ANNUAL REPORT

OF PUBLIC JOINT-STOCK COMPANY SYNERGY

FOR 2016

Preliminarily approved by the Board of Directors on May 18, 2017

Minutes No.155 dated May 19, 2017
1. COMPANY OVERVIEW

History
The history of Synergy, PJSC started in 1999, when Alexander Mechetin together with the other
shareholders founded Joint Stock Company Synergy-Vostok. At that time development of food
production in the Far East of Russia was the core business of Synergy-Vostok, JSC. Synergy, PJSC
(hereinafter referred to as "the Company") was established in December 2004 to optimize the corporate
structure of the existing group of companies.
In 1999 the Company acquired a majority interest in one of the largest meat products manufacturers in
Primorye, Nakhodkinsky Meat Processing Plant, OJSC.
In 2000, Ussuriysky Milk Plant, JSC became a part of the Group. Today, this plant is one of the leaders
on the dairy market in Primorye.
Since 2003, an agro-industrial complex in the Saratov region has been operating under the control of the
Group. It was created on the basis of Mikhailovskaya Poultry Farm JSC, the largest poultry enterprise in
the Saratov region, and today, being represented by two companies, it is one of the largest poultry
enterprises in the Volga region. Apart from Mikhailovskaya Poultry Farm JSC, the complex includes PPZ
Tsarevshchinsky-2 JSC (brood broiler egg production).
Since 2002, the Group has been actively developing its spirits branch: a series of mergers and take-overs
have been done, that ensured rapid increase of the Group's share on the federal market of spirits and
brought it to the top three companies.
In 2002, the Group acquired the majority interest of Open Joint Stock Company Ussuriysky Balsam, the
spirits market leader of Primorsky Territory.
In 2003, it acquired the majority interest of Joint Stock Company URAL-ALKO Perm Distillery, the
largest producer in the Urals region.
In 2004, Joint Stock Company Arkhangelsk Distillery (ALVIZ JSC), the absolute market leader in the
Arkhangelsk region, joined the Group.
In 2005, the Group's business line Spirits production was reinforced with the acquisition of the majority
interest of Joint Stock Company Khabarovsky Distillery, which enabled the Group to increase its market
share of spirits in the Far Eastern Federal District.
Since 2005, spirits production has been a strategic priority for the Group's development. Relying on its
dominant positions in the local markets in the regions where production facilities are located, the Group
launched a number of federal brands and ensured their wider distribution.
In 2006, leading manufacturers of Nizhny Novgorod and Kemerovo regions, ROOM CJSC and Mariinsky
Distillery JSC, entered the Group. In April 2006, the Group continued to develop its dairy branch and
acquired the majority interest of Joint Stock Company DAKGOMZ (Komsomolsk-on-Amur). The
amalgamation of two leading regional dairy producers, DAKGOMZ JSC and Ussuriysky Milk Plant JSC,
enabled the Group to become one of the largest market players in this segment in the Far East.
In 2007, a deal was made on acquisition of TRADITIONS OF QUALITY, the factory near Moscow, and
the Belenkaya vodka brand, one of the leaders in the middle-priced segment. Moreover, this year Beluga,
the flagship brand of the Group was acquired, which became an absolute leader in the super-premium
segment very soon.
In March 2008, the Group completed a deal on acquisition of Myagkov, one of the most successful brands
in the lower premium segment.
Information on the current main affiliated companies of the Group:

Holding companies
Public Joint-Stock Company Synergy
Joint-Stock Company Penta Agrogroup
Joint-Stock Company Synergy Capital
Joint-Stock Company Synergy-Vostok

Distilleries
Joint-Stock Company Arkhangelsk Distillery
Joint-Stock Company Khabarovsky Distillery
Joint-Stock Company Mariinsky Distillery
Joint-Stock Company URALALKO Perm Distillery
Open Joint-Stock Company Ussuriysky Balsam
Limited Liability Company Traditions of Quality

Trading houses
Closed Joint-Stock Company Synergy Market Arkhangelsk
Limited Liability Company Sinergy Market Vostok
Limited Liability Company Sinergy Market DV
Limited Liability Company Sinergy Import
Limited Liability Company Sinergy Market Khabarovsk
Limited Liability Company Sinergy Market Nizhny Novgorod
Limited Liability Company Sinergy Market Vladivostok
Limited Liability Company Sinergy Market Perm
Limited Liability Company Sinergy Market Trading House
BELUGA VODKA INTERNATIONAL LIMITED

Food manufacturers
Joint-Stock Company DAKGOMZ
Joint-Stock Company Mikhailovskaya Poultry
Joint-Stock Company UssuriyskyMILK PLANT
Open Joint-Stock Company Nakhodkinsky Meat Processing Plant
Joint-Stock Company PPZ Tsarevshchinsky-2
Limited Liability Company RodStor Trading House

COMPANY POSITION IN THE INDUSTRY

Synergy is the largest company in the Russian spirit market. Our core business is the production and
distribution of strong alcoholic beverages of the highest quality. Nowadays Synergy unites more than
9,000 employees and presents its production in over 75 countries around the world.
A well-balanced portfolio of trademarks ensures the presence of Company’s production in all key
segments of strong alcoholic beverages. Synergy key vodka brands today are the following: BELUGA,
Veda, Myagkov, Belenkaya, and Gosudarev Zakaz. The Company’s brandy line includes the following
trademarks: Zolotoy Rezerv, Kamenniy Lev, Staraya Gvardia as well as a broad brand line of VOGUE
sparkling wines. The company is the leader in the production of bitter and sweet liqueurs of Doctor
August line.
Synergy is an exclusive representative and distributor in premium producers of the world-famous trade
marks: the multi-brand company William Grant & Sons, Camus cognacs, the iconic bitter (herbal liqueur)
Riga Balsam, Torres brandy, Amarula cream liqueur, Barcelo rum, wine companies such as famous Cono
Sur, Maset, Pasqua. In addition, Synergy is a partner of global leader Bacardi in bottling and packaging of
William Lawson’s whiskey.
Synergy has one of the most powerful and effective production complexes in Russia: 6 distilleries that are
situated throughout the Russian Federation. Some of them have more than a century-old history.
Nowadays all the distilleries of Synergy use the most modern equipment with a total output of over 15
million decalitres. The Company also manages its own largest distributive system in Russia with the staff
of around 3,000 highly-skilled employees.
The additional business of Synergy is foodstuff manufacturing that is carried out by the subsidiary
company PentAgro, JSC (www.penta-agro.ru).
The Company has long-term international Issuer Default Rating (IDR) at level 'B+' and national long-
term rating at level 'А-(rus)' assigned by Fitch Ratings.
Synergy considers itself as a responsible participant of the national spirits market and implements the
proactive policy of social responsibility. Regarding these directions, financial and organizational support
of cultural and social projects, charity assistance are the essential part of the Company business. Synergy
cooperates with professional industrial sector and government institutions (the Union of Spirits
Manufacturers, Federal Service for Spirits Market Regulation). Besides, Synergy acts as a responsible
taxpayer – at the year-end of 2016 the total payments of Synergy, PJSC and its affiliated companies to the
budgets of different levels amounted to over 28 billion rubles.

BRANDS
Synergy’s portfolio of strategic brands comprises a number of vodka, brandy and whisky brands. These
trademarks have long been successful and constitute good shares in fast growing spirits segments. Federal
brands are sold not only in the Russian Federation, but also abroad. Each brand is highly popular with
consumers and targeted at a certain segment, ranging from the super-premium to the middle-priced,
which ensures higher profitability of the company’s national portfolio as a whole.
The company pays a lot of attention to the basic marketing function, branding, innovations, and restyling,
which boost customers’ loyalty and brings new ones. Each of the Synergy brands has its own clear-cut
features and character as well as unique positioning.

Beluga vodka is the Company’s flagship product, brand No.1 in the super-premium and ultra-premium
segments in Russia. The unique combination of traditions and innovations together with the usage of the
best ingredients allowed Beluga vodka to have pride of place in the list of symbols of Russia. Advance
equipment of Mariinsky Distillery, artesian water wells, the possibility to use expensive malt spirit, and
years-long experience of experts are the basic principles of stability and high quality of the product.
In 2015, the company expanded its Beluga line (Beluga Noble, Beluga Transatlantic, Beluga Allure,
Beluga Gold Line), having introduced Beluga Celebration vodka and a series of Beluga Hunting bitters
on the market: Beluga Hunting Herbal and Beluga Hunting Berry. In 2016, Beluga's cooperation with
Lalique, the world-famous crystal and jewellery trading company, released a series of Beluga Epicure by
Lalique decanters limited to 1000 copies.

Myagkov vodka is one of the key players in the Russian vodka market in the sub-premium segment. The
main competitive advantage of the brand is its exceptional mild flavour. This unique peculiarity of the
product is due to combination of softened water, dynamic filtration, and natural ingredients during the
production process.
The Myagkov brand team is constantly searching for and developing non-standard marketing solutions:
the assortment of the Myagkov brand is regularly accomplished with new products of the most popular
market trends, such as liqueurs. 40%-strong Myagkov Cranberry, Myagkov Lemon, Myagkov Chili &
Honey, as well as 20%-strong Myagkov liqueurs have all taken their place in the brand line. The
Company launched a unique series of Myagkov Playboy in collaboration with the world famous
magazine, which became an instant best-seller.
Belenkaya vodka is an absolute leader in the vodka market of Russia as of 2016 according to the Nielsen
study: it shares 4.3% of the vodka market in volume terms which exceeds the closest competitor's figures
by 27%. For the third year in a row, Belenkaya vodka has been awarded annual national prize Product of
the Year in the vodka category keeping to enhance its leading positions and increasing the breakaway
from principal competitors. Moreover, the brand is actively developing in export markets and always in
the world's best-selling vodka brands as rated by The Millionaires’ Club Drinks International. This results
from the stable high quality of the product above the state (GOST) standards.

Snezhny Crab (Snow crab) vodka is the first vodka in the world featuring crab flavour, a speciality of
2016. A unique composition of Snezhny Crab vodka featuring crab shell extract makes it an exclusive
product both in the Company's portfolio and in the entire vodka pool. The product is produced by
Ussuriysky Balsam distillery in the main habitat of snow crab, in the Russian Far East.

Georgievskaya vodka is the one that embodies an idea of classic national values, the cause to be proud
and awards for good achievement, a confident player in the Standard segment.
Russian Ice vodka.
It is among the most famous brands of the Company with more than 10-year history. Over a number of
years in the market Russian Ice vodka gained around it a significant pool of customers who stay loyal to
the brand and prefer vodka in its classic representation.

Gosudarev Zakaz (Sovereign’s order) vodka is a leader in the economy segment and Russian vodka
market in general. At the year-end of 2016, according to Nielsen rating agency, Gosudarev Zakaz vodka
became one of the top 5 brands in the vodka market having increased its market share to 3% and
continued a dynamic development. In order to consolidate the brand's positions, to reflect its leading
positions and to draw the consumers' attention to the classical canons of vodka production, it is expected
to rebrand Gosudarev Zakaz as TSAR in 2017.

Arkhangelskaya North Tempered Vodka. A successful speciality that in only two years of its presence
in the market made it to become popular among traditionalist consumers who treat the high quality of
production and history of vodka with the highest respect. Focusing primarily on numerous sustainable
advantages of the product and its craft component Arkhangelskaya North Tempered vodka shows high
sales in an intense competitive environment. In 2017, Arkhangelskaya North Tempered vodka will
become one of the Company's priority brands for a quicker development in the market.

Brandy Category Numerous efforts by our Company towards the brandy category development in 2016
turned a significant success: at the year-end Synergy became the second manufacturer in Russia having
increased its market share to 9.5% The Company's flagship brand - Zolotoy Rezerv - became a leader in
the mid-price segment being one of the 3 top brands in the market, according to Nielsen agency. Staraya
Gvardia and Kamenniy Lev brands launched in 2014 also showed a development sharing 2.0% in 2016.
The Company's own trademark of Georgian brandy Sokrovishche Tiflisa seamlessly complemented the
brand portfolio. An important event in terms of achievement of the Company's leading position in the
brandy market was the return of legendary premium brand Bastion. This will allow the Company to open
a new segment of premium national brandies with the capacity of 4 mln. dL. In 2017, the Company will
also develop its range of products towards the growing economy segment.

Captain’s Collection Line. Expanding and developing the Captain’s Collection line is a prompt reaction
of Synergy to the growing demand for affordable beverages of the Brown Spirits category (rum, whiskey,
brandy). In 2016, in addition to Captain's Rum already known to the consumer, the line was
supplemented with Captain's Whiskey and Captain's Brandy. Captain's Gin seamlessly complements the
line.

Doctor August
Doctor August brand has been already 3 years in the market, and in 2016 remained brand No. 1 sharing
9% in the market of liqueurs, the brand sales grew by 18%. The goal for the nearest 2-3 years is to
become the first brand of million sales in the Russian market of distilled beverages.
The brand's success is due to several factors: firstly, this is the widest range of flavours that includes 28
articles in Russia; secondly, beverages are made of natural berries and herbs which ensures high quality
of all of them; thirdly, the perfect formulation and production traditions of centennial ALVIZ and
Ussuriysky Balsam distilleries allow for maintaining the highest standards of production.
Restyling of 2016 with a focus on the natural origin of product ingredients will be supported in 2017 by
an aggressive marketing campaign to expand the product presence in the market.
BELUGA
Beluga vodka is a unique product, it is the leader in the segment of super and ultra-premium kinds of
vodka in Russia in terms of sales. It is the first truly premium, global Russian brand. Beluga is
manufactured at Mariinsky Distillery. The base of the product consists of high quality ingredients,
painstaking work of masters, their focused attention to every detail and continuous production control.
Beluga vodka is actively promoted in export markets in Europe, Asia, the US, Latin America and the
Middle East; and it is sold in more than 75 countries and 220 airports worldwide.
Today the assortment of Beluga consists of the following products:
Beluga Noble is the flagship product in the Beluga brand family. This designer drink obtained the status
of 'the classics.' Beluga Noble has a noble flavourful taste because it comprises some unique natural
ingredients. Malt spirit and the purest artesian water are traditional ingredients and they are of primary
importance in the Beluga vodka production. As soon as the beverage is ready, the thirty-day 'rest' period
starts. This kind of technology has been proven for centuries. It eliminates strong spirituous smell and
provides Beluga Noble with a flavourful taste and soft aroma.
Beluga Celebration is a special series dedicated to the anniversary of Mariinsky distillery, founded in
1900. This is where Beluga, a sample of Russian vodka craftsmanship, is produced. Production
technology of Beluga Celebration bottle is complicated and labour-intensive: It includes double platinum
vacuum metallization, coating of bottles with golden lacquer and silk-screen decoration. This anniversary
product is our homage to the plant with a centuries history.
Beluga Transatlantic Racing is a limited series of Beluga vodka, created in honour of our sailing team
that took part and won number of brilliant victories at the most prestigious sailing world cups. The unique
formula, which is the basis for the Beluga Transatlantic Racing production, requires the addition of the
barley malt traditional for vodka Beluga, and it is purified by running through a specific cotton filter,
which makes the taste of the vodka soft, clean and elegant.
Beluga Allure is the collection series of Beluga vodka, created in honour of our horse polo team that
made a series of victories in major championships of world importance. Beluga Allure is the
personification of aristocracy and nobility inherent in this royal sport bordering on art.
Beluga Gold Line is a limited series for those who truly appreciate luxury. Beluga Gold Line is available
in a limited edition with own serial number on each bottle. Harmonious, solemnly noble flavour of this
vodka is the result of long creative search of the specialists.
Beluga Hunting are noble Beluga Hunting Herbal bitters and Beluga Hunting Berry bitters, created at
Mariinsky distillery by masters of blending, carefully keeping the secrets of Beluga vodka. The unique
combination of herbs and berries, cleanest water from artesian wells and the plant's traditions with a
centuries history have embodied in the original and multi-layered taste of Beluga Hunting. Each bottle of
the bitter traditionally has an important element: a small Beluga fish manually attached to the bottle - a
symbol and distinctive sign of the Beluga brand.
Beluga Epicure by Lalique is a result of cooperation between Beluga vodka and legendary French
manufacturer of crystal ware and jewellery Lalique. Each of 1000 decanters are hand-made in Lalique
shops located in the North-East of France, in Alsace, and given a unique number. Once released, Lalique
decanters are sent to Russia, to the legendary Mariinsky Distillery. There unique vessels are filled with
vodka specifically developed based on an old formulation. Each decanter Beluga Epicure by Lalique is a
real piece of art devoted by the two brands to their fans, true devotees and collectors.
MYAGKOV
Myagkov vodka is one of the key players in the Russian vodka market in the sub-premium segment.
Today the assortment of the Myagkov brand comprises 2 kinds of vodka: Myagkov and Myagkov Silver;
3 kinds of bitter liqueur: Myagkov Cranberry, Myagkov Lemon and Myagkov Chili & Honey; 1 sweet
liqueur Myagkov Ashberry with Brandy and liqueur Myagkov Cappuccino.
The current design of the brand - the shape of the bottle, the label and cap design - is a vivid example of
innovative marketing. Thus, the wave-like embossing made the bottle more ergonomic. The label is there
now to cater to consumers’ needs and prevents counterfeiting: materials used in its production are limited
and available to selected market leaders only.
In the future the brand is going to renew the assortment to offer more unusual and creatively different
products. In addition, in 2017, new bottles will be displayed on shelves to stronger emphasize the brand's
style even. Restyled bottles will feature an original neck label repeating elements of the main design, and
a new Kendo cap. The composition and the quality remained at the same high level.

The product looks actual, technological and innovative, stands out on the shelf and is highly competitive
with major international market players.

VEDA
Veda vodka is one of the top 10 players in the premium segment. Veda vodka is a contemporary product
that combines both traditional technologies and the unique 'double ice filtering' method distinguishing
Veda from the other brands. The production of this premium vodka was launched in 2004. Thanks to the
dynamic strategy of promotion that lasted for three years, the brand became the second most popular in
the premium segment.
Customers consider the Veda brand to be an innovation product, the creation of the latter is only possible
through the use of by far the most updated technologies.
Today Veda vodka is manufactured at one of the most up-to-date and hi-tech enterprises in Russia – at
Mariinsky Distillery located in Siberia and being a part of Synergy.

Russian Ice
Russian Ice is one of the Synergy Company’s oldest brands, which has taken its
rightful place in the Company’s assortment for 10 years. After the revolutionary restyling, the brand
package design became fully correspondent to the criteria of the contemporary market and it made the
trademark more popular as well as increased the consumer audience. The present strong vodka taste of
Russian Ice is achieved thanks to use of high quality spirit Lux class and a special technology of multiple
filtration that includes charcoal, gold and silver filtration.

Russian Ice vodka has a significant export potential and annually expands its presence geography. In
2016, the customer base included distributors from 20 countries.

Belenkaya
Belenkaya vodka is Russia's brand No. 1 in terms of sales volume that shares 4.3% in the total sales in the
vodka market. In its Standard segment Belenkaya vodka have been acknowledged to be the leader in
volume, monetary and quantitative terms sharing over 10% of sales in the segment. In confirmation of
this, it was awarded numerous annual national prizes Product of the Year in the vodka category.
Moreover, every year the brand consistently ranks in the list of best-selling vodka brands in the world
according to studies of “Drinks International”, the internationally recognized magazine about spirits.
The success of the brand is achieved thanks to steadily high quality of the product: quality performance of
Belenkaya is several times higher than GOST requirements. Strong manufacturing traditions and rigid
quality requirements make sure that every drop of vodka runs through 13 meters of the charcoal filter,
which makes the product especially popular with the connoisseurs.
The development of the brand product line is achieved particularly through limited series. The New-Year
limited series based on Belenkaya Lux Vodka that every year is released in a new New-Year design, as
well as a limited series of Belenkaya Lux Vodka with unique camouflaged design and horses’ images
have taken their place in the market of limited edition products.
Snezhny Crab (Snow Crab)
Snezhny Crab vodka is the first vodka with a crab flavour. We created Snezhny Crab vodka for the most
experienced consumers who are always open to new impressions and experiments.
The product is produced by Ussuriysky Balsam distillery located in the main habitat of snow crab, in the
Russian Far East. Its exclusive taste owes to a unique ingredient, crab shell extract, a product that results
from processing of crab shells a certain method. The product is purchased from the exclusive supplier of
crab extract, then crab shell extract is blended with water-alcohol solution, following which the solution is
infused and saturated with a pleasant crab flavour and odour.
Pleasant odour and after-taste make Snezhny Crab suitable for use as an aperitif in combination with main
courses, and as an ingredient for preparation of crab dishes.

Georgievskaya
Well-recognized images in the product design and carefully specified complements make this product
really a valuable and understandable to the consumer. Five levels of quality and special gold filtration
make it possible to turn a simple formulation and flavours familiar to the consumer into a classic premium
product.

Gosudarev Zakaz (Sovereign’s Order)

A leader in the national vodka market: at the end of 2016, this trademark became one of the top 5
trademarks in the vodka market sharing 3.1% (vs. 2.5% in 2015). Over 6 years of its continuous growth
the volume of the trademark sales increased by 2.2 times as compared to 2011. According to The
Millionaires Club, Gosudarev Zakaz is always on the short list of the most rapidly growing vodka
trademarks in the world.

Gosudarev Zakaz is a classic brand in the vodka market focused in its promotion among consumers on the
high quality, traditional technology and experience of enterprises which history trace their origin to the
end of the 19th century when the production standards were defined under the patronage of the imperial
family. In order to make this communication more prominent, in early 2017 Gosudarev Zakaz will be
renamed as TSAR, a name, shorter and clearer to the consumer.

Arkhangelskaya North Tempered

Arkhangelskaya North Tempered vodka is a real craft vodka focused at sustainable advantages, unique
origin and high quality of the product. Main advantages of the products: extra ageing in centennial
isolated tanks, use of unique northern ingredients and smooth northern water that allow for achieving an
amazing balance and softness. The brand's image is consolidated by the production site: Arkhangelskaya
vodka is produced at ALVIZ distillery established in 1898 by the personal order of Minister of Finance of
the Russian Empire S.Yu. Witte.

At the end of 2016, Arkhangelskaya North Tempered line was supplemented by unique flavour offers –
Arkhangelskaya Garlic and Pepper and Arkhangelskaya Juniper Berry.

The main sales points of Arkhangelskaya North Tempered vodka are hypermarkets, alcoholic beverages
stores and wine houses – stores featuring the widest possible range. In 2016, Arkhangelskaya vodka was
listed in the principal federal networks of a big format: Metro, Auchan, Perekrestok, where it is very
popular among the most demanding consumers. In 2017, the brand's presence will be expanded by the
HoReCа sector establishments to attract progressive consumers.
Kamenniy Lev (Stone Lion)
Kamenniy Lev brandy is Synergy's brand of the subpremium price segment of Russian brandies.
Kamenniy Lev was created on the model of the best European samples and stands out among its
competitors in the range of Russian brandy. The main advantage of the Kamenniy Lev brand is the
production of the latter mainly from French cognac materials. Status strict design of the bottle is made in
the premium frosted dark-green colour scheme that makes the product more attractive. The taste of
Kamenniy Lev is characterized by fruity hints with subtle vanilla and chocolate flavours.

Staraya Gvardia (Old Guard)

A brandy of mid-price segment is called Staraya Gvardia (Old Guard). This product naturally
complemented the Company’s brandy range. The original taste obtained through French cognac
materials, a bright design of the product that personifies world military history, all these arouse
considerable interest of consumers in Staraya Gvardia brandy.
Along with flagship trademark Zolotoy Rezerv, Staraya Gvardia brandy ensures Synergy's leadership in
this price segment. The highest growth in 2016 was observed in national discount chains. At present, the
brand has a stable position in the market and a high development potential.

Zolotoy Rezerv (Gold Reserve)

The Zolotoy Rezerv (Gold Reserve) brandy is the result of the unique combination of centuries long
traditions and modern technologies. French cognac materials of 5 years ageing give Zolotoy Rezerv a
deep harmonic taste and a pleasant mature aroma.
Zolotoy Rezerv is a leader in the Russian brandy market and one of the top 3 trademarks in the market
according to Nielsen agency. In 2016, sales grew by 25% with the brand share reaching 6.0% in 2016
versus 5.0% as of 2015.

Zolotoy Rezerv success owes to its total distribution as the product is presented both in all key nation-
wide chains and in traditional retail stores. In 2017 it is expected to restyle the package and make the
premium image of the brand sharper in the consumer's mind.

Doctor August
Doctor August is a collection of liqueurs prepared with respect for traditions and with use of the latest
technologies. Rich flora of Russia is fully reflected in its great flavour. Berries and fruits for Doctor
August liqueurs are picked on the days of their most generous blooming.

Exquisite flavour and aroma of Doctor August liqueurs are guaranteed by careful handling of ingredients,
rigorous selection, high-quality alcohol, and specially prepared water.

The brand line includes 4 types of products that meet the most demanding tastes of the end consumer:
sweet liqueurs, cognac, bitter and low alcohol liqueurs. Thus, the consumer can make a unique choice
from 28 flavours which is the main competitive advantage of the product.

Notwithstanding the uneasy economic environment in Russia, we are proud of having made it to maintain
the beverage quality at a traditional high level while keeping the prices of 2015. This is due to restyling of
products where innovation packaging solutions were used to allow for optimizing the cost of
complements. Doctor August now looks more modern and the label has a seal to guarantee that only
natural ingredients were used in the formulation.

This approach enabled a significant growth of the product sales and there are new flavours expected to be
introduced in the next year to supplement the range in the key markets.
Sales of the category of liqueurs noticeably increased in Russia while the main volume is traditionally
concentrated in the economy and mid price segment where Doctor August has an attractive offer in terms
of price with the high quality of products maintained.
Trinity
Synergy group pays careful attention to the behaviour of categories in the strong alcohol market, and,
following the trend towards the growth of sales in the spiced rum and flavoured whiskey categories,
decided to launch the first product in Russia in spirit of these categories – Trinity.

Trinity – is a beverage oriented to whiskey devotees who look for new dimensions of the favourite
beverage. Matured Scotch whiskey distillate, natural honey and cinnamon extract contribute to the unique
taste and deep spicy aroma.

The beverage secret is in 3 main ingredients: whiskey distillate gives the beverage its deep specific
aroma; sweetness, aromatic power and softness of the beverage owes to white honey, and picked
cinnamon makes the taste fiery, spicy and slightly stingy.

The bright controversial design of the product, unique bottle made of green glass that resembles whiskey
barrels (the first in the Company's own portfolio) and the developed formulation will make the product
noticeable in retail and conquering consumers' preferences.

Сaptain’s Сollection
Captain’s Collection line to the fullest extent possible satisfies growing demands of consumers for
affordable alcoholic beverages of the Brown Spirit’s category. Over 2016 the Captain’s brand sales grew
by 2.3 times. The brand's success is due both to development of sales and distribution of the flagship
position, Captain's Rum, and to specialities in the whiskey and brandy segment. At the end of 2016, the
distribution covered 50,000 sales points including big chains. Specialities also started successfully sharing
19% in the total Captain's range.

The further successful development of Captain’s Collection is based on an affordable offer to consumers
and high quality of products supported by our enterprises' long term experience in production of liqueurs
and spirits as well as by a high competence of our Company in selection and supply of imported cognac
and whiskey spirits.

Ussuriysky Balsam (Ussuri Herbal Liqueur)

Ussuriysky Balsam, Ussuriysky Liqueur and Ussuriysky Koren (Ussuri root) are produced using the most
advanced technologies, preserving the natural taste of taiga herbs. Strong tonic effect is achieved thanks
to accurate following of the manufacturing procedure stated in the secret recipe.
In the USSR, Ussuriysky Balsam had long remained a product in short supply, available only to
employees of 'closed' enterprises and the party elite. Today, the product has overcome all the social and
geographical boundaries. This legendary beverage is now available to every connoisseur of eco-products.
2. ADDRESS BY CHAIRMAN OF THE MANAGEMENT BOARD AND ADDRESS BY
CHAIRMAN OF THE BOARD OF DIRECTORS

Dear shareholders, partners and customers!

In 2016, the Company was strengthening its positions in the market, building up its leadership through
organic growth and diversification of business, simultaneously increasing its operational efficiency. All
these, along with the positive trends formed in the Russian alcohol market, allowed Synergy to
demonstrate significant growth of its key financial and operational indices.
The Company increased its net revenue by 17%, the alcohol segment revenue by 23% and gross profit by
15%, against a 18% increase in shipments in volume terms. One of the major factors that influenced the
growth of performance of both our Company and the country’s whole legal alcohol market was
significant reduction of illegal manufactures’ share. It was mainly due to the state’s active work for
suppressing such activities. Moreover, we note gradual recovery of consumers’ purchasing power that
also positively influenced the Company’s financial results. Due to the measures aimed at increasing
business performance, namely: reduction in operating expenses, mainly administrative costs; innovative
restyling of products with a focus on import substitution of components; optimization of the production
platform; in 2016, Synergy created a strong basis to increase its profitability performance profile.
Currently, Synergy is taking the leading position in the alcohol market, possessing a diversified portfolio
consisting of leading brands, great and unique distribution platform, while being the No. 1 independent
importer of premium spirits. It is worth pointing out that all these achievements would have been
impossible without a professional team of talented and success-oriented employees.
During the reporting period, the Company, having followed its diversification strategy, continued active
brand marketing development. A number of new brands were launched, including the innovation brands:
Trinity liqueur and Snezhny Crab vodka. Other novelty products include Arkhangelskaya North
Tempered vodka. The Company continued developing its flagship super-premium Beluga brand. Here,
we increased our presence due to the unique series Beluga Epicure by Lalique.
In general, the growth of Beluga vodka sales at the year end reached 31% while export shipments of the
brand increased by 36%.
In 2016, the Company also developed distribution of imported products from partner companies. At year-
end, the Company’s imports showed a 44% increase (665 thousand dL).
We have signed exclusive contracts with new partners represented by the companies Gallo Vineyards Inc.
GWS, Domaine Barons de Rothschild. Thanks to that, the Company has significantly widened the range
of imported up-scale wines represented on the territory of Russia. One should also make note of the
contract with the global leader Bacardi for bottling WILLIAM LAWSON’S whisky using Synergy’s
capacities; this is a unique contract in the domestic alcohol market.
Synergy continues its dynamic growth by increasing its overall business efficiency, operating with
confidence within most of the high revenue categories, winning new high positions in these categories,
which has a positive impact on the profitability of its business and serves as direct evidence of its
stability.

Alexander Mechetin, Chairman of the Management Board of Synergy PJSC

Dear shareholders,

Due to its proactive business strategy, Synergy, PJSC continues to be the systemically-important
company, the largest private Russian company for the production and distribution of alcohol beverages,
being to a certain extent the consolidator of the alcohol industry. The Company contributes to the
development of civilized Russian spirits market at the operational and financial level, as well as through
its legislative initiatives.
The year of 2016 has presented new tasks and objectives for the industry, and Synergy in particular.
Facing the challenges, by possibly diversifying our activities, we continued our way forward reaching
new horizons.
Using its market advantages, Synergy has retained the market leader during the whole 2016, strengthened
its presence not only in domestic but also external markets, launched new products, developed existing
brands, and widened products import portfolio. This was ensured by innovative approaches in solving the
tasks, constant monitoring of customers' preferences and focus on the diversification of business.
Moreover, the Company has strictly followed its basic operation principles: effective cost control, higher
labour productivity, operational optimization of business processes. As before, Synergy's results could not
have been achieved without the unified team of managers, which has guided the company’s activities for
many years now, have unique experience, knowledge and skills for successful business and development
of the Company in accordance with international corporate management principles.
All Synergy employees have had no less contribution to the company's success. On behalf of the Board of
Directors I would like to thank each member of our big team for the hard work, loyalty, and devotion. I
would also like to express my gratitude to all the investors and partners who believed in the Company and
supported it.

Sergey Molchanov, Chairman of the Board of Directors of Synergy PJSC

3. KEY EVENTS 2016

New Beluga products

At the end of 2015 Beluga brand introduced a product in its new category of bitters - Beluga Hunting
series. Like Beluga vodka, the super-premium bitters Beluga Hunting Herbal and Beluga Hunting Berry
are produced at Mariinsky distillery. The bitters are made of dozens of different herbs and berries,
artesian water, and special malt spirit. Launching a new product is due to the observed potential for bitters
in Russia, the desire to attract new customers and maintain the loyalty of the current brand lovers.
In 2016, having won the Russian consumers' recognition, Beluga Hunting successfully started in the duty
free channel and in the export markets (CIS countries). In the short term, Beluga Hunting bitters will be
available in other regions where Beluga vodka has already proven itself to be a successful super premium
Russian product.
Also in 2016, Russian consumers were presented unique collectors' series Beluga Epicure by Lalique
created in cooperation with legendary French crystal glass trading company Lalique. The name chosen for
the limited series of vodka, Epicure, underlines the value and beauty of an elusive moment. An elegant
vessel is decorated with an image of a mysterious naked woman model surrounded by wheat heads, the
symbol of yield and fertility, while there is unique vodka inside recreated by craftsmen based on an old
formulation retrieved from Mariinsky distillery archives. The cooperation with the legendary French
producer is the first experience of an international collaboration for Beluga intended to consolidate the
super premium brand's image both in Russia and abroad.

Unique Myagkov Playboy Project

The year 2016 saw a project of the Myagkov brand's cooperation with PLAYBOY magazine
unprecedented in the Russian market for Playboy.
We chose 10 best covers of the iconic magazine from different countries since 1960, and remade them
with Russian models. These remakes of legendary covers formed the basis of the unique design of the
limited series of vodka MYAGKOV PLAYBOY.
The preparation lasted about two years, which included negotiations with the right-owners, design
development and its implementation. At different stages, 10 companies from several countries (Russia,
Greece, Italy, the USA and Canada) participated in the project.
To select 10 best covers for “Myagkov”, 500 covers of the legendary magazine since 1960 from all
countries of presence were selected. For non-stop shooting of 10 remakes, the Moscow-based studio took
3 working days, which were attended by more than 20 stylists, make-up artists, photo and video operators
and 1 truck of props.
The basis for a remake of internationally selected covers was models from Russia, similar to the original
to the point of confusion, which gave the original picture a unique local charm.
Especially for this series a mobile application was developed - every consumer can now scan the QR code
and see the backstage videos of the shooting process. Moreover, for each cover there is a legendary
Myagkov-based cocktail recipe of the represented era. These cocktails will be available in
restaurants/bars all over Russia, all the recipes are also available in the mobile application and on the
website myagkovvodka.com.
Sales channels of the limited series “Myagkov Playboy” were primarily federal and regional chains, as
well as non-chain retail outlets.
Revival of the Bastion Brand
The year 2016 saw an outstanding event both for our Company and for the Russian brandy market in
general: restyling and release of legendary Bastion brandy. This move, on the one hand, will allow for
solving the tactical task of entering the large segment of Russian premium brandies with the sales
reaching 4 mln dL and, on the other hand, meets the Company's strategic goal, that is, the leadership in
the Russian brandy market.
Bastion is a legend of the Russian brandy market, one of the first Russian brands in the cognac category
tracking its history back to 2002. Over 15 years of the brand's presence in the market it has achieved a
steady image of a high quality premium brandy both in the product supply chain and in the end
consumer's mind. Besides, this is the first line in Synergy portfolio that includes a differentiation by age:
3, 4 and 5 years.

Successful Start of the VOGUE Sparkling Wine

The first full year of VOGUE sparkling wine sales shows the market's interest in the new product based
on a high level of the brand recognition. There were dozens of thousands decalitres of VOGUE sparkling
wine sold over 2016 while Nielsen rating agency included VOGUE in the short list of the most noticeable
specialities in the market of sparkling wine. The increase in the key indicator for sparkling wines, sales in
the highest, pre-New Year season, calls attention: in November-December 2016б the sales of VOGUE
sparkling wine appeared to be two times higher from the same period in 2015.
Apart from the popularity and premiality, VOGUE brand success factors include production from high
quality domestic grapes, the quality consistency and the cooperation with internationally acclaimed
publishing house Conde Nast».

Captain’s Collection Completion

Once new positions were added in the middle of 2016 to the Captain’s line – Captain’s Whisky and
Captain’s Brandy – the line has finally become a worthy offer to the consumer of wide range of alcoholic
products capable of satisfying the needs in affordable and quality products of the Brown Spirits category.
New products in the line are based on high quality Scotch whiskey and French cognac spirits with
addition of spices and ingredients that are most popular among consumers.
First sales of specialities in the second half of the year exceeded the expectations: the share of specialities
in the line structure at the year end reached 19%, specialities entered the range of both large regional
chains and significant federal clients, such as Magnit, Karusel and Lenta chains.
The final completion of the Captain's line will allow for our stronger leadership in the segment of
affordable Brown Spirit’s which capacity is rated to reach 1,000,000 dL. We expect to share 1/3 of this
segment already in 2017.

Arkhangelskaya North Tempered Collection Supplemented with Unique Flavours

In October 2016, Arkhangelskaya North Tempered line was supplemented by unique northern flavours –
Arkhangelskaya Garlic and Pepper bitter and Arkhangelskaya Juniper Berry vodka. Launching of new
formulations in the market is an intent to support the image of flagship product Arkhangelskaya North
Tempered with craft flavours that would strengthen the brand's positioning and deepen an impression of
the brand as of a unique product. The specialities take from the flagship brand all the technological
advantages such as extra ageing in centennial isolated tanks, special "cold" tempering of infusions and
the use of unique, other than competitors', ingredients in the production process. An additional advantages
of the specialities is production thereof without any flavouring agents or additives, where the unique taste
is achieved exclusively through natural components.

New Life of the “Fox and Dogs” brand

In response to the growing trend in the category of affordable alcoholic beverages the Company
repositioned Fox and Dogs trademark, namely began producing this beverage on the basis of high quality
Scotch distillates. This allowed for maintaining the affordable price while keeping the design features
known to the end consumer after three years of the brand's presence in the market.

Import Portfolio Increased

Over the past year the Company increased the sales of imported products. In particular, the sales of
premium Spanish brand Torres and of popular rum Ron Barcelo grew by 3.5 and 2.5 times respectively –
both brands are the third top brands in the Russian market in their respective categories. The Company
also demonstrated a significant gain of 70% in wine sales.
There were new contracts made with such producers as Sazerac, Baron Philippe De Rotshild S.A.,
Barefoot.
In general, at the year end the imports grew by 44%. Today, the share of imported products in the
Company's revenue is 10.3 %, and Synergy itself is the largest independent Russian importer, as well as
No. 5 among global importers, covering more than 3% of this segment.

4. STRATEGY. DEVELOPMENT PERSPECTIVES

Strategy
The strategy of Synergy is based on the idea of the best consumer-oriented company in the Russian
market. The Company implements this strategy through resolution of challenging tasks: the leadership in
the Russian alcoholic market and the widest possible international fame and recognition of Beluga cult
brand. The Company implements these tasks out of the following priorities: diversification of its
transactions both in the external and internal markets; focusing on premium products and operating
performance, modern marketing and innovations, direct distribution expansion, consolidation of allocated
sales teams, promotion of Synergy brands' recognition and presence, increase of social responsibility.

By consistently implementing set tasks the Company expects to achieve the medium term objectives:
Synergy is to share 20-25% in the legal alcohol market of Russia and to achieve a significant share in the
global market of super and ultra premium vodka. .

Development perspectives
The Company’s development strategy ensures continuous overall efficiency improvement, production
costs optimization, system-based market expansion, development of adaptive distribution platforms for
internal and external transactions.
Diversification activities will include optimized portfolio of exclusively distributed and imported brands
as well as significant export development. The Company is the largest Russian independent spirits
importer and one of the leading spirits exporter. One of the development priorities is to increase the
leadership in export and import transactions.
The Company pays much attention to the social corporate responsibility. The Company's short-term plans
include development of cultural, social and economic initiatives in the area of responsible alcohol
consumption.

5. MARKETING
Marketing plays one of the important roles in the Company’s activities: a team of professionals does not
stop the search for and development of new solutions to improve product quality and increase brand
awareness. This is an important part of activities aimed at keeping the Company’s leading position in the
market.
In the context of the complete ban on alcohol advertising in the media, the Company is developing its
marketing strategy with the enhanced support of its brands in the commodity structure. Intensive trade
marketing events for distributors, promotion in retail outlets, promos for consumers – these activities help
not only maintain, but also increase the brand loyalty.
Beluga brand strategy
In the context of the current legislative restrictions, the Beluga brand focused on the quality and quantity
of representation in trendy trade channels, attraction of attention to the brand on the shelf and
differentiation from competitors, launch of new products, trade-marketing programs, elaboration of
effective and trend-setting marketing solutions aimed at end consumer and implying the unique
experience of brand interaction. Beluga has traditionally remained committed to its super-premium brand
image by creating information events for the consumer and PR campaigns. An important tool of the
brand's development became an integrated program in digital communications with a special focus on the
work with intensively developing social networks.

Beluga image activation at the salespoints

In 2016, the first seasonal branding of flagship stores in Moscow, St. Petersburg, Sochi and other cities in
Russia was started. There were Beluga Hunting après-ski zones opened in the best Russian ski resorts
(Krasnaya Polyana, Sheregesh, Okhta-Park, etc.). High-quality branding space attracted lots of visitors -
Beluga Hunting bars, made of fine wood and natural stone, elegant sleigh, sophisticated atmosphere with
elements of cosy French chalets, as well as hot seasonal punches and grogs based on Beluga Hunting herb
liqueurs.
There were Beluga pop-up zones arranged on New Year's Eve in Moscow in part of cooperation with the
key partner retailers, and there ambassadors held workshops in preparation of hot cocktails with Beluga
Hunting (Globus Gurme (Gourmet Globe), Vremena Goda (Four Seasons)).
In addition, there were Beluga Hunting promotional enclosures developed to go with alcohol runs of the
biggest printed federal publications (GQ, Forbes, Esquire, etc.) that by the high season become available
in supermarkets throughout Russia.
A limited series of Beluga Noble vodka – Beluga Noble Winter – was released specifically for the winter
season. The elegant silkscreen-printed Art Deco design of the label advantageously made the product
more noticeable on the shelf and became a popular gift during the holiday break.
Summer terraces of best summer restaurants and hotels in Russia (Prichal, Voronezh, Vodny, Erwin
Rekamore, Ritz, Kempinski, Europe Grand Hotel, Metropol) were branded, they serve chef cocktails
based on Beluga vodka, as well as special gastronomic sets. The release of customized Beluga vodka
bottles (Beluga Noble and Beluga Gold Line for Moskovsky bar, Four Seasons hotel, Beluga Noble for
the state department store (GUM)) as part of cooperation with the key partners continued.
Beluga Caviar Bar, situated in the historic centre of Moscow and being the first gastronomic space of
Beluga brand where in 2016 an extended caviar menu was presented to guests, continued its work.
5-star hotels in various countries hosted Beluga branded Art Deco cabinets, and a number of luxury
establishments worldwide organized designer Beluga showcases. Showcases were placed in most
prominent shopping centers and caviar boutiques in London, Vienna, Paris, Cannes and Monaco.
A special attention was drawn to expanding the Beluga presence in night clubs. The specifically
developed concept of branding and promotional materials allowed for implementing a number of
notorious projects including contracts with world-famous clubs VIP Rooms, Amber Lounge, Nikki
Beach, and a number of local initiatives in Slovakia, Israel and UAE.
A significant event in the brand's history in 2016 was a launch of new communications platform under the
"Created, not made" slogan. The first global promotional campaign of the brand took place within it,
including publications in printed media, placements on TV, Internet and advertisements in streets of the
largest cities of Europe and USA. Billboards with new advertising inserts decorated the central districts of
Berlin, Munich, Hamburg Paris, Los Angeles, San-Francisco, Rome and Milan.
The past year saw a serious breakthrough of Beluga in the Near East, primarily, due to the re-launch of
sales in Israel. The re-launch was accompanied with an intense marketing support: the biggest alcoholic
stores had promo zones arranged in the Home Bar concept, sales points were branded and a promotional
campaign was started in the Ben Gurion airport, in Internet and on TV. An integrated program of
cooperation with the opinion leaders in social networks had been implemented for the first time.
For the purpose of promoting the image, there were elegant branded Home Bar zones arranged in the
Duty Free channel in the Stockholm, Vnukovo, Pulkovo, Cancun and Dubai airports where promo offers
and tasting sessions of Beluga vodka took place. In February 2016, a promo offer took place in Beirut
with tasting of Beluga Celebration vodka. At the end of December 2016 the first Beluga Hunting après-
ski zone was arranged in the Vnukovo airport which attracted attention of the airport visitors and gained a
high score from the partners.

Beluga participates in significant events around the world

In 2016, Beluga became a variety of large cultural events in Russia and abroad having supported
Cosmoscow International Contemporary Art Fair, tournament of contenders to the world chess champion
title and competitions for the world chess champion title, one of the most prestigious horse polo
tournaments in USA organized by Greenwich Polo Club, and the lunch of the first immersive
performance in Russia titled Black Russian.
In autumn 2016, a complex PR campaign was organized to support the launch of decanter Beluga Epicure
by Lalique, which included a ceremonial event that took place in the official residency of France's
ambassador in Russia; a presentation in part of Cosmoscow International Contemporary Art Fair; a sale of
the first copy of the decanter by charity auction sponsored by Christie’s in favour of Natalia Vodianova's
Naked Heart Foundation, and a number of events for mass media as well as the launch of the web-site
www.beluga-epicure.com that enables to pre-order a decanter.
In order to increase the brand awareness around the world and within the framework of building a super-
premium image of Beluga, it successfully cooperates with the world's best performers and video directors
to feature the brand in popular music videos. In 2016, the Beluga vodka cooperated with stars such as
Jennifer Lopez, Jason Derullo, Fergie and Nicky Minaj, each of them gaining millions views of their
videos worldwide. In a number of cases the cooperation also included supporting of significant events and
joint promotion in social networks. For instance, there was Beluga bar installed at Jennifer Lopez's
birthday, of which the artist told to millions of her fans around the world on her official Instagram page.
Beluga vodka supported the key seasonal promo activities and events as part of cooperation with the best
world resorts and hotels. For instance, a contract was made in December 2016 with ASMALLWORLD, a
membership club uniting VIPs from around the world. Beluga vodka became an official sponsor of the
winter season opening in Swiss Gstaad having its seasonal branding arranged in famous Palace Hotel
Gstaad, which gave rise to fruitful cooperation with this establishment and ASMALLWORLD events in
other countries.
An agreement with popular Swiss ski resort Arosa was achieved during the same period so that Beluga
became a partner of Arosa Slalom international race, got an additional listing and opportunities for a
seasonal branding in five star Tschuggen Grand Hotel.

Work with digital communications channel

In 2016, there were the brand's global accounts at Facebook and Instagram re-launched, official pages of
Beluga were verified and there were standards developed for maintaining the brand's accounts for export
markets. A continuing work was carried out on maintaining a prompt feedback with the consumer, and
there were programs successfully started in Russia and Israel for working with the opinion leaders.
In 2016, the web-sites of Beluga Hunting and Beluga Epicure by Lalique became available in Russian and
English while the existing web-site of Beluga vodka was updated to support different browsers and
mobile formats. The web-site now also features an updated global store search engine including the
capability to work based on the user's geolocation data.
Cooperation with professional communities
Beluga always takes part in the industry events. In 2016, the brand successfully presented its specialities
at the biggest international trade shows, such as Bar Convent Berlin (Berlin), Vinexpo (Hong Kong),
Imbibe (London), TFWA (Singapore and Cannes). Beluga Hunting bitters were presented at Moscow Bar
Show 2016 (Saint Petersburg), where the brand's ambassadors introduced the show visitors to the
variability of flavours and bitter-based signature cocktails.
In 2016, Beluga Signature international education program was launched for bartenders from UK,
Germany and France. A web-site and Facebook community were set up to support it, where members
could track the stages in different countries and share their impressions; the key events were covered by
the leading professional mass media. The reputable jury at the final competition of Beluga Signature that
took place in autumn 2016 in Four Seasons hotel in Moscow awarded Mary Pikard from the bar of
Parisian boutique hotel André Latin. The members included representatives of such reputed European
establishments as The Connaught bar, Sexy Fish, Coburg bar, Chiltern Firehouse, China Tang, Yeels,
Puzzle bar, Le Fantome de l’Opera, Diplomatico, Herzog, Reingold, and many others.

Myagkov Playboy
The year 2016 saw a successful implementation of the project of cooperation between Myagkov vodka
and Playboy magazine. Throughout the year all federal and regional chains as well as independent retail
stores were selling limited series of Myagkov Silver bottles featuring a unique design based on cult
covers of the magazine starting from the sixties but remade engaging Russian models.

Especially for this series a mobile application was developed - every consumer can now scan the QR code
and see the backstage videos of the shooting process. Moreover, for each cover there is a legendary
Myagkov-based cocktail recipe of the represented era. These cocktails are available in restaurants/bars all
over Russia, all the recipes are also available in the mobile application and on the website
myagkovvodka.com.
There were total 3,000,000 bottles released which sales were intensely supported by promotional
activities in sales points and social networks. Myagkov Playboy's impressive and challenging idea of
communication in social networks won the Tagline prize, the top Russian award for achievements in the
digital field, as the Best Social Media and the Best Page/Group.

In 2016, Myagkov strongly supported sports events. The brand became a sponsor of several key boxing
matches, including the World Champion title fight. Besides, Myagkov supported significant football
matches of the Europa League and Champions League

Belenkaya vodka
The brand promotion and support in 2016 was carried out by placing advertisements at top sports events,
such as NHL World Cup 2016 in Canada, one of the most significant hockey championships, football
championship matches and matches of the leading Russian teams in part of the national team games,
Champions League, Europa League play-off 2015/2016 broadcast on central TV channels (Channel One,
Match TV). Each match attracted an estimated 40 million viewers.
Aiming to increase consumers' interest in the brand and attract additional followers, Belenkaya vodka
traditionally works on release of limited series: in December 2016, Belenkaya Lux was presented in an
updated New Year design.
As part of export trading activities, the year 2016 saw successful shipments to Romania, Greece,
Mongolia and Argentina and a significant growth of sales to the Netherlands, Belgium, Germany and
Latvia. There were large-scale promotional campaigns held to bring the main message to the consumer in
the markets of Romania and Bulgaria. In addition, the export line of Belenkaya vodka was extended with
new sizes – 0.2 l and 1.75 l.

Snezhny Crab
Snezhny Crab vodka was promoted both as a new brand in the market and as a brand new flavour in the
category of special vodkas. That is why the main tool of communication with the consumer became
tasting events held throughout the year in big federal chains: the result was 4 of 5 tasters giving a positive
feedback about the product and 70% buying it. Buyers liked the product both as it is and in cocktails with
non-standard ingredients. Besides, the announcement of unique crab flavour was widely spread through
branded promotional materials in off-trade and on-trade channels.

Strategy of Brown Spirits category development

Preserving the successful strategy of the range portfolio diversification, our Company keeps developing
and introducing new products to the market in line with the growing trend towards consuming alcoholic
beverages of the Brown Spirits category: marketing of Russian brandy and consolidation of the market
positions of affordable products in this category.
In 2016, there were two main directions for development of new brandies: return of Bastion cognac to the
market (was released in October 2016) and the beginning of development of affordable trademarks in the
economy segment expected to be launched in May-June 2017. Thus, it is expected to cover two large
segments of the market by new products and to have sold 1.5 mln dL within two years sharing 12% of the
market.
The search for new solutions for Captain’s Collection line also contributes to the Brown Spirits category
development: release of products in new categories and release of limited series. The year 2016 saw new
positions entering the market: Captain’s Whisky and Captain’s Brandy, and there were two limited series
developed for flagship SKU Captain’s Rum. The work on limited series is very important particularly in
the Brown Spirits category as it is a category standard of the leading global producers.

6. DISTRIBUTION AND IMPORT

Distribution
Synergy group of companies performs the sales through one of the most branched distribution networks
in Russia. Distribution network consists of several complementary channels: direct sales including own
retail outlets and sales through independent distributors.
Today the team that performs sales has 3,600 people. The Company’s distribution network geography is
divided into two parts: West and East. In those regions where distilleries are located, Synergy exploits its
own sales personnel, warehouses and its own transportation fleet to deliver the product directly to retail
outlets. Implementing the distribution network expansion the Company considerably increased promotion
and sales personnel. Each key brand occupied a special place on shop shelves after Synergy had
developed and approved its own standards of merchandising. In this connection the main aim of the
Company’s trade representatives and merchandisers became the corresponding product placement on
shop shelves.
Synergy is the only spirit Company in Russia where the merchandiser staff has 500 people and which 4
years ago launched a special system, allowing the Company to track the level of distribution of the
Company's brands in the Key Customers channel. Nowadays the sales are accompanied by trade
marketing program implementation, in particular by motivation campaigns for partners and advertising
material distribution in sale outlets.
For instance, the program aimed at trade outlets motivation to exhibit the full assortment of Synergy on
the best place is called A Gold Shelf. 10,000 retail outlets are involved in this campaign monthly. Every
employee involved in sales of the Company’s trademarks should understand the value of brands, in order
to achieve this there are 15 professional trainers in the Company’s personnel.
Every day the trainers organize master classes and put the information about unique brands across. Apart
from the work with own personnel the Company reinforces its positions among bartenders, waiters and
waitresses, and restaurateurs: 20 brand ambassadors work for them.
Synergy Import continues its active development in 2016, specializing on the import of premium alcohol
in Russia. The portfolio of Synergy Import consists of carefully selected leading brands of alcohol of the
most popular categories of whiskey, cognac, brandy and liqueur, wine and absinthe.
The portfolio of Synergy Import includes 28 brands of spirits from 12 key suppliers of the global spirits
market, 70 wine suppliers from 11 wineries around the world. The import share in the revenue of Synergy
spirits segment is 13%.
Undisputed leaders of sales by the end of 2016 are William Grant & Sons brands: Grant’s, Glenfiddich,
Balvenie. The brand with a long history - the French Cognac CAMUS - has retained reliable positions.
Ron Barcelo Dominican rum and Torres brandy show excellent sales.
Also in 2016 a contract was signed with the Sazerac brand, the start of sales of bourbons Buffalo Trace
and Benchmark as well as of the Fireball brand is scheduled for the current year.
We should also mention the success of Synergy Import in the development of wine business:
- since the beginning of the project (September 2014), the sales of imported wines have increased
significantly, and in 2016 the company doubled the sales volume by 75%;
- there were contracts signed with the renowned wine suppliers: Garcia Carrion (Spain), Baron Philippe
De Rotshild S.A. (France), Barefoot (USA), Duckhorn Vineyards (USA).

GRANT’S
The history of Grant’s started thanks to William Grant far back in 1898 when he made his first blend. It
is the oldest family blend in Scotland. 110 years later Grant’s whisky is still produced using traditional
technologies that are cherished and handed over from generation to generation. The flavourful and
balanced taste of all products in Grant’s line is achieved thanks to production on the base of grain whisky
Girvan. This whisky undergoes vacuum distillation under the conditions of relatively low temperatures
that contributes to keeping the sophisticated hints in the end product.
Grant’s Family Reserve. Thanks to delicate malt notes Speyside style is recognized unmistakably. One
can distinguish subtle oak and smoke notes, as well as sweet fruity aroma.
Grant’s Ale Cask Finish. Ageing in former ale barrels gives the whiskey tender crème brûlée flavour and
silky malt notes.
Grant’s Sherry Cask. Maturing the whiskey in hand-made sherry barrels gives warm spicy notes, sherry
earthy tones and dried fruit shades.
Grant’s Aged 8 Years Old. Aged for 8 years in oak barrels, the blend has sweet fruity Speyside-like
aroma with bright malt notes.
Grant’s Aged 12 Years Old is the mixture of best single malt and grain blends aged for at least 12 years.
After the 'marriage' the blend is further aged in barrels from American whiskey. As a result, we have a
scotch sort with incredibly rich and smooth taste.
Grant’s Aged 25 Years Old. To create this elegant, sophisticated, incredibly aromatic beverage, the
Blend Master, Brian Kinsman, uses whiskey aged in oak sherry and bourbon barrels for at least 25 years.
The ready blend undergoes additional ageing during several months to give the beverage luxurious,
fragrant, yet elegant style. Some of the whiskeys of the Grant's 25 Years Old line are no longer
manufactured and thus unique in its kind.

GLENFIDDICH
William Grant & Sons founder has forever changed the history of scotch. Even 125 years later,
Glenfiddich is the most titled single malt Scotch whisky in the world.
Glenfiddich 12 Years Old is a whisky with light fruity aroma, with subtle hints of young pear and oak. It
is achieved thanks to vatting in barrels previously containing Oloroso sherry or bourbon and to the purest
water from Robbie Dubh spring.
Glenfiddich Rich Oak 14 Years Old is filled with spicy oak and vanilla tones acquired as a result of
vatting in new previously not used barrels made of Spanish and American oak.
Glenfiddich 15 Years Old is a single-malt whisky with a rich bright honey spicy flavour. It is vatted in
three different types of oak barrels: previously containing sherry, bourbon and in barrels made of new
oak.
Glenfiddich 18 Years Old is a single-malt whisky with a mild and rich flavour, it is vatted in barrels
previously containing sherry or bourbon, this whisky is extra vatted for another three months in oak vats
until the 'marriage' of spirits occurs.
Glenfiddich 19 Years Old Age of Discovery has a versatile taste with ripe fig hints, baked fruit, cinnamon
and black pepper. This whisky is extra vatted in barrels previously containing Madeira.
Glenfiddich Malt Master Edition is the first whisky that undergoes ‘double ageing’ in two different types
of oak barrels: traditional and sherry.
Glenfiddich Cask of Dreams. For the first time scotch is extra vatted in barrels made of Russia oak. The
taste is bright, tannins and sweet-oaky. The main emphasis is bitterness of heather honey.
Glenfiddich 21 Years Old Gran Reserva. Glenfiddich 21 Years Old Gran Reserva is vatted in oak barrels
made of American oak for 21 years, that give the soft and flavourful taste. Extra-ageing in barrels
previously containing the Caribbean rum gives this drink some sweet hints of toffee, fig and vanilla.
Glenfiddich 26 Years Old Excellence is the first single-malt whiskey which is vatted for 26 years
exclusively in oak barrels made of American oak. It has a soft and delicate aroma with floral undertones.
Glenfiddich 30 Years Old. Glenfiddich 30 Years Old is made according to exceptional old supply from
distillery. The taste is flavourful and harmonious, once tasting its plum hints with some ripe banana, it is
impossible to forget it.
Glenfiddich 40 Years Оld is an exclusive position that is produced annually – no more than 600 bottles. It
has a luxury, silken and tender taste.
Glenfiddich 50 Years Old is vatted in two sherry barrels – one of which is a little older than 50 years
old. The whisky has kept al the freshness, fruit hints and acquired an unusual birch bark flavour.

THE BALVENIE
The Balvenie is a unique selection single malt Scotch whisky, created by the master of distillery David
Stewart. Each type of this whisky has its unique flavour: rich, soft, with bright hints of honey, unique for
The Balvenie. The collection consists of eight tastes of single malt whisky.
The Balvenie DoubleWood 12 Years Old. The Balvenie DoubleWood 12 Years Old spends many years in
traditional oak barrels and afterwards in the final stage it is put into a barrel, where previously Oloroso
sherry was kept.
The Balvenie Caribbean Barrel 14 Years Old is vatted in oak barrels previously containing bourbon
and then it is extra vatted for several months in barrels previously containing Caribbean rum.
The Balvenie Single Barrel 15 Years Old is vatted in one barrel previously containing bourbon. The
number of such a barrel can be found on each bottle.
The Balvenie Double Wood 17 Years Old. The Balvenie Double Wood 17 Years Old is a whisky that first
aged in a barrel made of American oak previously containing bourbon (it added some sweet hints of
vanilla) and then was put into sherry barrels made of European oak.
The Balvenie Peated Barrel 17 Years Old is vatted in barrels of peated sorts of the Balvenie as well as
in new barrels made of American oak.
The Balvenie PortWood 21 Years Old. In order to produce this whisky the blend of rare sorts the
Balvenie is extra vatted in barrels previously containing branded sorts of port wine.
The Balvenie TUN 1401 batch 5. For this series of whisky the master chose special old American and
sherry barrels, their year of 'birth' which varies from 1966 to 1991. The whisky from those barrels blend
and age in a tremendous 'marriage' Tun 1401.
The Balvenie Thirty 30 Years Old is a rare and truly peculiar single malt whisky, for which David
Stewart selects only the best barrels that are often older than 30 years old.
The Balvenie Forty 40 Years Old. In order to produce each of these drink batches that consists of only
150 bottles, David Stewart carefully selected and then blended whisky from the most rare barrels kept at
the distillery.
The Balvenie Fifty is vatted in an oak barrel made from European oak previously containing sherry and is
presented in a glass bottle manually blown that is kept in a wooden case.
Kininvie 23 years. Everyone knows about distillery Kininvie, as its alcohols are part of the special blend
of Monkey Shoulder whiskey, but nobody ever tried its single malt variation. Now all the whiskey lovers
in search of something unknown and new, with rich history and exclusive on the market, have a really
decent offer. Kininvie is the whiskey they are looking for, because it was born in a secret distillery.
Kininvie distillery opened in 1990, then closed, and reopened in 2012. However, the first version of
whiskey is available for affectionate enthusiasts - aged for 23 years!
Vibrating aroma with notes of ripe fresh fruit combined with velvety vanilla sweetness. Over the time, it
has acquired an elegant floral tone with subtle notes of summer flowering.

MONKEY SHOULDER
Scottish triple malt whiskey Monkey Shoulder is made by mixing single malt alcohols from three best
plants of Spaceside. It is an original brand in the world of whisky, where cherishing traditions are
considered to be the norm. Despite its modern daring style, it is produced following inviolable laws of the
production of genuine Scotch drink.
The master of the malt distillery personally selects no more than 27 casks of three types of single-malt
whisky, 'marries' them in a special tun and then leaves them there for several months. Then he puts the
scotch into barrels from 1st bourbon, where it acquires its individual taste and aroma. Delicate floral notes
are mixed with the scent of fresh oranges and delicate peaches. Shades of honey and spices make their
way through the rich vanilla sweetness. Monkey Shoulder is "the most wanted Scotch whiskey in the
world's best bars" as described by the Drinks international magazine.

THE GIRVAN
Grain whisky Girvan is a taste that fully reflects our heritage of the whiskey pioneers. This is a rare
alcohol: rich in vanilla, honey and hints of caramelized fruit.
The Girvan Patent Still No.4 apps is available in an exquisite white box - a modern take on the premium
whiskey packaging.
The Girvan Patent Still 25 years. Masterly distillation catalyses essential fruity notes in our alcohol,
creating flavours of citrus, vanilla, cream, roasted autumn fruit and caramelized apples, plums and pears.
And ageing in oak barrels adds the character and makes our whiskey delightfully different!

CLAN MACGREGOR
High-quality Scotch whiskey Clan MacGregor, which is enjoyed in over 30 countries around the world,
proudly carries its symbol and the slogan, along with the personal sign of the 24th head of the MacGregor
clan, Sir Malcolm MacGregor. The founder of the Clan is considered Gregor, the third son of Alpine, who
was the king of Scotland in the 8th century AD. Due to this connection with the king, the clan received
the motto "Royal is my race." The MacGregor Clan managed to overcome long years of struggle and
exile, their lands were confiscated more than once, they were even outlawed. But they kept fighting and
never gave up, and in the end all their privileges and rights were returned to them. Today Clan
MacGregor is one of the most popular blends in the UK. It is skillfully produced from selected malt and
grain Scotch whiskeys. Clan MacGregor is distinguished by fruit tones, characteristic of the typical
varieties of whiskey from Speyside valley. This is a light fresh whiskey with a well-balanced mild
flavour, for which it is so appreciated by the connoisseurs.

TULLAMORE D.E.W.
Irish blended whiskey Tullamore D.e.w. – is the premium blended Irish whisky with a soft harmonious
taste. For its production three kinds of whisky are used: the so-called "whisky of distilling tank", grain
and single-malt whisky. After creating a blend, the whiskey is aged in special oak barrels to give it even
greater softness and make it appropriate for any future occasion, be it a meeting with friends or dinner
with the family. You can enjoy Tullamore D.E.W. both in pure form and with ice, soda, or lime.
Tullamore D.E.W. line apart from the blend of standard ageing has another two products: single malt
whisky Tullamore D.E.W.
10 Years Old and blended Tullamore D.E.W. 12 Years Old. Tullamore D.E.W. 10 Years Old is vatted
for 10 years in barrels previously containing bourbon, Oloroso sherry, port wine and Madeira. This is the
only Irish single-malt whisky that is brought to perfection in four different types of barrels. These
specially selected barrels enrich and make the aroma of the drink stronger as a result it acquires a splendid
complex and flavourful taste.
Tullamore D.E.W. 12 Years Old is a blended Irish whisky created from carefully selected barrels of 12-
and 15-year-old ageing. The drink acquires its perfection thanks to triple distillation, crystal-clear water,
selected barley and ageing in barrels previously containing bourbon and Oloroso sherry.

MILAGRO
Тequila Milagro is more than just tequila. It is produced from 100% blue agave, the raw material that is
grown on own plantations, harvested by hand and is roasted in clay ovens. Triple distillation in small
batches creates a drink with a slight aroma and soft taste. Reposado and Anejo sorts age in oak barrels
longer than it is accepted in the industry. Premium bottles are blown according to a unique technology
and are processed manually. The collection consists of 6 tastes:
Milagro Silver has hints of blue agave as well as vegetable and citrus hints, and a spicy after-taste.
Milagro Reposado has hints of blue agave with subtle flavour of caramel and toast, and a spicy after-
taste.
Milagro anejo has caramel and coconut with chocolate, tobacco and banana notes, and a little sweet spicy
after-taste.
Milagro Select Barrel Reserve Silver has a bright taste of blue agave and vanilla hints, and a dry spicy
after-taste.
Milagro select barrel reserve reposado is pure with vanilla, black pepper and cinnamon hints, and a dry
after-taste.
Milagro select barrel reserve anejo has the flavour of not sweet chocolate, tobacco leaves, toffee with
bright oak hints, and a dry after-taste.

HENDRICK’S
Premium Scotch Gin
Hendrick’s is the gin that is produced in an unusual way with the addition of non-standard ingredients
which give it an original flavour and aroma – extracts from the petals of Bulgarian rose and fresh
cucumber. Hendrick’s is especially valuable because the main eleven ingredients (the so-called
botanicals, the combination of which gives this drink its unique character) are delivered from different
corners of the planet.
Surprisingly rich and intriguing blend of plants, with dominant aromas of rose and cucumber. The unique
combination of different ingredients of Hendrick’s is produced in Scotland using only pure water from the
local natural springs.

SAILOR JERRY
Sailor Jerry is a real spicy Caribbean rum with 40% alcohol. Its base is the best Caribbean rums that
blending masters “marry” using the detailed recipes and then add a unique mix of spices and other natural
flavours, the most striking of which are vanilla and cinnamon. The result is a stunning, high-quality, old-
school Caribbean rum with spices. Timeless classic!

DRAMBUIE
Legendary whiskey-based liqueur. Full-taste strong (40%) Drambuie liqueur is a unique blend of
whiskeys from Spaceside and Highland, known for its soft taste, and the secret extract of herbs, spices
and heather honey. The legendary whiskey-based liqueur, historically associated with the emergence of
the cocktails era in the 1960 in the USA.

CAMUS
Founded in 1863, CAMUS is a family company-owned company and it owns a unique portfolio of
premium alcoholic beverages, which are popular all over the world. Today Camus products are sold in
almost all the countries of the world, at international airports and on board of major airlines. CAMUS
represents the history of the cognac house, which belongs to five generations of the same family since
1863 and owns exclusive skills of creating outstanding cognacs with unique elegant style, transferred
carefully from father to son.
Passionate devotion to the business is still there today thanks to the current owner of the company Cyrille
Camus. Being loyal to his heritage, he preserves the independence of Camus and is the inspirer of what
we call a Living Tradition. The company creates cognacs of some unique style, they can satisfy the taste
of the most demanding connoisseur of this noble drink.
The hallmark of the Cognac house is spirits from the most valuable vineyards of the Camus family in
Borderies. CAMUS is one of the largest landowners in Borderies cru - the rarest of the six cognac
appellation regions - known for its high aromatic potential of cognac alcohols.
Borderies cognacs alcohols have fine exquisite aroma and are often added to classical blends, although
the solo cognac is also excellent, thanks to their bright floral notes, aromatic expression, hints of spice
and sweet pastries, as well as high ageing potential.
While constantly searching for new tastes, CAMUS discovered vineyards of Ile de Ré for cognac lovers,
which allowed it to create a series of exclusive island cognacs. Ile de Ré is located in the western part of
the cognac appellation. The line of CAMUS island cognacs has the unique character of alcohols with
bright sea influence, rich with fresh mineral notes.
Elegance is the main feature of CAMUS cognacs, and CAMUS VS ELEGANCE embodies the vitality of
youth in the fresh and bright cognac.
SAMUS VSOP ELEGANCE owes its excellent taste to the blend of wines, distilled on the dregs.
CAMUS XO ELEGANCE requires many years of patient and laborious work, it is a perfect blend of
fresh fruity aromas of the vine, which develop and mature during the masterly organized ageing process.
EXTRA ELEGANCE is a complex, velvety blend of old brandy spirits, mostly from Borderies, Grande
Champagne and Petite Champagne, perfectly balanced and aged, which further on highlights and reveals
the dignity of each of them.
BORDERIES. VSOP Borderies was released in a limited edition (15,000 bottles). All bottles are
individually numbered. XO Borderies is a unique offer on the market of premium cognacs. Classical
design and exquisite packaging.
Ile De Re Fine Island is a unique island cognac, exclusively presented by CAMUS on the international
market. Exceptional taste: its island nature is balanced with fruity notes and incredible softness. The fresh
sea taste with notes of dried fruit, a hint of salt and a soft after-taste. A true reflection of all the qualities
of cognac spirits from the Ile de Ré.
Ile de Re Double Matured
Original soft taste reflecting the island nature of the cognac: perfect balance of fruit notes with notes of
sea breeze and smoke tones in the after-taste.
Ile de Re Cliffside Sellar
Exceptional taste: its island nature is balanced with fruity notes and incredible softness. Bright, iodide,
spicy taste with hints of vanilla.

BERNEROY
Calvados Berneroy is one of the best samples of the unique beverage with the aroma of apple and old oak,
produced in the famous province of Normandy, France, for at least five centuries. It is produced from
carefully selected best varieties of apples. A single distillation provides for high concentration of aromatic
compounds and gives the alcohols natural apple flavour. Ageing in oak barrels of delicate roasting creates
the necessary balance of tannin and rich aroma.

TORRES
Brandy with history and heritage from the region of El Penedès (Barcelona). Back in 1928 Don Juan
Torres Casals, the second generation of the Torres Family, decided to start selling soft and fragrant
distillate of the finest white wines, that the family began producing in 1870. Torres brandy always follows
the traditional method of “Brandy - del - Penedès“, selecting best wines to ensure the highest quality of
the product. The beverage is kept exclusively in oak barrels, usually from American or French wood,
using the Solera process. Due to careful attitude to the legacy and strictly controlled manufacturing
process, Torres brandy rightfully earned the trust of consumers, who appreciate the history and the
tradition of the brand.
Nowadays Torres is the best-selling imported Spanish brandy brand, which was numerously awarded at
the most prestigious competitions in the spirits market.

RON BARCELO
Ron Barcelo is a high-quality rum from cane sugar produced in the Dominican Republic, province San
Pedro de Macoris. This area is famous for its ideal conditions for rum ageing: stable temperature (30
degrees Celsius) and humidity of 90%. A year's ageing here equals four year ageing in cooler regions!
During the ageing period in American oak barrels, the product takes in rich amber colour, unique flavour
and memorable taste. A recognition token of exceptional quality of Barcelo is the fact that the Swiss
chocolate company Lindt chose Ron Barcelo Gran Anejo 500 for its new praline filling - from over 500
rum sorts in the market.

XENTA
The leader of the absinthe category in Russia.
Xenta is an absinthe for true connoisseurs: a genuine recipe of the 19th century is used for its production,
whereas wormwood (Artemisia Absinthium) and many other herbs are long drawn, the resulting extract is
thoroughly filtered to obtain a special extraordinarily transparent emerald colour, unique to Xenta
absinthe.
Xenta distilled is a distillate of three main components of the traditional absinthe: wormwood, star anise
and coriander. Triple distillation, slow gentle filtration and water from alpine glaciers make this beverage
the quintessence of the absinthe's key components - crystal clear colour, strong and marked character, and
unexpectedly mild taste.
Xenta Superior is an absinthe of the super-premium class, designed specifically for true connoisseurs. For
the production of this masterpiece, only the top leaves of the bitter wormwood (artemisia absinthium) are
used, which are picked only in July and August. Special filtration technology keeps the aromatic
properties of wormwood and gives the beverage a distinctive dark green colour and noble bitterness. The
stylish bottle with a sprig of wormwood completes the image of Xenta Superior, making it a collector's
sample, which can also be an original and sophisticated gift.

RIGA BLACK BALSAM

LATVIJAS BALZAMS was founded in Riga more than 100 years ago and is a leading producer of spirit
beverages in the Baltics. LATVIJAS BALZAMS operates two distilleries producing more than 70 million
bottles per year. The main trademark of LATVIJAS BALZAMS is Riga Black Balsam, it is a legendary
bitter (herbal liqueur) that has been produced since 1752 and it is one of the oldest drinks. The line Riga
Black Balsam is presented by three tastes: classical bitter, with the taste of black currant and balsam with
rum.
Riga Black is classical but at the same time its contemporary bitter-sweet taste combines different
palatable nuances. Some people will find in its taste a mellow hint of lime blossom, raspberry, bilberry,
while the others will taste honey with savoury nuance of ginger, nutmeg or oak.
Riga Black Balsam Black Currant The taste of this mellow and sophisticated spirit beverage keeps its
bouquet till the impressive exquisite ending, the first currant note with pleasant balsam hints will quickly
make you hot.
Riga Black Balsam Element is a special composition of tastes that is based on original ingredients of Riga
Black with some addition of high quality rum.

ANTICA SAMBUCA
Antica Sambuсa is the number one liqueur in the UK. Sweet natural liqueur is produced by distilling of
anise (or stellate anise) infusion and herbs. It is made from exclusively natural, carefully selected
ingredients, which allows to achieve the highest quality. The product line consists of sambuca-based
liqueurs with different tastes: Antica Apple, Antica Raspberry, Antica Coffee, Antica Banana.

PLANTATION
High-quality premium rum. All Plantation rums are produced and aged in bourbon barrels and in a hot
tropical climate of the Caribbean countries (Trinidad, Barbados, Panama, Guyana, Nicaragua, Jamaica
and Grenada). The beverage undergoes additional ageing during a few months in brandy barrels in
Chateau de Bonbonnet (France). All Plantation rums have rich colour and flavour, and its modern and
stylish design makes it popular among the most sophisticated consumers.

WINE
BAREFOOT (USA, CALIFORNIA)
Starting from January 2017, it is expected to import Barefoot brand (distribution in the key and retail
channels).
Barefoot is one of the best recognized and fast moving wine brands in the world. Buyers will remember it
right away due to the unusual design of its label with a man's foot image on it that symbolizes an easy
way of life!
The brand's positioning is in a marked contrast to the traditional image of classical wines: instead of prim
intelligent feasters Barefoot chose people young at heart, free in mind, those who live despite of common
rules but follow their own judgements and principles. The brand's leading ambassadors (so-called
barefooters) express their philosophy in one significant sentence: "Our wines equally suit for drinking in
elegant evening wear at supper as well as wearing a t-shirt at home!"
And such brand's philosophy does work! Barefoot is wine brand No. 1 in the world, the fastest moving
American brand in England and the leading brand in Germany, Netherlands, Iceland, Ireland, UAE and
many other countries!
Russia is a new market for Barefoot with high hopes put on it!

GWS – OLD TBILISI (GEORGIA)

GWS (Georgian Wines and Spirits Company) is one of the oldest and most famous wineries in Georgia
established in 1993 in the Achinebuli village of Telavsky district on the base of the renowned Telavi 2
winery built in 1976. GWS brand portfolio includes unusual sparkling wines and alcoholic beverages:
Tamada, Old Tbilisi, Adamanti, Elibo, Vismino and GWS Chacha.
GWS has 400 ha of vineyard of which 280 ha are red grape and 120 ha are white grape. 70% of our
vineyards are traditional Georgian variety and 30% are international grape varieties. In the short term
GWS plans to present new biowines made of their own grapes.
In 1999-2016 the company sharply increased the quality level of wine and received around 160 awards at
national and international competitions: 4 double golden, 73 golden, 46 silver and 26 bronze medals.
GWS brands become increasingly popular at local and international markets (Russia, Kazakhstan,
Belarus, Ukraine, the Baltic states, China, Japan).
Founded in 1999, Old Tbilisi wine brand is of consumer grade. Affordable price and good organoleptical
properties made the wine a standard brand, the trademark of Tbilisi and Georgia. This wine is a symbol of
Georgian hospitality, friendly and family feast.

GARCIA CARRION (SPAIN)

In December 2016, a contract was signed with the largest winery of Spain, Garcia Carrion company.
Synergy became an exclusive distributor of Pata Negra brand in the Russian market. Pata Negra brand
offers wines from Spain's key origins: Rioja, Cava, Ribera del Duero.

DUCKHORN VINEYARDS (USA)

Duckhorn is one of the first wine producers making wine from Bordeaux grape varieties.
At present, Duckhorn has 7 vineyards located in different regions of Napa Valley and makes premium
wines from Bordeaux grape varieties.

LES GRANDS CHAIS DE FRANCE (FRANCE)

Les Grands Chais de France has been the largest exporter of wines from France since 1979 (the
company's wines are sold in more than 250 countries around the world). The company is highly market-
oriented, which is reflected in the approach to the creation of new products, their sales and promotion.
Les Grands Chais de France aims to make wine for a wide range of ordinary consumers, and not for
professional tasters. The main mission of the company is the production of top quality wines for the mass
market that undergoes strict quality control.
Product lines: Baron de Rothberg, Prestigium.

VEUVE AMBAL (FRANCE, BURGUNDY)

Wine house VEUVE AMBAL (French for “Ambal Widow”) is one of the most famous French
manufacturers of high-quality sparkling wines and “Crémant de Bourgogne”. VEUVE AMBAL products
gained international recognition and is represented today in many chain stores in Europe and in the world,
such as: Auchan, Metro C & C, Lecrerc, Carrefour and others.
At the moment VEUVE AMBAL owns 6 wine estates in different parts of Burgundy and is the largest
owner of vineyards in Burgundy (250 ha). VEUVE AMBAL wine house also owns RIVAROSE farm in
Provence.

PASCAL BOUCHARD (FRANCE, CHABLIS)

Pascal Bouchard Estate is a family-owned winery of five generations of winemakers. Today the Bouchard
family owns vineyards in the area of 32 ha. Great white wine “Pascal Bouchard” does not need any
advertising. Its unusual taste literally “explodes” in a multitude of fruit and floral notes, captivating and
wooing. This wine is worth the highest celebrations, it perfectly suits dishes of French cuisine, especially
seafood, fish and vegetables.
Pascal Bouchard total production volume is about 220,000 bottles/year.

MAILLY GRAND CRU (FRANCE, CHAMPAGNE)

Mailly Grand Cru is the only House in Champagne producing wine on the principle of Grand Cru Classé
Bordeaux. All the sparkling wines are produced from grapes harvested only from their own Grand Cru
vineyards. Vineyards Mailly Grand Cru cover 70 ha, where Pinot Noir (75%) and Chardonnay (25%) are
grown. Fertile terroir gives finesse and elegance to the wines, that are so highly appreciated by lovers of
this luxury beverage. Currently Mailly sparkling wines are popular and demanded not only in French
network stores and restaurants, but also actively exported to 35 countries, bringing perfection of
Champagne Mailly to the most distant corners of the world.

PASQUA (ITALY, VENETO)

Pasqua is a family-owned company, which was founded in 1925. The owners of the company is the
Pasqua family, represented by its third generation of winemakers. The brand with more than 80-year
history. Innovative technologies, modern production and ageing facility of Pasqua ensure production of
wines of excellent quality. To date Pasqua produces 13.8 mln bottles of wine per year and owns 139 ha of
vineyards in the most prestigious areas of the Veneto region: Bardolino, Soave, Valpolicella.
Product lines: Colori di Italia; Black label

FRATELLI MARTINI (ITALY, PIEDMONT)

In 1947, in the north of Italy, in the wine region of Piedmont, Langhe zone, brothers Secondo and Luigi
Martini founded the wine company "Fratelli Martini Secondo Luigi SPA". Today Fratelli Martini
Secondo Luigi SPA is the largest family-owned producer of wines in Italy. The total vineyard area is 285
ha, which allows to produce about 50.0 mln bottles of wine per year.
The first line of wines Fratelli Martini Secondo Luigi was named Casa SantOrsola after the church, which
was located on the farm, where brothers Secondo Luigi Martini were born.
The range of wines: Marchesini.

MONTELVINI (ITALY, VENETO)

Vineyards in Montelvini are located in Venegazzu, in the heart of the Veneto region, in north-eastern
Italy. The owners of the company is the Serena family, who have been producing wine for generations
since 1882. Headed by Armando Serena, the Montelvini farm significantly expanded and became a
modern successful company that skilfully combines high technologies with the best winemaking
traditions. Montelvini wines have unique style, blending innovations and dynamism with respect for
traditions and commitment to quality.
MIRAFIORE (ITALY, PIEDMONT)
The history of the Mirafiore house located in the famous wine region of Barolo began in 1878.
Today, the company’s experienced oenologists produce some of the most popular and high-quality wines
in Barolo - a line of six exquisite, original and high-quality Mirafiore wines, all sophisticated, elegant
and memorable. These wines express two basic concepts of the company's business: eco-compatibility
and the "green philosophy". Packaging for wine consists of 85% recycled glass, and labels are made of
natural dyes. All this are external positive changes, while the internal content, i.e. the wine itself, remains
the same - original and surprisingly delicious wine of the old Piedmont.

PELISSERO (ITALY, PIEDMONT)

Pelissero is a family-owned winery, which has been cultivating vines for generations in the heart of
Barbaresco. Today the firm is managed by Giorgio Pelissero, an experienced oenologist, actively engaged
in raising the quality of wine and the expansion of the company's estates, which make up 38 ha of land
now. The winery is located in Treiso area at the top of a picturesque hill. Pelissero produces annually
about 100,000 bottles of premium wine that have gained sincere affection of wine critics and specialized
wine magazines (especially the American publisher Wine Spectator).

CASTELLO DI QUERCETO (ITALY, TOSCANA)

The estate Castello di Querceto is located among green hills at the altitude of 470 meters above the sea
level. The total area of the estate is about 1900 hectares. There are a bottling shop and four cellars in the
territory of the castle, which cover different stages of wine production from fermentation to ageing. The
biggest share in the production of Castello di Querceto is taken by wines Chianti and Chianti Classico
Riserva, while the best-known wine of the Querceto house is the supertuscan wine Chinyale with an
image of the Tuscan wild boar on the label.

BODEGAS MURVIEDRO (SPAIN, VALENCIA)

Bodegas Murviedro company founded in 1927 represents the brand Gran Castillo.
Bodegas Murviedro produces 35 million bottles a year and is one of the most important wineries in the
Valencia region. The Gran Castillo brand is in the top 3 of the best-selling wine brands in the Baltics and
in the top 10 of the best-selling brands in 23 countries around the world.

CONO SUR (CHILE)

Cono Sur company was founded in 1993. The winery is located in the city of Chimbarongo in the
Colchagua Valley. The company owns 1,600 ha of vineyards from Limar Valley to Bio-Bio (21
vineyards, 19 varieties).
The logo of Cono Sur is the geographical silhouette of South America. For the first 5 years, Cono Sur
wines received more than 150 medals and awards at the most prestigious international competitions. Cono
Sur is served in top airlines: Lufthansa, British Airways, KLM, Virgin, American Airlines, Finnair and
others.
The Cono Sur brand is in the top 10 of the most famous wine brands in the world.
Product lines: Tocornal, Bicicleta, Reserva Especial, Single Vineyard, 20 Barrels Limited Edition,
Silencio.

DISTELL (South Africa)

Obikwa is a brand of Distell company. Obikwa wines appeared in the international market in 2002 and
are now represented in 43 countries around the world.
The wines were named after the obikwa peoples, who inhabited the South Africa centuries ago, and the
character of the wines fully reflects these peoples. The symbol of Obikwa wine line is an ostrich,
symbolizing the closeness to the nature and attentive attitude of the company to the environment. Obikwa
is one of the first South African bio wines, which is bottled in ultra-light bottles of 350 grams (25% less
than the weight of a standard 750 ml bottle).

BERTON VINEYARD (AUSTRALIA)

Since 2005, Berton has been one of 20 major wineries in Australia and is one of 17 best-selling brands in
the world. Berton wines receive a lot of awards both domestically and internationally (International Wine
Challenge). The Berton winery received 4 stars out of 5 from Australian wine critic James Halliday. The
Burton winery also received an international SFQ certificate (Sale Quality Food) 2000 Level 3. The total
number of produced wines is about 1 mln bottles.

MARKUS MOLITOR (GERMANY, MOSEL)

The owner of the winery is Markus Molitor, who inherited the business in the 80s of the last century,
including the largest farm in the Middle Mosel region, with a total area of 38 ha. The vineyards owned by
the Molitor family are unique: they are planted on steep slopes from Brauneberg to Traben-Trarbach and
the Saar River. Today, Markus Molitor wines are the most valued wines of Germany. Famous wine critic
Robert Parker rated Pinot Noir from Markus Molitor with 100 points similar to the greatest Grand Cru
Classé from Bordeaux.

7. PRODUCTION

Synergy Group operates 6 distilleries that are

according to the strategic Company’s interests located in the largest federal districts including Central,
Far Eastern, North-Western, Volga and Siberian. The number of distilleries and their geographic
diversification
provide the Company with additional savings in matters
of logistics and also reduction of technological risks in production activities. It also facilitates aversion of
other operational risks which
some companies having only one production facility experience at
times. All 6 distilleries operate advanced German and Italian equipment
with more than 15 million decalitres of total capacity.

Our Distilleries

Production programs of all distilleries include production of the full range of national and local brands.
The only exceptions are Beluga and Veda brands which are produced exclusively at the Mariinsky
Distillery in Siberia. Synergy distilleries are an important component of the Group's distribution system:
they are widely used as large logistic centres in their respective regions.

Traditsii Kachestva Distillery is one of the largest distilleries that produces strong spirit beverages in
Russia, it is located in Krasnoznamensk town, Moscow region. The distillery was founded in 1997 and
joined the Group in 2007. In 2009 the distillery became one of the top ten largest distilleries in terms of
production volumes. The distillery operates advanced Italian equipment. The distillery operates as a large
logistic and production centre producing all national vodka brands of the Group throughout the whole
western part of Russia up to Ural border.
Arkhangelsk Distillery was founded in 1899 and is now the largest distillery in Arkhangelsk region. The
distillery was acquired by Synergy in 2004 and is one of the leading strong spirit beverage producers in
the region. The distillery operates advanced high-performance German and Italian equipment.

URALALKO Perm Distillery is the leading strong spirit beverage producer,that is top 50 of the largest
plants in the region. It joined Synergy in 2003. The distillery commenced its activities in 1968 and
specialized initially in grape wine production and sales. The distillery operates advanced German and
Italian equipment. Besides, URALALKO functions as the distribution centre for the Company products
representing all national vodka brands of the Group in the Ural region of Russia.

Ussuriysky Balsam has been the leading factory in the spirit industry of the Primorsky Territory for more
than 100 years. The distillery joined Synergy in 2002. It was founded in 1894 by Mikhail Pyankov, the
merchant. The factory operates both as production and distribution centre and presents all national vodka
brands of the Company in the Far East of Russia.

Mariinsky Distillery in Kemerovo Region is one of the leading distilleries in Russia. The factory has
been in operation since 1900 and it functions as the logistic centre performing production and distribution
of the whole range of the Company products in Siberia. The distillery joined Synergy in 2006.

Khabarovsky Distillery,founded in 1881, is the largest distillery in the Far East. The distillery joined
Synergy in 2005.

8. EXPORT OPERATIONS

In 2016 Synergy continued to strengthen its export network which amounts to over 70 countries in the
world. The Company ranks among the top three of the largest exporters of Russian vodka. Synergy is still
the only company in Russia that successfully exports vodka of super-premium segment.
The super premium segment is the most steadily growing one in the vodka category with its average
annual growth over recent years ranging from 10% to 15% in different countries.
In this growing market, Beluga brand in 2016 grew more than by 36% thus having significantly
consolidated its positions and its global share.
Israel that is in the top 10 of the largest Super Premium markets is among the most outstanding successes
of the past year. Over one year Beluga got almost 16% of Israel's share having increased its sales more
than by 10 times in one year.
Beluga sales keep growing also in key countries of the Western Europe, Germany (12%), Italy (6%),
Spain (5%), Switzerland (5%).
Steady dynamics of the brand growth is still observed across the Eastern Europe. Over 3 years we
increased our sales here more than by three times (the total share increased from 2% to 13%) and are a
confident leader of the super premium vodka segment in Bulgaria, Slovakia, Serbia, Latvia, Lithuania and
Estonia. Our short-term objective for Beluga is to achieve the status of leading brand in the segment
across the Eastern Europe.
The brand already has this status in another large macroregion, CIS. Notwithstanding the general
downward trend of vodka sales in countries of the near abroad Beluga keeps leading the segment.
Duty Free sales are steadily growing too as the brand's presence is growing in existing airports and
expanded due to listings in new ones. For instance, in 2016 we entered the DF market of USA and are
already present in New York, Atlanta, Miami and other big cities.
Five leading countries in sales of super premium Beluga vodka today include: Israel, USA, Vietnam,
Kazakhstan, Germany.
Beluga's short term objective in the export direction is to share 10% of the super premium vodka segment
in the nearest 2-3 years.
The policy started in 2014 towards development of Belenkaya vodka as the Company's second
international brand has been successfully continued in 2016. Belenkaya vodka achieved a good progress
in Romania where sales amount to thousands decalitres a year. The brand keeps growing in Bulgaria. UK,
Germany, Vietnam. There are new significant projects launched: Netherlands, Brazil, Argentina, Italy.
Belenkaya vodka presence is also expanded in the Duty Free segment which contributes to the brand's
stronger global image.
Synergy export is also developing for other brands of the Company. For instance, in 2016 Beloye Ozero
(White Lake) vodka won the Swedish state monopoly's tender and now is available in special alcohol
stores across across country. Besides, Rzhanoj Kolos vodka gained success in Latin America where it is
successfully sold in a number of countries (Brazil, Argentina, Guatemala).

9. PentAgro Group

FOODSTUFF

The Company owns and operates agricultural and food business enterprises, carrying out the production,
marketing and sales of crops, poultry meat, dairy and meat products in Russia. In 2009, all the assets of
this business were separated from the spirits business of the Company and consolidated into a separate
company – JSC PentAgro which is a 100 % owned subsidiary of PJSC Synergy. PentAgro member
companies have leading market positions in the regions of their presence. Marketing and sales of food
products are carried out exclusively under the names of local brands and mainly in those regions where
the corresponding production plants are located. Products are distributed through direct sales, distributors
and wholesalers.

Dairy Products
Dairy products are manufactured and sold primarily in the Primorsky and Khabarovsk Territories. The
company’s dairy assets include two manufacturing businesses: Ussuriysky Milk Plant, JSC located in the
city of Ussuriysk of the Primorsky Territory and JSC "DAKGOMZ" located in Komsomolsk on Amur of
the Khabarovsk Territory.
These factories produce over 100 different products including different categories such as sterilized and
pasteurized milk, sour cream, cottage cheese, butter, cultured milk and soya products, ice cream, etc. JSC
"DAKGOMZ" is one of the few manufacturers of soya milk products in Russia and the only manufacturer
of such products in the Russian Far East.

Meat Processing
Meat products are produced by Nakhodkinsky Meat Processing Plant with location in the city of
Nakhodka, the Primorsky Territory, and are sold throughout the Far East. The plant produces a wide
range of processed meat: cooked, uncooked and semi-cooked sausages, ham, salami and semi-processed
meat. The company is focused on producing high-margin products in the medium price and premium
market segments of the processed meat market.

Poultry Meat Production

Poultry products are distributed mainly in Saratov Region and in the neighbouring regions of the Volga
Federal District. The essential in poultry business is an integrated poultry production complex in Saratov
Region. Its core assets are JSC Mikhailovskaya Poultry Farm and the stud farm JSC PPZ
Tsarevshchinsky-2. The poultry production complex produces the brood chicken egg, broiler chickens
and products made from them – more than 100 kinds of high quality products, including chilled poultry
meat, semi-finished products, ready meals and sausages. The complex also has its own distribution
network, sales department and its own retail stores.
10. FINANCIAL OVERVIEW
Report by the Board of Directors for priority areas

Financial Performance and Operations Results

The table below shows the Company’s consolidated financial performance for 2016 compared to
the figures for 2015.
(In million roubles, except for those figures stating otherwise)
2016 2015 Change
Sales, thousands dL 11,622 9,870 +18%
Sales, including excise tax 57,377 47,591 +21%
Net revenue 35,903 30,706 +17%
Cost of sales 21,385 18,033 +19%
Gross profit 14,518 12,673 +15%
Gross profit margin, % 40.4% 41.3% - 0.9 pp
General and administrative expenses 2,478 2,582 -4%
Selling expenses 9,346 8,260 +13%
EBITDA 3,218 2,885 +12%
EBITDA margin, % 9.0% 9.4% -0.4
Operating profit 2,486 2,109 +18%
Operating profit margin, % 6.9% 6.9% +0пп
Net financial expenses 2,039 1,737 +17%
Net profit 275 241 +14%
Net profit margin, % 0.8% 0.8% 0пп
Net profit per share, RUR 13.79 12.21 +13%
The growth of the Company's shipments by 18%, the growth of net revenue by 17% and the
growth of gross profit by 15% were due to a number of factors:
- absence of excise rate growth allowing better adaptation of the consumers to the current price
levels;
- significant progress made by the state in its struggle against the shadow market;
- organic growth in the categories of vodkas and distilled beverages, as well as brandy;
- two-value growth in export and import operations, mainly due to premium products in the
shipments structure.
Total costs and administrative costs were reduced by 4% up to 2,478 million roubles, being a
direct consequence of the measures aimed at administrative costs optimization.
Business expenses grew by 13% up to 9,346 million roubles. The growth of distribution expenses
is much less than shipments growth pace, being a direct evidence of the effectiveness of the
Company’s adaptive distribution platform.
Consolidated EBITDA for 2016 grew by 12% and amounted to 3,218 million roubles, mainly
due to organic growth.
Additional investments to the working capital conditioned by anticipatory growth of sales led to
increase in the total funding cost, including due to growth of interest on the significantly
increased bank guarantees portfolio. This partly curbed net profit growth: +14% to the last year’s
result.
Report by segments
The table below illustrates the changes in the segmental revenue and gross profit by segments for
the full year 2016 as compared with the similar previous period in 2015. The data presented
below do not include inter-segmental revenue.

(In million roubles)

Alcohol Segment Food Segment
2016 increase 2015 2016 increase 2015
Revenue 29,294 +23% 23,771 6,609 -4% 6,900
Gross profit 13,033 +20% 10,840 1,485 -18% 1,821
Gross profit margin, % 44.5% -1.1 pp 45.6% 22.5% -3.9 pp 26.4%

Alcohol Segment
The dynamics of the alcohol segment indices is similar to the overall results of the Group - the
Company demonstrates growth in revenue and overall profit due to shipments growth and
increase of premium exports and imports. Profitability in gross profit has slightly decreased due
to transferring of a number of trade network to net prices in the end of 2016.

Food Segment
The results in the food segment have worsened as compared to 2016, with a negative impact on
the overall Group results. In particular, the negative poultry meat pricing environment has led to
decrease in revenues against growth of the cost of feed and raw materials.

Capital Structure
The table below shows the changes in the capital structure as of December 31, 2016 as compared
to the previous period:
(In million roubles, except for those figures stating otherwise)
December 31, December 31,
Change
2016 2015
Total debt liabilities 9,053 8,449 +7.1%
Long-term debt liabilities 6,123 5,647 +8.4%
Short-term debt liabilities 2,930 2,802 +4.6%
Share of long-term debt liabilities in total debt,
68% 67% +1пп
%
Share of unsecured debt liabilities in the total
52% 43% +9пп
debt, %
Cash and cash equivalents 1,010 1,161 -13%
Net debt 8,043 7,288 +10.4%
Total Capital and Reserves 19,453 19,261 +1%
Total Capital 26,421 25,463 +3.8%
Net debt / EBITDA 2.50 2.53 -1.1%
In order to provide for actively development of distribution in the growing market, the Company
additionally invested in the working capital (in the first turn in inventories), having resulted in a
10% increase in net debt. Debt growth in the first half of the year amounted to 20%, but after
passing the active growth phase, there appeared an opportunity to decrease investments in the
working capital and stabilize financial debt indices. The average interest rate on loan portfolio as
of 31.12.2016 amounted to 12.53% as compared to 14.06% as of 31.12.2015, and it continued
decreasing in 2017.
It should be also noted that the share of non-secured liabilities increased up to 52%, with
retaining large share of long-term financing.

11. SOCIAL RESPONSIBILITY

Synergy builds its long-term development based not only on its commercial interests, but also on the
principles of social responsibility and ethical standards of doing business, always considering the balance
between business and society interests.
The Company seeks to make a contribution to the development of the Russian economy and the
prosperity of the country’s population. Thus, in 2016 the total volume of its tax payments
exceeded 28 billion rubles. Synergy’s management is convinced that the achievement of excellent results
and management effectiveness are to a considerable extent determined by the level of trust to the
Company. Trust, in its turn, is based on fair treatment and respect for all parties, concerned: shareholders,
customers, business partners, and employees. We build relationships with these groups and shape the
corporate reputation, which is one of the most significant non-financial assets, especially important for
any company operating in the consumer sector of the market.
Our corporate and social responsibility policy is based on the following four priority areas:
- socially responsible marketing and development of responsible alcohol consumption culture;
- socially responsible human resources policy based on mutual respect, fair compensation and
providing our employees with professional growth opportunities;
- taking care of the environment and preservation of natural resources;
- social and cultural initiatives encouraging harmonious society development.

Socially Responsible Marketing

Synergy is one of leaders of the Russian spirit market and with the help of its activity in spirit brands
promotion it tries to set an example of socially responsible marketing within the above mentioned market.
The Company’s products promotion and distribution are aimed exceptionally at adult consumers and we
take into account risks related to excessive alcohol consumption.
The Company performs marketing activities in full compliance with the Russian legislation and puts its
advertisements only on channels allowed by the law. Besides meeting regulation authorities’
requirements, the Company developed its own system of standards in responsible alcohol consumption
and informing consumers, which are based on recommendations and guidelines of such international
organizations as the European Alcohol and Health Forum and the EU Council of Ministers.
Synergy does not impose alcohol consumption process in its marketing activity but makes adults aware of
its products in order they could make a conscious choice in favour of one or another brand.
Synergy also acts as initiator of a wider spreading of information materials explaining the negative effects
of excessive alcohol consumption. So, in 2007, the Company developed and approved its own medium-
term information and explanatory program called "Responsible alcohol consumption." The main
objectives of this project are the avoidance of alcohol consumption among the under age, explanation of
the potential harm of spirit products to some groups of consumers (pregnant women, people suffering
from central nervous system diseases, etc.), prevention of road accidents that happen due to drink-driving.
Apart from following the legislation and more detailed in-house standards Synergy actively participates in
forming industry standards in responsible marketing area. Company’s specialists take part in the
development of such standards on the basis of the Union of Alcoholic Beverage Producers as well as in
cooperation with the Federal Service for Spirit Market Regulation.
Socially Responsible Human Resources Policy
Synergy’s employees are a guarantee of the Company’s future achievements. This is the reason for high
significance of ethical and socially responsible human resources policy for the Company.
Motivation of the staff, objective assessment of the professional contributions of each employee, talent
support and providing conditions for the self-realization of specialists are among the main goals of the
human resources policy. Particular attention is paid to improving life standards of Company’s employees
and their families. Benefits related to healthcare protection can be used by production staff as well as
office employees.
Professional medical checks are carried out at production facilities twice a year. Voluntary Health
Insurance scheme is operating for
office staff.
Moreover, employees and their family members can use benefits related to holiday options. In particular,
employees can be treated at health resorts at the Company’s expense once a year, and they can also send
their children to health resorts and summer camps. The Company tries to do its best in encouraging its
employees to lead a healthy lifestyle.
Synergy sticks to the principle of equal opportunities and the Company guarantees freedom from any kind
of discrimination to its employees. The Company closely monitors staff promotions to
ensure that career advancement is always the result of productivity gains, higher business skills and
gained experience. Recruitment and promotion are carried out without regard to gender, age, national
origin, religious beliefs, political opinions or membership in public associations. All government rules for
employer – employee relations are strictly adhered to.

Taking Care of the Environment

The Company operates in compliance with Russian legal requirements to environmental protection and
seeks to minimize the negative impact of its production process and waste on the nature. The rational use
of energy conservation and industrial waste management are among Company’s priority areas in
environmental protection.
The Company is conscious of the fact that plenty of limited natural resources, such as water and
hydrocarbon fuel, are used in the production process. The Company seeks the ways to utilize resources as
carefully as possible. It shall be noted that conservation of resources has both ethical and economic
significance for Synergy – it is an important component of its general cost management system. Plant
modernization consistently performed by the Company includes building environmental construction and
equipment of production facilities with production monitoring systems preventing environmental damage.

Social and Cultural Initiatives

From year to year Synergy builds up its participation in projects that are aimed at social support of
population in the regions where Company’s facilities are based. The Company conducts system-based
charitable activity and pursues a comprehensive approach to solving social problems in cooperation with
the local authorities.
The Company provides aid to poorest social groups but does not try to use this aid to promote its
products. Neither of such projects is used for information or advertising purposes. Moreover, Synergy
takes all measures necessary to avoid any associations between the aid that is addressed to the under age
and Company’s alcohol brands.
Apart from targeted aid Synergy actively participates in the program of Russian national public
organization "Delovaya Rossiya" (Business Russia) that is oriented to aid orphans, large families that
adopt children from orphanages and infant orphanages. In addition to the above-mentioned program the
Company regularly transfers money to "Delovaya Rossiya" to purchase toys, medication, clothes, books
and many other things necessary for such children and their families. Company was awarded the "Public
Recognition" certificate for this aid.
Also, Synergy has been implementing a policy of openness and participation in new significant projects
of the modern society. Currently, Synergy is supporting the Center for Contemporary Art "Zarya" in
Vladivostok.
Zarya Center is a non-profit organization established to promote the best achievements of Russian and
world’s modern culture in Vladivostok and support local young artists. The center is intended to become
an independent platform for the development of creative ideas through effective dialogue with the world’s
leading masters in the field of contemporary art, design, architecture, cinema, literature, theatre, music,
and new media.
Projects of Zarya Center for Contemporary Art are held under the slogan of experimental methods of
interaction between artists and spectators - performances, open creative workshops, interactive
installations, art therapy sessions, work-in-progress projects - aimed at the development of active
perception of spectators and stimulating the younger generation of artists to find their your own style and
format of the work in the context of current global trends.
One of the key elements of the exhibition program of the Center is the mobile art of the compact format:
miniature works, travelling in suitcases of famous artists to reach the most difficult audience, as well as
large-scale site-specific installations, that their authors reproduce anew from the materials available at
each stop.
Part of the educational program of Zarya Center is lectures on history and theory of contemporary art,
clothes and accessories design, literature, theatre, music and other creative industries; demonstration of
art and documentary films in the original language with subtitles; touring demonstrations of new thematic
festival films, as well as the annual project of An Artist Focus Series - review of the main world’s video
art, initiated by Zarya together with Artprojx Cinema.

12. TO SHAREHOLDERS AND INVESTORS

Shareholder Capital
The Synergy PJSC authorized capital amounts to
2,495,404,900 rubles divided into 24,954,049 uncertified registered ordinary shares with a nominal value
of 100 rubles.
Synergy PJSC ordinary shares were issued under State Registration Number 1-01-55052-E, ISIN:
RU000A0HL5M1.
The Synergy PJSC stock registrar was Open Joint Stock Company "VTB Registrator" (license No. 10-
000-1-00347, issued by the Russian Federal Committee for Securities Market on February 21, 2008).
Company’s shares (Bloomberg code SYNGRU Equity, SYNG RX Equity, Reuters code SYNG RTS) are
listed at the Moscow Stock Exchange, PJSC in the quotation list of the second level under the SYNG
code.
Data on entities entitled to dispose 5 or more percent of securities (as of the date of the preparation of the
list of entities entitled to participate at the annual General Meeting of shareholders, 10.05.2016):

Full corporate name: TOTTENWELL LIMITED

Short corporate name: -
Location:
CYPRUS, LIMASSOL, P.C. 4525, MONI, 8, THANOU KLEOVOULOU

Participation share in the issuer's authorized capital, %: 17.4

Share of owned issuer's ordinary shares, %: 17.4
Number of shares owned by TOTTENWELL LIMITED reduced by 1.2 % vs. previous reporting period.
TOTTENWELL LIMITED is an organization controlled by the Company.

Full corporate name: DEEPLINE CONSULTANTS LIMITED

Short corporate name: -
Location: THEMISTOCLES DERVIS STREET, 12, PALAIS D'IVOIRE, 1ST FLOOR, H/C/ 1066,
NICISIA, CYPRUS
Participation share in the issuer's authorized capital, %: 6.46
Share of owned issuer's ordinary shares, %: 6.46

Full corporate name: SYNEXEC SECURITES LIMITED

Short corporate name: -
Location: 13 CASTLE STREET, ST HELIER, JERSEY JE4 0Z
Participation share in the issuer's authorized capital, %: 13.99
Share of owned issuer's ordinary shares, %: 13.99
Number of shares owned by SYNEXEC SECURITES LIMITED reduced by 0.4 % vs. previous reporting
period.

Full corporate name: SWORD ENTERPRISES LIMITED

Short corporate name: -
Location: 13 CASTLE STREET, ST HELIER, JERSEY JE4 0Z
Participation share in the issuer's authorized capital, %: 14.35
Share of owned issuer's ordinary shares, %: 14.35

Full corporate name: NEW MINES CS INVESTMENTS LIMITED

Short corporate name: -
Location: GLADSTONOS 97, OASIS CENTER, BLOCK A, FLAT/OFFICE 102, 3030,
LIMASSOL, CYPRUS
Participation share in the issuer's authorized capital, %: 12.45
Share of owned issuer's ordinary shares, %: 12.45
Number of shares owned by NEW MINES CS INVESTMENTS LIMITED increased by 0.08 % vs.
previous reporting period.

Full corporate name: ABERDEEN GLOBAL

Short corporate name: -
Location: 2B RUE ALBERT BORSCHETTE L-1246 LUXEMBOURG
Participation share in the issuer's authorized capital, %: 9.0225
Share of owned issuer's ordinary shares, %: 9.0225
Outstanding Bonds
Documentary interest-bearing inconvertible bearer bonds with compulsory centralized storage and
redeemable at the nominal value
Documentary interest-bearing inconvertible exchange-traded bearer bonds with compulsory centralized
storage and early redeemable by demand of an exchange-traded bond bearer

Series BO-04
State Registration Number 4B02-04-55052-E of 26.07.2013
Stock exchange Moscow Stock Exchange, PJSC
Section 3rd level
Trading Code RU000A0JVG89
ISIN Code RU000A0JVG89
Volume at par 2 bn Rubles
Bond Nominal Value per piece 1,000 RUR.
Issue Quantity 2,000,000 pieces
Placement date 04.06.2015
Maturity date 28.05.2020
Circulation period 1,820 days
Number of Coupons ten
Coupon period 182 days

Series BO-05
State Registration Number 4B02-05-55052-Е of 26.07.2013
Stock exchange Moscow Stock Exchange, PJSC
Section 3rd level
Trading Code RU000A0JWFE0
ISIN Code RU000A0JWFE0
Volume at par 2 bn Rubles
Bond Nominal Value per piece 1,000 RUR.
Issue Quantity 2,000,000 pieces
Placement date 19.05.2016

Maturity date 29.04.2020 – the maturity date is

specified given the Issuer's partial call
(Order No. 68-од of 27.04.2016)
Circulation period 1,820 days
Number of Coupons eight
Coupon period 182 days

Account for Payment of Declared (Accrued) Dividends

on Company Shares
Throughout 2016, dividends on ordinary registered shares of Synergy PJSC were neither accrued nor
paid. The Company considers it expedient to reinvest the whole retained earnings and is not planning the
dividends payment. Thus, the Company fulfils its strategic plans to expand sales and increase its market
share, and Company’s shareholders get the benefit in the form of the stock value increase.
Synergy PJSC Ratings
Fitch Ratings
26.10.2016 Issuer's default long-term rating in foreign currency: B+, Outlook Stable.
26.10.2016 Issuer's default long-term rating in the national currency: B+, Outlook Stable.
26.10.2016 National long-term rating: А-(rus), Outlook Stable.

List of Major Transactions Conducted during the Reporting Year

In the reporting year the Company did not make any deals recognized as major ones according to the
Federal Law "On Joint-Stock Companies", or any other deals that demand the procedure for the approval
of major transactions according to the Charter of Synergy PJSC.

List of Interested Party Transactions Made in the Reporting Year

In the reporting year the Company did not make any transactions recognized as interested party
transactions according to the Federal Law "On Joint-Stock Companies."

Review of Transactions Made by Controlled Legal Entities

Transactions on the bank guarantee receipt for the production and sale of alcohol products are the main
transaction type made by spirits plants that are controlled by Synergy PJSC legal entities. Conditions
under which these transactions are made are market ones. The Company does not consider transactions on
bank guarantee receipt to be major transactions.

Information on Each Energy Resource Utilization in the Reporting Year

The Company consumes electricity and heating energy within ordinary amounts necessary for the
administrative employees' proper functioning. The Company rents office premises through a third
party and the current rental agreement does not assume defining a separate sum of compensation for
renter’s utilized energy resources in the total rental payment sum.
13. CORPORATE MANAGEMENT

Synergy PJSC works its way to the optimum management model guided by global best practices, the
Russian market environment and the specifics of its business.
The corporate management system of the dynamic company in a developing market cannot remain static.
That is the reason why Synergy PJSC focuses the improvement of this system for the benefit of its
shareholders.
The Synergy PJSC corporate management is based on the following principles:
- aspiration for the most efficient usage of Company’s assets to receive economic profit;
- strict compliance with the current law;
- equal treatment of all shareholders of the Company;
- business transparency, timely and complete information disclosure;
- ƒattention and respect for all parties concerned in the Company’s business.

The Company's management structure

The Company’s supreme management body is the General Meeting of Shareholders. It controls the Board
of Directors that performs general management of Company’s operations and determines its priority
operation areas and its development strategy. Executive bodies reporting to the Board of Directors are the
Chairman of the Management Board (the sole executive body) and the Management Board (the collegial
executive body) that carry out company’s operative management. Additional control of Company’s
financial and business operations is exercised by the Internal Audit Department, the Board of Director's
Audit Committee, an independent auditor and the Review Commission.

General Meeting of Shareholders

Synergy PJSC shareholders participate in the corporate management by voting at the General Meeting of
Shareholders in accordance with Federal Law "On Joint-Stock Companies" No. 208‑ FZ: shareholders of
company’s ordinary shares may take part in the General Meeting of Shareholders with the right to vote on
all matters within its competence. In 2016, the annual General Meeting of Shareholders was held.

Board of Directors
The Company’s Board of Directors consists of 7 persons, two of which are independent members of the
Board. The Board of Directors operating in 2016 was elected at the annual General Meetings of
Shareholders of Synergy, PJSC held on May 29, 2015 and June 21, 2016.
Composition of the Board of Directors:
1. Belokopytov, Nikolai V.
2. Gomzyakov, Andrey A.
3. Zavadnikov, Valentin G.
4. Kuptsov, Sergey A.
5. Malashenko, Nikolai G.
6. Mechetin, Alexander A.
7. Molchanov, Sergey V.

Sergey Molchanov
Year of birth: 1976

Chairman of the Board of Directors, Deputy Chairman of the Board - Operating Officer of Synergy PJSC
Has held executive positions in companies of Synergy Group PJSC for 15 years. Graduated from the Far
Eastern State University,
Economics Department, with the "economist" speciality. Earned a Bachelor’s Degree in Management at
the University of Maryland University College.
As of the end of the reporting period (31.12.2016) Synergy, PJSC had no shares in ownership. During the
reporting year S.V. Molchanov made the following transactions: acquisition of 27,000 Company's
ordinary registered shares, the transaction date is 01.03.2016, alienation of 5,000 Company's ordinary
registered shares, the transaction date is 06.07.2016, alienation of 59,800 Company's ordinary registered
shares, the transaction date is 17.10.2016.
Sergey Molchanov indirectly owns the Company's shares in the amount of 0.93 % of the Synergy PJSC
authorized capital, ownership percentage of ordinary shares is 0.93 %.
No conflict of interests is present.

Nikolai Belokopytov
Year of birth: 1975

Deputy Chairman - Chief Financial Officer of Synergy PJSC

Has occupied executive positions at enterprises of Synergy Group PJSC for 16 years. Graduated from the
Institute of Economics and Management of the Far Eastern State Technical University.
As of the end of the reporting period (31.12.2016) owned the Synergy PJSC shares in the amount of
0.167 % of the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0.167 %.
During the reporting year N.V. Belokopytov made the following transactions: acquisition of 27,000
Company's ordinary registered shares, the transaction date is 01.03.2016, alienation of 3,000 Company's
ordinary registered shares, the transaction date is 27.07.2016, alienation of 20,000 Company's ordinary
registered shares, the transaction date is 20.10.2016.
Nikolai Belokopytov indirectly owns the Company's shares in the amount of 0.93 % of the Synergy PJSC
authorized capital, ownership percentage of ordinary shares is 0.93 %.
No conflict of interests is present.

Andrey Gomzyakov
Year of birth: 1974

Independent Director,
Director General of Mir Produktov, LLC, Orient, CJSC
Graduated from Finance and Economics Institute of the Far Eastern State Agrotechnical University, with
the "economist-organizer" speciality.
As of the end of the reporting period (31.12.2016) owned Synergy, PJSC shares in the amount of 0.001 %
of the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0.001 %. During the
reporting year Andrey Gomzyakov made the following transactions: acquisition of 2,250 Company's
ordinary registered shares, the transaction date is 01.03.2016, alienation of 2,000 Company's ordinary
registered shares, the transaction date is 19.08.2016.
No conflict of interests is present.

Valentin Zavadnikov
Year of birth: 1963

Independent Director,
Vice President of the SKOLKOVO Management School, Moscow
For 10 years (2002-2012) was the Chairman of the Federation Council's Committee on Industrial Policy.
Graduated from the Admiral Nevelsky Far Eastern Higher Marine Engineering College, with the 'Water
Transportation Use' speciality.
Did not possess any Synergy PJSC shares throughout the reporting period.
No conflict of interests is present.

Sergey Kuptsov

Year of birth: 1973

Head of the Investment Department at Synergy PJSC

Has been working for Synergy PJSC for 16 years. Before that occupied executive positions in investment
company "Tiger Securities" in Vladivostok. Graduated from the Far Eastern State University, Physics
Department. Has a qualification certificate of the Federal Committee of Equity Market, Series 1.0.
As of the end of the reporting period (31.12.2016) owned Synergy, PJSC shares in the amount of 0.13 %
of the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0.13 %.
During the reporting year Sergey Kuptsov made the following transactions: acquisition of 27,000
Company's ordinary registered shares, the transaction date is 01.03.2016, alienation of 1,000 Company's
ordinary registered shares, the transaction date is 18.07.2016, alienation of 5,000 Company's ordinary
registered shares, the transaction date is 19.08.2016, alienation of 6,900 Company's ordinary registered
shares, the transaction date is 18.11.2016.
Sergey Kuptsov indirectly owns Company's shares in the amount of 0.13 % of the Synergy PJSC
authorized capital, ownership percentage of ordinary shares is 0.13 %.
No conflict of interests is present.

Nikolai Malashenko
Year of birth: 1974

Head of the Legal Department at Synergy PJSC

Has been the Head of the Synergy PJSC Legal Department since 2004. Before that occupied different
executive positions in Synergy-Vostok JSC. Graduated from the Far Eastern State University obtaining
two specialities: "law" and "financial management."
As of the end of the reporting period (31.12.2016) owned Synergy, PJSC shares in the amount of 0.002 %
of the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0.002 %. During the
reporting year Nikolai Malashenko made the following transactions: acquisition of 13,500 Company's
ordinary registered shares, the transaction date is 01.03.2016, alienation of 6,500 Company's ordinary
registered shares, the transaction date is 14.04.2016, alienation of 6,500 Company's ordinary registered
shares, the transaction date is 19.08.2016.
No conflict of interests is present.

Alexander Mechetin
Year of birth: 1975

Chairman of the Management Board at Synergy PJSC

The founder of Synergy Group PJSC; has been the Head of the Company for 17 years. Graduated from
the Institute of Economics and Management of the Far Eastern State Technical University, and the Law
Department of the Far Eastern State University. In 2001, defended a PhD thesis in economics on the topic
"Organizational and Economic Provisioning of Enterprises Reforming in the Transition Period." Has the
EMBA degree of the Oxford University.
As of the end of the reporting period (31.12.2016) owned Synergy, PJSC shares in the amount of 0.167 %
of the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0.167 %.
During the reporting year A. Mechetin made the following transactions: acquisition of 112,500
Company's ordinary registered shares, the transaction date is 01.03.2016, alienation of 112,500
Company's ordinary registered shares, the transaction date is 13.04.2016, alienation of 51,324 Company's
ordinary registered shares, the transaction date is 08.12.2016.
A. Mechetin indirectly owns Company's shares in the amount of 28.33 % of the Synergy PJSC authorized
capital, ownership percentage of ordinary shares is 28.33 %.
No conflict of interests is present.

In 2016, 6 meetings of the Board of Directors were held (five meetings held in the form of joint presence
of the Board members to discuss the agenda and make decisions, one was held in the form of absentee
voting), which addressed issues of approval of the Company's stock registrar, preparation, calling and
holding of annual General Meetings of shareholders, election of the Chairman of the Board of Directors,
members of the Board of Directors and members of the committees of the Board, approval of
transactions, internal documents of the Company, recognition of independence of the member of the
Board of Directors and other issues. Each meetings of the Board of Directors in 2016 was held with the
entire attendance of the members.
The Board of Directors assessed its activities in 2016 as reasonable, fair and effective, which was carried
out in the view of the ordinary business risk, taking into account the equal attitude to shareholders.

Committees of the Board of Directors

There are four Committees in the Board of Directors: the Audit Committee, the Strategic Planning
Committee, the HR and Remuneration Committee, and the Financial Committee. Committees carry out a
preliminary review of the most important issues related to the management of the Company, and make
recommendations for Meetings of the Board of Directors.

The Audit Committee of the Board of Directors (hereinafter “the Audit Committee”) ensures the actual
participation of the Board of Directors in control over Company’s financial and economic activities. The
Audit Committee acts on the premise that professional awareness of members of the Board of Directors
relating to financial and economic activities of the Company is necessary for the Board of Directors to
monitor the implementation of budgets (financial and business plans) of the Company, as well as to
monitor the effectiveness of the internal supervision and risk management of the Company.
The Committee's exclusive functions are:
- to monitor completeness, accuracy and reliability of the Company's financial statements including
monitoring of completeness and reliability of tax, accounting and managerial records in the Company;
analysis of Synergy Group statements prepared in accordance with the International Financial Reporting
Standards;
- to monitor reliability and efficiency of the risk management and internal control system performance
including performance valuation of the Company's internal controls and drafting of improving proposals;
- to ensure independence and credibility of internal and external audit functions including assessment of
potential auditors of the Company, assessment of auditor's opinion, performance efficiency monitoring of
the structural subdivision in charge of internal audit of the Company.
Goals and objectives of the Audit Committee and the procedure for coordination with Company’s bodies
are stated in the Provision on the Audit Committee of the Synergy PJSC Board of Directors. The
Committee should include only the members of the Board of Directors who are independent directors
according to the independence criteria set by the listing rules of the stock exchange on which the
Company's securities are traded, or, if it is impossible for objectively reasonable causes, independent
directors and members of the Board of Directors who are not sole executive bodies of the Company
and/or members of the Company's collegial executive body. It is headed by an independent director.
Members of the Audit Committee are:
Andrey Gomzyakov (Chairman of the Committee, Independent Director);
Valentin Zavadnikov (Independent Director);
Sergey Kuptsov.
The Strategic Planning Committee of the Board of Directors of the Company (hereinafter "the
Strategic Planning Committee") ensures the determination of strategic objectives and development of
priority areas of the Company; including business planning, budgeting and other plans of Company’s
financial and business activities for the long-term and current perspective.
Goals, objectives and functions of the Strategic Planning Committee and the procedure for coordination
with Company’s bodies are stated in the Provision on the Strategic Planning Committee of the Synergy
PJSC Board of Directors.
Members of the Strategic Planning Committee are:
Sergey Molchanov (Chairman of the Committee);
Alexander Mechetin;
Nikolai Belokopytov.

The HR and Remuneration Committee of the Board of Directors of the Company (hereinafter "The
HR and Remuneration Committee") ensures the involvement of most qualified specialists in the
management of the Company and creation of necessary incentives for their successful work.
Goals, objectives and functions of the HR and Remuneration Committee and the procedure for
coordination with Company’s bodies are stated in the Provision on the HR and Remuneration Committee
of the Synergy PJSC Board of Directors. The HR and Remuneration Committee should include only
independent directors according to the independence criteria set by the listing rules of the stock exchange
on which the Company's securities are traded, or, if it is impossible for objectively reasonable causes, the
majority of the Committee's members shall comprise independent directors while the rest of the members
may be members of the Board of Directors who are not sole executive bodies of the Company and/or
members of the Company's collegial executive body. It is headed by an independent director. Members of
the HR and Remuneration Committee are:
ƒAndrey Gomzyakov (Chairman of the Committee);
ƒSergey Molchanov;
Sergey Kuptsov.

The Financial Committee of the Board of Directors of the Company (hereinafter "the Financial
Committee") ensures a preliminary review of materials relating to transactions that are Company’s major
transactions and/or interested party transactions which should be approved by the Board of Directors. The
aim of the Financial Committee is to develop and make recommendations as well as advise the Board of
Directors of the Company in transactions approval. Goals, objectives and functions of the Financial
Committee and the procedure for coordination with Company’s bodies are stated in the Provision on the
Financial Committee of the Synergy PJSC Board of Directors.
Members of the Financial Committee are:
Nikolai Belokopytov (Chairman of the Financial Committee);
Sergey Kuptsov.
Nikolai Malashenko.

Executive Bodies of Synergy PJSC

Executive bodies of Synergy PJSC act for the benefit of the Company and its shareholders, and report to
the General Meeting of Shareholders and the Board of Directors.

Management Board
The Management Board develops the operating policy of the Company, coordinates the work of services
and divisions of the Company’s apparatus, it also make decisions on important issues of current economic
operations.
The Management Board acts on the basis of the Company’s Charter approved by the General Meeting of
Shareholders, the Provision on the Synergy PJSC Collegial Executive Body and other in-house
documents of the Company. According to the Synergy PJSC Charter, the number of members of the
Company’s Management Board is defined by the Board of Directors and comprises of at least 4 (four)
persons. The current Management Board was appointed by the Board of Directors on June 28, 2016
(Minutes No. 151 dated 28.06.2016). Before holding the Synergy, PJSC General Meeting of Shareholders
on June 21, 2016, the Management Board performed its activity having the same membership.

Composition of the Management Board

Elena Kim,
Year of birth: 1976

As of the end of the reporting period (31.12.2016) owned Synergy PJSC shares in the amount of 0.006%
of the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0.006%.

Alexander Prokopiev,
Year of birth: 1948

Advisor of the Chairman of the Board for Security of Synergy PJSC

As of the end of the reporting period (31.12.2016) owned Synergy, PJSC shares in the amount of 0.008%
of the Synergy PJSC authorized capital, ownership percentage of ordinary shares is 0.008%.

Oleg Yasenov,
Year of birth: 1981

Synergy PJSC Marketing Director

As of the end of the reporting period (31.12.2016) owned Synergy, PJSC shares in the amount of 0% of
the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0%.
During the reporting year O.I. Yasenov made the following transactions: acquisition of 4,500 Company's
ordinary registered shares, the transaction date is 01.03.2016, alienation of 10,800 Company's ordinary
registered shares, the transaction date is 06.09.2016.

Chairman of the Management Board

Alexander Mechetin
Year of birth: 1975
The Chairman of the Management Board of the Company is appointed by the General Meeting of
Shareholders for the period of 5 (five) years. The extraordinary General Meeting of Shareholders dated
December 16, 2014 appointed Alexander Mechetin as the Chairman of the Management Board for a new
term starting from December 18, 2014.
Rights and duties, responsibility and compensation package of the Chairman of the Management Board
are determined in the contract that is signed with him by the Company.
A. Mechetin is the founder of Synergy Group PJSC and has been the Head of the Company for 16 years.
Graduated from the Institute of Economics and Management of the Far Eastern State Technical
University, and the Law Department of the Far Eastern State University. In 2001, defended a PhD thesis
in economics on the topic "Organizational and Economic Provisioning of Enterprises Reforming in the
Transition Period." Has the EMBA degree of the Oxford University.
As of the end of the reporting period (31.12.2016) owned Synergy, PJSC shares in the amount of 0.167 %
of the Synergy, PJSC authorized capital, ownership percentage of ordinary shares is 0.167 %.
During the reporting year A. Mechetin made the following transactions: acquisition of 112,500
Company's ordinary registered shares, the transaction date is 01.03.2016, alienation of 112,500
Company's ordinary registered shares, the transaction date is 13.04.2016, alienation of 51,324 Company's
ordinary registered shares, the transaction date is 08.12.2016.
A. Mechetin indirectly owns Company's shares in the amount of 28.33 % of the Synergy PJSC authorized
capital, ownership percentage of ordinary shares is 28.33 %.
No conflict of interests is present.

The work of executive bodies is assessed by the Company as efficient. While performing their duties the
Management Board and the Chairman of the Management Board were governed by the legislation of the
Russian Federation, provisions of the Company's Charter, the Provision on the Management Board and
guidelines of the Company's Board of Directors.

Total amount of remuneration (compensation for expenses) of the person holding the position of the Sole
Executive Body, Members of the Collegial Executive Body and Members of the Board of Directors of the
Company
An employment contract, where the amount of remuneration obtained by the Sole Executive Body is
defined, was concluded between Synergy PJSC and the person holding the position of the Sole Executive
Body.
Members of the Synergy PJSC Collegial Executive Body do not get any remuneration or compensation
for performing their duties.
Members of the Synergy PJSC Board of Directors get remuneration (compensation for expenses)
according to the Provision on Remuneration for Members of the Synergy PJSC Board of Directors.
In 2016 and following 2016 no decision on the remuneration payment (compensation of expenses) to
persons holding positions of the sole executive boy, members of the collegial executive bodies and
members of the Board of Directors were not taken and payments were not made.

Information on the amount of remuneration for each management body (except for an individual
performing functions of the sole executive body of the issuer's management):

Board of Directors, RUB thd

Indicator 2016
Salary 43,430
Bonus 9,140
TOTAL 52,570

Collegial Executive Body, RUB thd

Indicator 2016
Salary 128,916
Bonus 38,207
TOTAL 167,123

Corporate Secretary
The Corporate Secretary's functions include:
- engagement in preparing and conducting of general meetings of the Company's shareholders;
- supporting the operation of the Board of Directors and its committees;
- involvement in implementation of the Company's information disclosure policy and keeping of
the Company's corporate documents;
 - managing the interaction between the Company and its shareholders and participating in
prevention of corporate conflicts;
- managing the interaction between the Company and regulatory bodies, trade organizers, registrar,
other professional players of the securities market within the powers vested in the Corporate Secretary;
- ensuring compliance with procedures provided for by the law and by the Company's internal
documents to ensure and monitor exercise of shareholders' rights and legitimate interests;
- prompt notification of the Board of Directors of all revealed breaches of legislation or provisions
of the Company's internal documents compliance with which is the Corporate Secretary's responsibility;
- involvement in improvement of the Company's corporate management system and practice.

Dmitry Timoshin, the head of the corporate law department of Synergy, PJSC, was appointed the
Corporate Secretary (by order of the Chairman of the Board No. 19 of 30.09.2016, decision of the Board
of Directors of 30.09.2016 (Minutes No.152 dated 04.10.2016).
He has higher legal education: graduated from the Academy of National Economy under the Government
of the Russian Federation.
As of the end of the reporting period (31.12.2016) Synergy, PJSC had no shares in ownership.
During the reporting year D.A. Timoshin made the following transactions: acquisition of 3,375
Company's ordinary registered shares, the transaction date is 01.03.2016, alienation of 3,375 Company's
ordinary registered shares, the transaction date is 19.08.2016.

Auditor of the Company

The annual General Meeting of Shareholders of the Company held on June 21, 2016 appointed as the
Company's auditor Limited liability Company Baker Tilly Rusaudit (location: Bld. 8, 5a
Novodmitrovskaya Street, Moscow 127015, INN 7716044594, OGRN 1037700117949), member of self-
regulatory organization of auditors Sodruzhestvo Association, location: Russian Federation, Moscow.
The procedure for selecting the Company's auditor: candidates of potential auditors are proposed by the
Board of Directors for their approval at the General Meeting of Shareholders.
Remuneration of the auditor: for an independent inspection of RAS accounting (financial) statements for
2016 the Issuer paid 370,000 Rubles to the auditor; for an independent inspection of the Company’s IFRS
consolidated financial statements - 8,000 Rubles;

Results of the assessment of the effectiveness of internal and external audit by the Audit Committee

Internal Audit
According to the Internal Audit Policy of Synergy, PJSC, the main objective of internal audit and
of the internal audit department in particular is to ensure effective performance throughout management
levels and to protect legal interests of the Company and its shareholders.
The main task of internal audit and of the internal audit department in particular is to assist the
Board of Directors and executive bodies of the Company in improving the effectiveness of the Company's
risk management and internal monitoring system, the Company's corporate control by assessing the
adequacy thereof, presenting the required conclusions and recommendations as to improvement, and
performing the relevant activities aimed at the check of:
- completeness and reliability of accounting, statistic, management and other reporting of the
Company;
- compliance with laws and regulations of the Russian Federation, decisions of the Company's
regulatory bodies and local regulations;
- soundness of the Company's assets;
- protection of rights and legitimate interests of the Company's shareholders;
- efficiency of implementation of the Company's business projects;
- protection of information systems;
- efficiency and effectiveness of the use of the Company's resources.
The internal audit functions are:
 - assessment of the effectiveness of the internal control system;
- assessment of the effectiveness of the risk management system;
- assessment of the corporate management.

Following the analysis of activities of the Internal Audit Department for the 2016 financial year, the Audit
Committee considers the organization and its implementation of functions and performance of the
Internal Audit Department as satisfactory.

External Audit
The Synergy PJSC external audit for the 2016 financial year under IFRS consolidated statements and
individual reports under the Russian Accounting Standards was conducted by independent auditor
company Baker Tilly Rusaudit LLC, which is a part of international auditor and consulting network
Baker Tilly International. Quality standards of this network and companies being part hereof are
recognized world wide. The Synergy PJSC Audit Committee considers the audit process to be efficient
and having satisfactory results.

Transparency of Information and Relations with Shareholders and Investors

Synergy PJSC appreciates its relations with institutional and private investors and strives for maximum
transparency of its operation. Dialogue with investors is a process that is conducted by the Company on a
daily basis.
The Internal Department of Shareholder and Investor Relations assists the Management Board and the
Board of Directors in communicating with shareholders and the investment community as a whole. The
Department maintains regular contact with institutional investors and investment analysts and regularly
makes perception studies to reveal the investors’ opinion of the Company’s operation. Disclosure of
Company’s semi-annual and annual financial results is accompanied by direct communication of
investors with Synergy OJSC leadership on the telephone and via Internet conferences.
The Synergy PJSC website contains a constantly updated section for investors, which includes news
about the circulation of Company’s securities on the market, presentations, and disclosure of financial
results and information on corporate management.

Information on the Compliance by Synergy PJSC with the Corporate Management Code
In its practice Synergy PJSC plans to implement actively provisions of the Corporate Management Code
recommended for application by Letter of the Bank of Russia No. 06-52/2463 dated 10.04.2014 "On the
Corporate Management Code" in order to increase the Company's attractiveness for existing and potential
investors.
Work was done in the reporting period to identify novelties of the Corporate Management Code to be
implemented in Synergy PJSC corporate management as well as to prepare for the application of
recommendations of the Corporate Management Code by the Company.
A report on the compliance with corporate management principles stated in the Corporate Management
Code, planned (envisioned) actions and events of the Company to modernize the corporate management
model and practice are provided in the Annex to this annual report.
14. DESCRIPTION OF KEY RISK FACTORS

Risk management
Synergy PJSC would not be able to reach its strategic goals without the timely identification and effective
management of existing and potential risks. Risk management and internal control facilitate the
attainment of strategic goals by most efficient means and enable to maintain high quality of the
Company's management.
The risk management and internal control system is based on interaction between Company's
management bodies, its structural divisions and individual employees as well as division of their
competences. Risk control includes all measures aimed at timely risk identification in order to reduce or
exclude it. It may be implemented by internal audit, external audit and internal control.
The Board of Directors assesses the effectiveness of the risk management and internal control system of
the Company as satisfactory.

Economic risks
Risk of Decreasing Demand
The main market risk is decreasing demand for Company’s products, in the first place, decreasing
demand for vodka. The customers’ change of preference in favour of other spirit beverages and
development of state programmes in healthcare can lead to decreasing demand for vodka.

Decreasing Demand Risk Management.

The Company developed a demand survey system in all segments of its products that allows to quickly
respond to possible demand fluctuations. Synergy PJSC expects that probable decrease in vodka demand
will, first of all, affect illegal production and the cheap price segment. The diversified portfolio of the
Company’s brands protects it from decreasing demand in different price segments. The demand
behaviour in Company’s priority vodka premium segments differs greatly from demand behaviour
concerning vodka on the whole; and the Company forecasts an active growth in this segment.
In order to support and develop customers’ demand for Synergy production, the Company regularly
performs the update (restyling) of its own brands.
Apart from the Company’s focus on making premium products, Synergy actively diversifies and enters
another premium segments of strong spirits. So, within the framework of developing its trademark
portfolio the Company has expanded its range, issued its whisky brand, launched its family of liquors and
herbal liquors.

Resource Price Fluctuation Risk

An increase in prices for resources used in the production higher than it was expected can negatively
affect Company’s results by increasing production costs and logistics expenses.
Additional risk factors connected to resources are the expediency and volumes of supplied raw materials.

Resource Price Fluctuation Risk Management

Synergy, PJSC monitors inflation dynamics of resources utilized by the Company, minimizes resource
price fluctuations by means of signing long-term agreements with suppliers, optimization of the
purchasing process and efficient stock management as well as its own proactive price policy.

Financial risks
The Company considers the following financial risks: customer and bank-counterparty credit risks,
interest rate fluctuations, under-liquidity risks as well as the violation of conditions of credit agreements
(covenants). Currency exchange rate fluctuations are considered to be insignificant because the Company
does not have considerable amounts of transactions with foreign contractors.
Information on financial risks and efforts of the Company in minimizing them can be found in notes to
consolidated financial statements (paragraph 27 – Financial Risk Management).

Production Risks
Technology Risks
Synergy, PJSC carries out an investment program aimed at increasing production capacities, increasing
performance, decreasing production costs and maintaining production quality in the process of the
growing production scale. The installation, start-up and maintenance of equipment demand considerable
internal and external engineering resources. Failures in the design process or in the installation process
can lead to the production plan breakdown and to Company’s increased costs. The deterioration of
equipment operating conditions
can lead to the violation of product quality standards.

Technology Risk Management

In order to reduce technology risks, the Company developed a system of scheduled preventive overhauls
and monitoring of product quality. There is a program of regular modernization of equipment to avoid
excessive wear. In order to reduce technology risks, Synergy, PJSC carefully chooses equipment
suppliers and signs long-term service agreements.
The Company carries out the insurance program of fixed assets corresponding to industry standards. The
level of technical staff training is regularly assessed and is improved by means of different trainings and
educational programs.

Risk of Losing Valuable Employees

Competitive conditions on the labour market create the risk of losing key skills and competence due to
employees leaving the Company. There is also a risk of the impossibility to find new qualified personnel
that are essential for maintaining and expanding the Company’s operation.
15. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income

2016 2015

Net revenue 35,903 30,706

Net Cost (21,385) (18,033)
Gross profit 14,518 12,673

General and administrative expenses (2,478) (2,582)

Selling expenses (9,346) (8,260)
Other income/(expenses) (208) 278
Operating profit 2,486 2,109

Share in the associated companies' profit 6 -

Net finance costs (2,039) (1,737)
Profit before taxation 453 372

Income tax (178) (131)

Net profit and consolidated income for the period 275 241

for:
Equity holders of the Company 237 210
Non-controlling shareholders 38 31

Basic revenue per share, RUR 13.79 12.21

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as of as of
December 31, December 31,
2016 2015
ASSETS
Non-current assets
Fixed assets 6,579 6,724
Goodwill 230 235
Investments in associated companies 706 700
Intangible assets 8,653 7,228
Other long-terms assets 115 102
Deferred tax assets 610 478
Total non-current assets 16,893 15,467

Current assets
Inventories 8,789 7,137
Biological assets 274 281
Trade and other receivables 10,252 10,970
Prepayments 509 576
Advance payments of income tax 25 61
Assets held for sale 241 -
Cash and cash equivalents 1,010 1,161
Total current assets 21,100 20,186
TOTAL ASSETS 37,993 35,653

EQUITY CAPITAL AND LIABILITIES

Equity and reserves

Share capital
2,495 2,495
Shares repurchased
(770) (773)
Paid-in capital in excess of par value
5,532 5,582
Retained earnings
11,505 11,268
Total equity attributable to shareholders’ share in
Synergy PJSC 18,762 18,572

Share of non-controlling shareholders

691 689
Total equity and reserves
19,453 19,261

Non-current liabilities
Credits and bonds 6,123 5,647
Deferred tax liabilities 845 555
Total non-current liabilities 6,968 6,202

Current liabilities
Credits and bonds 2,930 2,802
Trade and other payables 8,423 7,326
Income tax payable 219 62
Total current liabilities 11,572 10,190
TOTAL EQUITY CAPITAL AND LIABILITIES 37,993 35,653
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share of
Paid-in
Total non-
Share capital in Retained
Own shares equity controlling Total
capital excess of earnings
capital shareholder
par value
s

Balance as of
2,495 (785) 5,572 11,127 18,409 735 19,144
December 31, 2014
Other changes in non-
– – – – – (57) (57)
controlling interest
Dividends accrued for non-
controlling shareholders of – – – – – (20) (20)
subsidiaries
Separation of other reserves
from issuance revenue and
– – 69 (69) – – –
their inclusion in retained
earnings
Payments based on shares – 27 103 – 130 – 130
Repurchase of own shares – (15) (162) – (177) – (177)
Total changes, not
– 12 10 (69) (47) (77) (124)
recorded into net profit

Total income for the period – – – 210 210 31 241

Balance as of
2,495 (773) 5,582 11,268 18,572 689 19,261
December 31, 2015
Other changes in non-
controlling interest – – – – – (30) (30)
Acquisitions of enterprises – – – – – (6) (6)
Payments based on shares – 33 99 – 132 – 132
Repurchase of own shares – (30) (149) – (179) – (179)
Total changes, not
recorded into net profit – 3 (50) – (47) (36) (83)

Total income for the period – – – 237 237 38 275

Balance as of
December 31, 2016 2,495 (770) 5,532 11,505 18,762 691 19,453
CONSOLIDATED CASH FLOW STATEMENT

2016 2015

Cash flows from operating activities

Profit before income tax and finance costs 2,486 2,109
Adjustments:
Depreciation and amortisation 726 776
(Gain)/loss on disposal of fixed assets 8 (363)
Payments based on shares 132 130
Goodwill depreciation 5 -
Gain on change in fair value of biological assets 15 13
Other non-monetary operations 23 97
Changes in working capital:
(Increase)/decrease in inventories and biological assets (1,643) (1,773)
(Increase)/decrease in accounts receivable 775 2,035
Increase/(decrease) in accounts payable (363) 1,070
Cash flows from operating activities 2,164 4,094

Interest paid (2,004) (1,918)

Income tax paid (63) (109)
Net cash flow from operating activities 97 2,067

Cash flows from investing activities

Acquisition of subsidiaries and associated companies 16 (700)
Acquisition of property, plant and equipment and intangible assets (579) (639)
Disposal of fixed and intangible assets 79 394
Net cash flow from investing activities (484) (945)

Cash flows from financing activities

Repurchase of own shares (179) (177)
Dividends paid for non-controlling shareholders - (21)
Proceeds of credits and bonds 37,532 30,351
Repayment of credits and bonds (37,117) (30,596)
Net cash flow from financing activities 236 (443)

Net increase/(decrease) in cash and cash equivalents (151) 679

Cash and cash equivalents at beginning of the year 1,161 482

Cash and cash equivalents at end of the year 1,010 1,161
EBITDA CALCULATION (UNAUDITED)*

2016 2015

Net profit 275 241

Income tax 178 131
Net financial expenses 2,039 1,737
Amortisation 726 776
EBITDA 3,218 2,885

*- EBITDA represents net income before interest, income taxes and depreciation and amortization, adjusted for interest income, and other
financial expenses. EBITDA margin is EBITDA expressed as a percentage of sales.
The Company presents EBITDA because it considers it an important supplemental measure of the operating performance.
EBITDA has limitations as an analytical tool, and it should not be considered in isolation, or as substitute for analysis of our operating results as
reported under IFRS. Moreover, other companies may calculate EBITDA differently or may use it for different purposes than Synergy, Co. does,
limiting its usefulness as a comparative measure.
EBITDA also should not be considered as an alternative to cash flow from operating activities or as a measure of our liquidity.

57
16. APPENDIX Report on the Compliance with Principles and Recommendations of the Corporate Management Code

REPORT
on compliance with principles and recommendations
of the Code of Corporate Governance (hereinafter referred to as the "Code")

No Principles of Corporate Criteria for assessing compliance with the principle Status of compliance with the Explanations of deviations from the criteria for
. Governance of corporate governance principle of corporate assessing compliance with the principle of
governance corporate governance
1.1 The Company shall ensure equal and fair treatment for all shareholders in implementation of their right to participate in Company's management.
1.1.1 The Company creates for its
shareholders the best possible
1. The internal document of the Company approved
by the General Meeting of shareholders and
 Complied Regulations on the General Meeting of
Shareholders of the Company is in public access:
conditions for participation in the regulating the procedures of the General Meeting is  Partially complied posted on the Internet at the following addresses
General Meeting, the conditions to
elaborate well-reasoned position on
in public access.
 Not complied used by Synergy PJSC for information
disclosure: http://www.e-
2. The Company provides an affordable way of
the agenda of the General Meeting, disclosure.ru/portal/company.aspx?id=7380;
communication with the public, such as hot line, e-
coordinates its activities, as well as http://www.sygroup.ru/investor_center/
mail or forums on the Internet, allowing shareholders
gives the opportunity to express The Company provides an affordable way of
to express their opinions and send questions
their opinions on the issues. communication with the public, such as e-mail.
regarding the agenda in the preparation for the
Contacts for investors are posted on the website
General Meeting. These actions were made by the
of Synergy PJSC: ir@sygroup.ru,
public on the eve of every General Meeting, which
TimoshinDA@sygroup.ru
took place in the reporting period.

58
1.1.2 The order for the notification of the
General Meeting and the provision
1. Notification of the General Meeting of
Shareholders is posted (published) on the website no
 Complied
of materials for the General later than 30 days before the date of the General  Partially complied
Meeting gives shareholders the
opportunity to prepare in due
Meeting.
 Not complied
2. The notification of the meeting includes the place
course for participation in it.
of the meeting and the documents required to access
the premises.
3. Shareholders were provided with access to
information concerning the matter who proposed
agenda items and nominees to the Board of Directors
and the Audit Commission of the Company.
1.1.3 In the course of preparation and
holding of the General Meeting
1. In the reporting period, shareholders had the
opportunity to ask questions to members of the
 Complied In the reporting period, shareholders had the
opportunity to ask questions to members of the
shareholders had the opportunity to executive bodies and the members of the Board of  Partially complied executive bodies and the members of the Board
freely and timely receive
information on the meeting and
Directors before and during the Annual General
Meeting.
 Not complied of Directors before and during the Annual
General Meeting, eligible shareholders could get
materials to it, to ask questions to the information from the list of persons entitled
2. The position of the Board of Directors (including
the executive bodies and members to participate in the General Meeting, as defined
putting special opinions to the minutes), on each
of the Board of Directors, to by the legislation.
item of the agenda of the General Meetings held in
communicate with each other. Items on the agenda of the General Meetings of
the reporting period, was included in the materials
shareholders held in 2016, were approved by the
for the General Meeting of Shareholders.
members of the Board of Directors when calling
3. The Company provided shareholders with a right meetings, there were no special opinions, so the
to access the list of persons entitled to participate in materials for the collection of this information
the General Meeting from the date of its receipt by are not included in the meeting materials,
the Company in all cases of General Meetings in the
reporting period.
1.1.4 Implementation of the
shareholder's right to demand the
1. In the reporting period, shareholders had the
opportunity for at least 60 days after the end of the
 Complied Paragraph 5 of Article 2 of the Regulation on the
procedure of preparation and holding of the
calling of the General Meeting, relevant calendar year, to submit proposals for  Partially complied General Meeting of Shareholders of the
nominate candidates to the
management bodies and make
inclusion in the agenda of the Annual General
Meeting.
 Not complied Company provides for a period for sending
proposals to shareholders to include items in the
proposals for the agenda of the agenda of the Annual General Meeting of
2. In the reporting period, the Company did not
General Meeting did not involve Shareholders and nomination of candidates to the
refuse to accept proposals on the agenda or
unjustified difficulties. management bodies and other bodies of the
candidates in the bodies of the company due to typos
Company, elected at the Annual General Meeting
59
 and other non-essential flaws in the proposal of the of Shareholders, which should be received by the
shareholder. Company no later than 30 days after the end of
the fiscal year. There were no shareholders’
proposals on the agenda or candidates in the
bodies of the company in the reporting year.
1.1.5 Each shareholder had
possibility to freely exercise
the 1. The internal document (internal policy) of the
Company contains provisions, in accordance with
 Complied Internal documents of the Company do not
contain such provisions, but in practice
his/her right to vote in the most which each member of the General Meeting may,  Partially complied shareholders are provided with copies of filled-
simple and convenient way. prior to the end of the meeting, request a copy of
his/her filled-out ballot validated by the counting
 Not complied out ballots, if during the General Meeting of
Shareholders a shareholder requests so.
commission.
1.1.6 The order of the General Meetings
established in the Company
1. During the reporting period, there was enough
time for reports on the agenda and discussion of
 Complied The persons who present at the General Meetings
of Shareholders of the Company have equal
provides equal opportunities to all these issues during the General Meetings of  Partially complied opportunities to express their opinions and get
persons who present at the meeting
to express their opinions and ask
shareholders in the form of a meeting (joint presence
of shareholders).
 Not complied answers to their questions.
Candidates for the management bodies are
questions. available to answer questions of shareholders.
2. Candidates for the management and control bodies
The Company expects to use telecommunications
of the company were available to answer questions
at the Annual General Meeting of Shareholders
from shareholders at the meeting, at which their
in 2017.
nominations were put to the vote.
3. When making decisions related to the preparation
and holding of General Meetings of Shareholders,
the Board of Directors considered the use of
telecommunications means to provide remote access
to shareholders to participate in General Meetings
during the reporting period.
Shareholders are provided with equal and fair
opportunities to participate in the Company's profits
by receiving dividends.

60
1.2 Shareholders are provided with an equal and fair opportunity to participate in Company's profits by receiving dividends.
1.2.1 The Company has developed and
implemented a transparent and
1. The Company has developed the dividend policy,
which was approved by the Board of Directors and
 Complied
clear mechanism for determining disclosed.  Partially complied
the amount of dividends and its
payment.
2. If the dividend policy of the Company engages the  Not complied
Company’s statement metrics to determine the
amount of the dividend, the relevant provisions of
the dividend policy take into account the Company's
consolidated financial statements.
1.2.2 The Company does not make any
decision on payment of dividends,
1. The dividend policy of the company provides
clear reference to financial and/or economic
 Complied
if such a decision, while formally circumstances, in which the Company should not  Partially complied
not violating the restrictions
imposed by law, is economically
pay dividends.
 Not complied
unreasonable and can lead to
misinterpretation about the
Company’s activities.
1.2.3 The Company does not allow the 1. In the reporting period, the Company did not take
deterioration of the dividend rights any actions that led to the deterioration of the
 Complied
of existing shareholders. dividend rights of existing shareholders.  Partially complied
 Not complied
1.2.4 The Company tends to exclude
other ways of profiting (income)
1. In order to exclude other ways of getting profit
(income) from the Company by shareholders, in
 Complied Today, to determine the interest of a transaction,
the Company refers to the provisions of Chapter
from the Company by addition to dividends and the liquidation value, the  Partially complied XI of the Federal Law "On Joint-Stock
shareholders, in addition to
dividends and the liquidation
internal documents of the Company stipulate
monitoring mechanisms that ensure timely detection
 Not complied Companies".

value. and approval procedure for transactions with persons

affiliated (associated) with significant shareholders
(individuals, having the right to manage votes
corresponding to the voting shares), in cases where
the law does not formally recognize such
transactions as interested transactions.
1.3 The corporate management system and practice ensure equal conditions for all shareholders - holders of shares of one category (type) including minority (small) shareholders
and foreign shareholders as well as equal treatment of them from the Company.

61
1.3.1 The Company has created
conditions for fair treatment of
1. During the reporting period, the procedures to
manage potential conflicts of interest by significant
 Complied
each shareholder by the shareholders are effective, and the Board of  Partially complied
management and control bodies of
the Company, including conditions
Directors paid due attention to conflicts between the
shareholders (if any).
 Not complied
to prevent abuse by major
shareholders in relation to minority
shareholders.
1.3.2 The Company does not take 1. Quasi-treasury shares are absent or did not vote
actions that lead or may lead to during the reporting period.
 Complied As of now the legislation does not define the
term of quasi-treasury shares; regulations
unnatural redistribution of the  Partially complied governing the convention of the General Meeting
corporate control.
 Not complied of Shareholders do not provide / describe the
procedure for excluding quasi-treasury shares
from voting / a quorum. If the laws are amended,
the Company will carry out the necessary actions
to comply with this criterion.
1.4 Shareholders are provided with reliable and effective ways to address the rights of the shares and the possibility of free and easy disposal of shares held by them.
1.4 Shareholders are provided with 1. Quality and reliability of the Company’s registrar
reliable and effective ways to activities on keeping the register of securities holders
 Complied
address the rights of the shares and meet the needs of the Company and its Shareholders.  Partially complied
the possibility of free and easy
disposal of shares held by them.
 Not complied
2.1 The Board of Directors carries out the strategic management of the Company, defines basic principles and approaches to risk management and internal control systems,
controls the activity of executive bodies, and performs other key functions.
2.1.1 The Board of Directors is
responsible for decisions linked to
1. The Board of Directors has authorities defined in
the Charter to appoint, dismiss executive officers and
 Complied Reports of the sole executive body and members
of the collegial executive body are never done, as
the appointment and dismissal of define the terms of contracts with them.  Partially complied the Board of Directors is in constant interaction
executive officers, including due to
improper performance of their
2. The Board of Directors reviewed a report (reports)
of the sole executive body and members of the
 Not complied with the executive bodies of the Company and
has full information on their activities.
duties. The Board of Directors also collegial executive body on the implementation of
makes sure that the executive the Company’s strategy.
bodies of the Company act in
accordance with the approved
development strategy and the main
activities of the Company.

62
2.1.2 The Board of Directors establishes
the basic guidelines of the
1. During the reporting period, the meetings of the
Board of Directors addressed the issues related to the
 Complied Issues relating to the definition of key
performance indicators, key business goals of the
Company’s long-term activities, progress of implementation and update of the  Partially complied Company, as well as review of criteria and
indicators for implementation of the Company’s
evaluates and approves key
performance indicators and key
strategy, approval of the financial and economic plan
(budget) of the Company, as well as review of
 Not complied strategy and business plans were addressed by
business goals of the Company, criteria and indicators (including interim ones) of the the members of the Board of Directors during
evaluates and approves the strategy strategy and business plans of the Company. discussion and approval of the Company's annual
and business plans of the report.
Company’s core activities.
2.1.3 The Board of Directors determines
principles and approaches to the
1. The Board of Directors determined principles and
approaches to the organization of the risk
 Complied The Board of Directors did not conduct
assessment of risk management and internal
organization of the risk management and internal control system in the  Partially complied control systems of the Company during the
management and internal control
system in the Company.
Company.
 Not complied reporting year. Definition of principles and
approaches to risk management and internal
2. The Board of Directors has assessed the systems
control systems of the Company is under
of risk management and internal control of the
development.
Company during the reporting period.
2.1.4 The Board of Directors defines the
remuneration policy of the
1. The Company has developed and implemented a
policy (policies), approved by the Board of
 Complied During the reporting period, there was no need to
make changes to compensation and
Company and/or reimbursement Directors, on remuneration and reimbursement  Partially complied reimbursement (compensation) systems to the
(compensation) policy to the
members of the Board of Directors,
(compensation) to the members of the Board of
Directors, executive bodies and other key executives
 Not complied members of the Board of Directors, executive
bodies and other key executives of the Company
executive bodies and other key of the Company. (policies).
executives of the Company.
2. The issues related to this policy (policies) were
addressed during the reporting period at the meetings
of the Board of Directors.
2.1.5 The Board of Directors plays a key
role in prevention, detection and
1. The Board of Directors plays a key role in
prevention, detection and resolution of internal
 Complied
resolution of internal conflicts conflicts.  Partially complied
between the bodies of the
Company, shareholders of the
2. The Company has established a system to detect  Not complied
transactions involving a conflict of interest, and a
Company and Employees of the
system of measures aimed at resolving such
company.
conflicts.
2.1.6 The Board of Directors plays a key 1. The Board of Directors approved the Regulation
role in ensuring the transparency of on Information Policy.
 Complied The Company’s Board of Directors approved the
Regulations on use of information on the

63
 the Company, timeliness and 2. The Company defined persons responsible for the
completeness of disclosure of the implementation of the Information policy.
 Partially complied activities of Synergy PJSC, the Board of
Directors of the Company is responsible for
information by the Company, non-  Not complied compliance with its provisions.
burdensome access of shareholders
to the Company’s documents.
2.1.7 The Board of Directors controls the 1. During the reporting period, the Board of
corporate governance practices and Directors considered the issue of corporate
 Complied
plays a key role in significant governance practices in the Company.  Partially complied
corporate events.
 Not complied
2.2 The Board of Directors reports to the shareholders of the Company.
2.2.1 Information on the work of the 1. The annual report of the Company for the
Board of Directors is disclosed to reporting period includes information on attendance
 Complied
shareholders. of the meetings and committees of the Board of  Partially complied
Directors by individual directors.
 Not complied
2. The annual report contains information on the
main results of evaluation of the Board of Directors'
work during the reporting period.
2.2.2 The Chairman of the Board of 1. There is a transparent procedure in the Company
Directors is available for for providing shareholders with the opportunity to
 Complied
communication with the ask the Chairman questions and express their  Partially complied
Company’s shareholders. opinions on it.
 Not complied
2.3 The Board of Directors is an efficient and professional body of the Company’s management, able to make objective independent judgements and take decisions meeting the
interests of the Company and its shareholders.
2.3.1 Only persons who have excellent
business and personal reputation,
1. The Company’s adopted procedure for
evaluation of the effectiveness of the Board of
 Complied The Board of Directors assesses the candidates
for the Board of Directors during the approval of
and have the knowledge, skills and Directors involves assessment of professional  Partially complied the list of candidates for the members of the
experience required to make
decisions within the competence of
qualifications of members of the Board of
Directors.
 Not complied Board of Directors of the Company at the
General Meeting of Shareholders.
the Board of Directors and for the
2. During the reporting period, the Board of
effective performance of its
Directors (or a committee on nominations)
functions, are elected as members of
evaluated candidates for the Board of Directors as
the Board of Directors.
to whether they have the necessary experience,

64
 knowledge and business reputation, lack of conflict
of interest, etc.
2.3.2 The members of the Board of
Directors are elected in a transparent
1. In all cases of the General Meeting of
Shareholders during the reporting period,
 Complied Shareholders were not provided with the results
of the candidates’ evaluation, taking into account
procedure that allows shareholders to where the agenda had included the election of  Partially complied the fact that all the candidates are repeatedly
receive sufficient information on the
candidates to form an image of their
the Board of Directors, the Company
presented to the shareholders the curricula
 Not complied included in the list of candidates for the
Company's Board of Directors at the General
personal and professional qualities. vitae of all the candidates for members of the Meeting of Shareholders, and are well known to
Board of Directors, the results of the shareholders.
candidates’ evaluation conducted by the In the future, the Board of Directors intends to
Board of Directors (or the committee on include the results of the candidates’ evaluation
nominations), and information on compliance in the information (materials) of the
of a candidate with the independence criteria Shareholders' Meeting.
in accordance with recommendations
102 - 107 of the Code and the written consent of
the candidates to be elected to the Board of
Directors.
2.3.3 The composition of the Board of
Directors is balanced, including by
1. As part of the procedures for assessing the work
of the Board of Directors during the reporting
 Complied
qualifications of its members, their period, the Board of Directors reviewed its own  Partially complied
experience, knowledge and business
qualities, and shareholders trust
needs for professional qualifications, experience,
and business skills.
 Not complied
them.
2.3.4 The quantitative composition of the
Board of Directors ensures
1. As part of the Board of Directors assessment
procedures carried out in the reporting period, the
 Complied The issue of the number of members of the Board
of Directors in the reporting period was not
organization of the activities of the Board of Directors considered the issue of  Partially complied considered, since the Board of Directors
Board of Directors in the most
efficient manner, including the
compliance of the quantitative composition of the
Board of Directors with the needs of the Company
 Not complied consisting of 7 members, as stipulated in the
Company’s Charter, is considered by the Board
possibility to create board and the interests of shareholders. of Directors as optimal to the needs of the
committees, and also gives an Company and the interests of shareholders.
opportunity to significant minority
shareholders of the Company to elect
a candidate they vote for to the
Board of Directors.
2.4 The Board of Directors includes a sufficient number of independent directors.

65
2.4.1 The Board of Directors includes a
sufficient number of independent
1. During the reporting period, all the
independent members of the Board of
 Complied
directors. Directors complied with all the criteria for  Partially complied
An independent director is a person
who has enough professionalism,
independence set out in recommendations 102
- 107 of the Code, or were recognized as
 Not complied
experience and independence to have independent by the decision of the Board of
his/her own opinion, able to make Directors.
objective and honest judgements,
independent from the influence of
executive bodies of the Company,
separate groups of shareholders or
other stakeholders. It should be taken
into consideration that in usual
conditions a candidate (elected
member of the Board of Directors),
which is associated with the
company, its significant shareholder,
a significant counterpart or
competitor of the Company or
related to state bodies, cannot be
regarded as the independent one.
2.4.2 Candidates for members of the
Board of Directors are evaluated for
1. During the reporting period, the Board of
Directors (or a committee on nominations of the
 Complied In the reporting period, the Board of Directors
held its meetings two times to consider questions
compliance with the criteria of Board of Directors) developed its opinion about  Partially complied regarding independence of the members of the
independence; the independent
members of the Board of Directors is
each candidate's independence and submitted the
appropriate conclusion to shareholders.
 Not complied Board of Directors, N.G. Malashenko and A.A.
Gomzyakov.
also regularly analysed for their
2. During the reporting period, the Board of
compliance with independence In the future, the Board of Directors is going to
Directors (or a committee on nominations of the
criteria. During such evaluation, evaluate the independence of each candidate for
Board of Directors) at least once analysed the
content should prevail over form. the Board of Directors and include the results of
independence of the current members of the Board
the evaluation in the information (materials) for
of Directors, which the Company indicated in the
the Shareholders' Meeting.
annual report as independent directors.
3. The Company developed procedures describing
the necessary actions of a Board Member, when
he/she ceases to be independent, including the
obligation to timely inform the Board of Directors

66
 thereof.
2.4.3 Independent directors are at least one 1. Independent directors are at least one third of the
third of the elected Board of Board of Directors.
 Complied 2 out of 7 members of the Company's Board of
Directors are independent.
Directors.  Partially complied
 Not complied
2.4.4 Independent directors play a key role
in the prevention of internal conflicts
1. Independent Directors (who have no conflict of
interest) preliminarily estimate significant
 Complied
in the Company and the Company's corporate actions for possible conflicts of interest,  Partially complied
significant corporate actions. and the results of this evaluation are made
available to the Board of Directors.
 Not complied
2.5 The Chairman of the Board of Directors facilitates the most effective performance of functions charged with the Board of Directors.
2.5.1 An independent director is elected
as the Chairman of the Board of
1. The Chairman of the Board of Directors is an
independent director, or the senior independent
 Complied The Chairman of the Board of Directors of the
Company is not part of the executive bodies
Directors or a senior independent director is identified among independent  Partially complied (Chairman of the Board of Directors, the Board),
director is determined among
elected independent directors who
director<3>.
 Not complied has the necessary knowledge and experience to
manage the activities of the Board of Directors
2. The role, rights and responsibilities of the
will coordinate the work of and its effective operation. The role, rights and
Chairman of the Board of Directors (and, if
independent directors and interact responsibilities of the Chairman of the Board of
applicable, the senior independent director) are
the Chairman of the Board of Directors are defined in the Charter and
properly defined in the Company’s internal
Directors. Regulation of the Board of Directors.
documents.
2.5.2 The Chairman of the Board of 1. The Chairman’s performance is evaluated in the
Directors ensures the constructive framework of performance evaluation procedures of
 Complied Activities of the Chairman of the Board of
Directors comply with this principle. Evaluation
atmosphere of the meetings, free the Board of Directors in the reporting period.  Partially complied of the Chairman’s performance during the
discussion of the issues on the
agenda of the meeting, and control
 Not complied reporting period was not carried out.
The new Board of Directors will be tasked with
over the implementation of evaluating the performance of the Chairman of
decisions taken by the Board of the Board of Directors.
Directors.
2.5.3 The Chairman of the Board of
Directors takes the necessary
1. The Chairman of the Board of Directors'
responsibility to ensure timely provision of
 Complied
measures for timely provision of information to members of the Board of Directors on  Partially complied
information to members of the
Board of Directors for decision-
the agenda issues is set out in internal documents of
the Company.
 Not complied

67
 making on the agenda.
2.6 The Board members act in good faith and reasonably in the interests of the Company and its shareholders on the basis of sufficient information, with due care and attention.
2.6.1 The members of the Board of
Directors make decisions based on
1. The Company's internal documents define that a
member of the Board of Directors shall notify the
 Complied
all the available information, with Board of Directors, if he/she has a conflict of  Partially complied
no conflict of interests,
demonstrating equal attitude to the
interests with respect to any item on the agenda of
the meeting of the Board or the committee of the
 Not complied
shareholders of the Company, and Board of Directors, prior to the discussion of such
within the framework of the item of the agenda.
normal business risk.
2. The Company's internal documents define that the
Board member must abstain from voting on any
matter, in which he/she has a conflict of interests.
3. The Company defined a procedure that allows the
Board of Directors to receive professional
consultations on matters within its competence at the
expense of the Company.
2.6.2 The rights and obligations of the
members of the Board of Directors
1. The Company adopted and published an internal
document that clearly defines the rights and
 Complied
are clearly defined and set out in obligations of the members of the Board of  Partially complied
the internal documents of the
Company.
Directors.
 Not complied
2.6.3 The members of the Board of 1. Individual attendance of the meetings of the Board
Directors have sufficient time to and its committees, as well as the time spent for
 Complied The obligation to notify the Board of Directors of
the intention of the Board members to enter the
perform their duties. preparation for the meetings, were taken into account  Partially complied management bodies of other organizations is not
during the evaluation of the Board of Directors
during the reporting period.
 Not complied defined in the internal documents of the
Company, however the Board members shall
inform the Company of their positions and
2. In accordance with the internal documents of the
relevant changes.
Company, the Board members must notify the Board
of Directors of their intention to join other
organizations’ management bodies (in addition to the
controlled and affiliated bodies of the Company), as
well as the fact of such appointment.
2.6.4 All the Board members have equal 1. In accordance with the internal documents of the
access to the documents and the Company, members of the Board of Directors have
 Complied
68
 information of the Company. The
newly elected members of the
the right to get access to documents and to make
inquiries concerning the Company and its controlled
 Partially complied
Board of Directors are provided organizations, and the executive bodies of the  Not complied
with enough information on the Company should provide relevant information and
Company and the activities of the documents.
Board of Directors as soon as
2. There is a formalized program of informational
possible.
events for newly elected Board members in the
Company.
2.7 Meetings of the Board of Directors, preparation for them and participation of members of the Board of Directors in them ensure the effective activities of the Board of
Directors.
2.7.1 Meetings of the Board of Directors 1. The Board of Directors held at least six meetings
are held as necessary, taking into during the reporting year.
 Complied
account the scale of activities and  Partially complied
the challenges facing the Company
at certain time.
 Not complied
2.7.2 The Company's internal documents
set out the procedure of preparation
1. The Company adopted the internal document
defining the procedure of preparation and holding of
 Complied
and holding of the meetings of the the meetings of the Board of Directors, which  Partially complied
Board of Directors, which allows
members of the Board of Directors
defines that the notification of the meeting should be
sent, as a rule, no less than 5 days prior to the
 Not complied
to properly prepare for the meeting.
meeting.
2.7.3 The form of the meeting of the
Board of Directors is defined
1. The Charter or internal documents of the
Company set out that the most important issues
 Complied Due to different work schedules, work specifics
of members of the Board of Directors, some
taking into account the importance (according to the list in recommendation 168 of the  Partially complied meetings of the Board of Directors are held in
of the issues on the agenda. Most
important issues are decided at in-
Code) should be considered at in-person meetings of
the Board of Directors.
 Not complied absentia. Members of the Board of Directors
keep in contact through modern communications
person meetings. due to which meetings in absentia do not impact
the quality of decisions made by the Board of
Directors.
2.7.4 Decisions on the most important
issues of the Company's activities
1. The Company's Charter provides that
decisions on the most important issues outlined
 Complied At the Company's meetings of the Board of
Directors, the qualified majority of the votes can
are taken at the meeting of the in recommendation 170 of the Code, shall be taken  Partially complied be applied to decisions, for which such a
Board of Directors by a qualified
majority or a majority of all the
at a meeting of the Board of Directors by a qualified
majority not less than three fourths of the votes, or a
 Not complied procedure is stipulated by the legislation of the
Russian Federation.
69
 elected members of the Board of majority of all the elected members of the Board of In 2016, the members of the Board of Directors
Directors. Directors. unanimously decided to accept the
recommendations as to the size of dividends on
the company's shares as set out in
recommendation 170 of the Code.
2.8 The Board of Directors establishes committees for the preliminary review of most important issues of Company’s activities.
2.8.1 For preliminary review of issues
related to the control of financial
1. The Board of Directors created an audit
committee composed entirely of independent
 Complied The Company's Board of Directors created an
Audit Committee the functions of which are
and economic activity of the directors.  Partially complied stated in the Provision on the Audit Committee of
Company, an audit committee
composed of independent directors
2. The internal documents of the company  Not complied the Board of Directors. 2 directors out of 3
directors in the Audit Committee are
define the tasks of the audit committee,
was created. independent. The Audit Committee is headed by
including but not limited to, tasks contained in
an independent director.
recommendation 172 of the Code.
Extension of functions of the Audit Committee of
3. At least one member of the audit committee, being the Board of Directors in accordance with
an independent director, has experience and recommendations with the Corporate
expertise in the preparation, analysis, evaluation and Management Code for the Nomination
audit of accounting (financial) statements. Committee is under development now.
4. The audit committee met at least once per quarter
during the reporting period.
2.8.2 For preliminary review of issues
related to the creation of efficient
1. The Board of Directors set up the remuneration
committee, which consists solely of independent
 Complied The Company’s Board of Directors created a HR
and Remuneration Committee the functions of
and transparent remuneration directors.  Partially complied which are stated in the Provision on the HR and
practices, the Remuneration
Committee was created, consisting
2. The Chairman of the remuneration committee is  Not complied Remuneration Committee of the Board of
Directors. The HR and remuneration committee
an independent director who is not the Chairman of
of independent directors and includes 1 independent director who is not the
the Board of Directors.
headed by an independent director Chairman of the Board of Directors.
who is not the Chairman of the 3. The internal documents of the Company define Extension of functions of the HR and
Board of Directors. the tasks of the remuneration committee, including Remuneration Committee of the Board of
but not limited to, tasks contained in Directors in accordance with recommendations
recommendation 180 of the Code. with the Corporate Management Code for the
Nomination Committee is under development
now.
2.8.3 For preliminary review of issues 1. The Board of Directors established a committee
related to the workforce planning on nominations (or the tasks specified in
 Complied Functions of the Nomination Committee are
performed by the HR and Remuneration

70
 (succession
professional
planning),
staff and
the
the
recommendation 186 of the Code are performed by
another committee<4>), with the majority of its
 Partially complied Committee of the Board of Directors and not in
full correspond to recommendations of the
performance of the Board of members being independent directors.  Not complied Corporate Management Code for the Nomination
Directors, a committee on Committee.
2. The Company’s internal documents define tasks
nominations (nominations, Extension of functions of the HR and
of the nomination committee (or another relevant
personnel appointments) was Remuneration Committee of the Board of
committee with combined functions), including inter
established, with most of its Directors in accordance with recommendations
alia tasks contained in the Recommendation 186 of
members being independent with the Corporate Management Code for the
the Code.
directors. Nomination Committee is under development
now.
2.8.4 Given the scope and risk level, the
Board of Directors made sure that
1. During the reporting period, the Company’s Board
of Directors reviewed the composition of its
 Complied The question of the compliance of the
committees’ composition with the respective
the composition of its committees committees against the tasks of the Board and the  Partially complied tasks of the Board and the goals of the Company
fully meets the goals of the
Company’s activities. Additional
goals of the Company. Additional committees were
either created or were dismissed as unnecessary.
 Not complied was considered by the Board of Directors for the
creation of committees of the Board of Directors,
committees were either created or but was not put in a separate vote. According to
dismissed as unnecessary (strategy the members of the Board of Directors, the
committee, corporate governance committees’ composition corresponds to the
committee, ethics committee, risk tasks of the Board and the goals of the Company.
management committee, budget
committee, committee on health,
safety and the environment, and
others).
2.8.5 The composition of the committees
is defined in such a way that it
1. Committees of the Board of Directors are headed
by independent directors.
 Complied
ensures comprehensive discussion
2. Internal documents (policies) of the Company
 Partially complied
of preliminary issues taking into
account different opinions.
include provisions, under which persons who are not  Not complied
members of the audit committee, the committee on
nominations and the remuneration committee may
attend the committee meetings only upon invitation
of the Chairman of the relevant committee.
2.8.6 The Chairman of the Committee 1. During the reporting period, the chairmen of the
shall regularly inform the Board of committees reported regularly on the activities of
 Complied
Directors and its Chairman on the committees of the Board of Directors.  Partially complied
activities of its committees.
 Not complied
71
2.9 The Board of Directors ensures the assessment of the quality of work of the Board of Directors, its committees and members of the Board of Directors.
2.9.1 Assessment of the quality of the
Board of Directors’ work is aimed
1. Self-assessment or external assessment of the
Board of Directors held during the reporting period
 Complied
at determining the performance of included the assessment of the work of the  Partially complied
the Board of Directors, its
committees and the Board
committees, individual members of the Board of
Directors and the Board of Directors as a whole.
 Not complied
members, the compliance of their
2. The results of the self-assessment and the external
work with the Company’s
assessment of the Board of Directors held during the
development needs, facilitation of
reporting period were discussed at the internal in-
the Board of Directors’ work and
person meeting of the Board of Directors.
identification of improvement
areas.
2.9.2 The assessment of the work of the
Board of Directors, its committees
1. To perform an independent assessment of the
quality of the Board of Directors during the past
 Complied External organizations (consultants) are not
involved in assessment of the quality of work of
and members is performed on a three fiscal years the Company engaged an external  Partially complied the Board of Directors. The Board of Directors
regular basis at least once a year.
To perform an independent
organization (consultant) at least once.
 Not complied considers to engage external organizations
(consultants) for assessment of the quality of its
assessment of the performance of work in the future.
the Board of Directors an external
organization (consultant) is
engaged at least once every three
years.
3.1 The corporate secretary of the Company carries out effective interaction with the shareholders, coordinates the Company's actions to protect the rights and interests of
shareholders, supports the effective work of the Board of Directors.
3.1.1 The corporate secretary has the
knowledge, experience and
1. The Company adopted and disclosed an internal
document - Regulations for Corporate Secretary.
 Complied The annual report provide biographical
information on the Corporate Secretary, with the
qualification, sufficient for the
2. The Company's website and the annual report
 Partially complied same level of details as to the members of the
execution of his/her duties,
impeccable reputation and trust of
provide biographical information on the Corporate  Not complied Board of Directors and the executive
management.
Secretary, with the same level of details as to the
shareholders.
members of the Board of Directors and the executive
management.
3.1.2 The corporate secretary has 1. The Board of Directors approves the appointment,
sufficient independence from the dismissal and the additional remuneration of the
 Complied
executive bodies of the Company corporate secretary.  Partially complied
and has the necessary authorities
72
 and resources to carry out his/her
tasks.
 Not complied
4.1 Remuneration paid by the Company is sufficient for attracting, motivating and retaining persons with competence and qualification necessary for the Company. Remuneration
payment to members of the Board of Directors, executive bodies and other key management employees of the Company is made in accordance with the remuneration policy in
the Company.
4.1.1 The level of remuneration provided
by the Company to the members of
1. The Company adopted an internal document (s) -
the policy (policies) on remuneration of members of
 Complied
the Board of Directors, executive the Board of Directors, executive bodies and other  Partially complied
bodies and other key executives, is
sufficient motivation for them to
key executives, where approaches to the
remuneration of these persons are clearly defined.
 Not complied
work effectively, allowing the
Company to attract and retain
competent and qualified
specialists. Whereas the Company
avoids over-remuneration, as well
as unjustifiably large gap between
the levels of remuneration of such
officials and employees of the
Company.
4.1.2 The Company's remuneration
policy is developed by the
1. During the reporting period, the remuneration
committee reviewed the policy (policies) on
 Complied There is no remuneration policy in the Company.
Development of principles and criteria for the
remuneration committee and remuneration and practice of their implementation  Partially complied remuneration of the members of the Board of
approved by the Board of
Directors. The Board of Directors,
and, if necessary, made certain recommendations to
the Board of Directors.
 Not complied Directors, executive bodies and other key
executives of the Company is carried out by the
supported by the remuneration committee of the Board on nominations and
committee, monitors the remuneration based on the Provision on
introduction and implementation of Committee on HR and remuneration of the Board
the Company's remuneration of Directors of Synergy PJSC.
policy, and if necessary - reviews
and makes amendments to it.
4.1.3 The Company's remuneration
policy contains transparent
1. The Company's policy (policies) contains
(contain) transparent mechanisms for determining
 Complied There is no remuneration policy in the Company.
Development of principles and criteria for the
mechanisms for determining the the remuneration of the members of the Board of  Partially complied remuneration of the members of the Board of
remuneration of the members of
the Board of Directors, executive
Directors, executive bodies and other key executives
of the company, and regulates (regulate) all kinds of
 Not complied Directors, executive bodies and other key
executives of the Company is carried out by the
bodies and other key executives of payments, benefits and privileges provided to such committee of the Board on nominations and
73
 the Company, and regulates all persons. remuneration based on the Provision on
types of payments, benefits and Committee on HR and remuneration of the Board
privileges provided to such of Directors of Synergy PJSC.
persons.
4.1.4 The Company determines the
remuneration (compensation)
1. The remuneration policy (policies) or other
internal documents of the Company establish
 Complied Terms of reimbursement for the Board members,
executive bodies and other key executives of the
policy specifying the list of reimbursement rules for the Board members,  Partially complied Company are established by the Board of
reimbursable expenses and the
level of service, for which the
executive bodies and other key executives of the
Company.
 Not complied Directors' Committee on HR and remuneration in
accordance with the Provision on committee for
members of the Board of Directors, HR and remuneration of the Board of Directors
executive bodies and other key of Synergy PJSC.
executives of the Company may be
eligible. This policy can be part of
the Company's remuneration
policy.
4.2 The remuneration system for members of the Board of Directors ensures the rapprochement between financial interests of directors and long-term financial interests of
shareholders
4.2.1 The Company pays fixed annual
remuneration to the members of
1. The fixed annual remuneration was the only form
of monetary remuneration for the Board members
 Complied In the reporting year, remuneration to members
of the Board of Directors was not paid.
the Board of Directors. The for their work in the Board during the reporting  Partially complied
Company does not pay a fee for
participation in certain meetings of
period.
 Not complied
the Board or Board committees.
The Company does not use the
short-term form of motivation and
additional material incentives for
the members of the Board of
Directors.
4.2.2 The long-term ownership of shares
of the Company mostly unified the
1. If an internal document (s) - the Company's
remuneration policy (policies) include the provision
 Complied At present, the Company's remuneration policy
that includes the provision of the Company's
financial interests of the members of the Company's shares to the members of the  Partially complied shares to the members of the Board of Directors
of the Board of Directors with the
long-term interests of shareholders.
Board of Directors, clear rules of ownership of
shares by the Board members should be provided
 Not complied is being developed.

Whereas the Company does not and disclosed, aimed at promoting long-term
stipulate the right to sell shares ownership of such shares.
with the achievement of certain
74
 performance indicators, and the
Board members do not participate
in option programs.
4.2.3 The Company does not provide
any additional payments or
1. The Company does not provide any additional
payments or compensations in case of early
 Complied
compensations in case of early termination of powers of the members of the Board  Partially complied
termination of powers of the
members of the Board of Directors
of Directors in connection with the transfer of
control over the company or other circumstances.
 Not complied
in connection with the transfer of
control over the company or other
circumstances.
4.3 The remuneration system for executive bodies and other key management employees of the Company provides for the dependence of remuneration on the results of
Company’s operations and their personal contribution to this result.
4.3.1 Remuneration for executive bodies
and other key executives of the
1. During the reporting period, annual performance
indicators approved by the Board of Directors were
 Complied During the reporting year, remuneration for
executive bodies and other key executives of the
Company is determined in such a used in determining the amount of variable  Partially complied Company was not paid.
way as to provide a reasonable and
informed ratio of the fixed
compensation for the members of executive bodies
and other key executives of the Company.
 Not complied
remuneration and variable
2. During the last assessment of the remuneration
remuneration, depending on the
system for the members of executive bodies and
results of the Company and
other key executives of the Company, the Board of
personal (individual) employee's
Directors (the compensation committee) made sure
contribution to the final result.
that the Company used the effective ratio of the
fixed and variable remuneration parts.
3. The Company has a procedure that provides a
return of bonuses, unlawfully obtained by the
members of executive bodies and other key
executives of the company, to the Company.
4.3.2 The Company implemented a long-
term incentive program for the
1. The Company implemented a long-term incentive
program for the members of executive bodies and
 Complied Currently, there is a long-term incentive program
being developed for the members of executive
members of executive bodies and other key executives of the Company with use of the  Partially complied bodies and other key executives of the Company
other key executives of the
Company with use of the
company's shares (financial instruments based on
shares of the Company).
 Not complied with use of the Company's shares (financial
instruments based on the Company's shares) in
company's shares (options or other the Company.
2. The program for the long-term incentives for the
derivative financial instruments
75
 with the Company's shares as the members of executive bodies and other key
basic asset). executives of the company implies that the right to
sell shares and other financial instruments used in
such a program does not begin earlier than three
years from the date of their provision. In this case
the right to implement them occurs upon
achievement of certain performance indicators of the
Company.
4.3.3 The amount of compensation
(golden parachute), paid by the
1. The amount of compensation (golden parachute),
paid by the Company in case of early termination of
 Complied
Company in case of early powers of the members of executive bodies or key  Partially complied
termination of powers of the
members of executive bodies or
executives at the initiative of the Company and in
the absence of their unfair actions, did not exceed
 Not complied
key executives at the initiative of double fixed part of the annual remuneration in the
the Company and in the absence of reporting period.
their unfair actions, does not
exceed double fixed part of the
annual remuneration.
5.1 The Company has created an efficient risk management and internal control system aimed to ensuring the reasonable reliability in attaining goals set to the Company
5.1.1 The Board of Directors determined
principles and approaches to the
1. The functions of the various management bodies
and the Company's divisions in the risk management
 Complied The risk management and internal control system
is based on interaction between Company's
organization of the risk and internal control systems are clearly defined in  Partially complied management bodies, its structural divisions and
management and internal control
system in the Company.
the internal documents and/or respective company
policies approved by the Board of Directors.
 Not complied individual employees as well as division of their
competences.
5.1.2 Executive bodies ensure creation
and maintenance of the effective
1. The executive bodies of the Company ensured
distribution of functions and responsibilities in
 Complied
system of risk management and respect of risk management and internal control  Partially complied
internal control in the Company. between accountable managers of units and
departments.
 Not complied

76
5.1.3 The risk management and internal
control system in the Company
1. The Company approved the anti-corruption
policy.
 Complied The anti-corruption policy is not approved by the
Company. Coordination of activities of
provides an objective, fair and
2. The Company organized an easy way to inform
 Partially complied employees of the structural units of the Company
clear picture of the current state
and prospects of the Company,
the Board of Directors or the audit committee of the  Not complied aimed at prevention, detection and suppression of
unlawful acts of fraud and corruption is
Board of Directors on violations of the legislation,
integrity and transparency of the conducted by the Company's security
internal procedures, the code of ethics of the
Company's statements, the department.
Company.
reasonableness and acceptability of The Board of Directors is informed on the facts
the risks taken by Company. of violations of the law and internal procedures
of the Company.
5.1.4 The Board of Directors takes the
necessary measures to ensure that
1. During the reporting period, the Board of
Directors or the audit committee of the Board of
 Complied
the current system of risk Directors has evaluated the effectiveness of the risk  Partially complied
management and internal control in
the Company meets certain
management and internal control systems of the
Company. Information on the main results of this
 Not complied
principles and approaches as for its evaluation is included in the Company’s annual
organization and effective report.
functioning defined by the Board
of Directors.
5.2 For systemic independent assessment of reliability and effectiveness of the risk management and internal control system and corporate management practice, the Company
organizes internal audit.
5.2.1 To conduct an internal audit in the
Company, a separate structural unit
1. To conduct an internal audit in the Company, a
separate structural unit for internal audit was created,
 Complied
was created or an independent which is functionally accountable to the Board of  Partially complied
external organization was engaged.
Functional and administrative
Directors or the audit committee, or an independent
external organization with the same principle of
 Not complied
accountability of the internal audit accountability was engaged.
unit is separated. The functional
unit of the internal audit is
accountable to the Board of
Directors.
5.2.2 The internal audit unit performs
evaluation of the effectiveness of
1. During the reporting period, the internal audit
assessed the effectiveness of the internal control and
 Complied
the internal control system, the risk risk management systems.  Partially complied
management system, as well as the
corporate governance system. The
2. The Company uses generally acknowledged  Not complied
77
 Company uses generally approaches to internal control and risk management.
acknowledged standards for
internal audits.
6.1 The Company and its activities are transparent for shareholders, investors and other persons concerned.
6.1.1 The Company developed and
implemented the information
1. The Board of Directors approved the Company's
information policy, developed in view of the
 Complied The Company’s Board of Directors approved the
Regulations on use of information on the
policy to ensure the effective recommendations of the Code.  Partially complied activities of Synergy PJSC. A revision of the
information interaction among the
Company, its shareholders,
2. The Board of Directors (or one of its committees)  Not complied Regulation in view of the recommendations of
the Code is under development now.
discussed issues related to the Company's
investors, and other stakeholders.
compliance with its information policy at least once
during the reporting period.
6.1.2 The Company discloses
information on the system and
1. The Company discloses information on the system
of the corporate governance in the Company and the
 Complied
practice of the corporate general principles of corporate governance used in  Partially complied
governance, including detailed
information on the implementation
the Company, including the information placed on
the Company’s website.
 Not complied
of the principles and
2. The Company discloses information on the
recommendations of the Code.
composition of executive bodies and the Board
of Directors, independence of the Board
members and their membership in the
committees of the Board of Directors (as
defined in the Code).
3. If there is a person who controls the Company, the
Company publishes a memorandum of the
controlling person as to the plans of the person for
the corporate governance in the Company.
6.2 The Company timely discloses full, accurate and reliable information on the Company to ensure the possibility of taking reasonable relations by Company's shareholders and
investors.
6.2.1 The Company discloses
information in accordance with the
1. The Company's information policy defines
approaches and criteria to define the information that
 Complied The Company discloses information in
accordance with the principles of regularity,
principles of regularity, could materially affect the assessment of the  Partially complied consistency and operability, as well as the
consistency and operability, as well
as the availability, accuracy,
Company and the value of its securities, as well as
the procedures to ensure timely disclosure of such
 Not complied availability, accuracy, completeness
comparability of the disclosed data.
and

completeness and comparability of information. The approaches and criteria of the Information
78
 the disclosed data. 2. If the securities of the Company are traded on Policy are developed.
foreign organized markets, the disclosure of material
information in the Russian Federation and in such
markets is done synchronously and equivalently
during the year.
3. If foreign shareholders own a significant amount
of shares of the Company, then during the reporting
year the disclosure of the information was carried
out not only in Russian, but also in one of the most
common foreign languages.
6.2.2 The Company avoids a formal
approach to the disclosure of
1. During the reporting period, the Company
disclosed the annual and semi-annual financial
 Complied The Company avoids a formal approach to the
disclosure of information and reveals significant
information and reveals significant statements prepared under IFRS standards. The  Partially complied information on its activities. The annual report of
information on its activities, even
if the disclosure is not required by
annual report of the Company for the reporting
period included the annual financial statements
 Not complied the Company for the reporting period included
figures from the annual financial statements
law. prepared in accordance with IFRS standards, and the prepared according to IFRS standards, the
auditor's report. auditor's report is disclosed as part of the annual
financial statements prepared in accordance with
2. The Company discloses full information on the
IFRS standards, and the quarterly report.
Company's capital structure in accordance with
Recommendation 290 of the Code in the annual
report and on the Company's website.

79
6.2.3 The annual report, being one of the
most important tools of
1. The Company's annual report provides
information on the key aspects of the operations of
 Complied
information interaction with the Company and its financial results  Partially complied
shareholders and other
stakeholders, contains information
2. The Company's annual report contains  Not complied
information on the environmental and social aspects
allowing to assess the results of the
of the Company.
Company's activities for the year.
6.3 The Company provides information and documents upon requests of shareholders in accordance with the principles of equal access and non-onerousness.
6.3.1 Provision of information and
documents by the Company at
1. The Company’s information policy defines a non-
burdensome procedure of providing shareholders
 Complied
requests of shareholders is made in with access to information, including information on  Partially complied
accordance with the principles of
equal access and non-onerousness.
the controlled legal entities, upon request of
shareholders.
 Not complied
6.3.2 When providing information to the
Company's shareholders, the
1. During the reporting period, the Company did not
refuse to satisfy the shareholders' requests for
 Complied
reasonable balance between the information, or such refusals were justified.  Partially complied
interests of specific shareholders
and the interests of the Company,
2. In cases determined by the Company's information  Not complied
policy, shareholders are notified of the confidential
which is interested in the non-
nature of the information and take the responsibility
disclosure of the important
to preserve its confidentiality.
commercial confidential
information that may have a
material impact on its
competitiveness, should be
maintained.
7.1 Actions that significantly affect or may affect the structure of the share capital and the financial condition of the Company and, consequently, the position of shareholders
(major corporate actions) are carried out under fair conditions that ensure compliance with the rights and interests of shareholders and other stakeholders.
7.1.1 The recognized significant corporate
actions are reorganization of the
1. The Company's Charter contains a list of
transactions or other actions that are significant
 Complied The Charter of the Company does not define the
list of transactions or other actions that are
Company, the acquisition of 30% or corporate actions and criteria for their definition.  Partially complied considered significant corporate actions,
more of voting shares (takeover), the
Company's material transactions,
Decisions regarding significant corporate actions
fall within the competence of the Board of
 Not complied decisions on such transactions and actions are
taken in accordance with the Federal Law "On
increase or decrease in the Directors. In cases where the implementation of Joint-Stock Companies".
authorized capital of the Company, these corporate actions is directly and legally In the future the Company plans to establish a list
implementation of the listing and related to the competences of the General Meeting of transactions or other actions that are

80
 delisting of the shares of the of Shareholders, the Board of Directors provides considered significant corporate actions and the
Company, as well as other actions shareholders with appropriate recommendations. criteria for their definition.
that may lead to significant changes
2. The Charter of the Company recognizes at least
in the rights of shareholders or
the following significant corporate actions:
violation of their interests. The
reorganization of the company, acquisition of 30%
Company’s Charter determines the
or more of voting shares (takeover), the Company's
list (criteria) of transactions or other
material transactions, increase or decrease in the
actions, which are considered
authorized capital of the Company, implementation
significant corporate actions and the
of the listing and delisting of the Company's
consideration of which is in the
shares.
competence of the Company’s Board
of Directors including as follows:
7.1.2 The Board of Directors plays a key
role in making decisions or
1. The Company has a procedure in accordance
with which independent directors declare their
 Complied The Company's Charter does not define a list of
transactions or other actions that are considered
elaborating recommendations about opinions on significant corporate actions prior to  Partially complied significant corporate actions. The procedure,
significant corporate actions, the
Board of Directors refers to the
their approval.
 Not complied according to which independent directors declare
their opinions on significant corporate actions
opinion of independent directors of prior to their approval, is not envisaged in the
the Company. Company's Charter and the Regulation on the
Board of Directors.
In the future the Company plans to establish a list
of transactions or other actions that are
considered significant corporate actions and the
criteria for their definition.
7.1.3 When making major corporate
actions affecting the rights and
1. The Company's Charter, taking into account the
peculiarities of its activities, set lower criteria for
 Complied When making major corporate actions affecting
the rights and legitimate interests of shareholders,
legitimate interests of shareholders, classifying transactions of the Company as  Partially complied equal conditions for all the shareholders of the
equal conditions for all shareholders
should be provided, and in cases
significant corporate actions than the minimum
legal requirements.
 Not complied Company should be provided in accordance with
the Russian legislation.
when legal mechanisms aimed at However, the Company did not make any
2. During the reporting period, all major corporate
protecting the rights of shareholders significant corporate actions in 2016.
actions passed the approval process before their
prove insufficient, further measures
corresponding implementation.
to protect the rights and legitimate
interests of shareholders of the
Company should be taken. Whereas
the Company is governed not only
by compliance with the formal
81
 requirements of the law, but also the
principles of corporate governance
set out in the Code.
7.2 The Company ensures such a procedure for significant corporate actions that enables shareholders to timely receive full information on such actions, secures their possibility to
impact such actions and guarantees observation and adequate level of protection of their rights during such actions.
7.2.1 The information on taking
significant corporate actions is
1. During the reporting period, the Company
promptly and thoroughly disclosed information on
 Complied
disclosed with an explanation of material corporate actions of Company, including  Partially complied
the reasons, conditions and
consequences of such actions.
the reasons and timing of such actions.
 Not complied
7.2.2 The rules and procedures relating
to the implementation of
1. The Company's internal documents provide a
procedure to attract an independent assessor to
 Complied The Company’s internal documents provide a
procedure for engaging an independent assessor
significant corporate actions by the determine the value of the property, alienated or  Partially complied in cases stipulated by the Russian legislation.
Company are set out in the internal
documents of the Company.
acquired in a large transaction or an interested party
transaction.
 Not complied There were no major transactions and interested
party transactions during the reporting year.
2. The Company’s internal documents provide a
procedure for engaging an independent assessor to
assess the cost of acquisition and redemption of the
Company’s shares.
3. The Company's internal documents provide an
extended list of reasons, why the members of the
Board of Directors and other persons specified by
the legislation are deemed interested in the
transactions of the Company.

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