Management and Control System

Description of management and control system

A fundamental tool for the conduct and support of corporate governance at the Ignitis Group is an integrated management control system. The purpose of the system is to ensure that goals are achieved in a timely and effective way and are in keeping with stakeholders’ expectations.

The system covers all key elements of operations: from cyclical business planning and the setting of performance targets through actual operations to achieve the targets and assessment of the results. It ensures that the process is continuous and that the results of one cycle provide the starting data for the next cycle. This is an essential condition for making the principle of continuous improvement a reality.

The management control system distinguishes four groups of processes: management (planning, strategic decision-making), operations support (human resource management, communication, purchasing, etc.), core activities (production, services, trading, etc.), and the assessment and improvement of operations (monitoring, prevention, risk management).

Within each Group company, the processes for management, operations support, assessment and improvement are essentially the same and aim at the effective implementation, management, support, assessment and improvement of those companies’ core activities.

Thus the main purpose of corporate governance is to improve these common processes across the entire Ignitis Group through their centralisation, coordination and standardisation, and through sharing experience and good practices.

Governance activities are concentrated in the group’s parent company, AB “Ignitis Grupė”, which coordinates finance and legal matters, planning and monitoring, human resources, risk management, auditing, technologies, communication, and other common areas within group companies.

The Group’s companies base their activities in these areas on mutual agreement, working together with an eye to overall performance, and coordinate them by means of policies – general provisions and norms that apply to all the Group’s companies.

The Parent Company

The parent company of the group, AB Ignitis Group is responsible for transparent management and coordination of the group's operations, increasing its efficiency in order to provide competitive services to its customers and socially responsible long-term value to its shareholders.

The active patronage function of AB Ignitis Group includes management holding services, which is a common commercial practice in the European Union and in other countries used for providing services to the subsidiaries of the parent companies. Management services are defined as the integrated set of consultation services and other specific services provided by the parent company that are related to the core business functions of the group companies.

In its daily operations, the Group applies matrix management principles based on collaboration and agreement between the Group companies on activities, goals, responsibilities and accountability, as well as comprehensive exchange of identified information both vertically and horizontally, according to existing confidentiality obligations between the companies.

Structure of the Group