Sev.en Group Sustainability Report 2015 - 7.cz · PDF fileDiagram of grievance procedure...

Sev.en Group Sustainability Report 2015

www.sev-en.cz

2

Sev.en EC, a.s.(Chvaletice Power Station)

Energy Production

Severní energetická a.s.Coal Mining

PRAHA

3

Sev.en EC, a.s.(Chvaletice Power Station)

Energy Production

Severní energetická a.s.Coal Mining

PRAHA

This Sev.en Group report contains Standard Disclosures from the GRI Sustainability Reporting Guidelines Version G4 at “CORE” level.

The statement of the Supervisory Board of Severní energetická a.s. on the report content can be found on page 159

The English version of this annual report of the Sev.en Group was verified in June 2016 by DNV GL Business Assurance Czech Republic s.r.o.

GRI G4 content can be found on page 164, the verification report on page 160.

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CONTENTS ��4SIGNIFICANT SUBSEQUENT EVENTS 1 JANUARY – 31 MAY 2016 ��6FOREWORD BY THE CHAIRMAN OF THE SUPERVISORY BOARD OF SEVERNÍ ENERGETICKÁ A.S. ��7

I. SEVERNÍ ENERGETICKÁ (Sev.en) GROUP PROFILE �� 10

GENERAL INFORMATION �� 11Shareholder structure as at 31 December 2015 �� 12Governing and supervisory bodies of the key companies as at 31 December 2015 �� 12Formation of the Sev.en Group �� 13MISSION, VISION, STRATEGY �� 15SEV.EN GROUP CORPORATE GOVERNANCE �� 16Organisation Charts – Severní energetická a.s. and Sev.en EC, a.s. �� 17THE SEV.EN GROUP’S PERFORMANCE – ECONOMIC HIGHLIGHTS �� 19Sev.en Group financial results �� 19Sev.en Group’s direct economic value generated and distributed �� 21Sev.en Group levies and subsidies �� 22Brown coal mining fees �� 24IDENTIFICATION OF RISKS AND OPPORTUNITIES; ESTABLISHMENT OF SUSTAINABLE DEVELOPMENT GOALS �� 25Risk of the termination of mining operations at the ČSA Mine in 2024�� 25Project to overhaul Chvaletice Power Station (Sev.en EC, a.s.) �� 26SEV.EN GROUP RISKS AND OPPORTUNITIES; MEDIUM-TERM SUSTAINABLE DEVELOPMENT GOALS �� 28Sev.en Group risks and opportunities �� 28Medium-term sustainable development goals �� 30

II. DIALOGUE WITH STAKEHOLDERS AND DETERMINATION OF THE CONTENT OF THE REPORT �� 32

DIALOGUE WITH STAKEHOLDERS �� 33Sev.en Group’s stakeholder engagement �� 33Participation in addressing expert issues and regional development �� 33Key topics and concerns raised through stakeholder engagement�� 34BOUNDARIES AND IDENTIFICATION OF MATERIAL ASPECTS OF THE SEV.EN GROUP’S ACTIVITIES AND THE LIMITS THEREOF �� 41Definition of the Sev.en Group’s significant stakeholders �� 41Process of identifying relevant topics and stakeholder inclusion in the preparation of the Report �� 42

Determination of boundaries and material aspects �� 43Boundaries �� 43Material aspects �� 43Visualisation of aspects�� 45Boundaries of the impacts and benefits of material aspects of the Sev.en Group’s activities �� 47Supplementation of material respects stemming from feedback on the 2014 report �� 48REPORT METHODOLOGY �� 48Observations on data continuity for 2013, 2014 and 2015 �� 48Selection of the method for the calculation and aggregation of indicators, differences compared to GRI G4�� 48

III. SEV.EN GROUP’S ETHICAL BEHAVIOUR �� 49

SEV.EN GROUP’S ETHICAL BEHAVIOUR �� 50SEV.EN GROUP’S CODE OF ETHICS �� 50The Code of Commercial Ethics and Ethical Conduct �� 50GRIEVANCE MECHANISMS AND PROCEDURES �� 51Ethical misdemeanours 2015 �� 51Diagram of grievance procedure – reporting suspected unethical behaviour �� 52Other grievance mechanisms and procedures �� 53Complaints and rules on the handling of complaints about environmental impacts�� 53COMPLIANCE �� 54Prevention of the distortion of competition �� 55Customer privacy �� 56Respect for human rights and non-discrimination �� 56

IV. PRODUCTION AND TRADING �� 57

BROWN COAL PRODUCTION �� 58Mining technology at the ČSA Surface Mine �� 58Surface mining in 2015 �� 59Outlook for brown coal mining �� 63Brief overview of the procedure followed by Severní energetická a.s. in relation to the ČSA phase-out option and Centrum Mine phase-out �� 64Resettlement prompted by coal mining �� 66PRODUCTION OF FINAL PRODUCTS – BROWN COAL �� 67BROWN COAL TRADING IN 2015 �� 69

CONTENTS

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CONTENTS

ELECTRICITY AND HEAT GENERATING TECHNOLOGY - Sev.en EC, a.s. �� 71Basic production figures for 2015 �� 72Chvaletice Power Station Facility Rehabilitation Project �� 74TRADE IN ELECTRICITY �� 74RESPONSIBILITY FOR PRODUCTS �� 76Product impact on customer health and safety �� 76Product and service labelling �� 77Product responsibility – production of coal, production of energy and heat �� 78SEV.EN GROUP SUPPLIERS �� 79Procurement practices �� 79Overview of key suppliers �� 79Principles concerning responsibility and the control of labour and environmental practices at suppliers�� 80Checks on suppliers �� 81

V. EMPLOYMENT AND WORKING CONDITIONS �� 82

EMPLOYMENT AND WORKING CONDITIONS �� 83Provision of employment �� 84Employee benefits �� 88Labour/management relations �� 91Training and education �� 93Diversity and equal opportunities �� 96OCCUPATIONAL SAFETY AND EMERGENCY PREPAREDNESS �� 98Occupational safety and health �� 98Results of occupational safety in 2015 �� 100Basic safety indicators at Sev.en Group companies �� 102Emergency preparedness �� 105

VI. ENVIRONMENTAL PROTECTION �� 110

ENVIRONMENTAL PROTECTION �� 111Management of environmental risks and compliance �� 111Handling of chemical substances and preparations and prevention of environmental contamination �� 112Checks on environmental protection conditions and standards �� 113Specific issues surrounding coal extraction and electricity production in the protection of the environment and health �� 114Materials and energy consumption �� 115Important impacts of operations on environment �� 120

Air protection �� 121Emissions of air pollutants �� 121Immissions and noise caused by operations �� 124Greenhouse gas emissions – climate change �� 125Water management �� 127Management of surface and mine water �� 127Water management at Chvaletice Power Station �� 127Waste management �� 133Waste management at coal extraction and processing operations �� 133Waste generation at Chvaletice Power Station �� 133Sev.en WT, a.s. – water pumping, purification and treatment; metal recycling �� 136RECLAMATION OF LAND AFFECTED BY BROWN COAL MINING �� 137Biodiversity and reclamation �� 137Method used to consult reclamation projects – stakeholder engagement �� 138Basic data on progress in the reclamation of land affected by the Sev.en Group’s brown coal mining operations �� 138Rehabilitation and reclamation, preserving environmental mining boundaries �� 142RECLAMATION OF LAND IN THE CHVALETICE AREA �� 143HIPODROM MOST a.s. – SUCCESSFUL PROJECT TO REHABILITATE VELEBUDICE DUMP �� 144

VII. COMMUNITIES AFFECTED �� 145

IMPACTS ON AND BENEFITS FOR MUNICIPALITIES �� 146Reporting on the benefits for and impacts on local communities �� 148REGIONAL DEVELOPMENT SUPPORT �� 150Regional support (social investment) – Ústí nad Labem and Pardubice Regions �� 150Internal grant – regional support vehicle �� 156

VIII. ANNEXES �� 158

STATEMENT OF THE SUPERVISORY BOARD ON THE CONTENT AND METHODOLOGY OF THE REPORT �� 159REPORT VERIFICATION – AUDITOR’ STATEMENT (DNV GL) �� 160GRI G4 CONTENT INDEX �� 164

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SIGNIFICANT SUBSEQUENT EVENTS 1 JANUARY – 31 MAY 2016

The Severní energetická a�s� general meeting of 29 January 2016 removed Tomáš Fohler from his office of chairman of the company’s board of directors with immediate effect�On 3 February 2016, Petr Kolman was elected as the chairman of the board of directors of Severní energetická a�s� Both of the circumstances above were entered in the Commercial Register on 9 February 2016�

In March 2016, mining operations effectively came to an end in the Czech Republic’s final deep brown-coal mine – the Centrum Mine in Záluží. Důl Kohinoor a.s. is now proceeding in accordance with the applicable Centrum Mine Closure Plan, approved under Decision SBS/03124/2014/OBÚ-04/9 of the Ústí nad Labem Region’s District Mining Office.

In the first half of 2016, Severní energetická a�s� continued to excavate 12 exploration drifts at the ČSA deep mine. Once this task has been completed, the company will focus on contracting the excavation of further workings at the ČSA deep mine. This could provide an opportunity for some of the employees of Důl Kohinoor a.s. to work on extracting the remaining reserves from the side slopes of the ČSA Mine by means of the longwall working method. On 14 April 2016, the District Mining Office issued an opinion endorsing this plan.

In the first half of April 2016, work started on the rehabilitation and replacement of equipment that had reached the end of its service life at two units of the Sev�en EC, a�s� power station in Chvaletice.

In response to the phase-out of coal mining at the ČSA Mine, Severní energetická a.s. decided to sell its majority 57�54% shareholding in HIPODROM MOST a.s. The public share auction took place at the racetrack on 27 May 2016, with CHARVÁT Group s.r.o. becoming the new owner.

In response to Government Resolution No 827/2015, Tomáš Fohler (the sole member of Famlen s�r�o�) decided to sever his links with the Sev.en Group. The shareholders decided to prepare full-scale corporate reorganisation, drawing the companies back into a single group together with Vršanská uhelná a.s. All supervisory authorities and financing banks issued the necessary opinions endorsing these changes�

On 16 May 2016, HALTIXAR LTD took control of Severní energetická a�s� further to a permit from the Office for the Protection of Competition. The fledgling business group will encompass the ČSA and Vršany brown-coal mines, Chvaletice Power Station, the service company Coal Services a.s. and companies specialising in requirements specific to the brown-coal energy sector. This grouping will make it easier to weather adversity in the energy market�

ADDITIONAL TEXT

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1,640employees

the resettlement of the town, those in support of it and those who were undecided� Some 76% of inhabitants indicated that they would come to terms with being relocated� The survey findings provided seminal documentation for our updates of the fundamental principles underlying the compensation scheme in Horní Jiřetín and Černice. We released our updated offer in June 2015. Nonetheless, any future extraction in this area is a matter for the Czech Government, which held back on a decision on further production at the ČSA Mine at its meeting in the Ústí nad Labem Region in October 2015�Parallel to the debate on extending mining operations at the ČSA Mine, in 2015 we also prepared a project for facility reconstruction and NOx emission abatement at two units of the power station in Chvaletice. The aim is to ensure that the power station complies with all parameters established by applicable Czech and EU regulations and that it meets the highest standards of environmental operation while allowing us to respond as effectively as possible to business opportunities on the electricity market. In July 2015, public procurement procedure resulted in the signing of a contract with KRÁLOVOPOLSKÁ RIA, a.s. to carry out a CZK 2.5 billion overhaul of the two units�

Under Resolution of the Government of the Czech Republic No 827 of 19 October 2015 addressing brown coal mining limits in North Bohemia, the mining limits were kept as they were, preventing further development of the ČSA Mine but leaving the issue of this mine’s environmental boundaries conditionally open, pending re-evaluation by 2020. According to this Government decision, we have no option – despite the economic viability of extraction – but to press ahead with the staged winding-down of the ČSA surface mine, during which we must gradually scale back production volumes (with annual extraction projected at 2.5-3 million tonnes), decommission technology and lay people off. If no decision is taken to extend mining beyond the limits, operations are due to end sometime around 2024, after which work will start on mothballing or reclaiming the mine�

Dear Partners and Friends,The Sev.en Group entered 2015 as a fully consolidated entity. Besides the parent mining company, Severní energetická a.s., the Group comprises the subsidiaries Sev.en EC, a.s. (formerly Elektrárna Chvaletice a�s�)1, Důl Kohinoor a.s. and Sev.en WT, a.s. (formerly HUMECO, a.s.), as well as a shareholding in HIPODROM MOST a.s.At the end of 2015, the Sev.en Group had 1,640 employees, 81% of whom worked in the Ústí nad Labem Region (primarily in the districts of Most and Chomutov)�The Group was formed in 2013 when the then Litvínovská uhelná a�s�, hived off from the Czech Coal Group, was merged with Elektrárna Chvaletice a�s�, itself hived off from the ČEZ Group. Over the course of several steps, by the end of 2013 the legal, economic and staffing aspects of the merger had been completed and ownership issues with the original groups had been resolved. Starting on 1 January 2014, then, we began operating as a wholly autonomous Group, and by early 2015 we had also accomplished consolidation, including the reconfiguration of internal procedures and standards. As part of the new Group’s corporate social responsibility and transparency, we decided – among other things – to usher in non-financial reporting according to GRI guidelines� In 2015, this resulted in the Group’s first report drawing on GRI G4 guidelines – the first ever audited GRI G4 report to be issued in the Czech Republic.

The Sev.en Group’s vertical orientation – we mine coal and operate our own electricity generating facility – has seen us draw nearer to an ideal of sustainable development fully

in line with principles behind the long-term protection of the environment and the rights of neighbouring communities� At the end of 2015, the Group – aware of its influence and contribution as a major employer providing guarantees and hence sustaining cultural templates – adopted the binding Sev.en Group Code of Conduct and Commercial Practice, ready to be rolled out in 2016�The long-term business plan is to continue mining brown coal at the ČSA Mine. Beyond the limits currently in place, this is where the Czech Republic’s largest coal reserves lie, as confirmed by John T. Boyd Company in 2010. If they are opened up, mining potential at this site will take us beyond 2100� If they remained locked in, we face the prospect of thousands of job losses within the Sev�en Group and among downstream professions and businesses� We believe that it is essential to continue mining operations in order to safeguard the availability of a high-quality indigenous raw material that, in our opinion, should be integral to the Czech Republic’s future energy mix and to employment in the Most region. Acting on this conviction, in 2015 we focused on a raft of activities in the Most region that were aimed at reaching a consensus and at describing and spelling out what the benefits of continued mining would be and how we would tackle any potential risks. The Sev.en Group gleaned important insights into how the local community felt about continued coal mining from a set of sociological surveys conducted in Horní Jiřetín and Černice and published by STEM in early 2014� This investigation showed that there was an equal divide among those opposed to

FOREWORD BY THE CHAIRMAN OF THE SUPERVISORY BOARD OF SEVERNÍ ENERGETICKÁ A.S.

1 Elektrárna Chvaletice a.s. was renamed Sev.en EC, a.s. on 1 August 2015.

8

Total revenues (CZK

thousands)

26,244,822


Abatement Roadmap). This overhaul will not change the scope of operations or the capacity of existing boilers, nor the boiler fuel base, but will lead to the reconstruction and replacement of components that have reached the end of their service life.In May 2016, Units 3 and 4 will be shut down so that the actual project can be implemented. The repair work on the two units is due for completion by the end of 2016.

As I have already noted, we pulled off the Group’s consolidation without any serious glitches and without impinging on supplies to customers in any way. In 2015, the Group’s revenues totalled CZK 26,244,822,000. The Group extracted more than 4 million tonnes of brown coal and generated 3,527 GWh of electricity (4.2% of the Czech Republic’s overall production). The Sev.en Group’s headcount was virtually the same as in 2014 (overall there was a 0�2% dip; significant growth – just shy of 6% – was reported only at Chvaletice Power Station). We paid CZK 1,206,087,000 in taxes, contributions and other charges. The Sev.en Group’s parent company, Severní energetická a.s., was singled out by the Minister for Finance in 2015 as one of the 20 biggest income-tax payers in the Czech Republic. Severní energetická also chalked up valuable experience in this year when it debuted in the competition for the Ústí nad Labem Region Prize for Corporate Social Responsibility, where it earned a special mention for its approach to CSR.The fact that the accident rate (the number of registered occupational injuries per 100 employees) at key companies (Severní energetická a.s. and Sev.en EC, a.s.) – accounting for 75% of all employees – was less than 1 on aggregate is cause for celebration�As the Sev.en Group makes every effort to guarantee the safety of its employees, I am very pleased that there were no tragic incidents or serious work accidents in the Group’s operations in 2015.In coal mining and electricity generation, we paid a great deal of attention to the performance of environmental tasks, especially measures to prevent the production of emissions and waste, as well as adherence to noise-related hygiene limits and limits on the discharge of mine and waste water� In 2015, there were no accidents, malfunctions or adverse situations with impacts on the environment. Immission limits for sulphur dioxide and nitrogen dioxide were not exceeded in the vicinity of the Chvaletice Power Station complex in 2015.

In addition, Severní energetická a�s� will shut down the economically erratic operations at the underground Centrum Mine (Důl Kohinoor a�s�) for good2 in 2016� This is because the above Government decision precludes the long-term deep mining of side slopes, which had been the only durable prospect for Důl Kohinoor a.s.’s deep-operation employees.In this situation, at the end of 2015 the shareholders announced plans to prepare – with the authorisation of supervisory authorities (specifically the Office for the Protection of Competition) and financing banks – full-scale corporate reorganisation in 2016 so that a single group is formed again with Vršanská uhelná a.s. (Czech Coal Group), thereby cushioning as much as possible the effects that Czech Government Resolution No 827 will have on Sev.en Group employees and surrounding municipalities in North Bohemia. In its quest to face up to the fallout from the production phase-out, Severní energetická a�s� is also involved in the activities of a working party set up to tackle employment issues stemming from the decline in coal mining in North Bohemia�We continue to raise these changes and plans vociferously with responsible politicians, central and local government representatives, and officials from important institutions in the region. For the most part, bearing in mind the looming adverse repercussions rippling from the closure of extraction operations in the region, they have repeatedly endorsed our activities geared towards unlocking reserves beyond limits at the ČSA Mine. We are keen to keep up this partnership-rooted communication with the region� The electricity market has continued along the trajectory – reported in previous years – of declining electricity prices, driven down by the fall in prices of other energy commodities.

In defiance of this trend, in 2015 Sev.en EC, a.s. successfully and efficiently placed the electricity it had produced on both long-term and short-term markets. Electricity market events in 2015, spearheaded by outages and the shutdown of production facilities, underscored the importance of brown-coal-fired power stations as a grid stabiliser. The current overhaul of two generating units at the power station will enable the Company to respond more flexibly to electricity market needs and trends� Sev.en EC, a.s. complies with the obligations incumbent on it under Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (REMIT), and as such subscribes to the principles of an open and transparent market.Rising numbers of contractual partners, active trading on European markets and the breadth of its product portfolio have consolidated Sev.en EC, a.s.’s position as an established, dependable producer and trader. The Company placed the winning bid in a tender to provide support services to ČEPS, a.s. As at 31 December 2015, the Company stopped serving final customers completely, leaving the wholesale market as its sole sales platform.In July 2015, a facility reconstruction contract was signed with KRÁLOVOPOLSKÁ RIA, a.s. for Units 3 and 4. This is a milestone in the power station’s history because extending its life beyond 2020 will have positive consequences not only for the Czech Republic’s energy stability and for the Company itself, but also for employees, suppliers and the region at large. This work at the power station is centred on cutting emissions of pollutants (sulphur and nitrogen oxides, particulate matter) so that we comply with statutory limits by 2020 (the Emission

2 The Government had decided to shut the Centrum Mine as long ago as 1994. Several reprieves were made possible solely by the extraction of residual reserves at sites that had already previously been mined. Having reached break-even point, the mine’s closure has been mooted twice in the past few years. In the end, its operations were extended on multiple occasions in order to prevent redundancies and the loss of deep-mining skills.

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PROFIL SKUPINY SEVERNÍ ENERGETICKÁ (SEV.EN)

In 2015, the Sev.en group contributed:

12.5% of brown coal sold on the

Czech market;4.2% of

the Czech Republic’s

overall electricity production

12.5%

4.2%


us with constructive feedback and decided to contribute to the form taken by this 2015 Report.We believe that, in this Report, our open and rigorous approach to explaining our business operations’ benefits and risk management, along with issues related to the phase-out of brown coal mining, will prove a welcome source of information in the formidable regional and national debate on the future of the coal energy sector. With this in mind, we appreciate any suggestions on how to improve our Report.The Sev.en Group rose to the occasion in the handling of important tasks in 2015, and further significant challenges await it in 2016 – the closure of the final deep mine (Centrum Mine), continued work on phasing out the ČSA Mine, with the attendant reorganisation and layoffs, and the completion of repairs at two of the units at Chvaletice Power Station. Nevertheless, we will keep pressing for mining to be continued at the ČSA Mine in light of the fact that Government Resolution No 827 did not definitively rule out the possibility of progressing beyond current mining boundaries. I wish my colleagues at Sev.en Group the strength they need to address all these tasks, and I thank every one of you for your partnership to date.

Jan DienstlChairman of the Supervisory Board of Severní energetická a�s�

Sev.en Group’s approach to climate change issues relies primarily on national (Czech) and transnational (EU) strategy documents. Sev.en EC, a.s. is the only company in the Sev.en Group that is required to be involved in the European market in emission allowances (EU ETS). In 2015, Sev.en EC, a.s. underwent a successful audit in accordance with ČSN EN ISO 14001:2005 (EMS), as well as a review of its CO2 emissions from fossil fuel materials, conducted by BUREAU VERITAS CZECH REPUBLIC, spol. s r.o.In 2015, there were 40 hours and 24 minutes of impromptu shutdowns at Sev.en EC, a.s. These were caused by malfunctions rather than accidents� The high quality of the measures established and scrupulous adherence to all statutory standards were verified in periodic checks by competent authorities, which resulted in no serious reservations� The Group’s most significant environmental commitment in the Ústí nad Labem Region is the rehabilitation of the landscape in the wake of brown-coal mining. In 2015, the reclamation of 593 ha was in progress. Increasing areas of land are being completed and handed over for new use on a rolling basis (so far 2,200 ha and counting)� The environmental equilibrium and biodiversity of those parts of the landscape affected by mining operations is accentuated in line with the existing territorial environmental stability system (ÚSES)� The results of our reclamation work are open to scrutiny by the local population, which mainly uses the restored land for suburban recreation� The quality of reclamation also impresses thousands of visitors from other regions who descend on the Most region every year partly to enjoy our Coal Safari Project�Within the framework of regional policy, the Sev.en Group has successfully developed the partnership established in past years with

municipalities in the Most and Chomutov regions and has sponsored the expansion of the Most Racetrack� Sev�en EC, a�s� has also continued to encourage regional development. As most of our employees live in these areas, we feel it is natural to play a role in enhancing the quality of life and ironing out problems here. With this in mind, 2015 was another year in which we worked with the municipalities and institutions around us, using them as a platform to champion education, charity projects, and sport and leisure activities, especially for children and young people. We attach great importance to two-way communication with mayors in the surrounding municipalities, whom we keep abreast of the Company’s latest news and plans for the future. It is pleasing to note that most municipal representatives find our mutual contact to be sufficient and an official.

For three years now, the Sev.en Group has engaged in non-financial reporting. The outcome is proffered by this Report, drawn up to serve a verified, balanced and proportionate presentation of the organisation’s economic, environmental and social performance in the form of consolidated data for 2015. The Report has been compiled in accordance with GRI Sustainability Reporting Guidelines, G4, at “CORE” level�At the turn of 2014 and 2015 and in the second half of 2015, the Sev.en Group ran a far-reaching survey in order to grasp how the severity of the various aspects, risks, benefits and impacts of the Group’s operations was perceived, and to identify how the 2014 report had been received by key stakeholders (especially surrounding municipalities, supervisory authorities, customers, suppliers, financial institutions and, first and foremost, employees). We thank all those who provided

I. SEVERNÍ ENERGETICKÁ (Sev.en) GROUP PROFILE

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SEV.EN GROUP PERFORMANCE HIGHLIGHTS 2013–2015

2013 2014 2015

Profit after tax(CZK

thousands)1,059,574 1,139,868 1,262,907

Total revenues*(CZK

thousands)5,710,910 13,818,632 26,244,822

Total taxes, charges and other levies**(CZK

thousands)1,454,441 1,371,988 1,206,087

Total number of employees as at 31 December

1,495 1,643 1,640

Brown coal extracted from the ČSA Mine and the Centrum Mine

(thousands of tonnes)

3,435 3,789 4,003

Brown coal (including bought-in coal) sold outside the Sev.en Group

(thousands of tonnes)

3,289 2,155 2,342

Reclaimed areas of the the ČSA Mine and the Centrum Mine to date (including reclamation in progress)

(ha) 2,846 2,858 2,858

Of which: Septem-ber 2013 (within the

Sev.en Group)

Electricity generated at Sev.en EC, a.s. (7EC) (MWh) 3,122,124 1,280,962 3,910,633 3,526,657

Heat generated at 7EC (GJ) 143,841 51,884 130,657 128,667

Brown coal consumed at 7EC(thousands of

tonnes)2,657 887 2,682 2,459

* This figure comprises total revenues including financial revenues** In addition to tax, this figure includes social security and health insurance costs, VAT payments, etc.

GENERAL INFORMATION

The Severní energetická Group (“the Sev.en Group” or “the Group”), established on 18 March 2013, cou-ples a mining company in North Bohemia’s brown coal basin with a thermal power station in Chvaletice. This marriage was blessed by both the European Commis-sion and the Czech Republic’s Office for the Protection of Competition as a boon to competition in the energy market. The Group’s most significant business com-modities are brown coal and electricity�

Severní energetická a�s� manages the largest brown coal deposit in the Czech Republic, the ČSA surface mine, holding 750 million tonnes of finest quality brown coal reserves beyond the mining boundaries� In October 2015, the Czech government decided to continue phasing out the ČSA Mine. According to min-ing boundaries applicable as at 1 January 2016, the ČSA Mine has 24.1 million tonnes of surface mineable brown coal reserves�

Sev�en EC, a�s� (Chvaletice Power Station), one of the newest brown-coal-fired power stations, has an installed capacity of 4 x 205 MW and is able to supply more than 4 TWh of electricity every year. In 2016, the power station will be overhauled to meet the most stringent requirements for long-term environ-mentally-friendly operation. The overhauled units are due to be put into permanent operation in November 2016 (Unit 3) and December 2016 (Unit 4).

I. SEVERNÍ ENERGETICKÁ (SEV.EN) GROUP PROFILE

12

Shareholder structure as at 31 December 2015

Famlen s.r.o. and Remlan s.r.o., which pool their votes at general meetings under a shareholder agreement, exercised control over Severní energetická a�s� in 2015�

Famlen s.r.o. (member: Tomáš Fohler, with a 100% shareholding)registration number: 01504011, registered office: Václava Řezáče 315, 434 01 Most, incor-porated by entry in the Commercial Register kept by the Regional Court in Ústí nad Labem, Section C, File 32759. Shareholding in the Company: 30%

Remlan s.r.o. (number: Jan Dienstl, with a 100% shareholding)registration number: 01503979, registered office: Václava Řezáče 315, 434 01 Most, incor-porated by entry in the Commercial Register kept by the Regional Court in Ústí nad Labem, Section C, File 32760. Shareholding in the Company: 30%

HALTIXAR LTDregistered office: Dramas, 12, FREELAND BUILDING COMPLEX, 2nd floor, Flat/Office 4, Aradippou, 7101, Larnaca, Republic of Cyprus, registration number: HE 286578. Shareholding in the Company: 40%

Governing and supervisory bodies of the key companies as at 31 December 2015

SEVERNÍ ENERGETICKÁ A.S.Board of DirectorsTomáš Fohler, ChairmanPetr Kolman, memberDamir Dordevič, memberJan Pozler, member

Supervisory BoardJan Dienstl, ChairmanLuboš Dubnička, memberJaromír Franta, employee-elected member

SEV.EN EC, A.S.Board of DirectorsJan Dienstl, ChairmanLuboš Pavlas, memberJan Pozler, member

Supervisory BoardTomáš Fohler, ChairmanPetr Karas, member Jan Dvořáček, member (trade-union and employee nominee)


13


Sev.en Group as at 31 December 2015(Since 1 January 2014, these companies have formed the Sev.en VAT group with the single VAT registration number CZ699003245)

Formation of the Sev.en Group

The kernel of the Sev.en Group was formed on 18 March 2013, when the shareholder struc-ture of Litvínovská uhelná a�s� was revised and this company was spun off from the Czech Coal Group. On 31 July 2013, the Litvínovská uhelná a�s� extraordinary general meeting of

shareholders decided to change the company’s name to Severní energetická a�s� as of regis-tration of this fact in the Commercial Register (2 August 2013).

Severní energetická a.s. is the parent of the Sev.en Group. In 2013, Elektrárna Chva-letice a�s� (Chvaletice Power Station) was

put up for sale by ČEZ as part of a deal to settle a dispute with the European Commis-sion, under which it had made the voluntary commitment to scale down the share of its involvement in electricity generation� On 2 September 2013, Severní energetická a.s. became the 100% shareholder in Elektrárna Chvaletice a�s� (now Sev�en EC, a�s�)� It had

also become the 100% shareholder in Důl Kohinoor a�s� (on 28 February 2013) and a 57.54% shareholder in HIPODROM MOST a.s. (on 29 March 2013)� In 2014, it went on to become the 100% shareholder in HUMECO, a.s. (now Sev.en WT, a.s.), effective from 14 July 2014�

Severní energetická a.s. registered office: Václava Řezáče 315, 434 01 Most, registration number: 28677986

Sev.en EC, a.s. (formerly Elektrárna Chvaletice a�s�) (100%)registered office: K Elektrárně 227, Chvaletice, 533 12, registration number: 28786009

Důl Kohinoor a.s. (100%)registered office: Horní Jiřetín – Dolní Jiřetín 5, 435 43registration number: 25411616

Sev.en WT, a.s. (formerly HUMECO, a.s.) (100%)registered office: Václava Řezáče 315, Most, 434 01registration number: 14864657

HIPODROM MOST a.s., (57�54%)registered office: K Hipodromu 213, Velebudice, 434 01registration number: 64653269

14


Overview of milestones in changes to the Sev.en Group Structure

FORMATION OF THE SEV.EN GROUP AND TAKEOVER OF CHVALETICE POWER STATION

2013

March

The assets of Litvínovská uhelná a.s. are hived off from the Czech Coal Group

The agreement between Litvínovská uhelná a.s. and ČEZ, a.s. on the purchase of all shares in Elektrárna Chvaletice a.s. (ECHAS) is given the go-ahead

Litvínovská uhelná a.s. acquires a 57.54% shareholding in HIPODROM MOST a.s.

April Litvínovská uhelná a.s. applies to the Office for the Protection of Competition for the authorisation of a merger that would see it exercise exclusive control over Elektrárna Chvaletice a.s. (ECHAS)

May The Office for the Protection of Competition approves the merger of Litvínovská uhelná a.s. and ECHAS

June A proposal is tabled on how to handle the Litvínovská uhelná a.s. collective agreement following the company’s spin-off from the Czech Coal Group

AugustThe European Commission approves the purchase of ECHAS by Litvínovská uhelná a.s. (now Severní energetická a.s.) from ČEZ, a.s.

Litvínovská uhelná a.s. changes its name to Severní energetická a.s.

SeptemberSeverní energetická a.s. acquires a 100% shareholding in ECHAS on 2 September

Sev.en Group rebrands itself (with a new name, logo, visual style) and launches a new website and intranet

October The process of spinning off Severní energetická a.s. and transferring employees from the Czech Coal Group is completed

2014

January The Sev.en VAT group is formed (from 1 January 2014), undergoing value added tax group registration

September Elektrárna Chvaletice a.s. publishes a call for tenders seeking a supplier for the project “Overhaul of Two Units of Chvaletice Power Station”

July Severní energetická a.s. becomes the sole shareholder in HUMECO, a.s. (now Sev.en WT, a.s.)

2015

May The shareholder decides to take Důl Kohinoor a.s. v likvidaci out of liquidation as at 6 May 2015 and to change its name to Důl Kohinoor a.s.

JuneTenders are evaluated and a winning supplier is selected for the public procurement of the “Overhaul of Two Units of Chvaletice Power Station”; an agreement is signed

August Effective from 1 August 2015, Elektrárna Chvaletice a.s. is renamed Sev.en EC, a.s. (7EC)

October Existing mining limits are maintained under Resolution of the Government of the Czech Republic No 827 of 19 October 2015 on further procedure concerning environmental mining boundaries for brown coal extraction in North Bohemia; this blocks the further development of the ČSA Mine

November Information is reported on a signed shareholder plan to completely reorganise the companies into a single group with Vršanská uhelná a.s. once approval has been granted by supervisory authorities and the financing banks. This plan is notified to the Office for the Protection of Competition, whose approval is required for the two groups to merge.

The following matters are detailed on the Sev.en Group website:• Overview of changes in the ownership of the ČSA Mine, Komořany Coal Preparation Plant and Chvaletice Power Station (2006–2013)• The role played by the European Commission and the Office for the Protection of Competition in Severní energetická a.s.’s acquisition of Elektrárna Chvaletice a.s.See www.sev-en.cz/cz/spolecnost/downl/Overview_of_the_changes_of_ownership.pdf

http://www.sev-en.cz/cz/spolecnost/downl/Overview_of_the_changes_of_ownership.pdf

15

PROFIL SKUPINY SEVERNÍ ENERGETICKÁ (SEV.EN)

MISSION, VISION, STRATEGY

Mission

Sev.en Group mission:• To supply coal, electricity and heat safely

and reliably to customers while minimising the social and environmental impacts of the production thereof.

Ever since its formation in 2013, the Sev�en Group has espoused principles of open competition and sustainable development, advocated advanced efficient technology, and responsibly treated the national assets – coal – entrusted to it. Principal business:• The Group pursues two principal business

objects: the mining and sale of brown coal and the generation and sale of electricity�

• Secondary lines of business are the pro-duction and sale of energy by-products and heat, as well as the provision of ancillary services�

Vision

Group vision – coal mining and electricity generation:• By engaging in respectful coal mining, to

unlock reserves in current working districts of the ČSA surface mine and reduce the Czech Republic’s energy dependence while sharpening the industry’s competitiveness and scaling up inexpensive heat for house-holds;

• To modernise and green Chvaletice Power Station to make it a durable clean and effi-cient source of affordable electricity capable of stabilising the Czech Republic’s energy system;

• To fuse the extraction and production of energy into a single Group so as to put the brown coal mined to more efficient and meaningful work�

Group vision – addressing risks and effects on the surrounding area:• By continuously monitoring environmen-

tal impacts on the surrounding area, to minimise the negative ramifications and adopt efficient solutions to protect the air, manage water and waste, and restore the landscape;

• To foster the employer brand of a safe, long-term and sought-after place to work, and act as a reliable and valuable partner for regional development.

Group vision – trading in coal and electricity:• To champion the preservation of a sig-

nificant share of brown coal in the Czech Republic’s energy mix as a dependable and affordable domestic source making a major contribution to the country’s energy inde-pendence and freedom;

• To obtain a sustainable shareholder return within the Czech Republic’s competitive business environment in trading in brown coal and electricity, including the production thereof;

• To contribute to the creation of a non-dis-criminatory market environment for compe-tition involving all primary energy feed-stocks in the Czech Republic and the EU.

Strategy

Group strategy for brown coal mining and preparation and for electricity generation Strategy for brown coal production:• Rally behind a pragmatic national energy

concept and raw materials policy and seek a re-evaluation of brown coal mining limits in the Sev.en Group’s working districts. As a transitional solution, develop deep mining on the side slopes of the ČSA surface coal mine�

• Keep close to the technology frontier for coal quality management and maintain

first-rate customer services so that our production conforms to the most stringent demands of environmental protection and customer health and safety�

• Comply with all relevant statutory mining requirements�

• Carry out mine reclamation in line with en-vironmental and local-community needs.

Strategy for electricity generation – Chvaletice Power Station overhaul projectOverhaul the equipment in two ECHAS generating units by 2016 and, in doing so, keep to optimal capital and operating costs so that selected equipment remains serviceable until at least 2030 and is capable of respond-ing with maximum efficiency to business opportunities in the electricity market while adhering to environment-related legislative requirements in particular. Above all:• Enhance the operational reliability of tech-nology; • Increase economy of operation;• Broaden the units’ control area;• Optimise operations with a view to the

efficient use of brown coal.

Strategy for addressing risks and effects on the surrounding area:• In the mining and preparation of brown

coal, comply with fundamental manage-ment documents addressing coal mining risks, i.e. development and working face advance plans approved by central govern-ment supervisory authorities, taking into account the legitimate interests of municipalities, legal entities and individuals and including a means of addressing the effects of production and environmental impacts (noise and dust levels, air protection, water and waste management, reclamation, etc.);

• Against the background of the need to safeguard ongoing coal mining, commu-nicate in earnest with employees, local municipalities, those who live in the vicinity

of extraction sites, and state administration institutions, and explain to them the ben-efits and implications of re-evaluating coal mining limits on the one hand and phasing out mining on the other;

• Establish an internal employment plan map-ping job opportunities – within the Group or regionally – for employees made redundant as coal mining is phased out (Government Resolution No 827);

• In energy production, prepare and carry out the overhaul of the power station by 2020, pursue a policy for the management of the OSH and EMS systems, and comply with integrated permit requirements;

• Proceed in line with applicable mining and power-generation operational and safety standards; complement them with high-quality internal regulations;

• Work towards minimising workplace acci-dents and technology breakdowns by en-gaging in prevention, training, maintenance and quality management;

• Continuously update safety regulations and emergency response plans and intensify cooperation with specialised units, such as internal firefighting teams and the mines rescue station;

• As part of the activities of Most Central Mines Rescue Station (an organisational unit of Severní energetická a�s�), ensure effective responses to save lives and prop-erty when tackling emergencies in mines or other extreme conditions and within the scope of the Czech Republic’s public rescue services;

• Under regional cooperation programmes, support development in those regions where the Sev.en Group maintains a presence;

• Manage a grievance mechanism open to employees and external persons alike, and evaluate the results;

• Respect the Group’s ethical principles, especially the Sev.en Group Code of Ethics, Code of Commercial Ethics and Ethical Conduct�


16


Business and investment strategy:• In brown coal trading, where the current

enforcement of mining boundaries is cur-tailing the period over which the company is able to strike deals for coal supplies on the market, non-discriminatory conditions must be in place for the sale of coal for customers;

• In electricity, focus fully on generation and wholesale trading;

• In ancillary services:- offer water management services and the sale of accompanying raw materials, heat and energy by-products;- via the Most Central Mines Rescue Station, provide commercial services to organisa-tions – specialist operations under extreme conditions;• Resolutely foster conditions for responsible

long-term investment behaviour with a view to enhancing economic and environmental efficiency;

• In 2016, prepare – with the authorisation of supervisory authorities and financing banks – full-scale corporate reorganisation so that a single group is formed again with Vršanská uhelná a.s. (Czech Coal Group), thereby cushioning as much as possible the effects that Government Resolution No 8273 will have on Sev.en Group employees and surrounding municipalities in North Bohemia�

SEV.EN GROUP CORPORATE GOVERNANCE

Severní energetická a�s� is controlled by Famlen s�r�o� and Remlan s�r�o�, which, under a shareholder agreement, pool their votes at Severní energetická a�s� general meetings in areas such as appointments to company bodies and profit distribution.

All Sev.en Group members are public limited liability companies. The Group maintains a management system consistent with Czech laws�

The organisational setup and mission, the competence of the various governing bodies and sections, and the guiding principles applied to the division of labour within the company are laid down in the Rules on Or-ganisation�

The supreme body of these public limited liability companies is the general meeting. The governing body is the board of directors, which manages the company’s activities. The supervisory board, as the company’s oversight body, oversees the exercise of the board of di-rectors’ authority and the performance of the company’s business activities and presents the board of directors with proposals of requisite measures. Members of the supervisory board are entitled to inspect all documents and records relating to the company’s activities, to check whether accounting records are kept properly, and verify that the company’s busi-ness activities are conducted in accordance with legislation, the articles of association and the general meeting’s instructions.

Shareholders may put forward recommenda-tions regarding the management and strategic direction of the parent company, Severní energetická a�s�, at the general meeting� Members of subsidiaries’ supervisory boards and boards of directors are appointed and removed by the sole shareholder, acting in the capacity of the general meeting, with the exception of supervisory board members elected and removed by company employees in accordance with the Commercial Code� In the appointment of new members of Sev.en Group companies’ boards of directors, qualification requirements and the professional

and moral stature of the appointees are given special consideration. The procedure and method for selection, appointment, removal from office and related matters are laid down in Act No 262/2006, the Labour Code, Rules on Organisation, and Rules on Execution of Documents. Processes to avoid conflicts of interest are defined by legal provisions and also, for example, by employment contracts.

Boards of directors approve priorities, the pursuit of which stands at the root of the responsibilities of the individual companies’ executive management� The central task of 2015 was to support a plan to unlock coal reserves beyond the limits and to pave the way for the overhaul of units at Chvaletice Power Station� Other tasks are set at regular meetings of the board of directors� In 2015, work continued on the formation of key performance indicators (KPIs) for Severní energetická a�s� and Sev�en EC, a�s� The Sev.en Group Code of Ethics, Code of Com-mercial Ethics and Ethical Conduct was drawn up, subsequently taking effect from 2016.

Each company’s executive management is responsible for policing and implementing economic, environmental and social prior-ities and the outcomes thereof. Company management is professionally structured so as to encompass the organisation’s strategic direction, including matters associated with environmental and social risks and opportu-nities�

The executive management is spearhead-ed by the member of the board of directors given the role of chief executive officer. Task performance is evaluated at meetings held by the management of the various sections and departments. Documents underlying assessments of a company’s economic, en-vironmental and social performance are the

budget (planned, forecast and actual), key performance indicators (KPIs) and reports on the performance of tasks related to human resources, occupational safety and environ-mental protection. Managers are appraised on the basis of the results reported by their company and an evaluation of specific tasks, indicators and targets�

Group companies’ performance is monitored by reference to the financial and non-fi-nancial reporting of the various parts of the organisation. This reporting forms the basis for the companies’ annual reports. The Sev.en Group’s consolidated financial disclosures for 2015 were drawn up according to a Czech accounting standard. Non-financial reporting is prepared according to GRI G4 Guidelines.

The conduct of Group management and em-ployees is governed by the respective public limited liability company’s Articles of Asso-ciation, as well as by the subsidiaries’ other internal regulations, especially the conditions of employment and applicable collective agreements�

Rules and standards adopted by Severní energetická a�s� are subsequently subject to approval by each subsidiary and are incorporated into its internal regulations, naturally taking into account the attendant indus-try-specific regulatory environment, thereby achieving a consistent approach across the board and the application of identical princi-ples.

3 Existing mining limits have been maintained under Resolution of the Government of the Czech Republic No 827 of 19 October 2015 on further procedure concerning environmental mining boundaries for brown coal extraction in North Bohemia; this has blocked the further development of the ČSA Mine.

17


Organisation Charts – Severní energetická a.s. and Sev.en EC, a.s.

Severní energetická a.s. organisation chart

Human Resources

Accounts Unit

Tax Division

Production Management

Chief Power Engineer

Production Ordination

Communication Department

Asset Protection Department

Financing Department

Company Management

Office

Organisation Agenda

IT Administration

Mines Rescue Service Section

Human Resources

Section

Economic Section

Production Section

Technical Section

Commercial Section

StrategySection

Finance Section

CEO Section

Board of Directors

CEO

Coal Sales Department

Coal Transport

Asset Management

Division

Chief Engineer

Environmental Activity

Safety and Fire Protection

Quality Control Management

Reclamation Unit

Mining Activity and Geology

Division

Mine Surveying and

Geoinformatics

Economy of Labour, Payroll System Management

Payroll Accounting

Economic Instruments

Unit

Economic Support

Central Mines Rescue Service

Medical Care

Fire Brigade

18


Sev.en EC, a.s. (Chvaletice Power Station) organisation chart

Chvaletice Power Station Fire

Brigade

Support and Services

Department

Human Resources

Unit

Chemical Mode Unit

Sales Support

Department

Operations Management

Sales Control

Department

Equipment Management Department

Trading Department

CEO Section

Technical Section

Finance SectionFinance Section

Commercial Section

Overhaul Project Team

Board of Directors

CEO

Procurement Department

Controlling Department

Accounts Department

19

THE SEV.EN GROUP’S PERFORMANCE – ECONOMIC HIGHLIGHTS

Severní energetická a.s., registration number: 28677986, registered office: Václava Řezáče 315, 434 01, Most, is a Czech legal person. Financial statements, compiled after the individual accounts of individual Sev.en Group companies have been audited, are based on Czech accounting stan-dards�

The accounts of Severní energetická a�s� and Sev�en EC, a�s� were audited and consolidated by KPMG Česká republika Audit, s.r.o. Důl Kohinoor a.s. was audited by Luděk Hejda, while Sev.en WT, a.s. and Hipodrom Most a.s. were audited by Dagmar Švecová.


Sev.en Group financial results4

ECONOMIC HIGHLIGHTS (CZK THOUSANDS)

2013 2014 2015

Total revenues* 5,710,910 13,818,632 26,244,822

Value added** 3,152,603 3,558,405 3,605,246

EBITDA 2,144,072 2,400,592 2,455,131

Operating profit 1,492,434 1,625,079 1,672,485

Profit before tax 1,433,991 1,508,463 1,593,008

Profit after tax 1,059,574 1,139,868 1,262,907

Income tax on ordinary activities 410,438 438,087 373,443

Total assets 12,853,680 14,270,236 14,804,477

Equity 3,128,717 3,758,030 5,011,311

Liabilities (borrowed capital) 9,685,764 10,429,143 9,703,444

Number of employees as at 31 December 1,495 1,643 1,640

* This figure comprises total revenues including financial revenues** This figure comprises net sales minus the consumption of materials, energy and services.

FINANCIAL INDICATORS (INDEX, PER CENT)

2013 2014 2015

Net debt/EBITDA 1.144 1.403 0.390

Net debt/Equity 0.784 0.896 0.191

EBITDA margin (EBITDA/Net sales) = operating profit to sales ratio 0.375 0.174 0.093

Equity ratio (Equity/Assets) = financial stability of the company 0.243 0.263 0.339

ROE (Net income/Equity) 0.339 0.303 0.252

4 The financial data for the Sev.en Group include the figures reported by Severní energetická a.s. for the full calendar year of 2015. In this respect, the disclosures were audited by KPMG Česká republika Audit, s.r.o. See the Severní energetická a.s. Annual Report 2015 at www.sev-en.cz/en/spolecnost/vyrocni-zpravy.html

http://www.sev-en.cz/en/spolecnost/vyrocni-zpravy.html

20


Economic performance ASPECT: ECONOMIC PERFORMANCE (G4-EC1, G4-EC3, G4-EC4)

The Sev.en Group strives to achieve the best possible economic performance and safeguard its long-term investments (the repair of Chvaletice Power Station). Important parameters in this respect are EBITDA and profit. The approach to social costs (personnel costs, social funds, employee benefits, etc.) hinges on economic results, production requirements and the needs of employees, which are reflected in the Group companies’ commitments in collective agreements.

The Group management has singled out retirement saving schemes as an essential employee benefit (see page 88, 89). Besides taxes, particularly significant amounts flowing into the region include funds to finance reclamation and coal-mining fees. This money is mainly channelled into the budgets of surrounding municipalities.

Aspect Quantity Organisational unit Unit 2013 2014 2015

Eco

nom

ic r

esul

ts

Profit (loss) after tax Group CZK thousands 1,059,574 1,139,868 1,262,907

Income tax (due) Group CZK thousands 410,438 438,087 373,443

Personnel costs Group CZK thousands 652,869 890,294 959,112

Mining fees Severní energetická a.s. CZK thousands 39,792 34,460 31,910

Brown coal mining ČSA Surface Mine and

Centrum Minethousands of tonnes 3,435 3,789 3,597

Electricity production ECHAS MWh 3,122,124 3,910,633 3,526,657

OTHER SEV.EN GROUP ECONOMIC DATA (CZK THOUSANDS)

2013 2014 2015

Cost of goods sold 2,374,941 3,301,802 2,518,459

Personnel expenses 652,869 890,294 959,112

Income tax (due) 410,438 438,087 373,443

Total taxes, charges and other levies* 1,454,441 1,371,988 1,206,087

Subsidies received from the state/government, EU and other entities 374** 3,307*** 2,699***

* In addition to tax, this figure includes social security and health insurance costs, VAT payments, etc.** This figure comprises only subsidies granted to HIPODROM MOST a.s. (by the State Agricultural Intervention Fund, municipalities and regions).*** For details on subsidies, see page 23

21


Sev.en Group’s direct economic value generated and distributed

ECONOMIC PERFORMANCE REPORTED ACCORDING TO GRI (CZK THOUSANDS): SEV.EN GROUP’S DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED

2013 2014 2015

DIRECT ECONOMIC VALUE GENERATED: 5,492,943 8,810,142 8,900,651

Revenue from financial investments 29,05 16,619 10,821

Revenue from sale of assets* 5,681,860 13,802,013 26,234,001

Expense of goods sold (217,967) (5,008,490) (17,344,171)

NET ECONOMIC VALUE DISTRIBUTED, BY STAKEHOLDER (net): 4,419,975 5,996,982 4,558,082

SUPPLIERS – service and supply payments 2,157,035 3,301,802 2,518,459

Cash payments (for materials, product components, facilities, and services purchased) 2,157,035 3,301,802 2,518,459

EMPLOYEES – wages and benefits 652,869 890,111 945,458

Total payroll costs 464,55 614,584 665,461

Social fund – non-deductible employer costs (part of collective bargaining) 13,487 14,01

Employer’s social insurance contributions 157,193 168,664

Employer’s health insurance contributions 56,59 60,719

Other social costs incurred by the employer and total benefits (not included in personnel costs)

48,257 36,604

Payments to providers of capital 115,17 632,214 103,147

Dividends to shareholders 500 0

Interest payments made to providers of loans 115,17 132,214 103,147

GOVERNMENT – payments to government 1,454,441 1,133,374 953,608

Total taxes, charges and other levies (other than social and health insurance contributions, excluding municipalities)

1,454,441 1,133,026 953,445

Penalties paid to government 0 348 163

MUNICIPALITIES AND COMMUNITIES – community investments and payments to municipalities

40,46 39,481 37,41

Voluntary donations and sponsorship in the broader community 11,282 14,302 14,151

Coal-mining fees flowing into municipal budgets 29,178 25,179 23,259

ECONOMIC VALUE RETAINED (generated less distributed) 1,072,968 2,813,160 4,342,569

* The increase in revenues from sale assets was primarily due to an increase in energy trading.

22


Sev.en Group levies and subsidies

COMPLIANCE WITH LEVIES IMPOSED ON SEV.EN IN 2013–2015 (CZK THOUSANDS)

2013 2014 2015

Income tax (due) 410,438 438,087 373,443 373,443

Social security and health insurance 152,967 213,783 229,383 229,383

Tax on solid fuels 7,702 6,385 7,260 7,260

Tax on electricity 288 16,557 1,202 1,202

Taxe

s an

d c

harg

es

TOTAL 53,825 66,260 1,202

of w

hich

:

Road tax 188 221 298

Property tax 13,836 15,129 15,459

Conveyancing tax 6 0 172

Charges for minerals extractedmunicipalities 28,536 24,537 22,610

country 9,515 8,179 7,536

Charges for working district areas municipalities 636 636 636

Charges for the temporary removal of land from agricultural land resources

municipalities 6 6 13

State Environmental Fund

1,102 1,102 1,115

Other taxes and charges 0 16,450 13,410

VAT 829,221 630,916 533,550

Excise duty 0 0 0

TOTAL MUNICIPALITIES 29,178 25,179 23,259

TOTAL GOVERNMENT and state funds 1,425,263 1,346,809 1,182,828

TOTAL 1,454,441 1,371,988 1,206,087

23

SEV.EN GROUP COMPANY SUBSIDIES

Institute awarding the subsidy, subsidy scheme, 2014

2014(CZK

thousands)

Institute awarding the subsidy, subsidy scheme, 2015

2015(CZK

thousands)

Training courses (Severní energetická a.s.)Labour Office of the Czech Republic,scheme: Train for Growth in the Ústí nad Labem Region II – Project CZ.1.04/1.1.00/B1.00012

961Labour Office of the Czech Republicscheme: Train for Growth in the Ústí nad Labem Region

198

Job subsidisation (Severní energetická a.s.)

Labour Office of the Czech Republic,scheme: Training for Growth – Dedication of a Socially Purposeful JobProject CZ.1.04/2.1.00/03.00015

50Labour Office of the Czech Republic scheme: Training for Growth – Dedication of a Socially Purposeful Job

40

Language courses (7EC)Labour Office of the Czech Republic, scheme: Staff Training Support PAA-MN-39/2014Project CZ.1.04/1.1.00/C3.00001

22Labour Office of the Czech Republic, scheme: Staff Training Support

508

Land maintenance (HIPODROM MOST a.s.)Land Maintenance: State Agricultural Intervention Fund (SZIF)

370Land Maintenance: State Agricultural Intervention Fund (SZIF)

8

Promotion of sport (HIPODROM MOST a.s.)

Promotion of sport: Municipality of Bílina CZK 90,000Municipality of Teplice CZK 90,000Ústí nad Labem Region CZK 1,000,000Jockey Club of the Czech Republic CZK 596,000Municipality of Most CZK 140,000Blanka Vorlíčková CZK 20,000

1,904

Promotion of sport: Municipality of Bílina CZK 50,000Municipality of Teplice CZK 50,000Ústí nad Labem Region CZK 1,000,000Jockey Club of the Czech Republic CZK 505,000Municipality of Most CZK 300,000Municipality of Most CZK 20,000 – Children’s DayOther subsidies CZK 20,000

1,945

Total subsidies (Excluding the ECHAS allocation of emission allowances)

3,307(Excluding the Sev.en EC, a.s. allocation of emission allowances)

2,699


24


Brown coal mining fees

The importance of the employment factor and the financial benefits derived from brown coal mining is largely overlooked� Both of the central mining-related laws (Act No 44/1988 and Act No 61/1988) define the obligation to pay fees for permits and for the prospecting and exploration of deposits of reserved minerals, a working district fee and an annual levy on the average market price of the minerals extracted:1� fee for minerals extracted (Section 32a(2)

of Act No 44/1988, as amended);2. working district fee (Section 32a(1) of Act

No 44/1988, as amended);3. fee under Act No 334/1992 on the protec-

tion of agricultural land resources;4. the formation of financial reserves for mine

damage and for compensation therefor, i.e. for rehabilitation and reclamation (Section 37a of Act No 44/1988, as amended).

In real terms, mineral extraction fees have risen several times since the 1990s� They are derived from the market price of coal, which has reported significant growth. For example, whereas in 2008 the mining company (formerly Litvínovská uhelná, now Severní energetická a.s.) paid CZK 4.5 million per million tonnes of extraction into the government’s coffers, by 2015 that figure had risen to CZK 7�97 million (this includes coal from the Centrum Mine)5�

COAL-RELATED FEES (CZK). SEVERNÍ ENERGETICKÁ A.S. (ČSA MINE) AND DŮL KOHINOOR A.S. (CENTRUM MINE). AMOUNTS IN CZK.

MunicipalityWorking district fee (100% payable to

the municipalities affected)*

Fees for the extraction of minerals – coal and aggregate (75% for

municipalities and 5% for the central government budget)

Fees for the removal of land from agricultural land resources.

2013 2014 2015 2013 2014 2015 2013 2014 2015

Most 192,327 192,327 192,327 0 128,220 83,001 0 0 0

Vrskmaň 6,078 6,078 6,078 0 0 0 0 0 0

Horní Jiřetín 246,389 246,389 246,389 28,536,032 24,408,765 22,526,716 120 120 0

Litvínov 148,805 148,805 148,805 0 0 0 0 0 0

Vysoká Pec 42,301 42,301 42,301 0 0 0 5,495 5,495 13,488

Total municipalities

635,900 635,900 635,900 28,536,032 24,536,985 22,609,717 5,615 5,615 13,488

Central government budget

0 0 0 9,512,011 8,178,995 7,536,572 1,102,305** 1,102,305** 1 114 115**

Sev.en Group total fees

635,900 635,900 635,900 38,048,043 32,715,980 30,146,289 1,107,920 1,107,920 1,127,603

* Working district payments are made for those districts that, as at 1 January of the current year, are managed by the organisation, irrespective of how the area where the district is situated is used, i.e. it is irrelevant whether the working district is being mined, reclaimed or left idle.

** State Environmental Fund

The Sev.en Group’s brown coal extraction fees aggregated CZK 39,791,863 in 2013, CZK 34,459,800 in 2014, and CZK 31,909,792 in 2015. Sales revenue, mining costs and overall costs are factors that come into play when calculating payments for mineral extraction. Although ex-traction expanded by approximately 400,000 tonnes in 2014 and by a further 9.5% in 2015, the exercise price per GJ contracted year on year, while overall costs went up.

5 Since December 2012, the Dolní Jiřetín working district (the Centrum deep mine) has been managed by Severní energetická a.s. and, as payments for the district and minerals extracted are made by the working district manager, the payments for the Centrum Mine have been included in the overall amounts paid by Severní energetická a.s.

25

Resolution of the

Government of the Czech

Republic No 827 of

19 October 2015 has blocked

the further development of both the

ČSA surface mine and the underground

Centrum Mine.

No 827


IDENTIFICATION OF RISKS AND OPPORTUNITIES; ESTABLISHMENT OF SUSTAINABLE DEVELOPMENT GOALS

The Sev.en Group’s most significant business risk and opportunity is to safeguard further coal mining at the ČSA Mine and the long-term operation of Chvaletice Power Station. In both of these areas, Group’s management communicates extensively with the stakehold-ers concerned� Progress in further coal mining at the ČSA Mine beyond the mining limits is currently impeded because this depends on government policy-making, with a decision likely by 2020. In contrast, the project to overhaul Chvaletice Power Station has been moving ahead successfully�

Risk of the termination of mining operations at the ČSA Mine in 2024

Severní energetická a.s.’s frontline business plan is to mine brown coal at the ČSA Mine. Existing mining limits have been maintained under Resolution of the Government of the Czech Republic No 827 of 19 October 2015 on further procedure concerning environ-mental mining boundaries for brown coal extraction in North Bohemia; this has blocked the further development of both the ČSA surface mine and the underground Centrum Mine� However, the situation is far from clear because, in Resolution No 827, rather than take a final decision on the ČSA Mine, govern-ment ministers left the issue of this mine’s environmental boundaries conditionally open, with a re-evaluation to be held by 2020. Con-sequently, not only coal customers, but also the inhabitants of Horní Jiřetín and Černice, remain in limbo� The current government will not be revisiting limits at the ČSA production site for the rest of its tenure� It has merely

tasked individual ministers with the prepara-tion of their ministries for the situation taking hold in the region� However, in 2015 it did not put forward any specific plans on how to help the Most region cope with the deteriorating social situation as people are laid off and contracts dry up.The Most region is in a wretched economic and social position. It heads the unemploy-ment statistics (reporting a rate of around 13% in the past three years), yet no plans are in place to develop local industry and create more jobs. Shutting down production at the ČSA Mine without a clear and read-ily realisable vision to replace this domestic raw material and job losses runs the risk of making the problem much worse. There would also be serious repercussions for the central government budget due to reduced levies, charges, and taxes on the one hand, and higher social spending on the other. (For details, see page 65.)

The fact that the government has not made a final decision on the fate of coal from the ČSA Mine and on the municipality of Horní Jiřetín is a reflection of the approved updated national energy concept, which largely an-ticipates a role for coal in the energy sector in the years to come, but does not address whether mining limits will have to be revised� In other words, when it comes to coal beyond the ČSA Mine’s boundaries, the government is kicking the can down the road and assump-tions central to an actual decision need not hold true: if coal burning is not replaced by nuclear facilities in line with the national energy concept’s forecasts and if energy con-sumption does not fall, the government-ap-proved attendant measures are no guarantee of the sufficiently prompt and flexible imple-mentation of a backup solution. Consequent-ly, claims that coal extraction at the ČSA Mine in the future is definitively out of the question

may be wide of the mark� This is why, according to Resolution No 827, the government is to assess the implementation of the national energy concept every year up to 2020.

Question marks have essentially been left hanging over the fu-ture of the ČSA Mine, with no clear indication of how and when the situation will be resolved. The approved resolution does not even preserve access to the ČSA deposit in the slightest, despite urging from the Czech Confederation of Industry. This raises doubts about the possibility of any future use. If future developments reveal that coal reserves at the ČSA Mine need to be extracted, production will not be possible until 2030 and the financial cost of interrupting mining will have been enormous�

At a time when the availability of energy sources is parlous and energy feedstock supplies are being abused as a means of political extortion by Russia, maintaining the current en-vironmental mining boundaries for brown coal limits at the ČSA Mine will eventually cut off access to the country’s only indigenous energy feedstock – as it stands, 287 million tonnes of finest quality brown coal.

The government’s decision has yielded nothing new for Severní energetická a.s.’s management and owners regarding the continuation of production at the ČSA Mine. Faced with dwindling mineable reserves, Severní energetická a�s� will now refine its detailed plan to phase out production at the ČSA surface mine, which it has already put into action in recent years and which entails the staged scaling-down of mining, the decommissioning of technology, and redundancies� (For details, see page 64.)

In addition, Severní energetická a.s. will shut down operations at the underground Centrum Mine (Důl Kohinoor a.s.) for good in 2016. Though underground production at this mine has not been economically efficient for a number of years, it was kept going in particular with a view to preserving valuable know-how for future long-term mining of the side slopes as part of the second stage of the ČSA Mine (beyond existing limits). The government’s decision to keep to current mining limits obstructs the further development of the ČSA Mine, hence precluding long-term underground mining of the side slopes.

26


The gradual winding-down of the ČSA sur-face mine, inflicted by government volition rather than by any suggestion that it might be unprofitable, along with the closure of the underground Centrum Mine, will inflate regional unemployment and ramp up the already fraught social tensions. Sev.en Group is taking the following action to tackle these risks:1. Sev.en shareholders are gearing up for

full-scale corporate reorganisation in 2016 so that a single group is formed with Vršanská uhelná a.s. (Czech Coal Group), thereby cushioning as much as possible the effects that Government Resolution No 827 will have on employees and sur-rounding municipalities in North Bohemia, because a group of such magnitude should be able to absorb some of those who lose their jobs at the ČSA and Centrum mines. Needless to say, this change requires the approval of supervisory authorities and financing banks.

2. The Sev.en Group management is prepar-ing an internal employment plan that maps further job opportunities within the Group and/or the region�

3. In its quest to face up to the fallout from the production phase-out, Severní ener-getická a�s� is involved in the activities of a working party set up to tackle employment issues stemming from the decline in coal mining in North Bohemia� This working party, comprising representatives of the Ministry of Labour and Social Affairs, the Labour Office of the Czech Republic, the Ministry of Industry and Trade, the Ústí nad Labem Region, Severní ener-getická a.s., Severočeské doly, the Czech Chamber of Commerce, trade unions, the competent government commissioner and

the Office of the Government of the Czech Republic, discussed the following areas in particular at four meetings in late 2015 concerning the decline of coal mining in North Bohemia:

• Possible assistance in finding a new job for those employees at risk of redundancy;

• The potential financial repercussions; • Possible assistance for these employees

under a “welfare programme”.4. As a temporary solution to stave off a

brown coal shortfall, the Sev.en Group drew up a project to extract some of the coal reserves tied to the end side slopes of the ČSA Mine by underground mining methods. This would temporarily make up for coal missing on the market while giving work to some employees from the underground Centrum Mine (Důl Kohinoor a.s.). The plan to carry out underground mining on the mine’s side slopes was implemented in 2014 and 2015. The first circuit was driven and work started on room-and-pillar mining� However, bearing in mind the limits in force, once production at the ČSA Mine ends it will be impossible to build on this underground mining project. (For details, see page 63.)

Since its formation in 2013, Severní ener-getická a�s� has communicated in earnest with relevant stakeholders – especially representatives of local municipalities6, the public and employees – on coal mining devel-opments.

Key events and actions taken by Severní en-ergetická a�s� to unlock coal reserves beyond the set limits between 2015 and the publica-tion of the report can be found, for example, in the summary on pages 35-8 and 66.

Project to overhaul Chvaletice Power Station (Sev.en EC, a.s.)

Central to the Sev.en EC, a.s. business plan is the overhaul of two of the power station’s four units by the end of 2016 (specifically, Units B3 and B4). The idea behind extending the useful life of these two units is to improve their technical condition and enhance their operational reliability while ensuring compli-ance with statutory operating requirements, including reduced environmental limits prescribed by law for pollutant emissions. The power station needs to be overhauled for legislative reasons so that it can remain in operation. (See the technical details on pages 74 and 121�)

The main technical objectives are to increase the operational reliability of the technology, to enhance economy of operation, to expand the units’ control area, and to optimise operations with a view to the efficient use of brown coal. The project envisages the temporary, staged shutdown of the power station’s two units in 2016 for the eight-month period required to carry out the overhaul, which will mainly affect customers. This project is significant in that it will maintain employment levels in the region and provide further busi-ness opportunities during the overhaul.

Since the project’s launch, the Sev.en EC, a�s� management has communicated extensively with relevant stakeholders, espe-cially representatives of local municipalities7, suppliers, customers, supervisory authorities and employees. Mindful that the project is one of the most important investments in the region, the company management is making sure that the tendering procedure is

transparent and that the representatives and inhabitants of municipalities in the vicinity are kept informed. The other two units (B1 and B2) can be operated under current conditions until 2020. It is expected that work on green-ing and overhauling them will start in the first half of that year. Once completed, the project will usher in a radical improvement in environmental impacts on local communities, headed by the abatement of emissions of dust and nitrogen oxides� Parallel to this large-scale project, all of the units’ facilities will gradually be improved and, in particular, their capacity will be expanded.In July 2015, an agreement on the “Overhaul of Two Units of Chvaletice Power Station” was signed� The winning tender was submitted by KRÁLOVOPOLSKÁ RIA, a.s. The overhaul of the two units will cost CZK 2�5 billion� In this part of the contract, the successful tenderer will overhaul the boiler room, the engine room, the management and control system, the heavy-current equipment and electrostatic fly ash precipitators. In addition, Desulphurisation Absorber 2 will be overhauled and the internal and external coal conveyors will be adapted to reduce dust levels further� Consequently, the overhauled units will meet the most stringent requirements for long-term environmentally-friendly operation.

The overview below sums up progress in the power station overhaul project since it began in 2014, including upcoming plans.

6 Details about specific risks, benefits and effects of operations from the point of view of the municipalities’ mayors can be found in the annexes on page 148.7 Details about specific risks, benefits and effects of operations from the point of view of the municipalities’ mayors can be found in the annexes on page 149.

27


PLANNED PROJECT FLOW – CHVALETICE POWER STATION (SEV.EN EC, A.S.) OVERHAUL (AND EXPANSION OF THE CAPACITY OF THE STATION’S UNITS)

Stakeholders

2014

MarchAgreement with Orgrez a.s. on a “Technical Assessment of the Condition of Chvaletice Power Station’s Equipment and Recommendations to Extend Operations with a Useful Life Defined up to 2030”

shareholders, employees

July Increase in the units’ maximum capacity to 205 MW customers, employees, shareholders

August Establishment of the “Overhaul” Project Team shareholders, employees

September

Competitive procedure with negotiation – “OVERHAUL OF TWO UNITS OF CHVALETICE POWER STATION” suppliers, supervisory authorities, general public

Completion of prequalification documentation for the overhaul of the units suppliers, shareholders

Certification of support services for expanded capacity of 205 MW at Units B2, B3 and B4 (AF-Consult Czech Republic s.r.o.)

customers, employees, shareholders, supervisory authorities

October Organisational formation of the “Overhaul Project Team” department shareholders, employees

November

Completion of tender dossier for the overhaul of the two units suppliers, shareholders

Prequalification assessment and invitation to tender made to selected candidates for the overhaul of the units suppliers, shareholders

Certification: support services for Unit B1 with expanded capacity of 205 MW (AF-Consult Czech Republic s.r.o.)

customers, employees, shareholders, supervisory authorities

2015

February Submission of tenders for the overhaul of two units of Chvaletice Power Station suppliers

JuneEvaluation of the tenders and selection of a winning supplier for the public procurement of the “Overhaul of Two Units of Chvaletice Power Station”

suppliers, shareholders, employees

JulyExecution of agreement for the overhaul of Units B3 and B4 at Chvaletice Power Station with KRÁLOVOPOLSKÁ RIA, a.s.

suppliers, shareholders, employees

SeptemberSite handover to the supplier – joint facility to store the reagent for secondary denitrification of the units suppliers, employees

Reinforcement of the “Overhaul” Project Team employees

Planned (The forward-looking plan is valid as at 31 December 2015)

2016

January Completion of implementation – joint facility to store the reagent for secondary denitrification of the units suppliers, employees

March Shutdown of Unit B3 until overhaul suppliers, employees, customers

May Shutdown of Unit B4 until overhaul

NovemberPost-overhaul start-up of Unit B3, including completion of post-overhaul trial running and the putting of the unit into permanent operation

suppliers, employees, customers, supervisory authorities

DecemberPost-overhaul start-up of Unit B4, including completion of post-overhaul trial running and the putting of the unit into permanent operation

suppliers, employees, customers, supervisory authorities

28

PillarSelected risks Opportunities

Risk Risk impact Measures to mitigate the risk Opportunity

Ec

on

om

ic b

en

efi

t

Risk of coal shortage In a situation where the possibility of moving beyond the mining boundaries remains unresolved, the Sev.en Group and customers alike are wary that affordable coal of suitable quality parameters could become scarce, even in the short-term outlook.

If this risk is not confronted, relations with long-term customers would be tarnished and jobs would be lost.

Stopgap solution: Extract brown coal reserves that can be underground-mined from the ČSA Mine’s side slopes within environmental mining boundaries.

The securing of coal for customers.The safeguarding of jobs for employees from the underground Centrum Mine, which is being closed down.The preservation of underground mining skills in the region.

Risk of scant pensions for employeesThe Sev.en Group is mindful of the current pension-system deadlock in the Czech Republic, offering no guarantee that employees can enjoy a dignified old age. A significant proportion of the Group’s employees is over 50 years of age.

If this risk is not confronted, employees could lose the motivation to work and the social situation in the region could be adversely affected.

• The provision of a benefit, i.e. a “contribution to pension insurance” (or a supplementary pension scheme), to Sev.en Group employees;• The incorporation of this benefit into collective agreements;• Participation in the project “Bipartite Dialogue in the Extractive Industries” within the framework of the Employers’ Association of the Mining and Oil Industries, aimed at bracing employers and employees for the impacts and changes stemming from pension reform.

An increase in staff motivation and loyalty, and an improvement in the social situation in the region where employees’ families live.

Ou

re

mp

loye

es Occupational safety and health

As far as the Sev.en Group is concerned, occupational safety and health is a top priority. Unforeseeable incidents such as slipping superstrata and uncharted old workings are specific to opencast coal mining.

If safety regulations are not respected, human lives could be endangered, operations could be interrupted, and losses – including reputational risk – could be incurred.

• Constant checks on and improvements of safety regulations, standards and staff training;• All injuries are investigated and action is taken to prevent a recurrence of such an incident for similar reasons;• A system to monitor the ČSA Mine’s side slopes;• An emergency response plan to ensure the closest possible cooperation with the Central Mines Rescue Station when dealing with old workings.

The protection of employees’ health.Increased backing of and confidence in the company management.Improved labour efficiency due to lower absence rates.

SEV.EN GROUP RISKS AND OPPORTUNITIES; MEDIUM-TERM SUSTAINABLE DEVELOPMENT GOALS

Sev.en Group risks and opportunities

The Sev.en Group strives to be systematic in anticipating and minimising risks and, in keep-ing with its stakeholders, constructive in seiz-ing opportunities. The Sev.en Group aims to foster active relations with business partners, employees, the inhabitants of the regions where it maintains a presence, and bodies and institutions cultivating the legal landscape for its business. It is in all our stakeholders’ interests for us to anticipate risks and harness opportunities to safeguard the Group’s sustainable, durable growth. With this in mind,

we focus on a handful of particularly important areas of risks and opportunities that are per-ceived most keenly by management, share-holders and other key stakeholders, in respect of which there are internal opportunities for their planned management.Having said that, there are serious risks that are beyond the company management’s control and responsibility as they require universal consensus. Besides the above-men-tioned review of coal mining limits, which is entirely in the government’s hands and, with-out any shadow of a doubt, is a fundamental issue for most stakeholders, significant risks are primarily of a legislative nature (amend-ments to regulatory requirements associated, for example, with charges on extracted coal and greenhouse gas emissions) or concern developments in the Czech Republic’s energy and raw materials policy. The Sev.en Group

actively communicates with regulators and other stakeholders in the preparation of stat-utory standards, concepts and policies in its capacity as a member of industry associa-tions and federations�Within the Sev.en Group, the chief executive officers of the various companies are respon-sible for coordinating activities associated with risk management� Individual risks are continuously monitored and are evaluated at least once a year to ensure that an efficient approach is in place for their analysis and to limit any fallout. Opportunities influencing the Group’s sustainable development are also derived from each risk. The development of these opportunities mitigates the risk and en-genders spillover effects that have a positive bearing on the Group per se, its employees and other stakeholders�

In the report, we detail developments in priority areas in order to spell out all activities carried out by the Sev.en Group to deal with risks and challenges of relevance to stake-holders� The tables below analyse salient risks fully manageable by the Sev.en Group’s management, as well as measures to defuse risks over which the management is unable to exercise a decisive influence (the availability of a skilled workforce, unemployment spawned in particular by the forced phase-out of the ČSA Mine), and present the method used to establish goals in significant areas and indica-tions of development in the given field.


29


PillarSelected risks Opportunities

Risk Risk impact Measures to mitigate the risk OpportunityO

ur

em

plo

yee

s

Skilled workforce shortage

The Sev.en Group’s companies need skilled employees, and any shortage poses a major risk to continued production and profitability.

• Development of a system to provide drills and training at Group companies;• The allocation of plenty of time for training and education;• The granting of scholarships and time off for employees studying on the job;• Active collaboration with schools in the region, the support of apprenticeships, secondary schools and higher education institutions with mining-related courses.

Opportunities include the identification and development of key personnel and the involvement of staff as instructors. Stabilisation of the employee structure for Chvaletice Power Station.

Redundancies

In particular, the winding-down of the ČSA surface mine, inflicted by government volition rather than by any suggestion that it might be unprofitable, will ramp up the already fraught social tensions and inflate unemployment in the surrounding area, and will also trigger the loss or disappearance of a raft of professions and wealth of knowledge.

• Search for new jobs within the Sev.en Group and in the region for those who are laid off, i.e. draw up an internal employment plan;• Collaboration with ministries, regional institutions and trade unions within the framework of a working party, encompassing possible welfare programmes and the management of financial implications.

Searching for new jobs within the Sev.en Group and in the region for those who are laid off as operations at the Centrum and ČSA mines are wound down is a way of deflating the social repercussions of the government’s decision in the region and of tackling the risk of an exodus of highly skilled and experienced workers.

En

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nm

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t

Emissions into the air – the risk that the power station will be closed down

Current pollutant emissions into the air are a legislative obstruction to the continued operation of Chvaletice Power Station in the future.

• Preparations for compliance with Decision 2012/115/EU; • Chvaletice Power Station has been included in the Czech Republic’s Transitional National Plan for the Progressive Reduction of Total Annual Emissions up to 2020;• Publication of a call for tenders in accordance with the law for the project “Overhaul of Two Units of Chvaletice Power Station”;• The selection of suppliers and overhauling over a multiannual timeframe.

Pollution abatement; establishment of a long-term perspective for production up to at least 2030, profits, employment, and regional development.

Reclamation – the risk that environmental rehabilitation will be insufficientOpencast brown coal mining has a negative impact on the environment, mainly because of the way the terrain is transformed. The reclamation project at the Chvaletice Power Station site is very close to a municipality and requires special attention.

These effects are particularly disruptive to local communities and are a risk to the continued societal acceptance of the work we do. The negative impacts of our operations on the environment also pose a reputational risk.

• Implementation of reclamation projects in line with the approved rehabilitation and reclamation plan; • Implementation of reclamation projects in collaboration with environmental experts and municipal representatives;• Open communication on the implications of reclamation work;• Respect for the needs and requirements of the local community and municipalities;• Timely alerts to the community in an emergency.

Reclamation projects entail a monumental investment in environmental rehabilitation. In particular, there is an opportunity to draw up reclamation projects carrying both biological and social value.

So

cie

ty

Loss of social backing for the Group’s workThe new Sev.en Group’s activities are perceived and absorbed in a highly sensitive light.

Riding roughshod over the local population’s rights or behaving inappropriately towards inhabitants could hamper the Group’s future operations. Wayward information could stoke up opposition to the Group’s future plans.

An emphasis on the transparency of activities, timely, accurate and open communication on the Sev.en Group’s activities and future plans, and continuous dialogue with the community are all wrapped up in the regional cooperation programme.

Ongoing dialogue with the community and explanations of the Sev.en Group’s activities and goals, combined with sensitivity to regional needs, are an opportunity to foster synergies. Support for the development of municipalities and civic activities encourages the establishment of a decent place for employees’ families to live their lives.

Loss of social backing for the Group’s work if it moves beyond mining boundaries and insufficient information is made available on resettlement options.

Lack of information on the potential resettlement of Horní Jiřetín and on the advance of mining activities could trigger misunderstandings and a negative response from the local population and institutions.

Arrangements to keep the affected inhabitants and other entities properly informed of conditions and rules of potential resettlement (including financial compensation or replacement property assignment) and mining advances.

Publication of the principles underlying offers to settle conflicts of interest and of model formulae to calculate compensation paves the way for dialogue rooted in clear information. (QII 2015)

30

Medium-term sustainable development goals

The Sev.en Group sets goals for upcoming periods in a way that responds to stakehold-ers’ needs and concerns and follows up on

the risks and opportunities identified. The goals are limited to indicators for which it is technically feasible to set a new future target and in respect of which the Sev.en Group sets out to ensure long-term project continuity, maintenance and implementation. A full run-

down of all key indicators is provided in the various sections of this Report.The Sev.en Group’s management has set medium-term sustainable development goals and indicators, to be used as a vehicle for its evaluation of developments in any given

priority. When strategic sustainable devel-opment priorities were being set, particular consideration was reserved for economic, en-vironmental and social benefits to stakehold-ers over which the company management could wield full control�


STRATEGIC PRIORITIES, SUSTAINABLE DEVELOPMENT GOALS AND AFFECTED STAKEHOLDERS OF THE SEV.EN GROUP IN 2013-2015

Sustainable development pillar

Values of Sev.en Group sustainable development goal indicators

Priority GoalsStakeholder affected

Description of goalResults in 2014(Pages from 2014 REPORT)

Results in 2015 Goals for 2016

Ec

on

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ic b

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efi

t Safeguarding additional coal production and employment

To extract brown coal reserves that can be underground-mined within environmental mining boundaries

Employees, customers

Extraction of some of the coal reserves tied to the end side slopes of the ČSA surface mine by underground mining methods. The securing of coal for customers. Jobs for employees from the underground Centrum Mine.

Project-centred and legislative preparation of the project, approval process.The project was implemented successfully and according to plan.Pages 79, 80

Start of miningThe project was implemented successfully and according to plan.Pages 63

Continuation of mining; assessment of the profitability of mining in conditions revised by Government Resolution No 827*

Employee benefits

To support employees’ pension arrangements

Employees and their families, community, trade unions

Goal: the provision of a benefit, i.e. a “contribution to pension insurance” (or a supplementary pension scheme), to Sev.en Group employees.

Goal fulfilledPages 43, 156

Goal fulfilledPages 88, 90

(existing goal applies)

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Occupational safety

To keep to low injury limits

Employees and their families, community, supervisory authorities, trade unions

Goal: the injury frequency/rate is not to exceed 1.0 at key companies (Severní energetická a.s. and Sev.en EC, a.s.) (i.e. one registered injury [an injury necessitating more than three days’ absence] per hundred employees annually).

Goal fulfilled at key companiesPages 52-53, 154

Goal fulfilled at key companiesPages 98, 100-101


Employee training

To set aside sufficient numbers of hours for training and education

Employees, community, supervisory authorities

Goal: a minimum average number of 20 hours per employee per year at key companies (Severní energetická a.s. and Sev.en EC, a.s.).

Goal fulfilled throughout the Sev.en GroupPages 54, 155

Goal fulfilled throughout the Sev.en GroupPages 93-5


Maintaining employment

To find new jobs for those who are laid off

Employees and their families, community, state administration authorities, trade unions

The search for new jobs within the Sev.en Group for those who are laid off as operations at the Centrum and ČSA mines are wound down in the wake of Government Resolution No 827.

Decision to prepare an internal employment plan that maps further job opportunities for workers Page 87

Introduction of the internal employment plan

31

Sustainable development pillar

Values of Sev.en Group sustainable development goal indicators

Priority GoalsStakeholder affected

Description of goalResults in 2014(Pages from 2014 REPORT)

Results in 2015 Goals for 2016

En

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Abatement of emissions into the air

To develop the Chvaletice Power Station overhaul project

Central and local government authorities, community, financial institutions, employees, communities

Plan: a reduction in Chvaletice Power Station’s environmental impacts following completion of its overhaul

Project-centred and legislative preparation of the project, call for tenders to find a supplierThe project was implemented successfully and according to plan.Pages 120, 127-128

Evaluation of tenders and selection of a supplier to overhaul the units. Design and construction workThe project was implemented successfully and according to plan.Pages 74 and 121

The staged shutdown of the two units, unit overhauls, trial running, and launch of permanent operation.

ReclamationTo implement ČSA Mine reclamation projects

Community, central government and regional supervisory authorities, local government authorities

Reclamation – goal: the phased implementation of ČSA Mine reclamation projects at the base of the Ore Mountains (Krušné hory)

Goal fulfilledPages 103-104

Goal fulfilledPages 137-142


So

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Community

To promote quality communication with communities and regional development

Community, non-profit organisations, local government authorities

Investment in communities – goal: programmes geared towards regional cooperation and the support of municipalities in regions around the ČSA Mine and Chvaletice Power Station.

Goal fulfilledPages 50, 80, 98, 118-119

Goal fulfilledPage 150

Introduction of a new model to support communities in the areas around the mines being phased out (Centrum and ČSA)

To raise awareness of possible resettlement

Stakeholders: Horní Jiřetín and neighbouring municipalities

Plan: Arrangements to keep the affected inhabitants and other entities properly informed of conditions and rules of potential resettlement (including financial compensation or replacement property assignment) and mining advances.

Project preparation:Consultations with municipalities, inhabitants and the institutions concernedThe project was implemented successfully and according to plan.Pages 20, 314, 91-93

Publication of the principles underlying offers to settle conflicts of interest and of model formulae to calculate compensation**The project was implemented successfully and according to plan.Page 66

The resettlement project will be suspended in the wake of Government Resolution No 827*

* Existing mining limits have been maintained under Resolution of the Government of the Czech Republic No 827 of 19 October 2015 on further procedure concerning environmental mining boundaries for brown coal extraction in North Bohemia; this has blocked the further development of the ČSA Mine.

** May 2015, see www.sev-en.cz/cz/uhli/download/horni_jiretin.pdf


http://www.sev-en.cz/cz/uhli/download/horni_jiretin.pdf

II. DIALOGUE WITH STAKEHOLDERS AND DETERMINATION OF THE CONTENT OF THE REPORT

33

The Group’s companies

were members of 20

organisations and

associations.

20


DIALOGUE WITH STAKEHOLDERS

Sev.en Group’s stakeholder engagement

Principles underlying stakeholder engagementThe management of relations with all of the Sev.en Group’s stakeholders is subject to common principles:• Relations with all stakeholders are nurtured

with stringent adherence to legal obliga-tions�

• The principle of the Group’s sustainable development is reflected in relations with all stakeholders, i�e� relations between the Group and individual stakeholders are based on reciprocated information and transparent behaviour.

• As we believe that points where the com-mon preferences of stakeholders intersect can only be identified if data are disclosed, we endorse non-financial reporting accord-ing to the GRI standard�

In the realm of social responsibility, we make a distinction between the following key stake-holders and their specific requirements:

Customers and suppliersCustomers and suppliers obtain the majority of their information from the various sales units of the Group’s companies. Support is provided by the online apps at https://trade.sev-en.cz/. In addition, the Sev.en Group participates in energy-sector expert seminars and conferences attended by customers, suppliers and representatives of state admin-istration�

Employees and their organisationsEmployees have countless channels of communication, including via the bodies of individual companies (in particular when trade unions are negotiating with company management, for purposes of safety commit-

tees, etc.), the intranet, the Group newsletter – Sev.eNoviny, the complaint filing system, and direct talks with HR departments.

Local communities and local government authorit iesCompany management communicates with the representatives of municipalities at regu-lar meetings� Mayors may contact the chief executive officer of a company or, alterna-tively, get in touch with the communication department. Regular consultations are held with local government representatives, espe-cially within the scope of regional cooperation projects. Cooperation agreements provide for mutual disclosures. The general public may use the following official communication chan-nels to submit enquiries, complaints or other initiatives to companies in the Sev.en Group:• by post to the various companies’ regis-

tered offices;• in person at the communication depart-

ment of Severní energetická a�s� or Sev�en EC, a.s.;

• electronically, using the email addresses used by the different companies for information purposes (e.g. [email protected], [email protected]);

• by other means (e.g. by emailing a company employee directly).

Those employees who are contacted are re-quired to reply to enquiries within the short-est possible timeframe, or to forward them promptly to a competent employee dealing with the area covered by the enquiry in order for it to be processed. It is incumbent on em-ployees to archive replies drawn up in writing (including emails). The same applies to any enquiries and comments to which responses are made anywhere in the public domain (even if the enquiries are made by telephone, are communicated by journalists or mayors, or are put forward at conferences, etc.). The questions most frequently asked in person, over the telephone or by email are published at http://www.sev-en.cz/cz/promedia/otazky.html�

State administration and supervisory authorit iesSpecialised departments, depending on their specific competence, work with the relevant state supervisory authorities, especially in the fields of occupational safety, human resources, environmental protection and mining supervision.

Non-profit organisationsOpen communication is maintained here, with feedback pri-marily relating to conferences, seminars and other discussion platforms and other regional cooperation activities. A particular group here comprises non-governmental organisations specialising in environmental issues, which are involved in areas such as EIA processes.

Training and research partnersTraining-related collaboration tends to take the form of sup-port for projects implemented at primary schools, secondary schools and higher-education institutions in the surrounding regions�

MediaIn 2015, the media was given continuous access to the Sev�en Group’s information. The Group abides by the principle that every question from a journalist deserves an official response promptly and to a proper quality.

Employer organisations and professional associationsIn 2015, the Group was a member of 20 organisations andassociations, of which 16 were Czech and 4 were international� Within the Czech Confederation of Industry, the Employers’ Association of the Mining and Oil Industries, the Mining Union, the Czech Association of Energy Sector Employers, the Most Economic and Social Council and the Most District Chamber of Commerce, the Group is represented by members of the board of directors. Membership of these organisations is considered strategic�

Participation in addressing expert issues and regional development

The Sev.en Group is involved in expert issues and regional development through its membership of significant regional, national and international organisations�

https://trade.sev-en.cz/

https://trade.sev-en.cz/

mailto:mail%40sev-en.cz?subject=

mailto:mluvci%40sev-en.cz?subject=

http://www.sev-en.cz/cz/promedia/otazky.html

http://www.sev-en.cz/cz/promedia/otazky.html

34


Within the Czech Confederation of Industry, the Employers’ Association of the Mining and Oil Industries, the Czech Association of En- ergy Sector Employers, the Most Economic and Social Council, the Most District Chamber of Commerce, the Pardubice Regional Tripartite and the Czech Association for District Heat-ing, the Group is represented by members of the boards of directors of its key companies (Severní energetická a�s�, Sev�en EC, a�s�)� Membership of these organisations is considered strategic�Of the domestic central economic and business associations and federations, the Group attaches importance to its membership of the Czech Confederation of Industry, the Employers’ Association of the Mining and Oil Industries and the Mining Union. These are organisations where new and updated legislation can be consulted and where the Group is represented in the governing bodies. In 2015, the updating of the national energy and raw materials policy, an amendment to the Mining Act to address levies on mining activities, and the issue of brown coal mining limits remained the key topics within these organisations. In addition, new environment-related regulations and amendments (including draft amendments to the Waste Act, the Clean Air Act, the EIA Act, etc.) were consulted�

Within the Employers’ Association of the Mining and Oil Industries, the Group was involved – as part of the Extractive Industries Platform – in the project “Social Partners’ Common Action to Prepare the Sector for Pension Scheme Changes”, intended to pre-pare employers and employees for pension reform impacts and changes by engaging them in bipartite dialogue. The Group also benefits from its involvement in the Czech Association of Energy Sector Employers, drawing together employers doing business in the production and distribution of electricity and heat. Here, the Group is represented on the management board� In addition, the

Group is a member of the Association for Dis-trict Heating, which promotes business in the supply of thermal energy and the cogeneration of electricity and heat, and puts forward requirements relating to the energy sector and district heating in its relations with the state authorities of the Czech Republic and bodies of the European Union.Regionally, representation in Ústí nad Labem and Pardubice regional bodies is a key factor because the Group maintains a presence in both of these regions. The Group is represented in the Most District Chamber of Commerce and the Pardubice Regional Chamber of Commerce, where its representatives pursue activities intended to support and optimise business operations. In the Ústí nad Labem Region, the Group attaches importance to its representation in the Most Economic and Social Council, which aims to deliver balanced economic and social development in the Most district. In 2015, the Group’s representatives made active con-tributions to the formulation of requirements concerning compensation for the fact that the region is affected by energy operations and brown coal mining, and to the securing of funds to continue the area’s revitalisation. In the Pardubice Region, membership of the Regional Tripartite is important. Nationally, the Group is involved in the Czech Chamber of Commerce, which aims to create business opportunities while championing and rallying behind measures conducive to the devel-opment of business in the Czech Republic. Within the Czech Chamber of Commerce, the Group is an active player in the energy, legis-lation, environment and IT sections�

Professional organisations yielding beneficial membership include the Czech Society for Strategic Management, Innovation and Entre-preneurship, the Czech Office for Stand- ards, Metrology and Testing, the Czech IPPC Technical Working Party for Extractive Waste Management, and the Association for Energy Product Use.

Internationally, involvement in EURACOAL, the European Association for Coal and Lignite, is vital to the Group. This associ-ation sets out to promote the interests of the coal industry in European energy policy and actively contribute to the formation of a non-discriminatory EU framework for the coal industry. The Group has long been actively involved in EURACOAL’s activities. It is repre-sented in the executive committee, the energy policy committee and the environmental committee. In 2015, key topics were the creation of an Energy Union, regulation of the emission allowance trading system (a market stabilisation reserve), and BREFs for large combustion sources. EURACOAL discussed these topics with MEPs at the Round Table on Coal and with the European Commission within the framework of the 11th Coal Dia-logue. As EU energy policy veers towards low emissions, EURACOAL warned that, for the security of energy supply, such a transformation would require time for the reliable and sensible preparation of this plan. It also brought home that coal qualifies to be part of this process in every respect, e.g. as reliable support for unstable renewable sources and as a source of energy that is being harnessed ever more efficiently and greenly in line with coal technology advances. The importance of indigenous coal for the EU’s security of supply was the subject of an opinion drawn up by the Consultative Commission on Industrial Change (CCMI), which is part of the European Economic and Social Committee, an advisory body to the European Commission. A Group member was one of the opinion’s co-rappor-teurs. At its November meeting, the CCMI ad-opted the opinion with the recommendation to draw up a plan for regions dependent on coal mining�

Of international organisations, involvement in the IPPC Sevilla process is also important, as is activity in the working party on extractive waste management, where a draft review of the reference document on best

available technology for extractive waste management was drawn up and consulted. Euroregion Krušnohoří membership is helpful for cross-border cooperation. In 2015, a significant activity here was the discussion and assessment of the suitability of cross-border cooperation projects, such as the revitalisation use of the landscape.

Key topics and concerns raised through stakeholder engagement

The Sev.en Group provides the general public with information on its activities in annual reports and in the present report. Happenings within the company and in the region are re-ported in a monthly newsletter for employees (Sev.eNoviny). A quarterly magazine, Sedmý proud, and the Group’s website at www�7�cz are other sources of information�

For the Sev.en Group, transparency is a key requirement in relations with all stakeholders� Specific stakeholders are mentioned in rela-tion to individual key topics, in the following overview, and in other sections on individual Group company activities in this report.

In communication with stakeholders (es-pecially the surrounding municipalities and supervisory authorities), the following pro-jects and documentation preparations were significant in 2015:• Explanation of the current state of play

and potential ways in which coal mining at the ČSA Mine could be continued or wound down

• Information on the Chvaletice Power Station overhaul project

• The commencement of room-and-pillar mining in the side slopes of the ČSA Mine (the acquisition of a permit)

• Notification of the end of mining at the underground Centrum Mine in 2016

• The production of documentation and the submission of an application for longwall working in the side slopes of the ČSA Mine.

http://www.7.cz

35

Stakeholders

January

Shareholder meeting with employees employees

The Severní energetická Group informed trade union representatives and employees of the impacts of all four proposed approaches to the handling of mining limits from 1991, as put forward by the Ministry of Industry and Trade

employees

Underground mining commenced at the ČSA site – extraction of some of the coal reserves tied to the end side slopes of the ČSA Mine by means of the room-and-pillar mining method

employees, shareholders, general public, customers

Notification of the driving of an exploration heading, running for 100 m in the Dolní Jiřetín working district (Důl Kohinoor a.s. v likvidaci), to survey an exclusive deposit

District Mining Office for the Ústí nad Labem Region

Solid-fuel laboratory accreditation certificate – Severní energetická a.s. – laboratory (ISO 17025:2005); reaccreditation Czech Accreditation Institute, customers

Inspection of the uptake of financial reserves for rehabilitation and reclamation District Mining Office for the Ústí nad Labem Region

Assessment of the 2014 collective agreement trade unions, employees

Commencement of collective bargaining for the HUMECO, a.s. collective agreement covering the 2015-2017 period trade unions, employees

Public-administration inspection of a beneficiary of public financial support – no findings Labour Office of the Czech Republic – Ústí nad Labem regional branch

Company management meeting with employees on the site of the ČSA Mine employees

The Severní energetická Group informed representatives of trade unions and employees of the impacts of all four proposed approaches to the handling of mining limits from 1991, as put forward by the Ministry of Industry and Trade

trade unions, employees

Inspection of requirements concerning occupational safety and health and safe operation during mining activities – no transgressions found


February

Continuous tracking and evaluation of the monitoring of the mining situation at the ČSA Mine, and technical supervision of the ČSA Mine – Stage 10 of the work – 2014


Visit by the Czech President (ČSA Mine) shareholders, employees, politicians

Tax declaration – consultation with all employees employees

Regular meetings with trade unions – reporting, consultations Trade unions, employees

March

Regular meetings with trade unions – reporting, consultations Trade unions, employees

Publication of the conclusion from the screening procedure for the ČSA development and working face advance plan – Extraction of some of the coal reserves tied to the end side slopes of the ČSA Mine by underground mining methods – longwall working, in accordance with Act No 100/2001, as amended – no appreciable environmental impact; will not require assessment under the law

Ministry of the Environment, Ústí nad Labem Regional Authority, the municipalities of Litvínov and Horní Jiřetín, Czech Environmental Inspectorate, general public

Publication of the conclusion from the screening procedure for the development and working face advance plan for the Centrum Mine’s South Field, in accordance with Act No 100/2001, as amended – no appreciable environmental impact; will not require assessment under the law

Ministry of the Environment, Ústí nad Labem Regional Authority, the municipalities of Litvínov and Horní Jiřetín, Czech Environmental Inspectorate, general public

Visit by the Minister for Industry (ČSA Mine) shareholders, employees, politicians

District Heating and Energy Days – participation in a panel discussion on the future of district heating customers, professional community, politicians, media

The delivery of pension scheme record sheets for 2014, a regular meeting including feedback from employees on conditions at the company

employees

Meeting with pensioners – former employees, reporting on Group activities Former employees

Severní energetická a.s. and Důl Kohinoor a.s. – key events and stakeholder engagement MAIN EVENTS AT SEVERNÍ ENERGETICKÁ A.S. (THE ČSA MINE AND COAL PREPARATION PLANT) AND AT DŮL KOHINOOR A.S. IN 2015


36

Stakeholders

April

Meeting with the management of Triola – presentation of a project concerning mining beyond the limits and its effects on the activities of Triola, including an explanation of the principle underlying the handling of conflicts of interest

a business in Horní Jiřetín

Individual meetings with the mayors of partner municipalities – news on the situation surrounding limits and room-and-pillar mining representatives of municipalities

Reclamation presentation – Earth Reborn exhibition at Prague Castle (held under the auspices of the Czech President) shareholders, politicians, general public

Meeting between Vladimír Špidla, chief adviser to the prime minister, and trade unions (ČSA Mine) politicians, trade unions

Meeting with the authors of a study on limits for the Office of the Government – held at Sev.en in Most, supply of underlying documentation, discussion on topics related to the continuation of mining

politicians, professional community

May

Shareholder decision to take Důl Kohinoor a.s. v likvidaci out of liquidation as at 6 May 2015 and to change its name to Důl Kohinoor a.s.

supervisory authorities, employees, shareholders

Commencement of a comprehensive review by the District Mining Office for the Ústí nad Labem Region (an inspection of occupational safety and health and the safe operation of the mine) – 19 May 2015

District Mining Office for the Ústí nad Labem Region, Ústí nad Labem Regional Hygiene Station


Inspection by the District Mining Office focusing on mine drainage District Mining Office, HUMECO

Inspection of the implementation of and compliance with the rehabilitation and reclamation plan for 2013-2017environmental bodies of municipalities and Ústí nad Labem Regional Authority, Ministry of the Environment, District Mining Office for the Ústí nad Labem Region

Inspection of the uptake of financial reserves for rehabilitation and reclamation District Mining Office for the Ústí nad Labem Region

June

Minister for the Environment (Richard Brabec) – visit to the ČSA Mine, press conference politicians, media, general public

Public hearing on limits in the Czech Senate – presentation by the Sev.en management and trade unions politicians, general public

Publication and distribution of the updated offer to deal with the conflict of interests in Horní Jiřetín, media coverage of the offer, also dispatched to members of the government

inhabitants of Horní Jiřetín, media, general public, politicians

Completion of the comprehensive review by the District Mining Office for the Ústí nad Labem Region – Final Evaluation Report, 26 June 2015

District Mining Office for the Ústí nad Labem Region, Ústí nad Labem Regional Hygiene Station

JulyMinister for Labour and Social Affairs (Michaela Marksová-Tominová) at the ČSA Mine, press conference politicians, media, general public

Media coverage of room-and-pillar mining – breakthrough of drifts in the side slopes of the ČSA Mine media, general public

August

The District Mining Office for the Ústí nad Labem Region acknowledged the 29th amendment to the ČSA Mine’s development and working face advance plan – an update of the section “Geology and management of exclusive deposit reserves”

District Mining Office



37

Stakeholders

September

Control measurements of emissions from the operation of a specified stationary source of air pollution – the Komořany Coal Preparation Plant

authorised person, Czech Environmental Inspectorate

Accession to an appeal by the Most Economic and Social Council: “Most Region – We Will Not Be Snubbed” employees

Visit by the Minister for Finance (Andrej Babiš) and Minister for the Environment (Brabec) to the ČSA Mine, meeting with employees, press conference

politicians, employees, media, general public

Miners Day – presentation of mining traditions set against a backdrop of the future employees, general public

Visit by the Parliamentary Economic Committee – ČSA Mine – presentation of the plan for continued mining, discussion politicians

Shareholder meeting with employees from all Sev.en establishments – news on the situation surrounding limits employees

Inspection by the District Mining Office of ČSA Mine drainage on the south-western slopes of the Krušné hory mountains and at the inner dump (Hedvika)


Inspection of the implementation of and compliance with the rehabilitation and reclamation plan for 2013-2017environmental bodies of municipalities and Ústí nad Labem Regional Authority, Ministry of the Environment, District Mining Office for the Ústí nad Labem Region

October

Inspection of compliance with the terms and conditions of a permit by the State Office for Nuclear Safety (ash and sulphur analysers incorporate sealed radioactive sources) – no finding

State Office for Nuclear Safety – Ústí nad Labem

Inspection of the use of financial reserves for the rehabilitation and reclamation of the ČSA Mine Czech Mining Office for the Ústí nad Labem Region

Opening of negotiations on a higher-level collective agreement (Addendum 1) Trade unions, Employers’ Association of the Mining and Oil Industries

Demonstration by mining trade unions at a meeting of the Czech government in Ústí nad Labem. politicians, general public, employees

Existing mining limits have been maintained under Resolution of the Government of the Czech Republic No 827 of 19 October 2015 on further procedure concerning environmental mining boundaries for brown coal extraction in North Bohemia; this has blocked the further development of the ČSA Mine

all stakeholders

November

Submission of an application for approval to operate a facility recovering waste on the surface of the land and in the mined-out workings of the ČSA Mine

District Mining Office, Ústí nad Labem Regional Authority

Participation in the Ústí nad Labem Region Days in Brussels – presentation of Sev.en as a major employer. MEPs

Submission of documentation at the District Mining Office – evaluation of the results of measures taken during production in areas affected by underground mining – “Old or abandoned ČSA workings”


Approach to key stakeholders with a request for feedback on the Sev.en report stakeholders

Publication of the plan by the shareholder Tomáš Fohler to sell a shareholding in the Sev.en Group. all stakeholders

Information is reported on a signed shareholder plan to completely reorganise the companies into a single group with Vršanská uhelná a.s. once approval has been granted by supervisory authorities and the financing banks. Notification of the plan to the Office for the Protection of Competition, whose approval is required for the two groups to merge

all stakeholders

Publication of the plan to close the Centrum Mine in 2016 in connection with a decision by the Czech government to preserve mining limits at the ČSA Mine. Meeting with the employees of the Centrum Mine, written notification to members of the government, press statement for the media

all stakeholders

Sev.en representatives became members of a working party of the Ministry of Labour and Social Affairs and Ústí nad Labem Region set up to mitigate the impacts of the government’s decision to stick to the existing limits at the ČSA Mine. (Two meetings held by the end of the year)

employees, Ústí nad Labem Region, state administration


38

Stakeholders

December

Submission of an application to determine the method and conditions for discharging mine water into surface water from the ČSA-JŠ mine water treatment plant

Ústí nad Labem Regional Authority, Povodí Ohře s.p.

Submission of an application to renew a permit to discharge treated wastewater from the ČSA wastewater treatment plant Most City Hall Water Authority, Povodí Ohře s.p.

Closure of negotiations on a higher-level collective agreement (Addendum 1) trade unions, Employers’ Association of the Mining and Oil Industries

Invitation to assess and make recommendations on the content of the Group’s GRI report – “Participate in the Report”, in Sev.eNoviny

employees

Withdrawal of the application to determine the method and conditions for discharging mine water into surface water at the Centrum Mine

Ústí nad Labem Regional Authority

Company presentation at a conference held by the Employers’ Association of the Mining and Oil Industries on raw materials policy – the future of mining in the Most region.

professional community

Visit by the Czech President to the Ústí nad Labem Region – meeting in Třebívlice shareholders, politicians

30th amendment to the development and working face advance plan – approval of the rehabilitation and reclamation plan and the creation of financial reserves for mine damage and rehabilitation and reclamation

municipalities affected, Ministry of the Environment, District Mining Office for the Ústí nad Labem Region

Inspection of the uptake of financial reserves for rehabilitation and reclamation for 2016municipalities affected, Ministry of the Environment, District Mining Office for the Ústí nad Labem Region

The production of documentation and the submission of an application for longwall working in the side slopes of the ČSA Mine


Publication of the Code of Ethics, Code of Commercial Ethics and Ethical Conduct all stakeholders and management

ongoingCommunication with the representatives of a civic association in Horní Jiřetín willing to negotiate the plan to continue mining beyond the limits, and the ways in which this can be handled for the affected inhabitants, businesses and institutions

Dialog Horní Jiřetín (civic association) – municipal representatives in opposition

ongoing Communication with the media media

ongoing Active membership of industry organisations and, through them, communication (for example) within a tripartite politicians, professional community, trade unions

Sev.en EC, a.s. (7EC) – key events and stakeholder engagement (Elektrárna Chvaletice a.s. was renamed Sev.en EC, a.s. on 1 August 2015)KEY EVENTS IN 2015

Stakeholders

January

Establishment of a Measurement and Control Operations Unit (10 jobs) – a decision by the board of directors to take over the activities of measurement and control operating mechanics

employees, management

Change to the shift schedule for employees of the operations unit employees

Change to the remuneration system for employees receiving tariff-based wages employees

Competitive procedure with negotiation – overhaul of a desulphurisation absorber at Chvaletice Power Station suppliers

Open tendering procedure – reconstruction of insulated wiring in the even standby loop suppliers


39

Stakeholders

February

Signing of the Elektrárna Chvaletice a.s. Collective Agreement for 2015-2017 employees

Meeting with mayors + excursion to see the operation of ECHAS – information on power station repairs, evaluation of 2014, and specific plans for 2015

mayors of surrounding municipalities

Meeting between employees and management at the control room in the first dual unit employees from part of the enterprise

24 February 2015: Approval of an amendment to the integrated permit (seventh amendment) by a regional authority decision of 24 October 2014 (increase in dust emission ceilings from 324 tonnes per year to 524 tonnes per year)

Pardubice Regional Authority – Environment and Agriculture Department – IP Unit

24 February 2015: “Verification audit of the process of identifying and reporting the quantity of CO2 emissions” for 2014 BUREAU VERITAS CZECH REPUBLIC, spol. s.r.o.

March

Establishment of an electronic catering suggestions and complaints book employees

Consultation of economic results with trade unions trade unions

18 March 2015: Inspection of compliance with Section 10 of Act No 254/2001 on water, Implementing Decree of the Ministry of Agriculture 20/2002 on the method and frequency of measuring the quantity and quality of surface water, Act No 505/1990 on metrology, and associated implementing decrees

Povodí Labe, státní podnik

May

14-16 May 2015: first surveillance audit of the EMS system in accordance with ČSN EN ISO 14 001 BUREAU VERITAS CZECH REPUBLIC, spol. s.r.o.

“Agreement on Permanent Partnership and Cooperation” between Severní energetická, the power station (Sev.en EC) and the Czech Technical University (cooperation on technical, economic and environmental matters)

higher-education institutions

Amendment to the integrated permit (IP) – eighth amendment, by a regional authority decision of 27 May 2015 (reducing-agent warehouse on the premises of the wastewater treatment plant; this is a measure to reduce emissions of NO

x under the overhaul

project)

Pardubice Regional Authority – Environment and Agriculture Department – Integrated Prevention Unit

June

Meeting with employees at the control room in the first dual unit employees from part of the enterprise

Open Day public

Press release – “Agreement on the overhaul of two units of Chvaletice Power Station signed” suppliers, all stakeholders

6-20 June: scheduled shutdown of Units B3 and B4 – equipment repair and maintenance suppliers + operating employees

July

Launch of the EnergyTour project to provide public excursions general public

Staff meeting on the overhaul of the power station employees

Visit by mayors from the area surrounding the power station to the Coal Safari (ČSA Mine) mayors of surrounding municipalities

Inspection of compliance with obligations under legislation to ensure occupational safety and compliance with obligations under legislation to ensure the safe operation of technical equipment where there is an increased risk to life and health, as well as legislation on the safe operation of specified technical equipment

District Labour Inspectorate for the Hradec Králové Region and Pardubice Region.

August

Company name change to Sev.en EC, a.s. (7EC) all stakeholders

Staff meeting at the control room in the first dual unit employees from part of the enterprise

27 August 2015: “Strategic and risk analysis for 2015 – Stage 1 in the verification of CO2 emissions” BUREAU VERITAS CZECH REPUBLIC, spol. s.r.o.

22 August: commencement of the scheduled shutdown of Units B1 and B2 – equipment repair and maintenance suppliers, operating employees


40

Stakeholders

September

Meeting with employees: “Two years after – rebirth of a power station” employees

9 September 2015: Inspection of the system for the management of the production of energy by-products, by a certifying authority Technický a zkušební ústav stavební Praha, s.p.

The entire power station was shut down from 23:03 hours on 10 September until 11:39 hours on 12 September for emergency operational reasons. Units B1 and B2 were undergoing scheduled repair, Unit B3 was shut down due to slag caving, and Unit B4 was shut down due to a leak in the steam room area

customers, supervisory authorities, shareholders

Visit by Senator Miluše Horská representatives of the general public

Participation in the Electronics and IT fair secondary schools

Main sponsor of the “Award of František Filipovský Prizes for Best Dubbing” in Přelouč general public, regional population, educational organisations

18 September: completion of the scheduled shutdown of Unit B2 – for equipment repair and maintenance suppliers + operating employees

October

Meeting at the control room in the second dual unit employees from part of the enterprise

Announcement of the selection of candidates for membership of the supervisory board of Sev.en EC, a.s. shareholders, management, employees

Test of emergency preparedness for an oil spill into the Elbe company fire rescue service

The thousandth person to visit the operation of the power station general public

Practice drill by the Sev.en EC, a.s. company fire rescue service – fire in the compressor station of Absorber 2voluntary firefighting units of the municipalities of Zdechovice and Řečany nad Labem, and the fire station of the Přelouč Fire Rescue Service.

19 October 2015: practice drill by the company fire rescue service, involving the voluntary firefighting units of Řečany nad Labem and Zdechovice, as well as the Pardubice Regional Fire Rescue Service Unit from Přelouč

fire protection units of Přelouč, Řečany nad Labem, and Zdechovice

November

Selection of the winning candidate as a member of the supervisory board shareholders, management, employees

Donation to the Kladruby nad Labem National Stud Farm for the planting of greenery local community, general public

Active involvement by company representatives at the All for Power conference professional community

Inspection by the Czech Environmental Inspectorate – integrated prevention (5 and 6 November 2015)Czech Environmental Inspectorate – Hradec Králové District Inspectorate

Amendment to the integrated permit (IP) – ninth amendment, by a regional authority decision of 2 November 2015 (change in the dust level from 324 tonnes to 404 tonnes in accordance with an agreement between Sev.en EC, a.s. and UNIPETROL RPA, s.r.o. on the provision of part of the emission ceilings set for dust)

Pardubice Regional Authority – Environment and Agriculture Department – Integrated Prevention Unit

28 November: completion of the scheduled shutdown of Unit B1 for equipment repair and maintenance suppliers + operating employees

December

Meeting with mayors – power station repairs, events in 2015 and expectations for 2016 at 7EC, increase in the number of persons in the 7EC complex in the next year, preservation of mining limits

mayors of surrounding municipalities

Meeting with employees at the control room in the first dual unit employees from part of the enterprise

Meeting – Pensioners Club (for former employees of Chvaletice Power Station) former employees

Inspection (9 December) of compliance with Section 10 of Act No 254/2001 on water, Implementing Decree of the Ministry of Agriculture 20/2002 on the method and frequency of measuring the quantity and quality of surface water, Act No 505/1990 on metrology, and associated implementing decrees.

Povodí Labe, státní podnik

Publication of the Code of Ethics, Code of Commercial Ethics and Ethical Conduct all stakeholders and management


41

representatives of stakeholder

groups participated in the Sev.en

Group’s survey on report content.

148

BOUNDARIES AND IDENTIFICATION OF MATERIAL ASPECTS OF THE SEV.EN GROUP’S ACTIVITIES AND THE LIMITS THEREOF

The Sev.en Group is aware that the extraction of reserved minerals and the production of energy will always be matters of public inter-est, whether from the perspective of energy or raw materials policy or in terms of the se-curity of the Czech Republic or the European Community. Accordingly, the Sev.en Group strives to describe its principal activity, and the benefits and impacts thereof, to the best possible quality, as transparently as possible, and in a generally accepted way. The Sev.en Group has selected the GRI G4 standard as a suitable set of guidelines because this is the most widespread global non-financial reporting standard. This standard is also recommended by EU Directive 2014/95/EU as regards disclosure of non-financial and diver-sity information by certain large undertakings and groups.Unlike other types of standards in corporate social responsibility (CSR) or sustainable de-velopment, the GRI standard facilitates veri-fication by the audit organisation, continuous innovation and dialogue with all groups of stakeholders, and inter-industry benchmark-ing on account of its clear-cut indicators.

The Sev.en Group is mindful of the fact that its line of business, if it is to work, requires the backing of stakeholders more than sim-ply customer interest and compliance with legislation. Reliable non-financial reporting is an important aspect of the Group’s respon-sible behaviour and is a formidable vehicle for communicating with key stakeholders (irrespective of who exercises influence over whom)� Besides customers, the main key stakeholders are financial institutions, em-ployees, surrounding communities, state ad-

ministration and the supervisory authorities thereof, local government, the professional community and the general public. The report constitutes a source of information – verified by an independent organisation – on the results achieved by the Sev.en Group and on the specific impact that its various companies have on their surroundings. Not only is it a conduit for presenting the benefits of the Group’s activities, but it is also able to define the impacts and repercussions for which the Sev.en Group is held responsible and how it chooses to tackle them�

This non-financial yearly report does not replace the Sev.en financial annual report or other documents of Sev.en Group companies, nor is it a marketing tool� Rather, it sets out the results of non-financial reporting, which, in most respects, extends far beyond the framework of an annual report required by law.

This yearly report has been produced in elec-tronic format, which is available at www.sev-en.cz/report

Contact point for enquiries regarding the report and its content: Gabriela Sáričková BenešováEmail: [email protected] phone: +420 800 800 449

Definition of the Sev.en Group’s significant stakeholders

The key internal stakeholders are employees and their trade unions. Significant external stakeholders are determined by:• legislation (the supervisory authorities of

state administration); • the branch of activity (customers, suppliers,

professional associations, financial institu-tions); and

• the reach of influences and impacts (local communities and organisations)�

Stakeholders are broken down by level of influence, impact and engagement into two groups – key and indicative.We consider the following to be key fundamental stakeholders with an unceasing interest in the Sev.en Group’s activities, whose standpoints are continuously monitored and evaluated:• Group company employees and trade unions;• state supervisory authorities defined by legislation;• customers and suppliers, defined by contractual relations

with the Sev.en Group;• employer organisations and professional associations geared

towards the energy sector and extraction of raw materials;• the group of municipalities, their inhabitants and local

government authorities directly affected by Group opera-tions – both environmental impacts (emissions) and social effects (communities of employees). In particular, these are municipalities in the districts of Most and Chomutov that are situated around the ČSA Mine, as well as the region around Chvaletice Power Station, i.e. the western part of the Pardu-bice district;

• financial institutions providing services to Group companies.The second group comprises “indicative” stakeholders. Their relationship with the Sev.en Group is loose and discontinuous, but their standpoints could yield interesting initiatives: • organisations fully funded from the public purse and

non-profit organisations, especially within the communities of the municipalities affected;

• experts, analysts and partners in training and research;• media, bloggers, etc�The Sev.en Group also welcomes any feedback from groups mentioned here (e.g. the general public), although it does not actively look them up in the structuring of the Report’s content�

In order to conduct a quantitative study (at the turn of 2014/15) to verify the relevance of – and to identify the seriousness of – the aspects that were to be reported (with sustainable development aspects taking priority), we broke stakeholders down according to the recommended (G4) criteria�


http://www.sev-en.cz/report

mailto:mluvci%40sev-en.cz?subject=

42

STAKEHOLDER BREAKDOWN BY LEVEL OF INFLUENCE, IMPACT AND ENGAGEMENT

Are they affected by the impacts and products of the organisation?

Are they able to influence results within the organisation?

Are they invested in the success/failure of the organisation?

key stakeholders**

internalEmployees significantly fundamentally significantly

Trade unions* no fundamentally significantly

external

Communities affected (municipalities) fundamentally significantly indirectly

Supervisory authorities of state administration

no fundamentally no

Financial institutions/banks indirectly fundamentally fundamentally

Customers fundamentally indirectly fundamentally

Suppliers no indirectly(highly differentiated, some significantly)

indicative stakeholders

NGOs and professional associations no indirectly no

Media and bloggers no indirectly no

GRI experts and producer and scientific research organisations

no (some indirectly) no

* For data processing purposes, we present employees (usually middle management) and trade union leaders separately as the latter also represent the interests of lesser skilled employees who have not commented on the materiality of the aspects of activities.

** We consider key stakeholders to be twice as significant as indicative stakeholders


Process of identifying relevant topics and stakeholder inclusion in the preparation of the report

In our view, determining the relevance and materiality of aspects of the Sev.en Group’s activities is a continuous process. The Group publicly offers everyone the opportunity to express their opinion on the published report by using a single form (www.sev-en.cz/report)�

In the process of identifying and verifying relevant topics, we drew on the following in particular:• The legislative framework of activities,

internal rules and ongoing negotiations with stakeholders;

• The Sev.en Group’s strategy; • The system of management KPIs and

internal reporting;

• Knowledge of the context of sustainable development: we view the results of the organisation’s operations in the broader context of sustainable development, espe-cially in addressing the long-term impacts of operational activities and in anticipat-ing long-term trends, risks and legislative commitments;

• Feedback from existing stakeholder en-gagement mechanisms, stemming from company activities (see the table of signif-icant events and negotiations with stake-holders on pages 34-40), which covers all stakeholder groups;

• At the turn of 2014 and 2015, we offered stakeholders a list of 40 relevant aspects for an evaluation of their materiality; they singled out 23 as material aspects;

- Questionnaire surveys among representa-tives of surrounding local government au-

thorities – determination of the materiality of individual aspects and the perception of risks and benefits of activities carried out by the Sev.en Group’s establishments (November 2014 to February 2015);- A survey among stakeholder groups (No-vember 2014 to February 2015), initiated specifically for a definition of the report’s content and a determination of the materiality of individual aspects (83 – mining; and 65 – electricity generation) by representatives of stakeholder groups, encompassing all key and indicative groups of stakeholders);• Inspiration from the GRI’s Sustainability

Topics for Sectors. What do stakeholders want to know?, 2013, GRI;

In the preparation of the 2015 report, we also harnessed feedback on the 2014 report:• Impulses from the verification of the 2014

report (see the DNV GL audit report includ-ed in the 2014 report);

• Specific stakeholder observations on the published 2014 report;

• Feedback evaluating the content of the 2014 report, provided by various respondents (apart from employees and municipalities) (November-December 2015) – 28 responses;

• Feedback evaluating the content of the 2014 report – employee questionnaire to verify the definition of the report content and determine the materiality of individual aspects (November 2015 to January 2016) – 96 employees responded;

• Questionnaire surveys among represen-tatives of surrounding local government authorities – feedback on the report content and on the perception of risks and bene-fits of activities carried out by the Sev.en

http://www.sev-en.cz/report

43


Group’s establishments (December 2015; 12 municipalities);

• A discussion on the results of feedback of the level of section directors and specialised managers�

Determination of boundaries and material aspects

BoundariesSpecif ic identif ication of reporting entit iesThe report focuses on the main areas of the Group’s activities: brown coal mining and preparation and the production of electricity, i.e. centring on the production companies Severní energetická a�s�, Sev�en EC, a�s� Sev.en WT, a.s. and Důl Kohinoor a.s., which employ 99.6% of all staff.8 In the accounting period comprising the 2015 calendar year, as far as the Group’s size is concerned (from the perspective of the organisation, structure, ownership or supply chain), there were no changes in the location of establishments or in the struc-ture of registered capital, nor were there any significant changes in the supply chain structure or in relations with key suppliers. A fundamental new development in the supply chain has been the launch of the Chvaletice Power Station overhaul project (tendering procedure came to an end and an agreement was signed in 2015)�The Central Mines Rescue Station and Fire Brigade (an organisational unit of Severní en-ergetické a.s.) provides services to non-group entities year-round on account of its status; those activities provided as a supplier are not covered by the report.9 The activities of Sev�en WT, a.s. (water pumping, purification and treatment), which directs less than one third of its capacities to companies outside the Sev.en Group, are discussed separately (page 136).

Double boundaries of two regionally separate forms of productionIn an effort to capture the boundaries and the nature of the impacts of the relevant aspects (internal/external impacts), as well as their primary repercussions, we present the aspects separately according to operational boundaries (coal mining or electricity production). At play here are not only different production processes and ef-fects, but also areas that are separate from each other and are influenced completely differently, which for the most part even have different stakeholders� Coal is mined and processed on the border between the districts of Most and Chomutov in North-west Bohemia; electricity and heat pro-duction at Chvaletice Power Station takes place 200 km further east, near Chvaletice in the Pardubice Region� Consequently, we also provide graphic visualisations of the prioritisation of material aspects separately for brown coal mining and for electricity and heat production.Internal boundaries and external boundaries of aspects are mainly demarcated by the im-pacts of activities carried out by the Group’s establishments, by reference to documents consulted with broad swathes of stakeholders (especially the development and working face advance plan, the coal mine protection zone, the rehabilitation and reclamation plan, the EIA, the integrated permit, emergency response plans, etc.) and stakeholder feedback. The impacts and benefits of aspects beyond the organisation tend to be taken into account if the company has direct responsibility and competence in the area in question�In 2015, the boundaries for determining report content and the impacts of the aspects remained the same as in 2013 and 2014� The boundaries demarcated by the social and

environmental impacts of establishments also remained exactly the same as in 2013 and 2014�

Boundaries of impacts established by the supply chainSignificant suppliers generally provide work and services in the areas of the Sev�en Group’s key companies. The boundaries of impacts established by the supply chain more or less replicate the boundaries of the oper-ations of the Sev.en Group’s organisations. (See the list of companies on pages 79-81.)The repercussions of their supplier activity and any risks relating to sustainable development fall within the boundaries of influence of Severní energetická a.s. Impacts and risks are handled in accordance with applicable legislation and with the internal regulations and values in force at Severní energetická a�s� The subsidiary Sev�en WT, a.s. provides services to Severní energetická a�s� at the sites thereof� The land of the subsidiary Důl Kohinoor a.s. is owned by Severní energetická a.s. Significant suppliers outside the Group’s territory include ČD Cargo a.s., transporting coal by rail from Severní energetická a�s� to customers (including Chvaletice Power Station), and Vršanská Uhelná a.s., the coal supplier.Regarding Chvaletice Power Station, sig-nificant suppliers mainly provide work and services relating to maintenance, overhauls and modernisation (the Overhaul Project) at the power station. The repercussions of their supplier activity and any risks relating to sus-tainable development fall within the bound-aries of influence of Sev.en EC, a.s. Impacts and risks are handled in accordance with applicable legislation and with the internal regulations and values in force at Sev�en EC, a.s. (See the list of companies on pages 79-81.)

Material aspectsDuring the aforementioned relevance deter-mination processes, we identified 40 aspects relevant to our business and stakeholders� In a questionnaire survey, stakeholders identified 23 material aspects. Against the background of stakeholders’ partially different priorities, two aspects were subsequently added that were considered material from the point of view of management and employees (Education and Training; Employee Benefits). Certain aspects were identified as relevant by a single organisation, but management considers their reach to cover the entire Group (e.g. customer data protection and the grievance mechanism)�The main material aspects to be identified (25 aspects) are comprehensive (encompassing economic, environmental and social areas), mutually interconnected across the Group (they cover both of the key companies, i.e. Severní energetická a.s. and Sev�en EC, a�s�), and fundamental both for the Sev.en Group’s Management and for key stakeholders� In addition, they offer a fair and balanced snapshot of the Sev.en Group’s activities in relation to sustainable development, including positive and negative ramifications and impacts. In terms of the validity of the final selection, it is important that, among the material as-pects, none is missing that would be subject to inspection by supervisory authorities or that would not be affected by fundamen-tal legislative developments or regulation. Virtually all aspects singled out as material by stakeholders are – in view of the nature of coal or electricity production – direct and measurable impacts with a clear determination of their boundaries, whether within operations (coal mining, energy production) or territorially outside operations; where processes cannot be quantified (the grievance

8 The company providing sports services – HIPODROM MOST a.s., with a headcount of six employees – is not reported in GRI indicators (with the odd exception – employee figures), and information on its activities is set out in the section on reclamation and annexes (page 144).

9 For summary information, see the Central Mines Rescue Station Annual Report at www.hbzs.cz.

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44

mechanism, compliance with the legislation, labour/management relations), the aspects in question are part of internal documents, reports and briefings. Crucially, in view of the long-term nature of the Sev.en Group’s activities in both mining (up to the completion of reclamation) and electricity production (at least until 2030), material aspects do not omit any durable, continuous impacts. These main material aspects encompass what are, from the perspective of the Sev.en Group, significant areas of risk and opportunity management. They constitute critical impacts and benefits for the organisation’s long-term performance, as well as future financial and non-financial repercussions, and play a decisive role in the organisation’s strategy, processes, relations and commitments� Considering the nature of production at the Sev.en Group and the nature of the risks, these material aspects understandably have a direct impact on rele-vant stakeholders�

Comments on graphs – to visualise the material ity of aspects of the Sev.en Group’s activit iesWe have used a matrix to rank each material aspect according to stakeholder interest (the impact on stakeholders’ evaluations and decision-making) and its significance to the organisation – the business impact or risk

(the significance of the organisation’s eco-nomic, environmental and social impacts).The vertical axis represents the degree of stakeholder interest in an aspect or how rele-vant and important stakeholders consider it to be. The horizontal axis represents how the management of the Sev.en Group (Severní energetická a.s. and Sev.en EC, a.s.) classified the aspects, based on their perceived importance and potential impacts on business. This graph is not a definitive list of aspects material for the Sev.en Group. It offers a current picture of what our stakeholders have highlighted as having considerable financial and operational impacts, or impacts on stake-holders or the Group’s reputation.The most material and jointly assessed aspects for both types of operation (coal pro-duction, electricity production) are categor-ically emergency preparedness and occu-pational safety, fundamental environmental impacts (emissions, reclamation), the im-pacts on surrounding municipalities, econom-ic results, and the indirect economic impact in the region. Aspects where the opinions of stakeholders match those of management (resettlement, emergency response plans, occupational safety, emissions, electricity production efficiency, etc.) are consistent with aspects having a very serious impact on the organisation’s results.Specifically, with coal mining, material

aspects shared by the management and stakeholders encompass the way forward in mining, including resettlement necessitated by mining, and the closure of operations; with the operation of the power station, those aspects are the reliability of supply and pro-duction efficiency.

Other relevant context and modifications compared to 2014Compared to the report for 2014, we have made certain modifications to aspects which have not been identified as material (they do not feature in the graphs) but are relevant, to a certain degree, in providing a full descrip-tion of the context of the Sev.en Group’s activities� The Sev.en Group is mindful of the signifi-cance of certain internal aspects identified by stakeholders as less material (“only relevant”), such as wage comparability, apt product labelling, the impact of products on customer health and safety, energy consump-tion, verification of environmental and social (OSH) procedures at suppliers, preventive action against the distortion of competition, and development in electricity supplies. For these topics, the report presents key data using GRI indicators�According to feedback (end of 2015) and previous surveys (start of 2015) on the materiality of aspects and follow-up commu-

nication, on average stakeholders consider non-production and ethical aspects (training and education, non-discrimination, equal opportunities, freedom of association, etc.) to be much less material than management� Furthermore, stakeholders view compliance with legislation broadly, as compliance with commercial and environmental legislation or the Labour Code and related regulations� Consequently, in this area the company groups together aspects that are present-ed separately by GRI, such as: respect for human rights, freedom of association and collective bargaining, non-discrimination (on grounds of gender, origin, age, etc�), and equal opportunities. As these areas are part of the Czech legal system, we have decided to incorporate them under the aspect “Com-pliance with legislation”, using GRI indicators.


45

9.0

8.5

8.0

7.5

7.0

6.5

6.0

6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0

Further mining advancement, including resettlement plans

Impact on communities

Reclamations and biodiversity

Occupational safety

Emergency preparedness

Provision of employment

Indirect economic impact

Contracting in the region

Water contamination

Health endangering emisssions

Closure planning

Economic results

Compliance with legislation

Visualisation of aspectsVISUALISATION OF THE PRIORITISATION OF ASPECTS OF THE SEV.EN GROUP’S COAL PRODUCTION (SEVERNÍ ENERGETICKÁ A.S., AND THE SUBSIDIARIES DŮL KOHINOOR A.S., SEV.EN WT, A.S.)The intensity of the background indicates the main preferences of employees relative to all stakeholders

Relevance to the organisation

Sta

keho

lder

inte

rest

Employee evaluation (December 2015, n = 37)

Value of 8 or more Value of 7–8

Value of 6–7

Labourorganisation

Waste

Employee education and training,employee benefits


46

9.0

8.5

8.0

7.5

7.0

6.5

6.0

6.0 6,5 7,0 7.5 8.0 8.5 9.0 9.5 10.0

Impact on communities

Reliability of electricity supply

Efficiency of electricity generation

Water contamination

Occupational safety

Customer dataprotection

Complaints resolution

CO2 emissions

Waste

Indirect economic impacts

Economic results


VISUALISATION OF THE PRIORITISATION OF ASPECTS OF SEV.EN GROUP‘S ELECTRICITY PRODUCTION (SEV.EN EC, A.S.- POWER STATION CHVALETICE)The intensity of the background indicates the main preferences of employees relative to all stakeholders

Relevance to the organisation

Sta

keho

lder

inte

rest


Reclamation and biodiversity

Impacts of transport Water consumption

Consumption of materials

Employee evaluation (December 2015, n = 59)

Value of 8 or more Value of 7–8

Value of 6–7

Health endangering emissions


Employee education and training,employee benefits


47

Boundaries of the impacts and benefits of material aspects of the Sev.en Group’s activities

Area Material aspects

Companies for which the aspect is material

Stakeholders for whom the external impacts or benefits of the aspect are material

Brown coal mining (Severní energetická a.s. and subsidiaries: Důl Kohinoor a.s., Sev.en WT, a.s.)

Chvaletice Power Station(Sev.en EC, a.s.)

Economic

Economic results internal internal Employees, financial institutions, supervisory authorities

Indirect economic impact external external Local communities, local economic operators

Contracts concerning regional development external Communities, local economic operators

Environmental

Material consumption internal Shareholders, suppliers

Water consumption internal internal/external Local communities, supervisory authorities

Reclamation and biodiversity internal/external internal/externalCommunities, local economic operators, supervisory authorities

Greenhouse gas emissions external/internalGeneral public/shareholders, customers, supervisory authorities

Health endangering emissions external external Communities, supervisory authorities

Water pollution external external Local communities, supervisory authorities

Waste internal/external internal/external Local communities, general public, supervisory authorities

Environmental impacts of transport external Local communities

Social sphere

Compliance with legislation internal/external internal/external All stakeholders

Grievance mechanism internal/external internal/external All stakeholders

Provision of employment internal/external internal/external Local communities, employees, trade unions

Labour/management relations internal internal Employees, trade unions

Customer data protection internal/external internal/external Customers

Occupational safety and health internal internal Employees, trade unions, supervisory authorities

Impact on local communities external external Local communities

Emergency preparedness internal/external internal/external Local communities, customers, supervisory authorities

Training and education internal internal Employees

Employee benefits internal internal Employees and their families, trade unions

Coal mining

Further mining procedure, including resettle-ment plans necessitated by future production

internal/external Local communities, customers, employees, suppliers

Closure planning internal/external Local communities, customers, employees, suppliers

Electricity production

Reliability of electricity supply internal/external Shareholders, customers, supervisory authorities

Electricity production system efficiency internal Shareholders, supervisory authorities


48


Supplementation of material respects stemming from feedback on the 2014 report:In their voluntary feedback, facilitated by way of questionnaires since November 2015, stakeholders proposed (up to January 2016) the following relevant additions to the mate-rial aspects already mentioned. We respond to such additions in this Report. The vast majority of stakeholders are appreciative of the breadth and scope of information. No effective absence of information or untruth-ful claims were found� In those cases where supplementation was requested, the request focused on expanding comments or context rather than reconsidering or supplementing material aspects:• Employees’ opinions are added to the

visualisation of material aspects. They confirmed the materiality of the aspect “Training and education” and supplement-ed “Employee benefits”, which, needless to say, employees hold to be much more material than other stakeholders�

• The requirement for a more detailed explanation of the dependence of the future of coal mining on government documents and planned or possible legislative changes (see pages 25-6, 64-5, 142).

• The requirement for a more detailed de-scription of water and waste management (see pages 127-130, 133-5).

• The requirement for a more detailed de-scription of future “care for employees laid off on grounds of reorganisation/redundancy” (see pages 88, 93).

• The breakdown of personnel data by com-pany – the aggregation of personnel data results in distortion (see pages 86-7 – text, 89, 94, 100 – tables).

• The requirement for more detailed informa-tion on the protection of rare species and biodiversity (see pages 137-8).

• The requirement for a description of the relationship between mining activity and its impact on overall regional develop-ment, including tourism (however, here the Group does not have the corresponding figures or powers) (see pages 22 – taxes, 24 – charges, 150 – regional cooperation

and 144 – the Hippodrome, 152 – Coal Safari)�

• Neighbouring municipalities (5 in North Bohemia, 7 in the Pardubice Region) believe that negative impacts, especially dust and noise (see pages 124-5), are significant; they appreciate employment and financial assistance as benefits. (For a response, see pages 148-9.)

REPORT METHODOLOGY

Observations on data continuity for 2013, 2014 and 2015

The kernel of the Sev.en Group was formed on 18 March 2013, when the shareholder structure of Litvínovská uhelná a�s� was revised and this company was spun off from the Czech Coal Group. On 31 July 2013, the Sev�en extraordinary general meeting of shareholders decided to change the com-pany’s name to Severní energetická a.s. as of registration of this fact in the Com-mercial Register (2 August 2013). Severní energetická a�s� became a shareholder in Důl Kohinoor a.s. (on 28 February 2013), HIPODROM MOST a.s. (on 29 March 2013) and Elektrárna Chvaletice a.s. (on 2 Septem-ber 2013)�10 Bearing in mind the different dates of acquisition of the various companies, the need to safeguard comparability of data with data in the annual reports of the Sev.en Group’s individual companies, and the need to present adequate information as submitted on behalf of each public limited liability com-pany in reports to supervisory authorities and statistical registers, it was decided to employ a principle of presenting all figures for the entire calendar year of 2013. These figures, as published and verified in the 2013 report, have since been used in the further years of this report for the purposes of year-on-year comparisons with 2014 and 2015. The Group was consolidated in 2014, en-abling all disclosures to be made for the year as a whole. The only exception was the information for the subsidiary HUMECO, a.s. (now Sev.en WT, a.s.), as it was not acquired

until 14 July 2014. Personnel and occupa-tional safety disclosures for this company are calculated for the full year of 2014 (due to the need to make conversions for the year as a whole), while other information, including environmental disclosures, pertains only to the period from 14 July 2014 (this is specified in each case). These figures, as published and verified in the 2014 report, have also been used in this report for the purposes of year-on-year comparisons with 2015. In the information for 2013, a revision was made (payments for services and supplies, page 21); other disclosures from 2013 and 2014 remain unchanged compared to the figures already published and verified for 2013 and 2014� There were no acquisitions or sales in 2015� The Group structure was stable and all disclosures are for the full calendar year of 2015. The financial disclosures for the Sev.en Group contain the data of the parent company, Severní energetická a.s., for the full calendar year of 2015 including the data of subsidiaries. In this respect, the disclosures were audited by KPMG Česká republika Audit, s.r.o. Where figures are expressed for a time period other than the calendar year, this is always specified in the text or a note.

Selection of the method for the calculation and aggregation of indicators, differences compared to GRI G4

The report draws on methodology under the Global Reporting Initiative (GRI) standard: Sustainability Reporting Guidelines GRI, Version G4. It also takes account of cer-tain aspects and indicators of methodology concerning, in particular, the extraction of minerals (GRI G4 Mining and Metals Sector Supplement) and the production of electricity (GRI G4 Electric Utilities Sector Supplement). It includes a risk assessment of the Group’s business activities. The report has been drawn up with the intention of providing a trenchant, comprehensible description of all principal activities and impacts. This Sev.en Group Report contains “Standard Disclo-

sures” as per the GRI Sustainability Report-ing Guidelines, Version G4. An index of GRI indicators at the level of GRI G4 “CORE” can be found on page 164. A verification report is included on page 160.In view of the different practices in place for keeping track of certain information and combined variables, in the main body of text we have occasionally given preference to Czech practices (especially in relation to oc-cupational safety). Conversions according to GRI methodology and the baseline absolute figures can be found in the annexes. This pri-marily concerns the indicators of injury rate, labour turnover and absences (page 102). Financial disclosures are compiled according to a Czech accounting standard rather than International Financial Reporting Standards (IFRS), and they form the basis for the calcu-lation of GRI economic indicators�In the economic sphere, the reported fig-ures have been consolidated at the level of Severní energetická a�s� and the Sev�en Group. The report covers only basic economic data. Other economic and financial information can be found in the Annual Reports of Severní energetická a�s� and Sev�en EC, a�s� Environmental and social indicators are always reported for each company (Severní energetická a�s� and Sev�en EC, a�s�) so that the impacts are described in a local context. Indicators are calculated by reference to the complete monitoring data of the Sev.en Group’s individual companies in accordance with rules established by legislation, industry standards of the Czech Republic and GRI guidelines�

Report assessment and verification

The methodology and content involved in the production of the Sev.en Group’s non-finan-cial reporting for 2015 were assessed and approved at an extraordinary meeting of the Severní energetická a.s. supervisory board held on 3 June 2016 (page 159). The 2015 report was prepared in the period from De-cember 2015 to May 2015, and was verified by DNV GL Business Assurance Czech Repub-lic s.r.o. in June 2015 (page 160).


III. SEV.EN GROUP’S ETHICAL BEHAVIOUR

50

New

Sev.en Group Code of Ethics


SEV.EN GROUP’S ETHICAL BEHAVIOUR

The Sev.en Group, as a prominent regional company, is mindful of its benefits and im-pacts as an entity affecting the environment and markets, and recognises its intrinsic value as an employer and, by extension, as a bearer of cultural paradigms, including the ethical aspects thereof. With this in mind, it is currently (2015) working on a Group Code of Ethic and employment policy with a view to anchoring its significance within the Group and among Group stakeholders as an element of explicit corporate culture.

At the current juncture, Sev.en Group com-panies maintain a system of rules promot-ing ethical conduct, especially in terms of interaction with employees, customers and communities�• Ethical principles directly referring to

international standards issued by the ILO (International Labour Organisation), OECD and UN in accordance with other standards binding in the EU and the Czech Republic are espoused in all internal Group docu-ments. The basic documents are as follows: Rules on Organisation, Conditions of Em-ployment, the Group Code of Ethics, Code of Commercial Ethics and Ethical Conduct and the Collective Agreement. All employ-ees are trained in these documents�

• There is steadfast adherence to the prin-ciple of equality and non-discrimination in race and gender issues. This principle is included in conditions of employment and induction training and is supported in par-ticular by a system of tariff-related pay.

• Rules on transparent non-financial report-ing and openness towards stakeholders in accordance with GRI guidelines are applied throughout the Group.

• The Sev.en Group applies the precautionary approach (Article 15 of the Rio Principles) by means of a principle where commercial and production units manage and mitigate these risks by employing internal standards in the following areas: commercial risk management, occupational safety manage-ment and, in particular, improvements in emergency preparedness and technological procedures.

• In its marketing, including advertising and PR, the Sev.en Group complies with public relations codes of conduct that are based on an international standard represented in particular by the Stockholm Charter. They comprise, in particular, the PR code of con-duct for contracting entities (www.apra.cz), special Principles of Ethical Behaviour, the Advertising Code and the Service Support Code� The organisations initiating these codes belong to transnational institutions, and it is the principles of these institutions that they have adopted (APRA is a member of www.iccopr.com, while AKA is a partner of www�eaca�be)�

SEV.EN GROUP’S CODE OF ETHICS

The Sev.en Group Code of Conduct lays down and publicly declares the basic ethical values pursued by the Group.11 The Sev.en Group puts these values into action in its relations with all business partners, employees and other entities encountered in the course of its operations. The Group assumes responsibility for promoting these ethical values where it wields demonstrable influence and the neces-sary powers to do so. The Sev.en Group Code of Ethics is based on internationally acknowledged standards of ethical behaviour and also complies with the requirements of the

Code of Ethics of the Czech Confederation of Industry�The Code of Ethics encompasses the Sev.en Group’s fun-damental values (see http://www.sev-en.cz/cz/spolecnost/downl/eticky-kodex2016.pdf):• Compliance• Security• Environmental protection• Respect and reliability• Loyalty• Openness and reciprocity of information• Equality

The Code of Commercial Ethics and Ethical Conduct build on the Sev.en Group’s Code of Ethics.12 They define in detail how the Sev.en Group’s ethical values are applied in relation to various stakeholders and also set out rules on prevention, on anticorruption and on the protection of competition. Importantly, the rules of ethical behaviour enshrine procedure for reporting complaints and suspicions of infringements thereof�

The Code of Commercial Ethics and Ethical Conduct apply to the Sev.en Group’s companies. The Code of Commercial Ethics and Ethical Conduct are binding on all employees, members of all of the Sev.en Group’s bodies, as well as representatives and persons acting on behalf of the Sev.en Group or indi-vidual Group companies. The Sev.en Group expects all of its stakeholders to respect and accede to the Code of Commercial Ethics and Ethical Conduct�

11 The consolidated text of the Code of Conduct, including the relevant internal rules (PVAŘ), can be requested from [email protected] The consolidated text of the Code of Commercial Practice and Rules of Ethical Behaviour can be requested from [email protected].

http://www.apra.cz

http://www.iccopr.com

http://www.eaca.be

http://www.sev-en.cz/cz/spolecnost/downl/eticky-kodex2016.pdf

http://www.sev-en.cz/cz/spolecnost/downl/eticky-kodex2016.pdf

mailto:etic%40sev-en.cz?subject=


51


Rules for reporting infringements and suspected infringements of the Code of Commercial Ethics and Ethical Conduct and the submission of initiatives for the improvement thereof.The Sev.en Group sets transparent rules for reporting infringements and suspected in-fringements of the Code of Commercial Ethics and Ethical Conduct and the submission of initiatives for the improvement thereof. They are applicable to the entire Sev.en Group and are published online. The Sev.en Group is committed to investigating all notifications and complaints (unless vexatious and mani- festly unfounded) properly and impartially.

Notifications and complaints are considered confidential and treated accordingly.Notifications may be submitted by:1. Employees2. Others – business partners and other stakeholders

Notifications and complaints may be filed with a representative of the Ethics Committee:- in person- by telephone:+420 478 003 530+420 478 005 306+420 462 101 200 - by email: [email protected] in writing to: Ethics Committee RepresentativeSeverní energetická a�s� Ethics CommitteeVáclava Řezáče 315434 01 Most

This does not apply to the reporting of accidents and emergencies (e.g. workplace accidents, occupational injuries, fires) or to customer claims�

Ethical misdemeanours 2015

Two ethical misdemeanours violating the conditions of employment were handled at Severní energetická a.s. Two employees were dismissed for improper use of their employee cards and for falsely reporting the number of shifts worked�

Grievance mechanisms and procedures ASPECT: ENVIRONMENTAL GRIEVANCE MECHANISMS (G4-EN34) ASPECT: LABOR PRACTICES GRIEVANCE MECHANISMS (G4-LA16) ASPECT: HUMAN RIGHTS GRIEVANCE MECHANISMS (G4-HR12) ASPECT: GRIEVANCE MECHANISMS FOR IMPACTS ON SOCIETY (G4-SO11

The Group advocates an open approach – extending beyond the scope of applicable legislation – to grievances raised by employees, local inhabitants, and other persons or institutions affected.

Claimants are free to air their grievances with the competent state authorities or directly with the management of individual companies. The internal regulations of the Sev.en Group’s companies spell out how to deal with damage and submit complaints.

If a topic is identified for broader consultation, e.g. within municipal bodies, the Sev.en Group’s representatives will be given an opportunity to deliver a presentation at a meeting of the municipal council or assembly.

GRIEVANCE MECHANISMS AND PROCEDURES

aspect QuantityOrganisational unit

Unit 2013 2014 2015

Grievance mechanisms and procedures

Number of complaints concerning environmental protection and community impacts

Group Absolute number1 (dust from

reclamation around the power station)

3 (dust from the power station)

3 (dust from the power station)

Number of labour-law complaints Group Absolute number 0 0 0

Number of complaints concerning violations of human rights Group Absolute number 0 0 0

Number of complaints concerning the protection of customer rights

Group Absolute number 0 0 0


52

Diagram of grievance procedure – reporting suspected unethical behaviour

Employee

Trade unions

Member of the Ethical Committee

passes on the decision to the employee or the

stakeholders

Reporting of suspected non-ethical within the Sev.en Group

Top management

Line manager Complaint mail box

Member of the Ethical Committee– person appointed

by BoD(in person, by phone,

in writing, email)

Stakeholders

Opportunity to submit complaints or suggestions

Appeal by the employee or stake-holders, filed with the Committee’s

BoD

It provides information on submissions and resolutions

Supervisory Board(monitoring, independent

review of appeals)

Board of Directors (BoD)

ETHICAL COMMITTEE

Action proposed, or

rejection

appel


53

Other grievance mechanisms and procedures

Employees – grievance mechanismsMechanisms for reporting on or complaining about concerns related to violations of human rights or cases of unethical or unlawful behaviour are covered by legislation, the conditions of employment and the Code of Conduct. All employees are required to notify their superior or another senior employee of any cases of unethical or unlawful behaviour� Employees may file complaints with the trade union, their superior, or within the grievance mechanism under the Group Code of Ethics.Employees are also free to send their sugges-tions, enquiries and complaints to the Sev.en Group staff liaison officer at [email protected]. In the handling of complaints, as a rule of thumb complaints are passed on to the senior employee acting as guarantor for the area covered by the complainant. Following an investigation, the findings are consulted at a management meeting and the complainant is notified in writing. Employees may also submit suggestions and complaints via trade union bodies, whose representatives are executive members of production com-panies’ supervisory boards.In 2015, no employee complaints were received in any area. At Severní energetická a�s�, observations were made orally at meetings with trade unions – charter buses ran late, the quality of transport conditions was not up to scratch (on some routes the buses were not heated during the winter), and concerns were raised about the quality of food in the canteen. All observations were consulted with the charter company and the catering company.

Public, customers, institutions – grievance mechanismsIn addition to the grievance mechanism under the Code of Conduct, the local population and other entities can convey their complaints, opinions and observations directly or electronically (e�g� [email protected] or using the contact form at www.sev-en.cz/cz/kontakty/

kontakt�html). Another avenue open to them is the toll-free telephone service on 800 800 449.In the handling of complaints, complaints are generally passed on to the senior employee acting as guarantor for the area covered by the complainant. Following an investigation, the findings are consulted at a management meet-ing and the complainant is notified in writing.Employees, the public, other organisations and institutions can file complaints by way of the standard administrative channel, i�e� via government inspection bodies (regional hy-giene stations, the district mining office, the Czech Environmental Inspectorate, the Energy Regulatory Office, labour inspectorates, etc.).In 2015, there were no complaints about non-compliance with applicable legislation, failure to respect human rights, or discrimination on grounds of nationality, race, colour, sex, religion or social origin� Inhabitants from the village of Trnávka made three complaints about increased dust levels, which were ad-dressed immediately�

Enquiries and observationsThe public and other entities communicate their opinions and observations directly or electronically (e�g� [email protected] or via the contact form at www.sev-en.cz/cz/kontakty/kontakt�html) to the management section overseen by the Severní energetická a�s� Strategic Development Director. This section specialises in the dissemination of informa-tion on the projects to continue extraction at the ČSA Mine and to repair Chvaletice Power Station, and also releases information about other company news. It takes receipt of sponsorship applications and it is a contact point for secondary-schools and university students who are working on their extend-ed essays, dissertations or theses involving coal mining or landscape rehabilitation. The same services are available via the toll-free telephone service on 800 800 449.The CEO and heads of department and unit keep in contact with representatives of mu-nicipalities or officials on behalf of individual sections with a view to meeting the require-ments of both sides�

Complaints and rules on the handling of complaints about environmental impacts

Rules on the handling of complaints about environmental impacts in the ex-traction and processing of coal (Severní energetická a.s., Důl Kohinoor a.s., Sev.en WT, a.s.)The public may file complaints with the com-petent public administration authorities (the Czech Environmental Inspectorate, regional hygiene stations, district mining offices, and the environment departments at municipal authorities) or directly with the management of the individual companies via the contact details listed at http://www.sev-en.cz/cz/kontakty/index.html� Each complaint is assessed to determine:• how topical or urgent it is;• the area in which the company concerned

operates. A complaint is assigned to the competent manager for processing, and it is at this stage that its authenticity is verified. The manager then decides how to proceed with the issue set out in the complaint and notifies the complainant about how it is being han-dled. Documents relating to a complaint and its processing are archived at the office of the company’s management. In 2015, no complaints about the adverse environmental impacts of coal mining and processing were delivered or reported within the framework of company grievance mech-anisms�

Complaints and rules on the handling of complaints about environmental impacts in the production of electricity and heat (7EC)The public may file complaints with the competent government authorities (the Czech Environmental Inspectorate, regional hygiene stations, labour inspectorates, and the environment departments at municipal authorities) or directly with the management of the individual companies. The inhabitants of surrounding municipalities may file com-

plaints by calling the electricity control room on 462 102 210� This number is monitored and a supervisor is within reach at all times.On the basis of the internal directive “Com-pensation for Damage Caused by Sev.en EC, a.s.”, Chvaletice Power Station operates a round-the-clock public telephone number (462 102 212) for reports on damage to the property of members of the public arising from the operations of 7EC, and regulates procedure for the handling of claims seeking compensation for damage incurred in the performance of licensed activities in the energy sector or as a result of breaches of other legal obligations incumbent on 7EC. Arrange-ments to resolve property damage and health impairment are included here.Generally speaking, the following rules apply: damage must be reported without undue delay, i�e� within 12 hours of the occurrence or discovery of the damage� The damage site must be left untouched until a personal visit has been made, except where this could cause health problems or in order to prevent irreversible environmental or property dam-age. A report on the scale of the damage is drawn up on the spot. Once an expert assessment has been carried out, the notifier is informed of the compensation method or of the reasons for the rejection of the claim�In 2015, three complaints were received from inhabitants of Trnávka (on 18 May 2015)� These were handled in accordance with the document “Compensation for Damage Caused by Elektrárna Chvaletice a�s�”� These complaints centred on the higher dust levels when the unit was being started up and the temporary use of the power station’s chimney in poor dispersion conditions. Vehicles, a swimming pool, garden furniture, a skylight and washed linen were affected. 7EC provid-ed financial compensation for the damage caused, i.e. it paid for the vehicles to be washed in a carwash, the garden furniture to be cleaned, the water in the swimming pool to be replaced, and the linen to be re-washed at a total cost of CZK 1,855 (approximately EUR 70).


mailto:zamestnanec%40sev-en.cz?subject=

mailto:zamestnanec%40sev-en.cz?subject=


http://www.sev-en.cz/cz/kontakty/kontakt.html





http://www.sev-en.cz/cz/kontakty/index.html

54

Compliance ASPECT: COMPLIANCE (EN,SO,PR) G4-EN29, G4-SO8, G4-PR9; (G4-SO5)

Sev.en Group companies adhere fully to legislation of general application in all areas of their activity. All of the Group’s business takes place within the European Union. Group companies comply fully with all conventions, rules and declarations of human rights in the realm of investment and procurement procedures, the ban on child labour and the prevention of force labour, etc., that are in force and effect in this area. They are also governed by applicable Czech legislation. These legal provisions are incorporated into and developed in Group companies’ regulations on organisation (especially the Conditions of Employment and the Code Conduct), as well as in their internal standards and rules. They offer their employees training in response to major legislative amendments. Support for anticorruption approaches within the Sev.en Group is mainly structured around the creation of quality internal procurement standards and the quality management and control of sales staff. Since 2016, the Sev.en Group’s approved Code of Ethic has been in place.

The Group makes every effort to ensure compliance with environmental legislation. Periodic checks on the operating conditions of individual sources of air pollution, water facilities and waste management facilities are central to this approach. Emissions and immissions are measured for verification purposes at statutory intervals by authorised laboratories holding certificates issued by the Ministry of the Environment. Physical inspections of the facilities are conducted at the same time as checks on compliance with operating regulations. Where necessary, the operating regulations of facilities are updated. A major project responding to new legislation is the Chvaletice Power Station Facility Reconstruction Project.

Aspect Aspect Quantity Organisational unit Unit 2014 2015

Prevention of corruption and distortions of competition

Number of cases of corruption and distortions of competition rules among Sev.en Group employees



Number of fines imposed in the field of environmental protection and community impacts (above CZK 20,000)

Group Absolute number 1 (ECHAS) 0 0

Number of fines imposed in the field of labour law and OSH (above CZK 20,000)

Group Absolute number 02 (1 x Centrum Mine;

1 x ČSA Mine)0

Number of fines imposed in the field of product and service provision (above CZK 20,000)



At all Group companies, the management issues binding internal standards encompass-ing trading and invitations to tender, which also minimise opportunities for corruption (the Code of Commercial Practice and Rules of Ethical Behaviour, procurement rules, and customer contracting rules)� Fixed rules covering all legal acts, as described in the conditions of employment, the rules on exe-cution of documents and the rules on organi-sation, form the anticorruption bedrock at all Group companies. Other internal standards

dwell on more detailed rules and procedures, e.g. for procurement procedure (employee authorisations, financial limits, the procedure to be followed in the evaluation of tenders, etc.). The principles of ethical and anticorrup-tion behaviour, described in the Conditions of Employment and in the Group Code of Ethics, Code of Commercial Ethics and Ethical Conduct, are included in induction training for new employees and feature on the agenda of board meetings, where any findings are discussed�

All calls for projects under grant and spon-sorship schemes are published, and include rules to stave off corruption. The cooperation scheme with municipalities proceeds on the basis of a public contract (see pages 151-2).

In 2015, there were no confirmed cases of corruption among the Sev.en Group’s employees, nor were any contracts with busi-ness partners terminated in connection with corruption.

In 2015, there was no non-compliance with applicable legislation and no fines were imposed for failure to respect human rights, and there were no cases of discrimination on grounds of nationality, age, race, colour, sex, religion or social origin�

COMPLIANCE

55

In 2015, no corruption-related incidents were reported within the Sev.en Group by company employees, management, suppliers, customers or other stakeholders�In 2015, there was no non-compliance with

applicable legislation and no fines were im-posed in relation to the impacts of operations on local communities, due to the failure to respect environmental protection regulations, or due to non-compliance with applicable

legislation on the provision and use of prod-ucts and services� Likewise, there were no recorded cases of infringements of volun-tarily adopted communication and marketing codes�

In 2015, no fines were imposed on any Sev.en Group companies above CZK 20,000, with the exception of CZK 163,000 for finance-re-lated issues (most notably, CZK 159,000 for late payment of VAT by Sev.en EC, a.s.).

Prevention of the distortion of competition ASPECT: ANTI-COMPETITIVE BEHAVIOUR: (G4-SO7)

Ever since its formation in 2013, the Sev.en Group has espoused principles of open competition and an antimonopoly environment. Electricity trading is supervised directly by oversight and government bodies. Electricity trading pricing is transparent thanks to the activities of the Prague energy exchange (PXE – Power Exchange Central Europe). To ensure that coal sale conditions are non-discriminatory, the price of coal is derived from the price of black coal, a commodity traded on the international European Energy Exchange EEX (Leipzig). (See page 70.)

In 2015, there were no confirmed cases of breaches of competition rules by the Sev.en Group

Significant litigationSeverní energetická a.s. (“SEVEN”) was party to the following significant litigation in 2015:- CARBOUNION BOHEMIA, spol. s r.o. (“CB”),

the parent of the Carbounion Group, brought an action against SEVEN on 17 July 2012 seeking payment of a monetary amount – compensation for damage caused by an alleged infringement of a brown coal supply contract. On 12 March 2013, CB sent the Regional Court in Ústí nad Labem partial withdrawal of the action and the court par-tially discontinued the proceedings, i.e. to the extent requested� This litigation remains pending to the remaining extent.

- On 11 December 2014, SEVEN brought an action against North Bohemia Coal s�r�o� (“NBC”) seeking payment of a monetary amount – contractual penalties for breach of the obligation to purchase brown coal in accordance with a purchase contract. The District Court in Teplice resolved the case

by issuing a payment order of 28 January 2015, which became final and enforceable. This claim awarded against NBC is now subject to enforcement proceedings on the basis of an enforcement petition filed by SEVEN against NBC.

- On 29 December 2014, SEVEN brought an action against NBC and Pražská uhelná s.r.o. (“PU”) seeking payment of a monetary amount – contractual penalties for breach of the obligation to purchase brown coal in accordance with a purchase contract. The Praha 5 District Court handed down a judgment on 28 April 2015, but as yet (13 March 2016) it has not become final.

Důl Kohinoor a.s. (“DK”) was party to the following significant litigation in 2015:- On 25 June 2012, Emeran 1860, s.r.o., a

member of the Carbounion Group, brought an action against Důl Kohinoor a.s. v likvidaci seeking payment of an amount – a

contractual penalty for an alleged breach of the obligation to supply brown coal in accordance with a purchase contract. The case is far from being resolved, with proceedings pending at the Regional Court in Ústí nad Labem�

Sev.en EC, a.s. (“7EC”) was party to the following significant litigation in 2015:- On 26 October 2012, 7EC brought an action

against Areal Plus s.r.o. seeking the relin-quishment of unjust enrichment for the use of land owned by 7EC, across which runs an open drainage channel discharging waste-water from a wastewater treatment plant owned by Areal Plus s.r.o. Praha 2 District Court handed down an order on 3 Novem-ber 2014 requiring the production of an expert opinion to ascertain the amount of unjust enrichment. The proceedings remain pending.

- A series of actions brought by Lesy České

republiky, s.p. seeking compensation for alleged damage caused by immissions, covering the years 1997, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2007, 2008, 2009, 2010, 2011 and 2012� Some of these actions (damage up to 2008) were originally brought against ČEZ, a.s. Further to an application for 7EC to accede to the pro-ceedings, the courts allowed 7EC to become a party to the proceedings. The litigation remains pending.


56

Customer privacy ASPECT: CUSTOMER PRIVACY (G4–PR8)

Considering the nature of trade in the main commodities – electricity and coal, in which respect most products are purchased only by a few dozen large customers, customer privacy above and beyond the confines of Czech laws relies primarily on commitments made by the Group in contracts with customers. Compliance with internal standards and methodologies guards against potential breaches of customer privacy and the loss of customer data.

As in the previous two years, there were no complaints about breaches of customer privacy or customer data losses in 2015.

Respect for human rights and non-discrimination ASPECT: NON-DISCRIMINATION (G4–HR3)

Central to the Group’s approach in the field of non-discrimination is compliance with applicable legislation and respect for regulations on the protection of human rights, and the prevention of discrimination on grounds of nationality, race, colour, sex, religion or social origin. Since 2016, the Group has had an approved Code of Conduct and Code of Commercial Practice in place, providing blanket coverage of compliance with ethics and opportunities to file complaints. The Sev.en Group’s business operations are limited to the Czech Republic and the EU, so it does not find it necessary to have special provisions on human rights in its investment agreements, inasmuch as respect for human rights is incorporated into Czech and EU legislation, which includes the Universal Declaration of Human Rights and ILO conventions on fundamental human rights.


Respect for human rights and non-discrimination

Number of discrimination-related incidents Group Absolute number 0 0 0

Respect for human rights is laid down by le-gislation that employees are required to know and respect. The obligation to be familiar with this legislation is incorporated into internal standards, in particular the Rules on Organ- isation, the Conditions of Employment and the Code of Conduct� Basic obligations of em-ployees under the Conditions of Employment

include the fact that employees must not pervert the exercise of rights and obligations under employment relations to the detriment of another party to a labour-law relationship or to violate their human dignity� Since 2016, the Code of Conduct has significantly expanded the ways in which employees and other stakeholders can file complaints.

In 2015, no complaints of discrimination or violations of human rights were filed by employees in the Group’s workplaces or as a result of the Sev.en Group’s activities.


IV. PRODUCTION AND TRADING

58

24.1 million tonnes of

high-qualitysurface mi-

neable brown coal - current coal reserves within mining boundaries.

Beyond the mine

boundaries lie the biggest

coal reserves in the Czech Republic –

more than 750 million tonnes.

24.1750


BROWN COAL PRODUCTION

Incorporation of Severní energetická a.s.From 2008, the ČSA surface mine, along with the homogenisation plant and coal preparation plant in Komořany, was managed by Litvínovská uhelná a�s� On 18 March 2013, the shareholder structure of Litvínovská uhelná a�s� was revised and the company was spun off from the Czech Coal Group. On 31 July 2013, the extraordinary general meeting of shareholders decided to change the company’s name to Severní energetická a�s� as of registration of this fact in the Commercial Register (2 August 2013).Severní energetická a�s� continues the 500-year-old tradition of brown coal mining in North-west Bohemia, with coal use in the Most area stretching back to 1594�Severní energetická a�s� has shareholdings in Sev�en EC, a�s� (the Chvaletice Power Sta-tion)13 (since 2 September 2013), HIPODROM MOST a.s. (since 29 March 2013), Důl Kohi-noor a.s. v likvidaci (since 28 February 2013; the company went into liquidation on 1 De-cember 2012), and Sev.en WT, a.s. (formerly HUMECO, a.s.) (since 14 July 2014).

Mining technology at the ČSA Surface Mine(For basic mining documentation and terms, see www.sev-en.cz/banska-dokumentace)

Geological conditionsThe site lies on the north-western border of the North Bohemian Brown Coal Basin, largely in its Most part. Stratigraphically, it is char-acterised by lacustrine sedimentation with a uniformly developed coal seam, not interde-posited with spoil rock, and with markedly developed overlying clay and claystone. The most striking element – with the greatest impact on the geological structure – is the belt of variously crushed and altered crystal-line rocks along the north-western edge. This

belt, several hundred metres thick in places, is called the Krušné hory (Ore Mountains) Fault Zone and is a dividing line between the Krušné hory mountains and the basin.The basin bedrock consists of the Krušné hory crystalline complex together with denudation relics of Upper Cretaceous cover and irregular bodies of Tertiary volcanics� The coal seam roof comprises a complex of grey to grey-brown, predominantly silty, clay and claystone averaging a thickness of 150 metres� The coal seam is uniform in most of this area� Three benches (a bottom, middle and upper one), more or less different from each other geo-logically and technologically, can be identified within the vertical profile. They are typical of almost the entire Most part of the basin. The thickness of the brown coal seam is more or less uniform at approximately 30 metres. In some places, the seam is broken by previous deep mining. Where this occurs, coal seam quality and quantity are reduced during sur-face mining� The Marshal Konev Mine was the largest deep mine in the district, extracting coal in the area between Dřínov, Albrechtice, and Kundratice from 1883 to 1977� The Quido Mine creeps into the eastern part of the site. Surface mining in a seam broken by deep mining is an occupational safety challenge.

Extraction of overburden and coal by surface mining(See also the images and drawings available at www.sev-en.cz/cz/uhli/tezba.html)At the ČSA site, only two equipment com-plexes with second-level capacity (TC2) are used for overburden extraction� They have a reduced work-shift system (the first complex works in two shifts, the second in three)� Operations are being phased out due to the restrictions on ČSA mine advancement stemming from the mining boundaries in place (Government Resolution No 444/1991). The middle section of the overlying strata is extracted by a KU800 bucket-wheel excavator.


The lowest overburden benches, covering the coal seam, are mined with an RK5000 bucket chain excavator� Three ZP6600 spreaders are deployed at the inner dump. A 1,800 mm wide long-distance belt conveyor system is used to transport the extracted materials. The average distance to the inner dump is approximately 5 to 6 km. The restriction caused by mining boundaries will result in the decommissioning of another overburden extraction equipment complex at the end of 2016, accompanied by reduced over-burden extraction and redundancies�Coal is extracted with three KU300 excavators. The coal seam here has been deposited very unevenly (with a steep incline, undulation, and faults)� In addition, the seam extracted at the ČSA site is partially broken at depth by previous brown coal mines. A dump deploying a PVZ2500 mobile stacking conveyor has been created for extracted earth. All extracted coal is transported via a 1.2 m wide long-distance belt conveyor system. The transport distance to the loading site is approxi-mately 3 km�Auxiliary machinery (bulldozers, shovel excavators, freight vehicles, etc.) is used for other ancillary and supporting works. This additional technology is used to help with the operations of equipment complexes and also, for example, for the selective extraction of earth not suited to the main mining technology� For a site to be operable, it needs to be drained of water. In practice, this is achieved with a drainage system comprising drainage ditches, auxiliary pumping stations, and a main pumping station. Mine water is pumped to a mine water treatment plant at the edge of the mine for further treatment. Once treated, the water is discharged into public watercourses in line with a permit. There is no risk of leach from the removed overburden, the intermediate layers and their dumping because the rock in question comprises clay and claystone. Noise and dust gener-ated by extraction are regularly monitored and technology is selected with a view to minimising these effects. (See “Envir- onmental protection”, pages 124-5.)

Coal preparationCoal extracted from the ČSA Mine and the Centrum Deep Mine, including coal bought in from VUAS, is loaded onto wagons and transported to the Komořany Coal Preparation Plant for further processing. Here, individual commercial types of coal are processed according to catalogue specifications. Coal preparation procedures entail methods to sort and crush coal into the various commercial size categories� An information system (drawing on belt scales, automatic

http://www.sev-en.cz/banska-dokumentace

http://www.sev-en.cz/cz/uhli/tezba.html

59


area

of i

nter

est –

deep

min

ing

line of p

rofile

Eliška 3 site

main working face

Horní Jiřetín

ČSA Mine

Severníenergetická a.s.

Vysoká Pec

Jezeří Castle

Komořany Coal Preparation Plant

Centrum Mine

innerdump

ČSA Mine – principal sites

samplers, ash and sulphur analysers, certified rail and truck scales) is used to manage the resultant coal quality� (See “Brown coal quality management”, page 78.)These energy, pulverised, and sorted products are delivered to power stations, CHP plants and households either by rail-way wagon or by truck. (See “Coal trading”, page 69.)

Creation of dumpsIn the operation of surface coal mines, a solution needs to be in place for the removal of the coal seam overburden. This is why dumps are created. They are set up in accordance with the principles of soil mechanics so that they are stable and no subsoil is forced out, and so that the final slope structure is created as soon as possible. The formation of dumps and their general outline (inclination) must be determined by reference to an expert stability study� Reclamation works are carried out system-atically on dumps once they are no longer needed. (See “Reclamation”, page 137.) At the ČSA site, the Růžodol Dump in particular has been used as an external dumping area in the past. In addition, a residual pit from the neighbouring Obránců míru Mine has also been used as an external dumping area. Since 2004, all extracted overburden has been deposited exclusively in the inner dump of the ČSA Mine. Three ZP6600 spreaders – a terminal part of the equipment complex (TC2) – are used for this work. The material to be backfilled is transported to the spreader by 1.8 m wide belt conveyors. The average distance to the inner dump is approximately 5 to 6 km. The ČSA inner dump reaches a thickness of about 150 m in places. The side slopes of the ČSA Surface Mine are formed to be stable and prevent slides or signs of instability. Some side slopes are monitored by an automatic monitoring system in order to keep track of the actual situation.

Surface mining in 2015

In 2015, Severní energetická a.s. managed the Českoslov-enská armáda (ČSA) production site, including the homogenisation plant and the Komořany Coal Preparation Plant. Coal reserves here are restricted by the mining boundaries. Within these boundaries, there are 24.1 million tonnes of high-qual-ity surface mineable brown coal (as at 1 January 2015) with a calorific value of approximately 17.5 MJ/kg. Beyond the boundaries lie the biggest coal reserves in the Czech Republic – more than 750 million tonnes of brown coal with the high-est calorific value in the country.

60

Line of profile though the main working face and final end slopes The figure shows the effects of postponing the decision on mining advancement – the discontinuation of, or delay in, the extraction of overburden. If coal is to be supplied continuously, overburden mass approaching some 162 million m3 still has to be removed approximately five years in advance. In other words, it is best to fully exploit the period when coal is still available from ČSA Stage I.

Overburden yet to be removed (162 million m3)

Direction of advancement En

viro

nm

en

tal

bo

un

da

ry li

ne

Bedrock

Existing operating profile of the mine

Mine profile respecting environmental boundaries

Mine profile required to maintain the continuity of the extraction process

RK5000

Coal seam

Overburden


61

RESERVES OF SEVERNÍ ENERGETICKÁ A.S. BROWN COAL COMMERCIALLY EXTRACTABLE VIA SURFACE MINING (IN KEY SITES* AS AT 1 JANUARY 2016)

Mine(million tonnes) Qir (MJ/kg) PJ

Useful life of mineReserves Calorific value Heat

Severní energetická a.s. current coal reserves within mining boundaries (as at 1 January 2016)

ČSA Mine, Stage I* 24.1 17.50 422 up to 2024

Severní energetická a.s. reserves beyond mining boundaries14

ČSA Mine, Stage II 287 up to 17.00 4,879 up to 2070

Prospective sites beyond the mining boundaries

ČSA Mine, Stages III and IV 463 up to 15.50 7,177 after 2070

* Note: Reserves of approximately 8 million tonnes in the Eliška field were newly included in recoverable reserves in 2014 and 2015. In contrast, reserves that could be extracted by deep mining at the ČSA site are not included. Reserves extractable by deep mining will be included into total balances on completion of trial operations – room-and-pillar mining and the

organisation of the development and working face advance plan for longwall working.


14 Verification of ČSA Mine coal reserves As part of the discussions on the utilisation of coal reserves, the then company Litvínovská uhelná a.s. (now Severní energetická a.s.) commissioned a review of its coal reserves at the ČSA Mine (including reserves beyond the boundaries),

which was conducted in December 2010 by John T. Boyd Company. The aim was to procure an independent opinion on coal reserve estimates by revisiting the methodology and procedures used to formulate those estimates. This review also included the recalculation of coal reserves in accordance with international mineral reserve classification systems. The report by John T. Boyd Company provides a stable footing and support for negotiations with potential customers buying Most brown coal, for credit institutions providing funding, and for bodies of state administration. All coal reserve figures in this report are consistent with the methodology certified by John T. Boyd Company.

62

OVERBURDEN REMOVAL AND COAL EXTRACTION (GROSS PRODUCTION) AT THE ČSA MINE

2008 2009 2010 2011 2012 2013 2014 2015

overburden removal (thousands of m3) 21,497 18,961 16,622 17,386 16,659 7,970 8,536 5,790

coal extraction (thousands of tonnes) 5,216 4,721 4,628 4,054 4,043 3,077 3,316 3,597

Surface recoverable brown coal reserves at the ČSA Mine as at 1 January 2016 (illustration)

Litvínov

Louka u Litvínova

Horní Jiřetín

Vysoká Pec

2024 mining boundaries Stages III + IV

ČSA Stages III + IV: reserves of 463 million tonnes

Stage IIČSA Stage II: reserves of 287 million tonnes

ČSA MineExtraction within the framework of the limits up to 2024 – reserves of 24.1 million tonnes

Stage I


63

Outlook for brown coal mining

Unlocking reserves in the side slopes of the ČSA Mine by surface miningIn a bid to weather its dismal mining and technology plight, Severní energetická a.s. is taking legislative steps to unlock reserves in the side slopes of the ČSA Mine. The focus is on mining out reserves at the Eliška side slopes by means of surface methods and the utilisation of deep mining methods (room-and-pillar mining and longwall working) once a valid development and working face advance plan is in place.To increase the coal reserves available for surface mining, the need for certain operat-ing structures and facilities near the end side slopes at the Eliška site has been reviewed with a view to optimising the shape of the residual pit near the ČSA plant (redevelop-ment). The expansion in reserves available here is approximately 8 million tonnes of coal, which can be recovered by surface mining�

Unlocking reserves in the side slopes of the ČSA Mine by deep miningThe Československá armáda (ČSA) brown coal mine is operated under the shoulders of the Ore Mountains (Krušné hory). Advance-ment has been drastically curtailed by Czech Government Resolution No 444 of 30 October 1991 on environmental boundaries for brown coal mining in the North Bohemian Basin� Coal extraction was also severely hampered by the establishment of a protection pillar for the Jezeří group of monuments under a decision taken by the Most District Mining

Office on 16 March 1992, along with the requirement for a further protection pillar to cover the municipality of Černice further to a Most District Mining Office decision of 23 December 1993. The location of the reserves making up the Jezeří protection pillar and their accessibility from the ČSA Mine’s coal cuts make them ripe for a plan for partial extraction using a method that avoids caving, i.e. room-and-pillar mining. In July 2014, the District Mining Office for the Ústí nad Labem Region issued a decision to permit mining according to the documenta-tion “Development and working face advance plan, room-and-pillar mining – mining-out of coal reserves tied to the end side slopes of the ČSA site by deep mining”. In January 2015, deep mining was launched at the ČSA site to mine out some of the coal reserves tied to the end side slopes of the ČSA Mine by means of room-and-pillar mining.Administrative proceedings are currently under way to obtain a mining permit for deep mining by means of longwall working in part of the end slopes at the points where the inner dump has been established. Deep mining is projected to supply up to 400,000 tonnes of brown coal per year, with an aggregate of 3�2 million tonnes� Existing permits allow for the extraction of 1.5 million tonnes. (Room-and-pillar mining totalling 1.5 million tonnes has been permitted; the ad-ministrative proceedings focus on 1.7 million tonnes via longwall working�) In 2015, room-and-pillar mining extracted 52,800 tonnes of brown coal with a calorific value of more than 20 MJ/kg here�However, with the deep mining project barely

at break-even point, its main purpose is to maintain production levels (including coal supplied to produce mixtures with the re-quired parameters) and keep people in work, particularly miners from the Centrum Mine, which is to be closed in 2016. The project is being implemented mainly on account of the responsible approach pursued by the owners and management of the Sev.en Group; it would be inconceivable for these operations to go ahead were it not for the major economic results posted by surface mining. Bearing in mind current coal prices, the argument that it would be profitable to mine brown coal in the ČSA Mine solely by means of deep mining is completely wayward.

Centrum Mine – deep mining of brown coal (Důl Kohinoor a.s.)The Centrum Mine, the last active deep brown coal mine in the Czech Republic, which entered liquidation proceedings on 1 Decem-ber 2012, is operated by the Sev.en Group’s Důl Kohinoor a.s. The mine produces brown coal with a calorific value of approximately 12-14 MJ/kg and a low specific sulphur con-tent of not more than 0�5 gS/MJ� The mine is operated in the Dolní Jiřetín working district over an area of 780 ha� The Centrum Mine opened in 1888. Between then and 2015, it extracted 60�62 million tonnes of coal from a depth of about 170 metres beneath the surface� Production in 2015 came to almost 406,000 tonnes of coal�In recent years, annual production has hovered around 400,000 tonnes of brown coal. Today’s 322 mine employees work in a continuous three-shift operation. Longwall

mining technology makes it possible to revisit sites already mined for coal in the past (the Humboldt Mine)� In the 1990s, this technol-ogy replaced the previous mining method of chambering and significantly expanded ex-traction productivity. In 2015, the remaining reserves in the Humboldt II district and the Dolní Jiřetín Pillar district were mined out. Severní energetická a�s� will close the Cen-trum deep mine (Důl Kohinoor a.s.) for good in 2016. Some of the employees from here will switch to deep mining at the side slopes of the ČSA Mine. In 2015, the Centrum Mine had an existing headcount of approximately 45.At present (March 2016), 110 workers from the Centrum Mine are contributing to room-and-pillar mining with a view to pushing up the number of employees to 240 workers during 2016�Důl Kohinoor a.s. contractually transferred the Dolní Jiřetín working district to Lit-vínovská uhelná a.s. as at 1 December 2012� Severní energetická a�s� (formerly Litvínovská uhelná a.s.), as the company acquiring the Dolní Jiřetín working district, assumed all rights and obligations incumbent on it under Act No 44/1988, as amended, Act No 61/1988, as amended, and all applicable decisions of the competent bodies of the State Mining Administration related to the given working district, along with all rights and obligations stemming from the fact that it was in possession of working districts. This transfer saw Severní energetická a�s� take on all obligations of a working district manager, especially reclamation, payments, the condi-tions of the mining permit, etc.


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ČSA Mine phase-outIn the absence of a rational rethink of the way the use of more than 280 million tonnes of brown coal beyond the boundaries is viewed, mining at this site will grind to a halt after 2024� Given the technological com-plexity and high financial costs, resumption of production in the future would be very difficult, if not impossible. Employment in the region would be hard hit�Severní energetická a�s� (until 2013 Lit-vínovská uhelná a.s.) launched a phase-out scheme in 2012 in order to brace itself for the closure of operations. More precisely, it is steadily reducing production levels, decom-missioning technology and laying people off. 2015• At the ČSA site, only two equipment com-

plexes with second-level capacity (TC2) were used for overburden extraction in 2015. They had a reduced work-shift sys-tem (the first complex works in two shifts, the second in three)�

• The restriction caused by mining bound-aries will result in the decommissioning of another overburden extraction equipment complex at the end of 2016, accompanied by reduced overburden extraction and redundancies�

Up to 2024• Mining at the ČSA site will end, giving way

to final reclamation.• Consequently, jobs will be lost over time,

the contracts awarded to suppliers will be less plentiful, and development pro-grammes for the surrounding communities will be stymied (for the ramifications, see www.sev-en.cz/cz/spolecnost/limity.html)�

After 2024 – Reclamation the hydric way• Reclamation envisages the controlled flood-

ing of the residual pit to 180 m above sea level, requiring 274 million m3 of water to fill the deposit site.

• This means that halting production will effectively put a deposit of between 287 and approximately 750 million tonnes of quality coal beyond our reach in the future� It would take at least 15-20 years just to drain the water away again�

2020-2040 (approximate)• The general plan of rehabilitation and

reclamation covers the redevelopment work in detail by reference to the final shape of the residual ČSA shaft. This includes sealing the base and coal seam, as well as safe-guarding the stability of the side slopes by shaping them, erecting retaining benches, and using construction equipment to back-fill certain areas. Attention is paid to the

shoreline, along with modifications to the shape and slope of the banks, including the installation of defences with technical and biological elements to prevent erosion.

• A 690 ha expanse of water, with a maxi-mum depth of some 130 m, will be formed. The total area reclaimed will be just above 2,800 hectares, of which 26% will com-prise a body of water, 8% farmland, 17% forestland, and 49% other areas (parkland, recreation areas, and sites intended for professional or industrial use).

• The total cost of reclamation will run to approximately CZK 4.5 billion.

Centrum Mine phase-outSeverní energetická a�s� will shut down the Centrum deep mine (Důl Kohinoor a.s.) for good in 2016� Further to a shareholder decision to liquidate Důl Kohinoor a.s., the company operating the Centrum Mine, work started on a Centrum Mine Closure Plan, which was then submitted to the Most-based District Mining Office for the Ústí nad Labem Region for approval. On 4 September 2013, the District Mining Office issued a decision granting a mining permit to reflect the Cen-trum Mine Closure Plan, the main points of which are as follows:

• Closure of workings: after mining work is terminated, selected machinery, mechan-ics and electrical equipment and supplies, including environmentally objectionable apparatus and materials, will be lifted out of the mine�

• Closure of main workings: once environ-mentally hazardous components have been removed, preparations will be made to shut down the main workings by exposing the seals in line with the closure project. Under the project documentation, the closure of the main workings is split into five stages:

1 – the preparation and handling of legisla-tive requirements linked to the closure of the main workings and surface structures;2 – site preparation;3 – closure of the main workings with back-fill;4 – main workings closed over with a sealing pithead platform;5 – landscaping.Work under the approved Centrum Mine Closure Plan should be started after the last longwall face has been mined out�Deep mining in the side slopes of the ČSA Mine is expected to provide work for 240 employees.

Closures of (mining) operations MM Sector specific Aspect: Closure Planning (MM10)

In the closure and phasing-out of mines, the Sev.en Group is guided by projects submitted to the District Mining Office for approval. Each closure project envisages an organisational change and, where necessary, the accompanying redundancies.

Severní energetická a.s. will close the Centrum deep mine (Důl Kohinoor a.s.) for good in 2016. Some of the employees from here will switch to deep mining at the side slopes of the ČSA Mine.

The continued scaling-down of the ČSA surface mine in connection with Government Resolution No 827 includes a steady reduction in production levels, the shutdown of technology and job losses.

Social problems prompted by the closure of operations are always tackled in cooperation with the trade unions in accordance with the applicable collective agreement.

Brief overview of the procedure followed by Severní energetická a.s. in relation to the ČSA phase-out option and Centrum Mine phase-out


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Regional social impacts of the termination of production at the ČSA Mine15

The most spectacular social fallout from the shutdown of production at the ČSA Mine could well be the consequences for regional unemployment. The basin districts of north-western Bohemia are unemployment blackspots. Forecasts of increased unemployment indicate significant change in the Most district, where the rate is projected to climb from 13.2% to 16.6%, and in the Chomutov district, reporting a surge from 11�2% to 12�7%� The mine closure will not have such a pronounced effect in the Teplice district, where unemployment is predicted to nudge up from 9.5% to 9.7%, and in the Louny district, rising from 10�1% to 10.5%. The unemployment rate in the Ústí nad Labem Region as a whole would also undergo striking transformation, increasing from 10�8% to 11�6%�

The summary presented in the table shows that the economic ramifications of terminating production at the ČSA Mine for the central gov-ernment budget and public budgets will amount to around CZK 2.7 billion. (This figure is net of costs associated with the possible reopening of the deposit site in the future.)If production were to advance beyond the environmental mining boundaries, the company expects to create about 600 new jobs in mining per se, plus a further 744 jobs at downstream organisations� Preliminary estimates indicate that following this path will channel more than CZK 3 billion into the Czech economy, as op-posed to a projected CZK 2.7 billion loss if the mine were to close�

RESULTANT BALANCE OF IMPACTS OF THE TERMINATION OF PRODUCTION AT THE ČSA MINE ON PUBLIC BUDGETS AND REGIONAL AID (CZK MILLION/YEAR)

Sev.en Support Total

Loss of charge (minerals) (37) 0 (37)

Loss of charge (area) (1) 0 (1)

Total – charges (38) 0 (38)

Loss of tax + social security/health insurance contributions

(1,014) (548) (1,562)

Expenditure – aid (469) (564) (1,033)

Loss of regional aid (25) 0 (25)

Overall impact – CZ (1,545) (1,112) (2,657)

15 For more details, see: Studie dopadů ukončení těžby lomu ČSA (ČSA Mine Closure – Impact Study), Chapters 4 and 5, VUHU, Most Economic and Social Council, March 2015 http://www.hsr-uk.cz/hsr-m/files/studie_dopadu_ukonceni_tezby_lomu_CSA.pdf


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Severní energetická a.s. is duty-bound to adhere to the Mining Act. Government Resolution No 444 of 30 October 1991 on environmental mining boundaries is a piece of secondary legislation (a bylaw)� The law requires the company to extract minerals needed long term by electricity and heating companies as efficiently and ecologically as possible. It also requires the company to resolve conflicts of interest. If such conflicts are successfully handled, mining at the ČSA Mine may move on to Stage II, entailing the resettlement of Horní Jiřetín.

Despite the municipality leadership’s policy not to communicate with Severní energetická a�s�, the inhabitants of Horní Jiřetín regularly get in touch with the company to enquire about specific resettlement-related offers and about the initiation of real estate purchases.

In 2013, Severní energetická a�s�, deciding to elicit the current views and attitudes of the Horní Jiřetín population, launched a set of sociological surveys in this municipality. STEM, the polling agency, conducted surveys

in the summer and autumn of 2013�16 The results were presented at a press conference and on the company website in January 2014� They were subsequently discussed at personal meetings with various stakeholder groups (central and local government, employees, the public, and the media).

The survey results indicate that 67% of the population of Horní Jiřetín expects to see the mining boundaries revised in the next 10 years. In response to a general question, 57% of Horní Jiřetín’s inhabitants said they were staunchly opposed to mining. Probing deeper, however, showed that there was an equal three-way divide among those opposed to resettlement, those in favour and those undecided. Almost 76% of inhabitants indicated that they would come to terms with being relocated. The complete results of the sociological survey are available on the company website at www.sev-en.cz/cz/spolecnost/limity.html�

In 2015, extensive consultations with all stakeholder groups resulted in the publi-cation, in May 2015, of the Fundamental Prin-

ciples of Compensation for Horní Jiřetín and Černice. (See http://www.sev-en.cz/cz/uhli/download/horni_jiretin.pdf�)If production continues, compensation will be payable to owners of immovable prop-erty, permanent residents, businesses and economic operators, clubs, associations and other organisations with activities linked to the area in question. Compensation will be voluntarily offered to all inhabitants, owners and entities throughout Horní Jiřetín and Černice, i.e. not just in the area of interest (the working district of the mine). According to the Czech Office for Surveying, Mapping and Cadastre, this means the municipality of Horní Jiřetín (Most district), cadastral number 567175, and the cadastral communities of Albrechtice u Mostu (Most district); Černice u Horního Jiřetína (Most district); Čtrnáct Dvorců (Most district); Dolní Jiřetín (Most dis-trict); Horní Jiřetín (Most district); and Jezeří (Most district). Compensation will only be-come available if all conflicts of interest in the affected area are resolved� In other words, all stakeholders must agree to the method proposed to address their specific interests.

As things stand, existing mining limits have been maintained under Resolution of the Government of the Czech Republic No 827 of 19 October 2015 on further procedure con-cerning environmental mining boundaries for brown coal extraction in North Bohemia, but no final decision has been taken on the ČSA Mine� The issue of environmental boundaries at the ČSA Mine remains conditionally open, pending further evaluation by 2020. Conse-quently, not only coal customers, but also the inhabitants of Horní Jiřetín and Černice, remain in limbo� For this reason, further work on the resettlement project, with the excep-tion of the validity of the published “Funda-mental Principles of Compensation” for the affected residents, has been suspended.

Resettlement prompted by coal mining MM SECTOR SPECIFIC ASPECT: RESETTLEMENT (MM9)

The Sev.en Group’s approach to the possible resettlement of the town of Horní Jiřetín stems from its responsibility as a mining company to resolve conflicts of interest (the method of compensation when people are resettled to make way for advancing mining operations) if the mining boundaries are reconsidered.

The Group is actively interested in the local population’s opinion on this possibility. In May 2015, the “Fundamental Principles of Compensation for Horní Jiřetín and Černice” were published.

However, the situation at the ČSA Mine in the vicinity of Horní Jiřetín depends on the form taken by the Czech energy policy and Government Resolution No 827, determining how decisions are to be taken on whether mining will proceed here.

Resettlement prompted by coal mining


16 According to the 2011 census, there are 749 private households here, 735 of which were visited. With 538 interviews successfully conducted, the return rate was 75%.





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AVERAGE QUALITY PARAMETERS OF MARKETABLE COAL PRODUCTS FROM THE KOMOŘANY COAL PREPARATION PLANT IN 2013–2014

quality parameter coal type 2013 2014 2015

calorific value Qir (MJ/kg)

graded 21.14 20.95 20.96

pulverised 17.00 17.03 17.07

im/hm 14.94 14.28 14.23

total water content in fuel Wtr (%)

graded 26.28 26.24 26.12

pulverised 28.52 28.02 27.85

im/hm 26.26 26.35 25.67

content of ash in anhydrous state Ad (%)

graded 6.67 7.69 8.25

pulverised 18.86 19.47 20.01

im/hm 29.01 30.91 32.32

specific sulphur content Smr (g/MJ)

graded 0.53 0.50 0.57

pulverised 0.61 0.63 0.71

im/hm 0.64 0.67 0.76

Details are available in the Coal Catalogue at http://www.sev-en.cz/cz/uhli/katalog-uhli.pdf

PRODUCTION OF FINAL PRODUCTS – BROWN COAL

The Sev.en Group’s final brown coal output comprises:• brown steam coal (pulverised coal, indus-

trial and heating mixtures [im/hm], and partly graded nut-2 coal), used for power and heat generation and in industry;

• graded brown coal (cube, nut 1 and nut 2) intended primarily for households and small heating plants.

To satisfy the needs of customers in achieving suitable quality parameters for their combus-tion units, in addition to coal extracted from the ČSA Mine, marketable products are also made using coal bought in from Vršanská uhelná a.s. and Důl Kohinoor a.s. (the Cen-trum Mine)�

In 2015, the Sev.en Group extracted 3.597 million tonnes of brown coal, with an average calorific value 18.13 MJ/kg, from the ČSA Mine and just under 406,000 tonnes from the Centrum Mine�

Severní energetická a�s� bought in 327,000 tonnes of run-of-mine coal with an average calorific value 12.61 MJ/kg from Důl Kohinoor a.s. and, in an external purchase, another 778,000 tonnes of brown coal with an aver-age calorific value 9.01 MJ/kg from Vršanská uhelná a�s� for its requirements (the mixing of final products with lower calorific value).All coal extracted from the ČSA Mine and Důl Kohinoor a.s. v likvidaci and bought-in coal first makes its way to the Komořany Coal Preparation Plant, where the final products are made�


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HouseholdsSmall heating

plantsEnergy sector

Heat and power plants

Industry

Grading

Graded coal Pulverised coal Industrial and heating mixtures

Crushing

Severní energetická a.s.

ČSA Mine

Důl Kohinoor a.s.Centrum Mine

Vršanská uhelná a.s.Vršany Mine

Coal bought in Coal extracted

Processing

Shipping

BROWN COAL PRODUCTIONSimplified flowchart, 2015


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BROWN COAL TRADING IN 2015

In 2015, 4�780 million tonnes of Sev�en Group coal was traded (of which approxi-mately 81,000 tonnes were sold directly by Důl Kohinoor a.s.). Brown steam coal sales stood at 4�2 million tonnes, of which 2�438 million tonnes (59%) was used within the Group at Chvaletice Power Station (Sev�en EC, a�s�)�Other major customers of brown steam coal included UNIPETROL RPA, s.r.o., TO Ser-visní s.r.o., Teplárna Strakonice, a.s., Mondi Štětí a.s., ČEZ, a.s. and Czech Coal a.s.

Total sales of the Sev.en Group’s graded products in the brown coal retail market in 2015 came to approximately 0.6 million tonnes�

Shipping of coal products The Coal Services a.s. rail transport system carries extracted coal from mining facilities to designated destinations (the preparation plant, crushing plant, and storage site). Once prepared, the coal is transported to customers in line with their requirements� Coal products are loaded at the Komořany Coal Preparation Plant. The individual prod-ucts are shipped to customers in two ways: by rail and by road�

Products are loaded on to trucks in Komořa-ny. On average, approximately 42 trucks were loaded every day in 2015. A camera system enables road hauliers to monitor the density of traffic at the parking site and the loading station on the webpage at http://www.sev-en.cz/cz/uhli/webkamery.html�In 2015, brown coal was transported by: • ČD Cargo a.s. – transporting coal by rail

from Severní energetická a�s� to Chvaletice Power Station;

• other customers hired external entities to haul their brown coal�

Market share In the Czech Republic, indigenous brown coal remains the most important resource for energy production (with a 42.3% share of the mix in 1-11/2015). It is a guarantee of efficient and independent energy production, notwithstanding the fact that demand has been following a gentle downward trajectory� Brown coal contributes to the safe and reliable production of electricity and centrally generated heat for the population. Sev.en Group contributed 4.8 million tonnes (approximately 12.5%) to the aggregate 38�1 million tonnes of brown coal sold on the Czech market in 2015�

Czech Republic gross electricity generation, by fuel (%)

Source: ERO, 1-11/2015

brown coal (42.30)

nuclear power plants (32.40)

black coal (6.20)

hydropower plants (3.70)

other gases (3.70)

natural gas (2.30)

biomass (2.50)

biogas (3.10)

wind power plants (0.70)

solar power plants (2.90)

liquid fuels (0.10)

other fuels (0.20)


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of brown coal sold on the

Czech market in 2015

12.5%

Brown coal pricing Since 2013, the price of brown steam coal (in CZK/GJ), net of transportation, has been derived from the price of black coal, a com-modity traded on the international European Energy Exchange EEX (Leipzig), facilitating future purchases of assets under pre-agreed conditions, reduced by a brown steam coal utility factor (80% of the black coal price). Every year, the price of graded brown coal (in CZK/t) is tied to retail market trends�

Customer disclosures and claims Provisions on the quality of coal delivered, quality testing and the procedure in response to faulty supply (complaints) are an integral part of purchase contracts between Severní energetická a�s� and its customers� They are enshrined either directly in the body of the contract or are annexed thereto. At the customer’s request, “quality certificates” are provided for specific daily deliveries. These documents contain a basic technological analysis of quality, the weight of the delivery

and the date of shipment. If required by the customer, after the daily delivery has been made and samples have been tested in the labs, the resultant quality values of the fuel supplied are routinely dispatched electron-ically. All customers receive a rundown of the quality values of the fuel supplied to them together with the invoicing of supplies. Specialists in coal trading and sales clerks, primed to provide information to customers, deliver a comprehensive sales service to specific customer groups. Of the total sales and total supplies to cus-tomers in 2015, amounting to 4�780 million tonnes, claims were made with respect to 22,000 tonnes of Most brown coal, account-ing for approximately 0.5% of the Sev.en Group’s total coal sales.

Evaluation of customer satisfaction Regular sources of information on customer satisfaction with products include (a) periodic meetings of sales and management rep-resentatives with groups of customers, at

which illustrative corporate and sales presentations are used; (b) excursions arranged for selected customers; and, last but not least, (c) everyday communication between customers and sales personnel, who respond to customer needs and provide a comprehensive sales service to a specified group of customers� There were no claims for breaches of customer privacy or customer data losses in 2015. (Confidentiality provisions are incorporated into all purchase contracts between Sev.en and customers, and each contract is classed as a commercial secret�) In 2015, the Sev.en Group identified no infringements of laws and regulations concerning the handling and use of brown coal products.


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ELECTRICITY AND HEAT GENERATING TECHNOLOGY – Sev.en EC, a.s.

The brown coal fired thermal power station in Chvaletice (Sev�en EC, a�s�, or “7EC”)17 had 301 employees as at 31 December 2015. Chvaletice Power Station’s installed capacity of 820 MW makes it the third largest electric-ity producer in the Czech Republic (after the ČEZ Group and EPH). The power station can supply more than 4 TWh of electricity to the grid annually� Two units at 7EC are currently under extensive repair in a move that will bring about long-term emission abatement.Chvaletice Power Station is located in the Bo-hemian Elbeland near Pardubice� It was built between 1973 and 1979 on the site of the former Rhodonite Works (Mangano-kyzové závody), where pyrite mining had just ended. The Pardubice location ticked a number of boxes for the construction and operation of a coal-fired power station: coal shipping oppor-tunities, appropriate infrastructure, abun-dant water and good dispersion conditions, which – combined with a very high chimney (301 m – one of the two highest in the coun-try) – were ideal at the time of construction to ensure adequate dispersion of sulphur dioxide and other emissions� The building of the power station also prompted the completion of the Elbe Waterway, because the North Bohemian brown coal burned in Chvaletice was shipped here from Lovosice by water until mid-1996. The power station has a fuel storage site designed to hold 850,000 tonnes. Completion of a special railway rotary wagon tippler at Chvaletice Power Station in mid-1996 paved the way for North Bohe-mian brown coal to be transported by rail. Coal is supplied by means of belt conveyors either from fuel depots or directly from the unloading point (the rotary fuel tippler). This facility can cope with up to 240 wagons per day, equating to as much as 400 kt per month. The coal is transported approximately 200 km by rail� 17 The power station was renamed Sev.en EC, a.s. on 1 August 2015.

Thermal power station in Chvaletice (Sev.en EC, a.s)

Reclamation

Desulphurisation

Coal storage siteBoiler room

Engine room

Substations

ChvaleticePraha

Brno


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Basic production figures for 2015

In 2015, Sev.en EC, a.s. produced 3.5 TWh of electricity, in the process consuming 2.46 mil-

lion tonnes of brown coal (an annual average calorific value of 15.33 GJ/kg and annual average sulphur content in the original sample of 1�15%) and 3,586 tonnes of liquid fuel (an

average sulphur content of not more than 1%). In 2015, the net production efficiency was 31�16%�18 (The average efficiency of the power station’s boiler room was 85.19%; the

average efficiency of the engine room was 40�23%�)

Each generating unit consists of a boiler, a turbine with an alternator, and a unit trans-former� Cooling towers cool the cooling water from turbogenerator condensers� The boilers are of the same type, have the same steam output (655 t/h), and are fired by brown coal. The output is guided by two 400 kV lines to the Týnec nad Labem substation.In 2014, the installed capacity of individual units was increased from the original 200 MW to 205 MW. This rise in installed capacity had been endorsed by the turbine and generator manufacturers, and included the replacement of the nameplates. The increased output was not accompanied by a change in production technology. The process was rounded off on 8 September 2014 by the Energy Regula-tory Office when it approved the expanded installed capacity by amending the licence for the production of electricity and thermal

energy. The power station’s total installed capacity rose from the original 800 MW to 820 MW. The increase in installed capacity was followed, in the period from September to November 2014, by the new certification of support services for the new power ranges of 115 MW to 205 MW for secondary regulation (SR) and the 15-minute reserve. For primary regulation, the power range of 100 MW to 210 MW was re-certified.In May 2015, automatic secondary regulation of Unit B3 voltage was recertified.Chvaletice Power Station is not limited to the generation of electricity, as it also produces thermal energy. The units’ total heat output is 69.6 MWt. The two commodities are pro-duced in a common cycle (they are cogener- ated), resulting in higher fuel utilisation and thus higher energy efficiency with a positive

impact on the environment. Each unit is equipped with a heat exchanger, comprising a paired base and peaking heater, that supplies heat to the town of Chvaletice and other cus-tomers, including the power station’s captive consumption.Sulphur dioxide emissions are reduced by an efficient desulphurisation plant completed in 1998. The combustion products from boilers are channelled into electrostatic fly-ash precipitators. A smoke ventilator is installed behind each boiler to convey the combustion products to the desulphurisation unit or the power station chimney. Desulphurised combustion products are transferred directly to the cooling towers� The cooling towers are approximately 100 m high, with a ground-level diameter of about 60 m. The power station sources water from the River Elbe�

Boiler start-up or shutdown requires the igni-tion of black oil burners fuelled by heavy fuel oil (black oil). Once the required output is reached, the black oil burners are shut down and the combustion products are transferred to the desulphurisation unit. Since 1998, the power station chimney has only been used during boiler start-up or shutdown.Besides the four generating units, the power station is equipped with a 32.6 MWt start-up boiler room, used as a backup heat produc-tion source in cases where the generating units are completely shut down for any reason. The start-up boiler room is fitted with two black oil burning pressurised boilers that do not use induced-draught fans. Combustion products are discharged separately from each boiler into a shared steel chimney�


Electricity supply reliability and electricity production system efficiency

Net production efficiency Sev.en EC, a.s. % 31.73 32.06 31.16

Availability (level of preparedness of the energy production facility for production)

Sev.en EC, a.s. % 65.50 72.83 77.41

18 Here, the efficiency described in Implementing Decree No 441/2012 establishing the minimum energy efficiency in the production of electricity and thermal energy was applied. Net efficiency of electricity and thermal energy production in a steam turbine set: the ratio of the physical equivalent of generated electricity measured at the generator terminals Esv (MWh) – less captive electricity consumption in the production plant Evs (MWh) and useful heat supplied from the production plant – to the energy of fuel needed for the production thereof Qpal (GJ) over the same period.

etnet = (3,6 * (Esv – Evs) + Qtep) / Qpal * 100 Esv – generation of electricity measured at the generator terminals; Evs – captive electricity consumption in the production plant needed for the production of electricity, including transformation losses. Qtep – thermal energy delivered from the production plant (useful heat); Qpal – the energy of fuel consumed in boilers to cover power and heat generation.


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ELECTRICITY AND HEAT PRODUCTION FACTS (FIGURES FOR SEV.EN EC, A.S. APPLICABLE AS AT 31 DECEMBER OF THE GIVEN YEAR)

YEAR 2013Of which: from

September 2013 (within the Sev.en Group)

2014 2015

Electricity production [MWh] 3,122,124 1,280,962 3,910,633 3,526,657

Captive energy consumption [MWh] 272,923 100,579 292,877 297,804

Heat production [GJ] 143,841 51,884 130,657 128,667

Captive heat consumption [GJ] 92,144 33,941 86,922 84,199

Brown coal consumption (thousands of tonnes)

2,657 887 2,682 2,459

Until August 2013, Chvaletice Power Station featured in the ČEZ portfolio as a power station with higher variable costs. Consequently, the deployment of other power stations was prioritised. When ownership changed hands, there was a major change in operating methods, and Chvaletice Power Station started to make efficient use of its

entire installed capacity. This resulted in an approximately 0.8 TWh increase in production in 2014 compared to 2013.

In 2015, largely due to falling grid prices, there was a year-on-year decrease in produc-tion by approximately 0.4 TWh.

Changes in production parameters related to a change in fuel quality The power station’s boilers have been designed to burn brown coal with a calorific value (Qir) of 13�607 to 15�072 GJ/t� On 2 September 2013, Chvaletice Power Station passed into the hands of Severní energetická a.s., after which the capacity

to use new fuel supplied by Severní energetická a.s. was phased in. The power station switched fully to the new fuel in October 2013, resulting in very different qualitative parameters – a higher calorific value, lower ash content and lower sulphur content than the fuel used by the original owner (the ČEZ Group).

AVERAGE PARAMETERS OF COAL (WHEN CONSUMED)

1–8/2013 from 9/2013 2014 2015

SupplierSeveročeské doly a.s.

(ČEZ Group)Severní energetická a.s. (Sev.en Group)

Average calorific value – Qir (GJ/t) 10.79 15.24 15.26 15.33

Ash content – Ad (%) 44.0 30.0 30.0 30.0

Sulphur content – Sd (%) 3.1 1.8 1.8 1.8

Compared to 2013, the higher calorific value of coal from Severní energetická a�s� has resulted in an approximately 14% reduction in captive electricity consumption (equivalent to about 42,000 MWh) and an approximately 19�5% decrease in the quantity of fuel re-quired (equivalent to about 650,000 tonnes)�

(This means that 14% less captive con-sumption of energy and 19.5% less coal are required to produce one MWh.) The year-on-year difference in calorific value was approx-imately 3GJ/t� This also led to a decrease in transport costs and the lower environmental impacts of rail transport. The fuel switch cut

SO2 emissions as a result of the lower sulphur content�Compared to 2014, there was an approxi-mately 9% increase in captive electricity con-sumption (equivalent to about 27,000 MWh) and an approximately 0.4% decrease in the quantity of fuel required (equivalent to about

10,000 tonnes)� (This means that 9% more captive consumption of energy and 0.4% less coal are required to produce one MWh.) The year-on-year difference in calorific value was approximately 0.08 GJ/t.


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In 2015, Sev.en EC, a.s.

produced 9.8% of total

electricity production within the

framework of brown-coal resources in the Czech Republic.

9.8%

Chvaletice Power Station Facility Rehabilitation Project

In 2014, Chvaletice Power Station started working on the repair of two units. Mindful that the project is one of the most important investments in the region, the company man-agement is making sure that the tendering procedure is transparent and that the repre-sentatives and inhabitants of municipalities in the vicinity are kept informed. Employees and representatives from surrounding municipal-ities are kept abreast of important steps at meetings and by means of in-house news- papers and press releases.Chvaletice Power Station (Sev�en EC, a�s�) is defined by the Public Procurement Act as a sectoral contracting entity and is obliged to arrange for the supply of services, energy, spare parts and technological units in public tenders. With this in mind, the repair of the power station’s two units was put out to ten-der. This work at the power station is centred on cutting emissions of pollutants (sulphur and nitrogen oxides, particulate matter) so that we comply with statutory limits by mid-2020 (the Emission Abatement Roadmap). This overhaul will not change the scope of operations or the capacity of existing boilers, nor the boiler fuel base, but will lead to the rehabilitation and replacement of components that have reached the end of their service life�Equipment from the boiler room, the engine room, the electrostatic fly-ash precipitators, the management control system and related electrical parts, as well as measurement and control devices, will be rehabilitated� Repair work will optimise the operation of

Absorber 2 in dealing with the current fuel, which has less sulphur than that used by the previous owner. The aim is to enhance the regulatory scope and efficiency of the units, improve quality, effectiveness, reliability and safety, stream-line captive consumption and, above all, reduce emissions�In 2016, the power station wishes to repair two units with an installed capacity of 2 x 205 MW and thus meet stringent require-ments for long-term green operation.In September 2014, an invitation to tender was published for the repair of these two units at Chvaletice Power Station. Notification of competitive procedure with negotiation for this public contract was dispatched on 19 September 2014 for publication in the Public Procurement Journal in accordance with Section 146(1) of Act No 137/2006 on public procurement. It was published under regis-tration number VZ 497816 on 24 Septem-ber 2014. The public contract was awarded to KRÁLOVOPOLSKÁ RIA, a.s., which bid a price of CZK 2.5 billion, and the contract was signed in July 2015�In 2015, the following steps were taken un-der the Chvaletice Power Station repair pro-ject: an invitation to tender, the signing of a contract, the handover of the “site – common site warehouse of the reagent for secondary denitrification of the units”, and the start of design work�

Expenditure targeting the provision of reliable electricity supplies (maintenance, overhaul, innovation, investment) In 2015, efforts to grapple with the fun-damental change in operating prospects

– power station reconstruction rather than decommissioning – resulted once again in maintenance spending with a view to achieving the required facility reliability�Financially, the biggest investment projects in 2015 were: the reconstruction of insulated conductors of an even standby electric loop (cost: CZK 20.5 million); Structure 5 – stabiliser storage, technical rehabilitation, anti-dust measures (cost: CZK 13.028 million); and the upgrade of the Foxboro decentralised system (DCS) – Unit B2 (total cost: CZK 7.973 million)�After the contract for the reconstruction and repair of the power station had been signed, the first investment advances totalling CZK 730.0 million were paid in 2015. As in previous years, investments were made in tangible fixed assets to increase production efficiency and ensure conditions were in place for the continued operation of the power station. Investments were prepared and implemented in accordance with the company’s business plan.

TRADE IN ELECTRICITY

The Czech market in 2015The electricity market in the Czech Republic was influenced by several factors during 2015� The increasing share of electricity produced from renewable sources in Germany and a further decline in prices of other energy commodities (oil, coal, natural gas) affected the electricity markets. The price of the annual electricity product for 2016 began trading at EUR 31.95 per MWh in 2015, falling to EUR 28.70 per MWh at the end of the year. The average price on the day-ahead market was EUR 32.32 per MWh. Long-term price trends continued to follow a downward trajectory, impeding the energy sector’s profitability. During 2015, there was a prolonged unplanned shutdown of generating units at the nuclear power plant in Dukovany, and this year was the hottest on record. With production from re-newable sources difficult to predict, outage in production from nuclear units, and high temperatures in the summer months, prices and volumes proved volatile on spot markets. Sev.en EC, a.s. remained flexible in the use of its production capacity in order to respond to these circumstances.


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In the longer term, a major decision was taken that will affect the Czech Republic’s energy sector in the years to come� The Update of the National Energy Concept of the Czech Republic was approved, stating a preference for electricity produced from nuclear and renewable sources, mainly at the expense of coal-fired power stations, in the next few years. A study for the construction of new nuclear units should be prepared in 2016� However, the issue of the economic viability of nuclear production has remained unresolved in the light of sustained low electricity market prices (in 2014, the Czech Government refused to guarantee the feed-in tariff of electricity produced in this way). In 2015, bottlenecks in maintaining the market balance in the event of concurrent production downtimes emerged� During 2015, the price of CO2 emission al-lowances was relatively stable, ranging from

EUR 6.46 to 8.68 per tonne of CO2. Adminis-trative measures intended to push for a sharp increase in allowance market prices fell flat. During 2015, an amendment to the Ener-gy Act made its way through the approval process. The CNB continued its controlled de-preciation of the crown, and the role played by state institutions remained the same as in previous years.

Support for an open transparent marketThe Sev.en Group fully endorses rules on a transparent environment, anti-corruption and ethical conduct. These principles govern tendering procedure, contractual standards and procurement rules. In 2015, the Sev.en Group Code of Conduct – defining the funda-mental values to be applied in relations with business partners, employees and outside entities from 1 January 2016 – was approved.Sev.en EC, a.s. does its duty in reporting

commercial data according to Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy mar-ket integrity and transparency (i.e. REMIT). In keeping with that Regulation, the company also posts information about the output and shutdowns of production units on its website.

Market operations of Sev.en EC, a.s.Sev.en EC, a.s. is a stable trader on European electricity markets� It trades in available elec-tricity products on both short- and long-term markets and in emission allowances, and responds flexibly to the market’s situation and needs. It arranges support services for ČEPS, a.s. on the basis of successful tenders, and in the provision of such services ensures the stability of the transmission system in the Czech Republic. The company purchases the necessary number of emission allowances to cover the production of electricity.

Segments in the sale of electricity produced and demand managementIn 2015, Sev.en EC, a.s. produced 3,527 GWh of electricity, which accounted for 4.2% of total electricity production in the Czech Republic and 9.8% within the frame-work of brown-coal resources. The electricity produced is traded on the wholesale mar-ket. Only 32.04 GWh was supplied to final customers off the plant site and 1.66 GWh to on-site customers. The segment of off-site final customers was discontinued for good on 31 December 2015. In this segment, supplies were made to customers from industry and commerce; supplies were not made to households.

NUMBER OF FINAL CUSTOMERS CONNECTED TO THE NETWORK, 2015*

Type of customerType of network connection

Transmission Distribution

Households 0 0

Industrial customers 41 2

Commerce and services 0 1

Government 0 0

Agriculture 0 0

Total41

(on-site at Sev.en EC, a.s., 1.66 GWh)3

(supplied off-site, 32.04 GWh)

* This category includes both customers supplied with grid electricity (i.e. those who have entered into a distribution contract separately with a particular distributor) and customers with a bundled electricity supply service (i.e. those who have entered into a single contract under which the trader also contractually provides distribution).


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Trading in thermal energyLocally, Sev.en EC, a.s. is the leading supplier of thermal energy to the system operated by ČEZ Teplárenská, a.s. Further, the thermal energy was also sold to retail customers at the power plant. In 2015, the plant had a total of 29 thermal energy customers� Of the total sales of 44,468 GJ, approximately 91% was purchased by ČEZ Teplárenská, a.s. The selling price for ČEZ Teplárenská, a.s. is set according to an escalation formula derived the contract. The selling price for other cus-tomers is determined by pricing according to an Energy Regulatory Office price decision.

Contractual relations and dispute resolution All contractual relations formed by Sev.en EC, a.s. are governed by applicable legis-lation, commercial standards and in-house methodology� In 2015, no commercial data were leaked, no trade secrets or privacy were violated, and no commercial disputes with customers (other than the management of debts incurred for electricity supply) were recorded�

One significant electricity trading incident occurred on 11 September 2015. In the early hours of that day, the second generating unit

at Temelín Nuclear Power Station malfunc-tioned and the missing power in the Czech Republic’s transmission system had to be covered by putting back-up facilities into ser-vice and importing from abroad. At this time, Units B1 and B2 at the Sev.en EC, a.s. power station were undergoing a planned shut-down and Units B3 and B4 were taken out of service due to faults (slag caving and leaks in the area of the steam chest)� For Sev�en EC, a�s�, this situation required ad hoc balancing of its market position in the wholesale mar-ket� There were no further incidents of that magnitude in 2015�

Outlook for 2016For the next year, Sev�en EC, a�s� has set itself the goal of stabilising sales of the elec-tricity produced within the framework of long-term pricing trends, responding to market opportunities and succeeding in tendering procedure for a provider of support services. These goals will be boosted by the planned repair of Generating Units B3 and B4, which will increase production reliability.

Product impact on customer health and safety ASPECT: CUSTOMER HEALTH AND SAFETY (G4-PR1, G4-PR2)

Customer health is a fundamental priority for the Group when trading in coal and energy by-products from coal combustion. Severní energetická a.s. is unflagging in the care and thought it devotes to the quality of the brown coal that it supplies. All (100%) brown coal output is analysed

RESPONSIBILITY FOR PRODUCTS


The most important stage in the coal-use life cycle, when opportunities to improve/mitigate product impacts on health and safety come into play, is when coal is being produced to the required quality� The required coal quality, from the perspective of safety, fire and environmental parameters, is achieved thanks to the coal production quality man-agement information system. In the past two years, the information system hardware has

been honed� The suitability of the automatic coal sampler design and performance has been fully checked out, the certificates for all final product samplers, encompassing products for both the energy sector and the public, have been renewed, and the planned replacement of ash content analysers with newer types is under way. All (100%) brown coal output is analysed.

Another major factor improving the health-related effects of product (brown coal) use within the Sev.en Group is emission abatement during the generation of electricity – this is the goal pursued by the Chvaletice Power Station Reconstruction Programme, launched in 2015. (See pages 74 and 121.)Energy by-products of coal combustion at Ch-valetice Power Station are slag, FGD gypsum, stabiliser and fly ash. The quality required,

with regard to safety, environmental and health impacts for customers, is secured during production and certification, which is applicable to all energy by-products.

In 2015, there were no cases of regulatory non-compliance relating to the health, environmental and safety impacts of Sev.en Group products.

77

There has been no non-compliance with regulations on information and the label-ling of services and products at the Sev.en

Group. Nevertheless, claims procedure in 2015 encompassed 0.5% of total coal sales. There were no infringements of laws and

regulations on product and service quality or on information about product and service use at the Sev.en Group in 2015. No financial

penalties were imposed on the Sev.en Group in this respect.

Product and service labelling ASPECT: PRODUCT AND SERVICE LABELLING (G4-PR3, G4-PR4)

The Group meets applicable standards in its product labelling. Labelling, along with the safety and fire characteristics of a given type of coal on offer, is set out in the Coal Catalogue19 and detailed in contracts with customers� Burning brown coal in a power plant generates energy by-products. These products are certified and are known by their safe-use characteristics. The re-use of certified energy by-products in other industries reduces the need for natural raw materials. (See page 114.) The information system is being constantly refined to ensure consistent adherence to the quality of the fuel produced across the entire range. The system provides real-time monitoring of wide-ranging information and offers an objective view of the operation of mining technology and coal preparation. This Group approach is supported by the Group’s own accredited solid-fuel laboratory. The continuous coal analysis and labelling system makes it possible to trace a day, shift and loading site in response to any claims, thereby facilitating an immediate response to feedback from customers�

THE ORGANISATION’S PROCEDURES FOR REPORTING ON PRODUCTS AND PRODUCT LABELLING

Brown coalSeverní energetická a.s.

Energy by-products from coal combustion – products from the desulphurisation of Sev.en EC, a.s. operations

Percentage of significant product categories covered by the assessment

100% 100%

The sourcing of components of the product content, particularly with regard to substances that might produce an environmental or social impact.

• Coal Catalogue page 4 (standards applied in the testing of solid fuels)• Brown coal quality management information system• Complete legislation on the protection of health and the environment

(e.g. the development and working face advance plan, the rehabilitation and reclamation plan, EIAs – see www.sev-en.cz/banska-dokumentace).

• Certificates according to standards – specific technical requirements for slag, FGD gypsum, stabiliser and fly ash in cement and autoclaved aerated concrete; production management documents for fly ash in concrete and fly ash filler in concrete (aggregate) that are part of certification

• EMS standard • Complete legislation on the protection of health and the environment

(integrated permit, emission limits, desulphurisation)

Safe use of the product or service

• Brown coal storage requirements depend on the technical specifications (see the Coal Catalogue, page 3)*

• 88.5% of output is transported in bulk by rail • Brown coal use depends on the technical specifications (Coal

Catalogue)*

• Certificates according to standards – specific technical requirements for slag, FGD gypsum, stabiliser and fly ash in cement and autoclaved aerated concrete; production management documents for fly ash in concrete and fly ash filler in concrete (aggregate) that are part of certification

Disposal of the product, and related environmental protection or social impacts

Complete legislation on the protection of health and the environment (integrated permit, emission limits, desulphurisation) applies to the consequences of coal combustion

Not applicable to energy by-products

* The Most Brown Coal Catalogue can be downloaded from www.sev-en.cz/cz/uhli/katalog-uhli.pdf


19 http://www.sev-en.cz/cz/uhli/katalog-uhli.pdf

http://www.sev-en.cz/banska-dokumentace



78

Product responsibility – production of coal

Information system for the quality management of coal production

The information system has been introduced to ensure consistent adherence to the quality of the fuel produced across the entire range. The system provides real-time monitoring of wide-ranging information and offers an objective view of technological operations. The system consists of a network of sensors: high-quality rail and truck scales, belt scales, automatic samplers, ash and sulphur analysers. The quality parameters of the types of brown coal produced can subsequently be stabilised by computer processing.

The analysers make it possible to regulate the quality of steam coal and the quality of coal for small customers (small heating plants and households).

With this system, there is little straying from the qualitative indicators set out in the Coal Catalogue. If a customer makes a complaint, the date, shift and loading site, including the loading time and the specific employees handling the loading, can be retrieved from the archive�

The parameters of the coal extracted constantly vary depending on the part of the mine where it is produced. Analysers are set up and calibrated on the basis of the results produced by automatic samplers located on all belt conveyors, through which coal passes just before loading into trucks or wagons. All production is currently sampled by automatic samplers.20 The basic technological analysis of the sampled fuel is carried out by an accredited laboratory�21 Quality control entails sampling to determine the water, ash and sulphur content, as well as the calorific value, and to conduct particle size analysis (in order to check the coal grade)�

Brown coal, which has an ash content of up to 12% Ad (Ad is the ash content in an anhydrous state, measured as a percentage), is used for the production of the graded coal supplied to households and small heating plants under the brand names Ořech and Kostka. Coal with an ash content upwards of 12% Ad is supplied to industry, CHP plants and the energy sector (coarse powder, industrial and heating mixtures).

Product responsibility – production of energy and heat

Availability and reliability of electricity supplies from the Chvaletice Power Station – quality of service

The availability and reliability of electricity and heat supply is regularly monitored and evaluated in accordance with the guidelines “Incident Monitoring and Evaluation Method”, adopted for maintenance scheduling and the monitoring of plant maintenance in progress. The parameter monitored is outages caused by malfunctions, i.e. resulting from internal factors at a heating plant.

The reliability of electricity and heat supply to customers was not compromised in 2015.

Incident-related outages in 2015 amounted to 0.3 TWh.

In 2015, the available power was 634.76 MW, i.e. 77.41% of the attainable power of 820 MW. This calculation shows how many MW out of a possible 100% were used. In other words, 23% of “machine time” comprised shutdowns (whether or not planned).

If we take “operation” to mean the operation of at least one of the four units at Chvaletice Power Station,22 availability would have been 99.54%, i.e. complete power station outages lasted for only 40 hours and 24 minutes. (This is counting the time until the start-up of the first unit.)

In 2015, no plant-wide shutdowns were planned – the shutdowns lasting for 40 hours and 24 minutes were unplanned. The shutdowns of the entire power station were prompted by extraordinary operational reasons on the part of Elektrárna Chvaletice a.s., namely: • On 26 April 2015, Unit B4 was shut down for 3 hours and 9 minutes due to caving slag.• The entire power station was shut down on 10-12 September. Units B1 and B2 were

undergoing scheduled repair, Unit B3 was shut down due to slag caving, and Unit B4 was shut down due to a leak in the steam room area. The overall shutdown period was 37 hours and 16 minutes�


20 All automatic samplers meet the basic design and functional requirements under the standards ČSN 44 1304, ČSN ISO 5069–1,2 and ČSN ISO 13909. The entire process is linked to Act No 695/2004 on the conditions of greenhouse gas emission allowance trading and Implementing Decree No 696/2004.

21 The Komořany solid fuels laboratory holds Certificate No 16/2015, valid until 27 December 2016. Scope of accreditation granted: analyses of solid fuels, determination of the content of water, ash, sulphur, calorific value, volatile matter, carbon, hydrogen and nitrogen

22 Time (hours) power station in operation x 100 / annual number of hours (GRI availability factor).

79

Overview of key coal extraction suppliers

At Severní energetická a.s. (coal mining at the ČSA Mine, the Komořany Coal Preparation Plant), significant year-round suppliers operated in the company’s geographical area in 2015 within the framework of the current development and working face advance plan: • Coal Services a.s. – internal rail transport – transports mined coal from mining facilities

to designated destinations (preparation plant, crushing plant, storage site);• Czech Coal POWER s.r.o. – auxiliary machinery; • Slovácké strojírny a.s. – servicing of mechanical and electrical components in the main

mining and preparation technology;• KSK - BELT, a.s. – belt servicing – belt conveying, belt vulcanisation;• SECURITAS ČR s.r.o. – security of complexes;• DTS Vrbenský a.s. – earthmoving, transportation;• Vrtný a geologický průzkum s.r.o. – drilling;• REKULTIVACE , a.s. – reclamation work.The repercussions of supplier activity and any risks relating to sustainable development fall within the boundaries of influence of Severní energetická a.s. Impacts and risks are handled in accordance with applicable legislation and with the internal regulations and values in force at Severní energetická a.s. The subsidiary Sev.en WT, a.s. provides services to Severní energetická a.s. at the sites thereof. The land of the subsidiary Důl Kohinoor a.s. is owned by Severní energetická a�s�

Significant suppliers outside the Group include:• ČD Cargo a.s. – transporting coal by rail from Severní energetická a.s. to customers

(including Chvaletice Power Station);• Vršanská uhelná a.s. – coal supplier.

Overview of key power station suppliers

In the case of Sev.en EC, a.s., significant suppliers mainly provide work and services relating to maintenance and repairs at the power station (as part of a power station overhaul project). Significant suppliers in 2015 included:• Advanced World Transport a.s. – coal handling, including a fuel storage site and track

haulage;• BAUSET CZ, a.s – reclamation work at the site of the former rhodonite mine;• S U M O s.r.o. – electrical repairs and maintenance;• E S B a.s. – operation of a mixing centre (production and loading of energy by-products);• ORGREZ, a.s. – servicing, maintenance, repairs and safeguarding of the operation and

analysis of technology;• Doosan Škoda Power s.r.o. – turbine generator repair;• KRÁLOVOPOLSKÁ RIA, a.s. – general contractor for the repair of Units 3 and 4.The repercussions of supplier activity and any risks relating to sustainable development fall within the boundaries of influence of Sev.en EC, a.s. Impacts and risks are handled in accordance with applicable legislation and with the internal regulations and values in force at Sev�en EC, a�s�

Significant suppliers of raw materials delivered from areas outside the power station’s complex included:• Severní energetická a.s. – coal supplier;• Povodí Labe, s.p. – surface water abstraction;• Kotouč Štramberk spol. s r.o. – supplier of lime, limestone, slaked lime (including

transportation via ČD Cargo);• Unipetrol RPA, s.r.o. – supplier of heavy fuel oil.

SEV.EN GROUP SUPPLIERS

Procurement practices (contracts concerning regional development) ASPECT: PROCUREMENT PRACTICES (G4–EC9)

Region-centric contracts are an aspect relevant to numerous stakeholders, especially when it comes to coal mining, because the Group is a major employer and purchaser of goods and services in the region. The vast majority of suppliers (verging on 100%) are regional or Czech companies. Although local suppliers receive no favours in internal tendering rules as this would violate Europe’s free-market approach, they tend to be contracted on account of their extensive experience of mining operations in North Bohemia.

Most tendering procedure takes place electronically in PROebiz. Severní energetická a.s. and Sev.en EC, a.s. publish their invitations to tender at http://www.sev-en.cz/cz/kontakty/rizeni�html.

The aim is to achieve greater openness and transparency in the supplier selection process and to provide a level playing field for all potential tenderers.

The largest procurement project in 2015 was a call for tenders to repair two units at Chvaletice Power Station. The successful bid was placed by KRÁLOVOPOLSKÁ RIA, a.s., which was named the general contractor responsible for all subcontractors.


http://www.sev-en.cz/cz/

80

In 2015, no serious shortcomings in occupa-tional safety, fire protection, environmental care and the prevention of impacts on the surrounding communities were identified among suppliers operating in any of Sev.en Group complexes. In total, 13 registered ac-cidents were reported among suppliers, four at 7EC and nine at Severní energetická a�s� There were no fatal injuries or subsequent occupational diseases.

There was no legal action seeking clarification of responsibility for ensuring occupational safety, fire protection and environmental pro-tection and care between suppliers and Sev.en Group companies in 2015.

Principles concerning responsibility and the control of labour ASPECT: SUPPLIER ENVIRONMENTAL ASSESSMENT (G4-EN33)and environmental practices at regular suppliers ASPECT: SUPPLIER ASSESSMENT FOR LABOR PRACTICES (G4-LA15)

Rules on the assessment of labour and environmental practices at regular suppliersThe labour practices and environmental impacts of suppliers operating in the geographical area covered by Sev.en operations are regulated under supply contracts.The employer’s obligation to provide occupational safety and health, fire protection and environmental protection applies to all natural persons present in the workplace with the employer’s knowledge (Section 101/5 of Act No 262/2006). Compliance with this obligation, particularly in the field of environmental protection, is also important in the management of impacts on neighbouring communities and entails, for example, checks on reclamation work that has been outsourced.

The occupational safety of the employees of suppliers and other entities (subcontractors) used by them to get the job done is based on the handover of the workplace and transfer of risks. After the workplace has been duly handed over, suppliers are responsible for the occupational safety of their employees and subcontractors, fire protection and environmental protection. The Sev.en Group’s supply contracts include conditions (principles) on occupational safety and health, fire protection and environmental protection. These principles have been drawn up as a document that must be attached to contracts as an integral part thereof.(Since 2016, suppliers have been acquainted with the Sev.en Group Code of Conduct, Code of Commercial Practice and Rules of Ethical Behaviour�)

The training of regular suppliers’ responsible officers is central to occupational safety management. The Group-trained responsible officers of major suppliers then train their own employees. Employees of smaller or new suppliers are trained by the client’s responsible officer. The supplier takes over the workplace in accordance with Sev.en Group regulations and receives training covering a list of specific risks in accordance with the relevant Group company’s guide. During the work, suppliers are supervised by the client’s representatives (the quarry manager, senior staff, the occupational health and safety coordinator, etc.). Suppliers are required to report all occupational accidents occurring on premises managed by the Sev.en Group.23

23 Suppliers must report all occupational accidents – regardless of whether they are injuries without incapacity of more than three calendar days (registered) or injuries with or without incapacity shorter than three calendar days (recorded). This is reported to the Sev.en control centre (Section 105 of the Labour Code). In line with Government Regulation 201/2010, subsequent procedure only involves “registered” accidents. However, even “recorded” accidents must be reported in case they are reclassified as “registered” at a later date.


81

Checks on coal extraction suppliers

Occupational safety requirements are included in the external supplier procurement procedure, with the contracts incorporating conditions (principles) on occupational safety and health, fire protection and environmental protection. Separate agreements addressing occupational safety and health, fire protection and environmental protection are made with major Severní energetická a.s. suppliers involved in mining activities under the development and working face advance plan.24 Some invitations to tender need occupational safety addenda to contracts or safety certificate requirements.

Checks on occupational safety and health, fire protection and environmental protection (including reclamation) among suppliers are conducted at random or as part of special inspections (public screening, reviews by the State Mining Administration, etc.).

In cases where a Sev.en company has entered into a “Safety Agreement” and the workplace has been handed over, these companies (VUAS, Czech Coal POWER a.s., Coal Services a.s., Slovácké strojírny a.s., KSK BELT a.s.) have their own manager and safety officer and run checks at these workplaces themselves.

In 2015, Severní energetická a.s. conducted 45 checks on occupational safety and health, fire protection and environmental protection at suppliers, with a further five inspections carried out by the District Mining Office.

Checks on suppliers operating at a power station(Sev�en EC, a�s�, also 7EC)

7EC suppliers are required to abide by the rules set forth in the “7EC Code of Conduct”, which also covers occupational safety and health, fire protection and environmental protection. Contracts between suppliers and 7EC include references to environmental protection rules relating to waste and chemicals.

Checks on occupational safety and health, fire protection and environmental protection among suppliers are conducted at random or as part of special inspections (public screening, reviews by the district inspectorate, the Czech Environmental Inspectorate, etc.). In 2015, 7EC conducted 71 checks on occupational safety and health, fire protection and environmental protection at suppliers.

Contractors are audited twice a year, with a focus on how they manage waste and chemical substances and products.

Basic checks on occupational safety and health, fire protection and environmental protection at the general contractor and subcontractors are conducted daily under the power station repair project. Specific checks, e.g. in the form of periodical meetings held by the OSH coordinator, are carried out once a week�

24 In those cases, separate agreements are reached with suppliers working under the development and working face advance plan, who are required by mining regulations to appoint their own “quarry manager”. That manager is always the person then responsible for occupational safety and health, fire protection and environmental protection.


V. EMPLOYMENT AND WORKING CONDITIONS

83

EMPLOYMENT AND WORKING CONDITIONS

The Group considers employee care to be a fundamental value and mainstay of its devel-opment. The underlying approach is to have

management in direct contact with employ-ees in production operations, with a stress on occupational safety, staff training, employee involvement in corporate governance – in collective bargaining – and the provision of premium social benefits and regionally

above-average financial rewards. This corporate culture and owner investments in the overhaul of the Chvaletice Power Station, along with efforts to secure the continuation of brown coal mining, are essential if the Group is to successfully maintain a large

enough skilled workforce at all levels in the future, despite the fact that coal mining prospects beyond 2024 are precarious.


EMPLOYEE NUMBERS, BY EMPLOYMENT TYPE AND EMPLOYMENT CONTRACT, 2015

Sev.en Group

(absolute figures)Sev.en Group (%)

Number of employees as at 31 December 1,640 100

Number of WOMEN as at 31 December 339 100

Permanent employment (women) 287 84.7

full-time 284 83.8

part-time 3 0.9

Temporary employment (women) 52 15.3

full-time 50 14.7

part-time 2 0.6

Number of MEN as at 31 December 1,301 100.0

Permanent employment (men) 1,107 85.1

full-time 1,104 84.9

part-time 3 0.2

Temporary employment (men) 194 14.9

full-time 194 14.9

part-time 0 0

NUMBERS OF EMPLOYEES, 2015, BY PLACE OF RESIDENCE

Sev.en Group


Absolute number of employees as at 31 December

1,640 100.0

Most District 942 57.4

Chomutov District 306 18.7

Other districts in the Ústí nad Labem Region 81 4.9

Ústí nad Labem Region 1,329 81.0

Pardubice District 228 13.9

Other districts in the Pardubice and Hradec Králové Regions

18 1.1

Hradec Králové District 8 0.5

Pardubice and Hradec Králové Regions 254 15.5

Other areas in the Czech Republic, including Prague

57 3.5

SEV.EN GROUP – NUMBERS OF EMPLOYEES, BY EMPLOYMENT TYPE, 2015

Unit Total Total (%) Men Women Men (%) Women (%)

Number of employees as at 31 December absolute figure 1,640 100 1,301 339 79.39 20.671

• number of employees in top management (boards of directors and management boards – section directors)

absolute figure 10 0.61 9 1 90 10

• number of employees – white-collar, including in administration absolute figure 373 22.74 271 102 72.65 27.35

• number of employees – blue-collar (production, maintenance) absolute figure 1,257 76.65 1,021 236 81.23 18.77

84


Market presence: comparability of wages in the region ASPECT: MARKET PRESENCE (G4–EC5)

The Sev.en Group considers the internal labour market in the Czech Republic to be of fundamental importance. The most significant human resource planning principle is that it is necessary to capitalise on the internal human resources of a company as much as possible. Bearing in mind the nature of its activities, the Group tends to offer highly skilled, well-paid jobs and calls on subcontractors to provide technical and design services, which are a major boon for the region.


Ma

rke

t p

rese

nc

e

Total number of employees Group Absolute figure 1,495 1,643 1,640

Lowest starting pay Severní energetická a.s. CZK 12,100 13,800 13,900

7EC CZK 16,400 16,730 17,000

Average starting pay (excluding directors and contractual wages)

Severní energetická a.s. CZK 34,287* 22,093 22,151

7EC CZK 38,443* 25,776 31,098

Total personnel costs (including catering services) Severní energetická a.s. CZK millions 459.5 476.3 528.4

7EC CZK millions - 204.4 237.9

* Most recruitment in 2013 was necessitated by the transformation to technical and highly specialised positions, where the pay is above average.

The Sev.en Group is a leading regional em-ployer with a workforce of 1,640 people. It operates in two regions – Ústí nad Labem and Pardubice�Starting pay at key companies and smaller subsidiaries was above the minimum wage in 2015 and stood at CZK 9,200 (up from CZK 8,500 in 2014)�

Common principles of human resource planningThe Group is mindful of the fact that the em-ployees it needs for its operations and long-term prospects must primarily be capable, loyal and incentivised. Work in a brown coal mine or a power station is hard and employ-ees need to have much more than just the essential health requirements. The Group’s companies are constantly updating their re-cruitment plans. Every year, employees’ pen-sion claims are mapped out and interviews

are held with them to gauge how they picture their future employment. Numerous concepts and approaches are used to fill positions. In particular, selection procedure is held to fill technical and managerial posts, internal rota-tion and promotion is pursued, and graduates of regional schools and vocational centres are targeted� Keeping hold of quality employees, an area measured by the voluntary turnover rate, is crucial and figures among the Group’s strategic sustainable development priorities. The average voluntary turnover rate for the Sev.en Group as a whole was a very modest 2�1% (1/5 lower than in 2014)� In 2013 and 2014, the Group was able to increase the number of people it employed. If workforce numbers are to be maintained in the future, it is essential to ensure the con-tinuation of brown coal mining beyond exist-ing boundaries and to overhaul the Chvaletice

Power Station (Sev�en EC, a�s�), a facility taken over by the Group. In October 2015, the Czech Government decided – under Reso- lution 827 – to continue phasing out brown coal mining at the ČSA Mine. This will reduce the number of jobs available in the future�

Arrangements for employees when their employment endsFaced with a change in production programmes and the implementation of organisational changes, there is no choice but to lay off surplus employees. When deciding who to make redundant, the employer draws on an analysis of the skill and social structure and work adaptability of its workforce. Arrangements for employees when their employment ends and the implementation of organisational changes and rationalisation measures (including collective redundancies under Section 62 of the Labour Code)

are covered by the Labour Code and the collective agreements at Group companies. In these cases, the minimum notice period is two months� Additional severance pay has been negotiated in the Sev.en Group’s collective agreements beyond the scope required by the Labour Code, where such pay is covered by Section 62 and amounts to between one and three months’ pay, depending on how long employees have been in their job. In the Sev.en Group’s collective agreements applicable in 2015, beyond the confines of the Labour Code severance pay was set out as follows: the minimum severance pay at Severní energetická a.s., Důl Kohinoor a.s. and 7EC was double the average earnings, while at Sev.en WT, a.s. a multiple of 1 was used�


85

Provision of employment ASPECT: EMPLOYMENT (G4-LA1, LA2, G4-EU-15)

The Sev.en Group is a prominent employer in the Ústí nad Labem Region and Pardubice Region (via Sev.en EC, a.s.). This means it exercises appreciable influence on the economic and social situation in those regions. One of the fundamental regional benefits of the Group’s companies is that they provide jobs. The Group’s management follows up all avenues to provide employees with decent job prospects. The prime long-term employment objectives pursued by the Group’s management and shareholders are to cushion the effects of the brown coal mining phase-out and to secure skilled workers for the operation of Chvaletice Power Station.

The current goal of human resource planning at production companies in 2015 was to stabilise and develop key professions for the smooth coverage of the technology that is in operation here.

One of the most significant human resource planning principles is that it is necessary to capitalise on the internal resources of a company as much as possible. Examples of the broad application of this principle can be seen in the fact that the Group hires internally to fill vacancies and draws on its own employees to provide internal training.

Changes in employee numbers are monitored by periodic internal reporting and are assessed by the management. In particular, companies keep track of developments in the age structure and stability of employees in key positions.

In addition, expert studies are used to assess the impact of employment on the regional social situation.25

In line with Government Resolution 827 of October 2015, the coal mining phase-out plan is moving forward (this entails the phase-out of the ČSA Mine and will see the Centrum Deep Mine closed in 2016). The upshot of this will be job losses. Conversely, the Group’s takeover of Chvaletice Power Station has necessitated a small increase in skilled jobs.

In 2016, Severní energetická a.s. will submit an internal employment plan addressing the dwindling numbers of jobs in coal mining in the coming years.



Pro

visi

on

of

em

plo

yme

nt Total number of employees as at 31 December Group Absolute figure 1,495 1,643 1,640

Number of new-hires Group Absolute figure 227 166 126

Overall turnover Group % * 6.3 7.7

Average voluntary turnover rate Group % * 2.8 2.1

Percentage of employees to whom supplementary pension plan assistance is paid, relative to all employees (taken as the average monthly number)

Group % * 75 75

* In view of the fact that the Group was formed in 2013 and, bearing in mind the acquisitions it has made, these figures for 2013 are of negligible informative value.

25 For more details, see: Studie dopadů ukončení těžby lomu ČSA (ČSA Mine Closure – Impact Study), Chapters 4 and 5, VUHU, Most Economic and Social Council, March 2015 http://www.hsr-uk.cz/hsr-m/files/studie_dopadu_ukonceni_tezby_lomu_CSA.pdf

http://www.hsr-uk.cz/hsr-m/files/studie_dopadu_ukonceni_tezby_lomu_CSA.pdf

86

NUMBERS OF NEW-HIRES, BY EMPLOYMENT TYPE AND EMPLOYMENT CONTRACT, 2015

Sev.en Group(absolute figures)

Sev.en Group (%)

Number of new-hires in 2015 126 100.0

Number of female new-hires as at 31 December

22 100.0


full-time 6 27.3

part-time 0 0.0


full-time 14 63.6

part-time 2 9.1

Number of male new-hires as at 31 December 104 100.0

Permanent employment (men) 5 4.8

full-time 5 4.8

part-time 0 0.0

Temporary employment (men) 96 92.3

full-time 95 91.3

part-time 1 1.0

TOTAL NUMBER OF EMPLOYEES WHO LEFT THEIR JOBS IN 2015

Sev.en Group(absolute figure)

% of the employee age group

Number of employees as at 31 December 2015 1,640

Total number of employees who left their jobs in the given year

127 7.7

of which men 102 7.8

up to 30 years 23 17.6

30-50 27 5.1

over 50 52 8.2

of which women 25 7.4


30-50 4.4 3.4

over 50 20.0 9.9

In 2015, the Sev.en Group provided work to 1,640 employees, of whom 1,301 were men and 339 were women (20�7%)�

In 2015, 127 employees left the Group, 23 on account of organisational changes or

when their temporary contract came to an end, 35 resigned, 33 retired, and 12 left for medical reasons or because they had reached the maximum permissible level of exposure. (Two women went on maternity leave; one returned�)

The number of new-hires between 2013 and 2015 followed a downward trajectory� In 2015, there were 126 new-hires, which is fewer than in previous years. This decline can be attributed to the completion of the Group’s consolidation and the ongoing phase-out of

coal mining. Most new-hires (89%) were recruited on temporary contracts. In the year-on-year comparison (2014/2015), the number of jobs at the Sev.en Group remained more or less unchanged (there was a three--job).


87

Employment at mining companies

In the Ústí nad Labem Region, including at the subsidiaries situated here, the Group employed 1,339 people as at 31 December 2015, i.e. this region accounted for 81.7% of its employees (Severní energetická a.s. – 933, Důl Kohinoor a.s. – 322, and Hipodrom Most a.s. – 6, Sev.en WT, a.s. – 78).

As at 31 December 2015, Severní energetická a.s. had a workforce of 933. In that year, 47 employees left Severní energetická a.s. The largest group comprised the 13 who left voluntarily. Then there were 23 who retired, 19 upon reaching retirement age, the other four going into early retirement. Six reached the maximum permissible exposure, one employee’s temporary contract came to an end, and two women went on maternity leave. There were 34 new-hires. Of these, 29 were taken on temporarily, mainly in connection with the process of phasing out mining, and included working pensioners hired to help out due to their specific experience. Five of the new temporary employees were hired with a view to incorporating certain operations from external companies. Overall turnover in 2015 was 5% (1.4% voluntarily). The low rate of voluntary turnover shows that employees view Severní energetická a.s. as a sufficiently attractive employer. In the next five years, 15% of employees at Severní energetická will be entitled to retire.Hiring at Severní energetická a.s. in 2015 was characterised by the fact that people were taken on to fill vacancies or in preparation for job openings that would be emerging shortly.

As at 31 December 2015, the subsidiary Důl Kohinoor a.s. had 322 employees. During the year, 24 employees left their jobs, nine on account of organisational changes or when their temporary contract came to an end, nine resigned, eight retired, and six left because they had reached the maximum permissible level of exposure; there were 46 new-hires. The reasons behind the high number of temporary new-hires (all 46) were the need to address turnover and secure people for room-and-pillar mining (30) at the ČSA Mine. The temporary nature of the employment contracts was prompted by the plans to close down mining in 2016�As at 31 December 2015, the subsidiary Sev.en WT, a.s. had 78 employees. During the year, 11 employees left their jobs, two on account of organisational changes or when their temporary contract came to an end, four resigned, and five retired; there were nine new-hires. The subsidiary HIPODROM MOST a.s. had six employees. Over the course of the year, the workforce here dropped from 12 to 6. Four employees left their jobs on account of organisational changes or when their temporary contract came to an end, three resigned, and one retired; there was one new-hire.

Operational changes and their impacts on employeesSince 2008, the optimal numbers of employees have gradually been adjusted in line with the technology being operated at the ČSA surface mine. No steps were taken in 2014 on account of the validity of the mining boundaries. In 2015, measures were prepared for 2016, when the mining boundaries would necessitate the decommissioning of one equipment complex, resulting in a smaller workforce at the company.The gradual winding-down of the ČSA Mine in response to Government Resolution 827 of October 2015 (i.e. not because the mine is in anyway unprofitable) and the closure of the Centrum Mine (Důl Kohinoor a.s.) in 2016 will erode the number of jobs. In 2016, Severní energetická a.s. plans to submit an internal employment plan addressing the dwindling numbers of jobs in the coming years. Human resource requirements will be configured in line with the plan for the phase-out of operating technology and activities in the individual years (professions, navigation requirements, shifts, numbers) and will be compared with the actual number of employees (qualifications, retirements, temporary employees).

Employment at Chvaletice Power Station

As at 31 December 2015, Sev.en EC, a.s. (formerly Elektrárna Chvaletice a�s�) in the Pardubice Region had 301 employees (i.e. 18.3% of the Group’s workforce).In all, 20 employees left the power station, of whom six resigned, seven retired (with six going into early retirement), and seven left on account of organisational changes or when their temporary contract came to an end. There were 36 new-hires, of whom 34 were temporary. Overall turnover was 6.8% (2�0% voluntarily)�

Operational changes and their impacts on employeesOn 2 September 2013, Elektrárna Chvaletice a.s. changed hands, passing from ČEZ a.s. to Severní energetická a.s. In a situation where the previous owner had earmarked the power station for closure and was presenting this as a given, the showcasing of the power station (with its new owner and overall programme) as an employer offering decent long-term job prospects in 2014 was an important step. Even so, attracting new employees with a full secondary-school or university education in a technical field to a round-the-clock system of operation continued to prove difficult (this is a nationwide problem). These people are needed as unit operators, dual unit managers, shift engineers, and operations electricians. In the next five years, 15.5% of employees at Sev.en EC, a�s� will be entitled to retire�In 2015, recruitment focused on finding replacements for those who were retiring or resigning and on hiring assistant positions in operations (with training for senior operational positions).Two units of Chvaletice Power Station will be repaired in 2016. The rise in employees here will be reflected only in the number of work units, e�g� with jobs for operating technologists or equipment maintenance officers.


88

75%

Support for supplementary pension plans

is paidto 75% of

employees from

the whole Sev.en Group.

Employee benefits

The fact that employees can take their pick of employee benefits to reflect their personal preferences, subject to prescribed financial limits, is central to achieving the maximum efficiency of the system of benefits to moti-vate employees while preserving the principle of cost-effectiveness throughout the system. When it comes to availing themselves of the fund’s resources, employees tend to opt for recreation and the purchase of medical supplies and services. These employee pref-erences for a healthy lifestyle combine with a plethora of measures by the employer (a system of medical examinations, employee vaccinations, the provision of vitamins and beverages, etc.) to have a positive impact, among other things, on the rate of absences� In 2015, all employees (who had completed the probationary period) at the key com-panies (Severní energetická a.s. and 7EC) were given the opportunity to draw on these benefits irrespective of the type of contract they were on�

Conditions of employment and additional benefits - compliance with legislation26

Health care Occupational medical treatment is required by law in the Czech Republic.27 Beyond the requirements of the law, employees from selected professions (machine drivers, class I stokers, extraction machine operators, mine locomotive drivers, and signalmen) take psychological tests. Vaccinations are provided to employees who carry out work where there is a risk of infection, e�g� the

activities of rescue workers and work in grasslands. Selected groups of employees are provided with protective drinks when they work in climatic conditions exposing them to risk factors. In the winter, the employer provides all employees with vitamins, while mine rescue workers benefit from a five-day reconditioning and rehabilitation stay� Selected professions of employees at the deep mine operated by Důl Kohinoor a.s. (hewers, drifters and mine rescue workers) are provided with therapeutic stays depending on their seniority and profession.

Coverage of personal accident insurance and disabil ity The employer fully covers compulsory personal accident insurance within the scope of the statutory insurance of the employer’s liability for damage in case of an occupational accident or occupational disease; this encompasses occupational accidents, occupational diseases, and any consequences – disability. If employees can no longer be employed due to the permanent consequences of an occupational disease or occupational accident, upon terminating employment the employer pays 12 times the employee’s average monthly earnings. In those cases where occupational accidents result in death, the employer is required, beyond the scope of legislation, to pay the survivors lump sum indemnification as laid down by the collective agreement�

Supplementary insurance for employees in high-risk workplacesIn accordance with the collective agreement, selected groups of employees in high-risk

workplaces at Severní energetická a.s. enjoy supplementa-ry insurance in this respect. 7EC provides employees with a contribution to life policies In addition, employees working in an impaired working environment and at heights, etc., receive a supplement on account of the risky conditions.

Pension security for employeesA major benefit is pension security for employees. This takes the form of support for supplementary pension plans beyond the scope of statutory obligations (according to which the employer makes a pension security contribution of 21.5% of the employee’s assessment base and a contribution from the employee’s wage of 6.5% of the assessment base). In keeping with the agreed rules (usually in collective agreements), the amount of the employer’s contribution is generally tied to the period for which an employee has been at the company. In response to the lack of clarity surrounding pension reform in the Czech Republic, the Sev.en Group encourages employees’ efforts to secure a dignified old age and considers this benefit to be a significant contribution. The Sev.en Group has made the commitment, in collective agreements, to provide this benefit. This support for supplementary pension plans is paid to 75% of employees from the whole Sev.en Group.

Motivational bonus upon retirement If agreement is reached on how to proceed, employees receive an amount indicated by the collective agreement for every year they have worked at the Group in accordance with principles for the management of the employment of employ-ees who are about to reach pensionable and retirement age.

26 Maternity leave is not counted as a benefit under GRI because, just like returning to work, it is guaranteed by Section 195 of the Labour Code in the Czech Republic27 Occupational medical treatment is required by law in the Czech Republic and is therefore not counted as a benefit under GRI. It is one of the mainstays of care for occupational safety and health within the Sev.en Group: preventive care

and supervision in the workplace are the responsibility of a team of contracted highly skilled specialist health professionals. Types of examination – entry, periodical, emergency and exit. Medical examinations always take into account the employee’s position, the activities done and the working environment. Intervals are set according to age and health risks, as laid down by legislation. Other medical treatment is covered by compulsory health insurance, which is 9% of the employee’s assessment base.


89

OVERVIEW OF THE ECONOMIC, HEALTH AND SOCIAL BENEFITS OF EMPLOYEES AT KEY COMPANIES IN 2015 (NOT INCLUDING PENSION SECURITY)

Severní

energetická a.s.Sev.en EC, a.s. Důl Kohinoor a.s. Sev.en WT, a.s.

HIPODROM MOST a.s.

Average monthly number of employees 937 296 325 80 9

Collective agreement yes yes yes yes no

Percentage of employees covered by collective agreements 100% 100% 100% 100% no

Health care contribution yes yes yes yes no

Financial support for supplementary pension plans yes yes yes yes yes

Increased severance pay upon termination of employment due to an organisational change covered by the collective agreement

yes yes yes yes no

Disability insurance, insurance of the permanent consequences of personal accidents

yes yes yes no no

Parental leave yes yes yes yes no

Employees’ life policies no yes no no no

13th pay or bonus depending on economic performance yes yes yes yes no

Subsidised meals yes yes yes yes no

Services connected with works catering yes yes yes yes yes

Contracted coach transportation yes no yes no no

Protective drinks and vitamin products yes yes yes yes no

Contribution to children’s recreation yes yes yes yes yes

Contribution to family recreation yes yes yes yes no

Work with seniors yes yes yes yes no

Personal milestone bonuses yes yes yes yes no

University tuition fees for employees’ courses yes yes yes yes no

Cultural and sports allowance yes yes no yes no

Bonuses and donations – monetary yes yes yes yes no

Allowance for on-call duty yes yes yes yes yes

Social assistance yes yes yes yes no

Special allowance for miners yes no yes no no

One week’s extra annual leave per calendar year beyond the basic level

yes yes yes yes no

Interest-free loans yes yes no yes no


90

PENSION SECURITY FOR EMPLOYEES IN 2015

Unit Sev.en Group

Average monthly number of employees in the year absolute figure 1,647

Number of employees (average monthly figure), in respect of whom a pension security contribution is made equal to 21.5% of the wage assessed absolute figure 1,696

Number of employees drawing on support for supplementary pension plans absolute figure 1,232

Percentage of employees to whom supplementary pension plan assistance is paid, relative to all employees (taken as the average monthly number) % 75

Employee benefits – coal mining

At Severní energetická a.s., all employees had the opportunity to draw on CZK 10,000 from their own personal fund for 2015 in accordance with established rules; the figure at Sev.en WT was CZK 3,000. When it comes to availing themselves of the fund’s resources, employees tend to opt for recreation and the purchase of medical supplies and services. These employee preferences for a healthy lifestyle combine with a plethora of measures by the employer (a system of medical examinations, employee vaccinations, the provision of vitamins and beverages, etc.) to have a positive impact, among other things, on the rate of absences. This has been particularly evident in the past five years. The resources of employees’ personal funds are generated primarily in the social fund�28 Actual disbursement from of the Severní energetická a.s. social fund in 2015 amounted to approximately CZK 9.713 million. The remaining CZK 2.08 million was sourced from company costs.Důl Kohinoor a.s. has no social fund or personal funds. Employees have no opportunity to draw on benefits such as recreation and medical supplies and services. Beyond the requirement of statutory employer liability insurance, supplementary insurance of occupational accidents or occupational diseases has been contracted for employees engaging in high-risk activities, especially within the framework of mining (Severní energetická a.s., Důl Kohinoor a.s.).

The transport service that has been contracted is used by an estimated 65% of employees; this service is provided by Dopravní podnik měst Chomutova a Jirkova a.s. and Dopravní podnik měst Mostu a Litvínova, a.s. Altogether, they run five routes. The main transport service lines cover Most, Chomutov, Jirkov and Litvínov� This contracted service cost CZK 1�001 million in 2015�Severní energetická a.s., Důl Kohinoor a.s. and Sev.en WT, a.s. lay on subsidised catering for employees in the form of snacks, hot meals and cold food. They also provide a children’s recreation allowance, social assistance (repayable) – loans to bridge emergency situations in life (natural disasters etc.), non-repayable social assistance – when employees or their family members die, and financial support for supplementary pension plans.

Sev.en EC, a.s. (7EC) employee benefits

Sev�en EC, a�s� earmarked funds from its budget to cover costs incurred in particular in employee and pensioner catering, supplementary pension plans, the recreation and reconditioning allowance, the sickness allowance (CZK 200 per day of sickness over the first three calendar days) and other benefits. Where justified, 7EC also provided social assistance and interest-free loans to bridge the stressful situations faced by employees. In addition, 7EC supports the activities of its pensioners club for former employees.

Funds set aside for employee benefits from company costs amounted to CZK 13.574 million in 2015�

28 Companies set up a social fund to cover social costs which cannot be covered from costs that are fiscally active. The social fund is generated by an appropriation from profit approved by the company’s general meeting, usually in an amount equal to the budget emerging from collective bargaining on provisions with one-year validity. Dominant social fund budget items include the coverage of costs incurred in relation to health benefits (the Health Scheme) and another employer contribution to the price of meals in works catering. The employer’s supplementary pension plan contribution is now covered entirely from company resources on the basis of a previous amendment to legislation.


91

Employee participation in corporate governanceIt is standard procedure for the Sev.en Group’s companies to communicate with em-ployees in particular via a system of meetings supplemented by other communication plat-forms easing the availability of information, such as email, the Sev�eNoviny newsletter, notice boards or the intranet, where em-ployees can find, for example, all internal standards and information on organisational and personnel changes.At all production companies (other than HIPODROM MOST a.s.), an employee repre-sentative sits on the supervisory board.At the Sev.en Group’s parent company – Severní energetické a.s. – a member of the

supervisory board is elected by employees. This facilitates the fast, fluid transmission of initiatives or complaints from employees to company management and participation in checks on governments�Within the Group, beyond the definitions provided by Czech law, especially the Labour Code and safety regulations, a sizeable chunk of labour-law conditions and other estab-lished responsibilities are regulated by collec-tive agreements� Collective agreements have been concluded at all production companies and apply to 99.6% of employees.29 The collective agreements typically encom-pass, in particular, conditions of remuneration, the sharing of information between the employer and trade union representatives,

bargaining procedures, principles of equal opportunities and occupational safety and health. Compliance with the agreements is checked by joint panels and committees that also include employees’ representatives. The Sev.en Group adheres fully to employees’ right of assembly and right to strike as laid down by Czech legislation and the collective agreements that have been concluded� Employees’ rights of assembly and rights to strike are respected in their entirety within the Sev.en Group in this context. In 2015, there were no strikes, no declarations of imminent industrial action and no complaints indicating a threat to the right to the freedom of association and collective bargaining within the Sev.en Group.

Intrinsic value of collective agreements for trade unions’ surveillance activitiesThe trade union organisation jointly decides with the employer, other than in emergencies (production restrictions, accidents, organisa-tional changes, etc�), in matters relating to the issuance and amendment of the condi-tions of employment, the scheduling of leave, the organisation of OSH screening, etc�The employer holds discussions with the trade union organisation primarily on the economic situation, plans for structural changes or organisational measures affecting employment, changes in work organisation, the system of employee remuneration and appraisal, the employee training system, the issuance of occupational safety and health

Labour/management relations ASPECT: LABOUR/MANAGEMENT RELATIONS (G4-LA4, G4-MM4) ASPECT: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING (G4-HR4), G4-11

The management’s approach to employees relies on consulting serious matters with the trade union: the economic situation, plans for structural changes or organisational measures affecting employment, changes in work organisation, the system of employee remuneration and appraisal, the employee training system, the issuance of occupational safety and health rules, and numerous other areas.

Seminal documents shaping the management/labour relationship in more detail are the collective agreement, the Conditions of Employment and the Code of Ethic.

Since the Group’s formation in March 2013, it has forged ahead with the consolidation of human resource activities, especially in the field of collective bargaining. In 2014, collective bargaining on the full scale of the collective agreement was held in parallel at Severní energetická a.s., Sev.en EC, a.s. and Sev.en WT, a.s. Since 2015, Severní energetická a.s.’s personnel work has focused on methodological management of the entire Sev.en Group. At the Sev.en Group’s parent company – Severní energetická a.s. – one of the supervisory board members is elected by employees.

Collective agreements and/or addenda thereto covering 2015-17 have been concluded at Severní energetická a.s., Sev.en WT, a.s. and Sev.en EC, a.s. At Důl Kohinoor a.s., whose Centrum Mine awaits closure in 2016, an addendum to the collective agreement in force since 2014 was hammered out in 2015. The collective agreements apply to all of those companies’ employees without fail.

The companies’ management holds regular meetings with trade unions; this includes meetings and committees at the various management levels. In addition, company management and shareholders set up meetings with employees in order to inform them of future developments.

Labour/management relations

29 With the exception of the six employees at HIPODROM MOST a.s.


92

Employee participation in the governance of mining companies and collective bargaining

The Trade Union Association30 has committees at both mining companies. The committees communicate directly with company management or designated employees in the field of human resources, who are sent minutes of committee meetings. Besides committees, the following expert panels of the Trade Union Association exist:• Safety Panel: once a quarter, also attended by a representative of the Mining Office.• Payroll Panel: submits monthly and quarterly results.• Social Panel: addresses children’s holidays, camps, meals, employee transportation, etc.• Labour-law Panel: holds training twice a year for the chairpersons of trade union panels and committees.The Trade Union Association regularly takes part in the “Ústí nad Labem Region Roundtable”, a meeting of trade unions, representatives of employers from large enterprises, and regional government.

In 2015, collective bargaining was held at Severní energetická a�s� in October and November to negotiate Addendum 1 to the collective agreement concluded in 2014 for a three-year period, i.e. 2015-2017. In the addendum to the collective agreement, one-year provisions were agreed on payroll – a surcharge for response work and special work by rescue workers and the tariff-based wage rates. The amount of the social fund and its drawdown, on an item-by-item basis, was also agreed.The Důl Kohinoor a.s. collective agreement negotiated by the Centrum Mine PHGN Base-level Trade Union Association Organisation applies to all employees of Důl Kohinoor a.s. and is valid from 18 March 2014. In 2015, Addendum 1 entered into force. This addendum supplements the social and payroll area, especially the amount of severance pay for employees who reach the level of maximum permissible exposure. It also increases tariff wages for all employees by an average of 2.62%. Key matters discussed with the management of Důl Kohinoor a.s. included deep mining at the ČSA Mine and the Centrum Mine closure plan.

The Sev.en WT, a.s. collective agreement negotiated in January 2015 applies to the period from 2015 to 2017. By mutual consensus, the following provisions were negotiated only with one-year validity – they primarily cover payroll and social areas (health care – the Health Scheme, summer children’s recreation, social assistance – repayable and non-repayable loans – and a contribution to works catering).

rules, and numerous other areas, including employee grievances. The way relations between the employer and trade unions are governed in Group com-panies’ collective agreements means that delegated members of trade unions can run checks at the employer to ensure compliance with the Labour Code, the Employment Act, occupational safety and health regulations

and other labour-law regulations, internal regulations, wage regulations and obligations incumbent on the employer under the col-lective agreement and higher-level collective agreements, as well as checks on quality and the structuring of works catering� In these checks, trade union members are authorised to invite employees and officials of the competent higher-level trade union

bodies to assist them, subject to agreement with the employer.Meetings are regularly held between trade unions and management (once a month at Severní energetická a.s. and Důl Kohi-noor a.s.; once every half-year at 7EC; once or twice a quarter at Sev.en WT, a.s.) to evaluate compliance with the commitment to average earnings, assess employee satisfac-

tion, consult methodological instructions and rules of management in the field of human resources, report on changes that are in the pipeline and could have an impact on labour-law areas, report on developments in future coal mining and on the project to overhaul Chvaletice Power Station, and process comments and suggestions made by employees.

Employee participation in corporate governance and collective bargaining at Sev.en EC, a.s.

The 7EC collective agreement covers all employees, including those with a contractual wage� In 2015, two trade union organisations were active at 7EC – the Chvaletice Power Station Base-level Organisation of the Czech Power Engineers Trade Union (ZO ČOSE ECH) and the Shiftworkers Trade Union Organisation (OOPSP). Cooperation with trade union organisations is the responsibility of the head of human resources at 7EC�The basis for the implementation of social policy at the company is the applicable Collective Agreement for the period from 1 January 2015 until 31 December 2017, signed in 2015.A sea change for shift workers was the switch to 12-hour shifts and an extension to weekly working time by one hour� A change in the remuneration system made it possible to increase the share of the floating component of the wage (premiums). This is intended to motivate employees to increase their contribution to the achievement of company objectives. An agreement was reached to increase wage tariffs by 1% over each year that the collective agreement would be in force; this included an increase in the shiftwork allowance and the night work allowance� New incentives were introduced to train up replacements for vacancies and to reward outstanding performance and contributions by individual employees.The collective agreement includes additional expanded entitlements, such as an extension to leave by one week, a sickness allowance covering the first three calendar days, bonuses to mark anniversaries in life, etc�The most significant area discussed between the management and employees was the repair of two units at the power station.

30 The Trade Union Association draws together the following trade union organisations: Komořany Coal Preparation Plant Local Trade Union Organisation, Ervěnice Local Trade Union Organisation, CCPower Local Trade Union Organisation, Jan Šverma Mine Local Trade Union Organisation, Kohinoor Mine Local Trade Union Organisation, and Hrabák Mine Local Trade Union Organisation.


93

Notice periods for operational changesThe procedure for making organisational changes, as set out in internal regulations (Procedure for Organisational Changes) includes the requirement to report prepared measures affecting employee interests without undue delay� Internal regulations issued and amended by the employer that set out payroll and other rights in labour-law relations and on which employees can rely are issued after talks involving participation in consultation exercises with the compe-tent trade union organisations� Changes are consulted at regular monthly meetings with representatives of trade union organisa-tions. Consultations encompass information on changes in technology, changes in HR

work rules, and work on public holidays, and HR proposals raised by the trade unions – catering, transportation to work, protective devices, comments on the working environ-ment, etc�Generally, organisational changes or ratio-nalisation measures under preparation are consulted by the employer with the com-petent trade union body and are notified to employees at least a month before legal acts are taken to terminate the employment of individual employees.

OutplacementWhen organisational changes are made, according to the collective agreement employees are entitled to free legal and

psychological assistance in addition to severance pay. During a notice period prompted by organisational changes, employees are also given the opportunity to acquire skills in training activities organised by the training department.

Employees approaching retirement ageRules on employment relations with those approaching pensionable and retirement age at Severní energetická a�s� and 7EC enable employees to obtain sufficient amounts of in-formation required for further decision-mak-ing sufficiently in advance. Provided that agreement is reached on how to proceed, employees at Severní energetická a.s. are entitled, under the collective agreement,

to a motivational bonus (this was granted to 14 employees of the company in 2015) structured around the number of years they have worked at the company. At 7EC, this motivational bonus is tied to the training-up of a new employee to replace an outgoing employee.Retired former employees have the opportunity to participate in the Senior Club and the Pensioners Club of Chvaletice Power Station (26 members from Severní energetická, plus 15 from 7EC). They can participate in cultural and sports events and make discounted use of the Group’s recreational facilities.

Training and education ASPECT: TRAINING AND EDUCATION (G4-LA9,10)

The Group is mindful of the fact that its future hinges on skilled people. Access to employee training meets the needs of the Group and the individual development of employees. Compulsory training is based on the need to have qualifications relevant to perform activities and also aims to maintain certain skills through courses and re-examinations. As far as the category of optional training is concerned, the employer allows employees to develop themselves by attending non-compulsory courses, irrespective of whether or not they need such training for their job.

The main objective of training and education is to develop and expand or improve on employees’ skills and qualifications. In 2014-2016, the target is an average of 20 hours’ aggregate training per employee at key/production companies in the Sev.en Group.

Training and education


Training and educationAverage number of hours of training per employee

Group Absolute figure 23 20 21


94


Důl Kohinoor a. s. Sev.en WT, a.s. 7EC

Courses and training programmes to upgrade and compound qualifications and skills

Business training, courses yes yes yes yes

Financial support for training and education provided externally yes yes yes yes

Granting of study leave with a guaranteed return to work yes yes yes yes

Retirement or redundancy assistance

Pre-retirement planning for those who are due to retire yes no yes yes

Retraining (for other employment elsewhere) for those who wish to continue working, including the acquisition of new skills

yes no yes yes

Severance pay above and beyond legal requirements yes yes yes yes

If severance pay is provided, is the employee’s age and seniority taken into account? no yes no yes

Job placement services; assistance in job searches, etc. yes yes yes yes

Assistance (e.g. training, advisory services) for those transitioning to non-working life. yes no yes no

The frequency of specialist training is essentially dictated by legislation, depending on how long courses remain valid (one year, two years, three years, five years). With this in mind, the target of 20 hours is the projected annual average number of training hours undertaken by an employee. For example, in 2013 the actual figure was 23 hours, dipping to 20 hours in 2014. In 2015, the figure was 21.4 hours for the Group and 20.9 hours for key companies (Severní energetická a.s. and 7EC). Among men,

the number of hours was much higher than among women, i�e� 24�1 versus 11 hours of training, which can be explained by the gender-weighted specialisation of certain occupations.

Training is broken down, by category, into:• Compulsory education, training and

re-examination (employees in these areas: drivers, electronics, engineering, environment, commerce, safety, firefighters and rescue workers, geologists; stokers,

turbine operators, chemists, drivers, desk officers, etc.).

• Education, training and courses on new technology (IT) and changes in work organisation (in the following areas: OSH, environmental protection, training on legislation and technology, etc�)�

• Voluntary qualification-related training (welding courses, drivers, locksmiths, practical geology courses, training and workshops to increase skills and qualifica-tions in an employee’s existing profession,

InterLeader certification scheme)• Optional, voluntary training outside the

scope of employees’ skills, qualifications and position (on legislation, language courses, etc�)�

• Introductory training (in particular the Conditions of Employment, the Code of Conduct) for new employees, encompassing training on work responsibilities and rights, and on human rights and ethics�

PROGRAMMES FOR SKILLS MANAGEMENT AND LIFELONG LEARNING THAT UNDERPIN THE CONTINUED EMPLOYABILITY OF EMPLOYEES AND ASSIST THEM IN MANAGING CAREER ENDINGS; AT PRODUCTION COMPANIES, 2015


95

Employee training and psychological services – coal production

In 2015, training focused primarily on professional and vocational training, especially in the technical professions. The average number of hours of training per employee at Severní energetická a.s. was 19.8 hours (24.4 at the subsidiary Důl Kohinoor a.s.; 14.5 at Sev.en WT, a.s.). Some training took place as a collaboration between the Ústí nad Labem Labour Office and Severní energetická a.s. and with financial support under the DEminimis Project.Occupational psychology services are provided in cooperation with the Most Clinical Psychology Surgery, which offers extensive services in this field. In 2015, 25 employees received a professional diagnosis.

Employee training – production of electricity

Employee training, both compulsory (deriving from legislation and specific professions) and supplementary, was organised by the 7EC human resources unit. In 2015, the average annual number of hours’ training was 24.6 per employee. 7EC. Sev.en EC, a.s. also enables its employees to upgrade and compound skills and qualifications relating to their professional specialisation and career growth (university education, InterLeader – certification scheme). In 2015, it assisted two employees studying on the job (by covering study costs and providing a replacement wage for the leave granted).

Training, education and diversity in 2015Blue-collar employees chalk up much higher levels of training (23.8 hours) compared to

their white-collar counterparts (just 13.5 hours). On average, men have more hours’ training (24) than women (11), with the ex-

ception of 7EC and Důl Kohinoor a.s., where they are more or less equal�

2014 2015

Unit

Employees at key companies (76%): Severní

energetická a.s. and ECHAS

Sev.en Group

Employees at key companies (76%): Severní energetická a.s.

and Sev.en EC, a.s. (formerly ECHAS)

Sev.en Group

Number of employees as at 31 December Absolute figure 1,231 1,643 1,234 1,640

of which men Absolute figure 947 1,302 952 1,301

of which women Absolute figure 284 341 282 339

Average number of hours of all types of training over the year per employee, relative to the average monthly number of employees

Absolute figure 22 20 20.9 21.4

Average number of hours of all types of training over the year per employee as at 31 December Absolute figure 22 20 20.9 21.4

• Average number of hours of all types of training over the year per employee in top management Absolute figure 0.0 4.4 0.0 5.3

• Average number of hours of all types of training over the year per employee – white-collar and administration workers

Absolute figure 9.8 9.5 13.8 13.5

• Average number of hours of all types of training over the year per employee – blue-collar (production, maintenance)

Absolute figure 26.9 23.3 23.5 23.8

Men: Average number of hours of all types of training over the year per employee as at 31 December


Men: Average number of hours of all types of training over the year Absolute figure 24,664 27,851 23,149 31,383.9

Women: Average number of hours of all types of training over the year per employee as at 31 December


Women: Average number of hours of all types of training over the year Absolute figure 2,830 3,192 2,689 3,700.5

Total absolute number of employees as at 31 December Absolute figure 1,231 1,643 1,234 1,640


TRAINING, STUDIES AND COURSES AT KEY COMPANIES IN 2014-2015

96

Employees at all Sev.en Group companies are assigned a tariff-based wage within a range for the wage tariff under which the work they do is classified; for selected positions, a wage is payable in accordance with a contract on wage conditions� Basic factors that come into play in decisions on developments in the level of an employee’s wage are performance, wage competitiveness on the relevant labour market, and the prospects regarding the employee’s future work for the Sev.en Group. Gender plays no role in remuneration issues. Where men and women hold the same pos-ition, i�e� they are in the same tariff class, the pay ratio is 1:1; this applies throughout the Sev.en Group.

Diversity in management bodies (company board of directors and management = section directors) is 91�3% men and 8�7% women� Representation of men and women in managerial positions: in administration and operations (section director, head of units/de-partment) at key companies, this is 20 men versus 13 women at Severní energetická a�s� and 38 men versus 3 women at ECHAS. The men-to-women employee ratio for the Sev.en Group as a whole is 79% versus 21%.

Diversity and equal opportunities, ASPECT: DIVERSITY AND EQUAL OPPORTUNITY (G4-LA12), equal remuneration for men and women ASPECT: EQUAL REMUNERATION FOR WOMEN AND MEN (G4-LA13)

The approach to filling work positions and to remuneration is scrupulously managed according to the skill sets and track record of employees. Although mining activities and the type of power station output involved mean that there is considerable “gender-weighted specialisation” at the Group’s production companies, women and men enjoy equal conditions when it comes to remuneration at the company. The Sev.en Group applies a strict approach to equal opportunities in the recruitment of new employees and in employee performance appraisals and remuneration�


Equal remunerationPay ratio (women to men) in the tariff-based wage system

Group 1:1 1:1 1:1

DiversityPercentage of women employed in the Sev.en Group

Group % 20.3% 20.7% 20.7%

Respect for human rights and non-discrimination

Number of discrimination-related incidents

Group Absolute figure 0 0 0

Diversity and equal opportunities


97

Sev.en Group


Number of members of management bodies (company board of directors and management – section directors) at Group companies as at 31 December

23 100.0

of which men 21 91.3


30-50 10 43.58

over 50 11 47.8



30-50 1 4.3

over 50 1 4.3

of which degree holders (including bachelors) 22 95.7

of which secondary school 1 4.3

DIVERSITY IN MANAGEMENT BODIES (COMPANY BOARD OF DIRECTORS AND MANAGEMENT – SECTION DIRECTORS), 2015

Sev.en Group


Total absolute number of employees as at 31 December 1,640 100

of which men 1,301 79.33

up to 30 years 131 7.99

30-50 534 32.56

over 50 636 38.78



30-50 147 8.96

over 50 182 11.10

EMPLOYEE DIVERSITY, 2015


98

Joint occupational safety panels of the management, employees and trade unionsThe highest-ranking management figure responsible for occupational safety and health (OSH) is the mine manager at mining facilities and the OSH coordinator at energy production facilities.

At all companies, OSH is addressed in cooperation with the trade union organisa-tions. Whenever the causes of an accident are investigated and an accident report is drawn up, a representative of the trade union organisation must be invited� The activities of joint safety/investigative or indemnification panels cover all company employees without exception.

Detailed obligations of an employer, rights and obligations of employees and the in-volvement of trade union organisations in occupational safety and health are addressed by the applicable Labour Code, collective agreements and internal regulations. Group companies’ collective agreements enable designated members of trade union organisations to conduct checks on compliance with

the Labour Code and legislation on occupa-tional safety and health at the employer.At the Sev.en Group’s companies, trade union organisations take joint decisions with the employer by way of a “review panel” in the organisation of comprehensive OSH reviews at least once a year at all of the employer’s workplaces and facilities (Section 108 of the Labour Code). The employer consults trade

Occupational safety and health ASPECT: OCCUPATIONAL HEALTH AND SAFETY (G4-LA5, LA6, LA8)

Sev.en Group Employees work in the highly demanding environment of surface and deep brown coal extraction and preparation and electricity production. Occupational safety and health is one of the Group’s fundamental priorities. Occupational safety issues are incorporated into collective agreements. Joint panels comprising management and trade union representatives oversee occupational safety. The Group organises regular staff training.

Risks are assessed in all workplaces and for all work, and the results are incorporated into operational documentation drawn up in accordance with legislative requirements. Prevention and the management of urgent and emergency situations are covered by Group companies’ emergency response plans and fire regulations. Occupational safety and health is classified as a top priority. At all companies, OSH is addressed in cooperation with the trade union organisations.

Inspections by state expert supervisory bodies, including checks on occupational safety and health, are conducted on an ongoing basis.

At the Sev.en Group’s companies, there are some employees who work in particularly risky conditions. Intensified safety measures, special allowances and insurance apply to these employees.

The Sev.en Group aims to keep the accident rate among rank-and-file employees at a value of less than one registered accident (with absence of more than three days) per 100 employees per year at the Group’s key companies (Severní energetická a.s. and 7EC) in the coming years and, first and foremost, to prevent any fatal accident from occurring.

OCCUPATIONAL SAFETY AND EMERGENCY PREPAREDNESS


Occupational safety

Accident rate Group Absolute figure 2.29 2.28 1.9

Accident rate – key companies Severní energetická a.s. and Sev.en EC, a.s. (75% of employees)

Key companies Absolute figure 0.643 0.98 0.8

Number of fatal occupational accidents Group Absolute figure 0 1 0

Incapacity rate Group % 0.336 0.706 0.258


99

union organisations on occupational safety and health, including the publication of rules on occupational safety and health.

Panels exercising influence over occupational safety on which representatives of employees or trade unions sit and jointly take decisions:Severní energetická a.s. (ČSA Mine, Komořa-ny Coal Preparation Plant, etc.)• The OSH panel is a panel of the CCG Trade

Union Association that invites represen-tatives of management and government supervisory authorities to its meetings. It discusses overall cooperation with trade unions in OSH matters, including the results of the accident rate when accident bull-etins are delivered, the number of high-risk workplaces, and where appropriate newly emerging occupational diseases; this is an opportunity to share observations on OSH, as well as information on new operational documentation and fresh legislation� The

panel also discusses all adopted measures established to prevent a repeat of occu-pational accidents. The panel meets once a month and a general OSH appraisal is carried out once a year�

• The indemnification panel, which discusses and proposes the amount of compensation for occupational accidents and occupational diseases�

• The damages panel, which sets compen-sation for damage caused to an organisa-tion to be paid by the party causing the damage�

Sev�en EC, a�s� (Chvaletice Power Station)• The OSH review panel, which organises

comprehensive OSH reviews once a year, is split into six OSH review sub-panels, by operational section.

• The accident panel, which determines the degree to which an injured person can be held accountable for his or her occupational accident�

• The loss panel, established to objective-ly determine compensation for damage incurred due to a breach of obligations by an employee.

Důl Kohinoor a.s. (Centrum Deep Mine)• The OSH review panel, which organises

comprehensive OSH reviews once a year, is split into three OSH review sub-panels, by operational section.

• The accident panel, which determines the degree to which an injured person can be held accountable for his or her occupational accident�

• The loss panel, established to objective-ly determine compensation for damage incurred due to a breach of obligations by an employee.

Sev.en WT, a.s.• The OSH panel is a trade union associ-

ation panel that invites representatives of management and government supervisory authorities to its meetings� It discusses the results of the accident rate when accident bulletins are delivered and overall cooperation with the trade unions in OSH matters; this is an opportunity to share observa-tions on OSH, as well as information on new operational documentation and fresh legislation�

• The indemnification panel, which discusses and proposes the amount of compensation for occupational accidents and occupational diseases�

• The damages panel, which sets compen-sation for damage caused to an organisa-tion to be paid by the party causing the damage�

Legislation Collective agreement Internal standard

Protective devices and equipment yes yes yes

Joint panels/committees yes yes yes

The participation of employee representatives (trade unions) in OSH inspections and investigations into accidents and emergencies

yes yes yes

Training and education yes yes yes

Grievance mechanism yes no yes

Right to refuse dangerous work yes no yes

OSH periodic inspection yes yes yes

HEALTH AND SAFETY TOPICS COVERED BY NATIONAL LEGISLATION, COLLECTIVE AGREEMENTS WITH TRADE UNIONS AND INTERNAL STANDARDS AT THE GROUP’S KEY COMPANIES


100

Data Description Důl

Kohinoor a.s. Sev.en WT, a.s.


Sev.en EC, a.s.Sev.en Group’s

key operations*Sev.en Group

Number of employees

Absolute figureAverage monthly number of employees (FTE)

325 80 937 296 1,233 1,647

Number of fatal occupational accidents

Absolute figureNumber of fatal accidents over the year

0 0 0 0 0 0

Number of registered occupational accidents

Absolute figureNumber of registered occupational accidents resulting in incapacity lasting for at least three days

21 1 10 0 10 32

Total number of serious occupational accidents

Absolute figureTotal number of serious occupational accidents resulting in hospitalisation for longer than five days

1 1 0 0 0 2

Accident rate Relative figure

Number of registered occupational accidents resulting in incapacity lasting for at least three days, per hundred employees

6.5 1.2 1.1 0 0.8 1.9

Incapacity rate Relative figure

Ratio of the number of calendar days missed due to incapacity, multiplied by 100, to the number of calendar days, multiplied by the number of employees

0.779 0.329 0.118 0.121** 0.118 0.258

Number of occupational diseases

Absolute figureNumber of new occupational diseases in the given year

0 0 0 0 0 0

Absence due to disease or accident

Relative figure% of absences due to occupational, non-occupational accident and disease relative to the time planned

3.86 4.1 3.29 2.1** 3.0 3.2

* The Sev.en Group’s operations include key production companies, i.e. Severní energetická a.s and Sev.en EC, a.s. (Chvaletice Power Station), where 75% of its employees work. ** Applies to accidents, from the previous year – sickness benefit continued into 2015

BASIC SAFETY INDICATORS AT SEV.EN GROUP COMPANIES IN 2015


Results of occupational safety in 2015

All accidents, including investigations into the causes thereof, are rigorously recorded in all workplaces. In response to all occupational accidents, technical or training measures were taken to prevent a recurrence of an accident with the same cause� In 2015, there were 32 registered accidents in Sev.en Group workplaces, with an accident rate of 1.9. During 2015, there were no other

breaches of safety regulations by either the employer or employees. There were no occu-pational diseases at the Sev.en Group’s com-panies. The accident rate at key companies was 0�8 (this is the frequency of accidents per 100 employees) and was a year-on-year improvement.

The accident rate among men for the group as a whole was 2.2 (number of accidents:29), while among women it was 0�88 (three

accidents)� This difference can be attributed to the fact that there are many more men in production professions.The accident rate at the Centrum Mine (Důl Kohinoor a.s.) is persistently a lot higher than at the Group’s other production companies due to the nature of risks associated with deep mining (up to 200 m).

In 2015, there were no emergencies at the mining companies Severní energetická a.s.

and Důl Kohinoor, a.s. according to the definition under Czech Mining Office Decrees 22/1989, 26/1989 and 51/1989, as amend-ed. (See also “Emergency preparedness – emergencies”, pages 105-6.)In 2015, the Sev.en Group’s companies were not fined for breaches of rules on OSH and emergency preparedness.

101

An analysis of the causes of occupational accidents within the Group shows that, in 28 cases (87.5%), the cause of the occupational accident was “unforeseeable work risk or fail-ure of the human factor”, which can generally be regarded as ordinary imprudence and conduct stemming from a work risk� In the remaining two cases the reason was “other”�Two distinct factors are the year-on-year reduction in the number of accidents, from both an absolute and a relative point of view, and the fact that accidents in 2015 resulted in much lower levels of incapacity.


7ECDůl

Kohinoor a.s. Sev.en WT, a.s.

HIPODROM MOST a.s.

Sev.en Group total

Due to a malfunction or defects in any of the sources of accident 1* 1 2

Due to a poorly or insufficiently gauged risk 1 1

Due to an unforeseeable work risk or failure of the human factor 9 19 28

For other unspecified reasons 1 1

* Injury sustained by a firefighter from the Sev.en Fire Rescue Service when attending an emergency at Unipetrol within the scope of the integrated rescue system.

CAUSES OF OCCUPATIONAL ACCIDENTS IN 2015


102

Data Description

Sev.en Group’s key operations

(Severní energetická, a.s., 7EC)

Sev.en Group

2013 2014 2015 20132014 2015

total men women total men women

Number of employees Average monthly number of employees (FTE) 1,088 1,229 1,233 1,395 1,623 1,288 339 1,647 1,305 343

Number of fatal occupational accidents(GRI fatality)

Number of fatal accidents over the year 0 0 0 0 1 1 0 0 0 0

Number of registered occupational accidents(GRI Injury)

Number of registered occupational accidents resulting in incapacity lasting for at least three days

7 12 10 32 37 33 4 32 29 3

Number of occupational diseases(GRI OD)

Number of new occupational diseases in the given year

0 0 0 0 0 0 0 0 0 0

Absence(GRI absentee)

Unplanned absence – number of shifts missed* 6,200 7,421 9,633 10,504 11,488 8,813 2,975 14,065 11,282 3,062

Absence due to accident(GRI lost day)

Total number of shifts missed due to occupational accident or disease

259 2,266 533 1712 4,181 3,692 489 1,553 1,483 70

Accident rate Number of registered occupational accidents resulting in incapacity lasting for at least three days, per hundred employees

0.643 0.98 0.8 2.29 2.28 2.6 1.2 1.9 2.2 0.88

LTIFR (Lost Time Injury Frequency Rate)

This represents the number of accidents with at least three days’ incapacity, divided by the total number of hours worked, expressed in millions of hours

3.87 6.0 4.9 13.83 13.7 15.3 7.3 11.5 13.2 5.3

Incapacity rate(GRI lost day rate)

Ratio of the number of calendar days missed due to incapacity, multiplied by 100, to the number of calendar days, multiplied by the number of employees

0.065 0.505 0.118 0.336 0.706 0.786 0.395 0.258 0.311 0.056

Accident rate (GRI IR)

(Total number of accidents/Total number of hours worked) x 200,000**

0.77 1.2 1.0 2.77 2.7 3.1 1.5 2.3 2.6 1.0

GRI new occupational diseases rate (GRI ODr)

(Total number of cases of occupational diseases/Total number of hours worked) x 200,000**

0.0 0.0 0 0.0 0.0 0 0 0 0 0

Unplanned absence rate (GRI Absentee rate)

% of unplanned absences relative to the time planned

2.18 2.3 3.0 2.87 2.7 2.6 3.4 3.2 3.3 3.73

* Includes absences due to accidents, occupational and non-occupational disease, unexcused absences. Absence permitted as annual leave, study leave, parental leave and compassionate leave is not included.** The factor of 200,000 hours is derived from 50 working weeks of 40 hours each per 100 employees and is a standard basis for the calculation of the incidence rate.

Basic safety indicators at Sev.en Group companies. Year-on-year comparison 2013–2015


103

Occupational safety and health (OSH) in the extraction and processing of coal

Management documents in the field of occupational safety in coal miningState Mining Administration legislation, the Labour Code, Surface Mine Standards and Deep Mine Standards for OSH create a platform for the development of further internal OSH documents at the Sev.en mining companies which describe risks to work activities and the methods of protection against such risks, along with appropriate procedures (a risk register). Operational documentation – the ČSA Mine and Coal Preparation Plant Emergency Response Plan, Instructions for Employees, Mine Manager Orders, Mine Manager Measures, rules of operation, and technology and work procedures – is derived in part from the above regulations and standards, and the development and working face advance plan. Operational documentation is placed on the Sev.en portal and is available to managers and the technical supervisors of the various workplaces. Risks are assessed in all workplaces and for all work, and the results are incorporated into operational documentation drawn up in accordance with legislative requirements. The prevention and management of urgent situations is covered by Group mining companies’ emergency response plans and fire regulations. The method used to report emergencies is set out in the Emergency Response Plan and the measures taken are indicated in investigation reports.The mine managers, and at Severní energetická a.s. the production director too, are held statutorily liable for occupational safety and health and operating safety. They are liable to bodies of the State Mining Administration, the Regional Hygiene Station, the State Office for Nuclear Safety and law enforcement agencies, and they are authorised by the company board of directors to engage with those bodies.

Handling of personal work risks at mining companiesWorkplaces are classified by risk category on the basis of applicable legislation, in conjunction with occupational medicine. Risk factors are measured by the National Institute of Public Health; Sev.en, together with the Regional Hygiene Station, proposes how to deal with them. In those places where risks cannot be eradicated, they are mitigated by means of employees’ personal protective equipment (helmets, goggles, headphones, etc.); where required by the nature of the protective device, safety breaks are incorporated into the workflow. Personal accident insurance is paid for all employees. In addition, the Sev.en Group’s production companies provide protective beverages to selected employees in both the summer and winter on the basis of internal regulations�In those cases where the effects of risk factors cannot be eliminated entirely by means of protective devices, employees receive an allowance for working in an impaired working environment or at heights. The number of employees receiving allowances fluctuates, depending on their exposure in a particular high-risk environment. First and foremost, this group of employees comprises almost 200 male rescue workers at Severní energetická a.s. and Důl Kohinoor a.s.Additional special insurance is contracted for employees in workplaces with a heightened level of risk, in particular, of blow-outs, irruptions of water, landslides, tremors, or the leakage of poisonous substances, while professional and voluntary rescue workers are covered for death as a consequence of an occupational accident or an accident resulting in permanent disability.

Occupational safety at Chvaletice Power Station (Sev.en EC, a.s.)

Chvaletice Power Station (7EC) – safe undertakingThe main occupational safety management document at 7EC is the “OSH System Management Policy”�31 The Board of Directors appointed an OSH coordinator responsible for carrying out activities for the OSH management system, particularly in relation to the “Safe Undertaking” standard.32 The OSH objectives focus on compliance with requirements of the “Safe Undertaking” standard.Other OSH documents, describing risks to work activities and the methods of protection against such risks, along with appropriate procedures (a risk register), are derived from the OSH policy. These documents have been posted on the website33 and are publicly accessible both to rank-and-file employees and to supplier companies. Documents intended solely for 7EC employees are accessible in the SharePoint application on the company intranet. Reporting on accidents and near misses, and on the measures taken, is standard procedure at 7EC.In keeping with the principle of continuously approving OSH, an internal work safety audit is conducted annually and, once every three years, a recertification audit of the “Safe Undertaking” standard is conducted by the District Labour Office for the Hradec Králové Region and the Pardubice Region. In 2015, the “Safe Undertaking” standard was reviewed in an internal audit�Safety risk prevention and management is determined in the manner prescribed for employers under Act No 262/2006 as part of the annual comprehensive OSH reviews in all workplaces; these are held with the supervision of members of trade union organisations. In 2015, only minor shortcomings were identified, and these were resolved. Employees’ initiatives are registered in the log of OSH, fire protection and environment checks�

Handling of personal work risks in power station operations On the basis of applicable legislation, in conjunction with occupational medicine, workplaces and, under a decision of the Regional Hygiene Station, all workers are classified in terms of the health risk attributed to their work under four categories. An accredited hygiene laboratory conducts measurements of harmful quantities� On the basis of that measurement and under a decision by the Regional Hygiene Station, a system of internal examinations, periodic examinations and exit

31 see http://www.sev-en.cz/cz/elektrina/pro_dodavatele/pravidla.html32 The requirements for the OSH management system, as indicated in the “Safe Undertaking” programme, are based on the principle and policies applied by systemic standards ISO 14001, ISO 9001, ČSN OHSAS 18001:2008 and the manual

ILO-OSH 2001 (published by the International Labour Organisation). Since 2003, in accordance with Government Resolution 475, the “Safe Undertaking” programme has been included among the tasks established with a view to enhancing the standard of occupational safety via the National Occupational Safety and Health Policy. The State Labour Inspectorate Authority lays down conditions that, if met, entitle a legal entity to use the specification “Safe Undertaking”. A legal entity registering to participate in this programme undertakes to abide by the said conditions. Compliance auditing and reviews of the OSH management system at the legal entity are conducted by a team of district labour inspectorate inspectors. For more, see http://www.suip.cz/bezpecnost-prace/bezpecny-podnik/.

33 http://www.sev-en.cz/cz/elektrina/pro_dodavatele/pravidla.html


http://www.sev-en.cz/cz/elektrina/pro_dodavatele/pravidla.html

http://www.sev-en.cz/cz/elektrina/pro_dodavatele/pravidla.html

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OSH reviews, checks and reviews by the State Mining AdministrationOSH reviews were conducted at the workplaces of Severní energetická a.s. in accordance with the Labour Code and in accordance with Measure of the Mine Manager 119 between 20 May and 15 July 2015. An OSH technician drew up a separate record on the course and outcome of the review, indicating that it was free of defects, and that record was approved by the mine manager. During the inspection, only minor shortcomings were identified, and these were resolved while the review was still in progress.Inspections by state expert supervisory bodies, including checks on occupational safety and health: In 2015, the State Mining Administration conducted 14 independent inspections within the framework of highest-level supervision at the workplaces of Severní energetická a.s. via the district mining office for the Ústí nad Labem Region, which is headquartered in Most� • Employees of the Ústí nad Labem Regional Hygiene Station’s local office in Most carried out another two

independent inspections. • Most City Hall – the environmental department and the municipal authority carried out one inspection. • The State Office for Nuclear Safety conducted two inspections of facilities with sources of ionising radiation.• The technical supervision department carried out two inspections of compliance with rail system regulations.• The Ústí nad Labem Regional Fire Rescue Service inspected the situation and circumstances surrounding fire

protection.All inspections by state expert supervisory bodies detected only minor shortcomings, and these were resolved immediately or by the prescribed deadlines.• At Sev.en WT, a.s., OSH reviews were carried out on 10-12 November 2015 and a record was drawn up.

In 2015, the State Mining Administration, via the district mining office for the Ústí nad Labem Region, conducted an inspection of machinery that detected no defects.

• The Central Mines Rescue Station conducted OSH reviews at Sev.en on 23-24 September 2015. A detailed record of the outcome was drawn up, indicating that the result was free of defects requiring a solution by a particular deadline. The minor shortcomings identified were resolved while the review was still in progress.

• At the Centrum Mine and ČSA Mine, on 21-25 September 2015, a review of occupational safety and health and operational safety was conducted within the scope of the plant.

All inspections by state expert supervisory bodies detected only minor shortcomings, and these were resolved immediately or by the prescribed deadlines.

Occupational accidents and diseasesIn 2015, no fatal personal injuries were reported at Severní energetická a.s. There were 10 registered occupational accidents involving more than three lost days (two of those accidents were off Group premises). None of them was caused by a breach of regulations on the part of the employer or employee. Two accidents occurred off of the Sev.en Group’s premises – an injury sustained by a firefighter from the Sev.en Fire Rescue Service during an emergency response in the framework of the Czech Republic’s integrated rescue system, which occurred at Unipetrol (see Central Mines Rescue Station, page 108-9), and an injury sustained by a rescue worker during an inspection of portable fire extinguishers at the Lišnice l substation.There were no fatal, mass or serious occupational accidents at the ČSA site in 2015. There were no emergencies at the ČSA Mine, Komořany Coal Preparation Plant or workplaces operated by Důl Kohinoor a.s.There were 21 registered occupational accidents (with more than three days lost), of which one serious. There was one serious accident at Sev.en WT, a.s. There were no registered accidents at HIPODROM MOST a.s.

examinations of workers performing high-risk work has been set up. In those places where risks cannot be eradicated, they are mitigated by means of employees’ personal protective equipment (helmets, goggles, respirators, headphones, etc.); where required by the nature of the protective device, safety breaks are incorporated into the workflow. In those cases where the effects of risk factors cannot be eliminated entirely by means of protective devices, all those who work in an impaired working environment or difficult working conditions are paid an allowance for their work. In particular, this concerns noise, dust, chemicals, etc. A list of such work can be found in annexes to the Collective Agreement. The number of employees receiving allowances fluctuates, depending on their exposure in a particular high-risk environment�

OSH reviews, checks and reviews by state administration In July 2015, an inspection was conducted by the District Labour Inspection Office for the Hradec Králové Region and the Pardubice Region. This inspection focused on compliance with obligations under Section 3(1) of Act No 251/2005 on labour inspections, as amended, and in particular on compliance with obligations under legislation to ensure occupational safety and compliance with obligations under legislation to ensure the safe operation of technical equipment where there is an increased risk to life and health, as well as legislation on the safe operation of specified technical equipment. The inspection took place within the scope of annual inspection activity during the validity of the “Safe Undertaking” certificate.OSH goals were met in 2015. Everything was verified during the annual internal audit of the “Safe Undertaking” programme. A review of occupational safety and health was conducted at all workplaces at the company as required of employers under Act No 262/2006, the Labour Code. All shortcomings detected were resolved and everything took place under the supervision of members of trade union organisations.

Occupational accidents and diseases at 7ECIn 2015, there were no registered accidents (i.e. in respect of which days were lost due to accidents last year) at 7EC (Chvaletice Power Station)�From the point of view of the “Safe Undertaking” standard, no near misses or accidents were registered at 7EC�


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Emergency preparedness GRI G4: EU SECTOR SPECIFIC ASPECT: DISASTER/EMERGENCY PLANNING AND RESPONSE GRI G4: MM SECTOR SPECIFIC ASPECT: EMERGENCY PREPAREDNESS

Emergency preparedness is a central element of the activities carried out by the management of Group companies, and in this respect the following special sections or organisational units of Group companies have been set up: Central Mines Rescue Station (for coal mines) and the internal fire rescue service (for the power station). The sections are also important local units of the Integrated Rescue System of the Czech Republic.

Impact minimisation management at the level of individual technologies is secured by the various technological procedures in place at each company. Unexpected emergencies are governed by elaborate emergency response plans; where issues would also affect neighbouring communities, the municipal representatives are informed.

The number and impact of emergencies, success in the handling thereof, and the number of accidents they cause are touchstones in the evaluation of emergency preparedness.



Coverage of operations with emergency response plans Group % 100 100 100

Number of emergencies Group Absolute figure 2 10 0

Emergency preparedness – coal production

At Severní energetická a.s. and Důl Kohinoor a.s., emergency preparedness is guaranteed by emergency response plans, the activity of the Central Mines Rescue Station and the Fire Rescue Service, operating round the clock, which are responsible for handling emergency and rescue responses and other preventive and expert activity at the Sev.en Group’s mining companies. Sev.en WT, a.s. has drawn up an Incident Management Plan for the Ležáky site; the Severní energetická a.s. emergency response plans are also respected.

Emergency response plans The emergency response plan for the ČSA surface mine, the ČSA underground mine, the coal preparation plant and the Centrum mine (the “emergency response plan”) has been drawn up to tackle incidents and serious operating accidents. The form taken by emergency response plans is approved by the competent mine manager after consultation with the Central Mines Rescue Station� Checks on the emergency response plan are carried out by the District Mining Office.Considering the history of the ČSA site, the ČSA surface mine’s emergency response plan essentially concerns issues thrown up by old workings (former deep mines) that are re-exposed by the advance of the working faces of surface mining. Another significant document here is the Most Central Mines Rescue Station Response Rules – tactics for managing a response on the surface and in workings opening onto the surface, including emergency responses in the eventuality of a fire or fumigation and surveying. The main areas covered here are:• Management of the response on the surface and in workings opening onto the surface (where there is

a susceptibility to self-ignition) after exposure thereof, and preventive responses to or the management of fires in the event of a gob fire.

Emergency preparedness – electricity and heat production

The 7EC emergency response team has been set up as a body to manage and contain the fallout from emergencies� It may also be convened for other reasons, in particular to establish preventive measures to prevent the occurrence of an emergency. The emergency response team manages activities focusing in particular on the analysis and evaluation of security risks and on the planning, organisation, implementation and monitoring of activities carried out in the management of emergencies and incidents�

Emergency response plans7EC, under its integrated permit, has eight approved emergency response plans for water management, which concern the leakage of chemicals and fuel. Other management documents approved and used at 7EC are the Emergency Response Plan to Avert a Terrorist Threat and the Elbe Flood Plan. Emergency response plans are updated in response to construction within the scope of the power station repair project.In emergency situations where the emergency response team needs to be convened, surrounding municipalities are informed of this by the team, where necessary�The form taken by emergency response plans is subject to approval by the water authority. As 7EC holds an integrated permit, the competent water authority is the Pardubice Regional Authority. Before applying to the Pardubice


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• Incidents where persons, machinery or equipment fall or sink into old or abandoned workings and other underground areas�

In relation to the broad range of issues stemming from the risks posed by brown coal mining and preparation, the emergency response plan governs the procedure for incidents in the following additional areas:• Mining activities carried out within the scope of deep mining and at the Jezeří and Jiřetín galleries.• Coal cut fire or gob fire extinguishing.• The emergence of a flood situation or breakout of water and water bearing rocks endangering parts of

the ČSA sites and coal preparation plant, the water-bearing of working horizons and working horizons where there is a risk that the slopes of individual cuts or stages of dumps will slide.

• Radiation protection for workplaces where there is equipment containing sources of ionising radiation (ash content analysers)�

• The use of explosives, including partial poisoning with the products of explosions.• Rail transportation on the mine track.• Use of specified technical equipment (electrical, lifting, pressurised, or gas equipment).• Accidents involving contaminated substances, and the prevention or minimisation of the spread of

contaminated substances into the rock and surface water or groundwater�• Stationary sources of air pollution, if there is a dangerous situation threatening the quality of air or

technical defects (in particular, malfunctions in the coal dust precipitator at the preparation plant). • The declaration of emergency air situations (smog)�• Unauthorised entry by a natural or legal person onto the organisation’s premises.Emergency response plans in underground mines – the ČSA underground mine (deep mining in the end slopes of the ČSA surface mine) and Centrum Mine – are designed to tackle incidents and serious operating accidents in deep mining. They have been drawn up to cover all foreseeable types of accident, in particular: • Caving�• Drift fire.• Fan breakdown�• Action in response to sudden blackouts on the mine surface and in the mine.• Coal dust explosion and gas accumulation. • Measures in response to industrial action.• Measures in response to external threats. Additionally, at the Centrum Mine:• Accidents involving man-hoist mining equipment, accidents involving the return shaft ventilator.• Fires on the surface of the mine, fires at the longwall face and in the drifts of the longwall face, fires on

the going road� • Action in response to emergencies considered in workplaces with sources of ionising radiation (ash

content analyser)�

Emergencies in 2015In 2015, there were no emergencies at the sites of the ČSA Mine, the Komořany Coal Preparation Plant and the Centrum Mine in terms of the emergency response plan and occupational safety. This is a bold improvement on 2014 (when there were 10 emergencies).

Regional Authority for approval of the emergency response plans, 7EC obtained affirmative opinions from Lesy ČR s.p. and Povodí Labe s.p. In the emergency response plan approval procedure, the local community’s interests are defended by institutions of government/public supervision (the Czech Environmental Inspectorate). If there is a change in the integrated permit, the Pardubice Regional Authority approaches parties to the proceedings and competent administrative authorities (Lesy ČR s.p., the Czech Environmental Inspectorate, Povodí Labe s.p., the Regional Hygiene Station, municipal authorities, etc.).

Fire prevention and responses by the Internal Fire Rescue ServiceAt Chvaletice Power Station, emergency preparedness is guaranteed by emergency response plans and the Internal Fire Rescue Service34, which is also part of the Czech Republic’s Integrated Rescued System. The Internal Fire Rescue Service is housed separately in the 7EC complex. Service provision is organised in four shifts with an uninterrupted 12-hour cycle. In 2015, the 7EC Internal Fire Rescue Service had 21 employees. They are trained and drilled in accordance with the “Internal Fire Rescue Service Training Plan”. The Service’s employees took part in 10 types of training. Besides responding to fires, this firefighting unit also provides technological, technical and rescue assistance, fire-related assistance and pre-medical assistance inside and outside 7EC. There were 157 responses to emergencies in 2015. Of these, 154 were within the 7EC complex, including at the supplier companies here, and three were within the Czech Republic’s integrated rescue system.One significant activity of the Internal Fire Rescue Service is the monitoring of health in relation to harmful gases at 7EC� Measurements are taken monthly at predetermined structures and elevations of the boiler room, internal coal handling, external coal handling and fuel tipper. Random measurements are taken in response to fuel heating at hoppers; measurements are taken of SO2 in absorber pipes, and of H2 in the generating unit engine room� Continuous measurements are taken of CO, H2 and NOx, which are phenomena accompanying subsequent fires, on certain coaling routes and towers�

Emergencies at 7EC in 2015 There were no emergencies at 7EC, only shutdowns caused by the operation of Chvaletice Power Station (see also pages 87-88):- on 26 April 2015, Unit B4 was shut down due to caving slag;- the entire power station was shut down from 23:03 hours on 10 September until 11:39 hours on 12 September. Unit B3 was shut down due to slag caving, and Unit B4 was shut down due to a leak in the steam room area. The overall period of shutdowns caused by the power station was 40 hours and 24 minutes�

34 The ECHAS Internal Fire Rescue Service has been set up in accordance with Section 67(1) of Act of the Czech National Council No 133/1985 on fire protection, as amended (the “Fire Protection Act”), to perform the tasks set out in Section 70 of the Fire Protection Act.


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System to monitor the ČSA Mine’s side slopes

For a mining company it is essential to ensure the stability of surface mine slopes, as one of the conditions of a mining permit, in accordance with the development and working face advance plan, based on the provisions of the Mining Act and implementing decrees. To that effect, stability calculations are carried out (at Severní energetická a.s. this is done by the VÚHU brown coal research institute) and are also drawn up for individual equipment complexes (excavators, stackers, belt conveyors) in specific areas of the mine. Slope stability is also monitored by means of measurements directly on the ground. The results of ČSA Mine side slope monitoring from previous years have given rise to the conclusion that the crystalline complex of the Krušné hory (Ore Mountains) is stable, but problems could occur due to overlying sediments. With this in mind, Severní en-ergetická a.s. has focused on monitoring sediment in slopes around the ČSA Mine. Slope areas formed by overlying sediment are subject to long-term monitoring in line with the properties of the earth comprising the ČSA Mine’s side slopes. Since 2005, an automated measuring system has been in operation, where fixed measuring points positioned on the ČSA Mine’s side slopes are measured at set intervals. Using an automated Leica total station, situated in an area with projected high stability, positional deviations of fixed points are monitored and the results are evaluated� Since 2006, operational survey points have been used for the local monitoring of the stability situation as they facilitate speedy expansion of the management system. This monitoring system did its job during emergencies in June 2005 and January 2011, when there was an earth slide of the front formation in the north-western part of the side slope. In 2015, there were 56 monitor-ing points under surveillance.Since 2008, new independent monitoring methods have been tried out: • within the scope of remote sensing; • 3D laser scanning. The entire area is mapped by aerial survey photography carried out by an external company. Evaluations are conducted by refer-ence to aerial survey photographs, which have been in digital format since April 2009. Other measurements carried out: • Jezeří gallery height measurements • Monitoring of well casings under Jezeří Castle • Jezeří gallery connecting measurements • Červený Hrádek – Albrechtice grade line, once every five years (carried out by the Czech Technical University) • Measurements of the groundwater table (carried out by the VÚHU brown coal research institute) • Measurements of precise inclinometry (arranged by the VÚHU brown coal research institute) In 2015, automated monitoring was expanded to include measurement points added in connection with deep room-and-pillar min-ing in the ČSA Mine’s side slopes.

Outage management, backup sources at 7EC (Chvaletice Power Station)

7EC strives to minimise outages caused by malfunctions� It guards against malfunctions by providing timely facility maintenance. Maintenance is carried out during preplanned unit shutdowns. Outage management procedures are described in the power station’s operational documentation: Emergency Preparedness Plan and Emergency Response Plan to handle states of emergency in cogeneration�In the eventuality of a unit outage or a reduction in unit capacity due to a malfunction, the lost output is replaced by an increase in the capacity of the other units in operation or by purchasing energy from other producers or traders. Following a unit outage (the phase-out of the generator from the grid), once the cause of the outage has been detected and fixed, the unit is started up without undue delay and phased back into the grid.If there is an outage affecting all of the units in operation, first of all the backup source needs to be put into service. This start-up boiler house is a source of process steam needed for the start-up of the first and, in part, the second generating unit. After the prescribed operating parameters have been reached in the first restarted unit, that unit is able to supply process steam for the other units as they start up.During periods of restoration and shutdowns, the electricity take-up that has been contracted is at a level that the remaining operational units are able to produce. If the take-up contracted is higher, electricity is bought in. The supply of electricity and heat is also guaranteed by the presence of sufficient stockpiles of fuel which, provided that they are full, are enough to run the power station at maximum capacity for approximately two months� Once the planned repair of the power station has been carried out, it is anticipated that there will be a sharp fall in the frequency of malfunctions.


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Most Central Mines Rescue Station(www�hbzs�cz)

The Most Central Mines Rescue Station (the “Station”) is composed of two units: the Station per se and the Fire Rescue Service of Severní energetická a.s.; these are organisational units of Severní energetická a.s. They are ready, round the clock, to handle emergency and rescue responses, as well as other preventive and specialist activity at companies of the Severní energetická a.s. Group, as well as at Vršanská uhelná a.s., Severočeské doly a.s., and within the framework of the Czech Republic’s integrated rescue system. The Most Station performs tasks in accordance with Decree of the Czech Mining Authority No 447/2001 on the mining rescue service. The Fire Rescue Service has been set up in accordance with Section 67(1) of Act of the Czech National Council No 133/1985 on fire protection, as amended. Those provisions also established the professional competence of its members. The Station ensures the round-the-clock standby of mine rescuers and rescue equipment. The Station performs tasks in relation to surface mining activities with competence for the whole of the Czech Republic. It is also responsible for tasks prescribed by a decree related to the performance of mining activities underground at the Centrum and ČSA Mines in the Most district, the Marie Mine in the Sokolov district, the Richard Mine in the Litoměřice district, the Bratrství and Svornost Mines in Jáchymov and at the workplaces of RAKO-LUPKY, carrying out the extraction of refractory claystone by means of deep and surface mining in the Rakovník district. As at 1 January 2016, the Most Central Mines Rescue Station had 65 of its own members and, including the local mines rescue stations of the Centrum Mine and Sokolovská uhelná a.s., which fall within the competence of the Most Service for organisational purposes, it had 218 members. On the basis of a contract concluded with the Ústí nad Labem Region Fire Rescue Service, it is another unit of the Czech Republic’s integrated rescue system. In the performance of mining rescue services, the Most Service provides the following activities in particular to contractual partners: • work in a stifling or deleterious environment and work in extreme conditions; • emergency responses, clean-up work, fire protection activities;• work at heights over free points of depth; • training and drills; • the activity of a testing laboratory for cylinders, including the filling thereof; • the activity of a testing laboratory for breathing and resuscitation technology; • the activity of a gas laboratory; • the activity of a testing laboratory for exploders, ohmmeters and indication devices. In 2015, the Most Station carried out one emergency response. The fact that this was the only emergency response of the year is certainly a gratifying and positive trend. It took place during the closure of an opened gaseous old working at the Bílina Surface Mine of SD a.s. During 2015, there were also two events categorised as special emergency responses (responses within the framework of the integrated rescue system)� Both of these incidents occurred during the cleaning of a gaseous coal storage unit at LIAPOR a.s. in Kadaň. In addition, 12 non-emergency responses, 18 planned non-emergency responses and 308 commercial responses were carried out. In 2015, doctors providing a permanent medical service at the Station made two medical outings.


http://www.hbzs.cz

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The SEV-EN a.s. Fire Rescue Service was involved in the clean-up of an accident within the framework of the integrated rescue service in the complex of a chemical enterprise refining oil in a refinery of UNIPETROL RPA s.r.o. in Litvínov-Záluží on 13 August 2015. This accident had a significant influence on production at the ethylene unit, especially on the production of polypropylene. During the response, one of the responding firefighters, a member of the Sev-en a.s. Fire Rescue Service, was injured and was incapacitated from 13 to 19 August 2015.At the sites of the Sev.en Group (the ČSA Mine, the Komořany Coal Preparation Plant, the Centrum Mine), the Central Mines Rescue Station and the Fire Rescue Service of Severní energetická a.s. made five non-emergency responses, zero emergency responses and 10 planned responses and one medical outing. The technological assistance provided by the Fire Rescue Service was put to use in extinguishing 181 spontaneous coal fires and spraying one cave-in.Non-emergency responses took place at the ČSA Mine of Severní energetická a.s. and at the DB Mine of Severočeské doly a.s. in virtually equal measure (5:7). These responses generally comprised the sealing of the old deep workings that exist here and adversely affect the advance of the working face at these surface mines. Another significant area of the Service’s activity comprised work to do away with old workings throughout the Podkrušnohoří area, carried out in particular for the Ministry of the Environment, but also for other organisations, such as Vršanská uhelná a.s., the DNT mines of Severočeské doly a.s., and Kolbeschmidt a.s. in Ústí nad Labem-Trmice.A significant share of the Most Service’s work comprises commercial activity, especially high-risk work at heights, on premises with an unhealthy environment, in cramped spaces and underground for mining and non-mining organisations alike. It is in this area that most of the commercial activities carried out in particular for the Most Service’s founder, Severní energetická, are concentrated, whether this be at the ČSA Mine, the Komořany Coal Preparation Plant or the Centrum Mine (Důl Kohinoor a.s.); it also does such work for other companies, such as Vršanská uhelná a.s., LB MINERALIS s.r.o., KERA KAOLIN a.s., and RA Znojmo s.r.o.

Gas laboratory – Central Mines Rescue Station site in Most The laboratory of the Central Mines Rescue Station measures pollutants and accompanying substances exclusively for organisations and workplaces that carry out mining activities or work involving mining techniques. Further to a decision of the Ministry of the Environment issued under number 211/820/10/KS on 10 March 2010, the laboratory is authorised, in accordance with Section 15(1)(a) of Act No 86/2002, to measure immissions in the mine atmosphere, focusing on carbon monoxide from the perspective of the protection of human health, as well as nitrogen oxides from the point of view of protecting ecosystems and vegetation. When the new Act No 2001/2012, the Clean Air Act, took effect, this authorisation ceased to be restricted and was converted to an open authorisation in accordance with Section 42 of that Act. On the basis of that change, under Decision of the Czech Mining Office in Prague No SBS03027/2015/ČBÚ-21 of 17 March 2015, the laboratory acquired authorisation to analyse samples of mine atmosphere and other firedamp, the validity of which – with reference to Section 42 of Act No 201/2012 – is not limited in time�


VI. ENVIRONMENTAL PROTECTION

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ENVIRONMENTAL PROTECTION

Environmental protection in coal extraction and processing Environmental protection in electricity and heat production

Management of environmental risks and compliance In all areas of environmental protection and formation, legislation and the conditions spelt out in the decisions that have been issued are rigorously upheld. Records of data (on emissions, immis-sions, waste, water management, charges, etc.) are maintained to the extent required by Czech legislation, and summary annual statements are delivered to bodies of Czech public administration by the statutory deadlines�

Coal extraction and preparation – approach to environmental protection35

As a major regional production enterprise, Severní energetická a.s. is mindful of the importance of the impact that its industrial operations have on the quality of life and health of the local population. In surface and deep coal mining alike (Severní energetická a.s. and Důl Kohinoor a.s.), the management of surface water and mine water is an important and essential activity from the perspective of operational safety (the pumping of mine water) and environmental protection. The goals pursued in this area, in particular compliance with indicators of permissible levels of contamination in discharged water in accordance with applicable discharge permits, as well as admissible quantities of discharged water set by the water authority, were met last year in line with applicable legislation. Environmental care focuses, as a matter of priority, on preventing potential negative impacts engendered by mining operations and related activities, in particular coal preparation. Environmental care and the management of impacts on communities and customers are reflected in the following activities: • continuous monitoring of the quality of brown coal;• the rehabilitation and reclamation of areas affected by the consequences of mining activities;• compliance with rules of operation at facilities for the recovery of waste and sorting of

waste appropriate for reuse;• the protection of the air in the classification and preparation of coal, compliance with

statutory emission limits at sources of air pollution, the taking of regular measurements;• regular measurements of dust in the atmosphere and measurements of noise levels on

the boundaries of the hygiene protection zone surrounding the surface mine;• compliance with rules of operation at water management facilities, arrangements for

the high efficiency of wastewater treatment plants and compliance with the quality of discharged mine water and wastewater;

• compliance with rules for workplaces where chemicals are handled, as well as rules of operation for the use of sealed radioactive sources – part of ash and sulphur analysers;

• monitoring of the state of the ČSA Mine’s side slopes; • a high level of emergency preparedness.Environmental risks are managed in accordance with applicable development and working face advance plans and emergency response plans. These include the distribution of responsibility, as well as procedures and processes related to the technology in question, all with a view to minimising the impact on the local environment, including rules on the verification of environmental impacts at permanent suppliers.

7EC – approach to environmental protection

Today’s coal-fired power stations place less of a burden on the environment than the transport sector. By making efficient use of indigenous brown coal, reserves of which in the Czech Republic will serve several generations yet, we will support national energy security and independence. In this respect, high-quality environmental protection is a priority in risk management and in the planned retrofitting of Sev�en EC, a�s�The owners and management of Sev.en EC, a.s. recognise that the power station is one of the two largest stationary sources of air pollution in the region. Quality management of sources of pollution, regular measurements, technological discipline and maintenance, savings in energy, fuel and materials, and the ongoing training and emergency preparedness of employees receive the highest possible level of attention. Sev.en EC, a.s. is one of the two largest stationary sources of air pollution in the region, a major consumer of water from the River Elbe and a significant generator of wastewater. With this in mind, particular attention is paid to water management at the power station. Central to the mitigation of environmental impacts is waste prevention, achieved by making and using certified energy by-products.The burden on the environment and local communities will be substantially lightened once the planned repair of the power station has been completed. This is a monumental strategic project by the Sev.en Group.

Sev.en EC, a.s. is one of the most important production enterprises in the Pardubice Region. It operates in accordance with an integrated permit issued under Act No 76/2002 on integrated prevention and in accordance with a certified EMS system derived from ČSN EN ISO 14001: 2005 (Environmental management system).The aim of the EMS is to achieve consistently full compliance with legal requirements, improve relations with the public and public administration, mitigate the risk of environmental incidents, and scale down costs. The EMS is part of the overall management system at 7EC. This includes the organisational structure, the distribution of responsibility, as well as procedures and processes related to the technology in question, all with a view to minimising the impact on the local environment, including rules on the verification of environmental impacts at permanent suppliers. 7EC decided to implement the EMS voluntarily and at its own expense.

35 For definitions, see www.sev-en.cz/banske-dokumenty, www.sev-en.cz/rekultivace

http://www.sev-en.cz/banske-dokumenty

http://www.sev-en.cz/rekultivace

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A conceptual approach to minimising the impacts of brown coal mining throughout mining operations is guaranteed under the approved development and working face advance plan, which includes measures on safety and environmental protection. The mining permit includes specific obligations concerning water management, the operation of pumping stations, the operation of waste recovery facilities, and a specification of the scope and frequency of the monitoring of potential environmental impacts.These measures also reflect the legitimate interests of municipalities, legal entities and private individuals who are parties to the proceedings, e.g. the measurement of dust and noise levels in the protection zones that are set up. The basic concept paper for the termination of mining operations is the approved summary rehabilitation and reclamation plan, which includes consultation with the local authorities of the municipalities affected.In the preparation of the new mining plan or, where appropriate, the further continuation of mining, potential risks in the individual environmental subsystems are always identified and evaluated. This encompasses the potential impacts that the plan might have on:• public health, including socio-economic impacts;• the air and climate;• surface water and groundwater;• soil, rock formations and natural resources;• evaluations of stability conditions in the area;• fauna, flora, ecosystems and the landscape;• material assets and cultural heritage�In all cases, measures are in place to prevent, preclude, mitigate or counteract adverse impacts.

In 2015, Sev.en EC, a.s. held a valid integrated permit issued in accordance with Act No 76/2002 on integrated prevention, as amended. In that integrated permit, the Pardubice Regional Authority lays down binding conditions of operation, i.e. air and water emission limits, emission ceilings, permitted quantities of surface water and groundwater consumption, permitted quantities of discharged water, etc. The decision on a seventh amendment to the integrated permit entered into force on 25 February 2015�Sev.en EC, a.s. has drawn up rules of operation in accordance with Act No 201/2012 on the protection of the air and emergency response plans produced further to Act No 254/2001 on water and Implementing Decree 450/2005. Amendments to the rules of operation and emergency response plans are approved within the scope of the amendments to the integrated permit by the Pardubice Regional Authority.36

In 2015, the integrated permit was amended by Amendment 8 of 27 May 2015, which entered into effect on 4 June 2015, and Amendment 9 of 2 November 2015, which entered into effect on 19 November 2015�

Handling of chemical substances and preparations and prevention of environmental contamination

The database of safety data sheets that have been drawn up (by manufacturers or distributors) in accordance with European legislation (REACH) is kept up-to-date. Safety data sheets are available to all employees on the company intranet and form a basis for the production of rules in the relevant workplaces where substances risky to human health are handled� Preventive measures to combat potential contamination are implemented, i.e. earthmoving and ancillary machinery is kept in secured parking areas, vehicles are washed at the secured places designed for this, and the same applies to maintenance and repairs. In 2015, there was no environmental contamination in the operations of Severní energetická a�s� or its subsidiaries� Likewise, there were no accidents, malfunctions or adverse situations with impacts on the environment in 2015, nor were any such incidents handled�

The database of safety data sheets that have been drawn up (by manufacturers or distributors) in accordance with European legislation (REACH) is kept up-to-date. Safety data sheets are available to all employees on the company intranet. Relevant workplaces where chemical substances and preparations are handled are also equipped with safety data sheets. Safety data sheets form a basis for the production of rules in the relevant workplaces where dangerous chemical substances or chemical preparations are classified as very toxic, toxic, corrosive or carcinogenic labelled with phrase R45 or R49, mutagenic labelled with phrase R46, and toxic to reproduction labelled with phrase R60 or R61 in accordance with Section 44a of Act No 258/2000.In 2015, there were no leaks of dangerous chemical substances and there was no environmental contamination in the operations of 7EC. Preventive measures are taken to combat potential contamination, i.e. running-out pits and catch basins are integrated under equipment for the storage of dangerous substances. Equipment is regularly inspected by staff during inspection patrols. Likewise, there were no accidents, malfunctions or adverse situations with impacts on the environment in 2015, nor were any such incidents handled.In 2015, there were no accidents37 or malfunctions that needed to be handled in accordance with the rules of operation.

36 Rules of operation are a set of technical operating parameters and technical organisational measures to ensure the operation of stationary sources of pollution, including measures to mitigate the course of and to eliminate the consequences of an emergency situation in accordance with air protection conditions.

37 Under the rules of operation for Chvaletice Power Station, a “source accident” is a sudden or unexpected situation where pollutant emissions immediately and significantly rise and the source is typically unable to contain or stop them by ordinary technical procedures. As far as water is concerned, an “accident” is an exceptionally serious deterioration in or an exceptionally serious threat to the quality of surface water or groundwater. In addition, an “accident” is taken to mean cases of technical malfunctions and defects in facilities to capture, store, transport and dispose of substances hazardous to the environment if they precede such penetration.

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Checks on environmental protection conditions and standardsPeriodic checks on the operating conditions of individual sources of air pollution, water facilities and waste management facilities are conducted. Emissions and immissions are measured for verification purposes at statutory intervals by authorised laboratories holding certificates issued by the Ministry of the Environment. Physical inspections of facilities are conducted at the same time as checks on compliance with operating and handling rules. Where necessary, the operating and handling rules of facilities are updated. Inspections are also carried out by public authorities.

• On 10 September 2015, the district mining office in Most conducted an inspection at the ČSA Mine that focused on its drainage. The inspection detected no defects or shortcomings requiring the issuance of a binding order of removal by the inspector.

• On 20 October 2015, the State Office for Nuclear Safety in Ústí nad Labem ran a radiation protection inspection at Sev.en. The inspection detected no defects or shortcomings requiring the issuance of a binding order of removal by the inspector.

• In May 2015, Bureau Veritas Czech Republic, spol. s r.o. conducted its first surveillance audit in accordance with ČSN EN ISO 14001:2005 (EMS).

• On 5 and 6 November 2015, the Czech Environmental Inspectorate in Hradec Králové inspected integrated prevention, air protection obligations, water protection and waste management (compliance with emission limits, emission ceilings, the recovery factor of continuous emission measurements, the payment of the air pollution charge, the payment of waste water discharge charges, etc.) in accordance with Act No 201/2012 on air protection, Act No 254/2001 on water and Act No 185/2001 on waste. The inspection detected no defects.

• The production of CO2 emissions from fossil fuels and materials was verified on 11 February 2016 by the audit firm Bureau Veritas Czech Republic, spol. s r.o. with a greenhouse gas statement for 2015. The audit firm confirmed that 3,413,197 CO2 emission allowances had been consumed�

Fines and penalties in environmental protection

In 2015, Severní energetická a.s. and subsidiary Důl Kohinoor, a.s. operated all facilities in accordance with the applicable environmental legislation, conditions under the decisions issued, and rules of operation. In 2015, no fines were imposed on Severní energetická a.s. or the subsidiaries Důl Kohinoor, a.s. and HUMECO a.s. (renamed Sev.en WT, a.s. from 1 January 2016), nor were there any accidents at these companies.

In 2015, Sev.en EC, a.s. operated all facilities in accordance with the applicable environmental legislation, conditions under the decisions issued, and rules of operation. In 2015, Sev.en EC, a.s. was not fined, nor were there any accidents here.

38 Under Czech law, charges are listed exhaustively in relation to quantity, not as fines for exceedance of pollution levels. Air emission charges are laid down by Act No 201/2012 on air protection. Charges for discharging wastewater into surface water are laid down by Act No 254/2001 on water and amending certain laws (the Water Act). The obligation to pay landfilling charges is prescribed by Act No 185/2001 on waste and amending certain other laws.

In the current year (2016), emissions from sources of air pollution are charged according to the actual situation reported in the preceding year, i.e. 2015. Sources of air pollution in service in 2015 included the ČSA Mine and Komořany Coal Preparation Plant at Severní energetická a.s. and Boiler House K1 at Důl Kohinoor a.s. The charge for operating a source of air pollution – the Komořany Coal Preparation Plant – was calculated and subsequently put at CZK 62,700.00. As for the operation of Boiler House K1, the charge fell short of the amount prescribed for the imposition of payment, i.e. CZK 50,000, hence the air protection body did not demand it.

Charges38 for pollutant emissions

The air pollution charge for 2015 was CZK 10,118,900. Charges for the discharge of wastewater into surface water totalled CZK 356,739 in 2015. Waste charges came to CZK 0 (7EC passes on its waste to companies authorised to manage waste in accordance with Act No 185/2001)�

UnitČSA Mine and

downstream operationsCentrum Deep Mine 7EC

Overall area affected by coal extraction and energy production, including all reclamation (completed, in progress and future) in 2015

ha 4,316 718 149.4

SEV.EN GROUP

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Specific issues surrounding coal extraction and electricity production in the protection of the environment and health

Minimisation of the impact of blasting operations in coal extractionAt the current juncture, there are no large-scale blasting operations. The most recent large-scale blasting operations in connection with overburden mining were carried out in the second half of 2005. (In February 2011, ancillary large-scale blasting operations were carried out during the construction of belt conveyors�) It is possible to carry out blasting operations in accordance with the existing development and working face advance plan. These operations are generally carried out on certain parts of overlying rock where it is necessary to reduce digging resistance and achieve better lumpiness. According to the documentation on the development and working face advance plan, there is a “Line of restriction for large-scale blasting operations” to mitigate any effects of blasting operations on Černice and the structures of Jezeří Castle and chapel. That line is respected.

Sealed radioactive sourcesAt Severní energetická a.s., sealed radioactive sources are used as part of ash and sulphur analysers, i�e� ash content analysers (x 28) and sulphur content analysers (x 3). Facilities are operated in accordance with applicable legislation and further to authorisations issued by a public authority (State Office for Nuclear Safety) for the handling of nuclear materials�

Abatement of particulate matter (PM) and sulphur dioxide emissions in the production of electricity Electrostatic precipitators The principle of an electrostatic precipitator is that fly ash particles are charged by the effects of an electrostatic field. These particles reach the collection electrodes and settle on them. The settled fly ash is removed from the electrodes mechanically and falls into hoppers, from which it is taken away. The fly ash is subsequently reused for sale as a certified energy by-product intended for the construction industry, or is used at a mixing centre to produce stabiliser, which is also a certified energy by-product.

DesulphurisationCombustion gases from electrostatic precipitators are forced through the chimney fans of boilers via two smoke flues into two absorbers. In the absorber, the flue gases pass through a shower of aqueous suspension of finely ground limestone, in which sulphur oxides are leached from the from flue gases with high efficiency. The scrubbed flue gases are led into the cooling towers. The original content of sulphur oxides in the raw flue gases hovers around 4,000 mg/Nm3; the resultant combustion gases are scrubbed to a level below 300 mg/Nm3� The statutory limit is 500 mg/Nm3�Since 1998 sulphur dioxide and particulate matter (PM) emissions have decreased thanks to desulphurisation equipment. The main supplier was the Finnish-Japanese consortium of IVO International Ltd., Hitachi Ltd. and Itochu Corp. The technology is based on a wet limestone scrubber principle. Sorted limestone is delivered to the power station by rail from 270 km away (the Kotouč Štramberk surface mine); consumption in 2015 amounted to 80,325 tonnes. Desulphurisation and wet limestone scrubber technologies reduce emissions of sulphur oxides and dust. Emissions of dust, or particulate matter (PM) at the desulphurisation outlet into the atmosphere are at a level below 30 mg/Nm3� The statutory limit is 100 mg/Nm3� 7EC runs checks on these values by means of continuous emission measurements as required by law�

Energy by-productsThe burning of brown coal and the process of scrubbing the combustion gases produced generate energy by-products. At 7EC, these products are: slag, fly ash (four types), FGD gypsum and stabiliser. These energy by-products are certified as building materials (there were seven certificates in 2015). The certification of energy by-products includes verification that the properties match the requirements set out in the technical specifications for those products and correspond to the requirements of the implementing decree on radiation protection issued by the State Office for Nuclear Safety. Certified products are used in the construction industry (cement, concrete, autoclaved aerated concrete), as sub-base and backfilling in the construction of roads and railways, to modify the landscape, for terrain reconstruction, and other construction purposes. The use of these certified products saves significant natural raw materials, especially in the construction industry (aggregate, brick clay, natural gypsum, sand). In 2015, approximately 793,083.6 tonnes of energy by-products were made and 195,816.6 t were sold (24.7%). A major benefit of selling energy by-products, and thereby using them in other industrial sectors, is that the use of natural raw materials is reduced.7EC also has a mixing centre where unsold energy by-products and outlet water from desulphurisation are rendered as stabiliser, in the production of which lime is used. Stabiliser is used to reclaim former rhodonite mines in accordance with the Chvaletice Landscaping project. Once the stabiliser has been “concocted” it needs to be used within approximately 8 hours before the mixture hardens. The mixing centre also has collection points for fly ash mix, coarse ash, slag and the filling of railway wagons with FGD gypsum.


115

Transportation ASPECT: MATERIALS (G4-EN1), Consumption of materials ASPECT: TRANSPORT (G4-EN30)Energy consumption management ASPECT: ENERGY (G4-EN3, G4-EN6)

Reductions in material and energy intensity are generally associated with technological replacement. Positive changes in production parameters at 7EC, including a reduction in captive electricity consumption, were achieved by changing the quality of fuel. Further improvements in energy performance in 7EC operations are associated with the technological replacement of machinery and equipment under the project to repair Chvaletice Power Station. In the production of coal, the consumption of electricity depends on the volume of coal extraction at the ČSA Mine and the subsequent coal preparation.

The consumption of products or substances and raw materials at the Sev.en Group’s operations indirectly has repercussions for the environment. However, the extraction of brown coal does not make much use of other materials or partially processed products as ingredients in the final product. Likewise, the consumption of materials at 7EC (with the exception of limestone for desulphurisation and substances used in water treatment), from the aspect of volume and quantity, has no significant economic, environmental or social impact, and the materials consumed are not ingredients in the final products. Limestone is a major input in the process for the desulphurisation of combustion gases at 7EC. Other inputs that are monitored are chemical substances used at the power station to treat the water (for the chemical treatment of water or for the treatment of cooling water in cooling towers), and lime used to produce stabiliser.

The transportation of coal, as well as limestone needed for desulphurisation, is outsourced. The Group’s basic approach in this area is to prefer environmental, electrified rail transport. At least 88.5% of coal production is also transported by rail to industrial end-users and another approximately 11.5% (0.6 million tonnes) is transported down the line to smaller customers as there is no other possibility here. Limestone is transported to the power station exclusively by rail.


Material consumption

Limestone for desulphurisation 7EC tonnes 108,660 77,721 80,325

Approximate coal consumption (tonnes) per GJ of energy produced

7EC tonnes 0.24 0.189 0.192

Energy consumption

Captive energy consumption per MWh produced

7EC MWh 0.087 0.075 0.082

Captive energy consumption per thousand tonnes of coal produced

Severní energetická a.s., Důl Kohinoor a.s., Sev.en WT, a.s.

GJ/thousand t --- 103.17 86.82

Materials and energy consumption

Energy and material consumption of brown coal extraction and preparation

Energy consumption managementSeverní energetická a.s. (the ČSA Mine and coal preparation plant) and its subsidiary Důl Kohinoor a.s., which extracts brown coal, and subsidiary Sev.en WT, a.s., buy in the energy consumed (electricity, thermal energy, etc�)� The amount of electricity consumption depends primarily on the volume of coal extraction at the ČSA Mine and the subsequent coal preparation. The share of coal extraction and preparation in total energy consumption at Severní energetická a.s. and its subsidiaries is approximately 90%� Thermal energy from external sources is used in the heating system to heat surface buildings and technological structures at the ČSA Mine and Komořany Coal Preparation Plant. Boiler houses fired by brown coal, to heat the surface complex of the Centrum Mine

Energy and material intensity at 7EC

Energy consumption managementIn 2015, 7EC captive electricity consumption was approximately 289,000 MWh, i.e. 8% of the energy generated, broken down as: 53% boiler house, 26% engine room, 15% desulphurisation and 5% other equipment. Energy consumption is monitored by means of technical and economic indicators that are used to keep track of electricity production economy. Corrective action is taken if there are any imbalances. There was a year-on-year (14/15) increase in captive electricity consumption by approximately 9%.

Raw materials and processing aids (materials)Raw materials and processing aids are used to the extent necessary for the production process. The most significant materials include limestone and lime (see the paragraph on


116

Consumption of energy resources at the Sev.en GroupThe consumption of energy resources at the Sev.en Group is counted here as fuel (brown coal, liquid fuel – heavy fuel oil, extra light fuel oil) and fuel used for operations and the

generation of heat and electricity� In terms of GJ of energy in coal, our basis is the calorific value, not the efficiency of the technology. Electricity and heat generated by 7EC and consumed captively are not included because they are produced from the primary energy

sources included (brown coal and black oil)� We also include the necessary energy and fuel consumed in coal extraction and prepar-ation over the calendar year as a whole at Severní energetická a�s� and the subsidiaries Důl Kohinoor a.s. and Sev.en WT, a.s.

The calculation is consistent with changes in the asset structure (the acquisition of Sev�en WT, a.s.) and the year-round energy balance of electricity and coal production.

and mine water treatment plant, are also in operation. As the cost of buying in energy accounts for a large portion of overall operating costs, Severní energetická a.s. has long focused on scaling down consumption and enhancing the energy efficiency of the facilities it uses.

Materials and processing aidsSeverní energetická a.s. (the ČSA Mine and coal preparation plant) and its subsidiaries Důl Kohinoor a.s. and Sev.en WT, a.s. do not use a large quantity of other raw materials or partially processed products that are incorporated into the final product.

Desulphurisation, page 114), as well as substances used in water treatment. No facilities containing PCB are used at 7EC. The consumption of coal, lime, service water and certain chemicals depends on needs in the generation of electricity and heat further to the requirements of the energy control room� The generation of electricity and heat depends on the need for the given energy on the market (summer and winter operations, contracts for the take-up of electricity with customers, etc.). With ancillary processes, substances and preparations that are less dangerous but remain suitable from a utility and economic point of view, are preferred.

SEV.EN GROUP: ENERGY AND FUEL CONSUMED TO PRODUCE ENERGY AND HEAT, 2015

Sev.en Group total Recalculation

Direct energy consumption

Indirect energy consumption

Type of fuel or energy Unit Unit Conversion factor GJ GJ

TOTAL brown coalt 2,459,000 GJ/t coal 15.33 37,696,470.0

t 949 GJ/t coal 19.8 18,790.2

electricity MWh 68,506 GJ/MWh 3.6 246,621.8

thermal energy GJ 70,762 1 70,761.6

petrol l 38,661 GJ/l 0.03302 1,276.7

diesel l 402,187 GJ/l 0.03646 14,662.1

liquid fuel – heavy fuel oil t 3,583 GJ/t 39.51 141,564.3

liquid fuel – extra light fuel oil l 3,699 GJ/l 0.03804 140.7

Approximate overall consumption of primary and secondary sources of energy – Sev.en Group (GJ) 37,872,903.99 317,383.41

Data notes: Other than diesel consumed to operate 7EC’s coal handling (the operation of a coal storage site), other suppliers’ fuel and energy consumption is not included (especially belt and rail transportation and the operation of small dozers and freight transport at the ČSA Mine). Figures for 2014 and 2015 were not available. The calorific value measured as GJ/t coal (Qir – average calorific value) is a value obtained on the basis of data from purchase contracts covering the supply of brown coal. Other conversion factors for liquid fuel are lifted (or calculated by converting figures indicated in gallons) from the GRI guidelines for heavy fuel oil as set forth in the Národní inventarizační zpráva ČR (National GHG Inventory Report of the Czech Republic), ČHMÚ, 2014, p. 63.


117

COAL MINING – ENERGY AND FUEL CONSUMPTION

2014 2015 Conversion factor 2014 2015

coal consumption (heating) t 863 949 GJ/t coal 19.8 GJ 17,087.40 18,790.20

electricity MWh 83,299 68,506.0577 GJ/MWh 3.6 GJ 299,876.40 246,621.81

thermal energy GJ 65,354 70,761.6 1 GJ 65,354.00 70,761.60

petrol l 22,438.64 30,414.45 GJ/l 0.03302 GJ 740.96 1,004.33

diesel l 215,699.79 284,953.46 GJ/l 0.03646 GJ 7,863.52 10,388.22

Total GJ 390,922.28 347,566.1643

brown coal extraction (ČSA Mine)

thousands of tonnes

3316 3,597 Energy consumption per

thousand tonnes of coal produced (fuel, heating, electricity)

Severní energetická a.s.,

Důl Kohinoor a.s., Sev.en WT, a.s.

GJ/thousands of tonnes

103.17 86.82brown coal extraction (Centrum underground mine)

473 406

Total 3,789.0 4,003.4

ENERGY PRODUCTION 7EC, – ENERGY AND FUEL CONSUMPTION

Unit ECHASSev.en EC, a.s.

(formerly ECHAS) Conversion factor

ECHASSev.en EC, a.s.

(formerly ECHAS)

2014 2015 2014 2015

TOTAL brown coal t 2,682,000.00 2,459,000.00 GJ/t coal15.26 and 15.33

respectivelyGJ 40,927,320.00 37,696,470.00

petrol l 9,507.00 8,247.00 GJ/l 0.03302 GJ 313.94 272.33

diesel – road transport + other l 143,089.00 117,234.00 GJ/l 0.03646 GJ 5,216.43 4,273.87

liquid fuel (heavy fuel oil, extra light fuel oil) t 1,817.00 3,583.00 GJ/t 39.510 GJ 71,789.67 141,564.33

liquid fuel (extra light fuel oil) l 6,885.00 3,699.00 GJ/l 0.03804 GJ 261.91 140.71

Total GJ 41,004,901.95 37,842,721.24

electricity (captive consumption) MWh 292,877.00 289,019.00 GJ/MWh 3.6 GJ 1,054,357.20 1,040,468.40

thermal energy (captive consumption) GJ 86,922.35 84,200.20 1 GJ 86,922.35 84,200.20

Electricity production MWh 3,910,633 3,526,657 GJ/MWh 3.6GJ 14,208,935.80 12,824,631.80

Heat production GJ 130,657 128,667 1

Tonnes of coal consumed per GJ of energy produced (electricity + heat) tonnes 0.189 0.192

Energy consumption (fuel, heat, electricity) per GJ produced (electricity + heat) GJ 2.886 2.951

Captive energy consumption per MWh produced MWh 0.075 0.082

Data notes: Other than diesel consumed to operate 7EC’s coal handling (the operation of a coal storage site), other suppliers’ fuel and energy consumption is not included (especially belt and rail transportation and the operation of small dozers and freight transport at the ČSA Mine). Figures for 2014 and 2015 were not available. The calorific value measured as GJ/t coal (Qir – average calorific value) is a value obtained on the basis of data from purchase contracts covering the supply of brown coal. Other conversion factors for liquid fuel are lifted (or calculated by converting figures indicated in gallons) from the GRI guidelines for heavy fuel oil as set forth in Národní inventarizační zpráva ČR (National GHG Inventory Report of the Czech Republic), ČHMÚ, 2014, p. 63.


118

SEV.EN GROUP – CONSUMPTION OF RAW AND OTHER MATERIALS, 2015RAW AND OTHER MATERIALS IN THE PRODUCTION PROCESS THAT ARE NOT PART OF THE FINAL PRODUCT:

(Raw and other materials that can be regarded as renewable are indicated in green)

Severní energetická a.s. Sev.en EC, a.s. (formerly 7EC)

Důl Kohinoor a.s.Sev.en WT, a.s.

(formerly Sev.en WT, a.s.)

Unit 2015 2015 2015 2015

ferrous metals t 41.03 593 83.15

non-ferrous metals t 0.03 0.074 11.19

bronze t 0.03 0 1.31

material for welding t 1.28 1.49 1.12

wood m3 54.36 2,020.50 5

metallurgical materials t 56.52 1,234 2.14

iron section material t 17.49 72 8.073

oils, lubricantst 8.99 4.7 0.18 0.048

l 29,886 15,810 318.00

lubricating greases t 24.98 1.592 0.46 0.027

plastics t 1.2 4.627 0

paints t 1.29 0.376 0.3

industrial spirit l 390 477.00 0

oxygen m3 5,195 788.4 773.80 180.20

acetylene m3 734.72 364.00 70

noble gases (argon, stargon, etc.) m3 12.9 28.1

CO2 l 3591 550.00 250.00

helium l 100 0

flocculant t 6 1.25


119

SUBSTANCES USED TO TREAT WATER AT CHVALETICE POWER STATION – DESCRIPTION OF HOW SIGNIFICANT SUBSTANCES ARE USED: 2015

UnitSev.en EC, a.s. (formerly 7EC)

total consumption, 2015

Substances used for regeneration at the chemical water treatment plant

HCl 100% l 103,141

NaOH 100% l 169,433

NaCl kg 50,200

Substances used for decantingCa(OH)

2kg 58,000

FeCl3 40% l 40,160

Substances used for water treatment

A662 (mixture of phosphates and polycarbonates for the treatment of cooling water)

l 66,136

Na3PO

4kg 0

ammonia 24% aqueous solution l 1,620

Sanosil (disinfectant to treat drinking water, a mixture of H2O

2 and Ag) l 1,000

Turbanion (biocidal product for cooling towers) l 4,000

RAW AND OTHER MATERIALS IN THE PRODUCTION PROCESS THAT ARE PART OF THE FINAL PRODUCT – CERTIFIED DESULPHURISATION PRODUCTS AT 7EC – ENERGY BY-PRODUCTS.

UnitSev.en EC, a.s. (formerly 7EC),

total consumption 2015

Lime t 5,662

Limestone t 80,325


120

Emissions dangerous to health and greenhouse gas emissions ASPECT: EMISSIONS (G4-EN15,G4-EN16, G4-EN18, G4-EN21), G4-EU5 Water consumption ASPECT: WATER (G4-EN8, G4-EN9, G4-EN10)Water pollution, Waste ASPECT: EFFLUENTS AND WASTE (G4-EN22, G4-EN23, G4-EN24, G4-MM3)

The Sev.en Group recognises the importance of the influence that its industrial activities have in the regions where it operates. For extraction under the development and working face advance plan and in relation to Chvaletice Power Station, the approach it follows is rooted in a policy of managing the OSH system and EMS and complying with all legislative conditions applicable to its operations. In this respect, environmental care focuses, as a matter of priority, on preventing potential negative impacts engendered by production activities. The Sev.en Group’s approach to climate change issues relies primarily on its involvement in the European market in emission allowances.

The Group aspires to minimise its impact in particular by having its waste recycled and by engaging in a system for the take-back of scrapped equipment and materials.

Quality management of sources of pollution, regular measurements thereof, water and waste management, technological discipline and maintenance, and emergency preparedness receive the highest possible level of attention.

Important impact of operations on the environment


Specific emissions from the production of electricity

Specific CO2 emissions 7EC kg/GWh 967,553.16 962,269.79 967,827.88

Specific NOx emissions 7EC kg/GWh 1,164.56 1,170.28 1,241.69

Specific SO2 emissions 7EC kg/GWh 723.21 619.38 827.95

Specific PM emissions 7EC kg/GWh 101.89 102.05 91.82

Water

Water requiring treatment prior to discharge

7EC thousands of m3 55.265 46.438 39.308

Water requiring treatment prior to discharge

ČSA Surface Mine and Centrum Mine

thousands of m3 5,055.7 4,006.3 3,796.9

Production of energy by-products.Desulphurisation products (energy by-products)

7EC tonnes 1,036,695 804,100.5 793,083.6

Use of waste Captive reuse of waste generatedSeverní

energetická a.s.% 73 93 86.1

TransportationPercentage of the production of coal transported by rail


% 88 88.5 88.5


121

Air protection in coal extraction and procesing

Specified Sources of Air PollutionAir protection in coal extraction and processing is an important activity with immediate consequences for local communities in particular. Emissions of particulate matte are monitored from this point of view. Stationary combustion plants are another type of source. In the operation of these sources of air pollution, preventive emission abatement measures, checks on operations and, where appropriate, technical measures are rigorously implemented. Three stationary sources of air pollution,39 the ČSA brown coal surface mine, the Komořany Coal Preparation Plant, and the boiler house for heating at the Centrum Mine, are located in the industrial area of the Most district. Bearing in mind how close significant sources of pollution, in particular the Komořany CHP plant and the chemical plants in Litvínov, are to dense traffic (the Ore Mountains arterial road) and the local combustion plants in surrounding municipalities (especially Horní Jiřetín), it would be reasonable to assume that the sources of air pollution operated by Severní energetická a.s. and the subsidiary Důl Kohinoor a�s� are not the main burden on the health of regional inhabitants� The waste generated, mine water and wastewater pose no risk to the region. Noise and dust from the ČSA Mine that could influence living conditions in local communities are monitored and do not exceed applicable standards.

Severní energetická a.s., Důl Kohinoor, a.s. and Sev.en WT, a.s. operated three stationary sources of air pollution in 2015; these sources comply with prescribed legislative requirements. In 2015, Severní energetická a.s. operated two stationary sources of air pollution which, in keeping with Annex 2 to the Clean Air Act, were specified stationary sources. Specifically, they are the Komořany Coal Preparation Plant and the ČSA Mine. Operating permits were issued for these sources on 30 October 2013. In 2015, Důl Kohinoor a.s. operated one specified source of air pollution – Boiler House K1, which is used for heating�In 2015, local communities filed no complaints about impaired air quality due to operations at the ČSA surface mine and stationary sources of pollution (the Komořany Coal Preparation Plant and boilers to provide heating at the Centrum Mine).

Air protection

Emissions of air pollutants

Air protection in electricity and heat production

Specified Sources of Air Pollution According to the definition under Act No 201/2012 on the protection of the air, 7EC has three specified stationary sources of pollution: the power station’s generating units, the start-up boiler house and diesel units (backup sources).Sev.en EC, a.s. is one of the most important production enterprises in the Pardubice Region� The generating units of Chvaletice Power Station (7EC)40 are a source of emissions into the environment – into the air and into the water; solid waste is generated in small quantities. All sources of pollution are monitored, characteristics and the quantities emitted are known factors, and measures are taken to minimise emissions and waste – preventive and endpoint measures.The waste generated and wastewater pose no risk to the surrounding area.Emissions, especially from dust, that could influence living conditions in local communities are monitored and do not exceed applicable standards.

Benefits of the planned overhaul of Chvaletice Power Station for air protectionThe European Commission issued Decision 2012/115/EU, according to which Member States are to proceed in the preparation of their transitional national plans. 7EC has been included in the Czech Republic’s Transitional National Plan. The Transitional National Plan aims, through progressive reductions in total annual emissions of particulate matter, sulphur dioxide and nitrogen oxide from stationary combustion sources, to reach a stage of readiness to meet emission limits set with effect as of 1 January 2016 in Decree No 415/2012 not later than 1 July 2020�With this in mind, 7EC is planning to overhaul the power station in the coming years.

Emission limits laid down by Implementing Decree Existing emission limits prescribed No 415/2012 by the integrated permit41

PM 20 mg/Nm3 100 mg/Nm3

NOx 200 mg/Nm3 650 mg/Nm3

SO2 200 mg/Nm3 500 mg/Nm3

CO 100 mg/Nm3 250 mg/Nm3

Emissions of substances dangerous to health into the airEmissions of substances dangerous to health originate in coal combustion in the power station’s units and, to a lesser extent, in the combustion of black oil in the start-up boiler house. The lower emissions (NOx, PM) in 2015 compared to 2014 can be attributed to the lower production of electricity. Emissions produced by the generating units are measured continuously; at the start-up boiler house, a one-off measurement is carried out. The power station has not exceeded emission ceilings in any of the emissions measured (tonnes of substance per year).42

Emission ceilings (set for 7EC in 2015 under the integrated permit):PM 404 tNOx 6 200 tSO2 3 750 t

39 These sources – complying with Annex 2 to the Clean Air Act (Act No 201/2012) – are specified stationary sources.40 The power station was renamed Sev.en EC, a.s. (7EC) on 1 August 2015.41 This situation applies until the power station is incorporated into the Transitional National Plan, but for not longer

than up to 30 June 2020.42 Emission ceilings are set only for emissions discharged by the generating units, hence figures on the emissions

produced may differ depending on whether they are inclusive of emissions discharged from the start-up boiler house (for example, in the integrated polluters register)


122

POLLUTANT EMISSIONS INTO THE AIR FROM THE PRODUCTION OF COAL OVER THE YEAR (TONNES)

Total emissions produced

2013 2014 2015

ČSA Mine and down-

stream operations

(Severní energetická

a.s.)

Centrum Mine(Důl

Kohinoor a.s.)

ČSA Mine and down-

stream operations


a.s.)

Centrum Mine(Důl

Kohinoor a.s.)

ČSA Mine and down-

stream operations


a.s.)

Centrum Mine(Důl

Kohinoor a.s.)

NOx

0 1.15 0 0.847 0 1.5

SO2 0 5.73 0 -** 0 -**

PM 10.66* 0.50 19.365* 2.286 14.907* 0.55

Direct measurements of emissions (the measurement of sources of air pollution) and a subsequent calculation are used to calculate emissions in the processing of coal.* The emissions reported are only those from the operation of the Komořany Coal Preparation Plant as a source

of air pollution** Legislation does not prescribe the monitoring of SO

2 emissions

Check measurements at the Komořany Coal Preparation PlantThe sorting and other cold preparation of coal at the Komořany Coal Preparation Plant is categorised under specified sources according to Annex 2 to the Clean Air Act. In September 2015, an authorised entity carried out 20 one-off check measurements of particulate matter emissions from the vents of precipitators and the industrial vacuum cleaner located at operating structures in the complex of the coal preparation plant. The results of measurements of emissions at the inspected vents showed compliance with the emission limit prescribed under applicable legislation. The highest reading was 22.0% of the emission limit and the average particulate matter emissions identified were 5.39% of the emission limit (the emission limit is 100 mg/m3)� The quantity of PM emissions produced in 2015, i.e. 14.907 t, is based on a calculation drawing on the measurements taken and the number of hours over which the facilities were in operation.

7EC – POLLUTANT EMISSIONS INTO THE AIR OVER THE YEAR

Unit 2013 2014 2015

Total NOx

emissions produced

t

3,633.6 t generating units

2.3 t start-up boiler house

4575.961 t generating units




Total SO2

emissions produced

t







Total PM emissions produced43 t

317.6 t generating units0.5 start-up boiler house





Of which: airborne particles (PM)44

t 299.013 319.257 259.063

Total CO produced (not stated in the integrated pollution register because the notification threshold of 500 t was not reached)

t183.8 t generating units






Arsenic and its compounds (expressed as As)

t 0.08 0.101 0.094

Cadmium and its compounds (expressed as Cd)

t 0.01 0.016 0.015

Nickel and its compounds (expressed as Ni)

t 1.10 1.383 1.261

Lead and its compounds (expressed as Pb)

t 0.52 0.654 0.591

Mercury and its compounds (expressed as Hg)

t 0.09 0.148 0.052

Note: Emissions of heavy metals (As, Cd, Ni, Pb, Hg) from the combustion of coal at the power station’s units

are determined by means of a calculation.

43 The emissions of all particles, i.e. including those larger than 10 μm in size, are reported as particular matter (PM). Particular matter (PMx) is used to denote immissions of dust particles smaller than X μm that are dispersed in the atmosphere. Particles smaller than 10 μm, denoted as PM

10, which may settle in the windpipe and cause health

problems, are a typical monitored size.44 In 2013, the share of PM

10 in particular matter was calculated to be 94%. From 2014, in accordance with the

methodology for calculating the share of fractions of PM10

and PM2,5

particles in particular matter emissions, published in Annex 2 to the Journal of the Ministry of the Environment, the share of PM10 in particular matter was 80%.


123

Specific emissions at 7EC – year-on-year comparison The year-on-year comparison below includes a conversion to TJ of thermal energy produced and to GWh of electricity produced, including emissions from the start-up boiler house.

SPECIFIC EMISSIONS FROM THE THERMAL ENERGY PRODUCED

Year 2013 2014 2015

production of thermal energy [TJ] 28,014 35,298 32,216

SO2 emissions [t] 2,258 2,422 2,920

specific SO2 emissions [kg/TJ] 81 69 91

NOx emissions [t] 3,636 4,577 4,379

specific NOx emissions [kg/TJ] 130 130 136

PM emissions [t] 318 399 324

specific PM emissions [kg/TJ] 11 11 10

CO emissions [t] 184 171 151

specific CO emissions [kg/TJ] 7 5 5

CO2 emissions [t] 3,020,820.9 3,763,084.0 3,413,197

specific CO2 emissions [kg/TJ] 107,831 106,610 105,949

SPECIFIC EMISSIONS FROM THE ELECTRICITY PRODUCED

Year 2013 2014 2015

electricity production [GWh] 3,122.12 3,910.63 3,526.657

SO2 emissions [t] 2,257.95 2,422.16 2,919.89

specific SO2 emissions [kg/GWh] 723.21 619.38 827.95

NOx emissions [t] 3,635.90 4,576.55 4,379.01

specific NOx emissions [kg/GWh] 1,164.56 1,170.28 1,241.69

PM emissions [t] 318.10 399.07 323.82

specific PM emissions [kg/GWh] 101.89 102.05 91.82

CO emissions [t] 184.10 171.36 150.83

specific CO emissions [kg/GWh] 58.97 43.82 42.77

CO2 emissions [t] 3,020,820.95 3,763,084.00 3,413,196.97

specific CO2 emissions [kg/GWh] 967,553.16 962,269.79 967,827.88


124

Immissions and level of noise caused by operations at the ČSA Mine

The environment in municipalities in the immediate vicinity of the surface mine may be affected by the operations thereof. In the 1990s, zoning decisions on protection zones for the hygiene protection of municipalities, defining hygiene protection zones in relation to Černice – part of Horní Jiřetín, were issued. • The zoning decision on the ČSA Mine protection zone – Horní Jiřetín, Černice area, was

issued by the building authority in Litvínov on 12 May 1993 under number SÚ/273-PHO/1025-At/93. The building authority at Litvínov Municipal Authority confirmed the validity of the protection zone on 30 November 1998 under number SÚ/2611-SD/Hf/98.

• The Most district hygiene officer’s opinion on the proposed hygiene protection zone for Černice to buffer it from activities at the ČSA Mine was issued by the Most District Authority (district hygiene officer) on 16 March 1993 under number 689-241D/93.

In the years since, the terms and conditions of the decisions that were issued have been updated. One of the conditions is the performance of verification measurements of the current noise levels and concentration of dust particles on the borders of protection zones to the prescribed extent (in accordance with the terms and conditions of binding opinions issued by the regional hygiene station)� Frequency of measurements of noise and dust levels: January-February, June-July, September-October. Every year, measurement results are consulted and passed on to the leadership of municipalities and public authorities.Measurement results show that the highest admissible concentration of dust on the borders of municipalities’ hygiene protection zones has not been exceeded. The equivalent noise level measured in the vicinity of built-up areas neighbouring surface mining operations is consistent with applicable legislation in most cases. Preventive measures have long been taken to lower the noise levels. Locally however, there may be time-limited increases in the equivalent noise level, mainly due to the use of signalling when technology is started up.

DUST IMMISSIONS AND THE ACOUSTIC SITUATION MEASURED IN THE VICINITY* OF THE ČSA SURFACE MINE, 2013–2015

Immissions of suspended particles (PM10

) in an average 24-hour concentration – measured maximums/average (For daily concentrations of suspended PM

10 particles, the immission limit is

50 μg/m3 under Act No 201/2012 on the protection of the air)

μg/m3

2013 41.3/19.2

2014 45.0/36.7

2015 39.9/28.2

Average equivalent environmental noise level LAeq measured. (The maximum permissible equivalent environmental noise level LAeq in this case is 40 dB(A) at night according to Government Regulation No 272/2011 on the protection of health from the adverse effects of noise and vibrations.)**

dB(A)

2013 38.8 and 39.6

2014 40.6 and 36.9

2015 37.8 and 35.4

* Note: in Černice – Horní Jiřetín, noise is measured at two sites (the sites with land registry reference numbers 107 and 101).

** The equivalent noise level measured in the vicinity of built-up areas neighbouring surface mining operations is consistent with applicable legislation in most cases. Locally however, there may be time-limited increases in the equivalent noise level, mainly due to the use of signalling when technology is started up.

Immissions and noise caused by operations

Immissions and noise caused by Chvaletice Power Station

Sev.en EC, a.s. has an immission station in Hošťalovice, a municipality in the Ore Mountains� Concentrations of NO2 and SO2 are measured in Hošťalovice.45

The station is operated by external entities to ensure the independence of the measurements taken and the harmony of immission data evaluations and interpretations in accordance with legislation� The evaluated results of immission measurements in Hošťalovice are delivered to the Czech Republic’s database for immission measurements (the air quality information system – ISKO) maintained by the Czech Hydrometeorological Institute as a subordinate organisation of the Ministry of the Environment�In 2015, immission limits for sulphur dioxide and nitrogen dioxide were not exceeded at the immission monitoring stations�

SUMMARY OF IMMISSION CONCENTRATIONS, JANUARY-DECEMBER 2013-2015

Arithmetic average

for the reporting

period

Maximum hourly

figure in the period

Number of exceedan-ces of the

hourly limit value

Maximum daily figure

in the period

Number of exceedan-ces of the daily limit

value

StationSub-

stanceYear μg/m3 μg/m3 - μg/m3 -

Ho

šťa

lovi

ce SO

2

2013 6.52 70.1 0 37.9 0

2014 5.41 97.97 0 23.23 0

2015 5.77 71.92 0 18.46 0

NO2

2013 7.99 44.7 0 33.3 0

2014 6.83 39.08 0 22.31 0

2015 9.49 42.88 0 34.97 0

Noise burdenThe noise burden in the nearest inhabited settlements relates to part of the municipality of Chvaletice (Hornická čtvrť) and Trnávka. The main source of noise lies in the operation of transformers. According to the integrated permit issued by the environment and agriculture department of the Pardubice Regional Authority, 7EC operations need not comply with hygiene limits for noise levels at night over a temporary period lasting until 31 December 2017. This permit was issued on condition that this issue would be addressed in the future by a comprehensive technical project that would make structural modifications (e.g. replacement of the perimeter wall, the construction of noise barriers) complying with hygiene limits for noise after 2017. A study has been drawn up proposing specific structural modifications to bring noise levels down to the corresponding hygiene limits. In 2016, the first stage of the project to cut noise to the hygiene limits for noise levels will be commenced. This entails the soundproofing of feeder transformers in Units 3 and 4.

45 Amendment 7 to the integrated permit cancelled the obligation to monitor immission concentrations of gaseous sulphur dioxide pollution in Chvaletice because this activity was neither representative nor efficient.


125

Regulatory plans in smog situationsThe coal preparation plant in Komořany is classified as a source of air pollution subject to regulation where a smoke situation arises and is declared. When a “warning” or “regulation” signal is declared due to suspended PM10 pollution, the operator of this source is required to proceed in accordance with the operating permit that has been issued and in line with the conditions set out in the rules of operation. On 6-8 November, a smog situation was declared due to suspended PM10 pollution. The Komořany Coal Preparation Plant was operated in accordance with its operating permit.

Since September 2013 (when 7EC was taken over by the Sev.en Group), the inhabitants of part of Chvaletice – Hornická čtvrť and of Trnávka have not notified or delivered any complaints about noise caused by the Chvaletice Power Station�

Regulatory plans in smog situationsSev.en EC, a.s. adheres to methodology entitled “Declaration and withdrawal of signals of the central rules of regulation and the regional rules of regulation (Rules of Regulation)”� If regulation is declared, the operation of the power station (coal combustion) would not be restricted; the aim of regulation is to prevent dust from outdoor areas and the storage site for energy by-products. In this respect, Chvaletice Power Station is governed by the new Operating Instruction ECH0 0234 “Smog warning and information system”. An application for the approval of Operating Instruction ECH0 0234 was included as part of Amendment 7 to the integrated permit issued under a Decision of 28 August 2014.

Greenhouse gas emissions – climate changeThe Sev.en Group’s approach to climate change issues relies primarily on national (Czech)46 and transnational (EU) strategy documents and on a number of subsequent legislative standards, rules and implement-ing decrees. The specific impact of climate policies mainly affects Sev.en EC, a.s., which is the only company in the Sev.en Group that is required by law47 to be involved in the European market in emission allowances (the European Union Emissions Trading Scheme – EU ETS). The Sev.en Group primarily monitors potential legislative risks that could have financial repercussions for it. A particular risk is the way renewable electricity is financed and renewable sources are expanding. This

disproportionately encumbers large elec-tricity consumers, including Severní ener-getická a�s�, as well as its stakeholders and partners, because it reduces the competitive-ness of Czech industry�

Total direct and indirect greenhouse gas emissionsIn this section, the calculation of greenhouse gas emissions in tonnes of CO2e is based on a recommendation under GRI guidelines re-ferring to the UN Kyoto Protocol and WRI and WBCSD “GHG Protocol Corporate Accounting and Reporting Standard” (GHG Protocol)48� The GHG Protocol includes the classification “Scope 1, 2, 3”, which breaks down GHG emissions by point of generation. Direct emissions (Scope 1) are GHG emissions from

activities controlled or owned by the report-ing organisation� Indirect GHG emissions (Scope 2) originate in purchased electricity and heat consumed within the organisation� Other indirect GHG emissions (Scope 3) are other emissions not included above – not applicable in our case.Sev.en EC, a.s.’s direct CO2 emissions (from the power station’s generating units and start-up boiler house) amounted to 3,413,197 tonnes in 2015�We also include the energy and fuel con-sumed in coal extraction and preparation over the calendar year at Severní energetická a�s� and the subsidiaries Důl Kohinoor a.s. and Sev.en WT, a.s. (from 1 July 2014) among the power station’s greenhouse gas emissions� The quantity of these greenhouse

gas emissions stemming annually from the machinery operated, the electricity and heat consumed in coal extraction and preparation, and fuel consumed by the power station, amounts to just under 1�25% of overall production. The Sev.en Group’s greenhouse gas emissions included in the EU ETS account for 98�75% of overall direct and indirect production of CO2e at production companies within the Sev.en Group. The calculation corresponds to the year-round production of greenhouse gas emissions stemming from the power station and from coal extraction and preparation. The significant decrease in CO2e production (by 9.32%) compared with the preceding year is associated with lower electricity production in 2015.


46 National Programme to Mitigate the Effects of Climate Change in the Czech Republic (http://www.mzp.cz/cz/narodni_program_zmirnovani_dopadu_zmeny_klimatu).47 Act No 383/2012 on the conditions of greenhouse gas emission allowance trading. The national allocation table (NAT) contains values for the allocation of CO

2e for the individual companies in the EU ETS. Under the third national allocation

plan, each of the listed operators of a source is allocated a particular volume of CO2 emission allowances free of charge every year; these are broken down into allocation allowances for electricity (against environmental investments made)

and allocation allowances for heat.48 The World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD).

http://www.mzp.cz/cz/narodni_program_zmirnovani_dopadu_zmeny_klimatu

126

Source CO2 emissions Unit

Sev.en Group quantity

Unit Emission factor UnitEmissions – t

eq.CO2

Direct emissions (Scope 1 GHG Protocol)

greenhouse gas emissions, 7EC t eq. CO2 3,413,197

petrol litres 38,661 kgCO2/l 2.31 t eq. CO

2 89.31

diesel litres 402,187 kgCO2/l 2.07 t eq. CO

2 832.53

coal (combusted for heat at Důl Kohinoor a.s.)

GJ 18,790 t CO2/GJ 0.09799 t eq. CO

2 1,841.25

Direct emissions (Scope 1 GHG Protocol) t eq. CO2 3,415,960.09

Indirect emissions (Scope 2 GHG Protocol)

electricity (bought in from a non-Group source)

MWh 68,506 t CO2/MWh 0.465412 t eq. CO

2 31,883.54

thermal energy (bought in from a non-Group coal source)

GJ 70,762 t CO2/GJ 0.111 t eq. CO

2 7,854.54

Indirect emissions (Scope 2 GHG Protocol) t eq. CO2 39,738.08

Total emissions (Scope 1 + 2 GHG Protocol) t eq. CO2 3,455,698.17

Data notes: Other than diesel consumed to operate 7EC’s coal handling (the operation of a coal storage site), other suppliers’ fuel and energy consumption (especially belt and rail transportation and the operation of small dozers and freight transport at the ČSA Mine) is not included in the calculation – the figures for 2014 and 2015 were not available. Emission factors for the individual sources are recommended by the University of Chemistry and Technology, Prague; for brown coal, they are taken from Národní inventarizační zpráva ČR (National GHG Inventory Report of the Czech Republic), ČHMÚ, 2014, p. 63

CO2e and emission allowances The power station’s generating units, the start-up boiler house and the desulphurisa-tion process are sources of CO2 emissions� In 2015, direct greenhouse gas emissions from the 7EC power station and boiler house amounted to 3,413,197 t of CO2� The level of these emissions was confirmed by the audit firm BUREAU VERITAS CZECH REPUBLIC spol. s�r�o� by means of a greenhouse gas state-ment for 2015�

Balance of allowance consumption in 2015:3,413,197 t of CO2 100% (consumption verified by BV)3,742,354 t of CO2 99% (purchased for Vertis, ICE Futures Europe) 20,730 t of CO2 1% (free allocation of CO2 emission allowances for heat)

CO2 emissions from generating units are detected by continuous measurements, the correctness of which is verified by cross-checks with the balance calculation� CO2 emissions from the start-up boiler house are determined by a balance calculation� The determination of CO2 emissions by the bal-ance calculation is carried out in line with the methodology drawn up by ORGREZ – “Meth-odology for the calculation and validation of data concerning emission measurements and balance calculations of CO2 at Elektrárna Chvaletice a.s.”. That methodology anticipates that CO2 emissions are generated not only by the combustion of coal and fuel oils, but also by the desulphurisation process.

CO2 emissions [t]Year 2013 3,020,820.952013 months 1-8 1,777,444.592013 months 9-12 1,243,376.36 (since 7EC has been part of the Sev.en Group)Year 2014 3,763,084Year 2015 3,413,197


127

Management of surface and mine water

The management of surface and mine water in both the surface and deep mining of brown coal is an important and necessary activity not only from the aspect of the safety of operations, but also environmental protection. The quantity of this water depends mainly on precipitation at a surface mine and on hydro-geological conditions for deep mining.Drainage of a surface mine and the zone in front of the face is essential to ensure the safety of work and operations. The aim is to capture water with ditches and divert streams above the edge of the surface mine, and to discharge such water – in accordance with the law – into public watercourses as surface water. Water captured below the edge of the surface mine is discharged, by pumping, as mine water, but does not need to be treated. Water captured on coal cuts at the ČSA Mine which does not meet specified conditions of discharge is routed to the main pumping station and then pumped to the mine water treatment plant, where chemical and mechanical process are used to treat the water prior to discharge into the River Bílina�Furthermore, after cleaning at two wastewater treatment plants, sewage water from complexes of operational buildings is discharged into streams. Surface water is taken from streams to spray belt conveyors and transport routes in order to reduce dust�Mine drainage is the principal business of the subsidiary Sev.en WT, a.s. It traps and diverts surface water and shallow groundwater before it can penetrate the mine area. Another of its tasks is to pump out mine water that has reached the mine and to treat this water so that it has the prescribed parameters prior to discharge into a watercourse. In addition, mine water is pumped from underlying collectors. Sev.en WT, a.s. manages 34 pumping stations and drainage wells for Severní energetická a�s� (For more details, see the section on Sev.en WT, a.s., page 136). Mine water at

Water management

Water management at Chvaletice Power Station

In terms of hydrology, the land used by Sev�en EC, a�s� belongs to the Elbe basin� In the area of interest, there is groundwater with characteristics stemming from past mining operations in pyritic mines and natural conditions.Sev.en EC, a.s. proceeds with maximum professional care in the use, treatment and discharge of water. The quality of all water discharged is regularly measured and evaluated. Under the integrated permit, the power station has quantitative limits for the abstraction of surface water, for the quantity of groundwater abstracted from wells and drainage sumps, and quantitative and concentration limits for wastewater discharge. Wastewater is discharged into the River Elbe and complies with the prescribed emission limits and quantitative limits for water abstraction. In 2015, 7EC was not handed down any water management fines.

Simplified diagram of water management at 7EC

1. Water abstraction – water supplied to 7ECThe power station’s process water is sourced from the Elbe. In 2015, more than 11.07 million m³ of water was conveyed to the power station from that river. (By comparison with the average annual flow-through indicated in the “Gauging Profile Record Sheet 43” for the Přelouč station on the Czech Hydrometeorological Institute’s website, this is less than 1%.)Water from the Elbe is drawn via a raw water pumping station approximately 2 km north of 7EC. The supply pipe is approximately 2.4 km long. Prior to use in the power station’s operations, water is mechanically treated and filtered.

Chvaletice Power StationECHAS tailings

Trnávkasedimentationtank

Pumping stationRaw water

Drinking water supply system

Biological wastewatertreatment plant

Outfall I

Outfall II

Morašický potok (stream)

ElbeElbe


128

the Centrum Mine is pumped by a pumping station at depth (the main pumping station), which pumps water to a sedimentation tank at the surface, from where the water is discharged, by gravity, into the return flow of RPA Unipetrol a.s.Process water in a sealed recirculating circuit is used to dress coal at the coal preparation facility in Komořany. This entails approximately 120,000 m³ of surface water per month, which passes through the technology at the coal preparation plant. Regarding the preparation plant’s technology, service water comes into play in the dust precipitators and in the spraying and cleaning of the plant’s premises (industrial vacuum cleaners). As a result of these processes, a large quantity of coal dust particles makes its way into the service water� This water is then conducted to filter press technology, where the coal matter is separated, and the water can be reused in technology. It is topped up with captured rainwater (i.e. this is not registered water abstraction) in the complex of the Komořany Coal Preparation Plant or, if that is not enough, service water is taken from the Nechranice industrial supply system operated by Povodí Ohře, s.p. A wastewater treatment plant is operated entirely separately for sewage water at the Komořany Coal Preparation Plant�During 2015, sewage wastewater, surface water pumped from the forefield and mine water was discharged into public water courses in accordance with the conditions laid down in the relevant decisions issued by water authorities�

Mine and surface waterA total of 3,924,900 m³ of mine water, surface water and groundwater was pumped from all pumping stations and diverted into watercourses in 2015 (of this, 1,745,900 m³ was treated at the mine water treatment plant). Overall precipitation was average – normal – in 2015.

The source of drinking water used to supply the enterprise with drinking water and to cover technological and social purposes is the public water supply fed from the Mokošín waterworks near Přelouč. Drinking water is not treated at 7EC.Groundwater is drawn from three wells and three drainage sumps in order to reduce the surface level thereof. The level is lowered in order to maintain the groundwater table for the stability of structures in the 7EC complex.

2. Water release – water discharged from 7ECThe wastewater that undergoes purification is generally industrial wastewater and, to a lesser extent, wastewater from sanitary facilities. Much of the water released without treatment is rainwater from the 7EC complex, leachate and pumped groundwater.For the sake of completeness in the balance of incoming/outgoing water, water evaporation from the cooling towers needs to be included among “released water”. Given a nominal cooling tower water flow of 21,900 t per hour, approximately 1.5% of the water flowing through is evaporated every hour, equivalent to as much as 330 t per hour per tower. The power station’s cooling circuit has a retention capacity of approximately 41,000 m³. Evaporated water is replaced by water from the Elbe in such a way that the prescribed level is maintained in the cooling pumps’ suction tanks.

Industrial wastewaterWastewater is produced by individual operations at the power station, such as the engine room, leaks from the cooling circuit pipes, essential bleeding from circulation pipes, the overflows of sumps and water storage tanks, the cooling water pumping stations, the boiler house and its operations (the start-up boiler house, the black oil station), outdoor substations (100 kV and 400 kV), the chemical water treatment plants, the wastewater treatment plant and the biological waste water treatment plant. The quality of the water discharged is monitored as a whole, i.e. it encompasses the quality of water discharged jointly at outflows I and II – see below in the text. Elsewhere, the quality of water discharged from the biological waste water treatment plant is measured.Water from the tailings pond: The tailings pond is a 7EC category III water management structure according to Decree No 471/01. It is intended for emergency hydraulic transport and for the storage of a certified product – slag from Chvaletice Power Station. “Water management structure handling and operating rules” have been drawn up for the tailings pond. Technical and safety supervision here is carried out in accordance with Section 61 of Act No 254/2001 on water. Originally (in about 1978), the tailings pond covered virtually the entire area of the former Rhodonite Works. Over time, it has shrunk as a result of reclamation (the depositing of stabiliser) to the extent that it is now a small “residual lake”.49 Water from the tailings pond is considered to be:• superfluous rainwater and an indeterminate quantity of leachate from the southern slopes above the reclaimed land;• leachate from the tailings pond channelled via the drainage system into the pumping station, from where it is discharged into

the residual lake;• groundwater from one remediation borehole;• water from any hydraulic transportation of slag.Water from the tailings pond is not treated chemically or mechanically. In 2015, 488,587 m3 of wastewater was discharged from the tailings pond into the River Elbe via outflow II. Bled warmed cooling water: bled warmed cooling water is water drained from the cooling system to reduce the chemical concentration of the water. Some of it is mechanically treated by filtration. In 2015, 1,879,664 m3 of bled warmed water was discharged into the River Elbe via outflow II.

49 In previous years, the Biological Centre of the Czech Academy of Sciences in České Budějovice has conducted research into Hymenoptera at the tailing pond. It follows from the results that, in its current form, the pond site is forming a replacement habitat for species of insects that are otherwise dying out.


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At Důl Kohinoor a.s., 2,248,800 m3 of mine water was pumped and diverted into watercourses in 2015� Sewage water from the complex operated by Důl Kohinoor a�s� v likvidaci is discharged into the sewerage network of Unipetrol RPA a.s.; in 2015, this wastewater amounted to 18�6 m3�Water from the ČSA Mine is delivered to HUMECO, a.s. for treatment. Důl Kohinoor a.s. operates one mine water treatment facility. The individual wastewater treatment plants were operated in accordance with approved handling rules and in line with the decisions that had been issued� The volume of wastewater discharged into public water courses, i.e. 64,600 m³, is a modest decline by approximately 10,000 m³ compared to the amount of water discharged in 2014� Once treated, wastewater is discharged into the River Bílina, managed by Povodí Ohře, s.p.

Ensuring the quality of the water dischargedWater discharge and abstraction permits are held by Severní energetická a.s. (18) and Důl Kohinoor a.s. (2)� The frequency of monitoring, indicators monitored and the method for measuring volumes of water and the indicators monitored can be found in the individual applicable water decisions. (For example, monitoring frequency ranges from four times a year to once a week.) All analysis is within the limits set for qualitative indicators�The qualitative indicators of water purity/pollution have been determined as follows: Mine water: pH, suspended solids, Mn, Fe, and in certain cases SO4. Wastewater (wastewater treatment plants): suspended solids, BOD5 (biological oxygen demand), CODcr� (chemical oxygen demand)�Water analysis results (reports) are checked by the operator of the pumping station at the mine water treatment plant and wastewater treatment plant, i.e. by employees of Sev.en WT, a.s., and subsequently by the Sev�en water manager� Checks on the prescribed limits are also conducted by the district mining office during its inspections. The results of the annual monitoring of the individual discharge points are sent to the competent public

Reused waterOverall, 0.63% of water is reused: the quantity of surface water abstracted 11,070,495 m3 + quantity of groundwater abstracted that is then used in technology 292,476 m3 = 11,362,971 m3, of which the quantity of reused water 71,580 m3/quantity of water abstracted 11,362,971 x 100 = 0�63%� Sev.en EC, a.s. believes it is essential to reuse wastewater in particular.

Reused wastewaterReused wastewater in 2015 came to 71,580 m3 and comprised:Wastewater from the desulphurisation of combustion gases; strongly saline water with a high content of suspended substances is processed at the mixing centre in the production of stabiliser used for the reclamation of the former surface mine of the Rhodonite Works. In 2015, 13,406 m3 of water from desulphurisation was used at the mixing centre.Non-saline wastewater: this is wastewater from the washing of sand filters and clarification containing suspended solids and the sludge. It is pumped to the wastewater treatment plant and, once it has been mechanically treated, it is used in other technology at the power station as process water (desulphurisation). The total volume of water treated in 2015 was 24,073 m³Saline wastewater: this is neutralised wastewater from the regeneration of ion exchange fillers used in filters for the production of demineralised water and the treatment of condensates. Once it has been neutralised at the chemical water treatment plant, it is pumped to the buffer tank at the mixing centre and is then used as mixing water in the production of energy by-products. In 2015, the quantity of such water involved was 34,101 m3�

Wastewater from sanitary faci l it ies7EC operates a biological wastewater treatment plant, where sewage water from the power station’s sanitary facilities are treated along with sewage water from the municipality of Trnávka and from Eichenauer, a company based in Trnávka. In 2015, 23,573 m3 of sewage water from the Chvaletice Power Station Complex was treated. It is discharged by outflow I into the River Elbe. In addition, 14,144 m³ of sewage water from Trnávka and 1,591 m³ from Eichenauer was discharged via the same outflow.

Discharge of wastewater into the River Elbe Wastewater from 7EC is discharged into surface water, i.e. the Elbe, in two ways: Outflow I (Parshall flume): rainwater, process water, water pumped from the drainage sump (filtered through sedimentation tanks) and treated sewage water is discharged via an open waste channel. Water is discharged via this outflow continuously. It passes through sedimentation tanks in Trnávka, where it is constantly screened – on input and output – for the presence of oil (on input, the presence of any oil is indicated and on output there is an analyser to measure the concentration). This guards against any leakage of oil into surface water. At the Parshall flume measuring station, the volume is measured continuously and samples are taken once a fortnight in order to determine the quality. The inlet into the Elbe, approximately 2 km north of 7EC, falls within the cadastral community of Trnávka� Outflow II (at Chvaletice port): unused (superfluous) water from the tailings pond and bled warmed cooling water is discharged. This outflow is used for discharge only when required by the technological equipment in question. A shared quantity measuring device is installed behind the cooling water pumping station in the 7EC complex. Samples to determine quality are taken at the measuring station before the outlet into the Elbe and are evaluated once a fortnight. The discharge point into the Elbe, approximately 1.8 km north-west of 7EC, falls within the cadastral community of Chvaletice.


130

institutions and the river basin manager by 31 January of the following year via the integrated system for compliance with notification obligations in the field of the environment – ISPOP50�In 2015, all water was discharged in accordance with applicable decisions and within the prescribed quantitative limits for discharge. One exception was the discharge of mine water from pumping station K 28 into the OM waste channel, where the Mn indicator was exceeded in one case� This exceedance can be attributed to low precipitation at the time, which resulted in a higher concentration of the monitored indicators of mine water discharged�

In 2015, the quantity of wastewater discharged was lower than in 2014 due to the reduced production of electricity and the unusually dry weather. The quantity of water taken from the Elbe to produce 1 MWh of energy was 2,908 m3 in 2013, 2,898 m3 in 2014 and 3,139 m3 in 2015. The amount of surface water abstracted depends not only on production and on the condition of the equipment, but also on the quality of the water in the Elbe and on the weather conditions. The amount of water abstracted per MWh of electricity generated in 2015 can be attributed to the quality of the water in the Elbe and the weather conditions�

Ensuring the quality of the water discharged7EC’s water management authorisation (to discharge and abstract water) is covered by the integrated permit. The integrated permit also sets out the frequency of monitoring, the indicators monitored, the water sampling methods and the limits on the quantities of water discharged and abstracted. 7EC is required to sample discharged water at outflows I and II at least once a fortnight and at the outlet from the biological wastewater treatment plant at least once a month.50

The qualitative indicators of discharged water purity/pollution have been determined as follows: - from outflow I: suspended solids, RAS, C10–C40, pH, Hg; - from outflow II: suspended solids, RAS, pH, Hg.With wastewater (the biological wastewater treatment plant), the indicators are: suspended solids, BOD5 (biological oxygen demand), CODcr. (chemical oxygen demand).In addition to the indicators above, for which limits have been set, the integrated permit requires the monitoring of the following in discharged wastewater:- from outflow I (Parshall flume): manganese (Mn); - from the biological wastewater treatment plant: ammonia nitrogen (N-NH4), nitrate nitrogen (N-NO3) and total phosphorus (Ptotal)�Water analysis results (reports) are checked by the head of the laboratory at 7EC and subsequently by a 7EC specialist on ecology and water management. The results of the annual monitoring of the individual discharge points are sent to the competent public institutions and the river basin manager by 31 January of the following year via the integrated system for compliance with notification obligations in the field of the environment – ISPOP.51 The regional authority checks the report sent to the integrated system and receives a report on compliance with the conditions of the integrated permit, the inspection of which includes a check on compliance with the limits. In 2015, all water was discharged in accordance with applicable decisions and within the prescribed quantitative limits for discharge�

Accredited water testing laboratorySev.en EC, a.s. runs a testing laboratory accredited for the sampling of wastewater, surface water and groundwater. It carries out accredited analyses of water covering the following: ammonium ions, suspended solids, dissolved substances, total phosphorus, pH, CODCr, Mn, sulphates, BOD5. ASLAB issued Certificate of Good Laboratory Practice 428 in 2015. The laboratory complies with the international standard ČSN EN ISO/IEC 17 025:2005. The laboratory does not offer services beyond 7EC.

50 The integrated system for compliance with notification obligations (ISPOP) facilitates the processing and receipt of selected environment-related reports (notification applications) electronically and the further distribution thereof to the competent public administration institutions. The integrated system has been set up in accordance with Act No 25/2008 on the integrated pollution register and integrated system for compliance with notification obligations in the field of the environment.

51 Many other analyses take place because the Water Act, specifically Annex 2, Table B, sets the indicators to be monitored in order to calculate, where appropriate, a pollution charge (this is checked by the Czech Environmental Inspectorate), while other indicators are monitored for notification in the integrated polluters register.


131

VOLUMES OF WATER DRAWN AND DISCHARGED AT OPERATIONS FOR COAL PRODUCTION AND PREPARATION

2013 2014 2015


Důl Kohinoor, a.s.


Důl Kohinoor, a.s.

Sev.en WT, a.s. (from 1 July

2014)


Důl Kohinoor, a.s.

Sev.en WT, a.s.

Total volume of water abstracted

m3 thousands 96.2 20.2 125 18.6 1.9 106.3 18.6 2.9

of which

Surface water (Bílina) m3 thousands 8.2 11.8 12.7

Consumption of service water from the municipal water supply or other water services – bought in from outside the Group

m3 thousands 22.9 45.2 29.5

Consumption of drinking water from the municipal water supply or other water services

m3 thousands 65.1 20.2 68 18.6 1.9 64.1 18.6 2.9

Total volume of water discharged

m3 thousands 5,052.8 2,494.2 3,805.0 2,267.4 3,989.6 1,986.3

of which

Total quantity of discharged water not requiring treatment prior to discharge into the watercourse

m3 thousands 2,491.2 0 2065.8 0 2,179.0

Total quantity of sewage water treated prior to discharge

m3 thousands 82.5 0 70.9 0 64.7 0

Total quantity of mine water treated prior to discharge into the watercourse

m3 thousands 2,479.1 2,473.9 1,668.3 2,248.8 1,745.9 1,986.3

Total quantity of wastewater discharged into the public sewerage system

m3 thousands 0 20.2 0 18.6 0


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ABSTRACTED, USED, TREATED AND DISCHARGED WATER, 7EC (CHVALETICE POWER STATION)

Unit 2013 2014 2015

Total volume of water abstracted (including drinking water) m3 thousands 9,799.454 12,108.826 11,720.475

Of which:

Surface water (from the Elbe) m3 thousands 9,077.727 11,332.71 11,070.495

Groundwater (abstracted only to reduce the groundwater table) m3 thousands 641.001 701.018 583.581

Rainwater m3 thousands not monitored not monitored not monitored

Waste water collected from another organisation outside the 7EC complex (Sewage water)

m3 thousandsMunicipality Trnávka 17.954

Eichenauer, spol. s.r.o. 1.185 Municipality Trnávka 18.019

Eichenauer, spol. s.r.o. 1.676 Municipality Trnávka 14.144

Eichenauer, spol. s.r.o. 1.591

Consumption of service water from the municipal water supply or other water services

m3 thousands 0 0 0

Consumption of drinking water from the municipal water supply or other water services

m3 thousands 80.726 75.098 66.399

Total volume of water discharged* m3 thousands 3,258.996 3,824.275 3,567.394

Of which:

Total quantity of treated water discharged (requiring treatment prior to discharge)

m3 thousands55.265 (biological wastewater

treatment plant)**Other – not monitored.

46.438 (biological wastewater treatment plant)**

Other – not monitored

39.308 (biological wastewater treatment plant)**

Other – not monitored

* The quantity of water is measured at both outflows. “Other” quantity of water collected means evaporation, water incorporated into the production of stabiliser, or used for spraying during reclamation. Discharged water includes rainwater, which is not measured, hence the precise quantities cannot be specified.

** 7EC operates a sewerage system that also serves the public; wastewater treated at the biological wastewater treatment plant is discharged directly into the watercourse.


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Waste management

Waste management at coal extraction and processing operations

Nature of wasteThe aim of waste management at Severní energetická a�s� and its subsidiaries is to engage in waste prevention to the greatest possible extent, to use the waste generated for secondary purposes, and to pass on any waste that cannot be reused to specialised companies for disposal in accordance with Czech legislation. The quantities of waste reported in recent years have reflected, in particular, the removal of idle structures and buildings�Most of the waste generated originates in operations at the ČSA Mine and Centrum Mine. Technological operations at the Komořany Coal Preparation Plant use waste-free technology. The waste collected for reuse comprises waste oil, tyres, iron and steel, sorted municipal waste, construction and demolition waste, etc. The waste used internally comprises construction and demolition waste and excavated earth, which is used for the compacting of and as a sub-base for roads, or for the improvement of stability conditions within the mine�

Waste generationThe total annual waste generation (Severní energetická a.s., Důl Kohinoor a.s.) of 1,355�042 tonnes was 37,601�568 tonnes less than in 2014 (i�e� it stood at just 3�5% of the quantity reported in 2014). This was due to the decline in the generation of construction and demolition waste from the removal of structures� In terms of general waste categorisation, the category in question was “other”; the hazardous waste category was much smaller, accounting for under 16% of the overall volume of waste generated in 2015�In 2015, in absolute terms the hazardous waste produced was on a par with the level reported in 2014. The disposal of 186.14 tonnes of railway sleepers accounted for the largest proportion (almost 83%) of hazardous waste produced.In 2015, we reused 87,573.39 t of waste at facilities where this was possible (embankments, backfilling and the compacting of roads). In all, 87,480.39 tonnes of waste from other waste generators were used (93 tonnes internal)� Waste processing and disposal charges came to CZK 548,182 in 2015.The waste generated by Sev.en WT, a.s. tends to be sludge from wastewater treatment (640 t). This is discussed in a separate chapter (see page 136).

Take-backWith selected products, Severní energetická a.s. is involved in a “take-back” system, where equipment and materials no longer in service are collected by the original producer’s organisation (this concerns certain types of oil, light bulbs, batteries, etc.). Decommissioned parts of machinery and equipment and materials that are made from metal are sold as scrap. Rubber conveyor belts are sold for further processing (reconditioning)�Used equipment and materials that are taken back, along with conveyor belts, are not regarded as waste�

Waste generation at Chvaletice Power Station

Sources and nature of wasteThe main sources of hazardous waste at 7EC are systems working with all forms of petroleum and similar products. This concerns used substances, leaks and spills of those substances, residues, contaminated substances, sludge, diluting agents, cleaning agents, contaminated absorbents, etc� These substances are treated as hazardous waste� There were 46�302 t of hazardous waste in 2015, accounting for just 5�88% of all waste� Other waste (740.79 tonnes; 94,12%) is characterised as normal industrial waste, notably paper and cardboard packaging, plastic packaging, glass packaging, metal, concrete, sludge from industrial waste water treatment, mixed municipal waste, etc.The facilities used to collect other and hazardous waste are of a design ensuring that waste placed in them is protected against undesirable degradation, misuse, theft or leakage endangering the environment�

Waste management methods7EC neither disposes of nor processes its waste itself. All quantities of waste are handed over for disposal or recycling only to companies that are “entities authorised to manage waste” in accordance with Act No 185/2001 on waste and that hold the relevant trade authorisation and the approval of the locally competent regional authority for the specific types of waste in question.

Take-backWith selected products, Sev.en EC, a.s. is involved in a “take-back” system, where equipment and materials no longer in service are collected by the original producer’s organisation. In accordance with Section 38 of Act No 185/2001 on waste, the take-back of certain used products is arranged, and these products are not then registered as waste. In the take-back scheme, 0.143 t of used products (batteries, accumulators, and electrical and electronic equipment) were handed over.


134

Administration and finesThe Sev.en Group’s companies engaged in waste management in accordance with Czech legislation and on the basis of approval grant-

ed by a public administration body respon-sible for waste management, and were not subject to any fines.

GENERATION OF WASTE IN THE EXTRACTION AND PROCESSING OF COAL (ČSA MINE AND KOMOŘANY COAL PREPARATION PLANT, CENTRUM MINE, SEV.EN WT, A.S.))

2013 2014 2015

UnitSeverní

energetická a.s.Důl

Kohinoor a.s.Severní

energetická a.s.Důl

Kohinoor a.s.

HUMECO, a.s. from 1 July to 31 December

2014


Důl Kohinoor a.s.

Sev.en WT, a.s. (formerly

HUMECO, a.s.)*

TOTAL waste generated t 6,311.8 216.86 38,800.61 156.0 874.22 1,064.692 290.35 779.549

Of which:

generation of “other” waste t 5,953.3 215.19 38,633.05 154.8 874.05 880.652 288.25 778.653

generation of “hazardous” waste

t 358.5 1.67 167.56 1.2 0.172 184.04 2.1 0.896

Waste management method in the given year:

total quantity of waste intended for reuse

t 6,247.5 204.76 38,747.33 81.6 902.511* 916.248 230.01 755.106

total quantity of waste delivered to other companies for disposal

t 64.3 12.10 53.28 74.4 29.234* 148.444 60.34 47.461

The summary table of environmental indicators presents figures on the internal generation of waste by individual companies in the given year. Figures on the quantity of waste delivered for use or disposal may also include waste generated in previous years that was in temporary storage.* There is more reused and handed-over waste than waste generated because, at the end of the year, a larger quantity of waste generated in the previous year was handed over and reused on a one-off basis.


135

WEIGHT OF HAZARDOUS AND OTHER WASTE IN THE EXTRACTION AND PROCESSING OF COAL, BY THE METHODS OF DISPOSAL BELOW (SEVERNÍ ENERGETICKÁ A.S., DŮL KOHINOOR A.S., SEV.EN WT, A.S.)

2014 2015

Hazardous waste (tonnes)

Other waste (tonnes)

Method of waste disposal confirmed




Total* 198.46 39,750.75 customer 187.04 1,970.577 customer

Recycling (return to the same process) 8.23 2,301.63 collector 0.68 805.00 collector

Composting 0.00 701.00 collector 0.00 597.00 collector

Reuse (in another process) 154.50 36,688.75 Sev.en + collector 168.46 330.124 Sev.en + collector

Incineration 3.72 0.16 collector 12.45 1.85 collector

Landfilling 32.01 58.90 collector 5.33 236.603 collector

Other – disposal under Code D9 (stabilisation) 0.112 0 collector

How the method of waste disposal was confirmed: Collector – Information provided by the collector indicated for disposal of the waste, Sev.en – Disposal directly by the organisation (Sev.en)

WASTE AT 7EC (CHVALETICE POWER STATION)

Unit 2013 2014 2015

Total quantity of waste t 729.2 863.509 787.092

Of which:

Generation of “other” waste t 725.8 838.360 740.79

Generation of “hazardous” waste t 3.5 25.149 46.3

Waste management method in the given year:

total quantity of waste delivered for reuse (recycling) t 185.5 251.217 274.459

total quantity of waste delivered to other companies for disposal t 543.7 612.291 512.633

WEIGHT OF HAZARDOUS AND OTHER WASTE AT 7EC (CHVALETICE POWER STATION), BY THE METHODS OF DISPOSAL BELOW (TONNES)

2014 2015







Recycling (return to the same process) 1.788 249.429 collector 5.062 268.384 collector

Composting - - - -

Reuse (in another process) - - - -

Incineration 13.661 0.79 collector 39.12 - collector

Landfilling - 588.140 collector - 472.406 collector

Other (neutralisation) 9.7 - collector 2.12 - collector

How the method of waste disposal was confirmed: Collector – Information provided by the collector indicated for disposal of the waste


136

Sev.en WT, a.s. – water pumping, purification and treatment; metal recycling

Under a contract of 14 July 2014, Severní energetická a�s� became the sole shareholder of Sev.en WT, a.s. (for data consolidation pur-poses in the report, we only cover the output by Sev.en WT, a.s. from 1 July 2014).The core activities of Sev.en WT, a.s. include the professional drawing and treatment of water, wastewater treatment, the environ-mental drawing of water, the selective removal of natural and industrial sediment from the bottom of watercourses and bodies of water, and other operations.

Construction of fixed and mobile pumping stations, operation of pumping stations, water analyses: • Drainage of surface mines, pumping

of mine water and drainage of cuts in operation

Mine drainage is the principal business of the company. It traps and diverts surface water and shallow groundwater before it can penetrate the mine area. Another of its tasks is to pump out mine water that has reached the mine and to treat this water so that it has the prescribed parameters prior to discharge into a watercourse� In addition, mine water is pumped from underlying collectors. (For the Sev.en Group – 34 pumping stations and drainage wells�)• Mine water treatmentMine water contains pollutants that do not comply with legislative conditions for direct discharge into a public watercourse. They are treated to reduce the concentration of suspended matter, iron and manganese. Sev.en WT, a.s. arranges for mine water to

be treated at the Sev.en Group’s ČSA-JŠ mine water treatment plant.• Wastewater treatmentArrangements are in place for sewage water to be treated at waste water treatment plants from the surface complexes:- of the Sev.en Group: the wastewater treat-

ment plants at the ČSA, Obránců míru, and Komořany Coal Preparation Plant sites;

- of customers outside the Sev.en Group: Ležáky wastewater treatment plant for Coal Services a.s., Vrskmaň wastewater treat-ment plant for REMOV EK s.r.o.

• Treatment and discharge of water bodies The company offers a water suction dredge to clean water sources. WATERMASTER III, a Finnish-made machine, is designed for the environmental pumping and selective removal of natural and industrial sediment from the bottom of bodies and courses of water� Unlike the traditional method used to remove settlement, this method offers thorough cleaning without the need to drain the re-tention reservoir. Significant projects making use of this equipment include the cleaning of the ash washing site at the Počerady Power Station, and the cleaning of the secondary settlement tank at Vršany Mine Water Treatment Plant• Laboratory services Sev.en WT, a.s. runs a testing laboratory accredited for the analysis of water� It offers analyses of wastewater and surface water� The methods it uses determine BOD5, pH, calcium, chloride, CODCr, electrical conduc-tivity, manganese, the sum of calcium and magnesium, ANC, sulphates, suspended solids, dissolved substances, ammonium ions, iron, calcined dissolved substances, RAS. ASLAB issued Certificate of Good Laboratory Practice 410 in 2013; the laboratory complies

with ČSN EN ISO/IEC 17025:2005 (testing laboratory under number 4115)�The key customers of Sev.en WT, a.s. are Sev.en Group companies, to whom it provides the services of mine water drainage, pumping and treatment, along with wastewater treat-ment (71.16% of output in 2015).

Other activities: • Non-ferrous metal recycling in 2015Sev.en WT, a.s. handles metal waste in accordance with the Waste Act (with authorisation from the regional authority to operate a facility for the collection, purchase and processing of waste – CZU00354). Scrap is purchased and sold as waste. The company recycles metal waste, especially non-ferrous metals. In par-ticular, it buys waste cables from the Sev�en Group and granulates the metals from them. The final product rolling off the cable recycling line is granulated concentrate of non-ferrous metal and a mix of insulating materials. Scrap is sold to authorised entities (in accordance with the Waste Act) for reuse.In total, 3,295 kg of mixed metals and 3,982 kg of cabling were recycled� Sales of 7,432 kg of non-ferrous metals (Cu granulate from cable recycling) were recorded�40.99 t of waste product were landfilled. The waste in this respect is the sheathing and insulating materials used in cabling� The waste is transported to the landfill operated by Celio a�s� (Litvínov)� Professional fitting and electrical work – welding of PE pipes, and the manufacture of electrical equipment (transformers etc.)• Sales of accompanying raw materials –

sales of oxihumolite, sand, sealing clay (Vaton).

• Repairs of KDFU, GFHU, CVOU and CVE pumps.

Business strategySev.en WT, a.s.’s focus and prospective development lies primarily in the provision of reliable and highly professional activities in the drainage of mines and treatment of mine water, especially in relation to its parent, the Sev.en Group. Promising areas are the exter-nal contracting of its WATERMASTER suction dredge in the cleaning of watercourses, ponds and reservoirs, the welding of PE pipes and the construction of bespoke pumping facilities�

Waste generationA substantial portion of waste comes from the treatment of water and the operation of the metal waste recycling facility� Other waste is generated by the laboratory’s activities and during the welding of PE pipes. Waste is passed on to authorised entities. Waste passed on for reuse mainly comprises sludge from wastewater treatment (597 t), solid waste from the primary cleaning of water from screens and filters (more than 51 t), and ferrous and non-ferrous scrap (waste from metal recycling)� Hazardous waste includes laboratory chemicals, absorption agents and filtering materials, packaging, oils and solvents�

Fines in 2015Sev.en WT, a.s. was not fined, nor were there any accidents here�


137

Reclamation and biodiversity ASPECT: BIODIVERSITY (G4-EN11, G4-EN13, G4-MM1, G4-MM2, G4-EU13)

The original landscape in the ČSA Mine’s area of interest has long been distressed by industrial activities and could be characterised by waning biodiversity in terms of the number of species and ecosystems. The surface mining of brown coal and moves to fix the fallout have introduced entirely new elements into the original industrial landscape, ensuring the emergence of unique ecosystems and increasing numbers of living species. In its rehabilitation and reclamation work, the Sev.en Group has fostered conditions conducive to various habitats to develop biodiversity in the area. Biological research is conducted to support and map the existing biodiversity, including the protection of rare species, and measures are proposed for its preservation and development. At both sites (ČSA, 7EC), a new system of eco-stability elements has been created, which builds on the existing system.

Much of the land affected by mining in the Ústí nad Labem Region has been reclaimed. Work to efface the effects of the ČSA Mine has focused on its large external dumps. In the area covered by the ČSA Mine, inner dumps are now being reclaimed and the residual pits are expected to be fully smoothed over in 2036.


Rehabilitation and reclamation, including revitalisation projects

Reclaimed areas with increased local biodiversity

Severní energetická a.s.ČSA Surface Mine and Centrum Mine

ha 2,846 2,858 2,858

Reclamation and revitalisation costsSeverní energetická a.s.ČSA Surface Mine and Centrum Mine

CZK thousands 112,043 100,422 106,492

RECLAMATION OF LAND AFFECTED BY BROWN COAL MINING

Biodiversity and reclamation

Renewal and development of biodiversity – reclamation objective(For detailed information on biodiversity care and basic legislation on reclamation and rehabilitation, see http://www.sev-en.cz/rekultivace pages 1 to 3.)The original marshland created by the silting of Komořany Lake started to be artificially drained in 1832 in order to free it up for use by farmers and miners. Industrial develop-ments in the second half of the last century necessitated a supply of industrial water, prompting the creation of the local Dřínov Reservoir (in 1955). The decision to scrap the reservoir, taken as the 1970s gave way to the 1980s, was directly linked to the expansion of brown coal surface mining� Other decisive influences on the industrial landscape and the way it evolved can be found in the way the water conditions were handled in order to

clear the path for gradually advancing brown coal surface mining. The industrial landscape, ever reshaped over the years, is epitomised in particular by far-reaching changes to hy-drology and social conditions� Since the latter half of the 20th century, reclamation has been central to brown coal surface mining� A new landscape has steadily emerged that reflects the evolving natural conditions here.The Group’s most significant environmental commitment in the Ústí nad Labem Region is the rehabilitation of the landscape in the wake of brown-coal mining. The rehabilita-tion of the local area and landscape affected by extraction is the final stage in the mining business. This activity is the responsibility of the mining company and takes the form of rehabilitation and reclamation of mining-af-fected land. In this way, the company also complies with its legal obligations. The policy in place to smooth over the scars of surface mining at the ČSA Mine has also

comprehensively resolved landscape issues outstanding since the former deep mining (undermining) carried out up to 1977 (e.g. the Marshal Konev Mine)� Once extraction operations have been brought to a close, the newly formed landscape can be intuitively in-corporated into the local natural ecosystems.The environmental stability of the min-ing-affected landscape is rounded off in a way reflecting the existing local system of environmental stability� Here, environmental-ly significant parts of the new landscape are efficiently interconnected into a functioning whole in order to conserve the biodiversity of natural ecosystems. The possibility of disseminating the indigenous gene pool of flora, fauna and entire ecosystems is anticipated in order to revitalise the landscape and preserve its useful functions.52 Bearing in mind the conditions of operation at the ČSA Mine, the “wet” version of landscape remedi-ation – respecting the landscape’s historical

wetland nature – is proposed. A system of water features, devised as part of rehabili-tation and reclamation, will be used as the basic backdrop for the production of the area environmental stability system� The frame-work structure of environmental stability that is being put together logically builds on the significant landscapes forming the Central Bohemian Uplands (České středohoří) and the Ore Mountains (Krušné hory).

Biodiversity protection during mining – ČSA MineCondition 7 of the Environmental Impact Assessment Opinion, issued by the Minis-try of the Environment on 11 October 1999 under number NM700/2150/2414/OPVŽP/99, addresses biodiversity protection issues at the ČSA Mine. As the ČSA Mine operates in an area that, prior to 1998, had already long been an active mining site, the protection of specific species is covered by the Summary

52 The impact of future extraction and reclamation on the population of fauna and flora is addressed in a special study entitled “Biological survey and assessment of aspects of conservation in the area affected by the process of mining and reclamation at the ČSA Mine after 2014. Final report”, drawn up by Pavel Jaroš and Michal Holec, July 2014.




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ČSA Mine Rehabilitation and Reclamation Plan and involves the creation of habitats that are beneficial to those species, including temporary forms of reclamation� In activities at the ČSA Mine, i.e. at sites where extraction is ongoing, no additional biodiversity protection measures have been required. The Sum- mary ČSA Mine Rehabilitation and Reclamation Plan (the most recent 2015 update, from September 2015, page 52, section 10.4.5, Compliance with EIA Conditions) includes giving over suitable areas to follow their own course naturally. This offers an opportunity for the creation of habitat conditions where the incidence of wild fauna and flora, includ-ing endangered species, can be maintained. Likewise, the plan paves the way for the cre-ation of near-natural communities satisfying requirements – stemming from the general protection of nature – for the creation of a local system of environmental stability� The proposed area environmental stability system is a follow-up to the system already existing in the vicinity of the ČSA Mine’s residual pit. (See “Biodiversity care and basic legislation on reclamation and rehabilitation”, www.Sev-en/rekultivace pages 1 to 3.)

Biodiversity care during reclamationBiodiversity care is part of the comprehensive solution to issues under the Summary Rehabilitation and Reclamation Plan� The Summary Rehabilitation and Reclamation Plan conceptually handles the framework for the creation and protection of the area environmental stability system� Biological research is conducted to support and map the existing biodiversity, and measures are proposed for its preservation and development. In order to clear up after the ČSA Mine, the area environmental stability system has been devised� This system is broken down into six interconnected wildlife

corridors, which will link up sites of the (former) ČSA Mine so that species from the surrounding area are able to migrate to the reclaimed mine and the original biodiversity can be naturally restored� Sites of Community importance, specifically Východní Krušnohoří – Eastern Ore Mountains (CZ 0424127) and Kopistská výsypka – Kopisty Dump (CZ 0423216), can be found in the vicinity of (but not in direct contact with) the area of interest where ČSA Mine operations have been carried out. Severní energetická a.s.’s approach to reclamation has been driven by efforts to create new areas as efficiently as possible and particularly in relation to the region’s future development. So far, 593 ha are in progress. A separate project in the Pardubice Region – “Reclamation of Land in the Chvaletice Area” – is being implemented by Sev.en EC, a.s. (Chvaletice Power Station)� It entails the rec-lamation of the former rhodonite mine (91 ha) which, thanks to the depositing of stabiliser (made at a mixing centre from fly ash, FGD gypsum, water, lime and slag, see page 114), enables a link to be forged with the original landscape and similar biodiversity.

Method used to consult reclamation projects – stakeholder engagement

Rehabilitation and reclamation is the final stage of mining activity under Act No 44/1988 on the protection and use of mineral resources� Rehabilitation and reclamation plans and projects are consulted over several stages that link up with each other. The basic documents need to be approved prior to actual extraction work, i.e. prior to approval of the development and working face advance plan. Stakeholders (natural and legal persons and bodies of state administration) are involved in individual stages of consultation�

The legitimate interests of municipalities are taken into account if those interests are affected by the use of an exclusive deposit53 – and by post-mining landscape restoration.Project implementation is accompanied by ongoing assessments of workflow. Final approval entails the involvement of the relevant government environmental-protection authorities. Rehabilitation and reclamation comes to an end once a government environmental-protection authority has issued approval for the completion of reclamation work. When the rehabilitation and reclamation is over, the areas in which reclamation has been completed are handed over to the landowners, who are then responsible for the management of the land�In 2015, the 2015 Summary Rehabilitation and Reclamation Plan was consulted with the municipalities affected (Horní Jiřetín, Vysoká Pec, Most), environmental agencies and the Ministry of the Environment� This was followed by the approval of the 30th amend-ment to the development and working face advance plan.(Detailed information: “stakeholder engagement” and underlying legislation on reclamation and rehabilitation, see www.sev-en�cz/rekultivace, pages 4 and 5.)

Basic data on progress in the reclamation of land affected by the Sev.en Group’s brown coal mining operations

The overall area affected by mining operations in 2015, including reclamation, came to 5,034 ha. This land consisted primarily of the ČSA surface mine and its external dumps (4,316 ha) and the Centrum deep mine (Důl Kohinoor a�s�, 718 ha)� Following the transfer of the Dolní Jiřetín working district, Severní

energetická a.s. has been responsible for the rehabilitation and reclamation of land affect-ed by the Centrum Mine’s operations.By the end of 2015, the reclamation of 2,202 ha had been completed on land affect-ed by the ČSA Mine’s operations, including external dumps (this is the aggregate area reclaimed under both the present and past organisational setup). In connection with the deep mining operations at the Centrum Mine, the reclamation of 656 ha had been completed (this includes the Jan Žižka Mine in Chomu-tov). In 2015, a 24 ha Centrum – Dolní Jiřetín reclamation project was launched; none of the reclamation work was completed. At Severní energetická a�s�, reclamation work continued over 617 ha as the company cleared up the consequences of its mining activities�The reclamation of the ČSA Mine at the foot of the Ore Mountains chimes with plans to strike an overall balance in the landscape and achieve environmental equilibrium� Consider-able attention is paid to the final stability of the end side slopes. Reclamation work was also carried out on the ČSA Mine’s former external dumps, specifically at the site of the former Defenders of the Peace Mine (lom Obránců míru) and the Růžodol external dump. The whole gamut of reclamation comes into play here (agricultur-al, forestry, hydrological and others)� In the reclamation of the area covered by the deep mining operations of the Centrum Mine, a sensitive approach to rehabilitating the area is taken that relies, more than anything, on encouraging the spontaneous reintroduction of nature�The area of land still directly affected by mining is constantly contracting in the face of advancing reclamation and also on account of the fact that no new land has been expropriated.

53 The EIA on surface mining within the framework of the currently applicable development and working face advance plan was assessed in accordance with Act No 244/1992. See http://portal.cenia.cz/eiasea/detail/EIA_XXX589. Other plans notified for new sub-projects from 2007-2008 are available in the EIA database under numbers ULK451, ULK315, ULK374. (For the sake of completeness, plans notified for the mining-out of reserves by deep mining from 2014-2015 can be found under numbers MZP428, OV4123, OV4127.)


http://www.Sev-en/rekultivace

http://www.Sev-en/rekultivace



http://portal.cenia.cz/eiasea/detail/EIA_XXX589

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RATIO OF RECLAMATION TO LAND AFFECTED BY BROWN COAL MINING AT THE SEV.EN GROUP’S SITES

2013 2014 2015

(Figures presented in hectares)ČSA Mine

Centrum Mine

TotalČSA Mine

Centrum Mine

TotalČSA Mine

Centrum Mine

Total

Overall area affected by mining operations, including all reclamation, i.e. even at the mine’s external dumps

4,316 718 5,034 4,316 718 5,034 100% 4,316 718 5,034 100%

Of which:

Completed reclamation 2,202 644 2,846 2,202 656 2,858 56.8% 2,202 656 2,858 56.8%

Reclamation in progress 548 50 598 555 38 593 11.8% 555 62 6,173 12.3%

Area still directly affected by mining operations (future reclamation) 1,566 24 1,590 1,559 24 1,583 31.4% 1,559 0 1,559 30.9%

AREAS OF THE TYPES OF RECLAIMED LAND AT THE ČSA MINE AND CENTRUM MINE (ROUNDED)

ČSA Mine Centrum Mine

Reclaimedin 2012

ČSA Mine Centrum MineTotal reclai-med in 2014

(completed + in progress)

(ha)

ČSA Mine Centrum Mine

Total reclaimed to date (completed + in progress) (ha)In progress in 2013 (ha) In progress in 2014 (ha) In progress in 2015 (ha)

Reclaimed land Total

548 50 2,846 555 38 2,858 555 62 2,858 100%

Agricultural 91 0 268 91 0 268 91 0 268 9.4%

Forestry 135 22 1,897 137 22 1,897 137 27 1,897 66.4%

Hydro 3 9 133 3 9 133 3 25 133 4.6%

Other (including parkland)

319 19 548 324 7 560 324 10 560 19.6%


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RECLAMATION COSTS (CZK thousands)

2013 2014 2015

Total volume of work and supplies 112,043 100,422 106,492

Of which: Group’s financial reserve

Of which: ČSA Mine’s financial reserve 8,405 31,000 76,235

Of which: Centrum Mine’s financial reserve

0 721 2,215

Of which: other resources (government resources earmarked for historical environmental damage)

Of which: at the ČSA Mine 103,606 68,701 28,042

Of which: Centrum Mine 32 0 0

Checks on reclamation, 2015:Environmental agencies ran ongoing assessments of progress in reclamation work in 2015 in connection with approved implementation projects as part of regular rehabilitation and reclamation checks. These checks took place on 22 May and 25 September 2015.

Sev.en Group reclamation costs:During 2015, CZK 106,492,000 was spent on reclamation projects, CZK 28,042,000 of which was covered by state cof-fers earmarked to deal with historical environmental damage� Reclamation work under the individual projects was carried out in accordance with the corresponding design documenta-tion and the contracts that had been concluded�

JanovLitvínov

Most

Horní Jiřetín

Jezeří Castle


CentrumMine

ČSA

ČSA Mine

Růžodoldump

Kopistydump

Obráncůmírudump

ČSA internalDump Matylda Reservoir

Most Motor-racing Circuit

Horní Jiřetín Dump

Reclamation in progress

Reclamation completed

External reclamation

Černice

KomořanyCoal PreparationPlant

ChemparkZáluží u Litvínova

Loukau Litvínova

Reclamation by Severní energetická a.s. – situation in 2015

Most

Praha

Brno


141

Current reclamation projects Current reclamation projects comprise indi-vidual implementing projects encompassing operations in progress that are linked to the general reclamation plan. The general plan covers reclamation work initiated, in progress and being completed over the medium term. The 2013-2017 general reclamation plan respects the summary rehabilitation and reclamation plans for the individual sites that are currently active� Those plans are incorporated into the applicable development and working face advance plans and are kept up-to-date in line with progress in mining operations. Technical, economic and other factors emerging from developments since the previous review of

these documents are addressed and incorporated into their updates. These plans also include areas such as reclamation on land in the vicinity of the Jezeří state cultural monument� The current rehabilitation and reclamation plan (the 2015 update) has incorporated the deep mining of brown coal reserves tied to the side slopes.In 2015, reclamation work continued in accordance with mining documentation and in line with applicable decisions at the follow-ing ČSA Mine sites: the side slopes, internal dump and spoil heap at Obránců míru; the Růžodol dump. The Centrum Mine’s deep mining territory is also being rehabilitated�One major project being overseen by Severní

energetická a.s. is the landscaping of the extensive dump at the ČSA Mine – Růžodol Dump (760 ha). The site was reclaimed with a view to being used as a local recreational facility for the town of Litvínov� Some of the land covered by this dump has been re-for-ested. Reclamation of this external dump will be completed in 2018.The financial reserve to clear up the ČSA Mine and the Centrum Mine is funding pro-jects on the side slopes near the Arboretum, in the vicinity of the Jezeří state cultural monument and the northern slopes of the ČSA Mine, rehabilitation at the Eliška III site, and the first stage of rehabilitation at the side slope near Černice. It is also invest-ed in clearing up after mining operations at

the Centrum Mine’s Humboldt II and Dolní Jiřetín sites.A mining company acts as the guarantor for legal rehabilitation and reclamation obliga-tions. Besides the financing provided by the mining company itself, funds are also sourced from government coffers earmarked for the clean-up of historical environmental damage. These resources have been created to ad-dress environmental damage incurred prior to 1993, i.e. before the brown coal companies were privatised. The sub-projects here cover rehabilitation and reclamation at Obránců míru Dump, Růžodol Dump, and previously affected side slopes of the ČSA Mine spreading over a total area of 470 ha:

COSTS SPENT IN 2015 ON REHABILITATION AND RECLAMATION PROJECTS TO TACKLE HISTORICAL ENVIRONMENTAL DAMAGE, BY SITE (CZK thousands)

Obránců míru Dump 7,103

Růžodol Dump – in the vicinity of the airport 2,522

Rehabilitation and reclamation of the ČSA Mine’s north-western slopes 5,106

Total rehabilitation and reclamation (historical environmental damage) 14,731

The environmental damage on the ČSA Mine’s north-western slopes was caused in the 1980s, i�e� before the brown coal companies were privatised. As a result of the environmental boundaries in 1991, the con-sequences of interrupting extraction oper-

ations in Stage I, stalling the mine’s originally projected fluid advancement to Stage II, has been felt in the complexity surrounding the clean-up work, which includes the rehabilita-tion of the north-western slopes at the foot of the Ore Mountains; this is linked to the

advancement of the internal dump. The rehabilitation of the north-western slopes began in 2011 and is a major project in the handling of historical environmental damage� Projects to rehabilitate land affected by past mining also benefit from resources earmark-

ed to clean up historical environmental dam-age. (This is another stage – a rehabilitation and reclamation “upgrade” beyond the scope of obligations laid down by the Mining Act.)

REHABILITATION PROJECTS TO TACKLE HISTORICAL ENVIRONMENTAL DAMAGE (CZK thousands)

Reinforcement and landscaping of the Růžodol Dump’s slopes 150

Saxonia – rehabilitation and reclamation 6,672

Rerouting of the Vesnický potok watercourse 6,489

Total rehabilitation (historical environmental damage) 13,311

Government resources to clean up historical environmental damage have been used to

implement projects amounting to CZK 13,311 thousands�


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Rehabilitation and reclamation, preserving environmental mining boundaries

The Summary Rehabilitation and Reclamation Plan was drawn up as part of the policy behind the rehabilitation and reclamation and comprehensive clean-up of land following termination of mining operations at the ČSA Mine. The plan was part of the approval process for the start-up and continuation of mining and is updated on a regular basis. The most recent update was in 2015. Hydrological reclamation is planned for the clean-up of the ČSA Mine and all other surface mines in north-western Bohemia. This entails the sealing of the remnants of the coal seam and the bottom of the quarry, the preparation of the surrounding end slopes, and the flooding of the residual pit. This will give rise to a large 690 ha lake, with a maximum depth of 130 m and an average depth of 34 m. The total area reclaimed will be just above 2,800 hectares, of which 26% will comprise a body of water, 8% farmland, 17% forestland, and 49% other areas (parkland, recreation areas, and sites intended for professional or industrial use).This type of reclamation is not the ideal option for the ČSA Mine upon termination of mining at the territorial mining boundaries because the mine has always been designed for fluid advancement, i.e. its transfer to Stage II beyond the territorial boundaries has been anticipated.The approval of the mining boundaries (under Government Resolutions 444/1991 and 827 of October 2015) for the ČSA Mine also affected landscape planning. There is a dearth of material that can be used for the subbasing of the end slopes in the Ore Mountains, and requirements relating to the coordination of landscape planning and the technical solution for the clean-up of the ČSA Mine – especially as regards final rehabilitation and the stability of the end slopes – are intensifying�

The final situation planned for the reclamation and rehabilitation of the land, assuming adherence to the mining boundaries, i.e. upon termination of mining operations at the ČSA Mine in Stage I, is depicted in the figure showing ČSA Mine rehabilitation and reclamation in Stage I. (Source: Summary Rehabilitation and Reclamation Plan – Stage I.)

Horní Jiřetín

Horní Jiřetín Dump

RůžodolDump

ChemparkZáluží u Litvínova

Obránců mírudump

KopistyDump

Clean-up and reclamation methods

forestry

agricultural

hydro

landscape vegetation

ČSA internal dump

ČSA Lake 700 ha

Černice

Jezeří Castle

ČSA Mine rehabilitation and reclamation in Stage I

Most

Praha

Brno


143

RECLAMATION OF LAND IN THE CHVALETICE AREA

One area of operation at Chvaletice Power Station (Sev�en EC, a�s�) is the reclamation of the former rhodonite mine, where pyrite was extracted� The mine is located close to Hornická čtvrť (“Mining District”) in the municipality of Chvaletice. Power plant ash was deposited hydraulically by means of sluicing with dredging pumps between 1975 and 1997. Energoprojekt Praha subsequently drew up a study for building permit proceed-ings, “Set of structures for the staged res-toration of the landscape with stabiliser”, for which a building permit was issued. Building permits (building notifications these days) are issued by the locally competent Building Authority in Chvaletice. Municipal represen-tatives are kept informed of the progress in these structures and have the right to attend

inspections. Reclamation in the area around the municipality of Chvaletice is consistent with the programme entitled “Reclamation of Land in the Chvaletice Area”, Chvaletice’s town planning and the strategy “The Pardu-bice Region and Environmental Protection”� The overall size of land owned and used for production by 7EC is 149.4 ha, of which the area intended for reclamation is 91 ha�Stabiliser is deposited in accordance with the approved Land-use Plan and in line with documentation for the set of structures within the scope of the “Reclamation of Land in the Chvaletice Area”, i.e. this is no “fly ash dis-posal site”. Stabiliser, as a certified construc-tion product, is a mixture of fly ash, slag, FGD gypsum, mixing water and lime made according to an approved formula. Testing in 2000 showed that stabiliser leachate in no way endangers water, other components of the environment or the health of the local

population. The stabiliser leachate was shown to be less harmful than leachate from the bedrock (rocks)� Ever since, the stabiliser has been deposited free of charge.First of all, the eastern part of the reclamation was completed in line with the building permit for each structure in 2004/2005. In 2005, the documentation entitled “Set of structures in the Reclamation of Land in the Chvaletice Area – Western Part” was drawn up and approved as a whole in the land-use plan. This plan comprises 12 structures. In March 2016, the fifth structure in the sequence was completed. Since an amend-ment to the Building Act, enacted by Act No 350/2012, took effect on 1 January 2013, this construction work has been carried out on the basis of building notifications, with building approval granted by the locally competent building authority in Chvaletice. In response to the notification of the sixth struc-

ture, that authority approved commence-ment of the corresponding construction in 2016. This sixth project will entail the piping of the second part of the Chvaletický potok watercourse� The water unit of the building authority in Přelouč granted a building permit for this in December 2015.It is anticipated that stabiliser will be deposited until mid-2030, by which time 14.11 million m³ of material will have been used for this purpose. Sev.en EC, a.s. fully finances its reclamation work itself� In addition, in accordance with Act No 185/2001, the Waste Act, a financial reserve of CZK 22.47 million had been accumulated as at 31 December 2015� This reserve remains intact� In 2015, direct reclamation costs came to CZK 15�214 million� Reclamation work is outsourced in tendering procedure.

RECLAMATION OF LAND IN THE CHVALETICE AREA (ha)

2013 % 2014 % 2015 %

Total area intended for reclamation 91 100 91 100 91 100%

Of which:

Area remaining in use (intended for future reclamation) 0 0 0 0 0 0

Completed reclamation 59 64.8 61 67 65 71.5

Reclamation in progress 32 35.2 30 33 26 28.5

Reclamation by depositing stabiliser makes it possible to attain an elevation of 260 m in order to interact with the original landscape. Reclaimed parts will then be maintained for three years with grass-mowing and arboricul-ture. This will dissipate the division between mining areas and the original landscape.

The result will be a 91 ha landscape, with cover primarily comprising trees and shrubs (dominated by ash, rowan, pine, pear and aspen trees), that links up to the existing countryside�The eastern part, spreading over some 59 ha, has already been completed and re-

claimed in full� Grass has been sown, trees and shrubs have been planted on the newly formed benches, and trees have already colonised the upper parts. Stage II of the set of structures – the western part, where 3.42 million m3 of stabiliser is projected to be de-posited by 31 December 2020 (this estimate

is based on the levels of ash produced) – is now in progress.In 2015, no complaints or emergencies had to be tackled in the reclamation process.


144

HIPODROM MOST a.s. – SUCCESSFUL PROJECT TO REHABILITATE VELEBUDICE DUMP(www.hipodrom.cz)

HIPODROM MOST a.s. was formed in 1996. Its principal lines of business are the operation of a racing and training track and other related services, the organisation of functions and sports events, and advertising and pro-motional activities. The company carries out all of its activities at its complex on the site of the Velebudice Dump, one of the largest dumps in the former North Bohemian Brown Coal District with a total area of 790 ha. The track attracts more than 100,000 visitors every year�The company’s current shareholders are Severní energetická a�s� (57�54%), the Town of Most (42.09%) and EQUI Bořeň Svinčice spol. s.r.o. (0.37%).As at 31 December 2016, the company had six employees (the average monthly number in 2015 was nine, of whom four were women and five were men), all full-timers on permanent contracts.

Complex development The sports complex is constantly being expanded and is an internationally acclaimed Category A racecourse catering to flat racing and steeplechases alike. The main 30 m wide track runs for 1,800 m and has a straight of 1,200 m. A well-maintained 6 km training track is available at the complex to train racehorses. Besides racing, the complex managed by HIPODROM MOST a.s. also hosts showjumping events in its sand arena. In 2015, the Most racetrack was the site of five race meets and eight showjumping events. The top-class facilities here were also used for training programmes and assorted social and cultural events�Besides racing and showjumping, other social and sports events took place at the racetrack this year. One new fixture in the calendar was Summer of Caprice (Rozmarné léto), a festival serving up music by visitors’ favourite bands. As usual, Miners Day was held in September and the Senior Summer Gather-ing took place in August. One of the sports events was the Extreme Bike race meet�The race circuit also played host to an in-line camp and summer horseriding camps.

Employee and visitor safetyIn 2015, no serious personal injuries were reported. Employees receive periodical train-ing so that they are competent to prevent risks related to occupational safety and fire protection. Employee training and checks on occupational safety are outsourced to Kontrol s�r�o�There were no visitor accidents or injuries in 2015� Fire extinguishers and hydrants are inspected annually. The Fire Rescue Service ran a check on firefighting arrangements at the company in 2015. Safety signs warning of potential dangers and hazards have been installed on company premises. Instructions on how to sound the fire alarm are visibly on display. When the racetrack is closed, the external company Falcon Securitas, s.r.o. is responsible for guarding the premises and for operational surveillance.

Outlook for 2016In response to the phase-out of coal mining at the ČSA Mine, on 25 April 2016 Severní energetická a�s� decided to sell its majority shareholding in HIPODROM MOST a.s. The public share auction will take place at the racetrack on 27 May 2016� The auctioneer is Patria Finance, a�s�

The Government’s decision to preserve mining boundaries is forcing Severní ener-getická a�s� to gradually decommission its mining technology and reduce its workforce� The Government Resolution also has a negative impact on other areas of the Group’s operations. The horseracing complex is one such example. The shareholders are no longer in a position to support the racetrack, which has established itself as a part of re-gional life over the course of 20 years. Never- theless, they are keen for this unique work of reclamation to be developed further in the future, hence they are offering their majority stake to a new investor in the upcoming auc-tion� This situation will in no way affect the programme planned for the 2016 season.The main aim is to hold three top-quality race meets and seven days of showjumping events�The tasks for 2016 remain the expansion of the horseriding on offer to the public, children’s camps, children’s days for nur-sery schools and primary schools in the Most district and surrounding area, a sports and cultural gathering for seniors, a cross-country run and the ever-growing sports discipline of footballgolf�


http://www.hipodrom.cz

VII. COMMUNITIES AFFECTED

146


Stakeholder engagement, impact assess-ments and development programmes are borne along by Severní energetická a�s� in the field of coal mining, and by Sev.en EC, a.s. in the field of energy production. All of the fundamental activities and projects under preparation within the scope of these companies’ operations (100%) include an environmental and social impact assessment, encompassing:

Environmental and social impact assessments and ongoing monitoring Environmental and social impact assess-ments encompassing local communities and other stakeholders are conducted on 100% of the Sev.en Group’s production operations. Environmental impact assessments, ongoing monitoring of the environmental impacts, and stakeholder engagement are fully incorporated here (this covers the EIA process or amendments to the Integrated Permit)� Im-pact minimisation management at the level

of individual technologies is secured by the various technological procedures in place at each company. These rules apply to 100% of the Sev.en Group’s production operations. A conceptual approach to minimising the impacts of brown coal mining throughout mining operations is guaranteed under the approved development and working face advance plan, which includes an environmen-tal and social impact assessment. The plan encompasses both safety and environmental protection measures, reflecting the legitimate interests of municipalities, legal entities and private individuals who are parties to the proceedings, e.g. the measurement of dust and noise levels in the protection zones that are set up. The concept paper on impact minimisation during power and heat generation at Chva-letice Power Station is the Integrated Permit, which includes an environmental and social impact assessment, ongoing monitoring of pollution, operating rules and emergency

response plans. Emissions and noise are routinely measured and progress in reclamation is tracked. Emer-gency response plans are examined regularly and emergency preparedness is verified. The impact on social conditions in the region is al-ways examined from the point of view of the strategy for phasing out or developing Sev.en operations in cooperation with trade unions and community representatives.Summary information on environmental and social impacts and benefits, as well as on fundamental risks and prospects stemming from the Sev.en Group’s operations, have been covered by regular non-financial report-ing for three years�

Public disclosure of the results of environmental and social impact assessments Extraction plans for which mining per-mits are to be issued are required by Act No 100/2001, as amended, to undergo an

environmental and health impact assessment (an EIA).54 In 2014, Severní energetická a�s� prepared a plan for the extraction of some of the coal reserves tied to the end side slopes of the ČSA Mine by means of the longwall working deep mining method. Notification of the plan, accompanied by the environmental and human health impacts assessed, was submitted to the Ministry of the Environment in scoping and screening procedure. Acting on the information provided in the notifica-tion, written statements from the admin-istrative authorities affected, the relevant local administration units and the public, and scoping and screening procedure held in accordance with the principles set out in Annex 2 to the Act, the competent authority (the Ministry of the Environment) issued its finding in these proceedings on 31 March 2015, stating that the plan submitted would have no significant environmental impact.

Impacts on and benefits for municipalities ASPECT: LOCAL COMMUNITIES (G4-SO1)

Within the Group, the relationship with the region and local communities is formed by several stand-alone schemes pursuing a common goal: to aim for the best possible, most efficient working environment and employee care, the rehabilitation of land affected by mining, the minimisation of environmental impacts caused by the Group’s production work, and in particular the development of sound relations with neighbouring communities. This approach is one of the pillars of basic design documents, as can be seen – when it comes to coal mining – in the development and working face advance plan, the policy for the management of the OSH system and EMS at 7EC, and the power station modernisation project, as well as in contingency plans, crisis communication and – above all – regional cooperation projects.

In 2015, the Sev.en Group garnered the following awards:– Taxpayer – Award made by the Ministry of Finance and the General Financial Directorate for ranking among the top 20 corporate income tax payers

– Socially Responsible Company – Special mention in the competition “Ústí nad Labem Regional Prize for Corporate Social Responsibility”


Impacts on and benefits for the municipalities affected

Percentage of operations with environmental and social impact assessments

Group % 100 100 100

IMPACTS ON AND BENEFITS FOR MUNICIPALITIES

54 http://portal.cenia.cz/eiasea/detail/EIA_OV4127 – 2015 – Amendment to the ČSA DWFAP plan – Extraction of some of the coal reserves tied to the end side slopes of the ČSA Mine by means of the longwall working deep mining method. http://portal.cenia.cz/eiasea/detail/EIA_OV4123 – 2014 – Development and working face advance plan for the Centrum Mine’s South Field: the technical solution for the plan entails taking up the option of the effective longwall working method. http://portal.cenia.cz/eiasea/detail/EIA_MZP428 – 2014 – ČSA DWFAP – Extraction of some of the coal reserves tied to the end side slopes of the ČSA Mine by means of the room-and-pillar deep mining method.

http://portal.cenia.cz/eiasea/detail/EIA_OV4127 – 2015

http://portal.cenia.cz/eiasea/detail/EIA_OV4123 – 2014

http://portal.cenia.cz/eiasea/detail/EIA_MZP428 – 2014

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55 Internet reference to the public document comprising the ECHAS integrated permit: http://www.mzp.cz/www/ippc4.nsf/$pid/MZPLFGP1NSVM

The process of amending the Integrated Permit issued for Chvaletice Power Station (7EC)55 took place in 2015 in accordance with Act No 76/2002 (Amendment to an Integrated Permit (IP) – Ninth Amendment by a Decision of the Regional Authority of 2 November 2015) on integrated pollution prevention and control, and fully encompasses an assessment of environmental impacts and the ongoing monitoring thereof, including stakeholder engagement�Assessment results (in particular the reclamation progress, the monitoring of pollutant and noise emissions) (pages 122-5, 138) are regularly passed on to designated stakeholders (municipal representatives, state administration) and are published in the annual non-financial report. With development/phase-out plans, social environmental impacts are assessed and consulted with the relevant stakeholders (see, in particular, the question on the impacts of terminating coal mining at the ČSA Mine and Centrum Mine, (pages 64-5), and the Chvaletice Power Station Overhaul Project (pages 74 and 121)).

Stakeholder engagement plans and local community consultation As far as the Group is concerned, the local community’s opinions of its activities are a fundamental point of reference when deciding on the direction to be taken by its further development, including regional cooperation. Key events are consistently consulted with

stakeholders, especially representatives of the communities affected (pages 35-40, 48). The Sev.en Group’s companies try to work with the representatives of municipalities neighbouring the Group’s operations to devise a mutually consensual form for the re-porting of Group benefits and impacts against the background of sustainable development (see the tables below). All stakeholders are given the opportunity to contribute to the content of the non-financial report (http://www.sev-en.cz/cz/spolecnost/dotaznik.html)� The relevant municipalities, bodies of state administration and supervisory authorities are always sent feedback requests directly�Several times a year, representatives of the Sev.en Group’s management, or employees from the communication department, meet representatives of municipalities in the vicin-ity of the ČSA Mine and Chvaletice Power Sta-tion� They discuss the needs of the individual municipalities and the prevailing situation within the Sev.en Group. If a topic is jointly identified for broader consultation, e.g. within municipal bodies, the Sev.en Group’s repre-sentatives are given an opportunity to deliver a presentation at a meeting of the municipal council or assembly. Representatives of mu-nicipalities in the vicinity of the ČSA Mine and Chvaletice Power Station are free to contact the power station’s management directly at any time�As part of the project to continue brown coal mining, which also encompassed potential resettlement, in May 2015 Severní energetická a.s. published “Fundamental

Principles of Compensation” after consultation with all stakeholder groups (see page 66.) The Group is actively consulting the negative impacts of the termination of mining in 2024 with stakeholders (for more details, see pages 35-8, 64-5). The basic concept paper for the termination of mining operations is the approved summary rehabilitation and reclamation plan, which includes consultation with the local authorities of the municipalities affected and other stakeholders whose interests are at stake� (See www.sev-en.cz/rekultivace and page 138.) The project to overhaul Chvaletice Power Station fundamentally reduces the current adverse impacts (emissions, vibrations), and local communities are kept abreast of how it is progressing (see pages 38-40.) The assemblies of local municipalities have given a positive reception to the extended life of the power station, particularly because of the effect this will have on employment in the region. Representatives of municipalities in the vicinity of Chvaletice Power Station can telephone its director directly. Unexpected situations in the production of brown coal or electricity are governed by elaborate emergency response plans; where issues would also affect neighbouring com-munities, the municipal representatives are informed (see pages 105-9).Since 2014, the Sev.en Group’s employees have had the opportunity to play a role in the development of local communities under the “Internal Sedm for You Grant” scheme, which has been drawn up to promote special-inter-

est, cultural and sports activities and clubs in which the Group’s employees are involved (see the following subsection – “Internal grants”)�Formal local community grievance pro-cesses (for more details, see pages 51-53)At all of the Sev.en Group’s operations, all stakeholders can draw on several grievance mechanisms, and the possibilities here have now been expanded by the newly adopt-ed Code of Ethics. Complaints may also be submitted directly to the management of the individual companies or to the competent state authorities�

Occupational health and safety commit-tees (employee representation bodies) At all companies, at 100% of production operations, there are occupational health and safety committees, on which the represen-tatives of employees or trade unions sit and jointly take decisions (for more details, see pages 98-99).

Regional development programmes (see the following subsection – “Regional cooperation”)The Sev.en Group has drawn up develop-ment programmes reflecting the needs of local communities, particularly under the programme of partnerships with municipal-ities (taking the form of financial donations for approved projects) and through internal employee grants. Numerous projects are structured around support for the activities of vulnerable groups, especially children.

http://www.mzp.cz/www/ippc4.nsf/$pid/MZPLFGP1NSVM

http://www.sev-en.cz/cz/spolecnost/dotaznik.html

http://www.sev-en.cz/cz/spolecnost/dotaznik.html



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Reporting on the benefits for and impacts on local communities

OPINIONS OF THE REPRESENTATIVES OF MUNICIPALITIES AND THE ÚSTÍ NAD LABEM REGION CONCERNING THE PRESENCE OF THE ČSA MINE (APRIL 2015 AND DECEMBER 2015)*

Municipalities in the Most district

Most(December 2015)

Louka u Litvínova(December 2015)

Brandov(April 2015)

Meziboří(December 2015

Klíny(April 2015)

Mariánské Radčice(April 2015)

Vysoká Pec(December 2015)

Vysoká Pec(December 2015) Position of the Ústí nad Labem Region(December 2015)

What are the main problems in your municipality?

Unemployment, social excluded communities, outflow of young and educated people, poor job prospects, poor air quality – dust limits have been exceeded (due to industry, transport and residential heating with solid fuels).

- Unemployment- The municipality’s futureUnemployment at 31 October 2015 – 10.34%

Arranging for prompt medical assistance, maintaining the combined mountain school, jobs are in short supply

Improvements in infrastructure, heat management, sports grounds

Repairing municipal infrastructure, establishment of an arboretum

Multi-family buildings have reached the end of their life, financing of a sewerage system project

Maintaining the standard of service provision

Unemployment, education, the level of innovation, transport infrastructure, security (social exclusion)

Which of these issues are you able to tackle or influence?

Socially excluded communities – intensive work by companies specialising in social issues Transport

An application has been filed with the Ministry of the Environment and the Ministry of Industry and Trade to scrap the protected mineral estate in the municipality

The school to some extent, employment of the local population in cooperation with the Labour Office

All of them, but any help is welcome.

All of those listed

If funding is secured, yes

All of them.

Unable to address a number of the listed problems directly. The region is pressing the central authorities and, where possible, it is taking its own action.

How important is Sev.en’s support for your municipality?

In 2015, Severní energetická a.s. assisted the town with funds amounting to 500,000

Solid backing for projects – the general public (e.g. in 2015: purchase of gardening equipment – landscaping and clean-up of public spaces)

It is fundamentalYes – economic – support for young people

----It does help, but it is not a big amount

The company is our biggest provider of funds

Sev.en’s assistance is beneficial for the area, the region, local government and other entities; Sev.en gives them employment and provides work for subcontractors.

Benefits of the ČSA Mine

The benefit is the work available.The mining organisation offers plenty of jobs

EmploymentSignificant – the money provided makes it possible to channel the funds we save into other activities (school, sport in the municipality)

Increase in the security of those who live here, improvements in the quality of service and the overall appearance of the municipality

Economic support, covering cultural, sports and educational activities.Employment

Employment, social stabilisation, business support

EmploymentDirect support for projects. Employment.

Financial support for projects implemented by the Ústí nad Labem Region, development of education, employment

Risks arising from ongoing mining at the ČSA Mine

Poor image of the town – the prevailing opinion is that coal mining is directly linked to poor-quality environment and a devastated landscape

--- Unable to assess ---

Environmental impacts, impacts on local agglomerations

None direct – increased dust levels and this is not an attractive location to buy or build a house

Appropriation of some of the land. Slightly raised noise and dust levels (especially in the summer).

Environmental impacts

Assessment of Sev.en’s communication with municipalities

Communication is good Very good

We would certainly welcome regular communication on cooperation.

Very goodWe are kept sufficiently informed.

Sufficient Very good

Communication with regional representatives is rated positively

Population 66,417 7,251 227 4,705 114 472 1,050 approximately 820,000.

* Unfortunately, one of the three municipalities in the vicinity of the ČSA Mine – Horní Jiřetín – did not reply to the questionnaire


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MUNICIPALITIES’ OPINION OF SEV.EN EC, A.S. (CHVALETICE POWER STATION) (DECEMBER 2015 – JANUARY 2016)

Municipalities in the vicinity of Chvaletice Power Station

Trnávka Přelouč Chvaletice Kojice ŘečanyKladruby nad Labem

Břehy

What are the main problems in your municipality?

The state of communication

1. absolute dearth of funds needed for the town’s sustainable development2. excessive traffic congestion, scarcity of parking facilities3. utilities are missing (construction of new houses), the technical condition of roads and pavements is inadequate

Broken paths – they need to be reconstructed. Because of the size of its population, subsidies are beyond Chvaletice’s reach. Grant schemes are currently only available for municipalities with populations of between 500 and 2,000

The condition of road II/322 (property of Pardubice Region). The road is not being repaired due to the planned bypass around Kojice, but this work is constantly being postponed. Operation of heavy agricultural machinery in the municipality.The condition of local roads and pavements.

Pollution of the air and vegetation, noise levels from the power station

Construction or modernisation of utilities (sewerage system), environmental care, building maintenance and repairs, landscaping of public space

One problem that is nearly 10 years old is the canalisation of the Elbe – section: Pardubice – Přelouč – Chvaletice. The problem of transportation between Břehy and Přelouč is linked to this; fundamental reduction in the risk of flooding Sufficient funds to complete projects that have been started in the municipality

Which of these issues are you able to tackle or influence?

We are gradually tackling the condition of the roads as and when funds allow

Regarding 2 and 3: partially – limited by the avenues of funding open to the town

They could be addressed if enough money was available

Operation of heavy agricultural machinery in the municipality.The condition of local roads and pavements

None Most tasks can be addressed

We would welcome any financial assistance and cooperation.

How important is support for your municipality?

The power station does not cooperate with our municipality financially

Sev.en EC, a.s. financially supports major projects in the town; for the town this is a source of significant assistance in a situation where it can provide very little funding for cultural events

It is definitely beneficial, but it does not amount to much

For a municipality with a budget of 5 million, any help from sponsors is important. We use it for smaller projects linked to children and young people, sport.

Very significant, it compensates at least partially for the negative impacts that the power station has on the environment in the municipality

We welcome environmental assistance – the restoration of vegetation

Chvaletice Power Station has always been a good partner for us, we are now ready and waiting.

7EC benefits

Employment, it provides heating for some of the companies in our municipality

Sev.en EC, a.s. is a prestigious and stable employer for several dozen people from the town and is a major sponsor of cultural events in the region.

Job opportunities, financial support

A leading employer.Kept the power station in operation after buying it from ČEZ a.s., impacts on other jobs in the power station’s complex.Sponsorship.

Employment and occasional financial contributions to the primary school and nursery

Support for care of vegetation

The main benefit is that it provides jobs to many of our inhabitants. Looking to the future, it could also contribute to the further positive development of the municipality.

7EC impacts

Unfortunately, there are also negative impacts, especially the levels of dust

Only positive ones

The environment is encumbered and polluted by dust; increased strain on local roads.

Positive, see the point above, we do not find any negative ones

Air pollution, and residents’ property gets dirty when the units are started up and smoke is discharged from the high chimney, which contains ash deposit.

Occasional fallout

Employment is positive, the transportation of fly ash, slag and stabiliser by lorry through our municipality is negative.

Assessment of 7EC’s communication with municipalities

People in the municipality are generally happy with communications. Any of the problems that occasionally arise are addressed flexibly with the management.

Excellent (compared with other employers in the region).

Very positive

Very good – we are kept informed by means of internal documents that are delivered, along with other materials, press releases, invitations to open days, and meetings with mayors. Thanks

Communication is excellent. Excellent

It appears to be developing along positive lines.

Population 218 9,200 3,100 440 1,350 640 1,000


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Regional Support (Social Investment) – Ústí nad Labem Region

The programmes used by Severní energetická a.s. as a vehicle to contribute to the development of the Ústí nad Labem Region have clearly formulated rules approved by the board of directors or a management meeting, and project implementation is subject to public checks by local inhabitants. All this underpins the transparency of the entire process of financial support provided to the region. In 2015, within the scope of regional policy, Severní energetická donated more than 12 million to the region and state beyond the statutory levies. Key long-standing recipients include the Ústí nad Labem Region, our partner municipalities in the Most district, and the Association of Municipalities of the Ore Mountains. We have also made repeated contributions to the Podkrušnohoří Technical Museum, the HC Verva junior ice-hockey team, and the Destination Agency in the Ore Mountains. Another interesting form of support is our internal “7 for You” grant scheme, which has been drawn up to promote special-interest, cultural and sports activities and clubs in which our employees are involved. Most of these resources also go towards helping out in the Ústí nad Labem Region�

Direct regional development support Regional support is rooted in long-term partnerships with municipalities. In 2015, Severní energetická a.s. continued its cooperation with the Ústí nad Labem Region and with towns and villages in the Most district. This cooperation relies on deeds of gift. The municipalities involved are: Meziboří, Lom, Louka u Litvínova, Mariánské Radčice and Vysoká Pec. It also cooperates with municipalities in the mountain area, specifically: Nová Ves v Horách, Hora Sv. Kateřiny, Brandov, Český Jiřetín and Klíny.

Regional Support – Pardubice Region

Sev.en EC, a.s. (Chvaletice Power Station) mainly supports the region by providing donations and sponsorship, especially in education, sport, the arts, charity and the leisure time of children and young people. Municipalities and various organisations established, operating or holding events in the Pardubice Region are encouraged to apply for support as a matter of priority.Projects are accepted throughout the year in the form of support applications. These are then subject to approval on a quarterly basis at a meeting of the company’s board of directors. Decisions on the allocation of support are taken by the company management. Projects backed by 7EC in the Pardubice Region are approved by the board of directors, with project implementation subject to public checks by local inhabitants. All this contributes to the transparency of the entire process of financial support provided to the region. In 2015, we received no complaints concerning regional support.

Infrastructure investment ASPECT: INDIRECT ECONOMIC IMPACTS (G4-EC7)

The Group believes it is essential to contribute to improvements in the standard of living and in the handling of problems in the regions in which it operates and where most of its employees live. This is why the Group’s regional policy focuses on the Ústí nad Labem Region (and in particular the Chomutov and Most districts) and on the Pardubice Region. The Group contributes to the development of the Most Racecourse and to the support of other entities from the non-profit sector.

The Sev.en Group assists local communities directly by providing them with gifts or sponsorship, and also by means of internal employee grants. Rules on sponsorship, donations and grants are addressed in publicly declared schemes.

Needless to say, the scope of regional cooperation hinges on the economic development of the company and on the efficiency of collaboration with the representatives of employees, municipalities and organisations in the region.

In a situation where the ČSA Mine phase-out programme is continuing in response to a Government Resolution rather than on grounds of non-profitability, where the Centrum Mine is to close in 2016 in a related move, and where grid electricity prices are expected to be low in Central Europe, the Sev.en Group will be rolling out a new regional support model in 2016.


Infrastructure investment Regional support Group CZK thousands 11,282 14,548 14,152.6

REGIONAL DEVELOPMENT SUPPORT


151

Since 2007, the leadership of the town of Horní Jiřetín has refused to work with the Group, but support is available for local organisations who put forward their own applications. The partnership agreement with the town of Litvínov came to an end in 2012 and as yet no agreement has been reached on an extension. We continue to communicate with the town’s management. Local associations and organisations that have submitted their own individual applications receive support directly within the scope of year-round sponsorship.The lines of support are updated every year at a meeting between mayors and representatives of Sev.en with a view to reflecting the partner municipalities’ needs. In particular, they encompass events and projects that would be impossible without the company’s assistance on account of the budget available to the individual municipalities. In 2015 alone, this form of cooperation netted the Ústí nad Labem Region and municipalities CZK 4�25 million�In 2015, we received no complaints concerning regional support.

Significant projects supported by Severní energetická a.s. in local municipalities:Ústí nad Labem Region – Donation for environmental and educational purposesLitvínov – Money from Severní energetická a.s. was used in the scope of year-round sponsorship to support the Association of Municipalities of the Ore Mountains, the Podkrušnohoří Technical Museum, Pro Litvínov and the HC Verva ice-hockey team.Vysoká Pec – Donation for documentation for the new primary school and nurseryLom – The municipality used its donation for sports, cultural and social purposes.Meziboří – Donation for sports and social purposes.Louka u Litvínova – The municipality used its donation for environmental purposes.Mariánské Radčice – Donation for cultural events during 2015.

Year-round sponsorshipIn 2015, obligations for the support of a particular activity and specific and short-term events will once again be accepted on a year-round basis in quarterly approval cycles in line with publicly notified rules.56 Longer-term projects benefiting the broadest possible audience are given preference. As a rule, private individuals are not supported. Priority goes, for example, to sports clubs, teams, children’s and young people’s organisations and facilities, educational projects, institutions working with the handicapped, and non-profit organisations. The choice of sponsorship applications that are to be supported is approved on a quarterly basis by the strategic communication director and, subsequently, by the board of directors of Severní energetická a�s� In 2015, 20% of incoming applications received assistance. In 2015, projects worth more than CZK 7 million were supported.

Cooperation with schools – work experience and student projectsAware of the fact that a large proportion of its employees are aged over 50, the company aspires to attract new employees. Cooperation with schools focuses primarily on internships and work experience for students at affiliates. One of the traditional ways in which schools and students are supported is the involvement of specialist employees in the preparation of dissertations.

In 2015, 71% of support applications were approved and 16.3% were rejected. Another 12.7% of the applications received were forwarded to the town of Chvaletice under a partnership agreement or were granted in-kind assistance. In 2015, cooperation continued with local municipalities under two partnership agreements, one with the town of Chvaletice, the other with the municipality of Břehy. Lines of support reflecting municipalities’ needs were updated within the scope of these agreements at a meeting with mayors�

Direct regional development supportSev.en EC, a.s. (Chvaletice Power Station) supports the region where it operates and where most of its employees live. Support is structured around municipalities neighbouring the operations of the power station, in particular the towns of Chvaletice and Přelouč and the municipalities of Zdechovice, Řečany nad Labem, Kladruby nad Labem, Trnávka, Břehy, Hlavečník, Tetov and Kojice. In 2015, 7EC backed 40 projects worth an aggregate of more than CZK 2 million. Projects supported included donations for the planting of trees at the Kladruby nad Labem National Stud Farm and for the repair of pavements in Tetov, along with the traditional partnership in the Award of František Filipovský Prizes for Best Dubbing and a national junior football tournament, both of which were held in Přelouč. The company has also long been a partner of many sports clubs and cultural events in the area. The main aim of the project is to foster quality relations with local communities and strive to improve the quality of life enjoyed by the regional population.

Assistance for Pardubice regional fire rescue service unitsThe Internal Fire Rescue Service of Sev�en EC, a�s� (Chvaletice Power Station) contributes to emergency rescue in the region as a basic unit of the Czech Republic’s integrated rescue system. In particular, it covers the cadastral community comprising the municipalities of Chvaletice, Zdechovice, Trnávka and Řečany nad Labem. Beyond the confines of the power station, the 7EC Fire Rescue Service responds to calls from the Regional Operation and Information Centre as a basic unit of the Czech Republic’s integrated rescue system. In 2015, for example, it responded to fires (on three occasions) and other emergencies (pre-medical assistance on three occasions)�


56 http://www.sev-en.cz/cz/spolecnost/index.html

http://www.sev-en.cz/cz/spolecnost/index.html

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Excursions and the Coal Safari Project in 2015In 2015, Coal Safari, a joint project between the current Severní energetická a.s. (formerly Litvínovská uhelná a.s.) and Vršanská uhelná a.s., was implemented over a six-month period (May – October). This way of organising excursions, where – since 2009 – production sites have been made accessible to the general public while still in full operation, once again attracted huge interest in its sixth official year. At the ČSA site, 53 planned excursions and a number of special excursions were carried out. In total, 3,600 members of the public took part in the project, more than a third of whom visited the ČSA site. In 2015, the project was accompanied by a competition on the theme of Most – European City of Sport. The Coal Safari’s own website, the electronic booking system used to make payments for excursions, and Facebook (used to keep the public informed and hold the competition) were again the channels for communication with the public at large. The proceeds from 2015, totalling nearly CZK 200,000 (of which Severní energetická a.s. accounted for CZK 114,000) were donated to the Ore Mountains Destination Agency by Severní energetická. The aim was to promote the development of tourism in the Most district. The Coal Safari Project is continuing in 2016 as a joint project between the two companies above.

Support of education and excursions at the power stationSev�en EC, a�s� (Chvaletice Power Station) is involved in supporting technical education at all levels of the education system. It offers primary, secondary, post-secondary vocational and higher education institutions specialist excursions to the power station’s operations. Almost 1,000 students of primary, secondary and higher education institutions visited the power station on school excursions. In July, the Energytour project of organised excursions for the general public was launched and attracted 137 people. Almost 300 visitors attended the open day on 13 June. Over 2015, 1,562 visitors took up the opportunity to come and see the power station. In its cooperation with schools, 7EC arranges for secondary-school students to have work experience and university students to have specialist internships, and helps with school-leaving examination and seminar papers. In 2015, three high-school students had work experience at the company.


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REGIONAL SUPPORT FROM SEVERNÍ ENERGETICKÁ A.S. IN 2015

Company name Municipality Amount (CZK thousands)

Support provided as a donation

Municipalities

donation for cultural, sports and social purposes Town of Meziboří Meziboří 700

donation for cultural events during 2015 Municipality of Mariánské Radčice Mariánské Radčice 150

donation for documentation for the new primary school and nursery Municipality of Vysoká pec Vysoká pec 125

donation for environmental and educational purposes Ústí nad Labem Region Ústí nad Labem 2,500

presentations at town events Statutory City of Most Most 500

donation for environmental purposes Louka u Litvínova Louka u Litvínova 125

donation for sports, cultural and social purposes Town of Lom Lom 175

Support of regional organisations or projects

presentation at the Czech Cup Krušnoman Triathlon Team Litvínov 30

presentations at showjumping competitions in 2015 Jezdecká společnost Most 50

presentation at an exhibition of photographs ECOCONSULT PONS Most 500

donation for cultural and sports purposes Municipality of Boleboř Boleboř 25

36 tonnes of coal Most District Charity Most 82.588

donation for fire protection purposes Josef Hevák Ústí nad Labem 15

support of a sports ground TJ Sokol Bečov Bečov 12.5

donation for educational purposes Pro Litvínov Litvínov 70

donation for educational purposes Hornická společnost Most 5

24 tonnes of coal (single-nut) Aeroklub Most Most 53.169

presentations at District Chamber of Commerce events District Chamber of Commerce Most 150

support of a sports ground Most Sports Hall Most 30

support of a sports ground TJ Baník Meziboří Meziboří 5

Wine Days Jiří Puc Most 20

advertising at meetings of association members WomenNet o.s. Litvínov 30

support of a sports ground TJ VČSA Ervěnice Ervěnice 10

support of a sports ground Indoor Hall Association Jirkov 32.5

support of a sports ground Jirkov Tennis Club Jirkov 35

decommissioned firetruck with ladder Podkrušnohoří Technical Museum Most 50

presentations on Spejbl and Hurvínek DVDs Junior Aréna Litvínov 100

donation for the anniversary of the establishment of the schoolSociety for the Support of a Commercial Academy – Post-secondary Vocational School

Most 15

support of club activities – special-interest activities of children Báječné děti z. s. Litvínov 30


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Support provided as sponsorship

donation for social purposes Jistoty domova Czech Republic 100

presentation in the Uhlí Rudy magazine Agricola Czech Republic 150

presentation at the Memorial Air Show Aeroklub MEMORIAL AIR SHOW Roudnice nad Labem 500

conference presentation MONTANEX a.s. Czech Republic 32

Makarius memorial concert SNIP & CO, reklamní společnost, spol. s r.o. Czech Republic 15

donation for social purposes Jistoty domova Czech Republic 100

presentation in the Uhlí Rudy magazine Agricola Czech Republic 150

presentation at the Memorial Air Show Aeroklub MEMORIAL AIR SHOW Roudnice nad Labem 500

conference presentation MONTANEX,a.s. Czech Republic 32

Total 11,536,147

REGIONAL SUPPORT FROM SEV.EN EC, A.S. (CHVALETICE POWER STATION) IN 2015


Support provided as a donation

Direct support of municipalities (budget contributions)

Town of Chvaletice – Partnership Agreement Town of Chvaletice Chvaletice 750

Town of Přelouč – Sponsor of the “Award of František Filipovský Prizes for Best Dubbing”

Town of Přelouč Přelouč 150

Municipality of Břehy – Partnership Agreement Municipality of Břehy Břehy 150

Municipality of Zdechovice – Equipping of a new fire truck Municipality of Zdechovice Zdechovice 50

Municipality of Tetov – contribution to pavement repairs Municipality of Tetov Tetov 30

Municipality of Labská Chrčice – contribution to the social event “Saint Martin’s Ride”

Municipality of Labská Chrčice Labská Chrčice 10

Support of regional organisations or projects

Donation to the Kladruby nad Labem National Stud Farm for the planting of greenery

Kladruby nad Labem National Stud Farm Kladruby nad Labem 187

Donation for the equipment of a classroom – Primary and Nursery School, Hlavečník

T.G. Masaryk Primary and Nursery School, Hlavečník

Hlavečník 50

Donation for the Krtek (Mole) National Children’s Cancer Fund Krtek National Children’s Cancer Fund Czech Republic 30

Donation for the purchase of maths e-textbooks for Masarykovo náměstí Primary School, Přelouč

Masarykovo náměstí Primary School Přelouč Přelouč 26


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Support provided as sponsorship

Sponsor of the cycling race “Chvaletice Power Station Grand Prix” Pardubice Association of Cyclists Pardubice Region 50

Sponsor of BK JIP Pardubice BK JIP Pardubice Basketball Club Pardubice 50

Sponsor of the family event “Oblaka fest” Václav Mazal Pardubice Region 50

Sponsor of the event “Celebration of the 25th anniversary of the Czech Confederation of Industry”

Czech Confederation of Industry Prague 50

Sponsor of Řečany nad Labem Sports Club SK Řečany nad Labem 1920 Řečany nad Labem 45

Sponsor of Přelouč Rugby Club Rugby Club Přelouč Přelouč 30

Sponsor of the 59th annual national junior football tournament in Přelouč FK Přelouč Přelouč 30

Sponsor of Přelouč Basketball Club BK Přelouč Přelouč 30

Sponsor of TJ ENERGETIK Chvaletice TJ ENERGETIK Chvaletice 30

Sponsor of the sports club Orel Jednota Přelouč Orel Jednota Přelouč Přelouč 25

Sponsor of the “Festive Music with Monika” project Art klub z.s. Přelouč 24

Sponsor of the event “Golden Tour Praha five-a-side football league” I.S.C. Sports, s.r.o. Prague 23

Sponsor of the “International Team Races” event at the Kladruby nad Labem National Stud Farm

Kladruby nad Labem National Stud Farm Kladruby nad Labem 20

Sponsor of the 118th Opening of the Spa Season in Lázně Bohdaneč Léčebné lázně Bohdaneč a.s. Lázně Bohdaneč 20

Sponsor of “Pardubice Musical Spring” Barocco Sempre Giovane Pardubice Region 20

Sponsor of the project “Restoration of the Antonín Švehla Monument in Přelouč”Association for the Restoration of the Antonín Švehla Monument

Přelouč 18

Sponsor of Jestřábi Přelouč Ice-Hockey Club Jestřábi Přelouč Ice-Hockey Club Přelouč 15

Sponsor of the Pasíčka Rescue Station Czech Union for Nature Conservation East Bohemia 15

Sponsor of the “Sculpture Symposium” in Přelouč Art klub z.s. Přelouč 12

Sponsor of Zdechovice Fistball Club Czech Fistball Association Zdechovice 10

Sponsor of the “Retroměstečko (Retro Town)” event in Přelouč X-land, s.r.o. Pardubice Region 10

Sponsor of the Three Kings Concert Regional Chamber of Commerce Pardubice 10

Sponsor of the Choltice Umbrella charity event Umbrella Club [Spolek Deštník] Choltice 10

Sponsor of the event “Jumping Competition, Schools League, Kolesa” Horse Breeding Secondary School Kladruby nad Labem 6

Sponsor of the Czech Hobby Dance and Figural Waltz Championship Dance Teachers Association Pardubice 5

Sponsor of the “133th Student Rag” in Nový Bydžov Sdružení studenstva Novobydžovského, z.s. Nový Bydžov 5

Sponsor of the event “Centenary of the Children’s Home in Pardubice” Pardubice Children’s Home Pardubice 2

2015 TOTAL 2,048


156

Internal grant – regional support vehicle

In 2014, the Group also announced the “Internal Sedm for You Grant” scheme, which has been drawn up to promote special-inter-est, cultural and sports activities and clubs in which its employees are involved. The

availability of the grant is announced at the beginning of the year in an internal periodical, on the intranet and on notice boards and flyers. It has clear rules, which are published for employees on the intranet. Support appli-cations are submitted by employees. Those employees also act as the guarantor for their project. Agreements are concluded with the

executive officer of the organisation that is to be supported and for the benefit of whom the employee is applying for the grant. Again, the majority of the money disbursed in this way provides assistance in the Ústí nad Labem and Pardubice Regions� It is through these employees of Severní en-ergetická a�s� that a further CZK 373,500 was

channelled into the region (via 22 projects). Of the applications delivered, 72% received assistance in 2015�Through the employees of Sev.en EC, a.s. (Chvaletice Power Station), a further CZK 193,000 was channelled into the Pardubice Region (via 15 projects). Of the grant appli-cations received, 60% were approved.

SEVERNÍ ENERGETICKÁ A.S. EMPLOYEE GRANTS, 2015

(CZK thousands)

support of a modern gymnastics club Mika Chomutov 20

road bike racing on natural circuits in Most contribution to a specific employee 30

contribution to floodlighting Litvínov Football School 15

purchase of uniform kit for an employee cycling club contribution to a specific employee 15

subsidy to transport children to camp contribution to a specific employee 10.5

Jiří Píža Memorial tennis tournament Klíny complex Advertising resources

contribution to equipment Bowling Benedikt Most 2.5

purchase of cycling equipment for the cycling club Jirkov Cycling Club 10

purchase of aids for children Nursery School – OP Albrechtická, Most 12.5

support of a side stage at Dočesná 2015 in Žatec (event attended by approximately 2,000 people) Občasné sdružení o.s. 10

support of children’s firefighting sport Most District Firefighters Association 25

support of an in-line children’s club (races and training camp) Stars Praha 20

support of yachting sport/racing etc. contribution to a specific employee 15

equipping the firefighters’ office with IT Hora Svaté Kateřiny voluntary firefighting unit 25

support of convalescent stays for employees with cancer AMA – society of employees with cancer 15

equipping of the library in Patokryje Municipality of Patokryje 40

World Dragon Boat Championships – ICF club crews contribution to a specific employee 15

completion of the fencing room TJ Baník Most 15

purchase of hurdles for an athletics team to practise hurdling Dům v Krušných horách o.s. 15

Total 373.5


157

SEV.EN EC, A.S. EMPLOYEE GRANTS, 2015

(CZK thousands)

the organisation of a joint men’s and women’s street hockey tournament Klub Delta Pardubice Advertising resources

support of a weekend rafting event in Žehušice na Doubravě contribution to a specific employee 8

arrangements for a children’s and sports day on 4 July in Litošice Municipality of Litošice Advertising resources

contribution to sanitary facilities for a farm camp contribution to a specific employee 25

contribution to a festival of amateur dramatics – Chvaletická scéna Chvaletické divadlo Jen Tak (theatre) 25

purchase of a Native American tepee, children’s stay, for scouts Chvaletice Scout Troop 20

Support of the motoring event “Břehy Stadium Cup” (approximately 2,500 people) ČHJ Přelouč 10

support of a junior football club FK Přelouč 20

financial support of dance sport and purchase of competition attire TK Chvaletice 10

donation to a dance company Milada Mikulenková – Studio XIV. 5

equipping of an office of the Přelouč bowling alley to manage sports events and prepare match reports SKK Kuželky Přelouč 10

repair of club and provision of IT TJ Sokol Kojice – football team 30

financial support of Valy Nursery School, for the opportunity to develop young people’s sports and cultural activities

Valy Nursery School 25

fourth-graders’ Christmas ice-hockey tournament HC Baník Sokolov 5

Total 193


VIII. ANNEXES

159

STATEMENT OF THE SUPERVISORY BOARD ON THE CONTENT AND METHODOLOGY OF THE REPORT

VIII. ANNEXES

Excerpt from Minutes No 5/2016of the Extraordinary Meeting of the Supervisory Board of Severní energetická a.s., Reg� No 286 77 986,registered office: Most, Václava Řezáče 315, 434 01, incorporated by entry in Section B, File 1986, of the Commercial Register maintained by the Regional Court in Ústí nad Labem,held on 3 June 2016 at V Celnici 1031/4, 110 00 Praha 1.

Excerpted item:

Discussion on content and methodology for 2015 non-financial reporting on the Severní energetická GroupThe Chairman of the Supervisory Board, Mr Dienstl, submitted the Non-financial Report (here-inafter the Report) for the 2015 calendar year to be discussed and approved by the Board, in particular the content and methodology adopted for the development of the Report. He briefed the Board that the Report had been drawn up according to the Global Reporting Initiative stan-dard: GRI Sustainability Reporting Guidelines, G4 Version and the Sector Supplement (GRI G4 Mining and Metals Sector Supplement). The Report covers the business operations of Severní energetická a.s., the parent company, and its subsidiaries, in particular Sev.en EC, a.s., Reg. No (IČO) 28786009, from 1 January 2015 to 31 December 2015. The determination of the Sev.en Group’s material aspects to be reported within the scope of the Materiality Check was verified by DNV GL on 9 March 2016. The verification process resulted in a proposal for the further elaboration of certain topics, which were subsequently included in the Report content relative to their materiality in the context of the Group operations (specifically: GHG emissions, chemical management, noise and vibrations)�Mr Dienstl also spelt out to the Supervisory Board in great detail the financial and non-financial data stated in the Report, particularly in the context of the period for which the data were pre-pared, i.e. the entire 2015 calendar year. As no discrepancies were detected and no reservations were raised by by the members of the Supervisory Board after thorough discussion of both the content and the methodology behind the Report’s preparation, Mr Dienstl submitted a motion to the Supervisory Board for the approval of the Report content and the methodology and for the adoption of the following resolutions on the Report:

RESOLUTIONS1�1 The Supervisory Board approves the content and methodology used in the preparation

of the non-financial Report of the Sev.en Group for the 2015 consolidated year.1�2 The Supervisory Board, in the context of the discussion on the Report content and meth-

odology, states that:1.2.1 The financial data stated in the Report are consistent with the Consolidated Financial

Statements published in the 2015 Annual Report of Severní energetická a.s.;1.2.2 For operational and record-keeping reasons, the Report covers the non-financial data of

subsidiaries for the period from 1 January 2015 to 31 December 2015;1.2.3 The reporting on non-financial data from the perspective of a single year makes it possible

for local communities, the general public, state administration and other groups of Report users to analyse and understand the environmental and social impacts of the operations of Severní energetická (Sev.en) Group companies;

1.2.4 The content was consulted with stakeholders (relevant topics were identified and the material aspects of companies’ operations from the point of view of reporting were drawn up) in the best achievable manner. The consultation process ran from November 2015 to March 2016. It combined the outcome from ongoing communication – an integral part of routine company operations and Group management – with the outcome of special meetings held to communicate important projects and/or changes, and with question-naire-based surveys seeking feedback on how the materiality of each aspect of Sev.en Group business operations is perceived by different groups of stakeholders;

1.2.5 The Report defines risks, opportunities and sustainability goals. It also reflects, in a rea-sonable and balanced way, Sev.en Group business operations in the context of sustainabil-ity, encompassing positive and adverse impacts and effects alike;

1.2.6 Non-financial data stated in the Report are consistent with the records kept by Severní energetická (Sev.en) Group companies and, in all respects, give a true and fair view of their operations and reliable information on their non-financial standing.

Result of the vote: public voting by a show of hands, approved by all votes of the Supervisory Board members present, i.e. Jan Dienstl, Pavel Tykač, Michal Tykač, Veronika Tykačová, Jaromír Franta cast votes in favour of the resolutions proposed.

Correctness of the excerpt confirmed by:

Eva Nováková, Supervisory Board Secretary and Minutes-taker

160

VIII. ANNEXES

Statement n. STAT-14909-2016-CSR-ITA-DNV DNV GL Business Assurance Czech Republic s.r.o., - IČO: 024 85 818, Thákurova 531/4, 160 00 Praha 6 – Dejvice

Page 1 of 4

Sev.en Group Sustainability Report 2015 - Independent Assurance Statement

Introduction DNV GL Business Assurance Czech Republic s.r.o. (‘DNV GL’) was commissioned by the management of the Sev.en Group (“Sev.en”) to carry out an assurance engagement on the company’s Sustainability Report 2015 (‘the Report’), which is prepared in accordance with the Sustainability Reporting Guidelines, version 4 (‘G4’) of the Global Reporting Initiative (‘GRI’) and the G4 Sector Disclosures (Electric Utilities and Mining and Metals). Sev.en is responsible for the collection, analysis, aggregation and presentation of information contained in the Report. The assurance engagement is based on the assumption that the data and information provided in good faith by the organization are complete, sufficient and authentic. Our responsibility in performing the work commissioned, in accordance with the terms of reference agreed on with Sev.en, is solely towards the Management of Sev.en. This Independent Assurance Statement is intended solely for the information and use of the stakeholders of Sev.en, and is not intended to be and should not be used by anyone other than these specified parties.

Scope of Assurance The scope of work agreed on with Sev.en includes the following aspects:

• Review of sustainability performance data and activities in the Report related to the period between January and December 2015. • Evaluation of the adherence to the Principles defining Report content and Report Quality as set forth in GRI.

We planned and performed our work to obtain the evidence necessary to provide a basis for our assurance opinion, providing a ‘moderate level’ of assurance. Our verification was carried out in June and July 2016. As part of this engagement we:

• interviewed with selected Directors and Managers responsible for the strategic direction and governance of sustainability issues and review of selected evidence to support issues discussed;

• conducted a site visit to the Group’s headquarters to review processes and systems for preparing site level sustainability performance data and implementation of sustainability strategy;

• conducted site visits to the power plant Chvaletice in Chvaletice (Sev.en EC, a.s.) and the mining site Severní energetická a.s.

REPORT VERIFICATION – AUDITOR‘ STATEMENT (DNV GL)

161

VIII. ANNEXES


Page 2 of 4

We understand that the reported financial data and information are based on data from the Financial Report, which are subject to a separate audit process. The review of financial data from the Annual Report and Accounts was not within the scope of our work. Verification of GHG emissions is subject to a separate audit process and it is not covered by this statement.

Verification methodology Our assurance engagement was planned and carried out in accordance with the DNV GL protocol for verification of Sustainability Reporting, ’VerisustainTM’ Version 5, , which is based on our professional experience and international assurance best practice, and the International Standard on Assurance Engagements ISAE 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information. These documents require, inter alia, that the assurance team possesses the specific knowledge, skills and professional competencies needed for an assurance engagement regarding sustainability information, and that the team complies with ethical requirements to ensure its independence.

In accordance with the Verisustain protocol, available on demand on our website1, the Report was evaluated by considering its adherence to the following principles: Stakeholder Inclusiveness, Materiality, Responsiveness, Completeness, Neutrality, Accuracy and Reliability. We reviewed the sustainability-related statements and propositions as part of the verification made in the Report and we assessed the robustness of the underlying data management system, information flow and controls. We performed sample-based audits of the following:

• mechanisms for the implementation of its sustainability policies, as described in the Report; • processes for determining the materiality of the contents to be included in the Report; • processes for generating, gathering and managing the quantitative and qualitative data included in the Report.

We interviewed the Corporate Social Responsibility Manager and a group of 24 people within the Company who were involved in the operational management of matters covered in the 2015 Report. In addition, we interviewed representatives from two of the categories of the stakeholders.

Conclusions On the basis of the work undertaken, nothing came to our attention to suggest that the ‘Sustainability Report 2015’ does not properly describe Sev.en’s adherence to the Principles.

- Materiality

The Report is the main tool for reporting the Organization's performance and it is the basis of the stakeholders’ assessments and decisions. The contents of the Report, which are the result of a structured process for identifying the topics stakeholders considered relevant, cover aspects that reflect the organization’s significant economic, environmental and social impacts. It is important to underline the importance of a constant involvement concerning corporate functions which contribute to the drafting of the document and to the identification of issues and indicators that can be considered relevant to the reporting year. We recommend continuing the effort for the stakeholder engagement, which helps Sev.en in focusing on material aspects. In particular, some improvements can be achieved by enlarging the number of employees involved in the internal annual survey. 1 https://www.dnvgl.com/assurance/reporting/index.html

162

VIII. ANNEXES


Page 3 of 4

- Stakeholder Inclusiveness

The Report reflects Sev.en’s commitment to continually extending its dedication to stakeholder dialogue and engagement, as well as the range of channels used to ensure inclusion of the stakeholders’ interest with particular reference to public authorities and local communities. We recommend that the Report provide information on how the engagement has influenced the organization’s sustainability activities and the Report content. At the same time, we underline the importance, in the development of the contents of the Report, to enable stakeholders to understand how the themes and issues which emerged and were considered significant have been integrated into the strategies and actions implemented by Sev.en.

- Completeness

The Report allows stakeholders to evaluate Sev.en’s economic, social and environmental performances during the reporting year, as well as understanding its medium-long sustainability strategies and objectives. The disclosure of information in the report is commendable: information, data and facts related to the reporting year are well disclosed in the document, referring to the structure defined in the boundary; in the case of data attributed to a more limited boundary, the Report identifies such restriction through proper notes.

- Sustainability context

The report describes how sustainability topics relate to mid-term organizational strategy, risks, and opportunities and reflects where the company is on the material issues that affect the industry. With respect to sustainable objectives Sev.en should consider disclosing more details on its performance in a manner that presents the magnitude of its impact and contribution in the different local contexts.

- Responsiveness

Sev.en’s commitment in integrating the considerations deriving from stakeholders within their decision making and their plans of action is evaluated positively. The Report discloses a very extensive range of information, which enables stakeholders to understand Sev.en’s performance and how the company has engaged and responded to sustainability issues. Sev.en should consider disclosing more detail on how stakeholders are regularly involved in setting strategies, plans and actions. We recommend Sev.en to simplify the structure of the Report, in order to facilitate stakeholders’ access to pertinent information.

Principle of report quality

Neutrality: The Report is a full and impartial description of Sev.en’s sustainability impacts. The document reflects the Organization’s will to represent the activities and results for the reporting year in a balanced and consistent way.

Accuracy: Based on our data analysis and on the business processes that generate them, the data reported in the Report appear as the result of stable and repeatable activities. The information contained in the Report is therefore accurate and detailed.

Reliability: The data included in the Report subjected to our verification, were found to be identifiable and traceable; the personnel responsible was able to demonstrate reliably the origin and interpretation of the data. Data gathering processes should be continuously shared across the Sev.en’s operations in order to avoid risks arising from different approaches. and Reliability’ During our work, we found a limited number of non-material errors and these were corrected prior to inclusion in the Report.

163

VIII. ANNEXES


Page 4 of 4

DNV GL confirms compliance of the Report with the option of ‘Core’ application referred to GRI G4. Additional findings and observations on the adoption of reporting principles and information on the specific performances shown below.

Opportunities for improvement The following is a summary of the observations and prospects reported back to the Management of Sev.en. These do not, however, affect our conclusions regarding the Report, and they are indeed consistent with the management objectives already in place.

• In order to continue structuring dialogue activities and monitoring their strategic suppliers, it is considered important to continue with the communication of such aspects, also through the consolidation of the process and tools implemented for the collection of information regarding the different suppliers of the companies belonging to the boundary, with particular reference to the performances on safety and environment.

• To facilitate the Report readability for different groups of stakeholders, we suggest Sev.en to improve and simplify the structure of the Report.

DNV GL’s Competence and Independence DNV GL is a leading provider of sustainability services, including the verification of sustainability reports. Our environmental and social assurance specialists operate in over 100 countries. DNV GL was not involved in the preparation of any statements or data included in the Report except for this Assurance Statement. DNV GL maintains complete impartiality toward stakeholders interviewed during the verification process. DNV GL expressly disclaims any liability or co-responsibility for any decision a person or an entity may make based on this Assurance Statement. For DNV GL Business Assurance Czech Republic s.r.o.,

Fabrizio Foglia Lead Verifier

Seung Hyun Kwak Assurance Reviewer

Prague, 26th July 2016

164

GRI G4 CONTENT INDEX

MATERIAL ASPECTS

NON-MATERIAL ASPECTS

GRI indicator Standard Disclosure Title Page Number (or Link)

STRATEGY AND ANALYSIS 2015

G4-1 Statement from the most senior decision-maker of the organisation 7-9

G4-2 Description of key impacts, risks, and opportunities 15-16, 25-31

ORGANIZATIONAL PROFILE

G4-3 Name of the organisation. 13

G4-4 Primary brands, products, and services. 67-69, 71-72

G4-5 Location of the organisation’s headquarters. 13

G4-6 Countries where the organisation operates Czech Republic, 11

G4-7 Nature of ownership and legal form 11-13

G4-8 Markets served 67-69, 71-72

G4-9 Scale of the organisation 11-12, 17-19

G4-10 Numbers of employees 11, 83

G4-11 Employees covered by collective agreements 91 (99.6% employes)

G4-12 Organisation’s supply chain 43, 79-80

G4-13 Significant changes 25, 26-27, 48

G4-14 Precautionary approach – Principle 15 of the “Rio Declaration” 50

G4-15 Externally developed economic, environmental and social charters, principles 50

G4-16 Memberships of associations 33-34

EU1 Installed capacity 72

EU2 Net energy output 72

EU3 Number of customer accounts 75

EU4 Length of above and underground transmission and distribution lines Not applicable, Sev.en Group has no

transmission and distribution lines.

EU5 Allocation of CO2e emissions allowances 126

VIII. ANNEXES

165


IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-17 List all entities included in the organisation’s consolidated financial statements43, 13 (See annual report www.sev-en.cz/cz/

spolecnost/vyrocni-zpravy.html)

G4-18 Process for defining the report content 42-43

G4-19 List all the material aspects identified in the process for defining report content. 43-44, 45-46

G4-20 Aspect boundary within the organisation 47

G4-21 Aspect boundary outside the organisation 47

G4-22 Restatements of information provided in previous reports 48

G4-23 Significant changes from previous reporting periods in the Scope and Aspect Boundaries 44

STAKEHOLDER ENGAGEMENT

G4-24 List of stakeholder groups engaged by the organisation 33

G4-25 Basis for identification and selection of stakeholders 33, 41-42

G4-26 Organisation’s approach to stakeholder engagement 33, 42

G4-27 Key topics and concerns raised through stakeholder engagement 7-9, 34-40, 48

REPORT PROFILE

G4-28 Reporting period for information provided calendar year

G4-29 Date of most recent previous report September 2015 (Report for 2014)

G4-30 Reporting cycle (such as annual, biennial). annual

G4-31 Contact point for questions regarding the report 33

G4-32 GRI Content Index and External Assurance Report 164, GRI G4 “CORE”

G4-33 Organisation’s policy and current practice with regard to seeking external assurance for the report 54, 159, 160

GOVERNANCE

G4-34 Governance structure of the organization 16-18

ETHICS AND INTEGRITY

G4-56 Organisation’s values, principles, standards and norms of behaviour

15-16, 50-51; www.sev-en.cz/banske-dokumenty, www.Sev-en/rekultivace, 70 (EEX), 75 (REMIT), 103 (“Safe Undertaking” standard),

111 (EMS)

VIII. ANNEXES

166


SPECIFIC STANDARD DISCLOSURES

CATEGORY: ECONOMIC

Aspect ECONOMIC PERFORMANCE 20

G4-EC1 Direct economic value generated and distributed 21

G4-EC3 Coverage of the organisation’s defined benefit plan obligations 88,90

G4-EC4 Financial assistance received from government 23

Aspect MARKET PRESENCE 84

G4-EC5 Ratios of standard entry level wage compared to local minimum wage at significant locations of operation84 (Omissions: not disclosed by gender; small number of women - it is possible to detect the

salaries of single employees)

Aspect INDIRECT ECONOMIC IMPACTS 150

G4-EC7 Development and impact of infrastructure investments and services supported 63, 74,150, (141,143,144)

Aspect PROCUREMENT PRACTICES 79

G4-EC9 Proportion of spending on local suppliers at significant locations of operation 21, 79

EU Aspect: AVAILABILITY AND RELIABILITY 72, 78, 107

G4-EU10 Planned capacity 72, 74, 107

EU Aspect: DEMAND-SIDE MANAGEMENT 74-76

EU Aspect: RESEARCH AND DEVELOPMENT 74

EU Aspect: SYSTEM EFFICIENCY 72

G4-EU11 Average generation efficiency 72

CATEGORY: ENVIRONMENTAL

Aspect MATERIALS 115

G4-EN1 Materials used by weight or volume 118-119

Aspect ENERGY 115

G4-EN3 Energy consumption within the organisation 116

G4-EN5 Energy intensity 117

G4-EN6 Reduction of energy consumption 74

VIII. ANNEXES

167


Aspect WATER 120, 127-130

G4-EN8 Total water withdrawal by source 131, 132

G4-EN9 Water sources significantly affected by withdrawal of water 143

G4-EN10 Percentage and total volume of water recycled and reused 128,129

Aspect BIODIVERSITY 137, www. Sev-en/rekultivace, 134

G4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas 137, www.Sev-en/rekultivace

G4-EN13 Habitats protected or restored 137-138

G4-MM1 Amount of land disturbed or rehabilitated 138-137, 144

G4-MM2 Sites identified as requiring biodiversity management plans 137-142

G4-EU13 Biodiversity of offset habitats compared to the biodiversity of the affected areas 134

Aspect EMISSIONS 120, 121-122, 125

G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 125-126

G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) 125-126

G4-EN21 NOX, SO

X, and other significant air emissions

123 (114 desulphurisation, blasting); 124-125 (noise, immissions)

Aspect EFFLUENTS AND WASTE 120, (127-130 water), (133 waste), 136

G4-EN22 Total water discharge by quality and destination 127-130, 131, 132

G4-EN23 Total weight of waste by type and disposal method 134-135, 135

G4-EN24 Total number and volume of significant spills 112

G4-MM3 Total amounts of overburden 62

Aspect COMPLIANCE 54

G4-EN29Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

53, 54, 113

Aspect TRANSPORT 125

G4-EN30 Significant environmental impacts of transporting products and materials

115 (73); The information is not currently fully available; omission: the transport of products is fully in the hands of suppliers, we have no data

on env. impacts, nor do we have data on the impacts of employee transport

VIII. ANNEXES

168


Aspect SUPPLIER ENVIRONMENTAL ASSESSMENT 80

G4-EN33 Significant actual and potential negative environmental impacts in the supply chain 80-81

Aspect ENVIRONMENTAL GRIEVANCE MECHANISMS 51, 53

G4-EN34 Number of grievances about environmental impacts 57

CATEGORY: SOCIAL

SUB-CATEGORY: LABOUR PRACTICES AND DECENT WORK

Aspect EMPLOYMENT 85

G4-LA1 Total number and rates of new employee hires and employee turnover 86-87

G4-LA2 Benefits provided to employees 88-90

EU15 Percentage of employees eligible to retire in the next 5 and 10 years 87 (Not broken down by job category and

region – confidential);

Aspect LABOUR/MANAGEMENT RELATIONS 91-92

G4-LA4 Minimum notice periods regarding operational changes, including whether these are specified in collective agreements 93

G4-MM4 Number of strikes 91, No one strike

Aspect OCCUPATIONAL HEALTH AND SAFETY 98

G4-LA5 Percentage of total workforce represented in formal joint management-worker health and safety committees 98

G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities 102, (100-104)

G4-LA8 Health and safety topics covered in formal agreements with trade unions 98-99

Aspect TRAINING AND EDUCATION 93

G4-LA9 Average hours of training per year 95

G4-LA10 Programmes that support continued employability 94

Aspect DIVERSITY AND EQUAL OPPORTUNITY 96

G4-LA12 Composition of governance bodies and breakdown of employees per employee category

97 (Not broken down by minority/religion. The registration of such data is contrary to Act

No 101/2000 on the protection of personal data (as amended from 1 January 2015)

Aspect EQUAL REMUNERATION FOR WOMEN AND MEN 96

G4-LA13 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation 96

Aspect SUPPLIER ASSESSMENT FOR LABOUR PRACTICES 80

G4-LA15 Significant actual and potential negative impacts for labour practices in the supply chain and actions taken 80-81

VIII. ANNEXES

169


Aspect LABOUR PRACTICE GRIEVANCE MECHANISMS 51-53

G4-LA16 Number of grievances about labour practices filed, addressed, and resolved through formal grievance mechanisms 51, 54

SUB-CATEGORY: HUMAN RIGHTS

Aspect NON-DISCRIMINATION 56

G4-HR3 Total number of incidents of discrimination and corrective actions taken 56

Aspect FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING 91

G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated (91-92), No one operations

Aspect HUMAN RIGHTS GRIEVANCE MECHANISMS 51-53

G4-HR12 Number of grievances about human rights 51, 54

SUB-CATEGORY: SOCIETY

Aspect LOCAL COMMUNITIES 146

G4-SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programmes 146-143

Aspect ANTI-COMPETITIVE BEHAVIOUR 55

G4-SO7 Total number of legal actions for anti-competitive behaviour and monopoly practices 55


G4-SO5 Confirmed incidents of corruption and actions taken 54-55

G4-SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations 54-55

Aspect GRIEVANCE MECHANISMS FOR IMPACTS ON SOCIETY 51

G4-SO11 Number of grievances filed about impacts on society 51, 53

EU/MM aspect EMERGENCY PLANNING AND RESPONSE, EMERGENCY PREPAREDNESS 105

G4-EU The disaster/emergency management plan and recovery/restoration plans 105-106, 107

G4-MM The disaster/emergency management plans 105-106, 107,108

MM aspect RESETTLEMENT 66

G4-MM9 Sites where resettlements took place 66

73 CLOSURE PLANNING 64

G4-MM10 Number of operations with closure plans 64-65

VIII. ANNEXES

170


SUB-CATEGORY: PRODUCT RESPONSIBILITY

Aspect CUSTOMER HEALTH AND SAFETY 76

G4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed 76

G4-PR2 Total number of incidents of non-compliance 76

Aspect PRODUCT AND SERVICE LABELLING 77

G4-PR3 Type of product and service information required by the organisation’s procedures for product and service information and labelling 77

G4-PR4 Total number of incidents of non-compliance concerning product and service information and labelling 77

Aspect CUSTOMER PRIVACY 56

G4-PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data 56, 70, 76


G4-PR9Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

54, 76-77

EU Aspect: ACCESS 78

G4-EU30 Average plant availability factor 78

VIII. ANNEXES


Headquarters: Václava Řezáče 315, 434 01 Most, Czech RepublicPhone: +420 476 205 311E-mail: [email protected]

www.sev-en.cz

Responsible Coordinator: Gabriela Sáričková Benešová, Communication ManagerGRI Consultant a Project Manager: Stanislav Kužel (smart-report CZ s.r.o.)© Production: R MEDIA, spol. s r.o. Member of Economia Group.

© Severní energetická a�s�August 2016


http://www.sev-en.cz

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