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Report of the Supervisory Board

Ladies and gentlemen!

In the 2011/12 financial year, the EVN Group continued to be confronted with difficult economic and energy sector conditions. Growth of the global economy once again perceptibly weakened in the spring of 2012, and had a negative effect on the economic development of the European countries. In addition, the confidence and sovereign debt crises in the eurozone became more acute due to the increasing financing needs of banks in Southern Europe. Tensions on financial markets also increased. The economic uncertainty was reflected in the development of Europe’s energy markets, and led to a negative development of electricity prices. In spite of the challenging environment, EVN demonstrated a high level of stability in the 2011/12 financial year thanks to its business model.

The Supervisory Board actively monitored and supported EVN’s strategic steps as part of its designated responsibilities. It convened four times for plenary meetings during the period under review, fulfilling the tasks and duties incumbent upon it in accordance with legal regulations and the Articles of Incorporation.

The Executive Board reports provided the Supervisory Board with regular, timely and comprehensive information about all relevant aspects of the Group’s business development, including the risk situation and risk management of the company, as well as the development of key Group subsidiaries. Thus the Supervisory Board was able to continually supervise and support the Executive Board’s management activities. The advisory and control functions exercised by the Supervisory Board within the framework of open discussions with the Executive Board did not lead to any objections. Suggestions made by the Supervisory Board were taken up by the Executive Board.

Main resolutions passed by the Supervisory Board

Among the main decisions made by the Supervisory Board during the 2011/12 financial year were, in addition to approving the 2012/13 budget for the EVN Group, particularly the approval given to acquiring the Bulgarian government’s shareholdings in the two companies EVN Bulgaria EP and EVN Bulgaria EC. Other important issues were the renewal of the syndicated line of credit to the amount of EUR 600.0m, and establishing a financing framework totaling EUR 200.0m for refinancing measures.

The Supervisory Board revised the mission statement of EVN and the EVN Code of Conduct to reflect legal changes.

In the past financial year, the Supervisory Board in cooperation with the Executive Board carried out a tender for providing auditing services to EVN AG and its direct or indirect subsidiaries during the 2012/13 financial year. It also evaluated the submitted offers, and resolved to recommend to the Annual General Meeting to select KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft as the auditor of the company’s Financial statements and Consolidated financial statements for the 2012/13 financial year.

With respect to the Generation segment, the Supervisory Board approved the acquisition of small-scale hydropower plants, in part including the distribution network acquired by EVN Netz GmbH, as well as the construction of wind park projects in the supply area of Lower Austria covered by EVN. Furthermore, the Supervisory Board also dealt with public participation models for photovoltaic plants in Lower Austria.

With respect to the subsidiary EVN Wärme, the Supervisory Board granted approval to the investments in the co-generation plant in Vösendorf and the Guntramsdorf heating plant.

In the Environmental Services segment, the Supervisory Board dealt with the acquisition of municipal drinking water pipelines as well as international drinking water and water purification projects.

Austrian Corporate Governance Code, Supervisory Board committees

As a publicly traded company, EVN is committed to adhering to the Austrian Corporate Governance Code. The Supervisory Board resolved to apply the stipulations of the revised January 2012 version of the Austrian Corporate Governance Code to EVN as of the 2012/13 financial year. The adjustment of the provisions of the Austrian Corporate Governance Code to reflect the changes contained in Austria’s Second Stability Act is binding under this law. The Supervisory Board strives to consistently abide by the stipulations of the code pertaining to the Supervisory Board. In this regard, all rules relating to the cooperation of the Supervisory Board with the Executive Board as well as to the Supervisory Board itself are complied with except for two deviations which are correspondingly justified in the Corporate governance report.

Pursuant to the requirements laid out in the Austrian Corporate Governance Code, the Supervisory Board conducted a self-evaluation of its activities during the course of the year under review. This took place in the form of a questionnaire, which primarily focused on the organisation and mode of operation of the Supervisory Board. The results of the survey were discussed at a plenary session of the Supervisory Board.

In line with the requirements stipulated in the Austrian Corporate Governance Code, and the internal rules of procedure governing the Supervisory Board, the Supervisory Board established an Audit Committee, a Personnel Committee which simultaneously serves as a Remuneration and Nomination Committee, as well as a Working Committee.

The Personnel Committee convened twice during the 2011/12 financial year, dealing with issues pertaining to the relationship of the company and the members of the Executive Board.

The Working Committee held two meetings in the course of the reporting period, which in particularly dealt with the privatisation of the government’s stakes in the companies EVN Bulgaria EP and EVN Bulgaria EC, renovation work on the steam generator at the Walsum 10 power plant, approval of the joint venture model at the central wastewater purification facility in Prague, Czech Republic, as well as financing issues.

The Audit Committee convened twice during the 2011/12 financial year, and mainly focused on preparing the resolution approving the annual Financial statements, the appointment and work of the certified public accountants to audit the annual accounts, as well as the company’s half-year results including the outlook for the rest of the financial year. In addition, it dealt with current developments in the business segments, and in particular discussed the internal control, audit and risk management systems.

Further information on the composition and mode of operation of the Supervisory Board and its committees as well as remuneration of Supervisory Board members and guidelines the Supervisory Board has defined to ensure its independence can be found in the Corporate governance report.

Annual Financial statements and Consolidated financial statements

KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna appointed as EVN’s certified public accountants for the 2011/12 financial year, starting October 1st, 2011 and ending on September 30th, 2012, examined the annual accounts of EVN AG on September 30th, 2012, which were prepared in accordance with Austrian accounting regulations, as well as the Management report submitted by the Executive Board. KPMG presented a written audit report, and issued an unqualified opinion. Following detailed scrutiny and discussions in the audit committee and the entire body, the Supervisory Board approved the Financial statements and the Consolidated financial statements on September 30th, 2012 submitted by the Executive Board, the related Management report, Corporate governance report and the proposals for the distribution of profits. The Financial statements on September 30th, 2012 are thereby approved, pursuant to § 95 para 4 of the Austrian Stock Corporation Act. These statements were prepared pursuant to International Financial Reporting Standards (IFRS) and audited by KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna, which issued an unqualified opinion. The Supervisory Board approved the Consolidated financial statements, the Consolidated notes and the Management report.

In closing, the Supervisory Board wishes to express its sincere gratitude to the Executive Board and all employees of the EVN Group for their endeavours, hard work and commitment during the 2011/12 financial year. Particular thanks are extended to the shareholders, customers and partners of the EVN for their confidence in the company.

Maria Enzersdorf, December 12th, 2012

On behalf of the Supervisory Board:

Unterschrift Szyszkowitz

Burkhard Hofer



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