Report on Review of Interim Financial Information PJSC Inter RAO and Its Subsidiaries for the Three-Month Period Ended 31 March 2020

Report on Review of Interim Financial Information PJSC Inter RAO and its subsidiaries for the three-month period ended 31 March 2020

May 2020

Report on Review of Interim Financial Information of PJSC Inter RAO and its subsidiaries

Contents Page

Report on Review of Interim Financial Information 3

Appendices

Interim consolidated statement of financial position 5 Interim consolidated statement of comprehensive income 6 Interim consolidated statement of cash flows 7 Interim consolidated statement of changes in equity 9

Notes to the interim financial information

1. The Group and its operations 10 2. Basis of preparation 10 3. Summary of significant accounting policies 11 4. Segment information 11 5. Acquisitions and disposals 17 6. Property, plant and equipment 18 7. Investments in associates and joint ventures 19 8. Securities 19 9. Other non-current assets 20 10. Accounts receivable and prepayments 20 11. Cash and cash equivalents 21 12. Other current assets 21 13. Equity 21 14. Loans and borrowings 21 15. Accounts payable and accrued liabilities 22 16. Other non-current liabilities 23 17. Revenue 23 18. Other operating income 23 19. Operating expenses 24 20. Finance income and expenses 24 21. Income tax expense 24 22. Fair value of financial instruments 25 23. Commitments 26 24. Contingencies 27 25. Related party transactions 30 26. Events after the reporting period 33

2 Ernst & Young LLC ООО «Эрнст энд Янг» Sadovnicheskaya Nab., 77, bld. 1 Россия, 115035, Москва Moscow, 115035, Russia Садовническая наб., 77, стр. 1 Tel: +7 (495) 705 9700 Тел.: +7 (495) 705 9700 +7 (495) 755 9700 +7 (495) 755 9700 Fax: +7 (495) 755 9701 Факс: +7 (495) 755 9701 www.ey.com/ru ОКПО: 59002827 ОГРН: 1027739707203 ИНН: 7709383532

Report on Review of Interim Financial Information

To the shareholders and Board of Directors of PJSC Inter RAO

Introduction

We have reviewed the accompanying interim condenced consolidated financial statements of PJSC Inter RAO and its subsidiaries, which comprise the interim consolidated statement of financial position as at 31 March 2020, interim consolidated statement of comprehensive income for the three-month period then ended, interim consolidated statement of cash flows and interim consolidated statement of changes in equity for the three-month period then ended, and selected explanatory notes (interim financial information). Management of PJSC Inter RAO is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34, Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

3 A member firm of Ernst & Young Global Limited

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting.

I.A. Buyan Partner Ernst & Young LLC

22 May 2020

Details of the entity

Name: PJSC Inter RAO Record made in the State Register of Legal Entities on 1 November 2002, State Registration Number 1022302933630. Address: Russia 119435, Moscow, Bolshaya Pirogovskaya street, 27, building 2.

Details of the auditor

Name: Ernst & Young LLC Record made in the State Register of Legal Entities on 5 December 2002, State Registration Number 1027739707203. Address: Russia 115035, Moscow, Sadovnicheskaya naberezhnaya, 77, building 1. Ernst & Young LLC is a member of Self-regulatory organization of auditors Association “Sodruzhestvo”. Ernst & Young LLC is included in the control copy of the register of auditors and audit organizations, main registration number 12006020327.

A member firm of Ernst & Young Global Limited

Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

1. The Group and its operations

General information on the Group

Public Joint Stock Company “Inter RAO UES” (the “Parent Company” or the “Company” or PJSC “Inter RAO”) is incorporated and domiciled in the Russian Federation and whose shares are publicly traded.

The Russian Federation is the ultimate controlling party of PJSC Inter RAO. The main state shareholders of the Parent Company as at 31 March 2020 are Group ROSNEFTEGAZ (27.63%) and PJSC FGC UES (8.57%).

The Company has controlling interests in a number of subsidiaries operating in different regions of the Russian Federation and abroad (the Company and its subsidiaries collectively are designated as the “Group”).

The Group is engaged in the following business activities:

► Electricity production, supply and distribution;

► Export and import of electricity;

► Sales of electricity purchased abroad and on the domestic market;

► Engineering services;

► Energy effectiveness research and development.

The Group’s business environment

The governments of the countries where the Group entities operate directly affect the Group’s operations through regulation with respect to energy generation, purchases and sales. Governmental economic, social and other policies in these countries could have a material effect on the operations of the Group.

The Russian Federation, Georgia, Moldavia (including Transdniestria Republic), Turkey, Lithuania, Latvia and Estonia have been experiencing significant (albeit different) political and economic changes that have affected, and may continue to affect, the activities of the Group entities operating in this environment. Consequently, operations in these jurisdictions involve risks that typically do not exist in other mature markets. These risks include matters arising from the policies of the government, economic conditions, the imposition of or changes to taxes and regulations, foreign exchange fluctuations and the enforceability of contract rights.

The accompanying interim financial information reflects management’s assessment of the impact of the business environment on the operating results and the financial position of the Group in the countries where the Group entities operate. Management is unable to predict all developments which could have an impact on the utilities sector and the wider economy in these countries and consequently, what effect, if any, they could have on the financial position of the Group. Therefore, future business environment may differ from management’s assessment.

2. Basis of preparation

(a) Statement of compliance

This interim financial information has been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting.

The interim financial information does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual financial statements as at 31 December 2019.

(b) Functional and presentation currency

The national currencies of the countries where the Group entities operate are usually the individual company’s functional currencies, because they generally reflect the economic substance of the underlying transactions and circumstances of those companies.

The Group applies judgment in determination of the functional currencies of certain Group entities. The functional currency determination influences foreign exchange gain/losses recognised in profit and loss and translation differences recognised in other comprehensive income.

The interim financial information is presented in millions of the Russian roubles (“RUR”). The main part of the Group is represented by entities operating in the Russian Federation having RUR as their functional currency. All values are rounded to the nearest million, except when otherwise indicated.

10 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

2. Basis of preparation (continued)

Demand for electricity is to some extent influenced by the season of the year. Revenue is usually higher in the period from October to March than in other months of the year. This seasonality does not impact revenue or cost recognition policies of the Group.

3. Summary of significant accounting policies

The accounting policies adopted in the preparation of the interim financial information for the three months ended 31 March 2020 are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2019.

The following IFRSs and amendments to existing IFRSs that have been published and effective as of 1 January 2020 and did not have any impact on the Group’s consolidated financial information

► Amendments to IAS 1 and IAS 8 Definition of Material.

► Amendments to IFRS 3 Definition of a Business.

► Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform.

The following IFRSs and amendments to existing IFRSs that have been published but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s interim financial information are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective:

► IFRS 17 Insurance Contracts. IFRS 17 is effective for reporting periods beginning on or after 1 January 2021, with comparative figures required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. This standard is not applicable to the Group.

► Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively. The Group will apply these amendments when they become effective.

4. Segment information

Operating segments are components of an enterprise about which separate financial information is available and is evaluated regularly by the Chief Operating Decision Maker (‘CODM’) in deciding how to allocate resources and in assessing performance. The Management Board of the Parent Company has been determined as the CODM; the operating segment has been defined as a legal entity or a particular business activity of a legal entity. The Management Board analyses the effectiveness of the operating segments based on IFRS financial reporting.

The Management Board considers the Group activities from both geographical (by countries of the Group entities’ jurisdiction) and business perspective (generation, trading, supply, distribution, engineering and other) meaning that each operating segment represents a certain type of business activities or legal entities in a certain country.

11 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

4. Segment information (continued)

The following reporting segments have been identified based on the requirements of IFRS 8 Operating Segments (taking into consideration aggregation criteria as well as quantitative thresholds on revenue and EBITDA):

► Supply in the Russian Federation (represented by JSC Mosenergosbyt, LLC MosOblEIRTS, JSC Saint Petersburg Power Supply Company (Group of entities), PJSC Tambov Energy Retailing Company, PJSC Saratovenergo, JSC Altayenergosbyt, LLC INTER RAO Orlovskii Energosbyt, JSC Industrial Energetics, LLC RN-Energo, JSC Tomskenergosbyt, LLC Omsk Energy Retailing Company, JSC EIRTS LO, LLC ESC Bashkortostan, LLC Inter RAO − EIRTS, LLC Energosbyt Volga, LLC RT − Energy Trading (equity accounted investee), LLC North Supply Company, LLC ESCB − Development, LLC EIRTS RB (from July 2019) and LLC EIRTS TO (from September 2019) and LLC United Processing Centre (from December 2019)).

► Electric Power Generation in the Russian Federation (represented by Group Inter RAO − Electric Power Plants, including JSC Nizhnevartovskaya GRES (equity accounted investee)).

► Thermal Power Generation in the Russian Federation represented by:

► TGC-11 (represented by JSC TGC-11, JSC Tomsk generation, JSC TomskRTS and JSC OmskRTS);

► Bashkir Generation (represented by Group Bashkir Generation Company).

► Trading in the Russian Federation and Europe (represented by the trading activities of the Parent Company, RAO Nordic Oy, AB INTER RAO Lietuva and its subsidiaries, JSC Eastern Energy Company, LLC Inter RAO Georgia (equity accounted investee from May 2019).

► Foreign assets represented by the following reporting sub-segments:

► Georgia (represented by JSC Telasi, JSC Khramhesi I and JSC Khramhesi II);

► Moldavia (represented by CJSC Moldavskaya GRES);

► Turkey (represented by Trakya Elektrik Uretim Ve Ticaret A.S.).

► Engineering in the Russian Federation (represented by LLC INTER RAO Engineering, LLC Quartz Group, LLC Power Efficiency Centre INTER RAO UES (equity accounted investee), LLC INTER RAO − Export, Energy beyond borders Non-for-profit Fund and LLC TCC Energy beyond borders (till December 2019), RUS Gas Turbines Holding B.V. (equity accounted investee, from April 2019), LLC INTER RAO Export – Projects Management (from October 2019).

► Corporate centre includes elimination of transactions among the reporting segments and management expenses, interest income and interest expense of the Parent Company and other subsidiaries, as well as loans and borrowings, obtained by the Parent Company and other subsidiaries, which cannot be allocated to a specific reporting segment on a reasonable basis.

The CODM evaluates performance of the operating segments based on EBITDA, which is calculated as profit/(loss) for the period before finance income and finance expenses; income tax expense; depreciation and amortisation of property, plant and equipment, intangible assets; impairment charge/(release) of property, plant and equipment; impairment of goodwill and other intangible assets; impairment of securities, investments in associates and joint ventures and assets classified as held-for-sale; provisions for doubtful debts and for inventory obsolescence; other provisions; share in profit/(loss) of associates and effects from acquisition and disposal of Group entities; income/(loss) from purchase and sale of securities and assets classified as held-for-sale; and charity expenses, income/(loss) from disposal of non-financial assets and some other included in Other item within the reconciliation between EBITDA of the reporting segments and net income/(loss) for the reporting period. The Group’s definition of EBITDA may differ from that of other companies. Information about depreciation and amortisation of property, plant and equipment and intangible assets, interest income and interest expenses is disclosed in segment information as it is regularly reviewed by the CODM.

Revenue of each segment is mainly represented by sales of electricity and capacity and heat-power allocated to the reporting segments.

The CODM analyses leverage of the Group’s subsidiaries, joint ventures (equity accounted investees) on a regular basis; loans and borrowings are allocated to the reporting segments excluding inter-segment balances.

Joint ventures (equity accounted investees) are reviewed by the CODM in terms of the Group’s share in their profit/(loss) and loan and borrowings.

12 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

4. Segment information (continued)

Below is the performance of the operating segments for the three months ended 31 March 2020:

Total revenue 189,057 46,416 11,611 17,956 10,987 2,890 2,474 − 3,956 (18,441) 266,906 Revenue from external customers 188,424 33,986 10,384 14,413 10,679 2,890 2,474 − 3,383 273 266,906 Inter-segment revenue 633 12,430 1,227 3,543 308 − − − 573 (18,714) −

Operating expenses, including: Purchased electricity and capacity (113,086) (1,666) (759) (1,294) (9,499) (2,462) − − − 18,072 (110,694) Transmission fees (62,168) − − (1) (885) (371) (20) − − − (63,445) Fuel expenses − (15,896) (4,224) (8,659) − − (1,359) − − 724 (29,414) Share in profit of joint ventures − 1,071 − − 24 − − − 32 − 1,127

EBITDA 8,013 23,314 4,146 5,172 1,888 (374) 693 (38) (28) (1,409) 41,377

Depreciation and amortisation (704) (3,967) (446) (1,015) (45) (143) (92) − (34) (448) (6,894) Interest income 522 1,783 63 171 2 9 − 4 39 762 3,355 Interest expense (51) − (9) (5) (3) (54) − − (19) 64 (77) Interest expense on lease liabilities (101) (1,272) (16) (74) (1) (1) − − (1) (9) (1,475)

13 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

4. Segment information (continued)

Below is the performance of the operating segments for the three months ended 31 March 2019:

Total revenue 185,940 53,453 12,199 18,660 20,702 2,978 1,969 1,168 4,370 (19,993) 281,446 Revenue from external customers 185,350 39,913 10,922 14,940 20,344 2,978 1,969 1,168 3,621 241 281,446 Inter-segment revenue 590 13,540 1,277 3,720 358 − − − 749 (20,234) −

Operating expenses, including: Purchased electricity and capacity (114,520) (1,776) (901) (1,299) (13,179) (2,291) − − − 19,402 (114,564) Transmission fees (58,934) − − (1) (1,776) (463) (13) − − − (61,187) Fuel expenses − (20,501) (4,482) (9,423) − − (993) (2) − 842 (34,559) Share in profit/(loss) of joint ventures − 730 − − − − − − (8) − 722

EBITDA 7,015 25,127 4,236 4,779 6,525 (242) 555 1,002 (329) (1,056) 47,612

Depreciation and amortisation (771) (3,886) (435) (997) (46) (153) (85) (444) (38) (306) (7,161) Interest income 544 1,540 91 126 4 27 − 8 100 1,323 3,763 Interest expense (113) − (30) (1) (11) (61) (3) (28) (22) 106 (163) Interest expense on lease liabilities (124) (1,084) (17) (110) (1) (2) − − (1) (6) (1,345)

14 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

4. Segment information (continued)

As at 31 March 2020:

Electric Power Generation in the Russian Thermal Power Generation Supply Federation in the Russian Federation Trading Foreign assets Engineering Inter RAO − Electricity The Russian The Russian Generation Bashkir Federation The Russian Corporate Federation Group TGC-11 Generation and Europe Georgia Moldavia Turkey Federation centre Total Loans and borrowings, including: (50) − (1,095) − (259) (1,770) − − − − (3,174) Share in loans and borrowings of joint ventures − − − − − − − − − − −

Lease liabilities, including: (4,178) (50,231) (604) (3,323) (121) (52) − − (73) (377) (58,959) Share in lease liabilities of joint ventures − (218) − − − − − − (18) − (236)

As at 31 December 2019:

Electric Power Generation in the Russian Thermal Power Generation Supply Federation in the Russian Federation Trading Foreign assets Engineering Inter RAO − Electricity The Russian The Russian Generation Bashkir Federation The Russian Corporate Federation Group TGC-11 Generation and Europe Georgia Moldavia Turkey Federation centre Total Loans and borrowings, including: (568) − (874) (700) (267) (907) − − − − (3,316) Share in loans and borrowings of joint ventures − − − − − − − − − − −

Lease liabilities, including: (4,150) (48,634) (582) (3,551) (107) (47) − − (75) (384) (57,530) Share in lease liabilities of joint ventures − (216) − − − − − − (19) − (235)

15 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

4. Segment information (continued)

The reconciliation between EBITDA of the reporting segments and net profit for the reporting period in the interim consolidated statement of comprehensive income is presented below:

For the three months ended 31 March 2020 2019 EBITDA of the reportable segments 41,377 47,612 Depreciation and amortisation (Note 19) (6,894) (7,161) Interest income (Note 20) 3,355 3,763 Interest expense (Note 20) (77) (163) Interest expense on lease liabilities (Note 20) (1,475) (1,345) Foreign currency exchange gain/(loss), net (Note 20) 8,912 (1,922) Other finance expense (Note 20) (6) (435) Provisions charge, including (Note 19): (806) (1,234) Impairment of accounts receivable, net (548) (1,879) (Charge)/release of other provisions (97) 458 (Charge)/release of VAT provision (161) 187 Gain from disposal of Group entities, net (Note 18) − 63 Other item 23 (178) Share of loss of associates (Note 7) (9) (221) Income tax expense (Note 21) (9,781) (7,609) Profit for the reporting period in the interim consolidated statement of comprehensive income 34,619 31,170

The reconciliation between loans and borrowings of the reportable segments and loans and borrowings for the reporting period in the interim consolidated statement of financial position is presented below:

As at 31 March As at 31 December 2020 2019 Loans and borrowings of the reportable segments (3,174) (3,316) Less: Share in loans and borrowings of joint ventures − − Loans and borrowings in the interim consolidated statement of financial position (3,174) (3,316)

Lease liabilities of the reportable segments (58,959) (57,530) Less: Share in lease liabilities of joint ventures 236 235 Lease liabilities in the interim consolidated statement of financial position (58,723) (57,295)

16 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

4. Segment information (continued)

Information about geographical areas

The Management Board also considers revenue of the Group entities generated in their countries of jurisdiction and abroad as well as non-current assets (property, plant and equipment, investments in associates and jointly controlled entities and intangible assets, including goodwill) based on location of assets.

For the three months ended For the three months ended 31 March 2020 31 March 2019 Revenue in Revenue in countries Total countries Total Revenue in other than revenue Revenue in other than revenue the Group Group based on the Group Group based on entity’s entity’s location of entity’s entity’s location of jurisdiction1 jurisdiction customers jurisdiction jurisdiction customers Russian Federation 252,219 − 252,219 256,707 − 256,707 Finland 1,623 28 1,651 7,955 38 7,993 Lithuania 2,411 − 2,411 6,264 − 6,264 Georgia 2,890 448 3,338 2,978 55 3,033 Moldavia (incl. Transdniestria Republic) 2,474 − 2,474 1,969 − 1,969 China − 1,134 1,134 − 1,069 1,069 Turkey − − − 1,168 − 1,168 Kazakhstan − 774 774 − 875 875 Mongolia − 373 373 − 392 392 Latvia 47 − 47 296 − 296 Poland 1,406 − 1,406 955 − 955 Estonia 188 66 254 203 130 333 Other − 825 825 − 392 392 Total 263,258 3,648 266,906 278,495 2,951 281,446

Total non-current assets based on location of assets2 As at 31 March As at 31 December 2020 2019 Russian Federation 339,073 339,423 Georgia 9,345 8,440 Moldavia (incl. Transdniestria Republic) 5,454 4,444 Lithuania 1,127 948 Other 309 308 Total 355,308 353,563

5. Acquisitions and disposals

Acquisition of non-controlling interest in JSC Tomskenergosbyt

In February 2019 the Group bought 11.53% of ordinary shares and 4.71% of preferred shares of JSC Tomskenergosbyt from non-controlling shareholders (10.83% of the total voting shares of the company) under the voluntary public offer on 12 November 2018 for RUR 270 million. As a result the Group has increased its participation in JSC Tomskenergosbyt to 95.84%.

On 24 May 2019 the Group acquired 2.85% of ordinary shares and 15.67% of preferred shares for the total cash consideration of RUR 104 million and increased its participation in JSC Tomskenergosbyt from 95.84% to 100.00%.

1 Revenues are attributable to countries on the basis of the customer’s location. 2 Total non-current assets based on location of assets exclude deferred tax assets, securities and other non-current assets. 17 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

5. Acquisitions and disposals (continued)

Acquisition of non-controlling interest in PJSC Tambov Energy Retailing Company

In August 2019 the Group bought 20.25% of ordinary shares and 0.13% of preferred shares of PJSC Tambov Energy Retailing Company from non-controlling shareholders (17.74% of the total voting shares of the company) for RUR 77 million. As a result the Group has increased its participation in PJSC Tambov Energy Retailing Company to 84.98%.

In December 2019 the Group bought 0.06% of ordinary shares and 0.01% of preferred shares of PJSC Tambov Energy Retailing Company from non-controlling shareholders (0.06% of the total voting shares of the company) under the voluntary public offer for RUR 0.3 million. As a result, the Group has increased its participation in PJSC Tambov Energy Retailing Company to 85.04%.

In March 2020 the Group bought 0.115% of ordinary shares and 0.509% of preferred shares of PJSC Tambov Energy Retailing Company from non-controlling shareholders (0.164% of the total voting shares of the company) under the voluntary public offer for RUR 0.6 million. As a result, the Group has increased its participation in PJSC Tambov Energy Retailing Company to 85.21%.

6. Property, plant and equipment

Infra- Const- Land and structure Plant and ruction in buildings assets equipment Other progress Total Cost Balance at 31 December 2019 132,116 105,052 355,452 14,974 16,342 623,936 Reclassification (42) 1 (5) 46 − − Additions 256 (70) 2,122 8 2,484 4,800 Disposals (282) (27) (139) (174) (23) (645) Transfers 244 973 2,789 64 (4,070) − Transfer to other accounts (34) − (103) (83) − (220) Translation difference 1,879 1,753 3,651 213 239 7,735 Balance at 31 March 2020 134,137 107,682 363,767 15,048 14,972 635,606 Including right-of-use assets 9,305 1,543 50,877 701 − 62,426

Depreciation and impairment Balance at 31 December 2019 (52,348) (54,272) (181,472) (6,667) (1,197) (295,956) Reclassification 2 − − (2) − − Depreciation charge (999) (933) (4,141) (247) − (6,320) Disposals 68 19 125 172 12 396 Transfers − (3) (16) − 19 − Transfer to other accounts 16 − 96 79 − 191 Translation difference (1,567) (1,083) (2,750) (154) (76) (5,630) Balance at 31 March 2020 (54,828) (56,272) (188,158) (6,819) (1,242) (307,319) Including right-of-use assets (2,727) (825) (5,657) (269) − (9,478)

Net book value Balance at 31 December 2019 79,768 50,780 173,980 8,307 15,145 327,980 Balance at 31 March 2020 79,309 51,410 175,609 8,229 13,730 328,287

Construction in progress is represented by property, plant and equipment that has not yet been ready for operation and advances to suppliers of property, plant and equipment. Such advances amounted to RUR 4,726 million as at 31 March 2020 (31 December 2019: RUR 3,865 million).

Additions of right-of-use assets for the three month period ended 31 March 2020 amounted to RUR 177 million (for the three month period ended 31 March 2019: RUR 4,955 million).

For the three months ended 31 March 2020 the revaluation of right-of-use assets was recognized in the amount of RUR 2 220 million (for the three months ended 31 March 2019: RUR 518 million).

Depreciation of right-of-use assets for the three month period ended 31 March 2020 amounted to RUR 1,119 million (for the three month period ended 31 March 2019: RUR 1,017 million).

18 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

6. Property, plant and equipment (continued)

As at 31 March 2020 net book value of right-of-use assets amounted to RUR 52,948 million (as at 31 December 2019: RUR 51,832 million), including the net book value of right-of-use assets of Kaliningrad Generation LLC in the amount of RUR 44,963 million (as at 31 December 2019: RUR 43,647 million).

The long-term lease liabilities as at 31 March 2020 amounted to RUR 50,287 million (as at 31 December 2019: RUR 48,934 million). The short-term portion of long-term lease liabilities as at 31 March 2020 amounted to RUR 8,436 million (as at 31 December 2019: RUR 8,361 million).

7. Investments in associates and joint ventures

Joint ventures JSC Nizhne- RUS Gas vartovskaya Turbines Other joint GRES Holding B.V. ventures Associates Total Carrying value at 31 December 2019 13,514 1,643 6 616 15,779 Share of profit/(loss) after tax 1,071 32 24 (9) 1,118 Translation difference − − 1 − 1 Carrying value at 31 March 2020 14,585 1,675 31 607 16,898

JSC Kaskad

In January 2019 the Group sold 25% of shares of JSC Kaskad to third parties. As a result the Group recognised gain from disposal in the amount of RUR 63 million in the interim consolidated statement of comprehensive income (Note 18), сash inflow due to sale of JSC Kaskad amounted to RUR 103 million was recognised in the interim consolidated statement of cash flows in investing activities.

RUS Gas Turbines Holding B.V.

In April 2019 the Group increased its share in RUS Gas Turbines Holding B.V. by 25% to 50%. As a result RUS Gas Turbines Holding B.V. became a joint venture.

UAB Alproka

As at 31 December 2019 the Group has written off UAB Alproka due to the process of liquidation of the company (the company was officially liquidated on 17th February 2020).

8. Securities

As at 31 March As at 31 December 2020 2019

Equity instruments 5,668 5,573 FVOCI 4,103 4,008 FVPL 1,565 1,565

Debt instruments 2,065 2,224 FVOCI 2,065 2,224 Total 7,733 7,797

For the three months ended 31 March 2020 and 31 March 2019 there was no impairment loss on securities recognised through profit and loss in the interim consolidated statement of comprehensive income.

For the three months ended 31 March 2020 the amount of RUR 77 million, net of tax RUR 18 million was recognised as a gain from revaluation of equity securities through other comprehensive income in the interim consolidated statement of comprehensive income (for the three months ended 31 March 2019: gain from revaluation in the amount of RUR 154 million, net of tax RUR 31 million).

Debt instruments at fair value through OCI represent quoted bonds of Peresvet Bank. During the reporting period the change of bonds fair value in the amount of RUR 129 million, net of tax RUR 30 million was recognised as a loss through other comprehensive income in the consolidated statement of comprehensive income (for the three months ended 31 March 2019: gain RUR 122 million, net of tax RUR 31 million).

19 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

9. Other non-current assets

As at 31 March As at 31 December 2020 2019 Financial non-current assets 1,704 1,179 Non-current trade receivables 977 838 Less impairment provision (81) (94) Non-current trade receivables − net 896 744

Other non-current receivables 406 425 Less impairment provision (49) (54) Other non-current receivables − net 357 371

Non-current loans issued (including interest) 390 −

Long-term bank deposits 61 64

Non-financial non-current assets 1,168 1,094 Non-current advances to suppliers and prepayments 111 127 Less impairment provision (3) (4) Non-current advances to suppliers and prepayments − net 108 123

VAT recoverable 697 534 Other taxes recoverable 140 116 Other 223 321 2,872 2,273

10. Accounts receivable and prepayments

As at 31 March As at 31 December 2020 2019 Financial assets 100,208 89,312 Trade receivables 102,357 92,072 Less impairment provision (20,378) (20,513) Trade receivables − net 81,979 71,559

Other receivables 12,330 13,380 Less impairment provision (5,133) (4,951) Other receivables − net 7,197 8,429

Short-term loans issued (including interest) 348 724 Less impairment provision (250) (250) Short-term loans issued (including interest) − net 98 474

Short-term outstanding interest on bank deposits 3,895 3,020

Short-term receivables on construction contracts 7,039 5,830

Non-financial assets 9,534 12,921 Advances to suppliers and prepayments 6,644 6,759 Less impairment provision (1,532) (1,543) Advances to suppliers and prepayments − net 5,112 5,216

Short-term VAT recoverable 1,304 1,256 Taxes prepaid 3,118 6,449 109,742 102,233

The Group does not hold any collateral as a security.

20 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

11. Cash and cash equivalents

As at 31 March As at 31 December 2020 2019 Cash at bank and in hand, national currency 28,378 31,555 Cash at bank and in hand, foreign currency 21,900 21,520 Bank deposits with maturity of three months or less 82,551 42,849 Total 132,829 95,924

12. Other current assets

As at 31 March As at 31 December 2020 2019 Bank deposits with maturity of 3-12 months 152,682 161,447 Restricted cash 1,076 727 Short-term derivative financial instruments 29 242 Debt instruments 1,236 1,232 Other 1,426 407 Total 156,449 164,055

As at 31 March 2020 other current assets included bonds issued by financial institutions with total carrying value of RUR 1,236 million (as at 31 December 2019: RUR 1,232 million). During the reporting period the change of bonds fair value in the amount of RUR 20 million, net of tax RUR 1 million was recognised as a loss through other comprehensive income in the consolidated statement of comprehensive income (for the three months ended 31 March 2019: gain RUR 3 million).

13. Equity

Share capital

As at 31 March As at 31 December 2020 2019 Number of ordinary shares issued and fully paid (in units) 104,400,000,000 104,400,000,000 Par value (in RUR) 2.809767 2.809767 Share capital (in million RUR) 293,340 293,340

14. Loans and borrowings

This note provides information about the Group’s loans and borrowings. Certain loan agreements include financial and non-financial covenants.

As at 31 March As at 31 December Currency 2020 2019 Loans and borrowings GEL 1,305 554 JPY 462 350 EUR 259 267 RUR 700 800 USD − − Total long-term loans and borrowings 2,726 1,971

Less: current portion of long-term loans and borrowings (1,730) (1,497) 996 474

As at 31 March 2020 fair value of loans and borrowings amounts to RUR 2,809 million (as at 31 December 2019: RUR 2,130 million) and estimated by discounting of contractual future cash flows at the prevailing current market interest rates available to the Group for similar financial instruments.

21 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

14. Loans and borrowings (continued)

In June 2010 JSC Stantsiya Ekibastuzskaya GRES-2, joint venture till the December 2016, recognised liability under two credit lines in the amount of USD 385 million and RUR 12,000 million from Eurasian Development Bank and SC Vnesheconombank, accordingly, maturing in 2025. Shareholders of JSC Stantsiya Ekibastuzskaya GRES-2 issued guarantees to the banks in the amount equal to 50% of the loans carrying value and pledged shares of JSC Stantsiya Ekibastuzskaya GRES 2 as a collateral. In December 2019, the Group sold the shares in JSC Stantsiya Ekibastuzskaya GRES-2 to JSC Sovereign Wealth Fund “Samruk-Kazyna”. In accordance with the collateral agreement, the sale of shares of JSC Stantsiya Ekibastuzskaya GRES-2 must be agreed with creditors. The creditors approved the deal, provided that the existing encumbrances on the shares of JSC Stantsiya Ekibastuzskaya GRES-2, as well as the guarantees given by the shareholders of JSC Stantsiya Ekibastuzskaya GRES-2 to the creditors, are preserved. As at 31 March 2020 the Parent Company’s contingent liability under the guarantee amounted to RUR 9,093 million (as at 31 December 2019: RUR 7,781 million). The Parent Company’s guarantee will expire until 30 June 2021 after JSC “Samruk-Energo” (subsidiary of JSC Sovereign Wealth Fund “Samruk-Kazyna”) redeems the debt of JSC Stantsiya Ekibastuzskaya GRES-2 to SC Vnesheconombank. The obligation of JSC “Samruk-Energo” to redeem the debt to SC Vnesheconombank was secured by the additional guarantee signed between the Parent Company and SC Vnesheconombank in December 2019. As of 31 March 2020, the guarantee amounted to RUR 4,817 million (as at 31 December 2019: RUR 4,803 million). To eliminate the risks the corresponding counter-guarantees between of JSC Sovereign Wealth Fund “Samruk-Kazyna” and the Parent Company for equivalent amounts were issued. As of 31 March 2020, the maximum possible amount of the Group’s obligations under the above guarantees as well as reimbursement amount of corresponding counter-guarantees is limited by RUR 11,502 million (as at 31 December 2019: RUR 10,182 million). The likelihood of negative outcome for the Group regarding guarantees mentioned above is low as of 31 March 2020.

Changes in interest rates impact loans and borrowings by changing either their fair value (fixed rate debt) or their future cash flows (variable rate debt). The Parent Company has a formal policy of determining how much of the Company’s exposure should be to fixed or variable rates. At the time of raising new loans or borrowings management applies the policy to determine whether a fixed or variable rate would be more favorable to the Company over the expected period until maturity. As for other entities of the Group, following the corporate regulative documents, the decisions on raising new loans and borrowings at the subsidiaries level are subject for approval by the Parent Company. Management applies the same policy in making decisions in respect of the conditions of raising loans and borrowings on the subsidiary level.

15. Accounts payable and accrued liabilities

As at 31 March As at 31 December 2020 2019 Financial liabilities Trade payables 56,662 47,983 Short-term derivative financial instruments 238 1 Dividends payable 137 140 Obligation to repurchase own equity instruments 763 763 Other payables and accrued expenses 5,175 6,039 Total 62,975 54,926

Non-financial liabilities Advances received 21,841 33,874 Staff payables 13,722 11,259 Provisions, short-term 2,919 2,500 Total 38,482 47,633 101,457 102,559

As at 31 March 2020 advances received included RUR 5,253 million of advances for construction contracts received from customers of LLC INTER RAO Engineering (31 December 2019: RUR 6,320 million), RUR 10,801 million of payments for electricity sales from customers of JSC Mosenergosbyt, JSC Saint Petersburg Power Supply Company, LLC RN-Energo and Group Bashkir Generation Company (31 December 2019: RUR 20,099 million).

22 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

16. Other non-current liabilities

As at 31 March As at 31 December 2020 2019 Financial liabilities Long-term derivative financial instruments 45 − Other long-term liabilities 1,021 675 Total financial liabilities 1,066 675

Non-financial liabilities Pensions liabilities 4,162 4,152 Restoration provision 4,069 4,409 Government grants 12 12 Other long-term liabilities 773 679 Total non-financial liabilities 9,016 9,252 Total 10,082 9,927

17. Revenue

Three months ended 31 March 2020 2019 Electricity and capacity 242,648 257,019 Thermal energy sales 17,466 17,746 Other revenue 6,792 6,681 266,906 281,446

18. Other operating income

Three months ended 31 March 2020 2019

Penalties and fines received 1,234 1,135 Electricity derivatives 1,574 1,032 Gain from disposal of Group entities, net − 63 Other 701 1,250

3,509 3,480

23 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

19. Operating expenses Three months ended 31 March 2020 2019 Purchased electricity and capacity 110,694 114,564 Electricity transmission fees 63,445 61,187 Fuel expenses 29,414 34,559 Employee benefit expenses and payroll taxes 13,663 12,885 Depreciation and amortisation 6,894 7,161 Agency fees 1,404 1,372 Repairs and maintenance 1,188 1,187 Transportation expenses 773 719 Other materials for production purposes 755 755 Thermal power transmission expenses 641 918 Provision for impairment of accounts receivable, net 548 1,879 Water supply expenses 535 807 Taxes other than income tax 396 677 Consulting, legal and auditing services 237 350 Charge/(release) of VAT provision 161 (187) Charge/(release) of other provisions 97 (458) Short-term lease 34 74 Loss on sale or write-off of inventory 27 12 Lease of low-value assets 5 14 Loss from electricity derivatives 2 − Other 6,929 8,071 237,842 246,546

20. Finance income and expenses Three months ended 31 March 2020 2019 Finance income Interest income 3,355 3,763 Unwind of discount of accounts receivable 38 61 Dividend income 41 − Foreign currency exchange gain, net 8,912 − Discounting of payables 1 − Other finance income 63 101 12,410 3,925

Three months ended 31 March 2020 2019 Finance expenses Foreign currency exchange loss, net − 1,922 Interest expense on lease liabilities 1,475 1,345 Unwind of discount of accounts payable 13 522 Interest expense 77 163 Discounting of accounts receivable 19 9 Other finance expenses 117 66 1,701 4,027

21. Income tax expense Three months ended 31 March 2020 2019 Current tax expense 8,620 7,238 Deferred tax expense 1,219 352 Amended tax declaration (58) (43) Provision for income tax − 62 Income tax expense 9,781 7,609

24 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

22. Fair value of financial instruments

Fair value is determined either by reference to market or by discounting relevant cash flows using market interest rates for similar instruments. As a result of this exercise management believes that fair value of its financial assets and liabilities approximates their carrying amounts except for loans and borrowings. Fair value of loans and borrowings is disclosed in Note 14.

Financial assets and liabilities measured using a valuation technique based on assumptions that are supported by observable current market transactions and assets and liabilities for which pricing is obtained via pricing services. In case prices have not been determined in an active market, financial assets with fair values based on broker quotes, investments in private equity funds with fair values obtained via fund managers and assets that are valued using the Group’s own models whereby the majority of assumptions are market observable. Non-market observable inputs mean that fair values are determined in whole or partly using a valuation technique (model) based on assumptions that are neither supported by prices from observable current market transactions with the same instrument nor they are based on available market data. Main asset classes in this category are unlisted equity investments and debt instruments. Valuation techniques are used to the extent that observable inputs are not available, whereby allow situations in which there is little, if any, market activity for the financial instrument at the measurement date. Therefore, unobservable inputs reflect the Group’s own assumptions about the assumptions that market participants would use in pricing of the financial instrument (including risk assumptions). These inputs are developed based on the best information available, which might include the Group’s own data.

Determination of fair value and fair values hierarchy

The Group uses the following hierarchy to determine and disclose fair value of financial instruments:

► Level 1 − quoted (unadjusted) market prices in active markets for identical assets or liabilities;

► Level 2 − valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;

► Level 3 − valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

The following table shows an analysis of financial instruments by level of the fair value hierarchy:

Total Fair value hierarchy At 31 March 2020 Note fair value Level 1 Level 2 Level 3 Financial assets Derivative financial instruments Electricity derivatives 12 29 29 − −

Securities Equity instruments at FVOCI 8 4,103 4,103 − − Equity instruments at FVPL 8 1,565 − − 1,565 Debt instruments at FVOCI 8 3,301 3,301 − −

Debt instruments at amortised cost Long-term bank deposits 9 61 − − 61 Total financial assets 9,059 7,433 − 1,626

Financial liabilities Derivative financial instruments Electricity derivatives 15, 16 282 282 − − Interest rate SWAP 15 1 − 1 −

Financial liabilities designated at fair value through profit or loss Obligation to repurchase own equity instruments 15 763 − 763 −

Financial liabilities at amortised cost Loans and borrowings 14 2,809 − 2,809 − Total financial liabilities 3,855 282 3,573 −

25 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

22. Fair value of financial instruments (continued)

Determination of fair value and fair values hierarchy (continued)

Total Fair value hierarchy At 31 December 2019 Note fair value Level 1 Level 2 Level 3 Financial assets Derivative financial instruments Electricity derivatives 12 242 242 − − Securities Equity instruments at FVOCI 8 4,008 4,008 − − Equity instruments at FVPL 8 1,565 − − 1,565 Debt instruments at FVOCI 8 3,456 3,456 − − Debt instruments at amortised cost Long-term bank deposits 9 64 − − 64 Total financial assets 9,335 7,706 − 1,629

Financial liabilities Derivative financial instruments Interest rate SWAP 15 1 − 1 − Financial liabilities designated at fair value through profit or loss Obligation to repurchase own equity instruments 15 763 − 763 − Financial liabilities at amortised cost Loans and borrowings 14 2,130 − 2,130 − Total financial liabilities 2,894 − 2,894 −

23. Commitments

Investment and capital commitments

In accordance with the memorandum signed between the Group and the Government of Georgia in March 2013, the Group has to invest in realisation of projects aimed to improve the electricity network which belongs to the Group entity JSC Telasi. As at 31 March 2020 realisation of investment commitments was in line with schedule for the year 2020.

As at 31 March 2020 capital commitments of subsidiaries of the Company are as follows:

Subsidiary RUR, million Inter RAO − Electric Power Plants 9,433 Group Bashkir Generation Company 1,674 Other 850 Total 11,957

Capital commitments of JSC Inter RAO − Electric Power Plants as at 31 March 2020 are mainly for modernisation of blocks of Kostromskaya GRES, Gusinoozerskaya GRES and Iriklinskaya GRES, modernisation of powersupply equipment of Cherepetskaya GRES, supply of equipment for Permskaya GRES and Ivanoskiye CPP, development of information system for modernisation and maintenance of power equipment.

Capital commitments of Group Bashkir Generation Company are mainly for the modernisation of heatsupply equipment of Karmanovskaya GRES, construction of new heatsupply station and reconstruction of heating networks.

The Group’s share in capital commitments for joint ventures which are to be incurred jointly with other investors amounts to RUR 2,604 million (as at 31 December 2019: RUR 160 million).

26 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

23. Commitments (continued)

Guarantees

As at 31 March 2020 the Group has the following guarantees:

► In December 2017 and May 2016 the Group entered into the new guarantee agreements with State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” for the purpose of financial support of the agreement between the Group and Empresa Importadora de Objetivos Electroenergeticos for capacity increase of TPP “East Havana” and TPP “Maximo Gomes” (Cuba). As at 31 March 2020 the guarantees amounted to EUR 6.9 million, or RUR 594 million at the Central Bank of the Russian Federation exchange rate as of 31 March 2020 (as at 31 December 2019: EUR 7.2 million, or RUR 499 million at the Central Bank of the Russian Federation exchange rate as of 31 December 2019). The guarantees will expire in January 2024.

► In December 2010 the Group together with General Electric and State Corporation Russian Technologies established an associate entity, RUS Gas Turbines Holdings B.V. The Group’s share in the entity was 25%. Since April 2019 the Group’s share in the company is 50%. The entity was established to participate in production and sales of high-performance industrial gas turbines in the Russian Federation. The Group has certain financial obligations to finance the entity. In August 2017 the Group entered into the standby letter of credit with BNP Paribas Group in favour of GE ENERGY HOLDINGS VOSTOK B.V. (Beneficiary) with the maximum aggregate amount of EUR 30 million in order to fulfill the Group’s investment obligations related to the entity. As at 31 March 2020 the standby letter of credit outstanding amount was EUR 21 million, or RUR 1,781 million at the Central Bank of the Russian Federation exchange rate as of 31 March 2020 (as at 31 December 2019: EUR 21 million, or RUR 1,441 million at the Central Bank of the Russian Federation exchange rate as of 31 December 2019). The standby letter of credit will expire in September 2020.

► In March 2018 the Group entered into the guarantee agreements with Unicredit Bank for the purpose of financial support of the agreement between the Group and Bangladesh Power Development Board for capital repair works at Ghorasal Thermal Power Station. As at 31 March 2020 the guarantee amounted to USD 1.5 million, or RUR 117 million at the Central Bank of the Russian Federation exchange rate as of 31 March 2020 (as at 31 December 2019 the guarantee amounted to USD 1.5 million, or RUR 93 million at the Central Bank of the Russian Federation exchange rate as of 31 December 2019). The guarantees will expire in December 2020.

► In August 2019 the Group entered into the guarantee agreement with Raiffeisen Bank for the purpose of financial support of the agreement between the Group and PJSC Wimm-Bill-Dann for construction and installation works. As at 31 March 2020 the guarantee amounted to RUR 61 million. The guarantee will expire in December 2020.

► In October 2019 the Group issued the letter of guarantee with Raiffeisen Bank for the purpose of financial support of the agreement between the Group and JSC Electric Power Plants (EPP) for participation in the tender. As at 31 March 2020 the guarantee amounted to USD 2.3 million or RUR 176 million at the Central Bank of the Russian Federation exchange rate as of 31 March 2020 (as at 31 December 2019: USD 2.3 million, or RUR 140 million at the Central Bank of the Russian Federation exchange rate as of 31 December 2019). The guarantee will expire in August 2020.

► In December 2019 and March 2020 the Group issued the letter of guarantees with Gazprom Bank for the purpose of financial support of the agreement between the Group and PJSC Unipro for modernization of the turbine units at Berezovskaya GRES. As at 31 March 2020 the guarantees amounted to RUR 76 million (as at 31 December 2019: RUR 58 million). The guarantees will expire in May 2021.

24. Contingencies

(a) Operating environment

The operations and earnings of Group entities continue, from time to time and in varying degrees, to be affected by political, legislative, fiscal and regulatory developments, including those related to environmental protection, in Russia, Georgia, Moldavia (including Transdniestria Republic) and Lithuania.

A significant drop in crude oil prices and a significant devaluation of the Russian rouble, as well as series of unilateral restrictive political and economic measures imposed on the Russian Federation by several countries occurred in 2014, continued to have a negative impact on the economy of the Russian Federation, primary jurisdiction of the Group, in 2020. The combination of the above resulted in reduced access to capital, a higher cost of capital, increased inflation and uncertainty regarding economic growth in the Russian Federation, which could negatively affect the Group’s future financial position, results of operations and business prospects. Management believes it is taking appropriate measures to support the sustainability of the Group’s business in the current circumstances.

27 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

24. Contingencies (continued)

(a) Operating environment (continued)

Coronavirus pandemic

In the first quarter of 2020, the global economy was negatively affected by the coronavirus pandemic (COVID-19). The tightening of isolation measures aimed at combating the spread of COVID-19 in various countries caused a significant decrease in consumer spending and business activity. Social distance and isolation measures led to the cessation of companies in the field of retail, transport, travel and tourism, catering, entertainment and many other areas. The impact of the pandemic on the development of the economy at the level of individual countries and the world economy as a whole has no historical analogues with other periods when governments adopted packages of measures to save the economy. An additional risk lies in the possible protracted nature of the pandemic, in which the spread of the virus will continue in the second half of 2020, before effective countermeasures are found.

The Russian economy is affected by the worsening situation with the spread of the pandemic. The Russian government has taken a number of unprecedented measures to support the economy, to provide liquidity and support the activities of Russian companies and the public, including Decree of the Government of the Russian Federation of 2 April 2020 N424. According to the decree, until 1 January 2021, a moratorium on the payment of penalties for overdue debts under supply contracts with resource-supplying organizations is introduced. Against this background, uncertainty remains regarding the future business environment for the Group and its counterparties.

Such macroeconomic factors as the growth of unemployment in Russia, the reduction in liquidity and profitability of companies, as well as the growth of bankruptcy cases in a number of industries may affect the ability of some of the Group's consumers to repay debts for electricity consumed.

These events, the effects of which are difficult to predict at present, may have a further significant impact on the future operations and financial position of the Group. The future economic and administrative environment and its impact on the Group’s operations may differ from management’s current expectations and there will continue to be significant risks of worsening the situation, which may have a significant impact on management's assessments of provisions for impairment of current and future receivables, as well as other estimates Group management.

The management of the Group is in the process of analyzing the impact of changes in the economic environment on the activities of the Group in 2020. At the same time, the management of the Group believes that the interim condensed financial statements presented reflect all the best estimates with respect to possible consequences as of 31 March 2020.

(b) Insurance

The unified corporate standards are established in the Group for insurance coverage, for insurance companies reliability requirements and insurance coverage procedures developed by Parent Company.

There are two types of insurance undertaken by the Group: obligatory (as required by the law or by agreement between parties) and voluntary.

Obligatory insurance includes public liability insurance of owners of dangerous facilities and public liability insurance of car owners. The Group is obligated to insure different types of property, plant and equipment under loan agreements provisions.

Voluntary insurance includes property insurance against certain risks and equipment breakdown insurance, vehicles insurance, insurance against construction and assembly risks, voluntary public liability insurance of owners of dangerous facilities against social and environmental harm risks. The Group also undertakes insurance of directors’ and officials’ of certain Group entities responsibilities to cover financial losses of third parties.

The Group’s assets are insured for its replacement value which is set by valuation reports for insurance purposes considering technical risks. Obligatory condition of the property insurance of foreign subsidiaries is the availability of reliable reinsurance protection, which is done by transferring part of the risk to the foreign reinsurers with high reliability ratings.

In order to optimise insurance protection management performs regular appraisal of efficiency of Group’s insurance terms and rationale for new insurance products acquired.

28 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

24. Contingencies (continued)

Legal proceedings

In the normal course of business the Group is a party to legal actions and consequently had received a number of legal claims from customers and subcontractors with the likelihood of negative outcome for the Group as not probable, but only possible, and, consequently, no provision has been made in these financial statements:

As at 31 March As at 31 December 2020 2019 Legal claims 2,912 2,301

Other than those litigations which have been accrued in the provisions (Note 15) and disclosed above, management of the Group is unaware of any actual, pending or threatened claims as at the date of approval of this interim financial information, which would have a material impact on the Group.

(d) Tax contingencies

The taxation systems in the Russian Federation and in other countries in which the Group operates are relatively new and characterised by frequent changes in legislation, official pronouncements and court decisions which are often unclear, contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to review and investigation by a number of authorities, which have the authority to impose severe fines, penalties and interest charges.

A tax year remains open for review by the tax authorities during three to five subsequent calendar years; however, under certain circumstances a tax year may remain open longer.

These circumstances may create tax risks in the Russian Federation and in the other countries in which the Group operates. Management believes that it has adequately provided for tax liabilities based on its interpretations of applicable relevant tax legislation, official pronouncements and court decisions.

However, the interpretations of the relevant authorities could differ and the effect on this interim financial information, if the authorities were successful in enforcing their interpretations, could be significant.

The Group includes a number of operating and investment companies located in a number of different tax jurisdictions across Europe and the CIS. Those entities are subject to a complex variety of tax regimes and the nature of current and past trading and investment activities exposes them to areas of tax legislation involving considerable judgement and, consequently, uncertainty. The Group estimates that possible claims in respect of certain open tax positions of Group entities as at 31 March 2020 would be successfully challenged in the amount of RUR 82 million (as at 31 December 2019: RUR 72 million).

The Parent Company and subsidiaries in the countries where they operate have various transactions with related parties. The pricing policy could give rise to transfer pricing risks. In management’s opinion, the Group is in substantial compliance with the tax laws of the countries where Group entities operate. However, relevant authorities could take different positions with regard to interpretive issues or court practice could develop adversely with respect to the positions taken by the Group and the effect could be significant.

(e) Environmental matters

Group entities operate in the electric power industry in the Russian Federation, Georgia and Moldavia. The enforcement of environmental regulations in these countries is evolving and position of government authorities is continually being reconsidered. Group entities periodically evaluate their obligations under environmental regulations.

Potential liabilities might arise as a result of changes in legislation and regulation or civil litigation. The impact of these potential changes cannot be estimated but could be material. In the current enforcement climate under existing legislation, management believes that there are no significant liabilities for environmental damage, except restoration provision.

Restoration provision liabilities relate to reclamation of land plots, used for ash dumps by generating entities, which use coal for production purposes (Note 16).

29 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

24. Contingencies (continued)

(f) Ownership of land

The current legislation in Georgia is unclear in relation to ownership issues with regard to land over which the Company’s equipment for the transmission of electricity is located (JSC Telasi). On further clarification of the law, it is possible that the Company may be required to acquire ownership over certain land plots or to pay rentals to other parties for their use. At the date of approval of these financial statements, management considers that it is not possible to quantify any additional expense, if any, which JSC Telasi might incur and consequently, no provision has been made against such potential liabilities in these financial statements.

25. Related party transactions

(a) Parent Company and control relationships

The Russian Federation is the ultimate controlling party of PJSC Inter RAO. Details of operations with entities controlled by the Russian Federation are provided in Note 25 (d).

(b) Transactions with key management personnel

The members of the Management Board own 0.20792% of ordinary shares of PJSC Inter RAO as at 31 March 2020 (31 December 2019: 0.21092%).

Compensation paid to key management and members of the Board of Directors for their service in that capacity is made up of contractual salary and performance bonuses. Key management and members of the Board of Directors received the following remuneration during the period, which is included in employee benefit expenses and payroll taxes (Note 19):

Three months ended 31 March 2020 2019 Salaries and bonuses 54 64

Sales to and purchases from joint ventures and associates are made at terms equivalent to those that prevail in arm’s length transactions.

The Group’s transactions with associates and joint ventures are disclosed below.

Three months ended 31 March 2020 2019 Revenue Joint ventures 463 151 Associates − 7 463 158 Purchased power Joint ventures 59 20

Purchased capacity Joint ventures 775 501

Other expenses Joint ventures 1 63 835 584 Capital expenditures Joint ventures − 1

As at 31 March As at 31 December 2020 2019 Accounts receivable Joint ventures 79 245

Accounts payable Joint ventures 274 246

30 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

25. Related party transactions (continued)

(d) Transactions with entities controlled by the Russian Federation

Sales to and purchases from entities controlled by the Russian Federation are made at terms equivalent to those that prevail in arm’s length transactions.

Information on transactions with entities controlled by the Russian Federation is presented below:

Three months ended 31 March 2020 2019 Revenue Electricity and capacity 76,495 82,500 Other revenues 2,830 3,849 Other operating income 317 842 79,642 87,191

Operating expenses Purchased power and capacity 38,379 38,754 Transmission fees 58,624 57,569 Fuel expenses (gas) 21,769 26,567 Fuel expenses (coal) 179 158 Other purchases 10 42 Other expenses 2,994 3,338 121,955 126,428 Capital expenditures − 5,373

Finance income/(expenses) Interest income 832 1,636 Other finance income − 3 Dividend income 41 − Interest expenses (34) (38) Interest expense on lease liabilities (1,352) (1,198) (513) 403

Financial transactions Loans and borrowings received 680 1,841 Loans and borrowings repaid − (155) Repayment of leases (1,908) (1,527) (1,228) 159

As at 31 March As at 31 December 2020 2019 Securities 6,007 6,067

Long-term accounts receivable Other account receivables 93 90 Less impairment provision (26) (28) Other receivables − net 67 62

Short-term accounts receivable Trade accounts receivable, gross 27,168 26,352 Less impairment provision (6,496) (7,455) Trade receivables − net 20,672 18,897

Advances issued 1,730 66 Advances issued for capital construction 31 31 Accounts receivable on construction contracts 6,286 5,078 Other receivables 781 816 29,500 24,888 Other current assets 522 545

31 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

25. Related party transactions (continued)

(d) Transactions with entities controlled by the Russian Federation (continued)

As at 31 March As at 31 December 2020 2019 Accounts payable Trade accounts payable 25,655 22,851 Payables for capital construction 33 36 Long-term accounts payable 507 511 Other accounts payable 207 491 Advances received 7,230 13,187 33,632 37,076 Other long-term liabilities 30 18

Loans and borrowings Short-term loans and borrowings 620 309 Long-term loans and borrowings 637 194 Interest on loans and borrowings 2 2 1,259 505 Lease liabilities Short-term portion of long-term lease liabilities 7,315 7,296 Long-term lease liabilities 46,134 44,832 53,449 52,128

Cash and cash equivalents 23,999 23,985 Other current assets (bank deposits incl. outstanding interest) 67,439 50,517

In July 2011 subsidiary of PJSC Inter RAO entered into an agreement with a state-controlled company for sale of electric power under the “take-or-pay” arrangement through 30 June 2026. The sales to and purchases from enterprises controlled by the Russian Federation are made at terms equivalent to those that prevail in arm’s length transactions.

(e) Transactions with other related parties

Sales to and purchases from other related parties are made at terms equivalent to those that prevail in arm’s length transactions. Amounts of transactions with other related parties (except for those controlled by the Russian Federation, equity investees and joint ventures), for each of the reporting periods are provided below:

Three months ended 31 March 2020 2019 Revenue Electricity and capacity 9 7

Operating expenses Other expenses 5 4

Financial Income and expenses Interest income 645 769 Interest expenses − (25)

As at 31 March As at 31 December 2020 2019 Short-term accounts receivable Trade and other accounts receivable 57 136

Short-term accounts payable Trade and other accounts payable 3 2

Cash and cash equivalents Cash in bank 10,770 12,183 Short-term bank deposits 36,060 36,011 46,830 48,194

32 Notes to the interim financial information PJSC Inter RAO for the three months ended 31 March 2020 (unaudited) (in millions of RUR)

26. Events after the reporting period

In April-May 2020 the Group bought 0.051% of ordinary shares and 3.147% of preferred shares of PJSC Tambov Energy Retailing Company from non-controlling shareholders (0.4381% of the total voting shares of the company) under the voluntary public offer. As a result, the Group has increased its participation in PJSC Tambov Energy Retailing Company to 85.65%.