ALTEO Energy Services Public : The Corporate Governance Report of ALTEO Nyrt. for the business year 2023 - 2024.04.19

STATEMENT

on

ALTEO Nyrt.'s

corporate governance practices

for 2023

based on the

Corporate Governance Recommendations

of the

Budapest Stock Exchange

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1. The operation of the Board of Directors
   The Board of Directors is the Company's managing body that governs the Company and monitors its day-to-day operation on the basis of effective law, the Company's Articles of Association and the resolutions passed by the General Meeting and the Supervisory Board.
   The members of the Board of Directors are elected by the General Meeting for a term of up to five years. Members of the Board of Directors shall elect one of their number as Chair. The Board of Directors shall elect the person entitled to hold the title of Chief Executive Officer ("CEO") from among its members by a three-quarters majority of the votes of the members of the Board of Directors present at the Board meeting, provided that the resolution shall be deemed to have been adopted if it is unanimously voted by the non-executive members of the Board of Directors (who are only engaged by the Company under an agency agreement). The Company has no Nomination Committee or Remuneration Committee in place.
   The Board of Directors consisted of the following five members from January 1, 2023 through April 3, 2023:

The Board of Directors consists of the following four members as of April 3, 2023:

The Board of Directors is entitled and required to decide on all issues that, by virtue of the provisions of the law or the effective Articles of Association, do not fall within the competence of the General Meeting, the Supervisory Board or the Audit Committee.

Members of the Board of Directors decide jointly, as a corporate body on issues set out in the rules of procedure. The CEO of the Company is authorized and required to decide on all issues which are not referred to the exclusive competence of the Board of Directors, as a corporate body, by the Articles of Association or the rules of procedure of the Board of Directors, but which otherwise fall within the competence of the Board of Directors, unless the Board of Directors stipulates expressly otherwise in a separate resolution.

The Board of Directors in office until April 3, 2023 held three meetings in 2023 with a 100% attendance rate and passed nine resolutions without holding a meeting.

The Board of Directors elected on April 3, 2023 held eleven meetings in 2023 with a 100% attendance rate and passed seven resolutions without holding a meeting.

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1. The Chief Executive Officer (CEO)
   The Chief Executive Officer shall act within the limits of the applicable laws, the Articles of Association, and the rules of procedure of the Board of Directors in all matters which the Board of Directors, in its rules of procedure, has delegated to the Chief Executive Officer and, in this context, shall direct and control the day-to-day operational activities of the Company, unless the Board of Directors has expressly provided otherwise in a resolution.
   During the day-to-day operations of the Company, the CEO works with members of the management responsible for each function to make decisions.
   The CEO shall exercise the employer's rights over the employees of the Company, and is entitled to delegate the right to exercise such rights to another member of the Board of Directors or any person employed by the Company in writing.

The Management

The CEO is assisted in the day-to-day operational management of the Company by management, the members of which are responsible for functions within their scope of responsibility.

Management consists of the following members in 2023:

1. The Supervisory Board of the Company
   The Company's Supervisory Board, under mandate from the General Meeting, has been supervising the Company's management since September 6, 2010. As part of its activities, it carries out the duties prescribed by the law and its rules of procedure, discusses the reports of the Company's
   Ethics, Compliance and Control function, and the Sustainability and HSE function on the current major events in the area, and discusses the Company's risk management report.
   The Supervisory Board acts as a corporate body. Members of the Supervisory Board are required to act in person; agency is not allowed in the activities of this body. Members of the Supervisory Board may not be instructed in that capacity by their employer or shareholders of the Company. Members of the Supervisory Board are elected by the General Meeting for a definite term of up to five years. Members of the Supervisory Board can be removed at any time and may be reelected upon the expiry of their mandates. The General Meeting decides on the remuneration of members of the Supervisory Board.
   The Supervisory Board elects a chair from its membership and, as necessary, a vice chair. The Supervisory Board sets out its own rules of procedure, which are then approved by the General Meeting. The brief professional summaries of the members of the Supervisory Board are available on the Company's official website (https://alteo.hu/az-alteo/szervezet/felugyelo-bizottsag/).
   Until April 3, 2023, the Supervisory Board consisted of five members, three of whom were independent individuals. Members of the Supervisory Board until April 3, 2023:

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The Supervisory Board consists of the following four members as of April 3, 2023:

The Supervisory Board meets as required, but at least every 3 (three) months.

The Supervisory Board in office until April 3, 2023, held two meetings in 2023, one of which was attended by four out of five members, and passed two resolutions without holding a meeting.

The Supervisory Board elected on April 3, 2023 held four meetings in 2023 with a 100% attendance rate, and did not pass any resolutions by written procedure.

The Audit Committee consists of the following four members as of April 3, 2023:

The Audit Committee verifies the Company's accounting regime, comments on its annual report prepared pursuant to the Accounting Act, monitors compliance with professional requirements and

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conflict of interest rules applicable to auditors and performs the tasks specified in its rules of procedure.

The Audit Committee in office until April 3, 2023 held two meetings in 2023 with a 100% attendance rate, and passed two resolutions without holding a meeting.

The Audit Committee elected on April 3, 2023 held four meetings in 2023 with a 100% attendance rate, and did not pass any resolutions by written procedure.

1. Evaluation system
   The CEO continuously monitors the accomplishment of specific objectives affecting the Company and belonging to the scope of responsibility of the various members of management, as well as the activities of members of management, and evaluates these on a weekly basis. The evaluation of the activity of management in respect of the impact on the Company's strategic objectives is performed as needed, but at least twice each year.
   As required, but at least once each year, the management holds a separate investment pipeline and commercial strategy meeting to evaluate the Company's operations in the preceding period, to explore the opportunities of the period ahead, and to see whether these opportunities are in line with the Company's strategic goals. As a result of these strategic meetings, the management makes a recommendation to the Board of Directors as necessary to review the Company's commercial and business strategy.
   The CEO reports as needed, but at least every quarter, to the Board of Directors on the activity of management, on the steps taken in order to accomplish the Company's strategic objectives, and on the implementation of the decisions of the Board of Directors.
   Every three months, the Board of Directors draws up a management report for the Supervisory Board, which is discussed at the meeting of the Supervisory Board. Based on the quarterly reports, the Supervisory Board may formulate recommendations and may also use the audit tools set out in the applicable laws and its rules of procedure.
   The Board of Directors draws up a report on the Company's annual business activity, which report
   - along with the draft of the annual report prepared pursuant to the Accounting Act - is assessed by the Supervisory Board. If the Supervisory Board accepts the report of the Board of Directors and the draft annual report, it recommends it to the General Meeting for approval. The General Meeting decides on the approval of the report and the annual report.

report on them for management each month. Jointly with the management, the CEO determines the necessary steps in line with the objectives set by the Board of Directors.

The organizational unit specializing in energy retail acts in accordance with its own risk management policy. The Company Group places particular emphasis on mitigating its market risks. The objective of risk management is at all times to establish economically sustainable operation through the mitigation of the effects of market uncertainties on company profit, and to ensure stable and predictable cash flow.

Market risks resulting from the volatility of natural gas and electricity prices is typically mitigated through natural gas and electricity hedging transactions. The Company's market risk management is essentially divided into three segments - market-priced heat energy production and sales, regulated-price heat energy production and sales, and cogenerated heat and electricity production - and two time horizons - short-medium term (the unit price of heat energy sales can be accurately defined) and medium term (the unit price of heat energy sales cannot be accurately defined). Market exposures are mitigated through the hedging of basic products synchronous with the Company's physical market exposures with derivative instruments quoted on various financial and physical markets.

In developing its Compliance Management System, the Company assigned Compliance its place within the corporate structure, determined its scope of competence and its responsibilities, the Compliance Committee was set up, the risk map of the Group was drawn up on the basis of executive self-assessments, the regulation and the procedural rules of compliance audits (conflict of interest, business partner due diligence, ethics and compliance audits) were developed, and the Code of Ethics constituting a key component of the program was also created.

The implementation of the Compliance Management System is the responsibility of the Director of Ethics, Compliance and Control, pursuant to a mandate from the CEO. The compliance manager is responsible for ensuring compliance with the applicable laws, internal policies and the Company's Code of Ethics, for identifying unethical, unlawful or excessive business non-compliance, for assigning responsibilities, initiating corrective measures and following up on actions taken by business areas. They are also responsible for delivering training on policies related to compliance (e.g. Code of Ethics, Privacy Policy, Information Security Policy), conducting conflict-of-interest assessments and initiating measures, supporting operation complying with data protection laws, promoting fraud-free and corruption-free operation, supporting the selection of appropriate business partners, supporting the establishment of the information security and human security requirements and criteria required by the law, and supporting and monitoring the establishment of the necessary property protection and physical security requirements and criteria.

The Ethics, Compliance and Control organization fundamentally pursues a supportive, preventive and control activity, with these roles enforced collectively, aimed at preventing damages and abuse, and minimizing risks across the entire operation of the Company.

The Company is committed to creating and maintaining a safe working environment that does not represent a threat to health. To this end, the Sustainability and HSE Directorate shall be responsible for ensuring HSE compliance on the employer's side, which is performed in collaboration with the HSE representatives selected from among Company employees.

The Company complies with legal requirements on disclosure and publication, particularly with the provisions of Act CXX of 2001 on Capital Markets, Act V of 2013 on the Civil Code and Decree 24/2008. (VIII. 15.) of the Minister of Finance on the detailed rules of disclosure obligations related to publicly traded securities, in accordance with the relevant provisions set forth in the Budapest Stock Exchange regulations.

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complete conformity with the relevant legal requirements in force. The Company discloses, in compliance with the legal requirements and internal regulations, all transactions by persons discharging managerial responsibilities at the Company and by persons closely related to them, in connection with ALTEO shares and publishes them in mandatory publication places.

In 2023, the Company reviewed its Insider Trading Policy, on which training was also provided.

1. Rules on the exercise of shareholder rights and the conducting of the General Meeting
   The Company has issued registered dematerialized shares with a nominal value of HUF 12.5 per share, with each share conferring identical shareholder rights.
   The rules on the exercise of shareholder rights and the conducting of the General Meeting are contained in the effective laws and the Company's Articles of Association.
   The prerequisite for the participation of shareholders (or the proxy of the shareholder, or in case of jointly owned shares, the joint proxy) at the General Meeting, and the exercise of shareholder rights is the registration of the shareholder or the proxy thereof in the Company's share register before
   6:00 p.m. on the second business day preceding the commencement date of the General Meeting (closing of the share register). In accordance with the provisions of the Articles of Association, the
   Board of Directors requests shareholder identification from KELER Központi Értéktár Zrt. (KELER) according to the rules of procedure of KELER Központi Értéktár Zrt., and KELER as the entity in charge of managing the share register deletes, at the instruction of the Board of Directors, all data valid at the time of shareholder identification and, at the same time, registers the data resulting from the shareholder identification in the share register, and closes the share register.
   The shareholder may exercise their shareholder rights by proxy. The Company's permanent auditor may not act as proxy. Neither may a member of the Board of Directors, an executive employee of the Company holding an executive position or a member of the Supervisory Board be a proxy, unless such persons have, as proxy, a clear voting instruction issued by the authorizing shareholder for each proposal for resolution. The letters of proxy must be submitted to the Company in the form

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Implementing the Remuneration Policy is the task and responsibility of the Chief Executive Officer. The CEO reports to the Board of Directors as needed on the implementation of the Remuneration Policy, prepares and submits to the Board of Directors the draft of the Remuneration Report and also reports on the Company's situation to the Supervisory Board four times each year, as part of which it also details the implementation of the Remuneration Policy.

The Company's Board of Directors prepares the Remuneration Report on an annual basis, based on the proposal by the CEO, and approves it by a three-quarters majority of the votes cast by the members of the Board of Directors present at the Board meeting, provided that the resolution shall be deemed to have been adopted if it is unanimously voted by the non-executive members of the Board of Directors (who are only engaged by the Company under an agency agreement) and, the Company's permanent auditor reviewed such resolution, the Board of Directors submits it to the annual ordinary General Meeting for an advisory vote, together with the opinion of the Supervisory Board.

The Remuneration Report provides a comprehensive overview of the remuneration, including all benefits in whatever form, granted to Directors under the Remuneration Report in accordance with the Remuneration Policy during, or based on the results of, the previous fiscal year, as well as the elements mandatorily set out in Section 19(2) and (3) of the Act while respecting applicable data protection provisions.

Following the resolution of the General Meeting, the Company makes the Remuneration Report publicly available - free of charge - on its website for a period of at least ten (10) years.

The Company specifies whether it applies the relevant recommendation or not, and if it does not, it describes briefly the reasons why a particular recommendation has not been implemented.

1.1.1. The Company has an internal unit charged with investor relations or these tasks are performed by a person appointed specifically for that purpose.

Explanation:

1.1.2. The Articles of Association is available on the Company's website.

Explanation:

1.1.4. If the Company's Articles of Association allow shareholders to exercise their rights in their absence, the Company published the methods and conditions of doing so, including all necessary documents.

Explanation:Shareholders may exercise their shareholder rights by proxy and the applicable conditions are published in the invitation to the General Meeting and on the Company's website. The Company's permanent auditor may not act as proxy. Neither may a member of the Board of Directors, an executive employee of the Company holding an executive position or a member of the Supervisory Board be a proxy, unless such persons have, as proxy, a clear voting instruction issued by the authorizing shareholder for each proposal for resolution. The letters of proxy must be submitted to the Company in the form of a notarized deed or a private deed of full probative force. The Company's Articles of Association does not allow for participation at the General Meeting through electronic means of communication.

1.2.1. The Company published on its website, in a summary document, the rules governing the process of the General Meeting and the exercise of shareholders' voting rights.

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Explanation:

1.2.2. The Company published the exact date when the range of those eligible to participate in a given company event is set (reporting date), and also the last day when the shares granting eligibility for participating in a given company event are traded.

Explanation:The reporting date was defined with respect to the date of the corporate event in compliance with the provisions of the Civil Code and the policies of KELER.

1.2.3. The General Meeting was held in a way to ensure the highest degree of attendance of shareholders.

Explanation:

1.2.6. The Company did not limit shareholders' right to appoint a separate proxy holder for each securities account to any General Meeting.

Explanation:

1.2.7. In the submissions prepared for each item on the agenda, the Supervisory Board's opinion was available for the shareholders besides the proposal of the Board of Directors.

Explanation:

1.3.3. The Company did not restrict the right of its shareholders attending a General Meeting to request information, add comments and submit proposals, or set any preconditions for these with the exception of some measures taken to conduct the General Meeting in a correct manner and as intended.

Explanation:

1.3.4. By answering the questions raised at the General Meeting, the Company ensured compliance with the information provision and disclosure principles set out in legal and stock exchange requirements.

Explanation:

1.3.5. The Company published on its website within three business days its answers to any question raised at a General Meeting which the attending representatives of the Company's organs or the auditor could not sufficiently address, or its reasons why it abstains from answering any certain question.

Explanation:No such question was raised.

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