2014 ANNUAL REPORT. Romande Energie Group

Transcription

1 2014 ANNUAL REPORT Romande Energie Group

2 UNITS Currencies CHF Swiss francs EUR euros m million bn billion Power kw kilowatt MW megawatt 1,000 kw Energy kwh kilowatt-hour MWh megawatt hour 1,000 kwh GWh gigawatt hour 1 million kwh TWh terawatt hour 1 billion kwh Voltage kv kilovolts 1,000 volts CONTENTS 1 ANNUAL REPORT 2 Message to shareholders 2 Risk management 6 Innovation in research and development 6 Average number of employees 6 2 CORPORATE GOVERNANCE 7 Group structure and shareholders 8 Capital structure 12 Board of Directors 13 Management Committee 21 Shareholders participation 25 Changes of control and defence measures 26 Auditing body 26 Information policy 27 3 REMUNERATION REPORT 29 Board of Directors 30 Executive Board 3 1 Other benefits for members of the Board of Directors and the Executive Board Romande Energie Group financial overview 36 Key consolidated figures 36 Financial developments 37 Romande Energie Group consolidated financial statements 40 Consolidated income statement 40 Consolidated comprehensive income statement 41 Consolidated balance sheet 42 Consolidated cash flow statement 43 Consolidated statement of changes in shareholders equity 44 Notes to the consolidated financial statements 45 Report of the statutory auditor on the consolidated financial statements 82 Romande Energie Holding SA financial statements 84 Income statement 84 Balance sheet 85 Notes to the parent company financial statements 86 Recommended appropriation of retained earnings 89 Report of the statutory auditor on the financial statements 90 CALENDAR CONTACTS This English version is based on the French original. In case of doubt the original French shall prevail. Romande Energie Group 2014 Annual report 1

3 MESSAGE TO SHAREHOLDERS Guy Mustaki, Chairman of the Board of Directors Pierre-Alain Urech, CEO ANNUAL REPORT Multi-faceted strategy coming to fruition despite uncertainty in energy industry Pierre-Alain Urech, CEO, and Guy Mustaki, Chairman of the Board of Directors Advancing globalisation in the energy sector has forced companies such as Romande Energie to contend with factors that are no longer merely local or national, but European - or even global - in scale. In recent years, drivers of changes have been proliferating and gathering momentum, leading to a paradigm shift in the power industry at a time when framework conditions are in a state of flux. We will continue to stay the course against this turbulent backdrop by building on the fundamental facets of our strategy. They include diversifying our energy portfolio, reinforcing service quality and increasing proprietary power generation. In addition, we will continue to maintain a high quality of distribution to customers, help implement a smart grid and develop synergies Romande Energie Group s goal over the coming years is to become the reference partner in Western Switzerland for all energy-related issues by simplifying and making the energy transition profitable for our customers. with a variety of business partners. We continue supporting programmes and initiatives fostering innovation. We remain dedicated to corporate social responsibility and have formulated a human-resources policy that both cares for and brings out the best in our staff. Operating processes are being constantly optimised. Facilitating energy efficiency through additional services and guidance Romande Energie Group s goal over the coming years is to become the reference partner in Western Switzerland for all energy-related issues by simplifying and making the energy transition profitable for our customers. The Energy Services business unit, launched on 1 January 2014, has been working towards this objective, with positive results thus far in the areas of building energy systems, lighting systems, advisory services and thermal systems. In particular, we have strengthened our position as the leading installer of heat pumps (renovation sector) in Vaud canton. Additionally, several municipalities and companies have entrusted us with the construction of district heating systems. This business unit will continue intensifying and diversifying its operations this year, for example by marketing photovoltaic solutions to residential customers in addition to the current line of solar thermal installations and heat-pump water heaters. However, we offer our customers more than simply technical solutions to walk them through the energy transition. Residential customers can request cantonal building-energy assessments, known as CECB certificates, and consult a veritable wealth of information and tips by visiting declics.romande-energie.ch. In addition, we provide online tools to help customers monitor energy consumption, compare the efficiency of electronic and household appliances currently on the market and evaluate the energy impact of their own routines and household items. Businesses are offered a large variety of customised consulting, training and support services. In late 2014, Romande Energie also signed a partnership with Agence Cleantech Suisse (act) to perform energy audits for high-consumption companies. As part of these audits, all parties jointly determine a set of energy-saving and carbon-cutting measures that are then implemented via target agreements with the Confederation. Continuing to invest despite unstable electricity market The ability to guarantee our customers a steady supply of electricity is a major long-term challenge, which is why Romande Energie Group continues to pursue a strategy of fostering proprietary production despite low electricity prices in Europe and Switzerland. Power plants running on renewable energies are given top priority, and each project undergoes a detailed risk analysis that takes into account the profitability margin set by the Board of Directors. An investment portfolio of almost one billion Swiss francs underpins numerous production projects in Switzerland as well as acquisitions in France and Germany. Last year, we inaugurated and began operations at the Agrogaz wet biomass power plant in Lignerolle (Vaud canton), installed ten large solar parks in Western Switzerland and acquired a seven-turbine wind farm in Brittany, France. Another important development to emphasise is the substantial renovation work undertaken at the hydropower plant in Farettes (Aigle, in Vaud canton) throughout This CHF 80m investment will boost production by 70% while allowing the plant to blend in better with its surroundings. It is essential to continue investing in hydropower despite current market conditions that threaten the profitability of this energy source. Renovating existing hydropower installations and constructing new ones is fundamental to preserving our energy independence and ensuring a steady supply to customers over the long term. The main concern today, however, lies not with the investment required to update and construct hydropower plants, but whether Swiss hydropower plants have a viable future in the current market. As it stands, the production cost of one kilowatt-hour at a Swiss plant is up to twice as much as its current selling price on the electricity market. Hydropower is also the only energy source in Switzerland subject to heavy taxation without benefiting from any subsidies or favourable framework conditions. It is therefore urgently necessary to determine which steps must be taken to ensure the survival of this renewable, native source of energy production - a true pillar of the Swiss power-generation industry. 2 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 3

4 Anticipating grid changes A growing number of municipalities, businesses and residential customers are beginning to produce their own electricity. The increase in decentralised production facilities has had a noticeable impact on the power grid, which must be reconfigured to handle multi-directional flows while integrating new, smart features. We have laid a solid foundation for anticipating and coping with changes in power distribution. Our efforts include participating in the Swiss Smart Grid Association and expanding our fibre-optics networks. In addition, we are part of the Datahub initiative, the goal of which to create a platform for monitoring power flows between the different agents in the power industry. Our Group s ability to embody key values - openness, innovation and responsibility - through our projects, actions and relationships with customers and other stakeholders is truly a great advantage. surrounding the implementation of the Confederation s Energy Strategy Investors caution regarding the energy industry is understandable, as several large groups - mainly power generators - saw their profits decrease in However, their reasons for shying away from companies such as Romande Energie are less discernible, as our business focuses on energy distribution and our procurement terms are advantageous. Dividend in respect of 2014 The dividend policy at Romande Energie is characterised by a stable payout ratio, resulting in a dividend rising over the long term. The highly satisfactory operating profit has prompted the Board of Directors to propose an ordinary dividend of CHF to the Annual General Meeting. If this amount is approved by shareholders at the Annual General Meeting, the total dividend payout will be CHF 30.8m, based on the total number of shares in circulation. ANNUAL REPORT Another noteworthy commitment is our annual investment of CHF 50 million to maintain and update grid infrastructure. One example is the large-scale replacement of power lines and substations on the northern shore of Lake Geneva, beginning in 2000 and culminating in the autumn of 2014 with the entry into service of a 125 kv connection between Gland and Vich. We also worked in close collaboration with the Nyon municipal utilities provider (SIN) and the inter-municipal electricity company SEIC to upgrade transformer substations in Nyon and Gland. In recent years, to consolidate the performances of our teams and systems in the Networks business unit, strategy has been focused on streamlining operations and improving customer interfaces. In 2014, these efforts resulted in a set portfolio of services available to other grid managers, an online portal recording all grid connection requests and new computer applications for managing and maintaining distribution infrastructure. Commitment-driven performance By stimulating grid performance and continuing the business strategy launched in 2013, Romande Energie Group is able to meet customer expectations with increasing efficiency. In concrete terms, this means even higher quality of supply, offering a wide range of innovative services and delivering impeccable customer service. In doing so, we strive to ensure simplicity for our customers while boosting Romande Energie s competitive edge, especially in light of the liberalisation of the market for all consumers as announced by the Federal Council. The Group is therefore making large-scale investments, implementing new resources and adopting new approaches in several areas of our business, focusing on IT, customer relationship management supply chain and new customer offerings as well as risk policy, marketing and communications. Romande Energie Group is able to continue its forward and upward trajectory in an increasingly competitive market by relying on suitable and effective human, technical and financial resources. Our success also depends significantly on the effort we invest daily as a corporate citizen, as well as our ability to embody key values - openness, innovation and responsibility - in our projects, actions and relationships with customers and other stakeholders. These same principles guide the Group s human resources policy, which values the skills, health and safety of each employee as well as their professional development. Our efforts were recognised in early 2015 by the equal-salary label, which certifies that Romande Energie affords men and women the same conditions and opportunities while implementing systems and cultivating a corporate culture that drive this equality forward. Best operating profits in ten years The net revenues of Romande Energie Group edged up 0.9% to CHF 583m in Additionally, continued falls in electricity prices and reduced end-customer demand resulted in a decline of 12.6% in total energy-purchasing costs to CHF 190m. Gross profit rose by a substantial 11.3% to CHF 289m. As a result, EBITDA rose by a significant 22.3% to CHF 150m. Similarly, EBIT climbed by 36.5% to CHF 94m. Amid an increasingly competitive energy market for which framework conditions remain shrouded in uncertainty, this excellent performance was offset by a share in the net profit of associates at CHF -243m. This figure resulted from sizeable impairment charges relating to the business of Alpiq and Romande Energie s interetst in Forces Motrices Hongrin-Léman SA (FMHL). A net loss of CHF 147m was reported for Despite this loss, the shareholders equity of Romande Energie Group stood at CHF 1.7bn as at 31 December Lastly, the abandonment of the minimum exchange rate between the euro and the Swiss franc by the Swiss National Bank on 15 January 2015 has led to a surge in the exchange value of the Swiss franc, which is the Group s reporting currency. This situation will have a negative impact on the translation of the financial statements of entities whose reference currency is the euro. It will also affect some cash balances. Conversely, euro depreciation offers the advantage of strengthening the Group s competitive position in terms of open-market offers, to the benefit of its customers. Based on the picture in late March 2015, however, the Group s operating profit is unlikely to be materially impacted. Share price impacted by industry instability The Romande Energie Holding SA share finished 2014 at a price of CHF 1,002, down 6% from 31 December This disappointing performance was due primarily to the developments in the electricity market in This was compounded by uncertainty Guy Mustaki Chairman of the Board of Directors Acknowledgements Pierre-Alain Urech CEO I would like to acknowledge all members of the Board of Directors for their unwavering support and tremendous contribution in driving our business forward. I am also grateful for the skill and determination with which our senior executives lead Romande Energie Group every day, enabling us to surmount an ever-increasing number of challenges. Likewise, my appreciation goes out to our employees, whose professionalism, dedication and innovative spirit mould the success of Romande Energie. Lastly, I would like to express my heartfelt thanks to the Cantonal Government, municipalities and all of the Group s shareholders, who continue to place their trust in us and support us year after year. Guy Mustaki, Chairman of the Board of Directors 4 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 5

5 Risk management The principles governing risk policy are adopted by the Board of Directors. The Management Committee is then responsible for controlling risk in accordance with this policy. The Risk Manager ensures the policy is implemented in day-to-day operations and submits half-year reports to the Executive Board and the Board of Directors. Risks are identified and catalogued in a joint effort between the various departments and the Risk Management team. Specific risks related to energy management are dealt with by an ad hoc committee that meets once a month and submits a Innovation in research and development A large-scale innovation process, known as idéo, was launched in 2014 to stimulate intellectual exchange within the Group. It features a collaborative platform on which anyone can share ideas and comment on specific topics with a view to increasing internal efficiency. An inter-departmental team coordinates the progress of these ideas as they develop from initials drafts to innovation projects or even new business models. In 2014, we embarked on 12 new innovation projects involving institutes of higher education, quarterly report to the Board of Directors. The Finance and Audit Committee issues recommendations to the Board of Directors concerning these two reports. Financial risks, including those related to the energy portfolio, are managed using limits. Operational risks are monitored individually in order to reduce their probability and mitigate their impact in case they materialise. These risks are evaluated based on assessments by specialists and historical data. universities and start-up companies. These new projects, which join over 30 studies or pilot projects already under way, focus on the designing of solutions for improving energy efficiency, optimising renewable-energy production methods and furthering the development of energy-storage methods and smart grids. These are all areas that relate directly to our business. The solutions thus generated will be deployed within the Group, either at production or distribution plants or as innovative services. 2 CORPORATE GOVERNANCE Average number of employees and distribution by age and gender Breakdown by age and gender Average workforce (FTE) Total no. of people = men = 530 women = Total FTEs = Romande Energie SA Romande Energie Commerce SA 91.4 EFFITEC 18.6 Tecfor 12 ENERBOIS 8 Re France SAS 1 6 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 7

6 Corporate governance at Romande Energie is guided by the core values of transparency and loyalty. This approach seeks to inspire confidence in all our stakeholders. Furthermore, the principles of Romande Energie s corporate governance aim to sustain profitability in the long run while also 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, distribution and marketing of electricity, along with energy services Operational structure of Romande Energie Group As at 31 December 2014, the operational structure of Romande Energie Group was comprised of four operating areas, namely the Networks business unit, Energy business unit, Energy Services business unit and Romande Energie Commerce, along with four support areas: the Finance department, Human Resources department, Corporate Secretary s office and Corporate Communications team. The diagram opposite illustrates the Group s organisational structure. was established in 1901 under the corporate name Compagnie vaudoise des Forces motrices des lacs de Joux et de l Orbe and was originally listed on the Lausanne Stock Exchange. Excluding holdings of own shares, market capitalisation amounted to CHF CHF 1.029bn as at 31 December Romande Energie Holding SA has no actual operations, and it is the only Group company whose shares are listed on the stock exchange. The list of companies that are part of the consolidation of Romande Energie Holding SA as at 31 December 2014 is shown in Note 35 of the 2014 Financial Review. Group s organisational structure As at 1 April 2015 HEAD-OFFICE DEPARTMENTS Chairman of the Board of Directors Guy Mustaki Chief Executive Officer Pierre-Alain Urech 1 CORPORATE GOVERNANCE Legal structure of Romande Energie Group Romande Energie Holding SA, whose head office is located at rue de Lausanne 53, CH-1110 Morges, Switzerland, is the top holding company of Romande Energie Group. Its securities are listed on the SIX Swiss Exchange in Zurich under security number and ISIN code CH It Legal Pierre Oberson 2 Chief Financial Officer Denis Matthey 1 Deputy CEO Head of Corporate Communications Karin Devalte 2 Head of Human Resources Jean-Daniel Habegger 1 BUSINESS DIVISIONS Networks business unit Philippe Verburgh 1 Energy business unit Christian Frère 1 Romande Energie Commerce SA Philippe Durr 1 Energy Unité Services d affaires business Services unit énergétiques Patrick Bertschy 1 1 Romande Energie Group fulfils the statutory and regulatory provisions applicable in Switzerland with regard to corporate governance. This report complies with the terms of 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 29). Unless stated otherwise, the information contained herein relate to dealings as at 31 December Executive Board member 2 Management Committee member 8 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 9

7 Group s legal structure As at 1 April % ROMANDE ENERGIE SA 100% ROMANDE ENERGIE SA ROMANDE ENERGIE HOLDING SA ROMANDE ENERGIE HOLDING 63.50% SA ROMANDE ENERGIE COMMERCE SA 63.50% ROMANDE ENERGIE COMMERCE SA 100% ROMANDE ENERGIE RENOUVELABLE SA 100% ROMANDE ENERGIE RENOUVELABLE SA ROMANDE ENERGIE HOLDING SA Top holding company of Romande Energie Group, shares of which are listed on SIX Swiss Exchange in Zurich. Owns equity interests, real property and intellectual property rights ROMANDE ENERGIE SA Group s operating company. Generates hydropower using conventional methods; owns and manages distribution grids; manages energy portfolios; offers energy services and provides services to Group companies ROMANDE ENERGIE COMMERCE SA Joint venture. Markets power and manages customer bases of partner Distribution System Operators (DSO); provides marketing and sales services to Group companies. ROMANDE ENERGIE RENOUVELABLE SA Company dedicated to novel sources of renewable energy. Owns interests and assets in the fields of wind power, solar power, biomass, smallscale hydropower and geothermics BAS-VALAIS ENERGIE SA Formed in June 2012 through merger of Société Electrique du Bas-Valais SA and Société Electrique de Champéry Val-d Illiez SA. Owns distribution grids and hydropower facilities on Tanay-Vouvry lake HYDRO EXPLOITATION SA Offers maintenance services for hydropower installations SOCIÉTÉ ELECTRIQUE DES FORCES DE L AUBONNE SA Owns and operates distribution grids and hydropower facilities on Aubonne river; markets electricity, indoor electrical installations and multimedia services FORCES MOTRICES DE SEMBRANCHER SA Owns hydropower facilities on the Dranse river VO ENERGIES HOLDING SA Owns and operates distribution grids and hydropower facilities on Jougnenaz and Orbe rivers; markets electricity, natural-gas distribution grid, indoor electrical installations and multimedia services CORPORATE GOVERNANCE 41.14% 5% 29.71% 75% 27.98% 10.99% Forces Motrices Hongrin-Léman SA 100% 100% 36% 48.89% 30% 33.34% 34% 12.9% 100% Effitec SA Tecfor SA CISEL Informatique SA neo technologies SA Spontis SA SITEL SA Energie Solaire SA Cadcime SA Romande Energie France SAS Centrale Thermique de Vouvry SA 95% EOS Holding SA* Bas-Valais Energie SA HYDRO Exploitation SA Société Electrique des Forces de l'aubonne SA Meyronnes SAS Ploudalmézau Breiz Avel 01 SAS Forces Motrices du Gd-St-Bernard SA Forces DransEnergie Motrices SA du Gd-St-Bernard SA Forces Motrices de l Avançon SA 41.14% 5% 29.71% 75% 31% 27.98% 10.99% 1.29% Forces Motrices Hongrin-Léman SA 100% 100% 36% 48.89% 30% 33.34% 34% 12.9% Effitec SA Tecfor SA CISEL Informatique SA neo technologies SA Spontis SA SITEL SA Energie Solaire SA Cadcime SA 100% 100% * EOS Holding 100% SA has a 31.38% Romande interest Energie in Alpiq Holding SA France SAS Equity interest exceeding 50% Centrale Thermique de Vouvry SA Equity interest equal to or less than 50% 95% 100% 100% 71.99% 7.6% 71.99% 36.63% 7.6% 20.6% 36.63% 12% 20.6% 2.52% 12% 2.52% EOS Holding SA* Bas-Valais Energie SA HYDRO Exploitation SA Forces Motrices de Sembrancher SA Société Electrique des Forces de l'aubonne SA vo energies holding SA Forces Motrices de Sembrancher SA Holdigaz SA vo energies holding SA Holdigaz SA Meyronnes SAS Ploudalmézau Breiz Avel 01 SAS 31% DransEnergie SA 50% 50% 50% 50% Forces Motrices de l Avançon SA Enerbois SA Brent Energia SA 3.32% 65% Enerbois Eoliennes SA de Provence SA Brent Energia SA VO RE-Nouvelable SA Eoliennes de Provence Gazobois SA St-Gingolph VO RE-Nouvelable Energia SA SA Agrogaz Gazobois Lignerolle SA SA St-Gingolph Energie Renouvelable Energia SA Vouvry SA Agrogaz Lignerolle SA Energie Renouvelable Vouvry SA 1.29% 3.32% 3.32% 3.32% 97.7% 97.7% 60% 65% 50% 60% 50% 50% 25% 50% 40% 25% 35% 40% 35% EOS HOLDING SA Manages interest in Alpiq and planned natural-gas plant in Chavalon (VS). Owns interests in wind-power firms operating in France and Germany FORCES MOTRICES HONGRIN-LÉMAN SA Owns pump-turbine facilities in Hongrin-Veytaux CENTRALE THERMIQUE DE VOUVRY SA Developing a combined-cycle natural-gas plant with output of 400MW in Chavalon area (VS) SOCIÉTÉ DES FORCES MOTRICES DU GRAND-ST-BERNARD SA Owns hydropower facilities on Toules-Pallazuit lake (VS) FORCES MOTRICES DE L AVANÇON SA Owns and manages distribution grids; owns and operates La Peuffeyre-Sublin and Benjamine hydropower facilities; also active in multimedia distribution DRANSENERGIE SA Offers maintenance services for hydropower installations and distribution grids. Provides services to outside parties EFFITEC SA Provides audits of indoor electrical installations TECFOR SA Geothermal/geotechnical drilling CISEL INFORMATIQUE SA Computer services provider owned jointly by Romande Energie, Groupe E and Alpiq NEO TECHNOLOGIES SA Computer services company owned jointly by Romande Energie, Lausanne City Council and the municipality of Lutry SPONTIS SA Joint venture between Romande Energie, BKW, Groupe E and Lausanne City Council. Provides standardisation, supply chain and logistics services for business partners SITEL SA Company controlled by upc cablecom Sàrl. Owns TV, internet and multimedia networks ENERGIE SOLAIRE SA Provides thermal solar solutions CADCIME SA Owns and operates district heating system HOLDIGAZ SA Owns and operates natural-gas distribution pipelines; advises on building techniques; offers energy services ENERBOIS SA Owns and operates a plant for producing electricity, heat energy and pellets from wood by-products BRENT ENERGIA SA Owns hydropower facilities in Brent area EOLIENNES DE PROVENCE SA Partnership with Zurich City Council (ewz, the city s energy provider). Developing wind farm in the Provence municipality in Switzerland ST-GINGOLPH ENERGIA SA Operates turbines on St-Gingolph drinking-water network VO RE-NOUVELABLE SA Joint venture with vo energies holding SA. Owns and develops production installations fired by novel sources of renewable energy GAZOBOIS SA Joint venture with Holdigaz SA. Developing wood-based methanation project AGROGAZ LIGNEROLLE SA Owns power plant fuelled by wet biomass ENERGIE RENOUVELABLE VOUVRY SA Owns Fossau hydropower facilities ROMANDE ENERGIE FRANCE SAS Simplified joint-stock company under French law. Owns and acquires interests in firms generating power from renewable energy sources in France CENTRALE HYDROÉLECTRIQUE DE MEYRONNES SAS Simplified joint-stock company under French law. Owns hydropower facilities on the Ubaye river, in the Alpes-de-Haute-Provence department PLOUDALMÉZAU BREIZ AVEL 01 SAS Simplified joint-stock company under French law. Owns wind farm in Ploudalmézeau, in the Finistère department ALPIQ HOLDING SA Founded in 2008 as a result of merger between Atel and EOS along with the Swiss assets of EDF. Generates power in Switzerland and abroad; trades and markets energy; provides energy services 10 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 11

8 1.2 Significant shareholders As at 31 December 2014, the significant shareholders entered in the share register of Romande Energie Holding SA were as follows: as at 31 December 2014 Vaud canton * shares * % Vaud municipalities * shares * % Banque Cantonale Vaudoise **, Lausanne shares ** 3.31 % Romande Energie Holding SA, Morges shares 9.95 % Groupe E SA, Fribourg shares 5.80 % BKW Energie AG, Bern shares 5.00 % Holdigaz SA, Vevey shares 2.52 % Free float shares % Total shares 100 % * Parties to an agreement relating to reciprocal pre-emptive rights ** Of which 9,900 shares tied to an agreement relating to reciprocal preemptive rights Three disclosures relating to shareholdings were published in the year under review. They can be consulted by visiting the website of the body responsible for such announcements: 2 Capital structure 1.3 Cross-shareholdings Romande Energie Holding SA has no knowledge of cross-shareholdings, on either side, exceeding 5% of equity or shares in their entirety with voting rights. It does not own shares in its significant shareholders, namely Groupe E SA (Fribourg), Banque Cantonale Vaudoise (Lausanne) or BKW Energie AG (Bern). Nor is there any cross-representation on the boards of directors of listed companies. However, Romande Energie Holding SA owns a 2.52% interest in Holdigaz SA, which owns a 2.52% interest in Romande Energie Holding SA. It should also be stated that Romande Energie SA, a subsidiary company of Romande Energie Holding SA, owns a 29.71% interest in EOS Holding SA, which in turn owns 31.38% of Alpiq Holding SA. Guy Mustaki, Chairman of the Board of Directors of Romande Energie Holding SA, also chairs the board of EOS Holding SA and sits on the Board of Directors of Alpiq Holding SA. Jean-Yves Pidoux, a member of the Board of Directors of Romande Energie Holding SA, also sits on the Boards of Directors of EOS Holding SA and Alpiq Holding SA in his capacity as Lausanne City Council representative. Michael Wider, a member of the Executive Board of Alpiq Group, is a member of the Board of Directors of Romande Energie Holding SA Limitations on transferability and nominee registrations The following rules apply: There are no transfer restrictions on registered shares Natural and legal persons are registered with no limitation on voting rights Fiduciary registrations carry no voting rights General authorisations for registration are accepted The Company does not print applications for registration The Company no longer prints paper certificates Nominee SIS (NS): no entry in the share register AREG-data compatible (electronic transmission) The Articles of Association have been amended to comply with the requirements of the Federal Act on Book-Entry Securities, which entered into force early in The Company offers Movements in shareholders equity CHF thousands Share capital shareholders based in Switzerland the option to deposit shares at SIX-SAG free of charge Reasons for granting exceptions in the year under review Admissibility of nominee registrations Procedure and conditions for cancelling statutory privileges and limitations on transferability The Articles of Association do not contain any specific provisions concerning these points. 2.7 Convertible bonds and options Romande Energie Holding SA has not issued any convertible bonds or options. General reserve Reserve for own shares Retained earnings Total shareholders equity Balance as at 1 January Net profit Dividend paid Balance as at 31 December Net profit Acquisition of own shares Dividend paid Balance as at 31 December Net profit Treasury share transactions and other Dividend paid Balance as at 31 December CORPORATE GOVERNANCE 2.1 Capital The ordinary share capital of Romande Energie Holding SA amounts to CHF 28.5m and is divided into 1,140,000 registered shares with a nominal value of CHF 25 each. Authorised capital amounts to CHF m. Romande Energie Holding SA has no conditional capital. 2.2 Authorised capital The Board of Directors has an authorised capital of CHF m, consisting of 405,000 registered shares with a nominal value of CHF 25 each, approval of which was renewed by a resolution made at the Annual General Meeting on 27 May This resolution expires on 27 May Under Article 5 of the Articles of Association, the terms and conditions for subscription of authorised capital are as follows: The Board of Directors shall decide the price and paying-in method (payment in cash, by set-off, in kind or by takeover of assets). The Board of Directors may exclude the pre-emptive rights of shareholders and confer them on third parties if the new shares are used for the acquisition of companies, parts of companies, equity interests or new investment projects in the energy field or related sectors, or to finance such transactions, or for employee profit-sharing schemes. 2.3 Changes in capital during the past three years None Shares, participation and dividend-right certificates 2.5 The share capital is formed solely of registered shares. All shares are vested with the same ownership and voting rights. There are no restrictions on the transferability of shares. The company has no liabilities in regard to participation and dividend-right certificates, or concerning convertible bonds. Net profit may be freely allocated by the Annual General Meeting subject to the provisions of Article 24 of the Articles of Association, which partly incorporate Article 671 of the Code of Obligations, according to which: 1 Five percent of the profit for the financial year are allocated to the general reserve until the reserve reaches twenty percent of the share capital. 2 The following items are also be allocated to this reserve even if it has reached the statutory limit: 1. After payment of issuance costs, the proceeds of shares issued that exceed the nominal value, inasmuch as they are not allocated to amortisation or to pension objectives. 2. The balance of the payments made on cancelled shares, less the loss that would have been incurred on shares issued in their stead. As Romande Energie Holding SA is a holding company, Article 671 (2) point 3 and Article 671 (3) of the Code of Obligations do not apply. 3 Board of Directors The Board of Directors of Romande Energie Holding SA, which acts concurrently as the Board of Directors of Romande Energie SA, sets out the Group s strategy and is the highest body supervising 3.1 Members of the Board of Directors The Board of Directors comprises eleven members. All Board members are Swiss citizens. They have no executive management role within the companies of Romande Energie Group and have not performed any such role over the past three years. Furthermore, they have no close business ties with any of these companies. The Board of Directors carried out a self-assessment on the competency of its members in Name Year of birth Since Expiry of term of office Functions Committee appointments Guy Mustaki * Chairman Chairman, Strategy and Corporate Development Committee Wolfgang Martz ** Vice-Chairman Chairman, Appointments and Human Resources Committee Laurent Ballif * Director Member, Appointments and Human Resources Committee Laurent Balsiger * Director Member, Appointments and Human Resources Committee Christian Budry ** Director Chairman, Finance and Audit Committee Paola Ghillani * Director Member, Finance and Audit Committee Bernard Grobéty ** Director Member, Finance and Audit Committee Jean-Jacques Miauton ** Director Member, Strategy and Corporate Development Committee Jean-Yves Pidoux * Director Member, Appointments and Human Resources Committee Alphonse-Marie Veuthey * Director Member, Finance and Audit Committee Michael Wider ** Director Member, Strategy and Corporate Development Committee * Director appointed by the Vaud cantonal government (Article 762 CO and 16 of Articles) The expiry of their terms of office falls under the remit of the cantonal government ** Director elected by shareholders at the Annual General Meeting implementation of this strategy. It is also the final governing body of the Group. Under its by-laws, it also comprises three special committees. 12 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 13

9 Education, career, other activities and vested interests GUY MUSTAKI * Chairman Doctorate in law from Lausanne University. Admitted to the bar. Guy Mustaki is a practising barrister and has been lecturing on commercial law, corporate law and corporate governance at the University of Lausanne since He has been a member of the Board of Romande Energie Holding SA and Romande Energie SA since the 2005 Annual General Meeting and took over the chairmanship on 19 May He also chairs the Strategy and Corporate Development Committee. In the power industry, Mr Mustaki is chairman of EOS Holding SA (Lausanne). He is a board member of Alpiq Holding SA (Lausanne), for which he chairs the Appointments and Compensation Committee. He is a director and member of the executive committee of Grande Dixence SA (Sion), and chairs the steering committee for the new hydroelectric plant on the Rhône at Bex-Massongex. He sits on the boards of Lausanne Palace SA (Lausanne), Société immobilière du Château d Ouchy SA (Lausanne), Yteqam SA (Lausanne) and Rahm & Cie SA (Lausanne). He is also a committee member of the Foundation for the Centre for Corporate Law (CEDIDAC) at the University of Lausanne (Chavannes-près-Renens), the Théodora Foundation (Lonay), the Chassot et Guex Foundation for Medical Ethics (Lausanne) and the Théâtre du Jorat Foundation (Mézières). LAURENT BALSIGER * Degree in environmental engineering from the Swiss Federal Institute of Technology, Lausanne. Certificate in public administration from the Swiss Graduate School of Public Administration, Lausanne. From 1994 to 2000, Laurent Balsiger worked as an environmental engineer for ESA Consultores (Honduras), Sulzer Chemtech and CSD Ingénieurs Conseils SA. He was service director for the public works and utilities division of the town of Pully between 2001 and Since 1 June 2013, he has headed up the energy directorate in Vaud canton. Mr Balsiger has been a Board member of Romande Energie Holding SA and Romande Energie SA since 2013, and is a member of the Appointments and Human Resources Committee. In the power industry, he sits on the boards of Société Electrique des Forces de l Aubonne (Aubonne) and Forces Motrices Hongrin-Léman SA (Château-d Oex). Besides occupational activities, he is a parish councillor (until June 2014) and a member of the Epalinges local council. He is also on the committee of the NGO Compassion Switzerland (Yverdon-les-Bains). CORPORATE GOVERNANCE WOLFGANG MARTZ Vice-Chairman Degree in agronomic engineering from the Swiss Federal Institute of Technology in Zurich. After first working in the development aid sector in Africa for four years, Mr Martz joined the dairy division of Nestlé (Nestec) for a further four years before becoming a partner in a management consultancy, where he spent another four years. He was appointed CEO of the Minoteries Group in April 1990, a position which he occupied until A member of the Board of Romande Energie Holding SA and Romande Energie SA since 2003, he became Vice-Chairman in He also chairs the Appointments and Human Resources Committee and attends all the meetings of the Strategy and Corporate Development Committee. In the power industry, Mr Martz is a board member of Romande Energie Commerce SA and EOS Holding SA (Lausanne). He is chairman of the boards of La Construction Services SA (Yverdon-les-Bains), the Vaud cantonal pension fund (Lausanne) and Société Coopérative Immobilière Montreux (SOCIM, Montreux), vice-chairman of Saline de Bex SA (Bex - until 30 September 2014) and interim chairman of the Centre Romand de Promotion du Management (CRPM, Lausanne), and a board member of Schenk Holding SA (Rolle). He is vice-chairman of the Swiss Employers Federation (until 30 June 2014) and the Vaud Chamber of Commerce and Industry (until 31 May 2014). Lastly, he heads the jury of the Esprix Trust (Zurich). CHRISTIAN BUDRY Graduate in economics and social sciences from Fribourg University. Swiss certified accountant. Mr Budry started his career with Ernst & Young SA as an auditor. He was then made a partner and director of the audit department for Western Switzerland before being appointed head of manufacturing, technology & energy for the Swiss market ( ). He was CFO and a member of the executive committee of Bobst Group, Prilly, from 2001 to Mr Budry joined the Board of Romande Energie Holding SA and Romande Energie SA in 2003 and has chaired the Finance and Audit Committee since 1 January In the power industry, he is a member of the board of directors and audit committee of EOS Holding SA (Lausanne). He also sits on the boards of the Vaud cantonal pension fund (Lausanne) and Kriss Group SA (Nyon). He chairs the boards of CFO Solutions SA (Lausanne), Groux arts graphiques SA (Mont-sur-Lausanne), TrustStone SA (Nyon) and Techdata (Bern). He is also a board member at Giovanna Holding SA (Montreux), Gonthier & Schneeberger (Lausanne), the group comprised of the firms Chanadela SA, Cadris SA, Cofidep SA (Boncourt) and the group formed by OREADE Manufacture de Boîtes de montre SA and OPAL créations SA (La Chaux-de-Fonds). He is still chairman of the Novandi Foundation (Boncourt) and sits on the board of the Greenbrix Investment Foundation (Geneva). He is member of the Oron town council. LAURENT BALLIF * Degree in political science from Lausanne University. Degree in sports management from the Swiss Graduate School of Public Administration (IDHEAP) in Lausanne. Laurent Baliff began his career as a journalist in Montreux and then worked for nearly twenty years as a swim coach in Vevey. After training to become a national coach, he went on to play a leading role in this sport. Mr Ballif has been active in politics since the mid-1980s, and served as cantonal secretary of the Vaud Socialist Party for seven years before working as secretary general of the IDHEAP from 1995 to He became a member of the Vaud cantonal parliament in 1994 and was elected to the Vevey municipal council in 2001 before becoming mayor in Since then he has devoted himself exclusively to political duties. He joined the Board of Romande Energie Holding SA and Romande Energie SA in 2007, and is a member of the Appointments and Human Resources Committee. Mr Ballif is chairman of the Vevey, Ville d Images Foundation and sits on the boards of the inter-municipal pension fund and the Vevey Arts and Events Foundation. PAOLA GHILLANI * Degree in pharmacy from Lausanne University. Degree in International General Management for Executives, IMD. Degree from the International Program in Board Management, IMD. After starting her career at Ciba/Novartis and spending the first part of her professional life with multinational companies, Ms Ghillani became CEO of the Max Havelaar Foundation, a leading organisation in the fair-trade industry, in During the same period, she was a board member of FLO International (Fair Trade Labelling Organisations), where she served as chair from 2001 to In 2005, Ms Ghillani founded her own company, Paola Ghillani & Friends SA, which advises on corporate strategy and management as well as promoting and implementing sustainable development and ethics in business. Ms Ghillani has been a board member of Romande Energie Holding SA and Romande Energie SA and has sat on the Finance and Audit Committee since Ms Ghillani sits on the boards of the Fédération des cooperatives Migros (Zurich), Helvetia Holding AG (St Gallen), Transitec Ingénieurs-Conseils SA (Lausanne), the International Committee of the Red Cross (ICRC, Geneva), the board of the Chênes Foundation (Vandœuvres). She also sits on expert panels advising sustainable investment funds. 14 Romande Energie Group 2014 Annual report * Appointed by the Vaud cantonal government Romande Energie Group 2014 Annual report 15

10 BERNARD GROBÉTY Swiss certified expert in accounting and controling. Mr Bernard Grobéty was deputy general manager of the financial division of Vaudoise Assu rances. He has spent the greater part of his career with this group, which he joined in 1972 and left in mid Following his retirement from Vaudoise Assurances, he has served as a corporate director. Mr Grobéty has been on the Board of Romande Energie Holding SA and Romande Energie SA since 2002 and is a member of the Finance and Audit Committee. He is also a director of Romande Energie Commerce SA. In addition to his work as a magistrate at the Lausanne district court, he is a board member of Hotela Assurances SA (Montreux), La Source Foundation (Lausanne), the Coopérative romande de cautionnement PME (Pully) and Parking des Hôpitaux SA (Lausanne). He is also chairman of Loginco, a housing cooperative for industry and trade (Lausanne). In addition, he is a vice-chairman of the Coopérative vaudoise de cautionnement hypothécaire (CVCH, Pully) and the Coopérative vaudoise de promotion du cautionnement (CVC, Pully). ALPHONSE-MARIE VEUTHEY * Law degree from Fribourg University. Admitted to the bar. Mr Alphonse-Marie Veuthey has worked as a barrister in Valais canton since 1994 and as a notary since He has been a member of the Board of Romande Energie Holding SA and Romande Energie SA since the 2011 Annual General Meeting and sits on the Finance and Audit Committee. He also chairs the board of Bas-Valais Energie SA (Vouvry) and sits on the board of Romande Energie Commerce SA (Morges). He is furthermore a member of the André Manzini Foundation (Aigle), the Fondation de Soutien de l Hôpital Riviera-Chablais et de Santé Rennaz SA (Rennaz). He was a member of the Valais cantonal parliament from 1997 to 2009 after serving as a deputy member of parliament from 1993 to He was also chairman of the Vionnaz town council from 2000 to CORPORATE GOVERNANCE JEAN-JACQUES MIAUTON Business education, specialising in steelworks in Italy. Mr Jean-Jacques Miauton spent a large part of his career at the Miauton Group and CRH Gétaz Holding (formerly Gétaz Romang, Vevey). He served as CEO at both. Since 2008, he has acquired and developed a group specialising in micromechanics and subcontracting for the watchmaking industry: Swiss Madeness Solutions Group SA. Mr Miauton is a board member and the CEO of this group, which is based in La Chaux-de-Fonds with offices in the Jura area. He also founded A+M Miauton Concept SA (Lausanne), specialising in storage containers, waste containers, modular buildings, equipment, fasteners and machines. He joined the Board of Romande Energie Holding SA and Romande Energie SA in 1997 and sits on the Strategy and Corporate Development Committee. He also sits on the board of directors of Romande Energie Commerce SA. Mr Miauton is a board member of CDM Hôtels et Restaurants SA (Lausanne), Codethic SA (Geneva), Maison Planzer Transports SA (Satigny), Giovanna Holding SA (Chailly), Patrimoine Gérance SA (Neuchâtel), CC Concept SA (Mont-sur-Lausanne) and Star Industrial Holding (Jersey). MICHAEL WIDER Law degree and MBA from Lausanne University. Mr Michael Wider began his career at Entreprises Electriques Fribourgeoises (EEF). In 1997, he was appointed to the company s executive board as head of financial and management services. In 2001, he oversaw the merger of EEF and ENSA (Electricité Neuchâteloise SA), which led to the creation of Groupe E. He was hired by EOS (Energie Ouest Suisse) in 2003 and put in charge of the company s restructuring project. From 2004 to 2007, he was chief operating officer before being appointed head of energy in Following the merger of Atel and EOS, he became head of generation at Alpiq in He has been a member of the Board of Romande Energie Holding SA and Romande Energie SA since the 2012 Annual General Meeting. He also sits on the Strategy and Corporate Development Committee. Mr Wider chairs the boards of various power companies, namely Hydro Exploitation SA (Sion), Kernkraftwerk Gösgen-Däniken AG (Däniken) and Nant-de-Drance SA (Finhaut) and sits on the board of Kernkraftwerk Leibstadt AG (Leibstadt), Swissgrid SA (Laufenbourg), Grande Dixence SA (Sion) and Centrale Thermique de Vouvry SA (Vouvry). He is a committee member of swisselectric (Bern). JEAN-YVES PIDOUX * Doctorate in sociology and anthropology from Lausanne University (UNIL). Mr Jean-Yves Pidoux was an associate professor at the UNlL Faculty of Social and Political Sciences and also a member of the board of trustees and the executive committee of Pro Helvetia, the Swiss arts council. Mr Pidoux has been a member of the Vaud cantonal parliament since He was a local councillor in Lausanne from 1998 to He was elected to the city council s executive in 2006, with responsibility for the city s public utilities department. He has been a Board member of Romande Energie Holding SA and Romande Energie SA since the 2007 Annual General Meeting and sits on the Strategy and Corporate Development Committee. In his capacity as head of the Lausanne public utilities department, Mr Pidoux is a board member of several companies in which the city has a direct or indirect financial interest; these include EOS Holding SA (Lausanne), Alpiq Holding SA (Lausanne), Grande Dixence SA (Sion), Hydro Exploitation SA (Sion), Forces Motrices Hongrin-Léman SA (Château d Oex), Gaznat SA (Vevey), Romande Energie Commerce SA (Morges), Boisy TV SA (Lausanne), Cadouest SA (Prilly), Forces Motrices de l Aboyeu SA (Collonges), Petrosvibri SA (Vevey), SI-REN SA (Lausanne), LFO SA (Lausanne), Swissgas (Zurich) and Transports Publics de la Région Lausannoise SA (Renens). Additionally, he is director of the cantonal insurance institution (Pully) and a committee member for the Foundation for dramatic arts and the Lausanne chamber orchestra. PIERRE OBERSON Board Secretary (non-member) Law degree from Fribourg University. Admitted to the bar. Advanced management programme for business leaders, St Gallen University. Mr Pierre Oberson started his career as legal counsel to a member of the Fribourg cantonal government in 1999 before joining the KPMG global network of audit and consultancy firms as manager in He moved to Romande Energie Group in 2008 as head of the legal department and was appointed Corporate Secretary of the Group and Secretary to the Board of Directors (non-member) of Romande Energie Holding SA and Romande Energie SA in September Mr Oberson has a seat on the boards of Romande Energie Commerce SA (Morges), Bas- Valais Energie SA (Vouvry), Romande Energie Renouvelable SA (Morges) and Eoliennes de Provence SA. He is also a trustee of the Romande Energie pension fund. He sits on the legal affairs committee of the Swiss Electricity Companies Association (AES), for which he chairs the group on energy law. 16 Romande Energie Group 2014 Annual report * Appointed by the Vaud cantonal government Romande Energie Group 2014 Annual report 17

11 3.3 Number of mandates permitted (Article 12 (1) point 1 of Swiss Federal Ordinance on Excessive Pay) Pursuant to Article 22a (1 and 3) of the Articles of Association, members of the Board of Directors may each hold the following other mandates in the management and supervisory bodies of legal entities which are required to be registered in the commercial register or a comparable foreign register: 1. no more than five mandates as a member of a board of directors or as a member of a supreme governing or supervisory body of companies considered as publicly traded companies, as defined by Article 727 (1) point 1 of the Swiss Code of Obligations; as well as 2. no more than fifteen mandates as a member of a board of directors or member of a supreme governing or supervisory body of companies not considered as publicly traded companies within the meaning of the Swiss Code of Obligations and the Federal Act on Collective Investment Schemes; and 3. no more than ten mandates as a member of the board of directors or member of a supreme governing or supervisory body of other legal entities not precisely meeting the above criteria. The restrictions of paragraphs 1 and 2 shall not apply in the presence of legal entities that are controlled directly or indirectly by the Company or which control the Company. Neither do they apply in the presence of legal entities which are the occupational pension funds insuring the employees of the Company or companies that it controls directly or indirectly. Furthermore, multiple mandates exercised in several outside legal entities among which there is direct or indirect control, or within occupational pension funds insuring the employees of these companies, only count as one mandate within the meaning of paragraphs 1 and Elections and terms of office Pursuant to Articles 762 of the Swiss Code of Obligations and 16 of the Articles of Association, 6 of the 11 members of the Board of Directors are appointed by the Vaud cantonal government, 2 of whom represent shareholding municipalities. The expiry of their terms of office falls under the remit of the cantonal government. The other five members of the Board are elected individually to office by shareholders at the Annual General Meeting for a term of one year, expiring after completion of the next Annual General Meeting. These directors are eligible for re-election. However, directors reaching the age of 70 in the calendar year in which the election takes place are no longer eligible. In addition, the Articles of Association contain no clauses deviating from the statutory provisions on the appointment of the Chair, members of the committee overseeing compensation and the independent proxy. 3.5 Internal organisational structure General considerations The Board of Directors meets for half-day sessions, in principle no less than five times a year. In 2014, the Board of Directors met six times for sessions lasting approximately three hours. It also met for a one-day seminar. Last year, the Board monitored business, reviewed changes in framework conditions, deliberated on strategy and looked into possible additional generation and procurement options to extend the Group s existing capabilities. It also forged strategic alliances and oversaw the development of new lines of business. Members of the Board of Directors faithfully attend the meetings of both the Board and the committees of which they are members. Under the by-laws, each committee of the Board of Directors is vested with a role, functions and responsibilities. The committees have no decision-making powers (see exceptions under Appointments and Human Resources Committee and under the Ad Hoc Committee). They meet several times a year, depending on the matters at hand and the opinions that need to be provided to the Board. Committee members receive the necessary documents in good time for them to prepare for deliberations. Committee meetings are attended by committee members, the CEO and, as needed, in-house or external experts who are called in to advise on particular points. Strategy and Corporate Development Committee The Committee consists of the Chairman of the Board, two members and the Vice-Chairman. Meetings are normally held four to six times a year (six times in 2014), and are chaired by the Chairman of the Board. Meetings last for three hours on average. The Committee is responsible for providing the Board with recommendations and opinions on the following issues: Electricity market and economic environment Group strategy for marketing, distribution and generation along with the development of new lines of business Forging strategic alliances Shareholder base Relations with Vaud canton and municipalities served Any other matter that the Board may wish to assign In 2014, the Committee continued to study different possibilities for procuring electricity, either through proprietary generation or through EOS Holding SA or Alpiq. Key points of these deliberations were monitoring the Group s strategy for along with strategic interests, alliances and cooperation agreements with other strategic partners, and investments in generation from renewable energy sources and the development of new activities. Furthermore, the Committee reviewed the opportunities for and threats to the Group arising from the second stage of liberalisation in the Swiss power industry. Lastly, the Committee considered the issue of Romande Energie s possible purchase of Alpiq s interest in Swissgrid SA. Finance and Audit Committee The Committee has four members and normally meets four to six times a year (seven times in 2014). Meetings last for three hours on average. The Committee is responsible for providing the Board with recommendations and opinions on the following issues: Budget estimates, the budget, the investment schedule and the medium-term financial plan The treasury position along with investment rules Internal control and audit procedures Risk management, particularly with respect to the wholesale buying and selling of energy Selection of external auditors, their terms of reference and any special assignments entrusted to them. In this respect, the Committee may hold discussions directly with the auditors. It analyses management letters and monitors implementation of any remarks contained therein Proposals concerning closure of the accounts (including the valuation adjustments for 2014 necessitated by the restructuring operations at Alpiq) and the draft of the annual report Revisions to the Articles of Association and by-laws Any other matter that the Board may wish to assign In addition, the Committee, acting upon the recommendation of the Executive Board, approves the annual internal audit programme and reviews the reports submitted to it by the auditors. The Committee may order extra audits. Appointments and Human Resources Committee The Committee has four members and normally meets three to six times a year (three times in 2014). Meetings last for two hours on average. The Committee is responsible for providing the Board with recommendations and opinions on the following issues: Members of the Board of Directors of Romande Energie Holding SA and its various committees, directors of subsidiaries and delegates to the boards of other companies and foundations The appointing of Executive Board members Job descriptions of the CEO and Executive Board members General staff remuneration policies General rules concerning annual pay rises Situation of the Romande Energie pension fund Furthermore, the Committee decides on the remuneration of Executive Board members in accordance with generally accepted practice and the principles adopted by the Board of Directors, upon recommendation of the CEO. These decisions are subject to supervision by the Board of Directors. CORPORATE GOVERNANCE 18 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 19

12 Ad Hoc Committee Furthermore, special decision-making authority is vested in a group of Board members who meet as needed. The following authority is granted in order to facilitate prompt action when strategic acquisition and investment opportunities arise: Decisions up to CHF 10 million an ad hoc committee consisting of the Chairman of the Board (who is also Chairman of the Strategy and Corporate Development Committee), the Vice-Chairman of the Board (Chairman of the Appointments and Human Resources Committee) and the Chairman of the Finance and Audit Committee. These transactions may not exceed CHF 30 million per calendar year and are only authorised if the financial situation so permits. Decisions involving amounts above CHF 10 million (or the maximum annual amount of CHF 30 million), the decision has to be approved by the Board of Directors in accordance with the normal procedure. This special decision-making authority was not exercised in Definition of areas of responsibility between Board of Directors and Executive Board The Board of Directors exercises the non-transferable and inalienable duties set out under Article 716a of the Swiss Code of Obligations. It defines corporate policy and strategy, approves annual operating and investment budgets, establishes financial policy, defines risk policy particularly with respect to the wholesale buying and selling of energy and is responsible for the founding or disposal of subsidiaries and the acquisition or sale of material shareholdings. Pursuant to Articles 716b of the Swiss Code of Obligations and 17 of the Articles of Association, the Board of Directors has delegated management of the Group to the Chief Executive Officer (CEO) under the by-laws. The CEO is responsible for organising and exercising the powers of the Executive Board, in particular: making recommendations on strategy, applying the principles of corporate policy and strategy, and implementing plans and projects; defining missions; managing the Company; ensuring the achievement of objectives, the profitability and expansion of the Company s business, and enhancing its reputation; preparing operating, investment and cash budgets; hiring and remuneration; representing the Company in its dealings with third parties; and organising the flow of information within and outside the Company. The CEO chairs the Management Committee, which consists of the members of the Executive Board plus the Corporate Secretary (who is also Secretary to the Board of Directors) and the Head of Communications. The Chairman of the Board of Directors and the CEO maintain close contact with one another in order to coordinate their actions and review ongoing business. 3.7 Information and control instruments with regard to the Executive Board The Board of Directors is informed of current business trends at every meeting. Particular attention is paid to the consolidated financial statements and the accounts of individual subsidiaries. Twice a year, the financial statements are accompanied by a detailed projection of estimated annual results. Reports on holdings in which Romande Energie has financial interests, together with a risk management report covering all the Group s activities, are also prepared by the Executive Board for the Board of Directors twice a year. Moreover, twice per year, the Board of Directors is furnished a progress report on strategic projects. The Executive Board submits its action plans to the Board of Directors. These are the basic reference documents that are used by the Board of Directors to monitor Executive Board activities, supplemented with regular information on the main projects undertaken by the Executive Board and on the Group s business developments: revenues, margins by client segment, cash flow, capital investment, guarantees and sureties, risks and workforce numbers. Romande Energie Holding SA has an internal audit structure in place to supplement the risk management function. The internal auditor reports independently to the Finance and Audit Committee. An internal audit charter has been drawn up and is applied rigorously. It is based on international standards such as those issued by the Institute of Internal Auditors and incorporates the main precepts: The audit helps the organisation to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Internal audits are regularly conducted with external specialists who are not the statutory auditors. The Board of Directors is kept regularly informed of the Group s business developments and receives reports at each of its meetings. The minutes of Management Committee meetings are submitted to the Chairman and Vice-Chairman of the Board of Directors. A daily press review is sent to each member of the Board of Directors. With regard to risk management, a description of the procedures adopted in this area can be found on page 6 of this report. For more detailed information, please refer to Note 5 of the 2014 Financial Review. 4 Management Committee The Management Committee is comprised of the members of the Executive Board supplemented by other executives. In principle, it meets every fortnight, either for a full or half day. Every year, it holds four or five days of seminars devoted to current issues. 4.1 Members of the Management Committee The Executive Board, whose members are appointed by the Board of Directors, consists of the following people: Name Position Business unit Nationality Year of birth Pierre-Alain Urech CEO Swiss Denis Matthey CFO Swiss Deputy CEO Philippe Verburgh Head of Networks Swiss and Belgian Philippe Durr Head of Romande Energie Commerce SA Swiss Christian Frère Head of Energy French and German Patrick Bertschy Head of Energy Services Swiss Jean-Daniel Habegger Head of Human Resources Swiss The additional members of the Management Committee, who are empowered to make proposals, are as follows: Name Position Business unit Nationality Year of birth Pierre Oberson Corporate Secretary Swiss Karin Devalte Head of Communications Belgian Education, career, other activities and vested interests None of the executives act as consultants for key lobbies in Switzerland or abroad. None of them worked for the Group or any of its companies before their current duties. Member since Member since CORPORATE GOVERNANCE 20 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 21

13 CORPORATE GOVERNANCE Pierre-Alain Urech Denis Matthey Philippe Verburgh Philippe Durr Christian Frère Patrick Bertschy PIERRE-ALAIN URECH CEO Degree in civil engineering from the Swiss Federal Institute of Technology, Zurich. Postgraduate degree from the Swiss Federal Institute of Technology, Lausanne. Mr Urech started his career working for the Swiss Federal Railways (CFF). After exercising management and executive roles at various strata of this company, he was put in charge of the Rail 2000 project and headed the CFF area management in Lausanne. He became a member of the management board in Bern in 1995, and was appointed deputy chief executive officer of CFF SA in He ran the infrastructure division for nine years, with overall responsibility for the energy sector and power plants, and was chairman or board member of numerous companies associated with CFF, the electricity business in Switzerland and railway operators in Europe. On 1 July 2004, Mr Urech joined Romande Energie Group, which he has led since that date. Mr Urech chairs the boards of Forces Motrices Hongrin-Léman SA (Château d Oex), Société des Forces Motrices du Grand-St-Bernard SA (Bourg-St-Pierre), Centrale Thermique de Vouvry SA, Forces Motrices de l Avançon (Bex) and Romande Energie Commerce SA. He is a board member of HYDRO Exploitation SA (Sion) and DransEnergie SA (Orsières). He is also a committee member of regiogrid, the federation of cantonal and regional power suppliers, and the Vaud canton economic council and energy commission. Aside from duties within the Group, he sits on the board of Télé Villars-Gryon SA and railcare AG (Härkingen). DENIS MATTHEY CFO and Deputy CEO Degree in business from the Faculty of Business and Economics of Lausanne University. Swiss certified accountant. Mr Matthey began his career as an auditor at PWC Zurich and KPMG Geneva ( ). He then occupied the post of finance and administrative director at STS, a subsidiary of the Shipley Group (Boston) from 1987 to During this period he was made a director of STS, which designs and manufactures galvanoplastic equipment for major computer manufacturers. Between 1990 and 2002 he worked as finance director and then as CEO of the Matthey Group, a leading European manufacturer of stainless steel pipes for the automotive industry, which was sold to Arcelor in Mr Matthey was then finance director of a business unit at Arcelor from 2002 to 2003 before becoming CFO of Romande Energie Group on 1 January He is chairman of Spontis SA (Granges-Paccot) and CISEL Informatique SA (Matran), and vice-chairman of Romande Energie Renouvelable SA. He sits on the boards of Romande Energie Commerce SA (Morges), Forces Motrices du Grand-St- Bernard SA (Bourg-St-Pierre), Bas-Valais Energie SA (Vouvry), neo technologies SA (Lausanne) and Energie Solaire SA (Sierre). All these companies have ties with Romande Energie Group. He also sits on the board of the Romande Energie pension fund. In a personal capacity, he is board member of Chauffage Bois- Energie Anzère CBA SA. Lastly, he chairs the Genolier local council. PHILIPPE VERBURGH Head of Networks Degree in electrical engineering, Faculty of Engineering at Mons University, Belgium. Doctorate from the Swiss Federal Institute of Technology, Lausanne. Mr Verburgh began his career as head of IT at Energie Ouest Suisse (EOS) and as project manager at ELCA Informatique, between 1983 and From 1995 to 2000, he was assistant business manager at EOS, then sales manager at Avenis Trading SA. In 2001, he joined Geneva public utilities as manager of the electricity department then head of the energy division. He was then customer manager between 2008 and Mr Verburgh became head of Romande Energie s Networks business unit on 1 February 2014 He chairs the board of directors of HC SA (Fribourg) and sits on the boards of Bas-Valais Energie SA (Vouvry) and Société des Forces de l Aubonne SA (Aubonne). In a personal capacity, Mr Verburgh is member of the board of directors of Brasserie Docteur Gab s SA (Savigny). PHILIPPE DURR Head of Romande Energie Commerce SA Master s degree in microtechnology, Swiss Federal Institute of Technology, Lausanne Executive management training from the European Institute of Business Administration (INSEAD) in Fontainebleau. Throughout his 20 years experience in managerial and sales/ marketing roles, Mr Durr has held a variety of executive positions in multinational and regional companies active in the power, environmental, clean-tech and aeronautical sectors. He was sales director and a member of senior management at Geneva public utilities from 2000 to 2008 and CEO of Mistral Engines (CH/ USA) from 2008 to Through his work as an independent consultant in 2011 and 2012, he was closely involved in the rollout of electric mobility solutions in Western Switzerland. He has managed Romande Energie Commerce SA since 1 January 2013 He sits on the boards of Bas-Valais Energie SA (Vouvry), CISEL Informatique SA (Matran) and neo technologies SA (Lausanne). Lastly, he is a member of the local council in Crans-près-Céligny and Services Industriels de Terre-Sainte et Environs (SITSE). CHRISTIAN FRÈRE Head of Energy Degree in physics from the University of Essen (Germany). Doctorate in natural sciences. At the start of his professional career in 1989, Christian Frère held various positions in industry as advisor or chief project engineer, notably at Rheinmetall in Düsseldorf and RWE in Essen ( ). At RWE, the main focus of his work was on waste disposal and recycling. In 1998, he joined Von Roll Environnement, where he occupied various managerial positions up to CEO level. In 2004 and 2005, he worked as an independent consultant. He then joined EGL (Dietikon), where he oversaw business development and investment in power generation and transmission facilities both in Switzerland and abroad. In this capacity, he was seconded to several subsidiaries and associates of EGL Group. In 2012, he joined Romande Energie as head of the Energy business unit. He chairs the boards of Romande Energie Renouvelable SA, Enerbois SA (Rueyres) and Eoliennes de Provence SA. He is vicechairman of VO RE-Nouvelable SA (Orbe) and sits on the boards of Forces Motrices Hongrin-Léman SA (Château-d Oex) and Gazobois (Cossonay). Lastly, he is managing director of Romande Energie France SAS (Paris). PATRICK BERTSCHY Head of Energy Services Electrical engineering, Fribourg School of Engineering. Executive Master of Business Administration, Fribourg School of Management. Between 1996 and 2000, Mr Bertschy worked as project engineer and project manager within ABB. In 2000, he joined Glas Troesch as technical director. Between 2001 and 2006, he was head of energy customers then head of the sales division at Gruyère Energie SA. He then moved on to become head of Morat public utilities before joining Romande Energie in H as head of the Energy Services business unit. Patrick Bertschy chairs the board of Effitec SA (Morges) and sits on the board of Cadcime SA (Eclépens). 22 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 23

14 the occupational pension funds insuring the employees of the Company or companies that it controls directly or indirectly. Furthermore, multiple mandates exercised in several outside legal entities among which there is direct or indirect control, or within occupational pension funds insuring the employees of these companies, only count as one mandate within the meaning of paragraphs 1 and 2. 5 Compensation, shareholdings and loans 4.4 Management contracts Romande Energie Holding SA has not entered into any management contracts. CORPORATE GOVERNANCE Please refer to the Remuneration Report. Jean-Daniel Habegger Karin Devalte Pierre Oberson JEAN-DANIEL HABEGGER Head of Human Resources Swiss VET certificate, business employee. Degree in human resources management. Advanced training in HR management at CRQP. Business administration course at the Centre Romand de Promotion du Management (CRPM). Mr Habegger has spent most of his career at Romande Energie, initially as an employee of Société Romande d Electricité (SRE), which he joined in After the merger between SRE and Compagnie Vaudoise d Electricité (CVE) in 1997, Mr Habegger held several positions in the HR department (personnel administration, head of recruitment and internal mobility). From 2002 to 2011, he was the HR delegate and deputy human resources manager for the Group. He has been Head of Human Resources since 1 December He also chairs the board of trustees of the Romande Energie ordinary and supplementary pension funds. 4.3 Number of mandates permitted (Article 12 (1) point 1 of Swiss Federal Ordinance on Excessive Pay) Pursuant to Article 22a (2 and 3) of the Articles of Association, members of the Executive Board, with the agreement of the Board of Directors, may each hold the following other mandates in the management and supervisory bodies of legal entities which are required to be registered in the commercial register or a comparable foreign register: 1. no more than two mandates as a member of a board of directors or as a member of a supreme governing or supervisory body of companies considered as publicly traded companies, as defined by Article 727 (1) point 1 of the Swiss Code of Obligations; as well as KARIN DEVALTE Head of Communications, Member of the Management Committee PIERRE OBERSON Corporate Secretary, Member of the Management Committee 2. no more than fifteen mandates as a member of a board of directors or member of a supreme governing or supervisory body of companies not considered as publicly traded companies within the meaning of the Swiss Code of Obligations and the Federal Act on Collective Investment Schemes; and 3. no more than ten mandates as a member of the board of directors or member of a supreme governing or supervisory body of other legal entities not precisely meeting the above criteria. The restrictions of paragraphs 1 and 2 shall not apply in the presence of legal entities that are controlled directly or indirectly by the Company or which control the Company. Neither do they apply in the presence of legal entities which are 6 Shareholders participation 6.1 Voting-right and representation restrictions All shares entitle the holder to one vote. There are no restrictions on voting rights. Pursuant to Article 12 (4 and 5) of the Articles of Association, a shareholder may be represented by another shareholder or a third party. In 2010, the Articles of Association were amended to comply with the Federal Act on Book-Entry Securities, which entered into force on 1 January The Articles of Association contain no clauses deviating or supplementing the statutory provisions with regard to independent proxy instructions. Neither do they contain rules relating to participation in the Annual General Meeting by electronic means. 6.2 Quorums and qualifying majorities Shareholders at the Annual General Meeting pass resolutions and conduct elections by a simple majority of the voting rights represented. Abstentions and blank or spoilt votes are not taken into consideration in the calculation of the majority. This does not apply to subjects requiring two-thirds of the voting rights represented, pursuant to Article 704 (1) of the Swiss Code of Obligations. 6.3 Convocation of the Annual General Meeting of shareholders This is governed by law, but one or several shareholders representing together no less than 5% of the share capital may also request the convening of a general meeting. The Annual General Meeting of shareholders is convened by way of a notice published in the Swiss Official Gazette of Commerce, at least twenty days prior to the appointed date, and by way of an individual notice to shareholders entered in the share register. An advance notice is published approximately three months before the date of the meeting. 6.4 Inclusion of items on the agenda One or several shareholders representing shares with an aggregate nominal value of CHF 1m or 5% of the share capital may request that an item of business be entered on the agenda. This request must be made to the Board of Directors in writing no later than thirty days before the date of the Meeting, indicating the purpose of the debates and the motions submitted. 6.5 Entry in the share register Shareholders must be registered in the share register no later than eight to ten days before the appointed date in order to take part in the Annual General Meeting or appoint a proxy. The deadline is shown in the official notice convening the Meeting and in the individual notice sent to shareholders. 24 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Annual report 25

15 7 Changes of control and defence measures 9 Information policy 7.1 Duty to make an offer There is no provision for this in the Articles of Association. There is no opting-out or opting-up clause. Vaud canton, Banque Cantonale Vaudoise and 119 Vaud municipalities are parties to a shareholders agreement providing for reciprocal pre-emptive rights to their shares. These shareholders hold 53.52% of the capital and total voting rights. 8 Auditing body 8.1 Duration of the mandate and term of office of the lead auditor Ernst & Young SA have been the statutory auditors of Romande Energie Group since the 1997 financial year. Previous to this, the statutory auditors were Société Fiduciaire Lémano, part of the same group. The lead auditor, Serge Clément, took up his duties in May The maximum rotation period for lead auditors is seven years, as required by law Auditing fees and additional fees 8.3 The fees charged by Ernst & Young are as follows: CHF Auditing of financial statements Tax advisory services Other advisory services Total Audit services comprise the basic work required each year to audit the accounts of individual Group companies and the consolidated financial statements of Romande Energie Group. This includes services rendered by auditors in connection with pension plans and supervision of the implementation or updating of accounting methods. This work also covers examining this 7.2 Clauses on changes of control This is not covered by any clause in the Articles of Association. Nor is there any agreement or programme benefitting the members of the Board of Directors or the Executive Board in such cases. The employment contract of the CEO can be terminated by either party by giving one year s notice as from the end of the current month. The notice period for other Executive Board members is six months as from the end of the current month. corporate governance chapter and the preparation of auditors reports. The Board of Directors decided at the end of 2011 that the external auditors would no longer be entrusted with advisory or support services for the internal audit department in order to ensure the utmost independence between internal and external auditing. 8.4 Informational instruments pertaining to an external audit See Finance and Audit Committee, Section 3.5. The auditors receive all the documentation that is prepared for every meeting of the Finance and Audit Committee. In 2014, they attended one meeting of the Committee and one meeting of the Board of Directors. Their comments form the basis of action plans, and the conclusions are all re-submitted to the Committee for verification. The auditors work is totally independent of the Board of Directors and the Executive Board. The auditors fees and services are also checked by the Finance and Audit Committee, which submits a report to the Board of Directors. The auditors fully guarantee their professional qualification as required for a listed company. They have the necessary resources available to fulfil their mission. Romande Energie Group pursues an open information policy in keeping with its size and importance. The communication measures adopted by the Group are designed to enhance its credibility and public image. Particular care is also taken to ensure that executives are provided with timely, accurate information to enable them to carry out their leadership responsibilities. Shareholders of Romande Energie Holding SA are kept informed of the basic aspects of the Group s business by the annual report, the half-yearly report and press releases. Sensitive data that may affect the share price is disclosed on an ad hoc basis in accordance with the relevant directives of the SIX Swiss Exchange. Information is compiled by the Corporate Communications department and the investor relations team. Information about the Group is also posted on the internet at Official notices are published in the Swiss Official Gazette of Commerce; notices convening the Annual General Meeting are sent personally to shareholders entered in the share register. A financial calendar containing the publication dates for the annual and interim financial statements and the annual report, as well as the date of the press conference, is posted on the Group s website early in the year. An events calendar for the current financial year and contact addresses are shown on the penultimate page of this report. The following links can be used to subscribe to our Alert Service, where you can select the type of news you would like to receive: In French aspx?sc_lang=fr-fr In English aspx?sc_lang=en CORPORATE GOVERNANCE 26 Romande Energie Group 2014 Annual report Romande Energie Group 2014 Management report 27

16 Ernst & Young Ltd Avenue de la Gare 39a P.O. Box CH-1002 Lausanne Phone Fax To the Board of Directors of Romande Energie Holding SA, Morges Lausanne, 30 March 2015 Review of Corporate Governance Disclosures REMUNERATION REPORT You engaged us to review the corporate governance disclosures of Romande Energie Holding SA made pursuant to the Corporate Governance Directive of the SIX Swiss Exchange for the period ended 31 December These disclosures are made in a separate section, on pages 7 to 26 of the annual report. The board of directors is responsible for the content of these disclosures. Our responsibility is to issue a report based on our review. A review, which provides less assurance than an audit, seeks to obtain moderate assurance about whether the corporate governance disclosures are complete and free from material misstatement. A review is limited primarily to inquiries of company personnel that participated in the preparation paration of the disclosures, to reviews of pertinent documents, and analytical procedures related to the corporate governance disclosures. In addition, we have requested a representation letter. We have not performed an audit, and, accordingly, we do not express an audit opinion. In our opinion, the corporate governance disclosures comply with the formal requirements of the Directive Corporate Governance. During our review, nothing has come to our attention that causes us to believe that the disclosures are not complete or contain material misstatements. Ernst & Young Ltd Serge Clément Licensed audit expert (Auditor in charge) Karine Badertscher Chamoso Licensed audit expert 28 Romande Energie Group 2014 Management report

17 1 Board of Directors 1.1 Governance Pursuant to Article 21 para. 3 point 2 of the Articles of Association, the Board of Directors, acting upon the recommendation of the Appointments and Human Resources Committee, determines the individual remuneration payable to the Board of Directors, bearing in mind the maximum aggregate amount of compensation approved by the General Meeting. Note that approval will be sought for this total amount, for the first time, at the 2015 Annual General Meeting, with regard to the maximum compensation payable in relation to the 2016 financial year, in application of Article 15 of the Articles of Association. 1.2 Remuneration principles The principles governing the remuneration of the Board of Directors are laid down by Article 22c of the Articles of Association. Members of the Board of Directors receive a fixed annual allowance, which is not determined by the Group s financial results, and attendance fees for attending meetings of the Board of Directors and its committees, as well as outside sessions or special preparatory meetings. Directors do not receive a set sum upfront to defray entertainment expenses but are reimbursed for actual expenses as and when these are incurred. Remuneration is not set at any particular intervals, with no distinction made between directors. Remuneration is determined in keeping with usual amounts of compensation in the Swiss business world. A comparative study was commissioned from CEPEC (Centre d Etude de Projects Economiques SA, Lausanne) in 2010, and concluded that the remuneration paid by Romande Energie Group is in line with customary business practice and can be deemed considerably lower in relation to other listed companies of comparable size in Switzerland as measured by revenues, staff numbers and market typology. Annual compensation and attendance fees are as follows: Annual compensation and fees CHF Chairman Vice-Chairman Director Chair of special committee, on top of basic compensation Attendance fees since 1 July 2010: - Half-day Full day Board members receive an allowance of CHF 0.70 per kilometre for the journey between their place of work or residence and the meeting venue. There are no directors bonuses, and no allotments of shares or other forms of profit-sharing. 1.3 Total remuneration Since the 2011 Annual General Meeting, Romande Energie Group has instituted a consultative vote on remuneration policy for members of the Board of Directors and the Executive Board. In 2014, Remuneration and social insurance expenses of the Board of Director were as follows: Total compensation CHF Remuneration Social Insurance costs Total 2014 Remuneration Social Insurance costs Total 2013 Guy Mustaki Board chair / SCDS chair Wolfgang Martz Board vice-chair / AHRC chair Laurent Ballif * Director Laurent Balsiger * Director Christian Budry Director / FAC chair Paola Ghillani Director Bernard Grobéty Director Jean-Jacques Miauton Director Jean-Yves Pidoux * Director Daniel Schmutz Director until 27 May Alphonse-Marie Veuthey Director Michael Wider ** Director Total Executive Board 2.1 Introduction The success of Romande Energie Group largely depends on the expertise and the dedication of its employees. As an employer, we aim to set the standard for attracting, retaining and motivating the most talented employees at every level. We want to establish a direct, objective relationship between remuneration policy, the financial results of the Group and its subsidiaries, and the individual performance of employees. These same principles apply to the members of the Executive Board. 2.2 Governance Under the terms of Article 15 of the Articles of Association, the General Meeting must annually approve the aggregate amounts of compensation payable to the Executive Board in the coming financial year. Note that approval will be sought for this total amount, for the first time, at the 2015 Annual General Meeting. On the recommendations of the Appointments and Human Resources Committee (AHRC), the Board of Directors defines the Group remuneration policy for the Executive Board, in keeping with the principles laid out in Article 22d of the Articles of Association. The AHRC, which consists exclusively of non-executive directors, monitors the application of established remuneration principles, examines the periodic proposals relating to trends in overall remuneration and determines the individual remuneration paid to Executive Board members, bearing in mind the maximum amount of compensation approved by the General Meeting. Remuneration practices in other companies serve as a basis of comparison. The last full survey was conducted in 2013, with comparisons drawn from a selection of Western Swiss companies operating in the energy, banking, insurance and industrial sectors. 2.3 Remuneration principles Since 2010, overall remuneration has consisted of the following components: Components of overall remuneration Profit-sharing in regard to the financial results of the Group Variable portion of compensation Basic salary Influence EBITDA+ over several years Performance relating to targets achievement and competency in job position a. Annual basic salary The annual basic salary is the cornerstone of overall remuneration and also serves as a reference for determining the variable salary. Every year, the Appointments and Human Resources Committee examines the possibility of increasing the total annual payroll on the basis of economic criteria and unchanged staff numbers. Executive Board members receive proportionally the same increase as that granted to all the Group s employees. Adjustments are made in terms of members individual performance (competency in job position) relating to leadership and management qualities as well as technical and relational skills. b. Variable salary As is the case for all Romande Energie employees, the variable component of remuneration is determined by competency on the job and the degree to which individual objectives have been met. The level of performance therefore has a direct impact on variable salary. Individual objectives are set and weighted at the start of the year. They are linked to the implementation of corporate strategy. Their evaluation at the end of the year reflects the extent to which they have been achieved. Barring extraordinary circumstances, the weighting of objectives is not reviewed. The target values for variable remuneration are shown below. The level of performance may affect these values as follows (as % of the annual basic salary): Target Minimum Maximum CEO 40 % 7.2 % 48 % Members 30 % 5.4 % 36 % REMUNERATION REPORT * Paid to Vaud canton or the municipality represented ** Paid to Alpiq The above amounts include compensation paid by Group subsidiary companies, i.e. in which the Group s shareholding exceeds 50%. The remuneration paid by third parties for offices held in associates (Group shareholdings of less than 50%) are not included in the above amounts. Given that any transactions with directors in relation to products marketed by Group are conducted at the going market rate, they are not included in the above amounts. However, the total amount of variable remuneration that can be allotted to members of the Executive Board, excluding the CEO, cannot exceed the sum total of variable remuneration paid if all executives were to attain 100% performance. 30 Romande Energie Group 2014 Management report Romande Energie Group 2014 Management report 31

18 The variable salary is paid in cash in the month of April following the reference year. The Appointments and Human Resources Committee, together with the Chairman of the Board, assesses the degree of competency and the achievement of objectives. No external consultants are used for this purpose. c. Profit-sharing The share in Romande Energie Group profits for all employees is determined every year by the Board of Directors on the basis of EBITDA, to which are added ordinary dividends on the Group s shareholdings (EBITDA+). The method of calculating the total amount proposed applies provided that ordinary depreciation and amortisation are covered by EBITDA+. In principle, there is no payment below this level, but the Board of Directors may decide otherwise. The maximum overall amount payable to the members of the Executive Board is determined within the following ranges (as % of annual basic salary): In order that profit-sharing should be seen from a long- term perspective, the total amount generated by EBITDA+ for the reference year is distributed as follows: Two-thirds of the amount is paid in full. One-third is paid on the average EBITDA+ for the reference year and the two previous years (i.e. three years). The amount is paid in cash in the month of April following the reference year. d. Summary In extreme cases, Executive Board members could theoretically obtain variable salaries (letters b and c) representing a total of 68% of their basic salary; for the CEO, this total could reach 96%. 2.5 Other allowances Entertainment expenses Entertainment expenses take the form of a fixed monthly allowance of CHF 1,250 (CHF 1,500 for CEO). In return, members pay their recurrent out-of-pocket expenses themselves up to an amount of CHF 50 per day (CHF 75 for the CEO). Company cars Members are provided with a company car if they want one, and reimburse the Company for any private use of the vehicle. Those not availing themselves of a company car instead receive a fixed allowance. Allowances in connection with activities on boards of directors All amounts (annual compensation and attendance fees) received by members in connection with directorships are remitted in full to Romande Energie. 2.6 Retirement benefits Senior managers belong to the Romande Energie pension plan and receive benefits identical to those provided for all company employees. There are no special benefits such as top-hat schemes or purchases of additional insurance years. For more details, see point 3. REMUNERATION REPORT Minimum Maximum CEO 0 % 48 % Members 0 % 32 % 3 Other benefits for members of the Board of Directors and the Executive Board 2.4 Total remuneration Total remuneration granted to members of the Executive Board, which comprised six members until 31 May 2014 and then seven thereafter, was as follows: CHF Basic salary Variable salary Total remuneration Entertainment expenses and car allowance if applicable Social insurance costs 2014 Total compensation Highest compensation Pierre-Alain Urech, CEO Total compensation Highest compensation Pierre-Alain Urech, CEO Social insurance costs are chiefly comprised of state and occupational pension contributions. Share ownership is as follows: Share ownership Shares held by Group companies as at 31 December 2014 (see table and accompanying remarks on page 12) shares 9.95 % Other shareholders shares % Of which: - Held by members of the Board of Directors 20 shares < 1 % - Held by members of the Executive Board 0 shares 0 % There were no management transactions in As in previous years, no benefits in the form of shares, options, additional fees, loans or other credit, repayment waivers, or other financial advantages or benefits in kind were granted to members of the Board of Directors or the Executive Board or to parties closely related to them in The municipalities of Vevey and Lausanne, where Messrs Ballif and Pidoux are members of the executive, hold 13,320 and 16,474 shares respectively. 32 Romande Energie Group 2014 Management report Romande Energie Group 2014 Management report 33

19 To the General Meeting of Romande Energie Holding SA, Morges Lausanne, 30 March 2015 Ernst & Young Ltd Avenue de la Gare 39a Phone Fax P.O. Box CH-1002 Lausanne Report of the statutory auditor on the remuneration report 4 FINANCIAL REVIEW We have audited the remuneration report dated 30 March 2015 for part 1.3 (page 30) and parts 2.4 to 2.6 and 3 (pages 32 to 33) of Romande Energie Holding SA for the year ended 31 December Responsibility of the Board of Directors The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance). The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages. Auditor's responsibility Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordance ance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles of the Ordinance. An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles of the Ordinance. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of remuneration, as well as assessing the overall presentation of the remuneration report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the remuneration report for the year ended 31 December 2014 of Romande Energie Holding SA complies with Swiss law and articles of the Ordinance. Ernst & Young Ltd Serge Clément Licensed audit expert (Auditor in charge) Karine Badertscher Chamoso Licensed audit expert 34 Romande Energie Group 2014 Annual report

20 ROMANDE ENERGIE GROUP FINANCIAL OVERVIEW Key consolidated figures as at 31 December 2014 In CHF thousands, unless otherwise stated Restated Restated INCOME STATEMENT Net revenues 582' ' ' ' '413 Gross profit 289' ' ' ' '419 Personnel expenses 89'881 91'319 89'032 82'181 76'033 EBITDA* 149' ' ' ' '592 EBIT** 94'099 68'917 67'789 35'155 48'825 Share of profit of associates (243'332) 7'075 (343'210) (250'812) 65'738 Net profit for the year (147'149) 67'922 (278'211) (235'180) 83'994 CASH FLOW Net cash provided by operating activities 175' ' ' ' '667 Purchase of property, plant and equipment, and intangible assets (109'194) (103'251) (79'373) (110'370) (113'008) Net cash provided by/used in financing activities (32'961) (109'172) (25'992) (53'080) 59'126 OTHER DATA Total dividend (proposed for 2014) per share (in CHF) Earnings per share (in CHF) (149) 62 (257) (206) 80 Equity attributable to parent company shareholders 1'724'694 1'958'369 1'947'441 2'279'478 2'608'065 Shareholders' equity as % of total assets 78% 81% 80% 85% 85% Shareholders' equity per share (in CHF) 1'680 1'903 1'774 2'077 2'376 Romande Energie Holding SA share price as at 31 Dec. (in CHF) 1'002 1'065 1'065 1'199 1'525 Market capitalisation *EBITDA: earnings before interest, taxes, depreciation and amortisation **EBIT: earnings before interest and taxes The above financial data were prepared in accordance with the International Financial Reporting Standards (IFRS). Financial developments Our operations in 2014 were extremely profitable, as attested to by the sharp increase in gross profit. Despite continued political uncertainty and arduous economic conditions in Europe, Romande Energie Group is able to report growth in 2014 EBITDA and EBIT to CHF 150m and CHF 94m, respectively, representing increases of 22% and 37%. This strong showing by our own operations was unfortunately cancelled out by profit from associates, which stood at a negative CHF 243m as a result of substantial impairment charges. Hit hard by these charges, the Group ultimately saw a net loss of CHF 147m for As a result, consolidated equity fell by 12% to CHF 1.7bn as at 31 December The Board of Directors, keen to maintain the dividend policy unchanged, recommends that the Annual General Meeting approves payment of an ordinary dividend of CHF 30 per share. Revenues In 2014, the net revenues of Romande Energie Group edged up by 0.9%, or CHF 5m, to CHF 583m. Energy distributed on the Group's grid fell by 3.2%, or 93 GWh, to 2,802 GWh, primarily as a result of the low-voltage segment. By contrast, revenue generated from this business rose by 3.7%, or CHF 5m, to CHF 152m, as a result of an increase in the regulated return (WACC), which rose from 3.83% in 2013 to 4.7% in Our customers were handed a 3% reduction in their power tariffs associated with this component in Power sales (kwh) rose by 3.0%, 95 GWh, to 3,265 GWh over the year. Energy sales to end customers fell by 5.2%, or CHF 15m, to CHF 275m following a drop in household demand, chiefly as a result of the mild winter temperatures in late Other income fell CHF 3m relative to the previous year, to CHF 61m in Electricity procurement Total energy requirements, including proprietary power generation, rose by 3.0%, or 95 GWh, to 3,171 GWh. Proprietary power generation fell by 14%, or 75 GWh, to 466 GWh, accounting for 14% of the Group's procurement needs over the year, as a result of less supportive weather conditions than in Continued falls in electricity prices, coupled with reduced endcustomer demand, resulted in a decline of 12.6%, or CHF 27m, in total energy-purchasing costs to CHF 190m. Stable gross profit Based on the above, gross profit rose by 11.3% to CHF 289m. Trend in gross margin (%) 100% 80% 60% 40% 20% 0% 41% 43% 45% 45% 50% Operating expenses Operating expenses rose by a minor 1.5%, or CHF 2m, to CHF 140m. Personnel costs fell slightly thanks to a pension charge that was CHF 1m lower than in 2013, resulting from the application of IAS 19R. Lower payroll was more than offset by a CHF 3m increase in other operating expenses. Increases in EBITDA and EBIT In 2014, Group EBITDA rose by a solid 22.3%, or CHF 27m, to CHF 150m. EBIT increased by an equally strong 36.5%, or CHF 25m, to CHF 94m. Lower net financial income/expense The low degree of fluctuation on currency markets resulted in a profit on forward transactions slightly below CHF 1m vs. CHF 10m in Financial expenses slightly exceeded income, resulting in a net figure in the red at CHF -2 m. 36 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

21 Profit from associates tarnished by impairment Alpiq substantially wrote down the value of its assets in 2014, responding to the continued drop in power prices since As a result, Alpiq took an after-tax impairment charge of CHF 1bn to its income statement. Consequently, EOS Holding reassessed the value of its equity interest in Alpiq, resulting in a further impairment charge of CHF 360m, which EOS Holding carried to its income statement for Based on EOS Holding s interest in Alpiq (31.4%) and, in turn, Romande Energie Group's interest in EOS Holding (29.7%), the negative impact of the Alpiq-related revaluations - after taking the ordinary business of Alpiq and EOS Holding into account - amounted to CHF -190m on the Group's income statement. Forces Motrices Hongrin-Léman SA (hereinafter FMHL) also suffered from developments in the power industry during For 2014, Romande Energie Group booked an impairment charge of CHF -58m Profit from other associates (CHF 5m) slightly mitigated the effects of impairment elsewhere. The Group's net share of profit or loss from associates for 2014 was CHF -243m. Net loss Despite solid gains in business profitability, the Group is forced to report a net loss of CHF 147m for 2014 as a result of the above impairment charges. Equity attributable to the Group Following the loss from associates, the shareholders' equity of Romande Energie Group contracted by 12%, or CHF 233m, to CHF 1.7bn as at 31 December Market capitalisation amounted to CHF 1.1bn as at 31 December 2014, which again was substantially below the carrying value of equity. The financial independence ratio dipped to 78% at the end of 2014, compared with 81% at the end of Share price in 2014 The registered share of Romande Energie Holding SA closed at CHF 1,002 on 31 December 2014, representing a decline of CHF 63 relative to the previous year-end price (CHF 1,065). 122% Stable ordinary dividend The Board of Directors will maintain its dividend policy, which has featured several increases over recent years. It will therefore be seeking approval from shareholders at the AGM to pay an ordinary dividend of CHF 30 per share, unchanged from the 2013 financial year. If this recommendation is adopted, total distribution in 2015 will be CHF 30.8m, taking into account the number of shares held in treasury. Enterprise value Enterprise value, which is the total amount that shareholders and third parties have invested in the Group less cash and cash equivalents, was as follows as at 31 December 2014: In CHF thousands Market capitalisation 1'028'616 1'093'290 Non-controlling interests 27'868 26'854 Financial liabilities 116' '556 Less cash and cash equivalents (191'157) (329'864) Enterprise value 981' '836 Enterprise value/ebitda Outlook for 2015 Uncertainty surrounding political questions and negotiations with the EU are still having an impact on the Swiss electricity market. The Group is doing everything it can to prepare for the changes ahead, especially the prospect of full market liberalisation. Economic woes in the EU are continuing to drag on business, as are low power prices - which are no showing signs of recovering in the near term. Faced with these developments, Romande Energie Group will continue originating products and services, most notably under the aegis of the new Energy Services business unit, which was founded on 1 January The Group also plans to continue expanding its proprietary generation network both in Switzerland and abroad by purchasing more companies and business assets. A milestone was reached with the acquisition of the very first wind farm in France, on 2 September 2014, through the purchase of the company Ploudalmézau. The abandonment of the minimum exchange rate between the euro and the Swiss franc by the Swiss National Bank on 15 January 2015 led to a surge in the exchange value of the Swiss franc, which is the Group's reporting currency. This situation will have a negative impact on the translation of the financial statements of entities whose functional currency is the euro. It will also affect some positions on the balance sheet and income statement. Euro depreciation offers the advantage of strengthening the Group s competitive position in terms of open-market offers, to the benefit of its customers. Based on the picture in late March 2015, the Group's operating profit is unlikely to be materially impacted. Barring exceptional items, the Group expects full-year operating profits to be in line with % % HREN 950 SPI 89% Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

22 ROMANDE ENERGIE GROUP CONSOLIDATED FINANCIAL STATEMENTS Consolidated income statement as at 31 December 2014 In CHF thousands, except per share amounts Note Revenues 8 521' '326 Other income 8 60'833 63'488 Net revenues 582' '814 Purchases of energy, goods and services 9 (293'300) (317'692) Gross profit 289' '122 Personnel expenses 10 (89'881) (91'319) Other operating expenses (49'722) (46'224) EBITDA 149' '579 Depreciation on property, plant and equipment 19, 20 (52'009) (50'168) Amortisation of intangible assets 21 (3'758) (3'494) EBIT 94'099 68'917 Financial income 11 2'057 12'304 Financial expenses 11 (3'963) (3'402) Share of profit of associates 22 (243'332) 7'075 Profit before taxes (151'139) 84'894 Consolidated comprehensive income statement as at 31 December 2014 In CHF thousands Note Net profit (loss) for the year (147'149) 67'922 Change in the fair value of hedging instruments and other changes 24 (461) 2'614 Tax effects (204) Fair-value adjustment to available-for-sale financial instruments (1'356) 1'136 Tax effects (89) Exchange difference (59) - Total other items reclassifiable subsequently to the income statement, net of tax (1'736) 3'457 Fair-value adjustment taken in shareholders' equity of associates 29 (11'577) 13'506 Actuarial gains and losses relating to pension plan 26 (51'936) 40'780 Taxes 12 10'881 (9'518) Total other items not reclassifiable subsequently to the income statement, net of tax (52'632) 44'768 Comprehensive income for the year (201'517) 116'147 Attributable to Parent company shareholders (207'041) 112'527 Non-controlling interests 5'524 3'620 (201'517) 116'147 The accompanying notes form an integral part of the financial statements. Income taxes 12 3'990 (16'972) Net profit for the year (147'149) 67'922 Attributable to Parent company shareholders (152'673) 64'302 Non-controlling interests 5'524 3'620 (147'149) 67'922 Weighted average number of shares outstanding 1'026'563 1'028'964 Earnings per share (in CHF) 13 (149) 62 Dividend per share (proposed for 2014) The accompanying notes form an integral part of the financial statements. 40 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

23 Consolidated balance sheet as at 31 December 2014 Consolidated cash flow statement as at 31 December 2014 In CHF thousands Note 31/12/14 31/12/13 ASSETS Current assets Cash and cash equivalents ' '864 Securities and term deposits '884 97'174 Trade accounts receivable 17 84'111 96'712 Current taxes receivable - 2 Other current assets 18 17'617 18'446 Total current assets 522' '198 Non-current assets Property, plant and equipment 19 1'016' '482 Investment property 20 2'409 2'584 Intangible assets 21 26'991 25'076 Investments in associates ' '238 Other long-term financial assets 23 24'960 27'066 Deferred tax assets 12 15'092 3'965 Total non-current assets 1'689'416 1'874'411 Total assets 2'212'185 2'416'609 In CHF thousands Group net (loss)/profit Non-cash items Note (147'149) 67'922 - Taxes 12 (3'990) 16'972 - Depreciation and impairment charge on property, plant and equipment 19, 20 52'009 50'168 - Amortisation and impairment charge on intangible assets 21 3'758 3'494 - Share of profit of associates '332 (7'075) - Net profit on sale of non-current assets 8 (866) (334) - Net financial income/expense 11 1'906 (8'902) - Increase in pension-plan liability 26 (1'141) (2'942) - Other non-cash items (6'998) 1'419 Dividends received from associates Interest received and other financial income Interest paid and other financial expenses Taxes paid Cash flows before change in working capital Change in net current assets and other cash flows from operating activities Net cash provided by operating activities 36'722 53'151 (2'996) (3'173) (7'334) (12'433) 168' ' '805 27' ' '789 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable 22'756 22'399 Other short-term liabilities and derivative financial instruments ' '701 Short-term portion of long-term borrowings Current taxes payable 4'255 - Short-term provisions 27 1'189 1'980 Total current liabilities 136' '342 Non-current liabilities Long-term borrowings ' '294 Deferred tax liabilities ' '823 Liabilities resulting from defined-benefit pension plan 26 70'065 16'988 Long-term provisions 27 1'082 1'939 Total non-current liabilities 323' '044 Total liabilities 459' '386 Equity attributable to parent company shareholders Share capital 28 28'500 28'500 Additional paid-in capital 13'111 13'111 Other reserves 29 (9'547) 3'707 Retained earnings 1'791'731 2'012'104 Own shares (99'101) (99'053) Total equity attributable to parent company shareholders 1'724'694 1'958'369 Non-controlling interests 27'868 26'854 Total shareholders' equity 1'752'562 1'985'223 Total liabilities and shareholders' equity 2'212'185 2'416'609 Purchase of property, plant and equipment, and intangible assets Sale of property, plant and equipment Acquisition of equity interests, net of cash and cash equivalents Acquisition of shareholdings in associates (Purchase)/Sale of investment securities and term deposits (Increase)/Decrease in other long-term financial assets Net cash used in/provided by investing activities Increase in/(repayment of) financial liabilities Acquisition of own shares Dividend paid to non-controllling interests Dividend paid to parent company shareholders Net cash used in financing activities Net effect of exchange difference on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year The accompanying notes form an integral part of the financial statements. 19, 21 (109'194) (103'251) 1'480 1'101 (11'113) (7'674) (30'840) 812 (132'745) (52'410) 749 (14'214) (281'663) (175'636) 5, (262) (2'901) (30'797) (32'961) - (78'227) (2'966) (27'717) (109'172) (138'707) (97'992) ' ' ' '864 The accompanying notes form an integral part of the financial statements. 42 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

24 Consolidated statement of changes in shareholders' equity Notes to the consolidated financial statements as at 31 December 2014 Equity of parent company shareholders In CHF thousands Share capital Additional paid-in capital Other reserves Retained earnings Own shares Total Noncontrolling interests Total share holders' equity Note Balance at 1 January '500 13'111 (9'184) 2'266'877 (19'826) 2'279'478 (661) 2'278'817 Change in shareholders' equity 2013 Dividend paid to parent company shareholders (CHF 27 per share) (27'717) (27'717) (27'717) Acquisition/(Sale) of own shares 1'000 (79'227) (78'227) (78'227) Change in consolidation scope 4'345 4'345 4'345 Dividend paid to non-controlling interests (2'966) (2'966) Net profit (loss) for the year 64'302 64'302 3'620 67'922 Other comprehensive income 16'963 31'262 48'225 48'225 Comprehensive income (loss) for the year 16'963 95' '527 3' '147 Balance at 31 December '500 13'111 3'707 2'012'104 (99'053) 1'958'369 26'854 1'985'223 Change in shareholders' equity 2014 Dividend paid to parent company shareholders (CHF 30 per share) (30'797) (30'797) (30'797) Acquisition/(sale) of own shares (48) (48) (48) Change in consolidation scope 2'505 2'505 2'505 Dividend paid to non-controlling interests (2'901) (2'901) Other changes 1'706 1'706 (1'609) 97 Net profit (loss) for the year (152'673) (152'673) 5'524 (147'149) Other comprehensive income (13'254) (41'114) (54'368) (54'368) Comprehensive income (loss) for the year (13'254) (193'787) (207'041) 5'524 (201'517) Balance at 31 December '500 13'111 (9'547) 1'791'731 (99'101) 1'724'694 27'868 1'752'562 The accompanying notes form an integral part of the financial statements. NOTE 1 General information Romande Energie Holding SA, a holding company incorporated in Switzerland with its registered office in Morges, is the direct or indirect owner of all the companies belonging to Romande Energie Group (the Group). The Group is active in four businesses related to energy: electricity distribution, energy marketing, energy management and energy efficiency. The mission of the distribution business is to manage the electricity grid in the allotted coverage area and ensure access to the grid for end consumers. The marketing business covers the supply of electricity to captive customers in the coverage area and to deregulated customers in the whole of Switzerland. Administrative and energy services are also offered in association with this business activity. Energy management comprises the Group's activities relating to the development and management of power generation. This unit is furthermore responsible for the Group's "energy" portfolio. Activities relating to energy efficiency were placed temporarily under the remit of the Finance Department until 31 December Since 1 January 2014, the Energy Services business unit has been marketing all of the services offered by the Group in the fields of building energy systems, lighting systems, advisory services and thermal systems. The Group s consolidated financial statements for 2014 were adopted by the Board of Directors of Romande Energie Holding SA on 30 March They will be submitted for shareholder approval at the Annual General Meeting on 26 May NOTE 2 Summary of accounting policies Key accounting policies used in the preparation of the Group s consolidated financial statements are described below. Unless otherwise stated, these policies have been applied uniformly to all the comparative figures shown. Basis of presentation The Group's consolidated financial statements are presented in CHF thousands and have been prepared under the historical cost convention, with the exception of certain property, plant and equipment, long-term financial assets, and financial instruments that are measured at fair value. They comply with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the Reporting Standards set out below. The preparation of financial statements under IFRS involves estimates and assumptions which affect asset and liability amounts, either reported or contingent, at the balance sheet date, and income and expense amounts for the period. Although the estimates are based on the best knowledge available to management regarding the Group's present situation and future operations, actual reported results may differ from what has been anticipated. Cases involving a high degree of judgement or complexity, and those where the estimates and assumptions made have a significant impact on the preparation of the financial statements are described in Note 3. Standards and Interpretations published but not yet applicable The Group assesses the potential impact of both new and revised reporting standards, the implementation of which is scheduled for subsequent financial years: - IAS 1 - Disclosure initiative (amendment), applicable from IFRS 10 & 12 and IAS 28 Investment entities (amendment), applicable from IFRS 9 Financial instruments, applicable from IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associate or joint venture (amendment), applicable from IAS 27 Equity method in separate financial statements (amendment), applicable from IFRS 15 Revenue from contracts with customers, applicable from IAS 16 & 41 Agriculture: bearer plants (amendment), applicable from IAS 16 & 38 Clarification of acceptable methods of depreciation and amortisation (amendment), applicable from IFRS 11 Accounting for acquisitions of interests in joint operations (amendment), applicable from IFRS 14 Regulatory deferral accounts, applicable from Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

25 In addition, the IASB published a compilation of improvements and amendments to IFRS/IAS (September 2014). The above changes are unlikely to have a material impact on the Group's financial statements, except for the introduction of IFRS 9 - Financial instruments. IFRS 9 may have an impact on the valuation and classification of financial assets. Standards, Amendments and Interpretations applicable as from 2014 Amendments applicable starting in 2014 had no material impact on the Group's financial statements. Principles of consolidation The closing date for individual financial statements every year is 31 December. Subsidiaries The Group's consolidated financial statements comprise the operations of Romande Energie Holding SA and those of directly and indirectly owned subsidiaries through which the Group is exposed to or has a claim on returns from its equity interest, and where the Group is able to influence such returns by its power over the company. In general, this power is determined by the Group controlling more than 50% of voting rights. The main subsidiaries are listed in Note 35. They are consolidated from the date on which control is transferred to the Group, but are excluded from the scope of consolidation as soon as such control ceases. All intercompany balances, transactions and profits are eliminated on consolidation. Non-controlling interests in shareholders equity and net profit are shown separately. Associates and joint ventures A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Associates and jointly controlled entities over which the Group exerts a significant influence and of which it has joint control (normally between 20% and 50% of voting rights) are accounted for using the equity method. These holdings are carried on the balance sheet as investments in associates and are initially recognised at cost and adjusted thereafter for the Group s share of retained earnings or losses after the acquisition date and any impairment charges. If the Group does not exert a significant influence over a company despite holding more than 20% of its shares, the company is treated as a long-term financial asset. Any impairment is recognised directly through profit and loss. Losses incurred by an associate that exceed the Group s stake in that company are not recognised. When a change in net assets of an associate is booked directly to its equity, the Group s portion of the change is recognised under comprehensive income and shown separately. Balances and material transactions with investees and jointly controlled entities accounted for using the equity method are shown separately as items relating to associates. Unrealised gains arising from transactions between Group companies and associates are eliminated in proportion to the Group s stake in the associate. Unrealised losses are eliminated in the same way, unless the transaction involves a transfer of assets requiring an allowance for impairment. Financial statements of associates are adjusted in order to ensure consistency with the Group's chosen accounting policies. Changes in scope The scope of consolidation pertaining to Romande Energie Group underwent the following changes in 2014: - On 18 June 2014, the share capital of Forces Motrices Hongrin- Léman S.A. was increased by CHF 70m to CHF 100m. Romande Energie SA participated in the amount of CHF 28.8m; its ownership interest remains unchanged. Capital raising was used to fund an increase in the production output of an existing installation. - On 23 June 2014, 2,600 shares in Forces Motrices de l Avançon SA were purchased by the Group for CHF 2.0m, raising its holding by 10.99% to 38.98%. As at 31 December 2014, the Group held 9,218 shares. Its share of voting rights was 37.23%. - On 9 July 2014, Energie Renouvelable Vouvry SA was founded. It is 35% owned by the Group. The object of this company is generating power by harnessing watercourses in the municipality of Vouvry, building reservoirs and related installations, and developing a full range of businesses in the renewable energy sphere. The company has a share capital of CHF 0.1m. - On 2 September 2014, the Group fully acquired the company Ploudalmézau-Breiz Avel 01 SAS. The object of the company is managing a wind farm in Ploudalmézeau, in the administrative department of Finistère, Brittany (France). It has a share capital of EUR 0.6m. The acquisition was transacted on the basis of the market price of the shares, amounting to a total of EUR 6.5m. As the company is comprised solely of wind-power installations, the capital assets could be revalued to EUR 9.5m on the basis of the company's value at the acquisition date (fair value under level 3), using a capitalisation rate of 5.5%. No goodwill, positive or otherwise, was recognised in the Group's financial statements. - On 23 December 2014, the share capital of Romande Energie France SAS was increased by EUR 4.6m to EUR 7.7m. This transaction was used to fund purchase of the company Ploudalmézau-Breiz Avel 01 SAS. Foreign currency translation Transactions in foreign currencies are translated into the functional currency at the exchange rate in effect at the time of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the year-end exchange rate. Differences in exchange rates resulting from these operations are booked to the income statement. The Group uses options and forward contracts to hedge against exchange rate risks. The financial statements of foreign entities whose functional currency is not the Swiss franc are translated into Swiss francs using the following procedure: - The balance sheets of foreign companies are converted at the exchange rate prevailing at the end of the reporting period. - The income and cash-flow statements of these companies are converted at the average exchange rate for the reporting period. - Any exchange differences resulting from the conversion of foreign companies' financial statements are taken to equity under "Exchange difference" Exchange rates used at year-end 1 euro Average monthly exchange rates used for the consolidated income and cash flow statements 1 euro Accounting and valuation principles Net revenues and revenue recognition Net revenues include all income from the sale of electricity, goods and services less VAT, rebates, discounts, other agreed deductions as well as provisions for doubtful accounts and bad debt expense. Revenues are recognised when electricity is supplied, goods are delivered and services are rendered. Customers meters are read periodically. Many customers have their electricity consumption readings taken once a year; this applies to roughly half of all kwh supplied by the Group. Revenues include the estimated volume of energy consumed, but not yet billed, between the date of the last meter reading and the end of the accounting period. Investment dividends are accounted for when the right to distribution has been clearly ascertained. Equipment charges collected from customers when they are connected to the grid are recognised as income when the connection is installed. Personnel expenses and pension plan The Group s liabilities arising from a defined-benefit plan and the cost of services rendered during the financial year are measured using the projected unit credit method. Actuarial gains and losses arising from the pension plan are recognised in full by an entry to the comprehensive income statement in the period in which they are incurred. They are also recognised in retained earnings and are not reclassified to the income statement in subsequent years. Costs relating to the provision of pension benefits are booked to the income statement in the period in which they are incurred. Net interest is calculated by applying the discount rate to the net pension asset (liability). Pension-related costs are divided into three categories: - Service costs after employee contributions - Interest - Administrative expenses Gains and losses arising from revised assumptions are booked to the comprehensive income statement. Impairment of property, plant and equipment and intangible assets At each financial year-end, an impairment review is carried out in order to identify any factors indicating a loss in value of an asset. A loss in value is immediately recognised if the book value of an asset is higher than its estimated recoverable value. Goodwill is tested for impairment at least once a year. The recoverable amount is defined as the higher of an asset s net selling price and its value in use. Value in use is the discounted present value of estimated future cash flows expected to be derived from this asset or the smallest identifiable group of assets to which it belongs, and whose continuing use generates cash inflows which are independent of those arising from other assets or groups of assets. Consequently, the Group must assess the overall economic conditions expected during the useful life of its assets. These estimates may diverge considerably from the actual values. 46 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

26 Cash and cash equivalents Cash and cash equivalents comprise cash at banks and in postal accounts, as well as money-market deposits and investments with an initial term of 90 days or less. Trade accounts receivable Trade accounts receivable are recorded at nominal value less an adjustment for doubtful accounts. A provision for doubtful accounts is made when there are objective signs that the Group will not be able to recover its receivable. A debtor s financial difficulties, default or overdue payment are considered as reliable indicators for booking a valuation allowance on the receivable. The Group issues a lump-sum provision for accounts which are more than 180 days overdue. This provision is made on the basis of historical loss and represents 75% of receivables overdue by more than 180 days. Losses on this position are booked to the provision account. Losses on accounts receivable are recognised on the basis of receiving orders and bankruptcy adjudications or any other document which can establish the debtor s default. Financial instruments (incl. borrowings) and derivatives Financial instruments are recognised as assets or liabilities on the balance sheet as soon as the Group enters into contracts involving these instruments. Investment securities consist of marketable equities and bonds, and money-market investments with an initial term of more than 90 days. They are carried on the income statement at fair value. Derivative financial instruments are carried at fair value; resultant profits and losses are booked to the income statement. Forward contracts for purchases of energy with physical delivery are excluded from the scope of IAS 39. These contracts are concluded as part of the Group s normal operations. This is the case as soon as the following conditions are met: - Energy is physically delivered. - The contracts are not sales of options within the meaning of the standard. Conversely, forward energy-purchase contracts entered into for the purposes of energy portfolio optimisation, or which are used for optimisation at a later date, are treated as financial instruments and measured at fair value. Valuation differences are carried to the income statement at the time of recognition. As from 1 January 2012, the Group has been using hedge accounting. Forward purchase contracts on currencies are designated as cash flow hedges and serve to protect future transactions deemed as highly likely. Valuations of hedging instruments are documented at the inception of the hedging arrangement and continuously thereafter. The Group determines whether a hedging arrangement has has properly offset fluctuations in the hedged item or not. The portion of the profit or loss realised on a hedging instrument deemed effective is taken directly to shareholders' equity. The ineffective part is booked to the income statement for the period. Borrowings Borrowings are initially accounted for at fair value, adjusted for directly chargeable transaction costs. Subsequently, they are valued at amortised cost using the effective interest rate method. Borrowings or tranches of borrowings carrying an irrevocable right to defer repayment for longer than 12 months are classified under non-current liabilities; all others are booked to current liabilities. No borrowing costs were capitalised either in 2014 or Long-term financial assets Investments in companies in which the Group holds less than 20% of voting rights or over which it does not exert a significant influence or have joint control, are taken to the balance sheet at cost and subsequently carried at fair value. Changes in fair value are recorded in the comprehensive income statement and reclassified to the income statement when the asset is sold or subject to impairment. Loans issued are carried at amortised cost less any impairment due to non-recoverable amounts. Own shares In the case of purchases of own shares, the total amount paid and the costs directly related to the transaction (net of income tax) are deducted from the Group s equity until the cancellation or later sale of the securities. If own shares are sold, the proceeds from the sale, net of transaction costs (but including the tax effect of income tax), are allocated to the Group s equity. Property, plant and equipment Land, buildings, machinery and equipment are recorded at cost less accumulated depreciation. Leasehold improvements are depreciated over their estimated useful life or the remaining term of the lease, whichever is shorter. Repairs and maintenance of rented buildings are charged directly to the income statement, while major renovations and refurbishments are capitalised as property, plant and equipment and depreciated over their estimated useful economic life. Depreciation is calculated using the straight-line method based on the shorter of the remaining term of the concessions and the estimated useful life of the asset, as follows: Useful life in years Group premises Investment property Power plants Electricity distribution grids Machinery, equipment, installations and tools 6-15 Vehicles 3-8 IT hardware 3-8 Land is only depreciated in the event of a loss in value, or if it is handed back in connection with the expiry of a concession contract. Equipment under development is treated as a fixed asset and written down beginning in the month it is brought into service. If the Group has to dismantle power plants or other fixed assets and recondition the property owned by third parties on which the assets are located, the estimated cost of such work is added to the initial cost at the acquisition date and written down over the useful economic life of the assets. Investment property Assets held with a view to obtaining a return or enhancing the value of the capital are considered as investment property. Investment property is carried at cost after deduction of accumulated depreciation. It is written off over a period of 20 to 40 years using the straight-line method. Intangible assets and goodwill The excess cost over the fair value of the acquired business assets is entered on the balance sheet as goodwill. Goodwill is deemed to have an unlimited life and undergoes an impairment review every year, or more frequently if events or changes in circumstances indicate a possible loss in value. The review is based on an assessment of future economic benefits. Other intangible assets are valued at cost and amortised using the straight-line method over their estimated useful life as follows: - Concessions: duration of the concession - Customers: until the electricity market is completely deregulated - Software: 5 years An impairment review is carried out where there are indications that the recoverable amount may be less than the carrying amount. Provisions Provisions consist of liabilities whose outcome, expiry or amount are uncertain. They are recorded when the Group is under a legal or implicit obligation arising from a past event, when it is probable that an outflow of funds will be necessary to discharge the obligation and when the amount of the obligation can be reliably estimated. The provision amount is estimated by the Executive Board at the balance sheet date on the basis of the best possible estimate of the expenditure required to settle the obligation. If an outflow of funds is not likely or the amount cannot be reliably estimated, the obligation is shown not on the balance sheet but under contingent liabilities. If the impact is significant, the cash flows expected in order to discharge the obligation are discounted. The provision is discounted at the current market rate, which is increased if necessary by a rate reflecting the risks inherent in the liability. Taxes (incl. deferred taxes) Current taxes are determined on the basis of taxable income for the year and are charged to the income statement. Income taxes are recorded in the same period as the revenues and expenses to which they relate. Deferred taxes are calculated using the asset and liability method, i.e. based on the timing differences between the value of assets and liabilities recognised by the tax authorities and their book value recorded in the consolidated financial statements. The amount of the provision for deferred taxes is determined on the basis of known tax rates at the balance sheet date which are likely to be applied when the timing differences are eliminated. Loss carry-forwards deductible from future taxable income and other deferred tax assets are only recorded as assets if it appears probable that they will be realised later. 48 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

27 Earnings per share Earnings per share are calculated by dividing net income by the weighted average number of parent company (Romande Energie Holding SA) shares outstanding. This indicator is shown before and after all potentially dilutive effects. Dividends Dividends are recorded in the consolidated financial statements once they have been approved by shareholders at the Annual General Meeting. Related parties Related parties are considered to be Vaud Canton, the Romande Energie pension fund, members of the Board of Directors and the companies with which they are affiliated, members of the Group Executive Board, and associates. Related parties are supplied with energy on terms comparable to those for customers who meet the same criteria. Vaud Canton collects fees for the use of hydropower. Discontinued operations and non-current assets available for sale Non-current assets or asset groups available for sale are valued at the lower of carrying value or fair value less expenses relating to their sale. Non-current assets are classified as available for sale if their book value is recovered mainly by selling them, rather than by using them. These conditions are met if the asset is available for sale immediately and if the sale is highly likely. Non-current assets designated as available for sale are no longer subject to depreciation or amortisation. NOTE 3 Critical valuation factors Estimates and assumptions are continuously assessed and are based on experience along with other factors, such as the likelihood that certain events will take place given the circumstances. Occupational pensions Pension obligations arising from defined-benefit plans are calculated using actuarial assumptions that may diverge from reality and influence the Group s assets and profits. As at 31 December 2014, liabilities arising from the pension plan totalled CHF 70.1m (2013: CHF 17.0m). Valuation adjustment of property, plant and equipment, intangible assets and goodwill The carrying value of property, plant and equipment, and intangible assets and goodwill, was CHF 1,046.2m (2013: CHF 982.1m). An impairment review is carried out annually or whenever there are indications of a loss in value. These reviews are made on the basis of estimated future cash flows resulting from the use and probable sale of assets. However, actual cash flows may differ significantly from initial estimates. Investments in associates This item mainly consists of the interest in EOS Holding SA (29.7%), which in turn owns 31.4% of Alpiq. It is sensitive both to changes in the euro exchange rate and energy prices on the wholesale market. Alpiq is a company active on the international market. Net revenues A large proportion of energy revenues is generated by residential customers, who are invoiced annually on the basis of meter readings taken throughout the year. The revenue received between the date of the last reading and 31 December is booked on the basis of the energy distributed and valued at an average price less the estimated grid losses. The figure thus obtained may differ from the actual values. NOTE 4 Disposals, business combinations and other important transactions Acquisitions in 2014 As in 2013, the Group did not make any significant acquisitions or disposals. Smaller changes to the scope of consolidation are detailed under Note 2. NOTE 5 Financial risk management Information on risk management The Group has appointed committees to manage specific risks such as those associated with electricity procurement. The work of these committees as well as risk management processes are coordinated by a risk manager, whose objective is to ensure that risks are systematically identified, assessed, controlled and monitored. The risk manager reports directly to the Group's finance executive. Twice a year, a detailed analysis of the most significant risks is presented to the Board of Directors. This analysis comprises a description of the risks and the measures taken to mitigate them. Risk exposure The Group is exposed to market risks which derive mainly from energy prices, exchange rates and interest rates, as well as credit and liquidity risks. Management monitors these risks on a regular basis. The Group carries out transactions in derivative instruments mostly interest rate swaps and forward exchange contracts in order to reduce the risks associated with interest rates on borrowings and with foreign currency transactions conducted in the course of its operations. The Group does not enter into financial transactions if they involve risks that cannot be estimated on their expiry date. The Group therefore does not engage in transactions without holding the underlying assets and liabilities. Hedging is only used where there is a high probability that assets and existing or contingent liabilities will be realised. Energy supply risk The Group is exposed to market-price fluctuations for all the energy it does not generate itself, i.e. around 86% of total requirements. It therefore concludes long-term procurement agreements on prices and volumes with selected partners. The agreement with the longest term runs until Added to the right of purchase described in Note 33, these contracts cover practically all energy requirements based on estimated 2015 consumption The remainder of the Group's procurement is covered by forward purchases on the European Energy Exchange (EEX), following the terms of the procurement strategy and in compliance with the risk-management policy. Through these purchases, the Group endeavours to hedge total estimated requirements for the next 24 months as a way of mitigating uncertainty relating to the price of electricity. Final portfolio adjustments are conducted on the spot market, in accordance with actual customer demand and output from the Group's own generation facilities. Higher demand for electricity on the European market has led to congestion of cross-border transmission systems. Depending on the strength of demand, interconnection capacities at national frontiers are auctioned. The amount by which these auctions can push up the cost of energy purchases is impossible to estimate and can fluctuate sharply from one year to the next. No auctions were conducted in 2014, compared with a cost outlay of CHF 5m in Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

28 Exchange-rate risk Risks relating to exchange rates chiefly arise from energy purchases on EEX, most of which are denominated in euros. The Group uses forward and options contracts to hedge currency risk. Until 31 December 2011, gains and losses were booked to the income statement. This method also applies to all hedging transactions performed before 1 January As from 1 January 2012, the Group has been using hedge accounting. As at 31 December 2014, a charge of less than CHF 1m (2013: CHF 2.6m) was recognised directly in equity. The ineffective part of hedging arrangements, charged to the income statement, was immaterial. If a forecast transaction or firm commitment is no longer likely to be performed, sums previously booked under equity are then carried to the income statement. Hedge accounting is no longer used if a hedging instrument lapses, is sold, is exercised or no longer fulfils conditions as a hedging arrangement. The resulting valuation differentials under equity are kept noted separately until the transaction connected with the hedged item is performed. All else being equal, the impact of +/10% change in the exchange rate is CHF 9m for the income statement (versus CHF 12m in 2013) and CHF 8 million in terms of equity (versus CHF 3m in 2013). Interest-rate risk Exposure to interest-rate risk is essentially due to borrowings by the Group and the short- and medium-term investments with financial institutions. On a pre-tax basis, the impact on the 2014 income statement of an increase or decrease of 50 basis points was CHF 0.9m, compared with CHF 1.0m in There was no effect on shareholders equity. Other price-related risks The Group is exposed to price risks on securities connected with investments in financial holdings. These investments are held for strategic rather than for trading purposes. The Group does not have any material exposure to fluctuations in securities prices. Any such fluctuations are recognised in equity. Credit risk Credit risk is managed centrally for the whole Group. It concerns the possibility that counterparties may not be able to honour their commitments. Customer-related risk is limited by the large number of customers, virtually all of whom are located in Switzerland. Receivables are monitored on a monthly basis (see Note 17). The Group does not have significant exposure to any individual counterparty. The risk associated with other financial instruments such as cash and cash equivalents, derivative financial instruments and deposits with financial institutions is managed by adhering to the Group s in-house treasury policy and regulations. Investments are placed only with top-tier financial institutions that comply with strict selection criteria. The maximum risk on this position is equal to the carrying value of the financial instruments. Liquidity risk Liquidity risk is the risk that the Group will be unable to honour its commitments as they fall due. The treasury department is responsible for cash flow and financing procedures. Liquidity and financing risks are continually monitored by the Executive Board at Group level. The Group has sufficient cash resources to meet all commitments on their maturity dates. The table below gives the repayment schedule for the Group s commitments (including interest). In CHF thousands 31 December 2014 Below 1 month 1-3 months 3-12 months 1-5 years Over 5 years Total Financial liabilities 2'601 14' ' '749 Trade accounts payable 19'034 3' '756 Other payables 23'867 41'383 41'146 1' '747 Total 42'901 44'960 43'783 15' ' '252 Derivative financial instruments Forward currency purchases 2'103 1'436 9'984 90'399 19' ' December 2013 Financial liabilities 2'563 10' ' '274 Trade accounts payable 17'928 4' '399 Other payables 30'474 47'061 44'743 1' '701 Total 48'402 51'211 47'480 11' ' '374 Derivative financial instruments Forward currency purchases 5'325 4'024 36'125 63'864 37' ' Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

29 Information on financial assets and liabilities Financial assets In CHF thousands Note Cash and cash equivalents ' ' ' '864 Securities and term deposits - marketable bonds 16 29'884 7'174 29'884 7'174 - term deposits '000 90' '000 90'000 Trade accounts receivable 17 84'111 96'712 84'111 96'712 Other current assets - derivative financial instruments 18 6'752 8'430 6'752 8'430 - miscellaneous receivables 18 1'604 1'657 1'604 1'657 Other long-term financial assets - miscellaneous financial investments 23 12'343 13'575 12'343 13'575 - loans to associates 23 12'408 13'271 12'408 13'271 - loans to third parties Total 36'636 15'604 12'343 13' ' ' ' '903 Financial liabilities Financial assets at fair value through income statement Financial liabilities at fair value through income statement Available for sale Other financial liabilities Loans and receivables Trade accounts payable 22'756 22'399 22'756 22'399 Other short-term liabilities - derivative financial instruments 24 4'674 11'293 4'674 11'293 - current accounts with partners (256) 563 (256) - miscellaneous short-term liabilities 24 90' '146 90' '146 Short-term portion of borrowings Long-term portion of borrowings ' ' ' '294 Total 4'674 11' ' ' ' '138 Assets and liabilities not measured at fair value (loans and receivables, and other financial liabilities) can be approximately estimated to be worth their carrying value. Total Total The following table provides an analysis of financial instruments accounted for at fair value, classified by level according to the degree of subjectivity regarding the criteria used to determine that fair value: - Level 1: Fair value corresponds to the price quoted on an active market. - Level 2: Fair value is determined in accordance with indications other than the quoted prices mentioned in level 1. - These indications are mainly obtained from data observable on the market or by other means. - Level 3: Fair value corresponds to a technical measurement comprising factors that are not based on observable market data. Level 1 Level 2 Level 3 Total In CHF thousands Note Financial assets Marketable bonds 16 29'884 7'174 29'884 7'174 Derivative financial instruments 18 2'531 4'182 4'221 4'248 6'752 8'430 Total financial assets 32'415 11'356 4'221 4'248 36'636 15'604 Financial liabilities Derivative financial instruments 24 4'674 11'293 4'674 11'293 Total financial liabilities 4'674 11'293 4'674 11'293 Derivative financial instruments Derivative financial instruments reflect the valuation of forward exchange contracts as well as measurements of forward energy-purchasing contracts designated for optimisation purposes. Amount of contracts Positive fair value Negative fair value In CHF thousands Forward currency contracts 63' '084 2'068 1'634 FX forward contracts (hedge acc.) 59'795 34'454 2'153 2'614 Forward power-purchasing agreements (portfolio optimisation) 22'076 47'182 2'531 4'182 4'674 11'293 Total derivative financial instruments 145' '720 6'752 8'430 4'674 11'293 In 2014, the measurement of forward currency contracts resulted in recognition of a financial gain of CHF 0.4m (2013: CHF 10.4m). The Group buys and sells power using forward agreements as a means of optimising its portfolio. As these transactions are not connected to deliveries to end-customers, they are measured at fair value. Any change in fair value is booked in the year of occurrence. Since 2012, hedge accounting has been in place for EUR/CHF financial instruments linked to purchases of energy for own use by Group customers. As at 31December2014, the total value of hedging instruments was CHF 59.8m (CHF 34.5m in2013). Fair-value adjustments takento equity were CHF 0.5m (CHF 2.6m in 2013). 54 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

30 NOTE 6 Capital management NOTE 7 Segment reporting The principal aim of capital management is to maintain the ability to raise funds in order to ensure continuity of operations and maximise enterprise value. The Group monitors indebtedness using the gearing ratio, which corresponds to net debt divided by equity + net debt. In CHF thousands Financial liabilities 116' '556 Less cash and cash equivalents (191'157) (329'864) Less securities and term deposits (229'884) (97'174) Net debt / (Net cash) (304'748) (311'482) Shareholders' equity 1'724'694 1'958'369 Gearing ratio -17.7% -15.9% Operating segments are determined based on the business units, which are required to submit regular reports to the Management Committee. The Group is currently organised into the following four business units: Marketing Networks Energy Energy Services These four business units are managed as separate entities even though they all engage in energy-related activities. As the Group operates almost exclusively in Switzerland, geographical areas have not been taken into account. The Marketing business unit is responsible for electricity sales, ancillary services (invoicing, call centre, etc.) as well as products and services embracing all customer categories, such as energy audits and public lighting systems. This business unit procures power from the Energy business unit. Virtually all operations in this business unit are housed within Romande Energie Commerce SA, a subsidiary in which the Group has a shareholding of 66.7%. The Networks business unit (known as Distribution until the end of 2013) aims to provide high-quality power transmission in accordance with prevailing standards. For this purpose, it is entrusted with the maintenance and development of the electricity distribution grid. Most of this business unit s operations are subject to regulation. Its revenues chiefly consist of the remuneration received for making the grid available to end customers and resellers. This remuneration is governed by the provisions of the Electricity Supply Act. The main tasks of the Energy business unit consist of reliable power supply to customers managed by Romande Energie Commerce SA, energy portfolio management, hydropower generation, and the development and generation of power using novel renewable sources and gas. On 1 January 2014, Romande Energie Group set up a new business unit, Energy Services. For comparison purposes, 2013 figures have been restated to take this change into account. This business unit is responsible for marketing all of the services offered by the Group in the fields of building energy systems (heat pumps, solar thermal energy and photovoltaic energy), lighting systems (public lighting and illumination), thermal advisory services and systems (heating solutions for companies and municipalities, advisory service and energy audits). It houses operations that were previously part of other business units, such as the aforementioned energy-efficiency business, alongside new services. Transactions between business units are carried out at a price close to market prices, except for activities where transfer prices are determined by law. The same accounting principles are applied in all the business units. The Group has no single client accounting for more than 10% of revenues. Operating assets of each business unit mainly consist of property, plant and equipment, trade accounts receivable and other receivables. Operating liabilities primarily comprise trade accounts payable and other payables. The various support services within the Group come under the Corporate division. This encompasses Finance, Human Resources, the Corporate Secretary's Office and Corporate Communications. Expenses attributable to the Corporate division are costs incurred in connection with the activities of the Group s head office. Income and expenditure that cannot be allocated to a specific business unit are also booked under this heading. Assets and liabilities mostly comprise cash and cash equivalents, investments in associates, and financial liabilities. Segment reporting is based on IFRS. 56 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

31 Reporting by operating segment for 2014 Reporting by operating segment for 2013 (restated) In CHF thousands Marketing Networks Energy Energy Services Corporate Eliminations Total In CHF thousands Marketing Distribution Energy Energy Services Corporate Eliminations Total Net revenues from third parties 241' '802 49'625 17'854 5' '769 Net revenues from other units 10'473 2' '692 1'892 44'626 (281'270) Net revenues of business units 251' ' '317 19'746 49'758 (281'270) 582'769 Purchases of energy, goods and services (213'371) (88'979) (200'106) (6'590) (3'874) 219'620 (293'300) Gross profit 38' '410 71'211 13'156 45'884 (61'650) 289'469 Net revenues from third parties 276' '049 34'390 17'792 2' '814 Net revenues from other units 19'505 4' '229 2'246 43'483 (331'027) Net revenues of business units 296' ' '619 20'038 46'267 (331'027) 577'814 Purchases of energy, goods and services (263'845) (79'635) (233'463) (6'960) (239) 266'450 (317'692) Gross profit 32' '978 62'156 13'078 46'028 (64'577) 260'122 Personnel expenses (11'903) (44'023) (5'386) (9'591) (18'978) (89'881) Other operating expenses (12'332) (41'018) (25'510) (5'899) (26'613) 61'650 (49'722) EBITDA 14'223 97'369 40'315 (2'334) '866 Depreciation and amortisation (19) (37'379) (10'753) (263) (7'353) (55'767) EBIT 14'204 59'990 29'562 (2'597) (7'060) 94'099 Financial income 2'057 2'057 Financial expenses (3'963) (3'963) Share of profit of associates (243'332) (243'332) Taxes 3'990 3'990 Net profit 14'204 59'990 29'562 (2'597) (248'308) (147'149) Personnel expenses (10'284) (44'341) (6'827) (10'237) (19'630) (91'319) Other operating expenses (12'943) (41'806) (23'723) (4'471) (27'858) 64'577 (46'224) EBITDA 9'232 84'831 31'606 (1'630) (1'460) 122'579 Depreciation and amortisation (36'610) (9'525) (247) (7'280) (53'662) EBIT 9'232 48'221 22'081 (1'877) (8'740) 68'917 Financial income 12'304 12'304 Financial expenses (3'402) (3'402) Share of profit of associates 7'075 7'075 Taxes (16'972) (16'972) Net profit 9'232 48'221 22'081 (1'877) (9'735) 67'922 Operating assets 64' ' '633 4'065 1'132'790 2'197'093 Assets unattributable to a segment 15'092 Total assets 64' ' '633 4'065 1'132'790 2'212'185 Operating liabilities 20'566 44'562 57'382 3' ' '067 Liabilities unattributable to a segment 210'556 Total liabilities 20'566 44'562 57'382 3' ' '623 Operating assets 80' ' '992 4'152 1'347'239 2'412'642 Assets unattributable to a segment 3'967 Total assets 80' ' '992 4'152 1'347'239 2'416'609 Operating liabilities 34'304 50'991 57'735 2' ' '574 Liabilities unattributable to a segment 165'812 Total liabilities 34'304 50'991 57'735 2' ' '386 Investments Property, plant and equipment '984 33' ' '231 Intangible assets and goodwill 18 1'101 (9) 853 1'963 Total investments '085 33' ' '194 Investments Property, plant and equipment 86'921 12' ' '555 Intangible assets and goodwill 2' '850 Total investments 86'921 15' ' ' Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

32 NOTE 8 Net revenues In CHF thousands NOTE 10 Personnel expenses In CHF thousands Energy revenues 274' '737 Grid usage revenues from own distribution grid 151' '161 VHV grid usage revenues and off-grid revenues 34'957 29'634 Reinvoiced dues, system services and Swissgrid 43'251 35'045 Transfers of assets and contributions from clients 17'421 13'749 Total revenues 521' '326 Other income 40'800 40'841 Internally generated asset additions 19'310 20'116 Net income from disposal of fixed assets Change in guarantees, losses on bad debts and provision for onerous contracts (143) 2'197 Total other income 60'833 63'488 Net revenues 582' '814 Income from selling power to the Swiss Confederation (Swissgrid) according to the compensatory feed-in remuneration (CFR) system was previously shown under other income. As a consequence of the development of this type of operation in recent years, this income must nowbe classified as energy revenues. Income stemming from compensatory feed-in remuneration amounted to CHF 10.0m compared with CHF 7.1m in Figures for 2013 have been restated to reflect this change. NOTE 9 Purchases of energy, goods and services In CHF thousands Energy purchases 190' '697 HV & VHV grid usage costs and off-grid costs 45'014 49'031 Grid dues, system services and Swissgrid 42'711 34'495 Concessions and fees 6'838 7'278 Other purchases 8'457 9'191 Total purchases of energy, goods and services 293' '692 Compensation 69'442 68'600 Social insurance and pension costs 15'795 17'582 Other personnel expenses 4'644 5'137 Total personnel expenses 89'881 91'319 Total headcount as at 31 December (full-time equivalents) NOTE 11 Net financial income In CHF thousands Change in fair value of financial instruments '426 Other financial income 1'622 1'878 Total financial income 2'057 12'304 Interest on borrowings, mortgages and bank debts (2'626) (2'789) Other financial expenses (1'337) (613) Total financial expenses (3'963) (3'402) Net financial income (expense) (1'906) 8'902 In 2014, energy purchases comprised the change in fair value of forward energy-purchase contracts relating to the optimisation portfolio, reflecting a net gain of CHF 5.6m (CHF 0.5m in 2013). 60 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

33 NOTE 12 Income taxes and deferred taxes Income taxes In CHF thousands Profit before taxes (151'139) 84'894 Expenses for current income taxes 8'661 14'966 (Revenues)/expenses for deferred taxes (12'651) 2'006 Total expenses (rebate) for income taxes (3'990) 16'972 Analysis of tax rate The main differences between the weighted average tax rate and the effective tax rate are as follows: Applicable weighted average tax rate (%) Effects of associates (%) (27.31) (1.80) Non-deductible valuation adjustments (%) Exceptional items taxed at lower rates (%) Effects due to changes in tax rate (%) Effects due to previous years and other factors (%) Effective tax rate Changes in the average weighted tax rate stemmed from differing rates between companies. No deferred taxes were recognised for tax-deductible losses, which totalled CHF 46m (2013 = CHF 46m). These losses can be carried over annually until However, the probability of using them is regarded as low. Deferred taxes In CHF thousands Property, plant and equipment Pension obligations Investments in associates and other intangible assets Other assets, provisions and accrued and prepaid items Deferred tax assets at 1 January '965 3'965 Deferred tax liabilities at 1 January 2014 (125'267) (12'349) (11'207) (148'823) Net deferred taxes at 1 January 2014 (125'267) 3'965 (12'349) (11'207) (144'858) Booked to the income statement 8' '930 2'421 12'651 Booked to comprehensive income statement 42 10' '063 Net deferred taxes at 31 December 2014 (117'171) 15'092 (10'314) (8'751) (121'144) Deferred tax assets at 31 December '092 15'092 Deferred tax liabilities at 31 December 2014 (117'171) (10'314) (8'751) (136'236) Deferred tax assets at 1 January '796 12'796 Deferred tax liabilities at 1 January 2013 (123'145) (12'464) (10'228) (145'837) Net deferred taxes at 1 January 2013 (123'145) 12'796 (12'464) (10'228) (133'041) Booked to the income statement (2'122) (775) (2'006) Booked to comprehensive income statement (9'518) (89) (204) (9'811) Net deferred taxes at 31 December 2013 (125'267) 3'965 (12'349) (11'207) (144'858) Deferred tax assets at 31 December '965 3'965 Deferred tax liabilities at 31 December 2013 (125'267) (12'349) (11'207) (148'823) Total 62 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

34 NOTE 13 Earnings per share NOTE 17 Trade accounts receivable In CHF thousands Weighted average number of shares outstanding 1'026'563 1'028'964 Earnings attributable to shareholders of Romande Energie Holding SA (in CHF 000) (152'673) 64'302 Earnings per share (in CHF) (149) 62 No factors led to a dilution of earnings. NOTE 14 Cash and cash equivalents In CHF thousands Liquid assets in bank current accounts and cash in hand 181' '864 Short-term deposits 10'000 10'000 Total cash and cash equivalents 191' '864 Liquid assets in bank current accounts earn variable rates of interest. Short-term deposits are placed for variable periods of between one day and three months in accordance with the Group's immediate cash-flowneeds. It should be noted that CHF 200m in cash was invested in terms upwards of 90 days compared with CHF 90m in 2013 (see Note 16). NOTE 15 Change in net current assets and other cash flows arising from operating activities In CHF thousands Change in trade accounts receivable 12'601 15'010 Change in trade accounts payable 357 (10'816) Change in other current assets, other current liabilities and other items relating to operating activities (5'153) 23'463 Total change in net current assets and other cash flows arising from operating activities 7'805 27'657 NOTE 16 Securities and term deposits In CHF thousands Note Marketable bonds 5 29'884 7'174 Term deposits with a maturity of more than 90 days 200'000 90'000 Total investment securities and term deposits 229'884 97'174 Trade accounts receivable 103' '421 Downpayments/non-invoiced energy deliveries and grid usage (16'622) (10'210) Total trade accounts receivable, gross 86'975 99'211 Provision for doubtful accounts (2'864) (2'499) Total trade accounts receivable, net 84'111 96'712 As at 31 December 2014, an impairment charge was booked for receivables in the amount of CHF 3.314m (2013: CHF 2.907m) The sum of the provision relating to this line item was CHF 2.864m as at 31December 2014 (2013: CHF 2.499m). The impairment charge for individual items concerned clients whose financial circumstances make it most unlikely that the Group will ever recover the amounts due. Receivables covered by individual provisions 1'516 1'279 Receivables covered by generic provisions 1'798 1'628 Total provisions for receivables 3'314 2'907 Movement of provision for doubtful accounts Balance as at 1 January (2'499) (2'715) Allocation (1'089) (480) Use Balance as at 31 December (2'864) (2'499) Credit risk The following table shows the degree of credit risk related to trade accounts receivable: Receivables that are neither due nor provisioned 79'997 92'948 Receivables that are due but for which no impairment charge was booked - Between 30 and 60 days overdue 1'785 1'781 - Between 60 and 90 days overdue Between 90 and 120 days overdue Between 120 and 180 days overdue Total 3'664 3'356 Receivables for which provisions were issued 3'314 2'907 Total receivables 86'975 99'211 NOTE 18 Other current assets In CHF thousands Note Prepaid expenses and accrued income 9'261 8'103 Miscellaneous receivables and miscellaneous current assets Current accounts with partners Derivative financial instruments 5 6'752 8'430 Taxes payable in advance, withholding taxes and other recoverable taxes 1'136 1'079 Total other current assets 17'617 18' Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

35 NOTE 19 Property, plant and equipment In CHF thousands 2014 Land and buildings Power generation plants Power distribution installations Other capital assets Construction work in progress Acquisition cost Balance as at 1 January 116' '277 1'351'275 60' '852 2'041'569 Acquisitions 7'360 23'245 1'909 74' '231 Entry in consolidation scope 17' '229 Divestitures (241) (577) (7'261) (3'257) (11'336) Transfers (1'616) 30'456 58'867 (18'377) (65'964) 3'366 Exchange difference (289) (4) (5) (298) Balance as at 31 December 114' '862 1'426'122 41' '605 2'158'761 Accumulated depreciation Balance as at 1 January 65' ' '136 52'482 1'087'087 Charge for the year 3'222 10'695 35'417 2'525 51'859 Entry in consolidation scope 6' '774 Divestitures (241) (576) (6'979) (2'899) (10'695) Transfers (2'962) 4'057 23'172 (17'177) 7'090 Exchange difference (104) (4) (1) (109) Balance as at 31 December 65' ' '742 35'097 1'142'006 Net carrying value as at 31 Dec. 48' ' '380 6' '605 1'016' Acquisition cost Balance as at 1 January 116' '046 1'311'187 60'533 88'470 1'943'557 Acquisitions - transfers 21 6'528 47'892 2'621 78' '308 Change in consolidation scope 8'405 8'405 Divestitures - transfers (9) (2'702) (7'804) (2'322) (32'864) (45'701) Balance as at 31 December 116' '277 1'351'275 60' '852 2'041'569 Total NOTE 20 Investment property In CHF thousands Acquisition cost Balance as at 1 January 4'093 3'982 Acquisitions 111 Transfers 477 Balance as at 31 December 4'570 4'093 Accumulated depreciation Balance as at 1 January 1'509 1'359 Charge for the year Transfers 502 Balance as at 31 December 2'161 1'509 Net carrying value as at 31 December 2'409 2'584 Investment property is valued using the amortised cost method. The Group estimates the fair value (level 3) of investment property at CHF 3.1m (unchanged relative to 2013). This estimate is based on market prices for similarproperty, not on an appraisal by a property specialist. Rental income amounted to CHF 0.3m (identical to 2013) and the direct operating expenses involved were CHF 0.2m (identical to 2013). There were no significant liabilities relating to property investments. Accumulated depreciation Balance as at 1 January 62' ' '671 52'169 1'041'718 Charge for the year 3'234 9'804 34'851 2'129 50'018 Change in consolidation scope 2'856 2'856 Divestitures - transfers (303) (5'386) (1'816) (7'505) Balance as at 31 December 65' ' '136 52'482 1'087'087 Net carrying value as at 31 Dec. 50' ' '139 8' ' '482 Thanks to improved bookkeeping information on property, plant and equipment, intangible assets and investment property, allocations to the various capital asset classes were reviewed. On this basis, transfers were carried out in 2014, with no impact on the financial statements. The table for 2013 has not been restated as impacts are immaterial. 66 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

36 NOTE 21 Intangible assets In CHF thousands Goodwill Other intangible assets 2014 Acquisition costs Balance as at 1 January 19'900 22'443 42'343 Acquisitions 1'963 1'963 Transfers 12'121 12'121 Exchange difference (39) (39) Balance as at 31 December 19'861 36'527 56'388 Accumulated amortisation Balance as at 1 January 4'460 12'807 17'267 Charge for the year 3'758 3'758 Transfers 8'372 8'372 Balance as at 31 December 4'460 24'937 29'397 Net carrying value as at 31 December 15'401 11'590 26' Acquisition costs Balance as at 1 January 17'746 21'747 39'493 Acquisitions - transfers 2' '850 Balance as at 31 December 19'900 22'443 42'343 Accumulated amortisation Balance as at 1 January 4'460 9'317 13'777 Charge for the year 3'494 3'494 Divestitures (4) (4) Balance as at 31 December 4'460 12'807 17'267 Net carrying value as at 31 December 15'440 9'636 25'076 Goodwill of CHF 13.3m is allocated to the Networks business unit. The impairment review carried out overa period of fiveyears (level 3 fair value), using a capitalisation rate of 4.25% (4.7% in 2013), substantiated this amount. No growth rate is applied. The financial forecasts used in impairment reviews to determine recoverable values are based on factors inherent to the electricity market, some of which are stable and knowable. Forecasts are based on the medium/long-term business plan, with which the Board of Directors is familiar. Total NOTE 22 Investments in associates The Group has significant interests in the following associates, which are accounted for using the equity method: In CHF thousands EOS Holding SA 544' '910 (190'301) 1'635 FMHL SA - 29'229 (58'022) - FMA SA 16'210 11' '295 SITEL SA 16'248 16'589 2'660 2'877 SEFA SA 16'014 15'369 1' Other 10'373 9' Total 603' '238 (243'332) 7'075 In CHF thousands Carrying value Impact on income statement EOS Holding is a strategic holding company coordinating and representing the interests of its shareholders, one of which is Romande Energie Group, specifically in connection with its ownership interest in Alpiq as well as various projects such as new sources of renewable energy. The following table summarises the financial positions of EOS Holding SA and other associates (on an aggregated basis): Condensed income statement of associates Aggregate net revenues 45'490 49' ' '053 Aggregate net profit (640'637) 5'503 (43'517) 16'668 Share of profit or loss from associates (190'301) 1'635 (53'031) 5'440 Other comprehensive income, total (38'949) 45'767 (17) (223) Share of comprehensive income of associates (11'570) 13'596 (7) (92) Condensed balance sheets of associates EOS Holding SA Other associates Current assets 262' ' ' '886 Non-current assets 1'812'250 2'539' ' '072 Current liabilities 27'833 33'283 50'475 69'382 Non-current liabilities 214' ' ' '729 Aggregate net assets 1'832'564 2'622' ' '847 Share of equity of associates 544' '910 58'845 82'328 Financial statements of associates that are prepared in accordance with different accounting standards from those used bythe Group were adjusted for purposes of comparison. In 2014, Alpiq was hit by a downturn in the energy market and, for 2014, booked impairment charges in the amount of CHF 1bn after tax. EOS Holding, which has a stake of 31.38% in Alpiq (unchanged from 2013), charged its share of this impairment, i.e. CHF 329m, to its own 2014 income statement. EOS Holding wrote down the value of its interest in Alpiq by a further CHF 360m, reducing the carrying value of EOS Holding's interest in Alpiq to CHF 4.7bn, corresponding to its share of Alpiq's consolidated equity. Owing to its investment in EOS Holding (29.71%), the Group's share of this charge came to CHF 189m, recognised under share of profit of associates. Earnings from the ordinary business of Alpiq and EOS Holding resulted in a net impact of CHF 190m. On the basis of these impairment charges, Romande Energie concluded that no further adjustment in the value of its EOS Holding interest was required. Forces Motrices Hongrin-Léman SA (hereinafter FMHL) also suffered from developments in the power industry during For 2014, Romande Energie booked an impairment charge in the amount of CHF 58m, thus writing down the carrying value of the Group's interest in FMHL to zero. 68 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

37 NOTE 23 Other long-term financial assets In CHF thousands NOTE 24 Other short-term liabilities In CHF thousands Note Miscellaneous financial investments - available-for-sale securities 12'343 13'575 Loans to associates 12'408 13'271 Loans to third parties Total other long-term financial assets 24'960 27'066 Loans to associates This position comprises accounts receivable totalling CHF 7.9m from Spontis, arising from the subcontracting of logistics operations, in particular the physical transfer of inventory (2013: CHF 8.9m). These loans also comprise a receivable of CHF 3.2m relative to Forces Motrices de Sembrancher SA, bearing interest at 3%, as well as various other loans, for a total of CHF 1.3m (CHF 1.2m in 2013). Loans are measured using the amortised cost method. Accrued expenses and deferred income 64'663 75'172 Salaries and other social insurance costs due 12'544 11'732 Derivative financial instruments 5 4'674 11'293 Tax liability other than for income tax 3'225 5'013 Current accounts with partners Discounts and duties payable to municipalities 9'124 9'806 Other 12'954 10'685 Total other short-term liabilities 107' '701 Miscellaneous financial investments Miscellaneous financial investments are measured at fair value. In the case of unlisted companies for which we do not have a recent valuation (level 3), fair value is determined on the basis of EBITDA, applying a multiplier reflecting the standards used in the relevant business sector. NOTE 25 Borrowings In CHF thousands Level 1 Level 2 Level 3 Total In CHF thousands Available-for-sales securities Cadcime SA Holdigaz SA HYDRO Exploitation SA VO Energies Holding SA Total available-for-sales securities 12'343 13'575 12'343 13'575 Changes in the fair value of Holdigaz SA and VO Energies Holding SA shares are based on the prices of the shares as determined by a bank active in the Swiss market. For HYDRO Exploitation SA, this is based on an EBITDA multiple of 5.7. All changes in fair value were booked to other comprehensive income for Shares in Cadcime SA are carried on the balance sheet at the price agreed on at the date of the transaction, 6 June Debts to banks and other financial institutions 114' '000 Other long-term financial commitments 2'293 2'556 Total borrowings 116' '556 Short-term portion of borrowings (263) (262) Total long-term borrowings 116' '294 The Group's exposure to risks of changes in interest rates and renewals of borrowings at the balance sheet date was as follows: Below 6 months Between 6 months and 1 year - - Between 1 year and 5 years 2'050 1'050 Over 5 years 113' '244 Total borrowings 116' '556 Credit lines Amount used Amount available 67'122 67'109 Total credit lines 67'200 67'200 Borrowings have fixed due dates with no early repayment clauses. Financial liabilities with banks are contracted at market terms. The average interest rate paid on borrowings was 2.28% (2.27% in 2013). The main loans contracted by Romande Energie Holding SA are as follows: In CHF thousands Rate Period Maturity AVS 2.120% AVS 2.120% Total borrowings Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

38 NOTE 26 Pension liabilities Basis and organisation of occupational pension provision The workforce of Romande Energie SA is affiliated to the Romande Energie staff pension fund (hereinafter, "the pension fund"). The pension fund is a provident institution that is legally independent and which works to apply the mandatory pension regime introduced by the Swiss Federal Act of 25 June 1982 on Occupational Old Age, Survivors and Invalidity Pension Provision (hereinafter "OPA"). The employers affiliated to the pension fund are: - Romande Energie SA - Romande Energie Commerce SA - Effitec SA - Enerbois SA Pension plans The pension fund runs a separate pension scheme for each employer. Under the terms of OPA, all pension plans are definedcontribution plans, with funding based on predetermined contributions from working insured members and employers in accordance with the insured income. Each company has a specific basic plan for covering fixed compensation. Additionally, three companies have a plan that covers variable compensation. The pension fund itself manages coverage for risks relating to old age, death and disability. Liabilities are measured using the socalled static method. As at 31 December 2014, the coverage ratio, which is fund assets relative to liabilities within the meaning of OPA, stood at 113%. If a plan were to become underfunded, OPA provides several remedial measures, such as modifying the conversion ratio or increasing contributions. Some features of Swiss pension plans lead to their categorisation as defined-benefit plans within the meaning of IAS 19. An IFRS-compliant actuarial report is drawn up every year. Management of investments The Board of Trustees, which is the highest instance of the pension fund, has responsibility over investing. It is comprised of five employee representatives and five members from the employer side. The assets of the pension fund serve solely to cover current and future liabilities. The investment policy aims to optimise the capital management so as to attain the stated provident goals of the pension fund. Actuarial data and requirements must be consistently represented in the investment policy objectives, which are liquidity, safety and income. The Board of Trustees defines the strategic allocation of the pension fund's assets together with authorised fluctuation margins that are consistent with the objectives of pension provision. Lastly, it ensures compliance with the investment principles laid down by legislation and its own investment guidelines. In CHF thousands Amount recognised on the balance sheet Present value of pension liabilities (532'806) (459'443) Market value of plan assets 462' '455 Amount recognised on balance sheet (70'065) (16'988) Analysis of costs relating to financial year Service cost, after employee contributions 7'500 8'483 Net interest on the net liability (asset) in connection with defined benefits Administrative expenses Total charge to income statement 8'302 9'950 Change in the present value of defined benefit obligation Balance as at 1 January 459' '291 Service cost, after employee contributions 7'500 8'483 Interest on pension obligations 10'073 8'866 Employee contributions 4'004 3'908 Net benefits paid (18'668) (22'765) (Gain)/loss due to experience 4'493 2'655 (Gain)/loss due to changes in demographic assumptions (7'589) - (Gain)/loss due to changes in financial assumptions 73'550 (19'995) Balance as at 31 December 532' '443 The weighted average for the duration of pension plan liabilities is 14.2 years. Change in the fair value of plan assets Balance as at 1 January 442' '465 Employer contributions 7'161 7'008 Employee contributions 4'004 3'908 Net benefits paid (18'668) (22'765) Administrative expenses (539) (527) Interest income 9'810 7'926 Return on plan assets, excluding amounts included in interest income 18'518 23'440 Balance as at 31 December 462' ' Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

39 In thousands of CHF Analysis of amounts recognised in other comprehensive income Loss due to changes in demographic assumptions (7'589) - (Gain)/loss due to changes in financial assumptions 73'550 (19'995) (Gain)/loss due to experience 4'493 2'655 Return on plan assets excluding amounts included in interest income (18'518) (23'440) Total remeasurements recognised in other comprehensive income 51'936 (40'780) Reconciliation of net defined-benefit liability Net liability recognised, as at 1 January (16'988) (54'826) Charge recognised in income statement (8'302) (9'950) Remeasurements recognised in income statement (51'936) 40'780 Employer contributions 7'161 7'008 Net liability recognised, as at 31 December (70'065) (16'988) Estimated expenses for 2015 In thousands of CHF 2015 Components of profit and loss for 2015 Net service cost, after employee contributions 9'273 Net interest on pension obligations 711 Administrative expenses 370 Total charge to income statement 10'354 Calculation of net service cost Normal cost 13'202 Interest on normal cost 145 Expected employee contributions (4'074) Net current service cost, after employee contributions 9'273 Employer contributions forecast for 2015 amount to CHF 7m % Sensitivity analysis to changes in principle actuarial assumptions Actuarial assumptions used for calculating profit and loss for 2014 and 2013 are as follows: Discount rate Salary rate increase (including inflation) Return on plan assets Rate of interest credited to retiree accounts Inflation Rate of pension increases Mortality table LPP 2010 GEN LPP 2010 GEN Breakdown of plan assets by asset category Cash and other Bonds Equities Commodities Swiss property Total Impact on present value of plan obligations (%) Change in assumption Increase in assumption Decrease in assumption Discount rate Salary rate increase (including inflation) Rate of interest credited to retiree accounts Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

40 NOTE 27 Provisions In CHF thousands OIBT Onerous contracts Dismantling 2014 Balance as at 1 January 2'347 1'572 3'919 Allocations Entry in consolidation scope Discounting effect Use (1'310) (1'076) (2'386) Exchange difference (3) (3) Balance as at 31 December 1' '271 Short-term portion of provisions (552) (637) (1'189) Total long-term provisions ' Balance as at 1 January 3'612 4'237 7'849 Allocations 1'436 1'436 Discounting effect Use (1'407) (4'274) (5'681) Balance as at 31 December 2'347 1'572 3'919 Short-term portion of provisions (983) (997) (1'980) Total long-term provisions 1' '939 OIBT Provision The Group has issued a provisiontocoverthe costs incurred by the Ordinance onlow Voltage Installations (OIBT), which came into effect in The OIBT stipulates that inspections that should have been carried out prior to its introduction must now be made and paid for by the grid operators concerned. The transitional regulations set deadlines for these inspections and require operators to bear the cost of any inspections performed after these deadlines have expired. This provision is reviewed every year on the basis of inspection work that still has to be carried out. The provision is expected to be fully utilised by the end of Provision for onerous contracts Since 2014, the provisionforonerous contracts has separated out the business profit earned ona price plan and the performance generated bya procurement strategy. The profitabilityof eachprice planis analysed onanannual basis. The provisionis calculated on the basis of the cash flows expected for the duration of each contract. The discount rate used for this type of operation is 6.25%. The Group expects to extinguish this provision by 2017, as the contracts are basically concluded for a period of three years. Provision for decommissioning Following the acquisition of Ploudalmézau-Breiz Avel 01 SAS on 2 September 2014, the Group took on the provision for decommissioning from this company's financial statements. The provision was calculated on the basis of actual decommissioning costs out to expiry in The discount rate used for this type of operation is 4.5%. Total NOTE 28 Share capital As at 31December 2014, the issued share capital consisted of 1,140,000 fully paid registered shares with a nominal value of CHF 25 each. The amount available for dividend distribution is based on the amount shown under retained earnings in the financial statements of the parent company, Romande Energie Holding SA. It is calculated in accordance with the provisions of the Swiss Code of Obligations. Consolidated equity includes legal reserves of CHF 140.8m (2013: CHF 140.4m), which are not available for distribution. There is an agreement between the Vaud Canton, various Vaud municipalities and Banque Cantonale Vaudoise laying down reciprocal preemptive rights in the event of the sale of shares held by any of these parties. Signatories of this agreement owned 53.56% of the share capital as at 31 December The Board of Directors has an authorised capital of CHF m, consisting of 405,000 registered shares with a nominal value of CHF 25 each, approval of which was renewed by a resolution made at the Annual General Meeting on 27 May This resolution expires on 27 May As at 31 December 2014, none of the shares making up the authorised capital had been issued. % Vaud Canton Vaud municipalities Own shares Groupe E SA, Fribourg BKW Energy SA, Bern Banque Cantonale Vaudoise, Lausanne Holdigaz SA, Vevey Free float NOTE 29 Other reserves In CHF thousands Valuation adjustement of associates Revaluation differences 2014 Balance as at 1 January (8'375) 12'082 3'707 Exchange difference and other changes (11'892) (426) (12'318) Fair-value adjustment of financial instruments 315 (1'251) (936) Balance as at 31 December (19'952) 10'405 (9'547) 2013 Balance as at 1 January (21'881) 8'625 (13'256) Exchange difference and other changes 11'318 2'410 13'728 Fair-value adjustment of financial instruments 2'188 1'047 3'235 Balance as at 31 December (8'375) 12'082 3'707 Total 76 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

41 NOTE 30 Shares outstanding NOTE 31 Related parties Total number of shares 1'140'000 1'140'000 Own shares held by the Group (113'437) (113'437) Shares outstanding 1'026'563 1'026'563 In CHF thousands Related parties Entities with significant influence on the Group Associates Key management personnel Taxes paid in Vaud Canton are not included in the data on related parties Sales to related parties Purchases from related parties Amounts due from related parties Amounts due to related parties ' '705 9'549 1' '409 36'256 1'489 1' '012 36'496 1'075 2' ' '710 5'547 6' ' '205 2'059 6'410 Shareholders who own 20% or more of the share capital of Romande Energie Holding SA, the parent company, are considered as entities with significant influence. Transactions with related parties are conducted at market rates. The amount due to the staff pension fund as at 31 December 2014 was CHF 0.4m (CHF 0.4m in 2013). NOTE 33 Other future liabilities, contingent liabilities and contingent assets In the normal course of its operations, Romande Energie has entered into various long-term commitments covering the procurement and sale of energy. Right of purchase Under the agreements concluded with EOS and taken over by Alpiq, the Group may purchase electricity from Alpiq between 1 October 2007 and 31 December 2030 on the following terms: pre-defined quantities amounting to less than 20% of its annual consumption may be purchased at a price equivalent to Alpiq s average production cost using the plants which previously belonged to EOS. The cumulative difference over the years between the average selling price at Alpiq and the average production cost for the quantities purchased may not exceed a mutually agreed ceiling. The above procurement option is considered as a right of purchase which will only vest when it is exercised and will only be extinguished by the physical delivery of electricity. It is therefore a future right tothe purchase of energythat depends on market conditions at the time it is exercised. This right is accounted for in the Group s financial statements if and when it is exercised. It represented an amount of CHF 0.6m for the 2014 financial year (2013: CHF 7m). This amount is deducted from the cost of energy purchases. In view of price trends on the electricity market, the Group expects to curb the use of this right in the coming years. Guarantees The Group has issued a guarantee of EUR 19.7m (the same amount as in 2013) in order to cover payments agreed between its subsidiary Romande Energie Renouvelable SA and a supplier of power-generation equipment. Further guarantees for a sum of less than CHF 0.1m have been issued. NOTE 34 Post-balance sheet events Abandonment of minimum EUR/CHF exchange rate On 15 January 2015, the Swiss National Bank announced that it was removing the minimum exchange rate between the euro and the Swiss franc. The news led to a surge in the exchange value of the Swiss franc, which is the reporting currency for the consolidated financial statements of Romande Energie Group. This situation will have a negative impact on the translation of the financial statements of entities whose functional currency is the euro, as well as some positions on the balance sheet and income statement (see Note 5). Discontinuation of the minimum exchange rate had no effect on the consolidated financial statements for NOTE 32 Remuneration of the Executive Board and the Board of Directors In CHF thousands Approval of the consolidated financial statements The consolidated financial statements of Romande Energie Group for 2014 were approved by the Board of Directors on 30 March A dividend of CHF 30 per share will be submitted for approval by shareholders at the Annual General Meeting. If this recommendation is adopted, the total dividend payment will amount to some CHF 30.8m, taking into account shares held by the Group in treasury. Basic salaries paid to Executive Board members during the year 1'559 1'470 Variable salaries paid to Executive Board 1' Allowances for entertainment expenses Social insurance costs (state pension, unemployment, occupational pension, etc.) Total remuneration, expenses and social insurance costs - Executive Board 3'304 3'020 Compensation paid to Board of Directors Social insurance costs (state pension, unemployment, etc.) Total remuneration, expenses and social insurance costs - Board of Directors The Executive Board had seven members, compared with sixin Contributions paid into the pension fund for members of the Executive Board came to CHF 324,000 (2013: CHF 295,000). The Board of Directors comprised 11 members, as in Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

42 NOTE 35 Subsidiaries and associates Main business Currency Share Shareholding (%)* capital ' Subsidiaries Romande Energie SA, Morges E CHF 36' Bas-Valais Energie SA, Vouvry E CHF 19' Romande Energie Commerce SA, Morges E CHF 15' Société des Forces Motrices du Grand-St-Bernard SA, Bourg-St-Pierre E CHF 10' Eoliennes de Provence SA, Provence E CHF 6' Romande Energie Renouvelable SA, Morges E CHF 2' Enerbois SA, Rueyres E CHF 2' Tecfor SA, Troistorrents N CHF Brent Energia SA, Brent E CHF Effitec SA, Morges I CHF HC SA, Fribourg N CHF Romande Energie France SAS, Paris 1) D EUR 7' Centrale Hydroélectrique de Meyronnes SAS, Meyronnes E EUR Ploudalmézau-Breiz Avel 01 SAS, Paris 2) E EUR Associates EOS Holding SA, Lausanne D CHF 324' Forces motrices Hongrin-Léman S.A. (FMHL), Château-d'Oex 3) E CHF 100' Sitel SA, Morges N CHF 20' Forces Motrices de l'avançon SA, Bex 4) E CHF 7' Forces Motrices de Sembrancher (FMS) SA, Sembrancher E CHF 6' Société Electrique des Forces de l'aubonne SA, Aubonne E CHF 5' DransEnergie SA, Orsières N CHF 2' neo technologies SA, Lausanne N CHF 2' Energie Solaire SA, Sierre N CHF 1' Cisel Informatique SA, Matran N CHF 1' Agrogaz Lignerolle SA, Lignerolle E CHF VO RE-Nouvelable SA, Orbe E CHF Gazobois SA, Cossonay-Ville E CHF Spontis SA, Granges-Paccot N CHF St-Gingolph Energia SA, St-Gingolph E CHF Energie Renouvelable Vouvry SA, Vouvry 5) E CHF Main business E) Production, distribution and sale of energy D) Holding company I) Installation inspections N) Other 1) Romande Energie France SAS increased its share capital on 23 December 2014 by EUR 4.6m to EUR 7.7m. This transaction was used to fund purchase of the company Ploudalmézau-Breiz Avel 01 SAS. 2) Romande Energie France SAS on 2 September 2014 acquired full ownership of Ploudalmézau-Breiz Avel 01 SAS. This object of the company is managing a wind farm installation in Ploudalmézeau, in the administrative department of Finistère, Brittany (France). It has a share capital of EUR 0.6m. 3) Forces Motrices Hongrin-Léman SA increased its share capital on 18 June 2014 by CHF 70m to CHF 100m. Romande Energie SA participated in the amount of CHF 28.8m; its ownership interests remains unchanged. Capital raising was used to fund an increase in the production output of an existing installation. 4) Romande Energie Holding SA on 23 June 2014 purchased 2,600 shares in Forces Motrices de l Avançon SA. As a result, the Group's interest rose to 38.98%, representing a further 10.99%, through ownership of 9,218 shares as at 31 December ) On 9 July 2014, Energie Renouvelable Vouvry SA was founded. It is 35% owned by the Group. The object of this company is generating power by harnessing watercourses in the municipality of Vouvry, building reservoirs and related installations, and developing a full range of businesses in the renewable energy sphere. The company has a share capital of CHF 0.1m. * The percentage of voting rights is systematically identical to equity interest with the exception of Romande Energie Commerce SA, Forces Motrices de l'avançon SA and Société Electrique des Forces de l'aubonne SA, for which the share of voting rights is 63.5%, 37.23% and 24.67%, respectively. 80 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

43 82 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

44 ROMANDE ENERGIE HOLDING SA FINANCIAL STATEMENTS Income statement as at 31 December 2014 In CHF thousands Income Rents and miscellaneous income 2'688 2'615 Financial income 111' '153 Total income 114' '768 Operating expenses Other operating expenses (419) (458) General administration costs (2'151) (2'021) Depreciation, amortisation and provisions (746) (746) Financial expenses (1'904) (2'347) Profit before taxes 109' '196 Income taxes (1'035) (1'836) Net profit for the year 108' '360 Balance sheet as at 31 December 2014 In CHF thousands Note ASSETS Current assets Cash and cash equivalents 184' '934 Securities, term deposits and derivative financial instruments 329' '250 Running accounts and other current assets from affiliates and related parties 250' '282 Other current assets 522 1'450 Total current assets 765' '916 Non-current assets Property, plant and equipment 11'356 12'102 Long-term financial assets 203' '104 Loans to affiliates 88'232 85'471 Total non-current assets 303' '677 Total assets 1'068' '593 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Running accounts and other current liabiliites with affiliates 38'527 17'394 Other short-term liabilities 2'902 2'684 Current taxes payable 3'254 2'344 Total current liabilities 44'683 22'422 Non-current liabilities Long-term borrowings 2 100' '000 Long-term provisions 14'800 14'800 Total non-current liabilities 114' '800 Total liabilities 159' '222 Share capital and reserves Share capital 28'500 28'500 General reserve 5'859 5'859 Reserve for own shares 3 99'124 99'076 Total share capital and reserves 133' '435 Retained earnings Income brought forward 667' '576 Net income for the year 108' '360 Retained earnings 775' '936 Total shareholders' equity 908' '371 Total liabilities and shareholders' equity 1'068' ' Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

45 Notes to the parent company financial statements NOTE 1 Major shareholdings NOTE 2 Borrowings Main business Currency Share capital ' Romande Energie SA, Morges 1) CHF 36' Bas-Valais Energie SA, Vouvry 1) CHF 19' Romande Energie Commerce SA, Morges 1) CHF 15' Romande Energie Renouvelable SA, Morges 1) CHF 2' Romande Energie France SAS, Paris 2) EUR 7' Sitel SA, Morges 2) CHF 20' Forces Motrices de l'avançon SA, Bex 1) CHF 7' Forces Motrices de Sembrancher (FMS) SA, Sembrancher 1) CHF 6' Société Electrique des Forces de l'aubonne SA, Aubonne 1) CHF 5' neo technologies SA, Lausanne 2) CHF 2' Energie Solaire SA, Sierre 1) CHF 1' Cisel Informatique SA, Matran 2) CHF 1' Main business 1) Production, distribution and marketing of energy 2) Other Shareholding (%) In CHF thousands Rate Period Maturity AVS 2.120% '000 50'000 AVS 2.120% '000 50'000 Total borrowings 100' '000 NOTE 3 Own shares In CHF thousands NOTE 4 Authorised capital NOTE 5 Significant shareholders Number of CHF 000 Number of shares shares CHF 000 Held by Romande Energie Holding SA Balance at beginning of year 113'437 99'076 12'765 6'153 Acquisition ' '761 Sale - - (48'917) (51'534) Transfer '595 13'696 Balance as at 31 December 113'437 99' '437 99'076 Held by Romande Energie SA Balance at beginning of year '595 13'696 Transfer - - (29'595) (13'696) Balance as at 31 December Total own shares 113'437 99' '437 99'076 The Board of Directors has an authorised capital of CHF m, consisting of 405,000 registered shares with a nominal value of CHF 25 each, approval of which was renewed by a resolution made at the Annual General Meeting on 27 May This resolution expires on 27 May % Vaud Canton Vaud municipalities Groupe E SA, Fribourg BKW Energy SA, Bern Banque Cantonale Vaudoise, Lausanne Holdigaz SA, Vevey Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

46 NOTE 6 Fire insurance value In CHF thousands Recommended appropriation of retained earnings As at 31 December 2014 Fire insurance value of buildings 33'160 33'160 NOTE 7 Miscellaneous liabilities The company is part of a VAT group and is therefore jointly and severally liable to the Swiss Federal Tax Administration for VAT debts incurred by the other members. The company has issued a guarantee of EUR19.7m in order to cover payments agreed between its subsidiary Romande Energie Renouvelable SA and a supplier of power-generation equipment. In addition, the company has issued other guarantees for a total of CHF 0.1m. In CHF thousands Balance carried forward from previous year 742'963 Dividend retained on own shares (Art. 659a CO) (3'403) Net profit for the year 108'334 At the disposal of the AGM 847'894 Dividend of CHF 30 per share 34'200 Balance carried forward 813'694 Total 847'894 NOTE 8 Compensation paid to members of the Board of Directors The remuneration and the social insurance costs of the Board of Directors and the Executive Board are shown inthe remuneration report, pursuant to the provisions of the Ordinance against Excessive Remuneration by Listed Companies (ERCO). No optionor conversion rights were held by the Board of Directors or the Executive Board as at 31 December 2014 or 31 December On behalf of the Board of Directors Guy Mustaki, Chairman Pierre Oberson, Corporate Secretary Share ownership is as follows: Held by members of the Board of Directors Held by members of the Executive Board NOTE 9 Compensation paid to members of the Executive Board 20 shares < 1 % 0 shares 0 % The Group has appointed committees tomanage specific risks such as those associated with the procurement of electricity. The work of these committees as well as risk management processes are coordinated by a risk manager. The internal control system (ICS) is thoroughly documented and adapted to business risks and the Group s sphere of activities. The ICS is fully compliant with thelawandfulfils therequirements of the ExecutiveBoard andthe Board of Directors. It enables management tomonitor themost important processes within the company, which have a significant impact on financial reporting. 88 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

47 90 Romande Energie Energie Group Group 2014 Financial review Review 2014 Romande Romande Energie Energie Group Group Financial 2014 Financial Review review

48 CALENDAR CONTACTS 26 May th Annual General Meeting, Ecublens, Swiss Tech Convention Center 28 May 2015 Last trading day with entitlement to receive the dividend 29 May 2015 Ex dividend date 1 June 2015 Dividend payment 1 September 2015 Publication of Interim Report Media relations Karin Devalte, Head of Communications T [email protected] Investor relations René Lauckner, Treasurer T [email protected] Corporate governance Pierre Oberson, Corporate Secretary T [email protected] April 2016 Publication of 2015 Annual Report May th Annual General Meeting PUBLISHED BY Romande Energie Holding SA Rue de Lausanne 53 P.O. Box CH-1110 Morges 1 T F

49 ROMANDE ENERGIE GROUP Romande Energie SA Rue de Lausanne 53 P.O. Box CH-1110 Morges 1 T F