2 CORPORATE GOVERNANCE Corporate governance at Romande Energie is guided by the core values of transparency and fairness as we seek to inspire confidence in all our stakeholders. Our principles of corporate governance aim to sustain profitability in the long run while safeguarding the interests of our shareholders, customers and business partners. 1 GROUP STRUCTURE AND SHAREHOLDERS Most of the Group’s business consists of the generation, distribu- 1.1.2- Legal structure of Romande Energie Group 1.1.3 tion and marketing of electricity, together with energy services. Romande Energie Holding SA, whose head office is located at rue de Lausanne 53, CH-1110 Morges, Switzerland, is the 1.1.1 Operational structure of Romande Energie Group top holding company of Romande Energie Group. Its securities As at 31 December 2017, the operational structure of Romande are listed on the SIX Swiss Exchange in Zurich under security Energie Group was comprised of four business units: number 2.560.733 and ISIN code CH 0025607331. It was Networks, Energy, Romande Energie Commerce and established in 1901 under the corporate name Compagnie Romande Energie Services (the final two being incorporated), Vaudoise des Forces Motrices des Lacs de Joux et de l’Orbe supported by four head-office departments: Finance, Human and was originally listed on the Lausanne Stock Exchange. Resources, Legal and Administrative Affairs, and Corporate Excluding holdings of own shares, market capitalisation Communications (which reports to the Corporate Secretary). amounted to CHF 1,217m as at 31 December 2017. Romande The diagram opposite illustrates the Group’s organisational Energie Holding SA has no actual operations, and it is the only structure. Group company whose shares are listed on the stock exchange. The list of companies that are part of the consoli- dation of Romande Energie Holding SA as at 31 December 2017 is shown under Note 36 of the Notes to the Consolidated Financial Statements. Romande Energie Group fulfils the statutory and regulatory provisions on corporate governance that are applicable in Switzerland. This report complies with the Directive on Information relating to Corporate Governance, issued by SIX Exchange Regulation on 1 September 2014, and uses the numbering system thereof. Additionally, it takes into account the Swiss Code of Best Practice for Corporate Governance (2014 edition). Supplementary information is contained in the Remuneration Report (see page 39). Unless stated otherwise, the information contained herein relates to business as at 31 December 2017. 16 Romande Energie Group 2017 Annual Report Group’s organisational structure As at 31 December 2017 Chairman of the Board of Directors Guy Mustaki Strategy and Corporate GOVERNANCECORPORATE Development Committee Guy Mustaki Appointments and Corporate Secretary Compensation Committee Wolfgang Martz Finance and Audit Committee Christian Budry Chief Executive Officer Pierre-Alain Urech1 HEAD-OFFICE DEPARTMENTS Internal Audit Finance Human Resources Denis Matthey1 Jean-Daniel Habegger 1 Deputy CEO Legal and Administrative Affairs Daniel Hammer 2 Corporate Communications Michèle Cassani BUSINESS UNITS Romande Energie Romande Energie Networks Energy 1 1 Commerce SA Services SA Patrick Bertschy Christian Frère Philippe Durr 1 Oliviero Iubatti 1 1 Member of the Executive Board 2 Member of the Management Committee Romande Energie Group 2017 Annual Report 17 Group’s legal structure ROMANDE ENERGIE As at 31 December 2017 HOLDING SA 100% 100% 73.93% ROMANDE ENERGIE ROMANDE ENERGIE ROMANDE ENERGIE SA SERVICES SA COMMERCE SA 100% 100% 100% Neuhaus Energie SA PolyTech SA** PolyForce SA** 41.14% 29.71% 36% 27.98% Forces Motrices Forces Motrices du Forces Motrices 11.02% EOS Holding SA* Hongrin-Léman SA Gd-St-Bernard SA de l’Avançon SA 31% 1.51% DransEnergie SA 100% Effitec SA 3.86% 71.99% Bas-Valais Energie SA Energie Renouvelable 51% de l'Avançon SA 49.99% DransGrid SA 50.01% Brent Energia SA 65% 45% CISEL Informatique SA Eoliennes de 7.6% HYDRO Exploitation SA 60% Provence SA 48.88% neo technologies SA Société Electrique des St-Gingolph 36.6% 25% Forces de l'Aubonne SA Energia SA 30% Spontis SA 9.53% vo énergies holding SA 50% VO RE-Nouvelable SA 50% 33.34% SITEL SA Forces Motrices 20.6% Agrogaz Lignerolle SA 40% de Sembrancher SA 8% B-Valgrid SA Energie Renouvelable 40% ThermorésÒ SA 35% Vouvry SA 34% Energie Solaire SA 25% EnergeÔ SA Avançon Energie SA 35% 3.12% SIRESO 2.52% Holdigaz SA 50% Gazobois SA 50% 12.89% Cadcime SA Société électrique 1.05% intercommunale 15.74% AGEPP SA de la Côte SA 100% Meyronnes SAS Romande Energie 100% 100% REF Eolien SAS France SAS Sté Icaunaise 5% d'électricité SAS * EOS Holding SA has a 31.44% interest in Alpiq Holding SA ** With effect from 1 January 2018 Equity interest exceeding 50% Equity interest equal to or less than 50% 18 Romande Energie Group 2017 Annual Report ROMANDE ENERGIE HOLDING SA SPONTIS SA Top holding company of Romande Energie Group, shares of which are Joint venture between Romande Energie, BKW, Groupe E and Lausanne listed on SIX Swiss Exchange in Zurich; owns equity interests, real property City Council; provides standardisation, supply-chain and logistics services and intellectual property rights for business partners ROMANDE ENERGIE SA SITEL SA Group’s operating company; generates hydropower using conventional Company controlled by UPC Cablecom Sàrl; owns TV, internet and multi- methods; owns and manages distribution grids; manages energy portfolios; media networks and provides services to Group companies DRANSGRID SA ROMANDE ENERGIE COMMERCE SA Owns and operates distribution grids in the Dranse region Joint venture; markets power and manages customer bases of partner FORCES MOTRICES DE SEMBRANCHER SA distribution system operators (DSO); provides marketing and sales services Owns hydropower facilities on the Dranse river to Group companies B-VALGRID SA ROMANDE ENERGIE SERVICES SA Owns and operates the high-voltage distribution grid in the Lower Valais region Designs and installs heat pumps, thermal solar and PV solutions as well HOLDIGAZ SA as district heating, ventilation, air-conditioning, home automation, telecom- Owns and operates natural-gas distribution pipelines; advises on building munications, IT and lighting (including street lighting); markets energy techniques; offers energy services GOVERNANCECORPORATE NEUHAUS ENERGIE SA ENERGIE SOLAIRE SA Installs heating, ventilation, air-conditioning and gas solutions as well as Provides thermal solar solutions plumbing and panelling solutions ENERGEÔ SA POLYFORCE SA Joint venture; responsible for developing a deep geothermal project in Provides heating, ventilation, air-conditioning, plumbing and refrigeration Vinzel solutions in canton of Fribourg SIRESO SOCIÉTÉ D’INVESTISSEMENT DE SUISSE OCCIDENTALE SA POLYTECH SA Owns, manages and holds equity interest in Swiss energy companies, thus Operates a design office, provides advisory and planning services for directly and indirectly representing the (primarily public) interests of the energy and building technology cantons and cities of Geneva, Vaud, Fribourg, Valais, Neuchâtel and Jura THERMORESEAU AVENCHES SA within these companies Generates and recovers heat; has created and installed a district heating SOCIÉTÉ ÉLECTRIQUE INTERCOMMUNALE DE LA CÔTE SA network in the Avenches region, which it also operates and maintains Owns and operates distribution grids; markets electricity and heating EOS HOLDING SA systems, indoor installations and multimedia services Manages interest in Alpiq; owns interests in wind-power and solar firms CADCIME SA operating in France and Germany Owns and operates a district heating system FORCES MOTRICES HONGRIN-LÉMAN SA AGEPP SA Owns pump-turbine facilities in Hongrin-Veytaux Responsible for developing geothermal drilling projects, primarily in the CENTRALE THERMIQUE DE VOUVRY SA Lavey region; leverages geothermal resources by supplying water to the Responsible for developing a combined-cycle natural-gas plant with output Bains de Lavey thermal baths as well as generating power and providing of 400 MW in the Chavalon area (VS) heat to various customers SOCIÉTÉ DES FORCES MOTRICES DU GRAND-ST-BERNARD SA BRENT ENERGIA SA Owns hydropower facilities on Toules-Pallazuit lake (VS) Owns hydropower facilities in the Brent area DRANSENERGIE SA EOLIENNES DE PROVENCE SA Offers maintenance services for hydropower facilities and distribution grids; Partnership with Zurich City Council (EWZ, the city’s energy provider); provides services to outside parties responsible for developing a wind farm in the Provence municipality in BAS-VALAIS ENERGIE SA Switzerland Formed in June 2012 through merger of Société Electrique du Bas-Valais ST-GINGOLPH ENERGIA SA SA and Société Electrique de Champéry – Val-d’Illiez SA; owns distribution Operates turbines on the St-Gingolph drinking-water network grids and hydropower facilities on Tanay-Vouvry lake GAZOBOIS SA FORCES MOTRICES DE L’AVANÇON SA Joint venture with Holdigaz SA; responsible for developing methanation Owns and manages distribution grids; owns and operates the La Peuffeyre- projects Sublin and Benjamine hydropower facilities; also active in multimedia distribution VO RE-NOUVELABLE SA EFFITEC SA Joint venture with VO Energies Holding SA; owns and develops generation Audits indoor electrical installations facilities powered by novel sources of renewable energy ENERGIE RENOUVELABLE DE L’AVANCON SA AGROGAZ LIGNEROLLE SA Responsible for constructing and operating the Bex hydropower plant,