Public Joint Stock Interregional Distribution Grid of North West : Annual report of Rosseti North-West, PJSC for 2021

Annex 1.

to the minutes of the Annual General Meeting of Rosseti North-West, PJSC

No. ___ of ___.___.2022

APPROVED:

by the Annual General Meeting of Shareholders Rosseti North-West, PJSC of __.__.2022 (Minutes No.__ of __.__.2022)

PRELIMINARY APPROVED: By the Board of Directors

Rosseti North-West, PJSC of 12.05.2022 (Minutes No.425/26 dated 16.05.2022)

RELIABILITY OF DATA CONTAINED IN THE ANNUAL REPORT IS CONFIRMED: By the Auditing Commission

Rosseti North-West, PJSC of 25.04.2022 (Minutes No.3 of 25.04.2022)

ANNUAL REPORT

Rosseti North-West, PJSC

2021

General Director
Rosseti North-West, PJSC	A. Yu. Pidnik

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Table of Contents
Overview of the Report ............................................................................................................	5
Address by the Chairperson of the Board of Directors.........................................................	6
Address by the General Director.............................................................................................	7
THEMED SPREADS ....................................................................................................................	8
Digital transformation of the power grid system ...................................................................	8
Implementation of lean manufacturing principles ................................................................	9
Modern standards of sustainable development....................................................................	10
STRATEGIC REPORT ..............................................................................................................	11
Company overview .................................................................................................................	11
Factors of investment appeal .................................................................................................	12
Key performance indicators ..................................................................................................	13
History of the Company .........................................................................................................	14
Highlights of the year .............................................................................................................	15
Structure, fixed assets and geographical footprint ..............................................................	16
Company standing in power market.....................................................................................	17
Business model ........................................................................................................................	18
Strategic development guidelines ..........................................................................................	19
Market overview..............................................................................................................	19
Strategic priorities and development prospects...............................................................	23
Key investment projects ..................................................................................................	36
Key performance indicators ............................................................................................	38
Performance results ................................................................................................................	42
Investment activities........................................................................................................	42
Power transmission and losses ........................................................................................	49
Technological connection................................................................................................	51
Other activities ................................................................................................................	57
Consolidation of power grid assets .................................................................................	58
Power grid system development in the RF regions within the Company's
geographical footprint .....................................................................................................	61
Comprehensive servicing of customers...........................................................................	61
Improving power supply efficiency, reliability and quality ............................................	63
Technical policy ..............................................................................................................	68
Innovative development ..................................................................................................	70
Information Technologies ...............................................................................................	76
Financial performance analysis .............................................................................................	78
Key financial and economic indicators of the Company under RAS..............................	78
Direct created and distributed economic value ...............................................................	84
Tariff regulation ..............................................................................................................	85
SUSTAINABLE DEVELOPMENT REPORT .........................................................................	91
Sustainable development management .................................................................................	91
The Company's understanding of sustainable development ...........................................	91
Rosseti North-West, PJSC activities and the UN sustainable development goals ..........	92
Sustainable development management system ....................................................................	97
Management Systems .............................................................................................................	99
Stakeholder interaction ........................................................................................................	101
Public, government and media relations .......................................................................	106
HR and Social Policy ............................................................................................................	107
Personnel headcount and breakdown ............................................................................	107
Personnel training and development, talent pool ..........................................................	110
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Social policy ..................................................................................................................	116
Support of retired employees ........................................................................................	117
Occupational health and safety......................................................................................	121
Environmental protection ....................................................................................................	123
Environmental policy ....................................................................................................	124
Energy saving and higher energy efficiency .................................................................	126
Atmospheric emissions of pollutants ............................................................................	131
Water usage ...................................................................................................................	131
Waste generation ...........................................................................................................	132
Biodiversity conservation..............................................................................................	132
Responsible business.............................................................................................................	133
Code of Corporate Ethics ..............................................................................................	133
Procurement activities ...................................................................................................	136
Anti-corruption policy...................................................................................................	141
Social responsibility ..............................................................................................................	145
Charity projects and volunteer programs ......................................................................	145
Rosseti North-West, PJSC supports regional and federal charity projects in the
following areas: .............................................................................................................	145
CORPORATE GOVERNANCE REPORT ............................................................................	147
Address by the Chairperson of the Board of Directors.....................................................	147
Memorandum of the Controlling Shareholder of Rosseti PJSC on the Controlled
Power Grid Companies ........................................................................................................	149
Overview of the Company's corporate governance...........................................................	150
Corporate governance system structure ........................................................................	150
Assessment of the corporate governance efficiency .....................................................	151
Report on compliance with the principles and recommendations of the Corporate
Governance Code ..........................................................................................................	152
Corporate governance improvement in 2021 ................................................................	154
General Meeting of Shareholders........................................................................................	155
Information on the General Meetings of Shareholders held in 2021 ............................	156
Company Board of Directors ...............................................................................................	158
Board of Directors' Report............................................................................................	158
Report of the Board of Directors on priority areas of activity ......................................	160
Composition of the Board of Directors .........................................................................	163
Independent assessment of the Board of Directors performance ..................................	173
New BoD member induction procedure........................................................................	174
The BoD member liability insurance ............................................................................	174
Committees of the Company Board of Directors...............................................................	175
Audit Committee ...........................................................................................................	175
HR and Remuneration Committee ................................................................................	178
Strategy Committee .......................................................................................................	180
Reliability Committee ...................................................................................................	182
Committee for Technological Connection to Electric Grids.........................................	184
Corporate Secretary .............................................................................................................	185
Executive Management Bodies of the Company................................................................	186
General Director ............................................................................................................	186
Management Board .......................................................................................................	187
The Management Board Report ....................................................................................	188
The Company remuneration system ...................................................................................	192
Remuneration System for members of the Board of Directors .....................................	192
Remuneration System for members of the Board of Directors Committees.................	194
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Remuneration System for the General Director and Members of the Management
Board .............................................................................................................................	195
Subsidiary management system ..........................................................................................	199
Supervisory bodies and risk management..........................................................................	199
Risk management system............................................................................................	199
Internal control system ...............................................................................................	206
Internal Audit ................................................................................................................	209
Compliance Service.......................................................................................................	210
Auditing Commission....................................................................................................	211
External Audit ...............................................................................................................	215
The system for conflict of interest prevention and insider information ........................	216
Information for investors and shareholders.......................................................................	217
Capital structure ............................................................................................................	217
Exchange details on the Company stock .......................................................................	219
Investor and shareholder relations.................................................................................	221
Dividend Policy.............................................................................................................	223
Information on major and interested-party transactions................................................	225
Major court proceedings in 2021...................................................................................	225
INFORMATION ABOUT THE REPORT .............................................................................	228
About the report and materiality ........................................................................................	228
Report overview ............................................................................................................	228
Materiality definition.....................................................................................................	229
Responsibility for the Report ........................................................................................	232
Standards compliance charts ...............................................................................................	233
GRI Index ......................................................................................................................	233
International Integrated Reporting (IR) Standard Compliance Chart ...........................	241
Terms and abbreviations......................................................................................................	242
Addresses and contacts.........................................................................................................	244
Annexes ..................................................................................................................................	245
Key financial and economic indicators of the Group under IFRS ................................	245
The main consolidated financial statements of Rosseti North-West, PJSC in
accordance with IFRS for 2021.....................................................................................	249
Report of the Auditing Commission .............................................................................	260
Report on compliance with the principles and recommendations of the Corporate
Governance Code of the Russian Federation ................................................................	270
Disclosure of Major and Related-Party Transactions made by Rosseti North-West,
PJSC in 2021 .................................................................................................................	302

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INTEGRATED ANNUAL REPORT 2021

of Rosseti North-West, PJSC

Overview of the Report

This 2021 Annual Report of Rosseti North-West, PJSC (hereinafter referred to as the Annual Report or the Report) was compiled using the information available to the Company at the time of its preparation.

This Report shows the performance of Rosseti North-West, PJSC and its branches, subsidiaries, and affiliates.

Within this Report, Rosseti North-West, PJSC is also referred to by the terms "Rosseti North-West", "we", "the Company", "the Issuer", and "the Public Company".

The Report discloses the production and financial performance results, as well as presents an overview of the corporate, social and environmental responsibility activities in 2021. Unless otherwise specified, the financial indicators in the Annual Report are provided and calculated based on the consolidated financial statements under IFRS. The performance data herein represent consolidated data of the Rosseti North-West Group.

The Report was prepared in line with international and Russian standards and regulations, as well as the reporting requirements of PJSC ROSSETI for its subsidiaries.

Furthermore, the Report reflects the activities aimed at achieving the UN Sustainable Development

Goals.

For more information about the Report, its preparation and materiality definition, as well as the responsibility for the information disclosed in the Report, see the "About the Report" section.

Key Focus

The key focus of this Report is "Energy in Details". Our goal is to present Rosseti North-West as an advanced, progressing company that implements innovation projects aligned with the Digital Transformation 2030 concept and follows the principles of Lean Manufacturing. Besides, we would like to present the Company as a socially responsible organization with convenient services, reliable power supply, and complying with the highest sustainable development standards.

Some definitions and forward-looking statements

Some of the statements in this Annual Report may contain assumptions or forecasts in respect of future events in the Rosseti North-West Group. Such statements contain the following expressions: "plans", "will be", "is expected", "will occur," "estimates," "will total," "will happen" etc., as well as statements including negation and other similar expressions. These are merely assumptions, and the actual developments or results may differ significantly from those stated. There are numerous factors that may divert the actual results of the Rosseti North-West Group from those stated in the assumptions and forecasts. The Company shall not be liable for any losses that may be incurred by private or legal entities acting on the basis of the forward-looking statements. The Company makes no commitment to review or verify the expectations and estimates or to publish updates and changes to the forward-looking statements contained in the Annual Report subject to further events or new information received, unless otherwise specifically provided by law.

The information about the Company's management is provided in accordance with the Federal Law No. 152-FZ On Personal Data of July 27, 2006.

Some values in the tables, graphs and charts in this Annual Report may differ from the sum of their components due to rounding.

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