CORPORATE SOCIAL AND ENVIRONMENTAL …An innovative company which creates value for stakeholders by...

CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY REPORT 2015

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MANAGEMENT REPORT CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY

1. INTRODUCTION .................................................................................................................................... 3 1.1. Our stakeholders as our whole focus ............................................................................................. 3 1.2. Our mission, vision and values: built around environment and sustainability ............................ 3

1.2.1. Our Mission statement: unlocking the Energy Transition ............................................................ 4 1.2.2. A clear Vision: an Energy Company and the world’s reference for a clean energy culture ......... 4 1.2.3. Our Values in three cornerstones ................................................................................................ 4

1.3. Our Corporate Social and Environmental Responsibilities ........................................................... 5

2. OUR RESPONSIBILITY TO THE FINANCIAL COMMUNITY .............................................................. 5 2.1. A constant dialogue with analysts and investors .......................................................................... 5 2.2. Stock performance and new-sflow commitment .......................................................................... 6

3. OUR RESPONSIBILITY TO THE EPS’ PEOPLE .................................................................................. 9 3.1. Our employees’ challenges .............................................................................................................. 9

3.1.1. A balanced organization .............................................................................................................. 9 3.1.2. Distribution of employees by gender ......................................................................................... 10 3.1.3. Distribution of employees by age .............................................................................................. 11 3.1.4. Distribution of employees by geographical area ....................................................................... 12 3.1.5. Our team is growing .................................................................................................................. 12 3.1.6. Remuneration: we reward performance .................................................................................... 13 3.1.7. Appraisals and career development .......................................................................................... 13 3.1.8. Our team, engaged shareholders .............................................................................................. 15 3.1.9. Evolution in compensation, our main investment ...................................................................... 16

3.2. Work-life balance strategy ............................................................................................................. 16 3.2.1. Working time and maternity protection ..................................................................................... 16 3.2.2. Our results: low absenteeism .................................................................................................... 16

3.3. Constant trade unions and labour relations ................................................................................. 16 3.4. Health and Safety as a priority ....................................................................................................... 17 3.5. Continuous Training ....................................................................................................................... 20 3.6. Equal opportunties for the EPS’ people ........................................................................................ 21 3.7. International Labor Organization compliance .............................................................................. 21

4. OUR RESPONSIBILITY TO ENVIRONMENT: OUR BUSINESS STRATEGY ................................... 23 4.1. Our environmental policy, our investments .................................................................................. 24 4.2. Pollution and waste management ................................................................................................. 25 4.3. Sustainable use of resources ........................................................................................................ 26 4.4. Climate change ............................................................................................................................... 28

5. OUR RESPONSIBILITY TO SOCIETY ................................................................................................ 29 5.1. Territorial, economic and social impact in terms of employment .............................................. 29 5.2. Innovation as local development driver, partnering with Universities ....................................... 29 5.3. Sponsorships and charities ........................................................................................................... 30 5.4. Enduring partnerships and stakeholders ..................................................................................... 31

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5.5. A supply chain engaged in Social and Environmental Responsibility ....................................... 31 5.6. Fair trade practices ......................................................................................................................... 32 5.7. Other measures taken in favour of human rights ........................................................................ 33

6. METHODOLOGY NOTE ...................................................................................................................... 33 6.1. Reporting boundaries and indicators selection criteria .............................................................. 33 6.2. Indicators criteria ............................................................................................................................ 34

7. CONCORDANCE TABLE .................................................................................................................... 36

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1. INTRODUCTION This report is part of a comprehensive approach to taking into account the Group’s corporate, environmental and social responsibility and transparency with respect to these issues.

Corporate social and environmental responsibility is an integral part of EPS’ way of doing business. The goal of the Group has always been to combine competitiveness with sustainability. It is a commitment aimed at pursuing growth, innovation and results, always placing great attention to the quality of life, and environmentally compatible development.

With the appointment of the new board, since February 2015, the Group has started for the first time to formalize and monitor such goals and way to do business, with precise policies and procedures of corporate social and environmental responsibility (“CSR”), that are now implemented by our new operational and staff departments.

1.1. Our stakeholders as our whole focus

In particular after the admissions of the EPS’ shares on Euronext in April 2015, the Group has focused immediately on the identification and formalization of its stakeholders outlined in the figure below.

Chart 1 – Our stakeholders

As an immediate consequence, the Group entrusted its new operational and staff departments, and in particular the Finance, Communication and Legal department to spearhead the implementation, ongoing application and continuous improvement by involving all employees.

1.2. Our mission, vision and values: built around environment and sustainability

EPS is a vertically integrated energy storage company. The ongoing transition in electrical power generation from fossil fuels and nuclear power to renewable energy sources has given rise to new challenges that have seen storage technology take the center stage. Storage could be a profitable enabler of this transition in three main ways:

ü in off-grid applications: to serve the 2.4 billion people (35% of the global population) and energy intensive businesses around the world that are not currently reached by a reliable electric power grid, so as to (i) replace diesel-fueled generators that currently provide power and capacity to the final users and (ii) make better use of renewable energy sources.

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ü for grid support: as intermittent and unpredictable renewable energy progressively displaces traditional power plants, electricity grids increasingly need storage systems that provide both capacity and flexibility; and ü behind-the-meter: commercial and industrial users need systems that manage at the same time back-up power supply, increasing demand charges and opportunities arising from demand-response programs.

As a result, having the goal to concretely enable renewables sources to unlock the energy transition, EPS’ mission, vision and values are built around environment and sustainability.

1.2.1. Our Mission statement: unlocking the Energy Transition

The Group has the Mission to unlock the energy transition, mastering the intermittency of renewable energy sources. We advocate competitive and technology-neutral energy and emission markets.

Through the seamless integration of the best battery technologies, and our hydrogen and oxygen platform for long autonomy, we enable renewable energies to power society: reliably, affordably and sustainably.

1.2.2. A clear Vision: an Energy Company and the world’s reference for a clean energy culture

We wish to be an Energy Company and the world’s reference for a clean energy culture and smart grid excellence.

An innovative company which creates value for stakeholders by providing net-zero solutions completely safe, reliable, profitable and sustainable.

1.2.3. Our Values in three cornerstones

Seeking innovation and sustainability of the energy transition are the main values of the Group.

It is expressed in three cornerstones:

ü reliability for our partners ü proactivity for our customers ü technological excellence in any solution deployed.

This means building value over time through continuing innovation, continuous improvement, transparency and people development.

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1.3. Our Corporate Social and Environmental Responsibilities

The Group has taken steps to identify its key CSR issues organized around three lines of action:

ü Our responsibilities to the financial community ü Our responsibilities to the EPS’ people ü Our responsibility to environment ü Our responsibility to society

Our responses to these issues are presented in this report.

2. OUR RESPONSIBILITY TO THE FINANCIAL COMMUNITY The Group attributes strategic importance to financial and corporate communication as a key instrument to build a relationship of trust with the financial community, one of its main stakeholders.

In this respect, the Group maintains an ongoing dialogue, through the Investor Relations department and the Group’s top management, with analysts as well as institutional and individual investors, promoting fair, transparent, timely and accurate communication.

In 2015, during the Initial Public Offering (“IPO”) process and after that, financial communication was aimed at creating and further strengthening dialogue with key stakeholders: public and institutional investors (representing 42% of the share capital), individual shareholders and financial analysts.

2.1. A constant dialogue with analysts and investors

During the IPO process the Group met more than 50 institutional investors in France, Italy, UK, Germany and Switzerland. During 2015 the Group organized meetings with financial analysts and leading local investors, also participating to small and mid cap conferences in Paris and Geneva, meeting more than 40 investors in Italy and abroad.

Furthermore, EPS was present and frequently speaker in the most important worldwide summits participated by the most influent energy analysts:

Bloomberg NEF Future of Energy EMEA Summit in London (UK)

World Economic Forum, Meeting of New Champions in Dalian (China)

Energy and Mines World Summit in London (UK)

Congreso del Futuro in Santiago (Chile)

These activities, together with the growing investors interest in the specificity of the equity story of EPS and in the storage and renewable energy industry, have led the shareholder base to become more international. In particular, this ongoing dialogue leveraged by the Group towards the financial community has been the enabler of:

ü the success of the IPO in April 2015, in which the Group issued 1,974,032 new shares at a subscription price of 7.30€ per share, raising 14.4 million euros;

ü the success of the capital increase via private placement in December 2015, through which EPS issued additional 701,500 new shares at a subscription price of 6.80€, i.e. with only 4.2% discount versus the weighted average of the stock closing prices during the preceding three trading days.

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The focus of the financial community in its dealings with the Group is confirmed by the coverage of its shares by French and international investment banks. The assessment and the related instant reactions to our news and press releases is periodically published (in terms of “Target Price” recommendation) on the company website in the Media and Investors section.

Chart 2 - Analyst Coverage

2.2. Stock performance and new-sflow commitment

The Group is committed to continuing its efforts to maintain constant relations with its investors and analysts by their direct involvement in all its results and strategy presentation.

The Group dedicated to fulfil the commitment to its financial community, has decided to:

ü publish and submit to the French Market Authorities their quarterly results even though French Law dated 30 December 2014 (n°2014-1662) has ruled out this obligation;

ü organize in 2016 conference calls with its investors on all the quarterly results and its strategy presentation, in order to better outline its achievements, and consequently publish the transcript of the entire call on its website;

ü regularly upload all investors and analyst presentations, news and materials on its website;

ü constantly share with the financial community that accepted to receive newsletters, all major news and press releases published on our website and broadcasted;

ü broadly share all our news-flow always through:

both Business Wire and Actus News Wire, broadcasters authorized and regulated by the AMF (Diffuseur Professionnel d'Information Réglementée autorisé par l’AMF), in order to ensure a wide coverage in France and Europe; and

Websim: a retail specialized broadcaster, which ensures a wide coverage of our news-flow in particular in Italy.

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As a consequence, our commitment resulted in a good correlation between news-flow and stock performance as shown in the chart below.

Chart 3 - News-flow correlation to stock performance

Stock performance has been subject to a lack of news-flow in the first months after the IPO, but from September 2015, particularly after the set up of a dedicated Investor Relations department led by Francesca Cocco as Vice President Investor Relations, the activation of proper broadcasters and a more focused effort towards the financial community, the stock trend has demonstrated a high sensitivity to news-flow.

In terms of market benchmarking, the stock demonstrated to be resilient and perform slightly better than the market, from September to December 2015, with an increase in volumes despite the volatility related to the small capitalization of the Group.

This brought to the inclusion of the Group’s stock (EPS:PA) on the CAC® MID & Small and CAC® All-Tradable indices: on 7 December, Euronext published the quarterly review results of the CAC family, and officially announced the inclusion of the EPS shares on these two leading indices on and from market close on 18 December 2015. This is a testament to the solid market capitalization and significant float rotation of the shares, confirming the liquidity of the stock and enhancing visibility towards institutional investors.

The chart below outlines the EPS stock performance trend compared to the main French and Italian indexes, CAC40 (FCHI) and FTSE MIB (FTSEMIB:MI).

21/04/2015EPS France successfully completed its IPO on the Euronext regulated market in Paris raising € 14,4m

30/04/2015 EPS announces its quarterly financial results. Its Q1’2015 amount to €130k are stable compared to those reported for Q1 2014.

21/05/2015Partialexercise oftheoverallotment option

22/09/2015EPS H1 revenues and other incomefor the first half of the year grew by31,5% compared to H1’14

29/07/2015start of the works on the new manufacturingplant in Torino in order to securemanufacturing capacity of 2MW per month

22/10/2015Launches of operation in San Franciscoand appointment of Marco Terruzzin asManaging Director for North and LatinAmerica

02/11/2015Appointment of Khek Koon Then as Senior Vice President for Singapore, for the development of EPS business in Asia Pacific market.

12/11/2015EPSannouncesQ3, increaseof 188%compared toQ3’14.

04/12/2015Success of the Increase in ShareCapital by means of PrivatePlacement, raising an amount of4,77 millions euros

14/12/2015EPS becomes an integrated Energy Storage Group with the acquisition of Elvi Energy. Grand Opening of new manufacturing

29/12/2015 Completion of the acquisition of Elvi Energy

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Chart 4 - Stock performance compared to CAC40 and FTSE MIB

Future challenges and approaches

The Group aims to forge a direct, personal and stable relationship over time, and is based on the vocation of permanent service, transparency, accuracy and reliability of the information supplied. It is determined to meet the numerous opportunities on the main European financial markets, by continuing its constant presence and participation in the future small-mid conferences and the road shows dedicated to corporate governance.

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3. OUR RESPONSIBILITY TO THE EPS’ PEOPLE 3.1. Our employees’ challenges

The Group considers its employees as the main contributor to creating value and the strategic factor in its own success. Dedicated employees with diverse background play a crucial role in creating the innovative corporate culture EPS needs to be successful and reach the targets. For that reason, their professional and personal fulfillment and their motivation are the key drivers for the Group’s development. In this context, the principal employment-related challenges are:

ü Developing a team spirit around the Group’s values; ü Maintaining excellence and a top level of know-how and expertise level; ü Ensuring equal opportunity employment and zero discrimination; ü Promoting dialogue between employees and management; ü Securing top working conditions no matter what.

3.1.1. A balanced organization

As EPS becomes an ever more global company, it is essential for our growth and competitiveness that we further develop diversity, improve our performance, expanding and realigning the Group’s organization. We want to make EPS a more diverse, collaborative and enjoyable place to work. As better detailed in the following sections of this report, in 2015 we’ve been transforming every aspect of our workplace, from the employment of new people, to the design of our offices, passing through the launch of flexible working initiatives, and replacing internal emails with other collaborative and social tools, down to the organization of our work.

Management attaches great importance to the full understanding of the corporate culture and ensures that every employee fully supports the Group’s strategy. Through regular information meetings on business developments and trends, EPS’ women and men are kept up-to-date on expectations of management and stakeholders. This commitment to the EPS’ spirit also involves a commitment to its ethical values by each employee, who is asked to adhere to the Group’s Code of Ethics, that is focused in particular on business confidentiality, sensitive transactions, health & safety, responsibility, risk management, respect for individual freedoms.

Within the Group, the organization is extremely flexible, thanks to the new matrix organization, and is composed of small teams who ensure horizontal interaction and a continuous adaptation to all changes or evolving external conditions.

We employ a workforce of technical, scientific and industry specialists whom we rely on to ensure the technological excellence and safe operation of the Group’s systems around the world.

Although we are an Energy Company, EPS is made up of many other facets. Strong and committed managers play a decisive role in the successful execution of the Group’s strategy. EPS’ leadership model clearly states that leaders have the responsibility to achieve business results and be people leaders at the same time.

Our team of corporate professionals and staff functions, although based in different locations, ensure we operate effectively as a listed company and in the most transparent way.

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At the end of 2015, the Group had 42 employees for an overall organization including dedicated business partners totaling 57 human resources, of which 32 with permanent contracts. Since the end of 2014 the Group is engaged in a significant corporate reorganization with no recourse to social shock absorber.

Chart 5 - Headcount

* This includes the Group Companies Elvi Energy and MCM and the international partners, please see the Methodology Note.

3.1.2. Distribution of employees by gender

Chart 6 - Gender distribution of employees

We promote the careers of women and getting the work-life balance right between employment and family (please see the maternity leave and flexibility provisions under section 3.6 and 3.2.1). In comparison to 2014, last year we increased the percentage of female workforce from 18% to 21%.

At the date of this report, the percentage decreased to 19% exclusively because of the acquisition of Elvi Energy, where the quasi-totality of the resources are electrical and system engineers, a specialization which is rarely addressed by women.

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This decreasing trend of women presence is expected to stop and turn upside-down in 2016. Indeed, since January 2016, women already cover 80% of the corporate and staff positions composed of Legal & Governance Affairs, Innovation & European Affairs, Investor Relations, Communication & Media Relations, and Office of the CEO.

3.1.3. Distribution of employees by age

Flexibility and diversity are key elements for creating an employment environment which will enable us to remain an attractive company over the time.

As regards the age structure of the workforce, the Group has in whole a balance, which has allowed a constant presence of senior staff that enriches the Group’s expertise besides the junior staff. Additionally, the Group’s contacts to school and universities enable the recruitment of high potential young specialists, thus bringing a reinforcement to the highly skills and new ideas requested per each recruitment.

Employees by age group Distribution

Less than age 21 0% 21 to 30 years 25% 31 to 40 years 41% 41 to 50 years 24% 51 to 60 years 4.4% More than age 60 5.6%

Chart 7 - Employees by age group

Our energy experts, scientist and technologists, their skills and competences are our primary assets and this means we have a specific responsibility towards our people. As we want to develop our business and climb the value chain, the Group considers R&D critical to active innovation, technological excellence and corporate growth. Regarding the distribution of employees by occupational category, research and development and engineering is the most representative area: 43% of the EPS’ women and man work on innovative projects and technologies (Technology, R&D, Innovation and Engineering).

The breakdown of the workforce is as follows:

Headcount by function 31.12.2015 Date of this Report

Management 5 5 Staff: Administration & Finance, IR, Legal and Communication 6 8

Business Development and International Projects 14 16 Technology and R&D 11 21 Innovation 3 3 Engineering 4 12 Production 8 9 Project Management 3 6 Customer Value Management 3 3 Total 57 83

Chart 8 - Headcount by function

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The Group boasts an extremely talented staff, with almost 73% of the headcount with a university degree, of which 48% in Engineering, and 25% with a Ph.D. or an M.B.A..

Headcount by degree 31.12.2015 Date of this Report

University Degree, of which: 40 61 - Engineers 20 40 - PHD or MBA 14 21 Technical Degree 17 22 TOTAL HEADCOUNT 57 83

Chart 9 - Headcount by degree

3.1.4. Distribution of employees by geographical area

We consider diversity as an enrichment, because it supports the cultural change within EPS and improves our routine work everyday.

Since the end of H1 2015, the Group has increased its global presence by launching operations in San Francisco in October 2015, by appointing on November 2015 a highly experienced energy executive to lead the development on the Asia-Pacific market, Mr. Khek Koon Then, and by establishing key partnerships for business development with dedicated resources such like the Bryanston Resources team, and Massimo Quattrocchi.

Chart 10 - Headcount by Geographies

3.1.5. Our team is growing

Electro Power Systems offers opportunities to pursue a career in a pioneering company with a strong focus on quality, innovation and sustainability.

Throughout the year, the Group has continued to promote and reward internal mobility with a communication campaign directed to employees showing the diversity of career paths supported within the Group.

In 2015 the recruitment trend was very positive: 26 new human resources entered the Group and the trend will continue in the following year as well.

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As at 31/12/2015 No. Variation

Recruitment 26 + 84%

Dismissals 0 0%

Resignations 5 - 16%

Variation in Human Resources + 21 + 68%

Chart 11 – Variation in Human Resources


EPS has also launched a recruitment campaign since June 2015 that will continue on 2016. More than 19 new job positions are expected to be filled within 2016, which will reinforce the Innovation, Technology, Production and Energy departments.

3.1.6. Remuneration: we reward performance

The compensation policy aims to attract, retain and reward employees, based on their collective and individual performance. This policy is grounded on four principles: rewarding performance, remaining on budget, ensuring that all employees are compensated according to the same principles and reflecting going rates. Total compensation is broken down to:

ü fixed compensation: base salary, seniority benefits etc.; ü variable compensation: linked to specific jobs or to individual performance (bonus/variable component or allowance), which is measured quarterly based on the appraisal process outlined in section 3.1.7 below; ü benefits: health and insurance benefits are provided to all the employees; and ü mandatory and optional profit-sharing: based on criteria for rewarding collective performance and quarterly appraisal process.

Compensation shall be based and benchmarked on the collective industry scheme for metal-workers (Contratto Collettivo Nazionale del lavoro, CCNL Metalmeccanici). As per 2015 the total compensation of the EPS employees was 41% higher than the minimum compensation guaranteed per each category by said collective scheme agreed with the Trade Unions.

3.1.7. Appraisals and career development

The Group’s variable compensation program, based on both collective financial performance, individual objectives and appraisal results is gradually being brought into alignment since 2015. The target percentages for variable compensation depend on local practices and are structured by level of responsibility. The results of appraisals in 2015 have allowed an increase of promotions by 6% and 66% of these promotions involved women within the Group who did not hold previously managing positions.

The appraisal platform studied and designed specifically by EPS has allowed an equal, independent and anonymous evaluation of the employees by their peers, direct reports and by

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the top management. All employees are evaluated and ranked based on their performance and potential.

For evaluation purposes, it was established a five pillars set of criteria in order to assess performance:

analytics and insight

ü understanding of the issue and recommendation of realistic solutions, based on sound business sense

ü accurate and rigorous analyses ü priorities management ü effective planning

internal interaction and communication

ü capacity of building strong, trust-based collaborative relationships ü documentation production to a client ready level (content and format) ü logical workflow construction ü effective participation to meetings ü audience engagement and strong presence expression

team and self management

ü efficient time management ü direct reports and/or colleagues motivation ü use and provision of feedback ü independent behavior and help requests when needed leveraging supervisors time

and skills effectively ü calm reactions and focus in stressful situations

entrepreneurial mind-set

ü contribution to the development of EPS as a company ü self-application to develop new business/R&D ü identification of new business development and R&D ü contribution to creating strong EPS relationships ü knowledge creation, arrangement and/or spreading

commitment and motivation

ü ownership of the project at hand ü will to run the “extra mile” when needed ü proactive engagement in new challenges ü endeavor to think in solutions ü care about advancing the project no matter what

On the basis of these criteria of evaluation, the employees are then assessed according to their performances, which rank from below expectations, meets expectations, above expectations to outstanding, combined with their potential of improvement, which is ranked in high, good and development needs.

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Chart 12 - Appraisal evaluation scheme

The results obtained by this appraisal allocate the employees within different areas of the evaluation card, thus paving the way for a reassessment, for an improvement course or for an early promotion.

All those employees who are ranked at the extreme top right of the chart become part of the Academy Talent Program (“ATP”), which consists in a three-year program dedicated to selected talents within the EPS Group worldwide. The ATP, subject to regular performance and improvement appraisal, implies:

ü increases of the total compensation and promotion program ü stock options plans ü benefits, bonuses ü courses, masters ü secondment programs


The Group will continue to build a value-driven high-performance culture across all our operations, supporting each and every employee in evolving his/her skills and career through our diverse systems for talent development.

3.1.8. Our team, engaged shareholders

The Group offered stock options to all its employees for the first time in 2015, by allocating stock options plans and profit sharing plans. As a result today 3.55% of fully diluted shareholding is held by Group’s employee and 10.77% is held by its directors.

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Category Fully Diluted capital

Profit Sharing Plan

Directors and Executive Directors 11% 75%

Employees 4% 25%

Chart 13 - Profit Sharing plan description

3.1.9. Evolution in compensation, our main investment

Due to the growth from 2014 to 2015 of the whole EPS staff, total compensation for the Group almost doubled from Euro 1.1mio in 2014 to Euro 2.2mio in 2015.

Labour Costs 2014 2015

Staff Costs 838,128 1,310,102 Social Security Charges 208,576 305,960 Benefits and service costs 56,452 67,230 Other Costs 0 36,858 Total staff Costs 1,103,156 1,720,150 Stock Options Costs (IFRS accounting method) 0 4,521,078

Chart 14 - Group compensation

3.2. Work-life balance strategy

3.2.1. Working time and maternity protection

The average number of working hours per week is set by law. Full time employees work between 35 and 40 hours per week. EPS has also set up initiatives for a better work-life balance by offering flexible work hours at the site. For that matter the Group has not implemented a control system on working hours, badging is done only for security reasons to monitor the persons actually present in the company during the day. In addition, women with at least two children can benefit from part-time conditions and remote working flexibility programs. At the date of this report 100% of the women with at least two children have opted for – and obtained – such flexibility schemes.

3.2.2. Our results: low absenteeism

The Total Absenteeism rate, which is a key indicator for measuring employee engagement and motivation, in 2015 was 1.1%. It has to be noted that 0.8% was due to sickness, and therefore the adjusted absenteeism rate, calculated taking into account the most conservatives parameter (including maternity leave as per Methodology Note in section 6) is totaling 0.3%.

3.3. Constant trade unions and labour relations

The Group has historically recognized a pivotal role to trade unions and social representatives to take any key decision regarding its personnel.

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At EPS this dialogue plays an essential role and goes beyond the formal legal obligations that are required, providing important input to identify any issues and fine tune strategic decisions and operations.

During the year dialogue with trade union representatives of our employees was fundamental in two key occasions: for the change management process that brought to the relocation of our operational site from Aosta to Turin, as well as to support the integration of Elvi Energy within the Group.

Managing relocation, inevitably involves the populations or individuals affected and a careful assessment of the psychological and social problems that can be expected at both individual and group level. During the relocation of our operational site, together with trade union representatives we examined economic, social and demographic aspects, forms of organization, and the levels of employment and pay in order to mitigate as far as possible the impact of such change.

At the moment of this reporting, after the acquisition of Elvi Energy, meetings between local labor representatives in Valtellina (Italy) and the Group’s representatives are ensuring tight coordination throughout the integration processes. In particular we’re defining a common business travel policy within the Group that takes into account the peculiarity of the regions where the Group’s operational sites are located, as well as workers’ health and safety. No collective agreements were signed in 2015, because both the business travel policy and the relocation of our production site will be formally defined by a collective agreement in Q1 2016.

3.4. Health and Safety as a priority

Health and Safety are EPS’ number one priority. The Group is committed to providing a healthy work environment for employees, contractors and all others at our sites to help meet our company-wide goal of achieving no harm to people. We strive to impart to employees a strong personal safety ethic that is rooted in awareness, focused on prevention and motivated by concern for human life. Because we want our workforce and the employees of our partners to return home every day as healthy as when they came to work first thing in the morning. The Group is fully compliant with the Italian regulation D.Lgs. 81/08 promoting activities, training, prevention and awareness-raising on health and safety issues and drawing up and collecting good practice. For this reason and considering the nature of our operations, no collective agreements were signed for health and safety matters in 2015.

Even though the results are easily observed through indicator trends (chart occupational incidents, injuries, accidents), there are many underlying factors: work organization, risk assessment and mitigation, training, the state of the equipment, management of production processes, corporate culture and the management’s leadership on the subject.

Type of incidents, injuries and accidents 2015 2014 Occupational diseases - - Occupational injuries 1 1 Occupational accidents - -

Chart 15 - Incidents type

Our trend on work safety is a positive one; nonetheless, EPS continues to work to further improve its performance by remaining highly focused on the health and safety of its people and contractors. The Group has applied a health and safety management system and has a Health

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and Safety Representative (Responsabile del Servizio Prevenzione e Protezione - RSPP) who supervises the compliance to the certifications OHSAS 18001, ISO 14001, ISO 9001 conferred to the Group.

The health and safety management system guarantees an effective and systematic administration of employees’ safety without disrupting the organizational work structure by implementing since 2006 the following:

ü adoption of a policy for the safety management; ü hazard identification, risk assessment and identifying the risk control procedures, as per legislative requirements; ü definition of specific programs and objectives; ü definition of tasks and responsibility; ü education, training and staff involvement; ü implementation of communication and consulting procedures with the employees and stakeholders; ü controlled management of archives; ü implementation of management procedures on the activities related to significant identified risks, including processes, such as design and maintenance; ü preparation of measures to detect, prevent and monitor potential accidents (injuries and failed accidents) and emergencies; ü Health and Safety system monitoring and performance measurements, corrective actions undertaken to maintain legal compliance; ü definition and implementation of systematic and periodic inspections (accidents, incidents, non-conformities, corrective and preventive actions) on management system adequacy; and ü identification and assessment of risks and dangers associated with the activities carried out by third parties at Group’s site.

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The key performance indicators we use for occupational safety are the Total Recordable Injury Rate (“TRIR”) and the Lost Time Injury Frequency Rate (“LTIFR”) the number of accidents with the loss of at least one day of work. In the reporting year 2015 we succeeded in maintaining the number of occupational diseases to zero and we had only one occupational injury that caused the loss of no. 3.5 working days.

Occupational safety KPI 2015 TRIR 3.5 LTIFR 17.7

Chart 16 - TRIR and LTIF metrics

Several measures were taken during the 2015 in order to create the best work conditions and improve work place comfort in all EPS premises: lighting conditions, ergonomic office chairs with silicon wheels to reduce noise, correct height of office table, relaxing spaces.

The new offices and premises in Turin (Italy) were studied in order to guarantee excellent work conditions. These offices, designed by international interior designers, are calm and bright, and all employees are equipped with laptop: there is no pre-assigned desk, as any premises of the Group is a “working area”, to encourage team working and horizontal interactions between the team members.

We invested approximately 800,000 euros for the new facilities in Turin, and in 2016 we will align also the Milan and Delebio premises to such standard of excellence.

Furthermore, particular attention has also drawn the subject of good posture in workplace and the muscle-skeletal and related hazards.

Itinerant employees are provided with quality company cars and computer equipment and smartphones specifically adapted to their needs and to facilitate their work conditions wherever should they find themselves.

The Group encourages employees to undertake periodical medical checkups, by providing employees with a health insurance coverage, which guarantees a reimbursement for specific medical and surgery costs sustained by the employees during the year.

With our well-being commitment, we are involved also in promoting the personal wellness of EPS’ people against a broader public health challenge such as obesity. For this reason the Group decided not to install any vending machine in its premises, to contribute reducing the consumption of high-calories snacks and carbonated drinks, while cutting the environmental impact of logistics and packaging associated to this distribution channel.


In all the countries where the Group operates, we will evaluate the need of specific collective agreements to further regulate aspects of workers’ health and safety.

While upholding occupational Health and Safety as one of our top priorities, we will continue to improve the working environments through:

ü safety measures for equipment ü assessments to promote risk mitigation ü specific corporate communication appointment

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ü training programs that teach employees skills and information about risks management

ü organizational principles ü healthy practices ü employee climate surveys.

In 2016 the Group will launch a specific healthy living program to inspire a happier and more active lifestyle based on nutrition information, balanced diet choices and sports practice. In particular, the Group encourages its employees to attend at least one Run 5.30: a non-competitive 5.3km run in the middle of Turin and Milan at 5:30am of a business day. This is a net-zero initiative with the goal to promote a wealthy lifestyle through running, food, culture, art and experience in the context in which people lives and works.

Finally, the Group is assessing a collaboration with local producers and innovative startups to supply fresh fruits every morning in its production sites and premises.

3.5. Continuous Training

The exchange of information and the dissemination of a corporate culture through initiatives to raise awareness and specific training courses delivered to the entire workforce with no exceptions are fundamental to maintaining good safety results. As required by the law the Group has a Health and Safety Executive Committee. During 2015 the Group has invested in 440 training hours divided in:

Training 2015 Hours per employee Employees (*) Hours

Training for personnel involved in operation of pressurized gas 4 22 88

Training on electrical systems regulation CEI 11-27 16 14 228 Training of employees on regulation 81/08 4 4 16 Training on firefighting 16 4 56 Training on first aid 6 2 12 Training on first aid (full course) 16 1 16 Total 416 (*) employees are indicated as full time equivalent

Chart 17 - Training Hours in 2015

Since July 2015 the Group launched the EPS’ Academy, the in-house training and management school supporting the corporate strategy and business with weekly meetings and courses. The EPS’ Academy aims to promote the development of workers and their ability to come up with effective problem solutions. Considering the respect for the environment is already embedded in our business strategy, in 2015 we did not provide our employees with any further training on the protection of the environment.


In 2016 the Group will extend the training on first aid to all employees. Special and practical courses of the EPS’ Academy are also under evaluation and will be implemented in close collaboration with our workforce. Particularly for training and information towards employees on

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environmental protection. The Group will also take into account measures to help prevent and reduce psychological stress on its employees.

3.6. Equal opportunties for the EPS’ people

The Group considers the features and ambitions of its people as a valuable resource and is committed to creating a working environment that guarantees equal opportunities and values the results of its employees. The Human Resources department pays particular attention to ensuring equal opportunity and non-discrimination for each recruitment. Only skills, experience, qualifications and the personality of the candidates are taken into account in the election process for new employees. The diversity in terms of profiles, culture, age and gender within the Group constitutes a decisive strength and one of the most important assets.

The Group also promotes gender equality in hiring and employment, offering equivalent career paths to men and women as well as equivalent compensation and promotions. The company ensures equal access to training and is committed in improving the work-life balance of its people, increasing employee awareness and communication with colleagues at all levels. All EPS’ women and men, regardless of marital status, qualify for maternity and paternity leave as per local legislation. Furthermore, as a sign of particular respect and support towards maternity, the Group guarantees No. 3 months of work-at-home to pregnant women to be utilized one-off in full, or on a non-consecutive basis, at full discretion of the employee.


As globalization and other global trends advance, we will expand the place of women and foreign national employees in the workforce, especially in executive posts. We will endure in our effort to create a work environment where each employee can demonstrate his or her talents to the greatest extent possible. As EPS becomes an ever wider company, it is essential for our growth and competitiveness that we express the value of the diversity of our workforce in all its forms. The Group has signed an agreement with the Piemonte Region, to provide disable people with sustainable work opportunities. At this extent, the Group will engage specialized employment service providers which work with disabled people only, such as the Italian startup Jobmetoo (formerly JobDisabili). In March 2016 we will open the doors to the first disabled person in EPS.

3.7. International Labor Organization compliance

The Group promotes and implements business ethics and respect for human rights and the fundamental conventions of the International Labor Organization Declaration (“ILO”). The Group confirms its commitment on the compliance with the ILO Declaration on fundamental Principles and Rights at Work. We support and uphold the freedom of association and the effective recognition of the right to collective bargaining. All Group staff are employed in countries with favorable labor legislation. EPS does not operate with Group’s employees in countries subject to risks with respect to noncompliance with international labor conventions. The Group respects the convention for the abolishment of child labor since all employees are of legal age at the time of their recruitment.


The Group envisions a labor-management partnership for participation and cooperation. We aspire to materialize community-type labor-management collaboration that helps build global competitiveness in our business, enrich the lives of our employees, and contribute to social development through sustainable performance.

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We believe in a horizontal relation between labor and management, not the vertical one that has often defined the dynamics between trade unions and management. We seek to establish a labor management collaboration underpinned by mutual respect and equality.

The Group has therefore put in place a unique model for collaboration that facilitates interactive participation and cooperation in three different dimensions, interlinked with labor-management collaboration, namely, corporate management, field operation and collective bargaining. The direction of cooperation between labor and management is defined as follows:

ü to enhance the value of the company and the employees through transparent and open management in the corporate management dimension; ü to maximize productivity through strong teamwork and innovation in the field operation dimension; and ü to establish a business-oriented labor-management collaboration on the basis of rational industrial practices and a productive negotiation culture in the collective bargaining dimension.

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4. OUR RESPONSIBILITY TO ENVIRONMENT: OUR BUSINESS STRATEGY

Energy and climate represent two of the toughest challenges of this century. The International Energy Agency (IEA) has calculated that global energy demand will increase 1.4 times between 2012 and 20401. We are undergoing a true energy revolution: according to the Bloomberg New Energy Finance report on green economy in 2015 the investments in renewables reached 329 billion dollars (4 percent higher than in 2014), while the installed capacity of wind power reached 64 GW and solar PV rose to 57 GW.

The renewables market is now consolidating, also thanks to the investments in two major areas of expansion in the world, such as Latin America and Far East (particularly China and Japan), where solar and wind power can be the quickest and most convenient answer to the emerging demands of energy.

The green revolution has started, and a 100 percent renewable energy system no longer seems to be a utopia.

In 2015 the twenty-first United Nations Conference on Climate Change (COP21) in Paris sent a clear message: greenhouse gas emissions must be remarkably reduced, in order to limit global warming to two degrees.

Unlike other companies, which have to develop a climate strategy aimed at mitigating their own impact on climate change, we at EPS contribute with our business not only to reduce our effects on the environment to the minimum, but also to unlock the energy transition on a global scale. We aim to establish ourselves as one of the world’s foremost eco-companies.

In other terms, regardless the policies implemented and outlined below, the main aspect to be considered is that EPS has the environment at the centre stage of its business strategy.

This has led the Group, as detailed in section 5.1.5(ii) of the Reference Document, to be:

ü listed in the 100 Cleantech businesses worldwide published by the Cleantech Group ü awarded as Worldwide Technology Pioneer by the World Economic Forum. ü awarded with the first prize in the Venture 4i in Grenoble and in the Italian Venture Forum 2014 ü selected as a “growing success story” for the Tech Tour Growth Forum in Geneva and Lausanne ü selected in June 2015 as one of the top companies worldwide to participate at the “Future of Electricity Workshop 2015” of the World Economic Forum in New Delhi (India). ü receive in the context of the European Project Horizon 2020 (please see section 11.2.3(1) of the Reference Document), the official “Seal of Excellence”, the certificate delivered by European Commission, signed by Carlos Moedas, Commissioner of Research, Science and Innovation, certifying the excellence in terms of real market potential, technology, quality of the team, efficiency of implementation and business plan:

1 International Energy Agency, World Energy Outlook 2014

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4.1. Our environmental policy, our investments

EPS’ goal is to definitely enable renewables as a 24/7 clean, reliable, affordable power source. We develop, provide and integrate environmentally conscious solutions which contribute to the reduction of the environmental impact of the electricity generation, trading, distribution, storage and use.

Our strategic emphasis on accelerating green resources growth as our primary value proposition seeks to leverage energy as the bridge to a lower-carbon economy and demonstrates our commitment to the climate change challenge.

The Group’s environmental policy comprises three main areas:

ü Technologies: at a technological level we contribute to the provision of stable power supply and to mitigate climate change through low-carbon energy solutions ü Manufacturing: as regards our processes we pursue high efficient manufacturing to reduce the environmental impact in production activities ü Basic activities: we rely on people’s personal and professional sense of responsibility for basic activities which could help reduce our consumption of resources, waste production and polluting emissions on a daily basis.

The Group makes every effort to minimize its environmental impacts: our Standards & Regulatory Assurance Specialists ensure we always operate in compliance with applicable legislation. Our actions aim to protect health and well-being of our people and communities, while contributing to socio-economic improvements and maintaining the financial stability of our business.

We consider environmental protection an essential part of sustainable development in all projects, throughout the lifecycle of our systems and in all contexts in which we operate.

Just as we target with our business strategy a mitigation of climate change and resource and energy efficiency for clients through our products portfolio, we’re also working to manage and reduce the impact of our own operations. From the R&D activities down to all stages of the energy value chain.

Outstanding operational management:

ü contributes to reducing costs as it increases efficiency; ü allows for product and process innovation; ü is a requirement for the company’s license to operate; and ü reduces business risks.

Each year the Group has been compliant with the requirements of the ISO 14001 certification. More specifically, it has adopted an environmental policy that:

ü identifies the environmental aspects of its activities, products and services within the defined scope of the environmental management system that it can control and those that it can influence, taking into account planned or new developments - either new or modified; ü determines those aspects that have or can have significant impacts on the environment.

EPS has identified the following benefits from the implementation of these standards:

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ü controlling potential risk factors affecting the impact of products on the environment; ü reducing the risk of confusion, deterioration, contamination and error; and ü paying greater vigilance by personnel in the performance of their activities.

The Group has also obtained without reserves the ISO 9001 certification, for the fulfillment of the specific requirements for a quality management system where an organization:

ü needs to demonstrate its ability to consistently provide products that meets customer and applicable statutory and regulatory requirements, and ü aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement and the assurance of conformity to customer and applicable statutory and regulatory requirements.

Finally, safety and environmental risk mitigation are also the subject matter of the CE, CSA and UL certification of all EPS products.

In this respect, the Group dedicated in 2015 to ISO 14001, ISO 9001 and CE, CSA and UL certifications investments for Euro 61,500 and has a budget in 2016 of approx. Euro 500,000.


The Group’s goal is zero environmental accidents. To achieve it, efficient systems, stable processes and a focused program of work with risk assessments, routines and advanced technology are mandatory. In the upcoming years, EPS’ environmental work will become even more systematic. At the time of this report, just a few months after the opening of our operational site in Turin (Italy), we haven’t got historical data yet to make a comprehensive evaluation of our environmental performance. We are now collecting and monitoring all information regarding the environmental impact of our operations as part of an ongoing process and we will be able to match goals and results next year. In 2016 the Group will report on waste production, water and energy consumption, CO2 emissions due to energy use.

4.2. Pollution and waste management

To compete successfully in the digital age, organizations need to identify appropriate responses that balance the needs for economical development, job creation, energy storage and supply with greenhouse gas emission reductions and better waste and pollution management.

As a technologically advanced and pioneering company, we recognize that we have a particular responsibility and opportunities to contribute finding the right solutions also at this level.

We have our own routines to ensure that waste is handled correctly and safety and has started negotiations to collaborate with a specialized supplier which will manage all the processes of hazardous waste.

EPS is a paperless company, and we encourage the use of:

ü Portable Document Format (PDF): to create, display and interact with electronic documents and forms; ü Databases: to capture data for prefilling and processing documents; ü Workflow platforms: to route information, documents and direct process flow; ü Digital signature solutions: to digitally sign documents (used by end-users);

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ü Cloud applications: to receive submitted data, store documents and manage document rights.

To minimize the use of paper we imposed a maximum of copies (printed or photocopied) per month, which is decreasing every quarter. All the paper used for printing and package is recycled paper.

EPS has also limited the usage of “plastic” within its sites, which imposes use of washable domestic utensils and cutlery for all the employees and staff, while plastic utensils are used only for guests.

Regardless the fact that our Hybrid Storage Solutions are completely clean and manufacturing and testing protocols entail just oxygen and hydrogen emissions (reason for which we have no financial provisions for environmental risks), EPS pays particular attention to measures to prevent environmental risks and pollution, in particular to the choice of techniques and materials. To further reduce the impacts of its activities and test on its products the Group takes great measures on preventing technological and chemical hazards. The hydrogen produced during the tests is stored and recycled for further use during other tests, while the pure oxygen

is released back in the atmosphere.

To achieve the objective of final waste volume reduction, programs are being implemented in all of the Group’s premises to:

ü minimize and control waste generation at the source; ü promote sorting by providing bins for separate waste collection or by creating in-house waste sorting centers; ü recycle materials and reuse waste by selecting the most suitable methods; and ü improve the processing and packaging of non-reusable waste.


Despite that fact that our manufacturing process does entail neither particular noise nor air, water or soil emission, in order to improve the health and wellness management process for our workforce, in 2016 the Group will make further investments to embed leading industry practices on noise pollution reduction within our premises and will start monitoring waste quantities from 2016 onwards.

4.3. Sustainable use of resources

The Group’s energy storage solutions, in particular HyESS (“Hybrid Energy Storage Systems”), allow a reduction in the quantities of energy produced by renewable sources, which would otherwise be curtailed, and represents lost income for the grid, estimated to reach more than US$ 30 billion at international level by 2023.

Our systems promote also a more direct participation of consumers at the level of use and in the management of their consumption (management of demand).

Energy storage should permit cost savings by allowing electricity producers and suppliers to avoid purchasing electricity at peak prices and buying (or producing) it when it is cheaper, regardless of the moment when it will be used. The recourse to energy storage in order to smooth load peaks, i.e. smoothing hourly production, represents a potential market estimated in a range of US$ 10-25 billion per year by 2025.

Devices that permit the storage of excess electricity, derived from renewable energy sources during periods of strong production and weak demand (e.g. at night) and returned to the grid

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when demand increases (around midday). This avoids a slowdown in conventional plants at night, and in this way permits a reduction in production costs and CO2 emissions.

During 2015 a wide variety of energy saving activities were implemented across the Group.

In October a completely new manufacturing facility was brought on line in Turin (Italy), helping ensure a higher level of operational reliability and resource efficiency.

Most commonly and cost effectively, both facilities and premises adopted energy-efficient LED lighting solutions, which will help reduce the consumption of electricity and the energy-related CO2 emissions. Through measures such as energy-efficient manufacturing and power equipment in the Turin site we optimised the lighting system passing from a need of 12kW to only 4.6kW.

Other activities included optimizing heating and cooling processes within offices and facilities, investments in more efficient equipment, encouraging sustainable mobility of the employees, by train, car-sharing and less polluting means of transport.

Our activities do not monitor specifically raw material consumption as the manufacturing process is mainly an assembly of raw materials produced by third parties such like chemical, industrial and electronics companies.


Further optimization in all operating units and premises continue to be pursued and additional improvements are possible. In 2016 energy efficiency reporting practices will be extended in line with internationally accepted best practice and in support of EPS’ operating model. To achieve enduring operational excellence, the Group is taking into account a photovoltaic project for 250kW to cover all the energy needs of testing activities of the systems manufactured in Turin through the electricity produced by solar panels on the roof. In addition, when available the data for the new manufacturing plant in Rivoli, the Group will strictly monitor the water consumption and will carefully consider local resources and the purchase of a water purification systems.

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4.4. Climate change

An important target of the European energy policy is the reduction of the greenhouse gas emissions. Unfavorable climate conditions, such as storms and floods nowadays affect business continuity, in a disruptive way. To meet the high demand of solutions to ensure energy efficiency and autonomy, we at EPS have developed a full range of products and services which solve different issues in the field of business continuity for telecommunication, energy and railway companies.

The energy supply of the future must become more climate-friendly, more efficient and more intelligent. Innovative technologies, products and systems at all stages of the energy value chain are essential for achieving this objective. The stages range from extraction of raw materials, through electricity generation, trading, distribution and storage of energy, to the use of energy.

Although climate change is not directly affecting our business, the EPS’ top priority is climate protection.

The Group’s aim is to tackle this issue by further expanding renewable energies, both in mature economies and in emerging countries, and to contribute to replacing older and polluting power plants, which generate high levels of emissions, with new and high-efficient plants. We’re playing a key role in structuring the energy transition so as to solicit and enable a carbon-neutral electricity supply, while at the same time being in a position to make provision for future energy needs with a high quality of backup power supply over the long term.

Climate protection also plays an important role in the debate going on in the public domain. Our stakeholders, mainly customers, institutions and politicians expect us to support the accomplishment of ambitious targets and to deliver a consistent approach directed towards the reduction of greenhouse gas emissions.

Our operations require energy which gives rise to the carbon dioxide emissions, directly or indirectly. To reduce greenhouse gas emissions, the Group decided to introduce a hybrid corporate fleet and will also evaluate the introduction of electrical vehicles for the urban business trips.


To help reducing the greenhouse gas emissions linked to the business trips of our workforce within the sites of the Group, we will introduce a multisite video-conference system. The Group will also introduce a specific “green procurement” in other words the sourcing of products and services which are more environment-friendly than others, such as recycled/reused materials for the premises’ stationery and similar.

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5. OUR RESPONSIBILITY TO SOCIETY 5.1. Territorial, economic and social impact in terms of employment

In pursuing its corporate goals, the Group is committed to contributing to the development of territories in which it operates by generating employment and income to local communities. This commitment is realized through collaboration in various projects with governments and local stakeholders, local content promotion, projects for local communities and with the preventive and inclusive stakeholders.

As our business continues to grow, we are creating more jobs and welcoming more individuals to the EPS family. To cultivate the economic opportunities that build mutually beneficial relationships in the communities where we operate, our manufacturing site and premises prioritize hiring colleagues from the local areas. As detailed in section 3. Our responsibility to the EPS people. in 2015 the Group hired no. 26 new resources, transforming no. 2 internship in permanent contracts, also takes advantage of the collaboration of partners of excellence from the worlds of university, research, top-level consultancy, both at an international level and in Italy.

5.2. Innovation as local development driver, partnering with Universities

In pursuing its corporate goals, the EPS is committed to contributing to the development of territories in which we operate. This commitment is realized through collaboration in various projects with governments and local stakeholders, local content promotion, projects for local communities and with the preventive and inclusive stakeholders.

The Group has a consolidated presence in many Italian areas and has consistently built long-term relationships based on projects with national and regional authorities aimed also at sustainable development.

ü HYSOLWIND project: launched in 2012, the project has led to the development, production and deployment of an integrated and optimized solution for energy storage in the off-grid sector that integrates hydrogen, wind and solar. The innovative solution is installed and under testing in the town of Macomer, in Sardinia (Italy). ü GBMP project: EPS acts as a partner in a consortium made up of regional industrial companies: Spesso Gaskets and Ferioli & Gianotti Thermal Treatments and with the technical and scientific excellence of the Department of Applied Science and Technology of the Polytechnic of Turin. ü ALCOTRA project: our products become co-generation solutions, installed to generate heat and power. Two application fields are explored: off-grid village in Lavasè, Valle d’Aosta Region (Italy) and greenhouse for plant cultivation in Albenga, Liguria Region (Italy). The Group acts as the only participant in this project.

In order to reinforce local partnerships already in place with the companies Mavel LTD and Eltek Plast S.p.A. and join the network and active research centers in the Valle d’Aosta Region, EPS advanced to the local political administration an establishment request for new premises, with the aim to maintain local premises in the region.

Unlike other organizations which acknowledge the importance of a constructive dialogue with universities only after years of activity, EPS has a strong and everlasting relationship with the Polytechnic of Turin right from the start. The Group has implemented an agreement with the Polytechnic of Turin, to support the design of the HyESS platform: Finite Element Method (FEM)

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and Computational Fluid Dynamic (CFD) analyses have been performed on main components together with Reliability, Availability, Maintainability, Safety (RAMS) analyses of the overall architecture.

The Group has a collaboration with the Istituto Superiore Mario Boella (ISMB) – a research and innovation center operating in the ICT domain - for the web-based remote control development of the HyESS.

At the moment of this reporting, the Group is further developing the collaboration with local stakeholders, in particular the Valle d’Aosta Region and the Piemonte Region, which are creating a technological and research hub, to engage multinational companies in research and development projects with direct effects on the local productive ecosystem.

Over the time we extended the dialogue to another leading Italian University: the Polytechnic of Milan, where Giuseppe Artizzu, Director of Global and Energy Strategy at EPS is visiting professor and board member of the Master Course on RIDEF (Renewables, Decentralization, Efficiency and Sustainability). At the end of 2015 we deepened this relationship even more with the strategic acquisition of a participation in MCM Energy Lab, a center of excellence, participated by the Polytechnic of Milan. MCM Energy Lab is specialized in the development, design and supply of digital control and static energy conversion systems which can be used as critical components in various applications, always with the aim of achieving energy savings. The main component of MCM technology is the Universal Digital Control System that provides an advanced interface to the public grid for Distributed Generation systems, suitable for all sources, such as wind, photovoltaic, gas micro cogeneration and mini hydroelectricity plants.


For the future, the Group will keep advancing collaborative research and development with local universities. At the moment of this reporting, the Group completed the acquisition of 100% of MCM Energy Lab. Partnership agreements and projects to support local communities will be further increased.

5.3. Sponsorships and charities

EPS contributes to associations intervening in the areas of solidarity and childhood, by providing financial assistance to support their projects.

On October 2015 we launched the twitter contest #unsecondo (one second) in cooperation with the national newspaper La Repubblica. This contest invited all the non-profit organizations to tweet by trending the hashtag #unsecondo on how they spent one second of their time. The non-profit organization that wrote the best tweet, received a funding of 5,000 euro (the financial equivalent of one second of energy consumed in Italy) to their main project.

The winner of the contest was the AIEonlus (Associazione Italiana Endometriosi), constituted and managed by women affected by the endometriosis syndrome, in order to support women emotionally, promote people’s awareness about the disease, solicit institutions on this condition and promote scientific research.

The Group since 2015 has decided to replace the amount usually planned for the Christmas corporate gifts with a donation to the Paideia Foundation. Founded on 1993 by the Giubergia and Argentero families, and supported by the Ersel Group and by many other donors, in 1998 the Foundation was recognized among the non-profit organizations of social utility. The purpose of Paideia is enclosed in its name, more specifically in ancient Greek the word ‘paideia’ had many meanings including: childhood, growth, education, training and culture. The Foundation

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is focused today mainly in the rehabilitation of disabled children and in the inclusion of their families during the process.


The Group aims at including sponsorships and charities within a wider and more structured Corporate Social Responsibility plan. At the moment of this report, we’re taking into consideration continuous collaborations with well-established and renowned international solidarity NGOs, who are directly involved in projects for the supply of electricity to under-electrified locations and people.

5.4. Enduring partnerships and stakeholders

The Group business relies on effective and sustainable supply chains to meet the evolving needs of our customers. As we do with all of our stakeholders, we strive to create relationships with suppliers that are built on a foundation of integrity, respect and mutual benefit.

We seek the most responsible and cost-effective ways to secure goods and services from our suppliers. In particular, we emphasize relationships with entities near our operations to the extent they meet our requirements. By supporting local suppliers, EPS benefits from proximity and security of supply, contributes to local economies and helps attract additional investment to the community.

5.5. A supply chain engaged in Social and Environmental Responsibility

EPS’ business relies on effective and sustainable supply chains and partnerships’ agreements to meet the evolving needs of our customers on the technical, energy and economic front. As we do with all of our stakeholders, we strive to create relations with suppliers, providers and business partners that are built on a foundation of integrity, respect and mutual benefit. The Group is committed to build sound partnerships with suppliers through fair-trading in compliance with procurement-related laws and regulations.

Our extremely innovative activity often requires exclusive components, products and supply which in most cases are customized for our special needs or provided by a unique partner. However, regardless of challenges, we’ve been selecting our technology providers paying a particular attention on their reputation in terms of social responsibility and operational excellence. The procurement department, in close collaboration with Engineering, Innovation, Technology and R&D has selected suppliers based on various Total Cost of Ownership (TCO) targets, combining economic performance with environmental responsibility. We work continually to improve the supply chain with a strong focus on its sourcing, sustainability, traceability and transparency. To reduce risks linked to the procurement, the Group has been working both at an engineering and market investigation levels on a variety reduction program, to ensure the sustainability of our purchasing.

The Group has agreements with the company Prima Electro S.p.A one of the Group’s principal shareholders and the preferential supplier of electronic components for the control and the system management, specially developed for the Group’s products. Over the time, we established various agreements with Prima Electro S.p.A., part of the Prima Industrie Group, relating to supply, research and development and a leasing agreement for commercial use. The choice of the Prima Industrie Group as preferred supplier has been driven also by their commitment in CSR, as they set officially as one of their four corporate values the Social and Environmental Responsibility.

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5.6. Fair trade practices

As the globalization of markets continues apace, national borders liquefy and loose their relevance for trade in energy sources. Companies like EPS are therefore being challenged by their stakeholders to exert influence on their suppliers through their procurement policy on both an international and local level.

Purchases principally consist of raw materials and semi-finished products, such as the components of fuel cells, which are then assembled and integrated into the Group’s systems, of Self’s electrolytic cell and of the electronic components.

The Group is committed to build sound partnerships with suppliers through fair-trading in compliance with procurement-related laws and regulations.

The Group is committed to the highest standards of ethics, honesty, openness and accountability. In the course of our business activities, we fully endorse all applicable anti-bribery, fraud, corruption, and money-laundering legislation, taking a zero-tolerance approach to any form of corruption or fraud from either our own staff or those acting on our behalf.

The Company and its Supervisory Committee (Organismo di Vigilanza) provide ongoing bribery awareness training to employees and have developed proportionate procedures across all its areas of operations to ensure that bribery and corruption risks are minimized and eliminated where possible.

This commitment is reflected in the key principles contained within the Ethical Code and Anti Fraud and Corruption Code of Conduct approved by the Group, which we expect all our staff and those acting on our behalf to understand and comply with.

Partners agree to and undertake to fulfil any provision of the Ethical Code and Anti Fraud and Corruption Code of Conduct approved by the Group and therefore agree, inter alia, to behave in the full respect of business, corporate and professional ethics, preventing the EPS from any relationship, agreement or role that may negatively affect our reputation, values and commitments.

We make all payments to the partners in compliance with any applicable anti-money laundering regulation from time to time.

Furthermore, the shares of Electro Power Systems S.A. are listed on the regulated market of Euronext in Paris. In this context, compliance by the Partner with rules applicable to stock transactions and the holding and use of material non-public information it may receive in the course of its activities under this Agreement is crucial for the Company. Such rules mainly stem from Articles 621-2 to 622-2 of the General Regulation of the French Autorité des Marchés Financiers (AMF) and Articles L. 465-1 et seq. of the French Monetary and Financial Code.


We will incorporate CSR criteria in our purchasing processes and decisions, such as occupational health and safety, consideration of human rights, respect of labor and environment. For the upcoming years, the Group plans to create a Best Technology Provider Award to reward and provide further visibility to the most strategic partners.

The Group is introducing a procurement policy which entrusts tender contracts for works, services and supplies in compliance with the legislation in force and the principles of cost-effectiveness, correctness, competition, and advertising, using procedures which guarantee participating businesses the utmost transparency, objectivity and equality of treatment.

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In 2016 the Group will introduce an anti-corruption compliance plan to which all suppliers and partners will be asked to adhere. We will incorporate CSR criteria in our purchasing processes and decisions, such as occupational health and safety, consideration of human rights, respect of labor and environment. Specific sustainability criteria are envisaged in terms of the approval procedures, procurement choices, contractual clauses and means of checking the work of suppliers.

For the upcoming years, the Group plans to create a Best Technology Provider Award to reward and provide further visibility to the most strategic partners.

5.7. Other measures taken in favour of human rights

We at EPS have set respect for human rights as the most important principle for conducting sound business activities. Wherever Electro Power Systems Group operates in the world, the company applies the same high standards and principles of conduct. Respect, diversity, integrity, ethics, safety and sustainability — the elements that make up the EPS’ corporate culture foundation — are taken into account by employees during their meetings with customers and colleagues around the globe.

The Group complies with all applicable laws and regulations concerning human rights in each country and region, understands international standards, and respect human rights, and shall not condone any use of either child labor or forced labor.


We will keep upholding human rights as one of our management principles and we will promote awareness about our commitment to protect human rights throughout the Group with specific workshops in the EPS’ Academy.

6. METHODOLOGY NOTE This CSR Report provides a detailed presentation of Group corporate social and environmental responsibility priorities and practices. It describes the current and future challenges faced by the Group in this area, the strategic approaches adopted in response and progress achieved in meeting its objectives. This report is drawn up in accordance with CSR reporting requirements applicable in France (L.225-102-1 and R.225-105-1 of the French Commercial Code). It provides a tool for measuring employment-related and societal impacts, governance and environmental performances.

This report was reviewed for compliance by the independent third-party, Ernst & Young et Associés.

6.1. Reporting boundaries and indicators selection criteria

The reporting boundary for employment, social and environmental indicators is comprised of the subsidiaries controlled by the Group as at 31 December 2015. These subsidiaries are consolidated according to the full consolidation method. As a result, unless otherwise specified in this report with the statement “at the date of this report”, any figure does not take into account the employment, social and environmental indicators on and from 1 January 2016 which includes the acquisition of Elvi Energy S.r.l. and MCM Energy Lab S.r.l., as well as the new hiring of the Group.

The reporting boundary for employment indicators for fiscal 2015 coincides with the Group’s structure for consolidation (cf. note 1.4 to the consolidated financial statements).

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The following indicators concern only the workforce located in Italy (79% of the Group’s workforce) due to the immateriality of information reported by other entities of the Group (Electro Power Systems Inc. and Electro Power Systems (India) Ltd.), essentially because of either the non operational activities or the exclusive focus on business development:

ü occupational accidents ü absenteeism ü training and the organization of dialogue between employees and management ü equal opportunity employment

Analysis of employment-related, environmental and social impacts relating to Group activities made it possible to define relevant indicators in accordance with requirements resulting from the Grenelle II Environmental Law (article 225). Certain information not falling within the scope of the Group’s activity or its environmental and societal priorities due to its operating method and structure was not considered pertinent and on that basis included in the reporting boundary just in the “Future challenges and approaches” section, or, with reference to the following information, excluded from this report and its reporting boundary:

ü water consumption and supply in relation to local constraints; ü land use; ü climate change; ü biodiversity; ü impacts on neighboring or local populations.

With the appointment of the new board in February, since 2015 the Group has started for the first time to formalize and monitor CSR goals, with precise policies and procedures that are implemented by its new operational and support departments. For that reason, CSR indicators and criteria have not been monitored in 2014 and therefore all quantitative indicators cannot be presented from one period to another. However, the 2015 CSR quantitative indicators presented in this report will serve as reference for any future CSR reporting of the Group.

6.2. Indicators criteria

Below are the methods for calculating

ü Total absenteeism = B / (A+B). Sickness absenteeism = C / (A+B). Where:

A = Number of hours effectively worked by all Employees with contracts, including training

B = Number of hours of absence (sick leave, occupational diseases, maternity leave, accidents in the work place and/or travel-to-work accidents or any other absence not provided for by contract or social shock absorbers schemes)

C = Number of days of sick leave (excluding occupational diseases, maternity leave, accidents in the work place and/or travel-to-work accidents)

ü Headcount: full and part-time employees on fixed-term, permanent, temporary and professional training contracts, and permanent advisors (“Employees”), as well as management (including Chairman, Executive board members and members of the Executive Commitee), and partners dedicated to the business development (which have been contracted through business partnership agreements), in force as at 31 December 2015. Temporary personnel is not included in this data. When reference is made to “at the date of this report”, the data includes Employees of EPS and Employees of Elvi Energy S.r.l. and MCM Energy Lab S.r.l and their partners as at the date hereof.

35

ü Training: the percentage of persons trained in relation to the total Italian workforce at 31 December 2015. ü Workforce by social professional category: as the same classification for management versus non management employees does not exist in certain countries, management refers exclusively to chairman, executive and active members of the board.

Total Recordable Injury Rate (TRIR): is a commonly used indicator that measures how many OSHA recordable incidents a company has per number of hours worked TRIR = (# of Recordable Injuries * 200,000) / # hours worked.

ü Lost Time Injury Frequency Rate (LTIFR): is the number of lost time injuries occurring in a workplace per 1 million man-hours worked.

LTIFR = (# of Lost Time Injuries * 1,000,000) / # hours worked.

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7. CONCORDANCE TABLE To facilitate the reading of the CSR report, the following concordance table provides cross-references to the main categories of information required by French law (Grenelle II Environmental Law and article R. 225-105.1 of the French Commercial Code):

Grenelle II Environmental Law (article R. 225-105.1 of the French Commercial Code) ENVIRONMENTAL INFORMATION Environmental policy Organization of the company to take into account environmental concerns. Environmental evaluation and verification approaches

4 / 4.1

Training and information towards employees on environmental protection 3.5 Budget dedicated to environmental protection and environmental risk mitigation 4.1 Financial provisions for environmental risks 4.2 Pollution and waste management Prevention, reduction and fixing of air/water/soil emissions 4.2 Prevention, recycling and cutting waste 4.2 Noise pollution and others types of pollution 4.2 Sustainable use of resources Water consumption 4.2 Water supply considering local resources 4.2 Consumption of raw materials 4.2 Measures taken to improve the efficiency of raw materials use 4.2 Energy consumption 4.3 Measures to improve energy efficiency and better use renewable energies 4.3 Land use 6.1 Climate change Greenhouse gas emissions 4.4 Measures to adapt to climate change 4.4 Biodiversity preservation Measures taken to save and develop biodiversity 4.5 SOCIAL INFORMATION Employment Total workforce 3.1.1 Workforce broken down by gender 3.1.1(A) Workforce broken down by age bracket 3.1.1(B) Workforce broken down by region 3.1.1(C) Hires 3.1.2 Redundancies 3.1.2 Compensations 3.1.5 / 3.1.6 Evolution of compensation 3.1.6 Organization of work Organization of work time 3.2.1 Absenteeism 3.2.2 Labor relations Organization of social dialogue 3.3. Outcome of the collective agreements 3.3. Occupational health & safety Health and safety conditions at work 3.4 Outcome of the collective agreements signed with trade unions regarding occupational health and safety 3.3 Frequency and seriousness of incidents 3.4 Occupational diseases 3.4 Training Policies implemented regarding training 3.1.4(E) / 3.5 Total number of training hours 4.5 Equal treatment Measures promoting gender equality 3.1.4(E) / 3.6 Measures promoting the employment and integration of people with disabilities 3.6

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Policy against discrimination 3.1.4(E) Promotion and respect for the clauses of ILO conventions Respect for the right to organize and collective bargaining 3.7 Abolition of discrimination in employment and occupation 3.7 Abolition of forced or compulsory labor Abolition of child labor 3.7 INFORMATION REGARDING COMMUNITY AND SOCIAL INVOLVEMENT PROMOTING SUSTAINABLE DEVELOPMENT

Regional, economic and social impact created by the activity of the company Regarding employment and local development 5.1 / 5.2 Impact on local and neighboring communities 6.1 Stakeholder relationship Conditions of the dialogue with the persons and organizations 5.2 Philanthropic actions and community involvement 5.3 Subcontracting and suppliers Integration of the social and environmental issues within the sourcing policy 5.5 Importance of subcontracting and integration of CSR in the relationships with suppliers and subcontractors 5.5 Fair operating practices Actions implemented to prevent any kind of corruption 5.6 Measures implemented to promote consumer health and safety 5.6 / 3.4 Other actions promoting human rights 5.7 / 5.3

Electro Power Systems Group

Year ended the 31 12 2015

Independent verifier’s report on consolidated social, environmental and societal information presented in the management report

ERNST & YOUNG et Associés

This is a free translation into English of the original report issued in the French language and it is provided solely for the convenience of English speaking users. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

Electro Power Sytems Group Year ended the 31 12 2015

Independent verifier’s report on consolidated social, environmental and societal information presented in the management report

This is a free translation into English of the original report issued in the French language and it is provided solely for the convenience of English speaking users. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the shareholders,

In our quality as an independent verifier accredited by the COFRAC1, under the number n° 3-1050, and as a member of the network of one of the statutory auditors of the company Electro Power Systems Group, we present our report on the consolidated social, environmental and societal information established for the year ended on the 31 12 2015, presented in the management report, hereafter referred to as the “CSR Information,” pursuant to the provisions of the article L.225-102-1 of the French Commercial code (Code de commerce).

Responsibility of the company

It is the responsibility of the Board of Directors to establish a management report including CSR Information referred to in the article R. 225-105 of the French Commercial code (Code de commerce), in accordance with the protocols used by the company (hereafter referred to as the “Criteria”), and of which a summary is included in the management report.

Independence and quality control

Our independence is defined by regulatory requirements, the Code of Ethics of our profession as well as the provisions in the article L. 822-11 of the French Commercial code (Code de commerce). In addition, we have implemented a quality control system, including documented policies and procedures to ensure compliance with ethical standards, professional standards and applicable laws and regulations.

1 Scope available at www.cofrac.fr

Electro Power Systems Group 2

Responsibility of the independent verifier

It is our role, based on our work:

- to attest whether the required CSR Information is present in the management report or, in the case of its omission, that an appropriate explanation has been provided, in accordance with the third paragraph of R. 225-105 of the French Commercial code (Code de commerce) (Attestation of presence of CSR Information);

- to express a limited assurance conclusion, that the CSR Information, overall, is fairly presented, in all material aspects, in according with the Criteria;

Our verification work was undertaken by a team of 3 people between January 2016 and the date of signature of our report for an estimated duration of 6 weeks.

We conducted the work described below in accordance with the professional standards applicable in France and the Order of 13 May 2013 determining the conditions under which an independent third-party verifier conducts its mission, and in relation to the opinion of fairness, in accordance with the international standard ISAE 30002.

1. Attestation of presence of CSR Information

We obtained an understanding of the company’s CSR issues, based on interviews with the management of relevant departments, a presentation of the company’s strategy on sustainable development based on the social and environmental consequences linked to the activities of the company and its societal commitments, as well as, where appropriate, resulting actions or programmes.

We have compared the information presented in the management report with the list as provided for in the Article R. 225-105-1 of the French Commercial code (Code de commerce).

In the absence of certain consolidated information, we have verified that the explanations were provided in accordance with the provisions in Article R. 225-105-1, paragraph 3, of the French Commercial code (Code de commerce).

Based on this work, we confirm the presence in the management report of the required CSR information.

2. Limited assurance on CSR Information

Nature and scope of the work

We undertook interviews with people responsible for the preparation of the CSR Information in the different departments, in charge of the data collection process and, if applicable, the people responsible for internal control processes and risk management, in order to:

- Assess the suitability of the Criteria for reporting, in relation to their relevance, completeness, reliability, neutrality, and understandability, taking into consideration, if relevant, industry standards;

2 ISAE 3000 – Assurance engagements other than audits or reviews of historical information


- Verify the implementation of the process for the collection, compilation, processing and control for completeness and consistency of the CSR Information and identify the procedures for internal control and risk management related to the preparation of the CSR Information.

We determined the nature and extent of our tests and inspections based on the nature and importance of the CSR Information, in relation to the characteristics of the Company, its social and environmental issues, its strategy in relation to sustainable development and industry best practices.

For the CSR Information which we considered the most important3:

-At the level of the consolidated entity, we consulted documentary sources and conducted interviews to corroborate the qualitative information (organisation, policies, actions, etc.), we implemented analytical procedures on the quantitative information and verified, on a test basis, the calculations and the compilation of the information, and also verified their ;

For the other consolidated CSR information, we assessed their consistency in relation to our knowledge of the company.

Finally, we assessed the relevance of the explanations provided, if appropriate, in the partial or total absence of certain information.

We consider that the sample methods and sizes of the samples that we considered by exercising our professional judgment allow us to express a limited assurance conclusion; an assurance of a higher level would have required more extensive verification work. Due to the necessary use of sampling techniques and other limitations inherent in the functioning of any information and internal control system, the risk of non-detection of a significant anomaly in the CSR Information cannot be entirely eliminated.

Conclusion

3Environmental and Societal information:

- Indicators (quantitative information): The company’s organization to taking into account environmental issues and, if applicable, the environmental assessment approaches or certifications

- Qualitative information: Territorial, economic and social impact of the company in terms of employment and regional development and on local population, relationships with persons or organizations interested in the company's business (dialogue conditions with those persons or organizations, actions of partnership or sponsorship), subcontractors and suppliers (consideration of social and environmental issues in the procurement policy of the company, importance of subcontracting and addressing the social and environmental responsibility of suppliers), fair practices (actions taken to prevent corruption, measures taken for health and consumer safety, occupational accidents, including the frequency and severity rates, and occupational diseases), and actions taken in support for human rights

Social / HR information:

- Indicators (quantitative information): Total number of employees and their geographic distribution, hiring and dismissals, absenteeism, health and safety conditions at work, occupational accidents, including the frequency and severity rates, and occupational diseases, total number of hours trained

- Qualitative information:Salary and their evolution, training policies


Based on our work, we have not identified any significant misstatement that causes us to believe that the CSR Information, taken together, has not been fairly presented, in compliance with the Criteria.

Paris-La Défense, March the 2nd, 2016

French original signed by:

Independent Verifier

ERNST & YOUNG et Associés

Partner, Sustainable Development

Christophe Schmeitzky

Partner

Bruno Perrin

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