Quarterly report public Joint Stock Company rosseti issuer Code: 55385-E

3.2.3. Materials, Goods (Raw Materials) and Suppliers of the Issuer

In 2015

The issuer’s suppliers accounting for at least 10 percent of total raw materials and materials supplies

The suppliers of raw materials (materials) accounting for at least 10 percent of total raw materials and materials supplies: none

Information about changes in the prices of principal materials and goods (raw materials) by more than 10% during the reporting period concerned year-on-year

Changes in the prices of principal materials and goods (raw materials) by more than 10% during the reporting period concerned: none

Import as a percentage of supplies of materials and goods, forecast of future availability of import sources and possible alternative sources

Import supplies: none

In the 3 months of 2016

The issuer’s suppliers accounting for at least 10 percent of total raw materials and materials supplies

The suppliers of raw materials (materials) accounting for at least 10 percent of total raw materials and materials supplies: none

Information about changes in the prices of principal materials and goods (raw materials) by more than 10% during the reporting period concerned year-on-year

Changes in the prices of principal materials and goods (raw materials) by more than 10% during the reporting period concerned: none

Import as a percentage of supplies of materials and goods, forecast of future availability of import sources and possible alternative sources

Import supplies: none

3.2.4. Target Markets for the Issuer’s Products (Work, Services)

Principal markets in which the issuer operates:

The Company operates in the Russian Federation.

The current core business of the Company is corporate management of a transmission grid company and interregional and regional distribution grid companies.

The core business of the ROSSETI Group’s companies includes providing electricity distribution and transmission services. The principal markets for such services are the regions where the ROSSETI Group’s grid companies operate. Electricity distribution and transmission services are a monopolistic activity and are performed under a standard form contract.

Consumers of electricity distribution and transmission services are the persons that own by virtue of ownership or otherwise by operation of law the power receiving devices and/or power facilities duly connected to the electric grid (including indirectly), as well as power retailers and suppliers of last resort operating in the interests of their customers.

Customers can be divided into four main groups:*

1. Suppliers of last resort - 70%*

2. Electricity retailers - 19%*

3. Territorial grid organizations - 5%*

4. Direct customers - 6%*

(* The share in the total revenue from electricity distribution services provided by the ROSSETI Group’s distribution companies)

Factors which can adversely affect the sales of the issuer’s products (work, services) and possible actions of the issuer aimed at mitigating such effect:

The main factor that materially affects the provision of electricity distribution services by the ROSSETI Group’s grid companies is changes in electricity demand. The ROSSETI Group’s grid companies are not able to reduce the impact of this factor.

An equally important factor is the change in the “pool above” payment model currently used in most regions electricity distribution services. In the course of switching over to the “pool below” payment model, the price of services may decrease by an amount related to the volume of services provided by allied territorial grid organizations. Possible measures of the ROSSETI Group’s grid companies to reduce the impact of this factor are to ensure the completeness and timeliness of payments to territorial grid organizations for their electricity distribution services.

3.2.5. Information Concerning the Issuer’s Permits (Licenses) or Authorizations for Specific Work Types

The issuer does not hold any permits (licenses) that should be stated in the quarterly report.

3.2.6. Information Concerning Activities of Certain Categories of Issuers

The issuer is not an equity investment fund, insurance undertaking, credit institution, or mortgage agent.

3.2.7. Additional Requirements Applicable to Issuers Whose Core Activities Are Mining Operations

The issuer’s core activities are not mining operations.

3.2.8. Additional Requirements Applicable to Issuers Whose Core Activities Are Telecommunications Services

The issuer’s core activities are not telecommunications services

3.3. Plans for Future Activities of the Issuer

Plans for future activities of PJSC ROSSETI are contained in the Strategy for Development of the Electric Grid Sector of the Russian Federation approved by Ordinance of the Government of the Russian Federation No. 511-r of April 3, 2013, (hereinafter, the “Strategy for Development of the Electric Grid Sector”) and specified in the Company’s Long-Term Development Program approved by the Government Commission on the Development of the Electric Power Industry and by the Board of Directors of the Company on December 19, 2014 (Minutes of the Meeting of the Board of Directors No. 174 of December 19, 2014).