ANTI-CORRUPTION POLICY AND SECURITY OF ECONOMIC ACTIVITIES

GRI 2-25, 2-26

The Anti-Corruption Policy of PJSC Rosseti South (hereinafter referred to as the Anti-Corruption Policy) defines anti-corruption measures.

The Company actively deploys standards and procedures aimed at ensuring honest and dedicated work, follows anti-corruption standards focused on open, responsible and honest performance of activities stipulated by the Company’s Articles of Association, thus minimising corruption offences in the power grid sector that affect consumer confidence and business reputation of the Company.

The Company shall ensure publicity of its anti-corruption measures, post documents and information on anti-corruption issues on the official website, including the Anti-Corruption Policy and the Code of Corporate Ethics and Official Conduct of the Company’s employees. Read more on the Company’s official website: https://rosseti-yug.ru/o-kompanii/protivodeystvie-korruptsii/.

In the second half of 2023, a new version of the Anti-Corruption Policy of PJSC Rosseti South Approved by the decision of the Board of Directors of PJSC Rosseti South on 2 August 2023 (Minutes No. 537/2023 dated 3 August 2023). was adopted.

In accordance with the Anti-Corruption Policy, PJSC Rosseti South joined the Anti-Corruption Charter of Russian Business (certificate No. 1517 dated 2 April 2015).

The effectiveness of measures to prevent and combat corruption was confirmed by the Rating Committee’s decision: for the fourth year in a row, the Rosseti Group was assigned the highest grade, and the Company received maximum scores and retained its place among the rating leaders.

The Company has the Commission for Compliance with Corporate Ethics and Settlement of Conflicts of Interest.

Local regulatory acts adopted in the reporting period

PJSC Rosseti and subsidiaries and affiliates of PJSC Rosseti approved the anti-corruption plan for 2023 (Order No. 86 dated 10 February 2023).

The Company has drafted and updated local regulatory acts aimed at preventing and avoiding corruption in accordance with the requirements of the Russian legislation:

• The Regulations on the Reporting by Employees of PJSC Rosseti South on the Receipt of a Business Gift (Order No. 337 dated 22 June 2023) were updated
• The composition of PJSC Rosseti South’s Commission for Compliance with Corporate Ethics and Settlement of Conflicts of Interest was updated (Order No. 449 dated 4 August 2023)
• The Anti-Corruption Policy of PJSC Rosseti South was enacted (Order No. 469 dated 15 August 2023)
• PJSC Rosseti South’s own list of insider information was updated (Order No. 701 dated 17 November 2023)

Documents adopted for prevention of and counteraction to corruption are communicated to employees on a mandatory basis.

Prevention and avoidance of corruption

In order to ensure a unified approach to the development and implementation of measures designed to prevent and counteract corruption, the Company organises a corruption risk management process.

The Company’s Management Board approved the risk register for 2023 (Minutes No. 459 dated 8 September 2022). The said register contains risks:

• FR12–04 “Involvement of the Company / Company employees in corrupt activities”, materiality level – ‘critical’
• BPR16–05 “Violations by employees of the requirements of regulatory documents, legislation of the Russian Federation that may lead to corrupt practices”, materiality level – ‘significant’
• BPR16–08 “Unfairness of the Company’s employees and counterparties with regard to transactions with affiliated parties”, materiality level – ‘moderate’

In order to effectively manage risks with the ‘critical’ and ‘significant’ materiality levels, an action plan to manage these risks for 2023 was developed and approved, including the action “Execution of the anti-corruption plan of PJSC Rosseti South for 2023”.

Every quarter, the Company monitors risk assessment, updates risk profiles, and prepares a progress report on the risk management action plan.

Based on the results of 2023, all planned activities were performed in due time.

As required by the Anti-Corruption Policy and protocol decisions of the joint meeting of the heads of security, internal control and risk management, and internal audit, financial and business operations at branches of PJSC Rosseti South were reviewed and the following S&As of PJSC Rosseti South were audited such as JSC Energetik Recreation Facility, JSC Volgograd Inter-District Power Grids, FVE PF “Interregional Energy Institute of the South”, and Autonomous Nonprofit Organisation “Southern Interregional Qualification Centre for the Electric Power Industry”.

The main issues included in the audit programmes:

• Control over compliance with the requirements of the Anti-Corruption Policy
• Identification of conflicts of interest
• Enforcement of the requirements of the anti-corruption standard for procurement activities of PJSC Rosseti and subsidiaries and affiliates of PJSC Rosseti in procurement activities and contractual work

Following the verification process, the identified violations and deficiencies were recorded and communicated to the facilities checked. In order to eliminate the identified violations and deficiencies, the facilities are to develop plans of corrective actions, with assignment of those responsible for monitoring the progress of implementation, as well as responsible persons and deadlines for each plan item. The corrective actions are subject to ongoing monitoring.

Consideration and resolution of information on possible instances of corruption

GRI 205-3

The Company has a procedure for receiving and reviewing complaints and reports from applicants (employees, contractors of PJSC Rosseti South, and other individuals and legal entities) about possible instances of corruption (hereinafter referred to as the Procedure).

According to the procedure, complaints may be sent to the official email address, through the feedback form on the corporate website, by telephone hotline, through personal reception, as well as by mail and other means.

The Company accepts, registers and records incoming applications, ensures confidentiality and safety of data received from the applicant, and envisages personal liability in accordance with the legislation of the Russian Federation for disclosure of received information.

In 2023, there were two reports of possible corruption. The reports were reviewed in due time, in accordance with the current procedure in place. As a result of the work performed, no signs of corrupt practices on the part of the Company’s employees were confirmed, and no signs of conflict of interest were identified.

Prevention and management of conflicts of interest

GRI 2-15

The Company takes measures to identify, prevent and resolve conflicts of interest.

In accordance with the Regulation on Settlement of Conflict of Interest in the Company (approved by Order No. 61 dated 7 February 2022), a three-level system of disclosure of information on the existence of a conflict of interest is established:

• Initial disclosure of conflicts of interest upon hiring / transfer to another position
• Annual disclosure of conflicts of interest as of 31 December of the relevant year
• Notifications from employees on the emergence of personal interest in the performance of official duties, which leads or may lead to a conflict of interest

During the reporting period, materials were checked and 574 opinions were prepared on the presence/absence of a conflict of interest in candidates for vacant positions (employment/transfer) in the Company. As regards the facts of possible conflict of interests and pre-conflict situation among the Company’s employees, 20 additional checks were carried out while preparing opinions on the presence/absence of conflict of interests among candidates for vacant positions.

Measures for the annual declaration of conflicts of interest of employees of PJSC Rosseti South and its subsidiaries and affiliates using the electronic declaration subsystem of the Automated System for Analysis and Collection of Information on Beneficiaries (hereinafter referred to as AS ACIB) were implemented on time and in full.

The number of persons subject to annual declaration as of 31 December 2022 was 2,241 persons in PJSC Rosseti South and its subsidiaries and affiliates.

According to the declaration results for 2022, there were no cases of pre-conflict situations in which close relatives were in direct or solid-line subordination.

Based on the recommendations of PJSC Rosseti (letter No. EU-6290 dated 1 December 2017), situations recognised as labour dynasties do not require resolution and additional action and are considered resolved.

In the reporting period, there were no notifications from employees about any personal agenda during the conduct of official duties, which leads or may lead to a conflict of interest.

In December 2023, preparations were made for the annual declaration of conflicts of interest of employees of the Company and its S&As for 2023. Order No. 121 dated 25 December 2023 “On Organising Measures to Declare Conflicts of Interest of PJSC Rosseti South’s Employees for 2023” was issued.

Legal education, counselling and training of employees

GRI 205-2

In order to improve the effectiveness of awareness-raising, educational and other corruption prevention activities, the Company regularly updates the regulatory and legal framework, counselling and training of employees.

The Company’s corporate website has an Anti-Corruption section that contains up-to-date information on anti-corruption activities, hotline numbers and other ways to report possible instances of corruption.

Information stands titled “Territory without Corruption” containing up-to-date information on the requirements of anti-corruption legislation, general principles of the Anti-Corruption Policy, hotlines, and other available ways to report corruption are located in the reception areas of subdivisions and PGRs, as well as in the Customer Service Centres of Rosseti South’s branches.

Under the approved training programme for Rosseti Group’s employees on preventing and combating corruption, 13,620 employees underwent online training and testing in 2023 and 1,164 employees in 2022. Training is delivered on the basis of Rosseti’s corporate educational portal using the resources of the distance learning systems of the Rosseti Group’s companies.

In November 2023, the Company conducted an anonymous employee survey with the aim to prevent corruption and avoid the realisation of corruption risks. Employees of PJSC Rosseti South showed the highest engagement rates across the Group of Companies – 71.6%, up 5.4% year-on-year.

Anti-corruption measures of the Company for 2024

In 2024, the Company scheduled the following key tasks related to the implementation of the Anti-Corruption Policy:

• To facilitate the development of an anti-corruption plan for 2024, to organise anti-corruption activities in accordance with the anti-corruption plan
• To organise annual declaration of conflicts of interest of the Company’s employees, prepare and submit a report on the declaration of conflicts of interest to the Commission for Compliance with Corporate Ethics and Settlement of Conflicts of Interest
• To arrange for monthly collection, analysis and verification of information regarding the entire chain of ownership of counterparties, including beneficiaries (including ultimate beneficiaries), as well as information on the composition of executive bodies, and send consolidated reports to PJSC Rosseti

The main objective of the anti-corruption measures implemented by the Company is to create an environment that would minimise corrupt practices. The achievement of this task will have a direct impact on the Company’s financial and economic activities, as well as its partners’ opinion of it and its commercial reputation.