Management Board Report on the Activity of ENERGA SA for the Year Ended 31 December 2013 CONTENTS BASIC STANDALONE FINANCIAL DATA of ENERGA SA for 2013
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Gdańsk, 6 March 2014 Management Board Report on the activity of ENERGA SA for the year ended 31 December 2013 CONTENTS BASIC STANDALONE FINANCIAL DATA OF ENERGA SA FOR 2013 .................................................................. 4 INFORMATION ON THE COMPANY AND THE ENERGA CAPITAL GROUP ........................................................ 5 ENERGA SA’s structure ...................................................................................................................................... 5 Activity of ENERGA and the Capital Group ......................................................................................................... 6 ENERGA Group's management model ............................................................................................................... 7 DESCRIPTION OF BUSINESS ACTIVITY OF ENERGA AND ENERGA GROUP .................................................. 7 Key events and achievements of ENERGA and ENERGA Group ...................................................................... 7 ENERGA SA's IPO on the WSE ...................................................................................................................... 7 Payment of dividend by the Company for 2012 ............................................................................................... 7 ENERGA Group's Strategy for 2013–2020 ......................................................................................................... 8 Long-term Strategic Investments Program (WPIS) .......................................................................................... 8 Investment commitments ................................................................................................................................. 9 Assessment of the capacity to execute investment plans ................................................................................ 9 Material factors relating to the development of ENERGA SA .......................................................................... 9 Information on concluded agreements and material transactions ....................................................................... 9 Material contracts ............................................................................................................................................ 9 Credit and loan agreements........................................................................................................................... 10 Domestic bond issue program ....................................................................................................................... 10 Eurobond issue program................................................................................................................................ 10 Loans received .............................................................................................................................................. 10 Guarantees and sureties given ...................................................................................................................... 11 Significant transactions with affiliated entities on non-market terms .............................................................. 11 Risk management in ENERGA ......................................................................................................................... 11 Strategic area ................................................................................................................................................ 12 Finance area .................................................................................................................................................. 12 Operating area ............................................................................................................................................... 13 Regulatory and legal area .............................................................................................................................. 13 HR and payroll situation .................................................................................................................................... 13 Headcount ..................................................................................................................................................... 13 Remuneration system .................................................................................................................................... 14 Important information influencing the Company's HR and payroll situation ................................................... 14 ANALYSIS OF THE FINANCIAL AND PROPERTY SITUATION OF ENERGA SA ............................................... 16 Description of the rules for preparation of financial statements of ENERGA SA ............................................... 16 Discussion of the key economic and financial numbers of ENERGA SA disclosed in the financial statements for the financial year 2013 ...................................................................................................................................... 16 Projected financial results ................................................................................................................................. 19 Ratings .............................................................................................................................................................. 19 Evaluation of financial resources management ................................................................................................. 20 Information about the audit firm auditing the financial statements .................................................................... 20 SHARES AND SHAREHOLDING STRUCTURE ................................................................................................... 20 ENERGA SA’s shareholding structure .............................................................................................................. 20 Agreements pertaining to potential changes in the shareholding structure ....................................................... 21 Proceeds from securities issues........................................................................................................................ 22 Purchase of treasury stock ................................................................................................................................ 22 Employee stock ownership programs ............................................................................................................... 22 Company listings on the Warsaw Stock Exchange ........................................................................................... 22 Investor relations in ENERGA SA ..................................................................................................................... 23 Recommendations for the shares in the Company ........................................................................................... 24 REPRESENTATION ON THE APPLICATION OF CORPORATE GOVERNANCE PRINCIPLES ......................... 25 Corporate governance rules not used in the Company ..................................................................................... 25 Shareholders holding significant blocks of shares ............................................................................................ 26 Holders of securities giving special rights of control and description of these rights ......................................... 28 Restrictions regarding the exercise of voting rights ........................................................................................... 28 Restrictions on the transfer of ownership title to securities ............................................................................... 29 2 Management Board Report on the activity of ENERGA SA for the year ended 31 December 2013 Rules for amending the Company’s Articles of Association .............................................................................. 29 Company's corporate bodies ............................................................................................................................. 30 General Meeting ............................................................................................................................................ 30 Supervisory Board ......................................................................................................................................... 33 Management Board ....................................................................................................................................... 39 Level of remuneration for persons discharging executive and supervisory functions........................................ 42 Management Board ....................................................................................................................................... 42 Agreements concluded with managers, which include compensation ........................................................... 42 Supervisory Board ......................................................................................................................................... 43 The number and nominal value of the Company’s shares and shares in the Company’s related parties held by persons discharging management and supervisory functions .................................................................. 43 Primary attributes of the