Consolidated Annual Report 2019 Connecting Gorenjska with Electricity

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Consolidated Annual Report 2019 Connecting Gorenjska with Electricity Consolidated Annual Report 2019 Connecting Gorenjska with electricity. Consolidated Annual Report 2019 Elektro Gorenjska Group Published by: Elektro Gorenjska, d. d. Text: Elektro Gorenjska, d. d. Design: Barbara Kocjančič s. p. July 2020 TABLE OF CONTENTS - BUSINESS REPORT Table of contents BUSINESS REPORT 15 1 OVERVIEW OF SIGNIFICANT EVENTS IN ELEKTRO GORENJSKA GROUP IN YEAR 2019 17 2 MANAGEMENT REPORT OF THE PARENT COMPANY 20 2.1 Corporate governance statement 23 2.2 Supervisory board report 24 3 PRESENTATION OF ELEKTRO GORENJSKA GROUP 30 3.1 Structure Of Elektro Gorenjska Group and associated companies 30 3.1.1 Elektro Gorenjska Company identity card 31 3.1.2 Gorenjske elektrarne Company identity card 32 3.1.3 GEK Vzdrževanje Company identity card 33 3.1.4 GE LES Company identity card 34 3.1.5 ECE Company identity card 35 3.1.6 Soenergetika Company identity card 36 3.2 Other related companies or related legal entities 37 3.3 Main activities and fields of business 37 3.4 Main area of operation 38 3.5 Main technical data 39 3.6 Management and governance of companies in Elektro Gorenjska Group 40 3.6.1 Management and governance of Elektro Gorenjska Company 40 3.6.2 Management and governance of Gorenjske elektrarne Company 44 3.6.3 Management and governance of GEK Vzdrževanje Company 44 3.7 Share capital and ownership structure 45 3.7.1 Share capital and ownership structure of Elektro Gorenjska Company 45 3.7.2 Share capital and ownership structure of Gorenjske elektrarne Company 46 3.7.3 Share capital and ownership structure of GEK Vzdrževanje Company 46 3.7.4 Share capital and ownership structure of GE LES Company 46 3.8 Vision, mission and values of the Group 47 3.9 Key strategic guidelines of the Group 48 3.10 Analysis of the environment and its impact on the operations of the Group 48 3.10.1 General economic environment and economic trend forecasts 48 3.10.2 Presentation of the industry 49 3.10.3 Network charge and price of electricity 51 3.10.4 Energy legal environment of group's operation in year 2019 52 3.10.5 Contract with SODO 52 3.10.6 Production of electricity 53 4 MANAGEMENT AND QUALITY SYSTEMS 54 4.1 Integrated quality management system (iSVK) of Elektro Gorenjska Company 54 4.2 Integrated quality management system of Gorenjske elektrarne Company 56 4.3 Risk management in Elektro Gorenjska Company 57 4.3.1 Significant business risks 58 4.3.2 Significant financial risks 59 4.3.3 Significant operating risks 59 4.3.4 Internal Audit 59 4.4 Risk management in Gorenjske elektrarne Company 60 5 BUSINESS ANALYSIS OF THE GROUP 62 5.1 Production of electricity 62 5.2 Quantities of distributed electricity 65 5.3 Quality of electricity supply 66 5.4 Investments 74 5.5 Maintenance of energy facilities 76 5 TABLE OF CONTENTS - BUSINESS REPORT 5.6 Development and design of the power system 77 5.7 Other services under the Contract with SODO 79 5.8 Market services 79 5.9 Financial performance criteria of the Group 81 5.9.1 Significant indicators 81 5.9.2 Structure of assets and liabilities 83 5.9.3 Structure of revenue and expenditure 84 5.9.4 Cash flow statement 86 6 SUSTAINABLE DEVELOPMENT 87 6.1 Care for employees 87 6.1.1 Demographic structure in the Group 87 6.1.2 Employment 88 6.1.3 Education and educational structure of employees 89 6.1.4 Employee motivation and remuneration 90 6.1.5 Organizational culture and employee commitment 90 6.1.6 Absence of employees 91 6.1.7 Relations between employees and management of individual companies 91 6.1.8 Communication with employees 91 6.1.9 Health and safety at work 92 6.2 Concern for the natural environment 92 6.3 Care for the public interest – social responsibility 93 7 EVENTS AFTER THE BALANCE SHEET DATE 95 6 TABLE OF CONTENTS - FINANCIAL REPORT FINANCIAL REPORT 97 8 MANAGEMENT RESPONSIBILITY STATEMENT 99 9 AUDITOR'S REPORT 100 10 FINANCIAL STATEMENTS OF ELEKTRO GORENJSKA GROUP FOR BUSINESS YEAR ENDED AS AT 31. 12. 2019 102 10.1 Statement of financial position of Elektro Gorenjska Group as at 31. 12. 2019 102 10.2 Profit or loss account of Elektro Gorenjska Group for business year ended as at 31. 12. 2019 104 10.3 Statement of other comprehensive income of Elektro Gorenjska Group for business year ended as at 31. 12. 2019 105 10.4 Cash flow statement of Elektro Gorenjska Group for business year ended as at 31. 12. 2019 106 10.5 Statement of changes in equity of Elektro Gorenjska Group for the business year ended as at 31. 12. 2019 107 11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT 109 11.1 Reporting company and Group structure 109 11.2 Basis for compiling the consolidated financial statements 109 11.2.1 Statement of compliance 109 11.2.2 Basis for measurement 109 11.2.3 Functional and presentation currency 109 11.2.4 Use of significant estimates and judgements 110 11.2.5 New accounting standards and interpretations not yet in force 111 11.3 Summary of significant accounting policies 114 11.3.1 Basis for consolidation 114 11.3.2 Intangible assets 114 11.3.3 Tangible fixed assets 115 11.3.4 Investment property 117 11.3.5 Assets received and leased 117 11.3.6 Financial instruments 118 11.3.7 Stocks 120 11.3.8 Other assets 120 11.3.9 Capital 120 11.3.10 Provisions 120 11.3.11 Assets acquired free of charge 121 11.3.12 Other liabilities 121 11.3.13 Deferred tax liabilities and tax receivables and income tax 121 11.3.14 Revenues 122 11.3.15 Expenditure 122 11.3.16 Consolidated cash flow statement 122 11.3.17 Earnings per share 123 11.4 Determination of fair value 123 11.5 Business combinations 124 12 NOTES TO THE STATEMENT OF FINANCIAL POSITION 126 12.1 Intangible assets 126 12.2 Tangible fixed assets 127 12.3 Investment property 130 12.4 Long-term financial investments 132 12.5 Assets (disposal groups) for sale 135 12.6 Stocks 135 12.7 Short-term financial investments 135 7 TABLE OF CONTENTS - FINANCIAL REPORT 12.8 Short-term operating receivables 135 12.9 Other current assets 137 12.10 Cash and cash equivalents 137 12.11 Capital 137 12.12 Provisions 139 12.13 Long-term financial liabilities 142 12.14 Other long-term liabilities 144 12.15 Deferred tax liability 146 12.16 Short-term financial liabilities 146 12.17 Short-term operating liabilities 146 12.18 Other short-term liabilities 147 12.19 Off-balance sheet records 147 13 NOTES ON PROFIT AND LOSS ACCOUNT ITEMS 148 13.1 Net sales revenues 148 13.2 Capitalized own products and own services 148 13.3 Other operating revenues 149 13.4 Acquisition cost of goods sold and cost of material used 149 13.5 Costs of services 150 13.6 Labour costs 151 13.7 Write-offs 151 13.8 Other operating expenses 152 13.9 Financial expenses from financial liabilities 152 13.10 Recognized profit or loss for investments valued using the equity method 152 13.11 Income tax 153 13.12 Deferred tax liabilities and deferred taxes 153 14 NOTES ON OTHER COMPREHENSIVE INCOME ITEMS 154 15 NOTES ON CASH FLOW ITEMS 155 16 FAIR VALUES 156 17 CAPITAL MANAGEMENT 158 18 TRANSACTIONS WITH AFFILIATES 159 18.1 Transactions with Group companies 159 18.2 Transactions with the Republic of Slovenia 159 18.3 Transactions with companies directly or indirectly owned by the Republic of Slovenia 160 18.4 Transactions with Management and Supervisory Board 161 19 AUDITING COSTS 163 20 FINANCIAL RISKS 164 21 EVENTS AFTER THE BALANCE SHEET DATE 169 8 INDEX OF FIGURES Index of figures Figure 1: Graphic image of the Group 26 Figure 2: Elektro Gorenjska Company identity card 27 Figure 3: Gorenjske elektrarne controlled Company identity card 28 Figure 4: GEK Vzdrževanje controlled Company identity card 29 Figure 5: GE LES Company identity card 30 Figure 6: ECE associated Company identity card 31 Figure 7: Soenergetika associated company identity card 32 Figure 8: Area of supply of electricity distribution companies 34 Figure 9: Organization chart of Gorenjske elektrarne Company 41 Figure 10: Organization chart of GEK Vzdrževanje Company 42 Figure 11: Changes in the number of shareholders of Elektro Gorenjska Company from 31. 12. 2015 to 31. 12. 2019 44 Figure 12: Ownership structure of Elektro Gorenjska Company as of 31. 12. 2019 (in %) 44 Figure 13: Supply model 49 Figure 14: Organization of electricity supply in Slovenia 51 Figure 15: Areas of operation of electricity distribution companies in Slovenia 52 Figure 16: Integrated quality management system within Elektro Gorenjska Company 56 Figure 17: Risk severity assessment matrix 59 Figure 18: Evaluation of risks 63 Figure 19: Electricity produced (in MWh) in period 2015–2019 67 Figure 20: Electricity produced (in MWh) in HE by months of year 2019 67 Figure 21: Electricity produced (in MWh) in FE and SPTE by months of year 2019 67 Figure 22: Share of revenues from electricity sales by individual production sources in year 2019 68 Figure 23: Changes in distributed quantities of electricity and GDP from year 2015 to year 2019 69 Figure 24: SAIDI - Average time of duration of all unannounced long-term interruptions 71 Figure 25: SAIFI – Average number of all unannounced long-term interruptions 71 Figure 26: MAIFI in MAIFIe – average number of all momentary interruptions 72 Figure 27: Share of losses in the network from 2015 to 2019 75 Figure 28: Parameter SAIDI for unplanned long-term interruptions (own causes) in the period 2015–2019 76 Figure 29: Parameter SAIFI for unplanned long-term interruptions (own causes) in the period 2015–2019 76 Figure 30: Share of the network in the cable design from 2017 to 2019 79 Figure 31: Share of measuring points in the remote measurement system in years 2017, 2018 in 2019 80 Figure 32: SAIFI - Average number of announced interruptions per customer in years 82 Figure 33: SAIDI - Average number of announced interruptions per customer in years 82 Figure 34: Changes in maintenance costs from 2015 to 2019 (in €) 83 Figure 35: Information on the number of project documentation made from 2015 to 2019 86 Figure 36: Changes in balance sheet total in the period 2017–2019 92 Figure 37: Structure of assets as of 31.
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