Structure of Management and Supervisory Bodies of MTS PJSC in 2024

¹ Powers terminated on 27.06.2024
² From 19.12.2024.

General Meeting of Shareholders

General Meeting of Shareholders — supreme management body of MTS PJSC. The procedure for holding the General Meeting of Shareholders is aimed at ensuring adherence to the rights of shareholders and meets all the requirements of the Russian Federation legislation. The procedure for preparing, convening, holding and summarizing the results of the General Meeting of Shareholders is determined by the Charter and the Regulations on the General Meeting of Shareholders of MTS PJSC.

The shareholders take part in governance over the Company and significantly impact its priority areas of business development by making decisions at the General Meeting of the Company’s Shareholders. The powers of the General Meeting of Shareholders include approving the annual report and accounting statements, distributing profit, including paying dividends, electing key management and control bodies of the Company, decision-making concerning the Company reorganization and a number of other important matters.

Notifying the Shareholders on Holding of the General Meeting of Shareholders

Shareholders shall be notified on holding of the General Meeting of Shareholders through posting of this information on the Company’s official website at least thirty (30) calendar days prior to the date of its holding.

The notice of holding the General Meeting of Shareholders may be additionally sent to the persons entitled to participate in the General Meeting of Shareholders and registered in the Company’s register of shareholders, by registered mail to the address specified in the register of the Company’s shareholders, or delivered personally to such persons against signature simultaneously with sending or handing over the voting ballots. The information and materials on the agenda of the General Meeting of Shareholders are provided to the persons registering their rights to the Company’s shares in a depositary by providing them to the Company’s registrar for direction to a nominee holder entered in the register of shareholders in accordance with the Russian Law on Securities.

Within the framework of preparation for the General Meeting of MTS Shareholders, the shareholders get the opportunity to ask members of the executive bodies and the Board of Directors about the items on the agenda of the General Meeting of Shareholders, as well as to voice their opinion about the items on the meeting agenda by sending e-mails to: shareholder@mts.ru. Materials on the meeting agenda are posted on a special page of the website dedicated to the Annual General Meeting of Shareholders.

Holding the General Meeting of Shareholders

Shareholders may exercise their voting right by ways most simple and convenient for them without any encumbrance. Voting at the General Meetings of Shareholders is conducted by direct participation in the meeting or by filling out and sending to the Company (as well as its registrar) ballots on agenda items or by filling out voting e-ballots on the MTS website via electronic services.

The General Meetings of Shareholders shall be set up and held so as to allow easy access for all the shareholders. General meetings held in the form of joint attendance shall be organized at locations convenient for arrival and personal participation by the shareholders and their representatives. During registration and during the break, the shareholders are provided with an opportunity to receive the necessary consultations on various Company projects.

Results of the 2024 Annual General Meeting of Shareholders

The Annual General Meeting of Shareholders of MTS PJSC was held on June 26, 2024 in absentia using the Registry-Online e-voting services by Reestr JSC. At the Annual General Meeting of Shareholders, 71.2% of those participating in the meeting voted electronically.

Board of Directors

The Board of Directors is a key element in the MTS PJSC corporate governance system representing the interests of its shareholders through efficient management organization.

Establishment procedure, status, composition, functions, goals and objectives, powers of the Board of Directors, the procedure for its operation and interaction with other management bodies of the company are set forth in the provisions of Russian Federation legislation, the Charter, the Regulations on the Board of Directors of MTS PJSC, as well as taking into account the recommendations of the Corporate Governance Code of the Bank of Russia.

Basic Functions of the Board of Directors:

• developing and analyzing general corporate strategy, and exercising control over its implementation;
• ensuring control over executive bodies and chief executive officers of the Company, and assessing their activities;
• increasing the Company’s capitalization, expanding its market positions, achieving and preserving the Company’s competitiveness;
• maintaining financial stability, and increasing revenue and profitability;
• protecting rights and legitimate interests of the Company’s shareholders.

Composition of the Board of Directors

The composition of the Board of Directors is formed in accordance with the interests of shareholders, taking into account the balance of professional qualifications, experience and business skills of its members. The issues related to the needs of the Board of Directors in the area of professional qualification, background and business skills of its members, as well as to the numerical composition, were considered within the procedure for assessing the Board of Directors’ performance¹. Current members of the Board of Directors of MTS PJSC were elected at the Annual General Meeting of Shareholders of MTS PJSC on June 26, 2024.

¹ See more in the “Assessing the Performance of the Board of Directors” section.

In recent years, the majority of seats on the MTS Board of Directors have been occupied by independent directors. The Board of Directors is well-balanced both in terms of numerical composition and in terms of experience and qualification of its members.

¹ Data as of December 31, 2024.

Chairman of the Board of Directors

The Chairman of the MTS PJSC Board of Directors ensures the growth in shareholder value and maintains a balance between short-term financial performance and long-term strategic positioning of the business. The key task of the Chairman of the Board of Directors is to create a dynamic and positive environment in the Board of Directors, where each member can show their best qualities.

By a unanimous decision of the MTS Board of Directors, a non-executive director was elected Chairman of the MTS PJSC Board of Directors on June 27, 2024, and an independent director was elected Deputy Chairman of the Board of Directors.

The Deputy Chairman of the Board of Directors actually performs the functions of the senior independent director provided for by the Corporate Governance Code. They coordinate the work of independent directors and build interaction between independent directors and the Chairman of the MTS Board of Directors.

Independent Directors

Independent directors ensure a reasonable balance of interests between all the concerned parties: The Company itself, its shareholders and other stakeholders.

The Audit Committee under the Board of Directors is headed by an independent director, who has experience and knowledge in the preparation, analysis, evaluation and audit of financial reporting.

The Audit Committee and the Remuneration & Nomination Committee of the Board of Directors are formed exclusively from independent directors. The remaining committees also include independent directors.

Independent directors participate in strategic sessions for discussing the Company’s strategy update with participation by members of the Board of Directors, and Company management.

The Company also introduced the practice of preliminary review of a number of interested-party transactions at the meetings of the Audit Committee of the Board of Directors consisting only of independent directors.

Independent directors are professional managers, whose experience and knowledge make a significant contribution to developing the Company’s corporate governance system.

Informing newly elected members of the Board of Directors and the committees of the Board of Directors about the Company’s operation

In accordance with the best corporate governance practices, an orientation (information) course is held for newly elected members of the Board of Directors and the committees of the Board of Directors in the format of an interactive presentation in Russian and English. This course makes it possible to briefly familiarize new members of the Board of Directors and the committees of the Board of Directors with the history of Company development, work of the Board of Directors, main documents governing the Company’s operations, annual financial statements, development strategy, the Company’s management structure, etc.

As part of the orientation course, meetings are held with the CEO and key representatives of MTS senior management, where members of the Board of Directors can receive any information they need for work.

Role of the Board of Directors in organizing an efficient risk management and internal control system¹

The Board of Directors determines the principles and approaches to organizing the risk management and internal control system in the Company and regularly reviews issues of organization, functioning and effectiveness of the risk management and internal control system. Approves internal documents defining the policy in the field of risk management and internal control; reviews and approves reports by the Audit Committee on the work of the internal audit, business ethics and compliance, risk management and internal control system departments, as well as reports on risk management in the MTS Group of Companies, reports on the development of the Unified Compliance System, reports on the development of the corporate anti-corruption compliance program in the MTS Group and reports on the results of internal audit activities in the MTS Group.

An efficient risk management, compliance and internal control system is in place in the Company designed to ensure a reasonable level of confidence in the Company achieving its objectives.

¹ See “Risk Management” section for details.

Organization of the Board of Directors activities

At least six in-person meetings shall be conducted each year in accordance with the approved plan of meetings of the Board of Directors. If necessary, it is possible to participate in a joint meeting through video conferencing. Extraordinary meetings are convened to make decisions on urgent matters. Issues that have been previously thoroughly worked out and with regard to which members of the Board of Directors do not have significant comments are brought up at the meetings in the form of absentee voting.

The plan of activities of the Board of Directors for the next year shall be approved in June of the current year. Dates, time and locations of meetings shall be determined according to the activity schedules of the Board of Directors members in order to provide for participation by all directors.

The activities plan includes the main issues of the Company’s operation: strategy, finances, budget and risks, HR. Such a plan shall be prepared with regard for the suggestions from the Board of Directors members and the Company’s management. All items on the agenda of the Board of Directors meeting shall normally be reviewed by the relevant committees, allowing discussion and generation of recommendations for a final decision by the Board of Directors.

In-person meetings of the Board of Directors are held in the Moscow headquarters. The first meeting of the newly elected composition of the Board of Directors shall be held in person, on the day of the General Meeting of Shareholders or within several business days after the election of the Board of Directors in a new composition, at which a decision on the election of the Board of Directors is made. The Company also uses remote forms of communication.

The Chairman of the Board of Directors holds monthly meetings/consultations with representatives of shareholders and/or management of the Company. The main topic of such meetings is the issue of managing strategic changes.

Corporate Secretary

The Corporate Secretary ensures efficient work of the Board of Directors, interaction with the shareholders, coordinates the Company’s activities aimed at protecting the rights and interests of the shareholders.

The functions of the Corporate Secretary in MTS PJSC are performed by the Corporate Governance Department acting on the basis of the Regulations on the Corporate Governance Department. The Corporate Governance Department is headed by the Corporate Governance Director, who is appointed and dismissed by the Company CEO in agreement with the Company Board of Directors.

The functions of the Corporate Governance Department include ensuring efficient ongoing interaction with shareholders, coordinating the Company’s actions aimed at protecting the rights and interests of shareholders, as well as supporting the efficient work of the Company’s Board of Directors.

Board of Directors Secretary

The Board of Directors Secretary ensures compliance by the Company’s management bodies with the requirements of legislation and internal regulations of the Company that guarantee the enforcement of rights and interests of its shareholders. The Board of Directors Secretary performs its functions in accordance with the Charter and Regulations on the Board of Directors of MTS PJSC.

The functions of the Board of Directors Secretary include, inter alia, induction of newly elected members of the Board of Directors, notification of members of the Board of Directors and invited persons about upcoming meetings, provision of materials on the agenda items and additional information, counting voting results, keeping minutes of meetings, control over execution of decisions by the Board of Directors, communication, organizational and other functions.

Report on activities of the Board of Directors

Examples of Major Issues Reviewed by the MTS PJSC Board of Directors in 2024

• Approval of the MTS PJSC technological strategy (IT) for 2025–2027
• Status of MTS PJSC transformation for 2023–2024
• Strategy of the MTS PJSC Venture Fund for 2023–2024
• On funds of the long-term material incentive programs for MTS PJSC employees
• Results of the MTS Group compliance culture study for 2024, improvement plans for 2025, as well as the results of the improvement implementation plan for 2024
• Development of MTS PJSC digital services in the field of personnel management
• On the main indicators (metrics) of the MTS Group strategy execution
• Status of transforming MTS PJSC corporate culture
• Implementation of MTS PJSC ESG strategy

Assessment of the Board of Directors’ performance

The Board of Directors’ performance is evaluated on a regular basis (annually). The assessment can be made as a self-assessment or by involving an independent consultant.

In 2024, MTS conducted an assessment of the Board of Directors’ performance in the form of a self-assessment. All current members of the MTS Board of Directors, as well as representatives of MTS management, took part in the survey.

The following items were assessed in 2024:

• composition, role and competences of the Board of Directors and the Committees of the Board of Directors;
• effectiveness of performance of functions by the Board of Directors and the Committees of the Board of Directors;
• procedures for the work by the Board of Directors and the Committees of the Board of Directors;
• individual work of each member of the Board of Directors and the Chairman of the Board of Directors;
• activities of the Corporate Secretary.

Results of Assessment of Board of the Directors Performance in 2024

The Preliminary Report on the Results of Assessing the Board of Directors Performance was reviewed at a joint meeting of the Remuneration & Nomination Committee and the ESG Committee of the MTS Board of Directors. The final report was reviewed at a meeting of the MTS Board of Directors.

The assessment confirmed that the principles of the Board of Directors’ work comply with high standards of corporate governance, and that members of the Board of Directors and the Chairman of the Board of Directors demonstrate high work efficacy. Areas for improvement in the work of the Board of Directors and the Committees of the Board of Directors were also identified.

The Board of Directors will continue to evaluate its performance to ensure continuous improvement in the effectiveness of the Board of Directors and the Committees of the Board of Directors.

Liability Insurance

The sum insured under the liability insurance contract for members of the Boards of Directors, officials of MTS and MTS Group companies (hereinafter the “Insurance Contract”) shall be USD50 million.

The Insurance Contract allows protection of members of the Board of Directors, Management Board and management of MTS PJSC and MTS PJSC subsidiaries and provides coverage for indemnification of executive officers, in connection with actions or claims submitted against them or their prosecution by authorized state authorities for their actions/omission while they exercise official duties in the office held, namely:

• reimbursement of expenses to executive officers for lawyers and legal protection in connection with the above actions or claims;
• indemnification for damages caused to plaintiffs by inadvertent actions/omission by executive officers (in the event that the action is satisfied by the court);
• indemnification of damages to MTS PJSC and subsidiaries of MTS PJSC for security-related claims (except for actions related to new IPOs of American depositary receipts).

Committees of the Board of Directors

Committees of the Board of Directors make a preliminary study of issues before they are submitted to the meeting of the Board of Directors. The committee members make a thorough study of an issue and propose elaborated alternative decisions to the members of the Board of Directors, making it possible for them to join the discussion of the issue more promptly.

Powers of and requirements for compositions of the committees shall be determined by Regulations on the Committees approved by the Board of Directors. The committees may involve third party experts and advisors in order to fulfill their tasks. The results of reviews of agenda items by the committees are communicated to the Board of Directors members before every meeting of the Board of Directors.

Each member of the Board of Directors is also a member of one to nine committees. Representation of the Company’s managers in the committees permits a meaningful dialog during committee meetings.

¹ Data as of December 31, 2024.

Audit Committee

The Audit Committee assists in efficient implementation of functions of the Board of Directors in terms of control over the Company’s financial and economic activities.

In their activities, the Committee members are guided by prevailing legislation, the Charter and the internal documents of the Company, the Corporate Governance Code¹, the Code of Business Conduct and Ethics of MTS PJSC, decisions by the Company’s management bodies, as well as the Regulations on the Audit Committee.

¹ The Corporate Governance Code recommended for use by the Bank of Russia (Letter No. 06-52/2463 dd. April 10, 2014).

Key functions of the Committee:

• monitoring completeness, accuracy, and objectivity of the MTS Group’s financial reporting;
• review and analysis, together with management and an external auditor, of the Group’s annual financial reporting, interim financial information and relevant documents submitted to the Bank of the Russia and other regulatory authorities;
• review of reports on financial and operational performance of MTS Group before issuing press releases;
• control over the reliability and efficiency of the risk management system, internal control and corporate governance of the MTS Group;
• assessment of the execution of procedures used by MTS Group to identify the principal risks and relevant control procedures in order to determine their adequacy and efficacy;
• review of reports on assessing the effectiveness of the internal control system, risk management and corporate governance of the MTS Group;
• preliminary review of interested-party transactions;
• review, together with the management, internal auditor and external auditor, of any cases of law violation, fraud and significant deficiencies in internal control and risk management procedures;
• supervision of the efficacy of the reporting system on potential fraud cases committed by the Group’s employees (including violation of anti-corruption policy, unfair use of insider and confidential information) and by third parties, as well as on other violations in the Group;
• review of the results of inspections and investigations made and reports on the work of the MTS Group Unified Hotline;
• supervision of updating, bringing the Code of Business Conduct and Ethics of MTS PJSC (hereinafter the “Code”) to the persons covered by the Code;
• review of the measures taken by the management of MTS PJSC to increase the level of corporate, compliance and risk culture, awareness of those covered by the Code about the Code requirements and the consequences of its violation;
• review of proposed measures to resolve the conflict of interests by MTS PJSC management bodies members;
• ensuring independence and objectivity of the internal audit function;
• review and approval of the internal audit policy, internal audit strategy, annual audit plan and the main changes made to the plan during the calendar year;
• review, together with the Internal Audit Director, and approval of the internal audit resource plan, budget and KPIs;
• assessment of efficacy of internal audit activities and the fulfillment of KPIs;
• assessment of the Group’s external auditors’ independence, objectivity, and lack of conflict of interest, including the assessment of candidates for the Group auditors, submission of recommendations on the appointment, re-appointment and discharge of the external auditors of the Group, remuneration for their services and contractual terms;
• supervision of the external audit, assessment of the quality of the audit and review of audit reports proving the reliability of the consolidated financial statements of the MTS Group prepared in accordance with International Financial Reporting Standards and the financial statements of MTS PJSC prepared in accordance with Russian Accounting and Reporting Standards;
• Composition of the Audit Committeesupervision of compliance with the Group’s procedures setting the principles for the provision and combination of audit and non-audit services by the auditor, and the preliminary approval of non-audit services.

Number of Members

There were no changes to the composition of the Committee during the reporting year.

The composition of the Committee was approved at the meeting of the Board of Directors on June 27, 2024.

Meetings

In the reporting year, 19 Committee meetings were held: 14 in-person meetings and 5 meetings in the form of absentee voting. In addition, 3 joint meetings were held with other committees of the Board of Directors.

Additionally, the Committee members held meetings with financial executives of the Company and managers responsible for risk management, internal control system, internal audit, business ethics and compliance, as well as with Company external consultants on a number of issues.

Recommendations to the Board of Directors on the issues considered

The Audit Committee provided recommendations to the Board of Directors regarding the review and approval of the following issues:

• Restated regulations on the Audit Committee under the MTS PJSC Board of Directors;
• Restated regulations on the MTS PJSC internal control system;
• Restated policy “Internal Audit of MTS PJSC”;
• MTS PJSC annual report and annual accounting statements for 2023, prepared in accordance with Russian accounting standards;
• Opinion of the third-party auditor and conclusions of the Auditing Commission based on the results of the audit of the MTS PJSC annual accounting statements for 2023, as well as the conclusions of the MTS PJSC internal audit;
• MTS PJSC risk management and key risk dashboard reports for the first six months and for 2024 and assessment of the MTS Group risk management performance in 2024;
• Report on developing the corporate anti-corruption compliance program of MTS PJSC and its subsidiaries for 2024;
• Results of the MTS Group compliance culture study for 2024, improvement plans for 2025, as well as the results of the improvement implementation plan for 2024;
• Report on the performance results of the internal audit of MTS PJSC and its subsidiaries for 2024, assessment of the work and fulfillment of key effectiveness indicators of the internal audit for 2024;
• Internal audit strategy for 2025–2027, audit plan, key effectiveness indicators and budget of the Internal Audit Block of MTS PJSC for 2025;
• Nominations of the auditor and remuneration of Business Solutions and Technologies JSC for audit services in 2024;
• major interested-party transactions falling within the competences of review by the Board of Directors.

Key areas of the Audit Committee activities and issues reviewed in 2024

In the field of financial reporting

During 2024, the Audit Committee reviewed the interim financial information of the MTS Group for Q1, Q2, Q3 of 2024 in order to determine the completeness, consistency of information and presentation of reasonable assessment of financial standing, performance indicators and prospects of the MTS Group.

The MTS Group consolidated financial statements for 2024 prepared in accordance with the International financial reporting standards and the accounting statements of MTS PJSC for 2024 prepared in accordance with the Russian accounting and reporting standards were reviewed; an analysis of the audit results was made together with the management and the external auditor.

The reports on the financial and operating performance of the MTS Group for Q1, Q2, Q3, Q4 and 2024 as a whole were reviewed and recommended for subsequent disclosure by the Committee.

In the field of risk management, internal control and corporate governance system

In December 2024, the Audit Committee reviewed and recommended to the Board of Directors to approve the restated Regulation on Internal Control System of MTS PJSC.

During 2024, the Committee reviewed the reports on risk management at MTS PJSC and dashboards for key strategic risks of the MTS Group for the first six months of the year and for 2024. The Audit Committee gave a positive assessment of the work of the MTS Group in the field of risk management in 2024.

The Committee reviewed the plans and performance results of the unit for the development and support of the internal control system for the first and second half of 2024, including the results of testing and assessing the efficacy of the internal control system over the reliability of MTS Group financial statements. The Committee gave a positive assessment of the unit performance results.

The Committee reviewed and took note of the results of assessing the internal control system efficiency, risk management processes and corporate governance of the MTS Group as of December 31, 2024, carried out by internal audit.

During 2024, the Committee conducted a preliminary review of MTS PJSC interested-party transactions, in accordance with the interest criteria provided for by the Federal Law “On Joint-Stock Companies”, and a number of transactions with related parties in accordance with the procedure described in the Regulation on the Audit Committee. The results of the analysis of economic feasibility and compliance with the requirements of regulations when making such transactions were discussed and taken into account.

In 2024, the Audit Committee carried out follow-up quarterly reviews of transactions related to investing in startups (including purchase, sale and change in ownership interest) made during the reporting quarter.

In the field of compliance and observance of the standards of business conduct and ethics

The Audit Committee reviewed the report on developing the MTS PJSC Unified Compliance System for 2024 and gave a positive assessment to the performance results of the Ethics & Compliance Department in terms of developing the Unified Compliance System for 2024 and assisting compliance program owners in maintaining it.

The Committee reviewed reports on developing the corporate anti-corruption compliance program of MTS PJSC and its subsidiaries based on the results of the first half of the year and for 2024 as a whole, as well as the results of studying the MTS Group compliance culture for 2024, including the improvement plan for 2025 and the report on implementing the improvement plan for 2024.

The Audit Committee gave a positive assessment to the activities in the area of business ethics and compliance, noting that the activities of the Ethics & Compliance Department are effective, key performance indicators and goals in the area of business ethics and compliance for 2024 have been achieved according with the expected results.

During the year, the Committee reviewed information on the status of conflict of interest management of members of the MTS PJSC management bodies, the results of internal investigations and reports on the work of the Unified Hotline of the MTS Group of Companies, as well as a number of other issues in the area of compliance, adherence to business conduct standards and ethics of MTS PJSC and its subsidiaries in accordance with the Regulation on the Audit Committee.

In December 2024, the Committee reviewed plans for 2025, the strategy for developing the corporate anti-corruption compliance program of MTS PJSC and its subsidiaries until 2026.

In the field of internal audit

In December 2024, the Audit Committee reviewed and recommended to the Board of Directors to approve the restated Policy “Internal Audit of MTS PJSC”.

In 2024, the Committee reviewed quarterly reports on the performance results of the internal audit of MTS PJSC and its subsidiaries, including information on the status of the introducing audit recommendations and eliminating deficiencies identified by the internal audit, and amendments made to the annual audit plan.

The Audit Committee positively assessed the work of the Internal Audit and believes that the internal audit function is efficient and that key performance indicators and internal audit goals for 2024 have been fully achieved.

In December 2024, the Committee reviewed, pre-approved and recommended to the Board of Directors to approve the internal audit strategy for 2025–2027, the audit plan, key performance indicators and budget of the MTS PJSC Internal Audit Block for 2025, and also took note of the audit plans for 2025 in the MTS PJSC subsidiaries with a decentralized internal audit function.

In the field of external audit

The Audit Committee recommended Business Solutions and Technologies JSC as the auditor of MTS PJSC financial reporting for 2024, which was confirmed by the recommendation by the Board of Directors and by the Company shareholders at the Annual General Meeting of Shareholders in June 2024. The Committee pre-approved and recommended that the Board of Directors approve remuneration for the auditor.

The Audit Committee discussed and took note of the results and conclusions of the external auditor based on the results of reviewing the quarterly financial information overviews of MTS Group for Q1, Q2 and Q3 2024 and the annual audit.

At year-end 2024, the Committee gave a positive assessment to the quality of the audit and the auditor’s conclusions based on the results of the audit of MTS PJSC accounting statements for 2024 prepared in accordance with the Russian accounting standards, and consolidated financial reporting of MTS Group for 2024 prepared in accordance with the International financial reporting standards.

The Committee supervised the external auditor’s compliance with the principles of independence and the execution of the Group’s procedures defining the principles for providing and combining audit and non-audit services by the auditor. During 2024, the Committee considered information on permissible non-audit services, which was provided by the external auditor, and discussed with the auditor the possible impact of the services on the auditor’s independence. Permissible non-audit services were pre-approved by the Committee in accordance with the procedure described in the Regulation on the Audit Committee.

In December 2024, the Audit Committee approved the work plan for the calendar year 2025.

2024 Performance

In the reporting year, the Audit Committee continued its work to monitor the reliability and effectiveness of the risk management system, internal control and corporate governance system, as well as to ensure the completeness and reliability of MTS Group financial reporting.

The Committee continues to focus on compliance issues, adherence to business conduct and ethics standards, and measures taken by the Company’s management to improve the level of corporate, compliance and risk culture.

The Committee continuously pays attention to ensuring the independence and fairness of the activities of the internal and external audit functions, monitoring the quality of their work and effective interaction.

Chairman of the Audit Committee

Remuneration & Nomination Committee

The Remuneration & Nomination Committee is an auxiliary collective deliberative body under the Board of Directors. The primary goals of the Committee: formulate the Company’s HR policy, determine the system for remunerating the Company’s chief officers, generate a strategy for developing corporate culture at the MTS Group.

The Committee members follow the leading global practices and trends in generating efficient solutions within the area of their competence.

In its activities, the Committee follows the recommendations and requirements of the prevailing legislation, the Charter and internal documents of the Company, the Code of Ethics and Business Conduct, decisions by Company management bodies, as well as the Regulation on the Committee.

Main Areas of Activities of the Remuneration & Nomination Committee in 2024

1. Issues in the field of appointment to the MTS management and management bodies. Recommendations to the Board of Directors regarding candidates for the positions of members of the Management Board, CEO and other key Company employees. Elaboration of proposals on the essential terms of employment agreements entered into with key Company employees.
2. Issues in the field of organizational structure, system of motivation and remuneration of the Company employees and members of the management and management bodies of the Company. Preparation of recommendations to the Board of Directors on approving the Company organizational structure. Preliminary review of provisions on short-term and long-term motivating members of the Company executive bodies. Preliminary review of internal documents related to implementing the Company option program.
3. Issues related to the Company HR Policy and remuneration strategy. Consideration of a set of measures aimed at implementing the HR Policy at MTS PJSC and providing relevant recommendations to the Board of Directors. Discussion of ecosystem issues affecting the Company’s personnel development strategy.
4. Assessment of the Board of Directors and Committees of the Board of Directors. Preliminary consideration of the report on the annual assessment of performance by the Board of Directors and Committees of the Board of Directors.
5. Succession planning for the members of the Board of Directors and key employees of the Company. Review of organizing the succession planning process for members of the Board of Directors and key Company employees, including the annual analysis of the composition of the Board of Directors in terms of Company needs, updating the succession plan, participating in the selection of candidates for members of the Board of Directors.

Number of Members

The composition of the Committee was changed during the reporting year.

The composition of the Committee was approved at the meeting of the Board of Directors on June 27, 2024.

Meetings

In the reporting year, 15 committee meetings were held: 12 in-person meetings and 3 meetings in the form of absentee voting.

Issues Reviewed

Concerning all of the issues reviewed, the Committee provided recommendations for appropriate decisions in accordance with the best global practices, the current business environment and the development strategy of the Company.

2024 Performance

In 2024, the Remuneration & Nomination Committee performed its assigned function as a consultant to the MTS PJSC Board of Directors in priority areas of HR management relying on the international experience of corporate governance and the best professional practices in its work.

The task of the Committee is to help ensure that the MTS HR management policy and corporate culture serve as important factors retaining and attracting the best market professionals to the Company. In this regard, the Committee monitors the implementation of all strategic MTS development initiatives aimed at meeting this objective and makes recommendations to MTS management and the Board of Directors based on the extensive expertise and practical experience of the Committee members.

Key tasks of the Committee in the past reporting year:

• ensuring the implementation of succession policy of the CEO and key managers, as well as improving the succession policy of the MTS PJSC Board of Directors members;
• updating the program for long-term financial incentives and key performance indicators of management;
• supporting the transformation of MTS corporate culture as a digital ecosystem;
• ensuring efficient membership of the Boards of Directors of MTS subsidiary businesses and engaging third-party experts — recommending and considering nominations of independent candidates;
• ensuring meeting the compliance requirements in HR management processes, including measures to stimulate compliance behavior at all levels of the organization.

I express my gratitude to the Committee members and the management of MTS PJSC for their efficient collaboration in 2024.

Chairman of the Remuneration & Nomination Committee

ESG Committee (Committee for Corporate Governance and Environmental & Social Responsibility)

The ESG Committee was established to improve the system and corporate governance practices in the Company, as well as to form the Company’s initiatives and policies in the field of sustainable development.

Within the scope of its competence, the Committee determines priority areas and monitors the Company’s activities in developing and introducing corporate governance and sustainable development standards that contribute to the formation of a high assessment of the quality (level) of corporate governance, environmental and social responsibility of the Company. The Committee makes a preliminary review of the most important issues in the field of corporate governance and sustainable development falling within the competence of the Board of Directors and prepares recommendations to the Board of Directors to make relevant decisions.

The Committee follows in its activities the recommendations and requirements of the prevailing legislation, the Regulation on the Committee, the Charter and internal documents of the Company, the Code of Ethics and Business Conduct, decisions of the Company management bodies, and the best practices of ESG agenda management.

Number of Members

The composition of the Committee was changed during the reporting year.

The new composition of the Committee was approved at the meeting of the Board of Directors dated June 27, 2024.

Meetings

During the reporting year, 16 in-person meetings were held and 3 meetings were held in absentia, including joint meetings of the ESG Committee, the Audit Committee and the Remuneration & Nomination Committee of the Board of Directors.

Key areas and issues in focus of the ESG Committee in 2024

• Status of Implementing the MTS Group ESG Strategy.
• Review of the roadmap to the MTS Greenhouse Gas Emissions Management Strategy.
• Status and measures for energy efficiency management at MTS facilities.
• Conducting and results of the annual assessment of the work by the MTS Board of Directors.
• Efficiency of information exchange between MTS, shareholders, investors and other stakeholders.
• Efficiency of corporate governance and activities of the MTS corporate secretary.
• Status of implementing ESG initiatives in MTS subsidiaries and affiliates.
• Implementation of initiatives in the area of social support for inclusive groups of employees of the MTS Ecosystem and their place in forming corporate culture and the brand of a socially responsible employer of MTS.
• Results of assessing the level of compliance culture at the MTS Group.
• ESG-reporting: sustainability report.

2024 Performance

Against the background of rapid changes, business sustainability and its impact on the development and well-being of society are becoming especially relevant for everyone, irrespective of profession, stage of life or social status.

In MTS, the ESG Committee plays an important role in shaping the Company’s strategy for interaction with society, as well as in practical implementation of ESG principles within the business strategy of the MTS Group.

In 2024, the ESG Committee in the MTS Group was focused on harmonizing management of social, economic and environmental resources of the digital ecosystem.

The updating of the ESG strategy allowed us to determine the priorities for sustainable business development in the midterm in a better way. These include innovation, development of human resources in digital industries, shaping of a brand of a socially responsible employer and an inclusive corporate culture, and boosting of our subsidiaries to develop own unique ESG initiatives in their activities. The ESG Committee also considered a roadmap for the MTS Greenhouse Gas Emissions Management Strategy and a set of measures to improve the energy efficiency of the Company’s facilities.

Late in 2024, the MTS Group started a large-scale transformation to effectively respond to new market opportunities and challenges. We are committed to our social mission to form potential for the society well-being and development  on the basis of MTS digital technology and products.

The MTS Group continues realizing the ESG strategy with an emphasis on the ethical and safe development, implementation of future technology and creation of a comfortable environment for people and business.

We believe that our ESG activity and achievements help support the long-term sustainability of ecosystem businesses of the MTS Group and contribute to positive social change in whole.

Chairman of the ESG Committee

Strategy Committee

The Committee prepares recommendations to the Board of Directors upon review of the general strategy issues of the MTS Group, strategic development of key functions, projects and the Company in general, as well as the implementation of M&A transactions and investment projects.

Number of Members

The composition of the Committee was changed during the reporting year.

The new composition of the Committee was approved on June 27, 2024.

Meetings

In the reporting year, 14 Committee meetings were held: 13 in-person meetings and 1 meeting in the form of absentee voting.

Issues reviewed

• MTS Group Strategy for 2024–2026 and 2025–2027.
• Strategies for business verticals and key functional horizontals.
• Distribution of profits (dividend payment) of MTS PJSC.
• Approval of the MTS Group budget for 2025.
• Current budget execution and debt management reports.
• On acquisition/sale and reorganization of assets.
• On reorganization of MTS PJSC in the form of acquisition and spin-off of its subsidiaries.

The Committee gave the following recommendations to the Board of Directors and management of the Company regarding:

• finalizing the MTS Group strategies for 2024–2026 and 2025–2027;
• finalizing business vertical strategies;
• dividend payment by MTS PJSC;
• approving transactions;
• approving the MTS Group budget for 2025.

2024 Performance

At the meetings of the Strategy Committee of the MTS Board of Directors in 2024, decisions were discussed and made on key projects that shape the development and status of implementing the MTS Group ecosystem strategy.

In particular, the 3-year strategy of the MTS Group ecosystem until 2027 and the relevant budget for 2025 were reviewed, and discussions of the strategies and budgets of the Company’s key functional and business areas were held.

A lot of attention in the work of the Strategy Committee was paid to issues of reorganizing and developing the MTS Group subsidiaries, as well as corporate changes and optimizations aimed at the effective implementation of the MTS Group strategy.

Traditionally, a significant part of the Strategy Committee meetings agenda was aimed at solving issues of potential M&A transactions and the status of implementing previously closed transactions. In light of tightening the monetary policy in the Russian market in 2024, the Strategy Committee members focused especial attention on investment planning and debt management issues of the MTS Group.

Chairman of the Strategy Committee

Special Committee for Cloud & Infrastructure Asset Development

The Committee was established to develop recommendations for developing cloud and infrastructure assets transferred to MWS JSC within the reorganization of MTS PJSC.

Number of Members

The composition of the Committee was changed during the reporting year.

The composition of the Committee was approved at the meeting of the Board of Directors on June 27, 2024.

Meetings

The reporting year saw 7 in-person meetings of the Committee.

Issues reviewed

In 2024, the work of the Special Committee for Cloud & Infrastructure Asset Development was focused on ensuring the growth in the efficiency of the technological and IT infrastructure of MWS, assistance in building the Company as a leading provider of digital infrastructure technologies and cloud solutions in the market of cloud and IT infrastructure services.

In particular, the results of MWS development for 2023, MWS strategy, AI Cloud Strategy, B2G Potential Development and other issues were discussed.

The Committee gave recommendations within the current competence.

2024 Performance

In the reporting year, the Committee reviewed the issues related to cloud and infrastructure asset development measures implemented by the Company.

Special Committee

The Committee was established to ensure compliance with the conditions of the planned major material transactions that potentially affect the activities of the MTS Group and ecosystem development.

Number of Members

The composition of the Committee was changed during the reporting year.

The composition of the Committee was approved at the meeting of the Board of Directors on June 27, 2024.

Meetings

No meetings of the Committee were held during the reporting year.

Special Committee for Transformation

The Committee was established at the end of 2024 to discuss issues related to the transformation of the MTS Group management system, as well as to develop recommendations to the Board of Directors of MTS PJSC on transformation issues.

Number of Members

The composition of the Committee was approved at the meeting of the Board of Directors on December 19, 2024.

Meetings

No meetings of the Committee were held during the reporting year.

Remuneration for Members of the Board of Directors

The procedure and terms for paying remuneration to the members of the MTS PJSC Board of Directors are determined in accordance with the Regulations on Remunerations and Compensations Payable to the MTS PJSC Board of Directors Members.

MTS pays remuneration to independent directors, as well as to directors, who are not employees or members of the management bodies of the MTS Group companies. Overheads are compensated to all directors in accordance with the target expenses actually incurred and documented.

The remuneration system applicable to the members of the Board of Directors provides for alignment of the financial interests of directors with the long-term financial interests of the shareholders¹.

¹ Refer to cl. 4.2.1 of the Report on Fulfilment of the Principles and Recommendations of the Corporate Governance Code for details.

Remuneration Paid to the Board of Directors Members in 2024

Indicator name	Amount, RUB
Remuneration for participation in operations of the management body	267,773,187.58
Reimbursement of expenses	0
Total	267,773,187.58

Remuneration components:

¹ Mandatory Committees: Audit Committee, Remuneration & Nomination Committee, ESG Committee, Strategy Committee.

² Special Committees: Special Committee for Compliance, Special Project Committee for Co-Locating Employees, Special Committee for Cloud & Infrastructure Asset Development, Special Committee.

³In this case, should any restrictions on operations (transactions) with shares/ADRs be introduced in accordance with the Russian Federation law or the applicable law of a foreign country or international instruments, the specified remuneration shall be replaced by remuneration in cash. The amount of the specified remuneration is USD100,000 or the equivalent of the specified amount in another currency, see cl. 6.10, 7.1 of the Regulations on Remunerations and Compensations Payable to Members of the MTS PJSC Board of Directors for details.

⁴ Regulations on Remunerations and Compensations Payable to Members of the MTS PJSC Board of Directors.

⁵ A director may dispose of the shares/ADR received starting from the fourth year after receipt of the first stock of shares.

CEO and MTS Management Board

A key role in pursuing the selected strategy, organizing efficient implementation of decisions of the Board of Directors and managing current activities of the Company is played by the Company’s executive bodies: The CEO¹ (sole executive body) and the Management Board (collective executive body).

¹ 26.02.2025 a record was made about changing information about a legal entity in the Unified State Register of Legal Entities: Inesa Galaktionova — CEO of MTS PJSC.

The executive bodies are accountable to the Board of Directors and the General Meeting of Shareholders.

The executive bodies of the Company shall be established by the Board of Directors.

The CEO and the Management Board act on the basis of the MTS PJSC Charter, the Regulations on the CEO of MTS PJSC and the Regulations on the MTS PJSC Management Board.

Powers of the executive bodies:

• organize the Company’s activities and bear liability for the results of these activities, ensure the enforcement of decisions made by the General Meetings of Shareholders and by the Board of Directors;
• assure establishment and maintenance of operation of the efficient risk management and internal control system at the Company, be responsible for executing the decisions made by the Board of Directors in terms of setting up the risk management and internal control system;
• be responsible for the efficacious economic, financial, scientific and technical and social policies of the Company.

The Board of Directors is entitled at any time to decide on the early termination of the CEO’s powers, as well as on the termination of the powers of an individual member of the Management Board or all members of the Management Board, as well as on establishment of new executive bodies.

Meetings of the Management Board

In 2024, 35 in-person meetings were held. The average participation rate was 91%..

Remuneration for Members of the Management Board and Senior Executive Officers Based on 2024 Results

Principles of Remuneration for Members of the Management Board and Senior Executive Officers

A contract is entered into with every Management Board member, which defines labor terms, procedure for defining the amount of remuneration, terms of reimbursement for expenses connected with execution of duties of the Management Board member and contract termination procedure. The contract shall be signed on behalf of the Company by the Chairman of the Board of Directors of the Company or by a person authorized by the Board of Directors. The Board of Directors is entitled at any time to terminate the contract with a member of the Company’s Management Board. Terms and conditions of the contract shall be approved by the Company’s Board of Directors.

Remuneration of senior executive officers is fixed and calculated based on the Policy for Payment of Labor of Employees at MTS PJSC and meets the following principles:

• observation of fairness and competitiveness of remuneration;
• connection of remuneration with personal contribution and final Company performance in general;
• motivation for achieving target business development parameters in accordance with strategic development guidelines approved by the Board of Directors.

MTS PJSC Business Key Performance Indicators System

The list of indicators for the Company’s directors is approved by the Board of Directors of the Company with preliminary discussion at the relevant committees on an annual basis.

The list of corporate performance indicators of the MTS PJSC CEO includes such indicators as:

• revenue;
• Ecosystem indicators;
• integral assessment of the implementation of strategic projects and business development;
• transformation indicators.

Structure of Remuneration for Top Management in 2024

The remuneration structure consists of basic and variable payments and depends on the position level in the Company structure.

Achievement of the established KPIs is the basis for being entitled to receive a variable payment, as it pertains to long-term payments, including an increase in the shareholder value of the Company and growth in its capitalization.

Evaluation of Performance of the CEO and Members of the Management Board

One of the tasks of the Board of Directors is to ensure control over the work of the CEO and members of the Management Board, as well as to assess their performance, which is carried out based on the materials approved by the Remuneration & Nomination Committee.

The assessment of the CEO and members of the Management Board for 2024 was made in accordance with the existing method based on fulfilment of key performance indicators of the Company in general and functional KPIs.

Remuneration System for Senior Executive Officers

Basic Remuneration Monthly salary.	Variable Part of Remuneration is determined by the results of the Company’s business in the reporting period in accordance with the Company’s internal regulations and approved by the Company’s Board of Directors.
	Short-term Incentive System Annual bonus paid for achieving ecosystem and functional key performance indicators (KPIs) determined by the Board of Directors for the relevant reporting period. The corporate governance trigger also applies to the bonus	Program of Long-Term Material Incentives Is aimed at increasing the Company’s shareholder value, accelerating its capitalization growth, as well as preserving long-term labor and corporate relations between the Company and its management

MTS PJSC Business Key Performance Indicators System

Ecosystem Indicators	Formed based on the Company’s business plan. Reflect the general corporate responsibility for the results of the MTS Group business and make it possible to track the generalized results of the Company’s business and adjust the strategy.	Financial and economic
		Industry
		Strategic
Functional indicators	are formed on the basis of business blocks strategies and strategic objectives of a specific director of the Company.

Remuneration Paid to Members of the Management Board in 2024

Indicator name	Amount, RUB
Salary	373,586,514
Bonuses	3,402,503,993
Reimbursement of expenses	136,383,605
Other remuneration types	3,623,685
Total	3,916,097,798

Remuneration Paid to Senior Executive Officers in 2024¹

Indicator name	Amount, RUB
Salary	476,830,466
Bonuses	3,893,999,015
Reimbursement of expenses	167,672,548
Other remuneration types	4,346,917
Total	4,542,848,946

¹ Includes information on remuneration of 30 senior executive officers of the Company (including members of the Management Board).

Control and Audit

Internal Control System

The MTS PJSC internal control system is implemented at all management levels on the basis of internal policies, regulations, procedures and methods of internal control and risk management. Operation of the internal control system is aimed at ensuring reasonable confidence in achieving the objectives facing the Company and allows proper control over financial and economic activities of the Company, its efficiency and accuracy of financial reporting.

The MTS PJSC Board of Directors approves the regulation on the internal control system and the policy regarding the internal audit of the Company and twice a year reviews the report of the Audit Committee on the results of work of the internal audit, business ethics and compliance, risk management and internal control system departments of MTS PJSC with an analysis of the current control procedures and detected violations.

The Report of the Auditing Commission is attached annually to the materials of the annual MTS PJSC General Meeting of Shareholders.

The Internal Audit Block contributes to improving the Company’s management processes, risk management and internal control. The Internal Audit Block is an individual structural unit of MTS PJSC functionally subordinate to the Board of Directors and administratively — directly to the MTS PJSC CEO.

For a systematic independent assessment of the reliability and effectiveness of the internal control system, risk management processes and corporate governance, the Internal Audit Block uses the results of the audits conducted to generate an opinion on the maturity level for the Company as a whole.

The Company’s internal control system is a set of interconnected components, the structure of which corresponds to the generally accepted COSO concept “Internal Control. Integrated Framework 2013”. The Company is creating a control environment, has a risk assessment system in place; the Department for Development and Support of Internal Control System ensures introduction of control procedures and assesses their efficiency and fulfilment, and changes in the organizational structure and business processes are monitored.

MTS PJSC approved the Policy for Complying with Anti-Corruption Legislation defining the measures aimed at establishing elements of the corporate culture, organizational structure, rules and procedures ensuring non-admission of corruption¹.

¹ See “Unified Compliance System” section for details.

The internal control system provides for a range of anti-corruption measures, mitigating reputational risks and risks of sanctions for bribery of officials imposed on MTS PJSC. For the purposes of counteracting abuses, authorization of transactions and operations, distinction of powers and rotation of duties, control over the actual availability and condition of facilities is implemented.

The Audit Committee of the MTS PJSC Board of Directors reviews reports on the performance of the Internal Audit Block on a quarterly basis and twice a year — reports on the work of the Department for Development and Support of the Internal Control System, Ethics & Compliance Department and the Risk Management Group. The Audit Committee evaluates the performance and draws conclusions on the efficacy of the internal audit, business ethics and compliance, risk management and internal control system departments of MTS PJSC.

The Audit Committee reviews quarterly the reports of the external auditor Business Solutions and Technologies JSC and draws conclusions about the quality of their work.

Audit Committee of the Board of Directors

The Audit Committee is a collective deliberative body under the Board of Directors. The Committee was established to assist in efficient implementation of functions of the Board of Directors in terms of control over financial and economic activities of the Company.

See “Committees of the Board of Directors” section for details about the Audit Committee’s performance in the reporting year.

The results of assessment by the Audit Committee of the external and internal audit process efficacy are specified in the section “Report on the Work of the Audit Committee”.

In 2024, the Audit Committee:

• positively assesses the work of the Internal Audit Block and believes that the internal audit function is efficient and that key performance indicators and internal audit goals for 2024 have been fully achieved;
• gives a positive assessment to the activities in the area of business ethics and compliance, noting that the activities of the Ethics & Compliance Department are effective, key performance indicators and goals in the area of business ethics and compliance for 2024 have been achieved with the expected results;
• positively evaluates the work of the Department for Development and Support of Internal Control System with regard to the creation, introduction and development of an efficient system of internal control over the reliability of generating financial reporting for the MTS Group, including in new businesses, for 2024;
• positively assesses performance of the risk management function as efficient and fit for its purposes at the moment.

Auditing Commission

On June 26, 2024, the Auditing Commission was elected at the MTS PJSC annual General Meeting of Shareholders.

Report on Operation of the Auditing Commission

In April 2024, the Auditing Commission audited financial and economic activity of the Company for 2023. The Auditing Commission did not record any material facts of violation of the procedures for accounting and submission of financial reporting while conducting financial and economic activities of the Company.

The Auditing Commission confirmed that the accounting statements of the Company for 2023 and the Annual Report on the Company’s activities for 2023, in terms of the Company’s accounting statements, are true.

In April 2025, the Auditing Commission plans an audit of financial and economic activities of the Company for 2024. The opinion of the Auditing Commission will be submitted for approval to the MTS annual General Meeting of Shareholders in June 2025.

Internal Audit Block

The Internal Audit group is structured effectively, has strong technical skills and is ready for further professional growth.

Advanced analytics tools are used widely in auditor projects, which helps to increase their efficacy and performance for the Company.

Approaches to the conducting and quality of audits are based on a unified methodology applied throughout the MTS Group.

The Internal Audit Block is an independent structural unit headed by the Director for Internal Audit. The Internal Audit Block performs the following functions:

• assessing the efficiency of the internal control system, risk management and corporate governance processes by analyzing the Company’s business operations and its information systems, achieving the Company’s strategic goals, the efficacy and performance of projects and products, the reliability and integrity of information on the Company’s operation, the protection of assets, compliance with internal regulations and external requirements;
• developing recommendations for improving internal control, risk management and corporate governance procedures, as well as assisting management in developing corrective measures based on the conducted audits;
• monitoring execution of recommendations for eliminating violations and deficiencies discovered based on audit results;
• developing and introducing IT analytics and digital data analysis tools for the purpose of continuous monitoring of risk indicators based on business process, project and product indicators, and improving the efficacy of audit procedures;
• providing consulting services (advice, recommendations, etc.) to the management, Board of Directors, Audit Committee and shareholders of the Company in order to assist and improve the processes of internal control, risk management and corporate governance in the Company;
• coordinating activities, planning issues, preparing reports and methodological support for an internal audit in MTS subsidiaries.

Report on Operation of the Internal Audit Block

The strategic goals of the Internal Audit Block include a focus on auditor projects that provide maximum value to the Company, addressing current risks, on the quality of interaction with management and other stakeholders based on openness and support, and promote the further development of a strong professional audit team. The internal audit achieves strategic goals through key initiatives carried out on a regular basis and a number of optimization and transformation initiatives.

The strategic goals and key performance indicators set by the internal audit for 2024 have been achieved completely. In 2024, all planned key initiatives, including those aimed at improving the efficacy of internal audit activities have been completed as scheduled.

The audit plan of MTS PJSC and its subsidiaries for 2024 has been fulfilled and contributed to the implementation of the internal audit strategy. Scheduled and unscheduled audits provided sufficient coverage of processes and areas with a high level of risk both in MTS PJSC and in the MTS Group as a whole. An improved process for monitoring the implementation of corrective actions based on audit results has resulted in improved statistics for introducing internal audit recommendations.

Internal Audit Block continues to introduce and apply digital technologies, advanced analytics tools, and artificial intelligence in its projects, improving their efficacy and performance for the Company.

The Internal Audit Block has created a competence center for analytics for auditors and other divisions and companies of the MTS Group. As part of analytical projects, dashboards and automated solutions are developed for customer departments and the internal needs of the Internal Audit Block.

In 2024, the Internal Audit Block combined the model for assessing the competences of its employees with the corporate-wide one; individual employee development plans for 2024 were formed within the framework of the Company’s unified Talent Review process (360-degree assessment). In order to develop competences and expertise, internal and external training was planned and conducted.

Employees of the MTS PJSC Internal Audit Block participate actively in community events organized by the internal auditors and arrange their own events to exchange experience and training in the field of internal audit, the use of new analytical tools in the work of auditors.

¹ Based on the results of the internal assessment of the quality of activities

The Audit Committee of the MTS PJSC Board of Directors reviews reports on the results of activities of the Internal Audit Block on a quarterly basis and forms conclusions about the effectiveness of the internal audit function.

The Audit Committee assesses positively the work of the Internal Audit Block and believes that the internal audit function is efficacious and that key performance indicators and internal audit goals for 2024 have been achieved completely.

In December 2024, the Audit Committee pre-approved and the Board of Directors approved the internal audit strategy for 2025–2027, the audit plan, key performance indicators and budget of the MTS PJSC Internal Audit Block for 2025, and also reviewed and took note of the audit plans for 2025 in the MTS PJSC subsidiaries with a decentralized internal audit function.

Department of Development and Support of Internal Control Systems (ICSD)

The Internal Control System (hereinafter “ICS”) function in subsidiaries is managed in the Corporate Center. This approach has proven its efficacy and has made it possible to optimize the time required to support the internal control system in subsidiaries, while maintaining the proper level of quality of the ICS.

In 2024, an assessment was made of the coverage of significant and material items of financial statements by ICS processes and the scope of key processes and control procedures was confirmed. Based on the results of this analysis, the reengineering of the ICS processes was carried out taking into account the requirements of the applicable Russian legislation.

As part of developing the internal control system, work has been done to update and introduce control procedures aimed at covering significant risks.

Based on the results of testing control procedures and assessing processes, an assessment was made of the efficacy of the internal control system over financial reporting in relation to business processes of functions and Subsidiaries of the MTS Group of Companies.

Significant events/projects of ICSD carried out in 2024 include the following.

• In 2024, employee access rights were revised for seven significant information systems and three business units of the MTS Group of Companies.
• Procedures for analyzing and mitigating SOD risks for MTS were completed. Based on the performance, SOD conflicts were compensated by the existing ICS procedures.

Based on the results of the internal assessment and external audit report, the Internal Control System for proving the accuracy of preparing financial reporting of the MTS Group as of December 31, 2024 was found to be efficacious and to have no material or significant deficiencies.

External Audit

At the MTS PJSC Annual General Meeting of shareholders¹, Business Solutions and Technologies Joint Stock Company was approved as the auditor² (hereinafter the “Auditor”).

¹ The Annual General Meeting took place on June 26, 2024.

² Location: 5 Lesnaya St., Moscow, 125047, Russian Federation, OGRN [Primary State Registration Number] 1027700425444, certificate of membership in the Self-Regulatory Organization of Auditors of the Association Sodruzhestvo (Association) of January 31, 2020, ORNZ [Principal Number of Registration Entry] 12006020384.

Business Solutions and Technologies JSC is one of the leading auditing and consulting companies providing services in the field of auditing, management and financial consulting, risk management, taxation and accompanying services. Since May 24, 2022, the Russian company, formerly part of the Deloitte international network, has continued to work in Russia under its own brand.

In the reporting year, the Auditor performed:

• an audit of annual accounting statements of MTS PJSC for 2024 prepared in accordance with the Russian Accounting Standards as per the International Audit Standards (IAS);
• an audit of consolidated financial reporting of MTS PJSC and its subsidiaries prepared in accordance with the International Financial Reporting Standards (IFRS) for 2024, as per the IAS.

At the beginning of 2025, the Audit Committee reviewed the results of the external auditor’s audits for 2024.

Following the audits performed, the MTS PJSC Auditor expressed opinions on the reliability of the accounting statements of MTS PJSC for 2024 prepared in accordance with Russian Accounting Standards, and the consolidated financial reporting by MTS PJSC and its subsidiaries for 2024 prepared in compliance with the IFRS.

Procedure for Selecting the Issuer’s Auditor

A tender for selecting an external auditor for MTS PJSC is conducted at least once every five years. To conduct the tender, MTS PJSC establishes a tender commission. Based on the tender results, the tender commission generates recommendations for selecting the external auditor that are submitted for approval to members of the Audit Committee of the MTS PJSC Board of Directors.

If the auditor’s candidacy is approved by the Audit Committee, Board of Directors and the General Meeting of Shareholders of the Company, a contract for the services for auditing the accounting statements is signed with the auditing company.

Remuneration of the Auditor

The amount of the auditor’s remuneration for the audit and other services of MTS PJSC and its subsidiaries for 2024 is approved by the Board of Directors of MTS PJSC and, according to the results of 2024, was RUB193,655,000, excluding VAT and overhead expenses, including the audit of statements of MTS PJSC in the amount of RUB15,900,000.

Settlement of potential conflict of interest

When managing a conflict of interests, the Company is guided by the principles of lawfulness, confidentiality, impartiality, objectiveness and reasonable sufficiency, obligatory immediate disclosure of information by Company’s employees, as well as directors, about an actual or potential conflict of interests.

Members of the Management Board, the Board of Directors and employees are not entitled to participate in approval, agreement, other decision-making with respect to transactions entered into by the Company if they are or may be under the influence of a conflict of interests.

For the purposes of non-admission of conflicts of interests, the Company holds an annual knowledge testing and certification of compliance with the standards of the Code of Business Conduct and Ethics for executives and top management. The testing results are reviewed by the Audit Committee of the MTS PJSC Board of Directors.

The Company has also created procedures to minimize the risk of making decisions in situations of conflict of interests of directors. Members of the Board of Directors must refrain from any actions that could result in the appearance of a conflict of interests and, if such a situation exists or arises, disclose information about it to the Board of Directors and not participate in voting on the conflict agenda items.

Members of the Board of Directors, who have an interest in agenda items of the Board of Directors, do not take part in discussing and voting on the specified agenda items.