Dear shareholders, partners and colleagues!

Summing up the results of 2012 we can say with confidence that JSC IDGC of the North-West is one of the key elements of the infrastructure of the North-West federal district of Russia and the Company's work is highly important for the daily living activities of the region ensuring its economic and social stability.

During 2012 the Board of Directors of the Company worked in three different compositions. Despite this fact, the members of the Board of Directors, who understand the importance of maintenance and strengthening of the Company's positions, made well-weighed and balanced decisions determining the development strategy and priority activity areas of the Company, always respecting shareholders' rights and legal interests.

The effectiveness of activities of the Board of Directors of JSC IDGC of the North-West directly depends on the balance of its structure. It includes shareholders of all categories, independent directors and persons representing interests of key stakeholders. All members of the Board of Directors possess considerable industrial experience, broad-mindedness, knowledge of corporate governance aspects.

During 2012 the Company's Board of Directors held 31 meetings, including 6 physical meetings. The key issues reviewed in the meetings included matters determining the Company's development strategy, priority activity areas and assurance of effective control over financial and business activities.

Increase of operational efficiency and investment attractiveness is the major component of JSC IDGC of the North-West's development, therefore, in early 2012, the Board of Directors of JSC IDGC of the North-West developed and approved the Plan of Implementation of IDGC Holding Development Strategy within JSC IDGC of the North-West till 2015 and prospectively till 2020, prepared with an active participation of representatives of minority shareholders. Under the Plan of Implementation of the Development Strategy, it is envisaged to increase the level of quality and reliability of power supply to end consumers, to keep tariff sources for investments in renovation and development of grids and to increase operational and investment efficiency.

The Board of Directors approved the Company's strategy in the area of information technologies, automation and telecommunications for the period until 2016 on the basis of the analysis of the current development level and automation of key business processes of the Company and its compliance with best international practice and standards. The Company's plan of actions for implementation of the Strategy in 2012 was also approved.

In 2012 the Board of Directors reviewed the results of collective assessment of the efficiency of activities of the Company's Board of Directors carried out by the consultant, CJSC Center of Corporate Development of the Association of Independent Directors. The proposals for optimization of the corporate governance practice made with regard to the results of assessment of the Board of Director's activities were approved and the resolution on carrying out the assessment of activities of the Company's Board of Directors on an annual basis was passed.

One of the major goals of the Board of Director's activities is the increase of investment attractiveness of the Company. The history of JSC IDGC of the North-West as a public company began in 2008. A listing procedure which the Company underwent in May 2011 and inclusion of shares in the quotation list A of the second level of CJSC MICEX Stock Exchange confirmed the Company's reliability and respect for the shareholders' rights. The crisis phenomena in the world economy which had a negative impact on the Russia's stock market influenced the prices for the Company's securities and resulted in the reduction of stock quotes. A step-by-step restoration of positive tendencies in the world's financial markets and activities of the Board of Directors and the management of JSC IDGC of the North-West, aimed at the Company's progressive motion towards modernization and increase of the efficiency of activities within the framework of the Strategy of Development of the Distribution Power Grid Complex of the RF (Russian Federation) will definitely have a positive effect on the Company's share prices and its capitalization.

In 2013 the Board of Directors will consistently follow the Strategy of Development of the Power Grid Complex of the Russian Federation the main provisions of which will be included in the Strategy for Development of JSC Russian Grids developed in accordance with Decree No. 1567 of the President of the RF V.V. Putin on Russian Grids Joint-Stock Company of November 22, 2012.

The Board of Directors and management are committed to use their best efforts to create an effective management system, to build-up and modernize assets with definitive assurance of reliability and quality of energy supply to consumers, thereby increasing the effectiveness of JSC IDGC of the North-West to the maximum level.

Chairman of the Board of Directors
JSC IDGC of the North-West

A.E. Murov