1 Information translation JSC Inter RAO 2014 Annual Report Preliminarily approved by the Board of Directors of JSC Inter RAO on April 07, 2015 (Minutes No. 138 of the meeting of the Board of Directors dated April 09, 2015). Management Board Boris Kovalchuk Chairman Chief Accountant Alla Vaynilavichute 2 Table of content 1 Report overview ........................................................................................................................ 4 2 General information on Inter RAO Group .................................................................................. 8 2.1 About Inter RAO Group ..................................................................................................... 8 2.2 Group's key performance indicators ................................................................................. 14 2.3 Inter RAO Group on the energy market ........................................................................... 15 2.4 Associations and partnerships ......................................................................................... 15 3 Statement for JSC Inter RAO shareholders and other stakeholders ........................................ 18 4 Development strategy of Inter RAO Group and its implementation ......................................... 21 4.1 Strategy of the Company ................................................................................................. 21 4.2 Business model ............................................................................................................... 26 4.3 Investment ....................................................................................................................... 27 4.4 Innovations ...................................................................................................................... 30 4.5 Energy efficiency ............................................................................................................. 34 5 Inter RAO Group’s business operations .................................................................................. 38 5.1 Segments ........................................................................................................................ 38 5.2 Group's key performance indicators ................................................................................. 41 5.3 Generation in the Russian Federation.............................................................................. 43 5.4 Supply in the Russian Federation .................................................................................... 48 5.5 Trading in the Russian Federation and Europe ................................................................ 56 5.6 Engineering ..................................................................................................................... 61 5.7 Georgia ............................................................................................................................ 64 5.8 Armenia ........................................................................................................................... 68 5.9 Moldavia .......................................................................................................................... 72 5.10 Turkey ............................................................................................................................. 74 5.11 Kazakhstan ...................................................................................................................... 76 6 Corporate governance ............................................................................................................ 79 6.1 Corporate governance system ......................................................................................... 79 6.2 Corporate governance model .......................................................................................... 81 6.3 General Shareholders Meeting ........................................................................................ 82 6.4 Board of Directors ............................................................................................................ 87 6.5 Management Board ....................................................................................................... 110 6.6 Corporate control ........................................................................................................... 117 6.7 Information disclosure and external communications ..................................................... 123 3 7 Company on the capital markets ........................................................................................... 129 8 Corporate social responsibility .............................................................................................. 135 8.1 Approach to sustainable development ........................................................................... 135 8.2 HR management ........................................................................................................... 136 8.3 Occupational health and safety ...................................................................................... 147 8.4 Contribution to the development of the regions of the Group’s operation ....................... 153 8.5 Environmental policy ...................................................................................................... 162 8.6 Asset security ................................................................................................................ 174 9 Risk management ................................................................................................................. 176 10 Procurement ..................................................................................................................... 185 11 Financial performance ....................................................................................................... 192 12 Appendices ....................................................................................................................... 198 12.1 Revision Commission Opinion ....................................................................................... 198 12.2 Consolidated financial statements according to IFRS .................................................... 202 12.3 Financial statements according to RAS ......................................................................... 210 12.4 GRI Content Index ......................................................................................................... 216 12.5 Information on compliance with the Corporate Governance Code ................................. 240 12.6 Major deals and related party deals ............................................................................... 240 12.7 Information on non-core assets disposal programme and non-core assets register ....... 241 12.8 Information on participation in other companies ............................................................. 243 12.9 Internal regulations of the Company .............................................................................. 262 12.10 Information on fulfilment of the orders of the President and Government of the Russian Federation aimed at improving JSC Inter RAO’s business activities ......................................... 266 12.11 Government support .................................................................................................. 268 12.12 Information on major litigation .................................................................................... 269 12.13 Glossary ..................................................................................................................... 271 13 Contact details .................................................................................................................. 273 4 1 Report overview The JSC Inter RAO 2014 Annual Report (hereafter referred to as the Report) features a compre- hensive description of Inter RAO Group's financial and non-financial performance results for this reporting period. The Report aims to update stakeholders on all significant aspects of Inter RAO Group's business activity, as well as on the Group's objectives and development prospects for the immediate future. The 2014 report has retained the structure adopted previously, but has been supplemented and updated pursuant to new financial reporting requirements and growing stake- holder expectations. Inter RAO Group's Annual Report has been compiled in accordance with the recommendations and regulatory requirements listed below: Decree of the Russian Government No. 1214 dated December 31, 2010 On the improve- ment of the procedure for management of open joint stock companies with shares in federal ownership and federal state unitary enterprises; Regulation on Information disclosure by issuers of securities No. 454-P, approved by the Bank of Russia on December 30, 2014; Order of the Federal Financial Markets Service of the Russian Federation No. 11-46/pz-n dated October 4, 20111; Federal Law No. 208-FZ dated December 26, 1995 (revised on December 22, 2014) On Joint Stock Companies; Letter No. 11/2035 dated January 23, 2015 of the Federal Agency for State Property Man- agement; Letter No. 06-52/2463 of the Central Bank of the Russian Federation dated April 10, 2014 On the Code of Corporate Governance; Regulations governing business procedure for compiling the Company's Annual Report, ap- proved by JSC Inter RAO, Order No. IRAO/905