Unipro PJSC
Annual Report for 2020
РУС

Management Bodies102-22102-23

General Shareholders’ Meeting

The General Shareholders’ Meeting is the supreme management body of the Company which carries out its activities in accordance with the current legislation, the Articles of Association and the Regulation on the Procedure for Preparing and Holding the General Shareholders’ Meeting of Unipro PJSC.

Unipro PJSC (hereinafter the «Company») held its Annual General Shareholders’ Meeting on 10 June 2020. In accordance with the recommendation of the Central Bank of Russia, the Annual General Shareholders’ Meeting was held in the form of absentee voting, and all shareholders were able to participate remotely in the meetings, in particular, by electronic voting. More than 96% of shareholders voted through electronic services.

According to the agenda, the shareholders reviewed the following matters:

  • approval of the Annual Report and Annual Accounting (Financial) Statements of the Company for 2019;
  • distribution of the Company’s profit (including disbursement (announcement) of dividends) and loss for 2019;
  • election of members to the Company’s Board of Directors;
  • approval of the auditor;
  • approval of the updated Articles of Association, Regulation on the Procedure for Preparing and Holding the General Shareholders’ Meeting, Regulation on the Board of Directors, and Regulation on the Management Board.

An Extraordinary General Shareholders’ Meeting of Unipro PJSC was held on 07 December 2020 in the form of absentee voting. In accordance with the agenda, the shareholders considered the issue of paying dividends based on the results of nine months of 2020.

All information on the Annual General Shareholders’ Meeting, including materials and minutes, is available on the Company’s website

Board of Directors102-24

One of the key elements of the Company’s corporate governance system is a professional and efficient Board of Directors, which ensures its consistent and productive development in the interests of Unipro PJSC.

The activities of the Board of Directors are governed by the Regulations on the Board of Directors of Unipro PJSC.

The Regulation on the Board of Directors of Unipro PJSC is available on the Company’s website

Key Operating Principles of the Board of Directors
  • Professionalism
  • Efficiency
  • Objectivity and independence of judgment
  • Maintaining the balance of interests of the Company and its shareholders

The competencies of the Board of Directors are established in the Articles of Association of Unipro PJSC, and are clearly differentiated from those of the Company’s executive bodies overseeing its daily operations. The Board of Directors, among other things:

  • performs operational management of the Company’s activities;
  • approves its priority development areas;
  • ensures implementation and protection of the rights and legitimate interests of the shareholders;
  • determines the Company’s vision, mission and strategy;
  • establishes effective executive bodies and provides control over their activities by reviewing reports on implementing strategic and business plans of the Company and maintaining an effective incentive system;
  • approves the internal control and risk management policy, ensures the functioning of risk management and internal control systems;
  • focuses on improvement of the Company’s corporate management system and practices;
  • ensures the timely disclosure of exhaustive and reliable information on the Company’s business.

The composition of the Board of Directors is structured in a way that ensures a balance of professionalism, knowledge and experience enabling proper performance of their duties by the members of the Board of Directors of the Company.

Members of the Board of Directors are elected annually at the General Shareholders’ Meeting by cumulative voting. Key criteria for the formation of the Board of Directors include the following:

  • specific qualifications, experience, knowledge, business skills and business reputation of candidates;
  • election of at least three independent directors of the Board;
  • limitation of the number of executive directors (not more than a quarter of Board members),
  • candidates should have no conflicts of interest.

Despite the absence of gender diversity requirements in the Company, women have equal rights and opportunities with men in the selection of candidates. For example, the position of Deputy Chairman of the Board of Directors is occupied by independent director Anna Grigorievna Belova.

Independent Directors

The current Board of Directors includes three independent directors, meeting the requirements established by the listing rules of Moscow Exchange PJSC and the Code of the Central Bank of Russia.

Independent directors make an important contribution to the successful functioning of the Board of Directors, especially as regards design of the Company’s growth strategy and risk management. They also protect the interests of shareholders and investors.

Since 2018, in an important step forward for corporate governance, the Company has instituted a practice of preliminary meetings with independent directors for discussion of key issues to be submitted for consideration by the Board of Directors.

Independent directors serving on the Board of Directors of Unipro PJSC in 2020 were as follows:

  • Anna Grigoryevna Belova;
  • Oleg Vyacheslavovich Vyugin;
  • Georgiy Levanovich Abdushelishvili.

In March 2020 the Appointment and Remuneration Committee analysed the professional qualifications and independence of all candidates to the Board of Directors of the Company. The analysis was carried out on the basis of information and completed questionnaires received from candidates to the Board of Directors of the Company, and also based on the available personal data of candidates. According to the Minutes of the meeting of the Board of Directors dated 03 April 2020 No. 287, all three candidates were recognised as independent.

Composition of the Board of Directors

The current composition of the Board of Directors of Unipro PJSC is well-balanced according to the necessary competencies and professional experience. The principle of balance of the Board of Directors is implemented based on a high level of professional knowledge and competence, sufficient time to perform the duties of a member of the Board of Directors, and absence of any conflict of interests, which contributes to effective decision-making.

The Board of Directors of Unipro PJSC includes 9 members, of which 3 are independent, 1 is executive, and 5 are non-executive.

In 2020, the work was carried out by two Boards of Directors. The first Board of Directors was elected at the Extraordinary General Shareholders’ Meeting that took place on 03 December 2019, when David Bryson joined the Board of Directors and Uwe Fip left the Board of Directors. The second Board of Directors was elected at the Annual General Shareholders’ Meeting on 10 June 2020, when Eckhardt Rümmler left the Board of Directors and Uwe Fip returned.

The independent directors of Unipro PJSC make well-considered independent opinions and judgments based solely on their experience and competence. The participation and contribution of independent directors to the work of the Board of Directors increase the level of trust of shareholders and a wide range of investors in the Company, improve the quality of management decisions, and promote compliance with the corporate governance principles of the Company

Given the recommendations of the Code of Corporate Governance provided by the Central Bank of Russia and the best market practices of corporate governance in Unipro, an independent director was appointed a Deputy Chairman of the Board of Directors on 10 December 2019

Status of directors, %
  • Non-executive
  • Independent
  • Executive
Term of continuous service on the Board of Directors, %
  • Less than 1 year
  • 1-3 year
  • 3-6 year
  • Over 6 year
Experience and competencies of Board members

Field of work

Full name

energy

finance

management

production

science

other competencies

A. Schierenbeck

+

+

A. Belova

+

+

PhD in Economic Sciences

G. Abdushelishvili

+

Training and recruitment

D. Bryson

+

+

+

Master of Defence Technology

Dr. Patrick Wolf

+

Law, Doctor's degree in canon and civil law

O. Vyugin

+

+

Candidate of Physical and Mathematical Sciences, Honoured Economist of the Russian Federation

Uwe Fip

+

Master in Petroleum Engineering

R. Hartman

+

Honoured Ph.D. of Marconi University (Italy)

M.Shirokov

+

+

On-boarding

For the first time, an elected member of the Board of Directors takes an introductory course in the following program: acquaintance with the members of the Management Board and management of the Company, study of the Company’s internal documents, software and hardware used in the work of the Board of Directors.

The Corporate Secretary serves as the link between the Board of Directors and the Company, answers all questions that arise and, if necessary, organises meetings with the Company’s management or the auditor

As of the date of nomination and during 2020, there were no notices from members of the Board of Directors that they have a conflict of interest (including those related to participation in the management bodies of the Company’s competitors)

Curricula vitae of the Company’s Board of Directors as of 31 December 2020

Curriculum vitae of the Company’s Board of Directors from 03 December 2019 to 10 June 2020

Report on the Board of Directors Performance

In 2020, 14 meetings of the Board of Directors were held (4 in person), where 69 issues were considered. The Board of Directors made a primary focus on the issues concerning Company strategy, corporate governance, financial and business operations, and HR matters.

All the issues submitted for consideration by the Board of Directors are previously considered at a meeting of the Management Board. The issues referred to the competence of the Committees (the Audit Committee and the Appointment and Remuneration Committee) are previously considered by the Committees, which, in accordance with the Listing Rules, consist entirely of independent directors.

Regards the most complex issues included in the agenda of the Board of Directors meeting, members of the Board of Directors are allowed to ask all the questions of interest to the initiators of the relevant issues both through the Corporate Secretary and through the meetings.

The number of Board of Directors meetings, pcs.
  • Meetings in absentia
  • Meetings in presentia
13
9
4
2018
16
12
4
2019
14
10
4
2020
Proportion of issues considered by the Board of Directors, %
  • Strategy and priority business areas
  • Corporate governance
  • Transactions
  • Approval of the internal documents
  • Control, risks and reporting
  • HR and Remuneration
  • Other
Personal attendance at meetings of the Board of Directors in 2020

Full name

Attendance at meetings / total number of meetings

Participation in meetings, %

Members of the Board of Directors during the entire reporting year

Andreas Schierenbeck

14/14

100

Anna Belova

14/14

100

Patrick Wolf

14/14

100

Oleg Vyugin

14/14

100

Georgiy Abdushelishvili

14/14

100

Reiner Hartmann

14/14

100

Maxim Shirokov

14/14

100

David Bryson

14/14

100

Persons appointed to the Board of Directors at the Annual General Shareholders’ Meeting on 10 June 2020

Uwe Fip

9/9

100

Persons who left the Board of Directors at the Annual General Shareholders’ Meeting on 10 June 2020

Eckhardt Rümmler

0/5

0

Minutes of the meetings of the Board of Directors of Unipro PJSC are available on the Company’s website

The most material issues considered by the Board of Directors in the reporting period

Categories

Most important issues

Strategy and priority business areas

The status of implementing the investment project “Recovery of Power Unit of Berezovskaya GRES of Unipro PJSC” was re-considered for the 6th time

In October 2020, the members of the Board of Directors discussed the Company’s strategic development prospects

The Board of Directors decided to participate in the selection of modernisation projects for 2026 for Power Unit No. 2 of PP Surgutskaya-2 of Unipro PJSC

Corporate governance

The Board of Directors considered recommendations for the corporate governance system improvement following which Unipro PJSC management was instructed to implement the recommendations in terms of increasing the amount of information disclosed in English on the Company’s website, setting the criteria for significant corporate actions in the Articles of Association, adopting a separate policy on remuneration of the Company’s Board of Directors, and securing the position of senior independent director

Control, risks and reporting

The current situation with COVID-19 in the Company’s branches was discussed at each meeting of the Board of Directors. The Company’s management informed the members of the Board of Directors about the measures being implemented to prevent the spread of coronavirus infection

HR and Remuneration

Additional agreements to collective bargaining agreements of the Company’s branches for 2018-2020 were approved

Assessment of the Board of Directors Performance102-28

Independent assessment

In the reporting period, an independent assessment of the activities of the Company’s Board of Directors was carried out by an external independent consultant – PricewaterhouseCoopers Consulting LLC.

The assessment of the activities of the Board of Directors was carried out from December 2019 to February 2020 through a survey of members of the Board of Directors, individual interviews with members of the Board of Directors and certain senior employees of the Company, as well as analysis of internal documents governing the activities of the Board of Directors and its committees, Corporate Secretary, minutes of meetings of the Board directors and committees and other relevant materials. The independent evaluation findings were reviewed at the meeting of the Board of Directors (Minutes No. 287 of 03 April 2020).

The perimeter of assessment included the following areas:

  • assessment of the performance of the Board of Directors in general;
  • assessment of the performance of each committee;
  • assessment of the performance of the Chairman of the Board of Directors.

Positive dynamics in the performance of the Board of Directors over the past few years includes:

  • improving the composition of the Board of Directors;
  • improvements in the working procedures of the Board of Directors, including the coverage of topics discussed at the Board of Directors, the culture of discussion, planning its work, frequency of inperson meetings, procedure for providing materials for the meetings;
  • more effective interaction of the Board of Directors with Internal Audit, deeper focus of the Board of Directors on the issues of risk management and compliance.

Self-assessment

In March 2020 a self-assessment of the work of the Board of Directors in 2019-2020 was carried out. The assessment was carried out using a questionnaire survey of the Board of Directors members, as well as an analysis of internal documents regulating the activities of the Board of Directors and its committees, minutes of meetings of the Board of Directors and committees, and other relevant materials.

Based on analysis of the data, the Appointment and Remuneration Committee compiled a report on performance by the Board of Directors and its committees in 2019–2020, and made recommendations for further improvement of work by the Board and its committees.

This report was considered at the meeting of the Board of Directors in the form of joint presence, which was held on 02 April 2020. 30 The assessment, which was carried out, confirmed that the Board of Directors and its committees had performed efficiently in 2019–2020.

Based on the self-assessment results, the following recommendations to further improve and develop the activities of the Company’s Board of Directors, its committees and the Company’s Corporate Secretary were given:

  • members of the Board of Directors and the Board Committees should be involved in the forming of the work plan of the Board of Directors for the next corporate year;
  • issues of a significant strategic or material nature should be considered at in presentia meetings of the Board of Directors only;
  • a regular practice of preliminary consideration of related-party transactions before their approval procedure by the Board of Directors should be introduced;
  • the materials which include both the methodology and numerical values, including comparison with market indicators, should be submitted to the committees.

All the above recommendations were successfully implemented during 2020.

Committees of the Board of Directors

Optimising resolutions by the Board of Directors, more detailed preliminary consideration of key issues and preparation of relevant recommendations were the responsibility of two committees in 2020:

  • Audit Committee;
  • Appointment and Remuneration Committee.

The committees are fully accountable in their work to the Board of Directors.

The committees are set up taking account of recommendations of the Code of Corporate Governance of the Central Bank of Russia, as well as the professional experience and knowledge of Board members in the relevant field, which enables them to carry out their tasks efficiently.

According to the requirements of the Listing Rules of Moscow Exchange PJSC, the Audit Committee and the Appointment and Remuneration Committee only comprise independent directors. This helps to ensure that the recommendations of the Committee are objective and well-grounded.

The resolutions on the committee, including the minutes of the meetings are available on the Company’s website

Audit Committee

The Audit Committee is 31 a corporate deliberative body established to assist in the effective performance of the functions of the Board of Directors in terms of control over the financial and business operations of the Company

The main purpose of the activities carried out by the Audit Committee is preparation and development of recommendations to the Board of Directors for making resolutions on the issues falling within the competence of the Committee.

The Committee acts by virtue of the Articles of Association and the Regulation on the Audit Committee of the Board of Directors of Unipro PJSC. The Regulation takes into account all the requirements set out by the Listing Rules of the Moscow Exchange PJSC for inclusion and maintenance of the shares of an issuer in the first level quotation list.

In 2020, 7 meetings of the Audit Committee were held. One meeting of the Audit Committee was held in presentia in Moscow, while all other meetings were held in person using telecommunications.

Proportion of issues considered by the Audit Committee, %
  • Accounting (financial) reporting
  • External audit
  • Risk management and internal control system
  • Corporate governance
  • Internal Audit
  • Other
Report on the Audit Committee Performance in 2020

Full name

Attendance

Most Important Issues Considered by the Audit Committee

Anna Belova (Chairman of the Committee)

7/7

Major focus was given towards the issue of the internal control system establishment in the Company (these discussions led to the development of Unipro PJSC Internal Control System Roadmap for 2020 and 1H 2021). The Committee’s members monitored the liquidity management and several times considered the issue of the Aggregated Asset Unplanned Unavailability Risk.

As ESG discussions, this Annual Report was planned to be prepared, taking into account the ESG issues.

The Audit Committee’s members considered the recommendations produced based on the findings of the Compliance Management System audit conducted in 2019 and the recommendations made based on the analysis of the structure of the Corporate Governance System conducted in 2019 (an action plan was developed to implement the recommendations based on the findings of the Compliance Management System audit).

For the purposes of enhancement the audit and control environment efficiency, the Audit Committee’s members separately discussed the issue of internal audit digitalization

Georgiy Abdushelishvili

7/7

Oleg Vyugin

7/7

Appointment and Remuneration Committee

The Appointment and Remuneration Committee constitutes a collegial deliberative body established in order to assist the Board of Directors in strengthening its professional composition and work efficiency, as well as in considering issues associated with the development of more efficient and transparent remuneration practices for members of the Board of Directors, Executive Bodies, and other key executives of the Company.

The main purpose of the activities carried out by the Appointment and Remuneration Committee is preparation and development of recommendations to the Board of Directors for making resolutions on the issues falling within the competence of the Committee.

The Committee acts by virtue of the Articles of Association and the Regulation on the Appointment and Remuneration Committee of the Board of Directors of Unipro PJSC. The Regulation takes into account all the requirements set out by the new Listing Rules of the Moscow Exchange PJSC for inclusion and maintenance of the shares of an issuer in the first level quotation list.

In 2020, 8 meetings of the Appointment and Remuneration Committee were held. One meeting of the Appointment and Remuneration Committee was held in presentia in Moscow, while all other meetings were held in person using telecommunications? the remaining being held in the form of absentee voting.

Proportion of issues considered by Appointment and Remuneration Committee, %
  • Remuneration and incentives
  • HR policy
  • Corporate governance
  • Other
Report on the Appointment and Remuneration Committee Performance in 2020

Full name

Attendance

Most Important Issues Considered by the Audit Committee

Georgiy Abdushelishvili (Chairman of the Committee)

8/8

Measures for the protection of personnel and businesses in the context of the COVID-19 pandemic have been repeatedly reviewed and evaluated

The issue concerning approval of the Remuneration and Expense Reimbursement (Compensation) Policy for Unipro PJSC Board Members was considered

The talent management system of Unipro PJSC: planning of key staff pool and HSSE enforcement system used by Unipro PJSC were reviewed

The Appointment and Remuneration Committee’s members have produced recommendations on election and succession planning of Unipro PJSC Board of Directors

Anna Belova

8/8

Oleg Vyugin

8/8

Corporate Secretary

In accordance with the Resolution of the Board of Directors of Unipro PJSC, the functions of the Corporate Secretary are assigned to the Corporate Policy Department.

The following key tasks shall be assigned to the Corporate Policy Department:

  • participation in improvement of the Company’s corporate governance system;
  • coordination of the Company’s efforts aimed at protecting and ensuring the exercise of rights and interests held by the Company’s shareholders;
  • efficient day-to-day interaction with the Company’s shareholders;
  • support of efficient performance of the Company’s Board of Directors.

The Corporate Policy Department shall operate under the Russian laws, the Unipro PJSC Articles of Association, Unipro PJSC Regulation on the Corporate Policy Department, Regulation on the Function Performing the Duties of the Corporate Secretary of Unipro PJSC, and other corporate documents of the Company and resolutions of the General Shareholders’ Meeting and the Board of Directors of the Company.

The Head of the Corporate Policy Department shall be subordinate and accountable to the Company’s Board of Directors. The Head of the Corporate Policy Department shall be appointed and dismissed by the Company’s General Director upon approval of the Company’s Board of Directors.

In March 2019, the Board of Directors of Unipro PJSC approved the appointment of Ekaterina Giganova to the position of the Head of the Corporate Policy Department of Unipro PJSC (Minutes No. 271 dated 29 March 2019).

No conflicts of interest in the work of the Corporate Secretary were identified in 2020.

Executive Bodies

The Management Board is a collective executive body supervising the most significant aspects of management of the Company’s business within the powers stipulated by the Articles of Association and the Regulation on the Management Board of Unipro PJSC. The Management Board reports to the Board of Directors and the General Shareholders’ Meeting.

Key responsibilities of the Management Board comprise the following:

  • development and submission to the Board of Directors of long-run plans for implementing the Company’s key business activities;
  • approval of major transactions of the Company;
  • determination of the Company’s position on a number of most critical issues in the business of its subsidiaries;
  • provision of social guarantees and benefits to Company employees;
  • design of draft resolutions and recommendations to the Board of Directors.

Pursuant to Clause 18.3 of the Articles of Association of the Company, members of the Company’s Management Board are elected by the Board of Directors and number at least three persons. The Board of Directors may determine a greater number of members of the Management Board.

No changes to the Management Board took place in 2020.

The Regulation on the Management Board of Unipro PJSC is available on the Company’s website

Curricula vitae of the Management Board’s members as of 31 December 2020

Report on the Management Board Performance

In 2020, 52 meetings of the Management Board were held, of which three were held in absentia, and the rest were held in person, including using telecommunications. At these meetings, 299 issues were considered in all areas of the Company’s operational activities

Number of Management Board’s meetings, pcs
  • Meetings in absentia
  • Meetings in presentia
47
10
37
2018
45
7
38
2019
52
3
49
2020
Proportion of issues considered by the Management Board, %
  • Procurement and contracts
  • Strategy and priority business areas
  • Measures for the prevention of coronavirus infection spread
  • Financial and economic activities
  • Subsidiaries
  • Corporate governance
  • Risk management
  • Social investments
  • Organizational issues
  • HR issues

Given the new realities and COVID-19 pandemic, the Company’s Management Board paid considerable attention to social investment issues, especially in terms of providing medical supplies and devices to hospitals in the regions where Unipro operates

The most material issues considered by the Board of Directors in the reporting period

Categories

Most important issues

Procurement and contracts

On a quarterly basis, the Management Board reviews the analysis of all purchases made in the Company
The electronic trading platforms the use of which is allowed for e-procurements have been approved.
Accession of Unipro PJSC to the Memorandum on the Stabilisation of Wholesale Market for Electricity and Power e with the guaranteeing suppliers of the North Caucasus Federal District, the Republic of Kalmykia and the Republic of Tyva has been approved.

Strategy and priority business areas

The prospects of business development for the construction and operation of small-scale generation facilities in Russia in 2020-2030 have been considered.
The status of the project Modernisation of the Unified Automated Control System of Financial and Economic Activities is considered.
The tariff setting by the Company for heat production, water treatment and water disposal is reviewed.
A three-year fuel procurement strategy is considered.

Measures for the prevention of coronavirus infection spread


Additional compensatory payments for mobile communication and Internet services have been set for to individual employees of branches of Unipro PJSC.
Approaches to risk-oriented liquidity management in 2020 have been approved.
Refusal to apply the moratorium in accordance with Article 9.1 of Federal Law No. 127-FZ of 26 October 2002 “On Insolvency (Bankruptcy)” have been considered.
Additional payments to the average earnings in case of temporary disability have been set for the employees of branches of Unipro PJSC.
The gratuitous transfer of property (food) has been approved by Unipro PJSC under donation agreements.

Subsidiaries

The business strategy of Siberia AIP LLC, the subsidiary of Unipro PJSC, have been approved.
Attn.: Shareholders and Investors
Audit and control