Report of the Supervisory Board on the 2010 financial statements and the proposal for the distribution of profit after taxation
 

The Supervisory Board performed its duties in full accordance with its statutory obligations, held 5 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 2010, the Supervisory Board dealt in detail with the business situation of the MOL Group, the strategic development of the Group and its Divisions. The Supervisory Board regularly got information about the decisions of the Board of Directors and issues concerning the Company.

MOL is a leading integrated energy company in Central and Eastern Europe, and with the parent company’s net sales of HUF 2,161 billion and the Group’s net sales of HUF 4,299 billion according to the International Financial Reporting Standards (IFRS), one of 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, while in 2010 it increased to HUF 19,505. MOL’s share price increased from the HUF 17,000 closing price of the last year to HUF 20,790 by the end of 2010.

The Company’s 2010 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 127 companies were fully, and a further 16 companies were partially consolidated, using the equity method. Last year the ownership structure changed: at the end of 2010, compared to the end of last year the shareholding of foreign institutional investors increased from 25.7% to 26.1%, while the ownership of domestic institutional and private investors decreased from 8.4% to 8.3%. 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 2010. The Company held 7.1% treasury shares at the end of December 2010.

The global economy went through a transition period in recent years, the signs of the recovery were already visible in 2010 and MOL closed a successful year. MOL continuously adjusts its operation to the external environment and became more international, more efficient and more upstream driven in the recent years.

Despite the challenging macro and regulatory environment, MOL not just remained committed to keep its financial stability but continue the key development projects, hereby established an outstanding position for the upturn period in each business division. MOL aims to exploit the significant organic growth potential of our integrated portfolio by operating the existing asset base on maximum efficiency.

The share of international operations in profit contribution increased significantly in 2010 and the Company expects this tendency to continue further in the coming years. In 2010 approximately half of the Group EBITDA was generated outside Hungary as share of international operation increased further considerably.

In the first full financial year together with INA, integration stepped on a higher level, which accompanied with effects of previous investments and ongoing efficiency improvement projects already reflected in the improving contribution.

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 Supervisory Board endorses the recommendation of the Board of Directors not to pay dividend in 2011 connected to the year ended 31 December 2010 and the total net income shall increase retained earnings.

The Supervisory Board proposes that the General Meeting approves the audited financial statements of MOL Plc for 2010, with a balance-sheet total of HUF 2,949 billion, net income for the period of HUF 103 billion, and tie-up reserve of HUF 153 billion and the audited consolidated financial statements of the MOL Group for 2010, with a balance sheet total of HUF 4,486 billion and profit attributable to equity holders of HUF 104 billion.



Budapest, 31st March, 2011



For and on behalf of the Supervisory Board and Audit Committee of MOL Plc:

 

Dr. Mihály Kupa
Chairman of the Supervisory Board

annual report 2010