INFORMATION ABOUT THE COMPANY

ALROSA. ANNUAL REPORT 2014 001 INFORMATION ABOUT THE COMPANY ALROSA is a Russian group of diamond mining companies that occupies a leading position in the industry and has the largest rough diamond reserves in the world. The Group accounts for one third of the reserves and more than a quarter of the production of the global rough diamond market. The key activities of ALROSA, which are the focus of major strategic efforts of the Group, comprise deposits exploration, mining, processing and sales of rough diamonds. The core activities of ALROSA Group are concentrated in two regions of the Russian Federation, namely Yakutia and the Arkhangelsk Region, as well as on the African continent, in Angola, Botswana and Zimbabwe. The majority of ALROSA revenue comes from selling gem quality rough diamonds, most of which are sold under long-term agreements to Russian and foreign diamond cutting companies. The rough diamond segment accounts for about 90% of the total Group revenue.

002 ALROSA. ANNUAL REPORT 2014 ALROSA. ANNUAL REPORT 2014 003 01 INTRODUCTION 006 GEOGRAPHIC REACH 008 KEY PERFORMANCE INDICATORS 010 ADDRESS OF THE CHAIRMAN OF THE SUPERVISORY BOARD OF OJSC ALROSA 012 ADDRESS OF THE ACTING PRESIDENT OF OJSC ALROSA 02 STRATEGIC REPORT 016 CONTRIBUTION OF OJSC ALROSA TO THE DEVELOPMENT OF THE INDUSTRY. 2014 KEY EVENTS 020 ALROSA MARKET POSITION AND BUSINESS MODEL 026 ALROSA GROWTH STRATEGY 034 MEETING KEY PERFORMANCE INDICATORS 036 OPERATING ACTIVITIES: RESULTS FOR THE REPORTING PERIOD 067 INVESTMENTS AND INNOVATIONS: RESULTS FOR THE PERIOD 079 FINANCIAL RESULTS FOR THE REPORTING PERIOD 088 RISK MANAGEMENT: MANAGEMENT AND CONTROL SYSTEM 097 SUSTAINABLE DEVELOPMENT 03 CORPORATE GOVERNANCE 106 ROLE OF CORPORATE GOVERNANCE IN IMPLEMENTATION OF THE COMPANY S DEVELOPMENT STRATEGY 107 PRINCIPLES OF CORPORATE GOVERNANCE 111 CORPORATE GOVERNANCE STRUCTURE 144 INTERNAL CONTROL SYSTEM 04 FINANCIAL RESULTS 150 AUDITOR S REPORT 156 MAIN FINANCIAL INDICATORS 05 INFORMATION FOR INVESTORS AND SHAREHOLDERS 160 INFORMATION ABOUT SECURITIES OF THE COMPANY 167 INTERACTION WITH THE INVESTMENT COMMUNITY 170 COMPANY DIVIDEND POLICY 06 PHOTO GALLERY: EVENTS OF 2014 172 PHOTO GALLERY 07 APPENDICES 188 5-YEAR DYNAMICS OF OPERATING INDICATORS 189 CONTACT INFORMATION 191 APPENDICES 193 List of LOCAL REGULATORY documents 194 OJSC ALROSA REGISTRAR AND TRANSFER AGENTS OF THE REGISTRAR 196 List and method of CALCULATION of ALROSA Group s KPI 198 Accounting STATEMENTS of OJSC ALROSA based on the Russian ACCOUNTING STANDARDS (RAS) 210 Information on disposal of non-core assets of OJSC ALROSA for 2014 220 Summary DATA on the RESULTS of sales of rough and polished diamonds, and on the achievement of planned targets of ALROSA Group in 2012-2014 224 Information on the Company s interested PARTY TRANSACTIONS and major TRANSACTIONS 242 Information on ALROSA s Compliance with the Corporate Code of Conduct per the RECOMMENDATIONS of the FFMS of Russia 258 Information on ACTUAL results of fulfilment of the INSTRUCTIONS of the President of the Russian FEDERATION and the GOVERNMENT of the Russian FEDERATION received by OJSC ALROSA in 2014 262 Minutes of the meetings of the SUPERVISORY BOARD and the issues considered at the meetings of the Committees 266 Energy CONSUMPTION and IMPLEMENTATION of the ENERGY SAVING program of ALROSA OJSC in 2014 268 Report of the Audit Committee of OJSC ALROSA for 2014

004 ALROSA. ANNUAL REPORT 2014 INTRODUCTION INTRODUCTION ALROSA. ANNUAL REPORT 2014 005 1 ALROSA INTRODUCTION produces diamonds in two regions of the Russian Federation, the Republic of Sakha (Yakutia) and the Arkhangelsk region - 11 kimberlite pipes and 16 placer mines. To maintain and expand its base of mineral raw materials, the company carries out prospecting and exploration works on the territory of the Russian Federation and in the countries of Africa.

006 ALROSA. ANNUAL REPORT 2014 INTRODUCTION INTRODUCTION ALROSA. ANNUAL REPORT 2014 007 GEOGRAPHIC REACH ANABARSKY DISTRICT, RUSSIAN FEDERATION OJSC ALMAZY ANABARA LONDON, UK ARCOS LTD. SAINT-PETERSBURG, RUSSIAN FEDERATION OJSC NPP BOUREVESTNIK (RESEARCH AND PRODUCTION COMPANY) MOSCOW, RUSSIAN FEDERATION BRILLIANTY ALROSA DIVISION, UNITED SELLING ORGANIZATION OF ALROSA REPRESENTATIVE OFFICE IN MOSCOW UDACHNY, RUSSIAN FEDERATION UDACHNY MPD SVETLY, RUSSIAN FEDERATION OJSC VILYUISKAYA HPP-3 NAKYN, RUSSIAN FEDERATION NYURBA MPD AIKHAL, RUSSIAN FEDERATION AIKHAL MPD ARKHANGELSK, RUSSIAN FEDERATION OJSC SEVERALMAZ AMAKINSKAYA EXPLORATION EXPEDITION ANTWERP, BELGIUM ARCOS BELGIUM N.V. BARNAUL, RUSSIAN FEDERATION KRISTALL BARNAUL LLC NYURBA, RUSSIAN FEDERATION OJSC ALROSA-NYURBA YAKUTSK, RUSSIAN FEDERATION ALROSA DIVISION YAPTA (YAKUTSK DIAMOND TRADING ENTERPRISE) REPRESENTATIVE OFFICE IN YAKUTSK GEOGRAPHIC LOCATION NEW YORK, USA ARCOS USA, INC. OREL, RUSSIAN FEDERATION OREL-ALROSA LLC REPRESENTATIVE OFFICE IN OREL GELENDZHIK, RUSSIAN FEDERATION CJSC GOLUBAYA VOLNA RESORT LENSK, RUSSIAN FEDERATION ALMAZDORTRANS PRODUCTION DIVISION OJSC ALROSA-LENA SHIPPING COMPANY SALES DIVISIONS, DIAMOND PRODUCTION NEBUG VILLAGE, RUSSIAN FEDERATION PROMETHEUS HEALTH AND RECREATION CENTRE HONG KONG, CHINA ARCOS HONG KONG LTD. SOCIAL FACILITIES REPRESENTATIVE OFFICES FOREIGN-BASED DIAMOND TRADING COMPANIES DUBAI, UAE ARCOS EAST DMCC RAMAT GAN, ISRAEL ARCOS DIAMONDS ISRAEL LTD MIRNY, RUSSIAN FEDERATION DIAMOND SORTING CENTRE MIRNY MPD MINING AND PROCESSING DIVISIONS EXPLORATION UNITS INDUSTRIAL AND EXPLORATION ENTITIES PRODUCTION INFRASTRUCTURE DIAMONDS AND GEMS COMPLEX LUANDA, ANGOLA HIDROCHICAPA S.A.R.L. REPRESENTATIVE OFFICE IN LUANDA LUANDA SUL, ANGOLA CATOCA LTD. MINING COMPANY CAPITAL CONSTRUCTION DIVISION (UKS), SUPPLIES & LOGISTICS DIVISION (UMTS), YAKUTNIPROALMAZ RESEARCH INSTITUTE, GEO-SCIENTIFIC RESEARCH ENTERPRISE (NIGP), ALMAZAVTOMATIKA SPECIALIZED DIVISION, MIRNY AUTOMOBILE ROADS DIVISION (MUAD) THE CULTURAL AND SPORTS COMPLEX (CSC) TSPK

008 ALROSA. ANNUAL REPORT 2014 INTRODUCTION INTRODUCTION ALROSA. ANNUAL REPORT 2014 009 KEY PERFORMANCE INDICATORS RESERVES ACCORDING TO JORC 608 MILLION CARATS AS OF 01.07.2013 RESOURCES ACCORDING TO JORC 973 97 MILLION CARATS AS OF 01.07.2013 GEM-QUALITY DIAMONDS AMOUNT TO PROFIT OF ALROSA ALROSA PLANS INCREASE IN MINING 41 MILLION CARATS IN 2019 36 MILLION CARATS IN 2014 ALROSA EXTRACTS DIAMONDS 95% 28% IN RUSSIA IN THE WORLD ALROSA DEVELOPS 16 11 PLACER DEPOSITS KIMBERLITE PIPES RESERVES ACCORDING TO STATE RESERVES COMMITTEE DIAMOND MINING AVERAGE CONTENT OF DIAMONDS SALES OF DIAMONDS +4% 1158 MILLION CARATS AS OF 01.01.2015 36,212 THOUS. CARATS 1,4 CARATS/TONNE 39,570 THOUS. CARATS

010 ALROSA. ANNUAL REPORT 2014 INTRODUCTION INTRODUCTION ALROSA. ANNUAL REPORT 2014 011 ADDRESS OF THE CHAIRMAN OF THE SUPERVISORY BOARD OF OJSC ALROSA Dear shareholders, ALROSA Group continues to be the undisputed leader of the world diamond mining industry. In 2014, the Company produced 36.2 mn carats of rough diamonds. Today ALROSA has the largest resource base and one of the longest estimated mining reserve periods among the major players in this market. The organized sales system enabled the Company to earn a record revenue of over $5 bn from sales of its products in 2014. Maintaining the leading position, focusing on the exploration and mining of rough diamonds and consolidating the Company s status on the world market form the basis of the longterm development strategy at ALRO- SA. The Company s current operating and financial figures confirm the economic efficiency of this model. The Company s activities are highly rated on the market, which is confirmed by the fact that since its IPO in October 2013, the Company s capitalization has more than doubled. In 2014, ALROSA took important steps to further develop this strategy. Udachny, the last of the four underground mines under construction, was put into operation. Construction of new enrichment facilities was completed and a new diamond pipe was put into operation in the Arkhangelsk Region. Stripping operations were completed and diamond mining commenced at the Botuobinskaya pipe in the western part of Yakutia. The Company s investments in the construction of new facilities made over the past years are beginning to produce returns. In 2015, ALROSA s production volume will rise to 38 mn carats and in the near future it will exceed 41 mn carats. In order to maintain and expand its resource base, the Company is continuing active geological exploration operations, focusing not only on Russia but also on Africa, a region with a high potential for discovery of new major diamond deposits. The record sales figures achieved by the Company are the direct result of a sales policy based on long-term contracts. Sales under such contracts provide the Company and its customers with stable supplies of rough diamonds, protect against price volatility on the rough diamond market and make it possible to plan business processes. This sustainable model is also integrated in the Company s development strategy and will remain unchanged. ALROSA has already established a pool of clients to work with under long-term contracts for the next 3 years. The Company ensures full transparency of its activities and has high requirements for its clients. Since 2015, long-term clients of OJSC AL- ROSA have to accept the Principles of responsible business conduct, declaring compliance with the requirements of the Kimberley Process in selling rough diamonds, financial transparency and openness of information, combating corruption, fair competition, respect for human rights and labour rights. A clear plan of production development and a balanced sales system make it possible for the Company to maximize the price of diamonds sold and ensure stability and predictability of cash flows from operating activities. Given the actual growth of financial indicators, ALROSA intends to pay dividends for 2014 at the level of 2013 despite receiving a nominal net loss as a result of the devaluation of the ruble. ALROSA implements corporate social responsibility measures in accordance with the best international practices. In 2014, the ALROSA Policy in the field of sustainable development and corporate social responsibility was developed and approved. It is aimed at respecting the rights and interests of employees, improving the quality of life, and promoting active development of the regions where the Company operates. The prerequisites for the development of this document were the strategic goals of the Company and compliance with recommendations of international experts and auditors. Today the ALROSA Supervisory Board comprises experienced directors and managers who are well versed in the specifics of the diamond industry and understand the challenges and tasks facing the Company. In 2014 we assessed the work of the Supervisory Board for the first time with the help of independent auditors. Following the assessment, the experts spoke favorably of the speed at which complex issues were addressed, the high level of teamwork and the efficiency of decision-making. I would like to acknowledge the tremendous contribution made to the development of the Company by Fyodor Borisovich Andreev, who passed away prematurely. Mr Andreev joined ALROSA in the difficult period of crisis and in just 5 years he managed to build a truly world-class company. Today ALROSA is one of the most successful mining companies in Russia and a major player on the world rough diamond market. The achievements that make the Company and its shareholders proud today are, in many respects, his achievements. I would like to praise the actions taken by the President and the Management Board of the Company and thank all the employees of ALROSA Group for their hard work in 2014. I am confident that the successful implementation of the development strategy carried out by many thousands of professionals employed by the Company will enable ALROSA Group to strengthen its leading position on the rough diamond market, and ensure sustainable long-term production, revenue growth, and an increase in shareholder value. Ilya Yuzhanov, Chairman of the Supervisory Board of OJSC ALROSA

012 ALROSA. ANNUAL REPORT 2014 INTRODUCTION INTRODUCTION ALROSA. ANNUAL REPORT 2014 013 ADDRESS OF THE ACTING PRESIDENT OF OJSC ALROSA Dear shareholders, In 2014 ALROSA confirmed its status as the world s largest supplier of diamonds. ALROSA enterprises extracted 36.2 mn carats of rough diamonds, the Company today accounts for over 25% of the world market. This leading position is the result of many years of consistent work aimed at developing production. In the past year, ALROSA completed an important phase in its development having implemented a program for the construction of underground mines in the Republic of Sakha (Yakutia). In June, the Company put the Udachny underground mine into operation. When it reaches its design capacity, the mine will produce 4 million tonnes of ore per year and will be the largest ALROSA underground mine and one of the largest mines in the world. Udachny is the fourth of the underground mines to be constructed under the ALROSA development program. In the past years, the Company also brought the Aikhal mine to design capacity and put the Mir mine into operation. The program for a transition to underground mining, in which ALROSA invested heavily, will allow the Company to maintain a stable high level of production in Yakutia. In the Arkhangelsk Region ALROSA put the processing facilities into operation allowing the Company to mine and process 4 mn tonnes of ore per year at the Lomonosov mine. We can in fact say that a new diamond mining province has appeared on the map of the Russian Federation, as until recently rough diamonds from hardrock deposits were only mined commercially in Yakutia. In 2015, OJSC Severalmaz will begin bringing about 2 mn carats of diamonds per year to ALROSA following the opening of Karpinskogo-1, a new kimberlite pipe, and in the long run production will increase to 5 mn carats. The world rough and polished diamond market situation in 2014 was not stable. Steady growth in the first six months of the year turned into a decline in demand in the second half of the year. Despite this, sales of rough and polished diamonds by ALROSA in 2014 exceeded the $5 bn mark for the first time in the Company s history. We were able to achieve such high figures due to an effectively organized sales system based on long-term contracts. The balanced system of sales to the largest participants of the global rough diamond market is approved by our shareholders and integrated in the Company s long-term development program. In 2015 ALROSA will begin a new three-year contract period, long-term agreements have been concluded with 47 clients. In 2014 ALROSA paid great attention not only to the organization of sales but also to working together with participants of the rough and polished diamonds market. During the year, the Company entered into memoranda of understanding with several key industry organizations. These agreements will facilitate information exchange between members of the industry and will help to provide a better understanding of the market conditions. They will also create a platform for working together in protecting the market from synthetic gems and protecting the reputation of diamonds, on which the long-term demand for our products ultimately depends. Within the framework of implementation of the strategy approved by the shareholders, ALROSA is focusing on the rough diamond mining business and continues to withdraw from noncore assets. In 2014 ALROSA closed large transactions involving the sale of CJSC Irelyakhneft oil producing company and INTERFINANCE financial investment company as well as the public sale of its insurance business to SOGAZ Group. In addition, the Company withdrew from participation in the capital of LLC Mediagroup Sitim, Sakha Diamond Corp., CJSC BRINT-M, OJSC Udachny KPP and JSCB SIR. The Company will continue disposing of non-core assets in 2015. In 2014 ALROSA demonstrated steady growth in terms of key operating and financial figures. The Company s Revenue increased 23% to RUB 207.2 billion, the flow of funds from core activities rose 40% in comparison to the previous reporting year totalling RUB 78 billion and in terms of EBITDA profitability (45.3%) OJSC ALROSA is one of the leaders of the Russian mining industry. However, the sharp rise of the dollar exchange rate in 2HY 2014 resulted in the revaluation of foreign currency liabilities, which at the end of the year led to a nominal net loss of RUB 16.8 bn in accordance with IFRS. ALROSA maintains a high level of corporate social responsibility. In 2014, the Company ensured that the salaries increased 8% on average in accordance with the Collective agreement, and continued the implementation of all corporate programs, including residential construction, pension, culture, sports and healthcare programs. The programs for local community support and environmental protection are being implemented in full. Today ALROSA, with its considerable mineral resource base and major investments in the production, has set itself the strategic objective of reaching an annual level of production of approximately 41 million carats. As early as in 2015 ALROSA diamond production will reach 38 mn carats due to the increased ore mining volumes at the Mir and Udachny underground mines and the start of open pit mining at Botuobinskaya and Karpinskogo-1 pipes. Implementation of the strategy of industrial development and withdrawal from non-core assets, efforts to expand the resource base, stable sales marketing and an efficient marketing policy have all contributed to ALRO- SA consolidating its position on the global rough diamond market. All the good performance indicators that we are proud of today were largely made possible by the great personal contribution of Fyodor Borisovich Andreev, the President of ALROSA, who passed away prematurely. His goal was to make the Company a global leader in all aspects. He dreamed that Russia, Yakutia and every employee would be proud of the Company. He was able to do a great deal for the production development and social and economic development of the Republic. We will remember his contribution and build on the good work that Mr Andreev has done. On behalf of the Executive Committee, I sincerely thank the shareholders of the Company, the Governments of the Russian Federation and the Republic of Sakha (Yakutia), the members of the Supervisory Board and all our business partners for their trust and support. Ilya Ryashchin, Acting President of ALROSA

014 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 015 2 STRATEGIC REPORT The main objective of ALROSA is to strengthen its leading position in the global diamond market by focusing on profile activities exploration, production and sale of rough diamonds. Successful implementation of the Group s tasks will ensure a steady production growth and secure long-term interests of its shareholders.

016 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 017 CONTRIBUTION OF OJSC ALROSA TO THE DEVELOPMENT OF THE INDUSTRY. 2014 KEY EVENTS The ALROSA strategy aims to keep and maintain leading positions in the production of rough diamonds. In 2014, the company was able to implement the planned strategic initiatives that in the future will increase rough diamond production to 41 mn carats per year. In 2014 ALROSA completed the following major projects aimed at expanding existing facilities and put into operation new facilities: the second module of the processing plant of the Lomonosov Mining and Processing Enterprise in the Arkhangelsk Region reached the designed capacity. An increase in the processing capacity of OJSC Severalmaz from 1 mn to 4 mn tonnes of ore per year made it possible to start production at Karpinskogo-1, a new pipe, in addition to the producing open pit at the Arkhangelskaya pipe. As early as in 2015 OJSC Severalmaz will reach a level of production of about 2 mn carats of diamonds and in the future will increase this figure to about 5 mn carats per year; Udachny mine, the last of the four mines included in the program for the construction of underground mines in Yakutia, was put into operation. When it reaches the design capacity, it will become one of the largest enterprises and will produce 4 mn tonnes of ore, or over 5 mn carats of rough diamonds per year. The program for the transition to underground mining, in which ALROSA has invested heavily in previous years, will allow the Company to maintain a stable high level of production in Yakutia; construction was completed of the Botuobinsky open pit at the Nyurba Mining and Processing Division, with a design capacity of 400,000 tonnes of ore; Ebelyakh River and Gusiny Brook placers owned by OJSC Almazy Anabara were put into operation. In 2014, with a view to developing the mineral resource base in the most promising regions, the Company implemented the following initiatives: obtained a license for exploration and mining at the Molodovo River deposit and the right to use the subsoil at the Olom Brook and Log 325 Brook deposits and Zarya pipe; ensured that research and production geological exploration works were performed in joint ventures in Angola, Botswana, Zimbabwe; increased exploration efficiency through introducing the use of contracted drilling services, which lowered the cost of the works by 17.5%. In 2014 ALROSA continued interaction with leading international organizations and cooperation with representatives of the diamond industry. The Company took an active part in the Kimberley Process. ALROSA contributed to completing the reform of the World Diamond Council (WDC) by establishing new management bodies (a representative of the Company became a member of the Board of Directors and Executive Committee of the WDC), developing a new agenda and determining ways to further develop the organization. In the past year ALROSA signed memoranda of understanding with the Gems and Jewellery Export Promotion Council of India (hereinafter referred to as the Council), the Dubai Diamond Exchange and the Diamond Dealers Club of New York. These agreements provide for close cooperation across a wide range of areas. In the course of cooperation with the Council, with the support of OJSC ALROSA, the World Diamond Conference took place in New Delhi (India) with the participation of Vladimir Putin, the President of Russia, and Narendra Modi, the Prime Minister of India, heads of major diamond mining companies of the world, representatives of industry organizations and financial institutions. The Russian Federation represented by the Federal Agency for State Property Management (Rosimushchestvo) is one of the shareholders of the Company. 1 In 2014 ALROSA provided full reports on the actual results of executing the instructions of the President and the Government of the Russian Federation. As for execution of the orders, the following initiatives were implemented in the Company in the reporting period: the ALROSA Group long-term development program up to 2023 was approved taking into account the recommendations prepared by the Ministry of Economic Development of the Russian Federation; measures were taken to ensure effectiveness of procurement involving the purchase of goods from small and medium-sized enterprises, including the purchase of high-tech and innovative products, as well as to reduce the cost per item of goods in the procurement process; a system of key performance indicators was developed for the remuneration of the top management; steps were taken to integrate the provisions of the Corporate Governance Code in the Company s activities; the Program for Innovation Development and Technological Upgrade of OJSC ALROSA for the period from 2011 to 2018 was updated; 1 The share in the registered capital is 43.9256%. The full information on the actual results of executing the orders of the President and the Government of the Russian Federation issued to OJSC ALROSA in 2014 is disclosed in Appendix 7.3.11. to the Annual Report. a new version of the Program on the non-core assets disposal of OJSC ALROSA was approved; steps were taken to structure the work of the Unified Treasury and the financial flows management system, which will make it possible for the Unified Treasury to start functioning from 2HY 2015.

018 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 019 2014 KEY EVENTS On March 14, in the Arkhangelsk region, ALROSA (subsidiary of OJSC Severalmaz) launched a second processing plant at the Lomonosov MPD. Such introduction of new processing facilities will allow processing additional volumes of ore at the Arkhangelskaya pipe. According to the forecasts, OJSC Severalmaz will reach the diamond production level of more than 5 mln carats per annum by 2021. On June 27, 2014 ALROSA Group commissioned Udachny underground mine. Reaching its design capacity of 4 mln tons of ore per year, Udachny will become the largest underground diamond mine in Russia and one of the largest worldwide. The underground mine is expected to reach its design capacity in 2019. On June 28, the Annual General Meeting of Shareholders of OJSC ALROSA was held in Mirny. During the voting, the shareholders adopted a resolution on payment of dividends based on the results of 2013, the dividends grew by 32 % up to RUB 1.47 per ordinary share compared with the previous year. ALROSA has received a RUB 1.028 bln installment from EVRAZ plc for a 51% stake in OJSC GMK Timir, including RUB 990 mn to repay the principal plus the interest on the outstanding balance. Within the framework of the corporate non-core asset disposal programme, ALROSA announced about signing of an agreement with CJSC Russian Funds on sale of a 19.9 % stake in Financial Investment Company INTERFINANCE for RUB 8.9 mn. ALROSA has sold its 99.74% stake in ALROSA Insurance Company to OJSC SOGAZ. The deal was priced through an open auction at RUB 620 mn. ALROSA sold its insurance business as part of the corporate non-core asset disposal programme to focus on diamond mining exclusively. EVENTS AFTER THE REPORTING DATE ALROSA compiled a list of long-term customers for the new contract period of 2015-2017. Within the period from January 19 to January 23, the company's new long-term customers carried out the first trade session. ALROSA sold its 84.7% stake in LLC MAK-Bank to Expobank, the purchase price of the said stake is RUB 200.9 mn, including taxes. 2014 2015 OJSC Severalmaz started extracting ore at Karpinskogo-1 pipe of the M.V. Lomonosov diamond deposit in the Arkhangelsk Region. On May 15, the shares of ALROSA were added to MSCI index. On April 28, ALROSA attracted two long-term bank loans in the total amount of USD 1,090 for a 3 year period. The funds in the amount of USD 820 mln were spent on early repayment of bank loans with withdrawals in June and December 2014. The ALROSA's bank loans and public debt instruments account for USD 4 bln with long-term debt share of 88 % as of April 30, 2014. On December 11, the Supervisory Board of ALROSA approved the Long-Term Program for Development up to 2023. Successful implementation of the development program will allow ALROSA Group to strengthen its leadership on the diamond market, ensure the stable long-term growth of production and proceeds, as well as the growth of shareholder value. The ALROSA Group (Nizhne-Lenskoe OJSC) won the auction for the right to carry out exploration and mining on the diamond placer along the Molodo River in the Republic of Sakha (Yakutia). ALROSA and Israel Diamond Stock Exchange signed a Memorandum of Understanding to strengthen partnership and develop the diamond mining industry in Russia and Israel.

020 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 021 ALROSA MARKET POSITION AND BUSINESS MODEL concentrated in India and China. Major jewellery brands collectively hold 15-20% of the total polished diamond jewellery manufacturing market. The average profitability in the jewellery production segment is 3-5%. RETAIL sales The main players on the retail polished diamond jewellery market include specialized jewellery shops, retail chains, department stores and online stores. Profitability in the retail sales segment is from 4-6% (small shops) to 14-18% (large chain stores) based on the size of the business. The leading polished diamond jewellery consuming countries are the USA, China and India, accounting for over 60% of the world polished diamond jewellery consumption. The USA accounts for about 35% of the consumption. Among the major macroeconomic factors that determine the demand for polished diamond jewellery, specialists highlight a higher level of disposable personal income and, mainly for China and India, the number of households with an annual income greater than $10,000. These factors are directly related to the growth of the country s GDP. BRIEF DESCRIPTION OF THE DIAMOND INDUSTRY The value chain in the diamond industry (from geological exploration and mining to retail sales of jewellery to end customers) includes several segments with significantly different economic characteristics. WORLD DIAMOND PRODUCTION IN 2014 KEY SEGMENTS Exploration, production and sale of rough diamonds The geological exploration and rough diamond mining segment is characterized as having a limited mineral and raw material base, a lengthy exploration and deposit development cycle, a large technological input and substantial investments. Due to these factors, the rough diamond mining market has a small number of participants. Given the current plans of diamond mining companies, expected deadlines for putting new pipes into production, the retirement of reserves of the existing deposits, the gradual transition from open pit to underground mining and changes in the quality structure of production, Bain & Company predict a moderate increase in the supply of rough diamonds in the coming years. The average annual rough diamond supply growth rates during the period from 2013 to 2019 are expected to be 3.5-4% per year, with a subsequent decrease of -1.5-2% per year during the period from 2019 to 2024. The average operating margin in the exploration and mining segment is 21-25% and 1-3% in the rough diamond sales segment. Cutting and sale of polished diamonds Gem quality diamonds are cut by specialized companies. Nowadays, most of the world s rough diamonds are processed in India. Historically, Belgium, Israel and the USA are also considered as the world s major cutting centres. The average level of profitability in the polished diamonds cutting and sales segment is 2-4%. MANUFACTURE of polished diamond JEWELLERY The key players in the jewellery design and manufacture segment are specialized manufacturers, international companies manufacturing luxury goods, and representatives of regional brands. There are a total of over 10,000 companies in this segment. Suppliers of little-known brands account for the vast majority (80-85%) and are mainly Over the past two years the world production volume levelled off at around 130 mn carats. Before the 2008-2009 crisis, world rough diamond production was 160-170 mn carats, but since 2009 there has been a significant drop in production to 120-130 mn carats of 24 8 9 OTHER COUNTRIES CANADA AUSTRALIA 12 DROC PRODUCTION VOLUME DISTRIBUTION IN 2014 natural diamonds. The Russian Federation ranks first in the world in terms of production volume. Botswana, Congo, Australia and Canada were also among the top five in 2014. Zimbabwe, Angola and South Africa are also major producers. These 8 countries account for 97% of the world production. 2 The world diamond production in 2014 is estimated at 131 mn carats, which corresponds to the level of 2013. RUSSIA 29 BOTSWANA 18 2 Statistics of the Kimberley Process.

022 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 023 KEY INDICATORS FOR ALROSA GROUP ROUGH DIAMOND DEMAND AND SUPPLY BALANCE IN 2014 DIAMOND MINING 3771 +23% SALES OF DIAMONDS 4901 $ MILLION $ MILLION +1,1% GROWTH IN RESERVES AND RESOURCES ACCORDING TO STATE RESERVES COMMITTEE 25.6 MILLION CARATS CAPITAL INVESTMENTS 38,537 MILLION RUBLES TAX OBLIGATIONS 42 BILLION RUBLES +13% GEOLOGICAL EXPLORATION 27 LICENSES 39 OBJECTS COST OF GEOLOGICAL EXPLORATION 6042.9 MILLION RUBLES +2,6% COST OF SOCIAL PROGRAMS 10,816 MILLION RUBLES The actual supply of rough diamonds by the leading companies that account for about 70-75% of the world rough diamond production in 2014 remained at the level of 2013. The situation on the world rough diamond market in 2014 was unstable. In 1HY 2014 the tendency was positive, there was a growth in demand against the limited supply of rough diamonds. This was caused, among other things, by reduced supplies from ALROSA and De Beers in Q2 compared to Q1 2014. ALROSA MARKET POSITION ALROSA Group is ranked first in the world in terms of rough diamond production in carats and based on 2014 data it accounts for 25% of the world production. ALROSA produces 97% of all diamonds in the Russian Federation. In 2014, the ALROSA Group companies produced 36.2 mn carats of rough diamonds. ALROSA carries out mining operations in the Republic of Sakha (Yakutia) and in the Arkhangelsk Region developing 11 kimberlite pipes and 13 placer deposits. The technologies underlying the Company production are based on However, in 2HY 2014 the market activity demonstrated a downward trend due to a number of factors, namely a decline in the demand for polished diamonds and a drop in the price of polished diamonds, increased stock of rough and polished diamonds at cutting enterprises and industry funding problems. In 2014, the macroeconomic situation on the major sales markets for polished diamond jewellery products was positive against the accelerating economic growth in the USA, the the best global scientific and technical achievements and unique engineering know-how of how to operate under the severe climate conditions of the northern regions of the Russian Federation. The proven and probable reserves of ALROSA exceed 600 mn carats. The total resource base of the Company is about 1 bn carats. Gem quality and near gem quality diamonds account for about 65% of production in volume terms and for over 95% in value terms. world s leading market for polished diamond jewellery, and high development rates in China and India. Overall, the world diamond market in 2014 demonstrated a growth in demand of 2% compared to the previous year. The fastest growing sales market was the USA. Further information is available on the corporate website at http://eng.alrosa. ru/diamonds-explained/ ALROSA has its own modern geological exploration facilities contributing to maintenance and increase of the resource base. The Company also carries out geological exploration works in African countries.

024 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 025 ALROSA BUSINESS MODEL BUSINESS MODEL ALROSA focuses its major strategic efforts on mining and sales of rough diamonds. The rough diamond segment accounts for about 90% of the total Group revenue. The main revenue of the Group comes from selling gem-quality rough diamonds, most of which are sold under long-term framework agreements with Russian and foreign cutting enterprises that prepare rough diamonds for use in the jewellery industry. Following the trend of the world diamond mining companies development with a focus on achieving the maximum performance figures, ALROSA Group adopted a strategy for the development of the core activities in rough diamond mining being the most profitable element of the production and sales chain of the diamond mining industry. The Group s strategy is aimed at ensuring that the Company occupies the position of a recognized market leader with a strategic focus on exploration, production and sales of rough diamonds and has a presence in promising regions of Russia and Africa. EXPLORATION EXPEDITION Amakinskaya Exploration Expedition, Mirny Exploration Expedition, Botuobinskaya Exploration Expedition MINING AND PROCESSING SUBDIVISIONS Aikhal MPD, Mirny MPD, Udachny MPD, Nyurba MPD ALROSA GROUP IMPLEMENTS A GLOBAL LEADERSHIP STRATEGY AT THE EXPENSE OF FOCUSING ON EXPLORATION, EXTRACTION AND SALE OF ROUGH DIAMINDS DIAMOND MINING SUBSIDIARIES Severalmaz ALROSA Nyurba Almazy Anabara Nizhne-Lenskoye* JV FOR DIAMOND EXTRACTION Catoca Mining Company Ltd. Profitability in segments, expert INDUSTRY-based assessment Source: AWDC SORTING, ASSESSMENT AND SALE United Selling Organization of ALROSA * - purchased in 2013 by Almazy-Anabara 21-25% 1-3% 3-4% SURVEY AND EXTRACTION SALE OF DIAMONDS CUT OF DIAMONDS DIAMOND CUTTING Brillianty Alrosa CUTTING - SUBSIDIARIES Orel-ALROSA Kristall Almazny Mir* 4-18% 3-5% 2-3% SUBDIVISIONS OF PRODUCTION INFRASTRUCTURE AND SOCIAL COMPLEX Subsidiaries, joint ventures RETAIL SALE OF JEWELLERY PRODUCTION OF JEWELLERY WITH CUT DIAMONDS SALE OF CUT DIAMONDS More detailed information on the strategy and competitive advantages is available at Company s Growth Strategy Further information is available in the Company Growth Strategy section.

026 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 027 ALROSA GROWTH STRATEGY In 2014, the ALROSA Supervisory board approved the Long-term ALROSA Group development program for the period up to 2023. It is based on the documents that were approved and put into effect in the company, namely the ALROSA Group Strategy, LOng-term development plan for 2012-2021 and other documents. The development program provides for the growth in diamond production by ALROSA up to 41 mn carats due to the diamond deposits in the Arkhangelsk Region reaching the design capacity, with the current production level in the Republic of Sakha (yakutia) remaining the same. The company will focus on the exploration, production and sale of rough diamonds. Successful implementation of the DeveLOpment Program will make it possible for ALROSA Group to consolidate leading positions on the rough diamond market, and ensure sustainable LOngterm production, revenue growth and an increase in the shareholder value. BY 2023 THE ALROSA GROUP VALUES ITSELF AS A recognized global market leader focused on exploration, extraction and sale of rough diamonds A diamond mining company that is present in the most promising development regions (Russia, Africa) STRATEGIC PRIORITIES OF ALROSA GROUP 1. Focus on diamond mining. ALROSA intends to adopt a monoproduct business strategy and focus on the core activities, namely the exploration, mining and sale of rough diamonds. This diamond industry Socially responsible company with high environmental and industrial safety standards Leader in the diamond industry in terms of operating efficiency at the expense of innovations and continuous improvement segment remains the most profitable. The accumulated experience and market analysis show that it is economically unfeasible for the Company to enter other industry segments, such as large-scale diamond cutting or jewellery manufacturing. Global leader in terms of maximization of price of rough diamonds rated No.1 among its customers Highly efficient organization with a strong managerial team and competences relating to change management The current mineral resource base and project portfolio make it possible for the Group to increase production of rough diamonds to more than 41 mn carats, thus consolidating the leading position of ALROSA on the market in the medium term. The focus on core activities implies the gradual retirement of ALROSA from non-core businesses. The diversification model requires significant capital expenditures, which are reflected in the cost of production of rough diamonds, thus affecting their competitiveness on the global diamond market. Income from the sale of non-core assets will be used to invest in core activities and reduce the Company s debt. 2. Preservation and expansion of the mineral and RAW MATERIAL base for LONG-term growth of ALROSA Group. ALROSA will keep investing in prospecting and geological exploration works in order to maintain and expand the mineral resource base, which is a catalyst for long-term business growth. The focus is on Africa and Russia being the two regions that have, in the opinion of the Group, the highest commercial diamond deposit discovery potential. The Company will also improve effectiveness of the development of existing deposits. For this purpose, an investment approach to the analysis of new projects is integrated into the Company s management system requiring persuasive arguments in the form of a return on investment and profitability figures at the key stages of funding each project. 3. Increasing productivity through INNOVATION and improvement of PRODUCTION processes. Innovative development is the most important part of the ALROSA production strategy. The use of new technology can improve operational efficiency and, consequently, raise the level of profitability. In open pit mining the Company is introducing the use of emulsion explosives and remotely operated equipment. To increase the profitability of underground mining, the Group is refining extraction and backfill technologies, optimizing compressor equipment, and using heading-and-stall development methods and forced collapse technologies. Along with these measures, ALROSA is striving to increase the diamond extraction ratio. With this objective in mind, the Group is introducing a multistage ore crushing and grinding cycle, and developing and introducing X-ray luminescent separation systems, tailings refining technologies and crystal preserving technologies. ALROSA actively optimizes costs at all stages of production. The measures taken by the Group include procurement optimization, use of standards to improve labour productivity, introduction of integrated management reporting and reduction of the inventory turnover rate. 4. CONSOLIDATION of the STATUS of a RECOGNIzed leader of the diamond INDUSTRY with a FLAWLESS REPUTATION among CUSTOMERS. Broadening the base of loyal and reliable customers to ensure stable sales of rough diamonds under long-term contracts is one of the main priorities of ALROSA Group. In order to achieve this goal, the Company is taking successive steps aimed at establishing a reputation of a customer-oriented business partner. ALROSA guarantees to all its buyers transparency of pricing, ensuring equal conditions of accessing rough diamonds, use of unified selling procedures and improvement of the standard of customer services. In addition, the Group intends to make efforts to liberalize and improve the rough diamond sales regulation regime including through new standard classifications of rough diamonds. The Group also intends to promote the ALROSA brand and amplify the level of influence that the Company has in the diamond industry through active participation in the work of international organizations and support for implementation of the Kimberley Process principles. 5. Compliance with high STANDARDS of ENVIRONMENTAL and INDUSTRIAL SAFETY, social responsibility and CORPORATE governance in the regions where the Company OPERATES. Sustainable development is inextricably linked to the implementation of corporate social responsibility measures. ALROSA Group carries out a set of traditional activities aimed at supporting personnel, creating conditions for professional development of specialists, ensuring a safe labour environment, minimizing the negative industrial impact on the environment, rational use of the subsoil, compliance with international environmental safety standards, and the promotion of social and economic development. The pattern of relations established by the Group in the regions of its presence is based on the principles of social responsibility and mutually advantageous cooperation with government authorities and local self-government bodies.

028 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 029 Strategic PRIORITY Activities COMPLETED Achievements/Comments Link TO additional information in a SECTION of the report Strategic PRIORITY Activities COMPLETED Achievements/Comments Link TO additional information in a SECTION of the report Consolidating the leading position on the world diamond mining market Completion of Botuobinsky open pit construction and commencement of ore mining at placer deposits. Launch of start-up complex I of Udachny mine. Mined rock processing 6,000,000 m3 Implementation of a long-term motivational program for the management (on the basis of shares/options). Constant improvement of the corporate governance quality. Focus on core rough diamond business Launch of the Ebelyakh River and Gusiny brook placers owned by OJSC Almazy Anabara. Implementation of the capital investments program of OJSC Almazy Anabara, namely construction of facilities at the Ebelyakh River and Gusiny brook placers and the Verkhnee Molodo deposit. Bringing the second module of the processing plant of Lomonosov Mining and Processing Enterprise of OJSC Severalmaz to design capacity. Implementation of the rough diamond mining plan within ALROSA Group. Implementation of the non-core assets disposal program: Withdrawal from participation in CJSC Irelyakhneft LLC Mediagroup Sitim, ALROSA Insurance Company LLC, Sakha Diamond Corp., Financial and Investment Company Interfinance LLC Liquidation of CJSC Brint-M, OJSC Udachny KPP and JSCB SIR. Increased funding from the budget to maintain the facilities associated with noncore activities of the Company. Ore dressing 1,050,000 m3 500,000 m3 total investments RUB 1,638 mn 3 million tons per year 36,212,000 carats of rough diamonds Information on the implementation of the program for the disposal of non-core assets of the Company for 2014 is presented in Appendix 7.3.7. Development of the mineral and raw material base in the most promising regions Marketing policy development Obtaining a license to develop the Molodovo deposit. Obtaining the right to use the subsoil at the Olom Brook and Log 325 Brook deposits. Obtaining the right to use the subsoil of the Zarya pipe in Q1 2014. Scientific and production support for geological exploration works carried out by joint ventures in Angola, Botswana, Zimbabwe. Increasing exploration efficiency through introducing the use of contracted drilling services. Increase in the number of long-term agreements for the 2015-2017 contractual period. Test sales of polished diamonds at Sotheby's auctions. Development of long-term cooperation with famous international jewellery companies, such as Tiffany, CTF, etc. Development of long-term relations with clients based on the principles of the ALROSA Alliance Responsible Principles Program. received in Q4 2014 received in Q3 2014 received in Q1 2014 reduction of the cost of the works being performed by 17.9% up to 62 agreements up to $2.65 mn Implementation of the program of reforming the housing and utility complex. Rough diamond product sales optimization in ALROSA Group Optimization of the corporate governance model Increasing the number of the directors meeting the advanced criteria of independence in the composition of the Supervisory Board of the Company to two directors. Development of a comprehensive risk management system. reduction of residues - 19.7% Further information is available in the Corporate Governance section In 2015, the Company will continue to focus on development of its rough diamond business according to the strategy adopted. Next year diamond production will increase by 2 mn carats compared to 2014 and will amount to 38.2 mn carats. Diamond production growth will be caused by increased ore mining volumes at the Mir and Udachny underground mines in accordance with the mining development plan and commencement of mining at the Botuobinskaya and Karpinskogo-1 pipes. The quality of ALROSA product assortment in 2015 improved compared to 2014 primarily thanks to rough diamonds mining at the Udachny mine, putting into production Karpinskogo-1 pipe and improvement of characteristics of the diamonds mined at the Internatsionalny underground mine. ALROSA Group rough diamond sales in 2015 will amount to about 40 mn carats. In 2015, the Company plans, within the framework of the program for the disposal of non-core assets, to withdraw from participation in 9 subsidiaries and affiliates.

030 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 031 COMPANY STRUCTURE AND MAJOR SHAREHOLDERS RUSSIAN FEDERATION (REPRESENTED BY ROSIMUSHCHESTVO) 43.9256% SHARE IN THE AUTHORIZED CAPITAL MINISTRY OF PROPERTY AND LAND RELATIONS OF THE REPUBLIC OF SAKHA (YAKUTIA) 25.0002% SHARE IN THE AUTHORIZED CAPITAL MINORITY SHAREHOLDERS 23.073% SHARE IN THE AUTHORIZED CAPITAL COMPETITIVE ADVANTAGES OF THE BUSINESS MODEL OF THE COMPANY Competitive advantages of ALROSA Group determine its possibilities and development strategy. USO OF ALROSA YAPTA DIVISION OF ALROSA HR TRAINING CENTER BRILLIANTY ALROSA ALROSA-TRANSSNAB ENTERPRISE KOMMERAL MEDICAL CENTER TRK (TV AND RADIO COMPANY) ALMAZNY KRAY COMPETITIVE ADVANTAGES OF THE BUSINESS MODEL OF THE COMPANY DIAMOND SORTING CENTER CULTURAL AND SPORTS COMPLEX YAKUTNIPROALMAZ RESEARCH INSTITUTE MIRNY AVIATION ENERPRISE MIRNY AUTOMOBILE ROADS DIVISION ALMAZDORTRANS PRODUCTION DIVISION SUPPLIES AND LOGISTICS DIVISION GEO-SCIENTIFIC RESEARH ENTERPRISE PROMETHEUS HEALTH AND RECREATION CENTRE STATE FARM NOVIY REPRESENTATIVE OFFICES The global leader in terms of diamond extraction with the world s largest reserve of rough diamonds Strong position in the developing industry and favourable fundamental indicators Attractive prospects for future growth Diversified portfolio of high quality assets Successful strategy for sale and marketing Stable cash flow and stable financial position Experienced and proven team of managers DIVISIONS OJSC ALROSA, MOSCOW OJSC ALROSA, YAKUTSK OJSC ALROSA OREL ALROSA SUBSIDIARIES AND AFFILIATES DIAMONDS AND GEMS COMPLEX (6) FOREIGN-BASED DIAMOND TRADING COMPANIES (6) INDUSTRIAL AND EXPLORATION (6) CONSTRUCTION (1) TRANSPORT (1) CREDIT AND FINANCIAL (1) ALROSA DIVISION IN THE REPUBLIC OF ANGOLA KEY BUSINESS ASSETS UDACHNY MPD MIRNY MPD NYURBA MPD AIKHAL MPD BOTUOBINSKAYA EXPLORATION EXPEDITION AMAKINSKAYA EXPLORATION EXPEDITION MIRNY AVIATION DIVISION ALMAZAVTOMATIKA SPECIALIZED DIVISION CAPITAL CONSTRUCTION DIVISION Due to the leading positions in rough diamond PRODUCTION, ALROSA Group meets the growing demand. Industry experts believe that in the coming years a there will be a lack in the supply of rough diamonds on the world market, which will result in a price rise for uncut diamonds. According to forecasts, the global demand for rough diamonds in the coming years will increase by an average of 5% per year due to the growing number of members of the middle class, especially in developing countries such as China and India. At the same time, the world rough diamond production is demonstrating a tendency towards decline in the medium term due to the gradual depletion of the producing deposits. It is estimated that only 1% of the kimberlite pipes discovered across the globe are suitable for cost-effective production of rough diamonds; furthermore, almost no new large deposits have been discovered since 1990. As the largest producer of raw diamonds in the world, ALROSA Group plans to build up and maintain a high level of production against the decline in the total world supply. The estimated mining periods for the deposits owned by ALROSA Group are considered to be the longest in the rough diamond industry. ALROSA Group invests in development of its business in the long run. ALROSA ensures the long-term growth and development prospects regardless of the external conditions. Even during the period before the 2008-2009 crisis the Group did not reduce funding under the investment program and did not suspend operation of the enterprises, realizing that the platform for its future growth is established. In the past years ALROSA successfully completed construction of several mining enterprises at its deposits. The projects being implemented will allow the Group to increase production from 36.2 mn carats in 2014 to 41 mn carats and more after 2019. NON-COMMERCIAL (1) WATER AND HEAT SUPPLY UNIT SALES AND OTHER (12) HOUSING AND UTILITIES DIVISION

032 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 033 42 41 40 39 38 37 36 35 34 33 ALROSA GROUP ROUGH DIAMOND PRODUCTION FORECAST up to 2023, mn carats 36.2 38.2 39.8 39.1 39.9 41.5 41.2 41.3 40.6 41 2014 2015P 2016P 2017P 2018P 2019P 2020P 2021P 2022P 2023P Actual Detailed information on capital expenditures of the Company, investment projects implementation, modernization and introduction of innovative technologies is given in the section Investment activities: construction, modernization, innovation and results for the reporting period. changes in conditions on the rough diamond market. Since 2009 ALROSA has focused its efforts on establishing a reliable longterm customer base comprising good reputation companies involved in rough diamond cutting and jewellery manufacturing. During this time the sales under long-term contracts in the total revenue of the Group increased noticeably and now amount to about 70%. ALROSA Group has subsidiaries in the major world centres of rough diamond trade, namely Antwerp, Ramat Gan, Dubai, New York and Hong Kong. International representative offices make it possible for the Group to maintain regular contact with key players on the diamond market and industry-specific organizations, and also promptly receive information on current market situation. Further information on the clients is available on the corporate website at http:// sales.alrosa.ru/rough-diamonds/long-termcontacts/our-customers/ ALROSA Group develops under the SUPERVISION of an experienced managerial team. ALROSA Group management was able to preserve the business of the Company overcoming the consequences of the global financial and economic crisis that started in 2HY 2008 and to cope with the downturn in the Russian economy in 2014. Top managers of ALROSA have extensive industry and marketing experience and all the necessary knowledge in strategic management and finance. The Company constantly strives to improve the quality of corporate governance. In 2013, the Corporate Governance Code was adopted, which aims to ensure efficient protection of the rights and interests of shareholders, transparency of the Company s management processes, and professional and ethical responsibility of managers at all levels. The Code was developed based on the best international practice including the principles specified in corporate governance codes of the OECD and the UK. The Company is developing a comprehensive risk management system, and is assessing the key risks and taking measures to mitigate them. Further information about members of the top managers of the Company and activities developed to improve the corporate governance quality is presented in the Corporate Governance section. ALROSA Group has a diversified portfolio of high quality assets. The main rough diamond mining facilities of the ALROSA Group are located in two regions of the Russian Federation, namely Yakutia and the Arkhangelsk Region. Six production complexes support diamond mining activities of the Company. Four of them, namely Udachny, Aikhal, Mirny and Nyurba, are mining and processing enterprises being a part of AL- ROSA. The other two, namely OJSC Almazy Anabara (including production and processing facilities of OJSC Nizhne-Lenskoe) and OJSC Severalmaz, are subsidiary companies. Each production enterprise consists of one or several deposits, processing facilities and related equipment. The resource base of ALROSA Group on average contains 1.4 carats of diamonds per tonne of ore and 44% of the reserves estimated according to JORC Code contain over 3 carats per tonne. High diamond content kimberlites are mined at five large pipes, namely Mir, Internatsionalnaya, Botuobinskaya, Aikhal and Nyurbinskaya. Together with Catoca Mining Company Ltd. (32.8% participation of ALRO- SA), the Group develops the Catoca kimberlite pipe in Angola. The ALROSA Group believes that the quality of the assets presents opportunities for achieving a high operating margin and obtaining significant economic benefits from the deposit mining. Further information on the production assets of the Company is available on the corporate website at http://eng.alrosa. ru/operations/where-we-operate/ ALROSA Group STEADILY DEVELOPS sales and marketing. ALROSA Group rough diamonds are sold in three ways: under long-term contracts, competitive sales and product sales on the spot market. This sales pattern makes it possible to improve the stability of sales, reduce dependence on the Company and its customers on rough diamond price fluctuations, strengthen relationships with a wide range of customers and flexibly manage its product offering in case of

034 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 035 MEETING KEY PERFORMANCE INDICATORS THE TARGET FIGURES OF ALROSA GROUP KEY PERFORMANCE INDICATORS KPI name UoM 2012 ACTUAL 2013 ACTUAL 2014 % of plan ACTUAL the plan 2015 2016 2017 2018 2019 2020 2021 2022 2023 Financial and ECONOMIC INDICATORS Market return per share % -31% 32% 46% The relative change in the market return per ALROSA share is more than the relative annual MICEX index growth (in case of MICEX index growth) and less than the relative annual MICEX index fall (in case of MICEX index fall) Dividend flow growth mn RUB 5,001 5,011 >0* 2,013 >0* KEY PERFORMANCE INDICATORS (KPIs) As per instructions of the President and the Government of the Russian Federation, OJSC ALROSA developed the list, calculation method and target figures of the key performance indicators of ALROSA Group for the period up to 2023 and they were approved by the Supervisory Board of OJSC AL- ROSA in December 2014. The main purpose of introducing the KPIs is translating the long-term plans and strategies of ALROSA Group into specific operational management indicators. Such indicators make it possible to appraise the current status, form a basis for taking long-term and medium-term managerial decisions, as well as to develop a motivational system linking interests of individual employees and the Group as a whole. The basic principles of developing the Key Performance Indicators system include: conformity to the strategic objectives of the Group; balance (financial and non-financial indicators; performance indicators contributing not only to the achievement of a short-term result but to the long-term development of the Group); interconnection (vertical and horizontal); integration of the KPIs into the motivational system of employees flexibility (KPIs change in line with strategic goals); conformity to requirements of the shareholders (the Federal Property Management Agency, the Ministry of Property Relations of the Republic of Sakha (Yakutia), minority shareholders). monitoring of actual vs. planned deviations in KPIs figures. The Key Performance Indicators system includes: financial and economic indicators (market return per share, dividend flow growth, return on equity, adjusted EBITDA profitability, net profit); industry-specific indicators (revenue from sales of core products, rough diamonds production, cost of sales share in the sales revenue); bonus cancellation reasons (net debt/adjusted EBITDA, lost time injury frequency rate (LTIFR)) Calculation of the key performance indicators is made on a quarterly and annual basis: the quarterly calculation includes the figures for: diamond production, revenue from sales of core products, net profit; the annual calculation includes the figures for: market return per share, dividend flow growth, return on equity, adjusted EBITDA profitability, cost of sales share in the sales revenue, net debt/adjusted EBITDA, lost time injury frequency rate. Since 2015, the key performance indicators developed have been integrated into the effective motivational system of the top management (President and Executive Committee members), the remuneration to be received by the management will be directly proportional to the achievement of the target KPI figures. The respective additions and amendments to the Regulations on Remuneration of the President and Members of the Executive Committee of OJSC ALROSA were approved by the Supervisory Board of OJSC ALROSA in December 2014. Return on equity (ROE) % 28% 22% 18% -11% -63% 19% 21% 21% 19% 19% 19% 20% 20% 21% Adjusted EBITDA profitability % 41% 41% 37% 45% 122% 40% 42% 44% 44% 44% 45% 47% 50% 53% corrected EBITDA Net profit bn RUB 34 32 30-17 -57% 37 47 54 57 63 72 86 104 121 INDUSTRY-specific INDICATORS Revenue from sales of core products $ mn 4,611 4,945 4 980 5,045 113% 5 191 5 528 5 785 5 998 6 467 7 100 7 734 8 413 9 046 Extraction of rough mn carats 34.4 36.9 36.0 36.2 100.6 38.2 39.8 39.1 39.9 41.5 41.2 41.3 40.6 41.0 diamonds Share of the cost of sales % 45% 49% 57% 47% 82% in the sales 54% 52% 50% revenue Bonus CANCELLATION INDICATORS Net debt/ coeff. adjusted EBITDA 1.9 1.9 2.0 1.9 2.0 1,0 Lost time injury frequency rate eff. co- 0.14 0.1 0.1 0.07 0.1 (LTIFR) LTIFR The 2014 figures of the key performance indicators exceed the parameters approved by the shareholders except for share capital profitability and net profit. The failure to achieve the planned level for these KPIs is caused by the result of revaluation of the credit portfolio denominated in US dollars as a consequence of the devaluation of the Russian rouble. The KPIs of ALROSA Group fully meet the requirements of the Guidelines on application of key performance indicators by public corporations, stateowned companies, state unitary enterprises and business entities with a share of the registered capital owned by the Russian Federation or a constituent entity of the Russian Federation totalling over fifty per cent, developed by the Ministry of Economic Development of the Russian Federation. The detailed list and calculation method for target figures of the key performance indicators of the Group are given in Appendix 7.3.4. to the Annual Report.

036 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 037 OPERATING ACTIVITIES: RESULTS FOR THE REPORTING PERIOD EXPLORATION Regeneration of the resource base is one of the main strategic objectives of ALROSA Group. In 2014, ALROSA Group balance reserves according to the standards of the State Reserves Committee of the Russian Federation as of 01.01.2015 amounted to 1,158,312,600 carats. 3 The Group strives to ensure that every year the reserves growth should be equal to the production volume. Reserves and prognostic resources growth based on the results of the work completed in 2014 amounted to 25.6 mn carats. In 2014 ALROSA Group performed exploration works using resources of its structural subdivisions, namely Amakinskaya, Botuobinskaya and Mirny geological exploration expeditions and the Geo-Scientific Research Enterprise as well as its subsidiaries, such as OJSC ALROSA-Nyurba, OJSC Severalmaz, OJSC Almazy Anabara and OJSC Nizhne-Lenskoe. The objective of increasing the reserves and prognostic resources in the reporting year was pursued through carrying out exploration works at the deposits that are being mined and that are being prepared for mining. Utilization of ALROSA Group geological exploration budget amounted to RUB 6,042.9 mn. The costs of these works increased by 2.6% compared to 2013. The operational exploration budget utilization amounted to RUB 1,144.3 mn. The cost of this type of work increased by 35.9% compared to 2013. OJSC ALROSA 3 The data include the deposits that are being prospected. In 2014, OJSC ALROSA carried out exploration works in nine districts of the Yakutian diamondiferous province: Sredne-Markhinsky, Muno-Tyungsky, Daldyno-Alakitsky, Morkokinsky, Ygyattinsky, Malo-Botuobinsky, Prilensky, Verkhne-Oleneksky and Nizhne-Oleneksky. The works aimed at geological survey of the subsoil and financed from its own funds were held under 27 licenses at 39 prospects, including: exploration works under 10 licenses at 9 prospects; prospecting and prospecting and appraisal works under 14 licenses at 17 prospects; comprehensive airborne geophysical survey and airborne geophysical surveys at 1:10000 and 1:5000 scales of 4 prospects; thematic works at 4 facilities; groundwater monitoring at 2 prospects that do not require licensing; prospecting for buried structures and drainage water injection under 3 licenses at 3 prospects. During the reporting period, exploration works were completed at 13 prospects. Small and medium-scale (regional) prospecting works aimed at detecting new kimberlite fields were carried out in Muno-Tyungsky, Morkokinsky, Ygyattinsky, Prilensky, Verkhne-Oleneksky and Nizhne-Oleneksky diamondiferous districts. More detailed prospecting surveys to detect new hardrock diamond deposits were carried out mainly within the radius of activities of OJSC ALROSA mining and processing enterprises in the Daldyno-Alakitsky, Sredne-Markhinsky and Malo-Botuobinsky diamondiferous areas. C1+C2 reserves and P1 resources growth for the reporting period amounted to 14.5 mn carats. The objective of increasing the reserves and Р1 prognostic resources in the reporting year was pursued through carrying out exploration works at the deposits that are being mined and that are being prepared for mining. Work continued to explore deep horizons of the Internatsionalnaya kimberlite pipe in the 1,190-1,450 m depth range (absolute depth marks: 790... -1,050 m); mining and exploration mine openings were completed; 4 inclined exploration wells and 6 degassing wells were drilled. Drilling was completed of inclined exploration wells at the Dalnyaya kimberlite pipe with a view to intersecting the contacts of the ore body at reference marks +400... +200 and studying its diamond content. According to the results of core samples enrichment, porphyry kimberlites were confirmed to be near-commercially diamondiferous. Materials for issuing the Conditions Feasibility Study were prepared and a reserves estimation report was produced. Total В+С1+С2+Р1 reserves and resources of rough diamonds at the deposit amount to 15.03 mn carats, with 11.60 mn carats of them in the central ore shoot. Exploration drilling at 80 x 80 m grid was completed at the Zarnitsa pipe. As a result of the works completed, the morphology of the ore body was verified, as well as the diamond content and physical and mechanical properties of kimberlite rocks. Geological materials to the Conditions Feasibility Study were compiled and submitted to Yakutniproalmaz Institute for estimation of the Zarnitsa pipe reserves as of 01.01.2014. Exploration works continued at the Mayskoe kimberlite body and adjacent placer occurrences. 7 inclined and 5 vertical wells were drilled to study the morphology and diamond content of the ore body. A cluster of exploration wells was drilled in the open pit cutback zone. 139 tonnes of core samples were prepared. Pilot development of the Verkhne-Munskoe field continued. Field preparation of 4,451 tonnes of bulk kimberlite samples was completed. Processing of concentrate and middling of bulk samples of kimberlites from the Deimos, Novinka and Zapolyarnaya pipes was completed. Design and estimate documentation for the Aikhal pipe was prepared and submitted to the State Expert Appraisal Committee to carry out exploration works and calculate diamond reserves in deep horizons of the Aikhal pipe down to the depth of 900 m (the horizon is 400 m). Drilling commenced of inclined exploration wells with the collection and preparation of core samples. Exploration wells are being drilled at the Zarya pipe together with well logging, core sampling and preparation of core samples. As a result of the work completed, the morphology of the ore body was verified and the diamond content of the kimberlites in the central ore shoot was confirmed as close to commercial. Two exploration trenches were dug at Piropovy Brook placer and the Udachnaya pipe deluvial placer located outside the outlined area (one for each placer). A bulk sample totalling 200 m3 of the sands was collected and prepared. Based on results of the works, a report on reserves and a feasibility report on permanent exploration conditions (Conditions Feasibility Study) were prepared. Geological exploration works in the north-western part of the Russian Federation were carried out under two licenses at 2 prospects, namely Kepinsky-3 and Verkhnekepinsky-3, using ALROSA funds. During the reporting period, at Kepinsky-3 prospect prospecting and confirmatory drilling works were carried out in two sections: the Pobeda pipe Gorelaya pipe in the central part of Kepinskaya area and the Solokha pipe in its south-eastern part. 18 promising magnetic anomalies were verified, no kimberlite bodies were found. Works at the facility were completed. The final exploration report on the results of the works was prepared. Prospecting and confirmatory drilling was carried out at the Verkhnekepinsky-3 prospect. Six promising magnetic anomalies were verified. Kimberlite sills were accessed at the depths of 61.5-180.0 m within VK264 and VK115 anomalies. Based on sampling results, no presence of diamonds in the kimberlite rocks was identified. Works at the facility were completed. A final exploration report on the results of the works was prepared. In addition to the abovementioned works, geological subdivisions conducted thematic geological surveys and operational exploration works based on the orders from mining and processing divisions. Within the framework of scientific support of geological exploration works the following was performed: prognostic estimation of the diamondiferous territories in the western part of Yakutia, north-western part of the Russian Federation and in Africa (Angola, Botswana, Zimbabwe); improvement of the local forecast methods and experimental and methodological testing of modern prospecting technologies (geophysical, drilling, mineral analysis); comprehensive study of the diamonds from prospecting areas and kimberlites of the deposits being studied.

038 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 039 Utilization of the OJSC ALROSA geological exploration budget in 2014 amounted to RUB 4,779.2 mn. Exploration costs increased by 5.3% compared to 2013. The operational exploration budget utilization amounted to RUB 816.9 mn. The expenses increased by 17.7% compared to 2013. OJSC ALROSA-NYURBA OJSC ALROSA-Nyurba carried out, at its own expense, geological exploration works at hardrock diamond deposits within the license areas, namely the Nyurbinskaya and Botuobinskaya pipes as well as Nyurbinskaya placer, a deposit genetically related to them. The works include different stages of geological study of the subsoil, namely: regional geological study of the subsoil including hydrogeological study (groundwater monitoring), monitoring of the geological environment aimed at studying the changes of hydrogeological regime of groundwater and condition of the geological environment caused by possible consequences of mineral deposits mining; prospecting for diamond deposits, testing that there are no ore bodies within the boundaries of the sites intended for construction of infrastructure facilities of the operating mining and processing enterprise; exploration of hardrock diamond deposits aimed at replacement of the mineral resource base of the operating diamond mining enterprise; operational exploration within the mining lease to obtain reliable initial data to ensure safety of works, carry out operational planning of mining works and ensure the rational use of mineral resources. The geological exploration works are carried out on the basis of contractor agreements with ALROSA subdivisions, including Botuobinskaya geological exploration expedition (prospecting and exploration) and Mirny geological exploration expedition (monitoring, hydrogeological, exploration, operational exploration works). Monitoring surveys in the area where the Botuobinskaya and Nyurbinskaya diamondiferous kimberlite pipes are located as well as in the adjacent areas constitute the basis for assessing the environmental conditions in the Nakyn kimberlite field and adjacent areas. They are being carried out in order to study the groundwater mode, dynamics and resources and the condition of the geological environment under the influence of natural and anthropogenic factors. Prospecting works are being carried out at the Promyshlenny-5 prospect to detect hardrock and placer diamond deposits and test that there are no ore bodies within the boundaries of the sites intended for construction of infrastructure facilities of Nakyn diamond mining enterprise. Exploration works are being carried out in order to obtain rough diamond reserves growth and prepare them for gradual integration in the development. For the Rudny-2 prospect materials were prepared for a Conditions Feasibility Study and the Report on results of exploration of the deep horizons of the Nyurbinskaya pipe in 2007-2013 accompanied by a calculation of reserves of the Botuobinskaya and Nyurbinskaya pipes and the associated placers having the same name (as of 01.01.2014). The report and Conditions Feasibility Study were submitted in December 2014 for state expert appraisal to the State Reserves Committee of the Federal Subsoil Resources Management Agency. In 2014 at Rossypnoy-B prospect appraisal works were carried out on the third phase of the Nyurbinskaya buried placer. Based on the results of the exploration samples preparation, 424 diamonds were extracted. In December 2014, based on results of the initial stage of appraisal works, a current estimation of prognostic resources was prepared for the third phase of the Nyurbinskaya placer (as of 01.12.2014). Operational exploration works were carried out at the Nyurbinskaya and Botuobinskaya pipes as well as the Nyurbinskaya placer. Works aimed at verification of the ore body parameters and host rocks characteristics between production levels -20.0... -140.0 m were carried out at the Nyurbinskaya pipe. 93 wells (393.5 m) were drilled to trace and verify the contacts of the pipe. No significant deviations of the ore body borders were identified. Drilling of operational exploration cluster wells and collection and preparation of core samples were carried out at the Nyurbinskaya placer. According to the operational exploration, the average content of diamonds of -2 +1 mm class within the tested clusters is 3.41 carats per tonne, which corresponds to the detailed exploration data. Drilling of operational exploration wells, collection and preparation of core samples were carried out at Botuobinskaya pipe with a view to verifying the diamond content of the deposit. The average diamond content within the sampled horizons is 3.21 carats per tonne, which corresponds to the detailed exploration data. In 2014, utilization of the OJSC AL- ROSA-Nyurba geological exploration budget amounted to RUB 393.7 mn. Geological exploration costs increased by 26.5% compared to 2013. OJSC ALMAZY ANABARA In 2014 OJSC Almazy Anabara carried out geological exploration works in the Anabar River basin in Anabarsky ulus. This was done at its own expense and in accordance with the geological exploration works plan broken down by prospects, as approved by the State Committee of the Republic of Sakha (Yakutia) on Geology and Mineral Resources. Prospecting and exploration for diamond deposits continued in the Khara-Masskaya area. Variability of the main parameters of the placers will be checked upon completion of the exploration works. The exploration grid density achieved will make it possible to substantiate C1 reserves calculation. Exploration works were carried out at the terrace placer of the Ebelyakh River deposit within the interval of exploration lines No. 10-240 (Priustievoy and Nizhny prospects) to clarify the spatial boundaries and parameters of the placer. Based on results of the works estimation of С1 reserves will be performed using the parameters developed for the Ebelyakh River deposit. Based on results of the exploration works at the Ebelyakh River deposit, approval was granted by the Territorial Committee for Natural Reserves of the State Committee of the Republic of Sakha (Yakutia) with regard to the Report containing current sand and rough diamond reserves estimation for the area within floodplain and terrace sediments of the Ebelyakh River placer (Minutes of the Territorial Committee for Natural Reserves No. 354 dated 27.03.2014). Reserves growth amounted to 0.3 mn carats. The actual mining operation at the Ebelyakh River deposit commenced in 2014. In 2014 Almazy Anabara received two new licenses: license ЯКУ 15790 КЭ issued for exploration and mining of diamonds within the subsoil area of federal significance including the Olom Brook placer (Istok prospect) and the Log 325 Brook placer; license ЯКУ 04105 КР issued for geological surveying, exploitation and mining of diamonds and associated components at the deposit located in the Malaya Kuonamka River basin with the Maspaky tributary. In 2014, utilization of the OJSC Almazy Anabara geological exploration budget amounted to RUB 333.4 mn. Cost of works increased by 0.9% compared to 2013. Operational exploration works, the budget of which was utilized in the amount of RUB 78.9 mn, were carried out at the Gusiny Brook and Kamenisty Brook placer deposits. Operational exploration costs increased by 33.3% compared to 2013. OJSC NIZHNE-LENSKOE During the reporting period, OJSC Nizhne-Lenskoe carried out geological exploration works at 5 prospects located in Oleneksky, Bulunsky and Anabarsky uluses of the Republic of Sakha (Yakutia). This was done at its own expense and in accordance with the geological exploration works plan broken down by prospects. Field exploration works at the Verkhnee Molodo prospect of the Molodo River placer were completed in 2011. Preparation and submission of the geological report is scheduled for 2015 under a new license. Geological exploration works at Nizhne-Kuonamsky prospect were completed in Q3 2013. In November 2014, Federal State-Funded Institution State Reserves Committee approved the Conditions Feasibility Study and the reserves estimation report based on results of the exploration works at the tributaries (Minutes No. 3953 dated 26.11.2014). Exploration works at Terraces and tributaries of the Bolshaya Kuonamka River exploration works continued at placer diamond deposits in the basin of the Bolshaya Kuonamka River. Exploration samples treatment was carried out during the summer period. As of 01.01.2014, the reserves of the Bolshaya Kuonamka River placer deposit were approved in the amount of 5.5 mn carats. Exploration works at Terraces and tributaries of the Bolshaya Kuonamka River exploration works continued at the placer diamond deposit in the basin of the Bolshaya Kuonamka River. Exploration samples treatment was carried out during the summer period. At Priustievoy prospect the exploration works in the lower part of the Billyakh River placer were completed in 2013. Based on results of the works, a report was prepared and submitted to geological funds. No changes of sand and rough diamond reserves in the National register were identified as a result of the State experts assessment. Exploration underground works at Billyakh-tributaries-3 prospect were carried out at Izvilisty and Lugovoy brooks, left tributaries of the Billyakh River, including selection and preparation of exploration samples. In 2014, utilization of the OJSC Nizhne-Lenskoe geological exploration budget amounted to RUB 371.8 mn, which is 8% less than the planned figures. Cost of exploration decreased by 18.7% compared to 2013. Mining and exploration works were carried at the Verkhnee Molodo prospect of the alluvial deposit located at the Molodo River and Lagerny and Shlikhovoy brooks to clarify the placer structure, quantity and quality of the sands and diamonds contained in the

040 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 041 sands, mining conditions and technological properties of the mineral raw materials. The mining and exploration budget utilization amounted to RUB 85.4 mn. OJSC SEVERALMAZ In 2014, OJSC Severalmaz carried out, at its own expense, prospecting, exploration and operational exploration works in the Arkhangelsk Region. Based on the current calculations for Karpinskogo-1 pipe, the diamond content of +3 sieve class in K-2-V section is 0.794 carats per tonne, which is slightly higher than the reserves calculation made by the predecessors (0.62 carats per tonne). At the Pionersky prospect follow-up exploration was carried out on the Pomorskaya pipe. Consolidated Geological materials from follow-up exploration of 2011-2014 and based on the results of 1983-1987 exploration of the northern group of pipes, namely Pionerskaya, Im. M.V. Lomonosova and Pomorskaya, were sent to Yakutniproalmaz Institute and GIPRORUDA JSC to be used for the preparation of a feasibility report on permanent exploration conditions. Current reserves growth amounted to 5.3 mn carats. Prospecting works were completed at Svetlinsky, Otugsky, Brusovitsky and Kodinsky prospects. No kimberlite bodies were identified as a result of the prospecting works. Exploration budget at the expense of OJSC Severalmaz in 2014 amounted to RUB 164.8 mn, which is 3.8% less than the planned figures. The exploration budget in the current period decreased by 33.1% compared to 2013. Operational exploration for Arkhangelskaya and Karpinskogo-1 pipes was carried out at the Arkhangelsky-4 prospect. The results obtained for А-2b-V section of the Arkhangelskaya pipe reveal a very poor ore quality. The average diamond content of +3 sieve class in the section was 0.092 carats per tonne, which is considerably lower than the minimum economically mineable diamond content of 0.166 carats per tonne, as approved by the Committee for Mineral Reserves of the Russian Federation for the southern group of pipes of the Lomonosov deposit (Minutes No. 738 dated 05.06.2002). The operational exploration budget utilization amounted to RUB 163.1 mn., which is an increase of 83.3% compared to 2013. exploration works under 7 licenses at 7 prospects; prospecting and prospecting and appraisal works under 12 licenses at 26 prospects; comprehensive airborne geophysical survey at 3 prospects; DIAMOND MINING AND ORE PROCESSING thematic works at 14 facilities; specialized hydrogeological surveys: groundwater monitoring and searching for the structures to dispose of drainage water. Exploration plans of ALROSA for 2015 are mainly focused on accomplishing KEY PRODUCTION-SPECIFIC ACCOMPLISHMENTS OF 2014 prospecting and exploration tasks in the Rough diamond industry. PLANS FOR 2015 In 2015, geological and operational exploration works will be carried out by structural subdivisions of ALROSA and subsidiaries. Exploration works in OJSC ALROSA will be carried out by four specialized subdivisions: Amakinskaya, Botuobinskaya and Mirny expeditions and Geo-Scientific Research Enterprise in nine districts of Yakut diamond-bearing province (Sredne-Markhinsky, Muno-Tyungsky, Daldyno-Alakitsky, Morkokinsky, Yg- yattinsky, Malo-Botuobinsky, Prilensky, Nizhne-Oleneksky and Verkhne-Oleneksky). The budgets of geological exploration and operational exploration works within ALROSA Group amounted to RUB 6.275 mn and RUB 1.207 mn respectively. Operational exploration works in 2015 will be carried out based on the orders from mining and processing divisions in accordance with the mining plans for the producing deposits of the Yubileinaya, Aikhal, Udachnaya, Nyurbinskaya, Botuobinskaya, Mir and Internatsionalnaya pipes. The works aimed at geological survey of the subsoil, funded by the Company, will be carried out under 19 licenses at approximately 50 prospects, including: In 2014 ALROSA Group rough diamond production amounted to 36.2 mn carats in volume terms and to $3 707.7 mn in value terms. In terms of value, the diamond mining figure grew by 23 % compared to 2013. The main reason for such growth was introduction of the Price list for August 2013 in the middle of March 2014. On average, the prices for the rough diamonds mined at the ALROSA Group deposits (except for some placers of OJSC Almazy Anabara and OJSC Nizhne-Lenskoe 4 ) increased by over 30%. The following circumstances had the main impact on the level of production: reduction in ore processing at Udachnaya pipe as a result of the transition from the open pit to underground mining; the necessity to carry out additional construction of a mine drainage system at the Mir mine, which resulted in a decrease in production and the need to adjust the time frame for the mine reaching the design capacity. The decline in rough diamond production within ALROSA Group as a result of these two factors amounted to about 2 mn carats. To some extent the decline in diamond production within the Group was caused by the temporary reduction of the resource base of OJSC Nizhne-Lenskoe due to the depletion of existing deposits, namely Billyakh, Nizhnee Molodo and Verkhnee Molodo placers, and preparations for commencement of production at 4 Due to natural factors (uneven distribution of rough diamonds by quality and sift characteristics along the placer). new deposits: Talakhtakh, Srednee Molodo, Bolshaya Kuonamka. At the same time, 2014 was marked by putting into operation the second module of the processing plant of OJSC Severalmaz, which capacity made it possible to process over 3 mn tonnes of ore and increase production to 1.64 mn carats. It should be noted that in Q4 2014 OJSC Severalmaz put into production the Karpinskogo-1 pipe where over 0.5 mn tonnes of ore was mined and processed with subsequent extraction of 266,000 carats of diamonds. Another significant event was OJSC Almazy Anabara putting into production Ebelyakh and Gusinaya placer deposits with the volume of production and processing of over 1.5 mn m3 of diamond-bearing sands

042 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 043 with the grade of 1.5 carats per m3, which made it possible to produce additional 2 million carats. Due to putting these deposits in operation, it was possible to compensate for the depletion of the placers in the Mayat River basin and increase the production by 0.5 mn carats (21.3%) compared to 2013. In general, implementation of the plan within ALROSA Group in 2014 is described by the following figures: 100.5% or 36.2 mn carats for the core products; 102.9% or $3 770.7 mn for the commercial products; Below are the tables presenting the key performance indicators of the AL- ROSA Group. More detailed results of each of the companies of the Group are discussed later in the Annual Report. MINING ACTIVITIES BY THE ALROSA GROUP Designation Pre-production mine development Stripping operations (including development and construction operations) UoM 2012 report 2013 report plan 2014 report % of the plan % COMPARED to 2013 % COMPARED to 2012 t/m 3 706.1 1,081.6 1,226.7 1,238.3 100.9 114.5 175.4 t/m 3 44,948.9 55,973.0 54,485.0 55,502.0 101.9 99.2 123.5 Ore extraction t/m 3 8,619.6 8,076.7 6,835.4 6,921.8 101.3 85.7 80.3 thous.t 19,632.6 18,808.2 15,230.3 15,379.6 101.0 81.8 78.3 ROUGH DIAMOND MINING BY THE ALROSA GROUP 5 By-product extraction of cut-off grade ore t/m 3 50.0 458.1 2,635.6 2,205.5 83.7 481.4 4,411.0 thous.t 1,431.6 913.1 5,760.3 4,383.2 76.1 480.0 306.2 UoM 2012 report 2013 report plan 2014 report % of the plan % COMPARED to 2013 % COMPARED to 2012 Sand extraction t/m 3 3,266.4 6,835.7 6,178.0 6,351.3 102.8 92.9 194.4 thousand carats 34,420.3 36,913.9 36,030.0 36,212.1 100.5 98.1 105.2 $ mn 2,684.4 3,065.2 3,664.5 3,770.7 102.9 123.0 140.5 Extraction of tailings Sand processing by dredging t/m 3 306.5 376.6 316.0 322.1 101.9 85.5 105.1 thous.t 568.0 715.0 601.0 612.0 101.8 85.6 107.7 t/m 3 1,636.0 1,437.0 1,640.0 1,497.0 91.3 104.2 91.5 thous. carats 2,684.40 2,684.40 3,770.70 $ mn 4000,00 Rock moved t/m 3 59,533.5 74,238.7 73,316.7 74,038.0 101.0 99.7 124.4 37 000 36 000 3000,00 35 000 2000,00 34 000 1000,00 33 000 2012 REPORT 2013 REPORT 2014 REPORT 0,00 MINING UNITS OF THE ALROSA GROUP $ MN THOUS.CARATS 5 The valuation is based on the effective Price list for diamonds. The main ALROSA rough diamond mining and processing facilities are located in two Russian regions: open pit, underground and placer mining in the Republic of Sakha (Yakutia) and open pit mining in the Arkhangelsk Region in the northwest part of the Russian Federation. The ALROSA Group mines diamonds at six mining complexes. Four of them, namely Udachny, Aikhal, Mirny and Nyurba Mining and Processing Divisions, are part of OJSC ALROSA. The other two, namely OJSC Almazy Anabara (including production and processing facilities of OJSC Nizhne-Lenskoe) and OJSC Severalmaz, are subsidiary companies. Each mining complex consists of one or more fields, processing facilities and equipment stock.

044 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 045 AIKHAL MINING AND PROCESSING DIVISION MINING ACTIVITIES The Aikhal Mining and Processing Division built in 1986 mines diamonds at the following deposits: The Yubileyny open pit (since 1989) located at the Yubileynaya pipe, the largest kimberlite pipe in western Yakutia. Currently, the field is developed by open pit mining. According to the JORC Code, the Yubileynaya pipe reserves are estimated at 107.2 mn tonnes of ore containing 97 mn carats with average diamond content in ore of 0.90 carats per tonne. Taking into account this reserves estimation and the planned production standards, the pipe may be mined until 2030. The Komsomolsky open pit (since 2002) at the Komsomolskaya pipe. The deposit is mined using open pit methods and explored down to the depth of about 460 m. Based on the JORC Code the reserves are estimated to total 4.8 mn tonnes of ore containing 1.8 mn carats. Diamond content in the ore of the Komsomolskaya pipe is lower (0.37 carats per tonne), but the average weight of the diamonds produced at this deposit is 1.5-2 times greater than the average weight of the diamonds extracted from the Yubileynaya and Aikhal pipes. The current production plan provides for mining the deposit up to 2020. The Aikhal mine (since 2005) at the site of the former Aikhal open pit. Development of the Aikhal pipe using open pit method began in 1961 and by 1997 the open pit reached its maximum depth of 305 m. After the decommissioning of the pit in 1997, the Group started pilot mining aimed at future underground mining. The first starting-up equipment of the underground mine was put into operation in 2005, and the second equipment with the design capacity of 250,000 tonnes of ore was put into operation in 2009. In 2012 the mine reached its design capacity of 500,000 tonnes of ore per year. The ore mined by the Aikhal Mining and Processing Division is processed at processing plants No. 8 and No. 14. The design capacity is 1.7 mn tonnes of ore and 10 mn tonnes of ore per year respectively. In 2014, the Aikhal Mining and Processing Division demonstrated an increase in production by 4% compared to 2013. Designation KOMSOMOLSKY OPEN PIT Pre-production mine development UoM 2012 report 2013 report plan 2014 % of the report plan % COMPARED to 2013 % COMPARED to 2012 t/m 3 30.0 10.0 30.0 39.0 130.0 390.0 130.0 Stripping operations t/m 3 4,450.0 4,520.0 4,130.0 4,130.0 100.0 91.4 92.8 Ore extraction t/m 3 216.3 5.0 6.7 134.0 3.1 thous.t 520.0 12.1 16.0 132.2 3.1 Rock moved t/m 3 4,696.3 4,530.0 4,165.0 4,175.7 100.3 92.2 88.9 AIKHALMINE Pre-production mine development Ore extraction linear m 900.0 1,200.0 1,100.0 1,100.0 100.0 91.7 122.2 t/m 3 17.1 22.3 20.5 20.5 100.0 91.9 119.9 t/m 3 215.7 230.6 229.8 230.7 100.4 100.0 107.0 thous.t 500.0 536.0 536.0 536.0 100.0 100.0 107.2 ROUGH DIAMOND MINING 6 Rock moved t/m 3 232.8 252.9 250.3 251.2 100.4 99.3 107.9 UoM thousand carats 2012 report 2013 report plan 2014 % of report the plan % COMPARED to 2013 % COMPARED to 2012 8,945.1 12,087.7 12,561.0 12,565.3 100.0 104.0 140.5 $ mn 503.8 947.3 1,250.1 1,309.9 104.8 138.3 260.0 thous. carats 14 000 503.8 947.3 1,309.9 $ mn 1400 YUBILEYNY OPEN PIT Pre-production mine development t/m 3 60.0 60.0 60.0 67.0 111.7 111.7 111.7 Stripping operations t/m 3 10,000.0 10,500.0 10,925.0 11,140.0 102.0 106.1 111.4 Ore extraction t/m 3 4,719.0 3,622.0 3,121.0 3,129.0 100.3 86.4 66.3 thous.t 10,382.0 8,114.0 7,050.0 7,083.0 100.5 87.3 68.2 Rock moved t/m 3 14,779.0 14,182.0 14,106.0 14,336.0 101.6 101.1 97.0 12 000 10 000 8 000 6 000 1200 1000 800 600 400 200 TOTAL FOR AIKHAL MINING AND PROCESSING DIVISION Pre-production mine development t/m 3 107.1 92.3 110.5 126.5 114.5 137.1 118.1 Stripping operations t/m 3 14,450.0 15,020.0 15,055.0 15,270.0 101.4 101.7 105.7 4 000 2012 REPORT 2013 REPORT 2014 REPORT 0 Ore extraction t/m 3 5,151.0 3,852.6 3,355.8 3,366.4 100.3 87.4 65.4 thous.t 11,402.0 8,650.0 7,598.1 7,635.0 100.5 88.3 67.0 $ MN THOUS.CARATS Rock moved t/m 3 19,708.1 18,964.9 18,521.3 18,762.9 101.3 98.9 95.2 6 The valuation is based on the effective Price list for diamonds.

046 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 047 MIRNY MINING AND PROCESSING DIVISION MINING ACTIVITIES Mirny Mining and Processing Division was founded in 1957 and is the oldest mining and processing division of the Company. Mirny Mining and Processing Division is developing the following deposits: The Internatsionalny mine has been in operation at the Internatsionalnoe deposit with very high diamond content in ore (8.09 carats per tonne) since 1999. According to the JORC Code, reserves of the Internatsionalny mine are enough to maintain production until 2022 mining 500,000 tonnes of ore per year. Mir mine reserves with 3.29 carats per tonne diamond content are sufficient to continue mining with a design capacity of 1 mn tonnes of ore per year until 2043. Current capacity of the mine is 500,000 tonnes of ore per year. The relevant measures are being taken to enable the mine to reach the design capacity. Irelyakh, Levoberezhnoe, Gornoe and Vodorazdelnye galechniki placer deposits. The technogenic deposit Tailings of the Processing Plant Number 5 is also being developed. Mirny Mining and Processing Division are processed at Processing Plant No. 3, which has a design capacity of 2 mn tonnes of ore per year. The Mirninsky mining and processing enterprise also operates three dredges that process diamond-bearing gravel from placer deposits. The decrease in production by Mirny Mining and Processing Division in 2014 in volume terms amounted to 17.3% compared to the previous reporting period. Designation MIR MINE Pre-production mining (open pit) Pre-production mining (underground) including ore Ore extraction UoM 2012 report 2013 report ORE DEPOSITS 2014 % plan report of the plan % COMPARED to 2013 % COMPARED to 2012 t/m 3 5.0 5.0 5.0 5.0 100.0 100.0 100.0 linear m 1,705.0 3,247.0 3,525.0 3,530.0 100.1 108.7 207.0 t/m 3 38.0 68.8 68.0 68.0 100.0 98.8 178.9 t/m 3 13.1 13.1 100.0 thous.t 31.2 31.2 100.0 t/m 3 209.4 268.4 183.6 184.9 100.7 68.9 88.3 thous.t 497.0 639.0 452.0 452.0 100.0 70.7 90.9 The Mir mine has been operating since 2009 at the Mir deposit. According to the JORC Code, the The kimberlites extracted from the Mir and Internatsionalny mines as well as sands from placer deposits of the Total ore t/m 3 209.4 268.4 196.7 198.0 100.7 73.8 94.6 thous.t 497.0 639.0 483.2 483.2 100.0 75.6 97.2 Rock moved t/m 3 252.4 342.2 256.6 257.9 100.5 75.4 102.2 INTERNATSIONALNY UNDERGROUND MINE ROUGH DIAMOND MINING 7 UoM thousand carats 2012 report 2013 report plan 2014 % of report the plan % COMPARED to 2013 % over 2012 8,707.5 7,361.1 6,085.0 6,088.5 100.1 82.7 69.9 $ mn 1,154.3 953.4 1,033.1 1,041.3 100.8 109.2 90.2 Pre-production mine development Ore extraction linear m 740.0 743.0 575.0 582.0 101.2 78.3 78.6 t/m 3 18.0 18.0 13.5 13.5 100.0 75.0 75.0 t/m 3 212.3 214.4 186.0 186.3 100.2 86.9 87.8 thous.t 515.0 520.0 450.0 450.0 100.0 86.5 87.4 Rock moved t/m 3 230.3 232.4 199.5 199.8 100.2 86.0 86.8 PLACER DEPOSITS VODORAZDELNYE GALECHNIKI thous. carats 10 000 8 000 1,154.3 953.4 1,042.3 $ mn 1200 1000 Pre-production mine development t/m 3 5.0 5.0 5.0 100.0 100.0 Stripping operations t/m 3 30.0 80.0 80.0 100.0 266.7 t t/m 3 30.0 40.0 53.5 53.5 100.0 133.8 178.3 6 000 4 000 800 600 400 Sand extraction thous.t 60.0 80.0 107.0 107.0 100.0 133.8 178.3 Rock moved t/m 3 30.0 75.0 138.5 138.5 100.0 184.7 461.7 2 000 200 IRELYAKHSKAYA PLACER 0 2012 REPORT 2013 REPORT 2014 REPORT 0 Pre-production mine development t/m 3 1.0 27.0 10.0 10.0 100.0 37.0 1,000.0 Stripping operations t/m 3 65.0 160.0 220.0 220.0 100.0 137.5 338.5 $ MN THOUS.CARATS Sand extraction t/m 3 150.0 155.8 175.0 175.3 100.2 112.5 116.9 thous.t 287.0 296.0 332.5 333.0 100.2 112.5 116.0 7 The valuation is based on the effective Price list for diamonds. Rock moved t/m 3 216.0 342.8 405.0 405.3 100.1 118.2 187.6

048 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 049 Designation UoM 2012 report 2013 report plan 2014 % of the report plan % COMPARED to 2013 % COMPARED to 2012 UDACHNY MINING AND PROCESSING DIVISION LEVOBEREZHNAYA Sand extraction t/m 3 20.5 thous.t 41.0 Rock moved t/m 3 20.5 DREDGE NO.201 Pre-production mine development PLACERS PROCESSED BY DREDGING t/m 3 15.0 15.0 15.0 15.0 100.0 100.0 100.0 Sand processing t/m 3 484.0 456.0 492.0 495.0 100.6 108.6 102.3 Rock moved t/m 3 499.0 471.0 507.0 510.0 100.6 108.3 102.2 DREDGE NO.202 Udachny Mining and Processing Division develops the Udachnaya and Zarnitsa pipes located in the western part of Yakutia. The Udachny open pit has been mined since 1971. Given that the open pit reached its design depth, mining in the open pit was terminated in 2014. The Zarnitsa open pit was commissioned in 1999. The diamond content in this deposit is far lower than at the Udachnaya pipe but the profitability of this open pit is maintained through the use of the existing equipment and processing infrastructure of the Udachny open pit. Udachny, the last of the four mines, was put into production in 2014. When it reaches the design capacity, it will become one of the largest enterprises and will produce 4 mn tonnes of ore per year. Kimberlites extracted from the Udachnaya and Zarnitsa pipes are processed at the Processing Plant No. 12, which has a design capacity of up to 11 mn tonnes of ore per year. The decline in rough diamond production at the Udachny Mining and Processing Division in 2014 amounted to 24.8% in volume terms compared to 2013. However, the diamond production indicator in value has remained virtually unchanged. This is due to the fact that in 2014, the enterprise was actively involved in processing the ore from the Eastern ore body which is characterized by a lower average diamond content but relatively higher average price for a carat. Pre-production mine development t/m 3 40.0 30.0 30.0 100.0 75.0 Sand processing t/m 3 585.0 600.0 558.0 425.0 76.2 70.8 72.6 Rock moved t/m 3 585.0 640.0 588.0 455.0 77.4 71.1 77.8 DREDGE NO.203 Pre-production mine development t/m 3 150.0 150.0 290.0 290.0 100.0 193.3 193.3 Stripping operations t/m 3 150.0 85.0 230.0 230.0 100.0 270.6 153.3 Sand processing t/m 3 567.0 381.0 590.0 577.0 97.8 151.4 101.8 Rock moved t/m 3 867.0 616.0 1,110.0 1,097.0 98.8 178.1 126.5 ROUGH DIAMOND MINING 8 UoM thousand carats 2012 report 2013 report plan 2014 % of report the plan % COMPARED to 2013 % COMPARED to 2012 5,845.2 4,891.5 3,678.0 3,679.1 100.0 75.2 62.9 $ mn 389.7 391.0 360.7 364.1 100.9 93.1 93.4 TAILS OF PLANT NO. 5 Extraction of tailings t/m 3 306.5 376.6 316.0 322.1 101.9 85.5 105.1 thous.t 568.0 715.0 601.0 612.0 101.8 85.6 107.7 Rock moved t/m 3 306.5 376.6 316.0 322.1 101.9 85.5 105.1 TOTAL FOR MIRNY MINING AND PROCESSING DIVISION Pre-production mine development t/m 3 227.0 328.8 436.5 436.5 100.0 132.8 192.3 Stripping operations t/m 3 215.0 275.0 530.0 530.0 100.0 192.7 246.5 thous. carats 7000 6000 5000 4000 3000 389.7 391 364.1 $ mn 395 390 385 380 375 370 Ore extraction t/m 3 421.7 482.8 369.6 371.2 100.4 76.9 88.0 thous.t 1,012.0 1,159.0 902.0 902.0 100.0 77.8 89.1 2000 1000 365 360 355 Sand extraction t/m 3 200.5 195.8 228.5 228.8 100.1 116.9 114.1 thous.t 388.0 376.0 439.5 440.0 100.1 117.0 113.4 0 2012 REPORT 2013 REPORT 2014 REPORT 350 Extraction of tailings t/m 3 306.5 376.6 316.0 322.1 101.9 85.5 105.1 thous.t 568.0 715.0 601.0 612.0 101.8 85.6 107.7 $ MN THOUS.CARATS Sand processing by dredging t/m 3 1,636.0 1,437.0 1,640.0 1,497.0 91.3 104.2 91.5 Rock moved t/m 3 3,006.7 3,096.0 3,520.6 3,385.6 96.2 109.4 112.6 8 The value appraisal was based on the current Price list for diamonds.

050 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 051 MINING ACTIVITIES NYURBA MINING & PROCESSING DIVISION Designation UDACHNY OPEN PIT Pre-production mine development UoM 2012 report 2013 report 2014 % plan report of the plan UDACHNY MINING & PROCESSING DIVISION % COMPARED to 2013 % COMPARED to 2012 t/m 3 5.0 5.0 5.0 5.0 100.0 100.0 100.0 Stripping operations t/m 3 1,283.0 83.0 1,274.0 1,274.0 100.0 1,534.9 99.3 Ore extraction t/m 3 1,294.4 1,855.2 312.0 319.7 102.5 17.2 24.7 thous.t 3,385.0 4,889.0 780.0 798.0 102.3 16.3 23.6 Rock moved t/m 3 2,582.4 1,943.2 1,591.0 1,598.7 100.5 82.3 61.9 UDACHNY MINE Pre-production mine development Ore extraction linear m 1,778.0 961.0 54.0 t/m 3 24.7 20.3 82.2 t/m 3 13.1 17.5 133.6 thous.t 33.9 45.3 133.6 Rock moved t/m 3 37.8 37.8 100.0 ZARNITSA OPEN PIT Pre-production mine development t/m 3 10.0 The Nyurba Mining and Processing Division is one of the youngest mining and processing enterprises of the Group. It operates at the Nakynskoe ore field. In particular, the mining and processing enterprise develops the following deposits: The Nyurbinsky open pit, where operation commenced in 2002. Currently, the field is developed by the open-pit method. The Botuobinskaya pipe was discovered in 1994 at a distance of 3.3 km southwest of the Nyurbinskaya pipe. Construction of the Botuobinsky open pit commenced in 2012 ROUGH DIAMOND MINING 9 UoM thousand carats 2012 report 2013 report with a view to compensating for the decline in production at Nyurbinsky. In 2014, the Company completed construction of the Botuobinsky open pit processing 6,000,000 m3 of mined rock. Open pit ore mining will begin in 2015. Alluvial placers located near the Nyurbinsky open pit. Commencement of development of the placers located near the Botuobinsky open pit is expected in a few years after this open pit is put into operation. Ore and sands from the Nyurba Mining and Processing Division are processed at the Processing Plants Nos. 15 and plan 2014 % of report the plan 16 with the design capacity of 0.5 and 1.4 million tonnes of ore, respectively. At the prospects of Nyurbinskaya and Botuobinskaya pipes all the works are performed by Nyurba Mining and Processing Division based on service contracts with OJSC ALROSA-Nyurba, the subsidiary company that holds the exploration and mining license. Diamond production at the Nyurba Mining and Processing Division in volume terms in 2014 remained at the level of 2013. % COMPARED to 2013 % COMPARED to 2012 7,955.9 7,406.8 7,350.0 7,362.9 100.2 99.4 92.5 $ mn 447.2 421.1 532.9 545.0 102.3 129.4 121.9 Stripping operations t/m 3 210.0 612.0 1,320.0 1,320.0 100.0 215.7 628.6 Ore extraction t/m 3 437.6 434.6 432.0 450.0 104.2 103.5 102.8 thous.t 1 002.0 1,000.0 1,000.0 1,039.0 103.9 103.9 103.7 thous. carats 8000 447.2 421.1 545 $ mn 600 Rock moved t/m 3 647.6 1,056.6 1,752.0 1,770.0 101.0 167.5 273.3 TOTAL FOR UDACHNY MINING AND PROCESSING DIVISION 7800 7600 500 400 300 Pre-production mine development t/m 3 5.0 15.0 29.7 25.3 85.2 168.7 506.0 7400 7200 200 100 Stripping operations t/m 3 1,493.0 695.0 2,594.0 2,594.0 100.0 373.2 173.7 t/m 3 1,732.0 2,289.8 757.1 787.2 104.0 34.4 45.5 Ore extraction thous.t 4,387.0 5,889.0 1,813.9 1,882.3 103.8 32.0 42.9 7000 2012 REPORT $ MN 2013 REPORT THOUS. CARATS 2014 REPORT 0 Rock moved t/m 3 3,230.0 2,999.8 3,380.8 3,406.5 100.8 113.6 105.5 9 The valuation is based on the effective Price list for diamonds.

052 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 053 MINING ACTIVITIES Designation NYURBINSKY OPEN PIT UoM 2012 report 2013 report 2014 % plan report of the plan % COMPARED to 2013 % COMPARED to 2012 Putting into production the Ebelyakh and Gusinaya placers with the volume of production and processing of over 1.5 mn m3 of diamond-bearing sands with the diamond content of 1.5 carats per m3, which made it possible to produce additional 2 million carats. Putting new facilities in operation made it possible to compensate for the depletion of the placers in the Mayat River basin and to increase production by 0.5 mn carats compared to 2013. The increase in rough diamond production of OJSC Almazy Anabara in 2014 amounted to 21.3% in volume terms compared to 2013. The growth was caused by the increased volume of processing. Pre-production mine development t/m 3 51.0 20.0 20.0 20.0 100.0 100.0 39.2 Stripping operations t/m 3 12,000.0 12,000.0 12,000.0 12,000.0 100.0 100.0 100.0 Ore extraction Sand extraction t/m 3 591.9 562.5 562.5 562.5 100.0 100.0 95.0 thous.t 1,400.0 1,350.0 1,350.0 1,350.0 100.0 100.0 96.4 t/m 3 252.1 83.4 thous.t 532.0 176.0 ROUGH DIAMOND MINING 10 UoM thousand carats 2012 report 2013 report plan 2014 % of report the plan % COMPARED to 2013 % COMPARED to 2012 2,408.0 2,521.3 2,951.5 3,059.5 103.7 121.3 127.1 $ mn 161.8 180.2 186.6 195.0 104.5 108.2 120.5 Rock moved t/m 3 12,895.0 12,665.9 12,582.5 12,582.5 100.0 99.3 97.6 BOTUOBINSKY OPEN PIT Development and construction operations t/m 3 5,500.0 6,000.0 6,000.0 100.0 109.1 thous.t 5,500.0 thous. carats 3100 2900 161.8 180.2 195 $ mn 200 160 Rock moved t/m 3 5,500.0 6,000.0 6,000.0 100.0 109.1 TOTAL FOR NYURBA MINING AND PROCESSING DIVISION 2700 120 80 Pre-production mine development t/m 3 51.0 20.0 20.0 20.0 100.0 100.0 39.2 2500 40 Development and construction operations t/m 3 5,500.0 6,000.0 6,000.0 100.0 109.1 2300 2012 REPORT 2013 REPORT 2014 REPORT 0 Stripping operations t/m 3 12,000.0 12,000.0 12,000.0 12,000.0 100.0 100.0 100.0 t/m 3 591.9 562.5 562.5 562.5 100.0 100.0 95.0 Ore extraction thous.t 1,400.0 1,350.0 1,350.0 1,350.0 100.0 100.0 96.4 t/m 3 252.1 83.4 Sand extraction thous.t 532.0 5,676.0 Rock moved t/m 3 12,895.0 18,165.9 18,582.5 18,582.5 100.0 102.3 144.1 OJSC ALMAZY ANABARA MINING ACTIVITIES Designation KURUNG-YURYAKH Pre-production mine development UoM $ MN 2012 report 2013 report t/m 3 50.1 60.0 THOUS.CARATS plan 2014 % of report the plan % COMPARED to 2013 % COMPARED to 2012 Stripping operations t/m 3 1,792.7 2,680.1 240.0 240.0 100.0 9.0 13.4 Sand extraction t/m 3 762.0 1,266.7 181.0 181.0 100.0 14.3 23.8 OJSC Almazy Anabara, a subsidiary of ALROSA, is engaged in rough diamond production at the placer deposits located near rivers and brooks in the Anabarsky district of Yakutia. Apart from the deposits originally owned by the enterprise, Almazy Anabara mining and processing enterprise currently also develops a group of placer deposits owned by Nizhne-Lenskoe, its subsidiary company. Information on the production results of OJSC Almazy Anabara in this section excludes the results of OJSC Nizhne-Lenskoe activities. Production results of Nizhne-Lenskoe are presented separately later in the report. Almazy Anabara operates placer deposits along the rivers that make up the basin of Anabar River. In 2012, the Company also worked at the Kholomolokh deposit, which mining was planned to be terminated in 2014. Assuming that the contribution of these deposits in the total reserves of the Group is likely to be insignificant, they were not estimated according to the JORC classification. The exception is the placer deposits at the Ebelyakh River and Gusiny Brook, where trial operations were conducted in 2012. Rock moved t/m 3 2,604.8 4,006.8 421.0 421.0 100.0 10.5 16.2 41 RUCHEY Pre-production mine development t/m 3 62.0 Stripping operations t/m 3 848.7 Sand extraction t/m 3 326.2 2.4 Rock moved t/m 3 1,236.9 2.4 10 The valuation is based on the effective Price list for diamonds.

054 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 055 Designation MORGOGOR UoM 2012 report 2013 report plan 2014 % of report the plan % COMPARED to 2013 % COMPARED to 2012 OJSC NIZHNE-LENSKOE Pre-production mine development t/m 3 78.6 200.0 90.8 90.8 100.0 45.4 115.5 Stripping operations t/m 3 1,385.5 3,074.7 598.0 599.0 100.2 19.5 43.2 Sand extraction t/m 3 781.2 1,653.4 395.0 396.0 100.3 24.0 50.7 Rock moved t/m 3 2,245.3 4,928.1 1,083.8 1,085.8 100.2 22.0 48.4 ISTOK Pre-production mine development t/m 3 50.0 37.0 37.0 100.0 74.0 Stripping operations t/m 3 299.4 800.2 377.0 426.0 113.0 53.2 142.3 Sand extraction t/m 3 252.7 553.0 218.0 218.0 100.0 39.4 86.3 Rock moved t/m 3 552.1 1,403.2 632.0 681.0 107.8 48.5 123.3 KHOLOMOLOKH Pre-production mine development t/m 3 84.0 Nizhne-Lenskoe was established in 1994 and was acquired in 1HY 2013 by Almazy Anabara. Nizhne-Lenskoe is engaged in diamond placer mining and holds a license to develop four mining deposits and two exploration deposits: the full-scale mining of the placer deposits near the Billyakh River commenced in 2002. The deposit includes the Tiglikit and Reliktovy mines; the placer deposit near the Molodo River has been developed since 1997. Since the acquisition of OJSC Nizhne-Lenskoe, ALROSA has taken a range of measures to improve its profitability. Currently, ALROSA is considering the possibilities for maximizing the synergy from the deal. The Company believes that it will be possible to use mobile processing units of OJSC Almazy Anabara to develop the prospects of OJSC Nizhne-Lenskoe. Currently the sands extracted from the mines of the Bilyakh River are processed at three seasonal plants located at Bilyakh, Reliktovy and Tiglikit mines as well as at four autogenous grinding mills. These mills prepare a concentrate which is then transported by trucks to the seasonal processing plants. The design capacity of the enterprise at the Reliktovy mine is 370,000 m3 per year, the enterprises at Billyakh and Tiglikit mines have a capacity of 400,000 m3 per year. The diamond-bearing sands extracted from the Molodo River are processed at one seasonal processing plant with a design capacity of 400,000 m3 per year. Stripping operations t/m 3 471.0 Sand extraction t/m 3 478.2 Rock moved t/m 3 1,033.2 RIGHT BANK OF MORGOGOR Pre-production mine development t/m 3 31.0 31.0 100.0 Stripping operations t/m 3 678.0 720.0 106.2 Sand extraction t/m 3 266.0 300.0 112.8 Rock moved t/m 3 975.0 1,051.0 107.8 ROUGH DIAMOND MINING 11 UoM 2013 REPORT plan 2014 report % of the plan % COMPARED to 2013 carats 2,009.8 1,794.5 1,818.0 101.3 90.5 $ mn 140.2 196.3 197.4 100.5 140.7 EBELYAKH Pre-production mine development t/m 3 20.6 55.0 55.0 100.0 267.0 Stripping operations t/m 3 132.3 1,251.0 1,180.0 94.3 891.9 Sand extraction t/m 3 113.0 1,267.0 1,259.0 99.4 1,114.2 Rock moved t/m 3 265.9 2,573.0 2,494.0 96.9 937.9 GUSINY thous. carats 2100 1900 140.2 197.4 $ mn 200 160 120 Pre-production mine development t/m 3 20.7 94.8 94.8 100.0 458.0 1700 80 Stripping operations t/m 3 81.3 1,171.0 1,167.0 99.7 1,435.4 40 Sand extraction t/m 3 100.5 651.5 653.5 100.3 650.2 Rock moved t/m 3 202.5 1,917.3 1,915.3 99.9 945.8 1500 2013 REPORT 2014 REPORT 0 TOTAL FOR OJSC ALMAZY ANABARA Pre-production mine development t/m 3 316.0 310.0 308.6 308.6 100.0 99.5 97.7 $ MN THOUS.CARATS Stripping operations t/m 3 5,010.9 6,555.0 4,315.0 4,332.0 100.4 66.1 86.5 Sand extraction t/m 3 2,813.8 3,475.5 2,978.5 3,007.5 101.0 86.5 106.9 Rock moved t/m 3 8,140.7 10,340.5 7,602.1 7,648.1 100.6 74.0 93.9 11 The valuation is based on the effective Price list for diamonds.

056 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 057 MINING ACTIVITIES OJSC SEVERALMAZ Designation MOLODO UoM Pre-production mine development t/m 3 2013 report plan 2014 report % of the plan % COMPARED to 2013 Stripping operations t/m 3 744.0 657.0 659.0 100.3 88.6 Sand extraction t/m 3 738.0 486.0 488.0 100.4 66.1 Rock moved t/m 3 1,482.0 1,143.0 1,147.0 100.3 77.4 VERKHNEE MOLODO Pre-production mine development t/m 3 30.0 30.0 100.0 Stripping operations t/m 3 1,287.0 1,289.0 100.2 Sand extraction t/m 3 919.0 941.0 102.4 Rock moved t/m 3 2,236.0 2,260.0 101.1 PRITOKI BILLYAKH Pre-production mine development t/m 3 182.6 182.6 100.0 Stripping operations t/m 3 1,786.0 1,831.0 102.5 OJSC Severalmaz, in which OJSC AL- ROSA owns 99.6% of shares, is engaged in the development of Lomonosovskoe deposit in the Arkhangelsk Region. The company is working on two projects: Mining in the Arkhangelsky open pit commenced in 2005. The ore is processed in the first module of processing plant No. 1 with a design capacity of 1 mn tonnes per year. The deposit is mined using open pit methods and the open pit is explored down to the depth of about 1,000 m. According to the JORC Code, the reserves of the pipe are estimated at 57.1 mn tonnes of ore containing 43.2 mn carats with average diamond content of 0.76 carats per tonne. The reserves of the Arkhangelsky open pit are sufficient to be mined until 2033. Putting into operation the second module of processing plant No. 1 in March 2014 made it possible to increase ore processing to 3.3 million tonnes and increase rough diamond production to 1.64 mn carats (158%). In Q4 2014, without following a plan, OJSC Severalmaz put into operation the open pit at the Karpinskogo-1 pipe where over 0.5 mn tonnes of ore was mined with subsequent extraction of 266,000 carats of rough diamonds. Karpinskogo-1 pipe was studied down to the depth of about 942 m. According to the JORC Code, the reserves of the pipe are estimated at 18.4 mn tonnes of ore containing 20.9 mn carats with average diamond content of 1.13 carats per tonne. The estimated reserves will be sufficient for development until 2033 in accordance with the anticipated production schedule. It should be noted that in Q4 2014 OJSC Severalmaz put into production the open pit of the Karpinskogo-1 pipe where 0.5 mn tonnes of ore was mined with subsequent extraction of 266,000 carats of diamonds. Sand extraction t/m 3 662.0 665.0 100.5 Rock moved t/m 3 2,630.6 2,678.6 101.8 ROUGH DIAMOND MINING 12 RELIKTOVY Pre-production mine development t/m 3 5.0 5.0 100.0 UoM 2012 report 2013 report plan 2014 % of report the plan % COMPARED to 2013 % COMPARED to 2012 Stripping operations t/m 3 250.6 108.0 108.0 100.0 43.1 Sand extraction t/m 3 465.0 205.0 269.0 131.2 57.8 Rock moved t/m 3 715.6 318.0 382.0 120.1 53.4 thousand carats 558.6 635.7 1,610.0 1,638.9 101.8 257.8 293.4 $ mn 27.5 32.0 104.9 118.1 112.6 369.2 429.1 TIGLIKIT Pre-production mine development t/m 3 169.2 103.8 103.8 100.0 61.3 Stripping operations t/m 3 1,615.4 587.0 589.0 100.3 36.5 Sand extraction t/m 3 1,281.0 699.0 752.0 107.6 58.7 thous. carats 1700 27.5 32 118.1 $ mn 140 Rock moved t/m 3 3,065.6 1,389.8 1,444.8 104.0 47.1 VERKHNY BILLYAKH Pre-production mine development t/m 3 146.3 Stripping operations t/m 3 731.0 1500 1300 1100 900 700 120 80 60 40 20 Sand extraction t/m 3 492.0 Rock moved t/m 3 1,369.3 500 2012 REPORT 2013 REPORT 2014 REPORT 0 TOTAL FOR OJSC NIZHNE-LENSKOE Pre-production mine development t/m 3 315.5 321.4 321.4 100.0 101.9 Stripping operations t/m 3 3,387.0 4,425.0 4,476.0 101.2 132.2 Sand extraction t/m 3 3,081.0 2,971.0 3,115.0 104.8 101.1 Rock moved t/m 3 6,783.5 7,717.4 7,912.4 102.5 116.6 $ MN 12 The valuation is based on the effective Price list for diamonds. THOUS.CARATS

058 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 059 MINING ACTIVITIES ROUGH DIAMOND PRODUCTION Designation UoM 2012 report 2013 report plan 2014 % of report the plan % COMPARED to 2013 % COMPARED to 2012 ARKHANGELSKY OPEN PIT Stripping operations t/m 3 7,536.0 7,653.0 5,618.0 5,520.0 98.3 72.1 73.2 Ore extraction By-product extraction of cut-off grade ore t/m 3 723.0 889.0 1,490.4 1,519.2 101.9 170.9 210.1 thous.t 1,431.6 1,760.2 2,966.3 3,008.0 101.4 170.9 210.1 t/m 3 232.1 356.6 391.8 109.9 168.8 thous.t 461.1 708.3 755.8 106.7 163.9 ALROSA Group cuts some of its rough diamonds using facilities of Brillianty ALROSA and subsidiaries. ALROSA started its own cutting operations 15 years ago during the period of implementing the vertical integration strategy that was given up by the Company later on. Currently, the diamond cutting and polishing capacity makes it possible for ALROSA to primarily monitor the market: by processing the entire range of rough diamonds from the standard boxes and selling the polished diamonds ALROSA receives information about the prices. The plants in Orel and Barnaul specialize in small and middle size rough diamond cutting. Brillianty ALROSA branch processes large stones, including with a view to selling the polished diamonds at auctions held by the world s leading houses. Rock moved t/m 3 8,259.0 8,774.1 7,465.0 7,431.0 99.5 84.7 90.0 KARPINSKOGO-1 OPEN PIT Development and construction operations t/m 3 4,244.0 4,888.0 2,298.0 4,780.0 208.0 97.8 112.6 Stripping operations t/m 3 1,650.0 SHARES OF COMPANIES IN THE POLISHED DIAMONDS PRODUCTION VOLUME (CARAT WEIGHT) t/m 3 300.0 315.3 105.1 Ore extraction thous.t 600.0 602.3 100.4 Secondary extraction of cut-off grade ore t/m 3 50.0 226.0 2,279.0 1,813.7 79.6 802.5 3,627.4 thous.t 100.0 452.0 5,052.0 3,627.4 71.8 802.5 3,627.4 BARNAUL KRISTALL LLC 37 Rock moved t/m 3 4,294.0 5,114.0 6,527.0 6,909.0 105.9 135.1 160.9 TOTAL OJSC SEVERALMAZ 40 BRILLIANTY ALROSA OREL ALROSA 23 Development and construction operations t/m 3 4,244.0 4,888.0 2,298.0 4,780.0 208.0 97.8 112.6 Stripping operations t/m 3 7,536.0 7,653.0 7,268.0 5,520.0 75.9 72.1 73.2 Ore extraction Secondary extraction of cut-off grade ore t/m 3 723.0 889.0 1,790.4 1,834.5 102.5 206.4 253.7 thous.t 1,431.6 1,760.2 3,566.3 3,610.3 101.2 205.1 252.2 t/m 3 50.0 458.1 2,635.6 2,205.5 83.7 481.4 4,411.0 thous.t 10.0 913.1 5,760.3 4,383.2 76.1 480.0 43,832.1 Rock moved t/m 3 12,553.0 13,888.1 13,992.0 14,340.0 102.5 103.3 114.2

060 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 061 SALE OF DIAMOND PRODUCTS SALES OF ROUGH DIAMOND PRODUCTS IN 2014 SORTING, ASSESSMENT, BATCHING AND SALES After extraction the diamonds undergo provisional classification by size. At the preliminary sorting stage the size and weight of diamonds are identified. The size of smaller rough diamonds is defined in the process of screening the rough diamonds through sieves and medium and large size rough diamonds are weighed on precision scales. At the next stage rough diamonds are sorted by comparing them with samples to determine the form, quality and colour. 100% of the large size and weight rough diamonds are sorted manually in accordance with the full list of classification criteria. Small and medium size diamonds are sorted in accordance with the expanded diamond type classification. Based on results of the sorting of rough diamonds in accordance with the classification criteria and application of the price list, the initial value of rough diamonds is determined. Boxes are formed at the batching stage. Each box consists of a set of various rough diamonds selected in accordance with the approved composition of the boxes. The so-called technical quality diamonds are separated during the initial sorting and are sold separately. At some cutting enterprises, particularly in India, there is demand for small size diamonds. This factor allows ALROSA to sell some diamonds, which are classified as technical quality diamonds, for use in the jewellery industry. Technical diamonds are mainly used for producing diamond powders that are widely used in various industries. The so-called diamonds of special sizes weighing 10.8 carats or more are evaluated in accordance with the Procedure approved by the Ministry of Finance of the Russian Federation. The main evaluation criterion according to this methodology is the expected value of polished diamonds, which can be obtained from one rough diamond crystal. Computer modelling makes it possible to make individual calculations for each gem. The sorting and valuation process is carried out with participation of representatives of the State control of the Ministry of Finance of the Russian Federation. Sorting and valuation for insurance purposes of the rough diamonds mined by ALROSA Group mining and processing enterprises (except for OJSC Severalmaz) are performed in the Diamond Sorting Centre in the town of Mirny. Rough diamonds are received by the Sorting centre directly from processing plants. For final sorting and valuation rough diamonds are sent to the United Selling Organization, a specialized subdivision of the Group that has sorting centres in Moscow, Mirny and Yakutsk. The rough diamonds mined by OJSC Severalmaz undergo initial sorting and evaluation in Gokhran before being sent to the United Selling Organization. In the future ALROSA intends to adjust this process so that the United Selling Organization can receive rough diamonds directly from these enterprises. In addition to sorting, assessment, batching and sales, the United Selling Organization provides additional services that include sale of the rough diamonds mined by other diamond mining companies, organization of diamond transportation to the buyers, performance of the necessary actions to comply with the customs requirements in connection with export of rough diamonds, etc. Potential customers have a chance to familiarize themselves with the products in special protected rooms of the United Selling Organization. There are approximately 700 employees at the United Selling Organization of OJSC ALROSA). The situation on the world diamond market in 1HY 2014 was characterized as consistently positive. By the middle of the year a firm trend had emerged for an increasing deficit of rough diamonds. First of all it was caused by reduced supplies from ALROSA and De Beers in Q2 compared to Q1 2014. However, in 2HY 2014, against the growing supply and problems with financing the industry, the market showed a trend towards a decline in customer spending, and the pace of sales slowed down, which resulted in lower prices for polished diamonds. Despite the rather negative market trend, the Company managed to maintain a stable high level of sales mainly through sales of the products 5000 4000 3000 2000 1000 0 under long-term agreements and sales on the spot market to regular customers. The consolidated rough and polished diamond sales by ALROSA Group in 2014 amounted to $5,045.0 mn (+2.0% compared to 2013), including rough diamond sales totalling $4,900.6 mn (+2.2% compared to 2013). Without taking into account the supplies to Gokhran, rough diamond sales in 2014 grew by 4.1% in value terms. ALROSA GROUP ROUGH DIAMOND SALES (LESS THE SALES TO GOKHRAN of RUSSIA), $ mn 2,739.1 2,597.3 1,278.7 3,337.6 4,273.6 4,193.5 4,707.3 4,900.6 2007 2008 2009 2010 2011 2012 2013 2014 Physical rough diamond sale volumes of ALROSA Group in 2014 increased by 4.1% compared to 2013 and amounted to 39.6 mn carats. The rough diamond sale volumes of individual companies within the Group changed: 1.8% decrease for OJSC AL- ROSA and 1.6% decrease for OJSC Almazy Anabara, 1.5% increase for OJSC ALROSA-Nyurba and 82.1% increase for OJSC Nizhne-Lenskoe, while OJSC Severalmaz sales increased 2.3 times.

062 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 063 2014 SALES STRUCTURE The consolidated data on changes in the selling price for the entire rough diamond assortment in 2012-2014 are given in the table below: The difference in the sales growth rate of different owners resulted in changes in the rough diamond sales structure by form of ownership in the reporting year compared to the same period of 2013. Total in 2012 02. 2013 03. 2013 06. 2013 07. 2013 09. 2013 10. 2013 12. 2013 Total in 2013 02. 2014 03. 2014 06. 2014 07. 2014 Total in 2014-19.6% +1.4% +3.5% +0.9% -1.0% -4.1% -0.3% -0.2% -0.1% 2.7% 1.8% 1.1% 1.6% 7.3% The revitalization of the rough diamond market in 1HY 2014 affected the pricing policy of the company. The increase in sale prices for the full diamond assortment in 2014 (the end of the year compared to the beginning of the year) amounted to 7.3%. ALROSA GROUP ROUGH DIAMOND SALES STRUCTURE BY FORM OF OWNERSHIP IN 2013-2014 (BY WEIGHT) OJSC ALROSA 64.3 OJSC ALROSA-NYURBA 22.4 OJSC ALMAZY ANABARA OJSC SEVERALMAZ OJSC NIZHNE-LENSKOE 8.1 1.5 3.6 OJSC ALROSA OJSC ALROSA-NYURBA 60.8 21.8 OJSC ALMAZY ANABARA OJSC SEVERALMAZ OJSC NIZHNE-LENSKOE 7.7 3.4 6.4 On March 15, 2014, the Ministry of Finance of the Russian Federation put into effect a new schedule of rates, which resulted in the rise of book prices for the products of ALROSA group by 35% compared to the effective prices. These changes affected the sales performance in 2014, which is calculated as the ratio of contract price of the diamonds sold to their book price. As of the end of 2014, the external market accounts for 89.3% of ALROSA rough diamond sales by value (85.8% in 2013) and 90.2% by weight (89.4% in 2013). In 2014, the sales of rough diamonds on the external market reached $4.4 bn, which is 6.4% more than in 2013. The domestic market is traditionally more sensitive to changes in the situation. Russian consumers of rough diamonds showed a significant reduction in demand in 2014 compared to external market consumers. Sales in the domestic market decreased by 11.5% and amounted to $524.6 mn (excluding supplies to Gokhran). There were no changes in the number of carats in the ALROSA Group diamonds sales structure in the reporting year. The proportion of gem quality diamonds in the total sales structure in carats remained at the level of 70.1% (70.2% in 2013). At the same time, the revenue earned from the sales of gem diamonds amounted to $4,754.9 mn as of the end of 2014 (an increase by 1.3% compared to 2013) and of technical diamonds to $145.7 mn (an increase by 42.7% compared to 2013). As of the end of 2014, gem quality diamonds accounted for 97.0% of the total rough diamond sales in value terms (97.9% in 2013). As for gem quality diamonds, a decrease was registered in the sales of special size rough diamonds (over 10.8 carats) compared to 2013. Such diamonds are sold at auctions, in 2014 the sales amounted to $533.3 mn, which is 5.7% less than in 2013. The ALROSA Group, total namely US Dollar/carat 2013 2014 special size rough diamond sales in Q1 2014 included the results of the Israeli auction held in December 2013, but which results were announced in January, 2014. Along with the diamonds from current production, small-sized stocks were sold. Thus, the share of cheaper products in the sales structure increased, which made the average selling price in 2014 decrease slightly compared to the average selling price in 2013. The table below shows the average rough diamond sale prices of ALROSA Group in 2013-2014: Change 2014 by 2013 126.1 123.9-1.8% gem quality 175.9 171.4-2.6% industrial 9.0 12.3 +36.9% In 2014 ALROSA Group held 28 private international auctions: 12 in Moscow; 4 in Antwerp; 3 in Hong Kong 7 in Ramat Gan; 1 in Dubai; 1 in Israel, Belgium and the United States; 1 in Yakutsk.

064 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 065 GEOGRAPHICAL STRUCTURE OF ALROSA GROUP ROUGH DIAMOND SALES IN 2013-2014 WITHOUT TAKING INTO ACCOUNT THE SUPPLIES TO GOKHRAN The proportion of rough diamond sales to Belgium increased from 49.3% in 2013 to 50.1% in 2014 and to China and the UAE from 3.2% and 1.5% to 3.4% and 2.0% respectively. However, the relative share of sales to India and in Russia fell from 15.0% and 12.6% to 14.0% and 10.7% respectively. by the Supervisory Board in December 2012. 2012-2014 changes in the share of the ALROSA Group total rough diamond sales under long-term contracts, on a competitive basis and on the spot market, broken down by value, are shown in the table: 2012 2013 2014 RUSSIAN FEDERATION HONG KONG + CHINA 2013 UAE INDIA USA In 2014 the ALROSA Group commercial products were sold in accordance with the basic principles of the 2013-2015 sales policy, which were accepted as a part of the Concept of ALROSA sales policy for 2013-2015 approved Long-term agreements 62% 61% 69% Auctions 16% 21% 21% Spot market 22% 18% 10% SWITZERLAND GREAT BRITAIN SOUTH AFRICA GEOGRAPHICAL STRUCTURE OF ALROSA GROUP POLISHED DIAMOND SALES IN 2013-2014 BY COST BELGIUM OTHER (CUSTOMS CONTROL ZONE + ALMAZYUVELIREKSPORT) ISRAEL CIS 18.6 USA RUSSIAN FEDERATION BELGIUM 1.7 39.8 9.5 INDIA 2013 10.9 UAE RUSSIAN FEDERATION 2014 UAE 9.2 ISRAEL HONG KONG 10.4 HONG KONG + CHINA INDIA USA SWITZERLAND MAURITIUS 17.8 USA RUSSIAN FEDERATION BELGIUM 1.1 38.1 OTHER (CUSTOMS CONTROL ZONE + ALMAZYUVELIREKSPORT) 12.5 INDIA 2014 BELGIUM ISRAEL 10.6 UAE CIS 11.5 ISRAEL HONG KONG 7.6

066 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 067 In 2014 the Company continued attracting new customers and testing them by spot sales with a view to signing new long-term agreements. As of the end of the year, 52 companies were approved as long-term customers for 2015-2017 contract period, including 47 long-term buyers of gem diamonds and 5 buyers of technical diamonds and diamond powders. In the reporting year, apart from rough diamonds, ALROSA sold polished diamonds worth $144.4 mn, which is 4.0% lower than the same figure in 2013. The main volume of sales of polished diamonds accounts for the external market. In 2014, 57 firms representing major world diamond trading centres purchased the products of the Brillianty ALROSA branch. Polished diamond sales on the Russian internal market in 2014 amounted to $1.5 mn (including retail sales of certified diamonds), which is 38.5% less than in the previous year. The products offered by the branch were purchased at the domestic market of the Russian Federation by 12 jewellery firms from Moscow, Yekaterinburg and Barnaul. INVESTMENTS AND INNOVATIONS: RESULTS FOR THE PERIOD As of the end of 2014, ALROSA Group investments in non-financial assets amounted to RUB 38,537.3 mn or 94% of the planned level. This amount includes investments in construction of facilities for the core activities of the companies of the Group totalling RUB 27,134.1 mn (95% of the plan) and investments in technical upgrade and replacement of worn-out equipment totalling RUB 8,774.5 mn (90% of the plan), with other investments totalling RUB 2,628.7 mn (112% of the plan). OTHER ACTIVITIES CAPITAL INVESTMENTS 13 OF ALROSA GROUP, mn RUB Given the remote location of the areas where the Group operates and other reasons of historical nature, ALRO- SA Group participates in a number of non-diamond mining companies. These companies provide services to the Group and to the third parties. In 2014, the total miscellaneous revenue of the Group from non-core activities (for all segments except for the rough diamond segment) amounted to RUB 23 bn or 11% of the consolidated revenue. The detailed financial information on non-core activities segments is available in the Financial Results Overview section. production of equipment for ore processing, cargo transportation and construction, provide services to the Group s enterprises specialized in diamond mining. Other non-core businesses The fact that ALROSA assets include the entities not related to the core activities of diamond mining is mainly the result of historical development, including the business diversification strategy that the Group implemented earlier. Such companies currently include trading companies and companies that provide printing and hotel services. The ALROSA Group strategy provides for focusing on rough diamond mining and gradual reduction of the Company participation in non-core businesses. The information on the plans for disposal of non-core assets is presented in the Company Growth Strategy section. Designation Investment in non-financial assets (capital investments) Technical upgrade and replacement of worn-out equipment REPORT for 2012 REPORT for 2013 2014 2014 COMPARED to the plan plan report mn RUB % 32,797.2 42,396.0 40,787.3 38,537.3-2,249.9 94% 4,462.0 8,772.7 9,759.3 8,774.5-984.9 90% Construction 27,118.8 29,077.1 28,670.3 27,134.1-1,536.2 95% including: Investments in underground mines: 11,127.5 10,708.2 14,142.3 14,058.7-83.7 99% newly created facilities 9,754.0 8,865.3 11,485.9 11,537.9 52.0 100% maintenance of current facilities 1,373.5 1,842.9 2,656.5 2,520.8-135.7 95% Other core production facilities 12,203.9 14,532.9 9,960.1 8,879.9-1,080.2 89% Non-core assets of the ALROSA Group can be divided into three main categories: Companies providing services to core mining operations Several companies involved in air transportation, power generation, Enterprises providing social infrastructure and related services The Group owns socially oriented enterprises in the regions of its core activities. In particular, the Group provides the services of management and operation of housing stock and manages healthcare, cultural and sports institutions. Ancillary production facilities 2,726.5 3,354.1 3,646.5 3,385.1-261.4 93% Facilities intended for social needs 1,060.9 482.0 921.4 810.5-110.9 88% 13 The data on the ALROSA Group capital investments are presented in accordance with RAS.

068 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 069 Designation REPORT for 2012 REPORT for 2013 2014 2014 COMPARED to the plan plan report mn RUB % OJSC ALROSA INVESTMENTS Other expenses of capital nature 1,216.4 4,546.1 2,357.6 2,628.7 271.1 112% namely: Prospecting assets (geological exploration) 745.2 801.0 1,807.5 2,185.6 378.1 121% ALROSA Group investments in non-financial assets account for approximately 73% of the total ALROSA Group investments. R&D 217.7 262.5 273.9 241.6-32.3 88% other non-current assets (acquisition of fixed assets, incomplete construction, housing) 253.5 3,482.6 276.2 201.6-74.6 73% Designation Investment in non-financial assets (capital investments) REPORT for 2012 REPORT for 2013 2014 COMPARED 2014 to the plan plan report mn RUB % 21,863.8 28,951.0 29,486.5 28,049.1-1,437.4 95% Investments in technical upgrade and replacement of worn-out equipment within ALROSA Group mainly comprise the expenses incurred by OJSC ALROSA as well as OJSC Almazy Anabara and OJSC Severalmaz, the main diamond mining companies of the Group. Technical upgrade and replacement of worn-out equipment 3,550.3 7,125.9 8,076.3 7,200.1-876.2 89% Construction 17,370.8 18,042.6 20,190.9 19,738.6-452.3 98% including: Investments in underground mines: 11,127.5 10,708.2 14,142.3 14,058.7-83.7 99% INVESTMENT IN TECHNICAL UPGRADE AND REPLACEMENT OF WORN-OUT EQUIPMENT, mn RUB newly created facilities 9,754.0 8,865.3 11,485.9 11,537.9 52.0 100% maintenance of current facilities 1,373.5 1,842.9 2,656.5 2,520.8-135.7 95% Enterprise REPORT for 2012 REPORT for 2013 2014 2014 COMPARED to the plan 2014 COMPARED TO 2013 plan report mn RUB % mn RUB % Other core production facilities 2,504.3 3,548.6 1,622.7 1,546.4-76.3 95% OJSC ALROSA 3,550.3 7,126 8,076 7,200-876 89.2% 74 101.0% Subsidiaries 911.7 1,647 1,683 1,574-109 93.5% - 72 95.6% including: OJSC ALROSA-Nyurba 8.002 1 3 2-1 69.3% 1 147.4% OJSC Almazy Anabara 735 1,207 1,219 1,163-56 95.4% - 44 96.4% OJSC Severalmaz 60.5 209 203 177-26 87.2% - 31 85.0% Other subsidiaries 108.2 230 258 232-26 -10.1% 2 0.87% Ancillary production facilities 2,696.2 3,308.1 3,516.2 3,333.7-182.5 95% Facilities intended for social needs 1,042.9 477.7 909.7 799.8-109.9 88% Other expenses of capital nature 942.7 3,782.5 1,219.3 1,110.4-108.9 91% namely: Prospecting assets (geological exploration) 573.4 546.3 1,018.7 975.6-43.1 96% R&D 185.7 153.7 139.6 126.8-12.7 91% TOTAL: 4,462.0 8,773 9,759 8,774-985 89.9% 2 100.0% other non-current assets (acquisition of fixed assets, incomplete construction, housing) 183.6 3,082.5 61.0 8.0-53.0 13%

070 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 071 One of the main strategic areas of the ALROSA Group investment program is the construction of underground mines. In 2014, works were carried out at four underground mines, namely Mir, Aikhal, Udachny and Internatsionalny. RUB 11,538 mn was allocated for the newly created facilities of Mir, Aikhal and Udachny mines and RUB 2,521 mn for maintaining the capacity of the Internatsionalny mine. Underspending of the allocated funds to be invested in the Internatsionalny mine was caused by rescheduling the delivery of automation equipment. Other construction projects of OJSC ALROSA are aimed at development of production facilities of the Company and associated technical and social infrastructure. Utilization of the capital investments in facilities of Nakynskoe deposit in 2014 amounted to RUB 1,050.0 mn against RUB 1,087.7 mn of the plan (97% of the plan). Works continued on the renovation of biological treatment plant No.2 of the rotational camp and 6kV HV line to biological treatment plant No.2 and machinery was purchased for the expansion of the open pit of the Nyurbinskaya pipe and development of the deposit of the Botuobinskaya pipe. Work was carried out on the development of the drainage water injection system of the Udachnaya pipe (Levoberezhny prospect) and construction of a section of the heat and water supply network from Processing Plant No. 12 to the Udachny mine; construction began of the motor road and power supply facilities for the open pit at the Zarya pipe deposit. Utilization of the investments in construction of other production facilities amounted to RUB 3,333.7 mn against RUB 3,516.2 mn of the plan (95% of the plan). In 2014, construction continued of a biological treatment unit in the town of Lensk, sewage treatment facilities in the settlement of Aikhal, modernization of the sewage treatment facilities of the mining and processing enterprise (Yubileynaya pipe), modernization of sewage treatment facilities in the town of Udachny and construction of water treatment facilities in the settlement of Aikhal. Construction began of a flush water pumping station with tanks in the town of Mirny. The decline in investments against the planned figures was caused by suspending implementation of the project on renovation of the treated waste water outlet of the biological treatment unit in the settlement of Aikhal due to necessity to revise the design solutions. In 2014, the Company allocated RUB 799.8 mn for facilities intended for social needs, which is 12% less than the planned level of investments. Underspending of the planned capital investments in construction of the facilities intended for social needs was caused by extension of the deadlines in negotiating the cost of the works within the framework of the procurement procedures carried out while entering into contracts with external contractors as well as by the necessity to suspend construction of the workers dormitory in the town of Mirny due to deviations from the design parameters. In 2014 the Company allocated RUB 7,200 mn for the technical upgrade and replacement of worn-out equipment, which is 1% more than in 2013. The major part of capital investments was allocated for the technical upgrade and replacement of worn-out equipment at mining and processing enterprises and transport and geological subdivisions of the Company. In the course of implementation of the technical upgrade measures in 2014, the Company focused on accomplishing the following tasks: the need to update the core and auxiliary technological equipment in all subdivisions of the Company; technical upgrade of exploration facilities and the introduction of modern high-performance drilling, geophysical and laboratory equipment to ensure greater exploration efficiency; implementation of the targeted technical upgrade programs for replacing special-purpose machinery, energy saving, improvement of sanitary conditions in structural subdivisions of the Company. INVESTMENTS OF SUBSIDIARIES AND AFFILIATES As of the end of 2014, the subsidiaries and affiliates of ALROSA Group account for 27% of the total investments in non-financial assets. Designation Investment in non-financial assets (capital investments) Technical upgrade and replacement of worn-out equipment REPORT for 2012 REPORT for 2013 2014 2014 COMPARED to the plan plan report mn RUB % 10,933.4 13,445.0 11,300.8 10,488.3-812.5 93% 911.7 1,646.8 1,683.0 1,574.4-108.7 94% Construction 9,748.0 11,034.5 8,479.4 7,395.5-1,083.9 87% including: Investments in underground mines: 0.0 0.0 0.0 0.0 0.0 - Other core production facilities 9,699.7 10,984.3 8,337.4 7,333.5-1,004.0 88% Ancillary production facilities 30.4 46.0 130.3 51.4-78.9 39% Facilities intended for social needs 18.0 4.3 11.7 10.7-1.0 91% Other expenses of capital nature 273.7 763.6 1,138.3 1,518.4 380.1 133% namely: Prospecting assets (geological exploration) 171.8 254.7 788.8 1,210.0 421.2 153% R&D 32.0 108.8 134.3 114.7-19.6 85% other non-current assets (acquisition of fixed assets, incomplete construction, housing) According to the above data, investments in non-financial assets by subsidiaries and affiliates of the Group in 2014 totalled RUB 10,488.3 mn, namely RUB 7,395.5 mn in construction and RUB 1,574.4 in technical upgrade and replacement of worn-out equipment, with other investments amounting to RUB 1,518.4 mn. 69.9 400.1 215.2 193.6-21.6 90% The proportion of investments by foreign companies selling rough diamonds in the total capital investments of the Group is insignificant and totalled 0.02% (RUB 6.1 mn) as of the end of 2014. As of the end of 2014, the investments in non-financial assets by OJSC Almazy Anabara, OJSC Nizhne-Lenskoe, OJSC Severalmaz and SA-Nyurba, the main diamond mining companies of ALROSA Group, amounted to RUB 8,543.0 mn or 103% mn RUB compared to the planned level (RUB 8,291.1 mn). In 2014 the share of investments by rough diamond mining companies in the total capital investments of the Group amounted to 22%.

072 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 073 INVESTMENTS OF DIAMOND MINING COMPANIES, mn RUB INNOVATIVE DEVELOPMENT Name of subsidiary (ASSOCIATED) COMPANY REPORT for 2012 REPORT for 2013 2014 2014 COMPARED TO the plan plan report mn RUB % Diamond mining companies 5,826.5 10,022.2 8,291.1 8,543.0 252.0 103% OJSC Almazy Anabara 1,319.1 2,792.0 3,312.9 3,134.6-178.2 95% OJSC ALROSA-Nyurba 48.5 1 259.4 1,710.5 2,115.1 404.6 124% OJSC Severalmaz 4,458.9 5,970.9 2,863.7 2,921.5 57.8 102% OJSC Nizhne-Lenskoe 0.0 0.0 404.0 371.8-32.3 92% The most significant deviation from the plan was registered for OJSC ALROSA-Nyurba (124% of the plan). The main reason for the deviations is the extensive geological exploration program implemented in 2014 (prospecting assets). Investments in exploration as of the end of 2014 amounted to RUB 451.7 mn compared to RUB 4.1 mn under the plan. The poor performance versus plan with regard to OJSC Almazy Anabara is largely caused by delays in the delivery of the equipment under the program for technical upgrade and replacement of worn-out equipment as well as by decreased investments in construction due to cutting the transportation and procurement costs, changes of design, structural and layout and arrangement solutions for certain construction projects. Investments in OJSC Nizhne-Lenskoe in 2014 are represented only by exploration works (prospecting assets). These expenses have been reflected in the Company investment since 2014 due to changes in the accounting policy. The poor performance against the exploration plan (RUB 371.8 mn or 92% of the plan) in 2014 was caused by the failure to reach the planned figures of transporting and preparing exploration samples. The geological objectives set in the project specification were achieved in full. As of the end of 2014, investments in non-financial assets by the remaining production and other companies of the Group amounted to RUB 1,938.4 mn or 65% of the planned level (RUB 2,982.2 mn). In 2014 the share of investments by industrial and other companies in the total capital investments of the Group amounted to 5%. The poor performance versus the 2014 plan was caused by postponing construction of several facilities of subsidiaries and affiliates of the Group until 2015, reduction of cost of equipment under the program for technical upgrade and replacement of worn-out equipment as a result of the procurement procedures, postponing conclusion of contracts and other factors. One of the main tasks that ALROSA Group is faced with is cutting costs when more and more rough diamonds are mined using a relatively expensive underground method. In order to improve production efficiency and profitability of its business, ALROSA opts for high-tech development model and introduces state-of-the-art mining and geological exploration solutions. The ALROSA Group investments in implementation of the innovation program amounted to RUB 2.7 bn in 2014. During the period up to 2018, it is planned to allocate RUB 13 bn for innovation projects. Nowadays, an important factor affecting the technological competitiveness of the Company is the availability of the technology management and R&D system, which makes it possible to: determine the priorities for activities in the field of science and technology; propose long-term solutions for integration into the set of medium and short-term objectives; improve the mechanism of the result-based management. STRATEGIC AREAS OF THE ALROSA INNOVATIVE DEVELOPMENT AND TECHNOLOGICAL MODERNIZATION PROGRAM Improvement of the operating efficiency of the existing enterprises Energy-saving and energy-efficiency Development of new diamond mining technologies Ecology and environmental protection In 2014 OJSC ALROSA introduced 28 scientific and technical developments and received 13 documents of title for utility model and inventions. Creation and implementation of costeffective development technologies for low-grade, technogenic and remote deposits with developed infrastructure Implementation of complex informational systems and communication Improvement of exploration efficiency Automation of technological processes Implementation of new materials and technologies in design and construction

074 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 075 FINANCIAL RESULTS OF THE INNOVATION- DRIVEN DEVELOPMENT AND TECHNOLOGICAL MODERNIZATION PROGRAM KEY PERFORMANCE INDICATORS (KPIs) Indicator 2013 ACTUAL plan 2014 ACTUAL The actual amount of funding for ALROSA innovative development and technological modernization program in 2014 amounted to RUB 2,693.91 mn against RUB 2,681.35 mn of the plan. Designation 2013 ACTUAL plan 2014 ACTUAL mn RUB Research financing and performance INDICATOR Volume of R&D financing as % of revenue 0.34 0.34 0.36* Number of R&D projects developed and implemented into production Indicators of technological leadership 31 27 28 TOTAL: 2,971.45 2,681.35 2,693.91 Expenditure on technological innovation, research and development 2,904.86 2,487.07 2,527.69 Funding for research and development 539.41 464.54 673.76 Capital investments 1,789.69 1,541.68 1,334.13 The number of patents and other E&P documents of title, for the year, pcs. (received by OJSC ALROSA) The number of patents and other E&P documents of title, for the year, pcs. (OJSC NPP Bourevestnik) Innovation efficiency INDICATOR 13 13 13 23 Other investments for the purchase of materials, software and services with a view to implementing technological innovations 575.76 480.85 519.80 Innovation efficiency indicator, RUB/RUB 0.44 0.48 0.48** R&D introduction effectiveness indicator, RUB/RUB. 1.38 1.40 1.40** Cost of targeted training at the premises of OOVO* 24.66 20.65 22.66 Environmental INDICATOR Expenses associated with marketing and organizational innovations, international cooperation 41.93 173.60 143.56 CO emission, thous. kg 4,505 4,680 4,254 CO emissions from stationary sources, thous. kg 2,897 2,880 3,007 *OOVO-educational institutions of higher education. CO emissions from mobile sources, thous. kg 1,608 1,800 1,247 Water extraction from the storage reservoir for needs of OJSC ALROSA, thous. m3 22,953 27,154 24,350 Energy EFFICIENCY INDICATOR RESULTS OF THE INNOVATION PROGRAM IMPLEMENTATION Energy consumption GJ / production of one carat 0.323 0.370 0.334 *Only OJSC ALROSA own funds amounting to RUB 578.5 mn, which is +0.36% of the revenue, were taken into account when calculating the R&D funding/results ratio. As a result of the innovation program implementation, the planned figures of the key performance indicators of OJSC ALROSA for 2014 were achieved. In 2014 the actual economic effect of using the scientific and technical developments made in 2013 (RUB 217.4 mn) was calculated, not taking into account the effect of implementing the activities related to the commercial products growth. This calculation was not made due to a lack of adequate calculation methods. The year 2013 figure is therefore pending until the methods are approved. **The calculation of the actual economic effect for 2014 will be made in 1HY 2015.

076 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 077 PECULIARITIES OF THE REPORTING STAGE OF THE PROGRAM IMPLEMENTATION When the OJSC ALROSA innovation program was updated and its new version was approved by the Supervisory Board of the Company in 2014, special attention was paid to integration of the Program into the unified strategy based on the indicators of long-term development plan of the Company with the maximum use of scenario parameters and assessment of the emerging risks. In November of the reporting year the Executive Committee of the Company approved the Regulations on innovative activities. In order to establish permanent mechanisms for acquisition of pilot samples, testing and introduction into production of world-class innovative products, the Standard called the Standard program, methods and procedure for testing pilot samples of innovative products in OJSC ALROSA was developed and approved (Order of OJSC ALROSA No. A01/187-P dated 17.07.2014). The action plan (road map) the Improvement of access of small and medium-sized enterprises to the procurement activities of infrastructure monopolies and companies with state participation, approved by the Order of the Government of the Russian Federation No. 867-r dated May 29, 2013, provides for increasing the share of purchase of innovative products from small and medium-sized enterprises. Following the provisions of this document, OJSC ALROSA developed an Action plan (road map) the Improvement of access of small and medium-sized enterprises (hereinafter referred to as the SMEs) to the procurement activities of infrastructure monopolies and companies with state participation (Order of OJSC ALROSA No. А01/152-P dated 05.06.2014). In 2014, for the purpose of increasing labour productivity, creating and modernizing high-performance workplaces, a comparative analysis was conducted measuring ALROSA Group labour productivity against similar foreign companies and developed a medium-term action plan. As per the order of Vladimir Putin, the President of the Russian Federation, given at the meeting on the government support provided to priority investment projects and territories of priority development in the Far East, held on September 1, 2014, in Yakutia, the Company entered into agreements on scientific and technological cooperation with Far-Eastern and North-Eastern Federal universities and allocated funds for joint research and development activities. Introduction of a scheme of open pit development with steeply inclined ramps and remote control system Introduction of chamber mining systems Introduction of technology for the detection of non-luminescent diamonds Introduction of steeply inclined ramps with a longitudinal incline of 25% ensures accessing deep horizons of the open pit with a minimal amount of overburden. This technology was applied at the Udachny mine. The introduction of the system of remote control of technological equipment and mineral production processes makes it possible to improve full extraction of the valuable ore, cut production costs and ensure better safety by reducing the influence of the human factor. Follow-up mining of ore pillars at Udachny open pit is carried out with application of the above mentioned technology with additional production of over 2 mn tonnes of ore. This technology is unique and has no domestic analogues. In 2014, a switch was made to a chamber mining system including stowing of the mined-out space and arranging the chambers in a chess-board configuration followed by changing the chamber cross-section (rhombus shaped). This arrangement makes it possible to carry out extraction of ore reserve using chambers with extended geometrical parameters, thus significantly reducing the impact of the overburden pressure on structural components of the mining system. The operational benefit is gained due to the fact that in the process of creating mining space, the upper portion of the chamber is a part of the filling mass of previously mined out chambers and the lower portion of the chamber penetrates the ore mass. The technologies developed and applied at Aikhal mine made it possible to: improve labour productivity; improve safety of mining works; cut the cost of ore mining by over 7%. ПРГС-1М and РГС-2 x-ray radiographic separators were successfully tested at Processing Plant No. 16 of the Nyurba Mining and Processing Division. The separators will make possible the additional extraction of non-luminescent and weakly luminescent diamonds and the diamonds covered with a layer of rocks that are not detected by the existing separators. With the use of new technologies it became possible to achieve the following results: increase income; reduce costs, including through replacement of the froth flotation technology used at processing plants. THE MAIN ACHIEVEMENTS IN THE COURSE OF IMPLEMENTATION OF THE INNOVATIVE DEVELOPMENT AND TECHNICAL UPGRADE PROGRAM IN 2014 Introduction of innovative methods of airborne geophysical prospecting for diamonds in Botuobinskaya Geological Exploration Expedition In 2014 Botuobinskaya Geological Exploration Expedition commenced implementation of the program of experimental and pilot operations using modern airborne geophysical technologies. The purpose of this program is testing and introduction in geological exploration (as outsourced services) of the modern airborne geophysical technologies that ensure intensification of geological exploration of OJSC ALROSA license areas and delineation of geophysical anomalies where kimberlite bodies in complex geological and prospecting conditions may be discovered. Airborne electromagnetic experimental and methodological surveys were completed in the reporting year. Pilot testing of a new technology for detecting diamonds in kimberlite The experimental electric pulse kimberlite disintegration unit was tested. The method of dual-energy X-ray absorptiometry makes it possible to discover diamonds inside kimberlites. In order to prove the possibility to use this method in diamond bearing ore dressing technology, preliminary testing was carried out on a prototype of the XRT-400 separator that was installed at Processing Plant No. 3 of the Mirny Mining and Processing Division at the beginning of 2015. The expected result is reduction in circulation costs, reduction of damage to the crystals and their value increase. The unit makes it possible to extract the diamonds detected inside lumps of ore without damaging the crystals, reduce circulation in mills, increase products value by reducing damage to the crystals. The expected result is the product price increase by 2-5%.

078 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 079 The technology of enriching the poor content ore using the method of comparative spectral analysis of intensiveness of carbon characteristic radiation line It was theoretically substantiated that it is possible to discover diamonds inside kimberlite lumps applying the method of dual-energy X-ray absorptiometry using high energy electromagnetic quanta. Introduction of unique rough diamond sorting machines In cooperation with Diamant LLC, subsidiary of Neutron Technologies Company (Dubna), a resident of the Skolkovo Foundation, a patent was granted for a new method and device. In the course of testing the method of fast tagged neutrons, two diamond inclusions were discovered in 50kg of kimberlite. Diamant LLC applied for a grant from the Skolkovo Foundation. Tests of the experimental unit are planned to be conducted at the Lomonosov Mining and Processing Enterprise of OJSC Severalmaz. In 2014, in cooperation with the Institute of Nuclear Physics of the Lomonosov Moscow State University and Scantronic Systems Ltd., theoretical research was completed that justified the selection of energies of a source of radiation and spatial resolution of an X-ray radiation receiver. In 2015 it is planned to create a prototype of the unit and conduct benchmark testing of the method in Scientific Research Institute of Nuclear Physics of the Lomonosov Moscow State University using natural diamonds and kimberlites. Within the framework of the Program for the Development and introduction of automatic rough diamond sorting machines for 2011-2014 and 2014-2017, unique machines for sorting of rough diamonds by weight, shape, colour and quality are being developed and introduced in the technological process. The use of machines increases labour productivity, reduces sorting time and operating costs. FINANCIAL RESULTS FOR THE REPORTING PERIOD The current review of the financial results is based on the consolidated financial statements of ALROSA Group prepared in accordance with IFRS for the 12 months ended on December 31, 2014. In 2014 ALROSA Group demonstrated stable levels of diamond production and rough diamond sales volume growth, which had a positive impact on the operating activity figures and cash flow growth. The Russian rouble devaluation in 2014 resulted in revaluation of the company debt obligations denominated in a foreign currency, which contributed to the negative financial result. Formation of long-term partnerships With a view to joint development and implementation of innovative technologies, agreements on cooperation in the sphere of science and innovations were concluded with Russian and foreign partners. These partners are the Federal Atomic Energy Agency, JSC SUEK, the Fraunhofer Society (Germany), the Bauman Moscow State Technical University, and the Far Eastern and North-Eastern Federal universities. CONSOLIDATED KEY FINANCIAL INDICATORS The consolidated revenue increased by 23% on an annualized basis and amounted to RUB 207.2 bn compared to RUB 168.5 bn received by ALROSA Group in 2013. Consolidated EBITDA amounted to RUB 93.9 bn, which is 36% more than in 2013. EBITDA profitability reached 45.3%, which is an increase by 4.3 pp compared to 2013. The growth rate was mainly caused by the faster growth of the revenue compared to the costs as well as by optimization of some operating expenditure items. The consolidated net loss for the reporting period amounted to RUB 16.8 bn due to the increased negative financial result from revaluation of the credit portfolio denominated in the US dollars as a consequence of the Russian rouble devaluation in 2014. The free cash flow reached RUB 44.8 bn, which is an increase of 157% compared to 2013 as a result of the increased cash flow from operating activities of the Company and decreased investments in the acquisition of fixed assets.

080 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 081 mn RUB 2013 2014 % COMPARED to 2013 Proceeds of sales 168,505 207,159 + 23% Cost of sales -82,232-98,936 + 20% EBITDA 69,100 93,857 + 36% EBITDA margin 41.0% 45.3% 4.3 pp Profit for the period 31,837-16,832-153% Net income margin 19% - 8% -27 pp ROUGH DIAMOND SEGMENT ANALYSIS, mn RUB 2013 2014 Change, % Gem-quality diamonds 140,535 94% 169,928 92% +21% Technical-grade diamonds 3,679 2% 7,801 4% +112% Polished diamonds 4,485 3% 5,449 3% +21% Resale of diamonds 599 0% 887 0% +48% TOTAL 149,299 100% 184,065 100% +23% REVENUE BY SEGMENT The consolidated revenue increased by 23% on an annualized basis and amounted to RUB 207.2 bn mainly due to the increase in the revenue from the sales of gem-quality diamonds. Key factors driving revenue growth were the increase in rough diamond sales in carats and the US dollar to Russian rouble exchange rate growth. Pressure was put on revenue by a drop in the price of rough diamonds due to a decline in sales of medium and large size diamonds against an increase in sales of small size diamonds with a lower price. Apart from the main rough diamond segment, the revenue was positively affected by gas sales segment amounting to RUB 1.145 bn due to the sales volume growth of CJSC Geotransgaz and OJSC ALROSA-Gas and the social infrastructure segment amounting to RUB 2.4 bn mainly due to government subsidies. Revenue from the sales of gem-quality diamonds increased by 21% and amounted to RUB 169.9 bn and the decline in the rough diamond segment compared to 2013 was 2 percentage points. Gem quality diamonds sales in carats grew by 4% from 26.7 mn carats to 27.7 mn carats. The main factors that affected the growth of revenue COST OF GOODS SOLD from the sales of gem-quality diamonds were the increase in the sales volume and the US dollar exchange rate growth. Revenues from technical-grade diamond sales in 2014 increased by 112% compared to 2013 and technical-grade diamonds sales in carats increased by 4% from 11.3 mn carats to 11.8 mn carats. The main factors that affected the growth of revenue from sales of technical-grade diamonds were the increase in the exchange rate of the US dollar and prices for technical-grade diamonds as well as the increase in rough diamond sales. REVENUE STRUCTURE BY SEGMENT, mn RUB 2013 2014 Change, % The cost of sales as of the end of 2014 increased by 20% and reached RUB 98.9 bn. The main items that affected the indicator growth were wages, taxes, payroll budget and other payments, depreciation and Mineral Extraction Tax. Diamond segment 149,299 184,065 23% Sales of gas 5,652 6,797 20% COST OF GOODS SOLD BY COST ELEMENT, mn RUB Transport 4,621 4,884 6% Social infrastructure 2,623 4,995 90% Miscellaneous revenue 6,310 6,418 2% TOTAL 168,505 207,159 23% 2013 2014 Change, % Wages, taxes including payroll and other payments 32,764 34,279 +5% Amortization 13,815 18,452 + 34% Fuel and power 11,016 13,686 + 24% Mineral Extraction Tax 10,509 14,697 + 40% Materials 8,845 9,569 + 8%

082 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 083 2013 2014 Change, % Services 3,865 4,740 + 23% Transport 2,559 2,474-3% Others 282 1,058 + 275% Total: production cost 83,655 98,955 + 18% Changes in rough diamond, ore and sand reserves -2,020-898 -56% Cost of diamonds for resale 597 879-47% Total: Cost of sales 82,232 98,936 +20% Labour costs grew by RUB 1.5 bn or 5% compared to 2013 mainly due to the quarterly wage indexation, which amounted to about 5.7% during the reporting period. Depreciation costs increased by RUB 4.6 bn or 34% compared to 2013 mainly due to the increased fixed assets input and production and services growth. In addition, the increase under this item was affected by the expenses associated with the depreciation of the OJSC Nizhne-Lenskoe licenses amounting to RUB 1.7 bn and depreciation of the gas companies licenses amounting to RUB 453 mn. Fuel and energy costs increased by RUB 2.7 bn or 24% compared to 2013 mainly due to production volumes growth at OJSC Severalmaz and OJSC Almazy Anabara. The expenses associated with paying the Mineral Extraction Tax for 2014 increased to RUB 4.2 bn or 40% compared to 2013. The increase in expenses of all ALROSA Group companies is caused by the Ministry of Finance introducing a new price list for the purpose of calculating the Mineral Extraction Tax, effective since March 15, 2014, and increase of the US dollar to the Russian rouble exchange rate. 13.8% 13.8% 18.6% 18.6% 34.6% 34.6% 13.2% 13.2% 16.5% 16.5% 39.2% 39.2% FUEL AND POWER FUEL AND POWER AMORTIZATION AMORTIZATION SALARIES, PAYROLL TAXES AND OTHER SALARIES, BENEFITS PAYROLL TAXES AND OTHER BENEFITS FUEL AND POWER FUEL AND POWER AMORTIZATION AMORTIZATION SALARIES, PAYROLL TAXES AND OTHER SALARIES, BENEFITS PAYROLL TAXES AND OTHER BENEFITS ALROSA GROUP EXPENSE STRUCTURE DYNAMICS IN 2013-2014 2014 2014 98,955 THOUS. 98,955 ROUBLES THOUS. ROUBLES 2013 2013 83,655 83,655 THOUS. ROUBLES THOUS. ROUBLES MINERAL EXTRACTION TAX MINERAL EXTRACTION TAX MATERIALS MATERIALS SERVICES TRANSPORT SERVICES OTHERS TRANSPORT OTHERS MINERAL EXTRACTION TAX MINERAL EXTRACTION TAX MATERIALS MATERIALS SERVICES TRANSPORT SERVICES OTHERS TRANSPORT OTHERS 14.9% 14.9% 9.7% 9.7% 4.8% 4.8% 2.5% 2.5% 1.1% 1.1% 12.6% 12.6% 10.5% 4.6% 10.5% 3.1% 4.6% 0.3% 3.1% 0.3% OPERATING PROFIT AND EBITDA ANALYSIS General administrative expenditures in 2014 year amounted to RUB 10.3 bn showing a slight increase compared to the same period last year. Commercial costs compared to the previous reporting period decreased by 3% due to optimization of the cost of services and other commercial costs and amounted to RUB 2.3 bn. The total general and administrative and commercial expenses against the revenue decreased from 7.3% down to 6.1%. Other operating expenses in 2014 amounted to RUB 24.2 bn, which is an increase of 21% compared to the same period last year. The major EBITDA ANALYSIS EBITDA increased by RUB 24.8 bn or 36% compared to 2013. EBITDA profitability grew to 45.3%, which is an increase by 4.3 pp compared to the same period last year. The main factor that affected the growth of the indicator was the operating income growth was registered for the items social expenditures and loss from retirement and write-off of fixed assets. The financial costs as of the end of 2014 amounted to RUB 84.7 bn, which is an increase of 401% compared to 2013. The main reason for the increase in financial costs was the exchange rate loss amounting to RUB 73.8 bn, which resulted in a loss registered for ALROSA Group as of the end of 2014. Interest expenses in 2014 totalled RUB 10.6 bn, which is an increase of 8% compared to 2013. The main costs increase is associated with servicing the Eurobonds and amounts to RUB 4.3 bn for the reporting period, which is 15% compared to 2013, as well as with growth against a lower rate of costs growth. The foreign exchange loss of RUB 73.8 bn mainly due to revaluation of the US dollar part of the credit portfolio as a result of the Russian rouble devaluation servicing the bank loans totalling RUB 3.1 bn, which is 37% more compared to the same period last year. The reason for expenses increase under this item is the significant reduction in the exchange rate of the national currency in 2014. The operating profit in 2014 amounted to RUB 74.4 bn, which is 31% more than the same indicator in 2013. in 2HY 2014 resulted in a consolidated net loss of RUB 16.8 bn.

084 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 085 ANALYSIS OF EBITDA, mn RUB FACTOR ANALYSIS OF NET PROFIT CHANGES 2013 2014 mn RUB Operating profit 56,871 74,376 Corrections: +24,757 Amortization 14,304 18,883 The positive exchange rate differences are reflected in other income - 3,011-63,989 Loss on disposals and writing off of fixed assets 585 3,472 31,837 Profit/loss from subsidiary divestiture - 2,660 137 EBITDA 69,100 93,857 EBITDA margin 41.0% 45.3% -767-4,579 +672 +629-2,887-2,505-16,832 NET PROFIT FOR 2013 INCREASE IN THE EBITDA PARAMETER INCREASE IN THE EXCHANGE LOSS INCREASE IN INTEREST EXPENSES INCREASE IN INCREASE AMORTIZATION IN THE EXPENSES INCOME FROM ASSOCIATED COMPANIES DECREASE IN THE PROFIT TAX EXPENSES INCREASE DECREASE IN IN THE OTHER INCOME LOSS FROM (MAINLY FROM DISPOSAL OF DISPOSAL OF FIXED ASSETS SUBSIDIARIES) NET LOSS FOR 2014 CASH FLOW, mn RUB 2013 2014 Change, % MAIN FACTORS AFFECTING EBITDA GROWTH mn RUB Net cash flow from operating activities before changes in working capital and tax payments 69,745 94,840 + 36% Investments in working capital -3,391-4,346 + 28% Income tax paid -10,715-12,379 + 16% +26,529-277 -1,098-141 -256 Net cash flows from operating activities 55,639 78,115 + 40% Acquisition of fixed assets -38,165-33,291-13% 93,857 Net cash flow 17,474 44,824 + 157% 69,100 EBITDA FOR 2013 INCREASE IN GROSS MARGIN (EXCLUDING AMORTIZATION) INCREASE IN ADMINISTRATIVE AND COMMERCIAL EXPENSES INCREASE IN SOCIAL EXPENSES INCREASE IN EXPLORATION EXPENSES CHANGES IN OTHER INCOME AND EXPENSES EBITDA FOR 2014

086 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 087 CAPITAL EXPENDITURES (CAPEX) CONSOLIDATED DEBT PORTFOLIO ANALYSIS 31.12.2013 31.12.2014 Change,% In 2014, the total capital expenditures amounted to RUB 33.3 bn, which is 13% less than in 2013. The major projects on expanding production facilities were associated with construction of the Mir and Udachny underground mines and facilities at the Botuobinskaya pipe. Investments in fixed assets broken down by category are presented in the table below. 14 Long-term part 82,296 176,358 114% Short-term part 56,295 20,802-63% Total debt 138,591 197,160 42% % of the long-term part 59% 89% 30 pp Total debt ($ mn) 4,234 3,504-17% Net debt 129,321 175,467 36% Mining activities: 2013 2014 Change, % Technical upgrade of the existing production facilities 14,095 14,119 0% EBITDA 69,100 93,856 Total debt/ebitda 2.0 2.1 Net debt/ebitda 1.9 1.9 Expansion of mining facilities, including: 15,112 14,122-7% Mir underground mine 1,218 1,356 11% Aikhal underground mine 1,027 767-25% Udachny underground mine 6,574 7,852 19% Botuobinskaya pipe 1,165 1,512 30% OJSC Severalmaz 5,128 2,634-49% Gas assets 2,053 1,068-48% Non-mining activities 6,413 3,284-49% Social infrastructure 491 698 42% During the year, the Company made efforts to restructure the credit portfolio in terms of increasing the share of longterm credits and loans, which made it possible to improve the structure of the debt portfolio significantly and increase their share from 59% to 89% as at the end of the reporting period. The short-term debt on credits and loans amounted to RUB 20.8 bn as of 31.12.2014, which is a decrease by 63% compared to 2013. The decrease is mainly caused by ALROSA Group repayment of Eurobonds issue in November 2014 amounting to RUB 23 bn ($500 mn) that was placed in 2004-2005, as well as ALROSA Group repayment (including early repayment) of bank loans in accordance with the terms of the loan agreements. The structure of borrowed funds for 12 months of 2014 changed: the ratio of the borrowed funds denominated in a foreign currency to the borrowed funds denominated in the Russian roubles was 90% to 10% as of 31.12.2014 compared to the ratio of 85 % to 15 % as of 31.12.2013. The weighted average interest rate on the received credit and loans as of December 31, 2014, increased slightly compared to December 31, 2013, and amounted to 6.1%, including: 5.73% for credits and loans denominated in a foreign currency; 8.89% for credits and loans in roubles. Total 38,165 33,291-13% CREDIT RATINGS LIQUIDITY AND FINANCIAL STABILITY The consolidated net debt as of December 31, 2014 grew by 36% compared to last year and amounted to RUB 175.5 bn. The debt portfolio of the Company in the US dollars decreased by 17% compared to the beginning of 2014. However, during 2014 the effect of revaluation of the part of the portfolio denominated in the US dollars as a result of the rouble weakening against the US dollar by 72% amounted to about RUB 74 bn (loss). Thus, the debt portfolio in roubles grew by 42% 15. The Company was given credit ratings by three international rating agencies: Fitch, Moody s and Standard & Poor s. In 2014, the credit rating of the Company was revised only by Fitch rating agency and it was confirmed to be BB/forecast: Stable. Rating agency RATING RATING assignment DATE Fitch BB / stable 30.07.2014 Moody's Ва3 / positive 26.07.2013 S&P BB- / stable 29.04.2013 14 The data are presented in accordance with IFRS. 15 The exchange rate as of 01.01.2014 is RUB 32.73 to $1. The exchange rate as of 31.12.2014 is RUB 56.26 to $1 Further information on credit ratings is available on the corporate website at http://eng.alrosa.ru/investors/ratings/

088 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 089 RISK MANAGEMENT: MANAGEMENT AND CONTROL SYSTEM SLOWDOWN IN THE GROWTH OF THE WORLD ECONOM KEY RISK FACTORS ASSESSMENT AND MANAGEMENT MECHANISMS The Company regularly monitors macroeconomic parameters in the major countries participating in the diamond market, adjusting its sales and financial policies if necessary. According to the updated macroeconomic forecast of the International Monetary Fund, it is expected that in 2015-2016 the growth in the world economy will increase compared to 2014 (+3.3% in 2014; +3.5% in 2015; +3.7% in 2016). The optimistic forecast is based on the decrease in oil prices, which contributes to enhancing purchasing power and private demand in oil-importing countries. For major countries consuming diamond jewellery, the economic forecast for 2015 is optimistic. The USA economy development is expected to accelerate compared to 2014, China and India GDP will also continue to demonstrate an upward trend of about +7% per year. The ALROSA Group is affected by various risks. A brief overview of the risks that the Group considers significant is given below. The ALROSA general risk management policy is aimed at minimizing potential adverse effects on the results of the Group. GDP GROWTH RATES FOR MAJOR COUNTRIES CONSUMING DIAMOND JEWELLERY (BY YEAR) 2013 2013 2014 2014 IMF FORECAST Q1 Q2 Q3 Q4 2015 2016 USA 2.2 1.9 2.6 2.7 2.5 2.4 3.6 3.3 China 7.7 7.4 7.5 7.3 7.4 7.4 6.8 6.3 STRUCTURING RISKS AND ACTIVITIES AIMED AT THEIR REDUCTION India 6.9 6.4 6.5 8.2 7.4 7.4 6.3 6.5 KEY RISK GROUPS INCLUDED IN THE MATRIX Source: US BEA, NBSC, MOSPI; IMF (20.01.2015) Regulatory and legal Social Industry-specific Financial Corporate governance risks Country-specific and regionspecific Productionspecific The external environment risks are hardly manageable risks. The internal environment risks are manageable risks. DECREASE IN CONSUMPTION OF DIAMOND JEWELLERY The Company business is affected by a number of risk factors that may occur on the external and internal markets. These risks include: slowdown in the growth of the world economy; decrease in the consumption of diamond jewellery; changes in foreign currency exchange rates; changes in interest rates of debt financing; credit risk; liquidity risk; reduction in prices for the Company s products; political, economic and geographic risks. This risk is a key risk for the Company and is unlikely to occur in the short term. Active actions taken by governments of the developed countries to address the problems arising from the financial crisis led to a recovery of the world economy and stable demand for diamond jewellery in developed countries. At the same time the world diamond jewellery market is demonstrating a downward trend in respect to the USA leading position with simultaneous significant growth in demand for diamond jewellery in China, India and the states of the Persian Gulf. Given that China and India account for one-third of the world s population, these markets are currently considered to be the most promising for the development of the jewellery industry.

090 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 091 EXCHANGE RATE RISKS CREDIT RISK In the normal course of business, the Company, like most exporters in the Russian base material sector whose revenue is earned mostly in US dollars, is exposed to significant exchange rate risks associated with changes in exchange rates of foreign currencies to the rouble. The management of the Company reduces the foreign exchange risk by matching assets and liabilities, the value of which is denominated in comparable foreign currencies. As a result of the rouble devaluation that began at the end of 2014, the Company had additional costs associated with servicing and performing the liabilities denominated in foreign currency. However, the risks associated with the devaluation of the rouble are limited and even partially or completely mitigated due to the increase in rouble revenue from export contracts denominated in foreign currency, which makes up the major part (about 90%) of the total revenue of the Company. Thus, the structure of revenue and obligations denominated in foreign currency contain natural hedging mechanisms where multidirectional factors negate one another reducing the effect of exchange rate risk on the results of financial and business activities of the Company. Credit risk is associated with cash and their equivalents as well as with an open creditor position with regard to counterparties, which includes outstanding trade receivables, issued loans, derivative financial instruments and other financial assets. Cash and cash equivalents are deposited only with banks which, in the opinion of the ALROSA management, have a minimum default risk at the time the deposit. Since most counterparties of the Company have no individual external credit rating, the Company developed its own procedures for assessing their credit history. The procedures involve different selection criteria including assessment of financial condition and experience of past relationships. In order to secure the accounts receivable due from some buyers of diamond products, the Company may require pledges, bank guarantees or surety of third parties. LIQUIDITY RISK INTEREST RATE RISKS Liquidity risks management implies that there are sufficient funds on the balance sheet, available sources of funding in the form of open lines of credit and the ability to close out market positions. Given the dynamic nature of the business and the Russian financial market turbulence in 2HY 2014, the Company managed to maintain flexibility of funding due to open credit lines and expected cash flows from operating activities. The management monitors the latest estimates concerning the liquid assets reserve of the Company (consisting of unused portion of borrowed funds and cash and cash equivalents) based on the expected cash flow and maintains the net foreign assets at the required level. The interest rate risks have some effect but they are not significant for the Company because the major part of the Company s debt incurred with respect to credits and loans are credits and loans in Eurobonds with fixed interest rates that cannot be increased during the validity period of the contracts until the final repayment of the debt. The Company has a good credit history and is therefore able to borrow funds on favourable terms and conduct constructive negotiations to restructure debts on loans. Should the current market fixed and floating interest rates change significantly, the Company s management may consider refinancing individual credits and loans under more favourable conditions for the Company in terms of interest rates. The 2014 tendency to international ratings lowering as well as the risk of possible further lowering of the Company credit rating create preconditions for the cost of debt financing to increase. Moreover, the measures taken by the ALRO- SA management helped to promptly solve the problem of refinancing the short-term debt of the Company to be repaid in 2015. This created a source of liquidity for the upcoming redemption of corporate and listed bonds of the Company denominated in roubles and excluded risks associated with the increased cost of the financing involving borrowed funds, if they are used in 2015. RISKS ASSOCIATED WITH POSSIBLE CHANGES IN PRICES FOR THE COMPANY S PRODUCTS The main industry-specific risk of the Company associated with production and sale of rough diamond and polished diamond products is reduction in prices for rough diamonds, which may lead to a decline in profits for the Company and affect the performance of obligations concerning securities. The Company sells its products in domestic and foreign markets at international prices. The comparison of the possible diamond jewellery consumption dynamics (and, accordingly, the demand for diamonds in jewellery) with the rate of change in the world diamond production suggests that demand for rough diamonds will exceed supply in the long term up to 2024. This, in turn, should lead to higher prices for rough diamonds and polished diamond products. In order to minimize the adverse effects of this risk, ALROSA adopts a flexible client-oriented policy, implements a production costs cutting program and actively introduces resource-saving technologies.

092 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 093 RISKS ASSOCIATED WITH THE POLITICAL AND ECONOMIC SITUATION IN THE COUNTRY OR REGIONS WHERE THE COMPANY OPERATES The Company operates in the Russian Federation, therefore it is potentially exposed to the risks associated with the changes in the overall economic situation in the country. The Company may also be affected by changes in the political and economic life of the country. One of the consequences of such changes in 2014 was the lowering of the international ratings of the Russian Federation, which had a negative impact on the investment climate in the country. The 2014 tendency for lower international ratings was conditioned by the slowdown of economic development of the Russian Federation (+0.6% GDP in 2014; +1.3% GDP in 2013) as well as by decreased investments and geopolitical tension. This tendency could, to some extent, restrict the Company s access to foreign capital. However, the significant gold and foreign currency reserves of the Russian Federation accumulated in the recent years mean that support can be provided to domestic producers during the crisis period so that they can implement investment programs as planned. A Government Commission determined the list of strategic enterprises with guaranteed support in receiving government-backed loans. ALROSA is one of these companies. Thus, in the current economic situation and given the uncertainty about credit granting, the state assumed the liability for some of the risks. The region-specific risks associated with the business of the Company are considered to be less significant than the country-specific risks. The main part of the assets of the Company is located in the Republic of Sakha (Yakutia), which limits the region-specific risks to the risks associated with this constituent entity of the Russian Federation. The Republic of Sakha (Yakutia) is one of politically, economically and socially stable regions. On August 29, 2014, Standard & Poor s, an international rating agency, confirmed that Yakutia has a long-term credit rating of BB+ and Russian scale rating of ruaa+, with the forecast remaining negative. The slowdown in income growth and the need to increase social spending may lead to larger deficits, taking into account the capital costs, than estimated now. In turn, this may lead to deterioration of the liquidity figures of the region, which are now rated as high. RISKS ASSOCIATED WITH GEOGRAPHICAL FEATURES OF THE COUNTRY (COUNTRIES) AND THE REGION WHERE THE COMPANY OPERATES The Company performs its core activity - the production of diamonds - in the Far North (Western Yakutia) under extreme climate conditions and using a complicated transport scheme to delivery materials and equipment. However, the risks associated with the possible negative effects of these adverse factors on the Company core activities are minimal. The reliable transportation scheme to deliver materials and equipment ensures smooth cargo delivery by road and river transport in summer and by air and road transport in winter. Enterprises of the Company receive electric power from the cascade of Vilyuy power stations HPP-1,2 and HPP-3; and heat from electric and gas-fired boilers (fed from the Mirny- Aikhal-Udachny gas pipeline). The availability of backup electric power and heat supply sources minimizes the risks associated with possible technological and natural disasters. RISK GROUPS MAIN RISK FACTORS POSSIBLE CONSEQUENCES MAIN RISK MANAGEMENT MECHANISMS Industryspecific PRODUCTIONspecific Limited world rough diamond stocks Macroeconomic changes affecting consumers welfare Fluctuations in demand for the product Emergence of cost-effective methods of producing synthetic gem-quality diamonds Mining and geological features of deposits Open-pit mining and underground mining High level of equipment wear and tear Hazardous production facilities of the Group Production decline and the corresponding economic loss Reduction of demand for (consumption of) diamond jewellery Actual product price increase rates lagging behind anticipated rates Loss of profit Failure of production programs in the current period and in the long run Failure to comply with the planned diamond production parameters, loss of profit Damage to life and health of staff and population caused by environmental accidents, lack of resources (water, electricity, etc.) Reparable and irreparable harm to the environment, local ecosystems Implementation of a comprehensive set of measures in the following areas: Exploration and prospecting works Development of deposits with a lower diamond content Construction, putting into operation and making the performance of the underground mines meet the planned figures in order to counterbalance retiring production volumes. Price regulation based on analysis and monitoring Formation of the sales system on the basis of long-term contracts Interaction with governmental agencies of the Russian Federation Interaction with international industry-specific organizations Technical upgrade and replacement of worn-out equipment Servicing of equipment and machinery in accordance with the timetable of the scheduled preventative repair works and quality assurance Implementation of the measures specified in the environmental policy aimed at minimizing the negative impact on the environment, rational and careful use of natural resources Corporate environmental monitoring system Preliminary evaluation of the possible consequences and development of environment protection measures at the works design stage Comprehensive system of occupational safety and labour protection management including insurance of public liability for the damage caused to the environment in the event of accidents at hazardous production facilities

094 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 095 RISK GROUPS MAIN RISK FACTORS POSSIBLE CONSEQUENCES MAIN RISK MANAGEMENT MECHANISMS RISK GROUPS MAIN RISK FACTORS POSSIBLE CONSEQUENCES MAIN RISK MANAGEMENT MECHANISMS Countryspecific and regionspecific Corporate governance risks Business activities of ALRO- SA in the Russian Federation The majority of the Group s assets are located in the Republic of Sakha (Yakutia), a geographically remote region with severe climatic conditions. The sales outlets and Catoca (Sociedade Mineira de Catoca), a subsidiary production unit, operate under foreign jurisdictions. Plans concerning privatization, share capital restructuring Scale and areas of activity of the Group Decrease in foreign investment resulting from the general deterioration of the economic situation in Russia Complexity of the transport scheme to deliver materials and equipment and supplying energy to key industrial facilities located in the Republic of Sakha (Yakutia) Reduction of profitability of investments in foreign assets. Restrictions in activities on international markets Realization of these risks may cause a wide range of negative effects, from failure of individual production programs to complete business ineffectiveness Interaction with governmental agencies of the Russian Federation Establishment of a reliable transport scheme to deliver materials and equipment in Yakutia Ensuring availability of backup power and heat supply sources Monitoring of changes in legislation and the political regime of foreign states Implementation of corporate governance mechanisms to avoid a conflict of interest: Providing equal access of shareholders to information on Company operations Social Law compliance obligations Changes in foreign exchange, tax, customs and other legislation Monopolistic position in the rough diamonds market of Russia Working conditions, including climatic, remoteness of the region where the major production facilities are located Specifics of the mining industry Deterioration in the financial condition of the Group Political and economic costs Insufficient production staff and qualified personnel Monitoring and strict compliance with the legislation in all areas of activity of the Group Constructive dialog with regulators on the issues concerning interpretation of legislation Development and obtaining approval from the Federal Anti-Monopoly Service (FAS) of public procedures for working with buyers Implementation of HR policy aimed at attracting and retaining qualified personnel, timely and high-quality training, development, adaptation of the personnel, formation of a pool of job candidates Following social partnership principles based on the collective agreement Meetings of management of the Company with work collectives Complex projects requiring investment Preliminary analysis, discussion and preparation at the Supervisory Board meeting of the agenda items for the General meeting of shareholders Interaction with governmental agencies System processes of improving the organizational structure Development and improvement of business processes, intracorporate regulatory system Financial OJSC ALROSA US dollars revenue generation US dollar to Russian rouble exchange rate fluctuations Lower profits in roubles Development of the mechanisms for hedging exchange rate risks using financial instruments

096 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 097 ROAD MAP TO IMPLEMENTATION OF THE KEY MEASURES AIMED AT IMPROVING THE RISK MANAGEMENT SYSTEM SUSTAINABLE DEVELOPMENT Development of regulations to formalize RMS: 1. Risk management policy 2. Provisions for risk management 2014 2015 2015 and on Submitting regulations relating to formalization of the RMS to the Supervisory Board for the approval (clauses 1-2) Development of methodological instruments in the area of RMS in accordance with approved Policy and Regulations for risk management: 3. Informational regulations for risk management 4. Risk classifier 5. Risk assessment methodology 6. Methodology for assessment of efficiency of RMS 7. Document templates 31.08.2015 01.11.2015 01.12.2015 Preparation of the Annual Report (clause 8) in accordance with the approved Policy and Regulations for risk management, including: a. Risk register b. Risk map c. Register on new risks established in the reference period d. Register of the most significant changes in the risk level occurred during the reference period, including new critical risks and risks excluded from the critical category e. Report on risks occurred in the reference period f. Report on implementation of the Plan of measures to minimize the risks UNTIL 01.03 OF EACH YEAR STARTING WITH 2016 UNTIL 31.03 OF EACH YEAR STARTING WITH 2016 Preparation of a plan of measures to minimize the risks (clause 9) in accordance with the approved Policy and Regulations for risk management Preparation of a plan of activities for development and improvement of the RMS (clause 10) in accordance with the approved Policy and Regulations for risk management UNTIL 30.04 OF EACH YEAR STARTING WITH 2017 UNTIL 30.04 OF EACH YEAR STARTING WITH 2016 Submission of the Report based on the results of assessment of efficiency of the risk management system to the Audit Committee and Supervisory Board for consideration (clause 12) Submission to the Supervisory Board / Audit Committee under the Supervisory Committee of the Annual Report on risks (clause 8), plan of measures to minimize the risks (clause 9), plan of activities for development and improvement of the RMS (clause 10), Report on implementation of the Plan of activities for development and improvement of the RMS (clause 11) COMMITMENT TO SUSTAINABLE DEVELOPMENT The key to effectiveness of the Company activities is the level of credibility gained in the eyes of the community. Being aware of its social responsibility, ALROSA Group keeps a balance between commercial and public interests, seeks to make a significant contribution to the development of the Russian economy and the well-being of the population in the regions of its presence. That is why activities of AL- ROSA Group are based on the principles of sustainable development, fair treatment and respect for all parties whose interests are affected by its activities. The sustainable development strategy integrated into the activities of the Group includes three main components: participation in maintaining the sustainability of the world rough diamond market, Russian economy, HR POLICY balance of reasonable expectations and interests of the stakeholders; Minimizing the negative industrial impact on the environment, rational use of mineral resources, resource conservation, compliance with international environmental protection standards; safety, health and professional development of the personnel, responsibility for the social and economic well-being of the population in the regions of the Company operation, support of local communities and charity. Within the framework of this approach, ALROSA Group has an on-going dialog with interested parties. The Group continues to work towards improving social responsibility based on international standards and the best world practice. In September 2014, a draft of the Policy in the sphere of sustainable development and corporate social responsibility of OJSC ALROSA was approved by a resolution of the Executive Committee of the Company. This document is aimed at systematizing the basic principles and approaches in the sphere of corporate social responsibility in line with the best international practice. Further information on the Company s Policy in sustainable development and corporate social responsibility is available on the corporate website at http://eng. alrosa.ru/sustainability/ 17.10.2014 11.12.2014 Submission of the developed methodological documents (clauses 3-5, clause 7) for approval by President of OJSC ALROSA Submission of the Methodology for efficiency of the RMS by the Supervisory Board (clause 6) Submission for consideration by executive bodies of the Annual Report on risks (clause 8), plan of measures to minimize the risks (clause 9), plan of activities for development and improvement of the RMS (clause 10) The main objectives of ALROSA HR policy comprise personnel number management, personnel attraction and retention, training and professional development, creation of a job candidates pool and favourable social climate. The majority of ALROSA Group personnel work in Western Yakutia. The average number of personnel of the Group in 2014 totalled 40 242 people, which is 752 people less compared to 2013 ( -1.8%). In 2014, in OJSC ALROSA the ratio of workers/employees to managers/specialists was 66.9% to 33.1%. The gender composition of the Company personnel is determined by the specifics of the mining industry and in

098 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 099 2014 the male/female ratio in OJSC ALROSA was 64.7% to 35.3%. In order to perform temporary works at the production facilities under construction, the Company invites qualified workers on a shift rotational basis, which obligatorily involves engaging the local workforce. The Company outsources shift workers from other regions of the Russian Federation and CIS countries when there are no professionals with the required qualifications and skills available in Yakutia or when it is economically feasible. In 2014, 640 people from regions of the Russian Federation were engaged to work rotating shifts (667 people in 2013). In 2014, in accordance with the order оn procedure for inviting workers to fill jobs (positions) with a shortage of candidates, 125 people were invited to fill worker positions in subdivisions of OJSC ALROSA. 29.1 GENERAL SECONDARY EDUCATION Professional development of the Company personnel and personnel turnover were based on the approved 2014 plans of training, retraining and advanced training of managers, specialists and employees on a centralized basis in the HR Training Centre and at the premises of its training schools. In 2014, 211 graduates received secondary vocational education diplomas in autonomous institution of the Republic of Sakha (Yakutia) Regional technical college in the town of Mirny. Training of young workers and technicians was also provided in state educational institutions of primary vocational training: 51 graduates of vocational school No. 28 in the town of Udachny and 50 graduates of No. 30 (the settlement of Aikhal). Svetlinsky industrial technical school trained 58 graduates having secondary vocational education. The main task of 2014 in the sphere of personnel management was engaging qualified personnel to carry out work at the Mir, Aikhal and Udachny underground mines. Training to workers was provided at the premises of Aikhal, Lensk, Mirny and Udachny training schools of the HR Training Centre. A complete list of the programs under EDUCATIONAL LEVEL OF OJSC ALROSA PERSONNEL which the training is provided includes more than 98 professions and special training courses. The Plan of training staff to fill worker positions in 2014 provided for training in basic professions and granting various work permits to 5,043 workers and briefing 4,016 workers. 5,280 people actually completed the training and 4,210 people received the briefing. The ALROSA Group aims to be an attractive employer. The relationships between the companies of the Group and employees in the social and labour sphere are based on the principles of social partnership. OJSC ALROSA and its employees represented by their Profalmaz labour union entered into a Collective agreement, which provides for a number of additional guarantees, benefits and compensations in addition to those specified in the applicable law. In 2013, a new 2014-2016 Collective agreement was signed, in which the existing benefits of the Company employees were retained and new social guarantees were added. HIGHER PROFESSIONAL EDUCATION SECONDARY AND ELEMENTARY VOCATIONAL EDUCATION 31.3 38.2 INDUSTRIAL SAFETY AND LABOUR PROTECTION Preservation of life and health of the employees and creation of the safest possible working environment are the key priorities of ALROSA Group. In order to ensure safety at work, the Group implements an integrated approach based on the following principles: priority of life and health of the employees over the results of production activities; commitment of the management of the Company to establishing a safe working environment; building the sustained motivation for the staff s safe behaviour in production. ALROSA Group accepts the obligations to introduce modern safety equipment preventing workplace injuries and to ensure sanitary conditions preventing the occurrence of occupational diseases. In order to achieve these objectives, in 2008 OJSC AL- ROSA implemented the System of industrial safety and labour protection management, which comprises a set of regulations and organizational and technical measures developed on the basis of legal requirements. In addition, the Program of work in the field of labour protection and industrial safety with participation of authorized labour protection commissions established on a parity basis is approved every year. The activities of the Program are coordinated by Profalmaz Interregional Labour Union. ALROSA pays special attention to training and certification of employees in the sphere of industrial safety and labour protection. In 2014, 356 managers and specialists of subsidiary companies of the Company completed pre-certification training, training and certification in the field of industrial safety. The annual knowledge test was conducted among 3,380 employees working in basic professions in subsidiary companies. In 2014, work continued on the certification and special assessment of work places in OJSC Severalmaz, OJSC Almazy Anabara and NPP Bourevestnik. The cost of certification amounted to RUB 1.08 mn. Also the designated employees of the production control services conducted 273 industrial safety checks and 9 inspections were conducted by Rostekhnadzor bodies. In addition to labour protection measures, OJSC ALROSA improves sanitary conditions in the subdivisions located in the western part of Yakutia. This includes overhauls in the administrative, residential and industrial buildings, replacement of residential cars at remote industrial sites, etc. This program covers a 3-year period, from 2013 to 2015. In 2014, the Work Program of Industrial Safety Directorate of OJSC ALROSA was approved. In the course of its implementation measures were taken in the following fields: In May 2014, due to changes in the Labour Legislation of the Russian Federation, adoption of new regulatory documents governing the procedure for evaluation of working conditions and awarding benefits and compensations to the employees working in harmful conditions, the Company entered into contract with the Klin Institute for Working Conditions and Occupational Safety to carry out a special assessment of working conditions at all work places throughout the Company. In order to meet the requirements of Article 10 of Federal Law No. 116 On Industrial Safety at Hazardous Production Facilities, the Program on establishing ALROSA auxiliary mine rescue teams was put into effect on March 17, 2014 by order of the President of the Company. In 2014, 215 members of auxiliary mine rescue teams were certified as having the right to carry out mine rescue operations, which is 127% for covering the pool of job candidates.

100 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 101 The Regulation on auxiliary mine rescue teams of OJSC ALROSA was developed and put into effect. The regulation specified the main criteria for establishing and operation of auxiliary mine rescue teams in structural subdivisions of the Company. In 2014, some changes were made in the internal regulatory documents of the Company or new documents were developed, namely: Changes were made to the Regulations on industrial safety management and labour protection system. The Standard entitled the Requirements to contractors for compliance with industrial safety and labour protection requirements was approved and is updated on a regular basis. The Regulations on exercising production control of compliance with industrial safety requirements at hazardous production facilities OJSC ALROSA is modified on a regular basis. In order to improve and separate the functions of supervising industrial safety and labour protection, a new position of a Head of Process Supervision Service was introduced at the five largest structural units of the Company, being mining and processing enterprises and the Capital Projects Directorate. Functionally, the specialists report to the Industrial Safety Directorate of the Company. The situation is monitored on an on-going basis and changes are made in the work of the process supervision services. The work aimed at improving the mechanism for cooperation of the Heads of the services will be continued in 2015. This work is mainly focused on training, professional development and competence development of the specialists in the field of industrial safety and production control. solutions taking into account the relevant environmental aspects of the Company activities; continuous improvement of the environmental management system; introduction of advanced technologies with a view to achieving a high level of environmental protection in all areas of activity of the Company; increase the level of environmental awareness among the personnel of the Company and its involvement in the activities aimed at reducing environmental risks; openness and availability of environmental information, disclosure of the information on environmental protection activities of the Company to all interested parties. Further information on the environmental policy of the Company is available on the corporate website at http://eng.alrosa.ru/sustainability/environment/ lished standards. In order to reduce the adverse impact, the Group carries out renovation of the existing facilities and construction of new sewage treatment facilities in the areas of its operations. All production facilities of OJSC ALROSA have a recycling water supply, which makes it possible for them to operate without draining. Drainage water of open pits and mines is transported to reinjection sites and pumped back into underground aquifers and perennial frozen rocks. Most of production and consumption wastes generated and disposed of by subdivisions of OJSC ALROSA comprise mining wastes (overburden rocks and mill tailings). This waste is considered virtually non-hazardous (hazard class V). The remaining waste is either reused in in-house production (waste oil, tires) or transferred to specialized organizations for use and disposal. A new Comprehensive Environmental Protection Program of OJSC ALROSA for 2011-2018 is in place and under the Program the Company will continue work to improve the environmental management system, including: Environmental protection activities of the Company involve addressing both, the issues associated with the core production operations and a number of issues of regional and republican importance for Yakutia. SA develops and obtains approvals of the Nature Conservation Ministry of Yakutia for comprehensive longterm environmental improvement programs. During the reporting year the implementation of environmental activities continued in accordance with the approved Comprehensive Environmental Protection Program of OJSC ALROSA for 2011-2018 with the planned funding of RUB 7.8 bn. In 2014, the amount of RUB 3.4 bn was allocated for environmental protection measures. ENVIRONMENTAL PROTECTION Reduction of the adverse impact on the environment, rational use of mineral resources and environmental protection are priority tasks in the activities of ALROSA Group. In September 2014, the Executive Committee approved the Policy in the sphere of sustainable development and corporate social responsibility of OJSC ALROSA. The Policy specifies the key areas of ALROSA activity in the sphere of sustainable development and corporate social responsibility including environmental responsibility. In the course of its production activities the Group uses various chemicals and generates waste water and sediments that, if not drained properly, may have an adverse impact on the flora and fauna of the adjacent areas. In addition, the Group uses hazardous substances, such as solvents for cleaning, polishing and maintenance of equipment. These and other operations are subject to various environmental laws and regulations of the Russian Federation. Environmental issues are handled centrally in the office of the Company in the town of Mirny. This does not apply to OJSC Almazy Anabara and OJSC Severalmaz that address environmental protection issues using mostly their own resources. At every mining and processing enterprise there is a designated employee responsible for compliance with environmental legislation and implementation of the environmental protection policy of the Group. For the purposes of environmental risks management and prevention and minimization of adverse impact on the environment, the Company implements the environmental policy which fundamental principles are the following: compliance with the national and international environmental legislation; reduction of the adverse environmental impact through adoption of managerial and processing The most serious threats to the environment posed by the core activities of the Company are emissions of pollutants into the atmosphere, discharges of pollutants into water bodies and production wastes disposal. The main emissions of pollutants to the atmosphere are emissions from stationary sources, namely boilers. The Group operates stationary sources in accordance with the technical requirements and pays for the emissions to established state standards. In order to minimize emissions, the Group retools boilers to use natural gas, carries out control and regulation, provides technical modernization based on European standards. Pollutants are discharged into water bodies only via large waste water treatment plants in towns and settlements in accordance with the estab- environmental audit; environmental monitoring; development and adoption of the corporate standards of environmental management system and its certification in accordance with the requirements of ISO 14001:2004 and ISO 14001:2007 Environmental Management System. scientific and technical support of environmental activities; search for, development and introduction of innovative technologies in the field of production waste treatment; increase in the degree of environmental openness and disclosing information on the Company environmental protection activities.

102 ALROSA. ANNUAL REPORT 2014 STRATEGIC REPORT STRATEGIC REPORT ALROSA. ANNUAL REPORT 2014 103 COST OF PERFORMANCE OF THE FINANCIAL OBLIGATIONS UNDER THE COMPREHENSIVE ENVIRONMENTAL PROTECTION PROGRAM AND OTHER ENVIRONMENTAL PROGRAMS WITHIN ALROSA GROUP Type of expenses Funds ALLOCATED, mn RUB Capital investments in construction of environmental protection facilities 1,746.7 Renovation and construction of sewage treatment facilities 1,182.7 Scientific and technical support of environmental activities 382.4 Comprehensive environmental monitoring 34.1 Mined land reclamation 45.2 Search for and introduction of state-of-the-art technologies in the field of waste handling Improvement of the environmental protection management system 4.3 Compensatory measures 5.9 Training, professional development 5.4 Participation in the forums, congresses, hearings, conferences, provision of information to the public Other ecological expenses 27 Total expenses 3,433.7 OJSC ALROSA SOCIAL PROJECTS In 2013 the Social Policy of OJSC AL- ROSA was approved. It covers personnel attraction and development, and the maintenance of stability in labour collectives and a high level of corporate culture. Implementation of the Social Policy of the Company is carried out on the basis of the principles of social partnership with Profalmaz trade union, government authorities and local self-government bodies in the regions where ALROSA operates. The priority tasks of the social policy are the preservation and promotion of employee health. In order to provide qualified and specialized medical care to workers, a comprehensive program Healthcare is implemented. In 2014 the costs under this program totalled RUB 268.4 mn. There was an 11.9% increase in funding compared to 2013. 2,200 people underwent medical examination and received treatment in health centres within the framework - 0.2 of the voluntary medical insurance scheme, including 250 non-working pensioners-veterans of the Company and 100 children of the Company s employees. 21,000 people exposed to harmful conditions at work undergo periodic medical examinations. The Culture and Sport program implemented in the Company contributes to reducing morbidity, preserving working capacity, improving educational level and maintaining the corporate culture. RUB 150 mn was allocated to organize and implement the activities under the program. 499 sporting and mass participation events were held in the Company s Cultural and Sports Complex, as well as 3,187 cultural events. The Cultural and Sports Complex has 175 classes and clubs operating on a permanent basis that are attended by over 10,000 people. Children under the age of 12 and adolescents with disabilities under the age of 16 attend the classes and clubs at the Cultural and Sports Complex free of charge. An important part of the social policy of the Company is the target program Residential Accommodation which aims to attract and retain qualified personnel at the Company and expand opportunities for employees to improve their housing conditions. In 2014 the program was based on new approaches to managing relationships in the residential accommodation sphere. In 2014, the Company continued performing the Agreement concluded with the Republic of Sakha (Yakutia) on passing the housing stock into ownership of municipalities, under which the Company assumed obligations to provide funding for maintenance of the housing stock. Within the framework of the program for demolishing dilapidated buildings, in 2014 the Company provided funding for construction of two apartment buildings with 35 flats each in the town of Mirny to resettle citizens in need for accommodation. Construction costs totalled RUB 146 mn. About 80% of the flats in the newly built apartment buildings will be received by employees of the Company. Since 2013, the Company has been engaged in the construction of workers dormitories with 450 beds in the settlement of Aikhal and 320 beds in the town of Mirny. In 2014, the expenses of the Company for these purposes amounted to RUB 376 mn and RUB 102 mn respectively. The workers dormitory in the settlement of Aikhal was opened in December 2014. In the long run ALROSA plans to build a workers dormitory for 500 people in the town of Mirny. For some years the Company has been working to resettle retired long-service employees in places with better living conditions. To this end, ALROSA provides residential accommodation in the town of Orel on favourable terms. The costs of resettling retired long-service employees in 2014 amounted to RUB 43 mn. In accordance with the Regulations on non-state pension provision to employees of OJSC ALROSA, 857 orders to award non-state long-service pensions and 20 orders to award non-state pensions due to the loss of breadwinner were issued in 2014. The main form of corporate support for Company employees who buy flats and houses at their own expense is the mortgage lending program. The program provides for favourable conditions with regard to setting the interest rate, the term of a loan and the possibility to compensate for payment of interest. In the reporting year, the amount of compensation with regard to mortgage loans totalled RUB 42.3 mn. There are about 300 participants in the program. Further information on the social programs of the Company is available on the corporate website at http://eng.alrosa. ru/sustainability/corporate-social-programmes/ Charity and sponsorship activities provide an effective tool of social interaction with the personnel, population and authorities of the regions where the Company operates. In 2014 the Company allocated RUB 2 422.4 mn for these purposes. The charitable activities are closely connected with participation of the Company in the programs for social and economic development of uluses of the Republic of Sakha (Yakutia). The Company allocated funds to be transferred to the budget of the Republic on a non-repayable basis for the construction of educational, healthcare, culture and sport institutions. The monies were transferred to the Target Fund for Future Generations of the Republic, the funding was provided to subsidize bathhouses in the Mirny district, construction of a skiing lodge and the repair of the facade of the library building in the town of Mirny. Owing to the financial aid provided, Batamay agricultural production facility in Lensk district continued operating and the department store building was repurposed for the needs of the police station in the town of Udachny. The funds were also allocated for construction and improvement of residential accommodation, educational and cultural institutions, namely a kindergarten in the settlement of Tas-Yuryakh, a park near the secondary school No. 1 in the town of Mirny, an ethnocultural centre in the settlement of Olenek and an apartment building with 71 flats for healthcare workers. ALROSA provided assistance to educational institutions of higher education, etc. In 2014 the Company continued the funding of Almazik, an autonomous non-profit pre-school education organization that includes 27 kindergartens. In 2014 the base capital contribution of the Company amounted to RUB 1,181 mn. In 2014, under the regional development program, uluses of Yakutia received financial assistance in the amount of RUB 83.2 mn.

104 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 105 3 CORPORATE GOVERNANCE ALROSA strives to correspond to the best world practices of corporate governance, which aim at ensuring efficient protection of the rights and interests of shareholders, transparency of the Company s management processes, and professional and ethical responsibility of managers at all levels.

106 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 107 ROLE OF CORPORATE GOVERNANCE IN IMPLEMENTATION OF THE COMPANY S DEVELOPMENT STRATEGY PRINCIPLES OF CORPORATE GOVERNANCE A total of 17 corporate events of the including 4 meetings and 13 absentee voting, were held. The Company has developed and is implementing a plan of events for the system improvement and corporate governance upgrade. The Company started working with the Russian Institute of Directors in order to obtain a corporate governance rating. When creating shareholder value, OJSC ALROSA strives to comply with the highest standards of corporate governance. To develop an optimal corporate governance model, the Company focuses on best international practices, legislative requirements and the characteristics of its own shareholder structure. In 2013, the Corporate Governance Code was adopted, which aims to ensure efficient protection of the shareholders rights and interests, the trans- parency of Company management, professional and ethical responsibility of managers at all levels. The Code is developed based on the best international practices, including the principles set in the codes of corporate management of OECD and the UK. TRANSPARENCY Timely disclosure of complete and reliable information on the Company, including its financial position, economic indicators, its ownership and governance structure, in order to ensure that the company s shareholders and investors can make well-informed decisions. Effective monitoring of financial and business operations of the Company for the purpose of protecting the rights and lawful interests of its shareholders. Creation of an anti-corruption system, its maintenance and improvement. Ensuring that shareholders take no action for the purpose of abusing their own rights, of inflicting any damages on the Company or other shareholders. Strict adherence to fair business ethics. ACCOUNTABILITY Ensuring that the Supervisory Board handles the strategic management of the Company s activities and delivers efficient monitoring of the work of the Company s executive bodies, as well as ensuring that the Supervisory Board is accountable to the General Meeting of Shareholders. Enabling the Company s executive bodies to manage the Company s regular activities efficiently, in good faith, conscientiously and exclusively for the benefit of the Company, as well as ensuring that the executive bodies are accountable to the Supervisory Board and the General Meeting of Shareholders. Assistance of the executive bodies to the Supervisory Board in achieving corporate objectives; the responsibility of the executive bodies for the Company s activities and high achievements. JUSTICE The shareholders right to take part in the Company s governance by making decisions on the most important aspects of the Company s activities at the General Meeting of Shareholders. Enabling all the shareholders to access effective protection, if their rights are violated. Enabling the shareholders to take part in the distribution of the Company s profits. Equal attitude to the Company s shareholders, including minority and foreign ones, and protection of their rights. Providing shareholders with reliable and effective methods of recording of their share ownership, as well as with the opportunity to dispose of their shares freely and quickly. RESPONSIBILITY Commitment to the Company s corporate social responsibility principles. Ensuring that the rights applicable under the legislation of Russian Federation to all interested individuals, including the Company s employees, are observed, and encouraging active cooperation between ALROSA and interested parties for the purpose of increasing corporate assets and the company s capitalization and creating new jobs.

108 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 109 INDICATORS OF CORPORATE GOVERNANCE DATA ON COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE 17 2 CORPORATE ACTIVITIES OF THE SUPERVISORY BOARD 177 ISSUES ARE CONSIDERED IN DECEMBER 2014 AUDITS APPROVED ROAD MAP FOR INTRODUCTION OF PROVISIONS OF THE СORPORATE GOVERNANCE СODE LONG-TERM PROGRAMME FOR DEVELOPMENT OF ALROSA GROUP IS APPROVED The Code of Corporate Governance (hereinafter the CCG) of OJSC AL- ROSA is approved by the Company s Supervisory Board on September 25, 2013, Minutes No. А01/202-ПР-НС. The CCG is developed in accordance with the existing laws of the Russian Federation, taking into account the existing Russian and foreign corporate governance practice. As the Government of the Russian Federation and the Bank of Russia approved the new Code of Corporate Governance to fulfil the instructions of the Government of the Russian Federation dated May 28, 2014 No. ДМ- П36-46пр (clause 2) and dated July 31, 2014 No. ИШ-ШЗ-5859 (clause 4 section 1), Minutes of the meeting of the Government of the Russian Federation dated February 13, 2014 No. 5 in relation to the implementation in the activities of organizations partially owned by the government of provisions of the Code of Corporate Governance, in September 2014, the Government of the Russian Federation approved a directive (No. 5667п-П13) for representatives of the interests of the Russian Federation in relation to their participation in meetings of the boards of directors (supervisory boards) of open joint-stock companies devoted to the development of a plan of activities (road map) for implementation of provisions of the Code of Corporate Governance in the activities of joint-stock companies. This matter was considered on October 23, 2014 (Minutes No. А01/221- ПР-НС). The Supervisory Board instructed the Company s management to undertake a comparative analysis of the existing standards of corporate governance in OJSC ALROSA and the key provisions of the CCG and develop a draft plan for activities (the road map) for the implementation of key provisions of the Code in the Company s activities. The draft was submitted for approval to the Ministry of Finance of the Russian Federation and the Federal Agency for State Property Management. In December 2014 the draft road map was approved by the Ministry of Finance of the Russian Federation without any comments and suggestions. As part of fulfilment of provisions of the Code of Corporate Governance and implementation of the regulators standards and recommendations in order to improve the Company s corporate governance, activities are carried out by the Company in several areas. Registrar TILL THE END OF 2015 PLANNED APPROVAL OF INFORMATION POLICY UP TO 2023 PAYMENTS TO MEMBERS OF THE SUPERVISORY BOARD 28,300,001 827,014,339 RUB PAYMENTS TO MEMBERS OF THE MANAGEMENT BOARD RUB In order to ensure registration and accounting of ownership to the AL- ROSA s shares, the register of shareholders is kept by OJSC Yakutsk Fund Centre, the only professional participant of the securities market in the Republic of Sakha (Yakutia) which, acting as a parent company, organizes and maintains the register of registered shareholders. OJSC Yakutsk Fund Centre was established in October 1993 and was one of the first Russian registrars to obtain the FCSM s license for carrying out the activities relating to maintaining the register No. 01009 in March 1996, and a permanent license for maintaining the register of registered securities No. 10-000-1-00309 in March 2004. Auditors During the period from 2013 to 2015, based on tendering procedures, the following auditors were determined: Finansoviye i Bukhgalterskie Konsultanty (Financial and Accounting Advisors) Limited Liability Company carries out annual audit of accounting statements in accordance with the RAS. CJSC PricewaterhouseCoopers Audit carries mandatory audit of consulting financial statements in accordance with the IFRS.

110 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 111 ROAD MAP FOR IMPLEMENTATION OF KEY PROVISIONS OF THE CODE OF CORPORATE GOVERNANCE CORPORATE GOVERNANCE STRUCTURE Rights of shareholders and equal CONDITIONS for shareholders in the exercise of their rights SUPERVISORY BOARD of the Company the SYSTEM for remuneration of the members of the SUPERVISORY BOARD, executive bodies and other MANAGERS DISCLOSURE of information on the Company Major CORPORATE ACTIONS ALROSA s corporate governance system is a well-designed organizational structure of managerial and control bodies with the clear interaction mechanism. The Company s supreme managerial body is the General Meeting of Shareholders. The Supervisory Board carries out strategic management and controls the Executive Committee s activities to ensure day-to-day management of the Company. Chairman of the Executive Committee is the sole executive body. Three committees function under the Supervisory Board whose activities are relating to improvement of the efficiency and quality of work of the Supervisory Board. The Company has implemented an effective internal and external control system: two external independent auditors, Auditing Committee and Internal Audit Directorate. Ensuring communications relating to the agenda of the meeting at the corporate website (forum on the agenda) Ensuring the rights of foreign shareholders to receive all materials before the General Meeting of Shareholders in a foreign language Ensuring access to the meeting via the corporate website (online broadcasting) Development and implementation of a policy for remuneration (and/or) compensation of expenses of key employees listed by the Supervisory Board Approval of the Company s informational policy Development of the policy relating to shareholding by the members of the Supervisory Board Liability insurance for the Supervisory Board members The Human Resources and Remuneration Committee shall consider and assess the feasibility of the long-term incentive program based on a business model, generally-acceptable corporate values, planning horizons, objectivity of longterm parameters, expected efficiency and cost of the program Disclosure of additional information on mission, strategy, corporate values, financial status, social and environmental responsibility within the framework of the Code of Corporate Governance Any additional information shall be simultaneously disclosed in a foreign language Disclosure of more detailed information in case of related party transactions, development of recommendations for the Supervisory Board members. Development of additional measures to prevent delisting of the Company s shares The company develops complex measures and relevant regulations (amendments to the existing documents) and plans to fulfill the required corp orate procedures for thei r approval until the end of 2015

112 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 113 ALROSA'S CORPORATE GOVERNANCE GOVERNANCE STRUCTURE STRUCTURE MANAGERIAL BODIES ALROSA STRIVES TO IMPLEMENT THE BEST CORPORATE GOVERNANCE STANDARDS. THE COMPANY HAS APPROVED THE CODE OF CORPORATE GOVERNANCE, TAKING INTO ACCOUNT THE BEST INTERNATIONAL PRACTICES MANAGERIAL BODIES (NUMBER OF MEMBERS) COMPETENCE CHARTER AND INTERNAL DOCUMENTS REGULARITY OF ACTIVITIES FORM OF ACTIVITIES The full version of the document is available at http://www.alrosa.ru/заседание-наблюдательного-совета-ак-39/. EXTERNAL CONTROL BODIES GENERAL MEETING OF SHAREHOLDERS EXECUTIVE BODIES General Meeting of Shareholders Election of members of the Supervisory Board and the Auditing Committee of the Company Approval of the Company s annual reports and annual accounting statements Distribution of the Company s profit and loss based on the results of the financial year Payment (announcing) of dividends based on the results of the financial year Legislation of the Russian Federation Charter of OJSC ALROSA Regulations on the General Meeting of Shareholders OJSC ALROSA The annual General Meeting of Shareholders is held not earlier than two months and not later than six months after the end of the financial year. EXTERNAL INDEPENDENT AUDITORS* Development of a strategy, control over activities of the executive bodies: CHAIRMAN OF THE EXECUTIVE COMMITTEE-PRESIDENT Approval of the Company s auditor Amendment of the Charter or approval of a new version of the Charter AUDIT COMMITTEE SUPERVISORY BOARD EXECUTIVE COMMITTEE Approval of internal documents that regulate the Company s activities Determination of the number, face value, category of authorized shares and rights provided by these shares Splitting and consolidation of shares THE COMMITTEES OF THE SUPERVISORY BOARD STRATEGIC PLANNING COMMITTEE CORPORATE SECRETARY Additional information and regulations are available at the corporate website http://www.alrosa.ru/лекарев-андрейгригорьевич-2/. Increase and decrease in the Company s authorized capital Placement of equity securities that can be converted in ordinary shares by way of public subscription Approval of related party transactions in cases stipulated by the Federal Law On Joint-Stock Companies HUMAN RESOURCES AND REMUNERATIONS COMMITTEE AUDIT COMMITTEE The Regulations on Committees are available at the corporate website. INTERNAL CONTROL SYSTEM HEAD OF THE INTERNAL AUDIT DEPARTMENT * - in accordance with resolutions of the annual General Meeting of Shareholders dated June 29, 2013 FBK LLC is approved as the auditor of OJSC ALROSA s accounting statements in accordance with the Russian accounting standards for 2013. And PricewaterhouseCoopers is responsible for the audit of consolidated financial statements of the ALROSA Group in accordance with International Financial Reporting Standards (IFRS). Approval of major transactions in cases stipulated by the Federal Law On Joint-Stock Companies Participation in financial and industrial groups, associations and other unions of commercial organizations Reorganization of the Company Liquidation of the Company, appointment of a liquidation committee and approval of interim and final liquidation balance sheets Making decisions on remunerations and/or compensation of expenses of the Supervisory Board and Auditing Committee members related to the performance of their duties.

114 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 115 MANAGERIAL BODIES (NUMBER OF MEMBERS) COMPETENCE CHARTER AND INTERNAL DOCUMENTS REGULARITY OF ACTIVITIES FORM OF ACTIVITIES MANAGERIAL BODIES (NUMBER OF MEMBERS) COMPETENCE CHARTER AND INTERNAL DOCUMENTS REGULARITY OF ACTIVITIES FORM OF ACTIVITIES Supervisory Board Passing resolutions on the issues relating to the general management of the Company except for the issues referred to the exclusive competence of the General Meeting of Shareholders by the Federal Law On Joint Stock Companies and the Charter of the Company. SUPERVISORY BOARD COMMITTEES Audit Committee Improvement of the efficiency and quality of the Supervisory Board s work through preliminary consideration and development of recommendations for the Supervisory Board in relation to the following issues: Russian legislation Charter Regulations on the Supervisory Board OJSC ALROSA Regulations on the Audit Committee under the Supervisory Board Quarterly Quarterly Meetings Absentee voting Meetings Absentee voting adoption of decisions on submission by the Supervisory Board to the General Meeting of Shareholders of the issues relating to participation of the Company in holding companies, financial and industrial groups, associations and other unions of commercial organizations management of securities, shares owned by the Company management of the Company s immovable property establishment of the Company s divisions, opening of representative offices and their liquidation risks relating to the completeness of the information disclosed financial reports external independent audit, internal audit internal control procedures Executive Committee All current activity management issues, except for the issues referred to the exclusive competence of the General Meeting of Shareholders and the Supervisory Board Human Resources and Remunerations Committee Improvement of the efficiency and quality of the Supervisory Board s work through preliminary consideration and development of recommendations for the Supervisory Board in relation to the following issues: Regulations on the Human Resources and Remunerations Committee Quarterly Meetings Absentee voting determination of key areas of the Company s HR policy attraction of skilled experts to the Company management and creation of the required incentives for their successful work GENERAL MEETING OF SHAREHOLDERS Strategic Planning Committee determination of the number and composition of the Company s Executive Committee Improvement of the efficiency and quality of the Supervisory Board s work through preliminary consideration and development of recommendations for the Supervisory Board in relation to the following issues: determination of priority areas of the Company s activities adoption of resolutions for submission by the Supervisory Board to the General Meeting of Shareholders of the issues relating to approval of major transactions and related-party transactions Regulations on the Strategic Planning Committee under the Supervisory Board Quarterly Meetings Absentee voting General Meeting of Shareholders is the supreme governing body of OJSC ALROSA, through which the shareholders exercise their right to participate in the Company management. The General Meeting of Shareholders acts in accordance with the Russian laws, Charter and Regulations on the General Meeting of Shareholders of OJSC ALROSA. In accordance with the provisions of the Federal Law on Joint Stock Companies and the Charter of the Company, the annual General Meeting of Shareholders of the Company is held not earlier than two months and no later than six months after the end of the financial year. At the annual General Meeting of Shareholders, the Company s annual report, annual financial statements, and distribution of profits and losses for the financial year, including payment (allocation) of dividends are approved, the Supervisory Board and the Auditing Committee members are elected, the Company s auditor is approved, and other issues related to the competence of the General Meeting of Shareholders can be addressed. In addition to the annual General Meeting of Shareholders, an extraordinary General Meeting of Shareholders can be held. Regulations on the General Meeting of Shareholders of OJSC ALROSA are available at www.alrosa.ru in the section to the Investors and Shareholders/Information Disclosure/Charter and other Internal Documents/2013 http://www.alrosa.ru/wp-content/uploads/2013/09/pologenie_o_osa. pdf

116 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 117 On June 28, 2014 the Annual General Meeting of Shareholders of OJSC ALROSA was held in Mirny 16. Based on the results of the meeting, the shareholders elected new members of the Supervisory Board and Auditing Committee and the following decision were adopted: to approve a new version of the Regulations on the General Meeting of Shareholders, Regulations on the Regulations on the Auditing Committee and Regulations on Remuneration of the Members of the Supervisory Board; to approve the Company s auditors. Detailed information is available at www.alrosa.ru: http://eng.alrosa.ru/alrosaboosts-dividend-for-2013-by-32/ NUMBER OF MEETINGS OF THE SUPERVISORY BOARD FOR THE PERIOD FROM 2012 TO 2014 Corporate activities to approve the annual report for 2013, annual accounting statements; to approve amendments to the Charter; to approve a decision on payment of dividends for 2013 in the amount of RUB 10,826 bn, and it was decided to spend the remaining part of the net profit on financing of the Company s investment programs; OJSC ALROSA did not held extraordinary General Meetings of Shareholders in 2014. including meetings in presentia SUPERVISORY BOARD Members of the Supervisory Board (hereinafter the SB) of OJSC ALROSA are elected by the General Meeting of Shareholders in accordance with the procedure established by the Federal Law On Joint Stock Companies and the Charter of OJSC ALROSA until the next annual General Meeting of Shareholders. The SB acts on the basis of Russian legislation, the Charter and the Regulations on the SB 17. The competence of the SB includes passing resolutions on the issues relating to the general management of the Company except for the issues referred to the exclusive competence of the General Meeting of Shareholders by the Federal Law On Joint Stock Companies and the Charter of the Company. In 2014, the Supervisory Board addressed 177 issues. In accordance with the Charter of the Company 15 people are elected to the SB. Chairman is elected by the members of the Supervisory Board from themselves by the three-fourths majority of votes. On June 28, 2014, 3 new members of the Supervisory Board were elected at the annual General Meeting of Shareholders of the Company: Spartak Grigoryevich Illarionov, Igor Arnoldovich Lozhevsky, Andrey Vladimirovich Sharonov. Pavel Andreevich Borodin, Vasily Ivanovich Lukyantsev, Alexander Nikolaevich Shokhin resigned from the Supervisory Board. As of December 31, 2014, there were 15 members of the Supervisory Board of the Company: 14 non-executive directors, including 2 independent, and 1 executive director. Composition of the SUPERVISORY BOARD as of December 31, 2014 1 2 3 4 Member of the SUPERVISORY BOARD Andreev Fedor Borisovich Barsukov Sergey Vladimirovich Demyanov Ivan Kirillovich Dubinin Sergey Konstantinovich Date of appointment Executive person + Non-Executive person Independent DIRECTOR REPRESENTATIVES of GOVERNMENTAL AUTHORITIES/ local AUTHORITIES Member/Chairman of the Audit Committee Member/Chairman of the Human Resources and REMUNERATIONS Committee Member/Chairman of the Strategic Planning Committee + Chairman + + Member Member + Chairman 5 Zakharov Dmitry Petrovich + Member 6 Illarionov Spartak Grigoryevich June 28, 2014 + + 16 Minutes No. 32. 7 Kondratyeva Valentina Ilyinichna + Member 17 Regulations on the Supervisory Board of OJSC ALROSA were approved as amended by the annual General Meeting of Shareholders on June 29, 2013, Protocol No. 30. 8 Kononova Nadezhda Egorovna + Member

118 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 119 9 Member of the SUPERVISORY BOARD Lozhevsky Igor Arnoldovich 10 Mestnikov Sergey Vasilyevich 11 Morozov Denis Stanislavovich 12 Osipova Nina Antoninovna 13 14 Fedorov Oleg Romanovich Sharonov Andrey Vladimirovich 15 Yuzhanov Ilya Arturovich Date of appointment June 28, 2014 June 28, 2014 Executive person Non-Executive person Independent DIRECTOR REPRESENTATIVES of GOVERNMENTAL AUTHORITIES/ local AUTHORITIES Member/Chairman of the Audit Committee Member/Chairman of the Human Resources and REMUNERATIONS Committee + + Member Member + + + + Member Member + + Member/Chairman of the Strategic Planning Committee + Chairman Member + + The composition of the SB as of December 31, 2014 with brief description of biographies and information on participation in the share capital of the Supervisory board members is given below. FEDOR ANDREEV President of OJSC ALROSA from 2009 to October 2014 Member of the Supervisory Board of OJSC ALROSA since 2009 Chairman of the Strategic Planning Committee under the Supervisory Board of OJSC ALROSA from October 2014 Executive Director of OJSC ALROSA from July 2009 to October 2014 Born in 1966 Between 2005 and 2009, he was senior Vice-president of OJSC Russian Railways, where he was responsible for the company s economic and financial policy. Between 2003 and 2005, he was Vice-president of OJSC Russian Railways. Between 2002 and 2003, he was first Vice-president of OJSC ALROSA, where he was in charge of financial and economic issues. In 1989, he graduated from the Leningrad State University named after Zhdanov, specializing in Political Economy. In 2007, he followed a refresher cascade training in CJSC Prioritet where he defended a functional quality improvement project. As of January 1, 2014, F. B. Andreev owned 8,410,800 ordinary shares (0.1142 % of the authorized capital) of OJSC ALROSA. As of June 5, 2014, F. B. Andreev disposed of 3,410,800 ordinary shares. After such changes, F. B. Andreev owns 5,000,000 ordinary shares (0.0679 %). As of November 5, 2014, F. B. Andreev disposed of 5,000,000 of ordinary shares (0.0679 %). After such changes, F. B. Andreev owns 0 ordinary shares (0 %). Highly qualified professionals participate in the Supervisory board of the company, including those having vast experience in mining industry, diamond industry, public administration, finance and management. As of December 31, 2014, F. B. Andreev owned 0 ordinary shares (0.0 % of the authorized capital) of OJSC ALROSA. SERGEY BARSUKOV Member of the Supervisory Board of OJSC ALROSA since June 2011 He does not own any shares in OJSC ALROSA. ECONOMY AND FINANCE 33.3% MANAGEMENT 25.9% Deputy Chairman of the Supervisory Board of OJSC ALROSA since July 2012 Member of the Audit Committee Member of the Strategic Planning Committee 29.6% OTHERS 15 people LAW 11.1% Born in 1971 From 2010 onwards Director of the Financial Policy Department at the Ministry of Finance of the Russian Federation. From 2013 to 2014, he was a member of the Supervisory Board of WEB Capital LLC. From 2012 onwards, he has been a member of the Supervisory Board of ASV Group of Companies. From 2014 onwards, he has been a member of the Board of Directors of OJSC NDKO AKG and member of the Board of Directors of OJSC National Payment Card System.

120 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 121 Between 2008 and 2010, he served as an assistant to the deputy prime minister of the Government of the Russian Federation and Minister of Finance of the Russian Federation. He graduated from the A.F.Mozhaysky Red Banner Military Space Engineering Academy in 1993 where he specialized in Mathematical Support for Automated Systems for the Collection and Processing of Information, from the St. Petersburg State University in 2005, specializing in State and Municipal Management. IVAN DEMYANOV DMITRY ZAKHAROV Member of the Supervisory Board of OJSC ALROSA since June 2012 Member of the Human Resources and Remunerations Committee Born in 1962 From 2008 onwards he has been the Chief executive of RIC-Finance LLC. From 2009 onwards he has been a member of the Board of Directors of RIC-Finance LLC. He does not own any shares in OJSC ALROSA. Member of the Supervisory Board of OJSC ALROSA since June 2005 Executive Director Vice-president of OJSC ALROSA from 1995 onwards Born in 1942 From 2013 onwards he has been a member of the Board of Directors of OJSC ALROSA Insurance Company. From 2012 onwards he has been the Chairman of the Board of Almaznaya Osen Non-State Pension Fund. From 2010 onwards he has been the Chairman of CJSC Golubaya Volna Resort. In 1982 he graduated from the Khabarovsk Higher Party School. SERGEY DUBININ He owns 0.0007 % of ordinary shares of OJSC ALROSA. He did not enter into any transactions relating to the purchase or disposal of his ordinary shares of OJSC ALROSA in 2014. SPARTAK ILLARIONOV In 1989, he graduated from the Faculty of Economy of the V.V.Kuibyshev Novosibirsk Institute of Civil Engineering. Member of the Supervisory Board of OJSC ALROSA Born in 1951 From 2013 onwards he has been the first deputy of Head of Olenek Evenk National District Municipal District of the Republic of Sakha (Yakutia). From 2003 to 2012, he served as the Chief for Supply of Udachny Mining and Processing Division of CJSC ALROSA. In 1978 he graduated from the Odessa State Hydrometeorological Institute, specializing in Meteorology, and the Far East Academy of Public Service in 1997, specializing in Public and Municipal Service. He does not own any shares in OJSC ALROSA. Member of the Supervisory Board of OJSC ALROSA since June 2009 Chairman of the Audit Committee under the Supervisory Board of OJSC ALROSA since July 2012 Born in 1950 Chairman of the Supervisory Board of OJSC VTB Bank from 2011 onwards. Currently he is a member of the Boards of Directors of CJSC VTB Capital, CJSC VTB Capital Holding and VTB Capital IB Holding LLC. From 2008 to 2014, he was a member of the Board of Directors of OJSC OTKRYTIE. Between 2008 and 2012, he was a member of the Board of Directors at VTB Capital Plc and I2BF Innovation Partnership. Between 2008 and 2011, he was a member of the Board of Directors of Derzhava Joint Stock Commercial Bank LLC. He graduated in 1973 from the Lomonosov Moscow State University specializing as Economist and Tutor in Political Economy. Doctor of Economics. He does not own any shares in OJSC ALROSA. VALENTINA KONDRATYEVA Member of the Supervisory Board of OJSC ALROSA since December 2013. Member of the Human Resources and Remunerations Committee Born in 1955 From 2013 onwards, she has been the head of the State Autonomous Institution Centre for Strategic Research of the Republic of Sakha (Yakutia). Between 2003 and 2013, she served as the First Deputy Minister of Economic Development of the Republic of Sakha (Yakutia). From 2014 onwards she has been a member of the Board of Directors of the Development Corporation of the Republic of Sakha (Yakutia). From 2012 to 2014 she was a member of the Board of Directors of OJSC Directorate for Construction of Berkakit-Tommot-Yakutsk Railway. From 2011 onwards, she has been the Member of the Board of Directors of OJSC Republican Investment Company. From 2012 to 2013 she was a member of the Board of Directors of OJSC Polar Airlines, OJSC Development Corporation of South Yakutia and OJSC Vodokanal. From 2009 to 2013 she was a member of the Board of Directors of OJSC Media Holding Yakutia. From 2004 to 2013 she was a member of the Board of Directors of JSC Air Company Yakutia. She does not own any shares in OJSC ALROSA. In 1977, she graduated from the M.K.Ammosov Yakutsk State University with a degree in Mathematics, qualification Teacher of Mathematics, in 1992 she graduated from the Far Eastern Social and Political Institute with a degree in Theory of Socio-Political Relations,

122 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 123 NADEZHDA KONONOVA qualification Political Scientist, Teacher, in 1994 she graduated from the Khabarovsk Institute of National Economy with a degree in Economic and Social Planning, qualification Economist. PhD in Economics. Member of the Supervisory Board of OJSC ALROSA since December 2013. Member of the Audit Committee She does not own any shares in OJSC ALROSA. SERGEY MESTNIKOV In 1979 he graduated from the Omsk State Technical University, specializing in System Engineering, in 1994 he mastered an MBA program of the Massachusetts University in Boston (USA), EDHEC-Risk institute, specializing in Finance. PhD, specializing in Technical Cybernetics. First Deputy Chairman of the Supervisory Board of OJSC ALROSA Member of the Supervisory Board of OJSC ALROSA since 2012 He does not own any shares in OJSC ALROSA. Born in 1959 Born in 1981 IGOR LOZHEVSKY From 2012 onwards she has been the Deputy General Director of OJSC Republican Investment Company. Between 2008 and 2012, she served as an advisor to the President of the Republic of Sakha (Yakutia). From 2014 onwards she has been a member of the Board of Directors of OJSC Sakhaneftegazsbyt and Sakhatransneftegaz. From 2013 onwards she has been a member of the Supervisory Board of the Centre of Strategic Research of the Republic of Sakha (Yakutia) State Autonomous Establishment and the Board of Directors of RIC-Plus. From 2012 onwards she has been a member of the Board of Directors of OJSC Yakutia Venture Company, Deputy Chairman of the Board of Directors of RIC-Finance LLC and Chairman of the Board of Directors of Tsentr Managing Company LLC. From 2010 onwards she has been the member of the Board of Directors of Almazergienbank Joint-Stock Commercial Bank. From 2009 to 2012 she was a member of the Board of Directors of OJSC Sakhaneftegazsbyt and OJSC Nizhne-Lenskoe. From 2009 to 2010 she was a member of the Board of Directors of OJSC Sakhatransneftegaz. From 2008 to 2012 she was a member of the Board of Directors of OJSC Republican Investment Company. She graduated from the Khabarovsk Polytechnic Institute, qualification Engineer-Economist of Forest Industry and Forestry in 1984; from the Russian Academy of Public Service under the President of the Russian Federation with a degree in Management in 1997. DENIS MOROZOV Since 2012 he has been the First Deputy Minister of Property and Land Relations of the Republic of Sakha (Yakutia). Between 2010 and 2012, he served as deputy head, then head of the Secretariat of the Prime Minister of the Republic of Sakha (Yakutia). In 2014 he was a member of the Board of Directors of OJSC Yakutsk Airport and OJSC Polar Airlines. From 2014 onwards he has been a member of the Board of Directors of JSC Air Company Yakutia and Sakhaplemobyedinenie. Since 2013 he has been a Member of the Board of Directors of Sakhamedstrakh. Between 2013 and 2014, he was a member of the Board of Directors of OJSC ALROSA-Nyurba. From 2012 onwards he has been the Chairman of the Supervisory Board of OJSB Almazenergienbank, the Chairman of the Board of Directors of OJSC Republican Investment Company, Chairman of the Board of OJSC Sakhatransneftegaz and a member of the Board of Directors of OJSC Sterkh. From 2012 to 2013 he served as the Chairman of the Board of Directors of OJSC Nizhne-Lenskoe. In 2003, he graduated from the M.K.Ammosov Yakutsk State University, specializing in Law, in 2013, from the Russian Presidential Academy of National Economy and Public Administration, specializing in Anti-Crisis Management of Enterprises, Regions and Industries. Independent Member of the Supervisory Board of OJSC ALROSA Member of the Audit Committee He does not own any shares in OJSC ALROSA. Independent Member of the Supervisory Board of OJSC ALROSA Member of the Audit Committee Member of the Human Resources and Remunerations Committee Born in 1957 From 2014 onwards he has been the Partner at Park Investors LLC. From 2008 to 2012 he served as Chief Executive Officer of Deutsche Bank Group in Russia and the CIS (Moscow). Between 2013-2014 he was a Deputy Chairman of Deutsche Bank AG for Eastern Europe (London). From 2011 onwards he has been a member of the Board of Directors of GeoProMining LLC. From 2013 to 2014 he was a member of the Board of Directors of OJSC RZD. Between 2012 and 2014, he was a member of the Board of Directors of OJSC Aeroflot. He does not own any shares in OJSC ALROSA. Member of the Human Resources and Remunerations Committee Born in 1973 From 2011 onwards, he has been the representative of the Russian Federation in the Board of Directors of the European Bank for Reconstruction and Development, Executive Director for the Russian Federation, Belarus and Tajikistan. In 2010, he served as President, CEO, Chairman Executive Committee and member of the Board of Directors of OJSC Uralkali. From 2014 onwards he has been the Chairman of the Supervisory Board of OJSC Rosselkhozbank. From 2013 onwards, he has been a member of the Board of Directors of OJSC RusHydro and OJSC Rosseti. From 2011 to 2014 he was a member of the Board of Directors of OJSC Russian Agency for Export Credit Insurance. In 2009 and 2010, he was a member of the Board of Directors of OJSC United Grain Company. He graduated from the Economic Faculty of Lomonosov Moscow State University with a degree in Political Economy in 1993, and

124 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 125 NINA OSIPOVA then, in 1996, from the Faculty of Law of the same university with a degree in Jurisprudence, and in 1999, from the Swiss Banking school, specializing in Commercial Banking. He studied in the U.S. at Harvard Business School and then at the School of International and Public Affairs of Columbia University. PhD in Economics. OJSC Sovkomflot, has been the Chairman of the Board of Directors of NefteTransServis LLC. From 2013 onwards he has been the Chairman of the Board of Directors of OJSC Eko-Sistema Managing Company. From 2011 onwards he has been a member of the Board of Directors of OJSC Bank of Moscow and member of the Supervisory Board of the Federal State Autonomous Establishment of National Research University Higher School of Economics. Member of the Supervisory Board of OJSC ALROSA since 2012 Born in 1957 From 2007 onwards she has been the Deputy Minister of Finance of the Republic of Sakha (Yakutia) with the status of the Deputy Permanent Representative of the Republic of Sakha (Yakutia) under the President of the Russian Federation. From 2013 onwards she has been a member of the Board of Directors of RIC-Finance OJSC and Development Corporation of South Yakutia. She does not own any shares in OJSC ALROSA. ILYA YUZHANOV In 1986 he graduated from Ufa Aviation Institute, specializing in Aviation Instrument Engineering, in 1996, from the Russian Academy of Public Service under the President of the Russian Federation, specializing in Law. PhD in Social Sciences. Chairman of the Supervisory Board of OJSC ALROSA Born in 1960 He does not own any shares in OJSC ALROSA. OLEG FEDOROV She graduated from the Plekhanov Moscow Institute of National Economy with a degree in Industrial Economy in 1978. Member of the Supervisory Board of OJSC ALROSA since 2013 Chairman of the HR and Remunerations Committee under the Supervisory Board since 2014 Member of the Strategic Planning Committee Born in 1968 He does not own any shares in OJSC ALROSA. Member of the Supervisory Board since 2009, Chairman since 2011. Currently, he is also the Chairman of the Board of Directors of Polyus Gold International. From 2012 to 2014 he was a member of the Board of Directors of OTKRYTIE Federal Company. Between 2004 and 2013, was a member and then the Chairman of the Supervisory Board of OJSC NOMOS BANK. In 2006-2011 he was a member of the Board of Directors of OJSC Uralkali, OJSC NOVATEK, OJSC Kirovsky Zavod and OJSC Polymetal. He graduated from the Faculty of Economics at Leningrad State University in 1982. PhD in Economics. From 2012 to 2014 he served as Adviser to the Head of the Federal Agency for State Property Management. Between 2009 and 2012, he was the Head of the Office for Cooperation with authorities and companies with state participation of the Department of Investment Banking in Global Markets of CJSC VTB Capital. From 2013 onwards he has been a member of the Board of Directors of OJSC Vnukovo International Airport, OJSC Vnukovo Airport and OJSC Irkutsk International Airport. Between 2009 and 2011, he was a member of the Board of Directors of OJSC Moscow Integrated Power Company; between 2004 and 2010, he was a member of the Board of Directors of the Association for Protection of Investors Rights; between 2003 and 2010, he was a member of the Board of Directors of OJSC VolgaTelecom. Regulations on the Supervisory Board are available at www.alrosa.ru in the section to the Investors and Shareholders / Information Disclosure / Charter and other Internal Documents / 2013 http://www.alrosa.ru/wp-content/uploads/2013/09/pologenie_o_ns.pdf He graduated from the Lomonosov Moscow State University with a degree in Mathematics & Applied Mathematics in 1992. ANDREY SHARONOV Member of the Supervisory Board of OJSC ALROSA Born in 1964 He does not own any shares in OJSC ALROSA. From 2013 onwards he has been serving as the President of Skolkovo Moscow School of Management. From 2010 to 2013 he was the Deputy Mayor of Moscow in the Government of Moscow for Economic Policy. From 2007 to 2010 he served as Managing Director of Troyka Dialog Investment Company. From 2014 onwards he has been a member of the Board of Directors of OJSC NOVATEK and

126 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 127 PROCEDURE FOR REMUNERATION OF MEMBERS OF THE SUPERVISORY BOARD OF OJSC ALROSA On June 28, 2014, the General Meeting of Shareholders of OJSC ALROSA adopted a resolution on the payment of remuneration for the work as members of the Supervisory Board within the corporate period (year) from June 29, 2013 to June 28, 2014 to the Members of the non-state employees and not being sole executive body or member of a collective executive body of OJSC ALROSA in the amount determined in accordance with the Regulations On Remuneration to Members of the Supervisory Board of OJSC ALROSA 18. STRUCTURE OF PARTICIPATION OF MEMBERS OF THE SUPERVISORY BOARD OF OJSC ALROSA IN THE WORK OF THE BOARD DURING THE YEAR 2014 In 2014, a total of 17 corporate events of the Supervisory board took place, including 4 meetings and 13 absentee voting. REMUNERATION OF THE SUPERVISORY BOARD, RUB 6,000,000 6,000,000 Full name PARTICIPATION in CORPORATE events in 2014 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Yuzhanov I. A., Chairman of the SB 4,600,000 4,200,000 3,666,667 3,666,667 Shokhin A. N., Chairman of the HR&R Committee Dubinin S. K., Chairman of the Audit Committee Zakharov D. P. Morozov D. S. 2,833,333 Borodin P. A. 1,666,667 1,666,667 ondratyeva V.I. Kononova N.E. Total meetings including: absentee VOTING Meetings of the Audit Committee Meetings of the REMUNERATIONS Committee Meetings of the Strategic Planning Committee F. B. Andreev 17 4 13 9 S. V. Barsukov 16 3 13 4 7 P. A. Borodin /powers terminated on June 28, 2014 6-6 1 I. K. Demyanov 15 4 11 S. K. Dubinin 17 4 13 8 2 D. P. Zakharov 16 4 12 4 Participation in the work of the SB Chairmanship of the Committee/SR S. G. Illarionov /elected on June 28, 2014 6 3 3 V. I. Kondratyeva 16 4 12 2 Total amount payable as remuneration to the members of the Supervisory Board based on the results of 2013 is RUB 28,300,000 (twenty-eight million three hundred thousand). The above remunerations have been paid to the members of the Supervisory Board of the Company in full. N. E. Kononova 16 4 12 4 I. A. Lozhevsky /elected on June 28, 2014 8 3 5 4 1 Regulations On the Remuneration to Members of the Supervisory Board of OJSC ALROSA are available at www.alrosa.ru in the section to the Investors and Shareholders/Information Disclosure/Charter and other Internal Documents/2013 http://www.alrosa.ru/wp-content/uploads/2013/12/03-полож-о-вознагр-нс-с-изм-от-20-12-131.pdf V. I. Lukyantsev /powers terminated on June 28, 2014 9 1 8 3 2 18 OJSC ALROSA approved the Regulations On the Remuneration of the Members of the Supervisory Board of OJSC ALROSA at the General Meeting of Shareholders of the Company on June 30, 2011, Minutes number 27. At the Extraordinary General Meeting of Shareholders of the Company on December 20,2013, minutes number 31, amendments to the Regulations On the Remuneration of the Members of the Supervisory Board of OJSC ALROSA were approved. S. V. Mestnikov 16 4 12 D. S. Morozov 17 4 13 3 2

128 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 129 Full name PARTICIPATION in CORPORATE events in 2014 Total meetings including: absentee VOTING N. A. Osipova 16 4 12 Meetings of the Audit Committee Meetings of the REMUNERATIONS Committee Meetings of the Strategic Planning Committee O. R. Fedorov 14 3 11 2 8 A. V. Sharonov /elected on June 28, 2014 A. N. Shokhin /powers terminated on June 28, 2014 8 3 5 I. A. Yuzhanov 16 4 12 9 1 8 3 3 Information on the SUPERVISORY BOARD s discharge of its duties RELATING to its role in the organization of an efficient risk MANAGEMENT and internal CONTROL SYSTEM In accordance with the requirements to the corporate governance established by the Code of Corporate Governance approved by resolution of the Government of the Russian Federation on February 13, 2014 and the Moscow Stock Exchange Listing Rules recommended for use by joint-stock companies that came into force on June 2, 2014 and comments made by auditors of OJSC ALROSA based on the results of verification of consolidated financial statements for 2011 and recommendations made by the Auditing Committee of OJSC ALROSA based on the results of revision for 2013, the Company developed the following draft internal regulations: Risk Management Policy of OJSC ALROSA Regulations for risk management of OJSC ALROSA These documents determine the structure and procedure for organization of the Company s risk management system, including the Company s principles, purposes and tasks in the area of risk management, unified terminology, key items of the risk management system, functions and roles of participants of a risk management process, key stages of the risk management process and members tasks within the framework of realization of stages. Taking into account the fact that one of the main targets of the Audit Committee under the Supervisory Board of the Company is preliminary consideration and development of recommendations to the Supervisory Board in relation to risk management and internal control procedures, these documents were approved by the Supervisory Board on December 11, 2014, Minutes No. А01/223-ПР-НС after their preliminary approval by the Audit Committee. STRUCTURE OF KEY ISSUES DISCUSSED AT THE MEETINGS OF THE SUPERVISORY BOARD IN 2014 31 ISSUES RELATING TO CURRENT ACTIVITIES ISSUES RELATING TO STRATEGIC MANAGEMENT 8 A report on the RESULTS of self-assessment or external assessment of the SUPERVISORY BOARD and Committees under the SUPERVISORY BOARD? Detailed information on certain resolutions adopted by the Supervisory Board is available at http://www.alrosa.ru/documents/сообщения/#2014 HR ISSUES 5 In accordance with the recommendations of its advisor, CJSC KPMG, based on the results of the audit of the Company s corporate governance system conducted in 2013 by an independent advisor, CJSC Bord Solutions, the work of the Supervisory Board and Committees under the Supervisory Board was assessed in 2014. This assessment was carried out in accordance with the international standards, best international corporate governance practices and recommendations of the Company s shareholders. On the Company s instruction, the advisor developed the draft Method of assessment of activities of the Supervisory Board and its Committees, Chairman, members of the Supervisory Board and Corporate Secretary of OJSC ALROSA. The Supervisory Board of OJSC AL- ROSA considered the results of the assessment and approved the following documents (Minutes No. А01/221-ПР- НС) on October 23, 2014: method of assessment of activities of the Supervisory Board and its Committees, Chairman, members of the Supervisory Board and Corporate Secretary of OJSC ALROSA; schedule of activities relating to fulfilment of recommendations based on the results of assessment of the Supervisory Board of OJSC ALROSA. Moreover, in 2014, in order to improve the corporate governance system, to regulate the process of assessment of the the annual General Meeting of Shareholders of the Company passed a resolution (on June 28, 2014, Minutes No. 32) to introduce certain amendments and additions into the Company s internal documents, i.e. Charter and Regulations on the Supervisory Board and Remuneration of the Members of the Supervisory Board.

130 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 131 THE COMMITTEES OF THE SUPERVISORY BOARD Audit Committee HR and REMUNERATION Committee Strategic Planning Committee Committees of the Supervisory board of OJSC ALROSA ensure control and strategic planning in three special areas referred to the competence of the Supervisory board, i.e. strategic planning, audit, HR and remuneration. SUPERVISORY BOARD DATE OF CREATION OF THE COMMITTEE management of securities, shares owned by the Company; management of the Company s immovable property; establishment of the Company s divisions, opening of representative offices and their liquidation. April 20, 2010 April 20, 2010 April 20, 2010 STRATEGIC PLANNING COMMITTEE AUDIT COMMITTEE HR AND REMUNERATION COMMITTEE КNUMBER OF MEMBERS OF THE COMMITTEE DURING THE PERIOD: January - July 2014 July - December 2014 5 5 5 5 6 6 GOALS OF THE COMMITTEE Audit Committee Improvement of the efficiency and quality of work of the Supervisory Board in the area of open communication with the Company s auditors, Auditing Committee, divisions, representative offices and services by way of preliminary consideration and development of recommendations for the Supervisory Board relating to the Committee s competence in the following areas: risks relating to the completeness of the information disclosed; financial statements; external independent audit; internal audit; internal control procedures. HR and REMUNERATION Committee Improvement of the efficiency and quality of the Supervisory Board s work through preliminary consideration and development of recommendations to the Supervisory Board in relation to the following issues: determination of key areas of the Company s HR policy; attraction of skilled experts to the Company management and creation of the required incentives for their successful work; determination of the number and composition of the Company s Executive Committee. Strategic Planning Committee Improvement of the efficiency and quality of the Supervisory Board s work through preliminary consideration and development of recommendations to the Supervisory Board in relation to the following issues: determination of priority areas of the Company s activities; adoption of resolutions for submission by the Supervisory Board to the General Meeting of Shareholders of the issues relating to approval of major transactions and related party transactions; adoption of decisions on submission by the Supervisory Board to the General Meeting of Shareholders of the issues relating to participation of the Company in holding companies, financial and industrial groups, associations and other unions of commercial organizations; EXISTING MEMBERS OF THE COMMITTEE elected by the Supervisory Board on July 10, 2014 NUMBER OF MEETINGS OF THE COMMITTEE IN 2014 NUMBER OF ISSUES CONSIDERED BY THE COMMITTEE Chairman of the Committee: Dubinin Sergey Konstantinovich, Member of the Supervisory Board Members of the Committee: Barsukov Sergey Vladimirovich, Member of the Supervisory Board, representative of the state and self-governmental authorities Kononova Nadezhda Egorovna, member of the Supervisory Board Lozhevsky Igor Arnoldovich, member of the Supervisory Board, independent director Morozov Denis Stanislavovich, member of the Supervisory Board, independent director 2 meetings, 6 absentee voting Chairman of the Committee: Fedorov Oleg Romanovich, Member of the Supervisory Board Members of the Committee: Zakharov Dmitry Petrovich, independent member of the Supervisory Board Kondratyeva Valentina Ilyinichna, member of the Supervisory Board Lozhevsky Igor Arnoldovich, member of the Supervisory Board, independent director Morozov Denis Stanislavovich, member of the Supervisory Board, independent director 3 meetings, 2 absentee voting Chairman of the Committee: Andreev Fedor Borisovich, Member of the Supervisory Board Members of the Committee: Borisov Egor Afanasyevich, President of the Republic of Sakha (Yakutia) Barsukov Sergey Vladimirovich, Member of the Supervisory Board, representative of the state and self-governmental authorities Grigorieva Evgenia Vasilyevna, Minister of Property and Land Relations of the Republic of Sakha (Yakutia) Danchikova Galina Innokentievna, Chairman of the Government of the Republic of Sakha (Yakutia) Fedorov Oleg Romanovich, member of the Supervisory Board 3 meetings, 6 absentee voting 61 12 58

132 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 133 AMOUNT OF REMUNERATION paid out to the members of the committee in 2014 Audit Committee Allowance 20 % to Chairman of the Committee S. K. Dubinin - RUB 700,000 HR and REMUNERATION Committee Allowance 20 % to Chairman of the Committee A. N. Shokhin - RUB 766,667 * In accordance with clause 3.2 of the Regulations on the Strategic Planning Committee under the Supervisory Board of OJSC ALROSA, non-members of the Supervisory Board can be elected to the Committee Strategic Planning Committee ALROSA on the distribution of profits for 2013, including the amount of dividends on shares of OJSC ALROSA and their payment procedure. 10. On approval of the Regulations for the procedure of disbursement by OJSC ALROSA of loans and purchase of the financial instruments of legal entities. 11. On consideration of the report on the work of Internal Audit Department of OJSC ALROSA for 2013. 12. On entering into a transaction for attraction of borrowed funds, including liabilities of OJSC ALROSA in the amount exceeding 5 % of the book value of assets of OJSC ALROSA. 13. On consideration of the work plan of the Internal Audit Department of OJSC ALROSA for 2014. 14. On approval of the related party transactions. The Regulations on the Audit Committee are available at www.alrosa.ru in the section About Us / Corporate Governance / Committees under the Supervisory Board http://www.alrosa.ru/wp-content/ uploads/2013/10/положение-о-комитетепо-аудиту_11_12_2014.pdf AUDIT COMMITTEE HUMAN RESOURCES AND REMUNERATIONS COMMITTEE The Committee is comprised of the members of the who are independent directors and have professional experience in the field of internal control, audit, finance, accounting and management of financial institutions. In accordance with the Regulations on the Audit Committee under the Supervisory Board of OJSC ALROSA, there are 5 members of the established 19 Committee. As of December 31, 2014 five members of the Supervisory Board were members of the Audit Committee, including two independent directors. In 2014 there were 2 meetings and 6 absentee voting of the Audit Committee, where 61 issue were considered. In particular, the following key issues were addressed: 1. On consideration of the Opinion of the Auditing Committee of OJSC ALROSA on the results of audit of financial and business activities in accordance with the instruction of the Federal Agency for State Property Management dated September 17, 2014, No. ОД-05/39780дсп. 2. On approval of the Standard for audit of implementation of a long-term development program of ALROSA Group. 3. On approval of the Terms of reference for audit of implementation of a long-term development program of ALROSA Group. 4. On recommendation of the Audit Committee under the Supervisory Board of OJSC ALROSA On the Approval of the Risk Management Policy of OJSC ALROSA and On Approval of the Regulations for risk management of OJSC ALROSA. 5. On draft new version the Regulations on the Audit Committee under the Supervisory Board of SA. 6. On preliminary approval of the Annual Report of OJSC ALROSA for 2013. 7. On accounting (financial) statements, including report on financial results of OJSC ALROSA for 2013. 8. On consolidated financial statements of OJSC ALROSA prepared in accordance with IFRS for 2013. 9. Recommendations to the General Meeting of Shareholders of OJSC 19 The Regulations on the Audit Committee, Human Resources and Remuneration Committee under the Supervisory Board are approved in the new version by the Supervisory Board on December 11, 2014, minutes number A01/223-PR-NS. The Committee is comprised of 5 members of the which are independent (non-executive) directors. As of December 31, 2014 five members of the Supervisory Board were members of the HR and Remunerations Committee, including two independent directors. In 2014, 3 meetings and 2 absentee voting of the HR and Remunerations Committee were held where the following issues were addressed: 1. On preliminary assessment of F.B. Andreev, the President of OJSC AL- ROSA (in order to prolong his powers) and on assessment of his activities. 2. On liability insurance of the members of managerial bodies of OJSC ALROSA. 3. On approval of a transaction that is free of chargeable remuneration, i.e. agreement for the exchange of premises between OJSC ALROSA and V.D. Nogovitsyn. 4. On approval of a related party transaction, i.e. agreement for the exchange of premises between OJSC ALROSA and R.Sh. Sanatulov. 5. On approval of a transaction that is free of chargeable remuneration, i.e. agreement for the exchange of premises between OJSC ALROSA and V.A. Dzurova. 6. On plan of work of the HR and Remunerations Committee under the Supervisory Board of OJSC ALROSA for 2014-2015 corporate year. 7. On the nomination of candidates to the Supervisory Board of SA in 2015-2016 corporate year. 8. On approval of the method of assessment of activities of the Supervisory Board and its Committees, Chairman, members of the Supervisory Board and Corporate Secretary of OJSC ALROSA. 9. On approval of the Regulations on the Corporate Secretary of OJSC AL- ROSA. 10. On approval of amendments to the Regulations on Remuneration of President of OJSC ALROSA and Regulations on Remuneration of Members of the Board of OJSC ALROSA. 11. On approval of the Regulations on the HR, Remunerations and Corporate Governance Committee under the Supervisory Board of OJSC ALROSA. Regulations on the Human Resources and Remunerations Committee are available at www.alrosa.ru in the section About Us/Corporate Governance/Committees under the Supervisory Board http:// alrosa.ru/wp-content/uploads/2013/10/ komitet_po_kadram1.pdf

134 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 135 STRATEGIC PLANNING COMMITTEE PRESIDENT AND EXECUTIVE COMMITTEE In accordance with the Regulations on the Strategic Planning Committee under the 20 non-members of the Supervisory Board can be elected to the Committee. The Committee consists of 6 members. As of December 31, 2014 the Strategic Planning Committee consisted of six persons, including three members of the Supervisory Board. In 2014 there were 3 meetings and 6 absentee voting of the Strategic Planning Committee, where 58 issues were considered, including the most important: 1. On determination of position of OJSC ALROSA in relation to the agenda of the General Meeting of Shareholders of OJSC Severalmaz. 6. On participation of OJSC ALROSA in Almaznaya Osen Non-State Pension Fund Joint-Stock Company. 7. On approval of the Adjusted Consolidated Budget of OJSC ALROSA for 2014. 8. On approval of a transaction that is free of chargeable remuneration between OJSC ALROSA and Association of Mini Football of Russia, All-Russian Public Organization. 9. On approval of a Long-Term Development Program of ALROSA Group until 2023. 10. On approval of the Consolidated Budget of OJSC ALROSA for 2015. 11. On approval of a new version of non-core asset disposal programme. by the Ministry of Property and Land Relations of the Republic of Sakha (Yakutia), i.e. agreement for the donation of movable property. 16. On approval of the Plan for work of the Strategic Planning Committee for 2014-2015 corporate year. 17. On approval of related party transactions. 18. On termination of participation in other entities. The Regulations on the Strategic Planning Committee are available at www. alrosa.ru in the section About Us / Corporate Governance / Committees under the Supervisory Board http://www.alrosa.ru/ wp-content/uploads/2013/10/komitet_po_ strat1.pdf The President (the sole executive body) and the Executive Committee (collegial executive body) manage the Company s activities. The scope of duties of the executive bodies includes all current activity management issues, except for the issues referred to the exclusive competence of the General Meeting of Shareholders and the Chairman of the Executive Committee Supervisory Board. The President and the Executive Committee arrange for the implementation of decisions of the General Meeting of Shareholders and the SB and are accountable to them. The Executive Committee is formed in a number of members determined by the SB. At the end of 2014, the Executive Committee consisted of 13 members. Information on the President and members of the Executive Committee of OJSC ALROSA is given in the table below: FEDOR ANDREEV President of OJSC ALROSA from 2009 to October 2014 Member of the Supervisory Board of OJSC ALROSA since 2009 Chairman of the Strategic Planning Committee under the Supervisory Board of OJSC ALROSA from October 2014 Executive Director of OJSC ALROSA from July 2009 to October 2014 Date of appointment: July 15, 2009 Born in 1966 Between 2005 and 2009, he was senior Vice-president of OJSC Russian Railways, where he was responsible for the company s economic and financial policy. Between 2003 and 2005, he was Vice-president of OJSC Russian Railways. Between 2002 and 2003, he was first Vice-president of OJSC ALROSA, where he was in charge of financial and economic issues. In 1989, he graduated from the A.A. Zhdanov Leningrad State University, specializing in Political Economy. In 2007, he followed a refresher cascade training in CJSC Prioritet where he defended a functional quality improvement project. Employment contract expires on: October 23, 2014. 2. On participation of OJSC ALROSA in the World Diamond Council. 3. On approval of the Regulations on Affiliates of OJSC ALROSA. 4. On approval of OJSC ALROSA s non-core asset disposal programme. 5. On approval of a transaction that is free of chargeable remuneration, i.e. targeted compensation of expenses in order to maintain allowances paid to the former employees of Udachny department of the Housing and Utility Division of OJSC ALROSA employed by the Municipal Unitary Udachny Housing Enterprise from July 1, 2014 and covering of losses incurred due to insufficient rates relating to provision of housing services by the Municipal Unitary Udachny Housing Enterprise. 12. On approval of related-party transactions made by OJSC ALROSA as part of fulfilment of the Consolidated Budget of OJSC ALROSA for 2015. 13. On approval of the Policy for Sustainable Development and Corporate Social Responsibility of SA. 14. On approval of a transaction that is free of chargeable remuneration between OJSC ALROSA and Zhigansk National Evenk Ulus Municipal District of the Republic of Sakha (Yakutia): agreement for the donation of movable property. 15. On approval of a transaction that is free of chargeable remuneration between OJSC ALROSA and the Republic of Sakha (Yakutia) represented Information on F.B. Andreev s transactions related to the purchase or disposal of shares of OJSC ALROSA for 2014: As of January 1, 2014, F.B. Andreev owned 8,410,800 ordinary shares (0.1142 %). As of June 5, 2014, F.B. Andreev disposed of 3,410,800 ordinary shares. After such changes, F.B. Andreev owns 5,000,000 ordinary shares (0.0679 %). As of November 5, 2014, F.B. Andreev disposed of 5,000,000 ordinary shares. After such changes, F.B. Andreev owns 0 ordinary shares (0,0 %). As of December 31, 2014, F.B. Andreev owns 0 ordinary shares (0.0 %) of OJSC ALROSA. 20 Regulations on the Strategic Planning Committee approved by resolution of the Supervisory Board on July 6, 2012, Minutes No. 184.

136 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 137 Executive Committee IVAN DEMYANOV Vice-president of OJSC ALROSA Member of the Supervisory Board of OJSC ALROSA since June 2005 Executive Director Date of appointment: October 26, 1995 Born in 1942 Since 1995, he has been the Vice-president of OJSC ALROSA. He supervises social and personnel policies of the Company. From 2013 onwards he has been a member of the Board of Directors of OJSC ALROSA Insurance Company. From 2012 onwards he has been the Chairman of the Board of Almaznaya Osen Non-State Pension Fund. From 2010 onwards he has been the Chairman of CJSC Golubaya Volna Resort. In 1982 he graduated from the Khabarovsk Higher Party School. Employment contract expires on: no fixed term. He owns 0.0007 % of ordinary shares of OJSC ALROSA. He did not enter into any transactions relating to the purchase or disposal of his ordinary shares of OJSC ALROSA in 2014. IGOR KULICHIK Vice-President and CFO of OJSC ALROSA Date of appointment: August 10, 2009 Born in 1967 Since 2009 he has been the Vice-president and CFO of OJSC ALROSA. In 1990 he graduated from the S. Ordzhonikidze Moscow Aviation Institute with a degree of Mechanical Engineer, in 1992, from the Zhukovsky Air Force Engineering Academy with a degree of Engineer Mathematician. Employment contract expires on: August 9, 2017. Information on I.M. Kulichik s transactions related to the purchase or disposal of shares of OJSC ALROSA for 2014: As of January 1, 2014, I.M. Kulichik owned 1,000,000 ordinary shares (0.01358 %). As of August 7, 2014, I.M. Kulichik disposed of 1,000,000 ordinary shares. After such changes, I.M. Kulichik owns 0 ordinary shares (0.0 %). As of December 31, 2014, I.M. Kulichik owns 0 ordinary shares (0.0 %). ALEXANDER MATVEEV Head of Legal Department of OJSC ALROSA Date of appointment: November 23, 2009 Born in 1976 From 2009 onwards he has been the Head of Legal Department of OJSC ALROSA. He graduated in 1998 from Omsk State University with a degree in Jurisprudence. Employment contract expires on: no fixed term. He does not own any shares in OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014. ALEXANDER MAKHRACHEV Director of Udachny MPD of OJSC ALROSA Date of appointment: March 18, 2008 Born in 1956 From 2008 onwards he has been the Director of Udachny MPD of OJSC ALROSA. In 1979, he graduated from the Moscow Institute of Steel and Alloys, specializing in Mineral Processing, qualification Engineer Metallurgist. He upgraded his skills in 1996 after completing the Managing mining business in market environment program at the Russian Federation Government s National Economy Academy. He graduated from the Moscow State Mining University in 2007 with a degree in Mining Engineering. Employment contract expires on: no fixed term. He owns 0.0029 % of ordinary shares of OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014. YURI OKOYOMOV Vice-president of OJSC ALROSA Date of appointment: August 6, 2009 Born in 1962 In 2009 he was appointed Vice-President of ALROSA, responsible for the Company s sales policy. In 1979 he finished the school of physics and mathematics in Verkhnevilyuysk village of the Yakut Autonomous Soviet Socialist Republic, in 1985, he graduated from the Moscow State Institute of Steel and Alloys, specializing in Metal Physics, in 1996, from the Russian Presidential Academy of National Economy and Public Administration with the qualification Highest Category Manager assigned. Employment contract expires on: August 5, 2017. He owns 0.0073 % of ordinary shares of OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014. ANDREY PISMENNY Chief Engineer of OJSC ALROSA Date of appointment: December 2, 2010 Born in 1960 He was appointed ALROSA s Chief Engineer in December 2010. Between 2007 and 2010, he worked as Chief Engineer and First Deputy Director of ALROSA s Yakutniproalmaz Research Institute. In 1982, he graduated from the Plekhanov Leningrad Mining Institute, specializing in Construction of Underground Structures and Wells, in 2005, from the Irkutsk State Technical University, specializing in Underground Mining of Mineral Deposits. Employment contract expires on: December 1, 2015. He does not own any shares in OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014.

138 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 139 SERGEY PUSHKIN Vice-president of OJSC ALROSA Date of appointment: January 25, 2010 Born in 1967 He was appointed Vice-president of ALROSA on January 25, 2010, oversees the activities of subsidiaries and affiliates, as well as the development of the Company s projects in Africa. Between 2004 and 2009, he was the President of OJSC TransCreditBank. He graduated from the Faculty of Aerodynamics and Aviation Engineering at the Moscow Institute of Physics and Technology in 1990. In 1990-1992, he studied at the Faculty of Aircraft and Engines at N.E. Zhukovsky Air Force Engineering Academy. Employment contract expires on: January 24, 2018. Information on S. N. Pushkin s transactions related to the purchase or disposal of shares of OJSC ALROSA for 2014: As of January 1, 2014, S.N. Pushkin owned 4,900,000 ordinary shares (0.0665 %). As of May 16, 2014, S.N. Pushkin disposed of 2,300,000 ordinary shares. After such a change, S.N. Pushkin owned 2,600,000 ordinary shares (0.0353 %). As of June 6, 2014, S.N. Pushkin disposed of 900,000 ordinary shares. After such a change, S.N. Pushkin owned 1,700,000 ordinary shares (0.0231 %). As of July 11, 2014, S.N. Pushkin disposed of 150,000 ordinary shares. After such a change, S.N. Pushkin owned 1,550,000 ordinary shares (0.0210 %). As of August 8, 2014, S.N. Pushkin disposed of 550,000 ordinary shares. After such a change, S.N. Pushkin owned 1,000,000 ordinary shares (0.01358 %). As of August 29, 2014, S.N. Pushkin disposed of 1,000,000 ordinary shares. After such a change, S.N. Pushkin owned 0 ordinary shares (0.0 %). As of December 31, 2014, S.N. Pushkin owned 0 ordinary shares (0.0 %). RAVIL SANATULOV Director of Aikhal MPD of OJSC ALROSA Date of appointment: September 27, 2007 Born in 1963 In 2007, he was appointed the Director of ALROSA s Aikhal Mining and Processing Division. He graduated from the Irkutsk Polytechnic Institute in 1986 with a degree in Mining Engineering, specialized in Technology and Integrated Mechanized Development of Mineral Fields. Employment contract expires on: no fixed term. He does not own any shares in OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014. VALERY SEROV Chief Geologist of OJSC ALROSA Date of appointment: February 1, 2011 Born in 1957 In February 2011 he was appointed ALROSA s Chief geologist. He has been the Chief geologist for the Amakinskaya Geologic Exploration Expedition since 1994. He graduated from the Moscow Geological Prospecting Institute in 1980 with a degree in Geological Surveying, Prospecting and Exploration of Mineral Fields. Employment contract expires on: January 31, 2016. He does not own any shares in OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014. ILYA RYASHCHIN First Vice-president of OJSC ALROSA Date of appointment: June 9, 2012 Born in 1973 From 2012 onwards he has been the First vice-president of OJSC ALROSA and in charge of the Company s financial and economic operations. He has been acting as the President of OJSC ALROSA since October 24, 2014. Between 2003 and 2012, he was the Deputy Head and First Deputy Head of the financial management department and the corporate finance department and Head of the planning and budget department at OJSC Russian Railways. In 1996, he graduated from the N.I. Lobachevsky Nizhny Novgorod State University, specializing in Finance and Credit. Employment contract expires on: June 8, 2015. He does not own any shares in OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014. IGOR SOBOLEV First Vice-President and Executive Director of OJSC ALROSA Date of appointment: January 1, 2012 Born in 1969 Since January 1, 2012 he has been acting as the First Vice-president and Executive Director of OJSC ALROSA. From 2007 to 2011, he was the Head of ALROSA s Capital Construction Division. He graduated from the Tula State Technical University in 1993 with a degree in Mining Construction Engineering, specialized in Mining and Underground Construction. Employment contract expires on: December 31, 2016. He owns 0.002 % of ordinary shares of OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014.

140 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 141 ALEXANDER CHAADAEV Vice-President for Innovation, Director of Yakutniproalmaz institute Date of appointment: May 28, 2012 Born in 1960 Since 2012 he has been the Vice-President for Innovation and Director of Yakutniproalmaz Research Institute of OJSC AL- ROSA. Between 2007 and 2012, he served as Director of Yakutniproalmaz Research Institute of OJSC ALROSA. He graduated from the Tyumen Civil Engineering Institute with a degree in Civil Engineering in 1982, specialized in Industrial and Civil Construction, in 2001, he graduated from the Finance Academy under the Government of the Russian Federation with a degree in Finance and Credit. PhD in Economics. Employment contract expires on: May 27, 2017. He owns 0.0004 % of ordinary shares of OJSC ALROSA. He did not enter into transactions relating to purchase/disposal of shares in 2014. The Regulations on the Executive Committee of OJSC ALROSA are available at www.alrosa.ru in the section to the Investors and Shareholders / Information Disclosure / Charter and other Internal Documents / 2013 http://www.alrosa.ru/wp-content/uploads/2013/09/pologenie_o_pravlenii.pdf PROCEDURE FOR REMUNERATION OF MEMBERS OF THE EXECUTIVE COMMITTEE OF OJSC ALROSA The Regulations on Remuneration of Members of the Executive Committee, its relationship with the system of key performance indicators of SA. The Regulations On Remuneration of Members of the Executive Committee of OJSC ALROSA (hereinafter the Regulations) were approved by the Supervisory Board of OJSC ALROSA (Minutes dated May 18, 2012 No. 181). In December 2013, the Rosimushchestvo, in order to fulfil the Instruction of President of the Russian Federation No. Пр-1474 dated July 5, 2013 based on the results of the St. Petersburg International Economic Forum, the Guidelines on application of key performance indicators by the public corporations, state-owned companies, state unitary enterprises and business entities with the share of the registered capital owned by the Russian Federation or a constituent entity of the Russian Federation totalling over fifty per cent were developed by the Ministry of Economic Development of the Russian Federation. The Guidelines were approved by the Government of the Russian Federation (instruction dated March 27, 2014 No. ИШ-П13-2043). This document required that the jointstock companies with public share in authorized capitals exceeding 50 % would create a system of key performance indicators (hereinafter the KPIs) to take into account for calculation of wages and HR solutions in relation to the sole executive body and members of the collective executive body of the company or to integrate the mandatory KPI in the senior management motivation systems used by the companies, directly relate the amount of remuneration and achievement by the company of the existing target KPIs. To fulfil this instruction, the Company developed and the Supervisory Board approved on December 11, 2014 (Minutes No. А01/223-ПР-НС) amendments and additions to the Regulation On Remuneration of the President of OJSC ALROSA and the Regulations On Remuneration of Members of the Executive Committee of SA that take into account the Guidelines of the Rosimushchestvo to the fullest extent. In accordance with the Regulations, annual remuneration is paid to the members of the Executive Committee for the achievement of KPIs relating to production and business activities. DATA ON PAYMENTS TO MEMBERS OF THE EXECUTIVE COMMITTEE IN 2014, RUB Indicator name Amount of PAYMENT Remuneration for participation in the governing body 0 Salary 259,171,270 Premiums 483,106,776 Commissions 0 Privileges 0 Reimbursement of expenses 0 Other remunerations 84,736,293 TOTAL 827,014,339

142 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 143 The remuneration of the President and members the Executive Committee who are staff members of the company for the current year are defined by a contract between each of them, the Company s internal documents, its Charter and the applicable laws. CORPORATE SECRETARY Main results of the assessment of work of the executive bodies of OJSC ALROSA The results of work of the executive bodies of OJSC ALROSA were not assessed in 2014. Resolutions on preliminary termination of powers, reasons for such resolutions Resolutions on preliminary termination of powers of members of the Executive Committee of OJSC ALROSA were not adopted in 2014. CORPORATE SECRETARY ANDREY LEKAREV Head of the Corporate Support Department, Corporate Secretary Born in 1981. In 2010 he was appointed as the Secretary of the Head of the Corporate Support Department, Corporate Secretary of OJSC ALROSA. He was the Lead Senior Counsel of the Service for Legal Support of Corporate relations of VTB Bank from 2007 to 2010. In 2003 he graduated from the Moscow State Legal Academy, specializing in Law, in 2011, from the International Business School under the Government of the Russian Federation, MBA Program International Banking Management. PhD in Law. Member of the All-Russian Public Organization National Association of Corporate Secretaries. For achievements in the area of corporate management, he was awarded with a premium Director of the Year (winner in the category Corporate Management Director - Corporate Secretary. 2013). He owns 0,00037 % of ordinary shares of OJSC ALROSA. The Corporate Secretary shall ensure the Company s compliance with company law, competition law and legislation on the securities market, procedures and practices of implementation of rights and legitimate interests of shareholders. He/she is responsible for organizing the disclosure, monitors compliance with legislation on combating illegal use of insider information and market manipulation. Rights and obligations of the Corporate Secretary of the Company are set forth in the Charter of the Company and detailed in the Regulations on the Corporate Secretary of OJSC ALROSA approved by the resolution of the Supervisory Board of OJSC ALROSA dated December 11, 2014, Minutes No. А01/223-ПР-НС. to ensure compliance by the executive bodies and employees of the Company of the requirements of legislation, the Charter and internal documents of the Company that guarantee rights and legal interests of shareholders; to ensure compliance with property interests of shareholders in execution of their rights, to maintain the balance of interests between the participants of corporate legal relations; to support the activities of the General Meeting of Shareholders, Committees under the Executive Committee and Auditing Committee; of newly elected members of the Supervisory Board; to develop the corporate governance system of the Company in line with the interests of all shareholders and the Company; to ensure the growth of investment attractiveness of the Company, to promote its sustainable development. The Corporate Secretary is the Company s official that is functionally subordinated and accountable to the Supervisory Board, and administratively subordinated to the President of the Company. Regulations on the Corporate Secretary are available at www.alrosa.ru in the section to the Investors and Shareholders / Information Disclosure / Charter and other Internal Documents / 2015 http://www.alrosa. ru/wp-content/uploads/2015/02/20150225145543974.pdf In accordance with the Regulations, the Corporate Secretary s objectives are: to support the members of the when they fulfil their functions, including initiation

144 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 145 INTERNAL CONTROL SYSTEM Member of the Auditing Committee: Denis Kim Principal adviser, companies and enterprises management section, Department of Property Relations, Ministry of Economic Development of the Russian Federation Marina Mikhina Adviser to the Head of the Federal Agency for State Property Management ANNUAL MEETING OF SHAREHOLDERS SUPERVISORY BOARD PRESIDENT OF THE COMPANY The annual General Meeting of Shareholders elects the members of the Auditing Committee annually. In 2014, the members of the Auditing Committee of the Company were not remunerated for the performance of their duties. AUDITING COMMITTEE AUDIT COMMITTEE Head of the Internal Audit DEPARTMENT Internal Audit DEPARTMENT Activities carried out by the Auditing Committee of OJSC ALROSA in 2014 Member of the Auditing Committee: Andrey GLINOV In terms of internal control and risk management, the principal burden is on the Internal Audit Department, which submits the annual plan for its work for approval by the Audit Committee of the and then by the President of SA. The Department works with the Audit Committee of the Supervisory Board on issues within the scope of duties of the Department and is accountable to the President of the Company. In addition, an important part of the internal control system is the Auditing Committee, elected by the annual General Meeting of Shareholders to oversee the finance and economic activities of the company and compliance with legal acts of the Russian Federation. The Auditing Committee of 5 members is elected for the period until the next annual General Meeting of Shareholders. Deputy Director of the Administrative Department of the Ministry of Finance of the Russian Federation, Chairman of the Auditing Committee Lyubov Berezkina First Deputy Finance Minister of the Republic of Sakha (Yakutia) Anna VASILYEVA Head of the Department of the Rough and Polished Diamond Complex Property, Financial and Insurance Organizations, Ministry of Property and Land Relations of the Republic of Sakha (Yakutia) In 2014 the Auditing Committee of OJSC ALROSA carried out two audits of the Company s financial and business activities. ANNUAL AUDIT of financial and business ACTIVITIES of OJSC ALROSA for 2013 Audit was carried out during the period from March 24, 2014 to April 7, 2014. The audit plan included the following issues: 1. Analysis of accounting (financial) statements. 2. Analysis of the implementation of the basic production indicators and planned economic indicators, including the analysis of actually achieved financial results. 3. Analysis of net profit spending. 4. Analysis of accuracy of calculation and payment of dividends. 5. On the course of implementation of the Program for the disposal of noncore assets approved by the resolution of the Supervisory Board on June 25, 2013. 6. Analysis of the performance of purchasing by OJSC ALROSA in 2013. 7. Analysis of the results of innovative implementations in 2013. 8. Analysis of the results of OJSC AL- ROSA s sales policy on domestic and foreign markets in 2013. 9. Analysis of the construction of new underground mines in 2013. 10. Analysis of the corrective actions following the previous internal audit. 11. Opinion, including recommendations to address identified deficiencies, conclusion. 12. Assessment of the results (status) of execution of the instructions of the President of the Russian Federation and the Government of the Russian Federation. Opinion of the Auditing Committee based on the results of the revision of OJSC ALROSA for 2013 was submitted to the annual General Meeting of Shareholders of the Company that took place on June 28, 2014, minutes No. 32. ExTRAORDINARY audit of financial and business ACTIVITIES of OJSC ALROSA An extraordinary audit was carried out by the Auditing Committee of the company in accordance with the instruction of the Federal Agency for State Property Management dated September 17, 2014, No. ОД- 05/39780дсп. Audit was carried out during the period from September 29, 2014 to October 30, 2014. Plan of the extraordinary audit included the following issues: 1. Analysis of obligations of OJSC AL- ROSA in 2009-2014 in terms of quantity and quality, including analysis and dynamics of the debt on credits and loans.

146 ALROSA. ANNUAL REPORT 2014 CORPORATE GOVERNANCE CORPORATE GOVERNANCE ALROSA. ANNUAL REPORT 2014 147 2. Financial and economic justification of the following transactions: purchase of OJSC Nizhne-Lenskoe; purchase of oil and gas assets from VTB Group in 2013; participation in additional emission of shares of OJSC Severalmaz in 2014; elaboration and financial justification of administrative expenses based on the results of 2013, including expenses for the staff of the Company; mechanisms and patterns of sale of rough diamonds, including through the Yakutsk Diamond Trading Enterprise (YAPTA). Opinion of the Auditing Committee based on the results of the audit of the economic and financial activities of OJSC ALROSA, carried out in accordance with the instruction of Rosimushchestvo after preliminary consideration on November 24, 2014 by the Audit Committee under the Supervisory Board, was considered by the Supervisory Board of the Company on December 11, 2014, Minutes No. А01/223-ПР-НС. DISCLOSURE CHANNELS Main channel for disclosure of information is its corporate site http:// www.alrosa.ru/ where important information on the Company and results of its activities for the reference period is available. At the same time the information is disclosed in the English version of the website http://eng.alrosa. ru/. In addition to publication at the corporate website, the Company uses the website of Interfax for mandatory disclosure of information as well as printed media: Rossiyskaya Gazeta, Mirninsky Rabochiy, Lensky Vestnik, Yakutia, Sakha Sire. SYSTEM FOR DISCLOSURE OF ALROSA S INFORMATION Status of the Company REGULATORY compliance DISCLOSURE channel DISCLOSED i nformation/audience INFORMATION POLICY Open joint stock company Federal Law On Joint- Stock Companies No. 208-ФЗ dated December 26, 1995 Corporate website: http://eng. alrosa.ru/ Charter and internal documents of the Company Information on important facts, affiliates Information about securities of the Company, payment of dividends Quarterly, annual and social reports The Company s information policy is based on the following principles for the disclosure of information: regularity and efficiency; availability of information; completeness and accuracy of the disclosed information; maintaining a reasonable balance between the openness of the Company and protection of its commercial interests. ALROSA understands that openness is one of the key conditions for the increase of the efficiency and sus- tainability of the Company s activities, strengthening of relations with the stakeholders. Apart from compliance with the requirements to obligatory disclosure of information, the Company maintains a permanent dialog with its stakeholders, assessing their additional informational need and striving to meet them in a timely manner. A substantial part of information disclosed by the Company is published in accordance with the requirements of the laws of the Russian Federation. Such an obligation shall be imposed on the Company as an issuer of equity securities and open joint-stock company. In 2014 the Company developed the Regulations on disclosure policy, taking into account the best Russian and international practices. The Regulations will be considered and approved by the Supervisory Board of the Company by the end of 2015. Issuer of equity securities Federal Law On Securities Market No. 39-ФЗ dated April 22, 1995 Regulation of the Federal Financial Markets Service of Russia On disclosure of information by issuers of equity securities Federal Law On counteracting misuse of insider information and market manipulation No. 224-ФЗ dated July 27, 2010 Newsline and webpage of the Company at the website of the authorized Interfax agency Printed media Rossiyskaya Gazeta, Mirninsky Rabochiy, Lensky Vestnik, Yakutia, Sakha Sire Corporate website, sub-section http://eng.alrosa.ru/investors/ Bloomberg IR activities (conference calls, meetings of the management with representatives of investment community, participation in investment conferences) Annual and interim financial statements Materials to the General Meetings of Shareholders and resolutions adopted by the meetings and resolutions adopted by the meetings of the Supervisory Board News releases Mandatory disclosure of information Disclosure of information to analysts, shareholders and representatives of the investment community in Russian and English to the extent of the results of the Company s activities, financial statements, implementation of major investment projects, implementation of strategic priorities Information in English for representatives of the investment community Disclosure of information to analysts of investment banks, representatives of investment funds, shareholders in various aspects of the Company s activities Requirements of the Moscow Stock Exchange to the issuers of shares traded in the A quotation list of the Stock Exchange

148 ALROSA. ANNUAL REPORT 2014 FINANCIAL RESULTS FINANCIAL RESULTS ALROSA. ANNUAL REPORT 2014 149 4 FINANCIAL RESULTS Sustainable mining and growing sales volumes contributed to the increased operating and financial indicators of ALROSA. In 2014, the Company had record revenues and EBITDA, in terms of profitability it was ranked among the leaders of Russia s mining industry.

150 ALROSA. ANNUAL REPORT 2014 FINANCIAL RESULTS FINANCIAL RESULTS ALROSA. ANNUAL REPORT 2014 151 AUDITOR S REPORT

152 ALROSA. ANNUAL REPORT 2014 FINANCIAL RESULTS FINANCIAL RESULTS ALROSA. ANNUAL REPORT 2014 153

154 ALROSA. ANNUAL REPORT 2014 FINANCIAL RESULTS FINANCIAL RESULTS ALROSA. ANNUAL REPORT 2014 155

156 ALROSA. ANNUAL REPORT 2014 FINANCIAL RESULTS FINANCIAL RESULTS ALROSA. ANNUAL REPORT 2014 157 EBITDA +4 P.P. +36% PROFITABILITY EBITDA MILLION RUBLES 93,857 45,3% REVENUE 207,159 +23% MILLION RUBLES FREE CASH FLOW MARKET CAPITALIZATION 44,824 33 291 INVESTMENTS IN FIXED ASSETS IN ACCORDANCE WITH IFRS CREDIT PORTFOLIO MILLION RUBLES +79.9% +157% 463.9 BILLION RUBLES MILLION RUBLES NET PROFIT -600 $ MILLION -153% -16,832 MILLION RUBLES

158 ALROSA. ANNUAL REPORT 2014 INFORMATION FOR INVESTORS AND SHAREHOLDERS INFORMATION FOR INVESTORS AND SHAREHOLDERS ALROSA. ANNUAL REPORT 2014 159 5 INFORMATION FOR INVESTORS AND SHAREHOLDERS As a public company, ALROSA is seeking to preserve the interests of investors and shareholders through effective cooperation in various areas. From 2011, the Company s shares are traded on the Moscow Stock Exchange. In 2014, they showed a positive dynamics.

160 ALROSA. ANNUAL REPORT 2014 INFORMATION FOR INVESTORS AND SHAREHOLDERS INFORMATION FOR INVESTORS AND SHAREHOLDERS ALROSA. ANNUAL REPORT 2014 161 INFORMATION ABOUT SECURITIES OF THE COMPANY INDICATORS FOR INVESTORS AND SHAREHOLDERS Shares In 2014 the Company s shares were included in MSCI Russia. In 2014 the Company s shares grew 1.9 times up to RUB 63 per share. The number of free float shares is 23.07 %. The Company s shares are included in the level 1 listing on the Moscow Stock Exchange. The authorized capital of OJSC AL- ROSA is 3,682,482,815 (three billion six hundred and eighty-two million four hundred and eighty-two thousand eight hundred and fifteen) roubles. The authorized capital is divided into 7,364,965,630 (seven billion three hundred and sixty-four million nine hundred and sixty-five thousand six hundred and thirty) common registered shares with a par value of 50 (fifty) kopecks each. Additional information is available at http://eng.alrosa.ru/investors/shareholder-information/equity/ GROWTH IN STOCK PRICING 63 FREE RUB PER SHARE +1.9 TIMES FLOAT 23.07% IN MAY 2014, THE SHARES OF ALROSA WERE ADDED TO MSCI RUSSIA INDEX Share capital STRUCTURE INTERACTION WITH THE INVESTMENT COMMUNITY AMOUNT OF DIVIDENDS FOR 2013 During the public offering of shares of OJSC ALROSA at the Moscow Stock Exchange in October 2013, 14 % of shares owned equally by the Russian Federation and the Republic of Sakha (Yakutia) were placed. In addition, the market was offered 2 % of quasi treasury shares held by the Cypriot company Wargan Holdings. The share of the Russian Federation in the Company s equity decreased from 50.9256 % to 43.9256 %, and the one of Yakutia from 32.0002 % to 25.0002 %. The volume of the Company s shares in free circulation after the placement has increased from 7 % to 23 %. >500 REPRESENTATIVES 63 MILLION SHARES ACQUIRED BY NEW SHAREHOLDERS 10.8 BILLION RUBLES +35%

162 ALROSA. ANNUAL REPORT 2014 INFORMATION FOR INVESTORS AND SHAREHOLDERS INFORMATION FOR INVESTORS AND SHAREHOLDERS ALROSA. ANNUAL REPORT 2014 163 MAJOR SHAREHOLDERS WHOSE SHARE EXCEEDS 1 % IN THE AUTHORIZED CAPITAL As of December 31, 2014* SHAREHOLDERS SHARE, % Rosimushchestvo 43.93 The Company s shares are traded at the Moscow Stock Exchange from 2011, ticker - ALRS, and now the shares are included in the level 1 listing, the Company complies with all stock exchange requirements, confirms compliance of the securities with the requirements of the laws of the Russian Federation, including regulations in the area of financial markets, meets the stock exchange criteria in terms of capitalization, number of free-float shares, complies with the corporate governance standards. The Company quarterly submits a report on compliance with the corporate governance standards for its shares to remain in the level one listing on the Moscow Stock Exchange. Ministry of Property and Land Relations of the Republic of Sakha (Yakutia) 25.00 Administrations of districts (uluses) of the Republic of Sakha (Yakutia) where the Company carries out its activities 8.00 Other legal entities and individuals**, including: 23.07 OppenheimerFunds 3.74 Lazard 3.34 Genesis Investment Management 1.67 Capital Group 1.18 Other 13.14 TOTAL 100.00 * Source: Bloomberg, Thomson Reuters ** free-float shares KEY PARAMETERS OF TRADE IN THE COMPANY S SHARES FOR 2013-2014 Indicator UoM 2013 2014 Average daily trading volume* USD mn 2.0 8.9 Minimum price RUB 29.1 32.0 Maximum price RUB 38.8 63.0 Price at the end of the year RUB 35.00 63.0 Free-float volume** pcs. 518,047,815 1,699,380,556 Free-float share** % 7.0% 23.1% In May 2014 the Company s shares were included in MSCI Russia, the weight of shares amounted to 1 % of the list. A range of foreign investment funds contribute shares included in the index in proportion to the weight therein and develops structural instruments based on this index. Inclusion of the Company s shares in MSCI increases liquidity of the Company s securities. Based on the results of the reporting period, the Company s shares were present in the following lists: Capitalization at the end of the year USD mln 7,900 8,186 Source: Bloomberg, Thomson Reuters, Moscow Stock Exchange, Company s calculations * in 2013, the volume of over-the-counter was not taken into account ** in 2013 the volume of free-float is stipulated prior to SPO Name of the LIST Weight in the index, % CURRENCY of the index MICEX Index 1.53 RUB MSCI Russia 1.00 USD Metals and Mining Index (MICEX) 16.94 RUB Broad Market Index (MICEX) 1.5 RUB RTS 1.53 USD Based on the results of trading for 2014, the dynamics of the Company s shares was positive, the price for 1 ordinary share increased 1.9 times from RUB 33.68 to RUB 63.00, the grows rate was 87%. The dynamics of the Company s shares was better than the sector index Metals and Mining MICEX (MCXMM) and MICEX Index (MOEX. MM) that demonstrated +57.25% and -6.14%, respectively, in 2014. Main events that supported the growth in the Company s shares: introduction of new production facilities, inclusion of the Company s shares in MSCI Russia; stable high performance indicators for the interim reference periods in accordance with the IFRS; consistent implementation of strategic initiatives, disposal of a range of non-core assets; implementation of the dividend policy, paying the dividends at the level of 35 % of the net profit in accordance with the IFRS; implementation of a well-balanced sale system, long-term agreement are made with 47 major international customers within the reporting period. Additional information on the Company s shares is available at www.alrosa.ru http://eng.alrosa.ru/investors/share-performance/

164 ALROSA. ANNUAL REPORT 2014 INFORMATION FOR INVESTORS AND SHAREHOLDERS INFORMATION FOR INVESTORS AND SHAREHOLDERS ALROSA. ANNUAL REPORT 2014 165 DYNAMICS OF THE COMPANY S SHARES COMPARED WITH THE DYNAMICS OF INDEXES MSCI RUSSIA AND MICEX 4 000 000 000 4 000 000 000 100% 100% 3 500 000 000 3 500 000 000 Включение акций Listing of the Компании в индекс Company's shares MSCI Russia in MSCI Russia 80% 80% 3 000 000 000 3 000 000 000 60% 60% 40% 40% 2 500 000 000 2 500 000 000 20% 20% 2 000 000 000 2 000 000 000 0% 0% 1 500 000 000 1 500 000 000-20$ -20$ 1 000 000 000 1 000 000 000-40% -40% 500 000 000 500 000 000-60% -60% 0 0-80% -80% 1.6.2014 1.20.2014 2.3.2014 1.6.2014 2.17.2014 1.20.2014 3.3.2014 2.3.2014 3.17.2014 2.17.2014 3.31.2014 3.3.2014 4.14.2014 3.17.2014 4.28.2014 3.31.2014 5.12.2014 4.14.2014 5.26.2014 4.28.2014 6.9.2014 5.12.2014 5.26.2014 6.9.2014 6.23.2014 7.7.2014 7.23.2014 6.23.2014 8.4.2014 7.7.2014 8.18.2014 7.23.2014 9.1.2014 8.4.2014 9.29.2014 8.18.2014 10.13.2014 9.1.2014 10.27.2014 9.29.2014 11.10.2014 10.13.2014 11.24.2014 10.27.2014 12.8.2014 11.10.2014 12.22.2014 11.24.2014 12.8.2014 12.22.2014 ОБЪЕМ ТОРГОВ, РУБ. TRADING VOLUME, ЦЕНА ЗАКРЫТИЯ, RUB % CLOSING ИНДЕКС PRICE, % MSCI RUSSIA INDEX MSCI ИНДЕКС RUSSIA MICEX INDEX MICEX

166 ALROSA. ANNUAL REPORT 2014 INFORMATION FOR INVESTORS AND SHAREHOLDERS INFORMATION FOR INVESTORS AND SHAREHOLDERS ALROSA. ANNUAL REPORT 2014 167 Bonds In 4Q 2014 the Company repaid a bond secured LOAn in the amount of USD 500 mn granted by a subsidiary, ALROSA Finance S.A., and guaranteed by OJSC ALROSA, and did not place additional bond issues in the reference period. INTERACTION WITH THE INVESTMENT COMMUNITY Amount as of December 31, 2014, mn Fixed RATE Date of placement MATURITY DATE LISTED AT Issuer GUARANTOR EUROBONDS USD 1,000 7.75 % CORPORATE AND EXCHANGE BONDS Series No. 20 November 2010 November 2020 Irish Stock Exchange Alrosa Finance S.A. RUB 3,000 8.95 % June 2010 June 2015 MICEX OJSC ALROSA Series No. 21 RUB 1.6 0.10 % June 2010 June 2015 MICEX OJSC ALROSA Series No. 22 RUB 42.5 0.10 % June 2010 June 2015 MICEX OJSC ALROSA Series No. 23 RUB 7,000 8.95 % June 2010 June 2015 MICEX OJSC ALROSA BO-01 series RUB 5,000 8.85 % BO-02 series RUB 5,000 8.85 % November 2012 November 2012 OJSC ALROSA October 2015 MICEX OJSC ALROSA October 2015 MICEX OJSC ALROSA Additional information on the Company s bonds is available at http://eng.alrosa.ru/investors/share-performance/ In 2014 interaction with the investment community was as follows: 1. Conference phone calls with participation of the Company s senior managers based on the results of the report on the financial results of ALROSA in accordance with the IFRS for the reference period. Total of 4 conference phone calls were made in 2014 with more than 250 participating representatives of the investment community. 2. Preparation and publication of reports on financial results of ALROSA Group in accordance with the IFRS for the reference period. 3. Preparation and publication of reports on the production results of AL- ROSA Group for the reference period. 4. Organization and carrying out of personal meetings, particularly, with participation of the Company s senior managers, representatives of shareholders, potential investors in shares and debt securities. Total in 2014 meetings with 169 representatives of the investment community were carried out. 5. Organization and carrying out of personal and group visiting meetings, particularly, with participation of the Company s senior managers and representatives of shareholders, potential investors in shares and debt securities in the course of conferences organized by Russian and foreign investment banks. In 2014 the Company s representatives participated in 4 investment conferences with 85 meetings with representatives of the investment carried out. 6. Organization and conduct of visit of a group of shareholders and investors representatives to the Company s production facilities. In 2014 two visits were organized: to the Republic of Sakha (Yakutia), 12 representatives of the investment community familiarized themselves with deposits and production facilities of Mirny MPD, Nyurba MPD, Udachny MPD and Aikhal MPD; and to the Arkhangelsk Region, 7 representatives of the investment community familiarized themselves with deposits and production facilities of OJSC Severalmaz. In 2014 interaction with more than 500 representatives of the investment community was arranged. In 2014, 63 mn of ALROSA s shares were purchased by new shareholders who participated in the meetings with the Company s representatives. In 2014, 10 ALROSA s shareholders purchased additional 144.8 mn Company s shares. As at the end of 2014, the analytical review of shares was made by 24 investment banks and companies, 19 of them recommended buying ALRO- SA s shares.

168 ALROSA. ANNUAL REPORT 2014 INFORMATION FOR INVESTORS AND SHAREHOLDERS INFORMATION FOR INVESTORS AND SHAREHOLDERS ALROSA. ANNUAL REPORT 2014 169 INTERACTION WITH REPRESENTATIVES OF THE INVESTMENT COMMUNITY IN 2014 participation in conferences of investment banks; constant updating of IR information at the corporate website in the section Shareholders and Investors; organization of internal IR activities (visiting deposits and the Company s production facilities). As at the end of 2014, the analytical review of shares was made by 24 investment banks and companies, 19 of them recommended buying ALRO- SA s shares. CONFERENCE PHONE CALLS conference with participation of top management representatives of the investment community took part in the activities. PREPARATION AND PUBLICATION OF REPORTING IN ACCORDANCE OF THE IFRS report for 2014 ANALYTICAL COVERAGE PREPARATION AND PUBLICATION OF REPORTS ON PRODUCTION RESULTS report for 2014 ARRANGEMENT AND CARRYING OUT OF INDIVIDAUL MEETINGS meetings, including those with participation of the Company s top management014 MEETINGS WITH INVESTORS WITHIN THE FRAMEWORK OF INVESTMENT CONFERENCES conference of investment banks meetings OFF-SITE EVENTS AT THE COMPANY S FACILITIES 4 4 4 169 4 2 250 The number of representatives of the investment community to participate in the IR events 85 visit 14 Republic of Sakha (Yakutia): visiting of deposits and industrial facilities of Mirny MPD, Nyurba MPD, Udachny MPD, Aikhal MPD 7 Arkhangelsk Region: Visiting Severalmaz DESCRIPTION OF KEY AREAS OF WORKS WITHIN THE IMPLEMENTATION OF IR STRATEGY FOR 2015 The Department for interaction with the Company s investors in 2015 continues implementing complex measures to increase investment attractiveness and information transparency of the Company. Plan for interaction with investors for 2015 provides for the following activities: 4 conference phone calls with participation of the Company s senior managers based on the results of the report on the financial results of ALROSA in accordance with the IFRS for the reference period; preparation and publication of 4 reports on financial results of ALROSA Group in accordance with the IFRS for the reference period; preparation and publication of 4 reports on production results of ALROSA Group for the reference period; organization and carrying out of the Investor s Day for groups of representatives of shareholders, potential investors in shares and debt securities based on the report on the financial results of ALROSA Group in accordance with the IFRS for 2014; organization and carrying out of personal meetings, particularly, with participation of the Company s senior managers, representatives of shareholders, potential investors in shares and debt securities (upon request of representatives of the investment community); organization and carrying out of personal and group visiting meetings, particularly, with participation of the Company s senior managers and representatives of shareholders, potential investors in shares and debt securities in the frame- work of conferences organized by Russian and foreign investment banks; organization and conduct of visit of a group of shareholders and investors representatives to the Company s production facilities. The investor s calendar is available in the section Shareholders and Investors at http://eng.alrosa.ru/investors/ The Company regularly interacts with analysts of investment banks and companies. Extension of the analytical coverage positively affects the investment attractiveness of ALROSA s securities. In order to ensure effective communication with analysts of investment banks and companies, IR-division uses a wide range of communication tools: conference phone calls, personal meetings with analysts with participation of the Company s senior managers;

170 ALROSA. ANNUAL REPORT 2014 INFORMATION FOR INVESTORS AND SHAREHOLDERS INFORMATION FOR INVESTORS AND SHAREHOLDERS ALROSA. ANNUAL REPORT 2014 171 COMPANY DIVIDEND POLICY THE COMPANY S DIVIDEND HISTORY FOR THE PERIOD FROM 2011 TO 2013 2011* 2012 2013 The amount of announced dividends per 1 ordinary share, RUB 1.01 1.11 1.47 Total number of announced dividends, mn RUB 7,439 8,175 10,826 Payout ratio (share in net profit)** 28 % 24 % 35 % * The parameter is adjusted taking into account the share split that took place in 2011. The dividend policy of OJSC ALROSA is based on the following principles: Balancing the Company s and shareholders interests in determining the amount of dividends as well as a balance between the shareholders short-term (gaining profit) and long-term (Company development and capitalization growth) interests. Maintaining the Company s required financial status and ensuring its development prospects. Enhancing the Company s investment appeal and its capitalization. Compliance with the shareholder rights provided for in the current legislation of the Russian Federation, the Company s Charter and its internal documents. Transparency of dividend calculation and dividend payment mechanisms, which the Supervisory Board and Annual General Meeting are guided by. In 2013, in order to increase the investment attractiveness of OJSC ALROSA, the Strategic Planning Committee of the Supervisory Board approved the amendment to the Regulations on Dividend Policy: the minimum dividend rate is increased to 35% of net profit determined on the basis of consolidated financial statements under the IFRS. Regulations on the dividend policy of the Company are available at http://www. alrosa.ru/wp-content/uploads/2014/02/ ALROSA-Dividend-Policy-RUS.pdf On June 28, 2014 in Mirny, the Annual General Shareholders Meeting of OJSC ALROSA was held. In the course of voting at the meeting, the shareholders adopted a resolution on payment of dividends based on the results of 2013. Compared with the previous year, the amount increased by 32 % up to RUB 1.47 per ordinary share. Detailed information on the annual General Meeting of Shareholders of the Company in 2014 and adopted resolutions on the Company s dividend policy is available at http://eng.alrosa.ru/alrosa-boostsdividend-for-2013-by-32/ ** the payout ratio is calculated by dividing the total amount of approved dividends for the relevant year into the profit of ALROSA s shareholders (in accordance with the IFRS). % 60 40 20 0 DIVIDEND AND PAYOUT RATIO FOR 2011-2013 28% 24% 35% 2011 2012 2013 mn RUB 12 000 10 000 8000 6000 4000 2000 0 DIVIDENT, RUB MN PAYOUT RATIO, % The Company s full dividend history is available at http://eng.alrosa.ru/investors/

172 ALROSA. ANNUAL REPORT 2014 PHOTO GALLERY: EVENTS OF 2014 PHOTO GALLERY: EVENTS OF 2014 ALROSA. ANNUAL REPORT 2014 173 6 PHOTO GALLERY: EVENTS OF 2014

174 ALROSA. ANNUAL REPORT 2014 PHOTO GALLERY: EVENTS OF 2014 PHOTO GALLERY: EVENTS OF 2014 ALROSA. ANNUAL REPORT 2014 175 On June 27, 2014, the first lot of ore was mined in the World s largest Udachny underground mine ALROSA diamonds In 2014, 28 science & technology projects were implemented

176 ALROSA. ANNUAL REPORT 2014 PHOTO GALLERY: EVENTS OF 2014 PHOTO GALLERY: EVENTS OF 2014 ALROSA. ANNUAL REPORT 2014 177 On March 14, 2014, the second phase of OJSC Severalmaz Factory was put into operation

178 ALROSA. ANNUAL REPORT 2014 PHOTO GALLERY: EVENTS OF 2014 PHOTO GALLERY: EVENTS OF 2014 ALROSA. ANNUAL REPORT 2014 179 Reaching its designed capacity, Udachny will produce 4 million tons of ore per year On May 19, 2014, ALROSA approved ALROSA ALLIANCE Guidelines on Responsible Business Practices On May 30, 2014, the meeting of Diamond Dealers Club New York (DDC) was held On October 6, 2014, the development of Karpinsky-1 kimberlite pipe was launched in Arkhangelsk region

180 ALROSA. ANNUAL REPORT 2014 PHOTO GALLERY: EVENTS OF 2014 PHOTO GALLERY: EVENTS OF 2014 ALROSA. ANNUAL REPORT 2014 181 On December 11, 2014, the Long-term Development Program up to 2023 was approved

182 ALROSA. ANNUAL REPORT 2014 PHOTO GALLERY: EVENTS OF 2014 PHOTO GALLERY: EVENTS OF 2014 ALROSA. ANNUAL REPORT 2014 183 On December 9, 2014, ALROSA held an Annual meeting with the Company s long-term customers On December 12, 2014, ALROSA signed a memorandum of understanding with Gem Jewellery Export Promotion Council (GJEPC) in New Delhi Nearly 30 % of ALROSA staff have higher professional education ALROSA produced 36.2 million carats of rough diamonds 9 211 young workers graduated from the Regional technical college in the town of Mirny in 2014

184 ALROSA. ANNUAL REPORT 2014 PHOTO GALLERY: EVENTS OF 2014 PHOTO GALLERY: EVENTS OF 2014 ALROSA. ANNUAL REPORT 2014 185 Revenue from the sale of rough diamonds and polished diamonds for the first time in the Company s history exceeded $ 5 billion

186 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 187 7 APPENDICES

188 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 189 5-YEAR DYNAMICS OF OPERATING INDICATORS CONTACT INFORMATION Parameters UoM 2010 2011 2012 2013 2014 Revenue (mn RUB) 113,394 137,732 150,880 168,505 207,159 Operating profit (mn RUB) 27,138 47,263 49,039 56,871 74,376 EBITDA (mn RUB) 34,814 65,217 61,950 69,100 93,857 Net profit (mn RUB) 11,788 26,658 33,634 31,837 (16,832) EBITDA/ Revenue (%) 31% 47% 41% 41% 45% Short-term debt (mn RUB) 12,944 20,024 32,344 56,295 20,802 Long-term debt (mn RUB) 89,021 75,529 90,357 82,296 176,358 Cash (mn RUB) 4,136 12,014 6,242 9,270 21,693 Total debt (mn RUB) 101,965 95,553 122,701 138,591 197,160 Net debt (mn RUB) 97,829 83,539 116,459 129,321 175,467 Capital expenditure (mn RUB) (11,968) (21,420) (30,050) (38,165) (33,291) Free cash flow (mn RUB) 25,832 27,762 11,957 17,474 44,824 Credit RATIOS Net debt/ EBITDA (LTM) Total Debt/ EBITDA (LTM) EBITDA/ financial cost (interest) coverage x 2.8x 1.3x 1.9x 1.9x 1.9x x 2.9x 1.5x 2.0x 2.0x 2.1х (%) 3.5x 9.1x 7.5x 7.0x 8.9х ROE** (%) 13% 26% 27% 21% -11% ROA (%) 11% 24% 18% 17% 20% ROIC*** (or after-tax ROCE) Financial leverage ratio**** (%) 11% 23% 18% 17% 22% (%) 54% 49% 48% 48% 63% ** ROE (Return on equity) is a ratio of net income for the given period to the weighted average equity of OJSC ALROSA shareholders. *** ROIC (Return on invested capital) is a ratio of operating profit to the weighted average invested capital (including equity and debt). **** Leverage ratio is a ratio of net debt to the amount of equity and net debt. Company full name Open Joint-Stock Company ALROSA Number and DATE of issue of the CERTIFICATE of STATE REGISTRATION of a legal ENTITY Certificate of Entering in the Unified State Register of Legal Entities on the legal entity registered before July 1, 2002, under the primary state registration number (OGRN) 1021400967092, issued on 17.07.2002, Series 14, No.000724010. Constituent ENTITY of the Russian FEDERATION where the Company is REGISTERED Republic of Sakha (Yakutia) Location 6, Lenina St., Mirny, Republic of Sakha (Yakutia), 678170, Russian Federation Contact telephone, fax (495) 411-75-25, (495) 620 92 50, (495) 662 36 26 (Moscow); (41136) 3 04 51 (Mirny) E-mail address info@alrosa.ru Core ACTIVITY As per information on the types of economic activity according to the All-Russian Classifier of Types of Economic Activity (OKVED OK 029-2001, NACE Rev. 1), the main activity is diamond mining, code 14.50.22. Information on the INCLUSION in the LIST of STRATEGIC enterprises and STRATEGIC joint- STOCK COMPANIES OJSC ALROSA is included in the list of strategic (systemically-important) enterprises based on the Decree of the President of the Russian Federation On Approval of the List of Strategic Enterprises and Strategic Joint-Stock Companies No. 1009 as of 04.08.2004. Full name and address of the REGISTRAR Yakutsk Fund Centre Specialized Republican Registrar (Open Joint Stock Company), 2/1 Glukhoy pereulok, Yakutsk, Republic of Sakha (Yakutia), 677980, Russian Federation Full name and address of the AUDITOR for MANDATORY annual audit of financial (ACCOUNTING) STATEMENTS PREPARED in ACCORDANCE with the Russian LEGISLATION Finansoviye i Bukhgalterskie Konsultanty (Financial and Accounting Advisors) Limited Liability Company, 44/1 bldg. 2AB, Myasnitskaya St., Moscow, 101990, Russian Federation Full name and address of the AUDITOR for MANDATORY annual audit of CONSOLIDATED financial STATEMENTS PREPARED in ACCORDANCE with the IFRS Closed Joint Stock Company PriceWaterhouseCoopers Audit, 10, Butyrsky Val, Moscow, 125047

190 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 191 Authorized CAPITAL 3,682,482,815 (three billion six hundred and eighty-two million four hundred and eighty-two thousand eight hundred and fifteen) roubles. Total number of shares 7,364,965,630 (seven billion three hundred and sixty-four million nine hundred and sixty-five thousand six hundred and thirty). Number of ordinary shares 7,364,965,630 (seven billion three hundred and sixty-four million nine hundred and sixty-five thousand six hundred and thirty). Par value of ORDINARY shares 3,682,482,815 (three billion six hundred and eighty-two million four hundred and eighty-two thousand eight hundred and fifteen) roubles. State REGISTRATION number for issue of ORDINARY (preferred) shares and DATE of STATE REGISTRATION 1-03-40046-N as of 25/08/2011. Disclaimer The annual report of ALROSA for 2014 (hereinafter referred to as the Annual Report) was prepared on the basis of the information available to the Group at the time of its preparation. This Annual Report contains forecasting statements in regard to business operations, economic indicators, financial status, as well as future events and/or actions, expected results of activities and growth prospects. Forecasting statements contained in this Annual Report are identifiable by the presence of terms such as expect, believe, forecast, plan, evaluate, intend, will [do], could [do], can and other similar expressions, either in the affirmative or in the negative. These statements are forecasts, and may differ from actual events or results substantially. ALRO- SA does not undertake to update such statements with the aim of reflecting events or circumstances arising after the date of preparation of the Annual Report, or to reflect the occurrence of unforeseeable events. Many factors including, among others, the state of the economy, competitive landscape, technological changes, and other factors may cause substantial differences between actual results and results included in the Annual Report s forecasting statements. State REGISTRATION number for additional issue of ORDINARY (preferred) shares N/A Number of preferred shares and PAR VALUE of the preferred shares No preferred shares. Information on additional shares PLACED by the Company and annual CAPITAL FLOW (a change in the COMPOSITION of people who HAVE the right to dispose, DIRECTLY or INDIRECTLY, of, at LEAST, five per cent of the VOTES ATTACHED to VOTING shares of the COMPANY) N/A APPENDICES Information on the number of shares held by the COMPANY, as well as the number of the Company shares owned by legal entities CONTROLLED by the Company N/A Special right of PARTICIPATION of the Russian FEDERATION in the MANAGEMENT of the Company (Golden Share) N/A Information on OJSC ALROSA s interest in the authorized CAPITALS and VOTING shares of Joint-Stock COMPANIES as of 31.12.2014 In 2014, the Company participated in 173 legal proceedings regarding debt recovery from the Company for the total amount of RUB 45,115,000. Name INTEREST in the authorized CAPITAL (%) Voting shares (%) In 2014, the Company participated in 852 legal proceedings regarding the Company s claims to third parties for debt recovery for the total amount of RUB 604,139,000. OJSC ALROSA-Nyurba 87.4877 87.4877 OJSC Almazy Anabara 99.9999 99.9999 OJSC Severalmaz 99.6564 99.6564 OJSC NPP Bourevestnik (Scientific and Manufacturing Company) 90.6555 71.27 OJSC Vilyuiskaya HPP-3 99.7313 99.7313 OJSC ALROSA-Lena Shipping Company 99.5617 99.5617 OJSC ALROSA-Gas 99.9995 99.9995 OJSC ALROSA-Yakutia 50.8510 50.8510

192 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 193 Name INTEREST in the authorized CAPITAL (%) Voting shares (%) OJSC Almazny Mir 47.3677 47.3677 OJSC Sakhaneftegaz National Oil&Gas Company 50.4006 50.4006 List of LOCAL REGULATORY documents CJSC ALROSA Air Company Limited 100.0000 100.0000 CJSC Golubaya Volna Resort 100.0000 100.0000 CJSC ALROSA-Torg 100.0000 100.0000 CJSC MMC Timir 48.9999 48.9999 Catoca Mining Company Ltd. 32.8000 32.8000 HIDROCHICAPA S.A.R.L. (Company limited by shares) 55.0000 55.0000 Arcos Ltd. 78.2800 78.2800 Arcos Belgium N.V. 99.6000 99.6000 Arcos East DMCC 100.0000 100.0000 The Charter and the list of internal documents adopted in 2014 are provided below. Amendments made to the Charter of OJSC ALROSA (approved on 28.06.2014 based on Minutes No.32) July 15, 2014 Amendments to the Regulations on the Auditing Committee of OJSC ALROSA (approved on 28.06.2014 based on Minutes No.32) July 4, 2014 http://www.alrosa.ru/wp-content/uploads/2014/07/1-изменения-рк.pdf The Regulations On Procurement of OJSC ALROSA January 10, 2014 http://www.alrosa.ru/wp-content/uploads/2014/01/pol_2011.pdf ARCOS USA Inc. 100.0000 100.0000 Arcos Diamonds Israel Ltd. 2.2885 2.2885 Arcos Hong Kong Limited 100.0000 100.0000 Alrosa Finance B.V. 100.0000 100.0000 ALROSA OVERSEAS SA 100.0000 100.0000 Almaznaya Osen Non-State Pension Fund 99.7000 99.7000 M-Diamond Joint Mongolian-Russian company 49.0000 49.0000 http://www.alrosa.ru/wp-content/up- loads/2014/07/изменения-в-устав- АК-АЛРОСА.pdf The Charter of OJSC ALROSA, approved by the decision of the extraordinary general shareholders meeting on 05.04.2011 (Minutes No.26) July 4, 2014 Amendments to the Regulations on the Supervisory Board of SA (approved on 28.06.2014 based on Minutes No.32) July 4, 2014 http://www.alrosa.ru/wp-content/ uploads/2014/07/1-изменения- Набсовет.pdf Kristall Barnaul LLC 100.0000 Orel-ALROSA LLC 51.0000 OJSC NIKONOVKA 100.0000 OJSC Mirny Town Printing House 57.2693 OJSC ALROSA-Okhrana 100.0000 OJSC ALROSA-Spetsbureniye 51.0000 ALROSA-VGS LLC 100.0000 http://www.alrosa.ru/wp-content/uploads/2013/12/charter_eng.pdf Amendments to the Regulations on Remuneration of Members of the Supervisory Board of OJSC ALROSA (approved on 28.06.2014 based on Minutes No.32) July 4, 2014 Amendments to the Regulations on the General Meeting of Shareholders of OJSC ALROSA (approved on 28.06.2014 based on Minutes No.32) July 4, 2014 http://www.alrosa.ru/wp-content/uploads/2014/07/1-изменения-оса. pdf OJSC Mirny Town Housing Enterprise 100.0000 OJSC Lensk Town Housing Enterprise 100.0000 OJSC Lensk Town Heat and Electric Networks Enterprise 100.0000 http://www.alrosa.ru/wp-content/ uploads/2014/07/1-изменения-в- Вознаграждение-НС.pdf OJSC Suntartseolit 35.3825 Mirny Commercial Bank MAK-Bank (LLC) 84.6622

194 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 195 OJSC ALROSA REGISTRAR AND TRANSFER AGENTS OF THE REGISTRAR Name Closed Joint- Stock Company Depository Clearing Company SERVICED issuers TRANSFER AGENTS OJSC Zoloto Yakutii, OJSC Tuymaada Diamond, OJSC Aldanzoloto, OJSC Production Association Yakuttsement, OJSC Yakutskgeofizika, OJSC Sakhaneftegaz National Oil&Gas Company, OJSC Severalmaz, OJSC AF Yakutstroy, OJSC Yakutskiy Gormolzavod, OJSC ALROSA Authorized person Marinicheva Galina Nikolaevna, Romanchenko Marina Sergeevna Location, CONTACTS 4/7, Bldg. 1, Vozdvizhenka St., Moscow, 125009, 8(495)9560999, 8(495)2326804 Transfer agent STATUS Professional participant Registrar Open Joint-Stock Company Republican Specialized Registrar Yakutsk Fund Centre (hereinafter referred to as the RSR YFC) is the only professional participant of the securities market of the Republic of Sakha (Yakutia) which, as a head organization, carries out the activity on maintenance of the register of registered securities owners. istrars that in March 1996 received the license of the FCSM (The Federal Commission on Securities Market of Russia) for conducting the activity on maintenance of the Register No. 01009, and in March 2004 - the lifetime license for conducting the activity on maintenance of the Register of registered securities owners No. 10-000-1-00309. companies are among the shareholders of the RSR YFC. Nowadays the RSR YFC provides its services to more than 200 issuers of different sectors of the national economic complex of the Republic of Sakha (Yakutia), the Republic of Buryatia, the Republic of Khakassia, Krasnoyarsk Territory and Arkhangelsk Region. Commercial Bank MAK-Bank (LLC) OJSC ALROSA, OJSC Yakutskgeofizika, OJSC ALROSA-Nyurba Zamula Yulia Anatolievna, Yulina Marina Vladimirovna OJSC Severalmaz OJSC Severalmaz Veprev Pavel Anatolievich 23, Bolshaya Yakimanka St., Moscow, 119180, 8(495)7458058, 8(499)2301040 Professional participant 8(8182)657507 Issuer RSR YFC, established in October 1993, was one of the first Russian reg- The Government of the Republic of Sakha (Yakutia), banks and industrial TRANSFER AGENTS Name SERVICED issuers Authorized person Location, CONTACTS Transfer agent STATUS Non-bank credit organization Closed Joint- Stock Company National Settlement Depository OJSC Severalmaz, OJSC Zvezda, OJSC Sakhaneftegaz National Oil&Gas Company, OJSC Sarylakh-Surma, OJSC Tuymaada Diamond, OJSC Yakutskgeofizika, OJSC ALROSA-Nyurba, OJSC ALROSA Closed Joint-Stock Company Boguchansky Aluminium Smelter, OJSC Khakassia Hotel, OJSC Khakassia Innovation Fund, OJSC Motor Transport and Agro-Construction Company, CJSC Krasnoturansky pedigree stock-breeding farm, OJSC Sayanmoloko OJSC Khakasgaz Turbovskaya Marina Viktorovna, Kozyreva Oksana Vitalievna, Bernevega Sergey Adolfovich, Lobanova Olga Vladimirovna, Golovkin Dmitry Nikolaevich 12, Spartakovskaya St., Moscow, 105066, 8(495)9560931 Professional participant

196 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 197 List and method of CALCULATION of ALROSA Group s KPI KPI weight KPI name UoM KPI CALCULATION frequency CALCULATION method President Member of the Executive Committee REMUNERATION PAYMENT CONDITION Achievement of planned net profit margin at the level of, at least, 80% % Annually Financial and ECONOMIC KPIs Market return per share % Annually Dividend flow growth mn RUB Annually (Actual net profit during a particular period / planned net profit during a particular period)* 100% (Share price at the end of the period share price at the beginning of the period)/ Share price at the beginning of the period)* 100%) (MICEX index at the end of the period MICEX index at the beginning of the period) / MICEX index at the beginning of the period)[2]* 100%) Dividends accrued based on the results of the reporting period (arithmetic average of dividends accrued based on the results of three years preceding the accounting period) - - 10 5 15 10 Return on equity (ROE) % Annually (Net profit/ Average annual equity)* 100% 25 15 Adjusted EBITDA margin (adjusted profit margin before deduction of taxes, interests and depreciation) % Annually (Profit before deduction of interest expenses, taxes, depreciation charges, adjusted by irregular constituents/ sales revenue)*100% 25 10 Net profit mn RUB Quarterly Profit during a particular period (after taxes) 30 30 Industry-specific KPIs Revenue from the sales of core products mn USD Quarterly The amount of diamond sales to third-party buyers at the contract value during a particular period with regard to OJSC ALROSA, OJSC ALROSA-Nyurba, OJSC Almazy Anabara, OJSC Nizhne-Lenskoe, OJSC Severalmaz 40 40 Extraction of rough diamonds Thous. carats Quarterly Total extraction of rough diamonds during a particular period with regard to OJSC ALROSA, OJSC ALROSA-Nyurba, OJSC Almazy Anabara, OJSC Nizhne-Lenskoe, OJSC Severalmaz 30 30 Share of the cost of sales in the sales revenue % Annually (Cost of sales/ sales revenue)*100% 25 10 Bonus cancellation indicators Net debt/adjusted EBITDA (ratio of net debt to adjusted profit before deduction of taxes, interests and depreciation charges) coeff. Annually (Total amount of long-term and short-term credits and loans less cash/ (profit before deduction of interest expenses, taxes, depreciation charges, adjusted by irregular constituents) - - Lost time injury frequency rate (LTIFR) LTIFR coeff. Annually (Total number of injuries (including fatal accidents) with regard to OJSC ALROSA, SA-Nyurba, OJSC Almazy Anabara, OJSC Nizhne-Lenskoe and OJSC Severalmaz / total number of man-hours worked with regard to OJSC ALROSA, OJSC ALROSA-Nyurba, OJSC Almazy Anabara, OJSC Nizhne-Lenskoe and OJSC Severalmaz)* 200 000 - - * Total KPI weight in the structure of annual remuneration of the Executive Committee members is 50%, the remaining 50% is execution of the individual targets A share price at the beginning/end of the given period is an average weighted price considering the volume of securities transactions at the MICEX main trading session for November and December preceding the reporting year/of the reporting year; the MICEX index at the beginning/end of the given period is an average weighted index of the MICEX main trading session for November-December preceding the reporting year/of the reporting year.

198 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 199 Accounting STATEMENTS of OJSC ALROSA based on the Russian ACCOUNTING STANDARDS (RAS) FBK Grant Thornton FBK Grant Thornton Auditor s REPORT To the shareholders of Open Joint Stock Company ALROSA Responsibility of the audited entity for accounting (financial) statements The management of the audited entity shall be responsible for preparation and reliability of the said accounting (financial) statements in accordance with the Russian Accounting (Financial) Reporting Rules as well as for the internal control system required for preparation of the accounting (financial) statements that are free from material misstatement, whether due to fraud or error. Audited person: Name: Open Joint Stock Company ALROSA (hereinafter referred to as OJSC ALROSA). Location: 6, Lenina St., Mirny, Republic of Sakha (Yakutia), 678174, Russia State registration: Registered by the administration of Mirny district (ulus) of the Republic of Sakha (Yakutia) on August 13, 1992 Certificate No. 000724010 series 14. Included in the Unified State Register of Legal Entities on July 17, 2002, under the primary state registration number (OGRN) 1021400967092. Auditor Name: Finansoviye i Bukhgalterskie Konsultanty (Financial and Accounting Advisors) Limited Liability Company (FBK LLC) Location: 44/1, Bldg. 2AB, Myasnitskaya St., Moscow, 101990 State registration: Registered by the Moscow Registration Chamber on November 15, 1993, certificate: No. 484.583 РП series ЮЗ 3. Included in the Unified State Register of Legal Entities on July 24, 2002, under the primary state registration number (OGRN) 1027700058286. Auditor s Responsibility Our responsibility is to express an opinion on the reliability of the financial statements based on our audit. We conducted our audit in accordance with the federal standards on auditing. These standards require that we comply with ethical requirements, plan and perform the audit to obtain reasonable assurance about whether the accounting (financial) statements are free from material misstatement. The audit involved performing audit procedures aimed at obtaining audit evidence about the figures and disclosures in the accounting (financial) statements. Selection of the audit procedures is subject to our judgment based on assessment of the risk of material misstatement, whether due to fraud or error. In assessing the risk, we reviewed the internal control system that ensures development and reliability of the accounting (financial) statements for the purpose of selecting the appropriate audit procedures but not for the purpose of expressing an opinion on effectiveness of the internal control system. The audit also involved evaluating the appropriateness of accounting policies used and the reasonableness of the estimated figures received by the management of the audited entity as well as evaluating the overall presentation of the accounting (financial) statements. We believe that the audit evidence we have obtained is sufficient for expressing an opinion on reliability of these accounting (financial) statements. Opinion In our opinion, the accounting (financial) statements give a true and fair view, in all material respects, of the financial position of OJSC ALROSA as of December 31, 2014 and its financial results and cash flow for 2014 in accordance with the Russian Accounting (Financial) Reporting Rules. Membership in a self-regulated organization of auditors: Non-profit partnership Audit Chamber of Russia Number in the register of auditors of the self-regulated organization of auditors: Certificate of membership in non-profit partnership Audit Chamber of Russia No. 5353, ORNZ (Principal Registration Number of Entry) 10201039470. We have audited the attached financial statements of OJSC ALROSA consisting of the accounting balance sheet as of December 31, 2014, financial performance report, statement of changes in equity and cash flow statement for 2014 and other appendices to the accounting balance sheet and financial performance report. President, FBK LLC Audit Team Leader The date of the Auditor s Report February 13, 2015 S.M. Shapiguzov, (on the basis of the Charter, Auditor Qualification Certificate NO. 01-001230 dated January 28, 2013, ORNZ (Principal Registration Number of Entry) 29501041926) S.V. Limanskaya, (Auditor Qualification Certificate NO. 01-000076 dated September 19, 2011, ORNZ (Principal Registration Number of Entry) 20501042231) OJSC ALROSA Auditor s Report 1 of 2 OJSC ALROSA Auditor s Report 2 of 2

200 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 201 BALANCE SHEET Notes INDICATOR name Code As of December 31ST, 2014 As of 31.12.2013 As of 31.12.2012 As of December 31, 2014 Codes Form as per OKUD 0710001 Date (DD/MM/YYYY) Company: OJSC ALROSA as per OKPO 23308410 Taxpayer Identification Number INN 1433000147 Activity: Diamond mining as per OKVED 14.50.22 Legal status / Form of ownership Open Joint-Stock Company/ mixed as per OKOPF/OKFS 1 22 47 43 UoM: thous. roubles / mn roubles (leave/strike as applicable) as per OKEI 384 Address: 6, Lenina St., Mirny, Republic of Sakha (Yakutia), 678174, Russia II. CURRENT ASSETS 4.9 Reserves 1210 44,503,558 39,592,762 38,051,304 Raw materials and other similar assets 1211 14,634,120 11,179,326 10,594,989 Animals for breeding and fattening 1212 629,782 651,791 531,153 WIP expenses 1213 19,079,204 18,564,131 16,751,498 Finished goods and goods for resale 1214 9,846,848 8,885,916 9,905,197 Goods shipped 1215 281,608 257,825 219,197 Deferred expenses 1216 31,996 53,773 49,270 4.10 Value-added tax on purchased assets 1220 768,133 817,369 267,255 4.11 Accounts receivable 1230 16,795,421 16,458,447 11,335,778 Long-term receivables 1231 2,630,351 785,392 2,364,899 Short-term receivables 1232 14,165,070 15,673,055 8,970,879 4.12 Financial investments (short-term) 1240 77,264,905 48,068,843 13,010,218 Loans 1241 68,967,068 46,637,263 13,010,218 Notes INDICATOR name Code As of December 31ST, 2014 As of 31.12.2013 As of 31.12.2012 Other financial investments 1242 8,297,837 1,431,580-4.13 Cash 1250 14,165,526 4,560,277 2,103,283 1 2 3 4 5 6 ASSETS I. NON-CURRENT ASSETS 4.1 Intangible assets 1110 66,066 91,272 117,548 4.2 Exploration and development results 1120 139,612 137,587 200,937 4.3 Intangible development assets 1130 2,157,332 1,181,774 635,428 4.3 Tangible development assets 1140 88,439 475,861 308,725 4.4 Fixed assets 1150 195,338,191 184,260,356 171,351,703 Fixed assets 1151 155,631,933 146,276,987 146,189,254 Construction in progress 1152 39,706,258 37,983,369 25,162,449 4.5 Income yielding investments into tangible assets 1160 731,566 745,808 761,520 4.6 Financial investments (long-term) 1170 139,935,180 119,736,218 132,351,275 Investments in subsidiaries 1171 105,621,021 76,785,094 82,042,716 Investments in associates 1172 4,947,226 4,947,226 193,141 Investments in other organizations 1173 2,546 22,457 22,457 Loans 1174 29,364,387 37,981,441 50,092,961 Other financial investments 1175 - - - 4.7 Deferred tax assets 1180 3,712,751 2,800,396 2,686,757 4.8 Other non-current assets 1190 5,241,666 2,999,054 529,843 Subtotal Section I 1100 347,410,803 312,428,326 308,943,736 4.14 Other current assets 1260 83,568 28,314 42,309 Notes Subtotal Section II 1200 153,581,111 109,526,012 64,810,147 BALANCE 1600 500,991,914 421,954,338 373,753,883 Indicator name Code As of December 31st, 2014 As of 31.12.2013 As of 31.12.2012 1 2 3 4 5 6 LIABILITIES III. CAPITAL AND PROVISIONS 4.15 Authorized capital (Joint-Stock, authorized fund, contributions of partners) 1310 3,682,483 3,682,483 3,682,483 4.16 Revaluation of non-current assets 1340 7,405,140 7,781,980 8,213,636 4.17 Additional capital (excluding revaluation) 1350 50,041,284 50,039,070 50,038,870 4.18 Reserve capital 1360 736,500 736,500 736,500 provisions established in accordance with legislation 1361 184,125 184,125 184,125 provisions established in accordance with constituent documents 1362 552,375 552,375 552,375 4.19 Undistributed profit (unrecovered loss) 1370 188,154,782 175,157,446 148,436,618 undistributed profit of previous years 1371 164,685,615 175,157,446 148,436,618 undistributed profit of the reporting year 1372 23,469,167 - - Subtotal Section III 1300 250,020,189 237,397,479 211,108,107 IV. LONG-TERM LIABILITIES

202 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 203 Notes INDICATOR name Code As of December 31ST, 2014 As of 31.12.2013 As of 31.12.2012 STATEMENT OF FINANCIAL PERFORMANCE 4.21 Borrowings 1410 175,807,500 81,738,603 105,857,210 Bank loans repayable over 12 months after the reporting date Loans repayable over 12 months after the reporting date 1411 119,549,100 28,965,342 24,298,160 1412 56,258,400 52,773,261 81,559,050 4.20 Deferred tax liabilities 1420 27,100,431 22,778,392 21,156,520 4.24 Estimated long-term liabilities 1430 5,815,674 7,105,262 6,902,223 Other liabilities 1450 - - - Subtotal Section IV 1400 208,723,605 111,622,257 133,915,953 V. SHORT-TERM LIABILITIES 4.21 Borrowings 1510 21,331,607 54,316,063 12,982,396 Bank loans repayable during 12 months after the reporting date Loans repayable during 12 months after the reporting date 1511 404,336 37,189,711 2,759,560 1512 20,927,271 17,126,352 10,222,836 4.22 Accounts payable 1520 13,344,608 12,307,730 9,600,053 4.23 Deferred income 1530 6,850 22,182 124,931 4.24 Estimated short-term liabilities 1540 7,541,416 6,067,959 5,912,750 4.25 Other liabilities 1550 23,639 220,668 109,693 Subtotal Section V 1500 42,248,120 72,934,602 28,729,823 BALANCE 1700 500,991,914 421,954,338 373,753,883 As of December 31, 2014 Codes Form as per OKUD 0710002 Date (DD/MM/YYYY) Company: OJSC ALROSA as per OKPO 23308410 Taxpayer Identification Number INN 1433000147 Activity: Diamond mining as per OKVED 14.50.22 Legal status / Form of ownership Open Joint-Stock Company/ mixed as per OKOPF/OKFS 1 22 47 43 UoM: thous. roubles / mn roubles (leave/strike as applicable) as per OKEI 384 Notes INDICATOR name Code For 2014 For 2013 1 2 3 4 5.1 Revenue 2110 159,174,480 138,224,691 5.2 Cost of sales 2120 (63,052,301) (62,504,376) Gross profit (loss) 2100 96,122,179 75,720,315 5.2 Business expenses 2210 (10,494,273) (7,422,337) 5.2 Administrative expenses 2220 (17,758,426) (15,130,951) Sales revenue (loss) 2200 67,869,480 53,167,027 5.3 Income from participation in other companies 2310 6,259,387 8,655,390 5.3 Interest receivable 2320 3,426,051 1,983,157 5.3 Interest payable 2330 (9,253,287) (7,804,955) 5.3 Other income 2340 27,166,921 13,354,508 5.3 Other expenses 2350 (64,985,943) (26,249,480) Profit (loss) before taxes 2300 30,482,609 43,105,647 5.4 Current profit tax 2410 (3,034,315) (7,461,149) 5.4 including permanent tax liabilities (assets) 2421 (2,051,898) (1,561,656) 5.4 Changes in deferred tax liabilities 2430 (4,322,039) (1,621,872) 5.4 Changes in deferred tax assets 2450 912,355 113,638 Miscellaneous 2460 (569,443) 386,263 Net profit (loss) 2400 23,469,167 34,522,527 REFERENCE Result of revaluation of non-current assets not included in the net profit (loss) for the period Result of other operations not included in the net profit (loss) for the period 2510 - - 2520 2,214 200 5.5 Consolidated financial results for the period 2500 23,471,381 34,522,727 5.5 Basic earnings (loss) per share 2900 0.003 0.005 5.5 Diluted earnings (loss) per share 2910

204 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 205 STATEMENT OF CHANGES IN EQUITY Indicator name Code Authorized capital Own shares redeemed from shareholders Additional capital RESERVE capital UNDISTRIBUTED profit (UNRECOVERED loss) TOTAL As of December 31, 2014 Codes Form as per OKUD 0710003 Date (DD/MM/YYYY) Company: OJSC ALROSA as per OKPO 23308410 Taxpayer Identification Number INN 1433000147 Activity: Diamond mining as per OKVED 14.50.22 Legal status / Form of ownership Open Joint-Stock Company/ mixed as per OKOPF/OKFS 1 22 47 43 UoM: thous. roubles / mn roubles (leave/strike as applicable) as per OKEI 384 decrease in the number of shares 3225 - - - - - - reorganization of a legal entity 3226 - - - - - - dividends 3227 (8,174,444) (8,174,444) Change in additional capital 3230 х х (431,656) х 431,656 х Change in reserve capital 3240 х х х - - х The amount of capital as of December 31, 2013 3200 3,682,483-57,821,050 736,500 175,157,446 237,397,479 For 2014 Total capital increase: 3310 - - 2,214-23,469,167 23,471,381 including: net profit 3311 - - - - 23,469,167 23,469,167 revaluation of assets 3312 - - - - - - revenues directly attributable to the increase in capital 3313 - - 2,214 - - 2,214 CAPITAL FLOW additional issue of shares 3314 - - - - - - Indicator name Code Authorized capital Own shares redeemed from shareholders Additional capital RESERVE capital UNDISTRIBUTED profit (UNRECOVERED loss) TOTAL increase in the nominal value of shares 3315 - - - - - - reorganization of a legal entity 3316 - - - - - - Total capital decrease: 3320 - - - - (10,848,671) (10,848,671) 1 2 3 4 5 6 7 8 The amount of capital as of December 31, 2012 3100 3,682,483-58,252,506 736,500 148,436,618 211,108,107 For 2013 Total capital increase: 3210 - - 200-35,600,710 35,600,910 including: net profit 3211 - - - - 35,600,710 35,600,710 revaluation of assets 3212 - - - - - - revenues directly attributable to the increase in capital 3213 - - 200 - - 200 additional issue of shares 3214 - - - - - - increase in the nominal value of shares 3215 - - - - - - including: loss 3321 - - - - - - revaluation of assets 3322 - - - - - - losses directly attributable to the decrease in capital decrease in the nominal value of shares decrease in the number of shares 3323 - - - - (28,300) (28,300) 3324 - - - - - - 3325 - - - - - - reorganization of a legal entity 3326 - - - - - - dividends 3327 - - - - (10,820,371) (10,820,371) Change in additional capital 3330 х х (376,840) х 376,840 х Change in reserve capital 3340 х х х - х х reorganization of a legal entity 3216 - - - - - - Total capital decrease: 3220 - - - - (9,311,538) (9,311,538) The amount of capital as of December 31, 2014 3300 3,682,483-57,446,424 736,500 188,154,782 250,020,189 including: loss 3221 - - - - (1,128,289) (1,128,289) revaluation of assets 3222 - - - - - - losses directly attributable to the decrease in capital decrease in the nominal value of shares 3223 - - - (8,805) (8,805) 3224 - - - - - -

206 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 207 Adjustments due to change in ACCOUNTING policy and CORRECTION of errors Net assets Indicator name Code As of December 31, 2012 Change in equity For 2013 from net profit due TO other FACTORS As of December 31, 2013 Indicator name Code As of December 31, 2014 As of 31.12.2013 As of 31.12.2012 1 2 3 4 5 Net assets 3600 250,027,039 237,419,661 211,233,038 1 2 3 4 5 6 Total CAPITAL prior to adjustments 3400 218,369,712 - - 245,787,373 adjustment due to: - changes in accounting policy 3410 (7,261,605) (15,651,499) - (8,389,894) error corrections 3420 - - - after adjustments 3500 211,108,107 (15,651,499) - 237,397,479 including: - undistributed profit - prior to adjustments 3401 155,698,223 - - 183,547,340 CASH FLOWS STATEMENT adjustment due to: (7,261,605) (15,651,499) - (8,389,894) changes in accounting policy 3411 As of December 31, 2014 error corrections 3421 - - - - after adjustments 3501 148,436,618 (15,651,499) - 175,157,446 Other capital items, for which adjustments were made: prior to adjustments 3402 62,671,489 - - 62,240,033 adjustment due to: - changes in accounting policy 3412 - - - - error corrections 3422 - - - - after adjustments 3502 62,671,489 - - 62,240,033 - Codes Form as per OKUD 0710004 Date (DD/MM/YYYY) Company: OJSC ALROSA as per OKPO 23308410 Taxpayer Identification Number INN 1433000147 Activity: Diamond mining as per OKVED 14.50.22 Legal status / Form of ownership Open Joint-Stock Company/ mixed as per OKOPF/OKFS 1 22 47 43 UoM: thous. roubles / mn roubles (leave/strike as applicable) as per OKEI 384 Indicator name Code For 2014 For 2013 1 2 3 4 Cash FLOW from current OPERATIONS Total income 4110 165,517,967 137,441,879 including: from the sale of products, goods, works and services 4111 160,039,296 136,060,218 from lease payments, license fees, royalties, commissions and other similar payments 4112 2,424,965 853,492 from resale of financial investments 4113 - - other income 4119 3,053,706 528,169

208 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 209 Indicator name Code For 2014 For 2013 Total payments 4120 (121,786,024) (115,836,512) including: to suppliers (contractors) for raw materials, works and services 4121 (42,059,237) (41,943,769) in connection with the remuneration of employees 4122 (30,158,381) (29,224,432) interest on debt 4123 (9,392,578) (8,133,123) income tax 4124 (7,478,551) (7,145,476) other payments 4129 (32,697,277) (29,389,712) Balance of cash flows from current activities 4100 43,731,943 21,605,367 Cash FLOWS from INVESTING ACTIVITIES Total income 4210 43,970,659 17,646,832 including: from sale of non-current assets (excluding financial investments) 4211 1,568,568 199,461 Indicator name Code For 2014 For 2013 on dividends and other fees for distribution of profits to owners (members) in connection with maturity (redemption) of promissory notes and other debt securities, repayment of loans and borrowings 4322 (10,828,063) (8,123,457) 4323 (112,955,830) (72,459,532) other payments 4329 - - Balance of cash flows for the reporting period 4300 (30,932,280) 3,100,258 Result of cash flow for the reporting period 4400 4,777,587 2,569,560 Balance of cash and cash equivalents at the beginning of the reporting period Balance of cash and cash equivalents at the end of the reporting period 4450 4,535,472 2,096,684 4500 14,140,272 4,535,472 Effect of changes in foreign currency exchange rate against the rouble 4490 4,827,213 (130,772) from sale of shares in other organizations (interest) 4212 1,646,706 2,370,101 from return of loans, sale of debt securities (rights of cash requirements to other parties) from dividends, interest on debt financial investments and similar income from participations in other organizations 4213 21,082,594 5,093,446 4214 10,578,161 9,983,824 other income 4219 9,094,630 - Total payments 4220 (51,992,735) (39,782,897) including: in connection with acquisition, construction, modernization, reconstruction and preparation of non-current assets 4221 (21,403,686) (15,895,551) in connection with purchase of shares in other organizations (interest) 4222 (16,023,042) (221,931) in connection with acquisition of debt securities (rights of cash requirements to other parties) and loans to other parties of interest on debt obligations that are included in the cost of investment assets 4223 (14,278,020) (23,389,557) 4224 (284,267) (275,858) other payments 4229 (3,720) - Balance of cash flows from investing activities 4200 (8,022,076) (22,136,065) Cash flow from financing ACTIVITIES Total income 4310 92,851,613 83,683,247 including: proceeds from borrowings 4311 92,851,613 83,683,247 from cash deposits of owners (members) 4312 - - from issuance of shares, increasing stakes 4313 - - from issuance of bonds, promissory notes and other debt securities etc. 4314 - - other income 4319 - Total payments 4320 (123,783,893) (80,582,989) including: to owners (shareholders) in connection with the redemption of their shares (stakes) in the organization or their retirement from its members 4321 - -

210 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 211 Information on disposal of non-core assets of OJSC ALROSA for 2014 Section I. Register of non-core assets in the form of shares (STAKES in authorized CAPITALS) of business entities SECTION I. REGISTER of non-core assets in the form of shares (STAKES in authorized CAPITALS) of business entities No. of item Non-CORE asset Company s interest in the authorized capital, % Balance sheet line which displays an asset on the balance sheet DATE prior TO asset sales Book-keeping ACCOUNTS (INCLUDING ANALYTICS) which DISPLAY INCOME and expenditure after asset retirement (91.1ххх/91.2ххх) Book VALUE of an asset, RUB ACTUAL sales COST, RUB DEVIATION of the ACTUAL sales COST from the book VALUE of an asset, RUB Reasons for DEVIATION of the ACTUAL sales COST from the book VALUE of an asset 1 CJSC Irelyakhneft 100 1242 9113421000/9123423000 20,300,000 21,000,000 700,000 Sales at the estimated cost 2 OJSC Sakha Diamond 3.9 1242 9113421000/9123423000 10,500 410,000 399,500 Sales at auction 3 LLC Interfinans 19.9 1242 9113750000/9123750000 19,900,000 8,926,000-10,974,000 Sales by public offering 4 OJSC Udachny Group of Food Enterprises 99.5 1171 9127905000 11,397,600 0-11,397,600 The program provides for an action - liquidation 5 CJSC BRINT-M 100 1171 9127905000 314,116,200 0-314,116,200 The program provides for an action - liquidation 6 Sitim Media Group, LLC 100 1242 9113750000/9123750000 128,248,200 1,520,000-126,728,200 Sales at auction 7 OJSC SK ALROSA Insurance Company 99.7 1242 9113750000/9123750000 623,333,000 620,000,000-3,333,000 Sales at auction Section II. Register of non-core assets in the form of IMMOVABLE PROPERTY SECTION II. REGISTER of non-core assets in the form of IMMOVABLE PROPERTY No. of item Non-CORE asset Asset reference number Book VALUE of an asset AT the retirement DATE, RUB ACTUAL sales COST, RUB DEVIATION of the ACTUAL sales COST from the book VALUE of an asset, RUB Reasons for DEVIATION of the ACTUAL sales COST from the book VALUE of an asset 1 Transformer substation 2х630 kva No.13, Aikhal settlement, Housing group No.3 1002848 1151 91131/912311 393,188 551,414 158,226 The sales cost was formed by tender 2 Transformer substation 2х630 kva No.12 1010235 1151 91131/912311 2,368,066 814,200-1,553,866 The sales cost was formed by tender 3 Well No.155-062 1093716 1151 91131/912311 30,678,883 36,201,082 5,522,199 Sales cost according to the report of market value 4 Well No.155-08 1094264 1151 91131/912311 35,983,863 42,460,958 6,477,095 Sales cost according to the report of market value 5 Oil well No.155-045 with a production Xmas tree 1096404 1151 91131/912311 29,383,151 34,672,118 5,288,967 Sales cost according to the report of market value 6 Well No.155-051 1100786 1151 91131/912311 32,111,783 37,891,904 5,780,121 Sales cost according to the report of market value 7 Well No.155-060 1094435 1151 91131/912311 27,603,051 32,571,600 4,968,549 Sales cost according to the report of market value 8 Oil well No.155-019 with a production Xmas tree 1096405 1151 91131/912311 27,239,526 32,142,641 4,903,115 Sales cost according to the report of market value 9 Oil well No.155-015 with a production Xmas tree 1096406 1151 91131/912311 36,881,421 43,520,077 6,638,656 Sales cost according to the report of market value 10 Well No.155-020 1096527 1151 91131/912311 38,636,797 45,591,420 6,954,623 Sales cost according to the report of market value

212 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 213 Section II. Register of non-core assets in the form of IMMOVABLE PROPERTY SECTION II. REGISTER of non-core assets in the form of IMMOVABLE PROPERTY No. of item Non-CORE asset Asset reference number Book VALUE of an asset AT the retirement DATE, RUB ACTUAL sales COST, RUB DEVIATION of the ACTUAL sales COST from the book VALUE of an asset, RUB Reasons for DEVIATION of the ACTUAL sales COST from the book VALUE of an asset 11 Oil well No.155-021 with a production Xmas tree 1096528 1151 91131/912311 21,998,034 25,957,680 3,959,646 Sales cost according to the report of market value 12 Well No.155-014 1096708 1151 91131/912311 28,300,235 33,394,277 5,094,042 Sales cost according to the report of market value 13 Well No.155-009 1098179 1151 91131/912311 28,041,366 33,088,812 5,047,446 Sales cost according to the report of market value 14 Well No.155-008 (k-5) 1100102 1151 91131/912311 39,422,524 46,518,578 7,096,054 Sales cost according to the report of market value 15 Oil well No.155-04 with a production Xmas tree 1096407 1151 91131/912311 8,920,182 10,525,815 1,605,633 Sales cost according to the report of market value 16 Well No.155-069 1096526 1151 91131/912311 35,617,224 42,028,324 6,411,100 Sales cost according to the report of market value 17 Well No.155-024 1096707 1151 91131/912311 28,250,533 33,335,629 5,085,096 Sales cost according to the report of market value 18 Well No.155-023 1098180 1151 91131/912311 27,042,334 31,909,954 4,867,620 Sales cost according to the report of market value 19 Well No.155-027 1100104 1151 91131/912311 35,520,383 41,914,052 6,393,669 Sales cost according to the report of market value 20 Well No.155-033A 1100103 1151 91131/912311 38,221,248 45,101,073 6,879,825 Sales cost according to the report of market value 21 Well No.155-043 (k-11) 1100718 1151 91131/912311 30,220,158 39,514,820 9,294,662 Sales cost according to the report of market value 22 Well No.155-032 1100719 1151 91131/912311 43,785,784 51,667,225 7,881,441 Sales cost according to the report of market value 23 Well No.739 1094263 1151 91131/912311 8,576,174 11,195,642 2,619,468 Sales cost according to the report of market value 24 Oil plume of well No.155-070 1094259 1151 91131/912311 87,666 103,446 15,780 Sales cost according to the report of market value 25 Gas plume of well No.155-070 1098162 1151 91131/912311 57,224 67,524 10,300 Sales cost according to the report of market value 26 Oil plume of well No.155-08 1094260 1151 91131/912311 134,284 158,455 24,171 Sales cost according to the report of market value 27 Gas-lift plume of well No.155-08 1098160 1151 91131/912311 69,289 81,761 12,472 Sales cost according to the report of market value 28 Oil plume of well No.001-155 1094261 1151 91131/912311 37,673 44,454 6,781 Sales cost according to the report of market value 29 Gas-lift plume of well No.001-155 1098161 1151 91131/912311 566,605 668,594 101,989 Sales cost according to the report of market value 30 Gas plume of well No.739 1094262 1151 91131/912311 3,142,577 4,744,274 1,601,697 Sales cost according to the report of market value 31 Well 1-RE Brine industry 1096402 1151 91131/912311 7,895,423 10,232,985 2,337,562 Sales cost according to the report of market value 32 Well 2-RE Brine industry 1096403 1151 91131/912311 9,448,625 11,149,378 1,700,753 Sales cost according to the report of market value 33 Exploratory-absorption well 3-RP 1100101 1151 91131/912311 6,083,226 7,178,207 1,094,981 Sales cost according to the report of market value 34 Administration building 3315 1151 / 1215 912511 14,303,865 70,832,000 56,528,135 Sales cost according to the report of market value 35 36 37 Building of the administrative and managerial staff s office AIRPORT TERMINAL BUILDING, the Anabar plateau AIRCRAFT MAINTENANCE BASE (AMB) BUILDING WITH OUTDOOR TOILET 0999349 1151 912412 4,491,174 0-4,491,174 The program provides for an action - liquidation 30748 1151 912511 10,411,061 0-10,411,061 The program provides for an action - donation 30749 1151 912511 2,026,084 0-2,026,084 The program provides for an action - donation 38 Garage for 14 cars 2492766 1151 912511 2,449,179 0-2,449,179 The program provides for an action - donation 39 Universal theatre, movie and concert hall (UTMCH) Yakutsk 0108426 1151 912511 508,923,353 0-508,923,353 The program provides for an action - donation 40 Fire water tank, V = 400 m3 0108427 1151 912511 2,897,617 0-2,897,617 The program provides for an action - donation 41 Improvement of UTMCH Yakutsk 0108428 1151 912511 13,290,874 0-13,290,874 The program provides for an action - donation

214 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 215 Section II. Register of non-core assets in the form of IMMOVABLE PROPERTY SECTION II. REGISTER of non-core assets in the form of IMMOVABLE PROPERTY No. of item Non-CORE asset Asset reference number Book VALUE of an asset AT the retirement DATE, RUB ACTUAL sales COST, RUB DEVIATION of the ACTUAL sales COST from the book VALUE of an asset, RUB Reasons for DEVIATION of the ACTUAL sales COST from the book VALUE of an asset 42 Land plot for operation of UTMCH Yakutsk (6957 m2) 0109260 1151 912511 587,330 0-587,330 The program provides for an action - donation 43 Non-residential premises 35N 000024 1151 91131/912311 5,385,877 10,300,000 4,914,123 Sales cost according to the report of market value 44 Non-residential premises 36N 000028 1151 91131/912311 9,036,735 17,000,000 7,963,265 Sales cost according to the report of market value 45 Non-residential premises 37N 000029 1151 91131/912311 5,382,274 10,000,000 4,617,726 Sales cost according to the report of market value 46 Non-residential premises 38N 000030 1151 91131/912311 10,397,333 18,000,000 7,602,667 Sales cost according to the report of market value 47 Non-residential premises 39N 000031 1151 91131/912311 5,219,090 10,000,000 4,780,910 Sales cost according to the report of market value 48 Non-residential premises 40N 000032 1151 91131/912311 10,051,654 18,000,000 7,948,346 Sales cost according to the report of market value 49 Non-residential premises 41N 000033 1151 91131/912311 5,456,004 11,200,000 5,743,996 Sales cost according to the report of market value 50 Non-residential premises 42N 000034 1151 91131/912311 9,177,022 18,000,000 8,822,978 Sales cost according to the report of market value 51 Non-residential premises 9N 000035 1151 91131/912311 16,775,356 17,000,000 224,644 Sales cost according to the report of market value 52 Non-residential premises 31N 000037 1151 91131/912311 5,999,539 11,000,000 5,000,461 Sales cost according to the report of market value 53 Non-residential premises 32N 000038 1151 91131/912311 7,551,305 19,000,000 11,448,695 Sales cost according to the report of market value 54 55 Premises No.2, local gas boiler house (address: 41A, premises 2, Chasovaya St., Orel city) Land plot for housing construction, with a total area of 23,730 m2 19 1151 912511 15,399,892 0-15,399,892 The program provides for an action - donation 192 1151 912511 13,183,333 0-13,183,333 The program provides for an action - donation 56 Substation KTPK V/k-400/6/0.4 U1 1025085 1151 91131/912311 1,143,276 1,364,080 220,804 The sales cost was formed by tender 57 Transformer substation 1025083 1151 91131/912311 1,090,917 1,300,360 209,443 The sales cost was formed by tender 58 Transformer substation KTP-630/6 1025084 1151 91131/912311 999,205 1,192,980 193,775 The sales cost was formed by tender 59 Administration building No ref. 1214 912551 467,626,444 0-467,626,444 The program provides for an action - donation 60 Fire pump house with tanks, 2*300 m3 No ref. 1214 912551 32,508,243 0-32,508,243 The program provides for an action - donation 61 Utilities and HVAC systems No ref. 1214 912551 2,440,144 0-2,440,144 The program provides for an action - donation 62 Power networks No ref. 1214 912551 2,917,486 0-2,917,486 The program provides for an action - donation 63 Utility networks, communications networks No ref. 1214 912551 7,966,556 0-7,966,556 The program provides for an action - donation 64 Consumer goods plant 0000294 1151 912511 869,882 0-869,882 The program provides for an action - donation 65 35, Gagarina St., pharmacy building, purpose: non-residential 0005298 1151 912511 11,303,058 0-11,303,058 The program provides for an action - donation 66 Land plot for pharmacy 0000844 1151 912511 1,048,857 0-1,048,857 The program provides for an action - donation 67 68 69 Gas field manufacturing workshops, including administration and amenity building Gas field manufacturing workshops, including garage Temporary communication hub - Dorozhny settlement 0005352 1151 912511 3,356,634 0-3,356,634 The program provides for an action - donation 0005353 1151 912511 2,246,353 0-2,246,353 The program provides for an action - donation 0005300 1151 912511 5,089,373 0-5,089,373 The program provides for an action - donation 70 Land plot for the temporary communication hub 0000845 1151 912511 164,782 0-164,782 The program provides for an action - donation

216 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 217 Section II. Register of non-core assets in the form of IMMOVABLE PROPERTY SECTION II. REGISTER of non-core assets in the form of IMMOVABLE PROPERTY No. of item Non-CORE asset Asset reference number Book VALUE of an asset AT the retirement DATE, RUB ACTUAL sales COST, RUB DEVIATION of the ACTUAL sales COST from the book VALUE of an asset, RUB Reasons for DEVIATION of the ACTUAL sales COST from the book VALUE of an asset 71 72 Warm paint-and-varnish materials warehouse, Ivanov St. (library) Land plot for warm paint-and-varnish materials warehouse 0005301 1151 912511 136,654 0-136,654 The program provides for an action - donation 0000846 1151 912511 102,989 0-102,989 The program provides for an action - donation 73 Cow-shed No.2 for 136 heads of cattle 0001713 1151 912511 0 0 0 The program provides for an action - donation 74 Trench silo 5555600 1151 912511 41,945 0-41,945 The program provides for an action - donation 75 Garage - Batamay settlement 5555621 1151 912511 1,917,192 0-1,917,192 The program provides for an action - donation 76 Molokanka, Batamay settlement 5555599 1151 912511 1 0-1 The program provides for an action - donation 77 Cow-shed (for 120 heads of cattle) 5555598 1151 912511 10,935,658 0-10,935,658 The program provides for an action - donation 78 Pump house building 5555601 1151 912511 250,237 0-250,237 The program provides for an action - donation 79 Office of the Housing and Public Utilities 3003764 1151 912511 1,914,032 0-1,914,032 The program provides for an action - donation 80 Land plot for operation of the building of the Office of the Housing and Public Utilities, storage shed 3002816 1151 912511 2,331,792 0-2,331,792 The program provides for an action - donation 81 Museum building 0107817 1151 912511 2,752,591 0-2,752,591 The program provides for an action - donation 82 Land plot for the museum operation (1,100 m2) 0107924 1151 912511 2,651,813 0-2,651,813 The program provides for an action - donation 83 Building of Victoria Sports Centre 0112682 1151 912511 7,222,796 0-7,222,796 The program provides for an action - donation 84 85 Yunost cinema building, 1965 YrBlt, 15a, Pobedy St. Land plot, 15a, Pobedy St., Lensk town (for operation of Yunost Recreation Centre) 0112683 1151 912511 132,841,995 0-132,841,995 The program provides for an action - donation 0112690 1151 912511 1,282,463 0-1,282,463 The program provides for an action - donation 86 Off-site utilities. Power supply. Yunost cinema 0112686 1151 912511 3,238,120 0-3,238,120 The program provides for an action - donation 87 Transformer substation 1019899 1151 / 1215 912511 274,844 888,564 613,720 The sales cost was formed by tender 88 Distribution substation - 6 kv 1020062 1151 / 1215 912511 1,706,529 1,395,940-310,589 The sales cost was formed by tender 89 90 Overhead lines - 6kV, TSEK (Central electrode boiler-house) KOS (Waste water treatment plants) Expansion of 110 kv outdoor switchgear (ORU- 110) capacity 1019384 1151 / 1215 912511 280,887 441,839 160,952 The sales cost was formed by tender 1019387 1151 / 1215 912511 6,932,126 1,230,120-5,702,006 The sales cost was formed by tender 91 Fencing of outdoor switchgear 1019471 1151 / 1215 912511 30,057 231,280 201,223 The sales cost was formed by tender 92 Power line, LEP-6 kv 1468993 1151 912412 253,583 0-253,583 The program provides for an action - liquidation 93 Cow-shed for 120 heads of cattle settlement Orto-Nakhar 5555773 1151 912412 1 0-1 The program provides for actions - donation, liquidation. The building is destroyed, the municipal entity refused to take ownership of it. 94 Fire water tank, V = 130 m3 Dorozhny settlement 0005299 1151 912412 0 0 0 The program provides for actions - donation, liquidation. The construction is dilapidated, the municipal entity refused to take ownership of it. 95 MI-8Т RA-25606 34744 1151 /123233 912511 1,602,649 25,031,104 23,428,455 Sales cost according to the report of market value 96 AN-2 RA-54909 29923 1151 /123233 912511 326,338 649,629 323,291 Sales cost according to the report of market value 97 АН-2 RA-54908 29924 1151 /123233 912511 347,540 671,959 324,419 Sales cost according to the report of market value

218 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 219 Section III. Register of non-core assets in the form of FACILITIES under CONSTRUCTION SECTION III. REGISTER of non-core assets in the form of FACILITIES under CONSTRUCTION No. of item Non-CORE asset Asset reference number Book VALUE of an asset AT the retirement DATE, RUB ACTUAL sales COST, RUB DEVIATION of the ACTUAL sales COST from the book VALUE of an asset, RUB Reasons for DEVIATION of the ACTUAL sales COST from the book VALUE of an asset 1 Liquid chlorine warehouse 12070708 1152 91245 11,832,418 0-11,832,418 The program provides for an action - liquidation 2 ALROSA micro-district water supply 2430017 1152 91245 8,263,727 0-8,263,727 The program provides for an action - liquidation 3 Nakyn diamond field. Field camp for 192 people 11560300 1152 91245 5,431,179 0-5,431,179 The program provides for an action - liquidation 4 Bakery for 3 tons/shift No ref. 1152 9123711 8,400,000 11,756,000 3,356,000 Sales at the estimated cost 5 Mineralized water conduit 02177 1152 9123711 1,060,419 1,251,294 190,875 Sales at the estimated cost 6 Well No.155-089 02185 1152 9123711 61,535,390 72,611,760 11,076,370 Sales at the estimated cost 7 Oil and gas collecting systems. 02151 1152 9123711 11,006,090 12,987,186 1,981,096 Sales at the estimated cost 8 Gas pipeline 02141 1152 9123711 8,100,208 9,558,245 1,458,037 Sales at the estimated cost 9 Well No. 155-005 02154 1152 9123711 55,010,331 64,912,191 9,901,860 Sales at the estimated cost 10 Well No.155-088 02159 1152 9123711 71,370,454 84,217,136 12,846,682 Sales at the estimated cost 11 Well No.155-004 02160 1152 9123711 64,491,331 76,099,771 11,608,440 Sales at the estimated cost 12 Well No.155-006 02162 1152 9123711 67,979,612 80,215,942 12,236,330 Sales at the estimated cost 13 Well No.155-010 02163 1152 9123711 64,761,727 76,418,838 11,657,111 Sales at the estimated cost 14 Oil-gathering collector 02145 1152 9123711 12,903,440 15,226,059 2,322,619 Sales at the estimated cost 15 Oil treatment plant. Brine extraction 02136 1152 9123711 55,030,887 64,936,447 9,905,560 Sales at the estimated cost 16 Overhead lines - 6kV, for five well clusters 02165 1152 9123711 16,303,956 19,238,668 2,934,712 Sales at the estimated cost 17 Development of well clusters No.5, 11, 12, 12a, 13a 02169 1152 9123711 82,414,100 97,248,638 14,834,538 Sales at the estimated cost 18 Brine treatment plant 02171 1152 9123711 4,136,964 4,881,618 744,654 Sales at the estimated cost TOTAL 3,788,598,226 2,395,144,021-1,393,454,205 Main reason: sales at the estimated cost that is lower than the book value; or liquidation of an asset or its donation according to the Program

220 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 221 Summary DATA on the RESULTS of sales of rough and polished diamonds, and on the ACHIEVEMENT of planned targets of ALROSA Group in 2012-2014 Contract VALUE, mn USD Percen- Excess of the Value change in TAGE of VALUE OVER the balance 2014 2014, %, AGAINST plan VALUE, % 1 2012 2013 performance plan report 2014 2013 2012 2012 2013 2014 Export 291.9 310.3 280.7 262.7 93.6 84.7 90.0 72.9 65.8 39.5 SEVERALMAZ 27.6 33.9 79.0 80.2 101.5 236.4 290.5 35.6 46.6-0.5 Domestic market, 13.6 0.1 0.7 17.2 13.8 including the GOKHRAN of RUSSIA 13.6 17.2 Export 14.0 33.9 79.0 80.1 101.4 236.1 570.9 59.0 46.6-0.5 NIZHNE-LENSKOE 116.0 295.5 302.6 102.4 260.8 61.1 25.7 Domestic market, 1.8 0.04 0.3 750.0 17.1 15.0 170.3 including the GOKHRAN of RUSSIA Total, ALROSA Group Contract VALUE, mn USD Percen- Excess of the Value change in TAGE of VALUE OVER the balance 2014 2014, %, AGAINST plan VALUE, % 1 2012 2013 performance plan report 2014 2013 2012 2012 2013 2014 Rough diamond sales 4,450.2 4,794.8 4,848.5 4,900.6 101.1 102.2 110.1 65.9 58.6 28.2 Domestic market, 1,035.6 680.4 565.8 524.6 92.7 77.1 50.7 44.2 32.1 11.6 including the GOKHRAN of RUSSIA (the State Precious Metals and Gems Repository of the Russian Federation) 256.7 87.5 41.8 28.0 Export 114.3 295.4 302.3 102.3 264.5 62.1 25.6 In addition: Shipment to Brillianty ALROSA branch 162.3 155.1 142.1 150.3 105.7 96.9 92.6 45.8 44.1 20.7 Polished diamond sales 2 Total 160.5 150.7 178.2 144.4 81.0 95.8 90.0 109.0 104.0 103.0 Export 158.9 148.2 176.4 142.9 81.0 96.4 89.9 109.0 104.0 103.0 Domestic market, 1.6 2.5 1.8 1.5 88.2 60.0 93.8 100.0 100.0 100.0 1 Data are given in the price list for actual appraisal services. 2 Excess of the contract value over the balance value is an excess of the contract value of polished diamonds over the selling price of the United Selling Organization (USO) for rough diamonds. Export 3,414.5 4,114.4 4,282.7 4,376.0 102.2 106.4 128.2 73.8 64.1 30.6 including: OJSC ALROSA 3,349.5 3,558.0 3,449.0 3,494.1 101.3 98.2 104.3 63.9 56.6 28.3 Domestic market, 797.2 591.5 502.9 462.8 92.0 78.2 58.1 43.6 31.9 11.5 including the GOKHRAN of RUSSIA 157.5 87.5 43.9 28.0 Export 2,552.3 2,966.5 2,946.1 3,031.4 102.9 102.2 118.8 71.4 62.7 31.3 ALROSA-NYURBA 725.5 776.0 744.0 760.4 102.2 98.0 104.8 76.7 65.5 29.4 Domestic market, 169.3 86.6 62.5 60.9 97.4 70.3 36.0 51.0 33.6 11.9 including the GOKHRAN of RUSSIA 42.3 47.3 Export 556.3 689.4 681.5 699.5 102.6 101.5 125.7 86.3 70.7 31.2 ALMAZY ANABARA 347.5 310.8 281.0 263.2 93.7 84.7 75.7 66.9 66.0 39.6 Domestic market, 55.6 0.5 0.29 0.54 186.2 98.5 0.9 41.1 409.0 57.6 Diamond sales by ALROSA Group Contract VALUE, mn USD 2012 2013 2014 PERCENTAGE of plan performance 2014 Value in 2014, %, AGAINST Excess of the VALUE over the balance VALUE, % plan report 2013 2012 2012 2013 2014 Total 4,450.2 4,794.8 4,848.5 4,900.6 101.1 102.2 110.1 65.9 58.6 28.2 Diamond jewellery Industrial-grade diamonds* 4,341.1 4,692.7 4,709.6 4,754.9 101.0 101.3 109.5 63.0 56.2 25.6 109.1 102.1 138.9 145.7 104.9 142.7 133.6 434.0 484.1 290.3 including the GOKHRAN of RUSSIA 43.3 38.5 * including polishing powders

222 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 223 Sales of diamonds for export Sales results AT international AUCTIONS Contract VALUE, mn USD 2012 2013 2014 PERCENTAGE of plan performance 2014 Value in 2014, %, AGAINST Excess of the VALUE over the balance VALUE, % plan report 2013 2012 2012 2013 2014 Contract VALUE, mn USD 2012 2013 2014 PERCENTAGE of plan performance 2014 Value in 2014, %, AGAINST Excess of the VALUE over the balance VALUE, % plan report 2013 2012 2012 2013 2014 Total export 3,414.5 4,114.4 4,282.7 4,376.0 102.2 106.4 128.2 73.8 64.1 30.6 Total diamond jewellery including: 3,336.9 4,023.8 4,156.4 4,238.7 102.0 105.3 127.0 71.0 61.4 27.8 - Market 2,761.4 3,273.4-3,441.9 105.1 124.6 64.1 52.9 21.0 - ALMA- ZYUVELIR- EXPORT (inspection lots) 172.5 188.4-264.9 140.6 153.5 53.9 46.6 17.7 International auctions (+10.8 ct), total including: - Russian enterprises - Foreign enterprises 407.9 565.6 506.1 533.3 105.4 94.3 130.7 157.2 151.3 114.3 4.9 3.6 1.3 35.7 26.3 101.7 104.9 91.0 403.0 561.9 506.1 531.9 105.1 94.7 132.0 158.1 151.7 114.4 - International auctions (+10.8) Total industrial diamonds* 403.0 561.9 506.1 531.9 105.1 94.7 132.0 158.1 151.7 114.4 77.6 90.7 126.3 137.2 108.6 151.3 176.8 461.7 508.4 301.4 * A price ceiling for diamonds +10.8 ct shall be determined in accordance with the Procedure for determining the limit evaluation of special-size diamonds with the weight of 10.8 ct and more, established by Order of the Ministry of Finance of the Russian Federation, No.54n as of 20.07.2001. * including polishing powders Sales of ALROSA Group s diamonds on the DOMESTIC market Sales of diamond jewellery on the foreign market by ALROSA Group (excluding sales of special-size diamonds at INTERNATIONAL AUCTIONS) Contract VALUE, mn USD 2012 2013 2014 PERCENTAGE of plan performance 2014 Value in 2014, %, AGAINST Excess of the VALUE over the balance VALUE, % plan report 2013 2012 2012 2013 2014 Contract VALUE, mn USD 2012 2013 2014 PERCENTAGE of plan performance 2014 Value in 2014, %, AGAINST Excess of the VALUE over the balance VALUE, % plan report 2013 2012 2012 2013 2014 Total market 2,761.4 3,273.4-3,441.9 105.1 124.6 64.1 52.9 21.0 Total domestic market * Diamond jewellery 1 * - including diamonds +10.8 1,035.6 680.4 565.8 524.6 92.7 77.1 50.7 44.2 32.1 11.6 1,004.2 668.9 553.2 516.2 93.3 77.2 51.4 41.1 30.5 10.5 4.9 3.6 1.3 36.1 26.5 101.7 104.9 91.0 Foreign enterprises Enterprises of the CIS 2,735.6 3,252.3 3,420.2 105.2 125.0 64.2 53.0 21.0 25.8 21.2 21.7 102.3 84.1 55.6 44.1 16.6 Industrialgrade diamonds 2 ** 31.5 11.4 12.6 8.4 66.7 73.7 26.7 376.0 343.9 169.5 including: Armenia 8.7 5.9 4.7 80.8 54.8 57.4 50.6 18.7 *Excluding shipment to Brillianty ALROSA **Including polishing powders The Republic of Belarus 17.1 15.3 17.0 111.3 99.6 54.7 41.8 16.5 * breakdown of target figures: foreign enterprises, enterprises of the CIS (Armenia, Belarus) were not included

224 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 225 Sales of diamond jewellery on the DOMESTIC market Domestic market. ALROSA Group including: - cutting enterprises Contract VALUE, mn USD 2012 2013 2014 PERCENTAGE of plan performance 2014 Value in 2014, %, AGAINST Excess of the VALUE over the balance VALUE, % plan report 2013 2012 2012 2013 2014 1,004.2 668.9 553.2 516.2 93.3 77.2 51.4 41.1 30.5 10.5 747.5 581.4 553.2 516.2 93.3 88.8 69.1 40.9 30.9 10.5 No. of item number Date of 2 12 17.01.2014 3 No ref. 27.01.2014 4 1 25.04.2014 Counter- PARTIES and PARTICIPANTS in the trans- ACTION OJSC Almazy Anabara OJSC Severalmaz OJSC SK ALROSA Insurance Company SUBJECT of the Provision of services on diamonds sales Provision of services on diamonds sales Insurance services Currency of the Amount of the amount in rouble terms RUB 41,592,000.00 41,592,000.00 RUB 8,000,000.00 8,000,000.00 RUB 353,250.00 353,250.00 INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes - the GOKHRAN of RUSSIA 256.7 87.5 41.8 28.0 5 26 04.02.2014 OJSC SK ALROSA Insurance Company Insurance services RUB 387,045.00 387,045.00 Besides, shipment to Brillianty AL- ROSA branch 162.2 155.1 142.1 150.3 105.7 96.9 92.7 45.7 44.1 20.7 6 25 04.02.2014 7 IGR13/ MSHD/ 0654/ 4945/67 25.02.2014 OJSC SK ALROSA Insurance Company OJSC VTB BANK, Moscow Insurance services Banking services, the Letter of Credit Agreement RUB 78,630,000.00 78,630,000.00 USD 100,000,000.00 3,551,120,000.00 A01/208-PR-NS, 7, 23.01.2014 8 105/128 12.05.2014 CJSC Irelyakhneft Issuance of a loan RUB 105,000,000.00 105,000,000.00 Information on the Company s interested PARTY TRANSACTIONS and major TRANSACTIONS 9 167 25.06.2014 10 1АА/E 01.08.2014 11 3NL/E 01.08.2014 OJSC Almazy Anabara OJSC Almazy Anabara OJSC Nizhne-Lenskoe Issuance of a loan Provision of services on diamonds sales Provision of services on diamonds sales RUB 2 225,000,000.00 2,225,000,000.00 RUB 52,000,000.00 52,000,000.00 RUB 495,000,000.00 495,000,000.00 A01-215-PR-NS, 10, 14.06.2014 A01/218-PR-NS, 2, 04.08.2014 A01/218-PR-NS, 4, 04.08.2014 12 4NL/VN 01.08.2014 OJSC Nizhne-Lenskoe Provision of services on diamonds sales RUB 11,000,000.00 11,000,000.00 A01/218-PR-NS, 3, 04.08.2014 ЗDuring the reporting period, in accordance with relevant Article 79 of the Federal Law On Joint-Stock Companies, the Company did not enter into major transactions. 13 201 08.08.2014 Almaznaya Osen Non- State Pension Fund Additional contribution to the aggregate contribution of founders RUB 20,000,000.00 20,000,000.00 A01-217-PR-NS, 9, 14.07.2014 LIST of INTERESTED PARTY TRANSACTIONS CONCLUDED by OJSC ALROSA in 2014 14 2AA/VN 01.08.2014 OJSC Almazy Anabara Provision of services on diamonds sales RUB 11,000,000.00 11,000,000.00 A01/218-PR-NS, 1, 04.08.2014 No. of item number Date of 1 15 10.01.2014 Counter- PARTIES and PARTICIPANTS in the trans- ACTION OJSC Nizhne-Lenskoe SUBJECT of the Provision of services on diamonds sales Currency of the Amount of the amount in rouble terms RUB 41,291,000.00 41,291,000.00 INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 15 5AN/E 01.08.2014 16 6AN/VN 01.08.2014 17 15S/E 23.10.2014 SA-Nyurba SA-Nyurba OJSC Severalmaz Provision of services on diamonds sales Provision of services on diamonds sales Provision of services on diamonds export RUB 720,000,000.00 720,000,000.00 RUB 11,000,000.00 11,000,000.00 RUB 414,000,000.00 414,000,000.00 A01/218-PR-NS, 6, 04.08.2014 A01/218-PR-NS, 5, 04.08.2014 A01/223-PR-NS, 3, 16.12.2014

226 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 227 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 18 283 27.10.2014 SA-Lena Building Company Issuance of a loan RUB 23,400,000.00 23,400,000.00 A01/223-PR-NS, 3.7, 16.12.2014 34 A-07/1 09.01.2014 OJSC Mirny Town Housing Enterprise Garbage disposal RUB 627,082.08 627,082.08 19 2416/339 19.12.2014 CJSC ALROSA Air Company Limited Acquisition of shares RUB 62,374,420.00 62,374,420.00 A01/221-PR-NS, 24, 28.10.2014 35 213-04.14 16.04.2014 OJSC Nizhne-Lenskoe Provision of services RUB 16,608,264.00 16,608,264.00 20 330 16.12.2014 21 13 (additional agreement) 28.03.2014 22 Agreement 08.04.2014 CJSC ALROSA Air Company Limited Almaznaya Osen Non- State Pension Fund Almaznaya Osen Non- State Pension Fund Acquisition of shares RUB 57,937,490.00 57,937,490.00 Co-investment RUB 411,166,944.00 411,166,944.00 Co-investment RUB 38,685,360.00 38,685,360.00 A01/221-PR-NS, 24, 28.10.2014 36 461-04.14 16.04.2014 37 No ref. 31.07.2014 38 62 10.01.2014 OJSC Almazy Anabara OJSC Almazy Anabara CJSC Irelyakhneft Storage and shipment of rough diamonds Storage and shipment of rough diamonds Oil fuel delivery RUB 11,891,048.80 11,891,048.80 RUB 5,243,271.00 5,243,271.00 RUB 38,753,088.00 38,753,088.00 23 24 25 02 (additional agreement) DMS 0100001-14 DMS 0100002-14 26.03.2014 01.01.2014 01.01.2014 26 04 20.01.2014 27 2790 09.01.2014 28 539/13 20.02.2014 29 Additional agreement No.1 27.11.2014 30 2014-AKCh 30.01.2014 31 32 NS 010 0025-14 G-GR 010 0001-14 31.03.2014 24.03.2014 33 A-07/2 09.01.2014 Almaznaya Osen Non- State Pension Fund OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company SA-Nyurba OJSC Mirny Town Printing House SA-Gas SA-Gas CJSC ALROSA Air Company Limited OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company OJSC Mirny Town Housing Enterprise Co-investment RUB 13,091,166.00 13,091,166.00 Health insurance Health insurance Provision of services Printing products Gas supply contract Gas supply contract RUB 97,204,800.00 97,204,800.00 RUB 10,817,160.00 10,817,160.00 RUB 41,521,002.20 41,521,002.20 RUB 12,120,000.00 12,120,000.00 RUB 1,250,602,000.00 1,250,602,000.00 RUB 39,621,000.00 39,621,000.00 Aircraft services RUB 21,609,883.00 21,609,883.00 Liability insurance Liability insurance Garbage disposal RUB 23,941,362.40 23,941,362.40 RUB 288,090,000.00 288,090,000.00 RUB 192,696.00 192,696.00 39 40 41 IYu/ATK/ VTK01 00031-14 IYu 010 0032-14 SD02-2501- 01-2501- 01/28 22.10.2014 27.11.2014 23.12.2014 42 29-OP 27.12.2014 43 DMS 0100003-14/24 27.01.2014 44 52 14.02.2014 45 51 14.02.2014 46 50 14.02.2014 47 99 27.03.2014 48 97 27.03.2014 49 98 27.03.2014 50 145 27.05.2014 OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company CJSC Golubaya Volna Resort OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company OJSC AL- MAZ-Okhrana Centre OJSC AL- MAZ-Okhrana Centre OJSC AL- MAZ-Okhrana Centre OJSC AL- MAZ-Okhrana Centre OJSC AL- MAZ-Okhrana Centre OJSC AL- MAZ-Okhrana Centre OJSC AL- MAZ-Okhrana Centre Insurance indemnity Insurance indemnity Sanatorium and spa treatment Health insurance Insurance services Security services Security services RUB 10,581,238.43 10,581,238.43 RUB 8,857,928.61 8,857,928.61 RUB 162,433,316.00 162,433,316.00 RUB 10,817,160.00 10,817,160.00 RUB 21,616,320.00 21,616,320.00 RUB 6,485,000.00 6,485,000.00 RUB 5,540,500.00 5,540,500.00 Maintenance RUB 590,499.99 590,499.99 Security services RUB 1,846,833.33 1,846,833.33 Maintenance RUB 196,833.33 196,833.33 Security services Security services RUB 2,161,666.67 2,161,666.67 RUB 29,470,385.88 29,470,385.88 A01/206-PR-NS, 2, A01/223-PR-NS, 3, 16.12.2014 A01/223-PR-NS, 3, 16.12.2014

228 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 229 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 51 2 15.10.2014 OJSC AL- MAZ-Okhrana Centre Security services RUB 5,834,622.33 5,834,622.33 68 2014-09/ ASP 01.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 414,980,684.00 414,980,684.00 52 81 10.02.2014 53 2014-06/ ASP 01.01.2014 54 22/14 14.02.2014 55 1-T 27.02.2014 56 05-01.14 01.01.2014 57 268 20.02.2014 58 70/14 P 28.04.2014 59 60 61 62 63 64 65 3 (additional agreement) 1 (additional agreement) 4 (additional agreement) 3 (additional agreement) 3 (additional agreement) 1 (additional agreement) No. 2014-10/ASP 20.05.2014 16.01.2014 16.01.2014 16.01.2014 16.01.2014 28.10.2014 01.01.2014 66 2401/14 24.01.2014 67 06 22.01.2014 OJSC SK ALROSA Insurance Company CJSC ALROSA Air Company Limited SA-Gas OJSC Mirny Town Printing House OJSC Almazy Anabara OJSC Mirny Town Printing House SA-Okhrana SA-Gas SA-Gas SA-Gas SA-Gas SA-Gas SA-Okhrana CJSC ALROSA Air Company Limited OJSC Mirny Town Printing House SA-Nyurba Motor transport RUB 5,913,654.36 5,913,654.36 Aircraft services RUB 7,621,836.00 7,621,836.00 Pipeline maintenance Printing products RUB 2,124,000.00 2,124,000.00 RUB 1,800,000.00 1,800,000.00 Property lease RUB 12,967,044.00 12,967,044.00 Printing products Provision of services Pipeline maintenance Real estate lease Real estate lease Real estate lease RUB 1,806,000.00 1,806,000.00 RUB 401,986.86 401,986.86 RUB 25,601,000.00 25,601,000.00 RUB 2,184,464.00 2,184,464.00 RUB 72,765,168.00 72,765,168.00 RUB 18,648,696.00 18,648,696.00 Property lease RUB 12,997,000.00 12,997,000.00 Security services RUB 6,906.19 6,906.19 Aircraft services RUB 8,431,443.00 8,431,443.00 Printing products Pre-production mining RUB 6,364,000.00 6,364,000.00 RUB 12,219,863,757.92 12,219,863,757.92 69 Addit. Agreement No.01 to the Contract No.2014-09/ASP 07.07.2014 70 53 11.12.2014 71 54 11.12.2014 72 A-08 30.01.2014 73 10/14-I 25.04.2014 74 53 01.07.2014 75 1 14.02.2014 76 1 03.03.2014 77 26 20.01.2014 78 27 24.01.2014 79 29 07.02.2014 80 28 12.02.2014 CJSC ALROSA Air Company Limited SA-Nyurba SA-Nyurba OJSC Mirny Town Housing Enterprise OJSC Bourevestnik RPE SA-Nyurba OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company ARCOS DIAMONDS ISRAEL LTD. Arcos Belgium N.V. ARCOS DIAMONDS ISRAEL LTD. ARCOS HONG KONG LIM- ITED Aircraft services RUB 3,221,724.00 3,221,724.00 Execution of mining and enrichment operations, treatment of diamond-bearing concentrates Execution of mining and enrichment operations, treatment of diamond-bearing concentrates Garbage disposal Measuring equipment Real estate lease Insurance services Health insurance Exhibiting diamonds Exhibiting diamonds Exhibiting diamonds Exhibiting diamonds RUB 10,446,516,022.40 10,446,516,022.40 RUB 6,486,659,018.80 6,486,659,018.80 RUB 8,251.08 8,251.08 RUB 62,250.00 62,250.00 RUB 1,818,323.87 2,145,622.41 RUB 719,003.00 719,003.00 RUB 23,856,360.00 23,856,360.00 USD 128,507.64 4,684,951.63 USD 140,469.79 4,998,055.60 USD 110,851.87 7,738,413.85 USD 135,295.08 4,829,804.35 A01-222-PR-NS, 39, 05.12.2014 A01-222-PR-NS, 39, 05.12.2014 196, 1, 12.04.2013

230 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 231 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 81 G-ATK 17-14/E 13.03.2014 OJSC SK ALROSA Insurance Company Insurance services RUB 560,838.00 560,838.00 98 2014-02/ ASP 31.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 221,943,324.00 221,943,324.00 82 1 31.07.2014 OJSC SK ALROSA Insurance Company Insurance services RUB 661,507.42 661,507.42 99 1 (additional agreement) 07.07.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 5,882,310.00 5,882,310.00 83 30 12.03.2014 ARCOS DIAMONDS ISRAEL LTD. Exhibiting diamonds USD 141,697.71 4,828,647.03 100 2015-04/ ASP 11.11.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 235,777,478.00 235,777,478.00 A01/223-PR-NS, 3, 16.12.2014 84 31 18.04.2014 Arcos Belgium N.V. Exhibiting diamonds USD 131,200.81 4,516,692.84 101 2 (additional agreement) 08.12.2014 OJSC Almazy Anabara Exploration operations RUB 27,771,623.00 27,771,623.00 A01/222-PR-NS, 4, 05.12.2014 85 32 30.04.2014 ARCOS DIAMONDS ISRAEL LTD. Exhibiting diamonds USD 76,826.06 2,655,807.75 102 2014-11/ ASP 09.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 125,935,642.00 125,935,642.00 86 86 26.06.2014 OJSC NPP Bourevestnik Screening equipment RUB 8,289,972.00 8,289,972.00 103 1 (additional agreement) 07.07.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 2,453,791.00 2,453,791.00 87 36 14.08.2014 Arcos Belgium N.V. Exhibiting diamonds USD 127,449.61 5,905,747.28 104 11-14/P 09.04.2014 SA-Lena Building Company Cargo transportation RUB 5,629,304.06 5,629,304.06 88 37 26.08.2014 ARCOS HONG KONG LIM- ITED Exhibiting diamonds USD 118,799.52 5,504,920.28 105 56/2014 01.10.2014 ALROSA-VGS LLC Repair works RUB 530,941.05 530,941.05 89 39 30.09.2014 Arcos Belgium N.V. Exhibiting diamonds USD 99,838.85 5,448,076.25 106 038500 01.02.2014 OJSC NPP Bourevestnik Lease of non-residential premises RUB 133,806.64 133,806.64 90 40 15.10.2014 ARCOS DIAMONDS ISRAEL LTD. Exhibiting diamonds USD 142,366.61 7,407,946.90 107 0240914- SA 01.10.2014 OJSC Severalmaz Lease of non-residential premises RUB 296,302.16 296,302.16 91 lyu 010 0029-14 20.10.2014 OJSC SK ALROSA Insurance Company Insurance services RUB 559,224.48 559,224.48 108 2 (additional agreement) 10.02.2014 Commercial Bank MAK- Bank (LLC) Real estate lease RUB 367,970.58 367,970.58 92 G-ATK 17-14/B 22.01.2014 OJSC SK ALROSA Insurance Company Insurance services RUB 599,133.00 599,133.00 109 9/13 01.01.2014 OJSC Severalmaz Geological contract RUB 76,775,744.20 76,775,744.20 93 No.20 08.05.2014 OJSC AL- MAZ-Okhrana Centre Security services RUB 4,391,542.44 4,391,542.44 110 Additional agreement No.3 01.12.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 843,112.00 843,112.00 94 0030914/ SA- 15.09.2014 OJSC Severalmaz Production of diamonds RUB 1,195,181.05 1,195,181.05 A01/220-PR-NS, 8, 24.04.2014 111 2 (additional agreement) 01.07.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 773,752.00 773,752.00 95 DMS 0100004-15 17.12.2014 OJSC SK ALROSA Insurance Company Health insurance RUB 8,333,300.00 8,333,300.00 112 2014-01/ ASP 01.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 49,383,059.00 49,383,059.00 96 DMS 0100007-15 17.12.2014 97 PD-02-V/14 03.02.2014 OJSC SK ALROSA Insurance Company SA-Nyurba Health insurance Geological contract RUB 314,600.00 314,600.00 RUB 424,017,000.00 424,017,000.00 113 No. 1/24/ 14/24/14 "O" Additional agreement 25.06.2014 SA-Okhrana Security services RUB 1,010,872.97 1,010,872.97

232 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 233 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 114 3-U/14 03.02.2014 SA-Nyurba Operational exploration RUB 326,185,323.20 326,185,323.20 130 27 01.01.2014 SA-Gas Fuels and lubricants RUB 22,892,743.59 22,892,743.59 115 2 (additional agreement) 25.08.2014 SA-Nyurba Geological contract RUB 8,784,637.44 8,784,637.44 131 1 (additional agreement) 26.06.2014 SA-Gas Fuels and lubricants RUB 1,319,686.83 1,319,686.83 116 1 (additional agreement) 18.02.2014 SA-Nyurba Geological contract RUB 9,061,828.88 9,061,828.88 132 67 01.01.2014 Commercial Bank MAK- Bank (LLC) Fuels and lubricants RUB 157,769.73 157,769.73 117 3-pg/14 03.02.2014 SA-Nyurba Exploration operations RUB 15,785,025.20 15,785,025.20 133 1 (additional agreement) 25.06.2014 Commercial Bank MAK- Bank (LLC) Fuels and lubricants RUB 165,704.80 165,704.80 118 1 (additional agreement) 18.02.2014 SA-Nyurba Provision of services RUB 7,004,488.26 7,004,488.26 134 66 01.01.2014 Commercial Bank MAK- Bank (LLC) Fuels and lubricants RUB 236,284.80 236,284.80 119 4-U/14 01.04.2014 SA-Nyurba Geological contract RUB 23,118,501.00 23,118,501.00 135 1 (additional agreement) 25.06.2014 Commercial Bank MAK- Bank (LLC) Fuels and lubricants RUB 248,168.83 248,168.83 120 10 09.01.2014 OJSC Mirny Town Printing House Printing products RUB 320,000.00 320,000.00 136 28 01.01.2014 CJSC ALROSA Air Company Limited Fuels and lubricants RUB 969,343,801.58 969,343,801.58 121 29 01.01.2014 SA-Okhrana Fuels and lubricants RUB 6,581,085.88 6,581,085.88 137 1 (additional agreement) 20.06.2014 CJSC ALROSA Air Company Limited Fuels and lubricants RUB 899,638.10 899,638.10 122 39 01.01.2014 123 31 01.01.2014 124 40 01.01.2014 125 126 127 1 (additional agreement) 2 (additional agreement) 2 (additional agreement) 20.06.2014 01.10.2014 20.06.2014 128 32 01.01.2014 129 30 01.01.2014 SA-Nyurba OJSC Lensk Town Heat and Electric Networks Enterprise OJSC Lensk Town Housing Enterprise OJSC Lensk Town Housing Enterprise OJSC Lensk Town Housing Enterprise OJSC Mirny Town Housing Enterprise OJSC Mirny Town Housing Enterprise SA-Spetsbureniye Fuels and lubricants Fuels and lubricants Fuels and lubricants Fuels and lubricants Fuels and lubricants Fuels and lubricants Fuels and lubricants Fuels and lubricants RUB 447,521.35 447,521.35 RUB 13,683,568.83 13,683,568.83 RUB 224,532.96 224,532.96 RUB 236,490.20 236,490.20 RUB 3,954.04 3,954.04 RUB 450,291.12 450,291.12 RUB 7,460,416.91 7,460,416.91 RUB 38,530,103.50 38,530,103.50 A01/215-PR-NS, 4, 14.06.2014 138 2014-01/TA 01.01.2014 139 140 1 (additional agreement) 3 (additional agreement) 30.06.2014 20.11.2014 141 02-14/P 27.01.2014 142 2 (additional agreement) 13.11.2014 143 01-14/P 09.01.2014 144 145 146 1 (additional agreement) 117/1/14 M/1162 044500/ 1129 19.11.2014 15.09.2014 01.10.2014 CJSC ALROSA Air Company Limited CJSC ALROSA Air Company Limited SA-Lena Building Company SA-Lena Building Company SA-Lena Building Company SA-Lena Building Company SA-Lena Building Company SA-Okhrana OJSC NPP Bourevestnik Air transportation of passengers and goods Provision of services Cargo transportation Cargo transportation Cargo transportation Cargo transportation Cargo transportation Provision of services RUB 938,723,749.00 938,723,749.00 RUB 12,537,100.00 12,537,100.00 RUB 7,816,151.25 7,816,151.25 RUB 158,731,750.18 158,731,750.18 RUB 49,000,000.00 49,000,000.00 RUB 526,681,437.58 526,681,437.58 RUB 121,000,000.00 121,000,000.00 RUB 289,773.83 289,773.83 Equipment RUB 22,161,162.22 22,161,162.22 A01/220-PR-NS, 5, 29.09.2014 A01/220-PR-NS, 6, 29.09.2014

234 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 235 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 147 47/14-t 12.05.2014 148 lyu 011 0009-14 18.04.2014 149 10/14 P 15.07.2014 150 9P-2801/14 16.01.2014 151 2U 22.04.2014 152 Drilling operations 1SR- 0508/14 05.08.2014 OJSC Lensk Town Heat and Electric Networks Enterprise OJSC SK ALROSA Insurance Company SA-Okhrana OJSC Mirny Town Printing House SA-Spetsbureniye SA-Spetsbureniye Heat supply contract Property insurance RUB 28,194,838.32 28,194,838.32 RUB 228,527.59 228 527.59 Maintenance RUB 122,515.88 122,515.88 Printing products Drilling operations RUB 299,784.00 299,784.00 RUB 63,580,000.00 63,580,000.00 RUB 149,500,000.00 149,500,000.00 A01/215-PR-NS, 7, 14.06.2014 A01/223-PR-NS, 3, 16.12.2014 163 3/3/14 "M" 11.03.2014 164 3/5/2014 "M" 01.07.2014 165 3/6/14 "M" 03.06.2014 166 3/8/14 "M" 01.07.2014 167 18-tbo/14 01.01.2014 168 52/14-t 05.02.2014 SA-Okhrana SA-Okhrana SA-Okhrana SA-Okhrana OJSC Lensk Town Housing Enterprise OJSC Lensk Town Heat and Electric Networks Enterprise Repair works RUB 590,165.28 590,165.28 Equipment installation Equipment installation Equipment installation Garbage disposal Heat and water supply contract RUB 493,435.87 493,435.87 RUB 80,729.44 80,729.44 RUB 339,933.90 339,933.90 RUB 53,046.70 53,046.70 RUB 1,738,379.01 1,738,379.01 153 1 (additional agreement) 30.01.2014 OJSC Mirny Town Printing House Printing products RUB 1,500,000.00 1,500,000.00 169 3/2-R/14 28.05.2014 OJSC Vilyuiskaya HPP-3 Repair works RUB 40,462.00 40,462.00 154 2 (additional agreement) 15.12.2014 SA-Nyurba Construction contract RUB 87,638,000.00 87,638,000.00 170 89/15 10.02.2014 SA-Gas Lease of non-residential premises RUB 723,807.63 723,807.63 155 1 (additional agreement) 30.06.2014 SA-Spetsbureniye Lease of non-residential premises RUB 48,274.18 48,274.18 171 2014-04/ ASP 01.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 4,118,159.00 4,118,159.00 156 3/1/14 "M" 11.02.2014 SA-Okhrana Equipment installation RUB 468,281.69 468,281.69 172 1/21/14"О" 05.05.2014 SA-Okhrana Security services RUB 1,763,920.63 1,763,920.63 157 2014-08/ ASP 01.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 15,425,059.00 15,425,059.00 173 12-A/14 16.01.2014 OJSC Mirny Town Printing House Printing products RUB 250,000.00 250,000.00 158 3/14 "M" 21.01.2014 SA-Okhrana Equipment installation RUB 519,519.31 519,519.31 174 1 (additional agreement) 07.07.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 29,141.00 29,141.00 159 2014/006 "PR" 07.02.2014 SA-Gas Construction materials RUB 761,426.52 761,426.52 175 2014-15/ ASP 30.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 3,235,134.00 3,235,134.00 160 2014/005- "U" 01.01.2014 SA-Gas Water supply contract RUB 155,018.02 155,018.02 176 5/14 17.01.2014 OJSC Mirny Town Printing House Printing works RUB 779,457.02 779,457.02 161 3/2/14"R" 24.02.2014 SA-Okhrana Fire safety services RUB 474,826.62 474,826.62 177 20/121-D 01.03.2014 CJSC ALROSA Air Company Limited Dosimetric control RUB 860,933.75 860,933.75 162 5 P 26.03.2014 SA-Spetsbureniye Drilling operations RUB 136,954,713.00 136,954,713.00 A01/220-PR-NS, 3, 29.09.2014 178 20/57-2d 12.03.2014 SA-Gas Testing of protective equipment RUB 109,240.90 109,240.90 179 20/97-A 01.01.2014 SA-Gas Property lease RUB 10,922,764.98 10,922,764.98

236 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 237 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 180 lyu 020 004-14 03.03.2014 OJSC SK ALROSA Insurance Company Insurance services RUB 186,669.57 186,669.57 196 7/112-14 02.04.2014 SA-Lena Building Company Fee-based services RUB 580,796.00 580,796.00 181 1 (additional agreement) 04.02.2014 SA-Nyurba Field supervision RUB 3,392,588.92 3,392,588.92 197 2014-03/ ASP 01.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 24,853,390.00 24,853,390.00 182 1 (additional agreement) 11.08.2014 SA-Nyurba Research and technical services RUB 6,958,224.00 6,958,224.00 A01/201-PR-NS, 21, 06.09.2013 198 1 (additional agreement) 07.07.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 70,839.00 70,839.00 183 1/14/14 "O" (additional agreement) 04.06.2014 184 09-01-14 20.01.2014 185 064-14/01/ ITU 30.01.2014 186 6041 14.03.2014 SA-Okhrana OJSC NPP Bourevestnik OJSC Severalmaz SA-Nyurba Security services Research and development work Research and survey work Design and survey work RUB 1,629,360.05 1,629,360.05 RUB 2,100,000.00 2,100,000.00 RUB 1,298,000.00 1,298,000.00 RUB 4,318,228.88 4,318,228.88 199 27-14/U 17.06.2014 200 85/14-t 21.11.2014 201 85/14-v 21.11.2014 Fee-based SA-Lena Building Company services OJSC Lensk Town Heat Heat supply and Electric contract Networks Enterprise OJSC Lensk Town Heat Provision of and Electric services Networks Enterprise RUB 65,924.10 65,924.10 RUB 169,967,498.50 169,967,498.50 RUB 267,917.75 267,917.75 187 6070 28.05.2014 188 6071 28.05.2014 189 6072 28.05.2014 SA-Nyurba SA-Nyurba SA-Nyurba Design and survey work Design and survey work Design and survey work RUB 17,125,926.46 17,125,926.46 RUB 22,994,461.76 22,994,461.76 RUB 7,579,764.22 7,579,764.22 202 85/14 21.11.2014 203 MTsU-1 01.11.2014 OJSC Lensk Town Heat and Electric Networks Enterprise Almaznaya Osen Non- State Pension Fund Water supply contract Real estate lease RUB 8,113,352.13 8,113,352.13 RUB 462,227.49 462,227.49 190 DGTM7-000007 03.06.2014 191 19 25.07.2014 192 019-14/07 22.12.2014 193 064-15/01 01.12.2014 194 DMS 0100001-15 18.04.2014 195 7/98-D 09.01.2014 CJSC Mining and Metallurgical Company Timir SA-Gas OJSC Severalmaz OJSC Severalmaz Almaznaya Osen Non- State Pension Fund OJSC Lensk Town Heat and Electric Networks Enterprise Design and survey work Provision of services Research and survey work Research and survey work Lease of non-residential premises Real estate lease RUB 12,000,000.00 12,000,000.00 RUB 134,402.00 134,402.00 RUB 31,723,440.37 31,723,440.37 RUB 2,385,156.30 2,385,156.30 RUB 506,004.12 506,004.12 RUB 158,419,889.92 158,419,889.92 A01/223-PR-NS, 3, 16.12.2014 A01/223-PR-NS, 3, 16.12.2014 204 7/11-15 01.12.2014 205 7/4-A/15 21.10.2014 206 207 208 209 Commercial Bank MAK- Bank (LLC) 1540/5- TE/14 SA-Gas 1540/1- E/14 SA-Gas 1540/4- PD/14 Soil preparation 1540/4- U/14 09.01.2014 09.01.2014 11.01.2014 10.01.2014 OJSC Suntartseolit SA-Gas SA-Gas Cargo transportation Lease of non-residential premises Heat supply contract Power supply contract Storage of and refill with fuels and lubricants RUB 24,382,831.12 24,382,831.12 RUB 44,827.04 44,827.04 RUB 143,538.00 143,538.00 RUB 987,590.00 987,590.00 RUB 2,815,843.00 2,815,843.00 RUB 227,141.00 227,141.00 A01/223-PR-NS, 3, 16.12.2014 A01/223-PR-NS, 3, 16.12.2014

238 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 239 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 210 2014-05/ ASP 30.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 11,905,785.00 11,905,785.00 225 2 (additional agreement) 10.01.2014 CJSC ALROSA Air Company Limited Airport and ground handling RUB 10,950,983.00 10,950,983.00 211 Additional agreement No.1 07.07.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 244,429.00 244,429.00 226 3 (additional agreement) 10.01.2014 CJSC ALROSA Air Company Limited Airport and ground handling RUB 1,322,942.00 1,322,942.00 212 9/14 R 24.03.2014 SA-Okhrana Maintenance RUB 232,058.23 232,058.23 227 13 01.01.2014 CJSC ALROSA Air Company Limited Storage of and refill with fuels and lubricants RUB 315,850.60 315,850.60 213 34/14-t 10.01.2014 214 34/13 10.01.2014 215 216 1540/10-26.08.2014 TE/14 3 (additional agreement) 01.01.2014 217 1 09.01.2014 1 (additional 218 agree- 10.01.2014 ment) 219 475 01.01.2014 220 474 01.01.2014 1 (addition- 221 al agreement) 10.01.2014 222 1/16/14"О" 13.02.2014 223 473 01.01.2014 1 (additional 224 agree- 10.01.2014 ment) OJSC Lensk Town Heat and Electric Networks Enterprise OJSC Lensk Town Heat and Electric Networks Enterprise SA-Gas CJSC ALROSA Air Company Limited OJSC Mirny Town Printing House CJSC ALROSA Air Company Limited CJSC ALROSA Air Company Limited CJSC ALROSA Air Company Limited CJSC ALROSA Air Company Limited SA-Okhrana CJSC ALROSA Air Company Limited CJSC ALROSA Air Company Limited Heat supply contract RUB 5,330,327.15 5,330,327.15 Water supply contract RUB 50,528.23 50,528.23 Heat supply contract RUB 133,106.00 133,106.00 Rental of vehicles RUB 130,173,746.31 130,173,746.31 Printing works RUB 1,600,480.37 1,600,480.37 Airport and ground handling RUB 658,718.00 658,718.00 Airport and ground handling RUB 162,817,980.00 162,817,980.00 Airport and ground handling RUB 80,108,361.00 80,108,361.00 Provision of services RUB 454,218.00 454,218.00 Security services RUB 2,609.53 2,609.53 Airport and ground handling RUB 577,094,465.00 577,094,465.00 Airport and ground handling RUB 86,175,802.00 86,175,802.00 228 1401 01.01.2014 229 18-2014 27.06.2014 230 16/1/14 М 23.05.2014 231 2 17.01.2014 232 4 12.03.2014 233 73/g 14.02.2014 234 2 26.06.2014 235 G-ATK17-14/T 27.03.2014 DMS- 236 0100008-22.04.2014 14 237 33/D 12.05.2014 238 32-449/14 01.04.2014 239 97/14 "O" 01.01.2014 240 12/14 "O" 01.01.2014 CJSC ALROSA Air Company Limited CJSC ALROSA Air Company Limited SA-Okhrana OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company OJSC AL- MAZ-Okhrana Centre OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company OJSC SK ALROSA Insurance Company OJSC AL- MAZ-Okhrana Centre CJSC ALROSA Air Company Limited SA-Okhrana SA-Okhrana Agency contract RUB 64,294,000.00 64,294,000.00 Cargo transportation RUB 4,990,118.30 4,990,118.30 Equipment repair RUB 2,345,010.57 2,345,010.57 Health insurance RUB 1,476,670.50 1,476,670.50 Health insurance RUB 1,477,342.80 1,477,342.80 Provision of services RUB 1,040,871.00 1,040,871.00 Insurance indemnity RUB 294,176.25 294,176.25 Insurance indemnity RUB 1,015,986.96 1,015,986.96 Health insurance RUB 1,454,400.00 1,454,400.00 Security services RUB 3,334,762.00 3,334,762.00 Aircraft services RUB 7,161,233.00 7,161,233.00 Security services RUB 280,340.73 280,340.73 Security services RUB 1,338,516.85 1,338,516.85 196, 1.8., 12.04.2013 196, 1.8., 12.04.2013

240 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 241 No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes No. of item number Date of Counter- PARTIES and PARTICIPANTS in the trans- ACTION SUBJECT of the Currency of the Amount of the amount in rouble terms INFORMATION on APPROVAL, the Minutes No., item of the Minutes, DATE of the Minutes 241 02-OP 09.01.2014 SA-Gas Training services RUB 163,052.40 163,052.40 257 78/14"S" 24.07.2014 SA-Okhrana Provision of services RUB 87,320.00 87,320.00 242 03-OP 09.01.2014 OJSC Mirny Town Housing Enterprise Training services RUB 482,384.00 482,384.00 258 99/14 "M" 23.09.2014 SA-Okhrana Provision of services RUB 2,327,978.07 2,327,978.07 243 01-OP 11.02.2014 OJSC Mirny Town Housing Enterprise Training services RUB 88,400.00 88,400.00 259 5/14 "R" 02.10.2014 SA-Okhrana Construction and installation works RUB 1,399,955.65 1,399,955.65 244 01-PPP 06.02.2014 OJSC Mirny Town Printing House Printing products RUB 649,141.60 649,141.60 260 P-07/2014 16.04.2014 OJSC Mirny Town Housing Enterprise Repair works RUB 32,125,500.00 32,125,500.00 245 08-OP 26.02.2014 SA-Gas Training services RUB 47,577.60 47,577.60 261 2014-07/ ASP 01.01.2014 CJSC ALROSA Air Company Limited Aircraft services RUB 3,876,173.00 3,876,173.00 246 508200 22.04.2014 OJSC NPP Bourevestnik Training services RUB 375,636.11 375,636.11 262 1/18/14 "O" 06.05.2014 SA-Okhrana Security services RUB 938,855.44 938,855.44 247 15-OP 08.07.2014 OJSC Mirny Town Housing Enterprise Training services RUB 67,401.60 67,401.60 263 2 (additional agreement) 01.10.2014 OJSC Mirny Town Printing House Printing works RUB 95,500.00 95,500.00 248 28-OP 27.08.2014 SA-Gas Training services RUB 161,235.20 161,235.20 264 1 (additional agreement) 01.06.2014 OJSC Mirny Town Printing House Printing works RUB 350,000.00 350,000.00 249 30-OP 27.08.2014 SA-Gas Training services RUB 17,936.00 17,936.00 265 1-MTs 09.01.2014 OJSC Mirny Town Printing House Printing works RUB 466,000.00 466,000.00 250 33-OP 26.09.2014 SA-Gas Training services RUB 146,036.80 146,036.80 266 1 (additional agreement) 27.12.2014 OJSC SK ALROSA Insurance Company Health insurance RUB 10,817,160.00 10,817,160.00 A01/223-PR-NS, 3, 16.12.2014 251 509100 17.10.2014 OJSC NPP Bourevestnik Training services RUB 114,481.16 114,481.16 252 36-OP 23.10.2014 OJSC Mirny Town Housing Enterprise Training services RUB 38,515.20 38,515.20 253 38-OP 26.11.2014 OJSC Mirny Town Housing Enterprise Training services RUB 149,848.20 149,848.20 254 37-OP 10.11.2014 SA-Gas Training services RUB 81,490.80 81,490.80 255 A-06 09.01.2014 OJSC Mirny Town Housing Enterprise Garbage disposal RUB 860,992.32 860,992.32 256 78/14 "O" 16.06.2014 SA-Okhrana Security services RUB 3,626,772.48 3,626,772.48

242 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 243 Information on ALROSA s Compliance with the Corporate Code of Conduct per the RECOMMENDATIONS of the FFMS of Russia The report on compliance with the principles and recommendations of the Code of Corporate Governance was designed and prepared in accordance with recommendations of the Bank of Russia No. 06-52/2825 as of 30.03.2015 On Disclosure of Information on Compliance with the Provisions of the Code of Corporate Governance in the Annual Report 2014 of the Joint-Stock Company as well as in accordance with the comments of CJSC MICEX SE (Stock Exchange) No. 31-14/236 as of 13.03.2015. No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS 1 2 3 4 I. Shareholders' rights and equal CONDITIONS for them in the exercise of their rights 1.1. The Company shall ensure equal and fair treatment of all shareholders in the exercise of their right to participate in the management of the Company. The system and practice of the corporate governance shall ensure equal conditions for all shareholders owners of shares of one category (type), including minority (small) shareholders and foreign shareholders, as well as equal treatment of them by the Company The Company has adopted an internal document defining main procedures for preparation, convening and holding of the Shareholders General Meeting, that complies with the recommendations of the Corporate Governance Code, including the following obligations of the Company: 1.1.1. - to inform shareholders on holding of the Shareholders General Meeting and provide access to materials, as well as post a message and materials on the Company s web-site on the Internet, at least 30 days prior to the date of the meeting (unless a longer period is specified by the legislation of the Russian Federation); - to disclose the information on the date of compilation of the list of persons entitled to participate in the Shareholders General Meeting, at least 7 days prior to the date; - to provide additional information and materials concerning the agenda in accordance with the recommendations of the Corporate Governance Code before the Shareholders General Meeting. Complied withto disclose the information on the date of compilation of the list of persons entitled to participate in the Shareholders General Meeting, at least 7 days prior to the date. The Corporate Governance Code was approved by the Board of Directors of the Bank of Russia on March 21, 2014; the Company implements the recommendations of the Code by making amendments to the internal documents. 1.1.2. In the course of preparing and conducting the Shareholders General Meeting the Company has taken the responsibility to provide shareholders with an opportunity to ask questions about the Company s activity to the members of the management and control bodies, the members of the Audit Committee, the Chief Accountant and auditors of the Company, as well as the candidates to the management and control bodies. The foregoing obligations are set forth in the Charter or internal documents of the Company. Complied with

244 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 245 No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS 1.1.3. The Company has accepted responsibility to adhere to a principle of inadmissibility of committing actions which cause artificial redistribution of corporate control (for example, voting with quasi-treasury shares, taking decision on payment of dividends on preferred shares under the conditions of limited financial means, taking decision on non-payment of dividends on preferred shares defined in the Charter of the Company when sufficient sources for their payment are available). The foregoing obligations are set forth in the Charter or internal documents of the Company. Complied with 1.1.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. Complied with 1.2 The shareholders shall be given an equal and fair opportunity to participate in the Company s profits by receiving dividends The Company has approved an internal document defining the Dividend Policy of the Company which complies with the recommendations of the Corporate Governance Code and specifies the following: 1.2.1. - procedure for determining a part of the net profit (for Companies preparing consolidated financial statements it relates to the minimum part (portion) of the consolidated net income) to pay dividends, as well as the conditions under which dividends are declared; Complied with - minimum size of dividends on the Company s shares of different categories (types); - obligation to disclose the document defining the Dividend Policy of the Company on the Company s website on the Internet. 1.2.2. Other key, in the Company s view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. II. BOARD OF DIRECTORS 2.1. The Board of Directors determines main long-term strategic directions of the Company s activity, key performance indicators, implements strategic management of the Company, defines main principles and approaches to arrange the risk management and internal control system in the Company, supervises the activity of the Company s executive bodies, determines the Company s policy on remuneration of members of the Board of Directors and executive bodies, as well as implements other key functions 2.1.1. 2.1.2. 2.2. The Company has established the Board of Directors which: - determines main long-term strategic directions of the Company s activity, key performance indicators of the Company; - supervises the activity of the Company s executive bodies; - defines principles and approaches to arrange the risk management and internal control system in the Company; - determines the Company s policy on remuneration of members of the Board of Directors, executive bodies and other key officers of the Company. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. The Board of Directors shall be an effective and professional management body of the Company which is able to make objective independent judgments and take decisions in favour of the Company and its shareholders. The Chairman of the Board of Directors shall contribute to more effective implementation of the tasks assigned to the Board of Directors. The Board of Directors meetings, preparation to them and participation of members of the Board of Directors shall ensure an effective operation of the Board of Directors. Complied with Complied with

246 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 247 No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS 2.2.1. The Chairman of the Board of Directors is an independent director; or a senior independent director is elected among independent directors who coordinates the work of independent directors and is responsible for interaction with the Chairman of the Board of Directors The Chairman of the Board of Directors is an independent director; or a senior independent director is elected among independent directors who coordinates the work of independent directors and is responsible for interaction with the Chairman of the Board of Directors The Company carries out the activity on improvement of the corporate governance quality. Detailed information on the plans for 2015 is provided in Section 3 of the Annual Report (please see the Road Map). Internal documents of the Company specify the procedure for preparation and conducting the meetings of the Board of Directors, that provides an opportunity for the members of the Board of Directors to adequately get prepared for the meeting, and stipulates, in particular: - terms of notification of the members of the Board of Directors on the forthcoming meeting; 2.2.2. - terms for submitting documents (ballots) for voting and receiving completed documents (ballots) while holding meetings in absentia; Complied with - possibility of sending and recording a written opinion on issues of the agenda for the members of the Board of Directors being absent at a meeting held in presentia; - possibility to discuss and vote by means of conference calls and video-conferencing. 2.2.3. The most important issues shall be solved at meetings of the Board of Directors held in presentia. The list of such questions is in line with the recommendations of the Corporate Governance Code 21. Complied with 2.2.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance Complied with 2.3. The Board of Directors shall consist of sufficient number of independent directors. 2.3.1. Independent directors shall comprise not less than one-third of the elected members of the Board of Directors. Independent directors shall comprise not less than one-third of the elected members of the Board of Directors. 2.3.2. The independent directors need to fully meet the independence criteria recommended by the Corporate Governance Code. 2.3.3. The Board of Directors (Committee on nominations (human resources, appointments)) shall evaluate the compliance of candidates nominated to the Board of Directors with independence criteria. 2.3.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. 2.4. The Board of Directors shall establish committees for the preliminary consideration of the most important issues of the Company s activity. 2.4.1. The Board of Directors of the Company has established the Audit Committee consisting of independent directors; the Committee s functions are assigned in internal documents and in line with the recommendations of the Corporate Governance Code 22. The Board of Directors of the Company has established the Audit Committee consisting of independent directors; the Committee s functions are assigned in internal documents and in line with the recommendations of the Corporate Governance Code. The Company carries out the activity on improvement of the corporate governance quality. Detailed information on the plans for 2015 is provided in Section 3 of the Annual Report (please see the Road Map). 2.4.2. The Board of Directors has established the Remuneration Committee (can be combined with the Committee on nominations (human resources, appointments)), consisting of independent directors, the functions whereof are in line with the recommendations of the Corporate Governance Code 23. The Board of Directors has established the Remuneration Committee (can be combined with the Committee on nominations (human resources, appointments)), consisting of independent directors, the functions whereof are in line with the recommendations of the Corporate Governance Code. The Company carries out the activity on improvement of the corporate governance quality. Detailed information on the plans for 2015 is provided in Section 3 of the Annual Report (please see the Road Map). 21 Specified in paragraph 168 of Section B of the Corporate Governance Code 22 Specified in paragraph 172, Section B of the Corporate Governance Code 23 Specified in paragraph 180, Section B of the Corporate Governance Code

248 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 249 No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS 2.4.3. The Board of Directors has established the Committee on nominations (human resources, appointments) (can be combined with the Remuneration Committee), most of the members of which are independent directors; the functions whereof are in line with the recommendations of the Corporate Governance Code 24. The Board of Directors has established the Committee on nominations (human resources, appointments) (can be combined with the Remuneration Committee), most of the members of which are independent directors; the functions whereof are in line with the recommendations of the Corporate Governance Code. The Company carries out the activity on improvement of the corporate governance quality. Detailed information on the plans for 2015 is provided in Section 3 of the Annual Report (please see the Road Map). 2.4.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. 2.5. The Board of Directors shall ensure carrying out of performance assessment of the Board of Directors, its committees and members of the Board of Directors. 2.5.1. Performance assessment of the Board of Directors shall be made regularly, at least once a year; besides the assessment shall be carried out with the assistance of an external organization (consultant) at least once every three years. Complied with 2.5.2. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. III. Corporate SECRETARY of the Company 3.1. The Corporate Secretary (or special structural unit headed by the Corporate Secretary) shall ensure an effective on-going interaction with the shareholders, coordination of the Company s activities on protection of the shareholders rights and interests, support of effective work of the Board of Directors. 3.1.1. The Corporate Secretary is accountable to the Board of Directors; he/she shall be appointed and dismissed from the position by the decision or with the consent of the Board of Directors. Complied with 3.1.2. The Company has adopted an internal document which defines the Corporate Secretary s rights and obligations (The Regulations on the Corporate Secretary) the content whereof is in line with the recommendations of the Corporate Governance Code 25. Complied with 3.1.3. The Corporate Secretary's position cannot be combined with other functions in the Company. The Corporate Secretary is vested with functions in accordance with the recommendations of the Corporate Governance Code. 26 The Corporate Secretary shall have sufficient resources to carry out his/her functions. Complied with 3.1.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. Complied with IV. The SYSTEM of REMUNERATION of the members of the BOARD of DIRECTORS, executive bodies and OTHER key ADMINISTRATIVE officers of the Company. 4.1. The level of remuneration paid by the Company should be sufficient to attract, motivate and retain persons with competence and expertise required for the Company. Payment of remuneration to the members of the Board of Directors, executive bodies and other key officers of the Company shall be made in accordance with the Remuneration Policy of the Company. 4.1.1. The Company regulates all payments, benefits and allowances provided to the members of the Board of Directors, executive bodies and other key officers of the Company. Complied with 4.1.2. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. Complied with 4.2 The system of remuneration of the members of the Board of Directors shall provide convergence of the directors financial interests and the shareholders long-term financial interests. 24 Specified in paragraph 186, Section B of the Corporate Governance Code. 25 Specified in paragraph 217, Section B of the Сorporate Governance Сode. 26 Specified in paragraph 218, Section B of the Сorporate Governance Сode.

250 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 251 No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS 4.2.1. The Company does not apply other forms for remuneration of the members of the Board of Directors in addition to the fixed annual remuneration. Complied with 4.2.2. The members of the Board of Directors of the Company have no opportunity to participate in stock options plans; and the right to sell the Company s shares belonging to them is not stipulated by achievement of certain performance indicators. Complied with 4.2.3. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. 4.3 The system of remuneration of the Company s executive bodies and other key officers shall consider dependence of remuneration on the Company s performance and their personal contribution to this performance. 4.3.1. Long-term motivation program for members of executive bodies and other key officers is introduced in the Company. Long-term motivation program for members of executive bodies and other key officers is introduced in the Company. The Company has planned corresponding activities within the framework of the long-term development program; more detailed information is provided in Section 3 of the Annual Report (please see the Road Map). 4.3.2. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. V. Risk MANAGEMENT and internal CONTROL SYSTEM 5.1. A well-functioning system of risk management and internal control designed to ensure reasonable assurance of achieving the Company s goals shall be established in the Company. 5.1.1. The Board of Directors has set the principles and approaches to arrange the risk management and internal control system in the Company. Complied with 5.1.2. The Company has established a separate structural division on risk management and internal control. Complied with 5.1.3. The Company has developed and implemented the Anticorruption Policy of the Company which defines measures to be taken for development of corporate culture elements, organizational structure, rules and procedures for corruption prevention. Complied with 5.1.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. Complied with 5.2. The Company shall carry out internal audit for systematic independent evaluation of reliability and effectiveness of the risk management and internal control system, as well as corporate governance practices. The Company has established a separate structural division performing internal audit functions; it is under the control of the Board of Directors of the Company. Functions of this division are in line with the recommendations of the Corporate Governance Code and include the following: 5.2.1. - evaluation of effectiveness of the internal control system; Complied with - evaluation of effectiveness of the risk management system; - evaluation of the corporate governance (in the absence of the Corporate Governance Committee). 5.2.2. The head of the internal audit division shall report to the Board of Directors; he/she is appointed and dismissed from position by the resolution of the Board of Directors of the Company. Complied with 5.2.3. The Company has approved the Internal Audit Policy (the Regulations on Internal Audit) that defines the objectives, tasks and functions of internal audit. The Company has approved the Internal Audit Policy (the Regulations on Internal Audit) that defines the objectives, tasks and functions of internal audit. The Company has planned corresponding activities; more detailed information is provided in Section 3.4 of the Annual Report the Internal Control System. 5.2.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance.

252 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 253 No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS VI. Disclosure of information on the Company, the INFORMATION POLICY of the Company 6.1. The Company and its activities shall be transparent to the shareholders, investors and other stakeholders. 6.1.1. The Company has approved an internal document that defines the Information Policy of the Company, which is in line with the recommendations of the Corporate Governance Code. The Information Policy of the Company includes the following means of communication with investors and other stakeholders: - creating a special web-site of the Company on the Internet where answers to typical FAQs of shareholders and investors, a regularly updated calendar of corporate events, as well as other useful information for shareholders and investors to be posted; - holding regular meetings of members of the executive bodies and other key officers of the Company with analysts; - regular presentations (including in the form of teleconferences, webcasts) and meetings with the members of management bodies and other key officers of the Company, including those accompanying the publication of accounting (financial) statements of the Company, or associated with the main investment projects and plans of strategic development of the Company. The Company has approved an internal document that defines the Information Policy of the Company, which is in line with the recommendations of the Corporate Governance Code. The Information Policy of the Company includes the following means of communication with investors and other stakeholders: - creating a special web-site of the Company on the Internet where answers to typical FAQs of shareholders and investors, regularly updated calendar of corporate events, as well as other useful information for shareholders and investors to be posted; - holding regular meetings of members of the executive bodies and other key officers of the Company with analysts; - regular presentations (including in the form of teleconferences, webcasts) and meetings with the members of management bodies and other key officers of the Company, including those accompanying the publication of accounting (financial) statements of the Company, or associated with the main investment projects and plans of strategic development of the Company. The Company has planned corresponding activities; more detailed information is provided in Section 3 of the Annual Report. 6.1.2. Implementation of the Information Policy is performed by the Company s executive bodies. The proper disclosure of information and observance of the Information Policy is monitored by the Board of Directors of the Company. Implementation of the Information Policy is performed by the Company s executive bodies. The proper disclosure of information and observance of the Information Policy is monitored by the Board of Directors of the Company. The Company has planned corresponding activities; more detailed information is provided in Section 3 of the Annual Report. 6.1.3. The Company has established the procedures for coordinating the work of all units and structural divisions of the Company related to disclosure of information or the activity of which may result in a need to disclose the information. The Company has established the procedures for coordinating the work of all units and structural divisions of the Company related to disclosure of information or the activity of which may result in a need to disclose the information. The Company has planned corresponding activities; more detailed information is provided in Section 3 of the Annual Report. 6.1.4. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. 6.2. The Company shall promptly disclose complete, current and reliable information on the Company to provide an opportunity of taking reasonable decisions by the Company s shareholders and investors. 6.2.1. If there is a substantial part of foreign investors in the capital, the most significant information about the Company (including announcements on holding the Shareholders' General Meeting, the Annual Report of the Company) in the foreign language generally used in the financial market, shall be disclosed along with the disclosure of information in the Russian language. Complied with 6.2.2. The Company ensures the disclosure of information not only about itself but also about the legal entities controlled by the Company and significant for the Company. Complied with 6.2.3. The Company discloses annual and intermediate (semi- annual) consolidated or individual financial statements, prepared in accordance with the International Financial Reporting Standards (IFRS). Annual consolidated or individual financial statements shall be disclosed together with the audit report, and intermediate (semi-annual) consolidated or individual financial statements - together with the report on the audit survey results or the audit report. Complied with 6.2.4. The Company has disclosed a special memorandum containing plans of the person having control over Company with regard to the Company. The memorandum was drafted in accordance with the recommendations of the Corporate Governance Code. The Company has disclosed a special memorandum containing plans of the person having control over Company with regard to the Company. The memorandum was drafted in accordance with the recommendations of the Corporate Governance Code. The Company carries out the activity on improvement of the corporate governance quality. Detailed information on the plans for 2015 is provided in Section 3 of the Annual Report (please see the Road Map).

254 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 255 No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS 6.2.5. The Company provides disclosure of information on the background of the Board s members, including information about whether they are independent directors or not, as well as prompt disclosure of information on the loss of the independent director status by a member of the Board of Directors. Complied with 6.2.6. The Company discloses information on the capital structure in line with the recommendations of the Corporate Governance Code. Complied with ГThe Annual Report of the Company contains additional information recommended in the Corporate Governance Code: - summary of the most significant transactions, including related transactions, carried out by the Company and legal entities under control of the Company during the past year; - the Report on the activity of the Board of Directors (including the Committees of the Board of Directors) for the year, including, information on the number of meetings in presentia (in absentia), on participation of each member of the Board of Directors at the meetings, description of the most significant and the most difficult issues discussed at meetings of the Board of Directors and Committees of the Board of Directors, the main recommendations given by the Committees to the Board of Directors; - information on the direct or indirect ownership of the Company s shares by the members of the Board of Directors and the executive bodies of the Company; - information on conflict of interests of the members of the Board of Directors and the executive bodies (including that related to the participation of the mentioned entities in the management bodies of the Company s competitors); 6.2.7. - description of the remuneration system for the members of the Board of Directors, including size of annual individual remuneration for each member of the Board of Directors (broken down into basic, additional remuneration for the Chairman of the Board of Directors, for the Presidency (membership) in the Committees of the Board of Directors, size of participation in the long-term incentive program, commitment of each member of the Board of Directors in the stock options plan, if any), compensation of costs related to participation in the Board of Directors as well as the Company s costs for liability insurance of the directors in capacity of members of management bodies; Complied with - information on the cumulative annual remuneration: a) with regard to a group of at least five highest-paid members of the executive bodies and other key officers of the Company, by each type of remuneration; b) with regard to all members of the executive bodies and other key officers of the Company subject to the Remuneration Policy of the Company, by each type of remuneration; - information on the annual remuneration received or to be received by the sole executive body from the Company (the legal entity of the group of organizations which includes the Company) for implementation of the duties in the capacity of the sole executive body or otherwise, by each type of remuneration. 6.2.8. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. 6.3. The information and documents shall be provided by the Company upon shareholders requests in accordance with the principles of fairness and simplicity. 6.3.1. In accordance with the Information Policy of the Company, the shareholders of the Company owning the same number of voting shares of the Company are provided with an equal access to information and documents of the Company. In accordance with the Information Policy of the Company, the shareholders of the Company owning the same number of voting shares of the Company are provided with an equal access to information and documents of the Company. The Company carries out the activity on improvement of the corporate governance quality, including the approval of the Information Policy. Detailed information on the plans for 2015 is provided in Section 3 of the Annual Report (please see the Road Map). 6.3.2. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. VII. Major CORPORATE ACTIONS 7.1. Actions that significantly affect, or may affect the equity structure and the Company s financial position and, consequently, the position of the shareholders (major corporate actions) shall be taken on the basis of fair terms ensuring observance of rights and interests of the shareholders and other stakeholders.

256 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 257 No. of item Corporate GOVERNANCE principle(s) or key criterion (RECOMMENDATION) Brief DESCRIPTION of the PART of a principle or key criterion which is NOT OBSERVED ExPLANATION of key reasons, FACTORS and CIRCUMSTANCES CAUSING a BREACH of (or a PARTIAL compliance with) a principle or a key criterion, description of used ALTERNATIVE mechanisms and CORPORATE governance TOOLS The Charter defines the list (criteria) of transactions or other major corporate actions to be considered within the competence of the Board of Directors of the Company, including: -reorganization of the Company, acquisition of 30% or more of the voting shares of the Company (absorption), increase or reduction of the Company s authorized capital, listing and delisting of the Company s shares; 7.1.1. - transactions on sales of shares (stocks) of the legal entities controlled by and significant to the Company, as a result of which the Company loses control over such legal entities; Complied with -transactions, including related transactions, involving property of the Company or legal entities under control of the Company, the cost of which exceeds the amount specified in the Company s Charter or which is essential for the economic activity of the Company; - creation of the legal entity under control of the Company, essential to the Company s activity; - disposal of treasury and quasi-treasury shares by the Company. 7.1.2. Other key, in the Company's view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance. Complied with 7.2. The Company shall ensure the procedure for implementing major corporate actions, which allows the shareholders to receive complete information on such actions in a timely manner, provides them with an opportunity to influence the implementation of such actions and guarantees the observance and an adequate level of protection of their rights while performing such actions. Internal documents of the Company specify the principle for providing equal conditions for all Company s shareholders while performing major corporate actions, affecting the rights and legitimate interests of the shareholders, and also set forth additional measures protecting the rights and legitimate interests of the shareholders of the Company under the Corporate Governance Code, including: - involvement of an independent evaluator who has a recognized reputation in the market and experience of performing evaluation in the relevant area, or justification for non-involvement of an independent evaluator, in order to determine the value of the property to be disposed or purchased within the major transaction or the interested party transaction; 7.2.1. - determination of the Company s shares price, during their purchase and redemption, by an independent expert with a recognized reputation in the market and experience of performing evaluation in the relevant area, considering the weighted average share price over a reasonable period of time, without considering the effect related to the respective transaction of the Company (also without considering share prices changes due to dissemination of information on the respective transaction made by the Company), as well as without considering the discount for disposal of shares of non-controlling interest; Complied with - extension of the list of reasons based on which the members of the Board of Directors of the Company and any other persons specified by law shall be considered non-arm s length people, for assessing actual relationship with the persons concerned. 7.2.2. Other key, in the Company s view, criteria (recommendations) of the Corporate Governance Code that are related to the mentioned principle (principles) of the corporate governance.

258 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 259 Information on ACTUAL RESULTS of fulfilment of the INSTRUCTIONS of the President of the Russian FEDERATION and the GOVERNMENT of the Russian FEDERATION received by OJSC ALROSA in 2014 LONG-TERM PLANNING A list of instructions (No. PR-3086, paragraph 1, subparagraph 32 as of 27.12.2013) on implementation of the message of the President of the Russian Federation to the Federal Assembly of the Russian Federation as of 12.12.2013, the directives of the Government of the Russian Federation (No.4955p-P13 as of 17.07.2014) Activity Plan on increase in labour productivity, creation and modernization of high-performance jobs (subparagraphs 6.2, 6.3 and 6.4, paragraph 6 of Section 2), approved by the Decree of the Government of the Russian Federation No. 1250-r as of July 9, 2014 and the Directives of the Government of the Russian Federation (No.7389p-P13 as of 31.10.2014) The long-term development program for the ALROSA Group up to 2023 was elaborated taking into consideration the Methodological recommendations issued by the Ministry of Economic Development of the Russian Federation on preparation of long-term development programs for strategic open Joint-Stock companies and federal state unitary enterprises, as well as public Joint-Stock companies with a share of the Russian Federation in the authorized capital exceeding fifty per cent (approved by the Government of the Russian Federation; instruction of the Government of the Russian Federation No. ISH-P13-2583 as of 15.04.2014). A range of measures directed to increase labour productivity, specifying values of labour productivity indicators of the Group ALROSA was developed and included into the Long-term program. ENSURING EFFICIENCY OF PROCUREMENT FROM SMALL AND MEDIUM BUSINESSES ENTITIES, INCLUDING PROCUREMENT OF INNOVATIVE AND HIGH-TECH PRODUCTS The Decree of the Government of the Russian Federation No.867-r as of 29 May, 2013, of the Order of the Ministry of Economic Development of the Russian Federation No.352 as of June 21, 2013 On Organization of Work for Implementation of the Action Plan (of the Road Map) REDUCTION OF COSTS PER UNIT IN PROCUREMENT PROCESS By the Instructions of the Government of the Russian Federation No. P13-44533 as of 16.09.2014 (On extending the period of monitoring of implementation of subparagraph E of paragraph 1 of the Instructions of the President of the Russian Federation (No. Pr-846 as of 02.04.2011) till 10.02.2015) The Company President approved the Action Plan of OJSC ALROSA (the road map) - Increase in access for small and medium-sized enterprises to the procurement processes of infrastructure monopolies and companies with State participation. Within the framework of implementation of the plan provisions, the Supervisory Board of the Company prepared and approved on 23.10.2014 the Regulations on Advisory body of OJSC ALROSA Pursuant to implementation of the action plan the Partnership Program was developed, that is aimed to establish a network of qualified and responsible partners from small and medium business entities supplying goods (work, services) to the Company, including those in the field of design and creation of innovative products. The Supervisory Board prepared a new edition of the Regulations on Procurement Procedures of OJSC ALROSA. Period of submission of quarterly reports on the specified index by the Company to the MEDT of Russia, the Federal Property Management Agency and the Ministry of Finance of Russia was extended till the specified date. APPLICATION OF THE SYSTEM OF KEY PERFORMANCE INDICATORS (KPIs) FOR PAYMENT OF REMUNERATION TO THE TOP MANAGEMENT OFFICIALS List of the instructions based on the results of the meeting of the Presidential Council for Science and Education (No. PR-1627, para. 2B, as of 01.07.2014) The long-term program was supplemented with materials specifying basic parameters of HR needs required for its implementation. On 03.12.2014 the Long-term program was approved by the Government of the Russian Federation (Minutes of the meeting are kept in the Office of the Deputy Chairman of the Government of the Russian Federation, Mr. Yu.P.Trutnev, No. YuT-P13-38pr); On 11.12.2014 the Supervisory Board approved the Long-term program for development of the ALROSA Group up to 2023 (Minutes No. A01/223-PR-NS) in accordance with the recommendations of the Strategic Planning Committee under the Supervisory Board of OJSC ALROSA. The Instructions of the President of the Russian Federation No.Pr-1474 as of 05.07.2013; The Company developed amendments and additions to the Regulations On Remuneration of the President of SA and to the Regulations On Remuneration of the Members of the Executive Committee of OJSC ALROSA, fully taking into account the recommendations of the Federal Property Management Agency and establishing direct relation of remuneration of the Company s management officials from the achievement of relevant KPIs. The Regulations on the Corporate Secretary of OJSC ALROSA was approved. It applies similar approaches while defining remuneration for the Corporate Secretary of the Company. The indicated documents were approved by the Supervisory Board of the Company (Minutes No.A01/223-PR-NS as of 11.12.2014) after consideration by the HR and Remunerations Committee.

260 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 261 INTRODUCTION OF PROVISIONS OF THE CORPORATE GOVERNANCE CODE ESTABLISHMENT OF THE UNIFIED TREASURY The Instructions of the Government of the Russian Federation No.DM-P36-46pr (para. 2) as of 28.05.2014 and No.ISH-SHZ-5859 as of 31.07.2014, paragraph 4 of Section 1 of the Minutes of the meeting of the Government of the Russian Federation No. 5 as of 13.02.2014 on implementation of the regulations of the Corporate Governance Code in the activity of organizations with state participation on 02.09.2014. The Company's Supervisory Board considered the mentioned issue on 23.10.2014, the Minutes No. A01/221-PR-NS, and after comparative analysis of the current Corporate Governance Standards in OJSC ALROSA and the key provisions of the Corporate Governance Code, requested the Company's management to develop a draft action plan (the Road Map) to implement key provisions of the Code into activities of OJSC ALROSA and to submit it to the Ministry of Finance of the Russian Federation and the Federal Agency for State Property Management to design a draft of relevant directives on approval of the Plan as per the procedure established by the Resolution of the Government of the Russian Federation No. 738 as of 03.12.2004 On Administration of Joint-Stock Companies Shares in Federal Ownership and Use of the Special Right on Participation of the Russian Federation in Management of Joint-Stock Companies ( Golden Share ). Pursuant to the Directives of the Government of the Russian Federation No. 5110p-P13 as of 08.08.2014 The Supervisory Board of the Company (Minutes No.A01/221- PR-NS as of 23.10.2014) requested the Company Executive Committee to make an analysis of the current management system of financial flows of the Company and its subsidiaries, and on the basis of the analysis results to develop and approve the structure of the Unified Treasury of the Company and its subsidiaries in order to prepare the corresponding internal documents of the ALROSA Group regulating the activity the Unified Treasury and system of financial flows management, taking into account the existing legislation. The Unified Treasury shall start its activity since the second half of 2015. LEVEL OF NET FOREIGN EXCHANGE ASSETS IMPLEMENTATION AND UPDATE OF THE PROGRAM OF INNOVATION DEVELOPMENT The recommendations of the Federal Agency for State Property Management (Letter No.GN-12/10963 as of 04.11.2012) are based on the results of the meeting of the Government Commission on high technologies and innovations as of 30.01.2012 The Supervisory Board approved the updated Program for Innovation Development and Technological Upgrade of OJSC ALROSA for the period from 2011 to 2018 (Minutes No. A01/212-PR-NS as of 24.04.2014). The Directives of the Government of the Russian Federation No. 8495p-P13 as of 17.12.2014 to the Russian Federation representatives on participation at the meetings of the Boards of Directors (Supervisory Boards) of open Joint-Stock companies; meetings of the Supervisory Board of the Company on the issue On the level of net foreign exchange assets of OJSC ALROSA to be held within three days The Supervisory Board of the Company (Minutes No. A01/224- PR-NS as of 22.12.2014) requested the Company s President up to March 1, 2015 to bring the size of net foreign exchange assets of OJSC ALROSA to the level not higher than as of October 1, 2014, in accordance with the schedule agreed by the Bank of Russia, and to ensure the subsequent maintenance of the size of net foreign exchange assets of OJSC ALROSA not higher than the specified level, as well as to submit a weekly report on size of net foreign exchange assets to the Bank of Russia and to ensure the implementation of the Directive provisions in the affiliated and associated companies. Directives are implemented. DISPOSAL OF NON-CORE ASSETS The Decree of the President of the Russian Federation No.596 as of 07.05.2012 On Long-Term State Economic Policy, paragraph 2, subparagraph C. The Supervisory Board of the Company approved the Program for the disposal of non-core assets of OJSC ALROSA on 25.06.2013. In 2014 the Company developed a new edition of the Program for the disposal of non-core assets of OJSC ALROSA, based on the provisions of the Federal Law No. 178-FZ as of 21.12.2001 On privatization of the State and Municipal Property, in accordance with the recommendations set out in the letter of the Federal Agency for State Property Management No.OD-05/5894 as of 17.02.2014. A new edition of the Program for the disposal of non-core assets of OJSC ALROSA was approved by the Supervisory Board of the Company (Minutes No. A01/223- PR-NS as of 11.12.2014).

262 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 263 Minutes of the meetings of the SUPERVISORY BOARD and the issues considered at the meetings of the Committees Information on AVAILABILITY of the REGULATIONS on the SUPERVISORY BOARD The Regulations on the Supervisory Board of OJSC ALROSA were approved by the decision of the annual General Meeting of Shareholders of the Company on 29.06.2013 (Minutes No. 30), amendments to the Regulations were approved by the annual General Meeting of Shareholders on 28.06.2014 (Minutes No. 32). The meetings (absentee VOTING) of the SUPERVISORY BOARD In 2014, a total of 17 corporate events of the Supervisory Board took place, including 4 meetings and 13 absentee voting. In 2014, 4 meetings (Minutes No. 212 as of 24.04.2014; Minutes No.217 as of 10.07.2014; Minutes No. 221 as of 23.10.2014; Minutes No. 223 as of 11.12.2014) and 13 absentee voting of the Supervisory Board (Minutes No. 208 as of 23.01.2014; Minutes No. 209 as of 12.02.2014; Minutes No. 210 as of 21.03.2014; Minutes No. 211 as of 21.03.2014; Minutes No. 213 as of 22.05.2014; Minutes No. 214 as of 06.06.2014; Minutes No. 215 as of 11.06.2014; Minutes No. 216 as of 27.06.2014, Minutes No. 218 as of 31.07.2014; Minutes No. 219 as of 29.08.2014; Minutes No. 220 as of 24.09.2014; Minutes No. 222 as of 04.12.2014; Minutes No. 224 as of 22.12.2014) were held. In 2014, the Supervisory Board addressed a total of 177 issues. In particular, the following key issues were addressed: 1. On the Long-term development program of the ALROSA Group up to 2023. 2. On development of the Action Plan (Road Map) for implementation of the provisions of the Corporate Governance Code in activities OJSC ALROSA. 3. On election of the Corporate Secretary of OJSC ALROSA. 4. On approval of the method of assessment of activities of the Supervisory Board and its Committees, Chairman, members of the Supervisory Board and Corporate Secretary of OJSC ALROSA. 5. On approval of the tender documentation for open competition for provision of services on complex maintenance of the Register of owners of registered securities of OJSC ALROSA. 6. On liability insurance of members of the Supervisory Board and the Executive Committee of OJSC ALROSA. 7. On approval of the Policy in the area of sustainable development and corporate social responsibility of OJSC ALROSA. 8. On consideration on the opinion of the Auditing Committee of OJSC ALROSA on the results of revision of financial and business activities of OJSC ALROSA in accordance with the instruction of the Federal Agency for State Property Management dated 17.09.2014, No. OD-05/39780dsp. 9. On approval of the Risk Management Policy of OJSC ALROSA and the Regulations for risk management of OJSC ALROSA. 10. On approval of a new edition of the Program for the disposal of noncore assets. 11. On verification of effectiveness of OJSC ALROSA activity. 12. On establishment of Unified Treasury of OJSC ALROSA, its subsidiaries and affiliates. 13. On approval of the Regulations on the Advisory body of OJSC AL- ROSA, responsible for public audit of efficiency of the procurement activities, including with regard to the use of advanced technological solutions, approval of the Chairman and the Vice Chairmen of the mentioned Advisory body. 14. On participation of OJSC ALROSA in the World Diamond Council. 15. On entering into a transaction for attraction of borrowed funds, including liabilities of OJSC ALROSA in the amount exceeding 5% of the book value of assets of OJSC ALROSA. 16. On approval of the Regulations for the procedure of disbursement of loans by OJSC ALROSA and acquisition of financial instruments of the legal entities. 17. On approval of the actual Program for Innovation Development and Technological Upgrade of OJSC ALROSA. 18. On approval of the Report on implementation of the Program for Innovation Development and Technological Upgrade of OJSC ALROSA for 2013. 19. On termination of authorities of the President of OJSC ALROSA. 20. On appropriateness of use of the recommendations of the Ministry of Economic Development on administration of rights for the results of intellectual activity in OJSC ALROSA. 21. On the results of procurement activities of OJSC ALROSA for 2013. 22. On approval of the Regulations on branches of OJSC ALROSA. 23. On assessment of the candidacy and activity of the President of OJSC ALROSA. 24. On approval of the Consolidated Budget of OJSC ALROSA for 2015. 25. On preliminary approval of the Annual Report of OJSC ALROSA for 2013. 26. On the annual accounting (financial) reporting, including the Report on financial results of OJSC ALROSA for 2013. 27. On the convocation of the Annual General Shareholders Meeting of OJSC ALROSA. 28. Recommendations to the General Shareholders Meeting of OJSC ALROSA on the distribution of profits based on the results of 2013, including the amount of dividend on shares of OJSC ALROSA and the payment procedure. 29. On the auditor of OJSC ALROSA for the Russian Accounting Standards. 30. On the auditor of OJSC ALROSA for the implementation of mandatory audit of consolidated financial statements of the ALROSA Group in accordance with the International Financial Reporting Standards. 31. On determination of the amount of remuneration for the auditors of OJSC ALROSA. 32. On approval of the adjusted Consolidated Budget of OJSC ALROSA for 2014. 33. On approval of an interested party transaction, i.e. the contract between OJSC ALROSA and the Russian Federation on joint consolidated sale of shares of Almazny Mir Open Joint- Stock Company at auction. 34. On approval of a transaction that is free of chargeable remuneration, i.e. targeted compensation of expenses in order to maintain allowances paid to the former employees of Udachny department of the Housing and Public Utilities Division of OJSC ALROSA employed by the Municipal Unitary Udachny Town Housing Enterprise from 01.07.2014 and covering of losses incurred due to insufficient rates relating to provision of housing services to the population by the Municipal Unitary Udachny Town Housing Enterprise. 35. On approval of transactions that are free of chargeable remuneration between OJSC ALROSA and the Association of Mini Football of Russia All-Russian Public Organization. 36. On approval of an interested party transaction between OJSC ALROSA and the Republic of Sakha (Yakutia), i.e. the contract for donation of movable and immovable property. 37. On approval of a transaction that is free of chargeable remuneration between OJSC ALROSA and Zhigansk National Evenk Ulus Municipal District of the Republic of Sakha (Yakutia): agreement for donation of movable property. 38. On the results of procurement activities of OJSC ALROSA (quarterly). 39. On the election of the Chairperson, the First Deputy Chairperson and the Vice-Chairperson of the Supervisory Board of OJSC ALROSA. 40. On composition of the Committees under the Supervisory Board of OJSC ALROSA. 41. On approval of transactions that are free of chargeable remuneration on provision of material assistance in the fields of education, culture and education. 42. On termination of participation of OJSC ALROSA in a number of organizations. 43. On the level of net foreign exchange assets of OJSC ALROSA. 44. On approval of transactions with interested parties. Information on availability of the Regulations on specialized Committees under the Supervisory Board The REGULATIONS on the Strategic Planning Committee WAS approved by the RESOLUTION of the SUPERVISORY BOARD on 06.07.2012, Minutes No. 184. The Regulations on the Audit Committee and the Human Resources and Remunerations Committee under the Supervisory Board are approved in the new version by the Supervisory Board on 11.12.14, Minutes No. А01/223-PR-NS.

264 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 265 Audit Committee In 2014, 2 meetings (Minutes No. 28 as of 15.04.2014; Minutes No.34 as of 24.11.2014) and 6 absentee voting of the Audit Committee (Minutes No. 27 as of 18.02.2014; Minutes No. 29 as of 06.06.2014; Minutes No. 30 as of 23.06.2014; Minutes No. 31 as of 24.07.2014; Minutes No. 32 as of 10.09.2014; Minutes No. 33 as of 20.10.2014) were held where 61 issues were discussed. In particular, the following key issues were addressed: 1. On consideration of the opinion of the Auditing Committee of OJSC AL- ROSA on the results of audit (revision) of financial and business activities of OJSC ALROSA in accordance with the instructions of the Federal Agency for State Property Management, No. OD-05/39780dsp as of 17.09.2014. 2. On approval of the Standard for audit of implementation of the Longterm development program of the ALROSA Group. 3. On approval of the Terms of reference for audit of implementation of the Long-term development program of the ALROSA Group. 4. On recommendation of the Audit Committee under the Supervisory Board. OJSC ALROSA regarding the Approval of the Risk Management Policy of OJSC ALROSA and the Approval of the Regulations for Risk Management of OJSC ALROSA. 5. On the draft of new edition of the Regulations on the Audit Committee under the Supervisory Board of OJSC ALROSA. 6. On preliminary approval of the Annual Report of OJSC ALROSA for 2013. 7. On the annual accounting (financial) reporting, including the Report on financial results of OJSC ALROSA for 2013. 8. On consolidated financial reporting of OJSC ALROSA prepared in accordance with the IFRS for 2013. 9. The recommendations to the General Shareholders Meeting of OJSC ALROSA on the distribution of profits based on results for 2013, including the amount of dividend on shares of OJSC ALROSA and the payment procedure. 10. On approval of the Regulations for the procedure of disbursement of loans by OJSC ALROSA and acquisition of financial instruments of the legal entities. 11. On consideration of the report on the work of the Internal Audit Department of OJSC ALROSA for 2013. 12. ALROSA in the amount exceeding 5% of the book value of assets of OJSC ALROSA. 13. On consideration of the work plan of the Internal Audit Department of OJSC ALROSA for 2014. 14. On approval of transactions with interested parties. The Regulations on the Audit Committee are available at www.alrosa. ru in the Section About us/ Corporate Governance/ Supervisory Board Committees http://www.alrosa.ru/wp-content/ uploads/2013/10/положение-о-комитетепо-аудиту_11_12_2014.pdf Human Resources and REMUNERATIONS Committee In 2014, 3 meetings (Minutes No.15 as of 30.01.2014; Minutes No. 18 as of 22.10.2014; Minutes No. 19 as of 09.12.2014) and 2 absentee voting of the Human Resources and Remuneration Committee (Minutes No. 16 as of 28.02.2014; Minutes No.17 as of 30.05.2014) were held where 12 key issues were addressed: 1. On preliminary assessment of the President of OJSC ALROSA, F.B. Andreev (in order to prolong his powers) and assessment of his activities. 2. On liability insurance of the members of managing bodies of OJSC ALROSA. 3. On approval of a transaction that is free of chargeable remuneration, i.e. the contract for exchange of premises between OJSC ALROSA and V.D. Nogovitsyn. 4. On approval of an interested party transaction, i.e. the contract for exchange of premises between OJSC ALROSA and R.Sh. Sanatulov. 5. On approval of a transaction that is free of chargeable remuneration, i.e. the contract for exchange of premises between OJSC ALROSA and V.A. Dzhura. 6. On the Work plan of the HR and Remunerations Committee under the Supervisory Board of OJSC ALROSA for 2014-2015 corporate year. 7. On the nomination of candidates to the Supervisory Board of OJSC AL- ROSA for 2014-2015 corporate year. 8. On approval of the method of assessment of activities of the Supervisory Board and its Committees, Chairman, members of the Supervisory Board and Corporate Secretary of OJSC ALROSA. 9. On approval of the Regulations on the Corporate Secretary of OJSC ALROSA. 10. On approval of amendments to the Regulations on Remuneration of the President of OJSC ALROSA and the Regulations on Remuneration of members of the Executive Committee of OJSC ALROSA. 11. On approval of the Regulations on the Corporate Secretary of OJSC ALROSA. 12. On approval of the Regulations on the HR, Remunerations and Corporate Governance Committee under the Supervisory Board of OJSC ALROSA. The Regulations on the HR and Remunerations Committee are available at www.alrosa.ru in the Section About us/ Corporate Governance/ Supervisory Board Committees http://alrosa.ru/wp-content/ uploads/2013/10/komitet_po_kadram1.pdf Strategic Planning Committee In 2014, 3 meetings (Minutes No.16 as of 22.10.2014, Minutes No. 17 as of 31.10.2014, Minutes No. 19 as of 08.12.2014) and 6 absentee voting of the Strategic Planning Committee (Minutes No. 11 as of 07.02.2014, Minutes No. 12 as of 28.02.2014, Minutes No. 13 as of 26.05.2014, Minutes No. 14 as of 27.06.2014, Minutes No. 15 as of 01.09.2014, Minutes No. 18 as of 21.11.2014) were held where 58 issues were addressed. In particular, the following key issues were addressed: 1. On determination of position of OJSC ALROSA in relation to the agenda of the General Meeting of Shareholders of OJSC Severalmaz. 2. On participation of OJSC ALROSA in the World Diamond Council. 3. On approval of the Regulations on branches of OJSC ALROSA. 4. On approval of the disposal of non-core assets of OJSC ALROSA. 5. On approval of a transaction that is free of chargeable remuneration, i.e. targeted compensation of expenses in order to maintain allowances paid to the former employees of Udachny department of the Housing and Public Utilities Division of OJSC ALROSA employed by the Municipal Unitary Udachny Town Housing Enterprise from 01.07.2014 and covering of losses incurred due to insufficient rates relating to provision of housing services to the population by the Municipal Unitary Udachny Town Housing Enterprise. 6. On participation of SA in Open Joint-Stock Company Almaznaya Osen Non-State Pension Fund. 7. On approval of the adjusted Consolidated Budget of OJSC ALROSA for 2014. 8. On approval of transactions that are free of chargeable remuneration between OJSC ALROSA and the Association of Mini Football of Russia All-Russian Public Organization. 9. On approval of the Long-term development program of the ALROSA Group up to 2023. 10. On approval of the Consolidated Budget of OJSC ALROSA for 2015. 11. On approval of a new edition of the Program for the disposal of noncore assets. 12. On approval of interested-party transactions made by OJSC ALROSA within the framework of fulfilment of the Consolidated Budget of OJSC ALROSA for 2015. 13. On approval of the Policy in the area of sustainable development and corporate social responsibility of OJSC ALROSA. 14. On approval of a transaction that is free of chargeable remuneration between OJSC ALROSA and Zhigansk National Evenk Ulus Municipal District of the Republic of Sakha (Yakutia): agreement for donation of movable property. 15. On approval of a transaction that is free of chargeable remuneration between OJSC ALROSA and the Republic of Sakha (Yakutia) represented by the Ministry of Property and Land Relations of the Republic of Sakha (Yakutia), i.e. the contract for donation of movable property. 16. On approval of the Work plan of the Strategic Planning Committee for 2014-2015 corporate year. 17. On approval of transactions with interested parties. 18. On termination of participation in other entities The Regulations on the Strategic Planning Committee are available at www. alrosa.ru in the Section About us/ Corporate Governance/ Supervisory Board Committees http://alrosa.ru/wp-content/ uploads/2013/10/komitet_po_strat1.pdf

266 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 267 Energy consumption and IMPLEMENTATION of the ENERGY saving program of ALROSA OJSC in 2014 CONSOLIDATED ACCOUNTS OF ENERGY CONSUMPTION OF ALROSA OJSC (FUEL CONSUMPTION FOR THE PRODUCTION OF HEAT AND ELECTRICITY) Energy COSTS for 2011-2014 2014 Indicator (Budget item) UoM 2011 report 2012 report 2013 report planned report The Company carries out energy saving and energy efficiency activities in accordance with the applicable legislation of the Russian Federation: the Federal law No. 261-FZ on energy saving and energy efficiency and on amendments to certain legislative acts of the Russian Federation, dated 23.11.2009. The energy saving and efficiency program includes the following key aspects: Energy consumption reduction activities at the industrial and economic sites, including: - operational activities - technical activities Energy costs mn RUB 5,894.2 6,235.0 6,957.8 7,629.9 7,554.7 - electrical energy mn RUB 5,690.4 6,030.1 6,708.4 7,359.1 7,300.5 - thermal energy mn RUB 196.6 197.8 239.4 260.2 244.3 - water costs mn RUB 7.2 7.1 10.0 10.6 9.9 ECONOMY OF FUEL AND ENERGY RESOURCES DUE TO ENERGY EFFICIENCY MEASURES IN 2014 In 2014, the actual indicators decreased in comparison with the planned figures: for electricity costs by 0.8%, thermal energy 6.1%, water 6.6%. In total, the energy costs in 2014 decreased by 1% in comparison with the planned figures and amounted to 7,554.7 million rubles (planned figure 7,629.9 million rubles). Type of resource Unit Planned ACTUAL electrical energy thermal energy gas other (diesel fuel and oil to produce electricity and heat) cold water mln kw*h 42.9 17.2 mln RUB 208.8 77.4 GCal - 5,307 mln RUB - 13.2 thous. cub.m 3,230.7 1,720.0 mln RUB 16.5 8.8 thous. ton 2,637.6 634.4 mln RUB 22.2 17.9 thous. cub.m - 254.3 mln RUB - 4.4 Note: when planning the program of energy savings, thermal energy and hot water savings (GCal) are reflected through fuel (diesel fuel, oil).

268 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 269 Report of the Audit Committee of OJSC ALROSA for 2014 OPINION of the Auditing Committee based on the results of the audit of financial and business activities of OJSC ALROSA for 2014 1 Moscow, March 25, 2015 The Auditing Committee of OJSC ALROSA elected by the annual General Meeting of Shareholders of OJSC ALROSA on June 28, 2014, Minutes No. 32, consisting of: Berezkina Lyubov Georgiyevna, First Deputy Minister of Finance of the Republic of Sakha (Yakutia); Vasilyeva Anna Ivanovna, Head of the Property Department of the diamond complex, financial & crediting and insurance organizations of the Ministry of Property and Land Relations of the Republic of Sakha (Yakutia), Glinov Andrey Vladimirovich, Deputy Director of the Administrative Department of the Ministry of Finance of the Russian Federation, Chairman of the Auditing Committee; Kim Denis Penkhvayevich, lead adviser for the monitoring of companies and enterprises of the Property Relations Department of the Ministry of Economic Development of the Russian Federation; Mikhina Marina Vitalyevna, Adviser to the Head of the Federal Agency for State Property Management carried out an annual audit (revision) of financial and business activities of OJSC ALROSA (hereinafter the Company) for 2014. The audit was carried out in accordance with the requirements of the Federal Law No. 208-ФЗ dated December 26, 1995 On Joint-Stock Companies, Charter of the Company, Regulations on the Auditing Committee of the Company and the applicable accounting and reporting regulations of the Russian Federation. The audit was carried out in the following areas in accordance with the plan approved by the Auditing Committee: 1. Analysis of accounting (financial) statements. 2. Analysis of the implementation of the basic production indicators and planned economical indicators, including the analysis of actually achieved financial results. 3.Analysis of net profit spending. 4. Analysis of accuracy of calculation and payment of dividends. 5.On the fulfilment of the Programme for the disposal of non-core assets, including agricultural assets, in 2014. 6. Analysis of the results of innovative implementations in 2014. 7. On the process of implementation of the road map for privatization of shares of OJSC ALROSA. 8. Analysis of the results of sales policy OJSC ALROSA on the domestic and foreign markets in 2014. 9. Assessment of the results (status) of instructions of President of the Russian Federation and Government of the Russian Federation. 10. Analysis of the performance of purchasing by OJSC ALROSA in 2014. 11. Analysis of the performed corrective actions following the previous internal audit.

270 ALROSA. ANNUAL REPORT 2014 APPENDICES APPENDICES ALROSA. ANNUAL REPORT 2014 271 2 3 The Auditing Commission considered the following documents submitted by the Company: 1. Draft Annual Report of OJSC ALROSA for 2014. 2. Auditor s Report on the accounting (financial) reports for 2014. 3. Accounting (financial) reports of OJSC ALROSA for 2014: balance sheet marked by a tax inspection; profit and loss statement; statement of changes in equity; cash flow statement; note to the accounting reports. 4. Order on accounting policy for 2014. 5. Information on payment of taxes, duties and other mandatory payments by OJSC ALROSA for 2013-2014. 6. Information on dividends accrued and paid on the Company s shares in 2014. 7. Reports on the work of the Supervisory Committee and Management Board of the Company for 2014. 8. Certificate confirming elimination of deficiencies identified during the previous audit. 9. Information on the execution of the instructions of President of the Russian Federation and Government of the Russian Federation. 10. Information on the debt of the Company on credits and loans against the third parties for 2014. 11. Registers of long-term financial investments and loans issued by the Company as of December 31, 2014. 12. Internal corporate documents regulating the interaction of OJSC ALROSA with its subsidiaries and affiliates. 13. The consolidated cash flow budget of the Company for 2014. 14. The register of agreements in the amount exceeding RUB 10 mn made by the Company in 2014. 15. Report on fulfilment of the Company s Programme for the disposal of non-core assets in 2014. 16. Report on the process of implementation of the road map for the privatization of shares of the Company in 2014. 17. Report on the implementation of the Innovation Development Program (PID and TM) in 2014. 18. Analytical report on the procurement activities carried out by the Company in 2014. 19. Summarized information on the sales of rough diamonds on the external and internal markets and import and export of diamonds (in physical and monetary indicators), including export under agency contracts. - for payment of dividends on shares: RUB 10,826.5 mn (RUB 1.47 per 1 share), i.e. 35.02 % of the net profit based on the IFRS; - the profit retained by OJSC ALROSA amounts to RUB 24,774.2 mn, including for the purposes of payment of remunerations to the members of the Supervisory Committee RUB 28.3 mn. The total dividends paid in 2014 were RUB 10,804.5 mn, including: - for previous years RUB 7.5 mn; - for 2013 RUB 10,797.0 mn, including: the Russian Federation RUB 4,755.6 mn; the Republic of Sakha (Yakutia) RUB 2,706.6 mn; Administrations of uluses (regions) of the Republic of Sakha (Yakutia) RUB 866.2 mn; Other shareholders RUB 2,468.6 mn. The dividends have not been paid out in full by reason of failure of shareholders to provide reliable and complete information required to receive dividends. In accordance with the Russian accounting regulations, the annual audit of the Company based on the results of 2014 approved by the annual General Meeting of the Company s Shareholders dated June 28, 2014, Minutes No. 32, was carried out by Finansoviye i Bukhgalterskie Konsultanty (Financial and Accounting Advisors) Limited Liability Company, the Company s Auditor. The Company s Auditor confirms reliability of the accounting (financial) statements as of December 31, 2014, results of financial and business activities and cash flow for 2014. Based on consideration of documents submitted by the Company, the Auditing Committee made a conclusion that OJSC ALROSA carried out its financial and business activities in 2014 out in accordance with the laws of the Russian Federation, reliability and completeness of the data of the accounting (financial) statements are confirmed by a sampling audit. There were no violations of the procedure for maintaining of accounting, financial and tax statements established by the legal acts of the Russian Federation and violations of legal acts of the Russian Federation in the course of performance of its financial and business activities. For 2014 ALROSA Group has extracted 36,212.1 thous. carats (100.5 per cent of the annual plan), including OJSC ALROSA 22,332.9 thous. carats (100 per cent of the annual plan). In 2014 the diamond sales in ALROSA Group amounted to USD 4,900.6 mn (101.1 per cent of the planned indicators), including OJSC ALROSA USD 3,494.1 (101.3 per cent of the planned indicators). Compared with 2013, the revenue of OJSC ALROSA from sale of products, works, services for 2014 increased by RUB 20,949,8 ml (15.2%) and amounted to RUB 159,174,5 mn. Net profit of OJSC ALROSA amounted to RUB 23,469.2 mn in 2014. In 2014 the Company paid RUB 29,923.8 mn taxes and mandatory payments to budgetary and non-budgetary funds. As per the decision of the General Meeting of Shareholders dated June 28, 2014 (Minutes No. 32), the following distribution of the net profit obtained during the year 2013 in the amount of RUB 35,600.7 mn was approved: Chairman of the Auditing Committee Members of the Auditing Committee: A.V. Glinov L.G. Berezkina A.I. Vasilyeva D.P. Kim S.V. Mikhina

notes