Forum for shareholders on the agenda of the Annual General Meeting of Shareholders following the results of 2017

Answer: The withdrawal of consumers of the "last mile" from 1 July 2017 in the Belgorod, Kursk, Lipetsk and Tambov regions was not a surprise for the company. In accordance with the federal legislation, the transition of large industrial consumers to settlements under the tariff of PJSC FGC UES was carried out in stages over three years. During the same period, the company through the tariff made partial compensation for lost revenue.

Despite the fact that as a result of the termination of lease contracts for "last mile" facilities, the decrease in the volume of electricity transmission in 2018 relative to 2017 is expected to be more than 9%, the Company’s revenue and profit from electricity transmission is expected to be increased relative to the previous year.

Question: By the end of 2017, net profit grew only by 9%, what instruments does the Company have for increasing the growth rate of net profit and what is the forecast for 2018 under RAS? (shareholder Sergej Nikolaevich Y.)

Answer: In the past 2017, the work of IDGC of Centre was complicated by a number of external factors that had a significant impact on financial and economic performance indicators.

Firstly, the boiler productive supply of electricity in comparison with 2016 decreased by almost 8%, which is due to the termination of the lease of "last mile" facilities from 1 July 2017 in the Belgorod, Kursk, Lipetsk and Tambov regions.

Secondly, an increase in the purchase price of electric energy to compensate losses of the Company by 14%, due to the establishment by the Government of the Russian Federation of a surcharge to the price for capacity for consumers of the first and second price zones of the Wholesale Electricity and Capacity Market in order to bring tariffs in the Far East to the average Russian level.

Thirdly, the reduction in the limiting rate of growth in the regulated tariffs of grid companies for transmission of electricity according to the Forecast of the Social and Economic Development of the Russian Federation from 7.5% in 2016 to 3% in 2017. At the same time, in the medium term, the established restriction on the rate of tariff growth will continue.

Nevertheless, even in these difficult external conditions last year, the Company managed to fully implement the production plans set and achieve decent financial results.

The achieved indicators are largely the result of active actions aimed at reducing transaction costs and increasing the economic efficiency of activities. In the current year of 2018, the Company also continues to implement measures aimed at reducing transaction costs, including reducing the level of electricity losses. All this will allow also in the current year to maintain a stable good financial condition of the company, and to increase the level of profit for the year.