EU RO P EAN ENERGY GROUPS

Bernard Timothe Minier-Cottin Juliette Master EBR - 2012/2013

European Energy Groups !

EU RO P EAN ENERGY GROUPS

Bernard Timothe Minier-Cottin Juliette Master EBR - 2012 / 2013

Introduction
The energy market as we understand it refers to an electricity market, but it can also refer to other sources of energy such as Coal, Hydro, Wind, Nuclear, Gas and other non-renewable. The energy development is usually due to an energy policy created by the government to develop a competitive manner in the industry of energy. This market is regulated by international authorities to avoid oligopolies and to protect the consumers. The following graph shows us the distribution of dierent energies of the European market.

graph 1: Source (2012): Annual Report of GDF SUEZ

The world energy market is dominated by the Chinese with the State Grid Corporation with a turnover of $ 259.142 millions (graph 2). The rst european group comes at the third place with E.on, a german group with a turnover of $ 157.057 millions. In this top ten, european groups are well represented with 5 groups, E.on, GDF Suez, Enel, EDF and RWE.

European Energy Groups !

graph 2 : Source (2011): Top 500 of Fortune Magazine To get straight to the heart of the matter with the european market and european groups (graph 3). In this report we will develop three major groups with E.on, GDF Suez, and EDF. We will present a comparison of major informations of these groups, of the corporate governance with the board of directors, of the shareholding structure and nally of the turnover and equity.

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graph 3 : Source (2012): xer, ! European Electricity and Gas ! Groups

Major Informations
in this part we will expose the major informations of each company by comparison to each other.

European Energy Groups !

1. E.ON is one of the world's largest investor-owned power and gas companies. At facilities across Europe, Russia, and North America, our nearly 79,000 employees generated just under 113 billion in sales in 2011. Its goal is to make energy cleaner and better wherever they & operate. The group is listed on the German DAX stock index and the Dow Jones Global Titans 50.

2. GDF SUEZ results from the merger between Gaz de France (GDF) and the SUEZ group, completed in July 2008. The group then merged with International Power in February 2011. GDF SUEZ is the second largest group in Europe with 84.5 billion of sales in 2010. In 2010 GDF SUEZ employed 236,000 people worldwide. GDF SUEZ is listed on the Euronext exchanges in Paris and Brussels and is a constituent of the CAC 40 and BEL 20 indices.

3. EDF Energy is part of EDF Group. EDF Group's activities include generation, trading, transmission, distribution, supply and other energy services. It has 158,640 employees

European Energy Groups !

worldwide. EDF Group has investments in 21 countries (12 of these in Europe) and oers services and consulting in 35 countries.

Corporate Governance
& 1) Board of Management

E.ON views corporate governance as a central foundation of responsible and value-oriented management, ecient collaboration between the Board of Management and the Supervisory Board, transparent disclosures, and appropriate risk management. E.ON AG issues reports about its situation and earnings by the following means: Interim Reports Annual Report Annual press conference Press releases Telephone conferences held on release of the quarterly Interim Reports and the Annual & Report Numerous events for nancial analysts in and outside Germany. The Board of Management consists of 6 members Dr. Johannes Teyssen (CEO) Jorgen Kildahl Prof. Dr. Klaus-Dieter Maubach Dr. Bernhard Reutersberg Dr. Marcus Schenck Regine Stachelhaus

They manage the Company's businesses, bearing joint responsibility for its decisions. They & establishes the Company's objectives, sets its fundamental strategic direction, and are & responsible for corporate policy and Group organisation.

European Energy Groups !

In 2011, the Board was composed by 13 members, the chairman, three executive directors, six independent non - executive directors, and three GDF - SUEZ appointed non - executive directors. Eight additional directors also served the group in 2011. The Chairman is a NonExecutive Director appointed by GDF SUEZ in accordance with the rights of the GDF SUEZ group under the Relationship Agreement. The executive team is divided into geographical areas, which a CEO for each area. The Board has responsibility for dening strategy, ensuring the successful implementation of approved projects/proposals and for reviewing the operations of the Group. The Board also reviews annually the risk policies and prole of the Group and it maintains a schedule of all matters requiring specic Board approval. The full Board met six times in 2011. Grard Mestrallet Jean-Franois Cirelli Dirk Beewsaert

Valrie Bernis

Jean-Louis Chaussade

Jean-Marc Dauger

Jean-Claude Depail

Isabelle Kocher

Jrme Tolot

European Energy Groups !

The board of Directors is composed of 18 members: one third are employees representatives, two third are appointed by the Shareholders. The Board of Directors determines the orientations of the Companys activities and oversees their implementation. It deliberates on all the strategic, economic, nancial or technological orientations concerning the Company as well as matters expressly entrusted to it by law or which it has reserved for itself. The Chairman of the Board of Directors assumes the function of Chief Executive Ocer and is appointed by decree on proposal by the Board of Directors. The board of Directors meets around 20 times a year.

Henri proglio (CEO)

Marianne Laigneau

Henri Lafontaine

Pierre Lederer

Herv Machenaud

Thomas Piquemal

Vincent de Rivaz

Alain Tchernonog

Denis Lpe

European Energy Groups !

2) Supervisory Board & committees E.ON is composed by a supervisory Board of 6 shareholders representatives and 6 employee representatives. But also of four committees: - Executive committee : The executive committee consists of four members. It prepares meetings of the Supervisory Board and advises the Board of Management on matters of general policy relating to Companys strategic development. - Audit and Risk Committee : The Audit and Risk Committee consists of four members who shall have special knowledge in the eld of accounting and/or business administration. Pursuant to the Code's mandates, the Chairperson as an independent expert has extensive knowledge and experience in applying accounting principles and/or in international business control processes. - Finance and Investment Committee : The Finance and Investment Committee consists of four members. It advises the Board of Management on all issues of corporate nance and investment planning. It decides on behalf of the Supervisory Board on the approval of the acquisition and disposition of companies, equity interests, parts of companies and investments in xed assets, as well as on nancial measures whose value exceeds 2,5 percent of the equity listed in the most recent Consolidated Balance Sheet. - Nomination Committee : The Nomination Committee consists of three shareholder representative members. Its Chairperson is the Chairperson of the Supervisory Board. In consideration of the Supervisory Board's targets regarding its constitution the Committees task is to recommend to the Supervisory Board suitable candidates for election to the Supervisory Board by the Annual Shareholders Meeting.

GDF Suez is composed of four committees: - the audit committee : The audit committee manages the relationships with the external auditors. It xes the level of the auditors remuneration and reviews the scope and adequacy of the audit of the Groups annual consolidated nancial statements. - the remuneration committee : The Remuneration Committee is responsible for ensuring that the overall remuneration of Executive Directors is maintained on a sensible and comparable basis and enables the Company to compete e ectively for good calibre executives. - the appointments committee : The Appointments Committee is responsible for matters of management succession and the identication and appointment of Directors.

European Energy Groups !

- the Health, Safety and Environment (HS&E) Committee : The HS&E committee is responsible for reviewing the Groups HS&E policies, objectives and performance. In EDF Group, the Board is supported by specialised committees that review and prepare specic reports for the Board. These committees are: - the Audit Committee : The Committee reviews and gives its opinion, before examination by the Board, on the Company's nancial position, the medium-term plan and the budget, the preliminary nancial reports prepared by the Corporate Finance Division - the Nuclear Commitments Monitoring committee : The Nuclear Commitments Monitoring Committee is tasked with monitoring changes in nuclear provisions, The Nuclear Commitments Monitoring Committee is tasked with monitoring changes in nuclear provisions, issuing an opinion on issues relating to governance of dedicated assets, the rules for asset-liability matching and on strategic allocation, and ensuring the compliance of the management of the assets implemented by EDF in accordance with the policy for constituting and managing the dedicated assets. - the Strategy Committee : The Strategy Committee issues an opinion to the Board of Directors on the Company's major strategy policies, in particular the major strategic development plan, the industrial and commercial policy, the public service contract, strategic agreements, alliances and partnerships, the research and development policy, external or internal growth or disposal projects that require authorisation from the Board of Directors. - the Ethics Committee : The Ethics Committee ensures that ethical considerations are taken into account in the work of the Board of Directors and in the management of the Company. It reviews the reports from the Mediator, the General Inspector for nuclear safety and radiation protection, the Inspector for hydropower safety and the General Inspector for the regulated sector governance. - the Appointments and Remuneration Committee : The Nominations and Compensation Committee submits proposals to the Board of Directors regarding the appointment of directors by the Shareholders' Meeting. It submits for approval, to the Minister for the Economy and for Energy, an opinion on the compensation of the Chairman and Chief Executive Officer regarding the salary, variable portion and peripheral compensation of the Chairman and Chief Executive Ocer. It also submits this opinion to the Board of Directors for deliberation and the setting of this compensation.

European Energy Groups !

Organisational and Internal Structure

Global units bring bring together E.ON businesses that operate on Europe's converging markets and that tend to track global trends. These businesses, some of which are also increasingly active in regions outside Europe, will be managed across national boundaries. The objective of this functional approach is to pool expertise and leverage synergies. E.ON ve global units are Exploration & Production, Generation, New Build & Technology, Optimisation & Trading and Renewables. E.ON organisational structure:

GDF SUEZ is organised into six organisational business units (Nuclear (13%), Fossil-red (natural gas & coal)(63%), Hydroelectricity (17%), Biomass and biogas (1%), Wind (1%) and other (5%))

GDF Suez organisational structure:

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Finally, EDF is only Divided into 3 BUs (Energy Sourcing and Customer Supply, the Nuclear New Build project and Nuclear Generation.) EDF organisational structure:

Shareholding structure
1) Shareholder structure by Country/Region E.ON, GDF Suez and EDF have the same shareholding structure. The biggest part of capital comes from the state of the country. Germany for E.ON and France for the others.

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2) Dividends Here are the graphs of Dividend that E.ON, GDF Suez and EDF are paying every year.

European Energy Groups !

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Turnover
D AT E 2010 2011

6 763m 84 498m 65 170m

7 058m 90 673m 65 300m

Conclusion
E.ON, GDF Suez and EDF are the largest european energy groups. The French groups have more employees than the german one and they have activities in more countries. Their board is also larger with an average of 15 numbers versus only 6 for E.ON. However all of them are divided into four or ve committees. On the other hand, E.ON is the rst on the european market with a totally dierent organisational structure. It is the only group that centralise its activities : everything comes from the corporate centre to the dierent divisions and regions. GDF Suez and EDF have the same organisational structure from the top (Direction) to the bottom (Business units). In terms of shareholding structure, they have quite the same. They are all owned in the majority by their home countries state (GDF Suez: 36%; E.ON: 35%; EDF: 84,44%). A dierence can be highlighted between the french companies and the german one. In the rst ones, the employees are more involved in the companies capital, they own around 2% of the groups. And Finally, E.on owners are more international. In terms of dividends policy, GDF Suez has a dierent way to share its prots with its shareholders. They indeed try to increase or stabilise the rate of dividend for seven years. Whereas the dividend history of E.ON and EDF show more uctuation on the dividend rates over the years .

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Although these three companies present dierences in terms of size, organisation, governance and shareholding structures, we can say that this market is quite homogenous. And it seems that to enter this market certain conditions have to be followed.

References
www.xer.fr/xer700.awp www.eon.com http://www.verivox.net/about_history.asp http://www.edfenergy.com/about-us/about-edf-energy/our-structure/ http://shareholders-and-investors.edf.com/edf-share/dividend-42689.html & http://www.euroinvestor.fr/actualites/2010/11/18/edf-change-in-top-management-with-a-focus-o n-group-synergies/11430778

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