30 June 2017 To: Nuon Energy Public Assurances
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OVERVIEW OF PUBLIC ASSURANCE ACTIVITIES DURING 1 JANUARY 2016 – 30 JUNE 2017 TO: NUON ENERGY PUBLIC ASSURANCES FOUNDATION FROM: MANAGEMENT BOARD OF N.V. NUON ENERGY SUBJECT: OVERVIEW OF ACTIVITIES DURING THE PERIOD 1 JANUARY 2016 – 30 JUNE 2017 RELATED TO THE PUBLIC ASSURANCES DATE: 6 OCTOBER 2017 Introduction On 1 July 2009, Vattenfall AB acquired from the N.V. Nuon Energy shareholders 49% of the outstanding share capital as a first tranche. Part of this transaction was setting up a foundation to safeguard Nuon Energy Public Assurances for a period of at least eight years. This foundation is called ‘Stichting Nuon Energy Public Assurances Foundation’. In 2011, 2012, 2013 and 2015 additional shares were acquired by Vattenfall. As of 1 July 2015 Vattenfall holds 100% of the outstanding share capital of N.V. Nuon Energy. The Public Assurances will remain applicable for a period of at least 8 years, unless stated otherwise, after completion (1 July 2009), irrespective of whether the A-shareholders (being the former shareholders of Nuon Energy) hold any shares. The agreed period of at least 8 years expired on 1 July 2017. As the NEPAF board has not received any requests for continuation of the Public Assurances after the 8 year period, the term of the initial agreement has expired and no running dissidents have been identified, the Public Assurances will no longer be applicable hereafter. The Public Assurances are in summary the following: 1. Maintain Nuon Energy locations, including its headquarters in Amsterdam and other main locations in the Netherlands 2. Maintain the trading office in Amsterdam for at least 5 years 3. N.V. Nuon Energy will be maintained as the regional holding of Vattenfall for the Benelux, responsible for the activities of Vattenfall in the Benelux (except for Trading and Wind) 4. Keep up know-how, R&D and cooperation with institutions 5. Continuation of the Nuon brand for at least 4 years 6. Long-term strategy for renewable energy portfolio, in particular 1400 MW wind energy, a European leadership position in heat, biomass and CCS (including Magnum phase I) 7. Long-term strategy for security of supply, in particular, gas storage and gas sourcing Strategy With this annual memorandum, the Management Board of N.V. Nuon Energy informs the Nuon Energy Public Assurances Foundation on the activities related to each of the public assurances mentioned above. In the past the memorandum disclosed activities on an annual basis. As this memorandum is the final and concluding report it discloses activities during a longer period namely 1 January 2016 −30 June 2017. A copy of this memorandum will also be made available to the Supervisory Board of N.V. Nuon Energy for information purposes. 1 I. NUON ENERGY PUBLIC ASSURANCES FOUNDATION As part of the transaction whereby Vattenfall AB (hereinafter ‘Vattenfall’) acquired from the N.V. Nuon Energy (Nuon Energy) shareholders 49% of the outstanding share capital on 1 July 2009 as a first tranche (the Transaction) it was agreed that a foundation would be set up. This foundation is called ‘Stichting Nuon Energy Public Assurances Foundation’ (the Foundation). In 2011, 2012, 2013 and 2015 additional shares were acquired by Vattenfall. Since 1 July 2015, Vattenfall holds 100% of the outstanding share capital of Nuon Energy. The Public Assurances will remain applicable for a period of at least 8 years, unless stated otherwise, after completion (1 July 2009), irrespective of whether the A-shareholders (being the former shareholders of Nuon Energy) hold any shares. The 8 year period expired on 1 July 2017. The objective of the Foundation is, in summary, to safeguard the Nuon Energy Public Assurances as envisaged by the agreement governing the Transaction and to give binding advice on the interpretation of the Nuon Energy Public Assurances as required under the shareholders agreement. A detailed description of the Nuon Energy Public Assurances, the status of these assurances and the progress made with regard to the assurances for the period 1 January 2016 −30 June 2017 can be found in chapter III of this document. In some cases developments that occurred after 30 June 2017 were given to complete the overall picture of the public assurances. Furthermore we note that as part of the Transaction documentation an Industrial Plan was agreed between Nuon Energy and Vattenfall. The Industrial Plan sets out several aspects of the business in the years following the Transaction. The Foundation consists of three members. One member is nominated by the former Nuon Energy shareholders and a second by Vattenfall. A third member, the chairman, is nominated by the other two members. Nuon Energy provides the Foundation with the means necessary for it to function properly and funds the members’ expenses or reimburses them. In 2009, Jan Ploeg was appointed by the former Nuon Energy shareholders and Vattenfall is represented by Gunnar Groebler since the end of 2014. Since 2010, Aad Groenenboom holds the position of chairman. The role of the chairman is to chair the Foundation and to act as the spokesman on behalf of the Foundation. The chairman may be required to clarify, explain or defend, possibly in public, certain decisions of Nuon Energy. The Management Board of Nuon Energy will inform the (former) Nuon Energy shareholders and the Foundation of any intended management decision or action that deviates or causes a deviation from the Nuon Energy Public Assurances. An intended decision, action or omission of Nuon Energy that could be in contravention of the Nuon Energy Public Assurances can be submitted to the Nuon Energy Public Assurances Foundation for review, by i) the shareholders (at least two shareholders who collectively held at least 5 percent or more of the outstanding and issued share capital), ii) Nuon Energy (represented by the majority of the Supervisory Board members) or iii) one director of the Foundation within four weeks of becoming aware of the decision or action or the intention to take it. The Foundation can then decide whether or not to give advice to the management of Nuon Energy. The Foundation can only give advice to i) take the decision or action, or ii) to reverse the decision or action, or, if not yet taken, not to take such action or decision and correct any noncompliance. The advice is binding on the management of Nuon Energy, except if in doing so the management would violate its fiduciary duties. If the management of Nuon Energy refuses to comply with the advice, the question of whether the management was allowed to deviate from the advice can be submitted for review by the Netherlands Arbitration Institute. On 1 July 2015 the remaining 21% of the Nuon shares owned by the Dutch shareholders have been transferred to Vattenfall, resulting in Vattenfall being the sole shareholder of Nuon as of that date. As the Foundation was incorporated to safeguard the Public Assurances which will remain applicable for a period of at least 8 years, unless stated otherwise, after completion (1 July 2009), irrespective of whether the A-shareholders (being the former shareholders of Nuon Energy) hold any shares. As the NEPAF board has not received a request for continuation of the Public 2 Assurances after the 8 year period, the term of the initial agreement has expired and no running dissidents have been identified, the Public Assurances will no longer be applicable hereafter. Consequently the Foundation will be dissolved after the meeting between the former shareholders of Nuon and the Board of the Foundation where this memorandum will be discussed. This memorandum will be complemented with a cover letter containing the view of the Board of the Foundation and will be distributed to the (former) Nuon Energy shareholders. As also stated in last year’s memorandum the memorandum will only cover the prevailing public assurances in the period 1 January 2016 −30 June 2017 . II. PUBLIC ASSURANCES Nuon Energy will keep the following Public Assurances in place for a period of at least 8 years, unless stated otherwise, after completion (1 July 2009), irrespective of whether the A- shareholders (being the former shareholders of Nuon Energy) hold any shares. The Public Assurances are the following: a. Maintain its headquarters in Amsterdam and its other main locations in the Netherlands in the Provinces (including the call centre in Leeuwarden) in which they are located at present; b. Maintain the trading office in Amsterdam for at least 5 years, as further described in Chapter IV, part (a) of the Industrial Plan, and maintain main functions in substance at such locations; c. Nuon Energy will be maintained as the regional holding of Vattenfall for the Benelux, which as such is responsible for the activities of Vattenfall in the Benelux, except for the trading office in Amsterdam which will at managerial level be integrated into the Pan European trading organization of Vattenfall, as further described in Chapter IV, part (a) of the Industrial Plan, and maintain main functions in substance at such locations; d. Keep up know-how and expertise required by the Group Companies to run their business as well as to develop their business in the Benelux within the Group Companies (including a Benelux R&D unit) and with access to all know-how within the Partner’s Group, including in respect of gas along the entire value chain. The Company will maintain cooperation with R&D institutes and education institutions (including universities) of good standing; e. Continue the Nuon brand in the Benelux for a period of at least 4 years as from 1 July 2009; f. Continue to pursue its present long-term strategy in respect of renewables, in particular with regard to building on a broad portfolio of renewable technologies in accordance with the Industrial Plan and remain one of the leaders in offshore wind in Europe by expanding prior to 2020 the installed capacity up to 1400 MW as described in Chapter III, part (b), paragraph (ii) of the Industrial Plan, it being understood that Nuon Energy may or may not receive the benefits (such as green rights, emission rights etc.) resulting from such investments.