ANNUAL REPORT 2011 BY PEOPLE FOR PEOPLE

ANNUAL REPORT 2011 BY PEOPLE FOR PEOPLE

Égáz-Dégáz Földgázelosztó Zrt. is proud to have been awarded the Hungarian Energy Consumers Prize based on the quality and client friendly services and high standards shown in 2011 for the fourth year running. Péter Tajti General Manager CEO s Foreword Within our operation area we supply gas to the customers of 19 free market traders and one universal service provider at the same time ensuring them discrimination-free access to our network and data management which are based on our devotion to the needs and interests of traders and consumers. In 2011 natural gas distributed on the free market amounted to 47% of the total distributed volume. During 2011 we invested HUF 3.217 million in development from our own resources without having had to take out any loans or facilities. This amount covered the costs of works performed to ensure compliance with law and regulations (connecting new consumers to our system, reconstructions), and to maintain operational safety. In 2011 Hungarian economy continued its fight against the economic crisis. The economic performance of the country was typically stagnating, and thus the consumption of natural gas decreased further. The results of the Company in 2011 were negatively influenced by the unusually warm winter, and the unfavourable course of distribution fees. Yet, in the face of all these negative factors, with our strict cost control and the dedication of our employees the Company managed to close another successful. Antoine Jourdain CEO Contents CEO s Foreword 1 Corporate Structure 2 Central and Regional Units 3 Important tasks and performance thereof 4 Market Position of the Company 5 Operation Area 6 Numbers of consumers and volumes 8 Evaluation of Economic Activity 9 Efficiency, Profitability and Cover Indices; Financial Situation 10 Financial Situation Assets and Liabilities 11 Investments; Human Resources Improvements 12 Social Responsibility

Corporate Structure Central and Regional Units Top management Founder Name Title Győr Szeged Tajti Péter Általános Vezérigazgató +36 (62) 569-741 Molnár Károly Hálózati Igazgató +36 (96) 616-218 Dr. Nagy Katalin Szervezetfejlesztési Igazgató +36 (62) 569-697 Auditor CEO Supervisory Board Szoldatics József Ügyfélkapcsolati Igazgató +36 (96) 616-205 General Manager Central units Name Address Telephone number Fax CEO s Office 6724 Szeged, Pulcz u. 44. +36 (62) 569-741 +36 (62) 494-733 Department of Quality Assurance and Safety Engineering Secretariat Department for Quality Assurance and Safety Engineering 6724 Szeged, Pulcz u. 44. +36 (62) 569-861 +36 (62) 494-733 Organisation Development Directorate 6724 Szeged, Pulcz u. 44. +36 (62) 569-697 +36 (62) 494-733 Finance Department 6724 Szeged, Pulcz u. 44. +36 (62) 569-833 +36 (62) 494-733 Network Director Customer Relations Director Organisation Development Director Regulation Department 6724 Szeged, Pulcz u. 44. +36 (62) 569-647 +36 (62) 473-943 Service Improvement Department 6724 Szeged, Pulcz u. 44. +36 (62) 569-767 +36 (62) 569-815 Secretariat Finance Department Regulation Department Customer Relations Directorate 9027 Győr, Puskás T. u. 37. +36 (96) 616-212 +36 (96) 616-212 Department of Distributor s Services 6724 Szeged, Pulcz u. 44. +36 (40) 820-005 +36 (62) 426-322 Department of Consumers Equipment 6000 Kecskemét, Ipoly sor 5. +36 (76) 484-784 +36 (76) 417-835 Department of Gas Network Development IT Platform Service Improvement Department Natural Gas Distribution Manager 6724 Szeged, Pulcz u. 44. +36 (62) 569-717 +36 (62) 494-733 Department of Gas Network Maintenance and Operation Department of Distributor s Services Natural Gas Distribution Manager Department for Gas Distribution and Settlement 6724 Szeged, Pulcz u. 44. +36 (62) 569-734 +36 (62) 569-660 Gas Metering Department 9027 Győr, Puskás T. u. 37. +36 (96) 503-135 +36 (96) 503-190 Department of Consumers Equipment Department for Gas Distribution and Settlement Network Directorate 9027 Győr, Puskás T. u. 37. +36 (96) 616-212 +36 (96) 503-190 Department of Gas Network Development 9027 Győr, Puskás T. u. 37. +36 (96) 616-212 +36 (96)615-212 Branch Offices Gas Metering Department Department of Gas Network Maintenance and Operation 9027 Győr, Puskás T. u. 37. +36 (96) 626-213 +36 (96) 503-190 Branch office in Baja Regional units, Southern region Branch office in Békéscsaba Name Address Telephone number Fax Branch office in Baja 6500 Baja, Bajcsy-Zsilinszky u. 4. +36 (79) 324-855 +36 (79) 325-563 Branch office in Győr Branch office in Békéscsaba 5600 Békéscsaba, Kétegyházi út 4. +36 (66) 443-711 +36 (66) 441-063 Branch office in Kecskemét Branch office in Kecskemét 6000 Kecskemét, Ipoly sor 5. +36 (76) 484-784 +36 (76) 481-033 Branch office in Szeged 6724 Szeged, Vásárhelyi Pál u. 6. +36 (62) 569-600 +36 (62) 466-998 Branch office in Szeged Regional units, Northern region Branch office in Szombathely Name Address Telephone number Fax Branch office in Győr 9027 Győr, Puskás Tivadar u. 37. +36 (96) 616-200 +36 (96) 503-121 Branch office in Szombathely 9700 Szombathely, Rákóczi u. 23-25. +36 (94) 518-700 +36 (94) 518-701 2 ÉGÁZ-DÉGÁZ FÖLDGÁZELOSZTÓ ZRT. 3

Important tasks and performance thereof Market Position of the Company Infrastructure Égáz-Dégáz Földgázelosztó Zrt. is a natural gas distributor company operating within the area of County Győr-Moson-Sopron, Vas, Komárom- Esztergom, Csongrád, Békés és Bács- Kiskun, as well as in three towns of County Veszprém. Within its service area it serves 667 settlements. The length of the gas pipe network operated by the Company is a total 23,002 km. The Company serves its consumers through 14 units integrated into six branch offices. Composition of gas pipe network within the operation area: Composition of gas pipe network based on material Composition of gas pipe network based on ownership In 2011 the Company considered it important to continue with its business policy and activity along the principles set down in its strategy. 4% Steel 2% Other Customer Relations The Company does not pursue trading activity, but to ensure its growth it wishes to take advantage of the following possibilities: identifying consumers who have gas pipes, but do not use the services of the Company; improving services; price strategy lobby in cooperation with the distribution licence holders operating in Hungary in order to ensure that the equity invested produces a yield equalling at least bank interests for the owners, and to ensure market conditions in the future that are similar to those in 2010; improving customer services (electronic services for those who register, enhance quality); improving the quality of meter reading, invoicing, collection processes; meeting the challenges of market anomalies, successful preparation for communication of the ever increasing number of market participants (free market traders), for the management of market emergencies, if any, and for ensuring appropriate flow of information (continuous development of IT platform). Network and Technology extending and strengthening the network according to consumer demand; using gas emission free pipe repair technology; reinforcing central work management system; performing tasks defined in the network renovation and metering modernisation policy; connecting more consumer metering points to the distant reading network; continuous supervision of metering loss, analysis to reduce such loss, drafting and implementing action plans. Finance continuous assessment of results; continuous analysis of financial processes; reducing receivables. The programmes above allowed the Company to progress according to the strategic targets defined, and contributed to the improvement of service level. 96% PE Regulatory environment The aim of Act Xl of 2008 on natural gas distribution (Gas Act) was to open up the gas market in several phases. As from 1 July 2011 distant heat providers entered the free market. From then on the law allows only retail consumers and consumers with meters below 20m³/hour to consume natural gas from the regulated market, to use universal services. 98% Own Natural gas distribution fees On 13 July 2011 the regional distribution fee was introduced and it replaced the previous national system of fees used jointly with a compensation mechanism. Accordingly, new distribution fees have been set for all distribution network operators, including our Company. The double tariff protocol for consumers eligible and not eligible for universal service remained in force. 4 ÉGÁZ-DÉGÁZ FÖLDGÁZELOSZTÓ ZRT. 5

Operation Area Unit in Szombathely 9700 Szombathely, Rákóczi u. 23-25. Telephone: (94) 518-700 Unit in Sopron 9400 Sopron, Ipar krt. 6. Telephone: (99) 513-210 Unit in Győr 9027 Győr, Puskás T. u. 39. Telephone: (96) 616-200 Unit in Tatabánya 2800 Tatabánya, Eötvös u. 11. Telephone: (34) 513-513 Unit in Szabadszállás 6080 Szabadszállás, Dózsa Gy. u. 10. Telephone: (76) 354-454 Unit in Kecskemét 6000 Kecskemét, Ipoly u. 5. Telephone: (76) 484-784 Unit in Szentes 6600 Szentes, Klauzál u. 24. Telephone: (63) 401-205 Unit in Szeghalom 5520 Szeghalom, Bocskai út 53. Telephone: (66) 371-608 Unit in Békéscsaba 5600 Békéscsaba, Kétegyházi u. 4. Telephone: (66) 441-333 Unit in Baja 6500 Baja, Bajcsy-Zsilinszky u. 4. Telephone: (79) 324-855 Unit in Kiskunhalas 6400 Kiskunhalas, Kertész u. 2. Telephone: (77) 422-633 Unit in Szeged 6724 Szeged, Vásárhelyi Pál u. 6. Telephone: (62) 569-600 Unit in Hódmezővásárhely 6800 Hódmezővásárhely, Kutasi út 24. Telephone: (62) 242-177 Unit in Orosháza 5900 Orosháza, Fürdő u. 1. Telephone: (68) 411-622 Northern Region Operative Units Southern Region Operative Units 6 ÉGÁZ-DÉGÁZ FÖLDGÁZELOSZTÓ ZRT. 7

Number of Customers and Volumes Evaluation of Economic Activity s in the number of customers Sales revenues and income Universal Free Market number 2010 2011 Absolute Relative Without meter 79 683 79 588-95 -0,1% Below 20 m³/h 625 967 716 633 90 666 14,5% 20-100 m³/h 1 854 221-1 633-88,1% 101-500 m³/h 9 0-9 -100,0% Above 500 m³/h 2 0-2 -100,0% SUBTOTAL 707 515 796 442 88 927 12,6% Without meter 0 6 6 0,0% Below 20 m³/h 95 056 7 620-87 436-92,0% 20-100 m³/h 3 644 5 309 1 665 45,7% 101-500 m³/h 775 837 62 8,0% Above 500 m³/h 196 170-26 -13,3% SUBTOTAL 99 671 13 942-85 729-86,0% Auto gas 2 2 0 0,0% TOTAL 807 188 810 386 3 198 0,4% The number of consumers has gone up by 0.4% by the end of 2011 as compared to portfolio the year before. We see a major change within the consumption structure as far as the proportion of consumers below 20m³/h using universal service and those consuming from free market. At the end of 2011 the number of consumers below 20m³/h who consumed from the free market went down by 87.5 thousand compared to the situation a year before. The reason for this is that as from 13 January 2011 the Hungarian Energy Office suspended the licence of the then largest free gas market trader, EMFESZ, and so the natural gas free market activity was discontinued. Main factors: Sales revenues from distribution Sales revenues went down on a year by year basis mainly because of the negative price impact of the differentiated (eligible/not eligible for universal service) tariffs implemented in December 2010, and because volumes are 8.2% behind the results of last year. Costs and expenses thousand HUF 2010 2011 1 Material type expenses 8 517 932 9 633 703 1 115 771 2 Personnel costs 3 170 336 3 566 909 396 574 3 Depreciation 3 514 557 3 782 290 267 732 4 Other expenses 1 242 558 729 554-513 004 thousand HUF 2010 2011 1 Sales revenues from distribution 22 787 916 20 634 888-2 153 028 2 Sales revenues from other activities 428 466 513 372 84 906 3 HFH, connection fees 33 016 38 508 5 493 I. Net sales revenues (1+2+3) 23 249 398 21 186 768-2 062 630 4 Other revenues 1 185 899 1 117 640-68 259 5 Financial income 267 443 295 131 27 689 6 Extraordinary income 8 845 10 605 1 760 = TOTAL REVENUES AND INCOME (I+4+5+6) 24 711 585 22 610 145-2 101 440 CAPITALIZED VALUE OF SELF- MANUFACTURED ASSETS 346 627 425 396 78 769 Metering difference in 2011 amounted to 1.99% which is although less than last year s result, its costs shot up significantly as a result of the increasing raw material price (USD/GJ molecule price), and the USD/HUF exchange rate going down. The volume of natural gas distributed in 2011 was 8.2% less than the volume distributed in 2010. Consumption in all segment decreased. The main reason being the unusually warm December 2011, and changes in saving and consumption attitudes. Retail consumption has dropped significantly as a result of increasing energy prices and overhead costs. We see a fall in industry, trade and public sectors. Since macro expectations continued to remain negative the members of each segment halted their investments, production and through this the consumption of energy. in the volume of the natural gas distributed Universal Free Market number 2010 2011 Absolute Relative Without meter 11 939 12 161 222 1,9% Below 20 m³/h 826 118 816 978-9 139-1,1% 20-100 m³/h 77 129 11 439-65 689-85,2% 101-500 m³/h 1 791 2 028 237 13,2% Above 500 m³/h 8 845 13 502 4 657 52,7% SUBTOTAL 925 822 856 109-69 713-7,5% Without meter 0 0 0 0,0% Below 20 m³/h 90 351 31 589-58 762-65,0% 20-100 m³/h 91 496 145 700 54 205 59,2% 101-500 m³/h 184 267 175 077-9 189-5,0% Above 500 m³/h 466 206 405 742-60 464-13,0% SUBTOTAL 832 320 758 109-74 211-8,9% Auto gas 910 1 029 119 13,1% Own consumption 844 860 16 1,9% TOTAL 1 759 896 1 616 107-143 789-8,2% I. Total operating costs and expenses (1+2+3+4) 16 445 383 17 712 456 1 267 073 5 Financial expenses 19 225 24 807 5 582 6 Extraordinary expenses 89 261 85 598-3 663 = TOTAL COSTS AND EXPENSES (I+5+6) 16 553 869 17 822 861 1 268 992 Profits thousand HUF 2010 2011 A Profit from operations 8 336 541 5 017 348-3 319 193 B Financial profit 248 218 270 325 22 107 C. Profit/Loss on ordinary activities (A+B) 8 584 759 5 287 673-3 297 086 D Extraordinary profit -80 416-74 993 5 423 E. Profit before tax (C+D) 8 504 343 5 212 680-3 291 663 XII Tax 1 315 933 806 111-509 822 F. Profit after tax (E+XII) 7 188 410 4 406 569-2 781 841 22 Use of accumulated profit reserve for dividends 0 0 0 23 Dividends and profit sharing paid 7 188 348 0-7 188 348 G. Retained earnings (net profit) (F+22+23) 62 4 406 569 4 406 507 EBITDA 11 548 953 8 957 064-2 591 889 NUMBER OF CUSTOMERS 807 188 810 386 3 198 8 ÉGÁZ-DÉGÁZ FÖLDGÁZELOSZTÓ ZRT. 9

Efficiency, Profitability and Security Indices Financial situation Assets and Liabilities Item Unit 2010 2011 Natural gas distribution per consumer m³/consumer 2 180 1 994 Revenues from natural gas distribution in a day HUF million/day 62,430 56,530 Direct costs in proportion to the net sales revenues % 54,860 65,780 Indirect costs in proportion to the net sales revenues % 9,042 12,370 Net sales revenues per employee HUF thousand/ person 37 989 35 292 Assets thousand HUF 2010 2011 A. Fixed assets 78 033 472 77 432 755-600 717 I. Intangible assets 621 336 615 242-6 094 II. Tangible assets 77 341 741 76 760 830-580 911 III. Financial investments 70 395 56 683-13 712 B. Current assets 9 524 243 7 540 721-1 983 522 I. Inventories 139 381 195 443 56 062 Profit before tax per employee Number of employees per 1000 customers Financial Situation HUF thousand/ person 13 896 8 683 person/1000 consumers 0,760 0,730 II. Receivables 9 260 513 7 288 232-1 972 281 III. Securities 0 0 0 IV. Liquid assets 124 349 57 046-67 303 C. Accrued and deferred assets 2 289 059 2 046 501-242 558 TOTAL ASSETS 89 846 774 87 019 977-2 826 797 Assessment of the financial situation Liquidity 2010 2011 Current Assets + Accrued and deferred assets / Short-term liabilities 103,8% 266,1% Credit cover index Receivables / Short-term liabilities 81,4% 202,3% Financial assets The Company holds no securities, permanent shares, permanent credit relation materialised by securities. Financial resources The loan portfolio of the Company according to maturity is as follows: Long-term: Short-term: HUF 48 million HUF 121 million The long-term loan portfolio has not changed on a year-year basis, while the shortterm portfolio has decreased by 7.4%% in 2011. The reason behind the significant differences between the indicators of the two years in question is that data given for year 2010 reflect the situation after the payment of dividends, while those given for year 2011 reflect the situation before the payment of dividends. Liabilities thousand HUF 2010 2011 D. Fixed assets 76 495 204 80 901 773 4 406 569 I. Subscribed capital 10 020 000 10 020 000 0 II. Unpaid subscribed capital 0 0 0 III. Capital reserve 66 474 620 66 474 620 0 IV. Profit reserve 522 584 62 V. Restricted reserve 0 0 0 VI. Evaluation reserve 0 0 0 VII. Retained earnings (net profit) 62 4 406 569 4 406 507 E. Provisions 196 325 6 441-189 884 F. Liabilities 11 380 376 3 607 002-7 773 374 I. Deferred liabilities 0 0 0 II. Long-term liabilities 4 813 4 813 0 III. Short-term liabilities 11 375 563 3 602 189-7 773 374 G. Accrued and deferred liabilities 1 774 869 2 504 761 729 892 TOTAL LIABILITIES 89 846 774 87 019 977-2 826 797 10 ÉGÁZ-DÉGÁZ FÖLDGÁZELOSZTÓ ZRT. 11

Investments Social Responsibility The value of the developments completed by the Company in 2011 was HUF 3.2 billion as follows: thousand HUF 2010 2011 2010-2011 Compensation for easement 291 641 169 159-122 482 Network construction 683 659 1 008 274 324 615 Network purchase 30 945 3 198-27 747 Network reconstruction 861 007 916 874 55 867 Tools, machines, technical installation 97 544 116 325 18 781 Technical IT development 193 088 150 063-43 025 Big meters and pressure controllers 251 890 256 369 4 479 Small value assets 6 875 6 093-782 Meters and pressure controllers (new consumers) 40 959 43 897 2 938 Meter replacement 379 627 547 212 167 585 As from the year 2010 the Company has pursued a rather low-key investment policy, although the expenses thereof in 2011 increased. This amount covered the costs of works performed to ensure compliance with law and regulations (connecting new consumers to our system, reconstructions), and to maintain operational safety. Environmental responsibility Environmental tasks arising from the business activity of the Company are completed in compliance with the applicable law and the Environment Regulations at the same time considering the interests of sustainable development. During its activity the scope of environmental responsibility shall cover the protection of waters, soil, fauna, air, as well as the built-up environment. Subject to this tasks related to the use of dangerous substances, and waste management are prioritised. In addition to this the Company considers it of great importance to educate its own employees with information about the significance of the protection of the environment (information regarding efficient energy utilisation, presentation about natural gas operated motoring), with the dissemination of good practices (selective waste collection, ensuring safe disposal of batteries used in the offices, reduction of paper demand), as well as by organising targeted events. TOTAL: 2 837 235 3 217 464 380 229 Social responsibility Human Resources Improvement The average staff headcount of the Company was 612 in 2010 and this went down to 600.3 in 2011. The qualified personnel required for performing distribution activity was available to the Company in the relevant fields. The training programme developed by the Company ensures that employees are adequately qualified, and their expertise is up to date. In 2011 445 employees participated in at least one type of training. The number of working days spent on trainings was 1,992; the amount spent on training, development was HUF 38 million. Égáz-Dégáz Földgázelosztó Zrt. followed the fate of the villages affected by the red sludge and that of the people living there with utmost care and attention. Our Company donated twenty thousand special, type FFP2 dust respiratory masks to the local government of Devecser to protect the health of the people participating in rescue. We also helped one of the victims of the catastrophe by PartnerGáz network In order to ensure high quality and complex services to meet the needs of our consumers our Company operates the PartnerGáz network which serves as a pooling platform for architects, constructors, gas fitters, producers and distributors within our service area. This way we can provide our customers complex offers from planning to installation. paying for the connection fee and giving HUF 100 000 to purchase gas fuelled equipment for the new home. For the World Environment Day we call for tenders from our employees. We were looking for one kindergarten, pre-school and elementary school in each region that needed their gardens to be renovated. The purpose was to make the environment nicer in which Anniversaries Our unit in Szabadszállás was established 25 years ago to ensure access in the region to natural gas, the comfortable, clean, modern, versatile and environment friendly energy. To commemorate this we held an event on 11 November 2011 for the political and professional heads of the region, as well as for the employees and retired personnel of the Company. children play and teachers work. As part of the tender in the southern region we have helped Sugovica ÁMK és Sportiskola Lőkert sori Óvoda in Baja, while in the northern region the Csillagsziget Bölcsőde in Tata in dressing up the garden and purchasing new toys. Our branch in Sopron started supplying gas 145 years ago. The commemorate this we have inaugurated a memorial plaque. 12 ÉGÁZ-DÉGÁZ FÖLDGÁZELOSZTÓ ZRT.

Our values drive commitment daring cohesion Published by: Égáz-Dégáz Földgázelosztó Zrt. 9027 Győr Puskás Tivadar utca 37. Editor: General Manager of Égáz-Dégáz Földgázelosztó Zrt. Printed by: INNOVARIANT Nyomdaipari Kft. Foto Credit: SUEZ ENVIRONNEMENT / KRISTA BOGGS DUREUIL PHILIPPE GDF SUEZ / HELSLY CEDRIC GDF SUEZ / JACQUES MOUSSAFIR - ISABELLE DENOYEL - ERIC WUILMOT ARCHITECTES / MILLIER SEBASTIEN / MAISON A / STUDIO B, ÉVÈNEMENT ORGANISÉ PAR ARCHITECTURES À VIVRE. www.egaz-degaz-foldgazeloszto.hu Printed on recycled paper.