Public Joint Stock Mosenergo : Sustainability Report of Gazprom Energoholding 2020

RESPONSIBLE STRATEGY -

LOGICAL GROWTH

Gazprom Energoholding Group 2020 Sustainability Report PAO Mosenergo | PAO TGC-1 | PAO OGK-2 | PAO MIPC

OOO GAZPROM ENERGOHOLDING

TABLE OF CONTENTS

1. 4

REPORT PROFILE

P. 5

STATEMENT FROM THE CEO OF

GAZPROM ENERGOHOLDING GROUP

P. 6

GAZPROM ENERGOHOLDING

GROUP TODAY

P. 16

BUSINESS MODEL

P. 22

01. SUSTAINABILITY MANAGEMENT

Gazprom Energoholding Group's

Development Strategy.. . . . . . . . . . . . . . . . . 24

Corporate Governance

and Remuneration Policy. . . . . . . . . . . . . . . 30

Risk Management. . . . . . . . . . . . . . . . . . . . . 34

P. 40

02. STAKEHOLDER ENGAGEMENT

P. 48

03. RESPONSIBLE ENERGY SUPPLY

Sustainability Report 2020

P. 58

04. ECONOMIC PERFORMANCE

Financial and Operating Results. . . . . . . . . 62

Supply Chain.. . . . . . . . . . . . . . . . . . . . . . . . . 66

Anti-corruption. . . . . . . . . . . . . . . . . . . . . . . . 68

P. 70

05. ENVIRONMENTAL PROTECTION

P. 96

06. HEALTH AND SAFETY

P. 104

07. PROFESSIONAL DEVELOPMENT AND SOCIAL SUPPORT

FOR EMPLOYEES

P. 120

1. 08. PHILANTHROPY AND SUPPORT FOR REGIONS OF OPERATION

2. 128

APPENDICES

2

3

OOO GAZPROM ENERGOHOLDING

REPORT

PROFILE

GRI 101, 102-46,103-1,102-48,102-49,102-50,102-51,102-52,102-54

This is the fifth Sustainability report (the "Report") of Gazprom Energoholding Group (the "Group") for the calendar year 2020..

In this Report OOO Gazprom Energoholding, PAO Mosenergo, PAO TGC-1, PAO OGK-2, and PAO MIPC are referred to as Gazprom Energoholding, Mosenergo, TGC-1,OGK-2, and MIPC, respectively. Gazprom Energoholding, Mosenergo, TGC-1,OGK-2, and MIPC are jointly referred to as Gazprom Energoholding Group companies, Gazprom Energoholding Group or Group companies. The generating companies Mosenergo, TGC-1,OGK-2, and MIPC managed by Gazprom Energoholding are jointly referred to as Gazprom Energoholding Group's generating companies or the Group's generating companies.

REPORT PREPARATION, CONTENT AND TOPIC BOUNDARIES

Sustainability Report 2020

STATEMENT

FROM THE CEO

of Gazprom Energoholding Group

GRI 102-14

DEAR

COLLEAGUES,

Standards for preparing and defining the Report content

Level of disclosure

Reporting cycle

Scope of disclosure

• GRI Standards
• UN Sustainable Development Goals embraced by Gazprom Energoholding Group

This Report has been prepared in accordance with the GRI Standards: Core option, with the GRI Compliance Table presented in Appendix 2. GRI Content Index

1 year

Four generating companies of Gazprom Energoholding Group:

• Electricity generating companies, Mosenergo, TGC-1 and OGK-2 [listed on the Moscow Exchange]
• A heat generating and supply company, MIPC [a non-listed company]1

In 2020, much like the rest of the country, we faced an unprecedented situation and formidable challenges..

The COVID-19 pandemic and ensuing restrictions have had a strong impact on our performance..

Disclosure period

Sources of information

Changes to disclosures compared to previous Reports

• 2020 calendar year
• Key events of 2021 before the Report's publication
• Management reports and audited IFRS financial statements
• Data received from relevant business units of Gazprom Energoholding Group companies
• Transition from a two-year to a one-year reporting cycle
• Update to the list of material topics disclosed in the Report2
  (an additional stakeholder survey was conducted as part of the Report preparation process)

Gazprom Energoholding Group had a special responsibility throughout this: to ensure the reliable operation of power plants that generate electricity and heat for millions of consumers across Russia, including healthcare facilities and critical infrastructure. Professionalism and commitment were of particular importance in this context.

All Group companies passed this challenge with flying colours, demonstrating strong operating and financial per- formance, operational efficiency and, most importantly, all while keeping our people as safe as possible. Today, we are making good progress towards delivering our sustainability strategy and are prepared to take on any challenge that may arise on the way.

The strong performance of our large team is at the heart of the sustainable growth of Gazprom Energoholding Group companies. We would like to thank all our employees for their smooth and effective teamwork in these challenging times!

4

All data on Mosenergo, TGC-1,OGK-2, and MIPC, except financials, are provided excluding their subsidiaries and affiliates unless stated otherwise. All financials are given as per IFRS consolidated financial statements. Going forward, the Group plans to gradually extend nonfinancial reporting to include all subsidiaries and affiliates of Mosenergo, TGC-1,OGK-2, and MIPC covered by consolidated financial statements.3

The Report presents the Group's medium-term and long-term plans. Their implementation is subject to inherent risks and uncertainties including factors beyond the control of Gazprom Energoholding Group companies.

• For the names, corporate forms, and addresses of the companies covered in this Report, see Appendix 3.

• For more details on the materiality process, a full list of topics and materiality assessment, see Appendix 1.

• For the full list of subsidiaries and affiliates covered by consolidated financial statements, see Appendix 4.

Denis V. Fyodorov

CEO, OOO Gazprom Energoholding

5

OOO GAZPROM ENERGOHOLDING

2020 HIGHLIGHTS

GRI 102-7

OPERATIONAL

PERFORMANCE

Electricity Output, mm kWh

54,434.0					44,247.0	27,912.1					126,593.1
2020																						-11.5%
60,110.3					54,668.1	28,275.1		143,073.5
2019																						-2.4%
58,315.6					58,919.4	29,327.4			146,562.4
2018
Net Heat Supply to Captive Consumers, thousand Gcal*
5,587	23,386						7,733								106,862
2020																	-3.7%
6,345	24,476						8,394							110,933
2019														-6.8%
6,702	25,312						9,425					119,056
2018

SRFC for Electricity Supply, g/kWh**

224	327											207						263
2020																										-1.9%
228	325											219						268
2019																														-1.5%
227								332						214				272
2018
SRFC for Heat Supply, kg/Gcal**
163	165				169	157										164
2020																								0.0%
163	165				169	157										164
2019																							+0.6%
163	153				168	158									163
2018
		Mosenergo				OGK-2					TGC-1				MIPC									«Mosenergo and MIPC

ECONOMIC

PERFORMANCE

Revenue (IFRS), RUB mm

180,908	120,687	88,889	156,132
2020
189,777	134,579	97,256			159,378
2019
198,870	143,227	92,455	162,841
2018

Profit for the Year (IFRS), RUB mm

8,045	13,265	8,253		11,351
2020
9,599	12,025	7,990		11,148
2019
21,405					8,305		10,421	9,210
2018

EBITDA (IFRS), RUB mm

30,472	31,569				21,935			30,259
2020
24,587	31,203				22,500			30,402
2019
41,085	27,053		20,887	26,579
2018

EBITDA Margin, %

16.8%	26.2%	24.7%	19.4%
2020
13.0%	23.2%		23.1%			19.1%
2019
20.7%	18.9%	22.6%	16.3%
2018

Total Asset Value, RUB mm***

406,991					224,431	190,787	289,100
2020
412,681					225,903	182,504	265,128
2019
328,159	213,382	167,912	241,493
2018
	Mosenergo		OGK-2				TGC-1						MIPC

Sustainability Report 2020

546,616	-5.9%
580,990	-2.7%
597,393

40,914	+0.4%
40,762	-17.4%
49,341

114,235	+5.1%
108,692	-6.0%
115,604

20.9%	+2.2 p. p.
18.7%	-0.6 p. p.

19.4%

1,111,309

+2.3%

1,086,216 +14.2%

950,946

* Including OOO TSK Mosenergo and AO Murmanskaya CHPP.

** Excluding AO Murmanskaya CHPP. The physical method of calculation was used for TGC-1 and Mosenergo, and the combined method for OGK-2.

• Based on data from certain IFRS consolidated financial statements of the Group's generating companies for 2018-2020.

6

7

OOO GAZPROM ENERGOHOLDING

SUSTAINABILITY

PERFORMANCE

Environmental Protection Costs, RUB mm

1,473	718	434	346
2020
1,133	881			354	352
2019
870	1,594									756		359
2018

GHG Emissions, mm tonnes of CO2-equivalent

37.1	27.8	11.1	2.0
2020
39.6	34.7			12.4	2.3
2019
40.9	38.2			12.4	2.5
2018

Headcount, employees*

8,225

7,372

7,474

14,045

2020

8,044 8,432 7,297 15,406

2019

7,945 8,456 7,188 14,223

2018

Employee Turnover, %

6.27%	4.24%		4.93%	8.60%
2020
7.48%	9.00%			5.90%			10.00%
2019
6.96%	9.60%		6.20%	9.50%
2018

Occupational Health Costs, RUB mm

919	461	123	852
2020
881	407		121 685
2019
862	357		136 397
2018
	Mosenergo		OGK-2		TGC-1			MIPC

• Including contractors employed under independent contractor agreements and part-time employees as at year end.

2,971	+9.2%
2,720	-24.0%

3,578

78.0 -12.4%

89.0 -5.3%

94.0

37,116	-5.3%
39,179	+3.6%
37,812

6.49% -1.61 p. p.

8.10% +0.03 p. p.

8.07%

2,355	+12.5%
2,094	+19.5%

1,751

Sustainability Report 2020

INVESTMENT

CASE

Market Capitalisation as at 31 December 2020:

82.3 42.9 80.9

RUB BN

RUB BN

RUB BN

Dividend Yield for 2018-2020, %

						10.79	11.24
			10.10
					9.36
		8.13 8.34 8.62	9.25	8.83
			8.72	8.32	8.40
	6.69 7.24		6.64
4.35 4.64	5.39				5.33
3.44
								0.00
Inter RAO	RusHydro	Unipro	TGC-1	Mosenergo	OGK-2	Enel Russia
Source: https://www.moex.com/ru/listing/dividend-yield.aspx.				2018	2019	2020

DIVIDENDS: HISTORY/LEVERAGE OF GAZPROM ENERGOHOLDING GROUP'S GENERATING COMPANIES**

The Dividend Policy is built to maintain balance	In 2019, the Group's generating companies
between debt servicing, investments and divi-	switched to a dividend payout of 50% of net profit.
dend maximisation.

Dividends, RUB mm

2020						7,133	2020								4,126	2020								6,632
2019				4,800			2019				3,995	2019				6,013
2018								8,320	2018					2,485	2018						3,901
2017				6,573	2017		1,888		2017		1,730
2016				3,359				2016				1,331			2016				874
2015			2,244				2015		937			2015		600
2014		396							2014		869			2014			861

Debt/EBITDA, 2020

0.5Х 0.8Х 1.4Х

** Dividends for the reporting period.

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