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Annual report of the Company Elektro Celje

and the Elektro Celje Group

for

2019

Green FutureNetwork

https://www.elektro-celje.si/si/



for

2019

Green FutureNetwork

3

Table of contents

E l e k t r o C e l j e i n 2 0 1 9

INTRODUCTORY PART ................................................... 7

01 Key indicators of operation of the Company Elektro Celje and the Elektro Celje Group .................8

02 Foreword by the chairman of the management board ....................................................................10

03 Corporate governance ....................................................133.1 Corporate Government Statement ...................................... 143.2 Supervisory Board Report ........................................................183.3 Corporate Integrity and the Code of Ethics .................. 223.4 Risk Management of the Company Elektro Celje and the Elektro Celje Group ............................................... 223.4.1 Overview of Basic Risks at the Company Elektro Celje ............................................................................................................. 243.4.2 Risk Management and Types of Risks in the Elektro Celje Group .............................................................................. 263.5 Internal Audit and Internal Control System ...................27

04 Major business events and circumstances in 2019 ........................................................... 284.1 Major events at the Company Elektro Celje and Elektro Celje Group after the end of the accounting period ...........................................................................................................31

BUSINESS REPORT of the company Elektro Celje .......................... 33

05 Introduction of the Company Elektro Celje .......................................................................................................... 345.1 Profile of the Company Elektro Celje ................................ 345.2 Our mission, vision and values ............................................. 355.3 Company's activity and area of operation ..................... 355.4 Ownership Structure .................................................................. 365.5 Organisation of the Company Elektro Celje .................. 365.6 Strategic Guidelines and Goals of the Company Elektro Celje .............................................................................................375.6.1 Presentation of the Strategy of the Company Elektro Celje .............................................................................................375.6.2 Strategic Objectives and Diagram .................................. 385.6.3 Business Goals of the Company Elektro Celje .......... 395.7 Operating Conditions of the Company Elektro Celje ............................................................................................................ 4006 Activities of the Company Elektro Celje .............................416.1 Operation and Development of the Distribution Network ......................................................................................................416.1.1 Development of the Distribution Network ......................416.1.2 Operation of the Distribution Network ............................446.1.3 Protection and Remote Control ..........................................446.1.4 Telecommunication Support ................................................446.1.5 Access to Network .....................................................................446.1.6 Network Charge Calculation ............................................... 466.2 Maintenance of Electricity Infrastructure ..................... 466.3 Investments and Projects ........................................................476.4 Market Services .............................................................................51

07 Operation and performance analysis of the Company Elektro Celje ................................................. 52

08 Sustainable development ............................................618.1 Sustainable Development Goals ...........................................618.2 Investments and the Development of the Distribution Network .......................................................................... 628.3 Management Systems .............................................................. 648.4 Research and Development Projects ................................ 658.5 Information System Development ...................................... 668.6 Societal and Social Aspects ...................................................678.7 Environmental Care .....................................................................73

FINANCIAL REPORTof the company Elektro Celje ...........................75

09 Independent auditor's report ....................................76

10 Financial statements of Elektro Celje ..............7810.1 Balance sheet ...............................................................................7810.2 Income statement .....................................................................8010.3 Statement of comprehensive income .............................8110.4 Statement of cash flows ........................................................ 8210.5 Statement of changes in equity ........................................ 83

11 Explanatory notes to the financial statements ......................................................................................... 8511.1 Reporting Company .................................................................. 8511.2 Bases for the Preparation of the Financial Statements .............................................................................................. 8511.3 Important accounting policies ............................................ 8911.4 Disclosure of Items in the Balance Sheet ....................10111.4.1 Long-term Intangible Assets and Long-term Deferred Expenses and Accrued Revenue ............................ 10211.4.2 Tangible fixed assets ........................................................... 10311.4.3 Long-term Financial Investments ................................ 10511.4.3.1 Long-term Financial Investments into Companies within the Corporate Group .......................................... 10511.4.3.2 Long-term Financial Investments in Associates ........... 10511.4.3.3 Long-term Financial Investments in Shares and Stakes of Other Companies ................................................................ 10611.4.4 Deferred Tax Assets ............................................................. 10611.4.5 Inventory .....................................................................................10711.4.6 Receivables ...............................................................................10711.4.6.1 Long-term Operating Receivables ..................................... 10811.4.6.2 Short-term Operating Receivables .................................... 10811.4.7 Cash ............................................................................................. 10911.4.8 Deferred Expenses and Accrued Revenue .............. 10911.4.9 Equity ...........................................................................................11011.4.10 Provisions and Long-term Accrued Expenses and Deferred Revenue ......................................................................11011.4.11 Financial Liabilities..............................................................11211.4.12 Operational Liabilities .......................................................11311.4.13 Deferred Tax Liabilities ..................................................... 11411.4.14 Short-term Accrued Expenses and Deferred Revenue .................................................................................................... 11411.4.15 Contingent Liabilities ........................................................11511.4.16 Potential Receivables and Other Off-Balance Sheet Items ............................................................................................11511.5 Significant Events After the Balance Sheet Date ...11611.6 Disclosure of Items in the Income Statement ...........11611.6.1 Sales Revenue ..........................................................................116

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E l e k t r o C e l j e i n 2 0 1 9

11.6.2 Capitalised Own Services .................................................. 11711.6.3 Other Operating Revenue .................................................. 11711.6.4 Costs of Materials and Services ..................................... 11711.6.5 Labour Costs ............................................................................11811.6.6 Write-offs ...................................................................................11911.6.7 Other Operating Expenses ................................................11911.6.8 Financial Profit or Loss ...................................................... 12011.6.9 Other Revenue ........................................................................ 12011.6.10 Other Expenses ....................................................................12111.6.11 Profit or Loss ..........................................................................12111.6.12 Statement of Comprehensive Income ......................12111.6.13 Income Tax ..............................................................................12111.7 Disclosure of Items in the Income Statement ............12111.8 Disclosure of Items in the Statement of Changes in Equity .................................................................................................. 12211.9 Financial Risk Management ............................................... 12311.9.1 Credit Risk ................................................................................. 12311.9.2 Market Risk .............................................................................. 12511.9.3 Liquidity Risk ........................................................................... 12611.9.4 Equity Risk .................................................................................12711.10 Transactions with Associated Parties .........................12711.10.1 Transactions with Group Companies .........................12711.10.2 Data on Groups of Persons ........................................... 12811.11 Disclosures Pursuant to the Energy Act .................... 13011.11.1 Balance Sheet Broken Down by Activities ............. 13011.11.2 Income Statement Broken Down by Activities .... 13411.11.3 Statement of Cash Flows Broken down by Activities .................................................................................................. 136

BUSINESS REPORT of the Elektro Celje Group .................................. 139

12 Presentation of the Elektro Celje Group ...... 14012.1 Subsidiary ECE .......................................................................... 14012.2 Subsidiary Elektro Celje OVI ............................................. 14312.3 Strategic Guidelines and Goals of Elektro Celje Group .........................................................................................................14412.4 Terms and conditions of the Elektro Celje Group ....145

13 Performance analysis of the Elektro Celje Group ....................................................................................... 148

14 Employees and social responsibility in the Elektro Celje Group .................................................. 156

FINANCIAL REPORT of the Elektro Celje Group .................................. 159

15 Independent auditor's report .................................. 160

16 Consolidated financial statements .................. 16216.1 Consolidated statement of financial position .......... 16216.2 Consolidated income statement ..................................... 16416.3 Consolidated comprehensive income statement .. 16416.4 Consolidated statement of cash flows ........................ 16516.5 Consolidated statement of changes in equity ........ 166

17 Explanatory notes to the consolidated financial statements .............................................................. 16817.1 Reporting Company................................................................. 16817.2 Bases for the Preparation of Consolidated Financial Statements ...................................................................... 168

17.3 Significant Accounting Policies ........................................ 17117.4 Determination of Fair Value ................................................ 18417.5 Composition of the Elektro Celje Group ....................... 18517.6 Intangible assets ...................................................................... 18617.7 Tangible fixed assets ...............................................................18717.7.1 Right to Use Leased Assets .............................................. 18817.8 Investment property ............................................................... 18917.9 Financial Investments............................................................ 19017.9.1 Other financial investments ............................................. 19017.9.2 Investment in an Associate ............................................. 19017.10 Inventory .....................................................................................19117.11 Operating Receivables ..........................................................19117.11.1 Long-term Operating Receivables ...............................19117.11.2 Short-term trade receivables ....................................... 19217.11.3 Assets from Contracts with Customers .................. 19217.11.4 Other Operating Receivables and Other Assets .. 19217.12 Cash and Cash Equivalents .............................................. 19217.13 Equity and Reserves ............................................................ 19317.14 Provisions ................................................................................... 19517.15 Long-term deferred revenue ............................................ 19617.16 Loans Received and Other Financial Liabilities .... 19617.17 Operating liabilities .............................................................. 19817.17.1 Liabilities from Customer Contracts.......................... 19817.18 Contingent Liabilities .......................................................... 19817.19 Contingent Assets and Other Off-balance-sheet Records ........................................................... 19917.20 Determination of Fair Value ............................................ 19917.21 Important Events Following the Date of the Group's Statement of Financial Position .............................. 20017.22 Sales Revenue ......................................................................... 20117.23 Capitalised Own Products ................................................20217.24 Other operating revenue ...................................................20217.25 Costs of Materials and Services ...................................20217.26 Labour Costs ............................................................................20317.27 Depreciation .............................................................................20417.28 Losses, write-offs and revaluation adjustments .20417.29 Other Operating Expenses ...............................................20417.30 Financial Revenue and Expenses .................................20517.31 Income Tax .................................................................................20517.31.1 Deferred tax assets ........................................................... 20617.31.2 Deferred tax liabilities ..................................................... 20617.32 Earnings per share ...............................................................20717.33 Disclosure of Items in the Consolidated Statement of Cash Flows ...............................................................20717.34 Financial Risk Management ........................................... 20817.34.1 Credit Risk ............................................................................. 20817.34.2 Market Risk ............................................................................ 21017.34.3 Liquidity Risk ........................................................................ 21017.34.4 Equity Risk ..............................................................................21117.35 Transactions with Associated Parties ....................... 21217.35.1 Transactions with Owners .............................................. 21217.35.2 Transactions of the Parent Company with Group Subsidiaries ............................................................................ 21217.35.3 Data on Groups of Natural Persons .......................... 21317.36 Auditor Costs ........................................................................... 215

List of abbreviations ............................................................... 216

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Energy is what drives us onBy enabl ing a rel iable, h igh-qual i ty , cost-effect ive and environmental ly fr iendly electr ic i ty supply and modern services, we enable development and progress. We are constantly developing our knowledge and using i t in cooperat ion with our users. With years of experience, we develop new and eff ic ient services that enable our users to strengthen their business opportunit ies.

INTRODUCTORY PART

7

Company Elektro Celje (in EUR)Achieved Graphical

comparison2015 2016 2017 2018 2019

Net sales revenue 53,791,561 49,517,923 49,823,026 50,512,707 50,831,032

EBITDA 26,639,589 27,596,970 26,982,023 28,994,302 27,536,024

EBITDA margine 28.37% 42.59% 41.11% 42.75% 40.90%

EBIT 8,539,422 9,518,167 8,688,934 11,504,499 9,478,479

Net profit or loss 6,808,482 9,435,710 9,062,759 10,428,778 9,252,820

Equity 196,443,080 200,929,373 207,146,133 214,215,726 219,909,447

Assets 272,260,993 276,059,990 279,697,695 284,080,642 290,471,682

Net financial debt/EBITDA 1.70 1.62 1.47 1.28 1.42

ROA 2.54% 3.44% 3.26% 3.70% 3.22%

investments 21,765,222 20,072,117 22,140,904 23,669,548 24,664,650

Key indicators of operation of the Company Elektro Celje and the Elektro Celje Group

Revenue from the sale of services to customers

EUR 2.4 million

Equity

EUR 219.9 million

Investments

EUR 24.7 million

Electricity losses in the distribution network in MWh

Number of remote metering points

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

+28.5%(compared to 2018)



01Company Elektro Celje

Losses in MWh

95,857

4.97% 4.93%4.54% 4.55%

4.05%

90,01895,823 107,40890,886 122,40391,334 134,17882,518 148,070

% of electricity losses

8 0 1 Ke y i n d i c a t o r s o f o p e ra t i o n o f t h e C o m p a n y E l e k t ro C e l j e a n d t h e E l e k t ro C e l j e G ro u p

Elektro Celje Group (in EUR)Achieved Graphical

comparison2015 2016 2017 2018 2019


EBITDA 31,585,802 30,468,792 30,256,783 33,122,836 27,866,198

EBIT 12,227,963 10,793,236 11,353,737 14,908,206 9,278,099

Net profit or loss 10,233,231 10,747,578 9,843,544 12,550,115 8,595,312

Equity 207,638,928 213,314,562 219,770,154 228,621,568 233,303,669

Assets 312,244,544 314,273,205 318,122,910 323,636,596 332,064,289

Gross value added 54,680,314 55,176,463 54,971,932 58,888,825 53,868,030

ROE 5.06% 5.11% 4.55% 5.60% 3.72%

Net sales revenue

EUR 223.9 million

Assets

EUR 332.1 million

Electricity production in the subsidiary Elektro Celje OVI in MWh

Electricity sales and revenue from electricity sales

2015 2016 2017 2018 2019



Elektro Celje Group

3,730 4,555 2,870 3,411 3,728

2015 2016 2017 2018 2019

Amount of electricity sold (in GWh)

2,716

139.3

2,723

130.0

2,849

125.9

2,729

127.6

3,150

167.6Revenue from the sale of electricity (in EUR million)

9E l e k t r o C e l j e i n 2 0 1 9

Foreword by the chairman of the management board

The goal of the company Elektro Celje in 2019 was to ensure the safe and reliable supply of energy services to customers according to market and sustainable development principles, taking into account the efficient use, economical use of renew-able energy and environmental protection conditions. We have built a robust and powerful electricity network that provides ad-equate power and quality of voltage and current in accordance with current standards.

Internal controls and risks are an integral part of the Group's operations. The key risks to which the company was exposed were identified, assessed, monitored and managed.

Operating results indicate a job well doneResponsible management and actions are reflected in the numbers at the end of the year, and the company Elektro Celje ended 2019 with good operating results. Revenue of the company Elek-tro Celje amounted to EUR 68,443,737, which is 1.8% more than planned. Net profit or loss is a profit in the amount of EUR 9,252,820, which is 8.2% more than planned. Return on Assets (ROA) in the amount of 3.22% exceeded the projected and expected value in the Annual Capital Investment Management Plan of SSH by 0.22%.

The value of realised investments amounted to 24,664,650 EUR, which is 7.2% more than planned. This also means that CAPEX in net sales revenue (48.52%) is higher than planned (46.34%).

All strategic criteria indicators are more favourable than projected and expected in the AMP. The SAIDI and SAIFI indica-tors are more favourable than the values specified in the act by the Energy Agency, mainly because there were no DTS outag-es in 2019 and no extreme weather con-ditions, which would affect outages for a longer period of time. The uninterruptible power supply is defined for the total num-ber and the duration of unplanned mo-mentary and longer interruptions in one year at one input/output point. The num-ber of planned interruptions is also de-fined. With the quantity of electricity dis-tributed amounting to 2,036,262 MWh,

021 0 0 2 F o r e w o r d b y t h e c h a i r m a n o f t h e m a n a g e m e n t b o a r d

the share of losses per unit of electricity distributed in 2019 stood at 4.05% (4.55% in 2018), while recognised losses as per the Energy Agency regulatory framework amounted to 4.81%.

Ready for changes, we are strengthening cooperation in European projectsThere are certainly major changes ahead, as the company Elektro Celje operates in a rapidly changing environ-ment. We have appropriately responded to all of these changes and are certain-ly among the companies that in 2019 already provided answers to the con-temporary challenges of the systemic transition to renewable energy, electric mobility, the use of alternative, environ-mentally friendly energy products, the development of sustainable mobility and the provision of integrated intelligent electricity consumption management services. There are new technologies on the march which will demand huge investments in electricity infrastructure, information technology and the acquisi-tion of new skills. Electricity will certain-ly be the energy of the future due to its properties. The classical energy supply system that was present in past will cer-tainly no longer exist in the future.

At the company Elektro Celje, we are aware of the importance of cooperation in the field of technological development and innovative activities and that is why we participate in projects that directly relate to the technological fields of elec-tricity distribution. In 2019, we became involved in several European projects such as Compile project, X-FLEX project, BD4OPEM project, which aims to gain more value from the data available and thus create new market opportunities for both existing and new solutions and the Energy Agency's Use Wisely project. We have also joined a consortium for promo-tion and acceleration of the green trans-formation of Slovenian energy, with the aim of decarbonising Slovenia by 2050.

All these projects, including several more planned for the future, are important for the region as well as network develop-ment, and enable distribution companies

to obtain European development funds, which would otherwise not be possible.

We will cope with the new development trendsIn 2019, we paid great deal of attention to upcoming new development, electri-fication, decentralisation of production resources and digitalization trends, and laid the groundwork for the transforma-tion of the company. We are taking effec-tive change management as a challenge and an opportunity. We are strengthen-ing corporate governance and seeking synergies between affiliates regarding operations that can be performed inside and outside the Group. We have focused on innovative development of those mar-ket activities that are acceptable from the EU as well as the Slovenian regulation standpoint and provide comprehensive solutions for customers. A key element of a comprehensive corporate strategy is the timely construction of electricity infrastructure to keep up with the goal of 100% involvement of all the customers in the network. A lot of effort has been put into optimising the planning and imple-mentation of electricity infrastructure (EI) investments. We are upgrading and integrating software solutions that ena-ble the optimal evaluation of investment initiatives in the energy planning phase and the correct and timely preparation of investment project suggestions. The market flexibility and the ability to re-spond "Just In Time" are provided by metering data and the establishment of effective centralised or standardised access to the data. With the accelerat-ed digitalization of operating in 2019, we are getting more and more involved in cyberspace, increasing the risk of cyber-attacks. In accordance with the national and international legislation for protection against such cyber-attacks, we have been intensively upgrading the applicable systems and establishing a cyber defence strategy, while strength-ening cooperation with other electricity distribution companies.

Employees are the key to this success storyThe basic purpose of planned building of an organisational culture is to achieve

1 1E l e k t r o C e l j e i n 2 0 1 9

business efficiency and adapt employ-ees to the company strategy, in order to promote a process of change: from a culture focused on functional or techni-cal excellence to a culture focused on stakeholders (consumers, customers, etc.) and a culture of relations between the employees themselves. In 2019, the Group had more than 700 employees. We develop their competences, constant-ly care for their education and monitor their satisfaction. Employees build up the strength and reputation of the Group with their commitment, motivation and knowledge. This year, we laid the founda-tions for some strategic human resourc-es projects that will continue the already outlined path of comprehensive human resources development and represent an upgrade of the work from previous years.

The operation, products, services and activities of companies within our corpo-rate group incorporate the principles of sustainable development in a way that meets today's needs, without compro-mising the ability of future generations to meet their own needs. Global respon-sibility, intergenerational justice and solidarity, the integration of social and environmental goals, the precautionary principle and the cooperation principle are our responsibilities, which we are cer-tainly aware of.

At the company Elektro Celje, we are aware of our responsibility to all stake-holders. We are proud of our Family Friendly Company certificate and ISO 9001, ISO 14001, ISO 45001 and ISO 27001 certificates. We have a system in place that ensures compliance of our operation with legislation, regulations and internal acts, as well as risk man-agement and internal control systems as an integral part of the company's man-agement.

STATEMENT OF THE MANAGEMENT BOARDThe Management Board of the compa-ny Elektro Celje hereby confirms the Financial Statements disclosed and presented in this Annual Report, and all other components thereof, and that the Financial Statements of Elektro Celje are in accordance with Slovenian Account-ing Standards and the Consolidated Fi-nancial Statements of the Elektro Celje Group are in accordance with Interna-tional Financial Reporting Standards.

The Management Board of Elektro Celje is responsible for compiling the Financial Statements and presenting them to the interested public in such a way that the statements present a faithful and fair ac-count of the financial position and per-formance of the company Elektro Celje and the Elektro Celje Group.

The Management Board hereby declares that all Financial Statements have been compiled in compliance with profession-al standards and legislation regulating operation, accounting, taxation, and finance, and that the accounting esti-mates are prepared with the prudence and diligence befitting a good manager and not in order to achieve a particular presentation of the company.

The Management Board approved the Annual Report on 24 April 2020.

Chairman of the Management BoardBoris Kupec, MSc

1 2 0 2 F o r e w o r d b y t h e c h a i r m a n o f t h e m a n a g e m e n t b o a r d

Corporate governance03The corporate governance bodies at El-ektro Celje are: The Management Board, the Supervisory Board and the Share-holders Assembly.

The Management Board is composed of a single member appointed by the com-pany's Supervisory Board for a four-year mandate. In 2019, Elektro Celje was man-aged by the Management Board repre-sented by the Chairman of the Manage-ment Board Boris Kupec, MSc..

The Supervisory Board has six members, four of which are shareholder representa-tives and two of which are employee rep-resentatives. The members of the Super-visory Board are appointed for four-year terms and are eligible for re-election. The members of the Supervisory Board representing shareholders are elected to the Supervisory Board by the Sharehold-ers Assembly with a simple majority of the shareholders present. The members representing employees are elected by the company's Works Council.

Supervisory Board of the company Elektro Celje

Representatives of shareholders

Rosana Dražnik, MSc Chairwoman

Mirjan Trampuž, MSc Deputy

Miha Kerin, MSc member

Drago Štefe, MSc member

Representatives of employees

Miran Ajdnik, Bachelor of Electrical Engineering member

Janko Čas, electronics engineer member

Supervisory Board Committees of the company Elektro Celje

Audit committee Human Resources Committee

Miha Kerin, MSc, Chairman Drago Štefe, MSc, Chairman

Ignac Dolenšek, MSc, external expert member Rosana Dražnik, MSc, member

Darinka Virant, BA in Economics, external expert member

Janko Čas, electronics engineer, member

1 3E l e k t r o C e l j e i n 2 0 1 9

3.1 Corporate Government StatementThe Management and Supervisory Boards of the company Elektro Celje, d.d. declare that the management of the company in 2019 was carried out in ac-cordance with the laws and regulations, the Articles of Association of the public limited company Elektro Celje, as well as the Recommendations and Expectations of SDH, d.d. (Slovene Sovereign Holding; hereinafter Recommendations of the SSH), published on their website www.sdh.si in March 2018.

In its work and operations, Elektro Celje observes and applies voluntarily the Cor-porate Governance Code for Companies with Capital Assets of the State (May 2017, published on the website www.sdh.si).

The Corporate Government Statement forms an integral part of the 2019 Annual Report and is accessible on the compa-ny's website www.elektro-celje.si.

The Management Board represents the company and manages the company's business independently and on its own responsibility. In doing so, it makes de-cisions in line with the strategic goals of the company and to the benefit of the shareholders. The governance and management system steers the compa-ny and enables supervision of the com-pany and its controlled undertakings. It defines the distribution of rights and responsibilities among the managing bodies, determines the rules and proce-dures to follow in deciding on corporate issues, provides a framework for setting, achieving and supervising the achieve-ment of business goals, and establish-es the values, principles and standards of fair and responsible decision-making and conduct in all aspects of business. The applicable regulations important for the operation of the company as well as the company's Articles of Association are published on the company's website (www.elektro-celje.si).

The governance and management sys-tem is a mean for achieving the compa-ny's long-term strategic goals and the manner in which the Management Board and the Supervisory Board of the compa-

ny Elektro Celje carry out their respon-sibility towards shareholders and other stakeholders of the company.

The vision and objective of the company Elektro Celje and its subsidiaries is the implementation of modern principles of governance and management that rep-resents the fullest conformity with ad-vanced business practices in Slovenia and abroad.

Explanations relating to the Code of Corporate Governance of State-Owned Enterprises and Recommen-dations of the SSH.

In 2019, the company's operation did not deviate from the principles, procedures and criteria prescribed by the above Code or from Recommendations of the SSH. The company declares that it may not act in accordance with the Code or Recommendations and Expectations ful-ly and coherently, when the provisions of the said code or recommendations and expectations are already governed differently by the law or the company's Articles of Association, when non-man-datory actions are not prescribed in the company's acts, or when practices are not established as legal obligations.

The company's operations deviated from the following principles, procedures and criteria:

• Supervisory Board — The selection procedure of candidates for Supervisory Board and the drafting of proposals for the Assembly - Section 6.8.1, Section 6.8.2:

In 2019, the Supervisory Board did not set up a Nomination Committee for the selection procedure of candidates for the Supervisory Board and, consequent-ly, accepted no new external members because no member mandates expired in that year.

The Supervisory Board determines the remuneration paid out to the Chairman of the Management Board pursuant to the Act Governing the Remuneration of Managers of Companies with Majority Ownership held by the Republic of Slove-

1 4 0 3 C o r p o r a t e g o v e r n a n c e

nia or Self-Governing Local Communities (Official Gazette of the Republic of Slo-venia, No. 21/2010 and 8/2011), and the Regulation on Setting the Highest Corre-lation of Basic Payments and the Rate of Variable Remuneration of Directors (Offi-cial Gazette of the Republic of Slovenia, Nos. 34/2010 and 52/2011).

It is this company's opinion that the members of the Supervisory Board are professional, responsible and independ-ent in performing their duties, and act in accordance with the provisions of the said Code, as well as Recommendations of the SSH.

The company also declares that, in 2019, the Management Board of the controlling company has followed actively and su-pervised directly the operation of the subsidiaries ECE and Elektro Celje OVI in accordance with strategic guidelines, with the purpose of achieving the set business objectives. In the governance and management of its subsidiaries, the company has imposed uniform Cor-porate Governance Standards as they apply for the controlling company in the Elektro Celje Group.

The company Elektro Celje will continue to observe the Recommendations of SSH in the future, fine-tuning and improving its management system accordingly. In case of any deviations from the present statement on the Code's observance, the company will see to its timely publica-tion.

Clarifications in accordance with the Companies Act

The company Elektro Celje provides the following explanatory notes pursuant to the provision of the fifth paragraph of Article 70 of the Companies Act (ZGD-1), defining the minimum content of the Cor-porate Governance Statement:

1. Description of the main features of in-ternal control systems and risk manage-ment in the companyInternal controls represent guidelines and procedures that the company Elek-tro Celje conducts at all levels to manage risks, including those related to financial reporting. The internal control system in place ensures the accuracy, reliability and completeness of data and informa-tion for the proper and fair preparation

of financial statements and financial re-porting in accordance with the laws and regulations. The company has estab-lished a system of internal controls and risk management related to financial reporting. In this system, controls are integrated into business processes and systems.

When establishing an internal control system, the principle of three lines of de-fence is taken into account:• environmental assessment, risk

assessment (performed by "risk owners"),

• determination of the control method - setting up the control system (performed by different professional services),

• controlling the operation of the system and introducing improvements (performed by the internal audit service).

Internal audit is the third line of defence designed to determine the status and functioning of internal controls, taking into account the company's strategy, goals and risks, and seeks to offer ways to mitigate by means of improvement, notably key risks in the form of recom-mendations made. In section 3.5 (Inter-nal Audit and Internal Control System) the company discloses the control mechanism for risk management and the role and function of internal audit in ensuring an effective and efficient inter-nal control system.

Procedures for verifying internal controls relevant to the audit are also performed by an authorized audit company during the performance of the audit.

By identifying, assessing and discuss-ing the risks at all levels and fields, the company will be able to manage risks at acceptable levels and take the opportu-nities that arise in the process.

The Management Board implements the risk management policy and responds to the risks adequately, thus increasing the likelihood of achieving the goals. It enables the risk management process to be an integral part of management incorporated into the company's culture and practices and adapted to the com-pany's business processes. Each deci-sion-making process in the company, notwithstanding its level of importance,

1 5E l e k t r o C e l j e i n 2 0 1 9

includes consideration of risks and the use of risk management to a certain de-gree. The Management Board is respon-sible for ensuring orderly risk manage-ment for the company Elektro Celje in the manner prescribed by the legislation and in accordance with the requirements of the Asset Manager. It is in charge of ad-equate organisation and communication in managing risks, as well as the requisite professional competence of employees to ensure quality risk management. It places a responsibility on the Risk Man-agement Committee and empowers it for managing risks, while, at the same time, providing the required financial and other resources for risk management to it.

The company has a coordinator of risk management activities, responsible for determining and harmonising the neces-sary activities and reporting on risks. The company discloses significant risks and methods for their management, includ-ing a description of the internal control system in its Annual Report.

2. Significant direct and indirect owner-ship of the company's securities in terms of achieving a qualified holding, as de-termined by the Act governing acquisi-tions.All company shares are ordinary regis-tered no-par value shares, giving their holders the right to manage the compa-ny and an entitlement to a dividend and to the payment of remaining assets in the event of liquidation. All shares are of the same class and are issued in de-materialized form. All shares are freely transferable.

As of 31 December 2019, the owner of a qualified holding as determined by the Takeovers Act of the company Elektro Celje is the Republic of Slovenia, with 19,232,978 shares, that is a 79.50% own-ership stake.

The company Elektro Celje has no share schemes for employees.

There are no agreements between share-holders which could result in a limitation of transfer of securities and voting rights.

The company has no agreements with members of the management and super-visory bodies that anticipate compensa-tion if due to a bid as determined by the law governing takeovers, these persons

resign, are dismissed without valid rea-son, or their employment is terminated.

3. Clarifications on each holder of secu-rities with special controlling rights.Individual shareholders of the company Elektro Celje have no special controlling rights arising from their holding shares of the company. There are no special agreements that could result in a restric-tion on the transfer of shares or voting rights.

4. Clarifications concerning all restric-tions on voting rights.The shareholders of the company Elek-tro Celje have no restrictions in exercis-ing their voting rights.

5. The company's rules on the appoint-ment and replacement of members of management or supervisory bodies and amendments to the Articles of Associa-tion.The rules of the company do not specif-ically regulate the appointment and re-placement of members of management or supervisory bodies and amendments to the Articles of Association. In such cases, the company refers entirely to the current legislation.

6. Authorizations of management, par-ticularly authorizations to issue or pur-chase Treasury Shares.In 2016, the company Elektro Celje ob-tained an authorisation to redeem Treas-ury Shares based on the Decision of the Shareholder's Assembly dated 31 August 2016, that was valid for the period from 1 September 2016 to 31 March 2018. Following the authorisation of the Gen-eral Meeting and the conducted public call for shareholders to redeem Treasury Shares, the company acquired a total of 333,849 Treasury Shares in years 2016, 2017 and 2018 and, thus, on 31 Decem-ber 2019 had 333,849 Treasury Shares.

Based on the decision of the Assembly dated 31 August 2016, the Management Board was also authorized, with the pri-or consent of the Supervisory Board, to withdraw the acquired shares with-out further decision on the reduction of share capital.

7. Activities of the company's General Meeting and its key responsibilities.In 2019, the Shareholders` Assembly met once. The powers of the Shareholders`


Assembly and the shareholders' rights are specified by law, and shall be exer-cised in the manner as provided in the company's Articles of Association, As-sembly Rules of Procedure, and by the Chair of the Assembly.

8. Data on the structure and operation of the management and supervisory bodies and their commissions.A comprehensive presentation of the management and supervisory bodies and their commissions is given in Sec-tion 3.2 of the 2019 Annual Report.

9. System of Operations Compliance and Corporate IntegrityA system of corporate integrity, with el-ements containing elements defined by the Slovenian Guidelines of Corporate In-tegrity, was established and used in the company in 2019. Corporate integrity and risks related to it are included into the already functioning Risk Manage-ment System. Risks related to corporate integrity are included in the Risk Register, where they are identified, assessed and managed through suggested measures. Through a Corporate Integrity Officer, a mechanism was established for regular and comprehensive identification of cor-porate integrity risks, their assessment, and a systematic and independent con-trol of risk management efficiency.

Corporate integrity of the company is defined as one of the strategic goals and is included into the strategic guidelines of the Elektro Celje Group. In this way, we wish to facilitate the attainment of set goals, promote the proactive man-agement, enhance the identification of opportunities and threats, act in com-

pliance with the applicable Regulations and Standards, and increase operational efficiency and performance.

In 2019, the Code of Ethics has been in force, defining the basic principles and rules followed by our personnel, pro-viding an additional basis for ensuring compliance of operations with positive legislation and codes, a legal framework for ensuring data protection and integ-rity and prevention of discrimination of all forms in the workplace. The Code of Ethics was distributed to all employees in a printed edition and is published on the company's intranet as well as on its website for the purpose of informing the internal and external public about its content. All employees have signed the Statement on acquaintance with and ob-servation of the provisions of the Code of Ethics. The company adopted additional organisational and technical measures, which, through an additional communi-cation channel, enable anonymous noti-fication of any irregularities or violations of compliance of operations in the com-pany. Any procedures for disclosure of conflicts of interest, self-elimination and adoptions of decisions on elimination are also recorded through the Corporate In-tegrity Officer appointed by the Manage-ment Board.

Pursuant to Article 60a of the Compa-nies Act, the Management Board and the Supervisory Board of the company Elek-tro Celje ensure that the Annual Report of the Company Elektro Celje and Elek-tro Celje Group for 2019 is compiled and published in compliance with the Com-panies Act and Slovenian Accounting Standards.

Chairman of the Management BoardBoris Kupec, MSc

Chairwoman of the Supervisory BoardRosana Dražnik, MSc

1 7E l e k t r o C e l j e i n 2 0 1 9

3.2 Supervisory Board ReportINTRODUCTION

In 2019, the Supervisory Board super-vised the management and operation of the company, whereby it took care of the long-term interests of the company, the implementation of the adopted strategy and the socially responsible increase of the economic efficiency of the compa-ny Elektro Celje and Elektro Celje Group in accordance with relevant legislation, the company's Articles of Association, the Rules of Procedure of the Supervi-sory Board, the Code of Corporate Gov-ernance of State-Owned Enterprises, recommendations of the Capital Assets Management Agency of the Republic of Slovenia, and other principles of good practice of corporate governance. The SB read reports on the company's oper-ations and other key company activities regularly, adopted adequate resolutions and monitored their implementation.

The composition of the Supervisory Board and its committees did not change in 2019. The members of the Superviso-ry Board representing the shareholders were appointed via a structured nomina-tion accreditation procedure by the Slo-vene Sovereign Holding (SSH) referred to as SDH, d.d., and subsequently elected and thus confirmed by the Shareholders Assembly; the employee representatives were elected by the Workers' Council. The composition of the Supervisory Board is presented in more detail in the Annual Report in Section 11.10.2.

The work of the Supervisory Board was professionally supported by the Supervi-sory Board Audit and Human Resources Committees. The Audit Committee con-sists of three members. The Chairman of the Committee is a member of the SB, while the other two members are exter-nal members, who with their expertise and competences make a significant contribution to the successful work of the Audit Committee and the Superviso-ry Board. The Human Resources Com-mittee of the Supervisory Board consists of three members, all of whom are also Supervisory Board members. Two mem-bers of the Human Resources Committee are shareholder representatives in the Supervisory Board with one member an employee representative.

Expenses for the operation of the Super-visory Board, the Audit Committee and the Human Resources Committee con-sists of payment for the performance of their duties, meeting fees, and training and travel costs in accordance with the Resolutions of the Shareholders Assem-bly and are disclosed in Section 11.10.2 of the company's Annual Report 2019. A contract on cooperation was signed with independent expert members of the Audit Committee, which is subject to the criteria and recommendations of the Capital Assets Management Agency of the Republic of Slovenia.

SUPERVISION OF OPERATIONS AND MANAGEMENT OF THE COMPANY

In compliance with its fundamental func-tion of responsible supervision of the company's management and operations, the Supervisory Board monitored the implementation of set goals and the ef-ficiency of company operations with the purpose of ensuring stable operations and development orientation.

The Supervisory Board held nine regu-lar and no correspondence meetings in 2019. The members of the SB regularly attended the meetings and carefully pre-pared for the topics covered, which en-abled a constructive discussion, and on the basis on carefully prepared reports and oral and written information pro-vided by the Management Board, made competent decisions and efficiently ex-ercised control over the company's oper-ations. The Supervisory Board, together with the Management Board and with the support of the Supervisory Board's expert committees, endeavored to adequately manage risks and seek opportunities for improving the operations. The Manage-ment Board observed and acted on the recommendations and decisions of the Supervisory Board. In compliance with the company Articles of Association, the Supervisory Board granted approvals to individual company transactions. At its meetings, the Supervisory Board adopt-ed the following decisions regarding indi-vidual tasks and areas of operations:

Operations supervision:• The Supervisory Board (SB) was pre-

sented quarterly reports on the oper-


ations and performance of the com-pany Elektro Celje, and its subsidiaries ECE d.o.o. and Elektro Celje OVI, risk management and litigation matters, while carefully monitoring the compa-ny's performance indicators.

• It monitored investment realisation with an emphasis on important invest-ment projects.

• The SB monitored the realisation of strategic goals set out in the Strategic Business Plan of the company for the period 2017-2020.

• The SB monitored the functioning of individual business processes and rec-ommended which improvements could be made, pointing out potential risks.

• It particularly monitored the field of security culture in the company, the human resources policy and the or-ganisational climate.

• The SB approved the Business Plan of the Company and the Elektro Cel-je Group for 2020, complete with the starting points for 2021 and 2022, and before that, on the proposal of the Amending Business Plan of the Com-pany Elektro Celje, d.d. and the Elektro Celje Group for 2019, complete with the starting points for 2020 and 2021.

Internal Audit:• The Supervisory Board gave its consent

to the plan for the internal audit activity for 2020 and monitored the activities and findings within the scope of the in-ternal audit activity.

• The SB took note of the report on the external audit of the internal audit ac-tivity. The external auditor stated that the activity of the internal audit func-tion in the company Elektro Celje from 1 January 2017 to 30 November 2018 was in all significant respects carried out in accordance with the International Standards of Professional Practice in In-ternal Auditing, the Code of Ethics of the Internal Auditor and the Code of Internal Audit Principles.

Shareholders Assembly:• The SB approved the Annual Report of

the company Elektro Celje for 2018, and the Consolidated Annual Report of the Elektro Celje Group, and adopted the report on the Annual Report audit.

• The SB proposed to the company's Shareholders Assembly to appoint the audit firm BDO Revizija, d.o.o. as the certified auditor for the fiscal years 2019, 2020 and 2021.

• The SB proposed to the company's Shareholders Assembly that they adopt the Decision on granting a dis-charge from liability to the company Management Board and Supervisory Board for 2018, and approved the pro-posal of the Management Board for the allocation of distributable profits.

Corporate governance:• In accordance with the provisions of

Article 22 of the company's Articles of Association, the Supervisory Board conducted the selection procedure for the Chairman of the Management Board for a mandate period. In order to ensure the stability and continued operation success of the company, the SB invited the current Chairman of the Management Board to the can-didature. After the selection procedure was completed, the Supervisory Board appointed Boris Kupec, MSc as the Chairman of the Management Board of the company Elektro Celje for the mandate period extending from 1 May 2020 to 30 April 2024.

• The SB was acquainted with reports on the implementation of corporate integ-rity, reports of the Corporate Integrity Compliance Officer and communica-tion promotion plan of the Code of Eth-ics.

• The SB monitored activities regarding possibilities for integrating subsidiar-ies with strategic partners.

SUPERVISORY BOARD COMMITTEES

AUDIT COMMITTEEThe Audit Committee of the Supervisory Board met at seven regular meetings and carried out one correspondence meet-ing. Prior to the Supervisory Board meet-ings, the Audit Committee reviewed busi-ness reports for the reporting period and provided its opinion thereon to the Su-pervisory Board and recommendations for the Management Board. The Audit Committee worked in close cooperation with the Internal Audit Department. At its meetings, the Committee discussed the areas of financial reporting, the internal control and risk management systems regularly. It studied the individual re-ports by the Internal Audit Department, acquainted itself with the report on the external audit of the internal audit ac-tivity, and reviewed in greater detail the individual key processes, including ten-dering procedures.

1 9E l e k t r o C e l j e i n 2 0 1 9

With regard to the 2018 audit, the Au-dit Committee interviewed an external auditor, reviewed the unaudited and au-dited Annual Reports of the company of Elektro Celje, d.d. and the consolidated Annual Report of the Elektro Celje Group, providing its opinion for the Supervisory Board. Based on the presentation and report of the external audit firm BDO, the Slovenian Directors' Association guide-lines for external audit quality monitor-ing and the auditor's own financial state-ment quality assessment, the Committee gave a positive assessment of the audi-tors' work in 2018.

In May 2019, in cooperation with the ser-vices of the company Elektro Celje, the Committee conducted a selection proce-dure for an external auditor to perform audit services in the period 2019-2021 and proposed to the Supervisory Board to recommend the audit firm BDO Re-vizija d.o.o., Cesta v Mestni log 1, 1000 Ljubljana, as the auditor of the financial statements for 2019, 2020 and 2021 to the Shareholders Assembly of the com-pany Elektro Celje.

The Audit Committee carried out a self-appraisal of performance in the au-tumn of 2019 and, based on the results, identified the indicative activities that it will strive towards in the coming period.

HUMAN RESOURCES COMMITTEEIn 2019, the Human Resources Commit-tee met at four meetings and carried out one correspondence session. Through its work, the HR Committee provided expert assistance to the Supervisory Board in evaluating the performance of the Man-agement Board or the assessment and remuneration of the Management Board and became acquainted with the succes-sion planning at the company Elektro Celje and made certain recommendations to the Management Board.

The most important task that the HR Com-mittee had in 2019 was the process of ap-pointing the Chairman of the Management Board of Elektro Celje for the next mandate period. Under the authorisation of the Su-pervisory Board, it carried out a personal invitation procedure for the new four-year mandate term of the Chairman of the Management Board of Elektro Celje can-didature and invited Boris Kupec, MSc to submit his candidature. After examining all the supporting documents, the work pro-

gramme and interviewing the candidate, the Human Resources Committee sug-gested Boris Kupec, MSc as the Chairman of the Management Board for the mandate period extending from 1 May 2020 to 30 April 2024 to the Supervisory Board. The Human Resources Committee also drafted an employment contract proposal and the Chairman of the Management Board's re-muneration and reward policy.

SUPERVISORY BOARD COMPOSITION AND SELF-APPRAISAL

All Supervisory Board members meet, in addition to the statutory criteria, the requirements of the Corporate Govern-ance Code for state-owned assets of the Republic of Slovenia and are not in any potential conflict of interest with the company. The members of the Supervi-sory Board complement each other in terms of their expertise and competenc-es. Its composition is diverse in terms of education, work experience and personal characteristics, which enabled the effec-tive exchange of views and opinions and the drawing up of joint decisions. The two employee representatives also support the functions of the Supervisory Board with their long-term experience and spe-cific knowledge of power distribution and the conditions in the company.

The members are allowed to carry out their functions independently and objec-tively, but must acknowledge the interest of the company and follow the princi-ples of corporate governance, ethical principles of business culture and good practice. They are committed to person-al integrity and business ethics. They follow current trends and events in the business world and take care of their per-sonal and professional development. All members of the Supervisory Board have signed the Statements of Independence and Absence of Conflict of Interest, pub-lished on the company website.

The Supervisory Board, as always, car-ried out a self-appraisal or evaluation of work efficiency with the purpose of im-proving the quality of work of the Super-visory Board and the Committees. The Slovenian Directors' Association meth-odology was applied. The results show that the Supervisory Board operates well, but there are areas where opportunities for improvement are present.


SUPERVISION OF COMPANY AND GROUP OPERATIONS AFTER THE END OF THE FISCAL YEAR

Following the conclusion of the fiscal year 2019, the Supervisory Board paid special attention to completing the fis-cal year 2019, reviewing the company's Annual Report for 2019 and monitoring the final phase of auditing the financial statements for 2019. The members of the Supervisory Board were acquainted with the measures taken by the company Elektro Celje, together with its subsidiar-ies, due to the epidemiological situation, with the aim of managing the risks and preventing the spread of the coronavirus (COVID-19) infection among employees and potential consequent disruptions in the work process.

AUDIT AND APPROVAL OF THE ANNUAL REPORT

The Supervisory Board reviewed the au-dited Annual Report of the company Ele-ktro Celje and the Elektro Celje Group for 2019 at its 4th regular session held on 19 May 2020. The Supervisory Board notes that in 2019, the company achieved most of its economic and technical goals.

The annual reports of the company Elek-tro Celje, the Elektro Celje Group and the subsidiary ECE were audited by the audit firm BDO Revizija, d.o.o., giving a favour-able opinion on the Annual Report of the company Elektro Celje as well as on the Consolidated Annual Report of the Elek-tro Celje Group for 2019.

The Supervisory Board discovered that the Annual Report of the company Ele-

ktro Celje for 2019 was prepared in ac-cordance with the provisions of the Com-panies Act (ZGD-1) and the Slovenian Accounting Standards that apply to the company and the International Finan-cial Reporting Standards that apply to the Elektro Celje Group. The Supervisory Board believes that the Annual Report of the company and the Elektro Celje Group is a credible reflection of the companies’ operations in the past financial year, and presents a true and fair view of the financial state of the company Elektro Celje and the Elektro Celje Group on 31 December 2019, of its profit or loss and cash flows in 2019.

When adopting the Annual Report, the Supervisory Board took a stance on the Corporate Governance Statement and the Declaration of Conformity, which is included in the business report of the Annual Report of the company Elektro Celje and Elektro Celje Group for 2019, and assessed that it reflected the actual corporate governance state of the com-pany in 2019.

After the final audit of the annual reports and financial statements with notes, the audit of the Management Board's propos-al for the use of the distributable profit and the report of the authorised auditor, the Supervisory Board had no comments and approved the Annual Report of the company Elektro Celje and the Consoli-dated Annual Report of the Elektro Celje Group for 2019.

Celje, 19 May 2020

Chair of the Supervisory BoardRosana Dražnik, MSc

2 1E l e k t r o C e l j e i n 2 0 1 9

3.3 Corporate Integrity and the Code of EthicsEthical rules, which we as employees must follow in certain circumstances, are laid down in the Elektro Celje Group Code of Ethics. The Code, which is made avail-able publicly on the company's website,

is a guide of fundamental regulations, standards of conduct and decision-mak-ing that must be followed by all Group companies. We use it in everyday activ-ities and its laid-down values and prin-ciples help us in situations when we are uncertain about how to act correctly.

Corporate integrity in the Elektro Cel-je Group is understood as operating in

accordance with the legislation, rules, recommendations, internal rules of the company and in accordance with good business practices and ethical princi-ples.

The Corporate Integrity Plan, together with the Code of Ethics, is a tool for establish-ment/monitoring of integrity within the Elektro Celje Group, as well as identifying/eliminating the susceptibility of the Group, its individual companies and their employ-ees to acts of corruption. Through a Cor-porate Integrity Officer, a mechanism was established for regular and comprehensive identification of corporate integrity risks, their assessment, and a systematic and independent control of risk management efficiency. On this basis, the corporate in-tegrity of the company was defined as one of the strategic goals and included into the strategic guidelines of the Elektro Celje Group.

Corporate integrity and related risks were included in the Risk Register, where they are identified, assessed and managed through suggested measures. In this way, we wish to facilitate the attainment of set goals, promote the proactive management, enhance the identification of opportunities and threats, act in compliance with the ap-plicable Regulations and Standards, and increase operational efficiency and perfor-mance.

3.4 Risk Management of the Company Elektro Celje and the Elektro Celje GroupA risk management sub-process within the management process, which defines the necessary activities and responsibil-ities for risk assessment and manage-ment, management of the risk register, monitoring and updating risks, adopting and implementing measures, reporting risk management and operating and controlling the risk management pro-cess, was put in place by the company Elektro Celje. All employees are respon-sible for identifying risks, each within his/her area of work. More significant risks

when setting process goals are identi-fied, analysed and addressed by risk managers who are also process owners and thus responsible for achieving the goals of their processes. At the same time, risks are identified through internal audits, internal and external estimation of management systems, annual inter-views with employees, SiOK analysis pro-duction, EFQM self-assessment, security incident analysis, etc. The coordinator responsible for risk management is re-sponsible for improvement of the meth-


Risk Potential

Insignificant (up to once

every 20 years)

Low (up to once

every 10 years)

Medium (up to once

every 4 years)

High (up to once

every 3 years)

Very High (once or more

in 2 years)

Quantitative impact assessment (damage/benefit occurrence)

1 2 3 4 5

Disastrous (over EUR 5 million) 5 5 10 15 20 25

Huge (from EUR 1 million up to and including EUR 5 million)

4 4 8 12 16 20

Large (from EUR 250,000 up to and including EUR 1 million)

3 3 6 9 12 15

Moderate (from EUR 50,000 up to and including EUR 250,000)

2 2 4 6 8 10

Small (up to and including EUR 50,000) 1 1 2 3 4 5

20, 25 High risk: unacceptable, risk must be avoided or transferred

9, 10, 12, 15, 16 Medium risk: unacceptable

4, 5, 6, 8 Low risk: conditionally acceptable if the costs of managing the risk are greater than the damage of risk realization

1, 2, 3 Very low risk: targeted, acceptable risk

odology of assessment and treatment of risk, management of the risk register and reporting to the Management Board and the Supervisory Board or the Audit Committee. The Internal Auditor moni-tors whether all major risks are identi-fied, determines the effectiveness and adequacy of existing/new measures, and advises on risk management. The Risk Management Committee, consisting of risk administrators, an internal auditor and a risk management coordinator, op-erates as a separate independent body that reports directly to the Management Board. It is responsible for planning, functioning and control of the risk man-agement process. Twice a year, as part of the managerial review of management systems, the Risk Management Commit-tee reviews the effectiveness of the risk management process and verifies the adequacy of the estimated risk levels.

Risk management is based on the com-pany's policy on risk management and meeting the requirements of ISO 31000, ISO 45001, ISO 14001 and ISO 27001 standards.

In the company, risk is defined as the im-pact of uncertainty to the achievement of goals. It represents the possibility of an internal or external occurrence of an event, which can have a negative (threat) or positive (opportunity) impact on the achievement of the company's goals in the area of financial management, achieving quality for customers, occu-pational safety and health, information security and environmental impacts.

The extent of the risk is a product of probability and impact. The probability of occurrence is calculated by estimat-ing the probability of occurrence of the event and monitored for a period of up to 20 years. The consequences are valued in terms of their impact on financial per-formance (profit or loss) and qualitative criteria when assessing the consequenc-es of the event on the quality of services to customers, occupational safety and health of employees, information securi-ty and the environment. We use a rating scale ranging from 1 to 5.

Unacceptable pre-control risks (high, medium and low) are recorded in the risk register and assessed depending on the scale (quarterly or half-yearly). Risk managers most commonly manage such risks by implementing risk mitigation measures. Targeted and acceptable risks are risks that are post-control assessed

as low (the cost of further reduction would be greater than the harm caused by the realisation of the risk) and any small risks. The company takes these risks. The risk of corporate integrity (eth-ical conduct of employees), where there is zero tolerance, is the exception.

2 3E l e k t r o C e l j e i n 2 0 1 9

3.4.1 Overview of Basic Risks at the Company Elektro Celje

In 2019, the risk managers, together with the risk management coordinator, updat-ed the risk catalogue in order to adapt to changes in the environment and in the company itself.

The risks fall into three categories: stra-tegic, financial and operational. We iden-tified 36 risks as unacceptable and clas-sified them into thirteen types of risks.

A risk sheet was prepared for each risk identifying the risk description, possible sources of risk and its consequences, documentation relating to the risk, im-pact of the risk on strategic goals, risk indicators, continuous and expected new measures, the person responsible for risk management and the person responsi-ble for management control.

Risks in the company Elektro Celje as at 31 December 2019

Risk Assessment and Key Activities in 2019 and the Outlook for 2020

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Financial Risks

• CAPITAL RISK• LIQUIDITY RISK• MARKET RISK• CREDIT RISK

Operational Risks

• SECURITY RISKS• ORGANISATIONAL RISKS• OPERATIONAL RISKS• PROCUREMENT RISKS• INFORMATIONAL RISKS

Strategic Risks

• STRATEGY OF THE COMPANY/OWNER'S GUIDELINES

• REGULATION RISK• HUMAN RESOURCES RISKS• DEVELOPMENT RISKS• CORPORATE INTEGRITY RISKS


The extent of the risks pre- and post-con-trol significantly decreased on 31 Decem-ber 2019. Risks were mainly managed by measures, both one-off and permanent.

Based on the measures taken in 2019, there were no identified post-control high risks on 31 December 2019. We identified four medium-sized risks that will be addi-tionally reduced with measures that will be taken in 2020. These are:

Information Intrusion and Data TheftThis risk is the occurrence of events and incidents that could result in business interruptions and may allow unauthor-ized persons to use, modify and destroy or steal sensitive information and intel-lectual property of the company. We reduced the risk by allowing access to services and servers only to devices that are part of the domain ec.si, providing access to external users only through VPN access provided by Informatika d.d., managing the active network equipment of the telecommunication service, com-plying with security and data protection policies, conducting network penetration tests, monitoring mechanism for securi-ty events on domain controllers, estab-lishing controls for lowering identity theft etc. This kind of risk is set to increase in 2020, so the company is already plan-ning additional measures.

Ensuring Continuity of OperationsThis risk is the occurrence of events that could adversely affect the continuity of business critical processes and activities in the event of major IT infrastructure failures, catastrophic events or cyber attacks. The company has a secondary location in place where a recovery plan was successfully implemented and an additional backup copy component was established. Due to the introduction of a new information system, the company has carried out a new assessment, which will provide the base for necessary levels of service provision in 2020, and we con-sequently expect a reduction in risk.

Risk of Data Protection ComplianceThis risk is represented by the process-ing of personal data that would be incon-sistent with the General Data Protection

Regulation (GDPR). Personal data in El-ektro Celje is processed for the purpose of connecting users to the electricity distribution system, ensuring its use for electricity consumption and/or produc-tion, and for the purpose of operation and ensuring reliability of supply and other public service obligations. The distribu-tion network system operator (DNSO) and the electricity distribution companies process the personal data of the system users as joint operators. A data protec-tion compliance officer was appointed for compliance in the field of personal data protection, with acts relating to data pro-tection revised, roles and authorizations of responsible persons regarding per-sonal data protection or processing de-fined, incident management processes arranged (identification by employees, reporting and handling) and security inci-dents defined. Notifications on data pro-tection were made (in information solu-tions, online), with separate keeping of human resource and financial records as well as data processing for different pur-poses being carried out, etc. An internal audit of compliance with the GDPR regu-lation was also carried out. Internal audits in May and June were focused on the re-view of personal data protection, and the company has some other risk mitigation measures in plan for 2020.

Natural hazards and major disastersThe risk of external events (heavy snow-fall, avalanches, landslides, floods, wind, storms, hail, sleet, earthquakes) is, from the point of view of impact on the elec-tricity system, particularly recognised as a significant risk. These impacts are gradually reduced by cabling and prop-erly designing the facilities according to the terrain configuration. However, such risks cannot be completely avoided. A portion of the risk is transferred to the insurance company (with fixed assets insurance), while the rest of the risk is accepted by the company. It is very like-ly that there will be natural hazards and disasters in the future.

Other risks are low or insignificant.

All financial risks are presented in more detail in Section 11.9.

2 5E l e k t r o C e l j e i n 2 0 1 9

3.4.2 Risk Management and Types of Risks in the Elektro Celje Group

Risks of the Elektro Celje Group are divid-ed into: strategic risk, financial risk and reputation risk.

Strategic risks:Subsidiary management riskElektro Celje, d.d., as the majority owner of ECE d.o.o. and 100% owner of Elektro Celje OVI, d.o.o. directs and monitors the operations of both companies. The com-pany directors give their owners, follow-ing the latter's oral or written request, explanations regarding operations and provide them with requested documen-tation. The owners of the subsidiaries may at any time request an audit of the companies' operations.

Two “supervisory colleges” were estab-lished to monitor the operations of the subsidiaries. The supervisory college at ECE comprises of the Chairmen of the Management Boards of Elektro Cel-je, d.d. and Elektro Gorenjska, d.d., the Director of the Joint Services Sector of Elektro Celje, d.d. and the Auditor of El-ektro Gorenjska, d.d. The supervisory college at Elektro Celje OVI comprises of the Chairman of the Management Board of Elektro Celje, d.d., the Director of the Development and Operations Sector and the Director of the Joint Services Sector, both from Elektro Celje, d.d.

The supervisory colleges meet as neces-sary, with the aim of resolving outstand-ing issues.

A suitably conceived management sys-tem for the subsidiaries may, with the

preparation and implementation of strat-egies and business plans, provide an op-portunity for long-term stable operation thereof.

Risks of strategic orientation of the own-er/stateExpectations of SDH, d.d. from the com-pany Elektro Celje, which are set out in the Annual Management Plan of Equity Investments for 2017 for the Group, are that the company Elektro Celje strate-gically connects/sells the companies involved in the sale and production of electricity with energy pillars owned by the government.

Financial risks:Risk of poor operations of ECE d.o.o. (es-pecially due to price or credit risk) and El-ektro Celje OVI, d.o.o., which would result in lower financial revenue for the compa-ny Elektro Celje and lower profits, which would affect the performance indicators (ROA, ROE) and potential failure to comply with the expectations of SDH, d.d. In the long run, poor performance could have an impact on the value of the investments of Elektro Celje.

Risks that would arise in the event of trading the majority shareholding of El-ektro Celje, d.d. in ECE d.o.o. for the mi-nority shareholding in another company.

Risk to reputation:The weakened reputation of the compa-nies in the group could result in the poor-er reputation of the parent company and the entire group.


3.5 Internal Audit and Internal Control SystemElektro Celje is establishing and devel-oping a control method for managing with three lines of defence. Internal audit is the third defensive line of corporate government designed to determine the status and functioning of internal con-trols, taking into account the company's strategy, goals and risks. It seeks to offer ways to mitigate by means of improve-ments, notably key risks in accordance with recommendations made.

Internal audit enhances the benefits by improving the company's performance by systematically and methodically as-sessing and improving the performance of the internal control system, in order to determine whether the company has effective, efficient and successful inter-nal controls in relation to the risks af-fecting prudent operations towards the achievement of goals, reliable account-ing and lawful operation of the compa-ny.

The establishment and operation of a risk management control mechanism designed, monitored and developed by the second line of defence is the respon-sibility of the directors of the sectors or services (first line of defence) and the in-ternal audit checks the suitability of the operation of the first and second lines of control.

Through internal audit, the Management Board obtains impartial assurances that the most important risks are appropri-ately addressed and managed and that

the internal control system operates ef-fectively and efficiently.

The company has an internal control sys-tem, which consists of the organisational structure and system of competences, responsibilities and authorisations de-fined in the Rules on Organisation and the System of Positions in the company Elektro Celje, issued authorisations of the Chairman of the Management Board, rules and procedures defined in the com-pany's internal regulations adopted fol-lowing the procedures of the governance system. In its operations, it adheres to the legal bases governing the operation of the distribution network operator sys-tem.

The internal control system in place en-sures the accuracy, reliability and com-pleteness of data and information for the proper and fair preparation of financial statements, prevents and detects errors in the system, and ensures a consistent and efficient business.

The company has an established inter-nal audit activity with the head of inter-nal audit employed which, in view of ad-ministration, acts under the authority of the Chairman of the Management Board, and, as regarding function, the Supervi-sory Board Audit Committee (SB AC) and Supervisory Board (SB). The role, compe-tences, organisation, responsibilities and tasks are defined in the Fundamental Charter of the Internal Audit Activity of Elektro Celje.

2 7E l e k t r o C e l j e i n 2 0 1 9

Major business events and circumstances in 2019

Significant investments in the Upper Savinja Valley were completed.

In addition to the mayors of the municipalities of the Upper Savinja Region, the Minister of

Infrastructure, Alenka Bratušek, MSc, also attended the event as a

keynote speaker.

The company obtained the certificate for the ISO 27001:2013 information security management

system.The production contract with the company Informatika d.d. for the

period 2019-2022 was signed.

As part of a working visit to the Carinthian region, Elektro Celje

received a visit from the Japanese Ambassador in Slovenia, Mr.

Masaharu Yoshida and Head of the Department of Cultural Affairs, Mrs.

Sayaka Yamashita.

The 5th Slovenian EDC Strategic Conference was held, at which

the EDCs (Electrical Distribution Companies), united in the Economic Interest Association for Electricity

Distribution (GIZ DEE), set their development and future activities

as the focal point, focusing on solutions that will enable the

transition to a low carbon society.

On 12 April 2019, the AE adopted a decision on the inclusion of SHPP Majcen Mislinja into the support

scheme.

0403

0204

M a r c h

F e b r u a r y

A p r i l

2 8 0 4 M a j o r b u s i n e s s e v e n t s a n d c i r c u m s t a n c e s i n 2 0 1 9

We received a notification of qualification of the Use Smart

project and the eligibility of research and innovation costs for

the next 3 years from AE.

We were informed by the European Commission of the qualification of

the X-FLEX project and the eligibility of research and innovation costs for

the next 4 years.

The company ECE set up its first solar power plants.

At the 24th regular Shareholders Assembly of Elektro Celje, d.d.,

the shareholders were informed of the company's operations in 2018

and presented with the reports of the company's Management and Supervisory Boards. The

shareholders, among other things, adopted the Decision on the use

of distributable profit for 2018, on granting a discharge from liability

to the company’s Management and Supervisory Boards for the work

performed in the previous year, and on appointing an authorised auditor for the fiscal years 2019, 2020 and

2021.

The Supervisory Board of the company, at its 5th regular meeting

on 28 June 2019, adopted the resolution appointing the Chairman

of the Management Board and awarded Boris Kupec, MSc with

another term of office for the next 4-year term, from 1 May 2020 to 30

April 2024.

05

07

06M a y

J u l y

J u n e

We were informed by the European Commission of the positive outcome of the BD4OPEM project application.

The aim of the project is to gain added value from the available

data and thus create new market opportunities for both existing and

new solutions.

08A u g u s t

2 9E l e k t r o C e l j e i n 2 0 1 9

On 27 September 2019, Elektro Celje paid dividends in the amount of EUR 3,220,907.76 following the

Assembly's resolution on the use of distributable profit from 2018.

The company ECE received a Platinum Certificate of Business Excellence, awarded by Bisnode.

The company ECE introduced new products at the MOS fair. The

highest demand was for solar power plants.

On 21 November 2019, Elektro Celje received the Best Annual Report Award at the 2018 Best Annual

Report competition.

The company ECE received the Online Retailer of the Year Award

in the "Shopping Centre" category at the 2019 Online Retailer

competition.

0911S e p t e m b e r

N o v e m b e r

On 9 October 2019, Elektro Celje joined a consortium for promotion

and acceleration of the green transformation of Slovenian energy,

with the aim of decarbonising Slovenia by 2050. The consortium

formed by the companies ELES and GEN-I acquired three new members; the companies Elektro Celje, Elektro

Gorenjska and Elektro Ljubljana recognised the importance of

networking for a successful green transformation.

The EDC's, united in Economic Interest Association

for Electricity Distribution, set up a free unified web portal called

"Moj elektro" (My Elektro).

10O c t o b e r

3 0 0 4 M a j o r b u s i n e s s e v e n t s a n d c i r c u m s t a n c e s i n 2 0 1 9

4.1 Major events at the Company Elektro Celje and Elektro Celje Group after the end of the accounting periodJANUARY 2020Signing a contract with SODO d.o.o.: Af-ter obtaining the consent of the Supervi-sory Board, Elektro Celje, d.d., signed the Agreement on the lease of electricity in-frastructure and the provision of services for the distribution operator SODO d.o.o. for the 2019-2021 period.

FEBRUARY 2020Signature of Annex no. 1 with SODO d.o.o.: After obtaining a legal opinion, El-ektro Celje, d.d. signed the Annex no. 1 to the Agreement on the lease of electricity infrastructure and the provision of ser-vices for the distribution operator SODO d.o.o.

On 27 February 2020, in accordance with EU Regulation 2018/1999 on the Govern-ance of the Energy Union and Climate Action, the Government of the Republic of Slovenia adopted the comprehensive national energy and climate plan of the Republic of Slovenia (NEPN), which was submitted to the European Commis-sion. It is an action-strategy document that sets goals, policies and actions for the five dimensions of the Energy Union for the period until 2030 (with a view to 2040). These are decarbonisation, ener-gy efficiency, energy security, the inter-nal market and research, innovation and competitiveness.

MARCH 2020Pursuant to Article 7 of the Contageous Diseases Act, Slovenia declared an epi-demic on 12 March 2020 due to an in-crease in the number of COVID-19 coro-navirus infections. The company Elektro Celje has taken various measures to pro-tect the employees to the greatest extent possible, while ensuring a smooth supply

of electricity and performance of public services in line with the legally stipulated minimum. Due to uncertain conditions, the extent of the negative impact on the operations of Elektro Celje cannot be cal-culated at this time.

The electricity distribution companies have identified the spread of COVID-19 coronavirus infections as a threat to the uninterrupted supply of electricity to end customers, which is why we have already taken steps to continue the system's smooth operation in accordance with the plans. A plan to ensure the smooth run-ning of companies' work processes is in place.At the company Elektro Celje, we are aware of the gravity of the spread of new coronavirus infections in the country, and have been informing our employ-ees about information provided by the National Institute of Public Health (NIJZ) since the outbreak of the infections. Due to the situation with the new coronavirus, we constantly adjust our responses and measures to the situation and measures of the country. Since it was necessary to adjust the implementation of work pro-cesses and to take additional measures for a longer period of time, we have from Monday, 30 March 2020, until further notice, laid off employees who tempo-rarily can not be provided with work by the employer due to its business position and for business reasons, with a view to maintaining their employment.In March, the effects of the epidemic were not yet significantly reflected in the liquidity of the operations. However, business partners are already turning to us with requests for deferral of pay-ment or they are not paying the network charges; we anticipate payment delays

to increase significantly in the coming months, thus reducing liquidity.As part of measures to mitigate the so-cial and economic consequences of the spread of the coronavirus, the Energy Agency has implemented an emergency measure to change tariff lines for network charges. For the period from 1 March to 31 May 2020, household and small busi-ness customers will not be charged with tariff lines for capacity charges, or the price for this charge will be 0.00 EUR/kW (OG RS, No. 31, of 20 March 2020). We estimate that the monthly loss of network charges will amount to EUR 0.5 million.

APRIL 2020On 2 April 2020, the National Assembly passed the Intervention Measures Act to curb the COVID-19 epidemic and mit-igate its consequences on citizens and the economy.

Due to the uncertain situation in the com-ing weeks, it is difficult to make a realistic assessment of the impact on the realisa-tion of the goals set out in the business plan of the company and the Group for 2020 and the impact on the achieve-ment of strategic goals. At the company Elektro Celje, we estimate that if we start operating steadily by mid-May, the real-isation of investments and services pro-vided to our customers in 2020 will be approximately 10% lower than planned.

Due to the reduced volume of distributed electricity, non-payments and delays in payments of network charges as well as the deficiency of network charges in re-lation to the regulatory framework will be mainly overcome by means of liquidity loans (estimated up to EUR 5 million).

E l e k t r o C e l j e i n 2 0 1 9 3 1

What we do is sustainableWe generate good business results , d istr ibute electr ic i ty to more than 170,000 customers and employ more than 700 people. We meet the needs of our users by not compromising the capabi l i t ies of future generat ions and ensuring a balance between economic growth, care for the environment and social wel l -being.

BUSINESS REPORT

of the company Elektro Celje

3 3

Introduction of the Company Elektro Celje055.1 Profile of the Company Elektro Celje

Profile of the Company Elektro Celje

Name: ELEKTRO CELJE, podjetje za distribucijo električne energije, d.d.

Abbreviated name: ELEKTRO CELJE, d.d.

Registered seat: Vrunčeva 2a, 3000 Celje

Phone: (03) 42 01 000

Call centre: (03) 42 01 180

Press contact: (03) 42 01 435

Email address: [email protected]

Website: http://www.elektro-celje.si

Entry in the Companies Register: Register of Companies of the District Court of Celje, Ref. No. 1/00600/00

VAT identification number: SI62166859

Registration number: 5223067

Company share capital: EUR 100,953,200.63

Number of shares: 24,192,425

Company size (according to the provisions of the Companies Act - ZGD-1):

large company

Number of employees as of 31 December 2019: 628

Number of MWh distributed in 2019: 2,036,262 MWh

Number of customers as of 31 December 2019: 172,927

Chairman of the Management Board: Boris Kupec, MSc

Chairwoman of the Supervisory Board: Rosana Dražnik, MSc

3 4 0 5 I n t r o d u c t i o n o f t h e C o m p a n y E l e k t r o C e l j e

5.2 Our mission, vision and values

5.3 Company's activity and area of operationThe basic activities of the company are the administration, management and operation of the distribution system as well as the maintenance, construction and renovation of power distribution lines and installations in territory of Sav-inja Region, Carinthia and Lower Sava

Region, comprising 40 municipalities in their entirety and 2 in part. It covers 4,345 km2 or 22% of the area of Slovenia. Dispersed lines and devices represent, in view of their total length, the second longest network among all five distribu-tion companies in Slovenia.

Elektro Celje, d.d., is the owner of an electricity in-frastructure (consisting of 12,774 km of low-voltage networks, over 1,072 km of medium-voltage under-ground cables, 89 km of 110 kV overhead power lines, 2,531 km of medium-voltage overhead pow-er lines, 18 distribution transformer substations, 17 distribution substations and more than 3,500 transformer substations), which it leases to a pub-lic service contractor of the electricity distribution system operator, company SODO.

DU CELJE

DU KRŠKO

DU SLOVENJ GRADEC

DU VELENJE

Distribution units and supervision of the company

MISSION VISION VALUESTo provide a reliable, high-quality, cost-effective and

environment-friendly electric power supply and related

services.

To become a leading company with a technologically advanced electricity

network supplying electricity to customers, which will lead to the

recognition of the company as an agent of improvement of the quality of life, with a responsible attitude towards

the environment and its employees.

Good faith and fair dealing, professional competence

and entrepreneurship, partnership, respect and

responsibility, positive communication, equality, healthy lifestyle, safety at work and data protection.

3 5E l e k t r o C e l j e i n 2 0 1 9

5.4 Ownership StructureThe company operates as a public lim-ited company. The Republic of Slovenia with a 79.5% stake is the largest share-holder and 1.38% are Treasury Shares. Other shareholders as of 31 December

2019 were: Kapitalska družba (1.57%), investment companies and other legal entities (15.26%) and natural persons (2.29%).

5.5 Organisation of the Company Elektro CeljeThe organisational chart is based on the current Rules on Organisation and the System of Positions, which ensure the professional, efficient and rational exe-

cution of activities and effective internal control over the performance of tasks performed by Elektro Celje.

CHAIRMAN OF THE MANAGEMENT

BOARDCabinet of the Chairman

of the Management Board

Internal Audit

Business Data Processing

Department

Development and Operation

Sector

Joint Services Sector

Economic and Financial

Sector

Maintenance and Engineering

Sector

Organisational Development Department

OHS and FS Department

Human Resources

Department


5.6 Strategic Guidelines and Goals of the Company Elektro Celje

5.6.1 Presentation of the Strategy of the Company Elektro CeljeIn 2019, the Strategic Business Plan for the period 2017 - 2020 was in the process of implementation. Considering the results of self-appraisals according to the EFQM model and strategic analysis, the com-pany verifies the valid strategy and the achievement of strategic goals. Strategic guidelines deriving from the company's operations were not changed. However, the company's values and management system were adjusted in part. Strategic goals were renewed and set in a transpar-ent and structured manner in accordance with the company's process organisation in the Strategic Business Plan in 2017. Six strategic goals with responsible opera-tors in charge of achievement of goals in the planned periods were set to adhere to

the identified strategic guidelines, among which network availability and customer satisfaction should be highlighted.

Every six months, an analysis of the achievement of the strategic goals and the realisation of the strategic plan are prepared. The achievements are report-ed to the Supervisory Board.

Strategic guidelines of the company Elektro Celje until 2020Strategic guidelines intended for pre-paring and defining strategic goals, ac-tivities and tasks were suggested and adopted on the basis of careful analysis of changes in the external and internal environment and the SWOT analysis:

PROVISION OF HIGH-QUALITY SERVICES FOR CUSTOMERS BY STRENGTHENING THE DISTRIBUTION NETWORKThe introduction of new technologies, optimization of the electric power supply to customers, improved customer communication, obtaining concessions for the activity of the general economic interest DNSO in the Elektro Celje, d.d. geographical area, an improved employee working culture, introduction of advanced IT support, and optimising the delimitation of work performed with the company’s own resources and in cooperation with subcontractors, will have the greatest impact on the successful implementation of these strategic guidelines in the future.

OPTIMIZATION AND INCREASED EFFICIENCY OF BUSINESS PROCESSESThe following are related to optimization and increased operational efficiency: Optimization of costs and the entire business operation, improving warehouse operations and distribution of material to working grounds, improving the work conditions of field workers, optimising the company's debt position, managing energy losses, introducing new technologies, improving the performance of the operative sector in distribution units (process planning) and managing transport costs.

CORPORATE GOVERNANCE OF SUBSIDIARIES AND INVESTMENTS OF THE COMPANY ELEKTRO CELJETransparent investment management pursuant to the Management Policy must be ensured for investments of the company Elektro Celje, d.d. in ECE d.o.o. (a 74.3256% ownership stake) and Elektro Celje OVI, d.o.o. (a 100% ownership stake). The investment in the company Informatika d.o.o. is strategic. After completing the information support upgrade (ERP, Maximo), the strategy of the investment has to be verified, which will depend on the successful completion of projects. The investment in the company Stelkom d.o.o. must be monitored and monetised at the appropriate moment. For corporate governance of subsidiaries, synergies must be found within the legally possible limits, and the Management Policy of the company Elektro Celje, d.d. must be taken into account.

3 7E l e k t r o C e l j e i n 2 0 1 9

5.6.2 Strategic Objectives and DiagramStrategic objectives, enabling us to en-sure the expected development and suc-cessful operations of the company, were set for implementing strategic guidelines. Strategic goals represent an agreement on what we will achieve in the period 2017 - 2020 in terms of realization of the company's mission and vision. Of course, goals can be achieved successfully only with a clearly elaborated strategy on how to reach those goals, that is, which strategic activities will be performed and until when as well as, in particular, who is responsible for their successful perfor-

mance. A system of balanced indicators (BSC) as an established managerial tool for strategy planning and implementation was used for in-depth understanding of the strategy, and mainly for ensuring its integrity and consistency. A selection of strategic indicators was defined for moni-toring the successful strategy implemen-tation and achieving strategic goals.

Interlinks between strategic goals (un-derstanding the cause-consequence relation) are shown schematically in the strategic diagram.

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ive

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ROA: > 3.3%EBITDA margin: > 42%Net financial debt/EBITDA: < 1.7Value added per employee: > 77,125

Total SAIDI/SAIFI: < 200/2SAIDI/SAIFI own cause: < 22.38/0.47Losses in the distribution network: < 4.92%

OPEX/electricity distributed: < EUR 21/MWhPlanned SAIDI/SAIFI: < 150/1

CAPEX to net revenue from sales ratio: < 42.5%

Total score according to the EFQM Excellence Model: > 500Execution of strategic tasks in accordance with the criteria and deadlines set: > 80%

Improvement of categories from the SiOK (communication, rewarding, career development): > 3.1To increase the number of active employees: Positive TrendTo increase the number of suggested improvements: > 15 per year

SG 1COMPREHENSIVE

STAFF DEVELOPMENT

SYSTEM

SG 2DEVELOPMENT

OF AN EXCELLENT ORGANISATIONAL

STRUCTURE

SG 4EFFICIENT

IMPLEMENTATION OF MAINTENANCE

AND INVEST-MENTS

RENEWAL AND INTEGRATION OF

INFORMATION SYSTEMS

SG 3EFFICIENT

IMPLEMENTATION OF SUPPORTING

BUSINESS PROCESSES

SG 6OPERATIONAL

PERFORMANCE AND FINANCIAL

STABILITY

SG 5NETWORK

AVAILABILITY AND CUSTOMER SATISFACTION

Strategic goals are not presented in or-der of their importance, but in an order that follows the implementation of the strategy or the understanding of the strategic diagram through a bottom-up approach: development of competences of employees, where their motivation and enthusiasm within an excellent organiza-tion leads to successful development of infrastructure and management of all as-sets (Learning and Growth Perspective), which allows for a successful implemen-

tation of other processes (Internal Busi-ness Processes Perspective). Successful and efficient processes enable the real-isation of the company's mission which is: To provide a reliable, high-quality, cost-effective and environment-friendly electric power supply and related servic-es (Customer and Market Perspective). The result is successful and efficient operations and satisfied stakeholders (Financial Perspective).


Strategic Plan RenewalA new self-appraisal according to the EFQM model was implemented in 2018, with a renewed self-appraisal and partic-ipation in the Business Excellence Prize of the Republic of Slovenia (PRSPO) competition envisaged for 2020. Both

self-appraisals and an external apprais-al will ensure an appropriate selection for any possible changes in the renewed strategy and the definition of strategic goals for the new 2021 to 2025 strategic period. The strategic plan will be ready in 2020.

5.6.3 Business Goals of the Company Elektro CeljeBusiness goals for 2020 are set out in the Business Plan of Elektra Celje, d.d. and the Elektro Celje Group for 2020 with baselines for 2021 and 2022. Strategic starting points and goals of the company Elektro Celje for the period 2017–2020, the Plan for the Development of the Elec-tricity Distribution Network for the period 2019–2028, the regulatory framework of the Energy Agency, recommendations by the capital assets management of

the Republic of Slovenia, Slovenian Sov-ereign Holding, the binding regulations and internal documents of Elektro Celje and forecasted current macroeconom-ic developments formed a basis for its preparation. The company's operations will be in accordance with the Code of Corporate Governance of State-Owned Enterprises and Recommendations and Expectations of the Slovenian Sovereign Holding.

Operational Goals of the Company Elektro Celje and their Achievement Plan 2019 Achieved 2019 Plan 2020

SAIDI (System Average Interruption Duration Index) ≤ 32.00 31.13 ≤ 31.00

Share of distributed electricity loss (in %) ≤ 4.49 4.05 ≤ 4.40

OPEX per electricity distributed (in EUR/MWh) ≤ 19.98 19.99 ≤ 19.72

SAIFI (System Average Interruption Frequency Index) ≤ 0.75 0.66 ≤ 0.70

MAIFI (Momentary Average Interruption Frequency Index) ≤ 3.90 2.93 ≤ 3.80

ROA (in %) ≥ 3.00 3.22 ≥ 2.73

EBITDA margin (in %) ≥ 40.98 40.90 ≥ 40.60

Net financial debt/EBITDA (in EUR) ≤ 1.47 1.42 ≤ 1.57

CAPEX to net revenue from sales ratio (in %) ≥ 46.34 48.52 ≥ 50.38

Value added per employee (in EUR 000) ≥ 79.25 82.01 ≥ 80.72

Net profit (in EUR) ≥ 8,550,230 9,252,820 ≥ 7,974,500

Investment realisation (in EUR) ≥ 23,000,000 24,664,650 ≥ 25,000,000

Self-made investment realisation (in EUR) ≥ 15,234,821 15,164,716 ≥ 15,845,994

Realisation of customer services (in EUR) ≥ 1,474,200 2,393,164 ≥ 1,480,000

3 9E l e k t r o C e l j e i n 2 0 1 9

According to the first estimate (based on the quarterly data), the GDP in the Re-public of Slovenia stood at EUR 48,007 million (EUR 45,948 million in 2018). It realistically grew by 2.4%, which is less than the Institute of Macroeconomic Analysis and Development (UMAR) had predicted (prediction for 2019 was 2.8%).

The average registered unemployment rate decreased in 2019 from 8.2% in 2018 to 7.7%. According to data from the Employment Agency of the Republic of Slovenia, there were 75,292 registered unemployed persons in Slovenia as of the end of December 2019, which is 4.1% less than in December 2018.

Annual price growth was 1.8% in 2019 (1.4% in 2018). Average annual inflation rate equalled 1.6% (1.7% in 2018). The higher prices of food and miscellaneous goods and services (0.4 of a percentage point) contributed most to the overall annual price increase (0.5 percentage points). The higher prices of water sup-ply, miscellaneous services related to living costs and higher prices of catering services also contributed to the annual inflation by 0.2 percentage points.

Average monthly gross salary for 2019 in Slovenia amounted to EUR 1,753.84. It was more than the average monthly gross salary in 2018: having increased by 4.3% in nominal and 2.7% in real terms.

The Energy Regulatory Environment of Elektro Celje's OperationsElectricity distribution companies are crucial for the development of a cost-ef-ficient distribution network in Slovenia,

ensuring high-quality and reliable sup-ply to customers in Slovenia. The role of distribution in the Slovene electric pow-er system is defined by the Energy Act (EZ-1), together with Slovenia's Energy Concept, in which the targets of reliable, sustainable and competitive electricity supply for the subsequent 20-year pe-riod and 40-year framework period will be set, based on the projections of the economic, environmental and social de-velopment of Slovenia and international commitments made.

The goal of energy policy is to ensure conditions for a safe and reliable supply of energy services according to market and sustainable development principles to customers, taking into account its ef-ficient use, economical use of renewable energy and environmental protection conditions.

The development of the electricity distri-bution network and provision of a long- term, stable electricity supply is defined in the Plan for the Development of the Electricity Distribution Network in the Re-public of Slovenia for the 10-year period from 2019 to 2028, prepared by SODO as the holder of the concession for perform-ing the compulsory public service of Dis-tribution Network System Operator in the Republic of Slovenia, for which previous consent must be given by the Ministry of Infrastructure.

In its operations in 2019, the company Elektro Celje complied with all the core legislative and regulatory bases and changes in legislation relating to the company's operations.

Economic trends indicators 2015 2016 2017 2018 2019

GDP, real growth (in %) 2.9 2.5 4.9 4.5 2.4

Registered unemployment rate (in %) 12.3 11.2 9.5 8.2 7.7

Inflation, annual average (in %) —0.5 —0.1 1.4 1.7 1.6

Average gross salary in the Republic of Slovenia, nominal growth (in %) 0.7 1.8 2.7 3.4 4.3

Average gross salary in the Republic of Slovenia, real growth (in %) 1.2 1.9 1.3 1.7 2.7

5.7 Operating Conditions of the Company Elektro CeljeBusiness Environment Analysis

Source: Statistical Office of the Republic of Slovenia and the Employment Service of Slovenia


Activities of the Company Elektro Celje066.1 Operation and Development of the Distribution NetworkThe company Elektro Celje performs the control, management and operation of the distribution network and telecom-munications systems, provides network development, complies with systemic op-erational instructions, manages the elec-tricity transmission via the distribution network and exchange with other net-works, provides optimum restoration of

system operations following any faults, coordinates operation of the distribu-tion network with connected networks, provides system protection of the dis-tribution network, conducts operational measurements in the distribution net-work, conducts measurements and anal-yses in the field of quality of electricity supply, settles network charges.

6.1.1 Development of the Distribution NetworkIn 2019, due to the increased number of applications for dispersed resources (the method of connection self-supply), the

number of issued permits for connection to the distribution network was signifi-cantly increased.

0

Num

ber

12,000

10,000

8,000

6,000

4,000

2,000

919917

2,688

2,162

1,105

1,464

2,949

2,267

1,145

1,465

3,376

2,455

114

1,083 1,161

1,485 1,700

3,6274,832

2,589

3,140108

71

Approval for construction

Agreement on the connection to the distribution network

Approval for the connection to the distribution network

Approval of project documentation

Land development documents

2015 2016 2017 2018 2019

Land development documents issued

Land Development Documents

4 1E l e k t r o C e l j e i n 2 0 1 9

Quality of Electricity Supply and Network Development

At Elektro Celje, we plan our network so as to provide a supply of electricity of adequate quality with the possibility of allowing the connection of new consum-ers. For the purposes of including new, larger customers and distributed ener-gy sources, analyses of the network are performed with the use of appropriate software.

By following the reliability indicators (SAIFI, SAIDI and MAIFI), which are also included in the set of strategic indicators of the company Elektro Celje, we monitor

the progress towards one of our key stra-tegic goals – reliability and safety of net-work operation – and the implementation of strategic activities towards achieve-ment of the following goals: ensuring reli-ability of the network operation, efficient control of voltage conditions, MV network automation upgrade, MV network ca-bling, and optic cable upgrade. In 2019, the company Elektro Celje received 106 consumer complaints about the quality of electricity provided (81 in 2018), of which 85 were justified (53 in 2018).

Total values of SAIFI and SAIDI reliability indicators for 2019 regarding the cause of interruption are shown below.

SAIFI/SAIDI Reliability indicators

UNPLANNED INTERRUPTIONS PLANNED INTERRUPTIONS

OWN CAUSE THIRD-PARTY CAUSE FORCE MAJEURE

SAIFI(int./cust.)

SAIDI (min/cust.)

SAIFI(int./cust.)

SAIDI (min/cust.)

SAIFI(int./cust.)

SAIDI (min/cust.)

SAIFI(int./cust.)

SAIDI (min/cust.)

Total urban lines 0.409 19.008 0.120 3.629 0.049 3.461 0.611 88.238

Total rural lines 0.897 42.357 0.308 16.315 0.828 59.293 1.569 246.232

Total value 0.662 31.132 0.218 10.216 0.453 32.452 1.109 170.276

Planned interruptions for the company Elektro Celje for 2019 amounted to:• SAIFI indicator: 1.109 interruptions/customer, which is 33.9% more than the average of EDCs (0.828 interruptions/customer),• SAIDI indicator: 170.276 minutes/customer (the average of EDCs is 114.735 minutes/customer).

SAIFI – Average number of interruptions per customer

MAIFI − - Average number of momentary interruptions per customer

SAIDI – Average duration of interruption per customer in minutes

2015 2016 2017 2018 2019

2015 2016 2017 2018 2019

2015 2016 2017 2018 2019

1.581

3.066

3.066

60.691

27.404

1.148

2.284

1.4381.333

3.114

4.513

3.4872.929

3.114 4.513 3.487 2.929

63.671

168.424

78.610 73.801

18.065

46.21533.838 31.132

Total value of unplanned interruptions

Own cause

Value of unplanned momentary interruptions

Trend

Total value of unplanned interruptions

Own cause

0.6970.479

1.0320.801

0.662

4 2 0 6 A c t i v i t i e s o f t h e C o m p a n y E l e k t r o C e l j e

0.8

0.4

1.2

0.2

0.0

1.0

0.6

Aver

age

num

ber o

f int

erru

ptio

ns p

er c

usto

mer

0.76 0.75

0.47

0.71 0.750.70

0.48

1.03

0.80

0.66

Total value of SAIFI: unplanned interruptions - own cause

YEAR 2015 YEAR 2016 YEAR 2017 YEAR 2018 YEAR 2019

SAIFITarget value

SAIFIActual value

SAIFITarget value

SAIFIActual value

SAIFITarget value

SAIFIActual value

SAIFITarget value

SAIFIActual value

SAIFITarget value

SAIFIActual value

Aver

age

dura

tion

of in

terr

uptio

n pe

r cus

tom

er

Total value of SAIDI: unplanned interruptions – own cause


SAIDITarget value

SAIDIActual value

SAIDITarget value

SAIDIActual value

SAIDITarget value

SAIDIActual value

SAIDITarget value

SAIDIActual value

SAIDITarget value

SAIDIActual value

40

20

10

0

50

3029.13 28.04

22.38

27.7832.00

27.40

18.06

46.22

33.8431.13

Aver

age

num

ber o

f int

erru

ptio

ns p

er c

usto

mer

Total value of MAIFI: unplanned momentary interruptions


MAIFITarget value

MAIFIActual value

MAIFITarget value

MAIFIActual value

MAIFITarget value

MAIFIActual value

MAIFITarget value

MAIFIActual value

MAIFITarget value

MAIFIActual value

4.0

2.0

1.0

0.0

5.0

3.0

6.0 5.54

3.50 3.46 3.463.90

3.07 3.11

4.51

3.49

2.93

4 3E l e k t r o C e l j e i n 2 0 1 9

6.1.2 Operation of the Distribution NetworkIn 2019, a great deal of activity was de-voted to editing the data needed to re-place SCADA with the ADMS software tool. We have regularly made all the nec-essary changes to the network that are important so that DCC (Distribution Con-trol Centre) dispatchers can reliably con-

trol and perform all the necessary switch manipulations that are performed for the purpose of regular maintenance, invest-ment, and defects. As the company Ele-ktro Celje focuses on cabling the LV and MV networks, a lot of these changes are made on a daily basis.

6.1.3 Protection and Remote ControlIn 2019, we carried out the replacement of uninterruptible RUPS software system at DTS Podlog, DTS Laško DES and DTS Krško, as well as batteries at DTS Ravne, DTS Slovenj Gradec and DTS Selce. We also replaced and upgraded the remote

control at DTS Šentjur and DTS Laško DES (replacement of the remote-control system from COM615 with the SYS600 system), performed remote control of three transformer stations and delivered 6 RCS sets.

6.1.4 Telecommunication SupportThe company Elektro Celje maintains an optical network, the IP/MPLS Ether-net network in several redundant rings, a digital radio system for speech and narrow-band data connections, and the telephone system with a Call Centre and a Customer Relationship Management (CRM) system. In addition to the systems mentioned above, the company is also fully responsible for the technical admin-istration of the mechanical mechanisms, with the support of software mechanisms for cybersecurity and information secu-rity, a microwave connection system, a

corporate video conference system and the Wi-Fi wireless network, for marketing surplus telecommunication capacities through the company Stelkom, and for renting the remaining TC infrastructure.

In 2019, we upgraded the network to IP/MPLS technology and integrated cyber-security elements in the network process segment. The systems will enable cyber-protection of power facilities and the en-cryption of data between the power facil-ities and the distribution centre.

6.1.5 Access to NetworkAccess to the distribution network in-cludes the process of managing the en-tire collection of data on metering points in the area of administration of the Elek-tro Celje network and the processes di-rectly related thereto.

Input (Production) BalanceIn 2019, the total input of electricity into the distribution network of the compa-

ny Elektro Celje amounted to 2,118,789 MWh, which is 1% more than in 2018, while maximum peak load reached a limit of 338 MW in January. The total amount of electricity distributed to customers amounted to 2,036,262 MWh (1.5% more than in the previous year). Electricity losses in the distribution network in 2019 amounted to 82,518 MWh or 4.05% of the quantities distributed.

The total input of electricity into the

distribution network of the company

Elektro Celje in 2019

2,118,789 MWh


Input and output (generation and consumption) balance

Year 2015in MWh

Sharein %

Year 2016in MWh

Sharein %

Year 2017in MWh

Sharein %

Year 2018in MWh

Sharein %

Year 2019in MWh

Sharein %

Transmission network 1,861,240 91.93 1,868,970 91.61 1,922,865 91.90 1,928,955 91.93 1,944,017 91.75

Producers 143,688 7.10 152,298 7.46 150,134 7.18 149,636 7.13 155,556 7.34

Unregulated supply 19,719 0.97 19,032 0.93 19,337 0.92 19,703 0.94 19,216 0.91

Total input into the distribution network 2,024,647 100.00 2,040,300 100.00 2,092,336 100.00 2,098,294 100.00 2,118,789 100.00

Total output of electricity 1,928,787 / 1,944,411 / 2,001,430 / 2,006,905 / 2,036,262 /

Unregulated output 4 / 66 / 19 / 55 / 9 /

Losses 95,857 4.97 95,823 4.93 90,886 4.54 91,334 4.55 82,518 4.05

Network UsersAt the end of 2019, 172,927 electricity consumers (including consumers with generation units and self-supply) and

2,226 generation units connected di-rectly to the network were connected to the distribution network of the company Elektro Celje.

Number of electricity consumers connected to the Elektro Celje network

2015 2016 2017 2018 2019

Business customers 19,929 20,021 20,147 20,362 20,516

Household customers 150,077 150,667 151,193 151,770 152,411

Total 170,006 170,688 171,340 172,132 172,927

Number of operating power plants in 2019 by energy source

Energy source Number of power plants Production (in MWh)

Sun 1,995 53,650

Water 131 30,955

Biomass 10 42,698

Municipal waste 1 4

Gas 86 28,245

Wind 3 2

Total 2,226 155,554

In 2019, 12,463 customers switched its electricity supplier in the Elektro Celje distribution area, which is 2,326 more than in 2018.

Metering EquipmentIn the remote metering system, there were 2,729 concentrators installed in TSs (78.1% of all TSs), and 2,900 control me-

ters (83% of all TSs) at the end of 2019. 155,944 meters, enabling remote trans-mission of data, were installed (90.2% of all customers connected to the distri-bution network of the company Elektro Celje). At the end of 2019, the number of customers billed on the basis of actual electricity consumption was 148,070.

meters, enabling remote transmission

of data, installed

155,944

4 5E l e k t r o C e l j e i n 2 0 1 9

6.1.6 Network Charge Calculation

Pursuant to the agreement with SODO, the company Elektro Celje is invoicing network charges to those customers who are not billed for the network charge by their electricity suppliers.

The network charges invoiced on behalf of SODO amounted to EUR 87,990,741, which is 2.2% less than in 2018.

Services of the network charge department 2015 2016 2017 2018 2019

Agreements on access to the distribution network 15,463 13,658 14,477 12,214 13,346

Manual meter reading - annual reading 85,511 71,341 52,701 50,673 31,994

Manual meter reading - monthly reading 62,502 44,189 25,988 20,745 14,607

Remote meter reading - household and business customers 947,066 1,172,177 1,401,387 1,531,041 1,686,040

Manual meter reading due to change of supplier 4,847 6,570 4,374 2,630 2,278

Remote meter reading due to change of supplier 4,101 8,949 8,722 7,507 10,185

6.2 Maintenance of Electricity InfrastructureThe company Elektro Celje takes care of the maintenance and perfect technical condition of power plants, fast imple-mentation of interventions and the recti-fication of consequences of defects and emergencies.

The Tables below show the data on the amount and value of maintenance of electricity infrastructure by type of as-sets and work for 2019.

Maintenance by class of asset and type of work (physical realisation)

Type of work

Unit of measurement

DU CELJE DU KRŠKO

DU SLOVENJ GRADEC

DU VELENJE

TOTAL ELEKTRO CELJE

110 kV infrastructure

HV overhead power lines inspection km 61 21 0 7 89

clearance km 6 0 0 0 6

DTS 110/MV kV, DS 110 kV inspection number 75 55 44 40 214

revision number 206 105 118 148 577

MV infrastructure

MV overhead power lines inspection km 752 826 423 689 2,690

clearance km 189 69 77 60 395

MV underground cables inspection km 55 38 20 2 115

DTS MV/MV, DS MV with control and protection

inspection number 44 21 32 40 137

revision number 32 27 29 54 142

TS MV/0.4 kV, TS MV/0.95 kV, TS 0.95/0.4 kV

inspection number 1,129 1,071 776 867 3,843

revision number 252 318 169 338 1,077

LV network inspection km 1,678 1,204 1,108 1,143 5,134

clearance km 11 15 38 13 77


The table does not include the costs of material, services and hours of work performed for: - organisation and provision of emergency services,- management-operation and process management, - TC support and operation of protective devices.

The number of interruptions on MV in-frastructure longer than 3 minutes de-creased by 29% at the company level (from 296 to 210) compared to the previ-

ous year. The number of faults on the LV infrastructure increased by 6.4% (from 2,240 to 2,383).

Number of interruptions and the time required to repair the faults

DU Celje DU Krško DU Slovenj Gradec DU Velenje Total Elektro Celje

Number of interruptions on the 110 kV infrastructure 1 1 0 0 2

Duration of interruptions on the 110 kV infrastructure

0.03 0.03 0.00 0.00 0.06

Number of interruptions longer than 3 minutes on the MV infrastructure

46 74 26 64 210

Number of hours required to repair the faults on the MV infrastructure

1,126 342 310 161 1,938

Number of faults on the LV network 956 336 191 900 2,383

Number of hours required to repair the faults on the LV network

11,204 3,360 1,916 7,339 23,819

In 2019, we replaced 30 transformers due to the increased capacity, and 42

due to faults and wear. We also restored 741 LV connections.

6.3 Investments and ProjectsIn the area of investments in the com-pany Elektro Celje we plan, control and direct investments and produce project documentation (for new SN and LV infra-structure, DSs, DTSs and 110 kV lines, we manage investments from the prepara-tion of the project task to the very intro-duction of the facilities into operation). We devote a considerable amount of time to the integration of facilities into the environment, impacts on the envi-ronment, matters related to legal issues regarding land, coordination regarding

electrical power line routes and the lo-cation of electricity installations with landowners, negotiating the amount of easement compensations, and conclud-ing contracts of easement.

Project planningThe total investment value of the com-pleted building permit acquisition project documentation and executive design construction project documentation in 2019 amounted to EUR 10,249,552.

Maintenance of electricity infrastructure by type of asset TOTAL ELEKTRO CELJE

Material (in EUR) Services (in EUR) Hours

HV overhead power lines 946 29,390 1,080

HV lines and cables in total 946 29,390 1,080

MV overhead power lines 94,530 426,013 39,263

MV underground cables 8,653 45,900 3,438

MV lines and cables in total 103,184 471,913 42,701

LV network 271,646 211,348 92,398

LV network in total 271,646 211,348 92,398

DTS 110/MV kV 13,349 117,676 9,063

DTS MV/MV, DS MV (with control and protection) 9,444 16,861 5,389

TS MV/0.4 kV, TS MV/0.95 kV, TS 0.95/0.4 kV 169,510 40,306 36,544

GENERAL 14,451 180,731 103,050

TOTAL MAINTENANCE OF PRIMARY EQUIPMENT AND INFRACTRUCTURE 582,531 1,068,224 290,225

4 7E l e k t r o C e l j e i n 2 0 1 9

12,000,000

120,000,000

140,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

0

8,000,000

10,000,000

6,000,000

4,000,000

2,000,000

Valu

e (in

EU

R)

6,15

3,56

6

8,08

8,37

6

8,04

6,14

4

8,38

1,61

6

10,0

69,3

12

10,2

66,0

17

9,58

1,39

3

8,89

3,69

7

9,71

8,93

7

10,2

49,5

52

Planned value Realised value Cumulative value

2015 2016 2017 2018 2019

Plan and realisation of completed projects according to estimated value of investment

Number of projects completed by year

140180

100

120

140

160

80

60

40

20

0

100

60

20

120

80

40

0

Num

ber o

f pro

ject

s

PD

AD

BD, DD

TOTAL

130129

159149 153

1 54 74 9 75 75 8 57 84 7 32 114 8 11 111

2015 2016 2017 2018 2019

InvestmentsIn 2019, investments we made amount-ed to EUR 24,664,650, which is equiva-lent to 107.2% of the annual plan of EUR 23,000,000. The favourable weather conditions contributed to the high reali-sation of investments in the reconstruc-

tion of the MV and LV infrastructure. Due to the costs of licenses and rights to upgrades in information services, which had to be covered (from the standpoint of the audit firm) from the investment funds, the realisation of non-energy in-vestments is higher than planned.

Realisation of investments in 2019 Plan Achieved Index ach./plan

New MV and LV infrastructure 7,904,526 8,392,998 106.2

Reconstruction of MV and LV infractructure - R/R and R&IC

6,113,566 7,054,820 115.4

Other energy investments 5,489,908 5,342,297 97.3

Non-energy investments 3,492,000 3,874,535 111.0

TOTAL 23,000,000 24,664,650 107.2


Value and structure of investments

Realisation of investmentactivation review

35,000,000

0

0 100 200 300 400 500 600 700 800 900

25,000,000

25,000,000

15,000,000

15,000,000

5,000,0005,000,000

30,000,000

30,000,000

in EUR

20,000,000

20,000,000

10,000,000

NON-ENERGY INVESTMENTS

OTHER ENERGY INVESTMENTS

RECONSTRUCTION OF MV AND LV INFRACTRUCTURE (R/R + R&IC)

NEW MV AND LV INFRASTRUCTURE

10,000,000

0

NEW MV AND LV INFRASTRUCTURE

RECONSTRUCTION OF MV AND LV INFRACTRUCTURE - R/R and R&IC

OTHER ENERGY INVESTMENTS

NON-ENERGY INVESTMENTS

TOTAL

21,765,222

7,025,371

9,184,323

3,201,331

2,354,197

20,072,117

7,300,414

7,178,660

3,136,479

2,456,564

22,140,904

8,242,167

6,204,094

3,883,142

3,811,501

23,669,54824,664,650

9,977,679

6,635,622

4,778,214

2,278,034

8,392,998

7,054,820

5,342,297

3,874,535

2015 2016 2017 2018 2019

The graph below shows the number of structures that were inactively trans-ferred to 2019, the number of structures with realisation in 2019, the number of

activated structures, and the number of inactive structures as of 31 December 2019.

Non-activated on 31 December 2019 Activated 2019 Realisation 2019 Value transfer

5

3

36

24

196648

772205

229215

367234

5162

26

35

4 9E l e k t r o C e l j e i n 2 0 1 9

Presentation of the 10 largest investments in 2019, out of 1,094 ongoing investments in total:

DTS 110/20 kV Vojnik - Structure, prima-ry and secondary equipmentTo improve the criteria of reliability of SAI-DI and SAIFI power supply and improve-ment of the possibility of connecting new customers in the Vojnik area and its sur-roundings, we began with the construc-tion of a DTS 110/20 kV Vojnik in 2018. In 2019, we completed the construction of the facility, performed the installation of 110 kV GIS and 20 kV switchgear, own use and control equipment. A technical inspection was carried out to obtain the operating permit. In 2019, the realization amounted to EUR 1,993,790.

2x20 kV UC DTS Vuzenica - DS Radlje, 3rd phaseIn 2019, we completed the last of three phases of construction of underground cables between DTS 110 kV Vuzenica and DS Radlje, in order to improve the reliabil-ity of the power supply and increase the possibility of connecting new customers in the Radlje ob Dravi area. In 2019, the realization amounted to EUR 573,498.

20 kV UC DTS Krško DES - TS PC Drnovo East 1We built a new TS Drnovo East 1 with a 20 kV underground cable from the DTS 110/20 kV Krško, to power the facilities in the area of the new business zone. In 2019, the realization amounted to EUR 447,214.

MV outputs from DTS Vojnik IFor integration of DTS 110/20 kV Vojnik into the 20 kV network, we performed 20 kV outputs in the direction of TS OPC Arclin 1, TS Lož mill, TS Vojnik Hospital, alternative TS Zone 10 with 20 kV un-derground cables to TS School and TS Vojnik Hospital. In 2019, the realization amounted to EUR 326,153.

TS Resevna, TS Vodruž and power linesIn order to deal with poor voltage condi-tions in the settlement of Resevna near Šentjur, we constructed a new TS Resev-na with the connection to the LV and MV networks. Due to the cabling of the exist-ing 20 kV overhead power line, we also constructed a replacement TS Vodruž. In 2019, the realization amounted to EUR 248,485.

110 kV OPL Rogaška Slatina - Cirkovci, anti-corrosion treatmentAnticorrosive treatment of 59 lattice masts and replacement of damaged metal parts was carried out on the 110 kV overhead power line. In 2019, the real-ization amounted to EUR 227,818.

20 kV underground cable TS Koprivna - 20 kV OPL Logar ValleyIn 2019, we completed the second phase of construction of 20 kV underground cable between TS Koprivna and 20 kV OPL Logar Valley, in order to improve the reliability of the power supply and in-crease the possibility of connecting new customers in the Logar Valley and Črna na Koroškem area. In 2019, the realiza-tion amounted to EUR 192,066.

LV and MV UC from TS Založe SatlerIn 2019, we cabled a part of the 20 kV overhead power line route for TS Založe Satler and a part of the LV network. In 2019, the realization amounted to EUR 167,562.

Cabling of 20 kV OPL Podplat and 20 kV OPL ŠentvidWe cabled parts of the 20 kV OPL Podplat and the 20 kV OPL Šentvid. In 2019, the realisation amounted to EUR 163,033.

LV network TS Lava - ZabrežIn order to regulate the poor voltage con-ditions from TS Konc and Lava, we cabled and rearranged the LV network. In 2019, the realization amounted to EUR 143,975.


6.4 Market ServicesMarket services in the company Elektro Celje are classified into several groups:• Project preparation,• Construction and electric installation

works,• Maintenance of third-party devices,• Various measurements for customers,• Other works in non-energy market

activities (network switchovers, works at metering control devices, supervision during construction of facilities etc.).

In 2019, revenue from sale of services to customers amounted to EUR 2,393,164, which is 28.5% more compared to the previous year or 62.3% more than planned for 2019. The largest share is

held by the construction of LV and MV facilities for customers, other works in non-energy marketing activities and the construction of LV connections.

The planned revenue was exceeded due mainly to:

• the planned execution of preparation of offers and communication with potential subscribers to our services,

• increased demand for these services, or increased investment of external investors in the construction of the new and renovation of the existing electricity infrastructure,

• the completion of a significant volume of work under the NEDO project.

2015 2016 2017 2018 2019

1,066,138 1,460,148 1,727,155 1,862,240 2,393,164

in EUR

Revenue from sale of services to customers

5 1E l e k t r o C e l j e i n 2 0 1 9

Operation and performance analysis of the Company Elektro Celje07Profit or LossIn 2019, the operating revenue of the company Elektro Celje amounted to EUR 67,324,012, which is 1.7% more than planned. Higher operating revenue stem mainly from higher revenue from the sale of services to customers, which mainly

consist of the performance of electrical installation services for external cus-tomers and rentals, and amounted to EUR 2,393,164 (EUR 918,964 more than planned), with the difference in price achieved amounting to EUR 1,078,331 (EUR 610,886 more than planned).

0

50,000,000

70,000,000

30,000,000

60,000,000

80,000,000

40,000,000

20,000,000

10,000,000


Capitalised own products 14,324,151 13,260,484 14,011,503 15,193,945 15,164,716

Other operating revenue 1,317,814 2,011,845 1,801,851 2,120,225 1,328,264

77.5%76.4% 75.9% 74.5% 75.5%

20.6% 20.5% 21.4% 22.4% 22.5%

in EUR

1.9% 3.1% 2.7% 3.1% 2.0%

2015 2016 2017 2018 2019

Operating Revenue of the Company Elektro Celje

Revenue from the construction of own fixed assets was generated in the amount of EUR 15,164,716, which is 0.5% less than planned for 2019. The value of the consumed material amounted to EUR 8,040,892, the value of the work per-formed EUR 6,024,185 and the cost of car travel EUR 1,099,639.

Other operating revenue in the amount of EUR 1,328,264 is comparable to planned values; it is 37.4% lower than in 2018, mainly due to lower revenue from the cancellation of provisions.

5 2 0 7 O p e r a t i o n a n d p e r f o r m a n c e a n a l y s i s o f t h e C o m p a n y E l e k t r o C e l j e

Operating Expenses of the Company Elektro Celje

Operating expenses of the company Ele-ktro Celje amounted to EUR 57,845,533, which is 1% more than planned for 2019.

2015 2016 2017 2018 2019

0

50,000,000

30,000,000

60,000,000

70,000,000

40,000,000

20,000,000

10,000,000

Cost of purchase of electricity 4,925,127 0 0 0 0

Cost of material 9,668,912 8,593,165 10,189,292 9,709,206 10,464,641

Cost of services 6,732,642 6,483,331 6,171,799 6,049,823 6,043,125

Labour costs 21,093,085 21,748,590 21,976,626 22,748,559 22,952,006

Write-offs 18,100,167 18,078,803 18,293,089 17,489,803 18,057,545

Other operating expenses 374,172 368,196 316,640 324,987 328,216

in EUR

34.6% 39.3% 38.6% 40.4% 39.7%

11.1% 11.7% 10.8% 10.7% 10.4%

15.9% 15.5% 17.9% 17.2% 18.1%8.1%

29.7% 32.7% 32.1% 31.1% 31.2%

0.6% 0.8% 0.6% 0.6% 0.6%

Cost of materials and services in the amount of EUR 16,507,766 was 2.4% higher than planned, mainly due to self-made investments, which were made with a higher proportion of installed material (by EUR 339,044 or 4.4%), higher values of used maintenance material (by EUR 196,350 or 44.7%), due to services pro-vided to customers to a greater extent than planned, making costs of materials and services from services to customer also increase (by EUR 282,546 or 40%).

Labour costs in the amount of EUR 22,952,006 make up 39.4% of total ex-penses. The average gross salary per employee based on working hours in the period from January to December 2019 was EUR 2,211. It was 15.9% high-er compared to the average gross salary in Slovenia in the period from January to November 2019. Labour costs include a performance bonus of EUR 1,592,709. The accrued costs for unused annual leave for 2019 amount to EUR 545,402. Other labour costs in the amount of

EUR 3,228,672 were 15.1% higher than planned, mainly due to the actuarial cal-culation of the higher present value of fu-ture payments for long-service bonuses and severance pays (the discount rate decreased from 1.57% on 31 December 2018 to 0.78% on 31 December 2019).

Write-offs in the amount of EUR 18,057,545 including amortisation and depreciation costs (EUR 17,861,945), operating expenses from revaluation of fixed assets (ie. loss for the elimination or sale of fixed assets in the amount of EUR 123,204), write-offs of short-term receiv-ables (EUR 50,169) and expenses from revaluation of inventories (EUR 22,227), were 0.6% lower than planned, mainly due to lower adjustments of receivables.

Other operating expenses in the amount of EUR 328,216 were 6.5% higher than planned, mainly due to higher fees and court costs (EUR 13,622 more than planned).

5 3E l e k t r o C e l j e i n 2 0 1 9

Financing Revenue and Expenses

Item (in EUR) The company Elektro Celje

Achieved 2015

Achieved 2016

Achieved 2017

Achieved 2018

Achieved 2019

Financial revenue 145.345 470.426 1.805.998 1.099.051 1.067.415

Financial expenses —1.082.192 —642.354 —455.770 —417.422 —413.001

Net financial profit or loss

—936.847 —171.928 1.350.228 681.629 654.414

Financial revenue in the amount of EUR 1,067,415 was 2.4% higher than planned, mainly due to higher interest income from loans (EUR 9,623 more than planned) and higher interest revenue re-lated to RO calculation (EUR 21,874 more than planned). Financial expenses in the amount of EUR 413,001 include mainly interest on borrowings (ie. EUR 323,485), which represent 92.4% of the projected level and are 6.1% lower than in 2018.

Other revenue from extraordinary activ-ities in the amount of EUR 52,310 were EUR 37,920 higher than planned, main-ly due to contractual penalties received

(EUR 43,135 more than planned). Other expenses from extraordinary activities amounted to EUR 35,375 and were EUR 32,125 lower than planned, mainly due to lower compensation (EUR 19,669 less than planned).

The company Elektro Celje generated EUR 68,443,737 in total revenue (1.8% more than planned and 0.7% less than in 2018). Total expenses amounted to EUR 58,293,909 (0.9% more than planned and 2.2% more than in the previous year). Net profit or loss for 2019 is a profit of EUR 9,252,820 (8.2% more than planned and 11.3% less than achieved in 2018).

80,000,000

in EUR

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

60,000,000

40,000,000

20,000,000

0

69,6

05,7

26

65,2

69,3

85

67,4

53,0

30

68,9

36,4

59

68,4

43,7

37

62,0

39,7

13

56,0

15,2

40

57,4

56,5

64

57,0

34,8

08

58,2

93,9

09

Total revenue of the company Elektro Celje Total expenses of the company Elektro Celje Net profit or loss of the company Elektro Celje

2015 2016 2017 2018 2019

Total Revenue, Total Expenses and Net Profit or Loss of the Company Elektro Celje

6,808,482

9,435,710 9,062,759

10,428,778

9,252,820


Financial and Asset SituationThe total assets of the company Elektro Celje on 31 December 2019 amounted to

EUR 290,471,682 and were 2.2% higher than in 2018.

Assets (in EUR) The company Elektro Celje

31 Dec. 2019 Share (in %) 31 Dec. 2018 Share (in %) Index 2019/2018

Long-term assets 275,357,738 94.8 268,879,026 94.7 102.4

Intangible assets and long-term deferred expenses and accrued revenue

4,252,408 1.5 3,083,401 1.1 137.9

Tangible fixed assets 260,519,495 89.7 254,312,030 89.5 102.4

Long-term financial investments 7,666,961 2.6 7,658,081 2.7 100.1

Long-term operating receivables 1,340,801 0.5 2,213,183 0.8 60.6

Deferred tax assets 1,578,073 0.5 1,612,331 0.6 97.9

Current assets 12,832,650 4.4 12,516,763 4.4 102.5

Inventories 1,616,344 0.6 1,700,625 0.6 95.0

Short-term operating receivables 10,801,812 3.7 10,306,106 3.6 104.8

Cash 414,494 0.1 510,032 0.2 81.3

Short-term accrued revenue and deferred expenses 2,281,294 0.8 2,684,853 0.9 85.0

Total assets 290,471,682 100.0 284,080,642 100.0 102.2

Equity and liabilities (in EUR) The company Elektro Celje


Equity 219,909,447 75.7 214,215,726 75.4 102.7

Provisions and long-term accrued expenses and deferred revenue

19,098,746 6.6 18,783,995 6.6 101.7

Long-term liabilities 29,024,849 10.0 26,834,819 9.4 108.2

Short-term liabilities 21,880,727 7.5 23,622,058 8.3 92.6

Short-term accrued expenses and deferred revenue 557,913 0.2 624,044 0.3 89.4

Total equity and liabilities 290,471,682 100.0 284,080,642 100.0 102.2

The majority (94.8%) of assets are rep-resented by long-term assets, of which intangible and tangible fixed assets represent 91.2%. In accordance with the changed position of the external auditor of BDO, d.o.o., the method of ac-counting for the use of IBM MX licenses and upgrades has been changed. They were activated as intangible assets in the procurement cost of EUR 1,254,309. Tangible fixed assets, amounting to EUR 260,519,495, increased by EUR 6,207,465 in 2019, mainly due to invest-ments in electricity facilities.

Long-term operating receivables in the amount of EUR 1,340,801 are down 39.4% from those on 31 December 2018,

mainly due to long-term receivables on the company SODO in the amount of EUR 1,146,535 (EUR 2,198,543 on 31 Decem-ber 2018).

Value of inventories on 31 December 2019 amounted to EUR 1,616,344 and is EUR 84,281 lower than at the end of 2018. The index of average invento-ry commitment amounted to 82 days, which is 2 days less than in 2018.

Short-term accrued revenue and de-ferred expenses amounted to EUR 2,281,294 and decreased by EUR 403,559 compared to last year, mainly due to lower SODO short-term accrued revenues.

Equity of the company as of the end of 2019 amounted to EUR 219,909,447, which is 2.7% more than on 31 December 2018. It represents 75.7% of liabilities to asset sources. The ownership structure is presented in more detail in Section 5.4.

Provisions and long-term accrued ex-penses and deferred revenue increased by 1.7% compared to the end of 2018, mainly due to higher long-term provi-sions for severance pay and long-service bonuses (EUR 672,599 more than on 31 December 2018).

5 5E l e k t r o C e l j e i n 2 0 1 9

Financial liabilities to banks are present-ed in detail in Sections 11.4.11 and 11.4.13.

Short-term accrued expenses and de-ferred revenue as of 31 December 2019

amounted to EUR 557,913, which is EUR 66,131 less than at the end of 2018, mainly due to lower accrued costs of un-used annual leave (EUR 53,311 less than on 31 December 2018).

Cash Flow Statement

Cash flow (in EUR) The company Elektro Celje

2019 2018

Net operating cash flow 11,100,628 13,942,022

Net investing cash flow —9,118,391 —8,420,322

Net financing cash flow —2,077,775 —5,182,729

Change in net cash and cash equivalents —95,538 338,971

Cash assets of the company Elektro Celje decreased by EUR 95,538 in 2019. Cash flows from operating activities showed a surplus of inflows, while cash flows from investing and financing activities showed a surplus of outflows. Operating expenses were EUR 1,732,456 higher than in 2018, mainly due to higher expenses for the pur-chase of materials and services. Investing expenses were EUR 1,187,893 higher than in the previous year, mainly due to higher expenses for the acquisition of tangible fixed assets as a result of higher invest-ments. The negative cash flow from fi-nancing activities is mainly attributed to the payment of long-term bank loans.

Performance IndicatorsThe operations of Elektro Celje in 2019 were in line with the Business Plan. The net financial debt/EBITDA indicator, which stands at 1.42 and is better than planned (1.47), mainly due to higher rev-enue generated from service to custom-ers.

Return on Assets (ROA) in the amount of 3.22% exceeded the projected value of the AMP by 0.22%, mainly due to higher net profit (8.2% more than planned).

The value of realized investments amounts to EUR 24,664,650, which is 7.2% more than planned. This also means that CAPEX in net sales revenue (48.52%) is higher than planned (46.34%).

Gross value added per employee exceeds the plan by EUR 2,752, mainly due to the 1.7% higher gross operating income.

The SAIDI and SAIFI indicators are more favourable than the values specified in the act by the Energy Agency (SAIDI: 47.72, SAIFI: 1.23), mainly because there were no DTS outages in 2019 and no crit-ical weather conditions, which would af-fect outages for a longer period of time.

With the quantity of electricity distrib-uted amounting to 2,036,262 MWh, the share of losses per unit of electricity dis-tributed in 2019 stood at 4.05% (4.55% in 2018), while recognised losses as per the Energy Agency regulatory framework amounted to 4.81%.

As of the balance sheet date on 31 De-cember 2019, Elektro Celje fulfilled both contractual financial commitments to-wards the SID Bank (financial debt/equi-ty < 0.4, net financial debt/EBITDA < 2.7).


A. FINANCING INDICATORS (INVESTMENTS)

in EUR 31 Dec. 2016 31 Dec. 2017 31 Dec. 2018 Plan 2019 31 Dec. 2019 Graphical comparison

Equity 200,929,373 207,146,133 214,215,726 219,112,350 219,909,447

Liabilities 276,059,990 279,697,695 284,080,642 287,957,141 290,471,682

Equity financing rate 72.78% 74.06% 75.41% 76.09% 75.71%

Equity plus long-term debt (including provisions) and long-term accrued expenses and deferred revenue

254,207,932 255,517,623 259,834,540 267,707,369 268,033,042

Liabilities 276,059,990 279,697,695 284,080,642 287,957,141 290,471,682

Long-term financing rate 92.08% 91.35% 91.47% 92.97% 92.28%

B. INVESTMENT INDICATORS


Fixed assets (carrying values) 246,036,537 247,578,613 254,312,030 257,737,683 260,519,495

Assets 276,059,990 279,697,695 284,080,642 287,957,141 290,471,682

PP&E to total assets ratio 89.12% 88.52% 89.52% 89.51% 89.69%

Fixed assets (PP&E) plus long-term accrued revenue and deferred expenses (carrying value), investment property, long-term financial investments and long-term trade receivables

259,893,517 262,430,181 267,266,695 270,985,677 273,779,665

Assets 276,059,990 279,697,695 284,080,642 287,957,141 290,471,682

Long-term assets rate 94.14% 93.83% 94.08% 94.11% 94.25%

in EUR 2016 2017 2018 Plan 2019 2019 Graphical comparison

Actual investments 20,072,117 22,140,904 23,669,548 23,000,000 24,664,650

Planned investments 20,000,000 22,400,000 22,000,000 23,000,000 23,000,000

Investment realisation rate 100.36% 98.84% 107.59% 100.00% 107.24%

Investing cash flow 20,072,117 22,140,904 23,669,548 23,000,000 24,664,650

Net revenue from sales 49,517,923 49,823,026 50,512,707 49,636,668 50,831,032

CAPEX to net revenue from sales ratio 40.54% 44.44% 46.86% 46.34% 48.52%

C. HORIZONTAL FINANCIAL STRUCTURE INDICATORS


Equity 200,929,373 207,146,133 214,215,726 219,112,350 219,909,447


Equity to operating fixed assets ratio 0,817 0,837 0,842 0,850 0,844

Liquid assets 180,689 171,061 510,032 651,595 414,494

Current liabilities 21,156,172 23,452,968 23,622,058 19,681,772 21,880,727

Equity to operating fixed assets ratio 0.009 0.007 0.022 0.033 0.019


Sum of liquid assets and short-term receivables

10,418,982 10,638,718 10,816,138 11,198,960 11,216,306


Acid-test ratio 0.492 0.454 0.458 0.569 0.513

5 7E l e k t r o C e l j e i n 2 0 1 9

D. ECONOMIC INDICATOR


Operating revenue 64,790,252 65,636,380 67,826,877 66,199,828 67,324,012

Operating expenses 55,272,085 56,947,446 56,322,378 57,246,258 57,845,533

Operating efficiency ratio 1.172 1.153 1.204 1.156 1.164

E. PROFITABILITY INDICATORS


EBITDA 27,596,970 26,982,023 28,994,302 27,127,532 27,536,024

Gross operating profit 64,790,252 65,636,380 67,826,877 66,199,828 67,324,012

EBITDA margin 42.59% 41.11% 42.75% 40.98% 40.90%

EBIT 9,518,167 8,688,934 11,504,499 8,953,570 9,478,479


EBIT margin 14.69% 13.24% 16.96% 13.53% 14.08%

Net profit 9,435,710 9,062,759 10,428,778 8,550,230 9,252,820

Average equity (excl. net income from the current year)

193,968,372 199,039,520 204,730,104 210,187,971 212,436,177

Net return on equity (ROE) 4.86% 4.55% 5.09% 4.07% 4.36%

Net profit 9,435,710 9,062,759 10,428,778 8,550,230 9,252,820

Average assets 274,160,492 277,878,843 281,889,169 284,981,577 287,276,162

Return on assets (ROA) 3.44% 3.26% 3.70% 3.00% 3.22%


Sum of dividends for the fiscal year 3,234,527 2,636,124 3,145,015 3,066,100 3,220,908

Average share capital 100,953,201 100,953,201 100,953,201 100,953,201 100,953,201

Dividends to share capital ratio 0.032 0.026 0.031 0.030 0.032

Dividend paid out in the year 3,234,527 2,636,124 3,145,013 3,066,100 3,220,907

Average equity 198,686,227 204,037,753 210,680,930 214,463,086 217,062,587

Dividend to equity ratio 1.63% 1.29% 1.49% 1.43% 1.48%

F. LABOUR PRODUCTIVITY INDICATOR



Number of employees per hours worked 631 624 629 628 616

Gross value added per employee 78,202 78,443 82,201 79,254 82,006


G. TECHNICAL INDICATORS

2016 2017 2018 Plan 2019 2019 Graphical comparison

SAIDI (System Average Interruption Duration Index) - unplanned interruptions - own cause

18.06 46.22 33.84 32.00 31.13

SAIFI (System Average Interruption Frequency Index) - unplanned interruptions - own cause

0.48 1.03 0.80 0.75 0.66

MAIFI (Momentary Average Interruption Frequency Index)

3.11 4.51 3.49 3.90 2.93

Losses (MWh) 95,823 90,886 91,334 90,883 82,518

Electricity distributed (MWh) 1,944,411 2,001,430 2,006,905 2,022,686 2,036,262

Losses to electricity distributed ratio 4.93% 4.54% 4.55% 4.49% 4.05%

Electricity supplied in the time interval (MW)

232 239 239 241 242

Peak power in the time interval (MW) 316 335 341 335 338

Load factor (LF) 0.74 0.71 0.70 0.72 0.71


Standardised network length (km) 591 584 583 592 577

Power distribution per standardised network length

3,290 3,427 3,445 3,417 3,528


Number of connection approvals issued by consumer category

- MV (1 - 35 kV) 38 16 31 20 49

- 0.4 kV measured power 157 145 180 195 245

- 0.4 kV without measured power 813 857 805 830 756

- households 1,856 1,405 2,226 2,180 2,842

- electric vehicle charging 1


Number of employees 632 628 633 628 628

Standardised network length per employee 0.94 0.93 0.92 0.94 0.92

5 9E l e k t r o C e l j e i n 2 0 1 9

H. TECHNICAL ECONOMIC INDICATORS OF REGULATED ACTIVITY


Operating expenses of regulated activity (in EUR)

40,730,638 41,169,008 39,236,015 40,413,266 40,702,409


OPEX per electricity distributed 20.95 20.57 19.55 19.98 19.99

Operating expenses of regulated activity (in EUR)

40,730,638 41,169,008 39,236,015 40,413,266 40,702,409


OPEX per standardised network length 68,918 70,495 67,344 68,266 70,512

Investments in regulated activity (in EUR) 19,875,252 21,606,689 23,669,548 21,926,915 24,268,183


Investment per electricity distributed 10 11 12 11 12

Labour costs of regulated activity (in EUR) 15,898,245 16,297,584 15,633,136 16,277,127 16,141,614

Number of customers 170,688 171,340 172,132 172,721 172,927

Labour costs per customer (in EUR) 93 95 91 94 93

Operating revenue of regulated activity (in EUR)

49,533,777 49,676,656 50,444,747 49,026,705 49,519,229


Operating revenue per electricity distributed

25 25 25 24 24

I. INDICATORS OF COMPLIANCE WITH BANK COMMITMENTS


Financial debt 44,996,904 39,730,756 37,676,913 40,602,450 39,589,797

Average equity 198,686,227 204,037,753 210,680,930 214,463,086 217,062,587

Financial debt/Equity* 0.226 0.195 0.179 0.189 0.182

Net financial debt 44,816,215 39,559,695 37,166,881 39,950,855 39,175,303

EBITDA 27,596,970 26,982,023 28,994,302 27,127,532 27,536,024

Net financial debt/EBITDA* 1.624 1.466 1.282 1.473 1.423

* Indicators referring to commitments to the SID bank.


Sustainable development08The company's sustainable development forms a constituent part of the business processes at Elektro Celje. The integra-tion of sustainable development and so-cial responsibility principles into business processes contributes to the creation of value added, ensuring compliance of company's operations with the quality policy, operations within the framework of regulatory provisions and ethical stand-ards, strengthening concern for employ-

ees and efforts to improve their satisfac-tion, concern for environment protection and encouragement of efficient energy use of customers. The promotion of per-sonal growth of employees enables the development of their own potentials and abilities, with organisational culture fo-cused on enhancing the awareness of employees of the importance of customer satisfaction at all levels enabling compa-ny's growth and development in the future.

8.1 Sustainable Development GoalsElektro Celje reports on its sustainable op-eration for ensuring sufficient information on the company's socially responsible be-haviour. We have laid down indicators for measuring orientation towards sustainable environmental protection, relation towards employment, employee satisfaction, pro-tection of the health of employees and most importantly, provision of a constant electricity supply to consumers as a con-dition of sustainable development.

The company monitors the achievement

of the goals of non-financial indicators in the Performance Indicators System. Some of them are already presented in other sections of the Annual Report (Section 6.1.1 Land development documents and power supply reliability indicators - SAIDI, SAIFI and MAIFI, Section 6.1.6 Meter read-ing indicators, Section 6.2 Number of inter-ruptions and the time required to repair the faults, Section 8.7 Environmental care.

Elektro Celje also monitors the following non-financial indicators:

Non-financial indicators Target Achieved

Average time required to issue a connection approval (in days) 20 13.45

Average time required to issue an agreement on connection to the LV network (in days) 20 7.93

Average time required to respond to a complaint regarding voltage quality (in days) 30 5.38

Average time required to resolve voltage deviations (in months) 6 2.669

Average time required to repair a meter fault (in days) 5 4.633

Average time required to eliminate defects in the TC network (in hours) 1 1

Average time required for response to written inquiries, complaints or user requests (in days) 7 4.082

Number of hours of training and education per employee (in hours) 20 22

Assessment of efficiency of employee training and education (1 - 5) 4.5 4.3

6 1E l e k t r o C e l j e i n 2 0 1 9

8.2 Investments and the Development of the Distribution NetworkLong-term development of the Elektro Celje distribution network is defined by a 10-year plan for the development of the electricity distribution network from 2019 to 2028, which foresees EUR 203.6 million of investments for the period from 2020 to 2028 (short-term investment needs for the next three years saw an increase of 12.1%) and the Business Plan for Elektro Celje, d.d. for 2020 with base-lines for 2021 and 2022, which predicts investments of EUR 76 million (EUR 25 million in 2020 and in 2021, and EUR 26 million in 2022).

The implementation of the company's distribution will also be influenced in the future by the commitments in the field of climate policy, which Slovenia has ac-cepted with the ratification of the Paris Agreement, and on this basis new ener-gy and environmental policy goals have been formulated. The plan for the devel-opment of the distribution network has been drawn up on the basis of new find-ings, national energy policy guidelines

and EU directives. It is based on analyses of the condition of the distribution net-work, envisaged development of individ-ual regions, and consequently, on the foreseen assessment of electricity con-sumption and load in the future. Develop-ment planning is becoming increasingly complex and is moving away from estab-lished guidelines. Connections of newly built electric vehicle chargers, increased use of heat pumps, increased share of energy from renewable energy sources in end-use and active engagement of customers in the role of consumer and manufacturer require an almost "new electrification" at the LV level (renova-tions and cabling of LV networks, con-struction of new MV/0.4 kV TSs), with renovations and new constructions also necessary at high voltage levels due to increased load. Updating the distribution network with new technologies and in-stallation of modern metering systems in the network for obtaining accurate and more representative information on elec-tricity consumption is essential.

FUNDAMENTAL OBJECTIVES FOR EFFICIENT PLANNING OF THE DISTRIBUTION NETWORK:

• Ensure planned and actual consumption of electricity and meet the requirements regarding electrical power;

• Satisfy requirements for including distributed production of electricity and other system users;

• Ensure the network and condition thereof, which corresponds to state-of-the-art technology;

• Ensure a long-term increase in and maintenance of the quality of supply according to the target level of quality;

• Ensure a cost-effective network;• Ensure environmental protection in accordance with legislation;• Meet the requirements from the Slovenia’s Energy Concept (SEC);• Meet the requirements dictated by national energy climate objectives.

The projected intensity of development dictates appropriate funding sources. There is a gap between the resources pro-vided and the resources needed due to fi-nancing of new factors that will have a sig-nificant impact on the future development of the distribution network. The imple-mentation of the "extended variant" of the development plan will therefore depend to a large extent on the provision of ad-ditional funding. The possibilities od inter-nal financing are mostly already exploit-ed (available depreciation, disinvestment,

etc.). In order to provide funds for urgent investments, the Management Board ear-marked two thirds of the remainder of the net profit for the financial year for other reserves (to invest in planned distribution network development), and will, to provide necessary funds for urgent investments in the long run, propose an increase in share capital from the company's other reserves in 2020.

The company Elektro Celje projects that, in the period from 2020 to 2028, it will

6 2 0 8 S u s t a i n a b l e d e v e l o p m e n t

allocate 60.9% of funds for new construc-tions, 34% for reconstructions and 5.1% for project documentation. The most funds will be earmarked for medium voltage (36.9%) and low voltage energy facilities (24.6%). The high frequency of extreme weather events in recent years and the constant exposure to external influences dictate a higher degree of cabling of MV and LV lines, where field conditions allow. The environmental impacts on groundwa-ter are much smaller compared to those on surface water, which in turn improves the quality and reliability of electricity supply. Cabling also results in the reduc-tion of electricity losses and improvement of voltage conditions. Apart from that, underground cables with lines with large cross-sections are cheaper and easier to site compared to overhead power lines.

Among the projects that have proven to be a priority in the development of the company development plan, the most important new and renovation invest-ments are:• The construction of 2 × 110 kV OPL

DTS Trebnje - DTS Mokronog - DTS Sevnica (ca. 9 km) and 2 x 110 kV UC DTS Trebnje - DTS Mokronog (0.4 km) in 2024.

• The construction of 2 x 110 kV OPL DTS Ravne to DTS Mežica (ca. 8 km) and 2 x 110 kV UC DTS Ravne to 2 x 110 kV OPL DTS Mežica (ca. 0.5 km) in 2027;

• The completion of 110/20 kV DTS Vo-jnik in 2020 (connecting to network in 2021);

• The construction of 110/20 kV DTS Mokronog in 2022 (connecting to net-work in 2024);

• The construction of 110/20 kV DTS Mežica in 2028;

• Renovation and restoration works in DTSs due to wear and tear, improve-ment of operational reliability and provision of adequate power supply quality.;

• Investments in existing TSs and the MV and LV lines and facilities based on the projected electricity consump-tion, the state of the installed technol-ogy, environmental requirements and terms of the consensors.;

• Investments in the MV and LV networks (increased investment in cabling of the network, in line with projected electric-ity consumption growth, construction of business and residential zones, ad-

equate quality supply and increased requirements for renewable electricity sources connection);

• The continuation of the transition from 10 to 20 kV lines in the area of Celje;

• Control and protection of DCCs (mod-ernisation of remote-control equip-ment, protection systems in DTSs and DSs, installation of additional re-mote-controlled switchgears and fault indicators, as well as TS remote con-trol in poorly accessible and especially critical sections of the network);

• Completing the construction of the advanced metering system, consisting of system meters, associated informa-tion communication infrastructure and IT systems (all system meters that will allow customers to be billed on the ba-sis of actual electricity consumption will be reinstalled);

• Investments in telecommunications in-frastructure include further expansion of our own optical network in redun-dant rings throughout the power sys-tem of DTS and DS facilities and to key TSs. As the construction of the optical network is unlikely to keep up to speed with the telecommunications require-ments of the devices and systems in the mentioned facilities, especially at the lower levels of the LV network and the end user, setting up of a parallel private LTE network will be necessary in the future. A lot of emphasis on all levels of telecommunications networks and information systems will be placed on cyber and information security, both in IT and particularly in OT pro-cess networks and systems: in addi-tion to all the measures taken so far, the introduction of advanced security mechanisms with artificial intelligence support (including for SCADA proto-cols) and the establishment of a joint (inter)sector SOC will ensue (Security Operations Centre).

• Environmental investments - the en-vironmental awareness of the society is increasing and Elektro Celje, d.d. continues to pursue the goal of re-ducing its impact on the environment; investments in ecological containers, arrangements for the collection and separation of hazardous and non-haz-ardous waste, the rebuilding of oil pits and septic tanks, the reduction of light pollution of commercial and power fa-cilities and the increase of energy effi-ciency of business facilities.

6 3E l e k t r o C e l j e i n 2 0 1 9

8.3 Management SystemsISO 9001, ISO 45001, ISO 27001 and ISO 14001 management systems provide a methodological support to the organiza-tional development of the company on the basis of a process approach to man-agement. The company has policies in place for all segments of the integrated management system with which we are committed to being responsible in the ar-eas of quality management, employees' health, information security, environ-mental management and risk manage-ment.

All systems are integrated into a single management system under identical procedures for documentation and risk management, communication, preven-tive and corrective measures, corrections and improvements, management reviews and other activities that enable the im-provement of operations. The umbrella document that defines the management system, the processes and procedures, is referred to as "Poslovnik vodenja" (Rules of Management) of the company Elektro Celje, d.d. The main tools used in Company management are internal audits, external audits, management re-views and auditing of certification.

With the management review, we deter-mine the efficiency and suitability of the management system. Measures whose implementation depends on the manage-ment review are also important manage-ment tools. Examiners from the Bureau Veritas Slovenia who annually review the functioning of the management system did not detect any inconsistencies at the December 2019 audits. In addition to the recommendations given, the company has identified three good practices.

In the field of quality system, which is the basic standard for running a business, we have adapted existing processes, de-signed some new subprocesses and add-ed new goals to existing processes due to new MX and AX information systems, changes in the company and in the com-pany environment.

Healthy lifestyle and safe work are not just the company's legal obligations but also its values and that is why in 2019, numerous activities were aimed at com-bining occupational safety and health

with the requirements of the new system and at the same time promoting and im-proving Occupational Health and Safety System in society, which made an ISO 45001 assessment possible. Occupa-tional Health and Safety Policy, followed by all employees, including external con-tractors, was updated and new goals for Occupational Health and Safety were set. The audited risk assessment statement is the basis for preventive and proactive action and a quality work environment, as a workplace risk assessment prevents occupational accidents and injuries and health damages. With safety measures we tackle the source of dangers, define and demand the use of personal safety equipment and convey relevant informa-tion and instructions for occupational safety and encourage a culture where each individual looks out for themselves and others so as to prevent the risk of accidents and negative health impacts.

Familiarity of employees with internal in-vestigations of accidents and dangerous events enables us to identify dangers in the work process and to find solutions to prevent similar accidents and events. In 2019, we registered 8 minor accidents at work and documented 13 dangerous events, 5 of which were connected to the use of or work at or in the immediate vi-cinity of electricity installations.

The company Elektro Celje operates in an environmentally friendly manner, in accordance with the legal requirements and requirements of the Environmental Management System.

Information Security Management Sys-tem includes the protection of the com-pany’s assets and information. In 2018, the Critical Infrastructure Act and the In-formation Security Act came into force, imposing new measures in the field of protection and planning of critical infra-structure protection, protection of net-works and information systems. As the company Elektro Celje is engaged in the supply of electricity, it has been recog-nised as a provider of essential services.

In 2019, the company implemented some of the improvements identified in the most recent self-appraisal following the EFQM excellence model in the most

Elektro Celje is the holder of four quality standards: ISO

9001, ISO 45001, ISO 14001 and ISO 27001, which it

successfully certifies every year.


demanding way, with the simulation of cooperation within the scope of the Busi-ness Excellence Prize of the Republic of Slovenia (PRSPO), in 2018. As part of the self-appraisal, a managerial document with a comprehensive representation of

the activities and results of the company was prepared. It is the basis for a possi-ble re-inclusion in the external evaluation within the scope of PRSPO, which moni-tors the multi-year business trend.

8.4 Research and Development ProjectsEuropean Compile ProjectThe purpose of the COMPILE project is to provide opportunities for decarbonising energy supply, building energy commu-nities and generating environmental and socio-economic benefits. The Slovenian part of the pilot testing will be held in Luče, where a local energy community with a high share of RESs will be estab-lished. The project's goal is to increase self-sufficiency and security of supply and to manage the flexibility of the local energy community, which includes res-idential and commercial buildings. The company Elektro Celje will be the sub-contractor of the distribution network tasks and the consultant.

NEDO demonstration projectIn 2019, the NEDO demonstration project, involving Slovenian and Japanese part-ners, was successfully completed. The Japanese partner, HITACHI, developed an advanced integrated system for manag-ing distribution networks. The integrated system functions covers the field of Volt-age Regulation, a system for automatic detection and locating outages, and a system service for ELES, which conducts a conservative voltage reduction. The Slovenian partners developed comple-mentary functionalities for voltage regu-lation in LV networks and loop operation in MV networks, established the neces-sary communication infrastructure as well as a platform and programme solu-

tions for integrating all the technologies mentioned above. The developed and tested conservative voltage reduction mechanism represents a significant po-tential and opportunity of marketing this new service for the transmission opera-tor. Experience gained by completing the integration via a standardised CIM profile is of great importance for the company Elektro Celje. The NEDO demonstration project is successfully operating in a real-istic environment of the company Elektro Celje in the area of DTS Slovenj Gradec. During the implementation of the project, the company Elektro Celje provided a re-alistic polygon, enabled the installation of equipment and demonstrated the use of the technologies mentioned above.The operation of this demonstration project is already proving its impact on better adaptability of the distribution network to including distributed energy sources. The introduced solutions ena-ble better managing of voltage profiles, reduce losses during electricity trans-fer, and directly improve the reliability of electricity supply.

European X-FLEX projectThe aim of the X-FLEX project is to de-sign integrated technology solutions that will enable optimal combinations of decentralised flexibility sources. This will give all stakeholders the opportunity to offer their flexibility in the market, there-by creating benefits for all players in the smart grid value chain.

In Slovenia, the project will be carried out at two demonstration sites, name-ly in Luče and in Ravne na Koroškem. A Traffic Light System in connection with the SCADA system for efficient cooper-ation between the distribution network operator and the aggregator, algorithms

We participate in several European projects, with

which we take care of the development of the company

and look for new business solutions for our users.

6 5E l e k t r o C e l j e i n 2 0 1 9

and market mechanisms for managing the domestic charging infrastructure, system services for the distribution network operators and methodologies for financial evaluation of these system services will be developed and tested in Luče. Improvements in reliability of supply through cooperation between different system operators during times of extreme weather conditions will be demonstrated in Ravne na Koroškem. The company Elektro Celje participates in the project as a partner.

European BD4OPEM research projectThe BD4OPEM project will develop spe-cific tools for the energy sector that will increase their added value, functionality

and performance. The aim of the project is to gain more value from the available data and thus create new market oppor-tunities for both existing and new solu-tions. Innovative services and tailored marketing solutions will be integrated into the open innovation concept, which

connects secure data flows from data providers to solution providers to pro-mote adaptability to market demands. The company Elektro Celje will, as a part-ner in the project, carry out large-scale pilot testing.

"Use Smart" ProjectOn 1 June 2019, the company Elektro Celje started the "Use smart" research project. The project priority theme is re-lated to a specific new implementation practice directly related to the opera-tion of the distribution system. The Net-work Charges Act enables this priority to be addressed by promoting adapted consumption and electricity consump-tion management with network charge mechanisms set out in Articles 135 and 137 of the Energy Act (EZ-1). The nega-tive and positive critical peak tariff as well as self-supply of consumers in the community will be used in the project. The secondary priority is the specific new placement or application of existing equipment for the transfer or distribution of electricity. The project will adapt and use existing equipment used within the scope of the Flex4Grid project - the sys-tem for using user flexibility in the criti-cal peak tariff and expand it by using the system for recording electricity genera-tion and electricity meters, enabling the user access to information on their use in real time.

8.5 Information System DevelopmentIn the future, we will continue to provide modern, efficient and reliable domain infrastructure, adequate licensing cover-age and adaptation of dedicated appli-cation software to the needs of business processes. Microsoft Dynamics AX R3 support expires in October 2021, so in 2020 we will begin the transition to the Dynamics 365 FO (Finance and Opera-tion) version.

In 2020, we will upgrade EAM (IBM Maxi-mo) to version 7.6.0.4., with an improved mobile application support. Integrations will migrate from MX SDI to ESB, which means easier adaptation, better trans-parency of operation, ability to re-trigger integration scenarios in case of failure, traceability/storage of call and WS re-

sponse (both MX and AX), better system robustness, lower service claims number and consequently less dependency on the subcontractor.

In the process informatics (OT) segment, the 2018 investment will continue to in-troduce an Advanced Distribution Man-agement System (ADMS) to replace the existing SCADA and DMS systems in 2020.

In the field of security, we will begin to introduce the Security and Operational Centre (SOC) common to the whole en-ergy sector. For this purpose, we need to set up our own SIEM (Security informa-tion and event management).

We provide modern, efficient and reliable domain

infrastructure, adequate licensing coverage and

adaptation of dedicated application software to the

needs of business processes.


8.6 Societal and Social AspectsResponsibility towards EmployeesThe mission with managing people at work is to be a partner to leaders and associates in developing and harnessing the potential of colleagues. Through sys-tematic, professional and comprehensive approaches, we ensure and maintain competent staff and promote changes in order to build commitment and business excellence. Employee development and human resource planning are a part of the annual and strategic plan of the com-pany. The Human Resource Management Strategy arises from the key strategic starting points for the period 2017 - 2020 and includes a comprehensive view of the renewal of the process of treatment of people at work and subprocesses ad-dressing the realisation of the defined strategy in view of the defined key fields and the needs of the organisation.

We are aware that no business process can be completed without employees. The key here is having people with the right capabilities in the right place at the right time. Employees ensure that the activities in business processes are running as re-quired. We treat them comprehensively, as the ability for coordinated functioning comes from the individual. By investing in the development of our employees, we take care of their personal and profession-al development. We work in accordance with legal standards and ethical rules and respect human rights. The common goal of all employees and external contractors is to build a reputation and maintain the integrity of the company Elektro Celje and the Elektro Celje Group, and build a culture based on our ethical values to-gether. We provide new employment and career development to employees under equal conditions, without discrimination. We do not tolerate any form of violence or mobbing among our employees. Every employee has the right to protection of privacy in the workplace and a safe and healthy working environment.

Managers respect the dignity, personal integrity and privacy of every employ-ee when making decisions. They create favourable conditions for personal and professional development of employees, conduct interviews with colleagues for the purpose of open dialogue and coordina-tion of personal and common goals, iden-tify human resources potential and suc-cessors, conduct mentoring and transfer of knowledge to colleagues. Open com-munication and promotion of actions cre-ates a stimulating environment and builds a culture in which the diverse community can work together and coherently. Impor-tant social partners in the dialogue are the Trade Union and the Worker's Council.

Supplementary Pension InsuranceThe company Elektro Celje has had a sup-plementary pension plan in place since 2001. All employees are included in the second pension pillar. Premiums for sup-plementary pension insurance are paid by the company Elektro Celje (EUR 789,386 in 2019) in a contractually defined share of the maximum premium amount, and em-ployees have the opportunity to pay their own share of the premium themselves.

Structure of EmployeesThe fluctuation in the number of em-ployees in the 2015 - 2019 period, the structure of employees by employment status, the percentage of employees by gender and the average age for the entire Elektro Celje Group are shown in Section 14.

9 workers retired in the company Elektro Celje, one retirement was on grounds of disability. In recent years, the trend for older employees is opting not to retire immediately after meeting the first con-dition but rather continue to work. This is due mainly to stimulative legislation, which financially rewards continuation of work, and the fact that pensions are lower than wages.

Managers respect the dignity, personal integrity and privacy

of every employee when making decisions.

6 7E l e k t r o C e l j e i n 2 0 1 9

The company Elektro Celje exceeds the share of employees with the status of a disabled person, as regulated by the De-cree Establishing an Employment Quota for Persons with Disabilities in the field of Electricity Supply. For several years, we have been reaching an 8% share of em-ployees with the status of disabled per-son which is 2% more than determined for the field of electricity supply by the decree.

We ensure our disabled employees and those with various health limitations con-tinuation of work even after disability oc-curs, by adapting the work process and relocating them to a more fitting post, which is adjusted to their work capabil-ities. We also encourage professional retraining of those who can no longer perform their work, taking an active part in it.

In 2019, as in the previous year, sick leave in the company Elektro Celje amounted to 5.6% (proportion of hours in relation to hours worked during that period, which includes refundable and non-refunda-ble hours). As the trend of sick leaves in 2019 remained the same, we pay special attention to occupational health pro-motion, the analysis and management of psychosocial workload risks, and the analysis of lifestyle habits of individuals.

EmploymentEmployees that leave who are in more demanding management or profession-al positions are replaced mostly through internal redistribution. We thus cultivate

knowledge transfer among employees and enable career advancement for em-ployed staff, which is an additional work motivation. It is therefore important to identify key personnel and key positions in a timely fashion.

When selecting our employees, we pay attention not only to expertise, but also to commitment, target-orientation and the ethics of the candidates. In planning for new employment, we follow the policy of recruiting highly qualified, ambitious and competent employees. Through this endeavour, we strive for the future, which even in traditional industries such as ours brings significant changes to tech-nological development.

Employee Development and TrainingA cycle of annual development inter-views (ADI) was successfully carried out in 2019 as well. We approached the ex-ecution in a planned manner, with five manager workshops, which provided guidelines for conducting interviews for further work with colleagues and pre-sented individual content in the field of human resource management.

The acquisition, transfer and improve-ment of competences is designed through the "Knowledge Centre", which ensures that the skill needs are identi-fied in time and offers employees differ-ent ways of developing them. It includes 4 development methods:• External training/conferences /

workshops,• online training (e-learning),

15–20 years

21–30 years

31–40 years

41–50 years

51–60 years

above 61 years 21.7%

27.2%

9.9%

37.7%

0.3%3.2%

Age structure of employees in the company Elektro Celje

We ensure our disabled employees and those with various health limitations

continuation of work even after disability occurs, by

adapting the work process and relocating them to a more fitting post, which is adjusted

to their work capabilities.

When selecting our employees, we pay attention

to commitment, target-orientation and the ethics of

the candidates.


• internal training,• formal education (co-financing of

formal education).• anje pridobivanja formalne izobrazbe).

In 2019, numerous education and train-ing courses were carried out in all profes-sional fields of our company. Educational needs were expressed in ADIs or during the year, and were based on business needs related to the company goals and strategy.

Our employees attended various work-shops, informal forms of education and conferences. The employees' interest in obtaining a higher level of education was also increased, so there were more for-mal forms of education.

Most of the education courses were held outside the organization, but many of them were organized in our company (in the field of GIS computer program, ADI conducting and execution, personal data protection, corporate integrity, presenta-tion of the SiOK (Slovenian Organization-al Climate) questionnaire results, Cognos - basics of reporting, etc.). E-education courses were also carried out and will continue to be in the future. Through in-ternal training, we take care of our tradi-tion and expand our human capital.

The company Elektro Celje's business success is the result of efficient work of our professionally trained and dedicated employees. Due to the specifics of the industry, the development of intellectual capital and education of the company's own staff is of key importance. That is the reason for our cooperation with ed-ucational institutions and involvement of students and pupils in the work process while obtaining practical training.

Feedback regarding satisfaction with ed-ucation and training is obtained based on reports and training efficiency as-sessments. According to these assess-ments, employees were satisfied with the implemented education and trainings.

Human Resources ProjectsIn 2019, the company Elektro Celje start-ed a strategic HR project with the aim of raising productivity among employees and establishing working conditions that will further motivate employees and cre-ate conditions for their personal devel-opment and quality work. After an initial

analysis of the situation and needs, the project at hand included the "system of positions" and "promotion system" con-tent sets. The purpose of the project was to review, supplement and upgrade the system of positions. The promotion system was developed based on the con-tent of the workshops, the values and the competence model of the company.

We successfully participated in the call for tenders for co-financing the estab-lishment and operation of HR devel-opment competence centres: Energija Competence Centre 2019 - 2022, where 30 electricity companies are involved in a partnership. The aim of the project is to develop key competences of the future (e.g. digitalisation, automation, manage-ment, communication, foreign languag-es,…), for employees to acquire specific knowledge and skills, to raise awareness of the necessity of lifelong learning, to have a unified approach to HR develop-ment for the challenges of the future, to increase competitiveness among employees and companies, to establish long-term partnerships with the expan-sion of the partner network, to increase research and development investment, to have a single voice in the market and to establish a dialogue with the public. The purpose of the project is to improve the competences, productivity, creativity and innovativeness of employees and to strengthen the competitiveness of the economy.

We are involved in the Munera 3 project, which offers employees numerous oppor-tunities for participation in further voca-tional education and training programs, with the aim of improving their compe-tences in order to meet labour market needs, increase their employability and mobility between the fields of work, per-

6 9E l e k t r o C e l j e i n 2 0 1 9

sonally develop and function in modern society.

The company Elektro Celje developed two professional 50-hour programmes:• The design and execution of power

facilities in the reconstruction of facil-ities,

• The management and optimisation of work in the installation of "smart me-ters" measuring/controlling devices,

and participated in the Munera project programme: Fundamentals of Law in the Energy Sector.

We also took part in the SPIN - Ready for change project

The purpose of the project is to encour-age individuals to effectively manage their careers, while focusing on provid-ing additional competences for employ-ees, whether due to organisational or technological changes in business pro-cesses, career development to maintain employment, prevention of the transition to unemployment, or easier transition to a new job. Workshops and individual consultations were carried out for our temporary staff, as some of them are in need of additional knowledge or compe-tences in order to be even more effective, motivated and resourceful at work and for colleagues at the beginning of their

careers. Another reason for joining the SPIN project was to improve the skills of our mentoring staff.

With the projects presented within the Knowledge Centre, we have expanded the programmes that represent the ba-sic compulsory form of acquiring addi-tional competences related to the func-tional role acquired by our employees (managing, mentoring, employment and professionalism). We have also been ac-tively building an employer brand. We attended the Open Day of the Slovenian Economy for the first time in November 2019. The event, which is aimed toward young and future jobseekers, attracted more than 50 visitors. Our projects build a company culture and bring positive ef-fects in the future.

Research on Climate and Employee Sat-isfaction (SiOK 2019)Every 2 years we conduct researches on climate and employee satisfaction and employee commitment. The results show that our employees are loyal and faithful and that the proportion of ac-tively committed employees is increas-ing. We define organisational climate as the perception of all elements of the work environment that are important to employees. The total organisational cli-mate index for 2019 stands at 3.25, up 0.07 points from the previous measure-ment. The employee satisfaction index for 2019 stands at 3.55, up 0.02 points from 2017.

Communication with EmployeesOpen and regular communication be-tween personnel and management, as well as among the employees, is of key importance. We ensure responsible and ethical communication and promote communication at all levels. That is how we create a productive working atmos-phere, increase the sense of belonging and build a culture of mutual trust and respect.• Internal communication most common-

ly takes the form of meetings, face-to-face and telephone conversations, our website, electronic mail and the intranet. One of the forms of employee informing is the GEC internal newsletter, a joint newsletter of the Elektro Celje Group, comprising three issues per year.

• Annual development interviews are an important instrument for the target-ed management of human resources

The results of the research on climate and employee

satisfaction show that our employees are loyal and faithful and that the

proportion of actively committed employees is

increasing.


in modern organisations striving for excellence. The annual development interview is an in-depth dialogue re-garding current tasks, implemented work, results, objectives and tasks for the future, and the employee's person-al development and career path.

• Through our Intranet site, we regularly notified all employees of events and activities at the company in a trans-parent manner. We published nearly 200 employee announcements. Im-mediate superiors play a major role in internal communication; therefore, we strive to ensure that information from superiors is forwarded to all employ-ees.

Communication with CustomersTwo call centres are available to Elek-tro Celje customers. Call Centre oper-ators receive and handle complaints, consumer notifications regarding meter faults, metering device statuses required for annual billing, notify consumers on planned power supply interruptions, reply to customers' general questions, communicate regularly with workers in the field and electricity suppliers and handle communications involving other services within the company.

The website of Elektro Celje is used as a tool for communicating with the pub-lic. The website contains all information required by the SSH and the Public Infor-mation Act regarding the company.

Notification of customers on planned power supply interruptions is necessary and essential for the safe performance of all necessary work on electricity installa-tions as soon as possible. The works are planned carefully, therefore we can in-form our customers about planned pow-er supply interruptions at least 48 hours in advance. Notifications of planned power supply interruptions are published

on the company website and announced via radio and local TV stations.

"Moj Elektro": A Single Metering Data Ac-cess SystemElectricity companies united into Eco-nomic Interest Association for Electricity Distribution have set up a free, unified web portal "Moj elektro" - Single Meter-ing Data Access System (SEDMp), where customers can access their metering data, regardless of the distribution area or the supplier. It is intended for end users (consumers and producers of electricity), who did not have the possibility of cen-tralised access to the metering data for their or authorised metering points until now. Customers will, with appropriate au-thorisations, also be able to access the data of other beneficiaries on the portal.

Communication with Business Partners and ShareholdersThe main goal of the company Elek-tro Celje is to maximise the company's value and operate for the benefit of all stakeholders, including for the benefit of shareholders and investors. Respon-sible management is demonstrated by the attainment of operational goals, ad-equate operational transparency and shareholder communication. Operation-al transparency is achieved through the publication of data and information about our business on the company's website and is compliant with the adopt-ed good corporate governance practices and governance codes.

Communication with shareholders and the financial public is transparent and compliant with all effective provisions. The information provided to sharehold-ers relates mainly to business perfor-mance and the company's future strate-gy. Public information (quarterly reports, concluded contracts, General Assembly meetings and material thereof) is dis-closed on the corporate website www.el-ektro-celje.si. Shareholder communica-tion is based on SSH recommendations and OECD guidelines for corporate gov-ernance of state-owned enterprises that put emphasis on three main principles of corporate governance significant for an active shareholder concept: transparen-cy, efficiency and responsibility.

Communication with business partners is based on personal contacts and e-com-munication. Personal contacts are neces-

Notifications of planned power supply interruptions

are published on the company website.

Operational transparency is achieved through the publication of data and

information about our business on the company's

website and is compliant with the adopted good corporate

governance practices and governance codes.

7 1E l e k t r o C e l j e i n 2 0 1 9

sary in the business world; therefore, our customers are treated on an individual basis.

Communication with the interested publicOur media relations are based on transpar-ent and updated communication. Media communication predominantly regards the company's operations, new services and sponsorship agreements, network developments and completion of major electricity distribution infrastructure. We are regular contributors to the Slovenian power industry newsletter, Naš stik (Our Contact), publishing news and contribu-tions and informing the wider professional community of the activities implemented at the company Elektro Celje.

Communication with the influential publicThe communication of the company Elektro Celje with the crucial influen-tial public on the content related to the regulations and legislation and on the management of relationships with var-ious institutions is regular and open. It includes governmental institutions of the Government of the Republic of Slovenia, department ministries and other impor-tant institutions (the Energy Agency, the Slovenian Sovereign Holding and others).

Participation in the Economic Interest Association of Electricity Distribution CompaniesThe cooperation of Elektro Celje with other electricity distribution companies in Slovenia, joined within the scope of the Economic Interest Association for Electricity Distribution, is satisfactory. The basic goals of the Economic Interest Association for Electricity Distribution are to facilitate, coordinate and step up the activity of the services of general economic interest DNSO and the supply of electricity to tariff consumers, to im-prove the results in the activity as well as to facilitate and coordinate other activ-

ities or interests. Harmonised operation of the companies within the framework of the Economic Interest Association en-ables the achievement of more favoura-ble results for the companies as well as consumers.

A strategic conference, where the cur-rent state of development and challeng-es we face are presented, is organised by electricity distribution companies every year to present trends and opportunities that need to be considered in developing, planning and constructing the electricity distribution system to the professional and general public.

Communication with the Local Community and Social ResponsibilityQuality Standards at the company Ele-ktro Celje (ISO 9001: 2015, ISO 14001: 2015, ISO 27001: 2013, ISO 45001: 2018)At the company Elektro Celje, we strive towards quality and transparent opera-tions, as the fundamental mission of the company is a reliable and quality elec-tricity supply to consumers and the pro-vision of related services.

Family-friendly enterpriseFor many years, the company has been encouraging the values of mutual respect and meeting ethical and legal standards. Since 2011, special attention has been devoted to harmonisation of professional and family life. As a socially responsible company, we are aware that employees are the most important part of an organ-isation and that their opinions, points of view, suggestions as well as problems are important. With common efforts to implement an employee-friendly organ-isational policy, we ensure conditions to facilitate harmonisation of family and business obligations. On 11 November 2019, as part of managing a good work-life balance, a Work-Family Day was held and promoted.


Our Sports Society promotes physical activities among the employees. Employ-ees and retired workers are offered the company's holiday facilities, where they can spend quality free time.

Sponsorships and DonationsThe company Elektro Celje allocates a part of available funds for sponsorships and donations based on a system ensur-ing transparent, economic and compet-itive-driven operations of the company with regard to signing deals related to the

company's expenditure including spon-sorship and donation funds. In 2019, we supported sports, cultural, educational and other events. In the New Year's holi-day period, we funded various humani-tarian activities in the local communities where Elektro Celje is active. When provid-ing sponsorships, we observed the prin-ciple of balance, economic benefit and diversification, while, in providing dona-tions, the principle of social responsibility was applied.

8.7 Environmental CareWe care for the natural environment through prudent and environmentally sound siting of power facilities in any giv-en area and through our utmost respect for legislation regarding electromagnetic, thermal and light radiation and noise. We follow good practices of environmental protection and comply sensibly with the guidelines of local communities and pop-

ulation. The company periodically evalu-ates suppliers' environmental suitability (additional points are awarded to suppli-ers who have an ISO 14001 environmental management system in place).

The following environmental indicators are monitored at the company Elektro Celje:

Indicator 2015 2016 2017 2018 2019 Graphic comparison

Electricity consumption (in MWh)

With the energy renovation of buildings (installation of heat pumps and CHP plants), insulation and high-quality builders' joinery, we will contribute to reduced electricity consumption.

866.6 816.6 910.2 857.1 917.6

Water consumption (in m3)

We take care of rational drinking water consumption through improvement of the control of the water supply system and reducing technical losses in the water supply network and use of rainwater for domestic and process water.

5,858 3,733 4,797 11,105 5,786

Share of transformers with environmentally sound oil (in %)

We are systematically integrating TRs with environmentally sound oil into the electricity network. Where sensible/permissible, chestnut wood or coniferous tree wood impregnated with environmentally acceptable impregnation is used for the construction of OPLs.

23.4 26.6 26.3 29 32

Reported hazardous waste (number)

TR waste oil, used oil filters, discarded electronic equipment containing dangerous substances and other hazardous waste are collected in specially marked containers. Their removal is arranged by the contractual transferee. The amount of hazardous waste depends on the reconstruction of infrastructure in each year.

11 8 7 18 22

Mixed municipal waste (kg)

Municipal waste collection is organised according to the decrees issued by municipalities and competent local public utility companies. The company takes care of the comprehensive management of useful (recyclable) and useless waste.

97,500 110,833 110,900 110,800 111,200

7 3E l e k t r o C e l j e i n 2 0 1 9

What we do is innovativeWe part ic ipate in several European projects, with which we take care of the development of the company and look for new business solut ions for our users. By continuously acquir ing and sharing knowledge and experience, str iv ing for innovation and fol lowing best pract ices, we bui ld professional ism, improve our operat ions and remain committed to f inding the best solut ions for continuous improvement of the qual i ty of e lectr ic i ty supply.

FINANCIAL REPORT

of the company Elektro Celje

7 5

Independent auditor's report09

Tel: Fax:

+386 1 53 00 920 +386 1 53 00 921

Cesta v Mestni log 1 SI-1000 Ljubljana Slovenija

[email protected] www.bdo.si

BDO Revizija d.o.o., slovenska družba z omejeno odgovornostjo, je članica BDO International Limited, britanske družbe “limited by guarantee” in je del mednarodne BDO mreže med seboj neodvisnih družb članic. Okrožno sodišče v Ljubljani, vl.št. 1/26892/00, osnovni kapital: 9.736,66 EUR, matična št.: 5913691, ID št. za DDV: SI94637920.

INDEPENDENT AUDITOR’S REPORT (Translation from the original in Slovene language)

To the Shareholders of ELEKTRO CELJE, d.d. Vrunčeva ulica 2a 3000 Celje

Opinion We have audited the financial statements of Elektro Celje, d.d. (the Company), which comprise the balance sheet as at December 31, 2019 and the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies. In our opinion the accompanying financial statements present fairly, in all material respects, the financial position of the company Elektro Celje, d.d. as at December 31, 2019, and its financial performance, comprehensive income and cash flows for the year then ended in accordance with Slovenian Accounting Standards. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Slovenia, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information

Management is responsible for the other information. The other information comprises the information included in introductory part and in the business report of the annual report of the company Elektro Celje, d.d., but does not include the financial statements and our auditor’s report thereon. We have received other information before the date of auditor’s report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, regulatory requirements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. With regards to these procedures we report on the following:

- Other information is consistent with audited financial statements in all respect - Other information is prepared in line with regulatory requirements and - Based on our knowledge and understanding of the company and its environment, obtained during the

audit, no material inconsistencies were found in relation to other information. Responsibilities of Management and Supervisory Board for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with Slovene accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

7 6 0 9 I n d e p e n d e n t a u d i t o r ' s r e p o r t

Tel: Fax:

+386 1 53 00 920 +386 1 53 00 921

Cesta v Mestni log 1 SI-1000 Ljubljana Slovenija

[email protected] www.bdo.si

accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Supervisory Board is responsible for overseeing the Company’s financial reporting process and for confirmation of audited annual report. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or

error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with Audit Committee and Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide Audit Committee and Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Ljubljana, April 24, 2020

BDO Revizija d.o.o.

Cesta v Mestni log 1, Ljubljana

Maruša Hauptman,

Certified auditor, procurator

7 7E l e k t r o C e l j e i n 2 0 1 9

Financial statements of Elektro Celje10 10.1 Balance sheet

ITEM Note Amount (in EUR)

As of31 December 2019


ASSETS

A. Long-term assets (I. + II. + III. + IV. + V. + VI.) 275,357,738 268,879,026

I. Intangible assets and long-term accrued revenue and deferred expenses (1 to 6)

11.4.1 4,252,408 3,083,401

1. Long-term property rights 3,816,997 3,065,917

4. Intangible assets in development 405,251 4,900

6. Other long-term accrued revenue and deferred expenses 30,160 12,584

II. Tangible fixed assets (1 to 4) 11.4.2 260,519,495 254,312,030

1. Land and buildings (a + b) 192,623,802 183,789,118

a) Land 5,985,194 5,980,401

b) Buildings 186,638,608 177,808,717

2. Production equipment and machinery 60,646,372 60,548,447

3. Other plant and equipment 67,445 75,687

4. Tangible fixed assets in the course of acquisition (a + b) 7,181,876 9,898,778

a) Tangible fixed assets under construction and production 6,773,154 9,898,778

b) Advances for the acquisition of tangible fixed assets 408,722 0

IV. Long-term financial investments (1 to 2) 11.4.3 7,666,961 7,658,081

1. Long-term financial investments excluding loans (a + b + c + d) 7,666,961 7,658,081

a) Shares and shareholdings in companies within the corporate group 7,246,976 7,246,976

b) Shares and shareholdings in associates 206,987 206,987

c) Other shares and shareholdings 212,998 204,118

V. Long-term operating receivables (1 to 3) 11.4.6.1 1,340,801 2,213,183

2. Long-term trade receivables 1,333,119 2,206,058

3. Long-term operating receivables due from others 7,682 7,125

VI. Deferred tax assets 11.4.4 1,578,073 1,612,331

B. Current assets (I. + II. + III. + IV. + V.) 12,832,650 12,516,763

II. Inventory (1 to 4) 11.4.5 1,616,344 1,700,625

1. Material 1,616,344 1,700,625

IV. Short-term operating receivables (1 to 3) 11.4.6.2 10,801,812 10,306,106

1. Short-term operating receivables from companies within the corporate group 28,820 51,155

2. Short-term trade receivables 10,212,953 10,062,638

3. Short-term operating receivables due from others 560,039 192,313

V. Cash 11.4.7 414,494 510,032

C. Short-term accrued revenue and deferred expenses 11.4.8 2,281,294 2,684,853

TOTAL ASSETS (A + B + C) 290,471,682 284,080,642

7 8 1 0 F i n a n c i a l s t a t e m e n t s o f E l e k t r o C e l j e




LIABILITIES TO ASSET SOURCES

A. Equity (I. + II. + III. + IV. + V. + VI. +VII.) 11.4.9 219,909,447 214,215,726

I. Called-up capital (1 to 2) 11.4.9 100,953,201 100,953,201

1. Share capital 100,953,201 100,953,201

II. Share premium 62,260,317 62,260,317

III. Revenue reserve (1 to 5) 11.4.9 54,472,191 48,173,508

1. Legal reserves 4,470,302 4,008,638

2. Reserves for own shares and interest 886,371 886,371

3. Own shares and interest —886,371 —886,371

5. Other revenue reserves 50,001,889 44,164,870

V. Reserves resulting from valuation at fair value 11.4.9 —710,867 —392,208

VII. Net income/profit for the year 11.4.9 2,934,605 3,220,908

1. Undistributed net income/profit for the year 2,934,605 3,220,908

B. Provisions and long-term accrued expenses and deferred revenue (1 to 3) 11.4.10 19,098,746 18,783,995

1. Provisions for pensions and similar liabilities 6,672,190 5,999,591

2. Other provisions 182,578 264,405

3. Long-term accrued expenses and deferred revenue 12,243,978 12,519,999

C. Long-term liabilities (I. + II.+ III.) 29,024,849 26,834,819

I. Long-term financial liabilities (1 to 4) 11.4.11 28,703,764 26,461,253

2. Long-term financial liabilities to banks 28,399,049 26,353,527

4. Other long-term financial liabilities 304,715 107,726

II. Long-term operating liabilities (1 to 5) 11.4.12 307,218 361,386

2. Long-term trade payables 307,218 361,386

III. Deferred tax liabilities 11.4.13 13,867 12,180

D. Short-term liabilities (I. + II. + III.) 21,880,727 23,622,058

II. Short-term financial liabilities (1 to 4) 11.4.11 10,886,033 11,215,660

2. Short-term financial liabilities to banks 10,584,477 11,149,424

4. Other short-term financial liabilities 301,556 66,236

III. Short-term operating liabilities (1 to 8) 11.4.12 10,994,694 12,406,398

1. Short-term operating liabilities to companies within the corporate group 55,657 49,130

2. Short-term trade payables 3,274,348 3,669,684

4. Short-term operating liabilities from operations for third-party account 3,386,273 3,864,248

5. Short-term liabilities to employees 3,167,144 3,143,468

6. Short-term liabilities to state and other institutions 414,522 972,907

7. Short-term operating liabilities based on advances 119,388 100,190

8. Other short-term operating liabilities 577,362 606,771

D. Short-term accrued expenses and deferred revenue 11.4.14 557,913 624,044

TOTAL LIABILITIES TO ASSET SOURCES (A + B + C + D + E) 290,471,682 284,080,642

7 9E l e k t r o C e l j e i n 2 0 1 9

10.2 Income statement

ITEM NOTE Amount (in EUR)

2019 2018

1. Net sales revenue (a + b) 11.6.1 50,831,032 50,512,707

a. on the domestic market 50,831,032 50,512,707

3. Capitalised own products and services 11.6.2 15,164,716 15,193,945

4. Other operating income (including revaluation surplus) 11.6.3 1,328,264 2,120,225

5. Costs of goods, materials and services (a + b) 11.6.4 16,507,766 15,759,029

a. Purchase cost of sold goods and costs of used material 10,464,641 9,709,206

b) Cost of services 6,043,125 6,049,823

6. Labour costs (a + b + c + d) 11.6.5 22,952,006 22,748,559

a. Cost of salaries 16,278,950 16,224,669

b. Pension insurance costs 2,248,125 2,280,376

c. Other social security costs 1,196,259 1,209,644

d. Other labour costs 3,228,672 3,033,870

7. Write-offs (a + b + c) 11.6.6 18,057,545 17,489,803

a. Depreciation 17,861,945 17,353,162

b. Operating expenses from revaluation of intangible and tangible fixed assets 123,204 120,991

c. Operating expenses from revaluation of current assets 72,396 15,650

8. Other operating expenses 11.6.7 328,216 324,987

9. Financial revenue from shares (a + b + c) 11.6.8 1,007,400 1,007,400

a. Finance revenue from shares in companies within the corporate group 1,000,000 1,000,000

b. Financial revenues from shares in other companies 7,400 7,400

10. Financial revenue from loans granted (a + b) 11.6.8 10,008 68

a. Financial revenue from loans to companies within the corporate group 292 0

b. Financial revenue from loans to others 9,716 68

11. Financial revenue from operating receivables (a + b) 11.6.8 50,007 91,583

b. Financial revenue from operating receivables due from third parties 50,007 91,583

13. Financial expenses from financial liabilities (a + b + c + d) 11.6.8 323,567 344,388

b. Finance expenses related to loans from banks 323,485 344,388

d. Financial expenses from other financial liabilities 82 0

14. Financial expenses from operating liabilities (a + b + c) 11.6.8 89,434 73,034

c. Financial expenses from other operating liabilities 89,434 73,034

15. Other revenue 11.6.9 52,310 10,531

16. Other expenses 11.6.10 35,375 295,008

17. NET PROFIT/LOSS FOR THE PERIOD BEFORE TAXES (1 ± 2 + 3 + 4 – 5 – 6 – 7 – 8 + 9 + 10 + 11 – 12 – 13 – 14 + 15 – 16)

11.6.11 10,149,828 11,901,651

18. Income tax 11.6.13 828,545 1,400,295

19. Deferred taxes 11.6.13 68,463 72,578

20. NET PROFIT/LOSS FOR THE PERIOD (1 ± 2 + 3 + 4 – 5 – 6 – 7 – 8 + 9 + 10 + 11 - 12 – 13 - 14 + 15 – 16 – 18 + 19)

11.6.11 9,252,820 10,428,778


10.3 Statement of comprehensive income

ITEM (in EUR) Amount (in EUR)

2019 2018

1. Net profit or loss for the financial period 9,252,820 10,428,778

3. Changes in reserves resulting from valuation at fair value 7,193 3,357

a. Revaluation of financial investments measured at fair value through equity 8,880 4,144

b. Adjustment to reserves resulting from valuation at fair value for deferred tax liabilities —1,687 —787

5. Other components of comprehensive income —345,384 33,045

a. Actuarial gains/losses in provisions for severance pays —379,589 39,244

c. Impact of deferred tax on actuarial gains/losses in provisions for severance pays 34,205 —6,199

6. Total comprehensive income for the financial period (1 + 2 + 3 + 4 + 5) 8,914,629 10,465,180

Notes to the Statement of Comprehensive Income are shown in Section 11.6.12.

8 1E l e k t r o C e l j e i n 2 0 1 9

10.4 Statement of cash flows

ITEM Amount (in EUR)

2019 2018

A. CASH FLOWS FROM OPERATING ACTIVITIES

a. Inflows from operating activities 105,246,055 106,354,993

Inflows from sale of goods and services 103,936,283 104,683,658

Other inflows from operating activities 1,309,772 1,671,335

b. Outflows from operating activities —94,145,427 —92,412,971

Purchase of material and services —62,717,821 —61,994,150

Salaries and employees' share in the profit —22,320,620 —22,231,636

Charges (contributions and other taxes) —7,805,115 —7,089,199

Other outflows from operating activities —1,301,871 —1,097,986

c. Positive or negative net cash flow from operating activities (a + b) 11,100,628 13,942,022

B. CASH FLOW FROM INVESTING ACTIVITIES

a. Inflows from investing activities 2,094,820 1,604,996

Inflows from interests and dividends received relating to investing activities 1,007,785 1,007,468

Inflows from disposal of property, plant and equipment 187,035 597,528

Inflows from disposal of short-term financial investments 900,000 0

b. Outflows from investing activities —11,213,211 —10,025,318

Cash payments for the acquisition of intangible assets —1,912,761 —2,184,607

Purchase of property, plant and equipment —8,400,450 —7,840,711

Purchase of short-term financial investments —900,000 0

c. Positive or negative net cash flow from investing activities (a + b) —9,118,391 —8,420,322

C. CASH FLOWS FROM FINANCING ACTIVITIES

a. Inflows from financing activities 29,883,839 29,195,000

Inflows from the increase in financial liabilities 29,883,839 29,195,000

b. Outflows from financing activities —31,961,614 —34,377,729

Interest paid on financing activities —337,443 —349,412

Cash payments for equity redemption 0 —250,572

Repayments of financial liabilities —28,403,263 —30,632,732

Payments of dividends and other profit shares —3,220,908 —3,145,013

c. Positive or negative net cash flow from financing activities (a + b) —2,077,775 —5,182,729

D. CLOSING BALANCE OF CASH ASSETS 414,494 510,032

Net cash flow for the period (sum of cash flows Ac, Bc and Cc) —95,538 338,971

Opening balance 510,032 171,061

Notes to the Statement of Cash Flows are shown in Section 11.7.


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Explanatory notes to the financial statements1111.1 Reporting CompanyThe company Elektro Celje is the con-trolling company of the Elektro Celje Group. The key task of the company is that through the planning of the network, its development, construction, manage-ment, operation and maintenance in the distribution zone of Elektro Celje, it ensures the long-term performance of the network, as well reliable, safe and efficient electricity supply to customers (presentation of the company in Section 5).

The financial statements have been pre-pared under the assumption of contin-uing operation of the Company and the Group in the future. They are prepared for the financial year which coincides with the calendar year from 1 January to 31 December 2019. In accordance with Article 56 of the Companies Act (ZGD-1), a company based in Slovenia which is the parent company of one or more com-panies must also prepare a consolidated annual report.

11.2 Bases for the Preparation of the Financial Statementsa) Declaration of conformityThe company's financial statements have been prepared in accordance with Slovenian Accounting Standards 2016 (hereinafter: SAS 2016), with the corre-sponding relevant positions and inter-pretations as adopted by the Profes-sional Council of the Slovenian Institute of Auditors, provisions of the Companies Act (hereinafter: ZGD-1), rules on ac-counting, the Energy Act (EZ-1) and oth-er regulations governing the accounting, financial and tax fields. The selected accounting policies are implemented consistently, and any changes in ac-counting policies are duly disclosed. The Management Board of the company ap-proved the financial statements on 31 March 2020.

b) Reporting by business and geographical segmentsIn accordance with Article 109 of EZ- 1, the company ensures separate ac-counting for monitoring activities pur-suant to the contract on the lease of electricity distribution infrastructure and provision of services for the distri-

bution network system operator and for the marketing activity; these two activ-ities are also considered business seg-ments according to SAS 2016. The com-pany does not have any geographical segments. The balance sheet, income statement, statement of cash flows and criteria and standards for allocating di-rect and indirect costs, expenses, reve-nue, and assets and sources of assets for individual activities are presented in Section 11.11.

c) Basis for measurementThe financial statements reflect a true and fair presentation of the company's financial position, its economic outturn and cash flows. In preparing financial statements, the company observes the fundamental accounting assumptions of accruals and the going concern basis. In doing so, the qualitative character-istics of financial statements are taken into account: clarity, relevance, reliabil-ity and comparability. The selection and application of accounting policies are based on prudence, substance over form and materiality.

8 5E l e k t r o C e l j e i n 2 0 1 9

The financial statements have been pre-pared on a historical cost basis, except for financial assets, which are quoted at active market prices and whose value can be reliably measured and are there-fore measured and accounted for at fair value.

d) Functional and presentation currencyThe financial statements are presented in euros (EUR), which is the functional currency of the company. All financial data presented in euros are shown as rounded-off figures.

e) Use of estimates and assumptions and significant uncertainty in operations

Use of estimates and assumptions in the preparation of the financial statementsThe preparation of the financial state-ments in accordance with SAS 2016 re-quires the use of estimates and assump-tions that affect the residual value of reported assets and liabilities on the re-porting date and the amount of revenue, costs and expenses during the reporting period. Estimates and assumptions are based on management's best knowledge of current and future events and activi-ties, and are regularly reviewed, with ad-justments recognised in the period of the change, valid for all future periods which the changes affect. Information regard-ing significant estimated uncertainty and critical assessments are described in the following notes:• Note 11.4.1, 11.4.2 and Accounting

Policy 11.3 (a, b) - Determining the useful lives of intangible and tangible fixed assets,

• Note 11.4.4 and Accounting Policy 11.3 (e) - Deferred taxes,

• Note 11.4.10 and Accounting Policy 11.3 (j) - Long-term accruals and deferred income, measurement of provisions for severance pay and long-service bonuses and lawsuits,

• Note 11.4.3 and Accounting Policy 11.3 (d) - Valuation of financial investments,

• Note 11.4.6 and Accounting Policy 11.3 (g) - Impairment of receivables,

• Note 11.4.2 and Accounting Policy 11.3 (c) - Determination of the discount rate for leases.

Regulatory framework for the period 2019-2021The Energy Agency, pursuant to Arti-cle 116 of the Energy Act (EZ-1) has the authority to determine the methodolo-gy for calculating network charges and eligible costs of providers of SODO ac-tivities. On 21 June 2018, the Council of the Energy Agency adopted the Legal act on the methodology for determining the regulatory framework and network charge for the electricity distribution system (Official Gazette of the RS, Nos. 46/18, 47/18-corr. and 86/18, hereinafter referred to as the Network Charge Act) which defines the methodology for de-termining the regulatory framework and calculation of the network charge. On 11 December 2018, the Energy Agency with Decision no. 211-42/2018-58/452 defined the regulatory framework for the period 2019-2021.

The amendment, which significantly af-fects the amount of revenue in the reg-ulatory period 2019-2021, relates to the weighted average cost of capital pre tax, which was set at 5.26%. Prior to the change in methodology, it amounted to 7.14% for the new energy infrastructure (i.e. EI activated after 31 December 2010) and 4.13% for all the other fixed assets in SODO activities. New investments will in-crease the value of infrastructure and oth-er fixed assets, but due to the lower rate of revenue on the new EI, there will be a downward trend in revenue growth, which will also cover the costs and expenses of the regulated activities of the company not recognised by the Energy Agency.

The conditions for recognising the un-controlled and controlled eligible costs of operation and maintenance have not significantly changed. The latter remain determined based on the average re-alised eligible costs in the period 2011-2013 and vary only depending on the efficiency factor, the inflation rate, the change in line/cable length, the number of stations and customers. The cost of insurance premiums continues to be recognised as an average of costs in the regulatory period 2011-2013, rather than the actual amount achieved in the year of incurrence, which is significantly high-er due to large loss events in later years (due to the average in 2011-2013, which amounted to EUR 698,906, the cost of insurance premiums in 2019 was recog-nised as 85.2% of the actual cost).

The preparation of the financial statements in

accordance with SAS 2016 requires the use of estimates and assumptions that affect

the residual value of reported assets and liabilities on

the reporting date and the amount of revenue, costs and expenses during the reporting

period.

8 6 1 1 E x p l a n a t o r y n o t e s t o t h e f i n a n c i a l s t a t e m e n t s

Under the uncontrolled costs, costs of loss events are still recognised as eligible only in the amount of 10% and operating expenses from revaluation in connec-tion with trade receivables from network charges in the amount of 0.2% of the net-work charges for the distribution system. The costs of research and innovation in-vesting, as well as the revenue from the co-financing of the European Union, will only be recognised for qualifying pro-jects and only in the regulatory year in which each individual pilot project will be completed. These are innovations in smart grids that enable better usage of existing EIs and renewable energy sourc-es, as well as research and demonstra-tion projects that offer broader societal benefits and network usage savings for the final customer and provide more effi-cient network investment.

Purchase of electricity for losses of elec-tricity in the distribution network in the distribution area of Elektro Celje, in the regulatory period 2019-2021, is being performed by SODO, in accordance with the Network Charges Act. The contract between the Company and SODO d.o.o. regulates the stimulation or penalisation under the heading of managing quanti-ties of electricity losses in the network. Revenue under this heading for the year 2019 amounted to EUR 778,862 (EUR 1,024,902 in 2018).

Operations with SODOFrom 2007 onwards, the company SODO d.o.o. has been operating as the holder of the concession for the implementa-tion of the service of general economic interest of the electricity distribution net-work system operator in the territory of the Republic of Slovenia. The company, which owns the electricity distribution infrastructure, concluded a new Agree-ment on the Lease of Electricity Distri-bution Infrastructure and Provision of Services with SODO in February 2020, and in accordance with the provisions of the Agreement, the contracting par-ties signed the Annex No. 1, defining the amount of the lease fee and scope of services implemented in the distribution network for the regulatory period 2019-2021.

In March 2020, the company received a preliminary reconciliation of the regula-tory year 2019 from SODO in accordance with the contract and the annexes there-

to, which was carried out on the basis of data from not-yet completed financial statements of the company. From the offset it is seen that the already charged contractual value of services and lease in 2019 was EUR 1,985,070 less than the value determined on the basis of the pro-visions of the Network Charges Act. The company issued an invoice in the calcu-lated amount of the deficit in the month of March with payment due in the month of April 2020 and in the amount of estab-lished difference, recognised additional revenue to SODO for 2019. The final cal-culation for the regulatory year 2019 will be based on audited figures from both contracting parties and the decision is-sued by the Energy Agency.

The short-term portion of long-term receivables due from SODO in 2020 amounts to EUR 1,062,805 (a third of the deficit of the preliminary reconciliation for 2015 and relevant interest in the to-tal amount of EUR 1,210,664 and a third of the final reconciliations for th period 2014-2017 in the amount of –147,859 EUR).

f) Amendments to accounting policies

Amendments to accounting policies of SAS 1 (2019) In 2019, the company supplemented its accounting policies, the treatment of business events and their presentation in the financial statements in accord-ance with the amendments to Slovenian Accounting Standard 1 (SAS 2019). With effect from 1 January 2019, the right to use the leased asset was recognised for long-term leased assets (duration of the lease more than 1 year) and leased assets of higher value (more than EUR 10,000, taking into account the value of the new leased asset), and among the liabilities the lease liability. The change-over to the new accounting method was restated by the company in accordance with the requirements of SAS 1.68 (2019), and the opening balances were restated in a simplified manner.

Effects due to the changed definition of a lease and changed accounting for leasesThe company applied the exception and at the time of transition for unex-pired lease agreements did not reassess whether they contained a lease. For

The company Elektro Celje, which owns the electricity distribution infrastructure,

concluded a new Agreement on the Lease of Electricity Distribution Infrastructure and Provision of Services

with SODO in February 2020, and in accordance with the provisions of the

Agreement, the contracting parties signed the Annex

No. 1, defining the amount of the lease fee and scope of

services implemented in the distribution network for the

regulatory period 2019-2021.

8 7E l e k t r o C e l j e i n 2 0 1 9

agreements that were already classified as leases, it was considered they meet the condition set out in SAS 1.27 (2019).

Prior to 1 January 2019, the company classified leases as operational and fi-nancial. Operating lease was recognised as a cost of rent, and now tenants, on the basis of lease agreements, show the leased assets among fixed assets as as-sets from the right to use, and among liabilities as lease liability. Upon initial recognition, the company measures the right to use the asset at the present val-ue of future leases, depreciates that right and recognises the cost of depreciation and, due to the time value of money, the cost of interest in financing expenses. The change in the definition of a lease has no significant impact on the finan-cial situation of the company.The right to use is impaired in accord-ance with the requirements of SAS 17 - Impairment of tangible fixed assets and intangible assets.

Presentation of the financial effects of the use of SAS 1 (2019), where the com-pany acts as a tenantThe company reviewed and analysed the lease agreements with a duration longer than one year and, on the basis of the costs of the lease and the duration of the lease, estimated the value of the

right to use the leased assets and liabil-ities from the lease. In accordance with the amended SAS 1 (2019), it changed the method of reporting the effects of the lease agreements in 2019 and rec-ognised the right to use the leased as-sets and liabilities from the lease in the balance sheet on 1 January 2019. Short-term leases, low-value leases and leas-es that are exempt from SAS 1 (2019) are exceptions. The value of the right to use the leased assets and liabilities was based on discounting future cash flows for the period of the duration of the lease, using the average weighted interest rate on investment loans as of 31 December 2018 (0.889%).

The company used a uniform approach and practical solutions to recognise all leases: a single discount rate for dis-counting future leases and exceptions set by SAS 1 (2019) standard for short-term leases with a 12-month duration pe-riod from the date the standard was first applied and low-value leases.As of 1 January 2019, the company also held financial leases in the amount of EUR 170,093; short-term leases in the amount of EUR 107,726 and long-term financial liabilities in the amount of EUR 62,367. For this reason, there were no ef-fects on the financial statements at the time of transition to SAS 1 (2019).

Assessment of the impact of the SAS 1 standard (2019) on the profit or loss account of the company Elektro Celje in 2019 (in EUR)

2019 SAS 1 (2019) 2019 SAS 1 (2016) 2018 SAS 1 (2016)

OPERATING COSTS AND EXPENSES

Cost of services —41,370 —43,059 —40,798

Lease cost —41,370 —43,059 —40,798

Write-offs —1,643 0 0

Amortisation and depreciation of rights of equipment use —1,643 0 0

Operating profit or loss —43,013 —43,059 —40,798

Financial expenses from financial liabilities —82 0 0

Financial expenses for interest payment from the right to use the assets —82 0 0

Profit or loss before taxes —43,095 —43,059 —40,798

Assessment of the impact of the SAS 1 standard (2019) on the items in the balance sheet of the company Elektro Celje as of 1 January 2019 (in EUR)

1 January 2019 SAS 1 (2019)

Change SAS 1 31 December 2018 SAS 1 (2016)

ASSETS

Tangible fixed assets 60,558,445 9,998 60,548,447

Manufacturing plants and equipment 60,558,445 9,998 60,548,447

Total assets 284,090,640 9,998 284,080,642


Long-term financial liabilities 116,118 8,392 107,726

Other long-term financial liabilities 116,118 8,392 107,726

Short-term financial liabilities 67,843 1,607 66,236

Other short-term financial liabilities 67,843 1,607 66,236

Total liabilities 183,960 9,998 173,962


Depreciation costs are calculated by us-ing depreciation rates assessed based on the remaining lease agreement dura-tion period.

Amendments to accounting policies of SAS 15 (2019In 2019, the company amended its accounting policies, changed the rec-ognition of revenue and prepared new notes to the financial statements in ac-cordance with the amended Slovenian Accounting Standard 15 (SAS 2019), ef-fective from 1 January 2019. It analysed the contracts concluded with the cus-tomers and estimated that they did not contain separate performance obliga-tions according to SAS 15.18 (2019), also because of the first application of this standard on 1 January 2019 there was no effect on retained profit or loss.

Recognition of revenue The basis for the classification of sales revenue are no longer the invoice and the amount on the invoice, but the con-tract with the customers for the sale of goods and services. Sales revenue is recognised in an amount that reflects the transaction price, i.e. the amount of compensation that the company expects to be entitled to in return for the transfer of services to the customer. The compa-ny recognises the revenue as soon as it fulfills the contractual (performance) obligation to provide the customer with a contractual service, which it does by

transferring the services agreed to in the contract to the customer. Services are transferred when the customer ac-quires them for control, i.e. when he/she acquires the right to decide on their use and the right to the remaining benefits. Recognition of revenue from customer services is gradual. The method of inputs (e.g. assets, car rides, working hours, costs), which have already been spent by the metering date, is used to measure the performance obligation.

As of 31 December 2019, in accordance with SAS 15 (2019), the company recog-nised assets from contracts with custom-ers in the amount of EUR 2,031,712 in the case of services that met the conditions for gradual recognition of revenue, but in accordance with contractual provisions, the company is not able to charge these amounts to the customer (unpaid servic-es to customers and to SODO). When it is entitled to charge these amounts, they are reclassified from accruals to short-term trade receivables.

On 31 December 2019, in accordance with SAS 15, the company also recog-nised liabilities from contracts with cus-tomers for payments received in the amount of EUR 118,709, for which the company has not yet transferred control of services, and which, according to SAS 15, it discloses among short-term ad-vances and securities received.

11.3 Important accounting policiesThe company has been using SAS 2016 for the presentation and valuation of items in the financial statements from 1 January 2016 onwards directly. The company does not apply accounting pol-icies which do not comply with individual accounting standards of SAS 2016.

Items for which SAS 2016 offer the com-pany the choice between different valu-ation methods are identified with the ac-counting policies disclosed in the annual report for each item.

According to the provisions of SAS 2016, the company discloses all significant items, with the importance of individual items defined in the accounting rules; in disclosing information, which form the basis for the preparation of the balance

sheet and the individual balance sheet items, these are values of significant transactions or business events that ex-ceed 2% of the value of the assets or lia-bilities at the balance sheet date, and in the preparation of the income statement, those that exceed 2% of total revenue or expenses of the company in the financial year.

a) Intangible fixed assets and long-term accrued revenue and deferred expensesAn intangible asset is a non-monetary asset, which is as a rule without physical form and appears as an intangible fixed asset. The company discloses long-term property rights (mainly investment in software), similar assets in preparation and accrued revenues and deferred ex-

The company has been using SAS 2016 for the presentation

and valuation of items in the financial statements from

1 January 2016 onwards directly.

Intangible fixed assets and long-term accrued revenue and

deferred expenses

8 9E l e k t r o C e l j e i n 2 0 1 9

penses (long-term deferred expenses) among the intangible fixed assets. In-vestments into real rights on immovable property are disclosed in the item land and buildings in the balance sheet ac-cording to SAS 2.39.

Recognition and derecognition of intan-gible assetsAn intangible asset is recognised if it is probable that the economic benefits as-sociated with the asset will flow in and its cost can be measured reliably. An intangible asset is derecognised upon disposal or when no more economic ben-efits are expected from its use and sub-sequent disposal.

Initial accounting measurement and measurement upon recognitionAn intangible asset is initially recognised at cost, which also includes import and

non-refundable purchase taxes after deduction of discounts and any directly attributable costs of preparing the asset for its intended use. Acquisition costs are subsequently reduced by the amount of accumulated depreciation.

Depreciation and useful lifeAll intangible assets are depreciable as-sets with a finite useful life. The straight-line depreciation method is used, with the depreciation basis equal to the ac-quisition value of intangible assets. Am-ortisation of intangible assets begins on the first day of the following month after the asset becomes available for use. De-preciation calculated for each account-ing period is recognised as a cost or operating expense for the period. Due to impairment, intangible fixed assets are usually revalued as soon as their book value exceeds their recoverable value.

Significant groups of depreciable assets

Estimated useful life in years

Depreciation rate in %

Computer software 3 33.33

Rights in rem on immovable property 100 1.00

Right to use facilities 30 3.33

Long-term accrued revenue and de-ferred expenses include amounts of de-ferred costs and expenses relating to a period longer than one year and are not yet charged to the profit or loss.

b) Tangible fixed assetsA tangible fixed asset is an asset owned or financially leased or otherwise con-trolled by the company which is used for the implementation of services, leasing or administrative purposes and is ex-pected to be used for this purpose during more than one accounting period. Groups of tangible fixed assets are immovable property (land, buildings), equipment and other tangible fixed assets as well as in-vestments in the acquisition of such as-sets and receivables for advances in this respect. Some types of small tools with useful lives longer than one year (hand tools and devices) are also considered tangible fixed assets.

Recognition, initial measurement and derecognition of tangible fixed assetsA tangible fixed asset is recognised when it is probable that future econom-ic benefits associated with it will flow to the company and its cost can be meas-

ured reliably. A tangible fixed asset is valued at cost upon initial recognition. This consists of the acquisition cost, import and non-refundable purchase duties and expenses which are directly attributable to the activities necessary to prepare the asset for its intended use. The cost also comprises borrowings costs related to the acquisition of new tangible fixed assets for those fixed as-sets, for which the period from the date of the provision of services of the first invoice for construction-assembly ser-vices or equipment to bringing the fixed asset for use is longer than one year. The period from the payment deadline of each invoice until the date of bringing the fixed asset into use shall be taken into account, whereby the capitalisa-tion rate is calculated for each individ-ual investment, taking into account the weighted average rate of withdrawals of investment loans for the current year. If the cost of the fixed asset is significant, it shall be divided into its parts. If these parts have different useful life and/or samples of use significant in the rela-tion to the complete cost of the tangi-ble fixed asset, every part is dealt with individually.

Tangible fixed assets


Land is valued at acquisition cost, which includes costs of real estate turnover taxes and land registry fee. The ac-quisition cost of buildings comprises expenditures to cover the purchase, construction or upgrading of facilities, project and other documentation on the basis of which the acquisition was made, construction or upgrades for land development, for the necessary permits for the manufacture of con-nections and other costs that can be directly attributable to preparing them for use. Expenditures for the acquisition of land on which buildings are situated and expenditures for the acquisition of land intended for access to buildings or for other needs regarding their use are not included in the acquisition cost. The acquisition cost of equipment compris-es expenditures to cover the purchase, manufacture or elaboration of equip-ment, costs of delivery, installation and other expenses arising during purchase, manufacture or elaboration.

The acquisition cost of tangible fixed assets constructed or produced in the company consists of costs originating from their construction or manufac-ture and indirect costs of construction or manufacture that can be attribut-ed to the asset. It does not comprise costs not related to their construction or manufacture, and costs which the market does not recognise. The cost of such fixed assets cannot be higher than the same or similar fixed assets on the market. Investments carried out in the company are divided into reconstruc-tion, which covers major repairs of fixed assets due to wear, substitution and ca-pacity increases, which include invest-ment for replacement and increasing of capacity of existing fixed assets and new investments, which cover invest-ments in the acquisition of new fixed assets. Here, the fixed assets acquired free of charge are valued at cost, and if this is not known, at fair value as de-termined in the free acquisition agree-ment.

A fixed asset is derecognised when dis-posed of or if no further economic ben-efits may be expected from its use or disposal. Derecognition and disposal of tangible fixed assets arise from new in-vestments, investments in reconstruc-tion and restoration, technical, economic or physical obsolescence of fixed assets,

disposal and loss events, and primarily due to extreme weather events. Gains and losses from the sale or disposal, which are determined in such a way that sales revenues are compared to the book value, are included in the Profit or Loss Statement of the group.

Measurement after recognition and sub-sequent costsIn evaluating tangible fixed assets, the company uses the cost model and car-ries them at cost, less accumulated de-preciation and accumulated impairment losses.

Subsequent costs incurred for repairs and maintenance related to tangible fixed assets are recognised as mainte-nance costs when they are incurred in the process of restoring and maintain-ing future economic benefits based on the initial estimated level of the asset's efficiency. Estimated costs of regular inspections or repairs of tangible fixed assets are treated as parts of tangible fixed assets.

RevaluationDue to impairment, intangible fixed as-sets are usually revalued as soon as their book value exceeds their recover-able value. The recoverable amount is the fair value less costs of sale or value in use, whichever is greater. A signifi-cant change in the operating situation is one for which the assumptions used in assessing value in use and fair val-ue reduced by costs of sale change by more than 5% in one year. A review of impairments is decided based on a sig-nificant asset with the longest useful life; the company defines a significant asset as an asset whose acquisition cost is more than 0.5% of the total cost of tangible fixed assets. A decrease in value of depreciable assets due to im-pairment is treated as an operating ex-pense which is also the residual value of an asset that no longer possesses any usefulness. If this asset is sold and the net realizable value is greater than the carrying amount, the difference is treat-ed as a revenue from revaluation.

The value of land, buildings and distri-bution equipment is assessed by certi-fied appraisers. The company as a rule does not revalue other equipment as it represents less than 5% of total fixed assets.

9 1E l e k t r o C e l j e i n 2 0 1 9

Significant groups of depreciable assets Estimated useful life in years


Minimum Maximum

Energy infrastructure buildings 20–40 2.50 5.00

Other buildings 20–40 2.50 5.00

Energy infrastructure equipment 3–33.33 3.00 33.33

Other equipment 2–33.33 3.00 50.00

Vehicles 7–12.5 8.00 12.50

Depreciation rates are set according to the expected useful lives which depend on expected physical wear, technical and economic aging and expected legal or other restrictions regarding their use, taking into account the one that is the shortest. The useful life of fixed assets is determined by the Joint Commission of electricity distribution companies desig-nated for that purpose.

Depreciation is calculated individually, until the amount fully replaces the value that forms the basis for the calculation of depreciation. Accumulated deprecia-tion of fixed assets is carried out for the amount of depreciation, which is deter-mined in the final annual accounts of de-preciation. Depreciation is not calculated for land, fixed assets of cultural, histor-ical or artistic significance, fixed assets permanently out of use, investing in the acquisition of fixed assets until they are available for use, and advances for the acquisition of fixed assets.

The company verifies the useful lives of significant fixed assets whose cost ex-ceeds EUR 1 million at least every two years, with depreciation rates recalcu-lated accordingly, if expectations differ significantly from the estimates. The ef-fect of the recalculation is treated as a change in accounting estimates.

c) LeasesAt the conclusion of the agreement, the company assesses whether it is a lease agreement or whether the contract con-tains leases and recognises the right to use the leased asset for long-term leased assets (duration of the lease more than 1 year) and leased assets of higher val-ue (more than EUR 10,000, taking into account the value of the new leased asset), and the associated lease liabil-ity. An agreement is a lease agreement

if it conveys the right to control the use of the asset for a fixed period of time in return for compensation. The duration of the lease is determined by the company on the basis of the period during which the lease cannot be canceled, and also takes into account the period for which the possibility of renewal or cancellation of the lease applies.

At the commencement of the lease, the liabilities for the leased assets are stated in the same amount as the rights to use the assets and are reduced by repay-ments, while the value of the rights to use the leased assets decreases by the cal-culated depreciation over the period of the lease. Depreciation rates are based on the leasing period. The financial ex-penses of the period bear the costs of the accrued interest expenses.

The right to use the leased assetRecognition, initial measurement of leas-esThe company recognises the right to use the assets according to the purpose of use of the leased asset and measures it by the value of the associated lease liability and the value of the lease pay-ments made on or before the commence-ment date of the lease, reduced by the received lease incentives and increased by the initial direct costs incurred to the tenant.

Depreciation, useful life and revaluationThe company depreciates the asset rep-resenting the right to use from the begin-ning of the lease to the end of its useful life or until the end of the duration of the lease, if shorter. If, by the end of the duration of the lease, ownership of the asset is transferred to the tenant by the lease, or the company uses the option to purchase, the depreciation is calculated based on the estimated useful life.

Depreciation and useful lifeA tangible fixed asset begins to be de-preciated on the first day of the following

month after the asset becomes available for use. The company uses the straight-line depreciation method.

Leases


Depreciation of rights to use of leased assets Estimated useful life in years


Minimum Maximum

Right to use equipment 8 12.50 12.50

The right to use the leased asset is reas-sessed if the duration period of the lease, the amount of the lease payments (e.g. change in future amounts of the lease payments as a result of change in index or rate of determining the amount of the lease payments) or the estimate of the lease termination fee changes and when the lease agreement is modified, if this change is not accounted for as a sepa-rate lease. The company also revaluates the right to use the assets for possible impairment in accordance with the re-quirements of SAS 17.

Liabilities for leased assetsRecognition, initial measurement of lease liabilitiesThe cost includes the amount of the ini-tial measurement of the lease liability, the lease payments made on or before the commencement date of the lease, reduced by the received lease incentives and increased by the initial direct costs. At the commencement date of the lease, the company recognizes the right to use the leased asset and measures the lease liability at the present value of the lease payments not yet paid at that date. In the calculation of the present value of lease payments, the interest rate that has been accepted on the lease is used, but if that not being determinable, the aver-age weighted interest rate on investment loans after the commencement date of the lease is used. Lease payments in-cluded in the measurement of lease lia-bilities are fixed lease payments, reduced by lease incentives receivables, variable lease payments, the exercise price of the purchase option, if it is fairly certain that the company will exercise this option and the payment of lease termination fees, if the duration of the lease indicates, that the tenant will use the option of terminat-ing the lease. Lease liabilities are shown under the item of short-term/long-term liabilities among financial liabilities (Sec-tion 11.4.11 - Financial liabilities).

Measurement after recognition and re-valuationUpon initial recognition, the amount of the lease liability is increased by the ac-crued interest and reduced by the pay-ments to the lessor. The carrying amount

of the lease liability is reassessed if the duration period of the lease, the amount of the lease payments (e.g. change in fu-ture amounts of the lease payments as a result of change in index or rate of de-termining the amount of the lease pay-ments) or the estimate of the lease termi-nation fee changes and when the lease agreement is modified, if this change is not accounted for as a separate lease.

Short-term and low-value leasesThe company applies the exception for leases of assets in the value of up to EUR 10,000 and for leases with a duration period of 12 months or less and do not include an option to purchase. It recog-nizes the costs associated with the lease of these assets among the cost of lease payments, evenly over the duration peri-od of the lease or on another systemat-ic basis that best reflects the pattern of benefits it receives.

d) Financial investmentsFinancial investments are financial as-sets held by the investing company so that the yield arising from them would increase its financial revenue and are shown as long-term investments in the balance sheet, namely those that the company intends to hold for a period longer than one year, and not held for trading and short-term financial invest-ments. Long-term financial investments that mature within one year after the balance sheet date are reclassified to short-term financial investments in the balance sheet.

Exposure to various types of risks, espe-cially the risk of reduction in the value of financial investments below their cost is not hedged with financial instruments. The value that best represents the max-imum exposure to such risk is the total value of the investment.

The company's balance sheet shows long-term financial investments in the capital of subsidiaries and other shares and stakes. Long-term financial invest-ments in the capital of other companies are allocated among other long-term in-vestments, allocated and measured at cost, or other financial investments. Allo-

Financial investments

9 3E l e k t r o C e l j e i n 2 0 1 9

cation and measurement is performed at fair value through equity. Received profit pay-outs from long-term investments are recognised as financial revenue at the moment the company acquires the right to the payment of dividends.

Recognition and derecognition of finan-cial investmentsFinancial investments are recognised when it is probable that future economic benefits associated with them will flow to the company and its cost can be re-liably measured. When acquiring or sell-ing financial investments, the company recognises them on the day of trading or settlement. The company performs rec-ognition of a financial asset the moment a contractual obligation related to cash flows no longer exists or when all the risks and benefits associated with own-ership of the financial risk is transferred to a third party.

Initial accounting measurement and measurement upon recognitionUpon initial recognition, a financial in-vestment is measured at fair value. Trans-action costs that are directly attributable to the acquisition or issue of a financial asset are also added, except for assets measured at fair value through profit or loss. The company classifies financial assets which are financial investments upon initial recognition as financial as-sets, measured at fair value through profit or loss, financial investments held to maturity, loans, assets available for sale or financial assets measured at cost. Financial assets measured at fair value through profit or loss are usually short-term investments. Financial in-vestments in the equity of subsidiaries are measured and calculated by the company only at cost. If the fair value of investments in stocks and stakes cannot be reliably measured, they are valued at cost, increased by transaction costs, less any impairment.

Revaluation of financial investmentsThe company revalues investments to their fair value at the end of the finan-cial year. If the recorded carrying value of long-term financial investments is higher than the market value calculat-ed according to the last published stock exchange price, the company will imple-ment an impairment; if their proven fair value according to the last published stock exchange price exceeds their car-

rying value, the company appreciates the financial investments (the carrying value is increased to the fair value). Fair value is established, if it can be reliably measured and is determined in accord-ance with SAS 16. Proven profits or loss-es arising from the change in fair value of a financial asset are recognised directly in equity as an increase (gain) or a re-duction (loss) in reserves resulting from valuation at fair value.

A financial investment/group of finan-cial investments carried at cost by the company is impaired (long-term) which causes losses if objective evidence of impairment for a financial investment/group of financial investments exists and their recorded book value is higher than the proven realizable value due to an event/events after initial recognition of the investment. On the balance sheet date, the company carries out a test to assess the impairment of financial in-vestments in equity instruments, if the carrying amount of the investments at the balance sheet date is more than 20% greater than the proportional part of the carrying amount of the total cap-ital of the company in which it has an investment and also, if the company's future business plans indicate perma-nent impairment of these investments. The amount of loss is measured as the difference between the carrying amount of the financial investments on the bal-ance sheet date and the present value of expected future cash flows of these investments, discounted at the current market rate of return (recoverable value), which applies to similar financial assets, and recognised in the income statement as a revaluation financial expense. Such impairment losses may not be reversed.

e) Deferred tax assets and liabilitiesDeferred tax assets and liabilities are the result of calculating current and future tax consequences (future repayment/settlement of the carrying value of as-sets/liabilities recognised in the balance sheet of the company and transactions and other business events in the period in question, recognised in the financial statements of the company).

Deferred tax assets are the amounts of income taxes recoverable in future pe-riods and recognised by the company at the end of the reporting period, if it is likely to have future taxable profits which

Deferred tax assets and liabilities


could be burdened by deductible tem-porary differences. Deferred tax assets reduce tax expense, thereby contribut-ing to an improved operating result, or directly increasing capital.

The company accounts for deferred tax-es by using the liability method on the balance sheet, taking into account tem-porary differences between the book and tax values of individual assets and liabil-ities which arise from each respective state of accounting items and not from differences between the previous and current states. Deferred taxes are meas-ured at tax rates that are expected to be applied in the financial year when the de-ferred tax assets are realised or deferred liabilities settled, and are based on tax rates and tax regulations valid until the balance sheet date.

Whenever the carrying amount of de-ferred tax changes due to changes in tax rates or tax regulations, a reassessment of the recoverability of deferred tax as-sets or changes in the expected manner of recovery of the assets, the resulting deferred tax is recognised in profit or loss, except to the extent that it relates to items previously recognised outside profit or loss.

f) InventoryInventory comprises a part of current as-sets in tangible form, which will be used to create products or provide services. The company shows material and small tools with a useful life of up to one year which have the characteristics of inventory among stocks of materials, but may also include those with useful lives exceed-ing one year, if their individual acquisition value does not exceed EUR 500. The com-pany also includes protective equipment and tools under small tools. The company monitors stocks of materials by individual material in its analytical records.

Recognition and derecognition of inven-toryStocks of materials in the accounting records and the balance sheet are rec-ognised if it is probable that future eco-nomic benefits associated with them ex-ist and their value or cost can be reliably measured. Recognition of inventory is eliminated when the material has been consumed, sold, or otherwise ceases to exist, as confirmed by relevant docu-ments.

Initial measurement and valuation of in-ventory after recognitionA unit of stock of materials is valued at cost, which comprises the acquisition cost, reduced by discounts, import and other non-refundable acquisition duties and direct acquisition costs. Consump-tion of stocks of materials is valued ac-cording to the weighted average price method.

Revaluation of inventoryStocks of materials are revaluted due to impairment, if their carrying amount exceeds the net realisable value. Write-downs of damaged and obsolete inven-tories are performed by the company regularly throughout the year and during inventory-taking.

g) ReceivablesReceivables are property rights and other rights based on legal relationships to de-mand that a particular person pay a debt or in the case of advance payments to de-mand the supply of goods or performance of a service. Depending on their maturities, they are allocated to short-term receiv-ables due within one year and long-term receivables. Long-term receivables that have matured and are not yet settled, and those which will fall due for payment with-in one year after the balance sheet date are recognised as short-term receivables. Receivables that arise in the company are mainly trade receivables, receivables from employees, from the state, from suppliers for advance payments etc.

Recognition and elimination of receiva-blesReceivables are recognised in the book-keeping and balance sheet items, if it is probable that the economic benefits as-sociated with them will flow in and their original value can be reliably measured. Derecognition is implemented if they no longer fall under binding contractu-al rights because they either expired or were assigned.

Initial accounting measurement and measurement upon recognitionUpon initial recognition, receivables of all types are recognised in the amounts that arise from relevant documents (invoices, contracts), assuming that they will be paid. Receivables from legal and natural persons abroad are converted into do-mestic currency on the day of occurrence using the current reference exchange rate

Inventory

Receivables

9 5E l e k t r o C e l j e i n 2 0 1 9

of the European Central Bank. Later re-ceivables can be increased or decreased (subsequent discounts, complaints), thereby affecting the relevant business and financial revenues.

Revaluation of receivablesThey mainly appear as a revaluation of receivables due to their impairment or reversal of impairment, i.e. reduction or subsequent increase in their value to their liquid value. In the balance sheet, receivables are carried at amortised cost, which means that they are reduced by the amount of the value adjustment for doubtful and disputed receivables. In ac-cordance with SAS, the company carries out a valuation adjustment in the total amount for receivables in bankruptcy pro-ceedings, for receivables which are the subject of litigation, and for receivables whose due date has exceeded 90 days on the balance sheet date. For receivables in compulsory composition proceedings, the company carries out a valuation adjust-ment depending on the decisions of com-pulsory compositions or in the amount of 80% if compulsory composition has not yet been confirmed. The company, in ad-dition to receivables on network charges and receivables on default interest for network charges, also adjusts values for non-matured receivables and receiva-bles with maturities up to 90 days in the amount of the calculated percentage of non-payments based on the average monthly balance of receivables of the pre-vious three years and the predicted IMAD economic growth in the coming year. Val-uation adjustments are reduced by pay-ments and write-offs of receivables on the basis of supporting documents: court de-cision, decision on compulsory composi-tion, decision on bankruptcy proceedings and other relevant documents.

Long-term receivables relating to trade receivables, which are undergoing com-pulsory settlement are remunerated in accordance with the decisions on com-pulsory settlements. Long-term operat-ing receivables from SODO bear interest in accordance with Article 85 and Item 3 of Annex 1 of the Network Charges Act (Official Gazette of the RS, No. 66, of 14 September 2015). Receivables of signif-icant value which are not remunerated are shown at discounted values in the balance sheet, taking into account the interest rate, which is equal to the aver-age interest rate of long-term loans.

h) Cash Cash of the company includes money in the transaction accounts and deposits at commercial banks, investments that can be converted to known amounts of cash quickly or in the near future and where the risk of changes in value is insignifi-cant (overnight deposits with banks). It is recognised in the amounts derived from the relevant documents.

i) EquityTotal equity is the liability to owners of the company, which is due for payment when the company goes out of business. It is defined in the amounts invested by the owners and the amounts generated during operation that belong to the own-ers. Equity is reduced by loss from op-erations, repurchase of treasury shares and dividend payments. It consists of called-up capital, capital reserves, profit reserves, revaluation reserves, reserves resulting from valuation at fair value, re-tained net earnings from previous years, and temporarily undistributed net profit for the business year.

Called-up capital of the company is share capital divided into 24,192,425 ordinary freely transferable shares. Ordinary shares give their holders the right to participate in the management of the company, entitlement to a part of the profits (dividends) and the right to participate in an appropriate share of assets remaining after the liquidation or bankruptcy of the company. There are no agreements between sharehold-ers which could result in a limitation of transfer of securities and voting rights. The company also has no restrictions on voting rights, except for treasury shares which do not have voting rights, nor provide dividends. All shares are of the same class and have been fully paid up, there were no newly issued shares. The shares are issued in dematerial-ised form and held at KDD - Centralna klirinško depotna družba, d. d. (Cen-tral Securities Clearing Corporation) in accordance with regulations. The company has no employee sharehold-er scheme and did not conditionally increase its share capital during the fi-nancial year.

The company's capital reserves consist of amounts of reversals of the general capital revaluation adjustment and are formed in accordance with item 15 of

Cash

Equity


the Introduction to SAS 2006 (transi-tional provisions) to be used in accord-ance with Article 64 of the Companies Act (ZGD-1). Profit reserves include legal reserves, reserves for treasury shares, acquired treasury shares, and other profit reserves. Profit reserves are formed in the amount and under the conditions laid down in Article 64 of the Companies Act (ZGD-1) and Articles of Association of the company from net profit amounts for the business year. Reserves for treasury shares are formed in accordance with the Articles of Asso-ciation of the company in the following order: from the net profit for the year, re-tained earnings and from other profit re-serves, which exceed the amount of any losses brought forward, which could not be offset against net profit for the year. Other profit reserves are established in the amount and under the conditions laid down by the law and Articles of As-sociation of the company. The Manage-ment Board may establish other profit reserves in the proportion of up to two thirds of the remaining net profit for the year that remains after legal reserves and reserves for treasury shares are formed, unless they already amount to one half of share capital; other profit re-serves form own source of investment fi-nancing. Capital and statutory reserves may pursuant to the Companies Act be used to cover net loss for the year if it cannot be covered from retained net profit or other profit reserves and for coverage of retained loss, if it cannot be covered by net profit for the year or from other profit reserves.

Reserves arising from revaluation at fair value are based on actuarial gains or losses from severance pay upon retire-ment and amounts of proven gains or losses from changes in fair value of fi-nancial assets available for sale.

Acquired treasury shares are a constitu-ent part of total equity and are deducted from it. The purpose and reason for ac-quisition of treasury shares was deter-mined by the decision of the 21st Gener-al Assembly of Elektro Celje of 31 August 2016, namely to increase the value of the company's assets and maximize val-ue for shareholders. The acquisition of treasury shares was implemented in ac-cordance with the published Programme for Acquisition of Treasury Shares of El-ektro Celje.

j) Provisions and Long-term Accrued Expenses and Deferred RevenueThe purpose of these provisions is to collect amounts in the form of accrued costs or expenses which will in the fu-ture be used to cover costs or expenses incurred at that time. Deferred revenue, which will cover estimated expenses in a period exceeding one year, fall under long-term accrued expenses and de-ferred revenue.

Recognition and derecognition of provi-sionsProvisions are recognised if due to a past event a current obligation exists (with probability greater than 50%), which is expected to be settled in a period which cannot be determined with certainty, and if the amount of the obligation can be measured reliably. Derecognition is carried out when the item for which the provisions were made has already been used or there is no longer a need for it.

Initial accounting measurement of pro-visionsThe amount recognised as a provision is the best estimate of the expenditures (in-cludes risks and uncertainties) required for settlement of usually long-term com-mitments existing on the balance sheet date. If the effect of the time value of money is material, the expected expendi-tures must be appropriately discounted to their present value.

Provisions for payment of retirement benefits and long-service awardsThe company pursuant to legislation and the collective agreement is obliged to pay long-service awards to employees, severance upon their retirement and al-lowance in the case of the death of em-ployees, for which provisions were cre-ated for the long-term benefit of future payments discounted at the balance sheet date. The actuarial calculation was prepared using the projected unit credit method based on the multiple decrement model and takes into account current service costs, interest costs, payment of benefits and actuarial gains/losses that result from changes in actuarial assump-tions and adjustments based on experi-ence. In accordance with SAS 10.35 on the balance cut-off date, the company determines and in the income state-ment recognises revenue or expenses connected to the adjustment of provi-sions for retirement benefits (long-ser-

Provisions and Long-term Accrued

Expenses and Deferred Revenue

9 7E l e k t r o C e l j e i n 2 0 1 9

vice costs and interest), while actuarial gains and losses arising from liabilities for retirement benefits are recognised in equity within reserves resulting from val-uation at fair value.

The company similarly in accordance with SAS 10.36 on the cut-off balance date determines, and in the income statement recognises, revenue and ex-penses connected to the adjustment of provisions for long-service payments and allowance payments in the case of death of an employee (long-service costs, interest, actuarial gains/losses).

Provisions for lawsuitsThe company discloses provisions for lawsuits in which it acts as the defend-ant. Every year, the eligibility of provi-sions formed is assessed in relation to the state of disputes and the likelihood of a favourable or unfavourable reso-lution. The amount of the provisions is determined by the known amount of compensation claims or according to the anticipated amount if the claim amount is not yet known.

Long-term accrued expenses and de-ferred revenue The company recognises long-term ac-crued expenses and deferred revenue for fixed assets acquired free of charge classified in categories according to the rate of depreciation of the acquired assets. They are intended to cover de-preciation costs of depreciable assets and are used by reallocating them to operating revenue. Acquisition of fixed assets free of charge relates mainly to the connections of customers which the company assumed as tangible fixed as-sets with a commitment to maintain and restore them, in accordance with regula-tions (Official Gazette of RS, no. 126/07, General conditions for connection to the distribution electric system).

The company also recognises long-term accrued expenses and deferred revenue for the calculation of average costs of connection pursuant to the Decision on determining the network charge for use of the electricity networks of the Energy Agency of the Republic of Slovenia for electricity for the period up to 30 June 2007 and relate to the dedicated pay-ment of connections to the network or increase in coupling strength (financing investments in network expansion). Their

purpose is to cover depreciation of as-sets and they are used by reallocating them to operating revenue at the pre-vailing depreciation rate of fixed assets of the energy infrastructure, i.e. at a rate of 3%.

Revaluation and measuring changes in provisions and long-term accrued ex-penses and deferred revenueProvisions and long-term accrued ex-penses and deferred revenues are not revalued. At the end of the accounting period, they are adjusted due to changed estimates so that their value is equal to the current value of the expenditure ex-pected to be required to settle the obli-gation.

k) LiabilitiesLiabilities are recognised obligations associated with the financing of own assets, which must be repaid or settled, mainly in cash. The company discloses financial and operating liabilities, and depending on the maturity of the pay-ment as long-term or short-term. Short-term liabilities mature into payment with-in a period shorter than one year.

Recognition and elimination of liabilitiesLiabilities are recognised if it is likely that their settlement will reduce factors allowing for economic benefits and if the amount of their settlement can be reliably measured. Derecognition is per-formed when the obligation specified in a contract or other legal instrument is discharged, cancelled or expires.

Initial accounting measurement of liabil-itiesUpon initial recognition, liabilities are valued at the amounts arising from rel-evant documents on their origin, which for financial liabilities is evidence of re-ceived loans, or obligations for the pay-ment of interest, dividends or payment of a business debt, and for operating liabilities, receipt of a product or ser-vice, performed work or accrued cost, expense or a share in profit or loss.

Measurement after initial recognitionLiabilities are measured at amortised cost. Before compiling the financial state-ments, the company estimates the fair value of short-term liabilities based on contracts at least once a year, and if the carrying values are lower than the estab-lished fair values, a mandatory increase

Liabilities


in the value of the company's short-term liabilities is implemented. Liabilities in-crease by the amount of accrued interest and decrease by repaid amounts or oth-er form of settlement. The carrying value of long-term liabilities equals their histor-ical cost decreased by repayment of the principal and transfers under short-term debts. When purchasing on credit and if the contractual deadline for payment is exceeded, that part of the liability re-lating to interest is treated as financial expense. Subsequent reduction by the amount for which agreements with credi-tors exist (subsequent discounts, returns of sold material, recognised complaints, etc.) reduces the relevant costs or oper-ating or financial expenses. Short-term debts denominated in foreign currencies are translated into local currency at the reference exchange rate of the European Central Bank by the company on the bal-ance sheet date.

Revaluation of liabilitiesThe company does not carry out impair-ment of short-term liabilities or disclose it.

l) Short-term accruals and deferralsShort-term deferred costs and accrued revenue include short-term deferred costs/expenses, which are expected to be realised in the coming year and whose appearance is probable and whose size can be reliably estimated and which do not yet affect profit or loss, ac-crued revenue if they are justified in the income statement, for which the com-pany has not yet received payment and which could not be invoiced, and VAT on advances received and overpayments of network charges.

Short-term deferred costs and accrued revenue include accrued costs or ex-penses arising on the basis of equal burdening of profit or loss with expect-ed costs, which have not yet arisen, and deferred revenue and VAT from granted advances.

Recognition and elimination of short-term accruals and deferralsShort-term accruals and deferrals are recognised when it is probable that dur-ing the period for which they were cre-ated, such revenue and costs/expenses are actually incurred. Derecognition is performed when all incurred options have expired or accruals and deferrals are no

longer needed. They are only used for the items for which they were originally rec-ognised. The reality of the items in short-term accrued revenue and deferred costs must be justified on the balance sheet date, while items in accrued expenses and deferred revenue should not hide the reserves.

Revaluation of short-term accruals and deferralsAccruals and deferrals are not revalued and at the end of the accounting period, their reality and eligibility of their forma-tion are verified.

m) Income TaxIncome tax for the business year com-prises current and deferred tax. Current tax is the tax paid by the company from its taxable profit for the year, using tax rates in force on the reporting date, and taking into account any adjustment to tax liabilities in respect of previous busi-ness years.

n) RevenueRevenue is broken down into operating, financial and other revenue. Operating and financial revenue is regular revenue.

Operating revenue comprises sales rev-enue, capitalised own services and other operating revenue associated with busi-ness effects.

Sales revenue includes revenue of SODO from the lease of electricity infrastruc-ture and the provision of related servic-es, revenue from the provision of services to customers in the market, from rental of premises and the company's vacation facilities. Sales revenue is recognised on the basis of the terms of the contracts with the customers, upon transfer of con-trol of the services to the customer, in the amount of the expected fees to which the company is entitled in return for the ser-vices performed and when reduced by the returns and discounts granted at or after the sale due to an earlier payment. Recognition of revenue from customer services is gradual. The method of inputs (e.g. assets, car rides, working hours, costs), which have already been spent by the metering date, is used to measure the performance obligation.

Amounts that have been invoiced in the name and for the account of SODO d.o.o. are not shown under revenue, but among

Short-term accruals and deferrals

Income Tax

Revenue

9 9E l e k t r o C e l j e i n 2 0 1 9

operating liabilities towards SODO. VAT and excise duty are not counted as sales revenue, but as withdrawal liabilities.

The right to compensation in return for services that are transferred to the cus-tomer is an asset from contracts with customers. The company discloses ac-crued revenue for services rendered to customers among assets from contracts with customers. Since SAS 15 does not provide for separate disclosure of these items in the balance sheet, they are rec-ognised under accrued revenue and de-ferred expenses.

A liability arising from contracts with customers is an obligation to transfer a service to the customer in exchange for compensation received by the company from the customer. As part of the liabili-ties arising from contracts with custom-ers, the company discloses liabilities for received securities and advances. They are recognised as revenue when the company fulfills its performance obliga-tion under the contract. Since SAS 15 does not provide for separate disclosure of these items in the balance sheet, they are recognised under accrued expenses and deferred revenue.

Capitalised own services are services rendered for the company's own needs and capitalised among tangible fixed as-sets or intangible non-current assets.

Other operating revenue comprises revenue from the reversal of provisions (mainly for fixed assets acquired free of charge), revenue associated with busi-ness effects (received compensation, subsidies, grants, etc.), and operating revenue from revaluation, arising from the disposal of fixed assets as surplus-es of their sales value over their carrying amounts, sale of dismantled material, write-offs of liabilities and the elimination of revaluation adjustments.

Financial revenue arises in connection to financial investments (mainly income from dividend payments and participa-tion in profits of subsidiaries), receiva-bles (mainly interest on late payments of the network charge and services), interest received from deposits, cash in accounts and granted loans, positive exchange rate differences and revalu-ation financial revenue. Revenue from interest is recognised on the date of its

occurrence using the effective interest rate, revenue from dividends on the date when the shareholder's right to receive payment is exercised, and late charg-es on overdue payments of the network charge and services rendered at settle-ment when there is no doubt with respect to their amount and maturity date.

Other revenue comprises unusual items which are not expected to occur regular-ly or frequently (recovered receivables written off in previous years, received reimbursement of legal costs and dam-ages etc.).

o) Costs and expensesCosts and expenses are classified as operating, financial and other expenses. Operating and financial expenses are regular expenses.

Operating costs and expenses include costs of goods, materials and services, labour costs, write-downs and other op-erating expenses.

Financial expenses are expenses from the company's financing (borrowing costs, exchange rate differences etc.) and expenses from investing activities (e.g. impairment and write-downs from investments) and are divided into the part associated with the creation of op-erating revenue, and the part associated with the creation of financial revenue.

Other expenses include unusual items and other expenses reducing profit (fines, compensation, annuities, etc.).

Recognition of expensesExpenses are recognised if decreased economic benefits in an accounting pe-riod are related with decreased assets or increased debt and if such decrease can be reliably measured. Operating expens-es from revaluation are recognised when the adequate revaluation is performed. Revaluated financial expenses are also recognized in the sale or other disposal or derecognition of financial investments other than equity instruments, or in the sale of receivables as a negative differ-ence between the sale and carrying value, adjusted for any reserve arising from fair value. Financial expenses are recognised at settlement irrespective of the payments associated with them. Borrowing costs are recognised in the income statement us-ing the effective interest method, except

Costs and expenses

1 0 0 1 1 E x p l a n a t o r y n o t e s t o t h e f i n a n c i a l s t a t e m e n t s

for those costs that are capitalised and attributable to tangible fixed assets in the course of construction or development.

Initial accounting measurement of ex-pensesConsumption of stocks of materials is val-ued according to the weighted average price method. Labour costs include sala-ries and other labour costs calculated in gross amounts, as well as contributions paid from these bases which are not a constituent part of the gross amounts. The company complied with the provi-sions of general and industry collective agreements and individual employment contracts with regard to payment of sal-aries. Write-offs include depreciation and operating expenses from revaluation. Depreciation was calculated based on the depreciation rates laid down by the so-called single commission of the five distribution companies with respect to the useful life of fixed assets. Revaluated operating expenses arise in connection with long-term intangible and tangible fixed assets and current assets due to their revaluation to a lower value and in connection with the sale or other disposal and derecognition of fixed assets.

p) Statement of Comprehensive IncomeThe statement of comprehensive income is a financial statement which gives a true and fair view of all components of the income statement for the periods for which it is prepared, and includes those items of revenue and expenses that are not recognised in profit or loss, but have an impact on the size of total equity. The company uses Version I of the profit or

loss statement in accordance with SAS 21.8. Total comprehensive income with items from 19 to 24 of SAS 21.8 and items from 25 to 29 of SAS 21.10 is given in an additional statement.

q) Cash flow statementThe statement of cash flows faithfully and fairly presents the changes in in-flows and outflows in operating, investing and financing activities and explains the changes in the cash balance for the fi-nancial year. Cash and cash equivalents in the statement of cash flows include cash in current accounts, cash items in the process of collection, and deposits redeemable at notice. The statement of cash flows is compiled using the direct method (Version I) in accordance with SAS 22.6. Inflows from sales include val-ue added tax and excise duties; cash flow items in investing and financing activi-ties are reported in non-offset amounts. The data for the items of the statement of cash flows are derived from analyti-cal records, current account summaries, and offsets.

r) Statement of changes in equityThe statement of changes in equity faithfully and fairly presents changes in all equity components in the balance sheet for the financial year in accord-ance with SAS 23.4 and SAS 23.5 in the form of a table of changes in all equity components. Total company equity con-sists of share capital as entered into the court registry, capital reserves, profit re-serves, reserves arising from valuation at fair value, net profit or loss brought for-ward and net income for the fiscal year.

11.4 Disclosure of Items in the Balance SheetThe balance sheet is a fundamental fi-nancial statement which shows the fair balance of assets and liabilities as at 31 December 2019. It is compiled in a se-quential order as defined in SAS 20.4 and

the Companies Act. Items are recorded at their carrying values as the difference between total value and revaluation ad-justment. The principle of individual valu-ation of assets and liabilities is observed.

Statement of Comprehensive Income

Cash flow statement

Statement of changes in equity

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11.4.1 Long-term Intangible Assets and Long-term Deferred Expenses and Accrued Revenue

Long-term property rights as of 31 De-cember 2019 mainly represent invest-ments in software in the amount of EUR 3,801,902 (EUR 3,047,463 in 2018), of which the residual value under lease agreements, upgrades and provisions of software and appropriate licenses for the operation of IT support amounted to EUR 1,460,905 (acquisition cost to EUR 2,316,364, revaluation adjustment

to EUR 855,459), and the unpaid part under the same agreements to EUR 595,248 (EUR 297,304 mature in 2020, EUR 286,285 in 2021 and EUR 11,659 in 2022).

The acquisition cost of property rights and property rights in preparation, which pursuant to SAS 2.39 are managed as intangible assets in the accounting re-

Intangible assets and long-term deferred expenses and accrued revenue (in EUR) 31 December 2019 31 December 2018

Long-term property rights 3,816,997 3,065,917

Intangible long-term assets in development 405,251 4,900

Other long-term accrued revenue and deferred expenses 30,160 12,584

Total 4,252,408 3,083,401

Changes in intangible fixed assets (in EUR) Long-term property rights

Intangible assets in development

Long-term accrued revenue and deferred

expenses

Total

COST

As of 1 January 2018 11,151,738 0 57 11,151,795

Increase 0 509,050 12,584 521,634

Carry-over from ongoing investments 504,150 —504,150 0 0

Decrease —1,445 0 —57 —1,502

As of 31 December 2018 11,654,443 4,900 12,584 11,671,927

As of 1 January 2019 11,654,443 4,900 12,584 11,671,927

Increase 0 2,659,505 20,135 2,679,640

Carry-over from ongoing investments 2,259,154 —2,259,154 0 0

Decrease —1,030,055 0 —2,559 —1,032,614

As of 31 December 2019 12,883,542 405,251 30,160 13,318,953

REVALUATION ADJUSTMENT

As of 1 January 2018 7,506,798 0 0 7,506,798

Depreciation 1,079,817 0 0 1,079,817

Rentals from holiday facilities 3,356 0 0 3,356

Decrease —1,445 0 0 —1,445

As of 31 December 2018 8,588,526 0 0 8,588,526

As of 1 January 2019 8,588,526 0 0 8,588,526

Depreciation 1,504,716 0 0 1,504,716

Rentals of holiday facilities 3,358 0 0 3,358

Decrease —1,030,055 0 0 —1,030,055

As of 31 December 2019 9,066,545 0 0 9,066,545

CARRYING AMOUNT

As of 1 January 2018 3,644,940 0 57 3,644,997

As of 31 December 2018 3,065,917 4,900 12,584 3,083,401

As of 1 January 2019 3,065,917 4,900 12,584 3,083,401

As of 31 December 2019 3,816,997 405,251 30,160 4,252,408


Property, Plant and Equipment (in EUR) 31 December 2019 31 December 2018

Land 5,985,194 5,980,401

Buildings 186,638,608 177,808,717

Equipment 60,713,817 60,624,134

Property, plant and equipment in the course of acquisition 6,773,154 9,898,778

Advance payments for PP&E 408,722 0

Total 260,519,495 254,312,030

cords and shown in the item land and buildings and ongoing investments in the balance sheet amounted to EUR 67,865 as at 31 December 2019 (EUR 53,745 on 31 December 2018), while the revaluation adjustment of those rights amounted to EUR 3,173 (EUR 2,605 on 31 December 2018), and rights in rem on immovable property under acquisition amounted to 208 EUR.

Trade payables for the acquisition of in-tangible assets of the company amount-ed to EUR 1,111,876 as of 31 December 2019 (EUR 675,995 as of 31 December 2018). The company had no assets with limited property rights or given as guar-antees for debt repayments. As of 31 De-cember 2019, the company did also not have any contracts on the purchase of intangible assets, whereby liabilities have not yet been recognised yet, concluded.

11.4.2 Tangible fixed assets

The carrying value of long-term intangi-ble and tangible fixed assets leased to SODO d.o.o. based on the Contract on leasing of the electricity distribution in-frastructure and provision of services for the system operator and associated an-nexes on 31 December 2019 amounted to EUR 255,945,609 (EUR 246,184,532 in 2018). The calculated value of revenue from leases to SODO for the financial year 2019 in the preliminary reconcilia-tion of the regulatory year 2019 amount-ed to EUR 25,014,020 (EUR 25,830,457 in 2018).

The cost of constructing and manufac-ture of tangible fixed assets for the com-

pany's own account amounted to EUR 15,164,716 in 2019 (EUR 15,193,945 in 2018), purchases from suppliers, which also include acquisitions of intangible assets, EUR 9,499,934 (EUR 8,030,349 in 2018) and acquisitions free od charge EUR 346,331 (EUR 248,412 in 2018).

The rate of write-off of engeneering struc-tures amounted to 68.2% (69.4% in 2018) and equipment to 64.6% (63.7% in 2018). Borrowing costs, which in 2019 were at-tributed to newly activated engineering structures amounted to EUR 4,925 (EUR 6,979 in 2018). Investments in progress include interest in the amount of EUR 3,122 (EUR 129 in 2018).

The carrying value of long-term intangible and tangible fixed assets leased to SODO d.o.o. based on the Contract on leasing of the electricity

distribution infrastructure and provision of services

for the system operator and associated annexes on

31 December 2019 amounted to EUR 255,945,609

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The company as of 31 December 2019 did not have any tangible fixed assets pledged as guarantee for liabilities.

Right to use leased assets

Changes in property, plant & equipment (in EUR)

Land Buildings Equipment Ongoing investments

Advance payments for

PP&E

Total

COST

As of 1 January 2018 5,947,524 571,184,658 163,331,654 7,680,901 20,000 748,164,737

Increase 0 0 0 23,408,910 37,997 23,446,907

Carry-over from ongoing investments 42,619 14,831,756 6,316,658 —21,191,033 —57,997 —57,997

Decrease —7,137 —4,897,633 —2,874,243 0 0 —7,779,013

As of 31 December 2018 5,983,006 581,118,781 166,774,069 9,898,778 0 763,774,634

Adjustment due to change in SAS 1 (2019) 0 0 9,998 0 0 9,998

As of 1 January 2019 5,983,006 581,118,781 166,784,067 9,898,778 0 763,774,634

Increase 0 0 0 22,351,586 409,995 22,761,581


Decrease —30,805 —12,453,289 —1,758,581 —110 0 —14,242,785

As of 31 December 2019 5,988,367 587,638,163 171,493,749 6,773,154 408,722 772,302,155


As of 1 January 2018 2,105 398,061,305 102,522,714 0 0 500,586,124

Depreciation 500 10,080,478 6,192,367 0 0 16,273,345

Decrease 0 —4,831,719 —2,565,146 0 0 —7,396,865

As of 31 December 2018 2,605 403,310,064 106,149,935 0 0 509,462,604

As of 1 January 2019 2,605 403,310,064 106,149,935 0 0 509,462,604

Depreciation 568 10,070,468 6,286,193 0 0 16,357,229

Decrease 0 —12,380,977 —1,656,196 0 0 —14,037,173

As of 31 December 2019 3,173 400,999,555 110,779,932 0 0 511,782,660

CARRYING AMOUNT

As of 1 January 2018 5,945,419 173,123,353 60,808,940 7,680,901 20,000 247,578,613

As of 31 December 2018 5,980,401 177,808,717 60,624,134 9,898,778 0 254,312,030

As of 1 January 2019 5,980,401 177,808,717 60,634,132 9,898,778 0 254,312,030

As of 31 December 2019 5,985,194 186,638,608 60,713,817 6,773,154 408,722 260,519,495

Changes in the right to use the leased equipment (in EUR) Amount

COST

As of 31 December 2018 0

Adjustment due to changes in SAS 1 (2016) 9,998

As of 1 January 2019 9,998



As of 1 January 2019 0

Depreciation 1,643

As of 31 December 2019 1,643

CARRYING AMOUNT




Changes in long-term financial investments (in EUR)

Investments into companies within

the corporate group

Investments in associates

Other investments Total

Carrying value as of 1 January 2018 7,246,976 206,987 199,974 7,653,937

Changes in other comprehensive income 0 0 4,144 4,144

Carrying value as of 31 December 2018 7,246,976 206,987 204,118 7,658,081

Carrying value as of 1 January 2019 7,246,976 206,987 204,118 7,658,081

Changes in other comprehensive income 0 0 8,880 8,880

Carrying value as of 31 December 2019 7,246,976 206,987 212,998 7,666,961

Shares in the associate (in EUR) 31 December 2019 Number of shares or shareholdings

31 December 2018 Number of shares or shareholdings

Informatika, d.d. 206,987 2,479 206,987 2,479

Total 206,987 206,987

The carrying value of rights to equip-ment as of 31 December 2019 amounted to EUR 8,355. Payment amounts for the lease of equipment for the entire lease period (96 months), ending on 31 Janu-ary 2025, are agreed in the terms of the contract and are fixed. Payments of the tenant's obligations from the lease of as-

sets are secured by bills of exchange. The possibility of termination of an individual lease agreement exists in the event of a breach of contractual obligations of the parties or on the basis of mutual agree-ment, while the possibility of renewal of the lease agreement is not specified in the contracts.

11.4.3 Long-term Financial Investments

The company did not hold stakes in other companies for which it possessed unlimited liability for the obligations of the company.

11.4.3.1 Long-term Financial Investments into Companies within the Corporate Group

Long-term investments in Group compa-nies are carried at cost:• ECE d.o.o., Vrunčeva 2a, in the amount

of EUR 5,501,023 (contribution in kind). The basic contribution of shareholder Elektro Celje d.d. was EUR 2,554,399, comprising 74.3256% of its share capital (data on the performance of the company, Section 17.5);

• ELEKTRO CELJE OVI, d.o.o., Vrunčeva 2a, in the amount of EUR 1,745,952 (of which contribution in cash in the amount of EUR 12,519 and contribution in kind in the amount of EUR 1,733,433). The company is 100% owned by the parent company (information on the performance of the company, Section 17.5).

11.4.3.2 Long-term Financial Investments in Associates

The cost of the investment in the associ-ate Informatika d.d. has not changed in comparison with 2018; the last revalua-

tion being made on 31 December 2015, when its impairment in the amount of EUR 103,508 was carried out.

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11.4.3.3 Long-term Financial Investments in Shares and Stakes of Other Companies

Financial investments in shares and stakes of other companies are stated at cost, except for investments in shares of Zavarovalnica Triglav d.d., which are recorded as other long-term financial investments, classified and measured at fair value through equity. Reserves arising from the valuation at fair value through equity, which as of 31 December 2018 amounted to EUR 64,106, increased by EUR 8,880 due to revaluation of the

shares of Zavarovalnica Triglav, d.d. and as of 31 December 2019 amounted to EUR 72,986.

In 2004, the company carried out an im-pairment of its investment in equity of the company Stelkom by EUR 1,243. For investments carried at cost and whose price is not quoted on an active market, the company has estimated that in 2019 there was no need for their revaluation.

11.4.4 Deferred Tax Assets

A tax rate of 19% was used for the calcu-lation of deferred tax liabilities in 2019, which is expected to also be used in 2020 (the same as in 2018). As of 31 De-cember 2019, the company had no oth-

er significant temporary tax differences and tax credits, which could constitute an additional source for the formation of deferred tax assets.

Deferred tax assets (in EUR) 31 December 2019 31 December 2018

Short-term receivables 116,524 140,369

Long term receivables 12,868 15,060

Provisions for long-term benefits 617,789 555,504

Financial assets measured at cost 19,667 19,667

Long-term accrued expenses and deferred revenue for fixed assets acquired free of charge 811,225 881,731

Total 1,578,073 1,612,331

Changes in the deferred tax asset (in EUR)

Short-term receivables

Long term receivables

Provisions for long-term

benefits


Long-term accrued

expenses and deferred

revenue for fixed assets acquired free of charge

Depreciation calculated above tax deductible

Total

As of 1 January 2018 151,939 15,154 550,146 19,667 952,237 1,965 1,691,108

Recognised in the Income Statement –11,570 –94 11,557 0 –70,506 –1,965 –72,578

Recognised in the Comprehensive Income Statement 0 0 –6,199 0 0 0 –6,199

As of 31 December 2018 140,369 15,060 555,504 19,667 881,731 0 1,612,331

As of 1 January 2019 140,369 15,060 555,504 19,667 881,731 0 1,612,331

Recognised in the Income Statement 0 0 28,080 0 0 0 28,080

Recognised in the Comprehensive Income Statement 0 0 34,205 0 0 0 34,205

Reversed in the Income Statement –23,845 –2,192 0 0 –70,506 0 –96,543

As of 31 December 2019 116,524 12,868 617,789 19,667 811,225 0 1,578,073

Other shares and shareholdings (in EUR) 31 December 2019 Number of shares or shareholdings


Zavarovalnica Triglav, d.d. 98,568 2,960 89,688 2,960

Stelkom, d.o.o 114,430 12.64% 114,430 12.64%

Total 212,998 204,118


Inventories (in EUR) 31 December 2019 31 December 2018

Material 1,520,842 1,570,385

Material in processing 469 0

Small tools 95,033 130,240

Total 1,616,344 1,700,625

Changes in revaluation adjustments to short-term receivables for 2019 (in EUR)

As of 1 January 2019

Write-offs Reconciliation As of 31 December 2019Recognition Reversal

Adjustments to receivables - network charge 579,948 —63,122 24,577 0 541,403

Adjustments to receivables - SODO services 18,790 —1,331 1,743 0 19,202

Adjustments to receivables - services 80,520 —64,296 0 —564 15,660

Adjustments for receivables - other 7,658 —6,978 0 —351 329

A Total adjustments to - receivables 686,916 —135,727 26,320 —915 576,594

Adjustments to late charge - network charge 35,144 —14,478 4,275 0 24,941

Adjustments to late charge - SODO services 0 0 560 0 560

Adjustments to late charge - services 2,943 —1,169 0 —187 1,587

Adjustments to late charge - other 3,203 —2,545 0 0 658

B Total adjustments to late charge 41,290 —18,192 4,835 —187 27,746

Adjustments to misc. short-term receivables 10,754 —1,923 116 0 8,947

C Adjustments to misc. short-term receivables

10,754 —1,923 116 0 8,947

TOTAL (A + B + C) 738,960 —155,842 31,271 —1,102 613,287


As of 1 January 2018

Write-offs Reconciliation As of 31 December 2018Recognition Reversal

Adjustments to receivables - network charge 620,052 —48,891 8,787 0 579,948

Adjustments to receivables - SODO services 16,477 —2,278 4,591 0 18,790

Adjustments to receivables - services 89,201 —867 0 —7,814 80,520

Adjustments for receivables - other 16,267 —11,130 2,521 0 7,658

A Total adjustments to - receivables 741,997 —63,166 15,899 —7,814 686,916

Adjustments to late charge - network charge 39,230 —5,174 1,088 0 35,144

Adjustments to late charge - services 4,133 —1,623 433 0 2,943

Adjustments to late charge - other 3,512 —258 0 —51 3,203

B Total adjustments to - receivables 46,875 —7,055 1,521 —51 41,290

Adjustments to misc. short-term receivables 10,981 —936 709 0 10,754

C Adjustments to misc. short-term receivables

10,981 —936 709 0 10,754

TOTAL (A + B + C) 799,853 —71,157 18,129 —7,865 738,960

11.4.6 Receivables

11.4.5 InventoryDuring the regular annual inventory (as of 30 November and 31 12. 2019), the company established a EUR 4,392 defi-cit (EUR 650 in 2018) and a EUR 17,639 surplus (EUR 251 in 2018), which was accounted for within the company's ex-

penses or revenue. Due to obsolescence or changes in quality of the materials, EUR 20,639 worth of inventories were written off in 2019 (EUR 3,680 in 2018). The company had no inventories pledged as security for its obligations.

Total receivables of the company as of 31 December 2019 amounted to EUR 12,142,613 (EUR 12,519,289 on 31 De-

cember 2018), of which EUR 10,801,812 comprised short-term operating receiv-ables. The revaluation adjustment of

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receivables amounted to EUR 613,287, expenses from formation of receivables amounted to EUR 31,271, while revenue from a reversal of adjustments to receiv-ables amounted to EUR 1,102. A part of operating receivables in the amount of EUR 865,431 is insured based on debt collection instruments. Security for re-ceivables and maturity analysis are pre-

sented in Section 11.9.1. No operating receivables were pledged as security for liabilities of the company. The company also disclosed it had no receivables from members of the Management Board and the Supervisory Board and internal own-ers, except for regular invoices for net-work charge and electricity.

11.4.6.1 Long-term Operating Receivables

Long-term trade receivables as of 31 December 2019 in the amount of EUR 1,333,119 included:• Long-term trade receivables in the

amount of EUR 186,584; the majority, in the amount EUR 180,779, refers to the long-term part of the receivable arising from unjustified consumption in 2019 (EUR 154,953 matures in 2021 and the rest in 2022), and EUR 5,805 to trade receivables from customers in compulsory composition,

• Long-term receivables from SODO in the amount of EUR 1,146,535: EUR 1,237,297 from the preliminary reconciliation of the RF 2015, EUR -11,428 from discounting these receivables and one third of final reconciliations of the RF for the period

2014 - 2017 and contractual interst from peliminary reconsiliation of the RF 2015 in the total amount of EUR -79,334. Receivables towards SODO from the preliminary reconciliation of the regulatory year 2015, which following inclusion in the regulatory framework for the period 2019-2021 no longer bear interest, were recorded at their discounted values in line with SAS 5.36, with the method of remuneration of deficits and surpluses from Article 85 of the Network Charges Act (Official Gazette of RS, No. 66/2015, dated 14 September 2015) and an interest rate in the amount of 0.835% equal to the average weighted interest rate on long-term loans on 31 December 2019 taken into account.

11.4.6.2 Short-term Operating ReceivablesAs of 31 December 2019, the company disclosed short-term operating receiv-ables in the amount of EUR 10,801,812; these comprise receivables from Group companies representing 0.3% (receiva-bles from network charges, leases and services to its subsidiaries).

Short-term trade receivables in the amount of EUR 10,174,396, reduced by adjustment of value for trade receiva-bles, included: receivables for mainte-

nance and lease of the electricity infra-structure and provision of services for SODO d.o.o. (EUR 5,722,386) and fully non-matured, receivables from custom-ers for network charges (EUR 3,330,872), trade receivables for services (1,056,328 EUR), receivables for leases, average connection costs, sold fixed assets and waste material (EUR 79,785) and the dis-counted value of receivables from SODO from the preliminary reconciliation of the regulatory year 2015 (–14,975 EUR).

Long-term operating receivables (in EUR) 31 December 2019 31 December 2018

Operating trade receivables 1,412,275 2,307,546

— revaluation adjustment to trade receivables —67,728 —79,263

— discounted SODO receivables —11,428 —22,225

Long-term trade receivables 1,333,119 2,206,058

Long-term operating receivables due from others 7,682 7,125

Total 1,340,801 2,213,183


Short-term operating receivables (in EUR) 31 December 2019 31 December 2018

Short-term operating receivables from companies within the corporate group 28,820 51,155

Short-term receivables from foreign customers 1,050 1,050

Short-term receivables from domestic customers 10,765,965 10,733,729

— revaluation adjustment to trade receivables —576,594 —686,916

— discounted trade receivables from SODO —14,975 —26,052

Receivables for interest 28,148 46,617

— revaluation adjustment to receivables for interest —27,746 —41,290

Advance payments made 37,105 35,500

Short-term trade receivables 10,212,953 10,062,638

Short-term operating receivables due from others 568,986 203,067

— revaluation adjustment to short-term receivables from others —8,947 —10,754

Short-term operating receivables due from others 560,039 192,313

Total 10,801,812 10,306,106

Cash (in EUR) 31 December 2019 31 December 2018

Cash in current accounts 50,854 19,819

Overnight deposits 363,640 490,213

Total 414,494 510,032

Short-term accrued revenue and deferred expenses (in EUR) 31 December 2019 31 December 2018

Short-term deferred expenses 247,694 49,208

Short-term accrued projects 125,974 133,352

Short-term accrued revenue - SODO 1,905,739 2,499,913

VAT from advance payments received 1,766 2,347

VAT from overpayment of network charge 121 33

Total 2,281,294 2,684,853

Short-term interest receivables, reduced by revaluation of interest receivables, referred to default interest for services in the amount of EUR 402. Receivables from others in the total amount of EUR 560,039 included receivables from input

VAT (EUR 2,628), receivables from corpo-rate tax (EUR 455,060), receivables from state institutions (EUR 86,908) and other short-term operating receivables from others (EUR 15,443).

11.4.7 CashThe company had concluded a short-term contract with a commercial bank for an overdraft on its transaction account in the amount of EUR 500,000, valid un-

til 31 December 2019 (EUR 400,000 in 2018), which means there were no nega-tive balances on transaction accounts at the end of the year.

11.4.8 Deferred Expenses and Accrued RevenueSODO's short-term accrued revenue in-cludes the preliminary reconciliation of 2019 in the amount of EUR 1,985,070 and the short-term part of the final ac-counts for the period 2014-2017 and in-

terest for the preliminary deficit of 2015 in the amount of EUR -79,331. Items in the balance sheet are real and do not in-clude undisclosed reserves.

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Provisions and long-term accrued expenses and deferred revenue (in EUR) 31 December 2019 31 December 2018

Provisions for payment of retirement benefits and long-service awards 6,672,190 5,999,591

Provisions for lawsuits 182,578 264,405

Long-term accrued expenses and deferred revenue:— from received government support— fixed assets acquired free of charge— from connection fees

767,1859,342,4492,134,344

757,5489,520,1142,242,337

Total 19,098,746 18,783,995

11.4.9 EquityTotal equity of the company as of 31 December 2019 amounted to EUR 219,909,447 and was 2.7% higher com-pared to the equity as of 31 December 2018. Carrying value of the share as of 31 December 2019 amounted to EUR 9.09 (EUR 8.86 on 31 December 2018), with earnings per share amounting to EUR 0.38 (EUR 0.43 as of 31 December 2018). The state of individual components of the equity structure as of 1 January 2019 and 31 December 2019 and the changes of individual components of the equity structure in 2019 are shown in Section 10.5. Called-up capital of the company is share capital divided into 24,192,425 freely transferable ordinary shares in the amount of EUR 100,953,201 (de-scribed in Section 11.3 (i)). The weighted average number of ordinary shares out-standing during the accounting period is 23,858,576. The ownership structure is presented in Section 5.4.

Share premium includes a general equi-ty revaluation adjustment in the amount of EUR 62,260,317. Profit reserves in the amount of EUR 54,472,191 include: legal reserves in the amount of EUR 4,470,302 (5% of net profit for the years 2003-2018, with EUR 461,664 of profit reserves formed in 2019), reserve for acquired treasury shares and other profit reserves amounted to EUR 50,001,839 (EUR 5,837,019 formed in 2019). Reserves arising from revaluation at fair value as

of 31 December 2019 amounted to EUR -710,867. In 2019, they increased by EUR 62,617 (EUR 34,205 from actuari-al gains identified in forming provisions for retirement benefits, EUR 8,880 from revaluation of shares of Zavarovalnica Triglav, d.d. and EUR 19,532 from the transfer of a proportionate part of ac-tuarial losses recorded while forming provisions for retirement benefits to re-tained earnings) and decreased by EUR 381,276 (EUR 1,687 due to value adjust-ments of surpluses from revaluation of fi-nancial investments for deferred tax and EUR 379,589 due to deferred tax arising from actuarial losses). The nature and purpose of all reserves are presented in Section 11.3 (i).

On the balance sheet date the company held 333,849 treasury shares, repre-senting 1.3799% of all company shares at a cost of EUR 886,371 (i.e. EUR 2.655 per share). By acquiring treasury shares, the company in compliance with the Ar-ticles of Association and paragraph 5 of Article 64 of the Companies Act (ZGD-1), formed reserves for treasury shares from net profit for the financial year 2018 in the balance sheet, which as of 31 De-cember 2019 amounted to EUR 886,371 (same as of 31 December 2018).

Remaining net profit for the financial year amounted to EUR 2,934,605.

11.4.10 Provisions and Long-term Accrued Expenses and Deferred Revenue

Total equity of the company as of

31 December 2019

Remaining net profit for the financial year

EUR

219,909,447

EUR

2,934,605


Changes in provisions and long-term accrued expenses and deferred revenue (in EUR)

Provisions for long-term benefits

Other provisions Long-term accrued costs and deferred revenue

Total

As of 1 January 2018 5,915,537 826,783 12,998,482 19,740,802

Utilization —390,012 0 0 —390,012

Recognition 474,066 220,555 251,514 946,135

Reversal 0 —782,933 —729,997 —1,512,930

As of 31 December 2018 5,999,591 264,405 12,519,999 18,783,995

As of 1 January 2019 5,999,591 264,405 12,519,999 18,783,995

Utilization —323,221 0 0 —323,221

Recognition 995,820 0 461,202 1,457,022

Reversal 0 —81,827 —737,223 —819,050

As of 31 December 2019 6,672,190 182,578 12,243,978 19,098,746

Provisions for long-term service, retirement benefits and death allowances

Liabilities related to long-term employment benefits (in EUR)

Long-service bonuses

Severance payments Death grants Total

As of 1 January 2018 1,558,271 4,210,604 146,662 5,915,537

Current service costs 153,841 208,211 10,563 372,615

Interest expense 18,163 52,579 1,643 72,385

Payments of benefits —171,797 —196,965 —21,250 —390,012

Actuarial surplus 53,747 —39,244 14,563 29,066

As of 31 December 2018 1,612,225 4,235,185 152,181 5,999,591

As of 1 January 2019 1,612,225 4,235,185 152,181 5,999,591




Actuarial surplus 141,582 379,589 7,856 529,027

As of 31 December 2019 1,750,548 4,752,489 169,153 6,672,190

Sensitivity analysis Discount rate Salary growth Staff fluctuation Life expectancy

Change in the percentage point 0.50 —0.50 0.50 —0.50 1.00 —1.00 + 1 year — 1 year

Impact on the state of liabilities (in EUR) —305,722 332,721 337,137 —313,364 –597,665 233,902 7,587 —8,310

Provisions for long-term service, re-tirement benefits and death allowance to employees in the amount of EUR 6,672,190 were formed in the amount of estimated future payments, discount-ed on 31 December 2019. The actuarial calculation on 31 December 2019 took into account the following assumptions: the statistical probability of death and disability, retirement in accordance with the law and staff turnover (3% until the

age of 40 and 1% probability between the ages of 41 to 50, 0% for those over 51 years old), 0.7782% discount rate, sala-ry growth in the electricity sector (2.3%), salary growth in the company (2.3%) and in the Republic of Slovenia (3%), valid employer contribution rate (16.1%) and growth (0.25%) in the amounts provided for in Decree on the tax treatment of re-imbursement of costs and other income from employment.

The expected present value of liabilities also includes actuarial gains/losses due to changes in financial and demographic assumptions and adjustments for expe-rience. During 2019, EUR 323,221 worth

of provisions were used based on actual costs incurred for long-term employee benefits (390,012 EUR in 2018) with EUR 995,820 of additional provisions formed (474,066 EUR in 2018).

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Other provisionsOther provisions in the amount of EUR 182,577 included provisions formed and debited to operating expenses for law-suits; in 2015 provisions were formed in the amount of EUR 19,850 (due to discon-nection of the neutral line), EUR 12,000 in both 2016 and 2017 (due to TS land ownership) and in 2018 in the amount of EUR 138,727 (EUR 55,727 due to the re-lease of the bank guarantee, EUR 18,000 due to damage caused by clearing the routes, EUR 53,000 for a lawsuit over a electricity bleed-through that allegedly caused the fire of a show house and EUR 12,000 for a lawsuit over TS land owner-ship). Compared to the end of the year, they decreased by EUR 81,827 (out-of-court settlement concluded in the case of an action for damages over the eco-nomic damage caused by the power out-age in the amount of EUR 39,900).

Long-term accrued expenses and deferred revenueLong-term accrued expenses and de-ferred revenue regarding fixed assets ac-quired free of charge were formed in the amount of EUR 346,331. EUR 631,989 in long-term deferrals and accruals were reversed for fixed assets acquired free of charge and average connection fees, EUR 4,886 for the use of assigned con-tributions under the Vocational Reha-bilitation and Employment of Disabled Persons Act and EUR 97,276 for use of government subsidies for the purchase of fixed assets. In 2019, the company received a grant in the amount of EUR 114,871 from the European Union to cover costs and expenses incurred in the X-Flex project; their consumption amounted to EUR 3,072.

11.4.11 Financial Liabilities

The carrying value of debt as of 31 Decem-ber 2019 was equal to its amortised cost and is not subject to specific currency and credit risks (Section 11.9.2).

As of 31 December 2019, the company did not have any long-term debts to members of the Management Board, Supervisory Board or internal owners.

Bank loansFinancial liabilities to banks as of 31 December 2019 amounted to EUR 38,983,526, of which short-term parts of long-term loans to banks amounted to EUR 10,584,477.

To finance investments the compa-ny concluded a loan agreement in the amount of EUR 28,000,000 with the Eu-ropean Investment Bank in 2015, with

the credit conditions determined upon absorption of individual tranches (mora-torium of 2 to 36 months, maturity up to 15 years, interest rate etc.). In 2019, the company withdrew EUR 12,630,000 in in-vestment loans from commercial banks with a repayment period of five years and a moratorium of one year to finance investments. The company took advan-tage of the revolving credit amounting to up to EUR 3,000,000 under the contract concluded in 2019 to finance the occa-sional deficit in liquid assets, with a ma-turity of 33 months.

In 2019, the company repaid EUR 11,149,424 of the principal of investment loans, and the amount of interest paid disclosed among financial expenses, amounted to EUR 337,245. Loans were secured by bills of exchange. The aver-

Financial liabilities (in EUR) 31 December 2019 31 December 2018

Long-term financial liabilities to banks 28,399,049 26,353,527

Long-term financial lease liabilities 304,715 107,726

Long-term financial liabilities 28,703,764 26,461,253

Short-term financial liabilities to banks 10,584,477 11,149,424

Short-term financial lease liabilities 298,925 62,367

Short-term payables for dividends paid out 2,631 3,869

Short-term financial liabilities 10,886,033 11,215,660

Total 39,589,797 37,676,913


Changes in lease liabilities recognised by the right to use the assets

Amount (EUR)


Adjustment due to change in SAS 1 (2016) 9,998


Payment of rents —1,606


age weighted interest rate of investment loans as of 31 December 2019 amount-ed to 0.835% (0.899% on 31 December 2018). The company does not secure fluctuations in EURIBOR interest rates by financial instruments. The value of the principal due for payment five years after the balance sheet date amounted to EUR 6,318,140 (EUR 7,073,617 on 31 December 2018).

With the acquisition of long-term loans, the company committed to the achieve-ment of indicators during the financing period, namely by 2030 for the company Elektro Celje: financial debt/equity (low-er than 0.40) and net financial debt to EBITDA (lower than 2.70) and for the El-ektro Celje Group: financial debt/EBITDA

(less than 2.5), financial debt/equity (less than 0.3), EBITDA/financial expenses from financial liabilities (greater than 12) and current ratio (greater than 0.9). The company had fulfilled all its contractual financial obligations as at the balance sheet date.

Short-term financial lease liabilitiesInformatika d.d. will be issuing invoices to the company until the end of 2021 for the unpaid portion of the lease agreements, upgrade and provision of software and the appropriate licenses, which is nec-essary for the operation of IT support of the company, in the total amount of EUR 595,248 (EUR 297,304 matures in 2020, EUR 286,285 in 2021 and EUR 11,659 in 2022).

Among the lease liabilities recognised by the right to use the assets, the company discloses liabilities for leased assets, the

value of which was calculated in accord-ance with SAS 1 (2019).

11.4.12 Operational LiabilitiesLong-term operational liabilities mature in 2021 and refer to the purchase of soft-ware licenses and services performed (ERP - MS Dynamics AX system) in the amount of EUR 135,711 and the use (pro-vision) of Microsoft software licenses in the amount of EUR 171,507 and will be settled in 2021.

Short-term operating liabilities to group companies in the amount of EUR 55,657 regarded liabilities to ECE subsidiaries in the amount of EUR 16,720 (mainly for supplied electricity and gas) and Elektro Celje OVI in the amount of EUR 38,937 (mainly for supplied thermal energy, electricity and for the lease of charging stations).

Short-term operating liabilities to SODO refer to the use of the network in accord-ance with the contract (EUR 3,386,273). Short-term liabilities to employees in-clude accrued and unpaid wages, sev-erance pay and long-service bonuses in December, including liabilities for their contributions (EUR 3,167,144). The com-pany had short-term liabilities to state and other institutions in the amount of EUR 414,522 (liability for VAT charged in the amount of EUR 403,397 and taxes for meeting fees, mandatory practical train-ing and other liabilities to government institutions in the amount of EUR 11,125). Other short-term operating liabilities (EUR 577,362) mainly include liabilities from the deposits submitted by tender-ers from public tenders (EUR 316,409) and liabilities for voluntary supplementa-ry pension insurance (EUR 115,796).

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Short-term accrued expenses and deferred revenue (in EUR) 31 December 2019 31 December 2018

Short-term accrued costs and expenses 554,784 611,144

Short-term deferred revenues 0 9,967

VAT from advance payments made 3,129 2,933

Total 557,913 624,044

According to the balance sheet as of 31 December 2019, the company had settled all outstanding trade payables with other short-term liabilities due for payment within a period of up to three months after the balance sheet date, ex-cept the liabilities arising from deposits of providers which mature in accordance with the contract and short-term por-tions of long-term trade payables.The company had no other liabilities to

the Management Board, Supervisory Board and internal owners except for salaries and the attendance fees of the members of the Supervisory Board and Audit Committee of the Supervisory Board for December 2019. The company did also not grant any loans, advances or guarantees for liabilities to them. The company does not have its liabilities se-cured by real collateral.

11.4.13 Deferred Tax Liabilities

11.4.14 Short-term Accrued Expenses and Deferred Revenue

Long-term and short-term operating liabilities (in EUR) 31 December 2019 31 December 2018

Long-term trade payables 307,218 361,386

Long-term operating liabilities 307,218 361,386

Short-term liabilities to companies within the corporate group 55,657 49,130

Short-term trade payables for fixed assets 1,991,097 2,030,284

Short-term trade payables for current assets 1,272,811 1,583,409

Short-term trade payables for current assets abroad 7,848 39,867

Short-term trade payables for non-invoiced material and services 2,592 16,124

Short-term operating liabilities from operations for third-party account (to company SODO) 3,386,273 3,864,248

Short-term liabilities to employees 3,167,144 3,143,468

Short-term liabilities to state and other institutions 414,522 972,907

Short-term liabilities based on advance payment 119,388 100,190

Other short-term operating liabilities 577,362 606,771

Short-term operating liabilities 10,994,694 12,406,398

Total 11,301,912 12,767,784

Deferred tax liabilities (in EUR) 31 December 2019 31 December 2018

Financial assets measured at fair value 13,867 12,180

Financial assets measured at fair value 13,867 12,180

Changes in deferred tax liabilities (in EUR) Financial investments


Recognised in the Comprehensive Income Statement 787



Recognised in the Comprehensive Income Statement 1,687



Contingent Liabilities (in EUR) 31 December 2019 31 December 2018

Ongoing litigation procedures 52,317 1,460,498

Bank guarantees received 19,539 19,539

Total 71,856 1,480,037

Contingent assets and other off-balance-sheet records (in EUR) 31 December 2019 31 December 2018

Contingent assets:

Bank guarantees received 2,981,920 2,552,878

Damage claims 84,722 50,479

Receivables from partners in companies deleted from the register 235,776 283,626

Allowance for employing disabled persons 108,520 113,033

Total 3,410,938 3,000,016

Other off-balance-sheet records:Infrastructure owned by SODO d.o.o. 3,132,909 3,275,596

Short-term accrued expenses relate to accrued labor costs for unused annu-al leave of employees for 2019 in the amount of EUR 545,393 (EUR 598,704 for 2018) and accrued interest expens-

es of banks in the amount of EUR 9,391 (EUR 12,440 in 2018). Short-term de-ferred revenue decreased by EUR 9,967 in 2019 (write-off due to the termination of attachment of funds of the debtor).

11.4.15 Contingent Liabilities

Contingent liabilities which on 31 12. 2019 did not meet the conditions for rec-ognition in the balance sheet items are included in off-balance sheet records. The amount of outstanding litigation pro-cedures where Elektro Celje d.d. is the defendant decreased by EUR 1,408,181 (99.8% of which concluded in favour of the company) due to the concluded payment of compensation proceedings,

while there were no newly initiated liti-gation procedures. The major part in the amount of EUR 1,402,004 was related to the shareholders' claim for the annul-ment of the decision on the distribution of dividents from the distributable profit for 2016. The claim was rejected finally. The company does not disclose other off-balance sheet contingent liabilities as defined by the Companies Act (ZGD-1).

11.4.16 Potential Receivables and Other Off-Balance Sheet Items

Assets that were included in off-balance sheet records after the balance sheet of 31 December 2019 do not qualify for rec-ognition among the balance sheet items. Claims to insurance companies in the amount of EUR 84,722, which by 31 De-cember 2019 had not been paid are shown as an off-balance sheet item prior to liquidation of the claim by the insur-ance company (at that time receivables amounting to the value of recognised compensation are transferred to the bal-

ance sheet total). The share of damages paid from claims for damages disclosed as off-balance-sheet items on 31 Decem-ber 2018 amounted to 31.9%.

The carrying value of fixed assets trans-ferred to SODO d.o.o. on the basis of a mutual agreement on the transfer and acquisition of fixed assets financed from funds from average connection fee costs and sales contracts amounted to EUR 3,132,909.

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11.5 Significant Events After the Balance Sheet DatePursuant to Article 7 of the Communi-cable Diseases Act, Slovenia declared an epidemic on 12 March 2020 due to an increase in the number of COVID-19 coronavirus infections. The adoption of various measures by the state and the company and the anticipated impact of the epidemic on the operation of the company in the coming months is pre-sented in Section 4.1.

There were no other events following the balance sheet date and up to the date of the auditor’s report which would materi-ally affect the assets and liabilities of the company and thus impair the ability of the balance sheet users to perform a rel-evant evaluation and reach an informed decision.

11.6 Disclosure of Items in the Income StatementThe income statement is a fundamental financial statement that provides a faith-ful and fair account of the income for the fiscal year 2019. The company uses

Version I of SAS 21.6, and as such it re-ports the costs separately by functional groups in accordance with SAS 21.20:

Operating costs and expenses from re-valuation may be direct, meaning they

can be directly linked to arising business impacts (direct costs), or general.

11.6.1 Sales Revenue

The company generated net sales rev-enue in the amount of EUR 50,831,032 in the domestic market and no revenue in international markets. They mainly include revenue from regulated activi-

ties according to thecontract and per-taining annexes with SODO d.o.o. for 2019 in the amount of 47,862,849 EUR; EUR 25,014,020 for the lease and main-tenance of electricity infrastructure

Type of expenses (in EUR) Direct costs General costs Total

2019 2018 2019 2018 2019 2018

Cost of material 10,340,124 9,604,429 124,517 104,777 10,464,641 9,709,206

Cost of services 4,634,718 4,710,770 1,408,406 1,339,053 6,043,125 6,049,823

Labour costs 19,392,410 19,176,061 3,559,596 3,572,498 22,952,006 22,748,559

Depreciation 16,263,952 16,982,829 1,597,993 370,333 17,861,945 17,353,162

Revaluation expenses 151,076 127,486 44,525 9,155 195,600 136,641

Other expenses 247,458 246,671 80,758 78,316 328,216 324,987

Total 51,029,738 50,848,246 6,815,795 5,474,132 57,845,533 56,322,378

Net sales revenue (in EUR) 2019 2018

Revenue from the leasing of infrastructure and SODO services 47,862,849 48,019,782

Revenue from provision of services for customers 2,302,327 1,826,727

- revenue from the sale of services to companies within the corporate group 40,311 80,814

Revenue from unpaid provision of services to customers 125,974 133,352

Revenue from lease 539,882 532,846

- revenue from lease to companies within the corporate group 107,517 104,147

Total 50,831,032 50,512,707


Other operating income (in EUR) 2019 2018

Revenue from elimination of provisions 41,927 782,933

Revenue from reversal of long-term accrued expenses and deferred revenue 631,989 624,335

- of which acquisition of fixed assets free of charge 523,997 516,343

- of which average connection fees 107,992 107,992

Other revenue associated with business effects 200,889 242,048

Compensation received from insurance companies and others 349,232 138,956

Revaluation operating revenue 104,227 331,953

Total 1,328,264 2,120,225

Cost of material (in EUR) 2019 2018

Cost of material for the implementation of self-managed investments 8,040,892 7,577,772

Cost of material used in provision of services to customers 608,563 615,765

Cost of material used in maintenance 635,430 469,196

Cost of fuel and energy 735,314 726,104

Write-offs of small tools 236,306 168,043

Cost of material for damage repair 153,662 125,054

Other cost of material 54,474 27,272

Total 10,464,641 9,709,206

and EUR 22,848,829 for implementa-tion of the services for SODO , with EUR 1,985,070 comprising a deviation in

2019, identified through the preliminary reconciliation.

11.6.2 Capitalised Own ServicesThe company generated 22.2% of its revenue in the amount of EUR 15,164,716 (EUR 15,193,945 in 2018) through the

construction of own fixed assets. The company does not disclose profit in this regard.

11.6.3 Other Operating RevenueOther revenue associated with prod-ucts and services in the amount of EUR 200,889 include incentives for employ-ment of people with disabilities and awards for the employment of disabled persons above the statutory quota in the amount of EUR 85,370 (EUR 103,060 in 2018) and subsidies for staff from EU

funds, drawing on government subsidies for fixed assets and grants totalling EUR 115,519 (EUR 138,988 in 2018). Operating revenue from revaluation relate mainly to revenue from the sale of fixed assets and dismantled material in the amount of EUR 77,290 (EUR 324,074 in 2018).

11.6.4 Costs of Materials and Services

In accordance with Article 57 of the Com-panies Act (ZGD-1), the company is subject to mandatory audit. BDO Revizija, d.o.o., was appointed as the company auditor for the annual report of the 2019 fiscal year. An auditing contract for the consolidated

annual report 2019 in the amount of EUR 10,480 (excluding VAT) was signed with said auditing firm. Cost of other services comprising guarantees in 2019 amounted to EUR 960.

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11.6.5 Labour Costs

As at the balance sheet date, the com-pany recognised EUR 545,393 in labour costs from unused annual leave in 2019, including related payables (EUR 598,704 in 2018). Other labour costs in the amount of EUR 2,701,560 included EUR 776,799 for meal allowance for employ-

ees, EUR 664,834 for travel to and from work, EUR 1,203,439 for annual leave, EUR 26,059 for death allowance and EUR 30,429 for other remuneration.

Cost of services (in EUR) 2019 2018

Cost of maintenance services 2,106,098 2,099,076

Cost of IT 1,030,100 1,123,980

Cost of payments, bank services and insurance premiums

846,572 1,121,753

Cost associated with provision of services to customers

379,755 191,933

Cost of intellectual and personal services 343,923 337,618

Cost of transport services 253,585 243,236

Cost of services of damage repair 122,928 74,146

Cost of membership fees 76,718 78,582

Cost of studies 53,865 46,715

Rent 41,370 40,798

Other cost of services 788,211 691,986

Total 6,043,125 6,049,823

Labour costs (in EUR) 2019 2018

Cost of salaries 16.278.950 16.224.669

Cost of supplementary employee retirement insurance 789.386 805.326

Cost of employer contributions and other levies on salaries

2.654.998 2.684.694

Other labour costs 2.701.560 2.592.945

Provisions for long-service awards and severance pays 527.112 440.925

Total 22.952.006 22.748.559

Number of employees according to the educational structure in 2019:

No. of employees 1 January 2019

Share No. of employees 31 December 2019

Share

Educational level I 3 0.5% 2 0.3%

Educational level II 3 0.5% 3 0.5%

Educational level III 19 3.0% 19 3.0%

Educational level IV 181 28.5% 176 28.0%

Educational level V 239 37.7% 233 37.1%

Educational level VI/1 67 10.6% 72 11.5%

Educational level VI/2 60 9.5% 60 9.6%

Educational level VII 48 7.6% 50 8.0%

Educational level VIII/1 13 2.1% 12 1.9%

Educational level VIII/2 1 0.2% 1 0.2%

Total 634 100.0% 628 100.0%


Write-offs (in EUR) 2019 2018

Depreciation 17,860,302 17,353,162

Amortisation and depreciation of rights of equipment use 1,643 0

Operating expenses from revaluation of tangible and intangible fixed assets 123,204 120,991

Operating expenses from revaluation of current assets 72,396 15,650

Total 18,057,545 17,489,803

Depreciation according to groups of assets (in EUR)

Intangible fixed assets

Rights on immovable property

Buildings Equipment Right to use equipment

Total

Depreciation for 2019 1,504,716 568 10,070,468 6,284,550 1,643 17,861,945

Depreciation for 2018 1,079,817 500 10,080,478 6,192,367 0 17,353,162

Name of depreciation group

FA useful life since 1 January 2019

Depreciation rate 2019


Depreciation calculated for 2019 (in EUR)

Depreciation estimated for 2018 (in EUR)

Change in accounting

estimate (in EUR)

TC hub equipment and high-frequency apparatus

5 years 20% 14.29% 214,804 153,478 61,326

TOTAL 214,804 153,478 61,326

11.6.6 Write-offs

Depreciation It represents 30.6% of the total costs and expenses of the company:

On 1 January 2019, the expectations re-garding the useful life of certain tangible fixed assets related to the TC hub equip-ment and HF apparatuses have changed.

The change in the accounting estimate amounted to EUR 61,326 and is recorded as an increase in depreciation costs un-der this heading.

Operating expenses from revaluation of fixed assetsThey relate to losses upon the elimina-tion of fixed assets in the amount of EUR 123,094 (EUR 120,991 in 2018) and the elimination of unfinished investments in the amount of EUR 110.

Operating expenses from revalua-tion of current assets In 2019, they were realised in the amount of EUR 72,396 (EUR 15,650 in 2018) and included revaluation adjustments to stocks of material in the amount of EUR 22,227 (EUR 3,680 in 2018), short-term receivables in the amount of EUR 30,169 (EUR 10,264 in 2018) and the write-off of trade receivables in the amount of EUR 20,000 (EUR 1,706 in 2018).

11.6.7 Other Operating ExpensesOther operating expenses in the amount of EUR 328,216 (EUR 324,987 in 2018) include charges for use of construc-tion land in the amount of EUR 173,753 (EUR 170,004 in 2018), court fees in the amount of EUR 30,922 (EUR 37,352 in

2018), awards to pupils and students on practical training, including reimburse-ments and contributions in the amount of EUR 15,266 (EUR 14,511 in 2018), and other operating expenses.

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11.6.8 Financial Profit or Loss

Financial revenue from shares for 2019 amounted to EUR 1,007,400, of which EUR 1,000,000 referred to the payment of participation in the profit of the sub-sidiary ECE (the same for 2018), with financial revenue from shares in other companies mainly regarding dividends paid out by Zavarovalnica Triglav d.d. in the amount of EUR 7,400.

Financial revenue from interest on grant-ed loans to others in the amount of EUR 9,623 includes accrued contractual in-terest for instalment repayment of un-authorised consumption, determined in 2019.

The accrued interest costs on asset leas-es amount to EUR 82.

Financial expenses from operating lia-bilities amounted to EUR 89,434 (EUR 73,034 in 2018). They mainly include net interest expenses in the amount of EUR 89,119, calculated by the actuarial esti-mation as on 31 December 2019 and re-gard the expected present value of liabil-ities for long-service awards, severance pays and solidarity aid (EUR 72,385 in 2018).

11.6.9 Other Revenue

Financial revenue and expenses (in EUR) 2019 2018

Financial revenue from shares 1,007,400 1,007,400

Finance revenue from shares in companies within the corporate group 1,000,000 1,000,000

Financial revenue from shares in other companies 7,400 7,400

Financial revenue from loans granted 10,008 68

Financial revenue from loans granted to companies within the corporate group 292 0

Financial revenue from deposit interest 93 68

Financial revenue from loans granted to others 9,623 0

Financial revenue from operating receivables 50,007 91,583

Financial revenue from default interest arising from trade receivables 28,133 41,114

- of which for network charges 24,631 29,611

- of which for services 3,496 2,120

- of which for other trade receivables 6 9,383

Financial revenue from the discounting of receivables from SODO 21,874 50,469

Total financial revenue 1,067,415 1,099,051

Financial expenses from financial liabilities —323,567 —344,388

Financial expenses related to loans from banks —323,485 —344,388

Financial expenses from other financial liabilities —82 0

Financial expenses from operating liabilities —89,434 —73,034

Financial expenses from other operating liabilities —89,434 —73,034

Total financial expenses —413,001 —417,422

Total 654,414 681,629

Other income (in EUR) 2019 2018

Collected receivables from earlier periods, previously written off

446 791

Received payments of court fees, and compensations

7,740 8,180

Received contractual penalties 43,135 0

Other revenue 989 1,560

Total 52,310 10,531


Other expenses (in EUR) 2019 2018

Compensations 7,382 274,579

Donations 13,673 8,858

Annuities, reimbursement claims 11,970 11,512

Fines 2,342 0

Other expenses 8 59

Total 35,375 295,008

CASH FLOW (in EUR) 2019 2018

Cash flow from operating activities 11,100,628 13,942,022

Cash flow from investing activities —9,118,391 —8,420,322

Cash flow from financing activities —2,077,775 —5,182,729

Net cash flow for the period —95,538 338,971

Opening balance 510,032 171,061

Closing balance 414,494 510,032

11.6.10 Other Expenses

11.6.11 Profit or LossOperating profit amounted to EUR 9,478,479 (EUR 11,504,499 in 2018). Taking into account financial revenue and expenses, the net operating prof-it from ordinary operation amounted to EUR 10,132,893 (EUR 12,186,128 for 2018). Together with other revenue and

expenses from extraordinary opera-tions, and taking into account the cor-porate income tax, which amounted to EUR 828,545 and deferred taxes in the amount of EUR 68,463, net profit for 2019 amounted to EUR 9,252,820 (EUR 10,428,778 for 2018).

11.6.12 Statement of Comprehensive IncomeTotal comprehensive income for the accounting period amounted to EUR 8,914,629 and was due to changes in reserves resulting from valuation at fair value (EUR 7,193) and changes in other

components of comprehensive income (EUR -345,384) EUR 338,191 lower than the net profit for the accounting period (EUR 9,252,820).

11.6.13 Income TaxThe company was liable for payment of corporate tax in the amount of EUR 828,545 in the fiscal year 2019 (EUR 1,400,295 in 2018), recognised on the

basis of the tax return. The corporate tax rate in Slovenia amounted to 19% in 2019 (the same as in 2018).

11.7 Disclosure of Items in the Income Statement

Net cash flow for the period January-De-cember 2019 amounted to -95,538 EUR. The opening cash balance as of 1 Jan-

uary 2019 amounted to EUR 510,032, while the closing balance as of 31 De-cember 2019 amounted to EUR 414,494.

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In 2019, the company created:• EUR 105,246,055 in inflows from op-

erating activities, mainly from network charges (EUR 39,318,378), receiva-bles for lease and services pursuant to the agreement with SODO d.o.o. (EUR 59,006,011), services to customers (EUR 1,933,819), receivables from lease payments (EUR 637,116) and services to customers on behalf and for the ac-count of SODO d.o.o. (257,847 EUR);

• EUR 2,094,820 in inflows from invest-ing activities, which include received payment for participation in the profits of the subsidiary ECE (EUR 1,000,000), dividends received from Zavaroval-nica Triglav d.d. (EUR 7,400), inflows from received interest on deposits and the positive balance of assets on the current account (EUR 385), inflows from the disposal of tangible fixed as-sets (EUR 187,035) and repayment of the loan given to the subsidiary (EUR 900,000);

• EUR 29,883,839 in inflows from fi-nancing activities, which include the use of long-term loans from commer-cial banks for financing investments (EUR 12,630,000), receipts from multi-ple drawings of the long-term revolving credit facility in the amount of EUR 3 million (EUR 17,095,000) and the use of a limit (EUR 158,839).

With disposable assets (EUR 137,224,714), the company financed outflows in the amount of EUR 137,320,252:• EUR 94,145,427 in outflows from oper-

ating activities, which mainly include expenditures for the purchase of ma-terials and services (EUR 62,717,821), salaries together with expenditures for contributions and taxes (EUR 22,320,620), value added tax (EUR 5,547,048), corporate income tax for 2018 and advance payments in 2019 (EUR 1,911,204), expenditure on volun-tary supplementary pension insurance (EUR 788,091), etc.

• EUR 11,213,211 in outflows from in-vesting activities, which include ex-penditures for the acquisition of intan-gible and tangible fixed assets (EUR 10,313,211) and a loan given to a sub-sidiary (EUR 900,000);

• EUR 31,961,614 in outflows from fi-nancing activities, which refer to ex-penditure on interest paid on loans and the use of the limit (EUR 337,443), repayments of investment loans (EUR 11,149,424), multiple repayments of the leased revolving credit facility (EUR 17,095,000) and used limit values (EUR 158,839) and dividend pay-outs (EUR 3,220,908).

11.8 Disclosure of Items in the Statement of Changes in EquityThe state of individual components of the equity structure as of 1 January 2019 and 31 December 2019 and changes in individual components of the equity structure in 2019 are shown in the Table 10.5 and described in Sections 11.3 (i) and 11.4.9.

Elektro Celje must comply with the rules of the profession to provide quality and reliable electric power supply and sus-tainable operation, maintenance and de-velopment of an efficient electric power distribution system. Long-term access to the distribution network, sufficient trans-

mission capacity of the network, reliabil-ity of supply, adequate voltage quality, short circuit control and safe and reliable operation are only possible through con-tinuous investment in the development of the distribution network. Because of the need to ensure resources for the realisation of the planned volume of in-vestments, among which other profit re-serves are important and in accordance with the provisions of the Companies Act (ZGD- 1) and the Articles of Association of the company, other profit reserves in the amount of EUR 5,837,019 were formed in 2019.


Operating receivables (in EUR) 31 December 2019 31 December 2018

Long-term operating receivables 1,340,801 2,213,183

Short-term operating receivables 10,801,812 10,306,106

Total 12,142,613 12,519,289

Distributable profit and proposed allocation (in EUR) 2019 2018

a Net income/profit for the year 9,252,820 10,428,778

b Retained net profit/retained net loss (deductible item) –19,532 –26,009

c Increase in revenue reserves pursuant to decisions by the management and supervisory bodies (legal reserves, reserves for own shares and shareholdings and statutory reserves)

461,664 770,711

č Increase in revenue reserves pursuant to decisions by the management and supervisory bodies (other revenue reserves)

5,837,019 6,411,150

DISTRIBUTABLE PROFIT (a + b - c - d) 2,934,605 3,220,908

The Management Board of Elektro Cel-je proposes that the distributable profit for 2019 amounting to EUR 2,934,605 is

allocated in full to the payment of divi-dends.

11.9 Financial Risk ManagementThe stability of long-term operations is ensured through active risk manage-ment. Risk identification is based on the company's strategic and annual goals. Financial risk management relates to management of credit, market, equity, and liquidity risk. Exposure to individu-al types of risks and risk management measures are assessed and implement-ed on the basis of their effects on cash

flows and financing expenses. Financial risks, in accordance with the adopted risk management policy are regularly assessed along with the suitability of the measures implemented to manage them. The method and methodology of finan-cial risk management are presented in more detail in the Business Report under Risk Management Section 3.4.

11.9.1 Credit RiskMaximum exposure to credit risk aris-es from financial assets, with the most important regarding non-fulfilment by debtors due to non-payment or untime-ly settlement of liabilities by electricity consumers and customers for services rendered being trade receivables.

Management of receivables and debt recovery is implemented in accordance with the provisions of the Energy Act (EZ-1), Decree on General Conditions for the Supply and Consumption of Electricity (SPDOEE) and the provisions of the Rules on the financial operations of the com-pany. Risk management activities are focused on continuous monitoring and accounts receivables security and active collection of overdue and unpaid receiva-bles and the charging of default interest in case of delayed payment. The pro-

cesses for managing receivables, recov-ery of debts, the responsible persons and channels and instruments for credit risk management are defined in the Rules on the financial operations of the company.

The volume of operating receivables as of the balance sheet date 31 Decem-ber 2019 compared to the end of 2018 decreased by 3%, mainly due to the one-third payment of receivables from the preliminary reconciliation of the regulatory year 2015, and final recon-ciliations and corresponding interest from the years 2014–2017 totalling EUR 1,074,879. A part of long-term receiva-bles from SODO, which matures in 2020 (in the amount of EUR 1,062,805) was included under short-term operating re-ceivables, comprising 89% of the compa-ny's short-term assets.

Maximum exposure to credit risk arises from financial

assets, with the most important regarding non-

fulfilment by debtors due to non-payment or untimely settlement of liabilities by electricity consumers and

customers for services rendered being trade

receivables.

1 2 3E l e k t r o C e l j e i n 2 0 1 9

The policy for insuring receivables in 2019 remained unchanged compared to 2018. Trade receivables for the net-work charge are not insured as it is not envisioned by SPDOEE. In line with the company's risk management system, insurance of receivables is required from riskier business partners. According to the balance sheet as of 31 December 2019, EUR 865,431 (EUR 434,933 of re-ceivables in 2018) of total receivables were insured based on debt collection instruments.

Exposure to credit riskAs of 31 December 2019, the company had EUR 520,519 (EUR 706,778 in 2018) of receivables for network charges, ser-vices, lease, average connection fees and late charges with maturities longer than 365 days (bankruptcies, compul-sory compositions, lawsuits and prop-erty manager debt under the Housing Act and revaluation adjustment for the aforementioned) and EUR 9,904,486 (EUR 9,654,402 in 2018) of non-matured receivables. The percentage of unrecov-ered receivables from 2018 which remain unsettled one year after their due date is 0.02%. Following control, the risk of expo-sure from customer non-payment is low.

The maturity structure of receivables takes into account short-term operating receivables due from group companies, from customers and interest receivables, without revaluation adjustments to the aforementioned.

In 2019, a revaluation adjustment of short-term receivables in the amount of EUR 31,271 was performed, with a reversal of revaluation of EUR 1,102 im-plemented on short-term receivables, (in 2018 additional revulation adjustments in the amount of EUR 18,129 and a rever-sal of revaluation in the amount of EUR 7,865 were made). Until 1 January 2019, the company, in accordance with SAS, had been carrying out a valuation ad-justment in the total amount for receiv-ables in bankruptcy and composition proceedings, for receivables which are the subject of litigation, and for receiv-ables whose due date has exceeded 90 days on the balance sheet date. In 2019, the company in addition to receivables on network charges and receivables on default interest for network charges also adjusted values for non-matured receiva-bles and receivables with maturities up to 90 days, in the amount of the calculated

percentage of non-payments based on the average monthly balance of receiva-bles of the previous three years and the predicted IMAD economic growth in 2020. Without a change in the revaluation ad-justments, the adjustments to network charge receivables as of 31 December 2019 would amount to EUR 59,323 less and the adjustments to receivables for late payment interest on network charge to EUR 4,303 less. Receivables written off amounted to EUR 155,842 (EUR 71,157 of receivables in 2018). Revaluation adjust-ment of receivables is explained further in Section 11.3 (f).

In 2019, EUR 462,193 in invoices for un-justified consumption of electricity was charged (EUR 14,321 in 2018); Most of the receivables were settled by repay-ment in instalments, and the payment was insured based on debt collection in-struments. Revenue under this heading amounted to EUR 143,989 (EUR 24,029 in 2018).

The company is also exposed to credit risk from financial investments. Cred-it risk arising from investments refers to the risk of higher fluctuations in the

Maturity analysis of short-term trade receivables (in EUR) 31 December 2019

Share in % 31 December 2018

Share in %

Receivables not yet due 9,904,486 91.5 9,654,402 89.1

Receivables overdue less than 30 days 361,474 3.3 411,208 3.8

Receivables overdue by 31—60 days 17,388 0.2 31,711 0.3


Receivables due by 91—180 days 5,824 0.1 8,289 0.1


Receivables overdue by over 365 days 520,519 4.8 706,778 6.5

Total 10,823,983 100.0 10,832,551 100.0


value of financial instruments. Reduced creditworthiness affects the liquidity of financial instruments and complicates the possible sale of the investment. In extreme cases, credit risk may lead to an investment being worthless. Financial assets, the prices of which are quoted in an active market and whose fair val-ue can be reliably measured, are meas-ured at fair value (i.e. 2,960 shares of Zavarovalnica Triglav d.d. in the amount of EUR 98,568), and others at cost val-

ue. On the balance sheet date, the com-pany's management assesses whether there are objective grounds for impair-ment of financial investments into an equity instrument. The value that rep-resents the maximum exposure to such risk is the total value of the investment. Exposure to the risk of reduction in the value of long-term financial investments below their cost cannot be hedged with financial instruments (Section 11.3 (c)).

11.9.2 Market RiskWhen financing current operations and in the case of investment activities in the context of market risk the company is exposed to, risks of changes in interest rates on acquired loans is of utmost im-portance. Risk arising from fluctuations in interest rates and the resulting impact on interest sensitive financing liabilities may lead to an increase or decrease in costs in this regard.

Exposure to interest rate riskExposure to interest rate risk only re-gards the (un)favourable trend of EURI-BOR reference interest rates, while the company has available to it at all times the option of early repayment or refi-nancing of long-term debt without ad-ditional costs. Exposure to interest rate risk has been assessed as low. Accord-ing to the balance sheet as of 31 Decem-ber 2019, 46.64% of financial liabilities were tied to an interest rate tied to the 1-, 3- or 6- month EURIBOR (48.6% on 31 December 2018). The company does not secure fluctuations in EURIBOR interest rates by financial instruments.

In harmonising contracts, the company rejects all provisions of contracts that would allow the lender to subsequently change interest rates (increased costs clauses) due to changed conditions in the money and capital markets, chang-es in regulations and instructions of any governmental, fiscal or monetary author-ities, changes in the borrower’s credit ranking etc. The company borrows in ac-cordance with the Decree on the Terms and Conditions and Methods of Borrow-ing by Legal Entities referred to in Article 87 of the Public Finance Act. In accord-ance with the Decree, the consent of the Ministry of Finance is required for com-mencement of any and each borrowing

procedure and for signing of contracts with banks.

The costs of managing the interest rate risk at a 100% (interest rate hedging or taking out all loans at a higher fixed in-terest rate not based on the EURIBOR) would outweigh the benefits. The com-pany in 2020 does not expect a major increase in the EURIBOR, which is pro-jected to remain negative. The average weighted interest rate on loans as of 31 December 2019 amounted to 0.835% (0.889% in 2018). The reduction in the average weighted interest rate is the result of an additional debt in 2019 at an interest rate lower than the average weighted interest rate achieved in 2018 and due to repayments of the reduction in the share of loans with higher interest rates.

Cash flow sensitivity analysisSensitivity to changes in interest rates is assessed using the sensitivity analysis method. Given the volume of acquired loans as at 31 December 2019 and the projected negative trend for EURIBOR, a change in the interest rate (EURIBOR) of 0.3% (30 basis points) would result in a higher expenses for interest paid. The probability of larger change in the EURI-BOR is estimated as low. Low sensitivity to changes in interest rates is related to the interest rate clauses in credit agree-ments, as in the case of a negative value of EURIBOR for the calculation of interest for the interest period the value of EURI-BOR = 0 is taken into account, and to an increased volume of loans with a fixed interest rate comprising 53.4% of total loans as of 31 December 2019 (51.4% of total loans as of 31 December 2018). This analysis assumes that all other variables remain unchanged.

1 2 5E l e k t r o C e l j e i n 2 0 1 9

11.9.3 Liquidity RiskThe company Elektro Celje is exposed to liquidity risk in its operations, namely that at any given time it will not be able to meet its obligations. Exposure is meas-ured based on the balance of inflows and outflows.

Exposure to liquidity riskAn important aspect of managing liquid-ity risk (including short-term risk), which is rated as low, is planning cash flows performed on a daily, weekly, monthly and annual basis by the company Elek-tro Celje.

The dynamics of investment and volume of collected network charges for the dis-tribution network impact cash flow risk, as due to a deficit in network charges in 2015, the preliminary reconciliation for contractual obligations to SODO will not be settled until the regulatory period

2019-2021. The receivable is stated in the company’s financial position state-ment at a discounted value, which was calculated for the period after inclusion of receivables in the regulatory frame-work, when in accordance with the Net-work Charges Act their remuneration will cease. The preliminary reconciliation for 2019 which was sent on 15 March 2020 will be settled within the due date of April 2020, as the volume of collected network charges from users in 2019 is sufficient to cover the eligible costs of the system operator. The payment of contractu-al interests charged to SODO from the preliminary reconciliation of the regu-latory year 2015 in the amount of EUR 205,584 and final reconciliations for the period 2014-2017 in the amount of EUR -443,582 was included in the regulatory period 2019-2021.

Since May 2019, the company can draw from the long-term revolving loan in the amount of EUR 3,000,000 to ensure dai-ly liquidity and in the event of increased liquidity needs. In 2015, the company signed a contract with the EIB for EUR 28 million to finance investments in the period 2015-2017, in 2018 a credit agreement with a commercial bank in the amount of EUR 10 million and in 2019

in the amount of EUR 10.7 million. By providing appropriate financing sources and favorable values of financial indica-tors, the company manages liquidity risk and the risk of failure to implement finan-cial commitments, the risk is therefore assessed as very low. Hedging of loans and financial commitments to banks is explained in Section 11.4.11.

Preliminary and final reconciliations received Carrying value as of

1 January 2019

Carrying value as of 31

December 2019

Payment in the regulatory year

2020


2021


2022

1 SODO - preliminary reconciliation of the regulatory year 2015

3,426,391 2,379,433 1,142,136 1,142,136 95,161

2 SODO - contractual interest for PRO 2015 205,584 137,056 68,528 68,528 0

3 Final reconciliation of the regulatory year 2014 —8,640 —5,760 —2,880 —2,880 0

4 Final reconciliation of the regulatory year 2015 80,205 53,470 26,735 26,735 0



7 Total deviations from the Regulatory Framework 3,188,393 2,220,768 1,062,805 1,062,802 95,161

Maturity of financial liabilities to banks as of 31 December 2019 (in EUR)

Carrying value as of 31 December 2019

Maturity

up to 1 year from 1 year to 5 years over 5 years

1. Investment financing loans 38,983,527 10,584,478 22,080,909 6,318,140

Total financial liabilities to banks 38,983,527 10,584,478 22,080,909 6,318,140

Maturity of financial liabilities to banks as of 31 December 2018 (in EUR)


Maturity


1. Investment financing loans 37,502,951 11,149,424 19,279,910 7,073,617



11.9.4 Equity RiskThe purpose of equity management is to ensure a high credit rating, long-term solvency, capital adequacy and favour-able financing indicators, and to maxi-mize the value of shares and dividends to shareholders. The equity to total lia-bilities rate in 2019 was 75.7% (75.4% in 2018).

Changes in equity are monitored using the financial leverage indicator, calculat-ed by dividing (net) financial liabilities by equity. The company includes long-term and short-term liabilities to banks and other financial liabilities, less cash and

cash equivalents in net financial liabili-ties. When making decisions regarding equity management, the company also observes all the remaining financial com-mitments pursuant to credit agreements, which are described in Section 11.4.11. The company had fulfilled all contractual financial commitments as at the balance sheet date.

Exposure to equity riskThe company's net debt to equity ratio is low. Equity risk over a longer period is estimated as small.

Financial leverage indicator (in EUR) 31 December 2019 31 December 2018

1. Loans granted and other financial liabilities 39,589,797 37,676,913

2. Minus cash and cash equivalents 414,494 510,032

3. Net financial liabilities 39,175,303 37,166,881

4. Equity 219,909,447 214,215,725

5. Net financial liabilities/equity indicator 17.8% 17.5%

11.10 Transactions with Associated Parties

11.10.1 Transactions with Group Companies

Item/year (in EUR) 2019 2018

ECE d.o.o. Elektro Celje OVI, d.o.o. ECE d.o.o. Elektro Celje OVI, d.o.o.

Assets

Short-term trade receivables 10,455 18,364 10,400 40,755

Deferred expenses and accrued revenue 0 0 728 82

Total assets 10,455 18,364 11,128 40,837

Liabilities

Short-term trade payables 16,503 38,937 17,479 31,546

Other operational liabilities 217 0 105 0

Total liabilities 16,720 38,937 17,584 31,546

Revenue

Net sales revenue 104,289 43,539 103,692 81,268

Financial revenue 1,000,292 0 1,000,000 0

Revaluation revenue 0 0 0 1,034

Total revenue 1,104,581 43,539 1,103,692 82,302

Costs and expenses

Cost of material 138,684 147,787 116,831 142,011

Cost of services 0 33,597 6,131 876

Total costs and expenses 138,684 181,384 122,962 142,887

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11.10.2 Data on Groups of Persons

Gross receipts of groups of persons (in EUR) 2019 2018

Member of the Management Board 117,638 113,131

Members of the Supervisory Board and Supervisory Board Audit and Human Resources Committees

136,972 131,142

Other employees on individual contracts 476,092 440,526

Total 730,702 684,799

Remuneration of the Management Board of the Company

Name and surname Position Receipts (in EUR) Salary

Boris Kupec, MSc Chairman of the Management Board of Elektro Celje, d.d.

Gross receipts 117,638

Net receipts 55,828

Cost of benefits and reimbursement of travel expenses for the Chairman of the Management Board arising from the

contract of employment and the cost of professional education in 2019 are as follows:

Name and surname Receipts (in EUR) Reimbursement of labour costs

Insurance premiums

Use of company vehicle

Professional education

Holiday bonus

Boris Kupec, MSc 11,869 1,509 649 6,306 1,498 1,907

Cost of benefits and reimbursement of travel expenses of the Chairman of the Management Board arises from the con-tract of employment and is accounted for in accordance with the contract of employment or collective agreement at the company level and includes daily and meal allowances and travel expenses for business trips. The cost of insurance pre-miums and the use of company vehicles represent the creditworthiness of the Management Board. The Chairman of the Management Board, who has been in office since 1 May 2016, was appointed as a member of the Supervisory Board of the company STELKOM - telekomu-nikacije in storitve d.o.o. on 17 December 2018, is the deputy mayor of the munic-ipality of Prebold for the mandate period 2018-2022 and has a subsidiary activity on his farm, his main activity (Standard Classification of Activities -SKD) being

85.590 (Instruction, training and further training), since 1 May 2016.

Remuneration of members of the compa-ny's Supervisory Board and the Supervi-sory Board Audit CommitteeThe Supervisory Board has six mem-bers, four of whom are shareholder rep-resentatives and two who are employee representatives. All Supervisory Board members possess equal rights and du-ties. The Supervisory Board members are appointed by the Shareholder's Assem-bly by a simple majority of shareholders present, except members of the Super-visory Board elected by the Workers' Council. Amendments and supplements to the Articles of Association are adopt-ed by the Assembly by a three-fourths majority of the equity represented at the General Meeting. The Supervisory Board held nine sessions in 2019.


Name and surname Position Attendance at meeting Receipts in EUR (net)

Receipts in EUR (gross)

Attendance fees and basic remuneration

in EUR

Travel expenses

in EURSB meeting

SB HRC meeting

SB HRC corre-spond-ence

meeting

SB AC meeting

SB corre-spond-ence

meeting

1 2 3 5 6 7 8 9 10 = 11 + 12 11 12

REPRESENTATIVES OF SHAREHOLDERS

Drago Štefe, MSc Member of the SB since 30 August 2017 and Chairman of the HR Committee since 14 December 2017

9 4 1 0 0 16,257 22,389 21,406 984

Miha Kerin, MSc Member of the SB since 1 September 2016 and Chairman of the SB AC since 3 October 2017

9 0 0 7 1 16,757 23,076 22,066 1,010

Mirjan Trampuž, MSM and MSc Energetics

Chairman of the SB until 26 August 2017, member of the SB since 27 August 2017 to 6 September 2017, Deputy Chairman since 7 September 2017

8 0 0 0 0 12,482 17,198 16,500 698

Rosana Dražnik, MSc Member of the SB from 27 August 2017 to 6 September 2017, Chair of the SB since 7 August 2017 and member of the HR Committee since 14 December 2017

9 4 1 0 0 20,227 27,847 26,281 1,567

REPRESENTATIVES OF EMPLOYEES

Miran Ajdnik, Bachelor of Electrical Engineering

Member of the SB since 1 October 2018

9 0 0 0 0 11,229 15,475 15,475 0

Janko Čas, Electronics Engineer and energetics expert

Member of the SB since 1 October 2018 and member of the HR committee since 15 November2018

9 4 1 0 0 14,360 19,781 19,781 0

INDEPENDENT THIRD-PARTY EXPERTS, MEMBERS OF THE SB AC

Ignac Dolenšek, MSc Member of SB AC since 19 October 2017

0 0 0 7 1 4,169 5,732 4,966 766

Darinka Virant, BA in Economics

Independent third-party expert, member of the SB AC since 9 December 2013

0 0 0 7 1 3,980 5,472 4,966 506

TOTAL 99,461 136,972 131,441 5,531

Basic annual remuneration (in EUR) Decision of the 21st Shareholders Assembly (valid since 1 September 2016)

Chairman of the Supervisory Board 19,500

Deputy Chairman of the Supervisory Board 14,300

Member of the Supervisory Board 13,000

Chairman of the Supervisory Board Committee 4,875

Member of the Supervisory Board Committee 3,250

The cost of liability insurance in accord-ance with the resolution of the Supervi-sory Board of Elektro Celje d.d. present-ed in the credit rating of members of the Supervisory Board represents the cost of other benefits for members of the Su-pervisory Board in 2019. Members of the Supervisory Board and the Supervisory Board Audit Committee in accordance

with the resolution of the 21st Share-holders' Assembly of 31 August 2016 are entitled to reimbursement of the costs of professional education and training con-textually connected to the performance of control functions and operations of the company in the total amount of EUR 10,000 per individual financial year.

1 2 9E l e k t r o C e l j e i n 2 0 1 9

The Management Board and Supervisory Board did not receive any remuneration in connection with tasks in subsidiaries. Elektro Celje also did not approve any advances, loans or guarantees to mem-

bers of the Supervisory Board, the Su-pervisory Board Audit Committee or the Management Board and as of 31 Decem-ber 2019, does not show any receivables from these addresses from them.

Membership in the management or supervisory bodies

Drago Štefe, MSc /

Miha Kerin, MSc Chairman of the Management Board of the company Varnost sistemi, d.o.o.

Mirjan Trampuž, MSM and MSc Energetics /

Rosana Dražnik, MSc Director of company Finera svetovanje d.o.o.,

Sole trader, Rosana Dražnik s.p., Intax;

Miran Ajdnik /

Janko Čas /

Employee remuneration on the basis of contracts which are not subject to the tariff part of the collective agreementRemuneration to employees on the basis of contracts which are not subject to the

tariff part of the collective agreement in 2019 amounted to EUR 476,092 gross or EUR 251,025 net (EUR 440,526 gross or EUR 235,769 net in 2018).

11.11 Disclosures Pursuant to the Energy ActElektro Celje d.d. draws up the financial statements of the company as a whole, and pursuant to Article 109 of the Energy Act (EZ-1) and SAS also reports on busi-ness segments or activities in explanato-ry notes to the financial statements. The

activities of the company include provi-sion of infrastructure and the services of general economic interest of the distri-bution network system operator accord-ing to the agreement with SODO d.o.o., as well as marketing activities.

11.11.1 Balance Sheet Broken Down by ActivitiesTransactions affecting the accounts of assets and liabilities are recorded on an accrual basis and by activity, where-

by the company applies the principle of individual valuation of assets and liabili-ties. The balance sheet by activity - busi-

Costs of other benefits (in EUR) Liability insurance


REPRESENTATIVES OF SHAREHOLDERS

Drago Štefe, MSc 97 0

Miha Kerin, MSc 97 427

Mirjan Trampuž, MSM and MSc Energetics 97 391

Rosana Dražnik, MSc 97 351

REPRESENTATIVES OF EMPLOYEES

Miran Ajdnik, Bachelor of Electrical Engineering 97 544

Janko Čas, Electronics Engineer and energetics expert 97 544

INDEPENDENT THIRD-PARTY EXPERTS, MEMBERS OF THE SB AC

Ignac Dolenšek, MSc 0 1,216

Darinka Virant, BA in Economics 0 0

TOTAL 580 3,473


ness segments - has the form of a dou-ble-entry balance and contains the items identified in the SAS 20.4.

In accordance with the Rules on the cri-teria for separate accounting recording and reporting by business activities of Elektro Celje, assets and liabilities are classified according to their purpose and use according to relevant activities of the company. The entire distribution network including the control centres activity is classified directly under the activity of providing power distribution infrastructure and services for the distribution network operator, while the remaining fixed assets of this sector that are not exclusive to one activity are classified in the appropriate category based on the number of hours spent by the sector working on each ac-tivity. Electricity infrastructure is defined in the Decree on energy infrastructure (Official Gazette of RS, No. 22/16).

The activity of provision of power infra-structure and services is directly allocat-ed into short-term and long-term finan-cial liabilities to banks from investment loans, short-term liabilities from opera-

tions for a third-party account (SODO), and short-term and long-term trade re-ceivables for network charges and trade receivables due from the system opera-tor. The market activity is directly allo-cated into long-term investments in the subsidiary for distribution power genera-tion, and into the subsidiary company for the marketing of electricity.

Short-term financial investments and available cash are calculated based on the amount of assets and liabilities of the activity. The amounts of share cap-ital and capital reserves by activity are determined and do not change, while the changes of other components of capital by individual segments are disclosed and reported in the statements of changes in equity, broken down by activity. The re-maining assets of the sector that are not exclusive to one activity are classified into the appropriate category based on the number of hours spent by the sector working on each activity.

With regard to assets and liabilities of shared functions, classification by activ-ity follows these criteria:

Account Criterion

007, part of 06, 08, 25, 262, 263, 2650, 2663, 277, 282, 285, 2851 to 2859, 320, 321, 966, 975, 989, part of 95 1

003, 004, 008, 010, 015, 020, 021, 027, 035, 040, 041, 045, 047, 048, 050, 051, 055, 058, 089, 130, 131, 968 2

120, 129, 1321, 133, 150, 151, 155, 159, 160, 161, 164, 165, 169, 190, 191, 192, 195, 260, 290, 291, 295 3

30, 31, 1320 4

2201, 230, 221, 224, 2651 - 6 and 2660 - 2 5

11, 18, 90 - 93, 963 Calculation

• Criterion 1 - Share of hours worked for a particular activity in the accounting period is used to allocate long-term financial investments not assigned to a particular activity, long-term loans granted, long-term operating receiv-ables, liabilities related to salaries, short-term liabilities to state and oth-er institutions, other short-term oper-ating liabilities, small tools inventory, long-term operating liabilities, long-term liabilities from financial lease and retained contributions for employment of persons with disabilities over the mandatory quota. These assets and liabilities are related by content and amount to the number of hours worked or the number of employees (sale of apartments with payment in instal-ments, small tools inventory purchas-es, employees' salaries).

• Criterion 2 - Share of fixed assets cur-rent value is used in classifying fixed assets used within shared functions that serve both activities. Fixed assets are allocated to the appropriate cate-gory based on the share of fixed assets pertaining to each activity in the main-tenance and investment sector.

• Criterion 3 – Share of total revenue in the accounting period, excluding rev-enue from shared functions, is used in classifying short-term receivables, payables for VAT, and short-term ac-cruals and deferrals that are not as-signed to a particular activity. The balance of these assets and liabilities depends on the scope of invoicing and the related total revenue.

1 3 1E l e k t r o C e l j e i n 2 0 1 9

• Criterion 4 - Share of material used in the accounting period by individual activity (excluding the cost of elec-tricity purchased to cover the losses) – is used in classifying the inventory of material. Increased consumption of material requires larger purchases, and consequently a larger inventory.

• Criterion 5 - Share of cost of material and services by individual activity (excluding

the cost of electricity purchased to cover the losses) – is used in classifying trade payables to suppliers of fixed and cur-rent assets. Since these payables are based on the invoices for material and services received, which are recorded upon occurrence at the level of shared functions, they are classified based on a combined criterion of used material and services by the activity from which these payables reasonably derive.

BALANCE SHEET BY ACTIVITY

ITEM (in EUR) As of 31 December 2019 As of 31 December 2018

SODO activity

Market activities

Total SODO activity

Market activities

Total

A. Long-term assets (I. + II. + III. + IV. + V. + VI.) 266,495,397 8,862,341 275,357,738 259,962,843 8,916,183 268,879,026

I. Intangible assets and long-term accrued revenue and deferred expenses (1 to 6)

4,203,645 48,763 4,252,408 3,062,745 20,656 3,083,401

1. Long-term property rights 3,795,026 21,971 3,816,997 3,048,969 16,948 3,065,917

4. Intangible assets in development 386,813 18,438 405,251 4,875 25 4,900

6. Other long-term accrued revenue and deferred expenses 21,806 8,354 30,160 8,901 3,683 12,584

II. Tangible fixed assets (1 to 4) 259,307,208 1,212,287 260,519,495 252,998,800 1,313,230 254,312,030

1. Land and buildings (a + b) 192,098,587 525,215 192,623,802 183,239,705 549,413 183,789,118

a) Land 5,953,029 32,165 5,985,194 5,946,145 34,256 5,980,401

b) Buildings 186,145,558 493,050 186,638,608 177,293,560 515,157 177,808,717

2. Production equipment and machinery 60,025,493 620,879 60,646,372 59,862,848 685,599 60,548,447

3. Other plant and equipment 26,505 40,940 67,445 33,011 42,676 75,687

4. Tangible fixed assets in the course of acquisition (a + b) 7,156,623 25,253 7,181,876 9,863,236 35,542 9,898,778

a) Tangible fixed assets under construction and production 6,747,901 25,253 6,773,154 9,863,236 35,542 9,898,778

b) Advances for the acquisition of tangible fixed assets 408,722 0 408,722 0 0 0

IV. Long-term financial investments (1 to 2) 232,385 7,434,576 7,666,961 227,339 7,430,742 7,658,081

1. Long-term financial investments excluding loans (a + b + c + d)

232,385 7,434,576 7,666,961 227,339 7,430,742 7,658,081

a) Shares and shareholdings in companies within the corporate group

0 7,246,976 7,246,976 0 7,246,975 7,246,975

b) Shares and shareholdings in associates 149,652 57,335 206,987 146,402 60,585 206,987

c) Other shares and shareholdings 82,733 130,265 212,998 80,937 123,182 204,119

V. Long-term operating receivables (1 to 3) 1,339,181 1,620 1,340,801 2,211,628 1,555 2,213,183

2. Long-term trade receivables 1,333,119 0 1,333,119 2,206,058 0 2,206,058

3. Long-term operating receivables due from others 6,062 1,620 7,682 5,570 1,555 7,125

VI. Deferred tax assets 1,412,978 165,095 1,578,073 1,462,331 150,000 1,612,331

B. Current assets (I. + II. + III. + IV. + V.) 9,006,627 3,826,023 12,832,650 10,157,329 2,359,434 12,516,763

II. Inventory (1 to 4) 259,654 1,356,690 1,616,344 262,976 1,437,649 1,700,625

1. Material 259,654 1,356,690 1,616,344 262,976 1,437,649 1,700,625

IV. Short-term operating receivables (1 to 3) 9,431,965 1,369,847 10,801,812 9,893,352 412,754 10,306,106

1. Short-term operating receivables from companies within the corporate group

20,935 7,885 28,820 45,017 6,138 51,155

2. Short-term trade receivables 9,006,313 1,206,640 10,212,953 9,684,155 378,483 10,062,638

3. Short-term operating receivables due from others 404,717 155,322 560,039 164,180 28,133 192,313

V. Cash —684,992 1,099,486 414,494 1,001 509,031 510,032

C. Short-term accrued revenue and deferred expenses 2,125,125 156,169 2,281,294 2,544,271 140,582 2,684,853

TOTAL ASSETS (A + B + C) 277,627,149 12,844,533 290,471,682 272,664,443 11,416,199 284,080,642


ITEM (in EUR) As of 31 December 2019 As of 31 December 2018

SODO activity

Market activities

Total SODO activity

Market activities

Total

A. Equity 211,444,008 8,465,439 219,909,447 206,250,648 7,965,078 214,215,726

I. Called-up capital 98,665,077 2,288,124 100,953,201 98,665,077 2,288,124 100,953,201

1. Share capital 98,665,077 2,288,124 100,953,201 98,665,077 2,288,124 100,953,201

II. Share premium 60,849,175 1,411,142 62,260,317 60,849,175 1,411,142 62,260,317

III. Revenue reserve 50,065,700 4,406,491 54,472,191 44,848,396 3,325,112 48,173,508

1. Legal reserves 4,125,076 345,226 4,470,302 3,742,672 265,966 4,008,638

2. Reserves for own shares and interest 866,281 20,090 886,371 866,281 20,090 886,371

3. Own shares and interest –866,281 –20,090 –886,371 –866,281 –20,090 –886,371

5. Other revenue reserves 45,940,624 4,061,265 50,001,889 41,105,724 3,059,146 44,164,870

IV. Reserves resulting from valuation at fair value –566,726 –144,141 –710,867 –322,751 –69,457 –392,208

VII. Net income/profit for the year 2,430,782 503,823 2,934,605 2,210,751 1,010,157 3,220,908

1. Undistributed net income/profit for the year 2,430,782 503,823 2,934,605 2,210,751 1,010,157 3,220,908

B. Provisions and long-term accrued expenses and deferred revenue (1 to 3)

17,074,170 2,024,576 19,098,746 17,122,063 1,661,932 18,783,995

1. Provisions for pensions and similar liabilities 4,692,551 1,979,639 6,672,190 4,391,229 1,608,362 5,999,591

2. Other provisions 182,578 0 182,578 264,405 0 264,405

3. Long-term accrued expenses and deferred revenue 12,199,041 44,937 12,243,978 12,466,429 53,570 12,519,999

C. Long-term liabilities (I. + II.+ III.) 28,852,348 172,501 29,024,849 26,693,944 140,875 26,834,819

I. Long-term financial liabilities (1 to 4) 28,620,204 83,560 28,703,764 26,429,721 31,532 26,461,253

2. Long-term financial liabilities to banks 28,399,049 0 28,399,049 26,353,527 0 26,353,527

4. Other long-term financial liabilities 221,155 83,560 304,715 76,194 31,532 107,726

II. Long-term operating liabilities (1 to 5) 222,118 85,100 307,218 255,608 105,778 361,386

2. Long-term trade payables 222,118 85,100 307,218 255,608 105,778 361,386

III. Deferred tax liabilities 10,026 3,841 13,867 8,615 3,565 12,180

D. Short-term liabilities (I. + II. + III.) 19,836,324 2,044,403 21,880,727 22,144,708 1,477,350 23,622,058

II. Short-term financial liabilities (1 to 4) 10,802,704 83,329 10,886,033 11,196,273 19,387 11,215,660

2. Short-term financial liabilities to banks 10,584,477 0 10,584,477 11,149,424 0 11,149,424

4. Other short-term financial liabilities 218,227 83,329 301,556 46,849 19,387 66,236

III. Short-term operating liabilities (1 to 8) 9,033,620 1,961,074 10,994,694 10,948,435 1,457,963 12,406,398

1. Short-term operating liabilities to companies within the corporate group

51,487 4,170 55,657 45,405 3,725 49,130

2. Short-term trade payables 2,522,140 752,208 3,274,348 3,621,814 47,870 3,669,684

4. Short-term operating liabilities from operations for third-party account

3,386,273 0 3,386,273 3,864,248 0 3,864,248

5. Short-term liabilities to employees 2,348,330 818,814 3,167,144 2,286,250 857,218 3,143,468

6. Short-term liabilities to state and other institutions 299,321 115,201 414,522 694,789 278,118 972,907

7. Short-term operating liabilities based on advances. 5,951 113,437 119,388 185 100,005 100,190

8. Other short-term operating liabilities 420,118 157,244 577,362 435,744 171,027 606,771

E. Short-term accrued expenses and deferred revenue 420,299 137,614 557,913 453,080 170,964 624,044

TOTAL LIABILITIES TO ASSET SOURCES (A to E) 277,627,149 12,844,533 290,471,682 272,664,443 11,416,199 284,080,642

1 3 3E l e k t r o C e l j e i n 2 0 1 9

11.11.2 Income Statement Broken Down by ActivitiesThe income statement broken down by activities - business segments - is drawn up pursuant to Version I of SAS 21.6. All revenue, expenses and net income are broken down into the part related to ac-tivities providing power distribution in-frastructure and rendering services for SODO, and market activities.

Organisational activities are not sep-arated; they are conducted within the Maintenance and Investment Sector, Development and Operations Sector, and Shared Functions. Revenue, costs and

expenses that cannot be directly attrib-uted to a particular activity based on the type of work are classified in the appro-priate category based on the number of hours spent by the sector working on each activity. In allocating the revenue, costs and expenses of the shared func-tions and organisational units within the shared functions, which cannot be di-rectly attributed to a particular activity, the classification under the appropriate category is carried out according to the following criteria:

Group of accounts Criterion

part of 760, 765, 766, 768, 769, 774, 775, 777, 78, 720, 721, 722, 723, 740, 743, 745, 746, 749

Shared functions

40, 41, 47, 48, 75 Individual organisational unit within shared functions

43 Share of the present value of individual fixed asset for both activities

The criteria of shared functions and an individual organisational unit within the shared functions are based on the cal-culation of appropriate ponders, which include the following categories:• Activity revenue (the criterion is calcu-

lated based on revenue by activity for the accounting period, minus the reve-nue from shared functions),

• Current value of fixed assets associ-ated with the activity (the criterion is calculated based on the current value of fixed assets by activity on the last day of the accounting period),

• Consumption of material (the criterion is calculated based on the amounts of material used, excluding the costs of electricity, by activity in the account-ing period),

• Number of hours worked by activity (the criterion is calculated based on the actual hours worked by the em-ployees per individual activity in the accounting period),

• Cost of business data processing (the criterion is calculated based on the shares of use of resources accord-ing to the price list from the contract signed with Informatika d.d.),

• Transport costs (the criterion is calcu-lated based on the value of transport by activity in the accounting period)

The share of each fixed asset's current value criterion for both activities is used to classify depreciation of fixed assets used within shared functions that serve both activities.


INCOME STATEMENT BY ACTIVITY

ITEM (in EUR) 2019 2018

SODO activity

Market activities

Total SODO activity

Market activities

Total

1. Net sales revenue 48,325,222 2,505,810 50,831,032 48,468,649 2,044,058 50,512,707

a. on the domestic market 48,325,222 2,505,810 50,831,032 48,468,649 2,044,058 50,512,707

3. Capitalised own products and services 0 15,164,716 15,164,716 0 15,193,945 15,193,945

4. Other operating income (including revaluation surplus) 1,194,007 134,257 1,328,264 1,976,098 144,127 2,120,225

5. Costs of goods, materials and services (a + b) 6,415,605 10,092,161 16,507,766 6,339,419 9,419,610 15,759,029

a. Purchase cost of sold goods and costs of used material 1,507,387 8,957,254 10,464,641 1,231,845 8,477,361 9,709,206

b) Cost of services 4,908,218 1,134,907 6,043,125 5,107,574 942,249 6,049,823

6. Labour costs (a + b + c + d) 16,141,614 6,810,392 22,952,006 15,633,136 7,115,423 22,748,559

a. Cost of salaries 11,456,581 4,822,369 16,278,950 11,151,069 5,073,600 16,224,669

b. Pension insurance costs 1,600,803 647,322 2,248,125 1,588,554 691,822 2,280,376

c. Other social security costs 841,954 354,305 1,196,259 831,557 378,087 1,209,644

d) Other labour costs 2,242,276 986,396 3,228,672 2,061,956 971,914 3,033,870

7. Write-offs (a + b + c) 17,851,500 206,045 18,057,545 16,979,297 510,506 17,489,803

a. Depreciation 17,668,489 193,456 17,861,945 16,845,019 508,143 17,353,162

b. Operating expenses from revaluation of intangible and tangible fixed assets

121,516 1,688 123,204 118,169 2,822 120,991

c. Operating expenses from revaluation of current assets 61,495 10,901 72,396 16,109 -459 15,650

8. Other operating expenses 293,690 34,526 328,216 284,163 40,824 324,987

9. Financial revenue from shares (a + b) 0 1,007,400 1,007,400 0 1,007,400 1,007,400

a. Finance revenue from shares in companies within the corporate group

0 1,000,000 1,000,000 0 1,000,000 1,000,000

b. Financial revenues from shares in other companies 0 7,400 7,400 0 7,400 7,400

10. Financial revenue from loans granted (a + b) 9,909 99 10,008 47 21 68

a. Financial revenue from loans to companies within the corporate group

217 75 292 0 0 0

b. Financial revenue from loans to others 9,692 24 9,716 47 21 68

11. Financial revenue from operating receivables 48,937 1,070 50,007 90,667 916 91,583

b. Financial revenue from operating receivables due from third parties

48,937 1,070 50,007 90,667 916 91,583

13. Financial expenses from financial liabilities (a + b) 323,555 12 323,567 344,388 0 344,388

b. Finance expenses related to loans from bank 323,485 0 323,485 344,388 0 344,388

d. Financial expenses from other financial liabilities 70 12 82 0 0 0

14. Financial expenses from operating liabilities 67,098 22,336 89,434 53,114 19,920 73,034

c. Financial expenses from other operating liabilities 67,098 22,336 89,434 53,114 19,920 73,034

15. Other revenue 8,245 44,065 52,310 9,440 1,091 10,531

16. Other expenses 31,529 3,846 35,375 292,971 2,037 295,008

17. NET PROFIT/LOSS FOR THE PERIOD BEFORE TAXES (1±2+3+4—5—6—7—8+9+10+11—12—13—14+15—16)

8,461,729 1,688,099 10,149,828 10,618,413 1,283,238 11,901,651

18. Income tax 736,532 92,013 828,545 1,368,242 32,053 1,400,295

19. Deferred taxes 60,932 7,531 68,463 0 72,578 72,578

20. NET PROFIT/LOSS FOR THE PERIOD (1±2+3+4—5—6—7—8+9+10+11—12—13—14+15—16—18+19)

7,664,265 1,588,555 9,252,820 9,250,171 1,178,607 10,428,778

Net sales revenue by activity (in EUR) SODO activity Market activities Total

2019 2018 2019 2018 2019 2018

From lease and maintenance of infrastructure and provision of services for SODO

47,862,849 48,019,782 0 0 47,862,849 48,019,782

From the sale of services 462,373 448,867 2,505,810 2,044,058 2,968,183 2,492,925

Total 48,325,222 48,468,649 2,505,810 2,044,058 50,831,032 50,512,707

1 3 5E l e k t r o C e l j e i n 2 0 1 9

11.11.3 Statement of Cash Flows Broken down by ActivitiesThe statement of cash flows broken down by activities is a financial state-ment of the company that faithfully and fairly presents changes in cash by ac-tivity. It refers to the financial year for which it was compiled. It discloses cash flows generated from operating activi-ties, investing activities and financing activities. It is compiled using the direct method, Version I (26.5 SAS) and in the line-by-line form.

The basis for compiling the statement of cash flows by activity includes data from relative underlying documents on cash flows. The allocation of revenue and expenses by activity for the relevant

accounting period follows the criteria for allocating assets, liabilities, revenue and expenses.

Cash flows increasing or decreasing the values of the assets and liabilities of a sector and which cannot be directly at-tributed to one particular activity are classified under the appropriate category based on the number of hours spent by the sector working on each activity. The allocation of revenue and expenses of shared functions to the appropriate activ-ity follows the criteria defined in the Rules and regulations on the criteria for sepa-rate accounting recording and reporting by the business activities of Elektro Celje:


08, 25, 262, 263, 2650, 2663, 277, 282, 285, 2851 to 2859, 320, 321, 966, 97 1

003, 047, 089, 130, 131 2

120, 121, 1321, 133, 150, 151, 155, 159, 160, 161, 164, 165, 169, 190, 191, 192, 195, 260, 290, 291, 295 3

1320 4

220, 230, 221, 224, 2651 - 6 and 2660 - 2 5

11, 18, 90 - 93, 963 Calculation

Cash flows which increase or decrease the volume of revenue, costs and ex-penses of activities within the Mainte-nance and Investment Sector and within the Development and Operations Sector, and which cannot be directly attributed to a particular activity based on the type of work, are classified under the appro-priate category based on the number of

hours spent by each sector working on a particular activity. The allocation of revenue, costs and expenses of shared functions and organisational units with-in shared functions, which cannot be di-rectly attributed to a particular activity, follows the criteria specified in Articles 14 and 15 of the said Rules:


77, 78, 7460/1,2 Shared functions

41, 48, 7540, 75 Individual organisational unit within shared functions

The surplus of inflows from operating activities over the outflows from the ac-tivity of providing the power distribution infrastructure and rendering of servic-es for the distribution network operator

represents a funding source for investing activities, payments to suppliers, and carrying out own investments within the company’s non-electricity related activ-ities.


STATEMENT OF CASH FLOWS BY ACTIVITY

Item (in EUR) Leto 2019 Leto 2018

SODO activity

Market activities

Total SODO activity

Market activities

Total


a. Inflows from operating activities 101,198,397 21,223,291 122,421,688 103,976,116 19,500,227 123,476,343

Inflows from sale of goods and services 100,121,389 20,990,527 121,111,916 102,575,601 19,229,407 121,805,008

Other inflows from operating activities 1,077,008 232,764 1,309,772 1,400,515 270,820 1,671,335

b. Outflows from operating activities —74,130,967 —20,014,460 —94,145,427 —71,585,432 —20,827,539 —92,412,971

Purchase of material and services —51,043,359 —11,674,462 —62,717,821 —49,543,914 —12,450,236 —61,994,150

Salaries and employees' share in the profit —16,515,028 —5,805,592 —22,320,620 —16,111,774 —6,119,862 —22,231,636

Charges (contributions and other taxes) —5,624,900 —2,180,215 —7,805,115 —5,142,596 —1,946,603 —7,089,199

Other outflows from operating activities —947,680 —354,191 —1,301,871 —787,149 —310,837 —1,097,986

c. Positive or negative net cash flow from operating activities (a + b)

27,067,430 1,208,831 28,276,261 32,390,684 —1,327,312 31,063,372


a. Inflows from investing activities 152,794 1,942,026 2,094,820 440,015 1,164,981 1,604,996

Inflows from interests and dividends received relating to investing activities

279 1,007,506 1,007,785 49 1,007,419 1,007,468

Inflows from disposal of property, plant and equipment

152,515 34,520 187,035 439,966 157,562 597,528

Inflows from disposal of financial investments 0 900,000 900,000 0 0 0

b. Outflows from investing activities —26,720,633 —1,668,211 —28,388,844 —27,092,044 —54,623 —27,146,668

Cash payments for the acquisition of intangible assets

—1,348,332 —564,429 —1,912,761 —2,173,326 —11,281 —2,184,607

Purchase of property, plant and equipment —25,372,301 —203,782 —25,576,083 —24,918,718 —43,342 —24,962,061

Purchase of financial investments 0 —900,000 —900,000 0 0 0

c. Positive or negative net cash flow from investing activities (a + b)

—26,567,839 273,815 —26,294,024 —26,652,029 1,110,357 —25,541,672


a. Inflows from financing activities 29,883,839 0 29,883,839 29,195,000 0 29,195,000

Inflows from the increase in financial liabilities 29,883,839 0 29,883,839 29,195,000 0 29,195,000

b. Outflows from financing activities —31,069,423 —892,191 —31,961,614 —33,451,504 —926,225 —34,377,729

Interest paid on financing activities —337,443 0 —337,443 —349,412 0 —349,412

Cash payments for equity redemption 0 0 0 —244,893 —5,679 —250,572

Repayments of financial liabilities —28,403,263 0 —28,403,263 —30,632,732 0 —30,632,732

Payments of dividends and other profit shares —2,328,717 —892,191 —3,220,908 —2,224,467 —920,546 —3,145,013

c. Positive or negative net cash flow from financing activities (a + b)

—1,185,584 —892,191 —2,077,775 —4,256,504 —926,225 —5,182,729

D. CLOSING BALANCE OF CASH ASSETS —684,992 1,099,486 414,494 1,001 509,031 510,032

Net cash flow for the period (sum of cash flows Ac, Bc and Cc)

—685,993 590,455 —95,538 1,482,151 —1,143,180 338,971

Opening balance 1,001 509,031 510,032 —1,481,150 1,652,211 171,061

1 3 7E l e k t r o C e l j e i n 2 0 1 9

What we do is reliableWe are aware that we are part of a wider community connected to the energy network. Through our act iv i t ies, we contr ibute to safety and qual i ty of l i fe. We ensure that the distr ibut ion of e lectr ic i ty is rel iable, safe and uninterrupted.

BUSINESS REPORT

of the Elektro Celje Group

1 3 9

Presentation of the Elektro Celje Group12In addition to the controlling company Elektro Celje, the Elektro Celje Group also includes the subsidiaries ECE, as a supplier of electricity and other energy sources, and Elektro Celje OVI, as a pro-

ducer of electricity and an engineering contractor.

The composition of the Elektro Celje Group is shown in detail in section 17.5.

12.1 Subsidiary ECEECE, energetska družba, d.o.o. was es-tablished with the Articles of Associ-ation on 4. 9. 2015. The company has been founded by Elektro Celje and Ele-ktro Gorenjska. The shareholder Elektro Gorenjska, d.d. entered the group during the process of merging their subsidiary

Elektro Gorenjska Prodaja with Elektro Celje Energija. The business stake of each member in the subsidiary's share capital is as follows:• Elektro Celje, d.d.: 74.3256%• Elektro Gorenjska, d.d.: 25.6744%

Basic Company Data on ECE

Name: ECE, energetska družba, d.o.o.

Abbreviated name: ECE d.o.o.

Business address: Vrunčeva 2a, 3000 Celje

Branch offices: Celje, Kranj, Krško, Slovenj Gradec, Velenje, Žirovnica

Phone: 080 22 04

Email address: [email protected], [email protected], [email protected]

Website: http://www.ece.si

Entry in the Companies Register: Register of Companies of the District Court of Celje, Ref. No. Srg 2011/36741 and changes upon merger, Ref. no. Srg 2015/37235



Company share capital: EUR 3,436,767.65


large company


No. of sold GWh EE in 2019: 3,150 GWh

Number of measuring points as of 31 December 2019: 172,023

Director: Sebastijan Roudi, MSc

1 4 0 1 2 P r e s e n t a t i o n o f t h e E l e k t r o C e l j e G r o u p

80.9%

19.1%

ECE business operations

ElectricityIn 2019 we supplied energy to 11,621 le-gal entities. Electricity consumption by these customers depends on the eco-nomic situation and their sales success. Contractual agreements with customers are usually tied to a calendar year, and especially with larger customers and public institutions, we are seeing shifts in the direction of different contractu-al ties. The reason is mainly in the high variability of stock market prices, which is why buyers more often opt for a short-

er supply of our services. At the begin-ning of 2019, we significantly intervened in the structure of types of supply and new offers of time-guaranteed prices in the segment of household customers. We have reduced the number of price lists and significantly simplified the offer, making it more transparent and under-standable for customers.

In 2019, we supplied electricity to 172,023 measuring points in Slovenia; of which 80.9% to large, medium and small business customers and 19.1% GWh to household customers.

Structure of end customers

Electricity sales and revenue from electricity sales in the period from 2017 to 2019

Business consumption

Household consumption

2,500 0

20

40

60

80

100

120

140

160

180

EUR (millions)

GW

h

3,200

3,100

3,000

2,900

2,800

2,700

2,600

2,849

3,150

2,729

Amount of electricity sold (in GWh) Revenue from the sale of electricity (in EUR million)

2017 2018 2019

125.9 127.6

167.6

Electricity consumption increased in 2019 due to the acquisition of the elec-

tricity supply business for the needs of losses in the distribution network.

1 4 1E l e k t r o C e l j e i n 2 0 1 9

Natural gasThe price range in the natural gas bal-ancing market jumped dramatically for the first time in 2019, and the market

was facing the largest range between annual and daily prices in the last twelve years, due to increased LNG gas supplies and above-average warm weather.

Volume and value of natural gas sales * 2015 2016 2017 2018 2019

Quantity (MWh) 107,108 101,642 102,022 104,891 185,802

Value (in EUR) 2,770,986 2,150,443 1,995,075 2,074,314 4,405,370

Quantity and value of wood biomass sales 2015 2016 2017 2018 2019

Quantity (T) 2,229 2,001 1,842 1,236 1,021

Value (in EUR) 415,981 356,747 346,735 269,722 236,547

* ECE introduced the sale of natural gas in December 2013. Since 1 January 2017, natural gas in Slovenia is charged in kWh (previously in Sm3).

In 2019, we supplied 185,802 MWh of natural gas, which is 77.1% more than in 2018. Increasing market share in the gas market requires a lot of effort, knowl-edge and management of systemic and

non-systemic risks. The resumption of growth of natural gas sales from 2016 onward is the result of our overall good purchasing and sales strategy and the vision we have for the coming years.

Wood biomass

The reasons for the constant decline in wood biomass sales in recent years (20.2% drop in 2019 compared to the previous year) are mainly unfair com-petition and a lack of regulations by the state, since a lot of sales are generated outside the rules. Additionally, the busi-ness is aggravated by problems with pro-curement in terms of providing adequate quantities and logistics. Nevertheless, biomass remains part of the sales offer, although more and more households are opting for heat pumps, given the orienta-tion of the wider environment.

Online storeThe online store ECE shop recorded sales growth in 2019 in the category of major appliances, telephony and heat-

ing and cooling, mainly due to the pos-sibility of installment payments without interest and additional costs. In 2019, we generated EUR 805,987 in revenues and achieved a 15.6% growth compared to the previous year.

Energy solutions - self-sufficient solar power plantsIn 2019, we started the systematic de-velopment of services, which we expect to be of increasing importance, given the development and expectations of the market. We focused mainly on the seg-ment of household and small business customers. We completed the first five projects, within which we generated EUR 125,890 in revenues.


Basic information about Elektro Celje OVI

Name: Elektro Celje OVI, obnovljivi viri in inženiring, d.o.o.

Abbreviated name: Elektro Celje OVI, d.o.o.

Business address: Rimska cesta 108, 3311 Šempeter v Savinjski dolini

Entry in the Companies Register: Register of Companies of the District Court of Celje, Ref. No. Srg 2018/11042



Company share capital: 12,518.78 EUR


micro company


Number of SHPs (small hydro power plants) 4

Number of SPSs (small-scale photovoltaic systems) 10

Number of CHHPs (combined heat and power plants): 4

Charging stations for electric vehicles: 7

No. of produced MWh EE in 2019: 3,728 MWh

No. produced MWh in the TPP in 2019 1,310 MWh

Director: Srečko Mašera, BSEE

12.2 Subsidiary Elektro Celje OVIElektro Celje OVI, obnovljivi viri in inženir-ing, d.o.o. is a limited liability company, the founder and sole owner of which is

Elektro Celje, d.d. It was founded on 29. 3. 2002, for the purpose of electricity generation.

Elektro Celje OVI business operationsIn 2019, due to heavy rainfall (despite intensive renovation works at the Ma-jcen Mislinja SHPP), production was 3.1% higher than planned. Frequent periods of rain also affected the operation of photo-voltaic power plants. Thus the production of electricity from MFE was 5.8% lower than planned. Co-generation of heat and electricity (CHP) is intended for heating the office buildings of Elektro Celje. In 2019, 4.6% lower electricity production was achieved than planned, due to en-gine failure in CHP Krško..

Investment activities were mainly fo-cused on SHPP Majcen Mislinja. The renovation of mechanical installations and hardware and electrical installations and electrical equipment was completed during the spring months. The inclusion of the facility in the support scheme for renewable energy sources provided ad-ditional impetus to continue the invest-ment. In the summer months, a building permit was obtained for the rehabilitation of the dam, which was mostly carried out by the end of December. The rear part of the pipeline in front of the Majcen Mislin-ja SHPP engine room was replaced simul-taneously.

1 4 3E l e k t r o C e l j e i n 2 0 1 9

0

3,500,000

2,500,000

1,500,000

4,000,000

3,000,000

2,000,000

1,000,000

500,000

Am

oun

ts i

n k

Wh

2015 2016 2017 2018 2019

Production of electricity in SHP 2,858,164 3,716,970 2,053,444 2,603,873 2,950,481

Production of electricity in SPS 432,370 425,433 442,650 383,608 402,959

Production of electricity in CHPP 439,522 413,025 346,621 423,931 374,992

Production of heat energy (in CHPP) 1,356,504 1,449,988 1,462,690 1,397,732 1,310,351

Production of electrical and heatenergy in the company Elektro Celje OVI

Customer service was performed in the field of measurements of earthing sys-tems and electrical installations, con-struction of facilities for customers,

e-mobility services and design of TP with connecting lines, LV connections and so-lar power plants.

12.3 Strategic Guidelines and Goals of Elektro Celje GroupECE 's strategic guidelines• To remain among the leading electric-

ity providers on the Slovenian market (market share of at least 20%) and cre-ate long-term business relationships with customers.

• To expand the portfolio of new prod-ucts and services for energy custom-ers, focused on cooperation with other providers of products and services (en-ergy solutions, e-mobility).

• To develop the online store business, with the goal of at least doubling sales in the next three years.

• To improve risk management in the field of energy portfolio management and upgrade risk management in the field of dynamic assessment of the fu-ture business potential of the compa-nies with which we cooperate.

• To carry out further connections with related companies in the industry and create conditions for further growth of the company with new development and capital potential.

• To develop ECE into a cost-effective,

well-organised and high-quality infor-mation-supported company that will be of interest to various stakeholders at all times).

Strategic guidelines of Elektro OVIThe set strategic guidelines of Elektro Celje OVI are: increasing the production of electricity from RES, providing engi-neering services in the field of energy, providing e-mobility services and in-volvement in development projects.

Increasing electricity production will be achieved by improving the efficiency of existing power plants and/or by building new renewable energy sources. The ren-ovation of existing hydroelectric power plants is at the forefront due to wear and tear.

Provision of market services will be in development in the field of construc-tion of self-sufficient solar power plants, preparation of project and technical doc-umentation, implementation of electrical


installation work, consulting in the field of energy efficiency and implementation of the energy contracting program.

Projects involving the set up of charg-ing stations, the operators of which are

municipalities, are underway. Charging stations within companies are becom-ing topical. We also plan to include the maintenance and management of for-eign charging stations in the information system "Gremo na elektriko".

Business goals of the Elektro Celje Group

12.4 Terms and conditions of the Elektro Celje GroupImpact of the Economic Environment on the Volume of Electricity ConsumptionThe economic environment did not change significantly in 2019, as we still witnessed favourable growth indicators, which reflected in energy consumption, and payment discipline remained at an enviably high level. Supply changes were as expected (on average we still lose more customers than we gain in the household customer segment, growth was, however, present in business customers).

However, some business conditions have changed significantly. If, on one hand, we can say that competitiveness is as high as expected, certain regulatory chang-es bring additional risk, at the expense of which electricity suppliers are faced with increased system balancing costs, which cannot be passed on to final sales prices. Additional uncertainty is intro-duced by the sudden, abrupt changes in stock market prices that we witnessed in 2019. The situation in the field of natural gas is also changing. Similar to electric-ity, there are greater risks when buying, with deviations on a daily basis, as the prices of deviations from the average

daily stock market price are moving fur-ther and further apart.

When we talk about price conditions in the long-term electricity market, we can see that there was a fall in first quarter, which was followed by growth until the last quarter, and later a decline again in the last quarter. There was a fluctuation of over 18% or 10 EUR/MWh between the highest and lowest achieved price. The key factors were CO2 emission coupons, expectations regarding the results of Brexit and unusual weather conditions relative to expectations.

In the field of purchasing, where we have missed more competition in the past, we have taken only a small step forward, work-ing with an additional partner in the field of electricity and one additional partner in the field of natural gas. Unfortunately, in these turbulent conditions, this did not sig-nificantly contribute to better purchasing conditions, as suppliers, with the exception of HSE d.o.o., significantly limited sales quotas and mutual price competitiveness.

An important change in the business environment was the intensive coopera-

Operational Goals of the Elektro Celje Group and their Achievement Plan 2019 v 2019 Plan 2020

ROE (in %) - Average equity includes net profit for the current year ≥ 4.35 3.72 ≥ 3.79

Total equity/liabilities ratio (in %) ≥ 71.22 70.26 ≥ 70.68

Net financial debt/EBITDA (in EUR) ≤ 1.20 1.38 ≤ 1.46

Financial debt/equity (in EUR) ≤ 0.18 0.17 ≤ 0.18

Current ratio (in EUR) ≥ 1.30 1.20 ≥ 1.30

Sale of electricity (in MWh) ≥ 2,934,214 3,149,941 ≥ 2,652,158

Electricity production (in kWh) ≥ 3,682,612 3,728,433 ≥ 3,772,456

Heat energy production (in kWh) ≥ 1,381,147 1,310,351 ≥ 1,385,193

1 4 5E l e k t r o C e l j e i n 2 0 1 9

tion between suppliers in certain areas where we encounter common problems. As the section for issues of electricity suppliers, we have achieved a change in certain legislative provisions, which are also reflected in the financial effects. An amendment to the Energy Act EZ-1 was also adopted, which changes certain re-strictions on the creation of price lists for household energy buyers and introduces stricter control over the work of contract agents in the door to door marketing of energy products.

Influence of expected economic conditions on electricity and heat productionPrice of electricity from RES consists of operating support and the purchase price of electricity. The generation of electricity at generating plants of RES and CHPPs is financially supported by the Republic of Slovenia if the costs of generating such electricity exceed its highest possible price on the market. The purchase price of electricity is defined by the market. Thus, we will try to follow the prices in the market in the following years and based on that achieve the highest possible price.

The operation of SHPs depends mainly on the quantity and annual distribution of rainfall. Consequently, fluctuations in the value of generation between individ-ual years and months can be observed. Recently, we have recorded an increase in storm periods and, consequently, problems with forecasts of production by SHPPs.

The operation of SPSs depends main-ly on the quantity of solar radiation. Its amount also varies depending on the time of year. The efficiency is increased by regular cleaning of the modules.

CHP are designed for heating buildings and must operate in such a way that they will operate during the heating sea-son, when the need for heat is greatest. The optimal way of operating the device is to operate throughout the heating sea-son (up to 4,000 hours), which is not al-ways possible due to fluctuations in out-door temperature and the need for heat off-take due to the work process.

Composition of the Price of Electricity for the Final CustomerThe final price of supplied electricity for a customer who is billed for the network charge and the electricity consumed by the electricity supplier is composed of the following categories:• electricity price,• network charges:

- transmission network charge and - distribution network charge,

• contributions: - contribution for providing support

for electricity production in high-efficiency co-generation and from renewable energy sources (RES and CHP),

- contribution for efficient energy use (EE),

- contribution for the market operator activity,

• excise duties on electricity,• value added tax.


Charges and contributions

30.7%

Network charge and subcharges

35.5%

Energy33.8%

Source: Energy Agency of the Republic of Slovenia

Shares of categories on the electricity bill for a typical household customer of the Company Elektro Celje

1 4 7E l e k t r o C e l j e i n 2 0 1 9

Performance analysis of the Elektro Celje Group13Profit or LossIn 2019 the operating revenue of the Elektro Celje Group amounted to EUR 241,548,945, which is 7.7% more than planned and 20.8% more than achieved in 2018. Compared to last year, the El-

ektro Celje Group increased its revenue from the sale of electricity (by 31.4%) and natural gas (by 115.1%) and revenue from the sale of other merchandise (by 36%).

Operating Revenue of the Elektro Celje Group

0

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40,000,000

20,000,000


Capitalised own products 14,324,151 13,260,484 14,011,503 15,193,945 15,164,716

Other operating revenue 3,061,767 2,582,045 2,632,533 3,751,527 2,499,734

90.3%92.0% 91.5% 90.5%

92.7%

8.0% 6.7% 7.2% 7.6% 6.3%

in EUR

1.7% 1.3% 1.3% 1.9% 1.0%

2015 2016 2017 2018 2019

1 4 8 1 3 P e r f o r m a n c e a n a l y s i s o f t h e E l e k t r o C e l j e G r o u p

Operating Expenses of the Elektro Celje Group

Revenue from construction of own fixed assets, created by the parent company are presented in Section 7.

Other operating revenue in the amount of EUR 2,499,734 was 53.3% higher than planned and 33.4% lower than in 2018, mainly due to lower revenue from the cancellation of provisions.

Operating expenses of the Elektro Celje Group amounted to EUR 232,270,846, which is more than planned (by 9.2%) and more than achieved in 2018 (by 25.5%). They are higher mainly due to higher sales of energy products.

0

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20,000,000

in EUR

2015 2016 2017 2018 2019

Cost of purchase of electricity 100,701,762 119,644,905 117,213,193 117,590,268 162,615,953

Cost of merchandise sold 3,928,583 2,259,616 2,535,914 2,840,700 5,514,469

Cost of material 9,620,625 8,512,799 10,224,596 9,822,889 10,407,438

Cost of services 10,040,032 9,746,247 9,106,864 9,339,230 8,657,816

Labour costs 23,094,512 24,707,671 24,715,149 25,765,989 26,001,832

Write-offs 19,357,839 19,675,556 18,903,046 18,214,630 18,588,099

Other operating expenses 761,506 2,361,678 732,769 1,450,763 485,239

6.3% 6.0% 5.2% 5.0% 3.7%7.7% 5.7% 4.6% 5.6% 4.5%

55.6%

60.1%

64.0% 63.8%

70.0%

14.6% 13.8% 13.2% 13.5% 11.2%

14.2% 11.6% 10.5% 10.3% 8.0%

1.3% 2.3% 1.2% 1.4% 2.4%

0.3% 0.5% 1.3% 0.4% 0.2%

Cost of services are lower than planned (by 5.6%) and achieved in the previous year (by 7.3%). A part of the reduction in these costs is the result of changes in the SAS in the area of leases, where the record keeping of lease services was

transferred to lease rights and, conse-quently, to the cost of depreciation and financing, while the transfer of cost of real estate service was transferred di-rectly to the cost of merchandise sold.

1 4 9E l e k t r o C e l j e i n 2 0 1 9

Lower costs than planned (by 42.4%) and achieved in 2018 (by 27.5%) are also recorded with operating expenses from revaluation, mainly due to lower adjust-ment to receivables.

Other operating expenses in the amount of EUR 485,239 were 42.4% lower than

planned and 66.6% lower than in 2018, because in 2019 the company ECE did not have the cost of guarantees of origin and incentives for efficient energy use, since the guarantees of origin prices were too high to be useful, and already filled the quotas in the previous year with re-gard to incentives for efficient energy use.

Financing Revenue and Expenses

Item (in EUR) Elektro Celje Group

Achieved 2015

Achieved 2016

Achieved 2017

Achieved 2018

Achieved 2019

Financial revenue 346.514 341.846 540.960 296.857 681.372

Financial expenses —1.103.061 —670.278 —464.216 —432.834 —431.458

Net financial profit or loss —756.547 —328.432 76.744 —135.977 249.914

Financial revenue in the amount of EUR 681,372 increased by EUR 384,515 from the achieved amount in 2018, mainly due to the sale of Gorenjska banka, d.d. shares. Therefore, in 2019, the subsidiary ECE generated revenue in the amount of EUR 411,534. Financial expenses in the amount of EUR 431,458 are similar to those planned and achieved in 2018.

The Elektro Celje Group generat-ed EUR 242,230,317 in total revenue (7.7% more than planned and 21% more than achieved in 2018). Total expenses amounted to EUR 232,702,304 (9.2% more than planned and 25.5% more than in the previous year). Net profit or loss of

the Elektro Celje Group is a profit of EUR 8,595,312 (13.8% less than planned and 31.5% less than achieved in 2018).

The Group's profit or loss was mainly worse due to the worse profit or loss of the subsidiary ECE, which amounted to 66,555 EUR (2,793,134 EUR less than in the previous year) and is the result of a change in the cost of providing system services. These significantly changed the purchase terms and could not be trans-ferred into the end customer price, while at the same time the prices of deviations between purchased and consumed elec-tricity were extremely unfavourable, espe-cially in the first five months of 2019.

250,000,000

in EUR

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

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50,000,000

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0

180,

137,

624

198,

298,

619

195,

326,

228

200,

229,

532

242,

230,

317

168,

607,

920

187,

578,

750

183,

895,

747

185,

457,

303

232,

702,

304

Total revenue of the Elektro Celje Group Total expenses of the Elekro Celje Group Net profit or loss of the Elektro Celje Group

2015 2016 2017 2018 2019

Total Revenue, Total Expenses and Net Profit or Loss of the Elektro Celje Group

10,233,23110,747,578

12,550,115

9,843,5449,843,544

8,595,3128,595,312


Economic and Financial PositionThe total assets of the Elektro Celje Group on 31 December 2019 amount-ed to EUR 332,064,289 and were 2.6% higher than in 2018. The increase in total assets was influenced by a change in ac-

counting standards on one hand, and by a larger volume of operations, which re-sulted in a higher number of short-term receivables and short-term liabilities, on the other.

Assets (in EUR) Elektro Celje Group


Long-term assets 272,975,410 82.2 265,911,720 82.2 102.7

Intangible assets 4,517,107 1.4 3,202,288 1.0 141.1

Tangible fixed assets 263,833,488 79.4 256,998,186 79.4 102.7

Investment property 202,251 0.1 217,391 0.1 93.0

Financial investments 335,501 0.1 548,480 0.2 61.2

Investments in associates 206,987 0.1 206,987 0.1 100.0

Operating receivables 1,526,724 0.5 2,315,085 0.7 65.9

Deferred tax assets 2,353,352 0.6 2,423,303 0.7 97.1

Current assets 59,088,879 17.8 57,724,876 17.8 102.4

Inventories 1,666,347 0.5 1,710,833 0.5 97.4

Operating trade receivables 51,714,648 15.6 47,931,200 14.9 107.9

Assets from contracts with customers 125,974 0.0 133,784 0.0 94.2

Income tax receivables 1,150,477 0.3 0 0.0 0

Other operating receivables 2,631,705 0.9 2,364,952 0.7 111.3

Cash and cash equivalents 1,799,728 0.5 5,584,107 1.7 32.2

Total assets 332,064,289 100 323,636,596 100 102.6

Operating receivables in the amount of EUR 1,526,724 were down 34.1% from those on 31 December 2018, mainly due to lower

long-term receivables from the company SODO in the amount of EUR 1,146,535 (EUR 2,198,543 on 31 December 2018).

Equity and liabilities (in EUR) Elektro Celje Group


Equity 233,303,669 70.2 228,621,568 70.6 102.0

Long-term liabilities 49,359,128 14.9 46,389,441 14.3 106.4

Short-term liabilities 49,401,492 14.9 48,625,587 15.1 101.6

Total equity and liabilities 332,064,289 100.0 323,636,596 100.0 102.6

Equity of the Group, representing 70.2% of liabilities, on 31 December 2019 amounted to EUR 233,303,669, which is 2% more than on 31 December 2018. The main reason for the increase are higher revenue reserves.

Financial liabilities to banks are present-ed in detail in Sections 11.4.11 and 17.16.

Cash Flow Statement

Cash flow (in EUR) Elektro Celje Group

31 Dec. 2019 31 Dec. 2018

Net operating cash flow 8,603,014 17,166,973

Net investing cash flow —10,328,351 —9,906,414

Net financing cash flow —2,059,042 —5,482,474

Change in net cash and cash equivalents —3,784,379 1,778,085

1 5 1E l e k t r o C e l j e i n 2 0 1 9

Cash assets of the Elektro Celje Group decreased by EUR 3,784,379 in 2019. Cash flows from operating activities showed a surplus of inflows, while cash flows from investing and financing activ-ities showed a surplus of outflows. Op-erating expenses were EUR 47,711,706 higher than in 2018, mainly due to higher expenses for the purchase of materials and services. Investing expenses were EUR 726,997 higher than in the previous year and mainly cover the expenses for the acquisition of intangible and tangible fixed assets. The negative cash flow from financing activities is mainly attributed to the payment of long-term bank loans.

Performance IndicatorsDue to poorer operating results than planned (13.8% lower net profit than planned), the return on equity of the Group (ROE) achieved was lower than planned (by 0.63 percentage points).

As of the balance sheet date 31 Decem-ber 2019, the Elektro Celje Group had fulfilled all its contractual financial com-mitments towards EIB (financial debt/EBITDA < 2.5, financial debt/equity < 0.3, EBITDA/financial expenses from finan-cial liabilities > 12 and current ratio > 0.9).

A. FINANCING INDICATORS (INVESTMENTS)


Equity 213,314,562 219,770,154 228,621,568 234,247,753 233,303,669

Liabilities 314,273,205 318,122,910 323,636,596 328,921,174 332,064,289

Equity financing rate 67.88% 69.08% 70.64% 71.22% 70.26%

Equity plus long-term debt (including provisions) and long-term accrued expenses and deferred revenue

267,685,213 269,248,860 275,011,009 283,937,076 282,662,797

Liabilities 314,273,205 318,122,910 323,636,596 328,921,174 332,064,289

Long-term financing rate 85.18% 84.64% 84.98% 86.32% 85.12%

B. INVESTMENT INDICATORS



Assets 314,273,205 318,122,910 323,636,596 328,921,174 332,064,289

PP&E to total assets ratio 79.05% 78.60% 79.41% 79.43% 79.45%

Fixed assets (PP&E) plus long-term accrued revenue and deferred expenses (carrying value), investment property, long-term financial investments and long-term trade receivables

257,137,015 258,980,458 263,488,417 268,013,684 270,622,058

Assets 314,273,205 318,122,910 323,636,596 328,921,174 332,064,289

Long-term assets rate 81.82% 81.41% 81.41% 81.48% 81.50%


Actual investments 20,328,477 22,487,596 24,216,074 23,640,000 25,473,187

Planned investments 20,470,000 23,017,320 22,390,000 23,640,000 23,640,000

Investment realisation rate 99.31% 97.70% 108.16% 100.00% 107.75%

Investing cash flow 20,328,477 22,487,596 24,216,074 23,640,000 25,473,187

Net revenue from sales 182,114,244 178,141,232 180,987,203 207,358,579 223,884,495

CAPEX to net revenue from sales ratio 11.16% 12.62% 13.38% 11.40% 11.38%


C. HORIZONTAL FINANCIAL STRUCTURE INDICATORS


Equity 213,314,562 219,770,154 228,621,568 234,247,753 233,303,669



Liquid assets 2,581,007 3,806,022 5,584,107 4,599,438 1,799,728




Sum of liquid assets and short-term receivables

49,619,370 55,461,943 56,014,043 57,078,646 57,422,532


Acid-test ratio 1.093 1.135 1.152 1.269 1.162

D. ECONOMIC INDICATOR


Operating revenue 197,537,341 194,785,268 199,932,675 224,224,249 241,548,945

Operating expenses 186,744,105 183,431,531 185,024,469 212,718,827 232,270,846

Operating efficiency ratio 1.058 1.062 1.081 1.054 1.040

E. PROFITABILITY INDICATORS


EBITDA 30,468,792 30,256,783 33,122,836 30,642,787 27,866,198


EBITDA margin 15.42% 15.53% 16.57% 13.67% 11.54%

EBIT 10,793,236 11,353,737 14,908,206 11,505,422 9,278,099


EBIT margin 5.46% 5.83% 7.46% 5.13% 3.84%

Net profit 10,747,578 9,843,544 12,550,115 9,966,213 8,595,312

Average equity 210,476,745 216,452,358 224,195,861 228,924,762 230,962,619

Net return on equity (ROE) 5.11% 4.55% 5.60% 4.35% 3.72%

Net profit 10,747,578 9,843,544 12,550,115 9,966,213 8,595,312

Average assets 313,230,669 316,198,058 320,879,753 323,923,450 327,850,443

Return on assets (ROA) 3.43% 3.11% 3.91% 3.08% 2.62%

1 5 3E l e k t r o C e l j e i n 2 0 1 9

F. LABOUR PRODUCTIVITY INDICATOR



Number of employees per hours worked 710 694 701 707 690

Gross value added per employee 77,713 79,184 84,062 79,837 78,098

I. INDICATORS OF COMPLIANCE WITH BANK COMMITMENTS


Financial debt 45,066,277 39,765,440 37,758,483 41,317,311 40,224,067

Equity 213,314,562 219,770,154 228,621,568 234,247,753 233,303,669

Financial debt/Equity* 0.211 0.181 0.165 0.176 0.172

Financial debt 45,066,277 39,765,440 37,758,483 41,317,311 40,224,067

EBITDA (for a period of 12 months) 30,468,792 30,256,783 32,819,106 30,642,787 27,697,812

Net financial debt/EBITDA* 1.479 1.314 1.151 1.348 1.452

EBITDA (for a period of 12 months) 30,468,792 30,256,783 32,819,106 30,642,787 27,697,812

Financial expenses from financial liabilities (for a period of 12 months)

543,229 384,811 345,724 365,597 328,928

EBITDA/Financial expenses from financial liabilities*

56 79 95 84 84

Current assets 50,840,105 56,586,554 57,724,876 58,603,716 59,088,879


Current ratio* 1.120 1.158 1.187 1.303 1.196

Net financial debt 42,485,270 35,959,418 32,174,376 36,717,873 38,424,339

EBITDA 30,468,792 30,256,783 33,122,836 30,642,787 27,866,198

Net financial debt/EBITDA 1.394 1.188 0.971 1.198 1.379

* Indicators referring to commitments to EIB. The revaluatory operating expenses with current assets are excluded from the calculation of EBITDA.

The indicators are adjusted to IFRS (current assets include accrued revenue and deferred expenses, non-current liabilities include provisions and accrued expenses and deferred revenue, with receivables and liabilities for corporate income tax offset).


1 5 5E l e k t r o C e l j e i n 2 0 1 9

Employees and social responsibility in the Elektro Celje Group14EmployeesAt the Elektro Celje Group, we strive to recruit dedicated and competent em-ployees. In accordance with the needs of work processes and replacement of employees, the number of employees in individual months increases slightly and then drops down again by the end of the financial year. The fluctuation was low (2.8%), arising primarily due to the retire-ment of employees and temporary em-ployments. The majority of the employ-ees that left the Group in 2019 retired.

In 2019, the number of new employees was not as high; the number of employ-ees was also strictly controlled during the calendar year, which is a great challenge given the requirements of work process-es and the structure of employees.

The total number of employees is the result of planned management of the number of employees at the level of indi-vidual companies and the Group. As of 31 December 2019, the Elektro Celje Group employed 705 workers.

700

500

300

100

600

400

200

0

Num

ber o

f em

ploy

ees

Elektro Celje, d. d.

ECE d. o. o.

Elektro Celje OVI, d. o. o.

633

73

3

628

73

4

628

74

0

632

75

0

632

85

0

2015 2016 2017 2018 2019

Number of employees in the Elektro Celje Group

1 5 6 1 4 E m p l o y e e s a n d s o c i a l r e s p o n s i b i l i t y i n t h e E l e k t r o E e l j e G r o u p

Structure of employees by employment status, share of employees by gender and average age

2019 data Elektro Celje, d.d. ECE d.o.o. Elektro Celje OVI, d.o.o.

Number of permanently employed workers 603 70 3

Number of temporarily employed workers 21 3 1

Number of trainees employed 4 0 0

Total number of employees 628 73 4

Average age 45 44 40

The proportion of female employees 14% 71% 0%

The proportion of male employees 86% 29% 100%

The majority of employees have a full-time employment status, only 1% of employees are under a part-time em-ployment contract. These are mainly employees with the status of disabled workers or those exercising the right of part-time employment due to parenting.

We consider a number of aspects in or-ganising work processes and placing employees. Employees that leave who are in more demanding management or professional positions are replaced mostly through internal redistribution, i.e. succession. We thus cultivate knowl-edge transfer among employees and en-able career advancement for employed staff. When employing external candi-dates, we publish a vacancy notice at the ESS.

Social ResponsibilityThe Elektro Celje Group allocated the majority of its sponsorship funds to sport clubs and associations operating in dif-ferent sports, both in the lower and high-

er categories of competitions throughout Slovenia. The larger ones include Kamnik Volleyball Club, Z'dežele Women's Hand-ball Club, Ajdovščina Basketball Club, Triglav Kranj Basketball Club and Velen-je Ski Jumping Club. Sponsorship funds have also been allocated for events that promote healthy leisure activities, such as Afrodita's Run with the Štajerski val radio station and "Na kolo" cycling gath-ering. Donations were given to organi-sations that needed assistance in oper-ating or provided assistance to those in need.

Environmental ResponsibilityAt the Elektro Celje Group, we place our responsibility toward the environment in which we live very high on our list of pri-orities. The "Protecting the environment with an e-invoice" campaign promoted the transition from paper to electronic in-voicing at the ECE subsidiary, which was rewarded with a discount on a monthly invoice. As part of the development of new services, we offered our customers the option of setting up their own renew-able energy source with a turnkey solar power plant. For more information on environmental protection in the parent company, see Section 8.7.

Responsibility to Customers and the General PublicIn communication with the company ECE, we highlighted a new service in 2019 - ECE Energy Solutions, in which we emphasized the installation of own turn-key solar power plants, and received an excellent response from the public at the Celje MOS trade fair. Communication in the parent company is presented in Sec-tion 8.6.

1 5 7E l e k t r o C e l j e i n 2 0 1 9

What we do is transparentCommunicat ion with stakeholders is transparent and in accordance with the appl icable provis ions. The information provided to stakeholders relates mainly to business performance and the company's future strategy. Information that is publ ic is publ ished on the company's website. When communicat ing with stakeholders, we fol low the pr inciple of compl iance with SDH (Slovenian Sovereign Holding) recommendations and OECD guidel ines, which highl ights three pr inciples of corporate management: transparency, eff ic iency and accountabi l i ty .

FINANCIAL REPORT

of the Elektro Celje Group

1 5 9

Independent auditor's report15

1 6 0 1 5 I n d e p e n d e n t a u d i t o r ' s r e p o r t

1 6 1E l e k t r o C e l j e i n 2 0 1 9

Consolidated financial statements16 16.1 Consolidated statement of financial position


As of 31 December 2019


ASSETS

A Long-term assets (1 + 2 + 3 + 4 + 5 + 6) 272,975,410 265,911,720

1. Intangible assets 17.6 4,517,107 3,202,288

2. Tangible fixed assets 17.7 263,833,488 256,998,186

a) Land 5,993,990 6,002,831

b) Buildings 188,123,201 178,756,949

c) Production equipment, machinery and other equipment 62,345,176 62,127,438

d) Tangible fixed assets under construction and production 7,371,121 10,110,968

3. Investment property 17.8 202,251 217,391

4. Financial investments 17.9.1 335,501 548,480

5. Investments in associates 17.9.2 206,987 206,987

6. Operating receivables 17.11.1 1,526,724 2,315,085

7. Deferred tax assets 17.31.1 2,353,352 2,423,303

B Current assets (1 + 2 + 3 + 4 + 5 + 6 + 7) 59,088,879 57,724,876

1. Inventory 17.10 1,666,347 1,710,833

2. Operating trade receivables 17.11.2 51,714,648 47,931,200

3. Assets from contracts with customers 17.11.3 125,974 133,784

4. Income tax receivables 17.31 1,150,477 0

5. Other operating receivables and other assets 17.11.4 2,631,705 2,364,952

6. Cash and cash equivalents 17.12 1,799,728 5,584,107

TOTAL ASSETS (A + B) 332,064,289 323,636,596

1 6 2 1 6 C o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s





A Equity (1 + 2 + 3 + 4 + 5) 17.13 233,303,669 228,621,568

1. Share capital 100,953,201 100,953,201

2. Share premium 62,260,317 62,260,317

3. Profit reserves 62,388,945 52,751,585

a) Legal reserves 4,471,554 4,009,890

b) Reserves for own shares and interest 886,371 886,371

c) Own shares and interest —886,371 —886,371

d) Other profit reserves 57,917,391 48,741,695

4. Fair value reserves —669,678 —344,565

5. Net profit or loss 3,406,410 7,765,656

a) Retained net income/profit from previous years 1,206,072 3,217,290

b) Net profit/loss for the year 2,200,338 4,548,366

Equity share of non-controlling interests 4,964,474 5,235,374

Equity share of controlling interests 228,339,195 223,386,194

B Long-term liabilities (1 + 2 + 3 + 4 + 5) 49,359,128 46,389,441

1. Provisions 17.14 7,610,574 6,960,898

2. Long-term deferred revenue 17.15 12,259,197 12,535,219

3. Financial liabilities 17.16 29,152,576 26,510,207

4. Operating liabilities 17.17 308,251 361,386

5. Deferred tax liabilities 17.31.2 28,530 21,731

C Short-term liabilities (1 + 2 + 3 + 4 + 5) 49,401,492 48,625,587

1. Financial liabilities 17.16 11,071,491 11,248,276

2. Trade payables 17.17 20,919,722 17,043,086

3. Liabilities from customer contracts 17.17.1 913,469 971,234

4. Operating liabilities from operations for third-party account 17.17 10,017,951 11,167,104

5. Other operational liabilities 17.17 6,478,859 7,357,477

6. Income tax liabilities 17.31 0 838,410

TOTAL LIABILITIES TO ASSET SOURCES (A + B + C) 332,064,289 323,636,596

1 6 3E l e k t r o C e l j e i n 2 0 1 9

16.2 Consolidated income statement

16.3 Consolidated comprehensive income statement


2019 2018

1. Net sales revenue 17.22 223,884,495 180,987,203

2. Capitalised own products 17.23 15,164,716 15,193,945

3. Other operating revenue 17.24 2,499,734 3,751,527

4. Used material costs 17.25 —178,537,860 —130,253,857

5. Cost of services 17.25 —8,657,816 —9,339,230

6. Labour costs 17.26 —26,001,832 —25,765,989

7. Depreciation 17.27 —18,275,668 —17,783,615

8. Losses, write-offs and asset revaluation adjustments 17.28 —312,431 —431,015

9. Other operating expenses 17.29 —485,239 —1,450,763

OPERATING PROFIT OR LOSS 9,278,099 14,908,206

10. Financial revenue 17.30 681,372 296,857

11. Financial expenses 17.30 —431,458 —432,834

PROFIT OR LOSS BEFORE TAXES 9,528,013 14,772,229

12. Income tax 17.31 —828,545 —2,095,718

13. Deferred taxes 17.31 —104,156 —126,396

NET PROFIT OR LOSS 8,595,312 12,550,115

14. Net profit share of controlling interests 8,518,553 11,756,236

15. Net profit share of non-controlling interests 76,759 793,879


2019 2018

1. Net profit or loss for the financial period 8,595,312 12,550,115

2 Items that will not be reclassified to profit or loss —375,861 38,962

a. Actuarial gains/losses in provisions for severance pays —410,066 45,161

b. Impact of deferred tax on actuarial gains/losses in provisions for severance pays 34,205 —6,199

3 Items that will be reclassified to profit or loss 28,987 3,357

a. Revaluation of financial investments measured at fair value through equity 35,786 4,144

b. Adjustment to reserves resulting from valuation at fair value for deferred tax liabilities —6,799 —787

4. Total other comprehensive income of the year —346,874 42,319

5. Total comprehensive income for the financial period (1 + 4) 8,248,438 12,592,434

of which:

- equity holders of the controlling company 8,173,908 11,797,036

- non-controlling shareholders 74,530 795,398


16.4 Consolidated statement of cash flows

Explanatory notes to the consolidated statement of cash flows are provided in Section 17.33.


2019 2018


a. Inflows from operating activities 390,656,092 351,508,345

Inflows from sale of goods and services 387,537,582 349,676,953

Other inflows from operating activities 3,118,510 1,831,392

b. Outflows from operating activities —382,053,078 —334,341,372

Outflows from the purchase of material and services —334,143,344 —289,142,161

Outflows from salaries and employees' shares in the profit —25,371,235 —25,085,639

Charges (contributions and other taxes) —20,769,775 —18,885,302

Other outflows from operating activities —1,768,724 —1,228,270

c. Positive or negative net cash flow from operating activities (a + b) 8,603,014 17,166,973


a. Inflows from investing activities 901,441 596,381

Inflows from interests and dividends received relating to investing activities 14,124 18,433

Inflows from disposal of tangible fixed assets 187,035 577,948

Inflows from disposal of short-term financial investments 700,282 0

b. Outflows from investing activities —11,229,792 —10,502,795

Cash payments for the acquisition of intangible assets —2,015,776 —2,222,066

Outflows from the purchase of tangible fixed assets —9,174,016 —8,280,729

Outflows from the acquisition of long-term financial investments —40,000 0

c. Positive or negative net cash flow from investing activities (a + b) —10,328,351 —9,906,414


a. Inflows from financing activities 31,782,885 29,290,160

Inflows from the increase in financial liabilities 31,782,885 29,290,160

b. Outflows from financing activities —33,841,927 —34,772,634

Interest paid on financing activities —339,709 —350,690

Cash payments for equity redemption 0 —250,572

Repayments of financial liabilities —29,935,879 —30,680,928

Payments of dividends and other profit shares —3,566,339 —3,490,444

c. Positive or negative net cash flow from financing activities (a + b) —2,059,042 —5,482,474

Č. CLOSING BALANCE OF CASH ASSETS 1,799,728 5,584,107

Net cash flow for the period (sum of cash flows Ac, Bc and Cc) —3,784,379 1,778,085

Opening balance 5,584,107 3,806,022

1 6 5E l e k t r o C e l j e i n 2 0 1 9

16.5 Consolidated statement of changes in equity

Expl

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ory

note

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the

cons

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17.

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CO

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LID

ATED

STA

TEM

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CH

ANG

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EQ

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Y fr

om

1 Ja

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19 to

31

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up c

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1 6 7E l e k t r o C e l j e i n 2 0 1 9

Explanatory notes to the consolidated financial statements1717.1 Reporting CompanyThe Elektro Celje Group, (hereinafter: Group), consists of the parent company Elektro Celje d.d. (hereinafter: Parent Company), as well as its subsidiaries ECE, energetska družba, d.o.o., podjetje za prodajo električne energije in drugih energentov, svetovanje in storitve (here-inafter: the company ECE), and Elektro Celje OVI, obnovljivi viri in inženiring, d.o.o., (hereinafter: the company Elektro Celje OVI). The Group companies were founded and operate in Slovenia.

The key tasks of the Group are to deliver a reliable, safe and efficient electricity supply to its customers in the distribu-tion area of Elektro Celje, as well as the purchase and sale of electricity and oth-er energy products to end customers, electricity and heat generation, and in-vestments in renewable energy sources.

17.2 Bases for the Preparation of Consolidated Financial Statementsa) Declaration of ConformityThe consolidated financial statements were confirmed by the Management Board on 6 April 2020.

The consolidated financial statements of the Group have been prepared in compliance with International Financial Reporting Standards (hereinafter IFRS) as adopted by the European Union, and Explanatory Notes, adopted by the In-ternational Financial Reporting Inter-pretations Committee (IFRIC) as well as the European Union, and in accordance with the provisions of the Companies Act (ZGD-1). The Group does not disclose information for which it may reasona-bly estimate that such disclosure could cause significant damage.

At the balance sheet date there are no differences in the Group's accounting policies between the IFRS used and those adopted by the European Union.

b) Basis for measurementThe consolidated financial statements present an understandable and appro-priate account of the financial position, financial performance and cash flows of the Group. They are prepared by observ-ing the assumptions of accruals and the going concern basis, with the informa-tion presented ensuring reliability, and are complete in terms of significance and costs. The fiscal year is the calen-dar year from 1 January to 31 December 2019.

1 6 8 1 7 E x p l a n a t o r y n o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s

Significant assets and liabilities of the Group Measurement method

Long-term assets

Intangible assets at cost

Tangible fixed assets at cost

Investment property at cost

Financial investments:

- of which investments measured at cost at cost

- of which investments measured at fair value through equity at fair value

Deferred tax assets at undiscounted amount measured by tax rates

Short-term assets

Inventory at lower value, whether at cost or net realizable value

Operating and other receivables at amortised cost

Cash and cash equivalents at amortised cost

Long-term liabilities

Provisions

- of which provisions for post-employment and other benefits at present value of evaluated future payments based on actuarial calculation

- of which provisions for lawsuits at present value of evaluated future settlements

Long-term deferred revenue at cost

Financial liabilities at amortised cost

Operating liabilities at amortised cost

Deferred tax liabilities at undiscounted amount measured by tax rates

Short-term liabilities

Financial liabilities at amortised cost

Operating and other liabilities at amortised cost

c) Functional and presentation currencyThe consolidated financial statements are presented in euros (EUR), which are the functional and presentation currency of the Group. All financial data presented in euros are shown as rounded-off fig-ures. Due to rounding off, differences be-tween financial statements and amounts in explanatory notes may occur.

d) Use of estimates and assumptions and significant uncertainty in operationsDue to uncertainty of future business events forming a part of operations and their impact on the Group, some items in the financial statements cannot be measured accurately, but are instead estimated. Thus, assessment based on the best knowledge of current and future events, experience, information, as well as taking potential changes in business environment into consideration, is used in accounting estimates. The preparation of financial statements in compliance with the IFRS is, consequently, based on certain estimates and assumptions that affect the residual value of reported as-sets and liabilities of the Group on the re-

porting date, and the amount of revenue, costs and expenses of the Group in the period ending at the balance sheet date.

Estimates and assumptions are reviewed regularly, with the changes in account-ing estimates recognised in the period of the change and in all future periods which the changes affect. Estimates and assumptions are present in the following assessments: • Explanatory note 17.3 (c), 17.3 (d) and

Accounting Policy 17.6, 17.7 - Deter-mining the useful life of depreciable assets;

• Explanatory note 17.3 (q) and Account-ing Policy 17.31.1, 17.31.2 - Deferred taxes;

• Explanatory note 17.3 (k), 17.3 (l) and Accounting Policy 17.14, 17.15 - Meas-urement and estimated value of long-term deferred revenue, provisions for post-employment benefits of employ-ees and lawsuits;

• Explanatory note 17.3 (f), 17.3 (g) and Accounting Policy 17.9 - Valuation of financial investments;

• Explanatory note 17.3 (f), 17.3 (g) and Accounting Policy 17.11 in 17.34.1 - Re-valuation adjustment to receivables;

1 6 9E l e k t r o C e l j e i n 2 0 1 9

• Explanatory note 17.3 (j) and Account-ing Policy 17.10 - Revaluation adjust-ments to inventory;

• Explanatory note 17.3 (d) and Account-ing Policy 17.7.1 - Determining the dis-count rate for leases.

e) Amendments to accounting policiesThe Group did not amend its accounting policies in 2019 and for the first time, in accordance with the transitional provi-sions, applied the accounting policies set out in IFRS 16 - Lease.

IFRS 16 eliminates the existing model of double accounting for leases; most leases from the statement of financial position are accounted for without a dis-tinction between an operating and a fi-nancial lease. According to IFRS 16, the lease agreement is considered to be a contract which grants the right to use certain assets in return for payment for a specified time period, providing that the tenant recognises the right to use the assets and liabilities from the lease. The right to use the asset is depreciat-ed, with interest credited to the liabilities. The new standard allows the exceptions referred to for tenants, including leases for the period of 12 months or less with-

out purchase option and leases where the leased asset has low value.

Effect of transition to IFRS 16 as of 1 January 2019The Group reviewed and analysed the lease agreements with a duration longer than one year and recognised the right to use the leased assets and liabilities form the lease on 1 January 2019. The Group assessed the value of rights of use and lease liabilities which will be recorded in the statement of financial position and impacts on the income statement based on the value of leases and the period of duration of lease contracts. Until now, the Group has been recognising operat-ing leases as lease costs, but according to the new model the long-term leased assets will now be recognised as untan-gible fixed assets and the entire contrac-tual debt will be disclosed. The value of the right to use and liabilities from leases was based on discounting future cash flows for the period of the duration of the lease, using the average weighted in-terest rate on investment loans as of 31 December 2018 in the amount of 1.259%. Depreciation costs are calculated by us-ing depreciation rates assessed based on the remaining lease period.

Impact of IFRS 16 on items in the statement of financial position of the Elektro Celje Group as of 1 January 2019 (in EUR)

1 January 2019 (IFRS 16)

Amendment (IFRS 16)

31 December 2018 (IAS 17)

ASSETS

Tangible Fixed Assets 257,305,037 306,851 256,998,186

Total assets 257,305,037 306,851 256,998,186


Financial liabilities 38,065,334 306,851 37,758,483

Total liabilities 38,065,334 306,851 37,758,483

Assessment of the impact of the IFRS 16 standard (2019) on the profit or loss account of the company Elektro Celje in 2019 (in EUR)

2019 (IFRS 16)

2019 (IFRS 17)

2018 (IAS 17)

OPERATING COSTS AND EXPENSES

Cost of services —308,949 —426,777 —497,867

Lease cost —308,949 —426,777 —497,867

Write-offs —113,608 0 0

Depreciation of rights of building use —46,642 0 0

Depreciation of rights of equipment use —66,966 0 0

Operating profit or loss —422,557 —426,777 —497,867

Financial expenses from financial liabilities —3,410 0 0

Financial expenses for interest payment from the right to use the assets —3,410 0 0

Profit or loss before taxes —425,967 —426,777 —497,867


17.3 Significant Accounting PoliciesThe Group uses the same accounting policies for all periods presented in the enclosed consolidated financial state-ments. The financial statements of Group companies are prepared for the same reporting period as the financial state-ments of the Parent Company, using the same accounting policies. All significant items are disclosed, with the significance of disclosure defined by internal rules of the Parent Company. The accounting policies and the calculation methods used are the same as for the last annual reporting, except for the newly adopted standards and explanatory notes.

A. Newly adopted standards and explanatory notes which came into effect on 1 January 2019The following amendments to existing standards and new explanatory notes were issued by the International Finan-cial Reporting Interpretations Commit-tee (IFRIC) and adopted by the EU, which came into force in the current account-ing period:

IFRS: 16 Leases – The standard and the impact of the implementation of the standard on the Group are presented in Section 15.2.e.

IFRS 9: Prepayment Features with Nega-tive Compensation (Amendment)The amendments are effective for annu-al periods beginning on 1 January 2019 and stipulate that financial assets or li-abilities with prepayment features with negative compensation that allow the contractual party a reasonable com-pensation for an early termination of the contract or for the renewal of the con-tract are measured at amortised cost or at fair value through other comprehen-sive income. The amendments did not affect the Group's financial statements.

IAS 28: Long-term Investments in Asso-ciates and Joint Ventures (Amendment)The amendments are effective for an-nual periods beginning on 1 January 2019. The amendments clarify that the company when recognising other finan-cial instruments in an associate or joint venture that are not subject to the equi-ty method must apply IFRS 9 - Financial Instruments. These include long-term investments that are substantially a part of the company's net financial invest-

ments in an associate or joint venture. When applying the IFRS 9, the company does not take into account any adjust-ments to the book value of long-term investments, which otherwise arise from the usage of the IAS 28 standard. The amendments did not affect the Group's financial statements.

Explanatory note to IFRIC 23: Uncer-tainty over the Accounting of the Corpo-rate Income TaxThe explanatory notes are effective for annual periods beginning on 1 January 2019. The explanatory note address-es the uncertainty surrounding the treatment of income tax. Uncertain tax treatment is a tax treatment for which it is uncertain whether the tax authority concerned will accept it as a tax treat-ment that complies with the tax law. The explanatory note implements guidelines for the accounting of uncertain tax treat-ments separately or together, reviews by tax authorities, use of appropriate method reflecting these uncertainties, and considering changes of facts and circumstances. The amendments did not affect the Group's financial statements.

Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (Amendments)The standard was adopted by the Europe-an Union on 13 March 2019 and is effective for annual periods beginning on 1 January 2019. The amendments require compa-nies to determine the costs of past service or settlement profit or loss and net interest amount over the remainder of the annual reporting period after the change, restric-tion or settlement of the plan based on the updated actuarial assumptions. At the same time, the company has to determine the effect of the asset ceiling after the modification, limitation or settlement of the programme. The amendments did not affect the Group's financial statements.

Amendments to various standards - Im-provements to IFRS (period 2015–2017)The International Accounting Standards Board has published a series of annu-al improvements to IFRS for the period 2015-2017. They are intended to elim-inate inconsistencies and to interpret the text. The amendments did not affect the Group's financial statements. The amendments provide the following ex-planatory notes:

Newly adopted standards and

explanatory notes which came into

effect on 1 January 2019

1 7 1E l e k t r o C e l j e i n 2 0 1 9

• IFRS 3 - Business Combinations: The company must remeasure its previ-ously held shares in the joint venture when it acquires control over the busi-ness entity.

• IFRS 11 - Joint Arrangements: If the company acquires joint control over the business entity, it does not remeasure its previously held shares in the joint venture.

• IAS 12 - Income Tax: The company rec-ognises the effects of income tax on dividends in the profit or loss, any oth-er comprehensive income or the equity in the same way.

• IAS 23 - Borrowing Costs: The compa-ny treats all loans that were originally intended for asset development, such as an asset qualified for an intended use or sale, as part of general loans.

B Standards and explanatory notes not yet in force and not adopted early by the GroupIFRS 17 - Insurance ContractsIt is effective for annual periods begin-ning on or after 1 January 2021.

Amendments to IFRS 10 - Consolidated Financial Statements and IAS 28 - In-vestments in Associates and Joint Ven-turesThe effective date is postponed for an indefinite period until the conclusion of the research project regarding the equity method. It refers to the sale or contribu-tion of assets between the investor and its associated company or joint venture and subsequent changes. The amend-ments will not significantly affect the Group's financial statements.

Conceptual framework of IFRS stand-ardsOn 29 March 2018, the International Ac-counting Standards Board (IASB) pub-lished a revised conceptual framework for financial reporting. The conceptual framework determines a comprehensive set of concepts in financial reporting, the setting of standards, guidelines for the preparation of consistent account-ing policies, and for easier understand-ing and interpretation of standards. The IASB also published a separate accom-panying document. Amendments to Ref-erences to the Conceptual Framework in IFRS Standards, which represents amendments to the relevant standards and serves to update the references to the revised conceptual framework. The

Board's objective is to provide support in the transition to a new conceptual framework for companies that adopt their accounting policies on the basis of the conceptual framework guidelines in the event that no specific IFRS stand-ard addresses a specific transaction. For draftsmen who adopt their accounting policies on the basis of the conceptu-al framework, the revised conceptual framework for the annual periods begin-ning on or after 1 January 2020. The Eu-ropean Union adopted the amendments on 29 November 2019. The Group is still researching the possible impact on the consolidated financial statements.

IFRS 3 - Business Combinations (Amend-ments)The IASB published amendments to the definition of business (amendments to the IFRS 3 standard), the purpose of which is to eliminate uncertainty in de-termining whether a business takeover or a takeover of a group of assets is at hand. The amendments apply to busi-ness combinations for which the take-over date is the date of the first annual reporting period beginning on or after 1 January 2020 and for the takeover of assets at the beginning of that period or later. Early application of amendments is permitted. The European Union has not yet approved the amendments to the standard. The amendments will not significantly affect the Group's financial statements.

IAS 1 - Presentation of Financial State-ments and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors: Definition of "Important" (Amend-ments)The amendments are effective for annu-al periods beginning on or after 1 January 2020. The amendments clarify the defi-nition of the term important and the way in which it is to be used. Under the new definition, "the information is important if it can reasonably be expected that its omission, misstatement, or concealment will affect the overall decisions of the pri-mary users of the financial statements who make the decisions based on finan-cial statements that provide the financial information of the particular company." In addition, the Board provided clarifica-tions on the explanatory notes accom-panying the definition. The amendments also ensure that the definition of "impor-tant" is consistent with all IFRS stand-

Standards and explanatory notes not

yet in force and not adopted early by the

Group


ards. The European Union adopted the amendments on 29 November 2019. The amendments will not significantly affect the Group's financial statements.

IAS 39 - Financial Instruments: Recogni-tion and Measurement and IFRS 7 - Finan-cial Instruments: Disclosures Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 ad IFRS 7) issued by IASB on 26 September 2019. Amendments to the Interest Rate Bench-mark Reform:a) They amend the specific hedge ac-counting requirements so that compa-nies can account for hedges, assuming that the reference interest rate on which hedged cash flows and cash flows from the hedging instrument are based on does not change due to the Interest Rate Benchmark Reform;

b) They are mandatory for any hedging relationship directly affected by the In-terest Rate Benchmark Reform;

c) They are not intended to mitigate any other consequences of the Interest Rate Benchmark Reform (if the hedging ratio no longer meets the requirements for hedge accounting for reasons other than those specified in the amendments, hedge accounting should be discontin-ued);

d) They require specific disclosures on the extent to which the amendments to the reform affect hedging relationships between companies. The European Un-ion adopted the amendments on 15 January 2020. The amendments will not significantly affect the Group's financial statements.

IFRS 14 - Regulatory Deferral AccountsThe IASB published the standard on 30 January 2014. The standard is aimed at enabling companies using IFRS for the first time and currently recognising reg-ulatory deferral accounts in accordance with previous GAAP to continue with such recognition upon transition to IFRS. The European Union has not yet approved the amendments to the standard. The amendments will not significantly affect the Group's financial statements.

a) Basis of consolidationBasis of consolidation Consolidated financial statements as of 31 December 2019 include the financial

statements of the Parent Company and the subsidiaries which are combined into the consolidated financial statements based on the full consolidation method, by adding related items of assets, lia-bilities, equity, revenue and expenses, taking into account consolidation ad-justments.

Transactions eliminated from consolida-tionIn preparing the consolidated financial statements, financial investments of the Parent Company into the equity of the subsidiaries and associated shares of the Parent Company in the equity of subsidiaries have been eliminated, as well as all balances, profits and losses or revenue and expenses arising from in-tra-group transactions.

Investments in subsidiariesSubsidiaries are entities controlled by the Parent Company. Control exists when the Parent Company has the abil-ity to affect the financial and business decisions of a company in the group to obtain benefits from its activities. In as-sessing the influence, the existence and impact of potential voting rights which can currently be used or exchanged, are taken into account. The financial state-ments of subsidiaries are included in the consolidated financial statements from the date when control commences until the date it ceases.

Investments in associates and jointly controlled companiesAssociated companies are companies over which the Group has a significant impact but does not control their finan-cial and operating policies. Jointly con-trolled companies are companies, the economic performance of which is un-der joint control of the Group based on a contractual agreement requiring unan-imous financial and business decisions. The Parent Company takes into account the significance of the impact in the in-clusion in consolidated financial state-ments.

b) Foreign currency conversion Transactions denominated in a foreign currency shall be converted into the appropriate functional currency of the companies within the group at the ex-change rate on the date of the trans-action. Positive or negative exchange differences are the differences between

1 7 3E l e k t r o C e l j e i n 2 0 1 9

the amortised cost in the functional cur-rency on the date of the transaction and in the amortised cost in foreign currency, calculated at the exchange rate at the time of payment, and are recognised in the profit and loss statement.

c) Intangible assets Intangible assets are non-monetary as-sets without physical existence and are recognised by companies in the group when it is probable that the economic benefits associated with such assets will flow into the group. An intangible asset is derecognised upon disposal or when no more economic benefits are expected from its use and subsequent disposal.

Intangible assets are, upon initial recog-nition, valued at cost, which also includes import and non-refundable purchase du-ties, after deducting all discounts, and di-rectly attributable expenditure from the preparation of the asset for its intended use. Acquisition costs are subsequently reduced by the amount of accumulated depreciation. As a rule, the Group reval-ues intangible fixed assets immediately, when their book value exceeds the recov-erable value.

Intangible fixed assets of the Group re-late to property rights (mainly invest-ment into software), such assets in de-

velopment, and other long-term accrued revenue and deferred expenses. The property rights of the Group consist of investments into software, real rights in immovable property, and substantive rights for the use of holiday apartments.

Subsequent costsThe subsequent costs related to the in-tangible assets are capitalised only in cases when it is likely that future eco-nomic benefits, associated with a part of this asset, will flow into the group, and if the cost can be measured reliably. All other costs are recognised in the profit and loss statement as costs as soon as they are generated.

Depreciation and useful lifeAll intangible assets are depreciable as-sets with a finite useful life. The straight-line depreciation method is used, with the depreciation basis equal to the ac-quisition value of intangible assets.

Depreciation, charged for each account-ing period, shall be recognised as a cost or an operating expense of the period and declared in the profit and loss state-ment under the item depreciation. The group checks the useful life in accord-ance with IAS 38 and, if necessary, car-ries out an adjustment.



Minimum Maximum

Computer software 2–3 33.33 50.00

Rights in rem on immovable property 100 1.00 1.00

Right to use facilities 30 3.33 3.33

d) Tangible fixed assets Tangible fixed assets, which are owned by the companies in the group, are rec-ognised when it is probable that the eco-nomic benefits associated with them will flow into the group, and their cost can be measured reliably. Groups of tangi-ble fixed assets are immovable property (land, buildings), equipment and other tangible fixed assets as well as invest-ments in the acquisition of such assets and receivables for other assets in this re-spect. Small tools with useful lives longer than one year (hand tools and devices) are also considered tangible fixed assets.

Upon initial recognition, they are valued at cost, which consists of the purchase price, import duties and non-refundable

purchase fees and costs that can be at-tributed directly to the preparation for their intended use. The cost also com-prises borrowings costs related to the acquisition of new tangible fixed assets for those fixed assets, for which the pe-riod from the date of the provision of services of the first invoice for construc-tion assembly services or equipment to bringing the fixed asset for use is longer than one year, and namely for the period from the payment deadline of each in-voice until the date of bringing the fixed asset into use, whereby the capitalisa-tion rate is calculated for each individ-ual investment, taking into account the weighted average rate of withdrawals of investment loans for the period for which interest is calculated.


Land is valued at acquisition cost, which includes costs of real estate turnover tax-es and land registry fee. The acquisition cost of buildings comprises expenditures to cover the purchase, construction or upgrading of facilities, project and oth-er documentation on the basis of which the acquisition was made, construction or upgrades for land development, for the necessary permits for the manufac-ture of connections and other costs that can be directly attributable to preparing them for use. Expenditures for the acqui-sition of land on which buildings are situ-ated and expenditures for the acquisition of land intended for access to buildings or for other needs regarding their use are not included in the acquisition cost. The acquisition cost of equipment compris-es expenditures to cover the purchase, manufacture or elaboration of equip-ment, costs of delivery, installation and other expenses arising during purchase, manufacture or elaboration.

The acquisition cost of tangible fixed as-sets constructed or produced in the com-pany consists of costs originating from their construction or manufacture and indirect costs of construction or manu-facture that can be attributed to the as-set. The cost of such fixed assets cannot be higher than the same or similar fixed assets on the market. Investments car-ried out in the Parent Company are di-vided into renovations (major repairs of fixed assets due to wear), replacements, and increase in capacity (investment in replacing or increasing the capacity of the existing fixed assets) and new invest-ments (investments in new fixed assets). Here, the fixed assets acquired free of charge are valued at cost, and if this is not known, at fair value as determined in the free acquisition agreement.

If the cost of the fixed asset is significant, it shall be divided into its parts. If these

parts have different useful life significant in the relation to the complete cost of the tangible fixed asset, every part is dealt with individually.

Measurement after recognition and sub-sequent costsIn evaluating tangible fixed assets, the Group uses the cost model and carries them at cost, less accumulated depre-ciation and accumulated impairment losses. Subsequent costs incurred for repairs and maintenance related to tan-gible fixed assets are recognised by the Group as maintenance costs when they are incurred in the process of restoring and maintaining future economic bene-fits based on the initial estimated level of the asset's efficiency. Estimated costs of regular inspections or repairs of tangible fixed assets are treated as parts of tangi-ble fixed assets.

A fixed asset is derecognised when dis-posed of or if no further economic bene-fits are expected from its use or disposal. Gains and losses from the sale or dispos-al, which are determined in such a way that sales revenues are compared to the book value, are included in the profit or loss statement of the Group.

Depreciation and useful lifeThe Group uses the straight-line depre-ciation method, taking into account the useful life of each individual part of the tangible fixed assets, which depends on the expected physical wear, technical and economic ageing, and expected le-gal, leasing and other restrictions of use, considering the shortest one. Useful life of the fixed assets of the Parent Com-pany shall be determined by the joint commission of electricity distribution companies, appointed specifically for that purpose, and for the assets of the subsidiaries, by the commission of the Parent Company.

Significant groups of depreciable assets Estimated useful life in years Depreciation rate in %

Minimum Maximum

Energy infrastructure buildings 20–50 2.00 5.00

Other buildings 20–40 2.50 5.00

Energy infrastructure equipment 3–33.33 3.00 33.33

Other equipment 2–33.33 3.00 50.00

Vehicles 5–12.5 8.00 20.00

Equipment in SHPs, SPSs and CHPPs 4–30 3.33 25.00

1 7 5E l e k t r o C e l j e i n 2 0 1 9

Depreciation is calculated individually, until the amount fully replaces the value that forms the basis for the calculation of depreciation. Accumulated depreciation of fixed assets is carried out for the amount of depreciation determined in the final annu-al accounts of depreciation. Depreciation is not calculated for land, fixed assets of cultural, historical or artistic significance, fixed assets permanently out of use, in-vesting in the acquisition of fixed assets until they are available for use, and other assets for the acquisition of fixed assets.

The Group checks the useful life of fixed assets in accordance with IAS 16, with the depreciation rate converted accordingly, if expectations differ significantly from the estimates. The effect of the restatement is treated as a change in the accounting estimate and shall be presented in the ex-planatory notes. Impairment of assets is described in Section 17.3 (h).

Assets under financial leaseA lease is a contractual relationship in which the landlord, in return for a pay-ment or series of payments, transfers the right to use an asset for an agreed time to the lessee. The lessee recognis-es the asset that represents the right to use and the liability from the lease on the commencement date of the lease.

Operating leases of up to 12 months (short-term leases) and/or of the leased asset value less than EUR 10,000 are

excluded. The Group recognises lease costs (excluding the cost of services such as insurance, maintenance etc.) on a straight-line basis in the Profit or Loss Statement under the item of Service Ex-penses.

Assets provided by the Group into an op-erating lease are demonstrated among its tangible assets; rental income is rec-ognised on a straight-line basis in the profit or loss statement under the oper-ating revenue item in the rental period.

Recognition and initial measurement of assets with the right to useAssets with rights to use are measured at cost, which includes the amount of the initial measurement of the lease liability, the lease payment made on or before the commencement date of the lease, re-duced by the received lease incentives, initial direct costs and an estimate of as-set disposal costs or restoring the site at the end of the lease. The asset is depre-ciated over the period. The lease liability represents the present value of the lease payments made during the lease period and is reduced by the repayment of lease and the recognition of interest expenses.

Depreciation, useful life and revaluationThe Group depreciates the asset repre-senting the right to use from the begin-ning of the lease to the end of its useful life or until the end of the duration of the lease, if the latter is shorter.



Minimum Maximum

Right to use equipment 2.2–8 12.50 46.15

Right to use buildings 3–3.3 30.77 33.33

The right to use the leased asset is reas-sessed if the duration period of the lease, the amount of the lease payments (e.g. change in future amounts of the lease payments as a result of change in index or rate of determining the amount of the lease payments) or the estimate of the lease termination fee changes and when the lease agreement is modified, if this change is not accounted for as a sepa-rate lease.

e) Investment property Investment property is real-estate owned by the Group with the purpose of bringing in rent. Investment property is defined as a commercial building, provided for sin-

gle or multiple instances of operating lease, or an empty commercial building, available for rent.

Investment property of the Group is measured at cost upon initial recogni-tion, which includes the purchase price and the costs that are attributable to it. Upon initial recognition, they are valued at cost, reduced by the depreciation amount, identified in the final Annual Statement of Depreciation. The Group uses the straight-line depreciation meth-od, taking into account an expected use-ful life of 50 years. Impairment of assets is described in Section 17.3 (h).


f) Financial instrumentsFinancial instruments relate to invest-ments into equity, operating and other receivables, cash and cash equivalents, loans received and given, as well as op-erating and other liabilities. Upon initial recognition, the Group classifies them as financial assets or financial liabilities measured at fair value through profit or loss, loans given and receivables, finan-cial instruments at fair value through comprehensive income and financial liabilities measured at amortised cost. Classification depends on the purpose for which the instrument was acquired.

Financial assets Financial assets of the Group include cash and cash equivalents, receivables, loans given, and investments. The Group initially recognises loans and receiva-bles, while cash and its equivalents are recognised on the day of their creation, with other financial assets recognised in-itially on the day of trading or settlement. Financial assets are derecognised by the Group when it no longer has any contrac-tual obligations in respect to the cash flows from a particular asset, or when all the risks and rewards of ownership of the financial assets are transferred to a third party.

Financial instruments at fair value through other comprehensive income are, upon initial recognition, measured at fair value plus transaction costs arising directly out of the purchase or issue of the financial asset.

Investments in the shares and share-holdings of companies that are classi-fied as financial instruments at fair value through other comprehensive income and that are listed on the stock exchange, are displayed by the Group at fair value. The fair value is measured according to the closing stock exchange price. Gains or losses from the revaluation are shown directly in equity (i.e. in the reserve for fair value), in an amount that has already been reduced by deferred taxes, and are recognised in the statement of oth-er comprehensive income. Reversal of investment also means reversal of loss or profit, previously recognised in the fair value reserve and recognised in the profit or loss statement if the financial asset is not an equity instrument, or in the profit or loss brought forward if it is an equity instrument. The fair value of

investments which are not dealt in on a stock exchange cannot be determined reliably, therefore it is recognised at cost. The Group, at the end of the year on the balance sheet date, evaluates these in-vestments to determine whether there is objective evidence for their impairment.

Exposure to various types of risks, espe-cially the risk of reduction in the value of financial investments below their cost is not hedged with financial instruments. The value that represents the maximum exposure to such risk is the total value of the investment.

Loans given and receivables are, de-pending on their maturity, classified as current financial assets (maturity of up to 12 months after the date of the Statement of Financial Position) or long-term financial assets (maturity over 12 months after the date of the Statement of Financial Position). The Group rec-ognises them initially at their historical cost, plus direct transaction costs. Upon initial recognition, receivables and loans are measured at amortised cost using the method of the applicable interest rate reduced due to impairment or increased as a result of their reversal. The excep-tions are long-term trade receivables from customers undergoing compulsory composition procedures bearing interest pursuant to the decisions on compulso-ry compositions, operating receivables from the company SODO, bearing inter-est in accordance with Article 85 and Item 3 of Annex 1 of the Network Charge Act (Official Gazette of the Republic of Slovenia, no. 66, of 14 September 2015) and pursuant to Article 98 and Item 3 of Annex 1 (Official Gazette of the Republic of Slovenia, no. 46/18, 47/18 - amen. and 86/18) as well as non-interest-bearing receivables of significant amount recog-nised at the discounted amount.

Cash and cash equivalents include cash on current accounts and deposits at commercial banks (investments which, in the near future, can be converted quickly to an amount of cash, known in advance, and which are subject to an in-significant risk of changes in value). It is recognised in the amounts derived from the relevant documents after verification that they have such a nature. Current account overdrafts at banks, which can be settled on call and are an integral part of the Group's cash, are included among

1 7 7E l e k t r o C e l j e i n 2 0 1 9

the components of cash and cash equiv-alents in the statement of cash flows.

Financial liabilitiesAmong financial liabilities, the Group also shows received loans, recognised when the Group becomes a contractual party related to a particular instrument. The Group derecognises such items when the obligations specified in the contract or other legal act are met, an-nulled or expired. They are recognised in-itially with the amounts from the relevant documents on their creation, plus costs directly attributable to the transaction. Received loans are measured at amor-tised cost. Before compiling the financial statements, the Group estimates the fair value of short-term liabilities based on contracts at least once a year, and if the book values are lower than the estab-lished fair values, it performs a manda-tory adjustment to their amortised cost. Received loans are increased by accrued interest and reduced by the liquidated amounts or any potential other settle-ments. Depending on the maturity, fi-nancial liabilities are classified as short-term (maturity of up to 12 months after the date of the statement of financial position), or long-term (maturity over 12 months after the date of the statement of financial position).

As at the balance sheet date 31 Decem-ber 2019, the Group had forward con-tracts concluded for the purchase of electricity for 2019 and 2020. The con-tracts were concluded for the purpose of receipt or delivery of non-financial assets in accordance with the expected purchase, sale or use thereof, and are therefore treated as ordinary purchase contracts by the Group on the basis of IAS 9.2.4 and not as derivative financial instruments (considering the purpose of purchase and manner of managing op-erations involving electricity, physical delivery is not present etc.).

Among financial liabilities, the Group also shows the liabilities relating to the distri-bution of profit or loss (dividends), which are recognised as a liability in the period and at the level approved by the Assem-bly, and financial liabilities for leased as-sets. At the commencement date of the lease, the Group recognizes the right to use the leased asset and measures the lease liability at the present value of the lease payments not yet paid at that date,

reduced by the lease incentive received and increased by the initial direct costs. In the calculation of the present value of lease payments, the interest rate that has been accepted on the lease is used, but if that not being determinable, the average weighted interest rate on loans taken out after the commencement date of the lease is used. The carrying amount of the lease liability is reassessed if the duration period of the lease, the amount of the lease payments, the estimate of the lease termination fee changes and when the lease agreement is modified, if this change is not accounted for as a separate lease.

g) Impairment of financial assetsA financial asset is deemed to be im-paired if there is objective evidence that shows that one or more events have led to a decrease in the expected future cash flows from that asset and that can be reliably measured.

Objective evidence of an impairment of financial assets can be as follows: re-ceivables which are the subject of liti-gation, receivables more than 90 days past maturity on the balance sheet date, indications that the debtor will initiate compulsory composition or bankruptcy, disappearance of an active market for this kind of instrument etc. The Group also checks whether the market for an individual financial investment works, or whether sufficient transactions have been concluded to reflect its fair value. In the case of investments that are not quoted in an active market, such checks are performed also if there are objective reasons for tests assessing impairment of such investments, if any of the invest-ments is losing value significantly or permanently, or if there is objective evi-dence that indicates permanent impair-ment of investments.

Impairment of financial investments at fair value through other comprehensive incomeThe Group revalues investments to their fair value at the end of the financial year. If the recorded book value of a long-term investment is higher than the market value calculated according to the last published stock exchange price, impair-ment is carried out. Proven losses from changes in fair value of a financial instru-ment at fair value through other compre-hensive income is recognised directly in


equity as a reduction in reserves (loss) resulting from fair-value based valuation. Financial investments which are not list-ed on an active market are impaired to the extent that their reported book val-ue is higher than the proven realisable value. On balance sheet date, the Group assesses whether there is objective ev-idence of the impairment of a financial investment.

The amount of loss is measured as the difference between the carrying amount of the financial investments on the bal-ance sheet date and the present value of expected future cash flows of these investments, discounted at the current market rate of return (recoverable value), which applies to similar financial assets, and recognised in the income statement as a financial expense. Such impairment losses may not be reversed.

Impairment of receivables The Group assesses evidence of an im-pairment of receivables and carries out a revaluation adjustment for total re-ceivables in bankruptcy proceedings, for receivables which are the subject of litigation, and for receivables more than 90 days past maturity on the balance sheet date. For receivables in compulso-ry composition proceedings, the Group carries out a valuation adjustment de-pending on the decisions of compulsory compositions or in the amount of 80% if compulsory composition has not yet been confirmed. Valuation adjustments are reduced by payments and write-offs of receivables on the basis of support-ing documents: court decision, decision on compulsory composition, decision on bankruptcy proceedings and other rele-vant documents. The Group, in addition to receivables on network charges and receivables on default interest for net-work charges, also adjusts values for non-matured receivables and receiva-bles with maturities up to 90 days in the amount of the calculated percentage of non-payments based on the average monthly balance of receivables of the previous three years and the predicted IMAD economic growth in the coming year.

Losses due to adjustments or impairment of receivables are recognised in profit or loss statements among expenses. When, due to later events, the amount of impair-ment loss is decreased, the decrease in

impairment loss is reversed through prof-it or loss.

h) Impairment of non-financial assets The Group reviews the carrying amount of significant non-financial assets to de-termine whether there is any indication of impairment. If such indications exist, the recoverable amount of the asset is estimated. The recoverable amount is the fair value less costs of sale or value in use, whichever is greater. As a rule, the Group revalues non-financial assets immediately, when their book value ex-ceeds the recoverable value. Impairment is shown in the profit and loss statement.

A substantial change in circumstances of operations as regards tangible fixed assets is such that, the assumptions used in estimating the value in use and fair value, reduced by the costs of sale, change by more than 5% in a single year. A review of impairments is decided based on a significant asset with the longest useful life; the Group defines a signifi-cant asset as an asset whose acquisition cost is more than 0.5% of the total cost of tangible fixed assets. A decrease in value of depreciable assets due to impairment is treated as an operating expense.

The value of land, buildings, distribution equipment and investment property is assessed by certified appraisers. Based on the fair value of investment property resulting from the official assessment of GURS, the Group identifies potential im-pairment indications.

i) EquityEquity is the liability to owners of Group companies, which is due for payment when the company goes out of business. It is defined in the amounts invested by the owners and the amounts generated during operation that belong to the own-ers. Equity is reduced by loss from oper-ations and payment of dividends. Total equity consists of share capital, share premium, profit reserves, retained net profit and fair value reserves.

Called-up or share capital of the Group refers to the share capital of the Parent Company, divided into 24,192,425 or-dinary freely transferable shares. The called-up capital of the Group refers to the share capital of the Parent Compa-ny, which is defined in the Articles of As-sociation as share capital and registered

1 7 9E l e k t r o C e l j e i n 2 0 1 9

in court. Each share represents an equal stake and the corresponding amount in the share capital. All shares are a part of one class and have been paid in full. Ordinary shares provide holders with the right to participate in the management of the Parent Company, to a share of profit and a proportional share of the as-sets remaining after liquidation or bank-ruptcy of the Parent Company. Dividends on ordinary shares are recognised as li-abilities in the period in which they were approved at the Assembly.

Share premium of the Group consist of amounts of reversals of the general capital revaluation adjustment and are formed in accordance with the purpose of use pursuant to Article 64 of the Com-panies Act (ZGD-1).

Profit reserves include:• Statutory reserves, i.e. the amounts

which are retained from profits from previous years purposefully, in par-ticular for the settlement of potential future losses.

• Reserves for treasury shares, which are formed in the statement of finan-cial position from net profit for the fi-nancial year in accordance with the Articles of Association and the Com-panies Act (ZGD-1) if the companies in the Group buy back their treasury shares. Acquired treasury shares are a constituent part of total equity and are deducted from it. Reserves for treasury shares may be released only if treasury shares have been alienated or withdrawn.

• Acquired treasury shares.• Other revenue reserves are formed

from the profits in the amount and un-der the conditions defined by the law and the Articles of Association of com-panies in the Group.

Profit reserves are formed in the amount and under the conditions laid down in Article 64 of the Companies Act (ZGD-1) and Articles of Association of the Parent Company from net profit amounts for the business year and the transferred profit.

Other profit reserves may be used for any purpose in accordance with the Compa-nies Act, except in the case of the fifth paragraph of Article 64 of the Companies Act or if the company's Articles of Asso-ciation provide otherwise. Capital and statutory reserves may pursuant to the

Companies Act be used to cover net loss for the year if it cannot be covered from retained net profit or other profit reserves and for coverage of retained loss, if it can-not be covered by net profit for the year or from other profit reserves. If the total amount of these reserves is higher than the statutory prescribed percent of share capital (10%), they can also be used to increase share capital from the Parent Company's assets and to cover net and retained loss for the business year.

Reserves for fair value contain the ef-fects of valuation of financial instru-ments at fair value through other com-prehensive income, as well as actuarial gains and losses related to provisions for post-employment and other long-term employee benefits.

j) InventoryThe Group's inventory includes the mate-rial, small tools with useful lives of up to a year, which have the characteristics of inventory, but also with the useful life of more than one year if its individual cost does not exceed EUR 500, and merchan-dise. Small tools of the Group include protective equipment and tools.

An inventory unit is recognised at cost consisting of the purchase price, reduced by any discount obtained, import and other non-refundable purchase fees (ex-cise duties) as well as the direct costs of acquisition (transport costs, the costs of loading, unloading, handling and trans-port insurance cost etc.). Inventory of material is valued at cost or net realisable value, specifically, the lesser of the two. Inventory of merchandise is held by retail prices including VAT, and is recorded at cost or net realisable value, the lesser of the two, in the statement of financial po-sition. Consumption of inventory of mate-rial is valued according to the weighted average price method, with merchandise valued at the most recent average cost.

Inventory of materials and merchandise is revalued due to the impairment if their carrying value exceeds the net realisable value. Write-downs of damaged and ob-solete inventories are performed by the Group regularly throughout the year and during inventory-taking.

k) ProvisionsProvisions are recognised when the Group has a present obligation as a re-


sult of a past event (legal or indirect), the amount of which can be estimated reliably, and it is likely that, in the settle-ment of the commitment, an outflow of the factors providing economic benefits will be necessary. The amount recog-nised as a provision is the best estimate of the expenditures (includes risks and uncertainties) required for settlement of usually long-term commitments existing on the date of the statement of financial position and is equal to the value of the expenditures expected to be required to settle the obligation. If the effect of the time value of money is material, the ex-pected expenditures must be appropri-ately discounted to their present value. Provisions are not revaluated. At the end of the accounting period, they are ad-justed so that their value is equal to the current value of the expenditure expect-ed to be required to settle the obligation.

Provisions for post-employment and oth-er long-term benefits of employeesLong-term provisions of the Group are formed for long-service awards to em-ployees, severance upon their retirement and allowance in the case of the death of employees in the amount of estimat-ed future payments for severance and long-service awards discounted at the end of the reporting period. The calcula-tion is made for each employee by tak-ing into account the costs of severance pay upon retirement and the cost of all expected jubilee benefits until retire-ment. A calculation using the Projected Unit Credit method based on the multi-ple decrement model, which takes into account the cost of the current service, interest expense, payment of earnings, and actuarial gains/losses incurred as a result of changes in actuarial as-sumptions and experience adjustments, is prepared by the authorised actuary. Payments of severance upon retirement and payments of long-service awards re-duce the provisions formed. In the profit and loss statement, the Group recognis-es revenue or expenses in connection with the adjustment of provisions for re-tirement severance (service costs, inter-est expenses), while actuarial gains and losses in respect of retirement severance commitments are recognised in equity in the context of the reserves for fair value. The revenue and expenditure in connec-tion with the adjustment of the provision for long-service awards and allowance payments in the case of death of an

employee (service costs, interest costs, actuarial gains/losses) are recognised in the profit and loss statement. Other liabilities arising from post-employment benefits of employees do not exist.

The Group discloses lawsuit provisions in which the companies act as the de-fendant. Every year, the eligibility of pro-visions formed is assessed in relation to the state of disputes and the likelihood of a favourable or unfavourable resolution. The amount of the provisions is deter-mined by the known amount of compen-sation claims or according to the antici-pated amount if the claim amount is not yet known.

l) Long-term deferred revenue Long-term deferred revenue for fixed assets acquired free of charge are clas-sified in categories according to the de-preciation rate of the acquired assets. Deferred revenue is reallocated to rev-enue in proportion to the depreciation rate of those depreciable assets. Acqui-sition of fixed assets free of charge also relates to the connections of customers which the Parent Company assumed as tangible fixed assets with a commit-ment to maintain and restore them, in accordance with regulations (General Conditions for Supply and Consumption of Electricity from the Electricity Distri-bution Network Official Gazette of RS, no. 126/07).

The Group also recognises long-term de-ferred revenue for average costs of con-nection charged for the calculation of average costs of connection pursuant to the Decision on determining the network charge for use of the electricity networks of the Energy Agency of the Republic of Slovenia for electricity for the period up to 30 June 2007 and relate to the ded-icated payment of connections to the network or increase in coupling strength (financing investments in network ex-pansion). Deferred revenue is reallocated to operating revenue in proportion to the depreciation rate of those depreciable assets equal to the prevailing level of fixed assets of electricity infrastructure in the amount of 3%.

Government grants, received to cover expenses, are recognised as income over the periods in which the expenses in question which should be replaced by these supports are produced.

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m) Operating and other liabilitiesThe Group discloses financial and oper-ating liabilities according to the maturi-ty date into long-term and short-term. Short-term liabilities mature into pay-ment within a period shorter than one year. Liabilities, upon initial recognition, are shown at cost, whereas after recog-nition, they are measured at amortised cost. The company does not carry out impairment of short-term liabilities or disclose it. Short-term liabilities de-nominated in foreign currencies at the balance sheet date are converted into national currency according to the refer-ence rate of the European Central Bank.

n) Short-term accrued and deferred rev-enue and expensesShort-term deferred costs or expens-es are those expected to be realised in the following year, and the formation of which is likely, with the size being esti-mated reliably, and which do not yet af-fect the profit or loss. Accrued revenue includes revenue, for which payment has not been received and was not possible to charge yet.

Accrued costs or expenses are formed on the basis of the steady burden of profit or loss with expected costs (ex-penses) which have not yet appeared. Short-term deferred revenue is generat-ed in the case of not yet carried out, but already charged or even paid service, but that does not create normal liabilities to customers, which would be considered as advances obtained.

o) RevenueNet revenue from sales includes revenue from the sale of electricity, charged rent and maintenance of the infrastructure, and the provision of services for SODO, revenue from the sale of other energy products (sale of wood pellets, natural gas), and other net income from servic-es rendered (revenue from services ren-dered to customers, rent).

Sales revenue is recognised in an amount that reflects the transaction price, i.e. the amount of compensation that the company expects to be entitled to in return for the transfer of services to the customer. They are measured on the basis of sales prices stated in the in-voices and other documents, reduced by refunds and rebates granted at the time of sale, or later as a result of the earli-

er payments, excluding value added tax. Revenues are disclosed when the buyer has taken the benefits from the supplied services. Recognition of revenue from customer services is gradual. The meth-od of inputs (e.g. assets, car rides, work-ing hours, costs), which have already been spent by the metering date, is used to measure the performance obligation.

Sales of services to SODOThe Parent Company, as the owner of the electricity distribution infrastructure, signed the Agreement on the Lease of Electricity Distribution Infrastructure and Provision of Services for the Distribution Network System Operator SODO d.o.o., which is the exclusive holder of the con-cession for performing the compulsory public service of Distribution Network System Operator in the Republic of Slo-venia. Pursuant to the provisions of said Agreement, the parties sign an amend-ment to the Agreement for each regula-tory period, which defines the amount of lease payments and the volume of ser-vices to be rendered by the Parent Com-pany for SODO in the power distribution area of the Parent Company. The Ener-gy Agency, which is, on the basis of the Energy Act (EZ-1), competent for deter-mining a methodology for charging the network charge and the eligible costs of DNSO operators, defined, with its de-cision the regulatory framework for the period 2019-2021. The Parent Compa-ny's revenue from leasing the electricity distribution infrastructure and provision of services for SODO is recognised on a monthly basis of issued advance invoic-es, while the basis for the recognition of total and actual revenue from the lease of electricity infrastructure and services rendered during the period is a devia-tions settlement, performed following the conclusion of the regulatory year. The preliminary reconciliation is prepared by SODO based on data from not-yet com-pleted financial statements for the reg-ulatory year and then forwarded to the Parent Company by 15 March, following conclusion of the accounting period with the final reconciliation based on revised data for the regulatory year, only for-warded until the preliminary reconcilia-tion of the next year is issued.

Sale of servicesRevenue from the sale of services is recognised in the accounting period in which they are rendered, based on the


conclusion of business, assessed on the basis of actually performed service. In the case of long-term projects, the Group recognises revenue from services ren-dered gradually by using the method of inputs on the Balance Sheet date of the Group company.

Capitalised own servicesCapitalised own services are services rendered for the company's own needs and capitalised among tangible fixed assets or intangible non-current assets. The Group recognises revenue in the amount of expenses, required for the construction or production of an asset which, however, shall not exceed the cost of similar assets that the Group may buy on the market.

Revenue from the sale of electricity and energy productsOperating revenue is recognised at the time of the sale of electricity and ener-gy products if it is reasonably expected that the sale will lead to benefits, if they are not implemented upon the sale itself. Electricity billing is carried out in three ways, namely:• According to actual consumption on a

monthly basis for the calendar month - larger customers are based on con-sumption in the previous month provid-ed with partial invoices for electricity consumed during a month, which are taken into account in the final monthly invoice;

• According to actual consumption on a monthly basis - the invoices are is-sued from the 1st up to 8th business day of each month for the preceding calendar month, with the amount of consumption taken monthly;

• Annual invoicing - informative calcula-tions are issued during the year based on average daily consumption of the previous accounting period, while, once annually, meters are recorded and an invoice is created. These are household and certain small business customers who do not yet have remote control meters.

VAT and excise duty, and the network charge on shared invoices shall not be considered as revenue from sale, but rather as withdrawal liabilities.

Other operating revenueThis includes revenue from reversal of provisions (mostly for fixed assets ac-

quired free of charge), the revenue relat-ed to business effects (received compen-sation, subsidies, grants etc.), operating revenue achieved from the sale of fixed assets and uninstalled material, the rev-enue from write-off of liabilities and the reversal of adjustments to receivables, and unusual items, for which it is not ex-pected that they will occur regularly or frequently (recovered written off receiv-ables from previous years, received reim-bursement of court costs and damages etc.).

p) Financial revenue and expensesFinancial revenue includes revenue from dividend payments, revenue from disposals of financial assets, interest received from deposits, assets of the accounts and loans granted, exchange gains, income, and interest on late pay-ment of electricity, network charges and services. Interest revenue is recognised as it accrues, using the effective interest rate, revenue from dividends on the date when the shareholder's right to receive payment is enforced, whereas interest on late payment of electricity, network charges and services are recognised when charged, if there is no doubt about their size and date of maturity.

Financial expenses comprise costs of borrowing (if these are not capitalised), expenses due to impairment and write-off of investments, interest from operat-ing liabilities and negative exchange rate differences. They are recognised in the profit or loss statement, if a decrease in economic benefits during the account-ing period is associated with the reduc-tion of assets or increase in debt, and if this reduction can be measured reliably. Financial expenses are recognised at settlement irrespective of the payments associated with them. Borrowing costs are recognised in the income statement using the effective interest method, ex-cept for those costs that are capitalised and attributable to tangible fixed assets in the course of construction or develop-ment.

q) Income taxIncome taxes from the business year in-clude current and deferred tax and are shown in the profit or loss statement, ex-cept for the part that is associated with the items disclosed directly in the com-prehensive income.

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Current tax is charged from the taxable profit of the Group for the financial year according to the tax rates applicable at the reporting date, and any adjustments to tax liabilities in relation to the previous fiscal years. Taxable profit differs from the net profit recorded in the income statement because it excludes items of income or expense that are taxable or deductible in other years, as well as items that are never taxable or deduct-ible.

Deferred tax is disclosed using the li-ability method after the statement of financial position, while accounting for temporary differences arising between the tax values of assets and liabilities and their carrying amounts in the sepa-rate financial statements of companies in the Group. The amount of the deferred tax is based on the expected mode of re-imbursement or settlement of the book value of assets and liabilities, using tax rates (and laws), which are expected to be used when the deferred tax asset is realised or the deferred tax liability is

cleared. A deferred tax asset is recognised in the amount of probable future taxable profits available, against which the deferred as-sets can be used in the future. Deferred tax assets are reduced by the amount for which it is no longer likely that tax relief, associated with an asset, can be claimed.

r) Earnings per shareThe Group discloses the basic profitabil-ity of shares, which is calculated by di-viding the profit accruing to the holders of the controlling interest in net profit by the weighted average number of ordinary shares for the financial year; the Group's treasury shares are thereby excluded.

s) Cash flow statementThe cash flow statement of the Group is prepared according to the direct method and shows truly and fairly revenue and expenses from operating, investing and financing activities explaining changes in the movement of cash.

17.4 Determination of Fair ValueAccording to the accounting policies of the Group, it is necessary, in certain cas-es, to determine the fair value of financial and non-financial assets and liabilities. Fair value is the amount for which an as-set could be sold or a liability exchanged, between knowledgeable, willing parties in an arm’s length transaction. The fair value of the Group, for the purpose of measurement or reporting, is set by the methods below.

Investment propertyIn determining the fair value of the in-vestment property owned by the Group, it adheres to the fair value stemming from the official evaluation of GURS.

InvestmentsThe fair value of financial assets that are listed on a stock exchange is determined on the basis of the final share price on the reporting date.

Financial investments which are not list-ed on an active market and the fair value of which cannot be estimated reliably,

are assessed by the Group on balance sheet date to decide whether there is im-partial evidence of their impairment. Im-pairments of these financial investments are described in Section 17.3 (g).

Operating and other receivables and op-erating and other liabilitiesShort-term operating receivables, due to their short-term nature, are not discount-ed, but the impairment of their value is taken into consideration. All receivables are subject to interest, except for SODO receivables, which due to outstanding preliminary reconciliations are only sub-ject to interest until their inclusion in the regulatory framework. These are receiv-ables of significant value, thus they are shown in the balance sheet at amortised cost.

As with short-term operating receivables, operating and other liabilities are also carried at amortised cost. Their fair value is not disclosed because in accordance with IFRS 7, amortised cost is a good ap-proximation of fair value.


17.5 Composition of the Elektro Celje GroupThe Elektro Celje Group consists of the Parent Company Elektro Celje and:• ECE d.o.o., subsidiary, head office:

Vrunčeva 2a, Celje. Its activity is buy-ing and selling electricity and other energy products to end customers, both household and business consum-ers.

• Elektro Celje OVI, d.o.o., subsidiary, head office: Rimska cesta 108, Šem-peter v Savinjski dolini. Its activity is the production of electrical and ther-mal energy in SHPs, SPSs and CHPPs, and the engineering of mainly electri-cal power plants.

• Informatika, d.d., associate, head of-fice: Vetrinjska ulica 2, Maribor. Its ac-tivity comprises of information servic-es and engineering.

The company Elektro Celje is the Parent Company of ECE, based on the rights stemming from the Shareholders Agree-ment. The company ECE operates as a part of the Elektro Celje Group. In doing so, risks arising from the operations of the subsidiary are managed in a unified manner. The Parent Company as a major-ity shareholder in accordance with para-graph 2 of Article 25 of the Shareholders Agreement nominates and dismisses the managing director of the subsidiary. The shareholder, as a body, influences the operations of the company, as ZGD-1 does not demand the independence of management in their management ac-tivities. Management decisions are tied to the consent of the Assembly, but the shareholder as a body may also issue binding instructions to the management. The information right of every share-holder is, irrespective of their owner-ship share, almost unlimited in content, whereby it may be implemented outside the Assembly, or independently of the agenda of the Assembly. In addition, the shareholder as a body has broad possi-bilities of direct control of the company's operations, as no Supervisory Board has been organised in the company. Through a supervisory college, the majority share-holder manages its investment through coordinating meetings with the direc-

tor of the subsidiary, giving binding in-structions on current issues, allowing for faster defining of actions to address the potential problems, while supervising the operations and the work of the director regularly and effectively. The dividends paid to the minority shareholder in 2019 amounted to EUR 345,431.

The company Elektro Celje is also the Par-ent Company of the company Elektro Cel-je OVI based on the rights as founder, and sole shareholder arising from the Articles of Association. The company Elektro Celje OVI operates as a part of the Elektro Celje Group. In doing so, risks arising from the operations of the subsidiary are managed in a unified manner. The company Elektro Celje, as sole shareholder in accordance with paragraph 2 of Article 12 of the Ar-ticles of Association, nominates and dis-misses the managing director of the sub-sidiary. The sole shareholder as a body influences the operations of the subsidi-ary, as all management decisions are tied to the prior consent of the sole sharehold-er, and the latter may issue as a body, binding instructions to the management. The managing director of the subsidiary also has a limit regarding the conclusion of legal transactions in excess of EUR 50,000 and regarding the conclusion of real estate transactions, for which in ac-cordance with paragraph 2 of Article 14 of the Articles of Association, the managing director must acquire the written consent of the Management Board of the Parent Company. The information right of every shareholder is, irrespective of their owner-ship share, unlimited in content. The sole shareholder has the option of direct con-trol of the company's operations, as no supervisory board has been organised in the company. Through a supervisory col-lege, the only shareholder manages its in-vestment through coordinating meetings with the director of the subsidiary, giving binding instructions on current issues, allowing for faster defining of actions to address the potential problems, while supervising the operations and the work of the director of the subsidiary regularly and effectively.

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Item (in EUR) Subsidiaries

ECE, d.o.o. Elektro Celje OVI, d.o.o.

31 December 2019 31 December 2018 31 December 2019 31 December 2018

Ownership share 74.3256 74.3256 100 100

Share capital 3,436,768 3,436,768 12.519 12.519

Book value of equity 18,406,619 19,694,179 2.473.200 2.429.678

Value of shares in subsidiaries 13,680,830 14,637,817 2.473.200 2.429.678

Profit or loss 66,555 2,859,689 43.522 29.234

Value of assets/liabilities 46,501,223 44,801,821 3.039.447 2.627.752

Net cash flow from operating activities —2,522,897 3,027,999 253.552 198.158

Net cash flow from investing activities 387,732 —121,423 —630.610 —365.875

Net cash flow from financing activities —1,541,378 —1,345,431 364.760 45.686

The Parent Company possesses 2,479 INFG shares issued by the company In-formatika, d.d. As the company Elektro Celje has a significant impact on adopt-ing decisions regarding financial and business orientations of the company Informatika, d.d., it was recognised as an associate. The Parent Company takes

into account the insignificance of the impact pursuant to Article 56 of ZGD-1 in the inclusion in consolidated financial statements, meaning that the financial statements of the associate are not in-cluded in the consolidated financial statements of the Elektro Celje Group.

17.6 Intangible assetsIntangible fixed assets (in EUR) 31 December 2019 31 December 2018

Property rights 3,941,830 3,159,722

Intangible assets in development 405,459 29,982

Advances for intangible fixed assets 80,830 0

Other long-term accrued revenue and deferred expenses

88,988 12,584

Total 4,517,107 3,202,288

The Group as of 31 December 2019 dis-closed financial liabilities arising from fi-nancial lease for the lease, upgrade and provision of software and the appropriate IT support licenses in the amount of EUR 595,248 (EUR 297,304 matures in 2020, EUR 286,285 in 2021, and EUR 11,659 in 2022), which, upon fulfillment of their contractual obligations, will become per-manently owned by the Group.

Operational liabilities for the acquisi-tion of intangible assets of the Group amounted to EUR 1,119,399 as of 31 De-cember 2019 (EUR 675,995 as of 31 De-cember 2018). The company had no in-tangible assets given as guarantees for debt repayments or with limited property rights, as well as no commitments to ac-quire intangible assets.


Changes in intangible fixed assets (in EUR)

Property rights Intangible assets in development

Advances for intangible FA

Other long-term accrued revenue

and deferred expenses

Total

Cost

As of 1 January 2018 12,258,368 876 0 57 12,259,301

Increase 5,704 540,432 0 12,584 558,720

Carry-over from ongoing investments 511,326 —511,326 0 0 0

Decrease —1,445 0 0 —57 —1,502

As of 31 December 2018 12,773,953 29,982 0 12,584 12,816,519

As of 1 January 2019 12,773,953 29,982 0 12,584 12,816,519

Increase 31,167 2,677,442 80,830 137,346 2,926,785

Carry-over from ongoing investments 2,276,965 —2,301,965 0 0 —25,000

Decrease —1,030,055 0 0 —60,942 —1,090,997

As of 31 December 2019 14,052,030 405,459 80,830 88,988 14,627,307

Revaluation adjustment

As of 1 January 2018 8,359,569 0 0 0 8,359,569

Depreciation 1,252,751 0 0 0 1,252,751

Rentals from holiday facilities 3,356 0 0 0 3,356

Decrease —1,445 0 0 0 —1,445

As of 31 December 2018 9,614,231 0 0 0 9,614,231

As of 1 January 2019 9,614,231 0 0 0 9,614,231

Depreciation 1,522,666 0 0 0 1,522,666

Rentals from holiday facilities 3,358 0 0 0 3,358

Decrease —1,030,055 0 0 0 —1,030,055

As of 31 December 2019 10,110,200 0 0 0 10,110,200

Carrying amount

As of 1 January 2018 3,898,799 876 0 57 3,899,732

As of 31 December 2018 3,159,722 29,982 0 12,584 3,202,288

As of 1 January 2019 3,159,722 29,982 0 12,584 3,202,288

As of 31 December 2019 3,941,830 405,459 80,830 88,988 4,517,107

17.7 Tangible fixed assetsProperty, Plant and Equipment (in EUR) 31 December 2019 31 December 2018

Land 5,993,990 6,002,831

Buildings 188,123,201 178,756,949

Equipment 62,345,176 62,127,438

Property, plant and equipment in the course of acquisition

6,957,089 10,110,968

Advance payments for PP&E 414,032 0

Total 263,833,488 256,998,186

The carrying value of long-term intangi-ble and tangible fixed assets leased to SODO d.o.o. based on the Contract on leasing of the electricity distribution in-frastructure and provision of services for

the system operator and associated an-nexes on 31 December 2019 amounted to EUR 255,945,609 (EUR 246,184,532 in 2018).

1 8 7E l e k t r o C e l j e i n 2 0 1 9

Changes in property, plant & equipment (in EUR)

Land Buildings Equipment Ongoing investments

Advances for acquisition of

tangible fixed assets

Total

Cost

As of 1 January 2018 5,974,525 572,906,707 166,005,016 7,783,902 91,370 752,761,520

Transfers between assets 0 0 0 168,921 0 168,921

Increase 0 0 8,235 23,812,674 37,997 23,858,906


Decrease —7,137 —4,897,633 —2,950,200 —50,630 —71,370 —7,976,970

As of 31 December 2018 6,002,831 582,854,438 169,786,143 10,110,968 0 768,754,380

Changes due to the implementation of IFRS 16

0 150,807 156,044 0 0 306,851

As of 1 January 2019 6,002,831 583,005,245 169,942,187 10,110,968 0 769,061,231

Transfers between assets 0 0 0 0 0 0

Increase 0 0 14,311 23,065,737 415,305 23,495,353


Decrease —30,805 —12,453,289 —1,818,251 —110 0 —14,302,455

As of 31 December 2019 5,993,990 590,003,905 174,883,840 6,957,089 414,032 778,252,856


As of 1 January 2018 0 398,803,199 103,903,799 0 0 502,706,998

Transfers between assets 0 5,052 82,685 0 0 87,737

Depreciation 0 10,120,957 6,313,324 0 0 16,434,281

Decrease 0 —4,831,719 —2,641,103 0 0 —7,472,822

As of 31 December 2018 0 404,097,489 107,658,705 0 0 511,756,194

As of 1 January 2019 0 404,097,489 107,658,705 0 0 511,756,194

Increase 0 0 20,841 0 0 20,841

Depreciation 0 10,162,879 6,574,983 0 0 16,737,862

Decrease 0 —12,379,664 —1,715,865 0 0 —14,095,529

As of 31 December 2019 0 401,880,704 112,538,664 0 0 514,419,368

Carrying amount

As of 1 January 2018 5,974,525 174,103,508 62,101,217 7,783,902 91,370 250,054,522

As of 31 December 2018 6,002,831 178,756,949 62,127,438 10,110,968 0 256,998,186

As of 1 January 2019 6,002,831 178,907,756 62,283,482 10,110,968 0 257,305,037

As of 31 December 2019 5,993,990 188,123,201 62,345,176 6,957,089 414,032 263,833,488

The cost of in-house construction and manufacture of tangible fixed assets amounted to EUR 15,164,716 in 2019 (EUR 15,193,945 in 2018). Borrowing costs, which in 2019 were attributed to newly activated engineering structures amounted to EUR 4,925 (EUR 6,979 in 2018). Investments in progress include interest in the amount of EUR 3,122 (EUR 129 in 2018).

The Group as of 31 December 2019 dis-closed liabilities in the amount of EUR

1,206,415 for the acquisition of tangible fixed assets (EUR 1,716,723 as of 31 De-cember 2018). The Group, according to the situation as of 31 December 2019, did not disclose any tangible fixed as-sets with limited right to property, nor were any of them pledged as security for liabilities. Concluded as of 31 December 2019, the Group also did not have any contracts on the purchase of fixed as-sets, whereby liabilities have not been recognised yet.

17.7.1 Right to Use Leased AssetsThe Group has buildings and various equipment under lease. The duration of the lease varies depending on the type of lease, for buildings from 2.2 to 8 years

and for equipment from 3 to 3.3 years. The lease payment amounts for the en-tire lease period are agreed in the terms of the contract and are fixed. The pos-


sibility of termination of an individual lease agreement exists in the event of a breach of contractual obligations of the parties or on the basis of mutual agree-

ment, while the possibility of renewal of the lease agreement is not specified in the contracts.

Right to Use Leased Assets Right to use buildings Right to use equipment Total

COST

As of 31 December 2018 0 0 0

Changes due to the implementation of IFRS 16 150,807 156,044 306,851

As of 1 January 2019 150,807 156,044 306,851

As of 31 December 2019 150,807 156,044 306,851



As of 1 January 2019 0 0 0

Depreciation 46,642 66,966 113,608

As of 31 December 2019 46,642 66,966 113,608

CARRYING AMOUNT


As of 1 January 2019 150,807 156,044 306,851

As of 31 December 2019 104,165 89,078 193,243

17.8 Investment propertyChanges in investment property (in EUR) Amount

Cost

As of 1 January 2018 790,791


As of 1 January 2019 790,791



As of 1 January 2018 558,259

Depreciation 15,141


As of 1 January 2019 573,400

Depreciation 15,141


Carrying amount

As of 1 January 2018 232,532


As of 1 January 2019 217,391


Investment property relates to a com-mercial building leased to individuals or other companies by the Group. Accord-ing to official evaluations of GURS, the fair value of the property amounts to EUR 302,420 (not counting the land val-ue) which, according to our estimates, is a good approximation, while the Group it-

self did not obtain an evaluation of invest-ment property by an authorised property appraiser. Revenue from lease in 2019 amounted to EUR 7,865 (EUR 9,496 in 2018), with relating costs amounting to EUR 9,214 (EUR 18,897 in 2018) and re-late to the ongoing maintenance of the property.

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17.9 Financial InvestmentsFinancial investments do not serve as se-curity for liabilities and are burden-free. All investments, except for Zavarovalnica Triglav, d.d., are valued at cost because they are not listed on a stock exchange,

and information needed to assess their fair value cannot be obtained by the Group. The Group took the view that there are no objective reasons for their impairment.

Changes in financial investments (in EUR) Shares in the associate

Other shares and interest

Other long-term financial investments

Total

Carrying value as of 1 January 2018 206,987 544,336 0 751,323

Adjustment to fair value 0 4,144 0 4,144

Carrying value as of 31 December 2018 206,987 548,480 0 755,467

Carrying value as of 1 January 2019 206,987 548,480 0 755,467

Increase 0 0 40,000 40,000

Adjustment to fair value 0 35,787 0 35,787

Sale 0 —288,766 0 —288,766

Carrying value as of 31 December 2019 206,987 295,501 40,000 542,488

17.9.1 Other financial investmentsAll investments in stocks and shares are classified as financial investments at fair

value through other comprehensive in-come under IFRS 9.

Financial investments (in EUR): 31 December 2019 Number of shares or shareholdings


Gorenjska Banka d.d. 0 0 288,766 2,350

Zavarovalnica Triglav d.d. 187,280 5,624 151,492 5,624

Stelkom, d.o.o 108,221 12.64% 108,222 12.64%

Total 295,501 548,480

The value of investments listed on a stock exchange amounted to EUR 187,280 as of 31 December 2019 (EUR 151,492 as of 31 December 2018). The fair value of shares of Zavarovalnica Triglav, d.d. as of 31 December 2019 compared to 31 De-cember 2018 increased by EUR 35,787 due to revaluation. In 2019, the sale of the financial investment in Gorenjska banka d.d. was carried out. The share sale price reached EUR 298, which means that the Group generated EUR 411,534 more in revenue than the carry-ing amount of the investment amounted

to. Costs of trading accounts amounted to EUR 1,216, while investment dividends received for Zavarovalnica Triglav d.d. amounted to EUR 14,060. The Group has in recent years carried out financial in-vestment impairment for its investment in the company Stelkom in the amount of EUR 1,243 in 2004.

Long-term financial investments include an investment in the company Solar plus d.o.o. worth EUR 40,000. The sole part-ner of the company since 31 December 2019 is the company EC OVI.

17.9.2 Investment in an AssociateInvestment in an associate (in EUR): 31 December 2019 Number of shares 31 December 2018 Number of shares

Informatika, d.d. 206,987 2,479 206,987 2,479

Skupaj 206,987 206,987

The Group as of 31 has carried out a fi-nancial investment impairment for its investment in the company Informatika

d.d. on 31 December 2015, and made a revaluation adjustment in the amount of EUR 103,508.


17.10 InventoryInventories (in EUR) 31 December2019 31 December2018

Material 1,520,842 1,570,385

Material in processing 469 0

Small tools 95,033 130,240

Merchandise 50,003 10,208

Total 1,666,347 1,710,833

In 2019, the Group established a EUR 4,392 deficit (EUR 650 in 2018) and a EUR 17,639 surplus (EUR 251 in 2018) in inventories of materials, which was accounted for within the company's ex-penses or revenue. Due to obsolescence

or changes in quality of the materials, EUR 20,639 worth of inventories were written off in 2019 (EUR 3,680 in 2018). The Group had no inventories pledged as security for its liabilities.

17.11 Operating Receivables

17.11.1 Long-term Operating ReceivablesLong-term operating receivables from SODO as of 31 December 2019 amount-ed to EUR 1,146,535 and included the long-term portion of the receivable from the preliminary reconciliation for 2015 in the amount of EUR 1,237,297 and their discounting in the amount of -11,428 EUR, as well as the long-term portion of accrued interest from outstanding defi-cits from the preliminary reconciliation for 2015 deficits and surpluses from net-work charges from the final reconcilia-tions of the regulatory framework for the

period 2014-2017, in the total amount of EUR –79,334. Receivables from SODO from the preliminary reconciliation of the regulatory year 2015, which following in-clusion in the regulatory framework will no longer bear interest, were disclosed at their discounted values, with the method of remuneration of deficits and surpluses from Article 85 of the Network Charges Act and an average weighted interest rate on the Parent Company's invest-ment loans in 2019 of 0.835% taken into account.

Long-term operating receivables (in EUR) 31 December 2019 31 December 2018

Operating trade receivables 1,882,848 2,703,708

- revaluation adjustment to trade receivables —352,378 —375,268

- discounting of receivables —11,428 —22,225

Long-term trade receivables 1,519,042 2,306,215

Long-term operating receivables due from others 7,682 8,870

Total 1,526,724 2,315,085

Other long-term operating receivables mainly refer to trade receivables from the sale of biomass and merchandise via an online store (EUR 174,026), to the long-term part of the receivable arising from unjustified consumption in 2019 (EUR 180,779, of which EUR 154,953 ma-

tures in 2021 and the rest in 2022) and receivables from companies in compul-sory settlement (EUR 17,684). Long-term receivables are not collateralised nor pledged as collateral for liabilities of the Group.

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17.11.2 Short-term trade receivables

Short-term trade receivables (in EUR) 31 December 2019 31 December 2018Trade receivables from customers abroad 1,050 1,050Trade receivables from domestic customers 54,856,958 52,038,374- revaluation adjustment to trade receivables —3,251,314 —4,166,515- discounting of receivables —14,975 —26,052Receivables for interest 157,950 208,700- revaluation adjustment to receivables for interest —111,276 —162,160Advance payments made 76,255 37,803Total 51,714,648 47,931,200

The majority of trade receivables, in a share of 76.5%, are shown by the subsidi-ary ECE (mainly for the sale of electricity to business and household customers), with the Parent Company disclosing 23.4% (of this amount, trade receivables for customers on the network charge

amounted toEUR 3,330,872, and re-ceivables for maintenance and lease of electricity infrastructure and services for SODO d.o.o. amounted to EUR 5,722,386), and Elektro Celje OVI 0.1%. The maturity profile of trade receivables and their in-surance are presented in Section 17.34.1.

17.11.3 Assets from Contracts with Customers

Assets from contracts with customers (in EUR) 31 December 2019 31 December 2018

Accrued projects from services performed to customers 125,974 133,784

Total 125,974 133,784

17.11.4 Other Operating Receivables and Other Assets

Other operating receivables and other assets (in EUR) 31 December 2019 31 December 2018

Other operating receivables and other assets 2,725,377 2,473,072

- revaluation adjustment to short-term receivables from others —93,672 —108,120

Total 2,631,705 2,364,952

Other operating receivables and other assets mainly relate to deferred costs of sponsorship in the amount of EUR 72,576 (EUR 94,783 in 2018), licenses in the amount of EUR 59,738, short-term portion of deviations of the final reconcil-

iations for the period 2014-2017 (–79,331 EUR), VAT on received advances (EUR 144,050) and input VAT receivables (EUR 1,954,275). Items in the statement of fi-nancial position are realistic and do not contain any hidden reserves.

17.12 Cash and Cash EquivalentsCash and cash equivalents (in EUR) 31 December2019 31 December2018

Cash in current accounts 1,436,043 5,092,657

Cash items in the process of collection 45 1,237

Overnight deposits 363,640 490,213

Total 1,799,728 5,584,107


Cash and cash equivalents on accounts with commercial banks are subject to in-terest rates for positive balances of up to 0.01%. The Group signed contracts with commercial banks on the use of a neg-

ative balance on transaction accounts in the amount of EUR 1,500,000 in 2019 (EUR 900,000 in 2018). As of 31 Decem-ber 2019, there were no negative balanc-es on transaction accounts.

17.13 Equity and Reserves Equity is the liability to owners of Group companies, which is due for payment when the company goes out of business. It is defined in the amounts invested by the owners and the amounts generated during operation that belong to the own-ers. Equity is reduced by loss from oper-ations and payment of dividends. Total

equity consists of share capital, share premium, profit reserves, retained net profit and fair value reserves. The state of and change in individual components of the Group’s equity structure in 2019 are shown in Table 16.5 and explained in Section 17.3 (j).

Equity (in EUR) 31 December 2019 31 December 2018

Equity share of controlling interests 228,339,195 223,386,194

Share capital 100,953,201 100,953,201

Share premium 62,260,317 62,260,317

Profit reserves 62,388,945 52,751,585

Legal reserves 4,471,554 4,009,890

Reserves for treasury shares 886,371 886,371

Treasury shares —886,371 —886,371

Other revenue reserves 57,917,391 48,741,695

Fair value reserves —669,678 —344,565

Reserves for fair value of financial instruments 105,581 82,191

Reserves for actuarial deficits and surpluses —775,259 —426,756

Net profit or loss 3,406,410 7,765,656

Retained net profit or loss from previous years 1,206,072 3,217,290

Net profit or loss of current year 2,200,338 4,548,366

Minority share 4,964,474 5,235,374

Total 233,303,669 228,621,568

Share capital The Group's share capital, amount-ing to EUR 100,953,201, is divided into 24,192,425 no-par value ordinary freely

transferrable shares. In 2019, there were no changes regarding the number of shares issued (Section 17.3 (i)).

Ownership Structure 31 December 2019 31 December 2018

Number of shares Shareholding (in %) Number of shares Shareholding (in %)

Republic of Slovenia 19,232,978 79.50 19,232,978 79.50

Kapitalska družba, d. d. 192,429 0.80 192,442 0.80

Financial corporations, insurance companies and funds

1,333,251 5.51 1,252,968 5.18

Other Slovene legal persons 1,106,428 4.57 983,349 4.06

Foreign legal persons 1,440,136 5.95 1,445,388 5.97

Natural persons 553,354 2.29 751,451 3.11

Treasury shares 333,849 1.38 333,849 1.38

Total 24,192,425 100.00 24,192,425 100.00

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ReservesReserves as of 31 December 2019 are comprised of share premium, profit re-serves and reserves for fair value (the creation, purpose of creation and utilisa-tion of individual reserves are described in Section 17.3 (i)).

Share premium of the Group includes a general equity revaluation adjustment in the amount of EUR 62,260,317, and are not intended for division, but may be used under the conditions and for the purposes specified by law.

Revenue reserves include: • Legal reserves, which are formed from

net profit for the financial year and as of 31 December 2019 amounted to EUR 4,471,554, showing a EUR 461,664 increase over 31 December 2018;

• Reserves for treasury shares, which were in the past years formed from net profit in the amount of the pur-chase of treasury shares and as of 31 December 2019 amounted to EUR 886,371;

• Other profit reserves as of 31 Decem-ber 2019 amounted to EUR 57,917,391, showing a EUR 9,175,696 increase over 31 December 2018.

Fair value reserves: • Fair value reserves for financial in-

struments in 2019 increased by EUR 23,391 in comparison with the previ-ous year, and as of 31 December 2019 amounted to EUR 105,581. The change is due to the EUR 8,880 increase in the fair value of financial assets measured at fair value through other compre-hensive income and the EUR 14,511 in-crease due to the deferred tax effect in connection with the change in value of these investments.

• Reserves for actuarial deficits and surpluses as of 31 December 2019, amounted to EUR -775,259, and in-clude a change in the present value of post-employment benefits in the amount of EUR -348,503, which com-prises a reduction of EUR 382,708 due to the converted post-employment benefits, and a EUR 34,205 increase due to the impact of deferred taxes due to the restatement of post-em-ployment benefits.

Retained net profit or loss and dividend per shareRetained net profit or loss in the amount of EUR 3,406,410 includes retained profit of previous years (EUR 1,206,072) and net profit of the current year (EUR 2,200,338). On 28 June 2019, shareholders of the Par-ent Company adopted a decision regard-ing the allocation of distributable profit, established on 31 December 2018, in the amount of EUR 3,220,907.76 for the payment of the dividends to the compa-ny's shareholders, namely EUR 0.135 per share (in 2018 dividends were paid for 2017 in the amount of EUR 3,145,015.25 at EUR 0.131 per share).

The Management Board of Elektro Celje proposes that the distributable profit for 2019 amounting to EUR 2,934,605 be al-located in its entirety for the payment of dividends.

Equity share of non-controlling interest Equity share of non-controlling interest pertains to the company Elektro Gorenjs-ka, which entered the company ECE as a partner in the process of merger with ac-quisition of its subsidiary Elektro Goren-jska Prodaja as the company acquired by the company Elektro Celje Energija on 1 October 2015.

Minority shareholder's interest Non-controlling interest (in %)

Minority shareholder's equity (in EUR)

Minority shareholder's net profit (in EUR)

31 December 2019

31 December 2018

31 December 2019

31 December 2018

31 December 2019

31 December 2018

Elektro Gorenjska, d.d., a minority shareholder of the subsidiary ECE d.o.o.

25.6744 25.6744 4,964,474 5,235,374 76,759 793,879


Provisions (in EUR) 31 December 2019 31 December 2018

Liabilities related to post-employment benefits for employees 7,412,840 6,639,043

Lawsuit provisions 197,734 321,855

Total 7,610,574 6,960,898

17.14 Provisions

Liabilities related to long-term employment benefits (in EUR)

Long-service bonuses

Severance payments

Death grants Total

As of 1 January 2018 1,734,629 4,615,045 159,778 6,509,452




Actuarial surplus/deficit 54,918 —45,161 17,285 27,042

As of 31 December 2018 1,800,971 4,671,986 166,086 6,639,043

As of 1 January 2019 1,800,971 4,671,986 166,086 6,639,043




Actuarial surplus/deficit 166,367 410,066 8,757 585,190

As of 31 December 2019 1,961,532 5,265,564 185,744 7,412,840

Changes in provisions (in EUR) Liabilities for post-employment and other long-term benefits

Other provisions Total

As of 1 January 2018 6,509,452 1,330,533 7,839,985

Utilisation —403,044 0 —403,044

Formation 538,552 260,661 799,213

Reversal —5,917 —1,269,339 —1,275,256

As of 31 December 2018 6,639,043 321,855 6,960,898

As of 1 January 2019 6,639,043 321,855 6,960,898

Utilisation —345,491 —3,713 —349,204

Formation 1,119,288 11,444 1,130,732

Reversal 0 —131,852 —131,852

As of 31 December 2019 7,412,840 197,734 7,610,574

Provisions for post-employment and other long-term employee benefits

Sensitivity analysis Discount rate Salary growth Staff fluctuation Life expectancy

Change in the percentage point 0.50 — 0.50 0.50 — 0.50 1.00 — 1.00 + 1 year — 1 year

Impact on the state of liabilities (in EUR) —345,046 375,978 380,818 —353,541 —674,143 270,300 8,074 —8,838

The actuarial calculation of the Parent Company as of 31 December 2019 took into account the following assumptions: A statistical probability of death and dis-ability, retirement in accordance with the law and staff turnover (3% probability un-til the age of 40, 1% probability between the ages of 41 and 50, 0% for those over 51 years of age), a 0.7782% discount rate, 3% salary growth in the Republic of Slovenia and 2.3% growth in the electric-ity sector, a valid employer contribution rate of 16.1% and a 0.25% growth in the

amounts provided for in the Decree on the tax treatment of reimbursement of costs and other income from employ-ment. The same assumptions were in-cluded in the actuarial calculation of the subsidiary, except for staff turnover until the age of 40, where a 1.5% rate was tak-en into account.

Benefit payments amounted to EUR 345,491, additional recognition of provi-sions to EUR 1,119,288 and the actuarial surplus of the Group to EUR 585,190.

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Lawsuit provisionsOther provisions as of 31 December 2019 in the amount of EUR 197,734 also includ-ed the formation of lawsuit provisions in the amount of EUR 182,577 (debited to operating expenses) by the Parent Com-pany. By concluding a settlement (in the amount of EUR 39,900), provisions in the

amount of EUR 81,828 (formed in 2018 due to the economic damage caused by a power outage) were eliminated in 2019 and in the amount of EUR 46,299 (a law-suit in favor of a former employee of a subsidiary).

17.15 Long-term deferred revenue

Changes in long-term deferred revenue (in EUR) Amount

As of 1 January 2018 12,998,482

Recognition 266,734

Reversal —729,997

As of 31 December 2018 12,535,219

As of 1 January 2019 12,535,219

Formation 461,201

Reversal —737,223

As of 31 December 2019 12,259,197

Long-term deferred revenue (in EUR) 31 December 2019 31 December 2018

For government grants received 782,404 772,768

For fixed assets acquired free of charge 9,342,449 9,520,114

For assets received from connection fees 2,134,344 2,242,337

Total 12,259,197 12,535,219

In 2019, the Group generated long-term deferred revenue from fixed assets ac-quired free of charge in the amount of EUR 346,331 (EUR 248,412 in 2018), with reversal of long-term deferred revenue from fixed assets acquired free of charge and average connection costs in the amount of EUR 631,989 (EUR 624,335 in 2018). Reversal of long-term deferred

costs from drawing on government subsi-dies for purchasing fixed assets amount-ed to EUR 97,276 (EUR 97,363 in 2018). In 2019, the Group received a grant in the amount of EUR 114,871 from the Europe-an Union to cover costs and expenses incurred in the X-Flex project; their con-sumption amounted to EUR 3,072.

17.16 Loans Received and Other Financial Liabilities

Financial liabilities (in EUR) 31 December 2019 31 December 2018

Long-term financial liabilities to banks 28,774,011 26,402,481

Long-term lease liabilities 378,565 107,726

Long-term financial liabilities 29,152,576 26,510,207

Short-term financial liabilities to banks 10,658,015 11,182,040

Short-term lease liabilities 410,845 62,367

Short-term payables for dividends paid out 2,631 3,869

Short-term financial liabilities 11,071,491 11,248,276

Total 40,224,067 37,758,483


Bank LoansTo finance investments in the period 2015-2017, the Parent Company con-cluded a loan agreement in the amount of EUR 28,000,000 with the European Investment Bank in 2015, with the credit conditions determined upon absorption of individual tranches (moratorium of 2 to 36 months, maturity up to 15 years, in-terest rate etc.). In 2019, the Group with-drew another EUR 12,630,000 of invest-ment loans from commercial banks with a repayment period of five years and a moratorium of one year, and took a long-term loan for the reconstruction of SHPP Majcen in the amount of EUR 399,046 as well. In order to finance occasional defi-cit in liquid assets, the Parent Company used a long-term revolving loan in an amount of up to EUR 3,000,000 in 2019 with a repayment period of 33 months, which was not utilised as of 31 Decem-ber 2019. The company ECE, however, was granted a credit line of up to EUR 1,500,000 for liquidity provision purpos-es, which was also not utilised as of 31 December 2019.

In 2019, the Group repaid EUR 11,182,040 of the principal of investment loans, with the amount of interest paid disclosed among financial expenses amounting to EUR 338,915. Maturing installments of principal and interest are settled within the time limits. The loans of the Parent Company are secured by bills of ex-change, while the loans of the compa-ny Elektro Celje OVI are secured by the

assignment of receivables. The value of the principal due for payment five years after the balance sheet date amounted to EUR 6,469,884.

Commitments of the Group for long-term loans obtained relate to monitoring the indicators, which are defined at the level of the consolidated financial statements of the Group: Financial debt/EBITDA (low-er than 2.5), financial debt/equity (lower than 0.3), EBITDA/financial expenses from financial liabilities (higher than 12) and current ratio (higher than 0.9). The Group had fulfilled all contractual fi-nancial commitments as at the balance sheet date.

Exposure to interest rate risk is present-ed in Section 17.34.2 and the maturity of financial liabilities in Section 17.34.3.

Lease LiabilitiesLease liabilities mainly relate to the un-paid portion of the lease agreements, upgrade and provision of software and the appropriate licenses for operation of IT support of the Parent Company, in the total amount of EUR 595,248, for which Informatika d.d. will be issuing invoices until the end of 2021 (297,304 EUR ma-tures in 2020, EUR 286,285 in 2021 and EUR 11,659 in 2022).

The total value of lease liabilities settled in 2019 amounted to EUR 851,156; short-term leases and low-value asset leases are also included.

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17.17 Operating liabilities Among long-term operating liabilities, the Group mainly discloses the debt for the purchase of software licenses and services (ERP - MS Dynamics AX system) in the amount of EUR 135,711 and the use (provision) of Microsoft software licenses in the amount of EUR 171,507, which will be settled in 2021.

Short-term operating liabilities are com-prised mainly of liabilities for the purchase

of electricity, liabilities from operations for third-party account (liabilities to SODO d.o.o. for using the network in accordance with the Agreement), trade payables for purchase of fixed assets, materials and services and liabilities to employees and the State. Accrued labour costs for per-formance (EUR 48,922), unexpended an-nual leave of employees for 2019 (EUR 611,726) and unpaid purchased electrici-ty (EUR 301,400) are also included.

Long-term and short-term operating liabilities (in EUR) 31 December 2019 31 December 2018

Long-term trade payables 307,218 361,386

Other long-term operating liabilities 1,033 0

Long-term operating liabilities 308,251 361,386

Short-term liabilities for purchase of electricity 16,745,911 12,436,929

Short-term trade payables 4,173,811 4,606,157

Short-term operating liabilities from operations for third-party account 10,017,951 11,167,104

Short-term liabilities to employees 3,355,959 3,337,381

Short-term liabilities to state and other institutions 1,442,181 1,184,250

Other short-term operating liabilities 1,680,719 2,835,846

Short-term operating liabilities 37,416,532 35,567,667

Total 37,724,783 35,929,053

17.17.1 Liabilities from Customer Contracts

Liabilities from customer contracts (in EUR) 31 December 2019 31 December 2018

Short-term operating liabilities based on advances 913,469 971,234

Total 913,469 971,234

17.18 Contingent LiabilitiesContingent liabilities in the amount of EUR 17,339,009 failed to comply with the conditions for recognition as balance sheet items. Bank guarantees given in the amount of EUR 17,286,692 mainly relate to the seriousness of payments to the company SODO (EUR 15,195,473) and to performance bonds. The amount of contingent liabilities arising from out-standing civil cases where the Parent

Company is the defendant decreased by EUR 1,408,181 due to the completed proceedings for the payment of compen-sation. The major part, in the amount of EUR 1,402,004, was related to the share-holders' claim for the annulment of the decision on the distribution of dividents from the distributable profit for 2016 which was definitively dismissed. There were no newly initiated civil cases.

Contingent Liabilities (in EUR) 31 December 2019 31 December 2018

Ongoing litigation procedures 52,317 1,460,498

Bank guarantees given 17,286,692 19,991,673

Total 17,339,009 21,452,171

The Group does not have off-balance sheet contingent liabilities as defined by

the Companies Act (ZGD-1).


Item (in EUR) 31 December 2019 31 December 2018

Contingent assets:

Bank guarantees received 2,981,920 2,552,878

Damage claims against insurance companies 84,722 50,479

Receivables from partners in companies deleted from the register

944,849 1,007,266

Allowance for employing disabled persons 108,520 113,033

Total 4,120,011 3,723,656

Other off-balance-sheet records:

Infrastructure owned by SODO d.o.o. 3,132,909 3,275,596

17.19 Contingent Assets and Other Off-balance-sheet RecordsThe value of the bank guarantees re-ceived for good performance and elimi-nation of defects in the warranty period on 31 December 2019, amounted to EUR 2,981,920, with claims for damages against insurance companies, which by 31 December 2019 had not been paid in full and are therefore, prior to the liquida-tion of the claim by the insurance compa-ny, recorded as off balance sheet items

in the amount of EUR 84,722, receiva-bles from shareholders from companies removed from the Register amounting to EUR 944,849, tax allowances for the employment of people with disabilities to EUR 108,520 and fixed assets financed from funds of average connection costs transferred to SODO d.o.o. amounting to EUR 3,132,909.

17.20 Determination of Fair ValueBook and fair value of financial instruments (in EUR) 31 December 2019 31 December 2018

Carrying value Fair value Carrying value Fair value

Financial assets at fair value through other comprehensive income 187,280 187,280 151,492 151,492

Loans received —39,432,026 —39,432,026 —37,584,521 —37,584,521

Financial lease liabilities —789,410 —789,410 —170,093 —170,093

Total —40,034,156 —40,034,156 —37,603,122 —37,603,122

The table includes assets and finan-cial liabilities measured at fair value for which the fair value is also disclosed. The Group did not include cash and cash equivalents and operating receivables and liabilities in the table, which in ac-

cordance with IFRS 7 are considered a good approximation of fair value. The table also does not include financial in-vestments which are valued at cost by the Group as their fair value cannot be measured reliably.

1 9 9E l e k t r o C e l j e i n 2 0 1 9

Financial instruments measured at fair value (in EUR)

31 December 2019 31 December 2018

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Financial assets at fair value through other comprehensive income

187,280 0 0 187,280 151,492 0 0 151,492

Financial instruments where fair value is disclosed (in EUR)

31 December 2019 31 December 2018

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Loans received 0 0 —39,432,026 —39,432,026 0 0 —37,584,521 —37,584,521

Financial lease liabilities 0 0 —789,410 —789,410 0 0 —170,093 —170,093

Total 0 0 —40,221,436 —40,221,436 0 0 —37,754,614 —37,754,614

Assets and liabilities with respect to the determination of their fair value are clas-sified into:• Level 1 - assets at market price;• Level 2 - assets whose values is deter-

mined directly or indirectly from com-parable market data;

• Level 3 - assets and liabilities whose values cannot be obtained from mar-ket data.

Financial instruments by categories

Financial liabilities measured at amortised cost 31 December 2019 31 December 2018

Financial liabilities 40,224,067 37,758,483

Operating liabilities 38,638,252 37,738,697

Total 78,862,319 75,497,180

Financial assets (in EUR) 31 December 2019 31 December 2018

Financial instruments at amortised cost

Financial assets at fair value through other

comprehensive income

Loans and receivables Financial assets at fair value through other

comprehensive income

Financial investments 0 295,501 0 548,480

Operating receivables 54,472,327 0 52,611,237 0

Cash and cash equivalents 1,799,728 0 5,584,107 0

Total 56,272,055 295,501 58,195,344 548,480

Financial instruments at fair value through other comprehensive income in-clude EUR 187,280 worth of investments

measured at cost (EUR 396,988 as of 31 December 2018).

17.21 Important Events Following the Date of the Group's Statement of Financial PositionPursuant to Article 7 of the Communi-cable Diseases Act, Slovenia declared an epidemic on 12 March 2020 due to an increase in the number of COVID-19 coronavirus infections.

Electricity and natural gas consumption reduced by 20% over the second half of March. This consequently means that

the sell-off of surplus energy purchased at lower daily prices is necessary. The liquidity problem also presents an issue, especially because business custom-ers, who are unable to carry out their activities due to epidemic containment measures, are late in their payments or are even unable to fulfill their obligations. The current estimate of the negative im-

Assets and liabilities with respect to the determination of their fair value


pact on the profit or loss of the subsidi-ary ECE amounts to EUR 0.5 million for each month of the duration of the epi-demic. Should the situation normalise in the second half of the year, the company estimates that the operating results in 2020 could still be positive. The adoption of measures by the state and the com-pany will also result in time delays in the supply of the already agreed services to customers and a difficult and reduced ac-quisition of new orders in the subsidiary ECE OVI. The impact of the epidemic and the adoption of measures by the state on the economy is currently impossible to realistically appraise, and consequently does not affect the achievement of the

company's business goals. The adoption of various measures by the state and the company and the anticipated impact of the epidemic on the operation of the Par-ent Company in the coming months is presented in Section 4.1.

There were no other events following the statement of financial position date and up to the date of the auditor’s report which would materially affect the assets and liabilities of the Group and thus im-pair the ability of the statement of finan-cial position users to perform a relevant evaluation and reach an informed deci-sion.

17.22 Sales RevenueA total of 3,149 GWh of electricity was sold in 2019, which is 15.4% less than in the previous year. However, the Group's revenue from electricity trading in 2019 increased by 31.4% compared to 2018. Revenues from the lease and mainte-nance of infrastructure and the provi-

sion of services for SODO d.o.o. in the amount of EUR 47,862,849 also include the preliminary reconciliation of the reg-ulatory year 2019 in the amount of EUR 1,985,070, which was invoiced in March 2020 and revenue recorded in 2019. The invoice will be paid in April 2020.

Net sales revenue (in EUR) 2019 2018

Revenue from contracts with customers

Revenue from trade in electricity 167,575,937 127,583,360

Revenue from the sale of natural gas 4,339,750 2,018,030

Revenue from the sale of services 2,491,981 2,007,820

Revenue from the sale of biomass 236,547 269,721

Revenues from the sale of other merchandise 659,982 485,342

Revenue from energy solution services 125,890 0

Revenue from the sale of electricity and heat generated 159,194 174,449

Total 175,589,281 132,538,722

Revenue from lease

Revenue from lease of electricity infrastructure and provision of services for SODO

47,862,849 48,019,782

Revenue from lease 432,365 428,699

Total 48,295,214 48,448,481

Total 223,884,495 180,987,203

2 0 1E l e k t r o C e l j e i n 2 0 1 9

Other operating income (in EUR) 2019 2018

Revenue from reversal and utilisation of provisions 45,652 782,933

Revenue from reversal of long-term deferred revenue 631,989 624,335

Profit from selling tangible fixed assets and dismantling material

102,711 334,022

Other revenue associated with business effects 735,374 1,182,219

Received contractual penalties 368,978 0

Compensation received 43,135 207,935

Other operating revenue 571,895 620,083

Total 2,499,734 3,751,527

Explanation regarding the reversal of long-term deferred revenue is presented in Section 17.14 and 17.15. Other oper-ating revenue mainly relate to revenue from the surplus in the imputed deviation in electricity of the previous years (EUR

530,684), and other operating revenue to revenue from reduced VAT liabilities (EUR 109,811) and revenue from write-off of liabilities and collection of receivables (EUR 344,754).

17.25 Costs of Materials and Services

Costs of merchandise and material (in EUR) 2019 2018

Cost of purchase of electricity 162,615,953 117,590,268

Cost of material for the implementation of self-managed investments 8,040,892 7,577,772

Cost of merchandise sold 5,514,469 2,840,700

Cost of material used in provision of services to customers 610,840 615,765

Cost of material used in maintenance 645,410 482,380

Cost of fuel and energy 547,427 603,657

Cost of material for damage repair 153,662 125,054

Cost of small tools 239,070 170,312

Other cost of material 170,137 247,949

Total 178,537,860 130,253,857

The purchasing costs of electricity amounted to EUR 162,615,953, repre-senting a 38.3% increase compared to

the previous year. The increase occured mainly due to higher input prices and higher sales volumes.

17.23 Capitalised Own ProductsCapitalised own products and services (in EUR) 2019 2018

In-house construction of electricity infrastructure 15,164,716 15,193,945

Capitalised own services are services provided by the Group for its own needs and capitalised among tangible fixed assets or intangible assets. The value of the consumed material amounted to

EUR 8,040,892, the value of the work performed EUR 6,024,185 and the cost of car travel EUR 1,099,639. The Group does not show profit in this regard.

17.24 Other operating revenue


Cost of services (in EUR) 2019 2018

Cost of maintenance services 2,545,303 2,440,107

Cost of intellectual and personal services 768,730 766,561

Costs of insurance premiums and payment transactions 993,423 1,266,475

Cost of transport services 1,037,080 1,056,114

Cost of fairs, advertising and representation costs 408,954 672,505

Cost of material used in provision of services to customers

366,555 191,933

Cost of services of damage repair 122,928 74,146

Lease payments 308,949 497,867

Cost of labour contracts 216,209 227,111

Cost of other services 1,889,685 2,146,411

Total 8,657,816 9,339,230

Costs of LeaseCosts of leases include the cost of short-term leases, the cost of low-value assets

leases and the cost of variable-rate leas-es.

Costs of lease (in EUR) 2019 2018

Depreciation of rights of use 113,608 0

Financing expenses 3,410 0

Lease costs 308,949 498,743

Total 425,967 498,743

17.26 Labour CostsLabour costs (in EUR) 2019 2018

Cost of salaries 18,461,588 18,416,961

Supplementary pension insurance costs for employees 878,829 892,269

Cost of employer contributions and other levies on salaries 3,021,801 3,044,969

Other labour costs 3,029,202 2,913,931

Post-employment and other long-term benefits 610,412 497,859

Total 26,001,832 25,765,989

Retirement and disability insurance costs in 2019 amounted to EUR 2,591,514, with the cost of other social security amount-ing to EUR 1,309,116. Labour costs in-clude labour costs accrued for unused

annual leave by employees in the Group in 2019 in the amount of EUR 611,726 (EUR 681,732 in 2018) and accrued costs for operating performance awards in the amount of EUR 52,812.

The number of employees by education in the Group in the financial year 2019:

Number of employees according to the educational structure in 2019:

No. of employees 1 January 2019

Share (in %) No. of employees 31 December 2019

Share (in %) Average no. of employees

Educational level I 3 0.4 2 0.3 3

Educational level II 3 0.4 3 0.4 3

Educational level III 21 3.0 21 3.0 21

Educational level IV 181 25.5 176 24.9 179

Educational level V 266 37.5 260 36.9 263

Educational level VI/1 76 10.7 81 11.5 79

Educational level VI/2 77 10.8 77 10.9 77

Educational level VII 63 8.9 66 9.4 65

Educational level VIII/1 19 2.7 18 2.6 19

Educational level VIII/2 1 0.1 1 0.1 1

Total 710 100.0 705 100.0 708

2 0 3E l e k t r o C e l j e i n 2 0 1 9

17.27 Depreciation

On 1 January 2019, the expectations re-garding the useful life of certain tangible fixed assets related to the TC hub equip-ment and HF apparatuses have changed.

The change in the accounting estimate amounted to EUR 61,326 and is recorded as an increase in depreciation costs un-der this heading.

Title of depreciation group FA useful life from 1 January

2019



Depreciation calculated for 2019 (in EUR)

Depreciation estimated for 2018 (in EUR)

Change in accounting

estimate (in EUR)

TC hub equipment and high-frequency apparatus

5 years 20% 14.29% 214,804 153,478 61,326

TOTAL 214,804 153,478 61,326

17.28 Losses, write-offs and revaluation adjustments

Losses, write-offs and assets revaluation adjustments (in EUR) 2019 2018

Losses from the elimination of tangible fixed assets 144,045 127,285

Asset revaluation adjustments 168,386 303,730

Total 312,431 431,015

Revaluation adjustments include adjust-ments to trade receivables in lawsuits, bankruptcy procedures and compulso-ry settlement proceedings, receivables whose due date has exceeded 90 days

on the balance sheet date, non-matured receivables and receivables matured for up to 90 days, and interest on network charges and revaluations of material in-ventory.

17.29 Other Operating ExpensesOther operating expenses (in EUR) 2019 2018

Cost of charges for use of construction land 178,020 174,708

Compensations and annuities 19,301 283,469

Cost of court and administrative fees 51,887 99,469

Donations and solidarity aid 13,673 26,161

Cost of promoting employment of people with disabilities

22,343 21,238

Environmental protection expenditure and environmental charges

1,843 7,866

Other operating expenses 198,171 837,852

Total 485,239 1,450,763

In 2018, the Group among other oper-ating expenses disclosed EUR 346,500 worth of costs on guarantees of origin for

electricity and EUR 293,341 worth of en-ergy efficiency costs.

Depreciation according to groups of assets (in EUR)

Intangible assets Buildings Equipment Right to use buildings

Right to use equipment

Investment property

Total

Depreciation for 2019 1,522,666 10,116,236 6,508,017 46,642 66,966 15,141 18,275,668

Depreciation for 2018 1,252,751 10,126,009 6,389,714 0 0 15,141 17,783,615


17.30 Financial Revenue and Expenses

Financial revenue and expenses (in EUR) 2019 2018

Revenue from shares in other companies 425,594 18,407

Financial revenue from loans granted to others 9,743 140

Financial revenue from operating receivables due from third parties

246,035 278,310

Total financial revenue 681,372 296,857

Financial expenses related to loans from banks —325,518 —345,724

Financial expenses from other financial liabilities

—3,410 0

Financial expenses from trade payables —2,308 —1

Financial expenses from other operating liabilities

—100,222 —87,109

Total financial expenses —431,458 —432,834

Financial profit or loss 249,914 —135,977

The dividends received by the Group amounted to EUR 14,060 (EUR 18,407 in 2018), and the financial revenue from the sale of Gorenjska banka d.d. shares to EUR 411,534. Financial revenue from interest on granted loans to others in-cludes accrued contractual interest in the amount of EUR 9,623 for installment repayment of unauthorised consump-

tion, determined in 2019. The accrued interest expenses on leased assets amounted to EUR 3,410, and the finan-cial expenses for net interest arising from the actuarial calculation of the ex-pected present value of liabilities arising from long-service bonuses, severance pay and solidarity aid amounted to EUR 98,809.

17.31 Income Tax

In 2019, the applicable income tax rate in the Republic of Slovenia was 19%. The Group was liable for a corporate tax re-

ceivable in the amount of EUR 1,150,477 in the financial year 2019, recognised on the basis of the tax return.

Income tax (in EUR) 2019 2018

Current tax 828,545 2,095,718

Deferred tax 104,156 126,396

Total income tax 932,701 2,222,114

Profit before tax 10,295,598 14,772,229

Tax levied theoretically (19%) 1,956,164 2,806,724

Tax from increase in expenses —182,665 —129,952

Tax from tax-non-deductible expenses 365,683 379,354

Tax from tax reliefs —1,038,454 —831,262

Tax from income reducing tax basis —419,254 —279,500

Tax from income increasing tax basis 13,595 10,067

Change in temporary differences 104,156 126,396

Tax from other items 133,476 140,287

Income tax 932,701 2,222,114

Effective tax rate 9.1% 15.0%

2 0 5E l e k t r o C e l j e i n 2 0 1 9

Income tax (in EUR) 31 December 2019 31 December 2018

Income tax receivables 1,150,477 9,931

Income tax liabilities 0 —848,341

Total 1,150,477 —838,410

17.31.1 Deferred tax assets

Changes in the deferred tax asset (in EUR)

Operating receivables

Provisions for post-

employment and other employee

benefits

Deferred tax

assets for tax

loss


Long-term deferred revenue for fixed assets acquired free of

charge

Depreciation calculated above tax deductible

Total

As of 1 January 2018 976,707 605,322 0 19,667 952,237 1,965 2,555,898

Recognised in the Income Statement —11,664 15,808 0 0 —70,506 —1,965 —68,327

Recognised in the Comprehensive Income Statement

0 —6,199 0 0 0 0 —6,199

Reversed in the Income Statement —58,069 0 0 0 0 0 —58,069

As of 31 December 2018 906,974 614,931 0 19,667 881,731 0 2,423,303

As of 1 January 2019 906,974 614,931 0 19,667 881,731 0 2,423,303

Recognised in the Income Statement 0 37,439 115,182 0 0 0 152,621

Recognised in the Comprehensive Income Statement

0 34,205 0 0 0 0 34,205

Reversed in the Income Statement —186,271 0 0 0 —70,506 0 —256,777

As of 31 December 2019 720,703 686,575 115,182 19,667 811,225 0 2,353,352

Deferred tax assets (in EUR) 31. 12 .2019 31 December 2018

Operating receivables 720,703 906,974

Provisions for post-employment and other employee benefits

686,575 614,931

Deferred tax assets for tax loss 115,182 0

Financial investments 19,667 19,667

Long-term deferred revenue 811,225 881,731

Total 2,353,352 2,423,303

17.31.2 Deferred tax liabilities

Changes in deferred tax liabilities (in EUR) Amount


Recognised in the Comprehensive Income Statement 787



Recognised in the Comprehensive Income Statement 6,799


Deferred tax liabilities (in EUR) 31 December2019 31 December2018

Financial investments 28,530 21,731

Total 28,530 21,731

Deferred tax liabilities relate to the change in the value of financial assets

measured at fair value through other comprehensive income.


17.32 Earnings per shareBasic earnings per share are calculated by dividing net profit for the account-ing period attributable to owners of the controlling share (EUR 8,518,553) by the weighted average number of ordinary shares outstanding in the accounting pe-

riod (EUR 23,858,576). Treasury shares are excluded from the calculations. Basic earnings per share in 2019 amounted to EUR 0.357 and were 27.4% lower than in 2018, when they amounted to EUR 0.492 per share.

17.33 Disclosure of Items in the Consolidated Statement of Cash Flows

CASH FLOW (in EUR) 2019 2018

Cash flow from operating activities 8,603,014 17,166,973

Cash flow from investing activities —10,328,351 —9,906,414

Cash flow from financing activities —2,059,042 —5,482,474

Net cash flow for the period —3,784,379 1,778,085

Opening balance 5,584,107 3,806,022

Closing balance 1,799,728 5,584,107

Net cash flow for the period January-De-cember 2019 amounted to -3,784,379 EUR. The opening cash balance as of 1 January 2019 amounted to EUR 5,584,107, while the closing balance as of 31 December 2019 amounted to EUR 1,799,728.

In 2019, the Group created:• EUR 390,656,092 in inflows from op-

erating activities, which mainly relates to inflows from the sale of electricity and other energy products, inflows from lease and services under con-tract with SODO d.o.o. and inflows from the use of the network;

• EUR 901,441 in inflows from invest-ing activities, which include inflows from received interest and shares from the revenue of others (EUR 14,124), inflows from the disposal of tangible fixed assets (EUR 187,035) and inflows from the sale of Gorenjska banka, d.d. shares (EUR 700,282);

• EUR 31,782,885 in inflows from fi-nancing activities, which include the use of long-term loans from com-mercial banks for financing invest-ments (EUR 13,029,046), inflows (EUR 17,095,000) from multiple drawings of the long-term revolving credit facility in the amount of EUR 3 million, the use of a limit (EUR 158,839) and the use of a credit line (1,500,000 EUR).

With disposable assets (EUR 423,340,418), the Group financed out-flows in the amount of EUR 427,124,797:• EUR 382,053,078 in outflows from op-

erating activities, mainly expenditures for the purchase of materials and ser-vices and salaries (94.1%), as well as expenditures (contributions and taxes) and other expenses;

• 11,229,792 EUR in outflows from in-vestment activities, which include expenditures for the acquisition of intangible and tangible fixed assets (EUR 11,189,792) and the purchase of the company Solar plus d.o.o. in the amount of EUR 40,000;

• 33,841,927 EUR in outflows from fi-nancing activities, which refer to expenditure on interest paid (EUR 339,709), repayments of investment loans (EUR 11,182,040), multiple re-payments of the leased revolving cred-it facility (EUR 17,095,000), used limit values (EUR 158,839) and credit lines (EUR 1,500,000) and dividend pay-outs (EUR 3,566,339).

2 0 7E l e k t r o C e l j e i n 2 0 1 9

Maturity 31 December 2019 Share in % 31 December 2018 Share in %

Receivables not yet due 47,740,678 89.9 42,962,151 86.5

Receivables overdue less than 30 days 2,195,465 4.1 2,876,590 5.8



Receivables due by 91—180 days 16,102 0.0 31,983 0.1


Receivables overdue by over 365 days 2,639,678 5.0 3,182,161 6.4

Total 53,110,219 100.0 49,668,878 100.0

17.34 Financial Risk ManagementExposure to individual risks and meas-ures for their appropriate management are assessed and implemented based on the effects on cash flows and financ-ing expenses. The Group assesses them regularly and verifies the suitability of

the effects for their management. The method and methodology of financial risk management are presented in more detail in the business report in the sec-tion on Risk Management and Risk Types in the Elektro Celje Group, Section 3.4.2.

17.34.1 Credit RiskCredit risk in operating receivables (risk of loss due to non-fulfillment of debtors` liability) is related to the non-payment or late payment by electricity consum-ers and by recipients of the services rendered by the Group. Management of receivables and debt recovery is im-plemented in accordance with the pro-visions of Article 76 of the Energy Act (EZ-1), Article 42 of the Decree on Gen-eral Conditions for the Supply and Con-sumption of Electricity (SPDOEE) and the provisions of the Rules on the financial operations of the Parent Company. Risk management activities are focused on continuous monitoring and accounts re-ceivables security and active collection

of overdue and unpaid receivables and the charging of default interest in case of delayed payment. The Group's short-term operating receivables, which relate to receivables from certain critical busi-ness customers, are secured through debt collection instruments, bank guar-antees, bills of exchange or security (8.5%). Other receivables are not insured by the Group as the Regulation on gen-eral conditions for the supply and distri-bution of electricity (SPDOEE) does not provide for this.

Exposure to credit riskMaturity analysis of short-term trade re-ceivables (in EUR):

As of 31 December 2019, the Group had EUR 2,670,478 of receivables for network charges, services, lease, average con-nection fees, electricity and other ener-gy products and late charges (3,192,029 EUR as of 31 December 2018) with ma-turities longer than 181 days (bankrupt-cies, compulsory compositions, lawsuits, and property manager debt as per the

Housing Act, and a revaluation adjust-ment recognised for these receivables) and EUR 47,740,678 of receivables not yet due. The maturity profile of receiva-bles of Group companies takes into ac-count short-term trade receivables and interest receivables (without revaluation adjustments).



As of 1 January

2019

Write-offs Reconciliation As of 31 December

2019Formation Transfer between accounts

Reversal

Adjustments to receivables - energy products 3,479,599 —677,942 148,818 72,592 —348,347 2,674,720

Adjustments to receivables - network charge 579,948 —63,122 24,577 0 0 541,403

Adjustments to receivables - SODO services 18,790 —1,331 1,743 0 0 19,202

Adjustments to receivables - services 80,520 —64,296 0 0 —564 15,660

Adjustments to receivables - others 7,658 —6,978 0 0 —351 329

A Total adjustments to - receivables 4,166,515 —813,669 175,138 72,592 —349,262 3,251,314

Adjustment to late charge - network charges. 35,144 —14,478 4,275 0 0 24,941

Adjustments to late charge - SODO services 0 0 560 0 0 560

Adjustment to late charge - services 2,943 —1,169 0 0 —187 1,587

Adjustment to late charge - others 124,073 —35,742 2,405 10,884 —17,432 84,188

B Total adjustments to - receivables 162,160 —51,389 7,240 10,884 —17,619 111,276

Adjustments to misc. short-term receivables 108,120 —14,933 116 369 0 93,672

C Adjustments to misc. short-term receivables 108,120 —14,933 116 369 0 93,672

TOTAL (A + B + C) 4,436,795 —879,991 182,494 83,845 —366,881 3,456,262


As of 1 January

2018

Write-offs Reconciliation As of 31 December

2018Formation Transfer between accounts

Reversal

Adjustments to receivables - energy products 3,654,921 —525,755 188,858 439,687 —278,112 3,479,599

Adjustments to receivables - network charge 620,052 —48,891 8,787 0 0 579,948

Adjustments to receivables - SODO services 16,477 —2,278 4,591 0 0 18,790

Adjustments to receivables - services 89,201 —867 0 0 —7,814 80,520

Adjustments to receivables - others 16,267 —11,130 2,521 0 0 7,658

A Total adjustments to - receivables 4,396,918 —588,921 204,757 439,687 —285,926 4,166,515

Adjustments to late charge - network charge 39,230 —5,174 1,088 0 0 35,144

Adjustments to late charge - services 4,133 —1,623 433 0 0 2,943

Adjustment to late charge - others 138,618 —15,137 9,691 501 —9,600 124,073

B Total adjustments to - receivables 181,981 —21,934 11,212 501 —9,600 162,160

Adjustments to misc. short-term receivables 548,628 —17,849 13,149 —435,808 0 108,120

C Adjustments to misc. short-term receivables 548,628 —17,849 13,149 —435,808 0 108,120

TOTAL (A + B + C) 5,127,527 —628,704 229,118 4,380 —295,526 4,436,795

Companies in the Group carried out a valuation adjustment in the total amount for receivables in bankruptcy and com-position proceedings, for receivables which are the subject of litigation, and for receivables whose due date has exceed-ed 90 days on the balance sheet date. Revaluation adjustment of receivables is explained further in Section 17.3 (g) within the framework of the accounting policies for receivables (measurement upon initial recognition). In 2019, the Parent Compa-ny in addition to receivables on network charges and receivables on default in-terest for network charges also adjusted values for non-matured receivables and receivables with maturities up to 90 days, in the amount of the calculated percent-age of non-payments based on the aver-age monthly balance of receivables of the

previous three years and the predicted IMAD economic growth in 2020. Without a change in the revaluation adjustments, the adjustments to network charge re-ceivables as of 31 December 2019 would amount to EUR 59,323 less and the ad-justments to receivables for late payment interest on network charge to EUR 4,303 less. In 2019, EUR 462,193 in invoices for unjustified consumption of electricity was charged (EUR 14,321 in 2018), with received payments under this heading amounting to EUR 143,989 (EUR 24,029 in 2018). Revaluation adjustment of receiva-bles for the Group in 2019 in amounted to EUR 182,494, with their reversal amount-ing to EUR 366,881. The total adjustment of the Group's receivables as of 31 Decem-ber 2019 amounted to EUR 3,456,262 (EUR 4,436,795 as of 31 December 2018).

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Credit risk arising from investments re-fers to the risk of higher fluctuations in the value of financial instruments. Reduced creditworthiness affects the liquidity of financial instruments and complicates the possible sale of the investment. In extreme cases, credit risk may lead to an investment being worthless. Financial assets, the prices of which are quoted in an active mar-ket and whose fair value can be reliably measured, are measured at fair value (i.e. 5,624 shares of Zavarovalnica Tri-

glav d.d. in the amount of EUR 187,280), and others at cost value. On the balance sheet date, the management of a Group company establishes whether there are any objective reasons for impairment assessment of a financial investment in an equity instrument. The value that rep-resents the maximum exposure to such risk is the total value of the investment. Exposure to the risk of reduction in the value of long-term financial investments below their cost cannot be hedged with financial instruments (Section 17.3 (g)).

17.34.2 Market RiskWithin market risks, the Group is most exposed to the risk of changes in interest rates on loans received. Exposure to in-terest rate risk represents an (un)favour-able movement of the EURIBOR refer-ence interest rate. The Group does insure against fluctuations of EURIBOR interest rates with financial instruments, with ex-posure to interest rate risk for the Group estimated as low. The average weighted interest rate on the Group's loans as of 31 December 2019 amounted to 0.845%. The Group in 2019 does not expect a ma-jor increase in the EURIBOR, which is pro-jected to remain negative.

Cash flow sensitivity analysisSensitivity to changes in interest rates is assessed using the sensitivity analysis method. Given the volume of acquired loans as of 31 December 2019 and the projected negative trend for EURIBOR, a change in the interest rate (EURIBOR) of 0.3% (30 basis points) would result in

a higher expenses for interest paid. The probability of larger change in the EU-RIBOR is estimated as low. This analysis assumes that all other variables remain unchanged.

As a precaution, the Group rejects all terms of Contracts that would allow the lender to change interest rates (in-creased costs clauses) subsequently due to changed conditions in the money and capital markets, changes in Regulations and instructions by any governmental, fiscal or monetary authorities, changes in the borrower’s credit ranking etc. The Par-ent Company acts in accordance with the Decree on the Terms and Conditions and Methods of Borrowing by Legal Entities from Article 87 of the Public Finance Act. In accordance with the Decree, the con-sent of the Ministry of Finance is required for commencement of any and each bor-rowing procedure and for signing of con-tracts with banks.

17.34.3 Liquidity RiskThe Elektro Celje Group measures expo-sure to liquidity risk based on the bal-ance of cash inflows and cash outflows, while an important element in liquidity risk management is also cash flow plan-ning. The Group’s cash flow risk is affect-ed by the amount of collected network charges for the distribution network, for due to the deficit in network charg-es for 2015, the payments pursuant to the preliminary reconciliations of SODO contractual liabilities in the amount of EUR 3,426,391, will only be made in reg-ulatory period 2019-2021 by thirds when the Energy Agency calculates them into tariff rates for network charges payable

by customers. The regulatory period 2019–2021 will also include the payment of contractual interest to SODO from the preliminary reconciliation for the regu-latory year 2015 in the amount pf EUR 205,584 and the envisaged final recon-ciliation for the period 2014-2017 in the amount of EUR -443,582. To ensure daily liquidity and for the event of increased liquidity demand, the Parent Company had a long-term bank credit agreement for a revolving credit amount-ing to EUR 3.145 million in 2019, and since May in the amount of EUR 3 million. In 2015, the company signed a contract with the EIB for EUR 28 million to finance


investments in the period 2015-2017, in 2018 a credit agreement with a commer-cial bank in the amount of EUR 10 million and in 2019 with the same bank in the amount of EUR 10.7 million. By providing appropriate financing sources and fa-

vourable values of financial indicators, the company manages the risk of poor credit and untimely acquisition of the necessary approvals for loans from sec-tor ministries.

Financial instruments based on maturity as of 31 December 2019 (in EUR)


Maturity


1. Loans from banks 39,431,527 10,657,516 22,304,127 6,469,884

2. Financial lease liabilities 789,410 410,845 378,424 141

3. Trade payables 21,227,973 20,919,722 308,251 0


Financial instruments based on maturity as of 31 December 2018 (in EUR)


Maturity


1. Loans from banks 37,584,521 11,182,040 19,328,864 7,073,617

2. Financial lease liabilities 170,093 62,367 107,726 0

3. Trade payables 17,404,472 17,043,086 361,386 0


In accordance with the depreciation schedules under loan agreements con-cluded with banks and the forecast movement of EURIBOR, we assess the interest for loans with maturity of up to

one year will amount to EUR 331,574, with those with a maturity from one to five years amounting to EUR 716,146 and above five years EUR 147,183.

17.34.4 Equity RiskThe Republic of Slovenia has, together with Kapitalska družba d.d. and DUTB d.d., in the Parent Company, which pro-vides services of public utilities (electric-ity distribution) an 80.9% stake which is defined as a strategic investment. In accordance with paragraph 5 item 6.1.1 of the Ordinance on State Asset Manage-ment, which the government adopted at its session on 17 July 2015, the Group, in terms of acquiring 100 percent owner-ship of the Republic of Slovenia in com-panies owning electricity distribution infrastructure in 2016, acceded to the

implementation of the programme of ac-quisition of treasury shares.

Lenders require that the Group meet fi-nancial commitments specified in loan agreements, whereby failure to achieve the prescribed limits may result in ear-ly maturity of loans. As of 31 December 2019, all contractual provisions at the Group level had been achieved (financial debt/equity < 0.3). The Group in 2020 again plans to meet all its financial com-mitments to banks and achieve a net re-turn on equity (ROE) of 3.79%.

Financial leverage indicator (in EUR) 31 December 2019 31 December 2018

1 Loans received and other financial liabilities 40,224,067 37,758,483

2 Equity 233,303,669 228,621,568

Debt to equity ratio 0.172 0.165

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17.35 Transactions with Associated Parties

17.35.1 Transactions with OwnersThe largest shareholder of the Parent Company, the Republic of Slovenia, has a 79.5% stake in the company Elektro Celje. The Parent Company provides services of public utility service – elec-

tricity distribution and, thus, the Repub-lic of Slovenia classified the investment as strategic. The dividends received from the Parent Company in 2019 amounted to EUR 2,596,452.

17.35.2 Transactions of the Parent Company with Group Subsidiaries

Item/year (in EUR) 2019 2018

ECE d.o.o. Elektro Celje OVI, d.o.o. ECE d.o.o. Elektro Celje OVI, d.o.o.

Assets:

Short-term trade receivables 10,455 18,364 10,400 40,755

Deferred Expenses and Accrued Revenue 0 0 728 82

Total assets 10,455 18,364 11,128 40,837

Liabilities:

Short-term trade payables 16,503 38,937 17,479 31,546

Other operational liabilities 217 0 105 0

Total liabilities 16,720 38,937 17,584 31,546

Revenue:

Net sales revenue 104,289 43,539 103,692 81,268

Financial revenue 1,000,292 0 1,000,000 0

Revaluation revenue 0 0 0 1,034

Total revenue 1,104,581 43,539 1,103,692 82,302

Costs and expenses:

Cost of material 138,684 147,787 116,831 142,011

Cost of services 0 33,597 6,131 876

Total costs and expenses 138,684 181,384 122,962 142,887

Group companies participated on the basis of concluded contracts of sale/purchase, whereby market prices for services, goods and materials (rental of business premises, supply of natu-ral gas, electricity and heat, provision of services), insurance and methods of

settlement, which are characteristic of normal market conditions, were used in transactions among associated parties. Dividends paid within the Group in 2019 amounted to EUR 1,000,000 (same as in 2018).


Gross receipts of groups of persons (in EUR) 2019 2018

Members of the Management Board 291,875 270,261

Holder of procuration 54,427 64,053

Receipts under management contracts 0 1,094

Members of the Supervisory Board and Supervisory Board Audit Committee

136,972 131,142

Other employees on individual contracts 563,327 525,687

Total 1,046,601 992,237

17.35.3 Data on Groups of Natural Persons

Amounts of remuneration granted to groups of persons for 2019 for the per-

formance of functions in the Group are as follow:

Remuneration of members of the Man-agement Board and holders of procura-tion in the Elektro Celje GroupCost of benefits and reimbursement of travel expenses arises from the contract of employment and is accounted for in accordance with the contract of em-

ployment or collective agreement and includes daily and meal allowances and travel expenses for business trips. The cost of insurance premiums and the use of company vehicles represent the cred-it.

Name and surname Position Receipts (in EUR) Total

Boris Kupec, MSc (since 1 May 2016) Chairman of the Management Board of Elektro Celje, d.d.


Net receipts 55,828

Sebastijan Roudi, MSc (since 12 August 2016) Managing Director of the company ECE Gross receipts 102,932

Net receipts 53,915

Srečko Mašera (since 1 February 2017) Managing Director of the company Elektro Celje, OVI


Net receipts 38,036

Karmen Šmon, MSc (since 12 August 2018) Procurator of the company ECE Gross receipts 54,427

33,056

Total Gross receipts 346,302

Net receipts 180,834

The costs of benefits and reimburse-ments of travel costs arising from em-ployment contracts and the costs of

professional education in 2019 were as follows:

Name and surname Total receipts (in EUR)

Reimbursement of labour costs

Insurance premiums

Use of company vehicle


Holiday bonus

Boris Kupec, MSc 11,869 1,509 649 6,306 1,498 1,907

Sebastijan Roudi, MSc 7,894 1,236 1,029 3,429 293 1,907

Srečko Mašera 6,734 1,438 263 3,126 0 1,907

Karmen Šmon, MSc 5,377 2,496 966 0 8 1,907

Total 31,873 6,679 2,907 12,861 1,799 7,628

The Chairman of the Management Board of the Parent Company, who has been in office since 1 May 2016, was appointed as a member of the Supervisory Board of the company STELKOM - telekomu-nikacije in storitve d.o.o. on 17 December 2018, is the deputy mayor of the munic-ipality of Prebold for the mandate period 2018-2022 and has a subsidiary activity

on his farm, his main activity (Standard Classification of Activities -SKD) being 85.590 (Instruction, training and further training), since 1 May 2016. The manag-ing directors and holders of procuration of the subsidiaries were not members of management or supervisory bodies in other companies in 2019.

2 1 3E l e k t r o C e l j e i n 2 0 1 9

Name and surname Position Attendance at meeting Receipts in EUR (net)

Receipts in EUR (gross)

Attendance fees and

basic remu-neration in

EUR

Travel expenses

in EURSB meeting

SB HRC meeting

SB HRC corre-spond-ence

meeting

SB AC meeting

SB corre-spond-ence

meeting

1 2 3 5 6 7 8 9 10 = 11 + 12 11 12

REPRESENTATIVES OF SHAREHOLDERS:

Drago Štefe, MSc Member of the SB since 30August 2017 and Chairman of the HR Committee since 14 December 2017

9 4 1 16,257 22,389 21,406 984

Miha Kerin, MSc Member of the SB since 1 September 2016 and Chairman of the SB AC since 3 October 2017

9 7 1 16,757 23,076 22,066 1,010


Chairman of the SB until 26 August 2017, member of the SB since 27 August 2017 to 6 September 2017, Deputy Chairman since 7 September 2017

8 12,482 17,198 16,500 698

Rosana Dražnik, MSc Member of the SB from 27 August 2017 to 6 September 2017, Chair of the SB since 7 August 2017 and member of the HR Committee since 14 December 2017

9 4 1 20,227 27,847 26,281 1,567

REPRESENTATIVES OF EMPLOYEES:


Member of the SB since 1 October 2018

9 11,229 15,475 15,475 0


Member of the SB since 1 October 2018 and member of the HR committee since 15 November2018

9 4 1 14,360 19,781 19,781 0

INDEPENDENT THIRD-PARTY EXPERTS, MEMBERS OF THE SB AC:

Ignac Dolenšek, MSc Member of SB AC since 19 October 2017

7 1 4,169 5,732 4,966 766

Darinka Virant, BA in Economics

Independent third-party expert, member of the SB AC since 9 December 2013

7 1 3,980 5,472 4,966 506

TOTAL 99,461 136,972 131,441 5,531

Remuneration of members of the Super-visory Board and the Supervisory Board Audit CommitteeThe Supervisory Board of the Parent Company has six members, four of which are shareholder representatives and two which are employee representatives. All Supervisory Board members possess equal rights and duties. The Supervi-

sory Board members are appointed by the Shareholder's Assembly by a simple majority of shareholders present, except members of the Supervisory Board elect-ed by the Workers' Council. Amendments and supplements to the Articles of Asso-ciation are adopted by the Assembly by a three-fourth majority of the equity rep-resented at the General Meeting.

Basic annual remuneration (in EUR): Decision of the 21st Shareholders Assembly (valid since 1 9. 2016)

Chairman of the Supervisory Board 19,500

Deputy Chairman of the Supervisory Board 14,300

Member of the Supervisory Board 13,000

Chairman of the Supervisory Board Committee 4,875

Member of the Supervisory Board Committee 3,250


Costs of other benefits Liability insurance (in EUR)

Professional education (in EUR)

REPRESENTATIVES OF SHAREHOLDERS:

Drago Štefe, MSc 97 0

Miha Kerin, MSc 97 427


97 391

Rosana Dražnik, MSc 97 351

REPRESENTATIVES OF EMPLOYEES:


97 544


97 544

INDEPENDENT THIRD-PARTY EXPERTS, MEMBERS OF THE SB AC:

Ignac Dolenšek, MSc 0 1,216

Darinka Virant, BA in Economics 0 0

TOTAL 580 3,473

The cost of liability insurance in accord-ance with the resolution of the Supervi-sory Board of Elektro Celje d.d. present-ed in the credit rating of members of the Supervisory Board represents the cost of other benefits for members of the Su-pervisory Board in 2019. Members of the Supervisory Board and the Supervisory Board Audit Committee in accordance

with the resolution of the 21st Share-holders' Assembly of 31 August 2016 are entitled to reimbursement of the costs of professional education and training con-textually connected to the performance of control functions and operations of the company in the total amount of EUR 10,000 per individual financial year.

Membership in the management or supervisory bodies

Drago Štefe, MSc /

Miha Kerin, MSc Chairman of the Management Board of the company Varnost sistemi, d.o.o.


/

Rosana Dražnik, MSc Director of the company Finera svetovanje d.o.o.,

Sole trader, Rosana Dražnik s.p., Intax

Miran Ajdnik /

Janko Čas /

The Management Board and Supervisory Board did not receive any remuneration in connection with tasks in subsidiaries. The Group did not approve any loans or guarantees to members of the Supervi-

sory Board, the Supervisory Board Audit Committee or the Management Board and as of 31 December 2019, does not show any receivables from these ad-dresses from them.

Remuneration to employees on the basis of contracts which are not subject to the tariff part of the collective agreement Remuneration to employees on the basis of contracts which are not subject to the

tariff part of the collective agreement in 2019 amounted to EUR 563,327 gross or EUR 297,304 net (EUR 525,687 gross or EUR 277,947 net in 2018).

17.36 Auditor CostsThe contractual value for auditing the Annual Reports of the Group, conducted by the auditing firm BDO Revizija d.o.o. in 2019, amounted to EUR 17,460, exclud-

ing VAT (same as in 2018), with the value of assurance services amounting to EUR 1,460, excluding VAT (same as in 2018).

2 1 5E l e k t r o C e l j e i n 2 0 1 9

List of abbreviations

EAgen Energy Agency of the Republic of SloveniaAMI Advanced Meter InfrastructureAX Information System for Comprehensive Management of OperationsGDP Gross Domestic ProductDTD Database of Technical DataD.D. Public Limited Company (Joint-Stock Company)D.O.O. Limited Liability CompanyDCC Distribution Control CentreDU Distribution UnitDMS Distribution Management SystemDNZO Documentation for Obtaining a Building Permit for Non-complex

ConstructionNSP National Spatial PlanOPL Overhead Power LineRCS Remote-Controlled SwitchgearEAM Enterprise Asset ManagementEDC Electricity Distribution CompanyE ElectricityEPS Electric Power System of the Republic of SloveniaEIB European Investment BankELES Elektro – Slovenija, d.o.o. (ELES, Ltd., Electricity Transmission System

Operator)ERP Enterprise Resource PlanningEA Energy ActGIS Geographic Information SystemEIA Economic Interest AssociationPUS Public Utility ServiceGPS Global Positioning SystemGURS Surveying and Mapping Authority of the Republic of SloveniaGWh Gigawatt HourHPP Hydro Power PlantHEP Hrvatska elektroprivreda d.d. (Croatian National Electricity Company -

HEP d.d.)PD Preliminary Design (IDP)CD Conceptual Design (IDZ)IP Internet ProtocolISO International Organization for StandardizationUC Underground Cablekm KilometrekV KilovoltkW KilowattkWh Kilowatt HourADI Annual Development Interview

2 1 6 L i s t o f a b b r e v i a t i o n s

MAIFI Momentary Average Interruption Frequency IndexSPS Small-scale Photovoltaic SystemSHPP Small Hydro Power PlantMW MegawattMWh Megawatt HourMX Asset Management Information SystemLVUC Low-voltage Underground CableSB Supervisory BoardNSP National Spatial PlanOMS Outage Management SystemOHSAS Occupational Health and Safety Management Systems 18001RES Renewable Energy SourcesBD Basic Design (PGD)AD As-built Design (PID)PRSPO Slovenian Business Excellence PrizePSI Software Solution for Distribution Control CentresFS Fire SafetyDD Detailed Design (PZI)RCC Regional Control CentreSB AC Supervisory Board Audit CommitteeDS Distribution SubstationRS Republic of SloveniaDTS Distribution Transformer SubstationSAIDI System Average Interruption Duration IndexSAIFI System Average Interruption Frequency IndexSCADA Supervisory Control and Data AcquisitionSSH Slovenski državni holding, d.d. (Slovenian Sovereign Holding)MV Medium VoltageSODO Sistemski operater distribucijskega omrežja z električno energijo, d.o.o.

(Distribution Network System Operator) CHPP Combined Heat and Power PlantEMS Environmental Management SystemQMS Quality Management SystemTIS Technical Information SystemTS Transformer SubstationTC TelecommunicationTR TransformerHV High VoltageHVUC High-voltage Underground CableOHS Occupational Health and SafetyZGD Zakon o gospodarskih družbah (Companies Act)CA Construction Act

2 1 7E l e k t r o C e l j e i n 2 0 1 9

Editing and copywriting: Elektro Celje, d.d.Design and typesetting: AV studio d.o.o.Design and DTP: AV studio d.o.o.Photographic art: Elektro Celje photography section, shutterstock.comYear of publication: 2020



for

2019

https://www.elektro-celje.si/si/