Report of the Supervisory Board
Dear Ladies and Gentlemen,
The situation on the energy markets remained tense throughout the 2013/14 financial year. The volatile generation from renewable energy sources led to temporary supply overhangs, which had a significant influence on the wholesale prices for electricity. The resulting price developments were reflected in decisions by a number of energy producers to shut down power plant capacity. However, steps like these endanger the high energy supply standard. The maintenance of sufficient capacity reserves on a pan-European basis is therefore required to protect supply security. For EVN, supply security is a top priority. Power plants are held in stand-by condition to give customers the greatest possible security. The resulting strong loyalty was also reflected in customer satisfaction with EVN’s set course during the past year.
The Supervisory Board actively monitored and supported EVN’s strategic steps as part of its designated responsibilities. Five plenary meetings were held during the reporting year, in which the Supervisory Board fulfilled the tasks and duties required by legal regulations and the company’s by-laws. The Executive Board provided the Supervisory Board with regular, timely and comprehensive reports on all relevant aspects of EVN’s business development, including the risk position and risk management, as well as the development of key Group companies. This reporting allowed the Supervisory Board to continually supervise and support the Executive Board’s management activities. The control functions exercised by the Supervisory Board within the framework of open discussions with the Executive Board did not lead to any objections. Recommendations by the Supervisory Board were taken up by the Executive Board.
Changes on the Supervisory Board
Following the resignation of Michaela Steinacker from the Supervisory Board, the 85th Annual General Meeting on 16 January 2014 elected Angela Stransky to serve out the remaining term of this member in accordance with the by-laws of EVN AG. Ms. Stransky’s function as a member of the Supervisory Board therefore began with the end of the 85th Annual General Meeting and will end with the Annual General Meeting that votes on the release from liability for the 2014/15 financial year. The Supervisory Board would like to thank Ms. Steinacker for her many years of successful work on the Supervisory Board.
Major resolutions passed by the Supervisory Board
The most important decisions taken by the Supervisory Board in 2013/14 included the approval of the annual financial statements and the 2014/15 budget for the EVN Group as well as the approval of the EVN StrategieUpdate 2013. The approval of the budget also covered investments in heating and windpower plants, in long-distance and district heating plants, in electricity, natural gas and heating networks and in IT infrastructure. These investments are designed, above all, to protect supply security and transport renewable energy production. Investments approved for the environmental services business are directed to improving water quality. In addition, the Supervisory Board discussed international projects for water purification. The Supervisory Board also approved the renewal and extension of the syndicated credit line at a reduced volume of EUR 400m with a term of up to seven years and local financing for individual companies.
The Executive Board informed the Supervisory Board of current developments in Bulgaria, Macedonia and Moscow.
Austrian Corporate Governance Code, Supervisory Board committees
EVN, as a listed company, is committed to compliance with the Austrian Corporate Governance Code. The Supervisory Board approved the implementation of the January 2012 version of the code by EVN beginning in 2012/13. The amendment of the Austrian Corporate Governance Code to reflect the July 2012 changes in Austria’s Second Stability Act is binding for EVN under this law. The Supervisory Board strives to consistently comply with the provisions of the code that relate to its activities. EVN complies with all rules governing the cooperation between the Supervisory Board and the Executive Board as well as the internal workings of the Supervisory Board with the exception of two deviations that are explained in the corporate governance report. The Supervisory Board examined all possible conflicts of interest and did not identify any inconsistencies.
In its meeting on 11 December 2013, the Supervisory Board approved the report prepared in accordance with Rule 18a of the Austrian Corporate Governance Code on measures to prevent corruption in the company.
In line with the requirements of the Austrian Corporate Governance Code and the rules of procedure for the Supervisory Board, the Supervisory Board established the following committees: the Audit Committee, the Personnel Committee which simultaneously serves as a Remuneration and Nominating Committee, and the Working Committee.
The Personnel Committee met three times during the 2013/14 financial year and dealt with issues pertaining to relations between the company and the members of the Executive Board. The Personnel Committee approved the acceptance of a seat on the supervisory board of CEESEG Aktiengesellschaft and on the supervisory board of Wiener Börse AG by Stefan Szyszkowitz. The Working Committee did not meet during the reporting year. The Audit Committee met three times in 2013/14 and dealt primarily with six-month results, including the outlook for the full financial year, the preparation of the resolution for the approval of the annual financial statements and the appointment and work of the auditor. The Audit Committee also discussed current developments in the operating segments, in particular the initial application of the new consolidation standards IFRS 10 –12 as well as current developments after the third budget update (status of projects in the environmental services business and the impairment testing of generation plants in connection with latest estimates for the short-, medium- and long-term development of electricity prices) and dealt extensively with the internal control, internal audit, risk and compliance management systems.
The corporate governance report provides additional information on the composition and working processes of the Supervisory Board and its committees as well as the remuneration of Supervisory Board members and guidelines defined by the Supervisory Board to ensure its independence.
Annual financial statements and consolidated financial statements
KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna, was appointed to audit the financial statements for the 2013/14 financial year from 1 October 2013 to 30 September 2014. This firm examined the annual financial statements of EVN AG as of 30 September 2014, which were prepared in accordance with Austrian accounting regulations, and the management report submitted by the Executive Board. KPMG presented a written audit report on the audit and issued an unqualified opinion.
Following detailed analysis and discussions by the Audit Committee and the Supervisory Board, the Supervisory Board approved the following documents that were submitted by the Executive Board: the annual financial statements as of 30 September 2014 together with the notes, management report and corporate governance report; and the recommendation for the use of profits.
The annual financial statements as of 30 September 2014 were thereby approved in accordance with § 96 (4) of the Austrian Stock Corporation Act. The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) and also audited by KPMG Austria GmbH Wirtschaftsprüfungs-und Steuerberatungsgesellschaft, Vienna, which issued an unqualified opinion.
The Supervisory Board approved the consolidated financial statements together with the respective notes and management report.
In conclusion, the Supervisory Board would like to thank the Executive Board and all employees of the EVN Group for their performance and commitment during the 2013/14 financial year. Special thanks are also directed to EVN’s shareholders, customers and partners for their confidence in the company.
Maria Enzersdorf, 10 December 2014
On behalf of the Supervisory Board: