Appene to te Annual Report 2016

Annual Report 2016 1 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT Contents APPENDIX 1. Additional Information on the The following Appendices are available on the official Company’s website at http://www.fsk-ees.ru/eng/investors/company_reports/ or in the electronic version of the Annual Report of PJSC FGC UES for 2016: Sections of the Annual Report

Appendix 1. Additional Information on the Sections of the Annual Report 1 About the Company

Appendix 2. Audit Commission’s Report 54 International Activity Appendix 3. Report on Compliance with the Russian Corporate Governance Code and 59 Federal Grid Company (PJSC FGC UES) is the transmission across the border of the Russian Report on Compliance with Main Principles of the UK Corporate Governance organization managing the Unified National Electric Federation and is a technical contractor of the export/ Code Grid (UNEG) under the Federal Law on 26 March 2003 import commercial contracts of the Wholesale Appendix 4. Information on Major Transactions and on Transactions by PJSC FGC UES in 80 No. 35-FZ On Electric Power. Starting from Electricity and Capacity Market (WECM) participants. 2016, Classified Under the laws of the Russian Federation as Related Party 1 January 2004 PJSC FGC UES performs the electricity Transactions Subject To Approval by the Company’s Authorised Governing Bodies Appendix 5. Information on Material Transactions made by PJSC FGC UES and Entities 113 Fnlan Controlled Thereby

Appendix 6. Information on the Actual Execution of Instructions of the President and the 116 Government of the Russian Federation Estonia China

Appendix 7. Information on the Participation of PJSC FGC UES in commercial and non- 123 commercial organizations in 2016

Appendix 8. Information on the Debt Recovery Claims in which PJSC FGC UES Participates 129 Lithuania Mongolia PJSC FGC UES Appendix 9. Information on Concluded Purchase Agreements of Shares, Stocks, Equity 134 Interest of Business Partnerships and Business Entities, including Information on Parties, Subject, Price, and Other Terms of the Agreements Rua Latvia Kazakhstan Appendix 10. Information on the Structure of the Property Portfolio of PJSC FGC UES 136

Appendix 11. Information on Land Plots of PJSC FGC UES 138 Belarus Azerbaijan

Appendix 12. Information on the Disposal of Non-Core Assets in 2016 140

Appendix 13. Annual Financial Statements of PJSC FGC UES for 2016 Under RAS 144 Ukraine Georgia

Consolidated Financial Statements of PJSC FGC UES for 2016 Under IFRS 166 Appendix 14.

Export and Import of Electric Power as per PJSC Inter RAO contracts in 2012—2016. Actual export of electric power, million kWh

No. Country 2012 2013 2014 2015 2016

1 Azerbaijan 55.770 57.422 53.054 54.848 59.560

2 Belarus 3,698.125 3,596.726 1,425.023 2,815.240 3,180.811

3 Georgia, South Ossetia 647.260 594.334 767.189 656.564 557.448

4 Kazakhstan 2,284.458 1,668.318 1,643.673 1,541.999 1,164.275

2 PJSC FGC UES Annual Report 2016 1 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

– arrangement and implementation of commercial In the framework of international exchange, PJSC FGC 5 China 2,630.173 3,495.300 3,375.632 3,299.350 3,319.908 metering of electricity transmitted along cross-border UES takes actions to enhance the relationship with the electricity transmission lines (CBETL); energy systems of the adjacent states in the field of 6 Latvia 0.000 0.000 0.000 0.000 0.000 electric power, including CIS Electric Power Council and – measurement of actual volumes of electricity its commissions, energy system committee of BRELL, transmitted across the State border. 7 Lithuania 4,780.170 3,567.969 3,215.539 2,994.516 3,018.544 work groups in Executive committee of CIS EEC and To determine amount of electricity transmitted via each Committee of BRELL energy systems. 8 Estonia 0.000 0.000 0.000 0.000 0.000 CBETL, PJSC FGC UES concluded the agreements with foreign electric power companies on metering of the 9 Mongolia 392.750 413.595 390.332 284.450 299.869 volume of power intercharge, according to which PJSC FGC UES exchanges commercial metering data with the 10 Ukraine 81.795 38.609 177.993 2,461.972 119.644 electricity systems of 11 foreign countries. 11 Finland 3,793.845 4,107.179 2,995.008 3,383.435 5,281.610

TOTAL: 18,364.346 17,539.452 14,043.443 17,492.374 17,001.669 Programmes existing in the Company in the framework Actual import of electricity, million kWh of implementation of the strategic development plans and No. Country 2012 2013 2014 2015 2016 Company's long term development programmes, Decision on approval 1 Azerbaijan 240.757 128.607 134.169 108.365 120.143 Long-term development The long-term development programme approved by a decision of the Board 2 Belarus 3.731 1.935 0.260 0.058 0.058 programme of Directors (minutes of 22 December, 2014 No. 243).

3 Georgia, South Ossetia 369.438 370.608 160.078 169.575 147.590 Investment programme Approved by the decision of the Board of Directors On approval of the Long- 4 Kazakhstan 1,973.181 3,930.689 3,084.440 989.666 2,725.996 term Investment Programme of PJSC FGC UES for 2016–2020, (minutes No. 310 on 29 February 2016, date of drafting of the minutes: 3 March 2016). 5 China 0.000 0.000 0.000 0.000 0.000

6 Latvia 0.000 0.000 0.000 0.000 0.000 Innovative development The PJSC FGC UES innovative development programme for 2016–2020, with programme a view to 2025, approved by the decision of the Board of Directors of the 7 Lithuania 0.000 99.253 43.161 114.561 115.575 PJSC FGC UES (minutes on 28 June 2016 No. 328).

8 Estonia 0.000 0.000 0.000 0.000 0.000 Unified Technical Policy Regulation on Unified Technical Policy in the electric power system 9 Mongolia 21.006 23.291 30.368 54.178 33.867 approved by the Board of Directors of PJSC Rosseti (minutes on 23 October 2013 No. 138) and enacted as the PJSC FGC UES internal document by 10 Ukraine 0.093 6.400 0.000 3.756 0.000 a decision of the Board of Directors of PJSC FGC UES (minutes on 12 December 2013 No. 208). 11 Finland 0.000 2.758 0.234 23.400 0.000 Programme of import substitution Approved by the Order of JSC FGC UES on 10 October 2014 No. 455. The of equipment, technologies, programme is not subject to the Board of Directors approval. TOTAL: 2,608.206 4,563.541 3,452.710 1,463.559 3,143.229 materials and systems

There are currently several agreements in force, In accordance with the Agreement of 15 March 2011 Energy saving and energy Approved by the Company’s Board (extract on 4 August 2015 No. 1326/2). stipulating parallel operation of the Russian UES with the between the Government of the Russian Federation and efficiency programme for the Energy saving and energy efficiency programme of PJSC FGC UES for the electric power systems of foreign countries. The parties the Government of the Republic of Belarus on certain period of 2015–2019. period of 2015–2019 (hereinafter – Energy saving and energy efficiency to these agreements are measures ensuring parallel operations of the unified programme) was up of in accordance with the new requirements of the energy systems of the Russian Federation and the Order of FTS of Russia on 26 March 2015 No. 525-e and Ministry of Energy PJSC FGC UES and economic entities of the following Republic of Belarus there is an electricity transit contract of Russia on 30 June 2014 No. 398. countries: Georgia, Azerbaijan, Kazakhstan, the Baltic signed, in accordance with which PJSC FGC UES pays States and the Republic of Belarus. In addition, there are An operating efficiency To be approved by the Board of Directors as a part of the Business Plan for for the electricity transit throughout the territory of agreements on technical support of parallel operations improvement programme was 2017–2021. Belarus. signed with Ukraine, the Republic of Belarus, as well as developed and approved in the Mongolia. The Company also signed an Inter-system In accordance with the Protocol on access provisiv on to framework of the PJSC FGC UES Contract with Finland and an Inter-system Agreement the services of natural monopolies in the field of electric Business Plan for 2015–2019. with the People’s Republic of China. power, including the pricing and tariff policy, which Programme for the Approved by the Order of PJSC FGC UES on 31 March 2015 No. 150. The is an Appendix No. 21 to the Agreement on Eurasian In accordance with the Agreement of 20 November 2009 implementation of environmental programme was developed in order to implement the provisions of the Economic Union, the inter-state transmission of the between the Government of the Russian Federation policy for 2015–2019. Company's environmental policy, approved by the PJSC FGC UES Board of electricity between the countries-participants is possible, and the Government of the Republic of Kazakhstan on Directors (minutes No. 230 of 30 September 2014) including the grids of UES of Russia. measures ensuring parallel operations of the unified energy systems of the Russian Federation and the As the organization managing UNEG, including the inter- Republic of Kazakhstan there is an electricity transit state power transmission lines, PJSC FGC UES performs: contract signed, in accordance with which PJSC FGC – coordination and engineering support of the UES pays for the electric power transit throughout commercial contracts for the import-export of the territory of Kazakhstan in order to provide reliable electricity; electricity supply of the Russian customers.

2 PJSC FGC UES Annual Report 2016 3 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Operating Performance Information on the Equipment with the Extended Service Life

2016 Information on the fixed productive assets for 2014–2016. SS equipment OHL Measurement Asset type 2014 2015 2016 unit >25 years 59% >35 years 59% Substations 35-1150 kV units 857* 861* 870*

Installed power (total) MVA 332,051.21 334,167.75 341,658.8 Information on Consolidation of the Electric Grid Assets units 857* 861* 870* According to the RF legislation the owners and other – undertakes the proper operation of these facilities SS 35-1150 kV legal owners of electric grid facilities included into (subject to the existence of corresponding MVA 331,600 333,800 341,188 UNEG are restricted in exercising their rights in terms obligations of PJSC FGC UES under the terms of the of: concluded contracts); units 279 246 277 Transformer substations, TS (DS) – the right to conclude service agreements for – approves their use (decommissioning); 6-10/0.4 kV transmission of the electricity via electric grid MVA 451.21 367.75 470.8 – ensures return to other owners or other legal facilities included into UNEG and defining the proprietors of the revenue obtained as a result of Distribution substations 6-10 kV units 27 27 27 provisions of such agreements; exercising their rights. – using (decommissioning) of the specified facilities Length of overhead lines 0.4-1150 In case of an economic expediency for PJSC FGC km 130,391.57 132,062.566 132,954.94** without approval of the organization managing kV along the route UES, the lease and purchase and sale contracts may UNEG. OHL 220 kV and higher km 128,744.955 130,335.999 131,198.07 be concluded with the owners and/or other legal The UNEG management organization is PJSC FGC UES. proprietors of UNEG facilities, according to which PJSC FGC UES acquires the rights, on a reimbursable OHL 110-150 kV km 1,175.782 1,186.234 1,200.29 In order to ensure the uniformity of the economic basis, of ownership and use and/or the disposal space in the area of the electric power circulation in (proprietorship) in respect to these facilities. OHL 35 kV km 185.754 186.404 186.814 accordance with the legislation provisions, PJSC FGC UES, by virtue of the contracts regulating the procedure As of 31 December 2016, ten contracts were concluded OHL 6-10 kV km 279.985 348.439 360.16 of using the electric grid facilities: between PJSC FGC UES and owners/other legal proprietors of UNEG facilities, which determined use of – concludes, on its own behalf, the service agreements OHL 0.4 kV km 5.091 5.491 9.611 the facilities that includes four contracts with a single with the third parties for transmission of electricity restriction (decommissioning of the facilities upon via the electric grid facilities that are included into Length of cable lines 0.4-500 kV km 1,083.25 1,032.9 1,048.39** approval of PJSC FGC UES) and 11 lease agreements. UNEG and owned by other owners or other legal CL 220 kV and higher km 267.256 281.458 292.45 proprietors;

CL 110 kV km 121.319 124.822 133.495

CL 35 kV km 98.537 98.537 99.362

CL 6-10 kV km 521.641 521.588 516.58

CL 0,4 kV km 74.496 6.496 6.5 2016 PJSC FGC UES Amount of consolidation of the electric grid assets * In addition to the other owners’ facilities (6 units) Pskovskaya GRES (MES North-West) MVA Km C.u. Pechorskaya GRES (MES North-West) Gusinoozerskaya GRES (MES Siberia) OSG (outdoor switchgear) 500 kV of Balakovskaya NPP (MES Volga) PJSC FGC UES TOTAL 6,738.08 3,785.22 31,890.79 OSG 220 kV Khabarovsk TPP-3 (MES East) OSG 500 kV TPP-26 (MES Centre) Acquisition of the electric grid facilities – – – * Except OSG 500 kV Iriklinskaya GRES (MES Urals) * Except SS 330 kV Sovetsk (402 MVA) (JSC Yantarenergo) Lease of the electric grid facilities* 6,512.98 3,555.34 27,571.96 ** Length of the transmission line is formed per report data in c.u. for Q4 2016. Other (permanent rights of use and disposal) – – –

Other (temporary rights of use and disposal)** 225.10 229.88 4,318.83

Note: * Amount of consolidation of the electric grid assets of PJSC FGC UES includes the lease of the facilities of the subsidiaries of PJSC FGC UES, JSC Kuban trunk grids and OJSC The Tomsk trunk grids. ** In pursuance of paragraph 4 of the order of the Russian Federation Government of 2 December, 2013 No. 2243-r the gratuitous use agreement concluded between the area office in Krasnodar Territory of the Federal Agency for State Property Management (Rosimushchestvo) and PJSC FGC UES for the property of the Russian Federation public treasury, the subject of which was the electric grid real estate of the distribution system, located in the Adler district of the city of Sochi in Krasnodar Region, built for the purpose of organizing and holding the XXII Olympic Winter Games and the XI Paralympic Winter Games in Sochi in 2014.

4 PJSC FGC UES Annual Report 2016 5 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

General Information on the Service of Technological Shunt reactor (SR) 750 kV to Implementation of Provision of uninterrupted power Leningradskaya SS Leningradskaya NPP-2 power supply to the Leningrad Region. Connection delivery project (JSC Rosenergoatom). Water- When serving the consumers on technological In order to increase the availability of the electric moderated power reactors are connection, the Company provides the following infrastructure for the potential consumers of the installed at the station. Fuel type services (processes): services of technological connection to UNEG grids, is nuclear. power deficit of 84.42 MW was reduced in 2016 at 11 – Technological connection to the UNEG electric grids, PJSC FGC UES feeding centres. MES Centre including under individual project; If engineering possibility of technological connection – Temporary technological connection to the PJSC FGC Yaroslavskaya OHL Implementation of the power The problem of energy deficit in the of the applicant’s electricity receiving devices is not UES electric grids. 220 kV renovation – Tutaev; delivery project of Huadian- Yaroslavl Region was solved. available and there is a need to construct (renovate) Yaroslavskaya OHL 220 kV – Teninskaya TPP with capacity The Company also provides associated services for the electric grid facilities that are not included into Tveritskaya. Approach lines to of 450 MW to Yaroslavskaya issuance of the certificates and documents confirming the investment programmes for the next period, a Yaroslavskaya TPP. energy system. The main type of technological connection to the grids and the possibility of implementing of the individual design of fuel is natural gas. restoration of previously issued documents. technological connection is provided. The individual design share of total technological MES South connection services comprised 4% in 2016. OHL 330 kV Zelenchukskaya HPP- Implementation of the The level of self-generated electric PSPP – Cherkessk with extension power delivery project of power provision of the Republic 330 kV Cherkessk SS Zelenchukskaya HPP-PSPP of increased to 45%, quality of power 300/160 MW (in turbine/pump supply of the Region improved Dynamics of Key Indicators for Technological Connection mode respectively) substantially because of the facility (PJSC RusHydro). The main commissioning. Indicators 2013 2014 2015 2016 source of electric power generation is water resource. units 398 311 303 361 Applications accepted MES Urals MW 9,253.31 9,252.69 8,605.92 8,041.40 Construction of 220 kV power Provision of the power delivery Commissioning of the new units units 497 260 270 328 Technical terms and conditions transmission line at the section of Chelyabinskaya GRES of ChGRES in the framework of approved from 220 V OHL Tsinkovaya – (JSC Fortum). The main type of power supply contract will increase MW 16,005.60 7,787.66 5,089.00 7,596.00 Novometallurgicheskaya tie-in fuel is natural gas. reliability of power supply of the city point to OSG 220 kV SS of Chelyabinsk and decrease power Technical terms and conditions units 175 81 75 83 220 kV Novometallurgicheskaya deficit in Chelyabinsk energy system. approved / reviewed by the with extension SS 220 kV Executive Office MW 12,145.00 4,901.89 2,421.90 3,795.00 Novometallurgicheskaya (with length of 5.353 km) units 652 226 210 308 Contracts signed Construction of 220 kV power Provision of the power delivery Commissioning of the new units MW 14992,84 4 828,07 4 660,81 6664,40 transmission line at the section of Chelyabinskaya GRES of ChGRES in the framework of from 220 V OHL Tsinkovaya – (JSC Fortum). The main type of power supply contract will increase Contracts fulfilled (not including units 298 273 245 216 Novometallurgicheskaya tie-in fuel is natural gas. reliability of power supply of the city acts under phased technological point to OSG 220 kV SS 500 kV of Chelyabinsk and decrease power connection) MW 5,350.66 5,536.95 8,185.00 5,634.67 Shagol with extension SS 220 kV deficit in Chelyabinsk energy system. Shagol (with length of 8.426 km) Renovation of SS 500 kV To provide technological Renovation of 500 kV SS Gazovaya Gazovaya. Installation of the connection of PJSC will increase power supply reliability Major Technological Connection Projects in 2016 2nd autotransformer bank (ATB) Orenburgneft (110/6 kV SS of the customers of the central power 550/220 kV with capacity of Rybinskaya, 110/6 kV SS generation node of Orenburg energy Main technical and economic Project name Project importance 501 MVA Zagorskaya) and CJSC Gazprom system and the city of Orenburg, indicators invest Yug (110/35 kV SS as well as provide technological Filipovskaya) to the grids of connection of the new customers. MES North West PJSC FGC UES.

Leningradskaya – Baltia Implementation of Provision of uninterrupted power MES Western Siberia approaches OHL 330 kV to Leningradskaya NPP-2 power supply to the Leningrad Region. Kingiseppskaya SS generation project 220 kV Gubernskaya SS with spur Provision of the technological The energy facility provides reliable (JSC Rosenergoatom). Water- lines from 220 kV OHL TTPP-2 – connection of the Antipinsky power supply to the second launch moderated power reactors are TMMZ circuit 1, 2. The first phase refinery. facility of the 3rd technological phase installed at the station. Fuel type of construction. Construction of of the Antipinsky refinery, which is nuclear. 220 kV SS Gubernskaya with spur is the most modern facility in the Construction of OHL 330 Implementation of Provision of uninterrupted power line. Ural Federal District with a high- kV Leningrad NPP-2 – SS Leningradskaya NPP-2 power supply to the Leningrad Region. tech oil processing and the quality Gatchinskaya delivery project of the diesel fuel produced per the (JSC Rosenergoatom). Water- requirements of Euro-5 standard. moderated power reactors are installed at the station. Fuel type is nuclear.

6 PJSC FGC UES Annual Report 2016 7 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Suspension of the second circuit Provision of technological Construction of 220 kV SS Tommot, Construction of SS 500 kV Provision of technological Commissioning of the energy facility of 220 OHL Nizhny Kuranakh – connection of 92 MW LLC 220 kV SS Maya with 220 V OHL Svyatogor with approaches OHL connection of LLC RN- allowed to exclude the existing deficit Tommot and 220 kV OHL Yakutenergo, 9.8 MW JSC DRSK, Nizhny Kuranakh – Tommot will 500 kV and 220 kV Yuganskneftegaz, JSC YUTEK, of the autotransformer equipment Tommot –Maya I and II circuit with 29.635 MW Transneft-Vostok, make it possible to unite South JSC Tyumenenergo. in Nefteyugansk energy region and 220 kV SS Tommot and 220 kV 0.9 MW PJSC MTS. and Central energy region of Sakha provide development of Malobalyksky Maya Republic (Yakutia) energy system, and Prirazlomny fields of PJSC NK increase power supply reliability of the Rosneft, Valdepskaya and Salymskaya existing customers, as well as provide oil field groups of Salym Petroleum possibility of technological connection Development N.V. In addition, the to new customers, including PJSC construction of the substation Transneft that executes the orders of provided additional power take-off and the Russian Federation Government technological connection to the energy and intergovernmental agreements on system of the electricity receiving crude oil supply to China. devices required for development of utility sector of Nefteyugansky District. 220 kV SS Mangazeya. Re- Provision of technological Provides development of the most approach of OHL 110 (220) kV connection of CJSC Vankorneft, important infrastructure projects – Mangazeya – Vankor-1, 2 to linear CJSC Rospan International. stable power supply to Vankor oil- cells and-gas field, implementation of the coming stage of power delivery scheme of Urengoiskaya GRES, creates additional opportunities of Information on the Technical Council of PJSC FGC UES new customers’ connection to UNEG. Construction of SS 220 kV Vektor Provision of technological Commissioning of the energy facility The Technical Council of PJSC FGC UES was The current activity and structure of the Technical established in 2010. The key objectives of the Technical council are determined by the order on 18 November with approaches OHL 220 kV Pyt – connection of allowed to exclude the existing deficit 2 Yakh – Ust – Balyk JSC Tyumenenergo, JSC YUTEK- of the autotransformer equipment in council are to make justified decisions aimed at 2013 No. 682 . increase of reliability and efficiency of the backbone Regionalnye Seti, Nefteyugansk energy region and to The Technical Council performs its activities via electric grids of the Russian Federation and efficient LLC RN-Yuganskneftegaz. provide development of Malobalyksky in-person meetings (joint presence) and meetings in implementation of the Provision on the Unified and Prirazlomny fields of PJSC NK absentia. In 2016, 2 face-to-face and 4 conference calls Technical Policy in the electric grid system1. Rosneft. In addition, the construction of the Technical Board were held. of the substation provided additional power take-off and technological connection to the energy system of the electricity receiving devices required for development of utility sector of PJSC FGC UES Technical Council Meetings in 2016. Nefteyugansky District. Date of Form of No. Meeting topics MES East minutes meeting – On the review of the work results under the contract Development of a SS 220 kV Zvezda with approach Provision of technological Construction of the modern shipyard software and hardware system for the continuous diagnostics of the OHL 220 kV Beregovaya-2 – connection of Zvezda SK Zvezda is performed on the output electromechanical devices of the relays of the Relay Protection Pereval shipbuilding and ship-repair territory of Zvezda ship-repair plant and Automation (RPA) devices; centre and the adjacent sites in the Bolshoy Kamen bay. The new shipyard will be – On the review of the work results under the contract Development building the ships of any complexity, of design documentation, standard solutions and development of a specifications and purposes, including prototype of a set of remote-control switching devices to be installed Meeting in those previously not built in Russia 1 29 April 2016 on the supports of 220-500 kV OHL for ice melting; because of existing restrictions of absentia – On the review of the PJSC FGC UES Innovative development launch and hydraulic structures. programme for 2016-2020 with a view up to 2025; Construction of the new shipbuilding complex is one of the mechanisms of – On the review of energy saving and energy efficiency issues; fundamental change in competitive – On the review of issues of creation and management of PJSC FGC UES position of Russian commercial intellectual property and rights. shipbuilding and construction of modern competitive sea equipment of the commercial purpose. – On the review of the proposals of MES Siberia and MES Centre on 220 kV SS Amur Provision of the technological The construction of 220 kV SS Amur decommissioning of the explosion and fire prevention systems of In-person connection of the JSC DRSK and will enable to increase the reliability 2 16 May 2016 Sergi Transformer Protector; meeting JSC KhGES customers. of electricity supply to the existing – On the inclusion of the newsletters and executive documents to the customers, as well as to provide standard technical documents Register of PJSC FGC UES. for opportunity of technological connection of the new consumers in the city area of Khabarovsk

1 Approved by the Board of Directors of PJSC FGC UES (minutes of 23 October 2013 No. 138) and enacted as the internal document of the PJSC FGC UES by the decision of the Board of Directors of the PJSC FGC UES (minutes of 27 December 2013 No. 208). 2 In the version of the order of JSC FGC UES of 5 February 2014 No. 57; the orders of the PJSC FGC UES of 7 June 2016 No. 173; of 8 September 2016 No. 312; of 9 February 2017 No. 53.

8 PJSC FGC UES Annual Report 2016 9 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

First Deputy Director General – Chief Engineer of PJSC FGC UES branch – – On the review of the proposals of MES Siberia and MES Centre on Terskov A. V. MES Siberia decommissioning of the explosion and fire prevention systems of Meeting in 3 17 June 2016 Sergi Transformer Protector; Ilyin D. L. Chief Engineer of the JSC CIUS EES (upon approval) absentia – On the inclusion of the newsletters and executive documents to the standard technical documents Register of PJSC FGC UES. Kosolapov I. A. Director General of JSC R&D Centre of FGC UES (upon approval) Head of Analysis and Technical Solutions Division of the Substations Department, – On the review of the work results under the contract «Development of Merzlikin A. P. the software and hardware system of scheme-engineering solutions executive secretary of the TC, non-voting optimization with account of the indicators of hardware and facility reliability»; – On the review of the work results under the contract Research and development of the software and hardware system of control of Meeting in Repair Programme Implementation Results in 2016 4 22 July 2016 Thyristor controlled shunt reactor (TCSR) 500 kV 180 MVA in the absentia The following planned repair and maintenance pause of one-phase automatic reclose (OARC) and when switching on – about 11 thousand OHL support foundations were measures were fully accomplished in 2016: the 500 kV line running idle; repaired and reinforced; – 81 autotransformer phases and 14 reactors, about – On the review of the work results under the contract Research – 108,403 thousand OHL insulators were replaced. 12 thousand circuit breakers, more than 2 thousand and production of an industrial prototype controlled by Direct breakers were repaired; Compensation Device (DCD) for 500 kV OHL of Sayano-Shushenskaya HPP – 500 kV SS Novokuznetskaya. – 42 thousand ha of overhead electricity transmission line routes were cleaned from tree and shrubbery – On the review of the work results under the contract Development of vegetation; electronic catalogue of standard projects for designing the main layout 30 September Meeting in 5 arrangements of 220–750 kV SS with application of the best available 2016 absentia technologies. – On the review of R&D Programme of PJSC FGC UES for 2016–2018. Results of the Implementation of Diagnostic Works in 2016 1 December In-person – On the review of the Replacement Programme for the RPA 6 In 2016, more than 92.6 thousand tests and associated with transportation of the test samples 2016 meeting microelectronic devices of PJSC FGC UES. measurements of PJSC FGC UES electric grid over the distances of more than 600 km. At the same equipment were executed, which was by 11.9% time, the speed and quality of monitoring of the oil-filled more than 2015; The increase of the tests is due equipment technical condition, the planning quality of to commissioning of new equipment, unplanned maintenance and repair activities increased. repair and emergency and recovery work testing, Five modern mobile electric laboratories were put Membership of the Technical Council of PJSC FGC UES implementation of repetitive and control tests as part into operation, which allows to perform a full range of of the repair work, and enhancement of diagnostics of high-voltage, low-voltage tests, as well as testing of the the controlled equipment. cable lines of any insulation type to a voltage grade of Dikoy V. P. Deputy Chairman of the Board – Chief Engineer, Chairman of the TC In 2016, extended integrated tests on the following up to 35 kV. programmes were carried out: The diagnostics divisions are equipped with 5 modern Epifanov A. M. Deputy Chief Engineer, Deputy Chairman of the TC – Special diagnostics of the facilities in a degraded television control devices for SS equipment. The chemical laboratories were additionally furnished with Korsunov P. Y. Deputy Chairman of the Board state, 52 units; diagnostics equipment and chemical reagents for – A comprehensive survey of overhead transmission performing of chemical analyses. Molsky A. V. Deputy Chairman of the Board lines, 4,795 supports. As of 1 January 2017, PJSC FGC UES operates: In 2016, 2 chemical laboratories were put into service, Zhukov A. N. Deputy Chief Engineer and furnished with equipment produced in Russia: – 163 mobile electric laboratories to perform high- voltage and low-voltage tests; Koltsov A. V. Deputy Chief Engineer – in the Far North (Yamal-Nenetsk PMES, SS 220 kV – 78 chemical laboratories; Urengoy); Nepomnyaschy E. E. Deputy Chief Engineer – Chief Dispatcher – 38 mobile electric laboratories for tests and – In the far south (Kaspiiskoye PMES, SS 330 kV diagnostics of the CL and OHL; Faustov D. V. IT Director – Head of IT Development and Operation Department Artem). Commissioning of new chemical laboratories ensured – 85 stationary laboratories for the testing of protective Abalin S. V. First Deputy Director General – Chief Engineer of PJSC FGC UES branch – MES Volga cost optimisation for performing of regular physical equipment. First Deputy Director General – Chief Engineer of PJSC FGC UES branch – MES North and chemical works, by excluding the third party Agapkin K. A. West physical and chemical testing, and overhead expenses

Grinko O. V. First Deputy Director General – Chief Engineer of PJSC FGC UES branch – MES East

Kovtun G. N. First Deputy Director General – Chief Engineer of PJSC FGC UES branch – MES South

First Deputy Director General – Chief Engineer of PJSC FGC UES branch – MES West Konishevsky V. V. Siberia

Melnikov A. R. First Deputy Director General – Chief Engineer of PJSC FGC UES branch – MES Urals

Lyapunov E. V. First Deputy Director General – Chief Engineer of PJSC FGC UES branch – MES Centre

10 PJSC FGC UES Annual Report 2016 11 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Operational Process and Situational Management The dynamics in the number of process disruptions The accomplishment factor of the emergency related to the operational personnel errors corresponds restriction schedules in 2016 remained unchanged Operational process management in FGC solves the When addressing the operational and process to the dynamics in the number of process disruptions as compared to 2015, but was far ahead of the target following main tasks: challenges, the Company is guided by the following related to the errors of all personnel categories. values. principles of building and functioning of the process – Providing reliable operation of the UNEG facilities operation management system: and execution of the work process modes set by the System operator’s control centres; – Standardisation of the structure of the Company’s The dynamics in the number of process disruptions The dynamics in outage schedule implementation operation and process control divisions, related to the operational personnel errors – Providing of the proper quality and safety when rate implementation of a common engineering policy of operating the UNEG facilities; their technique and information support; 2016 26 – Providing efficient operation of the unified training 2016 – Optimal distribution of the non-operational and system for the operational personnel; 2015 16 2015 operational functions and responsibilities between 2014 18 2014 98.8 – Minimizing the number of process disruptions the Company’s process operation management 2013 19 2013 98.6 resulting from erroneous actions of the operational divisions; 2012 2012 98.5 personnel; 40 – Inadmissibility of allocation of the operational – Participating in development and implementation functions to the Company’s process operation Process disruptions related to the errors of all personnel Actual value of the outage schedule implementation rate of UNEG development programmes in collaboration management divisions that are not directly categories with the System operator’s control centres; responsible for the operation of the certain facilities; Target value of the outage schedule implementation rate – Planning and implementing of the activities providing – Ensuring the constant readiness of equipment and repair outage, commissioning, modernisation and operational personnel for changes of the process renovation of the UNEG facilities; mode of operation or the operational status of UNEG facilities as per the System operator commands; – Eliminating of process disruptions in UNEG; The Company’s Operating Activities during Special Periods – Maintaining of operational process modes for the – Developing of emergency restriction schedules of equipment of the UNEG facilities in accordance with in 2016 power consumption and introducing emergency the authorities, signed contracts and market rules; restrictions upon the commands of the System In 2016, the Unified National Electric Grid operated in a The Company also prevented occurrence of major Operator’s control centres; – Providing an effective interaction with the System standard mode, including special periods – river floods, disruptions in the operation of the energy facilities operator when he performs the operational dispatch – Providing connection of the electric grid facilities and thunderstorms and fire hazards. during forest fires commenced in spring in the Far management of the UNEG facilities; consumer energy receivers to automatic emergency Last year, river floods were moderate in the most of Eastern Federal district. During the emergency, the response systems; – Effective use of the capabilities of the personnel of Russia. The situation was relatively tense at the facilities Company employees worked closely with the regional the operation and process management divisions for located in the operational area of PJSC FGC UES branch, administrations, Russian Ministry of Emergency Within the framework of operational and technological the needs of other divisions of the Company; PMES Primorsky – MES East. During the period from Situations, hydro-meteorological services, and energy management, the following situational management 29 August 2016 to 31 August 2016, long heavy and companies of the regional grid distribution system. The tasks are solved: – Establishing the necessary level of competence in very heavy rains were recorded in the most of Primorye work was done in advance to reduce the possibility of the Company sufficient to represent and protect the – Monitoring of the operational environment, territory due to the Lionrock typhoon. In general, at this the cut off of overhead lines due to the ground fires, dry interests of the Company in cooperation with the performing response activities, mobilizing of territory volumes of precipitations reached the criterion vegetation was removed in a timely manner and the fire electric energy sector counter-parties and electric manpower and resources in case of contingency and of an unfavourable meteorological phenomenon (15–48 break plowing was performed around the substations. power consumers; emergency situations; mm within 12 hours and less) in 75 cases, the criterion The Company entered into 134 agreements on – Ensuring that company personnel is constantly of a dangerous phenomenon – 20–91 mm (more than cooperation with contractors, which are involved, – Monitoring of arrangement, timing and progress of prepared to cope with the consequences of 50 mm within 12 hours and less) in 20 cases. The whenever necessary, in extraordinary and emergency the emergency and recovery work (hereinafter – emergency and contingency. long rains led to forming of floods, which became a and recovery works, 58 agreements with RosHydroMet ERW) at the UNEG facilities; catastrophic flooding, and occurrence of emergency and 88 agreements with the Russian Ministry of The objectives of the operational and process – Operational analysis of natural hazards for the risks in the region. Primorskoe PMES had commenced Emergency Situations. management were successfully met in 2016, with the of disrupting the reliable operation of UNEG facilities; emergency and recovery work as of September 1, 2016 following results: Fall-winter period of 2016–2017 comparing to the same using own resources, as well as the resources of JSC – Providing methodology, organization and monitoring periods of the previous years differed by significant – Since 2015, pilot projects were performed on the EES ENEG branch – Vostochnoe SPB, the works were of the FGC emergency operation headquarters; decrease of total number of transformers (specific telecommanding of substation equipment from the completed on 30 September 2016. accident rate decreased by 1%), for both SS equipment – Setting up a Company’s senior manager on duty for PMES grid control centres and the Dispatch centres and OHL. Decrease of the number of failures caused by weekends and non-working holidays; of JSC SO UES, in the PJSC FGC UES branches – personnel errors or wrong actions was observed. PMES Leningradskaya and Kuban PMES. In 2016, the – Organization of informational interaction with the operation of the automated switchover forms was situational centres of PJSC Rosseti, counter-parties checked; in Energy Sector, SO, Ministry of Energy of Russia, RosHydroMet of Russia, MES, Russian Railways, – In the branch of PJSC FGC UES – MES Volga, telecom operators, etc. in case of contingency and Electronic log register at the workplace of the emergency situations; operational personnel of the Main Grid Control Centre was introduced into industrial operations; – Forecasting the development of situations of a natural, man-impacted and man-made nature that – Optimization of time and use of the resources when contribute to the disruption of the reliable operation eliminating contingency, emergency and organising of the electric grid facilities. the emergency and recovery work was ensured in the branches.

12 PJSC FGC UES Annual Report 2016 13 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

IT Systems Operating in the Company Financial Performance Analysis

Automated Process Control System (APCS) Assets Structure Trends, RUB million Other assets APCS is a unified distributed hierarchical system – software and hardware system (SHS) of GCC of 2016 1,366,174 that allows both operational and non-operational PMES Khabarovsk; 2015 1,268,301 Current assets functions to be performed by Electric Grid Control 2014 1,231,217 Long-term financial investments – extension of GCC SHS of PMES Primorye with Centres, improves the efficiency of UNEG mode control 2013 1,214,291 Advance payments for non-current assets deployment of computation and analytical tasks. by allowing a high level of observability, prevents 2012 1,122,995 Construction in progress outages and reduces the time for decision-making and In the framework of the joint pilot projects with JSC Non-current assets the likelihood of errors by operational employees in SO UES and in the framework of the programmes of emergency situations. PJSC FGC UES Long-term efficiency increase project, the works on providing remote equipment (tele)control APCS, as a system for the management of UNEG, Net Asset Value, RUB million in the number of SS of MES North West, Centre, South embraces tools and subsystems of the automated and East from FGC Grid management centres and SO control systems that exist and develop on their own dispatch centres continued. 2012 2013 2014 2015 2016 (such as APCS, IATS, ADCS, RPA, EFMS), thus providing The activities on improving reliability and the necessary interface for interaction with the Nominal net asset value * 849,400 842,975 855,251 886,127 987,695 management control systems of the System operator monitorability of UNEG facilities continued In and distribution grid companies. 2016, the communication telecontrol servers Net asset value including (CTCS) were introduced into industrial operation contributions to the 855,251 886,127 987,695 As a system for the management of UNEG operations 852,647 846,731 in PMES Orenburgskoye, PMES Permskoys, PMES authorised capital** and development, APCS integrates the devices and Sverdlovskoye, PMES Yuzhno-Uralskoye and MES Urals. systems for the automated dispatch, processing and Work continues on the modernization of IATS in UNEG * Estimate based on the annual accounting statements with retrospective adjustments. operational activities of the Company’s administration SS. ** In 2012 and 2013, the authorised capital of Federal Grid was increased through the issue of additional shares. Consequently, current and MES / PMES services. payables on Shareholders’ contributions to the authorised capital were booked in accounts payable (other short-term liabilities). Upon When implementing «APCS creation» project, the registration of the placement of additional shares with Russia’s FFMS this debt will be converted to the authorised capital of Federal In 2016, as part of the project “APCS creation”, import substitution programme is also implemented, Grid Company. The estimate of net asset value includes the payables on authorised capital contributions into the authorised capital in the following automated systems of process and namely, the preference is with the equipment and the amount of RUB 2,219.2 million in 2011, RUB 3,247.3 million in 2012 and RUB 3,755.6 million in 2013. operational control of Grid management centres (GMC software of the domestic manufacturers at all the ADCS) were implemented and introduced into industrial hierarchy levels of the process control. operation in MES East:

– software and hardware system (SHS) of GCC of PMES Amurskaya; Cash Flow Analysis

2012 2013 2014 2015 2016

Corporate Information Management System (CIMS) Cash flow balance, 281 –3,196 22,149 –17,503 14,031 RUB million. CIMS is a set of information systems that is allowed to optimise organisational and labour costs methodologically and technically interconnected and associated with the manual content processing Cash flow balance from 100,494 86,688 101,013 99,090 99,198 designated for automation of the Company’s business- operations of the personnel (scanning, uploading, operations processes in order to increase their efficiency. searching, distribution, selection and completing, Cash flow balance from CIMS development is regulated by PJSC FGC UES etc.) investments –173,183 –163,485 –53,849 –132,629 -55,182 IT strategy and is implemented in the framework of In 2017, CIMS will continue to develop as part of the Cash flow balance from integrated Plan of IT strategy implementation of PJSC integrated IT strategy implementation plan of PJSC financial operations 72,970 73,601 –25,015 16,037 -29,985 FGC UES for 2014–2020 (IT strategy), approved by FGC UES for 2014–2020. Among the most significant Board of Directors of PJSC FGC UES in 2014. projects, the following are expected to be implemented: In 2016, the following most significant projects, in the Cash flow balance from operations in 2016 was as framework of CIMS were implemented: – Automated system to control operation of the – Remuneration of employees in the amount of customer-developer service, in order to enhance follows: RUB 16,006 million; – An automated system for management investment investment project management processes of PJSC – Revenue from sales of services of electric power – Interest payments in the amount of budget (ACS IB). Creation of the system allowed FGC UES in terms of report creation for the contract transmission via UNEG in the amount of RUB 8,396 million; to substantially increase quality and effectiveness of performing the functions of the customer- RUB 169,395 million; of investment budget management, by automation developer and cost planning/distribution for – Payments of profit tax, VAT, insurance, etc. in the – Revenue from sales of services of connecting to of the primary planning of the business processes, maintenance of the customer-developer service; amount of RUB 29,237 million. UNEG in the amount of RUB 7,306 million; balancing, adjustment, approval and monitoring of – An automated investment cost management system Net cash flow from investments in the reporting year the investment budget execution; – Revenue from property lease in the amount of (ACS IC) in order to enhance the processes of the included the following: RUB 866 million; – An automated system for management of electronic PJSC FGC UES investment projects management in – Negative balance of interests under debt obligations, archive services (ACS EAS). Creation of the system terms of recording of the accounts payable/accounts – Other revenues in the amount of RUB 7,991 million debt financial investments in the amount of allowed to increase quality and effectiveness of receivable, as well as removal of the contradictions (refund under the bank guarantees, as well as RUB 14,245 million; the Company operation in the framework of the between management and accounting recording of because of the contractor’s failure to perform or business processes based on use of the primary investment costs. properly perform their contractual obligations); – Investment related payments of RUB 79,204 million; documentation, by providing centralised access to – Payments to suppliers of crude materials, materials, – Positive balance loans that comprised, taking into the electronic repository of the documents. It also works, services in the amount of RUB 33,972 million; account their repayment, an amount of RUB 37,123 million;

14 PJSC FGC UES Annual Report 2016 15 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

– Proceeds from the sale of non-current assets in the for the amount of RUB 9,999 million and repayment of Debt Portfolio amount of RUB 1,135 million. the loans in the amount of RUB 23,172 million, as well as dividends distribution in the amount of Net cash flow from financial operations in total RUB 16,977 million. comprised of the revenue from placement of the FGC bond repayment offers in 2017 infrastructure bonds of PJSC FGC UES (BO-02 series) Coupon Outstanding Placement rate on the Date of offer/ Series Cost Optimisation volume, RUB coupon rate reporting date of repayment date Cost Management Programme. In order to increase developed a comprehensive Programme for Improving the operation efficiency, optimise production and Efficiency of Operations approved as a part of the PJSC 26 April 2017/ 4-21-65018-D of 21 June 2012 10,000,000,000 8.75% 8.75% management costs and their structure, the Company FGC UES Business Plan for 2016–2020. 6 October 2027

24 October 2017/ 4-09-65018-D of 5 November 2009 5,000,000,000 7.99% 7.99% 16 October 2020 2012 (basis) 2013 2014 2015 2016 24 October 2017/ Expenses included into 4-11-65018-D of 5 November 2009 10,000,000,000 7.99% 7.99% the basis of the Cost 16 October 2020 Management Programme 37,534 39,203 37,237 35,709 34,792 (in current prices), RUB million As of 31 December 2016, the following Company bond issues Number of equipment to be 1,097.56 1,171.471 1,224.742 1,305.611 1,323.610 are outstanding: maintained, c.u.‘000* Outstanding volume Current Deflator index (to 2012) 1.068 1.151 1.330 1.424 Total nominal Series Placement coupon rate with a nominal value coupon value (RUB) Given fixed costs (RUB) rate per 1 c.u. (in 2012 prices), 34.20 31.33 26.41 20.57 18.46 RUB thousand/c.u. 4-06-65018-D 10,000,000,000 7.15% 7,534,586,000 8.25% Unit OPEX reduction –8.4% -22.8% –39.9% –46.0% as compared to 2012**, % 4-07-65018-D 5,000,000,000 7.50% 1,760,821,000 7.50%

* the indicator is provided according to the new standards for gas-insulated equipment and cable lines of 330 kV, 500 kV (according to 4-08-65018-D 10,000,000,000 7.15% 7,314,887,000 8.25% the order of PJSC FGC UES of 3 December 2015 No. 482 On the approval of Guidelines for calculation of the service volumes of PJSC FGC UES in conventional units). 4-09-65018-D 5,000,000,000 7.99% 5,000,000,000 7.99% ** the effect is indicated taking into account the retrospective changes of the quantity of equipment under maintenance 4-10-65018-D 10,000,000,000 7.75% 29,151,000 7.75%

4-11-65018-D 10,000,000,000 7.99% 10,000,000,000 7.99%

4-12-65018-D 10,000,000,000 8.10% 46,462,000 8.10% By the end of 2016, the Company completed its the electric grid system of the Russian Federation in assignments in terms of operational efficiency accordance with the RF Government resolution 4-13-65018-D 10,000,000,000 8.5% 10,000,000,000 8.50% improvement: No. 511-r of 3 April 2013; – The reduction of specific operating expenditures 4-15-65018-D 10,000,000,000 8.75% 311,961,000 8.75% – The reduction of the operating expenditures as (OPEX) (per 1 c.u.) from the 2012 level was 46.0% compared to 2015 was 23.4%, pursuant to the (the total effect of reducing operating expenditures 4-18-65018-D 15,000,000,000 8.50% 109,762,000 8.50% Directive of the Russian Federation Government under the cost management programme was on 4 July 2016 No. 4750p-P13 on reduction of the RUB 17,276 million). Thus, the reduction of operating 4-19-65018-D 20,000,000,000 7.95% 20,000,000,000 7.95% operating expenditures in 2016 by at least 10%. expenditures is ahead of the level of 2012 in relation to the parameters of the Development Strategy of 4-21-65018-D 10,000,000,000 8.75% 10,000,000,000 8.75% 1-2 coupons – 9% per annum, 3-20 coupons are calculated 4-22-65018-D 10,000,000,000 10,000,000,000 10.00% according to formula*:

Кi = (CPI – 100%) + 2,5% 1 coupon – 8.4% per annum, 2-140 coupons are calculated 4-23-65018-D 10,000,000,000 10,000,000,000 7.10% according to formula:

Кi = (CPI – 100%) + 1% 4-24-65018-D 10,000,000,000 8.00% 10,000,000,000 8.00%

4-25-65018-D 15,000,000,000 8.60% 1,781,862,000 9.00%

16 PJSC FGC UES Annual Report 2016 17 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

1 coupon – 7.5% per annum, 2-136 coupons are calculated Non-convertible interest-bearing 4-26-65018-D 15,000,000,000 15,000,000,000 7.40% according to formula: certificated bearer bonds with К = (CPI – 100%) + 1% Exchange 4B02-04-65018-D mandatory centralised custody and i BО-04 10,000,000,000 12,740 bonds of 6 June 2012 the option of early redemption at the 1 coupon – 7.5% per annum, request of the bondholders and at 2-136 coupons are calculated the discretion of the issuer 4-27-65018-D 15,000,000,000 11,000,000,000 7.40% according to formula: К = (CPI – 100%) + 1% i Non-convertible interest-bearing 1 coupon – 8.4% per annum, certificated bearer bonds with 2-140 coupons are calculated Exchange 4B02-05-65018-D mandatory centralised custody and 4-28-65018-D 20,000,000,000 20,000,000,000 7.10% BO-05 15,000,000,000 12,740 according to formula: bonds of 6 June 2012 the option of early redemption at the Кi = (CPI – 100%) + 1% request of the bondholders and at the discretion of the issuer 1 coupon – 7.1% per annum, 2-132 coupons are calculated 4-29-65018-D 20,000,000,000 20,000,000,000 6.80% according to formula: Non-convertible interest-bearing

Кi = (CPI – 100%) + 1% certificated bearer bonds with Exchange 4B02-06-65018-D mandatory centralised custody and 1 coupon – 7.5% per annum, bonds BO-06 the option of early redemption at the 15,000,000,000 12,740 2-132 coupons are calculated of 6 June 2012 4-30-65018-D 10,000,000,000 10,000,000,000 7.10% request of the bondholders and at according to formula: Кi = (CPI – the discretion of the issuer 100%) + 1%

1 coupon – 7.5% per annum, Non-convertible interest-bearing 2-132 coupons are calculated 4-34-65018-D 15,000,000,000 14,000,000,000 7.10% certificated bearer bonds with according to formula: Exchange 4B02-07-65018-D mandatory centralised custody and Кi = (CPI – 100%) + 1% BO-07 15,000,000,000 12,740 bonds of 6 June 2012 the option of early redemption at the 1 coupon – 17.9% per annum, request of the bondholders and at 2-120 coupons are calculated the discretion of the issuer 4-37-65018-D 20,000,000,000 20,000,000,000 7.40% according to formula: К = (CPI – 100%) + 1% i Non-convertible interest-bearing 1 coupon – 17.9% per annum, certificated bearer bonds with 2-120 coupons are calculated Exchange 4B02-08-65018-D mandatory centralised custody and 4-38-65018-D 20,000,000,000 20,000,000,000 7.40% BO-08 15,000,000,000 12,740 according to formula: bonds of 6 June 2012 the option of early redemption at the request of the bondholders and at Кi = (CPI – 100%) + 1% the discretion of the issuer 4В02-02-65018-D 10,000,000,000 9.35% 10,000,000,000 9.35%

XS0863439161 17,500,000,000 8.446% 17,500,000,000 8.446%

The following issues of the Company’s bonds are available for placement Risk management of interest rate changes as of 31 December 2016 In the framework of Risk Management Programme the Company has the right for early bond repayment special attention is paid to risk management of interest at its own discretion in the event that the coupon rate rate changes and inflation risk growth. In order to exceeds 10% per annum, which corresponds to return Type of Registration Maturity, Series Identification attributes of securities Face value, RUB manage the inflation risk on repayment of the debt on the capital invested approved for the Company by security number and date days securities linked to CPI value, the Company has defined the regulator in the framework of tariff decisions. Thus, an excess of 9% inflation as an event when such according to the Company, interest rate fluctuations Non-convertible interest-bearing securities may be repaid early. The level of this risk is shall not have a lasting and significant impact on the certificated bearer bonds with considered by the Company as acceptable in view of Company operations. Exchange 4B02-03-65018-D mandatory centralised custody and the downward inflation trend (to 5.4% in 2016), and that BО-03 10,000,000,000 12,740 bonds of 6 June 2012 the option of early redemption at the request of the bondholders and at the discretion of the issuer

18 PJSC FGC UES Annual Report 2016 19 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

The stock exchanges where the Company’s shares and bonds are listed On 23 December 2014 the International rating agency (IDR) in foreign currency at BBB level, outlook is Stable. The Company’s bonds are listed on PJSC Moscow Eurobonds are listed on the Irish Stock Exchange. Moody’s Investors Service, once again put the rating On the national scale, IDR was assigned at AAA(rus) Stock Exchange on the second and third listing level. of the PJSC FGC UES on a revision with the possibility level. of downgrading as a consequence of similar situation On 17 October 2013, Standard & Poor’s confirmed the regarding the Russia’s rating. credit ratings of JSC FGC UES: long-term credit rating Dynamics of the average value of the Company’s bonds portfolio in 2016 On 21 October 2014, it affirmed the global scale of JSC FGC UES on the international scale has been long-term rating of PJSC EEC UES at the Baa3 level. confirmed at BBB (outlook: Stable), on the national 31 December 2015 31 December 2016 The credit quality of the Company relates to an scale, at the level of ruAAA. investment category that demonstrates the stability of Credit assessment of JSC FGC UES by both agencies Bond portfolio volume, RUB thousand 274,561.17 261,389.49 PJSC FGC UES main operations and its high financial was based on similar factors. The long-term default sustainability against a backdrop of deteriorating BBB ratings are two notches higher than JSC FGC macroeconomics and unfavourable market conditions. Average value, % per annum 12.89% 7.84% UES’s stand-alone credit taking into account moderately On 25 April 2014, Standard & Poor’s degraded the strong connections with the Company’s indirect Russia’s sovereign rating in foreign currency from BBB shareholder, the Russian Federation (BBB / outlook: to BBB– with a Negative outlook. In addition, the long- Stable) via JSC Rosseti. Assessment of FGC UES’s term ranking in national currency was degraded to BBB stand-alone credit at the level of BB+ as a positive Information on inclusion of the Company’s securities to Stock Market Indices from BBB +. The short-term rating in foreign currency factor takes into account the Company’s position as the Company bonds are not included to the Stock Market Indices. is downgraded from A-2 to A-3, and the national scale owner and monopoly operator of the national electricity rating is confirmed at the A-2 level. As a result, on 28 transmission grid and its high level of profitability and April 2014, the long-term rating in foreign currency of liquidity. At the same time, the rating agencies point PJSC FGC UES was also reduced by one notch from to the following factors as negative ones: instability BBB to BBB-, (Outlook Negative). of the regulatory environment and financial risks that Information on the Credit Ratings of PJSC FGC UES may relate to the implementation of a large-scale On 3 April 2014, Moody’s placed ratings of PJSC FGC investment programme. for the Period of 2012–2016 UES under review for downgrade due to the potential downgrade of the sovereign rating. On 1 July 2014, On 23 November 2012, Moody’s established JSC FGC the Company’s credit rating on the global scale was UES rating on the international scale Baa3 (outlook: Due to the revision on 16 September 2016 of the PJSC FGC UES. At the same time, the Agency stated confirmed at the previous level of Baa3 (so called Stable). On the national scale the Company’s rating Russian Federation’s credit rating outlook from that the withdrawal of the national scale ratings would investment category) with a negative outlook. was confirmed at the level of Aaa.ru. Downgrade of Negative to Stable and the confirmation of sovereign not affect the global scale rating of the agency. The the Moody’s rating from Baa2 to Baa3 was primarily credit ratings at the former level, Standard & Poor’s global scale revision procedure had been completed On 26 March 2014, Fitch Ratings, and on 27 March due to changes in the ownership structure, which took revised the rating outlook for 17 Russian companies, in April 2016, and the rating of the Company was 2014 Standard & Poor’s changed the outlook for PJSC place in accordance with the Decree of the President including PJSC FGC UES, from Negative to Stable on confirmed at the previous level of Ba1 with a negative FGC UES from stable to negative, at the same time the of Russia, No. 1567 of 22 November 2012. On Joint 20 September 2016. The rating value remains the same outlook. This value was not revised until the end of the Company’s long-term ratings in foreign and national Stock Company Rosseti. Assessment of the Company’s at the BB + level, which corresponds to the sovereign year. currencies were confirmed at the level of BBB. financial position has not changed. rating. On 4 February 2015, after the procedure of revision of On 25 October 2013, Fitch Ratings Ltd established the As part of the annual monitoring of rating values in July PJSC FGC UES rating, which had been initiated at the JSC FGC UES long-term rating of the issuer’s default 2016, Fitch Ratings has affirmed the long-term PJSC end of 2014, S&P lowered the Company’s credit rating FGC UES default rating in foreign and national currency to BB+ as a consequence of similar action on sovereign at the BBB– level with the Negative outlook and the rating. National long-term rating at the AAA (rus) level with a On 20 January 2015, after the procedure of revision of Stable outlook. As the communication message states, PJSC FGC UES rating with the possibility of degrading, the Company has a good financial profile, a moderately Accounts Payable, RUB million which had been initiated at the end of 2014, the diversified and stable customer base, flexible approach International rating agency Moody’s Investors Service in implementing a large-scale investment programme, 31 December 2014 31 December 2015 31 December 2016 shifted the credit rating of PJSC FGC UES one step and presence of the risks of the regulatory nature. In down to Ba1 with a negative outlook as a consequence October 2016 Fitch Rating performed rating activities of similar situation regarding Russia’s rating. In the end Accounts payable, including 77,551 54,748 60,032 for the Russian companies after revision of the Russian of 2015, the outlook for the Company was changed to Federation sovereign rating outlook. Long-term IDR in stable (7 December 2015). foreign currency is confirmed at the BBB– level, the suppliers and contractors 67,206 42,280 31,048 outlook has changed from Negative to Stable. This On 13 January 2015, the Fitch Ratings degraded the value has been maintained until the end of the reporting long-term default rating of PJSC FGC UES in foreign Wages and salaries due 221 18 21 period. and national currencies from BBB to BBB-. As the communication message states, the Company’s In Q1 2016, a team of International rating agency credit quality is restrained by the sovereign rating and analysts of Moody’s Investors Service initiated similar State non-budget funds liabilities 84 310 1 sovereign rating outlook, and has been revised to reflect actions for a number of Russian companies in the that fact. This rating is consistent with the downgrading non-financial sector, including the PJSC FGC UES, as of the Russia’s country ceiling to the BBB– level. Tax and levies liabilities 1,326 4,063 16,731 a consequence of the decision to revise the Russian credit rating due to the fact that the oil prices continue On 30 December 2014, the agency S&P, following the to decline. Rating values for both global and national sovereign rating of the RF (23 December 2014), put the Advance payments received 6,085 6,130 8,172 scales were subject to revision with the possibility FGC UES rating level on a potential downward revision. of degrading. In March 2016, in connection with the As the communication message states, the revision of Arrears in payment of income to participants 9 8 74 changes of legislation concerning operation of rating ratings has been caused by rapid decline of Russia’s (founders) agencies in the Russian Federation, Moody’s Investors flexibility in monetary policy and the impact of the Service withdrew all the national scale ratings in Russia country’s economy weakening on its financial system. Other accounts payable 2,620 1,939 3,985 (some 150 Russian issuers), including the rating of the

20 PJSC FGC UES Annual Report 2016 21 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Accounts Receivable, RUB million Tariff Setting The Company takes the measures, which have been 2014 No. 383 and of 16 September 2014 No. 402, determined by PJSC FGC UES orders of 9 September in order to collect the outstanding receivables. The list of main regulatory acts governing tariff setting and electricity 31 December 2014 31 December 2015 31 December 2016 transmission via UNEG operations – Federal Law On Electric Energy Industry No. 35-FZ – RF Government Resolution On investment Accounts receivable, including 60,163 69,491 135,201 of 26 March 2003; programmes of electricity industry entities No. 977 of 1 December 2009; Payments that are due for more than 12 – RF Government Resolution On pricing in regulated 1,111 9,504 11,327 months after the reporting date areas (tariffs) in the electric energy sector No. 1178 – FTS of Russia Decree On approval of the guidelines of 29 December 2011; for calculation of tariffs for electricity transmission via Unified National (All-Russia) electric Grid Buyers and customers 5 8,655 10,485 – RF Government Resolution On defining the applicable No. 56-e/1 of 21 March 2006; indicators of reliability and quality of goods and Other accounts receivable 1,106 849 842 services provided in establishing long-term tariffs – FTS of Russia Decree On approval of the Guidelines No. 1220 of 31 December 2009; on tariff regulation using the method of return on capital invested No. 228-e of 30 March 2012; That are due for more than 12 months – RF Government Resolution On approval of the 59,052 59,987 123,874 after the reporting date Rules for the Wholesale Electric Energy and Power – FTS of Russia Decree On approval of the Procedure Market and amendment of certain acts of the RF for preparing of consolidated balance forecast for Buyers and customers 37,501 39,753 89,976 Government related to organising the functioning of electricity (capacity) generation and sales within the wholesale market for electric energy and power the Unified Energy System of Russia by constituent No. 1172 of 27 December 2010; units of the Russian Federation and Procedure of Advances paid 1,559 766 516 determining the ratio of the total forecasted annual – RF Government Resolution On approval of the energy consumed by the population and similar Rules for non-discriminatory access to electricity consumer categories to the volume of electric power, Other accounts receivable 19,992 19,468 33,382 transmission services and provision thereof, the corresponding to the annual average forecasted Rules for non-discriminatory access to services capacity determined for these consumer categories on operational dispatch management in electric No. 53-e/1 of 12 April 2012. power industry and provision thereof, the Rules for non-discriminatory access to services of wholesale Litigation for the Collection of Receivables in 2016 market administrator and provision thereof, the Rules for technological connection of power As a result of the claim work done in order to collect – 7 contractors’ lawsuits against the PJSC FGC UES for receivers of electricity consumers, power generating the outstanding receivables for rendered services on the recovery of PJSC FGC UES debts arising from the facilities, and electric grid facilities owned by grid electric power transmission in 2016, PJSC FGC UES has contracts signed with the purpose of implementation organisations and other entities, to electric grids received positive judgements on 76 cases in the total of the PJSC FGC UES Investment programme in the No. 861 of 27 December 2004; claimed amount of RUB 14,190.76 million. Recovery in total amount of RUB 907,519,500.30. relation to two court cases was refused for a total of RUB 10.1 million. Number of trials in 2016 run by JSC CIUS UES as part of the implementation of the agents contract of 1 April As a result of the judgements rendered in 2016, there 2008 No. C/01: were writs of execution received for a total of RUB The main long-term regulatory parameters established by FTS of Russia for 8763.1 billion, of which RUB 2458.2 billion were paid. – 622 recovery suits in favour of PJSC FGC UES of 1 the cash funds (outstanding liabilities, penalties), the second long-term regulation period of 2015–2019 Number of litigations in 2016 run by the Legal in the framework of the contractual obligations of department: the contractors on implementation of the PJSC FGC 2015 2016 2017 2018 2019 – 20 enforcement claims in favour of PJSC FGC UES UES Investment Programme in the total amount of the monetary assets under the bank guarantees, of suits of RUB 35,261,580,954.03, of which RUB Rate of return on capital invested, % 10 10 10 10 10 which were provided as security for contractual 11,961,971,326.20 are recovered; obligation of the contractors in the framework of – 189 contractors’ lawsuits against the PJSC FGC Base level of operating expenditures, implementation of the PJSC FGC UES Investment 35,023.035 – – – – UES for the recovery of PJSC FGC UES debts arising RUB million. Programme in the total amount of claims of RUB from the contracts signed with the purpose of 4,790,160,632.43. Of these are recovered in favour of implementation of the PJSC FGC UES Investment Operating expenditure efficiency index, % – 3.0 3.0 3.0 3.0 the PJSC FGC UES: RUB 1,672,175,176.03; programme in the total amount of RUB 10,744,916,842.56. Net current capital, RUB million 11,417.538 11,919.910 12,432.466 12,967.062 13,524.645

Period of return of capital invested, years 35 35 35 35 35

electric power loss rate, when transferred 4.27 4.27 4.27 4.27 4.27 via electric grids, %

1 Approved by FTS of Russia Decree No. 297-e/3 of 9 December 2014.

22 PJSC FGC UES Annual Report 2016 23 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

The following changes to the established tariffs and – The forecast balance of electric energy and capacity Investment Activities regulatory parameters were made in 2016: for 2017 is approved , which envisages reduction of – The adjusted tariffs for the UNEG electricity the service volumes that FGC provides to the grid transmission services provided to PJSC FGC UES for companies as of 1 July 2017, due to the transition of Key Parameters of the Major Investment Projects 2017–2019 were approved ; the last mile consumers to the direct contracts with PJSC FGC UES and the payments based on average Funding Full cost Put into capacity. Implementation time volume in estimate operation Design Project 2016-2020. RUB billion in 2016 capacity RUB billion Tariffs for electricity transmission services via the facilities of the distribution start end electric grids Development of energy 972 MVA FGC activity in terms of the provision of electricity the electricity transmission services via the distribution infrastructure for oil 2012 2020 22.77 0 22.72 transmission services are performed using distribution grids in the Krasnodar territory4 is approved for PJSC transportation system 6 7 6 k m electric grids (DEG) facilities, built within the framework FGC UES in the amount of RUB 1,788,951 thousand (ESPO – I, II) 584 MVAr of the PJSC FGC UES Investment programme, including (3.5% growth rate) and RUB 1,797,139 thousand (0.5% Compensatory measures electric grid facilities built for the XXII Olympic Winter growth rate), respectively. for separate operation of the 125 MVA 125 MVA Games and XI Paralympic Winter Games of 2014 in 2015 2017 1.89 1.16 In addition, in 2017, the required gross revenue is UES of Russia and the IPS of Sochi3, as well as facilities built for electricity supply to 86.58 km 84 km approved for maintenance of the DEG facilities located Ukraine Valaam island in the Republic of Karelia. in the territory of the Republic of Karelia5 in the amount For 2016 and 2017 the required gross revenue of RUB 35,235 thousand. Improvement of the access 999 MVA (excluding payment of losses) from the provision of to electric grid infrastructure 2010 2019 4.62 0 4.18 of the Krasnodar territory 40 km

Provision of the capacity 8,809 MVA delivery of the generation 2009 2021 136.17 254.59 km 3,301.8 km 35.12 Regulation of the reliability and quality of services facilities. 2,320 MVAр Tariff regulation focusing on the maintenance of the The Guidelines for calculation and application of Development of the electric 3,998 MVA rate of return based on certain long-term parameters decreasing (increasing) factors7 allow to ensure that grid infrastructure in the 2010 2024 103.14 0 4,217.9 km 75.13 implies that FGC will assure the reliability and quality of tariff levels are consistent with the level of reliability area of BAM and TransSib 1,394 MVAр rendered services as provided by the FTS of Russia6: and quality of goods delivered and services provided. Building of electric power In accordance with these Guidelines, the increasing – electricity transmission reliability, which primarily infrastructure for gas or decreasing factors within the limits of 3% of the 2016 2020 0.93 0 114 km 0.93 characterises power system disturbances and their transportation system, required gross revenue will be applied to the FGC consequences for consumers; Power of Siberia revenues. – quality of services provided to consumers, which mostly defines the promptness of implementation of technological connection commitments.

Management and Quality Control of Capital Construction Planned reliability and quality indicators of FGC’s services as set by FTS Organisation and implementation of the construction of Construction Supervision and Occupational Safety of 7 supervision at the new construction and renovation JSC CIUS UES, as well as divisions in the subsidiaries of Russia for 2015–2019 sites of PJSC FGC UES is carried out by the Directorate of CIUS UES.

2015 2016 2017 2018 2019 Data on the number of professionals who performed construction supervision in 2016 at the PJSC FGC UES facilities

Service reliability indicator 0.03602 0.03548 0.03495 0.03443 0.03391 Number of CS Total number of CS Length of service of the CS personnel in the electric personnel with the personnel power sector Services quality indicator 1.23908 1.22049 1.20219 1.18415 1.16639 university degree

more than 5 years 3 to 5 years less than 3 years

121 116 94 15 12 1 Federal Antimonopoly Service (FAS) of Russia Decree No. 1892/16 of 12 December 2016 (FTS of Russia Decree No. 297-e/3 of 9 December 2014 was amended). 2 FAS of Russia Decree No. 1895/16-DSP of 28 December 2016. 3 In accordance with the RF Government Order No. 2243-r of 2 December 2013 the electric grid facilities that have been constructed Independent construction supervision was not The organisational and administrative documents on by SC Olympstroy, are transferred to FGC gratis use. performed at PJSC FGC UES facilities in 2016. management and supervision of the quality of capital 4 The Resolutions of the Department of Prices and Tariffs of Krasnodar territory (REC) on establishment of unified (boiler) tariffs for construction were not issued in the reporting year. electric power transmission services via the grids of Krasnodar Krai and the Republic of Adygeya No. 94/2015-e on 31 December 2015 and No. 57/2016-e on 30 December 2016. 5 Resolution of the State Committee of the Republic of Karelia on prices and tariffs No. 243 of 27 December 2016 On establishing of the unified boiler tariffs for the electric power transmission services via the grids of the Republic of Karelia for 2017. 6 According to the Guidelines for UNEG management organisation and territorial grid companies on calculating the level of reliability and quality of delivered goods and provided services approved by the Ministry of Energy of Russia Order No. 718. of 14 October 2013. 7 Approved by FTS of Russia Decree No. 254-e/1 of 10 October 2010. According to the Guidelines for calculation and application of decreasing (increasing) factors approved by the Resolution of FTS of Russia No. 254-e/1 of 26 October 2010.

24 PJSC FGC UES Annual Report 2016 25 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Reduction of Specific Construction Cost Indices for Facilities Put into Innovative Development Operation in 2016.

Target 2016 Actual 2016 Innovative Development Programme KPI’s Achievement in 2016

Actual 2012, RUB Name thousand/ (km/MVA) Priority (basic) Directions for the Innovative Development of PJSC FGC UES in Line with the Innovative Development Programme of FGC for 2016–2020

Implementation Physical parameters, km/MVA parameters, Physical assets, RUB New fixed excl. thousand, VAT RUB Specific indicator, cell 4/ thousand/(km/MVA), cell 3 2012 in Specific indicator thousand/ RUB prices, (cell (km/MVA), 5/1.06/1.049/1.143/1/06) to compared as Decrease 2) 6/cell %(1-cell 2012, km/MVA parameters, Physical assets, RUB New fixed excl. thousand, VAT RUB Specific indicator, cell 9/ thousand/(km/MVA), cell 8 2012 in Specific indicator thousand/ RUB prices, (cell (km/MVA), 10/1.06/1.049/1.143/1/06) to compared as Decrease 2) 11/cell (1-cell % 2012, Description of the direction Technologies time OHL 21.79 1270.92 29795.35336 23.44392515 17.40190835 20% 1275.90425 30278.4667 23.73098663 17.61498775 19.2% Digital Substation

OHL 220 kV OHL 220 14.72015261 397.17 7,673.598626 19.32069045 14.34132221 3% 403.486 7621.28321 18.88859393 14.0205865 4.8% "Digital Substation" is a substation with a high level of automation of the process control, equipped with advanced IT and control systems and tools (RPA, EA, OHL 330 kV OHL 330 22.37697715 139.36 4,293.230678 30.80676434 22.86718142 -2% 139.269 4189.11898 30.07933553 22.32722707 0.2% IATS, IFMS, Detectors of emergency events (DEE), SS equipment supporting data fault localisation (FL), etc.), in which all information exchange on the basis of IEC 61850 exchange processes between SS elements, OHL 500 kV OHL 500 25.89559445 734.39 17,828.52405 24.27664327 18.02001664 30% 733.14925 18468.06451 25.19004761 18.69801652 27.8% standard: bay controllers, switches, information exchange with external systems, as well fiber optic communication lines, as control of SS operation are performed in a digital 2016–2025 optical and electronic current and OHL 750 kV OHL 750 format based on IEC protocols. At the same time, the voltage transformers (conversion primary power equipment of the digital substation devices), intelligent electronic devices, (DSS) and the components of IT and control systems CL CL registration and diagnostics systems. shall be functionally and structurally designed to support digital data exchange, which allows to SS SS 4.99 11,409 49,886.63471 4.372568561 3.245661162 35% 11409.00 46946.83308 4.114894652 3.054395505 38.8% provide a high level of diagnostics and operational reliability while reducing maintenance costs. SS, input voltage level SS 110 11.07502554 Digital Design 110 kV SS, input An engineering ecosystem, a design based on voltage level SS 220 5.433342673 4,662 27,394.69187 5.876167282 4.361749316 20% 4662 26074.47951 5.592981448 4.15154672 23.6% modern design information technology, support of 220 kV teamwork and parallel engineering, introduction SS, input of digital assessment techniques, and virtual voltage level SS 330 2.86028519 1,050 4,435.487996 4.224274282 3.135585591 -10% 1050 3868.495389 3.684281323 2.734760732 4.4% testing of engineering solutions. This strategic 330 kV initiative is aimed at the implementation of the SS, input Development Strategy of the electric grid system voltage level SS 500 2.261053286 5,697 18,056.45485 3.169467237 2.352625596 -4% 5697 17003.85819 2.984703912 2.215479856 2.0% of the Russian Federation, approved by the RF 500 kV 2015–2020 Government Order No. 511-r of 3 April 2013, in CAD (PLM, BIM), modelling tools, (modification and SS, input terms of improving performance and reducing the e-catalogues, electronic design development of voltage level SS 750 1.763856772 unit cost of investment and complying with the services, data processing logistics, 750 kV the informational requirements of the Unified Technical Policy in the mobile terminals, geolocation, laser services: electric grid system at all stages of the life cycle of technologies. 2020–2025) the energy facilities by providing solutions related to optimisation and informatisation of the engineering activities, introducing modern industrial methods of Reduction of fixed construction cost compared Reduction of investment costs in 2016, production via electronic services that can operate to 2012, RUB thousand, VAT excl. / km (MVA) RUB million, VAT excl. within an integrated information environment that OHS 21,790.00 ensures uniformity of the processes in the design, 2016 plan 21,684 construction and interaction of entities when 17,614.99 –19.16% –22.5% constructing an electric grid facility. 2016 target 25,494 SS 4,990.00 –26.5% 3,054.39 –38.79% The effect of reducing fixed investment costs for Federal 2012 actual 2016 actual Grid Company actually exceeded the target. A 22.5% decrease was planned, compared to the level of 2012. The actual decrease reached 26.5% compared to 2012, which in absolute terms amounted to RUB 25.5 billion, VAT excluded.

26 PJSC FGC UES Annual Report 2016 27 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Energy Efficiency and Loss Reduction Reliability and Asset Management

As part of an approved Energy saving and energy Transactional and elements of efficiency programme, work is performed on an the asset management system, ongoing basis aimed at improving energy efficiency Development of a methodology for the integrated mobile terminal of operational Functional wire wraps, distributed of UNEG. At present, the level of technological management of production funds and assets, personnel, unmanned aviation 2015–2018 (intelligent) automatic voltage and losses in UNEG is average comparing to the foreign based on the planning of technical impacts on equipment, modelling systems (target reactive power control systems, heat counterparts. Further reduction of losses is possible equipment, taking into account the analysis of its of the consequences of process programmes recycling of transformers, energy only on the basis of technological innovations. The current technical condition, costs and potential risks. disruptions, systems of remote data implementation efficient cooling control systems of analysis showed that the activities related to the According to foreign data, an integrated approach reading from sensors and RFID-labels, 2018–2025) the power transformers, automatic 2016–2019 renovation and development of electric grids: use to the management of business assets reduces the systems of structuring and analysis equipment heating control systems. (modification and of new wire types, transformer equipment, and the repair costs by 5–15% (depending on the region of operational risks, geolocation development of introduction of reactive power compensation devices of the Company's presence), equipment downtime technology, intelligent monitoring the informational do not pay back from the loss reduction point of view. by 5–20%, and increases the equipment service and diagnostic systems, integration services: life by 5–30%. This includes the development of and collective use of operational data 2020–2025) Remote Control and Security an infrastructure for data aggregation, a series systems, systems of accumulation of data-processing studies, the adaptation and and visualisation of operational PJSC FGC UES is introducing an automated process implementation of technological innovations that are data (stationary, mobile), knowledge control system (APCS), a set of tools to automate actively used in logistics, re-work of the regulatory management systems, distance the tasks of production, engineering, operation documentation and the introduction of new service learning and personnel certification and process control of the UNEG grid facilities, approaches, including maintenance. systems, systems of roll out of good enabling remote control and monitoring of the facility practices in the production equipment operation to ensure high operational readiness of operation. the UNEG and system reliability of the UES as a Process control systems at the whole. Within the implementation of the programme, level of the control centres (SCADA, Composite Materials and Superconductivity development of technology of remote control from EMS) and facility level (IATS, PIATS), PJSC FGC UES Grid control centres, coordinated modern digital measurement systems This initiative is aimed at the implementation of the interaction with the dispatch control centres of JSC 2016–2025 (monitoring and diagnostic tools, Development Strategy of the electric grid system SO UES with the optimisation of the facility operation systems and tools for information of the Russian Federation, approved by the RF is provided. This has an effect of increased facility and physical protection, systems of Government Order No. 511-r of 3 April 2013, as well Composite materials for OHL and control while reducing management costs. In order detection and localization of cyber as by the RF Government Orders No. 1307-R of 24 SS structures, composite materials to ensure the implementation of the project and the attacks). July 2013, Development of the composite material for insulating products, composite development of the control and protection tools production industry in terms of improving the core and conductor products, market, a set activities for pilot implementation performance and reducing unit cost of investment 2015–2025 high-temperature superconductivity and development of regulatory and technical and compliance with the requirements of the technology, functional OHL wire documentation, as well as solutions to a number of Unified Technical Policy at all stages of the life cycle wraps, new warming materials to integration problems and development of appropriate of the electric facilities via development of new ensure cost reduction of consumption tools, is required. technical solutions with the wider application of new for own needs. construction materials, creation of a production base Quality of Electric Power and relevant standard solutions, industry standards and standards of the organisation. The work in this area involves the placement of voltage-control devices, a system of balancing and compensation of voltage harmonics in complex The package of FACTS technologies circuit-mode nodes of a grid. So far, a broad class (DCD, static thyristor compensator of devices, based on a power electronic hardware, (STC), controlled shunt reactor which enable to impart active characteristics to the (CSR), Phase shifting devices (PSD), elements of the electric grids and ensure control on Key Outcomes of the R&D Programme Implementation in 2016 STATCOM), systems of balancing and a new quality level, have been developed with the 2016–2025 compensation of voltage harmonics, participation of the PJSC FGC UES. In order to scale distributed monitoring and control – The pilot industrial operation of the automatic fire Technical specifications and operating manual of technology to the distribution system and energy systems, standard automatic control fighting system with fine water sprayers for 220 kV the CSCB prototype for OHL 220 kV. Guidelines for receiving devices of the industrial consumers, the systems that make it possible to transformers of 125–250 MVA capacity has been selecting the setting parameters (settings) of the pilot projects, development of new type of control regulate several electric power quality completed at the 220 kV SS of the MES Centre Tula Relay Protection and Automation (RPA) devices systems, regulatory and legislative adjustments, as criteria of voltage. branch. installed in the grid adjacent to the location of the well as the establishment of a ramified system of CSCB connection and, if necessary, compact DCD – Design documentation was developed for the independent control of the electric power quality are protection. The pilot industrial operation of the CSCB linear sets of switchgear devices (LSSG) for rated required. was performed at a specialised site. voltage of 220 and 330 kV with remote control for the arrangement of short circuit points for glaze ice – Guidelines were developed for development of circuit melting, installed on standard supports OHL 220, 330 solutions of microprocessor RPA devices, setting and 500 kV. and configuration of microprocessor RPA devices, development of data support for microprocessor – Design documentation was developed for a prototype RPA devices. of compact series capacitor bank CSCB for OHL 220 kV.

28 PJSC FGC UES Annual Report 2016 29 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Sustainability Results Award Policy In order to raise motivation for effective performance – 116 employees received the awards of the Ministry of Information on PJSC FGC UES Participation in Forums and Conferences and provide moral and financial awards for high results Energy of the Russian Federation for achievements the Company has been successfully implementing in the energy sector, including 2 employees who were in 2016 a programme of giving state awards, awards by the awarded of the highest industrial award, the honorary Government and Ministry of Energy of the Russian title of “Honourable Worker of the Fuel and Energy Federation, Russian National Association of Electricity Complex”; Event PJSC FGC UES participation Sector Employers (RaEL), PJSC Rosseti and corporate awards to its employees. – 153 employees received the RaEl Association Awards, including 14 employees for the All-Russian business forum – Is small business a Attending business programme events In 2016, 1,336 employees of the Company, subsidiaries achievements in the electric energy sector, long and national idea? and contracting organisations were awarded upon productive work in the electric energy sector received Participation with the presentation of the company’s recommendation of PJSC FGC UES, including: the titles and signs; work on the development of an environmentally oriented – For a great contribution to the power supply of the Economic and environmental forum of the OSCE – 205 employees who contributed significantly to the operation control system to minimize environmental Crimean Peninsula consumers, 5 employees were development of the electric grid system received impacts awarded of the state decorations and one employee awards of PJSC Rosseti; was awarded with the Honorary Diploma of the St. Petersburg International Legal Forum Attending business programme events President of the Russian Federation; – 846 employees received corporate awards for their achievements and contribution to development of – For achievements in the energy sector and many PJSC FGC UES. Skolkovo Startup Village Attending business programme events years of conscientious work, one employee was nominated the honorary title of Honorary energy Employees of PJSC FGC UES subsidiaries received also Attending business programme events worker of the Russian Federation; awards from the entities of the Russian Federation and subsidiaries for their contribution to the development of Conducting of business meetings – For a significant contribution to the development St. Petersburg International Economic Forum the regional electric grid system. Signing of cooperation agreements of integration processes in the energy sector of the States-members of the Commonwealth of Participation in the Global Energy award ceremony Independent States, 6 workers were awarded of Participation in the Russian booth the honorary title of «CIS Honorary energy worker», Attending technical exhibition 3 employees awarded of the Honorary Diploma of the Electric Power Council of the Commonwealth of 46th CIGRE Session Participation in the committees Independent States; Conducting of business meetings Signing of cooperation agreement A. E. Murov’s speech in the panel session on the issues Amount of energy resources used in FGC in 2016 of industrial operation environmental safety, rational Eastern Economic Forum resource use, preservation and recovery of the biological Deviation, No. Types of resources Measurement unit Target 2016 Actual 2016 diversity % Signing of cooperation agreement In physical terms – – – Attending business programme events Sochi International Investment Forum 1. nuclear energy* Conducting of business meetings In monetary terms – – – Attending business programme events Investment forum of VTB Capital – Russia calling! 39.5 thousand 39.6 thousand Conducting of business meetings In physical terms –0.4 Gcal Gcal heat in administrative Attending business programme events 2. buildings RUB 45,704.8 RUB 46,161.7 International Forum on Energy efficiency and energy Participation of A. E. Murov in a plenary session with In monetary terms** thousand, thousand, –1.0 development of "ENES" speech on the activities aimed at providing operational VAT excl. VAT excl. sustainability and development of Unified national electric 32,376.7 32,200.2 grid taking into account continuing challenges Electricity in In physical terms 0.5 administrative thousand kWh thousand kWh Moscow International Forum "Open Innovations" Attending business programme events 3. buildings powered RUB 142,781.2 RUB 144,257.0 from third-party In monetary terms** thousand, thousand, –1.0 sources VAT excl. VAT excl.

In physical terms – – – electromagnetic 4. energy* In monetary terms – – –

In physical terms – – – 5. oil* In monetary terms – – –

7,535.3 6,078.3 In physical terms 19.3 thousand l. thousand l. 6. car gasoline RUB 235,855.2 RUB 198,153.6 In monetary terms** thousand, thousand, 16.0 VAT excl. VAT excl.

30 PJSC FGC UES Annual Report 2016 31 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

6,852.5 5,954.5 In physical terms 13.1 – Activities for the construction, reconstruction – Installation of reflective shields behind the heating thousand l. thousand l. and development of electric grids, as well as appliances; 7. diesel fuel RUB 223,597.4 RUB 193,937.4 commissioning of energy saving equipment (loss – control of operation modes of heat nodes; In monetary terms** thousand, thousand, 13.3 reduction has a collateral effect). VAT excl. VAT excl. – Optimising operation of heating, air-conditioning, lighting of the buildings, and disconnecting of office In physical terms – – – According to the results of 2016, the equipment, electric appliances with the appointment 8. fuel oil* of responsible persons. In monetary terms – – – technological effect activities concerning Main activities aimed at reducing consumption of reduction of energy losses across FGC In physical terms – – – petrol, oil and lubricants: 9. natural gas * in total was 58,308.8 thousand kWh – Technical control of operation of vehicles (alignment In monetary terms – – – equivalent to 7,172.0 tonnes of reference of wheels, tyre pressure control, replacement of oil, filters, spark plugs, injection of fuel nozzles, etc.); In physical terms – – – fuel (TRF), the economic effect is 10. coal* – Adjustment of fuel consumption rates; In monetary terms – – – RUB 68,274 thousand. – Purchasing of the injection engine test benches; In physical terms – – – – Equipping of vehicles with satellite positioning Main activities aimed at reducing the cost of electric 11. oil shale* equipment for continuous monitoring; In monetary terms – – – and thermal power in buildings, constructions and structures: – Optimising traffic routes, educating personnel, In physical terms – – – – Improving heat insulation of building and structures; and, when possible, priority loading with minimum 12. peat* specific fuel consumption. In monetary terms – – – – Replacement of window structures with energy efficient ones (dome and ribbon windows); The effect of targeted measures on In physical terms – – – – Replacement of old lamps with new energy-saving 13. other* ones (mainly LED); reducing the resource consumption In monetary terms – – – – Installation of a lighting control system (installation for own needs was 388.1 TRF (769.03 of motion and presence sensors); * Resource is not used in FGC and according to the Order of FAS of Russia No. 508-E on 26 March 2014 is not a resource for which thousand kWh, 1.58 thousand Gcal, targets are set. – Replacing the old doors, entrance units and gates ** The monetary value is based on the average annual cost of the energy resource 52.9 thousand litres of lubricants) in the with new energy efficient ones; amount of RUB 7,011.2 thousand. – Modernization of heating, ventilation and air- conditioning systems;

Energy saving and energy efficiency measures, reduction of electric power losses and resource consumption for own needs in 2016

In 2016, the activities on energy saving and energy plan of targeted value for Russia was 5.8%; efficiency were implemented in the following main – Reduction of the specific consumption of petrol areas: used by FGC to provide electric power transmission FGC Pilot projects in the area of Energy saving and energy efficiency – Reduction of the specific consumption of electric services via UNEG, per 1 km of vehicle mileage was power for the own needs of the FGC substations 1.01% (TEI-7) when the FAS plan of targeted value for Building of energy-efficient pilot plant of 500 kV SS Nizhegorodskaya per 1 unit of equipment of the FGC substations was Russia was 0.4%; 2.41% (Targeted effectiveness indicator TEI-4) when – Reduction of the specific consumption of diesel fuel The heating system of the pilot plant building was replaced. Modern heating the FAS plan of targeted value for Russia (TEI) was used by FGC to provide electric power transmission radiators with temperature control valves were installed. 0.5%; services via UNEG, per 1 km of vehicle mileage was Installed capacity of the heating system was reduced by 20 times. Two – Equipping of the buildings, constructions, structures 2.37% (TEI-7.2) when the FAS plan of targeted value electrode boilers of the 450 kW capacity were replaced by 22 kW heat that are the property of FGC with the instrumentation for Russia was 0.5%; recovery system. 16 thousand kWh per annum metering utilisation of water, natural gas, thermal – Development and improvement of regulatory legal The rooms were categorised by the constant temperature. In the technical is an estimated energy saving power and electric power. 100% of the target is and internal FGC documents related to energy saving rooms the temperature was reduced to 9-15°C, with the possibility to provide achieved (TEI-2); and energy efficiency. rapidly comfortable environment, if required for working – Reduction of the specific consumption of electric The heating system was integrated into the APCS of the substation. The main In order to reduce the process costs (losses) of electric power in buildings, constructions and structures that parameters of the heating system are displayed on the mnemo circuit of the power in UNEG, the following activities are carried out are property FGC per 1 sq. m. of area of the specified substation. in FGC: premises was 3.43% (TEI-5) when the FAS plan of targeted value for Russia was 3.4%; – Measures to optimise circuit and mode parameters in the operation and operational control of electric – Reduction of the specific consumption of thermal grids; power in buildings, constructions and structures that are property FGC per 1 cubic m. of volume of the – Activities aimed at reducing the electric power specified premises was 5.61% (TEI-6) when the FAS consumption for own needs of the substations;

32 PJSC FGC UES Annual Report 2016 33 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Development of a unified heating system for the drive cabinets and terminal boxes of the breakers and OSG Electricity transmission reliability 2012 2013 2014 2015 2016 220-750 kV circuit breakers indicators (actual) Heating systems were created for the drive cabinets and terminal boxes of Unserved energy volume, MWh 3,594.91 4,079.54 1,561.87 1,093.22 1,155.98 the breakers, disconnecting switches, isolators, OLTC of OSG 110-750 kV transformers. Total duration of cessation of The heating systems of the drive cabinets and the terminal boxes of the 319.95 270.07 276.24 189.13 167.30 electricity transmission, h. breakers and disconnecting switches of the OSG 110-750 kV transformers Allows to reduce the power consumption of outdoor were upgraded. Average duration of cessation of cabinets. 0.0241 0.0199 0.01992 0.01348 0.01171 Technical solutions and unified heating systems for the oil switch tanks were electricity transmission. developed. Thermostats (T1 group) and single-channel digital thermostats (OF group) were installed.

An integrated project to reduce the energy consumption for own and utility needs of 750 kV SS Vladimirskaya Forecasted average duration of cessation of electricity transmission, set forth by the Decree of FTS of Russia No. 297-e/Z of 9 December 2014 Frequency control of electric motors of AT-7 cooling system was performed. Will allow to reduce power consumption of AT cooling and Fluid cooling of the AT-6 and heat recovery system of AT-6 for heating of the heating of the building of 750 kV pilot plant building and the PMES building complex is implemented. SS Vladimirskaya. 2017 2018 2019 Average duration of cessation of electricity transmission (forecast) 0.03495 0.03443 0.03391

The main indicator of quality of services rendered in Quality Management System Dynamics of services quality indicator on terms of technological connection to electric grids technological connection The Quality Management System has been introduced The System’s procedure is the development and is the services quality indicator for organisations, and is used in the Company. implementation of activities ensuring the quality of managing a unified national (all-Russian) electric grid. 1.0252 2016 Company’s services and control over their execution. 1.1 The System is a component of the Company’s general When calculating KPIs that characterize the quality of management system and is aimed at improving Description of the main elements of the Quality 1.024 services rendered in terms of technological connection 2015 customer satisfaction, by advancing management Management System of PJSC FGC UES is provided in for PJSC FGC UES, the actual value for 2016 (1.025) 1.1 principles, corporate culture, ensuring the Company’s the Provision on Quality Management System approved was better than the target (1.1). 1.028 2014 competitiveness. by the Board of Directors on 16 November 2015 1.1 (minutes No. 291 of 19 November 2015). The indicator is considered achieved if the indicator’s The System was developed pursuant to the Company’s 1.108 actual value does not exceed the specified target value. 2013 goals: Planning and control of achieving the System’s goals in 1.222 the Company in general is performed by the Company’s – ensuring reliable operation, efficiency improvement of 1.210 Board of Directors by means of: 2012 UNEG operation; 1.241 – approval of KPI target values for the Company’s top – client focus that ensures high standards of customer managers, as well as reports on performance of Target Actual for PJSC FGC UES service; indicators; – ensuring quality and reliability of provided services; – approval of the Action Plan aimed at improving the – maintenance and development of infrastructure; efficiency of the Company’s activities under the Company’s Long-Term Development Programme, as – effective operation of UNEG that is part of the Unified Information on implementation in 2016 of the Programme on well as reports on the implementation of the Long- Energy System of Russia. Term Development Programme. import substitution of equipment, technologies, materials, The main members of the System are: The Board The system of indicators for electricity transmission and systems for the period of 2015–2019 of Directors, the Management Board, Top managers, reliability is set forth in the Company based on the Strategy Committee of the Board of Directors Order of JSC FGC UES No. 368 of 19 November In accordance with the Directive of the RF government electric equipment manufacturers with the domestic The following services of the Company are the 2016 On approval of the guidelines for calculation No. 1346p-P13 of 5 March 2015, the import substitution manufacturers of nodes, materials and components System’s objects: of reliability and quality level of goods supplied activities are included into the Long-Term Development capable of ensuring their quality in conformity with the and services rendered for the UNEG administration – electricity transmission services; Programme of PJSC FGC UES. The activities planned international standards. company and the regional grid organisations. – technological connection to electric grids. for 2016 were implemented in full. The data collection and preparation of a list of FGC continues the implementation of a number of foreign-origin components and materials used by the the long-term contracts with leading manufacturers company’s main contractors was performed in the of electric equipment envisaging localization of its framework of this activity. The domestic enterprises production at the territory of Russian Federation. are acquainted with this list and negotiations are under The share of domestic products in FGC procurement of way for the use of the domestic products by major main electric equipment was 70% in 2016. manufacturers of electric equipment. With the purpose to support the activities on improving There is a work on introduction of domestic electric the level of localization of electric equipment products to foreign markets carried out. FGC interacts production in the territory of the Russian Federation, with the electric grid companies of China, India, FGC stimulates forming of cooperative ties of Vietnam and Belgium in the exchange of experience

34 PJSC FGC UES Annual Report 2016 35 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

in the operation of electric equipment, contributing of the Regulation of interaction of JSC FGC UES and Risk Management to their awareness of the products of the Russian the manufacturers in the framework of assessment manufacturers. of localisation level of electric equipment production To support the development of domestic approved by the FGC Order No. 445 of 6 October 2015. manufacturers, PJSC FGC UES provides assistance to The database for production localisation by the main Key risk factors and information on the implementation of their management enterprises that applied to the Industry Development FGC contractors was formed. As a result of the work activities in 2016. Fund for a special-purpose low-interest loan for done, recommendations were made to amend the production growth. Procurement Regulations and the Company’s standard procurement documentation to account for the level Risk name Factors that As part of the implementation of the import influenced the Risk of production localisation as part of the criteria for No. Description (factors) of risk Risk management activities substitution activities, there was an approbation (Division providing change in risk Materialisation evaluating the bids from the suppliers of electric risk information) conducted of the methods of assessment of assessment equipment for FGC. localisation level of electric equipment production in the territory of the Russian Federation, as well as Industry risks

1. Risks related to state – The amount of investable – Draft proposed changes to the corporate Investment tariff regulation funds in the tariff was reduced Programme and the structure of sources of financing and — — (Department of relative to the tariff sources changes in the structure of tariff decision in terms of tariff Economic Planning of funds for the Company’s sources of financing for the Investment Programme. Import substitution1 activities as part of the Company’s Programme and Tariffs Investment Programme that has – Draft and submit proposed amendments to laws and been taken into account when regulations on tariff setting and on defining the declared for Improving Efficiency of operations in 2016 tariffs for electricity transmission capacity that is used in setting the tariffs, as well as the were approved. The reduction volumes of electricity transmission to customers, and was caused by an increased cost other changes. Sources of of debt; No. Event Type of document Expected outcome Deadline – Draft proposals to include lost revenues (caused by financing – Reducing the actual revenue a reduced volume of services and increased costs of from the provision of electricity electricity transmission services via foreign energy 1 Development of an Procurement centralisation services due to changes in the Annual procurement systems) in the gross revenues. These proposals will be annual procurement in order to minimise the Within the payment procedure not taken into submitted to the Federal Tariff Service. plan and demand plan and PJSC FGC UES cost and standardise the Company's Annually account when tariffs were set; for main electric – Implement actions targeted at improving the demand for main electric equipment at the PJSC FGC budget – The costs of electricity efficiency of the Company’s operations and investments, equipment transmission services via foreign equipment UES facilities consistent implementation of the approved parameters energy systems increased due to of RAB regulation and at drawing up well-balanced and 2 Development changes of foreign currency rate; economically justified proposals on adjustment and Procedural guidelines for and approval of a Method of – Deviation of the actual average setting up these parameters. providing the preferences methodology to determining the Within the tariff for electricity transmission – Implement measures for the qualitative preparation to domestic manufacturers February from the target value in the determine the country country of origin of Company's of supporting materials for the application for the of the secondary 2016 business plan. of origin of secondary secondary systems budget establishment/revision of tariffs. electric equipment when systems and their and their elements – Improve the quality of budget planning and develop a performing procurement system of budget control through improving the corporate elements Budget Code and integrating the risk management 3 Development and Compliance with the processes in the system of medium-term and long-term approval of the requirements of article business planning. Registration procedure 3.1 of the Federal Law No. of investment projects 223-FZ of 18 July 2011 On 2. Risks of Risks related to the untimely The Company approved the Programme for Improving the Registration procedure to be included into procurement of products, technological meeting of contractual Efficiency of technological connection to electric grids — — of investment projects Within the the list of investment work and services by connection obligations under contracts and increasing transformer capacity utilisation. It includes to be included in the Company's July 2016 for technological connection, actions targeted at initiation of amendments to the projects, which is formed the certain types of the (Department of list of investment budget Technological including deviation of the actual Russian laws (law-making) and organisational actions. in accordance with the legal entities (amended projects Development) quality level of the technological Organizational actions within the Programme are targeted requirements of the on July 13, 2015) and connection services from the at improving of the efficiency of FGC’s operations during Russian Government the Resolution of the RF level established during tariff provision of technological connection services, including With the target Resolution No. 1516 of Government No. 1516 of 30 regulation. The quality level is the case when tariff sources of financing are insufficient: value of the measured as per Section 3 of 2 quality of utility 30 December 2015 December 2015. the Order No. 718 of 14 October – Activities aimed at increasing the production capacity utilization, including by identifying and decommissioning connection 4 The database Development of definition 2013, issued by the Ministry of services for Monitoring of the level of Within the Energy of the Russian Federation, of inefficient capacities, for production criteria for "Products 2016 at the production localisation by Company's Annually as the aggregate impact by the – Setting of schedules for completion of procedures level of 1.22049 localisation of the of Russian origin" and the main FGC contractors budget quality parameters of reviewing by the Company’s structural units and implementation (established electric equipment "Russian manufacturer" applications for technological of actions to improve control over scheduled deadlines by order of the connection; execution of at all stages of business process, from registration FTS of Russia contract for technological of an application for technological connection to full No. 297-E/3 of connection, compliance with the performance of contractual obligations. 9 December antimonopoly legislation and the Law-making activities in the context of these risks 2014), the actual quality of customer services. include the drafting of proposed amendments to laws indicator of and regulations that govern relations of the parties in the the quality of process of technological connection and responsibility technological of grid organisations and counter parties for complying connection with the material terms and conditions of contracts services for 2016 for technological connection. These proposals were amounted to communicated to the regulators (the Federal Anti- 1.0253. Monopoly Service and the Ministry of Energy of the Federation).

1 In accordance with the Directive of the RF government No. 1346p-P13 of 5 March 2015 on scheduled substitution of foreign products The FGC monitors and updates the values of free (work, services) with the Russian equivalents. transformer capacity for utility connection by customers 2 In accordance with the Directives of the RF Government No. 1659p-P13 on 15 March 2016 and Rosimuschestvo No. IB-11/11651 of 25 and generation facilities for all power centres, ensuring March 2016 On approval of the registering procedure for investment projects, which establishes the rules of developing, introducing the availability of the said information by disclosing it on and modifying of the list of investment projects, taking into account the Rules for selection of investment projects to be included into the company’s website. the Register of investment projects and administration of the Register of such investment projects approved by the Resolution of the RF government No. 1516 of 30 December 2015 .

36 PJSC FGC UES Annual Report 2016 37 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Risk name Factors that Risk name Factors that influenced the Risk influenced the Risk No. Description (factors) of risk Risk management activities No. Description (factors) of risk Risk management activities (Division providing change in risk Materialisation (Division providing change in risk Materialisation risk information) assessment risk information) assessment

3. Risks related to an Deviation of overdue accounts The company has approved the management procedure The risk Country and regional risks increase of overdue receivable from the amount for accounts receivable and accounts payable. This remained — and bad accounts established in the business procedure sets out the methods for taking decisions on stable at a receivable plan, as well as the emergence receivables by contract managers. Besides, the Budget significant 4. Risks related to (1) Despite the high estimates (1) The anti-terrorist policy of the Company is carried The rouble of doubtful and non-collectable Committee has been established and is operating. Its level. (Treasury and the political and by rating agencies of the general out in accordance with the Federal law 256-FZ of 21 July exchange rate — Corporate Finance receivables in the course of the goals are to make cash management in the Company The amount of economic situation level of political risk in Russia, 2010. On the safety of the fuel and energy complex and has stabilized, Department) Company’s acquisition of goods, more efficient, manage risks related to overdue accounts arrears in the in the country and these risks should be generally the requirements of the regulations of the Government and the works and services. receivable and payable, and improve cash turnover. course of 2016 the region recognized as negligible in of the Russian Federation No. 458 of 5 May 2012, inflation has The Committee’s competence in relation to the decreased (Corporate relation to the Company. The On the approval of the Regulations for the safety and been reduced. management of receivables and payables includes: by 6% as and Strategic Company is a large state-owned anti-terrorist protection of FEC facilities, and No. 993 The decisions company, whose share of state of 19 September 2015. On the approval of security of the – Review of aggregate reports about the status of compared to Management participation is established by requirements for FEC ground facilities, is to organize Government accounts payable and receivable and explanatory notes of the year 2015. Department) law and whose tax regime is not and carry out activities aimed at strengthening the of the Russian contract managers; subject to significant changes. engineering and technical reinforcement and anti-terrorist Federation on – Taking decisions about ways of recovering accounts The company does not operate protection of the Company’s facilities. The organizational the payment receivable that have been overdue for more than three abroad, hence it is not subject and planning activities carried out in 2016 allowed to in instalments months and accounts receivable that were submitted for to transfer risk. In certain increase by 8% the number of Company’s facilities of for the the Committee’s decision by contract managers regions of the country, the risk various hazard categories, whose anti-terrorist protection technological – Taking decisions to write off bad debt; of terrorist acts remains high, so fully complies with the requirements of the specified connection of the Company takes measures resolutions of the Government of the Russian Federation. the generation – Selective assessment of the performance of employees to prevent and protect against have been who manage accounts payable and receivable; Within the framework of interaction with representatives terrorist acts. of territorial security agencies and police, tactical- made. – Taking decisions on proposals about disciplinary special exercises and object training are planned and measures against delinquents to be brought for approval conducted at the Company’s facilities. The main efforts by the Chairman of the Management Board in cases when of the Company are aimed at increasing the antiterrorist the procedure of handling overdue accounts payable and protection of power facilities that will be involved in receivable is breached. providing reliable power supply to the infrastructure Risks of doubtful and non-collectable receivables related during the Confederations Cup 2017 and the 2018 FIFA to the acquisition by the Company of goods, works, and World Cup. services, are limited by the establishment of criteria of (2) With an insignificant share of (2) The Company is planning its activities on the basis of financial sustainability in the competition documents, budgetary consumers and a lack the forecast indicators of socio-economic development which are binding on the parties to the procurement of population, the Company is not being developed by the Ministry of Economic procedures, as well as requiring parties to provide directly affected by the budget Development of Russia and the areas of development financial security in the form of independent (bank) deficit and the unemployment of the backbone grid approved by the System operator guarantees, security payments, surety, and other forms of — — rate. However, these factors may of the UES and the Ministry of Economic Development fulfilment of obligations. reduce the solvency of the main of Russia. In order to limit the impact of country and users of the Company’s services regional risks as well as the impact of macroeconomic – territorial grid organizations. risk factors, the Company has adopted an Import There is still a significant risk of Substitution Programme for equipment, technologies, downing of the exchange rate of materials, and systems in the Company for 2015–2019. the Russian rouble and the stock In addition, other programs aimed at reducing costs and market due to various external improving the efficiency of operational and investment factors. activities have been approved. The Company is partially protected from the impact of economic risks by the statutory provision providing for increased financial responsibility in case of violation of the payment terms under the contract for electricity transmission services. In addition, the Company uses various instruments for managing accounts receivable, including claims and lawsuits, analysis of the financial status of counter parties, and the inclusion in the standard contracts of the obligation to provide financial security.

5. Risks related to The Company manages a unified The Unified Technical Policy (Regulation on a Unified the geographical national electricity grid on the Technical Policy in the electric grid complex, approved by — — characteristics larger territory of the Russian the Board of Directors of PJSC Rosseti, minutes No. 138 of the country or Federation. It has a distributed of 23 October 2013) is aimed at identifying of the key region, including network of structural units, technical areas that enhance the electric grid complex’s an increased risk business assets are located on reliability and efficiency in the short and medium of natural disasters the whole territory of the Russian terms with an appropriate industrial and environmental and possible Federation. Weather-climatic, safety based on innovative principles that provide non- discontinuation of seismic, and other natural discriminatory access to electric grids for all market transport services conditions are the risk factors for participants. This includes: (Corporate the Company’s operations. – an increased number of off-road vehicles and use of air and Strategic drones in the process of operating the overhead lines and Management arranging post-accident inspections; Department) – higher readiness for repair and recovery works

38 PJSC FGC UES Annual Report 2016 39 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Risk name Factors that Risk name Factors that influenced the Risk influenced the Risk No. Description (factors) of risk Risk management activities No. Description (factors) of risk Risk management activities (Division providing change in risk Materialisation (Division providing change in risk Materialisation risk information) assessment risk information) assessment (2)The risk of exchange rate ­ 1) and 2) The Company’s actions in the event of a Financial risk change is negligible. negative impact of changes in the exchange rate and — — The main source is the costs of interest rates. 6. Financial risk This risk is related to the Programme activities affecting the performance of the electricity transit contracts – early repayment of the Company’s choice of floating- (Treasury and possibility of losses and/or the Company have been developed and implemented, (Belarus, Kazakhstan) nominated rate bonds and their refinancing at fixed rates; Corporate Finance inability of the Company to including: in US dollars, Kazakh tenge, -The priority acquisition of foreign currency within the Department) ensure the performance of its – Investment Efficiency Programme which envisages a which makes in the Company’s limits of the amounts of currency obligations planned for obligations in full due to the reduction of investment costs; total annual operating expenses the next year, within the limits established by the Board influence of the following factors: no more than 5% on the horizon – Programme for Substitution of Imported Equipment, of Directors; – CBR’s monetary policy since 2014. Indirectly, foreign Technologies, Materials and Systems for 2015–2019; exchange risks are related – expansion and acceleration of the implementation of – Exchange rate fluctuations – Maintenance and Repair Costs Efficiency Programme; to the need to provide high- the Import Substitution Programme; – Changes of interest rates – Payroll Efficiency Programme; tech equipment of foreign – limitation of the company’s annual volumes of the – Inflationary pressures production, what is levelled Investment programme by revising priorities and time- – Programme for Improving Efficiency of Technological by the implementation of the frames of investment projects; – The Company’s restricted Connection to FGC’s Electric Grids and Increasing programme import substitution – establishment of «fixed» procurement prices in the access to equity or debt Utilisation Ratio of Transformer Capacities. for equipment, technology, financing bidding documentation and in the standard forms of The Company also implements other actions to minimise materials, and systems investment contracts; the financial effect of the above mentioned factors: for 2015–2019. – carrying out hedging activities based on market (1) Risk management of interest ­– It continuously monitors and manages risks related The Company’s debt portfolio is rate changes. conditions and within the Company’s Credit policy and to changes of the regulatory framework (this is done by fully nominated in roubles, which decisions taken by the Board of Directors. In order to finance its investment departments of finance and economy); eliminates the significant impact activities the company uses ­– It takes actions to improve management of the of foreign exchange risks on the The level of funds raised by issuing bonds Company’s working capital and ensure profit from Company’s financial state, its inflation (with with a floating coupon rate tied cash flow, including via stronger financial discipline of liquidity, and performance. respect to the to the inflation rate (RUB 150 counter parties. The Company also implements its policy The company does not hedge corresponding billion, or more than 50% of the month of the which envisions gradual reduction of advances paid to foreign exchange risks. The total debt, at the rate of “inflation contractors; Board of Directors of the previous year), + 1 ... 2.5% per annum”). The which was ­– FGC handles claims and bad debt recovery, and Company establishes a limit on level of the risk is regarded by the almost 17% p.a. manages accounts receivable in order to reduce overdue transactions that may result in Company as acceptable in view in 2015, showed accounts receivable or prevent their accumulation by obligations expressed in foreign of the downward trend of the a downward counter parties; currency (the current limit value is inflation (up to 5.4% for 2016), 2.5% of the annual revenue of the momentum and whether the Company has ­– The Company drafts proposals for the federal executive Company). in 2016 and the right for early repayment authorities on how to change the process of calculation reached 5.4% at of bonds at its own discretion of fines for untimely fulfilment of contractual obligations; (3) Inflation risk. In order to manage the inflation risk on repayment of the end of the in the event that the coupon the debt securities linked to CPI value, the Company has reporting period ­– The Company conducts negotiations with entities that The level of inflation (with respect rate exceeds 10% p.a., what is provide cross-border electricity transmission services defined an excess of 9% inflation as an event when such (the average in accordance with the rate of to the corresponding month of securities may be repaid early. In addition, the Company annual value is (Kazakhstan, Belarus). The aim of these negotiations the previous year), which was return of the invested capital is to achieve an agreement not to increase the cost of plans to take measures to reduce internal costs. 7.1%). Against approved for the Company almost 17% p.a. in 2015, showed the background transit due to exchange rate changes and synchronise the a downward momentum in 2016 by the regulator in the tariff parameters of tariff indexation between the countries; of financial decisions. Thus, according and reached 5.4% at the end of stability and a ­– The Board of Directors established a foreign currency to the Company, interest rate the reporting period (the average slowdown in limit on FX transactions in order to control operations in fluctuations should not have annual value is 7.1%). Against the economy, it foreign currency, approval of the Credit Policy containing a long-term and significant the background of financial seems likely that the maximum permissible values of leverage indicators; impact on the Company’s stability and a slowdown in the target level activities. The Company ­– The Company takes actions to obtain various forms the economy, it seems likely of inflation set does not hedge interest risks; of government support (allocations from the National that the target level of inflation by the Bank of however, it does not preclude Wealth Fund, budget allocations via federal targeted set by the Bank of Russia at Russia at 4% in hedging in the future and for programmes, loans and guarantees via investment 4% in 2017 would be achieved 2017 would be this purpose regularly monitors projects support programmes implemented on the basis and maintained at a constant achieved and market conditions and available of project financing and others). level in subsequent years. The maintained at a tools. In accordance with the policy of the Government of the constant level Articles of Association, if it is Russian Federation and the Bank in subsequent necessary to hedge transactions of Russia aimed at reducing years. The involving derivative financial inflationary risks allows us to policy of the instruments, the decisions on assess this risk as a stabilizing Government the approval of transactions, one. The critical value of inflation, of the Russian or on the determination of the according to the Company, which Federation and Company’s policy with respect may pose a significant threat to the Central Bank to transactions with such its economic activity, is found to of the Russian instruments, are made by the be above 19% p.a. on the horizon Federation aimed Board of Directors. of one year. The key threat is at reducing expressed in compliance with inflationary risks the debt servicing coverage allows us to ratio, whose value to maintain assess this risk the quality of a highly reliable as a stabilizing borrower should not exceed 0.25. one.

40 PJSC FGC UES Annual Report 2016 41 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Risk name Risk name Factors that influenced the Risk Factors that influenced the Risk No. Description (factors) of risk Risk management activities No. Description (factors) of risk Risk management activities (Division providing change in risk assessment Materialisation (Division providing change in risk assessment Materialisation risk information) risk information)

Legal risks Reputation risk

7. Legal risks Risks related to changes in The Company continuously contributes The resolution of the — 8. Risk of loss of (1) Decrease in the reliability of (1) Measures taken: (Rules and legislation and to regulation of to the drafting of rules and regulations at Government of the business reputation the UNEG and the occurrence – measures aimed at levelling operational and — — Regulations Company’s operational areas, the federal level, takes part in the work of Russian Federation No. (External of systemic disruptions of technological risks; Directorate, Legal including: inter-ministry panels on the regulation of 759 of 9 August 2016 Communications and energy supply to consumers and the electric power industry, and co-operates On the clarification of accidents. – timely and complete informing of stakeholders, Department) – Relations with other owners of GR Department) including consumers and the media, in accordance UNEG facilities with the relevant committees of the Federal the procedure for the Assembly of the Russian Federation. As implementation of with the Company’s regulations adopted by the – Calculation of the justified part of this work, in 2016, the Company technological connection to Company. value of maximum capacity for submitted to the federal executive authority electric facilities belonging technological connection of a number of proposals for changes in laws, to the management applicants (2) Level of awareness among (2) Mechanisms for interaction with the statutes and regulations. organization of the unified consumers, the public, and stakeholders, procedure for implementing – The procedure for defining the national (all-Russian) other stakeholders about the external communications, as well as the rules of declared capacity to be used electric grid has been Company’s activities. interaction between the Company’s divisions for for setting of the electricity adopted. This resolution these purposes were formalized. transmission tariffs and stipulates that at the calculation of service costs voltage level below 110 In addition, the Information policy regulation sets the rules and approaches for disclosure, – Technological connection to kV, it is permitted to perform the technological the purposes and principles of disclosure of the Company’s facilities having mandatory and supplementary information, voltage below 110 kW; connection of newly- attached power-receiving which contributes to increasing the information – Customers’ liability for the devices of electric power openness and transparency of relations between untimely payment for services; consumers and territorial the Company and shareholders, creditors, – Relations with the third parties grid organizations to the potential investors of the Company, professional in technological connection. electric grid facilities owned members of the securities market, public by the UNEG management authorities, and other stakeholders. organization and put into In 2016, the Board of Directors of the Company operation prior to 1 January developed and approved in February 2017 2018 and included in the the Regulation on the implementation of the List approved by the Order Information PJSC FGC UES, aimed, among other of the Government of the things, to build a positive business reputation Russian Federation of 9 and positive image of the Company, including August 2016 No. 1671-r, in cooperation with PJSC Rosseti in the Russian in the absence of the need Federation and abroad. The implementation of to carry out construction this Regulation will allow the Company to more or reconstruction with an effectively maintain a high level of awareness of increase in the transformer consumers, the public and other stakeholders capacity of such facilities, about the Company’s activities. excluding the construction

of electric grid facilities

from existing electric grid Strategic risk

facilities to the connected

power receiving facilities or 9. Strategic risk Strategy risk factors are related The objectives and goals of the Company’s power facilities. (Corporate to losses that the Company strategic development are outlined in its Long- — — and Strategic might incur because of mistakes Term Development Programme for 2015–2019, in taking decisions about the which was approved by the Board of Directors Risks related to public law and The Company monitors the key trends Management strategy of its operations and (minutes No. 243 of 22 December 2014). The pertaining to: in court practices pertaining to its main Department) — — development. Long-Term Development Programme contains operational areas. In the reporting period, – Changes of court practices on a set of activities aimed at implementing the there were no changes in the court issues related to the Company’s main provisions of the Programme, including practices on issues related to Company’s operations improving the efficiency of company management, core business that could have a significant investment policy priorities and improving – Balance of interests with the adverse effect on its performance and on investment performance, operational efficiency, other entities operating in the the outcomes of court trials in which the asset management, and others. electric power industry Company is a party. In order to monitor the implementation of the Long-Term Development Programme and minimize the strategic risk factors associated with potential changes in the internal and external environment, the Company monitors the implementation of activities provided for by the Long-Term Development Programme and annually prepares a report on the implementation of the Long-Term Development Programme and regularly conducts an external audit of the implementation in accordance with the Auditing Standard for implementation of the Programme (approved by the decision of the Board of Directors of 30 December 30 2014, minutes No. 245 of 31 December 2014). The Programme performance report and audit results are sent to the Ministry of Energy of Russia.

42 PJSC FGC UES Annual Report 2016 43 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Risk name Risk name Factors that influenced the Risk Factors that influenced the Risk No. Description (factors) of risk Risk management activities No. Description (factors) of risk Risk management activities (Division providing change in risk assessment Materialisation (Division providing change in risk assessment Materialisation risk information) risk information) The Long-Term Development Programme sets — — 2) Risks related to non- (2) In order to improve the environmental targets for the results of activities and functional fulfilment of the targets of management system, the Company’s Board — — areas that the Company needs to achieve, and key the Environmental Policy of Directors decision on the introduction of performance indicators (KPIs) for management that Implementation Programme. the environmental management system as a encourage the achievement of targets. The auditor’s voluntary environmental liability mechanism is reports and annual reports should include not only an being implemented (as well as its certification for analysis of the implementation of measures, but also compliance with the international standard ISO conclusions and proposals for adjusting the Long- 14001: 2004). Term Development Programme and KPIs for future In accordance with cl. 9.1.1.2 of the International periods. This provides feedback and adaptation of standard ISO 17021:2011 Conformity assessment. the strategy to changes and reduction of strategic Requirements to authorities auditing and certifying risk. The Company has developed an updated management systems, compliance audits of the Long-Term Development Programme for 2015– environmental management system were carried 2019, which includes two variants of the Company’s out in the executive office of the Company, in the development scenario: basic and risk. The basic Managements of MES East, MES of the Centre and scenario is based on a more favourable economic branches of PJSC FGC UES – MES Khabarovsk PMES environment for the Company’s development. The and Amurskoye PMES, and in the branches of PJSC risk scenario involves conditions that complicate the FGC UES – Volga-Donskoye PMES, Vologdskoye financial situation (increase the debt amount), the PMES, Chernozemnoye PMES and Special Purpose development and growth of the Company. Production Centre Bely Rast for compliance with The Company together with the System Operator the requirements of ISO 14001: 2004. In November annually develops the Plan and Development 2016, the Company’s environmental management Programme of the Unified Energy System of system received confirmation of compliance with Russia, which defines the main areas of the UNEG the requirements of the International standard. ISO development for the next seven years based on the 14001:2004. The validity of the conformity certificate medium-term forecast of the demand for electricity has been extended until the next compliance audit, and capacity. Plan and Development Programme of in 2017. UES of Russia is approved by the Ministry of Energy of the Russian Federation. (3) Reputation risks (3) The Company follows clearly formulated — — Based on the Plan and Development Programme principles of corporate social responsibility, the Company is developing an investment given its impact on the national economy, programme. The practice of the last three years is environment and the society. Particular attention public discussion of the investment programme by is paid to implementation of charitable, social and stakeholders, including large consumers and the environmental programmes most of which are long- Public Government. term ones. The Strategy Committee of the Board of Directors operates and performs preliminary review, analysis 11. Execution risk -Limited or impossible The company developed and approved measures to In 2015, the importance of and development of recommendations to the Board related to the procurement of electric products manage the risks associated with the implementation the risks of implementing — of Directors of the Company on: Import Substitution (caused by legislative restrictions of the Program for import substitution of equipment, the import substitution – the Company’s long-term performance evaluation; Programme or ban on import to Russia either technologies, materials and systems for the period programme grew as a result by foreign countries or by the 2015– 2019. of the deteriorating of the – approval of the Company’s long-term development (Innovative Russian Federation; refusal of foreign policy situation, the programme, amendments and addition thereto and Development Actions taken by the Company: foreign producers to co-operate imposition of additional reviewing its progress report; Department) with the Russian companies; – Setting priorities on specific projects from the sanctions on the Russian – setting out strategic objectives, monitoring the domestic producers do not Investment programme; Federation by a number of delivery of the Company’s strategy, adjusting the have the required technology, – Amending tendering documentation, standard countries, and the Russian exiting development strategy; equipment and competencies for purchase contracts to fix prices on electric machinery Federation’s reciprocal – determining the Company’s business priorities. manufacturing electric products and to include provisions on compulsory insurance of sanctions. This situation that would meet the present-day foreign exchange risks for the period of delivery; adversely affected the requirements); – Adjustments in the Company’s technical policy timing of the supply of -Increased prices on electric and main technical and project decisions in order electric components and, as Risks related to the Company’s activities products due to adverse external to increase the number and range of domestically a consequence, increased factors (Ruble depreciation manufactured electric products at the Company’s risk of disruption of the against the main currencies; facilities; delivery of the electric 10. Environmental risks (1) Risks arising from the (1) In accordance with the Instruction of JSC FGC foreign producers’ discriminatory equipment produced using failure to comply with UES of 29 April 2014 No. 232r, On the analysis of — — – transition to the centralised procurement of the (Department of policy toward Russian these components to the the requirements of the the environmental situation in the branches of JSC main groups of import substituted electric products Industrial Safety customers; absence of Russian Company’s facilities. This environmental legislation of FGC UES – MES, PMES, the current environmental and Environmental analogues of foreign equipment; – conclusion of long-term contracts for the supply situation adversely affected the Russian Federation. situation in the branches of PJSC FGC UES – MES, Policy) or strong dependence of their of products with domestic enterprises and foreign the delivery of components PMES is analysed. Based on the results of such manufacturing processes on enterprises localizing production in the territory of the for the production of analysis the assessment of possible risks (penal imported equipment, inputs and Russian Federation; electric products and, as and financial) for PJSC FGC UES is carried out, spare parts). – centralisation of procurement of the main electric a consequence, increased and proposals for improving the environmental equipment and an increased share of Russian-made risk of failure to deliver on performance of the branches of PJSC FSK UES – electric equipment procured for the Company, in time electric equipment MES, PMES are being given out. compliance with the applicable legislation; manufactured using these As per Order No. 76 of 11 March 2016, the components the Company’s – encouragement of innovative development of Company approved Regulations for Working with facilities. domestic producers of electric equipment including Trichlorodiphenyl-Containing Equipment in PJSC the transfer of technology for the production of At the present moment the FGC UES. electric equipment and the development and manufacturers of electric The Company’s production facilities (by the end of introduction of innovation in production; equipment have worked the year) have 49,708 units of equipment containing out alternative logistics – communication with the federal, regional and Trichlorodiphenyl, with a total weight of 1,961 tons, routes and established municipal authorities in order to ensure support of 5,118 units of which are out of service and 44,590 contacts with the suppliers domestic producers of electric equipment, including units remain in operation. In 2016, the branches of of the required components preference-giving in procurement activities performed PJSC FGC UES, MES Siberia, MES Centre, deposited from APEC . This generally by companies with state participation. 137 capacitor banks to specialized companies for mitigate the risks of storage. tightening sanctions by the USA and EU countries.

44 PJSC FGC UES Annual Report 2016 45 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Risk name Factors that influenced the Risk No. Description (factors) of risk Risk management activities (Division providing change in risk Materialisation Ensuring the Safety of the Company’s Activities risk information) assessment 12. Operational and This risk is related to high The Company operates in accordance with the — technological risk physical wear and obsolescence regulation on the Unified Technical Policy in the Protecting against Terrorism and Crime (Operational and of electric grid assets, violations Electric Grid Complex. The aim of its implementation Technological of service conditions and is to enhance the electric grid complex’s reliability The main goals of activities in this area were to In 2016, the Security Unit performed a considerable Management operational regimes of electric and efficiency in the short and medium term with an improve a management system of security units and amount of work to ensure protection of energy facilities Department) grid equipment, damages of appropriate industrial and environmental safety based equipment, wrong performance on innovative principles of development. enhance the efficiency of anti-terrorist security of UNEG against terrorism and crime, including categorisation facilities. In this regard, an ongoing interaction with the of facilities and interaction with law enforcement of relay protection of automatic Implementation of the corporate Investment Programme controls and automatic includes projects that aim to achieve the following goals: Working Group of the Ministry of Energy of Russia on agencies. In particular, activities were implemented emergency response system, combating terrorism at the Energy Sector facilities is that aimed at ensuring the integrated security of energy – reduce the degree of wear of fixed assets; the use of inefficient and conducted. facilities of MES branches – North-West, Volga, Ural, obsolete technologies and – renovate electric grid facilities; failure to implement the repairs South and Centre for the 2018 FIFA World Cup and the – ensure delivery of capacity by power plants and 2017 FIFA Confederations Cup. programme in full. reliability of cross-regional electric power exchanges; System-wide interruptions in – upgrade switchgear equipment, upgrade and develop performance and failures to automated process control systems; supply electricity to customers, – improve grid manageability and observability; With the target either due to equipment failures value of the Economic Security or natural disasters could – clear the routes for overhead transmission lines; indicator of the eventually cause significant – improve energy efficiency; average duration The main efforts in the area of economic security of potential contractors were implemented prior to economic and reputation losses of cessation for the Company. – expand the pool of backup electric power sources, focused on early identification and prevention conclusion of contracts, around 400 packages of vehicles and special-purpose machinery for post- of electricity (localization) of threats and risks that could cause documents of bidding procedures were analysed. Besides, they could affect the accident repairs; transmission volume of losses in its electric for 2016 at the the most serious financial and image damage to the In addition, debt collection activities were carried out grids. – implement an action plan to prevent an increase of level of 0.03548 Company. accident rate at high-voltage lines and substations. as part of enforcement proceeding. In 2016, more (established A series of audits were conducted to identify over than RUB 2.7 billion were reimbursed as a result of the Moreover, the Company implements the following by the order actions: of the Federal pricing for goods, works and services supplied to the performed activities. Company: around 1.6 thousand verification activities – Maintains the existing number of repair employees Tariff Service that provide maintenance and repair of substations and of Russia of 9 high-voltage lines; December 2014 No. 297-e/3), – Signs contracts for the servicing of substation the actual equipment with the producers of electric equipment; indicator of the Information Security – educates, oversees and certifies employees who average duration operate process equipment; of cessation The work on ensuring information security was In the reporting year the Programme for development – conducts emergency response drills and onsite of electricity performed in accordance with developed and approved of the integrated information security system of PJSC inspections in the Company’s branches; transmission Integrated Security Plan, instructions and orders of the FGC UES was developed and approved. Activities were for 2016 was Company’s management, PJSC Rosseti, the Russian organized to ensure information security at the facilities – implements the Property Insurance Coverage 0.01171. Programme; Ministry of Energy. of the Eastern Economic Forum 2016 in Vladivostok. – oversees operational and technological risks via Primary focus is on preparation of the facilities technical oversight and maintaining the quality of ensuring the energy supply to the infrastructure of the construction control which is exercised by the Technical 2018 FIFA World Cup. Supervision Centre as PJSC FGC UES’s branch; – maintains primary equipment at UNEG substations and high voltage lines, as well as auxiliary equipment at UNEG substations, in a working order in accordance with Integrated Security Management the regulatory requirements for maintenance and repair; – operations of permanent duty teams in the Company’s Along with measures to increase the antiterrorist in working order. In this regard, in the branches of branches. These teams are to conduct emergency protection of energy facilities, equipping them with MES South, East, Center and the North-West under the and recovery work at the grid facilities. Besides, the engineering and technical means of protection and supervision and control of the Security Unit, technical Company establishes emergency reserve of equipment optimal involvement of physical protection in 2016, maintenance and technical support of the IASMS in order to ensure reliable operations of UNEG facilities in cases of disruptions in the electric grids due either to measures were taken to maintain the integrated facilities were carried out. equipment failures or the aftermath of natural disasters automated safety management system (IASMS) or other emergency situations.

46 PJSC FGC UES Annual Report 2016 47 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Disclosure of Information and Interaction with Investors and Information on the minutes of the Board of Directors’ committees meetings Shareholders in 2016

Regulations for the implementation of the communication policy of PJSC Audit Committee: FGC UES – Date of the meeting – 12 February 2016 (minutes of – Date of the meeting – 23 September 2016 (minutes 16 February 2016, No. 45) of 23 September 2016, No. 50) The Regulation on the implementation of the public relations units of the Federal, Regional and – Date of the meeting – 29 March 2016 (minutes of 31 – Date of the meeting – 16 November 2016 (minutes of communication policy, reflecting the main principles Municipal authorities, state-owned and private March 2016, No. 46) 17 November 2016, No. 51) for the implementation of the unified communication companies, public and other organizations; policy of PJSC Rosseti, and the Regulations on the – Date of the meeting – 19 April 2016 (minutes of 20 – Date of the meeting – 8 December 2016 (minutes of –ensure proper quality and timeliness in the Information Policy of PJSC FGC UES were developed April 2016, No. 47) 8 December 2016, No. 52) preparation of information materials in the Company, in 2016 and approved by the decision of the Board of as well as a high culture of relations with journalists – Date of the meeting – 17 May 2016 (minutes of 18 – Date of the meeting – 28 December 2016 (minutes of Directors in 2017. and the public. May 2016, No. 48) 28 December 2016, No. 53) The Regulation was developed for the following The Regulation determines the organizational basis purposes: – Date of the meeting – 6 June 2016 (minutes of 8 for the implementation of the Company’s unified June 2016, No. 49) – develop a positive business reputation and a positive communication policy; forms of information support image of the Company, including in the interaction of of the Company’s activities; the procedure for planning, PJSC Rosseti in the Russian Federation and abroad; preparing, coordinating, providing and disseminating Investment Committee: in the media information on current activities and – carry out the information policy of the Company prospects for the Company’s development. – Date of meeting – 1 February 2016 (minutes of 4 – Date of the meeting – 20 June 2016 (minutes of 23 within the framework of the unified internal and February 2016, No. 52) June 2016, No. 60) After completion of corporate procedures, a external corporate information policy of PJSC Rosseti comprehensive vertically integrated external – Date of the meeting – 12 February 2016 (minutes of – Date of the meeting – 15 September 2016 (minutes in relation to the media and the public; communications system will be built in the subsidiaries 17 February 2016, No. 53) of 20 September 2016, No. 61) – establish of a unified set of norms, rules and of PJSC FGC UES, ensuring the implementation of the – Date of the meeting – 26 February 2016 (minutes of – Date of the meeting – 23 September 2016 (minutes requirements to the information interaction with principles of information openness, coherence and 29 February 2016, No. 54) of 18 October 2016, No. 62) the media, including the preparation, approval and consistency of information disseminated. provision of the relevant information to the media, – Date of the meeting – 22 March 2016 (minutes of 24 – Date of the meeting – 20 October 2016 (minutes of March 2016, No. 55) 25 October 2016, No. 63) – Date of the meeting – 19 April 2016 (minutes of 22 – Date of the meeting – 25 November 2016 (minutes of April 2016, No. 56) 30 November 2016, No. 64) – Date of the meeting – 22 April 2016 (minutes of 25 – Date of the meeting – 30 November 2016 (minutes of April 2016, No. 57) 5 December 2016 No. 65) Corporate Management – Date of the meeting – 25 May 2016 (minutes of 27 – Date of the meeting – 13 December 2016 (minutes of May 2016, No. 58) 16 December 2016, No. 66) Information on the minutes of the meetings of the Board of Directors in 2016 – Date of the meeting – 16 June 2016 (minutes of 17 – Date of the meeting – 20 December 2016 (minutes of June 2016, No. 59) 20 December 2016, No. 67) Information on the meetings of the Board of Directors, website at: http://www.fsk-ees.ru/shareholders_and_ information on decisions taken, numbers and dates investors/corporate_governance/decisions_of_the_ of the minutes are available on the Company’s official board/2016/. HR and Remuneration Committee: – Date of the meeting – 20 April 2016 (minutes of 20 – Date of the meeting – 5 October 2016 (minutes of 5 April 2016, No. 26) October 2016, No. 32) – Date of the meeting – 19 May 2016 (minutes of 20 – Date of the meeting – 10 October 2016 (minutes of May 2016, No. 27) 10 October 2016, No. 33) – Date of the meeting – 22 June 2016 (minutes of 23 – Date of the meeting – 21 October 2016 (minutes of June 2016, No. 28) 21 October 2016, No. 34) – Date of meeting – 2 September 2016 (minutes of 2 – Date of the meeting – 6 December 2016 (minutes of September 2016, No. 29) 6 December 2016, No. 35) – Date of the Meeting – 5 September 2016 (minutes of – Date of the meeting – 21 December 2016 (minutes of 5 September 2016, No. 30) 21 December 2016, No. 36) – Date of the meeting – 21 September 2016 (minutes of 21 September 2016, No. 31)

48 PJSC FGC UES Annual Report 2016 49 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Strategy Committee: Member name Core functions in the internal control system

– Date of the meeting – 11 February 2016 (minutes No. – Date of the meeting – 27 June 2016 (minutes No. 36 Other committees of the – monitor implementation of the set financial and operating indicators, 30 of 16 February 2016) of 28 June 2016) Board of Directors (HR and monitor the compliance with applicable legislation, performance of rules and – Date of the meeting – 30 March 2016 (minutes No. – Date of the meeting – 9 September 2016 (minutes Remuneration Committee, procedures set by local regulations, and monitor the reliability and timeliness of 31 of 5 April 2016) No. 37 of 13 September 2016) Strategy Committee, the Company’s reporting. – Date of the meeting – 20 April 2016 (minutes No. 32 – Date of the meeting – 22 September 2016 (minutes Investments Committee of 25 April 2016) No. 38 of 27 September 2016) Executive bodies of the – ensure the development and effective functioning of an internal control system; – Date of the meeting – 26 April 2016 (minutes No. 33 – Date of the meeting – 19 October 2016 (minutes No. Company (Management – ensure that the resolutions of the Board of Directors in terms of internal control of 27 April 2016) 39 of 24 October 2016) Board, Chairman of the Management Board) are being implemented. – Date of the meeting – 26 May 2016 (minutes No. 34 – Date of the meeting – 30 November 2016 (minutes of 31 May 2016) No. 40 of 2 December 2016) The Company's Management – ensures that the reports of the Chairman and members of the Management Board Board on the internal control system functioning are submitted to the – Date of the meeting – 21 June 2016 (minutes No. 35 – Date of the meeting – 20 December 2016 (minutes Company’s Board of Directors upon preliminary consideration by the Audit of 22 June 2016) No. 41 of 23 December 2016) Committee; – reviews the results of the external independent and internal assessment of the internal control system efficiency, the measures to develop and improve the Members of the internal control system and their functions internal control system. Chairman of the Company’s – adopts regulatory and methodological documents of the Company on Management Board development and functioning of the internal control system, except for the Member name Core functions in the internal control system documents that shall be approved by the Company’s Board of Directors; – ensures the implementation of the Company’s business plans necessary to Audit Commission – confirms the validity of data in the annual report and the annual accounting perform its targets; (financial) statements of the Company; – organises accounting and management accounting, issues accounting – analyses financial standing of the Company, identifies reserves for improving its (financial) and other statements; financial standing, makes recommendations to the governance bodies; – reports to the Board of Directors on the financial and economic activities of the – conducts inspections (audits) of the financial and economic activities of the Company and on the organisation and functioning of the Company’s internal Company. control system. The Board of Directors – determines the principles of and approaches to the development of the internal Heads of units and structural – are responsible for the development, documentation, implementation, control system, including the approval of internal documents of the Company, sub-divisions of the Company monitoring and improvement of internal control system in the functional areas stating the structure of internal control system, and the criteria for the internal of the Company’s operations; responsibility for arrangement and coordination/ control system efficiency assessment; implementation of the above operations is assigned to them by the corporate – supervises the activities of the Company’s executive bodies in the main regulations/ provisions on structural units, including: (priority) areas of operations; – ensuring the implementation of internal control principles; – annually reviews the report of the Chairman and members of the Management – arranging the efficient processes (activities), including development and Board on the functioning of the internal control system; implementation of new or changing the existing monitoring procedures, taking – annually reviews the internal audit reports on the internal control system into account the identified risks; efficiency; – evaluating the monitored processes (activities) to optimise their efficiency and – reviews the results of the external independent assessment of the internal meet the changing conditions of external and internal environment, ensuring control system. their regulation, and developing the proposals to improve control procedures; Audit Committee of the Board – performs preliminary consideration, prior to approval of the Company’s Board – organising the performance of control procedures; of Directors of Directors, of internal documents indicating the provisions on internal control – assessing (monitoring) of the compliance with control procedures; system and the criteria of its efficiency; – correcting the identified drawbacks of control procedures and processes – performs preliminary consideration of the following documents prior to (activities). submitting them to the Company’s Board of Directors: report of the Chairman and members of the Management Board on the functioning of the internal Employees in the structural – execute control procedures; control system; Internal Auditor’s report on the internal control system units of the Company, – ensure that line managers are duly informed of the cases when the execution efficiency, as well as information on the results of the external independent performing control of control procedures has become impossible and/or on any changes in the assessment of the internal control system efficiency; procedures as a part of their official duties design of control procedures in response to the changes of internal and/or – reviews issues related to inspecting reliability of the accounting (financial) external business environment of the Company; statements of the Company, selecting an external auditor and performing the – submit to line managers the proposals for implementation of control external audits, conforming to regulatory legal requirements and considering procedures in the respective areas of operations. the issues related to the analysis and assessment of implementation of the Regulations on Internal Control System.

50 PJSC FGC UES Annual Report 2016 51 Appendix 1 ADDITIONAL INFORMATION ON THE SECTIONS OF THE ANNUAL REPORT

Member name Core functions in the internal control system Member name Core functions in the internal control system

Specialised control bodies – monitoring functions of the first line of protection and key risks include risk Internal Audit Department – develops, upon internal audits, recommendations for improving control (risk management, legal management, regulatory compliance, environment, health and safety, quality procedures, individual components (elements) of internal controls and internal expertise, economic security, assurance, etc. control systems; quality control, – conducts an independent internal assessment of the internal control system compliance control) efficiency and the issues recommendations for improving efficiency and effectiveness of internal control system.

Directorate of Internal Control – provides overall coordination of internal control processes; and Risk Management – ensures development of basic internal control guidelines; – organises training for internal control specialists of the Company; – supports the Company’s management and the controlled entities in development of control procedures, monitors implementation of control procedures in the Company; – monitors the effectiveness of the internal control system in functional areas, including through the implementation of self-evaluation tools; – prepares the reports to management bodies and other stakeholders on functioning of efficient internal control system, improving the quality of corporate internal control system and the controlled entities; – develops and ensures implementation of the Anti-corruption policy of the Company; – organises and conducts corporate and anti-corruption compliance procedures in the Company; – monitors compliance with the requirements of the Russian legislation, regulations of Government and control bodies of the Russian Federation in terms of preventing and combating corruption; – organises and conducts legal trainings for the Company’s employees on anti- corruption issues and concepts of law-abiding behaviour; – implements and improves the set of measures to identify and resolve conflicts of interest; – organises and exercises efficient control over the execution by the Company’s employees of the legislation of the Russian Federation in the field of anti- corruption, applicable international laws, local regulations and institutional documents of the Company, and decisions of the collegiate bodies of the Company; – submits the reporting to the federal executive authorities in accordance with the requirements of the legal acts of the Russian Federation on disclosing information on the entire chain of owners of the counterparts.

52 PJSC FGC UES Annual Report 2016 53 Appendix 2 AUDIT COMMISSION’S REPORT

APPENDIX 2. Improving the Management of Open Joint Stock – The Articles of Association of the Public Joint Stock Companies Whose shares are in Federal Ownership Company Federal Grid Company of the Unified and Federal Unitary Enterprises”; Energy System approved by the Annual General Report Meeting of Shareholders of PJSC FGC UES of 29 – The Code of Corporate Governance recommended June 2016 (Minutes No. 17 of 4 July 2016); by the Letter of the Bank of Russia No. 06-52 / 2463 of 10 April 2014 for joint stock companies, whose – Accounting Policy of PJSC FGC UES for 2016 Of The Audit Commission securities are approved for on-exchange trading; approved by the Company’s Order No. 535 of 30 December 2015 (hereinafter – the Accounting – Information letter of the Bank of Russia of Public Joint Stock Company Federal Grid Company Policy); No. IN-06-52 / 8 of 17 February 2016 “On Disclosure of Unified Energy System of a Report on Compliance with the Principles and – Other legislative acts and internal organisational and Recommendations of the Corporate Governance administrative documents of PJSC FGC UES. Code in the Annual Report of Public Joint Stock Approved by Company”; Audit Commission of PJSC FGC UES (Minutes No. 6/2016 of 12 May 2017) I. Introduction

Members of the Audit Commission Company details Resolution of the Annual General Meeting of Shareholders The members of the Audit Commission were elected Public Joint Stock Company Federal Grid Company of the of PJSC FGC UES of 29 June 2016 (Minutes No. 17 of 4 Full title by the General Meeting of Shareholders Unified Energy System July 2016) 5a Academica Chelomeya St., Moscow 117630, Russian Location (legal address) Chairman and Secretary of the Audit Commission Minutes of the Audit Commission of PJSC FGC UES No. Federation were elected by the Audit Commission 1/2016 of 15 July 2016 Mailing address 5a Academica Chelomeya St., Moscow 117630 Chairman of the Audit Commission N.N. Pronin State registration (OGRN) 1024701893336 of 20 August 2002 Secretary of the Audit Commission I.V. Shmakov INN 4716016979

Members of the Audit Commission V.V. Khvorov, I.I. Karpov, T.V. Zobkova Chairman of the Management Board, Andrey Murov, The sole executive body (in the reporting period and on the basis of the resolution of the Extraordinary activities after the reporting date) General Meeting of Shareholders of PJSC FGC UES of 11 Audit period: In accordance with Federal Law “On Joint Audit programme: approved at the meeting of the Audit November 2013 (Minutes No. 14 of 11 November 2013) Stock Companies”, Articles of Association of PJSC FGC Commission (Minutes No. 4/2016 of 29 March 2016). Director of Accounting and Reporting Department Andrey Noskov according to the Order UES (hereinafter the Company) and Regulations on the Audit procedure: document audit. (Chief Accountant) No. 690/1R of 18 August 2011 Audit Commission of the Company, from 3 April 2017 Audit scope: random audit. to 10 May 2017 the Audit Commission of the Company has been assessing the reliability of data in the Annual During the inspection (audit) the following regulations Report and accounting (financial) statements for 2016. were applied: Auditor details The audit was carried out on the basis of: the – Federal Law No. 208-FZ of 26 December 1995 “On resolution of the Company’s Audit Commission of 15 Joint Stock Companies» Full title of the company Limited Liability Company RSM RUS July 2016 (Minutes No. 1/2016 of 15 July 2016). – Federal Law No. 402-FZ of 6 December 2011 “On Resolution of the Annual General Meeting of Resolution of the Annual General Meeting of Shareholders Audit objective: an independent evaluation of the Accounting”; reliability of data in the Annual Report and the annual Shareholders on approval of the candidate for the of PJSC FGC UES of 29 June 2016 (Minutes No. 17 of 4 accounting (financial) statements of the Company – The Regulation on Accounting and Reporting in the Company`s auditor July 2016). Russian Federation, approved by Order No. 34n of for 2016, developed in accordance with Russian The resolution of the Board of Directors on the Minutes of the meeting of the Board of Directors of PJSC the Ministry of Finance of the Russian Federation No. Accounting Standards (hereinafter the Reporting). Auditor's remuneration in 2016 FGC UES No. 322 of 27 May 2016 Reliability in all material respects means the accuracy 34n of 29 July 1998; of the Reporting data, which allows shareholders – Provisions (standards) on accounting in the Russian Agreement on provision of auditing services Agreement No. 161а051 of 4 August 2016 to draw the right conclusions about the results of Federation; economic activities, financial and property status of the Auditor's Report on Accounting Statements for 2016 Auditor's Report (number, date, document title) Company and take substantiated decisions based on – Order of the Ministry of Finance of the Russian No. RSM-1115 of 20 February 2017 these conclusions. Federation No. 66n of 2 July 2010 “On the Forms of Audited period: 1 January 2016 – 31 December 2016 Accounting Statements of Organisations”; Audited items: Annual Report of the Company, – Provisions on the disclosure of information by issuers annual accounting (financial) statements, accounting of equity securities approved by the Bank of Russia registers, primary accounting documents and other No. 454-11 on 30 December 2014; documentation on the financial and economic activities – Resolution No. 1214 of the Government of the of the Company. Russian Federation of 31 December 2010 «On

54 PJSC FGC UES Annual Report 2016 55 Appendix 2 AUDIT COMMISSION’S REPORT

The Company’s Annual Report for 2016, submitted – The Corporate Governance Code recommended by The inspection (audit) was carried out on a random We also selectively reconciled the indicators of for approval by the Annual General Meeting of the Letter Bank of Russia No. 06-52 / 2463 of 10 April basis and included a test-based study of the evidence the Annual Report and the accounting (financial) Shareholders, is developed with account of the 2014 for joint stock companies, whose securities are supporting the importance and disclosure in the statements for 2016, checking the completeness of approaches and principles contained in the following approved for on-exchange trading; Reporting of information on the financial and economic the disclosure of information in the Company’s Annual documents: activities of the Company, assessment of accounting Report for compliance with the requirements of the – Letter of the Bank of Russia No. IN-06-52 / 8 of principles and methods, the rules for developing Bank of Russia on disclosure of information by issuers – Federal Law No. 208-FZ of 26 December 1995 “On 17 February 2016 “On Disclosure in the Annual accounting (financial) statements, determining of of equity securities. Joint Stock Companies”; Report of a Public Joint Stock Company of a material estimated values. During the inspection (audit) Report on Compliance with the Principles and During the audit, the Company’s internal control system – Decree of the Government of the Russian Federation we determined the level of materiality (the level of the Recommendations of the Corporate Governance was also studied, as well as materials prepared on the No. 1214 of 31 December 2010 “On Improving the aggregate permissible error of the distortion of the Code”. basis of the results of the inspections conducted by the Management of Open Joint Stock Companies, with reporting indicators). By materiality we mean that the unit performing the functions of internal audit, external the Shares in Federal Ownership, and Federal State During the audit and issuance of this Report, the Annual information disclosed in the Reporting influences the auditor, external control and supervision bodies. The Unitary Enterprises”; Report has not yet been approved by the General decision-making of users of such reporting. The level Audit Commission of PJSC FGC UES relied, among Meeting of Shareholders or preliminary reviewed by the of admissible error shall be a criterion for us while – Regulations on the information disclosure by issuers other things, on the opinion of the Company’s auditor, Company’s Board of Directors. confirming the reliability of the Company’s reporting. of securities of the Bank of Russia No. 454-P of 30 LLC RSM Rus, No. RSM–1115 of 20 February 2016, as December 2014; During the inspection (audit), we reviewed compliance well as on the results of the first stage of the audit of with the legislation of the Russian Federation and local financial and economic operations of the Company for regulations of the Company. the year 2016. III. Summary

In our opinion, the accounting (financial) statements of During the inspection, the Audit Commission has not II. Analytics PJSC FGC UES fairly reflect, in all material respects, the found any material distortions of data contained in the financial standing of the Company as of 31 December Annual Report of PJSC FGC UES for 2016. 2016, the results of its financial and economic The book value of the Company’s assets as of 31 by 1% for the reporting year and amounted to RUB operations and cash flow in 2016, in accordance with December 2016 increased by 7.8% YOY and amounted 379,173.228 million as of 31 December 2016. the Russian accounting rules. to RUB 1,366,173.797 million. In the debt structure, the largest share accounts for Non-current assets make 86.7% of the property borrowed funds (70.2%) and accounts payable (16%). structure, their value as of 31 December 2016 The scope of borrowed funds in the reporting year The composition of the Company’s reporting, approved by the Audit amounted to RUB 1,183,264.138 million, which is by decreased by 5.4% and amounted to RUB 265,848.817 5.3% more than the amount of non-current assets as of Commission: million as of the last date of the reporting period. 31 December 2015. Total accounts payable as of 31 December 2016 As of 31 December 2016, the amount of accounts Sub- increased by 9.7% YOY and amounted to RUB Date of approval by Number of sheets in receivable (line 1,230 of the balance sheet) increased clause Type of reporting form 60,544.411 million, including RUB 60,031.744 million the management the document by 94.6% YOY and amounted to RUB 135,201.277 No. of short-term accounts payable. Overdue accounts million. The total amount of accounts receivable, payable reduced by 67.7% in the reporting year, the level 1. Balance Sheet as of 31 December 2016 20 February 2017 2 sheets accounted according to the conditions of contracts, of overdue accounts payable as of 31 December 2016 increased by 51.6% in the reporting year and amounted was 0.5% against 1.4% as of 31 December 2015. to RUB 194,711.786 million as of 31 December 2016. 2. Statement of Financial Performance for 2016 20 February 2017 2 sheets The Company’s operations in the reporting year The share of overdue debt in the total value of accounts returned RUB 106,070.911 million of net profit. (Net 3. Statement of Changes in Equity for 2016 20 February 2017 2 sheets receivable, accounted according to the conditions profit in the previous reporting period was RUB of contracts, decreased from 24.2% to 12.3% in the 17,870.137 million). reporting year. 4. Cash Flow Statement for 2016 20 February 2017 2 sheets The Company’s net asset value, as of the last date of The amount of bad debt provision, as of 31 December Explanatory Notes to the Balance Sheet and the reporting period, amounted to RUB 987,695.409 5. 20 February 2017 12 sheets 2016, changed insignificantly compared to the same Statement of Financial Position for 2016 million provided that its authorised capital amounts to indicator as of 31 December 2015. (a 1% increase) and Written Appendices to the annual financial RUB 637,332.662 million. 6. 20 February 2017 73 sheets amounted to RUB 59,510.509 million. The share of bad statements of PJSC FGC UES for 2016 debt provision in the total value of accounts receivable, The indicators of liquidity, solvency and financial Date of the accounted according to the conditions of contracts, stability are maintained within the recommended Annual Report of PJSC FGC UES for 2016 (Minutes Management Board decreased from 45.9% to 30.6%. limits, which indicates sound financial standing of the 7. of the Company's Management Board No. 1462 of 24 499 sheets Meeting – 21 April Company. April 2017) The balance under the item Cash and Cash Equivalents 2017 as of 31 December 2016, amounted to RUB 36,007,838. In the reporting year, the totality of the ways the Company keeps accounting, prescribed by the The Company’s equity in the equity and debt structure, Accounting Policy, was in accordance with the as of 31 December 2016, makes 72.3%, its share legislation of the Russian Federation on accounting and increased by 2.5 percentage points in the reporting year federal standards. and amounted to RUB 987,000.569 million as of the last date of the reporting period. The reporting is developed in accordance with the legislative and regulatory acts of the Russian The share of debt in the equity and debt structure Federation and local regulations of the Company in all accounts for 27.8%, the amount of debt increased material respects.

56 PJSC FGC UES Annual Report 2016 57 Appendix 2 AUDIT COMMISSION’S REPORT

APPENDIX 3. This Report of the Audit Commission of PJSC FGC UES Position for 2016 and written Appendices in the form of text and table, that are integral parts of the Annual Report of PJSC FGC UES for 2016. to the Balance Sheet and the Statement of Financial Report on Compliance with the Russian Corporate Governance Code and Report

Chairman of the Audit Commission N. N. Pronin on Compliance with Main Principles of PJSC FGC UES of the UK Corporate Governance Code Members of the Audit Commission of PJSC FGC UES I. V. Shmakov Report on Federal Grid Company’s Compliance with principles and recommendations of the Corporate Governance Code approved by the Board of Directors of the Bank of Russia on 21 March 2014 and recommended for application by the Bank of Russia V. V. Khvorov (Letter No. 06-52/2463 of 10 April 2014)

Report date: 30 March 2017 This Report shall be considered as an Appendix to

This Report has been considered by the Board of the 2016 Annual Report of PJSC FGC UES containing I. I. Karpov Directors of PJSC FGC UES as part of the preliminary the Corporate Governance section that includes the consideration of the Company’s Annual Report following information: (minutes No. 367 of 29 May 2017]. – Statement of the Federal Grid’s Board of Directors on compliance with the principles set out in the presented in this Report contains complete and Corporate Governance Code T. V. Zobkova accurate information on the Company’s compliance with the principles and recommendations of the Corporate Governance Code during the reporting period the Company’s corporate governance model and from 1 January 2016 through 30 March 2017. practices – Description of the methodology the Company has applied to assess compliance with the corporate governance principles

Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Status Criteria

1.1 The Company shall ensure equal and fair treatment of all shareholders exercising their right to participate in the governance of the Company.

1.1.1 The Company should create the 1. The Company’s internal document most favourable conditions for its approved by the General Meeting shareholders to enable them to of Shareholders and regulating the participate in the General Meeting and procedures for holding the General compliant develop sound positions on items on Meeting is publicly available. its agenda, as well as to provide them 2. The Company provides an accessible with the opportunity to coordinate their way to communicate with the actions and express opinions on items community, such as a hotline, special partially discussed. email or Internet forum that enables compliant shareholders to express their opinions and address questions regarding the agenda when preparing for the General Meeting. The above actions were taken not compliant by the Company before each General Meeting held in the reporting period.

1.1.2 Procedures for sending notice of the 1. The Notice of the upcoming General General Meeting and provision of Meeting was posted (published) on the relevant materials should enable the corporate website at least 30 days shareholders to get properly prepared for before the meeting. compliant participating therein. 2. The Notice of the General Meeting

meeting and documents required for admission to the premises. partially 3. Shareholders had access to the compliant information about who had proposed items on the agenda and nominated candidates to the Board of Directors and the Audit Commission of the Company. not compliant

58 PJSC FGC UES Annual Report 2016 59 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Compliance Criteria Status Criteria Status Criteria

1.1.3 During the preparation for and holding of 1. In the reporting period, shareholders the General Meeting, shareholders should were enabled to put questions to 1.2 Shareholders should have equal and fair opportunity to participate in the Company’s profits by means of receiving dividends be able to receive in a freely and timely members of the Company’s executive compliant manner information about the meeting bodies and the Board of Directors before 1.2.1 The Company should develop and put in 1. The Company’s dividend policy has Criterion 2 is not observed. and materials thereto, put questions to and during the Annual General Meeting. place a transparent and clear mechanism been developed, approved by the Board The recommended amount of dividends members of the Company’s executive compliant 2. Position of the Board of Directors for determining the amount of dividends of Directors and disclosed. is determined by the Board of Directors bodies and the Board of Directors, and to (including any dissenting opinions partially and payment thereof. 2. If the Company’s dividend policy uses according to the Dividend Policy, approved communicate with each other. recorded in the minutes) on each item compliant criteria from the Company’s financial by the Board of Directors on 16 January of the General Meetings held within the accounts to determine the amount 2010 on the basis of RAS financial reporting period was included in the of dividends, the dividend policy shall partially performance. materials for the General Meeting of employ the consolidated financial compliant Federal Grid Company is a state-owned Shareholders. not compliant indicators. company (more than 80% of its share 3. The Company provided shareholders, capital is indirectly owned by the State). entitled thereto, with access to the list A decision on dividend payment is made of persons entitled to participate in not compliant on the basis of directives issued by the the General Meeting, starting from the Government of the Russian Federation date of its receipt by the Company, in all with due account of the RF Government cases of holding general meetings in the Resolution No. 774-r of 29 May 2006 On reporting period. building positions of a shareholder – 1.1.4 There should be no unjustified difficulties 1. In the reporting period, shareholders Russian Federation in Joint Stock preventing shareholders from exercising were entitled to propose new items to Companies whose shares are in the their right to request for a General be included on the agenda of the Annual compliant federal ownership. Meeting to be convened, nominate General Meeting at least 60 days after Also, when determining the amount of candidates to the Company’s governing the end of the respective calendar year. dividend payments, the Company is guided bodies, and to place proposals on its 2. In the reporting period, the Company by the Methodological Recommendations partially agenda. did not refuse to accept proposals of the Federal Property Management compliant for the agenda or candidates to the Agency for Developing the Dividend Company’s bodies due to misprints Policy of Joint-Stock Companies with or other insignificant defects in a State Participation (Order No. 524 of 29 December 2014), according to which it shareholder’s proposal. not compliant is recommended to allocate at least 25% 1.1.5 Each shareholder should be able to 1. The Company’s internal document from the consolidated net profit of the freely exercise his right to vote in a (internal policy) includes provisions Company, compiled under RAS/IFRS, for straightforward and most convenient whereby any participant of the General compliant dividends (unless otherwise contradicts way. Meeting may, until the end of the General the shareholder’s position). Meeting, request a copy of the ballot Federal Grid Company is currently filled by that participant to be certified by discussing with federal executive the Company’s counting board. partially authorities the ways to update the compliant dividend policy and bring it in line with the regulations of the Government of the Russian Federation. not compliant 1.2.2 The Company should not make a 1. The Company’s dividend policy decision on the dividend payment if such clearly indicates the financial/economic 1.1.6 Procedures for holding a general meeting 1. In the reporting period, when general Criterion 3 is not observed. decision, without formally violating limits circumstances under which the set by the Company should provide equal meetings of shareholders were held in compliant In the reporting period, the Board of set by law, is economically unjustified Company should not pay dividends. opportunity to all persons present at the the form of a meeting (joint presence compliant Directors did not consider the matter on and might lead to false assumptions general meeting to express their opinions of shareholders), sufficient time was the use of telecommunications to provide about the Company’s activity. and ask questions that might be of provided for reports on items and for shareholders with remote access to the partially interest to them. further discussion thereof. general meetings. compliant 2. Candidates to the Company’s partially Therewith, from 2016, the Company governing and control bodies were compliant arranged live online broadcasting of the available to answer shareholders’ Annual General Meeting of shareholders. questions at the meeting where they were put to the vote. Arrangement of the Annual General not compliant not compliant Meeting of Shareholders provided 3. When making decisions related to the an option of remote attendance for 1.2.3 The Company should not allow 1. In the reporting period, the Company preparation and holding of the General shareholders with nominee-registered deterioration of dividend rights of its did not take any actions leading to the Meeting of Shareholders, the Board of holdings that means they will be able to existing shareholders. deterioration of dividend rights of the compliant Directors considered a matter on the submit, through the National Settlement existing shareholders. use of telecommunications to provide Depository (NSD), their electronic voting shareholders with remote access to instructions to the Registrar. Given the attend the General Meetings held in the implementation of the recommendation partially reporting period. with the participation of recording compliant organisations at the securities market, no separate decision of the Board of Directors is planned to be made. The Company plans to review the issue in not compliant future, in the case up-to-date and reliable technologies for electronic voting will be developed and implemented.

60 PJSC FGC UES Annual Report 2016 61 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Compliance Criteria Status Status Criteria Criteria

1.2.4 The Company should strive to rule out 1. To eliminate other methods for Criterion 1 is partially not observed. The shareholders should be provided with reliable and efficient means of recording their rights in shares as well as with the opportunity to freely dispose of such any ways through which its shareholders shareholders to obtain profit (income) 1.4 compliant The Company’s internal documents do not shares in a non-onerous manner. can obtain any profit or gain at the at the Company’s expense, other provide for controls that ensure the timely Company’s expense other than dividends than dividends and liquidation value, identification and procedure for the approval 1.4 The shareholders should be provided 1. The registrar’s quality and reliability and liquidation value. the Company’s internal documents of transactions with persons affiliated (related) with reliable and efficient means of in maintaining the shareholder partially compliant establish controls that ensure the timely compliant with substantial shareholders (persons entitled recording their rights in shares as well as register meet the Company’s and its identification and procedure for the to dispose of the votes attached to voting with the opportunity to freely dispose of shareholders’ needs. approval of transactions with persons shares), where the law does not formally such shares in a non-onerous manner. affiliated (related) with substantial partially not compliant recognise such transactions as related-party compliant shareholders (persons entitled to transactions. dispose of the votes attached to voting shares), where the law does not formally The Company’s substantial shareholders recognise such transactions as related- are PJSC Rosseti that holds 80.13% of not compliant party transactions. voting shares, and the Russian Federation represented by the Federal Property The Board of Directors provides strategic governance of the Company, determines the main principles of and approaches to the arrangement of the Company’s risk 2.1 Management Agency on the agreement made management and internal control systems, supervises the Company’s executive bodies, and performs other key functions. with PJSC Rosseti. The Russian Federation has no affiliated 2.1.1 The Board of Directors should be 1. The Board of Directors has the powers Criterion 1 is partially not observed. responsible for making decisions set out in the Articles of Association to persons. compliant According to the Company’s Articles of to appoint and remove members of appoint and remove members of the Transactions between PJSC FGC UES and Association, the Board of Directors shall executive bodies, including in connection executive bodies, as well as determine appoint members of the Federal Grid’s Rosseti’s affiliated persons are related-party with their failure to perform their terms and conditions of contracts to be transactions, approved in accordance with the partially Management Board, and the General Meeting duties properly. The Board of Directors entered with them. compliant of Shareholders shall appoint the Chairman requirements of the applicable legislation of should also ensure that the Company’s the Russian Federation. 2. The Board of Directors has considered of the Management Board. executive bodies act in accordance with a report (reports) of the CEO and In accordance with the corporate procedure, all an approved development strategy and The Company does not plan to amend members of the collective executive not compliant agreements concluded in the Company the Company’s businesses. its Articles of Association with respect board on the implementation of the to delegating the authority to appoint the shall be preliminary approved, including Company’s strategy. Management Board’s Chairman to the verification of the information on Board of Directors because of the high risk counterparties under the transactions. The of financial and economic implications for counterparties are also inspected at the stage the Company resulting from the possible of procurement procedures. demand for redemption of minority stakes. The Company does not currently plan to make 2.1.2 The Board of Directors should establish 1. During the reporting period, the any additional amendments to its internal basic long-term targets of the Company’s Board of Directors considered matters documents in respect of the introducing activity, evaluate and approve its key related to the progress review and compliant additional control measures and procedures performance indicators and principal updating of the Company’s strategy, the for the approval of transactions mentioned in business goals, as well as evaluate and approval of its financial and business this paragraph. approve its strategy and business plans plan (budget), and the review of criteria partially compliant The corporate governance system and practices shall guarantee equal conditions for all shareholders owning shares of the same category (type), including minority in respect of its core businesses. and performance indicators (including 1.3 shareholders and foreign shareholders, as well as their equal treatment by the Company. intermediate) of the Company’s strategy and business plan. not compliant 1.3.1 The Company should create conditions 1. During the reporting period, the No conflicts of that would enable its governing bodies procedures for managing potential interests were 2.1.3 The Board of Directors should determine 1. The Board of Directors should and controlling persons to treat each conflicts of interest among existing recorded in the principles of and approaches to the determine principles of and approaches shareholder fairly, in particular, which shareholders were efficient, and the compliant reporting period. establishment of the Company’s risk to the establishment of the Company’s compliant would eliminate the possibility of any Board of Directors paid due attention to management and internal control risk management and internal control abuse of minority shareholders by major conflicts among shareholders, if there systems. systems. shareholders. were any. partially 2. In the reporting period, the Board partially compliant compliant of Directors reviewed the Company’s internal control and risk management systems. not compliant not compliant 2.1.4 The Board of Directors should determine 1. The Company has developed and the Company’s policy on remuneration implemented the policy(-ies) approved 1.3.2 The Сompany should not take any 1. The Сompany does not have ’quasi- Criterion 1 is not observed. due to and/or reimbursement of by the Board of Directors on the compliant actions that will or might result in treasury’ shares or they were used in the compliant In the reporting period, ‘quasi-treasury’ shares expenses incurred by its Board members, remuneration and reimbursement artificial redistribution of corporate voting during the reporting period. of Federal Grid Company were involved in the members of its executive bodies and of expenses incurred by the Board control. voting at the Annual General Meeting other key managers. members, members of its executive partially compliant partially For objective reasons, including the most bodies and other key managers. compliant significant need to implement the key objective 2. During the reporting period, the Board of the Company stated in the Articles of of Directors considered issues related to not compliant Association (long-term maintenance of power the above policy(-ies). not compliant integrity (safety) of the Russian Federation and provision of reliable, high-quality and affordable 2.1.5 The Board of Directors should play a 1. The Board of Directors plays a key role energy supply to Russian customers), as key role in prevention, detection and in prevention, detection and resolution of compliant well as considering that the agenda of the resolution of internal conflicts between internal conflicts. General Meeting of Shareholders may include the Company’s bodies, shareholders and 2. The Company has established a items aimed at performing the orders of employees. system for identifying transactions partially the President and/or the Government of the involving conflicts of interest and a compliant Russian Federation, including the ones aimed system of measures aimed at resolving at implementing the grid development strategy such conflicts. of the Russian Federation, the opportunity to not compliant involve ’quasi-treasury’ shares in the voting at the general Meeting remains relevant today. However, trying to comply with the best corporate governance practices, the Company plans that the Board of Directors will consider the relevant item and make a conceptual decision on the use of ‘quasi-treasury’ shares in the voting at the AGM.

62 PJSC FGC UES Annual Report 2016 63 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Compliance Criteria Status Criteria Status Criteria

2.1.6 The Board of Directors should play a 1. The Board of Directors has approved 2.3.3 The composition of the Board of 1. As part of the Board performance key role in ensuring that the Company the regulations on the information policy. Directors should be balanced, in evaluation carried out in the reporting compliant compliant is transparent, discloses information in 2. The Company has determined particular, in terms of qualifications, period, the Board of Directors reviewed full and in a timely manner, and provides persons responsible for implementing expertise, knowledge and business its own needs in professional expertise, its shareholders with easy access to its the information policy. qualities of its members. The Board of experience and business skills. documents. partially Directors should enjoy the confidence of partially compliant shareholders. compliant

not compliant not compliant 2.1.7 The Board of Directors should monitor 1. During the reporting period, the 2.3.4 The number of members of the 1. As part of the Board performance the Company’s corporate governance Board of Directors considered items on Company’s Board of Directors must evaluation carried out in the reporting practices and play a key role in its the Company’s corporate governance compliant enable the Board to organise its activities period, the Board of Directors considered compliant material corporate events. practices. in the most efficient way, in particular, whether the size of the Board was to create Board committees, as well as appropriate in terms of the Company’s partially to enable the Company’s substantial needs and shareholder interests. partially compliant minority shareholders to elect a compliant candidate to the Board of Directors for whom they would vote. not compliant not compliant

2.2 The Board of Directors should be accountable to the Company’s shareholders. 2.4 The Board of Directors should include a sufficient number of independent directors.

2.2.1 Information on the Board of Directors’ 1. The Company’s annual report for the 2.4.1 An independent director should mean 1. During the reporting period, all Criterion 1 is partially not observed. activities should be disclosed and reporting period includes information on any individual who has required independent members of the Board of The Annual General Meetings of compliant compliant provided to the shareholders. the attendance at meetings of the Board professional skills and expertise and Directors met the independence criteria Shareholders in 2015 elected the Board of Directors and its committees. is sufficiently able to have his/her own specified in recommendations 102 to of Directors with 3 directors who met the position and make objective and fair 107 of the Code or were recognised as 2. The annual report contains partially independence criteria. information on the main findings of partially judgments, free from the influence such by the decision of the Board of compliant compliant of the Company’s executive bodies, Directors. Member of the Board of Directors the Board of Directors’ performance M.A. Kolesnikov was elected to the Board evaluation for the reporting period. certain groups of shareholders or other stakeholders. It should be noted that, in of Directors of PJSC FGC UES as an not compliant not compliant normal conditions, a candidate (or an independent director by AGM resolution elected director) should not be deemed as of 26 June 2015 (Minutes No. 16 of 2.2.2 The Chairman of the Board of Directors 1. The Company has a transparent independent, if he/she is associated 30 June 2015). However, later he lost must be available to communicate with procedure that enables shareholders with the company, any of its substantial the status of an independent director in the Company’s shareholders. to submit their questions and positions compliant shareholders, material trading partners or connection with the election to the Board of thereon to the Chairman of the Board of competitors, or the government. Directors of a subsidiary of PJSC Rosseti, a Directors. material shareholder of PJSC FGC UES. partially compliant The Annual General Meetings of Shareholders in 2015 elected the Board of Directors with 3 directors who met the not compliant independence criteria. In the event of such a situation in future, 2.3 The Board of Directors should be an efficient and professional governing body of the Company capable of making objective and independent judgments and taking the Company plans that it will be the decisions in the best interests of the Company and its shareholders. Board’s responsibility to decide whether a certain Board member is independent 2.3.1 Only persons with impeccable business 1. The procedure for the Board of or not. and personal reputation should be Directors’ performance evaluation elected to the Board of Directors; such adopted in the Company includes, compliant 2.4.2 It is recommended to evaluate whether 1. In the reporting period, the Board persons should also have knowledge, among other things, evaluation of candidates nominated to the Board of of Directors (or the Nomination skills, and experience required to make professional skills and expertise of the Directors meet independence criteria Committee) evaluated the independence compliant decisions that fall within the role and Board members. partially as well as to review, on a regular basis, of each candidate to the Board and compliant whether independent Board members submitted the relevant opinion to responsibilities of the Board of Directors 2. In the reporting period, the Board of meet the independence criteria. When shareholders. partially and to perform its functions efficiently. Directors (or its Nomination Committee) carrying out such evaluation, substance compliant evaluated candidates to the Board of not compliant should take precedence over form. Directors in terms of their experience, knowledge, business reputation, not compliant absence of conflicts of interest, etc. 2. In the reporting period, the Board 2.3.2 Board members should be elected 1. In all cases when a General Meeting of Directors (or the Nomination pursuant to a transparent procedure of Shareholders was held during the Committee) reviewed, at least once, compliant enabling shareholders to obtain reporting period, the agenda of which the independence of the existing Board information about the respective included the election of the Board members, indicated by the company candidates that is sufficient to get an of Directors, the Company provided in the annual report as independent idea of the candidates’ personal and shareholders with biographical data partially directors. professional qualities. of all candidates to the Board of compliant Directors, results of the evaluation 3. The Company has developed of such candidates performed by procedures that determine actions to the Board of Directors (Nomination not compliant be taken by a member of the Board Committee), as well as information on of Directors if he/she loses his/her the candidates’ compliance with the independence, including the obligation independence criteria according to the to notify the Board of Directors thereof in recommendations in paragraphs 102 a timely manner. to 107 of the Code, and the candidates’ written consent to be elected to the Board of Directors.

64 PJSC FGC UES Annual Report 2016 65 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Status Compliance Criteria Criteria Status Criteria

2.4.3 At least one third of the Board of 1. At least one third of the Board of Criterion 1 is partially not observed. 2.5.2 The Board Chairman should ensure that 1. The performance of the Board Directors shall be independent directors. Directors shall be independent directors. compliant In the reporting period, the number of Board meetings are held in a constructive Chairman was evaluated as part of the independent directors in the Company’s atmosphere and that all items on the Board performance evaluation in the compliant Board was less than one third. meeting agenda are discussed freely. reporting period. The chairman should also monitor partially Member of the Board of Directors execution of decisions made by the partially compliant M.A. Kolesnikov was elected to the Board Board of Directors. compliant of Directors of PJSC FGC UES as an independent director by AGM resolution of not compliant 26 June 2015 (Minutes No. 16 of 30 June not compliant 2015). However, later he lost the status of an independent director in connection 2.5.3 The Chairman of the Board of Directors 1. The duty of the Chairman of the with the election to the Board of Directors must take all the required measures to Board of Directors to provide all Board of a subsidiary of PJSC Rosseti, a material provide the Board members in a timely members with relevant information on compliant shareholder of PJSC FGC UES. manner with information required to meeting agenda in a timely manner The Annual General Meetings of make decisions on items on the agenda. is set out in the Company’s internal documents. partially Shareholders in 2016 elected the Board compliant of Directors with 3 directors who met the independence criteria, which is in line with the Listing Rules of the Moscow Exchange. not compliant 2.4.4 Independent directors should play a key 1. Independent directors (who do not Criterion 1 is not observed. role in the prevention of internal conflicts have any conflicts of interest) perform Independent directors (who do not have Board members must act reasonably and in good faith in the best interests of the company and its shareholders, being sufficiently informed, with due care and compliant 2.6 in the Company and in material corporate a preliminary evaluation of material any conflicts of interest) do not perform a diligence. actions taken by the latter. corporate actions related to a potential preliminary evaluation of material corporate conflict of interest, and the findings of actions related to a potential conflict of 2.6.1 The Board members should make 1. The Company’s internal documents such evaluation are submitted to the partially interest. decisions considering all available establish that a member of the Board compliant compliant Board of Directors. information, in the absence of a conflict of Directors is obliged to inform the The Company’s Articles of Association do of interest, treating shareholders of Board if he/she has a conflict of interest not define a concept of material corporate the Company equally, and assuming with respect to any item for a meeting not compliant actions. standard business risks. of the Board of Directors or a Board partially However, based on the definition of this committee, prior to the discussion of the compliant concept in the Corporate Governance respective item. Code, it should be noted that the Company’ 2. The Company’s internal documents not compliant Articles of Association provide for relevant provide that a member of the Board of responsibilities of the governing bodies on Directors should refrain from voting on matters related, according to the Code, to any item where he/she has a conflict of material corporate actions. interest. It should also be noted that in the reporting 3. The Company has established a period the Company made two transactions procedure that enables the Board of from the list of material corporate actions Directors to obtain professional advice specified in the Code that were not related on items falling within its remit, at the to a potential conflict of interest. Company’s expense. Items related to material transactions are 2.6.2 Rights and duties of the Board members 1. The Company has adopted and regulated in accordance with the Russian should be clearly defined and set out in disclosed an internal document that legislation and the Company’s internal the Company’s internal documents. clearly defines the right and duties of compliant documents. members of the Board of Directors. Under the current reforming of corporate legislation and the lack of a unified partially approach to understanding the essence of compliant “material corporate actions”, the Company does not currently plan to make any amendments to its internal documents. not compliant 2.6.3 The Board members should have 1. Individual attendance of the Board of 2.5 The Chairman of the Board of Directors should contribute to the most effective implementation of functions imposed on the Board. sufficient time to discharge their duties. Directors and its committee meetings, as well as the time devoted to the compliant 2.5.1 The Chairman of the Board of Directors 1. The Chairman of the Board of Criterion 1 is not observed. preparation for meetings was taken shall be an independent director; or Directors is an independent director; into account in the course of the Board compliant Chairman of the Board of Directors is not an a senior independent director shall or a senior independent director has performance evaluation in the reporting partially independent director. compliant be appointed among the Company’s been appointed among the Company’s period. In accordance with subparagraph “d” of independent directors to coordinate work independent directors. 2. According to the Company’s internal partially paragraph 1 of the list of instructions of of the independent directors and to liaise documents, members of the Board 2. The function, rights and duties of the compliant the President of the Russian Federation not compliant with the chairman of the Board. of Directors are obliged to notify the chairman of the Board of Directors (and, No. Pr-846 of 2 April 2011, as well as the Board of their intention to join governing if applicable, the senior independent RF Government Order No. ISH-P13-26pr bodies of other companies (except for director) are properly specified in the not compliant of 8 April 2011, professional attorneys the Company’s affiliates and dependent Company’s internal documents. shall be elected as chairmen of the boards companies) and of such actual of directors of companies with state appointments. participation. In the reporting period, the Company did 2.6.4 All Board members should have equal According to the Company’s internal not practice the appointment of a senior opportunity to access the Company’s documents, members of the Board of compliant independent director. documents and information. Newly Directors are entitled to get access to elected Board members should be the documents and to make requests provided with sufficient information related to the Company and its affiliates, about the Company and activities and the Company’s executive bodies partially of the Board of Directors as soon as are obliged to provide the relevant compliant practicable. information and documents. 2. The Company has a formalised not compliant induction programme for newly elected members of the Board of Directors.

66 PJSC FGC UES Annual Report 2016 67 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Compliance Criteria Status Criteria Status Criteria

2.7 Meetings of the Board of Directors, preparation for them, and participation of the Board members therein should ensure the effective performance of the Board. 2.7.4 Decisions on the most important items 1. The Company’s Articles of Criterion 1 is not observed. relating to the Company’s business Association provide that decisions compliant The Company’s Articles of Association should be made at a meeting of the on the most critical items outlined in contain no provisions according to which 2.7.1 It is recommended that meetings of the 1. The Board of Directors held at least Board of Directors by a qualified majority Recommendation 170 of the Code shall decisions on items are taken by the Board Board of Directors be held as needed, six meetings in the reporting period. vote or by a majority vote of all elected be made at a meeting of the Board of of Directors by a qualified majority, not less compliant partially with due account of the Company’s Board members. Directors by a qualified majority of at compliant than three-quarters of votes or a majority of scope of activities and its current least three quarters of votes or by a votes of all elected members of the Board objectives. majority of votes of all elected members of Directors. partially of the Board of Directors. compliant not compliant Paragraph 18.8 of the Company’s Articles of Association specifies the list of items to be resolved by a two-thirds majority of not compliant votes of the Board members participating in the meeting. In particular, the list includes 2.7.2 The Company’s internal documents 1. The Company has adopted an the items, stipulated by cl.4 and cl.8 of should establish a procedure for internal document that governs the Recommendation 170 of the Code: approval preparing and holding meetings of the procedure for preparing and holding compliant of the Company’s material transactions and Board of Directors, enabling the Board Board meetings and specifies, among consideration of material items relating to members to prepare for the meetings other things, that a notice of the meeting activities of any legal entities controlled by properly. should normally be made at least five partially the Company. days prior to the meeting. compliant In addition, in accordance with the Articles of Association, decisions are made by a not compliant two-thirds majority of votes of the Board members participating in the meeting 2.7.3 The form of a meeting of the Board of 1. The Company’s Articles of Criterion 1 is partially not observed. on the Company’s participation in other Directors should be determined with due Association or internal document organisations and credit policy setting. compliant The Company’s Articles of Association account of importance of the agenda provide that the most important and internal documents do not determine The Company does not currently plan to items. Most important items should be items (according to the list in what items should be considered at the amend its Articles of Association. considered at meetings held in person. Recommendation 168 of the Code) partially Board meetings held in person. should be considered at the Board compliant meetings held in person. According to the recommendations of the 2.8 The Board of Directors should establish committees for preliminary consideration of the most important items of the Company’s business. Corporate Governance Code, items to be considered at meetings held in person 2.8.1 For the purpose of preliminary 1. The Board of Directors established not compliant include the following: consideration of any matters relating to an Audit Committee composed of – items relating to holding an Annual oversight of the Company’s business, it independent directors only. compliant General Meeting of Shareholders; is recommended to establish an audit 2. The Company’s internal documents – items to be resolved in accordance with committee composed of independent determine the objectives for the Audit the directives of the Government of the directors. partially Committee, including those set out by compliant Russian Federation; Recommendation 172 of the Code. – approval of the Company’s material 3. At least one Audit Committee transactions; member, being an independent director, not compliant – consideration of material aspects of has an experience and knowledge business of any legal entity controlled in preparing, analysing, evaluating, by the Company; and auditing accounting (financial) – items relating the Company’s business statements. (including business plans); 4. The Audit Committee meetings – other items, including the results of were held at least quarterly during the the Board performance assessment, reporting period. consideration of a risk management policy, etc. 2.8.2 For the purpose of preliminary 1. The Board of Directors established consideration of matters relating a Remuneration Committee composed Thus, a number of items that, according to the development of efficient and entirely of independent directors. compliant to the Code, require face-to-face transparent remuneration practices, consideration by the Board of Directors 2. The Remuneration Committee is it is recommended to establish a involve tight deadlines which does not chaired by an independent director who remuneration committee composed of partially allow to ensure holding a Board meeting is not the Chairman of the Board of independent directors and chaired by an compliant in person within the time specified by law Directors. independent director who should not be due to a possible lack of quorum. the Board Chairman. 3. The Company’s internal documents The Company does not plan to amend determine the objectives for the not compliant its Articles of Association and/or internal Remuneration Committee, including documents to specify what items are to be those set out by Recommendation 180 considered at meetings held in person. of the Code. At the same time, the Board’s action plan 2.8.3 For the purpose of preliminary 1. The Board of Directors established determines priority items to be considered consideration of matters relating to a Nomination Committee (or its at the meeting held in person, including HR planning (succession planning), objectives, set out in Recommendation compliant the approval of the business plan professional composition and 186 of the Code, are delivered by another (consolidated business plan that includes efficiency of the Board of Directors, it is committee), and the majority of its key performance indicators of subsidiaries recommended to establish a nomination members are independent directors. partially compliant and associates) and the Company’s committee (nominating committee, 2. The Company’s internal documents investment programme, the Long-Term HR committee) with the majority of its determine the objectives for the Development Programme. members being independent directors. nomination committee (or another not compliant committee with the relevant functions), including those set out by Recommendation 186 of the Code.

68 PJSC FGC UES Annual Report 2016 69 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Corporate Governance Principle Compliance Explanations of Deviation from Corporate Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principle Compliance Compliance Criteria Status Corporate Governance Principles Governance Principles Compliance Comments Criteria Compliance Criteria Status Criteria 2.8.4 Taking account of the Company’s 1. In the reporting period, the Company’s In the reporting The Company’s Corporate Secretary shall be responsible for efficient shareholder engagement, coordination of the company’s actions aimed at protecting the scope of activities and a risk level, the Board of Directors reviewed the period, the 3.1 Board of Directors has ascertained conformity of the membership in its compliant Board of shareholder rights and interests, and support of efficient work of the Board of Directors. that the composition of its committees committees to the objectives assigned Directors meets the objectives of the Company. to the Board and to the Company’s reviewed the 3.1.1 The Corporate Secretary should 1. The Company adopted and disclosed Additional committees were either business goals. Additional committees partially conformity of have knowledge, experience, and an internal document – the Regulations established, or were not considered were either established or were not compliant its committees’ qualifications sufficient for the discharge on the Corporate Secretary. compliant necessary (a strategy committee, a recognised as necessary. composition of his/her responsibilities, as well as an 2. The Company’s website and annual corporate governance committee, an to their impeccable reputation and should enjoy report provide background information ethics committee, a risk management not compliant objectives when the trust of shareholders. partially on the corporate secretary with the compliant committee, a budget committee, considering same level of detail as for members of a committee on health, safety and matters on the the Board of Directors and the executive environment, etc.). committees’ management of the Company. membership, not compliant as well as the 3.1.2 The Corporate Secretary should be 1.The Board of Directors approves the approval of the independent enough of the Company’s appointment, dismissal and additional regulations on executive bodies and be vested with remuneration of the corporate secretary. compliant the committees. powers and resources required to carry 2.8.5 The composition of the committees 1. Committees of the Board of Directors Criterion 1 is partially not observed. out his/her tasks. should be determined in such a way are headed by independent directors. partially compliant The HR and Remuneration Committees; compliant that it would allow a comprehensive The Company’s internal documents Investment and the Audit Committees discussion of issues being considered on (policies) contain provisions whereby are headed by the independent directors. a preliminary basis with due account of individuals not included on the audit partially At the same time, the Strategy not compliant the variety of opinions. committee, the nomination committee compliant Committee is headed by the Board The level of remuneration paid by the Company should be sufficient to attract, motivate, and retain individuals having required skills and qualifications. Remuneration and the remuneration committee may member who is not independent attend meetings of these committees 4.1 to Board members, members of the executive bodies, and other key managers of the Company should be paid in accordance with a remuneration policy approved by director. the Company. only upon the invitation of the chairman not compliant of the respective committee. The Company’s internal documents do not contain an obligation to elect 4.1.1 It is recommended that the level of The Company has adopted internal The term ‘other key remuneration paid by the company to its remuneration document (s) - policy(- managers of the independent directors as the chairmen compliant of the Strategy and Investment Board members, executive bodies, and ies) for members of the Board of Company’ is not Committees. other key managers should be sufficient Directors, executive bodies and other applied according to motivate them to work efficiently key managers that clearly define the to the Action Plan According to the Regulations on and enable the Company to attract approaches to the remuneration of the partially (roadmap) on the above Committees, taking into and retain competent and qualified above individuals. compliant introducing the account certain resolutions of the professionals. The Company should Corporate Governance RF Government, these Committees avoid setting the level of remuneration Code provisions in the are composed mainly of individuals any higher than necessary, as well as not compliant Company’s practice who are not members of the Board of an excessively large gap between the approved by the Board Directors and provide an independent level of remuneration of any of the above of Directors on 12 and thorough discussion of issues individuals and that of the Company’s March 2015 (Minutes and the development of preliminary employees. No. 255). recommendations to the Board of Directors. 4.1.2 The Company’s remuneration policy 1. In the reporting period, the should be developed by its remuneration remuneration committee reviewed 2.8.6 The chairmen of the committees should 1. During the reporting period, the committee and approved by the Board the remuneration policy(-ies) and the compliant inform the Board of Directors and its Chairmen of the Committees reported of Directors. With the assistance practice of its/their implementation compliant chairman of the work of their committees on the Committees’ work to the Board of of its remuneration committee, the and, if necessary, submitted the relevant on a regular basis. Directors on a regular basis. Board of Directors should monitor the recommendations to the Board of partially implementation of and compliance with Directors. compliant partially compliant the remuneration policy by the Company and review and amend the same, if necessary. not compliant not compliant 4.1.3 The Company’s remuneration policy 1. The Company’s remuneration The term ‘other key should provide for transparent policy(-ies) provide(s) for transparent managers of the compliant 2.9 The Board of Directors should ensure evaluation of its own performance, and that of its Committees and members of the Board. mechanisms to be used to determine the mechanisms to be used to determine Company’ is not applied amount of remuneration due to members the amount of remuneration due to according to the of the Board of Directors, the executive members of the Board of Directors, Action Plan (roadmap) 2.9.1 The Board of Directors’ performance 1. The self-evaluation or external bodies, and other key managers of the the executive bodies, and other key partially on introducing the evaluation should be aimed at evaluation of the Board performance company, as well as to regulate all types managers of the company, as well compliant Corporate Governance compliant determining how efficiently the Board conducted in the reporting period of payments, benefits, and privileges as regulate(s) all types of payments, Code provisions in the of Directors, its Committees and Board included the performance evaluation of provided to any of the above individuals. benefits, and privileges provided to the Company’s practice members work and whether their work the committees, individual directors and above individuals. not compliant approved by the Board meets the Company’s needs, as well as the Board as a whole. partially of Directors on 12 compliant at making their work more active and 2. The results of the self-evaluation March 2015 (minutes identifying areas for improvement. or external evaluation of the Board No. 255). performance, conducted in the reporting not compliant 4.1.4 The Company is recommended to 1. The Company’s remuneration The term ‘other key period, were considered at the Board develop a policy on reimbursement of policy(-ies) or other internal documents managers of the meeting held in presence. expenses, which would contain a list establish(-es) the rules on the compliant Company’ is not applied 2.9.2 Performance evaluation of the Board 1. To conduct an independent of reimbursable expenses and specify reimbursement of expenses to members according to the of Directors, its Committees and Board performance evaluation, it is service levels provided to members of of the Board of Directors, executive Action Plan (roadmap) members should be conducted on a recommended to involve an outside compliant the Board of Directors, the executive bodies and other key managers of the partially on introducing the compliant regular basis, at least once a year. To party (consultant) on a regular basis, at bodies, and other key managers of the Company. Corporate Governance conduct an independent performance least once every three years. Company. Such policy can be a part of Code provisions in the evaluation, it is recommended to involve partially the company’s remuneration policy. Company’s practice an outside party (consultant) on a regular compliant not compliant approved by the Board basis, at least once every three years. of Directors on 12 March 2015 (minutes not compliant No. 255).

70 PJSC FGC UES Annual Report 2016 71 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Status Compliance Criteria Criteria Status Criteria

4.3.2 The Company has put in place a long- 1. The Company has put in place a long- Criteria 1, 2 are not observed. 4.2 The remuneration system of the Board members should ensure aligning of the directors’ financial interests with the long-term financial interests of shareholders. term incentive programme for members term incentive programme for members compliant of the Company’s executive bodies of the Company’s executive bodies 4.2.1 A fixed annual fee shall be a preferred 1. Fixed annual remuneration was the and other key managers involving the and other key managers involving the The Company does not have a form of monetary remuneration of the only monetary form of remuneration for company’s shares (options or other Company’s shares (financial instruments long-term incentive programme for compliant partially members of the its executive bodies Board members. The Company doesn’t members of the Board of Directors for derivative financial instruments the based on the Company’s shares). compliant pay a fee for participation in certain their work within the Board during the underlying assets for which are the involving the Company’s shares 2. The long-term incentive programme (financial instruments based on the meetings of the Board of Directors or its reporting period. Company’s shares). for members of the Company’s committees. partially Company’s shares). compliant executive bodies and other key not compliant The Company doesn’t use any form of managers implies that the right to sell short-term incentives and additional shares and other financial instruments financial incentives in respect of Board used under such programme will not not compliant members. arise earlier than three years from their provision. The said right should be 4.2.2 Long-term ownership of shares of the 1. If the Company’s internal This criterion is not applicable made conditional on the achievement of Company contributes most to aligning document(s) - remuneration policy(- because the Company’s compliant certain targets by the Company. the financial interests of the Board ies) provide(s) for granting shares to remuneration policy does not members with the long-term interests of members of the Board of Directors, clear provide for granting the Company 4.3.3 The amount of compensation (a 1. The amount of compensation (‘golden the Company’s shareholders. However, rules for holding shares by members shares to members of the Board of so-called ‘golden parachute’) payable parachute’) paid by the company in partially compliant it is not recommended to make the of the Board of Directors, aimed at compliant Directors. by the Company in the event of early the event of early termination of a right to dispose shares dependent encouraging long-term ownership of termination of a member of an executive member of an executive body or other on the Company’s achievement of such shares, should be available and body or other key manager at the key managers at the initiative of the certain performance results; nor should disclosed. initiative of the Company, provided that company, provided that there have partially not compliant the Board members take part in the there have been no unfair practices been no unfair practices on the part of compliant company’s option plans. on the part of such person, should not such person, did not exceed two times exceed two times the fixed portion of the fixed portion of his/her annual 4.2.3 The Company does not have any 1. The Company does not have any his/her annual remuneration. remuneration in the reporting period. not compliant additional benefits or compensation in additional benefits or compensation case of the early termination of members in case of the early termination of compliant of the Board of Directors in connection members of the Board of Directors in 5.1 The company has a sound risk management and internal control system aimed at providing reasonable assurance that the company’s goals will be achieved. with a change in control over the connection with a change in control over Company or other circumstances. the Company or other circumstances. partially 5.1.1 The Board of Directors should determine 1. Functions of various governing bodies compliant principles of and approaches to the and business units at the company establishment of the Company’s risk in the risk management and internal compliant management and internal control control system are clearly defined in not compliant system. the Company’s internal documents/ relevant policy approved by the Board of partially The system of remuneration due to members of the executive bodies and other key managers of the Company should provide that their remuneration is dependent on 4.3 Directors. compliant the Company’s performance and their personal contributions to the achievement thereof.

4.3.1 Remuneration due to members of the 1. During the reporting period, the The remuneration not compliant executive bodies and other key managers annual performance indicators approved system for members of of the Company should be set in such by the Board of Directors were used compliant the Company’s executive 5.1.2 The Company’s executive bodies should The Company’s executive bodies a way as to ensure a reasonable and to determine the amount of variable bodies is based on the create and maintain an efficient risk ensured the distribution of functions justified ratio between its fixed portion remuneration of members of executive achievement of the management and internal control system and powers related to risk management compliant and its variable portion that is dependent bodies and other key managers of the partially approved target values in the Company. and internal control among managers on the Company’s performance and Company. compliant of key performance (heads) of business units and divisions employees’ personal (individual) indicators (KPIs). accountable thereto. partially 2. During the most recent evaluation of compliant contribution to the achievement thereof. the remuneration system for members The Board of Directors not compliant of the executive bodies and other key reviews the results of managers, the Board of Directors (the target achievement, not compliant remuneration committee) made sure the and payment of Company applied an efficient ratio of remuneration according 5.1.3 The Company’s risk management and 1. The Company has approved an anti- the fixed portion of remuneration to the to the results achieved internal control system should enable corruption policy. compliant variable portion. is possible only upon one to obtain an objective, fair and 2. The Company has organised an 3. The Company has a procedure for the decision made by clear view of the current position and affordable method of informing the repaying bonuses unlawfully obtained the Board of Directors prospects of the company, integrity and Board of Directors or its audit committee to approve the relevant transparency of its accounts and reports, partially by members of the executive bodies and of any violations of legislation, internal compliant other key managers. report. and reasonableness and acceptability of procedures and the ethics code of the Thus, the possibility risks taken by the company. Company. to get remuneration not compliant unlawfully is eliminated. In addition, the results 5.1.4 The Board of Directors takes sufficient 1. In the reporting year, the Board of the Company’s measures to ensure that the existing of Directors or the audit committee KPI achievement risk management and internal control evaluated the efficiency of the compliant are reviewed by an system of the company is consistent Company’s risk management and independent auditor, with the principles of and approaches to internal control system. Information on who evaluates the its creation as set forth by the Board of the key findings of such evaluation is partially compliant achievement of Directors and that it operates efficiently. included in the Company’s annual report. indicators of the Company’s long- term development not compliant programme and submits all findings to the Board of Directors, thus mitigating the risk of manipulating the report data or other unethical practices.

72 PJSC FGC UES Annual Report 2016 73 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Compliance Criteria Status Criteria Status Criteria

For regular independent review of reliability and effectiveness of the risk management and internal control system and corporate governance practices, the Company The Company should disclose, on a timely basis, full, updated and reliable information about itself so as to enable its shareholders and investors to make informed 5.2 6.2 arranges for internal audits. decisions.

5.2.1 Internal audits are carried out by a 1. To perform internal audits, the 6.2.1 The Company should disclose 1. The company’s information policy Criterion 2 is partially not observed. separate structural unit created by company has established a separate information in accordance with the determines the approaches to, and The Company’s securities (Global compliant compliant the Company or through engaging an structural unit that performs internal principles of regularity, consistency criteria for, determining information that Depositary Receipts) are traded on the independent outside party. To ensure audit functions and reports functionally and timeliness, as well as accessibility, could have a significant influence on the London Stock Exchange. The disclosure the independence of the internal audit to the Board of Directors, or has reliability, completeness and company’s value and its securities, and partially of material information in the Russian department, it should have separate engaged an independent external partially comparability of data disclosed. the procedures that ensure the timely compliant Federation and abroad is not equivalent. lines of functional and administrative organisation subject to the same compliant disclosure of such information. The Company provides disclosures in reporting. Functionally, the internal audit reporting principle. 2. If the Company’s securities are traded department should report to the Board accordance with the requirements of the in foreign markets, equivalent material not compliant of Directors. not compliant Financial Services Authority of the UK. information was disclosed in the The FSA did not set a specific list of price 5.2.2 Internal Audit Department evaluates 1. In the reporting period, as part of an Russian Federation and in such markets sensitive information, and each issuer effectiveness of the internal control internal audit, the effectiveness of the simultaneously in the reporting period. decides whether certain information is price system and the risk management internal control and risk management compliant 3. If foreign investors hold a material sensitive. system, as well as to review corporate. system was reviewed. share in the Company’s capital, the The Company considers most corporate The Company applies generally accepted 2. The Company applies the generally Company disclosed information in announcements disclosed in accordance standards of internal auditing. partially Russian and in a commonly used foreign accepted approaches to internal control compliant with the legislation of the Russian and risk management. language in the reporting period. Federation to be not material to holders of Depositary Receipts. not compliant Thus, the Company considers the amount of information disclosed in accordance with the requirements of the UK legislation to be 6.1 The Company and its activities should be transparent for its shareholders, investors and other stakeholders. sufficient and does not plan to extend it. 6.2.2 The Company is advised against using 1. In the reporting period, the Company 6.1.1 The Company should develop and 1. The Company has approved a formalistic approach to information disclosed annual and interim IFRS implement an information policy enabling an information policy developed disclosure; it should disclose material financial statements. The Company’s compliant the Company to efficiently exchange in compliance with the Corporate compliant information on its activities, even if annual report for the reporting period information with its shareholders, Governance Code recommendations. disclosure of such information is not includes the annual IFRS financial investors and other stakeholders. 2. The Board of Directors (or one of its required by law. statements with the auditor’s opinion. partially committees) considered matters related partially compliant compliant 2. The Company discloses complete to the Company’s compliance with its information on the Company’s capital information policy at least once in the structure, according to Recommendation reporting period. not compliant not compliant 290 of the Code, in the annual report and on the Company’s website. 6.1.2 The Company should disclose The Company discloses information The Company has information on its corporate governance on its corporate governance system no information on 6.2.3 The Company’s annual report, being 1. The company’s annual report contains system and practices, including detailed and the general corporate governance compliant the availability of its one of the most important tool for the Company’s operating and financial information on compliance with the principles applied thereby, including on majority shareholder’s communication with shareholders and highlights. compliant principles and recommendations of the its corporate website. memorandum other stakeholders, should contain 2. The Company’s annual report contains Code. The Company discloses information partially concerning its information enabling one to evaluate the information on environmental and social compliant plans for corporate Company’s performance for the year. partially on the composition of its executive aspects of the Company’s business. compliant bodies and the Board of Directors, the governance in PJSC independence of Board members and FGC UES. not compliant their membership in committees of the As soon as the not compliant Board of Directors (as defined in the Company has Code). such a document 3. If there is a person who controls available, the latter 6.3 The company should provide information and documents requested by its shareholders in accordance with the principle of equal and easy access. the Company, the Company discloses will be disclosed a memorandum from the controlling in accordance 6.3.1 The exercise by the shareholders of The Company’s information policy Criterion 1 is partially not observed. person concerning that person’s with the Corporate their right to access the company’s specifies an easy procedure for plans for corporate governance at the Governance Code compliant Currently, the Information policy of the documents and information should not providing access to shareholders to Company. recommendations Company does not provide declarative be unreasonably burdensome. information, including information on the obligations of the Company regarding legal entities controlled by the Company, partially provision of information on legal entities upon the request of a shareholder. compliant controlled by the Company upon request of shareholders. At the same time, information on legal entities controlled by not compliant the Company (their businesses, contacts, composition of the governing and control bodies, annual financial indicators) is disclosed on the website of the Company and in the Company’s annual report. Information on material transactions of legal entities controlled by the Company are also disclosed in the Company’s annual report and on the website of the Company. The Company does not currently plan to amend its information policy in this regard. If a relevant request is made, information will be submitted in accordance with the legislation of the Russian Federation and internal documents of the Company.

74 PJSC FGC UES Annual Report 2016 75 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Explanations of Deviation from Corporate Explanations of Deviation from Corporate Corporate Governance Principle Compliance Corporate Governance Principle Compliance Corporate Governance Principles Governance Principles Compliance Comments Corporate Governance Principles Governance Principles Compliance Comments Compliance Criteria Compliance Criteria Status Status Criteria Criteria

6.3.2 When providing information to its 1. In the reporting period, the company 7.2.2 Rules and procedures in relation to 1. The Сompany’s internal documents Criterion 3 is not observed. shareholders, the company should did not deny shareholders’ requests material corporate actions taken by the provide for the procedure for engaging The Company’s internal documents do not compliant compliant maintain a reasonable balance between for information, or such denials were Company should be set out in its internal an independent appraiser when provide for an extended list of grounds on the interests of individual shareholders justified. documents. determining the value of property to which members of the Board of Directors, be acquired or disposed of under a and its own interests related to the fact 2. In cases specified in the company’s as well as other persons referred to in the major transaction or a related-party partially that the company is interested in keeping information policy, shareholders are partially compliant legislation, are deemed to be interested in compliant transaction. confidentiality of sensitive business informed of the confidential nature of the Company’s transactions. information that might have a material information and undertake to keep it 2. The Company’s internal documents Given the special aspects of activities of impact on its competitiveness confidential. provide for the procedure for engaging not compliant not compliant the holding structure PJSC Rosseti, which an independent appraiser for includes PJSC FGC UES, transactions with Any actions which have or may have a material effect on the Company’s share capital structure and its financial position and, accordingly, on the position of its determining a price of the company’s legal entities controlled by PJSC FGC UES 7.1 shareholders (‘material corporate actions’) should be taken on fair terms and conditions ensuring that the rights and interests of shareholders as well as other shares, repurchased or redeemed. and transactions with controlling entity of stakeholders are observed. 3. The Company’s internal documents PJSC FGC UES, PJSC Rosseti, and other 7.1.1 Material corporate actions shall be 1. The Company’s Articles of Criteria 1,2 are not partially observed. do not provide for an extended list of entities controlled by PJSC Rosseti are deemed to include reorganisation of Association specify a list of actions grounds on which members of the Board deemed to be related-party transactions. compliant The Company’s Articles of Association do the company, acquisition of 30 or more and other efforts that constitute of Directors, as well as other persons In 2016 the Company’s Board of Directors not define a concept of material corporate referred to in the legislation, are deemed percent of its voting shares (takeover), material corporate actions, and their actions. reviewed over 300 of such transaction. entering by the company into any determination criteria. Decision- to be interested in the Company’s partially However, in accordance with the applicable transactions. The expansion of grounds on which material transactions, increasing or making on material corporate actions compliant members of the Board of Directors and decreasing its share capital, listing and falls within the remit of the Board of legislation and the Company’s Articles of Association, decision making on matters other persons referred to in the legislation delisting of its shares, as well as other Directors. Where the taking of these are deemed to be interested in the actions which might result in significant corporate actions is directly referred by that relate to material corporate actions not compliant specified in Recommendation 303 of the Company’s transactions could hinder changes in rights of its shareholders law to the remit of the general meeting the activities of the Company due to the or violation of their interests. The of shareholders, the Board of Directors Code is reserved for the Board of Directors or General Meeting of Shareholders. increase in the number of transactions that Company’s Articles of Association makes the relevant recommendations to require approval. determine the list of (criteria for shareholders. When submitting for the shareholders’ identifying) transactions or other actions meeting of any matters, including material The Company does not plan to expand 2. The Company’s Articles of corporate actions, the Board of Directors the list of grounds on which members falling within the category of material Association classify as material corporate actions and provide therein provides shareholders with appropriate of the Board of Directors and other corporate actions, at least: recommendations. persons referred to in the legislation are that decisions on any such actions reorganisation of the Company, should fall within the matters reserved deemed to be interested in the Company’s acquisition of 30 or more percent of transactions. for the Company’s Board of Directors. its voting shares (takeover), entering into material transactions, increase or decrease of its share capital, listing and delisting of the Company’s shares. 7.1.2 The Board of Directors should play a key 1. The Company has a procedure role in making decisions or developing whereby independent directors declare recommendations relating to significant their position on material corporate compliant corporate actions; for that purpose, it actions prior their approval. should rely on opinions of the Company’s independent directors. partially compliant

not compliant 7.1.3 When taking any material corporate 1. The Company’s Articles of actions which would affect rights or Association, taking into account the legitimate interests of the company’s particular features of its business, compliant shareholders, equal terms and conditions established lower minimum criteria for should be ensured for all of shareholders; classifying the Company’s transactions if statutory mechanisms designed to as significant corporate actions than partially protect the shareholder rights prove to be stipulated by law. compliant insufficient for that purpose, additional 2. During the reporting period all material measures should be taken with a view corporate actions were approved before not compliant to protecting the rights and legitimate their implementation. interests of the Company’s shareholders. In such instances, the company should not only seek to comply with the formal requirements of law but should also be guided by the principles of corporate governance set out in the Code.

The Company should have in place such a procedure for taking any material corporate actions that would enable its shareholders to receive full information about such 7.2 actions in time and influence them, and that would also guarantee that the shareholder rights are observed and duly protected in the course of taking such actions.

7.2.1 Information about material corporate 1. In the reporting period, the Company actions is disclosed with explanations disclosed information on the Company’s concerning reasons for, conditions and material significant corporate actions in compliant consequences of such actions. a timely manner and in detail, including the reasons and time frame for taking of such actions. partially compliant

not compliant

76 PJSC FGC UES Annual Report 2016 77 Appendix 3 REPORT ON COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Compliance Corporate Governance Principle Explanations Report of PJSC FGC UES on compliance with the main principles of the UK Corporate Status Governance Code Section D Remuneration Report date: 30 March 2017 PJSC FGC UES, being a public Company whose securities (Global Depositary Receipts) are traded on the Main D.1. The Level and Executive directors’ remuneration should be designed to promote the long- Compliant Components of term objectives of the Company. Performance-related elements should be Market of the London Stock Exchange, applies the main principles of the UK Corporate Governance Code. Remuneration transparent, stretching and rigorously applied. D.2. Procedure There should be a formal and transparent procedure for developing policy Compliant on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his or her own Compliance Corporate Governance Principle Explanations remuneration. Status

Section А Leadership Section E Relations with shareholders

А.1. Role of the Board of Every company should be headed by the effective Board of Directors which Compliant E.1. Dialogue with There should be a dialogue with shareholders based on the mutual Compliant Directors ensures the efficient performance and bears collective responsibility for the Shareholders understanding of the Company's objectives. The Board as a whole has long-term success of the Company. responsibility for ensuring that a satisfactory dialogue with shareholders takes place. А.2. Division of There should be a clear division of responsibilities at the head of the Compliant responsibilities Company between the running of the Board and the executive responsibility E.2. Constructive Use of The Board should use general meetings to communicate with investors and Compliant for the running of the Company’s business. No individual should have General Meetings to encourage their participation in the Company's business activity. unfettered powers of decision. А.3.The Chairman The chairman is responsible for leadership of the Board and ensuring its Compliant effectiveness on all aspects of its role.

А.4.Non-Executive As part of their role as members of a unitary Board, non-executive directors Compliant Directors should constructively challenge and help to develop proposals on strategy.

Section B Efficiency

B.1.The composition of The Board and its committees should have the appropriate balance of skills, Compliant the Board of Directors experience, independence and knowledge of the Company to enable them to perform their respective duties effectively. B.2.Appointments to the There should be a formal, rigorous and transparent procedure for the Compliant Board of Directors appointment of new directors to the Board.

B.3. Commitment All directors should be able to allocate sufficient time to the company to Compliant perform their duties effectively.

B.4. Development All directors should receive induction on joining the Board when appointed Compliant as the members of the Board of Directors and should regularly update and refresh their skills and knowledge. B.5. Information and The Board should be supplied in a timely manner with information in a form Compliant Support and of a quality appropriate to enable it to perform its duties.

B.6. Evaluation The Board should undertake a formal and rigorous annual evaluation of its Compliant own performance and that of its committees and individual directors.

B.7. Re-election All directors should be submitted for re-election at regular intervals, subject to Compliant continued satisfactory performance.

Section C Accountability

C.1. Financial and The Board should present a fair, balanced and understandable assessment of Compliant Business Reporting the company’s position and prospects.

C.2. Risk Management The Board is responsible for determining the nature and extent of the Compliant and Internal Control significant risks it is willing to take in achieving its strategic objectives. The Board should maintain sound risk management and internal control systems. C.3. Audit Committee The Board should establish formal and transparent arrangements for Compliant and Auditors considering how they should apply the corporate reporting, risk management or internal control principles and for maintaining an appropriate relationship with the Company’s auditors.

78 PJSC FGC UES Annual Report 2016 79 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by Governing body that APPENDIX 4. PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction transaction (details) price*, parties to the transaction)

Information on Major Transactions 7. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes PJSC IDGC of Centre docs/01022016_protokol_SD_FSK_EES_ No. 307 of 1 February and Privolzhie N307.pdf and Transactions made by Federal Grid 2016, item No. 5) http://www.e-disclosure.ru/Event/ Print?guid=d9889a3d-10e0-43e2-b6af- Company in 2016, recognised under the laws 9f1b1e3f5dc5&source=Newsfeed 8. Consultancy agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes JSC R&D Centre docs/01022016_protokol_SD_FSK_EES_ A.A. Zaragatsky – of the Russian Federation as related party No. 307 of 1 February of FGC UES N307.pdf member of the 2016, item No. 6) http://www.e-disclosure.ru/Event/ Management Board Print?guid=d9889a3d-10e0-43e2-b6af- of PJSC FGC UES transactions, and subject to approval by the 9f1b1e3f5dc5&source=Newsfeed M.N.Pichugina – member of the Management Board of PJSC FGC UES Company’s authorised governing bodies as of the date of approval of the transaction 9. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 18.75.3253.10DS5 to Directors (minutes PJSC IDGC of Siberia docs/01022016_protokol_SD_FSK_EES_ V.M. Kravchenko – the services agreement No. 307 of 1 February N307.pdf member of the Board Information on transactions made by Federal Grid Company in 2016, recognised No.18.75.3253.10 of 12 August 2016, item No. 7) http://www.e-disclosure.ru/Event/ of Directors of PJSC 2010 Print?guid=d9889a3d-10e0-43e2-b6af- FGC UES as of the under the laws of the Russian Federation as major transactions 9f1b1e3f5dc5&source=Newsfeed date of approval of the transaction In 2016, the Company did not enter into any other transactions to which major transaction approval 10. Services agreement for temporary The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti transactions recognised by the Federal Law On Joint procedure applies pursuant to the Federal Grid’s use of spacing on supports Directors (minutes PJSC IDGC of Centre docs/01022016_protokol_SD_FSK_EES_ Stock Companies as major transactions, as well as Articles of Association. No. 307 of 1 February N307.pdf 2016, item No. 8) http://www.e-disclosure.ru/Event/ Print?guid=d9889a3d-10e0-43e2-b6af- 9f1b1e3f5dc5&source=Newsfeed 11. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Information on transactions made by Federal Grid Company in 2016, recognised Directors (minutes JSC Yeniseiskaya TGC docs/01022016_protokol_SD_FSK_EES_ S.N. Mironosetsky – No. 307 of 1 February (TGC-13) N307.pdf member of the Board under the laws of the Russian Federation as related party transactions and 2016, item No. 9) http://www.e-disclosure.ru/Event/ of Directors of PJSC Print?guid=d9889a3d-10e0-43e2-b6af- FGC UES as of the approved by the Company’s authorised governing bodies. 9f1b1e3f5dc5&source=Newsfeed date of approval of the transaction References to the information disclosed by Governing body that 12. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties Directors (minutes JSC MUS Energetiki docs/01022016_protokol_SD_FSK_EES_ material terms of the transaction (subject, transaction transaction (details) No. 307 of 1 February N307.pdf price*, parties to the transaction) 2016, item No. 10) http://www.e-disclosure.ru/Event/ 1. Supply agreement The Company’s Board of In accordance with clause 15.7 of the Provisions No. 454-P of 30 PJSC Rosseti Print?guid=d9889a3d-10e0-43e2-b6af- Directors (minutes December 2014 On disclosure of information by issuers of securities, 9f1b1e3f5dc5&source=Newsfeed No. 305 of 18 January approved by the Bank of Russia information related to terms of a 13. Agreement for the termination of The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti 2016, item No. 1) transaction, as well as its parties and beneficiaries shall not be disclosed. the premises lease contract No. Directors (minutes and PJSC Lenenergo docs/01022016_protokol_SD_FSK_EES_ 2. Supply agreement The Company’s Board of In accordance with clause 15.7 of the Provisions No. 454-P of 30 PJSC Rosseti 04/12/12-9559 of 27 November No. 307 of 1 February N307.pdf Directors (minutes December 2014 On disclosure of information by issuers of securities, 2012 2016, item No. 11) http://www.e-disclosure.ru/Event/ No. 305 of 18 January approved by the Bank of Russia information related to terms of a Print?guid=d9889a3d-10e0-43e2-b6af- 2016, item No. 3) transaction, as well as its parties and beneficiaries shall not be disclosed. 9f1b1e3f5dc5&source=Newsfeed 3. Agreement for repair and The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 14. Real estate lease contract The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti maintenance of Centralnaya OHL Directors (minutes JSIPS SakRusenergo docs/18012016_protokol_SD_FSK_EES_ M.N.Pichugina – member Directors (minutes and docs/01022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 500 kV – Enguri HPP (Kavkasioni) No. 305 of 18 January N305.pdf of the Management No. 307 of 1 February JSC Mobile Gas Turbine N307.pdf the Management Board on the territory of the Russian 2016, item No. 5) http://www.e-disclosure.ru/LentaEvent. Board of PJSC FGC UES 2016, item No. 12) Electric Power Plants http://www.e-disclosure.ru/Event/ of PJSC FGC UES Federation aspx?eventid=A-A1YNRiieUuohOvVgiiyjw-B- as of the date of approval Print?guid=d9889a3d-10e0-43e2-b6af- B&print=true#event of the transaction 9f1b1e3f5dc5&source=Newsfeed 4. Loan agreement The Company’s Board of In accordance with clause 15.7 of the Provisions No. 454-P of 30 PJSC Rosseti 15. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes December 2014 On disclosure of information by issuers of securities, V.P. Dikoy – member of Directors (minutes PJSC IDGC Ural docs/01022016_protokol_SD_FSK_EES_ No. 30 of 28 January approved by the Bank of Russia information related to terms of a the Management Board No. 307 of 1 February N307.pdf 2016, item No. 1) transaction, as well as its parties and beneficiaries shall not be disclosed. of PJSC FGC UES 2016, item No. 13) http://www.e-disclosure.ru/Event/ Print?guid=d9889a3d-10e0-43e2-b6af- 5. Agreement on modernisation The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 9f1b1e3f5dc5&source=Newsfeed of automated measuring and Directors (minutes IT Energy Service LLC docs/01022016_protokol_SD_FSK_EES_ information system for electricity No. 307 of 1 February N307.pdf 16. Agreement for the termination of The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti fiscal metering with respect 2016, item No. 2) http://www.e-disclosure.ru/Event/ contract No. 527 of 20 May 2009 Directors (minutes and JSC MUS Energetiki docs/01022016_protokol_SD_FSK_EES_ to collecting reference data of Print?guid=d9889a3d-10e0-43e2-b6af- No. 307 of 1 February N307.pdf measurement points 9f1b1e3f5dc5&source=Newsfeed 2016, item No. 14) http://www.e-disclosure.ru/Event/ Print?guid=d9889a3d-10e0-43e2-b6af- 6. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 9f1b1e3f5dc5&source=Newsfeed Directors (minutes JSC MUS Energetiki docs/01022016_protokol_SD_FSK_EES_ No. 307 of 1 February N307.pdf 17. Agreement on development of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 2016, item No. 4) http://www.e-disclosure.ru/Event/ automated information system Directors (minutes IT Energy Service, LLC docs/01022016_protokol_SD_FSK_EES_ Print?guid=d9889a3d-10e0-43e2-b6af- for metrological support of No. 307 of 1 February N307.pdf 9f1b1e3f5dc5&source=Newsfeed automated measuring and 2016, item No. 15) http://www.e-disclosure.ru/Event/ information system for electric Print?guid=d9889a3d-10e0-43e2-b6af- power fiscal metering of PJSC 9f1b1e3f5dc5&source=Newsfeed FGC UES (AIS Metrology) * The price of disposed or acquired property or services shall be determined by the Board of Directors of the Company based on market value and in accordance with Article 77 of the Federal Law “On Joint Stock Companies”

80 PJSC FGC UES Annual Report 2016 81 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by Governing body that References to the information disclosed by PJSC FGC UES in the Internet, comprising the Related party (-ies) to the Governing body that No. Transaction description resolved to approve the Transaction parties PJSC FGC UES in the Internet, comprising the Related party (-ies) to the material terms of the transaction (subject, transaction No. Transaction description resolved to approve the Transaction parties transaction (details) material terms of the transaction (subject, transaction price*, parties to the transaction) transaction (details) price*, parties to the transaction) 18. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 28. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes JSC MUS Energetiki docs/01022016_protokol_SD_FSK_EES_ to the agreement No. 11-SUID of Directors (minutes JSC Electrosetservice docs/29022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of No. 307 of 1 February N307.pdf 29 March 2003 for performance No. 309 of 29 February UNEG N309.pdf the Management Board 2016, item No. 16) http://www.e-disclosure.ru/Event/ of works under the title: Supply 2016, item No. 3) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES Print?guid=d9889a3d-10e0-43e2-b6af- of equipment, execution of aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- 9f1b1e3f5dc5&source=Newsfeed construction, installation and B-B&print=true#event 19. Supplementary agreement No. 2 The Company’s Board of PJSC IDGC of Centre and http://www.fsk-ees.ru/upload/ PJSC Rosseti commissioning works on complex to the real estate lease contract Directors (minutes Privolzhie and docs/01022016_protokol_SD_FSK_EES_ replacement of ТТ 110-750 kV at No. 5216/14-0004 of 1 September No. 307 of 1 February PJSC FGC UES N307.pdf the facilities of MES Volga. 2014 2016, item No. 17) http://www.e-disclosure.ru/Event/ 29. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Print?guid=d9889a3d-10e0-43e2-b6af- No. 2 to the agreement No. 94 of Directors (minutes JSC Electrosetservice docs/29022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 9f1b1e3f5dc5&source=Newsfeed 18 March 2013 for performance No. 309 of 29 February UNEG N309.pdf the Management Board 20. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of design, engineering, 2016, item No. 4) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES Directors (minutes JSC MUS Energetiki docs/01022016_protokol_SD_FSK_EES_ construction, installation and aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- No. 307 of 1 February N307.pdf commissioning works, and supply B-B&print=true#event 2016, item No. 18) http://www.e-disclosure.ru/Event/ of equipment for replacement of Print?guid=d9889a3d-10e0-43e2-b6af- 220 kV transformers at SS 220 kV 9f1b1e3f5dc5&source=Newsfeed Fevralskaya. 21. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 30. Supplementary agreement The Company’s Board of JSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 17 to the service agreement Directors (minutes JSC MUS Energetiki docs/01022016_protokol_SD_FSK_EES_ No. 1 of December 20, 2013 to the Directors (minutes JSTyumenenergo docs/29022016_protokol_SD_FSK_EES_ No. 923 for providing No. 307 of 1 February N307.pdf agreement No. М8/59/69 of No. 309 of 29 February N309.pdf communication channels 2016, item No. 19) http://www.e-disclosure.ru/Event/ 22 December 2011 for 2016, item No. 5) http://www.e-disclosure.ru/LentaEvent. of 1 March 2006 Print?guid=d9889a3d-10e0-43e2-b6af- reconstruction of OHL-500 kV aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- 9f1b1e3f5dc5&source=Newsfeed Somkinskaya – Magistralnaya. B-B&print=true#event 22. Supplementary agreement The Company’s Board of In accordance with clause 15.7 of the Provisions No. 454-P of 30 PJSC Rosseti 31. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 2 to the agreement Directors (minutes December 2014 On disclosure of information by issuers of securities No. 8 to the agreement Directors (minutes JSC Electrosetservice docs/29022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of 27 March 2015 unnumbered No. 308 of 12 February approved by the Bank of Russia, information related to terms of a No. 05/13 of 5 March 2013 No. 309 of 29 February UNEG N309.pdf the Management Board 2016, item No. 1) transaction, as well as its parties and beneficiaries shall not be disclosed. for repair, maintenance and 2016, item No. 6) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES diagnostic inspection of electric aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- 23. Service agreement for arranging The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti, grid facilities B-B&print=true#event operation and development Directors (minutes PJSC Rosseti docs/12022016_protokol_SD_FSK_EES_ A.A. Demin, O.M.Budargin of electric grid complex No. 308 of 12 February N308.pdf and A.E. Murov – 32. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 2315 of September 30, 2014 2016, item No. 3) http://www.e-disclosure.ru/LentaEvent. members of the Board No. 1 to the agreement Directors (minutes JSC Electrosetservice docs/29022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of (prolongation) aspx?eventid=-ARh7VdFOZ0aIpGT- of Directors of PJSC FGC No. 036-14/SUID of 10 October No. 309 of 29 February UNEG N309.pdf the Management Board CBH01xA-B-B&print=true#event UES S.I. Shmatko – 2014 for development of design 2016, item No. 7) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES member of the Board and working documentation, aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- of Directors as of the supply of material and technical B-B&print=true#event date of approval of the resources and equipment, transaction construction and installation and commissioning works under the 24. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti title: Replacement of 27 km of to accident and illness insurance Directors (minutes JSC SOGAZ docs/12022016_protokol_SD_FSK_EES_ A.E. Murov, A.V. Vasiliev, the defective ground wire on the contract No. 15LA0207 No. 308 of 12 February N308.pdf V.P. Dikoy, section of supports No. 187-221 of 1 December, 2015 2016, item No. 5) http://www.e-disclosure.ru/LentaEvent. A.A. Zaragatsky, of 500 kV Kirillovskaya – aspx?eventid=-ARh7VdFOZ0aIpGT- N.I. Pozdnyakov, Kholmogorskaya OHL CBH01xA-B-B&print=true#event M.G. Tikhonova – members of the 33. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Management Board of services of operational control of Directors (minutes JSC MUS Energetiki docs/29022016_protokol_SD_FSK_EES_ PJSC FGC UES DCS and communication systems No. 309 of 29 February N309.pdf V.A. Goncharov, for the needs of the Federal Grid’s 2016, item No. 8) http://www.e-disclosure.ru/LentaEvent. M.N. Pichugina, branch– MES Siberia aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- D.L. Shishkin – members B-B&print=true#event of the Management 34. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Board of PJSC FGC UES services for making and issuing Directors (minutes IT Energy Service, LLC docs/29022016_protokol_SD_FSK_EES_ as of the date of approval of electronic signature verification No. 309 of 29 February N309.pdf of the transaction key certificates 2016, item No. 9) http://www.e-disclosure.ru/LentaEvent. 25. Supplementary agreement No. 6 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- to lease contract No. АТ-1 Directors (minutes JSC Electrosetservice docs/12022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of B-B&print=true#event of 1 January 2012 No. 308 of 12 February UNEG N308.pdf the Management Board 35. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 2016, item No. 7) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES No. 5 to the agreement No. 117 Directors (minutes JSC MUS Energetiki docs/29022016_protokol_SD_FSK_EES_ aspx?eventid=-ARh7VdFOZ0aIpGT- of 1 July 2010 for maintenance of No. 309 of 29 February N309.pdf CBH01xA-B-B&print=true#event ESUCCN 2016, item No. 10) http://www.e-disclosure.ru/LentaEvent. 26. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- No. 7 to the agreement No. 06/13 Directors (minutes JSC Electrosetservice docs/12022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of B-B&print=true#event of 18 February 2013 on repairs, No. 308 of 12 February UNEG N308.pdf the Management Board 36. Agreement for operations support The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti troubleshooting of equipment and 2016, item No. 9) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES and maintenance of equipment Directors (minutes PJSC Lenenergo docs/29022016_protokol_SD_FSK_EES_ targeted programmes for the SS aspx?eventid=-ARh7VdFOZ0aIpGT- No. 309 of 29 February N309.pdf and OHL of MES Western Siberia CBH01xA-B-B&print=true#event 2016, item No. 11) http://www.e-disclosure.ru/LentaEvent. 27. Real estate lease contract, The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- concluded for a new period Directors (minutes JSC MUS Energetiki docs/12022016_protokol_SD_FSK_EES_ B-B&print=true#event No. 308 of 12 February N308.pdf 37. Agreement for operations support The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 2016, item No. 10) http://www.e-disclosure.ru/LentaEvent. and maintenance of equipment Directors (minutes PJSC Lenenergo docs/29022016_protokol_SD_FSK_EES_ aspx?eventid=-ARh7VdFOZ0aIpGT- No. 309 of 29 February N309.pdf CBH01xA-B-B&print=true#event 2016, item No. 12) http://www.e-disclosure.ru/LentaEvent. aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- B-B&print=true#event

82 PJSC FGC UES Annual Report 2016 83 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

38. Agreement on the termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 44. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti contracts for maintenance and Directors (minutes JSC R&D Centre of FGC docs/29022016_protokol_SD_FSK_EES_ A.A. Zaragatsky – to lease contract No. 29-12/01-15 Directors (minutes JSC “MUS Energetiki” docs/29022016_protokol_SD_FSK_EES_ technical support of information No. 309 of 29 February UES N309.pdf member of the of 27 May 2015 No. 309 of 29 February N309.pdf systems No. 290964, No. 290475 2016, item No. 13) http://www.e-disclosure.ru/LentaEvent. Management Board 2016, item No. 19) http://www.e-disclosure.ru/LentaEvent. and No. 290546 of 27 November aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- of PJSC FGC UES aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- 2013 B-B&print=true#event M.N.Pichugina – member B-B&print=true#event of the Management 45. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Board of PJSC FGC UES to the contractor agreement No. Directors (minutes JSC Electrosetservice docs/29022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of as of the date of approval 007-15/SUID for the supply of No. 309 of 29 February UNEG N309.pdf the Management Board of the transaction material and technical resources 2016, item No. 20) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES 39. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti and equipment, construction and aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- to lease contract No. 347337 of Directors (minutes JSYantarenergo docs/29022016_protokol_SD_FSK_EES_ M.A. Kolesnikov – installation and commissioning B-B&print=true#event 2 September 2012 No. 309 of 29 February N309.pdf member of the Board works under the title: Expansion 2016, item No. 14) http://www.e-disclosure.ru/LentaEvent. of Directors of PJSC of Kirillovskaya ORU 110 kV SS aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- FGC UES as of the 220 kV on two linear cells B-B&print=true#event date of approval of the 46. Movable property lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti transaction Directors (minutes JSCIUS UES docs/29022016_protokol_SD_FSK_EES_ N.I. Pozdnyakov – 40. Supplementary agreement No.1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 309 of 29 February N309.pdf member of the vto the agreement Directors (minutes JSC Electrosetservice docs/29022016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 2016, item No. 21) http://www.e-disclosure.ru/LentaEvent. Management Board of No. 016-14/SUID of 27 June No. 309 of 29 February UNEG N309.pdf the Management Board aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- PJSC FGC UES, General 2014 for development of design 2016, item No. 15) http://www.e-disclosure.ru/LentaEvent. of PJSC FGC UES B-B&print=true#event Director of JSC CIUS UES and working documentation, aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- D.L. Shishkin – member supply of material and technical B-B&print=true#event of the Management resources and equipment, Board of PJSC FGC as of construction and installation and the date of approval of commissioning works under the the transaction title: Reconstruction of Urengoi – 47. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES, http://www.fsk-ees.ru/upload/ PJSC Rosseti Pangody (Nadym) OHL 220 kV to the agreement No. 2-80/D for Directors (minutes JSC Chitatekhenergo docs/29022016_protokol_SD_FSK_EES_ and the Kirillovskaya - Kholmogory the provision of optical fiber No. 309 of 29 February and N309.pdf OHL 500 kV (installation / of 25 April 2013 2016, item No. 22) PJSC Rostelecom http://www.e-disclosure.ru/LentaEvent. replacement of ground wire) for aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- the needs of B-B&print=true#event JSC UES FGC branch – MES Western Siberia 48. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes JSC DESP docs/03032016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 41. Supplementary agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 310 of 3 March 2016, N310.pdf the Management Board to the premises lease agreement Directors (minutes JSCIUS UES docs/29022016_protokol_SD_FSK_EES_ N.I. Pozdnyakov item No. 8.1.) http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES No.1986/С of May 23, 2012 No. 309 of 29 February N309.pdf – member of the x?eventid=bLD7fC9Xt0mmPhZ3EUzhlQ-B- 2016, item No. 16) http://www.e-disclosure.ru/LentaEvent. Management Board of B&print=true#event aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- PJSC FGC UES, General B-B&print=true#event Director of JSC CIUS UES 49. Property custody agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti D.L. Shishkin – member Directors (minutes JSC DESP docs/03032016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of the Management No. 310 of 3 March 2016, N310.pdf the Management Board Board of PJSC FGC as of item No. 8.2.) http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES the date of approval of x?eventid=bLD7fC9Xt0mmPhZ3EUzhlQ-B- the transaction B&print=true#event 42. Liability insurance contract of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 50. Additional agreement No. 3 to The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti members of the Management Directors (minutes The winner of open docs/29022016_protokol_SD_FSK_EES_ A.E. Murov, the agreement No. 42/2012-02 Directors (minutes IT Energy Service LLC docs/14032016_protokol_SD_FSK_EES_ Board, Chairman of the No. 309 of 29 February competitive procurement N309.pdf A.V. Vasiliev, V.P. Dikoy, of December 27, 2012 for the No. 311 of 14 March N311.pdf Management Board, First Deputy 2016, item No. 17) procedures http://www.e-disclosure.ru/LentaEvent. A.A. Zaragatsky, provision of telecommunications 2016, item No. 5) http://www.e-disclosure.ru/LentaEvent. Chairmen of the Management aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- N.I. Pozdnyakov, services and hardware aspx?eventid=HK-CjZLpKC06utjWRC3oLOw- Board, Deputy Chairmen of the B-B&print=true#event M.G. Tikhonova – maintenance of the LAN B-B&print=true#event Management Board and Chief members of the infrastructure of PJSC FGC UES Accountant of PJSC FGC UES Management Board of PJSC FGC UES 51. Agreements classified as related The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti V.A. Goncharov, transactions Directors (minutes JSC ENIN docs/14032016_protokol_SD_FSK_EES_ M.N. Pichugina, No. 311 of 14 March N311.pdf D.L. Shishkin – members 2016, item No. 6) http://www.e-disclosure.ru/LentaEvent. of the Management aspx?eventid=HK-CjZLpKC06utjWRC3oLOw- Board of PJSC FGC UES B-B&print=true#event as of the date of approval 52. Agreeement No. М1-NK- The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of the transaction PIR-358/2013 of 19 July, 2013 Directors (minutes JSC R&D Centre of docs/14032016_protokol SD_FSK_EES_ A.A. Zaragatsky – 43. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti for performing design documents No. 311 of 14 March FGC UES N311.pdf member of the No. 8 to the agreement Directors (minutes JSC SO UES docs/29022016_protokol_SD_FSK_EES_ A.E. Murov – member of under the title: SS 220 kV 2016, item No. 8) http://www.e-disclosure.ru/LentaEvent. Management Board No. 159517 on the use of No. 309 of 29 February N309.pdf the Board of Directors of Andreanovskaya (Reconstruction aspx?eventid=HK-CjZLpKC06utjWRC3oLOw- of PJSC FGC UES standards of organizations 2016, item No. 18) http://www.e-disclosure.ru/LentaEvent. PJSC FGC UES, Chairman and equipment replacement, B-B&print=true#event M.N.Pichugina – member of May 23, 2011 aspx?eventid=dJT5ncGnZEWiC2Mv1-A9Ieg- of the Management including OD and SC) of the Management B-B&print=true#event Board of PJSC FGC UES Board of PJSC FGC UES M.S. Bystrov and as of the date of approval V.M. Kravchenko – of the transaction members of the Board 53. Supplementary agreement No. 7 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of Directors of PJSC to the agreement Directors (minutes JSC Chitatekhenergo docs/14032016_protokol_SD_FSK_EES_ FGC UES as of the No. 0817/10-V of 1 January No. 311 of 14 March N311.pdf date of approval of the 2011 for maintenance and repair 2016, item No. 9) http://www.e-disclosure.ru/LentaEvent. transaction. of ground wire in the area from aspx?eventid=HK-CjZLpKC06utjWRC3oLOw- support No. 1 OHL-220 kV KS-33, B-B&print=true#event UD-32 – to support No. 252 BD-75 220 kV OHL

84 PJSC FGC UES Annual Report 2016 85 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

54. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 62. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes JSC Tyumenenergo docs/14032016_protokol_SD_FSK_EES_ to the agreement No. 151602 of Directors (minutes JSC R&D Centre docs/28032016_protokol_SD_FSK_EES_ A.A. Zaragatsky No. 311 of 14 March N311.pdf April 03, 2015 for the development No. 312 of 28 March of FGC UES N312.pdf – member of the 2016, item No. 10) http://www.e-disclosure.ru/LentaEvent. of design and procurement 2016, item No. 7) http://www.e-disclosure.ru/LentaEvent.asp Management Board aspx?eventid=HK-CjZLpKC06utjWRC3oLOw- documents under the title: x?eventid=MaMjfalMNk6aBAodQhumaA-B- of PJSC FGC UES B-B&print=true#event OHL 750 kV Leningradskaya – B&print=true#event M.N.Pichugina – member Belozerskaya of the Management 55. Agreement for termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Board of PJSC FGC UES contract No. I-23-1EK/13 Directors (minutes JSC R&D Centre docs/14032016_protokol_SD_FSK_EES_ A.A. Zaragatsky – as of the date of approval of 28 December 2013 No.311 of 14 March of FGC UES N311.pdf member of the of the transaction 2016, item No.12) http://www.e-disclosure.ru/LentaEvent. Management Board aspx?eventid=HK-CjZLpKC06utjWRC3oLOw- of PJSC FGC UES 63. Agreement for development of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti B-B&print=true#event M.N.Pichugina – member design and estimate documents Directors (minutes JSC R&D Centre docs/28032016_protokol_SD_FSK_EES_ A.A. Zaragatsky – of the Management under the title: Technological No. 312 of 28 March of FGC UES N312.pdf member of the Board of PJSC FGC UES connection of power facilities 2016, item No. 8) http://www.e-disclosure.ru/LentaEvent.asp Management Board as of the date of approval of PJSC RusHydro branch – x?eventid=MaMjfalMNk6aBAodQhumaA-B- of PJSC FGC UES of the transaction Volzhskaya HPP – to electric B&print=true#event M.N.Pichugina – member grids of PJSC FGC UES (design of the Management 56. Real estate lease contract The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti and exploration works) Board of PJSC FGC UES Directors (minutes and PJSC RusHydro docs/14032016_protokol_SD_FSK_EES_ N.G. Shulginov, as of the date of approval No. 311 of 14 March N311.pdf V.M. Kravchenko, of the transaction 2016, item No. 13) http://www.e-disclosure.ru/LentaEvent. M.S. Bystrov – members aspx?eventid=HK-CjZLpKC06utjWRC3oLOw- of the Board of Directors 64. Agreement for the set of works The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti B-B&print=true#event of PJSC FGC UES as of on installation of voltage Directors (minutes JSC R&D Centre docs/28032016_protokol_SD_FSK_EES_ A.A. Zaragatsky – the date of approval of conversion and regulation units No. 312 of 28 March of FGC UES N312.pdf member of the the transaction under the title: Creation of the 2016, item No. 9) http://www.e-disclosure.ru/LentaEvent.asp Management Board interconnection at x?eventid=MaMjfalMNk6aBAodQhumaA-B- of PJSC FGC UES 57. Agreement for the development of The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti v220 kV between UES of Siberia B&print=true#event M.N.Pichugina – member basic technical solutions, design, Directors (minutes and JSC R&D Centre of docs/28032016_protokol_SD_FSK_EES_ A.A. Zaragatsky – and UES of East on the basis of the Management technical and procurement No. 312 of 28 March FGC UES N312.pdf member of the of the Zabaikalskaya converter Board of PJSC FGC UES documentation under the title: 2016, item No. 1) http://www.e-disclosure.ru/LentaEvent.asp Management Board system on Mogocha SS 220 kV, as of the date of approval Construction of double-circuit x?eventid=MaMjfalMNk6aBAodQhumaA-B- of PJSC FGC UES for the needs of PJSC FGC UES, of the transaction OHL 220 kV B&print=true#event M.N.Pichugina – MES Siberia branch Tira – Nadezhdinskaya member of the Management Board of 65. Agreement for the performance The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti PJSC FGC UES as of the of research, design, experimental, Directors (minutes JSC R&D Centre docs/28032016_protokol_SD_FSK_EES_ A.A. Zaragatsky – date of approval of the and process works No. 312 of 28 March of FGC UES N312.pdf member of the transaction 2016, item No. 10) http://www.e-disclosure.ru/LentaEvent.asp Management Board x?eventid=MaMjfalMNk6aBAodQhumaA-B- of PJSC FGC UES 58. Agreement for the performance The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti B&print=true#event M.N.Pichugina – member of research, design, experimental, Directors (minutes JSC R&D Centre docs/28032016_protokol_SD_FSK_EES_ A.A. Zaragatsky – member of the Management and process works related to: No. 312 of 28 March of FGC UES, CJSC N312.pdf of the Management Board Board of PJSC FGC UES Development of the software and 2016, item No. 2) Technical Inspection http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES as of the date of approval hardware complex for optimizing UES, PJSC Institute x?eventid=MaMjfalMNk6aBAodQhumaA-B- of the transaction the circuit and technical solutions ENERGOSETPROEKT B&print=true#event M.N.Pichugina – member taking into account the hardware of the Management Board 66. Supplementary Agreement No. 3 The Company’s Board PJSC FGC UES, http://www.fsk-ees.ru/upload/ PJSC Rosseti and facility reliability indicators of PJSC FGC UES as of to the Contract No. 58/13 of of Directors (minutes JSC Electrosetservice docs/28032016_protokol_SD_FSK_EES_ V.P. Dikoy – member of the date of approval of the 15 May 2013 for electric No. 312 of 28 March UNEG, and N312.pdf the Management Board transaction equipment maintenance 2016, item No. 12) JSC Electrozavod http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES (trilateral) x?eventid=MaMjfalMNk6aBAodQhumaA-B- B&print=true#event 59. Agreement for the development The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of design and working documents Directors (minutes JSC R&D Centre of FGC docs/28032016_protokol_SD_FSK_EES_ A.A. Zaragatsky – 67. Supplementary agreement No. 2 The Company’s Board PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti under the title: SS 500 kV Ust-Kut No. 312 of 28 March UES N312.pdf member of the to the lease agreement No.TSO-1 of Directors (minutes PJSC IDGC Ural docs/28032016_protokol_SD_FSK_EES_ with feeders of OHL 500 kV and 2016, item No. 3) http://www.e-disclosure.ru/LentaEvent.asp Management Board of 28 February 2015 for electric No. 312 of 28 March N312.pdf 220 kV x?eventid=MaMjfalMNk6aBAodQhumaA-B- of PJSC FGC UES grid facilities 2016, item No. 13) http://www.e-disclosure.ru/LentaEvent.asp B&print=true#event M.N.Pichugina – member x?eventid=MaMjfalMNk6aBAodQhumaA-B- of the Management B&print=true#event Board of PJSC FGC UES 68. Supplementary agreement The Company’s Board PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti as of the date of approval No. 7 to the agreement No. 06/13 of Directors (minutes JSC Electrosetservice docs/28032016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of the transaction of 18 February 2013 on repairs, No. 312 of 28 March UNEG N312.pdf the Management Board 60. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti troubleshooting of equipment and 2016, item No. 14) http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES No. 1 to the agreement No. 551 of Directors (minutes JSC Electrosetservice docs/28032016_protokol_SD_FSK_EES_ V.P. Dikoy – member of targeted programmes for the SS x?eventid=MaMjfalMNk6aBAodQhumaA-B- 15 July 2015 for the amendment No. 312 of 28 March UNEG N312.pdf the Management Board and OHL of MES Western Siberia B&print=true#event of working documentation, 2016, item No. 4) http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES 69. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti construction and installation x?eventid=MaMjfalMNk6aBAodQhumaA-B- No. 8 to the agreement No. 04/13 Directors (minutes JSC Electrosetservice docs/28032016_protokol_SD_FSK_EES_ V.P. Dikoy – member of and commissioning works B&print=true#event of 11 March 2013 for repair, No. 312 of 28 March UNEG N312.pdf the Management Board for improving lighting-surge maintenance and diagnostic 2016, item No. 15) http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES proofness at OHL 220 kV inspection of electric grid facilities x?eventid=MaMjfalMNk6aBAodQhumaA-B- Urgal –Eterkan (L-280) B&print=true#event 61. Supplementary agreement The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti 70. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 2 to the agreement No. 31 Directors (minutes and RNC CIGRE docs/28032016_protokol_SD_FSK_EES_ A.E. Murov – member of No. 9 to the agreement Directors (minutes JSC Electrosetservice docs/28032016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of 24 June 2005 on membership No. 312 of 28 March N312.pdf the Board of Directors of No. 05/13 of 5 March, 2013 No. 312 of 28 March UNEG N312.pdf the Management Board in the non-profit partnership – 2016, item No. 5) http://www.e-disclosure.ru/LentaEvent.asp PJSC FGC UES, Chairman for repair, maintenance and 2016, item No. 16) http://www.e-disclosure.ru/LentaEvent.asp of PJSC FGC UES The Russian National Committee x?eventid=MaMjfalMNk6aBAodQhumaA-B- of the Management diagnostic inspection of electric x?eventid=MaMjfalMNk6aBAodQhumaA-B- of the International Council on B&print=true#event Board of PJSC FGC UES grid facilities B&print=true#event Large Electric Systems 71. Supplementary agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti to the agreement No. 671 of 26 Directors (minutes JSC MUS Energetiki docs/28032016_protokol_SD_FSK_EES_ October 2009 for the provision of No. 312 of 28 March N312.pdf services for maintenance of of 2016, item No. 17) http://www.e-disclosure.ru/LentaEvent.asp equipment of ESUCCN (3rd stage) x?eventid=MaMjfalMNk6aBAodQhumaA-B- B&print=true#event

86 PJSC FGC UES Annual Report 2016 87 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

72. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 85. Agreement for termination The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 2 to the agreement No. 409 Directors (minutes JSC MUS Energetiki docs/04042016_protokol_SD_FSK_EES_ of contract No. 24/1 of 26 Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of 1 April 2014 for operation and No. 313 of 4 April 2016, N313.pdf March 2014 on replacement of No. 313 of 4 April 2016, UNEG N313.pdf the Management Board maintenance of DTCN equipment item No. 2) http://www.e-disclosure.ru/portal/event.asp reinforced concrete supports item No. 15) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES of ESUPCN of JSC FGC UES x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B 86. Agreement for the termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti the real property lease contract of Directors (minutes JSC MUS Energetiki docs/04042016_protokol_SD_FSK_EES_ 30 June 2014 No. 00000319147 No. 313 of 4 April 2016, N313.pdf 73. Agreement for the termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti item No. 16) http://www.e-disclosure.ru/portal/event.asp the real property lease contract Directors (minutes JSC Chitatekhenergo docs/04042016_protokol_SD_FSK_EES_ x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B No. 000000300046 of 27 January No. 313 of 4 April 2016, N313.pdf 2014 item No. 3) http://www.e-disclosure.ru/portal/event.asp 87. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B Directors (minutes JSTyumenenergo docs/04042016_protokol_SD_FSK_EES_ No. 313 of 4 April 2016, N313.pdf 74. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti item No. 18) http://www.e-disclosure.ru/portal/event.asp No. 6 to the agreement No. 02/13 Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B of 15 February 2013 for repair, No. 313 of 4 April 2016, UNEG N313.pdf the Management Board maintenance and diagnostic item No. 4) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES 88. Agreement for service for the The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti inspection of electric grid x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B organisation of work of control Directors (minutes JSC MUS Energetiki docs/04042016_protokol_SD_FSK_EES_ facilities center and monitoring the No. 313 of 4 April 2016, N313.pdf telecommunications network of item No. 19) http://www.e-disclosure.ru/portal/event.asp 75. Supplementary agreement No. 4 The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti MES Volga x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B to the agreement No. 56/13 of 14 Directors (minutes docs/04042016_protokol_SD_FSK_EES_N313. V.P. Dikoy – member of JSC Elektrosetservis 89. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti June 2013 for electric equipment No. 313 of 4 April 2016, UNEG pdf the Management Board maintenance (trilateral) item No. 5) of PJSC FGC UES Directors (minutes JSC Chitatekhenergo docs/04042016_protokol_SD_FSK_EES_ JSC Electrozavod http://www.e-disclosure.ru/portal/event.aspx? No. 313 of 4 April 2016, N313.pdf EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B item No. 20) http://www.e-disclosure.ru/portal/event.asp x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B 76. Agreement for operation and The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 90. Supplementary agreement No. 4 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti maintenance of dispatch control Directors (minutes JSC MUS Energetiki docs/04042016_protokol_SD_FSK_EES_ to the agreement No. 10/13 of 28 Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of system for 2016 No. 313 of 4 April 2016, N313.pdf December 2012 on performing No. 313 of 4 April 2016, UNEG N313.pdf the Management Board item No. 6) http://www.e-disclosure.ru/portal/event.asp emergency recovery works item No. 22) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B 77. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 91. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti services of operational control of Directors (minutes JSC MUS Energetiki docs/04042016_protokol_SD_FSK_EES_ No. 5 to the agreement No. 08/13 Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of DCS and communication systems No. 313 of 4 April 2016, N313.pdf of 15 February 2013 for repair, No. 313 of 4 April 2016, UNEG N313.pdf the Management Board for the needs of the Federal Grid’s item No. 7) http://www.e-disclosure.ru/portal/event.asp maintenance and diagnostic item No. 23) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES branch – MES Siberia x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B inspection of electric grid facilities x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B 78. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 92. Agreement for termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 5 to the agreement No. 07/13 Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of contract No. 3397 of 28 July Directors (minutes JSC R&D Centre docs/15042016_protokol_SD_FSK_EES_ A.A. Zaragatsky – of 13 March 2013 for repair, No. 313 of 4 April 2016, UNEG N313.pdf the Management Board 2014 on development of design No. 316 of 15 April 2016, v of FGC UES N316.pdf member of the maintenance and diagnostic item No. 8) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES and technical part of tender item No. 2) http://www.e-disclosure.ru/portal/ Management Board inspection of electric grid x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B documentation for the project: event.aspx?EventId=f5yvQEP4-AE-Cf- of PJSC FGC UES facilities Reconstruction of Zhireken AEGFxEDCOQ-B-B M.N.Pichugina – member SS 220 kV. Installation of the of the Management 79. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti controlled shunt reactor Board of PJSC FGC UES No. 3 to the agreement Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of as of the date of approval No. 51/13 of 14 June 2013 for No. 313 of 4 April 2016, UNEG JSC Electrozavod N313.pdf the Management Board of the transaction electric equipment maintenance item No. 9) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES (trilateral) x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B 93. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 2 to the contractor agreement Directors (minutes JSC Elektrosetservis docs/15042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 80. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of 18 January 2012 No. 203 for No. 316 of 15 April 2016, UNEG N316.pdf the Management Board No. 5 to the agreement Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of performance of works under the item No. 3) http://www.e-disclosure.ru/portal/ of PJSC FGC UES No. 03/13 of 15 February 2013 for No. 313 of 4 April 2016, UNEG N313.pdf the Management Board title: Reconstruction of event.aspx?EventId=f5yvQEP4-AE-Cf- repair and diagnostic scanning of item No. 10) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES 330 kV Baksan SS. Replacement AEGFxEDCOQ-B-B electric grid facilities (for target x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B of rectifier device for ice melting programmes, financed under the and setting ice load control points main activity) at Baksan – Nalchik OHL 330-30 81. Supplementary agreement No. 4 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti for ice melting at wires and to the agreement of 1 May 2013 Directors (minutes JSC Elektrosetservis docs/04042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of cables) No. 53/13 for electrical equipment No. 313 of of 4 April UNEG JSC Electrozavod N313.pdf the Management Board 94. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti service maintenance 2016, item No. 11) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES No. 4 to the agreement No. 01/13 Directors (minutes JSC Elektrosetservis docs/15042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B of 15 February 2013 for repair, No. 316 of 15 April 2016, UNEG N316.pdf the Management Board 82. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 83. maintenance and diagnostic item No. 4) http://www.e-disclosure.ru/portal/ of PJSC FGC UES telecommunications services and Directors (minutes IT Energy Service, LLC docs/04042016_protokol_SD_FSK_EES_ inspection of electric grid facilities event.aspx?EventId=f5yvQEP4-AE-Cf- hardware maintenance of the LAN No. 313 of 4 April 2016, N313.pdf AEGFxEDCOQ-B-B infrastructure of PJSC FGC UES item No. 12) http://www.e-disclosure.ru/portal/event.asp 95. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B to the real property lease contract Directors (minutes PJSC IDGC Ural docs/15042016_protokol_SD_FSK_EES_ 84. Agreement for information and The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 4062 of 26 February 2013 No. 316 of 15 April 2016, N316.pdf telecommunication support of the Directors (minutes JSC MUS Energetiki docs/04042016_protokol_SD_FSK_EES_ item No. 6) http://www.e-disclosure.ru/portal/ Situation Analysis Centre of PJSC No. 313 of 4 April 2016, N313.pdf event.aspx?EventId=f5yvQEP4-AE-Cf- FGC UES and support of meetings item No. 14) http://www.e-disclosure.ru/portal/event.asp AEGFxEDCOQ-B-B of the Headquarters of the electric x?EventId=kqpkjVKKQkKVrgkRacDFVQ-B-B 96. Real property lease contract (with The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti grid complex protocol of disagreements) Directors (minutes JSC Tyumenenergo docs/15042016_protokol_SD_FSK_EES_ No. 316 of 15 April 2016, N316.pdf item No. 7) http://www.e-disclosure.ru/portal/ event.aspx?EventId=f5yvQEP4-AE-Cf- AEGFxEDCOQ-B-B

88 PJSC FGC UES Annual Report 2016 89 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

97. Agreement of compensated The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 105. Agreement on termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti provision of educational services Directors (minutes JSC Tyumenenergo docs/15042016_protokol_SD_FSK_EES_ the agreement for lease of the Directors (minutes PJSC MOESK docs/15042016_protokol_SD_FSK_EES_ O.M. Budargin, No. 316 of 15 April 2016, N316.pdf connection cable of the Federal No. 316 of 15 April 2016, N316.pdf A.A. Demin – members of item No. 8) http://www.e-disclosure.ru/portal/ Grid’s branch - Moscow PMES of item No. 16) http://www.e-disclosure.ru/portal/ the Board of Directors of event.aspx?EventId=f5yvQEP4-AE-Cf- November 1, 2010 event.aspx?EventId=f5yvQEP4-AE-Cf- PJSC FGC UES AEGFxEDCOQ-B-B No. AK-1-10/540m AEGFxEDCOQ-B-B V.M. Kravchenko – member of the Board 98. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of Directors of PJSC services for maintenance and Directors (minutes JSC Chitatekhenergo docs/15042016_protokol_SD_FSK_EES_ FGC UES as of the repair of communication systems No. 316 of 15 April 2016, N316.pdf date of approval of the item No. 9) http://www.e-disclosure.ru/portal/ transaction event.aspx?EventId=f5yvQEP4-AE-Cf- AEGFxEDCOQ-B-B 106. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 5 to the agreement of Directors (minutes JSC SOGAZ docs/15042016_protokol_SD_FSK_EES_ A.E. Murov, 99. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti voluntary medical insurance No. 316 of 15 April 2016, N316.pdf A.V. Vasiliev, V.P. Dikoy, No. 3 to the Agreement of Directors (minutes JSC Elektrosetservis docs/15042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of No. 15LM1300 of 1 April 2015 item No. 17) http://www.e-disclosure.ru/portal/ A.A. Zaragatsky, 20 March 2013 No. 20-2013 No. 316 of 15 April 2016, UNEG N316.pdf the Management Board event.aspx?EventId=f5yvQEP4-AE-Cf- N.I. Pozdnyakov, for supply of materials and item No. 10) http://www.e-disclosure.ru/portal/ of PJSC FGC UES AEGFxEDCOQ-B-B M.G. Tikhonova – equipment, performance of event.aspx?EventId=f5yvQEP4-AE-Cf- members of the construction and installation AEGFxEDCOQ-B-B Management Board of works and commissioning PJSC FGC UES works under the title: Total V.A. Goncharov, reconstruction of for SS 500 M.N. Pichugina, kV Belozernaya (stage 1 D.L. Shishkin – members commisioning) of the Management 100. Supplementary agreement No. 3 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Board of PJSC FGC UES to the agreement of 29 October Directors (minutes JSC Elektrosetservis docs/15042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of as of the date of approval 2013 No. 045-13/SUID for the No. 316 of 15 April 2016, UNEG N316.pdf the Management Board of the transaction supply of material and technical item No. 11) http://www.e-disclosure.ru/portal/ of PJSC FGC UES 107. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti resources and equipment, event.aspx?EventId=f5yvQEP4-AE-Cf- No. 1 to the agreement No. 520 Directors (minutes JSC MUS Energetiki docs/25042016_protokol_SD_FSK_EES_ construction and installation AEGFxEDCOQ-B-B of 8 July 2014 on maintenance of No. 317 of 25 April 2016, N317.pdf and commissioning works of the communication lines item No. 8) http://www.e-disclosure.ru/portal/event.asp replacement programme TT 110- x?EventId=KP06nTyynUmJfZGvMvDqnA-B-B 750 kV at JSC FGC UES for the needs of the Federal 108. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Grid’s branch – Yamalo- Directors (minutes JSC Chitatekhenergo docs/25042016_protokol_SD_FSK_EES_ Nenetskoe PMES No. 317 of 25 April 2016, N317.pdf item No. 9) http://www.e-disclosure.ru/portal/event.asp 101. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti x?EventId=KP06nTyynUmJfZGvMvDqnA-B-B Directors (minutes PJSC IDGC of North-West docs/15042016_protokol_SD_FSK_EES_ No. 316 of 15 April 2016, N316.pdf 109. Agreement on performance of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti item No. 12) http://www.e-disclosure.ru/portal/ works (provision of services) Directors (minutes JSC MUS Energetiki docs/28042016_protokol_SD_FSK_EES_ event.aspx?EventId=f5yvQEP4-AE-Cf- on maintenance of electric grid No. 319 of 29 April 2016, N319.pdf AEGFxEDCOQ-B-B facilities item No. 5) http://www.e-disclosure.ru/portal/event. aspx?EventId=mu-CTo6EfTEqrhMF6YGix9Q- 102. Movable property lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti B-B Directors (minutes JSC ESSK UES docs/15042016_protokol_SD_FSK_EES_ A.A. Zaragatsky – No. 316 of 15 April 2016, N316.pdf member of the 110. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti item No. 13) http://www.e-disclosure.ru/portal/ Management Board of Directors (minutes PJSC IDGC of North-West docs/28042016_protokol_SD_FSK_EES_ event.aspx?EventId=f5yvQEP4-AE-Cf- PJSC FGC UES and No. 319 of April 29, 2016, N319.pdf AEGFxEDCOQ-B-B M.N. Pichugina, item No. 6) http://www.e-disclosure.ru/portal/event. D.L. Shishkin – members aspx?EventId=mu-CTo6EfTEqrhMF6YGix9Q- of the Management B-B Board of PJSC FGC UES 111. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti as of the date of approval No. 1 to the agreement No. Directors (minutes JSC Elektrosetservis docs/28042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of the transaction 98 of 14 December 2015 on No. 319 of 29 April 2016, UNEG N319.pdf the Management Board 103. Agreement for the provision The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti construction and installation and item No. 9) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES of services on placement of Directors (minutes JSC Chitatekhenergo docs/15042016_protokol_SD_FSK_EES_ commissioning works under the aspx?EventId=mu-CTo6EfTEqrhMF6YGix9Q- communication equipment in No. 316 of 15 April 2016, N316.pdf programme of improving reliability B-B Chita item No. 14) http://www.e-disclosure.ru/portal/ of the main equipment of SS and event.aspx?EventId=f5yvQEP4-AE-Cf- OHL of PJSC FGC UES SS and AEGFxEDCOQ-B-B OHL for the needs of PJSC FGC UES branch - MES South in 2015 104. Supplementary Agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti under the title: Programme for the to the Contract of Directors (minutes JSC Elektrosetservis docs/15042016_protokol_SD_FSK_EES_ V.P. Dikoy – member of replacement and reinforcement of 22 September 2015 No. 263/7- No. 316 of 15 April 2016, UNEG N316.pdf the Management Board OHL supports 15 for development of design item No. 15) http://www.e-disclosure.ru/portal/ of PJSC FGC UES and exploration works, working event.aspx?EventId=f5yvQEP4-AE-Cf- 112. Agreement for performing design The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti documentation, construction AEGFxEDCOQ-B-B and research work, drafting work Directors (minutes JSC R&D Centre of FGC docs/28042016_protokol_SD_FSK_EES_ A.A. Zaragatsky – and installation, commissioning documentation under 4 titles: No. 319 of 29 April 2016, UES N319.pdf member of the works and supply of material Reconstruction of SS 220 kV item No. 10) http://www.e-disclosure.ru/portal/event. Management Board and equipment under the title: SS-11 (for TP of energy receiving aspx?EventId=mu-CTo6EfTEqrhMF6YGix9Q- of PJSC FGC UES, The installation of the second devices of Transneft-Vostok), B-B M.N.Pichugina – member autotransformer with capacity of Reconstruction of SS 220 kV of the Management 125 MVA at Pogorelovo SS 220 kV PS-15 (for TP of energy receiving Board of PJSC FGC UES with the RU 220 kV and 110 kV devices of Transneft-Vostok), as of the date of approval Reconstruction of SS 220 kV of the transaction PS-16 (for TP of energy receiving devices of Transneft-Vostok), Reconstruction of SS 220 kV PS-19 (for TP of energy receiving devices of Transneft-Vostok)

90 PJSC FGC UES Annual Report 2016 91 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by Governing body that References to the information disclosed by PJSC FGC UES in the Internet, comprising the Related party (-ies) to the Governing body that No. Transaction description resolved to approve the Transaction parties PJSC FGC UES in the Internet, comprising the Related party (-ies) to the material terms of the transaction (subject, transaction No. Transaction description resolved to approve the Transaction parties transaction (details) material terms of the transaction (subject, transaction price*, parties to the transaction) transaction (details) price*, parties to the transaction) 113. Agreement on optical fiber lease The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 124. Agreement for the adjustment of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes PJSC RusHydro docs/25052016_protokol_SD_FSK_EES_ N.G. Shulginov, design, working documentation Directors (minutes JSC R&D Centre docs/27052016_protokol_SD_FSK_EES_ A.A. Zaragatsky No. 321 of 25 May 2016, N321.pdf V.M. Kravchenko, for improving lighting-surge No. 322 of 27 May 2016, of FGC UES N322.pdf – member of the item No. 3) http://www.e-disclosure.ru/portal/event.asp M.S. Bystrov – members proofness at Suojarvi - Läskelä item No. 13) http://www.e-disclosure.ru/portal/event. Management Board of x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B of the Board of Directors OHL 220 kV (L 224), Kolskaya aspx?EventId=K2WN8wpMnkyaHA3ebWa PJSC FGC UES of PJSC FGC UES as of NPP - Knyazhegubskaya No. 1 l2g-B-B M.N. Pichugina the date of approval of OHL 330 kV(L 396), Kolskaya – member of the the transaction NPP - Monchegorsk No. 1 OHL Management Board of 114. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 330 kV (L 397), Ondskaya HPP - PJSC FGC UES as of the No. 2 to the agreement No. 520 Directors (minutes JSC MUS Energetiki docs/25052016_protokol_SD_FSK_EES_ Kondopoga OHL 330 kV (L 390), date of approval of the of 8 July 2014 on maintenance of No. 321 of 25 May 2016, N321.pdf Ondskaya HPP - Putkinskaya HPP transaction communication lines item No. 4) http://www.e-disclosure.ru/portal/event.asp OHL 330 kV (L 391) x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B 125. Agreement for preparing project The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 115. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti and working documentation, Directors (minutes JSC R&D Centre docs/27052016_protokol_SD_FSK_EES_ A.A. Zaragatsky – services on organisation and Directors (minutes PJSC Lenenergo docs/25052016_protokol_SD_FSK_EES_ performance of construction No. 322 of 27 May 2016, of FGC UES N322.pdf member of the holding interregional professional No. 321 of 25 May 2016, N321.pdf and installation works and item No. 14) http://www.e-disclosure.ru/portal/event. Management Board of skill competitions in repair and item No. 5) http://www.e-disclosure.ru/portal/event.asp commissioning works under aspx?EventId=K2WN8wpMnkyaHA3ebWa PJSC FGC UES maintenance of substation x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B the title: Integrated project l2g-B-B M.N. Pichugina equipment and cable networks on reduction of electricity – member of the consumption for the own needs Management Board of 116. Agreement for operations support The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of SS 100 kV Vladimirskaya PJSC FGC UES as of the and maintenance of equipment Directors (minutes PJSC Lenenergo docs/25052016_protokol_SD_FSK_EES_ (implementation of frequency date of approval of the No. 321 of 25 May 2016, N321.pdf regulation systems for cooler transaction item No. 6) http://www.e-disclosure.ru/portal/event.asp engine management systems of x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B transformers and oil pumps) for 117. Agreement No. 58-10/436 of The Company’s Board of PJSC FGC UES and PJSC http://www.fsk-ees.ru/upload/ PJSC Rosseti the needs of the Federal Grid’s 31 January 2010 for the Directors (minutes MOESK docs/25052016_protokol_SD_FSK_EES_ O.M. Budargin, branch – Volgo-Okskaya PMES termination of the dispatch No. 321 of 25 May 2016, N321.pdf A.A. Demin – members of 126. Agreement on activity The Company’s Board of PJSC FGC UES http://www.fsk-ees.ru/upload/ PJSC Rosseti control system lease contract item No. 7) http://www.e-disclosure.ru/portal/event.asp the Board of Directors of arrangements and organisational Directors (minutes and RNC CIGRE docs/27052016_protokol_SD_FSK_EES_ A.E. Murov – member of of the PJSC FGC UES’s branch - x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B PJSC FGC UES and technical support for the No. 322 of 27 May 2016, N322.pdf the Board of Directors of Moscow PMES V.M. Kravchenko – running of the RNC CIGRE sub- item No. 15) http://www.e-disclosure.ru/portal/event. PJSC FGC UES, Chairman member of the Board committees for thematic area aspx?EventId=K2WN8wpMnkyaHA3ebWa of the Management of Directors of PJSC (Agreement to establish the RNC l2g-B-B Board of PJSC FGC UES FGC UES as of the CIGRE Leading Scientific and date of approval of the Technical Partner status. transaction 127. Supplementary Agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti 118. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti to the Contract Directors (minutes JSC Electrosetservice docs/27052016_protokol_SD_FSK_EES_ V.P. Dikoy – member of to the real property lease contract Directors (minutes JSC Elektrosetservis docs/25052016_protokol_SD_FSK_EES_ V.P. Dikoy – member of No. 13-SUID of 29 March 2013 No. 322 of 27 May 2016, UNEG N322.pdf the Management Board No. 10145/14 of 17 December No. 321 of 25 May 2016, UNEG N321.pdf the Management Board for performance of works item No. 16) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES 2015 item No. 8) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES under the title: Development aspx?EventId=K2WN8wpMnkyaHA3ebWa x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B of working documentation, l2g-B-B 119. Agreement for operations support The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti supply of equipment, execution and maintenance of equipment Directors (minutes PJSC Lenenergo docs/25052016_protokol_SD_FSK_EES_ of construction, installation No. 321 of 25 May 2016, N321.pdf and commissioning works on item No. 9) http://www.e-disclosure.ru/portal/event.asp the integrated programme for x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B 330-750 kV air circuit breakers replacement 120. Agreement for maintenance The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes IT Energy Service, LLC docs/25052016_protokol_SD_FSK_EES_ 128. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti No. 321 of 25 May 2016, N321.pdf No. 12 to the agreement Directors (minutes JSC Electrosetservice docs/27052016_protokol_SD_FSK_EES_ V.P. Dikoy – member of item No. 10) http://www.e-disclosure.ru/portal/event.asp No. 06/13 of 18 February 2013 on No. 322 of 27 May 2016, UNEG N322.pdf the Management Board x?EventId=pBCQYlGwE0ayd8Bf3VIzgw-B-B repairs, equipment diagnostics item No. 17) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES 27 for targeted programmes for aspx?EventId=K2WN8wpMnkyaHA3ebWa 121. Supplementary Agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti SS and OHL of MES Western l2g-B-B to the agreement No. 3440 of Directors (minutes JSC R&D Centre of FGC docs/27052016_protokol_SD_FSK_EES_ A.A. Zaragatsky Siberia 29 January 2015 for performance No. 322 of May 27, 2016, UES N322.pdf – member of the of works under the title: Coanda item No. 10) http://www.e-disclosure.ru/portal/event. Management Board of 129. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti OHL 220 kV - Chara (KC-49), aspx?EventId=K2WN8wpMnkyaHA3ebWa PJSC FGC UES Directors (minutes PJSC IDGC of North-West docs/27052016_protokol_SD_FSK_EES_ Taksimo OHL 110 kV - Tyagovaya l2g-B-B M.N. Pichugina – No. 322 of 27 May 2016, N322.pdf (TT-72). Reconstruction of OHL member of the item No. 18) http://www.e-disclosure.ru/portal/event. (support No. 233 - No. 238) Management Board of aspx?EventId=K2WN8wpMnkyaHA3ebWa PJSC FGC UES as of the l2g-B-B date of approval of the 130. Agreement on performance The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti transaction of works on the automation of Directors (minutes JSC Electrosetservice docs/27052016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 122. The agreement on compensation The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti dead-tank circuit breaker heating, No. 322 of 27 May 2016, UNEG N322.pdf the Management Board of expenses under the title: Directors (minutes JSC Kuban Trunk Grids docs/27052016_protokol_SD_FSK_EES_ the reconstruction of the power item No. 19) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES 220 kV Krylovskaya SS. No. 322 of 27 May 2016, N322.pdf supply scheme, the replacement aspx?EventId=K2WN8wpMnkyaHA3ebWa (Replacement of 6 oil circuit item No. 11) http://www.e-disclosure.ru/portal/event. of fuses for circuit breakers at l2g-B-B breakers 110 kV in 1989) aspx?EventId=K2WN8wpMnkyaHA3ebWa 220 kV Zavodoukovsk of the l2g-B-B Federal Grid’s branch – South PMES 123. Agreement on modernisation of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti, AT-3 (development of working Directors (minutes JSC Electrosetservice docs/27052016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 131. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti documentation, construction No. 322 of 27 May 2016, UNEG N322.pdf the Management Board Directors (minutes PJSC IDGC of North-West docs/27052016_protokol_SD_FSK_EES_ and installation, commissioning, item No. 12) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES No. 322 of 27 May 2016, N322.pdf equipment supply) under the title: aspx?EventId=K2WN8wpMnkyaHA3ebWa item No. 20) http://www.e-disclosure.ru/portal/event. 220 kV Kaluga-Sputnik SS for l2g-B-B aspx?EventId=K2WN8wpMnkyaHA3ebWa the needs of the Federal Grid’s l2g-B-B branch- Priokskoye PMES

92 PJSC FGC UES Annual Report 2016 93 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

132. Agreement to carry out The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti 141. Agreement on performance The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti emergency repair works to Directors (minutes JSC Electrosetservice docs/27052016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of works on development of Directors (minutes JSC R&D Centre of docs/17062016_protokol_SD_FSK_EES_ A.A. Zaragatsky – replace AT-2 at 220 kV RPP-1 No. 322 of 27 May 2016, UNEG N322.pdf the Management Board working documentation on the No. 325 of 17 June 2016, FGC UES N325.pdf member of the SS of the Federal Grid’s branch – item No. 21) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES facility Lesozavodsk – Spassk – item No. 16) http://www.e-disclosure.ru/portal/event.asp Management Board of Vologda PMES aspx?EventId=K2WN8wpMnkyaHA3ebWa Dalnevostochnaya OHL 220 kV x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B PJSC FGC UES l2g-B-B M.N. Pichugina – 133. Agreement for preparing project The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti member of the and working documentation, Directors (minutes JSC Electrosetservice docs/27052016_protokol_SD_FSK_EES_ V.P. Dikoy – member of Management Board of performance of construction No. 322 of 27 May 2016, UNEG N322.pdf the Management Board PJSC FGC UES as of the and installation works and item No. 22) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES date of approval of the commissioning works under aspx?EventId=K2WN8wpMnkyaHA3ebWa transaction the title: Almaz SS 220 kV l2g-B-B 142. Agreement No. 1 of 28 November The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti (Reconstruction with replacement 2014 for execution of works Directors (minutes JSC R&D Centre of docs/17062016_protokol_SD_FSK_EES_ A.A. Zaragatsky – of equipment, including OD, SC) under the title: Reconstruction No. 325 of 17 June 2016, FGC UES N325.pdf member of the for the needs of the Federal Grid’s of Mogocha SS 220/110/35/10 item No. 17) http://www.e-disclosure.ru/portal/event.asp Management Board of branch – MES Center kV. Installation of low-resistance x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B PJSC FGC UES 134. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti devices into the neutrals of T3, T4, M.N. Pichugina to the real property lease contract Directors (minutes JSCIUS UES docs/27052016_protokol_SD_FSK_EES_ N.I. Pozdnyakov – T5 and T6 transformers – member of the No. 1 of 2 September 2013 No. 322 of 27 May 2016, N322.pdf member of the Management Board of item No. 23) http://www.e-disclosure.ru/portal/event. Management Board PJSC FGC UES as of the aspx?EventId=K2WN8wpMnkyaHA3ebWa of PJSC FGC UES, date of approval of the l2g-B-B General Director of JSC transaction Centre for Engineering 143. Agreement for the amending the The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti and Construction territorial planning scheme of the Directors (minutes JSC R&D Centre of docs/24062016_protokol_SD_FSK_EES_ A.A. Zaragatsky – Management of UES Russian Federation on energy on No. 326 of 24 June 2016, FGC UES N326.pdf member of the D.L. Shishkin – member the facilities of PJSC FGC UES item No. 3) http://www.e-disclosure.ru/portal/ Management Board of of the Management event.aspx?EventId=ouVWTe-Awrku- PJSC FGC UES Board of PJSC FGC CI2eenDRJSw-B-B M.N. Pichugina – as of the date of the member of the transaction Management Board of 135. Agreement on transfer of rights The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti PJSC FGC UES as of the and obligations under the forest Directors (minutes JSTyumenenergo docs/17062016_protokol_SD_FSK_EES_ date of approval of the land lease agreement of 23 No. 325 of 17June 2016, N325.pdf transaction January 2009 No. 17/L-09 item No. 9) http://www.e-disclosure.ru/portal/event.asp 144. Agreement No. SAp/ESS/1 of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B 1 June 2008 for the termination of Directors (minutes JSC Electrosetservice docs/24062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 136. Supplementary agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti the premises sublease contract No. 326 of 24 June 2016, UNEG N326.pdf the Management Board to the agreement Directors (minutes JSC Electrosetservice docs/17062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of item No. 4) http://www.e-disclosure.ru/portal/ of PJSC FGC UES No. 1 of 29 April 2011 for the No. 325 of 17 June 2016, UNEG N325.pdf the Management Board event.aspx?EventId=ouVWTe-Awrku- development of design and item No. 10) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES CI2eenDRJSw-B-B working documentation for the x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B 145. Cooperative agreement No. 118 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti project Replacement of air circuit of 9 December 2014 between Directors (minutes JSC Mobile GTES docs/24062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of breakers 330 – 750 kV at the PJSC FGC UES and No.326 of 24 June 2016, N326.pdf the Management Board facilities of JSC FGC UES JSC Mobile GTES item No.5) http://www.e-disclosure.ru/portal/ of PJSC FGC UES 137. Agreement on development The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti event.aspx?EventId=ouVWTe-Awrku- of specialized software Directors (minutes IT Energy Service, LLC docs/17062016_protokol_SD_FSK_EES_ CI2eenDRJSw-B-B METROSKOP of automated No. 325 of 17 June 2016, N325.pdf 146. Agreement on performance of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti information-measurement item No. 12) http://www.e-disclosure.ru/portal/event.asp works on adjustment of working Directors (minutes JSC Electrosetservice docs/24062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of system for metrological support x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B documentation under the title: No. 326 of 24 June 2016, UNEG N326.pdf the Management Board of automated information and Programme of replacing of HVL item No. 6) http://www.e-disclosure.ru/portal/ of PJSC FGC UES measurement system for electric 330-750 kV at 500 kV Tomskaya event.aspx?EventId=ouVWTe-Awrku- electricity fiscal metering for SS. Replacing 4 HVLs-500 CI2eenDRJSw-B-B electric electricity fiscal metering (automated measuring and 147. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti, information system for electricity No. 5 of 27 September 2012 Directors (minutes PJSC IDGC of Siberia docs/24062016_protokol_SD_FSK_EES_ V.M. Kravchenko – fiscal metering for UNEG) via to the rental agreement No. No. 326 of 24 June 2016, N326.pdf member of the Board creation of a new version of 244.1900.587.11 item No. 7) http://www.e-disclosure.ru/portal/ of Directors of PJSC automated worksite ARM 3.0. event.aspx?EventId=ouVWTe-Awrku- FGC UES as of the CI2eenDRJSw-B-B date of approval of the 138. Agreement for providing services The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti transaction for maintenance of the collective Directors (minutes JSC MUS Energetiki docs/17062016_protokol_SD_FSK_EES_ information indication system No. 325 of 17 June 2016, N325.pdf 148. Supplementary Agreement of July The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti item No. 13) http://www.e-disclosure.ru/portal/event.asp 05, 2016 No. 18 to the Contract of Directors (minutes JSC CIUS UES docs/24062016_protokol_SD_FSK_EES_ N.I. Pozdnyakov – x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B 1 April 2008 No. 326 of 24 June 2016, N326.pdf Member of the No. TS/01 on performing item No. 12) http://www.e-disclosure.ru/portal/ Management Board of 139. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti functions of construction event.aspx?EventId=ouVWTe-Awrku- PJSC FGC UES services for technical support of Directors (minutes IT Energy Service, LLC docs/17062016_protokol_SD_FSK_EES_ manager CI2eenDRJSw-B-B D.L. Shishkin – member the automated measuring and No. 325 of 17 June 2016, N325.pdf of the Management information system for electricity item No. 14) http://www.e-disclosure.ru/portal/event.asp Board of PJSC FGC as of fiscal metering at cross-border x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B the date of approval of transmission lines for PJSC FGC the transaction 140. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti 149. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes JSC Electrosetservice docs/17062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of No. 1 to the agreement Directors (minutes JSC R&D Centre of FGC docs/24062016_protokol_SD_FSK_EES_ A.A. Zaragatsky – No. 325 of 17 June 2016, UNEG N325.pdf the Management Board No. 385041 of 25 December 2015 No. 326 of 24 June 2016, UES N326.pdf member of the item No. 15) http://www.e-disclosure.ru/portal/event.asp of PJSC FGC UES on performance of works on item No. 13) http://www.e-disclosure.ru/portal/ Management Board of x?EventId=rTrjOd9WdkC2qNIMpKGbqw-B-B drafting working documentation event.aspx?EventId=ouVWTe-Awrku- PJSC FGC UES under the title: 750 kV CI2eenDRJSw-B-B M.N. Pichugina – Leningradskaya – Belozerskaya member of the OHL for the needs of PJSC FGC Management Board of UES branch - MES North-West PJSC FGC UES as of the date of approval of the transaction

94 PJSC FGC UES Annual Report 2016 95 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

150. Agreement No. 0214-0-68-02- The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 157. Lease Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti PIR/14 of 21 October, 2014 Directors (minutes JSC R&D Centre docs/27062016_protokol_SD_FSK_EES_ A.A. Zaragatsky Directors (minutes PJSC MOESK docs/27062016_protokol_SD_FSK_EES_ O.M. Budargin, for adjustment of project No. 327 of 27 June 2016, of FGC UES N327.pdf – member of the No. 327 of 27 June 2016, N327.pdf A.A. Demin – members of documentation (including item No. 10) http://www.e-disclosure.ru/portal/event. Management Board of item No. 20) http://www.e-disclosure.ru/portal/event. the Board of Directors of engineering survey and expertise aspx?EventId=oM7TU5vDm06bhPaMdFB PJSC FGC UES aspx?EventId=oM7TU5vDm06bhPaMdFB PJSC FGC UES of the design and estimate udw B-B M.N. Pichugina udw-B-B V.M. Kravchenko – documentation) under the title: – member of the member of the Board Reconstruction of Management Board of of Directors of PJSC 220 kV Cherepetskaya HPP – PJSC FGC UES as of the FGC UES as of the Kaluzhskaya SS transit in the area date of approval of the date of approval of the of Orbita – Kaluzhskaya (including transaction transaction Orbita–Sputnik OHL 220 kV, 158. Agreement on performance of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti Sputnik–Kaluzhskaya OHL 220 kV emergency recovery works Directors (minutes JSC Electrosetservice docs/27062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of 1,2, Cherepet–Sputnik OHL No. 327 of 27 June 2016, UNEG N327.pdf the Management Board 220 kV) for the needs of the item No. 21) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES Federal Grid’s branch – MES aspx?EventId=oM7TU5vDm06bhPaMdFB Center udw-B-B 151. Supplementary Agreement No. 4 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 159. Lease Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti to the lease agreement Directors (minutes JSC ESSK UES docs/27062016_protokol_SD_FSK_EES_ A.A. Zaragatsky Directors (minutes RNC CIGRE docs/27062016_protokol_SD_FSK_EES_ A.E. Murov – member of No. 3.3-25/10/11/1 of 1 June No. 327 of 27 June 2016, N327.pdf – member of the No. 327 of 27 June 2016, N327.pdf the Board of Directors of 2010 item No. 11) http://www.e-disclosure.ru/portal/event. Management Board of item No. 22) http://www.e-disclosure.ru/portal/event. PJSC FGC UES, Chairman aspx?EventId=oM7TU5vDm06bhPaMdFB PJSC FGC UES M.N. aspx?EventId=oM7TU5vDm06bhPaMdFB of the Management udw-B-B Pichugina, D.L. Shishkin udw-B-B Board of PJSC FGC UES – members of the Management Board of 160. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti PJSC FGC UES as of the No. 17 to the Agency Contract Directors (minutes JSC Kuban Trunk Grids docs/27062016_protokol_SD_FSK_EES_ date of approval of the No. 69 of 29 May 2006 on the No. 327 of 27 June 2016, N327.pdf transaction implementation of the investment item No. 23) http://www.e-disclosure.ru/portal/event. programme of JSC Kuban Trunk aspx?EventId=oM7TU5vDm06bhPaMdFB 152. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti Grids on reconstruction and udw-B-B No. 2 to the Contract Directors (minutes JSC Electrosetservice docs/27062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of technical re-equipment of electric No. 210 of 8 October 2012 for No. 327 of 27 June 2016, UNEG N327.pdf the Management Board grid facilities execution of works under the item No. 13) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES title: Reconstruction of 33 kV aspx?EventId=oM7TU5vDm06bhPaMdFB 161. Settlement agreement The Company’s Board of PJSC FGC UES, http://www.fsk-ees.ru/upload/ PJSC Rosseti Cherkessk SS (replacement of udw-B-B Directors (minutes PJSC MOESK, state-run docs/28062016_protokol_SD_FSK_EES_ O.M. Budargin, 330 kV air circuit breakers) for No. 329 of 28 June 28 enterprise Moscow N329.pdf A.A. Demin – members of the needs of the PJSC FGC UES’s 2016, item No. 2) Energy Directorate and http://www.e-disclosure.ru/portal/event.asp the Board of Directors of branch - MES South the city of Moscow x?EventId=QJZevNoRvUOkA0y8cM1ptQ-B-B PJSC FGC UES represented by Moscow V.M. Kravchenko – 153. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti City Property Department member of the Board of No. 1 to the Contract of 17 Directors (minutes JSC Electrosetservice docs/27062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of Directors of PJSC FGC UES October 2013 No. 232 for No. 327 of 27 June 2016, UNEG N327.pdf the Management Board as of the date of approval performing of works (design item No. 14) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES of the transaction and survey works, working aspx?EventId=oM7TU5vDm06bhPaMdFB documentation, construction udw-B-B 162. Settlement Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti and assembly works, equipment) Directors (minutes PJSC Lenenergo docs/12072016_protokol_SD_FSK_EES_ E.V. Prokhorov, under the title: Arrangement of No. 331 of 15 July 2016, N331.pdf S.V. Sergeev, ice melting on facilities of Sochi item No. 2) http://www.e-disclosure.ru/portal/event. P.N. Snikkars – members Region of PJSC FGC UES for the aspx?EventId=SjLRB-CVcYkaeT3jWEG2eHQ- of the Board of Directors needs of PJSC FGC UES’s branch- B-B of PJSC FGC UES MES South 154. Supplementary Agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti to the Contract of 3 October 2012 Directors (minutes JSC Electrosetservice docs/27062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of No. 203 for performance of works No. 327 of 27 June 2016, UNEG N327.pdf the Management Board under the title: Reconstruction of item No. 15) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES the Volgodonsk RP (installation aspx?EventId=oM7TU5vDm06bhPaMdFB of rectifier devices of ice melting, udw-B-B 163. Agreement on debt repayment The Company’s Board of JSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti arranging ice melting on wires and of JSC IGDS of North Caucasus Directors (minutes SC IGDS of North docs/12072016_protokol_SD_FSK_EES_ cables for outgoing OHL 220 kV) for electricity transmission No. 331 of 15 July 2016, Caucasus N331.pdf 155. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti services via the Unified National item No. 3) http://www.e-disclosure.ru/portal/event. No. 3 to the Agreement of Directors (minutes JSC Electrosetservice docs/27062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of Electric Grid and Agreement on aspx?EventId=SjLRB-CVcYkaeT3jWEG2eHQ- 20 March 2013 No. 20-2013 No. 327 of 27 June 2016, UNEG N327.pdf the Management Board promissory note repayment B-B for supply of materials and item No. 17) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES 164. Agreement for termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti equipment, performance of aspx?EventId=oM7TU5vDm06bhPaMdFB the Contract No.0205-2-75- Directors (minutes JSC MUS Energetiki docs/05082016_protokol_SD_FSK_EES_ construction and installation udw-B-B 01-SM/12 of 29 October 2012 No. 332 of 8 August N332.pdf works and commissioning for the development of design 2016, 2016, item No. 1) http://www.e-disclosure.ru/portal/event. works under the title: Total and working documentation, aspx?EventId=0JUc3uEXWEun0gwfZ- reconstruction of for SS 500 equipment supply, construction A25KA-B-B kV Belozernaya (stage 1 and installation, commissioning commisioning) works under the title: Technical 156. Supplementary Agreement No. 3 The Company’s Board of PJSC FGC UES, http://www.fsk-ees.ru/upload/ PJCS Rosseti Re-equipment of SS 220 kV to the Contract of 15 May 2013 Directors (minutes v JSC Electrosetservice docs/27062016_protokol_SD_FSK_EES_ V.P. Dikoy – member of Obraztsovo. Replacement of SCS No. 58/13 for electrical equipment No. 327 of 27 June 2016, UNEG and N327.pdf the Management Board equipment for needs of PJSC FGC service maintenance (trilateral) item No. 19) JSC Electrozavod http://www.e-disclosure.ru/portal/event. of PJSC FGC UES UES branch – MES Center aspx?EventId=oM7TU5vDm06bhPaMdFB udw-B-B

96 PJSC FGC UES Annual Report 2016 97 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

165. Contract for performance The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti 175. Contract for development of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJCS Rosseti of works (construction and Directors (minutes JSC Electrosetservice docs/05082016_protokol_SD_FSK_EES_ V.P. Dikoy – member of working documentation, supply Directors (minutes JSC Electrosetservice docs/05082016_protokol_SD_FSK_EES_ V.P. Dikoy – member of assembly works, equipment) No. 332 of 8 August UNEG N332.pdf the Management Board of equipment, execution of No. 332 of 8 August UNEG N332.pdf the Management Board under the title: SS 330 kV Chirurt 2016, item No. 3) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES construction, installation and 2016, item No. 15) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES 330 kV installation of rectifier aspx?EventId=0JUc3uEXWEun0gwfZ- commissioning works under aspx?EventId=0JUc3uEXWEun0gwfZ- devices of ice melting with power A25KA-B-B the title: SS220 kV Bumazhnaya A25KA-B-B transformer for needs of PJSC (Reconstruction of switchgear – FGC UES branch – MES South 110, inst. Arc protection indoor switchgear -10, replacement of 166. Agreement for termination The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti OD and SC) of contract for the provision Directors (minutes JSC MUS Energetiki docs/05082016_protokol_SD_FSK_EES_ of communication service of No. 332 of 8 August N332.pdf 176. Agreement on performance of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti February 20, 2016 No. 390763 2016, item No. 4) http://www.e-disclosure.ru/portal/event. works on adjustment of design Directors (minutes JSC R&D Centre of FGC docs/05082016_protokol_SD_FSK_EES_ A.A. Zaragatsky – aspx?EventId=0JUc3uEXWEun0gwfZ- documentation under the title: No. 332 of 8 August UES N332.pdf member of the A25KA-B-B Complex technical re-equipment 2016, item No. 17) http://www.e-disclosure.ru/portal/event. Management Board of and reconstruction of aspx?EventId=0JUc3uEXWEun0gwfZ- PJSC FGC UES 167. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 220 kV Rayonnaya SS (Vladimir) A25KA-B-B M.N. Pichugina – No. 18 to the Agency Contract Directors (minutes JSC Kuban Trunk Grids docs/05082016_protokol_SD_FSK_EES_ Adjustment for needs of member of the of 29 May 2006 No. 69 on the No. 332 of 8 August N332.pdf PJSC FGC UES’s branch – Management Board of implementation of the investment 2016, item No. 5) http://www.e-disclosure.ru/portal/event. MES Center PJSC FGC UES as of the programme of JSC Kuban Trunk aspx?EventId=0JUc3uEXWEun0gwfZ- date of approval of the Grids on reconstruction and A25KA-B-B transaction technical re-equipment of electric grid facilities 177. Agreement for preparing project The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti and working documentation, Directors (minutes JSC R&D Centre of FGC docs/05082016_protokol_SD_FSK_EES_ A.A. Zaragatsky – 168. Contract for performance The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti technical part of tender No. 332 of 8 August UES N332.pdf member of the of works related to the 2 Directors (minutes JSCIUS UES docs/05082016_protokol_SD_FSK_EES_ N.P. Pozdnyakov – documentation under the title: 2016, item No. 18) http://www.e-disclosure.ru/portal/event. Management Board of construction stage under No. 332 of 8 August N332.pdf member of the Reconstruction of SS 220 kV aspx?EventId=0JUc3uEXWEun0gwfZ- PJSC FGC UES the title: Construction of 500 2016, item No. 7) http://www.e-disclosure.ru/portal/event. Management Board of Petrovsk-Zabaikalskaya kV with A25KA-B-B M.N. Pichugina – kV Beloberezhskaya SS with aspx?EventId=0JUc3uEXWEun0gwfZ- PJSC FGC UES changes of scheme of RU member of the approaches Novobryanskaya – A25KA-B-B D.L. Shishkin – member 220 kV for needs of PJSC FGC Management Board of Eletskaya OHL 500 kV, of the Management UES branch – MES Siberia PJSC FGC UES as of the Beloberezhskaya – Cementnaya Board of PJSC FGC UES date of approval of the OHL 220 kV, Beloberezhskaya – as of the date of approval transaction Mashzavod OHL 220 kV and of the transaction Beloberezhskaya – Bryanskaya 178. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti OHL 220 kV for the needs of PJSC Directors (minutes JSSO UES docs/09082016_protokol_SD_FSK_EES_ A.E. Murov – member of FGC UES branch - No. 333 of 12 August N333.pdf the Board of Directors of MES North-West 2016, 2016, item No. 2) http://www.e-disclosure.ru/LentaEvent.aspx PJSC FGC UES, Chairman ?eventid=wmDi3Nm3dk6Y60SwRG5MTg-B- of the Management 169. Agreement for termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti B&print=true#event Board of PJSC FGC UES Contract No. 80327 of Directors (minutes PJSC IDGC of Volga docs/05082016_protokol_SD_FSK_EES_ 4 April 2008 No. 332 of 8 August N332.pdf 179. Agreement for the termination of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 2016, item No. 8) http://www.e-disclosure.ru/portal/event. the lease contract No. 187/10 of Directors (minutes JSC Electrosetservice ?eventid=wmDi3Nm3dk6Y60SwRG5MTg-B- V.P. Dikoy – member of aspx?EventId=0JUc3uEXWEun0gwfZ- 30 December 2010 No. 333 of 12 August UNEG B&print=true#event the Management Board A25KA-B-B 2016, 2016, item No. 3) http://www.fsk-ees.ru/upload/ of PJSC FGC UES, docs/09082016_protokol_SD_FSK_EES_ 170. Contract for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti N333.pdf comprehensive technical support Directors (minutes JSC MUS Energetiki docs/05082016_protokol_SD_FSK_EES_ services and maintenance of No. 332 of 8 August N332.pdf 180. Agreement for the termination of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti facilities of KASUB of 2016, item No. 10) http://www.e-disclosure.ru/portal/event. the real estate lease contract Directors (minutes JSC MUS Energetiki ?eventid=wmDi3Nm3dk6Y60SwRG5MTg-B- PJSC FGC UES in 2016-2017 aspx?EventId=0JUc3uEXWEun0gwfZ- No. 349343 of 23 September No. 333 of 12 August B&print=true#event A25KA-B-B 2015 2016, item No. 4) http://www.fsk-ees.ru/upload/ docs/09082016_protokol_SD_FSK_EES_ 171. Contract on removal of use The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti N333.pdf restrictions for the land plot Directors (minutes PJSC IDGC of Centre docs/05082016_protokol_SD_FSK_EES_ No. 332 of 8 August N332.pdf 181. Real estate sub-lease contract The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 2016, item No. 11) http://www.e-disclosure.ru/portal/event. Directors (minutes JSSO UES ?eventid=wmDi3Nm3dk6Y60SwRG5MTg-B- A.E. Murov – member of aspx?EventId=0JUc3uEXWEun0gwfZ- No. 333 of 12 August B&print=true#event the Board of Directors of A25KA-B-B 2016, item No. 5) http://www.fsk-ees.ru/upload/ PJSC FGC UES, Chairman docs/09082016_protokol_SD_FSK_EES_ of the Management 172. Service Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti N333.pdf Board of PJSC FGC UES Directors (minutes PJSC IDGC of Volga docs/05082016_protokol_SD_FSK_EES_ No. 332 of 8 August N332.pdf 182. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 2016, item No. 12) http://www.e-disclosure.ru/portal/event. construction and installation Directors (minutes JSC Electrosetservice ?eventid=wmDi3Nm3dk6Y60SwRG5MTg-B- V.P. Dikoy – member of aspx?EventId=0JUc3uEXWEun0gwfZ- and commissioning works under No. 333 of 12 August UNEG B&print=true#event the Management Board A25KA-B-B the Programme on increase of 2016, item No. 6) http://www.fsk-ees.ru/upload/ of PJSC FGC UES reliability of the main equipment docs/09082016_protokol_SD_FSK_EES_ 173. Agreement for the termination of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti, of PJSC FGC UES SS and OHL N333.pdf the land plot lease Contract Directors (minutes PJSC IDGC of Siberia docs/05082016_protokol_SD_FSK_EES_ E.V. Prokhorov – member for the needs of PJSC FGC UES No. 04.4200.1007.13 of No. 332 of 8 August N332.pdf of the Board of Directors branch – MES Center in 2016 26 April 2013 2016, item No. 13) http://www.e-disclosure.ru/portal/event. of PJSC FGC UES aspx?EventId=0JUc3uEXWEun0gwfZ- 183. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti A25KA-B-B construction and installation Directors (minutes JSC Electrosetservice ?eventid=wmDi3Nm3dk6Y60SwRG5MTg-B- V.P. Dikoy – member of and commissioning works under No. 333 of 12 August UNEG B&print=true#event the Management Board 174. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti the Programme on increase of 2016, item No. 7) http://www.fsk-ees.ru/upload/ of PJSC FGC UES communication services Directors (minutes JSC SO UES docs/05082016_protokol_SD_FSK_EES_ A.E. Murov – member of reliability of the main equipment docs/09082016_protokol_SD_FSK_EES_ No. 332 of 8 August N332.pdf the Board of Directors of of PJSC FGC UES SS and OHL N333.pdf 2016, item No. 14) http://www.e-disclosure.ru/portal/event. PJSC FGC UES, Chairman for the needs of PJSC FGC UES aspx?EventId=0JUc3uEXWEun0gwfZ- of the Management branch – MES Western Siberia A25KA-B-B Board of PJSC FGC UES

98 PJSC FGC UES Annual Report 2016 99 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

184. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 194. Agreement for preparing project The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti construction and installation and Directors (minutes JSC Electrosetservice ?eventid=wmDi3Nm3dk6Y60SwRG5MTg-B- V.P. Dikoy – member of and working documentation, Directors (minutes JSC Electrosetservice x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- V.P. Dikoy – member of commissioning works under the No. 333 of 12 August UNEG B&print=true#event the Management Board performance of construction No. 336 of 31 August UNEG B&print=true#event the Management Board title: Reconstruction of OHL by 2016, item No. 8) http://www.fsk-ees.ru/upload/ of PJSC FGC UES and installation works and 2016, item No. 3) http://www.fsk-ees.ru/upload/ of PJSC FGC UES replacing the porcelain insulation docs/09082016_protokol_SD_FSK_EES_ commissioning works with docs/29082016_protokol_SD_FSK_EES_ ( OHL 110 kV, ETES - NZB, OHL N333.pdf equipment supply under the N336.pdf 220 kV G 20 - B10, OHL Programme on improving the v220 kV Novocherkasskaya Hydro lighting-surge proofness under Power Plant - R4 1.2 c) within ID for needs of PJSC FGC UES’s the programme on improving branch – MES Center reliability of the main equipment 195. Supplementary agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti of SS and OHL of PJSC FGC UES to the contract No. 47/13 of 10 Directors (minutes JSC Electrosetservice x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- V.P. Dikoy – member of 185. Agreement for repair and The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti July 2013 for performing works No. 336 of 31 August UNEG B&print=true#event the Management Board maintenance of SCS, cable line Directors (minutes JSC MUS Energetiki aspx?eventid=hkQbj0ptuU-CB23DzvWFFIQ- under the title: Programme for 2016, item No. 4) http://www.fsk-ees.ru/upload/ of PJSC FGC UES infrastructure and communication No. 334 of 22 August B-B&print=true#event the replacement VV 330-750 docs/29082016_protokol_SD_FSK_EES_ systems for needs of PJSC FGC 2016, item No. 1) http://www.fsk-ees.ru/upload/ kV. for SS 110 kV Barnaulskaya N336.pdf UES’s branch – Moscow PMES docs/19082016_protokol_SD_FSK_EES_ Replacement VV-500 10 units. N334.pdf 196. Agreement on termination The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti 186. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and IT http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti of contract No. 130-2013 of Directors (minutes JSC Electrosetservice x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- V.P. Dikoy – member of to the contract No. 25/2013-02 Directors (minutes Energy Service LLC aspx?eventid=hkQbj0ptuU-CB23DzvWFFIQ- 5 August 2013 for design, No. 336 of 31 August UNEG B&print=true#event the Management Board of 4 April 2013 for allocation of No. 333 of 22 August B-B&print=true#event equipment supply, construction 2016, item No. 5) http://www.fsk-ees.ru/upload/ of PJSC FGC UES server and telecommunication 2016, item No. 2) http://www.fsk-ees.ru/upload/ and installation, commissioning docs/29082016_protokol_SD_FSK_EES_ equipment at the prepared site in docs/19082016_protokol_SD_FSK_EES_ of automatic diagnostics systems N336.pdf the data processing center N334.pdf of GIS for the needs of PJSC FGC UES’s branch – MES Center 187. Agreement on termination The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti of contract No. 130-2013 of Directors (minutes JSC Electrosetservice aspx?eventid=hkQbj0ptuU-CB23DzvWFFIQ- V.P. Dikoy – member of 197. Supplementary Agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti 5 August 2013 for design, No. 334 of 22 August UNEG B-B&print=true#event the Management Board to the Contract No. 12.10 of 12 Directors (minutes JSC Electrosetservice x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- V.P. Dikoy – member of equipment supply, construction 2016, item No. 3) http://www.fsk-ees.ru/upload/ of PJSC FGC UES October 2012 for performance of No. 336 of 31 August UNEG B&print=true#event the Management Board and installation, commissioning docs/19082016_protokol_SD_FSK_EES_ works under the title: SS 500 kV 2016, item No. 6) http://www.fsk-ees.ru/upload/ of PJSC FGC UES of automatic diagnostics systems N334.pdf Kurdyum (Replacement of OV-110 docs/29082016_protokol_SD_FSK_EES_ of GIS for the needs of PJSC FGC vacuum circuit breaker with SF6 N336.pdf UES’s branch– MES Center circuit breaker) for the needs of the PJSC FGC UES ’s branch – 188. Supplementary Agreement No.1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti MES Volga to the Contract No. 650/14 of 4 Directors (minutes JSC MUS Energetiki aspx?eventid=hkQbj0ptuU-CB23DzvWFFIQ- February 2014 for maintenance No. 334 of 22 August B-B&print=true#event 198. Confidentiality agreement The Company’s Board of PJSC FGC UES and FSBEI http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti of ice melting system and 2016, item No. 4) http://www.fsk-ees.ru/upload/ Directors (minutes HE NRU MPEI x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- A.E. Murov – member of monitoring of optical fibers docs/19082016_protokol_SD_FSK_EES_ No. 336 of 31 August B&print=true#event the Board of Directors of condition N334.pdf 2016, item No. 7) http://www.fsk-ees.ru/upload/ PJSC FGC UES, Chairman docs/29082016_protokol_SD_FSK_EES_ of the Management 189. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti N336.pdf Board of PJSC FGC UES to the lease contract No. 387399 Directors (minutes JSIPS SakRusenergo aspx?eventid=hkQbj0ptuU-CB23DzvWFFIQ- M.N. Pichugina – O.M. Budargin – member of Centralnaya OHL 500 kV - No. 334 of 22 August B-B&print=true#event member of the of the Board of Directors Enguri HPP (Kavkasioni) on the 2016, item No. 5) http://www.fsk-ees.ru/upload/ Management Board of of PJSC FGC UES territory of the Russian Federation docs/19082016_protokol_SD_FSK_EES_ PJSC FGC UES as of the N334.pdf date of approval of the 199. Agreement for the provision The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti transaction of services on repair and Directors (minutes JSC Chitatechenergo x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- maintenance of communication No. 336 of 31 August B&print=true#event 190. Agreement on performing of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti systems on SS Goryachinskaya, 2016, item No. 8) http://www.fsk-ees.ru/upload/ works under the title: Emergency Directors (minutes JSC Electrosetservice aspx?eventid=hkQbj0ptuU-CB23DzvWFFIQ- V.P. Dikoy – member of FOCN OHL 220 kV Tataurovo – docs/29082016_protokol_SD_FSK_EES_ repair work for SS 220 kV No. 334 of 22 August UNEG B-B&print=true#event the Management Board Goryachinskaya for the needs of N336.pdf Tula. Modernization of АТ-1 for 2016, item No. 6) http://www.fsk-ees.ru/upload/ of PJSC FGC UES Trans-Baikal PMES replacement of high voltage docs/19082016_protokol_SD_FSK_EES_ bushings of PJSC FGC UES’s N334.pdf 200. Agreement on operating services The Company’s Board of PJSC FGC UES and IT http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti branch – Priokskoye PMES and expanded technical support Directors (minutes Energy Service LLC x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- of terminal access platform to the No. 336 of 31 August B&print=true#event 191. Service Agreement The Company’s Board of PJSC FGC UES and IT http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti corporate applications based on 2016, item No. 9) http://www.fsk-ees.ru/upload/ Directors (minutes Energy Service LLC aspx?eventid=hkQbj0ptuU-CB23DzvWFFIQ- Citrix software in PJSC FGC UES docs/29082016_protokol_SD_FSK_EES_ No. 334 of 22 August B-B&print=true#event N336.pdf 2016, item No. 7) http://www.fsk-ees.ru/upload/ docs/19082016_protokol_SD_FSK_EES_ 201. Contract No. 96 of 25 July The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru LentaEvent.asp PJSC Rosseti N334.pdf 2016 for performance of Directors (minutes JSC Electrosetservice x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- V.P. Dikoy – member of works (adjustment of project No. 336 of 31 August UNEG B&print=true#event the Management Board 192. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.as PJSC Rosseti documentation, working 2016, item No. 10) http://www.fsk-ees.ru/upload/ of PJSC FGC UES to the real estate lease contract Directors (minutes JSC ESSK UES px?eventid=qLzOLkzWCE6ZfNJZRPbuWQ- D.L. Shishkin – member documentation, construction docs/29082016_protokol_SD_FSK_EES_ No. 413630 of 4 April 2016 No. 336 of 31 August B-B&print=true#event≠≠≠ www.fsk-ees.ru/ of the Management and assembly works, supply N336.pdf 2016, item No. 1) upload/docs/29082016_protokol_SD_FSK_ Board of PJSC FGC UES of materials) under the EES_N336.pdf as of the date of approval title: Programme for the of the transaction replacement and reinforcement 193. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.asp PJSC Rosseti of OHL supports (OHL 220 kV to the real estate lease contract Directors (minutes JSC Mobile GTES x?eventid=qLzOLkzWCE6ZfNJZRPbuWQ-B- V.P. Dikoy – member of Chernomorskaya - Poselkovaya), No. 400741 of 1 February 2016 No. 336 of 31 August B&print=true#event the Management Board (OHL 500 kV Rostov Nuclear 2016, item No. 2) http://www.fsk-ees.ru/upload/ of PJSC FGC UES Power Plant - Budenovsk), (OHL docs/29082016_protokol_SD_FSK_EES_ 330 kV Stavropolskaya HPP - N336.pdf Armavir 1 circuit, OHL 330 kV Rostovskaya - Yuzhnaya, OHL 220 kV Novocherkasskaya HPP - Koisug 1c.) within the programme on improving reliability of the main equipment of SS and OHL of PJSC FGC UES

100 PJSC FGC UES Annual Report 2016 101 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

202. Supplementary Agreements The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti 207. Supplementary Agreements No. 1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJCS Rosseti No. 1 to the Contract Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of to the Contract Directors (minutes JSC R&D Centre of FGC aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- M.N.Pichugina – member No. 103-2016 of 7 June 2016 for No. 337 of 7 September UNEG B-B&print=true#event the Management Board No. 105-2016 of 3 June 2016 for No. 337 of 7 September UES B-B&print=true#event of the Management preparing project and working 2016, item No. 1) http://www.fsk-ees.ru/upload/ of PJSC FGC UES preparing project and working 2016, item No. 6) http://www.fsk-ees.ru/upload/ Board of PJSC FGC UES documentation, performance docs/02092016_protokol_SD_FSK_EES_ documentation, performance docs/02092016_protokol_SD_FSK_EES_ as of the date of approval of construction and installation N337.pdf of construction and installation N337.pdf of the transaction works and commissioning works and commissioning works works with supply of equipment with supply of equipment under under the title: SS 220 kV Almaz the title: Integrated project on (Reconstruction with equipment reduction of energy consumption replacement including OD and for own and business needs of SC) for the needs of PJSC FGC SS 750 kV Vladimirskaya (use of UES’s branch – MES Center frequency regulation systems for engine management of coolants, 203. Supplementary Agreements The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti transformers and oil pumps) No. 1 to the Contract Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of for the needs of PJSC FGC UES No. 104-2016 of 7 June 2016 No. 337 of 7 September UNEG B-B&print=true#event the Management Board branch – Volgo-Okskaya PMES for modernization of AT-3 2016, item No. 2) http://www.fsk-ees.ru/upload/ of PJSC FGC UES (development of working docs/02092016_protokol_SD_FSK_EES_ 208. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti documentation, construction N337.pdf No. 1 to the contract No. Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of and installation, commissioning, M9-NK-PD, RD, SMR, PNR- No. 337 of 7 September UNEG B-B&print=true#event the Management Board equipment supply) under the title: 24/2015 for performance 2016, item No. 7) http://www.fsk-ees.ru/upload/ of PJSC FGC UES 220 kV Sputnik SS for the needs of design, engineering, docs/02092016_protokol_SD_FSK_EES_ of the PJSC FGC UES’s branch – construction, installation and N337.pdf Priokskoye PMES commissioning works under the title: Replacement of 204. Supplementary Agreements No. 1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti Autotransformer-2 at 220 kV to the Contract No. 96-2015 of 2 Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of Oka SS December 2015 for performance No. 337 of 7 September UNEG B-B&print=true#event the Management Board of construction and installation 2016, item No. 3) http://www.fsk-ees.ru/upload/ of PJSC FGC UES 209. Supplementary Agreements The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti works and commissioning works docs/02092016_protokol_SD_FSK_EES_ No. 1 to Contract No. M6-NK- Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of with supply of equipment under N337.pdf SMR-187/2015 of 25 December No. 337 of 7 September UNEG B-B&print=true#event the Management Board the title: SS 220 kV Astakhovskaya 2015 for performance of 2016, item No. 8) http://www.fsk-ees.ru/upload/ of PJSC FGC UES (Reconstruction with equipment construction and installation docs/02092016_protokol_SD_FSK_EES_ replacement including OD and SC) works with supply of materials N337.pdf for the needs of PJSC FGC UES equipment under the title: branch – Volgo-Donskoye PMES Replacement of supports on Volgo-Okskaya PMES 205. Supplementary Agreements The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti No. 1 to the Contract No. 142- Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of 210. Contracting agreement No. 234 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti 2015 of December 4, 2015 for No. 337 of 7 September UNEG B-B&print=true#event the Management Board of 8 August 2016 for design Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of preparing project and working 2016, item No. 4) http://www.fsk-ees.ru/upload/ of PJSC FGC UES and survey works, working No. 337 of 7 September UNEG B-B&print=true#event the Management Board documentation, performance docs/02092016_protokol_SD_FSK_EES_ documentation, construction 2016, item No. 9) http://www.fsk-ees.ru/upload/ of PJSC FGC UES of construction and installation N337.pdf and installation, commissioning docs/02092016_protokol_SD_FSK_EES_ works and commissioning works works, performance of N337.pdf with supply of equipment at construction and installation Liteinaya SS 220 kV under the works, commissioning works title: Technical re-equipment of related to reconstruction of OHL Liteinaya SS 220 kV, Satarovskaya by replacement of porcelain SS 220 kV. Installation of rectifier insulation of MES Vostok devices to system PG for the 211. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti needs of the PJSC FGC UES’s No. 1 to the Contract No. 696/14 Directors (minutes JSC MUS Energetiki aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- branch – Volgo-Donskoye PMES of 18 March 2014 on equipment No. 337 of 7 September B-B&print=true#event 206. Contracting agreement No. 235 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti maintenance 14 SCS and ACS 2016, item No. 10) http://www.fsk-ees.ru/upload/ of 8 August 2016 for design Directors (minutes JSC Electrosetservice aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- V.P. Dikoy – member of of UNEG facilities in the area of docs/02092016_protokol_SD_FSK_EES_ and survey works, working No. 337 of 7 September UNEG B-B&print=true#event the Management Board operational responsibility of PJSC N337.pdf documentation, construction 2016, item No. 5) http://www.fsk-ees.ru/upload/ of PJSC FGC UES FGC UES branch – Orenburgskoe and installation, commissioning docs/02092016_protokol_SD_FSK_EES_ PMES works, performance of N337.pdf 212. Service Agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti construction and installation Directors (minutes JSC MUS Energetiki aspx?eventid=ygBuctxyFE2j4G2z3-Apm9g- works, commissioning works No. 337 of 7 September, B-B&print=true#event related to replacement and 2016, item No. 11) http://www.fsk-ees.ru/upload/ reinforcement of OHL MES Vostok docs/02092016_protokol_SD_FSK_EES_ supports N337.pdf 213. Contracting agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti No.433291 of 5 August2016 for Directors (minutes JSC Electrosetservice aspx?eventid=fhLmaT4C-A0qqH- V.P. Dikoy – member of construction and installation No. 338 of 15 September UNEG CGWQ8O1Sw-B-B&print=true#event the Management Board and commissioning works under 2016, item No.1) http://www.fsk-ees.ru/upload/ of PJSC FGC UES the Programme on increase of docs/12092016_protokol_SD_FSK_EES_ reliability of the main equipment N338.pdf of PJSC FGC UES SS and OHL for the needs of PJSC FGC UES branch – MES Volga

102 PJSC FGC UES Annual Report 2016 103 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

214. Agreement for adjustment of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti 225. Contracting agreement No. PPN/ The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti project documentation, working Directors (minutes JSC Electrosetservice aspx?eventid=fhLmaT4C-A0qqH- V.P. Dikoy – member of ESS-16 of 28 July 2016 for Directors (minutes JSC Electrosetservice aspx?eventid=jvfcEeBrKU-CpGGClkp-CoZg- V.P. Dikoy – member of documentation, construction and No. 338 of 15 September UNEG CGWQ8O1Sw-B-B&print=true#event the Management Board construction and installation No. 340 of 3 October UNEG B-B&print=true#event the Management Board installation works, commissioning 2016, item No. 2) http://www.fsk-ees.ru/upload/ of PJSC FGC UES and commissioning works under 2016, item No. 5) http://www.fsk-ees.ru/upload/ of PJSC FGC UES works with supply of equipment docs/12092016_protokol_SD_FSK_EES_ the Programme on increase of docs/28092016_protokol_SD_FSK_EES_ under the programme on N338.pdf reliability of the main equipment N340.pdf replacement of oil circuit of PJSC FGC UES SS and OHL breakers 110-220 kV at the (the programme of modernisation Company’s facilities for the needs of autotransformers, shunt of PJSC FGC UES’s branch – MES reactors and oil circuit breakers, Center programme of replacement of OHL, reconstruction of OHL 215. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti by replacement of porcelain No. 5 to the agreement No. 01/13 Directors (minutes JSC Electrosetservice aspx?eventid=fhLmaT4C-A0qqH- V.P. Dikoy – member of insulation) for the needs of PJSC of 15 February 2013 for repair, No. 338 of 15 September UNEG CGWQ8O1Sw-B-B&print=true#event the Management Board FGC UES branch 7 – MES Ural maintenance and diagnostic 2016, item No. 3) http://www.fsk-ees.ru/upload/ of PJSC FGC UES inspection of electric grid docs/12092016_protokol_SD_FSK_EES_ 226. Contracting agreement No. The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti facilities N338.pdf 505/ID of 1 August 2016 for Directors (minutes JSC Electrosetservice aspx?eventid=jvfcEeBrKU-CpGGClkp-CoZg- V.P. Dikoy – member of construction and installation No. 340 of 3 October UNEG B-B&print=true#event the Management Board 216. Supplementary agreement The Company’s Board of PJSC FGC UES, http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti and commissioning works under 2016, item No. 6) http://www.fsk-ees.ru/upload/ of PJSC FGC UES No. 4 to the agreement No.51/13 Directors (minutes JSC Electrosetservice aspx?eventid=fhLmaT4C-A0qqH- V.P. Dikoy – member of the Programme on increase of docs/28092016_protokol_SD_FSK_EES_ of 14 June 2013 for electrical No. 338 of 15 September UNEG, and CGWQ8O1Sw-B-B&print=true#event the Management Board reliability of the main equipment N340.pdf equipment service maintenance 2016, item No. 4) JSC Electrozavod http://www.fsk-ees.ru/upload/ of PJSC FGC UES of PJSC FGC UES SS and OHL (trilateral) docs/12092016_protokol_SD_FSK_EES_ for the needs of PJSC FGC UES N338.pdf branch – MES North-West 217. Supplementary agreement No. 5 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti 227. Contracting agreement No. 233 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti to the agreement No.10/13 of Directors (minutes JSC Electrosetservice aspx?eventid=fhLmaT4C-A0qqH- V.P. Dikoy – member of of 8 August 2016 for performing Directors (minutes JSC Electrosetservice aspx?eventid=jvfcEeBrKU-CpGGClkp-CoZg- V.P. Dikoy – member of 28 December 2012 on performing No. 338 of 15 September UNEG CGWQ8O1Sw-B-B&print=true#event the Management Board design and research work, No. 340 of 3 October UNEG B-B&print=true#event the Management Board emergency recovery works 2016, item No. 5) http://www.fsk-ees.ru/upload/ of PJSC FGC UES drafting working documentation, 2016, item No. 7) http://www.fsk-ees.ru/upload/ of PJSC FGC UES docs/12092016_protokol_SD_FSK_EES_ construction, installation and docs/28092016_protokol_SD_FSK_EES_ N338.pdf commissioning for modernisation N340.pdf 218. Service Agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti of autotransformers, shunt Directors (minutes JSC IDGC of Volga aspx?eventid=fhLmaT4C-A0qqH- reactors and oil circuit breakers at No. 338 of 15 September CGWQ8O1Sw-B-B&print=true#event SS of MES East 2016, item No. 6) http://www.fsk-ees.ru/upload/ 228. Agreement for executing work The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti docs/12092016_protokol_SD_FSK_EES_ under the title: Upgrading Directors (minutes JSC Electrosetservice aspx?eventid=jvfcEeBrKU-CpGGClkp-CoZg- V.P. Dikoy – member of N338.pdf measuring equipment of PJSC No. 340 of 3 October UNEG B-B&print=true#event the Management Board 219. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti FGC UES substations 35-750 kV 2016, item No. 10) http://www.fsk-ees.ru/upload/ of PJSC FGC UES No. 3/16-1322 to the premises Directors (minutes PJSC Lenenergo aspx?eventid=fhLmaT4C-A0qqH- O.M. Budargin, within responsibility area of PJSC docs/28092016_protokol_SD_FSK_EES_ lease agreement No. 11-8368 of No. 338 of 15 September CGWQ8O1Sw-B-B&print=true#event E.V. Prokhorov, FGC UES branch – MES Center N340.pdf 16 August 2011 2016, item No. 7) http://www.fsk-ees.ru/upload/ P.N. Snikkars, 229. Supplementary agreement No.1 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti docs/12092016_protokol_SD_FSK_EES_ S.V. Sergeev,– members to the agreement No.377/2 of 4 Directors (minutes JSC MUS Energetiki aspx?eventid=temmkkMbNkimWfdFy- N338.pdf of the Board of Directors February 2016 for information and No. 343 of 24 October AjW6Q-B-B&print=true#event of PJSC FGC UES telecommunication support of the 2016, item No. 1) http://www.fsk-ees.ru/upload/ 220. Agreement for the provision The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti Situation Analysis Centre of PJSC docs/21102016_protokol_SD_FSK_EES_ of services on placement of Directors (minutes PJSC IDGC of Volga aspx?eventid=fhLmaT4C-A0qqH- FGC UES and support of meetings N343.pdf communication equipment (with No. 338 of 15 September CGWQ8O1Sw-B-B&print=true#event of the Headquarters of the electric the protocol of disagreements) 2016, item No. 8) http://www.fsk-ees.ru/upload/ grid complex docs/12092016_protokol_SD_FSK_EES_ 230. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti N338.pdf control services for SCS and Directors (minutes JSC MUS Energetiki aspx?eventid=temmkkMbNkimWfdFy- 221. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti communication systems of MES No. 343 of 24 October AjW6Q-B-B&print=true#event Directors (minutes PJSC IDGC of Centre and aspx?eventid=fhLmaT4C-A0qqH- North-West 2016, item No. 2) http://www.fsk-ees.ru/upload/ No. 338 of 15 September Privolzhie CGWQ8O1Sw-B-B&print=true#event docs/21102016_protokol_SD_FSK_EES_ 2016, item No. 9) http://www.fsk-ees.ru/upload/ N343.pdf docs/12092016_protokol_SD_FSK_EES_ 231. Agreement for use of property The Company’s Board of PJSC FGC UES, http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti N338.pdf Directors (minutes PJSC MegaFon, aspx?eventid=temmkkMbNkimWfdFy- 222. Supplementary agreement The Company’s Board of JSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti No. 343 of 24 October PJSC VimpelCom, AjW6Q-B-B&print=true#event No. 2 to the agreement Directors (minutes JSYantarenergo aspx?eventid=jvfcEeBrKU-CpGGClkp-CoZg- 2016, item No. 3) Torsion-Telecom LLC, and http://www.fsk-ees.ru/upload/ No.1104/14-340027 of No. 340 of 3 October B-B&print=true#event PJSC IDGC of North-West docs/21102016_protokol_SD_FSK_EES_ 22 December 2014 for repair 2016, item No. 2) http://www.fsk-ees.ru/upload/ N343.pdf and maintenance of electric grid docs/28092016_protokol_SD_FSK_EES_ 232. Contracting agreement on The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti facilities N340.pdf performance of emergency Directors (minutes JSC Electrosetservice aspx?eventid=temmkkMbNkimWfdFy- V.P. Dikoy – member of 223. Supplementary agreement The Company’s Board of JSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti recovery works of transformer No. 343 of 24 October UNEG AjW6Q-B-B&print=true#event the Management Board No. 1 (with the protocol of Directors (minutes JSYantarenergo aspx?eventid=jvfcEeBrKU-CpGGClkp-CoZg- AD-2Т involving replacement of 2016, item No. 4) http://www.fsk-ees.ru/upload/ of PJSC FGC UES disagreements) to the agreement No. 340 of 3 October B-B&print=true#event high voltage bushings 220 kV, docs/21102016_protokol_SD_FSK_EES_ No. 017/15-390243 of 2016, item No. 3) http://www.fsk-ees.ru/upload/ phase A and C at the 220 kV N343.pdf 25 December 2015 for repair docs/28092016_protokol_SD_FSK_EES_ Kirovskaya SS and maintenance of electric grid N340.pdf 233. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti facilities performance of emergency Directors (minutes JSC Electrosetservice aspx?eventid=temmkkMbNkimWfdFy- V.P. Dikoy – member of 224. Agreement for performing The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti recovery works on replacement of No. 343 of 24 October UNEG AjW6Q-B-B&print=true#event the Management Board design and research work, Directors (minutes JSC Electrosetservice aspx?eventid=jvfcEeBrKU-CpGGClkp-CoZg- V.P. Dikoy – member of high voltage bushings at 2016, item No. 5) http://www.fsk-ees.ru/upload/ of PJSC FGC UES drafting working documentation, No. 340 of 3 October UNEG B-B&print=true#event the Management Board 220 kV SS Atkarskaya of PJSC docs/21102016_protokol_SD_FSK_EES_ construction, installation 2016, item No. 4) http://www.fsk-ees.ru/upload/ of PJSC FGC UES FGC UES branch – Nizhne- N343.pdf and commissioning for the docs/28092016_protokol_SD_FSK_EES_ Volzhskaya PMES replacement of high voltage N340.pdf bushings 220 kV on T-2 transformer at the Khani substation (Emergency repair work)

104 PJSC FGC UES Annual Report 2016 105 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

234. Agreement for the termination The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJCS Rosseti 246. The agreement on compensation The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti of the Agreement No. 56/46147 Directors (minutes JSC R&D Centre of FGC aspx?eventid=temmkkMbNkimWfdFy- of expenses under the title: AT Directors (minutes JSC Kuban Trunk Grids ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B A.V. Molskiy – member of of 20 January 20 2012 for the No. 343 of 24 October UES AjW6Q-B-B&print=true#event replacement programme No. 347 of 13 December http://www.fsk-ees.ru/upload/ the Management Board development of design and 2016, item No. 6) http://www.fsk-ees.ru/upload/ (220 kV Goryachiy Klyuch SS. 2016, item No. 6) docs/12122016_protokol_SD_FSK_EES_ of PJSC FGC UES working documentation under the docs/21102016_protokol_SD_FSK_EES_ AT-1 replacement 220/110/10 kV) N347.pdf title: Total reconstruction of SS N343.pdf 247. Supplementary agreement No.3 to The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 220 kV Semenovskaya the agreement No. 520 of Directors (minutes JSC MUS Energetiki ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B 235. Supplementary agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti 8 July 2014 on maintenance of No. 347 of 13 December http://www.fsk-ees.ru/upload/ to the lease agreement No.TSO-1 Directors (minutes PJSC IDGC Ural aspx?eventid=temmkkMbNkimWfdFy- P.N. Snikkars – member communication lines 2016, item No. 7) docs/12122016_protokol_SD_FSK_EES_ of 28 February 2015 for electric No. 343 of 24 October AjW6Q-B-B&print=true#event of the Board of Directors N347.pdf grid facilities 2016, item No. 7) http://www.fsk-ees.ru/upload/ of PJSC FGC UES 248. Supplementary agreement The Company’s Board of PJSC FGC UES and PJSC http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti docs/21102016_protokol_SD_FSK_EES_ No. 1 to the agreement No. 723 Directors (minutes IDGC of Volga ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B N343.pdf of 1 February 2010 for local No. 347 of 13 December http://www.fsk-ees.ru/upload/ 236. Agreement for provision of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti telephone communication 2016, item No. 8) docs/12122016_protokol_SD_FSK_EES_ operation control services of SCS Directors (minutes JSC MUS Energetiki aspx?eventid=Pj9TJWJ-AS06fVhmTo- services N347.pdf and communication systems No. 346 of 28 November CDJVw-B-B 249. Agreement for termination The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 2016, item No. 2) http://www.fsk-ees.ru/upload/ of agreement No. 236 of 1 Directors (minutes JSC MUS Energetiki ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B docs/28112016_protokol_SD_FSK_EES_ August 2008 for provision No. 347 of 13 December http://www.fsk-ees.ru/upload/ N346.pdf of infrastructure of electricity 2016, item No. 9) docs/12122016_protokol_SD_FSK_EES_ 237. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti communication systems being N347.pdf fully operational on a permanent communication services Directors (minutes No. 346 JSC SO UES aspx?eventid=Pj9TJWJ-AS06fVhmTo-CDJVw- A.E. Murov – member of basis of 28 November 2016, B-B the Board of Directors of item No. 3) http://www.fsk-ees.ru/upload/ PJSC FGC UES, Chairman 250. Regulations on interaction The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti docs/28112016_protokol_SD_FSK_EES_N346. of the Management Board Directors (minutes JSSO UES ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B A.E. Murov – member of pdf of PJSC FGC UES No. 347 of 13 December http://www.fsk-ees.ru/upload/ the Board of Directors of 2016, item No. 11) docs/12122016_protokol_SD_FSK_EES_ PJSC FGC UES, Chairman N347.pdf of the Management 238. Agreement on performance of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti Board of PJSC FGC UES emergency recovery works Directors (minutes JSC Electrosetservice aspx?eventid=Pj9TJWJ-AS06fVhmTo- V.P. Dikoy – member of No. 346 of 28 November UNEG CDJVw-B-B the Management Board 251. Agreement for performance of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 2016, item No. 4) http://www.fsk-ees.ru/upload/ of PJSC FGC UES works (provision of services) on Directors (minutes JSC MUS Energetiki ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B docs/28112016_protokol_SD_FSK_EES_ maintenance and repair of SCS No. 347 of 13 December http://www.fsk-ees.ru/upload/ N346.pdf and communication equipment 2016, item No. 12) docs/12122016_protokol_SD_FSK_EES_ N347.pdf 239. Agreement on performance of The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti emergency recovery works Directors (minutes JSC Electrosetservice aspx?eventid=Pj9TJWJ-AS06fVhmTo- V.P. Dikoy – member of 252. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti No. 346 of 28 November UNEG CDJVw-B-B the Management Board the adjustment of working Directors (minutes JSC Electrosetservice ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B V.P. Dikoy – member of 2016, item No. 5) http://www.fsk-ees.ru/upload/ of PJSC FGC UES documentation, construction and No. 347 of 13 December UNEG http://www.fsk-ees.ru/upload/ the Management Board docs/28112016_protokol_SD_FSK_EES_ installation and commissioning 2016, item No. 15) docs/12122016_protokol_SD_FSK_EES_ of PJSC FGC UES N346.pdf works for improving lighting- N347.pdf surge proofness at OHL 220 kV 240. Supplementary Agreement The Company’s Board of PJSC FGC UES, http://www.e-disclosure.ru/LentaEvent. PJSC Rosseti Gonzha-t - Skovoriodino with No.3 (with the protocol of Directors (minutes JSC Elektrosetservis aspx?eventid=Pj9TJWJ-AS06fVhmTo- V.P. Dikoy – member of branch lines to Taldan-t SS disagreements) to the agreement No. 346 of 28 November UNEG and CDJVw-B-B the Management Board No. 56/13 of 15 May 2013 for 2016, item No. 11) JSC Electrozavod http://www.fsk-ees.ru/upload/ of PJSC FGC UES 253. Agreement for performing The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti electrical equipment service docs/28112016_protokol_SD_FSK_EES_ design and research work, Directors (minutes JSC Electrosetservice ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B V.P. Dikoy – member of maintenance (trilateral) N346.pdf drafting working documentation, No. 347 of 13 December UNEG http://www.fsk-ees.ru/upload/ the Management Board construction, installation and 2016, item No. 16) docs/12122016_protokol_SD_FSK_EES_ of PJSC FGC UES 241. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti commissioning work with N347.pdf No. 1 to the agreement No. 807 Directors (minutes PJSC IDGC of Centre and ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B equipment supply for the of 1 February 2011 for local No.347 of 13 December Privolzhie http://www.fsk-ees.ru/upload/ replacement of RTD-35 kV reactor telephone communication 2016, item No. 1) docs/12122016_protokol_SD_FSK_EES_ at the 220 kV Vysokogornaya SS services N347.pdf and Eterkan SS 242. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 254. Reciprocal lease agreement on The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 2 to the lease agreement Directors (minutes JSC MUS Energetiki ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B telecommunication resources Directors (minutes JSC Upravleniye VOLS-VL docs/19122016_protokol_SD_FSK_EES_ No. 375 of 1 January 2010 for No. 347 of 13 December http://www.fsk-ees.ru/upload/ (optical fiber) No. 348 of 19 December N348.pdf telecommunication equipment 2016, item No. 2) docs/12122016_protokol_SD_FSK_EES_ 2016, item No. 1) http://www.e-disclosure.ru/LentaEvent.aspx N347.pdf ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B 243. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti 255. Supplementary Agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 6 to the agreement No. 02/13 Directors (minutes JSC Electrosetservice ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B V.P. Dikoy – member of on optical fiber lease to FGC UES Directors (minutes JSC Upravleniye VOLS-VL docs/19122016_protokol_SD_FSK_EES_ of 15 February 2013 for repair, No. 347 of 13 December UNEG http://www.fsk-ees.ru/upload/ the Management Board and Supplementary Agreement No. 348 of 19 December N348.pdf maintenance and diagnostic 2016, item No. 3) docs/12122016_protokol_SD_FSK_EES_ of PJSC FGC UES No. 2 on optical fiber lease to 2016, item No. 2) http://www.e-disclosure.ru/LentaEvent.aspx inspection of electric grid N347.pdf JSC Upravleniye VOLS-VL to the ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B facilities reciprocal lease agreement on telecommunication resources 244. Accident and illness insurance The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti (optical fiber) contract Directors (minutes PJSC Rosgosstrakh ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B A.E. Murov – member of No. 347 of 13 December http://www.fsk-ees.ru/upload/ the Board of Directors of 256. Agreement for the provision of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 2016, item No. 4) docs/12122016_protokol_SD_FSK_EES_ PJSC FGC UES, Chairman services for technical support of Directors (minutes IT Energy Service, LLC docs/19122016_protokol_SD_FSK_EES_ N347.pdf of the Management automated management system No. 348 of 19 December N348.pdf Board of PJSC FGC UES for PJSC FGC UES investment 2016, item No. 3) http://www.e-disclosure.ru/LentaEvent.aspx projects based on the Oracle ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B 245. The agreement on compensation The Company’s Board of PJSC FGC UES and http://www.e-disclosure.ru/LentaEvent.aspx PJSC Rosseti Primavera software of expenses under the title: Directors (minutes JSC Kuban Trunk Grids ?eventid=DkkYS6qcX0aqtVVpnN8cKw-B-B A.V. Molskiy – member of Expansion of 220/110/35/6 No. 347 of 13 December http://www.fsk-ees.ru/upload/ the Management Board 257. The agreement on compensation The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti kV Krymskaya SS, related to 2016, item No. 5) docs/12122016_protokol_SD_FSK_EES_ of PJSC FGC UES of expenses under the title: CPC Directors (minutes JSKuban Trunk Grids docs/19122016_protokol_SD_FSK_EES_ A.V. Molskiy – member of the technological connection N347.pdf Oil Pipeline System. External No. 348 of 19 December N348.pdf the Management Board of energy receiving devices of electricity supply of PS-7 2016, item No. 4) http://www.e-disclosure.ru/LentaEvent.aspx of PJSC FGC UES Novokrymskoe LLC to the new ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B 35 kV cells that are being built

106 PJSC FGC UES Annual Report 2016 107 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

258. Support Service Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 267. Agreement for the provision The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti (incident management) for PJSC Directors (minutes IT Energy Service, LLC docs/19122016_protokol_SD_FSK_EES_ of services on placement of Directors (minutes PJSC IDGC of Volga docs/28122016_protokol_SD_FSK_EES_ FGC UES users No. 348 of 19 December N348.pdf communication equipment No. 350 of 28 December N350.pdf 2016, item No. 5) http://www.e-disclosure.ru/LentaEvent.aspx 2016, item No. 10) http://www.e-disclosure.ru/LentaEvent.as ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B 259. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 268. Agreement for development The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti development of working Directors (minutes JSC Electrosetservice docs/19122016_protokol_SD_FSK_EES_ V.P. Dikoy – member of of design and research work, Directors (minutes JSC Electrosetservice docs/28122016_protokol_SD_FSK_EES_ documentation, supply of No. 348 of 19 December UNEG N348.pdf the Management Board construction, installation and No. 350 of 28 December UNEG N350.pdf materials, technical resources 2016, item No. 7) http://www.e-disclosure.ru/LentaEvent.aspx of PJSC FGC UES commissioning under the 2016, item No. 11) http://www.e-disclosure.ru/LentaEvent.as and equipment, execution ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B title: Retrofitting of 500 kV px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B of construction, installation Magistralnaya SS Emergency and commissioning works on repair work (replacement of retrofitting facilities (title: 220 kV 1М-500 circuit breaker at 500 kV SS Topaz. Replacement of VChZ- SDPP-2) 220 kV, TT-220 kV) for the needs of PJSC FGC UES branch – MES 269. Agreement for the development The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Western Siberia of draft amendments to the Directors (minutes JSC R&D Centre docs/28122016_protokol_SD_FSK_EES_ territorial planning scheme of No. 350 of 28 December of FGC UES N350.pdf 260. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti the Russian Federation for power 2016, item No. 13) http://www.e-disclosure.ru/LentaEvent.as development of working Directors (minutes JSC Electrosetservice docs/19122016_protokol_SD_FSK_EES_ V.P. Dikoy – member of industry regarding the facilities of px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B documentation, supply of No. 348 of 19 December UNEG N348.pdf the Management Board PJSC FGC UES materials, technical resources 2016, item No. 8) http://www.e-disclosure.ru/LentaEvent.aspx of PJSC FGC UES and equipment, execution ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B 270. Agreement for executing work The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of construction, installation under the title: Building smart Directors (minutes JSC CIUS UES docs/28122016_protokol_SD_FSK_EES_ N.I. Pozdnyakov – and commissioning works distribution grid 20/0.4 kV on the No. 350 of 28 December N350.pdf member of the on retrofitting facilities (title: territory of Skolkovo Innovation 2016, item No. 15) http://www.e-disclosure.ru/LentaEvent.as Management Board Lugovaya 500 kV SS replacement Centre, stage 2 px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B of PJSC FGC UES, of 220 kV transformers (7 phases) General Director of JSC for the needs of PJSC FGC UES Centre for Engineering branch – MES Western Siberia and Construction Management of UES 261. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti A.V. Molskiy and supply of materials, technical Directors (minutes JSC Electrosetservice docs/19122016_protokol_SD_FSK_EES_ V.P. Dikoy – member of R.E. Filimonov – resources and equipment, No. 348 of 19 December UNEG N348.pdf the Management Board members of the execution of construction, 2016, item No. 9) http://www.e-disclosure.ru/LentaEvent.aspx of PJSC FGC UES Management Board of installation and commissioning ?eventid=YaOSqEgDaUmiAh87joJ3Kg-B-B PJSC FGC UES works on retrofitting facilities (title: Kustovaya 500 kV SS 271. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Replacement of air circuit No. 4 to the agreement No. 520 Directors (minutes JSC MUS Energetiki docs/09012017_protokol_SD_FSK_EES_351. breakers 500 kV) for the needs of of 8 July 2014 on maintenance of No. 351 of 9 January pdf PJSC FGC UES branch – communication lines 2017, item No. 1) http://www.e-disclosure.ru/LentaEvent. MES Western Siberia aspx?eventid=Bvo4-ATZMyEi2KLNCJar5uQ- B-B 262. Real estate lease contract The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes PJSC RusHydro docs/28122016_protokol_SD_FSK_EES_ P.S. Grachev – member of 272. Supplementary agreement No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 350 of 28 December N350.pdf the Board of Directors of to the compensation agreement Directors (minutes PJSC IDGC of Centre and docs/09012017_protokol_SD_FSK_EES_351. 2016, item No. 3) http://www.e-disclosure.ru/LentaEvent.as PJSC FGC UES No. 165-2015 of 21 December No. 351 of 9 January Privolzhie pdf px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B 2015 2017, item No. 2) http://www.e-disclosure.ru/LentaEvent. aspx?eventid=Bvo4-ATZMyEi2KLNCJar5uQ- 263. Supplementary Agreement The Company’s Board of In accordance with clause 15.7 of the Provisions No. 454-P of 30 PJSC Rosseti B-B No. 3 to the agreement of Directors (minutes December 2014 On disclosure of information by issuers of securities N.I. Pozdnyakov 27 March 2015 unnumbered No. 350 of 28 December approved by the Bank of Russia, information related to terms of a – member of the 273. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 2016, item No. 4) transaction, as well as its parties and beneficiaries shall not be disclosed. Management Board the adjustment of working Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_351. of PJSC FGC UES, documentation, construction, No. 351 of 9 January UNEG pdf General Director of JSC installation and commissioning 2017, item No. 3) http://www.e-disclosure.ru/LentaEvent. Centre for Engineering works for improving lighting- aspx?eventid=Bvo4-ATZMyEi2KLNCJar5uQ- and Construction surge proofness at OHL 220 kV B-B Management of UES Neryungrinskaya SDPP – A.V. Molskiy and R.E. Nizhniy Kuranakh Filimonov – members of 274. Agreement for development The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti the Management Board of working documentation, Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_351. of PJSC FGC UES construction, installation and No. 351 of 9 January UNEG pdf 264. Agreement (with the protocol of The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti commissioning under the title: 2017, item No. 4) Emergency repair work at reconciliation of disagreements) Directors (minutes JSSO UES docs/28122016_protokol_SD_FSK_EES_ A.E. Murov – member of No. 350 of 28 December N350.pdf 220 kV Orlovskaya Regional the Board of Directors of SS. AT-2 replacement 2016, item No. 6) http://www.e-disclosure.ru/LentaEvent.as PJSC FGC UES, Chairman px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B of the Management Board 275. Trilateral agreement on partial The Company’s Board of In accordance with clause 15.7 of the Provisions No. 454-P of 30 PJSC Rosseti of PJSC FGC UES transfer of rights and obligations Directors (minutes December 2014 On disclosure of information by issuers of securities N.I. Pozdnyakov – under the agreement No. 351 of 9 January approved by the Bank of Russia, information related to terms of a member of the 265. Agreement on emergency repair The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 6950 of 26 November, 2017, item No. 5) transaction, as well as its parties and beneficiaries shall not be disclosed. Management Board work for T-2 replacement on Directors (minutes JSC Electrosetservice docs/28122016_protokol_SD_FSK_EES_ 2010 on development of design of PJSC FGC UES, 220 kV Barrikadnaya SS under No. 350 of 28 December UNEG N350.pdf documentation under the title General Director of JSC the title: Programme reserve for 2016, item No. 7) http://www.e-disclosure.ru/LentaEvent.as 500 kV HVL Rostovskaya – Centre for Engineering emergency repair work px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B Andreevskaya – and Construction 266. Service agreement for provision The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti P.N. Vyshesteblievskaya (Taman) of Management of UES of rack units for communication Directors (minutes PJSC IDGC Ural docs/28122016_protokol_SD_FSK_EES_ Snikkars – member of PJSC FGC UES branch – MES A.V. Molskiy and R.E. equipment No. 350 of 28 December N350.pdf the Board of Directors of South Filimonov – members of 2016, item No. 9) http://www.e-disclosure.ru/LentaEvent.as PJSC FGC UES the Management Board px?eventid=V67tp7sWgU6RNgn3F5Rsiw-B-B of PJSC FGC UES

108 PJSC FGC UES Annual Report 2016 109 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by References to the information disclosed by Governing body that Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the PJSC FGC UES in the Internet, comprising the Related party (-ies) to the No. Transaction description resolved to approve the Transaction parties No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction material terms of the transaction (subject, transaction transaction (details) transaction (details) price*, parties to the transaction) price*, parties to the transaction)

276. Property purchase agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 284. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Directors (minutes PJSC IDGC of Centre docs/09012017_protokol_SD_FSK_EES_351. No. 1 to the Contract No. 369 of Directors (minutes JSC Electrosetservice docs/09012017_protokol SD_FSK_EES_352. No. 351 of 9 January pdf 1 December 2014 for performing No. 352 of 9 January UNEG pdf 2017, item No. 6) http://www.e-disclosure.ru/LentaEvent. of design and research work, 2017, item No. 12.2.2.) http://www.e-disclosure.ru/portal/ aspx?eventid=Bvo4-ATZMyEi2KLNCJar5uQ- drafting working documentation, event.aspx?EventId=Gwv7V4T2o02G- B-B construction, installation and ATfRL9emDg-B-B commissioning with equipment 277. Property purchase agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti supply on replacement of 220 kV Directors (minutes PJSC IDGC of South docs/09012017_protokol_SD_FSK_EES_351. oil circuit breakers (1T; 2T) at No. 351 of 9 January pdf 220 kV Eterkan SS 2017, item No. 7) http://www.e-disclosure.ru/LentaEvent. aspx?eventid=Bvo4-ATZMyEi2KLNCJar5uQ- 285. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti B-B No. 5 to the Contract No. 195/12 Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. of 10 November 2012 to perform No. 352 of 9 January UNEG pdf 278. Service agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti work on service maintenance 2017, item No. 12.3.2.) http://www.e-disclosure.ru/portal/ Directors (minutes JSCIUS UES docs/09012017_protokol_SD_FSK_EES_352. N.I. Pozdnyakov – of equipment and systems event.aspx?EventId=Gwv7V4T2o02G- No. 352 of 9 January pdf member of the preventing explosions and fires in ATfRL9emDg-B-B 2017, item No. 2) http://www.e-disclosure.ru/portal/ Management Board of oil-filled transformer equipment of event.aspx?EventId=Gwv7V4T2o02G- PJSC FGC UES, General Proteсtor Transformer (TR) brand ATfRL9emDg-B-B Director of JSC Centre for 286. Supplementary Agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Engineering and to the Contract Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. Construction No. 216 of October 5, 2012 for No. 352 of 9 January UNEG pdf Management of UES performance of works under the 2017, item No. 12.4.2.) http://www.e-disclosure.ru/portal/ Molskiy and title: Reconstruction of SS B–10 event.aspx?EventId=Gwv7V4T2o02G- R.E. Filimonov – 220/110/10 kV. Installation of ATfRL9emDg-B-B members of the rectifier devices of ice melting Management Board of (arranging ice melting on wires PJSC FGC UES and cables for outgoing OHL-220 kV) 279. Contracting agreement for The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti development of design and Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. 287. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti working documentation, execution No. 352 of 9 January UNEG pdf No. 1 to the Contract Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. of construction, installation and 2017, item No. 3) http://www.e-disclosure.ru/portal/ No. 370 of 12 December 2013 No. 352 of 9 January UNEG pdf commissioning works under event.aspx?EventId=Gwv7V4T2o02G- for performance of design, 2017, item No. 12.5.2.) http://www.e-disclosure.ru/portal/ the title: Retrofitting of 500 kV ATfRL9emDg-B-B engineering, construction, event.aspx?EventId=Gwv7V4T2o02G- Magistralnaya SS. Emergency installation and commissioning ATfRL9emDg-B-B repair work (replacement of the works, and supply of equipment autotransformer f. S 2ATG, type for replacement of 220 kV ADCT-167000/500/220-75 U1) transformers at SS 500 kV for the needs of PJSC FGC UES Komsomolskaya (7 phases). branch – MES Western Siberia 288. Supplementary Agreements No. 1 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti 280. Supplementary agreement The Company’s Board of JSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti to the Contract No. M4-RD, SMR, Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. No. 8 to the agreement No.1058 Directors (minutes JSC Yantarenergo docs/09012017_protokol_SD_FSK_EES_352. PNR, P-15/2015 of 12 December No. 352 of 9 January UNEG pdf of 4 February 2004 on the use of No. 352 of 9 January pdf 2015 for preparing working 2017, item No. 12.6.2.) http://www.e-disclosure.ru/portal/ electric grid facilities 2017, item No. 5) http://www.e-disclosure.ru/portal/ documentation, performance event.aspx?EventId=Gwv7V4T2o02G- event.aspx?EventId=Gwv7V4T2o02G- of construction and installation ATfRL9emDg-B-B ATfRL9emDg-B-B works and commissioning works with supply of equipment 281. Supplementary Agreement No. 13 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti under the title: Reconstruction to the Agency Contract No. 29/08- Directors (minutes JSC Tomsk Trunk Grids docs/09012017_protokol_SD_FSK_EES_352. A.V. Molskiy – member of of Northern SS 220 kV to set AD of November 21, 2008 on the No. 352 of 9 January pdf the Management Board the third AT 220/110/10 kV implementation of the investment 2017, item No. 7) http://www.e-disclosure.ru/portal/ of PJSC FGC UES with a capacity of 200 MVA, the programme of JSC Tomsk Trunk event.aspx?EventId=Gwv7V4T2o02G- expansion of the RU 110 kV of Grids on building, reconstruction ATfRL9emDg-B-B Northern SS 220 kV with the and technical re-equipment of construction of two new cells electric grid facilities for the implementation of TP 282. Agreement on emergency repair The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti JSC Tula regional corporation work for T-3 replacement on Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. of development for the needs of 220 kV Volzhskaya SS under No. 352 of 9 January UNEG pdf the PJSC FGC UES’s branch – the title: Programme reserve for 2017, item No. 11) http://www.e-disclosure.ru/portal/ Priokskoye PMES emergency repair work event.aspx?EventId=Gwv7V4T2o02G- 289. Supplementary Agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti ATfRL9emDg-B-B to the Contract No. 252/857 Directors (minutes JSC MUS Energetiki docs/09012017_protokol_SD_FSK_EES_352. 283. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti of 17 February 2012 on No. 352 of 9 January pdf No. 1 to the contractor agreement Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. construction of FOCN at 220 2017, item No. 12.7.2.) http://www.e-disclosure.ru/portal/ No. 46/13 of July 9, 2013 on No. 352 of 9 January UNEG pdf kV SS Neryungrinskaya HPP – event.aspx?EventId=Gwv7V4T2o02G- performance of works under the 2017, item No. 12.1.2.) http://www.e-disclosure.ru/portal/ Nizhny Kuranakh – Tommot-Maya ATfRL9emDg-B-B title: Programme of replacing event.aspx?EventId=Gwv7V4T2o02G- OHL with SS 220 kV Tommot and of HVL 330-750 kV at 500 kV ATfRL9emDg-B-B SS 220 kV Maya, construction Tomskaya SS. Replacing stage 2 SS 220 kV Nizhny 4 HVLs-500 Kuranakh – Tommot-Maya with SS 220 kV Tommot and SS 220 kV Maya (without construction of SS 220 kV, SS 220 kV Tommot and SS 220 kV Maya) of JSC FGC UES’s branch – MES East

110 PJSC FGC UES Annual Report 2016 111 Appendix 4 INFORMATION ON MAJOR AND RELATED-PARTY TRANSACTIONS

References to the information disclosed by Governing body that PJSC FGC UES in the Internet, comprising the Related party (-ies) to the APPENDIX 5. No. Transaction description resolved to approve the Transaction parties material terms of the transaction (subject, transaction transaction (details) price*, parties to the transaction)

290. Supplementary agreement No. 8 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti Information on the material transactions to the agreement Directors (minutes JSC Chitatechenergo docs/09012017_protokol_SD_FSK_EES_352. No. 0817/10-V of 1 January No. 352 of 9 January pdf 2011 for maintenance and repair 2017, item No. 12.8.2.) http://www.e-disclosure.ru/portal/ made by PJSC FGC UES and entities controlled of ground wire in the area from event.aspx?EventId=Gwv7V4T2o02G- support No. 1 OHL-220 kV KS-33, ATfRL9emDg-B-B UD-32 – to support No. 252 BD-75 thereby 220 kV OHL 291. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti No. 2 to the Contract of 27 July Directors (minutes JSC MUS Energetiki docs/09012017_protokol_SD_FSK_EES_352. 2012 No. 859 for modernization No. 352 of 9 January pdf and expansion of telemechanic 2017, item No. 12.9.2.) http://www.e-disclosure.ru/portal/ In accordance with the recommendations of the 2.6. Transactions entered into by subsidiaries and and data transmission systems event.aspx?EventId=Gwv7V4T2o02G- Corporate Governance Code approved by the Board associates (including several related transactions) in the area of responsibility of ATfRL9emDg-B-B of Directors of the Bank of Russia on 21 March 2014, involving disposal or potential disposal of property PJSC FGC UES branch – MES North-West at SS 220 kV Velsk, SS 220 kV Zaovrazhye, SS 220 kV material: construction in progress not intended for producing, Kizema, SS 220 kV Plesetsk, SS 1. Sale of shares (interests) in any legal entities transmitting, dispatching and distributing electricity and Urdoma, SS 220 kV Konosha, SS controlled by PJSC FGC UES which is material to the heat, with a book or market value exceeding RUB 30 Obozerskaya, RP 220 kV SS 110 million; kV Pervomayskaya, SS 220 kV latter, where, as a result of such transaction, PJSC FGC Savino, SS 220 kV Shangaly – UES would lose control over such legal entities; 3. Establishment of legal entity controlled by PJSC Lot 1 2. Transactions with property of PJSC FGC UES or FGC UES and being material for business operations of 292. Supplementary Agreement No. 2 The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti any legal entities controlled thereby (including related PJSC FGC UES. to the Contract of 27 July 2012 Directors (minutes JSC MUS Energetiki docs/09012017_protokol_SD_FSK_EES_352. transactions, if any, entered into by PJSC FGC UES and 1. In 2016 there were no sale of shares (interests) in No. 860 for modernization and No. 352 of 9 January pdf one and/or more legal entities controlled thereby) any legal entities controlled by PJSC FGC UES which expansion of telemechanic and 2017, item No. 12.10.2.) http://www.e-disclosure.ru/portal/ data transmission systems in the event.aspx?EventId=Gwv7V4T2o02G- is material to the latter, where, as a result of such area of responsibility of PJSC FGC ATfRL9emDg-B-B in the Company’s Articles of Association or which is transaction, PJSC FGC UES would lose control over UES branch – MES North-West material to the Company’s business operations: such legal entities; at SS 220 kV Vorkuta, SS 220 kV Vozeyskaya, SS 220 kV Gazlift, 2.1. Transactions involving the Company’s non-current 2. Transactions with property of PJSC FGC UES or SS 220 kV Pechora, SS 220 kV assets in the amount exceeding 10 (ten) percent of the any legal entities controlled thereby (including related Severny Vozey, SS 220 kV Synya, book value of said assets as of the date of making a transactions, if any, entered into by JSC FGC UES and SS 220 kV Usinskaya, SS 220 decision on entering into said transaction; one and/or more legal entities controlled thereby) kV Inta, SS 220 kV Zeneloborsk, SS 2201 kV Mikun, SS 220 kV 2.2. Transactions (including several related Severnaya, SS 220 kV Uhta, transactions) involving disposal or potential disposal in the Company’s Articles of Association or which is SS 220 kV SindorSS, 220 kV material to the Company’s business operations: Syktyvkar - Lot 2 and construction in progress intended for producing, In 2016, there were no transactions involving 293. Supplementary agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti transmitting, dispatching and distributing electricity and the Company’s non-current assets in the amount No. 3 to the Contract No. 409 of Directors (minutes JSC MUS Energetiki docs/09012017_protokol_SD_FSK_EES_352. heat, with a book value exceeding RUB 75 million; exceeding 10 (ten) percent of the book value of said 1 April 2014 for operation and No. 352 of 9 January pdf assets as of the date of making a decision on entering maintenance of DTCN equipment 2017, item No. 12.11.2.) http://www.e-disclosure.ru/portal/ 2.3. Transactions (including several related of ESUPCN of JSC FGC UES event.aspx?EventId=Gwv7V4T2o02G- transactions) involving disposal or potential disposal into said transaction; ATfRL9emDg-B-B In 2016, there were no transactions (including 294. Supplementary Agreement The Company’s Board of PJSC FGC UES and http://www.fsk-ees.ru/upload/ PJSC Rosseti and construction in progress intended for producing, several related transactions) involving disposal or No. 1 to the Contract No. 366 of Directors (minutes JSC Electrosetservice docs/09012017_protokol_SD_FSK_EES_352. transmitting, dispatching and distributing electricity and 1 December 2014 for performing No. 352 of 9 January UNEG pdf heat, with a book or market value exceeding RUB 150 assets, intangible assets and construction in progress design and research work, 2017, item No. 12.12.2.) http://www.e-disclosure.ru/portal/ drafting working documentation, event.aspx?EventId=Gwv7V4T2o02G- million; intended for producing, transmitting, dispatching and construction, installation and ATfRL9emDg-B-B 2.4. Major transactions entered into by subsidiaries and distributing electricity and heat, with a book value commissioning with equipment associates of PJSC FGC UES; exceeding RUB 75 million; supply for replacement of 220 kV In 2016, there were no transactions (including several voltage transformer (6 phases) at 2.5. Transactions entered into by subsidiaries and 220 kV Dzhamku SS associates (including several related transactions) related transactions) involving disposal or potential involving disposal or potential disposal of property intangible assets and construction in progress not construction in progress intended for producing, intended for producing, transmitting, dispatching and transmitting, dispatching and distributing electricity and distributing electricity and heat, with a book or market heat, with a book or market value exceeding value exceeding RUB 150 million; RUB 15 million;

112 PJSC FGC UES Annual Report 2016 113 INFORMATION ON THE MATERIAL TRANSACTIONS MADE Appendix 5 BY PJSC FGC UES AND ENTITIES CONTROLLED THEREBY

Governing body that resolved Major transactions entered into by subsidiaries and associates of PJSC FGC UES: Transaction Transaction No. Transaction subject1 Transaction price to approve the transaction description parties Governing body that resolved (minutes' date and number) Transaction Transaction No. Transaction subject1 Transaction price to approve the transaction description parties 2. Property JSC ENIN and The Seller RUB 104,535,085.35 The Company's Board of (minutes' date and number) Purchase LLC Economics (JSC ENIN) Directors (minutes No. 326 1. Supplementary PJSC FGC UES Amendment of Total cost of services The Company's Board of Agreement of undertakes to transfer of 24 June 2016). The Board Agreement No. and JSC Centre conditions of the under the Contract with Directors (minutes No. 326 12 October 2016 the ownership of Directors of JSC ENIN 18 of 5 July 2016 for Engineering Contract No. TS/01 the Supplementary of 24 June 2016). General and the Buyer (minutes No. 11 of 24 June to the Contract and Construction of 1 April 2008 Agreements No. 1-18 Shareholders' Meeting of (LLC Economics) 2016). No. TS/01 of Management of on performing for the period from JSC Centre for Engineering agrees to accept April 1, 2008 UES of functions of 1 April 2008 to 31 and Construction the ownership and on performing construction December 2016 amounts Management of UES pay for movable and functions of manager in relation to no more than RUB (minutes of the Company's immovable property construction to the amount of 21,918,913,000.00 Management Board No. 1402 owned by the Seller manager commission payment of 20 July 2016) 3. Purchase JSC ENIN and The Seller (JSC ENIN) RUB 45,371,460.00 The Company's Board of 2. Loan Agreement PJSC FGC UES Loan disbursement RUB 2,100,000,000.00 The Company’s Board of Agreement for citizen of RF undertakes to transfer Directors (minutes No. 326 of 11 January and JSC APBE Directors (minutes No. 299 of Non-residential Kozorezov A.A. the ownership and of 24 June 2016). The Board 2016, unnumb. 15 December 2015) General Structures of the Buyer (citizen of of Directors of JSC ENIN Shareholders’ Meeting of 9 November RF Kozorezov A.A.) (minutes No. 11 of 24 June (minutes of the Company’s 2016 agrees to accept 2016). Management Board No. 1355 the ownership and of 18 December 2015) pay for movable and immovable property owned by the Seller

In 2016, subsidiaries and associates of PSC FGC UES and construction in progress intended for producing, 3. Establishment of legal entity controlled by PJSC IFRS, JSC Centre for Engineering and Construction didn’t enter into transactions (including several related transmitting, dispatching and distributing electricity and FGC UES and being material for business operations of Management of UES and JSC APBE are affiliated transactions) involving disposal or potential disposal heat, with a book or market value exceeding PJSC FGC UES. companies which are material for PJSC FGC UES and of property constituting fixed assets, intangible assets RUB 15 million. In accordance with data of consolidated financial the consolidated revenue share of each amounts to five statements of PJSC FGC UES for year ended on percent, besides PJSC FGC UES. 31 December 2016 and prepared in compliance with

Transactions of subsidiaries and associates (including several related transactions) involving disposal or potential disposal of property constituting fixed assets, intangible assets and construction in progress not intended for producing, transmitting, dispatching and distributing electricity and heat, with a book or market value exceeding RUB 30 million:

Governing body that resolved Transaction Transaction No. Transaction subject1 Transaction price to approve the transaction description parties (minutes' date and number) 1. Purchase JSC The Seller (JSC RUB 181,818,420.00 The Company's Board of agreement for Elektrosetservis Elektrosetservis Directors (minutes movable and UNEG and UNEG) undertakes to No. 311 of 14 March 2016). immovable LLC RETAIL transfer the ownership The Board of Directors of property STANDARD – and the Buyer (LLC JSC Elektrosetservis UNEG No. KPN-1/16 RYBINSK RETAIL STANDARD – (minutes No. 3 of 13 April of 14 June 2016 RYBINSK) agrees to 2016). accept the ownership of movable and immovable property owned by the Seller

1 All material terms of the transaction are disclosed in the respective resolutions of the Board of Directors on approval of transaction and available on website www.fsk-ees.ru in the section Investors / Corporate Governance /Decisions of the Board of Directors

114 PJSC FGC UES Annual Report 2016 115 INFORMATION ON THE ACTUAL PERFORMANCE OF INSTRUCTIONS Appendix 6 OF THE PRESIDENT AND GOVERNMENT OF THE RUSSIAN FEDERATION

Summary of Registration The Company’s activities to perform APPENDIX 6. Instruction the incoming Performance results data the instructions document

Information on the actual performance of Instructions 1 2 3 4 5 Within the Import Substitution Programme 3. In 2016, in order to reduce dependence of domestic producers of the President and Government of the Russian of PJSC FGC UES, in 2016 the following of transformer equipment on supplies of load voltage regulating activities were implemented: equipment by Maschinenfabrik Reinhausen, Germany (MR) 1. There were developed and approved (at the present time MR has a monopoly for supplies of load Federation by Federal Grid Company in 2016 the methods for determining of the origin voltage regulating equipment), PJSC FGC UES and Chinese country of secondary systems and their company, Huaming Power Equipment Co., Ltd (Huaming), signed elements for securing the procedure of a memorandum on cooperation within the implementation of providing preferences to the manufacturers the production localization project for load voltage regulating Summary of Registration The Company’s activities to perform of domestic secondary electrical equipment equipment at the production site of Togliatti Transformer LLC. Instruction the incoming Performance results The parties agreed to establish maintenance centres for load data the instructions while performing the procurement document (Order No. 24 of 27 January 2016); voltage regulating equipment at the territory of the Russian Federation. 2. Analytical work was carried out to 1 2 3 4 5 identify critical positions of materials and 4. To increase an export potential of domestic producers of components used in the production of electrical equipment, cooperation with foreign consumers of 1. Instruction of No. On introducing Within the development of the action plan The Methods for self-evaluation of corporate governance of PJSC electrical equipment, but not manufactured electrical equipment was carried out (Vietnam Electricity EVN the President ISH-P13-5859 of the provisions (“road map”) related to introducing the FGC UES were approved by the resolution of the Board of Directors at the territory of the Russian Federation, NPT, Belgian electricity transmission system operator, Elia) and of the Russian 31 July 2014 of the Corporate provisions of the Corporate Governance in April of 2016, (minutes No. 318 of 28 April 2016). This document such list of materials and components was interaction with JSC The Russian Export Center was established Federation Governance Code Code, the Company made and the Board of was developed on the basis of methods approved by the order of published on official website of PJSC FGC (financial and non-financial assistance). The result of interaction Directors approved the action plan aimed at Rosimuschesvo No. 306 of 22 August 2014 for self-evaluation of UES and sent to operating and maintenance with Vietnam Electricity EVN NPT was the participation of developing corporate governance of corporate governance in the companies with state participation in companies and to Federal Executive JSC R&D Centre of FGC UES in the International bidding for PJSC FGC UES for 2016 (minutes No. 318 order to ensure comparability of the annual evaluation performed Authorities for encouraging the production working-out of development strategy for Vietnamese electric grid of 25 April 2016) by the Company. of these materials and components at the facilities up to 2030. The plan determined a number of key For more information on evaluation of Company’s corporate territory of the Russian Federation. activities for the reporting period, including governance in 2016, see Report on Corporate Governance / General analysis of necessity to update internal Information on Corporate Governance in the Company / Evaluation 3. Instruction of No. Pr. -2821 On the introduction In implementation of the assignments of the In accordance with the minutes of the Board of Directors No. 307 documents issued by the Company of Corporate Governance Quality the President of 5 December of a bonus system President of the Russian Federation of 1 February 01 2016 on the item: of Russian 2014 for management on No. Pr-2821 of 5 December 2014, and also and standard documents issued for the The Methods for self-evaluation of corporate governance of PJSC 1. Inclusion of the target values for OPEX Reduction Indicator needs of its subsidiaries. In addition, the Federation the basis of their of the Directive of the Russian Government into the list of key performance indicators of the Company’s FGC UES subsidiaries were approved by the resolution of the Board key performance No. 2303p-P13 of 16 April 2015, the Board of development of methods for assessing of Directors (minutes of 20 February 2017). management that must be considered when making decisions the corporate governance of PJSC FGC indicators due Directors instructed (minutes No. 274 of about compensation and personnel decisions, as well as of UES and its subsidiaries, as well as the The Regulations on the evaluation of the Board of Directors’ to the necessity 25 June 2015) the Chairman of the the aligning of the amount of remuneration to be paid to the Regulations on the evaluation of the activities activities were approved by the resolution of the Board of Directors of reduction of Management Board of the Company to Company’s management with achievement of ‘OPEX Reduction’ of the Company’s Board of Directors, were (minutes of 28 April 2016). operating expenses submit for consideration of the Board of Indicator targets”. (costs) not less that Directors: schedulled. Analysis of the corporate For more information on the evaluation of the Board of Directors’ by 2-3% per year It has been resolved: governance practice on the basis of the road activities in 2016, see Report on Corporate Governance / Report of – item on including the target values for map implementation was declared as the key the Company’s Board of Directors/Evaluation of Board’s activities in ‘OPEX reduction’ Indicator into the list 1.1. To make amendments to the Methods for Calculation and priority of the plan. the reporting year. of key performance indicators of the Evaluation of Key Performance Indicators for PJSC FGC UES’s Company’s management that must be Senior Management, as approved by the decision of the Board of As of December 2016, the actions included in the plan were considered when making decisions about Directors of 19 December 2014 (minutes No. 243 of 22 December implemented by PJSC FGC UES in full. Expert Council of the compensation and personnel decisions, 2014), aimed at replacing the existing KPI “Reduction in unit Russian Government noted positive dynamics while monitoring the as well as of the aligning of the amount of operating expenses” with the KPI “Reduction in unit operating implementation of Corporate Governance Code in the companies remuneration to be paid to the Company’s expenses (costs).” with state participation and assigned to PJSC FGC UES the fifth management with achievement of the highest ranking in its rating. 1.2. To set the target value for the KPI “Reduction in unit operating ‘OPEX reduction’ Indicator; expenses (costs)” at the level of at least 14.2 % as of the end of For more information on compliance with the Corporate governance – item on the amending of provisions of 2015, compared to the level of 2014. code, see Appendix 3 to the annual report the labour agreement (contract) with Also, the indicator of the reduction in operating expenses (costs) 2. Instruction of No. On step-by-step PJSC FGC UES carries out its activities 1. At the end of 2016, the share of domestic electrical equipment the Company’s CEO with respect to the is currently incorporated in the draft methods for calculation and the President ISH-P13-1419 of substitution of related to the import substitution in procurements, included in the Import Substitution Programme, incorporation of the obligation to achieve evaluation of KPIs implementation for senior managers of PJSC of the Russian 5 March 2015 purchases of foreign accordance with the Import Substitution amounted to 70%. such target levels of the ‘OPEX reduction’ FGC UES for 2016, approved by the resolution of the Board of Directors (minutes No. 354 of 9 February 2017 ), while the target Federation products (works, Program for Equipment, Technologies Data on historical dynamics of respective indicator is shown in Indicator, as specified in the Company’s services) with those of Materials and Systems for 2015-2019 Long-Term Development Programme, value of the indicator is currently set at the level no less than 10% section Strategic Report / Sustainability results / Procurement / from the actual value in 2015. of Russian products approved by the order No. 455 of 10 October Import Substitution Programme thereto. (works, services) of 2014. As per Section 4, Paragraph 4.1 of the Regulations on terms and equivalent technical 2. In 2016, the Company continued the implementation of its conditions of labour contracts and determinations of amounts of In accordance with the Directive for the long-term contracts with manufacturers of electrical equipment parameters and representatives of interests of the Russian remunerations and compensations for senior managers of PJSC consumer properties. envisaging localization of its production at the territory of the FGC UES, as approved by the decision of the Board of Directors Federation in the meetings of the Board of Russian Federation. In 2016, in accordance with the long-term Directors of the open joint-stock companies (minutes No. 105 of 17 June 2010), “the system of material contract with Power Machines Toshiba. High-voltage transformers incentives for the Company’s senior managers aligns the amount with the total participation share of the LLC, 1000 MVA of transformer capacity were procured. Russian Federation exceeding 50% of remuneration to the achievement of key performance indicators (No. 1346p-P13 of 5 March 2015), the (hereinafter, KPI), as established by the Company’s Board of measures on step-by-step substitution Directors , including those established as part of the Long-Term of foreign products (works, services) Development Programme”. Thus, upon the incorporation of the procurements with domestic products ‘OPEX reduction’ Indicator in the list of key performance indicators (works, services) of equivalent technical for the Company’s managers, the ratio of this KPI achievement is parameters and consumer properties are automatically accounted for in the system of remuneration of the included in the Long-term Development Chairman of the Company’s Management Board, i.e. there is no Programme of PJSC FGC UES approved by need for any additional amendment to the labour contract signed the resolution of the Board of Directors with the Chairman of the Company’s Management Board. No. 243 of 22 December 2014. For more information on the Company’s key performance indicators The activities planned for 2016 were see section Strategic Report / Market Review, Strategy and KPIs / implemented in full. Key Performance Indicators For more information on remuneration of the Chairman and members of the Management Board see section Report on Corporate Governance / Remuneration system for members of the Board of Directors and Management Bodies / Remuneration System for the Chairman and the Members of the Management Board

116 PJSC FGC UES Annual Report 2016 117 INFORMATION ON THE ACTUAL PERFORMANCE OF INSTRUCTIONS Appendix 6 OF THE PRESIDENT AND GOVERNMENT OF THE RUSSIAN FEDERATION

Summary of Summary of Registration The Company’s activities to perform Registration The Company’s activities to perform Instruction the incoming Performance results Instruction the incoming Performance results data the instructions data the instructions document document

1 2 3 4 5 1 2 3 4 5

4. Instruction of No. Pr-3013 of On developing For implementation of the Instruction Starting from 2016, reports on the achievement of the approved Unified Treasury of PJSC FGC UES performs function of financial the President 27 December and approving of No. Pr-3013, Paragraph 2, the Company key performance indicators will be submitted, along with the centre for the companies of the Group, i.e.: of Russian 2014 the list of internal developed and approved the following other materials required for the preparation and holding of annual – concentrates free liquidity on its accounts; Federation documents, documents: general meetings of shareholders, within time frames in conformity governing the with the Federal law No. 208-FZ, On Joint-Stock Companies, of – takes decisions in relation to time period and tools of allocation Regulations on increase of investment of temporarily available funds; Company’s activities; and operating efficiency and reduction of 26 December 1995. Currently, efforts are being undertaken to on the mandatory expenses of PJSC FGC UES (approved by the prepare reports on the achievement of key performance indicators – redistributes financial resources between the companies of the reporting on resolution of the Board of Directors, minutes of PJSC FGC UES in 2016, to be further submitted along with the Group; progress in the No. 312 of 28 March 2016); other materials, for consideration at the AGM in 2017. – determines fund-raising forms and performance at the capital implementation For more information on the Company’s key performance indicators market; of long-term Provision on internal audit (approved by the resolution of the Board of Directors, minutes see section Strategic Report / Market Review, Strategy and KPIs / – approves and makes payments of branches; development Key Performance Indicators programmes, and No. 291of 19 November 2015); – makes over 95% of payments; on the achievement Provision on risk management system – controls the implementation of the limits within the limits of the approved (approved by the resolution of the Board of approved by the Board of Directors of subsidiaries and targets in respect Directors, minutes No. 291 of November 19, monitors the subsidiaries cash balances via corporate financial of key performance 2015. Updated by the resolution of the Board settlements centre; indicators of Directors, minutes No. 347 of December 13, 2016); – within the financing of investment activities via corporate financial settlements centre controls timely manner of payments Provision on quality management system of contractors to subcontractors in accordance with the (approved by the resolution of the Board of approved register of payment. Directors, minutes No. 291 of 19 November 2015); Due to the introducing of Unified Treasury in PJSC FGC UES Group the following quality effects were achieved: Provision on procedure of development and implementation of innovative development – Improvement of transparency of treasury processes and programmes (approved by the order of strengthening of financial control in relation branches and PJSC FGC UES No. 445 of 16 November subsidiaries; 2015); – Increase of timeliness and quality of management decisions For implementation of the Instruction related to management of financial resources; No. 3013, Paragraph 3 to the extent of the – Increase of business processes efficiency and optimisation reporting on the implementation of long-term of labour and administrative costs while performing treasury development programmes, the Board of functions; Directors instructed the Chairman of the – Decrease of financial risks. Management Board (minutes No. 267 of 25 May 2015) as to ensure provision, along Functioning and further development of Unified Treasury allowed with other materials mandatory for the the Company to achieve an additional economic effect in amount preparation and holding of annual general of RUB 431 mln during the year. The report on economic effect meetings of shareholders, of reports on the was submitted to Rosfinmonitoring and Ministry of Finances of the implementation of the Russian Federation. PJSC FGC UES’s development programme 6. Instruction of No. 596 of 7 On Disposal the Non- In 2012, the Company has been carrying Information on disposal of non-core assets in 2016 is given in and on the achievement of the approved the President May 2012 core Assets out activities aimed at identification and Appendix 12 to the annual report. key performance indicators in due time, in of Russian management of non-core assets. The Board conformity with the Federal Law No. 208-FZ, Information on disposal of non-core assets is placed quarterly Federation of Directors of JSC FGC UES (extract from on Interdepartmental Portal for Management of State Property On Joint-Stock Companies, of 26 December the minutes of the meeting of the Board of 1995. (Rosimuschestvo), information on the results of 2016 is presented Directors No. 178 of 16 November 2012) in full and includes all the implemented facilities owned by the 5. Instruction of No. Pr-1032 On ensuring a In the course of performance of the Over the course of 2016, The Company undertook activities as approved the Management Programme for subsidiaries of PJSC FGC UES. the President (internal) creation of single Directive, the existing system of financial follows: Non-core Assets (hereinafter - NCA) and by resolution of the Board of Directors (extract of the Russian of 7 May 2014 treasuries at parent flow management PJSC FGC UES was – Inventory auditing and the optimisation of the structure of Federation organisations, analysed and the respective report was from the minutes of the meeting No. 311 of transaction accounts of the Executive Office and branches of 14 March 2016) new version of NCA was subsidiaries, and compiled with description of main areas for PJSC FGC UES; associates further improvements and enhancement approved. of efficiency in the operation of a Unified – We implemented a set of activities aimed at the improving the The Registers of Non-core Assets in Treasury based at PJSC FGC UES, which was Group’s information structure, including introducing of Unified accordance with NCA Management further submitted to the Ministry of Finance Accounting Treasury System and tools for improvement of Programme (version 2012) were approved of the Russian Federation. functions and control efficiency (introducing of electronic by the Management Board, Register of Non- storage for documents, electronic digital signatures, automation core Assets updated in accordance with the Following the analysis performed, as per the of operational cash planning); Directive, a target structure of the Unified Management Programme (new version) was Treasury at PJSC FGC UES Group was – Based on the developed model of centralisation and automation approved by the Board of Directors of PJSC developed, along with a plan/schedule of of the treasury functional, headcount of financial services at FGC UES in May, 2016 (extract from minutes actions to create the target structure of the branches (MES, PMES) was optimised; No. 321 of 25 May 2016). Unified Treasury based at PJSC FGC UES. – Several internal documents, that were new to the Group, were According to the directives of the The Unified Treasury as part of the Company developed, specifically, Provision on securing of financial Government of the Russian Federation No. currently operates within the Group. sustainability of PJSC FGC UES subsidiaries and other 4863p-P13 of 7 July 2016 and in line with the companies in which PJSC FGC UES participates and Regulations Methodical Guidelines for identification and on monitoring of activities of subsidiaries in which PJSC FGC disposal of non-core assets (hereinafter – UES and on procedure of its maintaining and approval. Methodical Guidelines), developed by the Ministry of Economic Development and the Federal Property Management Agency, PJSC FGC UES developed Non-Core Assets Disposal Programme for PJSC FGC UES and its Subsidiaries (hereinafter – Non-Core Assets Disposal Programme) and updated the Register of Non-Core Assets of PJSC FGC UES, approved by the Board of Directors of PJSC FGC UES (extract from minutes No. 350/12 of 28 December 2016).

118 PJSC FGC UES Annual Report 2016 119 INFORMATION ON THE ACTUAL PERFORMANCE OF INSTRUCTIONS Appendix 6 OF THE PRESIDENT AND GOVERNMENT OF THE RUSSIAN FEDERATION

Summary of Summary of Registration The Company’s activities to perform Registration The Company’s activities to perform Instruction the incoming Performance results Instruction the incoming Performance results data the instructions data the instructions document document

1 2 3 4 5 1 2 3 4 5 7. Instruction of No. 6362p-P13 On expanding 1. The Board of Directors of PJSC FGC UES 1. Advisory body was formed including representatives of non- 10. Instruction of No. Pr-1474 of 5 On key performance The methods for calculation and evaluation The Board of Directors approved methods for calculation and the President of 24 October access for small (minutes No. 279 of 24 April 2015, agenda governmental organizations, which was approved by the Order the President July 2013 indicators to be of key performance indicators set for top evaluation of key performance indicators for top managers of JSC of the Russian 2013 and medium-sized item 6) made a number of resolutions of JSC FGC UES No. 93 of 25 February 2014 “On establishing of of the Russian adopted by joint- managers of JSC FGC UES are based on the FGC UES for 2014 (minutes No. 217 of 15 April 2014) Federation businesses to related to expanding access for small and Advisory body to ensure efficiency of procurement conducted by Federation stock companies methodological guidelines about using key 2015 (minutes No. 243 of 22 December 2014); PJSC FGC UES – procurements medium-sized businesses to competitive JSC FGC UES for small and medium-sized business entities”. performance indicators by the government- for 2016 (minutes No. 354 of 9 February 2017). conducted by procurements conducted by the Company. owned corporations, government-owned 2. The Order of JSC FGC UES No. 92 of 25 February 2014 “On For more information on the Company’s key performance indicators infrastructure 2. The activities are performed for processing approval of the partnership programme between JSC FGC UES and companies and government-owned unitary monopolies and enterprises as well as business entities, see section Strategic Report / Market Review, Strategy and KPIs / applications from small and medium-sized small and medium-sized business entities” was approved, being Key Performance Indicators companies with state business entities on joining the partnership drawn up on the basis of guidelines set out in the Letter of the in which the total share of the Russian participation For the programme between PJSC FGC UES and Ministry of Economic Development of Russia (No. 26231-ЕЕ/D28I Federation and a constituent of the Russian purpose of fulfillment small and medium-sized business entities, of 28 November 2013). Federation in the charter capital exceeds 50% of clauses 7, 8, 9, and the register of small and medium-sized in total. 10, 12, 17, 18, 19, 3. The percentage of e-procurements comprise more than 90% of business entities is being drawn up for 11. Instruction No. 1250-r of 9 On raising labour the Resolution of the Board of Directors The measures to be taken in order to improve labour productivity 20, 24, 25, 26,27, 28, bidding procedures’ total volume, which exceeds indicators set further cooperation upon entry into force of the July 2014 productivity as per (minutes No. 242 of 19 December 2014), have been specified in the Long-term Development Programme 30, 31 of the Action forth in the “road map”. of the Directive of the Government of the Government clause 6, section 2 the Chairman of the Management Board was of PJSC FGC UES. The Company also approved programmes for Plan (“road map”) 4. As part of implementation of cl. 31 of the Action Plan Russian Federation No. 1352 of 11 December of the Russian of the Action Plan assigned to ensure that appropriate steps are long-term improvement of efficiency. Their target is the reduction titled “Expanding (“roadmap”), KPI calculation methodology for top managers of 2014 “On specific aspects of participation Federation aimed at raising taken to improve labour productivity in the of operational and investment costs (the “40/40” project). One access for small JSC FGC UES approved by the Board of Directors (minutes No. 243 of small and medium-sized enterprises in labour productivity, Company. of the key areas of the “40/40 project” is the Labour Productivity and medium-sized of 19 December 2014) was amended by adding labour productivity procurement of goods, work, services by and the creation Improvement Programme. businesses to indicator. certain types of legal entities”. and modernisation procurements Labour productivity indicator was added to the Methods for 5. As part of implementation of clauses 17, 24, 25, amendments of highly productive conducted by 3. The Company amended Procurement calculation and evaluation of key performance indicators for top were made to Procurement Regulations on goods, work, services workplaces approved infrastructure Regulations of PJSC FGC UES upon entry into managers of PJSC FGC UES for 2015, which was approved by the for the needs of PJSC FGC UES (version No. 279 of 24 July 2015) by the Directive of monopolies and force of the Directive of the Government of Board of Directors (minutes No. 243 of 19 December 2014), as well the Government companies with the Russian Federation No. 1352 of 6. As part of implementation of cl. 30, the Order No. 177 of 22 April as the Methods for calculation and evaluation of key performance of the Russian state participation” 11 December 2014 “On specific aspects of 2015 “On approval of the methods for calculating and evaluating indicators for top managers of PJSC FGC UES for 2016, approved Federation No. 1250- approved by the participation of small and medium-sized the performance of KPIs for managers of executive departments by the Board of Directors (minutes No. 354 of 9 February 2017). enterprises in procurement of goods, work, and divisions of JSC FGC UES branches – MES, R&D Center”, and r of 09 July 2014 Directive of the For more information on labour productivity in the Company please services by certain types of legal entities” – the Order No. 145 of 29 April 2016 “On approval of the methods for Government of the see section Strategic Report / Sustainability results Russian Federation 1 July 2015. calculating and evaluating the performance of KPIs for managers For more information on the Company’s key performance indicators No. 867-p of 29 May 4. The Company drew up the List of goods, of executive departments and divisions of JSC FGC UES branches see section Strategic Report / Market Review, Strategy and KPIs / 2013 work, services to be purchased from small – MES, R&D Center” were issued. Key Performance Indicators and medium-sized enterprises. For more information on the Company’s procurement activities 5. PJSC FGC UES issued the Order No. 191 of please see section Strategic Report / Sustainability results / 12. Minutes of No. DM-P13-2pr On development The Board of Directors of PJSC FGU UES Reduction in unit operating expenses against the level of 2012 15 April 2014 “On creation and development Procurement the Meeting of 18 January (updating) of plans (minutes No. 346 of 28 November 2016) amounted to 46.03%. The total effect of reducing operating of organisational and technical conditions at the office 2016 (programmes) on assigned the Chairman of the Management expenses amounted to RUB 17.3 billion. for introducing of innovative and high-tech of the operating costs Board to: Given results were achieved thanks to reduction in purchase products at electric grid facilities of PJSC Chairman reduction for 10 1. Within a period of one month, as part of costs, reduction in cost of long-term contracts, reduction in cost FGC UES, including those produced by small of the percent the Long-Term Development Programme, of contracts for protection of facilities, for IT services, and by and medium-sized enterprises”. Government ensure the development (updating) of optimizing headcount. of the Russian measures (activities) aimed at operating 6. The Company adopted KPIs for Federation management (percentage of procurements costs reduction in 2016 in FGC UES Group for from small and medium-sized enterprises no less than 10 percent taking into account in 2015) Instruction No. the requirement to implement the activities of the ISH-P13-2047 of set forth in the directives of the Government Instruction of No. Pr-3086 of On development On 19 December 2014, the Board of Directors The Board of Directors of JSC FGC UES approved the Standard for 8. Government 11 April 2016 of the Russian Federation No. 303p-P13 of 16 the President 27 December and approval of the of JSC FGC UES approved the Long-Term the annual independent audit of the Programme implementation. of the Russian April 2015, including subsidiaries; of the Russian 2013 Company's long- Development Programme of JSC FGC UES for No later than 10 July of the year following the reporting year, the Federation 2. Ensure fulfillment of the directive of the Federation term development 2015–2019 and Prospects to 2030 (minutes audit results shall be submitted to the Ministry of Energy of Russia Government of the Russian Federation No. programme, No. 243 of 22 December 2014). in the form of suggestions on programme adjustment. 4750p-P13 of 4 April 2016 “On development performance of audit So far audit of the Long-Term Development Programme (updating) of plans (programmes) on on the programme implementation was held twice: in 2015 upon results of 2014 operating costs reduction for 10 percent”, implementation, and and in 2016 upon results of 2015. Suggestions on programme pursuant to the approved Business Plan of approval of audit adjustment were submitted to the Ministry of Energy of Russia. PJSC FGC UES, taking into account operating standards In 2017, the Report on implementation of the Long-Term costs reduction in 2015 for no less than Development Programme in 2016 was drawn up, audit service was 24.2% YOY, in 2016 for no less than 3% YOY, purchased. Audited Report will be included to the materials for the for 2014–2015 for no less than 27.2%. Annual General Meeting of Shareholders of PJSC FGC UES in 2017. 13. Instruction No. AD-P36- On development The Board of Directors of PJSC FGC UES The indicator “innovation activity efficiency” was included to the For more information on the Long-Term Development Programme of of the 6296 (cl. 5) of of indicators of (minutes No. 352 of 9 January 2016) Methods for Calculation and Evaluation of KPIs for top managers PJSC FGC UES please see section Strategic Report / Market Review, Government 15 September innovation activities assigned to: of PJSC FGC UES for 2016 approved by the Board of Directors Strategy and KPIs / Development Strategy of the Russian 2015 for state-owned – Amend the Long-Term Development (minutes No. 354 of 9 February 2017) with 20% weight number. Federation companies This indicator was also included to the list of KPIs of the Long- Instruction No. ISH-P8-6196 On including the On 19 December 2014 the Board of Directors Given the main initiatives of the Long-Term Development Programme of PJSC FGC UES approved 9. Term Development Programme submitted for approval. of the of 15 August key parameters of of JSC FGC UES (minutes No. 243 of 22 Programme, the corporate HR policy is particularly focused on the by the Resolution of the Board of Directors Government 2014 manpower needs December 2014) approved the Long-Term growth of labour productivity while maintaining the requirements of JSC FGC UES of 19 December 2014 For more information on the Company’s innovation activities please of the Russian (including those Development Programme of JSC FGC UES for to reliability of operations of the electric grid complex. (minutes No. 243 of 22 December 2014) see section Strategic Report / Innovative development by including an integrated key indicator Federation for engineering 2015–2019 and forecast until 2030 to which Corporate HR policy is based on the optimal use of manpower in For more information on the Company’s key performance indicators “innovation activity efficiency” to the list and technical the Manpower Needs Section is included. the Company’s interests and continuous professional development see section Strategic Report / Market Review, Strategy and KPIs / of KPIs of the Long-Term Development specialists) in the of its employees. Key Performance Indicators Company’s long- Programme of PJSC FGC UES. For more information on remuneration of the Chairman and term development For more information on the Company’s policy please see section – Starting from 2016, include an integrated members of the Management Board see section Report on programme Strategic Report / Sustainability results / HR and Social Policy key indicator “innovation activity efficiency” Corporate Governance / Remuneration system for members of the For more information on the Long-Term Development Programme of to the Methods for Calculation and Board of Directors and Management Bodies / Remuneration System PJSC FGC UES please see section Strategic Report / Market Review, Evaluation of KPIs for top managers of for the Chairman and the Members of the Management Board Strategy and KPIs / Development Strategy PJSC FGC UES with 20% weight number.

120 PJSC FGC UES Annual Report 2016 121 INFORMATION ON THE ACTUAL PERFORMANCE OF INSTRUCTIONS Appendix 6 OF THE PRESIDENT AND GOVERNMENT OF THE RUSSIAN FEDERATION

Summary of Registration The Company’s activities to perform Instruction the incoming Performance results APPENDIX . data the instructions document

1 2 3 4 5 Information about participation 14. Instruction No. On procurement The Board of Directors of PJSC FGU UES As part of implementation thereof, amendments were made to of the ISH-P13-1872 of domestic (minutes No. 342 of 13 October 2016) Procurement Regulations on goods, work, services for the needs of PJSC FGC UES in commercial Government of 1 April 2016 software required amended the Procurement Regulations of PJSC FGC UES (version No. 342 of 13 October 2016) of the Russian for operations related to competitive domestic software As part of implementation of the assignment to the Chairman of Federation of joint-stock required for operations of the Company. the Management Board, the letter of PJSC FGC UES No. FR-5925 and non-commercial organisations companies with The Chairman of the Management Board was of 14 October 2017 was sent to subsidiaries and associates. state participation assigned to ensure amendments are made Additionally, in accordance with Procurement Regulations, data to Procurement Regulations for the needs of on software procurement that was not included to the Software subsidiaries, the total share of direct and (or) indirect participation of PJSC FGC UES in the no later than 7 calendar days from the date of publishing of Regulating documents and policies on managing susidiaries authorized capitals of which exceeds 50%. information system (www.zakupki.gov.ru) and specialized websites on the Internet. and associates For more information on the Company’s procurement activities please see section Strategic Report / Sustainability results / Procurement Managing subsidiaries and business entities in – Methodology for KPI calculation and target which PJSC FGC UES participates is regulated by the achievement evaluation in subsidiaries and 15. Minutes of No. DM-P9-38pr On amending Pursuant to the Resolution of the As part of implementation, amendments were made to following internal documents of the Company: associates of PJSC FGC UES, procedure for the Meeting of 14 June 2016 the Company's Management Board of PJSC FGU UES Procurement Regulations on goods, work, services for the needs Procurement (minutes No. 1422 of 2 November 2016), of PJSC FGC UES (version No. 352 of 9 September 2017) – Regulations on managing subsidiaries, associates of of the Policy in relation the Board of Directors was recommended As part of implementation of the assignment of the Board of FGC UES with subsidiaries and associates with Chairman to the innovative to amend the Procurement Regulations PJSC FGC UES and other business entities in which Directors to the Chairman of the Management Board, the letter PJSC FGC UES participates; of the construction with regard to prioritizing procurement of of PJSC FGC UES No. TSA/278/49 of 7 February 2017 was sent for KPI calculation and performance evaluation; Government materials domestic innovative construction materials; to subsidiaries and associates. – Standard for drawing up summary instructions to of the Russian assign the Chairman of the Management – PJSC FGC UES’s Order on Approval of Standards and For more information on the Company’s procurement activities representatives of PJSC FGC UES on issues included Federation Board to ensure amendments are made to Template Regulations on Managing Subsidiaries the Procurement Regulations on goods, work, please see section Strategic Report / Sustainability results / in the agendas of General Meetings of Shareholders Procurement and Associates and other organisational and services of subsidiaries. (participants) and meetings of the Boards of administrative documents of PJSC FGC UES. directors (supervisory boards) of entities in which PJSC FGC UES participates; The key document regulating subsidiaries and associates management is Regulations on managing subsidiaries, associates of PJSC FGC UES and other business entities in which PJSC FGC UES participates.

overnance system of susidiaries distriution of responsiility and authorities among the Company’s governing odies and susidiaries

The main forms of cooperation between PJSC FGC UES – PJSC FGC UES contributes to the drafting of and its subsidiaries and associates are the following: proposals and decision-making by the management bodies of its subsidiaries through the Company’s – The Board of Directors of PJSC FGC UES reviews representatives at General Meetings of Shareholders issues pertaining to the Company representatives’ and in the Boards of Directors of subsidiaries; position on draft decisions on issues included in the agendas of GMS and meetings of the Boards of – Management Board of PJSC FGC UES reviews issues Directors of subsidiaries; of engagement with subsidiaries in accordance with its remit determined by the Company’s Articles of Association.

122 PJSC FGC UES Annual Report 2016 123 INFORMATION ON THE ACTUAL PERFORMANCE OF INSTRUCTIONS Appendix 7 OF THE PRESIDENT AND GOVERNMENT OF THE RUSSIAN FEDERATION The amount of Expenses of dividends on subsidiary for charitable Share of PJSC FGC the Company’s Financial Indicators for 2016 and The Company's UES in the Company’s shares owned Subsidiaries, associates and other entities in which PJSC FGC UES participates No. Region of operation Core activity sponsorship abbreviated name 1 authorised capital as by PJSC FGC support in of December 31, 2016 UES in the Net profit, reporting year, 2016, Core 100%-owned subsidiaries Core subsidiaries with less than Associates and other core entities Revenue, RUB 100% owned by PJSC FGC UES with less than 50% owned by PJSC RUB RUB RUB thousand thousand FGC UES thousand thousand 4 JSC ESSK UES Moscow, Saint Procurement agent 100.00% 170,820 23,301 14,310 0 Petersburg, services JSC “MUS Energetiki” JSC Tomsk Trunk Grids JSC Kuban Trunk Grids Yekaterinburg, (52.025%) (48.999%) Krasnoyarsk, Samara, Khabarovsk, Surgut, JSC IPS SakRusenergo PJSC INTER RAO JSC R&D Centre of FGC UES Zheleznovodsk (50%) (14.075%) 5 JSC Elektrosetservis Moscow, Moscow Region, Maintenance and repair of 100.00% 2,692,733 –17,576 0 0 UNEG Ryazan Region, Novgorod electric grid facilities JSC Centre for Engineering Region, JSC ACRA and Construction Management Novosibirsk, Ulyanovsk (3.7%) of UES Region, Pyatigorsk, Non-core subsidiaries and Yekaterinburg, JSC Elektrosetservis UNEG FGC – Asset Management LLC Khabarovsk, Surgut associates (0.01%) 6 Index Energetiki – Moscow Operations with securities 100.00% 106,442 14,034,996 0 0 FGC UES, LLC CJSC TaigaEnergoStroy JSC ESSK UES 7 JSC Tomsk Trunk Tomsk, Tomsk Region Provision of electricity 52.025% 191,642 23,318 0 0 (0.00067%) Grids transmission and distribution services 8 JSC IPS Georgia; Electricity transmission 50.00% –3 –3 0 – Index Energetiki- FGC UES LLC SakRusenergo on the territory of the services (former JSC IPS Russain Federation: GruzRosenergo) Karachai-Cherkess Autonomous Region, Krasnodar Territory 9 JSC Kuban Trunk Krasnodar, Krasnodar Provision of electricity 48.999% 124,420 –242,731 0 – Information about participation of PJSC FGC UES in subsidiaries, associates, Grids Territory transmission and distribution services Expenses of and other entities The amount of 10 PJSC INTER RAO Moscow; Electricity and heat 14.0749% 43,180,221 97,475,269 246,343 – dividends on subsidiary for charitable branch: Ivanovo Region; production Share of PJSC FGC the Company’s Financial Indicators for 2016 and The Company's UES in the Company’s shares owned representative offices: No. Region of operation Core activity sponsorship abbreviated name 1 authorised capital as by PJSC FGC Ecuador, Belgium UES in the support in of December 31, 2016 11 CJSC Krasnoyarsk Provision of electricity 1 share –3 –3 0 – Net profit, reporting year, 2016, Revenue, RUB TaigaEnergoStroy transmission services, RUB RUB RUB thousand thousand performing functions of thousand thousand construction manager 12 JSC ACRA Moscow Rating activity 3.704% –3 –3 0 – Core entities

2 1. JSC MUS Energetiki Moscow, Saint Сommunication services 100.00% 1,270,732 49,130 5,000 0 13 FGC – Asset Moscow Operations with securities 0.010%4 159,0585 2,134,8525 0 0 Petersburg, Samara, Management, LLC Yekaterinburg, Khabarovsk, Vladivostok, Non-core entities Krasnoyarsk, Omsk, 14 JSC Mobile Gas Moscow, Moscow Region, Electricity production 100.00% 9,642,209 –110,622 0 0 Novosibirsk, Turbine Electric Krasnodar territory, the Tyumen, Surgut, Power Plants Tuva Republic Perm, Chelyabinsk, 15 JSC Chita, Ulan-Ude Communication service, 100.00% 221,729 21,762 0 0 Orenburg, Chitatekhenergo design and operation of Ulyanovsk, Nizny communication lines Novgorod, 16 JSC APBE Moscow Power distributing 100.00% 12,539,187 -6,588 0 0 Saratov, Krasnodar, and supply activities, Rostov-on-Don, Sochi development of forecasts for electricity sector 2 JSC R&D Centre of Moscow, Novosibirsk, R&D, integrated design 100.00% 2,371,554 5,670 0 0 FGC UES Vladivostok in the energy industry 17 JSC Nurenergo The Chechen Republic Property lease 76.9996% 65,943 -79,946 0 0 (design and exploration works), industrial and civil engineering, testing, 18 CJSC Moscow Production and sales of 49.00% 0 -1,107 0 0 appraisal, and certification Severovostokenergo electricity and heat 3 JSC Centre for Moscow, Saint Performing functions of 100.00% 24,594,291 285,296 0 0 Engineering and Petersburg, Pyatigorsk, construction manager 19 IT Energy Service, Moscow IT services 79.999% 610,847 -24,882 171 – LLC Construction Yekaterinburg, in major construction, Management of UES reconstruction and Krasnoyarsk, technical re-equipment of Khabarovsk, Surgut electric grid facilities

124 PJSC FGC UES Annual Report 2016 125 INFORMATION ON THE ACTUAL PERFORMANCE OF INSTRUCTIONS Appendix 7 OF THE PRESIDENT AND GOVERNMENT OF THE RUSSIAN FEDERATION The amount of Expenses of dividends on subsidiary for charitable Share of PJSC FGC the Company’s Financial Indicators for 2016 and Non-commercial Financial conditions of The Company's UES in the Company’s shares owned Brief profile of the organisation (types of activities) Purpose of participation No. Region of operation Core activity sponsorship organisation name participation abbreviated name 1 authorised capital as by PJSC FGC support in of December 31, 2016 UES in the 2016, SRO Non-profit SRO Non-profit Partnership PeterburgEnergoAudit controls the members’ Possibility of conducting RUB 18,000 including Revenue, Net profit, reporting year, RUB Partnership activities in relation to compliance with the requirements of Russian mandatory energy inspections VAT quarterly RUB RUB RUB thousand thousand PeterburgEnergoAudit legislation, as well as internal documents of SRO by means of scheduled of PJSC FGC UES using its own thousand thousand and unscheduled inspections. resources partially or completely. 20 JSC ENIN Moscow R&D 38.24% 117,717 8,253 7842 – The Supervisory Committee of SRO Non-profit Partnership The measuring stage of the PeterburgEnergoAudit is the body that controls the compliance of SRO mandatory energy inspection members with the requirements of current legislation and internal of PJSC FGC UES in 2017 is 21 CJSC EnergoRynok Moscow Publishing and printing 8.50% –3 –3 0 – documents of SRO. performed using the staff of the services branches only, which allowed to Scheduled inspections of activities of each member of SRO Non-profit reduce the inspection costs. 3 3 Partnership PeterburgEnergoAudit are performed no less than once a year 22 JSC Stend Ivanovo Region Installation, commissioning 0.83% – – 0 – in accordance with the calendar of scheduled inspections. of GTD-110 gas turbine engines and their The bases for unscheduled inspections of activities of a member of SRO modifications; electricity Non-profit Partnership PeterburgEnergoAudit are: production and sales – inquiry of the federal bodies of state power, bodies of state power of constituents of the Russian Federation or bodies of local authorities; 23 JSC DESP Far East, Siberia Integrated design in the 0.0048% 5,257 –117,705 0 0 – a person’s complaint due to the actions (inactions) of a SRO member, power industry (1 share)6 except for anonymous complaints; 24 JSC Non- Moscow Non-Governmental pension 0.0011% –3 –3 0 – – resolution of management bodies of SRO and (or) SRO special bodies. Governmental programme, compulsory In case of violation by SRO member of the requirements of SRO standards Pension Fund NPF pension insurance and rules, conditions for membership in SRO, the inspection materials Elektroenergetiki shall be settled by the Disciplinary Committee of SRO Non-profit Partnership PeterburgEnergoAudit to consider cases of taking disciplinary 1 data related to the companies’ names are provided as of 31 December 2016 action against SRO member. 2 settlement of dividends in arrears accrued at the end of 2014 3 as of 23 March 2017 financial statements were not presented 4 99.99% of shares in the authorised capital of FGC – Asset Management, LLC belong to Index Energetiki – FGC UES, LLC, 100%-owned The Russian National International Council on Large Electric Systems – CIGRE (Conseil Learning new practices and best EUR 40,000, free of VAT subsidiary of PJSC FGC UES Committee of the International des Grands Réseaux Electriques – CIGRE) is the biggest technologies for managing power 5 for the period from 16 November 2015 to 31 December 2016 International Council international non-profit non-governmental and non-profit organization in systems and producing electric 6 the rest of the shares belong to JSC R&D Centre of FGC UES, 100%-owned subsidiary of PJSC FGC UES on Large Electric the field of power industry. equipment for the purpose of Systems CIGRE was founded in France in 1921 and today it is one of the most implementing import substitution Information on participation of PJSC FGC UES in non-commercial organisations reputable scientific and technical associations that unites scientists and programmes adopted at PJSC energy specialists from around the world and has a strong influence on FGC UES; the development of the industry’s strategy in many countries. timely identification of risks and Non-commercial Financial conditions of Brief profile of the organisation (types of activities) Purpose of participation threats based on the international organisation name participation CIGRE Central Office is in Paris. At present, Klaus Froehlich (Switzerland) is the President of CIGRE. From May 2014, Philippe Adam (France) has experience, facilitating the been appointed as the new Secretary General. identification of ways to mitigate Non-profit Partnership In accordance with clause 1, article 33 of the Federal Law On electric Provision of electricity and power Membership fees to the property them, which includes attracting Market Council power industry No. 35-FZ of 26 March 2003, Market Council is created in order to compensate losses in of Non-profit Partnership Market According to its Articles of Association, the major goal of CIGRE is world’s leading specialists and to maintain the functioning of a commercial infrastructure of the market, UNEG grids in accordance with Council, RUB 1,572 thousand coordination of research, exchange experience and scientific and exchange of experience with provide effective interconnection of wholesale and retail markets, creation the Federal Law On electric power research information related functioning of power systems. Design, partners at the international sites; of favourable conditions for attracting investments to power industry industry No. 35-FZ of 26 March construction, and maintenance of HV equipment are at the core of improving the quality of long-term and availability of a common position of wholesale and retail markets' 2003 CIGRE’s mission, as well as planning and operation of power systems, planning of scientific and technical participants in the course of development of regulatory documents development and implementation of new technology for information activities of PJSC FGC UES by for power industry, organization on the basis of self-regulation of the collection and processing and management systems. means of analysing international effective wholesale and retail trade of electricity, power, and other The activities of CIGRE form strategic vision on the power system experience and developing products allowed for circulation on the wholesale and retail markets, in development for the energy policy and are closely connected with the analytical models and creating order to ensure the energy security of the Russian Federation, unity of scientific research and development, defining the key directions in the favourable conditions for using economic area, freedom of economic activities and competition on the integration process. state-of-the-art international wholesale and retail markets, strike a balance of producers and buyers At present CIGRE membership in more than 1,000 organisations and developments and technologies of electricity and power, meeting public needs for reliable and sustainable 7,000 experts involved with all areas of power industry. The main for the benefit of PJSC FGC UES electricity supply. organizational principle of CIGRE is operating via national committees and the power grid complex of the Association of Association of construction organizations SRO Inzhspetsstoy- As part of the Company’s Pursuant to clause 1, article 12 of that unite the industry’s companies and institutions of their countries or Russian Federation; construction Electrosetstoy is an acting self-regulating organisation that was listed investment activity, the branches the federal Law On self-regulating geographic region. At present CIGRE counts members in 95 countries. to increase the efficiency of organizations Self- by the Federal Service for Environmental, Technological and Nuclear of PJSC FGC UES – MES perform organisations No. 315-FZ of 1 operating activities PJSC FGC regulating organisation Supervision in the Register of self-regulating organisations under the construction and installation December 2007, a member of UES, within the framework of Inzhspetsstoy- number SRO-S-054-26102009 of 26 October 2009. operations in-house. These the Association of construction CIGRE, interacts with foreign Electrosetstoy activities are regulated by federal organizations shall make the electric grid companies in terms of statutes – Town-Planning Code of following types of payments: In sharing experience in operation of (Association The main goals and activities of the Association of construction the Russian Federation No. 190-FZ a lump sum – entrance fee and electrical equipment. of construction organizations SRO Inzhspetsstoy-Electrosetstoy are the following: organizations SRO of 29 December 2004. contribution to the compensation Global Energy The Global Energy Association is a highly regarded and renowned Support of research and The annual membership fee is Inzhspetsstoy- – Improving the quality of construction, reconstruction, and major repairs In accordance with the fund, on a regular basis – Association organisation. Our key focus is support of research and innovations innovations in the field of power established by the resolution of Electrosetstoy) of capital construction projects. requirements of the Federal membership fees (quarterly). projects in the field of global energy, and managing an international award industry the Meeting of the Global Energy – Integration of efforts and potential of organizations of the construction Law, PJSC FGC UES has a valid Pursuant to the Minutes No. 21 The Global Energy Prize. Association Members by signing sector, individual entrepreneurs, and scientific organizations for the certificate of admission to the of 18 March 2014 of the Annual the Minutes. development of current policy areas aimed at the development of the works that influence the security General Meeting of the Association The Global Energy Association defines the world’s leading researchers construction market; of capital construction projects of construction organizations deserving the award, the most interesting and useful projects, surveys, In 2017, the membership fee and inventions, functions with the support from the leading Russian comprised RUB 58,200,000 (free – Formation of the concept of scientific and technical development of the No. 0441.04-2015-4716016979- SRO Inzhspetsstoy-Electrosetstoy, energy companies: PJSC Gazprom, JSC Surgutneftegas, and PJSC FGC of VAT) construction sector organizations, coordination and development of the S-054 of 18 August 2015 and is according to the clause 9.23.2 of UES. internal construction market; the member of the Association of the Rules of self-regulation, on construction organizations SRO the basis of the Resolution of the The Global Energy Prize was established in 2002 at the initiative of a – Support of economically favourable and innovation solutions in the area Inzhspetsstoy-Electrosetstoy. Board of Directors of group of famous Russian scientists and supported by the President of of development of the construction market; JSC FGC UES No. 110 of 4 August Russia. In November 2002, at Russia–EU summit Vladimir Putin, the – Control over the activities of the Association members in terms of 2010, quarterly membership fee President of the Russian Federation, announced on inception of a new compliance with the Requirements for issuing the certificates of comprises RUB 48 thousand (VAT scientific award. The new international prize became one of the most admission, the Association’s Standards and Rules as set forth in the free). famous and prestigious awards of its kind very quickly; sometimes it is Association’s Control Rules. unofficially called the “Energy Nobel” in mass media.

126 PJSC FGC UES Annual Report 2016 127 INFORMATION ON THE ACTUAL PERFORMANCE OF INSTRUCTIONS Appendix 7 OF THE PRESIDENT AND GOVERNMENT OF THE RUSSIAN FEDERATION

Non-commercial Financial conditions of APPENDIX . Purpose of participation organisation name participation

Participation of PJSC FGC UES in Pursuant to the extract from Information on debt recovery claims System was established on 20 May 2008 after winding up of JSC RAO consideration of issues relevant minutes No. 24 of 29 April 2016 Technical Council of to the industry and the Company of the Supervisory Board of Non- regarding engineering (technology) in which PJSC FGC UES participates the Board of Directors of JSC RAO UES of Russia No. 273 of 29 February development regulatory and 2008). technical documentation and System, membership fee is set in policy documents on development. the amount of RUB 2,000,000.00 Approval and recognition by the (free of VAT) UES is a member of the Supervisory Board of the Partnership, which is a energy community of deliverables permanently acting collegial management body of the Partnership and performs overall management of the Partnership’s activities. law on debt recovery claim with due sum indicated

of the industry: JSC SO UES, PJSC Rosseti, PJSC RusHydro, PJSC INTER RAO UES The areas of the Partnership’s activities include review and decision- Total claims, Case status in the Claimant Defendant Subect-matter of dispute Case number Debt, RUB Penalties, RUB entities: RUB court – expert review of various projects and works; – analysis of the UES development concept and strategy; PJSC FGC UES State-run enterprise On cost recovery for non- А40- 194,021,849.40 194,021,849.40 – Moscow City Moscow Energy contractual consumption 1072212013- Arbitration Court, – new engineering and technology; Directorate, JSC 127-1023 21 February 2017, – priority development areas of the industry; Moscow United Electric 10:00 am – R&D programmes; Grid Company, the federal city of Moscow – technical regulation and standartization; represented by the – publishing and other activities; Department of Moscow City Property PJSC FGC UES Housing and Utilities On debt and penalty А47-47602016 7,523,811.97 0.00 7,523,811.97 Arbitration Court of Directorate LLC recovery under the the Orenburg Region, agreement No. 729P 20 February 2017 of 5 March 2013 from 1 January 2013 through 31 December 2015 PJSC FGC UES EPM-Energo LLC On debt and penalty А40-611042015 9,758,631.69 0.00 9,758,631.69 Ninth Arbitration recovery under the Appeal Court, 15 agreement unnumb. of February 2017 21 October 2010 from 1 January 2012 through 31 December 2014 PJSC FGC UES Municipal Unitary On debt recovery under the А72-116522016 8,363,727.45 6,179,550.64 2,184,176.81 Arbitration Court Enterprise Electric Grids agreement on electricity of the Ulyanovsk transmission services Region, 15 February 2017 Electric Grid No. 707P of 11 February 2013 for the year 2013 PJSC FGC UES JSC Independent Power On debt recovery under the А40- 3,810,053.06 2,953,963.03 856,090.03 Moscow City Distributing Company of agreement No. 434P of 2034412016 Arbitration Court, 14 the Krasnodar Territory 29 September 2009 from 1 February 2017 January 2014 through 31 December 2015 PJSC FGC UES BNZ LLC On debt recovery under А47-82017 37,691,989.58 33,775,342.39 3,916,647.19 Arbitration Court at the agreement No. 614P the Russian Union on electricity transmission of Industrialists services from 2013 and Entrepreneurs, through 2014 Arbitration Court of the Orenburg Region, 9 February 2017 PJSC FGC UES JSC Izhora Electricity On debt and penalty 1142016-824 21,835,516.85 17,761,896.48 4,073,620.37 Arbitration Court at Company recovery under the the Russian Union agreement No. 827P of of Industrialists 12 December 2013 from 1 and Entrepreneurs January 2014 through 30 April 2016 23 November 2016 (court decision is under preparation, has not come into legal force) PJSC FGC UES JSC Saint-Petersburg Debt recovery for rendered А17-39262016 172,257,212.81 127,426,279.16 44,830,933.66 Arbitration Court of Sale Company services for the year 2014 the Ivanovo Region, 1 March 2017

128 PJSC FGC UES Annual Report 2016 129 INFORMATION ON DEBT RECOVERY CLAIMS Appendix 8 IN WHICH PJSC FGC UES PARTICIPATES

Total claims, Case status in the Total claims, Case status in the Claimant Defendant Subject-matter of dispute Case number Debt, RUB Penalties, RUB Claimant Defendant Subject-matter of dispute Case number Debt, RUB Penalties, RUB RUB court RUB court

PJSC FGC UES JSC Electric Power Debt for the period А51-467/2015 22,067,360.37 20,754,987.84 1,312,373.53 Arbitration Court PJSC FGC UES JSC On debt recovery for the А40- 10845/17 29,120,700.99 21,425,560.72 7,695,140.27 Moscow City Management Company from January through of the Krasnoyarsk Mezhregionenergosbyt period from April through Arbitration Court, September 2016 under the Region, examination March 2014, exceeded 14 February 2017 agreement on electricity of the claim was contracted capacity transmission services No. postponed for 5 April 880/P of 31 January 2014 2017 PJSC FGC UES JSC Regional Power On cost and penalty А45-10165/2016 26,653,901.03 0.00 26,653,901.03 The case was Grid recovery for electricity sent for trial by PJSC FGC UES JSC Uralchem, Azot On debt recovery for А40-8470/17 2,788,959.25 1,958,415.26 830,543.99 Moscow City transmission services Arbitration Court Branch rendered services on Arbitration Court, from April through October of the Novosibirsk electricity transmission 27 February 2017 2015 Region to the Ninth under the contract No. Arbitration Appeal 962/P of 22 July 2014 Court PJSC FGC UES JSC Chechenenergo On debt and penalty А77-1243/2015 253,330,145.88 217,760,424.47 35,569,721.41 Sixteenth Arbitration PJSC FGC UES Interspetsstroy LLC On cost recovery for А40-254745/16 1,264,433.52 1,153,204.57 111,228.95 Moscow City recovery under the Appeal Court, electricity consumption for Arbitration Court, agreement on electricity 14 March 2017 July 2015 under the Act 20 March 2017 transmission services via the Unified National PJSC FGC UES Municipal Unitary Debt for the period from А66-9162/2016 3,892,423.10 2,794,540.20 1,097,882.90 Arbitration Court of Electric Grid under the Enterprise January 2014 through the Tver Region, agreement No. 833/P of Tvergorelektro March 2016 under the 22 February 2017 16 January 2014 from 1 agreement No. 957/P of October 2013 through 31 31 May 2014 October 2015 PJSC FGC UES JSC IDGC Ural – On debt recovery under the А40-52928/2016 192,372,194.22 175,336,248.38 17,035,945.84 Moscow City PJSC FGC UES JSC Mosenergosbyt On debt recovery under the 60,887,711.38 51,577,649.51 9 ,310,061.87 Arbitration Court at Sverdlovenergo agreement No. 587/P for Arbitration Court, agreement on electricity the Fund for Law and the period from January 20 February 2017 transmission services Economics of Energy 2015 through February via the Unified National Sector, 7 October 2016 Electric Grid under the 2017. The case has agreement No. 223/P been submitted to PJSC FGC UES Public Utilities LLC On debt and penalty А51-24474/2016 30,998,159.74 27,404,730.28 3,593,429.46 Arbitration Court of of 16 January 2007 for the court, the court recovery under the the Primorye Territory October 2013 – April 2016 session date has not agreement No. 881/P 13 February 2017 been set of 31 January 2014 on electricity transmission PJSC FGC UES Triada LLC On debt recovery for А11-11623/2016 3,329,266.69 2,600,210.97 729,055.72 Arbitration Court of services for the period rendered services on the Vladimir Region, from July 2015 through electricity transmission 28 February 2017 March 2016 from 2014 through 2015 PJSC FGC UES Stroyindustiya LLC (Altai On debt recovery under А40-74985/2016 1,313,221.62 1,215,959.03 97,262.59 Moscow City PJSC FGC UES Multi-industry industrial On debt recovery under the А17-10116/2016 46,246,512.09 34,457,135.92 11,789,376.17 Arbitration Court of Territory) the service agreement Arbitration Court, park Kineshma, LLC agreement No. 877/P of the Ivanovo Region, (September 2015 – 19 January 2017. 1 April 2014 on electricity 9 February 2017 February 2016) The court sustained transmission services the claim (court from January 2014 ruling has not come through August 2016 into legal force) PJSC FGC UES JSC Debt for the period from А40-51001/16- 36,809,565.58 31,351,639.85 10,404,960.72 Arbitration Court PJSC FGC UES JSC VNIISV On debt and penalty А40-171294/16 70,223,585.16 66,066,171.42 4,157,413.74 Moscow City Mordovelectroteploset January 2014 through 97-379 of the Republic of recovery under the service Arbitration Court, February 2016 under the Mordovia, agreement (December 19 January 2017. agreement on electricity 16 February 2017 2015 – February 2016) The court sustained transmission services No. the claim (court 918/P ruling has not come into legal force) PJSC FGC UES JSC North-Kuzbass Debt for the period from А40-186150/16- 20,026,485.18 15,147,807.26 4,878,677.91 Moscow City Energy Company January 2015 through April 39-1600 Arbitration Court, PJSC FGC UES KAC LLC On debt and penalty А40- 103,991,667.79 88,082,223.12 15,909,444.67 Moscow City 2016 under the agreement 7 February 2017. recovery under the service 252153/2016 Arbitration Court, on electricity transmission Resolution part of a agreement No. 635/P for 9 March 2017 services No. 1017/P of 1 court decision (has the period from January January 2015 not come into legal 2013 through December force) 2014 PJSC FGC UES BNZ LLC On debt and penalty А47-7/2017 13,140,698.70 10,548,788.84 2,591,909.86 Arbitration Court of PJSC FGC UES JSC Kubanenergo On debt and penalty А32-30842/2016 748,419,004.79 666,484,348.44 81,934,656 Arbitration Court recovery under the the Orenburg Region, recovery under the of the Krasnodar agreement No. 1024/P on the case is under agreement No. P5/OU/4 Territory, 12 January electricity transmission legal proceedings of 24 December 2015 for 2017. The court services from January September 2015 – March sustained the claim 2015 through September 2016 (court ruling has 2016 not come into legal force) PJSC FGC UES JSC Saint Petersburg On debt and penalty А40-1077/2016 510,998,843.17 401,366,401.31 109,632,441.86 Moscow City Power Grid recovery under the Arbitration Court, PJSC FGC UES JSC Kamensk-Uralsky On debt and penalty А60-59971/16 5,539,338.57 5,019,060.24 520,278.33 Arbitration Court agreement No. 455/P of 31 March 2017 Metallurgical Works recovery for rendered of the Sverdlovsk 27 February 2010 from services from January Region, 3 March 1 April 2014 through 31 2015 through July 2016 2017 August 2015 PJSC FGC UES LLC Energosistemy On debt and penalty 125/2016-835 4,140,188.18 3,375,496.63 764,691.55 Arbitration Court at PJSC FGC UES New Engineering On cost recovery for А56-67587/2014 419,206.51 401,510.81 17,695.70 Arbitration Court of recovery under the the Russian Union Company LLC (the non-contractual electricity Saint Petersburg and agreement No. 854/P of of Industrialists Udmurt Republic) consumption from October the Leningrad Region, 28 January 2014 (October and Entrepreneurs. 2013 through February 9 February 2017 2015 – May 2016) Resolution part of the 2015 court decision was announced on PJSC FGC UES JSC Krasnoyarsk On debt and penalty А33-28042/2016 208,528,775.21 162,695,022.34 45,833,752.87 Arbitration Court 27 January 2017 Regional Energy recovery for the period of the Krasnoyarsk (court decision is Company from October 2013 through Region, 13 March under preparation, August 2016 under the 2017 has not come into agreement No. 800/P of 28 legal force) August 2013

130 PJSC FGC UES Annual Report 2016 131 INFORMATION ON DEBT RECOVERY CLAIMS Appendix 8 IN WHICH PJSC FGC UES PARTICIPATES

Total claims, Case status in the Total claims, Case status in the Claimant Defendant Subject-matter of dispute Case number Debt, RUB Penalties, RUB Claimant Defendant Subject-matter of dispute Case number Debt, RUB Penalties, RUB RUB court RUB court

PJSC FGC UES Promenergo Grid LLC On debt and penalty А40-254737/16 1,421,331.98 1,300,639.83 120,692.15 Moscow City PJSC FGC UES Yugvodokanal LLC Debt and penalty recovery А40-225889/16 429,750.17 347,969.90 56,986.00 Moscow City recovery under the Arbitration Court, under the agreement on Arbitration Court, agreement No. 1136/P 15 February 2017 electricity transmission 30 January 2017. of 22 March 2016 (March services No. 1092/P of 5 The court sustained 2016 – August 2016) November 2015 the claim in full (court ruling has not PJSC FGC UES Municipal Unitary Cost recovery for rendered А66-8805/2016 2,958,370.81 1,993,489.94 964,880.87 Arbitration Court of been published and Enterprise services (non-contractual the Tver Region, has not come into Tvergorelektro consumption) in 2013, 31 March 2017. The legal force) from January 2013 court sustained the through December 2013 claim (court ruling PJSC FGC UES JSC VNIISV Debt for the period from А40-252160/16 121,029,317.93 109,150,101.91 11,879,216.02 Moscow City has not come into March through August Arbitration Court legal force) 2016 proceedings are scheduled for PJSC FGC UES Energomodul LLC Debt for the period from А72/14467/2016 11,043,246.36 9,309,913.08 1,733,333.29 Arbitration Court 30 March 2017 January 2016 through May of the Ulyanovsk 2016 under the agreement Region, 2 March PJSC FGC UES United Electric Grid Debt and penalty recovery А40-106290/16 57,845,323.00 47,769,231.80 10,076,091.20 Moscow City on electricity transmission 2017 Company LLC (UEC) for rendered services on Arbitration Court services No. 1134/P of 25 Energotrest LLC electricity transmission for proceedings are January 2016 January 2013 – December scheduled for 2015 2 March 2017 PJSC FGC UES JSC Altayenergosbyt On cost and penalty А40- 15,223,140.24 12,295,958.99 2,927,181.25 Moscow City recovery for electricity 216056/2016 Arbitration Court, PJSC FGC UES, JSC Special Economic Debt and penalty recovery А40- 987,888,516.68 987,888,516.68 Moscow City transmission services 15 February 2017 MES Siberia Zones 235771/2016 Arbitration Court from January through proceedings are June 2016 scheduled for 15 March 2017 PJSC FGC UES Vladivostok Municipal On cost and penalty А40-233568/16 28,135,599.69 25,544,910.36 2,590,689.33 Moscow City Unitary Enterprise VPES recovery under the Arbitration Court, 5,151,275,567.64 4,526,060,939.98 613,468,814.96 agreement from January 15 March 2017 2016 through June 2016 PJSC FGC UES RT-Energotrading LLC On cost and penalty No. 126/2016 - 51,929,581.93 46,778,696.86 5,150,885.07 Arbitration Court at recovery under the 836 the Russian Union agreement from October of Industrialists and 2013 through June 2016 Entrepreneurs, 21 December 2017. Information on unfinished court proceedings in which PJSC FGC UES Court ruling is under preparation, has not defends a suit on debt recovery claim with due sum indicated come into legal force

PJSC FGC UES JSC Omskelectro On cost and penalty А46-15607/2016 27,266,751.45 25,059,289.11 2,207,462.34 Arbitration Court of Total claims, Case status in the Claimant Defendant Subject-matter of dispute Case number Debt, RUB Penalties, RUB recovery under the the Omsk Region, RUB court agreement from January 1 February 2017. 2016 through June 2016 The court sustained the claim (court JSC Special Economic PJSC FGC UES А40-188599/2014 on А40- 429,136,694.82 429,136,694.82 0.00 Moscow City ruling has not come Zones reversal of Arbitration 188599/2014 Arbitration Court into legal force) award No. 1/2014-479 of proceedings are 30 July 2014, recognition scheduled for PJSC FGC UES JSC Oboronenergo On debt recovery for А40- 99,179,530.63 93,405,477.48 5,774,053.15 Moscow City of additional agreement 14 March 2017 rendered services on 254139/2016 Arbitration Court, as invalid, on recovery of electricity transmission for 16 February 2017 429,136,694 roubles 82 January – June 2016 kopecks. PJSC FGC UES JSC Energiya On debt recovery for No. 109/2016- 251,700,123.63 231,511,715.91 20,188,407.72 Moscow City JSC PJSC FGC UES А40-52069/2014 on А40-52069/2014 374,266.50 374,266.50 0.00 Moscow City rendered services on 819 Arbitration Court, Novosibirskenergosbyt recovery of legal expenses Arbitration Court, electricity transmission for 9 February 2017 the Ninth Arbitration January – June 2016 Appeal Court sustained the claim. PJSC FGC UES JSC Samara Bearing Debt for the period from А55-21524/2016 61,781,883.05 50,231,218.95 11,550,664.10 Arbitration Court of The case was sent Plant November 2015 through the Samara Region, for trial to Arbitration June 2016 under the 21 January 2017. Court of Moscow agreement on electricity The court sustained Region upon PJSC transmission services No. the claim (court FGC UES's appeal 863/P of 6 February 2014 ruling has not come into legal force) JSC RUSAL Krasnoyarsk PJSC FGC UES А40-8424/16 on cost А40-8424/16 1,065,541,054.18 1,065,541,054.18 0.00 Moscow City Aluminium Smelter recovery of load losses Arbitration Court PJSC FGC UES JSC Saint Petersburg On debt and penalty А56-69632/2016 579,544,276.54 490,378,176.82 89,166,099.72 Arbitration Court of from 2013 through 2015 proceedings are United Electricity recovery for rendered Saint Petersburg and scheduled for Company services for the Leningrad Region, 20 March 2017 January 2015 – 13 February 2017 April 2016 PJSC Chelyabinsk Zinc PJSC FGC UES On recovery of unjust А40-220408/16- 155,829,943.74 123,010,818.30 32,819,125.44 Moscow City Plant enrichment and interests 48-2005 Arbitration Court PJSC FGC UES JSC Arkhoblenergo On debt and penalty А05-9961/2016 38,897.00 0.00 38,897.00 Arbitration Court under the agreement on proceedings are recovery under the service of the Arkhangelsk electricity transmission scheduled for agreement No. 1003/P Region, 17 January No. 955/P for the period 14 March 2017 for the period from March 2017. The court from May through through May 2016 sustained the claim December 2013 (court ruling has not come into legal JSC Kuban Power Supply PJSC FGC UES, On debt recovery for А32-1478/2017 900,976.38 900,976.38 0.00 Arbitration Court force) Company MES of South electricity transmission of the Krasnodar Territory, 27 February PJSC FGC UES JSC Arkhoblenergo On debt and penalty А05-103/2017 2,094,785.02 1,999,213.85 95,571.17 Arbitration Court 2017 recovery under the service of the Arkhangelsk agreement No. 1003/P Region, 13 February 1,651,408,669.12 1,618,589,543.68 32,819,125.44 for the period from June 2017 through August 2016

132 PJSC FGC UES Annual Report 2016 133 INFORMATION ON SIGNED SHARE PURCHASE AGREEMENTS Appendix 9 OF BUSINESS PARTNERSHIPS AND BUSINESS ENTITIES APPENDIX 9. — On 1 September 2016 PJSC FGC UES (Seller) and Agroray LLC (Buyer) entered into share purchase agreement: Information on signed share purchase Joint-stock company Energotekhkomplekt (short name – JSC Energotekhkomplekt) Issuer agreements (stocks, shares, equity interests) TIN 7709132641 OGRN (Principal State Registration Number) 1027739091115 of business partnerships and business entities Issuer's address 2 Verbnaya St., Moscow, 107143, Russia including information on the parties, subject, price, and other terms of the agreements Type, category, form of shares ordinary registered uncertified shares State registration number of the 73-1 "P"-1425; 73-1-6484 shares issue

In 2016, FGC UES entered into the following alienation agreements for shares owned by FGC UES: 3,272 (three thousand two hundred and seventy two) and 97,998 (ninety seven Amount of shares (pieces) — On 29 August 2016, PJSC FGC UES (Seller) and Maxim Vikulov (Buyer) entered into share purchase agreement: thousand nine hundred and ninety eight)

Nominal value of the Issuer's 1 (one) rouble Public joint-stock company Centrenergoholding (short name – share PJSC Centrenergoholding) Issuer Share fraction in the Issuer's TIN 7729604395 KPP (Tax Registration Reason Code) 772901001 OGRN 48.999% (Principal State Registration Number)1087760000020 registered capital

Keeper of the register of the Issuer's address 101 Vernadskogo pr., build. 3, Moscow, 119526, Russia Joint-stock company R.O.S.T. Registrar Issuer's shareholders

ordinary registered uncertified shares and preferred registered uncertified The Vendor's securities account at Depository and Corporate Technologies Type, category, form of shares Share storage area shares LLC

State registration number of the 8,458,000 (eight million four hundred fifty eight thousand) roubles 00 kopecks, 1-01-55412-Е; 2-01-55412-Е shares issue Share value VAT free (pursuant to sub-clause 12, clause 2, article 149 of the Tax Code of the Russian Federation)

Amount of shares (pieces) 300,000 (three hundred thousand) and 300,000 (three hundred thousand)

Nominal value of the Issuer's RUB 0.01 (zero point one hundredth) share

Share fraction in the Issuer's 0.00069% registered capital

Keeper of the register of the Joint-stock company DRAGA Issuer's shareholders

The Vendor's securities account at Depository and Corporate Technologies Share storage area LLC

166,976 (one hundred sixty six thousand nine hundred and seventy six) Share value roubles and 00 kopecks, VAT free (pursuant to sub-clause 12, clause 2, article 149 of the Tax Code of the Russian Federation)

134 PJSC FGC UES Annual Report 2016 135 INFORMATION ON THE PROPERTY PORTFOLIO STRUCTURE Appendix 10 OF PJSC FGC UES

Accumulated Quantity: for OHL and Loss from APPENDIX 10. Gain from amortisation Book (carrying) cable networks, the Book (carrying) 1 January 1 January 2016 from 1 January value as of length of the track value as of 2016 through Assets through 31 2016 through 31 December (km); for SS and other 1 January 2016, 31 December December 2016, 31 December 2016, Information on the property portfolio structure Assets, the number RUB thousand 2016, RUB thousand 2016, RUB thousand (pcs) RUB thousand of PJSC FGC UES RUB thousand 5.7. SS 35 kV

5.8. SS 10 kV and lower

Cable networks (all voltage Information on the property portfolio structure of the of PJSC FGC UES 5.9. classes) and its changes Other leased Assets Accumulated Quantity: for OHL and Loss from 5.10. designed to provide Gain from amortisation Book (carrying) cable networks, the Book (carrying) 1 January electrical connections 1 January 2016 from 1 January value as of length of the track value as of 2016 through Assets through 31 2016 through 31 December Other leased Assets, (km); for SS and other 1 January 2016, 31 December 6. 12,022 19,617,869 4,481,526 3,106,818 20,992,577 December 2016, 31 December 2016, including: Assets, the number RUB thousand 2016, RUB thousand 2016, RUB thousand (pcs) RUB thousand RUB thousand 6.1. Land plots 14, 394 16,414,869 4,490,291 2,813,111 18,092,049

Assets related to electric Assets used under lease 1. 780,566,598 110,932,325 1,157,938 73,686,962 816,654,023 grid facilities, including: agreements related to 7. electric grid facilities, 1.1. OHL 220 kV and higher 134,258,903 334,317,216 21,753,779 103,826 27,435,950 328,531,219 including:

1.2. OHL 110 kV 977,450 2,877,336 167,548 20,295 209,989 2,814,600 7.1. OHL 220 kV and higher

1.3. OHL 35 kV 65,465 117,549 3,870 93 12,346 108,980 7.2. OHL 110 kV

1.4. OHL 10 kV and lower 229,438 324,129 64,997 240 23,245 365,641 7.3. OHL 35 kV

1.5. SS 220 kV and higher 801 382,747,286 84,973,099 726,549 42,137,064 424,856,772 7.4. OHL 10 kV and lower

1.6. SS 110 kV 41 6,407,898 521,451 8,853 736,043 6,184,453 7.5. SS 220 kV and higher

1.7. SS 35 kV 7 593,592 40,773 440 83,790 550,135 7.6. SS 110 kV

1.8. SS 10 kV and lower 59 1,716,823 50,169 1,672 146,420 1,618,900 7.8. SS 35 kV

Cable networks (all voltage 7.9. SS 10 kV and lower 1.9. 396.210 30,073,939 67,309 255,620 1,292,318 28,593,310 classes) and cable lines Cable networks (all voltage 7.10. Other Assets designed classes) to provide electrical 1.10. 1,299.729 21,390,830 3,289,330 40,350 1,609,797 23,030,013 connections, aerial cable Other Assets used lines under lease agreements 8. designed to provide electric Non-core Assets listed in connections 2. the Register of Non-core 8,386,639 136,778 519,153 232,246 7,772,018 Assets Other Assets used under 9. lease agreements Other Assets (I.3 = I.4 – 3. 34,671,748 4, 237,459 -475,810 6, 370,947 33,014,070 I.2 –I.1), including: Total for leased assets, including those under lease 10. 29,038,831 7,963,407 4,023,435 32,978,803 3.1. Land plots under ownership 262 1,698,972 49,578 26,582 1, 721,968 agreements (I.10= I.5 + I.6 + I.7 + I.8 +I.9) Fixed Assets' (line of the 4. 823,624,985 115,306,562 1,201,281 80,290,155 857,440,111 balance sheet) 11. TOTAL (I.11 = I.4 + I.10) 852,663,816.00 123,269,969.00 5,224,716.00 80,290,155.00 890,418,914.00 Leased Assets related 5. to electric grid facilities, 9,420,962 3,481,881 916,617 11,986,226 including:

5.1. OHL 220 kV and higher 2,982.656 1,214,168 519,321 1,733,490

5.2. OHL 110 kV 89.710 4, 290 4, 290

5.3. OHL 35 kV 0

5.4. OHL 10 kV and lower 0.074 29 29

5.5. SS 220 kV and higher 31 914,660 474,439 440,221

5.6. SS 110 kV

136 PJSC FGC UES Annual Report 2016 137 Appendix 11 INFORMATION ON LAND PLOTS OF PJSC FGC UES

APPENDIX 11. Information on land plots of PJSC FGC UES

including: State Cadastral Records The total number and area leased (subleased), servitude is right of permanent recorded in the State Protective zones of land plots bought out as of the right was not determined rights registered as of No. Types of land plots established as of the reporting (perpetual) use as of the Cadastre as of the reporting date as of the reporting date the reporting date date reporting date reporting date

quantity ha quantity ha quantity ha quantity ha quantity ha quantity ha quantity ha quantity km

Land plots where facilities 1 of substations are located, 3,827 5,507 315 721 2,726 4,256 447 401 339 124 3,030 4,481 2,710 4,098 742 145 including:

for SS 220 kV and higher 914 4,054 115 646 784 3,364 – – 15 40 796 3,494 763 3,202 639 145

for SS 110 kV 53 26 9 7 44 19 – – – – 53 26 49 22 38 –

for SS 35 kV and lower 2,860 1,427 191 68 1,898 874 447 401 324 84 2,181 961 1,898 874 65 –

Land plots for OHL 220 kV and 2 14,619 5,939 121 6 11,688 5,621 169 57 2,653 255 13,268 4,414 11,255 4,443 4,736 148,092 higher Land plots for OHL 110 kV and 3 426 107 3 0 356 97 – – 67 1 410 103 343 102 158 1,445 lower including:

for SS 110 kV 316 78 3 0 246 77 – – 67 1 301 74 234 73 106 1,052

for SS 35 kV 52 20 – – 52 20 – – – – 54 20 54 20 17 159

for OHL 0.4/6/10 kV 58 9 – – 58 1 – – – – 55 9 55 9 35 235

Land plots where facilities of 4 – – – – – – – – – – – – – – – – power plans are located Land plots where facilities of 5 – – – – – – – – – – – – – – – – boiler stations are located Land plots where heating grid 6 37 15 4 2 35 15 2 0 – – 35 13 35 15 – – facilities are located Land plots where other facilities 7 329 202 42 33 268 158 – – 18 11 299 166 279 147 8 69 are located

TOTAL: 19,238 11,770 485 762 15,073 10,147 618 459 3,077 391 17,042 9,178 14,622 8,805 5,644 150,087

138 PJSC FGC UES Annual Report 2016 139 Appendix 12 NON-CORE ASSETS DISPOSAL

APPENDIX 12. It needs mentioning that since the beginning of 2016, 16 November 2012); and upon approval of the new disposal of the non-core assets of PJSC FGC UES was version of the Non-Core Assets Disposal Programme performed in accordance with the Register of Non- (extract from Minutes No. 311/3 of the Board of Non-Core Assets Disposal Core Assets, approved by the Management Board of Directors meeting of 14 March 2016) – in accordance PJSC FGC UES (extracts from Minutes No. 1292/2 of with the Register of Non-Core Assets of PJSC FGC UES, 20 February 2015 and No. 1310/8 of 25 May 2015) approved by the Board of Directors of PJSC FGC UES and in accordance with the Non-Core Assets Disposal (extract from Minutes No. 321/1 of 26 May 2016) and Programme of PJSC FGC UES, approved by the Board in line with the new version of the Non-Core Assets of Directors (extract from Minutes No. 178 of Disposal Programme. From 2012, PJSC FGC UES has started the FGC UES with account of the recommendations and identification and administration of non-core assets algorithms for classifying the assets as core or non- of PJSC FGC UES. Thus, under the Resolution of the core, provided by the Methodical Guidelines. Board of Directors of JSC FGC UES (minutes No. 178 The key corporate principles for Non-Core Assets Information on disposal of non-core assets of Federal Grid Company in 2016 of 16 November 2012) Non-Core Assets Disposal Disposal Programme implementation shall be as Programme of JSC FGC UES (hereinafter – the follows: Management Program for non-core assets) was Balance sheet line, Accounting Difference approved, and under the Resolution of the Board of – availability – providing public availability of the Actual where the asset entries (including between Cause for the difference information on methods and approaches applied to Identification Asset book disposal Directors of JSC FGC UES (minutes No. 311/3 of 14 Asset Name (according was reflected on itemisation) that actual disposal between actual disposal number value, RUB proceeds, March 2012) Non-Core Assets Disposal Programme identify non-core assets from the assets portfolio; to the NCA Register) the reporting date reflect income and proceeds and proceeds and asset book (if applicable) thousand RUB preceding the date expenditure from asset book value, value was updated. – consistency – performing an ongoing analysis of thousand of disposal disposal of asset RUB thousand According to the directives of the Government of the assets portfolio to identify the non-core assets; Russian Federation No. 4863p-P13 of 7 July 2016 – transparency – providing open and public procedures Shares of PJSC 9110021411; and in accordance with the Methodical Guidelines 1 – 1150 6.00 166.98 160.98 Sold through auction for the non-core assets disposal and disclosing Centerenergoholding 9120031413 for identification and disposal of non-core assets information on the sale of non-core assets in the way (hereinafter – Methodical Guidelines), developed Shares of JSC 9110021411; available to potential buyers; 2 – 1150 100.00 8,458.00 8,358.00 Sold through auction by the Ministry of Economic Development and the Energotekhnocomplect 9120031413 Federal Property Management Agency, pursuant to – efficiency – selecting the disposal method for each Access road to Z901000000; Charge-free transfer to the orders of the President of the Russian Federation non-core asset based on, among other things, the 3 Shmelevo SS 220 kV, 0209-2-12-40803 1132 1,023.48 – –1,023.48 9120032110 municipal ownership No. Pr-348 of 22 February 2016, approved by the order sale benefit analysis in an appropriate way; length of 2300 m of the Government of the Russian Federation No. Bezhetsk – maximization of revenues – performing non-core 0211-2-12-09499 Z901000000; Charge-free transfer to ISH-P13-4065 of 7 July 2016 and sent to the stock 4 SS 220 kV (engineering 1130 0,00 – – assets disposal on a reimbursable basis, other things 0211-2-12-09587 9120032110 municipal ownership companies by the letter of the Ministry of Economic infrastructure facilities) being equal; Development of the Russian Federation No. D06i-1744 Access road to Z901000000; Charge-free transfer to – minimization of costs – reducing maintenance costs 5 Shibanovo SS 220 kV 0209-2-12-20528 1132 0.00 – – of 19 July 2016, PJSC FGC UES developed (updated) 9120032110 municipal ownership the Non-Core Assets Disposal Programme of PJSC for illiquid assets; No. 666 FGC UES and its Subsidiaries (hereinafter – Non-Core – protection of the economic interests of the Company 9110021101; Assets Disposal Programme) and updated the Register 6 Land plot 0209-2-19-48972 1132 26,581.96 1, 580 451.79 1,553,869.83 Sold through auction when disposing assets – timely sale of assets, 9120031110 of Non-Core Assets of PJSC FGC UES, approved by prevention of assets depreciation, protection of 1-room apartment the Board of Directors of PJSC FGC UES (extract from 9110021501; the rights and interests of the Company, including 7 No. 106, total area 0100-1-13-00055 1132 5,912.27 6,919.98 1,007.71 Sold through auction Minutes No. 350/12 of 28 December 2016). 9120031511 in terms of the co-owners of assets and the third of 79.5 sq. m Non-Core Assets Disposal Programme determines parties. 2-room apartment 9110021501; the key approaches, principles and procedures for 8 No. 107, total area of 0100-1-13-00056 1132 2,669.62 3,674.14 1,004.52 Sold through auction 9120031511 identifying and disposing non-core assets of PJSC 42.8 sq. m 1-room apartment 9110021501; 9 No. 108, total area of 0100-1-13-00057 1132 6 743,78 6,885.17 141.39 Sold through auction 9120031511 90.2 sq. m 1-room apartment 9110021501; 10 No. 109, total area of 0100-1-13-00058 1132 2,794.69 4,008.93 1,214.24 Sold through auction The Company’s targets for non-core assets The Company's objectives for non-core assets 9120031511 46.7 sq. m disposal management 1-room apartment 9110021501; 11 No. 110, total area of 0100-1-13-00059 1132 2,681.56 3,759.98 1,078.42 Sold through auction – optimising the composition and structure of assets; – analysing the assets portfolio to identify the non- 9120031511 core assets; 43.8 sq. m – raising the efficiency of assets utilisation; 1-room apartment 9110021501; – developing and keeping the Register of Non-Core 12 No. 111, total area of 0100-1-13-00060 1132 2,563.32 6,127.88 3,564.56 Sold through auction – reducing the costs for non-core assets maintenance; 9120031511 Assets (NCA Register); 70.4 sq. m – raising the extra sources of funds; 3-room apartment – identifying the non-core assets subject to alienation 9110021501; 13 No. 112, total area of 0100-1-13-00061 1132 7,466.68 5,701.37 –1,765.32 Sold through auction – improving the competitiveness and investment and making the resolutions on the appropriate 9120031511 65.5 sq. m attractiveness of the Company; method of disposal per each non-core asset; 2-room apartment 9110021501; – adding the value. – arranging and holding the activities on non-core 14 No. 113, total area of 0505-2-13-19013 1132 14,253.43 20,656.65 6,403.22 Sold through auction 9120031511 assets disposal in accordance with the approved 219.9 sq. m Register (disposal plan) of non-core assets; 1-room apartment 9110021501; 15 No. 116, total area of 0100-1-13-00065 1132 2,658.59 3,863.00 1,204.41 Sold through auction 9120031511 – supervising the implementation of the resolutions 45 sq. m on non-core assets disposal and submitting the 1-room apartment progress reports of the Programme implementation. 9110021501; 16 No. 117, total area of 0505-2-13-19014 1132 12,435.26 18,195.52 5,760.26 Sold through auction 9120031511 193.7 sq. m

Apartment No. 101, 9110021501; 17 0100-1-13-00549 1132 5,236.69 6,960.28 1,723.59 Sold through auction total area of 75.8 sq. m 9120031511

140 PJSC FGC UES Annual Report 2016 141 Appendix 12 NON-CORE ASSETS DISPOSAL

Balance sheet line, Accounting Difference Balance sheet line, Accounting Difference Actual Actual where the asset entries (including between Cause for the difference where the asset entries (including between Cause for the difference Identification Asset book disposal Identification Asset book disposal Asset Name (according was reflected on itemisation) that actual disposal between actual disposal Asset Name (according was reflected on itemisation) that actual disposal between actual disposal number value, RUB proceeds, number value, RUB proceeds, to the NCA Register) the reporting date reflect income and proceeds and proceeds and asset book to the NCA Register) the reporting date reflect income and proceeds and proceeds and asset book (if applicable) thousand RUB (if applicable) thousand RUB preceding the date expenditure from asset book value, value preceding the date expenditure from asset book value, value thousand thousand of disposal disposal of asset RUB thousand of disposal disposal of asset RUB thousand

Apartment No. 105, Based on the results of 9110021501; 18 total area of 102.9 0100-1-13-00551 1132 6,608.86 9,150.77 2,541.91 Sold through auction the auction, purchase 9120031511 sq. m agreement was concluded in December Apartment No. 107, 9110021501; 1-room apartment 2016, monetary funds 19 0100-1-13-00553 1132 5,358.83 7,260.28 1,901.45 Sold through auction 9110021501; total area of 75.5 sq. m 9120031511 38 No. 121, total area of 0100-1-13-00289 1132 2,587.89 3,617.85 1,029.95 were received from sale, 9120031511 41.5 sq. m and the acceptance Flat No. 110, total area 9110021501; 20 0100-1-13-00555 1132 6,743.34 9,030.77 2,287.43 Sold through auction certificate was signed; 102.9 sq. m 9120031511 actual write-off of the facility was performed in Apartment No. 111, 9110021501; January 2017 21 total area of 102.9 0100-1-13-00556 1132 6,743.34 8,910.77 2,167.43 Sold through auction 9120031511 sq. m Based on the results of the auction, purchase Apartment No. 113, 9110021501; 22 0100-1-13-00558 1132 5,358.83 5,860.28 501.45 Sold through auction agreement was total area of 75.5 sq. m 9120031511 concluded in December 1-room apartment 2016, monetary funds Apartment No. 117, 9110021501; 9110021501; 39 No. 129, total area of 0100-1-13-00295 1132 2,999.46 4,193.21 1,193.75 were received from sale, 23 total area of 108.9 0100-1-13-00560 1132 7,136.54 8,850.88 1,714.34 Sold through auction 9120031511 9120031511 48.1 sq. m and the acceptance sq. m certificate was signed; actual write-off of the Apartment No. 119, 9110021501; 24 0100-1-13-00562 1132 5,358.83 5,860.28 501.45 Sold through auction facility was performed in total area of 75.5 sq. m 9120031511 January 2017 Apartment No. 123, 9110021501; Based on the results of 25 total area of 108.9 0100-1-13-00563 1132 7,136.54 8,950.88 1,814.34 Sold through auction 9120031511 the auction, purchase sq. m agreement was concluded in December Apartment No. 125, 9110021501; 26 0100-1-13-00564 1132 5,358.83 5,860.28 501.45 Sold through auction 1-room apartment 2016, monetary funds total area of 75.5 sq. m 9120031511 9110021501; 40 No. 142, total area of 0100-1-13-00302 1132 2,587.89 3,617.85 1,029.95 were received from sale, 9120031511 Appartment No. 128, 41.5 sq. m and the acceptance 9110021501; 27 total area of 108.9 0100-1-13-00565 1132 7,136.54 8,350.88 1,214.34 Sold through auction certificate was signed; 9120031511 sq. m actual write-off of the facility was performed in Apartment No. 134, 9110021501; January 2017 28 total area of 108.9 0100-1-13-00566 1132 6,708.38 8,950.88 2,242.50 Sold through auction 9120031511 sq. m 0603-1-11-04482 0603-1-11-04483 Apartment No. 135, 9110021501; 29 total area of 108.9 0100-1-13-00567 1132 6,708.38 8,350.88 1,642.50 Sold through auction 0603-1-11-04484 9120031511 Production Centre sq. m 0603-1-12-04487 9110021101; 41 in Kurgan, Panfilova 1130 3,735.95 27,760.42 24,024.47 Sold through auction 9120031110 Apartment No. 137, 9110021501; str. 22 0603-1-12-04488 30 0100-1-13-00568 1132 5,037.30 6,660.28 1,622.98 Sold through auction total area of 75.5 sq. m 9120031511 0603-1-12-04486 0603-1-12-04490 1-room apartment No. 9110021501; 31 128, total area of 40.8 0100-1-13-00294 1132 2,618.66 3,556.82 938.16 Sold through auction 0603-1-12-04489 9120031511 sq. m 0201-1-11-00143 1-room apartment Asset is liquidated 9110021501; 42 Arzamas SS 500 kV 0201-1-11-00337 1130 9120032110 413.61 – – 32 No. 34, total area of 0100-1-13-00022 1132 2,602.14 3,696.31 1,094.17 Sold through auction (written-off) 9120031511 0201-1-11-00340 42.4 sq. m 1-room apartment 9110021501; 33 No. 163, total area of 0100-1-13-00103 1132 2,608.30 3,687.59 1,079.28 Sold through auction 9120031511 42.3 sq. m 1-room apartment 9110021501; 34 No. 25, total area of 0100-1-13-00016 1132 2,916.61 4,123.47 1,206.86 Sold through auction 9120031511 47.3 sq. m 1-room apartment 9110021501; 35 No. 208, total area of 0100-1-13-00136 1132 1,837.53 2,597.88 760.35 Sold through auction 9120031511 29.8 sq. m 1-room apartment 9110021501; 36 No. 42, total area of 50 0100-1-13-00512 1132 3,840.58 4,723.05 882.47 Sold through auction 9120031511 sq. m 2-room apartment 9110021501; 37 No. 46, total area of 0100-1-13-00514 1132 5,358.83 6,191.07 832.24 Sold through auction 9120031511 75.5 sq. m

142 PJSC FGC UES Annual Report 2016 143 Appendi 1 ANNAL INANCIAL STATEENTS O PSC C ES OR NDER RAS

APPENDIX 1. Annal Finanial Statements o PJSC FGC UES or 201 Under AS

144 PJSC FGC UES Annal eport 201 14 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

Annex to Order of the Russian Ministry of Finance No. 66n dated July 2, 2010 (as revised by Order of the Russian Ministry of Finance No. 124n dated October BALANCE SHEET 5, 2011) as of December 31 20 16 Indicator As of December 31, As of December 31, As of December 31, CODES LIABILITY OKUD Form No. 1 0710001 code 2016 2015 2014 Date (year, month, day) 2016 12 31 1 2 3 4 4 III. CAPITAL and RESERVES Public Joint-Stock Company “Federal Grid Company Share capital (contributed capital, authorized fund, Organization as per OKPO 56947007 1310 637 332 662 637 332 662 637 332 662 of Unified Energy System” S.3.1 of Annexes** contributions of partners) Shares repurchased 1320 - - - Tax identification code INN 4716016979 Revaluation of non-current assets 1340 258 523 592 246 420 309 235 563 921 Activity power transmission as per OKVED 35.12 S.3.1 of Annexes** Additional capital (without revaluation) 1350 31 867 163 31 867 163 31 867 163 Form of corporate entity’s incorporation/ form of ownership Reserve capital 1360 14 188 807 13 295 300 13 038 463 47 41 public joint-stock company/mixed Russian assets with a federal share as per OKOPF/OKFS Undistributed profit (uncovered loss), including: 1370 45 088 345 ( 43 529 255 ) ( 63 312 639 )

Unit: RUB thousand as per OKEI 384 Uncovered loss of past years 1371 ( 60 982 566 ) ( 43 529 255 ) ( 63 312 639 ) Location (address) 5A Akademika Chelomeya Street, Moscow, Russia, 117630 Undistributed profit of past years 1372 - - - Approval date Mailing (acceptance) date Undistributed profit of the reporting year 1373 106 070 911 - - Indicator As of December 31, As of December 31, As of December 31, Uncovered loss of the reporting year 1374 - - - Notes ASSET code 2016 2015 2014 TOTAL for Section III 1300 987 000 569 885 386 179 854 489 570 1 2 3 4 5 IV. LONG-TERM LIABILITIES I. NON-CURRENT ASSETS S.3.12 of Annexes** Borrowings and loans 1410 236 653 463 249 660 368 232 771 196 Deferred tax liabilities 1420 49 658 250 44 035 756 34 211 465 S.1 of Notes* Intangible assets 1110 3 326 907 3 494 151 3 265 522 S.3.2 of Annexes** Estimated liabilities 1430 - - - S.1 of Notes* Research and development results 1120 163 047 243 651 324 255 Other liabilities 1450 512 667 462 788 453 029 S.3.6 of Annexes** TOTAL for Section IV 1400 286 824 380 294 158 912 267 435 690 S.2 of Notes* Fixed assets, including: 1130 857 440 111 823 624 985 788 861 095 S.3.3 of Annexes** V. SHORT-TERM LIABILITIES land plots and natural resources 1131 1 721 968 1 698 972 1 631 794 Borrowings and loans 1510 29 195 354 31 361 933 29 544 812 1132 852 356 759 817 957 414 782 636 932 S.5.3 of Notes* buildings, machinery and equipment, structures S.3.13 of Annexes** Accounts payable, including: 1520 60 031 744 54 748 132 77 550 930 1133 3 361 384 3 968 599 4 592 369 other fixed assets suppliers and contractors 1521 31 047 890 42 279 852 67 205 391 Income-bearing investments in tangible assets 1140 - - - S.3 of Notes* payables to employees 1522 21 370 18 486 221 038 S.3.7 of Annexes** Financial investments 1150 71 824 222 32 339 155 25 764 856 Deferred tax assets 1160 - - - payables to state non-budgetary funds 1523 555 310 101 84 162 S.2 of Notes* Other non-current assets, including: 1170 250 509 851 264 636 543 299 704 867 taxes and fees payable 1524 16 731 083 4 062 955 1 326 189 equipment for installation 1171 33 328 127 33 850 277 33 218 459 advances received 1525 8 171 878 6 129 644 6 085 001 S.3.4 of Annexes** investments into non-current assets 1172 191 073 182 209 738 793 226 376 514 other creditors 1526 3 984 504 1 939 360 2 619 738 S.5.1 of Notes* S.3.9 of Annexes** advances against non-current assets 1173 25 790 087 20 854 723 39 761 614 payables to members (founders) 1527 74 464 7 734 9 411 S.3.11 of Annexes** other non-current assets 1174 318 455 192 750 348 280 Deferred income 1530 694 921 740 903 760 936 TOTAL for Section I 1100 1 183 264 138 1 124 338 485 1 117 920 595 S.7 of Notes* 1540 2 426 829 1 905 387 1 435 028 II. CURRENT ASSETS Estimated liabilities Other liabilities 1550 - - - S.4 of Notes* Inventory, including: 1210 9 108 558 12 632 339 9 635 100 S.3.10 of Annexes** TOTAL for Section V 1500 92 348 848 88 756 355 109 291 706 raw materials, materials and other similar assets 1211 9 108 558 12 632 325 9 635 083 BALANCE 1700 1 366 173 797 1 268 301 446 1 231 216 966 finished goods and goods for sale 1212 - 14 17 * - Notes to the Balance Sheet and Statement of Financial Performance for 2016. Value added tax on purchased assets 1220 493 970 881 583 1 146 693 ** - Annexes to the annual 2016 Financial Statements.

S.5 of Notes* S.3.9 of Annexes** Accounts receivable, including: 1230 135 201 277 69 491 215 60 162 888

Accounts receivable (payments are expected over more than 12 months 1231 11 327 562 9 503 739 1 110 748 upon the balance sheet date), including: customers and consumers 1232 10 485 059 8 654 597 4 877 advance payments made 1233 - - - Chief Executive A.E. Murov Chief Accountant A.P. Noskov other debtors 1234 842 503 849 142 1 105 871 (signature) (print full name) (signature) (print full name) Accounts receivable (payments are expected within 12 months from the 1235 123 873 715 59 987 476 59 052 140 balance sheet date), including: “ 20 “ February 20 17 customers and consumers 1236 89 976 088 39 753 400 37 501 050 amounts owed by members (founders) as share capital 1237 - - - payments advance payments made 1238 515 934 766 050 1 559 543 other debtors 1239 33 381 693 19 468 026 19 991 547

S.3 of Notes* Financial investments (except cash equivalents) 1240 2 067 318 38 893 489 2 762 466 S.3.8 of Annexes** S.3.19 of Annexes** Cash and cash equivalents 1250 36 007 838 21 977 333 39 480 358 S.3.11 of Annexes** Other current assets 1260 30 698 87 002 108 866 TOTAL for Section II 1200 182 909 659 143 962 961 113 296 371 BALANCE 1600 1 366 173 797 1 268 301 446 1 231 216 966

146 PJSC FGC UES Annual Report 2016 147 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

Annex to Order of the Russian Ministry of Finance No. 66n dated July 2, 2010 (as revised by Order of the Russian Ministry of Finance No. 124n dated October 5, 2011) STATEMENT OF FINANCIAL RESULTS Form 0710002 p. 2 for 2016 CODES Indicator name As of December As of December Notes OKUD Form No.2 0710002 2016 2015 Date (year, month, day) 2016 12 31 FOR REFERENCE Result of the fixed assets revaluation, not included in the net profit (loss) for the Public Joint-Stock Company “Federal Grid S.3.3 of Annexes** 12 520 106 13 866 221 Organization as per OKPO 56947007 period Company of Unified Energy System” Gain or loss from other operations not included in the net profit for the Tax identification code INN 4716016979 period Activity power transmission as per OKVED 35.12 Form of corporate entity’s incorporation/ form of ownership 47 41 Total financial result for the period 118 591 017 31 736 358 public joint-stock company/mixed Russian assets with a federal share as per OKOPF/OKFS S.3.16 of Annexes** Basic earnings (loss) per share 0,0832 0,01402 Unit: RUB thousand as per OKEI 384 Diluted earnings (loss) per share

* - Notes to the Balance Sheet and Statement of Financial Performance for 2016.

** - Annexes to the annual 2016 Financial Statements. Indicator For the same period of For the reporting period Notes Description Code the last year 1 2 3 4 General income and expenses Chief Executive A.E. Murov Chief Accountant A.P. Noskov (signature) (print full name) (signature) Revenue from sale of goods, products and services (net of VAT, 2110 218 366 451 173 266 394 excise duties and other similar mandatory payments), including:

services for electric power transmission 2111 171 133 002 158 986 316 “ 20 “ February 2017 other activity 2112 47 233 449 14 280 078

S.6 of Notes* Production cost of goods, products and services sold, including: 2120 ( 140 037 974 ) ( 134 938 305 )

services for electric power transmission 2121 ( 138 756 529 ) ( 133 534 773 ) other activity 2122 ( 1 281 445 ) ( 1 403 532 ) Gross profit (2110 + 2120) 2100 78 328 477 38 328 089 Commercial expenses 2210 - - S.6 of Notes* Administrative expenses 2220 ( 8 032 766 ) ( 7 850 741 ) Profit (loss) from sales (2100 + 2210 + 2220) 2200 70 295 711 30 477 348 Income from participation in other companies 2310 260 824 100 849 Interest income 2320 7 807 492 8 211 453 Interest expenses 2330 ( 6 230 558 ) ( 8 464 150 ) S.3.15 of Annexes** Other income 2340 72 954 542 23 540 512 S.3.15 of Annexes** Other expenses 2350 ( 20 767 964 ) ( 25 981 751 ) Profit (loss) before tax (2200 +2310 + 2320 + 2330 + 2340 + 2300 124 320 047 27 884 261 2350)

S.3.5 of Annexes** Current income tax, including: 2410 ( 12 568 840 ) ( 69 822 ) permanent tax liabilities 2411 6 672 675 ( 4 317 261 ) S.3.5 of Annexes** Change in deferred tax liabilities 2430 ( 5 851 047 ) ( 9 530 440 ) S.3.5 of Annexes** Change in deferred tax assets 2450 228 553 ( 293 851 ) Other, including: 2460 ( 57 802 ) ( 120 011 ) Other similar mandatory payments 2461 ( 6 843 ) ( 120 011 ) Income tax adjustment for the previous periods 2462 ( 50 959 ) ( - )

Net profit (loss) for the reporting period 2400 106 070 911 17 870 137

148 PJSC FGC UES Annual Report 2016 149 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

Annex No. 2 to Order of the Russian Ministry of Finance No. 66n dated July 2nd, 2010 (as revised by Order of the Russian Ministry of Finance No. 124n dated October 5th, 2011) Form 0710023 p. 3 2. Corrections due to changes in the accounting policy and errors elimination Statement of changes in equity 2 for 20 16 Codes As of December 31, Changes in equity for 20 15 As of December 31, 1 2 OKUD Form 0710003 Indicator name Code 20 14 due to net profit due to other factors 20 15 Date (day, month, year) 31 12 2016 (loss) Equity - total Public Joint-Stock Company “Federal Grid Company before corrections 3400 - - - - Organization of Unified Energy System” as per OKPO 56947007 correction due to: Tax identification code INN 4716016979 changes in the accounting policy 3410 - - - - Economic activity power transmission as per OKVED 35.12 errors elimination 3420 - - - - Form of legal entity’s incorporation / form of ownership after corrections 3500 - - - - public joint-stock company/mixed Russian assets with a federal share as per OKOPF/OKFS 47 41 including: Unit of measure: thousand RUR (million RUR) as per OKEI 384 retained earnings (uncovered loss): 1. Changes in equity before corrections 3401 - - - - Treasury shares Additional Reserve Undistributed profits Indicator name Code Authorized capital repurchased Total capital capital (uncovered loss) from shareholders correction due to: 1 Capital value as of December 31, 20 14 3100 637 332 662 - 267 431 084 13 038 463 ( 63 312 639 ) 854 489 570 changes in the accounting policy 3411 - - - - 2 For 20 15 Increase in capital value - total: 3210 - - 13 866 221 - 17 870 137 31 736 358 errors elimination 3421 - - - - including: net profit 3211 х х х х 17 870 137 17 870 137 after corrections 3501 - - - - property revaluation 3212 х х 13 866 221 х - 13 866 221 income relating directly to the increase other capital items in capital value 3213 х х - х - - subject to corrections: additional issue of shares 3214 - - - х х - (per items)

increase of share denomination 3215 - - - х - х before corrections 3402 - - - - reorganization of legal entity 3216 ------other 3217 ------correction due to: Form 0710023 p. 2 Treasury shares changes in the accounting policy 3412 - - - - Undistributed profits Indicator name Code Authorized capital repurchased Additional capital Reserve capital Total (uncovered loss) from shareholders errors elimination 3422 - - - - Reduction of capital value - total: 3220 - - - - ( 839 749 ) ( 839 749 ) including: after corrections 3502 - - - - loss 3221 х х х х - - property revaluation 3222 х х - х - - expenses relating directly to the reduction of capital value 3223 х х - х - -

decrease of share denomination 3224 - - - х - - reduction of shares quantity 3225 - - - х - - reorganization of legal entity 3226 ------dividends 3227 х х х х ( 839 749 ) ( 839 749 ) 3. Net assets Changes in the additional capital 3230 х х ( 3 009 833 ) - 3 009 833 х Changes in the reserve capital 3240 х х х 256 837 ( 256 837 ) х 2 As of December 31, As of December 31, As of December 31,

Capital value as of December 31, 20 15 3200 637 332 662 - 278 287 472 13 295 300 ( 43 529 255 ) 885 386 179 3 2 1 3 For 20 16 Indicator name Code 20 16 20 15 20 14 Increase in capital value - total: 3310 - - 12 520 106 - 106 070 911 118 591 017 including: net profit 3311 х х х х 106 070 911 106 070 911 Net assets 3600 property revaluation 3312 х х 12 520 106 х - 12 520 106 income relating directly to the increase 987 695 490 886 127 082 855 250 506 in capital value 3313 х х - х - - additional issue of shares 3314 - - - х х -

increase of share denomination 3315 - - - х - х reorganization of legal entity 3316 ------Chief Reduction of capital value - total: 3320 - - - - ( 16 976 627 ) ( 16 976 627 ) including: Chief Executive A.E. Murov Accountant A.P. Noskov loss 3321 х х х х - - (signature) (print full name) (signature) (print full name) property revaluation 3322 х х - х - - expenses relating directly to the reduction of capital value 3323 х х - х - - “ 20 “ February 20 17

decrease of share denomination 3324 - - - х - - reduction of shares quantity 3325 - - - х - - reorganization of legal entity 3326 ------Notes dividends 3327 х х х х ( 16 976 627 ) ( 16 976 627 ) 1. The year preceding the previous year is indicated. other 3328 ------2. The previous year is indicated. Changes in the additional capital 3330 х х ( 416 823 ) - 416 823 х Changes in the reserve capital 3340 х х х 893 507 ( 893 507 ) х 3. The reporting year is indicated. 3 Capital value as of December 31, 20 16 3300 637 332 662 - 290 390 755 14 188 807 45 088 345 987 000 569

150 PJSC FGC UES Annual Report 2016 151 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

Annex to Order of the Russian Ministry of Finance No. 66n dated July 2nd, 2010 (as revised by Order of the Russian Ministry of Finance No. 124n dated October 5th, 2011) CASH FLOW STATEMENT

for 2016 Codes 1 2 3 4 OKUD Form 0710004 Cash flows from Date (day, month, year) 31 12 2016 financial transactions Public Joint-Stock Company “Federal Grid Company of Receipts - total, including: 4310 10 163 523 40 094 200 as per OKPO Unified Energy System” obtaining of credits and loans 4311 164 771 99 200 Organization 56947007 monetary contributions of owners (members) 4312 - - Tax identification code INN 4716016979 from issue of shares, participatory interest increase 4313 - - power transmission as per OKVED Activity 35.12 from issue of bonds, promissory notes and other debt securities 4314 9 998 750 39 995 000 Form of legal entity’s incorporation / form of ownership other receipts 4319 2 - public joint-stock company/mixed Russian assets with a federal share as per OKOPF/OKFS Payments - total, including: 4320 ( 40 148 306 ) ( 24 057 411 ) 47 41 to owners (members) due to repurchase of shares (participatory interest) of Unit of measure: thousand RUR as per OKEI 384 their organization or their cessation of membership 4321 - - for payment of dividends and other distribution payments For For profit to owners (members) 4322 ( 16 976 630 ) ( 847 383 ) Indicator name Code 2016 2015 due to the payment of promissory notes and other debt securities, repayment 1 2 3 4 of credits and loans 4323 ( 23 171 676 ) ( 23 210 028 ) Cash flows from other payments 4329 - - current transactions Cash flow balance from financial operations 4300 ( 29 984 783 ) 16 036 789 Receipts - total 4110 186 808 522 173 692 115 Cash flow balance for the reporting period 4400 14 030 529 ( 17 503 024 ) including: Cash and cash equivalents balance as of the beginning of the reporting from sale of products, goods, work and services 4111 177 950 601 160 139 058 year 4450 21 977 309 39 480 333 lease payments, license fees, royalties, commission charges and other similar payments 4112 866 454 972 286 Cash and cash equivalents balance as of the end of the reporting year 4500 36 007 838 21 977 309 from resale of financial investments 4113 - - other receipts 4119 7 991 467 12 580 771 Influence of foreign currency change versus RUR 4490 Payments - total, including: 4120 ( 87 611 024 ) ( 74 602 597 ) to suppliers (contractors) for raw materials, materials, work and services 4121 ( 33 971 675 ) ( 33 403 893 )

remuneration of labor 4122 ( 16 006 034 ) ( 16 197 793 ) Chief Executive A.E. Murov Chief Accountant A.P. Noskov debenture interest 4123 ( 8 395 873 ) ( 6 645 116 ) (signature) (print full name) (signature) (print full name) corporate tax 4124 ( 5 032 447 ) 1 164 771 “ 20 “ February 20 17 other payments 4129 ( 24 204 995 ) ( 19 520 566 ) Balance of cash flows from current transactions 4100 99 197 498 99 089 518 Cash flows from investment transactions Receipts - total, including: 4210 53 710 709 10 357 241 from sale of fixed assets (except financial investments) 4211 1 135 169 1 337 320 from sale of other companies’ shares (participatory interest) 4212 8 625 568 000 from repayment of granted loans, from sale of debt securities (claims for cash against third parties) 4213 47 478 220 5 988 017 dividends, interest on debt financial investments and other similar income from participatory interest in other companies 4214 5 088 695 2 463 904 budget subsidy 4218 - - other receipts 4219 - - Payments - total, including: 4220 ( 108 892 895 ) ( 142 986 572 ) payments associated with the acquisition, establishment, upgrading, reconstruction and preparation for the use of fixed assets 4221 ( 79 203 529 ) ( 75 449 636 ) from purchase of other companies’ shares (participatory interest) 4222 ( - ) ( 192 192 )

from purchase of debt securities (claims for cash against third parties), granting loans to third parties 4223 ( 10 355 719 ) ( 43 416 320 )

debenture interest included in the investment asset value 4224 ( 19 333 517 ) ( 23 926 874 ) from budget subsidy 4228 - - other payments 4229 ( 130 ) ( 1 550 ) Balance of cash flows from investment transactions 4200 ( 55 182 186 ) ( 132 629 331 )

152 PJSC FGC UES Annual Report 2016 153 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

Annex to Order of the Russian Ministry of Finance No. 66n dated July 2nd, 2010 (as revised by Order of the Russian Ministry of Finance No. 124n dated EXPLANATORY NOTES TO THE BALANCE SHEET October 5th, 2011) AND STATEMENT OF FINANCIAL POSITION for 2016

CODES OKUD Form No. 5 О71ООО5 1.3. Totally redeemed intangible assets Date [year, month, day] 2016\12\31

As of December 31, As of December As of December Public Joint-Stock Company “Federal Grid Company of Unified Indicator name Code 2016 31, 2015 31, 2014 Energy System” as per OKPO 56947007 1 2 3 4 5 INN 4716016979 Total 5130 6 198 334 5 612 715 4 090 740 power transmission as per OKVED 35.12 including Other 5131 6 198 334 5 612 715 4 090 740 public joint-stock company/mixed Russian assets with a federal share as per OKOPF/OKFS 47\41

RUB thousand as per OKEI 384 1.4. Availability and changes in R&D results

1. Intangible assets and expenses for research and development, design and experimental, and technological works (R&D) As of the beginning of year Changes for the period As of the end of period 1.1. Availability and changes in intangible assets Withdrawn part of cost Indicator As of the beginning of year Changes for the period As of the end of period Indicator name Code Period part of cost Received part of cost expensed as part of cost Withdrawn Revaluation initial/current initial/current initial/current expensed as expensed as incurred expensed as Initial/current Accumulated Received Initial/current Accumulated Accumulated Impairment loss Initial/current Initial/current Accumulated Item Code Period Depreciation market value market value market value market value depreciation market value depreciation depreciation market value market value depreciation incurred incurred incurred 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 2 3 4 5 6 7 8 9 10 11 5100 for 2016 11 430 798 (7 936 647) 1 034 374 (228 849) 228 849 (1 201 618) - - - 12 236 323 (8 909 416) Intangible assets - total 5140 for 2016 403 971 (160 320) - - - (80 604) 403 971 (240 924) 5110 for 2015 9 979 699 (6 714 177) 1 451 099 - - (1 222 470) - - - 11 430 798 (7 936 647) R&D - total 5150 for 2015 403 971 (79 716) - - - (80 604) 403 971 (160 320) including: including: 5101 for 2016 316 270 (88 465) 13 524 - - (29 001) - - - 329 794 (117 466) by patent holder for invention, industrial 5141 for 2016 65 811 (23 034) - - (13 162) 65 811 (36 196) prototype, useful model 5111 for 2015 254 276 (61 569) 61 994 - - (26 896) - - - 316 270 (88 465) Creation of the general information model of UES by possessor of right for computer programs, 5102 for 2016 8 485 549 (6 226 734) 818 153 (228 849) 228 849 (844 336) - - - 9 074 853 (6 842 221) based on IEC standards 5151 for 2015 65 811 (9 872) - - (13 162) 65 811 (23 034) databases 5112 for 2015 7 120 411 (5 346 299) 1 365 138 - (880 435) - - - 8 485 549 (6 226 734) 5142 for 2016 80 007 (33 337) - - - (16 002) 80 007 (49 339) AAS concept development 5103 for 2016 246 (246) ------246 (246) by owner for trademark and service mark, 5152 for 2015 80 007 (17 335) - - - (16 002) 80 007 (33 337) appellation of goods origin 5113 for 2015 246 (246) ------246 (246) 5143 for 2016 84 955 (35 398) - - - (16 991) 84 955 (52 389) 5104 for 2016 2 628 733 (1 621 202) 202 697 - - (328 281) - - - 2 831 430 (1 949 483) UNEG of Russia modernization program for the Other 5114 for 2015 2 604 766 (1 306 063) 23 967 - - (315 139) - - - 2 628 733 (1 621 202) period till 2020, with perspective till 2030 5153 for 2015 84 955 (18 407) - - - (16 991) 84 955 (35 398)

1.2. Acquisition cost of intangible assets created by the company itself Program of innovative development of JSC FGC 5144 for 2016 60 819 (25 342) - - - (12 164) 60 819 (37 506) UES till 2020 As of December 31, As of December As of December 5154 for 2015 60 819 (13 178) - - - (12 164) 60 819 (25 342) Indicator name Code 2016 31, 2015 31, 2014 5145 for 2016 112 379 (43 209) - - (22 285) 112 379 (65 494) 1 2 3 4 5 Other Total 5120 - - - 5155 for 2015 112 379 (20 924) - - (22 285) 112 379 (43 209)

154 PJSC FGC UES Annual Report 2016 155 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

1.5. Unfinished R&D and unfinished transactions on intangible assets acquisition 2. Fixed assets 2.1. Availability and changes in fixed assets

Changes for the period As of the beginning of year Changes for the period As of the end of period Indicator name Code Period As of the beginning expenses for the expenses accounted as As of the end of received objects withdrawn revaluation Indicator name Code Period accumulated accumulated accumulated accumulated accumulated accumulated initial cost initial cost initial cost initial cost initial cost of year period withdrawn as non- intangible assets or period depreciation depreciation depreciation depreciation depreciation depreciation effective R&D* 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Fixed assets (excluding income-bearing investments 5200 for 2016 1 486 934 382 (663 309 397) 104 047 056 (97 294) (3 551 048) 2 662 129 (80 290 155) 22 179 809 (11 135 371) 1 609 610 199 (752 170 088) in tangible assets) - total 5210 for 2015 1 370 707 288 (581 846 193) 99 262 311 (97 161) (11 223 820) 8 691 398 (75 995 873) 28 188 603 (14 061 568) 1 486 934 382 (663 309 397) 1 2 3 4 5 6 7 8 including: 5201 for 2016 83 833 105 (19 585 430) 8 933 484 (2 004) (336 658) 82 727 (3 097 940) 602 876 (418 313) 93 032 807 (23 020 960) Expenses for unfinished R&D - total 5160 for 2016 4 560 604 393 141 - (235 120) 4 718 625 Buildings 5211 for 2015 76 236 787 (16 745 681) 7 559 052 (3 826) (1 948 524) 671 375 (2 867 310) 1 985 790 (639 988) 83 833 105 (19 585 430) 5202 for 2016 892 294 143 (411 493 380) 39 704 589 (1 784) (620 676) 498 542 (37 250 622) 2 071 624 (827 728) 933 449 680 (449 074 972) Constructions and transfer mechanisms 5170 for 2015 4 389 233 254 466 - (83 095) 4 560 604 5212 for 2015 838 843 751 (374 355 608) 46 974 142 (2 493) (6 298 516) 5 465 076 (35 685 831) 12 774 766 (6 914 524) 892 294 143 (411 493 380) 5203 for 2016 497 416 084 (224 507 108) 54 718 230 (74 625) (2 402 982) 1 926 231 (38 720 682) 19 504 065 (9 889 009) 569 235 397 (271 265 193) Machinery and equipment including: 5213 for 2015 442 834 789 (184 177 106) 43 954 895 (82 918) (2 796 086) 2 388 506 (36 129 689) 13 422 486 (6 505 901) 497 416 084 (224 507 108) Development of technical requirements, design, 5204 for 2016 7 877 138 (5 261 649) 206 798 (17 420) (95 494) 86 839 (899 424) - - 7 988 442 (6 091 654) Transport vehicles manufacturing and testing of high-temperature 5161 for 2016 911 625 - - 911 625 5214 for 2015 7 862 630 (4 354 663) 131 742 (6 157) (117 234) 106 687 (1 007 516) - - 7 877 138 (5 261 649) 5205 for 2016 2 938 084 (2 083 191) 375 984 (1 178) (49 921) 49 208 (273 154) 3 (1) 3 264 150 (2 308 316) superconductor of direct-current cable, including Production and household stock 5215 for 2015 2 763 846 (1 877 424) 229 371 (1 767) (55 147) 52 119 (256 105) 14 (14) 2 938 084 (2 083 191) converters 5171 for 2015 864 177 54 999 - (7 551) 911 625 5206 for 2016 532 949 (361 444) 58 393 (283) (18 735) 18 582 (31 138) 1 241 (320) 573 848 (374 603) Other types of fixed assets 5216 for 2015 533 691 (335 711) 2 024 - (8 313) 7 635 (32 227) 5 547 (1 141) 532 949 (361 444) 5207 for 2016 1 698 972 - 49 578 - (26 582) - - - - 1 721 968 - Setting-up a smart network within UPS East 5162 for 2016 236 736 - - - 236 736 Land plots and natural resources sites 5217 for 2015 1 631 794 - 67 178 ------1 698 972 - (Vostok) 5220 for 2016 343 907 (17 195) - - - - (17 195) - - 343 907 (34 390) Fixed assets obtained under leasing agreement 5172 for 2015 214 075 30 900 - (8 239) 236 736 5230 for 2015 - - 343 907 - - - (17 195) - - 343 907 (17 195) Development and manufacture of the production 5163 for 2016 172 127 147 700 - (1 802) 318 025 prototype for 500 kV HV line of Sayano- Shushenskaya HPP 5173 for 2015 155 268 22 350 - (5 491) 172 127 5164 for 2016 3 240 116 245 441 (233 318) 3 252 239 Other 5174 for 2015 3 155 713 146 217 (61 814) 3 240 116

Unfinished operations on intangible assets 5180 for 2016 940 935 535 750 (59 153) (812 500) 605 032 acquisition - total 5190 for 2015 1 669 231 652 540 (10 853) (1 369 983) 940 935

including: 5181 for 2016 215 648 - - (215 648) - Creation of the integrated hardware/software and technological solution “GCM” 5191 for 2015 188 454 83 470 - (56 276) 215 648 5182 for 2016 60 001 - - (60 001) - Change in computation of time АMIS EPFA 5192 for 2015 60 001 - - - 60 001 5183 for 2016 55 475 - - - 55 475 Creation of OSNBS of electrical grid facilities 5193 for 2015 55 475 - - - 55 475 5184 for 2016 135 209 - - (135 209) - Formation of ACS Treasury 5194 for 2015 - 135 209 - - 135 209 5185 for 2016 169 392 - - (169 392) - UACS Modernisation 1st extension 5195 for 2015 - 169 392 - - 169 392 Special automatic information and measurement 5186 for 2016 133 990 - - - 133 990 system of Federal Grid Company 5196 for 2015 64 727 69 263 - 133 990 5188 for 2016 171 220 535 750 (59 153) (232 250) 415 567 Other 5198 for 2015 1 300 574 195 206 (10 853) (1 313 707) 171 220 * 5160 and 5170 lines reflect reclassification to fixed assets

156 PJSC FGC UES Annual Report 2016 157 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

2.2. Incomplete capital investments 2.4. Other use of fixed assets

Changes for the period As of December 31, As of December As of December accounted as fixed Indicator name Code assets or the value is As of the beginning expenses for the As of the end of 2016 31, 2015 31, 2014 Indicator name Code Period withdrawn increased of year period period 1 2 3 4 5 Rented fixed assets on the balance sheet 1 2 3 4 5 6 7 8 5250 for 2016 243 589 070 104 735 497 (20 052 760) (103 870 498) 224 401 309 5280 7 680 932 10 313 874 5 818 381 Construction in progress and incomplete operations on purchase, modernization etc. of fixed Rented fixed assets out of the balance sheet 5281 assets - total 5240 for 2015 259 594 973 96 869 758 (13 858 969) (99 016 692) 243 589 070 - - including: Leased fixed assets on the balance sheet 5251 for 2016 93 255 221 51 618 798 (582 701) (46 914 285) 97 377 033 97 377 033 new construction 5282 - - - 5241 for 2015 111 656 622 48 601 776 (1 052 638) (65 950 539) 93 255 221 5252 for 2016 106 531 284 33 208 715 (353 141) (55 488 425) 83 898 433 Leased fixed assets out of the balance sheet modernization and reconstruction 5242 for 2015 105 015 235 33 333 423 (873 538) (30 943 836) 106 531 284 5283 33 654 082 30 925 398 29 613 882 5253 for 2016 142 126 1 339 088 (12 166) (1 414 377) 54 671 acquisition of fixed asset items 5243 for 2015 419 526 1 846 937 (3 999) (2 120 338) 142 126 Real assets accepted into operation and actually 5284 5254 for 2016 4 560 604 393 141 (221 873) (13 247) 4 718 625 used, being in the process of state registration R&D objects 5244 for 2015 4 389 233 254 466 (81 116) (1 979) 4 560 604 5255 for 2016 940 935 535 750 (871 653) - 605 032 creation of intangible assets 5245 for 2015 1 669 231 652 540 (1 380 836) - 940 935 185 337 710 189 135 531 183 302 369 5256 for 2016 4 308 623 1 260 072 (1 149 307) - 4 419 388 DEW non-completed 5246 for 2015 3 226 667 1 868 651 (786 695) - 4 308 623 Isolated fixed assets 5257 for 2016 - 40 164 (40 164) - 5285 98 323 87 768 91 045 other 5247 for 2015 - - - - - Other use of fixed assets (pledge, etc.) 5286 - - - 5258 for 2016 33 850 277 16 339 769 (16 861 919) - 33 328 127 equipment for installation 5248 for 2015 33 218 459 10 311 965 (9 680 147) - 33 850 277

2.3. Change in the cost of fixed assets as a consequence of further construction, further equipment, reconstruction and partial liquidation

Indicator name Code for 2016 for 2015 1 2 Increase in the cost of fixed assets as a consequence of further construction, further equipment, reconstruction - total 5260 20 760 199 28 660 928 including: Buildings 5261 1 284 346 652 208 Constructions and transfer mechanisms 5262 14 100 881 24 887 730 Machinery and equipment 5263 5 353 834 3 116 146 Transport vehicles 5264 120 675

Production and household stock 5265 173 233 Other 5266 20 845 3 936 Decrease in the cost of fixed assets as a consequence of partial liquidation - total: 5270 (65 570) (26 582) including: Buildings 5271 (300) Constructions and transfer mechanisms 5272 (57 809) (26 055) Machinery and equipment 5273 (7 761) (227) Transport vehicles 5274 - - 5275 Production and household stock

158 PJSC FGC UES Annual Report 2016 159 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

3. Financial investments 4. Inventory 3.1. Availability and changes in financial investments 4.1. Availability and changes in inventories

As of the beginning of year Changes for the period As of the end of period As of the beginning of year Changes for the period As of the end of period Received Withdrawn (repaid) Withdrawn (repaid) accrual of interest current market revenues and loss from inventory provision for (including value (impairment cost reduction expenditures deterioration in turnover between cost reduction Indicator name Code Period production cost production cost deterioration in production cost accumulated accumulated accumulated adjustment of loss) accumulated reserve amount value their groups reserve amount Indicator name Code Period initial cost initial cost initial cost initial cost value correction correction correction initial value to correction (types) nominal one) 1 2 3 4 5 6 7 8 9 10 11 12 5400 for 2016 12 632 339 - 6 226 048 (9 749 829) - - - 9 108 558 - 1 2 3 4 5 6 7 8 9 10 11 12 13 Inventories - total 5301 for 2016 104 198 595 (71 859 440) - - (298 910) - - 39 783 977 103 899 685 (32 075 463) 5420 for 2015 9 635 100 - 7 193 896 (4 196 657) - - - 12 632 339 - Long-term - total 5401 for 2016 12 632 325 - 6 225 691 (9 749 458) - - - 9 108 558 - 5321 for 2015 102 612 989 (76 848 133) 3 312 460 - (1 726 854) - - 4 988 693 104 198 595 (71 859 440) Raw materials, materials and other valuables including: 5421 for 2015 9 635 083 - 7 192 832 (4 195 590) - - - 12 632 325 - 5402 for 2016 14 - 357 (371) - - - - - Investment into charter capitals of other 5302 for 2016 78 728 279 (62 562 606) - - (6) - - 39 769 727 78 728 273 (22 792 879) finished goods and goods for sale companies 5322 for 2015 78 616 955 (68 400 958) 111 324 - - - - 5 838 352 78 728 279 (62 562 606) 5422 for 2015 17 - 1 064 (1 067) - - - 14 - Investment into charter capitals of subsidiaries and 5303 for 2016 24 171 512 (9 296 834) - - (100) - - 14 250 24 171 412 (9 282 584) affiliates 5323 for 2015 23 991 914 (8 447 175) 180 180 - (582) - - (849 659) 24 171 512 (9 296 834) 4.2 Pledged inventory 5304 for 2016 ------Securities (promissory notes) 5324 for 2015 ------As of December 31, As of December As of December Indicator name Code 5305 for 2016 1 298 804 - - (298 804) - - - 1 000 000 - 2016 31, 2015 31, 2014 Loans extended 5325 for 2015 951 - 3 020 956 - (1 723 103) - - - 1 298 804 - 1 2 3 4 5 5306 for 2016 ------Inventory not paid as of the reporting date - total 5440 - - - Deposits 5326 for 2015 ------Inventory pledged under contracts - total 5445 - - - 5307 for 2016 ------Other 5327 for 2015 3 169 - - - (3 169) - - - - - 5308 for 2016 51 764 310 (12 870 821) 10 658 511 - (60 008 081) - (347 422) 12 870 821 2 067 318 - Short-term - total 5328 for 2015 15 633 287 (12 870 821) 42 118 793 - (5 987 770) - - - 51 764 310 (12 870 821) including: Investment into charter capitals of other 5309 for 2016 ------companies 5329 for 2015 ------Investment into charter capitals of subsidiaries and 5310 for 2016 ------affiliates 5330 for 2015 ------5311 for 2016 12 369 521 (12 369 521) - - (12 022 099) - (347 422) 12 369 521 - - Securities (promissory notes) 5331 for 2015 12 369 521 (12 369 521) ------12 369 521 (12 369 521) 5312 for 2016 9 268 226 (501 300) 10 654 522 - (17 864 150) - - 501 300 2 058 598 - Loans extended 5332 for 2015 3 255 046 (501 300) 12 000 950 - (5 987 770) - - - 9 268 226 (501 300) 5313 for 2016 30 116 320 - - - (30 116 320) - - - - - Deposits 5333 for 2015 - - 30 116 320 - - - - - 30 116 320 - 5314 for 2016 10 243 - 3 989 - (5 512) - - - 8 720 - Other 5334 for 2015 8 720 - 1 523 - - - - - 10 243 - 5300 for 2016 155 962 905 (84 730 261) 10 658 511 - (60 306 991) - (347 422) 52 654 798 105 967 003 (32 075 463) Financial investments - total 5320 for 2015 118 246 276 (89 718 954) 45 431 253 - (7 714 624) - - 4 988 693 155 962 905 (84 730 261)

As of December 31, As of December As of December Indicator name Code 2016 31, 2015 31, 2014 1 2 3 4 5 Financial investments received as pledge - total 53200 - - - Financial investments transferred to third parties (except sale) - total 53205 - - - Other use of financial investments 53209 - - -

160 PJSC FGC UES Annual Report 2016 161 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

5. Receivables and payables 5.3. Availability and changes in accounts payable 5.1. Availability and changes in accounts receivable

As of the beginning of year Changes for the period As of the end of period Changes for the period received disposals received disposals as a result of interest, fines and writing-off allowance recovery writing off at transfer from long- business activities other accruals due the expense of term to short-term as a result of interest, fines and transfer from Indicator name Code Period by contract terms bad debt provision repayment by contract terms bad debt provision As of the beginning As of the end of (transaction debt) provision funds debt Indicator name Code Period business activities other accruals due repayment writing-off long-term to short- of year period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 (transaction debt) term debt Long-term accounts receivable - 5501 for 2016 9 554 594 (50 855) 9 372 866 - (65 764) - - - (7 483 279) 11 378 417 (50 855) 1 2 3 4 5 6 7 8 9 10 total 5521 for 2015 1 110 836 (88) 8 720 738 - (52 366) - (50 767) - (224 614) 9 554 594 (50 855) 5551 for 2016 462 788 146 120 - (101 771) - 5 530 512 667 including: Long-term accounts payable - total 5502 for 2016 8 654 597 - 9 360 250 - (57 220) - - - (7 472 568) 10 485 059 - 5571 for 2015 453 029 33 086 - (6 335) - (16 992) 462 788 customers and consumers 5522 for 2015 4 877 - 8 713 575 - (44 498) - - - (19 357) 8 654 597 - 5560 for 2016 54 748 132 509 898 503 122 524 (504 706 814) (6 300) (24 301) 60 031 744 5503 for 2016 88 (88) - - - - - 88 (88) advance payments made Short-term accounts payable - total 5523 for 2015 88 (88) 4 635 - (4 635) - - - - 88 (88) 5580 for 2015 77 550 930 567 351 019 253 252 (590 373 194) (13 698) (20 177) 54 748 132 5504 for 2016 899 909 (50 767) 12 616 - (8 544) - - (10 711) 893 270 (50 767) other debtors including: 5524 for 2015 1 105 871 - 2 528 - (3 233) - (50 767) - (205 257) 899 909 (50 767) 5510 for 2016 118 887 847 (58 900 371) 712 758 788 3 498 802 (644 503 485) (489) (640 896) 81 613 (7 226 481) 183 333 369 (59 459 654) 5561 for 2016 42 279 852 225 287 412 7 (236 474 162) (6 300) (38 919) 31 047 890 Short-term accounts receivable - total suppliers and contractors 5530 for 2015 113 913 413 (54 861 273) 628 585 561 1 216 161 (616 584 691) (23 821) (4 091 818) 52 720 (8 166 056) 118 887 847 (58 900 371) 5581 for 2015 67 205 391 198 246 329 42 (223 152 380) (13 408) (6 122) 42 279 852 including: - 5562 for 2016 18 486 45 537 582 - (45 534 698) - - 21 370 5511 for 2016 50 679 611 (10 926 211) 262 022 163 - (206 108 767) (50) 1 535 823 - (7 226 481) 99 366 476 (9 390 388) Amounts owed to the company staff customers and consumers 5582 for 2015 221 038 25 409 648 - (25 612 200) - - 18 486 5531 for 2015 44 687 556 (7 186 506) 212 119 637 - (197 958 449) - (3 742 782) 3 077 (8 166 056) 50 679 611 (10 926 211) amounts owed by members (founders) as share 5512 for 2016 ------5563 for 2016 310 101 5 131 901 - (5 441 447) - - 555 capital payments 5532 for 2015 ------Amounts owed to state non-budget funds 5513 for 2016 2 746 155 (1 980 105) 9 420 918 - (9 614 884) (12) (56 138) 57 080 - 2 495 097 (1 979 163) 5583 for 2015 84 162 5 084 909 - (4 858 680) (290) - 310 101 advance payments made 5533 for 2015 3 540 506 (1 980 963) 71 530 913 - (72 323 833) (17) (556) 1 414 - 2 746 155 (1 980 105) 5564 for 2016 4 062 955 98 137 396 6 029 (85 475 297) - - 16 731 083 5514 for 2016 65 462 081 (45 994 055) 441 315 707 3 498 802 (428 779 834) (427) (2 120 581) 24 533 81 471 796 (48 090 103) Taxes and fees payables other debtors 5534 for 2015 65 685 351 (45 693 804) 344 935 011 1 216 161 (346 302 409) (23 804) (348 480) 48 229 - 65 462 081 (45 994 055) 5584 for 2015 1 326 189 74 456 831 11 248 (71 731 313) - - 4 062 955 5565 for 2016 6 129 644 37 617 465 - (35 589 849) - 14 618 8 171 878 Advance payments under non-current assets 5515 for 2016 26 272 966 (5 418 243) 223 481 092 - (214 907 684) (393) (3 637 651) 3 163 - 34 842 818 (9 052 731) Advances received (balance line 1173) 5535 for 2015 41 609 152 (1 847 538) 286 082 920 - (301 407 908) - (3 581 903) 11 198 - 26 272 966 (5 418 243) 5585 for 2015 6 085 001 233 957 505 - (233 898 807) - (14 055) 6 129 644 5500 for 2016 154 715 407 (64 369 469) 945 612 746 3 498 802 (859 476 933) (882) (4 278 547) 84 776 (14 709 760) 229 554 604 (68 563 240) Total 5566 for 2016 1 939 360 84 287 420 116 488 (82 358 764) - - 3 984 504 5520 for 2015 156 633 401 (56 708 899) 923 389 219 1 216 161 (918 044 965) (23 821) (7 724 488) 63 918 (8 390 670) 154 715 407 (64 369 469) Other creditors 5.2. Overdue accounts receivable 5586 for 2015 2 619 738 29 508 804 241 962 (30 431 144) - - 1 939 360 Payables to members (founders) 5567 for 2016 7 734 13 899 327 - (13 832 597) - - 74 464 As of December 31, 2016 As of December 31, 2015 As of December 31, 2014 5587 for 2015 9 411 686 993 - (688 670) - - 7 734 Indicator name Code balance value (less balance value (less balance value (less 5550 for 2016 55 210 920 510 044 623 122 524 (504 808 585) (6 300) (18 771) 60 544 411 by contract terms provision for by contract terms provision for by contract terms provision for doubtful Total doubtful debts) doubtful debts) debts) 5570 for 2015 78 003 959 567 384 105 253 252 (590 379 529) (13 698) (37 169) 55 210 920 1 2 3 4 5 6 Total 5540 35 768 797 15 516 478 37 857 026 18 476 959 26 427 560 16 074 584 including: Customers and consumers 5541 22 041 037 12 650 692 28 021 309 17 095 098 20 076 480 12 889 974 5.4. Overdue accounts payable Advance payments made 5542 2 381 - 1 849 - 2 335 - Other debtors 5543 As of December 31, As of December 31, As of December 31, 1 878 317 29 508 3 033 764 - 1 316 597 - Indicator name Code Advance payments under non-current assets 5544 2016 2015 2014 (balance line 1173) 11 847 062 2 836 278 6 800 104 1 381 861 5 032 148 3 184 610 1 2 3 4 5 Total 5590 251 777 778 259 59 680 including: Suppliers and contractors 5591 233 059 743 507 24 928 Advances received 5592 18 644 34 752 34 752 Other creditors 5593 74 - -

162 PJSC FGC UES Annual Report 2016 163 Appendix 13 ANNUAL FINANCIAL STATEMENTS OF PJSC FGC UES FOR 2016 UNDER RAS

6. Production costs 8. Securing Liabilities

Indicator name Code for 2016 for 2015 As of December 31, As of December 31, As of December 31, 1 2 3 4 Indicator name Code 2016 2015 2014 Material expenses 5610 23 714 349 23 929 722 1 2 3 4 5 Labor costs 5620 18 991 636 18 872 485 Received - total 5800 78 556 902 50 884 425 67 459 319 Fringe benefit expenses 5630 4 287 496 4 259 701 Depreciation 5640 81 490 149 77 216 689 including: Other expenses 5650 19 587 110 18 510 449 Banking guarantees 5801 77 737 509 50 063 709 67 131 149 Total by cost category 5660 148 070 740 142 789 046 Property pledge contract 5802 735 206 721 557 209 059 Change in balance (growth [-], loss [+]): - Other 5803 84 187 99 159 119 111 Issued under own obligations - total 5810 2 248 381 136 709 171 537 work in progress, finished goods, etc. (growth [-]) 5670 - including: work in progress, finished goods, etc. (loss [+]) 5680 - Surety 5811 2 248 381 136 709 171 537 Total costs for common activities 5600 148 070 740 142 789 046

7. Provisions for contingent liabilities

Indicator As of the beginning As of the end of Item Code Period Accrued Use Restored of year period 1 2 3 4 5 6 7 9. Government aid for 2016 1 905 387 3 831 169 (3 282 953) (26 774) 2 426 829 Contingent liabilities 5700 for 2015 1 435 028 3 441 538 (2 949 824) (21 355) 1 905 387 Indicator name Code For 2016 For 2015 including: 1 2 3 4 for 2016 762 619 2 220 485 (2 166 959) - 816 145 Estimated liability related to unutilized vacation 5701 Budget funds received – total 5900 - - for 2015 751 506 2 298 861 (2 287 748) - 762 619 including: Estimated liability related to prior period for 2016 876 899 943 507 (850 125) (26 774) 943 507 5702 investments into non-current assets payments for 2015 683 522 876 808 (662 076) (21 355) 876 899 5901 - - for 2016 265 869 106 428 (265 869) - 106 428 Estimated liability related to non-state pension 5703 fund for 2015 - 265 869 - - 265 869 for 2016 - 1 909 - - 1 909 Estimated liability related to payments to 5704 management and control bodies for 2015 - - - - - Estimated liability according to contract terms 5705 for 2016 - 558 840 - - 558 840 for 2015 - - - - -

Chief Executive ______A.E. Murov Chief Accountant ______A.P. Noskov [signature] [print name] [signature] [print name]

February 20, 2017

164 PJSC FGC UES Annual Report 2016 165 CONSOLIDATED FINANCIAL STATEMENTS OF PJSC FGC UES Appendix 14 FOR 2016 UNDER IFRS

APPENDIX 14. Consolidated Financial Statements of PJSC FGC UES for 2016 Under IFRS

CONTENTS

Independent Auditors’ Report

Consolidated Statement of Financial Position ...... 8 Consolidated Statement of Profit or Loss and Other Comprehensive Income ...... 9 Consolidated Statement of Cash Flows ...... 10 Consolidated Statement of Changes in Equity ...... 11

Notes to the Consolidated Financial Statements Note 1. PJSC “FGC UES” and its operations ...... 13 Note 2. Basis of preparation ...... 13 Note 3. Summary of significant accounting policies ...... 16 Note 4. Principal subsidiaries ...... 22 Note 5. Balances and transactions with related parties ...... 22 PJSC “FGC UES” Note 6. Property, plant and equipment ...... 24 Note 7. Intangible assets ...... 27 CONSOLIDATED FINANCIAL STATEMENTS Note 8. Investments in associates and joint ventures...... 27 Note 9. Available-for-sale investments ...... 28 PREPARED IN ACCORDANCE WITH Note 10. Long-term receivables and other non-current assets ...... 28 INTERNATIONAL FINANCIAL REPORTING STANDARDS Note 11. Cash and cash equivalents ...... 29 Note 12. Bank deposits ...... 29 FOR THE YEAR ENDED 31 DECEMBER 2016 Note 13. Accounts receivable and prepayments ...... 30 Note 14. Inventories ...... 31 AND INDEPENDENT AUDITORS’ REPORT Note 15. Equity...... 31 Note 16. Income tax ...... 33 Note 17. Non-current debt ...... 35 Note 18. Retirement benefit obligations ...... 36 Note 19. Current debt and current portion of non-current debt ...... 38 Note 20. Accounts payable and accrued charges ...... 38 Note 21. Revenues and other operating income ...... 38 Note 22. Operating expenses ...... 39 Note 23. Finance income ...... 39 Note 24. Finance costs ...... 40 Note 25. Earnings per ordinary share for profit attributable to shareholders of FGC UES ...... 40 Note 26. Contingencies, commitments and operating risks ...... 40 Note 27. Financial instruments and financial risks ...... 41 Note 28. Capital risk management ...... 44 Note 29. Segment information ...... 45 Note 30. Derecognition of subsidiary ...... 47

166 PJSC FGC UES Annual Report 2016 167 CONSOLIDATED FINANCIAL STATEMENTS OF PJSC FGC UES Appendix 14 FOR 2016 UNDER IFRS

168 PJSC FGC UES Annual Report 2016 169 CONSOLIDATED FINANCIAL STATEMENTS OF PJSC FGC UES Appendix 14 FOR 2016 UNDER IFRS

170 PJSC FGC UES Annual Report 2016 171 CONSOLIDATED FINANCIAL STATEMENTS OF PJSC FGC UES Appendix 14 FOR 2016 UNDER IFRS

172 PJSC FGC UES Annual Report 2016 173 CONSOLIDATED FINANCIAL STATEMENTS OF PJSC FGC UES Appendix 14 FOR 2016 UNDER IFRS

PJSC “FGC UES” PJSC “FGC UES”

Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Cash Flows (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Year ended Year ended Year ended Year ended Notes 31 December 2016 31 December 2015 Notes 31 December 2016 31 December 2015 Revenues 21 255,603 187,041 CASH FLOWS FROM OPERATING ACTIVITIES: Profit before income tax 78,484 56,287 Other operating income 21 6,039 4,001 Adjustments to reconcile profit before Operating expenses 22 (155,508) (130,963) income tax to net cash provided by operations Gain on derecognition of subsidiary 30 11,868 - Depreciation of property, plant and equipment 22 39,397 39,447 (Gain) / loss on disposal of property, plant and equipment 22 (72) 3,699 Impairment and revaluation loss on property, plant and equipment, net 6 (38,155) (2,850) Amortisation of intangible assets 22 1,330 1,481 Operating profit 79,847 57,229 Impairment and revaluation loss of property, plant and Finance income 23 6,974 8,701 equipment, net 6 38,155 2,850 Gain on derecognition of subsidiary 30 (11,868) - Finance costs 24 (8,010) (9,635) Share of result of associates 8 327 8 Share of loss of associates and joint ventures 8 (327) (8) Accrual of allowance for doubtful debtors 22 2,666 7,063 Profit before income tax 78,484 56,287 Accrual of other provision for liabilities and charges 20 2,502 434 Income tax expense 16 (10,102) (12,189) Finance income 23 (6,974) (8,701) Finance costs 24 8,010 9,635 Profit for the period 68,382 44,098 Other non-cash operating income (39) (74) Other comprehensive income / (loss) Operating cash flows before working capital changes and Items that will not be reclassified subsequently to profit or loss income tax paid 151,918 112,129 Working capital changes: Change in revaluation reserve for property, plant and equipment 6 14,280 117 Increase in accounts receivable and prepayments (43,273) (12,824) Remeasurements of retirement benefit obligations 18 1,500 (3,005) Decrease / (increase) in inventories 1,144 (5,607) Income tax relating to items that will not be reclassified 16 (2,948) 570 (Increase) / decrease in other non-current assets (69) 387 Total items that will not be reclassified to profit or loss 12,832 (2,318) Increase in accounts payable and accrued charges 7,375 5,865 Decrease in retirement benefit obligations (511) (2,833) Items that are or may be reclassified subsequently to profit or loss Income tax (paid) / received (5,108) 906 Change in fair value of available-for-sale investments 9 54,266 7,776 Net cash generated by operating activities 111,476 98,023 Foreign currency translation difference 8 (204) (152) CASH FLOWS FROM INVESTING ACTIVITIES: Income tax relating to items that may be reclassified 16 (10,853) (1,556) Purchase of property, plant and equipment (78,872) (75,604) Proceeds from disposal of property, plant and equipment 4,864 1,980 Total items that are or may be reclassified to profit or loss 43,209 6,068 Purchase of intangible assets (898) (948) Other comprehensive income for the period, net of income tax 56,041 3,750 Redemption of promissory notes 206 667 Total comprehensive income for the period 124,423 47,848 Investment in bank deposits (5,257) (30,422) Redemption of bank deposits 35,085 337 Profit / (loss) attributable to: Dividends received 353 21 Shareholders of FGC UES 25 68,159 44,768 Loans given (18) (1,000) Non-controlling interest 223 (670) Purchase of subsidiary (4) (293) Total comprehensive income / (loss) attributable to: Sale of subsidiary 14 568 Shareholders of FGC UES 123,705 48,499 Interest received 6,569 7,452 Net cash used in investing activities (37,958) (97,242) Non-controlling interest 718 (651) CASH FLOWS FROM FINANCING ACTIVITIES: Earnings per ordinary share for profit attributable to shareholders Proceeds from non-current borrowings 10,165 40,099 of FGC UES – basic and diluted (in Russian Rouble) 25 0.054 0.036 Proceeds from current borrowings 350 -

Repayment of current and non-current borrowings (23,172) (23,210) Repayment of lease (150) (150) Dividends paid (16,751) (840) Interest paid (27,732) (30,572) Net cash used in financing activities (57,290) (14,673) Net increase / (decrease) in cash and cash equivalents 16,228 (13,892) Cash and cash equivalents at the beginning of the period 11 28,176 42,068 Cash and cash equivalents at the end of the period 11 44,404 28,176

The accompanying notes are an integral part of these Consolidated Financial Statements The accompanying notes on are an integral part of these Consolidated Financial Statements 9 10

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Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated)

Attributable to shareholders of FGC UES Non- Attributable to shareholders of FGC UES Non- Share Share Treasury Accumu- controlling Total Share Share Treasury Accumu- controlling Total

Notes capital premium shares Reserves lated deficit Total interest equity Notes capital premium shares Reserves lated deficit Total interest equity As at 1 January 2016 637,333 10,501 (4,719) 229,578 (252,980) 619,713 (75) 619,638 As at 1 January 2015 637,333 10,501 (4,719) 226,382 (297,237) 572,260 971 573,231 Total comprehensive income for the period Total comprehensive income for the period Profit for the period - - - - 68,159 68,159 223 68,382 Profit for the period - - - - 44,768 44,768 (670) 44,098 Other comprehensive income / (loss), net of related income tax Other comprehensive income / (loss), net of related income tax Derecognition of revaluation reserve on disposed property, plant and equipment 15 - - - (3,365) 3,365 - - - Change in revaluation reserve for property, plant and equipment 15 - - - 75 75 19 94 Change in revaluation reserve for property, plant and equipment 6, 15 - - - 10,929 10,929 495 11,424 Change in fair value of available-for-sale investments 9, 15 - - - 6,221 - 6,221 - 6,221 Remeasurements of retirement benefit obligations 15, 18 - - - (2,413) - - Change in fair value of available-for-sale investments 9, 15 - - - 43,413 - 43,413 - 43,413 (2,413) (2,413) Foreign currency translation difference 8, 15 - - - (152) - (152) - (152) Remeasurements of retirement benefit obligations 15, 18 - - - 1,408 - 1,408 - 1,408 Total other comprehensive income - - - 3,731 - 3,731 19 3,750 Foreign currency translation difference 8, 15 - - - (204) - (204) - (204) - - - 3,731 44,768 (651) Total other comprehensive income - - - 52,181 3,365 55,546 495 56,041 Total comprehensive income for the period 48,499 47,848 Transactions with shareholders of FGC UES recorded directly in Total comprehensive income for the period - - - 52,181 71,524 123,705 718 124,423 equity Transactions with shareholders of FGC UES recorded directly in Dividends declared - - - - (832) (832) (1) (833) equity Total transactions with shareholders of FGC UES - - - - (832) (832) (1) (833) Dividends declared - - - - (16,817) (16,817) (1) (16,818) Changes in ownership Total transactions with shareholders of FGC UES - - - - (16,817) (16,817) (1) (16,818) Acquisition of subsidiary - - - - (214) (214) 58 (156) Changes in ownership Disposal of subsidiary - - - (535) 535 - (452) (452) Derecognition of subsidiary ------1,174 1,174 Total changes in ownership - - - (535) 321 (214) (394) (608) Total changes in ownership ------1,174 1,174 As at 31 December 2015 637,333 10,501 (4,719) 229,578 (252,980) 619,713 (75) 619,638 As at 31 December 2016 637,333 10,501 (4,719) 281,759 (198,273) 726,601 1,816 728,417

The accompanying notes on are an integral part of these Consolidated Financial Statements 12 The accompanying notes on are an integral part of these Consolidated Financial Statements

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 1. PJSC “FGC UES” and its operations Note 2. Basis of preparation (continued)

Public Joint-Stock Company “Federal Grid Company of Unified Energy System” (“FGC UES” or the New or Possible impact on “Company”) was established in June 2002 for the purpose of operating and managing the electricity transmission amended consolidated financial grid infrastructure of the Russian Unified National Electric Grid (the “UNEG”). standard Summary of the requirements statements FGC UES and its subsidiaries (the “Group”) act as the natural monopoly operator for the UNEG. The Group’s IFRS 9 In July 2014, the International Accounting Standards Board The Group is assessing the principal operating activities consist of providing electricity transmission services, providing connection to the Financial issued the final version of IFRS 9 Financial Instruments. potential impact on its electricity grid, maintaining the electricity grid system, technical supervision of grid facilities and investment Instruments IFRS 9 is effective for annual periods beginning on or after 1 consolidated financial activities in the development of the UNEG. The majority of the Group’s revenues are generated via tariffs for January 2018, with early adoption permitted statements resulting from the electricity transmission, which are approved by the Russian Federal Antimonopoly Service (the “FAS” – legal application of IFRS 9. successor of the Federal Tariff Service, abolished on 21 July 2015) based on the Regulatory Asset Base (“RAB”) IFRS 15 establishes a comprehensive framework for regulation. FGC UES's main customers are distribution grid companies (“IDGCs”), certain large commercial end IFRS 15 The Group is assessing the determining whether, how much and when revenue is customers and retail electricity supply companies. Revenue potential impact on its from recognised. It replaces existing revenue recognition guidance, consolidated financial On 14 June 2013 the Government of the Russian Federation (the “RF”) transferred its stake in FGC UES to Contracts including IAS 18 Revenue, IAS 11 Construction Contracts statements resulting from the PJSC “Russian Grids” (former OJSC “IDGC Holding”), the holding company of an electricity distribution group, with and IFRIC 13 Customer Loyalty Programmes. application of IFRS 15. controlled by the Government of the RF. As at 31 December 2016, FGC UES was 80.13% owned and controlled Customers IFRS 15 is effective for annual periods beginning on or after by PJSC “Russian Grids”. The remaining shares are traded on Moscow Interbank Currency Exchange and as 1 January 2018, with early adoption permitted Global Depository Receipts on the London Stock Exchange. IFRS 16 IFRS 16 introduces a single, on-balance lease sheet accounting The Group is assessing the The registered office of the Company is located at 5A Akademika Chelomeya Street, Moscow 117630, Russian Leases model for lessees. A lessee recognises a right-of-use asset potential impact on its Federation. representing its right to use the underlying asset and a lease consolidated financial Relationships with the state. The Government of the RF is the ultimate controlling party of FGC UES. The liability representing its obligation to make lease payments. statements resulting from the Government directly affects the Group's operations via regulation over tariff by the FAS and its investment There are optional exemptions for short-term leases and leases application of IFRS 16 program is subject to approval by both the FAS and the Ministry of Energy. Ultimately the Government supports of low value items. Lessor accounting remains similar to the the Group due to its strategic position in the Russian Federation. The Government's economic, social and other current standard – i.e. lessors continue to classify leases as policies could have a material impact on the Group’s operations. finance or operating leases. IFRS 16 replaces existing leases guidance including IAS 17 Business environment. The Group’s operations are primarily located in the Russian Federation. Consequently, Leases, IFRIC 4 Determining whether an Arrangement the Group is exposed to the economic and financial markets of the Russian Federation which display contains a Lease, SIC-15 Operating Leases—Incentives and characteristics of an emerging market. The legal, tax and regulatory frameworks continue development, but are SIC-27 Evaluating the Substance of Transactions Involving subject to varying interpretations and frequent changes which together with other legal and fiscal impediments the Legal Form of a Lease. contribute to the challenges faced by entities operating in the Russian Federation. (Note 26). The standard is effective for annual periods beginning on or The conflict in Ukraine and related events has increased the perceived risks of doing business in the Russian after 1 January 2019. Early adoption is permitted for entities Federation. The imposition of economic sanctions on Russian individuals and legal entities by the European that apply IFRS 15 Revenue from Contracts with Customers Union, the United States of America, Japan, Canada, Australia and others, as well as retaliatory sanctions at or before the date of initial application of IFRS 16. imposed by the Russian government, has resulted in increased economic uncertainty including more volatile equity markets, a depreciation of the Russian Ruble, a reduction in both local and foreign direct investment The following new or amended standards are not expected to have a significant impact of the Group’s inflows and a significant tightening in the availability of credit. In particular, some Russian entities may be consolidated financial statements. experiencing difficulties in accessing international equity and debt markets and may become increasingly dependent on Russian state banks to finance their operations. The longer term effects of recently implemented sanctions, as well as the threat of additional future sanctions, are difficult to determine.  Disclosure Initiative (Amendments to IAS 7). The consolidated financial statements (“Consolidated Financial Statements”) reflect management’s assessment  Recognition of Deferred Tax Assets for Unrealised Losses ( Amendments to IAS 12). of the impact of the Russian business environment on the operations and the financial position of the Group. The future business environment may differ from management’s assessment.  Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2). Note 2. Basis of preparation  Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS Statement of compliance. These Consolidated Financial Statements have been prepared in accordance with, and 10 and IAS 28). comply with, International Financial Reporting Standards (“IFRS”) and its interpretations. Critical accounting estimates and assumptions Management makes a number of estimates and assumptions that Each enterprise of the Group individually maintains its own books of accounts and prepares its statutory are continually evaluated and may differ from the related actual results. The estimates and assumptions that have financial statements in accordance with the Regulations on Accounting and Reporting of the RF (“RAR”). The the most significant effect on the amounts recognised in these Consolidated Financial Statements and estimates accompanying Consolidated Financial Statements are based on the statutory records and adjusted and that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial reclassified for the purpose of fair presentation in accordance with IFRS. year include: Functional and presentation currency. The Russian Rouble (“RR”) is functional currency for FGC UES and the Carrying value of property, plant and equipment (Note 6). The Group uses the revaluation model for property, currency in which these Consolidated Financial Statements are presented. All financial information presented in plant and equipment. The last external valuation was performed as at 31 December 2016. RR have been rounded to the nearest million, unless otherwise stated. Carrying value of investment in PJSC “INTER RAO UES” (Note 9). As at 31 December 2016 the Group owns New accounting developments not yet adopted. A number of new Standards, amendments to Standards and 18.57% of the voting shares of PJSC “INTER RAO UES” (“INTER RAO”). Management has assessed the level Interpretations are not yet effective as at 31 December 2016 and have not been applied in preparing these of influence that the Group has on INTER RAO, taking into account its limitation to obtain any additional consolidated financial statements. Of these pronouncements, potentially the following will have an impact on the financial information which may be an indicator of such influence, and determined that it does not have Group’s operations. The Group plans to adopt these pronouncements when they become effective. significant influence. Consequently, this investment is classified as available-for-sale investment.

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 2. Basis of preparation (continued) Note 3. Summary of significant accounting policies Loss of control over OJSC “Nurenergo”(Note 30). On 29 June 2016 the Commercial Court of the Republic of The accounting policies set out below have been applied consistently to all periods presented in these Financial Chechnya declared OJSC “Nurenergo”, the subsidiary of FGC UES, bankrupt and appointed an external Statements, and have been applied consistently by Group entities. bankruptcy manager. In accordance with Russian legislation on insolvency (bankruptcy), since the date a debtor Certain comparative amounts have been reclassified to conform with the current year’s presentation. is declared bankrupt, the power of all executive bodies of a debtor is terminated and transferred to a bankruptcy manager. Due to this fact FGC UES lost the right to direct relevant activities of the subsidiary and, therefore, lost Principles of consolidation. Subsidiaries are entities (including special purpose entities) controlled by the control over the entity. As a result the Group derecognized the assets and liabilities of the OJSC “Nurenergo” as Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement at 30 June 2016 and recognised gain amounted to RR 11,868 million in statement of profit and loss and other with the entity and has the ability to affect those returns through its power over the entity. The financial comprehensive income. statements of subsidiaries are included in the consolidated financial statements from the date that control On 27 of January 2017, the North-Caucasian District State Commercial Court (the Court of Cassation) commences until the date that control ceases. The accounting policies of subsidiaries have been changed when overturned the Court Ruling and sent the case to the Court of First Instance for re-trial. As at 31 December 2016 necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests the Group analysed all the facts and conditions and concluded that the control over the subsidiary was not in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests regained. to have a deficit balance. Tax contingencies. Russian tax legislation is subject to varying interpretations and changes, which can occur Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group frequently. Where the Group management believes it is probable that their interpretation of the relevant legislation and transactions, are eliminated. the Group’s tax positions cannot be sustained, an appropriate amount is accrued in the consolidated financial Purchases of subsidiaries from parties under common control. Purchases of subsidiaries from parties under statements. The possible tax claims in respect of certain open tax positions of the Group companies are disclosed in common control are accounted for using the predecessor values method. Under this method the consolidated Note 26. financial statements of the combined entity are presented as if the businesses had been combined prospectively Measurement of fair values. When measuring the fair value of an asset or a liability, the Group uses market from the date on which business combination between entities under common control occurred. The assets and observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based liabilities of the subsidiary transferred under common control are at the predecessor entity’s carrying amounts. on the inputs used in the valuation techniques as follows. The predecessor entity is considered to be the highest reporting entity in which the subsidiary’s IFRS financial  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. information was consolidated. Related goodwill inherent in the predecessor entity’s original acquisitions is also recorded in the consolidated financial statements. Any consideration for the acquisition is accounted for in the  Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, consolidated financial statements as an adjustment to retained earnings within equity. either directly (i.e. as prices) or indirectly (i.e. derived from prices). Associates and joint ventures. Associates and joint ventures are entities over which the Company has significant  Level 3: inputs for the asset or liability that are not based on observable market data (unobservable influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20 and 50 inputs). percent of the voting rights. Investments in associates and joint ventures are accounted for using the equity If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the method of accounting and are initially recognised at cost. The carrying amount of associates and joint ventures fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair includes goodwill identified on acquisition and is reduced by accumulated impairment losses, if any. The Group value hierarchy as the lowest level input that is significant to the entire measurement. discontinues the use of the equity method of accounting from the date when it ceases to have significant influence in the associate. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. The Group’s share of the post-acquisition profits or losses of associates and joint ventures is recorded in profit or loss, and its share of other comprehensive income of associates and joint ventures is recognised in the Group’s Further information about the assumptions made in measuring fair values is included in the following notes: other comprehensive income. When the Group’s share of losses in an associate and joint ventures equals or  Note 6 – Property, plant and equipment; exceeds its interest in the associate and joint ventures, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associates and  Note 10 – Long-term receivables and other non-current assets; joint ventures.  Note 17 – Non-current debt; Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the  Note 27 – Financial instruments and financial risks. extent of the Group’s interest in the associates and joint ventures; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates and joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. Classification of financial assets. The Group holds financial assets of the following measurement categories: loans and receivables and available-for-sale financial assets. Loans and receivables are unquoted non-derivative financial assets with fixed or determinable payments other than those that the Group intends to sell in the near term. All other financial assets are included in the available-for-sale category, which includes investment securities which the Group intends to hold for an indefinite period of time and which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. Classification of financial liabilities. The Group classifies non-derivative financial liabilities into the other financial liabilities category. These financial liabilities are carried at amortised cost using the effective interest method. Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade and other payables.

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 3. Summary of significant accounting policies (continued) Note 3. Summary of significant accounting policies (continued) Initial recognition of financial instruments. The Group’s financial instruments are initially recorded at fair Depreciation on property, plant and equipment is calculated on a straight-line basis over the estimated useful life value plus transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or of the asset when it is available for use. The useful lives are reviewed at each financial year end and, if loss on initial recognition is only recorded if there is a difference between fair value and transaction price which expectations differ from previous estimates, the changes are recognised prospectively. can be evidenced by other observable current market transactions in the same instrument or by a valuation The useful lives, in years, of assets by type of facility are as follows: technique whose inputs include only data from observable markets. Useful lives Derecognition of financial assets. The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expired or (b) the Group has transferred the rights to the cash Buildings 50-80 flows from the financial assets or entered into a qualifying pass-through arrangement while (i) also transferring Electric power transmission grids 20-50 substantially all the risks and rewards of ownership of the assets or (ii) neither transferring nor retaining Substations 15-30 substantially all risks and rewards of ownership but not retaining control. Control is retained if the counterparty Other 5-50 does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale. At each reporting date the management assesses whether there is any indication of impairment of property, plant and equipment. If any such indication exists, the management estimates the recoverable amount, which is Available-for-sale investments. The Group classifies investments as available-for-sale at the time of purchase. determined as the higher of an asset’s fair value less costs to sell and its value in use. The carrying amount is Available-for-sale investments are carried at fair value. Dividends on available-for-sale equity instruments are reduced to the recoverable amount and the impairment loss is recognised as current period loss to the extent it recognised in profit or loss when the Group’s right to receive payment is established and it is probable that the exceeds the previous revaluation surplus in equity on the same asset. An impairment loss recognised for an asset dividends will be collected. All other elements of changes in the fair value are recognised in other in prior years is reversed if there has been a change in the estimates used to determine the asset’s value in use or comprehensive income until the investment is derecognised or impaired at which time the cumulative gain or fair value less costs to sell. loss is reclassified from other comprehensive income to profit or loss for the period. Intangible assets. All of the Group’s intangible assets have definite useful lives and primarily include capitalised Impairment losses are recognised in profit or loss when incurred as a result of one or more events (“loss events”) computer software and licences. that occurred after the initial recognition of available-for-sale investments. Acquired computer software and licences are capitalised on the basis of the costs incurred to acquire and bring Any change in fair value of equity instruments is initially accumulated in other comprehensive income. them to use. Costs that are directly associated with the production of identifiable and unique software products A significant or prolonged decline in the fair value of an equity security below its cost is an indicator that it is controlled by the Group, and that will probably generate economic benefits, are recognised as intangible assets. impaired. If asset is considered to be impaired at the reporting date, the cumulative impairment loss (measured as After initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated the difference between the acquisition cost and the current fair value, less any impairment loss on that asset impairment losses. Amortisation of intangible assets is calculated on a straight-line basis over the useful lives. previously recognised in profit or loss) is removed from other comprehensive income and recognised in profit or loss. Impairment losses on equity instruments are not reversed through profit or loss. At each reporting date the management assesses whether there is any indication of impairment of intangible Foreign currency. Monetary assets and liabilities, which are held by the Group entities and denominated in assets. If impaired, the carrying amount of intangible assets is written down to the higher of value in use and fair foreign currencies at the end of the reporting period, are translated into Russian Roubles at the official exchange value less cost to sell. rates prevailing at that date. Foreign currency transactions are accounted for at the exchange rates prevailing at Research costs are recognised as an expense as incurred. Costs incurred on development projects are recognised the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the as intangible assets only when the Group can demonstrate the technical feasibility of completing the intangible translation of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, As at 31 December 2016, the official rate of exchange as determined by the Central Bank of the Russian how the asset will generate future economic benefits, the availability of resources to complete and the ability to Federation, between the Russian Rouble and the US Dollar was RR 60.66:US Dollar 1.00 (31 December 2015: measure reliably the expenditure incurred during the development. Other development expenditures are RR 72.88:US Dollar 1.00); between the Russian Rouble and Euro: RR 63.81:Euro 1.00 (31 December 2015: recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised RR 79.70:Euro 1.00). as an asset in a subsequent period. The carrying value of development costs is reviewed for impairment annually. Property, plant and equipment. Property, plant and equipment are stated at revalued amounts less any Cash and cash equivalents. Cash comprises cash in hand and cash deposited on demand at banks. Cash subsequent accumulated depreciation and any subsequent accumulated impairment losses, where required. equivalents comprise short-term highly liquid investments that are readily convertible into cash and have a maturity of three months or less from the date of origination and are subject to insignificant changes in value. Property, plant and equipment are subject to revaluation on a regular basis to ensure that the carrying amount Cash and cash equivalents are carried at amortised cost using the effective interest method. does not differ materially from that which is determined using the fair value at the end of the reporting period. The frequency of revaluation depends upon the movements in the fair values of the assets being revalued. Bank deposits. Bank deposits comprise cash deposited at banks with a maturity date of more than three months Increases in the carrying amount arising on revaluation of property, plant and equipment are credited to other from the acquisition date. Bank deposits are carried at amortised cost using the effective interest method. comprehensive income and increase the revaluation reserve in equity; the increase is recognised in current period Promissory notes. Promissory notes are financial assets with fixed or determinable cash flows recognised profits to the extent that it reverses previously recognised impairment loss of the same assets. initially at fair value and subsequently carried at amortised cost using the effective interest method. Decreases that offset previous increases of the same asset are recognised in other comprehensive income and Trade and other receivables. Trade and other receivables are recorded inclusive of value added tax (VAT). decrease the previously recognised revaluation reserve in equity; all other decreases are recognised in profit or Trade and other receivables are initially recognised at fair value and subsequently carried at amortised cost using loss for the period. Any accumulated depreciation at the date of revaluation is eliminated against the gross the effective interest method. amount of the assets, and the net amount is restated to the revalued amount of the asset. Impairment of financial assets carried at amortised cost. Impairment losses are recognised in profit or loss The revaluation reserve in respect of an item of property, plant and equipment is transferred directly to retained when incurred as a result of one or more events (“loss events”) that occurred after the initial recognition of the earnings when the item is derecognised (on the retirement or disposal of the asset). financial asset and which have an impact on the amount or timing of the estimated future cash flows of the Renewals and improvements are capitalised and the assets replaced are retired. The cost of minor repair and financial asset or group of financial assets that can be reliably estimated. The primary factors that the Group maintenance are expensed as incurred. Gains and losses arising from the retirement of property, plant and considers in determining whether a financial asset is impaired are its overdue status and realisability of related equipment are included in profit or loss as incurred. collateral, if any.

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 3. Summary of significant accounting policies (continued) Note 3. Summary of significant accounting policies (continued) If the terms of an impaired financial asset held at amortised cost are renegotiated or otherwise modified because The Group's uncertain tax positions are reassessed by management at each end of the reporting period. Liabilities of financial difficulties of the counterparty, impairment is measured using the original effective interest rate are recorded for income tax positions that are determined by management as more likely than not to result in before the modification of terms. additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the end of the Impairment losses are always recognised through an allowance account to write down the asset’s carrying reporting period and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes amount to the present value of expected cash flows (which exclude future credit losses that have not been other than on income are recognised based on management’s best estimate of the expenditure required to settle incurred) discounted at the original effective interest rate of the asset. The calculation of the present value of the the obligations at the end of the reporting period. estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. Trade accounts payable and accrued charges. Trade accounts payable are stated inclusive of value added tax. Trade payables are accrued when the counterparty performed its obligations under the contract. Accounts If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively payable are initially recognised at fair value and subsequently carried at amortised cost using the effective to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), interest method. the previously recognised impairment loss is reversed by adjusting the allowance account in profit or loss. Advances received. Advances received are primarily a deferred income for the future connection services and are Uncollectible assets are written off against the related impairment loss provision after all the necessary stated at nominal amount. procedures to recover the asset have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off are credited to impairment loss account in profit or loss. Debt. Debt is recognised initially at its fair value plus transaction costs that are directly attributable to its issue. Fair value is determined using the prevailing market rates of interest for similar instruments, if significantly Prepayments. Prepayments are carried at cost less provision for impairment. A prepayment is classified as non- different from the transaction price. In subsequent periods, debt is stated at amortised cost using the effective current when the goods or services relating to the prepayment are expected to be obtained after one year, or when interest method; any difference between the fair value of the proceeds (net of transaction costs) and the the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. If there is redemption amount is recognised in profit or loss as an interest expense over the period of the debt obligation. an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss. Borrowing costs are expensed in the period in which they are incurred if not related to purchase or construction of qualifying assets. Borrowing costs directly attributable to the acquisition, construction or production of assets Inventories. Inventories mostly include repair materials and spare parts for transmission assets. Inventories are that necessarily take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised as valued at the lower of cost and net realisable value. Cost of inventory is determined on the weighted average part of the costs of those assets. The commencement date for capitalisation is when the Group (a) incurs basis. Net realisable value is the estimated selling price in the ordinary course of business, less selling expenses. expenditures for the qualifying asset; (b) incurs borrowing costs; and (c) undertakes activities that are necessary Value added tax. Output value added tax related to sales is payable to tax authorities on the earlier of (a) collection to prepare the asset for its intended use or sale. Capitalisation of borrowing costs continues up to the date when of receivables from customers or (b) delivery of goods or services to customers. Input VAT is generally the assets are substantially ready for their use or sale. The Group capitalises borrowing costs that could have recoverable against output VAT upon receipt of the VAT invoice. The tax authorities permit the settlement of been avoided if it had not made capital expenditure on qualifying assets. Borrowing costs capitalised are VAT on a net basis. VAT related to sales and purchases is recognised in the consolidated statement of financial calculated at the Group’s average funding cost (the weighted average interest cost is applied to the expenditures position on a net basis and disclosed as an asset or liability. Where provision has been made for impairment of on the qualifying assets), except to the extent that funds are borrowed specifically for the purpose of obtaining a receivables, impairment loss is recorded for the gross amount of the debtor, including VAT. qualifying asset. Where this occurs, actual borrowing costs incurred less any investment income on the temporary investment of those borrowings are capitalised. Income taxes. Income taxes have been provided for in these Consolidated Financial Statements in accordance with Russian legislation enacted or substantively enacted by the end of the reporting period. The income tax Pension and post-employment benefits. In the normal course of business the Group makes mandatory social charge comprises current tax and deferred tax and is recognised in the profit or loss unless it relates to security contributions to the Pension Fund of the RF on behalf of its employees. These contributions are transactions that are recognised, in the same or a different period, in other comprehensive income. expensed when incurred and included in employee benefit expenses and payroll taxes in profit or loss. Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable In addition, the Group maintains a number of post-employment and other long-term benefit plans which are profits/losses for the current and prior periods. Taxes other than on income are recorded as operating expenses. defined benefit in nature. These plans include life pension, lump sum upon retirement, financial support after retirement, jubilee and death benefits and cover majority of the Group’s employees. Under the pension plan Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for amount of pension benefits that an employee will receive after retirement depends on his date of birth, number of years of service, position, salary and presence of awards. The Group settles its liability to provide life pension financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not through a non-state pension fund. However, the assets held in the non-state pension fund do not meet definition recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. of plan assets in accordance with IAS 19(2011). These assets are accounted for as other non-current assets. Other benefits, apart from life pension payable via the non-state pension fund, are provided when they are due directly Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting by the Group. period which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual companies of The liability recognised in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the Group. Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected to the extent that it is probable that future taxable profit will be available against which the deductions can be utilised. unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that have terms to maturity Deferred income tax is provided on post-acquisition retained earnings and other post acquisition movements in approximating the terms of the related pension liabilities. reserves of subsidiaries, except where the Group controls the subsidiary’s dividend policy and it is probable that the difference will not reverse through dividends or otherwise in the foreseeable future. 19 20

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 3. Summary of significant accounting policies (continued) Note 4. Principal subsidiaries All subsidiaries are incorporated and operate in the Russian Federation. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are The principal subsidiaries as at 31 December 2016 and 31 December 2015 are presented below: recognised immediately in profit or loss. 31 December 2016 31 December 2015 Name Ownership, % Voting, % Ownership, % Voting, % Operating leases. Where the Group is a lessee in a lease which does not transfer substantially all the risk and rewards incidental to ownership from the lessor to the Group, the total lease payments, including those on Transmission companies: expected termination, are charged to profit or loss on a straight-line basis over the period of the lease. OJSC “The Kuban trunk grids” 49.0 49.0 49.0 49.0 OJSC “The Tomsk trunk grids” 52.0 59.9 52.0 59.9 Finance lease liabilities. Where the Group is a lessee in a lease which transferred substantially all the risks and Other companies rewards incidental to ownership to the Group, the assets leased are capitalised in property, plant and equipment JSC “Mobile gas-turbine electricity plants” 100.0 100.0 100.0 100.0 at the commencement of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to JSC “Research and development centre of FGC UES” 100.0 100.0 100.0 100.0 achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of future JSC “Dalenergosetproject” 100.0 100.0 100.0 100.0 finance charges, are included in debts. The interest cost is charged to profit or loss over the lease period using the JSC “Specialised electricity transmission service effective interest method. The assets acquired under finance leases are depreciated over their useful life or the company of the UNEG” 100.0 100.0 100.0 100.0 shorter lease term if the Group is not reasonably certain that it will obtain ownership by the end of the lease term. JSC “Engineering and construction management centre of Unified Energy System” 100.0 100.0 100.0 100.0 Treasury shares. Treasury shares are stated at weighted average cost. Any gains or losses arising on the disposal LLC “Index energetiki – FGC UES” 100.0 100.0 100.0 100.0 of treasury shares are recorded directly in shareholders’ equity. Transmission companies. OJSC “The Kuban trunk grids” and OJSC “The Tomsk trunk grids” own the UNEG Dividends. Dividends are recognised as a liability and deducted from equity at the end of the reporting period assets which are maintained and operated by the Company. only if they are declared (approved by shareholders) before or on the end of the reporting period. Dividends are disclosed when they are declared after the end of the reporting period, but before the consolidated financial The Group holds 49% of the voting rights in OJSC “The Kuban trunk grids”, a fully consolidated subsidiary. The Group controls this entity as it has the power to govern the financial and operating policies of this subsidiary statements are authorised for issue. on the basis of a significant shareholding combined with other factors which allow the Group to exercise control, Non-controlling interest. Non-controlling interest represents minority’s proportionate share of the equity and most importantly: FGC UES has appointed the majority or of the members of the Board of Directors, FGC UES comprehensive income of the Group’s subsidiaries. This has been calculated based upon the non-controlling is the dominant owner and FGC UES has in substance full control of all aspects of the entity’s assets and interests’ ownership percentage of these subsidiaries. Specific rights on liquidation for preference shareholders operations. of subsidiaries are included in the calculation of non-controlling interests. The Group uses the ‘economic entity’ JSC “Mobile gas-turbine electricity plants”. The primary activity of the company is generating and sale of approach to the recognition of non-controlling interest. Any gains or losses resulting from the purchases and electricity provided by mobile gas-turbine electricity plants used in power deficient points of the power system sales of the non-controlling interests are recognised in the consolidated statement of changes in equity. or in peak periods as temporary source of additional capacity. Revenue recognition. Revenue amounts are presented exclusive of value added tax. Revenue from rendering the JSC “Research and development centre of FGC UES” is a research and development project institution in the electricity transmission services is recognised in the period when the services are provided. Revenue from sales of sphere of electric power. electricity is recognised on the delivery of electricity. Revenue from connection services represents a non-refundable JSC “Dalenergosetproject” is a grid engineering company. fee for connecting the customer to the electricity grid network and is recognised when the customer is connected to JSC “Specialised electricity transmission service company of the UNEG”. The main activities of this company the grid network and the amount of remuneration can be reliably measured. Revenue is measured at the fair value are technical inspection, maintenance and regular and emergency repairs of power grids and other electric power of the consideration received or receivable. facilities of the UNEG. Revenue from construction services are recognised in the accounting period in which the services are rendered, JSC “Engineering and construction management centre of Unified Energy System”. The main activity of this by reference to stage of completion of the specific transaction assessed on the basis of the actual service company is functioning as a customer-developer in capital construction projects associated with the provided as a proportion of the total services to be provided. reconstruction and technical modernisation of electricity supply facilities and infrastructure. Government grants. Government grants are recognised initially as deferred income at fair value when there is LLC “Index energetiki – FGC UES” (“Index Energetiki”) owns minority shares in PJSC “INTER RAO UES” reasonable assurance that they will be received and that the Group will comply with the conditions associated and PJSC “Russian Grids” (former OJSC “IDGC Holding”). with the grant and are then recognised in profit or loss as other income on a systematic basis over the useful life Note 5. Balances and transactions with related parties of the asset. Grants that compensate the Group for expenses incurred are recognised in profit or loss as other Government-related entities. In the normal course of business the Group enters into transactions with income on a systematic basis in the same periods in which the expenses are recognised. government-related entities – entities, controlled, jointly controlled or significantly influenced by the Share capital. Ordinary shares with discretionary dividends are classified as equity upon completion of share issue Government of the RF. Large portion of the Group's primary activity – transmission services are rendered to and registration of the issue in the Federal Financial Markets Service. Any excess of the fair value of consideration government-related entities at the regulated tariffs. The Group borrows funds from government-related banks at the prevailing market rates. Taxes are accrued and settled in accordance with Russian tax legislation. received over the par value of shares issued is recorded as share premium in equity.

Earnings per share. Earnings per share are determined by dividing the profit or loss attributable to owners of the Company by the weighted average number of participating shares outstanding during the reporting period.

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 5. Balances and transactions with related parties (continued) Note 6. Property, plant and equipment During the years ended 31 December 2016 and 31 December 2015 the Group had the following significant Power trans- Construction Buildings mission grids Substations in progress Other Total transactions with government-related entities: Year ended Year ended Appraisal value or cost 31 December 2016 31 December 2015 Balance as at 1 January 2016 20,820 392,762 256,529 155,704 37,177 862,992 Transmission revenue 145,518 135,244 Additions 155 299 605 91,591 995 93,645 Electricity sales 17,940 3,066 Transfers 2,719 18,519 51,712 (77,504) 4,554 - Construction services 15,573 6,483 Disposals (356) (127) (1,926) (2,093) (739) (5,241) Connection services 36,137 12,046 Purchased electricity for production needs (8,176) (7,971) Elimination of accumulated depreciation and impairment (766) (31,645) (34,233) (6,706) (11,332) (84,682) Significant balances with government-related entities are presented below: Reversal of impairment provision 1,429 8,703 28,237 707 4,448 43,524

31 December 2016 31 December 2015 Revaluation increase 1,025 12,567 11,276 174 4,490 29,532 Cash and cash equivalents 32,794 19,634 Decrease in revaluation reserve (184) (11,414) (3,077) (1) (576) (15,252) Bank deposits 450 16,269 Revaluation loss (975) (18,463) (19,597) (36,975) (1,813) (77,823) Long-term accounts receivable 44,512 14,229 Balance as at 31 December 2016 23,867 371,201 289,526 124,897 37,204 846,695 Other non-current assets 16 21 Other current assets 7 16 Including PPE under finance lease - - - - 805 805 Trade receivables Accumulated depreciation and impairment (net of allowance for doubtful debtors of RR 7,555 million as at Balance as at 1 January 2016 (356) (15,350) (17,335) (2,850) (5,987) (41,878) 31 December 2016 and RR 7,656 million as at 31 December 2015) 40,831 29,237 Depreciation charge (416) (16,303) (17,059) - (5,619) (39,397) Other receivables (net of allowance for doubtful debtors of RR 1,161 million as at Impairment loss - - - (3,856) - (3,856) 31 December 2016 and RR 1,235 million as at 31 December 2015) 2,221 2,009 Disposals 6 8 161 - 274 449 Available-for-sale investments 76,537 22,271 Elimination of accumulated depreciation Advances to construction companies and suppliers of property, plant and and impairment 766 31,645 34,233 6,706 11,332 84,682 equipment (included in construction in progress) 604 912 Balance as at 31 December 2016 ------Accounts payable to the shareholders of FGC UES (73) (6) Including PPE under finance lease ------Non-current debt (300) (416) Net book value as at 1 January 2016 20,464 377,412 239,194 152,854 31,190 821,114 Current debt (465) (104) Net book value as at 31 December 2016 23,867 371,201 289,526 124,897 37,204 846,695 Accounts payable and accrued charges (13,214) (22,537) As at 31 December 2016 and 2015 the Group had long-term undrawn committed financing facilities with government-related banks of RR 105,000 million with the interest rates not exceeding 14% and the maturity dates from 2018 to 2026. There were no short-term undrawn committed financing facilities with government- Power trans- Construction related banks as at 31 December 2015 and 2016. Buildings mission grids Substations in progress Other Total Tax balances and charges are disclosed in Notes 16, 20 and 22. Tax transactions are disclosed in the Appraisal value or cost Consolidated Statement of Comprehensive Income. Balance as at 1 January 2015 20,145 372,659 222,250 147,765 32,210 795,029 Directors’ compensation. Compensation is paid to the members of the Management Board for their services in Acquisition of subsidiaries 232 - - - 17 249 full time management position. The compensation is made up of a contractual salary, non-cash benefits, and a Additions 503 41 122 73,523 883 75,072 performance bonus depending on results for the period according to Russian statutory financial statements. Also, Transfers 1,864 21,772 35,652 (63,762) 4,474 - additional medical coverage is provided to the members of Management Board and their close family members. Disposals (1,924) (1,710) (1,495) (1,822) (407) (7,358) Fees, compensation or allowances to the members of the Board of Directors for their services in that capacity Balance as at 31 December 2015 20,820 392,762 256,529 155,704 37,177 862,992 and for attending Board meetings are paid depending on results for the year. Fees, compensation or allowances, Including PPE under finance lease - - - - 1,432 1,432 are not paid to the members of the Board of Directors who are government employees. Accumulated depreciation and impairment Total remuneration in the form of salary, bonuses and non-cash benefits (social security contributions are not included) provided to the members of the Management Board for the year ended 31 December 2016 and Balance as at 1 January 2015 ------31 December 2015 was as follows: Depreciation charge (385) (15,389) (17,541) - (6,132) (39,447) Year ended Year ended Impairment loss - - - (2,850) - (2,850) 31 December 2016 31 December 2015 Short-term compensation, including salary and bonuses 322 323 Disposals 29 39 206 - 145 419 Termination benefits 26 23 Balance as at 31 December 2015 (356) (15,350) (17,335) (2,850) (5,987) (41,878) Post-employment benefits and other long-term benefits 20 10 Including PPE under finance lease - - - - (72) (72) Total 368 356 Net book value as at 1 January 2015 20,145 372,659 222,250 147,765 32,210 795,029 The amount of the short-term compensation to members of the Management Board represents remuneration Net book value as at 31 December 2015 20,464 377,412 239,194 152,854 31,190 821,114 accrued during the respective period. Remuneration provided to the members of the Board of Directors for the year ended 31 December 2016 amounted to RR 6 million (31 December 2015: RR 7 million).

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 6. Property, plant and equipment (continued) Note 6. Property, plant and equipment (continued) Borrowing costs of RR 19,334 million for the year ended 31 December 2016 were capitalised within additions Revaluation results. Accumulated depreciation and impairment at 31 December 2016 are eliminated against the (for the year ended 31 December 2015: RR 23,927 million). A capitalisation rate of 9.09% was used for the year gross carrying amount of the property, plant and equipment and the net amount of PPE is restated to the revalued ended 31 December 2015 (for the year ended 31 December 2015: 10.96%) to determine the amount of amount. The results of revaluation of PPE as well as elimination are shown in the table above. borrowing costs eligible for capitalisation, representing the weighted average of the borrowing costs applicable to the borrowings of the Group that were outstanding during the periods. Historical cost. For each class of property, plant and equipment stated at revalued amount in these Consolidated Construction in progress is represented by the carrying amount of property, plant and equipment that has not yet Financial Statements, the carrying amount that would have been recognised had the assets been carried under the been put into operation and advances to construction companies and suppliers of property, plant and equipment. historical cost basis is as follows: As at 31 December 2016 such advances amounted to RR 9,244 million (as at 31 December 2015: RR 11,646 Power million, net of impairment of RR 4,308 million). transmission Construction in Other property, plant and equipment include motor vehicles, computer equipment, office fixtures and other Buildings grids Substations progress Other Total equipment. Land plots are classified together with items of property, plant and equipment located on them. Net book value as at Revaluation. In 2016, management commissioned an independent appraiser for revaluation of property, plant 31 December 2016 23,370 294,376 311,045 187,173 29,945 845,909 and equipment as at 31 December 2016. The fair value of property, plant and equipment was determined to be Net book value as at RR 846,233 million, which has been categorised as a Level 3 fair value based on the inputs to the valuation 31 December 2015 20,824 294,689 280,836 205,598 29,688 831,635 techniques used (see Note 2). Net book value as at The majority of the Group’s property, plant and equipment is specialised in nature and is rarely sold on the open 31 December 2014 18,713 274,793 247,829 223,140 26,553 791,028 market other than as part of a continuing business. The market for similar property, plant and equipment is not Leased property, plant and equipment. Included in property, plant and equipment are certain items under active in the Russian Federation and does not provide a sufficient number of sales of comparable property, plant and equipment for using a market-based approach for determining fair value. finance leases. As at 31 December 2016 the net book value of leased property, plant and equipment was RR 805 million (as at 31 December 2015: RR 1,360 million). The leased equipment is pledged as security for the lease Consequently the fair value of property, plant and equipment was primarily determined using depreciated replacement cost. This method considers the cost to reproduce or replace the property, plant and equipment, obligations. adjusted for physical, functional or economical depreciation, and obsolescence. Operating leases. The Group leases a number of land areas owned by local governments under operating lease. Depreciated replacement cost was estimated based on internal sources and analysis of the Russian and The expected lease payments due are determined based on the lease agreements and are payable as follows: international markets for similar property, plant and equipment. Various market data were collected from published information, catalogues, statistical data etc., and industry experts and suppliers of property, plant and 31 December 2016 31 December 2015 equipment were contacted both in the Russian Federation and abroad. Under one year 585 559 In addition to the determination of the depreciated replacement cost, cash flow testing was conducted for each Between one and five years 1,276 1,041 cash generating unit. The Group’s Transmission segment (Note 29) was considered as a single cash generating Over five years 8,643 7,357 unit. This resulted in depreciated replacement cost values being decreased by RR 823,745 million in arriving at Total 10,504 8,957 the above value. The following key assumptions were used in performing the cash flow testing of Transmission segment: The above lease agreements are usually signed for a period of 1 to 49 years and may be extended for a longer  Forecast period is determined as 10 years – from 2017 to 2026. period. The lease payments are subject to review on a regular basis to reflect market rent prices.  A nominal after-tax discount rate of 8.96% was determined based on the weighted average cost of capital. As at 31 December 2016 the carrying value of property, plant and equipment leased out under operating lease  Revenue projections are based on following assumptions: was RR 10,176 million (as at 31 December 2015: RR 8,071 million). - Approved Regulatory Asset Base tariff calculation for 2017-2019; - Key parameters for tariff-setting (rates of return for “old” and “new” capital (10%); normal useful live for calculation of return of capital (35 years); Net Working Capital to revenue ratio (7.9%)); - Increase of operating expenses at a compound annual growth rate of 3.5% that is determined with reference to expected inflation rate in RF and takes into account planned economy on controllable costs; - Decrease of the volume of “old” capital employed under RAB methodology –down to nil; - Fixed volume of contracted capacity from 2020 onwards; - Revenue included fees from technological connection services based on forecasted amount of consideration and relate to assets which are under construction as at period end..  The amount of expenditure for the period from 2017 through 2026 required for the maintenance of the current property, plant and equipment is assumed to be equal to the amount of such expenditure determined as allowable for the purpose of tariff regulation.  Terminal value was determined based on Gordon growth model with terminal growth rate of 2.89% (in line with long-term consumer price index forecast published by Ministry of Economic Development). The sensitivity of the recoverable amount of property, plant and equipment included in Transmission segment to changes in the weighted principal assumptions is as follows: Increase Decrease Discount rate (0.5% movement) (7.1%) 8,3% Terminal growth rate (1% movement) 10.5% (7.6%) Revenue (3% movement) 8.4% (8.4%)

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 7. Intangible assets Note 9. Available-for-sale investments Corporate Change in fair information 1 January 2016 Additions value Disposals 31 December 2016 management system Other intangible (SAP R/3) assets Total PJSC “INTER RAO UES” 21,480 - 53,040 - 74,520 PJSC “Russian Grids” 680 - 1,226 - 1,906 Cost as at 1 January 2015 5,512 11,168 16,680 Other 111 4 - (4) 111 Accumulated amortisation (3,617) (4,778) (8,395) Carrying value Total 22,271 4 54,266 (4) 76,537 as at 1 January 2015 1,895 6,390 8,285

Additions 564 399 963 1 January 2015 Additions Change in fair value 31 December 2015 Transfers 368 (368) - PJSC “INTER RAO UES” 13,759 - 7,721 21,480 Disposals – cost (11) (4) (15) PJSC “Russian Grids” 625 - 55 680 Amortisation charge (568) (913) (1,481) Other - 111 - 111 Carrying value as at 31 December 2015 2,248 5,504 7,752 Total 14,384 111 7,776 22,271

Cost as at 31 December 2015 6,433 11,195 17,628 For the year ended 31 December 2016 the increase in the fair value of these available-for-sale investments in the Accumulated amortisation (4,185) (5,691) (9,876) total amount of RR 54,266 million was recognised in other comprehensive income (for the year ended 31 Carrying value December 2015: RR 7,776 million). as at 31 December 2015 2,248 5,504 7,752 Valuation of PJSC “INTER RAO UES” and PJSC “Russian Grids” is made on a recurring basis using quoted Cost as at 1 January 2016 6,433 11,195 17,628 market prices (Level 1 inputs) at the end of each reporting period. Accumulated amortisation (4,185) (5,691) (9,876) Carrying value Note 10. Long-term receivables and other non-current assets as at 1 January 2016 2,248 5,504 7,752 31 December 2016 31 December 2015 Additions 441 736 1,177 Long-term trade receivables 45,145 15,180 Disposals – cost (175) (1,865) (2,040) (net of allowance for doubtful debtors of RR 524 million as at Disposals - accumulated amortisation 116 1,645 1,761 31 December 2016 and RR 118 million as at 31 December 2015) Amortisation charge (578) (752) (1,330) Loans given 1,000 1,030 Carrying value Long-term promissory notes 220 204 as at 31 December 2016 2,052 5,268 7,320 Total financial assets 46,365 16,414

Cost as at 31 December 2016 6,699 10,066 16,765 VAT recoverable 72 7 Accumulated amortisation (4,647) (4,798) (9,445) Other non-current assets 561 558 Carrying value Total other non-current assets 46,998 16,979 as at 31 December 2016 2,052 5,268 7,320 Long-term trade receivables mainly relate to the contracts of technological connection services provided that The Corporate information management system (SAP R/3) consists of several modules (parts) and related imply deferred inflow of cash and to restructured receivable balances for transmission services that are expected licences. As at 31 December 2016 only certain modules (parts) were placed in operation and are subject to to be settled within the period exceeding 12 months from the period end. amortisation. These modules are amortised during 5 years, on a straight-line basis. SAP R/3 includes Long-term receivables relating to the contracts of technological connection are paid in equal parts every six development costs of RR 251 million as at 31 December 2016 (as at 31 December 2015: RR 676 million). months with an interest accrued on the actual outstanding balances at the rate of 6% per annum. Fair value of Other intangible assets include capitalised development costs that meet the definition of an intangible asset of consideration receivable for these contracts is determined using present value technique based on estimated RR 354 million as at 31 December 2016 (as at 31 December 2015: RR 265 million). future cash flows and the discount rates of 9.33-9.63%. Note 8. Investments in associates and joint ventures All promissory notes are denominated in Russian Rouble. Fair value of promissory notes approximates their carrying value. The movements in the carrying value of investments in associates and joint ventures are as follows: Year ended Year ended 31 December 2016 31 December 2015 Carrying value as at 1 January 1,691 2,109

Share of result of associates and joint ventures (327) (8) Disposal of associates - (258) Translation difference (204) (152) Carrying value as at 31 December 1,160 1,691

The carrying value of investments in associates and joint ventures is as follows:

31 December 2016 31 December 2015

JSC UES “SakRusEnergo” 1,052 1,586 Other associates 108 105 Total investments in associates 1,160 1,691 27 28

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 11. Cash and cash equivalents Note 13. Accounts receivable and prepayments 31 December 31 December 31 December 2016 31 December 2015 2016 2015 Trade receivables Cash at bank and in hand 20,223 7,518 (net of allowance for doubtful debtors of RR 12,117 million as at Cash equivalents 24,181 20,658 31 December 2016 and RR 14,232 million as at 31 December 2015) 47,824 37,904 Other receivables Total cash and cash equivalents 44,404 28,176 (net of allowance for doubtful debtors of RR 3,513 million as at 31 December 2016 and RR 2,107 million as at 31 December 2015) 6,410 3,751 31 December 31 December Total financial assets 54,234 41,655 Cash at bank and in hand Rating Rating agency 2016 2015 VAT recoverable 580 2,676 JSC “Gazprombank” BB+ Fitch Ratings 7,704 469 Advances to suppliers PJSC “Sberbank” Ва2 Moody’s 5,892 733 (net of allowance for doubtful debtors of RR 2,054 million as at PJSC "RNCB" A++ Expert RA 3,465 4,180 31 December 2016 and RR 2,002 million as at 31 December 2015) 3,127 5,635 Federal Treasury Department - - 1,809 - Tax prepayments 246 77 JSC “Alfa-Bank” BB+ Standard & Poor's 1,288 1,767 Total accounts receivable and prepayments 58,187 50,043 Cash in hand 1 16 Trade and other receivables are not interest-bearing and are largely due in 30 to 90 days. Given the short period Other banks 64 353 of the trade and other receivables repayment, the fair value of such receivables approximates their book value.

Total cash at bank and in hand 20,223 7,518 Tax prepayments will be settled against future tax liabilities. Cash equivalents include short-term investments in bank deposits: Management has determined the provision for doubtful debtors based on specific customer identification, 31 December 31 December customer payment trends, subsequent receipts and settlements and analyses of expected future cash flows. The Bank deposits Interest rate Rating Rating agency 2016 2015 effects of discounting are reflected in the doubtful debtor allowance and expense. Management believes that the PJSC “VTB” 9,40-10,32% BB+ Standard & Poor's 12,972 6,599 Group entities will be able to realise the net receivable amount through direct collections and other non-cash PJSC “Bank Otkritie Financial settlements, and that therefore the recorded value of receivables approximates their fair value. Corporation” 9,00-10,30% BB- Standard & Poor's 5,907 - The movement of the provision for doubtful debtors is shown below: JSC “Alfa-Bank” 10,35% BB+ Standard & Poor's 4,177 6,364 JSC “Gazprombank” 8,00-9,35% BB+ Fitch Ratings 435 5,818 PJSC “Sberbank” 7,23-9,50% Ва2 Moody’s 398 1,770 Year ended Long-term trade Short-term trade Other short-term Advances to 31 December 2016 receivables receivables receivables suppliers Total Other banks 242 88 As at 1 January 118 14,232 2,107 2,002 18,459 Total bank deposits 24,131 20,639 Provision accrual 429 3,314 1,014 110 4,867

As at 31 December 2016 cash and cash equivalents include amounts denominated in foreign currency totalling Provision reversal - (2,147) (54) - (2,201) RR 721 million (as at 31 December 2015: nil). Debt written-off - (285) (9) (58) (352) Amortisation of discount (23) - (5) - (28) Note 12. Bank deposits Derecognition of subsidiary - (2,997) 460 - (2,537) As at 31 December 524 12,117 3,513 2,054 18,208 31 December 31 December Interest rate Rating Rating agency 2016 2015 JSC “Gazprombank” 9,55-11,15% BB+ Fitch Ratings 295 3,060

PJSC “VTB” 10,75-11,50% BB+ Standard & Poor's 155 13,116 Year ended Long-term trade Short-term trade Other short-term Advances to JSC “Alfa-Bank” 10,40-11,00% BB+ Standard & Poor's - 7,700 31 December 2015 receivables receivables receivables suppliers Total JSC "Bank “ROSSIYA” 4,00-10,20% A++ Expert RA - 6,300 As at 1 January 505 8,397 1,466 1,981 12,349 PJSC “Sberbank” 10,85-11,00% Ва2 Moody’s - 93 Provision accrual 85 8,137 971 22 9,215 Total bank deposits 450 30,269 Provision reversal - (1,960) (188) (4) (2,152) Debt written-off - (239) (146) (1) (386) The carrying amount of bank deposits approximates their fair value. Amortisation of discount (472) (84) 5 - (551) There were no bank deposits denominated in foreign currency as at 31 December 2016 and 31 December 2015. Acquisition of subsidiaries - - 10 4 14 Derecognition of subsidiary - (30) - - (30) Reclassifications - 11 (11) - - As at 31 December 118 14,232 2,107 2,002 18,459

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 13. Accounts receivable and prepayments (continued) Note 15. Equity (continued) As at 31 December 2016 the overdue accounts receivable for which the provision had not been recorded Reserves comprised the following: amounted to RR 17,762 million (as at 31 December 2015: RR 18,846 million). 31 December 2016 31 December 2015 Revaluation reserve (net of tax) for: The ageing of trade and other receivables that were not impaired at the reporting date was as follows: - property, plant and equipment (Note 6) 232,667 225,103 31 December 2016 31 December 2015 - available-for-sale investments (Note 9) 49,634 6,221 Neither past due nor impaired 37,961 22,809 Remeasurement reserve for retirement benefit Past due: - obligations (Note 18) (912) (2,320) Less than 3 months 1,996 7,919 Foreign currency translation reserve (Note 8) 370 574 3 to 6 months 2,084 3,572 Total reserves 281,759 229,578 6 to 12 months * 4,548 5,487 Reserves for the year ended 31 December 2016 (net of tax): 1 year to 3 years * 9,134 1,868 Total 55,723 41,655 Revaluation reserve for: Remeasure- *As at 31 December 2016 the overdue amounts mainly relate to balances from fellow subsidiaries for the total ment reserve amount of RR 10,365 million. Impairment amounted RR 378 million was accrued for those balances, where for Foreign settlement is expected to occur beyond normal credit terms. The remaining part of these balances were not property, available- retirement currency impaired as these amounts are expected to be settled in full (including an interest accrued at the rate of Russian plant and for-sale benefit translation Federation Central Bank key interest rate per annum). equipment investments obligations reserve Total (Note 6) (Note 9) (Note 18) (Note 8) reserves As at 31 December 2016 overdue accounts receivable for the total amount of RR 1,489 million were presented As at 1 January 2016 225,103 6,221 (2,320) 574 229,578 within long-term accounts receivable based on management’s expectation of future settlement. Change in revaluation reserve for property, plant and equipment 7,564 - - - 7,564 Note 14. Inventories Change in fair value of available-for-sale investments - 43,413 - - 43,413 31 December 2016 31 December 2015 Remeasurements of retirement benefit Spare parts 3,507 3,298 obligations - - 1,408 - 1,408 Repair materials 3,818 3,073 Foreign currency translation difference - - - (204) (204) Other inventories 7,575 9,692 As at 31 December 2016 232,667 49,634 (912) 370 281,759 Total inventories 14,900 16,063 Reserves for the year ended 31 December 2015 (net of tax): The cost of inventories is shown net of an obsolescence provision for RR 2 million as at 31 December 2016 (as at 31 December 2015: RR 47 million). As at 31 December 2016 and 31 December 2015 the Group had no Revaluation reserve for: inventories pledged as security under loan and other agreements. Remeasure- ment reserve for Foreign Note 15. Equity property, available- retirement currency Share capital plant and for-sale benefit translation equipment investments obligations reserve Total Number of shares issued and fully paid Share capital (Note 6) (Note 9) (Note 18) (Note 8) reserves

31 December 2016 31 December 2015 31 December 2016 31 December 2015 As at 1 January 2015 225,563 - 93 726 226,382 Ordinary shares 1,274,665,323,063 1,274,665,323,063 637,333 637,333 Change in revaluation reserve for property, As at 31 December 2016 the authorised share capital comprised 1,346,805,824 thousand ordinary shares with a plant and equipment (460) - - - (460) nominal value of RR 0.5 per share. Change in fair value of available-for-sale investments - 6,221 - - 6,221 Treasury shares. As at 31 December 2016 the Group held through a subsidiary 13,727,165 thousand ordinary Remeasurements of retirement benefit shares in treasury at the total cost of RR 4,719 million (as at 31 December 2015: RR 4,719 million). obligations - - (2,413) - (2,413) Reserves. Reserves included Revaluation reserve for property, plant and equipment and available-for-sale Foreign currency translation difference - - - (152) (152) investments, foreign currency translation reserve and remeasurement reserve for retirement benefit obligations. As at 31 December 2015 225,103 6,221 (2,320) 574 229,578 The Foreign currency translation reserve relates to the exchange differences arising on translation of net assets of a foreign associate. Dividends. The annual statutory accounts of the parent company, FGC UES, form the basis for the annual profit distribution and other appropriations. The specific Russian legislation identifies the basis of distribution as the net profit. For the year ended 31 December 2016, the net profit of FGC UES, as reported in the published statutory financial statements, was RR 106,070 million (net profit for the year ended 31 December 2015: RR 17,870 million).

The Annual General Meeting in June 2016 approved the decision to declare dividends for the year 2015 in the total amount of RR 16,977 million, RR 160 million of them relate to treasury shares. Dividends per ordinary share amounted to RR 0.01332.

The Annual General Meeting in June 2015 approved the decision to declare dividends for the year 2014 in the total amount of RR 847 million, RR 15 million of them relate to treasury shares. Dividends per ordinary share amounted to RR 0.00066. 31 32

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 16. Income tax Income tax expense comprises the following: Note 16. Income tax (continued) Year ended Year ended Deferred income tax assets and liabilities for the year ended 31 December 2015: 31 December 2016 31 December 2015

Current income tax charge (12,816) (146) Deferred income tax charge 2,714 (12,043) Movements for the year Total income tax expense (10,102) (12,189) Recognised Recognised in 31 December in profit or other compre- Disposal of 1 January During the years ended 31 December 2016 and 31 December 2015 the Company and its principal subsidiaries 2015) loss hensive income subsidiary 2015 were subject to tax rate of 20 percent on taxable profit. Deferred income tax liabilities In accordance with Russian tax legislation, tax losses in different Group companies may not be offset against Property, plant and equipment 18,457 12,887 23 (267) 5,814 taxable profits of other Group companies. Accordingly, tax may be accrued even where there is a net Investments in associates 21 (56) - - 77 consolidated tax loss. Available-for-sale investments 2,518 22 1,171 - 1,325 Profit before income tax for financial reporting purposes is reconciled to income tax expenses as follows: Other 390 (663) - (27) 1,080 Total deferred income tax liabilities 21,386 12,190 1,194 (294) 8,296 Year ended Year ended 31 December 2016 31 December 2015 Deferred income tax assets Property, plant and equipment (1,413) (46) - 72 (1,439) Profit before income tax 78,484 56,287 Long-term promissory notes (4,090) 12 - - (4,102) Theoretical income tax charge at the statutory tax rate of 20 percent (15,697) (11,257) Tax effect of derecognition of subsidiary 2,767 - Available-for-sale investments (2,000) - 385 - (2,385) Tax effect of items which are not deductible for taxation purposes 463 (1,151) Accounts receivable and prepayments (2,181) (664) - - (1,517) Movement in unrecognised deferred tax assets 2,365 219 Intangible assets (386) 33 - - (419) Total income tax expense (10,102) (12,189) Retirement benefit obligation (573) 508 (593) - (488) Current and non-current debt (104) 19 - - (123) Deferred income tax. Differences between IFRS and Russian statutory taxation regulations give rise to certain Accounts payable and accruals (961) (395) - - (566) temporary differences between the carrying value of certain assets and liabilities for financial reporting purposes Other (470) 114 - 5 (589) and for income tax purposes. Deferred income tax assets and liabilities were measured at 20 percent as at 31 December 2016 and 31 December 2015, the rates expected to be applicable when the asset or liability will Tax losses (1,586) 491 - - (2,077) reverse. Unrecognised deferred tax assets 6,707 (219) - - 6,926 Total deferred income tax assets (7,057) (147) (208) 77 (6,779) Deferred income tax assets and liabilities for the year ended 31 December 2016: Deferred income tax liabilities, net 14,329 12,043 986 (217) 1,517 Movements for the year Recognised Recognised in Unrecognised deferred tax assets in the amount of RR 1,636 million as at 31 December 2016 (as at 31 December 31 December in profit or other compre- Derecognition 1 January 2015: RR 6,707 million) include deferred income tax assets on tax losses carried forward and deferred income 2016) loss hensive income of subsidiary 2016 tax assets on temporary differences arising in respect of loss-making subsidiaries. These deferred tax assets are Deferred income tax liabilities not recognised because it is not probable that sufficient taxable profits will be available against which the Property, plant and equipment 21,686 373 2,856 - 18,457 deferred tax assets can be utilised. Investments in associates 22 1 - - 21 Tax losses carried forward in respect of which deferred tax assets were not recognised are presented by Available-for-sale investments 11,347 - 8,829 - 2,518 companies in the table below: Other 184 (206) - - 390 31 December 2016 31 December 2015 Total deferred income tax liabilities 33,239 168 11,685 - 21,386 JSC “Mobile gas-turbine electricity plants” 2,103 2,314 Deferred income tax assets OJSC “Nurenergo” - 4,635 Property, plant and equipment (861) 248 - 304 (1,413) Others 1,226 583 Long-term promissory notes (4,085) 5 - - (4,090) Total tax losses carried forward 3,329 7,532 Available-for-sale investments - (24) 2,024 - (2,000)

Accounts receivable and prepayments (1,373) (692) - 1,500 (2,181) Intangible assets (387) (1) - - (386) Retirement benefit obligation (422) 59 92 - (573) Current and non-current debt (83) 21 - - (104) Accounts payable and accruals (1,318) (357) - - (961) Other (261) 204 - 5 (470) Tax losses (666) 20 - 900 (1,586)

Unrecognised deferred tax assets 1,636 (2,365) - (2,706) 6,707 Total deferred income tax assets (7,820) (2,882) 2,116 3 (7,057) Deferred income tax liabilities, net 25,419 (2,714) 13,801 3 14,329

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 17. Non-current debt Note 18. Retirement benefit obligations

Effective 31 December 31 December The Group’s post-employment benefits policy includes the employee pension scheme and other various post- interest rate Due 2016 2015 employment, retirement and jubilee payments. The post-employment and retirement benefit system is a defined Certified interest-bearing benefit program as part of which every participating employee receives benefits calculated in accordance with non-convertible bearer bonds: certain formula or rules. The program’s core element is the corporate pension scheme implemented by the Group with fixed rates 7.5-9.35% 2017-2051 96,179 109,493 in cooperation with the Non-State Pension Fund of Electric Power Industry. with floating rates CPI+1-2.5% 2022-2050 151,727 153,586 The Group also pays various other long-term post-employment benefits, including lump sum benefits in case of Loan participation notes (LPNs) 8.45% 2019 17,943 17,943 death of employees or former employees receiving pensions, lump sum benefits upon retirement and in Finance lease liabilities 9.50% 2018 415 520 connection with jubilees. Additionally, financial aid in the form of defined benefits is provided to former employees who have state, Total debt 266,264 281,542 industry or corporate awards. Such financial aid is provided both to employees entitled and not entitled to non- Less: current portion of non-current bonds and LPNs (29,195) (31,362) state pensions. Less: current portion of finance lease liabilities (115) (104) The most recent actuarial valuation was performed as at 31 December 2016. Total non-current debt 236,954 250,076 The tables below provide information about benefit obligations and actuarial assumptions as at 31 December All debt instruments are denominated in Russian Rouble. 2016 and 31 December 2015. Reconciliation between carrying and fair values of financial liabilities is presented below. Fair value of level 1 The amounts recognised in the Consolidated Statement of Financial Position are determined as follows: bonds are determined based on quoted market prices at MICEX and Irish Stock Exchange.

Year ended Year ended 31 December 2016 31 December 2015 31 December 2016 31 December 2015 Present value of defined benefit obligation Carrying Carrying 5,692 7,021 Level Fair value value Fair value value Present value of other long-term employee benefit obligation 267 336 Non-convertible bearer bonds with fixed rates Total net defined benefit liability 5,959 7,357 and loan participation notes 1 109,355 113,856 117,161 127,337 Non-convertible bearer bonds with variable The movement in the net defined benefit obligation over the year is as follows: rates 1 9,761 10,411 10,281 10,722 Year ended Year ended Total debt classified into fair value 31 December 2016 31 December 2015 hierarchy level 1 119,116 124,267 127,442 138,059 Defined benefit obligations at 1 January 7,357 6,456 Other non-current debt with floating rates classified into fair value hierarchy level 3 represent non-quoted non- Included in profit or loss convertible bearer bonds with floating rate lined to inflation with a premium of 1-2.5%, which is a unique Current service cost 495 433 instrument with specific market. Hence, the management believes carrying amount of these instruments Past service cost (82) (2,634) approximates its fair value. Interest expense 613 728 As at 31 December 2016 the Group had long-term undrawn committed financing facilities of RR 152,500 1,026 (1,473) million (as at 31 December 2015: RR 152,500 million) which could be used for the general purposes of the Remeasurements of defined benefit liability Group. Remeasurements: Finance lease. Minimum lease payments under finance leases and their present values are as follows: (Gain) / loss from change in financial assumptions (200) 1,802 Due in Due between Due after Experience (gains) / losses (1,384) 1,324 1 year 1 and 5 years 5 years Total (1,584) 3,126 Minimum lease payments as at 31 December 2016 150 308 - 458 Benefits paid by the plan (840) (752) Less future finance charges (35) (8) - (43) Defined benefit obligations at 31 December 5,959 7,357 Present value of minimum lease payments as at 31 December 2016 115 300 - 415 Amounts recognized in profit or loss:

Minimum lease payments as at 31 December 2015 150 457 - 607 Year ended Year ended Less future finance charges (46) (41) - (87) 31 December 2016 31 December 2015 Present value of minimum lease payments as at Service cost 413 (2,201) 31 December 2015 104 416 - 520 Remeasurements of other long-term employee benefit obligations (84) 120 Interest expense 613 728 Leased assets with carrying amount disclosed in Note 6 are effectively pledged for finance lease liabilities as the Total 942 (1,353) rights to the leased asset revert to the lessor in the event of default.

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 18. Retirement benefit obligations (continued) Note 19. Current debt and current portion of non-current debt Amounts recognized in other comprehensive income: Year ended Year ended Effective

31 December 2016 31 December 2015 interest rate 31 December 2016 31 December 2015 (Gain) / loss from change in financial assumptions (191) 1,749 Bank loans 10.5% 350 - Experience (gains) / losses (1,309) 1,256 Current portion of non-current debt (Note 17) 29,310 31,466 Total (1,500) 3,005 Total current debt and current portion of non-current debt 29,660 31,466 The movement of remeasurements in other comprehensive income are as follows: As at 31 December 2016 and 2015 the Group had no short-term undrawn committed financing facilities. Year ended Year ended

31 December 2016 31 December 2015 Note 20. Accounts payable and accrued charges At 1 January 3,028 23 Movement of remeasurements (1,500) 3,005 31 December 2016 31 December 2015 At 31 December 1,528 3,028 Accounts payable to construction companies and suppliers of property, plant and equipment 23,759 29,140

The significant actuarial assumptions are as follows: Trade payables 8,670 21,949 Year ended Year ended Accrued liabilities 10 201 Financial actuarial assumptions: 31 December 2016 31 December 2015 Other creditors 1,303 1,451 Discount rate (nominal) 8.50% 9.50% Total financial liabilities 33,742 52,741 Future financial support benefit increases 4.70% 6.00% Future salary increases (nominal) 4.70% 6.00% Advances received 15,091 12,936 Accounts payable to employees 2,313 2,242 Taxes other than on income payable 7,221 2,169 Financial assumptions are based on market expectations, at the end of the reporting period, for the period over which the obligations are to be settled. The average period over which the Group obligations are to be settled is Other provisions for liabilities and charges 3,692 948 12.02 years. Total accounts payable and accrued charges 62,059 71,036

Demographic actuarial assumptions: Movement in other provisions for liabilities and charges: Year ended Year ended 31 December 2016 31 December 2015 Year ended Year ended

Expected retirement age 31 December 2016 31 December 2015 Male 60 60 Carrying amount at 1 January 948 500 Female 55 55 Additional amounts charged to profit or loss Employee turnover 5.0% 5.1% 3,678 878 Mortality table 1998_adjusted 1998_adjusted Unused amounts reversed (617) (428) Utilisation of provision (317) (2)

Carrying amount at 31 December 3,692 948 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is as follows: Note 21. Revenues and other operating income Change in assumption Impact on defined benefit liability Year ended Year ended 4.56% Discount rate Increase / decrease by 0.5% Decrease/ Increase by 31 December 2016 31 December 2015 Future salary increases (nominal) Increase / decrease by 0.5% Increase / decrease by 2.39% Future pension increases (nominal) Increase / decrease by 0.5% Increase / decrease by 2.33% Transmission fee 170,189 157,821 Employee turnover Increase / decrease by 10% Decrease/ Increase by 2.15% Connection services 39,088 12,425 Mortality level Increase / decrease by 10% Decrease/ Increase by 0.90% Electricity sales 22,093 6,442 Construction services 21,320 7,014 The above sensitivity analyses are based on a change in an assumption while holding all other assumptions Rental income 996 1,117 constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions Design works 545 508 the same method (present value of the defined benefit obligation calculated with the projected unit credit method Grids repair and maintenance services 543 700 at the end of the reporting period) has been applied as when calculating the pension liability recognised within Communication services 517 545 the consolidated statement of financial position. Research and development services 312 469

Total revenue 255,603 187,041 Other operating income primarily includes income from non-core activities. Year ended Year ended 31 December 2016 31 December 2015 Penalties and fines 4,710 2,860 Insurance compensation 531 284 Other income 798 857 Total other operating income 6,039 4,001

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Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 22. Operating expenses Note 24. Finance costs Year ended Year ended Year ended Year ended

31 December 2016 31 December 2015 31 December 2016 31 December 2015 Depreciation of property, plant and equipment 39,397 39,447 Interest expense 25,612 32,455 Employee benefit expenses and payroll taxes 26,782 25,218 Net interest on defined benefit liability 613 728 Purchased electricity for production needs 25,967 15,192 Foreign currency exchange differences 182 379 Subcontract works for construction contracts 11,779 5,267 Other finance costs 937 - Property tax 9,056 7,408 Total finance costs 27,344 33,562 Materials for construction contracts 8,090 653 Less capitalised interest expenses on borrowings related to qualifying Fuel for mobile gas-turbine electricity plants 7,817 1,878 assets (Note 6) (19,334) (23,927) Accrual of allowance for doubtful debtors 2,666 7,063 Total finance costs recognised in profit or loss 8,010 9,635 Movement in provision for legal claims 2,502 434 Electricity transit 2,295 4,019 Note 25. Earnings per ordinary share for profit attributable to shareholders of FGC UES Materials for repair 2,061 2,243 Year ended Year ended Repairs and maintenance of equipment 2,039 2,171 31 December 2016 31 December 2015 Rent 1,991 1,474 Weighted average number of ordinary shares Business trips and transportation expenses 1,976 2,182 (millions of shares) 1,260,938 1,260,938 Other materials 1,524 1,747 Profit attributable to shareholders of FGC UES Security services 1,476 1,568 (millions of RR) 68,159 44,768 Consulting, legal and auditing services 1,342 1,093 Weighted average earnings per share – basic and diluted (in RR) 0.054 0.036 Amortisation of intangible assets 1,330 1,481 The Group has no dilutive potential ordinary shares; therefore, the diluted earnings per share equal the basic Information system maintenance 1,083 1,206 earnings per share. Other subcontract works 900 1,070 Note 26. Contingencies, commitments and operating risks Utilities and maintenance of buildings 755 754 Political environment. The operations and earnings of the Group continue, from time to time and in varying Insurance 642 845 degrees, to be affected by the political, legislative, fiscal and regulatory developments, including those related to Communication service 539 609 environmental protection, in Russian Federation. (Gain) / loss on disposal of property, plant and equipment (72) 3,699 Insurance. The Group held limited insurance policies in relation to its assets, operations, public liability or other Other expenses 1,573 2,242 insurable risks. Accordingly, the Group is exposed to those risks for which it does not have insurance. Total 155,508 130,963 Legal proceedings. In the normal course of business the Group entities may be a party to certain legal In 2016 based on the recent legal practice the Group recognized allowance for doubtful debts for certain balances proceedings. As at 31 December 2016 claims made by suppliers of property, plant and equipment and other with customers where the Group had disputes related to certain terms of transmission services in the amount of counterparties to the Group amounted to RR 3,859 million. Management of the Group is unable to assess the RR 4,079 million (In 2015: RR 3,934 million). This expense was included in amount of allowance for doubtful ultimate outcome of the claims and the outflow of financial resources to settle such claims, if any. debtors. Management believes that it has made adequate provision for other probable claims (Note 20). In the opinion of Employee benefit expenses and payroll taxes include the following: management, currently there are no other existing legal proceedings or claims outstanding, which, upon final Year ended Year ended disposition, will have a material adverse effect on the financial position of the Group. 31 December 2016 31 December 2015 Tax contingency. Russian tax and customs legislation is subject to varying interpretation when being applied to Wages and salaries 20,919 21,809 the transactions and activities of the Group. Consequently, tax positions taken by management and the formal Social security contributions to the Pension Fund 3,974 3,912 documentation supporting the tax positions may be successfully challenged by the relevant regional and federal Social security contributions to other state non-budgetary funds 1,560 1,578 authorities. Russian tax administration is gradually strengthening, including the fact that there is a higher risk of Pension costs – defined benefit plans (Note 18) 329 (2,081) review of tax transactions without a clear business purpose or with tax incompliant counterparties. Fiscal periods Total employee benefit expenses and payroll taxes 26,782 25,218 remain open to review by the authorities in respect of taxes for three calendar years preceding the year of decision to perform tax review. Under certain circumstances reviews may cover longer periods. Note 23. Finance income Transfer pricing legislation enacted in the Russian Federation starting from 1 January 2012 provides for major Year ended Year ended modifications making local transfer pricing rules closer to OECD guidelines, but creating additional uncertainty 31 December 2016 31 December 2015 in practical application of tax legislation in certain circumstances. Interest income 6,418 8,255 Currently there is lack of practice of applying the transfer pricing rules by the tax authorities and courts, Foreign currency exchange differences 17 392 however, it is anticipated that transfer pricing arrangements will be subject to very close scrutiny potentially Dividends 353 21 having effect on these consolidated financial statements. Other finance income 186 33 Total finance income 6,974 8,701

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PJSC “FGC UES” PJSC “FGC UES”

Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 26. Contingencies, commitments and operating risks (continued) Note 27. Financial instruments and financial risks (continued)

As at 31 December 2016 management believes that its interpretation of the relevant legislation is appropriate and Investments the Group’s tax, currency and customs positions will be sustained. Loans and available for Other financial 31 December 2015 receivables sale liabilities Total Environmental matters. The enforcement of environmental regulation in the Russian Federation is evolving and Financial assets the enforcement posture of government authorities is continually being reconsidered. Group entities periodically Available-for-sale investments (Note 9) - 22,271 - 22,271 evaluate their obligations under environmental regulations. Long-term promissory notes (Note 10) 204 - - 204 Potential liabilities might arise as a result of changes in legislation and regulation or civil litigation. The impact Long-term receivables and other non-current of these potential changes cannot be estimated, but could be material. In the current enforcement climate under assets (Note 10) 15,180 - - 15,180 existing legislation, management believes that there are no significant liabilities for environmental damage. Cash and cash equivalents (Note 11) 28,176 - - 28,176 Capital commitments related to construction of property, plant and equipment. Future capital expenditures for Bank deposits (Note 12) 30,269 - - 30,269 which contracts have been signed amount to RR 210,968 million as at 31 December 2016 (as at 31 December Short-term promissory notes 194 - - 194 2015: RR 232,219 million) including VAT. These amounts include accounts payable to construction companies Loans given 1,114 - - 1,114 and suppliers of property, plant and equipment in the amount of RR 23,759 million as at 31 December 2016 (as Accounts receivable (Note 13) 41,655 - - 41,655 at 31 December 2015: RR 29,140 million) (Note 20). Total financial assets 116,792 22,271 - 139,063 Financial liabilities Note 27. Financial instruments and financial risks Non-current debt (Note 17) - - 250,076 250,076 Financial risk factors. The Group’s ordinary financial and business activities expose it to a variety of financial Accounts payable to the shareholders of FGC UES - - 6 6 risks, including but not limited to the following: market risk (foreign exchange risk, interest rate risks related to changes in the fair value of the interest rate and the cash flow interest rate, and price risk), credit risk, and Current debt and current portion of non-current debt (Note 19) - - 31,466 31,466 liquidity risk. Such risks give rise to the fluctuations of profit, reserves and equity and cash flows from one period to another. The Group’s financial management policy aims to minimise or eliminate possible negative Accounts payable and accrued charges consequences of the risks for the financial results of the Group. The Group could use derivative financial (Note 20) - - 52,741 52,741 instruments from time to time for such purposes as part of its risk management strategy. Total financial liabilities - - 334,289 334,289

Financial instruments by categories: (а) Market risk (i) Foreign exchange risk. The Group operates within the Russian Federation. The major part of the Group’s purchases is denominated in Russian Roubles. Therefore, the Group’s exposure to foreign exchange risk is Investments insignificant. Loans and available for Other financial 31 December 2016 receivables sale liabilities Total (ii) Interest rate risk. The Group’s operating profits and cash flows from operating activity are not largely Financial assets dependent on the changes in market interest rates. Changes in interest rates impact primarily loans and Available-for-sale investments (Note 9) - 76,537 - 76,537 borrowings by changing either their fair value (fixed rate debt) or their future cash flows (variable rate debt). Long-term promissory notes (Note 10) 220 - - 220 Management does not have a formal policy of determining how much of the Group’s exposure should be to fixed Long-term receivables and other non-current or variable rates. However, at the time of raising new loans or borrowings management uses its judgment to assets (Note 10) 45,145 - - 45,145 decide whether it believes that a fixed or variable rate would be more favourable to the Group over the expected Cash and cash equivalents (Note 11) 44,404 - - 44,404 period until maturity. Bank deposits (Note 12) 450 - - 450 The Group does not account for any fixed-rate borrowings at fair value through profit or loss. Therefore a change Short-term promissory notes 10 - - 10 in interest rates at the reporting date would not have an effect in profit or loss or in equity. There is no significant Loans given 1,130 - - 1,130 impact on the Group’s profit or loss or equity from the change in interest rates for variable rate borrowings as Accounts receivable (Note 13) 54,234 - - 54,234 most of the Group’s interest on borrowings is being capitalised in property, plant and equipment. Total financial assets 145,593 76,537 - 222,130 The increase of inflation by 1% will result in additional cash outflow of RR 1,500 million per year. Financial liabilities Non-current debt (Note 17) - - 236,954 236,954 (iii) Price risk. Equity price risk arises from available-for-sale investments. Management of the Group monitors its investment portfolio based on market indices. Material investments within the portfolio are managed on an Accounts payable to the shareholders of FGC UES - - 73 73 individual basis and all buy and sell decisions are taken by the management of the Group. The primary goal of Current debt and current portion the Group’s investment strategy is to maximise investment returns in order to meet partially the Group’s of non-current debt (Note 19) - - 29,660 29,660 investment program needs. Transactions in equity products are monitored and authorised by the Group’s Accounts payable and accrued charges corporate finance department. As at 31 December 2016, the total amount of investments available-for-sale exposed to the market risk equals RR 76,426 million. If equity prices at that date had been 10% higher (lower), (Note 20) - - 33,742 33,742 with all other variables held constant, the Group’s other comprehensive income would increase (decrease) by Total financial liabilities - - 300,429 300,429 RR 7,643 million.

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206 PJSC FGC UES Annual Report 2016 207 CONSOLIDATED FINANCIAL STATEMENTS OF PJSC FGC UES Appendix 14 FOR 2016 UNDER IFRS

PJSC “FGC UES” PJSC “FGC UES”

Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated)

Note 27. Financial instruments and financial risks (continued) Note 27. Financial instruments and financial risks (continued) (b) Credit risk. Less than 1 to 2 2 to 5 Over 5 1 year years years years Total The amounts exposed to credit risk are as follows: As at 31 December 2016 Non-current and current debt and interest payable Long-term Other Cash and Bank (Notes 17, 19) 47,917 35,161 98,751 312,322 494,151 promisso- non-cur- cash equi- deposits Short-term Accounts ry notes rent assets valents (Note promissory Loans receivable Accounts payable to the shareholders of FGC UES 73 - - - 73 31 December 2016 (Note 10) (Note 10) (Note 11) 12) notes given (Note 13) Accounts payable and accrued charges (Note 20) 33,742 - - - 33,742 Not overdue, not impaired 220 43,656 44,404 450 10 1,130 37,961 Total as at 31 December 2016 81,732 35,161 98,751 312,322 527,966 Not overdue, but impaired: ------As at 31 December 2015 - gross amount - 232 - - - - 4,758 Non-current and current debt and interest payable (Notes 17, 19) 55,652 42,873 102,855 351,941 553,321 - less impairment provision - (232) - - - - (4,758) Accounts payable to the shareholders of FGC UES 6 - - - 6 - 1,489 - - - - 16,273 Overdue, but not impaired Accounts payable and accrued charges (Note 20) 52,741 - - - 52,741 ------Overdue and impaired: Total as at 31 December 2015 108,399 42,873 102,855 351,941 606,068 - gross amount - 292 - - 12,022 - 10,872 - less impairment provision - (292) - - (12,022) - (10,872) (d) Fair value. Management believes that the fair value of financial assets and liabilities carried at amortised Total amount 220 45,145 44,404 450 10 1,130 54,234 cost is not significantly different from their carrying amounts. The carrying value of trade payables and trade receivables less provision for doubtful debtors is assumed to approximate their fair value due to their short-term nature. The financial instruments of the Group carried at fair value represent available-for-sale investments (Note 9). The fair value of the available-for-sale investments is determined by the quoted prices (Level 1 inputs) in Long-term Other Cash and Bank active markets for identical financial assets. There are no significant unobservable inputs used in measuring fair promisso- non-cur- cash equi- deposits Short-term Accounts values of financial assets and liabilities. ry notes rent assets valents (Note promissory Loans receivable 31 December 2015 (Note 10) (Note 10) (Note 11) 12) notes given (Note 13) Note 28. Capital risk management Not overdue, not impaired 204 15,180 28,176 30,269 194 1,114 22,809 Not overdue, but impaired: ------The Group’s management of the capital of its entities aims to comply with the capital requirements established - gross amount - 33 - - - - 2,719 by the legislation of the Russian Federation for joint stock companies, in particular: - less impairment provision - (33) - - - - (2,719)  share capital cannot be lower than RR 100 thousand; Overdue, but not impaired ------18,846 Overdue and impaired: ------ in case the share capital of an entity is greater than statutory net assets of the entity, such entity must - gross amount - 85 - - 12,022 - 13,620 reduce its share capital to the value not exceeding its statutory net assets; - less impairment provision - (85) - - (12,022) - (13,620)  in case the minimum allowed share capital exceeds the entity’s statutory net assets, such entity is Total amount 204 15,180 28,176 30,269 194 1,114 41,655 subject for liquidation. As at 31 December 2016 the amount of financial assets, which were exposed to credit risk, was RR As at 31 December 2016 several companies of the Group namely JSC “Mobile gas-turbine electricity plants”, 145,593 million (as at 31 December 2015: RR 116,792 million). Although collection of receivables could be OJSC “The Kuban trunk grids”, JSC “Specialised electricity transmission service company of the UNEG”, JSC influenced by economic factors, management of the Group believes that there is no significant risk of loss to the “Engineering and construction management centre of Unified Energy System”, JSC “Dalenergosetproject”, JSC Group beyond the provision for impairment of receivables already recorded. “APBE”, were not in compliance with all requirements mentioned above. Management of the Group is currently implementing measures to ensure compliance with all legislation requirements within a short period. The Group’s trade debtors are quite homogenous as regards their credit quality and concentration of credit risk. Management considers that a breach of above mentioned requirements will not have material effect on the They are primarily comprised of large, reputable customers, most of which are controlled by, or related to the Group’s consolidated financial statements. The Group’s capital management objectives are to ensure that its Government of the RF. Historical data, including payment histories during the recent credit crisis, would suggest operations be continued at a profit for the shareholders and with benefits for other stakeholders, and to maintain that the risk of default from such customers is very low. the optimal capital structure with a view to reduce the cost of capital. In order to maintain or adjust the capital Credit risk is managed at the Group level. In most cases the Group does not calculate their customers’ credit structure, the Group can adjust the dividends paid to the shareholders or their contributions to the authorised status but rates their creditworthiness on the basis of the financial position, prior experience and other factors. capital by issuing new shares or by selling assets to reduce debts. The cash has been deposited in the financial institutions with no more than minimal exposure to the default risk The Group monitors capital ratios, including the gearing ratio, calculated on the basis of figures of financial at the time of account opening. Although some of the banks and companies have no international credit rating, statements prepared under the Russian Accounting Regulations. The Group should ensure that its gearing ratio, management believes that they are reliable counterparties with a stable position on the Russian market. being the total debt divided by the total equity, does not exceed 0.50. As at 31 December 2016 the Company’s (c) Liquidity risk. Liquidity risk is managed at the Group level and includes maintaining the appropriate volume gearing ratio calculated under Russian Accounting Regulations was 0.27 (as at 31 December 2015: 0.32). of monetary funds, conservative approach to excess liquidity management, and access to financial resources by securing credit facilities and limiting the concentrations of cash in banks. The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows including estimated interest payments. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant.

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PJSC “FGC UES” PJSC “FGC UES”

Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) (in millions of Russian Rouble unless otherwise stated) Note 29. Segment information Note 29. Segment information (continued) The Group operates within one operating segment. The Group’s single primary activity is provision of electricity Year ended Year ended transmission services within the Russian Federation which is represented as Transmission segment. 31 December 2016 31 December 2015 The Board of Directors of the Company has been determined as chief operating decision maker (the “CODM”) Profit for the year (RAR) 119,869 19,186 of the Group which generally analyses information relating to Transmission segment. The Board of Directors Property, plant and equipment does not evaluate financial information of other components of the Group to allocate resources or assess Adjustment to the carrying value of property, plant and equipment 8,135 35,510 performance and does not determine these components as segments. The key indicator of the transmission Reversal of impairment / (impairment) of property, plant and equipment, segment performance is return on equity ratio (ROE). It is calculated based on the statutory financial statements net 1,357 (1,183) prepared according to Russian Accounting Regulations (RAR) as net profit divided by net assets. Accordingly, Financial instruments the measure of transmission segment profit or loss analysed by the CODM is net profit of segment based on the Re-measurement of available-for-sale investments (53,692) (7,750) statutory financial statements prepared according to RAR. The other information provided to the CODM is also Discounting of promissory notes 37 78 based on statutory financial statements prepared according to RAR. Discounting of long-term accounts receivable (7,825) 551

Transmission segment – based on statutory financial Consolidation statements prepared according to RAR Reversal of impairment of investments in subsidiaries (14) 851 Year ended Year ended Adjustments to intercompany promissory notes (13,233) (2,137) 31 December 2016 31 December 2015 Reversal of re-measurement of treasury shares 806 (202) Revenue from external customers 216,904 173,003 Other Intercompany revenue 1,585 362 Adjustment to provision for legal claims (2,180) (449) Total revenue 218,489 173,365 Adjustment to allowance for doubtful debtors (3,424) 2,760

Accrual of retirement benefit obligations (85) 1,796 Depreciation and amortisation * 82,075 77,744 Write-off of research and development to expenses (86) 70 Interest income 8,100 8,334 Share of result of associates (327) (8) Interest expenses 6,314 8,517 Deferred tax adjustment 8,378 (2,021) Current income tax 12,582 81 Other adjustments (2,627) (2,329) Profit for the year 119,869 19,186 Gain on derecognition of subsidiary 11,868 - Capital expenditure 104,757 75,597 Non-segmental other operating loss 1,425 (615) Profit for the year (IFRS) 68,382 44,098 31 December 2016 31 December 2015 Total reportable segment assets 1,398,048 1,287,303 31 December 2016 31 December 2015 Total reportable segment liabilities 428,746 433,413 Total reportable segment liabilities (RAR) 428,746 433,413 * Depreciation charge under RAR is based on useful lives determined by statutory regulations. Netting of VAT recoverable and payable (5,349) (3,703) Netting of advances and payables (1,410) (5,934) Recognition of finance lease liabilities 270 519 Year ended Year ended Accrual of retirement benefit obligations 5,607 7,034 31 December 2016 31 December 2015 Deferred tax liabilities adjustment (24,284) (29,384) Total revenue from segment (RAR) 218,489 173,365 Accrual of payables recognised in another accounting period 3,192 1,091 Reclassification between revenue and other income 317 (1,625) Non-segmental liabilities 19,747 39,126 Non-segmental revenue 45,332 15,679 Elimination of intercompany balances (57,826) (66,472) Elimination of intercompany revenue (1,585) (362) Recognition of revenue from connection services based on fair Total liabilities (IFRS) 368,693 375,690 value (6,391) -

Other adjustments (559) (16) Total revenue (IFRS) 255,603 187,041

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210 PJSC FGC UES Annual Report 2016 211 CONSOLIDATED FINANCIAL STATEMENTS OF PJSC FGC UES Appendix 14 FOR 2016 UNDER IFRS

PJSC “FGC UES”

Notes to the Consolidated Financial Statements (in millions of Russian Rouble unless otherwise stated) Note 29. Segment information (continued) 31 December 2016 31 December 2015 Total reportable segment assets (RAR) 1,398,048 1,287,303 Property, plant and equipment Adjustment to the carrying value of property, plant and equipment 184,953 197,355 Impairment and revaluation of property, plant and equipment, net (444,037) (466,452) Recognition of property, plant and equipment under finance lease 194 576 Financial instruments Adjustment to cost of investments in associates 447 979 Adjustment to cost of available-for-sale investments 2,098 12,377 Discounting of promissory notes (304) (350) Consolidation Reversal of impairment of investments in subsidiaries 9,284 9,298 Reversal of impairment of promissory notes 20,646 33,880 Reversal of re-measurement of treasury shares - (806) Unrealised profit adjustment (1,243) (426) Elimination of investments in subsidiaries (24,649) (23,847) Elimination of intercompany balances (57,826) (66,472) Other Write-off of research and development to expenses (2,268) (2,182) Adjustment to allowance for doubtful debtors 4,587 8,011 Discounting of long-term trade receivables (7,863) (38) Deferred tax assets adjustment (1,314) (11,851) Netting of VAT recoverable and payable (5,349) (3,703) Netting of advances and payables (1,410) (5,934) Other adjustments (2,974) (1,317) Non-segmental assets 26,090 28,927 Total assets (IFRS) 1,097,110 995,328

The main differences between financial information prepared in accordance with IFRS and the financial information reported to the chief operating decision-maker related to profit or loss, and assets and liabilities results from the differences in the accounting methods under IFRS and RAR. Financial information on segments reported to the CODM under RAR does not reflect the adjustments made in accordance with IFRS. Non-segmental revenue, non-segmental other operating loss, non-segmental assets and non-segmental liabilities represent corresponding revenue, loss (profit), assets and liabilities of components (subsidiaries) that are not determined as segments by the CODM. Information on revenue for separate services and products of the Group is presented in Note 21. The Group performs most of its activities in the Russian Federation and does not have any significant revenue from foreign customers or any non-current assets located in foreign countries. The major customers of the Group are government-related entities. The amounts of revenue from such entities are disclosed in Note 5. The Group has no other major customers with turnover over 10 percent of the Group revenue. Note 30. Derecognition of subsidiary On 30 June 2016 the Group derecognised its investment in OJSC “Nurenergo” as the Group lost control over the entity (Note 2). The derecognition of the subsidiary had the following effect on the Group’s assets and liabilities at the date of derecognition: Carrying amount at date of disposal Accounts receivable 533 Other current assets 49 Accounts payable 15,589 Total negative net assets and liabilities of subsidiary 15,007 Impairment of intercompany accounts receivable and loans given (1,965) Non-controlling interest (1,174) Gain on derecognition of subsidiary 11,868

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