2020
ANNUAL
REPORT
2020 ANNUAL REPORT
6
8
MESSAGE FROM THE
CHAIRMAN OF THE
BOARD OF DIRECTORS
MESSAGE FROM
THE CHIEF EXECUTIVE
OFFICER
13
199
2020
DIRECTORS’ REPORT
CONSOLIDATED
FINANCIAL
STATEMENTS
4 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 ANNUAL REPORT
269
INDEPENDENT
AUDITOR’S
REPORT
CONSOLIDATED FINANCIAL
STATEMENTS
277
SEPARATED
FINANCIAL
STATEMENTS
331
INDEPENDENT
AUDITOR’S
REPORT
SEPARATED FINANCIAL
STATEMENTS
336
DECLARATION
OF THE MANAGEMENT
5 | 2020 ANNUAL REPORT
ELECTRICA S.A.
MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS
MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS
MESSAGE FROM THE CHAIRMAN
OF THE BOARD OF DIRECTORS
Year 2020 has proved that unforeseen circumstances may represent an opportunity to become more
united and focused on achieving common goals, demonstrating adaptability and consistency. Ensuring
continuity in power supply represents an essential activity and Electrica Group respected, in an extra-
ordinary context, both its commitment towards its investors, partners and also towards its consumers.
We managed to do this with a united team of over 8,000 dedicated personnel with extensive experience
in the energy sector. At the same time, the good cooperation between the Board of Directors and the
management team of the Group was essential in achieving business objectives in a period such as 2020.
Based on a well-defined strategy, the company engaged in an extensive transformation and optimiza-
tion process, process that was implemented as planned and which led to a greater degree of flexibility.
The Board of Directors appreciates the progress recorded on all business lines, especially that of finali-
zing the two merger processes conducted, namely the merger of the distribution companies and the
merger of the service companies within the Group. We are confident that the new form of organization
will help increase quality standards throughout the entire organization, along with effective use of exis-
ting resources.
The Group continued its investments plan in all areas of activity, and the acquisition of renewable elec-
tricity generation capacity is an important first step in the context that we need to invest in sustainable
solutions that would contribute to carbon footprint reduction and fight against climate change.
Moreover, for the first time, the Group took the first step in its internationalization strategy, developing
business outside Romania’s borders by deciding to open a branch in the Republic of Moldova. It was
an important moment in the history of the company, which confirms the commitment to analyze and
capitalize opportunities that can generate sustainable growth and positive effects for clients, partners,
employees and investors.
Efficient management is also confirmed by the financial results, which strengthen the solid profile of
the company, but also its role in the economy. Furthermore, Electrica’s admission to trading represents
the largest initial public offering in the history of the Romanian stock exchange, being a model for local
companies.
I believe that we need to consider this atypical period in terms of the opportunities it can offer and focus,
as before, on measures that can bring long-term added value. Electrica has the necessary resources
to overcome any challenge and I am confident that, regardless the context, the Group will not deviate
from the development strategy, respecting its commitments and objectives set by all stakeholders.
Mr. Iulian Cristian Bosoancă
– Chairman of the Board of Directors Electrica SA
MESSAGE FROM THE CEO
MESSAGE FROM THE CEO
MESSAGE FROM
THE CHIEF EXECUTIVE OFFICER
The year 2020 was a totally atypical year, during which Electrica once again proved to be one of the pi-
llars of the Romanian economy, a strategic group made up of solid companies, which even under more
difficult conditions, has fulfilled its mission to stakeholders and achieved the objectives outlined in the
development strategy.
The pandemic context, the major changes in the energy market and the start of the alignment with the
European Green Deal objectives have created challenges on all business lines, which we have success-
fully faced, thanks to the effort and diligence of the entire Electrica team, which is worth, perhaps, more
than in any other year, recognition of performance and of demonstrated spirit of unity.
Despite the unprecedented global health crisis, we have been able to adapt, in a very short time, by
putting in place, from the very first signs of the pandemic, a resilience plan that guaranteed business
continuity in a national strategic sector, that is safe for our customers, colleagues, and partners. We
have worked to speed up the strategic steps of digitalization in order to provide our customers various
means of remote contact and payment, initiative that has increased their confidence and satisfaction,
according to the results of the “2020 Excellence in Customer Experience” report, carried out by KPMG
Romania, on the utilities segment. Beyond ensuring the current activity, we felt it was our responsibility
to help society revert to normality and to support with all possible means the medical units and non-go-
vernmental associations that were at the forefront of the fight against the new coronavirus.
The liberalization of the natural gas market, which took place starting 1 July 2020, followed by a period
of intense changes in the functionality of the power market prior to its liberalization, have led us to
implement a series of measures aimed primarily at optimizing the costs for the final customer, while
facilitating customer transition to the competitive market by simplifying contracting flows. We have
also diversified our product portfolio to meet consumers with stable offers that reflect different consu-
mer habits, predictable prices and transparent contract terms. These sustained efforts, reflecting the
customer satisfaction Group’s strategy, have contributed to maintain the position of market leader in
the supply segment in 2020.
We took important steps to align to the objectives of the European Green Deal, that implies adopting
solutions for resource efficiency and pollution reduction, by entering the market of renewable electri-
city producers following the acquisition of the Stanesti photovoltaic park in Giurgiu County.
We have also made significant progress in modernizing distribution facilities and promoting smart
grids, with total investments in the distribution segment of lei 596 million, ranking Electrica Group nu-
mber 1 in the investment hierarchy of distribution operators in 2020.
In the same year, Electrica also implemented a major process of optimizing its activity by merging the
three distribution companies within the group, as well as the two energy services companies, which
creates the conditions for improving operational performance and increasing the quality of service pro-
vided to approximately 3,8 million users whose confidence we enjoy.
All the initiatives implemented during 2020 are also confirmed by the financial results, which show a
consolidated net profit at group level of lei 388 million and an increase of 87,5% compared to 2019.
We remain consistent with our mission to deliver energy anywhere, anytime and to anyone at the hi-
ghest standards outlined in more than 120 years of energy tradition, and we continue to develop our
work to strengthen our leadership in a constantly changing market.
Mrs. Corina Popescu
CEO Electrica SA
9 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Directors’ report
for the year 2020
11 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
12 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
DIRECTORS’ REPORT
FOR THE YEAR 2020
(based on the individual financial statements prepared in accordance
with the Order of the Ministry of Public Finance no. 2844/2016 for the
approval of the Accounting Regulations in accordance with Interna-
tional Financial Reporting Standards, respectively on the consolida-
ted financial statements prepared in accordance with International
Financial Reporting Standards as adopted by the European Union)
REGARDING THE ECONOMIC AND FINANCIAL ACTIVITY OF
SOCIETATEA ENERGETICA ELECTRICA S.A. and ELECTRICA GROUP
in compliance with art. 63 of the Law no. 24/2017 on issuers of finan-
cial instruments and market operations and with annex no. 15 to ASF
Regulation no. 5/2018 and the Bucharest Stock Exchange Code
for the 12-month period ended 31 December 2020
Free translation from Romanian, which is the official and binding
version, and will prevail, in the event of any discrepancies with the
English version
13 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
TABLE OF CONTENTS
Glossary
Identification details of Electrica
1 Electrica 2020 Overview
1.1 2020 Key financial data
1.2 Key events in 2020
1.3 Post balance sheet events date
2 Electrica Group
2.1 Organizational structure
2.2 Mission, vision, values
2.3 Key elements of the 2019-2023 Strategic Plan
2.4 Outlook
2.5 Key factors, directions and significant market trends
affecting the operational results of Electrica Group
3 Electrica on the capital markets
3.1 Ownership structure
3.2 Shares evolution on BSE and Global depository receipts
(GDRs) evolution on LSE
3.3 Investor relations (IR)
3.4 Legal acts reported
3.5 Dividends policy
3.6 Dividend distribution
3.7 Own shares
4 Corporate Governance in ELSA
4.1 Corporate Governance Code
4.2 General Meeting of ELSA’s Shareholders
4.3 Shareholders’ rights
4.4 ELSA’s Board of Directors
4.5 The activity of ELSA’s Board of Directors and of its consultative
committees in 2020
4.6 ELSA’s Executive management
4.7 Remuneration of the Directors and of the Executive Managers
with mandate agreements
4.8 Corporate Governance in ELSA’s subsidiaries
4.9 Statement regarding the corporate governance “Comply
or Explain”
4.10 Implementing action plans undertaken by signing the framework
agreement with EBRD
4.11 Internal audit activity report for 2020
5 Operating activity of Electrica in 2020
5.1 Operating segments
5.2 Fixed assets
5.3 Procurement
5.4 Sales activity
5.5 Reorganization and disposal of assets
5.6 Personnel
5.7 Environmental considerations
5.8 Research and development activities
6 Electrica financial reporting for 2020
6.1 Consolidated statement of the financial position
6.2 Consolidated statement of profit or loss
6.3 Consolidated cash flow statement
6.4 Separated statement of the financial position
6.5 Separate statement of profit or loss
6.6 Separate cash flow statement
6.7 Risk management
6.8 Description of the main features of internal control and risk
management systems in relation to the financial reporting process
16
19
21
22
27
45
47
48
48
49
51
53
57
58
59
62
62
62
63
63
65
66
67
68
69
79
84
93
95
102
109
113
115
116
118
122
122
125
125
129
131
133
134
138
146
148
154
157
159
163
14 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Appendix 1 – Litigations
Appendix 2 – Details of the main investments of
Electrica Group during 2020
167
191
15 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
GLOSAR
ANRE
ASF
BPS
BoD
BRP
BSE
BTA
Romanian Energy Regulatory Authority
Romanian Financial Supervisory
Authority
Basis points
Board of Directors
Balance Responsible Party
Bucharest Stock Exchange
Business Transfer Agreement
CAPEX
Capital Expenditure
CGC
CMC
CMBC
(EA/CN)
CMNG-
AN
CMNG-
PA
CMNG-
OTC
CMUS
CNTEE
CSR
DAM
Corporate Governance Code
Competitive Market Component
Centralized Market for Bilateral
Contracts (Extended Auction/
Continuous Negotiation)
Centralized Market for Bilateral Natural
Gas Contracts – Auction and
Negotiation
Centralized Market for Bilateral Natural
Gas Contracts – Public Auction
Centralized Market for Universal Service
The National Transmission System Ope-
rator
Corporate Social Responsibility
Day Ahead Market
DAM-NG
Day Ahead Market – Natural Gas
DEER
DSO
DMS
EEA
EBIT
Distributie Energie Electrica Romania
Distribution System Operator
Distribution Management System
European Economic Area
Earnings before interest and tax
EBITDA
Earnings before interest, tax, depreciati-
on and amortization
EDN
EGMS
EFSA
ELSA
Electrical Distribution Network
Extraordinary General Meeting
of Shareholders
Electrica Furnizare SA
Electrica SA
16 | 2020 ANNUAL REPORT
ELECTRICA S.A.
ERM
EU
EUR
FCA
FPM
-LT
GC
GDP
GDR
GEO
GMS
HV
IAS
IFRIC
IFRS
Enterprise Risk Management
European Union
The monetary unit of several member
states of the European Union
Financial Conduct Authority
– United Kingdom
Medium and Long-Term Flexible
Products Market
Green Certificates
Gross Domestic Product
Global Depositary Receipts
Government Emergency Ordinance
General Meeting of Shareholders
High Voltage
International Accounting Standard
International Financial Reporting
Interpretations Committee
International Financial Reporting
Standard
IMS
IPO
IR
ISIN
KPI
kV
LOC
LR
LSH
LV
MV
MWA
MVh
MKP
NAFA
Integrated Management System
Initial Public Offering
Investor Relations
International Securities Identification Nu-
mber
Key Performance Indicators
KiloVolt
Land Ownership Certificate
Last Resort
Labor safety and health
Low Voltage
Medium Voltage
Mega Volt Ampere
MegaWatt hour
Management Key Position
National Agency for Fiscal
Administration
Centralized Market for Bilateral Natural
Gas Contracts – OTC
IM-NG
Intraday Market for Natural Gas
2020 DIRECTORS’ REPORT
US
USD
VAT
Universal Service
United States Dollar
Value Added Tax
NES
NL
NRC
OMPF
OGMS
OHS
OHSAS
National Electricity System
Network Losses
Nomination and Remuneration
Committee
Order of Ministry of Public Finances
Ordinary General Meeting
of Shareholders
Occupational Health and Safety
Occupational Health and Safety
Assessment Series
OPCOM
Romanian Gas and Electricity
market operator
PCB
RAB
RM
RON
RRR
SAD
SAPE
Polychlorinated Biphenylsor
Regulated Asset Base
Retail Market
Romanian monetary unit
Regulated Rate of Return
Distribution Automation System
Societatea de Administrare
a Participatiilor in Energie
SCADA
Supervisory Control And Data
Acquisition
SDEE
SDMN
SDTN
SDTS
SED
SEM
SEO
SoLR
SPO
TWh
TSO
UM
Societatea de Distributie a Energiei
Electrice SA
Societatea de Distributie a Energiei
Electrice Muntenia Nord SA
Societatea de Distributie a Energiei
Electrice Transilvania Nord SA
Societatea de Distributie a Energiei
Electrice Transilvania Sud SA
Servicii Energetice Dobrogea SA
Servicii Energetice Muntenia SA
Servicii Energetice Oltenia SA
Supplier of last resort
Secondary Public Offering
TeraWatt hour
Transmission and system operator
Unit of Measurement
Note: The figures presented in this document are rounded based on the round to nearest method; as a result,
rounding differences may appear.
17 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
18 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Identification details
of Electrica
Report date: 4 March 2021
Name of the Issuer: Societatea Energetica Electrica S.A.
Headquarter: no. 9 Grigore Alexandrescu Street, 1st District, Bucharest, Romania
Telephone/fax number: +4021.208.5999; +4021.208.5998
Fiscal code: 13267221
Trade Registry No: J40/7425/2000
LEI Code (Legal Entity Identifier): 213800P4SUNUM5AUDX61
Subscribed and paid share capital: RON 3,464,435,970
Main characteristics of issued shares: 346,443,597 ordinary shares of 10 RON nominal value, out of which
6,890,593 treasury shares and 339,553,004 shares issued in dematerialized form and freely transferable,
nominative, tradable and fully paid
Regulated market where the issued securities are traded: the company’s shares are listed on the Bucharest
Stock Exchange (ticker: EL) and the Global Depositary Receipts (ticker: ELSA) are listed on the London Stock
Exchange
Applicable accounting standards: Order of the Ministry of Public Finance no. 2844/2016 for the approval of the
Accounting Regulations in accordance with International Financial Reporting Standards and the International
Financial Reporting Standards as approved by the European Union
Reporting period: 2020 Year (period 1 January - 31 December 2020)
Audit: The individual and consolidated financial statements as of and for the period ended 31 December 2020 are
audited by an independent financial auditor
ISIN
ROELECACNOR5
US83367Y2072
Ordinary Shares
GDR
Bloomberg Symbol
Currency
Nominal Value
Stock Market
0QVZ
RON
RON 10
ELSA:LI
USD
RON 40
Bucharest Stock Exchange
REGS
London Stock Exchange
MAIN MARKET
Ticker
EL
ELSA
Source: Electrica
19 | 2020 ANNUAL REPORT
ELECTRICA S.A.
RAPORTUL ADMINISTRATORILOR 2020
2020 DIRECTORS’ REPORT
1.
Electrica
2020
Overview
21 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
1.1 2020 Key financial data
In 2020, the net result of Electrica Group was RON 387.5 mn, a result mainly driven by the performance of the
electricity supply segment.
Electrica Group revenues in 2020 and 2019 were of RON 6,501 mn and RON 6,280 mn respectively
(RON mn)
Revenue
Other operating income
Operational costs
EBITDA1
EBIT
Gross profit
Net Profit
Source: Electrica
2020
2020
6,501
165
(6,215)
953
459
442
388
2019
2019
6,280
160
(6,206)
718
234
226
207
2018
2018
5,613
165
(5,517)
681
261
263
230
As presented in the charts below, the EBITDA margin went up by 330 bps in 2020 compared to 2019, while the
net profit margin increased by 270 bps.
As of 31 December 2020, the Group has a net debt position2 of RON 81 mn.
Figure 1: Consolidated revenue of Electrica Group (RON mn) Figure 2: EBITDA (RON mn) and EBITDA margin (%)
5,613
378
6,280
6,501
518
557
12.1%
11.4%
5,235
5,762
5,944
681
718
14.7%
953
2018
2019
2020
2018
2019
2020
Revenues(w/o green certificates)
Revenues from green certificates
EBITDA
EBITDA Margin
Source: Electrica
Source: Electrica
1 Adjusted EBITDA (Earnings before interest, tax, depreciation and amortisation or namely EBITDA) is defined
and calculated as profit/(loss) before tax adjusted for i) depreciation, amortization and impairment/reversal
of impairment of property, plant and equipment and intangible assets, ii) impairment of assets held for sale
and iii) net finance income. EBITDA is not an IFRS measure and should not be treated as an alternative to IFRS
measures. Moreover, EBITDA is not uniformly defined. The method used to calculate EBITDA by other compa-
nies may differ significantly from that used by the Group. As a consequence, the EBITDA presented in this note
cannot, as such, be relied upon for the purpose of comparison to EBITDA of other companies.
2 Net debt/(Cash) is defined as bank borrowings + bank overdrafts + financial leases + funding for concession
agreements - cash and cash equivalents – restricted cash - bank deposits, treasury bills and government bonds.
22 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Figure 3: Consolidated net profit (RON mn)
Figure 4: Net debt/(cash) (RON mn)
6.0%
4.1%
3.3%
230
207
388
(670)
(81)
(166)
2018
2019
2020
2018
2019
2020
Net Profit
Net profit margin
Net debt/(cash)
Source: Electrica
Source: Electrica
DISTRIBUTION SEGMENT
Essential market information:
■
■
■
■
■
■
■
■
■
■
Electricity distribution in Romania is fulfilled mainly by eight electricity distribution system operators,
regulated by ANRE;
Each company is responsible for the exclusive distribution of electricity in the region for which it is
authorized, under a concession agreement concluded with the Romanian State;
Electrica and Enel own three distribution companies each, while CEZ through Distributie Oltenia and
E.ON through Delgaz Grid own the remaining two;
Electrica Group is a key player in the electricity distribution sector, both in terms of areas covered and
of number of users served;
The estimated Regulated Assets Base (RAB) value at the end of 2020 was RON 5.8 bn;
200,146 km of electric lines - 7,601 km for High Voltage (“HV”), 46,273 km for Medium Voltage (“MV”)
and 146,272 km for Low Voltage (“LV”);
Total area covered: 97,196 km2, 40.7% of Romania’s territory;
3.80 mn users (2020) for the distribution activity;
17.49 TWh of electricity distributed in 2020, a decrease of 1.4% as compared to 2019;
39.5% market share for the distribution of electricity to final users in 2019 (based on distributed
quantities, according to ANRE report for 2019).
23 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Figure 5: Romanian electricity distribution map
Source: Electrica
Figure 6: Evolution of the number of users (mn)
Figure 7: Quantity distributed (TWh)
9.33
9.45
9.55
44.30
44.80
44.90
5.66
5.72
5.75
26.50
27.15
27.17
3.67
3.73
3.77
17.80
17.65
17.73
2017
2018
2019
2017
2018
2019
Electrica
Others
Electrica
Others
Source: ANRE Report for performance indicators’
monitoring 2019
Source: ANRE Report for performance indicators’
monitoring 2019, Electrica
24 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Key financial indicators
In 2020, the revenues from the electricity distribution segment increased by approx. RON 9.7 mn, or 0.4%, to
RON 2,750.8 mn, from RON 2,741.2 mn in 2019. The positive effect, generated by the increase in distribution
tariffs, was significantly reduced by the fall in the distributed electricity volumes by 1.4% and by the RON 78.1
mn decrease of the revenues recognized in accordance with IFRIC 12 (these have no significant impact in the
result).
The significant decrease of the operating expenses, which cancelled the increase of the costs with the
electricity purchased to cover network losses and of the employee benefits costs, contributed to an EBITDA
increase on the distribution segment of RON 16.6 mn or 2.7%.
The segment net profit, additionally negatively influenced mainly by the increase in depreciation and
amortization charge and rise in the net finance cost, recorded a decrease of approx. RON 29.3 mn, or 27.5%.
Figure 8: Revenues - distribution segment (RON mn)
Figure 9: EBITDA – distribution segment (RON mn)
2,739
2,741
2,751
533
607
624
2018
2019
2020
2018
2019
2020
Source: Electrica
Source: Electrica
Figure 10: Net Profit – distribution segment (RON mn)
Figure 11: Net debt/(Cash) – distribution
segment (RON mn)
91
106
77
657
781
168
2018
2019
2020
2018
2019
2020
Source: Electrica
Source: Electrica
25 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
SUPPLY SEGMENT
Essential market data (according to ANRE Report for November 2020)
■
■
■
The supply market is composed of both competitive and regulated segment;
The regulated segment comprises five suppliers of last resort designated at national level;
The competitive segment comprises 89 suppliers (including suppliers of last resort with activity in
the competitive segment of retail market), out of which 81 are relatively small (<4% market share).
EFSA is the market leader with a share of 19.24%; it is also the leader on the regulated market with a market
share of 54.56%, on the competitive market having a share of 10.89%. In comparison, in 2019, EFSA had a
regulated market share of 51.48% and a competitive market share of 10.93% (ANRE report for December 2019).
Key financial indicators
The revenue from the electricity and natural gas supply activity increased in 2020 by approx. RON 246.5 mn,
or 5.2%, to RON 5,015.1 mn, from RON 4,768.7 mn in 2019.
This evolution is mainly the effect of the increase of the retail electricity sale prices by 2.8%, but also of a slight
increase of the volume of electricity supplied by 0.4%.
In terms of EBITDA, the supply segment recorded a significant increase of RON 126.4 mn in 2020, and a rise
in the EBITDA margin from 2.9% in 2019 to 5.3% in 2020.
The supply segment has a net cash position which decreased compared to 2019 by approx. RON 74.6 mn,
following the decrease of the cash level, influenced by the acquisition of EEV1, the increase of the trade
receivables, and the cash pooling scheme.
Figure 12: Revenues - supply segment (RON mn)
Figure 13: EBITDA - supply segment (RON mn)
4,769
518
5,015
557
3,995
378
3,617
4,250
4,458
5.3%
265
3.4%
2.9%
137
139
2018
2019
2020
2018
2019
2020
Revenues(w/o green certificates)
Revenues from green certificates
EBITDA
EBITDA Margin
Source: Electrica
Source: Electrica
26 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Figure 14: Net profit - supply segment (RON mn)
Figure 15: Net debt/(Cash) - supply segment (RON mn)
4,3%
214
2,7%
2,2%
108
104
(183)
(244)
(257)
2018
2019
2020
2018
2019
2020
Net profit
Net profit margin
Net debt/(Cash)
Source: Electrica
Source: Electrica
1.2 Key events in 2020
During 2020 the following main events took place: :
■■
ELSA’s General Meetings of Shareholders (GMS) and main projects developed and
completed during the year as a result of the approval received from ELSA’s GMS
In 2020, one Ordinary General Meetings of Shareholders (OGMS) took place on 29 April, and one Extraordinary
Meeting of Shareholders (EGMS) was held on 21 August.
During ELSA’s OGMS, which took place on 29 April 2020, at the company’s headquarters, the shareholders
approved, mainly, the following:
■
ELSA’s 2019 audited financial statements and the 2020 revenue and expenses budget, at individual as
well as at consolidated level;
the 2019 net profit distribution: total gross dividend value – RON 246.1 mn, gross dividend per share
–RON 0.7248, ex date – 5 June 2020, registration date – 9 June 2020, payment date – 26 June 2020;
the discharge of liability of the members of ELSA’s Board of Directors for the financial year 2019;
the election of Mr. Iulian Cristian Bosoancă as non-independent member of ELSA’s Board of Directors
for filling in the vacant position, following the renunciation to the mandate by the non-independent
director Mr. Niculae Havrilet. The term of the mandate of the elected director is for a duration equal
to the remaining period until the expiry of the mandate for the vacant position, i.e. until 27 April 2022.
■
■
■
The EGMS that took place on 21 August 2020, at ELSA’s headquarters, has been convened as a result of the
need to complete the legal steps regarding the merger by absorption of the three distribution operators,
respectively the merger by absorption of the two energy services companies within the Group. Therefore,
during the meeting, the shareholders approved the empowerment of ELSA’s representative to participate
in the EGMS of the absorbed companies – Societatea de Distributie a Energiei Electrice Muntenia Nord
(SDMN) and Societatea de Distributie a Energiei Electrice Transilvania Sud (SDTS), in case of the Distribution
Operators’ Merger (DSO Merger), respectively Servicii Energetice Muntenia (SEM), in case of the Energy
Services Companies’ Merger (ES Merger), and to express a favourable vote (“for”) regarding the approval
of the dissolution without liquidation and of the deregistration from the Trade Register of the absorbed
companies, the dissolution being a direct effect of the DSO Merger, respectively of the ES Merger.
Regarding the DSO Merger, the steps carried out from the beginning of 2020 are presented below.
On 27 May 2020, ELSA’s BoD mandated ELSA’s representative in the GMS of the three distribution companies
within Electrica Group to vote for the approval in principle of the initiation and participation at the merger
by absorption between SDTN, SDTS and SDMN, the absorbing company being SDTN.
In the meeting held on 3 July 2020, ELSA’s BoD approved the participation of ELSA, in its capacity as majority
shareholder of SDTN, SDTS, SDMN, in the EGMS of the companies and the expression of a favorable vote
27 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
(“for”) regarding, mainly, the following:
■
the approval of the plan for the merger by absorption and of the merger by absorption process
between SDTN, as absorbing company, and SDTS and SDMN, as absorbed companies;
the approval of the effective date of the Merger as established in the Merger Plan.
■
Furthermore, ELSA’s BoD approved the participation of ELSA, in its capacity as majority shareholder of SDTN, in
the EGMS of SDTN and the expression of a favorable vote (“for”) regarding, mainly, the following:
■
the approval of the change of the company’s name from Societatea de Distributie a Energiei Electrice
Transilvania Nord S.A. to Distributie Energie Electrica Romania S.A.;
the approval of the increase of the share capital of SDTN in accordance with the provisions of the Merger
Plan;
the approval of the amendment of the articles of association of SDTN to reflect these changes.
■
■
As a result of the resolution of ELSA’s EGMS dated 21 August 2020, the EGMS of SDTN, SDTS and SDMN for the
approval of the Merger by the merging companies took place on 26 August 2020. After its approval by the
court, the legal merger was completed, 31 December 2020 (end of the day) being the effective date, moment
from which the merger took effect, respectively SDTS and SDMN, as absorbed companies, have ceased to
exist, being dissolved without going into liquidation, and all their assets and liabilities were transferred to
SDTN, as absorbing company, with the increase of its share capital and the issuance and distribution of new
shares in favor of the shareholder of the absorbing company, namely ELSA.
The ES Merger, which involved the absorption of SEM by SERV, took place starting with 27 March 2020,
when ELSA’s BoD mandated ELSA’s representative in the GMS of the two energy services companies within
Electrica Group to vote for the approval in principle of the merger by absorption between SERV and SEM
and the participation of the companies to the merger, with SERV as absorbing company.
In the meeting held on 3 July 2020, ELSA’s BoD approved the participation of ELSA, in its capacity as shareholder
of SERV and SEM, in the companies’ EGMS and the expression of a favorable vote (“for”) regarding, mainly, the
following:aprobarea proiectului de fuziune prin absorbtie si a procesului de fuziune prin absorbtie intre SERV,
in calitate de societate absorbanta, si SEM, in calitate de societate absorbita;
■
the approval of the plan of the merger by absorption and of the approval of the merger by absorption
process between SERV, as absorbing company, and SEM, as absorbed company;
the approval of the effective date of the Merger as established in the Merger Plan - 30 November 2020;
the approval of the implementation of the Merger, namely the transfer of all the assets and liabilities of
SEM to SERV, in exchange for the issuance to ELSA of shares in the share capital of SERV.
■
■
Furthermore, ELSA’s BoD approved the participation of ELSA, in its capacity as shareholder of SERV, in the
EGMS of SERV and the expression of a favorable vote (“for”) regarding, mainly, the following:
■
■
the approval of the share capital increase of SERV in accordance with the provisions of the Merger Plan;
the approval of the amendment of SERV articles of association in order to reflect these changes.
As a result of the resolution of ELSA’s EGMS dated 21 August 2020, the EGMS of SERV, respectively of SEM, for
the approval of the Merger by the merging companies took place on 25 August 2020. After merger process’s
approval by the court, the two participating companies have completed all the procedural and operational
steps necessary to implement the merger starting with the effective date of 30 November 2020, the date
from which the merger took effect: starting with 1 December 2020, the Group’s energy services carried out
their activity only under in SERV entity, while SEM, as absorbed company, ceased to exist, being dissolved
without going into liquidation, and its assets and liabilities being universally and by law transferred, as effect
of the merger through absorption process, to SERV, as absorbing company, with the increase of SERV’s share
capital and the issuance and distribution of new shares in the absorbing company in favor of its shareholder,
namely ELSA.
■■
Changes in the structure of ELSA’s Board of Directors (BoD) and its committees
Following the vacancy of a position in ELSA’s BoD after the renunciation to the mandate by Mr. Niculae Havrilet,
starting with 10 December 2019, ELSA’s EGMS elected Mr. Iulian Cristian Bosoancă as a non-independent
member of ELSA’s BoD for filling in this position. Thus, starting with 29 April 2020, the composition of the
Board of Directors was as follows: Mrs. Ramona Ungur, Mr. Dragos Andrei, Mr. Cristian Bosoancă, Mr. Bogdan
Iliescu, Mr. Gicu Iorga, Mr. Radu Florescu and Mr. Valentin Radu.
Regarding the position of Chairman of ELSA’s BoD, it was occupied by Mr. Valentin Radu until 17 July 2020
(inclusively), the date on which ELSA’s BoD took note of his resignation as Chairman, starting with 18 July
2020. During the meeting held on the same date, the BoD elected Mr. Iulian Cristian Bosoancă as Chairman
of the Board of Directors, starting with 18 July 2020 and until 31 December 2020. Subsequently, during the
meeting dated 15 December 2020, Mr. Iulian Cristian Bosoancă was re-elected as Chairman of the Board of
Directors starting with 1 January 2021 until 31 December 2021.
Regarding the composition of ELSA’s BoD consultative committees, it underwent changes during 2020 by
the decision of ELSA’s BoD dated 28 January 2020, and of the one from 13 May 2020, as a result of the election
of Mr. Cristian Bosoancă as a member of ELSA’s BoD. Thus, as of 31 December 2020, the composition of the
consultative committees of ELSA’s BoD was the following:
28 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
■
■
■
The Nomination and Remuneration Committee:
- Mr. Bogdan Iliescu – Chair
- Mr. Valentin Radu – Member
- Mr. Gicu Iorga – Member
The Audit and Risk Committee:
- Ms. Ramona Ungur – Chair
- Mr. Bogdan Iliescu – Member
- Mr. Cristian Bosoancă – Member
The Strategy and Corporate Governance Committee:
- Mr. Dragos Andrei – Chair
- Mr. Radu Florescu – Member
- Mr. Valentin Radu – Member
In accordance with the decision of the Board of Directors of 15 December 2020, the composition of the
committees will remain the same during 2021.
ELSA’s executive management did not change during 2020. During the meeting held on 15 December 2020,
ELSA’s Board of Directors approved the further collaboration with Ms. Livioara Șujdea and her appointment
as Chief Distribution Officer (CDO) starting with 1 February 2021, for a 4 years mandate.
■■
■
■
■
■
■
Other relevant events
On 17 April 2020, the rating agency Fitch Ratings confirmed Electrica’s issuer corporate rating of BBB
(Investment Grade), obtained in September 2019, but revised its outlook from Stable to Negative.
The change appeared as a consequence of the revision of Romania’s rating Outlook from Stable to
Negative, mainly as a result of the implications of COVID-19 pandemic, as in Fitch’s view, the Company’s
rating should be capped at one notch above the one of the Romanian state, the largest shareholder.
The confirmation of the BBB rating continues to reflect Electrica Group’s solid financial profile,
adequate liquidity, low leverage level, as well as the leading position both on the electricity distribution
and regulated supply segments.
On 5 February 2020, ELSA concluded conventions for internal treasury with SDTN, SDTS, SDMN, EFSA,
SERV and SEM. These conventions are part of the documentation related to the implementation of
banking service structures for liquidity concentration (“cash-pooling”), necessary for improving the
efficiency of the treasury operations within the Group. On 20 December 2020, these conventions were
automatically renewed, for successive periods of one year each, in case they do not cease at maturity.
On 23 June 2020, EFSA signed a share purchase agreement with Raylexo Limited and Long Bridge
Management si Administrare S.R.L. for the acquisition of all shares in Long Bridge Milenium S.R.L.
(LBM), company which owns Stanesti Photovoltaic Farm in Giurgiu County, with an installed capacity
of 7.5 MW (operational power limited to 6.8 MW).
On 31 August 2020, the transaction has been closed and the transfer of shares’ ownership to EFSA was
realized, these being subject to fulfilment of the conditions precedent agreed by the parties as well
as to the relevant formalities. The purchase price of the shares was EUR 1,637,515. Amongst various
elements of the transaction, EFSA took over the loans granted by the former shareholders of LBM to
the acquired company, in total outstanding amount of EUR 3,817,749.
Subsequently, the acquired company was renamed Electrica Energie Verde 1 SRL („EEV1”), and on
30 December 2020 ELSA signed a convention for internal treasury with EEV1, concluded until 28
January 2022 with the option of automatic renewal for successive periods of one year each.
At the end of August 2020, the Competition Council included ELSA on the List of companies that were
involved in investigations regarding some public tenders’ rigging because, by Decision no. 77/20
December 2017, ELSA was sanctioned by the Competition Council, having the quality of “facilitator”
(concept not definitively confirmed by the Romanian courts), without being retained in the evidence
of the competition authority as a participant to the market agreements.
ELSA has been removed from the list on 20 December 2020, three years after the aforementioned
decision issuance. The case by which ELSA challenged the decision is pending before the High Court
of Cassation and Justice, with settlement deadline as of 9 February 2022, so that, at this moment,
there is no final court decision.
During the meeting held on 17 December 2020, the EGMS of EFSA approved the establishment of
EFSA’s Branch in the Republic of Moldova, headquartered in Chisinau, 63 Vlaicu Parcalab, MD-2012,
Republic of Moldova.
29 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
■■
Major holdings
On 30 March 2020, ELSA received the Notification of major holdings from Allianz SE. Thus, starting with 26
March 2020, the entities indirectly held by Allianz SE exceeded the threshold of 5%, respectively have reached
a holding of 5.09% of the voting rights of ELSA calculated based on all the shares to which voting rights are
attached.
Afterwards, on 24 August 2020, ELSA received an additional notification of major holdings from Allianz SE
because Fondul de pensii administrat privat AZT Viitorul Tau, entity managed by Allianz-Tiriac Pensii Private
SAFPP, exceeded the threshold of 5%. Therefore, the entities indirectly held by Allianz SE increased their
holdings again, reaching a holding of 5.30% of ELSA’s shares with voting rights.
On 22 September 2020, ELSA received the notifications of major holdings from Paval Holding SRL and
Dedeman SRL. According to the notifications, starting with 18 September 2020, Dedeman SRL has transferred
part of the shares to an affiliated company, respectively Paval Holding SRL. Following the transfer from that
date, Dedeman SRL held 0.79% of ELSA’s shares with voting rights, while Paval Holding SRL exceeded the 5%
threshold, respectively reached a direct holding of 7.46% of ELSA’s shares with voting rights. The voting rights
held directly or indirectly by Paval Holding were 8.25% of ELSA’s shares with voting rights at the moment of
their reporting.
■■
■
■
■
■
■
Litigations
On 3 February 2020, the company was notified about an action in court of a former Chief Human
Resources Officer against the defendant ELSA for the payment of certain amounts of money allegedly
due based on the mandate agreement, subject to case no. 38532/3/2019. The person was Chief Human
Resources Officer for a limited period of 1 year.
Taking into account that, according to the provisions of the mandate agreement concluded between
ELSA and the former Chief Human Resources Officer, the jurisdiction to settle the dispute belongs to
the International Arbitration Centre of the Austrian Federal Economic Chamber in Vienna, on 3 June
2020, the Bucharest Tribunal admitted the exception of the general lack of jurisdiction of the courts
invoked by ELSA and rejected, as not being within the competence of the courts, the action filed by
the former Chief Human Resources Officer. The solution is final, no appeal being filed.
On 5 February 2020, the company has received two claims under warranty against ELSA registered by
Mr. Mircea Patrascoiu, former Member of the Board of Directors and former CEO of EFSA, and by Ms.
Anca Dobrica, former member of Board of Directors of EFSA. On 24 February 2020, the Company has
received a claim under warranty registered by the defendant Victoria Lupu, as part of file no. 35647/3/2019
before the Bucharest Tribunal. All of them are defendants in file no. 35647/3/2019, having as object the
underscoring of the liability of the members of the BoD and the CEO of EFSA, action submitted by
the company in question, following the damages retained by the Court of Accounts of Romania in the
Decision no. 11/23 December 2016 and in the Control Report no. 5799/29 November 2016.
On 1 October 2020, Bucharest Tribunal admitted the exceptions of limitation periods regarding the
claim filed by EFSA and consequently rejected as devoid of object the above-mentioned warranty
claims. The solution is not final and can be appealed.
On 18 February 2020, the High Court of Cassation and Justice settled the appeal filed by ANRE in the
file no. 7341/2/2014, by admitting it and sending the case to the same court for re-examining the main
action and the requests for accessory intervention made by the interveners Enel Muntenia SA, Enel
Distributie Dobrogea SA and Enel Distributie Banat SA, in the first instance, and by the interveners
SDTS, SDTN, SDMN and ELSA, in appeal. The file has been registered at the Bucharest Court of Appeal
for retrial, under no. 4804/2/2020, having the term on 20 November 2020.
On 18 December 2020, Bucharest Court of Appeal dismissed the claim and the accessory intervention
as unfounded. The Decision is not final, being appealable within 15 days of its communication.
On 24 February 2020, the Bucharest Court of Appeal rejected the appeal filed by EFSA requesting
financial claims from ELSA in amount of RON 17,274,162. This amount has been noted by the Court of
Accounts, through Report no. 2835/17 May 2013 and Decision no. 20/17 June 2013, being considered as
representing the value of the invoices paid by EFSA in the absence of supporting documents, as well
as the payment of the related legal interest. The decision was issued in case no. 2869/3/2019, EFSA re-
appealing within 30 days of its communication. On 19 November 2020, the High Court of Cassation
and Justice rejected the request for review filed by EFSA against the civil decision no. 96/24 February
2020 issued by Bucharest Court of Appeal in the file no. 2869/3/2019. The High Court’s decision is final.
SDMN filed to the Bucharest Court a lawsuit for damages (file no. 18976/3/2020), communicated
to ELSA on 15 September 2020, having as object the obligation of ELSA: (i) to pay the amount of
RON 20,350,189, representing the undue payment made by SDMN to ELSA; (ii) to pay the amount
representing legal fees made in regard with this lawsuit.
Following the investigation carried out by the Romanian Court of Accounts in 2016, this institution
30 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
established a series of measures under SDMN’s responsibility by Decision no. 45/2016, based on the
Control report no. 618/11 November 2016. Among these measures there is also the recovery of RON
20,350,189, amount paid by SDMN to ELSA based on consultancy, services and mandate contracts, in
the period between 1 January 2013 and 30 June 2014. On 20 January 2021, the Court suspended the
settlement of the case untill the final settlement of case no. 1677/105/2017 of Prahova Tribunal.
On 17 December 2020, the High Court of Cassation and Justice took note of the waiver of the judgment
in file no. 8019/2/2017, formulated by ELSA and the distribution subsidiaries SDTN, SDTS and SDMN,
admitting the appeal and canceling the appealed decision.
The case was registered before the Bucharest Court of Appeal in October 2017, being rejected on the
merits as inadmissible, on 24 April 2018 (ELSA and the three distribution subsidiaries subsequently
filing an appeal). The object of the file is:
the annulment of the administrative acts by which the requests formulated by the distribution
companies for the favorable approval of the transfer of the AMR System from ELSA to the distribution
subsidiaries were rejected, respectively: (i) the ANRE address no. 63911/22 September 2017 for SDMN
(ii) ANRE address no. 63910/22 September 2017 for SDTN, (iii) ANRE Address no. 63912/22 September
2017 for SDTS;
obliging ANRE to issue administrative documents for the favorable approval of the transfer of the
AMR System from ELSA to each of the above-mentioned concessionary operators, taking into account
the provisions of ANRE Order no. 31/2013 on the Methodology for regulating the conditions for taking
over electricity distribution capacities, taking into account the transfer requests, respectively all the
elements indicated in them and taking into account the net book value of the AMR System at 30
September 2017; and
obliging ANRE to make the necessary corrections on the regulated revenue taken into account when
setting the previously approved distribution tariffs, following the inclusion of the investment with
the AMR System in the regulated asset base of the concession operators, taking into account all the
elements shown in the summons.
■
a.
b.
c.
Following the elimination from the Collective Labor Agreements of the benefit of the free electricity quota for
the former employees of the Group, current retirees, starting with 1 January 2020, Electrica Group is involved
in a number of 70 litigations through which the pensioners request the granting of the energy quota. From
the total number, 12 disputes were settled on the merits, of which 10 were favorable to the group companies,
the plaintiffs’ claims being dismissed, and in 2 cases the plaintiffs’ claims were admitted. The solutions are
not final, they can be appealed.
■■
Policies in force
In February 2020, the updated version of ELSA’s Corporate Governance Code was published on the Company’s
website, being available under the section Investors > Corporate Governance. On this occasion, ELSA has
published two additional policies:
■
IR Corporate Disclosure Policy, which presents the main methods used by the company to
communicate with investors and analysts. It covers also verbal statements made both in group or
individual meetings, as well as in telephone calls with shareholders, analysts, and potential investors;
Policy on Organizing and Running ELSA’s GMSs, which presents detailed aspects of interest for
investors regarding the way of organizing and carrying out the GMS.
■
On 22 July 2020, ELSA published on the website the updated version of the Corporate Governance Code
revised with regard to the Chapter 6 on the risk management system. Also, ELSA’s BoD approved the revised
version of the Policy on Transactions with Related Parties.
■■
Measures adopted in COVID-19 context
In the context of the crisis generated by the COVID-19 pandemic, ELSA’s representatives frequently
communicated with all the stakeholders, announcements being released in order to present the measures
taken by the Group companies and COVID-19’s impact on them.
In the fight against COVID-19 pandemic, ELSA has adopted all the necessary measures so that the activity
of the companies within the Group to continue to be carried out under normal conditions. Ever since the
beginning of the crisis, the resilience plan in force at Group level has been updated promptly to respond
to the exceptional situation generated by the pandemic. Essential activities and critical roles have been
identified, staff backup has been insured and three action scenarios on escalation levels depending on the
evolution of the situation in the external environment of the company have been defined, in order to ensure
the smooth running of the operations and the continuity in the electricity supply, as well as for the protection
of its customers, employees and partners.
Activities that involve interaction with clients and/or access to consumers’ homes had been limited and the
scheduled works had been reprioritized, in order for the scheduled interruptions in the electricity supply to
be diminished. EFSA’s customers had been encouraged to use methods of indirect interaction, through
internet or by telephone, to solve the various requests, by using online payment methods (MyElectrica
account, internet banking and mobile banking).
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2020 DIRECTORS’ REPORT
In order to limit the spread of COVID-19 and to protect the employees, including the frontline ones, various
measures have been implemented, such as: providing protective equipment, creation of a rotation system to
minimize meetings between teams, work-from-home - where feasible, limiting or temporarily suspending
access to certain locations, including customer relations centers, and redirecting communication and
correspondence to alternative electronic channels, etc.
Measures of social distancing have been recommended to the shareholders, who have been guided to use
electronic means/remote interaction for solving any requests regarding the activity of Electrica Group.
After the state of emergency ended, starting with 15 May 2020, the companies within Electrica Group have
adopted a plan of measures to gradually resume the activity so that the Group’s customers, partners and
employees to be protected, and the commitment to distribute and supply electricity at high quality standards
to be further fulfilled.
Regarding the electricity and natural gas supply segment, the cash collection activities through own
cashiers, the activities of the customer relations centers, as well as the field activities for B2B customers
(Business-to-Business) have been resumed starting with 18 May 2020, ensuring the provision of all services
offered prior to the initiation of the state of emergency, in a safely manner, with a limited number of employees
in front-office for a period of three months, and subsequently, with the monthly assessment of the situation
depending on the evolution of the national/regional context. The effect of GEO no. 29/2020 for small and
medium enterprises, by which the postponement of payments of electricity and natural gas bills is possible
based on state of emergency certificates received by companies, was minimal, considering the extensive
portfolio of EFSA. At the same time, the evolution of the aging intervals in the collection of receivables during
2020 did not register significant changes compared to the previous year.
The action plans of the distribution operators consider keeping the general preventive measures for their
own staff, users and collaborators as well as the organizational measures to ensure safe management and
operation of the network infrastructure, at a superior level of quality of the electricity distribution service.
The delays in investments and maintenance works, including those requiring consumers’ interruption, in
compliance with the Performance Standard for the distribution service, have been recovered.
The management permanently monitors the financial performance and liquidity of the Group companies
on several tiers, in order to ensure the availability of the necessary funds for carrying out the activity, by
analyzing with priority the cash flow, including the impact that the legislative changes may have on the
Group’s activities. The aim is to secure the collection of receivables from customers, to use the banking
structures for liquidity concentration (“cash-pooling”) implemented at the beggining of the year, as well as
the financing facilities available for the companies within the Group.
Distribution segment
At the end of 2020, Electrica has successfully completed the merger of the three electricity distribution
companies within the Group. Starting with 1 January 2021, the new company Distributie Energie Electrica
Romania S.A. (DEER) becomes the most important electricity distribution operator at national level, with a
coverage of 40.7% of the Romanian territory, which serves over 3.8 million network users.
By implementing the merger of the three distribution companies within the Group, medium and long-term
benefits could be obtained for all stakeholders. The current priorities for the distribution segment are:
■
■
■
■
■
■
cost efficiency;
accelerating the digitization of the main business processes;
orientation towards the smart grid concept by promoting on a large scale the smart metering;
improving operational performance;
increasing the quality of the distribution service;
reduction of distribution network losses.
■■
Distribution activity
During 2020, ANRE did the most extensive and complex process of reviewing incidental secondary legislation
in recent years (47 regulations adopted by 38 orders) in order to complete and align with the amendments to
the primary legislation (Law no. 155/24 July 2020).
a)
Regulations regarding tariffs:
■
-
-
Distribution tariffs approved for 2020:
Tariffs applicable in the period 1 January 2020 – 15 January 2020: in December 2019, the tariffs for 2020
were approved through ANRE Orders no. 227, 228 and 229/16 December 2019, which implied average
increases in distribution tariffs, compared to 2019 (SDMN +7%; SDTN +3.5%; SDTS +1%); these tariffs took
into account the percentage of 2% applied to the turnover set for the contribution due to ANRE and
the regulated rate of return (RRR) of 6.9%;
Tariffs applicable starting with 16 January 2020: following the application of the GEO no. 1/2020
provisions and the reduction of the contribution due to ANRE from 2% of the turnover to 0.2%, new
tariffs were issued, approved through ANRE Orders no. 7, 8, 9/15 January 2020, reduced by 1.8 pp.
32 | 2020 ANNUAL REPORT
ELECTRICA S.A.
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■
b)
■
■
■
■
The value of RRR
- In May 2020, ANRE approved the Order no.
75/6 May 2020 by which the RRR value was
established at 6.39% starting from 13 May
2020 until the end of RP4, for the distribution
and transmission service of the electricity and
natural gas; thus, the previously issued order
no. 168/2018 which established the RRR value
of 5.66% for the existing BAR was repealed.
The 1% RRR incentive granted during the
period for the network investments put into
operation in RP4 is still maintained.
Methodology for distribution tariffs’ setting
- ANRE approved the Order no. 207/28
October 2020 to amend the Methodology for
distribution tariffs setting approved by ANRE
order No. 169/2018 – 3rd phase of discussion,
the changes being:
Regarding the merger projects, the changes had
and will have the following impact for Electrica:
The legal representatives of the shareholder
and of the DSOs sent to ANRE on 1 December
2020 a document regarding the benefits of
the merger for each year of RP4 and the cost
reductions compared to the approved costs;
DEER will report annually separately the
cost reductions from the approved costs,
called gross benefits, as well as the expenses
generated by the merger, which will not be
recognized in the tariffs;
The gross benefits will be shared between
the operator and the network users (the DSO
keeps 40%);
DEER’s 2024 tariffs can increase in real terms
by a maximum of 10% compared to the 2023
zonal tariffs.
Regarding the decisions of state authorities:
In the case where ANRE is aware that, by
a decision of a state authority, which has
not been challenged in court and/or can
no longer be challenged, it has been found
that the DSO has violated the legislation in
force and affected the regulated tariffs, the
revenues based on which the regulated tariffs
of the DSO are established are diminished
accordingly with the value of the previously
recognized costs. It applies, as the case may
be, also in the situation where commitments
or other documents have been signed
between the DSO and a state authority, by
which the deeds have been acknowledged.
Other changes:
ANRE will not correct the inflation rate (IR) for
2017 and 2018;
Optic fiber investments are recognized in
RAB, and in case of rental, the optic fiber
is maintained in RAB, but the income is
corrected;
Granting the 1% RRR incentive within the
annual corrections during RP4;
The reference purchase price for the electricity
needed to cover network losses will include
the costs with the BRP administration;
Internalization/outsourcing is allowed during
the period, but they must not exceed the
equivalent of costs to third parties/within the
company.
2020 DIRECTORS’ REPORT
ANRE approved
the Order no. 3/20
January 2021 regarding the amendment
and completion of the Methodology for
distribution tariffs setting approved by ANRE
Order no. 169/18 September 2018:
- granting a 2% RRR additional incentive
for investments in the electrical distribution
network made with own funds within projects
in which European non-reimbursable funds
were also attracted, if the investments were
made and put into operation by operators
after 1 February 2021;
tangible/
- if
for certain categories of
legislation
intangible assets, the primary
regulated depreciation
establishes other
periods
the
Methodology or by the Catalogue for the
classification and normal useful lives of fixed
assets, approved by Government decision,
the annual regulated depreciation related to
those fixed assets is calculated based on the
regulated depreciation periods established by
the primary legislation.
those provided by
than
The distribution tariffs approved for the year
2021
- were approved by ANRE the Orders no.
220, 221 and 222/9 December 2020, the
average tariffs increasing compared to 2020
tariffs (in line with DSOs requests) as follows:
SDMN + 9.2%; SDTN + 2.4%; SDTS + 8.6%. ANRE
approved the reductions of the distributed
electricity quantities
for 2021
(according to the DSOs requests) and the
postponement of the RRR correction for the
year 2020 in the distribution tariffs for 2022.
forecasted
Investments Procedure
of
recovery period
ANRE approved the amendment of the
Investment Procedure by Order no. 155/2
September 2020 and the following changes
were made:
- the
unrealized
investments related to 2019 and 2020 plans
is extended by 4 months and 2 months
respectively;
- in justified cases, it will be allowed to exceed
the limit of 10% of the total number of works
when sending to ANRE the proposal of works’
replacement, on 1 October;
- investment plans will be allocated to the
counties.
On 6 November 2020, ANRE approved the
Order no. 205/28 October 2020 for the
approval of the Methodology regarding
the regulation of the conditions for taking
over the ownership of energy distribution
capacities, as a result of the amendments
introduced by Law no. 155/24 July 2020,
which stipulate the situations in which the
concesionnaire distribution operators have
the obligation to take over, in 120 days, energy
distribution capacities held by third parties,
at the value established by an independent
authorized expert. Capacity takeovers will
be made without ANRE’s approval, but the
recognition in investments will be conditioned
by the observance of the prudence criteria.
Correlated with capacity
the
following will change:
takeover,
33 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
- Investment procedure amended by Order
no. 206/28 October 2020, in force starting
with 5 November 2020:
■
i) the cumulative annual value of all
distribution energy capacities taken over by
the sale-purchase contract will not exceed
10% of the value of the investment program
for the voltage level related to the capacities
taken over;
ii) it is accepted the exceedance of this
cap in case of takeovers made according
to the Law, because for these cases the
Law imposes a deadline for taking over the
respective capacities.
- The
tariff methodology
distribution
amended by Order no. 207/28 October 2020,
in force starting with 1 November 2020: the
regulated income does not include the cost
of rent related to the energy capacities taken
over by the lease contract, which exceeds by
more than 5% the accounting depreciation
as a result of the amendments introduced by
Law no. 155/24 July 2020 - art. 44 para. (8) and
art. 46 para. (2^2) of Law no. 123/10 July 2012.
■
■
Licenses
ANRE approved the Order no. 197/28 October
2020 for the amendment and completion
of Regulation for granting licenses, in force
starting with 1 January 2021, by adding
two activities carried out based on licenses
granted by ANRE: the aggregation activity
and the commercial exploitation of energy
storage facilities.
ANRE approved by Order no. 196/28 October
2020 the General conditions associated
with the license for the aggregation activity,
in force starting with 1 January 2021; DSOs
endorse: the DMS SCADA solutions that the
implements and the operational
licensee
settlement procedures inside the aggregating
unit.
Smart metering regulations (SM)
ANRE decision no. 778/8 May 2019 approving
the SM Implementation Calendar at national
level, for the period 2019 - 2028: the SM
implementation plans for the Electrica Group
distribution operators were approved at the
values and parameters requested at ANRE.
c)
■
■
d)
■
e)
Technical regulations
Network connection
■
ANRE approved the orders regarding the
connection activity:
- ANRE Order no. 160/3 September 2020
regarding the amendment of the Regulation for
connecting users;
- ANRE Order no. 164/9 September 2020
regarding the amendment of the Connection
Framework Agreement;
- ANRE Order no. 162/9 September 2020
regarding the amendment and completion of the
Framework Content of the technical connection
approvals;
- ANRE Order no. 163/9 September 2020
regarding the amendment and completion of the
Framework Content of the connection certificates.
34 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Important changes regarding the connection
process starting with 1 January 2021:
- the connection contract
is concluded
directly by the user with a chosen constructor,
and the payment of the connection tariff is
made directly to the constructor;
- the connection installation remains the
property of the user, and the distribution
operator (DSO) is obliged to operate them, to
maintain them and to use them later for the
connection of other users, based on an in-
service agreement;
- DSO will finance and purchase from their
own sources both the meters and the fully
equipped measuring and protection block;
- The terms related to the connection process
are reduced;
- DSO will finance the connection works
for household customers and the recovery
of connection costs will be done through
accelerated
distribution
tariffs, with
in
depreciation
accordance with ANRE regulations.
in a period of 5 years,
for
evaluating
ANRE approved the Order no. 159/2 September
for amending and supplementing
2020
the
the Methodology
financing conditions for investments for the
electrification of localities or for the extension
of electricity distribution networks approved
by Order no. 36/28 February 2019:
- the possibility of requesting directly to
the DSO by a single user, or a group of users
natural/legal persons, the development of the
distribution network, the elimination of the
obligation to carry out the zonal urbanistic
plan by the local public authority;
- The concesionnaire distribution operator
co-finances the works to be developed
within the effective quota established by the
Methodology.
installation of
the connection
ANRE approved the Order no. 183/3 November
2020 regarding The procedure regarding the
connection to the electricity network of public
interest of the consumption places belonging
to the users which are non-household final
customers through connection installations
with lengths up to 2,500 meters:
- the costs with the design and execution
of
the
consumption places owned by them, with a
length of up to 2,500 meters, are supported by
DSO;
- the completion term for the connection
activities of the respective consumption places
imposed by the Law is 90 days from the date
of obtaining the agreement/authorization for
the realization of the connection installation,
including its reception and commissioning;
- the users have the obligation that, until the
date of conclusion by the DSO of the execution
contract of the connection installation, to
realize the user installation (the objective
from the consumption place) and to submit
the file of the user installation drawn up by its
executor;
- the DSO costs with the realization of the
connection installations will be recognized in
the distribution tariffs;
- the non-household user concludes with
DSO a connection agreement by which he
■
■
undertakes to use the consumption place and
to keep its destination for a period of 5 years
from the commissioning of the connection
installation;
- if the non-household customer does not
comply with the provisions assumed by the
agreement, he is obliged to return to the DSO
the value of the design and execution works
of the connection installation, proportionally
with the period left unused;
- in the sense of the above, ANRE provided
for the setting of a financial guarantee in
case of connection of a consumption place
with installed capacity higher than 1 MW/
approval of a benefit for consumption that
leads to an approved power greater than 1
MW, submitted by the applicant in favor of
the distribution operator who will execute the
guarantee in case of non-compliance with
the obligations assumed by the final non-
household customer;
- the procedure applies to users who have
submitted connection requests to the DSO
after 30 July 2020 and for whom no connection
agreements have been concluded.
regarding alignment with
ANRE approved the Order no. 184/21 October
2020 for the amendment of the Methodology
for issuing site notices and brought important
changes
the
provisions of Law No. 189/25 October 2019 and
Law No. 193/25 October 2019; thus, the costs
of the works generated by the construction/
exploitation of public roads, respectively
for the diversion/movement of electrical
networks are borne as follows:
- by road managers in the case of highways
and national roads;
- 50%
the
is co-financed by DSO
administrator is an administrative territorial
unit.
if
Based on Law no. 290/2020, draft orders were
issued for the amendment of:
- Regulation on
to
electricity networks of public interest - ANRE
Order no. 59/2013:
connecting users
regarding
introduction of provisions
reinforcement works;
introduction of the DSO obligation to
recalculate the value of the connection
tariff component;
elimination of the approval by ANRE of the
procedures regarding the connection of
the users to the network;
clarification of the cessation circumstances
framework agreement effects
of the
for the delivery into operation of user-
financed connection facilities,
in their
ownership.
- The procedure regarding the connection
to the electricity networks of public interest
of the consumption places belonging to the
non-household final customers type users
through connection installations with lengths
up to 2,500 meters and household customers
- revision of ANRE Order no. 183/2020:
the inclusion of household customers in
the category of those for whom the DSOs
have the obligation to finance and carry
out the design and execution works of the
2020 DIRECTORS’ REPORT
connection installation;
the possibility for domestic and non-
household customers to conclude the
agreement for the design and execution
of the connection installation directly with
a certified economic operator chosen by
them;
application of the procedure also for
places of consumption with storage
facilities or places of consumption and
production, with or without storage
facilities, provided with facilities for the
production of electricity from renewable
sources (prosumers);
it applies to all users that are household
submitted
customers, who
the Law
connection
no. 290/2020 entering
in force date,
respectively after 19 December 2020.
requests after
have
Prosumers
■
■
■
ANRE has approved regulations regarding
prosumers that have power plants for the
production of electricity from renewable
sources with the installed power of no more
than 27 kW/consumption place:
- change of the electricity trading rules;
- change of the Technical Norm „Technical
conditions for connection to the electricity
networks of public interest for the prosumers
with active power injection in the network”,
regarding the adjustments of the protections in
the prosumer’s installations, the coordination
with the electricity distribution network
protections, and the protection against their
change without the DSO consent;
- new procedure regarding the prosumers’
connection to the electricity networks.
the Order no.
amending
ANRE approved
165/16
and
September
supplementing Order no. 226/28 December
2018 - the value of the installed power for a
prosumer is changed from 27kW to 100kW;
2020
ANRE approved the Order no. 192/28 October
2020 for the amendment of Order no. 69/2020
on the Procedure regarding the connection
to the electricity network of public interest
of the consumption and production places
belonging to the prosumers who have
installations for electricity production from
renewable sources with the installed power
of not more than 27 kW/consumption place:
- replacement: “the installed power of at most
27 kW/consumption place” with the phrase
“the installed power provided in art. 14 para.
(6) of Law no. 220/2008 for setting the system
for promoting the production of energy from
renewable energy sources,
republished,
with the subsequent amendments and
completions”;
- introducing the option of direct contracting
by the prosumer of the design and/or
execution works of the connection installation
with a certain certified designer and/or
constructor, chosen by prosumer;
- DSO supports the costs with the purchase
and installation of the electricity metering
group or of the fully equipped measuring and
protection block according to the connection
35 | 2020 ANNUAL REPORT
ELECTRICA S.A.
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■
2020 DIRECTORS’ REPORT
solution,
including the electricity meter
related to it, depending on the connection
solution.
Distribution service performance standard - public
debate with deadline on 22 February 2021:
On 22 January 2021, ANRE submitted to public debate
the proposal to amend the Performance Standard
of the distribution service approved by ANRE Order
no. 11/2016, with subsequent amendments and
completions.
The main changes consider:
■
indicators
continuity
(the number of
unplanned long outages on LV is reduced
to a maximum of 8 and a new indicator on
the number of short interruptions on HV of
maximum 10 is introduced);
the compensations for non-compliance with
the indicators will be granted automatically to
the users, regardless of the voltage level and
without the need for a request from them,
and the value of the compensation for LV
increases to RON 50;
DSO will perform monitoring with quality
analyzers in an increased number of stations
and transformation substations, gradually
over time, in order to be monitored 100% of
the power stations starting with 1 January
2026 and 100% transformation substations
starting with 1 January 2028;
call center reception times are reduced: DSO
takes the call within 30 seconds of the user
initiating it and must enable the user to select
the option to transfer the call to a human
operator within 180 seconds of answering the
call; DSO ensures that the user will start talking
to a human operator within a maximum of 20
minutes from answering the call;
The license holders concessionaire DSOs shall
develop and use a common procedure, which
shall be endorsed by ANRE.
■
■
■
■
All distribution operators, through ACUE, sent
observations to ANRE on 22 February 2021 and
requested the application of possible amendments
to the Standard starting with the fifth regulatory
period, and not during RP4, as the investment plan
was approved for RP4 in close interdependence with
the plan of works for complying with the service
quality indicators, drawn up in order to ensure the
minimum level of the distribution service quality
imposed by the Standard in force.
f)
■
Primary legislation
■
On 9 January 2020, GEO no. 1/9 January 2020
entered into force, which amended:
- The Energy Law on the repeal, starting with
30 April 2020, of the article approving the
RRR value of 6.9%; ANRE will establish the
RRR value based on the information obtained
from the competent authorities, including at
the request of any injured party;
- ANRE functioning law, imposing towards
ANRE the setting the contribution value (thus
by ANRE Order no. 1/15 January 2020, the
contribution has changed from 2% to 0.2%).
■
The Law no. 26/27 March 2020 came into
force, for the amendment of the GEO no. 33/4
May 2007 regarding the organization and
36 | 2020 ANNUAL REPORT
ELECTRICA S.A.
functioning of ANRE:
- ANRE activity will not be restricted by any
other authority;
- the express indication of the distribution
tariffs date of approval, respectively
15
December, is deleted.
The Law no. 7/11 January 2020 was approved,
for amending and supplementing Law no.
10/18 January 1995 regarding the quality
in constructions and for the amendment
and completion of Law no. 50/29 July
1991 regarding the authorization for the
execution construction works, regarding the
authorization of the connections/connection
installations.
-
in which
the cases
The Law no. 155/24 July 2020 was approved
for amending and supplementing Law no.
123/10 July 2012:
- Licenses
the
distribution service can be provided without
a license are defined; the concessionaire
DSO has the right to refuse the agreement
for granting the license, only conditioned by
the connection in technical and economical
conditions advantageous for the applicant.
The distribution of electricity is made by the
DSO, legal person, license holder or exempted
from licensing;
- Networks takeover - DSO has the obligation
to take over in 120 days the capacity of a
third party at the value established by an
independent expert; the refusal of DSO to
take over is sanctioned with a fine that can be
included in the value range of 5-10% of turnover;
- Non-domestic connections with lengths
<2,500 m - DSO has the obligation to ensure
the financing and realization in 90 days of
the connections of non-domestic customers,
having a length lower than 2,500 m;
- Carrying out public purchases according
to the Methodology approved by ANRE -
by derogation from the
legal provisions
regarding the purchases and the realization
of purchases according to the regulations
approved by ANRE;
- Thefts - in case of theft, the DSO interrupts
the supply immediately if there is no supply
contract, or after a court decision if there is a
supply agreement;
- Contraventions - numerous fines calculated
as a percentage applied to the value of
turnover, for non-compliance with the license
and connection provisions.
On 19 December 2020, the Law no. 290/15
December 2020 entered into force for the
amendment and completion of Law 123/10
July 2012:
- The obligation of the DSO to finance the
connection works of the household customers,
provided by Art. 51 and the recovery of the
connection costs through the distribution
tariffs, with accelerated amortization in a
period of 5 years, in accordance with ANRE
regulations → the impact of connections in
proportion of 25% of the investment plans is
reflected by an increase in distribution tariffs
between 2% (in the first year) and 10% (in the
fifth year).
g)
■
European legislation
risk-
941/2019
The European Parliament approved in June
2019 the European regulations included in the
“Clean Energy for All Europeans” Program,
which includes the following documents:
on
- Regulation
no.
preparedness in the electricity sector;
- Regulation no. 942/2019, establishing the
European Union Agency for the Cooperation
of Regulators;
- Regulation no. 943/2019 on the internal
market for electricity - applied starting with 1
January 2020, without the need to transpose
into national legislation;
- Directive no. 944/2019 on common rules
is
for the
applied starting with 1 January 2021, after
transposition into national legislation, the
provisions with impact being:
internal market for electricity;
Network
losses - each distribution
system operator acts as a neutral
in procuring the
market facilitator
electricity needed to cover NL,
in
accordance with transparent, non-
and market-based
discriminatory
it has such a
procedures, where
function;
at least 80% of final customers must
have smart meters by 2024;
by 2026, the technical process of
switching to a new supplier should be
possible to complete within 24 hours;
Citizens’ energy communities (CECs)
have access to all markets, either
directly or by aggregation, in a non-
discriminatory way.
■
The Ministry of Economy and the Ministry of
European Funds establish the architecture of
the EU financing programs for 2021-2027, so
that the Romanian energy sector enters the
path of the ”Green Deal”.
h)
legislation - EU Regulation no. 943/2019
Alignment with the European
15 minutes settlement
■
Order no. 63/31 March 2020 regarding the
implementation of the
Program for the
in order to ensure
necessary measures
the settlement conditions at an interval of
15 minutes (in force from 1 January 2021);
until then, each DSO must comply with the
measures approved by the Program.
Operation of the electricity market
■
the minimum
Order no. 61/2020
for the approval of
regulations regarding the functioning of the
energy market (into force on 1 September
2020) establishes
and
maximum technical price
limits between
which it must fall, thus eliminating the price
gap between DAM and BM:
- Regulation of
settlement of the balancing market;
- Regulation of calculation and settlement
of the imbalances of the balance responsible
parties;
- the
programming
functioning
Regulation
and
the
for
■
■
■
■
■■
■
2020 DIRECTORS’ REPORT
dispatchable production units, dispatchable
consumers and dispatchable storage facilities.
introduces
On 9 December 2020 was published the
ANRE Order no. 213/25 November 2020 for
approving the Regulation for the calculation
and settlement of price on BRP - single
imbalance price, which
the
settlement based on the single imbalance
price. By Order no. 231/16 December 2020,
a calculation method was introduced for 2
prices: deficit price and surplus price, for a
settlement interval in which the imbalance
area is almost balanced and for which it
was assessed that the single
imbalance
price method is not the most economically
efficient method of settling imbalances of the
balance responsible parties - in force starting
1 January 2021, respectively 1 February 2021.
Order no. 64/31 March 2020 for the approval
of the Regulation for the conclusion of the
electricity bilateral contracts by extended
auction and the use of products that ensure
the flexibility of the transaction (use of a
formula for adjusting the price of the contract
according to the evolution of a public stock
index in the field of electricity; percentage
of variation of maximum 25% of the hourly
quantity compared to the value provided in
the offer);
ANRE Order no. 232/16 December 2020
approves the Procedure for determining
and using the residual consumption profile,
in force starting with 1 February 2021; -
elimination of the term hourly regarding the
settlement interval and replacement with the
general term of settlement interval (SI) of 15
minutes.
ANRE Order no. 233/16 December 2020
approved the Procedure for determining the
measured values per settlement interval of
the network losses in electricity distribution
networks, in force starting with 1 February
2021:
the
- elimination of
determination of
losses
forecasted on a monthly basis and on
settlement
in the physical
notifications by the BRP;
- profiling on the distribution network and
not on areas (implicitly allowing aggregate
profiling on total DEER).
the network
interval, used
article on
the
Investments
In 2020, the three distribution companies of
Electrica Group realized and commissioned
investments amounting to RON 609.2 mn,
representing 100.5% of the commissioning
program value planned for 2020 (i.e. RON
606.2 mn, of which RON 593.5 mn related to
the 2020 plan and RON 12.7 mn for values
carried forward related to 2019; RON 596.2 mn
were realized in the first category and RON 13
mn were related to 2019).
■
In 2021, the new operator Distributie Energie
Electrica Romania (DEER), resulting from the
merger of the three distribution operators
37 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
starting with 1 January 2021, will continue
to invest in distribution infrastructure, the
investments to be commissioned for 2021 by
DEER estimating an increase of about 10%
compared to the level of investments in 2020,
cumulating RON 662.5 mn (of which, RON
653.2 mn plan for 2021 and RON 9.3 mn values
related to the plan for 2020). In addition to the
works in the distribution networks provided
in the investment plan 2021, it is estimated
the realization of works for connecting users,
legal requirements
considering the new
introduced by Law no. 155/24 July 2020
and Law no. 290/15 December 2020 which
amended and supplemented Energy Law no.
123/10 July 2012.
■
The
in
investment plans were prepared
accordance with the requirements provided
by ANRE in the “Procedure regarding the
elaboration and approval of the investment
programs of the concessionary economic
operators of
the electricity distribution
service” approved by ANRE order no.
204/14 November 2019 with subsequent
amendments and completions.
■
Supply segment
■■
■
■
■
Key projects
Starting from the significant changes in
the energy market regarding the regulatory
framework, as well as from the increasing
competition, EFSA launched an ambitious
transformation project which
internal
aims to successfully meet the current and
future challenges and whose mission is the
transformation and optimization of sales and
customer relations activities, along with the
development of the entire staff’s skills.
In the first phase, the project focused on
developing the sales strategy. In the second
phase, the effort focused on internal processes,
improvement,
technology
systems and
and, naturally, on upgrading organizational
structures.
■
During 2020, EFSA continued to implement
processes of redefinition and adaption to
current challenges of the energy market,
by optimizing and rethinking the activities,
in order to be able to offer the company
customers services at the highest professional
level. Thus, in 2020, EFSA continued its efforts
to transform the internal processes in the
areas of sales and customer relations, focusing
on digitization and automation.
■■
Regulatory Framework
In 2020, the evolution of the regulatory framework
recorded significant changes, as follows:
■
a)
■
Primary legislation:
GEO no. 1/2020 on some fiscal-budgetary
measures and for amending and completing
some normative acts:
- until 31 December 2020, for household
through
customers the supply of electricity is carried
out under conditions regulated by ANRE;
- the purchase costs differences
in 2018
and 2019 of the suppliers of last resort, not
recovered
the prices charged,
are recovered in stages and in full until
31 December 2020, according to ANRE
regulations;
- the RRR change did not lead to a change
in the transmission and distribution tariffs
starting with 1 May 2020, thus did not lead to
the change in regulated tariffs for household
final customers; the most recent tariff
adjustment was on 1 July 2020;
- starting with January 2020, the level of tariffs
and contributions is established annually by
ANRE Order → the contribution decreased
from 2% to 0.1% of turnover;
- until 31 December 2020, the Romanian
Government regulates, at the initiative of
relevant ministry, the status and legal regime
of vulnerable consumer, as well as the way of
its financing.
Decree no. 195/2020 regarding setting the
state of emergency on Romanian territory
and Decree no. 240/2020 regarding state of
emergency extension on Romanian territory:
- duration: 30 days from 16 March 2020 and
extended by another 30 days until 15 May
2020;
- measures are taken to ensure continuity in
supply, respectively extraction, production,
processing, transmission, distribution, supply,
maintenance, maintenance and repair of
resources and raw and/or semi-processed
materials necessary for proper functioning
of national energy system, and ensuring
continuity of operation and all public utility
services;
- during state of emergency, the prices for
public utility services (electricity and heat,
gas, water supply, sanitation, fuels, etc.) may
be capped, within the average price of the
last 3 months before the state of emergency
declaration.
GEO no. 29/2020 on some economic and
fiscal-budgetary measures: during state of
emergency, small and medium enterprises,
which have ceased their activity totally
or partially based on decisions issued by
competent public authorities, according to the
law, during the state of emergency decreed
and holding
the emergency certificate
issued by the Ministry Economy, Energy and
Business Environment, benefit from payment
deferral for utility services - electricity, natural
gas, water, telephone and internet services, as
well as deferral of rent payment for building
intended for headquarters and secondary
offices;
Military Ordinance no. 4/2020 on measures
to prevent the spread of COVID-19: during
state of emergency, prices for electricity and
heat, natural gas, water supply, sanitation and
fuels may not be increased above the level
applied at the military ordinance issuance
date (29 March 2020); they may only be
reduced depending on demand and supply;
38 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
■
■
■
■
Decision no. 394/2020 on approval of state
of alert implementation at national level and
of the measures for prevention and control of
infections, in the context of epidemiological
situation generated by SARS-CoV-2 virus:
state of alert duration - 30 days starting
with 18 May 2020, subsequently extended
by 30 days (starting with 17 June 2020) by
Government Decision no. 476/2020, with
another 30 days (starting with 17 July 2020)
by Government Decision no. 553/2020, with
another 30 days (starting 16 August 2020)
by Government Decision no. 668/2020, with
another 30 days (starting 15 September 2020)
by Government Decision no. 782/2020, with
another 30 days (starting 15 October 2020)
by Government Decision no. 856/2020, with
another 30 days (starting 14 November 2020)
by Government Decision no. 967/2020 and
with another 30 days (starting 14 December
2020) by Government Decision no. 1,065/2020.
■
GEO no. 70/2020 on regulation of certain
measures, starting with 15 May 2020, in the
context of epidemiological state determined
by SARS-CoV-2 coronavirus spread,
for
certain terms extension, for amendment
and completion of Law no. 227/2015 on Fiscal
Code, of National Education Law no. 1/2011, as
well as other normative acts: during state of
alert, transmission and distribution operators
of electricity and natural gas ensure continuity
of service provision, and in case there is an
incident of disconnection, postpones this
operation until the state of alert ends;
GEO no. 74/14 May 2020 for amending and
supplementing the electricity and natural
gas law no. 123/2012:
- the producers that operate dispatchable
production units, only for units not benefiting
from support schemes, in the ascending
order of prices set by ANRE, are obliged to
sell through regulated contracts to the SoLR
so as to ensure the full amount of electricity
needed by household consumers for which
regulated tariffs are applied so that they are
not increased above the level applied on 19
May 2020; these could be adjusted according
to market developments, without being able
to exceed the aforementioned level;
- producers may conclude bilateral contracts
outside the centralized market, at negotiated
prices, in compliance with competition rules,
for electricity from new energy production
capacities, put into operation after 1 June
2020.
106/2020
for amending and
GEO no.
supplementing the electricity and natural
gas law no. 123/2012:
- the natural gas supplier has the obligation
to purchase the natural gas supplied to
household customers,
in conditions of
minimizing the cost of allocated resources,
based on
its own procedures developed
taking into account the new provisions on
the supply on centralized markets, to ensure
transparency of the natural gas purchasing
process and, at the same time, the equal and
non-discriminatory treatment of the persons
participating as bidders in the natural gas
purchasing procedure;
- natural gas suppliers will set up single
points of contact, physical or virtual, to provide
final customers with adequate means of
information on their rights, on the legislation
in force, on the ways of resolving disputes in
case of requests, complaints, notifications
or appeals, including information on the
average purchase prices of natural gas
supplied, for all categories of consumers.
These single points of contact can be part
of the general consumer information points
and provide final customers with information
free of charge → the obligation for natural gas
suppliers to set up single points of contact
(consisting of a central point coordinating the
regional/local information points) located at a
maximum distance of 50 km from the place
of consumption in the case of household
customers is eliminated;
- the notion of virtual points of contact is
introduced.
injected
Law no. 155/2020 for the amendment and
completion of the Law on electricity and
natural gas no. 123/2012:
- prosumers who own units of electricity
production from renewable sources with an
installed capacity of no more than 100 kW/
consumption place (compared to 27 kW,
before the change) can sell the electricity
in the electricity
produced and
network to the electricity suppliers with
whom they have concluded electricity supply
agreements;
- prosumers, natural and legal persons and
local government authorities who own power
plants producing electricity from renewable
sources, as well as natural or legal persons
who own units of electricity production
from
renewable sources are exempted
from the quarterly and annual obligation
of green certificates purchase,
for the
electricity produced and used for its own final
consumption, other than the network losses
of the power plant;
- electricity producers and public authorities
that own power plants from renewable
energy sources with installed capacities of
up to 3 MW/producer may conclude directly
negotiated contracts, only for the electricity
from these plants, only with final consumer
suppliers for the sale of electricity and/or
green certificates;
- until 30 June 2021, the selling price of natural
gas to household customers and producers
of thermal energy (only for the volume of
natural gas used to produce thermal energy
in cogeneration plants and thermal power
plants for consumption) is determined taking
into account free market conditions, from
the unit cost of natural gas, from which the
quantities of natural gas from import and
storage are excluded. If the suppliers will apply
to the unit cost of gas a cost higher than the
real purchase cost, the amount resulting from
the difference between the real purchase
price and the regulated price for producers
of RON 68/MWh is divided in the following
proportions: 10% remains at the supplier
and 90% is collected from the state budget
in a special account and is used exclusively
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for the protection of vulnerable customers.
The calculations are made monthly, for the
previous month.
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b)
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Law no. 290/2020 on the approval of GEO no.
106/2020 for amending and supplementing
law no.
the electricity and natural gas
123/2012:
- virtual single points of contact are introduced
for the electricity final customers that are
supplied in the universal service regime;
for contracts
- provisions are
for the reservation of electricity production
capacities and the possibility of concluding
these types of contracts on the competitive,
bilateral market, at negotiated tariffs for the
reservation of electricity production capacities,
in compliance with competition rules.
introduced
Secondary legislation
1/2020 regarding the
ANRE Order no.
approval of tariffs and monetary contributions
charged by ANRE in 2020 - following the GEO
no. 1/2020, the responsibility for establishing
the values of the contributions due to ANRE
reverted to ANRE;
ANRE Order no. 18/2020 regarding setting
the mandatory quota for green certificates
related to 2019 - was set at GC 0.433548/MWh,
without significant changes compared to
estimated quota;
ANRE Order no. 27/2020 for establishing
measures regarding natural gas supply
to household customers with a view to
eliminate regulated prices: from 1 July 2020,
the regulated prices for final gas customers
are eliminated;
regarding
ANRE Order no. 64/2020 approving the
Regulation
the manner of
concluding bilateral electricity contracts by
extended auction and the use of products to
ensure trading flexibility:
- delivery time: minimum 1 month;
- trading can be complete with a single
participant or partial and/or with several
participants to the quantity offered; for hourly
powers greater than 10 MW only the option
of partial trading/with several participants is
allowed;
- the offer contains a minimum requested
price, in case of a sale offer, respectively the
maximum price offered, in case of a purchase
offer; the bidder must include in the price
the TG component, corresponding to the
injection of electricity in the network;
- the option of varying the hourly power by up
to +/- 25% compared to the quantity provided
for in the offer, which applies at the reasoned
request of a party, if there is an expressed
agreement when signing the contract;
- a formula for adjusting the agreement/
agreements’ assigning price (closing price of
the auction) depending on the evolution of
a public stock market index in the electricity
field can be used, including the related
formula.
40 | 2020 ANNUAL REPORT
ELECTRICA S.A.
for approval
ANRE Order no. 61/2020
the programming of
of Regulation on
dispatchable production units, dispatchable
consumers and dispatchable storage facilities,
Regulation on operation and settlement of BM
and Regulation on calculation and settlement
of imbalances of the BRP: the technical price
limits for offers are represented by a minimum
price, which is the equivalent in RON at the
NBR exchange rate from the day before the
delivery of the value of EUR -99999/MWh and
a maximum price, which is the equivalent
in RON at the NBR exchange rate in the day
before the delivery of the value of EUR +99999/
MWh, between which the price of any price
- quantity pair must be included in an offer;
thus, the price difference between DAM and
BM of RON 450/MWh is eliminated starting
with 1 September 2020;
ANRE Order no. 65/2020, in place as of
1 September 2020, on amending and
supplementing some ANRE Orders:
- trading regulations on CM-OTC, CMBC-
EA, CMBC-CN, DAM, BRP settlement rules,
by introducing in the list of participants in
the electricity market: aggregators, storage
facilities, final customers;
- the long-term supply agreement represents
the agreement with a delivery period of more
than 1 year;
- the aggregation of the market participants
is done separately for the production activity,
respectively for consumption.
ANRE Order no. 73/2020 for the amendment
of ANRE Order no. 189/2018 annex: ANRE
web application “Electricity supply offers
comparator ” was updated
in order to
offer to final customers the possibility to
access, directly and centralized, information
for
regarding
concluding supply agreements, to download
documents necessary for supply agreements’
conclusion and to be informed on how to
send to suppliers the necessary documents
for supply agreements’ conclusion;
documents
necessary
ANRE Order no. 88/2020 for the approval of
the Methodology for setting regulated tariffs
and prices applied by SoLR to final customers
for the period 1 July – 31 December 2020
and for amending and supplementing the
Framework Agreement for the electricity sale
- purchase concluded between producers
of electricity and SoLR, approved by ANRE
Order no. 34/2019:
- electricity producers must sell through
regulated agreements concluded with SoLR
so as to ensure the full amount of electricity
needed for household consumers for whom
regulated tariffs apply, so that they are not
increased above the level practiced on 19 May
2020;
- the price for non-household customers
benefiting from US and inactive is established
by each SoLR, for each network area, on
competitive criteria.
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ANRE decisions no. 1074, 1075, 1076 and
1077/2020 regarding the setting of the
regulated price for the supplied electricity
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and of quantities of electricity sold based
on regulated agreements between 1 July –
31 December 2020 by producers Complexul
Energetic Oltenia, Hidroelectrica, OMV
Petrom and Nuclearelectrica:
- regulated amounts of electricity are
allocated to cover the portfolio household
customers’ consumption needs in H2 2020, so
that regulated tariffs decrease does not cause
losses to SoLR;
- for EFSA,
regulated contracts is 99% for H2 2020.
the coverage degree with
tariffs applied
138/2020 approving
to
ANRE Order no.
regulated electricity
household customers by SoLR EFSA:
- household final customers regulated tariffs
applicable by EFSA in H2 2020 are approved;
- regulated tariffs decrease on average by 1.7%
at EFSA; at the national level, the decrease is
1.89%.
ANRE Order no. 141/2020 for the approval of
electricity generic tariffs applied starting with
1 July 2020:
- applied by designated (optional) suppliers
of last resort who on 12 June 2020 did not
have, in this capacity, household customers
in portfolio in that network area, when billing
active electricity consumption at household
customers’ consumption places with which
it concludes contracts for electricity supply
under a regulated regime, located in that
network area;
- evolution of generic tariffs depending
on application area is as follows: Oltenia
+ 0.35%, Moldova -3.78%, Dobrogea -1.41%,
Banat +0.14%, South Muntenia +0.62%, North
Muntenia +2.38%, North Transilvania +2.86%
and South Transilvania +4.13%.
ANRE Order no. 143/17 July 2020 regarding
the obligation to offer natural gas on the
centralized markets of natural gas producers
whose annual production of the previous
year exceeds 3,000,000 MWh:
- setting the period 1 July 2020 – 31 December
2022 in which the natural gas producers whose
annual production achieved in the previous
year exceeds 3 TWh have the obligation to
offer the sale of quantities of natural gas, with
delivery between 1 July 2020 – 31 December
2022;
- the mandatory annual offer quota of 40%
and its breakdown on standardized products,
set on time periods.
ANRE Order no. 144/17 July 2020 regarding
the obligation of the participants in the
natural gas market to offer on the centralized
markets:
- the obligation to offer, as a seller, by
applying a percentage of 40% to the volume
of natural gas for which the participant in
the natural gas market, as a seller, concludes
sale - purchase agreements on the wholesale
market, starting with 1 July 2020, except
for volumes related to the transactions
performed on the centralized markets which
are delivered in the respective year;
- the obligation to offer, as a buyer, by
applying a percentage of 40% to the quantity
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2020 DIRECTORS’ REPORT
of natural gas for which the participant in
the natural gas market, as a buyer, concludes
sale - purchase contracts starting with 1 July
2020 on the wholesale market, except for
transactions on centralized markets, with
delivery in the respective year.
ANRE Order no. 150/2020 for the approval
of the Regulation on the organized trading
framework on the centralized natural gas
markets managed by OPCOM:
- establishes an organized, alternative,
centralized, transparent, objective and non-
discriminatory framework for the competitive
trading of natural gas within the centralized
natural gas markets managed by OPCOM;
- offers the following types of centralized
natural gas markets:
1. Markets of
standardized
products: A. IM-NG (intraday market for
natural gas); B. DAM-NG (day ahead market of
natural gas);
2. Medium and
long term standardized
product markets: A. CMNG-AN (centralized
market for bilateral natural gas contracts
- auction and negotiation); B. CMNG-PA
(centralized market of bilateral natural gas
contracts - public auction); C. CMNG - OTC
(centralized market for bilateral natural gas
contracts - OTC);
3. Medium and long term flexible products
market - FPM-LT.
short-term
ANRE Order no. 151/2020 for the approval
of the Regulation on the organized trading
framework on the centralized natural gas
market administered by TRADEX PLATFORM:
- establishes the rules for trading products
on the centralized natural gas market
administered by TRADEX PLATFORM;
- the market has the following segments:
The medium
1. The short-term standardized products
market;
2.
standardized products market;
3. The medium and long-term flexible
products market.
long-term
and
ANRE Order no. 161/2020 for the amendment
of the Regulation on the manner of concluding
bilateral electricity contracts by extended
auction and the use of products to ensure
trading flexibility, approved by ANRE Order
no. 64/2020 - modifies the CMBC-EA-flex
trading method, introducing the possibility to
modify the hourly quantity delivered by 100%
for renewable energy producers;
ANRE Order no. 171/2020 for the approval of
the conditions for the electricity supply by the
supplier of last resort (SoLR):
- starting with 1 January 2021, the prices for
household customers supplied at regulated
tariffs until 31 December 2020 are established
by SoLR, for each network area, on competitive
criteria, without ANRE approval;
- the prices for the non-household customers
benefiting from universal service (US) are
established by SoLR, for each network area,
on competitive criteria;
- for
inactive non-household customers
of SoLR (which do not benefit from US)
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the agreements remain in force until 31 December 2021. Until that date, it is necessary to conclude
agreements in a competitive regime with this category of clients, at negotiated prices;
- SoLR have the obligation to publish on their website the price applicable to US beneficiaries
(household and non-household) and inactive non-household, broken down by components (supply
price, regulated network tariffs), as well as their application period.
ANRE Order no. 173/2020 approving the Regulation on the last resort supply of natural gas:
- at least three natural gas SoLR are designated at national level, in compliance with some eligibility
conditions;
- the takeover period: three months from the takeover date in the case of final customers with an
annual consumption less than or equal to 28,000 MWh and one month from the takeover date in the
case of final customers with an annual consumption higher than 28,000 MWh;
- the supply cost and profit are established by SoLR, and the purchase cost must not exceed by more
than 10% the weighted average purchase price from DAM.
ANRE Order no. 187/2020 for the amendment and completion of some ANRE Orders and for the
abrogation of ANRE Order no. 14/2020 on the approval of the Methodology for establishing the unit
income related to the regulated supply activity and the approval of regulated prices in the natural
gas sector:
- concluding the supply contract - the customers who do not hold property deeds on the buildings
can also conclude supply contracts, based on a declaration on their own responsibility, for a limited
period;
- the obligation of the suppliers to return to the clients the amount paid in excess, if after the
regularization the amount exceeds RON 100.
ANRE Order no. 188/2020 for the approval of the Regulation for the electricity SoLR designation:
- the notion of bound SoLR and optional SoLR disappears. The designation of a supplier as SoLR
is made at national level and not on network areas, as provided in the current regulation. SoLR are
appointed for an indefinite period, starting with 1 January 2021;
- for the SoLR designation, the eligibility criterion based on serving a number of at least 2,000
consumption places at national level no longer applies - any supplier can become SoLR;
- ANRE will designate at least five SoLR at national level, either at the request of the designation sent
by the supplier, or by organizing a selection process if there are not at least five requests;
- SoLR will have the possibility to establish prices for the customers benefiting from US (Universal
Service) (household and non-household) and prices for taking over in last resort regime, different for
each network area separately. However, it is mandatory for each SoLR to publish offers for all network
areas;
- the criterion of taking over in last resort regime will be the “lowest cost”, regardless of whether they
are household or non-household clients. The lowest cost is established by ANRE monthly, for each
network area, by consulting the offers published by SoLR on their own websites.
Orders issued by ANRE regarding the licenses in the field of electricity and natural
gas:
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ANRE Order no. 196/2020 approving the General Conditions associated with the license for the
aggregation activity: the necessary conditions to perform the aggregation activity are defined;
ANRE Order no. 197/2020 on amending and supplementing the Regulation for granting licenses and
authorizations in the electricity sector, approved by ANRE Order no. 12/2015: enables the storage of
electricity and facilitates the aggregation of distributed demand and offer of electricity, in the form of
licensing these activities;
ANRE Order no. 198/2020 regarding the amendment and completion of ANRE Order no. 80/2013
for the approval of the General Conditions associated with the establishment authorization and
the General Conditions associated with the license for the commercial exploitation of the electricity
production capacities, and as the case may be, of the thermal energy produced in cogeneration:
if the storage facility is installed within an existing production capacity, the license for commercial
exploitation of the production capacity is modified in the sense of adding storage equipment; for the
commercial exploitation of energy storage facilities, which are not added to some energy production
capacity, a separate license is granted;
ANRE Order no. 199/2020 for the approval of the Regulation for granting authorizations and licenses
in the natural gas sector: provisions are included regarding hydrogen production facilities;
ANRE Order no. 200/2020 approving the framework conditions for validity associated with the
establishment authorization for new hydrogen production installations;
ANRE Order no. 201/2020 approving the framework conditions for validity associated with the
commercial exploitation license of the new hydrogen production installations;
ANRE Decision no. 1990/29 October 2020 designating EFSA as supplier of last resort for natural gas:
EFSA was designated SoLR for natural gas;
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ANRE Decision no. 2123/18 November 2020 (regarding the results of the process of designating the SoLR
for electricity for the suppliers that at the date of entry into force of the Regulation for designating the
SoLR, approved by ANRE Order no. 188/2020, have designation decisions as SoLR, and want to be further
designated in this capacity) for the designation of EFSA as a SoLR for electricity: EFSA was designated
SoLR for electricity;
ANRE Order no. 213/2020 approving the Regulation for calculating and settling imbalances of the BRP -
single imbalance price and for amending some ANRE orders:
- new regulation implementing a new method for settling BRP imbalances with a single settlement price
with the application date correlated with the implementation date of the 15-minute settlement interval;
- establishes the rules for registration and aggregation of the BRP and for determining and settling
the imbalances between the commercial position and the physical one, ascertained following the
measurements;
- establishes the payment obligations/collection rights of the BRP in an easy to understand, clear and
non-discriminatory way, allowing market participants to adopt adequate strategies to minimize the costs
of reducing imbalances.
ANRE Order no. 214/2020 approving the average tariff for the transmission service, the components
of the transmission tariff for the injection of electricity in the network (TG) and for the extraction of
electricity from the network (TL), the tariff for the system service and the price for reactive electricity, for
Transelectrica S.A., valid from 1 January 2021: average tariff for the transmission service: RON 20.55/MWh;
TG – RON 1.30/MWh (increase of 0.0%); TL - RON 19.22/MWh (increase of 15.3%); tariff for the system service:
RON 11.96/MWh (decrease 17.2%);
ANRE Order no. 223/2020 approving the tariffs and monetary contributions charged by ANRE in 2021:
both for the supply license and for the production license, the annual contributions remain at the level of
2020;
ANRE Order no. 224/2020 regarding the amendment of the ANRE Order no. 88/2015 for the approval of
framework agreement for the supply of electricity to household and non-household customers of SoLR,
the general conditions for the supply of electricity to the final customers of SoLR, the model electricity bill
and the model electricity consumption agreement, used by SoLR:
- based on the framework agreement, SoLR conclude supply contracts with household and non-
household customers, including with the customers taken over because they do not have ensured the
supply of electricity from any other source;
- the invoicing of the active electricity consumed at the consumption places is made at: a) The price from
the US offer communicated by SoLR; b) The final price of last resort (applies in the case of household
customers taken over by SoLR because they do not have ensured the supply of electricity from any other
source). The final price of last resort applies from the date of takeover by SoLR until the end date of
the second month following the takeover or until the date of entry into force of a new supply contract,
whichever comes first;
- at least 30 days prior to the expiry date of the price in force for the US, the SoLR is obliged to send to the
customer the new offer for the US, which will be applied automatically, without the need to conclude an
addendum.
ANRE Order no. 230/2020 regarding the extension of some terms provided in ANRE Orders: some terms
are postponed by 1 month, from 1 January 2021 to 1 February 2021:
- until 31 January 2021, the imbalance settlement interval is one hour, and from 1 February 2021, the
imbalance settlement interval is 15 minutes;
- the application is extended until 1 February for some provisions of the program for implementing the
necessary measures in order to ensure the settlement conditions at a 15 minutes interval and of the
Regulation for calculating and settling imbalances of the BRP – single imbalance price.
ANRE Order no. 231/2020 regarding the amendment and completion of ANRE Order no. 213/2020 and for
the amendment of the Regulation for the functioning and settlement of the balancing market, approved
by ANRE Order no. 61/2020: certain changes are made to the abovementioned Regulations;
ANRE Order no. 237/2020 regarding setting the estimated mandatory quota for the purchase of green
certificates related to 2021:
- the estimated mandatory quota for the purchase of green certificates for economic operators that
have the obligation to purchase green certificates for 2021 was set at GC 0.4505/MWh (compared to GC
0.45061/MWh in 2020) for a forecasted electricity consumption of 44 TWh;
- the estimated average impact in the final consumer’s invoice that supports the green certificates
related to the support scheme for 2021 is RON 0.063/kWh, comparable to the 2020 value;
ANRE Order no. 239/2020 for the amendment of ANRE Order no. 123/2017 regarding the approval of the
high efficiency cogeneration contribution and of some provisions regarding its invoicing method:
- the value of the cogeneration contribution, applicable from 1 January 2021, is RON 17.12/MWh. It is
24.3% lower than the value of the cogeneration contribution for November and December 2020 (RON
22.63/MWh);
- applying the new value of the cogeneration contribution, valid until 30 June 2021, will result in an
impact on the price to the final consumer of RON 0.01712/kWh.
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2020 DIRECTORS’ REPORT
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ANRE Order no. 241/2020 regarding the amendment of ANRE Order no. 171/2020 for the approval of
the conditions for the supply of electricity by SoLR:
- in the case of household customers from the portfolio of a SoLR that conclude, based on one of
the competitive offers, a contract entering into force between 1 - 31 January 2021, the electricity
consumption between 1 January 2021 and the date of entry in force of the new contract is invoiced
so that the price from the competitive offer is applicable starting with 1 January 2021 (by issuing a
regularization invoice within 90 days from the date of concluding the contract);
- SoLR have the obligation to send to household customers from their portfolio in December and
January 2021 an information that will have attached an offer for the universal service and at least a
competitive offer.
ANRE Order no. 242/2020 on the Regulation for the takeover by SoLR of the consumption places of
the final customers that do not have ensured the supply of electricity from any other source:
- SoLR have the obligation to make available to final customers, on their own website, a model request
for concluding an electricity supply agreement;
- SoLR have the obligation to publish on their own website, in a section dedicated to universal
service and supply in last resort regime, with direct access from the main page, the documents and
information for the takeover process;
- each network operator must ensure the continuity in the electricity supply of the consumption
places of final customers that are taken over, which are located in its area of activity.
ANRE Order no. 5/2021 regarding the amendment of ANRE Order no. 171/2020 for the approval of the
conditions for the supply of electricity by SoLR:
- the commercial discount, equal to the difference between the price from the universal service offer
applicable between 1 January and 30 June 2021 and the price from the competitive offer, provided
in the previous regulation for the period 1 January 2021 and until at least 30 June 2021, has become
optional in the contractual relations between SoLR and household customers;
- new obligations for SoLR regarding the provision of information for household customers from their
own portfolio were introduced:
Until 30 June 2021, with each invoice issued, will be sent a notification on the removal of
regulated prices, as well as an offer selection form, in the form established by ANRE, containing
the competitive offer with the lowest value, an alternative competitive offer and the universal
service price offer, offers applicable in the first semester of 2021, as well as the value of the
commercial discount granted and the application period, if applicable;
Between 1 May – 30 June 2021 - monthly, a competitive offer and the universal service offer,
valid as of 1 July 2021;
In H2 2021 - with each invoice issued, a notification regarding the removal of regulated prices.
■■
Corporate image
In 2020, Electrica remained in the first 10 places in TOP 50 of the most valuable Romanian brands.
In terms of transparency, Electrica remained in the top of the most appreciated companies, launching, for the
fourth consecutive year, the Sustainability Report.
Also, in 2020, the 4th edition of the Grant campaign “Electrica puts Romania in a different light” was
completed.
During 2020, the companies within Electrica Group donated almost RON 3.5 mn, the largest part of this
amount being granted to medical units, the frontline in the health crisis generate by COVID 19.
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Certifications
During September 2020, SDTS succesfully finalized the external recertification audit for its Quality-
Environment-SSO Integrated Management System according to ISO 9001:2015, ISO 14001:2015 and ISO
45001:2018 requirements. Considering the epidemiological context, the certification body SRAC Cert audit
was performed in two phases, a first phase, carried out remotely between 12 – 15 May 2020 and a second
phase, in site, between 22 - 23 September 2020. There was no non-compliance identified during the audit, the
company obtainig its new certificates valid until 19 September 2023.
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Etics and Compliance
The following policies have been updated:
■
Policy on avoiding and combating conflicts of interest in February 2020 - adopting it at the Group level,
in order to align with legislative changes, trends and good practices, as well as for a better adaptation
to the concrete aspects and specifics of the activity of the Electrica Group companies;
Policy on Related Party Transactions in July 2020 - its adoption at group level.
■
At the same time, in December 2020, the Code of Ethics and Professional Conduct was updated, being
communicated to the entire group for implementation.
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2020 DIRECTORS’ REPORT
1.3 Post balance sheet events date
Below are the relevant events that took place at the Group level in the period between the 2020 financial year
closing and the date of the present report.
■■
Litigations
On the term from 3 February 2021 of the case no. 1372/3/2017 of Bucharest Tribunal, Civil Section VII, the
court confirmed the reorganization plan of the company Transenergo Com S.A. (Transenergo), proposed by
the special administrator. According to this plan, unsecured creditors will not benefit from any distributions
of amounts. Electrica holds an unsecured receivable in amount of RON 37,088,830 composed of the main
receivable of RON 35,725,171 (from two agreements) and penalties of RON 1,363,659 calculated until the date
of insolvency proceedings’ opening. Since ELSA is the beneficiary of an insurance policy in amount of RON
4,000,000, having as object the guarantee of the payment obligations of Transenergo resulting from the BRP
Services Agreement no. 77/2005, out of the total receivable of RON 37,088,830, the amount of RON 4,000,000
was submitted under the resolutive condition of recovering the amounts from the insurer. ELSA will appeal
the sentence confirming the reorganization plan, but the execution of the plan is not suspended during the
trial of the appeal.
The financial exposure recorded by ELSA in relation to Transenergo is fully provisioned, so that the resolution
from file no. 1372/3/2017 has no negative impact on ELSA’s financial results for 2020 or 2021, the impact being
recorded in the previous periods (2016 and 2017).
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Transactions with related parties
Regarding the reporting of transactions with related parties, during the period between the 2020 financial
year closing and the date of the present report, the following relevant events took place at Group level:
■
A current report regarding the correction of several errors identified in the content of the reports on
transactions with related parties concluded by Electrica Group’s companies in the second semester of
2020, according to Art. 923 para (12) of Law No. 24/2017, was published on 26 January 2021;
The auditor’s independent limited assurance report regarding the transactions reported by ELSA
according to art. 923 of Law no. 24/2017 in the second semester of 2020 was published on 27 January 2021;
On 11 February 2021, a transaction between DEER and EFSA was concluded, having a value that,
cumulated with the rest of the transactions concluded/executed in the period 1 January - 11 February
2021, exceeds the threshold of 5% of Electrica’s net assets, according to Electrica’s individual financial
statements for 2019, respectively exceeds the value of RON 199,406,795.
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2020 DIRECTORS’ REPORT
2.
Electrica
Group
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2020 DIRECTORS’ REPORT
2.1 Organizational structure
As of 31 December 2020, the most significant shareholder of ELSA is the Romanian State, represented by
the Ministry of Economy, Energy and Business Environment (Ministry of Energy at the report date), holding
48.79% (31 December 2019: 48.79%).
The table below shows ELSA’s investments in subsidiaries:
Subsidiary
Activity
Registration
code
Headquarters
% shareholdings as of
31 December 2020
Source: Electrica
*indirect shareholding - Electrica Energie Verde 1 SRL is 100% owned by the subsidiary EFSA
The main activities of the Group are the regulated distribution of electricity (through operation and
development of electricity distribution networks) and the electricity supply to end consumers. The Group is
the electricity distribution operator and the main electricity supplier in North Transylvania (Cluj, Maramures,
Satu Mare, Salaj, Bihor, and Bistrita-Nasaud counties), South Transylvania (Brasov, Alba, Sibiu, Mures, Harghita,
and Covasna counties), and North Muntenia (Prahova, Buzau, Dambovita, Braila, Galati and Vrancea counties),
ensuring the service of the network users by operating installations that function at voltages ranging from
0.4 kV to 110 kV (power lines, substations and electrical transformer stations).
The distribution operator for the three regions - TN, TS, and MN, invoices the electricity distribution service
to electricity suppliers (mainly to EFSA subsidiary, the main electricity supplier in North Muntenia, North
Transylvania, and South Transylvania), which further invoices the electricity consumption to end consumers.
EFSA is a supplier of electricity in the competitive market and is also a designated supplier of last resort
(SoLR) at the national level.
According to the regulations issued by ANRE in 2020, the SoLR ensure the supply of electricity to final
customers who benefit, under the law, from universal service, non-household customers who have not
exercised their eligibility, and non-household customers taken over because the supply of electricity is not
ensured from any other source.
In the regulated market, the supply of electricity was made at final prices for universal service, final prices for
inactive customers, final prices of last resort, and at regulated tariffs for household consumers.
In the competitive market, the supply of electricity was made based on contracts with negotiated prices.
Regarding the electricity production segment, it is represented by the Electrica Group subsidiary, EEV1,
which owns a photovoltaic park in Stanesti, Giurgiu county, with an installed capacity of 7.5 MW (operating
capacity limited to 6.8 MW).
2.2 Mission, vision, values
As an essential step of the transformation, Electrica Group substantiates its future business development
on a new identity, adapted to the market context and respecting the specific elements of its companies.
Thus, the definition of the company’s mission, vision, and values has been finalized, following a process that
included internal consultations and specialized analyses; these will serve as a foundation for implementing
the Group’s strategic directions and objectives for the period 2019-2023.
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2020 DIRECTORS’ REPORT
Mission
Energy – anywhere, anytime, for anyone!
We bring energy where people materialize their dreams.
Vision
Excellence and robustness for the traditional segments, innovation, and flexibility in new approaches.
Promoter of electrification and green energy.
Values
■
■
■
■
Trust – we are the partner you can rely on, now and in the future.
Competence – we build with skill. We are proud of the role our work gives us within society.
Safety – we are always careful with the safety of our employees, collaborators, and the communities
in which we work.
Sustainability – our solutions are long-term and friendly for the environment as well as for the people.
2.3 Key elements of the 2019 – 2023 Strategic Plan
The Strategic Plan for the period 2019-2023, which reflects the Board of Directors’ vision of the management of
activities in the stakeholders’ best interest, both on a medium and a long-term horizon, has been formulated
after an analysis of the following areas:
■
the external environment, to determine the main environmental factors affecting the electricity
market and the key drivers that can significantly influence the evolution of the electricity market in
the future;
industry analysis, in order to identify trends in the electricity market, assess the market attractiveness,
and determine the critical success factors necessary for competing and surviving in this market;
internal analysis of the Group, to assess its past and current performance (relative to other market
players).
■
■
Electrica Group remains dedicated to ensuring the balance between generating value for its customers and
maximizing profit for shareholders, maintaining its ambition to become a regional player in the energy field,
within a culture of ethics, integrity, and sustainability.
The Group aims to optimize the contribution of each company to the financial objectives of the group,
through a homogeneous and efficient risk management system. In this regard, a unitary implementation
of the strategy will be ensured, within coordinated strategic projects, focused on achieving newly defined
objectives.
Governance and investor relations remain priorities for the Group, aiming for the constant improvement and
the implementation of best practices in corporate governance and investor relations.
For the 2019-2023 period, the Group’s key objectives are:
■
■
Expanding into related fields and obtaining synergies within the areas in which the Group operates;
Improving the operational performance to continuously increase the quality of the services offered to
clients;
Continuing investments to improve infrastructure reliability;
Increasing the performance and strengthening the sustainability of economic results.
■
■
In addition to the traditional areas of interest, namely the electricity distribution, electricity supply, and
natural gas and energy services, there is a high interest for the development of new activities, based on
innovative technology, while continuing to monitor and analyze the opportunities for growth through
mergers and acquisitions. Also, a closer relationship with the clients is pursued, based on the development of
competencies, but also on an offer of products and services in line with their needs.
In order to ensure the implementation of the strategic plan for the period 2019-2023, the company’s HR
strategy aims to provide the qualified human resources, necessary to support the initiatives that ELSA
has proposed for the next period, considering an accentuated dynamics of the labor market, significantly
influenced by the context of social distancing. Thus, the HR strategy aims to ensure staff - in terms of quantity
and professional competence - to increase operational performance and achieve the strategic objectives of the
Group, modernizing the organization by implementing an organizational culture having as central elements
excellence and safety, for staff and collaborators, modernizing the employer image and implementing a
coherent system for performance management and employee evaluation. In 2020, the projects approved to
be carried out were started, to follow the planned calendar.
At the Group level, a priority is to ensure the necessary human resources for key business areas, employees
training and capitalize on their potential, expertise, and aptitudes, to increase labor productivity and
individual performance.
Also, an important role will be played by the optimization of the classic IT&C support functions, but also by the
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implementation of the integrated IT&C organization as a strategic partner for the business lines; IT&C takes
over the responsibility of capitalizing on the synergies, but also of supporting the specific competencies
that offer strategic advantages to the business units. In this context, beyond the processes’ digitization
and their integration in IT platforms, the development of smart grids, the smart meters’ integration in the
rhythm of their implementation plan, support for the operationalization of prosumers, etc. are provided in
the distribution area. In the supply area, the development of a customer-friendly interface, the automation of
contracting, reporting, and invoicing processes, and data exchange with all Romanian distributors are critical
elements supported by IT&C as a strategic partner.
The improvement of the corporate governance framework is continued, closely following the Corporate
Governance Action Plan established with EBRD starting with 2014.
In the distribution segment, the organizational transformation process started in 2017 has been developed
and implemented, through the initiatives operationalized, measures aiming the efficiency and continuous
improvement of the activity.
Moreover, at the end of 2019, the implementation of the newly approved strategy at the Group level was
initiated - through the perspective of the megatrends that mark the energy industry (decarbonization,
decentralization, digitalization), which reveals a significant transformation process, accelerated internationally,
but initiated at the national level, also. The economic context at the national level, which brings additional
pressure on the regulated activities, and the strategic priorities assumed in the field of energy urgent the
need for transformation also at the level of electricity distribution companies, these becoming one of the
important pillars for the transformation of the energy system. The need and principles for transforming
the business model were analyzed in detail from the perspective of several implementation scenarios
- from individual optimization to the legal merger of the three distribution operators. The latter, through
the proposed target organizational model, created the premises for complying with current requirements,
ensuring medium-term operational efficiency, preparing the organization for the challenges related to the
energy transition, and for capitalizing on new medium and long-term business opportunities.
Thus, in 2020, the merger by absorption of the three distribution companies was carried out, the effective date
of the merger being 31 December 2020. Among the benefits expected after the merger, the following can be
listed: improving the quality of distribution service and implementing the concept of “customer-experience”
for users, improving operational and financial results and the financial position, reflected in added value for
shareholders, as well as optimizing the operating costs, streamlining support functions, improving network
security, and continuing and finalizing projects started, with a unitary focus on strategic initiatives, for the
distribution companies.
In the supply segment, the company has focused in 2020 on increasing the profitability of the customer
portfolio by developing specific measures to increase customer satisfaction, by restructuring the portfolio,
and by competitive and dynamic purchase strategies, in the context of a volatile and unpredictable electricity
market. Additionally, the traditional offer electricity supply was complemented with combined packages of
electricity, gas, and value-added services.
The measures taken during 2020 constitute a stable foundation for the Group’s ambitions to be a market
leader and to ensure, in a sustainable way, profitability and satisfaction for customers and partners. As a result,
the transformation project was started for the supply area in order to transform EFSA into an organization
capable of successfully responding to current and future challenges in the electricity market, including
the improvement of the financial results, improving NPS, defining a competitive commercial programme,
improving the position and transforming the organization into a supple and agile company.
In the energy services segment, in December 2019 the related strategy was revised, resulting in the decision
to develop an integrated energy services company, optimized in terms of costs, with internal capabilities and
partnerships that allow flexibility and agility in offering a wide range of services. After an analysis, the merger
of SERV and SEM was considered the best option for integrating their activities, the merger process being
completed on 30 November 2020. The main benefits expected from the merger are: improved business,
organizational synergies, presenting an integrated services offer, reducing the complexity of administrative
and support services, which will translate into a more competitive offer, less indirect costs, but also the
transfer of knowledge and the development of the works’ execution capacity.
Ethics remains a priority for the organization, as a preliminary requirement for the sustainable development
of the Electrica Group. The first steps in order to obtain ISO 37001 certification were taken – the anti-corruption
management system, which contributes to reducing the bribery risks and at the same time ensures the
existence of protection measures for interested parties, as well as the use of international good practices.
In the medium term, it is desired the development of an ethics ethical culture within Electrica Group, by
moving from the reactive stage to the integrity stage, by internalizing the ethical standards and the values
of the organization, understanding the role of ethics as a value-enhancing factor and ensuring a permanent
internal control system which involves the whole company’s personnel.
The CSR activities still remain very important for the Electrica Group, with multiple key areas being supported,
with hundreds of projects registered annually to benefit from Electrica’s support.
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2.4 Outlook
The year 2020 was influenced by the recent public health events (on 11 March 2020, the OMS declared the
COVID-19 pandemic) and the impact of these events on the business and social environment.
Electrica Group activates in a key economic sector and therefore is closely monitoring both the national and
the international context, to be able to take the best decisions in the following period and for addressing the
challenges in the short and medium term.
Globally, the budgets of countries where the number of pandemic infestations is high and economic sectors
such as services, production, transportation, as well as commerce and international trade are affected, all
these elements influencing the energy demand, the consumers’ behavior, as well as the measures taken by
the authorities, both for the energy sector and for the economic environment in general.
The current strategy of the Electrica Group is built on a set of trends and assumptions, and one of its goals
is to accelerate the company’s digitalization. This aspect is even more important as during the following
period it is necessary to support the measures of social distancing, the need for remote intervention and
back-up, as very relevant aspects for its activities. Thus, it will continue the efforts already started to support
investments in IT tools and automation, both for streamlining processes and for increasing the performance
of its distribution networks.
Considering energy policies developed at both EU and national level, as well as the international context of
the energy markets, the following trends are expected to characterize on medium and long term the local
electricity market:
■
Increased competition between the players in the electricity supply market at the national level,
especially regarding the diversification of the portfolio of products offered to customers (offers
for natural gas, insurance, home appliances, etc.) and digital services offered (mobile applications,
invoices, and online payments, extending the customer service through chat solutions); the supply
market liberalization imposed the rethinking of priorities and establishing strategies for maintaining
the market share;
The new legislation introducing provisions related to transactions in the non-regulated market, will also
influence the electricity market and future strategies of the SoLR regarding portfolio management;
A regulatory trend in the electricity distribution area is the principle of remuneration of the distribution
operator considering both the quality of the service, as well as the operational costs and efficiency
based on comparative analyzes between DSOs;
Electricity distributed generation technologies will determine the distribution operators to adapt
their processes and strategies regarding the upgrade and development of the network and to offer
solutions to the independent producers, considering the appearance of prosumers, which are active
participants in the energy market; in this context, significant investments are necessary to improve
both the transmission and the distribution infrastructure;
In the long term, fully electric vehicles, light commercial vehicles, and electrification of railways are
expected to increase the consumption of electricity in the transportation sector.
Future development of technologies will support energy efficiency policies such as:
- Development of transmission and distribution networks, including smart grid and smart
metering;
- End-use energy efficiency (thermal integrity of buildings, lighting, electric appliances, motor
drives, heat pumps, etc.);
The smart metering implementation will offer complex tariffs options to the consumers, detailed
information regarding the consumption profile, which might lead to increased flexibility and demand
reduction during peak periods. Thus, the consumers shall be better informed and involved in the
decision-making process, as active participants. The smart metering implementation pace depends
on the implementation calendar to be adopted at the national level;
The significant reduction in the cost of photovoltaic technologies is an opportunity for the development
of small-scale generation projects, especially in the domestic area;
The development of the transmission and distribution infrastructure and long-distance interconnection
will become a necessity. The electricity market target model, which implies the development of
Europe’s internal electricity market, will continue to evolve and be in line with future trends and
challenges in the energy industry.
■
■
■
■
■
■
■
■
The key drivers of changes in the electricity market are presented in the following table:
Key drivers
Description
Impact on
GDP evolution and
industry structure
Economic growth is a determinant factor of electricity
demand. Although there is not a one-to-one relation-
ship between GDP growth rate and electricity demand
growth rate, there is a positive correlation, mainly be-
tween the industrial demand for electricity and eco-
nomic growth. In the future, household and industrial
electricity demand will also be influenced by energy
efficiency policies.
Electricity
consumption
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Key drivers
Description
Impact on
The increase in electricity consumption is a constant
trend in Romania. Over 2013 - 2019, there was an increa-
se in electricity consumption, as opposed to a decrease
in gas consumption, mainly due to the curtailment of
heavy industrial production.
The COVID-19 pandemic has temporarily reduced elec-
tricity consumption, but the general upward trend will
be maintained.
In contrast with the demographic decline recorded at EU
and Romanian level, electricity consumption is positively
impacted by the changes in consumer behaviour and
the increase in urbanization. For example, the massive
increase in the number of connected devices and impli-
citly, in a less accelerated manner, in electricity consump-
tion, maintains the increasing trend of consumption.
The regulatory framework has undergone major chan-
ges with the aim of aligning the Romanian legislation
with the EU legislation. Although important steps have
been taken, other major changes are expected to occur
in the next decade, particularly following the new Fra-
mework Strategy for a European Energy Union, which
highlights the need for integration and cooperation
amongst member states.
In 2019, the 4th regulatory period began, and ANRE
approved significant changes to the Methodology both
in 2019 and 2020 for all elements of the tariff (regula-
ted rate of return, regulated assets base, network losses,
operating and maintenance expenses, dynamic distri-
bution tariffs starting with 2020).
In 2020, the most complex process of revision of secon-
dary legislation in recent years (47 regulations) took
place in order to align with the amendments of Energy
Law, the 15-minute Settlement, financing the connec-
tion works of domestic and non-domestic customers
with shorter lengths of 2.5km.
For the supply segment, important changes are fore-
casted in the purchase strategies and the sales to final
customers, considering the impact of the legislation re-
garding the elimination of the regulated contracts for
the household segment and allowing the transactions
to be carried out on the non-regulated markets.
Smart networks and smart meters will create benefits
for the end consumers, distributors, and suppliers in
terms of energy efficiency, resource optimization and
network operation, implementation of demand respon-
se, etc. It is necessary to prepare the networks and to
integrate the distributed resources (storage solutions,
micro-grids, local production, electric machines, etc.),
considering also the management of their impact.
Electricity
consumption
Electricity
consumption
Electricity prices
Electricity prices and
consumption
Romania has adopted the EU 20-20-20 targets, aiming
to reduce greenhouse gas emissions, improve energy
efficiency and raise the share of renewable energy. Mo-
reover, the 2030 Framework provides even more ambiti-
ous targets and therefore more efforts are needed from
governments and market players to achieve them.
Electricity prices and
consumption,
regulatory framework
GDP evolution and
industry structure
Demographic evolution
and technology
development
Changes in the
regulatory framework
Technological
development
Increase in
environmental
awareness
Source: Electrica
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The regulatory framework perspective and the impact on the energy market
2020 DIRECTORS’ REPORT
For the distribution segment, the significant changes in the Romanian legislation were detailed in chapter
1.2. Based on these changes, the expected effects refer to:
■
the changes brought by the new methodology for establishing the distribution tariffs and the RRR
level, that will generate a negative impact on the operational and financial performances of the OD,
as a result of the approval by ANRE of values of the operating costs and maintenance lower than the
necessary costs requested by the OD, as well as of ANRE carrying out the annual corrections of the
costs and of the forecast investments.
the changes brought to the methodology in 2020 regarding the regulation of some aspects in case of
mergers, which were materialized through the obligation regarding the annual reporting of the gross
benefits, as well as of the expenses generated by the merger;
investments in electrical distribution network - in January 2021, ANRE approved Order no. 3/20 January
2021 which grants a RRR incentive of 2% for investments in electrical distribution network made from
own funds in projects in which European non-reimbursable funds were attracted, if the investments
were made and commissioned by the operators after 1 February 2021.
■
■
The regulatory changes with significant impact in the supply segment are the following:
■
until 31 December 2020, for household customers the supply of electricity is done in conditions
regulated by ANRE; starting with 1 January 2021, the electricity market is liberalized for all categories
of final customers.
The human resources area perspective
As it resulted from the analyzes used in the elaboration of the human resources strategy, as well as from more
recent analyzes, the labor market will face new challenges, as demographic developments, labor migration,
and the evolution of the economy will accentuate the shortage of skilled labor. Also, the acceleration of
digitalization, generated by the pandemic context, the inherent technological changes, as well as the change
of generations that the Group will go through, will have a disruptive effect on the recruiting possibilities of
new employees, in the near future.
Combined with internal factors, companies in the energy-related markets, which need the same specializations
as those in the Electrica Group, enter the competition to attract new employees, with competitive packages
offers, aligned with the market. Also, given the current education system, it is difficult to cover the need
for skilled workers in the energy field. This will sharpen in the coming years, following the retirees among
employees of energy companies.
Electrica Group operates in a competitive market, where the technological progress is very fast and at a time
when the approach of companies and employees is changing towards the work process, as it was defined
in the past. Salary packages are no longer the only motivational lever. Non-financial benefits, along with the
organizational climate, are increasingly important to attract employees and retaining valuable ones.
Career opportunities, broadening the area of competence, and assigning more significant responsibilities
must be part of the strategies and tools used. At the same time, at the Group level, the provision of the
necessary human resources and the staff training in key business areas were treated as priority topics, to
increase labor productivity and individual performance.
The human resources strategy took into account these aspects and, through the proposed projects, aimed
at reducing the impact of the negative aspects in the retaining and development of the human resource.
2.5 Key factors, directions, and significant market
trends affecting the operational results of Electrica
Group
Considering the strategic elements defined for 2019-2023, the company analyzes the strategic options and
aims to implement streamlining measures, including through restructuring programs and transformation
of Group’s divisions, training, and staff development programs, redesigning business models, or entering
new business segments, in order to improve both the quality of the services offered, as well as the financial
performance.
The most important assumptions considered for the strategy review are the following:
■
The Romanian energy mix is changing significantly, being heavily disrupted by the advent of
renewables, together with the emergence of the prosumers in the following years;
Romanian GDP will have a stable long-term evolution;
Different trends in electricity consumption (an increasing trend on a medium term, but stagnation/
reduction on the long term);
Romania will maintain its commitment towards the accomplishment of the 20-20-20 strategy
regarding the climate changes and the implementation of the new Framework for the period 2020-
2030; Moreover, the adoption by the European Commission of the European Ecological Pact (the
■
■
■
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“Green Deal”) has the potential to significantly modify the entire macroeconomic system, leading to a
revision of the strategy in the following period, depending on the local implementation;
For the current regulatory period, the remuneration mechanism, the type of tariff and the method of
applying corrections are subject to modifications, these key factors being considered in the strategic
planning;
The supply segment will experience a short and medium term repositioning following the elimination
of regulated tariffs and liberalization of the electricity market starting with 1 January 2021;
The impact that the legislative framework changes may have, as well as the lack of predictability in
the medium and short term, particularly regarding the prices and supply conditions applicable to
household customers who currently benefit from universal service;
No major geopolitical turbulences have been taken into account, which might significantly affect the
Romanian electricity market;
Financial markets will allow access to profitable financing sources to support companies’ investment
programs.
■
■
■
■
■
As a result of the adoption of the new business strategy of the Electrica Group and in line with the main
objectives and directions established by it, in 2019 a process of analysis, evaluation, formulation, and approval
of a specific strategy for reorganizing Group IT&C activities took place. This strategy has clear and measurable
objectives for the period 2020-2023 to support business projects, including among others measures to
extend the digital transformation, increase the cyber security level at the Group level, develop virtual centers
of excellence based on the use of best practices and benefiting from economies of scale, maximizing the
economic benefits. During 2020, the implementation of the IT & C strategy achieved the proposed objectives
in the area of personnel reorganization, evaluation of technology and processes, and setting the alignment
plans that are already launched for 2021 and 2022.
In the distribution segment, the focus is on operational efficiency, by reducing technological and commercial
losses, optimizing internal processes, ensuring an optimal level of resources used, on user orientation and
ensuring their satisfaction, by improving the network access and the quality of service, on development of
smart grid technologies and cost recovery. Increasing the operational performance will lead to a positive
impact on the users’ experience, ensuring continuous supply security, at high quality and high standard
interactions with our staff. In parallel, exploiting the significant optimization potential and reducing losses
by streamlining the distribution operators’ activities are key factors in the optimal allocation of resources, so
important in this regulatory period.
The supply segment will focus on diversifying the activity through offers and services adapted to customers’
needs, on operational efficiency through optimized processes for the sale and purchase of electricity, and on
customer orientation and maximizing satisfaction. The aim is to increase the natural gas supply segment,
offer value-added solutions (products and services) and to digitize specific operations and processes.
Please note that other factors that are not available at the report date (eg. legislation and regulatory
provisions under disscusions discussions etc.) or not presented above, or not considered by the Group may
occur and may have a significant impact on the implementation and evolution of the Group’s strategy.
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3.
Electrica
on the
capital
markets
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3.1 Ownership structure
Until July 2014, the Romanian State, through the Ministry of Economy, Energy and Business Environment,
was the sole shareholder of ELSA. As of 4 July 2014, after the Initial Public Offering, the Company’s shares are
listed on the Bucharest Stock Exchange (BSE – ticker EL), and the Global Depositary Receipts are listed on the
London Stock Exchange (LSE – ticker ELSA).
After the secondary public offer that ended on 3 December 2019, during which a total number of 208,554
new shares were subscribed, with a nominal value of RON 10 and a total nominal value of RON 2,085,540, the
ownership structure according to the Central Depository records (Romanian: Depozitarul Central) as of 31
December 2020 is the following:
Shareholder
Number of
shares
Stake held (% of
the share capital)
Percent of voting
rights (%)
The Romanian State, through the Ministry
of Economy, Energy and Business Environ-
ment (currently the Ministry of Energy)*,
Bucharest, Romania
169,046,299
48.7948%
49.7850%
The European Bank for Reconstruction and
Development
17,355,272
5.0096%
5.1112%
6,890,593
1.9890%
0%
3,565,252
1.0291%
39.6285%
Other legal entities**
134,559,772
38.8403%
4.4254%
Individuals
15,026,409
4.3373%
4.4254%
346,443,597
100.0000%
100.0000%
Source: Central Depository, Electrica
Note 1: Shares with voting rights - 339,553,004, representing the total number of shares (346,443,597) without the
number of own shares held by Electrica (6,890,593), for which the voting right is suspended
* Until 15 February 2021, Depozitarul Central SA did not register the transfer of ELSA’s shares from the Ministry of
Economy, Energy, and Business Environment account to the account of the Ministry of Energy
** Paval Holding, NN Group NV, and Allianz SE hold, directly or indirectly, between 5 and 10% of the total number
of shares with voting rights
The shares presented to be held by the Bank of New York Mellon represent the global depositary receipts
(GDRs) owned by ELSA shareholders that are traded on the London Stock Exchange (LSE). A global depositary
receipt represents four shares. The Bank of New York Mellon is the depositary bank for these securities.
Following the stabilization process after the June 2014 IPO, ELSA owns 6,890,593 of its shares, representing
1.989% of the total share capital at 31 December 2020, with suspended voting rights, which does not entitle
ELSA the right to receive dividends.
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Total shares: 346.443.597
The Romanian state
through the Ministry of
Economy and Business
Environment
48.7948%
EBRD, UK
Electrica SA
Bank of New York Mellon
(DRS - LSE)
Other legal entities
Individuals
Figure 16: Ownership structure as of 31 December 2020
4.3373%
38.8403%
1.0291%
1.9890%
5.0096%
Source: Central Depository, Electrica
At the end of 2020, ELSA’s shares were owned by a total of 7,329 shareholders, of which 253 legal entities
and 7,076 individuals from over 30 countries. 88.03% of the total number of shares (304,983,226 shares) were
held by Romanian investors. Thus, foreign shareholders held 11.97% of the share capital (41,460,371 shares),
the largest weight being represented by European citizens. Shareholders in the United Kingdom and Ireland
held 5.43% of share capital, while those in the USA held 1.78%, in this category being included also the GDR
holders.
3.2 Shares evolution on BSE and Global depository
receipts (GDRs) evolution on LSE
BSE:
ELSA’s shares are included in several BSE indices, including the BET index (the reference index for the
Romanian capital market reflecting the performance of the most traded companies on the BSE’s regulated
market), as well as in the BET-NG index (the sectorial index that reflects the evolution of the companies listed
on BSE’s regulated market having as main activity energy and related utilities).
Between 4 July 2014 - 31 December 2020, ELSA’s shares recorded a minimum price of RON 8.06 (16 March
2020) and a maximum price of RON 14.96 (12 May 2017), therefore the weighted average price was RON 11.79.
Compared to the IPO price (RON 11), ELSA shares closed the year 2020 at a price of RON 12.55, up by 14.1%,
while the BET index increased by 39.8% and the BET-NG index diminished by 1.7%.
In order to support the liquidity of its listed shares, ELSA concluded a Market Making services contract with
Wood&Co, starting 30 September 2020.
The gross dividends per share granted by ELSA in this period reached a cumulative value of RON 4.5017, with
a return of 40.9% reported to the IPO price (RON 11). Thus, the aggregate yield generated by ELSA’s shares
(along with dividends) from the IPO and until the end of 2020 was 55%.
From the IPO dated 4 July 2014 until the end of 2020, ELSA shares attracted a RON 3.71 bn liquidity on BSE,
with a daily average of RON 2.29 mn. During this period of about 6 and a half years, 314.4 mn ELSA shares
have been traded (including DEAL transactions), representing 90.8% of the share capital and 92.6% of the
voting rights (total shares without ELSA shares). Thus, the average daily turnover during this period on BSE
was 193,943 shares.
Strictly analyzing the year 2020, the evolution of the share price was an ascending one, except for the period
between the end of February and the first part of March, a period strongly affected by the spread of the
COVID-19 virus worldwide. Thus, during this period the minimum closing price since the IPO was reached,
respectively RON 8.06, but the comeback was a strong one that led to reaching a maximum closing price
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of RON 12.55 (30 December 2020), so that the weighted average was RON 10.97. During the year, ELSA share
price increased by 17.8%, while the BET index went down by 1.7% and the BET-NG index depreciated by 11.8%.
Additionally, during 2020, a consolidation of the positions held by institutional investors, which traditionally
have a medium and long-term investment strategy, was noticed. It is considered that this is due also to the fact
that the defensive shares (those that are not very affected by the economic cycles), like those of Electrica, are
considered safer during such times of crisis, the utility companies being essential for the national economy.
The gross dividend per share granted by ELSA in 2020 (for 2019) was RON 0.7248, slightly below the 2019 level
(by 0.7%), with a yield of 6.9% (computed at the ex-date closing price from 5 June 2020). Thus, the aggregate
yield generated by ELSA’s shares (together with dividends) was 24.7% in 2020, while the yield of BET-TR index
was 3.4%.
During 2020, ELSA shares attracted a liquidity of RON 559.4 mn on BSE, with a daily average of RON 2.25 mn,
up by 33.4% compared to 2019, the seventh value in the market. The volume of shares traded was 50.97 mn,
up by more than 33% compared to 2019, so the daily average volume was 204,703 shares. The total volume of
shares traded in 2020 accounted for 14.7% of the share capital.
During the period from the beginning of 2020 and until 15 February 2021, ELSA’s share price recorded a strong
ascending trend, increasing by 10.4%, up to a closing price of RON 13.85. This evolution was recorded on a
traded volume of 2.68 mn shares, with an average daily turnover of 86.5 th shares. In the same period, the BET
index grew by 7.1% and the BET-NG index appreciated by 12.0%.
LSE:
The GDRs’ weight in ELSA’s total share capital diminished during the period following the Initial Public
Offering, reaching a level of 1.03% at the end of 2020, compared to 10.17% on 4 July 2014.
The maximum price reached by the GDRs was USD 15.3, in September 2014. Subsequently, the GDRs’ price
followed a fluctuating trend. During 2020, except for the period February-April (when the GDRs reached a
minimum price of USD 7.9 on 6 April 2020), the trend was an upward one, ending 2020 at a price of USD 12.50,
up by 28.9% compared to the end of 2019.
In the period since IPO and until the end of 2020, 12.6 mn GDRs have been traded, out of which 103,217 GDRs
in 2020 (+49% y/y).
Strictly referring to the year 2019, GDRs recorded an evolution similar to the one of ELSA’s shares, increasing
by 10.4%, up to USD 13.8 per GDR, based on a total volume traded of over 6,500 GDRs.
60 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Figure 17: Evolution of the adjusted3 closing price of ELSA’s shares vs BET-TR index during 2020
2020 DIRECTORS’ REPORT
30.00
20.00
10.00
0.00
-10.00
-20.00
-30.00
Reaching
the historical
minimum price
(RON 8.06 /
share) because
of the impact
of COVID-19 on
international
capital markets
Ex-date (5 June
2020)
Gross dividend:
RON 0.7248/share
Reaching the
maximum price
during 2020
Start of the period of
accelerated declines in
share prices caused by
the impact of COVID-19
Completion of the
merger process
of energy service
companies
Publication of H1
2020 financials
Approval of the
Group DSOs’ merger
by absorption
process by the Cluj
Tribunal
OGMS - the shareholders also
approved the initiation of the
merger by absorption process of
the energy services companies and
Group’s DSOs
Ja n-2 0
F e b-2 0
M ar-2 0
A pr-2 0
M ay-2 0
J u n-2 0
J ul-2 0
A u g-2 0
S e p-2 0
O ct-2 0
N o v-2 0
D e c-2 0
Ja n-21
Electrica’s price adjusted with dividends
Source: BSE, Electrica
Figure 18: Monthly trading volume and weighted average monthly closing price of shares on BSE (in RON) and
GDRs on LSE (in USD) during 2020
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
BSE - Shares - Monthly Volume
BSE - Shares - Average monthly closing price (RON)
LSE - GDRs - Monthly Volume
LSE - GDRS - Average monthly closing price (USD)
Source: BSE, LSE, Electrica
3 Adjusted at ex-date with the annual value of the dividend/share
61 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
3.3 Investor relations (IR)
As in every year, in 2020 ELSA’s management team continued to be involved in numerous activities for
investors and analysts. Although the crisis generated by the COVID-19 pandemic led to the impossibility of
establishing physical meetings, ELSA’s representatives continued to be present at national and international
conferences as well as at online individual meetings, and attended conference calls with Romanian and
foreign investors and analysts.
During the year, four teleconferences were organized to present the annual, quarterly, and half-yearly financial
results of the Group. The events have been streamed live through webcasts, both the supporting documents
and the webconference recordings can be accessed on the company’s website, under the section Investors
> Results and Reports.
Among the conferences that took place during 2020 and were attended by ELSA’s representatives, we
mention:
■
■
■
■
■
■
■
Austria & CEE Investor Conference 2020 in London (30 January 2020);
EME NYC! organized by Wood&Company, online event (25-26 March 2020);
Institutional Investor Conference in Zürs, online event (30 March - 1 April 2020);
Frontier Investor Days 2019 in Bucharest, online event (3-4 September 2020);
Virtual Investor’s Day: CEE Metals & Energy 2020, online event (28-30 September 2020)
The Finest CEElection Conference 2020, online event organized by Erste Group (5-7 October 2020);
Wood’s Winter Wonderland EME Conference, online event (1-4 December 2020).
During 2020, ELSA continued to be an associate member of the Romanian Investors Relations Association
(ARIR), being involved in numerous ongoing projects of the association.
In order to inform stakeholders correctly, continuously, and transparently, the Investor Relations Department
has disseminated a large number of current reports and communications on the platforms of the Bucharest
Stock Exchange (BSE), the London Stock Exchange (LSE), the Financial Supervisory Authority (ASF and FCA),
as well as on ELSA’s website. All these documents can be accessed on the company’s website, under Investors
section > Results and Reports.
All the actions taken during 2020, as well as the plans for the following years, have as main objective the
achievement of the best-in-class investor program, increasing the transparency and quality of communication
with investors and analysts, constantly driving shareholders’ retention and satisfaction. Evidence of the
recognition of these efforts was ELSA’s positioning in the top listed companies in terms of transparency and
communication in investor relations, by obtaining a score of 9.5 on Vektor – measure of the communication
of listed companies with investors (in 2020 only 7 companies have obtained a grade above 9), as well as the
awards granted by ARIR for the activity carried out by ELSA regarding its investors’ relations, at the categories
BEST COMPANY IN IR and BEST IRO, as a result of an annual survey conducted by Institutional Investor
among institutional investors and analysts to evaluate the practices of listed companies.
3.4 Legal acts reported
ELSA reports legal acts such as those listed in art. 82 of law no. 24/2017, representing mainly transactions with
affiliated parties. These can be found on the company’s website, at https://www.electrica.ro/en/investors/
results-and-reports/current-reports/.
Following the amendment of law 24/2017 regarding the issuers of financial instruments and market
operations by law no. 158/2020, the transactions falling within the scope of art. 923 of law 24/2017 (art. 82
being repealed).
ELSA has the obligation to report the significant transactions concluded by ELSA or its subsidiaries with
related parties, by drawing up and publishing reports on this aspect. „Significant transaction” means any
transfer of resources, services, or obligations, whether or not it involves the payment of a price, the individual
or cumulative value of which represents more than 5% of ELSA’s net assets, according to the latest individual
financial statements published by ELSA (in this case on 31 December 2019, RON 199,406,795). Thus, ELSA has
published numerous current reports on these types of transactions, these can be found on the company’s
website, at https://www.electrica.ro/en/investors/results-and-reports/current-reports-art-92-ind-3/.
3.5 Dividends policy
ELSA’s dividend policy, updated in February 2018, can be accessed on the company’s website under Investors
section > Corporate Governance > Corporate policies and other documents.
ELSA’s dividends are distributed from the annual net distributable profit based on the annual individual
audited financial statements after their approval by ELSA’s Ordinary General Shareholders’ Meeting (OGMS)
and the approval of the dividend proposal by the OGMS. The shareholders receive dividends proportionally to
their share in the company’s paid-up capital.
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2020 DIRECTORS’ REPORT
Regarding the global deposit receipts that are traded on the London Stock Exchange, ELSA pays dividends
to the GDRs issuer proportionally to its holdings. Holders of GDRs will then receive dividends from the GDR
issuer, proportionally to their holdings.
According to the policy in force, the dividend distribution that the Board of Directors will consider in
formulating the proposal to ELSA’s OGMS will be between 65% and 100% of its distributable net profit. In
case there are deviations outside this range, they will be substantiated and explained to shareholders in the
periods in which they occur. The company will pay all dividends in RON.
The dividend payout ratio from the distributable profit of the Group subsidiaries shall be consistent with
ELSA’s present dividend policy. The dividends paid by the Group’s subsidiaries to ELSA in year N (related to
year N-1 results) are recorded as finance income in ELSA’s individual financial statements in year N and thus
constitute the source of the net result from which ELSA declares and subsequently pays dividends to its
shareholders in year N+1 (related to the result of year N).
3.6 Dividend distribution
Figure 19: Gross dividends distributed (2014-2019) - RON mn
291.6
251.4
244.7
247.5
246.1
245.4
2014
2015
2016
2017
2018
2019
Source: Electrica
The dividends distributed4 by ELSA fluctuated in
the period 2014 - 2019, between RON 244.7 mn and
RON 291.6 mn, and the dividend payout ratio was
100% each year, except for 2014 (when it reached
a level of 96%) and 2018, when it was 87% (RON
35.57 mn was distributed to “Others reserves”).
The maximum amount was reached in 2015, when
the net profit distributable as dividends included
the amount of RON 5.7 mn representing retained
earnings from 2014.
For 2019, the net distributable profit included,
also, the net gain from the SPO, amounting to
RON 1.2 mn.
Figure 20: Gross dividend per share (RON) and dividend yield (%)
6.9%
6.1%
0.7217
0.8600
5.2%
7.3%
6.8%
6.9%
0.7415 0.7237 0.7300 0.7248
The yield of the dividend paid in 2020, for the 2019
results, recorded a level of 6.9%, the gross dividend
per share paid in 2020 being RON 0.7248. The
dividend yield (%) is calculated as Gross dividend
per share/Closing share price on BSE at ex-date.
Thus, Electrica continues to offer investors a
stable return, which is at a level between 5.2% and
7.3% for each year in the period 2014-2019.
2014
2015
2016
2017
2018
2019
Source: Electrica
3.7 Own shares
In July 2014, ELSA bought back for price stabilization purposes, 5,206,593 ordinary shares and 421,000 Global
Depositary Receipts, equivalent of 1,684,000 shares. The total amount paid for acquiring the shares and
Global Depositary Receipts was RON 75,372 th. There were no changes in the number of the treasury shares
until the date of the report.
4 Dividends refer to each financial year indicated and are paid during the following year.
5 Dividend payout ratio is calculated as Gross Dividends/Net profit distributable to dividend, whereas Net profit
distributable to dividend is Net profit according to individual financial statements of ELSA less the required
distributions to legal reserves.
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2020 DIRECTORS’ REPORT
4.
Corporate
governance
in ELSA
65 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
ELSA confers great importance to the principles of good corporate governance, considering corporate
governance a key element for the sustainable business growth and for the enhancement of long-term value
for shareholders.
ELSA constantly develops and adapts its corporate governance practices and model, both at standalone, as
well as at the Group level, so that it can align with the increasingly rigorous capital market requirements and
with the best practices in corporate governance at European level, and also for creating opportunities and
increase competitiveness.
Corporate governance represents the set of principles standing at the basis of the governance framework
used for the company’s management and control. Transposed in the internal rules and regulations, these
principles determine the efficiency and effectiveness of the control mechanisms aiming to protect and
harmonize the interests of all the stakeholders – shareholders, directors, executive managers, managers
of different structures of the company, employees, and the organizations that represent their interests,
customers and business partners, suppliers, central and local authorities, regulators and capital markets
operators, etc.
ELSA’s Code of Corporate Governance presents primarily the main work methods, attributions, and
responsibilities of the management and supervisory structures of the company, as well as those of the
committees, constituted to support these structures to fulfill their responsibilities.
ELSA undertook, from the moment of the IPO and admission to trading from July 2014, the implementation
of a corporate governance action plan, as part of the framework agreement concluded with the European
Bank for Reconstruction and Development. The standards and measures provisioned in this plan have been
implemented and continuously monitored. For more details about this Action plan, please see chapter 4.10.
4.1 Corporate Governance Code
Starting with 2014, ELSA adheres to and applies wilfully the provisions of the Corporate Governance Code
issued by BSE, as may be amended from time to time. This code can be accessed on the BSE’s website at the
following address: http://www.bvb.ro/Regulations/LegalFramework/BvbRegulations.
In order to ensure high standards of corporate governance, transparency, and business integrity, ELSA also
applies certain provisions of the LSE’s Corporate Governance Code.
Formally, ELSA adopted the Code of Corporate Governance (ELSA CGC) starting with February 2015 and made
it available to all the interested parties on ELSA’s website, in the section Investors > Corporate Governance.
In 2020, chapter six of the CGC ELSA regarding the risk management system was revised; in July 2020 the
amended ELSA CGC was published on the company’s website, and is available in the section Investors >
Corporate Governance.
ELSA’s compliance with BSE’s Corporate Governance Code is being thoroughly assessed, and as updates
and developments appear, ELSA promptly reports them to the capital market. The “Comply or Explain”
Corporate Governance Statement from chapter 4.9 presents annually the company’s compliance level with
the provisions of BSE’s CGC code. This is also available on the company’s website in the section Investors >
Corporate Governance > Comply or Explain.
ELSA CGC embeds the general principles and conduct rules that set forth and regulate the corporate values,
the responsibilities, the obligations and the business conduct of the company.
ELSA CGC contains the terms of reference and the main responsibilities of the company’s corporate bodies,
as they are detailed in ELSA’s Articles of Association, the organization and functioning regulations of the
Board of Directors and those of its committees.
ELSA CGC is also a guide on business conduct and corporate governance matters for the management
and for the employees of ELSA, as well as for other stakeholders, and provides information about the
company’s principles and policies. The corporate policies and documents referred to in ELSA CGC can be
accessed on the company’s website in the section Investors > Corporate Governance > Corporate policies
and other documents. These have been revised during 2020 and published on Electrica’s website in revised
form as follows: Investor Relation Corporate Disclosure policy on 25 August 2020, Policy on Transactions
with Affiliated Parties and Risk Management Policy on 24 July 2020, Policy on Organising and Running the
General Meetings of Shareholders on 25 August 2020.
In compliance with the company’s policies and with the procedures of the Code of Ethics and Professional
Conduct, the Audit and Risk Committee ensures that the company’s activity is carried on with honesty and
integrity, including the implementation of the whistle-blower policy.
ELSA has implemented a procedure for reporting ethical deviations, irregularities, and any other aspects of
non-compliance with the law that otherwise could cause image and/or commercial prejudice or even involve
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2020 DIRECTORS’ REPORT
legal sanctions, thus damaging the prestige and profitability of the company. The whistle-blowing reporting
tool, which functions according to this procedure, as well as the procedure itself, are available on ELSA’s
website, in the Whistleblowing section.
Since ELSA’s shares are allowed for trading both on the regulated market managed by Bucharest Stock
Exchange (BSE), as well as on the market managed by the London Stock Exchange (LSE), ELSA is subject to
the rules imposed by the national and European laws regarding market abuse prevention and the regime
applicable to inside information. Thus, ELSA has implemented a Policy on preventing the misuse of inside
information, unauthorized disclosure of inside information, and market manipulation (Policy regarding
Market Abuse). The purpose of this policy is to prevent violations of the legal provisions regarding the misuse
of inside information, by increasing the awareness of all persons who possess inside information regarding the
obligations, restrictions, and sanctions applicable in case of possession and abusive use of inside information
or in case of market manipulation regarding ELSA’s securities.
All the owners of financial instruments of the same type and class issued by ELSA are entitled to equal
treatment. To ensure efficient, active, and transparent communication with its shareholders, an investor
relations department has been created within ELSA and processes have been set up to ensure efficient and
transparent communication with investors, in compliance with the legal obligations in force, which can
be found in the Investor Relation Corporate Disclosure Policy, applicable at ELSA level, published on the
company’s website starting with 25 august 2020. The company’s rules and procedures that establish the
framework for organizing and conducting general meetings of shareholders are contained in ELSA’s GMS
Policy, amended on 25 August 2020 and available electronically on the company’s website in the sections
Investors > General Meeting of Shareholders and Investors > Corporate Governance > Corporate policies and
other documents.
The section dedicated to investors is available on ELSA’s website by accessing https://www.electrica.ro/en/
investors/. Up-to-date essential information, of interest for the investors, can be found in this section, providing
access to documents governing the company, following the provision of the CGC issued by BSE. This section
also contains the name and contact details of the person who can provide, upon request of interested parties,
relevant information regarding the activity of the company.
4.2 General Meeting of ELSA’s Shareholders
The General Meeting of Shareholders (“GMS”) is the main corporate governance body of ELSA, deciding
on the items as outlined in the Articles of Association. The convening, functioning, voting method, as well
as other provisions regarding the GMS are detailed in ELSA’s Articles of Association, which is available in
electronic format on ELSA’s website, in the section Group > About.
Starting with 1 February 2020, ELSA has in place a policy on organizing and conducting the general meetings
of shareholders of the company, which presents in detail aspects of interest for investors regarding the way of
organizing and carrying out the GMS. It was updated in August 2020. The policy is available on the company’s
website, under the section Investors > Corporate Governance.
ELSA’s ordinary general meeting of the shareholders (OGMS) has the following main duties:
■
to appoint and revoke the members of the Board of Directors and establish the level of their
remuneration and other rights according to the legal provisions;
to establish the revenues and expenses budget, to set out the activity plan of the company;
to establish the consolidated revenues and expenses budget at the Group level;
to discuss, approve or amend the annual financial statements according to the reports submitted by
the Board and the financial auditor;
to approve the profit appropriation according to the law and to establish the dividend;
to decide on the management activity of the directors and the discharge of their liability, in accordance
with the law;
to decide to file legal actions against the directors, managers, as well as the financial auditor for
damages they caused to the company by breaching their obligations towards the company;
to decide on mortgaging, renting, or closing of one or more units of the company;
to appoint and revoke the financial auditor and to set the minimum term of the financial audit
contract;
to carry out any other duties set out by the law.
■
■
■
■
■
■
■
■
■
■
■
ELSA’s extraordinary general meeting of the shareholders (EGMS) shall decide on the following:
■
withdrawal of the preference right of shareholders upon subscription of new shares issued by the
company;
contracting any type of loans, debts or obligations representing a loan, as well as the provision of
actual or personal guarantees relating to these loans, in each case in accordance with the limits of
competence set out in Appendix 1 to Articles of Association;
operations regarding the acquisition, sale, exchange, or creation of guarantee over fixed assets of the
company whose value exceeds, individually or cumulated, during a financial year, 20% of the total
fixed assets, fewer receivables and leases of tangible assets, for periods longer than one year, whose
individual or cumulated value towards the same co-contractor or involved persons or with whom it
acts in concert exceeds 20% of the fixed assets value, fewer receivables at the date of the conclusion of
67 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
the legal action, as well as joint ventures for a period of more than one year, exceeding the same value;
approving investment projects in which the Company will be involved in accordance with the
competence limits provided in Appendix 1 to the Articles of Association, other than the ones provided
in the annual investment plan of the company;
approving the issuance and admission to trading on a regulated market or on an alternative trading
system of shares, depositary certificates, allotment rights, or other similar financial instruments;
approving the competencies delegated to the Board;
changing the legal form;
relocation of the registered office;
changing the main or secondary business objects;
increasing the share capital, as well as decreasing or the replenishment of the share capital by issuing
new shares, according to the law;
the merger and the spin-off;
the dissolution of the company;
carrying out any bond issuance, as per the provisions of art. 10 of the Articles of Association, or
conversion of a category of bonds in a different category or in shares;
approving the conversion of preferential and nominative shares from one category to another,
according to the law;
any other amendment to the Articles of Association;
the establishment or dissolution of secondary offices: branches, agencies, representative offices,
working points or other similar units without legal status, according to the legal provisions;
participation in the establishment of new legal persons;
approval of the eligibility and independence criteria with respect to the Board members;
approval of the corporate governance strategy of the company, including the corporate governance
action plan;
donations within the limits of the competence provided in Appendix 1 to the Articles of Association;
approval of granting of intragroup loans with a value higher than EUR 50 mn per operation;
any other decision that requires the approval of the extraordinary general meeting of the shareholders.
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
The OGMS is convened at least once a year, within a maximum of four months from the end of the financial year.
Except for this situation, OGMS and EGMS are convened as many times as needed, being convened by ELSA’s
Board of Directors whenever necessary for the activity of Electrica Group. The GMS may be convened also, upon
the request of shareholders representing, individually or cumulatively, at least 5% of the share capital. In this
case, the general meeting of the shareholders shall be convened by the Board of Directors within no more than
30 days and shall meet within no more than 60 days from the date of receiving the request.
4.3 Shareholders’ rights
The rights of all ELSA’s shareholders, independent of their holdings, are protected according to the relevant
legislation. Shareholders have, amongst other rights provided under the company’s Articles of Association
and the laws and regulations in force, the right to obtain information about ELSA’s operations and results,
regarding the exercise of voting rights and the voting results in the GMS.
Shareholders have also the right to participate and vote in the GMS, as well as to receive dividends. Except for
the shares owned by ELSA following the stabilization after the IPO in 2014, there are no shares without voting
rights. There are no shares conferring the right to more than one vote.
Moreover, shareholders have the right to challenge the decisions of GMS or to withdraw from ELSA and to
request the Company to acquire their shares, in certain conditions mentioned by the law. Likewise, one or
more shareholders holding, individually or jointly, at least 5% of the share capital, may request the calling of
a GMS. Those shareholders have also the right to add new items to the agenda of a GMS, provided that those
proposals are accompanied by a justification or a draft resolution proposed for approval and copies of the
identification documents of the shareholders who make the proposals.
■
The rights and obligations of the holders of the shares, as extracted from ELSA’s Articles of Association, are:
Each share subscribed and fully paid in by the shareholders, in accordance with the law, grants the
■
shareholders (i) the right to one vote in the general meeting of the shareholders, (ii) the right to elect
the management bodies, (iii) the right to participate to the profit distribution, as well as (iv) other
rights provided by these Articles of Association and by the legal provisions;
The acquisition of the property right over a share by a person, directly or indirectly, has as effect the
obtainment of the capacity of shareholder of the company together with all rights and obligations
deriving from this capacity, in accordance with the law and these Articles of Association;
The rights and obligations deriving from the shares are transferred to the new acquirers together with
the shares;
When a nominative share becomes the property of several persons, the transfer shall be registered
only if they appoint a sole representative for exercising the rights derived from the shares;
The obligations of the company are secured by its social patrimony, and the liability of the shareholders
is limited to the subscribed share capital;
The shareholder that has, in a certain operation, either personally or as representative of another
person, an interest contrary to the interest of the company, must refrain from deliberations regarding
the respective operation.
■
■
■
■
68 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
■
■
■
■
■
■
The exercise of the rights by the holders of the depositary certificates6 is realized as follows:
■
The rights and obligations related to the underlying shares based on which the depositary certificates
were issued are exercised by the holders of the depositary certificates, proportionally to their holdings
of depositary certificates and taking into account the conversion rate between underlying shares and
the depositary certificates;
The issuer of the depositary certificates in the name of whom the underlying shares are registered
is the shareholder, as provided by Regulation no. 4/2013 regarding the underlying shares for the
certificates of deposit and within the meaning and for the application of Regulation no. 5/2018 on
issuers of financial instruments and market operations. In this sense, the issuer of the depositary
certificates is fully responsible for informing the holders of the depositary certificates in a correct,
complete and timely manner, observing the provisions of the issuance documents of the depositary
certificates, about the documents and the informative materials related to a general meeting of
shareholders, as made available by the company to the shareholders;
In order to exercise its rights and obligations related to a general meeting of shareholders, a holder of
depositary certificates will send to the entity where it has opened its account for depositary certificates
the voting instructions for the topics on the agenda of the general meeting of the shareholders, so
that the respective information is sent to the issuer of the depositary certificates;
The issuer of the depositary certificates votes in the general meeting of the shareholders of the
company in accordance with and within the limits of the instructions of the holders of the depositary
certificate which have this quality at the reference date;
The issuer of the depositary certificates may cast different votes for certain underlying shares in the
general meeting of the shareholders than those expressed for other underlying shares;
The issuer of the depositary certificates is fully responsible for taking all necessary measures, so that
the entity which keeps the records of the holders of the depositary certificates, the intermediaries
involved in the custody services for holders of the depositary certificates on the market where the
depositary certificates are traded and/or any other entities involved in recording the holders of the
depositary certificates, to send the voting instructions of the holders of the depositary certificates
related to the topics on the agenda of the general meeting of the shareholders;
Any reference date for the identification of the shareholders who have the right to take part and to
vote in the general meeting of the shareholders of the Company and any registration date for the
identification of the shareholders who have rights deriving from their shares, as well as any other
similar date set by the Company related to any corporate events of the Company will be established
in accordance with the applicable legal provisions and with a prior notice sent with at least 15 free
calendar days (in Romanian, zile calendaristice libere) to the issuer of the depositary certificates, in
the name of which the underlying shares are registered based on which the depositary certificates
mentioned above are issued. The reference date will be prior to at least 15 working days to the deadline
for submitting the power of attorney related to the vote.
Transfer of shares
The shares are indivisible. The company shall recognize a sole owner per each share, subject to the provisions of
article 11 paragraph (4) from Articles of Association.
The partial or total transfer of shares between the shareholders or to third parties shall be carried out according
to the terms and procedure provided by the applicable legal provisions, including the capital markets legislation.
4.4 ELSA’s Board of Directors
ELSA adopted a one-tier (unitary) corporate governance system, following the principles of good corporate
governance, transparency, and accountability towards its shareholders and other categories of stakeholders,
aiming to support and drive the business development and the efficient exchange of relevant corporate
information.
The Board of Directors (BoD) is responsible for taking all the necessary measures to carry out, as well as
supervising the activity of the company. Its structure, organization, duties and responsibilities are established
under the Articles of Association and the Charter (organization and functioning regulations) of the BoD.
According to the provisions of the company’s Articles of Association, starting with 14 December 2015, the BoD
is composed of seven non-executive directors, elected by the Ordinary General Meeting of Shareholders of
the company for a four years mandate, four of whom must meet the criteria of independence provided by
the Articles of Association.
During 2020, the Board of Directors’ structure has undergone several changes, as follows:
■
At the beginning of the year, the BoD consisted of the following members: Mr. Valentin Radu – Chair,
Mrs. Ramona Ungur, Mr. Dragos Andrei, Mr. Radu Florescu, Mr. Bogdan Iliescu, and Mr. Gicu Iorga;
On 29 April 2020, ELSA shareholders elected Mr. Iulian Cristian Bosoancă to occupy the vacant position
created after the resignation of the non-independent administrator Mr. Niculae Havrilet;
■
6 According to ELSA’s Articles of Association reflecting the dispositions of Regulation 4/2013 and of the former
Regulation 6/2009, Law no. 24/2017 on issuers of financial instruments and market operations and of Regulati-
on 5/2018 on issuers of financial instruments and market operations.
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2020 DIRECTORS’ REPORT
■
On 17 July 2020, following the resignation of Mr. Valentin Radu as Chair of the BoD, members of the
Board elected Mr. Iulian Cristian Bosoancă as Chair of the BoD starting with 18 July 2020 and until 31
December 2020.
At the end of 2020, as well as at the date of issuance of this report, the members of the BoD were the following:
No
Name
Term of office (until
27 April 2022)
Mr. Iulian Cristian Bosoancă
~2 years
Mrs. Ramona Ungur
4 years
Status
President,
non-executive
director
non-executive
director,
independent
Mr. Dragos Andrei
~3 years and 5 months
non-executive director
Mr. Radu Mircea Florescu
~3 years and 3 months
Mr. Bogdan George Iliescu
4 years
non-executive
director,
independent
non-executive
director,
independent
Mr. Gicu Iorga
4 years
non-executive director
Mr. Valentin Radu
4 years
non-executive
director,
independent
Starting date of
the first mandate
29 April
2020
27 April
2018
1 December
2018
7 February
2019
14 December
2015
1 May
2017
27 April
2018
Source: Electrica
More details on the Board members’ biographies can be found on the Group’s website in the section Investors
> Corporate Governance > Board of Directors.
Below are presented the most relevant aspects regarding the professional experience of the BoD members.
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2020 DIRECTORS’ REPORT
Iulian Cristian Bosoancă
IS A NON-EXECUTIVE DIRECTOR APPOINTED
ON 29 APRIL 2020, CHAIRMAN OF THE BOARD
OF DIRECTORS SINCE 18 JULY 2020, AND
MEMBER OF THE RISK AND AUDIT COMMITTEE.
(accounting, financial,
He holds an extensive professional experience in the
economic field
tax), having
over 20 years of activity. The basic profession is carried
out as an independent professional since 2008, being
currently shareholder and director of the company Expert
Contabilitate & Servicii S.R.L., and within the Individual
Cabinet of Accounting Expertise, also being a judicial
accounting/tax expert.
Beginning with 2016, Iulian Cristian Bosoancă holds the
position of President of C.E.C.C.A.R. Mehedinti branch,
carrying out lecturer activities in the past within C.E.C.C.A.R.
Throughout his career, Mr. Bosoancă has been a member
of the Board of Directors in various companies such as:
CAZANELE S.A. between August 2005 – September 2006,
Mehedinti County National Health Insurance in the period
May 2012 – October 2014, and also Chairman of the Board
of SECOM S.A. (a local company managing the Water
Supply and Sewage Service in Mehedinti County)
between September 2017 – May 2018.
In parallel, for the past 8 years, he
has also performed the mediation
Individual
Mediator’s Cabinet, member
of The Mediators Council of
activity within his
Romania.
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2020 DIRECTORS’ REPORT
Ramona Ungur
IS A NON-EXECUTIVE INDEPENDENT DIRECTOR
SINCE 27 APRIL 2018 AND CHAIR OF THE AUDIT
AND RISK COMMITTEE.
She holds vast experience in the banking sector, having over
20 years of experience in various reputable banking entities
such as Banca Comerciala Romana S.A., Eximbank Romania
S.A., Credit Europe Bank, National Bank of Romania.
Throughout her career, Ramona Ungur has coordinated
audit, back-office activities, risk and restructuring of non-
performing loans departments.
Ramona Ungur was a member of the Board of Directors of
SNGN Romgaz S.A. between July 2018 - June 2019.
Currently, Ramona Ungur
consultant and a member of the Board of Directors of Oil
Terminal S.A. Constanta (since November 2017).
independent business
is an
2020 DIRECTORS’ REPORT
Dragos Andrei
IS A NON-EXECUTIVE DIRECTOR SINCE
1 DECEMBER 2018 AND CHAIR OF THE
STRATEGY AND CORPORATE GOVERNANCE
COMMITTEE.
Dragos Andrei has an impressive financial experience, of
over 30 years, but also a remarkable career in diplomacy
and central administration.
From April 2015 to January 2020, Mr. Andrei was a
member of the Board of Directors, being also the
Deputy Manager of the Constituency Turkey/Romania/
Azerbaijan/Moldova/Kyrgyzstan within the European
Bank for Reconstruction and Development (EBRD).
From this position, he assured the representation of
Romania in EBRD’s Board of Directors, the approval of
the sectoral and country strategies of EBRD, as well
as the monitoring of all banking and capital market
operations of the financial institution.
During the period 2013 - 2015, he held the position of State
Counsellor within the Chancellery of the Prime Minister,
after having previously held the position of Minister
Counsellor within the Permanent Representation of
Romania to the European Union in Brussels. In addition,
in the period 2014 - 2015, he coordinated the Inter-
ministry Committee for the Coordination of State Aid
Schemes.
Beginning with 2003, Dragos Andrei occupied
important positions in the administration
of the Romanian state: Secretary of
State within the Ministry of Public
the
Minister within the Ministry of Internal
Affairs and Administration, and
Secretary of State within the
Ministry of Public Finance.
Administration, Counsellor of
Graduate
of
the
Bucharest Academy
of Economic Studies,
Dragos Andrei was
top
part of
the
of
management
some
important
f inancial-banking
in
institutions
during
Romania
1990 - 1999.
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2020 DIRECTORS’ REPORT
Bogdan George Iliescu
IS A NON-EXECUTIVE DIRECTOR APPOINTED
ON 29 APRIL 2020, CHAIRMAN OF THE BOARD
OF DIRECTORS SINCE 18 JULY 2020, AND
MEMBER OF THE RISK AND AUDIT COMMITTEE.
Bogdan George Iliescu has a career of over 20 years in
investment banking, as well as a vast experience as an
independent non-executive director in one of the top ten
listed companies in Romania. Between May 2007 and May
2016, he led the Corporate Finance Department of BRD -
Groupe Société Générale in Romania, being involved in
various national and international M&A projects, listings,
and bond issues.
Currently, he is also a member of the SNTGN Transgaz
S.A. Board of Directors, currently exercising his second
consecutive mandate.
In the last five years, Bogdan George Iliescu held the
following management/supervisory positions
in other
companies:
-
General Manager BRD Corporate Finance S.R.L.
(2007 - 2015);
Executive Manager BRD - Groupe Société Générale,
Corporate Finance (2015 - 2016);
Independent non-executive director
SNTGN Transgaz S.A. (2013 - present);
and
Manager of S.C. Bogdan
Corporate Finance S.R.L. (2016 -
present).
Iliescu
-
-
-
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2020 DIRECTORS’ REPORT
Radu Mircea Florescu
INDEPENDENT NON-EXECUTIVE
IS AN
DIRECTOR SINCE 7 FEBRUARY 2019 AND A
MEMBER OF THE STRATEGY AND CORPORATE
GOVERNANCE COMMITTEE.
Radu Mircea Florescu is currently the CEO of Centrade |
Cheil, South East Europe, the regional communications
hub for Cheil Worldwide, coordinating 11 markets in the
Adriatic and Balkan region.
For more than 25 years, Radu Mircea Florescu has worked
with leading Fortune 500 companies and EU-funded
programs operating
throughout emerging markets
including Romania, Moldova, Bulgaria, Serbia, and Croatia.
A graduate of Marketing and Finance from Boston College
with a Bachelor of Science degree, Radu Mircea Florescu
began his career in commodity trading with Merrill Lynch/
EF Hutton at NYMEX (New York Mercantile Exchange),
with a specific focus on WTI (West Texas Crude), fuel oil
and gasoline. In 1989, he co-founded Centrade USA and
became one of the leading pioneers for marketing and
communication services on the Romanian market with
the launch of Saatchi & Saatchi, SSX, Chainsaw Studios,
Cable Direct, and Zenith Media.
Radu Florescu has held other notable positions including
nomination as a member to numerous board positions:
founding member and board member of IAA Romania,
co-founder and member of the Union of Advertising
Agencies of Romania (UAAR), member of the European
Council of the European Association of Communication
Agencies (EACA), representing Romania and Eastern
Europe in Brussels (2012 - 2015, 2017 and presently
Treasurer), member of the Board of Directors
and vice-president of the American Chamber
of Commerce in Romania (2013 - 2015 and
2016 - present), member of TAROM’s Board
of Directors (March 2015 - June 2017),
coordinator and member of the Steering
Committee for Coalition for Romania’s
Development – the “umbrella” group
and leading association representing
the business community and
trade sections from key foreign
embassies in Bucharest.
Radu Mircea Florescu is also
active in the field of social
responsibility, with a long
history of philanthropy
local community
and
service.
Currently,
Radu is a member of
the AIESEC Romania
Board, member of the
JA (Junior Achievement)
Council, member of the
OvidiuRo Board, member
of the Supervisory Board of the
Foundation,
Margareta
president of the MBA ASEBUSS Program
Board - top EMBA business school in Romania,
member of Hospice Casa Sperantei Board
and member and President of United Way
Romania Board for 12 years.
Principesa
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2020 DIRECTORS’ REPORT
Valentin Radu
IS A NON-EXECUTIVE INDEPENDENT DIRECTOR
SINCE 27 APRIL 2018, THE CHAIRMAN OF THE
BOARD OF DIRECTORS UNTIL 17 JULY 2020,
AND A MEMBER OF THE STRATEGY AND
CORPORATE GOVERNANCE COMMITTEE.
in business
Consultant by profession, with studies
management, has over 15 years of experience
in
strategic consultancy and organizational change
management, having
significant achievements
in maximizing the value of companies through
measures and initiatives for business development
and by implementing effective strategies to achieve
financial and operational excellence.
He managed and coordinated a large number of
complex strategy and restructuring/reorganization
projects for both national and international clients.
During 1995 - 2003 he was Senior Project Manager at
Roland Berger Strategy Consultants and was involved
in over 40 consulting projects in various industries.
Between 2003 and 2007 he worked for Tiriac Holdings
as CEO, being in charge of the strategic and operational
management of the holding divisions, as well as being
a member of the Board of Directors and/or Board of
Managers of Tiriac Bank, Allianz Tiriac Asigurari, Tiriac
Leasing, Premium Leasing, Romcar, and Autorom.
Starting with 2008, Mr. Valentin Radu is
the Founder and Managing Partner of
Platinum Capital, a consultancy
company focused on providing
strategy, financial consultancy,
redress
restructuring
services, interim management,
and crisis management.
and
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2020 DIRECTORS’ REPORT
Gicu Iorga
IS A NON-EXECUTIVE DIRECTOR SINCE 1 MAY
2017 AND A MEMBER OF THE NOMINATION
AND REMUNERATION COMMITTEE.
Gicu Iorga has an experience of over 30 years in the field
of economics and public administration. Since April 2017,
Mr. Iorga has held the position of General Secretary at
the Ministry of Energy. Presently, Mr. Iorga is Deputy
General Secretary within the Ministry of Economy,
Entrepreneurship and Tourism.
Most of his professional activity was carried out
in institutions such as the National Customs
Authority, NAFA – General Customs Directorate,
the General Regional Public Finances Directorate
of Bucharest, and the National Sanitary Veterinary
and Food Safety Authority (ANSVSA).
2020 DIRECTORS’ REPORT
Three consultative committees support the activity of the BoD, respectively the Nomination and Remuneration
Committee, the Audit and Risk Committee, and the Strategy and Corporate Governance Committee, each of
them composed of three directors and chaired by one of them. The majority of members of the Nomination
and Remuneration Committee and of the Audit and Risk Committee, as well as their Chairs, are independent
directors.
The consultative committees’ members are elected for a period of one year. Changes in the composition of
the committees during this period may intervene with the vacancy of a Board position. The organization,
duties, and responsibilities of each committee are set under ELSA’s Articles of Association, respectively in the
committee Charters and in the Company’s Corporate Governance Code.
According to the changes registered in the BoD composition, the composition of the committees changed
during 2020, as it follows:
▶
28 January – 12 May 2020
Nomination and Remuneration Committee:
- Mr. Bogdan Iliescu – Chair of the committee;
- Mr. Valentin Radu – Member;
- Mrs. Ramona Ungur – interim member until the nomination of a new member of the BoD.
Audit and Risk Committee:
- Mrs. Ramona Ungur – Chair of the committee;
- Mr. Bogdan Iliescu – Member;
- Mr. Gicu Iorga – Member.
Strategy and Corporate Governance Committee:
- Mr. Dragos Andrei – Chair of the committee;
- Mr. Radu Florescu – Member;
- Mr. Valentin Radu – Member.
▶
13 May – 31 December 2020
Nomination and Remuneration Committee:
- Mr. Bogdan George Iliescu – Chair of the committee;
- Mr. Valentin Radu – Member;
- Mr. Gicu Iorga – Member.
Audit and Risk Committee:
- Mrs. Ramona Ungur - Chair of the committee;
- Mr. Bogdan Iliescu – Member;
- Mr. Cristian Bosoancă – Member.
Strategy and Corporate Governance Committee:
- Mr. Dragos Andrei - Chair of the committee;
- Mr. Radu Florescu – Member;
- Mr. Valentin Radu – Member.
▶
At the issue date of this report, the composition of the BoD Committees is as follows:
Nomination and Remuneration Committee:
- Mr. Bogdan George Iliescu – Chair of the committee;
- Mr. Valentin Radu – Member;
- Mr. Gicu Iorga – Member.
Audit and Risk Committee:
- Mrs. Ramona Ungur - Chair of the committee;
- Mr. Bogdan Iliescu – Member;
- Mr. Cristian Bosoancă – Member.
Strategy and Corporate Governance Committee:
- Mr. Dragos Andrei - Chair of the committee;
- Mr. Radu Florescu – Member;
- Mr. Valentin Radu – Member.
According to the available information, there is no agreement, understanding, or family relation between the
directors of the company and another person who may have contributed to their appointment as directors.
As of 31 December 2020, the BoD members did not hold ELSA shares.
According to the available information, the BoD members were not involved in litigations or administrative
proceedings regarding their activity within the company or regarding their capacity to fulfill their duties
within the company in the past five years.
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4.5 The activity of ELSA’s Board of Directors and its
consultative committees in 2020
In 2020, the Board of Directors met 24 times; of these, 21 meetings were organized with the physical presence
of the members, two were held by conference call, per Art. 18 para. 20 of the company’s Articles of Association
and one was held electronically, following the provisions of Art. 18 para. 23 of the Articles of Association of the
company7.
The Board members’ attendance (in person, by conference call, or by email) in the meetings of the Board of
Directors and its committees in 2020 is presented below:
Name
The Board
of Directors
(no. of meetings
- 24)
The Audit and Risk
Committee
(no. of
meetings - 16)
The Nomination
and Remuneration
Committee
(no. of
meetings - 16)
The Strategy and
Corporate Gover-
nance Committee
(no. of meetings
- 19)
Source: Electrica
*Member starting 29 April 2020
The key decisions taken by the BoD during 2020 refer to:
■
Election of the chairman of the BoD and establishing the composition of the consultative committees
and election of their chairs (after the GMS has established the new structure);
Revision and endorsement of ELSA’s revenue and expenses budget at standalone and consolidated
levels, as well as of the revenue and expenses budgets of company’s subsidiaries for the financial year
of 2020;
Analysis and endorsement of ELSA’s financial statements at an individual and consolidated level, as
well as of the financial statements of the company’s subsidiaries, for the financial year ended at 31
December 2019;
Quarterly analysis of the registered financial results, analysis of the budgetary execution;
Approval, by principle, of the merger between SDTN, SDTS, and SDMN and participation of the
companies in the merger with SDTN as absorbing company. This approval by principle is in line with
Electrica Group strategy and its scope is to increase the efficiency of the distribution area;
Approval, by principle, of the merger between SERV and SEM and participation of the companies in
the merger, with SERV as absorbing company. This approval by principle is in line with the Electrica
Group Strategy for the period 2019-2023 and its scope is to increase the efficiency of the activities of
the two companies;
Approval of the acquisition of 100% of the share capital of Long Bridge Milenium S.R.L., a company
that owns and operates the Stanesti photovoltaic park, in Giurgiu County, with an installed capacity
of 7.5 MW. The photovoltaic park was built between October 2012 - January 2013 and started injecting
energy into the grid in February 2013;
Participation, in the consortium formed together with the Societatea de Administrare a Participatiilor
in Energie S.A. (S.A.P.E. S.A.) and Societatea de Producere a Energiei Electrice in Hidrocentrale
Hidroelectrica S.A., at the competitive procedure organized by CEZ for the sale of its business in
Romania;
Participation in the competitive processes of acquisition of operations in the electricity sector from
renewable sources;
Participation in the EFSA EGMS and expressing a favorable vote regarding the establishment of EFSA
branch in the Republic of Moldova;
Revision of the Governance Code and other corporate documents to which it refers such as: Investor
Relations Corporate Disclosure Policy, Policy on Transactions with Related parties, Risk Management
Policy, Policy on Organizing and Running the General Meetings of Shareholders;
Reviewing the Delegation Policy, the Delegation of the Authority and the Regulation on Organization
and Functioning at the company level;
Amending the Code of ethics and professional conduct;
Revision of the Articles of Association of the subsidiaries.
■
■
■
■
■
■
■
■
■
■
■
■
■
7 In accordance with the provisions of the Art. 18 para 19 of the Constitutive Act, when the Board members were
unable to attend the meetings organized by the three methods specified by the Company’s Articles of Associ-
ation (physical presence, by telephone conference call, videoconference or any other form of communication),
they were represented based on the mandates given to another Board member.
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Regarding the structuring and development of the Group’s business portfolio, the BoD analyzed the
existing opportunities and decided the following:
■
Participation in the EGMS of the distribution subsidiaries and energy services subsidiaries and
expressing a favorable vote regarding the merger processes;
Continuous analysis of investment opportunities, taking into account the energy market development,
the impact on the activity of the group’s subsidiaries and competitive advantages of the competition
and participation in various competitive processes for this purpose;
Approval of the consolidated annual investment plan at group level for 2020;
Reviewing the communication strategy following the Group Strategy;
Implementation of the transformation process of the supply segment;
Increasing the share capital of distribution subsidiaries by contribution in kind.
■
■
■
■
■
■
Regarding the human resources and the managerial competencies, the BoD took the following measures:
Continuing the collaboration with Mrs. Livioara Șujdea and granting a new mandate as CDO starting
■
with 1 February 2021, for 4 years;
Revision of the Policy regarding the recruitment and nomination of candidates for positions of
executive management within the Group companies;
Adoption of the Succession Policy regarding the group companies;
Evaluating the performances registered by ELSA executive directors in 2019 and establishing new
performance indicators for 2020;
Initiating the elaboration and implementation of a catalog of performance indicators at the Group level;
Revising the Remuneration Policy for key positions within the Group;
Implementing the Electrica Group Human Resources strategy, by cascading the objectives in strategic
initiatives and materializing them in strategic projects.
■
■
■
■
■
The main aspects of audit and financials areas referred to:
■
■
Monitoring the internal audit plan implementation for 2020 and approving the audit plan for 2021;
Approval of the Risk Management Policy.
Evaluation of the Board of Directors
The Board evaluates annually its activity and the activity of the consultative Committees and establishes
the necessary elements to be improved to increase efficiency. The purpose of the evaluation is to provide
the members of the Board with an overview of the activity performed, the strengths/weaknesses, the
performance, and the potential of collective and individual development, in order to efficiently and effectively
fulfill the responsibilities of the Board.
According to the established mechanism, the evaluation of its activity can be carried out either with the
support of a consultant or by self-evaluation.
The Board of Directors decided, following good corporate governance practice, to conduct the evaluation
ofevaluate its activity and functioning during 2020 with the support of an external consultant, with
international experience, specialized in assessing management teams and board of directors of listed
companies. In addition, the Board has evaluated its achievements regarding the main objectives defined
by the General Meeting of Shareholders for the Board: Group Strategy, Corporate Governance, Placing of
financial investments, and Investment achievement in the distribution companies.
Previously, the 2019 Board’s activity evaluation was conducted using an internal questionnaire defined and
thoroughly discussed and agreed upon by the Board members.
The consultant’s evaluation was focused on the following objectives:
1.
Assess the Board structure and its composition, diversity, competencies of its members, operations,
and structure with regards to its effectiveness for the company’s strategy and its business environment;
Assess the dynamics and functioning of the Board;
Asses the Board role in strengthening the confidence in the Company’s approach to corporate
governance;
Assess the management of tools/procedures used to prevent fraud, the quality of the audit process,
and the strength of the risk management program;
Interaction of the Board with interested parties;
Identify ways in which the Board can better contribute to the company’s performance.
Among the positive aspects of the Board functioning, the following were highlighted:
■
Progress in establishing a corporate governance framework that is well structured, communicated,
and understood at the Board level and cascaded in the subsidiaries;
Most processes and procedures are considered adequate, well documented, and following applicable
legislation;
Significant improvement of the process of identifying and mitigating risks as well as of the control
mechanism;
Engagement towards the significant shareholder and how communication with other shareholder
takes place, all shareholders being treated equal and transparent;
A clear perception of the Board with regards to the corporative culture;
The existence of a clear vision over the company’s strategy;
Preparation of the Board meeting, frequency, and allocated time for debate.
2.
3.
4.
5.
6.
■
■
■
■
■
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Improvement areas were suggested as follows:
■
Better communication of the company’s vision and strategy, along with the changes brought to
the organizational culture in order to ensure the necessary climate to reach medium and long-term
strategic objectives;
Paying more attention to succession planning at the level of Senior Management, so that the existing
system meets all expectations and provisions that succession planning should take into account
not only the existence of a person that possesses the skills of the person currently in office, but also
addresses future challenges;
Improvement of the remuneration system to assure high qualified personnel and appropriate
performance motivation;
Communication with the general public.
Regarding the main elements of Electrica’s Strategy for the period 2019-2023 presented during the General
Meeting of Shareholders, major steps were taken in 2020. A remarkable moment is the successful completion
of the merger processes of the 3 distribution subsidiaries as well as the 2 services subsidiaries. These will
contribute to increasing the group’s performance and the quality of services offered to customers. Also,
opportunities for inorganic growth were exploited by expanding the activity in the electricity production
sector, additional efforts should be taken in this direction in the upcoming future.
Also, progress was made in optimizing the Group’s corporate governance framework through best practices
in the field of corporate governance, investor relations, and consolidating the sustainability profile.
Continued investments remained a priority for Electrica in 2020, thus, the investments made by the
distribution subsidiaries being in line with the values approved by the regulatory authority.
In the area of risk management, a new Risk Management Policy was adopted, applicable at the Group level,
a fact that led to the amendment of ELSA Governance Code by aligning it with its provisions.
Last but not least, the Board continues to allocate particular importance to occupational health and safety
issues within the Group, aiming to devote time and effort in 2021 to support management in improving the
company’s occupational safety culture.
■■
The Nomination and Remuneration Committee
The Nomination and Remuneration Committee consists of three non-executive BoD members, two of its
members are independent.
The role of the Committee is to propose candidates for the BoD, to develop and propose to the Board the
selection procedure of candidates for the executive managers’ positions and other management positions,
to recommend the Board candidates for these positions, to formulate proposals on the managers’ and other
management positions’ remuneration.
The Committee has the following responsibilities concerning nomination matters:
■
recommends to the Board a nomination policy, including a target Board profile, the process, and
principles to be considered by the shareholders when proposing candidates for company’s directors,
and advises the Board regarding the nomination of interim directors in accordance with the policy;
reviews the implementation of the nomination policy, submits a report to the Board on its
implementation, and presents a summary of this report in the Directors’ Report;
advises the Board on the appointment and dismissal of the Chief Executive Officer, makes
recommendations on the appointment and dismissal of the company’s executive management
team after consulting with the Chief Executive Officer, and makes proposals on the appointment and
dismissal of subsidiaries’ board of directors members following the Group Governance Policy;
recommends to the Board policies in the human resources field, including those covering recruitment
and dismissal, talent management and development and succession planning across the company
and its subsidiaries (the Group);
recommends to the Board a succession policy, both for the members of the board and for the executive
team;
oversees the process for the annual evaluation of the effectiveness of the Board and its consultative
committees;
periodically assesses the size, composition, and Committee’s structure and makes recommendations
to the Board oncerning any changes;
advises the Board on continuous skill development programmes for Board members and executive
management;
oversees the nomination process of the appointment of subsidiaries’ CEOs and executive managers
according to the nomination and remuneration policy.
The Committee has the following duties regarding remuneration:
■
advises the Board in relation to the remuneration, incentive, and compensation policies of the
company;
advises the Board regarding the periodic review of the remuneration policy for Board members and
executive managers;
advises the Board in relation to the remuneration of the CEO and other executive managers, including
■
■
■
■
■
■
■
■
■
■
■
■
■
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the main remuneration components, annual and long term performance objectives, and regarding
evaluation methodology;
makes recommendations to the Board on the remuneration of subsidiaries’ board members and the
general limits of remuneration for subsidiaries’ executive management;
monitors compensation trends within areas relevant to the Group;
oversees the remuneration process of the subsidiaries’ chief executive officer and executive managers
according to the nomination and remuneration policy at the Group level;
verifies at least once a year the number of mandates held in other companies by the members of the
Board and by the executive managers, in order to evaluate their independence;
Oversees the annual evaluation process of the Board of Directors’ activity.
■
■
■
■
■
The Nomination and Remuneration Committee met 16 times during 2020, among the main aspects on
which the activity of the Committee focused, were the following:
Analysis of ELSA executive managers’ KPIs achievement for 2019 and establishing a new improved
KPIs system, along with the new performance evaluation methodology for 2020;
Supervising the evaluation process of the Board of Directors’ activity;
Endorsing the proposals regarding the nomination of the subsidiaries’ Board members;
Reviewing the Policy on the recruitment and nomination of candidates for executive management
within the Group companies;
Endorsement of the Succession Policy for the Group companies;
Proposals regarding the nomination of the Chairman of the BoD and the consultative committee’s
componence.
■■
The Audit and Risk Committee
The Committee is composed of three non-executive BoD members, two of them being independent. The
Committee’s composition provided the necessary expertise in finance and risk management, according to
legal requirements.
The main role of the Committee is to support the Board in fulfilling its duties of verifying the efficiency of the
company’s financial reporting, internal control, and risk management. While fulfilling this role, the Committee
advises the Board regarding the assessment of the annual report and annual financial statements, whether
the documents are accurate, balanced, and comprehensive and provide all the necessary information for the
shareholders’ evaluation of the financial performance.
The Committee has the following duties in terms of financial reporting:
■
examines and monitors the financial reporting process, the integrity of annual and interim financial
statements, at standalone and consolidated levels, or of disclosures made by ELSA and its subsidiaries;
reviews press releases announcing financial or operational results related to or derived from such
financial statements, as well as any financial information or earning guidance, to be provided to
financial analysts or rating agencies, by analyzing the fairness and adequacy of the content and
presentation of such statements or information;
regularly reviews the adequacy of the Group’s accounting policies;
reviews and recommends to the Board’s approval the company’s financial forecast policy;
advises the Board on whether the content of the annual report, taken as a whole, represents a fair,
balanced, and understandable account for shareholders and provides them with the information
necessary to assess the Company’s performance.
Regarding the audit and internal control matters, the Committee has the following responsibilities:
■
endorses, for the Board’s approval, the annual plan at Group level, based on the annual risk assessment,
as well as any significant changes to the plan and receives periodic reports on activities, important
findings, and follow-up of internal audit reports;
periodically reviews the charter and internal audit manual and submits them to the Board, for approval;
advises the Board on the appointment, dismissal, and remuneration of the Head of Internal Audit
Department;
monitors the adequacy, effectiveness, and independence of the internal audit function;
makes recommendations to the Board on the appointment, rotation, or dismissal of the company’s
external auditor;
reviews the plan, activity, and findings of the external auditor;
assesses the independence and objectivity of the external auditor and monitors the compliance
with relevant ethical and professional guidance, including the requirements on the rotation of audit
partners;
monitors the application of the legal standards and generally accepted internal audit standards;
endorses the internal audit reports, the recommendations made by the internal auditors, and the
plans of measures for the implementation of the recommendations;
performs any other activities established by the Board and the law;
regularly reviews the adequacy of the key internal control policies, including fraud detection and bribe
prevention policies;
reviews the operations between affiliated parties following a policy drafted by the Committee and
approved by the Board;
analyzes the annual report prepared by the Internal Audit Department and/or Risk Management,
which evaluates the effectiveness of the internal control system within the Group.
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
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The Committee has the following responsibilities concerning risk management matters:
■
reviews regularly the main risks facing the company and the Group, recommending to the Board
adequate policies for risks identification, mapping, management, and mitigation;
monitors the main categories of risks that are recorded annually in the management report in order to
reduce them and to evaluate the efficiency of the risk management system within the Group;
makes recommendations to the Board on financing methods, including proposals for contracting any
type of loans and securities associated with these loans;
makes recommendations to the Board regarding major economic transactions within the authority
of the General Meeting of Shareholders and assesses the associated risks regarding such transactions.
■
■
■
The Audit and Risk Committee met 16 times during 2020, among the main aspects on which the activity of
the Committee focused, being the following:
Analysis of the financial statements of ELSA at standalone and consolidated level for the financial year
of 2019, as well as the financial statements of the company’s subsidiaries for the financial year of 2019,
together with the financial auditor report and recommendations, issued during the auditing process;
ELSA’s budget execution, the consolidated budget execution, and the quarterly financial results;
Revision of the internal audit plan for 2020 and analysis of its achievement, as well as the reports
submitted by the Internal Audit Department, proposing recommendations;
Monitoring the implementation of the recommendations made by the internal audit department;
Support in the realization of the consolidated Sustainability Report at Electrica Group level for 2019;
Revising the Policy on Transactions with Affiliated parties;
Financing the investment program of the distribution subsidiaries for 2021 - 2023;
Updating the Code of Ethics and Professional Conduct.
The internal audit activity is carried out by a structurally separate organizational unit (the internal audit
department), within the Company. In order to ensure the fulfillment of its main functions, it reports
functionally to the BoD through the Audit and Risk Committee and administratively to the CEO.
■■
The Strategy and Corporate Governance Committee
The Committee is composed of three non-executive BoD members, holding the necessary expertise in
performing the committee’s specific duties, two of them being independent.
The Committee has the following duties in terms of strategy:
■
makes proposals to the Board on the development of the medium-term strategic plan, makes
recommendations on the strategic direction, priorities, and long term objectives of ELSA and its
subsidiaries;
reviews management proposals on the Group’s consolidated annual budget, subsidiaries’ annual
budgets, investment plans of the Group companies and makes relevant recommendations to the
Board;
advises the Board in monitoring and assessing the Group’s performance in relation to the approved
strategic plan, budgets, investment plans, industry trends, local and regional market trends, company’s
competitiveness and technological advances;
periodically reviews the overall strategic planning process, including the process of developing the
medium-term strategic plan, makes recommendations on the issues that can be improved in strategic
planning, and provides feedback to the executive management;
makes recommendations to the Board regarding the proposed acquisitions, divestments, investment
projects, joint-ventures, and collaboration projects, especially assessing their alignment with the
Group’s strategy;
performs any other activities or assume responsibilities regarding strategic matters which may be
delegated periodically to the Committee by the Board.
Regarding the tasks of the Committee on restructuring, they mainly relate to the following:
■
reviews and makes recommendations to the Board concerning the development and implementation
of the Group’s overall restructuring plans and objectives, including any decision regarding the conduct
or rationalization of core businesses;
regularly reviews the organizational structure and chart of the company, and makes recommendations
to the Board in this regard;
performs any other activities or responsibilities on restructuring matters as may be periodically
delegated to the Committee by the Board.
■
■
Also, the Committee has duties in terms of corporate governance:
■
oversees and monitors the company’s compliance with legal and contractual obligations on corporate
governance, as well as other applicable corporate governance principles and makes recommendations
to the Board;
regularly reviews the company’s Corporate Governance Code, the Charter of the Board of Directors,
and the company’s Articles of Association and makes recommendations to the Board on relevant
amendments to the company’s corporate governance policy and documentation;
submits the Group Governance Policy to the Board for approval and regularly reviews it thereafter;
reviews the company’s Delegation of Authorities policy and the company’s Delegation of Authority
standard to ensure that the delegation of authorities to management allows for effective and efficient
decision-making process, and makes recommendations to the Board in this respect;
■
■
■
■
■
■
■
■
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■
■
■
reviews the company’s policy for corporate social responsibility and stakeholder engagement, and
makes recommendations to the Board in this regard;
makes recommendations to the Board on improving the quality of information flows to the Board,
including the improvement of reports sent, key performance indicators presented to them, and
guidelines for preparing Board documents and presentations;
drafts reports or materials related to corporate governance, upon the Board request.
During the year 2020, the Committee met 19 times, among the main aspects on which the activity of the
Committee focused, being the following:
Initiating and monitoring the process of merger by absorption of the three distribution subsidiaries;
Initiating and monitoring the process of merger by absorption of the two energy services subsidiaries;
Analysis of the opportunities and the efficiency of investments in different renewable production
capacities and participation in various competitive processes in this regard;
Finalizing the sales transformation program;
In terms of corporate governance, the Corporate Governance Code and other corporate policies and
documents referring to the Code were revised, such as the Policy on Transactions with Related Parties,
Risk Management Policy, Investor Relation Corporate Disclosure Policy, or Policy on Organizing and
Running the General Meetings of Shareholders;
Revising the Communication Strategy in accordance with the new Group Strategy;
Actions to achieve the objectives regarding the internationalization of the Group’s activities by
establishing an EFSA branch in the Republic of Moldova.
4.6 ELSA’s Executive management
Per ELSA’s Articles of Association, the Board of Directors (BoD) appoints and revokes the CEO, as well as the
other executives with mandates, and also approves their empowerments.
The attributions of the Company’s executive managers (including those of the General Manager) are
established by the mandate agreements based on which the directors carry out their activity within ELSA,
the internal organization and functioning regulations of ELSA, and the applicable legal provisions.
On 15 December 2020, the BoD approved the continuation of the collaboration with Mrs. Livioara Șujdea and
her appointment as Distribution Director (CDO) starting with 1 February 2021, for a 4 years term.
The BoD decided, in March 2020, to change the name of the IT & T Direction to IT & C, and in May 2020, to
change the name of the Strategy, Mergers and Acquisitions Direction to Corporate Development Direction.
Following these changes, at the end of 2020, as well as the date of issuing this report, the ELSA’s executive
managers, each appointed four years, were:
Name
Function
Georgeta Corina Popescu
Chief Executive Officer
Mihai Darie
Chief Financial Officer
Livioara Șujdea
Chief Distribution Officer
The Executive
Manager’s mandate
1 February 2019
– 31 January 2023
3 January 2018
– 3 January 2022
1 February 2017 – 31 January
2021, the mandate being
renewed for a continuous
period of 4 years,
respectively 1 February 2021
- 31 January 2025
Anamaria Dana
Acristini-Georgescu
Chief Corporate Development Officer
1 May 2017 – 1 May 2021
Catalina Popa
Chief Market Officer
Bibiana Constantin
Chief Human Resources Officer
12 December 2017
– 11 December 2021
1 February 2019
– 31 January 2023
Mircea Toma Modran
Chief IT & C Officer
1 June 2019 - 1 June 2023
Source: Electrica
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More details on the executive managers’ biographies can be found on ELSA’s website in the section Investors
> Corporate Governance > Executive Management.
We present below the most relevant aspects regarding the professional experience of ELSA’s executive
managers:
According to the information held by ELSA, there is no contract, understanding, or family relationship
between the executive managers of the Company and another person who may have contributed to their
appointment as executive managers.
According to available information, ELSA’s executive managers mentioned in this chapter have not been
involved, in the last five years, in any litigations or administrative proceedings related to their activity within
the company and neither to their capacity to fulfill their work-related duties in the Group.
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Georgeta Corina Popescu
CHIEF EXECUTIVE OFFICER
Mrs. Georgeta Corina Popescu is a top executive with
impressive experience in the field of electricity and natural
gas. Appointed CEO of SDMN, part of Electrica Group, on 1
June 2018, Corina Popescu took over from 1 November
2018 the position of interim CEO of ELSA. Starting
with 1 February 2019, Corina Popescu holds the CEO
position of ELSA, for a 4 year period.
Graduate of the Faculty of Power Engineering
at the University Politehnica of Bucharest
specialized in Power Engineering Systems,
Georgeta Corina Popescu started her
in Sucursala de
professional career
Distributie si Furnizare a Energiei Electrice
Bucuresti.
Since 2007, Georgeta Corina Popescu
has worked in the private sector, holding
important positions in E.ON Romania Group
and OMV Group.
Between December 2015 and February 2017,
Corina Popescu held the position of State
Secretary within the Ministry of Energy,
a period during which she was also a
member of the BoD of ELSA. Starting
with 1 May 2017, she was appointed
in Transelectrica’s Directorate, and
during the June 2017 – April 2018
period she was Transelectrica’s
Directorate President.
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Mihai Darie
CHIEF FINANCIAL OFFICER
Mr. Mihai Darie has 21 years of professional experience
in finance, acquired in various fields such as energy,
infrastructure, financial advisory, banking, investment
funds in executive as well as management positions,
gained in companies such as Nuclearelectrica SA,
Fondul Proprietatea SA, Raiffeisen Bank, and BDO
Romania.
Mihai Darie is a graduate of the Finance and Banking
Faculty within the Academy of Economic Studies
Bucharest, he is an expert accountant member of
CECCAR, he is a graduate of Asebuss Bucharest EMBA
program and he is an ACCA UK member as well as a
CFA (Chartered Financial Analyst) certification holder.
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Livioara Șujdea
CHIEF DISTRIBUTION OFFICER
With over 21 years of experience in the energy field,
Livioara Șujdea started her activity as a Design
Engineer at ELSA, subsequently occupying
various top management positions, including
Deputy CEO and member in the BoD of E.ON
Moldova Distributie, E.ON Gas Distributie,
E.ON Distributie Romania, Operation and
Maintenance Director at Delgaz Grid and
Deputy CEO and member in the BoD of
E.ON Energie.
from
Livioara Șujdea graduated
the
Technical University “Gheorghe Asachi” of
Iasi – Faculty of Electrical Engineering and
Energy, where she also obtained a master’s
degree
in Business Management and
Commercial Engineering, and she also has an
Executive MBA with specialization in General
Management at the University of Sheffield UK
and a Strategic Management and Leadership
Degree
the Chartered Management
Institute London, UK.
from
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Anamaria Acristini-
Georgescu
CHIEF CORPORATE DEVELOPMENT OFFICER
Anamaria Acristini has an experience of over 13 years in
the energy field, in particular from strategic and financial
perspectives; the last position held was as Strategy Director
within E.ON Romania. Previously, she held important
positions in leading companies, such as Ernst&Young,
Mazars, and KPMG.
Anamaria Acristini
is a graduate of the Bucharest
Academy of Economic Studies, has a master’s degree
in International Project Management, and holds an
Executive MBA from Sheffield University (U.K.). Moreover,
she is also an affiliated member of the ACCA UK.
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Catalina Popa
CHIEF MARKET OFFICER
With an experience of more than 29 years in the field of
electrical power and natural gases, Catalina Popa started
her activity as an engineer within Electrica. Subsequently,
she occupied several top management positions within
E.ON, among which Sales Management Executive
Director, Director of Operations, Financial Director,
and Director of Energy Network Performance
Management.
is a graduate of the Power
Catalina Popa
Engineering Faculty within
the University
Politehnica of Bucharest, holding a diploma as
well in Management & Business Administration
from Codecs-Open University, Great Britain.
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Bibiana Constantin
CHIEF HUMAN RESOURCES OFFICER
degree
Graduate of the Faculty of Psychology and Sociology
– West University of Timisoara and with a Master’s
in Human Resources Management and
Communication, as well as of a Master’s degree in
Psychology, Bibiana Constantin has experience
in consultancy and HR management for various
industries, including the energy field.
With more than 10 years of experience in
managing company restructuring and
executive search projects, at a national
and international level, but also with
a solid knowledge of the human
resources market, Bibiana Constantin
has provided,
years,
in
specialized consultancy and occupied
positions in the top management of
large companies in the industry.
recent
2020 DIRECTORS’ REPORT
Mircea Toma Modran
CHIEF IT & C OFFICER
Starting with 1 June 2019, Mr. Mircea-Toma Modran has
taken over the position of Chief Information Officer within
Electrica SA, for 4 years.
With more than 30 years of professional experience, he
occupied for 20 years top management positions for
Romanian and foreign, private, and state-owned, listed
companies, operating in energy and utilities, oil and
gas, chemical, aeronautics, and information technology,
fulfilling a wide range of responsibilities, from the classic
IT and industrial automation to direct coordination of
operational divisions with strategic impact on financial
results.
Mr. Mircea-Toma Modran graduated from the Faculty of
Electrical Engineering, Department of Automation and
Computers (currently the Faculty of Automation) of the
University of Craiova, with an Electrical Engineer degree,
and the York University Schulich School of Business Toronto,
with a master’s degree in Business Administration. He also
attended postgraduate programs at Humber College and
the Niagara Institute in Canada and the Ashridge-Hult and
Edinburgh Universities in the UK.
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4.7 Remuneration of the Directors and the Executive
Managers with mandate agreements
ELSA’s Remuneration Policy for Directors and Executive Managers was prepared based on the best practice
used at the international and national level by companies similar to ELSA, as identified after the company was
listed, and updated taking into consideration the impact of the fiscal changes of the Romanian legislation.
The Policy was approved by the General Shareholders Meeting – regarding the Directors’ remuneration and
the remuneration limits for the executive managers, and by the Board of Directors – regarding the setting of
the remuneration and benefits for each executive position, according to the Nomination and Remuneration
Committee’s recommendation.
According to ELSA’s Corporate Governance Code, the Nomination and Remuneration Committee (NRC)
established within the BoD has the following responsibilities related to remuneration:
■
makes recommendations to the Board on the remuneration, incentive, and severance compensation
policies of the Company;
makes recommendations to the Board on the remuneration policy for Board members;
makes recommendations to the Board on the remuneration of the CEO and other executive managers,
including the main remuneration components, performance objectives, and evaluation methodology;
makes recommendations to the Board on the remuneration of subsidiaries’ board members and the
general limits of remuneration for subsidiaries management;
monitors compensation trends within industries relevant to the Group;
oversees the remuneration process of the general managers and executive managers in the
subsidiaries according to the Nomination and Remuneration Policy.
■
■
■
■
■
The Remuneration Policy for Directors and Executive Managers is subject to annual review by the NRC
and describes the main pillars of remuneration, as well as the terms, conditions, and non-financial benefits
approved by the corporate bodies of ELSA.
The Remuneration Policy has the following objectives:
■
■
■
to establish clear guidelines and thresholds on remuneration matters;
to establish the remuneration structure;
to set the correlation matrix between remuneration levels within the company.
The principles governing this policy are:
1.
2.
The remuneration structure is defined separately for the Board of Directors and the executive
management.
The remuneration structure and thresholds were set considering national and international best
practices and benchmarks, respectively:
2.1
2.2
2.3
the remuneration system includes a fixed component and a variable component based on
performance, in line with market practice; additionally, it also includes non-financial benefits;
the benchmarks were established based on data on remuneration within several international
companies of comparable size in the energy sector, in Romania, but, also, compared to other
industries (e.g., oil & gas industry) and to other countries in European Economic Area (EEA);
most companies’ practice of to choosechoosing the range between the median and upper
quartile in order to be attractive on the competitive market, that is, however, not positioned to
the upper limit.
3.
The variable component is comprised of:
3.1
3.2
3.3
a short term variable remuneration, granted for the collective and individual contribution of
the executive managers to the company’s objectives, determined yearly based on performance
criteria;
a long term variable remuneration – a package of options of virtual shares – considered as
remuneration tool for executive managers with the aim of promoting added value and
contribution over medium to long term;
for the Board members – both the international practices and the fact that ELSA is a listed
company on both Bucharest Stock Exchange and London Stock Exchange, provide for an
attendance fee for Board members participating to the BoD and its committees’ meetings;
4.
5.
The importance of the company on the energy market – ELSA is a strategic company in the energy
sector, with the potential of becoming a regional player;
The need to attract and retain in the BoD’s structure specialists and senior managers with broad
experience in a wide range of activities at a national and international level, and not only in the energy
sector.
A.
Board of Directors
The BoD members’ remuneration has as main pillars a monthly fixed remuneration and an attendance fee for
participating at meetings, and it is completed by facilities (benefits) necessary for the mandate fulfillment,
as follows:
■
the fixed monthly remuneration is differentiated between the Chair and the Board members,
respectively EUR 3,630 gross for the BoD members and EUR 4,985 gross for the Chair;
the attendance fee to the Board and its committees’ meetings is differentiated as well between
■
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the members and the committees’ Chairs, respectively EUR 1,200 gross for the Board/committees’
members and EUR 1,445 gross for the committees’ chairs. The annual number of meetings to be
remunerated is limited to 12 for BoD and to 6 of for each committee. However, if the BoD composition
changes, either as an effect of registering a vacancy of one or more Director positions, or as an effect
of applying the cumulative voting method, the Director appointed as such will be entitled to receive
the remuneration fee for the Board/committees meetings attended;
reimbursement of reasonable expenses related to the execution of the mandate;
a “directors & officers’ liability” insurance policy, supported by the company, according to market
terms;
same medical services and/or medical insurance package contracted by the Company for the
employees (if any);
other legal expenses incurred by the Director in defending against a third party claim made against
the Director in relation to the performance of its duties according to his mandate agreement, the
Articles of Association, the Board Charter, or the Legal Framework shall be borne by the Company,
to the extent that they are not already covered by the directors & officers liability insurance policy in
force at the time;
compensation in case of unjustified revocation.
■
■
■
■
B.
The Executive Management
B.1. General remuneration limits for ELSA’s CEO
The remuneration of ELSA CEO is comprised of: (a) a fixed monthly remuneration, (b) a variable yearly
remuneration depending on the achievement of the performance indicators, and (c) a package of options of
virtual shares (hereinafter referred to as “OAVT”), as follows:
a.
The fixed monthly remuneration is between EUR 9,000 and EUR 13,050 gross. This remuneration is
established by the BoD within limits approved by the GMS;
The variable yearly compensation is between 30% and 50% of the fixed yearly remuneration. The
percentage is established by the BoD, within the limits approved by the GMS. The payment of the
variable yearly compensation (partially or in full) depends on the achievement of the KPIs set for the
respective year;
The value of the OAVT package will be set between 150% and 200% of the fixed yearly remuneration
and cashed only at the end of the term, according to the mandate agreement.
b.
c.
B.2. General remuneration limits for ELSA’s Executive Managers (mandated by the BoD)
The remuneration of the executive managers consists of: (a) a fixed monthly remuneration, (b) a variable
yearly compensation depending on the achievement of KPIs, and (c) a package of options of virtual shares
(hereinafter referred to as “OAVT”), as follows:
a.
The fixed monthly remuneration approved by the GMS will be between EUR 6,980 and EUR 11,700
gross. The remuneration is established by the BoD within the limits;
The variable yearly compensation of an executive manager is between 15% and 40% of the fixed
yearly remuneration - limits approved by the GMS. The percentage is established by the BoD within
these limits. The payment of the variable yearly compensation (partially or in full) depends on the
achievement of the KPIs set for the respective year;
Each executive manager (unless mandated on an interim or on a short-term basis) will receive at the
beginning of the term an OAVT package. The value of the OAVT package will be between 60% and
160% of the fixed yearly remuneration, within the limits approved by the GMS. The executive manager
is entitled to cash in the value of the OAVT package only at the end of the term, according to the
mandate agreement.
b.
c.
At the beginning of the Executive Manager’s mandate (including the CEO), the BoD will set up the long-
term KPIs (for the duration of the mandate). At the end of the term, the Board will review the achievement
of the long-term KPIs and will adjust the final value of the OAVT package paid out to the executive manager,
including the CEO.
In order to perform more efficiently their duties and obligations, in a proper and safe mannerproperly and
safely, the mandate agreements of all executive managers approved by the BoD stipulate the specific
equipment that the company makes available (e.g.: company car, mobile phone, laptop), the rules to use it, as
well as other kinds of related benefits (e.g.: reimbursement of reasonable expenses related to the execution
of the mandate, a “directors & officers’ liability” insurance policy, mobility package).
The Executive Managers cannot receive more than one remuneration from the Group companies and for
those who occupy/exercise other roles/positions within the Group companies, the remuneration can be
increased temporarily, only during the exercise of those roles/functions. The total of the monthly fixed and
additional remuneration cannot exceed the limit of the monthly fixed remuneration established by the GMS
for the position of executive managers.
B.3. General remuneration limits for the Executive Managers within the Company’s subsidiaries (mandated
by the BoD)
The remuneration of the executive managers is comprised of: (a) a fixed monthly remuneration, (b) a variable
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yearly compensation depending on the achievement of KPIs and (c) a long-term gross variable compensation,
granted at the conclusion of a full term of four years, as follows:
a.
The fixed monthly remuneration for the SDTS, SDTN, SDMN, and EFSA’s CEO is between EUR 6,593 and
EUR 10,257 gross; the remuneration for the SDTS, SDTN, SDMN, and EFSA’s Deputy CEO is between
EUR 5,300 and EUR 9,231 gross.
The fixed monthly remuneration for SERV and SEM’s CEO is between EUR 5,558 and EUR 8,718 gross.
The remuneration for the SERV’s Deputy CEO is between EUR 5,300 and EUR 7,846 gross and the
remuneration for the SEM’s Deputy CEO is between EUR 4,505 EUR and EUR 7,846 gross.
The final remuneration will be established by the BoD within the limits presented above, approved by
the GMS of each subsidiary.
The fixed monthly remuneration for the SDTS, SDTN, SDMN, EFSA si SERV’s Executive Manager is
between EUR 5,128 EUR and EUR 6,837 gross.
The fixed monthly remuneration for the SEM’s executive manager is between EUR 4,359 and EUR 5,811
gross.
The final remuneration will be established by the BoD within the limits presented above, approved by
the GMS of each subsidiary.
The variable yearly remuneration of an executive manager is between 15% and 40% of the fixed yearly
remuneration. The final percentage is established by BoD within the limits presented above, approved
by the GMS of each subsidiary. Granting the variable yearly compensation (partially or in full) depends
on the achievement of the KPIs set for the respective year.
The long-term gross variable remuneration, granted at the conclusion of a full term of four years
is between 60% and 120% of the fixed yearly remuneration (limits approved by the GMS of each
subsidiary).
b.
c.
d.
At the beginning of the executive managers’ mandate (including the CEO), the BoD will set up the long-
term KPIs (for the duration of the mandate). At the end of the term, the Board will review the long-term KPIs’
achievement and will grant accordingly the final value of the the long-term gross variable compensation.
In order to perform more efficiently their duties and obligations, in a proper and safe mannerproperly and
safely, the mandate agreements of the executive managers (including the CEO and deputy CEO), approved
by the BoD stipulate the specific equipments that the company makes available (e.g.: company car, mobile
phone, laptop), the rules to use it, as well as other kinds of related benefits (e.g.: reimbursement of reasonable
expenses related to the execution of the mandate, a “directors & officers’ liability” insurance policy, mobility
package).
In December 2020, as a result of the merger of the 3 distribution subsidiaries, the changes to the fixed
remuneration limits of the executive directors of DEER, the distribution company that appeared following
the merger, were approved, applicable starting with 1 January 2021. The new fixed monthly remuneration
limits are the following:
a)
b)
c)
the fixed monthly remuneration of the General Manager is between EUR 6,593 and 11,000 gross;
the fixed monthly remuneration of the deputy general managers is between EUR 5,300 and 10,300 gross;
the fixed monthly remuneration of the executive directors is between EUR 5,128 and 9,231 gross.
4.8 Corporate Governance in ELSA’s subsidiaries
The Board of Directors of ELSA’s subsidiaries
During 2020 and until the date of this report, all the Boards of Directors of ELSA’s subsidiaries were composed
of non executive directors, which are executive managers or employees of ELSA, and, according to ELSA’s
policy, do not receive any remuneration from the subsidiaries for the quality of member of their Board of
Directors.
During 2020 and until the date of this report, the composition of the Boards of Directors of ELSA’s subsidiaries
were was as follows:
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The distribution subsidiaries, respectively SDTN, SDTS, and SDMN – 1 January 2020 – 31 December 2020
(the effective date of the merger)
1 January –
3 January 2020
4 January –
11 February 2020
12 February –
31 December 2020
Georgeta Corina Popescu
– Chair
Georgeta Corina Popescu
– Chair
Georgeta Corina Popescu
– Chair
Livioara Șujdea
Livioara Șujdea
Livioara Șujdea
Ana Maria Nistor
Stefan Alexandru Frangulea
Stefan Alexandru Frangulea
Stefan Alexandru Frangulea
Mircea Toma Modran
Mircea Toma Modran
Mircea Toma Modran
Mirela Dimbean Creta
Source: Electrica
The mandate of the BoD members of the absorbed companies, SDTS and SDMN, ended starting with the
effective date of the merger of the distribution subsidiaries, 31 December 2020.
The mandate of the BoD members of the absorbing company, SDTN, which changed its name to DEER,
ended on 31 January 2021.
The distribution subsidiary DEER – 1 January 2021 – date of the report
1 January –
31 January 2021
1 February –
date of the report
Georgeta Corina Popescu
– Chair
Livioara Șujdea – Chair starting with
8 February 2021
Livioara Șujdea
Stefan Alexandru Frangulea
Stefan Alexandru Frangulea
Mircea Toma Modran
Mircea Toma Modran
Mirela Dimbean Creta
Mirela Dimbean Creta
Geanina Dumitru
Source: Electrica
The end date of the mandates of DEER’s directors at the date of this report is 31 January 2025.
The supply subsidiary EFSA – 1 January 2020 – date of the report
1 January –
4 October 2020
5 October –
4 December 2020
5 December –
1 February 2021
2 February 2021 -
date of the report
Catalina Popa
- Chair
Mihai Darie – Chair,
starting with
8 October 2020
Mihai Darie – Chair
Mihai Darie
Bibiana Constantin
Bibiana Constantin
Georgeta Corina Popescu
– Chair starting with
9 February 2021
Mihai Darie – Chair until
9 February 2021
Mihai Ioanitescu
Stefan Valeriu Ivan
Maria Cristina Manda
Bibiana Constantin
Bibiana Constantin
Maria Cristina Manda
Laura Mihaela Nastasescu
Maria Cristina Manda
Stefan Valeriu Ivan
Laura Mihaela Nastasescu
Laura Mihaela Nastasescu
Source: Electrica
96 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
The end date of the mandates of EFSA’s directors at the date of this report is 26 April 2021.
The energy services subsidiary SERV – 1 January 2020 – date of the report
1 January –
11 February 2020
12 February –
4 June 2020
5 June –
8 June 2020
9 June –
14 July 2020
Mihai Darie
– Chair until
11 February 2020
Stefan Valeriu Ivan- Chair
starting with 17 February
2020; interim between 12
February – 4 March
Stefan Valeriu Ivan
- Chair
Stefan Valeriu Ivan
- Chair
Mihai Ioanitescu
Mihai Darie
Mihai Darie
Mihai Darie
Vasile Moise
Vasile Moise
Bibiana Constantin
Bibiana Constantin
Bibiana Constantin
Bibiana Constantin
Anamaria-Dana
Acristini-Georgescu
Anamaria-Dana
Acristini-Georgescu
Anamaria-Dana
Acristini-Georgescu
Anamaria-Dana
Acristini-Georgescu
Ion Udrea –interim
between 9 June – 29 June
Source: Electrica
15 July –
21 July 2020
22 July 2020 –
17 January 2021
18 January 2021 –
14 February 2021
15 February 2021 –
date of the report
Stefan Valeriu Ivan-
Chair
Stefan Valeriu
Ivan-
Chair
Mihai Darie
Georgeta Corina Popescu -
Chair starting with 16
February 2021
Mihai Darie
Mihai Darie
Bibiana Constantin
Mihai Darie
Bibiana Constantin
Bibiana Constantin
Anamaria-Dana
Acristini-Georgescu
Anamaria-Dana
Acristini-Georgescu
Anamaria-Dana
Acristini-Georgescu
Irina Clima
Irina Clima
Bibiana Constantin
Anamaria-Dana
Acristini-Georgescu
Irina Clima
Source: Electrica
The end dates of the mandates of SERV’s directors at the date of this report is 12 December 2021 in the case
of Mrs. Bibiana Constantin, Irina Clima, and Anamaria-Dana Acristini-Georgescu and respectively 29 January
2022 in the case of the other two directors.
SERV, the absorbing company within the merger of the energy services subsidiaries, absorbed SEM starting
with the effective date of the merger, 30 November 2020.
The energy services subsidiary SEM – 1 January 2020 – 30 November 2020 (the
effective date of the merger with SERV)
1 January
– 28 June 2020
29 June
– 30 November 2020
Anamaria-Dana Acristini-Georgescu
– Chair
Anamaria-Dana Acristini-Georgescu
– Chair
Mihai Darie
Mihai Darie
Bibiana Constantin
Bibiana Constantin
Mihai Ioanitescu
Mihai Ioanitescu
Gheorghe Gadea
Stefan Valeriu Ivan – interim between
29 June – 21 July 2020
Source: Electrica
97 | 2020 ANNUAL REPORT
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The mandate of the BoD members of the absorbed company, SEM, ended starting with the effective date of
the merger of the energy services subsidiaries, 30 November 2020.
Executive management of ELSA’s subsidiaries
The tables below show the subsidiaries’ executive managers with delegated management duties by the
Board of Directors of ELSA subsidiaries in 2020, as well as until the date of this report, as follows:
The distribution subsidiaries, respectively SDTN, SDTS, and SDMN – until 31 December
2020 (the effective date of the merger)
Name
Period (day month year)
Function
SDTN
Emil Merdan
3 July 2017 – 31 December 2020
General Manager
Dora Fataceanu
1 February 2019 – 31 December 2020
Vasile Farcas
1 February 2019 – 31 December 2020
Sorin – Viorel Muresan
1 August 2019 – 31 December 2020
Business Support
Division Manager
Network Operations
Division Manager
Energy Management
Division Manager
Mihaela Rodica Suciu
5 June 2020 – 31 December 2020
Deputy General Manager
Gabriel Adrian Margin
1 October 2018 – 15 October 2020
Constantin Buda
1 October 2017 – 15 October 2020
Network Development
Division Manager
Asset Management
Division Manager
SDTS
Sinan Mustafa
27 August 2018 –31 December 2020
General Manager
Dragos Eduard - Staicu
1 July 2018 – 31 December 2020
Monica Radulescu
1 August 2018 – 31 December 2020
Raul Toma
15 October 2018 – 31 December 2020
Simon Lajos Attila
1 August 2018 – 31 December 2020
Alexandru Nine
1 July 2019 – 31 December 2020
Mihai Catalin Nicolae
1 October 2020 - 31 December 2020
SDMN
Deputy General Manager
With delegated attribution of
Asset Management Division
Manageruntil the appoint-
ment of a new manager
Shared Services
Division Manager
Energy Management
Division Manager
Network Operations
Division Manager
Network Development
Division Manager
Asset Management
Division Manager
Valentin Branescu
1 November 2018 – 31 December 2020
General Manager
Diana Moldovan
1 April 2019 – 31 December 2020
Deputy General Manager
Gabriela Dobrescu
24 September 2018 – 31 December 2020
Marius Raduta Petrescu
1 September 2018 - 31 December 2020
Ilie Marin
1 September 2018 - 31 December 2020
Vasile Claudiu Tudose
1 September 2018 - 31 December 2020
Bogdan Ionut Vlad
2 September 2019 – 14 December 2020
Asset Management
Division Manager
Network Operations
Division Manager
Network Development
Division Manager
Energy Management
Division Manager
Shared Services
Division Manager
Source: Electrica
98 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
The distribution subsidiary DEER– 1 January 2021 – date of the report
Name
Period
(day month year)
Function
Mandate until the date
(for acting executive mana-
gers at the date of the report)
(day month year)
Emil Merdan
Sinan Mustafa
1 January 2021
- present
1 January 2021
- present
Valentin Branescu
1 January 2021
- present
Dragos Eduard Staicu
Diana Moldovan
Dora Fataceanu
1 January 2021
- present
1 January 2021
- present
1 January 2021
- present
General Manager
30 June 2021
Deputy General Mana-
ger coordinating Energy
Management Division
and Asset
Management Division
Deputy General Ma-
nager coordinating
Network Development
Division and Network
Operations Division
Integration Division
Manager
Business Support
Division Manager
Financial Division
Manager
26 August 2022
1 May 2023
30 June 2022
31 March 2023
31 January 2023
Monica Mariana
Radulescu
1 January 2021
- present
Procurement
Operations Manager
31 July 2022
Raul Toma
1 January 2021
- present
Energy Management
Division Manager
14 October 2022
Gabriela Dobrescu
1 January 2021
- present
Asset Management
Division Manager
24 September 2022
Catalin Mihai
Mihaela Suciu
Vasile Caudiu Tudose
Alexandru Nine
Ilie Marin
Vasile Farcas
1 January 2021
- present
Innovation Engineering
Manager
31 December 2021
1 January 2021
- present
Network Development
Division Manager
31 December 2021
1 January 2021
- present
1 January 2021
- present
1 January 2021
- present
1 January 2021
- present
TN Power Construction
Unit Manager
1 September 2022
TS Power Construction
Unit Manager
30 June 2023
MN Power Construction
Unit Manager
1 September 2022
Network Operations
Division Manager
31 January 2023
Sorin Viorel Muresan
1 January 2021
- present
TN Network Operations
Unit Manager
31 December 2021
Simon Lajos Attila
1 January 2021
- present
TS Network Operations
Unit Manager
31 July 2022
Marius Raduta
Petrescu
1 January 2021
- present
MN Network Operations
Unit Manager
1 September 2022
Sursa: Electrica
99 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
The supply subsidiary EFSA – until the date of the report
Name
Period
(day month year)
Function
Darius - Dumitru
Mesca
1 October 2019
– present
General Manager
Mandate until the date
(for acting executive mana-
gers at the date of the report)
(day month year)
30 September 2023
With delegated attributions
of Sales Division Manager un-
til the appointment of a new
manager
Claudiu - Daniel
Radulescu
10 March 2020 – present
(vacancy position until
9 March 2020)
Interim
Raluca - Florentina
Dumitriu
1 August 2019
– 16 September 2020
Daniel Anton
Ionut – Bogdan Vlad
17 September 2020
– 14 December 2020
Interim
15 December 2020
– present
Deputy General
Manager
31 March 2021
Financial Division
Manager
15 December 2024
Corina - Cristina
Drumeanu
16 October 2019
- present
Portfolio Management
Manager
15 October 2023
Paul Ferdoschi
Silvia – Cristina
Macedon
21 January 2020
– 12 April 2020
Interim
13 April 2020
- present
Sales Division Manager
Corina Vasile
20 August 2019
– 29 February 2020
Cristian - Eugen
Radu
1 March 2020 – present
Interim
Marketing Division
Manager
12 April 2024
31 March 2021
1 August 2019
– 30 September 2020
Interim(vacancy position
starting with 1 October
2020)
Operations Division
Manager
Constantin Marin
Source: Electrica
The energy services subsidiary SERV – until the date of the report
Name
Period
(day month year)
Function
Mandate until the date
(for acting executive mana-
gers at the date of the report)
(day month year)
Vasile Ionel Bujorel
Oprean
18 December 2019
– 14 December 2020
with delegated attributions
Beatrice Ambro
15 December 2020
– 15 January 2021
General Manager
Vasile Ionel
Bujorel Oprean
16 January 2021
– present
with delegated attributions
Maroiu Marian
15 April 2020 –
15 October 2020
(one DGM position was
dissolved starting with
5 November 2020)
Deputy General
Manager
16 April 2021
Marius Guran
6 May 2020 - present
31 December 2021
Source: Electrica
100 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
Name
Period
(day month year)
Function
Mandate until the date
(for acting executive mana-
gers at the date of the report)
(day month year)
Ioana Lavinia Panu
15 December 2020
– 15 January 2021
Financial Manager8
Gheorghe Batir
1 June 2018 - present
Technical Manager
31 March 2021
Vasile Ionel
Bujorel Oprean
1 December 2017 - present
Property Management
and Product
Development Manager
31 December 2021
Source: Electrica
The energy services subsidiary SEM – until 30 November 2020 (the effective date of
the merger with SERV)
Name
Period (day month year)
Function
Alexandru Vladu
12 aprilie 2019 - 12 mai 2020
Constantin Gheban
13 mai 2020 – 30 noiembrie 2020
Director General
Sursa: Electrica
Number of shares owned by the managers of Electrica Group
The table below shows the situation of ELSA shares held by the executive managers of the companies in the
Group which were mentioned in this chapter, a situation valid both on 31 December 2020, as well as on 15
February 2021 (last update):
Item no.
Name
Number of shares
Weight in the share capital (%)
1
2
Emil Merdan
Dora Fataceanu
7.277
1.000
0,0021%
0,00029%
Source: Depozitarul Central, Electrica
According to information held by ELSA, there is no contract, understanding, or family relationship between
the executive managers of the Group companies mentioned in this chapter and another person who may
have contributed to their appointment as executive managers.
According to available information, the members of the BoD and the executive managers of the Group
companies mentioned in this chapter have not been involved, in the last five years, in any litigations or
administrative procedures related to their activity within the Group and to their capacity to fulfill their work-
related duties within the Group.
General Meetings of Shareholders of ELSA subsidiaries
Corporate approvals at the GMS/BoD level in the case of ELSA’s subsidiaries are regulated through their
articles of association, as well as through the implemented corporate policies.
ELSA, as majority shareholder of its subsidiaries, voted in their GMS in 2020 on various topics, amongst which
the most important are related to:
■
revenue and expenses budgets, financial statements, the financial part of the individual annual
investment plan, profit appropriation;
contracting long-term loans to finance investments by distribution subsidiaries; acquisition of a
credit line for working capital financing in the case of SDTS; contracting a working capital loan facility
intended to finance the current activity in the case of EFSA;
general debt limit in case of EFSA;
amendments/improvements of the articles of association, except in the case of SEM;
increases in the share capital with land plots in the case of SDMN, EFSA, and SERV;
■
■
■
■
8 The position of Financial Manager was held by Alexandrina Rusu, on the basis of an individual labor agree-
ment between 1 January 2020 – 14 December 2020 and with delegated attribution starting with 20 January
2021 – present (until the appointment of a financial manager with mandate contract)
101 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
■
■
■
■
■
increases in the share capital with the value of the component assets of the AMR system in the case
of distribution subsidiaries;
membership of the distribution subsidiaries in the EU - DSO entity;
the merger of distribution subsidiaries (SDTN, SDMN, and SDTS) and merger of energy services
subsidiaries (SERV and SEM);
establishment of EFSA’s branch in Chisinau, Republic of Moldova;
the acquisition by EFSA of 100% of the share capital of Long Bridge Milenium SRL.
Starting with the end of 2019/beginning of 2020, a unitary policy was implemented within the Group’s
subsidiaries, regarding the organization and conduct of the General Meetings of Shareholders of the
Electrica Group companies, whose objectives are for each company to obtain the corporate approvals
in the competence of the GMS in a timely mannerpromptly, in order to carry out in good conditions the
operational activity, in compliance with all legal and statutory provisions, implementation of a unitary system
of convening, organizing, carrying out the GMS meetings in Electrica Group, as well as better tracking of the
implementation of GMS resolutions.
4.9 Statement regarding the corporate governance
“Comply or Explain”
The present Statement reflects ELSA’s status of compliance with the new BSE Corporate Governance Code
as of 4 March 2021.
Note: considering the fact thatbecause there are no mentions for “Reason for non-compliance”, the
corresponding column has been removed from the table below.
No.
Name
Compliance
YES/NO/
PARTIALLY
Other remarks
Section A – Responsabilities
A.1.
All companies must have an internal Board re-
gulation which includes the terms of reference/
responsibilities of the Board and the key mana-
gement functions of the company, and which
applies, among other things, the General Princi-
ples of this Section.
YES
(it
ELSA’s
Corporate Governance
Code (ELSA’s CGC) was adopted
in February 2015 and published
on ELSA’s website
included
the Articles of Association of
ELSA, the rules of organization
and functioning of the BoD and
these
its committees). All of
documents mentioned
above
contain the terms of reference/
the responsibility of BoD, as well
as those of the key management
functions of the company.
In 2016, the Board carried out an
extensive project to review the
Articles of Association and the
above-mentioned
in
order to detail the responsibilities
of the Board, of its committees, and
of the management team, taking
into account the recommendations
made in the Evaluation Report of the
Board’s activity in the previous year.
In 2020, the Board revised ELSA’s
CGC,
the
in accordance with
Group’s Risk Management Policy.
It is available on the company’s
website in the section “Investors ->
Corporate Governance”.
regulations
A.2.
Provisions for the management of conflict of in-
terest should be included in the Board regulation.
YES
Such provisions are mentioned
in ELSA’s CGC, in the Articles of
Association, in the Code of Ethics
and Professional Conduct, and the
BoD organization and functioning
regulation.
A.3.
The Board of Directors must consist of at least five
members.
YES
ELSA’s BoD consists of seven mem-
bers since 14 December 2015.
102 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
No.
Name
Compliance
YES/NO/
PARTIALLY
Other remarks
Section A – Responsabilities
The majority of the members of the Board of
Directors must have no executive function. In the
case of Premium Companies no less than two non-
executive members of the Board of Directors should
be independent. Each independent member of
the Board of Directors should submit a declaration
at the time of its nomination for election or re-
election as well as when any change in its status
occurs, indicating the elements based on which it
is considered independent in terms of its character
and judgment and according to the following
criteria: A.4.1. is not the General Manager/Executive
Director of the company or a company controlled by
it and has not held such a position for the past five
(5) years; A.4.2. is not an employee of the company
or a company controlled by it and has not held such
a position for the past five (5) years; A.4.3. does not
and did not receive additional remuneration or
other advantages from the company or a company
controlled by it, other than those corresponding
to the quality of a non-executive director; A.4.4. is
not or has not been an employee or has not had a
contractual relationship, during the previous year,
with a significant shareholder of the company,
shareholder who controls more than 10% of voting
rights or with a company controlled by him; A.4.5.
does not have and did not have in the previous
year a business or professional relationship with
the company or with a company controlled
by it, either directly or as a customer, partner,
shareholder, member of the Board/Administrator,
General Manger/Executive Director or employee of
a company if, by its substantial nature, this report
may affect its objectivity; A.4.6. is not and has not
been for the last three years the external or internal
auditor or partner or associate employee of the
current external financial or internal auditor of
the company or a company controlled by it; A.4.7.
is not the general manager/executive director
of another company where another general
manager/executive director of the company is a
non-executive director; A.4.8. has not been a non-
executive director of the company for more than
twelve years; A.4.9. has no family ties to a person in
the situations mentioned in points A.4.1. and A.4.4.
A.4.
YES
All the members of ELSA’s BoD are
non-executive. According to the
Articles of Association, at least four
out of seven members must be
independent. The
independence
criteria stipulated in the Articles of
Association are similar and even
more restrictive than those in the
BSE’s Corporate Governance Code.
Currently, four out of seven members
are independent. All independent
members submitted a declaration
of independence, at the time of their
appointment by the OGMS.
A.5.
Other relatively permanent professional commit-
ments and obligations of a Board member, inclu-
ding executive and non-executive Board positi-
ons in companies and not-for-profit institutions,
must be disclosed to shareholders and potential
investors before the appointment and during his/
her term of office.
YES
A.6.
Any member of the Board should submit to the
Board information on any relationship with a
shareholder who holds, directly or indirectly,
shares representing more than 5% of all voting
rights.
YES
A.7.
The company should appoint a Board secretary res-
ponsible for supporting the Board’s work.
YES
The professional background of the
proposed candidates, as well as of the
current Board members are available
on ELSA’s website in the Investors >
General Meeting of Shareholders
section. Their biographies contain all
the relevant information requested
by this provision of the Code. The up-
dated biographies of each member
of the Board are presented annually
in the Directors’ Report.
When a Board member has entered
into a relation with a shareholder
who directly or indirectly holds sha-
res representing more than 5% of all
voting rights, he/she briefly informed
the entire Board.
The company has established the
General Secretary Department,
which is directly subordinated to
the Board of Directors.
103 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
No.
Name
Compliance
YES/NO/
PARTIALLY
Other remarks
Section A – Responsabilities
A.8.
The corporate governance statement will inform
whether an evaluation of the Board has taken place
under the leadership of the chair or the nomination
committee and, if so, will summarize the key mea-
sures and changes resulting from it. The company
should have a policy/guide regarding the evaluati-
on of the Board including the purpose, criteria, and
frequency of the evaluation process.
A.9.
The corporate governance statement must con-
tain information on the number of meetings of
the Board and committees during the last year,
directors’ attendance (in person or absent), and a
report of the Board and committees on their ac-
tivities.
YES
YES
A.10.
The corporate governance statement must con-
tain information on the exact number of the inde-
pendent members of the Board of Directors.
YES
A.11.
The Board of Premium Companies must set
up a nomination committee of non-executive
members that will
lead the procedure of
nomination of new members to the Board and
will make recommendations to the Board on
the appointment and the revocation of the Chief
Executive Officer and the management team.
The majority of the members of the nomination
committee must be independent.
YES
Section B – Risk management and internal
control system
B.1.
The Board must set up an audit committee in which
at least one member must be an independent
non-executive director. A majority of members,
including the chairman, must have proven that
they are adequately qualified relevant to the
functions and responsibilities of the committee. At
least one member
of the audit committee must have proven and
appropriate audit or accounting experience.
In the case of Premium Companies, the audit
committee must consist of at least three members,
and the majority of the audit committee must be
independent.
YES
This provision was applied starting
with 2015, the BoD carrying out an
annual assessment process of its ac-
tivity with the support of an external
consultant (in 2015, 2017, and 2020),
or using a self-assessment question-
naire (in 2016, 2018, and 2019)
More details are provided in the 2015-
2017 Annual Reports in chapters 6.1
and 6.2, for 2018 and 2019 and 2020
in chapter 4.5.
Details regarding the compliance
with this provision are presented in
the Annual Report, in the Corporate
governance chapter. For 2020, please
see chapter 4.5.
Four out of seven members of the
BoD are independent and this is
in the Annual Report.
specified
More details are provided in the
Annual Reports for 2015-2017,
in
chapters 6.1 and 6.2, for 2018 and
2019 in chapters 4.4 and 4.5, and for
2020 in chapter 4.4.
On ELSA’s website, in the section
Investors > Corporate Governance
> Board of Directors, it is specified
are
exactly which members
independent.
regulation
The Articles of Association and EL-
SA’s CGC highlight the existence of
this committee
(Nomination and
Remuneration Committee - NRC), its
structure, and responsibilities. The
NRC structure is reviewed annually,
following the NRC organization and
functioning
(Charter)
and at the beginning of each new
mandate of the BoD. In May 2020,
its structure was revised according
to the changes that occurred in the
board structure. According to the
NRC’s Charter, in December 2020
the current structure of the NRC was
established, two of the members be-
ing independent. Details regarding
the NRC structure are presented in
chapter 4.4.
The Articles of Association and ELSA’s
CGC highlight the existence of this
committee (Audit and Risk Commit-
tee - ARC), its structure, and respon-
sibilities.
The ARC structure is reviewed annu-
ally, according to ARC Charter, and at
the beginning of each new mandate
of the BoD.
In May 2020, its structure was revi-
sed according to changes in the BoD
structure. In accordance with the
ARC Charter, the current composition
of the ARC was voted in December
2020, in which two of the members
are independent. Details of this are
presented in chapter 4.4.
104 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
No.
Name
Compliance
YES/NO/
PARTIALLY
Other remarks
Section B – Risk management and internal
control system
B.2.
The chairman of the audit committee must be an
independent non-executive member.
YES
B.3.
Among its responsibilities, the audit committee
must carry out an annual assessment of the inter-
nal control system.
YES
Mrs. Ramona Ungur, an independent
non-executive board member was
re-elected as Chairman of the Audit
and Risk Committee on 13 May 2020
and subsequently on 15 December
2020, being in this position since 18
February 2019.
According to the organization and
functioning regulation, the Audit
and Risk Committee (ARC) has the
following responsibilities on internal
control issues:
(i) regularly review the adequacy
and implementation of key internal
control policies, including fraud de-
tection and bribery prevention po-
licies; (ii) reviewing related parties
transactions in accordance with a
policy developed by the Commit-
tee and approved by the Board;
(iii) analysis of the annual report
prepared by the Internal Audit De-
partment and/or Risk Management
Department assessing the effective-
ness of the internal control system
within the Group.
B.4.
The assessment must consider the effectiveness
and purpose of the internal audit function, the
adequacy of risk management and internal control
reports submitted to the audit committee of the
Board, the promptness and effectiveness with whi-
ch the executive management solves the deficien-
cies or weaknesses identified as a result of the inter-
nal control and the submission of relevant reports to
the Board’s attention.
YES
Such reports are annually presen-
ted. The assessment report for 2020
specified in the CGC was presented
and discussed by the Audit and Risk
Committee in the meeting on 4 Mar-
ch 2021.
B.5.
The audit committee must assess conflicts of in-
terests in connection with the transactions of the
company and its subsidiaries with related parties.
YES
B.6.
The audit committee must assess the effectiveness
of the internal control system and risk management
system.
YES
The assessment is carried out
annually. The assessment report
for 2020 specified in the CGC was
presented and discussed by the
Audit and Risk Committee at its
meeting on 4 March 2021.
The ARC has at least the following
responsibilities on risk management
issues:
(i) regularly review of the main ris-
ks to which the company and the
Group are exposed, recommending
to the Board appropriate policies for
identifying, mapping, management,
and risk reduction;
(ii) annual analysis of a management
report that assesses the effective-
ness of the risk management system
within the Group.
Based on the ARC Charter’s provisi-
ons, the evaluation report for the year
2020 was presented and discussed
by the Audit and Risk Committee at
its meeting on 4 March 2021.
Details regarding the ARC activity for
the year 2020 are presented in chap-
ter 4.5 of the Annual Report.
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No.
Name
Compliance
YES/NO/
PARTIALLY
Other remarks
Section B – Risk management and internal
control system
B.7.
The audit committee must monitor the application
of legal standards and generally accepted internal
audit standards. The audit committee must receive
and assess the reports of the internal audit team.
YES
The ARC has the following responsi-
bilities on internal audit issues:
(i) approval of an annual audit plan
at Group level, based on an annual
risk assessment, as well as any sig-
nificant changes to the plan and
receipt of periodic reports on acti-
vities, key findings and follow up of
internal audit reports;
(ii) advising the Board on the appo-
intment, revocation, and remune-
ration of the Head of Internal Audit
Department;
(iii) monitoring the adequacy, effec-
tiveness, and independence of the
internal audit function.
Details regarding the ARC activity
are presented in chapter 4.5 of the
Annual Report.
B.8.
Whenever the Code mentions reports or analyses
initiated by the Audit Committee, these must be
followed by regular (at least annual) or ad-hoc re-
ports to be submitted to the Board afterward.
YES
B.9.
No shareholder may be granted preferential treat-
ment over other shareholders with regards to tran-
sactions and agreements concluded by the com-
pany with shareholders and their related parties.
YES
Provisions on this matter are inclu-
ded in ELSA’s CGC and in the Policy
on Transactions with Related Parties.
B.10.
The Board must adopt a policy to ensure that any
transaction of the company with any of the compa-
nies with which it has close relations whose value
is equal to or more than 5% of the net assets of the
company (according to the latest financial report),
is approved by the Board following a mandatory
opinion of the Board’s audit committee and fairly
disclosed to shareholders and potential investors, to
the extent that these transactions fall under the ca-
tegory of events subject to reporting requirements.
YES
The Policy regarding the transacti-
ons with Related Parties, has been
updated in July 2020 and covers all
the required aspects.
B.11.
Internal audits must be carried out by a separa-
te structural division (internal audit department)
within the company or by hiring an independent
third-party entity.
YES
The internal audit is carried out by
the Internal Audit Department, a
structurally separate entity.
B.12.
In order to ensure the performance of the main
functions of the internal audit department, it must
report functionally to the Board through the audit
committee. For administrative purposes and within
the framework of management’s obligations to
monitor and reduce risks it must report directly to
the chief executive officer.
YES
The Internal Audit Department re-
ports functionally to the BoD throu-
gh the ARC, while administratively
reports to the CEO.
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Name
Compliance
YES/NO/
PARTIALLY
Other remarks
2020 DIRECTORS’ REPORT
Section C – Fair rewards and motivation
The company must publish on its website the re-
muneration policy, and include in its annual report
a statement of the remuneration policy during the
annual period under review. The remuneration po-
licy must be formulated in such a way as to allow
shareholders to understand the principles and
arguments underlying the remuneration of the
members of the Board and the CEO, as well as the
members of the Management Board in two-tier
board systems. It should describe how the process
is managed and decision-making on remuneration,
detail the components of executive management
remuneration (such as salaries, annual bonus, long
term incentives related to the value of shares, be-
nefits in kind, pensions, and others), and describe
the purpose, principles, and assumptions under-
lying each component (including general perfor-
mance criteria for any form of variable remunera-
tion). Also, the remuneration policy must specify
the duration of the executive manager’s contract
and the notice period provided for in the contract
as well as any compensation for revocation without
just cause. The remuneration report must present
the implementation of the remuneration policy for
the persons identified in the remuneration policy
during the annual period under review.
Any essential change in the remuneration policy
must be published in a timely manner on the com-
pany’s website.
Section D – Building value through
investors’ relations
The company must have an Investor Relations
function – indicating to the public the person(s)
responsible or the organizational unit. In addition
to the information required by legal provisions, the
company must include on its website a section de-
dicated to Investor Relations, both in Romanian and
English, with all relevant information of interest to
investors, including:
D.1.1. Main corporate regulations: the articles of asso-
ciation, the procedures regarding the general mee-
tings of shareholders.
D.1.2. Professional CVs of members of the company’s
management bodies, other professional commit-
ments of the board members, including executive
and non-executive positions on board of directors
of companies or non-profit institutions
D.1.3. Current and periodic reports (quarterly,
semi-annual and annual reports);
D.1.4. Information related to general meetings of
shareholders; D.1.5. Information on corporate events;
D.1.6. The name and contact details of a person
who should be able to provide relevant information
upon request;
D.1.7. Corporate presentations (e.g. investors presen-
tations, quarterly results presentations, etc.), finan-
cial statements (quarterly, semi-annual, annual),
audit reports, and annual reports.
C.1.
D.1.
YES
The remuneration limits for the Ge-
neral Manger and others executive
managers were approved by the Ge-
neral Meeting of Shareholders (GMS)
on 9 July 2015. In March 2016, the
GMS approved the new Directors Re-
muneration Policy. Considering the
tax changes introduced during 2017,
the Board has analyzed their impact
and submitted for the GMS approval
proposals regarding the revision of
the Remuneration Policy for the BoD
members and of the remuneration li-
mits for the executive managers. On
9 February 2018, the GMS approved
the revised Directors’ Remuneration
Policy and remuneration limits for
the executive managers. The Remu-
neration Policy for directors and the
executive management is available
on the ELSA website, under Investors
> Corporate Governance > Corporate
Policies and other documents.
YES
The company has both an Investor
Relations department and a section
dedicated to Investor Relations on
its website (in both Romanian and
English). All relevant information for
investors is published under the In-
vestors section on ELSA’s website.
D.2.
The company will have a policy on the annu-
al distribution of dividends or other benefits to
shareholders, proposed by the CEO or the Ma-
nagement Board and adopted by the Board, in
the form of a set of guidelines that the company
intends to follow regarding the distribution of net
profit. The principles of the annual distribution
policy to shareholders will be published on the
company’s website.
YES
The BoD last revised the Dividends
Policy at its meeting on 14 February
2018. It is published on ELSA’s web-
site, in the Investors > Corporate Go-
vernance > Corporate Policies and
other documents section.
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No.
Name
Compliance
YES/NO/
PARTIALLY
Other remarks
Section D – Building value through
investors’ relations
D.3.
The company will adopt a policy regarding the fo-
recasts, whether they are made public or not. The
forecasts refer to quantified conclusions of studies
aimed at determining the overall impact of several
factors for a future period (so-called assumptions):
by its nature, this projection has a high level of un-
certainty, the actual results may differ significantly
from the forecasts initially presented. The forecast
policy will determine the frequency, period envisa-
ged, and the content of the forecasts. Forecasts, if
published, may only be part of annual, semi -annu-
al, or quarterly reports. The forecast policy should
be published on the company’s website.
YES
The BoD last revised the Forecasts Po-
licy in its meeting on 14 February 2018.
It is published on the ELSA website, in
the Investors > Corporate Governance
> Corporate Policies and other docu-
ments section.
D.4.
The rules of general meetings of shareholders
should not limit the participation of shareholders
in general meetings and the exercise of their ri-
ghts. Changes to the rules will take effect at the
earliest, starting with the next general meeting
of shareholders
YES
ELSA rules and procedures that
establish the framework for the or-
ganization and conduct of general
meetings of shareholders are part of
ELSA’s Policy on organizing and run-
ning the General Meetings of Sha-
reholders, available from the begin-
ning of 2020 and in updated form
from August 2020,
in electronic
form on ELSA website in the section
Investors > Corporate Governance >
Corporate Policies and other docu-
ments.
Also, the rules of general meetings
of shareholders are mentioned in
each convening notice, published in
accordance withfollowing the legal
and statutory requirements approxi-
mately 45 days before each meeting.
D.5.
The external auditors should attend the gene-
ral meetings of shareholders when their reports
are presented.
YES
External auditors attend each
OGMS in which the annual reports
are approved.
The directors’ annual report, presen-
ted to the annual general meeting
of shareholders together with the
financial statements, contains the
BoD’s assessments on the systems of
internal controls and significant risk
management.
As a practice, all the documents
subject of to the GSM approval are
endorsed by the BoD; this is clearly
stated in the documents presented
to the shareholders.
In this respect, the agreement of
the shareholders present at the Ge-
neral Meetings was requested each
time it was the case.
D.6.
The Board will present to the annual general
meeting of shareholders a brief assessment of
the systems of internal control and significant
risks management, as well as opinions on issues
subject to the decision of the
general meeting.
D.7.
D.8.
Any professional, consultant, expert, or financial
analyst may attend the shareholders’ meeting
on the bases basis of a prior invitation from the
Board. Accredited journalists may also attend the
general meeting of shareholders, unless the Chair
of the Board decides otherwise.
The quarterly and semi-annual financial reports
will include information in both Romanian and En-
glish on key factors influencing changes in sales le-
vels, operating profit, net profit, and other relevant
financial indicators, both from quarter to quarter as
well as from one year to another.
YES
YES
YES
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No.
Name
Compliance
YES/NO/
PARTIALLY
Other remarks
Section D – Building value through
investors’ relations
D.9.
A company will hold at least two meetings/te-
leconferences with analysts and investors each
year. The information presented on these occasi-
ons will be published in the investor relations sec-
tion of the company’s website at the date of the
meetings/teleconferences.
D.10.
If a company supports different forms of artistic and
cultural expression, sports activities, educational or
scientific activities, and considers that their impact
on the innovative character and competitiveness of
the company part of its mission and development
strategy, it will publish the policy regarding its acti-
vity in this area.
Source: Electrica
YES
YES
ELSA organizes quarterly teleconfe-
rences with analysts and investors
and publishes presentations and au-
dio recordings of the teleconference
on the ELSA website, in the section
Investors > Results and Reports >
Presentations and other information.
Information regarding the CSR ac-
tivities can be found online on the
company’s website, in the CSR sec-
tion. The Grants Program is annually
reviewed and approved by the BoD.
The projects and activities supported
each year are presented in ELSA’s an-
nual Sustainability Reports, available
on the ELSA website, in the CSR sec-
tion > Non-financial Reporting.
4.10 Implementing action plans undertaken by
signing the framework agreement with EBRD
The company’s initial public offering and dual listing preparation process involved the signing of a framework
agreement with the European Bank for Reconstruction and Development (EBRD), which includes action
plans aiming at key dimensions for the company’s transformation: developing a culture of integrity and
compliance, adopting best practices concerning corporate governance and incorporating the sustainability
principles at Group level.
As for the development of a culture of integrity and compliance at the Electrica Group level, in line with the
EBRD standards, the year 2020 meant maintaining the compliance framework from an ethical perspective
and updating it in accordance with the evolutions of the social and legal context in which the organization
operates, through concerted actions on four main directions:
■
maintaining the organizational structures dedicated to ethics and compliance and increasing their
awareness on of their role within the organization;
updating the compliance framework - reviewing the provisions of The Code of Ethics and Profesional
Conduct and its subsequent policies, according to the new Strategy Group;
informing, through the information channel of all employees, on updating the compliance framework
– The Code of Ethics and Professional Conduct, as well as other policies/procedures implemented,
promoting and disseminating these documents at the level of all entities within the Group;
promoting and monitoring compliance in relation to the framework defined by the Code of Ethics and
Professional Conduct and subsequent policies.
■
■
■
Having mainly a preventive role in relation to the risks to which the organization is exposed, compliance adds
value to each business, but, to be effective, the compliance framework must be adapted to the organization
transformations and to be aligned permanently with legislative changes, external environment trends and
business ethics’ best practices.
Given this principle, Electrica Group embraced a proactive attitude, updating and developing certain
provisions of the compliance framework in order to better suit the practical aspects and the specific activity
of the companies within the group. As a result, in February 2020, The Policy Regarding the Avoidance and
Combating Conflicts of Interest was reviewed and updated, in line with the legal framework and organizational
environment evolution.
In March 2020, at the ELSA level was carried out an activity to inform employees about combating harassment
at work, currently being in progress, a policy to prevent combating harassment and sanction any forms of
harassment at work.
Subsequently, due to the restrictions generated by the current pandemic crisis, were carried out, exclusively
through the information channel of all employees, information and awareness activities on the provisions
of the compliance framework from an ethical perspective, as well as monitoring the compliance in relation
with it through the organizational structures dedicated to ethics and compliance existing in the companies
within the Group.
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Regarding the organizational entities dedicated to ethics and compliance, these exist in all the Group
companies.
The steps towards the professional training of the dedicated staff and the increase of the integration level
of the specific approaches and solutions materialized in 2020 through information made through the
communication channel of the dedicated staff from the group companies, carried out by the ethics and
compliance officer, which, in two situations that occurred during 2020, also provided the necessary support
to this staff to solve complex cases.
Awareness regarding the standards of ethics and compliance and compliance monitoring continued at the
Electrica Group level throughout 2020.
Regarding the donations, in 2020 Electrica Group focused on donations in the health field in order to support
the situation created by the COVID-19 pandemic.
The action plan regarding corporate governance
The implementation of the Corporate Governance Action Plan, assumed as part of the Framework Agreement
with EBRD, has been considered since the IPO and the company’s listing. The standards and measures it
envisaged have been implemented, maintained, and continuously monitored.
Selection of independent directors
The EBRD guidelines were included in ELSA’s Articles of Association adopted on 4 July 2014, being maintained
in the context of increasing the total number of directors from five to seven, by adopting the Extraordinary
General Meeting of Shareholders decision from 10 November 2015; out of the seven directors, four must meet
the independence criteria.
For details about ELSA’s Board of Directors, its members, and the election of its members, please see chapter
4.4.
Nomination and Remuneration Policies
ELSA uses nomination and remuneration principles in accordance with best practices for the appointment
and remuneration of directors, executive management, and other members of its staff. In this respect, the
Profile of the Board of Directors and the Policy for the nomination of the executive managers were elaborated.
The Nomination and Remuneration Committee periodically reviews The Remuneration Policy for ELSA’s
Directors and Executive Management which describes the main pillars of remuneration, as well as the
terms, conditions, and non-financial benefits approved by ELSA’s corporate governance bodies. Following
the approvals received at the General Meeting of Shareholders, the policy was published on the company’s
website in the Corporate Governance section in March 2017 and subsequently updated in May 2018.
For details regarding the remuneration of the Board members and the executive management of ELSA,
please see chapter 4.7.
Advisory Committees of the Board of Directors
In order to increase the effectiveness of its activity, ELSA’s Board of Directors has established the following
committees with an advisory role: the Nomination and Remuneration Committee, the Audit and Risk
Committee, and the Strategy and Corporate Governance Committee. For details, please see chapter 4.5.
Internal Control and Audit Framework
During 2020, the documentation governing the internal audit activity at the Electrica Group level approved in
November 2019 was maintained and applied. This documentation was approved in its first version by the BoD
at the beginning of 2015 and includes the Internal Audit Charter, the Audit Manual, and the Auditor’s Code
of Ethics, its last update dating from 2019. The documents are available on ELSA’s website in the section The
group > Internal Audit. For details about the internal audit please see chapter 4.11. and for more details on the
internal control, please see chapter 6.8.
ELSA’s Articles of Association
EBRD guidelines were included in the Articles of Association of ELSA adopted on 4 July 2014.
In 2019, ELSA’s Articles of Association were updated according to ELSA Board of Directors’ decisions from
9 December 2019, following the increase of the company’s share capital. All versions of the ELSA Articles of
Association adopted since the listing of the company are available on its website in the section The group >
About > Articles of Association.
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Clear lines of competence and responsibility
To define the reporting system and to set responsibilities and competencies at the level of the group and
its’ companies, ELSA, and its subsidiaries carried out projects for processes’ mapping both in distribution
and in supply areas, benefiting from external consultancy in this regard. In the context of the 2018 – 2020
organizational transformation, the applicable procedural framework, and the documentation of the Quality
– Environment - OHS Integrated Management Systems implemented at each Group company level have
been fully revised, maintaining their certifications in accordance with ISO 9001:2015, ISO 14001:2015 and ISO
45001:2018 following the audit performed during 2020 by the SRAC CERT certification body, IQNet affiliate.
In 2020, the Delegation of Authority Policy was updated both by ELSA and the companies within the Group.
Code of Conduct
EBRD requirements are covered by the Code of Ethics and Professional Conduct, which has been updated
following the new Strategy adopted by the Electrica Group. Regarding the Whistleblowing Policy, it has been
updated and is available on the company’s website.
During 2020, follow-up actions were carried out in relation to the provisions of the Code at the group level,
after it was disseminated and implemented in its new version within the Group.
Compliance with BSE Corporate Governance Code
On 4 January 2016, the new BSE Corporate Governance Code entered into force and, on this occasion, ELSA
published on 8 January 2016 the „Corporate Governance Code Apply or Explain” statement according to the
new provisions. ELSA publishes the updated statement yearly and reports promptly to the capital market any
update of its compliance.
In its turn, ELSA adopted its own Corporate Governance Code since the beginning of 2015, its last update
being approved by the BoD on 23 June 2020. This version, as well as the policies and other corporate
documents referred to by the Corporate Governance Code of ELSA, are available on the company’s website in
the Investors > Corporate Governance section (https://www.electrica.ro/en/investors/corporate-governance/).
For details, please consider chapters 4.9 and 4.1.
Electrica Group continues to have a Market Abuse Policy adopted by all companies within the Group.
The Social and Environmental Action Plan
The measures set by The Social and Environmental Action Plan, an annex to the Framework Agreement
signed by ELSA with EBRD, have been implemented and monitored since the end of 2014, aiming the highest
degree of compliance with the bank’s requirements.
1.1. In the context of the organizational transformations implemented between 2018 and 2020, the companies
within Electrica Group redefine their quality - environment - OHS integrated management systems by
redesigning and redocumenting their processes with the revision of the applicable procedural framework.
The endeavour for aligning the specific processes documentation within the quality - environment - OHS
integrated management systems, initiated in 2019 for the distribution operators within the group, was an
important step in preparing their merger at the end of 2020.
In 2020, the redesign of EFSA’s specific processes and the redefinition of its integrated quality - environment
- SSO management system continued in the context of the Brancusi project.
At the end of 2020, each of the group companies had integrated quality management systems - environment
- SSO, implemented and certified in accordance with the reference standards ISO 9001: 2015, ISO 14001: 2015,
and ISO 45001: 2018, successfully completing recertification and supervision audits performed by the same
certification body, SRAC Cert, affiliated to IQNet.
The implementation of the international standard for energy management ISO 50001:2011 was scheduled
after the implementation of the organizational transformation projects at the Electrica Group level.
1.2. For ensuring the contractors’ compliance with the company’s environment and OHS standards, ELSA
developed certain provisions integrated into dedicated conventions, concluded as part of the agreements/
contracts with works and services providers.
1.3. During 2020, the practice of including chapters dedicated to the environmental and OHS aspects, in the
new investment projects, continued at the Group level. There were considered mainly the measures for the
grids crossing the bird-protected areas and Natura 2000 sites, according to the digital maps highlighting the
priority areas for risk mitigation.
1.4. Regarding Corporate Social Responsibility, in 2020 ELSA maintained its grants, donations, and sponsorships
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policies approved in 2018, implemented at the level of its subsidiaries in 2019, and operationalized through a
dedicated working procedure, the policies being available on the ELSA website.
As in previous years, during 2020 the company was involved in the community and financially supported
social causes, directly or via prestigious non-governmental organizations in Romania, focusing on supporting
the health system in managing the COVID-19 pandemic throughout the country. All information on donations,
sponsorships, and grants provided by ELSA is available on its website under the CSR section.
In mid-2020, ELSA posted on its website the Group-level Sustainability Report for 2019, prepared in accordance
with the requirements of GRI (Global Reporting Initiative) standards.
1.5. Complaints’ management within Electrica Group is based on procedures in force at each company level and
involves several departments, both for investigating and analyzing the information, as well as for remedying the
situation and documenting the answers, if required. In 2019, for the three distribution companies, integration
of the call centers serving the users of electricity distribution networks operated in a unique Call Center, by
implementing an IT application for management, distribution, and prioritization was made.
Since April 2015, at Electrica Group level is available and functional a reporting system for ethical misconduct,
irregularities, or any violations of the law through professional alert devices (whistleblowing system). It includes
a dedicated hotline, postal addresses (physical and electronic), as well as an online platform for receiving
integrity warnings, accessible from the websites of all companies within the group. The services for receiving
and anonymizing integrity warnings have been outsourced since the launch of the system and maintained like
this even during 2020.
In November 2019, the Procedure for reporting ethical misconduct, irregularities, or violations of the law through
professional alert devices was reviewed and a dedicated Whistleblowing Policy was approved by ELSA’s BoD.
The approved documents are available on the company’s website, in the Whistle-blower section.
1.6. The identification and assessment of environmental and social risks by an independent consultant was
an integral part of the project initiated in November 2017, for the improvement and development of the risk
management system in accordance with the SR ISO 31000:2010 provisions. The consultant defined a dedicated
methodology, analyzing all vulnerabilities in relation to the environment, communities, occupational health
and safety, and to business ethics, and has conducted interviews and evaluation sessions across all the group’s
companies. In 2018, the vulnerability analysis was completed and the external consultant’s report on Electrica
Group environmental and social risks was approved, following that the implementation of their mitigation
measures to be monitored as part of the Risk Register by the organizational entity with responsibilities for risk
management within each Group company.
1.7. Regarding the development of a corporate policy on the reorganization/restructuring actions carried out, in
the context of the extensive organizational transformation projects implemented at the Group level, dedicated
provisions were negotiated with the trade unions as part of the Collective Labor Agreement for all Electrica
Group companies, a medium-term human resources strategy being defined.
2.1. The recent study carried out on the level of electromagnetic fields in installations belonging to a distribution
company of Electrica Group (transformer stations and high voltage overhead lines), conducted by RENAR
accredited laboratory of ICEMENERG National Research and Development Institute, concluded that no
parameters exceed the admitted standards in accordance with the legal provisions in force for any of the
locations for which the evaluation was conducted. The external consultant involved in the environmental and
social risk assessment at the group level also found that the respective environmental aspect is not significant.
2.2. Electrica Group companies selectively collect and temporarily store the generated waste and then processes
it through authorized contractors, according to the legal requirements in force, fulfilling their reporting
obligations to the competent environmental authorities, based on the implemented waste management
procedures.
In 2019, under ELSA guidance, the group distribution companies agreed upon implementing the process of
managing environmental issues and reports in a unitary manner. Thus, a unique waste management procedure
was adopted, which prepared the implementation of a unitary waste management system at the company
level resulting from the merger of the three distribution operators in the Group, which took place at the end of
2020. However, the nature of the specific activities makes necessary a distinct process and implicitly different
procedures for EFSA, ELSA, and SERV.
2.3. Electrica group distribution companies have an ongoing program to eliminate asbestos and PCB from
the managed installations, in accordance with specific national and European legislation in force, developed
based on a risk assessment regarding the use of these materials in their own activity. The program is monitored
annually through reports, the objective being considered in the investment projects initiated.
2.4. Accidental leakage of insulating oil from transformers from the stations operated by the group distribution
companies is monitored and recorded in registers of faults. For several locations (repair shops, warehouses)
soil and water analysis were conducted, following the requirements imposed by environmental authorizations.
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In 2020, at the level of the Electrica Group, an incident that generated minor accidental pollution was
registered, its minor effects being completely eliminated, as described in section 5.7, dedicated to the
environment, of this report.
3.1. The reduction of noise pollution in residential areas and of the associated health risks is achieved by
including specific provisions in the works and services contracts, when applicable, and by measurements
made in the substations located in the vicinity of such areas. For 2020 no significant impact, nor complaints
or notifications regarding noise pollution were registered or reported.
4.1. The 2020 year meant for the emergency situations and fire protection management a series of usual
prevention measures implemented at the level of all companies, which included: control of compliance with
specific rules by its own authorized personnel, regular training for all categories of personnel according to
approved training programs and topics, carrying out intervention and evacuation exercises in emergency
situations, check and maintenance for fire protection installations, respectively for firefighting means and
devices at each location with authorized companies, keeping pathways and evacuation routes free, measures
to prevent fires specific for the hot and cold seasons. At the same time, given the epidemiological crisis
generated by the COVID-19 pandemic, the actions in the field of managing emergency situations aimed
at developing and implementing resilience plans for each company within the Group, starting from the
resilience concept defined and provided by ELSA.
4.11 Internal audit activity report for 2020
The Internal Audit Department is responsible for conducting risk-based audit missions at the Group
companies’ level.
The Internal Audit Department performs its activity based on an audit plan, which is endorsed by the Audit
and Risk Committee, and subsequently approved by the Board of Directors. The 2020 Audit Plan included
assurance missions, operational, as well as ad-hoc audit missions, started after their validation by the Audit
and Risk Committee. The audit plan is aligned with the risk register at the Group level and prioritizes the main
risks identified for the major business areas.
During 2020, assurance audit missions were carried out, as well as various ad-hoc missions on the most
important business activities. The audit missions were performed on major projects or events within the
Group, but also on procurement, information security, physical security, and other areas. The Audit and Risk
Committee together with the Board of Directors analyzed the audit reports regarding the findings identified,
as well as the action plans established to remedy them.
Throughout 2020, the internal audit department team consisted of four internal auditors, out of which one
has a management role.
Among the most important audit missions carried out in 2020 are:
1.
2.
3.
4.
5.
Evaluation and audit of the procurement activity at ELSA, SERV, and SEM. Three audit reports were
prepared, containing 27 findings regarding the procurement activity, of which 15 with high impact;
Evaluation and audit on information security and access rights systems areas, carried out at ELSA and
SERV. Two audit reports were prepared containing 27 findings, of which 12 with high impact;
Evaluation and audit of the activity regarding the physical security at ELSA and SERV. Two audit
reports were prepared containing 8 findings, of which 2 with high impact;
Two “follow-up’’ missions were carried out at the Group level, which aimed to identify and monitor the
implementation degree of the audit recommendations related to the issued reports;
Based on the procedure for analyzing integrity warnings, 89 warnings were received through the
“whistle-blower” system. Out of the total number of warnings received during the year 2020, ELSA
Internal Audit Department analyzed 16 warnings, of which 11 were resolved and 5 are still under analysis.
The audit reports are submitted to and agreed by the audited companies’ management and further submitted
to the Audit and Risk Committee of ELSA, as well as to the Board of Directors. Following the conclusion of
the audit engagements and after agreeing on the audit recommendations with the responsible persons, the
Internal Audit Department works together with the audited structures in order to draw up the action plans
aimed to reduce or eliminate the identified risks.
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5.
Operating
activity of
Electrica
in 2020
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5.1 Operating segments
The operations of each reportable segment are summarized below.
Segments
Operations
Electricity and gas supply
Purchasing and supplying electricity and gas to end consumers (EFSA,
including the trading and representation activity on the Balancing
Market as Balance Responsible Party – BRP)
Electricity distribution
Electricity distribution service (in 2020 included SDTN, SDTS, SDMN,
SERV and the activity performed by ELSA within the distribution
network; starting with 1 January 2021, includes DEER, following the
DSO merger, serving the areas TN, TS, MN)
Electricity generation
Production of electricity from renewable sources (photovoltaic panels)
External electricity
network services
Headquarters
Source: Electrica
Repairs, maintenance, and other services for electricity
networks owned by other distributors
Includes corporate services at parent level
The figure below shows the areas covered by the Group subsidiaries and the number of customers/users they
serve.
Figure 21: The geographical coverage of the companies in the Electrica Group in 2020
Network area of
Transilvania North
1.31 mn users
Network area of
Muntenia North
1.32 mn users
Electrica
Furnizare (EF)
3.6 mn consumption
places
Network area of
Transilvania South
1.17 mn users
Source: Electrica
Note: The figure refers to the company’s number of consumption places/users on 31 December 2020
DISTRIBUTION SEGMENT
Electrica Group’s distribution segment refers to the activity of its subsidiaries SDMN, SDTN, SDTS, and SERV.
Starting with 1 January 2021, Electrica Group’s distribution segment is represented by the activity of DEER
(with the following network areas: Transylvania North, Transylvania South, and Muntenia North) and SERV.
The electricity distribution segment is a regulated area of activity, in which operations are conducted in
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a geographically limited area in accordance with the concession agreement, the nature of the services
provided, and the specific obligations are stipulated in the license conditions of the concessionaire operator.
Thus, Electrica Group, through its subsidiary, is the electricity distribution operator in Transylvania North (Cluj,
Maramures, Satu Mare, Salaj, Bihor, and Bistrita-Nasaud counties), Transylvania South (Brasov, Alba, Sibiu,
Mures, Harghita, and Covasna counties) and Muntenia North (Prahova, Buzau, Dambovita, Braila, Galati and
Vrancea counties), operating electrical installation with voltages between 0.4 kV and 110 kV.
DEER holds the exclusive electricity distribution license in these regions of network areas valid for the next
seven years with an extension clause for another 25 years. Within its service for distribution activity, SERV
provides maintenance, repair, and various services to group companies (car rental, rental of buildings, etc.) as
well as repairs and other related services to third parties.
The specific distribution tariffs are determined and approved by ANRE based on the “tariff basket cap” method
as set out in ANRE Order no. 169/18 September 2018 regarding the approval of the tariff setting methodology
for the electricity distribution service (applicable in the fourth regulatory period 2019 - 2023), with subsequent
amendments, and respectively GEO no. 1/15 January 2020 and ANRE Order no. 75/6 May 2020 regarding the
establishment of RRR applied to the approval of tariffs for the electricity distribution service.
The regulatory method “tariff basket cap” aims to avoid significant fluctuations in the tariffs applied to the
users for electricity distribution. The model for determining the regulated income is based on the principle
of remunerating in tariffs the justifiable costs recorded by the distribution system operator, the main source
of profit of the distribution company being the rate of return of capital invested in the distribution activity.
The tariffs are adjusted annually, taking into account the operational performance achieved, the quantities
of electricity distributed, the quantities and the purchase price of electricity needed to cover network losses
(NL), controllable and noncontrollable costs, the change in reactive energy revenues from forecasted values,
the depreciation and carrying out expected capitalizable expenses, the changes in actual gross profit from
other activities compared to the forecasted one, as well as the corrections in previous periods, carried out
according to the methodology.
As of 31 December 2020, the Group is in an estimated over-recovery position of approximately RON 88 mn
(2019: RON 80 mn), which will be deducted from the distribution tariffs of the following years.
The current regulatory period (the fourth regulatory period – RP4) began on 1 January 2019 and will end
on 31 December 2023. Both the current regulatory framework and the rules on RAB and distribution tariffs
determination are expected to remain unchanged until the end of 2023. ANRE sets the annual level of
distribution tariffs in RON per MWh for each distribution company, respectively on each network area in case
of a merged DSO and for each voltage level (high, medium, and low). The invoiced tariffs are summed up
according to the related voltage level (e.g., the medium voltage tariff includes the high voltage tariff, and the
low voltage tariff includes the high voltage and medium voltage tariff).
ANRE determines the regulated annual income required for each year of the regulatory period based on
projections submitted by distribution operators in accordance with the methodology requirements, at the
beginning of the regulatory period.
The electricity distribution tariffs approved by ANRE for 2021 are as follows (RON/MWh):
Applicable starting with 1 January 2021
ANRE Order no.
HighVoltage
Medium Voltage
Low Voltage
220/11
December 2020
221/11
December 2020
222/11
December 2020
18.72
19.23
22.23
38.15
47.12
127.88
107.58
45.24
111.31
Tariff
(RON/MWh)
MN
TN
TS
Source: ANRE
SUPPLY SEGMENT
Electrica Group operates on the electricity supply segment through its subsidiary, EFSA, both on the regulated
electricity market (as SoLR in the territorial areas where the Group’s distribution subsidiaries operate), and
on the competitive market, at a national level. EFSA holds an electricity supply license that covers the entire
Romanian territory, valid until 2021, with the possibility of extension. Additionally, holds a license for supplying
natural gas, valid until 2022.
The electricity market is split between the regulated market (through suppliers of last resort) and the
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competitive market. On both markets, electricity can be sold/purchased wholesale or retail.
Regulated market
The liberalization of the electricity market has accentuated the competition between traditional suppliers
and other suppliers newly entering the energy market, generating a massive offer for the segment of
household customers in the regulated market. During 2020, similar to 2019, there was an increase in the
number of products offered by suppliers to end customers and the option of customers for offers that
combine electricity, gas, and/or other products and services.
Currently, EFSA is a supplier of last resort for approximately 3 mn customers with 3.3 mn consumption places.
Competitive market
In 2020, the trading on the wholesale competitive market is transparent, public, centralized, and non-
discriminatory and takes place on OPCOM platforms; prices can be freely negotiated by the parties on the
competitive retail market. The participants on the wholesale market can trade electricity based on bilateral
contracts concluded on the markets managed by OPCOM or on the spot markets also managed by OPCOM.
BRP Electrica - Balance Responsible Party
The activity of representation in the Balancing Market as the Balance Responsible Party (BRP) took place
within EFSA.
Starting with 1 April 2018, the client portfolio is diversified, consisting of producers (hydro, thermal, wind,
photovoltaic, biogas, biomass), suppliers, and distribution operators, ensuring the balancing service of over
24% of total electricity consumption from Romania.
The distribution companies within Electrica Group have delegated their responsibility to BRP EFSA.
The Balancing Market, a component of the wholesale energy market, is a market for which each licensee must
either assume the balancing responsibility or transfer the balancing responsibility to a BRP. By transferring
the responsibility to a balance responsible party, there is the advantage of aggregating imbalances, in the
sense of reducing costs on the Balancing Market compared to the situation where the producer/supplier/
distributor would be itself a Balance Responsible Party.
ENERGY SERVICES SEGMENT
The Group’s portfolio also includes the energy services segment (equipment maintenance, repairs, and other
additional services related to the network), performed almost entirely for the distribution companies outside
the Group.
Until 30 November 2020, the segment was represented by SEM, and after the merger by absorption between
SERV and SEM, the segment includes the energy services activity within SERV.
5.2 Fixed assets
The number of users and volume of installations as of 31 December 2020 at the level of the three distribution
regions and at the Group’s overall level are quantified as follows:
Geographical coverage
Number of users,
of which:
high voltage (HV – 110 Kv)
medium voltage (MV)
low voltage (LV)
Overhead power lines
length, out of which:
high voltage (HV – 110 Kv)
medium voltage (MV)
MU
km2
no.
no.
no.
no.
km
km
km
TN
MN
TS
34,162
28,962
34,072
Total
97,196
1,312,694
1,320,321
1,170,517
3,803,532
35
4,292
40
4,325
45
2,937
120
11,554
1,308,367
1,315,956
1,167,535
3,791,858
53,115
59,382
45,746
158,243
2,196
11,897
2,146
12,641
3,149
7,491
10,507
35,045
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UM
TN
MN
TS
Total
low voltage (LV)
km
39,022
44,595
32,090
115,707
out of which connections
km
18,265
24,262
17,352
59,879
Underground power lines
length, out of which:
high voltage (HV – 110 Kv)
medium voltage (MV)
low voltage (LV)
out of which connections
Cumulative power of
transformers/power AT
km
17,245
12,191
12,467
41,903
km
km
km
km
30
4,135
13,080
7,697
17
3,510
8,664
2,292
63
3,583
8,821
2,846
110
11,228
30,565
12,835
MVA
6,257
8,778
7,003
22,038
in power stations(HV/MV + MV/MV)
MVA
3,760
5,786
4,158
13,704
in HV/MV power stations
MVA
3,712
5,437
4,104
13,253
in MV/MV power stations
MVA
48
349
54
451
Switching stations/
Transformer stations
No. of substations,
out of which:
HV/MT power stations
MT/MT power stations
pcs
2,497
2,992
2,845
8,334
pcs
pcs
pcs
121
92
29
212
124
88
105
101
4
438
317
121
Number of switching stations
and transformer stations
pcs
9,187
10,598
9,427
29,212
Source: Electrica
Most of the distribution installations currently in the patrimony of the electricity distribution companies
within Electrica Group, about 70% of the total volume, was built in the period 1960-1990, in the successive
stages of development of the National Energy System. This has led to a wide variety of equipment currently
in operation. These represent installations made with Romanian technology in the period 1960 - 1990, where
there is a high degree of physical and moral wear and tear. It should be noted that the installations put into
operation between 1980 - 1990 (approximately 10%) gradually exceed the normal operating time.
A relatively small category, representing about 30% of the total installations, is represented by the new
installations, put into operation after 1990 and which are made to technical standards that meet the current
requirements.
Depending on the voltage level, categories of installations, the year of commissioning, and the specific
operating conditions, the degree of wear and tear of the installations can be assessed as follows:
High voltage power lines (110 kV)
Underground power lines
Overhead power lines
Medium voltage power lines
Underground power lines
Overhead power lines
Low voltage power lines
Underground power lines
Overhead power lines
Substations
TN
25%
74%
48%
59%
52%
57%
70%
MN
45%
65%
65%
60%
70%
65%
75%
TS
50%
75%
65%
60%
75%
68%
60%
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Transformers
Source: Electrica
Investments
Pole - mounted
Concrete enclosure
Pad - mounted
Underground
Concrete base
TN
44%
50%
69%
15%
10%
MN
50%
65%
75%
95%
9%
TS
50%
75%
20%
85%
12%
The investments at the Electrica Group level have been prioritized considering especially the distribution
companies’ assets degree of wear, and with a particular focus on the improvement of the distribution service
quality, the safety in operations, as well as the increase in efficiency.
The Group will continue to modernize and to develop the smart distribution network by installing smart
network infrastructure systems, such as SCADA, SAD, electricity measurement systems, etc., in order to
improve the energy and operational efficiency, to improve the network flexibility, the distribution service
quality and to ensure the continuity in the electricity supply and the networks’ safety.
In the investments’ program implementation, the Group’s strategy and in particular the following criteria are
ensured:
■
■
tracking the inclusion of regulated investments in the RAB;
non-regulated investments of the Group must provide an internal rate of return higher than the
weighted average cost of capital;
the proposed investment program must follow the Group’s financial strategy of maintaining a solid
capital structure.
■
Thus, those categories of capital expenses that contribute to the development of a profitable and sustainable
distribution activity, as well as to the creation of the conditions of access to the electricity distribution network
for the consumers and electricity producers, in accordance with market requirements, are prioritized, based
in particular on:
■
■
■
distribution automation by integrating of the installation in SCADA, SAD, DMS, etc.;
modernizing the equipment from the transformer substations and the medium voltage network;
introducing equipment with reduced technological losses, higher operating efficiencies and
environmentally friendly;
modernizing of the medium and low voltage distribution network and the connections;
expansion of modern systems for measuring electricity consumption and transmitting consumption
data.
■
■
At the same time, the Group is considering investments in the upgrade of IT infrastructure and IT systems,
taking into account both the legal requirements regarding data protection and the positive effect on the
quality of the services provided.
The following table presents the investment program approved by ANRE for the distribution area within
Electrica Group for the period 2019 - 2023 (in 2018 real terms):
Commissioning program approved by ANRE for the period 2019 - 2023 (RON mn)
SDTN
SDTS
SDMN
Total
Source: ANRE
2019
2020
2021
2022
2023
Total
190
200
200
590
175
190
190
555
170
170
160
160
170
160
160
160
165
855
890
875
500
490
485
2,620
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In 2020, Electrica Group companies realized the following investments, compared to the planned values:
Electrica Group subsidiary (RON mn)
Planned 2020
Planned revised
2020
Achieved 2020
SDTN
SDTS
SDMN
EFSA
SERV
SEM9
ELSA
Total
200.0
177.0
220.0
25.3
9.1
4.9
41.8
678.2
200.0
197.1
220.0
25.3
9.1
4.9
41.8
698.3
200.0
185.6
188.5
4.6
1.0
-
35.0
614.7
Source: Electrica
At Electrica Group level, in 2020, the consolidated CAPEX plan was achieved at a rate of 88% compared to the
revised plan approved by the Board of Directors of ELSA in August 2020, and for the distribution subsidiaries,
the average degree of achievement is 93% compared to the revised plan.
The synthetic structure of investments achieved (CAPEX) by the distribution subsidiaries in 2020 is presented
in the table below (for details of the most important investments see Appendix 2):
Category of works (RON mn)
Efficiency, out of which:
Energy efficiency/NL
Operational efficiency
Quality of distribution service
Other categories
Independent equipment
Studies and projects for the coming years
Total
Source: Electrica
Total
256
134
122
246
61
7
4
574
The main investments of the Electrica Group were focused in 2020 on improving the quality of the distribution
service, as well as on increasing the energy and operational efficiency.
Figure 22: The structure of CAPEX achievements for distribution operators within the Group, in 2020 (mn RON)
Source: Electrica
9 Following the merger between SERV and SEM, the CAPEX realized by SEM until 30 November 2020 is inclu-
ded in the CAPEX presented for SERV.
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The approved plan of investments to be commissioned for 2020 was in the total amount of RON 606.2 mn,
this value also including investments carried forward, for the year 2019 (RON 12.7 mn).
Thus, from the investment plan for 2020, of RON 593.5 mn, the three distribution companies of Electrica
group realized and commissioned investments of RON 596.2 mn, representing an average percentage of
achievement of 100.5%.
In addition, investments related to 2019 of RON 13 mn were realized, representing a percentage of achievement
of 102% of the total investments carried forward.
Electrica Group subsidiary
(RON mn)
Total 2020 plan
Total achieved
2020
Total percentage
of achievement %
SDMN
SDTS
SDTN
Total
215.8
203.2
187.1
606.2
214.7
204.3
190.2
609.2
99.5%
100.5%
101.7%
100.5%
Source: Electrica
As a result of investments made during 2014-2020, the value of the Regulated Assets Base of the Group’s
distribution operators has progressively changed, with an increasing evolution, and is as follows:
RAB (RON mn)
201410
2015
2016
2017
2018
201911
202012
SDTN
SDTS
SDMN
Total
1,331
1,420
1,519
1,624
1,728
1,856
1,952
1,333
1,377
1,388
1,475
1,521
1,486
1,543
1,581
1,679
1,769
1,691
1,913
1,778
2,035
4,150
4,340
4,488
4,779
5,019
5,460
5,764
Source: Electrica
5.3 Procurement
The procurement activity is carried out in accordance with the legal provisions in force, as well as in accordance
with own procedures and regulations, as appropriate, aiming to cover the needs of goods, services, and
works, in order to carry out in good conditions the Group’s activities. In some cases, purchases are carried out
centralized, by delegating the purchase’ coordination to a Group company, with the primary goal of reducing
costs, optimizing the procurement, and ensuring a unified policy within the Group.
5.4 Sales activity
Electrica Group’s revenues are influenced mainly by the distribution and supply segments. The contribution
of the distribution segment to the total revenues was of 22.9% in 2020 (2019: 24.2%), while the contribution of
the supply segment was of 76.6% in 2020 (2019: 75.4%).
The Group’s distribution operators (one operator from 1 January 2021) are natural monopolies in their
respective markets and as such, they hold a dominant position. In addition, the Group’s distribution operators
have a legal monopoly in their relevant regions; hence, other entities cannot set up a competing electricity
distribution business.
The following figure shows the national market share (based on the quantities of distributed electricity) held
by the Group’s subsidiaries in the electricity distribution segment, according to the 2019 ANRE report for
performance indicators’ monitoring.
10 In 2018, ANRE communicated the final value of the investments recognised for 2014, due to this reason star-
ting with 2014 the RAB values have been modified.
11 The values estimated as of 31 December 2019 may suffer corrections/changes, following ANRE’s analysis process.
12 The values estimated as of 31 December 2020 may suffer corrections/changes following ANRE’s analysis process.
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Figure 23: Market share of distribution segment in 2019
Others
60.55%
2020 DIRECTORS’ REPORT
SDTN
12.43%
SDTS
13.93%
SDMN
13.09%
Source: ANRE Report for performance indicators’ monitoring 2019
Regarding the supply segment, although it holds a strong position on in the electricity supply market, EFSA
is facing growing competition on in its market.
The figures below shows Electrica market shares for the supply activity as of 30 November 2020 (based on
the quantities supplied):
Figure 24: Regulated Market, 2020
Electrica Furnizare,
54.56%
Enel Energie Muntenia,
11.03%
E.ON Energie Romania,
14.90%
CEZ Vanzare,
12.61%
Enel Energie,
6.90%
Source: ANRE monthly report (November 2020)
Figure 25: Competitive Market, 2020
Others,
36.39%
Enel Energie,
9.37%
Enel Energie Muntenia,
8.70%
Electrica Furnizare,
10.89%
Getica 95 COM,
9.23%
Tinmar Energy,
7.76%
E.ON Energie Romania,
7.26%
CEZ Vanzare,
6.39%
ALRO,
4.01%
Source: ANRE monthly report, November 2020
Note: ʺOthersʺ category includes suppliers whose individual market shares are below 4%
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Figure 26: Volume of electricity supplied on
the retail market (TWh)
Figure 27: Evolution in the number of customers (th)
10.6
5.4
9.2
4.2
9.2
9.3
4.4
4.2
8.5
3.6
5.2
5.0
4.9
4.9
5.1
3,601
3,577
131
215
3,541
253
3,553
3,583
269
314
3,470
3,362
3,288
3,284
3,269
Regulated market
Competitive market
Regulated market
Competitive market
Source: Electrica
Source: Electrica
Figure 28: Customers by electricity supplied
volume, 2020
Figure 29: Customers by revenues, 2020
Household customers,
regulated market; 49%
Eligible, competitive market;
46%
Non-household customers,
regulated market; 5%
Household customers,
regulated market; 50%
Eligible, competitive market;
43%
Non-household customers,
regulated market; 7%
Source: Electrica
Source: Electrica
Major customers exposure
EFSA does not have significant exposure to a particular customer or group of customers that could have a
major influence on its business.
However, vulnerable consumers, regardless of the reason for falling into this category (low income or
health reasons) cannot be disconnected by the electricity supplier. In addition, customers who fall under
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the insolvency law can benefit from its protection against its creditors, and therefore possibly also from
electricity suppliers. As a result, electricity must be supplied to them by EFSA, even if they are unable to
pay. At the same time, during the state of alert that entered into force on 18 May 2020, it is mandatory to
ensure the continuity of service provision: in case there are reasons for disconnection, these operations are
postponed until the state of alert ends.
BRP Electrica - Balance Responsible Party
In 2020, all market participants (cca. 920) were established as Balance Responsible Parties at Transelectrica
S.A., out of which 65 participants assumed the responsibility of balancing in their own name as well as for
other licensees.
Based on the EU Regulation no. 943/2019 of the European Parliament and of the Council of 5 June 2019 on
the internal electricity market, ANRE approved several orders, which have been detailed in subchapter 1.2.
Starting with 1 September 2020, when ANRE Order no. 61/2020 entered into force, 2 imbalance prices (surplus
and deficit) are kept, but the price limits in the Balancing Market are eliminated and the technical price limits
for offers are mentioned, being represented by a minimum price of EUR -99999/MWh and a maximum price
of EUR +99999/MWh. Until 1 September 2020, the price limits were between RON 0.1/MWh and DAM closing
price RON +450/MWh (according to ANRE Order no. 31/2018). This change in price limits was reflected in
surplus and deficit prices, respectively in the case of surplus prices by a decrease, and in the case of deficit
prices by an increase.
Thus, in the case of surplus prices, there were also intervals with negative prices, for instance, between
September and December 2020, when the average surplus price was negative only in September and
October 2020 (September 2020: RON -18.18/MWh and October 2020: RON -13.84/MWh), in the last 2 months
of 2020, the average surplus price being a positive one (November 2020: RON 4.22/MWh and December 2020:
RON 13.85/MWh) (source: Transelectrica).
At the end of 2020, about 98 licensed participants (8 suppliers, 6 distribution operators, and 84 producers) had
transferred responsibility to BRP EFSA, compared to the end of 2019, when about 107 licensed participants
were registered.
In 2020, the average number of customers was about 97, meaning 1% lower than the average of 2019 and an
average number of over 300 bilateral contracts, respectively exchanges with OPCOM, were notified.
5.5 Reorganization and disposal of assets
In 2020, two mergers by absorption took place, namely one of the distribution operators (SDTN, SDMN, and
SDTS, the absorbing entity being SDTN), and the merger of the energy service companies (SERV and SEM,
the absorbing entity being SERV). Details on these two mergers were presented in subchapter 1.2.
5.6 Personnel
On 31 December 2020, Electrica Group had 8,126 employees. The table below provides an overview of the
employment in the Group, by business segments, at the end of the specified years. Starting with 2020, the
figures include also the mandate contracts.
Electricity distribution segment
7,213
6,972
6,697
2020*
2019
2018
MN
TN
TS
SERV
Supply segment – EFSA
Services related to other distribution networks –
SEM (included in SERV starting December 2020)
ELSA
Total
2,184
2,191
2,166
2,248
2,233
2,160
2,087
2,085
2,024
694
793
0
120
463
896
296
128
347
872
303
123
8,126
8,292
7,995
Source: Electrica
*According to the modified reporting methodology to INS, the employees’ number from 31.12.2020 also includes
24 persons who worked based on a mandate contract.
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In addition to the traditional areas of interest, new ones appeared, such as the development of new activities,
based on innovative technology, the development of a closer relationship with customers, based on the
development of competencies, but also on an offer of products and services aligned with their needs, which
led to an increase in the number of employees within the Group.
Also, ensuring the necessary human resources (from internal resources or through specific recruitment) for
key business areas and training staff and capitalizing on its potential, expertise, and skills, in order to increase
labor productivity and individual performance, are treated as priority topics.
As of 31 December 2020, approximately 53% of the Group’s employees represent directly productive staff, and
47% represent indirectly productive staff, including technical, economic, social, and administrative personnel.
The table below presents the Group’s employment by age, as follows:
Age category
under 18
18-30
31-40
41-50
51-60
over 60 years old
Total
31 December 2020
31 December 2019
0.01%
4.60%
16.32%
36.99%
39.26%
2.82%
100%
0%
4.40%
17.05%
38.63%
37.66%
2.26%
100%
Source: Electrica
As of 31 December 2020, about 98% of the Group’s employees are union members and their employment
conditions are governed by the Collective Labor Agreement, which will expire on 2 April 2022 for ELSA and on
31 December 2021 for the Group’s subsidiaries. Electrica Group did not face any union actions in 2020.
On 27 March 2020, the Board of Directors approved the modification of the organizational structure and
ELSA’s headcount, starting with 1 April 2020, the targeted structure being implemented in stages, throughout
2020.
In 2020, the voluntary leave program with compensatory payments was implemented in ELSA during two
short time periods, in order to support the implementation stages of the new approved organizational
structure. This program was also carried out within the transformation projects of EFSA and SERV subsidiaries.
In the same context of transformations, in 2020, the distribution subsidiaries did not run a voluntary leave
program with compensatory payments, these entering the recruitment phase in order to cope with the new
projects launched, respectively to ensure the performance and efficiency of the activities at the level required
by the regulatory authorities and the energy market.
ELSA has successfully concluded negotiations on a new collective labor agreement, valid for 2 years starting
from 3 April 2020.
An extensive professional training project was launched last year within the Group, in the area of Project
Management, AGILE transformation, PMO, and Business Case guides, which has the role of preparing the
organization for the future period. There were more than 40 days dedicated to the training program on these
topics and more than 100 participants were involved in these courses.
Both ELSA and its subsidiaries prepared and updated policies, procedures, and internal regulations that
contain provisions regarding employment, non-discrimination, occupational health and safety, employer and
employees’ rights and obligations, the procedure for solving the employees’ complaints, the labor discipline,
disciplinary sanctions and deviations, rules regarding the disciplinary procedure, criteria and procedures for
the professional evaluation of employees and final provisions.
Achieving the best possible correlation between the future needs of the organization and the competencies,
experience, and career aspirations of its members, led to the definition of the guidelines of the succession in
the company concept.
Also, the improvement and continuous development of the performance management system contributes
to the achievement of Electrica Group key objectives, set for the 2019-2023 period (Improving operational
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performance to continuously increase the quality of customer service and Increasing performance, and
strengthening the sustainability of economic results).
By adopting the human resources strategy, the Group aims to ensure the qualified resources necessary to
support the initiatives for the next period, in the conditions of an accentuated dynamics of the labor market.
One of the strategic objectives is the education and training to ensure the necessary qualified human
resources, with the expected result of creating an internal training system, which addresses the main skills
needed by the employees, to increase and maintain organizational capabilities, and to support performance.
Thus, the training program in the dual education system was implemented, which takes place in all three
distribution regions, TN, MN, and TS. The classes are organized in high schools with energy profile, and thus,
the Group is involved in the life of the communities in which it operates, supporting children of families
with modest material possibilities to remain in the education system, and at the same time, forming a solid
base of young electricians who will be able in the future to join the distribution company, depending on the
workforce need.
Another desideratum, established by the strategic objective regarding modernization, is the increase of the
employees’ trust in the employer and the creation of a suitable working environment for collaboration and
obtaining the envisaged performances. Thus, in order to improve the interactions of the Electrica Group
employees with the human resources departments, to increase the employee retention, and to improve the
perception of the organizational culture, a project was launched in 2020, to improve the employee experience
in the Electrica Group.
Also, in order to improve the employer’s image and in the pandemic context traversed during 2020, the ”work
from home” system was successfully implemented within the Electrica Group. This working system type still
continues, following the authorities’ recommendations in the state of alert context and complying with the
new internally defined processes, regarding workplace safety and human resources activity management.
The organizational culture modernization, having as central elements ”excellence” and ”safety”, is one of the
strategic objectives, and one of the projects in this area is represented by the program „Change agents” in the
distribution regions, with the role of supporting organizational change that occurred following the merger of
the distribution companies. This program aims to promote opening to the new challenges and to encourage
employees to propose solutions to solve the problems they face at work. Change agents are employees who
not only accept the change, but seek solutions and support its implementation.
Another objective of major interest is performance management, as a coherent system that evaluates as
objectively as possible the activity of the employees, in close correlation with the system of compensations
and benefits and the professional development one.
Thus, the Group’s Key Performance Indicators Catalogue was elaborated, as a tool that ensures the objective
and professional evaluation of Electrica’s strategic objectives achievement on each main area of activity.
Additionally, a framework methodology for the application of the KPIs Catalogue and performance
management according to best practices has been developed, which is to be adapted to each company. The
project also included a series of applied workshops, training sessions on setting and evaluating performance
indicators, as well as other discussions aimed at transferring knowledge for methodological alignment at all
hierarchical levels and expressing expectations to strengthen internal teams.
Additionally, in 2020, the methodological and conceptual framework for the application of international
best practices was developed in order to increase the maturity of the performance management system
within Electrica, which considers the continuous improvement of the employee evaluation process and the
development of the necessary tools to build a solid performance-based system.
The training programs carried out at the Electrica Group level took into account both the constant evolution
and the improvement of the Group employees’ skills.
The company’s management supports the principle of development through continuous training by involving
employees in these programs, thus supporting them to effectively address their professional challenges.
Health and safety at work
The Integrated Quality-Environment-SSO Management System, implemented, certified, and supervised
at the level of each company within the Electrica Group by the SRAC Cert certification body, ensures the
companies’ compliance with the legal requirements in the field of occupational safety and health, those of
the SR ISO reference standard. 45001: 2018 and enhances the provision of services and the conduct of business
processes in safe conditions for the staff of the organization and the contractor, but also for customers.
The situation of work accidents and specific indicators for Electrica Group
In 2020 was recorded one fatal work accident at the level of the Electrica Group, compared to two fatal work
accidents registered in 2019.
However, the total number of work accidents at the Group level increased by one compared to the previous
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year, recording five work accidents compared to four accidents recorded in 2019, but their number remained
below the level recorded in 2018, of six accidents for work. As a result, an electrician from SDTN died, three
other employees within Electrica Group companies (from SDMN, SDTN, and SDTS) needed hospitalization,
and an employee (from SERV) suffered a fracture.
The complex of complementary causes and contributing factors that determined the occurrence of each
of these accidents were analyzed either by the Territorial Labor Inspectorates or by the companies where
the accidents occurred, by the legally constituted commissions, and the research files include measures
that must be implemented by each company to prevent similar situations. Three of the five work accidents
recorded at the Group level occurred due to the materialization of the risk of falling from a height, for one
of the accidents the electrical risk generated fatal consequences, and the other accidents occurred by
stumbling and falling from the same level.
Figure 30: Work Accident Frequency Index ‰)
2.12
1.06
0.72
2018
Sursa: Electrica
2.53
0.95
0.5
2019
1.84
0.66
0.4
2020
The frequency index (FI), expressed as the
number of injured people per 1000 employees
is 0.4 ‰ for Electrica Group in 2020, decreasing
compared to 2019 when it had the value of 0.5 ‰
and 2018 when it recorded the value of 0.72 ‰.
the
is a statistical
indicator recommended
FI
by
International Labor Organization
(ILO) through the Resolution on Workplace
Accident Statistics adopted in October 1998,
as it that correlates the number of accidents
with the number of workers,
increasing
the comparability of HSS organizations’
performance and eliminating the distortions
generated by the size of these organizations
(the numbers of staff in each organization).
Based on the background of the organizational
transformations initiated, starting with 2018 and continuing in the following years, the IF for Electrica Group
registered decreases and was constantly below the national value of the indicator and well below the level
registered by the industry in which it operates. Its downward trend continued in 2020, even in the case of a
slight increase in the number of accidents, in the context of an increase in the numbers of staff, as seen in
the graph above.
Aspects regarding the health status of employees
At the Electrica Group level, no occupational illnesses were recorded neither in the reference year, nor in the
previous years.
The prevention, monitoring, and assurance of occupational health for Electrica Group was performed by
physicians specialized in occupational medicine, based on dedicated services contracts and was followed
up by ELSA through half-year reports and the OHS Committee with coordinating role, formed in 2018, which
brings together trade unions representatives, the management with OHS responsibilities and the executive
management of the Group companies.
Actions to improve the health and safety at work climate for employees
A sustained effort by the HSS teams of each Group company, coordinated at the level of IMSD & HSS ELSA,
it was required throughout 2020 the preparation and implementation of company resilience plans in the
context of the COVID-19 pandemic, the main actions defined and managed at the HSS level being:
■
defining the regulatory framework necessary to prevent the spread of the new coronavirus at the
level of Group companies (rules for collaboration and use of common areas, rules for sanitation of
equipment and work devices, rules for travel in service interest, intervention protocols in self-isolation
locations or quarantine, disease management protocols, direct/indirect contact, return from risk
areas, etc.);
internal communication of relevant aspects in the context of developments in the external and
internal environment;
ensuring staff awareness and training in order to reduce the risk of contamination at work (hygiene
rules, legal obligations, use of medical devices dedicated to the prevention, new regulations, telework
regime, etc.)
operationalization of the concept of telework together with the Human Resources team, for the staff
for which the nature of the activity allowed and reorganization of the activity to ensure the continuity
of key processes where the telework it was not applicable
ensuring the endowments and services necessary for the protection of the personnel (hygienic-
sanitary materials and services, medical devices, markings and signals, testing services and kits, etc.).
■
■
■
■
As a result of the implementation of the training component on the Resilience Plans, in 2020 the total
number of HSS training hours performed increased by over 10%, reaching 312,100 hours from 276,056 HSS
training hours in 2019.
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Given the traffic restrictions, initially imposed at the national level during the State of Emergency, and later to
avoid a possible transmission from one area to another of the virus based on the differentiated developments
at a regional level, the concept of cross-control on HSS line was abandoned in 2020, despite the proven
effectiveness of the program implemented in 2019. The same reasons limited to 2,105 the total number of HSS
controls performed by Electrica Group with its own staff, to identify deficiencies that could increase the risk
level to work safety and health of employees, these controls being followed by the immediate treatment of
risk factors or non-conformities identified.
Although during the reference period there was a higher number of controls of the Territorial Labor
Inspectorates and Inspectorates for Emergency Situations compared to the previous year, some of them
concerning the implementation and the degree of compliance with the new legal regulations intended to
limit the spread of COVID - 19, in 2020 no sanctions, warnings or plans of preventive / /corrective measures
were imposed for any of the Group companies.
The year 2020 marked the completion of the migration of Integrated Environmental Quality Management
Systems - SSO implemented at the level of Electrica Group companies to the new standard SR ISO 45001:
2018. During the year, all companies underwent external audits carried out by the certification body, either
for the supervision of the system, maintaining their certifications behind them, or for the certification of the
system, obtaining the certification.
5.7 Environmental considerations
In 2020, Electrica Group invested in the field of environmental protection over RON 14.4 mn, the value
recording an increase of almost 23% from the level of RON 11.7 mn recorded in 2019.
The consolidated non-financial statement is included in the Group’s Sustainability Report, which is published
within a maximum of 6 months from the date of the Directors’ Report.
Continuing the practice of previous years in identifying and evaluating all real and potential environmental
aspects with positive and negative effects, associated with specific processes, both in normal operating
conditions, as well as in abnormal operating conditions and emergency situations at the level of each
company, Electrica Group has defined and promoted its main concerns in order to increase environmental
performance, as follows:
■
■
reducing or limiting the impact of services and infrastructure on the environment;
responsible waste management with safe disposal of generated waste, especially of those the highly
polluting ones;
conservation of biodiversity and resources.
■
Figure 31: PCB capacitors in operation at the end of 2020
1,442
1,215
475
475
263
186
SDTN
SDTS
SDMN
Source: Electrica
2019
2020
Subordinated to the concern for
reducing or limiting the impact
infrastructure
of services and
on
the
the environment, at
level of distribution operators
within the Group is carried out a
program of elimination of PCBs
biphenyls)
(polychlorinated
from electrical
in
operation that continued in 2020,
with
represented
results
the accompanying graph,
in
implementation pace ensuring
that companies are comfortable
in
the national
elimination programme with a
deadline of 2028, according to GD
no. 1497/2008.
implementing
installations
the
For responsible waste management and the safe disposal of the generated waste, especially highly polluting
waste, a unified process has been defined and implemented at the level of Electrica Group, governed by
the principles of selective collection and recycling – when its requirements are met - or destruction with
authorized operators.
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Figure 32: Waste processing
620.0
1,636.0
305.4
Recycling
Final storage
Temporary storage
Incineration
5,088.2
Source: Electrica
In this regard, all Group’s companies agreed to contracts with authorized providers for processing/storage
of all categories of generated waste, the transport being carried out by these respective contractors as part
of the contracted services. Based on these contracts, at Electrica Group level was selected and managed in
2020 a total amount of 7,648.5 tons of waste, most of them, of over 5,000 tons, being recycled.
The only environmental impact incident recorded during 2020 occurred at the SDTS level, consisting of
accidental soil pollution with electro-insulating oil, at the superficial level, on a restricted and very well
delimited area. This was generated by leaks that appeared as a consequence of inadequate storage of some
transformers withdrawn from Zizin Station – Regional Operating Network Structure Brasov.
Following the incident, as a measure to reduce the risk of similar incidents, the deposit was partially released,
the fully depreciated transformers being scrapped and capitalized by sale.
In order to eliminate the effects of accidental pollution, the soil which presented traces of oil was removed and
deposited separately, suitable, in order to be handed over to an authorized economic operator for treatment,
based on a contract. Measurements of soil quality indicators were not required, according to the regional
environmental authority, the incident being considered minor.
The environmental authority applied to SDTS a fine of RON 3,750 for improper storage of equipment,
according to GD no. 235/2007, fully paid by the company.
The measures implemented have ensured the fast and complete elimination of the effects of accidental
pollution.
Protecting biodiversity and decreasing the effects of the Group’s activities and assets on flora and fauna has
also been maintained as a priority direction of action for 2020, the amount allocated by Electrica Group in this
regard remaining at the same level, of approximately RON 3 mn, as in 2019.
Thus, during 2020, at the Electrica Group level continued the implementation of practices and solutions
harmonized with the environmental protection norms and the principles of sustainable development.
For distribution and supply activities no environmental authorizations are required, and the energy services
companies within Electrica Group, which merged at the end of 2020 (Serv and SEM) held at the time of the
merger, 1 December 2020, the environmental authorisations needed for the operation of more than 95% of
the locations and in the case of two locations for which the authorization had expired, the documentation for
re-authorization already being submitted, in accordance with the legislation in force.
Following external supervisory/certification audits carried out by certification body SRAC Cert, companies
within Electrica Group maintained in 2020 their own certifications for Integrated Quality-Management
Systems – Environment – Occupational Health and Safety through which the environmental aspects specific
to the activities performed are managed in a responsible and efficient manner, in accordance with the
provision of the international standard SR EN ISO 14001:2015.
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5.8 Research and development activities
Electrica Group is promoting technological innovation by participating in research and development projects
financed/co-financed through European funds, having the possibility to test new technologies to manage
and optimize energy efficiency. Also, the electricity distribution networks integrate a high level of distributed
generation sources.
By participating in these research, development, and innovation projects with financing/co-financing
through non-reimbursable funds, Electrica Group has the following benefits:
■
having access to cutting-edge technologies in the field of optimizing the operating regimes of
the electricity distribution network (EDN) in terms of network connection of renewable electricity
production sources (distributed or concentrated);
the improvement of the safety and reliability of isolated electrical systems, of the quality of electricity
supplied by providing quick and low-cost reserves through flexible loads;
the possibility of identifying certain criteria to promote smart grids and smart metering solutions in
terms of the requirements of the new data protection measurement code and encryption methods;
the use of opportunities to develop the self-financing business portfolio of group companies;
developing new competencies through the transfer of know-how;
compliance with the best practices of similar companies in Europe;
creating new opportunities for the group companies to participate in projects funded by the European
Union.
■
■
■
■
■
■
Another important endeavour of Electrica Group in promoting technological innovation is to disseminate
the solutions of electricity networks’ modernization using the smart grid concept. The communications take
place at the international conferences/symposiums where Electrica Group participates or organizes internally
to align development plans with available new technologies.
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6.
Electrica
financial
reporting
for 2020
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The overview of the company’s consolidated financials is in accordance with the consolidated financial
statements that have been prepared in accordance with the International Financial Reporting Standards
(“IFRS”) adopted by the European Union („IFRS-EU”). These consolidated financial statements are presented
in RON, which is the functional currency of all companies within the Group.
6.1 Consolidated statement of the financial position
The following table presents the consolidated statement of the financial position (amounts in RON mn):
31 December
2020
31 December
2019
Variation
2020/2019
ASSETS
Non-current assets
Intangible assets related to concession agreements
5,455.2
5,188.2
5.1%
Other intangible assets
Property, plant and equipment
Restricted cash
Deferred tax assets
Other non-current assets
Right of use assets
7.2
508.1
-
19.7
1.2
27.1
13.4
544.1
320.0
19.9
1.8
35.0
-46.2%
-6.6%
-100.0%
-1.1%
-36.4%
-22.7%
Total non-current assets
6,018.5
6,122.4
-1.7%
Current assets
Trade receivables
Other receivables
Cash and cash equivalents
Restricted cash
Deposits with a maturity date of more than three months
Inventories
Prepayments
Current income tax receivable
Assets held for sale
Total current assets
1,029.8
32.5
570.9
320.0
-
70
2.8
1.8
15.5
890.0
28.5
607.5
-
66.5
74.4
2.7
8.3
17.0
2,043.3
1,694.8
15.7%
13.9%
-6.0%
-
-100.0%
-5.9%
4.4%
-77.8%
-9.1%
20.6%
Total assets
8,061.8
7,817.3
3.1%
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserves
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ELECTRICA S.A.
3,464.4
3,464.4
103.0
(75.4)
103.0
(75.4)
-
-
-
2020 DIRECTORS’ REPORT
Equity
Revaluation reserve
Legal reserves
Retained earnings
116.4
392.3
1.759.6
Total equity attributable to shareholders of the Company
5,760.3
Total equity
Liabilities
Non-current liabilities
Lease liability – long term
Deferred tax liabilities
Employee benefits
Other liabilities
Long-term bank borrowings
Total non-current liabilities
Current liabilities
Financing for network construction related
to concession arrangements
Lease liability – short term
Bank overdrafts
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
Current income tax liability
Current portion of long-term bank
borrowings
Total current liabilities
Total liabilities
Total equity and liabilities
5.760,3
16.9
177.7
143.9
33.9
400.3
772.7
-
10.7
165.0
607.2
241
5.6
92.3
19.2
9.2
378.6
1,528.8
2,301.5
8,061.8
87.7
371.8
1.637.9
5,589.5
5.589,5
9.6
168.1
126.4
36.8
432.8
773.7
1.0
26.9
350.6
730.5
218.3
6.9
87.9
19.6
4.9
7.5
1,454.0
2,227.7
7,817.3
32.7%
5.5%
7.4%
3.1%
3,1%
75.7%
5.7%
13.8%
-7.9%
-7.5%
-0.1%
-100.0%
-60.0%
-53.0%
-16.9%
10.4%
-18.6%
5.0%
-1.6%
88.1%
4,940.1%
5.1%
3.3%
3.1%
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Non-current assets
The non-current assets decreased by RON 104 mn in 2020, or 1.7%, to RON 6,018.5 mn as of 31 December 2020,
from RON 6,122.4 mn at 31 December 2019, this variation being the cumulated effect of:
-
network investments made by the distribution subsidiaries (the most relevant values of investments
and commissioned assets are presented in Annex 2);
decrease of property, plant, and equipment, mainly following the transfer of the AMR system from
ELSA to the three distribution companies, in the form of a contribution in kind to their share capital;
at a consolidated level, the Group has recognized the value of the AMR system under IFRIC 12 ‘Service
-
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2020 DIRECTORS’ REPORT
-
Concession Agreements’, thus increasing the value of intangible assets;
reclassification of long-term restricted cash, since the loan to BRD that had this cash as a guarantee,
will be repaid in less than 12 months, in October 2021.
Current assets
-
In 2020, current assets increased by RON 348.5 mn compared to 2019, or 20.6%, from RON 1,694.8 mn to
RON 2,043.3 mn, this evolution being mainly the net effect of higher trade receivables, lower value of cash
and cash equivalents and of the deposits with a maturity of more than three months and increase in short
term restricted cash. Below is presented the evolution of current assets’ elements that generate most of the
variation.
Trade receivables
Trade receivables increased by RON 139.8 mn during 2020, or 15.7%, to RON 1,029.8 mn, from RON 890 mn at
on 31 December 2019. This variation is generated by the impact of COVID-19 on the receivables collection, by
the issuance of emergency certificates, but also by the increase in sales, especially in the supply segment.
Cash and cash equivalents
Cash and cash equivalents include cash balances, call deposits, and deposits with maturities of up to three
months that have insignificant exposure to the fair value change risk, being used by the Group for the
management of short-term commitments.
Their value decreased by RON 36.6 mn in 2020, or 6%, reaching RON 570.9 mn, from RON 607.5 mn in 2019,
the reduction being generated mainly by the supply segment, through the acquisition of EEV1, the influence
of the receivables’ increase and the cash pooling structure.
(RON mn)
31 December 2020
31 December 2019
Bank current accounts
Call deposits
Cash in hand
Total cash and cash equivalents in the consolidated
statement of financial position
179.4
391.5
0.1
570.9
122.0
485.3
0.1
607.5
Overdrafts used for cash management purposes
(165.0)
(350.6)
Total cash and cash equivalents in the consolidated
statement of cash flows
406.0
256.9
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Deposits with a maturity date of more than three months
As of 31 December 2020, the value of the deposits with a maturity of more than three months is not significant
– most of the deposits held by ELSA, of RON 66.5 mn, were closed during 2020, the cash being subsequently
used mainly by the distribution companies for financing the investments and working capital, through cash
pooling.
Restricted cash
As of 31 December 2020, the restricted cash balance previously presented as long-term, which represents a
guarantee for the loan from BRD, was reclassified in the category of current assets, as the loan will be repaid
in less than 12 months, respectively in October 2021.
Share capital and share premium
The issued share capital in nominal terms consists of 346,443,597 ordinary shares at on 31 December 2020
and 2019 with a nominal value of RON 10 per share.
The company recognizes the changes in its share capital only after their approval in the General Meeting
of Shareholders and their registration with the Trade Register. Contributions made by the shareholder,
which are not registered with the Trade Register at the end of the year, are recognized as “Pre-paid capital
contributions in kind from shareholders”.
There were no changes in the number of shares in 2020.
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Number of ordinary shares
2020
2019
Number of shares at 1 January
346,443,597
345,939,929
Shares issued during the year
-
503,668
Number of shares at 31 December
346,443,597
346,443,597
Source: Electrica
Revaluation reserves
The reconciliation between the opening balance and the closing balance of the revaluation reserve is presented below:
(RON mn)
Balance at 1 January
Revaluation surplus of land, land improvements, and buildings
Release of revaluation reserve to retained earnings corresponding to
depreciation and disposals of property, plant, and equipment
Deferred tax liability arising on revaluation of land, land improve-
ments, and buildings
Balance at 31 December
2020
87.7
43.8
(7.2)
(7.9)
116.4
2019
108.7
-
(21.0)
-
87.7
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Legal reserves
The legal reserves are established as 5% of the profit before tax according to the individual statutory financial
statements of companies within the Group, until the total legal reserves reach 20% of the paid-up share
capital of each company, according to legal provisions. These reserves are deductible for income tax purposes
and are not distributable.
(RON mn)
Legal reserves
Balance at 1 January 2019
Set-up of legal reserves
Balance at 31 December 2019
Set-up of legal reserves
Balance at 31 December 2020
352.0
19.8
371.8
20.4
392.3
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Non-current liabilities
The non-current liabilities stand at approximately the same level as in 2019, their value as of 31 December
2020 being RON 772.7 mn (2019: RON 773,7 mn).
This evolution is a net effect of the main non-current liabilities categories variation, of which the most
significant relates to long-term borrowings, which decreased by RON 32.5 mn, from the cumulated effect of
the reclassification of the loan from BRD into current liabilities, and the increase of long-term borrowings,
mainly to finance the investments in the distribution network.
Current liabilities
In 2020, the current liabilities increased by RON 74.8 mn, to RON 1,528.8 mn, from RON 1,454 mn at the end of
2019, mainly as a result of the changes in the categories listed below.
Current portion of long-term bank borrowings
The current portion of long-term bank borrowings increased by RON 371.1 mn, following the reclassification
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2020 DIRECTORS’ REPORT
of the loan to BRD, which will be repaid in less than 12 months, respectively in October 2021.
Overdrafts
The overdrafts decreased in 2020 by RON 185.7 mn, reaching RON 165 mn, from RON 350.6 mn at the end of
2019, as the Group has streamlined its working capital financing methods, including the implementation of
a cash pooling structure.
Trade payables
As of 31 December 2020, the trade payables decreased by approx. RON 123.3 mn, to RON 607.2 mn, from RON
730.5 mn at on 31 December 2019, due to lower balances related to suppliers of non-current assets, as well as
to suppliers from the electricity market.
6.2 Consolidated statement of profit or loss
The following table presents the consolidated statement of profit or loss of Electrica Group for 2020 and 2019
(amounts in RON mn):
Revenue
Other income
2020
2019
Variation
2020/2019
6,501.1
6,279.8
3.5%
165.4
160.0
3.4%
Electricity and natural gas purchased
(3,905.7)
(3,859.6)
1.2%
Construction costs related to concession arrangements
(676.0)
(759.2)
-11.0%
Employee benefits
Repairs, maintenance and materials
Depreciation and amortization
Reversal of impairment/(Impairment) for trade and other receivables, net
Other operating expenses
Operating profit
Gain from bargain purchase of subsidiaries*
Finance income
Finance costs
Net finance cost
Profit before tax
Income tax expense
Profit for the year
Earnings per share
Basic and diluted earnings per
share (RON)
(774.5)
(620.2)
24.9%
(104.6)
(100.4)
4.2%
(490.9)
(480.3)
2.2%
62.2
(4.9)
-
(325.1)
(381.0)
-14.7%
451.9
234.2
92.9%
7.5
9.7
-
-
14.1
-31.6%
(26.8)
(22.3)
20.2%
(17.1)
(8.2)
108.9%
442.3
226.0
95.7%
(54.8)
(19.4)
183.0%
387.5
206.7
87.5%
1.14
0.61
86.9%
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
*the value is included in EBIT, is separated only for disclosure purposes
138 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Key financial indicators for 2020 and their y-o-y evolution:
■
■
■
■
■
Revenues: RON 6.5 bn, an increase of RON 221.3 mn, or 3.5%;
EBITDA: RON 953.1 mn, a RON 234.8 mn increase, or 32.7%;
EBIT: RON 459.4 mn, higher by RON 225.2 mn, or 96.1%;
EBT: RON 442.3 mn, an increase of RON 216.3 mn, or 95.7%;
Net result: profit of RON 387.5 mn, higher by RON 180.8 mn, or 87.5%.
Revenues and other income
In 2020, Electrica recorded total revenues (including other income) of RON 6,666.5 mn, increasing by RON 226.6
mn or 3.5%, from RON 6,439.9 mn in 2019; the variation is generated mainly by the revenues’ evolution, the other
operating income recording only a slight increase of RON 5.4 mn.
Revenues
Figure 33: Revenue for 2020/Q4 2020 and comparative information (RON mn)
6,280
518
5,762
1,672
133
1,539
6,501
557
5,944
1,725
144
1,577
2019
T4 2019
2020
T4 2020
Revenues from Green Certificates
Revenues (ex-Green Certificates)
Source: Electrica
The revenues increased by RON 221.3 mn, or 3.5%, being the net effect of the following main factors:
■
■
■
increase of RON 246.5 mn on the supply segment;
RON 9.7 mn increase of the distribution segment’s revenues;
external revenue (outside the Group): the Group’s revenues from third parties decreased by RON 36.8
mn, having an unfavorable impact.
Electricity and natural gas purchased
In 2020, the expense for electricity purchased increased by RON 46.1 mn, or 1.2%, to RON 3,905.7 mn, from
RON 3,859.6 mn in the comparative period.
This variation is mainly generated by the reduction of electricity costs on the supply segment, a positive
effect slightly alleviated by the increase in electricity costs needed to cover NL, as well as of green certificates
cost (pass-through cost).
The table below presents the structure of the electricity purchased expenses for the indicated periods:
(RON mn)
2020
2019
VAR %
Electricity purchased to cover network losses
Electricity and natural gas purchased for supply
Transmission and system services related
to supply activities
Green certificates
694.0
2,377.2
277.3
557.2
666.1
2,406.5
268.6
518.4
Total electricity and natural gas purchased
3,905.7
3,859.6
4.2%
-1.2%
3.2%
7.5%
1.2%
Source: Electrica
Construction costs
In 2020, the network construction costs related to concession arrangements decreased by RON 83.2, mn
or 11%, to RON 676 mn, from RON 759.2 mn recorded in 2019, being correlated with the evolution of the
investments recognizable in RAB realized in 2020, which were at a lower level compared to 2019.
139 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Employee benefits
The expenses for salaries and employee benefits increased by RON 154.3 mn, or 24.9%, reaching RON 774.5
mn in 2020, from RON 620.2 mn in the same period of the previous year, being mainly the cummulated effect
of:
-
the changes in the structure of the benefits granted to the Group’s employees, following the
implementation of the new collective labour agreement; significant variations were recorded in
the distribution segment, following the salary increases granted during 2020, but also in the supply
segment;
additional costs generated related to the compensatory payments for the voluntary leave program
within the supply company;
the employee benefits provision variation, resulting from the actuarial calculation, which generated a
negative impact of approx. RON 14 mn.
-
-
Repairs, maintenance, and materials
In 2020, the expenses with repairs, maintenance, and materials recorded only a slight increase of RON 4.2 mn,
or 4.2%, reaching RON 104.6 mn.
Reversal of impairment/(Impairment) for trade and other receivables, net
In 2020, the impairment adjustments for the depreciation of trade receivables had a net positive effect of RON
67.1 mn, reaching the value of RON 62.2 mn, from RON a negative impact of 4.9 mn, in 2019. This evolution is
generated mainly by:
-
impairment adjustments for the depreciation of trade receivables, with a negative impact of approx.
RON 42.8 mn, recognized as a result of the receivables’ recoverability assessment, considering, among
others, also the impact of COVID-19 on the customers’ payment behaviour;
the positive impact of approx. RON 105 mn, following the reversal of the impairment adjustments for
uncollected VAT related to the uncertain receivables from Oltchim; in the previous years, the Group
recognized impairment adjustments for the total amount of receivables from Oltchim, and based on
the decision to start its bankruptcy proceedings and on the provisions of the Fiscal Code, reversed the
impairment adjustments related to uncollected VAT, simultaneously with the VAT adjustment.
-
Gain from bargain purchase of subsidiaries
In 2020, a gain from bargain purchase of subsidiaries of RON 7.5 mn was recognized. This gain relates to the
acquisition of EEV1 (former Long Bridge Milenium S.R.L. or LBM) shares, which owns a photovoltaic park in
Stanesti, Giurgiu county; the completion of the transaction and the transfer of ownership of the shares to
EFSA was made on 31 August 2020. The recognized gain represents the difference between the value paid at
the transaction date and the assets and liabilities of EEV1.
Other operating expenses
The other operating expenses decreased in 2020 by RON 55.9 mn, or 14.7%, to RON 325.1 mn, from RON 381
mn in 2019, mainly from:
-
-
lower operating expenses by RON 64.1 mn, especially on the distribution segment;
the unfavorable impact of the net movement in provisions, of approx. RON 9.2 mn, since a revenue
from the reversal of previously recorded provisions for potential fiscal obligations of the group was
recognized in 2019; in 2020 there is no impact from this transaction.
EBITDA and EBITDA margin
Figure 34: EBITDA and EBITDA margin for 2020/Q4 2020 and comparative information (RON mn and %)
11%
718
2019
Source: Electrica
10%
169
Q4 2019
15%
953
7%
124
2020
Q4 2020
140 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Operating profit
The Group EBIT increased by approx. RON 225.2 mn y-o-y, adding to the EBITDA evolution mainly the impact
of the depreciation and amortization, an increase of RON 10.6 mn, or 2.2%.
Figure 35: EBIT and EBIT margin for 2020/Q4 2020 and comparative information (RON mn and %)
4%
234
2%
41
7%
459
0%
(2)
2019
Q4 2019
2020
Q4 2020
Source: Electrica
Net finance cost
The net finance cost at the group level increased by RON 8.9 mn in 2020 compared to 2019, as a result of
the increase in external financing, but also from the reduction in finance income, following the deposits’
decrease.
Profit before tax
The profit before tax increased by RON 216.3 mn in 2020, to RON 442.3 mn, from RON 226 mn in 2019.
Income tax expense
The profit tax increased by RON 35.4 mn, reaching RON 54.8 mn, variation in line with the gross profit, but
also as a result of a higher effective tax rate compared to 2019.
Profit for the year
As a result of the above-described factors, in 2020, the net profit increased by RON 180.8 mn, to RON 387.5
mn, from RON 206.7 mn in 2019.
Figure 36: Net profit and Net profit margin for 2020/Q4 2020 and comparative information (RON mn and %)
3%
207
2019
Source: Electrica
3%
46
T4 2019
6%
388
2020
0%
(9)
T4 2020
141 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
SEGMENT REPORTING - DISTRIBUTION
Key indicators - The distribution segment
Figure 37: Revenues w/o conso adjustments (RON mn)
Figure 38: EBITDA w/o conso adjustments (RON mn)
2,868
161
161
893
893
896
896
918
918
2,901
183
877
877
877
877
964
964
2,862
133
925
925
929
929
875
875
533
27
109
211
607
58
143
230
186
176
624
17
186
229
192
2018
2019
2020
2018
2019
2020
SDTS
SDTN
SDMN
ELSERV
SDTS
SDTN
SDMN
ELSERV
Source: Electrica
Source: Electrica
Figure 39: Net result - w/o conso adjustments (RON mn)
Figure 40: Net debt/(cash) (RON mn)
88
16
42
44
(13)
2018
104
34
54
18
(2)
75
22
45
16
(8)
781
3
189
264
325
657
94
260
333
(30)
168
120
153
(43)
(62)
2019
2020
2018
2019
2020
SDTS
SDTN
SDMN
ELSERV
SDTS
SDTN
SDMN
ELSERV
Source: Electrica
Source: Electrica
The following table presents elements from the reporting of the statement of profit or loss of the Group’s
distribution segment, for the period 2020 – 2019:
(RON mn)
External revenues
Inter-segment revenue
Segment revenue
Segment profit/(loss) before tax
Net finance (cost)/income
Depreciation, amortization and impairment, net
EBITDA
Net profit/(loss) of the segment
2020
1,486.6
1,264.2
2,750.8
95.1
(65.1)
(465.8)
624.0
77.1
2019
1,519.1
1,222.1
2,741.2
102.7
(59.0)
(441.8)
607.4
106.4
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
142 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Revenues
2020 DIRECTORS’ REPORT
In 2020, the revenues from the electricity distribution segment increased by approx. RON 9.7 mn, or 0.4%, to
RON 2,750.8 mn, from RON 2,741.2 mn in 2019, as a result of the following factors:
-
the favorable impact of approx. RON 89.4 mn, from the increase of distribution tariffs, compared
to 2019, which covers the negative effect generated by the reduction of the distributed electricity
volumes by approx. 1.4%;
the negative impact from the evolution of revenues from the construction of assets recognized
following IFRIC 12, since the revenues from the electricity distribution segment are influenced by
the recognition of investments into the network under concession agreements, these revenues
decreasing in 2020 by RON 78.1 mn, compared to 2019.
-
Electricity purchased
In 2020, the cost of the electricity purchased to cover network losses increased by RON 27.9 mn, or 4.2%, to
RON 694.0 mn, from RON 666.1 mn, the evolution being mainly generated by the increase in the electricity
purchase prices (negative effect of RON 33.6 mn), effect alleviated by the decrease in the quantity of electricity
needed to cover network losses (positive impact of RON 5.7 mn).
Employee benefits
-
The expenses with employee benefits increased by RON 119.5 mn, or 24.3%, to RON 612.3 mn in 2020, from
RON 492.8 mn in 2019, being the cumulative effect of:
-
salary increases granted during 2020, following the implementation of the new collective labor
agreement;
the negative effect generated by the variation compared to 2019, when the employee benefits
expenses were favorably influenced by the income recognized following the changes in the actuarial
calculation (following the elimination from the Collective Labor Agreement of the benefit in the
form of free electricity granted to certain categories of pensioners and employees who would retire
from the Group in the future), while in 2020, the impact from the actuarial calculation was negative,
regarding the long-term obligations of the employees.
Other operating expenses
The operating expenses on the distribution segment decreased significantly, by approx. RON 80 mn,
being the cumulated effect of the decrease of certain categories of costs, such as transport expenses, the
contribution due to ANRE, following the reduction of the percentage applied to the turnover from 2% to 0.2%,
expenses with other taxes, and other costs, as well as the implementation of other cost efficiency measures.
EBITDA
The increased revenues and especially the favorable variation of the operating expenses were the main
elements that positively influenced EBITDA, canceling the negative evolution of other expenses, such as the
electricity purchased cost and the employee benefits, leading to an EBITDA increase of RON 16.6 mn, or 2.7%.
Net finance cost
The net finance cost recorded an increase in 2020 of approx. RON 6.1 mn compared to the previous year, the
main factor being the growth of the external financing through loans at the level of the three distribution
companies, mainly for the investment works realized in 2020.
Net profit of the segment
The net profit recorded a fall of RON 29.3 mn, or 27.5%, compared to 2019, being negatively influenced by the
evolution of the net finance cost and of the impairment adjustments for the depreciation of tangible and
intangible assets.
143 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
SEGMENT REPORTING – SUPPLY
Key indicators - the supply segment
Figure 41: Revenues (RON mn)
4,769
518
4,250
3,995
378
3,617
5,015
557
4,458
Figure 42: EBITDA (RON mn)
3.4%
137
2.9%
139
5.3%
265
2018
2019
2020
2018
2019
2020
Revenues from Green Certificates
Revenues (ex-Green Certificates)
EBITDA
EBITDA Margin
Source: Electrica
Source: Electrica
Figure 43: Net profit (RON mn)
Figure 44: Net debt/(cash) (RON mn)
4.3%
214
2.7%
108
2.2%
104
(183)
(244)
(257)
2018
2019
2020
2018
2019
2020
Net profit
Net profit margin
Net debt/(cash)
Source: Electrica
Source: Electrica
The following table presents the elements from the reporting of the statement of profit or loss of the Group`s
supply segment for 2020 and 2019:
(RON mn)
External revenues
Inter-segment revenues
Segment revenue
Segment profit/(loss) before tax
Net finance (cost)/income
Depreciation, amortization and impairment, net
EBITDA
Net Profit/(loss) of the segment
2020
4,980.6
34.5
5,015.1
255.9
4.2
(12.8)
265.5
214.2
2019
4,734.1
34.6
4,768.7
127.1
3.2
(15.1)
139.1
104
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
144 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Revenues
2020 DIRECTORS’ REPORT
The revenues from the electricity and natural gas supply activity increased by approx. RON 246.5 mn, or 5.2%,
to RON 5,015.1 mn, from RON 4,768.7 mn in 2019. The variation of the supply segment revenue is mainly driven
by:
-
the increase of the retail sale prices by 2.7% and of the volume of electricity supplied on the retail
market by 0.6%;
the increase of the revenues from green certificates by RON 38.8 mn (these revenues do not influence
the segment’s result, since a cost with the green certificates of the same value is recognized).
-
The green certificates value included in the final consumer invoice, set by ANRE, increased from RON 59.4/
MWh in 2019 to RON 62.88/MWh in 2020.
Electricity and natural gas purchased
The cost of electricity and natural gas purchased for the supply segment increased by RON 18.2 mn, or 0.6%,
to RON 3,211.7 mn in 2020, from RON 3,193.5 mn recorded in 2019.
The evolution is mainly determined by:
-
the reduction of the cost of the electricity purchased for supply (including transmission and system
services) by RON 20.7 mn, mainly from the lower level of electricity purchase prices, especially on the
regulated sector, reflecting the recovery in 2020, in the form of positive corrections, of some purchase
losses from previous years, when the tariffs approved by ANRE were below the actual electricity
purchase price;
the increase in the costs with green certificates by RON 38.8 mn, detailed below.
Green certificates’ (GC) cost is recognized in the statement of profit and loss based on the quantitative quota
set by the regulatory authority and influenced by GC amount that the Group has to purchase for the current
year and GC purchase price on the centralized market. The green certificates cost is a pass-through cost.
In 2020, the cost of GC increased by RON 38.8 mn, or 7.5%, to RON 557.2 mn, from RON 518.4 mn in 2019.
The increase was mainly influenced by:
■
higher supplied volumes, for which there is an obligation to purchase green certificates, by 1.8%
(negative impact of RON 9.2 mn);
1.7% increase in the GC average purchase price from RON 137.2/GC in 2019 to RON 139.5/GC in 2020,
cumulated with the increase in GC average regulated quota imposed to electricity suppliers by ANRE
at 0.451 GC/MWh supplied in 2020 from 0.433 GC/MWh in 2019 (negative impact of RON 33.1 mn);
the regularization impact – positive variance of RON 3.5 mn, reflected in both revenue and expenses.
-
■
■
Impairment losses on trade and other receivables
The net impairment adjustments for trade receivables recorded a negative variation at the end of 2020
compared with 2019, of RON 37.9 mn, being mainly the effect of the impairment adjustments of approx. RON
32 mn, recognized as a result of the receivables’ recoverability assessment, considering, among others, also
the impact of COVID-19 on the customers’ payment behaviour; in 2019, the impairment adjustments had a
positive impact of RON 6 mn.
EBITDA
The above-presented factors led to an EBITDA increase of RON 126.4 mn, and a rise in the EBITDA margin
from 2.9% in 2019 to 5.3% in 2020.
Segment net profit
The net profit increased by RON 110.1 mn compared to 2019, the evolution of EBITDA being mainly influenced
by the increase of the corporate income tax by approx. RON 18.6 mn, the reduction of the depreciation charge
and fixed assets’ impairment adjustments by RON 1.3 mn and by the increase of the net financial income by
RON 1 mn.
145 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
6.3 Consolidated cash flow statement
The following table presents the consolidated statement of cash flows of Electrica Group, for 2020 and 2019
(amounts in RON mn):
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortization
2020
2019
Variation
2020/2019
387.5
206.7
87.5%
27.9
37.7
-26.2%
463.1
442.5
4.6%
Impairment of property, plant, and equipment and intangible assets, net
3.0
3.4
-12.1%
Gain on disposal of property, plant, and equipment and intangible assets
(0.3)
(2.3)
-87.4%
(Reversal of impairment)/Impairment of trade and other receivables,
net
(62.2)
(Reversal of impairment)/Impairment of assets held for sale
Change in provisions, net
Net finance cost
Changes in employee benefits obligations
Gain from bargain acquisition of subsidiaries
Corporate income tax expense
(0.2)
(0.3)
17.1
-
(7.5)
54.8
4.9
0.4
-
-
(9.5)
-96.6%
8.2
108.9%
(54.5)
-100.0%
-
-
19.4
182.8%
Changes in:
Trade receivables
Other receivables
Prepayments
Inventories
Trade payables
Other payables
Employee benefits
Deferred revenue
882.9
656.9
34.4%
(87.2)
(136.0)
-35.8%
27.2
-85.9%
3.8
0.6
4.3
-
(10.8)
(76.0)
177.0
(2.3)
14.7
(1.3)
3.4
4.8
1.9
-
-
-
-
208.6%
-
Cash generated from operating activities
739.5
724.4
2.1%
Interest paid
Income tax paid
(19.9)
(12.9)
54.8%
(51.7)
(13.9)
271.7%
Net cash from operating activities
667.9
697.6
-4.3%
Cash flows from investing activities
Payments for purchases of property, plant and equipment
(6.7)
(16.0)
-57.8%
Payments for network construction related to concession agreements
(638.0)
(887.4)
-28.1%
Payments for purchase of other intangible assets
(2.2)
(2.2)
-0.8%
146 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Proceeds from the sale of property, plant, and equipment
2020
2019
Variation
2020/2019
5.0
8.4
-40.2%
Payments for deposits with a maturity of 3 months or longer
-
(368.0)
-100.0%
Proceeds from deposits with a maturity of 3 months or longer
66.4
438.0
-84.8%
Interest received
Net cash effect from the gain of control over the acquired subsidiary
Payment for acquisition of subsidiaries
9.0
5.6
(8.0)
15.8
-43.4%
-
-
-
-
Net cash used in investing activities
(568.9)
(811.4)
-29.9%
Cash flows from financing activities
Proceeds from issue of share capital, net
-
1.1
-100.0%
Proceeds from long term bank borrowings
354.3
120.3
194.7%
Repayment of long term bank loans
(29.1)
-
-
Payment of lease liabilities
Dividends paid
Repayment of financing for network construction related to
concession agreements
(29.3)
(38.3)
-23.5%
(245.8)
(247.2)
-0.6%
-
(11.9)
-100.0%
Net cash from/(used in) financing activities
50.1
(176.1)
-128.5%
Net (decrease)/increase in cash and cash equivalents
149.1
(289.9)
-
Cash and cash equivalents at 1 January
256.9
546.8
-53.0%
Cash and cash equivalents at 31 December
406.0
256.9
58.0%
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
In 2020, the net increase in cash and cash equivalents amounted to RON 149.1 mn.
The net cash generated by the operating activity was RON 667.9 mn. The net profit of the period was RON
387.5 mn; the main net profit’s adjustments for non-monetary elements were: adding the depreciation and
amortization of RON 490.9 mn, eliminating the impact of the impairment of trade receivables of RON 62.2
mn, adding the income tax of RON 54.8 mn and the net finance cost of RON 17.1 mn.
Changes in working capital had an unfavorable effect, of RON 143.4 mn, the most significant impact being
generated by the negative change in trade and other receivables, in the amount of RON 83.4 mn, and in trade
and other payables of RON 63.6 mn (out of which, the change in employee benefits of RON 14.7 mn, having a
positive impact). Income tax paid and interest paid amounted to RON 71.6 mn.
For the investment activity, the cash used was RON 568.9 mn, the most significant values being related to
the payments for the network construction in connection with the concession agreements of RON 638.0 mn,
these being reduced y-o-y, but also to the proceeds from deposits with a maturity of 3 months or longer, of
RON 66.4 mn.
The financing activity generated an increase in cash and cash equivalents of RON 50.1 mn, the main factors
being the proceeds from long-term bank borrowings of RON 354.3 mn, and the dividends paid to the
shareholders, of RON 245.8 mn.
In 2019, the net decrease in cash and cash equivalents amounted to RON 289.9 mn.
The net cash generated by the operating activity was of RON 697.6 mn. The net profit of the period was RON
206.7 mn; the main net profit’s adjustments for non-monetary elements were: adding the depreciation and
amortization of RON 480.3 mn, adding the income tax of RON 19.4 mn, and deducting the impact of the
change in employee benefits obligations of RON 54.5 mn.
147 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Changes in working capital had a favorable effect, of RON 67.4 mn, the most significant impact being
generated by the change in trade and other receivables, having a negative impact, in the amount of RON
108.8 mn, and the positive change in trade and other payables of RON 185.2 mn (out of which, the change in
employee benefits of RON 4.8 mn). Income tax paid and interest paid amounted to RON 26.8 mn.
For the investment activity, the cash used was of RON 811.4 mn, the most significant values being related to
the payments for the network construction in connection with the concession agreements, of RON 887.4 mn;
these have recorded a slight increase y-o-y.
The financing activity generated a decrease in cash and cash equivalents of RON 176.1 mn, the main factors
being the dividends paid to the shareholders, of RON 247.2 mn, and the payments related to leasing contracts,
as a result of the IFRS 16 application.
6.4 Separate statement of the financial position
Financial information selected from the company’s separate statement of financial position (amounts in RON mn):
31 December 2020
31 December 2019
Variation
2020/2019
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
96.9
0.3
Investments in subsidiaries
2,284.9
Restricted cash
Loans granted to subsidiaries
– long term
Right of use assets
-
1,030
1.4
161.6
4.2
2,217.2
320
1,030
1.8
Total non-current assets
3,413.5
3,734.8
Current assets
Cash and cash equivalents
Deposits with a maturity date of
more than three months
Restricted cash
Trade receivables
Other receivables
Inventories
Prepayments
Loans granted to subsidiaries
– short term
Total current assets
Total assets
Equity
Share capital
Share premium
Treasury shares reserve
Revaluation reserves
193.5
-
320.0
0,4
180.8
-
0.4
-
695.1
4,108.6
180.3
66.5
-
5
15.1
0.1
0.2
5.5
272.7
4,007.5
3,464.4
3,464.4
103.1
(75.4)
12.6
103.1
(75.4)
5.9
-40%
-93.6%
3.1%
-100%
-
-22.2%
-8.6%
7.3%
-100%
-
-92%
1,095.5%
-100%
112.8%
-100%
-154.9%
2.5%
-
-
-
115.4%
148 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Legal reserves
Other reserves
Retained earnings
Gains referring to share issue
Losses referring to share issue
Total equity
Liabilities
Non-current liabilities
Lease liability – long term
Employee benefits
Total non-current liabilities
Current liabilities
Lease liability – short term
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
Total current liabilities
Total liabilities
31 decembrie 2020
31 decembrie 2019
212
35.6
297
-
-
197.1
35.6
256.2
2.2
(1)
4,049.3
3,988.1
0,5
1,5
2,0
1
7,2
36
0,2
7,1
5,8
57,3
59,3
1
2
3
0,8
4,9
1,6
0,6
5,2
3,3
16,4
19,4
Total equity and liabilities
4.108,6
4.007,5
Source: Separate financial statements of ELSA as of 31 December 2020
Non-current assets
Variatie
2020/2019
7.6%
-
15.9%
-100.0%
-100.0%
1.5%
-52%
-26,5%
-33,3%
21,8%
47,4%
2.133,7%
-72,5%
36,5%
75,9%
249,5%
205,6%
2,5%
On 31 December 2020, as compared to 31 December 2019, fixed assets decreased by RON 321.3 mn or 8.6%, to
RON 3,413.5 mn from RON 3,734.8 mn.
At the end of 2020, the land and buildings include the administrative headquarter of the company and the
corresponding land, the plots of land over which the company has obtained title deeds, and the land and
buildings acquired in 2020 from the subsidiary SEM.
On 28 May 2020, the company acquired a plot of land and several buildings from SEM in total amount of RON
33.8 mn, of which land in the amount of RON 31.9 mn and buildings in the amount of RON 1.9 mn. The sale
price was settled as follows:
■
■
the settlement of the loan granted to the subsidiary in the amount of RON 5.5 mn;
the settlement of the receivable in the amount of RON 24.9 mn generated by the decrease in the share
capital of the subsidiary with the same amount, having no effect on the ownership of the Company;
cash payment in the amount of RON 3.4 mn.
■
An additional amount of RON 0.4 mn. representing taxes paid for the acquisition of the land was capitalized
in the value of the land.
The sale price represents the market value established through a valuation report prepared by an independent
valuer.
The plot of land received according to the payment agreement is in surface of 15,844 sqm and the buildings
are represented by 22 constructions in various stages of degradation, constructions for which the Company
149 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
has recognized an impairment amounting to RON 1.9 mn.
Disposals from property, plant, and equipment in the net amount of RON 90.5 mn refer mainly to the AMR
system (Automatic Meter Reading) equipment consisting of electricity measuring equipment and 7 plots of
land that were contributed in kind by ELSA to the share capital of its subsidiaries (SDTN, SDTS, SDMN, and
SERV), as follows:
Month
Subsidiary
Active transferate
Book value
(RON mn)
June 2020
June 2020
SDMN
AMR equipment
SDMN
2 plots of land in surface of 28,696.79 sqm
June 2020
SDTN
AMR equipment
AMR license intangibles (see Note 21)
AMR construction in progress
June 2020
SDTS
AMR equipment
AMR construction in progress
May 2020
SERV
5 plots of land in surface of 23,474.07 sqm
Total
Source: Electrica
16.5
1.5
37
2.9
0.8
27.4
1.8
5.1
93.0
The contribution value for the AMR system was determined at the date of the contribution in kind through a
valuation report prepared by an independent valuer, the difference between the contribution value and the
net book value of the system, in the amount of RON 9.4 mn, being recognized as loss from disposal of assets.
Also in 2020, ELSA reversed the impairment loss for the AMR system assets, in the amount of RON 1.2 mn.
As of 31 December 2020, the land and the buildings were revalued at fair value by an independent valuer.
Following the revaluation performed, the gain from the increase in value on the land and buildings was
charged to other comprehensive income in the amount of RON 11.9 mn and in statement of profit or loss in
the amount of RON 0.2 mn.
During 2020, ELSA increased investments in its subsidiaries, SDMN, SDTN, and SDTS, through the contribution
in kind of the AMR system to their share capital. The investment in SERV was also increased, following the
merger between SERV and SEM, ELSA’s investment in SEM was transferred to SERV, as well as the contribution
in kind to the share capital with the land.
During 2019, ELSA increased its investments in its subsidiaries, SDMN, SDTN, SDTS, SERV, SEM, by contribution
in kind to their share capital with land.
Trade receivables
As of 31 December 2020, the company’s trade receivables decreased by RON 4.6 mn, or 92%, to RON 0.4
mn, from RON 5 mn on 31 December 2019, mainly because the revenues from AMR services are no longer
obtained.
Cash, restricted cash, and short-term investments
As of 31 December 2020, the cash and cash equivalents increased by RON 13.2 mn or 7.3%, to RON 193.5 mn
from RON 180.3 mn on 31 December 2019.
(RON mn)
31 December 2020
31 December 2019
Bank current accounts
Call deposits
Total cash and cash equivalents in the separate state-
ment of financial position and in the separate state-
ment of cash flow
Source: Separate financial statements of ELSA as of 31 December 2020
18.4
175.1
193.5
3
177.3
180.3
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ELECTRICA S.A.
2020 DIRECTORS’ REPORT
As of 31 December 2020, ELSA has collateral deposits at BRD - Groupe Societe Generale set up as guarantees
for the long-term borrowings received from BRD by SDTS, SDTN, and SDMN. The amount of the collateral
deposits as of 31 December 2020 is RON 320 mn (31 December 2019: RON 320 mn). These collateral deposits
are presented in the individual statement of the financial position as short-term restricted cash as they will be
reimbursed in less than 12 months, respectively in October 2021.
Deposits with a maturity date of more than three months
(RON mn)
31 December 2020
31 December 2019
Deposits with a maturity date of more than three months
-
66.5
Source: Separate financial statements of ELSA as of 31 December 2020
As of 31 December 2020, the Company no longer had deposits with an original maturity of more than three
months. As of 31 December 2019, the deposits with an original maturity of more than three months had an
average interest rate of 2.6%.
Loans granted to subsidiaries
(RON mn)
31 December 2020
31 December 2019
DEER (long term loan granted) *
1,030
SDTN (long term loan granted)
SDMN (long term loan granted)
SDTS (long term loan granted)
SEM (short term loan granted)
-
-
-
-
-
360
380
290
5.5
Total loans granted to subsidiaries
1,030
1,035.5
Source: Separate financial statements of ELSA as of 31 December 2020
(*)Starting with 31 December 2020 the three distribution companies merged into one single distribution
company named Distributie Energie Electrica Romania S.A. („DEER”)
The closing balance of the loans granted to subsidiaries are related to intragroup loans granted in 2017 and
2018 as follows:
■
Intragroup loan agreement concluded with SDMN in April 2018. The main provisions are: the maximum
amount of the loan: RON 230 mn; the purpose of the loan: financing the investment program of 2018;
interest rate: 4.7% per year; maturity: 84 months; period allowed for disbursements: 12 months; full
repayment at maturity; reimbursement in advance allowed, but not earlier than the 12 months of the
period of use. As of 31 December 2020, the loan balance is RON 230 mn (31 December 2019: RON 230
mn);
Intragroup loan agreement concluded with SDTN in April 2018. The main provisions are: the maximum
amount of the loan: RON 160 mn; the purpose of the loan: financing the investment program of 2018;
interest rate: 4.7% per year; maturity: 84 months; period allowed for disbursements: 12 months; full
repayment at maturity; reimbursement in advance allowed, but not earlier than the 12 months of the
period of use. As of 31 December 2020, the loan balance is RON 160 mn (31 December 2019: RON 160
mn);
Intragroup loan agreement concluded with SDTS in April 2018. The main provisions are: the maximum
amount of the loan: RON 130 mn; the purpose of the loan: financing the investment program of 2018;
interest rate: 4.7% per year; maturity: 84 months; period allowed for disbursements: 12 months; full
repayment at maturity; reimbursement in advance allowed, but not earlier than the 12 months of the
period of use. As of 31 December 2020, the loan balance is RON 130 mn (31 December 2019: RON 130
mn);
In May 2018, the company concluded a loan agreement with SEM. The main provisions were: the
maximum amount of the loan: RON 5.5 mn, granted in two installments; the purpose of the loan: the
first installment in the amount of RON 1.5 mn for financing the payment of the last installment due to
the two creditors enrolled at the creditors’ table, the second installment in the amount of RON 4 mn to
finance working capital needs; interest rate: 4.5% per year; withdrawal period: 1 to 12 months from the
date of granting, 2 to 24 months from the date of granting; reimbursement: first installment – within
maximum 12 months from the date of granting; second installment – at any time during the term of
the loan, but not later than the final maturity of the entire installment, i.e. 2 years from the date of
signing the loan agreement. On 30 April 2020, the loan was repaid;
Intragroup loan agreement with SDMN concluded in November 2017. The main provisions are: the
maximum loan amount: RON 150 mn; the purpose of the loan: financing the investment program of
2017, Interest rate: 2.79% per year, maturity: 84 months, period allowed for disbursements: 12 months.
■
■
■
■
151 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
■
■
Repayment in full at maturity; reimbursement in advance allowed, but not earlier than the 12 months
of the period of use. As at of 31 December 2020, the outstanding balance is of RON 150 mn (31 December
2019: RON 150 mn);
Intragroup loan agreement with SDTN concluded in November 2017. The main provisions are: the
maximum loan amount: RON 200 mn; the purpose of the loan: financing the investment program of
2017, interest rate: 2.79% per year, maturity: 84 months; period allowed for disbursements: 12 months.
Full repayment at maturity; reimbursement in advance allowed, but not earlier than the 12 months of
the period of use. As of 31 December 2020, the outstanding balance is of RON 200 mn (31 December
2019: RON 200 mn);
Intragroup loan agreement with SDTS concluded in November 2017. The main provisions are: the
maximum loan amount: RON 160 mn. Purpose of the loan: financing the investment program of
2017; interest rate: 2.79% per year, maturity: 84 months, period allowed for disbursements: 12 months.
Repayment in full at maturity; reimbursement in advance allowed, but not earlier than the 12 months
of the period of use. As of 31 December 2020, the outstanding balance is of RON 160 mn (31 December
2019: RON 160 mn).
Multi-borrower credit agreements
On 1 April 2019, between Banca Comerciala Romana, as lender and ELSA, as guarantor and borrower, together
with its distribution subsidiaries (SDMN, SDTN, and SDTS), as borrowers, was concluded a contract for a multi-
product revolving facility, as follows: maximum loan amount: RON 125 mn; the purpose of the loan: financing
the current activity; interest rate: 0.77% + ROBOR 1M p.a.; maturity: 31 March 2021. Repayment: in full, at
maturity. As at of 31 December 2020, the outstanding balance of the facility for the Company is nil.
On 16 April 2019, between BNP PARIBAS, as the lender, and ELSA, as guarantor and borrower, together with
its subsidiaries, EFSA and SERV, as borrowers, was concluded a contract for a credit facility in the form of
a credit line from the current accounts opened by the borrowers to the lender, as follows: maximum loan
amount: RON 160 mn (maximum amount for ELSA is RON 10 mn); the purpose of the loan: financing the
current activity; interest rate: 0.60% + ROBOR 1M p.a.; maturity: 16 March 2021. Repayment: in full, at maturity.
As of 31 December 2020, the outstanding balance of the facility for the Company is nil.
Cash pooling system at Group level
On 20 December 2019, between ING Bank N.V., ELSA, and its subsidiaries were concluded two agreements for
the implementation of two cash pooling schemes, as follows:
■
a first system involving ELSA, as cash pool leader, and its distribution subsidiaries (SDMN, SDTN, and
SDTS), as participants.
The credit facility offered by the pool leader to each participant is up to the amount of RON 180 mn,
and the credit facility offered by each participant to the pool leader is up to the amount of RON 50
mn. The interest rate is ROBOR 1M + 0.07% p.a. However, if the amounts drawn by the participants are
covered both by the internal liquidity of ELSA, and by drawing from the credit line granted to ELSA,
the amount of interest due by the participants to ELSA will be calculated using a weighted interest
rate, calculated based on the ROBOR internal rate 1M +0.07% p.a. and the ROBOR bank rate 1M + 0.8%
p.a. The initial due date was 20 December 2020, the convention being automatically extended for a
period of 1 year.
a second system involving ELSA, as cash pool leader and its subsidiaries, EFSA, SERV, and SEM, as
participants.
The credit facility offered by the participants to the pool leader is up to the amount of RON 180 mn for
EFSA, RON 50 mn for SERV, and RON 2 mn for SEM. The credit facility offered by the pool leader to the
participants is up to the amount of RON 30 mn in the case of EFSA, RON 10 mn in the case of SERV,
and RON 2 mn in the case of SEM. The interest rate is ROBOR 1M + 0.07% p.a. However, if the amounts
drawn by the participants are covered both by the internal liquidity of ELSA, and by drawing from the
credit line granted to ELSA, the amount of interest due by the participants to ELSA will be calculated
using a weighted interest rate, calculated based on the ROBOR internal rate 1M +0.07% p.a. and the
ROBOR bank rate 1M + 0.8% p.a. The initial due date was 20 December 2020, the convention being
automatically extended for a period of 1 year.
■
Through these systems, the bank will automatically transfer all available amounts existing at the end of each
day in the current bank accounts of the participants to the master bank account of ELSA. In case the current
bank accounts of the participants have a negative balance at the end of the day, the bank will transfer the
necessary amounts from the master bank account of ELSA to the current bank accounts of the participants,
so as to at the end of each day the balance of the current bank accounts of the participants is nil. In case the
balance of the master bank account of ELSA is not sufficient to cover the negative balance of the current bank
accounts of the participants, the bank will make available the necessary funds from the overdraft facility that
will be signed between the bank and ELSA.
On 30 December 2020, Electrica Energie Verde 1 (EEV1), entered the second cash pooling system.
The credit facility that can be borrowed by EEV1 under the agreement is up to RON 15 mn and the amount
that can be borrowed by ELSA under the convention is up to RON 10 mn. The interest rate is ROBOR 1M +
0.07% p.a. However, if the amounts drawn by EEV1 are covered both by the internal liquidity of ELSA, and by
drawing from the credit line granted to ELSA, the amount of interest due to ELSA will be calculated using
152 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
a weighted interest rate, calculated based on the ROBOR internal rate 1M +0.07% p.a. and the ROBOR bank
rate 1M + 0.8% p.a. The agreement has as due date 28 January 2022, with the option of automatic renewal for
successive periods of 1 (one) year.
Share Capital
The issued share capital in nominal terms consists of 346,443,597 ordinary shares as at of 31 December 2020
(346,443,597 ordinary shares as of 31 December 2019) with a nominal value of RON 10 per share. Ordinary
shares offer the right to dividends and the right to one vote per share in the company’s shareholder meetings,
except for the 6,890,593 shares redeemed by the Company in July 2014, for the purpose of prices stabilization.
All shares confer equal rights in the company’s net assets, except for the 6,890,593 shares redeemed by the
company, in July 2014.
ELSA recognizes changes in share capital only after their approval in the General Shareholders Meeting and
their registration in the Trade Register.
Dividends
The company may distribute dividends from the statutory profit, according to the audited individual financial
statements prepared in accordance with Romanian accounting regulations.
The dividends distributed by the Company in the years 2020 and 2019 (from previous years’ profits) were as
follows:
(RON mn)
Dividends distributed
2020
246.1
2019
247.5
Source: Separate financial statements of ELSA as of 31 December 2020
On 29 April 2020, the General Meeting of Shareholders of ELSA approved the distribution of dividends in the
amount of RON 244.9 mn and other reserves in the amount of RON 1.2 mn. The value of dividends per share
distributed to the shareholders of the Company were: RON 0.7248 per share (2019: RON 0.73 per share).
Out of the dividends distributed by the Company of RON 246.1 mn (2019: RON 247.5 mn) the dividends
paid were RON 245.8 mn (2019: RON 247.2 mn), the difference representing dividends uncollected by the
shareholders.
Provisions
(mil. RON)
Litigations and other risks
Balance at 1 January 2020
Provisions made
Provisions utilized
Provisions reversed
Balance at 31 December 2020
3.3
2.5
-
-
5.8
Source: Separate financial statements of ELSA as of 31 December
The provisions in the amount of RON 5.8 mn as of 31 December 2020 (31 December 2019: RON 3.3 mn) refer
mainly to the benefits granted upon the termination of executive managers’ contracts.
153 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
6.5 Separate statement of profit or loss
Financial information selected from the company’s separate statement of profit or loss (RON mn):
Indicator
2020
2019
Impairment of property, plant and equipment, net
(10)
(3.9)
155.5%
Change in provisions for legal cases and non-compete
clauses, net
(2.5)
0.4
-
Other operating expenses
(23.9)
(20.7)
Profit/(loss) before financing result
35.1
(52.9)
Revenues
Other income
Employee benefits
Depreciation and amortization
Reversal of impairment of trade and other
receivables, net
Finance income
Finance costs
Net finance income
Profit before tax
Income tax benefit/(expense)
Profit for the year
Earnings per share
3.3
14.5
19
2.3
(31.8)
(29.5)
(13.1)
(22.1)
Variation
2020/2019
-82.9%
523.2%
7.9%
-41.0%
98.6
1.6
5,904.5%
14.7%
-
-16.3%
-38,8%
-16.3%
14.6%
-
260.3
310.9
(0.1)
(0.2)
260.2
310.7
295.3
257.8
3.1
0
298.4
257.8
15.8%
Basic and diluted earnings per share (RON)
0.88
0.76
15.8%
Source: Separate financial statements of ELSA as of 31 December 2020
Revenues
During the year 2020, ELSA recorded revenues of RON 3.3 mn, compared to RON 19 mn in 2019. The revenues
obtained by the Company are represented by revenues from service agreements related to the AMR system
concluded with the distribution subsidiaries that include automatic meter reading services, communications,
and monitoring of the quality parameters of electricity services. Starting with 1 July 2020, the company no
longer registered this type of revenues, as a result of the AMR system assets transfer to the distribution
subsidiaries by contribution to their share capital.
Other income
During the financial year ended 31 December 2020, the other income mainly includes income from
compensations/refunds of certain amounts as a result of favorable court sentences, to which rent revenue
and proceeds from the disposal of assets are added.
Revenues from compensations consist mainly of the amount of RON 12.8 mn collected in 2020 by ELSA from
the National Agency for Fiscal Administration (“NAFA”) as a result of the final civil sentence obtained in Court,
which ordered the cancellation of certain enforceable titles as well as fiscal decisions.
During the financial year ended 31 December 2019, the other income mainly includes rent revenue and
proceeds from the disposal of assets.
Depreciation and amortization of tangible and intangible assets
The depreciation and amortization expense is RON 13.1 mn in 2020, compared to RON 22.1 mn in 2019,
154 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
as a result of the assets related to the AMR system transfer to the distribution subsidiaries in June 2020,
representing the assets for which it was recorded the most significant part of the depreciation expense at
the company level.
Employee benefits
In 2020, employee benefits increased by RON 2.3 mn to RON 31.8 mn from RON 29.5 mn in 2019. The variation
is the result of several factors, mainly changes in the structure of benefits granted to employees, as a result of
the provisions of the Collective Labor Agreement entered into force on 1 April 2020, the payments related to
the project to streamline the staff structure of the company, the plan to change the organizational structure
by transforming business structures with specialized staff.
Impairment of trade receivables and other receivables
Impairment adjustments for other receivables recognized during 2020 are in the amount of RON 98.6 mn and
mainly represent the reversal of the impairment adjustments for uncollected VAT related to the uncertain
receivables from Oltchim; in the previous years, ELSA recognized impairment adjustments for the total
amount of receivables from Oltchim, and based on the sentence opening for the bankruptcy proceedings
and on the provisions of the Fiscal Code, reversed the impairment adjustments related to uncollected VAT,
simultaneously with the VAT adjustment.
Impairment adjustments for other receivables recognized during 2019 are in the amount of RON 1.6 mn and
represent the reversal of the provision recognized during 2018, related to the legal penalty interest for late
payment of dividends by the SDTN subsidiary and related court costs.
Impairment of property, plant, and equipment
Impairment adjustments recorded during 2020 for property, plant, and equipment are in the amount of RON
10 mn, compared to the amount of RON 3.9 mn in 2019. These mainly refer to the RON 9.4 mn impairment
adjustment recorded following the evaluation of the AMR system assets, in view of representing a contribution
in kind to the share capital of the distribution subsidiaries.
Other operating expenses
In 2020, ELSA recorded other operating expenses in the amount of RON 23.9 mn, compared to the amount of
RON 20.7 mn in 2019. The evolution was mainly determined by the increase of consulting services expenses
related to the projects carried out at the company level.
Profit/(loss) before financing result
As a result of the above-mentioned factors, ELSA recorded in 2020 a profit before financing result in the
amount of RON 35.1 mn, while in 2019 it recorded a loss amounting to RON 52.9 mn.
Net finance income
ELSA’s main financial income is provided by the dividends distributed by its subsidiaries.
During the financial year ended 31 December 2020, ELSA recorded dividend income from its subsidiaries in
the amount of RON 215 mn (2019: RON 264.4 mn), structured as follows:
(RON mn)
SDMN
SDTS
SDTN
EFSA
SERV
Total
2020
2.7
6.9
54.1
124.0
27.3
215.0
2019
-
45.7
66.7
140.5
11.5
264.4
Source: Separate financial statements of ELSA as of 31 December 2020
155 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Another category of financial income related to its subsidiaries is represented by interest income related
to the loans granted, which slightly decreased to RON 39.4 mn in 2020 compared to RON 40.4 mn in 2019,
according to the detail:
(RON mn)
SDMN
SDTN
SDTS
SEM
Total
2020
15.2
13.3
10.8
0.1
39.4
2019
15.2
14.4
10.6
0.2
40.4
Source: Separate financial statements of ELSA as of 31 December 2020
In 2020 the liquidity concentration structure (cash pooling) was implemented within the Electrica Group,
which ensures that the current liquidity needs of the Group’s subsidiaries are covered. By implementing the
cash pooling scheme, the following financial revenues and expenses were recorded by ELSA:
(RON mn)
SDMN
SDTS
SDTN
EFSA
SERV
Total
2020
0.6
2.1
1.3
(1.3)
(0.7)
2
2019
-
-
-
-
-
-
Source: Separate financial statements of ELSA as of 31 December 2020
Profit before tax
In 2020, profit before tax increased by RON 37.5 mn or 14.6% to RON 295.3 mn from RON 257.8 mn in 2019.
Income tax benefit/(expense)
In 2020, the company recorded an income tax benefit of RON 3.1 mn (2019: the expense of RON 0.02 mn),
mainly due to the registration of deferred income tax revenues.
Net profit for the year
As a result of the factors presented above, the 2020 net profit recorded an increase of 15.8% compared to 2019,
to RON 298.4 mn from RON 257.8 mn.
156 | 2020 ANNUAL REPORT
ELECTRICA S.A.
6.6 Separate cash flow statement
Financial information selected from the cash flow statement of the company (RON mn):
2020 DIRECTORS’ REPORT
Indicator
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortization
Impairment of property, plant and equipment, net
Loss/(Gain) from the disposal of tangible assets
2020
2019
Variatie
2020/2019
298.4
257.8
15.8%
11.2
1.9
10
0.6
20.2
-45.1%
1.9
3.9
(1.4)
(1.6)
-
155.5%
-
5,904.5%
Reversal of impairment of trade and other receivables, net
(98.6)
Net finance income
(260.2)
(310.7)
-16.3%
Changes in employee benefits obligations
Changes in provisions, net
Income tax expense/(benefit)
Changes in:
Trade receivables
Other receivables
Trade payables
Other payables
Employee benefits
Cash generated/(used in) from operating activities
Interest paid
Net cash from/(used in) operating activities
Cash flows from investing activities
Payments for purchases of property, plant, and equipment
Payments for purchase of intangible assets
Proceeds from the sale of property, plant, and equipment
Payments for deposits with a maturity of 3 months or longer
(0.4)
2.5
(3.1)
-
(0.4)
0
-
-
-
(37.7)
(30.3)
24.3%
103.2
4.3
1.8
(0.4)
1.9
5.6
4.3
1.3
(2.5)
(1.3)
73.1
(22.9)
0
(0.1)
73.1
(23.0)
1,746.2%
0.3%
41.2%
-83.4%
-
-
-
-
(4)
-
0.2
-
(2.2)
78.9%
(0.3)
-
1.8
-89.2%
(368)
-
Proceeds from deposits with a maturity of 3 months or longer
66.4
403
-83.5%
Cash pooling net position
Loans granted to subsidiaries
Interest received
Dividends received
(132.2)
-
-
-
(62.2)
43.7
-5.4%
264.4
-18.7%
-
41.4
215
Net cash from investing activities
186.8
280.2
33.3%
157 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Indicator
Cash flow from financing activities
2020
2019
Variation
2020/2019
Proceeds from issue of share capital, net
-
1.1
-
Dividends paid
Payment of lease liabilities
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
(245.8)
(247.2)
-0.6%
(0.9)
(0.8)
12.4%
(246.7)
(246.9)
-0.1%
13.2
180.3
10.3
170
28.1%
6.1%
Cash and cash equivalents at 31 December
193.5
180.3
7.3%
Source: Separate financial statements of ELSA as of 31 December 2020
In 2020, the net increase in cash and cash equivalents amounted to RON 13.2 mn.
The net cash generated by the operating activity was of RON 73.1 mn. The net profit of the period was RON
298.4 mn; the main non-monetary elements adjustments for the net profit were: adding the amortization
and depreciation of tangible and intangible assets in the amount of RON 13.1 mn, adding the impact of
tangible assets disposal in the net amount of RON 10.6 mn, adding the variation of the change in provisions
of RON 2.5 mn, eliminating the impact of the impairment of trade receivables of RON 98.6 mn, deduction of
the income tax benefit of RON RON 3.1 mn and deduction of the net financial result of RON 260.2 mn.
Changes in working capital had a favorable effect, of RON 110.8 mn, the most significant impact being
generated by the positive change in trade and other receivables, in the amount of RON 107.5 mn, and in trade
and other payables of RON 3.3 mn (out of which, a RON 1.9 mn positive impact from the change in employee
benefits).
For the investment activity, the cash generated was of RON 186.8 mn, the most significant values being
related to the dividends received in the amount of RON 215 mn, to the proceeds from deposits with a maturity
of 3 months or longer, of RON 66.4 mn, to interest received in the amount of RON 41.4 mn, but also to the
payments for purchases of property, plant, and equipment in the amount of RON 4 mn, and the amounts
paid within the cash pooling scheme, implemented at the Group level, amounting to RON 132.2 mn.
The financing activity generated a decrease in cash and cash equivalents of RON 246.7 mn, mainly from the
dividends paid to the shareholders - RON 245.8 mn.
In 2019, the net increase in cash and cash equivalents amounted to RON 10.3 mn.
The net cash generated by the operating activity was of RON 23 mn. The net profit of the period was RON
257.8 mn; the main non-monetary elements adjustments for the net profit were: adding the amortization and
depreciation of tangible and intangible assets in the amount of RON 22.1 mn, impairment adjustments for
tangible assets of RON 2.5 mil. RON, eliminating the impact of the impairment of trade and other receivables
of RON 1.6 mn and deduction of a net financial result of RON 310.7 mn.
Changes in working capital had a favorable effect, of RON 7.3 mn, the most significant impact being generated
by the positive change in trade and other receivables, in the amount of RON 9.9 mn, positive effect reduced
by the change on payable and other payables with a negative effect of RON 2.6 mn (out of which, a RON 1.3
mn from the change in employee benefits). Interest paid was RON 0.1 mn.
For the investment activity, the cash used was of RON 280.2 mn, the most significant values being related to
the dividends received in the amount of RON 264.4 mn, to interest received in the amount of RON 43.7 mn,
to the proceeds from deposits with a maturity of 3 months or longer, of RON 35 mn, and to the loans granted
to subsidiaries of RON 62.2 mn.
The financing activity generated a decrease in cash and cash equivalents of RON 246.9 mn, the main factors
being the dividends paid to the shareholders, RON 247.2 mn.
158 | 2020 ANNUAL REPORT
ELECTRICA S.A.
6.7 Risk management
In 2020, Electrica continued to improve and develop the risk management system, based on best practices
in the field.
2020 DIRECTORS’ REPORT
At the Electrica Group level several specific initiatives can be mentioned that targeted the risk management
activity in 2020:
■
The Risk Management Department substantially contributed to achieving and monitoring the
implementation of resilience plan for management activities in the context of COVID-19 at the
Group level;
Updating the risk governance framework by approving and implementing a new Risk Management
Policy at the level of all companies within the group, by amending ELSA Corporate Governance Code,
regarding the attributions related to risk management, and by approving the new Risk Management
Procedure within ELSA;
The transition from a risk management approach based on three lines of defense to one based
on five lines of defense: the first line refers to business line coordinators, having an operational
role in identifying, assessing, treating, and monitoring risks in their own fields of activity; the second
line includes the functions with clearly defined roles in the control of certain types of specific risks;
the third line provides for the aggregation, monitoring and reporting of relevant information on the
identified risks and is represented by the risk management function; the fourth line is represented by
the internal audit component, which has a role of validating the effectiveness and efficiency of the risk
management system; and the fifth line is represented by the external audit;
Updating the specific taxonomy for risk management: by establishing and defining new categories
of risks specific to the group’s activities, but also by redefining the quantitative and/or qualitative
assessment scale that allows the framing and aggregation of identified risks;
Development of new punctual approaches regarding the management of market risk and credit
risk, associated with electricity and natural gas supply activities, as well as electricity production from
renewable sources activity. In this respect, at the EFSA level, the project dedicated to market risk
management has been completed, the guarantee manual was developed to cover the credit risk
regarding all types of guarantees, as well as the procedures for analysis and evaluation of guarantees;
procedures of economic-financial analysis and analysis of the counterparty risk, assessment of
exposure to the credit risk, have been developed in order to ensure the preventive control of the credit
risk.
Regular communication on risk management activities at the level of the entire group, by
organizing workshops, course sessions, online meetings, as well as the meetings of the Risk Supervision
Committee at the level of the group companies;
Updating the plans of control/treatment measures for the identified and evaluated risks, and
monitoring their implementation.
■
■
■
■
■
■
Two other great challenges of 2020 consisted of the two major internal merger projects within the Electrica
Group, respectively, the merger by absorption of the two energy services subsidiaries SERV with SEM, and the
merger by absorption of the three companies of electricity distribution, SDTN, SDTS, and SDMN, resulting in
Distributie Energie Electrica Romania (DEER), which also involved the management of specific risks to such
projects.
For the next year, we intend to further develop the risk management system at the level of the entire Electrica
Group, by improving the risk governance framework, in order to develop a relevant database for risk analysis,
taking into account particularly the new context created by the COVID-19 pandemic, national and European
Union regulations, such as the provisions of European Regulation no. 941/2019 on risk preparedness in the
electricity sector, the provisions of the European Green Deal to combat climate change, as well as other
provisions that may have a significant impact on the Electrica Group in the future.
FINANCIAL RISK MANAGEMENT
The Group is exposed to the following risks resulting from the use of financial instruments: credit risk, liquidity
risk, and market risk.
■■
Credit risk
Credit risk is the risk that the Group will register a financial loss if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from
customers, cash, and cash equivalents, restricted cash, and bank deposits.
The Group’s exposure to credit risk is mainly influenced by the individual characteristics of each customer. In
the past, the Group had a high credit risk mainly from State-owned companies.
Cash and bank deposits are placed in financial institutions that are considered to have to have a low risk of
default.
The carrying amount of financial assets represents the maximum credit exposure.
159 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
Trade receivables
The Group’s credit risk in respect of receivables was concentrated in the past around state-controlled
companies and in the recent years refers to clients that are facing financial difficulties in their industries due
to specific changes in circumstances in their industry sector. The Group is in process of setting up a policy
regarding the insurance of the trade receivables. Also, the electricity supply contracts include termination
clauses in certain circumstances.
The Group establishes an allowance for impairment that represents the amount of expected credit losses,
calculated based on the expected loss rates.
Impairment
The following table provides information on the exposure to credit risk and expected credit losses for trade
receivables as of 31 December 2020:
(RON mn)
Expected
credit loss rates
(“ECL”)
Gross
value
Lifetime ECL
Net trade
receivables
Credit
impaired
31 December 2020
Neither past due nor
impaired
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due more than
90 days
2%
1%
12%
33%
99%
812.9
163.4
49.0
17.4
(13.1)
(2.3)
(5.8)
(5.7)
936.6
(922.7)
799.8
161.1
43.2
11.8
13.9
No
No
No
No
Yes
Total
1,979.3
(949.6)
1,029.8
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
The following table provides information on the exposure to credit risk and expected credit losses for trade
receivables as of 31 December 2019:
(RON mn)
Expected
credit loss rates
(“ECL”)
Gross
value
Lifetime ECL
Net trade
receivables
Credit
impaired
31 December 2019
Neither past due nor
impaired
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due more than
90 days
2%
2%
12%
33%
99%
705.9
(10.8)
695.1
154.5
34.6
6.3
(2.6)
(4.2)
(2.1)
1,010.8
(1,002.6)
151.9
30.5
4.3
8.2
No
No
No
No
Yes
Total
1,912.1
(1,022.1)
890.0
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
■■
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations associated with
its financial liabilities that are settled by transferring cash or another financial asset. The Group’s liquidity
management policy is to maintain, as far as possible, sufficient liquidity to meet its obligations when they are
due, under both normal and stressed conditions, to avoid unacceptable losses.
The Group aims to maintain the level of its cash and cash equivalents at an amount above expected
cash outflows on financial liabilities. The Group also monitors the level of expected cash inflows on trade
160 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
receivables together with expected cash outflows on trade and other payables. In addition, the Group
maintains overdrafts facilities.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted, and include estimated interest payments.
(RON mn)
Contractual cash flows
Financial liabilities
Carrying
amount
Total
less than
1 year
1-2
years
2-5
years
More than 5
years
31 December 2020
Bank overdrafts
Lease liability
Long term bank
borrowings
165.0
27.6
165.0
165.0
27.6
10.7
-
6.8
-
10.0
-
0.1
778.9
778.9
378.6
70.8
212.5
117.0
Trade payables
607.2
607.2
607.2
-
-
-
Total
1,578.7
1,578.7
1,161.5
77.6
222.5
117.1
31 December 2019
Bank overdrafts
350.6
350.6
350.6
Financing for network
construction related to
concession agreements
1.0
1.0
1.0
-
-
-
-
Lease liability
36.5
36.5
26.9
7.2
1.3
Long-term bank
borrowings
440.3
440.3
7.5
337.6
52.9
Trade payables
730.5
730.5
730.5
-
-
Total
1,558.9
1,558.9
1,116.5
344.9
54.2
-
-
1.1
42.2
-
43.3
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
■■
Market risk
Market risk is the risk that changes in market prices – foreign exchange rates and interest rates – will affect
the Group’s income or the value of its financial instruments held. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Currency risk
The Group has exposure to currency risk to the extent that there is a mismatch between the currencies in
which sales, purchases, and borrowings are denominated and the functional currency of the Group. The
functional currency of all entities belonging to the Group is the Romanian Leu (RON).
The currency in which these transactions are primarily denominated is RON. Certain liabilities are denominated
in foreign currency (EUR). The Group also holds deposits and bank accounts denominated in foreign currency
(EUR). The Group’s policy is to use the local currency in its transactions as far as practically possible. The Group
does not use derivative or hedging instruments.
161 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
Exposure to currency risk
The summary of quantitative information on the Group’s exposure to currency risk is given below:
(RON mn)
Cash and cash equivalents
Financing for network construction related to
concession agreements
Lease liability
Net statement of financial position exposure
31 December 2020
EUR
31 December 2019
EUR
3.4
-
(24.5)
(21.1)
0.3
(1.0)
(35.4)
(36.1)
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
The following significant exchange rates have been applied during the year:
Average rate
Year-end spot rate
2020
2019
2020
2019
EUR/RON
4.8371
4.7452
4.8694
4.7793
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Sensitivity analysis
A reasonably possible strengthening (weakening) of the EUR against RON on 31 December would have
affected the measurement of financial instruments denominated in a foreign currency and profit before
tax by the amounts shown below. The analysis assumes that all other variables, in particular interest rates,
remain constant and ignores any impact of forecast sales and purchases.
(RON mn)
Effect
Profit before tax
Strengthening
Weakening
31 December 2020
EUR (5% movement)
31 December 2019
EUR (5% movement)
(1.1)
(1.8)
1.1
1.8
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
(RON mn)
31 December 2020
31 December 2019
Fixed-rate instruments
Financial assets
Call deposits
Deposits with a maturity date of more than three months
Financial liabilities
Financing for network construction related
to concession agreements
Long-term bank borrowings
Lease liability
Total
391.5
-
-
(728.9)
(9.1)
(346.5)
485.3
66.5
(1.0)
(440.3)
(16.0)
94.5
162 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
(RON mn)
31 December 2020
31 December 2019
Variable-rate instruments
Financial liabilities
Lease liability
Long-term bank borrowings
Bank overdrafts
Total
(18.6)
(49.9)
(165.0)
(233.5)
(20.5)
-
(350.6)
(371.1)
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Fair value sensitivity analysis for fixed-rate instruments
The Group does not account for any fixed-rate financial assets or financial liabilities at fair value through
profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 50 basis points in interest rates at the reporting date would have increased
(decreased) profit before tax by the amounts shown below. This analysis assumes that all other variables, in
particular foreign currency exchange rates, remain constant.
(RON mn)
Effect
Profit before tax
50 bp increase
50 bp decrease
31 December 2020
Variable-rate instruments
31 December 2019
Variable-rate instruments
(1.2)
(1.9)
1.2
1.9
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
6.8 Description of the main features of internal
control and risk management systems in relation
to the financial reporting process
The internal control represents all measures, procedures, and policies adopted by ELSA management and
their implementation by the employees regarding the organizational structure, applied procedures, methods,
techniques, and instruments, with the purpose of implementation of the Company’s strategy and objectives.
The internal control includes all control forms performed at the company level, such as preventive financial
control, internal and managerial control, compliance control.
The internal control is a means of analyzing the ELSA’s activities, of adopting and applying internal
management, including the knowledge activity, which allows the company’s management to coordinate
the organization’s activities efficiently.
In this sense, the internal control follows and verifies, in accordance with the legislation in force and the
specific procedures, the compliance with the legal framework that regulates the activities carried out in the
verified entities, according to the approved control objectives and themes.
Through internal control, the management ascertains the deviations from the established objectives,
analyzes the causes, and orders the corrective or preventive measures that are required.
The internal control and the risk management systems have the following main goals:
■
■
■
■
protecting organizational resources against losses due to waste, negligence, abuses, fraud, etc.;
compliance with the applicable legislation and the internal regulations;
the reliability of financial reporting (accuracy, completeness, and correctness of the information);
ensuring an environment based on identifying, understanding, and controlling risks, environment
which will contribute to achieving the organizational goals;
efficient and effective business operations and use of resources;
■
163 | 2020 ANNUAL REPORT
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2020 DIRECTORS’ REPORT
■
applying the Board of Directors’ and executive management resolutions and follow-up.
Accomplishing these goals in 2020 was performed as follows:
■
recruitment of personnel with an adequate level of competency, in accordance with the company’s
needs, accompanied by the development of a continuous training plan to allow an update of specific
knowledge or supplementation of internal resources with external consultants, when appropriate.
In this context, in 2020, at the level of the specific department within ELSA were employed two persons
with experience in performing internal control, as well as one for ensuring internal compliance with
competition and state aid rules.
clear definition and split of responsibilities of each person involved in the organizational process;
segregation of duties regarding the carrying out of operations among personnel, so that the approval,
control, and recording attributions are adequately assigned to different persons (according to the
company’s organizational chart);
elaboration, update, and implementation of regulations, policies, procedures, forms, etc.; in August
2020, the Procedure for carrying out the control activity at the ELSA level was updated, through which
the control activity for ELSA and for the companies in its portfolio was improved and adapted to the
management requirements, in accordance with the Group’s Strategy;
the existence of a Guide for Accounting Policies, elaborated in accordance with the requirements of
the legislation in force, approved by the Board of Directors;
the existence of a calendar and a well-defined process regarding the elaboration of accounting and
financial information in accordance with the reporting requirements (financial reports, including
financial statements, annual and interim reports, budget, etc.) and their appropriate verification and
approval by the Board of Directors, in order to be further published.
■
■
■
■
The framework of ELSA’s internal control system consists of the following elements:
Control environment – The existence of a control environment represents the basis of an efficient
internal control system. It consists of the commitment towards integrity and ethical values (for
this purpose, a series of policies on zero tolerance towards corruption, anti-fraud and anti-money-
laundering, avoidance and fighting against conflicts of interest, policy for gifts and protocol expenses
as well as forbidding facilitating payments, transparency and the involvement of stakeholders), as well
as organizational measures (policies on the delegation of authority and responsibilities);
Evaluation of risks – Generally, all processes are within the scope of the internal control system. An
identification process is carried out regarding major or critical risks, related to particular activities for
stimulating internal control methods;
Control activities meant to reduce the risks – Control activities have different forms (managerial
control, general control, preventive financial control, etc.) and are implemented and carried out with
the purpose of reducing significant operational and compliance risks;
Information and communication – Information helps all other components of the internal control
system by means of communication to the employees of their responsibilities regarding the control
and the provision of information in an adequate and timely manner, so that all employees may
carry out their duties. Internal communication is performed by means of disseminating information
to all levels, while the external one implies the dissemination of information to external parties, in
accordance with the requirements and expectations;
Monitoring activities – the Audit and Risk Committee and the Internal Audit Department assess the
efficiency and the effective implementation of the internal control system.
The management monitors the functioning of internal controls by means of periodical analyzes; for instance,
the budget execution, the security incidents monitoring, internal and external audit reports, and internal
control reports.
Deficiencies in the implementation or functioning of internal controls are noted in the internal control
reports, information notes, as well as internal audit reports, and are presented to the management, with the
purpose of issuing the corrective actions.
The internal audit missions evaluate the internal control system, the risks and the implemented control
strategies, and also suggest initiatives, proposals, solutions, and recommendations to mitigate the risks of
fraud and to improve control strategies.
The internal audit includes, but is not limited to, the examination and evaluation of the adequate nature and
the efficiency of the organization’s corporate governance, risk management, and internal controls and of the
quality performance in carrying out the assigned responsibilities, in order to achieve the assumed strategy
and objectives of the organization.
The Guide for Accounting Policies is consistently applied in all companies within the Group, for the purpose of
ensuring an accounting treatment consistently applied for the same business situations, for the preparation
of annual and interim financial statements of the Group on a standalone and consolidated basis. This guide is
subject to review based on the changes made to the International Financial Reporting Standards as adopted
by EU, respectively by the changes in the Order of the Minister of Public Finance no. 2844/2016 for the
approval of the Accounting Regulations in accordance with the International Financial Reporting Standards.
From the perspective of the statutory regulations, the Group’s subsidiaries apply their own accounting policy
manuals, in accordance with the provisions of the Order of the Minister of Public Finance no. 1802/2014
164 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
regarding the individual and consolidated annual financial statements, with subsequent amendments. The
statutory accounting policies are applied consistently to all subsidiaries of the Group, being aligned where
possible, to ensure a uniform accounting treatment applied for similar operations. The accounting policy
manuals are revised according to the changes in the legislation, as well as the operations carried out by each
company.
The Group has appropriate systems in place for the collection, storage, protection, and processing of data
in order to generate financial and managerial reports for both internal and external use, as well as proper
systems and procedures for meeting the legal requirements and financial reports requirements in a timely
manner and subject to control review.
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2020 DIRECTORS’ REPORT
Appendix 1
Litigations
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2020 DIRECTORS’ REPORT
Electrica Group litigations in 2020 (updated as of 4 March 2021):
1.
Disputes with ANRE
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
Cancellation of the ANRE
Order no. 146/2014 regar-
ding
the establishment
of the regulated rate of
return considered to the
approval of the tariffs for
the electricity distribution
service provided by con-
cessionary DSOs starting
with 1 January 2015 and the
abrogation of Art. 122 of the
Tariff Setting Methodology
for Electricity Distribution
Service, approved by the
ANRE Order no. 72/2013.
Cancellation of ANRE Or-
der no. 155/2014 regarding
the approval of the speci-
fic tariffs for the electricity
distribution service and
the price for the reactive
energy for SDTN.
Cancellation of ANRE Or-
der no. 156/2014 regarding
the approval of the speci-
fic tariffs for the electricity
distribution service and
the price for the reactive
energy for SDTS.
Plaintiff: ELSA
Defendant: ANRE
192/2/2015
Plaintiff: ELSA;
Defendant: ANRE;
361/2/2015
Plaintiff: ELSA;
Defendant: ANRE;
360/2/2015
High Court of
Cassation and
Justice
Appeal
suspen-
–
ded until the settle-
ment of case no.
(actual
7341/2/2014
4804/2/2020).
High Court of
Cassation and
Justice
Suspended
un-
til the settlement
of the case file no.
192/2/2015.
High Court of
Cassation and
Justice
Suspended
un-
til the settlement
of the case file no.
192/2/2015.
Plaintiff: ELSA;
Defendant: ANRE;
340/2/2016
Action for partial annul-
ment (regarding the spe-
cial tariffs) of the adminis-
trative act – ANRE Order
171/2015.
High Court of
Cassation and
Justice
Appeal - Suspended
until the settlement
of the case file no.
192/2/2015.
Plaintiff: ELSA;
Defendant: ANRE;
342/2/2016
Action for partial annul-
ment (regarding the spe-
cial tariffs) of the adminis-
trative act – ANRE Order.
No. 172/2015.
High Court of
Cassation and
Justice
Appeal - Suspended
until the settlement
of the case file no.
192/2/2015.
Plaintiff: ELSA;
SDTN; SDTS;
SDMN;
Defendant: ANRE;
7614/2/2018
Action for partial annul-
ment of ANRE Order no.
169/2018
the
approval of the Tariff Set-
ting Methodology for the
Distribution
Electricity
regarding
Service.
Plaintiff: ELSA;
SDTN; SDTS;
SDMN;
Defendant: ANRE
7591/2/2018
Action for the annulment
of the ANRE Order no.
168/2018
the
regulatory rate of return
and obliging ANRE to is-
sue a new order.
regarding
Bucharest
Court of Appeal
In course
of settlement.
Bucharest
Court of Appeal
In course
of settlement.
1.
2.
3.
4.
5.
6.
7.
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ELECTRICA S.A.
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
2020 DIRECTORS’ REPORT
8.
9.
10.
11.
Plaintiff: Fondul
Proprietatea
Defendant: ANRE
Intervenient: ELSA;
SDTN; SDTS; SDMN;
4804/2/2020
(former
7341/2/2014)
Legal action having as ob-
ject the partial annulment
of ANRE Order no. 112/2014
regarding the amendment
and completion of the tari-
ff setting methodology for
the electricity distribution
service, approved by the
ANRE Order no. 72/2013.
Plaintiff: ELSA,
SDMN
Defendant: ANRE
434/2/2019
regarding
Legal action for annul-
ment of ANRE Order
197/2018
the
approval of the specific
tariffs for the electricity
distribution service and
the price for the reactive
energy for SDMN.
Plaintiff: ELSA,
SDTS
Defendant: ANRE
435/2/2019
Plaintiff: ELSA,
SDTN
Defendant: ANRE
436/2/2019
the
Legal action for annul-
documents
ment
of
issued by
regula-
tory authorities - Order
199/2018
the
approval of the specific
tariffs for the electricity
distribution service and
the price for the reactive
energy for SDTS.
regarding
the
Legal action for annul-
documents
of
ment
issued by
regula-
tory authorities - Order
198/2018
the
approval of the specific
tariffs for the electricity
distribution service and
the price for the reactive
energy for SDTN.
regarding
Bucharest
Court of Appeal
Retrial – the action
was dismissed as
unfounded. The de-
cision si appealable
within 15 days of its
communication.
Bucharest
Court of Appeal
In course
of settlement.
Bucharest
Court of Appeal
On 09.06.2020, the
court rejected the
ation as unfounded.
The decision can be
appealed within 15
days from the com-
munication. The De-
cission has not been
communicated.
Bucharest
Court of Appeal
In course
of settlement.
12.
Plaintiff: SDMN
Defendant: ANRE
184/2/2015
Administrative litigation –
Cancellation of ANRE Or-
der no. 146/2014 regarding
the setting of the regula-
ted rate of return applied
at the approval of the ta-
riffs for the electricity dis-
tribution service provided
by the DSOs starting with
1 January 2015 and the ab-
rogation of art. 122 of the
tariff setting methodolo-
gy for the electricity distri-
bution service, approved
by the ANRE order no.
72/2013.
High Court of
Cassation and
Justice
Suspended case file
until the final settle-
ment of the Bucha-
rest Court of Appeal
case 7341/2/2014 (ac-
tual 4804/2/2020).
169 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
13.
14.
Plaintiff: SDMN
Defendant: ANRE
164/2/2016
Plaintiff: SDMN
Defendant: ANRE
309/2/2020
Plaintiff: SDMN;
SDTS
Defendant: ANRE
15.
8901/2/2018
Plaintiff: SDMN;
SDTS
Defendant: ANRE
16.
8901/2/201
17.
Plaintiff: SDTN
Defendant: ANRE
213/2/2015
18.
Plaintiff: SDTN
Defendant: ANRE
305/2/2020
Cancellation of ANRE Or-
der no. 165/2014 regarding
the modification of the
Tariff Setting Methodology
for Electricity Distribution
Service, approved by the
ANRE Order no. 72/2013.
Legal action on the can-
cellation of documents is-
sued by regulatory autho-
rities – Order no. 227/2019
regarding the approval of
the tariffs for the electri-
city distribution service
and the price for the reac-
tive energy for SDMN.
Action in administrative
litigation to oblige ANRE
to
issue an address of
response to the request
of DSOs within Electrica
Group to issue a decision
stating whether they have
exclusive or special rights
in accordance with the
provisions of Law 99/2016.
Cancellation of the ad-
ministrative act for the
refusal to issue a favo-
rable opinion regarding
the transfer of the AMR
system and requiring the
issue of favorable admi-
nistrative documents for
the cession of the AMR
to
system
DSOs, also obliging ANRE
to adjust the distribution
tariffs of DSOs.
from ELSA
Cancellation of ANRE Or-
der no. 146/2014 regarding
the establishment of the
regulated rate of return
applied to the approval
of the tariffs for the elec-
tricity distribution servi-
ce provided by the DSOs
from 1 January 2015 and
the abrogation of Art.
122 of the Tariff Setting
Methodology for Electri-
city Distribution Service,
approved by the ANRE Or-
der no. 72/2013.
Cancellation of ANRE Or-
der no. 228/2019 regarding
the approval of the speci-
fic tariffs for the electricity
distribution service and
the price for the reactive
energy for SDTN.
High Court
of Cassation
and Justice
The case file no.
1574/2/2016
has
been linked to this
case file. The action
was definitively dis-
missed.
Bucharest Court
of Appeal
In course
of settlement.
Bucharest Court
of Appeal
The action was ad-
mitted by the first
instance. The de-
is final by
cision
non-appeal.
High Court
of Cassation
and Justice
In the appeal, the
court
admitted
the appeal and an-
nulled the appealed
sentence. The co-
urt took note of the
request to waive the
trial of ELSA, SDMN,
SDTN, and SDTS.
High Court
of Cassation
and Justice
Appeal
– suspended.
Bucharest Court
of Appeal
In course
of settlement.
170 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
2020 DIRECTORS’ REPORT
19.
Plaintiff: SDTS
Defendant: ANRE
371/2/2015
Plaintiff: SDTS
Defendant: ANRE
208/2/2015
Cancellation of ANRE Or-
der no. 156/2014 regarding
the approval of the specific
tariffs for the electricity dis-
tribution service and the
price for the reactive ener-
gy for SDTS.
to
Cancellation of the ANRE
Order no. 146/2014 regar-
ding the establishment
of the regulated rate of
the
return applied
approval of the tariffs for
the electricity distribu-
tion service provided by
DSOs from 1 January 2015
and the abrogation of Art.
122 of the Tariff Pricing
Methodology for Electri-
city Distribution Service,
approved by the ANRE Or-
der no. 72/2013.
Bucharest Court
of Appeal
un-
Suspended
til
the settlement
of the case file no.
208/2/2015.
High Court of
Cassation
and Justice
Suspended. Wai-
ver of the trial at the
appeal regarding the
suspension decision.
Plaintiff: SDTS
Defendant: ANRE
73/197/2019
Complaint against
the
contravention report no.
97341/18 December 2018.
Brasov
Court
Action definitively
rejected.
Plaintiff: SDTS
Defendant: ANRE
303/2/2020
Cancellation of ANRE Or-
der no. 229/2019 regarding
the approval of the of the
specific tariffs for the elec-
tricity distribution service
and the price for the reac-
tive energy for SDTS.
Bucharest Court
of Appeal
In course
of settlement.
20.
21.
22.
Source: Electrica
2.
Fiscal matter disputes
Crt.
no.
Parties/Case
file number
1.
Plaintiff: ELSA
Defendant: NAFA
17237/299/2017
Object
Court
Case status
forced
1. Suspension of
execution initiated by NA-
FA-DGAMC in the enforce-
ment file no. 13267221 un-
der the enforceable order
no. 13725/3 May 2017 and of
the no. 13739/03 May 2017;
2. Cancellation of
the
enforcement order no.
13725/3 May 2017, of the
61/90/1/2017/263129
no.
(which also bears the No.
13739/3 May 2017) issued
by NAFA-DGAMC for RON
39,248,818 and all sub-
sequent execution orders
issued in connection with
the forced execution of the
amount of RON 39,248,818
in the execution file no.
13267221.
District 1 Court
Suspended until the
final settlement of
case no. 9131/2/2017.
171 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Object
Court
Case status
2.
3.
Plaintiff: ELSA
Defendant: NAFA
9131/2/2017
Plaintiff: ELSA
Defendant: NAFA
6043/2/2018
Plaintiff: ELSA
Defendant: NAFA -
DGAMC
4.
25091/299/2018
Annulment of the tax de-
cisions
issued by NAFA
and communicated to the
company by address no.
665/17 March 2017, new
accessories amounting to
RON 39,000,000.
1. Obligation of NAFA to
correct the evidence of
tax receivables, so that it
reflects the decisions gi-
ven by the courts in the
disputes between
the
parties, through decisions
that have come into the
power of the judicial work.
2. In particular, in order to
adjust the financial sta-
tement in the sense indi-
cated in paragraph 1, the
NAFA shall be obliged to
draw up those corrective
administrative acts or ope-
rations which:
a) to reflect in the fiscal
file the extinguishment by
prescription of the amount
of RON 16,915,950 represen-
ting the profit tax registe-
red in Decision no. 3/2008
(the „Main Claim”) and the
removal from its tax recor-
ds, ‘
b) to reflect in the fiscal file
the corresponding extinc-
tion of all the accessories
calculated by NAFA in the
Main Claim (extinguished
by prescription) and the re-
moval from their tax recor-
ds (including the amount
of RON 30,777,354 included
in Decision no. 357/2008).
Appeal to execution and
suspension of forced exe-
cution - the cancellation
of the enforcement order
no. 13566/22 June 2018
and the notice 13567/22
June 2018, issued in the
execution file no. 13267221
/ 6 1 / 9 0 / 1 / 2 0 1 8 / 2 7 8 5 3 0 ,
amounting
RON
(representing
10,024,825
the partial fine from the
Competition Council).
to
High Court of
Cassation and
Justice
Action admitted in
first court
instan-
ce. - ANAF filed an
appeal, in course of
settlement.
High Court of
Cassation and
Justice
In the first instance,
Electrica’s action
was admitted. NAFA
filed an appeal – in
course of settle-
ment.
District 1 Court
Suspended
until the settle-
ment of case no.
3889/2/2018.
172 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Crt.
no.
Parties/Case
file number
Object
Court
Case status
2020 DIRECTORS’ REPORT
Plaintiff: SDMN
Defendant: NAFA -
DGAMC
5.
1018/2/2016*
Cancellation of adminis-
trative act – Decision no.
462/23 November 2015,
litigation amount of RON
7,731,693 (RON 4,689,686 in-
come tax + RON 3,042,007
VAT) and for the amount
of RON 6,154,799
(RON
3,991,503
interests/penal-
ties and late fees related to
income tax + RON 2,163,296
interests/penalties and de-
lay fees related to the VAT).
High Court of
Cassation and
Justice
The court of first in-
stance rejected the
action as unfounded.
The plaintiff filed an
appeal, admitted by
the court, which qu-
ashes the contested
decisions and re-jud-
ging, partially admits
the action. Partially
annuls Decision no.
462 / 23.11.2015 issued
by A.N.A.F –DGSC, re-
garding point 3. Obli-
the defendant
ges
A.N.A.F –DGSC to se-
ttle on the merits of
the claim regarding
the amount of RON
10,091,323. It sends for
retrial to the same
court the request re-
garding
the other
fiscal obligations re-
tained by the fiscal
body, amounting to
RON 13,886,492. Final
(file no. 1018/2/2016 *).
DGAMG - ANAF rejec-
ted by Solution Decisi-
on no. 154 / 02.07.2020,
the appeal regarding
the amount of RON
10,091,323 (Point 3 of
Decision no. 462/2015)
reason for which an
action for annulment
was filed on 22.12.2020
(file no. 641/42 / 2020).
6.
7.
Plaintiff: SDMN
Defendant:
DGAMC – NAFA
641/42/2020
Plaintiff: SDMN
Defendant: Galati
City Hall - DITVL
Galati
263/42/2020
Annulment of the admi-
nistrative act of the Se-
ttlement Decision 154 /
02.07.2020 for the amount
of RON 10,091,323 (point 3
of the Decision no. 462 /
23.11.2015)
Cancellation of adminis-
trative documents issued
by the fiscal bodies within
the Galati City Hall - DITVL
Galati, respectively Fiscal
inspection report, taxati-
on decision, and decisi-
on to resolve the appeal.
According to the Fiscal
Inspection Report,
the
control team determin-
ed an additional tax on
buildings, together with
the related accessories,
in a total amount of RON
24,831,293, for the 2012-
2015 period.
Ploiesti Court
of Appeal
In course of settle-
ment.
Ploiesti Court
of Appeal
In course of settle-
ment.
173 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Object
Court
Case status
8.
Plaintiff: SERV
Defendant: NAFA
5786/2/2018
Cancellation of administra-
tive act NAFA RIF 2017 and
decision no. 305/30 May
2017, amounting to RON
46,260,952, the amount by
which the financial loss of
the Company was dimi-
nished; RON 7,563,561 esta-
blished as additional VAT
for payment by the refusal
to deduct the VAT + related
accessories.
High Court of
Cassation and
Justice
By decision 2145/2019
dated
03.07.2019,
the court admits the
request. Partially an-
nuls Decision no. 22
/ 18.01.2018 regarding
the
settlement of
the appeal, Taxation
Decision no. F-MC
305 / 30.05.2017, The
provision
regarding
the measures esta-
blished by the fiscal
inspection bodies no.
115046
/ 30.05.2017
and RIF no. F-MC 177
/ 30.05.2017,
regar-
ding the amount of
RON 7,264,463 VAT
with the related ac-
illegally
cessories,
retained as non-de-
respecti-
ductible,
the
vely
amount
RON
37,083,657 with which
the financial loss was
illegally diminished.
In this case, an appeal
was filed by both par-
ties, currently in the
filter procedure.
regarding
of
Cancellation of the ad-
ministrative
decision
no. 221/19 July 2017 - the
cancellation of penalties
related to decision no.
305/2017 from above, RON
118,215.
The appeal of tax decision
no. F-MM-180/2016 regar-
ding additional tax and
VAT, as well as interest/
increases
late payment
and late payment penal-
ties. Preliminary adminis-
trative procedures were
conducted in 2017 before
the action was brought
in court. Amount: RON
32,295,033.
Bucharest
Court
Suspended until
the final settle-
ment of case no.
5786/2/2018.
High Court of
Cassation and
Justice
Appeal – in course
of settlement.
DGSC Decision
F-MC
F-MC
Decision
Cancellation of:
•
no. 325/26 June 2018
•
678/28 December 2017
•
385/28 December 2017
•
511/24 October 2018
•
Decision
21095/24 July 2018
Amount: RON 11,483,652
Decision
Report
no.
no.
Bucharest Court
of Appeal
Suspended - until
the settlement of
case no. 2213/2/2017
– Court of Accounts
(appeal at High
Court of Cassation
and Justice)
9.
10.
11.
Plaintiff: SERV
Defendant: NAFA
31945/3/2018
Plaintiff: SDTN
Defendant: MFP -
NAFA - DGRFP Cluj
- AJFP Maramures
371/33/2017
Plaintiff: EFSA
Defendant: NAFA
– DGAMC
8709/2/2018
Sursa: Electrica
Sursa: Electrica
174 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
3.
Other significant litigations (with a value higher than EUR 500 th)
Crt.
no.
Parties/Case
file number
Object
Court
Case status
Plaintiff: SPEEH
Hidroelectrica S.A.
Defendant: ELSA
13268/3/2015
The obligation of Electrica
to pay to SPEEH Hidroe-
lectrica SA the amount of
RON 5,444,761 (the loss su-
ffered by selling energy at
an average price per MWh
under the production cost
of 1 MWh); partial obliga-
tion to pay the unrealized
benefit of Hidroelectrica by
selling the total amount of
398,300 MWh, calculated
according to the ANRE re-
gulations (RON 9,646,826,
according to the written
instructions dated 5 May
2015/RON 5,444,761 ac-
cording to the applicant’s
conclusions mentioned in
the Conclusion of 15 March
2017); ordering the defen-
dant to pay the legal inte-
rest from the date of the
decision until the effective
payment, court costs.
High Court of
Cassation and
Justice
The court of the first
instance rejects the
exception of the pre-
scription of the mate-
rial right to the action
as unreasonable and
the action as unfoun-
ded.
Both parties have
appealed, dismissed
it as unfounded. Both
parties filed an appe-
al.
Hidroelectrica’s
appeal was rejected.
The ELSA appeal was
admitted, the case
being sent for retrial
to the Bucharest Co-
urt of Appeal.
Creditor: ELSA
Debitor: Petprod
S.A.
47478/3/2012/a1
Insolvency proceedings,
registering to the list of
creditors for the amount
of RON 2,591,163
Bucharest
Court
Ongoing procedure.
Creditor: ELSA
Debtor: CET Braila
S.A.
2712/113/2013
Creditor: ELSA,
AAAS, BCR SA, and
others
Debtor: Oltchim S.A.
887/90/2013
Creditor: ELSA
Debitor: Romenergy
Industry SRL
2088/107/2016
Bankruptcy, registering to
the list of creditors in the
amount of RON 3,826,035
Bankruptcy,
remaining
amount to be recovered -
RON 614,124,366.
Braila Court
Ongoing procedure.
Valcea Court
Ongoing procedure.
Bankrupcy,
registering
to the list of creditors in
amount of RON 2,917,266
Alba Court
Ongoing procedure.
Creditor: ELSA
Debtor: Transenergo
Com S.A.
1372/3/2017
Insolvency proceedings.
Amount RON 37,088,830.
Bucharest
Court
Ongoing procedure.
On 3 February 2021,
the Debtor’s reorgani-
zation plan was con-
firmed, according to
which unsecured re-
ceivables do not parti-
cipate in distributions.
ELSA will appeal the
sentence.
Creditor: ELSA
Debtor: Electra Ma-
nagement & Supply
SRL
41095/3/2016
Bankruptcy.
Amount:
RON 6,027,537.
Bucharest
Court
Ongoing procedure
1.
2.
3.
4.
5.
6.
7.
175 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Object
Court
Case status
Creditor: ELSA
Debtor: Fidelis
Energy SRL
3052/99/2017
Insolvency
proceedings.
Amount: RON 11,354,912.
Iasi Court
Ongoing procedure
8.
9.
Plaintiff: SAPE
Defendant: ELSA
46365/3/2016
Action for damages – RON
3,629,529,920.
Bucharest
Court
definitively
Action
dismissed
against
ELSA. SAPE was obli-
ged to pay to ELSA
the amount of RON
329,993.37 as judicial
costs.
Re-trial: By the de-
cision of 20.10.2020,
the court dismissed
SEM appeal, as un-
founded, so that the
sentence on merits
was maintained by
which the excepti-
on of prescription
was admitted. With
appeal within 30 days
from the communi-
cation. Considering
the EGMS SEM Deci-
sion no. 9 / 07.11.2019
by which the share
capital of SEM was
increased with these
2 lands, the request
will remain without
an object.
Decision
no.
1369/2020 21.10.2020
pronounced by the
CAB by which the
appeal formulated by
SEM was rejected, the
decision remained fi-
nal by not exercising
the appeal, conside-
ring the lack of inte-
rest of SEM (the share
capital was increased
with the 2 lands).
Bucharest
Court of Appeal
High Court of
Cassation and
Justice
The court dismissed
ELSA’s action as un-
founded; ELSA filed
an appeal – in course
of settlement.
(„Deposits
Obligation to increase the
share capital of SEM, with
the value of the lands lo-
cated in Dobroiesti, str.
Zorilor no. 71, Ilfov Coun-
ty
land and
Fundeni thermal power
station”), with an area of
6,480 sqm, CADP M03 no.
10982/2008,
respectively
from Bucharest, Timisoa-
ra Boulevard no. 104, dis-
trict 6 („Land for energy
equipment repair shop”,
with an area of 8,745 sqm,
CADP M03 no. 12917/2014
to RON
– amounting
7,344,390.
litigation
Administrative
- annulment of Competi-
tion Council Decision no.
77/20 December 2017, by
which an ELSA charge is
set through a fine of RON
10,800,984 and,
in the
subsidiary, the reduction
of the fine set up to the
legal minimum of 0.5% of
ELSA’s turnover, by re-in-
dividualizing the alleged
anticompetitive
facts,
with the retention and full
use of all mitigating cir-
cumstances applicable to
ELSA.
10.
Plaintiff: SEM
Defendant: ELSA
5930/3/2016*
11.
Plaintiff: ELSA
Defendant: Com-
petition Council
3889/2/2018
176 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Object
Court
Case status
12.
Plaintiff: ELSA
Defendant: SERV
39968/3/2018
Action for damages - requ-
est payment of penalty
in the amount
interest
of RON 4,671,287, related
to the amount of RON
10,327,442.
Bucharest Court
of Appeal
The first court partly
admitted
the acti-
on and ordered the
payment of the le-
interest calcu-
gal
lated for the period
20.11.2015-22.05.2018.
On 22.05.2020 SERV
filed an appeal, in co-
urse of settlement.
13.
14.
15.
16.
17.
18.
Plaintiff: ELSA
Defendant: Elite In-
surance Company
44380/3/2018
Plaintiff: ELSA
Defendant: Zurich
Broker de Asigu-
rare Reasigurare
SRL
3310/3/2020
Plaintiff: Transener-
go
Defendant: Zurich
Broker de Asigurare
Reasigurare SRL
Intervenient: ELSA
3474/299/2020
Claims - request for the
equivalent value of the
insurance policy issued to
guarantee the obligations
of Transenergo Com S.A.,
in the amount of RON
4,000,000.
Claims - RON 4,000,000 -
regarding the
insurance
policy issued to guarantee
the payment obligations
of Transenergo Com
Claims of Transenergo
Com against Zurich Broker,
in which ELSA is interve-
ning, formulating its own
claims (RON 4,000,000)
Bucharest
Court
Suspended based on
art. 307 Civil Proce-
dure Code.
Bucharest
Court
In course
of settlement.
Bucharest,
District 1 Court
Connected to case
no. 3310/3/2020.
Plaintiff: ELSA
Defendant: former
directors and admi-
nistrators of ELSA
35729/3/2019
Claims - claim for damages
calculated as a result of the
control of the Court of Ac-
counts, amounting to RON
322,835,121
Bucharest
Court
In course
of settlement.
Plaintiff: EFSA
Defendant: ELSA
2869/3/2019
Plaintiff: VIR Com-
pany International
S.R.L.
Defendant: SDMN
7507/105/2017
Claims: request of pay-
invoices paid
ment of
without justificative do-
cuments, as it has been
stated by the Court of Ac-
count, in the amount of
RON 17,274,162.
Claims - the amount requ-
ested by VIR Company In-
ternational SRL consists of:
- EUR 5,000,000, damage
caused by delayed issuan-
ce of the connection cer-
tificate for the photovol-
taic plant located in Valea
Calugareasca commune,
Darvari village;
- EUR 155,000, equivalent
of the amount of electri-
city produced by the plant
during the technological
tests period;
- EUR 145,000, green cer
High Court of
Cassation and
Justice
Action definitively
dismissed.
Prahova Court
In course
of settlement.
177 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Object
Court
Case status
Plaintiff: VIR Com-
pany International
S.R.L.
Defendant: SDMN
7507/105/2017
tificates related to the
amount of energy produ-
ced by the photovoltaic
plant during the technolo-
gical tests period.
In addition, it requires to
SDMN to pay the penalty
interest of 5.75%/year for
all the amounts of money
claimed and court costs.
Prahova
Court
In course
of settlement.
Creditor: SDMN
Debtor: Transener-
go Com S.A.
1372/3/2017
Insolvency
proceedings.
Amount: RON 8,418,833.
Bucharest
Court
Ongoing proceedin-
gs. On 3 February
2021, the Debtor’s re-
organization plan was
confirmed, according
to which unsecured
receivables do not
in distri-
participate
butions.
Plaintiff: SDMN
Debtor: ELSA
(18976/3/2020)
33763/3/2019
Claims, according to the
Court of Accounts Deci-
sion,
representing pay-
ments not owed of RON
20.350.189 made by SDMN.
Bucharest
Court
Suspended until
the final settle-
ment of case not.
1677/105/2017.
Plaintiff: Tutu Dani-
el and Tudori Ionel
Defendant: SDMN
180/233/2020
Claims - the equivalent
value of land related to
the Galati Center Trans-
formation Station – RON
2,500,000.
Galati Court
In course of
settlement.
18.
19.
20.
21.
22.
Plaintiff: Sinaia City
Hall
Defendant: SDMN
3719/105/2020
„Obligation to do” adminis-
trative litigation. Sinaia City
Hall requests:
-mainly: obliging MN to
comply with LCD 113/2015
in the sense of executing
the works regarding the
underground
location of
the
technical-municipal
networks for the project
„Energy efficiency and li-
ghting extension of the
historic area - Sinaia”
- in the alternative: in case
MN will not execute the
works in due time and
the City Hall will execu-
te the works in our name
and on our behalf, MN will
be obliged to pay RON
7,659,402.72 + VAT (RON
9,101,192);
- updating the amount
requested in the subsidiary
with the inflation rate and
legal interest.
Prahova
Court
In course of
settlement.
23.
Plaintiff: SDTN
Defendant: Rome-
nergy Industry S.A.
2088/107/2016
Bankruptcy
- amount:
RON 5,439,537.
Alba Court
Ongoing
proceedings.
178 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Crt.
no.
Parties/Case
file number
Object
Court
Case status
2020 DIRECTORS’ REPORT
24.
25.
26.
27.
Plaintiff: Asirom
Vienna Insurance
Group S.A.
Defendant: SDTN
439/111/2017
Plaintiff: Energo
Proiect SRL
Defendant: SDTN
374/1285/2018
Plaintiff: SDTS
Defendant: Ro-
menergy Industry
S.A.
2088/107/2016
Plaintiff: SDTS
Defendant: Rome-
nergy Industry S.A.
3086/62/2016
Recourse claims – for the
amount of RON 2,842,347,
representing the compen-
sation paid by the plaintiff
to the insured company SC
Ciocorom SRL following a
fire that occurred on 7 Mar-
ch 2013. SDTN fault is in-
voked for the over-voltage
after a power outage.
Bihor Court
In course of settle-
ment.
Claims of RON 2,387,357.
Cluj
Commercial
Court
In the first court, the
case was dismissed.
Appeal – in regulari-
zation proceedings.
Bankruptcy
- amount:
RON 3,987,508.
Alba Court
Ongoing
proceedings.
Payment
ordinance
-
amount: RON 2,806,318.
Brasov Court
28.
Plaintiff: SDTS
Defendant: ELSA
4469/62/2018
Claims according to the
Courts of Account findings
– RON 8,951,811
Brasov Court
29.
30.
31.
32.
Plaintiff: SDTS
Defendant: directors
and managers
342/62/2020
Plaintiff: SERV
Defendant: Best
Recuperare Creante
SRL
2253/3/2011 (former
58348/3/2010)
Plaintiff: SERV
Defendant: National
Leasing IFN S.A.
18711/3/2010
Plaintiff: SERV
Defendant: Servicii
Energetice Banat
S.A.
8776/30/2013 (joint
with 2982/30/2014)
Claims against the for-
mer general managers of
the company, as a result
of the non-fulfillment of
some measures ordered
by the Court of Accounts
for the amount of RON
8,951,812.
Brasov Court
In course of
settlement.
Insolvency – amount to be
recovered: RON 3,938,811.
Bucharest
Court
Ongoing
proceedings.
Insolvency – remaining
amount to be recovered:
RON 12,204,221.
Bucharest
Court
Ongoing
proceedings.
Bankruptcy - amount
RON 73,453,299.
Timis Court
Ongoing
proceedings.
179 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Suspended case file
until the settlement
of the case file regar-
ding the bankrupt-
cy of Romenergy
Industry S.A. (file no.
2088/107/2016).
First instance. The
High Court of Cas-
sation and Justice
solved the negative
competence conflict
between Brasov
Court and Bucha-
rest Court, the case
being in course of
settlement at Brasov
Court.
2020 DIRECTORS’ REPORT
Crt.
no.
33.
Parties/Case
file number
Plaintiff: SERV
Defendant: SEO
2570/63/2014
Object
Court
Case status
Bankruptcy - amount
RON 26,448,134.
Dolj Court
Ongoing
proceedings.
34.
35.
36.
37.
Plaintiff: SERV
Defendant: SED
8785/118/2014
Plaintiff: SERV
Defendant: SE
Moldova
4435/110/2015
Plaintiff: SERV
Defendant: New
Koppel Romania
20376/3/2016
Plaintiff: Integrator
S.A.
Defendant: EL
SERV,
SAP Romania
34479/3/2016**
Bankruptcy - amount
RON 12,297,491.
Constanta
Court
Ongoing
proceedings.
Bankruptcy – amount:
RON 73,708,083.
Bacau Court
Ongoing
proceedings.
Claims – EUR 655,164,
equivalent of RON
2,948,240.
Bucharest
Court
Ongoing
proceedings.
Claims – RON 17,677,309
Bucharest
Court of
Appeal
The case was suspen-
ded on 12.06.2019
until the jurisdiction
was established
in
case 3O 266/2017 re-
gistered with the Kar-
lsruhe Court and de-
clined in favor of the
Mannheim Court.
Appeal partly admit-
ted, the court orde-
ring the registration
of the appellant in the
preliminary table of
the debtor’s obligati-
ons with the amount
of RON 18,807.37, re-
presenting leasing ra-
tes and maintenance
services.
The court dismissed
the action as
prescribed, ordering
the plaintiff to pay
the
judicial costs.
The sentence can be
appealed.
The court dismissed
the action as it has
been modified and
specified, as pre-
scribed. Orders the
plaintiff to pay the
judicial costs. The
can be
sentence
appealed within
30 days of its
communication.
38.
Plaintiff: SERV
Defendant: SED
8785/118/2014/a1
Bankruptcy – opposition
to the preliminary table -
amount RON 3,025,622.
Constanta
Court
39.
40.
Plaintiff: SERV
Defendant: direc-
tors and adminis-
trators 2013-2014
35815/3/2019
Action in attracting the
liability of directors and
administrators
- mea-
sure II.7 of Decision no.
13/27.12.2016 issued by the
Court of Accounts of Ro-
mania – RON 7,165,549.
Bucharest
Court
Plaintiff: SERV
Defendant: direc-
tors and adminis-
trators 2010-2014
35828/3/2019
Action in attracting the li-
ability of directors and ad-
ministrators - measure II.8
of Decision no.13/27.12.2016
issued by the Court of Ac-
counts of Romania for the
amount of RON 19,611,812.
Bucharest
Court
180 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Crt.
no.
Parties/Case
file number
Object
Court
Case status
2020 DIRECTORS’ REPORT
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
Creditor: EFSA
Debtor: Apaterm
S.A. Galati
4783/121/2011*
Bankruptcy – registering
to the list of creditors
for the amount of RON
2,547,551.
Galati Court
Ongoing
proceedings.
Creditor: EFSA
Debitor: Vegetal
Trading SRL Braila
1653/113/2014
Insolvency proceedings
- registering to the list of
creditors for the amount
of RON 1,851,392.
Braila Court
Ongoing
proceedings.
Creditor: EFSA
Debtor: Ariesmin
S.A. Branch
7375/107/2008
Bankruptcy - registering
to the list of creditors
for the amount of RON
20,711,588.
Alba Court
Ongoing
proceedings.
Creditor: EFSA
Debtor: Zlatmin
S.A. Branch
6/107/2003
Bankruptcy - registering
to the list of creditors
for the amount of RON
9,314,176.
Alba Court
Ongoing
proceedings.
Creditor: EFSA
Debtor: Hidrome-
canica S.A.
3836/62/2009
Bankruptcy - registering
to the list of creditors
for the amount of RON
4,792,026.
Brasov Court
Ongoing
proceedings.
Creditor: EFSA
Debtor: Nitramo-
nia S.A.
1183/62/2004
Bankruptcy - registering
to the list of creditors
for the amount of RON
2,321,847
Brasov Court
Ongoing
proceedings.
Creditor: EFSA
Debtor: Remin S.A.
32/100/2009
Insolvency proceedings
- registering to the list of
creditors for the amount
of RON 71,443,402.
Timisoara
Court
Ongoing
proceedings.
Creditor: EFSA
Debtor: Oltchim
S.A.
887/90/2013
Bankruptcy - registering
to the list of creditors
for the amount of RON
56,533,826.
Valcea
Court
Ongoing
proceedings.
Creditor: EFSA
Debitor: Energon
Power and Gas
S.R.L.
53/1285/2017
Insolvency proceedings
- registering to the list of
creditors for the amount
of RON 2,421,236.
Cluj
Specialized
Court
Ongoing
proceedings.
Creditor: EFSA
Debitor: CUG S.A.
2145/1285/2005
Bankruptcy - registering
to the list of creditors
for the amount of RON
7,880,857.
Cluj
Specialized
Court
Ongoing
proceedings.
Plaintiff: EFSA
Defendant: ELSA
6665/3/2019
Claims: request of pay-
ment of invoices paid
without justificative do-
cuments, as it has been
stated by the Court of
Account – RON 7,025,632.
Bucharest
Court
Suspended until the
settlement of case
no. 2213/2/2017 (Court
of Accounts – High
Court of Cassation
and Justice – appeal)
181 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
52.
53.
54.
55.
Plaintiff: EFSA
Defendant: natural
persons
35647/3/2019
Claims according to art.
155 of Companies Law no.
31/1990 for the amount of
RON 7,128,509.
Bucharest
Court
Plaintiff: EFSA
Defendant: natural
persons
Called in guarantee:
ELSA
35647/3/2019
Claims regarding the
call in guarantee action
of ELSA, filed Mr. Mircea
Patrascoiu, Mrs. Anca
Dobrica, and Mrs. Victoria
Lupu – RON 6,232,398
Bucharest
Court
Dismisses as prescri-
bed the action filed
by the plaintiff Soci-
etatea Electrica Fur-
nizare SA. EFSA is to
appeal
Dismisses as prescri-
bed the action filed by
the plaintiff Societatea
Electrica Furnizare SA.
and dismisses as ob-
jectless the warranty
claims issued by the
defendants Pătrăşco-
iu Mircea, Dobrică
Anca, and Lupu Victo-
ria against Societaea
Energetica Electrica
S.A. The Decision is
not final.
Claims. Late penalties re-
garding the litigation with
Autocourier S.R.L. in the
amount of RON 3,068,930
according to the Agree-
ment no. 1055/2002 as
well as delay penalties
for the main debt of RON
5,605,351 calculated
after 30.06.2015
until the entire payment
of the main debt.
The appeal filed by
Enel against the deci-
sion favorable to SEM
was dismissed, the
solution is not final.
Bucharest
Court
Civil liability - work ac-
cident resulting in em-
ployee death (amount of
compensation claims –
EUR 3 million).
Bucharest
Court
Case suspended ac-
cording to art. 413
par. 1 par. 1 Civil Pro-
cedure Code. (crimi-
nal file ongoing).
Plaintiff: Servicii
Energetice Mun-
tenia
Defendant: ENEL
DISTRIBUTIE
MUNTENIA S.A.
4233/2/2020 (former
nr. 24088/3/2015)
Plaintiff: IVAN
LAURA IONELA
IVAN CONEL IONUT
IVAN VLADIMIR
MIHAI
Defendant: Servicii
Energetice
Muntenia
34705/3/2015
Source: Electrica
4.
Litigations against the Romanian Court of Accounts
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
1.
Plaintiff: ELSA
Defendant: Ro-
manian Court of
Accounts
2268/2/2014*
Suspension and cancella-
tion of the administrative
act: Decision no.3/14 Ja-
nuary 2014 and the Re-
solution no. 23/17 March
2014.
High Court
of Cassation
and Justice
First court: the claim
is partly admitted,
partially cancels the
Resolution no. 23 of
17 March 2014 regar-
ding the items 1 and
5 and the Decision
no. 3/14 January 2014
regarding the items
4 and 8. Dismisses, as
ungrounded the cla-
im regarding items 2,
3 and 4 in the Resolu-
tion no. 23/17 March
2014 and items 5, 6
and 7 in the Decision
no 3/14 January 2014.
Rejects
requ-
the
est to suspend the
182 | 2020 ANNUAL REPORT
ELECTRICA S.A.
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
2020 DIRECTORS’ REPORT
1.
Plaintiff: ELSA
Defendant: Ro-
manian Court of
Accounts
2268/2/2014*
Suspension and cancella-
tion of the administrative
act: Decision no.3/14 Ja-
nuary 2014 and the Re-
solution no. 23/17 March
2014.
High Court
of Cassation
and Justice
execution of Decisi-
on no. 3/14 January
2014, as unfounded.
ELSA and CCR filed
an appeal. The court
partly admits ELSA’s
request and sent the
case for retrial to the
first instance, regar-
ding the annulment
of point 5 of the De-
cision no. 23/17 Mar-
ch 2014, related to
point 8 of the Deci-
sion no. 3/14 January
2014. Retrial phase:
On first instance, the
court rejected the
plaintiff’s request for
annulment of point 5
of the Resolution no.
23/17.03.2014, with
correspondent in po-
int 8 of the Decision
no. 3/14.01.2014 issu-
ed by the defendant.
ELSA has appealed
the case, with term
on 25.03.2022.
2.
Plaintiff: ELSA
Defendant: Ro-
manian Court of
Accounts
2229/2/2017
Partial annulment of
Decision no. 12/27 De-
cember 2016, issued by
the director of the 2nd
Direction from the IVth
Department of the Court
of Accounts, regarding
the faults from point 1 to
8, with the consequence
of dismissing the actions
from point 1, 3 to 9 inclu-
sive, imposed to ELSA by
the disputed Decision;
the partial annulment of
the conclusion no. 12/27
February 2017 of the Co-
urt of Accounts, rejecting
the objection raised by
ELSA against Decision no.
12, regarding the faults
and orders mentioned
above. In subsidiary, the
extension of the deadli-
nes for carrying out all
the measures ordered by
ELSA through Decision
no. 12/27 December 2016
with at least 12 months;
the suspension of the
enforceability of De-
cision no. 12 until final
settlement of the present
dispute.
Bucharest Court
of Appeal
In course
of settlement.
183 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
3.
4.
5.
6.
7.
Plaintiff: ELSA
Defendant: Ro-
manian Court of
Accounts
7780/2/2018
Plaintiff: Romanian
Court of Accounts
Defendant: ELSA
36484/3/2019
Administrative litigation
for annulment of Decision
no. 38/9 October 2018, the
annulment of the conclu-
sion by which the appeal
imposed by Decision no.
12/1 of 27 December 2016
was dismissed, the revo-
cation of the Decision no.
12/1 and the cessation of
any CCR control act.
for the settle-
Complaint
ment/non-referral
soluti-
on - complaint against the
Public Prosecutor’s Order
dated 06.09.2019, pronoun-
ced in the criminal file no.
208/P/2017, by which the clo-
sing of the case was ordered
according to the aspect of
committing the offense of
abuse in service, in relation
to the facts presented in the
notification of the CCR no.
IV/40.269/26.04.2017,
recor-
ded in the Control Report no.
(CCR
9900/20307/29.11.2016
decision no. 12/27.12.2016)
Plaintiff: EFSA
Defendant: Ro-
manian Court of
Accounts
2213/2/2017
Disputes with the Roma-
nian Court of Accounts
(Law no. 94/1992), action
for the annulment of the
Decision no. 11/2016, of
the Decision no. 23/2017
and of the Control Report
no. 5799/2016.
Plaintiff: SERV
Defendant: Ro-
manian Court of
Accounts
2098/2/2017
Disputes with the Roma-
nian Court of Accounts
for the annulment of the
administrative act – De-
cision no. 11/27 February
2017, for RON 2,351,034.
Plaintiff: SDMN
Defendant: Ro-
manian Court of
Accounts
Intervenient: SERV
1677/105/2017
Suspension and annul-
ment of the measures
imposed by the Decisi-
on of Prahova Chamber
of Accounts no. 45/2016,
following
the Control
Report of the Prahova
Chamber of Accounts no.
6618/11 November 2016.
High Court
of Cassation
and Justice
The court of first in-
stance dismissed the
action as
inadmis-
sible. ELSA filed an
appeal, with term on
26.05.2022.
Bucharest
Court
The complaint filed
by the Romanian Co-
urt of Accounts was
rejected as unfoun-
ded. Final decision.
High Court of
Cassation and
Justice
The first instance re-
request
the
jected
filed by EFSA as un-
founded. EFSA filed
an appeal, in course
of settlement.
Bucharest
Court of
Appeal
In course of
settlement.
Prahova Court
In course
of settlement.
Source: Electrica
184 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
5.
Other litigations with significant impact
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
1.
2.
3.
4.
5.
Plaintiff: Niculescu
Vladimir
Defendant: SDMN,
City Hall Valenii de
Munte
1580/105/2008**
Claim under Law no.
10/2001 – for a land of 1,558
sqm and built area of 202
sqm, located in Valenii de
Munte, N. Iorga str. no. 129
and being used by the Ex-
ploitation Center Valeni.
Prahova Court
Plaintiff: SDTN
Defendant: Local
Council of Oradea
City, RCS&RDS
3340/111/2015
Cancellation of Oradea
LCD no. 108/17 February
2014 regarding the organi-
zation of the public auction
for the concession of the
100,000 sqm land area, in
order to realize an under-
ground sewerage for the
placement of electronic
and electrical communica-
tions networks.
Bihor Court
Plaintiff: Delalina
S.R.L.
Defendant: SDTN
910/111/2016
The obligation to
issue
technical permit for con-
nection in the favour of SC
Delalina SRL.
Bihor Court
In first instance, the
plaintiff’s action was
partly admitted, it is
the
acknowledged
right
reparative
to
measures by equi-
land
valent for the
of 1,402 sqm located
in Valenii de Munte,
Blvd. Nicolae Iorga no.
129 (currently no. 131),
Prahova County.
The Plaintiff and Va-
lenii de Munte Town
Hall filed an appeal.
The Plaintiff’s appe-
al was admitted and
the case was sent for
retrial to the first in-
stance – in course of
settlement.
At the request of
RCS-RDS, the case
was suspended
until the case file
2414/2/2016 was
settled with Delalina
SRL, a file that is in
the role of the Bucha-
rest Court of Appeal.
The case file was sus-
pended until the se-
ttlement of the case
file no. 2414/2/2016
with Delalina SRL,
case file on the law-
suit of the Bucharest
Court of Appeal.
Claims - it is requested to
grant compensation
in
the form of material and
moral damages, caused,
by interrupting the supply
of electricity to the consu-
mers, in the Carei muni-
cipality, during 31.12.2014-
02.01.2015.
Cluj Napoca
Court
Re-trial – in course of
settlement.
Cancellation of adminis-
trative acts (Order 73/2014,
Concession agreements).
High Court of
Cassation and
Justice
First court has rejec-
ted the exceptions
and the action filed
by the plaintiffs, whi-
ch have initiated an
appeal; in course of
settlement.
Plaintiff: Carei City
and others
Defendant: SDTN
15600/211/2016*
Plaintiff: Delalina
S.R.L., Foto Distri-
butie S.R.L.
Defendant: SDTN,
ANRE, Romanian
Government, Mi-
nistry of Economy,
Commerce and
Relationships with
the Business En-
vironment, Ministry
of Energy, Banat
185 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
5.
6.
7.
8.
Enel Distribution,
Muntenia Enel Dis-
tribution, Dobrogea
Enel Distribution
2414/2/2016
Plaintiff: Delalina
S.R.L., Foto Distri-
butie S.R.L.
Defendant: ANRE
Intervener: SDTN
4013/2/2016
Plaintiff: ELSA
Defendant: E – Dis-
tributie Banat S.A.
30399/325/2018*
Plaintiff: ELSA
Defendant: Baile
Herculane City
4572/208/2018
9.
Plaintiff: E-Distri-
butie Banat
Defendant: ELSA
12857/3/2019
Cancellation of adminis-
trative acts (Order 73/2014,
Concession agreements).
High Court of
Cassation and
Justice
First court has rejec-
ted the exceptions
and the action filed
by the plaintiffs, whi-
ch have initiated an
appeal; in course of
settlement.
The cancellation of the
ANRE decision on refusal
to give licenses for electri-
city distribution.
Court of Appeal
Bucharest
The file was suspen-
ded until the settle-
ment of case file no.
2414/2/2016.
Timisoara
Court of
Appeal
Case rejected by fir-
st and second court.
ELSA filed an appeal.
In course of settle-
ment.
Timisoara
Court of
Appeal
The first court admits
the exception of the
lack of active procedu-
ral quality of ELSA and
dismisses the action.
ELSA filed an appeal,
dismissed as unfoun-
ded. ELSA filled an
appeal.
Bucharest
Court
Suspended until the
settlement of the file
1994/30/2019.
Obligation to do - Mainly
obliging the defendant
to hand over the docu-
mentation for the land in
Bocsa. In subsidiary, the
obligation to draw up the
CADP
documentation
and payment of damages.
Claim for land Lot 1-NC
32024 (area of 259 sqm)
and lot 2 NC 31944 (with a
surface of 1,394 sqm), both
located in Baile Herculane,
Uzinei str. 1 and FC rectifi-
cation.
(i) ELSA’s compliance with
the obligation of not to do
regarding the share capi-
tal and the AoA of the EDB
and the termination of
abusive actions consisting
of the requests addressed
to the ONRC to change
the structure of the share
capital and the articles of
association of the EDB by
increasing the share capi-
tal with the value of the
land in the Certificates of
attestation of the proper-
ty right held by ELSA on
the land used by EDB in
order to carry out the ac-
tivity; (ii) Stating the fact
that Electrica does not
hold the quality of public
authority involved in the
privatization process and,
consequently, acknowle-
dging the absence of the
right of ELSA to request
ONRC to modify the con-
stitutive act of the EDB
by increasing the share
capital with the value of
the land owned by ELSA
based on CADP on the
used land from EDB; (iii)
As against to the abusive
actions taken in the EDB’s
opinion, ELSA’s obligation
186 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
9.
10.
11.
12.
Plaintiff: E-Distri-
butie Banat
Defendant: ELSA
12857/3/2019
to pay the damages whose
existence and amount will
be proved by the deadline
provided by law.
Tribunalul
Bucuresti
Suspended until the
settlement of the file
1994/30/2019.
Plaintiff: ELSA
Defendant: E-Dis-
tributie Banat
Intervenient: SAPE
988/30/2019
Plaintiff: ELSA,
SAPE
Defendant: E-Dis-
tributie Banat
949/39/2019
Plaintiff: E-Distri-
butie Banat
Defendant: ELSA
1994/30/2019
Action for the annulment
of Shareholders Decision
5/06.12.2018 (share capital
increase for SAPE).
Timis Court
Connected to case no.
(parties:
949/30/2019
SAPE and EDB).
Action for the annulment
of Shareholders Decision
5/06.12.2018 (share capital
increase for SAPE).
Timis Court
In course
of settlement.
Complaint against the
resolution of the ORC
director.
Timisoara
Court of
Appeal
Suspended for amica-
ble settlement.
13.
Plaintiff : Dana
Dragan
Defendant: ELSA
38532/3/2019
1. obligation of Electrica
to pay to the plaintiff the
non-competition
commis-
sion provided by art. 5.2.3 of
the Mandate Agreement no.
15 / 25.09.2017, in a total gross
value of EUR 102,576, as well
as updating these amounts
with the inflation rate;
2. re-qualification of the
activity carried out in Elec-
trica, between 05.10.2016-
30.08.2017, as being specific
to a commercial mandate
agreement and the obliga-
tion of Electrica to pay the
difference between the re-
muneration provided by the
mandate agreement and
the salaries paid under the
employment
agreement
during the period 05.10.2016-
30.08.2017, estimated at a
total gross value of RON
189,501, as well as updating
these amounts with the in-
flation rate;
3. obligation of Electrica to
recalculate and pay the gross
annual variable remunera-
tion due for 2017, according
to the Mandate Agreement,
by reference to the recogniti-
on of the activity carried out
during the period 05.10.2016-
30.08.2017 as being specific
to a commercial mandate
agreement, as well as to the
recalculated value of the re-
muneration due for this pe-
riod, in a total gross value of
EUR 6,865.71, including up-
dating these amounts with
the inflation rate.
4. Obligation to pay the court
costs.
Bucharest
Court
The request was re-
jected as not being
within the competen-
ce of the courts. Final
by non-appealing.
187 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
14.
Plaintiff: ELSA
Defendant: UAT
Targu Neamt
122/321/2020
15.
Plaintiff: ELSA
Defendant: UAT
Bicaz
91/188/2020
16.
Plaintiff: ELSA
Defendant: Videle
City, through
Mayor
948/335/2020
1. obliging the defendant to
leave us in full ownership
and possession the land
with an area of 3,389 sqm,
located in Targu Neamt,
2. rectification of the en-
tries from the land book
no. 55409 of the City of Tar-
gu Neamt, in the sense of
suppressing the inappro-
priate registrations made
in it, in order to agree the
tabular status with the real
legal situation of the buil-
ding, respectively the can-
cellation of the property
right of the tabular owner
Targu Neamt and the re-
gistration of the property
right of the Energy Com-
pany Electrica SA
3. Order the defendant to
pay the court costs.
1.obliging the defendant to
leave us in full ownership
and possession the land in
the area of 10,524 sqm (from
documents 22,265 sqm), lo-
cated in Bicaz,, Jud. Neamt.
2. rectification of the en-
tries from the land book no.
52954 of Bicaz City, in the
sense of suppressing the
inappropriate entries made
in it, in order to agree on
the tabular status with the
real legal situation of the
building, respectively the
cancellation of the property
right of the tabular owner
Bicaz City and the registra-
tion of the property right of
Societatea Energetice Elec-
trice Electrica S.A.
3. Order the defendant to
pay the court costs.
1.obliging the defendants
to leave us in full owner-
ship and possession the
land surfaces that overlap
with the land located in
Aleea FRE street no. 1, Vi-
dele, Teleorman county,
for which we hold CADP.
2. the delimitation of the
above-mentioned proper-
ties, by establishing the
boundary line according
to the property deeds of
the parties;
3. rectification of the en-
tries in the land book and
registration of the pro-
perty right of the plaintiff
ELSA on this area of land
Targu Neamt
Court
The action was dis-
missed in first court.
ELSA filed an appeal.
Bicaz Court
In course
of settlement.
Videle
Court
In course
of settlement.
188 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
17.
18.
Plaintiff: SDTS,
SDMN, SDTN;
Defendant: ANARC
(ANCOM) si Te-
lekom Romania
Communications
SA
7407/2/2020
Plaintiff: Valenii de
Munte City Hall
Defendant: SDMN
2848/105/2020
Appeal against Decision
no. 1177 / 13.11.2020 of the
ANARC President. It was
requested the partial an-
nulment of the ANCOM
decision and the complete
rejection of the Telekom
Romania request.
Valenii de Munte City Hall
requests the obligation of
SDEE Ploiesti to take over
public
installa-
lighting
tions and to pay their
equivalent value of RON
466,880.
Source: Electrica
Bucharest
Court of
Appeal
Regularization
proceedings.
Prahova
Court
In course
of settlement.
189 | 2020 ANNUAL REPORT
ELECTRICA S.A.
190 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Appendix 2
Details of
the main
investments
of Electrica
Group during
2020
191 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
During 2020, the most significant investments of Electrica Group are the following:
DESCRIPTION
Value
(RON mn)
MUNTENIA NORD
Extension and modernization of 110/20/6 kV Tecuci Substation, Galati county
Upgrading protections for 110 kV and 6 kV cells, installation of the second ne-
utral treatment group by resistor at 20 kV and SCADA system integration in
110/27,5/20/6 kV Ploiesti Nord Substation
Modernization and SCADA system integration of 110/20/6 kV Ramnicu Sarat Substation
Modernization and SCADA system integration of 110/6 kV SNG Substation
Modernization and SCADA system integration of 110/20 kV Ianca Substation
Modernization and SCADA system integration of 110/20 kV Mizil Substation
Voltage level improvements Tudor Vladimirescu, Galati county
Modernization of 110 kV OHL Focsani Vest - Tataranu, pillars 36-85
Increasing the network voltage from 6 kV to 20 kV in Tecuci city, stage III
– neighborhoods N.Balcescu, Gh. Petrascu and Criviteni, Galati county
Modernization and SCADA system integration of 110/20 kV Valea Larga
Modernization of LV OHL and LV connection for users of Razvad village, streets
Gimnaziului, Garii, Bisericii, Gatejesti, Scoala de Fete, Redeventa, Rezvedeanca,
Luca, Campului, Valea Mare, Lunca
Modernization of transformer substations powered from 20 kV Independenta
underground cable line, Unirii, 24 Ianuarie, Substatia Obor, Patinoar, in Buzau city
Voltage level improvements in Matca locality - area Matca 7 of Pole Mounted
Transformer Substations Matca no. 13, 14 and 15, Galati county
4.40
4.15
4.63
4.65
6.53
3.65
3.71
5.53
3.98
6.54
3.37
5.07
2.45
Upgrading of 110kV protection system and SCADA system integration for Ploiesti Sud Substation
9.41
Modernization of 20kV OHL by replacing the insulation and conductors (20kV
OHL Pisc – SPP 4, 20kV OHL Cuza Voda- Tufesti, 20kV OHL Maxeni Scortaru,
20kV OHL Romanu – Traianu)
Increasing energy efficiency of distribution network and improving technical
conditions of power supply by increasing the transformer substations voltage
to 20 kV in the Hipodrom, Obor, Victoriei neighborhoods of Braila city
Voltage level improvements for consumers powered from pole mounted
transformer substations no. 4085, 4091, 4092, 4093, 4094, 4095, 9012 in Runcu
locality, vol. II, Dambovita county
Modernization of LV OHL and LV connections for consumers of locality Surdila Gaiseanca
Modernization and SCADA system integration of 110/20 kV Satuc Substation
Modernization of Pole Mounted Transformer Substations, LV OHL and
LV connection of Corbii Mari, Petresti, Satu Nou, Baraceni localities
Modernization and SCADA system integration of 110/20/6 kV Azuga
Substation
Voltage level improvements for users of Sotanga locality, Sotanga village,
streets Campulet, Fagetel and Principala
Implementation of SMART Measurement System (SMS)
Extension of SMART Measurement System (SMS) in the localities Padureni,
Cornetu, Slobozia Bradului, Olareni, Valea Beciului, Salcia Veche, Tataru, Maica-
nesti, Obrejita, Slimnic, Vanatori, Dumbraveni, Garoafa, Sihlea, Golestii de Sus,
Dumitresti, Dumitrestii Fata, Dumitrestuii de Sus, Lupoaia, Gugesti, Rastoaca,
Lamotesti, Vrancea county
4.78
3.50
3.05
2.43
5.74
3.12
2.27
2.38
10.88
2.80
192 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
TRANSILVANIA SUD
DESCRIPTION
Value
(RON mn)
Integration of substations from CEM 110 kV into the SCADA DMS system of SDTS
22.62
Integration in SCADA-DMS system of transformers substations prepared for MTCU
installation (Monitoring and data Transmission Control Unit)
Increasing distribution capacity and supply reliability for the developing area
adjacent to the new objective, Clinical Hospital BV: Realization of new 110/20 kV
Substation, in the axle of 110 kV OHL Bartolomeu-FS Rasnov, common circuit with
110 kV OHL ICA Ghimbav in area of pillars no. 54-56.
Modernization, securing and systematization of LV connections in Brasov city (str.
Minerva, Mercur, Cometei, Soarelui, Constelatiei, Neptun, Saturn, Apollo, b-dul
Victoriei, Aleea Sanzienelor, Aleea Lacramioarelor, Mimozei, Cocorului, Stefan Miro-
nescu, Aleea Petuniei, Zizinului nr.81-99, Gen Mociulschi, Colonia Metrom, Oltet,
Aleea Constructorilor, Barbu Lautaru, b-dul Garii, Szemler Ferencz no.3, 5, 7, Infrati-
rii no. 6, 8, 9, 16, 21, 22, 23, 13 Decembrie no.86-88, Spicului, Bobului, Lacramioarelor,
Garii Noua, Anghel Saligny, Calea Bucuresti), Brasov county - stages 1, 2, 3 and 5.
Increasing the supply reliability for the users connected to 110/20 kV Corunca Sub-
station, Mures county
Modernization of transformer substations by MV cell replacement, indoor network
distribution board replacement, integration in Distribution Automation System
and repair of buildings of transformer substations in Codlea, Brasov county
Voltage level improvements and modernization of LV OHL and LV electrical
connection in Sancraiu de Mures and Nazna, Mures county
Modernization of LV OHL and LV connections in Teius, Alba county
Modernization of wall cabin transformer substations no.28 Alba and LV OHL,
str. Calea Motilor and Horea Boulevard, Alba Iulia city, Alba county
Modernization of electricity supply installations in Medias city – Vitrometan
neighborhood, Sibiu conunty
7.49
7.74
8.19
4.73
3.84
3.04
5.42
2.57
2.62
Modernization of LV OHL of transformer substations no.37, Sebes locality, Alba county
3.14
Conductor replacements, securing and systematization of LV connections of LV
OHL Soars, reconfiguration of 20 kV OHL Cincu, Brasov county
Voltage level improvements and LV network modernization (pole mounted
transformer substations no. 1, 2, 4 and 5) in Cartisoara laocality, Sibiu county
Voltage level improvements and LV network modernization in Terezian neighbor-
hood, apartment buildings on Str. Rusciorului, str. Lunga, Sisbiu city, Sibiu county
Modernization of 6 kV network distribution on str. 13 Decembrie, Brasov city, area
4 between Str. Zaharia Stancu and Str. H. Coanda, Brasov county
Modernization of LV network distribution and LV connection on str. 8 Martie,
Tg. Mures city, Mures county
Voltage level improvements in area of pole mounted transformer substations no.
27 Stupinii Harmanului – neighborhood Salcamilor, Izvor, in Tarlungeni locality,
Brasov county
Voltage level improvements and modernization of LV OHL on str. Avram
Iancu and Motilor in Aiud locality, Alba county
TRANSILVANIA NORD
2.2
3.00
2.29
3.27
2.91
2.47
2.00
Integrated security, monitoring and intervention System for the substations of SDTN
3.33
Network Access Management Information System (SIMAR)
2.29
193 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
DESCRIPTION
Value
(RON mn)
TRANSILVANIA NORD
Increasing the network voltage to 20 kV: distributors L5, L6, L17 and L2SMA of
Turda Substation, Cluj county area
2.7
Modernization of MV OHL Mihai Viteazu -Tv, Cluj county semi axles and relted connections
9.4
Modernization of Cluj Nord 110/10 kV Substation and introduction of 20 kV busbar
Modernization of 110/20 kV Baciu Substation
Modernization of 110/20 kV Alesd Substation
Regulating 110 kV OHL of Oradea metropolitan area
Modernization of Baia Sprie 1 110/35/6kV Substation and introduction of 20kV busbar
Distribution Automation System 2018, Baia Mare branch
Increasing the quality of the distribution service vol.2A - modernization of 32 wall cabin
transformation substations from Baia Mare, Somcuta Mare, Targu Lapus, Ulmeni locali-
ties, Maramures county
Increasing the quality of the distribution service vol.2B modernization of 31 built
transformation substations from OC Sighet
Modernization of Baia Mare 2 110 kV Substation and introduction of 20kV busbar
Modernization of pole mounted transformer substations belonging to Bistrita branch
SMART Measurement System (SMS) 2020 in SDTN, Cluj Napoca branch
Modernization of 110/20/6 kV Prundu Bargaului Substation
Source: Electrica
5.0
6.95
4.61
9.57
3.99
5.92
6.48
6.78
5.24
2.26
2.83
4.39
During 2020, the largest transfers from tangible assets in progress to tangible assets, representing mainly
commissioning of investments, are the following:
DESCRIPTION
Value
(RON mn)
MUNTENIA NORD
Extension and modernization of 110/20/6 kV Tecuci Substation, Galati county
Modernization and SCADA system integration of 110/20 kV Insuratei Substation
Increasing the network voltage from 6 kV to 20 kV in Tecuci city, stage III – nei-
ghborhoods N.Balcescu, Gh. Petrascu and Criviteni, Galati county
Modernization and SCADA system integration of 110/20 kV Ianca Substation
Modernization of 110 kV OHL Focsani Vest - Tataranu, pillars 36-85
Modernization and SCADA system integration of 110/20 kV Satuc Substation
4.64
4.12
3.92
5.87
5.95
8.19
Modernization of LV OHL and LV connections for consumers of locality Surdila Gaiseanca
2.54
Modernization and SCADA system integration of 110/20/6 kV Ramnivu Sarat Substation
8.57
Upgrading protections of 110 kV and 6 kV cells, installation of the second neutral
earthing group by resistor at 20 kV and SCADA system integration in 110/27,5/20/6
kV Ploiesti Nord Substation
Voltage level improvements in Matca locality - area Matca 7 of Pole Mounted
Transformer Substations Matca no. 13, 14 and 15, Galati county
Modernization and SCADA system integration of 110/20 kV Valea Larga
Mounting the second 110/20 kV power transformer in 110/20 kV Substations: Vidra,
Jugureanu, Bujoru, Cudalbi, Galati Centru – Vol. 1 Vidra 110/20 kV Substation
8.15
2.56
6.44
2.44
194 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
DESCRIPTION
Value
(RON mn)
MUNTENIA NORD
Voltage level improvements for users of Sotanga locality, Sotanga village, streets
Campulet, Fagetel and Principala.
Modernization of Pole Mounted Transformer Substations, LV OHL and LV connec-
tion of Corbii Mari, Petresti, Satu Nou, Baraceni localities
Voltage level improvements for consumers powered from pole mounted transfor-
mer substations no. 4085, 4091, 4092, 4093, 4094, 4095, 9012 in Runcu locality, vol.
II, Dambovita county
Modernization of LV OHL and LV connection for users of Razvad village, streets
Gimnaziului, Garii, Bisericii, Gatejesti, Scoala de Fete, Redeventa, Rezvedeanca,
Luca, Campului, Valea Mare, Lunca
Voltage level improvements in Tudor Vladimirescu locality, Galati county
Modernization of 20kV OHL by replacing the insulation and conductors (20kV
OHL Pisc – SPP 4, 20kV OHL Cuza Voda- Tufesti, 20kV OHL Maxeni Scortaru, 20kV
OHL Romanu – Traianu)
Modernization of transformer substations powered from 20 kV Independenta
underground cable line, Unirii, 24 Ianuarie, Substatia Obor, Patinoar, in Buzau city
Modernization and SCADA system integration of 110/20 kV Mizil Substation
Upgrading of 110kV protection system and SCADA system integration for Ploiesti
Sud Substation
Modernization and SCADA system integration of 110/6 kV SNG Substation
Modernization and SCADA system integration of 110/20 kV Maneciu Substation
Extension of SMART Measurement System (SMS) in the localities Padureni, Cor-
netu, Slobozia Bradului, Olareni, Valea Beciului, Salcia Veche, Tataru, Maicanesti,
Obrejita, Slimnic, Vanatori, Dumbraveni, Garoafa, Sihlea, Golestii de Sus, Dumitres-
ti, Dumitrestii Fata, Dumitrestuii de Sus, Lupoaia, Gugesti, Rastoaca, Lamotesti,
Vrancea county
Increasing energy efficiency of distribution network and improving technical
conditions of power supply by increasing the transformer substations voltage to
20 kV in the Hipodrom, Obor, Victoriei neighbourhoods of Braila city
Implementation of SMART Measurement System (SMS) in Braila, Focsani, Galati end
Targoviste branches
Modernization of electrical networks in Tecici city, street Dacia corner with cu
street Vrancei, Galati county
TRANSILVANIA SUD
Integration of substations from CEM 110 kV into the SCADA DMS system of SDTS
Modernization of transformer substations by MV cell replacement, indoor network
distribution board replacement, integration in Distribution Automation System
and repair of buildings of transformer substations in Codlea, Brasov county
Modernization of 110/27.5/20/6kV Zizin Substation, Brasov county
Modernization, securing and systematization of LV connections in Brasov city (str.
Minerva, Mercur, Cometei, Soarelui, Constelatiei, Neptun, Saturn, Apollo, b-dul
Victoriei, Aleea Sanzienelor, Aleea Lacramioarelor, Mimozei, Cocorului, Stefan Miro-
nescu, Aleea Petuniei, Zizinului nr.81-99, Gen Mociulschi, Colonia Metrom, Oltet,
Aleea Constructorilor, Barbu Lautaru, b-dul Garii, Szemler Ferencz no.3, 5, 7, Infrati-
rii no.6, 8, 9, 16, 21, 22, 23, 13 Decembrie no. 86-88, Spicului, Bobului, Lacramioarelor,
Garii Noua, Anghel Saligny, Calea Bucuresti), Brasov county stages 1, 2, 3 and 5
Increasing the supply reliability for the users connected to 110/6 kV Corunca
Substation, Mures county
Increasing the supply reliability at the interconnection of 20 kV OHL Blaj 1, 20 kV
OHL PT 51, 20 kV OHL Jidvei, in Blaj locality, Alba county
2.53
3.26
3.49
3.51
3.63
4.25
4.67
7.42
7.10
5.71
4.65
2.55
4.70
10.93
3.03
24.2
13.77
5.43
12.03
7.3
2.54
195 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Descriere
Valoare
(mil. RON)
Integration in SCADA-DMS system of transformer substations prepared for MTCU
installation (Monitoring and data Transmission Control Unit)
Modernization of LV OHL and LV connections in Teius, Alba county
Modernization of wall cabin transformer substations no.28 Alba and LV OHL, str.
Calea Motilor and Horea Boulevard, Alba Iulia city, Alba county
8.61
5.56
3.14
Modernization of LV OHL of transformer substations no.37, Sebes locality, Alba county
3.58
Increasing the supply reliability in area of transformer substations: Polico Imbent,
no. 56 Agip, no. 49 and no.27, Sebes locality, Alba county
Decentralization of MV network, voltage level improvements - str. Poarta Campu-
lui, Mechenndorfer, Dealului, Sanpetru locality, Brasov county
Voltage level improvements and modernization of LV OHL and LV electrical connection
in Sancraiu de Mures and Nazna, Mures county
Modernization of electricity supply installations in Medias city – Vitrometan nei-
ghborhood, Sibiu conunty
Modernization of LV network distribution and LV connection on str. 8 Martie, Tg.
Mures city, Mures county
Modernization of 110 kV OHL Zizin - IABv - Metrom and 110 kV OHL Darste - IABv -
Racadau by switching partly from overhead line to underground cable
Modernization of 6 kV network distribution on str. 13 Decembrie, Brasov city,
area 4 between Str. Zaharia Stancu and Str. H. Coanda, Brasov county
Voltage level improvements and LV network modernization in Terezian neighborho-
od, apartment buildings on Str. Rusciorului, str. Lunga, Sisbiu city, Sibiu county
Conductor replacements, securing and systematization of LV connections of LV
OHL Soars, reconfiguration of 20 kV OHL Cincu, Brasov county
Voltage level improvements in area of pole mounted transformer substations no. 27 Stu-
pinii Harmanului – neighborhood Salcamilor, Izvor, in Tarlungeni locality, Brasov county
Voltage level improvements by power injection with new built transformer
substations, LV conductor replacement and LV connection replacement of pole
mounted transformer substations no. 1, 2, 3 and 4 Tomesti, Harghita county
Voltage level improvements and LV network modernization (pole mounted
transformer substations no. 1, 2, 4 and 5) in Cartisoara locality, Sibiu county
Increasing distribution capacity and supply reliability for the developing area
adjacent to the new objective, Clinical Hospital BV: Realization of new 110/20 kV
Substation, in the axle of 110 kV OHL Bartolomeu - FS Rasnov, common circuit
with 110 kV OHL ICA Ghimbav in area of pillars no. 54-56
TRANSILVANIA NORD
Integrated security, monitoring and intervention system for the substations of
SDTN
Increasing the network voltage to 20 kV: distributors L5, L6, L17 and L2SMA of
Turda Substation, Cluj county area
Modernization of MV OHL Mihai Viteazu -Tv, Cluj county semi axles and related
connections
Modernization of Cluj Nord 110/10 kV Substation and introduction of 20 kV busbar
Modernization of 110/20 kV Marghita Substation – stage 2
Modernization of 110/20 kV Alesd Substation
Regulating 110 kV OHL of Oradea metropolitan area
2.45
3.01
3.06
2.64
2.96
2.31
3.31
2.47
2.4
2.05
2.78
3.3
6.84
3.29
3.20
10.5
7.55
3.18
7.90
3.53
196 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Descriere
Valoare
(mil. RON)
TRANSILVANIA NORD
Increasing the power supply reliability in Alesd area, Lugasu de Jos, Tinaud, by
construction of new MV underground cable, Bihor county
Modernization of Baia Sprie 1 110/35/6kV Substation and introduction of 20kV busbar
Distribution Automation System 2018, Baia Mare branch
Increasing the quality of the distribution service vol.2A - modernization of 32 wall
cabin transformation substations from Baia Mare, Somcuta Mare, Targu Lapus,
Ulmeni localities, Maramures county
Increasing the quality of the distribution service vol.2B modernization of 31
built transformation substations from OC Sighet
Modernization of Baia Mare 2 110 kV Substation and introduction of 20kV busbar
Increasing the network voltage to 20 kV within SDTN Satu Mare area – Distributor:
SM1-PA 1001 CIR – PA 1002 Martirilor Deportati – PT 507 Aurora
Modernization of 110/20 kV Rodna Substation
Modernization of 110/20 kV Jibou Substation
Modernization of 110/20 kV Zalau Substation
Modernization of pole mounted transformer substations belonging to Bistrita branch
SMART Measurement System (SMS) 2020 in SDTN, Cluj Napoca branch
2.54
6.78
6.79
4.20
7.71
4.78
2.74
5.82
3.60
3.56
2.18
2.88
Source: Electrica
197 | 2020 ANNUAL REPORT
ELECTRICA S.A.
198 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
Consolidated
Financial
Statements
as at and for the year
ended 31 December
2020
prepared in accordance with
International Financial Reporting
Standards as adopted by
the European Union
199 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY
THE EUROPEAN UNION
CONTENTS
Consolidated statement of financial position
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Basis of preparation
1.
2.
3.
4.
Reporting entity and general information
Basis of accounting
Functional and presentation currency
Use of judgments and estimates
Accounting policies
5.
6.
7.
Basis of measurement
Significant accounting policies
Adoption of new and revised standards
Performance for the year
8.
9.
10.
11.
12.
13.
Operating segments
Revenue
Electricity and natural gas purchased
Other income and expenses
Net finance result
Earnings per share
Employee benefits
14.
15.
16.
Short-term employee benefits
Post-employment and other long-term employee benefits
Employee benefit expenses
Income taxes
17.
Income taxes
Assets
18.
19.
20.
21.
22.
23.
24.
25.
Trade receivables
Deposits with maturity date more than three months
Other receivables
Cash and cash equivalents
Assets held for sale
Inventories
Property, plant and equipment
Intangible assets
Equity and liabilities
26.
27.
28.
29.
30.
Capital and reserves
Trade payables
Other payables
Provisions
Long-term bank borrowings
Financial instruments
31.
Financial instruments - Fair values and risk management
200 | 2020 ANNUAL REPORT
ELECTRICA S.A.
202
204
205
206
208
210
210
210
217
217
217
219
219
219
229
230
230
235
235
236
237
237
237
237
238
241
241
241
243
243
244
244
245
245
246
246
249
251
251
252
252
253
253
255
255
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY
THE EUROPEAN UNION
Other information
32.
33.
34.
35.
36.
Acquisition of subsidiaries
Related parties
Contingencies
Commitments
Subsequent events
259
259
260
262
264
265
201 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
ASSETS
Non-current assets
Intangible assets related to concession arrangements
Other intangible assets
Property, plant and equipment
Restricted cash
Deferred tax assets
Other non-current assets
Right of use assets
Total non-current assets
Current assets
Trade receivables
Other receivables
Cash and cash equivalents
Deposits with maturity date more than three months
Restricted cash
Inventories
Prepayments
Current income tax receivable
Assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserve
Pre-paid capital contributions in kind from shareholders
Revaluation reserve
Legal reserves
Retained earnings
Note
31 December
2020
31 December
2019
25
25
24
21
17
18
20
21
19
21
23
22
26
26
26
26
26
26
5,455,185
5,188,155
7,213
508,130
-
19,666
1,173
27,091
13,410
544,098
320,000
19,887
1,845
35,034
6,018,458
6,122,429
1,029,775
32,460
570,929
-
320,000
70,066
2,817
1,837
15,476
889,979
28,503
607,506
66,471
-
74,370
2,699
8,288
17,027
2,043,360
1,694,843
8,061,818
7,817,272
3,464,436
3,464,436
103,049
(75,372)
7
116,372
392,276
103,049
(75,372)
7
87,665
371,833
1,759,506
1,637,909
Total equity attributable to the owners of the Company
5,760,274
5,589,527
Total equity
5,760,274
5,589,527
202 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Liabilities
Non-current liabilities
Lease liability – long term
Deferred tax liabilities
Employee benefits
Other payables
Long-term bank borrowings
Total non-current liabilities
Current liabilities
Financing for network construction related to concession
agreements
Lease liability – short term
Bank overdrafts
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
Current income tax liability
Current portion of long-term bank borrowings
Total current liabilities
Total liabilities
Note
31 December
2020
31 December
2019
17
15
28
30
21
27
28
14,15
29
30
16,875
177,787
143,876
33,873
400,296
772,707
9,607
168,138
126,424
36,775
432,786
773,730
-
1,008
10,747
164,966
607,195
240,946
5,629
92,292
19,238
9,211
378,613
26,900
350,624
730,455
218,285
6,918
87,857
19,558
4,898
7,512
1,528,837
1,454,015
2,301,544
2,227,745
Total equity and liabilities
8,061,818
7,817,272
The accompanying notes are an integral part of these consolidated financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
203 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, except per share data)
Revenue
Other income
Electricity and natural gas purchased
Construction costs related to concession agreements
Employee benefits
Repairs, maintenance and materials
Depreciation and amortization
Reversal of impairment/(Impairment) for trade and
other receivables, net
Other operating expenses
Operating profit
Gain from bargain purchase of subsidiaries
Finance income
Finance costs
Net finance cost
Profit before tax
Income tax expense
Profit for the year
Profit for the year attributable to:
-owners of the company
Profit for the year
Earnings per share
Note
2020
2019
9
11
10
25
16
24,25
18,20
11
32
12
12
17
6,501,100
6,279,834
165,422
160,031
(3,905,705)
(3,859,617)
(675,967)
(759,205)
(774,501)
(620,192)
(104,577)
(100,379)
(490,918)
(480,273)
62,167
(4,940)
(325,104)
(381,037)
451,917
234,222
7,477
-
9,651
(26,736)
(17,085)
14,118
(22,297)
(8,179)
442,309
226,043
(54,766)
387,543
(19,366)
206,677
387,543
387,543
206,677
206,677
Basic and diluted earnings per share (RON)
13
1.14
0.61
The accompanying notes are an integral part of these consolidated financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
204 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA SA
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
2020
2019
Profit for the year
387,543
206,677
Other comprehensive income
Items that will not be reclassified to profit or loss
Re-measurements of the defined benefit liability
Tax related to re-measurements of the defined benefit
liability
Revaluation of property, plant and equipment
Tax related to revaluation of property, plant and equipment
15
17
24
17
(7,152)
572
43,823
(7,931)
291
502
-
-
Other comprehensive income, net of tax
29,312
793
Total comprehensive income
416,855
207,470
Total comprehensive income attributable to:
-owners of the Company
Total comprehensive income
416,855
416,855
207,470
207,470
The accompanying notes are an integral part of these consolidated financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
205 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
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206 | 2020 ANNUAL REPORT
ELECTRICA S.A.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
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207 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortisation
Impairment of property, plant and equipment and intan-
gible assets, net
Gain on disposal of property, plant and equipment and
intangible assets
(Reversal of impairment)/Impairment of trade and other
receivables, net
(Reversal of impairment)/Impairment of assets held for
sale
Change in provisions, net
Net finance cost
Changes in employee benefits obligations
Gain from bargain acquisition of subsidiaries
Corporate income tax expense
Changes in:
Trade receivables
Other receivables
Prepayments
Inventories
Trade payables
Other payables
Employee benefits
Deferred revenue
Cash generated from operating activities
Interest paid
Income tax paid
Note
2020
2019
387,543
206,677
27,850
37,743
463,068
442,530
3,025
3,441
(285)
(2,256)
24
25
24
24
18,20
(62,167)
4,940
22
29
12
15
32
17
(188)
416
(320)
(9,548)
17,085
8,179
-
(54,546)
(7,477)
54,766
-
19,366
882,900
656,942
(87,249)
(135,955)
3,837
593
27,156
(33)
4,307
(10,785)
(76,010)
176,993
(2,331)
14,735
(1,289)
3,406
4,775
1,881
739,493
724,380
(19,953)
(12,893)
(51,672)
(13,901)
Net cash from operating activities
667,868
697,586
208 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
2020
2019
Cash flows from investing activities
Payments for purchases of property, plant and equip-
ment
Payments for network construction related to concession
agreements
Payments for purchase of other intangible assets
Proceeds from sale of property, plant and equipment
Payments for deposits with maturity of 3 months or
longer
Proceeds from deposits with maturity of 3 months or
longer
Interest received
Net cash effect from gain of control over the acquired
subsidiary
Payment for acquisition of subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital, net
Proceeds from long-term bank borrowings
Repayment of long-term bank loans
Payment of lease liabilities
Dividends paid
Repayment of financing for network construction related
to concession agreements
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
(6,730)
(15,964)
(637,996)
(887,419)
(2,226)
(2,243)
5,012
8,384
-
(368,000)
66,471
438,000
8,962
15,845
5,577
(8,006)
-
-
(568,936)
(811,397)
-
1,122
354,383
120,260
(29,130)
-
(29,324)
(38,310)
(245,780)
(247,198)
-
(11,939)
50,149
(176,065)
149,081
(289,876)
256,882
546,758
405,963
256,882
19
19
32
32
26
30
30
26
21
21
The accompanying notes are an integral part of these consolidated financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
209 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
1
Reporting entity and general information
(a)
General information about the Group
These financial statements are the consolidated financial statements of Societatea Energetica Electrica S.A.
(“the Company” or “Electrica SA”) and its subsidiaries (together “the Group”) as at and for the year ended 31
December 2020.
The registered office of the Company is no. 9, Grigore Alexandrescu Street, District 1, Bucharest, Romania. The
Company has sole registration code 13267221 and Trade Register registration number J40/7425/2000.
As at 31 December 2020 and 31 December 2019, the major shareholder of Societatea Energetica Electrica S.A.
is the Romanian State, represented by the Ministry of Energy (former Ministry of Economy, Energy and Busi-
ness Environment) with a share of ownership of 48.79% from the share capital.
The Company’s shares are listed on the Bucharest Stock Exchange and the global depository receipts (“GDRs”)
are listed on the London Stock Exchange. The shares traded on the London Stock Exchange are the global
depositary receipts, one global depositary receipt representing four shares. The Bank of New York Mellon is
the depositary bank for these securities.
As at 31 December 2020, the Company’s subsidiaries are the following:
Subsidiary
Activity
Sole registration
code
Head
Office
% shareholding as at
31 December 2020
Distributie Energie
Electrica Romania
S.A. („DEER”)
Electricity distribution in
geographical areas Tran-
silvania Nord, Transilvania
Sud and Muntenia Nord
Electrica Furnizare
S.A.
Electricity and natural
gas supply
Services in the energy
sector (maintenance,
repairs, construction)
Electrica Serv S.A.
Electrica Energie
Verde 1 SRL* („EEV1”
– former Long
Bridge Milenium
SRL)
14476722
Cluj-
Napoca
100%
28909028
Bucuresti
99.9998409513906%
17329505
Bucuresti
100%
Electricity generation
19157481
Bucuresti
100%*
*indirect shareholding - Electrica Energie Verde 1 SRL is 100% owned by the subsidiary Electrica Furnizare S.A.
As at 31 December 2019, the Company’s subsidiaries were the following:
Subsidiary
Activity
Sole registration
code
Head
Office
% shareholding as
at 31 December 2019
Societatea de Distri-
butie a Energiei Elec-
trice Muntenia Nord
S.A. (“SDEE Muntenia
Nord S.A.”)
Societatea de Dis-
tributie a Energiei
Electrice Transilvania
Nord S.A. (“SDEE
Transilvania Nord
S.A.”)
Societatea de Dis-
tributie a Energiei
Electrice Transilvania
Sud S.A. (“SDEE Tran-
silvania Sud S.A.”)
Electricity distribution in
geographical area of Mun-
tenia Nord
14506181
Ploiesti
99.9999719027621%
Electricity distribution in
geographical area of Tran-
silvania Nord
14476722
Cluj-
Napoca
99.9999731116341%
Electricity distribution in
geographical area of Tran-
silvania Sud
14493260
Brasov
99.999977637%
Electrica Furnizare
S.A.
Electricity and natural gas
supply
28909028
Bucuresti
99.9998390431663%
210 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Subsidiary
Activity
Sole registration
code
Head
Office
% shareholding as
at 31 December 2019
Electrica Serv S.A.
Servicii Energetice
Muntenia S.A.
Services in the energy sec-
tor (maintenance, repairs,
construction)
Services in the energy sec-
tor (maintenance, repairs,
construction)
17329505
Bucuresti
100%
29384120
Bucuresti
100%
Changes in Group structure during 2020
Merger of the three distribution companies within the Group
On 27 May 2020, Electrica SA’s Board of Directors approved in principle the merger through absorption be-
tween Societatea de Distributie a Energiei Electrice Muntenia Nord S.A., Societatea de Distributie a Energiei
Electrice Transilvania Nord S.A. and Societatea de Distributie a Energiei Electrice Transilvania Sud S.A., the
absorbing entity being Societatea de Distributie a Energiei Electrice Transilvania Nord S.A..
Subsequently, on 3 July 2020 Electrica SA’s Board of Directors approved the merger through absorption be-
tween the aforementioned distribution entities, the absorbing entity being Societatea de Distributie a Ener-
giei Electrice Transilvania Nord S.A. according to the merger project no. 1404 dated 26 June 2020 that was
registered with the Trade Register Office of Cluj Court, the Trade Register Office of Prahova Court and the
Trade Register Office of Brasov Court and was published in the Official Gazette of Romania Part IV no. 2351
from 10 July 2020.
On 21 August 2020, the Extraordinary General Meeting of the Shareholders of Electrica SA approved the em-
powerment of the representative of Electrica SA to participate in the Extraordinary General Meeting of the
Shareholders of SDEE Transilvania Sud S.A. and SDEE Muntenia Nord S.A. and to express a favourable vote
regarding the dissolution without liquidation and of the deregistration from the Trade Register and from the
financial administration’s records of the absorbed companies SDEE Transilvania Sud S.A. and SDEE Muntenia
Nord S.A. starting with the effective date of the merger, in accordance with the Merger Project. Subsequently,
on 26 August 2020, took place the Extraordinary General Meetings of the Shareholders of SDEE Transilvania
Sud S.A., SDEE Transilvania Nord S.A. and SDEE Muntenia Nord S.A. regarding the approval of the merger by
the companies involved in this process.
On 14 October 2020, the Cluj Specialized Court admitted the requests of SDEE Transilvania Nord S.A., as
absorbing company, and the request of SDEE Transilvania Sud S.A. and SDEE Muntenia Nord S.A., as the
absorbed companies, approved the merger and ordered the deregistration of the absorbed companies from
the Trade Register.
Therefore, the merger produces its effects starting with the effective date, 31 December 2020, when SDEE
Transilvania Sud S.A. and SDEE Muntenia Nord S.A. as the absorbed entities ceased to exist, being dissolved
without going into liquidation. Consequently, all of their assets and liabilities were transferred through the
effect of the merger by absorption to SDEE Transilvania Nord S.A., as the absorbing entity, in exchange of the
issuance of new shares in the share capital of SDEE Transilvania Nord S.A. in favour of the shareholder of the
absorbed entities, namely Electrica SA.
Thus, on 31 December 2020, Distributie Energie Electrica Romania SA, formed by the merger of the three
former electricity distribution companies was recorded on the National Trade Register Office.
Also, based on the Romanian Energy Regulatory Authority decision no. 2461 dated 23 December 2020, the
electricity distribution licenses granted by the regulator to the absorbed companies for the areas Muntenia
Nord and Transilvania Sud were transferred to the absorbing company, Distributie Energie Electrica Romania
S.A., starting with 1 January 2021.
Merger of the two energy services companies within the Group
On 27 March 2020, Electrica SA’s Board of Directors approved in principle the merger through absorption
between Electrica Serv S.A. and Servicii Energetice Muntenia S.A. and the participation of the companies to
the merger, with Electrica Serv S.A. as absorbing company.
Subsequently, on 3 July 2020, Electrica SA’s Board of Directors approved the merger through absorption be-
tween Electrica Serv S.A. and Servicii Energetice Muntenia S.A. according to the merger project no. 934 dated
12 June 2020 that was registered with the Trade Register Office of Bucharest Court and was published in the
Official Gazette of Romania Part IV, no. 2303 from 8 July 2020.
211 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
On 21 August 2020, the Extraordinary General Meeting of the Shareholders of Electrica SA, as the shareholder
of Servicii Energetice Muntenia S.A., approved the empowerment of the representative of Electrica SA to
participate in the Extraordinary General Meeting of the Shareholders of Servicii Energetice Muntenia S.A. and
to express a favourable vote regarding the dissolution without liquidation and of the deregistration from the
Trade Register and from the financial administration’s records of the absorbed company Servicii Energetice
Muntenia S.A. starting with the effective date of the merger, 30 November 2020. Subsequently, on 25 August
2020, took place the Extraordinary General Meetings of the Shareholders of Servicii Energetice Muntenia S.A.
and Electrica Serv S.A. regarding the approval of the merger by the companies involved in this process.
On 17 September 2020, the VI Civil Section of the Bucharest Court admitted the request of Electrica Serv S.A.,
as absorbing company, and the request of Servicii Energetice Muntenia S.A., as the absorbed company, and
ascertained the legality of the merger process and approved the registration with the Trade Register of the
corresponding merger mentions.
Therefore, the merger produces its effects starting with the effective date, 30 November 2020, when Servicii
Energetice Muntenia S.A., as the absorbed entity, ceased to exist, being dissolved without going into liqui-
dation. Consequently, all of its assets and liabilities were transferred through the effect of the merger by ab-
sorption to Electrica Serv S.A., as the absorbing entity, in exchange of the issuance of new shares in the share
capital of Electrica Serv S.A. in favour of the shareholder of the absorbed entity, namely Electrica SA.
Thus, starting with 1 December 2020, the merger between the aforementioned companies was finalised and
the Group’s energy services will be carried out only under the umbrella of Electrica Serv. The registration on
the National Trade Register Office took place on 2 December 2020, with effective date 30 November 2020.
Both mergers that took place within the Group during 2020 consist only in reorganization of the subsidiaries
and have no impact on the consolidated financial statements, Electrica SA remaining the parent company
with the same % of ownership.
Acquisition of a photovoltaic park
On 23 June 2020, Electrica Furnizare S.A. signed a sale purchase agreement for the acquisition of 100% of
the share capital of Long Bridge Milenium SRL, a company that owns a photovoltaic park located in Stanesti,
Giurgiu County, with an installed capacity of MW 7.5 (operational power limited at MW 6.8). The photovoltaic
park was built between October 2012 and January 2013 and has been delivering electricity into the national
grid since February 2013.
Closing of the transaction and the transfer of shares’ ownership to Electrica Furnizare S.A. took place on 31
August 2020, the purchase price of the shares being of RON 7,830 thousand (equivalent of EUR 1,617,940). On
30 October 2020, the purchase price was adjusted in accordance with the purchase agreement based on the
financial results of the acquired company as at 31 August 2020, the final price being RON 8,006 thousand
(equivalent of EUR 1,637,515 and fees of EUR 17,318). Amongst various elements of the transaction, Electrica
Furnizare S.A. also took over the loans granted by the former shareholders of Long Bridge Milenium SRL to
the acquired company, in amount of RON 18,473 thousand (equivalent of EUR 3,817,749) (for further details
please refer to Note 32).
On 24 November 2020, the company Long Bridge Milenium SRL changed its name to Electrica Energie Verde
1 SRL.
Group’s main activities
The main activities of the Group include operation and construction of electricity distribution networks and
electricity and natural gas supply to final consumer as well as energy production from renewable sources.
The Group is the electricity distribution operator and the main electricity supplier in Muntenia Nord area (Pra-
hova, Buzau, Dambovita, Braila, Galati and Vrancea counties), Transilvania Nord area (Cluj, Maramures, Satu
Mare, Salaj, Bihor and BistritaNasaud counties) and Transilvania Sud area (Brasov, Alba, Sibiu, Mures, Harghita
and Covasna counties), operating with transformation station and 0.4 kV to 110 kV power lines.
The Company’s distribution subsidiary, Distributie Energie Electrica Romania S.A. which resulted from the
merger through absorption of the three distribution subsidiaries Societatea de Distributie a Energiei Elec-
trice Transilvania Nord S.A., Societatea de Distributie a Energiei Electrice Muntenia Nord S.A. and Societatea
de Distributie a Energiei Electrice Transilvania Sud S.A. now operates electric lines in 18 counties, from three
geographical areas of the country, representing 40.7% of the Romanian territory, and serves over 3.8 million
users. It invoices the electricity distribution service to electricity suppliers (mainly to Electrica Furnizare S.A.
subsidiary) which further invoices the electricity consumption to final consumers.
Electrica Furnizare S.A. is active on both the competitive market and as the supplier of last resort for aprox. 3.1
million clients (defined as supplier designated by the regulatory authority to deliver the universal service of
electricity supply under specific regulated conditions) in Muntenia Nord, Transilvania Nord and Transilvania
Sud areas. According to the regulations issued by the National Authority for Energy Regulation (“ANRE”), the
suppliers of last resort have the obligation to ensure electricity supply to final customers which have not exer-
cised their eligibility right – the right to choose their electricity supplier (hereinafter named captive consu-
212 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
mers). Starting with 1 January 2021, as a result of the changes in the regulatory framework, Electrica Furnizare
S.A. is designated as supplier of last resort (SoLR) at national level, continuing to supply the existing clients in
the universal service regime, but also with the possibility to take over in the supply of last resort regime the
clients who are left without a supplier from any network area on the Romanian territory.
At the same time, Electrica Furnizare S.A. is also designated as SoLR for natural gas at national level, but only
with the possibility of taking over the customers left without a supplier.
Through the acquisition of the new subsidiary Electrica Energie Verde 1 S.R.L. (former Long Bridge Milenium
S.R.L.) as of 31 August 2020, the Group entered on the electricity generation segment, in particular from re-
newable sources.
Electrica Energie Verde 1 S.R.L. is a producer of electricity from renewable sources, operating a photovol-
taic park in Stanesti, Giurgiu county, with an installed capacity of MW 7.5 (operating capacity limited MW
to 6.8). In 2020 the operation of the plant was continuous, with no significant events leading to production
shutdowns, producing in total MWh 10,131. According to Law no. 220/2008 and based on the accreditation
issued by ANRE, Stanesti park receives a number of 6 green certificates (“GC”) for each MWh produced and
delivered, of which until 2020, 4 GC were issued for trading and 2 GC were postponed (the amendment is
introduced by Law no. 184/2018). The postponed green certificates will be reinserted starting with 1 January
2021, in equal monthly tranches until 31 December 2030.
(b)
Regulations in the energy sector
Regulatory environment
The activity in the energy sector is regulated by the Romanian Energy Regulatory Authority.
Some of the main responsibilities of ANRE are to approve prices and tariffs and to issue substantiation me-
thodologies used to set regulated prices and tariffs.
Electricity distribution
Electricity distribution is a monopoly activity. Distribution tariffs are established through a “tariff basket-pri-
ce cap” mechanism. The methodology for setting the electricity distribution tariffs applicable for the years
ended 2019 and 2020 was approved by ANRE Order no. 169/2018 with subsequent amendments (Orders no.
193/2018, no. 60/2019, no. 203/2019, no. 207/2020 and no. 3/2021).
The specific distribution tariffs applicable for the three voltage levels (high, medium and low) by regions, for
the years 2020 and 2019, were approved by ANRE orders as follows (RON/MWh, presented cumulatively for
medium and low voltage levels):
Order 198,199,197/20.12.2018
1 January-28 February 2019
High voltage
Medium voltage
Low voltage
SDEE Transilvania Nord S.A.
SDEE Transilvania Sud S.A.
SDEE Muntenia Nord S.A.
18.16
20.27
15.21
60.00
60.10
48.29
158.67
160.31
162.46
Order 25,26,24/25.02.2019
1 March-30 June 2019
High voltage
Medium voltage
Low voltage
SDEE Transilvania Nord S.A.
SDEE Transilvania Sud S.A.
SDEE Muntenia Nord S.A.
18.58
20.75
15.56
61.40
61.52
49.40
162.38
164.08
166.20
213 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Order 79,80,78/24.06.2019
1 July-31 December 2019
High voltage
Medium voltage
Low voltage
SDEE Transilvania Nord S.A.
SDEE Transilvania Sud S.A.
SDEE Muntenia Nord S.A.
19.03
21.21
15.93
62.88
62.88
50.58
166.27
167.72
170.16
Order 228,229,227/16.12.2019
1 January-15 January 2020
High voltage
Medium voltage
Low voltage
SDEE Transilvania Nord S.A.
SDEE Transilvania Sud S.A.
SDEE Muntenia Nord S.A.
19.11
20.69
16.97
65.48
62.49
54.09
171.98
169.01
180.15
Order 8,9,7/15.01.2020
16 January-31 December 2020
High voltage
Medium voltage
Low voltage
SDEE Transilvania Nord S.A.
SDEE Transilvania Sud S.A.
SDEE Muntenia Nord S.A.
18.77
20.31
16.68
64.31
61.34
53.16
168.91
165.90
177.06
In 2019, a new regulatory period began, governed by the provisions of ANRE Order no. 169/2018 for the appro-
val of the Methodology for establishing the tariffs for the electricity distribution service (IV regulatory period:
2019-2023).
The following items are considered by ANRE when setting the target revenue for one year of the regulatory
period: controllable and non-controllable operating and maintenance costs; costs of electricity purchased for
own technological consumption (distribution network losses); regulated depreciation charge; the return on
the regulated assets base (“RAB”); revenues from reactive energy and revenues from other activities, as well
as corrections from previous periods.
Starting with 2019, the regulated rate of return (“RRR”) on RAB was 5.66%, according to ANRE Order no.
168/2018. For the investments in the electricity distribution networks commissioned during the period 2019-
2023, an incentive of 1 percentage point is granted over the regulated rate of return approved by the ANRE
Order no. 168/2018. Subsequently, according to Government Emergency Ordinance no. 19/2019, the approved
regulated rate of return was 6.9%.
On 9 January 2020 was issued the Government Emergency Ordinance no. 1 which modified:
The Energy Law regarding the cancellation of the article approving the regulated rate of return of 6.9%
starting with 30 April 2020;
ANRE functioning law, imposing the establishment of the value of the contribution charged by ANRE
(thus by ANRE Order no. 1/2020, the contribution has changed from 2% to 0.2%).
ANRE Order no. 75/2020 for establishing the regulated rate of return for the electricity and natural gas distri-
bution and transport tariffs until the end of the fourth regulatory period entered into force on 13 May 2020.
Thus, for the year 2020, the regulated rate of return is as follow:
For the period 1 January 2020 – 29 April 2020: 6.9%;
For the period 30 April 2020 – 12 May 2020: 5.66% plus an incentive of 1% for new investments;
For the period 13 May 2020 – 31 December 2020: 6.39% plus an incentive of 1% for new investments.
The Methodology for establishing the distribution tariffs approved by ANRE Order no. 169/2018 was modified
by ANRE Orders no. 207/2020 and no. 3/2021 as follows:
granting a 2% RRR incentive for investments in the electricity distribution network financed from own
funds in projects in which European non-reimbursable funds are also attracted, if the investments are
performed and put into function by operators after 1 February 2021;
in cases where, for certain categories of tangible/intangible assets, the regulated legislation estab-
214 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
lishes other regulated useful lives than those provided by the Methodology or in the Catalogue on the
classification and normal operating useful lives of fixed assets, approved by Government decision, the
annual regulated depreciation of those assets is calculated on the basis of the regulated useful lives
established by the primary legislation.
Regulatory asset base (“RAB”)
In accordance with the old tariff methodology for electricity distribution approved by ANRE Order no. 72/2013
with subsequent amendments (Orders no. 112/2014, no. 146/2014 and no. 165/2015), and the new tariff me-
thodology of electricity distribution approved by ANRE Order no. 169/2018 with subsequent amendments
(ANRE Orders no. 193/2018, no. 60/2019, no. 203/2019, no. 207/2020 and no. 3/2021), hereinafter referred to as
Methodology, the determination of the distribution tariffs is based on, inter alia, the RAB. The RAB calculation
is based on capital expenditure.
The regulatory asset base at the beginning of the first regulatory period (1 January 2005) (“initial RAB”) inclu-
des the net book value of the property, plant and equipment and intangible assets as approved by ANRE and
used only for regulated electricity distribution.
The subsequently calculated RAB includes besides the initial RAB, as a net value, the net value of the tangi-
ble and intangible assets subsequently acquired through investments approved by ANRE. The BAR does not
include the fixed assets financed from donations or other non-reimbursable funds, including the connection
fee received from the new users of the electricity distribution network.
Tariff adjustments
Annually, ANRE makes revenue corrections due to: change in the quantities of electricity distributed compa-
red to the forecast; change in quantities and acquisition price for the regulated own technological consump-
tion (distribution network losses) compared to the forecast; the annual change in controllable operating and
maintenance costs, realized and accepted against the forecast; annual change in uncontrollable operating
and maintenance costs compared to the forecast; changes in revenues from reactive energy compared to the
forecast; failure to meet/exceeding the approved investments programme; revenues generated from other
operations made by the distribution operator and the quantity of electricity recovered from recalculations.
In regulated activities, the regulator establishes through the tariff adjustment mechanism (as presented
above), the criteria to recognise over or under recoveries of one period in future periods. The Group does not
recognise regulatory assets and liabilities in respect of these under or over recoveries, as these differences are
recovered or returned through the tariffs charged in subsequent periods.
Electricity supply
Regulated market
Starting with the 1 January 2018, the total liberalization of the energy market was achieved and conditions
were created for the transition to eligibility of a larger number of household customers. There were signifi-
cant migrations of domestic customers between suppliers, which led to a change in the structure of their
portfolio. Furthermore, in 2019 there was an increase in the number of products offered by suppliers to final
clients and customer options for offers that combine electricity, natural gas and/or telecommunications ser-
vices.
However, after the total aforementioned liberalization from 1 January 2018, the regulatory framework for the
supply activity has been modified starting with 1 March 2019, in accordance with the provisions of the Gover-
nment Emergency Ordinance (GEO) no. 114/2018. The new secondary legislation approved by ANRE has rein-
troduced the regulated contracts with the electricity producers and modified the pricing methodology for
the household customers in the regulated segment. Subsequently, by Government Emergency Ordinance
no. 1/2020, the period of application of regulated tariffs to household customers was shortened, respectively
until 31 December 2020. The secondary legislation issued by ANRE approved a series of rules and conditions
for the liberalization of the electricity market with regards to the manner and frequency of informing and
offering the final clients beneficiaries of universal service, the supply in last resort regime, the applicable
framework contracts and the possibility to grant a commercial discount to the domestic clients, at least until
30 June 2021.
The abovementioned regulatory changes are applicable for clients in the regulated market. Taking into ac-
count the provisions of the Electricity Law and the European Directive no. 54/2003, the electricity market is
fully liberalised starting with 1 July 2007 and all consumers were declared eligible. The eligible consumers
are free to choose their electricity supplier from which they purchase electricity at negotiated prices. For the
other consumers (including those that did not exert their eligibility right), as mentioned before, the tariffs/
prices have been regulated/approved on the basis of ANRE orders, until 31 December 2019 for non-household
clients and 31 December 2020 for household clients.
Through ANRE Order no. 188/2020 for the approval of the Regulation for the designation of suppliers of last
resort, the notion of obligatory SoLR and optional SoLR disappears. The designation of a supplier as SoLR is
215 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
made at national level and not on network areas, as previously provided. SoLRs are designated for an indefini-
te period, starting with 1 January 2021, and in the designation process the eligibility criterion based on serving
a number of at least 2,000 consumption places at national level is no longer applied, so that any supplier can
become SoLR.
Through ANRE Decision no. 2123/2020, Electrica Furnizare S.A. was designated as a supplier of last resort for
an indefinite period, starting with 1 January 2021, for all network areas in Romania. The criterion for taking
over a customer as a last resort supplier will be the „lowest cost”, regardless of whether they are domestic or
non-domestic clients. The lowest cost is established by ANRE monthly, for each network area, by consulting
the offers published by SoLR on their own web pages.
Competitive market
Transactions on the competitive wholesale market are transparent, public, centralised and non-discrimina-
tory. Participants to the wholesale market can trade electricity based on the bilateral contracts concluded on
the dedicated markets.
The supply of electricity to customers on the competitive market is based on negotiated contracts (within the
limits of the regulations in force). Electricity consumption is invoiced, according to the contractual provisions,
at negotiated tariffs with the final customer.
Green certificates
Electricity suppliers have a legal obligation to purchase green certificates from producers of electricity from
renewable sources, based on annual targets or quotas set by law, which are applied to the quantity of electri-
city purchased and supplied to final customers. The cost of green certificates is invoiced to final customers
separately from the tariffs for electricity.
For 2020, the mandatory estimated annual quota for green certificates was established by ANRE through Or-
der no. 238/2019 (0.45061 GC/MWh) following that until 1 March 2021, ANRE will establish also through Order,
the annual mandatory quota for the acquisition of green certificates related to 2020, based on the quantities
of electricity from renewable sources and the final consumption of electricity of the previous year. For 2019,
the mandatory quota of green certificates was established by ANRE through Order no. 18/2020, at the value
of 0.433548 GC/MWh.
Electricity generation
Green certificates
Electricity producers are entitled by to receive a certain number of green certificates for each MWh of elec-
tricity produced from renewable sources and injected into the network, according to Law No. 220/2008 and
based on the accreditation issued by ANRE. Photovoltaic Stanesti Park is accredited to receive a number of 6
GC for each MWh produced and delivered, of which by 2020 4 GC were issued for trading and 2 GC postponed
(the postponement is introduced by Law no. 184/2018).
The green certificates can be sold on the spot market, term market or a combination of both. The selling price
must fall between the minimum and maximum values set by Law no. 220/2008 for establishing the system
for promoting the production of electricity from renewable energy sources, republished, with subsequent
amendments.
The trading value of green certificates on the markets in accordance with the provisions of Law no. 220/2008,
republished, with subsequent amendments and additions from Order no 24/2017, falls between:
(a)
(b)
a minimum trading value of EUR 29.4/GC and
a maximum trading value of EUR 35/GC.
For the year 2020, the trading of green certificates was carried out at the minimum price on all markets, as a
result of the excess GC offered for sale compared to the suppliers’ purchasing obligations.
COVID-19 impact
On 11 March 2020 the World Health Organization (hereinafter “WHO”) declared the COVID-19 outbreak a pan-
demic and on 16 March 2020 Romania entered into a state of emergency. Measures taken by the Romanian
Government included restrictions on the cross-border movement of people, entry restrictions on foreign visi-
tors and lock-down of certain industries. Furthermore, significant key players on the market decided to shut
down their operations, especially in the automotive and heavy industries, while some smaller businesses
decided to curtail or temporarily suspend their operations. Therefore, on a macroeconomic level, the CO-
VID-19 pandemic generated a downturn of the economy leading to a decrease in the demand for electricity,
especially from non-household consumers.
In the fight against the COVID-19 pandemic, the Group has adopted all the necessary measures for the ac-
tivity of the companies within the Group to continue to be carried out under normal conditions and issued
216 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
guidelines aimed at preventing and/or mitigating the effects of contagion at the workplace. Most important
measures included strict adherence to hygiene and social distancing rules as well as working from home
where possible. In addition, technicians who perform field work received special equipment in order to mi-
nimize the risk of infection. A resilience plan was developed for each company within the Group, identifying
essential activities and critical roles through scenario analysis and ensuring staff backup. All the aforementi-
oned resilience plans were integrated at Group level in order to ensure that actions taken were appropriate
for each company individually as well as for the Group overall. As a result all key functions of the Group were
maintained, enabling the Group to provide secure energy distribution and supply services while maintaining
the safety of employees and customers.
The aforementioned difficult conditions led to an increase in the operating expenses, mainly for the purchase
of protective equipment as well as sanitation services. However, despite the unstable economic environment,
through a close monitoring of the financial performance on multiple tiers, the Group’s financial performance
maintained a positive trend as compared with the previous year, with improvements in profit, revenues and
operating cash flows. Furthermore, the liquidity of the Group remained at a good level, with no significant
difficulties in receivables collection and consequently payment of debts being noted. Therefore, based on
the publicly available information and considering the actions already implemented, the Group does not an-
ticipate a negative financial impact of the COVID-19 outbreak on its operations and no significant threat over
the Group’s ability to continue as a going concern over a period covering at least 12 months from the date of
these consolidated financial statements has been identified. However, considering the recent developments
of the market, the long term effects of the COVID-19 outbreak cannot be reliably estimated currently as the
Group cannot preclude the possibility of further lock downs or an escalation in the severity of current mea-
sures.
Where it was possible to determine the financial impact based on professional judgment made by manage-
ment, this has been recognized in the consolidated statement of profit or loss for the year ended 31 Decem-
ber 2020 (see Note 18 for bad debt allowances). The Group continues to closely monitor the macroeconomic
outlook and as additional information will be available, their effects on the activity of Group companies and
over the financial results will be analyzed.
Moreover, the Group will build on its policy to promptly and transparently communicate any information that
is reasonably expected to affect investor’s perception and as further effects of the COVID-19 pandemic over
the financial results of the Group can be established, such information will be included in the future financial
statements and will be made available to investors.
2
Basis of accounting
These annual consolidated financial statements have been prepared in accordance with International Finan-
cial Reporting Standards (“IFRS”) as adopted by the European Union (“IFRS-EU”). The consolidated financial
statements were authorized for issue by the Board of Directors on 4 March 2021 and will be submitted for
shareholders’ approval in the meeting scheduled on 28 April 2021.
The Company also issues an original version of the consolidated financial statements prepared in accordan-
ce with IFRS-EU in Romanian language, that will be used for submitting to the Bucharest Stock Exchange,
which is the original binding version.
Details of the Group’s accounting policies are included in Note 6. The Group has consistently applied the ac-
counting policies to all periods presented in these consolidated financial statements.
3
Functional and presentation currency
These consolidated financial statements are presented in Romanian Lei (RON), which is the functional
currency of all Group companies. All amounts have been rounded to the nearest thousand, unless otherwise
indicated.
4
Use of judgements and estimates
In preparing these consolidated financial statements, management has made judgements, estimates and
assumptions that affect the application of the Group’s accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and un-
derlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
(a)
Judgements
InfInformation about judgements made in applying accounting policies that have the most significant
effects on the amounts recognised in the consolidated financial statements is included below.
Revenue recognition
The Group assesses its revenue arrangements based on specific criteria to determine if it is acting as a prin-
cipal or an agent. In applying IFRS 15, the Group has identified that it acts in the capacity of an agent in case
217 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
of transactions as Balancing Responsible Party (“BRP”) and thus recognises revenue as the net amount of
the commission earned by the Group. The Group concluded that it is acting as a principal in all other revenue
arrangements.
Service Concession Arrangements
The distribution subsidiaries (as operators) that merged into one single distribution operator as of 31 De-
cember 2020 concluded concession contracts with the Ministry of Economy (as grantor) in 2005, updated
by subsequent addendums. These contracts concern the operation of electricity distribution service in the
established territory (Transilvania Nord, Transilvania Sud, Muntenia Nord), on the risk and responsibility of the
operators and taking into account the regulations applicable to the operation, modernization, rehabilitation
and development of energy distribution networks specified in the Electricity Law, the terms and conditions
of the licenses for electricity distribution and the regulations issued by ANRE. The distribution operator re-
sulting from the merger of the three distribution operators within the Group, Distributie Energie Electrica
Romania concluded addendums to the concession agreements signed with the Ministry of Economy for the
operation of electricity distribution service in all three areas.
IFRIC 12 “Service Concession Arrangements” deals with public-to-private service concession arrangements.
IFRIC 12 applies to public-to-private service concession arrangements if:
(a) the grantor controls or regulates what services the operator must provide with the infrastructure, to
whom it must provide them, and at what price; and
(b) the grantor controls - through ownership, beneficial entitlement or otherwise - any significant residual
interest in the infrastructure at the end of the term of the arrangement.
The control or regulation referred to in condition (a) could be by contract or otherwise (such as through a
regulator). The activities of the electricity distribution operators, including distribution tariffs, are regulated
by ANRE.
The concession contracts are concluded for a period of 49 years and may be extended for a period equal to
no more than half of that period. As a price for the concession, the operators pay an annual royalty fee recog-
nized in the distribution tariff of 1/1000 of the revenues from electricity distribution. According to the conces-
sion contracts, the operators use the assets representing the distribution network owned by them located in
the above-mentioned territory for electricity distribution. According to the concession contracts, the grantor
will buy at the end of the term of concession contract the ownership right of the „relevant assets”, that are
mainly the electricity distribution networks, at a price equal to the value of the regulated assets base at the
end of the concession.
Within the arrangements, the Group incurs significant expenditure in relation to the development and main-
tenance of the infrastructure. The construction works are either outsourced by the Group to sub-contractors,
or performed internally. Significant management judgment is involved in accounting for the concession
arrangements under IFRIC 12, including those in respect of the recognition of revenue based on the separa-
tion of construction or upgrade services from operation services.
The concessionaires act as service suppliers (they build, modernize and maintain the distribution network)
and the revenues related to the construction or improvement of infrastructure is recorded according to IFRS
15. This results in revenues and expenditures being recognized in the profit and loss account (related to the
construction and modernization of infrastructure), as well as of a margin resulting from rendering the con-
struction services establised by the Group. The 3% margin applied is determined based on the Group’s expe-
rience in working with external contractors.
(b)
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that may result in a material adjustment in the
subsequent twelve month period is included in the following notes:
Note 6 k) – assumptions regarding the useful life of the intangible assets related to concession arrangements;
Note 6 j) – estimates regarding the useful lives of property, plant and equipment;
Nota 6 b) – assumptions regarding recognition of revenue from supply and distribution of electricity to con-
sumers based on estimates for electricity delivered and for which no reading was performed yet;
Notes 18 and 31 – assumptions and estimates about measurement of the allowance for trade receivables at
the level of expected credit losses (ECL), respectively in determining the loss rates;
Note 24 – assumptions regarding the revalued amount of property, plant and equipment;
Notes 29 and 34 – recognition and measurement of provisions and contingencies;
Note 15 – measurement of defined benefit obligations and other long-term employee benefits: key actua-
rial assumptions.
Management projections din not modify significantly as a result of the COVID-19 pandemic, thus the as-
sumptions related to the impact of COVID-19 are not expected to result in any material adjustments to the
carrying amounts of assets and liabilities within the next twelve month period.
218 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as pos-
sible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the
valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities, which the Group
can access;
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of
the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the
fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
Nota 31 – Instrumente financiare;
Nota 24 – Imobilizari corporale.
5
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the land and
buildings which are measured based on the revaluation model.
6
Significant accounting policies
The Group has consistently applied the following accounting policies to all periods presented in these con-
solidated financial statements. The new amendments to existing standards that are effective starting with 1
January 2020 do not have a significant impact over the Group’s consolidated financial statements.
(a)
(i)
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are included in the consolidation perimeter from the date that
control commences until the date on which control ceases.
(ii)
Loss of control
On the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any non-controlling
interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the
loss of control is recognized in profit or loss. If the Group retains any interest in the previous subsidiary, then
such interest is measured at fair value at the date that control is lost. Subsequently that retained interest is
accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the
level of influence retained.
(iii)
Non-controlling interests
The Group measures any non-controlling interests in the subsidiary at their proportionate share of the sub-
sidiary’s identifiable net assets.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as
equity transactions. Adjustments to non-controlling interests are based on a proportionate amount of the
net assets of the subsidiary.
(iv)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
Unrealized gains arising from transactions with equity-accounted investees are eliminated against the in-
vestment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same
219 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
way as unrealized gains, but only to the extent that there is no evidence of impairment.
(b)
Revenue
The Group recognize the revenues from contracts with customers in accordance with IFRS 15.
Under the standard, revenue is recognized when or as the customer acquires control over the goods or servi-
ces rendered, at the amount which reflects the price at which the Group is expected to be entitled to receive
in exchange of those goods or services. Revenue is recognized at the fair value of the services rendered or
goods delivered, net of VAT, excises or other taxes related to the sale
Supply and distribution of electricity
The revenue from supply and distribution of electricity to consumers is recognized when electricity is deli-
vered to consumers (consumed by consumers), based on meter readings and based on estimates for elec-
tricity delivered and for which no reading was performed yet. The invoicing of electricity sales is performed
on a monthly basis. Monthly electricity invoices are based on meter readings or on estimated consumptions
based on the historical data of each consumer. Electricity supplied to consumers which is not yet billed as
at the reporting date is accrued on the basis of recent average consumption or based on subsequent meter
readings. Differences between estimated and actual amounts are recorded in subsequent periods.
Revenues from electricity distribution and supply also include the cost of green certificates recharged by the
Group to final consumers (see paragraph (h)).
The Group acts in the capacity of an agent in case of transactions as Balancing Responsible Party (“BRP”).
Thus, in its quality as an agent, the Group recognizes revenue for the commission earned in exchange for
facilitating the transfer of goods or services. Any holder of a production/supply/distribution license must be
established as a Balancing Responsible Party or must delegate this responsibility to a Balancing Responsible
Party. By delegating this responsibility to a BRP, there is the benefit of imbalance aggregation in the mea-
ning of Balancing Market cost reduction by comparison with the case where the producer/supplier/distribu-
tor would act itself as a Balancing Responsible Party.
Electrica Furnizare S.A. acts as BRP for a large number of participants, electricity producers as well as elec-
tricity suppliers and distribution operators. For the settlement of imbalances, BRP Electrica is using the
“method of internal redistribution of payments”, ensuring benefits of imbalance aggregation for all the par-
ticipants included in the BRP. BRP Electrica provides the transmission of physical notifications to CNTEE
Transelectrica SA and its role is to balance the differences between the electricity contracted and the electri-
city measured at the level of the entire BRP.
Generation and sale of electricity
The electricity produced by the Group is mainly sold on the Day Ahead Market and the revenue is recognized
when the electricity is injected into the network and is being sold on the market.
Sale of green certificates
Electricity suppliers have a legal obligation to purchase green certificates from producers of electricity from
renewable sources, based on annual targets or quotas set by law, which are applied to the quantity of elec-
tricity purchased and supplied to final customers. Cost of green certificates is invoiced to final customers
separately from the tariffs for electricity.
Electricity producers are entitled by the law in force to receive a certain number of green certificates for each
MWH of electricity produced from renewable sources and injected into the network. The green certificates
can be sold on the spot market, term market or a combination of both. The selling price must fall between
the minimum and maximum values set by Law no. 220/2008 for establishing the system for promoting the
production of electricity from renewable energy sources, republished, with subsequent amendments. Reve-
nue from green certificates is recognized in the profit or loss statement when the green certificates are sold
on the trading market.
Rendering of services
Revenues related to services rendered are recognised in the period in which the services were rendered based
on statements of work performed, regardless of when paid or received, in accordance with the accrual basis.
Sales of goods
Revenue from sale of goods is recognized when the goods are delivered and significant risks and rewards of
ownership of the goods have passed to the buyer.
Service concession arrangement
Revenue related to construction or upgrade services under service concession arrangement is recognised
220 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
based on the stage of completion of the work performed, consistent with the accounting policy on recogni-
sing revenue on construction contracts, as follows:
Contract revenue includes the initial amount agreed plus any variation in contract work, claims and
incentive payments, to the extent that it is probable that they will result in revenue and can be mea-
sured reliably.
If the outcome of a construction contract can be estimated reliably, then contract revenue is recogni-
sed in profit or loss in proportion to the stage of completion of the contract. The stage of completion
is assessed with reference to surveys of work performed. Otherwise, contract revenue is recognized
only to the extent of contract costs incurred that are likely to be recoverable.
Contract expenses are recognized as incurred unless they create an asset related to future contract
activity. An expected loss on a contract is recognised immediately as expense.
(c)
Commissions
The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal
or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements except for
the transactions acting as Balancing Responsible Party. If the Group acts in the capacity of an agent rather
than as the principal in a transaction, then the income recognised is the net amount of commission earned
by the Group.
(d)
Finance income and finance costs
The Group’s finance income and finance costs include:
interest income;
interest expense;
foreign currency gains or losses on financial assets and financial liabilities;
impairment losses recognised on financial assets (other than trade receivables).
Interest income or expense is recognised using the effective interest method.
(e)
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at the exchange rates at the dates
of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency
at the exchange rate at the reporting date, as communicated by the National Bank of Romania. Non-mone-
tary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional
currency at the exchange rate when the fair value was determined. Foreign currency differences are recogni-
sed in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are
not translated to the functional currency.
(f)
(i)
Employee benefits
Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and are expensed as the related ser-
vice is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal
or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
(ii)
Defined benefit plans
The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by esti-
mating the amount of future benefit that employees have earned in the current and prior periods, discoun-
ting that amount.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projec-
ted unit credit method.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, are recogni-
sed immediately in other comprehensive income. The Group determines the net interest expense/(income)
on the net defined benefit liability for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then-net defined benefit liability, taking into
account any changes in the net defined benefit liability during the period as a result of contributions and
benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised
in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group
recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
221 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(iii)
Other long-term employee benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine its present value. Re-measurements are recognised in profit or loss in the period in which they arise.
(iv)
Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those
benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled
wholly within 12 months of the end of the reporting period, then they are discounted.
(g)
Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that
it relates to a business combination or items recognised directly in equity or in other comprehensive income.
(i)
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enac-
ted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.
(ii)
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a bu-
siness combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries, associates and joint arrangements to the
extent that the Group is able to control the timing of the reversal of the temporary differences and it
is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary di-
fferences to the extent that it is probable that future taxable profits will be available against which they can
be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it
has become probable that the future taxable profits will be available against which they can be used.
The Group applies IFRIC 23 „Uncertainty over Income Tax Treatments”. IFRIC 23 clarifies how to apply the
recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments.
In such a circumstance, the Group shall recognise and measure its current or deferred tax asset or liability
applying the requirements in IAS 12 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates determined applying this interpretation.
The Group assesses whether it is probable (more than 50% chances) that a tax authority will accept an un-
certain tax treatment.
Thus, the Group shall reflect the effect of uncertainty for each uncertain tax treatment by using either of the
following methods, depending on which method the entity expects to better predict the resolution of the
uncertainty:
(a)
(b)
the most likely amount - the single most likely amount in a range of possible outcomes. The most
likely amount may better predict the resolution of the uncertainty if the possible outcomes are binary
or are concentrated on one value.
the expected value - the sum of the probability-weighted amounts in a range of possible outcomes.
The expected value may better predict the resolution of the uncertainty if there is a range of possible
outcomes that are neither binary nor concentrated on one value.
222 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(h)
Green certificates
Electricity supply
Electricity suppliers have a legal obligation to purchase green certificates from producers of electricity from
renewable sources, based on annual targets or quotas set by law, which are applied to the quantity of electri-
city purchased and supplied to final customers.
The cost of green certificates is accrued in the profit or loss based on the quantitative quota determined by
the regulator representing the quantity of the green certificates that the Group has to purchase for the year
and based on the price of green certificates acquired on the centralized market. The obligation for covering
the annual acquisition quota is accrued in profit or loss.
Electricity generation
Electricity producers are entitled by the law in force to receive a certain number of green certificates for each
MWH of electricity produced from renewable sources and injected into the network.
Green certificates are recognized at the time of the sale, while the existing balance of green certificates at
period end is disclosed as a contingent asset, which is not recognized, as the sale of green certificates is not
completely under the control of the company.
(i)
Inventories
Inventories consist mainly of spare parts that do not meet the recognition criteria for property, plant and
equipment, consumables, goods for resale, other inventories and the natural gas storage.
Inventories are measured at the lower of cost and net realizable value.
The cost of inventories is based on the weighted average cost method. The cost of inventories includes all the
acquisition costs and other expenses related to bringing the inventories to their current place and condition.
Consumables used for the repairs and maintenance of the electricity network are included in profit and loss
when consumed and presented in “Repairs, maintenance and materials”.
( j)
(i)
Property, plant and equipment
Recognition and measurement
Property, plant and equipment are stated initially at cost, which includes purchase price and other costs
directly attributable to acquisition and bringing the asset to the location and condition necessary for their
intended use.
After initial recognition, land and buildings are measured at revalued amounts less any accumulated depre-
ciation and any accumulated impairment losses since the most recent valuation. The other items of property,
plant and equipment are measured at cost less any accumulated depreciation and any accumulated impair-
ment losses.
Revaluations of land and buildings are made with sufficient regularity to ensure that the carrying amount
does not differ materially from the one that would be determined using the fair value at the end of the re-
porting period.
When a building is revalued, the accumulated depreciation is eliminated against the gross carrying amount
of that item, and the net amount is restated to the revalued amount of the asset.
If significant parts of an item of property, plant and equipment have different useful lives, then they are ac-
counted for as separate items (major components) of property, plant and equipment.
Spare parts, stand-by and servicing equipment are classified as property, plant and equipment if they are
expected to be used during more than one period or can be used only in connection with an item of property,
plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
(ii)
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with
the expenditure will flow to the Group.
223 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(iii)
Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is recognised in profit or
loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reaso-
nably certain that the Group will obtain ownership by the end of the lease term. Land and construction in
progress are not depreciated.
The estimated useful lives of property, plant and equipment are as follows:
Category
Useful lives (years)
Buildings
Equipment
Motor vehicles and office equipment
45-70
3-25
3-10
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(k)
Intangible asset in a service concession arrangement
(i)
Recognition and measurement
The Group recognises an intangible asset arising from a service concession arrangement when it has a right
to charge for use of the concession infrastructure. An intangible asset received as consideration for providing
construction or upgrade services in a service concession arrangement is measured at fair value on initial
recognition with reference to the fair value of the services provided. Subsequent to initial recognition, the
intangible asset is measured at cost, less accumulated amortization and accumulated impairment losses.
(ii) Amortization
The amortization method used is selected on the basis of the expected pattern of consumption of the expec-
ted future economic benefits embodied in the asset, and is applied consistently from period to period, unless
there is a change in the expected pattern of consumption of those future economic benefits. The Group de-
termined that the amortization method that reflects appropriately the expected pattern of consumption of
the expected future economic benefits is correlated with the amortisation of the regulated asset base “RAB”.
(l)
Connection fees
According to art. 25 paragraph (1) of Law no. 123/2012 on electricity and natural gas, as subsequently amended
and supplemented, access to power grids of public interest is a mandatory service provided under regulatory
conditions, which the transmission and system operator as well as the distribution operators must ensure.
At the request of a new or pre-existing customer, the distribution operators are obliged to communicate the
technical and economic conditions for the connection network and to cooperate with the applicant to choo-
se the most advantageous technical and economic solution. Afterwards, a connection contract is concluded
between the distribution operator and the customer at a regulated tariff. The actual construction of the con-
nection installation is carried out by a construction supplier certified by ANRE.
The Group collects cash from customers, which is used only to pay for the construction of the connection sta-
tion, and the Group must then use this asset to connect customers to the network. According to ANRE Order
no. 59/2013, with subsequent amendments, these assets remain in the ownership of the network operator.
The Group recognizes the assets at nil value, net of the amount of the deferred income representing the
contributions from customers. The assets financed from connection fees received from the new users of the
distribution network are not included in the RAB. At the end of the concession contract, the assets built from
the connection tariff will be transferred to the concessionaire free of charge together with the assets part of
RAB.
Starting with 2021, according to ANRE Order no. 160/2020 amending ANRE Order no.59/2013, the connection
installations that are financed by the customers will remain in their ownership and are being exploited by the
network operator. However, for the connection installations of all household consumers and of the non-hou-
sehold with lengths less than 2.5 km, the distribution operator has the obligation to finance them and these
will remain in the ownership of the network operator.
(m)
Other intangible assets
(i)
Recognition and measurement
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
224 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
accumulated amortization and any accumulated impairment losses.
(ii)
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goo-
dwill and brands, is recognised in profit or loss as incurred.
(iii)
Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful lives, and is generally recognised in profit or loss.
The estimated useful lives of software and licenses are 3-5 years.
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(n)
Assets held for sale
Non-current assets or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is
highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value
less costs to sell. Impairment losses on initial classification as held-for-sale and subsequent gains and losses
on remeasurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amorti-
sed or depreciated, and any equity-accounted investee is no longer equity accounted.
(o)
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when
the Group becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of
the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
(i)
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace. All recognised financial assets are measured subsequ-
ently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Financial assets are initially measured at fair value and subsequently at amortized cost in accordance with IFRS 9, as
they are held in a business model to collect contractual cash flows and these cash flows consist solely of payments of
principal and interest on the principal amount outstanding.
The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition
minus the principal reimbursements, plus the cumulative amortization using the effective interest method of any
difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying
amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss allowance.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that
foreign currency and translated at the spot rate at the end of each reporting period.
Loans and receivables
These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, they are measured at amortised cost using the effective interest method. The amortised
cost is reduced by impairment losses.
Loans and receivables comprise trade receivables, cash and cash equivalents and deposits.
225 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Trade receivables
Trade receivables include mainly unsettled invoices issued until reporting date for supply and distribution
of electricity and services, late payment penalties and accrued revenue for electricity delivered and services
rendered until the end of the year, but invoiced after the end of the year.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and deposits with maturities of three mon-
ths or less from the set-up date that are subject to an insignificant risk of changes in their fair value, and are
used by the Group in the management of its short-term commitments.
(ii)
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at
fair value through profit or loss.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii)
held-for-trading, or (iii) valued as at fair value, are measured subsequently at amortised cost using the effecti-
ve interest method. The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments (including all fees and points paid or received that form
an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a
financial liability.
Other financial liabilities include bank borrowings, bank overdrafts, financing for network construction rela-
ted to concession agreements and trade payables.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management
are included as a component of cash and cash equivalents in the statement of cash flows.
(iii)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares,
net of any tax effects, are recognised as a deduction from equity.
Repurchase and reissue of ordinary shares (treasury shares)
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes di-
rectly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares
are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are
sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting
surplus or deficit on the transaction is presented within share premium.
(iv)
Impairment
Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortized cost or at fair value through other comprehensive income. The amount of expected
credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument.
The Group always recognizes lifetime expected credit losses for trade receivables. The expected credit losses
on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss
experience, adjusted for factors that are specific to the debtors, general economic conditions and an assess-
ment of both the current as well as the forecast direction of conditions at the reporting date, including time
value of money where appropriate.
i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recog-
nition, the Group compares the risk of a default occurring on the financial instrument at the reporting date
with the risk of a default occurring on the financial instrument at the date of initial recognition.
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is
more than 90 days past due unless the Group has reasonable and supportable information to demonstrate
that a more lagging default criterion is more appropriate.
226 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(ii) Write-off policy
The Group writes off a financial asset after the finalization of the bankruptcy proceedings. Finan-
cial assets written off may still be subject to enforcement activities under the Group’s recovery
procedures, taking into account legal advice where appropriate. Any recoveries made are recog-
nised in profit or loss.
(iii) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given
default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The as-
sessment of the probability of default and loss given default is based on historical data adjusted
by forward-looking information as described above. As for the exposure at default, for financial
assets, this is represented by the assets’ gross carrying amount at the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractu-
al cash flows that are due to the Group in accordance with the contract and all the cash flows that
the Group expects to receive, discounted at the original effective interest rate.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and rewards
of ownership of the asset to another entity. If the Group neither transfers nor retains substantially
all the risks and rewards of ownership and continues to control the transferred asset, the Group
recognises its retained interest in the asset and an associated liability for amounts it may have
to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also recognises a colla-
teralised borrowing for the proceeds received.
(p)
Revaluation reserve
The difference between the revalued amount and the net carrying amount of property, plant and
equipment is recognised as revaluation reserve included in equity.
If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognised
and accumulated in equity under the heading of revaluation reserve. However, the increase is
recognised in profit and loss to the extent that it reverses a revaluation decrease of the same
amount of the asset previously recognised in profit and loss.
If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised
in profit or loss. However, the decrease is recognized in equity in revaluation reserves if there is
any credit balance existing in the revaluation reserve in respect of that asset.
The revaluation reserve is transferred to retained earnings in an amount corresponding to the use
of the asset (as the asset is depreciated) and upon disposal of the asset.
(q)
Dividends
Dividends are recognized as a deduction from equity in the period in which their distribution is
approved and recognised as a liability to the extent it is unpaid at the reporting date. Dividends
are disclosed in the notes to financial statements when their distribution is proposed after the
reporting date and before the date of the issuance of the financial statements.
(r)
Pre-paid capital contributions in kind from shareholders
These contributions from a shareholder represent pre-paid contributions of land for which the
Company obtained title deeds in respect of future issuance of shares. The amounts recorded are
based on the fair value of the land.
(s)
Provisions
A provision is recognised if, as a result of a past event, the Group has a present, legal or construc-
tive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognised
as finance cost.
A provision for restructuring is recognised when the Group has approved a detailed and formal
restructuring plan, and the restructuring either has commenced or has been announced publi-
cly. Future operating losses are not provided for.
227 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(t)
Contingent assets and liabilities
A contingent liability is:
(a)
a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control
of the Group; or
a present obligation that arises from past events that is not recognised because:
(b)
i. it is not probable that an outflow of resources embodying economic benefits will be required
to settle the obligation; or
ii. the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognized in the Group’s financial statements, but disclosed unless the possi-
bility of an outflow of resources embodying economic benefits is remote.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control
of the Group.
A contingent asset is not recognized in the Group’s financial statements, but disclosed when an inflow of
economic benefits is probable.
(u)
Leases
(i) The Group as lessee
The Group applies IFRS 16 „Leases”.
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recogni-
ses a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is
the lessee, except for short-term leases (with a lease term of 12 months or less) and leases of low value assets
(of less than USD 5,000). For these leases, the Group recognises the lease payments as an operating expense
on a straight-line basis over the term of the lease unless another systematic basis is more representative of
the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the com-
mencement date, discounted by using the default rate in the lease. If this rate cannot be readily determined,
the Group uses its incremental borrowing rate.
The lease liability is presented as a separate line in the consolidated statement of financial position. The lease
liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use
asset) whenever:
the lease term has changed or there is a significant event or change in circumstances resulting in a
change in the assessment of exercise of a purchase option, in which case the lease liability is remea-
sured by discounting the revised lease payments using a revised discount rate;
the lease payments change due to changes in an index or rate or a change in expected payment un-
der a guaranteed residual value, in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the lease payments change is due
to a change in a floating interest rate, in which case a revised discount rate is used);
a lease contract is modified and the lease modification is not accounted for as a separate lease, in
which case the lease liability is remeasured based on the lease term of the modified lease by discoun-
ting the revised lease payments using a revised discount rate at the effective date of the modification.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the under-
lying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset
reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depre-
ciated over the useful life of the underlying asset. The depreciation starts at the commencement date
of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of financial position.
(ii) Rental income
Rental income from property, plant and equipment other than investment property is recognised as Other
income. Rental income is recognised on a straight-line basis over the term of the lease.
(v)
Segment reporting
Segment results that are reported to the Company’s Board of Directors (the chief operating decision maker)
228 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly deferred taxes.
(w)
Subsequent events
Events occurring after the reporting date 31 December 2020, which provide additional information about
conditions prevailing at the reporting date (adjusting events) are reflected in the consolidated financial sta-
tements. Events occurring after the reporting date that provide information on events that occurred after the
reporting date (non-adjusting events), when material, are disclosed in the notes to the consolidated financial
statements. When the going concern assumption is no longer appropriate at or after the reporting period,
the financial statements are not prepared on a going concern basis.
7
Adoption of new and revised standards and interpretations
Initial application of new amendments to the existing standards effective for the current reporting pe-
riod
The following amendments to the existing standards issued by the International Accounting Standards Board
(IASB) and adopted by the EU are effective for the current reporting period:
Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in
Accounting Estimates and Errors” - Definition of Material - adopted by the EU on 29 November 2019 (effec-
tive for annual periods beginning on or after 1 January 2020);
Amendments to IFRS 3 “Business Combinations” - Definition of a Business - adopted by the EU on 21 April
2020 (effective for business combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on
or after the beginning of that period);
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measure-
ment” and IFRS 7 “Financial Instruments: Disclosures” - Interest Rate Benchmark Reform - adopted by the
EU on 15 January 2020 (effective for annual periods beginning on or after 1 January 2020);
Amendments to IFRS 16 “Leases” - Covid-19 - Related Rent Concessions - adopted by the EU on 9 October
2020 and effective at the latest, as from 1 June 2020 for financial years starting on or after 1 January 2020;
Amendments to References to the Conceptual Framework in IFRS Standards - adopted by the EU on 29
November 2019 (effective for annual periods beginning on or after 1 January 2020).
The adoption of new amendments to the existing standards has not led to any material changes in the Group’s
consolidated financial statements.
Standards and amendments to the existing standards issued by IASB and adopted by the EU but not yet
effective
At the date of authorization of these consolidated financial statements, the following amendments to the existing
standards were issued by IASB and adopted by the EU and which are not yet effective:
Amendments to IFRS 4 Insurance Contracts “Extension of the Temporary Exemption from Applying IFRS
9” - adopted by the EU on 16 December 2020 (the expiry date for the temporary exemption from IFRS 9 was
extended from 1 January 2021 to annual periods beginning on or after 1 January 2023);
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measure-
ment”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases” - In-
terest Rate Benchmark Reform - Phase 2 adopted by the EU on 13 January 2021 (effective for annual periods
beginning on or after 1 January 2021);
The Group has elected not to adopt the amendments to existing standards in advance of their effective dates. The
Group anticipates that the adoption of these amendments to existing standards will have no material impact on
the financial statements of the Group in the period of initial application.
New standards and amendments to the existing standards issued by IASB but not yet adopted by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Ac-
counting Standards Board (IASB) except for the following new standards and amendments to the existing standar-
ds, which were not endorsed for use in EU as at the date of publication of these consolidated financial statements
(the effective dates stated below is for IFRS as issued by IASB):
IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January 2016) -
the European Commission has decided not to launch the endorsement process of this interim standard and
to wait for the final standard;
IFRS 17 “Insurance Contracts” including amendments to IFRS 17 (effective for annual periods beginning on
or after 1 January 2023);
Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current or Non-
Current (effective for annual periods beginning on or after 1 January 2023);
Amendments to IAS 16 “Property, Plant and Equipment” - Proceeds before Intended Use (effective for annu-
al periods beginning on or after 1 January 2022);
229 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Onerous Contracts - Cost
of Fulfilling a Contract (effective for annual periods beginning on or after 1 January 2022);
Amendments to IFRS 3 “Business Combinations” - Reference to the Conceptual Framework with amend-
ments to IFRS 3 (effective for annual periods beginning on or after 1 January 2022);
Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and
Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and
further amendments (effective date deferred indefinitely until the research project on the equity method
has been concluded);
Amendments to various standards due to “Improvements to IFRSs (cycle 2018 -2020)” resulting from the
annual improvement project of IFRS (IFRS 1, IFRS 9, IFRS 16 and IAS 41) primarily with a view to removing
inconsistencies and clarifying wording (The amendments to IFRS 1, IFRS 9 and IAS 41 are effective for annual
periods beginning on or after 1 January 2022. The amendment to IFRS 16 only regards an illustrative example,
so no effective date is stated.).
The Group anticipates that the adoption of these new standards and amendments to the existing standards
will have no material impact on the consolidated financial statements of the Group in the period of initial
application.
8
Operating segments
(a)
Basis for segmentation
The following summary describes the operations of each reportable segment:
Reportable segments
Operations
Electricity and natural gas
supply
Buying and supplying electricity and natural gas to final consumers (includes
Electrica Furnizare S.A.)
Electricity distribution
Electricity distribution service which includes the former Societatea de Dis-
tributie a Energiei Electrice Transilvania Sud S.A., Societatea de Distributie
a Energiei Electrice Transilvania Nord S.A. and Societatea de Distributie a
Energiei Electrice Muntenia Nord S.A., currently Distributie Energie Electrica
Romania S.A. (that covers the all three distribution areas: Transilvania Sud,
Transilvania Nord and Muntenia Nord), Electrica Serv S.A. and the activity
performed by Societatea Energetica Electrica S.A. within the distribution ne-
twork until June 2020
Electricity generation
Production of electricity from renewable sources (photovoltaic panels) (inclu-
des Electrica Energie Verde 1 SRL)
External electricity network
maintenance
Repairs, maintenance and other services for electricity networks owned by
other distributors (includes Servicii Energetice Muntenia S.A. until 30 Novem-
ber 2020 and part of Electrica Serv S.A. onwards)
Headquarter
Includes corporate activities at parent company level
The Board of Directors of the Company reviews management reports of each segment. Segment earnings before
interest, tax, depreciation and amortisation (“EBITDA”) is used to measure performance because management
believes that such information is one of the most relevant in evaluating the results of the segments.
There are varying levels of integration between the Electricity supply, Electricity distribution and External electricity
network maintenance segments. This integration includes energy distribution, shared electricity network mainte-
nance services, respectively. Inter-segment pricing policy is determined on an arm’s length basis.
230 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(b)
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231 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
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ELECTRICA S.A.
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SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
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233 | 2020 ANNUAL REPORT
ELECTRICA S.A.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
The breakdown of the Electricity distribution reportable segment is as follows:
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234 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(c)
Reconciliation of information on reportable segments to consolidated amounts
Total assets
Total assets for reportable segments
Elimination of inter-segment assets
Unallocated amounts
Consolidated total assets
Trade and other receivables
Trade and other receivables for reportable segments
Elimination of inter-segment trade and other receivables
Consolidated trade and other receivables
Trade and other payables and short term employee benefits
Trade and other payables and short term employee benefits for
reportable segments
Elimination of inter-segment trade and other payables and short
term employee benefits
Consolidated trade and other payables and short term employee
benefits
9
Revenue
Electricity distribution and supply
Supply of natural gas
Construction revenue related to concession agreements (Note 25)
Repairs, maintenance and other services rendered
Proceeds from sale of green certificates
Re-connection fees
Sales of merchandise
Total
31 December
2020
31 December
2019
9,645,703
9,165,632
(1,603,551)
(1,368,247)
19,666
19,887
8,061,818
7,817,272
1,596,251
(534,016)
1,062,235
1,216,981
(298,499)
918,482
1,489,755
1,344,183
(515,449)
(270,811)
974,306
1,073,372
2020
2019
5,697,668
5,375,107
42,362
696,246
54,472
3,163
2,673
4,516
63,329
774,389
58,272
-
7,173
1,564
6,501,100
6,279,834
In respect to the timing of the revenue recognition, most of the Group’s services provided are transferred
to the customer over time, only a small part amounting to RON 2,131 thousand (2019: RON 2,090 thousand)
being transferred at a point in time (e.g. metering services provided by the distribution companies, providing
periodic data analysis to the customer for certain taxes collected on behalf of them).
10
Electricity and natural gas purchased
Electricity purchased
Green certificates purchased
Natural gas purchased
Total
2020
2019
3,298,325
3,273,474
557,222
50,158
518,379
67,764
3,905,705
3,859,617
The cost of electricity and natural gas purchased includes the cost of the green certificates purchased by the
supply subsidiary which has a legal obligation to purchase green certificates from producers of electricity
from renewable sources, based on annual targets or quotas set by law, which are applied to the quantity of
electricity purchased and supplied to final customers. The cost of green certificates is then invoiced to final
customers separately from electricity tariffs.
235 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
11
Other income and expenses
(a)
Other income
Rental income
Late payment penalties from customers
Revenues from indemnities
Revenue from notices
Other
Total
2020
2019
93,753
26,872
17,153
6,018
21,626
165,422
103,677
24,475
-
12,587
19,292
160,031
Rental income refers mainly to the rental of the electricity poles by the distribution subsidiary to telecom
operators.
Revenues from indemnities consist mainly of the amount of RON 12,827 thousand collected in 2020 by Elec-
trica S.A. from the National Agency of Fiscal Administration (“NAFA”) as a result of final civil sentences obtai-
ned in Court, which ordered the cancellation of certain enforceable titles as well as fiscal decisions (please
refer to Note 34). As at 31 December 2020, the amount was entirely collected from the NAFA. Furthermore,
during the year, the supply subsidiary Electrica Furnizare S.A. benefited from the cancellation of ancillary fis-
cal obligations in the amount of RON 4,326 thousand as a result of the application of the facilities stipulated
by the Government Ordinance no. 6/2019.
(b)
Other operating expenses
Other taxes and duties
Utilities
Printing and distribution of invoices services
IT services
Security services
Meters reading expenses
Cash collection services
Call centre services
Expenses with services from subcontractors
Postage and telecommunication services
Cleaning expenses
Cost of merchandise sold
Rent
Marketing expenses for the supply activity
Sponsorships and donations
Expenses with clients notified
Other
Total
2020
2019
42,388
40,753
38,720
29,106
27,012
19,514
16,079
10,678
7,989
7,307
5,145
4,994
4,992
4,859
3,611
1,224
60,733
325,104
101,851
40,787
36,943
27,149
27,220
25,867
16,470
12,654
5,793
11,757
4,526
2,079
18,036
1,257
1,692
5,917
41,039
381,037
According to ANRE Order no. 1 published on 15 January 2020 the monetary contribution charged by ANRE
to holders of licences in 2020 is of 0.2% (as compared to 2% in 2019), applied to the turnover obtained from
licensed activities. This led to a decrease in contributions charged by ANRE for both distribution and supply
subsidiaries, from RON 55,907 thousand for the year 2019 to RON 10,622 thousand for the year 2020 presented
as Other taxes and duties.
The decrease in rent expenses is mainly due to lower optical fiber leases contracted from telecom suppliers.
236 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
12
Net finance result
Interest income
Other finance income
Total finance income
Interest expense
Interest cost for employee benefits (Note 15)
Foreign exchange losses, net
Total finance costs
Net finance cost
13
Earnings per share
2020
2019
8,962
689
9,651
(20,710)
(5,883)
(143)
(26,736)
(17,085)
13,132
986
14,118
(12,893)
(7,764)
(1,640)
(22,297)
(8,179)
The calculation of basic and diluted earnings per share has been based on the following profit attributable to
Company’s shareholders and weighted-average number of ordinary shares outstanding:
Profit attributable to shareholders
Profit for the year attributable to the owners of the Company
Profit attributable to shareholders of the Company
Weighted-average number of ordinary shares (in number of shares)
2020
2019
387,543
387,543
206,677
206,677
2020
2019
Issued ordinary shares at 1 January (Note 26)
339,553,004
339,049,336
Effect of shares issued in December
-
20,986
Weighted-average number of ordinary shares at 31 December
339,553,004
339,070,322
For the calculation of basic and diluted earnings per share, treasury shares (6,890,593 shares) were not trea-
ted as outstanding ordinary shares and were deducted from the number of issued ordinary shares.
Earnings per share
Basic and diluted earnings per share (RON)
14
Short-term employee benefits
Personnel payables
Current portion of defined benefit liability and other employee
benefits
Social security charges
Tax on salaries
Total
2020
2019
1.14
0.61
31 December
2020
31 December
2019
52,573
10,420
24,531
4,768
92,292
47,796
13,821
21,808
4,432
87,857
For details of the related employee benefit expenses, see Note 16.
In Romania, all employers and employees, as well as other persons, are contributors to the State social secu-
rity system. The social security system covers pensions, child benefit, temporary inability to work situations,
risks of work accidents and professional diseases and other social assistance services, redundancy payments
and incentives granted to employers for creating new jobs.
237 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
15
Post-employment and other long-term employee benefits
The Group provides cash benefits to employees depending on seniority in the form of jubilee bonuses and
depending on the years of service at retirement in the form of retirement bonuses. The post-employment
and other long-term employee benefits are stipulated in the Collective Labour Contracts.
Also, in accordance with Government Decisions no. 1041/2003 and no. 1461/2003, the Group provides also, as
benefit in kind, free of charge electricity in quantity of KWh 1,200 per year to employees who retired before
30 September 2000 from the companies that belonged to the former Minister of Energy.
From all the Collective Labour Contracts of the Group companies the benefit in kind consisting of free of
charge electricity granted to employees who retired was excluded. This benefit was stipulated in the Collec-
tive Labour Contracts valid until 31 December 2019 for all subsidiaries and until 31 March 2020 for Electrica SA.
Thus, the Group management considers that legally, the companies belonging to the Electrica Group have
the obligation to continue to grant the free quota of electricity to the persons retired before 30 September
2000 and who fulfil the conditions stipulated in the Government Decision no. 1041/2003, this right resulting
from the stipulations of the Government Decision no. 1041/2003. The free of charge electricity benefit gran-
ted to employees who retired from the Group after 30 September 2000 or who will retire in the future from
the Group is no longer granted starting with 1 January 2020 in case of all subsidiaries and 1 April 2020 in case
of Electrica SA, due to the fact that the aforementioned benefit was expressly excluded from the Collective
Labour Contracts.
In the same time, in order to compensate for the exclusion of the benefit in the form of free of charge electri-
city, as per the new Collective Labour Contracts in force starting 1 January 2020, respectively 1 April 2020, the
retirement bonus increased by 1 gross monthly base salary on all three levels of seniority.
In 2020 and 2019, employee benefit obligations were computed by an independent actuary using the projec-
ted unit credit method with benefits calculated proportionally to the period of service.
Defined benefit liability
Other long-term employee benefits
Total
- Current portion*
- Non-current portion
*included in Personnel payables in Note 14
31 December
2020
31 December
2019
68,101
86,195
154,296
10,420
143,876
59,698
80,547
140,245
13,821
126,424
(i)
Movement in the defined benefit liability and other long-term employee benefits
The following tables show a reconciliation from the opening balances to the closing balances for the defined
benefit liability and other long-term employee benefits and its components. There are no plan assets.
Defined benefit liability
2020
2019
Balance at 1 January
Included in profit or loss
Current service cost
Past service cost
Interest cost
Included in other comprehensive income
Remeasurements loss/(gain)
- Actuarial loss/(gain)
Other
Benefits paid
Balance at 31 December
238 | 2020 ANNUAL REPORT
ELECTRICA S.A.
59,698
112,847
4,519
(346)
2,493
1,243
(52,647)
3,765
7,152
(291)
(5,415)
68,101
(5,219)
59,698
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Other long-term employee benefits
2020
2019
Balance at 1 January
Included in profit or loss
Current service cost
Past service cost
Actuarial loss/(gain)
Interest cost
Other
Benefits paid
Balance at 31 December
80,547
84,812
8,482
767
1,645
3,390
(8,636)
86,195
2,522
-
(5,382)
3,999
(5,404)
80,547
Defined benefits refer to the retirement bonuses granted according to the seniority within the Group and
other long-term benefits refer to the jubilee bonuses granted for seniority.
(ii)
Actuarial assumptions
The following were the main actuarial assumptions at each reporting date:
(a) Macroeconomic assumptions:
inflation. The actuary used information from the National Commission for Strategy and Prognosis:
Year
Valuation date
31 December 2020
Valuation date
31 December 2019
2020
2021
2022
2023
2024+
-
2.5%
2.5%
2.5%
2.5%
2.6%
2.5%
2.5%
2.5%
2.5%
the discount rate used is based on the yield of the Romanian Government bonds at the reporting date,
therefore the weighted average discount rate is 3.3% for the year 2020 (2019: 4.49%);
the electricity price per KWh used for 2021 is RON 0.525110 and for future periods is adjusted with in-
flation (2019: RON/KWh 0.46506);
the mortality rate published by the National Institute of Statistics was adjusted to 90% to approximate
the mortality rates by generations;
taxes and social charges are those in force as at the reporting date.
(b)
Group specific assumptions:
For the year 2021 were taken into consideration the salaries’ growth rates approved through the
agreements signed with the Trade Unions. Starting with the year 2022, salaries’ growth is forecasted
at the inflation rate;
Employees’ turnover: based on historical data;
Jubilee and retirement bonuses granted based on seniority as per the collective labour contracts, as
follows:
Jubilee bonus based on years of service in the Group
Seniority
20 years
30 years
35 years
40 years
45 years
No of gross monthly base salaries
31 December 2020
31 December 2019
1
2
3
4
5
1
2
3
4
5
239 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Retirement bonus based on years of service in the Group
Seniority
Between 8 and 10 years
Between 10 and 25 years
More than 25 years
No of gross monthly base salaries
31 December 2020
31 December 2019
2
3
4
2
3
4
The Group provides also as benefit free of charge electricity in quantity of kWh 1,200 per year to employees
who retired before 30 September 2000 who fulfill the conditions stipulated in the Government Decision no.
1041/2003. In the event of pensioner’s death, the husband/wife is entitled to receive the same benefit until he/
she will marry again.
Termination benefits
(a)
Termination benefits for individual lay-offs at the Group’s initiative
In accordance with the Collective Labour Contracts concluded between the Group and the Unions, when
individual labour contract are terminated at the Group’s initiative, the Group pays termination benefits to the
employees depending on their period of service, as follows:
Period of service
No of gross monthly base salaries
1 - 2 years
2 - 5 years
5 - 10 years
10 - 20 years
More than 20 years
2
3
4
5
8
(b)
Termination benefits for collective lay-offs at the Group’s initiative
For collective lay-offs, according to the Collective Labour Contracts, the Group pays termination benefits to
the employees depending on their period of service, as follows:
Period of service
No of gross monthly base salaries
1 - 3 years
3 - 5 years
5 - 10 years
10 - 20 years
More than 20 years
3
6
7
11
16
The above mentioned stipulations do not apply to employees with individual labour contract concluded for a
determined period. The above stipulations do not apply to employees that obtained other higher cumulative
salary compensation rights, provided by legal regulations regarding the Group’s reorganization and restruc-
turing. Employees who are re-employed within the Group after lay-off are not entitled to the above-mentio-
ned benefits.
The financial statements do not include any provision for liabilities relating to compensation payments be-
cause there is no present obligation in this regard.
(c)
Termination benefits for voluntary redundancies
In accordance with the Agreements signed between the Group and the Unions and the Addendums to
Collective Labour Contracts, in case the individual labour contract is terminated as voluntary redundancy
from the employee, the Group pays termination benefits depending on the period to reach the standard re-
tirement age, the period of service in the Group and the seniority. The number of gross monthly base salaries
paid as termination benefits vary between 5 and 23.
240 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(iii) Sensitivity analysis
Significant actuarial assumptions for the determination of the benefit obligation are the discount rate, ex-
pected salary increase and retirement age. The sensitivity analysis below has been determined based on re-
asonably possible changes of the respective assumptions occurring at the end of the reporting period, while
holding all other assumptions constant.
Discount rate
Salary growth
Increase by 1%
Decrease by 1%
2020
(13,216)
13,561
2019
(11,471)
11,784
2020
13,216
2019
11,471
(13,561)
(11,784)
Increase by 1 year
Decrease by 1 year
Retirement age
2020
3,367
2019
3,101
2020
(3,367)
2019
(3,101)
The sensitivity analysis presented above may not be representative of the actual change in the benefit obli-
gation as it is unlikely that the changes in assumptions would occur in isolation of one another as some of the
assumptions may be correlated. In presenting the above sensitivity analysis, the present value of the benefit
obligation has been calculated using the projected unit credit method at the end of the reporting period,
which is the same as that applied in calculating the benefit obligation liability recognized in the statement
of financial position.
16
Employee benefit expenses
Average number of employees
Number of employees at 31 December
Wages and salaries*
Social security contributions
Meal tickets
Termination benefits
Total employees benefits for the year
Capitalised employee benefit expenses
Total employees benefits in the statement of profit or loss
2020
2019
8,053
8,126
8,043
8,292
2020
2019
738,009
610,580
17,133
27,080
25,751
807,973
(33,472)
774,501
14,782
23,774
2,277
651,413
(31,221)
620,192
*Wages and salaries includes also current service cost, defined benefits and other long-term employee benefits.
Management remuneration is disclosed in Note 33 b) Related parties.
17
Income taxes
In determining the amount of current and deferred tax, the Group takes into account the impact of uncer-
tain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates
and assumptions and may involve a series of judgments about future events. The Group considers that the
accounting records for taxes due are adequate for all open tax years, based on assessment made by mana-
gement taking into account various factors, including the interpretation of tax legislation and previous expe-
rience. New information may become available that causes the Group to change its judgment regarding the
adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period when
such a determination is made.
(i)
Amounts recognised in profit or loss
Current tax expense
Deferred tax expense/(benefit)
Total expense related to income tax
2020
2019
53,928
838
54,766
25,099
(5,733)
19,366
241 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(ii)
Amounts recognised in other comprehensive income
2020
2019
Before tax
Tax (expense)/
benefit
Net of tax Before tax
Tax
benefit
Net of
tax
Revaluation of land,
land improvements and
buildings
Remeasurement of
defined benefit liability
Total
tax
(7,931)
35,892
(7,152)
36,671
572
(6,580)
(7,359)
29,312
-
291
291
-
-
502
502
793
793
(iii)
Reconciliation of effective tax rate
Profit before tax
442,309
226,043
2020
2019
Tax using Company’s domestic tax rate
Non-deductible expenses
Non-taxable income
Deduction of legal reserves
Other tax effects
Recognition of tax effect of previously
unrecognised tax losses
Income tax expense
(iv)
Movement in deferred tax balances
2020
Net balance
at 1 January
2020
Recognised
in profit or
loss
16%
6%
-5%
-1%
0%
-4%
12%
70,769
27,453
16%
10%
36,167
22,183
(20,537)
-10%
(21,907)
(3,244)
(402)
(19,273)
54,766
-1%
-5%
-1%
9%
(3,167)
(11,343)
(2,567)
19,366
Balance at 31 December 2020
Acqui-
sition of
subsidia-
ries*
Net
De-
ferred
tax
assets
Deferred
tax
liabilities
Recog-
nised in
other
compre-
hensive
income
Property, plant
and equip-
ment
Intangible
assets related
to concession
agreements
Employee
benefits
Impairment of
trade receiva-
bles
Tax loss
carried
forward
35,828
(4,876)
7,931
2,874
41,757
162,923
8,789
-
(20,203)
(1,828)
(572)
(19,402)
(1,457)
-
-
-
171,712
(22,603)
(22,603)
(20,859)
(20,859)
-
-
41,757
171,712
-
-
-
-
-
-
-
Other items
(3,936)
(6,959)
395
(185)
(1,201)
(7,765)
(7,765)
-
(4,121)
(4,121)
148,251
838
7,359
1,673
158,121
(55,348)
213,469
35,682
(35,682)
(19,666)
177,787
Tax liabilities/
(assets) befo-
re set-off
Set off of tax
Net tax
liabilities/
(assets)
*see Note 32
242 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Net ba-
lance at 1
January
2019
Recognised
in profit or
loss
Recognised
in other com-
prehensive
income
Acquisition
of subsidia-
ries*
Deferred tax
assets
Deferred
tax
liabilities
Balance at 31 December 2019
46,219
(10,391)
154,489
8,434
-
-
35,828
162,923
-
-
35,828
162,923
2019
Property, plant and
equipment
Intangible assets
related to concessi-
on agreements
Employee benefits
(17,228)
(2,473)
(502)
(20,203)
(20,203)
Impairment of trade
receivables
(30,193)
10,791
Tax loss carried
forward
(2,710)
(4,249)
Other items
3,909
(7,845)
-
-
-
(19,402)
(19,402)
(6,959)
(3,936)
(6,959)
(3,936)
-
-
-
-
Tax liabilities/(as-
sets) before set-off
Set off of tax
Net tax liabilities/
(assets)
154,486
(5,733)
(502)
148,251
(50,500)
198,751
30,613
(30,613)
(19,887)
168,138
(v)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the certain tax losses generated by the Company,
because it is not probable that future taxable profit will be available against which the entity generating it
can use the benefits therefrom.
Tax losses
2020
2019
371,426
485,358
In 2019, the Company has considered the previously non-deductible bad debt allowance for Oltchim as de-
ductible, as the client entered into bankruptcy proceedings in 2019, thus recording a tax loss of RON 485,358
thousand for which no deferred tax asset was recognised (amounting to RON 77,657 thousand).
18
Trade receivables
Trade receivables, gross
Bad debt allowance
Total trade receivables, net
31 December 2020
31 December 2019
1,979,348
(949,573)
1,029,775
1,912,119
(1,022,140)
889,979
Trade receivables from related parties are presented in Note 33.
Trade receivables, gross, comprise:
Electricity distribution and supply
Late payment penalties receivable
Customers with judicial execution titles
Repairs, maintenance and other services
Other
Total trade receivables, gross
31 December 2020
31 December 2019
1,026,525
84,729
760,229
12,624
95,241
1,979,348
858,840
83,955
865,770
15,206
88,348
1,912,119
The reconciliation between the opening balances and the closing balances of the impairment for trade recei-
vables in the form of lifetime expected credit losses is as follows:
243 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Lifetime expected credit losses
2020
2019
Balance as at 1 January
Loss allowance recognized
Decrease in loss allowance
Amounts written off
Balance as at 31 December
1,022,140
1,025,714
60,773
(121,176)
(12,164)
949,573
39,023
(33,652)
(8,945)
1,022,140
The aging of trade receivables is presented in Note 31.
Loss allowances are determined according to IFRS 9 “Financial instruments” based on “expected credit loss”
model. In applying IFRS 9, the Group has identified 5 clusters of customers based on shared risk characteris-
tics: 3 separate clusters for the distribution subsidiaries and 2 clusters (households and non-households) for
the supply subsidiary.
A significant part of the bad debt allowances refers to clients in litigation, insolvency or bankruptcy procedu-
res, many of them being older than five years. The Group will derecognize these receivables together with the
related allowances after the finalization of the bankruptcy process. These receivables were treated separately
in computing the allowance according to IFRS 9.
Amounts written off refer mainly to clients for which the bankruptcy procedure was finalized.
Oltchim (a state-controlled company) was an important customer of Electrica S.A. until January 2012, when
the Company transferred the contract to Electrica Furnizare S.A.. In January 2013, Oltchim entered into insol-
vency procedures and subsequently in May 2019 started the bankruptcy procedures. Due to the uncertainties
regarding the recoverability of the amounts owed by this customer, the Group recognized in prior years a
bad debt allowance for the entire amount receivable. During 2020, the Group adjusted the uncollected VAT
in amount of RON 105,042 thousand related to the doubtful receivables from Oltchim, based on the sentence
of starting the bankruptcy procedures and the provisions of art. 287 of the Fiscal Code. As the entire amount
was recovered during 2020, by offsetting the VAT positions to be recovered with the payment position at the
level of the VAT group to which the companies in the Electrica Group belong, the bad debt allowance was
reversed with the same amount.
In the light of the impact generated by COVID-19 pandemic, the Group has identified the probability of defa-
ult, taking into account a number of factors to ensure that the classification to default is done not only based
on the historical expected credit loss but also based on circumstances according to which economic losses
are likely to occur. IFRS 9 is based on a set of principles that, by nature are not mechanical and require the
application of a certain degree of professional judgement. In applying IFRS 9 as of 31 December 2020, the
Group has considered all the information available without undue costs (including forward looking informa-
tion) that may affect the credit risk of its receivables since original recognition, thus recording a bad debt
allowance in amount of RON 60,773 thousand.
19
Deposits with maturity date more than three months
Deposits with maturity of more than three months
Total deposits with maturity of more than three months
-
-
66,471
66,471
31 December 2020
31 December 2019
As at 31 December 2020, the Group no longer has deposits with original maturity of more than three months. As at
31 December 2019, deposits with original maturity of more than three months have an average interest rate of 2.6%.
20
Other receivables
VAT receivable
Interest receivable
Other receivables
Lifetime expected credit losses
Total other receivables, net
31 December 2020
31 December 2019
12,565
77
40,782
(20,964)
32,460
12,631
159
38,441
(22,728)
28,503
Other receivables include mainly guarantees and receivables to be recovered from state authorities in res-
pect to medical leave indemnities.
244 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
The reconciliation between the opening balances and the closing balances of the impairment for other re-
ceivables is as follows:
Loss allowance
2020
2019
Balance as at 1 January
Loss allowance recognized
Decrease in loss allowance
Amounts written off
Balance as at 31 December
21
Cash and cash equivalents
22,728
237
(2,001)
-
23,159
-
(431)
-
20,964
22,728
Bank current accounts
Call deposits
Cash in hand
Total cash and cash equivalents in the
consolidated statement of financial position
Overdrafts used for cash management purposes
Total cash and cash equivalents in the consolida-
ted statement of cash flows
Restricted cash – long-term
Restricted cash – short-term
31 December 2020
31 December 2019
179,362
391,514
53
570,929
(164,966)
405,963
-
320,000
122,033
485,325
148
607,506
(350,624)
256,882
320,000
-
As at 31 December 2020, Electrica SA has collateral deposits at BRD - Groupe Societe Generale as guarantees
for the long term borrowings received from BRD – Groupe Societe Generale by Societatea de Distributie a
Energiei Electrice Transilvania Sud S.A., Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.
and Societatea de Distributie a Energiei Electrice Muntenia Nord S.A. in amount of RON 320,000 thousand
(31 December 2019: RON 320,000 thousand). As the long term borrowings are repayble on 16 October 2021
(see also Note 30), the amount of the collateral deposits as at 31 December 2020 of RON 320,000 thousand is
presented in the consolidated statement of financial position as short-term restricted cash.
The Group has overdrafts from various banks (ING Bank N.V., Raiffeisen Bank, Banca Comerciala Romana,
Banca Transilvania, BNP Paribas and Intesa Sanpaolo Bank) with a total overdraft limit of up to RON 1,155,000
thousand and maturities ranging from January 2021 to January 2022. The overdraft facilities are used for fi-
nancing the current activity. The outstanding balance of the overdraft facilities as at 31 December 2020 is of
RON 164,966 thousand (31 December 2019: RON 350,624).
The collateral for these overdrafts is presented in Note 35 c).
The following information is relevant in the context of the consolidated statement of cash flows. Non-cash
activity includes:
set-off between trade receivables and trade payables of RON 9,734 thousand in 2020 (2019: RON 47,329
thousand).
22
Assets held for sale
Electrica Serv S.A.’s Board of Directors approved the selling plan of part of their available assets and accor-
dingly, those assets were presented as Assets held for sale, being expected to be sold in the following period.
During 2020 were sold a number of 8 assets in amount RON 1,735 thousand.
The assets held for sale comprise:
Land and buildings
Total assets held for sale
31 December
2020
31 December
2019
15,476
15,476
17,027
17,027
245 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
23
Inventories
As at 31 December 2020 and 31 December 2019, inventories are as follows:
Spare parts
Consumables and other materials
Natural gas
Other inventories
Allowance for impairment of inventories
Total inventories
31 December 2020
31 December 2019
40,582
22,672
1,725
23,868
(18,781)
70,066
42,771
24,723
7,118
19,049
(19,291)
74,370
Inventories include mainly spare parts, consumables and the natural gas storage (applicable only for the
supply subsidiary) that was set up according to ANRE’s regulations. Spare parts refer mainly to items such as
cables, conductors, sockets, switches which are used for the distribution network.
According to ANRE Decision no. 675/23.04.2020, Electrica Furnizare S.A., as holder of a license for the supply
of natural gas, had the obligation to store a minimum level of gas in the underground storage deposits until
31 October 2020. Thus, as at 31 December 2020, the remaining quantity of natural gas stored is of MWh 20,307
(31 December 2019: MWh 57,030), amounting to RON 2,762 thousand (31 December 2019: RON 7,118 thousand).
The natural gas in storage is valued at net realizable value, an allowance for impairment of RON 2,698 thou-
sand being recorded in this respect during 2020.
24
Property, plant and equipment
The movements in property, plant and equipment in 2020 and 2019 are as follows:
Land
and land
improve-
ments
Buildings
Equipment
Vehicles,
furniture
and office
equipment
Construction in
progress
Total
258,327
190,655
268,734
90,443
45,966
854,125
251
-
-
(25,386)
70
1,281
-
-
6,390
1,559
4,551
12,821
13,881
2,907
(18,069)
-
-
-
-
-
(4,503)
(4,503)
-
(25,386)
Gross carrying amount
Balance at 1 January
2019
Additions
Transfer from constructi-
on in progress
Transfer to intangible
assets
Transfer to intangible
assets related to conces-
sion agreements
Disposals
(2,467)
(3,512)
(1,831)
(1,485)
(203)
(9,498)
Reclassification from
Assets held for sale (Note
22)
Balance at 31 December
2019
Additions
Transfer from constructi-
on in progress
Transfer to intangible
assets related to conces-
sion agreements
1,661
4,234
-
-
-
5,895
232,386
192,728
287,174
93,424
27,742
833,454
85
-
157
1,269
1,997
1,259
2,986
6,484
-
622
(1,891)
-
(1,442)
-
(213,590)
-
(2,567)
(217,599)
Disposals
(920)
(1,471)
(11,419)
(1,048)
(45)
(14,903)
Revaluation recognized
in other comprehensive
income
Revaluation recognized
in profit or loss
15,834
27,989
(126)
(2,294)
-
-
-
-
-
-
43,823
(2,420)
246 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Land
and land
improve-
ments
Buildings
Equipment
Vehicles,
furniture
and office
equipment
Construction in
progress
Total
Gross book value netted
off against the accumu-
lated depreciation at
revaluation
Acquisition of
subsidiary (Note 32)
Balance at 31
December 2020
-
(26,563)
-
-
258
5,333
34,734
1,079
-
-
(26,563)
41,404
246,075
197,148
98,896
95,336
26,225
663,680
Accumulated depreciation and impairment
losses
Balance at 1 January
2019
Depreciation
Accumulated depreciati-
on of disposals
Impairment loss
Reversal of impairment
loss
Reclassification to Assets
held for sale (Note 22)
Balance at 31 December
2019
Depreciation
Accumulated depreciati-
on of disposals
Impairment loss
Reversal of impairment
loss
Accumulated depreci-
ation netted off against
gross book value at
revaluation
Transfer to intangible
assets related to conces-
sion agreements
Balance at 31 December
2020
Net carrying amounts
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,528
137,442
79,771
17,206
252,947
7,131
26,452
4,160
(1,636)
(1,783)
(1,485)
-
-
129
1,772
-
-
-
-
-
-
-
37,743
(4,904)
2,134
3,906
(465)
(465)
-
129
24,152
163,883
82,446
18,875
289,356
5,922
(403)
1,905
17,058
4,870
(11,321)
(766)
-
-
(1,196)
(26,563)
-
-
(123,208)
-
-
-
-
-
-
-
27,850
(12,490)
1,905
(104)
(1,300)
-
-
(26,563)
(123,208)
5,013
45,216
86,550
18,771
155,550
At 1 January 2019
258,327
172,127
131,292
10,672
28,760
601,178
At 31 December 2019
232,386
168,576
At 31 December 2020
246,075
192,135
123,291
53,680
10,978
8,786
8,867
544,098
7,454
508,130
Tangible assets include mainly land, buildings and equipment.
Transfers to intangible assets related to concession agreements in the net amount of RON 94,391 thousand
refer to:
-
the AMR system (Automatic Meter Reading) equipment consisting of electricity measuring equip-
ment in amount of RON 92,949 thousand;
2 plots of land in the total surface of 28,696.79 sqm in amount of RON 1,442 thousand
-
that were contributed in kind by Electrica SA to the share capital of its distribution subsidiaries (SDEE Tran-
silvania Nord S.A., SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A.), these assets being part of the dis-
tribution network (see Note 25).
247 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
As at 31 December 2020, the Group performed the revaluation at fair value of tangible assets consisting of
land, land improvements and buildings. The revaluation was performed by an independent authorized eva-
luator Darian DRS S.A..
Following the revaluation the gain charged to other comprehensive income was in amount of RON 43,823
thousand and the loss recognized in profit or loss was in amount of RON 2,420 thousand.
Measurement of fair value
The Group’s land, land improvements and buildings are stated at their revalued amounts, being the fair va-
lue at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated
impairment losses. The fair value measurements of the Group’s land, land improvements and buildings as
at 31 December 2020 were performed by Darian DRS S.A., an independent valuer not related to the Group.
Darian DRS S.A. is member of the National Association of Authorised Romanian Valuers and has appropriate
qualifications and recent experience in the fair value measurement of properties in the relevant locations.
The valuation conforms to International Valuation Standards and was based on recent market transactions
on arm’s length terms for similar properties, whenever possible and discounted cash-flows method.
There has been no change to the valuation technique during the period between the present revaluation
performed as at 31 December 2020 and the previous one, performed as at 31 December 2017.
The following table shows the valuation techniques used in measuring fair values (Level 3), as well as the
significant unobservable inputs used.
Inter-relationship be-
tween key unobservable
inputs and fair value
measurement
The estimated fair value
would increase/(decrea-
se) if:
Adjustment for liqui-
dity, location or size
would be lower/(higher)
Occupancy rates were
higher/(lower)
Yield rates were lower/
(higher)
Annual rent per sqm
was higher/(lower)
Category
Valuation technique
Significant unobser-
vable inputs
Land and
land
improve-
ments
Buildings
Market approach
The fair value is estimated based on
selling price per square meter of land
of similar characteristics (i.e. owner-
ship, legal limitations, financing and
selling conditions, location, physical
and economical properties and best
use). The market price is mainly based
on recent transactions.
Market approach and discounted
cash-flows (DCF) method
Buildings were evaluated using the
following methods, depending on
the best use and the availability and
credibility of available market infor-
mation:
Market approach
The market approach is based on
the selling price per square meter for
buildings with similar characteristics
(i.e. ownership, legal limitations, finan-
cing and selling conditions, location,
physical and economical properties,
and best use), adjusted for liquidity,
location, size etc.
The DCF method
The valuation model based on the
DCF method estimates the present
value of net cash flows to be genera-
ted by a building taking into account
occupancy rate and annual rent. The
discount rate estimation considers,
inter alia, the quality of a building and
its location.
Adjustment for
liquidity, location,
size.
Adjustment for
liquidity, location,
size.
Office space rent
Occupancy rates
(between 80% and
90%)
Yield rates (between
7% and 10%)
Annual rent per
sqm (between 9
and 19 EUR/sqm),
depending on loca-
tion;
Commercial
space rent
Occupancy rates
(between 85% and
90%)
Yield rates (between
7.25% and 11.5%)
Annual rent per
sqm (between 10
and 60 EUR/sqm),
depending
on location;
248 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
25
Intangible assets
Intangible assets include mainly intangible assets related to distribution service concession agreements re-
corded in accordance with IFRIC 12 “Service Concession Arrangements”, as well as licenses and costs of SAP
ERP implementation, customer management and billing system and other software, as follows:
Intangible assets
related to
concession
agreements
Software and
licenses
Intangible
assets in
progress
Total
Gross book value
Balance at 1 January 2019
Additions
Transfers from property, plant
and equipment
Transfers from intangible
assets in progress
Transfers from property, plant
and equipment in progress
Disposals
Balance at 31 December 2019
Additions
Transfers from property, plant
and equipment
Transfers from intangible
assets in progress
Transfers from property, plant
and equipment in progress
Reclassification to intangible
assets related to concession
agreements
Disposals
8,159,747
749,003
25,386
-
-
-
8,934,136
598,930
91,824
-
2,567
4,503
-
Balance at 31 December 2020
9,631,960
Accumulated amortization
and impairment losses
Balance at 1 January 2019
Amortization
Accumulated amortization of
disposals
Balance at 31 December 2019
Amortization
Reclassification to intangible
assets related to concession
agreements
Accumulated amortization of
disposals
3,349,407
396,574
-
3,745,981
429,216
1,578
-
Balance at 31 December 2020
4,176,775
Net carrying amounts
At 1 January 2019
At 31 December 2019
At 31 December 2020
4,810,340
5,188,155
5,455,185
184,094
2,786
-
481
4,503
(440)
191,424
2,226
-
302
-
(4,503)
(770)
188,679
172,345
7,778
(440)
179,683
5,498
(1,578)
(770)
182,833
11,749
11,741
5,846
2,150
8,345,991
-
-
751,789
25,386
(481)
-
-
-
4,503
(440)
1,669
9,127,229
-
-
601,156
91,824
(302)
-
-
-
-
2,567
-
(770)
1,367
9,822,006
-
-
-
-
-
-
-
-
3,521,752
404,352
(440)
3,925,664
434,714
-
(770)
4,359,608
2,150
4,824,239
1,669
5,201,565
1,367
5,462,398
249 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
The distribution subsidiaries (as operators) that merged into one single distribution operator as of 31 Decem-
ber 2020 concluded concession contracts with the Ministry of Economy concerning the operation of electri-
city distribution service in the established territory (Transilvania Nord, Transilvania Sud, Muntenia Nord), on
the risk and responsibility of the operator and taking into account the technical regulations applicable to the
operation, modernization, rehabilitation and development of energy distribution networks specified in the
Electricity Law, the terms and conditions of the licenses for electricity distribution and the regulations issued
by ANRE.
The distribution operator resulting from the merger of the three distribution operators within the Group,
Distributie Energie Electrica Romania concluded addendums to the concession agreements signed with the
Ministry of Economy for the operation of electricity distribution service in all three areas starting with 1 Janu-
ary 2021, taking over all the rights and obligations from the three former electricity distribution companies.
The Group applies IFRIC 12 for the accounting of the transactions under these concession contracts. (See
further details in Notes 4, 6(b) and 6(k)).
For the year ended 31 December 2020, the Group has recognized construction revenue related to the con-
cession agreements of RON 696,246 thousand (2019: RON 774,389 thousand) and construction costs of RON
675,967 thousand (2019: RON 759,205 thousand).
The main information related to the current concession contracts agreements and the intangible assets
amounts recognized for each network distribution area is summarized below:
Network
distribution
areas
Con-
tract
date
Concession
period
(years)
Contract
expiry
date
Concession
period
remaining
(years)
Renewal
option
Net
carrying
amount at
31 Decem-
ber 2020
Net carrying
amount at 31
December
2019
Muntenia
Nord area
Transilvania
Nord area
Transilvania
Sud area
Total
2005
2005
2005
49
49
49
2054
2054
2054
34
34
34
Yes
1,893,208
1,804,375
Yes
1,810,611
1,703,247
Yes
1,751,366
1,680,533
5,455,185
5,188,155
The concession contracts can be prolonged for a period up to half of the initial established period of 49 years.
The expenditure in relation to the development and modernization of the infrastructure incurred in 2020
refers mainly to:
-
Modernization of the current transformer points and stations, current underground and overhead
power lines in amount of RON 165,480 thousand (2019: RON 177,590 thousand);
Modernization and inclusion in SCADA (which is an automatic control system which monitors the
equipment) of transformers points and stations, in amount of RON 78,980 thousand (2019: RON
68,490 thousand);
Acquisition of own car fleet, including utilities vehicles and specialized vehicles in amount of RON
56,220 thousand; (2019: RON 30,810 thousand);
Significant construction works of new transformer stations, new underground and overhead power
lines in amount of 2020: RON 36,470 thousand (2019: RON 37,130 thousand);
Investments related to improvements for electricity distribution network in amount of RON 51,190
thousand (2019: RON 16,420 thousand).
-
-
-
-
The Group collects cash from customers as connection fees which is only used for the construction of con-
nection stations. The Group recognizes the assets at nil value, net of the amount of the deferred income re-
presenting the contributions from customers. As at 31 December 2020, the Group held assets financed from
the connection fees charged from customers in the amount of RON 2,084,610 thousand (31 December 2019:
RON 1,933,059 thousand). Additions of assets built from the connection fees amount to a gross book value of
RON 255,752 thousand (2019: RON 239,957 thousand) (see further details in Notes 6(l)).
Transfers from property, plant and equipment in the amount of RON 94,391 thousand refer to:
-
the AMR system (Automatic Meter Reading) equipment consisting of electricity measuring equip-
ment in amount of RON 92,949 thousand;
2 plots of land in the total surface of 28,696.79 sqm in amount of RON 1,442 RON
-
that were contributed in kind by Electrica SA to the share capital of its distribution subsidiaries (SDEE Tran-
silvania Nord S.A., SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A.), these assets being part of the dis-
tribution network (see Note 24).
250 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
26
(a)
Capital and reserves
Share capital and share premium
The issued share capital in nominal terms consists of 346,443,597 ordinary shares as at 31 December 2020
(31 December 2019: 346,443,597) with a nominal value of RON 10 per share. As of 4 July 2014, after the Initial
Public Offering (“IPO”), the Company’s shares are listed on the Bucharest Stock Exchange and the Global
Depositary Receipts are listed on the London Stock Exchange.
The shares owned by the Company’s shareholders that are traded on the London Stock Exchange are the
global depositary receipts (GDRs). A global depositary receipt represents four shares. The Bank of New York
Mellon is the depositary bank for these securities. The GDRs’ weight in Electrica’s total share capital dimi-
nished following the Initial Public Offering, reaching a level of 1.03% at the end of 2020 as compared to 10.17%
at 4 July 2014.
The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per
share in the shareholders’ meetings of the Company, except for the 6,890,593 treasury shares purchased by
the Company in July 2014 in order to stabilize the price. All shares rank equally and confer equal rights to the
net assets of the Company’s, except for treasury shares.
The Company recognizes changes in share capital only after their approval in the General Shareholders Mee-
ting and their registration by the Trade Register. The contributions made by the shareholders which are not
yet registered with the Trade Register at year end are recognized as pre-paid capital contributions from
shareholders.
The share premium resulted at IPO was RON 171,128 thousand. The transaction costs of RON 68,079 thousand
were deducted from the share premium.
Following the SPO that took place in November 2019, the share capital of Electrica SA was increased by in
kind and in cash contribution, with the amount of RON 5,037 thousand, from the amount of RON 3,459,399
thousand to the amount of RON 3,464,436 thousand, by issuing a number of 503,668 new nominative and
dematerialized shares with a nominal value of 10 RON/share.
The costs generated by the secondary public offering were in amount of RON 964 thousand. Also, the Com-
pany recorded gains referring to share issue of RON 2,186 thousand, resulting from the difference between
the contribution value of the plots of land and their value recorded as pre-paid capital contributions in kind
from shareholders.
(b)
Treasury shares reserve
In July 2014, the Company purchased 5,206,593 ordinary shares and 421,000 Global Depositary Receipts, equi-
valent to 1,684,000 shares (totalling 6,890,593 shares). The total amount paid for acquiring the shares and
Global Depositary Receipts was RON 75,372 thousand.
(c)
Revaluation reserve
The reconciliation between opening and closing balance of revaluation reserve is as follows:
Balance at 1 January
Revaluation surplus of land, land improvements
and buildings
Deferred tax liability arising on revaluation of land,
land improvements and buildings
Release of revaluation reserve to retained earnings
corresponding to depreciation and disposals of
property, plant and equipment
Balance as at 31 December
2020
2019
87,665
43,823
(7,931)
(7,185)
116,372
108,704
-
-
(21,039)
87,665
As at 31 December 2020, the Group performed the revaluation of land, land improvements and buildings at
fair value. The previous revaluation was performed as at 31 December 2017 (please see Note 24).
(d)
Legal reserves
Legal reserves are set up as 5% of the gross profit for the year in the statutory individual financial statements
of the companies within the Group, until the total legal reserves reach 20% of the paid-up nominal share
capital of each company, according to the legislation. These reserves are deductible for income tax purposes
and are not distributable.
251 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Balance at 1 January 2019
Set-up of legal reserves
Balance at 31 December 2019
Set-up of legal reserves
Balance at 31 December 2020
(e)
Dividends
Legal reserves
352,038
19,795
371,833
20,443
392,276
Romanian companies may distribute dividends from statutory profits, according to the separate financial
statements prepared in accordance with Romanian accounting regulations.
The dividends declared by the Company in 2020 and 2019 (from the statutory profits of previous years) are
as follows:
To the owners of the Company
Total
Distribution of dividends
2020
246,108
246,108
2019
247,506
247,506
On 29 April 2020 the General Shareholders Meeting of the Company approved dividend distribution of RON
246,108 thousand (2019: RON 247,506 thousand). The dividend per share distributed is RON 0.7248 per share
(2019: RON 0.73 per share).
When calculating the dividend per share, the Company’s repurchased own shares (6,890,593 shares) were
not considered as outstanding shares and are deducted from the total number of issued ordinary shares.
Out of the dividends declared by the Company of RON 246,108 thousand (2019: RON 247,506 thousand), the
dividends paid were of RON 245,780 thousand (2019: RON 247,198 thousand) the remaining difference repre-
sents dividends uncollected by the shareholders.
27
Trade payables
Electricity suppliers
Capital expenditure suppliers
Other suppliers
Total
31 December 2020
31 December 2019
373,563
138,391
95,241
607,195
446,161
183,372
100,922
730,455
Electricity suppliers are mainly state-owned electricity producers, as detailed in Note 33, but also other parti-
cipants to the electricity market.
Other suppliers include suppliers of services, materials, consumables, etc.
28
Other payables
31 December 2020
31 December 2019
Current
Non-current
Current
Non-current
VAT payable
Liabilities towards the State
Other liabilities
Total
128,450
6,820
105,676
240,946
-
-
33,873
33,873
107,546
10,478
100,261
218,285
-
-
36,775
36,775
Other liabilities include mainly guarantees, sundry creditors, connection fees, habitat tax and cogeneration
contribution. Other non-current liabilities refer to guarantees from customers related to electricity supply.
252 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
29
Provisions
Balance at 1 January 2020
1,592
17,966
19,558
Tax related
Other
Total
Provisions recognized
Provisions utilised
Provisions reversed
Balance at 31 December 2020
-
-
(392)
1,200
4,710
(200)
(4,438)
18,038
4,710
(200)
(4,830)
19,238
As at 31 December 2020, provisions refer mainly to benefits upon the termination of executive directors’ man-
date contracts in the form of a non-compete clause amounting to RON 6,139 thousand (31 December 2019:
RON 5,792 thousand) and for various claims and litigations involving the Group companies in amount of RON
13,099 thousand (31 December 2019: RON 13,766 thousand).
30
Long-term bank borrowings
Drawings, respectively takeovers and repayments of borrowings during the year ended 31 December 2020
were as follows:
Balance at 1 January 2020
Drawings/takeovers of borrowings
during the period, out of which:
BRD
UniCredit Bank
Banca Transilvania
BCR
BRD
BRD
BCR (Note 32)
Total drawings/takeovers
Accumulated interest
Payment of interest
Exchange rate differences
Reimbursements, out of which:
Banca Transilvania
UniCredit Bank
BRD
BCR
Balance at 31 December 2020
Currency
Interest rate
Maturity year
Amount (RON
thousand)
440.298
RON
RON
RON
3.99%
3.85%
4.59%
RON ROBOR 3M+1%
RON
RON
EUR
3.85%
3.85%
EURIBOR
6M+5.75%
RON
RON
RON
EUR
4.59%
3.85%
3.99%
EURIBOR
6M+5.75%
2026
2026
2027
2028
2028
2028
2026
2027
2026
2026
2026
115,903
50,573
28,264
49,855
69,528
40,260
12,509
366,892
795
(38)
92
(8,929)
(2,400)
(5,200)
(12,601)
778,909
253 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
As at 31 December 2020, respectively 31 December 2019, the long term portion of bank borrowings is as
follows:
Lender
Borrower
Balance at 31
December 2020
Balance at 31
December 2019
BRD
BRD
BRD
Distributie Energie Electrica Romania
(former SDEE Muntenia Nord S.A.)
Distributie Energie Electrica Romania
(former SDEE Transilvania Nord S.A.)
Distributie Energie Electrica Romania
former SDEE Transilvania Sud S.A.)
Banca Transilvania
Distributie Energie Electrica Romania
(former SDEE Transilvania Sud S.A.)
UniCredit Bank
Distributie Energie Electrica Romania
(former SDEE Transilvania Nord S.A.)
BRD
BRD
BRD
BCR
Total
Distributie Energie Electrica Romania
(former SDEE Muntenia Nord S.A.)
Distributie Energie Electrica Romania
(former SDEE Transilvania Nord S.A.)
Distributie Energie Electrica Romania
(former SDEE Transilvania Sud S.A.)
Distributie Energie Electrica Romania
(former SDEE Muntenia Nord S.A.)
Less: current portion of the long-term bank borrowings
Less: accumulated interest
80,000
80,000
114,000
114,000
126,000
126,000
116,086
96,751
58,201
124,800
69,584
40,289
49,949
778,909
(377,818)
(795)
9,432
14,115
-
-
-
440,298
(7,474)
(38)
Total long-term borrowings, net of current portion
400,296
432,786
a)
Investment loans granted by BRD – Groupe Societe Generale
On 17 October 2016, the Company’s distribution subsidiaries (Societatea de Distributie a Energiei Electrice
Transilvania Sud S.A., Societatea de Distributie a Energiei Electrice Muntenia Nord S.A. and Societatea de Dis-
tributie a Energiei Electrice Transilvania Nord S.A., currently Distributie Energie Electrica Romania S.A.) con-
cluded long term loan contracts with BRD – Groupe Societe Generale, in which Electrica SA has the quality of
guarantor. These are fully reimbursable at maturity (16 October 2021). The loans are subject to a fixed interest
rate of 0.02% per annum. As at 31 December 2020, the outstanding balance is of RON 320,000 thousand (31
December 2019: 320,000 thousand) (see also see Note 21).
b)
Investment loan granted by Banca Transilvania
On 18 July 2019, Societatea de Distributie a Energiei Electrice Transilvania Sud S.A., currently Distributie Ener-
gie Electrica Romania S.A., as a borrower, concluded with Banca Transilvania an investment credit agree-
ment with the purpose of financing investments in the electricity distribution network, according to the
investment plan. Main provisions are: Maximum loan amount: RON 125,000 thousand; Interest rate: fixed,
4.59% per annum; Reimbursements: quarterly instalments until 30.06.2027; Grace period: 12 months. As at 31
December 2020, the outstanding balance is of RON 116,086 thousand, of which RON 116,071 thousand princi-
pal and RON 15 thousand accrued interest (31 December 2019: RON 96,751 thousand).
c)
Investment loan granted by Unicredit Bank
On 13 November 2019, Societatea de Distributie a Energiei Electrice Transilvania Nord S.A., currently Dis-
tributie Energie Electrica Romania S.A., as borrower, concluded with Unicredit Bank an investment credit
agreement with the purpose of financing investments in the electricity distribution network, according to
the investment plan. Main provisions are: Maximum loan amount: RON 60,000 thousand; Interest rate: fixed,
3.85% per annum; Reimbursements: quarterly instalments until 13.11.2026; Grace period: 12 months. As at 31
December 2020, the outstanding balance is of RON 58,201 thousand, of which RON 57,600 thousand principal
and RON 601 thousand accrued interest (31 December 2019: RON 9,432 thousand).
d)
Investment loan granted by BRD – Groupe Societe Generale
On 29 October 2019, Societatea de Distributie a Energiei Electrice Muntenia Nord S.A., currently Distributie
Energie Electrica Romania S.A., as borrower, concluded with BRD – Groupe Societe Generale an investment
credit agreement with the purpose of financing investments in the electricity distribution network, accor-
254 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
ding to the investment plan. Main provisions are: Maximum loan amount: RON 130,000 thousand; Interest
rate: fixed, 3.99% per annum; Reimbursements: quarterly instalments until 28.10.2026; Grace period: 12 mon-
ths. As at 31 December 2020, the outstanding balance is of RON 124,800 thousand (31 December 2019: RON
14,115 thousand).
e)
Investment loan granted by BRD – Groupe Societe Generale
On 25 June 2020, Societatea de Distributie a Energiei Electrice Transilvania Nord S.A., currently Distributie
Energie Electrica Romania S.A., as a borrower, concluded with BRD – Groupe Societe Generale an investment
credit agreement with the purpose of financing investments in the electricity distribution network, accor-
ding to the approved investment plan for 2020. Main provisions are: Maximum loan amount: RON 100,000
thousand; Interest rate: fixed, 3.85% per annum; Reimbursements: quarterly instalments until 2028; Grace
period: 12 months. As at 31 December 2020, the outstanding balance is RON 69,584 thousand, of which RON
69,528 thousand principal and RON 56 thousand accrued interest.
f)
Investment loan granted by BRD – Groupe Societe Generale
On 25 June 2020, Societatea de Distributie a Energiei Electrice Transilvania Sud S.A., currently Distributie
Energie Electrica Romania S.A. as a borrower, concluded with BRD – Groupe Societe Generale an investment
credit agreement with the purpose of financing investments in the electricity distribution network, accor-
ding to the approved investment plan for 2020. Main provisions are: Maximum loan amount: RON 80,000
thousand; Interest rate: fixed, 3.85% per annum; Reimbursements: quarterly instalments until 2028; Grace
period: 12 months. As at 31 December 2020, the outstanding balance is RON 40,289 thousand, of which RON
40,260 thousand principal and RON 29 thousand accrued interest.
g)
Investment loan granted by Banca Comerciala Romana
On 17 September 2020, Societatea de Distributie a Energiei Electrica Muntenia Nord S.A., currently Distri-
butie Energie Electrica Romania S.A., as a borrower and Electrica SA as a guarantor, concluded with Banca
Comerciala Romana S.A. an investment credit agreement with the purpose of financing investments in the
electricity distribution network, according to the approved investment plan for 2020. Main provisions are:
Maximum loan amount: Ron 155,000 thousand; Interest rate: ROBOR 3M+1% per annum; Reimbursements:
quarterly instalments until 2028; Grace period: 12 months. As at 31 December 2020, the outstanding balance
is RON 49,949 thousand, of which RON 49,855 thousand principal and RON 94 thousand accrued interest.
h)
Investment loan granted by Banca Comerciala Romana
As of 31 August 2020, as a consequence of the purchase of the photovoltaic park owned by Electrica Energie
Verde 1 (former Long Bridge Milenium SRL), the Group took over a loan agreement concluded by Long Bridge
Milenium in 2013 with BCR. Main provisions are: Maximum loan amount: EUR 7,750 thousand; Interest rate:
EURIBOR 6M+5.75% per annum; Reimbursements: quarterly instalments until 2026. As at 31 December 2020,
the outstanding balance of the loan is nil, as the Electrica Energie Verde 1 has fully reimbursed in advance
the loan.
All financial covenants specified in the long-term borrowing contracts have been fulfilled as at 31 December
2020, respectively as at 31 December 2019.
31
(a)
Financial instruments - fair values and risk management
Accounting classifications and fair values
According to IFRS 9, financial assets are measured at amortised cost as they are held within a business model
to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on
the principal amount outstanding.
The Group assessed that the carrying amount is a reasonable approximation of the fair value for the financial
assets and financial liabilities.
(b)
Financial risk management
The Group has exposure to the following risks arising from financial instruments:
credit risk;
liquidity risk;
market risk.
These risks are further explained and detailed.
(i)
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally from the Group’s receivables from customers, cash
255 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
and cash equivalents, restricted cash and bank deposits.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. In
the past, the Group had a high credit risk mainly from State-owned companies.
Cash and bank deposits are placed in financial institutions which are considered to have low risk of default.
The carrying amount of financial assets represents the maximum credit exposure.
Trade receivables
The Group’s credit risk in respect of receivables was concentrated in the past around state-controlled com-
panies and in the recent years refers to clients that are facing financial difficulties in their industries due to
specific changes in circumstances in their industry sector. The Group has implemented a policy on credit risk
management and is also considering securing trade receivables. Also, the electricity supply contracts include
termination clauses in certain circumstances.
The Group establishes an allowance for impairment that represents the amount of expected credit losses,
calculated based on the expected loss rates.
Impairment
The following table provides information about the exposure to credit risk and expected credit losses for tra-
de receivables for customers as at 31 December 2020:
31 December 2020
Expected cre-
dit loss rates
(“ECL”)
Gross value
Lifetime ECL
Neither past due nor
impaired
2% 812,855
(13,053)
Net trade
receiva-
bles
799,802
Past due 1-30 days
1% 163,436
(2,285)
161,151
Past due 31-60 days
12% 48,993
(5,822)
43,171
Past due 61-90 days
33% 17,450
(5,679)
11,771
Past due more than 90
days
Total
99% 936,614
(922,734)
13,880
1,979,348
(949,573)
1,029,775
Credit impaired
No
No
No
No
Yes
The Group performed a sensitivity analysis and a 5% increase in the expected credit loss rates would not lead
a material impact on the results of the Group.
The following table provides information about the exposure to credit risk and expected credit losses for tra-
de receivables for customers as at 31 December 2019:
31 December 2019
Expected
credit loss
rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receiva-
bles
Credit impaired
Neither past due nor
impaired
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due more than 90
days
Total
2%
2%
12%
33%
705,896
(10,774)
695,122
154,496
34,625
6,336
(2,577)
151,919
(4,155)
30,470
(2,075)
4,261
99%
1,010,766
(1,002,559)
8,207
1,912,119
(1,022,140)
889,979
No
No
No
No
Yes
256 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Details of the main movements in the allowances for doubtful debts are disclosed in Note 18.
(ii)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to ma-
naging liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they are due, under both normal and stressed conditions, without incurring unacceptable losses.
The Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected
cash outflows on financial liabilities. The Group also monitors the level of expected cash inflows on trade
receivables together with expected cash outflows on trade and other payables. In addition, the Group main-
tains overdrafts (refer to Note 21).
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted and include estimated interest payments.
Contractual cash flows
Financial liabilities
Carrying
amount
Total
less than
1 year
1-2
years
2-5 years
more than
5 years
31 December 2020
Bank overdrafts
Lease liability
164,966
164,966
164,966
-
-
27,622
27,622
10,747
6,806
9,961
-
108
Long term bank borrowings
778,909
778,909
378,613
70,817
212,453
117,026
Trade payables
607,195
607,195
607,195
-
-
-
Total
1,578,692
1,578,692
1,161,521
77,623
222,414
117,134
31 December 2019
Bank overdrafts
Financing for network con-
struction related to concessi-
on agreements
350,624
350,624
350,624
1,008
1,008
1,008
-
-
-
-
-
-
Lease liability
36,507
36,507
26,900
7,204
1,273
1,130
Long-term bank borrowings
440,298
440,298
7,512
337,647
52,938
42,201
Trade payables
730,455
730,455
730,455
-
-
-
Total
1,558,892
1,558,892
1,116,499 344,851
54,211
43,331
(iii)
Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates and interest rates – will
affect the Group’s income or the value of its financial instruments held. The objective of market risk mana-
gement is to manage and control market risk exposures within acceptable parameters, while optimising the
return.
Currency risk
The Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which
sales, purchases and borrowings are denominated and the functional currency of the Group. The functional
currency of all entities belonging to the Group is the Romanian Leu (RON).
The currency in which these transactions are primarily denominated is RON. Certain liabilities are denomi-
nated in foreign currency (EUR). The Group also has deposits and bank accounts denominated in foreign
currency (EUR). The Group’s policy is to use the local currency in its transactions as far as practically possible.
The Group does not use derivative or hedging instruments.
257 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Exposure to currency risk
The summary of quantitative data about the Group’s exposure to currency risk is as follows:
in thousands of RON
Cash and cash equivalents
Financing for network construction related to
concession agreements
Lease liability
Net statement of financial position
exposure
31 December 2020
31 December 2019
denominated in EUR
denominated in EUR
3,347
-
(24,472)
(21,125)
310
(1,008)
(35,388)
(36,086)
The following significant exchange rates have been applied during the year:
RON
1 EUR
Sensitivity analysis
Average rate
Year-end spot rate
2020
4.8371
2019
2020
4.7452
4.8694
2019
4.7793
A reasonably possible strengthening (weakening) of the EUR against RON at 31 December would have affec-
ted the measurement of financial instruments denominated in a foreign currency and profit before tax by
the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain
constant and ignores any impact of forecast sales and purchases.
Effect
31 December 2020
EUR (5% movement)
31 December 2019
EUR (5% movement)
Interest rate risk
Profit before tax
Strengthening
Weakening
(1,056)
(1,804)
1,056
1,804
For financing purposes, the Group uses both medium and long-term bank loans and short term loans in the
form of overdraft facilities (please see Notes 21, 30).
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floa-
ting interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and
floating rate borrowings (please see Notes 21, 30), as the long term borrowings are contracted mainly at fixed
rates, while the overdraft facilities bear variable rates. The Group does not have in place hedging contracts
for interest rate.
The Groups exposures to interest rates on financial assets and financial liabilities are detailed below. The
Group is exposed to the interest rate benchmark ROBOR, which is the interest rate on the Romanian inter-
bank market.
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
258 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
31 December 2020
31 December 2019
Fixed-rate instruments
Financial assets
Call deposits
Deposits with maturity date more than three months
Financial liabilities
Financing for network construction related to conces-
sion agreements
Long-term bank borrowings
Lease liability
Variable-rate instruments
Financial liabilities
Lease liability
Long-term bank borrowings
Bank overdrafts
391,514
-
-
(728,960)
(9,070)
(346,516)
(18,552)
(49,949)
(164,966)
(233,467)
485,325
66,471
(1,008)
(440,298)
(16,024)
94,466
(20,483)
-
(350,624)
(371,107)
Fair value sensitivity analysis for fixed-rate instruments
The Group does not account for any fixed-rate financial assets or financial liabilities at fair value through pro-
fit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 50 basis points in interest rates at the reporting date would have increased
(decreased) profit before tax by the amounts shown below. This analysis assumes that all other variables, in
particular foreign currency exchange rates, remain constant.
31 December 2020
Variable-rate instruments
31 December 2019
Variable-rate instruments
32
Acquisition of subsidiaries
Profit before tax
50 bp increase
50 bp decrease
(1,167)
(1,856)
1,167
1,856
On 23 June 2020, Electrica Furnizare S.A. signed a share purchase agreement for the acquisition of 100% of
Electrica Energie Verde 1 S.R.L. (former Long Bridge Milenium S.R.L.) a company that owns a photovoltaic
park located in Stanesti, Giurgiu County, with an installed capacity of 7.5 MW (operational power limited at
6.8 MW). The photovoltaic park was built between October 2012 and January 2013 and has been delivering
electricity into the national grid since February 2013.
Closing of the transaction and the transfer of shares’ ownership to Electrica Furnizare S.A. took place on 31
August 2020, the purchase price of the shares being of RON 7,830 thousand (equivalent of EUR 1,617,940),
based on the fair value report as of acquisition date. On 30 October 2020, the purchase price was adjusted
in accordance with the purchase agreement based on the financial results of the acquired company as at 31
August 2020, the final price being RON 8,006 thousand (equivalent of EUR 1,637,515 and fees of EUR 17,318).
Amongst various elements of the transaction, Electrica Furnizare S.A. also took over the loans granted by the
former shareholders of Electrica Energie Verde 1 S.R.L. to the acquired company, in amount of RON 18,473
thousand (equivalent of EUR 3,817,749).
The acquisition of Electrica Energie Verde 1 S.R.L. will allow the Group to enter the renewable energy market
having the main purpose of increasing the Group’s profitability. From the acquisition date until 31 Decem-
259 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
ber 2020, Electrica Energie Verde 1 S.R.L. had a contribution to the Group revenues in amount of RON 3,736
thousand and net profit of RON (617) thousand. If the acquisition date would have been the beginning of
the period, the Group revenues would have been higher by RON 4,500 thousand and net profit of the Group
would have been higher by RON 135 thousand.
For the acquisition of the share capital of Electrica Energie Verde 1 S.R.L., Electrica Furnizare S.A. paid the total
amount of:
Purchase price of shares
Settlement of former shareholders loan
Total
(RON thousand)
8,006
18,473
26,479
For the settlement of former shareholders loans, Electrica Furnizare S.A. paid the loans granted by the former
shareholders Electrica Energie Verde 1 S.R.L. in amount of RON 18,473 thousand, the equivalent of the out-
standing balance of EUR 3,817,749 at the transaction date.
The assets and liabilities of Electrica Energie Verde 1 S.R.L. taken over in the consolidation perimeter at the
date when the control was obtained by the Group (31 August 2020) were as follows:
Long Brige Milenium as at 31 August 2020
Property, plant and equipment
Other intangible assets
Trade and other receivables
Cash and cash equivalents
Other current assets
Total assets
Long-term bank borrowings
Deferred tax liability
Trade and other payables
Total liabilities
Net assets acquired
Consideration paid
Gain from bargain purchase of subsidiaries
41,404
73
253
5,577
951
48,258
(12,509)
(1,673)
(120)
(14,302)
33,956
(26,479)
7,477
The bargain purchase resulted is due to the fact that the Group would obtain specific synergies by integra-
ting the production subsidiary with the existing supply company, which otherwise wouldn’t have been seen
in the value of the company acquired on a separate individual basis. This is the main reason for the lower
consideration paid as compared to the fair value of the net assets acquired.
The gain from bargain purchase was recognised in the consolidated statement of profit and loss for the year
ended as at 31 December 2020.
33
(a)
Related parties
Main shareholders
As at 31 December 2020 and 31 December 2019, the major shareholder of Societatea Energetica Electrica S.A.
is the Romanian State, represented by the Ministry of Energy (former Ministry of Economy, Energy and Busi-
ness Environment) with a share of ownership of 48.79% from the share capital.
(b)
Management and administrators’ compensation
Executive Management compensation
2020
2019
29,072
25,790
Executive management compensation refers to both the managers with mandate contract and those with
labour contract, from both the subsidiaries and Electrica SA. This also includes the benefits in the event of
260 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
the termination of mandate contracts for executive directors.
Compensations granted to the members of the Board of Directors were as follows:
Members of Board of Directors
2020
2019
2,568
2,650
Electrica SA’s Board of Directors comprises 7 members. According to the remuneration policy approved by
the General Meeting of Shareholders that took place on 9 February 2018, the annual number of paid sessions
is limited to twelve for Board of Directors meetings and to six for each of the committees.
No loans were granted to directors or administrators in 2020 and 2019.
(c)
Transactions with companies in which the state has control or significant influence
The Group has transactions with companies in which the State has control or significant influence in the
ordinary course of business, related mainly to the acquisition of electricity, transport and system services and
sale of electricity. Significant purchases and balances are mainly with energy producers/suppliers, as follows:
Purchases (without VAT)
Balance (including VAT)
Supplier
2020
2019
31 December
2020
31 December
2019
Transelectrica
Nuclearelectrica
Hidroelectrica
Complexul Ener-
getic Oltenia
OPCOM
Electrocentrale
Bucuresti
ANRE
Others
Total
680,258
528,652
476,845
304,218
272,246
116,530
10,882
9,347
457,070
383,990
343,266
361,135
528,191
117,782
55,948
15,014
113,059
61,848
34,471
92,691
29,987
26,835
37,350
36,269
4,209
-
176
1,779
4,164
1,285
3,909
2,536
2,398,978
2,262,396
252,892
197,676
The Group also makes sales to companies in which the State has control or significant influence representing
supply of electricity, of which the most important transactions are the following:
Sales (without
VAT)
Balance,
gross
(including
VAT)
2020
60,549
41,175
40,967
37,501
12,457
9,138
8,575
7,517
3,738
1,569
1,436
3,634
7,841
5,191
1,246
641
598
420
12
-
-
Client
OPCOM
Transelectrica
C.N.C.F CFR SA
SNGN Romgaz SA
CN Romarm
Hidroelectrica
Municipiul Galati
CFR Electrificare
Transgaz
CNAIR
ANAR - Adm. Nat. Apele
Romane
Allowance
(including VAT)
Balance, net
31 December 2020
-
-
-
-
-
-
-
-
-
-
3,634
7,841
5,191
1,246
641
598
1,731
420
12
-
-
261 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
CN Remin SA
CET Braila
Termoelectrica
Oltchim
C.N.C.A.F. MINVEST SA
Others
Total
549
7
-
-
-
31,008
71,215
3,361
1,217
565,484
26,802
1,453
256,186
690,846
(71,215)
(3,361)
(1,217)
(565,484)
(26,802)
(493)
(668,572)
-
-
-
-
-
960
22,274
Sales (without
VAT)
Balance,
gross (inclu-
ding VAT)
Allowance (inclu-
ding VAT)
Balance, net
Client
Transelectrica
OPCOM
Hidroelectrica
SNGN Romgaz SA
CN Romarm
C.N.C.F CFR SA
CFR Electrificare
Cupru Min SA Abrud
CNAIR
CN Posta Romana SA
Transgaz
ANAR - Adm. Nat. Apele
Romane
Baita SA
CN Remin SA
Termoelectrica
CET Braila
Oltchim
C.N.C.A.F. MINVEST SA
Others
Total
34
Contingencies
Contingent assets
2019
32,173
29,617
14,905
14,382
12,700
11,871
7,859
5,525
2,851
2,782
1,989
1,404
1,068
553
150
18
-
-
3,347
4,343
1,840
1,445
1,479
2,203
1,654
-
-
266
79
11
68
71,260
1,217
4,075
670,526
26,802
21,940
2,259
161,787
792,874
31 December 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
(71,260)
(1,217)
(4,075)
(670,526)
(26,802)
(563)
(774,443)
3,347
4,343
1,840
1,445
1,479
2,203
1,654
-
-
266
79
11
68
-
-
-
-
-
1,696
18,431
With the acquisition of Electrica Energie Verde 1 (former Long Bridge Milenium S.R.L) (please refer to Note 32),
the Group took over the balance of green certificates existing at the acquisition date, respectively 31 August
2020.
The photovoltaic park receives a number of six green certificates for each MWh of electricity produced and
delivered, out of which for the period 2013-2020, two green certificates were postponed for trading, following
to be recovered in equal tranches from 1 January 2021 to 31 December 2030.
Green certificates are recognized at the time of the sale, while the existing balance of green certificates at
period end is a contingent asset, which is not recognized.
At 31 December 2020, Electrica Energie Verde 1 SRL holds a total of 148,581 green certificates, out of which 139,805
are postponed for trading and the remaining 8,776 are tradeable green certificates. The total value of the green
certificates held by Electrica Energie Verde 1 S.R.L. is RON 21,130 thousand, valued at the weighted average trading
price of RON/GC 142.2107, as published by the operator of the green certificate market (OPCOM).
262 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Contingent liabilities
Fiscal environment
Tax audits are frequent in Romania, consisting of detailed verifications of the accounting records of tax-
payers. Such audits sometimes take place after months, even years, from the date liabilities are established.
Consequently, companies may be found liable for significant taxes and fines. Moreover, tax legislation is sub-
ject to frequent changes and the authorities demonstrate inconsistency in interpretation of the law.
Income tax returns may be subject to revision and corrections by tax authorities, generally for a five-year
period after they are completed.
The Group may incur expenses related to previous years’ tax adjustments as a result of controls and litigati-
ons with tax authorities. The management of the Group believes that adequate provisions were recorded in
the consolidated financial statements for all significant tax obligations; however a risk persists that the tax
authorities might have different positions.
Tax inspection report for SDEE Muntenia Nord S.A.
The subsidiary SDEE Muntenia Nord S.A. was subject to a tax audit performed by the Local Taxes Depart-
ment of Galati City Hall that referred to the building taxes paid for the period 2012-2016. The tax audit was
finalized in December 2019, when the fiscal inspection report was communicated to the subsidiary. The fiscal
report established additional payment obligations for the subsidiary representing building tax for the period
01.01.2012-31.12.2015 in the total amount of RON 24,831 thousand, of which principal in amount of RON 12,051
thousand and related late penalties computed as of October 2019, in amount of RON 12,780 thousand. Again-
st Galati City Hall, SDEE Muntenia Nord S.A. filed a legal request registered at Ploiesti Court of Appeal, with
the next term on 17 March 2021.
The Group recognised an expense in amount of RON 12,051 thousand during the year ended 31 December
2019 in accordance with IFRIC 23 „Uncertainty over Income Tax Treatments”.
Tax inspection report for Electrica Serv S.A.
In May 2017 a tax inspection at Electrica Serv S.A. was finalized and the tax authorities concluded that ad-
ditional tax obligations of RON 12,281 thousand should be paid by the subsidiary. This amount represents
VAT (including related interest and penalties) that was considered tax deductible in the period 2012-2013 by
the subsidiary in relation with certain invoices issued by a lease supplier who was inactive at that time. The
company appealed in Court the measures imposed by the tax authorities. On 3 July 2019 the Bucharest Court
of Appeal partially admitted the appeal through the partial annulment of the fiscal decision for the amount
of RON 7,264 thousand representing the VAT and the related interest and penalties, unlawfully retained as
non-deductible. Against this decision, on 27 November 2020 NAFA filed an appeal, which is in the filter pro-
cedure at the High Court of Cassation and Justice.
As at 31 December 2020 and 31 December 2019, the Group has a receivable from the fiscal authorities in
amount of RON 12,281 thousand, without a related bad debt allowance, taking into account that manage-
ment’s best estimate is that Electrica Serv S.A. shall be able to obtain a favourable final Court decision in this
case.
Litigation with the National Agency of Fiscal Administration (“NAFA”)
In May 2017, after the revision of Electica’s tax record, the tax authorities issued an enforcement order for
additional interest and penalties of RON 39,249 thousand as a result of certain tax record allocations for prior
periods. Electrica filed a complaint with the tax authorities against the enforcement order and also filed a
legal action to suspend the enforced payment by the resolution of the above mentioned complaint. These
additional interest and penalties are related to the prior enforcement orders received by Electrica SA in the
prior years of RON 72,460 thousand.
In February 2018, Electrica SA has obtained a favourable Supreme Court ruling in one of the litigations with
NAFA, which essentially maintains into force a prior Court of Appeal decision, which is favourable for the
Group. Based on this Court ruling and in conjunction with all other litigations with NAFA on the same histori-
cal amounts, for taxes including penalties and interest, as well as based on analysis with internal and external
lawyers, the management best estimate is that Electrica SA shall be able to obtain favourable Court rulings
with the end result of no future cash outflows.
Also, in April 2019, Electrica SA obtained another favourable decision pronounced by the Bucharest Court of
Appeal in one of the disputes with NAFA, whereby the Court obliges NAFA to correct the evidence of the tax
receivables so that it reflects the extinction by prescription of the amount of RON 16,916 thousand represen-
ting income tax as well as all the related accessories. This decision forms the object of the appeal declared by
NAFA, with the Court term on 17 November 2021, at the High Court of Cassation and Justice.
263 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
Morevover, in November 2019, Electrica SA obtained one more favourable decision pronounced by the Bucha-
rest Court of Appeal in one of the disputes with NAFA, whereby the Court obliges NAFA to cancel the admi-
nistrative documents issued regarding the accessory fiscal obligations in the amount of RON 39,249 thou-
sand and ordered the refund/ compensation of the amount and the correction of the tax record. Against this
decision, NAFA filed an appeal, registered to the High Court of Cassation and Justice, with the Court term on
23 March 2022.
Thus, as at 31 December 2019, the Group did not recognize any provision in this respect, taking into account
that management’s best estimate is that Electrica SA shall be able to obtain a final favourable Court decision
in this case.
During 2020, the Group recognized revenues from indemnities in the amount of RON 12,827 thousand (plea-
se refer to Note 11) related to the amounts collected during the year by Electrica SA from NAFA as a result of
the final civil sentences obtained in Court, which ordered the cancellation of certain enforceable titles as well
as fiscal decisions.
Moreover, as at 31 December 2020, the Group no longer has a contingent liability of RON 39,249 thousand
in respect to the additional interest and penalties to be paid by Electrica SA to NAFA, as it applied for the
cancellation of ancillary fiscal obligations stipulated by the Government Emergency Ordinance no. 69/2020.
Through NAFA’s decision no. 2738/22.12.2020, the cancellation of the ancillary fiscal obligations mentioned
above was approved, based in articles IX-XI of the Government Emergency Ordinance no. 69/2020.
Other litigations and claims
The Group is involved in a series of litigations and claims (ie. with SAPE, ANRE, NAFA, Court of Accounts, clai-
ms for damages, claims over land titles, labour related litigations etc.).
As summarised in Note 29, the Group set-up provisions for the litigations or claims for which the manage-
ment assessed as probable the outflow of resources embodying economic benefits due to low chances of
favourable outcomes of those litigations or disputes. The Group does not present information in the financial
statements and did not set-up provisions for items for which the management assessed as remote the pos-
sibility of outflow of economic benefits.
The Group discloses if the case information on the most significant items of litigations or claims for which
the Group did not set-up provisions as they relate to possible obligations that arise from past events whose
existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly
within the control of the Group (ie. litigations for which different inconsistent sentences were issued by the
Courts, or litigations which are in early stages and no preliminary ruling was issued so far).
In respect to the litigation in which Electrica SA was sued by Societatea de Administrare a Participatiilor in
Energie S.A. („SAPE”) for the joint payment of the amount of RON 1,569,144 thousand and the amount of EUR
458,381 thousand for the alleged damages suffered by the Romanian State as a result of the inaction regar-
ding the monitoring, coordination and verification of the performance with the observance of the conditions
of legality of the privatization contracts of Electrica SA subsidiaries, Electrica SA filed a pleading in which it
invoked the exception of the lack of passive procedural quality, exception regarding the statute of limitation,
as well as other arguments on the merit of the case against SAPE’s allegations. On 20 June 2019, the Court
dismissed SAPE’s action for claims of approx. EUR 800 million, admitting:
-
-
the exception of Electrica’s lack of passive processing quality, for the claim based on contractual civil
liability;
the exception of the prescription of the material right to action, for the claim based on civil tort liability.
The decision remained final by non-appeal.
35
(a)
Commitments
Contractual commitments
Contractual commitments as at 31 December 2020 and 31 December 2019 are as follows:
Purchase of electricity
Purchase of green certificates
Purchase of property, plant and equipment and
intangible assets
Total
31 December 2020
31 December 2019
2,067,439
402,341
141,033
2,610,813
1,870,832
172,181
426,643
2,469,656
264 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in THOUSAND RON, if not otherwise stated)
(b)
Investment program
The investment program at Group level approved for the year 2021 is as follows:
Distribution activity
Supply activity
Maintenance activity
Other/ shared
Total
2021
638,900
51,186
11,561
10,727
712,374
The capital expenditures actually incurred may differ from the ones planned.
(c)
Guarantees and pledges
On 19 January 2021, the credit facility contract signed between Electrica SA and ING Bank N.V. for an overdraft
facility of up to RON 210,000 thousand for financing the current activity, in the context of the liquidity con-
centration operations set-up within the Group and having the following characteristics: Interest rate: ROBOR
1M+0.8% p.a., was extended until 28.01.2022.
At 31 December 2020, the Group has outstanding bank letters of guarantee of RON 607,735 thousand (31 De-
cember 2019: RON 567,967 thousand) issued in favour of its suppliers.
36 Subsequent events
Overdraft facility granted by ING Bank N.V.
On 19 January 2021, the credit facility contract signed between Electrica SA and ING Bank N.V. for an overdraft
facility of up to RON 210,000 thousand for financing the current activity, in the context of the liquidity con-
centration operations set-up within the Group and having the following characteristics: Interest rate: ROBOR
1M+0.8% p.a., was extended until 28.01.2022.
Change in distribution tariffs starting 1 January 2021
According to ANRE orders, the specific tariffs for the electricity distribution service applicable starting with 1
January 2021 are the following:
-
ANRE Order no. 220/09.12.2020 regarding the approval of the specific tariffs for electricity distribution
service and of the price for reactive electricity for Muntenia Nord area;
ANRE Order no. 221/09.12.2020 regarding the approval of the specific tariffs for electricity distribution
service and of the price for reactive electricity for Transilvania Nord area;
ANRE Order no. 222/09.12.2020 regarding the approval of the specific tariffs for electricity distribution
service and of the price for reactive electricity for Transilvania Sud area.
-
-
The orders were published in the Official Gazette of Romania, part I, no. 1216/11.12.2020.
According to the ANRE Orders, the specific tariffs for the electricity distribution service for applicable starting
with 1 January 2021, compared to those applicable starting with 16 January 2020 (the last time they were mo-
dified), are the following (RON/MWh, presented cumulatively for medium and low voltage levels):
Order 221,222,220/09.12.2020
Order 8,9,7/15.01.2020
Starting with 01 January 2021
16 January-31 December 2020
High
Voltage
Medium
Voltage
Low
Voltage
High
Voltage
Medium
Voltage
Low
Voltage
Transilvania Nord area
Transilvania Sud area
Muntenia Nord area
19.23
22.23
18.72
66.35
67.47
56.87
173.93
178.78
184.75
18.77
20.31
16.68
64.31
61.34
53.16
168.91
165.90
177.06
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
265 | 2020 ANNUAL REPORT
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266 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
The
indipendent
auditor report
on consolidated
financial statements
situations
267 | 2020 ANNUAL REPORT
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INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
Deloitte Audit S.R.L.
Clădirea The Mark Tower
Calea Griviței nr. 82-98
Sector 1, 010735
București, România
Tel: +40 21 222 16 61
Fax: +40 21 222 16 60
www.deloitte.ro
INDEPENDENT AUDITOR’S REPORT
To the Shareholders,
SOCIETATEA ENERGETICA ELECTRICA S.A.
Report on the Audit of the Consolidated Financial Statements
Opinion
1. We have audited the consolidated financial statements of SOCIETATEA ENERGETICA ELECTRICA S.A. and its subsidiaries
(the Group), with registered office in Bucharest, District 1, Street Grigore Alexandrescu, No. 9, identified by unique tax
registration code 13267221, which comprise the consolidated statement of financial position as at December 31, 2020,
and the consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies and notes to the consolidated financial statements.
2.
The financial statements as at December 31, 2020 are identified as follows:
Net assets / Equity
Net profit for the financial year
RON 5,760,274 thousand
RON 387,543 thousand
3.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at December 31, 2020, and its consolidated financial performance and
its consolidated cash flows for the year then ended in accordance with Order 2844/2016, with subsequent
amendments for the approval of accounting regulations conforming with International Financial Reporting Standards
as adopted by EU.
Basis for Opinion
4. We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014
of the European Parliament and the Council (forth named “the Regulation”) and Law 162/2017 (“the Law”). 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), in accordance with
ethical requirements relevant for the audit of the financial statements in Romania including the Regulation and the
Law 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.
Key Audit Matters
5.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
1
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INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
Key audit matter
How our audit addressed the key audit matter
Valuation of Retail accrued revenue, related to
electricity supplied to households
The Group recognizes at the end of each reporting
period accrued revenue from the energy supply
activity, related to the household population. If the
actual meter readings are not available at the end of
the reporting period, energy supplied to households is
estimated based on internal information related to
historical patterns of consumption. The degree of
estimation uncertainty reduces from one period to
another, however judgement is inherent in the
valuation of the accrued revenue related to the
household population.
The Group operates in 3 different geographical areas
in Romania and the tariffs provided by the Romanian
Energy Regulatory Authority (“ANRE”) for the
regulated supply market are different from one region
to the other.
Because of the significance of the estimations around
the accrued revenue related to the households and
the inability of relying on the effectiveness of the
controls, we consider the valuation of retail accrued
revenue, related to households a key audit matter.
Contingent liabilities and provisions
As presented in Note 34 to the consolidated financial
statements, the Group is involved in a series of
litigations and claims (i.e. with the Romanian
Privatization Agency, Energy Regulator, Fiscal
Authorities, Romanian Court of Accounts, claims for
damages, claims over land titles, labor related
litigations and others).
The estimation of whether a provision should be
recorded or whether a contingent liability should be
disclosed is based on significant management
judgement. Considering the large number of
litigations ongoing that the Group is facing, the
uncertainty regarding the final possible outcome of
each case and the high level of professional
judgement involved we consider the Contingent
liabilities and provisions resulting from these
litigations to be a key audit matter.
The group has a number of IT systems across the businesses and we were
not able to rely on the effectiveness of IT controls within the revenue
cycle. The audit procedures adopted were substantive in nature and
included the following:
•
•
•
•
•
Obtaining an understanding of the accounting policies used in the
preparation of the consolidated financial statements, with respect
to revenue recognition;
Testing the reconciliation made by the Group between the quantity
of electricity purchased for supply purposes and the quantity of
electricity delivered from the supply activity;
Testing the acquired electricity for supply purposes through a
combination of direct confirmations received from the electricity
producers and other supporting documents;
Testing the revenues related to electricity supplied to industrial
customers on the free market through a combination of direct
confirmations and other supporting documents;
Testing the revenues related to electricity supplied to all customers
on the regulated market by means of independent re-computation
of the revenues, using the regulated tariffs as published by the
market regulator.
•
Performing analytical procedures on all electricity sales.
In assessing whether the contingent liabilities and provisions arising from
litigations have been properly recognized, our procedures included the
following:
•
•
•
•
•
Inspection of the minutes of the meetings of the shareholders and
administration council;
Obtaining legal letters from the internal and from the external
lawyers of the Group and assessing the interpretation of the
lawyers for the cases presented;
Discussing with the internal and external lawyers and assessing the
reasonability of the professional judgements used as a basis for the
recognition of provisions or contingent liabilities;
Assessing the judgement performed by the Group management in
conjunction with the assessment of the internal or external
lawyers;
Assessing the adequacy of the contingent liabilities disclosures in
the consolidated financial statements.
2
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INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
Other information – Administrator’s Report
6.
The administrator is responsible for preparation and presentation of the other information. The other information
comprises the Administrator’s report but does not include the consolidated financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information and, unless otherwise explicitly
mentioned in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements for the year ended December 31, 2020, our
responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
With respect to the Administrator’s report, we read it and report if this has been prepared, in all material respects, in
accordance with the provisions of Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, for
the approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU.
On the sole basis of the procedures performed within the audit of the consolidated financial statements, in our
opinion:
a)
b)
the information included in the administrators’ report for the financial year for which the financial statements
have been prepared is consistent, in all material respects, with these financial statements;
the administrators’ report has been prepared, in all material respects, in accordance with the provisions of
Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, for the approval of
accounting regulations conforming with International Financial Reporting Standards as adopted by EU;
Moreover, based on our knowledge and understanding concerning the Company and its environment gained during
the audit of the consolidated financial statements prepared as at December 31, 2020, we are required to report if we
have identified a material misstatement of this Administrator’s report. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
7. Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with Order 2844/2016, with subsequent amendments, for the approval of accounting regulations
conforming with International Financial Reporting Standards as adopted by EU and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
8.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
9.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the consolidated 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 consolidated financial statements.
270 | 2020 ANNUAL REPORT
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3
INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
11. 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 consolidated 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
Group'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 Group’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 consolidated
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 Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
12. We communicate with those charged with governance 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.
13. We also provide those charged with governance 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.
14. From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
Report on Other Legal and Regulatory Requirements
15. We have been appointed by the General Assembly of Shareholders September 18, 2018 to audit the consolidated
financial statements of Societatea Energetica Electrica S.A. for the financial year ended December 31, 2020. The
uninterrupted total duration of our commitment is 3 years, covering the financial years ended December 31, 2018 to
December 31, 2020.
4
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INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
We confirm that:
Our audit opinion is consistent with the additional report submitted to the Audit Committee of the Company that
we issued the same date we issued and this report. Also, in conducting our audit, we have retained our
independence from the audited entity.
No non-audit services referred to in Article 5 (1) of EU Regulation No. 537/2014 were provided.
The engagement statutory auditor on the audit resulting in this independent auditor’s report is Răzvan Ungureanu.
Report on compliance with the Commission Delegated Regulation (EU) 2018/815 (“European Single Electronic Format
Regulatory Technical Standard“ or “ESEF”)
We have undertaken a reasonable assurance engagement on the compliance with Commission Delegated Regulation (EU)
2019/815 on the European single electronic format ("ESEF Regulation") for the financial statements included in the annual
financial report in ESEF format ( the “digital files”) prepared by SOCIETATEA ENERGETICA ELECTRICA S.A..
Management Responsibility for the Digital files prepared in compliance with the ESEF
SOCIETATEA ENERGETICA ELECTRICA S.A. management is responsible for preparing digital files that comply with the ESEF.
This responsibility includes:
the design, implementation and maintenance of internal control relevant to the application of the ESEF;
the selection and application of appropriate iXBRL mark ups using professional judgement where necessary;
ensuring consistency between the digital files and the consolidated financial statements to be submitted in
accordance with Order 2844/2016 with subsequent amendments;
Auditor’s Responsibility
Our responsibility is to express a conclusion on whether the consolidated financial statements included in the annual
financial report complies in all material respects with the requirements of ESEF based on the evidence we have obtained.
We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements
3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information (ISAE 3000) issued
by the International Auditing and Assurance Standards Board.
A reasonable assurance engagement in accordance with ISAE 3000 involves performing procedures to obtain evidence about
compliance with ESEF. The nature, timing and extend of procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material departures from the requirements set out in ESEF, whether due to fraud or error. A
reasonable assurance engagement includes:
obtaining an understanding of Societatea Energetica Electrica S.A. process for preparation of the digital files in
accordance with ESEF, including relevant internal controls;
reconciling the digital files including the marked up data with the audited consolidated financial statements of
Societatea Energetica Electrica S.A. to be submitted in accordance with Order 2844/2016 with subsequent
amendments;
evaluate if all financial statements contained in the consolidated annual report have been prepared in a valid
XHTML format;
Evaluating if all mark-ups, including the voluntary mark-ups of disclosures meet the following requirements:
o
o
o
the XBRL mark-up language is used;
the elements of the core taxonomy specified in Annex VI of the ESEF Regulation with the closest
accounting meaning shall be used, unless an extension taxonomy element is created in compliance with
Annex IV of the ESEF Regulation;
the mark-ups shall comply with the common rules on mark-ups as per ESEF Regulation;
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
272 | 2020 ANNUAL REPORT
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5
INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
Conclusion
In our opinion, the consolidated financial statements for the year ended 31 December 2020 included in the annual financial
report in the digital files, comply in all materials respects with the requirements of ESEF Regulation.
In this section, we do not express an audit opinion, review conclusion or any other assurance conclusion on the consolidated
financial statements. Our audit opinion relating to the consolidated financial statements of Societatea Energetica Electrica
S.A. for the year ended 31 December 2020 is set out in the section Report on the audit of the consolidated financial
statements above.
Răzvan Ungureanu, Statutory Auditor
For signature, please refer to the original signed
Romanian version.
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under AF 4866
On behalf of:
DELOITTE AUDIT SRL
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under FA 25
The Mark Building, 84-98 and 100-102 Calea Griviței,
8th Floor and 9th Floor, District 1
Bucharest, Romania
March 4, 2021
6
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2020 DIRECTORS’ REPORT
Separate
Financial
Statements
as at and
for the year ended
31 December 2020
prepared in accordance with
Ministry of Public Finance Order no.
2844/2016 for the approval of the
Accounting Regulations in
accordance with International
Financial Reporting Standards
Free translation from Romanian,
which is the official and binding version
275 | 2020 ANNUAL REPORT
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SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
PREPARED IN ACCORDANCE WITH THE ORDER OF THE MINISTRY OF PUBLIC FINANCE NO. 2844/2016
CONTENTS
Separate statement of financial position
Separate statement of profit or loss
Separate statement of comprehensive income
Separate statement of changes in equity
Separate statement of cash flows
Notes to the separate financial statements
Basis of preparation
1.
2.
3.
4.
Reporting entity and general information
Basis of accounting
Functional and presentation currency
Use of judgments and estimates
Accounting policies
5.
6.
7.
Basis of measurement
Significant accounting policies
Adoption of new and revised standards
Performance for the year
8.
9.
10.
11.
Revenue
Other income and operating expenses
Net finance income
Earnings per share
Employee benefits
12.
13.
14.
Short-term employee benefits
Post-employment and other long-term employee benefits
Employee benefit expenses
Income tax
15.
Income tax
Assets
16.
17.
18.
19.
20.
21.
22.
23.
Trade receivables
Deposits with maturity date more than three months
Other receivables
Cash and cash equivalents
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Loans granted to subsidiaries
Equity and liabilities
24.
25.
26.
27.
Capital and reserves
Trade payables
Other payables
Provisions
Financial instruments
28.
Financial instruments - fair values and risk management
278
280
281
282
284
286
286
286
288
288
288
289
289
289
296
297
297
297
298
298
298
298
299
301
302
302
303
303
304
305
305
306
310
310
313
316
316
317
317
318
318
318
276 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
PREPARED IN ACCORDANCE WITH THE ORDER OF THE MINISTRY OF PUBLIC FINANCE NO. 2844/2016
Other information
29.
30.
31.
32.
Related parties
Contingencies
Commitments
Subsequent events
321
321
325
327
327
277 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Restricted cash
Loans granted to subsidiaries – long term
Right of use assets
Total non-current assets
Current assets
Cash and cash equivalents
Deposits with maturity date more than three months
Restricted cash
Trade receivables
Other receivables
Inventories
Prepayments
Loans granted to subsidiaries – short term
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserve
Pre-paid capital contributions in kind from shareholders
Revaluation reserves
Legal reserves
Other reserves
Retained earnings
Gains referring to share issue
Losses referring to share issue
Total equity
Note
31 December 2020 31 December 2019
20
21
22
19
23
19
17
19
16
18
23
24
24
24
24
24
24
24
24
24
96,943,295
272,880
161,619,617
4,231,289
2,284,881,698
2,217,229,628
-
320,000,000
1,030,000,000
1,030,000,000
1,433,070
1,739,658
3,413,530,943
3,734,820,192
193,484,820
180,279,381
-
66,471,188
320,000,000
411,954
180,761,447
-
427,549
-
5,051,841
15,120,713
89,312
200,921
-
5,500,000
695,085,770
272,713,356
4,108,616,713
4,007,533,548
3,464,435,970
3,464,435,970
103,049,177
103,049,177
(75,372,435)
(75,372,435)
7,366
7,366
12,605,266
5,851,829
212,027,639
197,091,689
35,644,469
35,645,456
296,938,104
256,204,946
-
-
2,185,519
(963,601)
4,049,335,556
3,988,135,916
278 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Note
31 December 2020
31 December 2019
13
25
26
12,13
27
485,741
1,453,187
1,938,928
968,556
7,199,932
36,034,414
152,559
7,168,505
5,818,263
1,012,867
1,978,305
2,991,172
795,513
4,886,047
1,613,208
554,548
5,249,675
3,307,469
57,342,229
16,406,460
59,281,157
19,397,632
Liabilities
Non-current liabilities
Lease liability – long term
Employee benefits
Total non-current liabilities
Current liabilities
Lease liability – short term
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
Total current liabilities
Total liabilities
Total equity and liabilities
4,108,616,713
4,007,533,548
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
279 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Revenues
Other income
Employee benefits
Note
2020
2019
8
9
14
3,250,787
19,040,578
14,516,325
2,329,343
(31,818,555)
(29,501,304)
Depreciation and amortization
20,21
(13,050,255)
(22,132,605)
Reversal of impairment of trade and other receivables, net
16,18
98,583,335
1,641,814
Impairment of property, plant and equipment, net
Change in provisions for legal cases and non-compete clauses, net
Other operating expenses
Profit/(loss) before finance result
Finance income
Finance costs
Net finance income
Profit before tax
Income tax benefit/(expense)
Profit for the year
Earnings per share
20
27
9
10
10
(9,979,491)
(3,905,952)
(2,510,794)
409,308
(23,870,825)
(20,813,350)
35,120,527
(52,932,168)
260,305,358
310,927,134
(123,963)
(202,583)
260,181,395
310,724,551
295,301,922 257,792,383
15
3,076,614
(17,652)
298,378,536
257,774,731
Basic and diluted earnings per share (RON)
11
0.88
0.76
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
280 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Note
2020
2019
Profit for the year
298,378,536
257,774,731
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of property, plant and equipment
Tax related to revaluation of property, plant and equipment
Re-measurements of the defined benefit liability
Tax related to re-measurements of the defined benefit liability
24
15
13
15
11,901,253
(3,059,897)
-
-
104,482
(60,739)
(16,717)
17,652
Other comprehensive income, net of tax
8,929,121
(43,087)
Total comprehensive income
307,307,657
257,731,644
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
281 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
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282 | 2020 ANNUAL REPORT
ELECTRICA S.A.
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SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
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283 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortisation
Impairment of property, plant and equipment, net
Loss/(Gain) from the disposal of tangible assets
Reversal of impairment of trade and other
receivables, net
Net finance income
Changes in employee benefits obligations
Changes in provisions, net
Income tax (benefit)/ expense
Changes in:
Trade receivables
Other receivables
Trade payables
Other payables
Employee benefits
Cash generated/(used in) from operating
activities
Note
2020
2019
298,378,536
257,774,731
20
21
20
9
11,133,444
20,268,618
1,916,811
1,863,987
9,979,491
3,905,952
629,452
(1,366,442)
16,18
(98,583,335)
(1,641,814)
10
13
27
15
(260,181,395)
(310,724,551)
(390,301)
-
2,510,794
(409,308)
(3,076,614)
17,652
(37,683,117)
(30,311,175)
103,223,222
5,591,265
4,329,592
4,316,870
1,755,495
1,243,177
(419,871)
(2,531,418)
1,888,495
(1,278,415)
73,093,816
(22,969,696)
Interest paid
(1,983)
(68,675)
Net cash from/(used in) operating activities
73,091,833
(23,038,371)
284 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Note
2020
2019
Cash flows from investing activities
Payments for purchases of property, plant and equipment
(4,024,333)
(2,248,969)
Payments for purchase of intangible assets
(29,175)
(280,541)
Proceeds from the sale of property, plant and equipment
191,996
1,785,429
Payments for deposits with maturity of 3 months or longer
-
(368,000,000)
Proceeds from deposits with maturity of 3 months or
longer
Loans granted to subsidiaries
Cash pooling net position
Interest received
Dividends received
66,471,188
403,000,000
23
29
-
(62,209,626)
(132,171,404)
-
41,385,917
43,746,912
10
214,969,717
264,434,825
Net cash from investing activities
186,793,906
280,228,030
Cash flows from financing activities
Proceeds from issue of share capital, net
24
-
1,121,939
Dividends paid
Payment of lease liabilities
Net cash used in financing activities
24 (245,779,724)
(247,197,612)
(900,576)
(801,567)
(246,680,300)
(246,877,240)
Net increase in cash and cash equivalents
13,205,439
10,312,419
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
19
19
180,279,381
169,966,962
193,484,820
180,279,381
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
285 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
1
Reporting entity and general information
These financial statements are the separate financial statements of Societatea Energetica Electrica S.A.
(“Company” or “Electrica SA”) as at and for the year ended 31 December 2020.
Electrica was originally incorporated as a company in 1998 by Government Decision no. 365/1998, following the
restructuring of the former National Electricity Company (RENEL). On 1 August 2000, following the restruc-
turing of the former National Electricity Company (CONEL) under the Government Decision no. 627/2000, the
Company was allocated a new tax registration number. The registered office of the Company is no 9, Grigore
Alexandrescu Street, District 1, Bucharest, Romania. The Company has sole registration code 13267221 and
Trade Register number J40/7425/2000.
As at 31 December 2020 and 31 December 2019, the major shareholder of Societatea Energetica Electrica S.A.
is the Romanian State, represented by the Ministry of Energy (former Ministry of Economy, Energy and Busi-
ness Environment) with a share of ownership of 48.79% from the share capital.
The Company’s shares are listed on the Bucharest Stock Exchange and the global depository receipts (“GDRs”)
are listed on the London Stock Exchange. The shares traded on the London Stock Exchange are the global
depositary receipts, one global depositary receipt representing four shares. The Bank of New York Mellon is
the depositary bank for these securities.
As at 31 December 2020, Electrica SA has the following investments in subsidiaries:
Subsidiary
Activity
Sole registration
code
Head
Office
% shareholding as at
31 December 2020
Distributie Energie
Electrica Romania
S.A. („DEER”)
Electricity distribution in
geographical areas Tran-
silvania Nord, Transilvania
Sud and Muntenia Nord
Electrica Furnizare
S.A.
Electricity and natural
gas supply
Electrica Serv S.A.
Services in the energy
sector (maintenance,
repairs, construction)
Servicii Energetice
Oltenia S.A. (in ban-
kruptcy)
Services in the energy
sector (maintenance,
repairs, construction)
Servicii Energetice
Moldova S.A. (in
bankruptcy)
Services in the energy
sector (maintenance,
repairs, construction)
Servicii Energetice
Banat S.A. (in ban-
kruptcy)
Services in the energy
sector (maintenance,
repairs, construction)
Servicii Energetice
Dobrogea S.A. (in
bankruptcy)
Services in the energy
sector (maintenance,
repairs, construction)
14476722
Cluj-
Napoca
100%
28909028
Bucuresti
99.9998409513906%
17329505
Bucuresti
29389861
Craiova
29386768
Bacau
29388211
Timisoara
29388378
Constanta
100%
100%
100%
100%
100%
As at 31 December 2019, Electrica SA had the following investments in subsidiaries:
Subsidiary
Activity
Sole registration
code
Head
Office
% shareholding as
at 31 Dec 2019
Societatea de Distri-
butie a Energiei Elec-
trice Muntenia Nord
S.A. (“SDEE Muntenia
Nord S.A.”)
Societatea de Dis-
tributie a Energiei
Electrice Transilvania
Nord S.A. (“SDEE
Transilvania Nord
S.A.”)
Electricity distribution in
geographical area of Mun-
tenia Nord
14506181
Ploiesti
99.9999719027621%
Electricity distribution in
geographical area of
Transilvania Nord
14476722
Cluj-
Napoca
99.9999731116341%
286 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Subsidiary
Activity
Sole registration
code
Head
Office
% shareholding as
at 31 Dec 2019
Societatea de Dis-
tributie a Energiei
Electrice Transilvania
Sud S.A. (“SDEE Tran-
silvania Sud S.A.”)
Electricity distribution in
geographical area of Tran-
silvania Sud
Electrica Furnizare
S.A.
Electricity and natural gas
supply
Electrica Serv S.A.
Servicii Energetice
Muntenia S.A.
Services in the energy sec-
tor (maintenance, repairs,
construction)
Services in the energy sec-
tor (maintenance, repairs,
construction)
Servicii Energetice
Oltenia S.A. (in ban-
kruptcy)
Services in the energy sec-
tor (maintenance, repairs,
construction)
Servicii Energetice
Moldova S.A. (in ban-
kruptcy)
Services in the energy sec-
tor (maintenance, repairs,
construction)
Servicii Energetice
Banat S.A. (in ban-
kruptcy)
Services in the energy sec-
tor (maintenance, repairs,
construction)
Servicii Energetice
Dobrogea S.A. (in
bankruptcy)
Services in the energy sec-
tor (maintenance, repairs,
construction)
The Company’s main activities
14493260
Brasov
99.999977637%
28909028
Bucuresti
99.9998390431663%
17329505
Bucuresti
100%
29384120
Bucuresti
100%
29389861
Craiova
100%
29386768
Bacau
100%
29388211
Timisoara
100%
29388378
Constanta
100%
Currently, the core business of the Company, according to the Statute is „Activities of business and manage-
ment consulting”, also performing corporate activities at parent company level for its subsidiaries.
Electrica SA is the parent company of one electricity distribution company (set up from merger of three elec-
tricity distribution companies), one electricity and natural gas supplier and five companies providing services
in the energy sector (out of which four are currently in bankruptcy). As of 31 August 2020, Electrica SA has
an indirect shareholding of 100% in one energy production company from renewable sources (photovoltaic
panels), Electrica Energie Verde 1 SRL, which was acquired by the subsidiary Electrica Furnizare S.A..
During 2020, the three distribution subsidiaries, Societatea de Distributie a Energiei Electrice Muntenia Nord
S.A., Societatea de Distributie a Energiei Electrice Transilvania Nord S.A. and Societatea de Distributie a Ener-
giei Electrice Transilvania Sud S.A., merged through absorption, the absorbing entity being Societatea de
Distributie a Energiei Electrice Transilvania Nord S.A..
On 14 October 2020, the Cluj Specialized Court admitted the request of SDEE Transilvania Nord S.A., as absor-
bing company, and the request of SDEE Transilvania Sud S.A. and SDEE Muntenia Nord S.A., as the absorbed
companies, approved the merger according to the merger project no. 1404 dated 26 June 2020, registered
with the Trade Register Office of Cluj Court, the Trade Register Office of Prahova Court and the Trade Register
Office of Brasov Court and published in the Official Gazette of Romania Part IV no. 2351 from 10 July 2020 and
ordered the deregistration of the absorbed companies from the Trade Register.
Therefore, the merger produces its effects starting with the effective date, 31 December 2020, when SDEE
Transilvania Sud S.A. and SDEE Muntenia Nord S.A. as the absorbed entities ceased to exist, being dissolved
without going into liquidation. Consequently, all of their assets and liabilities were transferred through the
effect of the merger by absorption to SDEE Transilvania Nord S.A., as the absorbing entity, in exchange of the
issuance of new shares in the share capital of SDEE Transilvania Nord S.A. in favour of the shareholder of the
absorbed entities, namely Electrica SA. Thus, on 31 December 2020, Distributie Energie Electrica Romania
S.A., formed by the merger of the three former electricity distribution companies was recorded on the Nati-
onal Trade Register Office.
During 2020, the two energy services subsidiaries, Electrica Serv S.A. and Servicii Energetice Muntenia S.A.
merged through absorption, the absorbing entity being Electrica Serv S.A..
On 17 September 2020, the VI Civil Section of the Bucharest Court admitted the request of Electrica Serv
S.A., as absorbing company, and the request of Servicii Energetice Muntenia S.A., as the absorbed company,
287 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
approved the merger according to the merger project no. 934 dated 12 June 2020 registered with the Trade
Register Office of Bucharest Court and published in the Official Gazette of Romania Part IV, no. 2303 from 8
July 2020 and ordered the deregistration of the absorbed company from the Trade Register.
Therefore, the merger produces its effects starting with the effective date, 30 November 2020, when Servicii
Energetice Muntenia S.A., as the absorbed entity, ceased to exist, being dissolved without going into liqui-
dation. Consequently, all of its assets and liabilities were transferred through the effect of the merger by ab-
sorption to Electrica Serv S.A., as the absorbing entity, in exchange of the issuance of new shares in the share
capital of Electrica Serv S.A. in favour of the shareholder of the absorbed entity, namely Electrica SA.
Thus, starting with 1 December 2020, the merger between the aforementioned companies was finalized and
the energy services will be carried out only under the umbrella of Electrica Serv.The registration on the Nati-
onal Trade Register Office took place on 2 December 2020, with effective date 30 November 2020.
COVID-19 impact
On 11 March 2020 the World Health Organization (hereinafter “WHO”) declared the COVID-19 outbreak a pan-
demic and on 16 March 2020 Romania entered into a state of emergency. Measures taken by the Romanian
Government included restrictions on the cross-border movement of people, entry restrictions on foreign visi-
tors and lock-down of certain industries. Furthermore, significant key players on the market decided to shut
down their operations, especially in the automotive and heavy industries, while some smaller businesses
decided to curtail or temporarily suspend their operations. Therefore, on a macroeconomic level, the COVID
– 19 pandemic generated a downturn of the economy leading to a decrease in the demand for electricity,
especially from non-household consumers.
In the fight against the COVID-19 pandemic, the Company has adopted all the necessary measures for the ac-
tivity to continue to be carried out under normal conditions and issued guidelines aimed at preventing and/
or mitigating the effects of contagion at the workplace. Most important measures included strict adherence
to hygiene and social distancing rules as well as working from home where possible. A resilience plan was de-
veloped identifying essential activities and critical roles through scenario analysis and ensuring staff backup.
The aforementioned difficult conditions led to an increase in the operating expenses, mainly for the purchase
of protective equipment as well as sanitation services. However, despite the unstable economic environ-
ment, through a close monitoring of the financial performance on multiple tiers, the Company’s financial
performance maintained a positive trend as compared with the previous year, with improvements in profit,
revenues and cash flows.
Therefore, based on the publicly available information and considering the actions already implemented, the
Company does not anticipate a negative financial impact of the COVID-19 outbreak on its operations and no
significant threat over the Company’s ability to continue as a going concern over a period covering at least 12
months from the date of these consolidated financial statements has been identified. However, considering
the recent developments of the market, the long term effects of the COVID-19 outbreak cannot be reliably
estimated currently as the Company cannot preclude the possibility of further lock downs or an escalation in
the severity of current measures.
2
Basis of accounting
These separate financial statements have been prepared in accordance with the Ministry of Public Finance
Order no. 2844/2016 for the approval of the Accounting Regulations in accordance with International Financi-
al Reporting Standards („OMFP no. 2844/2016”). In acceptance of OMFP no. 2844/2016, International Financial
Reporting Standards are standards adopted under the procedure provided by the European Commission
Regulation no. 1606/2002 of the European Parliament and of the Council of 19 July 2002 regarding the appli-
cation of the international accounting standards.
These separate financial statements were authorized for issue by the Board of Directors on 4 March 2021 and
will be submitted for shareholders’ approval in the general meeting scheduled on 28 April 2021.
Details of the Company’s accounting policies are included in Note 6. The Company has consistently applied
the accounting policies to all periods presented in these separate financial statements.
3
Functional and presentation currency
These separate financial statements are presented in Romanian Lei (RON), which is the functional currency
of the Company. All amounts are in RON, if not otherwise stated.
4
Use of judgements and estimates
In preparing these separate financial statements, the management has made judgements, estimates and
assumptions that affect the application of the Company’s accounting policies and the reported amounts of
assets, liabilities, revenues and expenses. Actual results may differ from these estimates.
288 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are pros-
pectively recognised.
Judgements, assumptions and estimation uncertainties
Information about judgements made in applying accounting policies and assumptions and estimation uncer-
tainties that have the most significant effects on the amounts recognised in the separate financial statements is
included below:
Note 6 h) – estimates regarding the useful lives of property, plant and equipment;
Note 20 – assumptions regarding the revalued amount of property, plant and equipment;
Note 22 – assumptions and estimates regarding the valuation of shareholdings in the subsidiaries;
Management projections diD not modify significantly as a result of the COVID-19 pandemic, thus the as-
sumptions related to the impact of COVID-19 are not expected to result in any material adjustments to the
carrying amounts of assets and liabilities within the next twelve month period.
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values for
both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as
possible. Fair values are categorised into different levels in the fair value hierarchy based on the inputs used
in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or a liability are categorised into different levels of the
fair value hierarchy, then the fair value measurement is entirely categorised on the level of the lowest level
input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting peri-
od during which the change has occurred.
Further information about the assumptions used in measuring fair values is included in
Note 20: Property, plant and equipment.
Note 28: Financial instruments - fair values and risk management.
5
Basis of measurement
The separate financial statements have been prepared on the historical cost basis, except for the land and
buildings, which are measured based on revaluation model.
6
Significant accounting policies
The Company has consistently applied the following accounting policies to all periods presented in these
separate financial statements. The new amendments to existing standards that are effective starting with 1
January 2020 do not have a significant impact over the Company separate financial statements.
(a) Revenue
The Company recognizes the revenue from contracts with customers in accordance with IFRS 15.
Under the standard, revenue is recognized when or as the customer acquires control over the goods or servi-
ces rendered, at the amount which reflects the price at which the Company is expected to be entitled to re-
ceive in exchange of those goods or services. Revenue is recognized at the fair value of the services rendered
or goods delivered, net of VAT, excises or other taxes related to the sale.
(b)
Commissions
The Company assesses its revenue arrangements based on specific criteria to determine if it is acting as prin-
cipal or agent. If the Company acts in the capacity of an agent rather than as the principal in a transaction,
then the recognised revenue is the net amount of commission earned by the Company.
289 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
(c)
Finance income and finance costs
The Company’s finance income and finance costs include:
interest income;
interest expense;
dividend income;
the foreign currency gain or loss on financial assets and financial liabilities;
impairment losses recognised on financial assets (other than trade receivables).
Interest income or expense is recognised using the effective interest method.
(d)
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at the exchange rates at the date
of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency
at the exchange rate at the reporting date, as communicated by the National Bank of Romania. Non-mone-
tary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional
currency at the exchange rate when the fair value was determined. Foreign currency differences are recogni-
sed in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are
not translated to the functional currency.
(e)
Employee benefits
(i)
Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and are expensed as the related ser-
vice is provided. A liability is recognised for the amount expected to be paid if the Company has a present,
legal or constructive obligation to pay this amount as a result of past services provided by the employee and
the obligation can be reliably estimated.
(ii)
Defined benefit plans
The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by
estimating the amount of future benefits that employees have earned in the current and prior periods, by
discounting that amount.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projec-
ted unit credit method.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, are reco-
gnised immediately in other comprehensive income. The Company determines the net interest expense/
(income) on the net defined benefit liability for the period by applying the discount rate used to measure
the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability,
considering any changes in the net defined benefit liability during the period as a result of contributions and
benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised
in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Com-
pany recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(iii)
Other long-term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine its present value. Re-measurements are recognised in profit or loss in the period in which they arise.
(iv)
Termination benefits
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of
those benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be
settled wholly within 12 months of the end of the reporting period, then they are discounted.
(f)
Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except for the items
recognised directly in equity or in other comprehensive income, in which case it will be recognized directly in
equity or in other comprehensive income.
290 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
(i)
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enacted or
substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.
(ii)
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for:
temporary differences arising from the initial recognition of assets and liabilities resulting from transac-
tions that are not business combinations and that affect neither accounting nor taxable profit or loss;
temporary differences resulting from investments in subsidiaries, associates and jointly controlled
entities, to the extent that the Company can exercise control over the reversal period of the temporary
differences and it is probable that they will not be reversed in the foreseeable future.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary diffe-
rences only to the extent that it is probable that future taxable profits will be available to be used for covering
them. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax is measured based on the tax rates that are expected to be applicable to temporary differences
when they are reversed, using tax rates enacted or substantively enacted at the reporting date.
The measurement of the deferred tax reflects the tax consequences that would follow from the manner in
which the Company expects to recover or settle the carrying amount of its assets and liabilities at the repor-
ting date.
Deferred tax assets and liabilities are offset only if certain criteria are met.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it
is probable that the future taxable profits will be available against which they can be used.
(g)
Inventories
Inventories consist mainly of consumables and other materials.
Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated
selling price in the ordinary course of the business, less the estimated costs of completion and the estimated
costs necessary to perform the sale.
The cost of inventories is based on the weighted average cost method. The cost of inventories includes all the
acquisition costs and other expenses related to bringing the inventories to their current place and condition.
(h)
Property, plant and equipment
(i)
Recognition and measurement
Property, plant and equipment are initially recognised at cost, which includes purchase price and other costs
directly attributable to acquisition and bringing the asset to the location and condition necessary for their
intended use. After initial recognition, land and buildings are measured at revalued amounts less any accu-
mulated depreciation and any accumulated impairment losses since the most recent valuation.
The Company used the fair value as deemed cost for the tangible assets for the opening of the financial po-
sition.
Revaluations are performed with sufficient regularity to ensure that the carrying amount does not materially
differ from the one which would be determined using the fair value at the end of the reporting period.
When a building is revalued, the accumulated depreciation is eliminated against the gross carrying amount
of that item, and the net amount is restated to the revalued amount of the asset.
If significant parts of an item of property, plant and equipment have different useful lives, then they are ac-
counted for as separate items (major components) of property, plant and equipment.
Spare parts, stand-by and servicing equipment are classified as property, plant and equipment if they are
expected to be used during more than one period or can be used only in connection with an item of property,
plant and equipment.
291 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
(ii)
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with
the expenditure will flow to the Company.
(iii)
Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives and is recognised in profit
or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is re-
asonably certain that the Company will obtain ownership right by the end of the lease term. Land and other
non-current assets in progress are not depreciated.
The estimated useful lives of property, plant and equipment are as follows:
Category
Buildings
Equipment
Vehicles, furniture and office equipment
Useful lives (years)
40-60
4-12
3-10
The depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted
if appropriate.
(i)
(i)
Intangible assets
Recognition and measurement
Intangible assets that are acquired by the Company and have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses.
(ii)
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goo-
dwill and brands, is recognised in profit or loss as incurred.
(iii)
Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful lives, and is recognised in profit or loss.
The estimated useful lives of software and licenses are 3-5 years.
Amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
( j)
Financial instruments
Financial assets and financial liabilities are recognised in the Company’s statement of financial position
when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of
the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
(i)
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within
the time frame established by regulation or convention in the marketplace. All recognised financial assets
are measured subsequently in their entirety at either amortised cost or fair value, depending on the classifi-
cation of the financial assets.
292 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Financial assets are initially measured at fair value and subsequently at amortized cost in accordance with
IFRS 9, as they are held in a business model to collect contractual cash flows and these cash flows consist
solely of payments of principal and interest on the principal amount outstanding.
The amortized cost of a financial asset is the amount at which the financial asset is measured at initial re-
cognition less the principal reimbursements, plus the cumulative amortization using the effective interest
method, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortized cost
of a financial asset before adjusting for any loss allowance.
Foreign exchange gains and losses
The carrying amount of financial assets that are denominated in a foreign currency is determined in that
foreign currency and translated at the spot rate at the end of each reporting period.
Loans and receivables
These assets are initially recognized at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, they are measured at amortized cost using the effective interest method. The amortised
cost is reduced by impairment losses.
Loans and receivables comprise trade receivables, cash and cash equivalents and bank deposits.
Trade receivables
Trade receivables include mainly invoices issued or to be issued to the subsidiaries for the rendered services.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits and deposits with maturities of three
months or less from the transaction date that are subject to an insignificant risk of changes in their fair value,
that are used by the Company in the management of its short-term commitments.
(ii)
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at
fair value through profit or loss.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii)
held-for-trading, or (iii) designated as at fair value, are measured subsequently at amortised cost using the
effective interest method. The effective interest method is a method of calculating the amortised cost of a
financial liability and of allocating interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments (including all fees and points paid or received
that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised
cost of a financial liability.
Other financial liabilities include trade payables.
(iii)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares,
net of any tax effects, are recognized as a deduction from equity.
Repurchase and reissue of ordinary shares (treasury shares)
When shares recognized as equity are repurchased, the amount of the consideration paid, which includes
directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased
shares are classified and presented in the treasury share reserve. When treasury shares are sold or reissued
subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit
on the transaction is presented within share premium.
(k)
Impairment
Impairment of financial assets
The Company recognises a loss allowance for expected credit losses on investments in debt instruments that
are measured at amortised cost or at fair value through other comprehensive income. The amount of expec-
ted credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of
the respective financial instrument.
293 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
The Company always recognises lifetime expected credit losses for trade receivables. The expected credit
losses on these financial assets are estimated using a provision matrix based on the Company’s historical cre-
dit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an
assessment of both the current as well as the forecast direction of conditions at the reporting date, including
time value of money where appropriate.
i) Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recogni-
tion, the Company compares the risk of a default occurring on the financial instrument at the reporting date
with the risk of a default occurring on the financial instrument at the date of initial recognition.
Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is
more than 90 days past due unless the Company has reasonable and supportable information to demonstra-
te that a more lagging default criterion is more appropriate.
(ii) Write-off policy
The Company writes off a financial asset when after the finalization of the bankruptcy proceedings. Financial
assets written off may still be subject to enforcement activities under the Company’s recovery procedures,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
(iii) Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e.
the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probabi-
lity of default and loss given default is based on historical data adjusted by forward-looking information as
described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross
carrying amount at the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows
that are due to the Company in accordance with the contract and all the cash flows that the Company ex-
pects to receive, discounted at the original effective interest rate.
Derecognition of financial assets
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the as-
set expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of
the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards
of ownership and continues to control the transferred asset, the Company recognizes its retained interest in
the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all
the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the
financial asset and also recognizes a collateralized borrowing for the proceeds received.
(l)
Revaluation reserves
The difference between the revalued amount and the net carrying amount of property, plant and equipment
is recognized as revaluation reserve included in equity.
If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognized and accumu-
lated in equity under the heading of revaluation reserve. However, the increase is recognized in profit and
loss to the extent that it reverses a revaluation decrease of the same amount of the asset previously recogni-
sed in profit and loss.
If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit or
loss, However, the decrease is recognized in equity in revaluation reserves if there is any credit balance exis-
ting in the revaluation reserve in respect of that asset.
The revaluation reserve is transferred to retained earnings in an amount corresponding to the use of the asset
(as the asset is depreciated) and upon disposal of the asset.
(m)
Dividends
Dividends are recognized as a deduction from equity in the period in which their distribution is approved and
recognized as a liability to the extent it is unpaid at the reporting date. Dividends are disclosed in the notes to
financial statements when their distribution is proposed after the reporting date and before the date of the
issuance of the financial statements.
294 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
(n)
Capital contributions in kind from shareholders
These contributions from a shareholder represent pre-paid contributions of land for which the Company
obtained title deeds in respect of future issuance of shares. The amounts recorded are based on the fair value
of the land.
(o)
Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obli-
gation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required
to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
The unwinding of the discount is recognised as finance cost.
A provision for restructuring is recognised when the Company has approved a detailed and formal restruc-
turing plan, and the restructuring either has commenced or has been announced publicly. No provisions are
provided for future operating losses.
(p)
Contingent assets and liabilities
A contingent liability is:
(a)
a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control
of the Company; or
a present obligation that arises from past events that is not recognised because:
(b)
i. it is not probable that an outflow of resources embodying economic benefits will be required
to settle the obligation; or
ii. the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognized in the financial statements of the Company. They are presented in
case the output of resources incorporating economic benefits is possible and not probable.
A contingent asset is a potential asset that appears as a result of previous events and whose existence will be
confirmed only by the occurrence or the non-occurrence of one or more uncertain future events, which are
not fully controlled by the Company.
A contingent asset is not recognized in the financial statements of the Company, but it is shown when an
input of economic benefits is likely to arise.
(q)
Leases
(i)
The Company as lessee
The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in
which it is the lessee, except for short-term leases (with a lease term of 12 months or less) and leases of low
value assets (of less than USD 5,000). For these leases, the Company recognises the lease payments as an
operating expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the com-
mencement date, discounted by using the default rate in the lease. If this rate cannot be readily determined,
the Company uses its incremental borrowing rate.
The lease liability is presented as a separate line in the statement of financial position. The lease liability is
subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-
use asset) whenever:
the lease term has changed or there is a significant event or change in circumstances resulting in a
change in the assessment of exercise of a purchase option, in which case the lease liability is remea-
sured by discounting the revised lease payments using a revised discount rate;
the lease payments change due to changes in an index or rate or a change in expected payment un-
der a guaranteed residual value, in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the lease payments change is due
to a change in a floating interest rate, in which case a revised discount rate is used);
a lease contract is modified and the lease modification is not accounted for as a separate lease, in
which case the lease liability is remeasured based on the lease term of the modified lease by discoun-
295 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
ting the revised lease payments using a revised discount rate at the effective date of the modification.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying as-
set. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the
Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful
life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the statement of financial position.
(ii)
Rental income
Rental income from property, plant and equipment other than property investment is recognised as Other inco-
me. Rental income is recognised on a straight-line basis over the term of the lease.
(r)
Subsequent events
Events occurring after the reporting date 31 December 2020, which provide additional information about condi-
tions prevailing at the reporting date (adjusting events) are reflected in the separate financial statements. Events
occurring after the reporting date that provide information on events that occurred after the reporting date
(non-adjusting events), when material, are disclosed in the notes to the separate financial statements. When the
going concern assumption is no longer appropriate at or after the reporting period, the financial statements are
not prepared on a going concern basis.
7
Adoption of new and revised standards and interpretations
Initial application of new amendments to the existing standards effective for the current reporting period
The following amendments to the existing standards issued by the International Accounting Standards Board
(IASB) and adopted by the EU are effective for the current reporting period:
Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in
Accounting Estimates and Errors” - Definition of Material - adopted by the EU on 29 November 2019 (effec-
tive for annual periods beginning on or after 1 January 2020);
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measure-
ment” and IFRS 7 “Financial Instruments: Disclosures” - Interest Rate Benchmark Reform - adopted by the
EU on 15 January 2020 (effective for annual periods beginning on or after 1 January 2020);
Amendments to IFRS 16 “Leases” - Covid-19 - Related Rent Concessions - adopted by the EU on 9 October
2020 and effective at the latest, as from 1 June 2020 for financial years starting on or after 1 January 2020;
Amendments to References to the Conceptual Framework in IFRS Standards - adopted by the EU on 29
November 2019 (effective for annual periods beginning on or after 1 January 2020).
The adoption of new amendments to the existing standards has not led to any material changes in the Company’s
separate financial statements.
Standards and amendments to the existing standards issued by IASB and adopted by the EU but not yet
effective
At the date of authorization of these separate financial statements, the following amendments to the existing
standards were issued by IASB and adopted by the EU and which are not yet effective:
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measure-
ment”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases” - In-
terest Rate Benchmark Reform - Phase 2 adopted by the EU on 13 January 2021 (effective for annual periods
beginning on or after 1 January 2021);
The Company has elected not to adopt the amendments to existing standards in advance of their effective dates.
The Company anticipates that the adoption of these amendments to existing standards will have no material im-
pact on the separate financial statements of the Company in the period of initial application.
New standards and amendments to the existing standards issued by IASB but not yet adopted by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International
Accounting Standards Board (IASB) except for the following new standards and amendments to the existing stan-
dards, which were not endorsed for use in EU as at the date of publication of these separate financial statements
(the effective dates stated below is for IFRS as issued by IASB):
IFRS 17 “Insurance Contracts” including amendments to IFRS 17 (effective for annual periods beginning on
or after 1 January 2023);
Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current or
Non-Current (effective for annual periods beginning on or after 1 January 2023);
Amendments to IAS 16 “Property, Plant and Equipment” - Proceeds before Intended Use (effective for an-
nual periods beginning on or after 1 January 2022);
296 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Onerous Contracts -
Cost of Fulfilling a Contract (effective for annual periods beginning on or after 1 January 2022);
Amendments to various standards due to “Improvements to IFRSs (cycle 2018 -2020)” resulting from the
annual improvement project of IFRS (IFRS 1, IFRS 9, IFRS 16 and IAS 41) primarily with a view to removing
inconsistencies and clarifying wording (The amendments to IFRS 1, IFRS 9 and IAS 41 are effective for annual
periods beginning on or after 1 January 2022. The amendment to IFRS 16 only regards an illustrative exam-
ple, so no effective date is stated.).
The Company anticipates that the adoption of these new standards and amendments to the existing standards
will have no material impact on the separate financial statements of the Company in the period of initial applica-
tion.
8
Revenue
Revenues from services contracts related to the Automatic
Meter Reading System
3,250,787
19,040,578
2019
2020
In 2020, the revenues earned by the Company are represented by revenues from service contracts related to the
AMR system, concluded with the distribution subsidiaries that include services such as automatic meter reading
services, communications and monitoring of the quality parameters of electricity.
Starting with July 2020, the Company no longer provides services related to the AMR system as the system was
transferred as a contribution in kind to the share capital of its distribution subsidiaries (SDEE Transilvania Nord S.A.,
SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A), these assets being part of the distribution network (Note 20).
In respect to the timing of the revenue recognition, the services provided by the Company are transferred to the
customers over time.
9
Other income and operating expenses
(a)
Other income
Revenues from indemnities
Rental income
Gains from disposal of assets
Other
Total
2020
2019
12,827,435
-
332,589
130,246
-
1,366,442
1,356,301
832,655
14,516,325
2,329,343
Revenues from indemnities consist of the amount of RON 12,827,435 collected in 2020 by Electrica SA from
the National Agency for Fiscal Administration (“NAFA”) as a result of final civil sentences obtained in Court,
which ordered the cancellation of certain enforceable titles as well as fiscal decisions (Note 30). As at 31 De-
cember 2020, the amount was entirely collected from the NAFA.
(b)
Other operating expenses
Legal assistance and consulting fees
Postage and telecommunication
Other taxes and duties
Consumables
Repair and maintenance expenses
Losses from disposal of assets
Insurance premiums
Donations and sponsorships
Travel and transportation expenses
Other third party services
Other
Total
2020
2019
2,990,741
1,043,024
885,998
660,017
630,721
629,452
408,692
117,305
115,645
3,856,907
2,167,668
1,354,939
489,900
568,300
-
183,885
300,733
667,370
15,727,097
9,892,461
662,133
1,331,187
23,870,825
20,813,350
297 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
10
Net finance income
Dividends income
Interest income
Other finance income
Total finance income
Interest expense
Interest cost for employee benefits (Note 13)
Foreign exchange losses, net
Total finance costs
Net finance income
2020
2019
214,969,717
264,434,825
44,852,139
46,013,283
483,502
479,026
260,305,358
310,927,134
(1,983)
(80,355)
(41,625)
(68,675)
(94,638)
(39,270)
(123,963)
(202,583)
260,181,395
310,724,551
In 2020, the Company collected the entire amount of the total income of RON 214,969,717 received as divi-
dends from its subsidiaries (2019: RON 264,434,825).
11
Earnings per share
The calculation of basic and diluted earnings per share is based on the following profit attributable to share-
holders and weighted-average number of ordinary shares outstanding:
Profit attributable to shareholders
Profit for the year attributable to the shareholders of the Company
298,378,536
257,774,731
Profit attributable to the shareholders of the Company
298,378,536
257,774,731
2020
2019
Weighted-average number of ordinary shares (in number of shares)
Issued ordinary shares at 1 January (Note 24)
339,553,004
339,049,336
Effect of shares issued in December
-
20,986
Weighted-average number of ordinary shares at 31 December
339,553,004
339,070,322
2020
2019
For the calculation of basic and diluted earnings per share, the own shares repurchased by the Company (6,890,593
shares) were not treated as outstanding shares and are deducted from the total number of issued ordinary shares.
Basic and diluted earnings per share (RON)
0.88
0.76
2020
2019
12
Short-term employee benefits
Personnel payables
Current portion of defined benefit liability and other long-term
employee benefits
Social security charges
Tax on salaries
Total
31 December
2020
31 December
2019
6,335,832
4,102,791
48,477
194,372
620,934
163,262
782,577
169,935
7,168,505
5,249,675
Details related to employee benefit expenses are presented in Note 13.
In Romania, all employers and employees, as well as other persons, are contributors to the state social security
system. The social security system covers state pensions, child benefit, temporary incapacity for work situations,
risks of work accidents and professional diseases and other social assistance services, redundancy payments and
298 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
incentives granted to employers for creating new jobs.
13
Post-employment and other long-term employee benefits
The Company provides cash benefits to employees depending on seniority in the form of jubilee bonuses and de-
pending on the years of service at retirement in the form of retirement bonuses. The post-employment and other
long-term employee benefits are stipulated in the Collective Labour Contract.
Starting 1 April 2020, from the Collective Labour Contract of the Company the benefit in kind consisting of free of
charge electricity granted to employees who retired was excluded. This benefit was stipulated in the Collective
Labour Contract valid until 31 March 2020. In the same time, in order to compensate for the exclusion of the benefit
in the form of free of charge electricity, as per the new Collective Labour Contract in force starting 1 April 2020, the
retirement bonus increased by 1 gross monthly base salary on all three levels of seniority.
Thus, excluding the free of charge electricity benefit to the retired persons from the Collective Labour Contract ge-
nerated in 2020 a decrease in Employee benefits costs amounting to RON 574,243. In the same time, the increase
in the retirement bonus by 1 gross monthly base salary generated an additional expense in amount of RON 183,942.
In 2020 and 2019, employee benefit obligations were computed by an independent actuary using the projected
unit credit method with benefits calculated proportionally to the period of service.
Defined benefit liability
Other long-term employee benefits
Total
- Current portion*
- Non-current portion
*included in Personnel payables in Note 12
31 December
2020
31 December
2019
691,940
809,724
1,501,664
48,477
1,093,812
1,078,865
2,172,677
194,372
1,453,187
1,978,305
(i)
Movement in the defined benefit liability and other long-term employee benefits
The following tables shows a reconciliation between the opening balances and the closing balances of the defined
benefit liability and other long-term employee benefits and their components. There are no plan assets.
Defined benefit liability
Balance at 1 January
Included in profit or loss
Current service cost
Past service cost
Interest cost
Included in other comprehensive income
Re-measurements (gain)/loss
- Actuarial (gain)/loss
Other
Benefits paid
Balance at 31 December
2020
2019
1,093,812
923,770
76,681
(390,301)
35,576
53,614
35,836
44,817
(278,044)
134,267
(104,482)
60,739
(19,346)
691,940
(24,964)
1,093,812
Other long-term employee benefits
2020
2019
Balance at 1 January
Included in profit or loss
Current service cost
Actuarial (gain)/loss
1,078,865
1,024,556
112,553
(226,090)
37,439
6,907
299 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Interest cost
Other
Benefits paid
Balance at 31 December
44,779
49,821
(200,383)
(39,858)
809,724
1,078,865
Defined benefits refer to the retirement bonuses granted according to the seniority within the Company and other
long-term benefits refer to the jubilee bonuses granted for seniority.
(ii) Actuarial assumptions
The following are the main actuarial assumptions at the respective reporting date:
(a)
Macroeconomic assumptions:
inflation. The actuary used information from the National Commission for Strategy and Prognosis:
Year
2020
2021
2022
2023
2024+
Valuation date 31
December 2020
Valuation date 31
December 2019
-
2.5%
2.5%
2.5%
2.5%
2.6%
2.5%
2.5%
2.5%
2.5%
the discount rate used is based on the yield of the Romanian Government bonds at the reporting date, the-
refore the weighted average discount rate is 3.3% for the year 2020 (2019: 4.49%);
the mortality rate published by the National Institute of Statistics was adjusted to 90% to approximate the
mortality rates by generations;
taxes and social charges are those in force as at the reporting date.
(b)
Company specific assumptions:
gross salaries’ growth was forecasted at the inflation level for period 2021-2023. Starting with the year 2024,
salaries’ growth was forecasted at 2.5% per year;
employees’ turnover: based on historical data;
jubilee and retirement bonuses granted based on seniority as per the collective labour contracts, as follows:
Jubilee bonuses based on years of service in the Company
Seniority
20 years
30 years
35 years
40 years
45 years
Retirement bonuses based on years of service in the Company
Seniority
Between 8 and 10 years
Between 10 and 25 years
More than 25 years
300 | 2020 ANNUAL REPORT
ELECTRICA S.A.
No. of gross monthly base salaries
31 December
2020
31 December
2019
1
2
3
4
5
1
2
3
4
5
No. of gross monthly base salaries
31 December
2020
31 December
2019
2
3
4
1
2
3
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Termination benefits
a.
Termination benefits for individual lay-offs at the Company’s initiative
In accordance with the Collective Labour Contract concluded between the Company and the Union, when indivi-
dual labour contract is terminated at the Company’s initiative, the Company will pay termination benefits to the
employees depending on their period of service, as follows:
Seniority
1 - 2 years
2 - 5 years
5 - 10 years
10 - 20 years
More than 20 years
No. of gross monthly average base
salary at Company level
2
3
4
5
8
b.
Termination benefits for collective lay-offs at the Company’s initiative
For collective lay-offs, per the Collective labour contract, the Company will pay termination benefits to the em-
ployees depending on their period of service, as follows:
Seniority
1 - 3 years
3 - 5 years
5 - 10 years
10 - 20 years
More than 20 years
No. of gross monthly average base
salary at Company level
3
6
7
11
16
The above-mentioned stipulations do not apply to employees with individual labour contract concluded for a de-
termined period. The above provisions do not apply to employees that obtained other higher cumulative salary
compensation rights, provided by legal regulations regarding the Company’s reorganization and restructuring. Em-
ployees who are re-employed within the Company after layoff are not entitled to the above-mentioned benefits.
The financial statements do not include any provision for liabilities relating to compensation payments because
there is no present obligation in this regard.
c.
Termination benefits for voluntary redundancies
In accordance with the Agreements signed between the Company and the Union and the Addendums to the
Collective Labour Contract, in case the individual labour contract is terminated as voluntary redundancy from the
employee, the Company pays termination benefits depending on the period to reach the standard retirement age,
the period of service in the Company and the seniority. The number of gross monthly base salaries paid in 2020 as
termination benefits varied between 9 and 23. As of 31 December 2020, there is no longer an agreement in place for
the voluntary redundancies.
14
Employee benefit expenses
Average number of employees
Number of employees at 31 December
Wages and salaries
Social security contributions
Meal tickets
Termination benefit for labour/mandate contracts
Total
2020
2019
107
120
117
128
2020
2019
29,896,689
28,111,393
642,577
379,780
899,509
595,808
373,470
420,633
31,818,555
29,501,304
301 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
The number or employees at 31 December 2020 includes also the 7 employees with mandate agreements.
Termination benefits represent compensation payments in case of employees’ voluntary departure (see also Note
13 c) as well as management compensation in case of mandate contracts termination.
Management remuneration is presented within Note 29 – Related parties.
15
Income tax
In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain
tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and as-
sumptions and may involve a series of judgments about future events. The Company considers that the accounting
records for taxes due are adequate for all open fiscal years, based on assessment made by management taking into
account various factors, including the interpretation of tax legislation and previous experience. New information
may become available that causes the Company to change its judgment regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact the income tax expense in the period when such a determina-
tion is made.
(i)
Amounts recognised in profit or loss
Deferred tax (benefit)/expense
Total (benefit)/expense related to income tax
2020
(3,076,614)
(3,076,614)
2019
17,652
17,652
(ii)
Amounts recognised in other comprehensive income
2020
Before tax
Tax expense Net of tax Before tax
2019
Tax
benefit
Net of tax
11,901,253
(3,059,897)
8,841,356
-
-
-
104,482
(16,717)
87,765
(60,739)
17,652
(43,087)
Revaluation of
property, plant and
equipment
Re-measurement
of defined benefit
liability
Total
12,005,735
(3,076,614)
8,929,121
(60,739)
17,652
(43,087)
(iii)
Reconciliation of effective tax rate
2020
2019
Profit before tax
Tax using Company’s domestic
tax rate
Non-deductible expenses
Non-taxable income
Deductible legal reserve
Recognition of tax effect of pre-
viously unrecognised tax losses
Other tax effects
Total (benefit)/ expense rela-
ted to income tax
295,301,922
47,248,308
5,540,066
(38,303,478)
(2,362,415)
(18,163,352)
2,964,257
(3,076,614)
16%
2%
-13%
-1%
-6%
1%
-1%
257,792,383
41,246,781
6,936,425
(43,249,915)
(2,062,339)
(2,566,844)
(286,456)
17,652
16%
3%
-17%
-1%
-1%
0%
0%
302 | 2020 ANNUAL REPORT
ELECTRICA S.A.
-
-
-
-
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Non-taxable income represents dividend income in amount of RON 214,969,717 (2019: RON 264,434,825).
(iv)
Movement in deferred tax balances
2020
Net balance
at 1 January
2020
Recognised
in profit or
loss
Recognised in
other
comprehensi-
ve income
Balance at 31 December 2020
Net
Deferred
tax assets
Deferred
tax
liabilities
Property, plant and
equipment
2,188,192
(1,566,636)
3,059,897
3,681,453
-
3,681,453
Employee benefits
(1,356,886)
(489,773)
16,717
(1,829,942)
(1,829,942)
(831,306)
(1,020,205)
-
(1,851,511)
(1,851,511)
-
(3,076,614)
3,076,614
-
(3,681,453)
3,681,453
Tax loss carried
forward
Tax (assets)/
liabilities
2019
Net balance
at 1 January
2019
Recognised
in profit or
loss
Recognised in
other
comprehensi-
ve income
Balance at 31 December 2019
Net
Deferred
tax assets
Deferred
tax
liabilities
Property, plant and
equipment
3,277,724
(1,089,532)
-
2,188,192
-
2,188,192
Employee benefits
(568,633)
(770,601)
(17,652)
(1,356,886)
(1,356,886)
Tax loss carried
forward
Tax liabilities/
(assets)
(2,709,091)
1,877,785
-
(831,306)
(831,306)
-
17,652
(17,652)
-
(2,188,192)
2,188,192
(v)
Unrecognised deferred tax assets
The Company has not recognized deferred tax assets in respect of the entire cumulated tax losses as it is
not probable that future taxable profits will be available against which the Company can use the benefits
therefrom.
Tax losses
2020
2019
371,426,355
485,358,206
In 2019, the Company has considered the previously non-deductible loss allowance for Oltchim as deductible,
as the client entered into bankruptcy proceedings in 2019, thus recording a tax loss of RON 485,358,206 for whi-
ch no deferred tax asset was recognised (amounting to RON 77,657,313).
16
Trade receivables
Trade receivables, gross
Loss allowance
31 December 2020
31 December 2019
582,495,101
684,830,745
(582,083,147)
(679,778,904)
Total trade receivables, net
411,954
5,051,841
303 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Receivables from related parties are presented in Note 29.
Trade receivables, gross, comprise:
31 December 2020
31 December 2019
Electricity receivables from clients in litigation, insolvency
or bankruptcy (mainly Oltchim, Transenergo)
Late payment penalties from clients in litigation, insolven-
cy or bankruptcy (Oltchim)
Services related to the AMR system
Other
493,018,184
590,202,763
88,968,313
88,968,313
-
508,604
5,262,513
397,156
Total trade receivables, gross
582,495,101
684,830,745
Starting with July 2020, the Company no longer provides services related to the AMR system, as the system was
transferred as a contribution in kind to the share capital of the distribution subsidiaries (SDEE Transilvania Nord
S.A., SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A), these assets being part of the distribution network
(Note 20).
The reconciliation between the opening balances and the closing balances of the impairment for trade recei-
vables is as follows:
Loss allowance
Balance as at 1 January
Loss allowance recognized
Loss allowance used
Decrease in loss allowance
Balance as at 31 December
2020
2019
679,778,904
680,590,341
18
-
(41,527)
(811,437)
(97,654,248)
-
582,083,147
679,778,904
The ageing of trade receivables is presented in Note 28.
Oltchim (a state-controlled company) was an important customer of Electrica S.A. until January 2012, when the
Company transferred the contract to Electrica Furnizare S.A.. In January 2013, Oltchim entered into insolvency
procedures and subsequently in May 2019 started the bankruptcy procedures. Due to the uncertainties regar-
ding the recoverability of the amounts owed by this customer, the Company recognized in prior years a bad
debt allowance for the entire amount receivable. During 2020, the Company adjusted the uncollected VAT in
amount of RON 95,186,215 related to the doubtful receivables from Oltchim, based on the sentence of starting
the bankruptcy procedures and the provisions of art. 287 of the Fiscal Code.
Also during 2020, the Company adjusted the uncollected VAT related to the doubtful receivables from two
other clients based on the sentences of starting the bankruptcy procedures and the provisions of art. 287 of
the Fiscal Code, as follows: the amount of RON 707,624 related to CET Braila and the amount of RON 1,003,559
related to Electra Management & Supply.
As the entire amount of RON 96,897,398 was recovered during 2020, by offsetting the VAT positions to be reco-
vered with the payment position at the level of the VAT group to which the companies in the Electrica Group
belong, the adjustment for impairment was reversed with the same amount.
Loss allowances are determined according to IFRS 9 “Financial instruments” based on “expected credit loss”
model. A significant part of the loss allowances refers to clients in litigation, insolvency or bankruptcy procedu-
res, many of them being older than five years. The Company will derecognize these receivables together with
the related allowances after the finalization of the bankruptcy process. These receivables were treated separa-
tely in computing the allowance according to IFRS 9.
17
Deposits with maturity date more than three months
Deposits with maturity date more than three months
Total deposits with maturity date more than three months
-
-
66,471,188
66,471,188
31 December 2020
31 December 2019
304 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
As at 31 December 2020, the Company no longer has deposits with original maturity of more than three
months. As at 31 December 2019, deposits with original maturity of more than three months have an average
interest rate of 2.6%.
18
Other receivables
Cash-pooling receivables
Interest receivable
Other receivables
Bad debt allowance
Total other receivables, net
31 December 2020
31 December 2019
166,281,881
15,380,004
10,145,826
(11,046,264)
180,761,447
-
15,347,982
11,748,100
(11,975,369)
15,120,713
Cash-pooling receivables comprises the receivable of Electrica as at 31 December 2020 as cash pool leader in
the two cash-pooling systems set up at Group level (Note 23 and Note 29).
Interest receivable represents mainly interest to be received from related parties for the loans granted (Note
29).
The reconciliation between the opening balances and the closing balances of the impairment for other recei-
vables is as follows:
Loss allowance
Balance as at 1 January
Loss allowance recognized
Loss allowance used
Decrease in loss allowance
Balance as at 31 December
19
Cash and cash equivalents
2020
2019
11,975,369
13,617,183
-
-
-
-
(929,105)
(1,641,814)
11,046,264
11,975,369
Bank current accounts
Call deposits
Total cash and cash equivalents in the separate
statement of financial position and in the separate
statement of cash flow
31 December 2020
31 December 2019
18,418,340
3,019,423
175,066,480
177,259,958
193,484,820
180,279,381
Restricted cash – long-term
Restricted cash – short-term
-
320,000,000
320,000,000
-
As at 31 December 2020, Electrica SA has collateral deposits at BRD – Groupe Societe Generale as guarantees
for the long term borrowings received from BRD – Groupe Societe Generale by the Company’s distribution
subsidiaries (Societatea de Distributie a Energiei Electrice Transilvania Sud S.A., Societatea de Distributie a
Energiei Electrice Transilvania Nord S.A. and Societatea de Distributie a Energiei Electrice Muntenia Nord S.A.,
currently Distributie Energie Electrica Romania S.A.) in amount of RON 320,000,000 (31 December 2019: RON
320,000,000). As the long term borrowings are repayble on 16 October 2021, the amount of the collateral depo-
sits as at 31 December 2020 of RON 320,000,000 is presented in the statement of financial position as short-
term restricted cash.
305 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
20
Property, plant and equipment
The reconciliation between the initial balance and the final balance of property, plant and equipment in 2020 and
2019 was as follows:
Land and
land
improve-
ment
Buildings
Equipment
Vehicles,
furniture
and office
equipment
Construction
in progress
Total
Gross carrying
amount
Balance at 1
January 2019
Additions
Transfer from
construction in
progress
Transfer to intan-
gible assets
74,614,673
21,054,921
237,496,383
895,952
21,942,902
356,004,831
-
-
-
63,671
886,500
185,864
741,021
1,877,056
-
-
-
13,488,421
-
-
-
(13,488,421)
-
(4,503,110)
(4,503,110)
(912,135)
(298,450)
-
(38,660,586)
Disposals
(37,450,001)
Balance at 31
December 2019
37,164,672
21,118,592
250,959,169
783,366
4,692,392
314,718,191
Additions
32,235,368
1,905,508
285,216
520,751
54,230
35,001,073
Revaluation reco-
gnized in other
comprehensive
income, net
Revaluation reco-
gnized in profit
or loss, net
Gross book value
netted off against
the accumulated
depreciation at
revaluation
6,880,612
5,020,641
166,490
-
-
(890,671)
-
-
-
-
-
-
-
-
-
11,901,253
166,490
(890,671)
Disposals
(6,764,156)
(147,779)
(224,809,642)
(129,119)
(2,612,179)
(234,462,875)
69,682,986
27,006,291
26,434,743
1,174,998
2,134,443
126,433,461
-
-
-
314,424
129,341,260
473,659
-
130,129,343
301,013
19,897,386
70,219
-
(969,062)
(236,277)
-
-
20,268,618
(1,205,339)
Balance at 31
December 2020
Accumulated
depreciation
and impairment
losses
Balance at 1
January 2019
Depreciation
Accumulated
depreciation of
disposals
306 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Land and
land
improve-
ment
Buildings
Equipment
Vehicles,
furniture
and office
equipment
Construction
in progress
Total
-
-
-
-
-
-
-
-
-
-
-
1,771,509
-
-
-
-
1,771,509
2,134,443
2,134,443
615,437
150,041,093
307,601
2,134,443
153,098,574
299,307
10,714,327
119,810
(24,073)
(143,843,969)
(129,120)
1,905,508
9,435,994
-
(1,195,521)
(890,671)
-
-
-
-
-
-
-
-
-
11,133,444
(143,997,162)
11,341,502
(1,195,521)
(890,671)
1,905,508
25,151,924
298,291
2,134,443
29,490,166
Impairment of
property, plant
and equipment
Impairment of
construction in
progress
Balance at 31
December 2019
Depreciation
Accumulated
depreciation of
disposals
Impairment of
property, plant
and equipment
Reversal of
impairment of
property, plant
and equipment
Gross book value
netted off against
the accumulated
depreciation at
revaluation
Balance at 31
December 2020
Net carrying
amounts
At 1 January 2019
74,614,673
20,740,497
108,155,123
422,293
21,942,902
225,875,488
At 31 December
2019
At 31 December
2020
37,164,672
20,503,155
100,918,076
475,765
2,557,949
161,619,617
69,682,986
25,100,783
1,282,819
876,707
-
96,943,295
As at 31 December 2020, the buildings and land include the administrative headquarter of the Company and
the corresponding land, the plots of land over which the Company has obtained title deeds and the land and
buildings acquired in 2020 from the subsidiary Servicii Energetice Muntenia S.A..
On 28 May 2020, the Company acquired a plot of land and several buildings from Servicii Energetice Muntenia
S.A. in the total amount of RON 33,772,570, of which land in amount of RON 31,867,062 and buildings in amount
of RON 1,905,508.
The sale price was settled as follows:
the settlement of the loan granted to the subsidiary in amount of RON 5,500,000 (Note 23);
the settlement of the receivable in amount of RON 24,873,550 generated by the decrease in the share ca-
pital of the subsidiary with the same amount having no effect on the ownership of the Company (Note 22);
cash payment in amount of RON 3,399,020.
An additional amount of RON 368,306 representing taxes paid for the acquisition of the land was capitalized in
the value of the land.
307 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
The sale price represents the market value established through a valuation report prepared by an independent
valuer, member the National Association of Authorised Romanian Valuers and not related to the Company.
The plot of land received according to the payment agreement is in surface of 15,844 sqm and the buildings
are represented by 22 constructions in various stages of degradation, constructions for which the Company has
recognized an impairment amounting to RON 1,905,508.
Disposals from property, plant and equipment in the net amount of RON 90,465,713 refer mainly to the AMR
system (Automatic Meter Reading) equipment consisting of electricity measuring equipment and 7 plots of
land that were contributed in kind by Electrica SA to the share capital of its subsidiaries (SDEE Transilvania Nord
S.A., SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A. and Electrica SERV S.A.), as follows:
Month
Subsidiary
Assets transferred
Net book value (RON)
June 20 SDEE Muntenia Nord S.A.
AMR equipment
June 20 SDEE Muntenia Nord S.A.
2 plots of land in surface of 28,696.79
sqm
June 20 SDEE Transilvania Nord S.A.
AMR equipment
AMR license intangibles (see Note 21)
AMR construction in progress
June 20 SDEE Transilvania Sud S.A.
AMR equipment
AMR construction in progress
May 20
Electrica Serv S.A.
5 plots of land in surface of 23,474.07 sqm
Total
16.521.690
1.497.132
37.014.957
2.925.303
763.741
27.409.181
1.803.638
5.103.471
93.039.113
The contribution value for the AMR system was determined at the date of the in kind contribution through
a valuation report prepared by an independent valuer, member of the National Association of Authorised
Romanian Valuers and not related to the Company.
The independent valuer was appointed on 5 June 2020 by the Trade Register Office of Cluj Court, on 10
June 2020 by the Trade Register Office of Prahova Court and on 28 May 2020 by the Trade Register Office of
Brasov Court. Following the valuation performed, the Company booked an impairment for the AMR system
in amount of RON 9,435,994.
The in kind contribution of Electrica S.A. to the share capital of its distribution subsidiaries was approved by
the General Extraordinary Shareholders Meetings as follows:
SDEE Muntenia Nord S.A. General Extraordinary Shareholders Meeting Decision no. 4/18 June 2020;
SDEE Transilvania Nord S.A. General Extraordinary Shareholders Meeting Decision no. 4/18 June 2020;
SDEE Transilvania Sud S.A. General Extraordinary Shareholders Meeting Decision no. 5/18 June 2020
and no. 6/23 June 2020.
The share capital increase of the distribution subsidiaries with the in kind contribution of the AMR system
was approved by the Trade Register Offices as follows:
On 25 June 2020 by the Trade Register Office of Prahova Court;
On 22 June 2020 by the Trade Register Office of Cluj Court;
On 24 June 2020 by the Trade Register Office of Brasov Court.
Also in 2020, the Company reversed an impairment loss in amount of RON 1,195,521 for the equipment part of
the AMR system which was written off during 2020.
As at 31 December 2020, the Company performed the revaluation at fair value of tangible assets consisting
of land and buildings. The revaluation was performed by an independent authorized valuer Darian DRS S.A..
Following the revaluation performed, the gain from the increase in value on the land and buildings was
charged to Other Comprehensive Income in amount of RON 11,901,253 and in Profit or Loss in amount of RON
166,490.
Measurement of fair value
The Company’s land and buildings are stated at their revalued amounts, being the fair value at the date of re-
valuation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The fair value measurements of the Company’s land and buildings as at 31 December 2020 were performed
308 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
by Darian DRS S.A. an independent valuer not related to the Company. Darian DRS S.A. is member of the Na-
tional Association of Authorised Romanian Valuers, and has appropriate qualifications and recent experience
in the fair value measurement of properties in the relevant locations. The valuation conforms to International
Valuation Standards and was based on recent market transactions on arm’s length terms for similar proper-
ties, whenever possible and discounted cash-flows method.
There has been no change to the valuation technique during the period between the present revaluation
performed as at 31 December 2020 and the previous one, performed as at 31 December 2017.
The following table shows the valuation techniques used in measuring fair values (Level 3), as well as the
significant unobservable inputs used.
Category
Valuation technique
Land
Market approach
The fair value is estimated based on selling price per
square meter of land of similar characteristics (i.e.
ownership, legal limitations, financing and selling
conditions, location, physical and economical pro-
perties, and best use). The market price is mainly
based on recent transactions.
Buildings
Significant unob-
servable inputs
Inter-relationship be-
tween key unobserva-
ble inputs and fair value
measurement
Adjustment for
liquidity, locati-
on, size.
The estimated fair value
would increase/(decre-
ase) if:
Adjustment for
liquidity, location or
size would be lower/
(higher).
Market approach and discounted cash-flows (DCF)
method
Buildings were evaluated using the following me-
thods, depending on the best use and the availabi-
lity and credibility of available market information:
Market approach
The market approach is based on the selling price
per square meter for buildings with similar charac-
teristics(i.e. ownership, legal limitations, financing
and selling conditions, location, physical and econo-
mical properties, and best use)., adjusted liquidity,
location, size etc.
The DCF method
The valuation model based on the DCF method
estimates the present value of net cash flows to
be generated by a building taking into account
occupancy rate and annual rent. The discount rate
estimation considers, inter alia, the quality of a buil-
ding and its location.
Adjustment for
liquidity, locati-
on, size.
Adjustment for
liquidity, location or
size would be lower/
(higher).
Occupancy rates were
higher/(lower)
Yield rates were lower/
(higher)
Annual rent per sqm
was higher/(lower)
Occupancy
rates (90%)
Yield rates (be-
tween 9% and
10%)
Annual rent
per sqm (be-
tween 2 and
10 EUR/sqm),
depending on
location;
309 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
21
Intangible assets
Intangible assets include mainly licenses and costs of implementation of the accounting system SAP and
licenses for various software, as follows:
Gross carrying amount
Balance at 1 January 2019
Additions
Transfer from property, plant and equipment in progress
Disposals
Balance at 31 December 2019
Additions
Disposals
Balance at 31 December 2020
Accumulated depreciation and impairment losses
Balance at 1 January 2019
Amortisation
Accumulated amortization of disposals
Balance at 31 December 2019
Amortisation
Software and
licenses
Total
4,371,857
4,371,857
280,541
4,503,110
(268,717)
280,541
4,503,110
(268,717)
8,886,791
8,886,791
29,175
29,175
(5,093,287)
(5,093,287)
3,822,679
3,822,679
3,806,283
3,806,283
1,117,936
(268,717)
1,117,936
(268,717)
4,655,502
4,655,502
1,062,281
1,062,281
Accumulated amortization of disposals
(2,167,984)
(2,167,984)
Balance at 31 December 2020
3,549,799
3,549,799
Net carrying amounts
At 1 January 2019
At 31 December 2019
At 31 December 2020
565,574
565,574
4,231,289
4,231,289
272,880
272,880
Disposals from intangible assets in the net amount of RON 2,925,303 represent Converge licenses, part of the
AMR system that were transferred as in kind contributed by Electrica SA to the share capital of its subsidiaries
(SDEE Transilvania Nord S.A., SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A) (Note 20).
22
Investments in subsidiaries
The investments in subsidiaries are presented as follows:
31 December 2020
Gross value
Impairment
Net
Distributie Energie Electrica Romania S.A.
1,741,663,339
Electrica Furnizare S.A.
Electrica Serv S.A.
225,783,453
-
-
1,741,663,339
225,783,453
481,803,862
(164,368,956)
317,434,906
Servicii Energetice Oltenia S.A.(in bankruptcy)
82,033,220
(82,033,220)
Servicii Energetice Moldova S.A. (in bankruptcy)
106,162,492
(106,162,492)
Servicii Energetice Banat S.A. (in bankruptcy )
43,761,094
(43,761,094)
Servicii Energetice Dobrogea S.A. (in bankruptcy)
23,822,124
(23,822,124)
-
-
-
-
Total
2,705,029,584
(420,147,886)
2,284,881,698
310 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
31 December 2019
Gross value
Impairment
Net
Societatea de Distributie a Energiei Electrice Muntenia
Nord S.A.
534,323,696
Societatea de Distributie a Energiei Electrice Transilva-
nia Nord S.A.
539,102,599
Societatea de Distributie a Energiei Electrice Transilva-
nia Sud S.A.
Electrica Furnizare S.A.
Electrica Serv S.A.
580,356,224
225,783,453
-
-
-
-
534,323,696
539,102,599
580,356,224
225,783,453
460,898,882
(164,368,956)
296,529,926
Servicii Energetice Muntenia S.A.
41,133,730
-
41,133,730
Servicii Energetice Oltenia S.A. (in bankruptcy)
82,033,220
(82,033,220)
Servicii Energetice Moldova S.A. (in bankruptcy)
106,162,492
(106,162,492)
Servicii Energetice Banat S.A. (in bankruptcy )
43,761,094
(43,761,094)
Servicii Energetice Dobrogea S.A. (in bankruptcy)
23,822,124
(23,822,124)
-
-
-
-
Total
2,637,377,514
(420,147,886)
2,217,229,628
Changes in Company’s subsidiaries structure in 2020
Merger of the three distribution companies
On 27 May 2020, Electrica SA’s Board of Directors approved in principle the merger through absorption be-
tween Societatea de Distributie a Energiei Electrice Muntenia Nord S.A., Societatea de Distributie a Energiei
Electrice Transilvania Nord S.A. and Societatea de Distributie a Energiei Electrice Transilvania Sud S.A., the
absorbing entity being Societatea de Distributie a Energiei Electrice Transilvania Nord S.A..
Subsequently, on 3 July 2020 Electrica SA’s Board of Directors approved the merger through absorption be-
tween the aforementioned distribution entities, the absorbing entity being Societatea de Distributie a Ener-
giei Electrice Transilvania Nord S.A. according to the merger project no. 1404 dated 26 June 2020 that was
registered with the Trade Register Office of Cluj Court, the Trade Register Office of Prahova Court and the
Trade Register Office of Brasov Court and was published in the Official Gazette of Romania Part IV no. 2351
from 10 July 2020.
On 21 August 2020, the Extraordinary General Meeting of the Shareholders of Electrica SA approved the em-
powerment of the representative of Electrica SA to participate in the Extraordinary General Meeting of the
Shareholders of SDEE Transilvania Sud S.A. and SDEE Muntenia Nord S.A. and to express a favourable vote
regarding the dissolution without liquidation and of the deregistration from the Trade Register and from the
financial administration’s records of the absorbed companies SDEE Transilvania Sud S.A. and SDEE Muntenia
Nord S.A. starting with the effective date of the merger, in accordance with the Merger Project. Subsequently,
on 26 August 2020, took place the Extraordinary General Meetings of the Shareholders of SDEE Transilvania
Sud S.A., SDEE Transilvania Nord S.A. and SDEE Muntenia Nord S.A. regarding the approval of the merger by
the companies involved in this process.
On 14 October 2020, the Cluj Specialized Court admitted the request of SDEE Transilvania Nord S.A., as absor-
bing company, and the request of SDEE Transilvania Sud S.A. and SDEE Muntenia Nord S.A., as the absorbed
companies, approved the merger and ordered the deregistration of the absorbed companies from the Trade
Register.
Therefore, the merger produces its effects starting with the effective date, 31 December 2020, when SDEE
Transilvania Sud S.A. and SDEE Muntenia Nord S.A. as the absorbed entities ceased to exist, being dissolved
without going into liquidation. Consequently, all of their assets and liabilities were transferred through the
effect of the merger by absorption to SDEE Transilvania Nord S.A., as the absorbing entity, in exchange of the
issuance of new shares in the share capital of SDEE Transilvania Nord S.A. in favour of the shareholder of the
absorbed entities, namely Electrica SA.
Thus, on 31 December 2020, Distributie Energie Electrica Romania SA, formed by the merger of the three
former electricity distribution companies was recorded on the National Trade Register Office.
Also, based on the Romanian Energy Regulatory Authority Decision no. 2461 dated 23 December 2020, the
electricity distribution licenses granted by the regulator to the absorbed companies for the areas Muntenia
Nord and Transilvania Sud were transferred to the absorbing company, Distributie Energie Electrica Roma-
nia, starting with 1 January 2021.
311 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Merger of the two energy services companies
On 27 March 2020, Electrica SA’s Board of Directors approved in principle the merger through absorption
between Electrica Serv S.A. and Servicii Energetice Muntenia S.A. and the participation of the companies to
the merger, with Electrica Serv S.A. as absorbing company.
Subsequently, on 3 July 2020, Electrica SA’s Board of Directors approved the merger through absorption be-
tween Electrica Serv S.A. and Servicii Energetice Muntenia S.A. according to the merger project no. 934 dated
12 June 2020 that was registered with the Trade Register Office of Bucharest Court and was published in the
Official Gazette of Romania Part IV, no. 2303 from 8 July 2020.
On 21 August 2020, the Extraordinary General Meeting of the Shareholders of Electrica SA, as the shareholder
of Servicii Energetice Muntenia S.A., approved the empowerment of the representative of Electrica SA to
participate in the Extraordinary General Meeting of the Shareholders of Servicii Energetice Muntenia S.A. and
to express a favourable vote regarding the dissolution without liquidation and of the deregistration from the
Trade Register and from the financial administration’s records of the absorbed company Servicii Energetice
Muntenia S.A. starting with the effective date of the merger, 30 November 2020. Subsequently, on 25 August
2020, took place the Extraordinary General Meetings of the Shareholders of Servicii Energetice Muntenia S.A.
and Electrica Serv S.A. regarding the approval of the merger by the companies involved in this process.
On 17 September 2020, the VI Civil Section of the Bucharest Court admitted the request of Electrica Serv S.A.,
as absorbing company, and the request of Servicii Energetice Muntenia S.A., as the absorbed company, and
ascertained the legality of the merger process and approved the registration with the Trade Register of the
corresponding merger mentions.
Therefore, the merger produces its effects starting with the effective date, 30 November 2020, when Servicii
Energetice Muntenia S.A., as the absorbed entity, ceased to exist, being dissolved without going into liqui-
dation. Consequently, all of its assets and liabilities were transferred through the effect of the merger by ab-
sorption to Electrica Serv S.A., as the absorbing entity, in exchange of the issuance of new shares in the share
capital of Electrica Serv S.A. in favour of the shareholder of the absorbed entity, namely Electrica SA.
Thus, starting with 1 December 2020, the merger between the aforementioned companies was finalized
energy services will be carried out only under the umbrella of Electrica Serv.The registration on the National
Trade Register Office took place on 2 December 2020, with effective date 30 November 2020.
Both mergers that took place during 2020 consists only in reorganization of the subsidiaries and have no
impact on the Company’s ownership, Electrica SA remaining the parent company with the same % of ow-
nership.
Movements in investments
During 2020, Electrica SA has increased, its investments in its subsidiaries (Societatea de Distributie a Ener-
giei Electrice Muntenia Nord S.A., Societatea de Distributie a Energiei Electrice Transilvania Nord S.A., Socie-
tatea de Distributie a Energiei Electrice Transilvania Sud S.A. and Electrica SERV S.A.), by in kind contribution
to their share capital with plots of land for which it held property deeds and with the AMR system including
AMR license, with the amount of RON 92,525,620. The value of the assets contributed to the share capital of
the subsidiaries was established according to evaluation reports drawn up by the appointed valuation ex-
perts (Note 20).
On 18 December 2019, through decision no. 11 of the General Extraordinary Shareholders Meeting of Servi-
cii Energetice Muntenia S.A., was approved the share capital reduction of Servicii Energetice Muntenia S.A.
with the amount of RON 24,873,550 thorugh the reduction in the number of shares from 3,687,355 shares to
1,200,000 shares with a nominal value or RON/share 10 and recording a receivable in the same amount by the
shareholder, Electrica S.A.. The share capital reduction was approved by the Bucharest Trade Register Office
on 18 May 2020. Following the approval, on 28 May 2020, the receivable of Electrica S.A. was compensated
with the debt from the acquisition of a plot of land an related buildings from Servicii Energetice Muntenia
S.A. (Note 20).
During 2019, Electrica SA has increased its investments in its subsidiaries (Societatea de Distributie a Energiei
Electrice Muntenia Nord S.A., Societatea de Distributie a Energiei Electrice Transilvania Nord S.A., Societatea
de Distributie a Energiei Electrice Transilvania Sud S.A., Electrica SERV S.A. and Servicii Energetice Muntenia
S.A.), by in kind contribution to their share capital with plots of land for which it held property deeds. The
value of the land contributed to the share capital of the subsidiaries was established according to evaluation
reports drawn up by the appointed valuation experts (Note 20).
As regard to Electrica Serv S.A., the Company has recognized an impairment in prior years, based on a valu-
ation report prepared by an independent valuator and having as purpose the assessment of the recoverable
value of the investment in Electrica Serv S.A..
As of 31 December 2020, also considering the merger of the two energy services companies, the manage-
ment has reassessed the recoverability of the net book value of the investment in Electrica Serv S.A. and the
312 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
consistency of the impairment as compared to 31 December 2019, by taking into account the value of the net
assets and the assets owned and concluded that there is no indication that the investment may be additio-
nally impaired or that the impairment should be reversed.
The main economic and financial indicators achieved by the Company’s subsidiaries on 31.12.2019
The main economic and financial indicators achieved by the Company’s subsidiaries as at 31 December 2019
(the last financial year for which the statutory financial statements were approved) are as follows:
Indicators
SDEE
Muntenia
Nord S.A.
SDEE
Transilvania
Sud S.A.
SDEE
Transilvania
Nord S.A.
Electrica
Serv S.A.
Electrica
Furnizare S.A.
Servicii
Energetice
Muntenia
S.A.
Turnover
693,333,891
683,410,095
681,569,479
197,348,410
4,915,956,637
24,027,731
Gross profit/
(loss)
3,164,683
8,111,688
69,940,204
31,416,622
128,861,854
(336,908)
Share capital
355,906,870
447,166,500
371,908,060
37,253,650
62,873,860
36,873,550
Total equity
1,606,926,965
1,559,433,368
1,295,134,633
313,782,245
244,586,615
98,168,684
Non-current
assets
Current
assets
Current
liabilities
2,712,774,812
2,895,370,320
2,618,935,728
223,769,075
90,576,017
105,579,204
243,685,078
173,180,274
195,673,374
148,454,124
1,032,603,884
20,325,111
237,995,272
275,436,842
337,419,672
46,895,711
806,999,344
10,135,569
Provisions
47,262,417
41,242,151
42,578,972
10,632,238
29,514,862
953,460
Deferred
revenue
Non-current
liabilities
590,742,425
686,612,198
656,048,412
913,005
5,304,274
16,646,602
473,532,811
505,826,035
483,427,413
-
36,774,806
-
23
a)
Loans granted to subsidiaries
Loans granted to subsidiaries – long term
Distributie Energie Electrica Romania S.A. (former Societa-
tea de Distributie a Energiei Electrice Transilvania Nord S.A.)
Distributie Energie Electrica Romania S.A. (former Societa-
tea de Distributie a Energiei Electrice Muntenia Nord S.A.)
Distributie Energie Electrica Romania S.A. (former Societa-
tea de Distributie a Energiei Electrice Transilvania Sud S.A.)
Loans granted to subsidiaries
31 December 2020
31 December 2019
360,000,000
360,000,000
380,000,000
380,000,000
290,000,000
290,000,000
Total loans granted to subsidiaries – long term
1,030,000,000
1,030,000,000
313 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
The Company has entered into loan agreements as lender with its distribution subsidiaries, as follows:
Loans granted in 2018:
-
Intragroup loan agreement with Societatea de Distributie a Energiei Electrice Muntenia Nord S.A.
(currently Distributie Energie Electrica Romania S.A.) concluded in April 2018. Main provisions are: maximum
loan amount: RON 230,000,000; Purpose of the loan: to finance the investment program of 2018; Interest
rate: 4.7% per annum; Maturity: 84 months; Period allowed for disbursements: 12 months; Repayment in full
at maturity; Reimbursement allowed in advance, but not earlier than the 12 months of the period of use. As
at 31 December 2020, the outstanding balance is of RON 230,000,000 (31 December 2019: RON 230,000,000);
Intragroup loan agreement with Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.
-
(currently Distributie Energie Electrica Romania S.A.) concluded in April 2018. Main provisions are: maximum
loan amount: RON 160,000,000; Purpose of the loan: to finance the investment program of 2018; Interest rate:
4.7% per annum; Maturity: 84 months; Period allowed for disbursements: 12 months; Repayment in full at
maturity; Reimbursement allowed in advance, but not earlier than the 12 months of the period of use. As at 31
December 2020, the outstanding balance is of RON 160,000,000 (31 December 2019: RON 160,000,000);
-
Intragroup loan agreement with Societatea de Distributie a Energiei Electrice Transilvania Sud S.A.
(currently Distributie Energie Electrica Romania S.A.) concluded in April 2018. Main provisions are: maximum
loan amount: RON 130,000,000, Purpose of the loan: to finance the investment program of 2018, Interest rate:
4.7% per annum, Maturity: 84 months, Period allowed for disbursements: 12 months, Repayment in full at
maturity; Reimbursement allowed in advance, but not earlier than the 12 months of the period of use. As at 31
December 2020, the outstanding balance is of RON 130,000,000 (31 December 2018: RON 130,000,000).
Loans granted in 2017:
Intragroup loan agreement with Societatea de Distributie a Energiei Electrice Muntenia Nord S.A.
-
(currently Distributie Energie Electrica Romania S.A.) concluded in November 2017. Main provisions are: maxi-
mum loan amount: RON 150,000,000; Purpose of the loan: to finance the investment program of 2017; Interest
rate: 2.79% per annum; Maturity: 84 months; Period allowed for disbursements: 12 months; Repayment in full
at maturity; Reimbursement allowed in advance, but not earlier than the 12 months of the period of use. As
at 31 December 2020, the outstanding balance is of RON 150,000,000 (31 December 2019: RON 150,000,000);
-
Intragroup loan agreement with Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.
(currently Distributie Energie Electrica Romania S.A.) concluded in November 2017. Main provisions are: ma-
ximum loan amount: RON 200,000,000; Purpose of the loan: to finance the investment program of 2017; Inte-
rest rate: 2.79% per annum; Maturity: 84 months; Period allowed for disbursements: 12 months; Repayment in
full at maturity; Reimbursement allowed in advance, but not earlier than the 12 months of the period of use.
As at 31 December 2020, the outstanding balance is of RON 200,000,000 (31 December 2019: 200,000,000);
-
Intragroup loan agreement with Societatea de Distributie a Energiei Electrice Transilvania Sud S.A.
(currently Distributie Energie Electrica Romania S.A.) concluded in November 2017. Main provisions are: ma-
ximum loan amount: RON 160,000,000; Purpose of the loan: to finance the investment program of 2017;
Interest rate: 2.79% per annum; Maturity: 84 months; Period allowed for disbursements: 12 months; Repay-
ment in full at maturity; Reimbursement allowed in advance, but not earlier than the 12 months of the period
of use. As at 31 December 2020, the outstanding balance is of RON 160,000,000 (31 December 2019: RON
160,000,000).
b)
Loans granted to subsidiaries – short term
Loans granted to subsidiaries
31 December
2020
31 decembrie
2019
Servicii Energetice Muntenia S.A.
Total loans granted to subsidiaries – short term
-
-
5,500,000
5,500,000
In May 2018, the Company has concluded a loan agreement with Servicii Energetice Muntenia S.A.. Main
provisions are: maximum loan amount: RON 5,500,000, granted in two tranches; Purpose of the loan: tranche
1 amounting to RON 1,500,000 to finance the payment of the last instalment due to the creditors enrolled at
the creditor’s table, tranche 2 amounting to RON 4,000,000 to finance the working capital; Interest rate: 4.5%
per annum; Period allowed for disbursements: 1 to 12 months from the date of granting, 2 to 24 months from
the date of granting; Reimbursement: ranche 1 - within 12 months from the date of granting; the repayment
period of tranche 1 was extended by addendums until the latest 29.05.2020; tranche 2 - at any time on the
period of validity of the loan, but not later than the final maturity of the entire tranche, respectively 2 years
from the date of signing the loan agreement.
On 28 May 2020, the Company acquired a plot of land and several buildings from Servicii Energetice Mun-
tenia S.A. in the total amount of RON 33,772,570, the amounts being compensated, among others, with the
settlement of the outstanding loan granted to the subsidiary in amount of RON 5,500,000 (Note 20).
314 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
c)
Multi-borrower credit agreements
On 1 April 2019, between Banca Comerciala Romana, as lender and Societatea Energetica Electrica SA, as
guarantor and borrower, together with its distribution subsidiaries (SDEE Muntenia Nord S.A., SDEE Tran-
silvania Nord S.A. and SDEE Transilvania Sud S.A., currently Distributie Energie Electrica Romania S.A.) as
borrowers, was concluded a contract for a multi-product revolving facility, as follows: Maximum loan amount:
RON 125,000,000; Purpose of the loan: financing the current activity; Interest rate: 0.77% + ROBOR 1M p.a.;
Initial maturity: 16 March 2020 and was extended with 1 year, until 16 March 2021 under the same terms and
conditions. Repayment: in full, at maturity. As at 31 December 2020, the outstanding balance of the facility
for the Company is nill.
On 16 April 2019, between BNP PARIBAS, as lender and Societatea Energetica Electrica SA, as guarantor and
borrower, together with its subsidiaries, Electrica Furnizare S.A. and Electrica Serv S.A. as borrowers, was
concluded a contract for a credit facility in the form of a credit line from the current accounts opened by
borrowers to the lender, as follows: Maximum loan amount: RON 160,000,000 (maximum amount for Electri-
ca is RON 10.000.000); Purpose of the loan: financing the current activity; Interest rate: 0.60% + ROBOR 1M p.a.;
Initial maturity: 16 March 2020 and was extended with 1 year, until 16 March 2021 under the same terms and
conditions. Repayment: in full, at maturity. As at 31 December 2020, the outstanding balance of the facility
for the Company is nill.
d)
Cash pooling system at Group level
On 20 December 2019, between ING Bank N.V., Electrica SA and its subsidiaries were concluded two agree-
ments for the implementation of two cash pooling schemes, as follows:
a first system involving Electrica SA, as cash pool leader and its distribution subsidiaries (Societatea
de Distributie a Energiei Electrice Muntenia Nord S.A., Societatea de Distributie a Energiei Electrice
Transilvania Nord S.A. and Societatea de Distributie a Energiei Electrice Transilvania Sud S.A., currently
Distributie Energie Electrica Romania S.A.), as participants;
The credit facility offered by the pool leader to each participant is up to the amount of RON 180,000,000
RON; The credit facility offered by each participant to the pool leader is up to the amount of RON
50,000,000; Interest rate: ROBOR 1M + 0.07% p.a. However, if the amounts drawn by the participants
are covered both by the internal liquidity of Electrica SA, and by drawing from the credit line granted
to Electrica SA, the amount of interest due by the participants to Electrica SA will be calculated using
a weighted interest rate, calculated on the basis of the ROBOR Internal Rate 1M +0.07% p.a. and the
ROBOR Bank Rate 1M + 0.8% p.a. The initial due date was 20.12.2020, the convention being automati-
cally extended for a period of 1 year;
a second system involving Electrica SA, as cash pool leader and its subsidiaries, Electrica Furnizare
S.A., Electrica Serv S.A. and Servicii Energetice Muntenia S.A (currently absorbed by Electrica Serv S.A.)
as participants;
The credit facility offered by the participants to the pool leader is up to the amount of RON 180,000,000
for Electrica Furnizare S.A., RON 50,000,000 for Electrica Serv S.A. and RON 2,000,000 for Servicii Ener-
getice Muntenia S.A. (currently absorbed by Electrica Serv S.A.). The credit facility offered by the pool
leader to the participants is up to the amount of 30,000,000 RON in the case of Electrica Furnizare S.A.,
RON 10,000,000 in the case of Electrica Serv S.A. and RON 2,000,000 in the case of Servicii Energetice
Muntenia S.A. (currently absorbed by Electrica Serv S.A.). Interest rate: ROBOR 1M + 0.07% p.a. Howe-
ver, if the amounts drawn by the participants are covered both by the internal liquidity of Electrica SA,
and by drawing from the credit line granted to Electrica SA, the amount of interest due by the parti-
cipants to Electrica SA will be calculated using a weighted interest rate, calculated on the basis of the
ROBOR Internal Rate 1M +0.07% p.a. and the ROBOR Bank Rate 1M + 0.8% p.a. The initial due date was
20.12.2020, the convention being automatically extended for a period of 1 year;
through which the bank will automatically transfer all available amounts existing at the end of each day in
the current bank accounts of the participants to the master bank account of Electrica SA. In case the current
bank accounts of the participants have a negative balance at the end of the day, the bank will transfer the
necessary amounts from the master bank account of Electrica SA to the current bank accounts of the par-
ticipants, so as at the end of each day the balance of the current bank accounts of the participants is nil. In
case the balance of the master bank account of Electrica SA is not sufficient to cover the negative balance
of the current bank accounts of the participants, the bank will make available the necessary funds from the
overdraft facility that will be signed between the bank and Electrica SA.
On 30 December 2020, Electrica Energie Verde 1 SRL (“EEV1”), the new company acquired with a 100% share-
holding by Electrica Furnizare SA, entered into the second cash pooling system.
The credit facility that can be borrowed by EEV1 under the agreement is up to RON 15,000,000 and the
amount that can be borrowed by Electrica under the convention is up to RON 10,000,000. Interest rate: RO-
BOR 1M + 0.07% p.a. However, if the amounts drawn by Electrica Energie Verde 1 are covered both by the
internal liquidity of Electrica SA, and by drawing from the credit line granted to Electrica SA, the amount of
interest due to Electrica SA will be calculated using a weighted interest rate, calculated on the basis of the
ROBOR Internal Rate 1M +0.07% p.a. and the ROBOR Bank Rate 1M + 0.8% p.a. The agreement has as due date
315 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
28 January 2022 with the option of automatic renewal for successive periods of 1 (one) year.
As of 31 December 2020, the credit facilities were not used, the outstanding balance being nil. For the
amounts drawn/transferred to the cash pooling systems between Electrica SA and the other participants,
please refer to Note 29.
24
(a)
Capital and reserves
Share capital, share premium, gains and losses referring to share issue
The issued share capital in nominal terms consists of 346,443,597 ordinary shares as at 31 December 2020
(31 December 2019: 346,443,597) with a nominal value of RON 10 per share. As of 4 July 2014, after the Initial
Public Offering (“IPO”), the Company’s shares are listed on the Bucharest Stock Exchange and the Global
Depositary Receipts are listed on the London Stock Exchange.
The shares owned by the Company’s shareholders that are traded on the London Stock Exchange are the
global depositary receipts (GDRs). A global depositary receipt represents four shares. The Bank of New York
Mellon is the depositary bank for these securities. The GDRs’ weight in Electrica’s total share capital dimi-
nished following the Initial Public Offering, reaching a level of 1.03% at the end of 2020 as compared to 10.17%
at 4 July 2014.
The holders of ordinary shares are entitled to receive dividends as declared, and are entitled to one vote per
share in the shareholders’ meetings of the Company, except for the 6,890,593 shares purchased by the Com-
pany in July 2014 in order to stabilize the price. All shares rank equal and confer equal rights to the net assets
of the Company, except for treasury shares.
The Company recognizes changes in share capital only after their approval in the General Shareholders Mee-
ting and their registration by the Trade Register. The contributions made by the shareholders which are not
yet registered with the Trade Register at year end are recognized as pre-paid capital contributions from
shareholders.
After IPO privatization, the Company recognized an increase of share capital of RON 1,771,887,440 and a share
premium of RON 171,128,062. The transaction costs of RON 68,078,885 were deducted from the share premium.
Following the SPO that took place in November 2019, the share capital of Electrica SA was increased by in
kind and cash contribution, with the amount of RON 5,036,680, from the amount of RON 3,459,399,290 to the
amount of RON 3,464,435,970, by issuing a number of 503,668 new nominative and dematerialized shares
with a nominal value of 10 RON/share.
The costs generated by the secondary public offering are in amount of RON 963,601. Also, the Company re-
corded gains referring to share issue of RON 2,185,519, resulting from the difference between the contribution
value of the plots of land and their value recorded as pre-paid capital contributions in kind from shareholders.
(b)
Treasury shares reserve
In July 2014, the Company purchased 5,206,593 ordinary shares and 421,000 Global Depositary Receipts, equi-
valent to 1,684,000 shares (totaling 6,890,593 shares). The total amount paid for acquiring the shares and
Global Depositary Receipts was RON 75,372,435.
(c)
Revaluation reserves
The reconciliation between opening and closing balance of the revaluation reserve is as follows:
Balance at 1 January
Revaluation of property, plant and equipment
Deferred tax liability arising on revaluation of property,
plant and equipment
Release of revaluation reserve to retained earnings corres-
ponding to depreciation and disposals of property, plant
and equipment
2020
2019
5,851,829
11,901,253
(3,059,897)
11,837,805
-
-
(2,087,919)
(5,985,976)
Balance at 31 December
12,605,266
5,851,829
(d)
Legal reserves
The Legal reserves are set up as 5% of the gross profit for the year, until the total legal reserves reach 20% of
the paid-up nominal share capital of the Company, according to the legislation. These reserves are deductible
316 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
for income tax purposes and are not distributable.
(e)
Dividends
The dividends distributed by the Company in 2020 and 2019 (from the statutory profits of preceding years)
were as follows:
Distributed dividends
2020
2019
246,108,017
247,506,015
On 29 April 2020, the General Shareholders Meeting of the Company approved the distribution of dividends
as follows:
Dividends to be distributed to shareholders from the net distributable profit for the financial year
ended as of 31 December 2019 (100%): RON 244,885,112;
Dividends to be distributed to shareholders from the net gain obtained from the Secondary Public
Offering, after covering the loss associated with the Secondary Public Offering costs: RON 1,221,918;
Dividends to be distributed from “Other reserves”: RON 987.
The total amount of dividends to be distributed to shareholders in 2020 was of RON 246,108,017. The value of
dividends per share distributed to the shareholders of the Company were: RON 0.7248 per share (2019: RON
0.73 per share). When calculating the dividend per share, the Company’s repurchased own shares (6,890,593
shares) were not considered as outstanding shares and are deducted from the total number of issued ordi-
nary shares.
Out of the dividends declared by the Company of RON 246,108,017 (2019: RON 247,506,015), the dividends paid
were RON 245,779,724 (2019: RON 247,197,612), the remaining difference represents dividends uncollected by
the shareholders.
25
Trade payables
Suppliers of goods and services
Capital expenditure suppliers
Suppliers – related parties (Note 29)
Total
Payables to related parties are detailed in Note 29.
26
Other payables
31 December 2020
31 December 2019
7,028,982
103,421
67,529
3,638,583
694,883
552,581
7,199,932
4,886,047
31 December 2020
31 December 2019
Current
Non-current
Current
Non-current
Cash-pooling payables
Dividends payable
VAT under settlement
Other payables to the state budget
Other liabilities
Total
34,110,477
1,705,199
14,391
6,782
197,565
36,034,414
-
-
-
-
-
-
-
1,376,906
-
6,428
229,874
1,613,208
-
-
-
-
-
-
Cash-pooling payables comprises the payable of Electrica as at 31 December 2020 as cash pool leader in the
two cash-pooling systems set up at Group level (Note 23 and Note 29).
Other liabilities include mainly guarantees and sundry creditors. Dividends payable represent the dividends
uncollected by the shareholders.
In August 2020, the VAT group was established at the Electrica level in accordance with the provisions of
Article 269 (9) of the Tax Code and the rules for its application, National Agency for Fiscal Administration
(“NAFA”) Order No. 3006/2016 on the approval of the Procedure for the implementation and administration of
the single tax group. The members of the VAT group are Electrica SA and its subsidiaries. The representative
of the group is Electrica Furnizare S.A., having all the reporting and VAT record obligations stipulated by the
legal regulations in force for the whole group.
317 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
For the implementation of the group, the members submitted application No. 2366/06.07.2020 which inclu-
ded the documentation for the formation of the group according to the provisions of the Tax Code and the
NAFA Order 3006/2016. Approval of the formation of the Electrica VAT Group was granted by address No 1587/
SRC/09.07.2020, issued by the National Agency for Fiscal Administration – General Directorate for the Admi-
nistration of Large Taxpayers, Taxpayers Register Service and Tax File Management.
27
Provisions
Balance at 1 January 2020
Provisions recognized
Provisions utilized
Provisions reversed
Balance at 31 December 2020
Litigations and other risks
3,307,469
2,510,794
-
-
5,818,263
During 2020, the Company collected a doubtful other receivable from Autoritatea pentru Administrarea Ac-
tivelor Statului (“AAAS”), following the request it made to a bailiff. However, on 13 July 2020, AAAS filed for
appeal against the measure of the judicial bailiff in order to cancel the enforcement order. In the first instan-
ce, the challenge to the execution of AAAS was upheld. Against the ruling, the Company made an appeal for
which no court date has yet been set. If the Company loses the appeal, it will be obliged to return to AAAS the
amount that was transferred by the liquidators, thus a provision in amount of RON 1,628,660 was recognised
for the amount initially collected.
The provisions in amount of RON 4,140,732 as at 31 December 2020 (31 December 2019: RON 3,307,469) refer to
the benefits granted upon the termination of executive directors’ and management key personnel contracts
in the form of a non-compete clause.
28
(a)
Financial instruments - fair values and risk management
Accounting classifications and fair values
According to IFRS 9, financial assets are measured at amortised cost as they are held within a business model
to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on
the principal amount outstanding.
The Company assessed that the carrying amount is a reasonable approximation of the fair value for the finan-
cial assets and financial liabilities.
(b)
Financial risk management
The Company has exposure to the following risks arising from financial instruments:
•
•
•
credit risk;
liquidity risk;
market risk.
These risks are further explained and detailed.
(i)
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises mainly from the Company’s receivables from customers,
cash-pooling debtors, cash and cash equivalents, restricted cash and bank deposits.
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
In the past, the Company had a high credit risk mainly from State-owned companies. Until 2012, the Com-
pany had a concentration of credit risk with Oltchim, company that went into bankruptcy procedures during
2019 (see Note 16).
Cash and bank deposits are placed in financial institutions, which are considered to have good creditworthi-
ness. The carrying amount of financial assets represents the maximum credit exposure.
Trade receivables
The Company establishes an allowance for impairment that represents the amount of expected credit losses,
calculated based on the expected loss rates.
318 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Impairment
The following table provides information about the exposure to credit risk and expected credit losses for tra-
de receivables for customers as at 31 December 2020:
31 December 2020
Expected loss
rates (“ECL”)
Gross
value
Lifetime ECL
Net trade
receivables
Credit impaired
Neither past due nor
impaired
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due more than 90
days
0%
0%
0%
0%
411,954
-
-
-
-
-
-
-
100% 582,083,147
(582,083,147)
411,954
-
-
-
-
No
No
No
No
Yes
Total
582,495,101
(582,083,147)
411,954
Allowances for impairment are referring mainly to Oltchim in amount of RON 518,938,151 (2019: RON
614,124,366), Transenergo Com in amount of RON 35,725,171 (2019: RON 35,725,171) and to Fidelis Energy in
amount of RON 11,218,320 (2019: RON 11,218,320). Please see Note 16.
An analysis of trade receivables from the point of view of the credit risk and expected credit losses for trade
receivables for customers as at 31 December 2019, is as follows:
31 December 2020
Expected loss
rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
0%
0%
0%
0%
4,417,554
634,287
-
-
-
-
-
-
100% 679,778,904
(679,778,904)
4,417,554
634,287
-
-
-
No
No
No
No
Yes
Neither past due nor
impaired
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due more than 90
days
Total
684,830,745
(679,778,904)
5,051,841
(ii)
Liquidity risk
Liquidity risk is the risk that the Company might encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The Company has
significant cash and cash equivalents so that no liquidity risk is experienced.
The Company aims to maintain the level of its cash and cash equivalents at an amount in excess of expected
cash outflows on financial liabilities. The Company also monitors the level of expected cash inflows on trade
receivables together with expected cash outflows on trade and other payables.
Exposure to liquidity risk
The following table presents the contractual maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted, and include estimated interest accrued.
Financial liabilities
31 December 2020
Trade payables
Lease liability
Total
Contractual cash flows
Carrying
amount
Total
less than 1
year
1-2 years
2-5 years
7,199,932
7,199,932
7,199,932
-
1,454,297
1,454,297
968,556
365,389
8,654,229
8,654,229
8,168,488
365,389
-
120,352
120,352
319 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
31 December 2019
Trade payables
Lease liability
Total
(iii)
Market risk
4,886,047
4,886,047
4,886,047
-
1,808,380
1,808,380
795,513
746,474
6,694,427
6,694,427
5,681,560
746,474
-
266,393
266,393
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates – will affect the
Company’s income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Currency risk
The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in
which sales, purchases and borrowings are denominated and the functional currency of the Company. The
functional currency of the Company is the Romanian Leu (RON).
The currencies in which these transactions are primarily denominated are RON and EUR. The Company also
has deposits and bank accounts denominated in foreign currency (EUR). The Company’s policy is to use the
local currency in its transactions as far as practically possible. The Company does not use derivative or hed-
ging instruments.
Exposure to currency risk
The summary of the quantitative data about the Company’s exposure to currency risk is as follows:
In RON
31 December 2020
31 December 2019
denominated in EUR denominated in EUR
Cash and cash equivalents
898,585
143,088
Lease liability
Net statement of financial position exposure
(1,454,297)
(555,712)
(1,808,380)
(1,665,292)
The following significant exchange rates have been applied during the year:
RON
EUR 1
Sensitivity analysis
Average rate
Year-end spot rate
2020
2019
2020
2019
4.8371
4.7452
4.8694
4.7793
A reasonable possible appreciation (depreciation) of the EUR against RON at 31 December would have affec-
ted the measurement of financial instruments denominated in a foreign currency, the profit before tax and
the equity, respectively, by the amounts shown below. The analysis assumes that all other variables, in espe-
cially the interest rates, remain constant and ignores the impact of forecasted sales and purchases.
Effect
31 December 2020
EUR (5% movement)
31 December 2019
EUR (5% movement)
Profit before tax
Appreciation
Depreciation
(27,786)
27,786
(83,265)
83,265
320 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Interest rate risk
The Company exposures to interest rates on financial assets and financial liabilities are detailed below. The
Company is exposed to the interest rate benchmark ROBOR, which is the interest rate on the Romanian in-
terbank market. The Company does not have in place hedging contracts for interest rate.
Exposure to interest rate risk
The interest rate profile of the Company’s interest-bearing financial instruments is as follows:
Fixed-rate instruments
Financial assets
Call deposits
31 December 2020
31 December 2019
175,066,480
177,259,958
Deposits with maturity date more than 3 months
-
66,471,188
Restricted cash
Variable-rate instruments
Financial assets
320,000,000
320,000,000
495,066,480
563,731,146
Cash pooling receivables (Note 23, Note 29)
166,281,881
Financial liabilities
Cash pooling payables (Note 23, Note 29)
Lease liability
Total
Fair value sensitivity analysis for fixed-rate instruments
(34,110,477)
(1,454,297)
130,717,107
-
-
(1,808,380)
(1,808,380)
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through
profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable-rate instruments
A reasonably possible change of 50 basis points in interest rates at the reporting date would have increased
(decreased) profit before tax by the amounts shown below. This analysis assumes that all other variables, in
particular foreign currency exchange rates, remain constant.
31 December 2020
Variable-rate instruments
31 December 2019
Variable-rate instruments
29
Related parties
(a) Main shareholders
Profit before tax
50 bp increase
50 bp decrease
653,586
(653,586)
(9,042)
9,042
As at 31 December 2020 and 31 December 2019, the major shareholder of Societatea Energetica Electrica S.A.
is the Romanian State, represented by the Ministry of Energy (former Ministry of Economy, Energy and Busi-
ness Environment) with a share of ownership of 48.79% from the share capital.
321 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
(b) Management and administrators’ compensation
2020
2019
Management compensation
6,042,695
4,199,926
Executive management compensation refers to both the managers with mandate contract and those with
labour contract, concluded with Electrica SA. This also includes the benefits in the event of the termination
of mandate contracts for executive directors.
As of 31 December 2020 and 31 December 2019, the Company had 7 managers with mandate agreements, as
no changes occurred during 2020.
Compensations granted to the members of the Board of Directors were as follows:
Members of Board of Directors
2,468,177
2,527,131
2020
2019
Electrica SA’s Board of Directors comprises 7 members. According to the remuneration policy approved by
the General Shareholders Meeting that took place on 9 February 2018, the annual number of paid meetings
is limited to twelve for the Board of Directors meetings and to six for each of the committees.
No loans were granted to managers and administrators in 2020 and 2019.
(c)
(i)
Transactions with the Group companies
Balance of receivables and payables from/ to Group companies:
Trade Receivables/Trade Payables
Receivables from
Payables to
31 December
2020
31 December
2019
31 December
2020
31 December
2019
Distributie Energie Electrica
Romania S.A.
Societatea de Distributie a Energi-
ei Electrice Transilvania Nord S.A.
Societatea de Distributie a Energi-
ei Electrice Transilvania Sud S.A.
Societatea de Distributie a Ener-
giei Electrice Muntenia Nord S.A.
Electrica Serv S.A.
Electrica Furnizare S.A.
-
-
-
29,515
29,790
Servicii Energetice Muntenia S.A.
-
449,299
-
2,422,073
-
-
-
44,800
1,824,948
-
461,967
1,377,686
34,347
7,059
2,073
-
-
-
-
67,529
45,814
-
-
Total
508,604
5,668,186
67,529
552,581
As at 31 December 2020, receivables from electricity distribution subsidiaries include mainly other services
reinvoiced, while as at 31 December 2019, receivables from electricity distribution subsidiaries include mainly
receivables from the services rendered related to the AMR system.
322 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Loans granted/interest receivable:
Distributie Energie Electrica
Romania S.A.
Societatea de Distributie a Ener-
giei Electrice Muntenia Nord S.A.
Societatea de Distributie a Energi-
ei Electrice Transilvania Nord S.A.
Societatea de Distributie a Energi-
ei Electrice Transilvania Sud S.A.
Servicii Energetice Muntenia S.A.
Loans granted to
Interest receivable from
31 December
2020
31 December
2019
31 December
2020
31 December
2019
1,030,000,000
-
13,518,378
-
-
380,000,000
-
-
-
360,000,000
290,000,000
5,500,000
-
-
-
-
4,901,556
4,773,778
3,843,044
41,937
Total
1,030,000,000
1,035,500,000
13,518,378
13,560,315
Cash-pooling system:
Amount
drawn
by participants
Amount
contributed to by
participants
Net
position
Interest
receivable/
(payable)
31 December
2020
31 December 2020
31 December
2020
31 December
2020
Distributie Energie Electrica
Romania S.A.
151,282,223
-
151,282,223
304,831
Electrica Furnizare S.A.
-
(200,121)
(200,121)
(171,143)
Electrica Energie Verde 1 S.R.L.
14,999,506
-
14,999,506
862
Electrica Serv S.A.
152
(33,910,356)
(33,910,204)
(60,591)
Total
166,281,881
(34,110,477)
132,171,404
73,959
(ii)
Transactions with subsidiaries
Sales/Purchases (including recharging)
Sales in 2020
Sales in 2019
Purchases
in 2020
Purchases in
2019
3,457,185
7,871,650
27,736
356,944
670,475
5,683,561
26,494
388,208
Societatea de Distributie a Energiei
Electrice Transilvania Nord S.A.
Societatea de Distributie a Energiei
Electrice Transilvania Sud S.A.
Electrica Furnizare S.A.
Societatea de Distributie a Energiei
Electrice Muntenia Nord S.A.
Electrica Serv S.A.
264,591
370,469
Servicii Energetice Muntenia S.A.
-
2,512
448,821
273,181
93,075
407,020
6,795,950
381,381
10,000
-
-
-
-
-
Total
5,114,253
20,817,217
461,250
1,136,533
323 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Starting with July 2020, the Company no longer provides services related to the AMR system as the system
was transferred as a contribution in kind to the share capital of its distribution subsidiaries (SDEE Transilvania
Nord S.A., SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A.).
Reimbursements / Borrowings
Borrowings
granted in
2020
Borrowings
granted in 2019
Reimbursement
in 2020
Reimbursements
in 2019
Societatea de Distributie a Energiei
Electrice Transilvania Sud S.A.
Societatea de Distributie a Energiei
Electrice Muntenia Nord S.A.
Societatea de Distributie a Energi-
ei Electrice Transilvania Nord S.A.
Servicii Energetice Muntenia S.A. (*)
Total
-
-
-
-
-
48,092,536
13,440,613
379,462
-
-
-
297,014
5,500,000
62,209,625
5,500,000
-
-
-
-
-
* Transactions presented are carried out with Servicii Energetice Muntenia S.A. for the period 01.01.2020-30.11.2020,
until the effective date of merger by absorption with Electrica Serv S.A..
On 28 May 2020, the Company signed an agreement with Servicii Energetice Muntenia S.A. in which the
Company acquired a plot of land in amount of RON 31,867,062 and buildings in amount of RON 1,905,508,
the amounts being compensated, among others, with the settlement of the loan granted to subsidiary in
amount of RON 5,500,000. (Note 20).
Interest income for loans
Societatea de Distributie a Energiei Electrice Munte-
nia Nord S.A.
Societatea de Distributie a Energiei Electrice Transil-
vania Nord S.A.
Societatea de Distributie a Energiei Electrice Transil-
vania Sud S.A.
Servicii Energetice Muntenia S.A.(*)
Total
Interest income 2020
Interest income 2019
15,244,917
15,188,141
13,318,333
14,352,283
10,750,233
10,565,727
101,750
39,415,233
245,703
40,351,854
* Transactions presented are carried out with Servicii Energetice Muntenia S.A. for the period 01.01.2020-30.11.2020,
until the effective date of merger by absorption with Electrica Serv S.A..
Dividends income
Electrica Furnizare S.A.
124.015.481
140.491.455
Dividends income 2020
Dividends income 2019
Societatea de Distributie a Energiei Electrice
Transilvania Nord S.A.
Electrica Serv S.A.
Societatea de Distributie a Energiei Electrice
Transilvania Sud S.A.
Societatea de Distributie a Energiei Electrice
Muntenia Nord S.A.
54.065.512
27.247.429
6.935.492
2.705.803
66.691.458
11.547.903
45.704.009
-
Total
214.969.717
264.434.825
324 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
Cash pooling system – interest income/(expense)
Interest income/(expense) 2020
Societatea de Distributie a Energiei Electrice Transilvania Sud S.A.
Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.
Societatea de Distributie a Energiei Electrice Muntenia Nord S.A
Electrica Energie Verde 1 S.R.L.
Servicii Energetice Muntenia S.A.(*)
Electrica Serv S.A.
Electrica Furnizare S.A.
Total
2,132,479
1,256,996
568,730
862
14
(673,516)
(1,282,859)
2,002,706
* Transactions presented are carried out with Servicii Energetice Muntenia S.A. for the period 01.01.2020-30.11.2020,
until the effective date of merger by absorption with Electrica Serv S.A..
(d)
Transactions with companies in which the state has control or significant influence
The Company had sale and purchase transactions mainly with the following companies:
Supplier
2020
2019
31 December 2020 31 December 2019
Purchases (without VAT)
Balance (including VAT)
ANCOM
Others
Total
542,560
30,877
573,437
534,532
27,278
561,810
90,871
860
91,731
133,633
484
134,117
Sales (without VAT)
Balance, gross
(including VAT)
Allowance (including VAT)
Balance, net
Client
2020
31 decembrie 2020
Oltchim
CET Braila
Total
-
-
-
518,938,151
(518,938,151)
3,118,411
(3,118,411)
522,056,562
(522,056,562)
-
-
-
Sales (without VAT)
Balance, gross
(including VAT)
Allowance (including VAT)
Balance, net
Client
2019
31 decembrie 2019
Oltchim
CET Braila
Total
-
-
-
614,124,366
(614,124,366)
3,826,035
(3,826,035)
617,950,401
(617,950,401)
-
-
-
30
(a)
Contingencies
Contingent Liabilities
Litigation with National Agency of Fiscal Administration (“NAFA”)
In May 2017, after the revision of Electica’s tax record, the tax authorities issued an enforcement order for ad-
ditional interest and penalties of RON 39,248,818 as a result of certain tax record allocations for prior periods.
Electrica SA filed a complaint with the tax authorities against the enforcement order and also filed a legal
action to suspend the enforced payment by the resolution of the above mentioned complaint. These addi-
tional interest and penalties are related to the prior enforcement orders received by Electrica SA in the prior
years of RON 72,460,387.
325 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
In February 2018, Electrica SA has obtained a favourable Supreme Court ruling in one of the litigations with
NAFA, which essentially maintains into force a prior Court of Appeal decision, which is favourable for the
Company. Based on this Court ruling and in conjunction with all other litigations with NAFA on the same
historical amounts, for taxes including penalties and interest, as well as based on analysis with internal and
external lawyers, the management best estimate is that Electrica SA shall be able to obtain favourable Court
rulings with the end result of no future cash outflows.
Also, in April 2019, Electrica SA obtained another favourable decision pronounced by the Bucharest Court of
Appeal in one of the disputes with NAFA, whereby the court obliges NAFA to correct the evidence of the tax
receivables so that it reflects the extinction by prescription of the amount of RON 16,915,950 representing in-
come tax as well as all the related accessories. This decision forms the object of the appeal declared by NAFA,
with the Court term on 17 November 2021, at the High Court of Cassation and Justice.
Morevover, in November 2019, Electrica SA obtained one more favourable decision pronounced by the Bucha-
rest Court of Appeal in one of the disputes with NAFA, whereby the court obliges NAFA to cancel the admi-
nistrative documents issued regarding the accessory fiscal obligations in the amount of RON 39,248,818 and
ordered the refund/ compensation of the amount and the correction of the tax record. Against this decision,
NAFA filed an appeal, registered to the High Court of Cassation and Justice, with the Court term on 23 March
2022.
Thus, as at 31 December 2019 Company did not recognize a provision in this respect, taking into account that
management’s best estimate is that the Company shall be able to obtain a favourable final Court decision in
this case.
During 2020, the Company recognized revenues from indemnities in the amount of RON 12,827,435 (Note
9) related to the amounts collected during the year by Electrica SA from NAFA as a result of the final civil
sentences obtained in Court, which ordered the cancellation of certain enforceable titles as well as fiscal
decisions.
Moreover, as at 31 December 2020, the Company no longer has a contingent liability of RON 39,248,818 in res-
pect to the additional interest and penalties to be paid by Electrica SA to NAFA, as it applied for the cancella-
tion of ancillary fiscal obligations stipulated by the Government Emergency Ordinance no. 69/2020. Through
NAFA’s decision no. 2738/22.12.2020, the cancellation of the ancillary fiscal obligations mentioned above was
approved, based in articles IX-XI of the Government Emergency Ordinance no. 69/2020.
Other litigations and claims
The Company is involved in a series of litigations and claims (ie. with SAPE, ANRE, NAFA, Court of Accounts,
claims for damages, claims over land titles, labour related litigations etc.).
As summarised in Note 27, the Company set-up provisions for the litigations or claims for which the mana-
gement assessed as probable the outflow of resources embodying economic benefits due to low chances
of favourable outcomes of those litigations or disputes. The Company does not present information in the
financial statements and did not set-up provisions for items for which the management assessed as remote
the possibility of outflow of economic benefits.
The Company discloses, if the case, information on the most significant items of litigations or claims for whi-
ch the Company did not set-up provisions as they relate to possible obligations that arise from past events
whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not
wholly within the control of the Company (ie. litigations for which different inconsistent sentences were issu-
ed by the Courts, or litigations which are in early stages and no preliminary ruling was issued so far):
In 2015, Electrica SA was sued by Hidroelectrica S.A., which claimed the payment of RON 5,444,761 and
other damages, representing claims related to acquisition of electricity by the Company from Hidro-
electrica S.A. at a price alleged to be unfair. The first court dismissed the exception of prescription of
the material right for action as unreasonable and the action as unfounded. Both parties have filed an
appeal, which were dismissed as unfounded. After that, both parties filed another appeal in which the
court quashed the contested decision and sent the case for a new trial at the same court. As of the
date of these financial statements, no term was set for the retrial.
In respect of the litigation in which the Company was sued by Societatea de Administrare a Participa-
tiilor in Energie S.A. („SAPE”) for the joint payment of the amount of RON 1,569,144,453 and the amount
of EUR 458,381,839 for the alleged damages suffered by the Romanian State as a result of the inaction
regarding the monitoring, coordination and verification of the performance with the observance of
the conditions of legality of the privatization contracts of Electrica SA subsidiaries, Electrica SA filed
a pleading in which it invoked the exception of the lack of passive procedural quality, exception re-
garding the statute of limitation, as well as other arguments on the merit of the case against SAPE’s
allegations. On 20 June 2019, the court dismissed SAPE’s action for claims of approx. EUR 800 million,
admitting:
the exception of Electrica’s lack of passive processing quality, for the claim based on con-
-
tractual civil liability;
326 | 2020 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2020
(All amounts are in RON, if not otherwise stated)
the exception of the prescription of the material right to action, for the claim based on civil
-
tort liability.
The decision remained final by non-appeal.
(b) Fiscal environment
Tax audits are frequent in Romania, consisting of detailed verifications of the accounting records of taxpayers.
Such audits sometimes take place after months, even years, from the date liabilities are established. Consequently,
companies may be found liable for significant taxes and fines. Moreover, tax legislation is subject to frequent chan-
ges and the authorities sometimes demonstrate inconsistency in interpretation of the law. Income tax statements
may be subject to revision and corrections made by tax authorities, generally for a five-year period after they are
filled in. The company was the subject of fiscal inspections until 31 March 2013.
The Company may incur expenses related to tax adjustments related to previous years as a result of tax authorities
inspections and disputes. The Company’s management considers that adequate reserves were established in the
separate financial statements for all the significant fiscal obligations, however a risk that the tax authorities could
take different positions still persists.
(c)
Transfer prices
According to the fiscal legislation, the fiscal assessment for a transaction with affiliates is based on the market pri-
ce concept for that transaction. Based on this concept, the transfer prices must be adjusted in order to reflect the
market prices that would have been established between the entities having no affiliation relation and are acting
independently, based on “normal market conditions”.
Likely, verifications of the transfer prices may be done in the future by the fiscal authorities, in order to establish
if these prices are respecting the principle of the “normal market conditions” and that the tax base for Romanian
taxpayer is not distorted.
31
a)
Commitments
Contractual commitments
Contractual commitments as at 31 December 2020 and 31 December 2019 are as follows:
Purchase of property, plant and equipment, intangible
assets and other maintenance and repairs services
4,859,511
457,393
31 December 2020
31 December 2019
b)
Investment program
The investment program approved for the year 2021 is as follows:
Investment program
The capital expenditures actually incurred may differ from the ones planned.
c)
Guarantees and pledges
2021
10,727,054
The Company has a facility for issuing bank guarantee letters in the amount of RON 200,000,000 contracted
from Unicredit Bank and which is used at Group level, out of which the used amount as of 31 December 2020
is RON 171,870,774 (31 December 2019: RON 182,507,819). The maturity of the facility is on 31 December 2027.
32
Subsequent events
Overdraft facility granted by ING Bank N.V
On 19 January 2021, the credit facility contract signed between Electrica SA and ING Bank N.V. for an overdraft
facility of up to RON 210,000,000 thousand for financing the current activity, in the context of the liquidity
concentration operations set-up within the Group and having the following characteristics: Interest rate: RO-
BOR 1M+0.8% p.a., was extended until 28.01.2022.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Mihai Darie
4 March 2021
327 | 2020 ANNUAL REPORT
ELECTRICA S.A.
328 | 2020 ANNUAL REPORT
ELECTRICA S.A.
2020 DIRECTORS’ REPORT
The
indipendent
auditor report
on separated
financial statements
situations
329 | 2020 ANNUAL REPORT
ELECTRICA S.A.
INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
Deloitte Audit S.R.L.
Clădirea The Mark Tower
Calea Griviței nr. 82-98
Sector 1, 010735
București, România
Tel: +40 21 222 16 61
Fax: +40 21 222 16 60
www.deloitte.ro
INDEPENDENT AUDITOR’S REPORT
To the Shareholders,
SOCIETATEA ENERGETICA ELECTRICA S.A.
Report on the Audit of the Separate Financial Statements
Opinion
1. We have audited the separate financial statements of Societatea Energetica Electrica S.A. (“the Company”), with
registered office in Bucharest, District 1, Street Grigore Alexandrescu, No. 9, identified by unique tax registration code
13267221, which comprise the separate statement of financial position as at December 31, 2020, and the separate
statement of comprehensive income, separate statement of changes in equity and separate statement of cash flows
for the year then ended, including a summary of significant accounting policies and notes to the separate financial
statements.
2.
The separate financial statements as at December 31, 2020 are identified as follows:
Net assets/ Equity
Net profit for the financial year
RON 4,049,335,556
RON 298,378,536
3.
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate
financial position of the Company as at December 31, 2020, and its separate financial performance and its separate
cash flows for the year then ended in accordance with Order 2844/2016, with subsequent amendments, for the
approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU.
Basis for Opinion
4. We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014
of the European Parliament and the Council (forth named “the Regulation”) and Law 162/2017 (“the Law”). 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), in accordance with
ethical requirements relevant for the audit of the financial statements in Romania including the Regulation and the
Law 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.
Key Audit Matters
5.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
separate financial statements of the current period. These matters were addressed in the context of our audit of the
separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
We have determined that there are no key audit matters to communicate in our report.
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
1
330 | 2020 ANNUAL REPORT
ELECTRICA S.A.
INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS
Other information - Administrator’s Report
6.
The administrator is responsible for preparation and presentation of the other information. The other information
comprises the Administrator’s report, but does not include the consolidated and separate financial statements and our
auditor’s report thereon, nor the non-financial information declaration being presented in a separate report.
Our opinion on the separate financial statements does not cover the other information and, unless otherwise explicitly
mentioned in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the separate financial statements for the year ended December 31, 2020, our
responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the separate financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
With respect to the Administrator’s report, we read it and report if this has been prepared, in all material respects, in
accordance with the provisions of Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, for the
approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU, article
no. 20.
On the sole basis of the procedures performed within the audit of the separate financial statements, in our opinion:
a)
b)
the information included in the administrators’ report for the financial year for which the separate financial
statements have been prepared is consistent, in all material respects, with these separate financial statements;
the administrators’ report has been prepared, in all material respects, in accordance with the provisions of
Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, for the approval of accounting
regulations conforming with International Financial Reporting Standards as adopted by EU, article no. 20;
Moreover, based on our knowledge and understanding concerning the Company and its environment gained during
the audit on the separate financial statements prepared as at December 31, 2020, we are required to report if we have
identified a material misstatement of this Administrator’s report. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Separate Financial Statements
7. Management is responsible for the preparation and fair presentation of the separate financial statements in
accordance with Order 2844/2016, with subsequent amendments, for the approval of accounting regulations
conforming with International Financial Reporting Standards as adopted by EU 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.
8.
In preparing the separate 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 accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
9.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Separate Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the separate 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 separate financial statements.
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
2
331 | 2020 ANNUAL REPORT
ELECTRICA S.A.
RAPORTUL AUDITORULUI INDEPENDENT | SITUATII FINANCIARE INDIVIDUALE
11. 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 separate 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
separate 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 separate financial statements, including the
disclosures, and whether the separate financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
12. We communicate with those charged with governance 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.
13. We also provide those charged with governance 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.
14. From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
3
332 | 2020 ANNUAL REPORT
ELECTRICA S.A.
RAPORTUL AUDITORULUI INDEPENDENT | SITUATII FINANCIARE INDIVIDUALE
Report on Other Legal and Regulatory Requirements
15. We have been appointed by the General Assembly of Shareholders on September 18, 2018 to audit the separate
financial statements of Societatea Energetica Electrica S.A. for the financial year ended December 31, 2020. The
uninterrupted total duration of our commitment is 3 years, covering the financial years ended December 31, 2018
and December 31, 2020.
We confirm that:
Our audit opinion is consistent with the additional report submitted to the Audit Committee of the Company that
we issued the same date we issued and this report. Also, in conducting our audit, we have retained our
independence from the audited entity.
No non-audit services referred to in Article 5 (1) of EU Regulation No. 537 / 2014 were provided.
The engagement statutory auditor on the audit resulting in this independent auditor’s report is Razvan Ungureanu.
Razvan Ungureanu, Statutory Auditor
For signature, please refer to the original
signed Romanian version.
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under AF 4866
On behalf of:
DELOITTE AUDIT SRL
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under FA 25
The Mark Building, 84-98 and 100-102 Calea Griviței,
8th Floor and 9th Floor, District 1
Bucharest, Romania
March 4, 2021
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
4
333 | 2020 ANNUAL REPORT
ELECTRICA S.A.
DECLARATION OF
THE MANAGEMENT
We confirm to the best of our knowledge that the consolidated fi-
nancial statements, prepared in accordance with the applicable ac-
counting standards, give a true and fair view of the financial position
of the Group, its financial performance and cash flows for the year
ended 31 December 2020, and that the Directors‘ report gives a true
and fair view of the development and performance of the business
of the Group, together with a description of the main risks and un-
certainties associated with the expected development of the Group.
IULIAN CRISTIAN BOSOANCA
NON-EXECUTIVE DIRECTOR
CHAIRMAN OF THE BOARD OF DIRECTORS
RAMONA UNGUR
NON-EXECUTIVE DIRECTOR
DRAGOS ANDREI
NON-EXECUTIVE DIRECTOR
RADU MIRCEA FLORESCU
NON-EXECUTIVE DIRECTOR
BOGDAN GEORGE ILIESCU
NON-EXECUTIVE DIRECTOR
GICU IORGA
NON-EXECUTIVE DIRECTOR
VALENTIN RADU
NON-EXECUTIVE DIRECTOR
GEORGETA CORINA POPESCU
GENERAL MANAGER
334 | 2020 ANNUAL REPORT
ELECTRICA S.A.
335 | 2020 ANNUAL REPORT
ELECTRICA S.A.