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Report of the Supervisory Board
The Supervisory Board performed its duties in full accordance with its statutory obligations, held 4 meetings during the year, regular agenda points of the meetings include the quarterly report of the Board of Directors on Company’s operations and the reports of Internal Audit, Corporate Security and Audit Committee. In addition, the Supervisory Board reviewed the proposals for the Annual General Meeting. The report of the Supervisory Board has been prepared pursuant to the report of the Board of Directors, the opinion of the auditors, the scheduled regular midyear reviews and the work of the Audit Committee. In its meetings during 2009, the Supervisory Board dealt in detail with the business situation of the MOL Group, the strategic development of the Group and its Divisions as well as respectively paid highlighted attention to the treatment of the economic crisis by the company. The Supervisory Board regularly got information about the decisions of the Board of Directors and issues concerning the Company.
MOL is the leading integrated oil and gas company in Central and Eastern Europe, the market leader in Hungary, and with the parent company’s net sales of HUF 1,856.3 billion and the Group’s net sales of HUF 3,226.0 billion according to the International Financial Reporting Standards (IFRS), the largest company in Hungary. MOL is a decisive Company in the region with its USD 10 billion market capitalisation. In 2009, the weighted average stock exchange price of MOL shares was HUF 12,595. MOL’s share price increased considerably from the HUF 9.870 closing price of the last year to HUF 17.000 by the end of 2009, significantly outperforming its peer group.
The Company’s 2009 financial statements - in accordance with Accounting Law - provide a true and fair picture of its economic activities and were audited by Ernst & Young Kft. The accounting methods applied in developing the financial reports are supported by the report of the Audit Committee, comply with the provisions of the Accounting Act and are consistent with the accounting policies of the Company. All figures in the balance sheet are supported by analytical registration. Assessment and payment of tax obligations were implemented as prescribed by law.
For the MOL Group a total of 137 companies were fully, and a further 17 companies were partially consolidated, using the equity method. Last year the ownership structure changed: at the end of 2009, compared to the end of last year the shareholding of foreign institutional investors increased from 24.1% to 25.7%, while the ownership of domestic institutional and private investors decreased from 10.3% to 8.4%. According to the received request for the registration of the shares and the published shareholders notifications the Company had seven shareholders that held more than 5% voting rights on the 31st December 2009. The Company held 7.1% treasury shares at the end of December 2009.
MOL respectively paid highlighted attention to the treatment of the significantly changed external environment, the impacts of the global economic and financial crisis with initiatives of additional efficiency improvement and cost cutting arrangements. MOL was among those companies, which reacted immediately following the first sign of the crisis. The Company cut back its CAPEX budget from the previous HUF 350 billion to HUF 220 billion and during 2009, MOL remained disciplined to its reduced CAPEX plan, and financed it through the operating cash flow, which rose compared to the previous year. Thanks to our early answer to the crisis, our well-recognized efficiency leadership and integrated business model we managed to keep our strong balance sheet and stable financial position.
Significant milestone have been achieved in the area of the strategy accomplishment in 2009. MOL and Government of Croatia have signed the Shareholder’s Agreement on the operation of INA, whereby from the 30th of June 2009 INA has been fully consolidated in MOL Group’s report. MOL’s upstream portfolio became more extended, diversified and balanced with practically doubling its SPE 2P reserve base as of the end of 2009 and significantly increasing its production. With the newly consolidated assets in the downstream segment MOL’s refinery pool widened with two refineries, and so total capacity increased to 23.5 mtpa. The five refineries operated under joint supply-chain optimisation on adjacent markets provide outstanding further growth opportunity.
On the 1st of October 2009 Hungary's latest strategic gas storage - with 1.2 billion cubic meter capacity and a total cost of HUF 150 billion - was handed over located at the gas filed in Szőreg. In order to further improve security of supply, projects aimed the interconnection of natural gas transmission system of countries in Central and Eastern Europe are underway.
The Company’s main goal for the coming years is to maximize the value of its extended portfolio by harmonizing the operation and exploiting the synergies. The Company’s key tasks are the significant development of INA’s businesses, elevate its profitability and efficiency to our standards and enhance its market position in Croatia, South Eastern Europe and in the Adriatic region by leveraging its knowledge and expertise.
During 2009 MOL could not just preserve its strong balance sheet and stable financial position, but created a strong basis for further organic growth. In addition, the Group is highly committed to maintain its strong financial background for the next years.
The Supervisory Board endorses the recommendation of the Board of Directors not to pay dividend in 2010 connected to the year ended 31 December 2009 and the total net income shall be booked as retained earnings. The Supervisory Board proposes that the General Meeting approves the audited financial statements of MOL Plc for 2009, with a balance-sheet total of HUF 2,738 billion, net income for the period of HUF 253 billion, and tie-up reserve of HUF 138 billion and the audited consolidated financial statements of the MOL Group for 2009, with a balance sheet total of HUF 4,229 billion and profit attributable to equity holders of HUF 116 billion.
Budapest, 31st March, 2010
For and on behalf of the Supervisory Board and Audit Committee of MOL Plc:
Dr. Mihály Kupa
Chairman of the Supervisory Board
