QUARTERLY REPORT Kuban Open Joint-Stock Company of Power Industry and Electrification Issuer’s code 00063-A Quarter 1, 2014 Issuer’s address: 2 Stavropolskaya str., Krasnodar, Russia 350033 Information contained in the quarterly report is subject to disclosure in accordance with the legislation of the Russian Federation Director general Date: May 13, 2014 ____________ Gavrilov A.I. signature Chief accountant – head of Department of accounting and tax reporting ____________ Skiba I.V. Date: May 13, 2014. signature Contact person: Kruglova Svetlana Ivanovna, Chief Specialist of the Department for Corporate Governance and Interaction with Shareholders Telephone: (861) 212-2510 Fax: (861) 212-2708 E-mail: [email protected] Internet page(s) used for disclosure of information contained in this quarterly report: www.kubanenergo.ru/stockholders/disclosure_of_information/amp_reports/ 1 Introduction ................................................................................................................................................................... 5 I. Brief data on members of the Issuer's management bodies, data on bank accounts, auditor, appraiser and the financial consultant of the Issuer as well as other persons signed the quarterly report ................................................. 6 1.1. Members of the Issuer's management bodies ..................................................................................................... 6 1.2. Details on the Issuer's Bank Accounts ............................................................................................................... 6 1.3. Information on Issuer’s auditor .......................................................................................................................... 7 1.4. Details of Appraiser(s) of the Issuer .................................................................................................................. 9 1.5. Details of consultants of the Issuer .................................................................................................................... 9 1.6. Details of other persons having signed the quarterly report ............................................................................... 9 II. Basic information on business activity of the Issuer ................................................................................................ 9 2.1. Indices of the Issuer’s business activity ............................................................................................................. 9 2.2. Issuer's Market Capitalization .......................................................................................................................... 10 2.3. Issuer's Liabilities ............................................................................................................................................. 11 2.3.1. Accounts payable .......................................................................................................................................... 11 2.3.2. Issuer's Credit History ................................................................................................................................... 15 2.3.3. Issuer’s liabilities arising from guarantees provided to third persons ........................................................... 16 2.3.4. Issuer's other liabilities .................................................................................................................................. 16 2.4. Risks related to acquisition of issue-grade securities being placed (placed) .................................................... 16 2.4.2. Country and regional risks ............................................................................................................................ 18 2.4.3. Financial risks ............................................................................................................................................... 19 2.4.4. Legal risks ..................................................................................................................................................... 20 2.4.5. Risks associated with the Issuer’s activity .................................................................................................... 21 III. Detailed information on the Issuer ........................................................................................................................ 22 3.1. History of foundation and development of the Issuer ...................................................................................... 22 3.1.1. Information on the Issuer’s business name (registered name)....................................................................... 22 3.1.2. Data on the Issuer’s State Registration .......................................................................................................... 22 3.1.3 Information on establishment and development of the Issuer ........................................................................ 23 3.1.4. Contact information ...................................................................................................................................... 25 3.1.5. Taxpayer Identification Number ................................................................................................................... 26 3.1.6. Branches and representative offices of the Issuer ......................................................................................... 26 3.2. Issuer's core business activity ........................................................................................................................... 28 3.2.1. Issuer's branch identity .................................................................................................................................. 28 3.2.2. Issuer's core business activity ........................................................................................................................ 28 3.2.3. Materials, goods (raw materials) and suppliers of issuer .............................................................................. 42 3.2.4. Target markets of the Issuer's products (works, services) ............................................................................. 44 3.2.5. Information on the Issuer’s licenses .............................................................................................................. 45 3.3. Issuer's future activity plans ............................................................................................................................. 47 3.5. Subsidiary and dependent companies of the Issuer .......................................................................................... 48 3.6. Composition, structure and value of the Issuer's fixed assets, information on plans for acquisition, replacement and retirement of fixed assets as well as all facts of encumbrance on the Issuer’s fixed assets ......... 55 3.6.1. Fixed assets ................................................................................................................................................... 55 IV. Information on issuer’s business activity .............................................................................................................. 66 4.1. Results of business activity .............................................................................................................................. 66 4.2. Liquidity of the Issuer, sufficiency of equity and current assets ...................................................................... 67 4.3. Financial investments of the Issuer .................................................................................................................. 68 4.4. Intangible assets ............................................................................................................................................... 72 4.5. Details of the Issuer’s policy and expenses in the field of scientific and technical development, with regard to licenses and patents, new researches and developments ......................................................................................... 74 4.6. Analysis of development trends in the sphere of Issuer's core activity ............................................................ 75 4.6.1. Analysis of factors and conditions affecting the Issuer's activity .................................................................. 76 4.6.2. Issuer's Competitors ...................................................................................................................................... 78 V. Details on persons that are members of the Issuer’s management bodies, the Issuer’s bodies in charge of control of financial and business activity and brief details on the Issuer’s employees (workers) ........................................... 78 5.1. Details of the structure and competence of the Management Bodies of the Issuer .......................................... 78 2 5.2.1. Composition of the Board of Directors of the Issuer (Supervisory Board) ................................................... 86 5.3. Details of the amounts of reward, benefits and/or compensation for expenses due to each of the Issuer's management bodies ............................................................................................................................................... 116 5.4. Details on structure and competence of bodies for control of