable 102-40 List of stakeholder groups Full 3.3. Stakeholder Engagement created in 2020; 102-41 Collective bargaining agreements Full 3.7.2. Social Responsibility

102-42 Identifying and selecting stakeholders Full 3.3. Stakeholder Engagement

102-43 Approach to stakeholder engagement Full 3.3. Stakeholder Engagement

102-44 Key topics and concerns raised Full 3.3. Stakeholder Engagement

Material Topics and Boundaries Identified 102-45 Entities included in the consolidated financial Full 2.2.2. Financial Results (IFRS) statements

102-46 Defining report content and topic Boundaries Full 3.1. Company Priorities

178 179 ANNUAL REPORT PJSC MOESK 2019

Indicator Description Disclosure Reference to Section of the Report Indicator Description Disclosure Reference to Section of the Report level level

102-47 List of material topics Full 3.1. Company Priorities 302-5 Reductions in energy requirements of products and Full 3.5. Energy Efficiency and Power Consumption services 102-48 Restatements of information Full No restatements of information took place Water 102-49 Changes in reporting Full No changes were made in the scope and boundaries of topics 103-2 The management approach and its components Full 3.4. Environmental Policy

General Information about the Report 303-1 Water withdrawal by source Full 3.4. Environmental Policy 102-50 Reporting period Full Introduction, About the Report 303-2 Water sources significantly affected by withdrawal Full 3.4. Environmental Policy of water 102-51 Date of most recent report Full Introduction, About the Report 303-3 Water recycled and reused Full 3.4. Environmental Policy 102-52 Reporting cycle Full Introduction, About the Report Biodiversity 102-53 Contact point for questions regarding the report Full Contact Information 103-2 The management approach and its components Full 3.4. Environmental Policy 102-54 Claims of reporting in accordance with the GRI Full Introduction, About the Report Standards 304-1 Operational sites owned, leased, managed in, Full 3.4. Environmental Policy or adjacent to protected areas and areas of high 102-55 GRI content index Full GRI Content Index biodiversity value outside protected areas

102-56 External assurance Full The report was not directed for an external assurance 304-2 Significant impacts of activities, products, and Full 3.4. Environmental Policy The management approach and its components services on biodiversity 103-1 Explanation of the material topic and its Boundary Full 3.1. Company Priorities 304-3 Habitats protected or restored Full 3.4. Environmental Policy

103-3 Evaluation of the management approach Full 1.4. Key Performance Indicators 304-4 IUCN Red List species and national conservation list Full No data 4.2.5. Director General species with habitats in areas affected by operations

Category Economic Emissions

Economic Performance 103-2 The management approach and its components Full 3.4. Environmental Policy 103-2 The management approach and its components Full 2.2.2. Financial Results (IFRS) 305-1 Direct (Scope 1) GHG emissions Full 3.4. Environmental Policy

201-1 Direct economic value generated and distributed None 305-2 Energy indirect (Scope 2) GHG emissions Full Accounting of indirect greenhouse gas emissions is not performed 201-3 Defined benefit plan obligations and other retirement Full 3.7.2. Social Responsibility plans 305-3 Other indirect (Scope 3) GHG emissions Full Accounting of other indirect greenhouse gas emissions (motor vehicle emissions) is not performed Indirect Economic Impact 305-4 GHG emissions intensity Full GHG emissions intensity is not calculated 103-2 The management approach and its components Full 2.6. Investment Activities 305-5 Reduction of GHG emissions Partial 3.4. Environmental Policy 203-1 Infrastructure investments and services supported Full 2.6. Investment Activities 305-6 Emissions of ozone-depleting substances (ODS) Full There are no ODS emissions Anti-Corruption 305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other Full 3.4. Environmental Policy 103-2 The management approach and its components Full 4.5. Anti-Corruption Policy and Corporate Ethics significant air emissions

205-1 Operations assessed for risks related to corruption Partial 4.5. Anti-Corruption Policy and Corporate Ethics Effluents and Waste 205-2 Communication and training about anti-corruption Full 4.5. Anti-Corruption Policy and Corporate Ethics 103-2 The management approach and its components Full 3.4. Environmental Policy policies and procedures 306-1 Total water discharge by quality and destination Full 3.4. Environmental Policy 205-3 Confirmed incidents of corruption and actions taken Full 4.5. Anti-Corruption Policy and Corporate Ethics 306-2 Total weight of waste by type and disposal method Full 3.4. Environmental Policy

Category Ecological 306-3 Significant spills Full No significant spills were registered at the Company’s facilities in 2019 Energy 306-4 Transportation of hazardous waste Full PJSC MOESK does not perform international shipments, 103-2 The management approach and its components Full 3.5. Energy Efficiency and Power Consumption including import, export, or waste treatment

302-1 Energy consumption within the organization Full 3.5. Energy Efficiency and Power Consumption 306-5 Water bodies significantly influenced by water Full PJSC MOESK does not discharge waste water to water discharges and runoff from the organization territory bodies 302-4 Reduction of energy consumption Full 3.5. Energy Efficiency and Power Consumption

180 181 ANNUAL REPORT PJSC MOESK 2019

Indicator Description Disclosure Reference to Section of the Report Indicator Description Disclosure Reference to Section of the Report level level

Compliance Category Social — Society 103-2 The management approach and its components Full 3.4. Environmental Policy G4- DMA Contingency planning measures, disaster/emergency Full 3.6. Occupational Health and Safety (formerly management plan and training programs, and 307-1 Non-compliance with environmental laws and Full 3.4. Environmental Policy EU21) recovery/restoration plans regulations G4- EU25 Number of injuries and fatalities across the public Full 3.6. Occupational Health and Safety Category Social — Labor Practices and Decent Work involving the Company assets including legal judgments, settlements and pending legal cases of Employment diseases 103-2 The management approach and its components Full 3.7.1. HR Policy G4- EU28 Power outage frequency (SAIFI) Full 2.5. Increased Reliability 401-2 Benefits provided to full-time employees that are not Full 3.7.2. Social Responsibility provided to temporary or part-time employees with G4- EU29 Average time for restoration of electric power supply Full 2.5. Increased Reliability the breakdown by significant locations of operation (SAIDI)

Personnel/Management Relations 103-2 The management approach and its components Full 3.7.1. HR Policy

Occupational Health and Safety 103-2 The management approach and its components Full 3.6. Occupational Health and Safety

403-2 Types of injury and rates of injury, occupational Partial 3.6. Occupational Health and Safety diseases, lost days, and absenteeism, and number of work-related fatalities

403-3 Workers with high incidence or high risk of diseases Full 3.6. Occupational Health and Safety related to their occupation

403-4 Health and safety topics covered in formal Full 3.6. Occupational Health and Safety agreements with trade unions

Training and Education 103-2 The management approach and its components Full 3.7.1. HR Policy 3.7.2. Social Responsibility

404-2 Programs for upgrading employee skills and Full 3.7.1. HR Policy transition assistance programs

404-3 Percentage of employees receiving regular Partial 3.7.1. HR Policy performance and career development reviews

Category Social — Society

Public Policy 415-1 Political contributions Full No financial contributions or inkind contributions were made for political purposes

Standard Protocol for Electric Power Sector

Category Economic G4 — Length of above and underground transmission and Full Key Reporting Indicators EU4 distribution lines by regulatory regime

G4- DMA Activities and expenses for research and Full 2.7. Technologies and Innovations (formerly development to ensure reliable electric power supply EU8) and sustainable growth

G4- EU12 Electric power losses during transmission and a Full 2.1.1. Transmission and Distribution of Electric Power share in total electric power volume 3.5. Energy Efficiency and Power Consumption

182 183 ANNUAL REPORT PJSC MOESK 2019

GLOSSARY OF MAIN TERMS AND ABBREVIATIONS SS substation rated for 35 kV and above

Smart Grid Smart Grid technology ICC I&C complex

AIIS KUE automated measuring and information system for electric power fiscal metering RAS Russian Accounting Standards

ASTU computer-aided system of technological control RTS Russian Trading System

OL overhead line Global Reporting Initiative, GRI Sustainability Reporting Standards by Global Reporting Initiative defining principles, which determine the report content and ensure reporting data quality; standard reporting elements, which consist of FOCL fiber-optical communication line effectiveness indicators in the field of economic, environmental, social impact of the organization, approaches to impact management and other characteristics as well as recommendations on EGSM Extraordinary General Shareholders Meeting specific report technicalities

GIS geographic information system PGR Power Grids Region

AGMS Annual General Meeting of Shareholders SSIC self-supporting insulated conductor

S&A subsidiaries and affiliates MM mass media

Uniform (common pot) tariff price (tariff) for electric power transmission services used for settlements with service consumers SPAM system of production assets management (excluding grid companies) located in the corresponding constituent entity of the RF and belonging to a group (category), which is subject to differentiation of tariffs for electric energy (power) in M&R maintenance and repair accordance with the RF law, regardless of the electric grid company, to which they are connected, unless otherwise stipulated by the RF Government resolution TC technological connection

Concerned Party (Stakeholder) in the broad sense: a group of individuals or legal entities able to influence the company’s activities R&R retrofit and revamp or is dependent on the company’s activities. In the narrow sense: public authorities and local self-governing authorities, commercial companies, social and non-profit organizations and units LGO local grid operator (including informal), position of which in relation to the Company activities is publicly expressed and aimed at protection of socially significant and group interests TS technical specifications

IT information technology FEC Fuel and Energy Committee

ACL aerial cable line FAS of Russia Federal Antimonopoly Service of Russia

CL cable line FGC UES Federal Grid Company of Unified Energy System of Russia

KPI key performance indicators FFMS Federal Financial Markets Service (liquidated on September 1, 2013, the functions were assigned to the Financial Markets Service within the Bank of Russia) ETL electrical transmission line

RF Ministry of Energy Ministry of Energy of the Russian Federation

IDGC interregional distribution grid company UNITS OF MEASUREMENT

IFRS International Financial Reporting Standards kV kilovolt bln billion

IEC International Electrotechnical Commission Standard MW megawatt rub. ruble MVA megavolt-ampere t ton VAT Value Added Tax kWh kilowatt-hour ref. fuel reference fuel RDED research, development and experimental design activities km kilometer c.u. conventional unit R&D research and development kop. kopeck pcs. unit autumn-winter period AWP mln million SWYD outdoor switchgear

p.p. percentage point

184 185 CONTACT INFORMATION

Legal address: 115114, Moscow, 2nd Paveletsky Ave, 3, building 2

Light Line Contact Center: 8 (800) 700-40-70 PJSC MOESK Reception: +7 (495) 662-40-70, +7 (495) 363-40-70, [email protected] Inquiries on correspondence: +7 (499) 951-06-26, +7 (499) 951-06-50 (fax) Anti-Corruption Hotline: +7 (499) 951-06-49, [email protected]

Contacts for shareholders: +7 (495) 662-40-70, +7 (495) 363-40-70 (ext. 11-75), [email protected] Contacts for investors: +7 (495) 662-40-70, +7 (495) 363-40-70 (ext. 12-89), [email protected] Contacts for media representatives: +7 (495) 662-40-70, +7 (495) 363-40-70 (ext. 40-56), [email protected]

Working hours of the executive staff: Monday to Thursday from 8.30 to 17.30 Friday from 8.30 to 16.40 Lunch break from 12.00 to 12.50 Website: http://www.moesk.ru/en/

Central Customer Office: Address: 117312, Moscow, Vavilov str., 7B Time of reception: Mon–Sat.: 9:00–20:00 (no lunch break) Addresses and office hours of other customer service centers are posted on the portal for technological connection http://utp.moesk.ru

Auditor Ernst & Young LLC Location: 115035, Moscow, 77 Sadovnicheskaya Naberezhnaya, building 1 Telephone: + 7 (495) 705-97-00; + 7 (495) 755-97-00 Fax: +7 (495) 755-97-01 Website: https://www.ey.com/en_ru E-mail address: [email protected]

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