KIRILL SELEZNEV. Member of the Management Board, PJSC Gazprom Chairman of the Board of Directors, TGC-1

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1 RESULTS

2 KIRILL SELEZNEV Member of the Management Board, PJSC Gazprom Chairman of the Board of Directors, TGC-1 2

3 Results 2017 Dear Shareholders, 2017 became a crucial milestone in the development of Gazprom's electric power activities. Ten years have passed since Gazprom entered electric power industry. At a constituted meeting the Board of Directors of PJSC Gazprom noted successful completion of main strategic tasks in electric power industry, which had been set forth in The largest electric power holding in Russia was established and unified assets in the fields of electricity and heat generation, heat transfer and sales. Over the past decade Gazprom completely fulfilled its obligations for construction and upgrade of capacities, which were undertaken upon entering the sector. At the moment, all electric power generating companies of the Group demonstrate stable growth of their economic results and strengthen their financial stability. It is noteworthy that 2017 the 100th anniversary of one of the biggest shocks experienced by our country was marked with a productive event: power supply of St. Petersburg s city centre, including the Winter Palace, was switched to the state-of-art equipment of Centralnaya CHPP of TGC-1. A modern gas turbine plant with the capacity of 100 MW is the final facility commissioned by TGC-1 as part of fulfilling Gazprom's investment obligations. At present, TGC-1 is a unique power company focused on maximum efficient use of its configuration advantages, such as new steam-gas generating units and gas turbine plants, hydroelectric generation and conventional heat generating facilities. At that, the Company is continuously working on its internal improvement. For example, the outcome of measures taken to improve operating efficiency and optimise costs in 2017 almost doubled the expected figures. Due to reduction of operating costs the improved productivity corresponds to interests of all shareholders and strengthens the Company's competitive positions. Comprehensive development of TGC-1, supported by Gazprom, provides for reaching stable and positive results. TGC-1's revenue increased by 11.2% to RUB 82.8 billion in EBITDA rose by 32.8% to RUB 18.6 billion which significantly improved EBITDA to debt ratio. A new power unit of the Centralnaya CHPP in St. Petersburg is equipped with the most modern systems of filtration and deionisation. The renovated Pervomayskaya CHPP, which sweeping rebuild was completed in 2017, is equipped with the first indirect cooling system in the history of TGC-1, which prevents the process of water leakage to the ambient environment. The Company makes efficient efforts to improve the environment in Murmansk Oblast. TGC-1 is suitably placed to diversify its activities and enter new markets, which have synergy with current operations. With that in mind a number of investment projects intended for the future are currently under consideration. Furthermore, the Company is preparing to take part in projects aimed at further upgrading of production capacities and will start implementing them when economic incentives are put forth at the state level. Dear Shareholders, TGC-1 with the support of Gazprom continues its steady advance towards a key strategic goal of securing stable profit growth, while maintaining reliable power supply of consumers. We look forward to your cooperation in these endeavours! Member of the Management Board, PJSC Gazprom Chairman of the Board of Directors, TGC-1 Kirill Seleznev It is extremely important that development of TGC-1 takes into consideration the environmental friendliness and minimising industrial impact both in St. Petersburg and remote regions where the Company operates as well. 3

4 ALEXEY BARVINOK General Director of TGC-1 4

5 Results 2017 Dear Shareholders, 2017 was declared the Year of Ecology in Russia. Our Company achieved outstanding production results in all areas of its activity and implemented several projects aimed at reducing environmental impact. In May 2017, the consumer hot water supply of the Southwest area of the city was switched to the new Pervomayskaya CHPP integrated auxiliary building, and the old part of the station was decommissioned. In summer, the historic centre of St. Petersburg was transferred to energy from the Power Plant No. 1 at the Centralnaya CHPP. The city now has efficient environmentally friendly facilities and its energy supply is a strategic reserve for further development. In Murmansk Oblast, preparations continued for the renovation of the key station in the region's energy system: the parameters of the new equipment at the Verkhne-Tulomskaya HPP were determined in compliance with the most current standards for reliability, safety, and ecology. The production volume of electricity generated in 2017 by TGC-1, including PJSC Murmanskaya CHPP, increased by 6.6% compared to 2016, amounting to 29 billion, million kwh. The main growth factors were increased energy consumption in the Northwest region, the new highperformance power generating units that were loaded and commissioned, and a high water content, which allowed to increase output at hydroelectric power plants. Another area of the Company's business activity is the strengthening of payment discipline in the regions where it operates. The Company continues to implement measures aimed at increasing payment discipline and solving the issue of consumer debt to TGC-1 for supplied heat energy. The most important aspects of our business activity are ensuring the reliability of equipment and infrastructure and increasing security of power-generating facilities, which will be developed next year along with preparation for the Company's participation in projects aimed at upgrading of production facilities, the specifics of which are going to be decided at the state level. It must be noted that none of our tasks could be solved without the competent professionals who work hard every day to create a better future. Dear shareholders, colleagues, and partners, I believe that the ability to find effective and simple solutions, work smoothly towards achieving overall results and employ our wealth of experience in the process will allow us to keep the leading position in the energy industry of the Northwest region. General Director of TGC-1 In supporting initiatives related to the Year of Ecology, TGC-1 launched a number of new projects; the most important involved signing an agreement with the Government of Murmansk Oblast to establish a partnership in the sphere of environmental protection with regard to heat sources at PJSC Murmanskaya CHPP. In 2017, the Company celebrated the 120th anniversary of its oldest operating power plant the Power Plant No. 2 of the Centralnaya CHPP and continued its collaboration with the Hermitage. As a contribution to preserving the history of the energy industry and the cultural heritage of the Northwest region, the Company implemented a joint modernisation project to update the lighting in the museum's halls. Alexey Barvinok 5

6 OVERVIEW Public Joint Stock Company Territorial Generating Company No.1 (hereinafter referred to as TGC-1 or the Company) is the leading producer of electricity and heat in the Northwestern Federal District of Russia. TGC-1 was founded on 25 March 2005 in the course of reforming the electric energy industry of the Russian Federation. Today, the Company incorporates power generating enterprises from the Baltic Sea to the Barents Sea. The Company's generating assets comprise of 53 power plants of various types in four constituent territories of the Russian Federation: St. Petersburg, the Republic of Karelia, the Leningrad and Murmansk Oblasts. 13,646 6, % 5.4% 82.5% 26.4% 12.0% 61.6% Murmansk Oblast Republic of Karelia St. Petersburg and Leningrad Oblast Generated electricity is delivered to the domestic wholesale electricity and capacity market and is also exported to Finland and Norway. TGC-1 is a strategic supplier of heat in St. Petersburg, Petrozavodsk, Murmansk, and the cities Apatity and Kirovsk in Murmansk Oblast. TGC-1 includes the following subsidiaries: PJSC Murmanskaya CHPP (power supply to Murmansk and the surrounding areas; a 98.68% stake in the authorised capital), JSC St. Petersburg Heating Grid (association of the heating grids within the area of the Company s CHPPs operations; a 74.99% stake in the authorised capital), and affiliates: JSC HHC (heat transfer from the Apatitskaya CHPP to consumers of Kirovsk; a 50% stake in the authorised capital), and TGC-Service LLC (specialised repair and maintenance enterprise; a 26% stake in the authorised capital). TGC-1 is a part of the Gazprom Group. Controlling stakes in Gazprom's generating companies are consolidated on the balance sheet of Gazprom Energoholding LLC, a subsidiary of Gazprom, established to implement Gazprom's Power Generation Strategy, which enables it to create an effective management system based on unified corporate standards. Via Gazprom Energoholding LLC, the Group consolidated the controlling stakes in PJSC Mosenergo, PJSC OGK-2, TGC-1 and PJSC MOEK. Gazprom is the major owner of the generating assets in Russia and one of the ten leading European electricity producers. 6

7 Results Murmansk Oblast 2 13 CHPPs HPPs Republic of Karelia 16 St. Petersburg and Leningrad Oblast CHPPs HPPs The key shareholders of TGC-1 are as follows: Shares of TGC-1 are traded on the Moscow Exchange and included in Level 1 of the quotation list. Gazprom Energoholding LLC % shares, The second largest shareholder, Fortum Power and Heat Oy, is Scandinavian leading energy concern, with the highest standards of business conduct. Fortum Power and Heat Oy makes a valuable contribution to the enhancement of the Company s management efficiency. Fortum Power and Heat Oy % shares. Thus, guided by international standards of business conduct, operating environmentally responsible production and implementing an innovative social policy, TGC-1 is striving to take the leading position in the energy market, to be a reliable partner for investors, to take care of shareholders interests and satisfy customers highest requirements. 7

8 Installed capacity of TGC-1 produc on complex Heat Electric St. Petersburg and Leningrad Oblast Yuzhnaya CHPP 2,353.0 GCal/h 1,207.0 MW Avtovskaya CHPP MW 1,849.0 GCal/h Centralnaya CHPP MW 1,488.0 GCal/h Pravoberezhnaya CHPP 1,283.0 GCal/h MW Severnaya CHPP 1,188.0 GCal/h MW Vasileostrovskaya CHPP MW 1,113.0 GCal/h Vyborgskaya CHPP MW 1,056.0 GCal/h Pervomayskaya CHPP MW GCal/h Ladoga HPPs Cascade Vuoksa HPPs Cascade Narvskaya HPP MW MW MW HPP 41.1 % Electricity genera on Republic of Karelia Petrozavodskaya CHPP GCal/h MW CHPP 58.9 % Kem HPPs Cascade Vyg HPPs Cascade MW MW Heat market share Suna HPPs Cascade 63.7 MW Murmansk Oblast PJSC Murmanskaya CHPP 12.0 MW 46 % 100 % 100 % 75 % St. Petersburg Petrozavodsk Apa ty, Kirovsk in Murmansk Oblast 1,122.0 GCal/h Murmansk Apa tskaya CHPP GCal/h MW Tuloma and Serebryanskiye HPPs Cascade MW Niva HPPs Cascade MW Paz HPPs Cascade MW 8

9 Results 2017 THE COMPANY'S EVENTS IN 2017 March January 50 years of operation of the Palakorgskaya HPP celebrated in the Republic of Karelia. 80 years of operation of the Nizhne-Tulomskaya HPP the first plant in the GOERLO plan in the Subarctic. New hydraulic turbine for the Verkhne-Tulomskaya HPP was tested. A working meeting of power specialists and environmentalists from Russia, Norway and Finland to regulate the water regime of Lake Inari and use of water resources of border HPPs was held in Murmashi village in Murmansk Oblast. Marina Kovtun, the Governor of Murmansk Oblast, and Alexey Barvinok, General Director of TGC-1 signed the Environmental Agreement. The document provides for continuing cooperation in implementing several significant environment protection projects at the heat supply sources of PJSC Murmanskaya CHPP. TGC-1 sponsored the construction of the Ice Arena opened in the Governor's Park of Petrozavodsk for residents and city visitors. February The interactive annual report of TGC-1 for 2015 won the main prize in the Digital Media & Tools nomination of the annual Digital Communication AWARDS established by the Association of Directors of Communications and Corporate Media of Russia. Annual meeting of the Commission for Prevention and Elimination of Emergencies and Fire Safety was held at the Administration of TGC-1. The Commission discussed the readiness of HPPs for water passage during the period of snow and ice melting. 50 years of operation of the Putkinskaya HPP celebrated in the Republic of Karelia. Alexander Drozdenko, the Governor of Leningrad Oblast, visited the Verkhne-Svirskaya HPP to discuss the prospects for renovation of hydraulic structures of the plant and construction of a separate bridge to connect the two banks of the Svir River. 60 years of operation of the Pervomayskaya CHPP in St. Petersburg. April Alexey Barvinok, the General Director of TGC-1, received the award from Expert Northwest business magazine in the nomination Production Sector Expert. The Russian International Energy Forum opened in St. Petersburg. Denis Fedorov, General Director of Gazprom Energoholding LLC, spoke at the plenary session devoted to Russia's energy security. The company's employees became laureates of the international contest of scientific, technical and innovative developments to promote the fuel, energy and production industries, held with the support of the Ministry of Energy. 120 years of operation of Power Plant No. 2 of the Centralnaya CHPP the oldest operating CHPP in St. Petersburg. As part of the celebration of CHPP's anniversary, the exhibition The Power Industry of the Historic Centre of St. Petersburg: From the 19th to the 20th Century was opened in the pedestrian area of Bolshaya Morskaya Street. There were boat trips entitled St. Petersburg Energy from the Water organised for residents and visitors to the city. 9

10 May The annual press conference of Denis Fedorov, General Director of Gazprom Energoholding LLC, was held in Moscow to present Gazprom's strategy in the power industry. TGC-1 sponsored the VII Charity North Ball held in the Ethnographic Museum of St. Petersburg for children left without parental care. Georgy Poltavchenko, the Governor of St. Petersburg, took part in the celebration of completion of complex reconstruction of the Pervomayskaya CHPP. June TGC-1 Annual General Shareholders Meeting. At the Annual General Shareholders Meeting of PJSC Gazprom, the outdated power supply to the facilities in the historical centre of St. Petersburg, including the halls of the Hermitage, was switched to the new equipment of Power Plant No. 1 of the Centralnaya CHPP. Participants of the meeting arranged a teleconference with Power Plant with the participation of Denis Fedorov, General Director of Gazprom Energoholding LLC, Alexey Barvinok, General Director of TGC-1, the top management of Gazprom Energoholding LLC, and journalists. Alexey Miller, Chairman of the Management Committee of PJSC Gazprom, congratulated Gazprom shareholders and employees of Gazprom Group's power companies on the successful completion of the project. PJSC Murmanskaya CHPP Annual General Shareholders Meeting TGC-1 newspaper, "Energy of the North-West", the Company's official website and its consumers relations projects were among the winners of the VIII Corporate Competition of Public Relations Services of the Subsidiaries and Organizations of PJSC Gazprom. July The film made by TGC-1 showing the completion of complex reconstruction of the Pervomayskaya CHPP in St. Petersburg took second place in the nomination The Best Corporate Film. Technologies. Products. Services of the national competition for corporate videos and TV, Silver Threads August The Svetogorskaya HPP in Leningrad Oblast celebrated its 70th anniversary. TGC-1 opened a series of the Energy Art Plein Airs "Techniques in Different Techniques" at HPPs of the Leningrad and Murmansk Oblasts with the participation of professional artists and art school graduates. The festival of ancient villages "Beside the Girvas Volcanoes" was held for the first time at the wastewater outlet of the Palyeozerskaya HPP in the Republic of Karelia. September Fitch Ratings international agency has affirmed longterm the Issuer Default Rating (IDR) of TGC-1 in foreign and national currency at 'ВВ+', Outlook Stable, and short-term Issuer Default Rating in foreign and national currency at 'В'. Standard & Poor's Global Ratings international agency has revised its outlook on TGC-1 from stable to positive thanks to improvement in the Company's performance indicators. The Company's long-term and short-term corporate credit ratings were confirmed at ВВ+/В levels, respectively. TGC-1 s project, Anniversary of the Volkhovskaya HPP, won the regional round of the MediaTEK All-Russia Contest among Media and Press Services of Fuel and Energy Companies in the nomination Social Initiatives. 65 years of operation of the Verkhne-Svirskaya HPP in Leningrad Oblast. 30 years of operation of the Nizhne-Teriberskaya HPP in Murmansk Oblast the youngest HPP of TGC-1. 10

11 Results 2017 October TGC-1 took part in the VII St. Petersburg International Gas Forum. 85 years of operation of the Vasileostrovskaya CHPP in St. Petersburg. The awards ceremony of the All-Russia contest MediaTEK-2017 was held as a part of the business program of Russian Energy Week International Forum. TGC-1 won a special jury prize for a series of projects about social initiatives and popularization of the Fuel and Energy sector in the regions of Northwest Russia. 95 years ago, the first combined heat and power plant in St. Petersburg CHPP Krasny Oktyabr was put into operation under the GOELRO plan. Nowadays, the Pravoberezhnaya CHPP has become its successor. November The interactive annual report of TGC-1 for 2016, designed together with 2PR Agency, received the platinum award at MarCom Awards-2017, a prestigious international competition of design projects in marketing, corporate communications and PR. The Museum of Energy History of the North-West celebrated its 50th anniversary. A two-year project for replacement of the excitation system on two hydraulic units of the Poduzhemskaya HPP in the Republic of Karelia was completed. December 80 years of operation of the Lesogorskaya HPP. An exhibition of art works from the EnergyArt Plein Airs "Techniques in Different Techniques" opens at the Museum of the Stieglitz State Academy of Art and Design. 45 years of operation of the Serebryanskaya HPP-2 in Murmansk Oblast. 65 years ago, the Niva HPP-1 started operation in Murmansk Oblast. 55 years of operation of the Kumskaya HPP in Murmansk Oblast. 55 years of operation of the Belomorskayaya HPP in the Republic of Karelia. Charity events of the annual festival Energy Tree of Wishes were held in all regions of the Company's operations. A round table to discuss the "Pressing issues of sales activities in the energy industry and their effective solutions" took place in Murmansk within the 12th exhibition conference SevTEK: Northern Energy Facilities The conference was organised by TGC-1 and PJSC Murmanskaya CHPP. The event included discussion of the most acute and pressing issues of housing and communal services and the awards ceremony of the interregional prize The Best Housekeeper according to the ratings of heat power consumers. A panel discussion "Environmental Communication as an Instrument of Strategic Cooperation", supported by TGC-1, took place at Saint Petersburg State University. 11

12 PRODUCTION At the end of 2017, installed electric capacity of the Company's power plants, including PJSC Murmanskaya CHPP, was 6,949.6 MW and heat capacity 13,645.9 Gcal/h. 29,509.3 Electricity output by the Company's mln kwh power generating enterprises The basis of TGC-1's production capacities comprises of 53 power plants, including 40 hydroelectric power plants (HPP) and 13 combined heat and power plants (CHPP), with the subsidiary PJSC Murmanskaya CHPP. Most HPPs, located consequently down the water course and interconnected by the common water regime, are unified into cascades. Installed electric capacity factor in general for TGC-1 in 2017 was 48.5%, for HPPs it was registered at a level of 54.7%, and for CHPP at 44.2%. Following the results of 2017, electricity output by the Company's power generating enterprises, including PJSC Murmanskaya CHPP, comprised of 29,509.3 million kwh, which was 6.6% higher than in the respective period of Key operating performance indicators of TGC-1* (%) Installed electric capacity, MW 6,852 6, Installed heat capacity, Gcal/h 14,298 13, Electricity output, million kwh 27,672 29, Net electricity output, million kwh 30,591 32, Heat output, thousand Gcal 24,445 24, Net heat output, thousand Gcal 24,985 24, * Including the indicators of PJSC Murmanskaya CHPP. 12

13 Results 2017 Electricity output of TGC-1, thousand kwh (%) Nevsky Branch 16,687,384 18,178, Karelsky Branch 3,701,592 4,051, Kolsky Branch 7,266,602 7,263, TGC-1 27,655,578 29,493, PJSC Murmanskaya CHPP 16,760 15, TGC-1 including PJSC Murmanskaya CHPP 27,672,338 29,509, Total for CHPPs 14,809,260 15,823, Total for HPPs 12,863,078 13,685, Generation at the Nevsky Branch increased by 8.9%, at the Karelsky Branch by 9.4%, and at the Kolsky Branch decreased by 0.05%. In general, electricity output at CHPPs increased by 6.8% against 2016, while generation at HPPs increased by 6.4%. The main factors of increase of the total electricity output by CHPPs in 2017 were as follows: increase of demand in the Northwest of Russia; increased load of the stations upon a request of the System Operator of Unified Power System; commissioning of a new high-efficient GTU-CHPP at Power Plant No. 1 at the Centralnaya CHPP. Generation by HPPs increased due to the higher water content at the Nevsky and Karelsky Branches compared to Heat output, Gcal (%) Nevsky Branch 19,123,226 19,286, Karelsky Branch 1,704,626 1,709, Kolsky Branch 1,502,531 1,515, TGC-1 22,330,384 22,511, PJSC Murmanskaya CHPP 2,114,604 2,203, TGC-1 including PJSC Murmanskaya CHPP 24,444,988 24,714, As for 2017, the heat output from collectors of TGC-1, including PJSC Murmanskaya CHPP, comprised of 24,714.6 thousand. Gcal, which is 1.1% higher compared to 2016, due to the prolonged heating period. The heat output at the Nevsky and the Kolsky Branches increased by 0.9% for each of the subsidiaries, at the Karelsky Branch heat output increased by 0.3%. The heat output of PJSC Murmanskaya CHPP increased by 4.2% against Following the results for 2017, total specific fuel equivalent consumption by TGC-1 for supplied electricity amounted to g/kwh, which was by 0.3 g/kwh lower than in Specific fuel equivalent consumption per unit of heat sold decreased by 0.5 kg/gcal and amounted to kg/gcal. 13

14 SALES ACTIVITIES TGC-1 electricity sales in 2017 amounted to 32,579.2 million kwh, which was 6.5% higher than in PJSC Murmanskaya CHPP is not a participant in the wholesale electricity and capacity market, the entire amount of generated electricity in was used for operational needs. The major amount of the Company's electricity is sold at the day-ahead market (DAM), in 2017 the share of DAM accounted for 76.8% of total sales and 85.1% of total revenue from electricity sales, as well as under regulated contracts (RC), sales amounted to 16.2%, the share in electricity revenue accounted for 7.2%. The Company's capacity sales were registered at the level of 5,420.1 MW/month, which was by 0.5% higher than in In 2017, the sale of the capacity after competitive capacity outtake (CCO) comprised 31.1% of the sales, capacity sales under RC comprised of 24.6%, the capacity sales under capacity delivery agreement (CDA) comprised of 22.8%, capacity sold in forced mode (FM) comprised of 15.0%, the share of the non-regulated electricity and capacity sale and purchase contracts (NRECC) comprised of 6.5%. In this way, the major part of revenue from capacity sales was formed by sales under CDA, amounting to 69.2%, the contribution into the revenue structure from CCO sales amounted to 12.2%, the share of RC amounted to 9.7%, sales in FM were 6.4%, share of NRECC was 2.6%. Electricity purchase in 2017 amounted to 5,095.3 mln kwh, which was 4.4% more than 2016, capacity purchase of MW/month, which was 8.4% lower than in Electricity sales by market sectors, million kwh 25,000 23, , ,000 Total electricity sales volume: 15, ,579.2 mln kwh ,590.9 mln kwh 10,000 5,000 4, , , , RC DAM BM Export Retail

15 Results 2017 Capacity sales structure by market sectors (average monthly values), MW Total capacity sales volume: 2, ,420.1 MW/month 2,000 1, ,391.9 MW/month 1,500 1, , , , , RC NRECC CCO CDA FM Thanks to the unique geographical location of some power plants, TGC-1 has the possibilities to export part of the generated electricity. Export sales are made to Finland and Norway. Actual export sales of TGC-1 in 2017 amounted to million kwh, demonstrating an increase of 35.3% compared to In 2017, the net heat output of TGC-1 power plants to the consumers, including PJSC Murmanskaya CHPP, amounted to 24,938 thousand Gcal, which was 0.2% lower than in Net heat output excluding PJSC Murmanskaya CHPP amounted to 22,900 thousand Gcal. Following the results for 2017, revenue from the supplied heat of TGC-1 increased by 4.7%, to RUB 31,598.0 million. Including PJSC Murmanskaya CHPP, revenue from the supplied heat comprised RUB 37,166.5 million, which is 3.9% higher than in Net heat output and revenue from heat sales in 2017* Nevsky Branch (including the reserve heat capacity maintenance services) Kolsky Branch (including subsidies for compensation of lost proceeds) thous. Gcal RUB thous., excl. VAT 19,598 25,775,961 1,436 2,509,102 Karelsky Branch 1,866 3,312,952 TGC-1 22,900 31,598,015 PJSC Murmanskaya CHPP (including subsidies for compensation of lost proceeds) 2,038 5,568,476 TGC-1 including PJSC Murmanskaya CHPP 24,938 37,166,491 * Contracts for reserve heat capacity maintenance services at the Nevsky Branch of TGC-1 were signed with the consumers, who do not consume heat but have not disconnected their heat consumption facilities from the heat supply grid in order to reserve the possibility to restart heat consumption when needed. 15

16 FUEL SUPPLY In 2017, TGC-1 power plants and leased boiler facilities, excluding PJSC Murmanskaya CHPP, consumed 5,555.7 million m 3 of gas, 1.9 thousand tonnes of fuel oil, thousand tonnes of coal, and 13.9 thousand solid m 3 of fuel wood to deliver electricity and heat. Gas share in fuel balance amount to 94.8%, fuel oil 0.04%, coal 5.1%, and fuel wood 0.06%. Fuel balance structure in 2017, % Gas Fuel oil Coal Fuel wood Nevsky Branch Karelsky Branch Kolsky Branch TGC PJSC Murmanskaya CHPP TGC-1 including PJSC Murmanskaya CHPP

17 Results 2017 INVESTMENT ACTIVITY Implementation of TGC-1 s large-scale investment program continued in Activities continued at the following major facilities: the Centralnaya CHPP, the Tuloma and Serebryanskiye HPPs Cascade of the Kolsky Branch. The Company performed investment activity in the following areas: implementation of new high-priority construction projects and refurbishment of generating facilities; improvement of reliability and equipment efficiency; replacement of worn-out power equipment; performance of the requirements of the supervisory authorities; safe operation of power facilities; development of the Company's IT infrastructure and introduction of new technologies. Financing by investment projects in 2017 Type of the investment project Financing, RUB million including VAT 1. Strategic 539 Upgrading of the Verkhne-Tulomskaya HPP 399 Renovation of PP-2 of the Centralnaya CHPP 118 Renovation of the Avtovskaya CHPP 10 Renovation of a turbine at the Petrozavodskaya CHPP Efficiency Mandatory 1, Reliability 2, Other 3,817 Loan interest 140 Total 8,616 17

18 SECURITIES AND EQUITY TGC-1 equity capital structure as of December 31, % Gazprom Energoholding LLC Fortum Power and Heat Oy Other shareholders % % The authorised capital of TGC-1 totals RUB 38,543,414, and is divided into 3,854,341,416,571 +3/7 ordinary registered shares with a face value of RUB Preferred shares were not placed by the Company. During the year, there were no changes in the structure of the main TGC-1 shareholders. As of December 31, 2017, the total number of persons registered in the Shareholders Register of TGC-1 was 290,001, and most of them were individuals. Since March 26, 2007, shares of TGC-1 are traded on the Moscow Stock Exchange (ticker: TGKA), the main trading floor of the Russian stock market; the shares were included on the First Level quotation list. Transactions with securities are executed on the stock market of the Moscow Stock Exchange in the Main trading mode: T+shares and DR. Global depositary receipts (GDRs) of TGC-1 are traded on foreign markets. The dynamics of stock prices of TGC-1 was closely correlated with the dynamics of the Russian share trading as a whole. As of December 29, 2017, the Company's capitalisation amounted to RUB 45.6 billion. According to the decision made by the Annual General Shareholders Meeting of TGC-1 on June 19, 2017, the amount of dividends to be paid per ordinary share of the Company following the results of 2016 amounted to RUB in cash. According to the results of 2016, the total amount of declared dividends of TGC-1 was RUB 1,331, or 36.6% of net profit. A total of RUB 1,317,777, or 99% of dividends was paid as of December 31, As of December 31, 2017, the share of GDRs in the authorised capital of TGC-1 was %, while the number of GDRs in accordance with Rule 144A was 16,100, and the number of GDRs in accordance with Regulation S was 213,650. As of December 31, 2017, the cost of one GDR equalled USD RUB bln The Company's capitalisation as of December 29, 2017 Currently two bonds of TGC-1 of series 03 ( D) and series 04 ( D) are traded on the Moscow Stock Exchange. 18

19 Results 2017 MANAGEMENT AND CONTROL BODIES General Shareholders Meeting is the supreme management body of the Company. The Board of Directors: The procedure for the activities and meetings of the Board of Directors is governed by the Provisions on the TGC-1 Board of Directors that was approved by the Annual General Shareholders Meeting on June 19, 2017 (Minutes No. 2 of June 20, 2017). According to the Provisions on the TGC-1 Board of Directors, the Board of Directors is responsible for the overall management of the Company's activities and controls the implementation of decisions of the General Shareholders Meeting, observance of the rights and legitimate interests of the Company's shareholders in accordance with the legislation of the Russian Federation. In accordance with TGC-1 Article of Association management bodies are: General Shareholders Meeting; The Board of Directors; The Management Board; The General Director. The following Committees of the Board of Directors proceeded with activities aimed at ensuring efficient operation of TGC-1 Board of Directors: Audit Committee; Business Strategy and Investments Committee; Human Resources and Remuneration Committee; Reliability Committee. Members of the Board of Directors approved by the Extraordinary General Shareholders Meeting on December 21, 2017 Name Position* Chairman of the Board of Directors Kirill Seleznev Member of the Management Board, Head of Department at PJSC Gazprom, General Director of Gazprom Mezhregiongaz LLC Deputy Chairman of the Board of Directors Head of Directorate of PJSC Gazprom, General Director of Gazprom Energoholding LLC, Denis Fedorov General Director of PJSC Centerenergoholding Members of the Board of Directors Parviz Abdushukurov Alexey Barvinok Yuri Eroshin Kari Kautinen Irina Korobkina Andrey Khorev Alexander Chuvaev Igor Shatalov Pavel Shatsky Vice President, Deputy General Director for Operations Chief Engineer of PJSC Fortum General Director of TGC-1 Vice President for Production and Trading Portfolio at PJSC Fortum Member of the Management Board, Senior Vice President for Mergers and Acquisitions, and for Development of Solar and Wind Generation at Fortum Deputy Head of Directorate at PJSC Gazprom Chairman of the Board of Directors of CJSC Monolit CapitalStroy Member of Fortum Management, Executive Vice President of Fortum Corporation, President of Fortum Russia, General Director of PJSC Fortum First Deputy Head of Department at PJSC Gazprom First Deputy General Director of Gazprom Energoholding LLC * Positions are indicated at the time of election. 19

20 The Management Board is a corporate executive body of TGC-1 and realises the current operations management of the Company within the competence defined by Article 27 of the TGC-1 Articles of Association. TGC-1 General Shareholders Meeting approved the Provisions on the TGC-1 Management Board on June 22, 2015 (Minutes No. 1 as of June 23, 2015). The General Director is the sole Company s executive body and is entitled to resolve issues of current operations in accordance with Article 26 of the TGC-1 Articles of Association. The General Director is also the Chairman of the TGC-1 Management Board. The Audit Commission: Activities of TGC-1 Audit Commission are regulated by the Provision on the Audit Commission approved by the Annual General Shareholders Meeting on June 19, 2017 (Minutes No. 2 of June 20, 2017). Members of the Management Board Composition as of December 31, 2017 Name Position Chairman of the Management Board Alexey Barvinok General Director TGC-1 Members of the Management Board Vadim Vederchik Alexey Vorobyev Igor Kartsev Igor Kurbatov Eduard Lisitsky Stanislav Nazarov Gennady Semenov Andrey Sokolov Raisa Stanishevskaya Michael Tuznikov Deputy General Director for Capital Construction Deputy General Director Chief Engineer Director of the Nevsky Branch Deputy General Director Director of the Karelsky Branch Deputy General Director for Corporate Protection Deputy General Director for Development Deputy General Director Director of the Kolsky Branch Deputy General Director for Sales and Marketing Deputy General Director Chief Accountant Deputy General Director for Economy and Finance Members of the Audit Commission as of December 31, 2017 Name Position Chairman of TGC-1 Audit Commission Marat Salekhov Deputy Head of Department, Head of Gazprom Directorate Audit Commission Members Anatoly Kotlyar Denis Korshnyakov Yury Linovitsky Alexander Yuzifovich Head of PJSC Gazprom Directorate Head of Financial Investments and Investor Relations Division of the Corporate Work Department at Gazprom Energoholding LLC Head of Internal Audit Department, Gazprom Energoholding LLC, Internal Audit Project, Gazprom Personal LLC Deputy Head of Treasury Directorate, Gazprom Energoholding LLC 20

21 Results 2017 IFRS FINANCIAL RESULTS Key financial indicators of TGC-1 and its subsidiaries under IFRS, RUB million (%) Revenue 78,891 87, Operating expenses* (70,290) (75,409) 7.3 Operating profit 8,601 11, EBITDA** 16,285 20, Profit before taxation 6,466 10, Profit 5,324 7, Total assets 159, , * Taking into account state subsidies, accrual/recovery of provision for impairment of fixed assets p.a. and other operating proceeds. ** EBITDA = operating profit + depreciation of fixed assets, intangible assets and investment property. Revenue structure, RUB million (%) Electricity 27,522 29, Capacity 15,186 19, Heat 33,702 35, Export 1,249 1, Other sales 1,232 1, Total revenue 78,891 87,

22 Structure of operating expenses, RUB million (%) State subsidies Operating expenses: (69,802) (76,007) 8.9 fixed costs (20,920) (22,315) 6.7 variable costs (41,198) (45,238) 9.8 depreciation of fixed assets, intangible assets and investment property (Allowance)/replenishment reserve for impairment of fixed assets over the year (7,684) (8,454) 10.0 (1,313) Other operating proceeds Total operating expenses (70,290) (75,409) 7.3 The Group consists of TGC-1 and its subsidiaries: PJSC Murmanskaya CHPP and JSC St. Petersburg Heating Grid (the Group). On results of 2017, the consolidated revenue of the Group amounted to RUB 87,395 million, which was by 10.8% more than in ,927 RUB mln On the results of 2017, the profit increased almost 1.5 times against 2016 The Group's operating expenses in 2017 increased by 7.3% against the previous year and amounted to RUB 75,409 million. Variable costs increased by 9.8%, to RUB 45,238 million mainly due to growth in fuel consumption caused by increased production. Fixed costs increased by 6.7%, to RUB 22,315 million due to rent growth. The Group's operating profit increased by 39.4%, to RUB 11,986 million. EBITDA increased by 25.5% against 2016, to RUB 20,440 million. On the results of 2017, the profit increased almost 1.5 times against 2016 and reached RUB 7,927 million. 22

23 Results 2017 RAS FINANCIAL RESULTS Key financial indicators of TGC-1 under RAS*, RUB million (%) Revenue 74,512 82, Production cost (65,058) (72,093) 10.8 Gross profit 9,454 10, Profit before taxation 4,454 8, EBITDA 14,017 18, Net profit 3,636 7, Total assets 123, , Earnings per share, RUB * RAS statements of TGC-1 do not consolidate financial performance of the subsidiaries. Revenue structure (%) RUB million share, % RUB million share, % Electricity and capacity, including 43, , electricity and capacity in the regulated sector electricity and capacity in the competitive sector 3, , , , electricity exports 1, , electricity in the retail market Heat 30, , Other products, works, services Total revenue 74, ,

24 Production cost structure for core operations (%) RUB million share, % RUB million share, % Production cost for core operations, total 64, , Fuel 27, , Purchased power 5, , Water for process needs 2, , Repairs of fixed assets 2, , Payroll and insurance payments 5, , Depreciation 7, , Heat transit 8, , Services in the wholesale and retail markets Lease , Taxes 1, , Other 3, , Profit dynamics of TGC-1, RUB million (%) Profit from sales 9, , Profit before taxation 4, , Net profit 3, , In 2017, Company's revenue was formed due to sales of heat, electricity and capacity in the wholesale and retail markets, export supplies, as well as through the sale of other products, works and services, and amounted to RUB 82,851 million, which exceeded the same indicator of 2016 by RUB 8,340 million. On the results of 2017, revenue from sales of electricity and capacity increased by 15.3% against 2016 and amounted to RUB 50,694 million compared to RUB 43,957 million in the previous year. In 2017, revenue from sales of heat increased by 4.7% against 2016 and amounted to RUB 31,598 million against RUB 30,178 million in the previous year. Increase in revenue from sales of heat was caused by an increase in the average heat tariffs by 6% against 2016, as well as the growth of heat output due to prolonged heating period. Cost of production and sales of products, works and services in 2017 amounted to RUB 72,092 million, including RUB 71,896 million from core operations and RUB 196 million from non-core operations. The main share of the production cost is the cost of electricity generation RUB 36,324 million and heat generation RUB 35,572 million. In 2017 profit from sales increased by RUB 1,305.1 million, to RUB 10,758.6 million. Profit before taxation amounted to RUB 8,798.4 million. In 2017 net profit of the Company increased by RUB 3,624.7 million against 2016 and amounted to RUB 7,261.0 million. EBITDA grew by 32.8% and reached RUB 18,616.3 million.

25 Results 2017 ABRIDGED FINANCIAL STATEMENTS OF TGC-1 FOR 2017 UNDER THE RUSSIAN ACCOUNTING STANDARDS Balance sheet as of December 31, 2017, RUB thousand Name December 31, 2016 December 31, 2017 I. FIXED ASSETS Intangible assets 12, ,597 Results of research and development 8,833 6,833 Fixed assets 79,697,289 76,469,486 Income-bearing investments into tangible assets Long-term financial investments 16,990,937 19,030,809 Deferred tax assets 83,930 80,919 Other non-current assets 1,014,752 1,447,536 Total Section I 97,807,920 97,143,180 II. CURRENT ASSETS Inventories 2,431,608 2,829,490 Value added tax on goods purchased 173, ,681 Accounts receivable 18,054,446 16,959,666 Short-term financial investments (excluding cash equivalents) 471,229 79,494 Cash and cash equivalents 3,337,023 6,815,910 Other current assets 981,048 1,418,965 Total Section II 25,448,668 28,237,206 TOTAL SECTION I AND II 123,256, ,380,386 25

26 Balance sheet as of December 31, 2017, RUB thousand Name December 31, 2016 December 31, 2017 III. EQUITY AND RESERVES Authorized capital 38,543,414 38,543,414 Own shares buy-back Revaluation of non-current assets 9,672,881 9,620,653 Additional capital (without revaluation) 23,285,600 23,285,600 Reserve capital 1,227,129 1,408,944 Retained earnings (loss) 13,955,859 19,756,245 Total Section III 86,684,883 92,614,856 IV. NON-CURRENT LIABILITIES Borrowings and bank loans 14,624,529 13,253,350 Deferred tax liabilities 4,236,358 3,510,561 Other non-current liabilities 32,703 25,008 Total Section IV 18,893,590 16,788,919 V. CURRENT LIABILITIES Borrowings and bank loans 8,612,646 7,110,530 Accounts payable 8,859,637 8,496,313 Income of future periods Estimated liabilities 205, ,768 Other current liabilities Total Section V 17,678,115 15,976,611 TOTAL SECTION III, IV, V 123,256, ,380,386 26

27 Results 2017 Statement of financial performance for 2017, RUB thousand Name Revenue 74,511,514 82,851,156 Cost of sales (65,058,001) (72,092,584) Gross profit (loss) 9,453,513 10,758,572 Commercial expenses Administrative expenses Profit (loss) from sales 9,453,513 10,758,572 Income from participation in other companies Interest receivable 353, ,226 Interest payable (1,996,544) (1,461,257) Other income 1,795,695 4,344,781 Other expenses (5,152,148) (5,140,900) Income (loss) before taxation 4,454,451 8,798,422 Income tax, including: (860,831) (2,259,917) current income tax (1,047,203) (2,261,185) income tax of previous years 186,372 1,268 including in line Income tax permanent tax liabilities (assets) 238,011 (26,756) Changes in deferred tax liabilities 4, ,797 Changes in deferred tax assets 38,147 (3,011) Other (39) (275) Net profit (loss) 3,636,295 7,261,016 REFERENCE Result of revaluation of non-current assets not included to the net profit (loss) for the reporting year Results of other transactions not included to the net profit (loss) for the reporting year Cumulative financial result for the year 3,636,295 7,261,016 Basic earnings (loss) per share, RUB Diluted earnings (loss) per share 27

28 ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS OF TGC-1 FOR 2017 UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS Consolidated statement of financial position as of December 31, 2017, RUB thousand Name December 31, 2016 December 31, 2017 ASSETS Non-current assets Property, plant and equipment 132,468, ,411,806 Investment property 191, ,424 Intangible assets 779,445 1,417,030 Investments in associates 395, ,926 Deferred income tax assets 526, ,550 Other non-current assets 1,087,518 1,019,458 Total non-current assets 135,449, ,845,194 Current assets Cash and cash equivalents 3,354,882 6,975,598 Short-term investments 4,370 10,144 Trade and other receivables 17,583,729 16,678,334 Current income tax prepayments 473,162 50,364 Inventories 2,768,011 3,117,999 Total current assets 24,184,154 26,832,439 Non-current assets held for sale 137, ,070 TOTAL ASSETS 159,770, ,787,703 28

29 Results 2017 Name December 31, 2016 December 31, 2017 EQUITY AND LIABILITIES Equity Share capital 38,543,414 38,543,414 Share premium 22,913,678 22,913,678 Merger reserve (6,086,949) (6,086,949) Other reserves (1,209,011) (1,209,011) Effect of remeasurements of post-employment benefits obligations 52,151 (71,760) Retained earnings 47,464,616 53,740,611 Equity attributable to the Company s owners 101,677, ,829,983 Non-controlling interest 8,305,973 8,629,256 TOTAL EQUITY 109,983, ,459,239 LIABILITIES Non-current liabilities Long-term borrowings 17,022,529 16,351,350 Deferred income tax liabilities 10,952,740 11,081,932 Post-employment benefits obligations 923,938 1,138,739 Other non-current liabilities 115,052 58,219 Total non-current liabilities 29,014,259 28,630,240 Current liabilities Short-term borrowings 10,129,851 8,358,294 Trade and other payables 9,433,751 7,843,745 Current income tax payable 3, ,669 Other taxes payable 1,205,530 1,599,516 Total current liabilities 20,772,823 18,698,224 TOTAL LIABILITIES 49,787,082 47,328,464 TOTAL EQUITY AND LIABILITIES 159,770, ,787,703 29

30 Consolidated statement of profit or loss and other comprehensive income for 2017, RUB thousand Name Revenue Sales of electricity 43,956,494 50,693,819 Sales of heat 33,702,402 35,275,073 Other sales 1,232,206 1,425,810 Total revenue 78,891,102 87,394,702 Government grants 269,320 71,283 Operating expenses (69,802,169) (76,007,497) Impairment loss reversed/(recognized) during the year (1,312,851) Other operating income 555, ,329 Total operating expenses (70,290,175) (75,408,885) Operating profit 8,600,927 11,985,817 Finance income 272, ,572 Finance costs (2,406,699) (1,794,864) Finance costs, net (2,134,457) (1,466,292) Profit before income tax 6,466,470 10,519,525 Income tax expense (1,142,297) (2,592,026) Profit for the year 5,324,173 7,927,499 Other comprehensive income Items that will not be reclassified to profit or loss: remeasurements of post-employment benefits obligations 80,892 (147,434) income tax on remeasurement of post-employment benefit obligations (13,962) 26,345 Other comprehensive income for the year 66,930 (121,089) Total comprehensive income for the year 5,391,103 7,806,410 Profit is attributable to: owners of the TGC-1 5,386,680 7,607,038 non controlling interests (62,507) 320,461 Profit for the year 5,324,173 7,927,499 Total comprehensive income is attributable to: owners of the TGC-1 5,450,503 7,483,127 non controlling interests (59,400) 323,283 Total comprehensive income for the year 5,391,103 7,806,410 Earnings per ordinary share for profit attributable to owners of the TGC-1, basic and diluted, RUB

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32 CONTACTS Antonina Maksimova Head of Corporate Management Department, Corporate Secretary Tel. +7 (812) Svetlana Vaschenko Head of Equity and Investor Relations Division Tel. + 7 (812) Vaschenko.SA@tgc1.ru ir@tgc1.ru Ekaterina Vareeva Head of Investor Relations Tel. + 7 (812) Vareeva.ES@tgc1.ru ir@tgc1.ru Alla Matrosova Head of the Shareholder Relations Division Tel. +7 (812) Matrosova.AV@tgc1.ru