2021
ANNUAL
REPORT
1 | RAPORT ANUAL 2020
ELECTRICA S.A.
1 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 2 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 3 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 6
8
MESSAGE FROM THE
CHAIRMAN OF THE
BOARDS OF DIRECTORS
MESSAGE FROM THE
CHIEF EXECUTIVE
OFFICER
11
207
DIRECTORS’ REPORT
FOR THE YEAR 2021
SEPARATE
FINANCIAL
STATEMENTS
4 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 273
279
STANDALONE
AUDIT
REPORT
CONSOLIDATED
FINANCIAL
STATEMENTS
367
374
CONDOLIDATED
AUDIT
REPORT
DECLARATION OF THE
MANAGEMENT
5 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT MESSAGE FROM THE CHAIRMAN OF THE BOARDS OF DIRECTORS
Dear shareholders,
The events of 2021 have brought many challenges
and transformations for the entire energy sector,
both nationally and internationally. Implicitly, the
challenges, the transformations, were also received
by Electrica.
We had the opportunity to prove that in any context
there is an opportunity to become more focused
and involved in order to achieve common goals,
being needed, more than ever, a higher degree of
adaptability and consistency.
Also in 2021, Electrica Group has constantly sought
to
reflect
its commitments
to shareholders,
consumers, and all stakeholders, through a team of
over 8,000 very experienced people in the field of
energy.
There was good cooperation between the Board
of Directors and the Group’s management team in
2021.
Electrica Group makes every effort to implement the
Corporate governance is a key element of Electrica’s
best standards in the Investor Relation corporate
strategy and
is essential
for the sustainable
disclosure Policy, increasing the transparency and
development of the company in the future, but also
quality of communication with analysts, being
a condition to create added value for our investors
constantly thoughtful of the shareholders’ opinion.
and partners. Since its listing in 2014, in order to
Evidence of the recognition of these efforts was the
ensure high standards of corporate governance,
Group’s ranking in the top of listed companies, by
transparency and integrity of the business, Electrica
obtaining a rating of 10 on Vektor – the indicator of
Group has adhered and applied the provisions of the
communication with investors for the companies
Corporate Governance Code issued by BSE and LSE.
listed on the stock exchange. The award given by the
Starting with 2015, the Group has created its own
Association for Investor Relations at the Romanian
Code of Governance which is permanently revised
Stock Exchange (ARIR), for the activity carried out
and supplemented. As there are updates, progress
by The Group in the category „Best Sustainability
and other impactful elements, the Group reports
them to the capital market, given the commitment
Report”, also came as a recognition of having best
practices in place.
made
to our shareholders
to communicate
transparently and promptly, understanding that
The Board of Directors has done its best to integrate
transparency and communication are important
the principles of sustainable development into
elements in our relationship with investors.
the company’s business model and strategy as
6 | 2021 ANNUAL REPORT
ELECTRICA S.A.
MESSAGE FROM THE CHAIRMAN OF THE BOARDS OF DIRECTORS
well as into our investment processes, in a difficult
2021 the shareholders approved the set-up of the
year, with many transformations and challenges.
Electrica Foundation, an independent organization,
According to the strategy for the period 2019-
established with the purpose of getting involved in
2023, Electrica aims to expand in related fields and
social responsibility activities throughout Romania.
obtain synergies with the fields in which it operates.
Managing the impact that the unfavourable context
An important step towards the implementation
had on the energy market in 2021 and the limitation
of the growth strategy by expanding the value
of the negative effects of this context was also
chain was the signing of the financing agreement
possible through a close collaboration with the
worth RON 750 million, with Erste Group Bank AG
Group’s executive management, but also with the
and Raiffeisen Bank Romania S.A., for production
support of the professionalism and dedication of
projects from renewable resources and other value-
wonderful people from the great Electrica team.
added services, but also the acquisition of ready-
Sure, it’s always possible to do more and better.
to-build projects, of different capacities, in order to
develop the electricity production line.
On behalf of the entire Board of Directors, I thank
you for your support and assistance and I assure
Being aware of the strategic role we have in the
diligence and knowledge in order to achieve the
Romanian energy market, as well as in supporting
planned objectives, for the long-term sustainable
the objectives of the European Green Deal, we
development and for increasing the value of the
continued the strategy of modifying, transforming,
Electrica Group.
you that we, the Directors, will act with all our
and integrating the activities, being approved the
establishment of a subsidiary dedicated to projects
in the area of power generation from renewable
sources, Electrica Productie Energie S.A.
I believe that the Directors must have a special
involvement in the sustainability aspects, because,
through their role, they militate for the long-term
success of the company.
In order to take to another level our involvement in the
company and to remain relevant in the perception
of all stakeholders, whether we are talking about
shareholders, community or employees, in August
Iulian Cristian BOSOANCA
- Chair of the Board of Directors Electrica SA
7 | 2021 ANNUAL REPORT
ELECTRICA S.A.
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER
Dear shareholders,
The energy sector has been
in a continuous
transformation in 2021, starting with the total
liberalization of energy prices and up to the
accelerated increase in acquisition costs of electricity.
On the national market, the uncertainties generated
by the changes in the legislative framework was
added to these challenges with impact on the
financial statements of the distribution operators,
but especially the electricity and natural gas supply
companies.
In this difficult market context, and in a period
marked by volatility, we have adopted a series of
measures to prepare the Electric Group to act more
agilely, across all business lines, and strengthens its
resilience to other challenges that may occur. We
proved that we are a solid company, which found the
right resources and implemented the right projects
to keep our promise to all interested parties. For
all of this, as well as for the support provided, a big
level of investment among distribution operators.
“thank you” to the entire Electrica’s team.
In fact, after the listing in 2014, The Electrica Group
Being aware of the strategic position of the
and refurbishment of the electricity distribution
Group, we have focused our resources to ensure
networks, with a total of over RON 4.8 billion
the continuity of the activity and energy supply.
invested in the period 2014-2021.
For Electrica Group, the key words of 2021 were
consolidation, growth, flexibility.
Under
the circumstances of energy market
became the largest investor in the modernization
liberalisation, Electrica Furnizare was the market
Starting with 1 January 2021, the new company
leader in 2021, with a market share of 18.42% and
Distributie Energie Electrica Romania S.A. (DEER),
one of our major objectives was to protect the entire
resulting from the legal merger of the Group’s
customers’ portfolio, the company providing energy
three Distribution companies, has become the
for approximately 3.5 million of consumption places.
most important electricity distribution operator at
For this purpose, we have kept the tariffs negotiated
national level, with a coverage of 40.7% of Romania’s
with the customers throughout 2021, despite the
territory and 3.8 million users.
increase in the purchase price, the company keeping
its commitment to remain a trustful partner for its
The total investments assumed and accomplished
consumers.
between 2018-2021, exceeded
the value of
RON 2.65 billion, representing by far, the highest
8 | 2021 ANNUAL REPORT
ELECTRICA S.A.
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER
With the largest portfolio of customers in the
The Board of Directors proposed for the approval
regulated market at the beginning of 2021, Electrica
of the General Meeting of Shareholders a gross
Furnizare, managed to apply measures so that, at
dividend, from the
individual profit registered
the end of the year, over one million customers were
by Electrica SA. for the financial year 2021, in the
transferred to the competitive market.
amount of 0.45 RON / share. The total gross value
Electrica Serv S.A. is one of the most performant
of the dividends amounted to RON 152.8 million,
providers of energy services,
in continuous
corresponding to 50% of the individual net profit
transformation and keeping up with the new
after distribution to the legal reserve, established
technologies. The company provides integrated
on the basis of electrica SA’s audited individual
maintenance services, design, support services
financial statements for 2021.
for some of the Distribution Operators as well as
values-added energy services such as complete
In the near future, we intend to continue the projects
grid connection, energy efficiency solutions,
of consolidation and sustainable development
electromobility and energy
installing photovoltaic power plants
independence by
for final
across all business
the
acceleration of digitalization and the development
lines, supported by
customers, achieving in 2021 a doubling of the
of the production from renewable sources. We will
turnover.
continue to invest in the preparation of distribution
grids towards smart grid concept, in order to cope
Consistent with the goal of creating medium and
with the challenges of energy transition, as well
long-term value for investors and reconfirming the
as the development of alternative channels for
Group’s commitment to aligning with the objectives
interactions with end users.
of the European Green Deal, we have continued
the integration of activities and we proposed to our
For an optimal use of opportunities, Electrica aimed,
shareholders to set up a subsidiary dedicated to
on long term, the development of a portfolio of
projects in the area of generation of electricity from
electricity generation capacities from renewable
renewable sources, Electrica Productie Energie S.A.,
sources with a cumulative capacity of 400 MW, in
cumulated with the development and operation
parallel with electricity storage capacities up to 100
of storage solutions that the company intends to
MW.
develop and in the future.
Part of the Group’s development strategy is also
In 2021, the inorganic growth projects resulted
the expansion of operations outside the domestic
in the acquisition of four companies that have a
market (at regional level) in order to ensure a
portfolio of projects for the production of electricity
balance between long-term value creation and
from renewable sources with a projected installed
maximizing profit for shareholders.
capacity of 284 MW, of which 163 MW in three
photovoltaic projects and 121 MW in a wind project
that will include a storage capacity of 60 MWh. The
On behalf of the Electrica Group team, thank you
for your trust and support and we assure you that
acquisition adds to the existing production capacity
we will make every effort for a positive change,
at the end of 2020, of 7MW.
through continuing the initiatives to improve
the operational and financial performance of the
We have continued the process of organizational
company and that we will remain the same reliable
transformation and optimization, started in the
partner for all stakeholders.
previous years with the Group Reorganization Plan,
a necessary and timely measure in order to increase
financial and operational performance, reduce costs
and the cultural transformation of the organization
by accelerating the adoption of good practices.
Georgeta Corina POPESCU
- General Manager of Electrica S.A.
9 | 2021 ANNUAL REPORT
ELECTRICA S.A.
10 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT DIRECTORS’ REPORT
FOR THE YEAR 2021
(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 International
Financial Reporting Standards, respectively on the consolidated
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 financial
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 2021
Free translation from Romanian, which is the official and binding
version, and will prevail, in the event of any discrepancies with
the English version
11 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT TABLE OF CONTENTS
Glossary
Identification details of Electrica
1
Electrica 2021 Overview
1.1
1.2
1.3
2021 Key financial data
Key events in 2021
Subsequent events
2
Electrica Group
2.1
2.2
2.3
2.4
2.5
Organizational structure
Mission, vision, values
Key elements of the 2019 - 2023 Strategic Plan
Outlook
Key factors, directions and significant market trends affecting
the operational results of Electrica Group
3
Electrica on the capital markets
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Ownership structure
Shares evolution on BSE and Global depository receipts (GDRs)
evolution on LSE
Investor relations (IR)
Related parties transactions
Dividends policy
Dividend distribution
Own shares
4
Corporate Governance in ELSA
4.1
4.2
4.3
4.4
4.5
4.6
4.7.
4.8.
4.9.
4.10
4.11
Corporate Governance Code
General Meeting of ELSA’s Shareholders
Shareholder’s rights
ELSA’s Board of Directors
The activity of ELSA’s Board of Directors and of its consultative
committees in 2021
ELSA’s Executive management
Remuneration of the Directors and of the
Executive Managers with mandate agreements
Corporate Governance in ELSA’s subsidiaries
Statement regarding the corporate governance „Comply or Explain”
Implementing action plans undertaken by signing
the framework agreement with EBRD
Internal audit activity report for 2021
14
16
17
18
24
48
51
52
53
54
57
62
65
66
67
69
70
70
71
71
73
74
76
77
80
87
94
98
102
110
120
126
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
5
Operating activity of Electrica in 2021
5.1
5.2
5.3
5.4
5.5
5.6
5.7
Operating segments
Fixed assets
Procurement
Sales activity
Personnel
Environmental considerations
Research and development activities
6
Electrica financial reporting for 2021
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
Consolidated statement of the financial position
Consolidated statement of profit or loss
Consolidated cash flow statement
Separate statement of the financial position
Separate statement of profit or loss
Separate cash flow statement
Risk management
Description of the main features of internal control
and risk management systems in relation
to the financial reporting process
Anexa 1 – Litigations
Anexa 2 – Details of the main investments of
Electrica Group during 2021
127
128
131
135
135
138
142
144
145
146
150
158
160
165
168
170
174
177
199
13 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
GLOSSARY
ANRE
Romanian Energy Regulatory
Authority
ASF
BPS
BoD
BRP
BSE
BTA
Romanian Financial Supervisory
Authority (Autoritatea de Suprave-
ghere Financiara)
Basis points
Board of Directors
Balance Responsible Party
Bucharest Stock Exchange
Business Transfer Agreement
CAPEX
Capital Expenditure
CGC
CMC
CMBC
(EA/CN)
Corporate Governance Code
Competitive Market Component
Centralized Market for Bilateral
EEA
EBIT
EBITDA
EDN
EGMS
EFSA
ELSA
ERM
EU
EUR
FCA
European Economic Area
Earnings before interest and tax
Earnings before interest, tax,
depreciation, and amortization
Electrical Distribution Network
Extraordinary General Meeting of
Shareholders
Electrica Furnizare SA
Electrica SA
Enterprise Risk Management
European Union
The monetary unit of several member
states of the European Union
Financial Conduct Authority – United
Contracts (Extended Auction/Conti-
Kingdom
nuous Negotiation)
FPM-LT
Medium and Long-Term Flexible
CMNG-AN
Centralized Market for Bilateral
Natural Gas Contracts – Auction and
Negotiation
CMNG-PA
Centralized Market for Bilateral Na-
tural Gas Contracts – Public Auction
CMNG – OTC
Centralized Market for Bilateral
Natural Gas Contracts – OTC
CMUS
Centralized Market for Universal
Service
CNTEE
The National Transmission System
Operator
CSR
DAM
Corporate Social Responsibility
Day Ahead Market
GC
GDP
GDR
GEO
GMS
HV
IAS
IFRIC
IFRS
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
DAM-NG
Day Ahead Market – Natural Gas
Standard
DEER
DSO
DMS
Distributie Energie Electrica
Romania
Distribution System Operator
Distribution Management System
IM-NG
Intraday Market for Natural Gas
IMS
IPO
Integrated Management System
Initial Public Offering
14 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT IR
ISIN
KPI
kV
LOC
LR
LSH
LV
MV
MVA
MWh
MKP
NAFA
NES
NL
NRC
OMPF
OGMS
OHS
OHSAS
Investor Relations
Regulated Rate of Return
International Securities Identification
Number
RRR
SAD
Distribution Automation System
Societatea de Administrare a Participatiilor
Key Performance Indicators
SAPE
in Energie
KiloVolt
Supervisory Control And Data Acquisition
SCADA
Land Ownership Certificate
Societatea de Distributie a Energiei
SDEE
Electrice SA
Last Resort
Labor safety and health
SDMN
ce Muntenia Nord SA
Societatea de Distributie a Energiei Electri-
Low Voltage
Medium Voltage
Mega Volt Ampere
MegaWatt hour
Management Key Position
National Agency for Fiscal
Administration
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
Societatea de Distributie a Energiei Electri-
SDTN
ce Transilvania Nord SA
Societatea de Distributie a Energiei Electri-
SDTS
ce 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
Universal Service
United States Dollar
Value Added Tax
SED
SEM
SEO
SoLR
SPO
TWh
TSO
UM
US
USD
VAT
OPCOM
operator
Romanian Gas and Electricity market
PCB
RAB
RM
Polychlorinated Biphenylsor
Regulated Asset Base
Retail Market
Romanian monetary unit
RON
Note: The figures presented in this document are rounded based on the round to nearest method; as a result, rounding differences may appear.
15 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Identification details of
Electrica
Report date: 28 February 2022
Name of the Issuer: Societatea Energetica Electrica S.A.
Headquarter: 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: 2021 Year (period 1 January - 31 December 2021)
Audit: The individual and consolidated financial statements as of and for the period ended 31 December 2021 are
audited by an independent financial auditor
Ordinary shares
GDRs
ISIN
ROELECACNOR5
US83367Y2072
Simbol Bloomberg
Currency
Nominal Value
0QVZ
RON
RON 10
ELSA:LI
USD
-
Stock Market
Bucharest Stock Exchange REGS
London Stock Exchange
MAIN MARKET
Ticker
Source: Electrica
EL
ELSA
16 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 1. Electrica 2021
Overview
1.1. 2021 Key financial data
In 2021, the net result of the Electrica Group was a loss of RON 553 mn, a result generated mainly by the performance
of the electricity supply segment significantly influenced by the increase in energy costs, to which is added the
increase in electricity costs to cover CPT for distribution segment.
The revenues of the Electrica Group in 2021 and 2020 were RON 7,179 mn, respectively RON 6,501 mn.
(RON mn)
Revenue
Other operating income
Operational costs
EBITDA1
EBIT
Gross profit
Net profit
Source: Electrica
2021
2020
7,179
196
(7,980)
128
606
632
(553)
2020
2019
6,501
165
(6,215)
953
459
442
388
2019
2018
6,280
160
(6,206)
718
234
226
207
As can be seen in the graphs below, the EBITDA margin decreased by 1640 ppb in 2021 compared to 2020 (vs. 330
ppb increase in 2020 compared to 2019), while the net profit margin decreased by 1370 ppb (vs. increase 270 ppb
in 2020 compared to 2019).
The Group has a capital structure with a net debt position of RON 1,056 mn (31 December, 2020: RON 81 mn).
Figure 2: EBITDA (RON mn) and EBITDA margin (%)
Figure 1: Consolidated revenue of Electrica Group
(RON mn)
6,280
518
5.762
7,179
585
6.594
6,501
557
5.944
Revenues (w/o
green certificates)
Green Certificate
Revenues
14.7%
953
11.4%
718
2019
2020
2021
Source: Electrica
2019
2020
Source: Electrica
EBITDA
EBITDA Margin
-1.8%
(128)
2021
Figure 3: Consolidated net profit (RON mn)
Figure 4: Net debt/(cash) (RON mn)
3.1%
207
6.0%
388
-7.7%
(553)
Net
Profit
Net Profit
margin
2019
2020
2021
Source: Electrica
1.056
Net Debt / (cash)
81
2020
2021
(166)
2019
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 companies 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.
18 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT DISTRIBUTION SEGMENT
Essential market information:
Electricity distribution in Romania is fulfilled mainly by six 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;
Enel owns three distribution companies each, while Electrica through Distributie Energie Electrica Romania
(formed by the merger at 31 December 2020 of Societatea de Distributie a Energiei Electrice Transilvania
Nord, Societatea de Distributie a Energiei Electrica Transilvania Sud and Societatea de Distributie a Energiei
Electrice Muntenia Nord), CEZ through Distributie Oltenia and E.ON through Delgaz Grid own the remaining
three;
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 2021 was RON 6,0 bn;
200,774 km of electric lines - 7,601 km for High Voltage (“HV”), 46,403 km for Medium Voltage (“MV”) and
146,771 km for Low Voltage (“LV”);
The total area covered: 97,196 km2, 40.7% of Romania’s territory;
3.03 mn users (2021) for the distribution activity;
18.5 TWh of electricity distributed in 2021, a decrease of 1.6% as compared to 2020;
39.6% market share for the distribution of electricity to final users in 2020 (based on distributed quantities,
according to ANRE report for 2020).
Figure 5: Romanian electricity distribution map
Transilvania Nord
area
Transilvania Sud
area
Source: Electrica
Muntenia Nord
area
19 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Figure 6: Evolution of the number of users (mn)
Figure 7: Quantity distributed (TWh)
9.45
5.72
9.55
9.67
44.80
44.90
5.78
5.87
27.15
27.17
44.10
26.62
3.73
3.77
3.80
17.65
17.73
17.48
2018
2019
2020
2018
2019
2020
Electrica
Others
Electrica
Others
Source: ANRE Report for performance indicators’ monitoring 2020
Source: ANRE Report for performance indicators’ monitoring 2020,
Electrica
Key financial indicators
In 2021, revenues from the electricity distribution
the tariffs for the electricity distribution service, the
segment decreased by approx. RON 20 mn, or 0.7%,
difference between the energy price for CPT achieved
to RON 2,730.8 mn, from RON 2,750.8 mn in 2020.
in 2021, by each Distribution Operator and the ex
The effect of the decrease by RON 195.9 mn of
-before established by ANRE, it will be recovered
revenues recognized in accordance with IFRIC 12
through tariffs in 2023, within the minimum limit
(these having no significant impact on the result),
between the average price realized and the average
was offset by the increase in distribution tariffs as
of the prices realized in 2021 by the network operators
well as the volumes of electricity distributed by 5.7%.
(distribution and transport).
EBITDA in the segment is adversely affected by the
The net result of the segment is further influenced,
increase in CPT costs and contributed to a decrease
unfavorably by the increase of the negative financial
of RON 251.6 mn or 40.3%. The Electricity Distribution
result, to which is added the favorable impact from
Operators were directly affected by this significant
the decrease of the depreciation of tangible and
price increase, being obliged, according to ANRE
intangible assets and registered a reduction of approx.
Order no. 73/2014, to purchase the electricity
RON 216.1 mn. The result was also adversely affected
necessary to cover their technological consumption
by the provision of impairment adjustments for trade
(CPT), to comply with the general conditions
receivables related to the insolvency of electricity
associated with the license. distribution on the
wholesale electricity market, in accordance with the
suppliers in the market in the amount of approximately
RON 20.4 million.
Law on electricity and natural gas no. 123/2012 with
We also mention the fact that, at the beginning of
subsequent amendments and completions (Art.
the current PR4 regulatory period, ANRE made a total
45). For 2021, for the Group’s electricity distribution
negative correction for the closing of PR3 in the amount
subsidiary, the average electricity purchase price for
of RON (730) million (nominal terms), respectively (RON
CPT was 67% higher than the value set by ANRE ex-
665) million (2018 terms), of which (341) million RON for
ante in tariffs, generating additional costs of RON 397
the meters recognized as investments in PR2 (2008-
mn. The effect of the increase in electricity purchase
2013). The meter correction was challenged in court by
prices for CPT was felt mainly in the third and fourth
the distribution branch of the Electrica Group, because
quarters of 2021 when the increase in prices was 36%,
respectively 55% 167% compared to the same period
in 2013, ANRE recognized the meters in BAR based on
the principle of non-discrimination of all distribution
in 2020.
operators, although they were not registered as fixed
According to the methodology applicable to the
assets. The total negative correction related to PR3
distribution activity, respectively ANRE Order no.
decreased the regulated profitability related to PR4,
169/2018 approving the Methodology for establishing
with an average annual value of (146) million RON.
20 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Figure 8: Revenues - distribution segment (RON mn)
Figure 9: EBITDA – distribution segment (RON mn)
2.741
2.751
2.731
607
624
372
2019
2020
2021
2019
2020
2021
Source: Electrica
Source: Electrica
Figure 10: Net Profit – distribution segment (
Figure 11: Net debt/(Cash) – distribution segment
RON mn)
(RON mn)de distributie (mil. RON)
106
77
(139)
657
781
706
2019
2020
2021
2019
2020
2021
Source: Electrica
Source: Electrica
21 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT SUPPLY SEGMENT
Essential market data (according to ANRE Report for November 2021)
The supply market is composed of both competitive and universal service and last resort segments (US and
LR);
The universal service and last resort segment consist of 6 last resort suppliers designated at the national
level;
The competitive segment consists of 92 suppliers (including the last resort suppliers operating on the retail
competitive segment), out of which 84 are relatively small (below 4% market share);
EFSA is the market leader with a market share of 18.39%; it is also the leader on the LR segment having a market
share of 30.67%, while its market share on the competitive segment is 12.58% (in accordance with ANRE November
2021 Report). Comparatively, in 2020, EFSA had a market share of 19.25% in the total energy market; 54.56% of the LR
market, and a market share of 10.86% of the competitive market (ANRE report for December 2020).
Overall Market Share – November 2021
Supplied volumes in 2021 (TWh)1
Others
33.03%
Tinmar
Energy
7.06%
Electrica
Furnizare
18.39%
Electrica
Furnizare
3.74
3.2
6.94
ENEL2
3.21
2.43
5.64
45.8
TWh
ENEL2
18.00%
EON
1.25
3.01
3.36
CEZ
1.40
1.54
2.94
CEZ
Vanzare
7.61%
Getica
95 COM
7.01%
E.ON Energie
Romania
8.90%
Source: November 2021 ANRE Report
Key financial indicators
Revenues from the supply of electricity and natural
December 2021. The acquisition market registered
gas increased in 2021 by approx. RON 757,2 mn, or
during 2021 significant increases, manifested at
15.1%, to RON 5,772.4 mn, from RON 5,015.1 million in
the level of international and determined by the
2021.
international economic and political context.
This evolution represents mainly the effect of the
The prices for Q products (quarter) registered an
increase of the sale prices of electricity on the retail
market by 12.5%, but also of a slight increase of the
ascending trend since the end of the first quarter
of 2021, later the growth being much faster, so
quantity of electricity supplied by 1%.
the prices in the wholesale market registered an
Regarding EBITDA, the supply segment registered
increase from RON 250-280 / MWh - to RON 1,300 /
in 2021 a significant decrease of RON 705.2 mn
MWh. Another important factor was the unilateral
reaching the level of -RON 439.7 mn, and a decrease
termination of some of the contracts concluded
of the EBITDA margin from 5.3% in 2020 to -7.6% in
on the wholesale market as well as the takeover of
2021.
a significant number of final customers based on
The main cause of this evolution is the increase in
the obligations assumed as a supplier of last resort,
prices on the electricity market and the impossibility
which led to the need to purchase larger quantities.
of transferring these price increases to the final
customer. Thus, the prices on the Romanian
from the Day-Ahead Market. The negative impact
on the gross electricity margin, generated by the
electricity market
increased by approximately
increase in prices is approximately RON 896,1 M in
400% on the Next Day Market from January to
2021. Although up pricing was taken in cases where
1 Based on the performance indicators published by each SoLR for Q3 2021 – last available information for all suppliers
2 ENEL refers to Enel Energie Muntenia and Enel Energie
22 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT the legislation in force allowed the modification of
of the Emergency Ordinance 118/2021, completed
existing contracts, the positive impact generated by
and modified by
the Emergency Ordinance
these steps was only partial.
no. 120/2021, certain temporary energy support
Also, another factor that contributed to the decrease
measures were established for domestic and non-
in the EBITDA margin was the impact generated by
household consumers, which generated a negative
the protection measures related to the liberalization
impact on the company’s results as a result of the
of the electricity market. Thus, according to Order
supply segment. Thus, in the last quarter of the
171/2020 with the amendments and completions of
year, the application of the support scheme for
Order 5/2021 art. 4, paragraphs 4 and 5, for domestic
the final consumer provided by GEO 118/2021, Law
customers who have concluded, based on one
259/2021, and GEO 130/2021 also generated an effect
of the competitive offers (transmitted either as a
of reducing the EBITDA margin through the capping
result of ANRE Order 171/2020 in conjunction with
mechanism due to the uncertainty in regarding
ANRE Order 5/2021 or published), a contract with
the full recovery of the respective amounts by the
effect between 1 and 30 June 2021, the electricity
suppliers.
consumption achieved between 1 January 2021
It should also be mentioned that the energy suppliers
and the date of entry into force of the new contract
are unable to terminate the existing contracts
was billed at the price of the universal service offer
according to the Law on Electricity and Natural Gas
communicated by the supplier of last resort. If the
no. 123/2012, based on Article 57.
customer did not enter the competitive market until
The supply segment has a net cash financial position
30 June 2021, a commercial discount was applied for
the period 01 January 2021 - 30 June 2021, a discount
which has decreased compared to 2020 by approx.
RON 424.3 mn, following the decrease of the cash
which was supplemented by a discount for the
level, the use of overdrafts, the increase of trade
period 01.07.2021-31.08.2021, which generated a total
receivables, and the usage of funds from the cash
negative impact of RON 18.3 M in total gross margin.
pooling scheme.
According to Law 259/2021, regarding the approval
Figure 12: Revenues - supply segment (RON mn)
Figure 13: EBITDA - supply segment (RON mn)
4,768
518
4.250
5,015
557
4.458
5,772
585
5.187
Revenues from
Green Certificates
Revenues (w/o
Green Certificates)
5.3%
265
2.9%
139
-7.6%
EBITDA
EBITDA Margin
(440)
2019
2020
2021
2019
2020
2021
Source: Electrica
Source: Electrica
Figure 14: Net profit - supply segment (RON mn)
Figure 15: Net debt/(Cash) - supply segment
4.3%
214
2.2%
104
(RON mn)
-6.8%
(390)
Net profit
Net Profit
Margin
(257)
(183)
242
Net Debt /
(cash)
2019
2020
2021
2019
2020
2021
Source: Electrica
Source: Electrica
23 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 1.2. Key events in 2021
In 2021 the following main events took place:
ELSA’s General Meetings of Shareholders (GMS) and the main projects developed and completed during
the year as a result of the approval received from ELSA’s GMS
In 2021, an Ordinary General Meetings of Shareholders (OGMS) took place on 28 April, and three Extraordinary
General Meetings of Shareholders (EGMS) were held on 28 April, 11 August, and, respectively, on 8 December.
On 4 March 2021, ELSA’s BoD approved the convening of ELSA’s Ordinary General Meeting of Shareholders
(OGMS) and of the Extraordinary General Meeting of Shareholders (EGMS), meetings that took place on 28 April
2021.
During the OGMS, ELSA’s shareholders approved mainly the following:
the audited annual financial statements for 2020 and the ELSA’s budget of revenues and expenses for 2021,
both at individual and consolidated level;
distribution of the net profit for the financial year 2020: total value of gross dividends - RON 247.9 M, the
value of gross dividend/share - RON 0.73, ex date – 2 June 2021, registration date – 3 June 2021, date of
dividends’ payment – 25 June 2021;
discharge of liability of the members of ELSA’s Board of Directors for the financial year 2020;
prolongation of the mandate of the financial auditor of ELSA, Deloitte Audit S.R.L., for two years, respectively
for the financial years 2021 and 2022;
the Remuneration Policy of the Directors and Executive Managers;
the election of the BoD’s members, by applying the cumulative voting method. Following the elections,
ELSA’s new Board of Directors is composed of: Mr. Iulian Cristian Bosoanca, Mr. Gicu Iorga, Mr. Ion-Cosmin
Petrescu, Mr. Adrian-Florin Lotrean, Mr. Radu Mircea Florescu, Mr. Dragos-Valentin Neacsu, and Mr. George
Cristodorescu. The mandate’s duration for the elected directors is for four years.
The shareholders attending the EGMS approved mainly the following:
the guarantee to be issued by ELSA for the term loan in the amount of up to EUR 210 M or equivalent in RON
that DEER will contract from the European Investment Bank (EIB) for financing the investments plan for
the period 2021-2023, the value of the independent guarantee provided by ELSA for the first request being
of maximum EUR 252 M or equivalent in RON;
ELSA’s contracting of a non-binding bridge loan in the amount of up to RON 750 M from a consortium
comprised by Erste Bank and Raiffeisen Bank, together with an engagement letter for arranging a bond
issue (conditional upon obtaining the necessary corporate approvals) to finance the inorganic growth
opportunities, having a single guarantee, respectively a mortgage on the bank accounts opened by ELSA
with BCR and Raiffeisen Bank, for a maximum value of RON 825 M.
On 18 June 2021, ELSA’s BoD approved the convening of ELSA’s Extraordinary General Meeting of Shareholders
(EGMS), which took place on 11 August 2021.
The ELSA’s shareholders attending the EGMS approved, mainly, the following:
The empowerment of the ELSA representative to participate in the EGMS of DEER and to express the vote in
favor of the approval to transfer one share held by ELSA in DEER towards SERV, representing 0.00000071%
of DEER’s share capital, for the total price of RON 10 and approving the article 6 amendment - Share Capital,
from the Articles of Association of DEER, to reflect the new shareholdings of the two shareholders;
The empowerment of the ELSA representative to participate in the EGMS of SERV and to express the vote in
favor of the approval to transfer one share held by ELSA in SERV towards DEER, representing 0.00001905% of
SERV’s share capital, for the total price of RON 10 and approving the amendment of article 6 - Share Capital,
from the Articles of Association of SERV, to reflect the new shareholdings of the two shareholders;
The approval of the participation of ELSA, as a founding member, to the establishment of Electrica
Foundation;
The approval for the amendment of the ELSA’s Articles of Association, regarding:
-
the alignment of the art. 12, para. (2) provisions with the Law 24/2017 regarding the issuers of financial
instruments and market operations;
-
the introduction of a new attribution of the OGMS regarding the approval of the Remuneration Policy
for Directors and Executive Managers;
-
the completion of the situations in which the secret vote is applied, in accordance with the applicable
legal provisions.
24 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The approval of ELSA’s participation, together with SERV, in the establishment of a new legal entity - Electrica
Productie Energie S.A., organized as a public limited liability company, a subsidiary of ELSA, in which ELSA
holds a percentage of 99.9920% of the share capital and SERV holds a percentage of 0.0080% of the share
capital.
On 15 October 2021, ELSA’s BoD approved the convening of ELSA’s Extraordinary General Meeting of Shareholders
(EGMS), which took place on 8 December 2021.
The shareholders attending the EGMS rejected:
The acquisition by Electrica, as Buyer, of the following holdings of MT Project B.V. (“MTP”) and HiTech Solar
Investment GmbH (‚HSI’), as Sellers:
-
in TCV Impex S.A. („TCV”), a company of Romanian nationality, having its registered office at 1/VII Bd.
Pipera, Nord City Tower Building, office no. 1, Section A7, 8th floor, Voluntari, Ilfov County, registered
with Ilfov Trade Registry under no. J23/1072/2018, sole registration code 19123942,
-
n ACV Solar Technology S.A. (“ACV”), a company of Romanian nationality, having its registered office
at 1/VII Bd. Pipera, Nord City Tower Building, office no. 1, Section A6, 8th floor, Voluntari, Ilfov County,
registered with Ilfov Trade Registry under no. J23/351/2018, sole registration code 30042717,
-
in TIS Energy S.A. („TIS”), a company of Romanian nationality, having its registered office at 1/VII Bd.
Pipera, Nord City Tower Building, office no. 1, Section A5, 8th floor, Voluntari, Ilfov County, registered
with Ilfov Trade Registry under no. J23/354/2018, sole registration code 28563306,
-
in Delta & Zeta Energy S.A. (“DZE”), a company of Romanian nationality, having its registered office
at 1/VII Bd. Pipera, Nord City Tower Building, office no. 1, Section A3, 8th floor, Voluntari, Ilfov county,
registered with Ilfov Trade Registry under no. J23/350/2018, sole registration code 29092649,
-
in the Gama & Delta Energy S.A. („GDE”), a company of Romanian nationality, having its registered
office at 1/VII Bd. Pipera, Nord City Tower Building, office no. 1, Section A4, 8th floor, Voluntari, Ilfov
county, registered with Ilfov Trade Registry under no. J23/349/2018, sole registration code 29092657,
hereinafter referred to as the Companies, holdings which together represent 100% of the share
capital of each Company, as follows:
-
4,597,060 shares held by MTP out of the total number of 4,600,000 shares, representing 99.936087%,
respectively 2,940 shares held by HSI out of the total number of 4,600,000 shares, representing
0.063913% of the share capital of TCV for a total price of EUR 5,997,900 which will be adjusted in
accordance with the provisions of the Sale Purchase Agreement („SPA”);
-
4,249,100 shares held by MTP out of the total number of 4,250,000 shares, representing 99.978824%,
respectively 900 shares held by HSI out of the total number of 4,250,000 shares, representing
0.021176% of the share capital of ACV for a total price of EUR 6,058,500 which will be adjusted in
accordance with the provisions of the SPA;
-
5,899,100 shares held by MTP out of the total number of 5,900,000 shares, representing 99.984746%,
respectively 900 shares held by HSI out of the total number of 5,900,000 shares, representing
0.015254% of the share capital of TIS for a total price of EUR 7,094,500 which will be adjusted in
accordance with the provisions of the SPA;
-
5,993,322 shares held by MTP out of the total number of 6,000,000 shares, representing 99.888700%,
respectively 6,678 shares held by HSI out of the total number of 6,000,000 shares, representing
0.111300% of the share capital of DZE for a total price of EUR 7,924,550 which will be adjusted in
accordance with the provisions of the SPA;
-
6,693,382 shares held by MTP out of the total number of 6,700,000 shares, representing 99.901224%,
respectively 6,618 shares held by HSI out of the total number of 6,700,000 shares, representing
0.098776% of the share capital of GDE for a total price of EUR 7,924,550 which will be adjusted in
accordance with the provisions of the SPA.
Also, the shareholders attending the EGMS approved:
The completion of the guarantee structure for the bridge loan up to RON 750,000,000 of non-binding nature
to be contracted by Electrica from a consortium of banks comprising by Erste Bank and Raiffeisen Bank
accompanied by an engagement letter for the arrangement of a bond issue (bond issue conditional upon
obtaining the necessary corporate approvals) to finance inorganic growth opportunities, the contracting
of which was approved by Electrica’s EGMS resolution no 1 of 28 April 2021, as follows: in addition to the
mortgage guarantee on the bank accounts opened by Electrica to BCR and Raiffeisen Bank, which will be
25 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT made up for a maximum amount of RON 825,000,000, as approved by Electrica’s EGMS resolution no 1 of
28 April 2021, a mortgage on the present and future receivables of Electrica, resulting from the intragroup
loan agreements that will be concluded with its subsidiaries in order to carry out the inorganic growth
transactions granted from the amounts drawn from the bridge loan, shall be constituted as a guarantee in
favour of the banks, subject to the fulfilment of certain conditions detailed in the bridge loan agreement,
this being to be constituted for a maximum value that will not exceed the total ceiling of the previously
approved guarantees, in the amount of RON 825,000,000.
Changes in the structure of ELSA’s Board of Directors (BoD) and its committees
At the beginning of 2021, the composition of the Board of Directors was as follows: Mrs. Ramona Ungur, Mr.
Dragos Andrei, Mr. Iulian Cristian Bosoanca, Mr. Bogdan Iliescu, Mr. Gicu Iorga, Mr. Radu Mircea Florescu and Mr.
Valentin Radu. On 22 April 2021, the Board of Directors took note of the resignation of Mrs. Ramona Ungur as the
administrator of the Company.
Subsequently, on 28 April 2021, during the OGMS meeting, ELSA’s shareholders elected the following BoD members:
Mr. Iulian Cristian Bosoanca, Mr. Gicu Iorga, Mr. Ion-Cosmin Petrescu, Mr. Adrian-Florin Lotrean, Mr. Radu Mircea
Florescu, Mr. Dragos Valentin Neacsu, and Mr. George Cristodorescu.
1 January - 28 April 2021
28 April - 31 December 2021
Ms. Ramona Ungur
Mr. Dragos Andrei
Mr. Iulian Cristian Bosoanca
Mr. Gicu Iorga
Mr. Iulian Cristian Bosoanca
Mr. Ion-Cosmin Petrescu
Mr. Bogdan Iliescu
Mr. Gicu Iorga
Mr. Adrian-Florin Lotrean
Mr. Radu Mircea Florescu
Mr. Radu Mircea Florescu
Mr. Dragos-Valentin Neacsu
Mr. Valentin Radu
Mr. George Cristodorescu
Regarding the position of Chairman of ELSA’s BoD, it was occupied by Mr. Iulian Cristian Bosoanca being elected
in this capacity during the Board meeting of 15 December 2020 for the period starting from 1 January 2021 and until
31 December 2021. Subsequently, as a result of the change of the BoD structure, during the meeting of 6 May 2021,
Mr. Iulian Cristian Bosoanca was re-elected as Chairman of the Board of Directors starting with 6 May 2021 and until
31 December 2021.
Regarding the composition of ELSA’s BoD consultative committees, it underwent changes during 2021 by the
decision of ELSA’s BoD dated 15 December 2020, and of the one from 6 May 2021. Thus, as of 31 December 2021, the
composition of the consultative committees of ELSA’s BoD was the following:
The Nomination and Remuneration
Committee
The Audit and Risk Committee
The Strategy and Corporate
Governance Committee
Chairman
Mr. Adrian-Florin Lotrean
Chairman
Mr. Radu Mircea Florescu
Chairman
Mr. Gicu Iorga
Member
Mr. Radu Mircea Florescu
Member
Mr. Dragos-Valentin Neacsu
Member
Mr. George Cristodorescu
Member
Mr. Ion Cosmin Petrescu
Member
Mr. Iulian Cristian Bosoanca
Member
Mr. Adrian-Florin Lotrean
26 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
In accordance with the decision of the Board of Directors of 15 December 2021, the composition of the committees
will remain the same during 2022.
Regarding ELSA’s executive management during 2021, several changes occurred, as follows:
The Board of Directors approved the continuation of the collaboration with Mrs. Livioara Șujdea and her
appointment as Chief Distribution Officer (CDO), starting with February 1st, 2021, for a 4 years mandate.
On 1 May 2021, the mandate agreement of the Chief Corporate Development Officer, Mrs. Anamaria Dana
Acristini Georgescu, has terminated, upon the lapse of the mandate duration.
During the meeting held on 22 September 2021, ELSA’s Board of Directors decided on the appointment of
Mr. Stefan Ionut Pascu as Chief Corporate Development Officer, until 31 December 2021. During the meeting
held on 22 December 2021, the mandate agreement of Mr. Stefan Ionut Pascu has been extended until
31 December 2022.
On 11 December 2021, the mandate agreement of the Chief Marketing Officer, Mrs. Catalina Popa, has
terminated, upon the lapse of the mandate duration.
During the meeting held on 15 December 2021, ELSA’s Board of Directors revoked, without cause, Mrs.
Bibiana Constantin from the position of Chief Human Resources Officer, starting with 1 January 2022,
31 December 2021, being the last day of exercising the mandate agreement.
During the meeting held on 15 December 2021, ELSA’s Board of Directors took note of the expiration
on 3 January 2022 of the mandate agreement between the Company and the Chief Financial Officer,
Mr. Mihai Darie.
Other relevant events
In 2021 the following main events took place:
Changes in the structure of shareholders within the subsidiaries of the Group
On 18 August 2021, the second shareholder was introduced within DEER and SERV (DEER within FISE
and FISE within DEER) in compliance with the assumed term by the Merger Project of the distribution
subsidiaries, respectively by the Merger Project of energy services companies, mergers that took place
during the year 2020;
Amendments to the articles of association within the Group’s subsidiaries
The amendment of the Article of Association of SERV by reducing to 3 the number of members for SERV’s
Board of Directors through EGMS of 30 December 2021.
Establishment of a new subsidiary of the Group
On 6 September 2021, a new legal entity is established, Electrica Productie Energie S.A., organized as a public
limited company, in which Electrica SA holds a percentage of 99.9920% of the share capital and Electrica
Serv S.A. holds a percentage of 0.0080% of the share capital. The object of the activity is the production
of electricity from renewable sources through the acquisition and development of projects, namely the
operation of renewable electricity generation parks, combined with the development and operation of
independent storage solutions which they intend to develop in the near future.
Fitch Ratings
In April 2021, Electrica has received confirmation of maintaining the corporate rating of BBB (Investment
Grade), with a Negative outlook, from the rating agency Fitch Ratings. The negative perspective is imposed
by the rating of Romania (BBB- with negative perspective) taking into account that Fitch considers that the
rating of the Company must be limited to one notch above that of the Romanian State, its main shareholder.
Any revision of the Outlook of the Romanian sovereign rating back to Stable would result in a similar action
for Electrica’s rating. In Fitch Ratings’ opinion, the BBB rating continues to reflect Electrica Group’s solid
financial profile, adequate liquidity, low gearing level, as well as the fact that the distribution segment
dominates the Group’s activities.
Fitch Ratings also viewed as positive for the analysis of Electrica’s credit profile the consolidations achieved
through the mergers of the distribution subsidiaries and, respectively, of the energy services subsidiaries, as
they have simplified the Group structure and is estimated to provide costs savings and an improvement of
internal business processes.
Also, in the rating agency’s opinion, the Group’s business profile proved to be solid, resilient to the COVID-19
outbreak and related economic shock, the volumes of distributed and respectively supplied energy in 2020
being only slightly lower than in 2019, while the investment projects in the distribution area were unfolded
according to the planning.
27 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Investments in entities producing electricity from renewable sources
On 28 July 2021, three shares sales and purchase agreements (“SPAs”) were signed in three project
companies, by ELSA, as a buyer, with Mr. Emanuel Muntmark, and with Mr. Catalin Mrejeru, as sellers, having
as the main object of activity the production of energy from renewable sources, as follows:
-
A SPA regarding the acquisition of 100% of the shares held by the sellers in Crucea Power Park SRL
for an estimated total price of EUR 8,470,000. The final price will be determined by adjusting the
total estimated price depending on the production capacity, respectively the authorized storage,
based on a contractually established calculation formula. Crucea Power Park SRL develops the eolian
project “Crucea Est”, with a designed installed capacity of 121 MW and a projected electricity storage
capacity of 60 MWh (15 MW x 4h), located outside the Crucea commune, Constanta county;
-
A SPA regarding the acquisition of 100% of the shares held by the sellers in Sunwind Energy SRL
for a total estimated price of EUR 1,485,000. The final price will be determined by adjusting the
total estimated price according to the authorized production capacity, based on a contractually
established calculation formula. Sunwind Energy SRL is developing the photovoltaic project „Satu
Mare 2” with a designed installed capacity of 27 MW, located near Satu Mare;
-
A SPA regarding the acquisition of 100% of the shares held by the sellers in New Trend Energy SRL
for a total estimated price of EUR 3,245,000. The final price will be determined by adjusting the
total estimated price according to the authorized production capacity, based on a contractually
established calculation formula. New Trend Energy SRL develops the photovoltaic project „Satu Mare
3”, with a designed capacity of 59 MW, located near Satu Mare.
On 7 December 2021, Electrica signed, as a buyer, with Mr. Emanuel Muntmark, and with Mr. Catalin Mrejeru,
as sellers, a shares sales and purchase agreement (“SPAs”) in one project company having as the main
object of activity the production of energy from renewable sources.
The SPA concerns the acquisition of 100% of the shares of Foton Power Energy S.R.L, wholly owned by the
sellers, for an estimated total price of EUR 4,262,500. The final price will be determined by adjusting the
total estimated price depending on the production capacity, respectively the authorized storage, based on
a contractually established calculation formula. Foton Power Energy S.R.L. develops the photovoltaic project
“Bihor 1”, with a designed installed capacity of 77.5 MW, located near Oradea city.
The SPAs stipulate the acquisition by Electrica of the shares in the three companies and the payment of the
corresponding price in four stages; in the first stage, when signing the sale-purchase agreements, 30% of
the share capital of the three companies will be acquired, and subsequently, the rest of the shares will be
acquired depending on the development stage of the project and provided that the suspensive conditions
are met.
Treasury matters
On 10 June 2021, was signed the Addendum no. 1 to the Convention no. 25/5 February 2020 concluded
by ELSA with EFSA on Internal Treasury, by which the amount that can be borrowed by EFSA within the
Convention is increased from up to RON 30 M to up to RON 180 M.
On 12 October 2021, Electrica concluded with DEER an Intragroup Credit Agreement, valid until 12 October
2029, the amount that can be borrowed by DEER under the contract being up to RON 246,325,000.
On 22 October 2021, was signed the Addendum no. 2 to the Convention no. 25/5 February 2020 concluded
by ELSA with EFSA on Internal Treasury, by which the amount that can be borrowed by EFSA within the
Convention is increased from up to RON 180 M to up to RON 245 M.
IT&C activities
Using the strategic advantage obtained in 2020 by merging the IT&C responsible operational entities and
implementing capabilities-based departments and centers of excellence, the IT&C organizations of Electrica SA
and its subsidiaries have taken over the needed tasks and projects to further consolidate the legal merger activities,
by absorption. In turn, projects were triggered to unify the system and data used by each merging entity, others
to align the support processes and prepare the expected flexibility to exploit the economies of scale and scope.
Hence, the following activities have been achieved:
The enrollments into the National Registry of Essential Services Operations of Distributie Energie Electrica
Romania SA and Electrica Furnizare SA as Essential Services Operators.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The current applications (used by SDTN, SDMN, SDTS) consolidation, a complex process involving the initial
evaluation of three alternatives in use, choosing the optimum and extending its utilization to the other two
operators.
Merging and standardization of the common procurement operations for IT&C at the Group level in order to
cover the licensing and producer support needs while acquiring the expected volume discount.
Preparation of the projects for the unification of complex ERP (Enterprise Resource Planning) systems at
DEER (from the three Distribution Operators) and FISE (from the two Electrical Services organizations), in
sync with the 2021 EFSA ERP system update.
Maximize the existing IT&C resource existing in Group key organizations, DEER and EFSA, in order to
implement digital solutions required to fulfill speed and flexibility expectations.
The IT&C Governance framework alignment in order to respond to the standardization and blending the
IT&C specific processes and projects.
Litigations
On 3 February 2021, the Bucharest Court, Civil Section VII, confirmed the reorganization plan of the company
Transenergo Com S.A. (Transenergo), proposed by the special administrator from case no. 1372/3/2017.
According to this plan, unsecured creditors will not benefit from any distributions of amounts. ELSA holds
an unsecured receivable of RON 37 M composed of the main debit of RON 35.7 M and penalties of RON
1.3 M calculated until the date of insolvency proceedings’ opening. Since ELSA is the beneficiary of an
insurance policy of RON 4 M having as object the guarantee of the payment obligations of Transenergo
resulting from the BRP Services Agreement no. 77/2005, the amount of RON 4 M was submitted under the
resolutive condition of recovering the amounts from the insurer. ELSA appealed the sentence confirming
the reorganization plan, an appeal that was the object of file no. 1372/3/2017/a35 of the Bucharest Court of
Appeal.
On 23 June 2021, the court definitely rejected the appeal filed by ELSA against the decision for the confirmation
of the reorganization plan of Transenergo Com S.A. no. 469/3 February 2021 issued by Bucharest Courthouse
– Civil Section VII - in case no. 1372/3/2017.
Considering that the exposure registered by ELSA concerning Transenergo is fully provisioned, this file
resolution has no negative impact on the company’s financial results for 2020 or 2021, the impact is recorded
in the previous periods (2016 and 2017).
By the conclusion from 27 April 2021, the Bucharest Courthouse decided to suspend the trial of the case that
forms the object of file no. 35729/3/2019 until the final settlement of file no. 2229/2/2017, pending before the
Bucharest Court of Appeal.
File no. 35729/3/2019 has as object the patrimonial liability incurring of the persons who have held positions
of directors and respectively of executive managers of ELSA, for not fulfilled and/or improperly fulfilled
obligations, according to art. 155 of Law no. 31/1990, which determined the damages retained by the
Romanian Court of Accounts by Decision no. 11/23 December 2016, as well as against the representative of
the Authority of Valuation of the State Assets in ELSA’s OGMS on 10 December 2008 and the issuer of the
voting mandate for the respective OGMS.
Decision no. 1368/18 December 2020 issued in the retrial of case no. 4804/2/2020 (former no. 7341/2/2014)
of the Bucharest Court of Appeal by which it dismissed the action and the ancillary intervention requests
as unfounded, became final by non-appealing it by Fondul Proprietatea. The object of the case is Fondul
Proprietatea’s request for the cancellation of art. I, points 2, 3, 8, 9, and 10 of ANRE Order no. 112/2014 for
amending and completing the Methodology for setting the electricity distribution service tariffs, approved
by ANRE Order no. 72/2013. ELSA and DEER are accessory intervenients in the case.
On 18 October 2021, the Company, as Defendant, has received a statement of claim of Mrs. Augusta Romana
Alexandra Borislavschi Popescu, who was Chief of Corporate Governance & M&A for a period of 4 years, by
which the plaintiff requests:
1.
The obligation of the defendant to pay to the plaintiff the amount of RON 166,738, representing the
percentage of 55% of the OAVT package, in accordance with the provisions of Annex 3 to the mandate
contract no. 42/10.08.2015;
The obligation of the defendant to pay to the plaintiff damages for non-execution of the obligation to
2.
pay the percentage of 55% of the OAVT package;
3.
The obligation of the defendant to pay the amount of RON 11,973, representing the annual variable
remuneration for 2018;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 4.
The obligation of the defendant to pay the amount of RON 24,756, representing the annual variable
remuneration related to 2019;
5.
Updating the amounts provided in the previous items, with penalizing legal interest. The asked
damages should be calculated as the legal penalty interest plus 8% payable per each day of delay
as of the date of the registration of the claim until the payment of the 55% of OAVT package by the
defendant.
6.
The obligation of the defendant to pay the expenses incurred by the request for arbitration.
The case was registered before the Vienna International Arbitral Centre, under no. ARB-5670 Borislavschi
(RO) vs Energetica Electrica (RO).
In case no. 35647/3/2019, on 13 December 2021, the Bucharest Court of Appeal rejected as unfounded the
appeal filed by Electrica Furnizare S.A. (EFSA) against the decision pronounced by the Bucharest Court,
maintaining as legal and valid the sentence pronounced by the Bucharest Court. The Decision is not final, it
can be appealed within 30 days of the communication.
In this file, Societatea Energetica Electrica S.A. (Electrica) has the legal quality of being called in warranty.
We mention that Bucharest Court admitted the exceptions of limitation periods regarding the claim filed by
EFSA and consequently rejected as devoid of purpose the warranty claims filed by Mircea Patrascoiu, Anca
Dobrica, and Victoria Lupu in file no. 35647/3/2019 having as object the underscoring of the liability of the
members of the Board of Directors and the Chief Executive Officer of EFSA, claim submitted by the company
concerned, following the damages ascertained 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.
Policies in force
On 7 May 2021, Electrica published on the company’s website, in the section Investors -> Corporate Governance ->
Corporate policies and other documents, the updated form of the Remuneration Policy for Directors and Executive
Managers, following its approval within the OGMS dated 28 April 2021.
Measures adopted in COVID-19 context
In the context of the crisis generated by the COVID-19 pandemic, ELSA’s representatives communicated with
stakeholders, mostly internally, announcements being released to present the measures taken by the Group
companies and COVID-19’s impact on activity.
In the fight against the 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 conditions as close to normal as possible.
Ever since the beginning of the crisis, the resilience plan in force at the Group level was constantly updated to
respond to the pandemic context and legal framework evolutions. Essential activities and critical roles have been
identified, staff backup has been insured and the action scenarios on escalation levels depending on the situation
evolution from the external environment of the company have been redefined, in order to ensure the smooth
running of the operations and the continuity in the electricity supply, as well as for the protection of the Group
customers, employees, and partners.
During accelerated growth and peaks periods of the pandemic, the 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 digital instruments (MyElectrica, website, digital invoice) offered or methods of mediated
interaction (by e-mail, by telephone) to solve the various requests, using also online payment methods (MyElectrica
account, internet banking, and mobile banking).
In order to limit the spread of COVID-19 and to protect the employees, firstly for the frontline ones, various measures
have been implemented, such as: providing medical protection devices and hygienic-sanitary materials, 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, disinfection performed in locations in the case of occurrence,
etc.
Social distancing measures 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.
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)
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT were carried out in strict compliance with the protection measures (use of the mask, distance, limitation of the
number of people present in the premises) and with the monthly assessment of the situation according to the
evolution of the context at national/regional level, for offering all services in safe conditions.
The action plans of the distribution operators consider keeping the general preventive measures for their staff,
users, and collaborators, as well as the organizational measures to ensure safe management and operation of the
network infrastructure, at a superior quality level for 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 receivables collection from customers, to use the banking structures for liquidity concentration
(“cash-pooling”) implemented last year, as well as the available financing 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 the national level, with a coverage of 40.7% of the
Romanian territory, which serves over 3.8 million network users.
By implementing the merger, medium and long-term benefits could be obtained for all stakeholders. The current
priorities for the distribution segment are:
cost efficiency;
accelerating the main business processes digitization;
orientation towards the smart grid concept by promoting on a large scale the smart metering;
operational performance improving;
distribution service quality increasing;
distribution network losses reduction.
In 2021, the new company Distributie Energie Electrica Romania S.A. (DEER), created by the merger of the three
electricity distribution companies within the Group, started the implementation of a multi-annual legal post-
merger integration program, having as objectives the continuous improvement in the operational area and building
a performance based culture within the Electrica Group, in a customer-centric paradigm, keeping costs under
control. The long-term goal of the management team is a corporate cultural transformation of the organization,
focused on efficiency and performance, to ensure the sustainability of the business.
In this approach, efforts to maximize efficiency potential focus on three relevant areas:
1.
2.
3.
a unified organizational structure and efficiency of support activities;
he optimization of imbalances and the cost of purchasing electricity to cover losses in distribution
networks;
the optimization of the function of Information and Communication Technology and related
components.
ANRE has issued documents for the regulatory framework that requires additional efforts from distribution
operators in order to comply with the new requirements:
a) Regulations regarding tariffs:
The distribution tariffs approved for 2022 were approved by ANRE Order no. 119/24 November 2021, the
regional average tariffs for DEER having the following increase compared to the 2021 tariffs: MN +8.1%; TN
+10.4%; TS +7.4%.
The distribution tariffs approved for 2022 ANRE approved the Order no. 3/20 January 2021 regarding
the amendment of the Methodology for distribution tariffs setting approved by ANRE Order no. 169/18
September 2018:
-
granting a 2% additional incentive to RRR 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 1st February 2021;
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if for certain assets categories, the primary legislation establishes other regulated depreciation
periods than those provided by 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.
ANRE approved Order no. 101/30.09.2021 for the modification and completion of the Methodology for
establishing the tariffs for the distribution service - in force since October 1st, 2021:
-
Network losses price: (i) ANRE has the right to correct the projection of distribution tariffs for a
regulatory period of one year if it finds that there have been significant variations in prices on the
electricity market, which lead to a significant change in distribution service costs; (ii) at the justified
request of the DO, the regulated income of year t+1 may include a cost adjustment with regulated
network losses forecast for year t+1, by changing the reference price, depending on the evolution of
prices on the electricity market and the result of the analysis on the evolution of tariffs for the current
-
-
-
regulatory period.
Personnel costs - at the request of the DO accompanied by supporting documents, ANRE may
accept in the regulated income for year t+1 a variation of the personnel costs approved for year t+1,
generated by the appearance of unforeseen conditions during the substantiation and approval of
the forecast. costs.
Destination of non-household consumption place - DO are obliged to find non-compliance with
the obligation of non-household users to keep the destination of a place of consumption, and in this
case, users are obliged to return the value of design and execution works paid by DO, and DO exclude
fixed assets from RAB.
Connection workings done by users - Fixed assets made in year t of the connection workings paid
by users are not included in the RAB, but they are recognized in the regulated income for year t+1, by
including one-fifth of the refundable value.
-
the accounting depreciation of the fixed assets that are not part of the RAB and that were financed
from own resources and for which the DO has assigned the use to a third party is taken into account
to gross profit computation from other unregulated activities.
b) Investments Procedure
ANRE Order no. 19/16 March 2021 - in force since 19 March 2021:
-
the amendment considers the establishment of the DSO obligation to carry out the connection
workings to the final customers, additionally to the annual investment plan.
c) Licenses
ANRE Order no. 115/2021 for amendment and completion The Regulation for granting licenses
and authorizations for the electricity sector approved by ANRE Order no. 12/2015 - in force since
2 of December 2021:
DSOs have the obligation to send to ANRE:
-
until 31 December 2021 - information on power lines, power stations, and medium and high voltage
substations (technical data according to ANRE Order no. 181/2019);
until 31 December 2022 - information on medium and high voltage power lines, according to ANRE
-
Order no. 115/2021 - including economic attributes;
-
until December 31, 2023 - all the information regarding the LV, according to the ANRE Order no.
115/2021 - including the economic attributes.
Starting with 01 January 2022 enters into force the new scheme published on the ANRE website regarding
the GIS information in the national stereographic coordinate system 1970, which has attached as attributes
to the spatial data requested within the GIS application, a set of associated data to presented spatial data,
which includes the fixed asset number and value for the electrical transmission/distribution network
components, necessary for ANRE to verify the fixed assets made by the licensees in order to recognize them
in RAB
d) Smart metering regulations (SM):
ANRE approved Order no. 94 / 18.08.2021 for the amendment and completion of the Framework
Conditions for the realization of the implementation calendar of the intelligent electricity measurement
systems at the national level approved by ANRE Order no. 177/2018 - in force since 1 January 2022
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The value of the indicator „Annual average of the daily success rates of data transmission from meter
to HES / MDMS” of at least 80%. The indicator taken into account is calculated annually on each
transformation station in the areas where the SMI has been implemented. In case of non-fulfillment
of this condition, ANRE proceeds to the non-recognition of the depreciation costs and profitability
corresponding to the equipment that ensures the transmission of the data related to the respective
transformation stations, for the respective year.
-
The DOs have the obligation to fulfill the annual targets provided in the implementation schedule of
the SMI at the national approved level, in a proportion of at least 90% regarding the total number of
users provided for integration, respecting all the areas planned for integration in that period.
-
The invoicing of the distribution service is to be performed based on the measurement data registered
by SMI for the users whose consumption/production and consumption places are integrated with
SMI.
-
The installation of meters that can be integrated with the SMI when connecting new users should
be done only for consumption/production and consumption places located in areas where the
implementation of the SMI is scheduled in the next 5 years.
e) Technical regulations
Network connection
ANRE Order no. 16/10 March 2021 - the amendment of the Regulation on connecting users to electricity
networks of public interest (ANRE Order no. 59/2013) - in force since 16 March 2021:
-
the introduction of provisions regarding reinforcement works - the introduction of the DSO’s
obligation to recalculate the value of the connection tariff component;
-
elimination of the ANRE endorsement of the procedures regarding the users’ connection to the
network;
-
clarification of the termination circumstances of the effects of the framework convention for the
handing over of user-financed connection facilities in their ownership.
ANRE Order no. 17/10 March 2021 - The procedure regarding the connection to the electricity networks
of public interest of the consumption places belonging to the non-household final customer type users
through connection installations with lengths up to 2,500 meters and household customers - revision of
ANRE Order no. 183/2020 - in force since 16 March 2021:
-
the inclusion of household customers in the category of those for which the DSO have the obligation
to finance and carry out the design and execution works of the connection installation;
-
the possibility for household and non-household customers to agree on the connection installation
design and execution directly with a certified economic operator chosen by them;
-
the application of the procedure also for the consumption places with storage facilities or
consumption and production places, with or without storage facilities, provided with installations for
the production of electricity from renewable sources (prosumers);
-
applies to:
a.
household users who have submitted connection requests to the concessionaire distribution
operators after 19 December 2020;
b.
to non-household final customers type users, who submitted connection requests to the
concessionaire distribution operators after 30 July 2020.
ANRE Order no. 45/2021 - the amendment of the Regulation on connecting users to electricity networks of
public interest - in force since 23 June 2021:
-
Elimination of the user’s obligation to send to the network operator (NO), through the documentation
attached to the connection request, the approved zonal urban plan („PUZ”) or the approved detailed
urban plan („PUD”), if it was requested by the urbanism certificate;
ANRE Order no. 53/2021 for the approval of the Methodology for evaluating the financing conditions of the
investments for the localities’ electrification or the electricity distribution networks’ extension approved by
ANRE Order no. 36/2019 - in force since 28 June 2021:
-
also applicable if an association of public authorities requests the DSO to develop the electricity
network of public interest in order to connect based on regional development and urbanism plans;
the definition of electricity distribution networks’ extensions has been modified, by eliminating the
-
phrase “urban” from its content;
-
for the situation in which the public authority/user/group of users decides to fully finance the
investment, it was explicitly introduced, besides the term for returning the operators’ co-financing
quota, also the term for taking over by the network operator the elements related to the returned
quota. It is mentioned that this completion is an explanation because the restitution of the quota is
done simultaneously with the takeover;
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clarifications were made regarding the value of the quota returned to the public authority/user/group
of users, in case they decide to fully finance the investment, by establishing the quota based on the
minimum between the value of works according to the DSO offer and the value of works specified in
the reception documents for the works’ commissioning;
-
for the situation in which the public authority/user/group of users decides to fully finance the
investment, it was specified that the technical project and the request for proposal are carried out by
them, with an economic operator certified by ANRE;
-
based on the technical project and the specifications, the public authority/user/group of users carries
out the works regarding the development of the electricity distribution network for electrifying the
localities or for extending the electricity distribution networks with an economic operator certified
by ANRE.
ANRE Order no. 85/2021 - Order for the amendment and completion of ANRE Order no. 74/2014 for the
approval of the Framework Content of the technical connection approvals (TCA) - in force from 6 July 2021:
the elimination of the DSO’s obligation to send to ANRE reports regarding the users’ appeals regarding the
issuance of TCA.
ANRE Order no. 137/2021 Order for the approval of the Procedure regarding the determination of
the available capacity in the electrical networks for the connection of new installations of electricity
production - in force starting with 1st of March 2022:
-
rules for determining the capacity available in the electrical transmission network/electrical
distribution network at the 110 kV voltage level;
-
-
rules for the data publication regarding available capacities;
deadlines and frequency of data publication regarding available capacities by network operators:
monthly starting with 1st of April 2022; twice a month starting with 1 July 2022.
Prosumers
ANRE Order no. 15/10 March 2021 - Procedure regarding the connection to the electricity networks 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 at most 100 kW/consumption
place - in force since 16 March 2021:
-
considering the legislative amendments brought by Law no. 290/2020, in force since 19 December
2020, it was necessary to revise the previously proposed form regarding the DSO’s obligations to
finance and realize the design and execution works of the connection installations for non-household
final customers, through connection installations with lengths up to 2,500 meters and the design
and execution of connection installations for household customers.
ANRE Order no. 50/2021 for the approval of the trading rules for the electricity produced in power plants
from renewable sources with an installed power of up to 100 kW belonging to prosumers - in force since
1 July 2021:
-
-
repeals the ANRE Order no. 226/2018;
revised as a result of the amendments brought by Law nr. 155/2020 and Ministry of the Environment,
Waters and Forests Order no. 121/2021 amending the Financing Guide of the Program regarding the
installation of photovoltaic panel systems for electricity production, in order to cover the necessary
consumption and the surplus delivery in the national network, approved by Ministry of Environment
Order no. 1287/2018;
elimination of the reporting models from Appendices 1 and 2 of the ANRE Order no. 226/2018, with
-
their full takeover in the draft revision order of ANRE Order no. 195/2019.
ANRE Order no. 52/2021 for the approval of the Methodology for monitoring the system for promoting the
electricity from renewable energy sources production (RES) – in force since 1 July 2021:
-
-
repeals the ANRE Order no. 195/2019;
systematization of data collection by integrating the information and data contained in the
regulations in the field of electricity promotion in RES;
-
completing the data necessary to be collected for the monitoring of the promotion system for
the electricity produced in RES power plants with an installed electrical power of at most 100 kW
belonging to prosumers, through a dedicated software interface directly on the ANRE website;
introduces the DSO obligation to publish on their website, every month, information on the prosumers
-
connected to the electricity grid;
-
introduces the obligation of the DSO and TSO, as appropriate, to publish on their website, every
month, the information on technical connection approvals, connection contract and connection
certificates issued in the previous month for power plants belonging to the producers of electricity
from renewable energy sources (E-RES) and prosumers.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Distribution service performance standard
ANRE Order no. 46/15 June 2021 for the approval of the Distribution Service Performance Standard - in force
since 1 July 2021:
-
the standard imposes additional obligations for the DSOs, and in order to fulfill them, additional
investments and the increase of operating expenses will be necessary;
-
the obligation of the DSO to monitor the short interruptions, and to grant compensations for non-
compliance with the imposed thresholds: HV=300 RON (>10 interruption/year), MV =10 RON (>10
interruption/week), LV=5 RON (>10 interruption/week);
-
the obligation to comply with the 90-day deadline for commissioning a connection, including the
reception and commissioning of the connection installation, the compensation for non-compliance
being 100 RON;
-
the obligation of the DSO to ensure, starting with 1 January 2022, reduced voltage deviations for LV
level (from +10% to +5% of the nominal voltage value, monitored weekly), the compensations being
for legal entities: HV - 270 RON, MV and LV - 130 RON (for each monitoring period), and for individuals:
HV - 270 RON, MV and LV - 70 RON (for each monitoring period);
-
setting an implementation calendar for the quality analyzers, so that 100% of the power stations
will be monitored with the help of this equipment until the end of 2026, respectively 100% of the
transformation stations until 1st January 2028. This implementation program is correlated with the
provisions of the SM implementation schedule;
setting intervals for the reception of telephone calls made by network users through the call centers
-
managed by distribution operators, namely:
a.
maximum 30 seconds from the call initiation by the user until it is taken over, without the
intervention of the human operator;
b.
maximum 180 seconds from receiving the call for the user to be able to select the option to
transfer the call to a human operator;
c.
maximum 20 minutes from taking over the call to start the user’s conversation with a human
operator.
Commercial Regulations
ANRE Order no. 25/2021 regarding the amendment of the Framework Contract for the distribution service
- in force since 1st July 2021:
-
in the process of changing the supplier, for the small household and non-household customers, the
measurement group index reading for settlement related to a consumption place is performed by
the DSO, if the final customer does not send the self-read index;
-
the DSO has the obligation to inform the supplier about the change of the measuring group reading
period at least 60 days before the change date;
-
within a maximum of two months from the entry into force of this order, the DSO and the electricity
suppliers update the electricity distribution service contracts according to the provisions of the
framework contract from the Appendix no. 1 to the ANRE Order no. 90/2015, with subsequent
amendments and completions;
ANRE Order no. 82/2021 for the amendment and completion of the Regulation for the supply of electricity to
final customers, approved by ANRE Order no. 235/2019 and the repeal of ANRE Order no. 130/2015 regarding
the approval of the Procedure regarding the electricity supply of the DSO own consumption places – in
force from 1st July 2021 (except for the provisions of art. I points 25-27, 33 and 34 which enter into force on
1st January 2022):
-
in case of the electricity supplier change, the customers can communicate to the new supplier
the self-read index at the date of sending the change of supplier notification; the supplier has the
obligation to take over and send to the DSO the index self-read by the final customer; the self-read
index is taken into account by the DSO when setting the electricity consumption in the process of
changing the supplier;
if the final customer does not send the self-read index, the DSO has the obligation to read the
-
index of the measuring equipment in the period between the date of sending the supplier change
notification and the date of the actual change of the supplier;
-
the DSO has the obligation to create and maintain in the database, for each consumption place, for
each month from the period January - December, information on the estimated active electricity
consumption, established as appropriate, based on: (i) consumption of electricity recorded at
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT the consumption place in the similar period of the previous year or of the determined electricity
consumption taking into account the most recent readings made by the DSO; (ii) the specific
consumption profile, determined by the DSO for the respective category of the final customer if
there is no consumption history for the place of consumption.
-
the DSO has the obligation to allow free access to all electricity suppliers to the data in the database
-
-
and to inform them on how to access the data;
until 1st November 2021, the DSOs have the obligation to make available to the electricity suppliers
the consumption data provided in the order and to publish on its web pages information regarding
the way of accessing these data;
starting with 1st January 2022, in the case of consumption places for which consumer agreements
are concluded, the distribution service invoicing will be performed by the DSO, based on these
agreements, if there is no index for these consumption places read by the DSO or by the end customer.
Compliance Regulation
ANRE approved Order no. 97 / 08.09.2021 approving the Regulation on establishing the compliance
program and designating the compliance agent by the electricity / natural gas distribution operators and
by the natural gas storage operators that are part of a vertically integrated economic operator effective
1 January 2022:
-
-
designating the approval and activity of the compliance agents - DO will send to ANRE the
nominations of the compliance agent until 1st of November 2021, conditions: (i) at least 3 years before
the date of designation as compliance agent and for the entire period in which a compliance agent
is appointed, not to have held / not to hold any professional position or responsibility, interest or
business relationship, of direct or indirect order, with the vertically integrated economic operator
or with any part thereof; (ii) have at least 5 years of experience in the field of electricity / natural gas;
-
the manner of elaboration and the content of the compliance programs drawn up by the DO for
electricity / natural gas, respectively for the storage of natural gas;
-
implementation of the measures provided in the compliance program and monitoring the application
of the compliance programs, respectively of the measures therein;
f) Primary legislation:
Energy law no. 123/2012 - amended by Government Emergency Ordinance “GEO” no. 143/2021 - in force
starting with 31 December 2021
-
new attributions of Ministry of Energy: approves the development plans of TSO and DOs from the
point of view of ensuring the concordance with the provisions of the energy strategy and PNIESC
2021-2030; approves the reliability standard.
-
Directly negotiated bilateral transactions can be concluded on the wholesale market in all time
intervals;
-
In the case of the final household customer, in order to issue the regularization invoice, the DO has
the obligation to ensure the reading of the index of the measuring group at a time interval of a
maximum of 3 months.
Each DO acts as a neutral market facilitator in electricity acquisition to cover NL, in accordance with
-
transparent, non-discriminatory, and market-based procedures, in consideration of ANRE regulations.
-
household connections - In the case of household customers, when commissioning the connection
workings, DO will reimburse the applicant the effective value of the connection design and execution
works, up to an average value of a connection, established according to a methodology approved by
ANRE. The assets resulting from the connection workings become the property of the distribution
operator from the moment of commissioning, through the effect of this law, at the value reimbursed
to the household customer, being recognized by ANRE as part of the regulated assets base.
-
non-household connections - In the case of non-household customers, the value of the connection
workings, including those for the design of the connection/connection made, is fully financed by
them. The assets resulting from the connection workings enter the patrimony of the distribution
operator from the moment of commissioning, through the effect of the present law, without being
recognized by ANRE as part of the base of the regulated assets. -in case the final customers do
not have SMI, OD provides them with individual conventional meters that accurately measure their
real consumption. OD ensures that end customers can easily read their conventional meters, either
directly or indirectly, through an online interface or another appropriate interface that does not
involve a physical connection to the meter.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT GEO no. 84/2021 - in force starting with August 6, 2021
-
Repeals the provision of art. 72, paragraph (1) from GEO nr. 70/2020, according to which DOs and TSO
ensure the continuity of electricity supply in the alert state
-
The cessation of the provision of services corresponding to the non-payment of outstanding debts
cannot be achieved earlier than 90 days from the entry into force of GEO no. 84/2021.
Law no. 259/29.10.2021 for the approval of GEO no. 118/2021 regarding the establishment of a compensation
scheme for the consumption of electricity and natural gas for the cold season 2021-2022, as well as for the
completion of the Government Ordinance no. 27/1996 regarding providing facilities to persons residing
or working in some localities in the Apuseni Mountains and the Biosphere Reserve „Danube Delta”
-
For the period November 1st, 2021 - March 31, 2022, a support scheme was established for the payment
-
of invoices related to the consumption of power and gas for several categories of final customers.
To regularize the amounts related to the support scheme, the electricity / natural gas distribution
operators have the obligation, in April-June 2022, in addition to the readings established according
to the regulations in force, to read the meter index to final customers who have benefited from
the support scheme and to communicate to the electricity / natural gas suppliers their measurement
data.
-
Exemption of some categories of small consumers (SMEs, PFA) from the payment of distribution
tariffs, transport, green certificates, the contribution for high-efficiency cogeneration, and excise.
g) Alignment with the European legislation - EU Regulation no. 943/2019:
15 minutes settlement
ANRE Order no. 27/31 March 2021 - ANRE orders amendment - settlement interval (SI) to 15 minutes - in force
since 1st April 2021:
-
the amendment of ANRE orders containing references to trading/delivery/settlement intervals
lasting one hour, with the intent to modify by using the phrase “settlement interval” and setting the
duration of this interval to 15 minutes. The settlement interval is one hour until 1 July 2021, respectively
15 minutes, starting with 1 July 2021.
Electricity market functioning
ANRE Order no. 26/31 March 2021 for the amendment of art. VII of the ANRE Order no. 65/2020 - in force
since 1st April 2021:
-
long-term supply contract means any contract with a delivery duration equal to or higher than one
month;
Draft order approving the balancing clauses and conditions - public debate – phase III:
-
the purchase by the TSO, on the European trading platforms for balancing energy, of energy from the
balancing service providers from EU member countries;
-
separate activation by direction of the balancing energy from the frequency restoration reserve with
automatic activation (RRFa = the new term used to define the secondary setting);
the use of standard balancing energy products within each European balancing energy platform,
-
which have the same static characteristics for all balancing service providers from each EU member
state;
-
considering, in the internal balancing market settlement, the unintentional electricity trade between
state members;
-
the emergence of the capacity market for frequency recovery reserves (RSF = the new term used to
-
-
define the setting);
enters into force starting with 1st October 2022;
the ODs collaborates and elaborates, following a public consultation process, a unique procedure
regarding the way of establishing, verifying, confirming by the involved parties, and implementing
the way of aggregating the measured values related to a BM, which each OD then publishes on its
own website within three months from the publication of the order.
ANRE Order no. 128/2021 - Order for the approval of suspension and re-establishment Rules of market
activities and for the applicable settlement Rules – in force since 1 October 2022:
-
determining the situations and conditions in which TSO can suspend market activities with
diminishing the impact on the coupling of DAM and IM energy markets;
identification of the market activities that can be suspended and of the procedure of their suspension
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT and restoration: stages, role, and responsibilities TSO / designated electricity market operator/factors
involved;
-
-
the communication procedure detailing the tasks and actions that each party must perform;
the suspension during the collapse period and the restoration from the collapse of SEN of all contracts
on the wholesale market (including transactions concluded on DAM and IM), and its sale/acquisition
will be made at a single restoration price, respectively the settlement method applicable in these
situations and the way of making payments and contesting the settlement.
-
the order will be applied to start with the 1 October 2022, the date from which the ANRE Order no.
23/2016 repeals.
ANRE Order 3/2021 approving the Regulation on the organization and operation of the online supplier
change platform (POSF) and for contracting the supply of electricity and natural gas - in force since
August 28, 2022
-
The online platform (POSF) is unique at the national level, end customers and economic operators
involved in changing the supplier and contracting the supply have the obligation to use exclusively
-
-
-
-
this platform.
Implementation of the platform starting on 28 August 2022.
Duration of the supplier change process 24 hours
The client is obliged to register the self-read index in POSF
The client uploads the self-read index at the beginning of the supplier change process and a second
self-read index at the date of the actual change of the supplier. If the end customer does not upload
the index on the date of the actual change of the supplier, OD has the obligation to register in POSF,
within 5 days from the date of the actual change of the supplier by the end customer, the index read
by OD or provided by the system. intelligent measurement.
-
The regulation details: how the POSF is organized and operated, the content of the POSF database,
the data needed to create the POSF access account, the rights and obligations of POSF users, the
rules for concluding the supply contract, the actual supplier change procedure.
-
ANRE is the administrator and operator of the Online Platform intended for the change by the final
customer of the electricity and/or natural gas (POSF) supplier
-
In the period between the date of entry into force of the Order and August 28, 2022, all economic
operators are obliged to comply with any ANRE requests for the realization and implementation of
POSF.
Investments
In 2021, the operator Distributie Energie Electrica Romania (DEER), resulting from the merger in 2021 of the three
distribution operators of Electrica Group realized and commissioned investments amounting to RON 541.4 M,
representing 96.69 % of the commissioning program value planned for 2021 (eg. RON 558.6 M, of which RON 549.2
M related to the 2021 plan and RON 9.4 M for values carried forward related to 2020; RON 532.2 M were realized in
the first category related to 2021 and RON 8.2 M were related to 2020).
In 2022, Distributie Energie Electrica Romania (DEER), will continue to invest in distribution infrastructure, the
investments to be commissioned for 2022 by DEER, cumulating RON 587.5 M (of which, RON 558.5 M plan for 2022
and RON 29 M values related to the plan for 2021). In addition to the works in the distribution networks provided
in the investment plan 2022, it is estimated the realization of works for connecting users, considering the new
legal requirements introduced by government emergency ordinance OUG nr. 143/2021 which amended and
supplemented Energy Law no. 123/10 July 2012, as well as amending other legislation.
The investment plans were prepared in 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 and growing
competition, EFSA finished an ambitious internal transformation project which set to successfully meet the current
and future challenges, and which mainly targeted the internal reorganization of the company, in terms of internal
and external work processes and streamlining the customer experience in all points of contact, as well as the
development of new skills specific to the sales area.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT In the first stage, the project focused on developing the sales strategy, and in the second stage, the effort focused on
internal processes, systems, and technology improvement, and, naturally, on upgrading organizational structures.
A process of redesign and adjustment to present market challenges came next, aiming to upgrade and re-think
relevant activities in order to supply customers with the highest level of services.
In 2021, EFSA continued its efforts to transform the internal processes in the sales and customer relations areas,
focusing on digitization and automation.
The current priorities in the supply segment are:
-
-
-
-
improving operational performance;
speeding up the digitization of main business processes;
continuous development of value-added products and services;
increasing the quality of supply service.
Regulatory Framework
a. Primary legislation
In 2021, the following legal acts, with an impact on the supply of electricity and gas, have been approved:
Government Emergency Ordinance no. 143/2021 amending Electricity and Gas Law no. 123/2012:
-
-
the ordinance primarily aims to transpose Directive (EU) 944/2019 on common rules for the internal
electricity market, bringing several amendments/additions concerning mainly the following:
universal service (US): by any supplier on the competitive market (who shall elaborate US offers and
supply the US to customers, if requested), exclusively to household customers;
-
electricity end-user price: removal of all provisions concerning regulation/approval of end-user prices;
in return, the ordinance provides for the possibility of public interventions in the price setting for
the supply of electricity to vulnerable or energy-poor customers, under certain conditions and with
notification to the European Commission;
-
wholesale electricity market: removal of exclusively public and centralized trading obligation; the
new stipulations explicitly mentioned “the directly negotiated bilateral transactions”;
-
suppliers’ obligations: removal of the obligation to set up physical customer care centers for US
customers at max. 50 km;
-
suppliers’ (misc.) rights: permission to charge customers (without discrimination) contract termination
fees where those customers voluntarily terminate fixed-term, fixed-price electricity supply contracts
before their maturity; permission to charge customers, except for households and small enterprises,
supplier switching fees;
-
electricity supplier switching: until 2026, supplier switching shall be performed in 24 h at the latest,
in any working day; customers shall be given the right to engage in collection supplier switching
schemes;
-
electricity standard offers/price comparison tool: expansion of suppliers’ obligation to elaborate
standard offers also for microenterprises*, and upload them to ANRE Price Comparison tool (eg. an
enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance
sheet total does not exceed EUR 2 million) with an expected yearly consumption of below 100 000
kWh;
misleading/incorrect commercial practices in the field of electricity and gas supply: maintain the
-
infringement identified by ANRE only concerning non-household customers; also, the penalty for
breach of obligation calculated as a percentage of the annual turnover shall be replaced with a
lump sum penalty; with regard to household customers, the non-compliance will be assessed by the
National Consumer Protection Authority(NACP);
-
electricity and gas billing: settlement bills for household customers shall be issued once every 3
months at the least; the breach of the obligation shall be fined with a lump sum penalty;
-
prohibition of disconnection for electricity: ANRE shall be granted the right to identify additional
categories of customers that cannot be disconnected, apart from the vulnerable ones;
-
offences: the repeated breach is (again) defined as at least 2 breaches occurring in 12 consecutive
months (as opposed to at least 2 breaches);
-
prosumers: prosumers shall benefit also from net metering, in addition to the financial settlement
before; installed capacity limits have been increased.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Law no. 226/2021 approving social protection measures for the vulnerable energy consumers:
-
-
the law applies as of 1 November 221;
the following financial measures have been approved to support vulnerable consumers: the aid for
residential heating, during the cold season, eg. 1 November – 31 March (max. RON 500 /month for
electricity, and RON 250 /month for natural gas); the energy subsidy, to be given all year long (RON
30 /month for lighting and RON 70 /month in case electricity is the only source of energy used, and
RON 10 /month for gas); the money for both types of aid shall be paid directly to energy suppliers, and
deducted from the invoices;
-
consumers fulfilling the income-related eligibility criteria will benefit from the financial protection:
the maximum monthly net average income that qualifies for the heating aid is RON 1,386 /person for
families, and RON 2,053 for single persons.
Government Emergency Ordinance (OUG) no. 118/2021 establishing a compensation scheme for the
consumption of electricity and gas during the 2021-2022 cold season, approved with amendments by Law
No. 259/2021:
-
the support scheme shall be applied for the consumption of electricity and gas from November 2021
to March 2022, and has been approved given the surge in international energy prices and the impact
-
-
thereof on the Romanian population;
The following support mechanisms have been put in place:
compensation for household customers provided they fall within the maximum consumption limits
set for the whole period (eg. 1,500 kWh for electricity, and 1,000 m3 for gas), as well as per month, and
within the reference price set at 0.68 lei/kWh for electricity, and 125 lei/MWh for gas; the compensation
amounts to 0.291 lei/kWh for electricity, and 33% of the invoice for gas;
-
exemption from all energy regulated tariffs and taxes for SMEs, individual medical practices and
other liberal professions, microenterprises, authorized natural persons, individual enterprises, family
enterprises (eg. regulated transmission tariffs/cut-off from the network, distribution tariff, system
services tariff, transmission tariffs, green certificates, high-efficiency cogeneration contribution,
energy tax – for electricity; transmission costs, distribution tariff, and energy tax – for gas);
-
capping of the end-user price at max. 1 leu/kWh for electricity (out of which max. 0.525 lei/kWh will
be the energy component), and max. 0.37 lei/kWh for gas (out of which max. 0.250 lei/kWh will be
the energy component) for household customers, public and private hospitals, public and private
schools, kindergartens for small babies, NGOs, churches, public and private social service providers;
-
moratorium on bills – upon request, only for vulnerable consumers, for min. 1 month and max. 6
months;
-
the legislation also provides for reimbursement mechanisms from the state budget to electricity and
gas suppliers.
Order of the minister of labor and social protection (No. 1.155/25.11.2021), minister of energy
(no. 1.240/25.11.2021), and minister of finance (no. 1.480/26.11.2021) approving the procedure for
compensation of suppliers for the consumer support scheme set by OUG no.118/2021:
-
-
-
the order clarifies as to the implementation of support schemes and compensation of suppliers;
regarding the household customers support scheme: the order mentions the documents to be sent
by suppliers for compensation and related deadlines;
scheme for exemption of non-household customers from regulated tariffs, energy tax, contributions,
etc. – the order includes the following: the documents to be sent by suppliers for compensation;
a template for customers’ application and declaration; the fact that the benefit shall be granted
starting with the month of the application (except for the applications made in December, where
the benefit shall be granted starting with November); the fact that, in case of supplier switching,
customers shall be compensated pro-rata;
-
price cap – the order mentions that: the subscription (the value of subscription services) is not
included in the price cap (eg. RON 1 /kWh for electricity, RON 0,37 /kWh for gas); the average price in
the suppliers’ compensation formula refers to procurements made by each supplier; the calculation
for suppliers’ compensation shall be calculated on a monthly basis, and a settlement shall follow at
the end of the scheme’s implementation period.
Government Emergency Ordinance no. 130/2021 regarding fiscal-budgetary measures, the extension of
deadlines amending, inter alia, certain pieces of legislation:
-
-
the ordinance brought several changes to OUG no. 118/2021 and Law no. 259/2021 concerning mainly:
compensation of suppliers for the energy price cap scheme: the calculation formula shall factor in
the average price of ongoing contracts with physical deliveries over the scheme’s implementation
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT period; procurements related to supply of last resort shall be analyzed separately so as to reflect the
additional volumes purchased for the supply of last resort to customers; underlying documents for
compensation of suppliers shall consist in volumes and prices from ongoing procurement contracts
with physical deliveries over the scheme’s implementation period, and electricity/gas volumes
delivered to cap priced customers.
Government Decision no. 1077/2021 approving the preventive action plan for the safeguard of security of
gas supply in Romania
-
-
the Plan does not include important new elements as compared to the previous one;
the suppliers remain under the obligation to secure, in emergency situations, continuity of gas
supply to protected customers in the three crisis cases respectively (eg. household customers, SMEs,
essential service providers, district heating installations supplying heat to protected customers who
cannot operate with other fuels and supply heat to the protected mentioned customers); gas supply
cannot be cut to the protected customers.
Regarding the legislation related to the energy sector, in the context of the COVID-19 pandemic, the Government
has decided to successively extend the state of alert initially established in 2020 (by Decision No. 394/2020), with 30
days each time, as follows: starting with 13 January 2021, by GD no. 3/2021; starting with 12 February 2021, by GD no.
35/2021; starting with 14 March 2021, by GD no. 293/2021; starting with 13 April 2021, by GD no. 432/2021; starting with
13 May 2021, by GD no. 531/2021; starting with 12 June 2021, by GD no. 636/2021; starting with 12 July 2021, by GD no.
730/2021; starting with 11 August 2021, through GD no. 826/2021; starting with 10 September 2021, by GD no. 932/2021;
starting with 10 October 2021, by GD no. 1090/2021; starting with 9 November 2021, by GD no. 1183/2021; starting with
9 December 2021, by GD no. 1242/2021; starting with 8 January 2022, by GD no. 34/2022.
Correlatively, until 6 August 2021, this implied the application of the measures with impact on the electricity and
natural gas supply activity (i.e., the obligation of the transmission and distribution operators of electricity and natural
gas to ensure the continuity of service supply, and, in case a situation of disconnection occurs, the postponement
of performing this operation until the end of the state of alert).
As of 6 august 2021, when GEO no. 84/2021 had been enforced, the prohibition to disconnect electricity and gas
customers during the state of alert had been removed. Regarding the supply cessation in case of non-payment of
the outstanding debts, according to GEO no. 84/2021, this measure could not have been taken earlier than 90 days
from the entry into force of GEO no. 84/2021.
b. Secondary legislation
During the period analyzed, at the level of the regulatory framework, there were changes and completions in the
following areas of activity and regulation:
Liberalization of the electricity market
ANRE Order no. 5/2021 amending the ANRE Order No. 171/2020 for the approval of the suppliers of last resort
(SoLR) electricity supply conditions and for amending and supplementing the Framework agreement for
the supply of electricity to SoLR household customers, approved by the ANRE Order No. 88/2015:
-
it includes provisions regarding the discount the SoLRs can grant to household customers who
choose a competitive supply agreement. This discount, equal to the difference between the price
in the universal service offer applicable between 1 January - 30 June 2021 and the price in the
competitive offer with the lowest value, available on 20 January 2021, applies for the period from
1 January 2021 and until at least 30 June 2021;
-
New information obligations have been introduced for SoLRs for household customers from their
own portfolio:
until 30 June 2021, accompanying each invoice issued: information regarding the regulated tariffs’
elimination, as well as an offer selection form, in the form established by ANRE, containing the
competitive offer with the lowest value, a competitive alternative offer, and the universal service
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 the second semester of 2021, accompanying each invoice issued: notification regarding the
regulated tariffs’ elimination.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT ANRE Order no. 6/2021 for the amendment of the Regulation for the electricity SoLR designation, approved
by ANRE Order No. 188/2020:
-
the definition of the non-household customers under supply of last resort regime (LR) has been
modified, to include the customers who are taken over because there is no other supply source
ensured, as well as those who request the supply in the LR regime.
Retail electricity/gas market – commercial regulations
ANRE Order no. 82/2021 and no. 91/2021 amending and supplementing the Regulation on the supply of
electricity to final customers:
-
the amendments/completions are applicable, as a general rule, from 1 July 2021, and, as an exception
(e.g., the new provisions regarding the settlement of customer complaints regarding the invoice,
payment of compensations due based on the Performance Standard), from 1 January 2022;
-
the changes concern mainly: the content and publication of the offer and the supply contract (it
must include all the price elements and it is published, cumulatively, in the ANRE Price Comparator,
on the website and at the single point of contact), the determination method of the consumption for
invoicing in the absence of the read/self-read index (estimation of consumption by the supplier based
on the most recent readings or consumption from the previous similar period being allowed only until
the end of 2021, afterwards will be made exclusively based on the consumption agreement issued
by the distributor and concluded with the final customer by the supplier), the supply agreement
conclusion – necessary documents (eg. the ownership deed is no longer mandatory, being replaced
with a declaration on own responsibility on the ownership right over the consumption place),
settlement of invoice-related complaints and the supply contract termination for non-payment
of the invoices (without being mandatory the consumption place disconnection), completing the
mandatory content of the disconnection notice.
ANRE Order no. 83/2021 approving the Performance Standard for the electricity/gas supply activity:
-
the Regulation is common for electricity and gas, replaces the standards in force for the two areas,
and is applicable from 1 January 2022, except for the provisions regarding the reception of telephone
calls through the call center (applicable from 1 July 2023, respectively from 1 January 2024 regarding
the payment of the compensations);
-
11 guaranteed quality indicators are established regarding the response times to requests related
to: supply offer communication; supply contract conclusion; amendment/completion of the supply
contract; invoices; supply interruption/limitation at the consumption place, as the case may be,
requested by the supplier; resumption of supply at the consumption place, whose interruption/
limitation was ordered by the supplier, subject related to the field of activity of the network operator;
communication of responses received from the network operator; supplier change process; supply
activity, other than those expressly provided; the response time of a telephone call made through
call center service;
-
for each quality indicator, ANRE has established a guaranteed level that the suppliers have the
obligation to respect and for whose non-compliance the suppliers will automatically/legally pay
compensations to all categories of final customers;
-
a manner of evaluating by ANRE the activity carried out by the suppliers is introduced, through a
scoring system established considering the degree of observance of the quality indicators guaranteed
levels, a classification that will be made public through the ANRE Price Comparator;
-
in conclusion, by comparison with the current standards: the scope was extended in terms of
automatic payment of compensations to all categories of customers, several guaranteed quality
indicators were introduced (11 compared to 8 for electricity, respectively 4 for natural gas, currently),
the compensation levels for natural gas have been doubled/tripled, the suppliers’ classification
manner according to the level of compliance with the guaranteed quality indicators has been
introduced.
ANRE Order no. 138/2021 amending several ANRE orders:
-
several provisions and enforcement deadlines related to the performance standards for electricity/
gas supply have been changed as follows:
-
the deadline for sending the customer the response to complaints concerning electricity bills has
been changed to 15 working days (instead of 5 working days before);
-
the deadline for sending the customer the response to complaints concerning gas bills has been
changed to 15 working days (instead of 15 calendar days before);
-
enforcement of certain changes brought to the Electricity Supply Regulation, by ANRE Order no.
82/2021, has been postponed until 1 July 2022 (from 1 January 2022 before); most importantly, the
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT enforcement of automatic compensation of all categories of customers (not only US customers) in
case of breach of obligations;
-
the enforcement of the new performance standard for the supply of electricity/gas (approved by
ANRE Order no. 83/2021) has been postponed until 1 July 2022 (from 1 January 2022 before).
ANRE Order no. 139/2021 amending and supplementing the gas distribution framework- contract, and
related general conditions (approved by ANRE Order no. 78/2020), as well as the Gas Supply Regulation (as
approved by ANRE Order no. 29/2016):
-
the order contains changes concerning mainly the following: documents needed for signing a gas
supply contract (e.g. a self-declaration shall replace the deed of ownership or use needed before);
management of supplier-distributor gas distribution contracts (removal of the obligation to sign
addenda in case of prolongation or change of contract); metering (distributor shall read the meter
at the beginning and end of the supply, including in case of supplier switching; a standard template
shall be used for the data sent by the distributor for gas measuring; distribution services shall be
invoiced based on actual measurements or customers’ meter self-reading).
Supply of last resort
ANRE Order no. 125/2021 changing the Gas Supply of last Resort Regulation (approved by ANRE Order no.
173/2020):
-
-
the order contains changes concerning mainly the following:
designation of suppliers of last resort (SoLR): at least 5 SoLRs, with an aggregated market share in
terms of customers and volumes of min. 70% (as opposed to at least 3 SoLRs with no associated
conditions);
-
conditions under which a supplier may relinquish its SoLR quality – the new aggregated conditions
for the SoLRs appointed based on availability and eligibility (such as Electrica Furnizare) are: after at
least 1 year from designation (as before); not to have any customer supplied under SoLR at the date
of the relinquish (newly added requirement); with prior notification of ANRE with at least 60 days
before (compared to 45 days before);
-
duration of the supply of last resort: min. 12 months from takeover for small customers, eg. customers
with an annual consumption below or equal to 28 000 MWh (compared to 3 months before);
-
supply of last resort price: supply and transmission components of the price shall be maintained
unchanged for 3 months from takeover (as opposed to monthly setting of all energy price
components); exemption from this rule – where these components decrease;
-
criteria for selection of SoLRs for the automatic takeover of customers: the “lowest cost” criterion;
the takeover capacity criterion, under which the number of customers taken over may not exceed
30% of SoLR’s number of customers; the availability to take over criterion, in case SoLRs do not meet
previously mentioned criterion (as compared to a single criterion, eg. “the lowest cost”, before).
ANRE Decisions on termination of several gas SoLRs designation decisions, and on the designation of
several new gas SoLRs:
-
termination of SoLR designation decisions, upon request of the suppliers concerned to renounce at
this quality, for: CEZ Vanzare (starting with 2 January 2022) – ANRE Decision no. 2233/2021, CIS Gaz
(starting with 14 December 2021) – ANRE Decision no. 2234/2021;
designation of new SoLRs (according to the new rules introduced by ANRE Order no. 125/2021): E.ON
-
Energie Romania – ANRE Decision no. 2237/2021, OMV Petrom – ANRE Decision no. 2238/2021, both
starting with 15 December 2021;
-
Electrica Furnizare still SoLR for gas.
Wholesale electricity/natural gas market
ANRE Order no. 7/2021 approving the Regulation on the organized framework for trading standardized
products on the centralized natural gas markets managed by Romanian Commodities Exchange S.A.:
-
the Regulation includes trading rules for the centralized markets related to short, medium, and long-
term products, as well as flexible medium and long-term products.
ANRE order no. 26/2021 for the amendment of ANRE Order No. 65/2020 regarding the amendment and
completion of certain ANRE orders:
-
in the application of the EU Regulation no. 943/2019 provisions on the internal electricity market
(relating to the over-the-counter sale of energy), the long-term supply contract was redefined as
any contract with a delivery duration greater than or equal to one month (compared to one year,
according to previous regulations);
43 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT -
the above-mentioned contracts are concluded in compliance with the competition rules and are
reported according to the provisions of the EU Regulation on the integrity and transparency of the
energy wholesale market (REMIT).
ANRE Order no. 27/2021 on amending and supplementing of certain ANRE orders:
-
in the implementation of the European rules regarding the settlement interval at 15 minutes, nine
regulations have been modified that establish trading rules on the centralized term markets for
electricity, in which the reference to the duration of one hour will be replaced with the reference to
the settlement interval, and this duration of the settlement interval should be one hour until 1 July
2021, respectively 15 minutes starting with 1 July 2021.
ANRE Order no. 33/2021 regarding the amendment and completion of ANRE Order no. 213/2020 for the
approval of the Regulation for the calculation and settlement of the balance responsible parties’ imbalances
- single imbalance price:
-
-
the new rules apply to start with 1 June 2021;
the calculation method for determining the imbalance and the payment obligations/collection
rights used in the imbalance price formula is replaced, with the values for these exchanges received
by TSO from the European platform; the remuneration way for the electricity produced in production
capacities/electricity storage installations that are in the trial period is modified.
ANRE Order no. 37/2014 for the repealing of the Regulation on the organization and functioning of the
electricity Day-Ahead Market (DAM), respecting the mechanism of markets price coupling and the
amendment of some normative acts that regulate the electricity DAM:
-
the repeal enters into force on 17 June 2021 and occurs in the context of the application of harmonized
norms at the European level to unify the day-ahead markets.
ANRE Order no. 30/2021 regarding the amendment and completion of the Methodology for regularizing the
differences between the allocations and the quantities of distributed natural gas approved by ANRE Order
no. 16/2020:
-
the new rules apply in the process of gas system balancing and regulate the situation in which a
distribution operator does not transmit to a network user the differences between the allocation
and the distributed quantities and/or the differences between the final monthly allocation and the
sum of the daily allocated quantities, as well as the specification of the weighted average price that
applies in case the distribution contract terminates during the respective gas year.
ANRE Order No. 96/2021 amending the Regulation on calculation and settlement of electricity imbalances
– the single imbalance price, approved by ANRE Order No. 213/2020:
-
the following elements have been updated: the way imbalances are determined; the formula for
calculating starting short and long prices; the deadline for the submission by Transelectrica of
preliminary and final data on the settlement of unintended exchanges; formula for calculating the
costs/revenues and actual costs for the imbalance energy.
Renewable energy sources, green certificates, prosumers
ANRE Order no. 9/2021 establishing the mandatory green certificate (GC) purchase quota for 2020:
-
the quota has been set at 0.45074 GC/MWh (as compared to 0.45061 GC/MWh estimated quota for
2020 and 0.433548 GC/MWh mandatory quota for 2019).
ANRE Order no. 15/2021 for the approval of the procedure regarding the connection to the public interest
electricity networks of the consumption and production places belonging to the prosumers who own
installations for the electricity production from renewable sources with the installed power of at most 100
kW/consumption place:
-
the regulation is relevant for the electricity supplier as it can carry out, on behalf of the prosumer, the
connection-related procedures, i.e., the transmission of the connection request, of the notification for
connection work execution to the DSO, and the request for the prosumer quality certification.
ANRE Order no. 50/2021 for the approval of the rules for the sale of electricity produced in power plants, from
renewable sources, with an installed electrical power of no more than 100 kW belonging to prosumers:
-
-
The new rules are applicable from 1 July 2021;
it is introduced, compared to the previous division into natural persons prosumers and legal person
prosumers, the division into natural person prosumers with max. 27 kW installed power, respectively
individual prosumers over 27 kW and max. 100 kW and legal entities max. 100 kW, in the application
of the provisions regarding: determining the quantity of electricity that benefits from the special
applicable price, transmitting the measurement data by invoice or according to the sale-purchase
contract concluded with the supplier, and regularization in the invoice or between invoices.
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT ANRE Order no. 52/2021 for the approval of the Methodology on monitoring the promoting system of the
electricity production from renewable energy sources:
-
-
the new Methodology is applicable from 1 July 2021;
it is taken over from the Rules for selling electricity produced by prosumers and completed, both in
terms of transmission methods and content, the obligation of suppliers to submit monthly to ANRE
information on sales-purchase contracts concluded with prosumers.
ANRE Order no. 131/2021 setting the estimated mandatory green certificates purchase quota for 2022:
-
the estimated quota set at 0.5014313 green certificates/MWh (as compared to the estimated quota
for 2021 of 0.4505 green certificates/MWh)
ANRE Order no. 117/2021 approving the rules on mitigating green certificate annual impact in electricity
consumers’ bills:
-
the order sets a calculation algorithm aiming at maintaining the average impact of green certificates
in electricity consumer’s bills at the present legal value of EUR 14.5 /MWh for as long as the excess of
green certificates in the green certificates market in percentages is higher or equal to the average
value of the previous 3 years. In case the excess of green certificates in the green certificates market, in
percentages, falls below the average of the 3 previous years, the average impact of green certificates
in consumers’ bills shall be reduced.
ANRE Order no. 137/2021 approving the Procedure on the determination of available electricity network
capacity for connection of new electricity generation facilities:
-
the procedure has been drafted given the European Green Deal and “Fit for 55” objectives, which
Romania shall have to endorse, and that calls for the construction of new electricity generation
facilities. It consequently became necessary, especially in the absence of network consolidation
works, to determine the available electricity network capacity;
-
the procedure sets: rules for determining the available electricity transmission and distribution
(110kV) network capacity; rules on the publication transparently and periodically by the transmission
and system operator of data concerning the available capacities in the electricity transmission and
distribution (110kV) networks; deadlines for the publication by networks operators of data on available
capacities (eg. on a monthly basis as of 1 April 2022; twice a month as of 1 July 2022; weekly as of 1st
October 2022).
Regulated tariffs, and other taxes and contributions
ANRE Order no. 10/2021 regarding the amendment of the ANRE Order no. 214/2020 on the approval of the
average tariff for the transmission service, of the components of the transmission tariff for the insertion of
electricity in the network (TG), and for the extraction of electricity from the network (TL), of the tariff for the
system service and of the regulated price for reactive electricity practiced by Transelectrica S.A.:
-
-
the new tariffs are applicable from 1 March 2021;
transmission tariff – introducing electricity into the network component - TG = RON 1.3/MWh (same
level as before);
-
transmission tariff – electricity extraction from the network component - TL = RON 19.22/MWh (same
level as before);
-
system service tariff = RON 10.82/MWh (lower by 9.5% compared to the previous level).
ANRE Order no. 21/2021 for the abrogation of the ANRE Order No. 14/2019 on the approval of the Methodology
establishing the regulated tariffs for the provision of underground natural gas storage services:
-
the Order aims the implementation of the amendments brought in 2020 to the Law on electricity
and natural gas No. 123/2020, with subsequent amendments and completions, according to which,
after 2020-2021 extraction cycle, the natural gas storage will no longer be a regulated activity;
-
therefore, starting with 1 April 2021, the underground natural gas storage service tariffs are no longer
regulated by ANRE but established by the storage operators, and the access to the storage depots
(eg. the related conditions) will be negotiated between the storage operators and users.
ANRE Order No. 111/2021 amending ANRE Order No. 123/2017 approving the high-efficiency cogeneration
contribution:
-
The new contribution is applied as of 1 November 2021, is included in the final end-user price for
electricity, and is 50% higher than the previous value (eg. 0.02554 lei/kWh from 0.01712 lei/kWh).
ANRE Orders no. 118-123/2021 approving electricity distribution tariffs and the price for reactive electricity:
-
-
the new tariffs are in place as of 1 January 2022;
the low voltage tariffs for Distributie Energie Electrica Romania are 10% to 14% higher compared to
2021.
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT ANRE Order no. 124/2021 approving Transelectrica’s average electricity transmission tariff, the injection (T_G)
and withdrawal transmission charges (T_L), the system service tariff, and the regulated price for reactive
energy:
-
-
the new tariffs are in place as of 1 January 2022;
the average electricity transmission tariff is 16.6% higher than in 2021.
ANRE Order no. 143/2021 approving the fees and contributions charged by ANRE in 2022:
-
the annual contribution owed by suppliers amounts to 0.1% of the annual turnover for electricity (as
opposed to 0.2% in 2021), and 0.056 lei/MWH for gas;
-
given the implementation of customers’ support schemes approved by OUG no. 118/2021, as approved
by Law no. 259/2021, the order includes clarification as to the calculation of the turnover, eg. this
shall be calculated as a net turnover, excluding green certificates and the cogeneration fee from the
calculation.
Investigation on the energy market
ANRE Order no. 22/2021 on amending and supplementing the Regulation for the organization and
development of the investigation activity in the field of energy regarding the functioning of the wholesale
energy market, approved by the ANRE Order No. 25/2017:
-
the amendments to the Regulation refer to, among others, the procedure for resolving complaints/
notifications, providing the data, information, and documents requested by ANRE, the rights of the
investigation team members concerning the market participants.
Licenses and authorizations
ANRE Order no. 24/2021 on amending and supplementing certain ANRE orders:
-
changes to the Validity Conditions associated with the natural gas supply license have been approved:
e.g. obligation to notify ANRE, within 5 working days, for any changes of the name, headquarters,
or contact data; elimination of the obligation to notify ANRE on the decisions to change/establish/
dissolve the main or secondary headquarter/headquarters, the single points of contact, the regional/
local information points; completing the ways of communicating with or transmitting information to
ANRE (e.g. including magnetic support - CD/DVD/memory stick transmitted/deposited at the ANRE
registry; by uploading on the ANRE website, etc.).
ANRE Order no. 42/2021 on the approval of the Framework conditions for validity associated with the license
for the activity of natural gas trader:
-
the rights and obligations of the natural gas trader license holders are established, with the mention
that the trader license is absolutely necessary only in the case of an exclusive development of this
activity, otherwise, the natural gas supply license also allows the trading activity.
ANRE Orders no. 103 and 112 of 2021 changing the gas authorization and licensing Regulation (as approved
by ANRE Order no. 199/2020):
-
the order hardens the procedure on withdrawal of license upon request (eg. motivated request
for withdrawal, confirmation that obligations towards ANE had been met; additionally, for the gas
supply license, suppliers need to actually not perform the activity at the time of the request). As
regards the supply license, it practically becomes close to impossible to have the license withdrawn
upon request.
ANRE Order no. 115/2021 changing the electricity authorization and licensing Regulation (as approved by
ANRE Order no. 12/2015):
-
the order hardens the procedure on withdrawal of license upon request; from the holder’s initiative
by making it conditional and confirmation that obligations towards ANRE had been met, request
and the requirement that the applicant holding a license for supplying electricity no longer carry out
the activity, for which it holds the license, at the time of submitting the application;
-
the order also provides for additional documents to be submitted by the applicant for an aggregation
license (e.g. a description of the activity the applicant intends to perform, including the electricity
market/markets it intends to participate in).
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Smart metering for electricity
ANRE Order No. 94/2021 amending and completing the Framework-conditions for the implementation of
smart metering in Romania, approved by ANRE Order No. 177/2018, and ANRE Order No. 88/2015 approving
the Framework-contracts for the supply of electricity by the suppliers of last resort:
-
the following aspects, applicable as of 1 January 2022, impact suppliers’ activity: processing of personal
data, collected and transited via the smart meter (with the prior consent of the customer, which, in
case of contracts with network regulated services included, have to be obtained by the supplier);
customer information concerning the smart meter installation (which shall be carried out by the
SoLRs for their customers, by sending them a related appendix to the supply contract); invoicing of
the consumption/consumption and production sites with a smart meter installed (which shall be
carried out by the SoLRs for their customers solely based on the data registered by the smart meter,
with only one exception to the rule allowed); invoicing of distribution services for the consumption
sites with smart meters installed (which shall be done solely based on the measuring data registered
by the smart meter).
Unbundling of gas activities
ANRE Order ANRE nr. 93/2021 amending the Regulation on unbundling of accounts of gas activities,
approved by ANRE Order No. 21/2020:
-
The provisions of interest to our activity refer to the gas supply of las resort, an unregulated activity
according to ANRE change of rules in 2020; in this respect, the obligation to keep separate accounts
and report to ANRE shall only apply in case of the supply of last resort at regulated prices.
Corporate image
In 2021, Electrica climbed two positions, reaching 8th place in the ranking of the most valuable Romanian brands,
with an estimated market value of 163 million euros, an increase of 19.2% compared to the previous year, representing
the largest growth in the Top 10. It is the best position occupied by Electrica in this top, so far.
In terms of transparency, Electrica remained in the top of the most appreciated companies, launching, for the fifth
consecutive year, the Sustainability Report, awarded by the Romanian Investors Relations Association.
In 2021, the companies within Electrica Group granted around RON 1 M in donations and sponsorships in the
amount of, for various charity causes.
Certifications
In April 2021, DEER successfully finalized the external recertification audit for its Quality-Environment-SSO
Integrated Management System implemented according to ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018
requirements after the three distribution operators merger into one legal entity. No major non-conformities were
identified during the audit and the new distribution company, DEER, obtained the certification valid until 2024,
annual supervisory audits will be performed by the certification body during the validity period.
In the second half of September 2021, EFSA was also audited by the external certification body for the recertification
of its Integrated Management System Quality - Environment - SSO implemented according to the reference
standards ISO 9001: 2015, ISO 14001: 2015, and ISO 45001: 2018, successfully completing the certification.
The other companies within the group, being inside the validity period of the certification obtained for their
Integrated Management Systems Quality - Environment - SSO implemented in accordance with the requirements
of the references ISO 9001: 2015, ISO 14001: 2015, and ISO 45001: 2018, have only undergone annual supervisory
audits of the external certification body, completed without major non-compliances.
Ethics and Compliance
The Code of Ethics and Professional Conduct was updated and a new policy was adopted, namely, The Policy of
preventing, combating, and sanctioning any form of harassment in the workplace.
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 1.3. Subsequent events
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.
Decisions of ELSA’S Board of Directors
During the meeting held on 2 February 2022, the Board of Directors of the Company approved the
implementation of a reorganization process of the Company’s personnel structure and the initiation of the
collective dismissal procedure, and the amendment of the Company’s organizational structure effective as of
1 March 2022, the notification to the relevant authorities and of the Trade Union regarding the final decision
of the company to implement the reorganization process and to make collective dismissal of employees
currently in jobs to be terminated, as well as the transmission of all data and information provided in Article
72 of the Labor Code, including the outcome of the information and consultation process with the Trade
Union.
Regarding the necessity and opportunity to carry out the reorganization process of the Company’s personnel
structure, it is mentioned that this is one of a broader and complex package of measures considered by the
executive management and the Board of Directors of the Company, regarding the global transformation
process of Electrica Group, designed to support both Electrica and each of its subsidiaries to act in an agile
manner in a field marked by volatility, uncertainty, and complexity, to face the challenges of the internal and
external environment and to strengthen its financial performance, so that the Company has the resources
to transpose the development projects, on which shareholders and investors are informed in accordance
with the principles of transparency adopted by the Company.
The organizational measures provided for in the reorganization plan have the objectives of resizing and
redefining the company’s staff plan and its organization and functioning way, in order to adapt optimally
the number of staff and the functions performed by the staff to the current conditions of activity on the
energy market. The implementation of the organizational transformation project will achieve a reduction
from an existing structure of 120 jobs to a future structure of 85 jobs and a flat structure by reducing the
number of hierarchical levels. As a result of this approach, the number of organizational entities within the
company will decrease significantly - a decrease of 19%, while the number of management/ coordination
positions will decrease even more - a decrease of 25%.
During the meeting held on 31 January 2022, the Company’s Board of Directors endorsed the draft
amendment of Electrica’s Articles of Association that is submitted for stakeholders’ consultation and the
approval by the General Meeting of Shareholders, after completion of the consultation process.
The proposed amendments can be found in Appendix 1 of the Communication published on February 1st,
2022 on the company’s website in the section: Investors – Results and Reports – Current Reports, as well as
on the company’s website, together with the Articles of Association in the form proposed by the company’s
board of directors, accessing the following link:
https://www.electrica.ro/investitori/guvernanta-corporativa/politici-corporative/.
Documents may also be made available to interested parties in physical form at the company’s registry.
During the meeting dated 28 January 2022, the Company’s Board of Directors decided to convene the
Company’s Extraordinary General Meeting of Shareholders (EGMS) on 21 March 2022, regarding the approval
of a total ceiling of short-term financing that can be contracted by EFSA during the financial year 2022 from
banking institutions (commercial banks or international financial institutions – IFI), With Electrica warranty.
During the meeting held on 3 January 2022, the Board of Directors of the Company decided the nomination
of Mr. Stefan-Alexandru Frangulea, a Romanian citizen, as interim CFO, starting with 4 January 2022 until
31 December 2022.
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Litigations
Case no. 887/90/2013
months since its communication.
On 3 February 2022, the final updated consolidated
In the final updated consolidated table, Electrica is
table of the debts owed by Oltchim S.A. was published
registered with (i) the amount of RON 116,058,538
in IPB no. 2049/03.02.2022. The table was updated
representing the secured debt, with the right to vote,
mainly because of the decision of the European
(ii) the amount of RON 45,106,237.96 representing
Tribunal of Justice in Luxembourg, pronounced on
the secured debt registered under the condition
15 December 2021, in case T565/19, a decision that
precedent of pronouncing a final decision amending
partially annulled the Decision of the European
the decision of the EU Tribunal, without the right
Commission no. C (2018) 8592 final, dated 17.12.2018,
to vote and (iii) the amount of RON 509,853,434.01
which established a series of measures regarding
representing the unsecured debt registered under
the recovery by Romania of the state aid granted to
the condition precedent of the pronouncement of
Oltchim SA, in violation of art.108 paragraph 3 of the
a final decision amending the decision of the EU
TFEU, through some companies, including Electrica.
Tribunal, without the right to vote.
In its ruling, the European court annulled several
Case no. ARB-5670 – Borislavschi (RO) vs Electrica
measures to recover state aid established by the
(RO)
European Commission, including Measure 3, which
On 7 February 2022, the dispute that makes the
also refers to the total amount of RON 554,959,671.97
object of file no. ARB-5670 - Borislavschi (RO) vs
(RON 45,106,237.96 representing the secured debt
and the amount of RON 509,853,434.01 representing
Electrica (RO), pending before the International
Court of Arbitration in Vienna, was settled amicably
the unsecured debt), considered state aid with
by concluding a transaction.
which Electrica was listed in the table of debts.
Detailed information on the object of the case can
The decision is enforceable, but not final, and can be
be found in Section 1.2. – Key Events – Litigation of
contested by the European Commission within two
this Report.
Transactions with related parties
Regarding the reporting of transactions with related parties during the period between the end of the financial
year 2021 and the date of this report, the following relevant events took place at the level of the Group.
Between 5 January and 26 January 2022 were reported the transactions, in line with Article 108 from Law no
24/2017, transactions performed between OPCOM - DEER, OPCOM - EFSA, DEER - EFSA, and Transelectrica
- EFSA, the value of which exceeds the threshold of 5 % of ELSA net assets, calculated based on Electrica’s
individual financial statements for 2020, that exceeds the value of RON 202.466.778.
On 26 January 2022 the financial auditor’s limited independent assurance report was published, on the
transactions reported by ELSA in the second half of 2021, under Article 108 of Law No 24/2017.
Supply segment
In order to expand the economic activities of Electrica Furnizare S.A. (EFSA) in Hungary, the Electricity Trading
License was granted by the Hungarian Energy and Public Utilities Regulatory Authority (MEKH) for Electricity
Supply, by Decision no. H879 / 2022.
This license will allow Electrica Furnizare to register and trade electricity in Hungary, on the wholesale market,
including the derivatives market, and the operations will take place at EFSA headquarters.
Legislation
GEO no. 2/2022 regarding the establishment of social protection measures for employees and other
professional categories in the context of prohibition, suspension, or limitation of economic activities,
determined by the epidemiological situation generated by the spread of SARS-CoV-2 coronavirus, as well as
for amending and supplementing normative acts :
-
the ordinance provides for amendments and completions of GEO no. 118/2021 as follows:
extending the scope of application of the ceiling by including in the category of beneficiaries
the public cultural institutions and cultural establishments subordinated to the central and local
public administration authorities;
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT the provision of the interdiction to disconnect or interrupt the supply of electricity to household
customers until 30 June 2022;
the provision, in case of invoices that do not comply with the legal provisions regarding the
application of support schemes (compensation, exemption, capping), of their ex officio redone in
max. 15 days from the date of issue. For the invoices already issued, the deadline for their redone
is 15 days from the entry into force of this GEO, so until 3 February 2022 (inclusive). Also, the
execution of the obligation to pay the invoices being recalculated is suspended, until the issuance
of the new invoices.
GEO no. 3/2022 for the amendment and completion of GEO no. 118/2021:
the following amendments and completions of GEO no. 118/2021:
-
increasing the consumption margin for granting compensation, from 300 kWh/month (+ 10%) to
500 kWh / month (+ 10%) for electricity and from 200 m3/month to 300 m3/month for natural gas;
changing the capped price for HOUSEHOLDS (from RON 1/kWh to RON 0.8 /kWh for electricity
and from RON 0.37 /kWh to RON 0.31/kWh for natural gas) and introducing the capping for all
customers non-household appliances (RON 1/kWh for electricity and RON 0.37/kWh for natural
gas);
the capping still targets both the final price and the purchase component of electricity/natural
gas: for households – RON 0.8/kWh the final price for electricity, out of which RON 0.336 /kWh is
the price component of electricity; RON 0.31/kWh final price for natural gas, out of which RON
0.200/kWh is the natural gas price component; for non-household customers: RON 1 /kWh final
price for electricity, out of which RON 0.525/kWh is the price component of electricity; RON
0.37/kWh the final price for natural gas, out of which RON 0.250/kWh is the natural gas price
component;
the recovery of the capped amounts will be made according to the thresholds indicated above,
corroborated with the application period: from 1 November 2021 to 31 January 2022, by the
difference between the average monthly purchase price and the threshold of RON 525/MWh for
electricity and RON 250/MWh for natural gas. From 1 February, the recovery is made: for household
customers - by the difference between the average monthly purchase price and the threshold of
RON 336/MWh for electricity and RON 200/MWh for natural gas; for non-household customers -
due to the difference between the average monthly purchase price and the threshold of RON 525
for electricity and RON 250 /MWh for natural gas.
ANRE Order no. 1/2022 for the abrogation of ANRE Order no. 32/2016 on the approval of the Methodology for
drawing up the Annual Report by licensees in the electricity and heat sector:
-
the obligation of licensees (including suppliers) to prepare and submit to ANRE the annual report on
the activities covered by the license has been eliminated.
ANRE Order no. 3/2022 for the approval of the Regulation on the organization and operation of the online
platform for changing the electricity and natural gas supplier and for contracting the supply of electricity
and natural gas:
-
-
application deadline - 28 August 2022;
an initiative started in order to achieve the objective provided by the European legislation regarding
the change of supplier in 24 hours, starting with the year 2026;
-
ANRE is the administrator and operator of the platform in which data will be uploaded by end
customers, suppliers, network operators, aggregators, etc. (including standard offers of suppliers),
which will facilitate the process of changing the supplier by going through the necessary
administrative and technical stages and through which customers will be able to contract a new
supplier;
-
The regulation details also the rules regarding the conclusion of the supply contract, respectively the
effective procedure for changing the supplier, which will replace the procedure in force.
ANRE Order no. 4/2022 for the amendment and completion of ANRE Order no. 143/2020 regarding the
obligation to offer natural gas on the centralized markets of natural gas producers whose annual production
achieved in the previous year exceeds 3,000,000 MWh:
-
the quantitative weight distributed for the offer on each of the standardized products was modified,
provided for the period January - 31 December 2022. In the context of the COVID-19 pandemic, the
government decided to successively extend the state of alert initially established in 2022 starting
with 8 January 2022, by GD no. 34/2022; starting with 7 February 2022, by GD no. 171/2022.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 2. Electrica Group
2.1. Organizational structure
Distributie Energie Electrica
Romania S.A.
99,99%2
99,99%2
Electrica Furnizare S.A.
Distribution Operator
HQ: Cluj-Napoca
Electricity and natural
gas supply company
HQ: Bucharest
FISE1 Electrica Serv S.A.
99,99%2
ELECTRICA S.A.
HQ: Bucuresti
100%3
Electrica Energie
Verde 1 S.R.L.4
Energy services company
HQ: Bucharest
Photovoltaic park – production of electricity
Stanesti, Giurgiu County
99,99%2
Electrica Productie Energie S.A.
Company established for development
and operation of electricity
generation capacities
HQ: Bucharest
% Ownership Electrica S.A.
As of 31 December 2021, the Company’s associates are the following:
Associate
Activity
Registration
Code
Head-
quarters
% shareholdings as of
31 December 2021
Production of electricity
Production of electricity
Production of electricity
Production of electricity
Source: Electrica
The main activities of the Group are the operation and development of electricity distribution networks and the
supply of electricity and natural gas 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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The SoLR ensures the supply of electricity to final customers who benefit from, according to the legal framework,
universal service, non-household customers who have not exercised their eligibility right and non-household
customers taken over since they have not secured the electricity supply from any other source.
However, EFSA is designated as a supplier of last resort also in the natural gas sector, only with the possibility to
take over the consumers left without a supplier.
Regarding the electricity production segment, this 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). During 2021, four renewable energy projects acquired by ELSA have been added to this solar
power project (three photovoltaic parks with an installed capacity of 163.5 Mw and a wind power park with an
installed capacity of 121 Mw, having attached an electricity storage capacity of 60 Mw)
2.2. Mission, vision, values
Electrica Group substantiates its future business development by adapting to the market context and highlighting
the specific elements of its companies.
Mission
Energy – anywhere,
anytime, for anyone!
We bring energy where
people materialize
their dreams.
Values
Trust, Competence,
Safety, Sustainability
Vision
Excellence and
robustness for the
traditional segments,
innovation, and flexibility
in new approaches.
The promoter of
electrification
and green energy.
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,
Sustainabaility
our solutions are long-term and friendly for
collaborators, and the communities in which we work.
the environment as well as for the people.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 sector,
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 the constant improvement and the
implementation of best practices in corporate governance and investor relations areas.
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 in order to continuously increase the quality of the services offered
to clients;
Continuing investments in order 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, as well as 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 emphasized 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.
Considering that the limitations generated by the pandemic context in 2021 were extended, the calendars of some
projects have been adapted to the current situation.
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, in order 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
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 segments. 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
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 operationalized initiatives, measures aiming at 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 (decarbonisation, decentralization,
digitalization), which reveals a significant transformation process, accelerated internationally, but initiated
nationally, 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, achieved at the end of 2020, through the proposed organizational model
and the initiation of the legal post-merger integration program, is likely to create the premises for compliance
with the current requirements of the framework that has been in a special dynamic lately, ensuring medium-
term operational efficiency, preparing the organization for the challenges related to the energy transition and
capitalizing on new medium and long-term business opportunities.
The year 2021 represented the year in which the foundations of the new approach were laid in terms of reorganizing
the business and organizational model, which were established - in a broad conceptual and operationalization
effort - the target objectives, as well as the method and tools to be used for the current year and the next 2 years,
the implementation being started in several areas: (i) the unified target organizational chart; (ii) reviewing and
optimizing the processes - as a whole, but also within specific Centers of Excellence, prioritized for implementation
depending on the impact in the operational area and the interaction with the client; (iii) the identification and
application of those initiatives and optimization measures that would lead to the strict compliance with the targets
approved by ANRE regarding the operational and personnel expenses for the distribution service; improving the
model of analysis and monitoring of the results obtained compared to the established targets, with the application
of a more agile approach (iv) IT&C technology area - with a decisive role in transforming the company, as a whole
and in implementing all defined projects, as part of the program.
Following the application, starting with 1 January 2022, of the new unified target organization chart, through
which all structures in the area of strategic activities (asset management, energy management, integration
program management, IT&C, strategic project management), financial and support were reunited under unique
coordination at the level of the company resulting from the merger - Distributie Energie Electrica Romania SA
(DEER), in the coming years will continue the process of adaptation and continuous technology improvement of
processes and support, as defined by the approved Strategy for the distribution segment.
Supply segment
The company has focused in 2021 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 2021 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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
Thus, during the first half of 2021, the progress of the implementation of the Transformation Plan was evaluated
through two audit exercises, and in parallel, the implementation of the initiatives identified for the efficiency of the
supply segment activity continued, as follows:
-
-
-
-
-
-
-
consolidating the position outside the traditional area for the non-household customer segment;
continuing the process of developing and optimizing the portfolio of products/services adapted to
the clients’ needs;
implementation of an IT application for the management of the electricity acquisition activity;
development and optimization of the invoicing and customer management application;
continued implementation of the Customer Relationship Management (CRM) system - the first two
phases of the project were implemented;
modernization of the integrated risk management system;
implementation of a system for continuous monitoring of customer satisfaction and identification of
measures to improve the quality of services;
At the same time, as part of the priority measures for modernization and adaptation of internal information systems,
in 2021 the preparation for the transition to the SAP HANA-ERP system and the migration of all necessary data were
made, so that the system became operational starting with January 2022.
In the energy services segment, after the completion of the merger between the SERV and SEM subsidiaries on
30 November 2020, it was necessary to develop a new plan of measures for operational optimization, organizational
and strategic repositioning of the integrated company, Electrica Serv SA. The proposed measures are a complex
and detailed response based on the current crisis situation of the company, in terms of losses suffered in 2020
and the estimation of the final financial results for 2021. The plan contains an in-depth multicriteria analysis of the
company’s activities and highlights the underlying causes of the deteriorating financial situation. The measures
included in the recovery plan aim at aligning costs with revenues, returning the company to positive financial
results, and staff restructuring, with the ultimate goal of increasing labor productivity by eliminating production
flow dysfunctions and redundancies in the decision-making process. The recovery plan also overviews the strategic
repositioning of the company by developing and consolidating new activities that will serve both the companies
within the Group and companies outside it.
Ethics remains a priority for the organization, as a preliminary requirement for the sustainable development of
the Electrica Group. The Policy on zero tolerance for corruption, fraud, and money laundering has been revised
and updated accordingly with ISO 37001 standard. In the medium term, it is desired the development of an 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
providing a permanent internal control system which involves the entire 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.
Also, an important role will be played by the optimization of the classic IT&C support functions, but also by the
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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 2.4. Outlook
The year 2021 continued under the 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, in order to make the best decisions in the following period and to address 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 the economic environment in general.
The current strategy of the Electrica Group is built on a set of trends and assumptions, and the acceleration of
digitalization is one of its objectives. This aspect is even more important as during the following period it is necessary
to continue 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 the 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:
The volatility of electricity price, with an accentuated increasing trend - correlation of exogenous factors
to the industry - tightening of the environmental conditions in which producers must operate, limiting
primary energy sources through imperative policies, the lack of policies to stimulate the emergence of new
producers – as well as some endogenous ones - the tendency to sell only for short periods and congestion in
the balancing and peak area - accentuates price volatility and the increasing trend;
Increased competition between the players in the electricity supply market at the national level, especially
in terms of diversifying 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
priorities’ rethinking and establishing strategies for maintaining the market share;
The new legislation introducing provisions related to the non-regulated market transactions will also
influence the electricity market and future strategies of the SoLR regarding portfolios’ management;
In the electricity distribution area, the regulatory trend is to provide remuneration to the distribution
operator considering both the quality of the service, as well as the operational costs and efficiency based on
comparative analysis 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 in order 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
adopted at the national level;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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
The economic growth is a determinant factor of electricity demand.
Although there is not a one-to-one relationship between GDP growth
rate and electricity demand growth rate, there is a positive correlation,
mainly between the industrial demand for electricity and economic
growth. In the future, household and industrial electricity demand will
GDP evolution and
also be influenced by energy efficiency policies.
industry structure
GDP evolution and
industry structure
The increase in electricity consumption was a constant trend in Romania
in the last years.
The COVID-19 pandemic has
temporarily
reduced electricity
consumption, but the general upward trend will be maintained.
Demographic
evolution and
technology
development
In contrast with the demographic decline recorded at the EU and
Romanian levels, electricity consumption is positively impacted by the
changes in consumer behavior and the increase in urbanization. For
example, the massive increase in the number of connected devices
Electricity
and implicitly, in a less accelerated manner, in electricity consumption,
consumption
maintain the increasing trend of consumption. However, due to rising
prices, the percentage of the population affected by energy poverty is
expected to increase.
As regards the supply of electricity, 2021 has brought several changes in
the legal framework with a significant impact on this activity.
The schemes that have been approved in order to support customers
paying their electricity/gas bills, and that shall be implemented from
1 November 2021 to 31 March 2022, involve the ex-post compensation
of suppliers for the implementation of the schemes, thus risking to
affect the activity in case of delays in the recovery of the costs borne by
suppliers or in case these costs are not fully recovered.
Changes in
As of 2022, only household customers shall have the right to universal
the regulatory
service. Therefore, new competitive contracts must be signed with
Electricity prices
framework
non-household customers which previously benefitted from universal
service, if not, these customers may be switched to a supplier of last
resort.
The new Performance Standard for electricity/gas supply shall be
enforced in 2022, bringing higher quality requirements for the supply of
electricity, as well as higher obligations concerning the compensation
of customers, including the obligation to pay compensations to all
categories of customers in case of breach of quality standards.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Key drivers
Description
Impact on
Regarding the distribution segment, in 2019 the 4th regulatory period
began (2019-2023), and ANRE approved significant changes to the
Methodology for all elements of the tariff (regulated rate of return, the
base of regulated assets, own consumption technological, operating,
and maintenance costs, dynamic distribution tariffs starting with 2020).
The energy law was amended in the period 2020-2021, so that: in 2021
OD financed the works for connecting domestic and non-domestic
customers with lengths of less than 2.5 km, and starting with 2022,
the free for non-domestic customers was eliminated. households, and
for households the obligation to finance by OD only a connection in
average value established by ANRE was maintained.
The transactions concluded on the centralized platforms exceeded the
threshold of 700 lei / MWh for the Year 2022 product and 1000 lei / MWh
for the short-term products related to the winter period, and on DAM
the weighted average price doubled compared to the beginning of
the year 2021. Distribution operators purchase energy for NL at a price
double that the ex-ante price approved in the distribution tariffs.
Smart networks and smart meters will create benefits for the
end consumers, distribution operators, and suppliers in terms of
energy efficiency, resource optimization and network operation,
implementation of demand response, etc. It is necessary to prepare the
networks and to integrate the distributed resources (storage solutions,
micro-grids, local production, electric machines, etc.), also considering
the management of their impact.
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. Moreover, the 2030 Framework provides
even more ambitious targets and therefore more efforts are needed
from governments and market players to achieve them.
Source: Electrica
The regulatory framework perspective and the impact on the energy market
The regulatory changes with significant impact in the supply segment are the following:
Enforcement of OUG no. 143/2021 amending the Electricity and Gas Law no. 123/2012, which transposes into
national legislation Directive (EU) 944/2019 on common rules for the internal electricity market and brings
new rights and obligations for the suppliers of electricity concerning inter alia: obligation to supply universal
service (US) to household customers only; removal of the obligation to set up physical customer care centers
for US customers at max. 50 km; obligation to issue settlement bills for household customers once every 3
months at the least; right to conclude directly negotiated bilateral transactions on the wholesale markets for
any period of time; obligation to procure the electricity needed to cover customers’ consumptions, whose
breach shall be sanctioned with a fine calculated as a percentage form the annual turnover;
Implementation, from 1 November 2021 to 31 March 2022, against the background of the surge in the
energy price on the international and national markets and the impact thereof on Romanian customers,
of the customer support schemes approved by OUG no. 118/2021, as approved with amendments by Law
no. 259/2021 and amended by OUG no. 130/2021. The way the schemes shall be implemented, i.e. through
suppliers, and especially the way suppliers shall be compensated, ex-post, from the state budget for the
costs borne, implies cash flow constraints, and uncertainties concerning the full recovery of the costs borne
by suppliers with the implementation of the schemes;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Enforcement, in 2022, of the new Performance Standard for the supply of electricity/gas, approved by
ANRE Order no. 83/2021, bringing higher quality requirements for the supply of electricity, as well as higher
obligations concerning the compensation of customers, including the obligation to pay compensations to all
categories of customers in case of breach of the quality standards, and more guaranteed quality indicators;
Amendment of the Electricity Supply Regulation, by ANRE Order no. 82/2021 and no. 91/2021, according to
which, as of 1 January 2022, the consumption of electricity from the monthly invoice sent by the network
operator to suppliers shall be determined, in the absence of the meter reading, based on a consumption
convention, with a positive impact on the level of invoiced consumption and the value of the distribution
services priced according to the distribution tariff;
Amendment of the Gas Supply of Last Resort Regulation by ANRE Order no. 125/2021, making it more difficult
for suppliers of last resort (SoLRs) to voluntarily relinquish this quality and bringing changes concerning the
duration of the supply of last resort (min. 12 months for small customers) and the price-setting mechanism
(i.e. the supply and transmission components of the final price must be kept unchanged for at least 3
months). Also, the criteria for the selection of SoLRs for the automatic takeover of customers have been
supplemented with the takeover capacity criterion, under which the number of customers taken over may
not exceed 30% of SoLR’s number of customers.
For the distribution segment, the significant changes in the Romanian legislation were detailed in chapter 1.2. Key
Events. 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 will
generate a negative impact on the operational and financial performances of the DSO, as a result of the
ANRE approval of the operating and maintenance costs at a lower level than the necessary costs requested
by the DSO, as well as of ANRE annually carrying out the costs and forecast investments corrections.
the changes brought to the methodology in 2020 regarding the regulation of some aspects in case of
mergers, which were materialized through the obligation of the gross benefits annual reporting, as well as
of the merger associated expenses;
investments in electrical distribution network - ANRE approved Order no. 3/20 January 2021 which grants
a 2% additional incentive to RRR 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;
for the year 2021 it has been introduced the DSO obligation to perform, in addition to the investment
plan, the connection workings of the household and non-household customers; and starting with 2022,
the Energy Law was amended by GEO no. 143/2021, the connection of non-household customers will no
longer be free of charge, and for domestic customers, the Distributor will pay only the average value of a
connection, established by ANRE;
ANRE has approved the Performance Standard for the electricity distribution service, which brings additional
obligations for the DSO which will lead to operating costs and investments higher than the values approved
by ANRE.
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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 faces new challenges, as demographic developments, labor migration, and
the evolution of the economy will accentuate the shortage of skilled labor. Also, the acceleration of digitization,
generated by the pandemic context, the inherent technological changes, as well as the process of succession to
a new generation, inherent at the Group level, will determine the transition to new profiles for employees that
include a mix of skills and, at the same time, real challenges in recruiting new employees with a high level of
expertise shortly.
Electrica Group operates in a competitive market, where 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 and the organizational climate,
are increasingly important to attract employees and retain the 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, in order 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.
At the same time, considering the evolution of the financial and operational performance, registered during the
past years, as well as the transformations and the trends of the energy sector, it was decided to start a corporate
reorganization plan as a necessary and opportune measure to adapt to the market context. This initiative pursues
a series of strategic objectives, such as:
-
-
-
-
increasing financial and operational performance;
the organization corporate cultural transformation, focused on efficiency and performance, in order
to ensure the sustainability of the business;
work efficiency, staff improvement, and specialization;
accelerating the embracing of the market’s best practices and new technologies, increasing
transparency, and reducing costs.
For 2022, in line with the objectives and directions included in the IT&C Strategy approved in 2019, the Group
aims to complete the consolidation of integrated ERP systems from the Group’s subsidiaries, synchronizing
these requirements with the needs, decisions, and initiatives to reorganize divisions and operational directions.
In addition to traditional IT&C infrastructure and services, the Group aims to continue and accelerate digitization
initiatives and the application of technologies that lead to faster, more flexible, and customer-friendly interaction.
Last but not least, the Group set out to analyze the options for the next stage of technological development and
harmonization; the future Digitization Strategy should take over the results of the current phase in 2023 and place
full emphasis on optimizing internal and other processes, with all stakeholders, based on the Group’s advanced
Digital Transformation technologies.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 2.5. Key factors, directions, and significant market
trends affecting the operational results of
Electrica Group
Considering the strategic elements defined for 2019-
No major geopolitical turbulences have been
2023, the company analyzes the strategic options
taken into account, which might significantly
and aims to implement streamlining measures,
affect the Romanian electricity market;
including through restructuring programs and
Financial markets will allow access to
transformation of Group’s divisions, training, and
profitable financing sources to support
staff development programs, redesigning business
companies’ investment programs.
models, or entering new business segments, in order
As a result of the adoption of the new business
to improve both the quality of the services offered, as
strategy of the Electrica Group and in line with the
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
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 in order to support business projects,
emergence of the prosumers in the following
including among others measures to extend the
years;
digital transformation, increase the cyber security
Romanian GDP will have a stable long-term
level at the Group level, develop virtual centers of
evolution;
excellence based on the use of best practices and
Different trends in electricity consumption
benefiting from economies of scale, maximizing
(an increasing trend in the medium-term, but
the economic benefits. During the year 2020, the
stagnation/reduction in the long term);
implementation of the IT&C strategy achieved the
Romania will maintain
its commitment
proposed objectives in the area of the personnel
towards the accomplishment of the 20-20-20
reorganization, evaluation of
technology and
strategy regarding the climate changes and
processes, and setting the alignment plans that are
the implementation of the new Framework
for the period 2020-2030; Moreover, the
adoption by the European Commission of the
already launched for 2021 and 2022.
In the distribution segment, the focus
operational efficiency, by reducing technological and
is on
European Ecological Pact (the “Green Deal”)
commercial losses, optimizing internal processes,
has the potential to significantly modify the
ensuring an optimal level of resources used, on
entire macroeconomic system, leading to a
user orientation and ensuring their satisfaction, by
revision of the strategy in the following period,
improving the network access and the quality of
depending on the local implementation;
service, on development of smart grid technologies
For the current regulatory period, the
and cost recovery.
Increasing the operational
remuneration mechanism, the type of tariff
performance will lead to a positive impact on the
and the method of applying corrections are
subject to modifications, these key factors
users’ experience, ensuring continuous supply
security, at high quality and high standard
being considered in the strategic planning;
interactions with our staff. In parallel, exploiting
The supply segment will experience a short
the significant optimization potential and reducing
and medium-term repositioning following
losses by streamlining the distribution operators’
the elimination of regulated tariffs and
activities are key factors in the optimal allocation of
liberalization of the electricity market starting
resources, so important in this regulatory period.
with 1 January 2021;
One of the main factors influencing the strategic
The impact that the legislative framework
decisions for the Distribution area is represented by
changes may have, as well as the lack of
the trend of energy market prices which negatively
predictability
in the medium and short
term, particularly regarding the prices and
impacts in a significant way the cost of energy
acquisition for network losses and for which there
supply conditions applicable to household
are no premises for a comeback, with a significant
customers who currently benefit
from
negative impact over profitability.
universal service;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
The supply segment will focus on diversifying the
activity through offers and services adapted to
these increases for the Romanian population, will
be applied, through the effect GEO no. 118/2021,
customers’ needs, on operational efficiency through
with subsequent amendments and completions, a
optimized processes for the sale and purchase
series of support schemes for electricity / natural gas
of electricity, and on customer orientation and
customers. In particular, given how these schemes
maximizing satisfaction. The aim is to increase the
are implemented and the mechanism for settling
natural gas supply segment, offer value-added
the amounts granted as support for customers, ex-
solutions
(products and services), and digitize
post, from the state budget to electricity suppliers,
specific operations and processes.
Please note that other
factors that are not
they are likely to generate constraints in terms of
cash flows, as well as uncertainties regarding the full
available at the report date (eg. legislation and
recovery of the respective amounts by the suppliers.
regulatory provisions under discussion etc.) or not
In this context, EFSA is reviewing its medium and
presented above, or not considered by the Group
long-term strategy such as to manage responsibly
may occur and may have a significant impact on
and sustainably the impact of these measures on
the implementation and evolution of the Group’s
the company’s activities, in this legal framework that
strategy.
has successive and high impact changes lately.
Supply segment
Evolution of purchase prices
The legal framework has been suffering significant
2021 was a year characterized by an abrupt increase
changes
in
the
last decade,
including
the
of prices both for energy and natural gas, reaching
market
liberalisation, separation of activities,
historical maximum levels for trades.
the implementation of the support scheme for
There has been a recorded increase of over 400%,
renewable energy, supporting electricity prosumers.
from RON200-300/Mwh energy trading price in
Starting with the 1 January 2021, together with the
2020 to over RON 1,000 /Mwh trading prices in 2021.
elimination of regulated final prices for electricity, the
As a result of coupling to the regional markets, the
electricity market is fully liberalized for all categories
trading prices from the wholesale energy market
of customers. As a result, both for universal service
have been aligned to those from the region.
offers and for competitive market offers, the price is
The main causes that favored the increase of prices:
set up by suppliers in free-market conditions.
Increase of
trading prices
for carbon
At the same time, the amendments and completions
emission certificates, from EUR 20-0/ton to
brought to the Law on electricity and natural gas no.
EUR 80-90/ton
123/2012 by GEO no. 143/2021, created new rights and
Increase of natural gas price
from
obligations for electricity suppliers, among which:
RON 60-70/Mwh in 2020 to RON 500-600/
the obligation to provide universal service only to
Mwh in 2021 with direct impact on the
households; elimination of the obligation regarding
increase of the production costs of electrical
the establishment of single physical contact points
power plants that use natural gas as fuel;
at max. 50 km for customers receiving universal
Lack of
investments
in new production
service; the obligation regarding the issuance of
capacities.
the regularization invoice for the households once
In the context of the high volatility of trading
at max. 3 months; the right to carry out, on the
wholesale market, directly negotiated bilateral
prices and the unpredictability created by
the legal framework, it is difficult to assess
transactions for any time interval; the obligation
what would be the evolution of the wholesale
regarding the purchase of electricity in order to
energy market in 2022. Due to the lack
ensure the coverage of the clients’ consumption, the
of major investments in new production
non-observance of which constitutes a contravention
capacities, it is estimated that the ascending
sanctioned with a fine applied to the turnover.
trend will be maintained in the energy and
Moreover, between 1 November 2021 and 31 March
natural gas market.
2022, in the context of the increase in prices on the
electricity and natural gas markets at an international
and national level, as well as the effects caused by
63 | 2021 ANNUAL REPORT
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The impact on customers
Continue expansion of the activity through opening new offices in the non-traditional business activity of
Electrica Furnizare, with providing consulting to clients regarding the products on the competitive market
and facilitating the conclusion of advantageous contracts;
Developing partnerships with the scope of the open approach of the market in the dynamic context created
by liberalization;
Modernization of many centres for managing clients relationships, out of which are those from Cluj-Napoca,
Brasov;
Acceleration of digitization and streamline of processes to optimize customer relations;
the dynamic of the energy market and international context has influenced the evolution of the energy
market in Romania, by simplifying the processes for bidding, contracting, supplier change;
Context influenced by supporting measures given to companies that operate in the sectors impacted by the
pandemic crisis (ex. HoReCa);
Insolvency of the energy suppliers in the context generated by pandemic, that triggered the transfer of
customers to last resort supply, generating imbalances of the competitive market.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 3. Electrica on the
capital markets
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 2021 is
the following:
Shareholder
Number of shares
Stake held
(% of the share capital)
Percent of voting
rights (%)
The Romanian State, through the
Ministry of Energy, Bucharest, Romania
The European Bank for Reconstruction
and Development
Electrica SA
BNY MELLON DRS, New York, USA
Other legal entities*
Individuals
TOTAL
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
* 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 2021, with suspended voting rights, which does not entitle ELSA
the right to receive dividends.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Figure 16: Ownership structure as of 31 December 2021
5.0409%
38.3817%
Total shares: 346,443,597
The Romanian state through the
Ministry of Economy, Energy and
Business Environment
48.7948%
EBRD, UK
Electrica SA
Bank of New York Mellon (DRS - LSE)
Other legal entities
Individuals
0.7842%
1.9890%
5.0096%
Source: Central Depository, Electrica
At the end of 2021, ELSA’s shares were owned by a total of 10,090 shareholders, of which 264 legal entities and
9,826 individuals from over 30 countries. 89.43% of the total number of shares (309,808,734 shares) were held by
Romanian investors. Thus, foreign shareholders held 10.57% of the share capital (36,634,863 shares), the largest
weight being represented by European citizens. Shareholders in the United Kingdom and Ireland held 5.36% of
share capital, while those in the USA held 1.27%, in this category is included also in the GDR holders.
3.2. Shares evolution on BSE and Global depository
receipts (GDRs) evolution on LSE
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 2021, 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 11.85.
The gross dividends per share granted by ELSA in this period reached a cumulative value of RON 5.2317. Thus, the
aggregate yield generated by ELSA’s shares (along with dividends) from the IPO and until the end of 2021 was
38.83%.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
From the IPO dated 4 July 2014 until the end of 2021, ELSA shares attracted a RON 3.92 bn liquidity on BSE, with
a daily average of RON 2.04 mn. During this period of about 8 years, 332.03 mn ELSA shares have been traded
(including DEAL transactions), representing 95.84% of the share capital and 97.79% of the voting rights (total shares
without ELSA shares). Thus, the average daily turnover during this period on BSE was 172.935 shares.
The gross dividend per share granted by ELSA in 2021 (for 2020) was RON 0.73, in line with those granted in the
previous years, with a yield of 5.72% (computed at the ex-date closing price from 3 June 2021).
In 2021, ELSA shares attracted liquidity of RON 217.15 mn on BSE, with a daily average of RON 858.29 thousand,
dropping by 61.18% compared to 2020, the tenth in the top by trading data on BVB. The volume of shares traded was
17.65 mn, dropping by 65.37% compared to 2020, so the daily average volume was 69.743 shares. The total volume
of shares traded in 2021 accounted for 5.09% of the share capital.
In order to support the liquidity of its listed shares, ELSA concluded a Market-Making services contract with
Wood&Co, starting 30 September 2020, its validity being extended by one year, starting 30 September 2021.
The GDRs’ weight in ELSA’s total share capital diminished during the period following the Initial Public Offering,
reaching a level of 0.78% at the end of 2021, compared to 10.17% at 4 July 2014.
The maximum price reached by the GDRs was USD 15.3, in September 2014 and the minimum price was USD 7.9 on
6 April 2020. Subsequently, the GDRs’ prices followed a fluctuating trend. During 2021 the trend was a downward
one, ending 2021 at USD 9, dropping by 28% compared to the end of 2020.
In the period since IPO and until the end of 2021, 12.6 mn GDRs have been traded, out of which 35,304 GDRs in 2021.
Figure 17: Evolution of the adjusted3 closing price of ELSA’s shares vs BET-TR index during 2021
EL: -14.51%
BET-TR: 39.46%
Ja n-21
Ja n-21
M ar-21
A pr-21
M ay-21
M ay-21
J u n-21
J ul-21
A u g-21
S e p-21
O ct-21
N ov-21
D e c-21
Source: BSE, Electrica
BET-TR
Electrica’s price adjusted with dividends
50.00
40.00
30.00
20.00
10.00
0.00
-10.00
-20.00
3 Adjusted to ex-data with the annual dividend/share value
68 | 2021 ANNUAL REPORT
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Figure 18: Monthly traded volume and the evolution of the monthly weighted average price of shares on BSE (in RON)
and GDRs on LSE (in USD) during 2021
2.894.263
2.218.423
1.755.148
1.799.309
1.344.710
1.252.345
1.209.435
1.255.592
1.075.017
1.174.202
12.624
18.688
7.520
7.180
56.716
2.000
388
17.508
2.600
4.744
10.680
0
0
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
867.265
776.898
BVB – Actions – Monthly volume
BVB – Actions – Monthly medium closing price (RON)
LSE – GDRs – Monthly volume
LSE – GDRs – Monthly medium closing price (USD)
Source: BSE, LSE, Electrica
3.3. Investor relations (IR)
As in every year, in 2021 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 organizing 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 or 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 web-conference recordings can be accessed on the company’s website, under the section Investors > Results
and Reports.
Among the conferences that took place during 2021 and were attended by ELSA’s representatives, we mention:
Institutional Investor Conference in Zürs, online event (12 April 2021);
WOOD’s EM Energy & Commodities Conference, online event (13 April 2021);
Invest Talk - Investeste la Bursa, online event (2 June 2021)
Frontier Investor Days 2021 – Wood’s virtual conference, online event (2-3 September 2021);
Wood’s Winter Wonderland EME Conference, online event (9-10 December 2021).
In 2021 ELSA continued to be an associate member of the Romanian Investors Relations Association (ARIR), being
involved in numerous ongoing projects of the association.
To inform stakeholders correctly, continuously, and transparently, the Investor Relations Department has
disseminated a large number of current reports and announcements 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 the Investors section >
Results and Reports.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT All the actions taken during 2021, 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 10 on Vektor – a measure of the communication of listed companies with investors
(in 2021 only 10 companies have obtained a grade above 9), as well as the award granted by ARIR for the activity
carried out by ELSA, at the category Best Sustainability Report.
3.4. Related parties transactions
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, as per art. 108 of law no. 24/2017. „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 2020, RON 202,466,778).
The current reports on this type of transaction published by ELSA in 2021 may be retrieved on the company’s
website, at https://www.electrica.ro/en/investors/results-and-reports/current-reports-art-108/.
3.5. Dividends policy
ELSA’s dividend policy, updated in February 2018, can be accessed on the company’s website under the 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.
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 documented 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 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).
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 3.6. Dividend distribution
Figure 19: Gross dividends distributed (2014-2020) - RON M
291.6
244.7
251.4
245.4 247.5 246.1 247.9
The dividends distributed by ELSA fluctuated in the
period 2014 - 2020, between RON 244.7 M and RON
291.6M, and the dividend payout ratio was 96% in
2014, 100% each year between 2015-2017, 87% in 2018
(RON 35.57 M was distributed to “Others reserves”),
and 100% in 2019.
The dividend payout ratio for 2020 was 87.5% (RON
35.57 M was distributed to “Others reserves”).
2014 2015 2016 2017 2018 2019 2020
Source: Electrica
Figure 20: Gross dividend per share (RON) and dividend yield (%)
7.3%
6.9%
6.8% 6.9%
6.1%
6.0%
0.8600
5.2%
0.7217
0.7415
0.7237 0.73 0.7248 0.73
The yield of the dividend paid in 2021, for the 2020
results, recorded a level of 6.0%, the gross dividend
per share paid in 2021 being RON 0.73. The dividend
yield (%) is calculated as the 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 2014-2020.
2014 2015 2016 2017 2018 2019 2020
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 to 1,684,000 shares. The total amount paid for acquiring the shares and Global
Depositary Receipts was RON 75,372 thousand. There were no changes in the number of 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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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 4. Corporate
Governance in ELSA
4. Corporate Governance in ELSA
ELSA confers great importance to the principles of good corporate governance, considering corporate governance
a key element for sustainable business growth and 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 the 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, reviewed periodically. 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
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 administrative and
executive management, 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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT ELSA CGC is also a guide on business conduct and corporate governance matters for the management and 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.
During 2021 the following corporate documents have been revised and published on Electrica’s website:
Remuneration Policy for Directors and Executive Managers – on 7 May 2021, the Code of Ethics and Professional
Conduct – on 31 December 2021 and the Articles of Association – on 16 September 2021.
Based on the principles set out in the Code of Ethics and Professional Conduct, corroborated with the need to
comply with legal provisions in force, ELSA has adopted, starting with 15 December 2021 and entering into force on
1 January 2022, the Policy for preventing, combatting and sanctioning of any type of workplace harassment. This
corporate policy can be found on the company’s website in the section Investors> Corporate Governance> Policies
and other corporate documents.
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 legal
sanctions, thus damaging the prestige and profitability of the company. The whistle-blowing reporting system
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.
In order to ensure efficient, active, and transparent communication with its shareholders, within ELSA activates
the investor relations department and related 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, available, in the updated form, on the company’s
website since 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, in accordance with 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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 1st 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. Its update was carried out 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
a.
ELSA’s extraordinary general meeting of the
shareholders (EGMS) shall decide on the following:
a.
withdrawal of
the preference
right of
the Board and establish the level of their
shareholders upon subscription of new
remuneration and other rights according to
shares issued by the Company;
the legal provisions;
b.
to establish the income and expenses budget,
to set out the activity schedule;
b.
contracting any type of
loans, debts or
obligations representing a loan, as well as
creating real or personal security related to
c.
to establish the income and expenses budget
these loans, in each case in accordance with
consolidated at the group level;
the competence limits provided in Appendix
d.
to discuss, approve or amend the annual
1 to these Articles of Association;
financial statements according to the reports
c.
operations
regarding
the
acquisition,
submitted by the Board and the financial
alienation,
exchange,
or
creation
of
auditors;
encumbrances over fixed assets of the
e.
to approve the profit distribution according
Company whose value exceeds, individually
to the law and to establish the dividend;
or cumulated, during any financial year, 20%
f.
to decide on the management activity of
of the total fixed assets, fewer receivables,
the directors and the discharge of liability, in
and leases of tangible assets for periods
accordance with the law;
longer than one year, whose individual or
g.
to decide to file legal actions against the
cumulated value towards the same co-
directors, managers as well as financial
contractor or involved persons or with whom
auditors for damages they caused to the
it acts in concert exceeds 20% of the fixed
Company by breaching their obligations
assets value, fewer receivables at the time of
towards the Company;
entering in the relevant operation, as well as
h.
to decide on mortgaging or leasing or closing
joint ventures above the same value and with
of one or more units of the company;
a duration of over one year;
i.
to appoint and revokes the financial auditor
d.
approving investment projects in which the
and to set the minimum term of the financial
Company will be involved in accordance with
audit contract;
approves
the Remuneration Policy
j.
for
Directors and Executive Managers;
the competence limits provided in Appendix
1 to these Articles of Association, other than
the ones provided in the annual investment
k.
to carry out any other duties set out by the
plan of the Company;
law.
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e.
approving
the
issuance and admission
to trading on a regulated market or an
alternative trading system of shares, deposit
certificates, allotment
rights, or other
similar financial instruments; approving the
competencies delegated to the Board;
f.
g.
changing the legal form;
relocation of the registered office;
h.
changing the main or secondary business
objects;
i.
increasing the share capital, as well as
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT decreasing or the replenishment of the share
strategy of the Company,
including the
capital by issuing new shares, according to
corporate governance action plan;
the law;
j.
the merger and the spin-off;
k.
the dissolution of the Company;
s.
donations within the limits of the competence
provided in Appendix 1 to these Articles of
Association; and
l.
carrying out any bond issue, as per the
t.
approves granting of intragroup loans with a
provisions of art. 10 of the Articles of
value of more than EUR 50 mil. per operation;
Association, or conversion of a category of
u.
any other decision that requires the approval
bonds in a different category or in shares;
of the extraordinary general meeting of the
m.
approving the conversion of preferential
shareholders.
and nominative shares from one category to
another, according to the law;
The OGMS is convened at least once a year, within
n.
any other amendment to the Articles of
a maximum of four months from the end of the
Association;
financial year. Except for this situation, OGMS and
o.
the establishment or dissolution of secondary
EGMS are convened as many times as needed,
offices: branches, agencies, representative
being convened by ELSA’s Board of Directors
offices, working points or other similar units
whenever necessary for the activity of Electrica
without legal status, according to the legal
Group. The GMS may be convened also, upon the
provisions;
request of shareholders representing, individually
p.
participation in the establishment of new
legal persons;
or cumulatively, at least 5% of the share capital. In
this case, the general meeting of the shareholders
q.
approval of the eligibility and independence
shall be convened by the Board of Directors within
criteria concerning the Board members;
no more than 30 days and shall meet within no more
r.
approval of
the corporate governance
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 granting 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 a shareholder of the company together with all rights and obligations deriving
from this capacity, in accordance with the law and the 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;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
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.
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 deposit certificates, proportionally to their holdings of deposit
certificates and taking into account the conversion rate between underlying shares and the deposit
certificates;
The holder of the deposit certificates issued based on the underlying shares is the shareholder within
the meaning and for the application of Law 24/2017 on the issuers of financial instruments and market
operations. The issuer of the deposit certificates is fully responsible for informing the holders of the deposit
certificates in a correct, complete, and timely manner, observing the provisions of the documents of the
issue of the deposit certificates, regarding 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
deposit certificates will send to the entity where it has opened its account for deposit 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 deposit 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 deposit certificate which have
this quality at the reference date;
The issuer of the deposit 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 deposit certificates is fully responsible for taking all necessary measures, so that the entity
which keeps the records of the holders of the deposit certificates, the intermediaries involved in the custody
services for holders of the deposit certificates on the market where the deposit certificates are traded
and/or any other entities involved in recording the holders of the deposit 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 which 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 deposit certificates, in the name of which the underlying shares
are registered based on which the deposit 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 procedures provided by the applicable legal provisions, including the capital markets legislation.
6 According to ELSA’s Articles of Association reflecting the dispositions of Law no. 24/2017 on issuers of financial instruments and
market operations.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Electrica
Management
4.4. ELSA’s Board of Directors
ELSA adopted a one-tier (unitary) corporate governance system, in accordance with 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 to supervise
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, out of which four must meet the criteria of independence provided by the
Articles of Association.
In 2021, 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. Iulian Cristian Bosoanca –
Chairman, Mrs. Ramona Ungur, Mr. Dragos Andrei, Mr. Radu Mircea Florescu, Mr. Bogdan George Iliescu, Mr.
Gicu Iorga, and Mr. Valentin Radu;
On 22 April 2021, the Company’s Board of Directors took note of the resignation of Ms. Ramona Ungur as a
member of the Board of Directors;
On 28 April 2021, ELSA OGMS took place, when ELSA shareholders were elected by the method of cumulative
voting, with the following members of the Board of Directors: Mr. Iulian Cristian Bosoanca, Mr. George
Cristodorescu, Mr. Radu Mircea Florescu, Mr. Gicu Iorga, Mr. Adrian-Florin Lotrean, Mr. Dragos-Valentin
Neacsu, and Mr. Ion-Cosmin Petrescu;
As a result of the changes that occurred at the level of the Board of Directors, on 6 May 2021, the members
of the Board re-elected Mr. Iulian Cristian Bosoanca as Chairman of the BoD starting with 6 May 2021 and
until 31 December 2021.
At the beginning of 2021, the members of the BoD were the following:
No
Name
Term of office
(until 27 April 2022)
Status
Starting date of the
first mandate
Mr. Iulian Cristian Bosoanca*
~ 2 years
Chairman, non-executive
director
29 April 2020
Mrs. Ramona Ungur
4 years
non-executive director,
independent
27 April 2018
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT No
Name
Term of office
(until 27 April 2022)
Status
Starting date of the
first mandate
Mr. Dragos Andrei
~3 years and 5 months
non-executive director
1 December 2018
Mr. Radu Mircea Florescu
~3 years and 3 months
non-executive director,
independent
7 February 2019
Mr. Bogdan George Iliescu
4 years
non-executive director,
independent
14 December 2015
Mr. Gicu Iorga
4 years
non-executive director
1 May 2017
Mr. Valentin Radu
4 years
non-executive director,
independent
27 April 2018
Source: Electrica
*Mr. Iulian Cristian Bosoanca was nominated to fill the vacancy, following the resignation of the non-independent director Niculae Havrilet, the term of office
being equal to the period remaining until the expiration of the term related to the vacancy, respectively until 27 April 2022.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT At the end of 2021, as well as at the date of issuing of this report, the members of the Board of Directors were the
following:
No
Name
Term of office
(until 27 April 2025)
Status
Starting date of the
first mandate
Mr. Iulian Cristian Bosoanca*
4 years
Chairman, non-executive
director
29 April 2020
Mr. George Cristodorescu
4 years
non-executive director,
independent
28 April 2021
Mr. Radu Mircea Florescu
4 years
non-executive director,
independent
7 February 2019
Mr. Gicu Iorga
4 years
non-executive director
1 May 2017
Mr. Adrian-Florin Lotrean
4 years
non-executive director,
independent
28 April 2021
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT No
Name
Term of office
(until 27 April 2025)
Status
Starting date of the
first mandate
Mr. Dragos-Valentin Neacsu
4 years
non-executive director,
independent
28 April 2021
Mr. Ion-Cosmin Petrescu
4 years
non-executive director
28 April 2021
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.
Iulian Cristian Bosoanca 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.
He holds relevant professional experience in the economic field, especially in the areas of finance, accounting,
economic-financial analysis, and taxation, having over 20 years of practical activity. He holds competencies in
management, compliance, legal, payroll, and human resources, developed in practicing his activity and following
as a result of specialized training.
The basic profession, accounting, and taxation, he carries out as a freelancer ever since 2008, within the company
Expert Contabilitate & Servicii S.R.L. (company member CECCAR) but also within the Individual Cabinet of
Accounting Expert / Fiscal Consultant, through which he carries out activities of accounting, fiscal and judicial
expert.
Starting 1998, Mr. Bosoanca held several positions, executive or management positions, being also a member of
the Boards of Directors in various companies such as CAZANELE S.A. in the period August 2005 – September 2006,
Mehedinti County Health Insurance House in the period May 2012 – October 2014 and SECOM S.A. in the period
September 2017 – May 2018 (where he was also elected Chairman of the Board of Directors).
Since 2016, Iulian Cristian Bosoanca holds the function of President of the Body of Expert Accountants and Licensed
of Romania (C.E.C.C.A.R), Mehedinti Branch.
He also acted as a lecturer within C.E.C.C.A.R. and starting with December 2020 he holds the position of Director of
the Ministry Cabinet within the Ministry of Energy.
George Cristodorescu is a non-executive, independent director since 28 April 2021 and a Member of the Strategy
and Corporate Governance Committee.
He holds extensive professional experience in the energy field, currently holding the position of Head of Cluster for
Energy and Climate within the Deutsche Gesellschaft für Internationale Zusammenarbeit, GIZ GmbH, a company
where he has a cumulative experience of 12 years.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Previously, Mr. Cristodorescu acted as Partner in Stein & Partner, Executive Search & Management Performance
and freelancer, being manager and consultant in various projects of energy efficiency, renewable, district heating,
and electrical networks.
Between October 2013 – May 2014, Mr. Cristodorescu held the position of Chairman of the Supervisory Board of
Hidroelectrica SA, where he coordinated the implementation of corporate governance, preparation of the strategic
development plan of the company, and preparation of the company for the initial public offering.
Between September 2005-2013, he was Deputy CEO of E.ON Romania, Head of Division, Head of Administrative
Boards of 3 Companies within the E.ON Romania Group, and CEO of the E.ON Romania Renewables S.R.L, a period
in which he coordinated, among others, the restructuring of the E.ON Romania group after privatization, the
strategic development of the gas and electricity distribution and supply activities business and, as director, the
activity of corporate governance and communications. In parallel, he was appointed as a member of the core group
strategy group for E.ON AG, Düsseldorf, a member of the policy group for E.ON AG, Brussels, and President of the
Association of Utility Companies in Romania.
Radu Mircea Florescu is an independent non-executive director since 7 February 2019, Chair of the Audit and Risk
Committee, and member of the Nomination and Remuneration 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 38 years, Radu Florescu worked in top multinational companies from Fortune 500, activating in
emerging countries, including programs financed from EU funds. Mr. Florescu began his career in trading at NYMEX
where he coordinated all trading activities for petroleum products and precious metals. 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, having a long history of contribution to the
local community, presently acting as a Member of the Board of Directors for different organizations such as AIESEC
Romania (International Association of Students in Economics), Junior Achievement Program, OvidiuRo, Principesa
Margareta Foundation, ASEBUSS and United Way Romania.
Gicu Iorga is a non-executive director since 1 May 2017 and President of the Strategy and Corporate Governance
Committee.
Gicu Iorga has experience of over 35 years in the field of economics and public administration and currently holds
the position of Head of Customs Office within A.N.A.F. – D.G.V Bucharest.
Most of his professional activity was carried out in institutions such as National Customs Authority, A.N.A.F – General
Customs Directorate, General Public Finances Directorate Bucharest, and National Sanitary Veterinary and Food
Safety Authority (A.N.S.V.S.A.).
Starting with April 2017 and until November 2019 Mr. Gicu Iorga held the position of General Secretary within the
Ministry of Energy where he coordinated the good functioning of the departments and functional activities within
the Ministry. Further to that, starting March 2020 and until March 2021 he occupied the position of Deputy General
Secretary within the Ministry of Economy, Energy and Business Environment.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Adrian-Florin Lotrean is a non-executive, independent director since 28 April 2021, the Chairman of the Nomination
and Remuneration Committee, and a member of the Strategy and Corporate Governance Committee.
Presently Mr. Lotrean holds the position of President/interim member of the Board within the Compania Municipala
Termoenergetica S.A and an extensive professional experience in the field of insolvency, coordinating, as insolvency
practician and Associated Lawyer in the civil professional company CITR SPRL, in the period February 2010 –
December 2020, complex restructuring projects on production of thermal energy and electricity in cogeneration
(for clients such as CET ARAD SA, Electrocentrale Constanta SA), being a consultant to the judicial administrator of
Electrocentrale Bucuresti SA and coordinating the restructuring procedure of Hidroserv S.A.
Previously, between September 2019 – December 2020, Mr. Lotrean held the position of Member of the Board of
Directors of Electroplast SA Bistrita, between November 2007 and February 2010 he was insolvency practitioner in
the professional civil company Casa de Insolvență Transilvania S.P.R.L where he participated in the management of
projects for more than 50 commercial companies.
Between January 2003 – November 2007, Mr. Lotrean held the position of Financial Consultant within SC Depofarm
SLR, providing consultancy for the elaboration of projects financed from European funds, the elaboration of
feasibility studies, business plans, and financial-fiscal consultancy. Previously, between November 2001 and
December 2002, he held the position of specialized inspector within the Fiscal Control Department of the General
Directorate of Public Finance Satu Mare.
Dragos-Valentin Neacsu is a non-executive, independent director since 28 April 2021, and a member of the Audit
and Risk Committee.
Mr. Neacsu has extensive professional experience in the field of investment management and financial markets,
currently holding the position of an independent member of the Board, member of the Audit Committee, and
Chairman of the Appeals Commission of the Bucharest Stock Exchange S.A.
Mr. Neacșu is also the CEO of the GS1 Romania Association, part of a global network of 115 not-for-profit organizations,
with an activity focused on elaborating and promotion of coding systems, serialization, and traceability in business
communication.
Until October 2019, Mr. Neacșu held the position of Chief Executive Officer, Chairman of the Board of SAI Erste
Asset Management SA, previously being Director, Financial Advisory Services of Deloitte Consultancy SRL. Between
February-September 2005 he was State Secretary Minister, Head of State Treasury within the Ministry of Public
Finance. Between July 1998 and February 2005, he held the position of President – CEO of SSIF Raiffeisen Capital &
Investment S.A.
Among other relevant positions held by Mr. Neacsu: Member of the Board of Governors EFAMA (European Fund
and Asset Management Association, between 2013-2016), Romania’s representative in multilateral financial
institutions (Council of Europe Bank (BDCE), Black Sea Trade and Development Bank (BSTDB)), Vice-president and
then President of the Romanian Association of Asset Managers (AAF, between 2008-2016), founding member and
first Vice President of the Board of Romanian Association for Privately Managed Pension Funds (APAPR in 2004),
Independent non-executive member of the Supervisory Board of BCR Pensii, Private Pension Fund Management
Company S.A. (between 2009-2019), Non-executive member of CEC Bank S.A Board (between 2005-2006), Non-
Executive Member of the Bucharest Stock Exchange Board of Governors (2001-2005), Independent Non-Executive
Member of the Board of FINS IFN SA (2018-present), Board Member of the Romanian Business Leaders Foundation
(2017-present), member of the Board of “Merito” educational project.
He is part of the first generation (1994-1995) of the Romanian-Canadian MBA Program, cooperation of UQAM and
McGill Canadian universities, together with Academy of Economic Studies in Bucharest, and holds a BA in Civil
Engineering from Technical University Bucharest (1989).
Ion-Cosmin Petrescu is a non-executive director since 28 April 2021, a member of the Nomination and Remuneration
Committee.
Mr. Cosmin Petrescu holds extensive professional experience in business development, sales, and management,
Mr. Cosmin Petrescu presently activates in FNGCIMM, where he leads the activity of IT, State Aid, and Reporting
Divisions. Cosmin Petrescu is also the President of the working groups dedicated to the program IMMINVEST
ROMANIA and for the relation with the European Bank of Reconstruction and Development.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Starting February 2021, he holds the position of Adviser within the Chancellery of the Prime Minister, on digitization
issues.
Previously, starting with the year 2001, Mr. Petrescu held different positions within companies acting in the Oil &
Gas sector where he proved competence in optimizing business processes (Lean Management).
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 members of the Nomination and
Remuneration Committee and 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 the Company’s Corporate Governance Code.
According to the changes registered in the BoD composition, the composition of the committees changed during
2021, as it follows:
1 January – 28 April 2021
Nomination and Remuneration Committee:
- Mr. Bogdan Iliescu – Chairman;
- Mr. Valentin Radu – Member;
- Mr. Gicu Iorga – Member
6 May – 31 December 2021
Nomination and Remuneration Committee:
- Mr. Adrian-Florin Lotrean – Chairman;
- Mr. Radu Mircea Florescu – Member;
- Mr. Ion Cosmin Petrescu – Member.
Audit and Risk Committee:
Audit and Risk Committee:
- Mrs. Ramona Ungur – Chairman;
- Mr. Bogdan Iliescu – Member;
- Mr. Cristian Bosoanca – Member.
- Mr. Radu Mircea Florescu - Chairman;
- Mr. Dragos-Valentin Neacsu – Member;
- Mr. Iulian Cristian Bosoanca – Member.
Strategy and Corporate Governance Committee:
Strategy and Corporate Governance Committee:
- Mr. Dragos Andrei – Chairman;
- Mr. Radu Florescu – Member;
- Mr. Valentin Radu – Member.
- Mr. Gicu Iorga - Chairman;
- Mr. George Cristodorescu – Member;
- Mr. Adrian-Florin Lotrean – Member.
At the issue date of this report, the composition of the BoD Committees is as follows:
Nomination and Remuneration
Committee:
Audit and Risk Committee:
Strategy and Corporate
Governance Committee:
Chairman
Mr. Adrian-Florin Lotrean
Chairman
Mr. Radu Mircea Florescu
Chairman
Mr. Gicu Iorga
Member
Mr. Radu Mircea Florescu
Member
Mr. Dragos-Valentin Neacsu
Member
Mr. George Cristodorescu
Member
Mr. Ion Cosmin Petrescu
Member
Mr. Iulian Cristian Bosoanca
Member
Mr. Adrian-Florin Lotrean
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 2021, among the BoD members, Mr. Dragos-Valentin Neacsu holds a number of 20 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 fulfil their duties within the
company in the past five years.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 4.5. The activity of ELSA’s Board of Directors and its
consultative committees in 2021
In 2021, the Board of Directors met 28 times; of these, 21 meetings were organized with the physical presence of
the members, and seven were held by conference call, in accordance with Art. 18 paragraph 20 of the company’s
Articles of Association.
The Board members’ attendance (in person or by conference call) in the meetings of the Board of Directors and its
committees in 2021 is presented below:
Name
The Board of
Directors (no.
of meetings 28)
The Audit and Risk
Committee (no.
of meetings - 17)
The Nomination
and Remuneration
Committee (no.
of meetings - 23)
The Strategy and Corporate
Governance Committee
(no. of meetings - 21)
Source: Electrica
* The mandates ended according to the OGMS Decision no. 1/28 April 2021;
** Mrs. Ramona Ungur resigned from the position of member of the Board of Directors on 22 April 2021.
The key decisions taken by the BoD
during 2021 refer to:
Quarterly analysis of the registered financial
results and analysis of
the budgetary
Election of the chairman of the BoD
execution;
and establishing the composition of the
Approval of the financing lines at Group level;
consultative committees and election of their
Endorsement of
the establishment of
chairs (after the GMS has established the new
Electrica Foundation;
structure);
Endorsement of the updated Remuneration
Revision and endorsement of ELSA’s revenue
Policy for Directors and Executive Managers,
and expenses budget at standalone and
consolidated levels, as well as of the revenue
to respond to changes in the legislative
framework
and expenses budgets of the company’s
Participation in the competitive processes of
subsidiaries for the financial year of 2021;
acquisition of electricity production projects
Analysis and endorsement of ELSA’s financial
from renewable sources, acquisition of 100%
statements at the individual and consolidated
of the shares of Crucea Power Park (Crucea
level, as well as of the financial statements of
Est project - projected capacity of 121 MW
the company’s subsidiaries, for the financial
and a storage capacity of 60Mwh), Sunwind
year ended at 31 December 2020;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
Energy SRL (Satu Mare 2 project - projected
Evaluating
the performances
registered
capacity 27 MW), New Trend Energy (project
by ELSA executive directors in 2020 and
Satu Mare 3 - projected capacity 59 MW)
establishing new KPIs for 2021;
Foton Power Energy SRL (Bihor 1 project -
Continuing
the
implementation of
the
projected capacity 77.5 MW);
Human Resources strategy at the Electrica
Establishment of the ELSA branch for the
Group level.
development and operation of electricity
production capacities;
Endorsement of
the amended ELSA’s
The main aspects of audit and financials areas
referred to:
Articles of Association and approval of the
Ensuring the necessary financing for the
amendments of the subsidiaries Articles of
activity performed by the companies within
Association;
the Group;
Revision of the Internal Standard Delegation
Monitoring
the
internal
audit
plan
of the Authority and the Regulation of
implementation for 2021 and approving the
organization and functioning at the company
revised audit plan for 2022;
level;
Updating the Code of Ethics and Professional
Conduct and adopting
the Policy
for
preventing, combating, and sanctioning any
Evaluation of the Board of Directors
activity during 2021:
form of harassment at work;
The Board evaluates annually its activity and that
Initiation of the reorganization project of the
of its consultative Committees to identify areas of
Company;
Initiation of the project to revise the Group
improvement, and to increase its efficiency. The
purpose of the evaluation is to provide members
Strategy;
Regarding the structuring and development of the
Group’s business portfolio, the BoD analyzed the
existing opportunities and decided the following:
Continuous
analysis
of
investment
of the Board with an overview of their activity,
strengths/weaknesses, performance,
and
the
potential of collective and individual development,
in order to efficiently and effectively fulfil their
responsibilities as members of the Board.
opportunities,
taking
into account
the
According to the established mechanism, the
energy market development, the impact on
evaluation is conducted either with the support of a
the activity of the group’s subsidiaries and
consultant or by self-evaluation.
competitive advantages of the competition
and participation
in various competitive
At the beginning of 2022, The Board of Directors has
processes for this purpose;
self-evaluated its activity for the year 2021, using a
Establishment of the ELSA branch for the
questionnaire, internally developed, discussed, and
development and operation of electricity
agreed by the Board members.
production capacities;
Adoption of policies in the field of risk
The members of the Board who contributed to the
management;
evaluation are: Mr. Iulian Cristian Bosoanca – Chair of
Approval of
the
consolidated annual
the BoD, Mr. George Cristodorescu, Mr. Radu Mircea
investment plan at group level for 2021;
Florescu, Mr. Gicu Iorga, Mr. Adrian-Florin Lotrean,
Increasing the share capital of distribution
Mr. Dragos Neacsu and Mr. Ion-Cosmin Petrescu.
and supply subsidiaries.
Regarding the human resources and the managerial
Board activity in the following areas:
competencies, the BoD took the following measures:
Specific KPIs as provided in the mandate
The questionnaire used aimed at evaluating the
Awarding a new mandate in the position of
agreements (the main objectives defined by
CDO for a period of 4 years to Mrs. Livioara
the General Meeting of Shareholders: Group
Sujdea and nominating Mr. Stefan-Ionut
strategy, Corporate Governance, Placement
Pascu as Interim Executive Director of the
of financial investments and Investments
Corporate Development Division starting
achievement in the distribution companies);
with October 1st, 2021, initially for 3 months;
Board Efficiency and Ways of Working of the
subsequently, the term of the mandate was
extended until 31 December 2022;
Board;
Board interactions and activities’ dynamics;
Nomination of members in the Boards of
Self-Assessment of each Board member;
Directors in the Subsidiaries;
Functioning of the Board Chair;
Adoption of the Succession Policy for ELSA;
Board’s interactions with CEO/Management;
Endorsement of the Remuneration Policy
Board’s interactions with stakeholders.
for the Company’s Directors and Executive
Managers;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT After analyzing the questionnaire’s results, the
appreciated that this is done at high standards.
general conclusion was that the functioning of
9.
Communication within the Board in terms of
the BoD activity during 2021 took place in good
the frequency and intensity, issues addressed
conditions, among the positive aspects the following
as well as transparency and sincerity of
were listed:
the dialogue,
is considered positive and,
1.
Most of the respondents rated the overall
according to the opinion of most members, the
activity of the Board conducted during 2021
atmosphere at the Board level encourages the
as good, the average score being 4, on a scale
expression of all perspectives and open debates,
from 1-5;
which constitutes a base for substantiating the
2.
Regarding the performance
indicators of
decisions adopted.
the Board members, it was appreciated that,
10.
Also, in the context of the atypical events
to a large extent, the goal of implementing
that took place during 2021, the Board
corporate governance at the group level was
considers that it performed well as a team,
achieved. Furthermore, the Board undertook to
each of the members bringing added value
implement a project of revising the corporate
and contributing to the activity carried out.
governance framework, expectations being
Moreover, the work done by the Chair received
that will lead to further improvements in the
positive
feedback
from all
respondents,
relationship with the companies within the
especially regarding the facilitation of an open
Group.
3.
Regarding the level of investments during 2021,
the established/expected level was reached,
and constructive dialogue during the Board
meetings. Regarding the collaboration with the
General Manager, members appreciated that
creating the premises for future development
the Chair maintains a close and constructive
and improvement of the results registered by
professional relationship with him.
the distribution subsidiary.
4.
In line with previous years, the ability of the
The
following areas
for
improvement were
Board to identify developments in the business
suggested:
environment in which the Company operates
1.
It is still necessary to improve communication
and certain potential opportunities were
with the public and strategic communication
exploited, the general appreciation being
with shareholders, concrete measures are
that the competence of analysis and strategic
needed in this regard. Moreover, deriving from
planning is at a higher level, a fact to which
the need to improve communication regarding
contributed the resources made available to
the mission, vision, and strategic directions of
the members of the Board.
medium-term development of the company, the
5.
Regarding the efficiency and the operating
Board started an extensive process of revising
of the Board, members appreciated that
the adopted Strategy, subsequently to that, to
their contribution to the development of the
elaborate a plan for their communication.
company is substantial, further considering
2.
Board members believe that the functionality
that it is necessary to focus on the strategic
of the company’s management system can
aspects of the company. Moreover, the current
be improved while appreciating the changes
composition of the Board was appreciated as
that occurred during the year at the level of the
optimum, benefiting from diversified expertise.
executive management can be constituted as
6.
Regarding the identification and mitigation
of risks, in line with the results of the previous
an incentive for other employees.
At the same time, the Board considers as
3.
evaluation, Board members appreciated that
critical improvement of the interaction with
the main risks and mitigation mechanisms have
the company’s subsidiaries, major changes
been identified. Furthermore, the occurrence
being required from this perspective to ensure
of some risks specific to the sector determined
the achievement of the assumed strategic
the need to further optimize the business
objectives.
processes, so that it would result in an increase
4.
Paying more attention to succession planning
of the reaction speed and adaptation to market
at the Senior Management level as well as
dynamics.
stimulating
its
implementation remains a
7.
Board members appreciated their personal
contribution in the activity they conducted, the
priority for the Board and its future activity.
At the same time, the BoD considers it necessary
5.
involvement, and the impact of the decisions
to take measures to
improve the process
adopted.
of preparing Board meetings,
improving
8.
Regarding the observance of the corporate
frequency and time allocated to debates.
governance principles, members of the Board
89 | 2021 ANNUAL REPORT
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT In continuation of the effort made previously,
supervises
the process of
the annual
the Board allocates particular
importance to
evaluation of the effectiveness of the Council
occupational health and safety issues within the
and its advisory committees;
Group, aiming to devote time and effort in 2022 to
periodically assesses the size, composition,
support management in improving the company’s
and Committee’s structure and makes
occupational safety culture.
recommendations to the Board with regard
The Nomination and Remuneration
Committee
to any changes;
advises the Board on continuous skill
development
programmes
for Board
members and executive management;
oversees the nomination process of the
The Nomination and Remuneration Committee
appointment of subsidiaries’ CEOs and
consists of three non-executive BoD members, two
executive managers according
to
the
of its members are independent.
nomination and remuneration policy.
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
The Committee has the following duties regarding
remuneration:
advises
the Board
relation
the
to
in
positions, to recommend the Board candidates
remuneration, incentive, and compensation
for these positions, to formulate proposals on the
managers’ and other management positions’
remuneration.
The Committee has the following responsibilities
concerning nomination matters:
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
recommends to the Board a nomination
executive managers,
including the main
policy, including a target Board profile, the
remuneration components, annual and long
process, and principles to be considered by
term performance objectives,and regarding
the shareholders when proposing candidates
evaluation methodology;
for company’s directors, and advises the
makes recommendations to the Board on the
Board regarding the nomination of interim
remuneration of subsidiaries’ board members
directors in accordance with the policy;
and the general limits of remuneration for
reviews
the
implementation
of
the
subsidiaries’ executive management;
nomination policy, submits a report to the
monitors compensation trends within areas
Board on its implementation, and presents
relevant to the Group;
a summary of this report in the Directors’
oversees
the
remuneration process of
Report;
the subsidiaries’ chief executive officer
advises the Board on the appointment and
and executive managers according to the
dismissal of the Chief Executive Officer, makes
nomination and remuneration policy at the
recommendations on
the appointment
Group level;
and dismissal of the company’s executive
verifies at least once a year the number of
management team after consulting with
the Chief Executive Officer and makes
mandates held in other companies by the
members of the Board and by the executive
proposals on the appointment and dismissal
managers,
in order
to evaluate
their
of subsidiaries’ board of directors members
independence;
in accordance with the Group Governance
Oversees the annual evaluation process of
Policy;
the Board of Directors’ activity.
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);
The Nomination and Remuneration Committee
met 23 times during 2021, among the main aspects
on which the activity of the Committee focused,
were the following:
Analysis of ELSA executive managers’ KPIs
recommends to the Board a succession
achievement for 2020 and establishing of the
policy, both for the members of the board
KPIs for 2021, along with the performance
and the executive team oversees the process
evaluation methodology;
for the annual evaluation of the effectiveness
Supervising the evaluation process of the
of the Board and its consultative committees;
Board of Directors’ activity during 2020;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Endorsing the proposals
regarding the
reviews and advises the Board on whether
nomination of
the subsidiaries’ Board
the content of the annual report, taken as
members;
a whole, represents a fair, balanced, and
Endorsement of the Board Profile and the
understandable account for shareholders and
eligibility criteria for the Board members of
provides them with the information necessary
the companies within the Group;
to assess the Company’s performance.
Revision of the Methodology to evaluate
the achievement
level of
short-term
Key Performance
Indicators
(KPI) and
Regarding the audit and internal control matters,
the Committee has the following responsibilities:
endorsement of the Methodology to evaluate
endorses, for the Board’s approval, the annual
the achievement level of long-term KPIs
plan at Group level, based on the annual
applicable to the Executive Managers at
risk assessment, as well as any significant
Electrica Group Level;
changes to the plan and receives periodic
Revision of the Remuneration Policy for
reports on activities, important findings, and
the Company’s Directors and Executive
follow-up of internal audit reports;
managers;
periodically reviews the charter and internal
Endorsement of the Succession Policy for
audit manual and submits them to the Board,
ELSA.
for approval;
The Audit and Risk Committee
advises the Board on the appointment,
dismissal, and remuneration of the Head of
Internal Audit Department;
The Committee is composed of three non-executive
monitors the adequacy, effectiveness, and
BoD members, two of them being independent. The
independence of the internal audit function;
Committee’s composition provided the necessary
makes recommendations to the Board on
expertise
in finance and
risk management,
the appointment, rotation, or dismissal of the
according to legal requirements.
company’s external auditor;
reviews the plan, activity, and findings of the
The main role of the Committee is to support the
external auditor;
Board in fulfilling its duties of verifying the efficiency
assesses the independence and objectivity
of the company’s financial reporting,
internal
of the external auditor and monitors the
control, and risk management. While fulfilling this
compliance with
relevant ethical and
role, the Committee advises the Board regarding
professional
guidance,
including
the
the assessment of the annual report and annual
requirements on the rotation of audit
financial statements, whether the documents are
partners;
accurate, balanced, and comprehensive, and provide
monitors
the application of
the
legal
all the necessary information for the shareholders’
standards and generally accepted internal
evaluation of the financial performance.
audit standards;
endorses the
internal audit reports, the
The Committee has the following duties in terms of
recommendations made by the
internal
financial reporting:
auditors, and the plans of measures for the
examines and monitors
the financial
implementation of the recommendations;
reporting process, the integrity of annual and
interim financial statements, at standalone
performs any other activities established by
the Board and the law;
and consolidated levels, or of disclosures
regularly reviews the adequacy of the key
made by ELSA and its subsidiaries;
internal control policies,
including fraud
reviews press releases announcing financial
detection and bribe prevention policies;
or operational results related to or derived
reviews the operations between affiliated
from such financial statements, as well as any
parties in accordance with a policy drafted by
financial information or earnings guidance,
the Committee and approved by the Board;
to be provided to financial analysts or rating
analyzes the annual report prepared by
agencies, by analyzing the fairness and
the
Internal Audit Department and/or
adequacy of the content and presentation of
such statements or information;
Risk Management, which evaluates the
effectiveness of the internal control system
regularly reviews the adequacy of the Group’s
within the Group.
accounting policies;
reviews the financial forecast policy of the
Company and recommends, to approval,
towards Board of Directors.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The Committee has the following responsibilities
concerning risk management matters:
reviews regularly the main risks facing the
The Strategy and Corporate Governance
Committee
company and the Group, recommending
The Committee is composed of three non-executive
to the Board adequate policies for risks
BoD members, holding the necessary expertise in
identification, mapping, management, and
performing the committee’s specific duties, two of
mitigation;
them being independent.
monitors the main categories of risks that are
recorded annually in the management report
in order to reduce them and to evaluate the
The Committee has the following duties in terms of
strategy:
efficiency of the risk management system
makes proposals to the Board on the
within the Group;
development of the medium-term strategic
makes recommendations to the Board on
plan, makes
recommendations on
the
financing methods, including proposals for
strategic direction, priorities, and long term
contracting any type of loans and securities
objectives of ELSA and its subsidiaries;
associated with these loans;
reviews management proposals on the
makes
recommendations
to
the Board
Group’s
consolidated
annual
budget,
regarding major economic
transactions
subsidiaries’ annual budgets,
investment
within the authority of the General Meeting
plans of the Group companies and makes
of Shareholders and assesses the associated
risks regarding such transactions.
The Audit and Risk Committee met 17 times during
2021, among the main aspects on which the activity
of the Committee focused, being the following:
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
Analysis of the financial statements of ELSA
and technological advances;
at the standalone and consolidated level
periodically reviews the overall strategic
for the financial year of 2020, as well as
planning process,
including the process
the financial statements of the company’s
of developing the medium-term strategic
subsidiaries for the financial year of 2020,
plan, makes recommendations on the issues
together with the financial auditor report
that can be improved in strategic planning,
and recommendations, issued during the
and provides feedback to the executive
auditing process;
management;
ELSA’s budget execution, the consolidated
makes
recommendations
to
the Board
budget execution, and the quarterly financial
regarding
the
proposed
acquisitions,
results;
divestments,
investment projects,
joint-
Revision of the internal audit plan for 2021
ventures,
and
collaboration
projects,
and analysis of its achievement, as well as
especially assessing their alignment with the
the reports submitted by the Internal Audit
Group’s strategy;
Department, proposing recommendations;
performs any other activities or assumes
Monitoring
the
implementation of
the
responsibilities regarding strategic matters
recommendations made by the internal audit
department;
Updating the Code of Ethics and Professional
which may be delegated periodically to the
Committee by the Board.
Conduct;
Regarding
the
tasks of
the Committee on
Endorsement of the Know Your Customers
restructuring, they mainly relate to the following:
Policy (clients and suppliers) and of the
reviews and makes recommendations to
Security Policy;
the Board with respect to the development
and implementation of the Group’s overall
The internal audit activity is carried out by a
restructuring plans and objectives, including
structurally separate organizational unit
(the
any decision regarding the conduct or
internal audit department), within the Company. To
ensure the fulfilment of its main functions, it reports
efficiency of core businesses;
regularly reviews the organizational structure
functionally to the BoD through the Audit and Risk
and chart of the company, and makes
Committee and administratively to the CEO.
recommendations to the Board in this regard;
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT performs
any
other
activities
or
reviews the company’s policy for corporate
responsibilities on
restructuring matters
social
responsibility
and
stakeholder
as may be periodically delegated to the
engagement, and makes recommendations
Committee by the Board.
to the Board in this regard;
makes recommendations to the Board on
Also, the Committee has duties in terms of corporate
improving the quality of information flows
governance:
to the Board, including the improvement
oversees and monitors
the company’s
of reports sent, key performance indicators
compliance with
legal and contractual
presented
to
them,
and guidelines
obligations on corporate governance, as well
for preparing Board documents and
as other applicable corporate governance
presentations;
principles and makes recommendations to
drafts reports or materials related to corporate
the Board;
governance, upon the Board’s request.
regularly reviews the company’s Corporate
Governance Code, the Charter of the Board
During the year 2021, the Committee met 21 times,
of Directors, and the company’s Articles of
among the main aspects on which the activity of the
Association and makes recommendations
Committee focused, being the following:
to the Board on relevant amendments to the
Analysis of
the opportunities and
the
company’s corporate governance policy and
efficiency of
investments
in different
documentation;
submits the Group Governance Policy to the
renewable production
and
participation in various competitive processes
capacities
Board for approval and regularly reviews it
in this regard;
thereafter;
Endorsement of the ELSA branch for the
reviews
the company’s Delegation of
development and operation of electricity
Authorities policy and
the company’s
production capacities;
Delegation of Authority standard in order
Endorsement of the amendments to the
to ensure that the delegation of authorities
ELSA’s Articles of Association and those of the
to management allows for the effective
Articles of Association of the subsidiaries;
and efficient decision-making process, and
Revision of the Internal Standard Delegation
makes recommendations to the Board in this
of the Authority and the Regulation of
respect;
Organization and Functioning of SE Electrica
SA;
Endorsement of the reorganization process
of the Company’s personnel structure.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 4.6. ELSA’s Executive management
In accordance with 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.
The Board of Directors approved the continuation of the collaboration with Mrs. Livioara Șujdea and her appointment
as Chief Distribution Officer (CDO), starting with 1 February 2021, for a 4 years mandate.
On 1 May 2021, the mandate agreement of the Chief Corporate Development Officer, Mrs. Anamaria Dana Acristini
Georgescu, has terminated, upon the lapse of the mandate duration.
During the meeting held on 22 September 2021, ELSA’s Board of Directors decided on the appointment of Mr.
Stefan Ionut Pascu as Chief Corporate Development Officer, until 31 December 2021. During the meeting held on
22 December 2021, the mandate agreement of Mr. Stefan Ionut Pascu has been extended until 31 December 2022.
On 11 December 2021, the mandate agreement of the Chief Marketing Officer, Mrs. Catalina Popa, has terminated,
upon the lapse of the mandate duration.
During the meeting held on 15 December 2021, ELSA’s Board of Directors revoked, without cause, Mrs. Bibiana
Constantin from the position of Chief Human Resources Officer, starting with 1 January 2022, 31 December 2021,
being the last day of exercising the mandate agreement.
During the meeting held on 15 December 2021, ELSA’s Board of Directors took note of the expiration on 3 January
2022, of the mandate agreement between the Company and the Chief Financial Officer, Mr. Mihai Darie.
Following these changes, during 2021, the ELSA’s executive managers, each appointed by mandate agreements,
were:
Name
Function
The Executive Manager’s mandate
Chief Executive Officer
1 February 2019 - 31 January 2023
Chief Financial Officer
3 January 2018 – 3 January 2022
Chief Distribution Officer
1 February 2017 – 31 January 2021, the
mandate being renewed for a period
of 4 years, respectively 1 February
2021 - 31 January 2025
Chief Corporate
Development Officer
1 May 2017 – 1 May 2021
Stefan Ionut Pascu
Chief Corporate
Development Officer
1 October 2021 – 31 December 2021,
the mandate was renewed for a period
of 12 months, respectively 1 January
2022 – 31 December 2022
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Name
Function
The Executive Manager’s mandate
Chief Market Officer
12 December 2017 – 11 December 2021
Chief Human Resources
Officer
1 February 2019 - 31 Decembre 2021*
Chief IT & C Officer
1 June 2019 - 1 June 2023
Source: Electrica
*Termination without cause of the mandate agreement.
More details on the in-place executive managers’ biographies can be found on ELSA’s website (www.electrica.ro) in
the section Investors > Corporate Governance > Executive Management.
We present below the most relevant aspects regarding the professional experience of ELSA’s executive managers:
Name
Professional experience
Ms. 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,
Georgeta Corina Popescu -
for 4 years.
Chief Executive Officer
Graduate of the Faculty of Power Engineering at the University
Politehnica of Bucharest specializing in Power Engineering Systems,
Georgeta Corina Popescu started her professional career in Sucursala
de 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.
Mr. Mihai Darie has 22 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.
Mihai Darie -
Chief Financial Officer
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Nume
Experienta profesionala
Livioara Șujdea -
started her activity as a Design Engineer at ELSA, subsequently
Chief Distribution Officer
occupying various top management positions, including Deputy
With over 22 years of experience in the energy field, Livioara Sujdea
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.
Livioara Sujdea graduated from 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 from the
Chartered Management Institute London, UK.
Anamaria Dana Acristini
Mrs. Anamaria Acristini has experience of over 14 years in the energy
Georgescu - Chief Corporate
Development Officer
field, in particular from the 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.
The collaboration with Mrs. Anamaria Dana Acristini Georgescu ended
on 1 May 2021, upon the lapse of the mandate duration.
Mr. Pascu has an experience over 16 years of
leadership and
entrepreneurship in the energy & utility field of Central and Eastern
Europe, telecommunications, management consulting, and non-
Ionut Stefan Pascu - Chief
profit sectors and has functional expertise in several areas as strategy,
Corporate Development Officer
marketing & sales, digital transformation, innovation, M&A, post-
acquisition integrations, restructuring and cost reduction programs,
customer service and organizational excellence.
Graduate of the Faculty of International Economic Relations at ASE
Bucharest, Mr. Pascu attended the courses of the program equivalent to
the Executive MBA (Program for Leadership Development), at Harvard
Business School.
Prior to joining Electrica Group, Mr. Pascu worked for Deutsche Telekom
Group Romania as Digital Director and previously, as a member of the
management team for Roland Berger in Romania, Central and Eastern
Europe, and the United Kingdom.
Interested and directly involved in initiatives with social impact, Ștefan-
Ionuț Pascu is a founding member of The Social Incubator Association
and Global Dignity Association, two non-governmental organizations in
Romania with social and youth activities.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Nume
Experienta profesionala
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.
Catalina Popa is a graduate of the Power Engineering Faculty within
the University Politehnica of Bucharest, holding a diploma as well in
Management & Business Administration from Codecs-Open University,
Great Britain.
The collaboration with Mrs. Catalina Popa ended on 11 December 2021,
upon the lapse of the mandate duration.
Bibiana Constantin – Chief
Human Resources Officer
University of Timisoara and a master’s degree in Human Resources
Management and Communication, as well as of a master’s degree in
Graduate of the Faculty of Psychology and Sociology – the West
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 the national and
international level, but also with a solid knowledge of the human
resources market, Bibiana Constantin has provided, in recent years,
specialized consultancy and occupied positions in the top management
of large companies in the industry.
The collaboration with Mrs. Bibiana Constantin ended on December 31,
2021, by termination without cause of the mandate agreement.
Starting with 1 June 2019, Mr. Mircea-Toma Modran has taken over the
position of Chief Information Officer within Electrica SA, for 4 years.
Mircea Toma Modran -
years top management positions for Romanian and foreign, private and
Chief IT&C Officer
state-owned, listed companies, operating in energy and utilities, oil and
With more than 30 years of professional experience, he occupied for 20
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.
Source: Electrica
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 fulfil their work-related duties in the Group.
4.7. Remuneration of the Directors and the Executive
Managers with mandate agreements
The Directive 828/2017 of the Council and the European Parliament, amending Directive 2007/36 / EC as regards
the encouragement of long-term involvement of shareholders, was transposed into national legislation by Law
no. 24/2017, regarding the exercise of certain rights within the listed companies and aims to ensure the long-term
sustainability of the listed companies.
On the ELSA’s Ordinary General Meeting of Shareholders (OGMS) held on April 28, 2021, was approved the
Remuneration Policy for Directors and Executive Managers, without any changes being made to the previously
established remuneration limits. The amendments concern the additions as a result of the new legislative
provisions, in order to present transparently the elements of fixed and variable remuneration, including financial
and non-financial benefits, in any form, which are granted to Directors and Executive Managers.
As well, the elaboration of the Remuneration Policy considered the good practices used at an international and
national level for similar companies as ELSA, as they were identified after the ELSA’s listing process.
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 regular review of the remuneration policy for Directors and
Executive Managers;
makes recommendations to the Board on the remuneration of the CEO and other executive managers,
including the main remuneration components, annual and long term performance objectives, and the
evaluation methodology;
makes recommendations to the Board on the remuneration of subsidiaries’ board members and the
remuneration policy for the subsidiaries’ executive managers in order to express ELSA’s vote at the
subsidiaries’ general meetings of the shareholders;
monitors compensation trends within industries relevant to the Group;
verifies at least once a year, the number of mandates held by the members of the Board of Directors and by
the members of the Executive Management in other companies, in order to evaluate their independence;
supervises the annual evaluation process of the activity of the Board of Directors.
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 ensure the correlation between the remuneration levels within ELSA.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
The principles governing this policy are:
According to best practice, the remuneration structure is defined separately for Directors and Executive Managers.
The principles of the Directors’ remuneration structure are the following:
1.
Ensuring a level of remuneration adapted both to the labour market level and to the level of dedication,
qualification, and responsibility required by these positions;
2.
The level of remuneration should be sufficiently motivating, in a manner that would ensure the commitment
of directors towards the interests of the company, while not representing an impediment in ensuring their
independence.
The remuneration principles of the remuneration structure of Executive Managers are the following:
1.
Ensuring correlation of remuneration to the achievement of strategic objectives and delivering value to
shareholders, a significant part of the remuneration package being related to the achievement of performance
objectives (on the short and long term);
2.
Ensuring a competitive, fair, and non-discriminatory level of remuneration (irrespective of gender, race,
ethnicity, religion, or sexual orientation), in order to attract and retain valuable management staff.
In determining the level of remuneration, the following factors are considered:
1.
External factors:
-
the remuneration system includes a fixed component and a variable performance-based component,
in line with market practices; in addition, it includes also other non-financial benefits;
-
the reference values were established considering both data regarding the remuneration practiced
in international companies of comparable size active within the Romanian energy sector, but also
based on data from other industries (e.g. petroleum industry) and other EEA countries;
-
the practice of most companies to choose the interval between the middle and upper quartile, from
the consideration of being attractive on the competitive market, a range which, however, does not
position itself towards the upper limit;
-
the design and customization of the remuneration packages, at the company level, are realized in
order to align and reflect the company’s corporate governance philosophy, ownership structure, level
of autonomy, role, and impact of the Board of Directors and Executive Managers.
2.
Internal factors
-
the remuneration policy follows principles similar to those of the employee remuneration and
describes the various elements of fixed and variable remuneration, including other financial and
non-financial benefits. In establishing these principles, internal equity is maintained, by applying the
principle of proportionality regarding the various categories of staff, the level of remuneration is set
at the market median for all hierarchical levels;
-
while carrying out a considerable part of the business in a regulated environment, the remuneration
policy induces certain particularities in determining the level of the monthly gross fixed remuneration
and of the structure of the remuneration package, as a whole;
-
the remuneration policy establishes clear, complete, and varied criteria of granting variable
remuneration, these being established according to the Company’s strategy and business objectives.
A.
Board of Directors
The BoD members’ remuneration has as main pillars a monthly fixed remuneration and an attendance fee for
participating at meetings (Board of Directors and its Committees) as follows:
the fixed monthly remuneration is differentiated between the Chair and the Board members, respectively
EUR 4,985 gross for the Chair and EUR 3,630 gross for the BoD members;
the attendance fee to the Board and its committees’ meetings is differentiated as well between 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 6 for each committee.
However, if the BoD composition changes, either as a result of the vacancy of one or more Director positions,
or as a result of the cumulative voting method, the Director thus appointed will have the right to collect the
remuneration for participation in the Board/Committes meetings
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Additional committee meetings can be organized only in exceptional situations, upon the Chairs’ decision,
who are responsible to efficiently organizing the agenda and activity. However, only one such additional
meeting shall be remunerated, for each committee. The meeting attendance fee has the specific role to
recognize the additional effort required for the contribution made and the support provided during the
meetings.
Also, the Remuneration Policy provides for a series of financial and non-financial benefits granted to the Directors,
as follows:
reimbursement of the reasonable expenses related to the execution of the mandate;
“Directors & officers liability” (D&O) insurance policy, with an insured value of EUR 10 million / person/ event,
according to the market terms, up to a limit of EUR 40 million / company. The policy will also cover a period
of a maximum of 5 (five) years from the date of termination of the Mandate Agreement, for events that
occurred as a result of the activity carried out by the Directors, during their term of office. The company will
bear and pay the cost of the premiums of this insurance;
the same package of medical services and/or medical insurance contracted by the Company for the
employees;
other legal expenses incurred by the Director in defending against a third-party claim made against the
Director in relation to the performance of the duties according to the mandate agreement, the Articles of
Association, the BoD Charter, or the Legal Framework, shall be borne by the Company, to the extent these
are not already covered by the “Directors & Officers liability” (D&O) insurance policy in force at the time;
compensation in case of unjustified revocation, detailed at point 5.4;
any other equipment/resources, in connection with and necessary for the proper execution of the
attributions and obligations provided by the Mandate Agreement (equipment/resources of long-distance
communication, travel expenses, etc.)
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;
b.
The variable yearly compensation is between 30% and 50% of the fixed annual remuneration. The percentage is
established by the BoD, within the limits approved by the GMS. The value of the annual variable remuneration
shall be determined depending on the degree of achievement of the KPIs, established for the respective year;
c.
the OAVT package, granted at the beginning of the mandate, will have a value between 150% and 200% of
the annual fixed remuneration (calculated as monthly gross fixed remuneration at the time of signing the
mandate agreement x 12), in compliance with the provisions of the Remuneration Policy for Directors and
Executive Managers.
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 approved by the GMS;
b.
the annual variable remuneration is between 15% and 40% of the annual fixed remuneration. The final
percentage is decided by the Board of Directors within the limits approved by the GMS. The value of the
annual variable remuneration shall be determined depending on the degree of achievement of the KPIs,
established for the respective year;
c.
to each executive manager (unless mandated on interim or a short-term basis) it is granted at the beginning of
the term an OAVT package. The value of the OAVT package will be between 60% and 160% of the annual fixed
remuneration (calculated as monthly gross fixed remuneration at the time of signing the mandate agreement
x 12), within the limits approved by the GMS
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT d.
The executive manager is entitled to cash the value of the OAVT package upon the expiration of the Duration of
the Mandate Agreement or in the last 6 months remaining until its expiration, in case the mandate agreement
terminates during this period, excepting for the resignation or revocation of mandate agreement with just
cause.
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.
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 an executive
manager.
The limits of the benefits granted to the Executive Managers
the Executive Managers benefit from a D&O professional insurance policy, having an insured value
amounting to EUR 10 million / person/event, according to market terms, within the limit of EUR 40 million
/ Company.
The policy will cover a period of a maximum of 5 (five) years from the date of termination of the Mandate
Agreement, for events that occurred as a result of the activity carried out by the executive managers, during
their term of office. The company will bear and pay the cost of premiums of this insurance;
the Company provides the specific equipment, as well as other types of necessary support, in order for the
executive manager to fulfil the responsibilities, in an adequate and safe manner, including a company car or
a car in company’s use, mobile phone, laptop, equipment that will be returned by the executive managers
at the termination of the mandate agreement;
reimbursement of the reasonable expenses related to the execution of the mandate, based on the supporting
documents;
same medical services and/or medical insurance package contracted by the Company for the employees;
mobility package up to the value of EUR 1,000 gross / month, an amount that will be within the limits of
monthly fixed remuneration and which is granted for a maximum period of 12 months from the signing
date of the addendum to the mandate agreement, only if the executive manager resides at a distance of
more than 100 km from the Company’s headquarters and does not have or did not have resided in the city
of the workplace in the last 12 months from the signing date of the addendum to the mandate agreement.
For successive mandates, relocation to the same city will be paid only once;
maternity leave paid for a maximum period of 6 months during the mandate agreement;
maximum 30 working days of holidays per year;
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 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 DEER’s CEO is between EUR 6.593 and EUR 11.000 gross; the
remuneration for the DEER’s Deputy CEO is between EUR 5,300 and EUR 10.300 gross.
The fixed monthly remuneration for EFSA’s CEO is between EUR 6.593 and EUR 10.257 gross. The remuneration
for EFSA’s Deputy CEO is between EUR 5.300 and EUR 9.231;
The fixed monthly remuneration for SERV’s CEO is between EUR 5.558 EUR and 8.718 EUR gross. The
remuneration for SERV’s Deputy CEO is between EUR 5.300 EUR and 7.846 EUR gross.
The final remuneration will be established by the BoD within the limits presented above, approved by the GMS
of each subsidiary.
b.
The fixed monthly remuneration for a DEERs Executive Manager is between EUR 5,128 EUR and EUR 9.231
gross.
The fixed monthly remuneration for an EFSA and SERVs Executive Manager is between EUR 5.128 and 6.837
gross. The final remuneration will be established by the BoD within the limits presented above, approved by
the GMS of each subsidiary.
c.
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
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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.
d.
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).
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 manner, the mandate
agreements of the executive managers (including the CEO and deputy CEO), 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).
4.8. Corporate Governance in ELSA’s subsidiaries
The Board of Directors of ELSA’s subsidiaries
During 2021 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 2021 and until the date of this report, the composition of the Boards of Directors of ELSA’s subsidiaries
was as follows:
The distribution subsidiary DEER – 1 January 2021 – date of the report
Georgeta Corina
Popescu –
Chair
Livioara Sujdea –
Chair starting with
8 February 2021
Livioara Sujdea –
Chair
Livioara Sujdea –
Chair
Stefan Alexandru
Frangulea
Stefan
Alexandru
Frangulea
Stefan Alexandru
Frangulea
Stefan Alexandru
Frangulea
Mirela Dimbean
Creta
Mircea Toma
Modran
Mirela Dimbean
Creta
Mirela Dimbean
Creta
Maria Cristina
Manda
Mirela
Dimbean
Creta
Geanina
Dumitru
-
-
Maria Cristina
Manda
-
-
-
Livioara
Sujdea
Stefan
Alexandru
Frangulea
Mircea Toma
Modran
Mirela
Dimbean
Creta
Source: Electrica
Stefan
Alexandru
Frangulea
Mirela
Dimbean
Creta
Maria
Cristina
Manda
Ligia Costin
Stefan
Valeriu Ivan -
Chair starting
with 31.01.2022
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The end date of the mandates of DEER’s directors at the date of this report is 31 January 2025 in the case of Mrs.
Maria Cristina Manda, Mrs. Mirela Dimbean Creta, and Mr. Stefan Alexandru Frangulea, and respectively 30 June
2022 in the case of the other two directors, Mrs. Ligia Costin and Mr. Stefan Valeriu Ivan.
The supply subsidiary EFSA – 1 January 2021 – date of the report
1 January –
1 February 2021
2 February –
26 April 2021
27 April –
7 September 2021
8 September –
11 December 2021
12 December –
29 December 2021
30 December –
31 December 2021
Mihai Darie –
Chair
Georgeta Corina
Popescu – Chair
starting with 9
February 2021
Georgeta Corina
Popescu –
Chair
Georgeta Corina
Popescu –
Chair
Georgeta Corina
Popescu –
Chair
Georgeta Corina
Popescu –
Chair
Bibiana
Constantin
Maria Cristina
Manda
Mihai Darie
Mihai Darie
Mihai Darie
Mihai Darie
Mihai Darie
Bibiana
Constantin
Bibiana
Constantin
Bibiana
Constantin
Bibiana
Constantin
Bibiana
Constantin
Laura Mihaela
Nastasescu
Maria Cristina
Manda
Maria Cristina
Manda
Catalina Popa
-
Laura Mihaela Nas-
tasescu
Catalina Popa
-
Source: Electrica
-
-
Stefan Ionut Pascu
Razvan Tudor
1 January 2022 –
3 January 2022
4 January 2022 –
3 February 2022
3 February 202 –
date of the report
Georgeta Corina Popescu –
Chair
Georgeta Corina Popescu –
Chair
Stefan Ionut Pascu –
President starting
from 8 Februay 2022
Mihai Darie
Stefan Ionut Pascu
Razvan Tudor
Stefan Ionut Pascu
Razvan Tudor
Mihai Ioanitescu
Razvan Tudor
Mircea Toma Modran
Mircea Toma Modran
Mihai Ioanitescu
Source: Electrica
-
-
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The end date of the mandates of EFSA’s directors at the date of this report is 30 June 2022
The energy services subsidiary SERV – January 2021 – date of the report
Through the Decision of SERV GMS from 30 December 2021, the articles of association of SERV was amended in the
sense of reducing to 3 the number of members of the Board of Directors of SERV.
1 January –
17 January 2021
18 January –
14 February 2021
15 February –
29 April 2021
30 April –
24 June 2021
Stefan Valeriu
Ivan- Chair
Mihai Darie
– Chair starting with 16
Popescu - Chair
Georgeta Corina Popescu
Georgeta Corina
February 2021
Mihai Darie
Bibiana Constantin
Mihai Darie
Mihai Darie
Bibiana Constantin
Anamaria-Dana
Bibiana Constantin
Bibiana Constantin
Anamaria-Dana
Acristini-Georgescu
Acristini-Georgescu
Irina Clima
Anamaria-Dana
Acristini-Georgescu
Irina Clima
Irina Clima
-
Irina Clima
-
Source: Electrica
25 June –
7 September 2021
8 September –
31 December 2021
1 January 2022 –
3 January 2022
4 January 2022 –
date of the report
Georgeta Corina
Popescu - Chair
Georgeta Corina
Popescu - Chair
Georgeta Corina
Popescu - Chair
Georgeta Corina
Popescu - Chair
Mihai Darie
Mihai Darie
Mihai Darie
Irina Clima
Bibiana Constantin
Bibiana Constantin – in-
terim between 12 Decem-
ber – 31 December 2021
Irina Clima
Stefan Ionut Pascu
Irina Clima – interim
Irina Clima
between 12 December
Stefan Ionut Pascu
2021 – 3 January 2022
Maria Cristina
Manda
Source: Electrica
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
The electricity production subsidiary EPE – 3 September 2021 (date of the establishment of the subsidiary) –
date of the report
Through the Decision of EPE GMS from 3 January 2022, the articles of association of EPE were amended in the
sense of reducing to 3 the number of members of the Board of Directors of EPE.
Source: Electrica
The end date of the mandates of EPE’s directors at the date of this report is 3 September 2023 in the case of Mrs.
Georgeta Corina Popescu, and respectively 30 June 2022 in the case of the other two directors, Mr. Mihai Ioanitescu
and Mr. Razvan Tudor.
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 2021, as well as until the date of this report, as follows:
The distribution subsidiary DEER– 1 January 2021 – date of the report
1 January 2021 –
30 June 2021
General Manager
-
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 27 September 2021 -
present
General Manager
26 March 2022
1 January 2021 - present
Integration Division
Manager
30 June 2022
1 January 2021 - present
Business Support Division
Manager
31 March 2023
1 January 2021 –
8 July 2021
Financial Division
Manager
9 July 2021 –
31 January 2022
Financial Division
Manager
-
-
1 February 2022 – present
Interim Financial
Division Manager
Executes and takes over
the functions of Integrati-
on Division Manager
30 April 2022 or until the
appointment of Financial
Division Manager if the
appointment is before 30
April 2022
1 January 2021 - present
Procurement Operations
Manager
31 July 2022
1 January 2021 - present
Energy Management
Division Manager
14 October 2022
1 January 2021 - present
Asset Management
Division Manager
24 September 2022
1 January 2021 –
31 December 2021
Innovation Engineering
Manager
-
1 January 2021 – present
Network Development
Division Manager
31 December 2024
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 1 January 2021 - present
TN Power Construction
Unit Manager
1 September 2022
1 January 2021 - present
TS Power Construction
Unit Manager
30 June 2023
1 January 2021 - present
MN Power Construction
Unit Manager
1 September 2022
1 January 2021 - present
Network Operations
Division Manager
31 January 2023
1 January 2021 –
31 December 2021
TN Network Operations
Unit Manager
1 January 2021 –
15 June 2021
TS Network Operations
Unit Manager
-
-
1 January 2021 - present
MN Network Operations
Unit Manager
1 September 2022
Source: Electrica
The supply subsidiary EFSA – until the date of the report
1 October 2019 - present
General Manager
30 September 2023
10 March 2020 – present
Interim
Deputy General Manager
31 March 2022
13 April 2020 - present
Sales Division Manager
12 April 2024
16 October 2019 - present
Portfoliu Management
Manager
15 October 2023
15 December 2020 –
present
Financial Division
Manager
23 februarie 2022
1 March 2020 – present
Interim
Marketing Division
Manager
31 March 2022
6 October 2021 – present
(vacancy position until 5
October 2021)
Operations Division
Manager
31 December 2022
Source: Electrica
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The energy services subsidiary SERV – until the date of the report
15 December 2020 -
15 January 2021
General Manager
16 January 2021 –
16 July 2021
General Manager
* with delegated
attributions
-
-
17 July 2021 -
15 December 2022
6 May 2020 –
31 December 2021
1 December 2017 -
16 December 2023
1 June 2018 -
31 March 2021
Starting with 1 April 2021
based on an individual
labor agreement
General Manager
15 December 2022
Deputy General Manager
-
Property Management
and Product
Development Manager
Technical Manager
16 December 2023
-
-
-
15 December 2020 –
15 January 2021
Financial Manager
20 January 2021-
31 August 2021
1 September 2021-
30 June 2022
Financial Manager
*with delegated attributi-
on based on an individual
labor agreement
Financial Manager
30 June 2022
Source: Electrica
The electricity production subsidiary EPE – 3 September 2021 (date of the establishment of the subsidiary) –
date of the report
The Board of Directors did not appoint executive managers within the subsidiary during the period from the
establishment until the date of the report.
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 2021, as well as on 16 February 2022
(last update):
Item no.
Name
Number of shares
Weight in the share
capital (%)
Source: Depozitarul Central, Electrica
Niculae Havrilet
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 fulfil 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 2021 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 a term loan from the EIB and a term loan from the EBRD to finance the investment plan for the
period 2021-2023 by DEER, guaranteed by ELSA; contracting a multi-product credit line (cash/overdraft and
non-cash / letters of bank guarantee) and a line of credit for issuing letters of guarantee (non-cash) from
commercial banks to finance the current activity by EFSA, with a guarantee by ELSA;
general debt limit in case of EFSA;
amendments/improvements of the articles of association of the subsidiaries;
increases in the share capital with land plots in the case of DEER and EFSA (initiations of the increases in
the share capital in case of DEER and EFSA and completion of the increase in the share capital initiated in
2020 in case of EFSA);
introduction of the second shareholder within DEER and SERV;
SERV participation, together with ELSA, in the establishment of a new legal entity, ELSA subsidiary for
electricity production, Electrica Productie Energie S.A., in the case of SERV;
SERV participation, together with ELSA, in the establishment of the Electrica Foundation;
changing the name of DEER subsidiaries;
extension of the mandate of the financial auditor Deloitte Audit SRL for a period of two years, in case of
DEER, EFSA, SERV;
the acquisition of printing services, the services for folding up the electricity / natural gas bills and other
documents, as well as the opportunity to purchase postal services for the distribution of correspondence,
parcels, and computer archiving services of documents resulting from the distribution of disconnection
notices, in case of EFSA;
appointment of the directors in the Board of Directors of the subsidiaries;
amending the articles of association of SERV and EPE in the sense of reducing to 3 the number of members
of the Boards of Directors of SERV and EPE.
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 manner, 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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 28
February 2022.
Note: considering the fact that there are no mentions for “Reason for non-compliance”, the corresponding column
has been removed from the table below.
The company had elaborated ever
since February 2015 ELSA’s Corporate
(ELSA’s CGC) that
Governance Code
included the Articles of Association of the
Company, the rules of the organization,
and the functioning of the BoD and
its committees. All these 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 regulations
A.1. All companies must have an
internal
in order to detail the responsibilities of
Board regulation which includes the terms of
the Board, of its committees, and the
reference/responsibilities of the Board and the
YES
management team, taking into account
key management functions of the company, and
the recommendations made
in the
which applies, among other things, the General
Evaluation Report of the Board’s activity
Principles of this Section.
in the previous year.
In recent years, these documents have
undergone successive revisions to align
with domestic and international best
practices.
The most recent versions of the Articles
of Associations, ELSA’s CGC, and the
Charter of the BoD and its Committees
are available on the company’s website
in the section “Investors -> Corporate
Governance”.
Such provisions are mentioned in ELSA’s
A.2. Provisions for the management of conflict
YES
CGC, in the Articles of Association, in
of interest should be included in the Board
the Code of Ethics and Professional
regulation.
Conduct, and the BoD organization
and functioning regulation.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
A.3. The Board of Directors must consist of at least
ELSA’s BoD consists of seven members
five members.
YES
since 14 December 2015.
A.4. 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 on
the basis of which it is considered independent
in terms of its character and judgement 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;
All the members of ELSA’s BoD are non-
A.4.2. is not an employee of the company or a
executives. According to the Articles of
company controlled by it and has not held such
Association, at least four out of seven
a position for the past five (5) years; A.4.3. does
members must be independent. The
not and did not receive additional remuneration
independence criteria
stipulated
in
or other advantages from the company or a
YES
the Articles of Association are similar
company controlled by it, other than those
and even more restrictive than those in
corresponding to the quality of a non-executive
the BSE’s Corporate Governance Code.
director; A.4.4. is not or has not been an employee
Currently, four out of seven members are
or has not had a contractual relationship, during
independent. All independent members
the previous year, with a significant shareholder
submitted a declaration of independence,
of the company, shareholder who controls more
at the time of their appointment by the
than 10% of voting rights or with a company
OGMS.
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 Manager/
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.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT A.5. Other relatively permanent professional
commitments and obligations of a Board
member, including executive and non-executive
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
Board positions in companies and not-for-profit
information requested by this provision
institutions, must be disclosed to shareholders
YES
of the Code. The updated biographies of
and potential investors before the appointment
each member of the Board are presented
and during his/her term of office.
annually in the Directors’ Report and on
the company’s website in the section
Investors> Corporate Governance> Board
of Directors.
When a Board member has entered
A.6. Any member of the Board should submit to
into a relationship with a shareholder
the Board information on any relationship with
who directly or indirectly holds shares
a shareholder who holds, directly or indirectly,
YES
representing more than 5% of all voting
shares representing more than 5% of all voting
rights, he/she promptly informed the
rights.
entire Board.
A.7. The company should appoint a Board
The company has established the General
secretary responsible for supporting the Board’s
YES
Secretary Department, which is directly
work.
subordinated to the Board of Directors.
A.8. The corporate governance statement will
assessment process of its activity with
inform whether an evaluation of the Board
the support of an external consultant
has taken place under the leadership of the
(in 2015, 2017, and 2020), or using a self-
chair or the nomination committee and if so,
YES
assessment questionnaire (in 2016, 2018,
will summarize the key measures and changes
2019, and 2021)
This provision was applied starting with
2015, the BoD carrying out an annual
resulting from it. The company should have a
policy/guide regarding the evaluation of the Board
including the purpose, criteria, and frequency of
the evaluation process.
More details are provided in the 2015-2017
Annual Reports in chapters 6.1 and 6.2, for
2018 and 2019, 2020 and 2021 in chapter
4.5.
A.9. The corporate governance statement must
Details regarding the compliance with
contain information on the number of meetings
this provision are presented in the Annual
of the Board and committees during the last year,
directors’ attendance (in person or absent), and
YES
a report of the Board and committees on their
activities.
Report,
chapter. For 2021, please see chapter 4.5.
in the Corporate governance
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT A.10. The corporate governance statement must
in the Annual Report. More details are
contain information on the exact number of
independent members of the Board of Directors.
YES
provided in the Annual Reports for 2021
in chapter 4.4.
Four out of seven members of the BoD
are independent and this is specified
On ELSA’s website,
in the section
Investors > Corporate Governance >
Board of Directors, it is specified exactly
which members are independent.
The Articles of Association and ELSA’s CGC
highlight the existence of this committee
Remuneration
and
(Nomination
Committee - NRC), its members, and its
A.11. The Board of Premium Companies must set
responsibilities. The NRC composition is
up a nomination committee of non-executive
reviewed annually, in accordance with
members that will
lead the procedure of
the NRC organization and functioning
nomination of new members to the Board and
regulation (Charter) and at the beginning
will make recommendations to the Board on
YES
of each new mandate of the BoD. In May
the appointment and the revocation of the Chief
2021, its structure was revised according
Executive Officer and the management team.
to the changes that occurred in the
The majority of the members of the nomination
board structure. According to the NRC’s
committee must be independent.
Section B
Risk management and internal
control system
Charter, in December 2021 the current
structure of the NRC was established,
two of the members being independent.
Details regarding the NRC structure are
presented in chapter 4.4.
The Articles of Association and ELSA’s CGC
B.1. The Board must set up an audit committee
highlight the existence of this committee
in which at least one member must be an
independent non-executive director. A majority
(Audit and Risk Committee - ARC), its
structure, and responsibilities.
of members,
including the chairman, must
The ARC structure is reviewed annually,
have proven that they are adequately qualified
according to ARC Charter and at the
relevant to the functions and responsibilities of
beginning of each new mandate of the
the committee. At least one member
YES
BoD.
of the audit committee must have proven and
In May 2021, its structure was revised
appropriate audit or accounting experience.
according to changes in the BoD structure.
In the case of Premium Companies, the audit
In accordance with the ARC Charter, the
committee must consist of at least three members,
current composition of the ARC was voted
and the majority of the audit committee must be
independent.
in December 2021, in which two of the
members are independent. Details of this
are presented in chapter 4.4.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Section B
Risk management and internal
control system
B.2. The chairman of the audit committee must
YES
Florescu, an independent non-executive
On 6 May 2021 and subsequently, on
15 December 2021, Mr. Radu Mircea
be an independent non-executive member.
B.3. Among
its
responsibilities,
the audit
YES
board member was elected and
respectively re-elected as Chairman of
the Audit and Risk Committee.
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
fraud detection
policies,
including
committee must carry out an annual assessment
and bribery prevention policies;
(ii)
of the internal control system.
reviewing related parties transactions
in accordance with a policy developed
by the Committee and approved by
the Board; (iii) analysis of the annual
report prepared by the Internal Audit
Department and/or Risk Management
Department assessing the effectiveness
of the internal control system within the
Group.
B.4. The assessment must consider
the
effectiveness and purpose of the internal audit
Such reports are annually presented.
function, the adequacy of risk management
The assessment report for 2021 specified
and internal control reports submitted to the
in the CGC was presented and discussed
audit committee of the Board, the promptness
YES
by the Audit and Risk Committee in the
and effectiveness with which the executive
meeting on 24 February 2022.
management
solves
the deficiencies or
weaknesses identified as a result of the internal
control and the submission of relevant reports to
the Board’s attention.
B.5. The audit committee must assess conflicts
The assessment is carried out annually.
of interest in connection with the transactions
The assessment report for 2021 specified
of the company and its subsidiaries with related
YES
in the CGC was presented and discussed
parties.
by the Audit and Risk Committee during
its meeting on 24 February 2022.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Section B
Risk management and internal
control system
The ARC has at least the following
responsibilities on risk management
issues:
(i) regularly review of the main risks to
which the company and the Group are
exposed, recommending to the Board
appropriate policies
for
identifying,
mapping, management,
and
risk
B.6. The audit committee must assess the
reduction;
effectiveness of the internal control system and
YES
(ii) annual analysis of a management
risk management system.
report that assesses the effectiveness of
the risk management system within the
Group.
Based on the ARC Charter’s provisions,
the evaluation report for the year 2021
was presented and discussed by the
Audit and Risk Committee at its meeting
on 24 February 2022.
Details regarding the ARC activity for the
year 2021 are presented in chapter 4.5 of
the Annual Report.
The ARC has the following responsibilities
on internal audit issues:
(i) approval of an annual audit plan at
Group level, based on an annual risk
assessment, as well as any significant
changes to the plan and receipt of
periodic
reports on activities, key
B.7. The audit committee must monitor the
findings and follow up of internal audit
application of
legal standards and generally
reports;
accepted internal audit standards. The audit
(ii) advising
the Board on
the
committee must receive and assess the reports
YES
appointment,
revocation,
and
of the internal audit team.
remuneration of the Head of Internal
Audit Department;
(iii) monitoring
the
adequacy,
effectiveness, 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
analysis initiated by the Audit Committee, these
must be followed by regular (at least annual)
YES
or ad-hoc reports to be submitted to the Board
afterward.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT B.9. No shareholder may be granted preferential
Provisions on this matter are included
treatment over other shareholders with regards
YES
in ELSA’s CGC and the Policy on
to transactions and agreements concluded by
Transactions with Related Parties.
the company with shareholders and their related
parties.
B.10. The Board must adopt a policy to ensure
that any transaction of the company with any of
the companies 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
The Policy regarding the transactions
latest financial report), is approved by the Board
YES
with Related Parties, has been updated
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 category of events
subject to reporting requirements.
in July 2020 and covers all the required
aspects.
B.11. Internal audits must be carried out by
The internal audit is carried out by the
a separate structural division (internal audit
YES
Internal Audit Department, a structurally
department) within the company or by hiring an
separate entity.
independent third-party 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
Departamentul
de
audit
intern
the audit committee. For administrative purposes
YES
raporteaza din punct de
vedere
and within the framework of management’s
functional catre CA prin intermediul CAR
obligations to monitor and reduce risks it must
si administrativ directorului general.
report directly to the chief executive officer.
Section C
Fair rewards and motivation
C.1. The company must publish on its website the
In accordance with Law 24/2017,
remuneration policy and include in its annual
as
amended
and
subsequently
report a statement of the remuneration policy
supplemented by Law no. 158/2020
during the annual period under review. The
(Art.92 ^ 1), on 28 April 2021, ELSA GMS
remuneration policy must be formulated in such
approved the updated Remuneration
a way as to allow shareholders to understand
Policy
for Directors and Executive
the principles and arguments underlying the
Managers,
in which all the aspects
remuneration of the members of the Board
stipulated by this statement are detailed.
and the CEO, as well as the members of the
The Remuneration Policy for Directors
Management Board in two-tier board systems.
It should describe how the process is managed
YES
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
and Executive Managers
is available
on the ELSA website, under Investors
> Corporate Governance > Corporate
Policies and other documents.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Section C
Fair rewards and motivation
shares, benefits in kind, pensions, and others),
In previous years, issues related to the
and describe the purpose, principles, and
implementation of the Remuneration
assumptions underlying
each
component
Policy were presented in the annual
(including general performance criteria for any
report. For the year 2021, ELSA has
form of variable remuneration). In addition, the
prepared an independent report on the
remuneration policy must specify the duration
remuneration of the administrators and
of the executive manager’s contract and the
executive directors to be submitted to
notice period provided for in the contract as well
the consultative vote of the ELSA GMS,
as any compensation for revocation without just
according to the applicable legislative
cause. The remuneration report must present the
provisions.
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
company’s website.
Section D
Building value through investors’ relations
D.1. 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 dedicated 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
association, the procedures regarding the general
meetings of shareholders.
D.1.2. Professional CVs of members of the
The company has both an Investor
company’s management bodies, other
Relations department and a section
professional commitments of the board
dedicated to Investor Relations on its
including executive and non-
members,
executive positions on board of directors of
YES
companies or non-profit institutions
website (in both Romanian and English).
All relevant information for investors is
published under the Investors section
D.1.3. Current and periodic reports (quarterly,
on ELSA’s website.
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 presentations, quarterly results
presentations, etc.), financial statements
(quarterly,
semi-annual, annual), audit
reports, and annual reports.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Section D
Building value through investors’ relations
D.2. The company will have a policy on the
annual distribution of dividends or other benefits
The BoD
last revised the Dividends
to shareholders, proposed by the CEO or the
Policy at its meeting on 14 February
Management Board and adopted by the Board, in
the form of a set of guidelines that the company
YES
intends to follow regarding the distribution of net
2018. It is published on ELSA’s website, in
the Investors > Corporate Governance >
Corporate Policies and other documents
profit. The principles of the annual distribution
section.
policy to shareholders will be published on the
company’s website.
D.3. The company will adopt a policy regarding
the forecasts, whether they are made public or
not. The forecasts refer to quantified conclusions
of studies aimed at determining the overall
impact of a number of factors for a future period
(so-called assumptions): by
its nature, this
projection has a high level of uncertainty, the
YES
actual results may differ significantly from the
forecasts initially presented. The forecast policy
The BoD last revised the Forecasts Policy
in its meeting on 14 February 2018. It is
published on the ELSA website, in the
Investors > Corporate Governance >
Corporate Policies and other documents
will determine the frequency, period envisaged,
section.
and content of the forecasts. Forecasts,
if
published, may only be part of annual, semi-
annual, or quarterly reports. The forecast policy
should be published on the company’s website.
ELSA rules and procedures that establish
the framework for the organization
and conduct of general meetings of
shareholders are part of ELSA’s Policy
on organizing and running the General
D.4. The rules of general meetings of shareholders
Meetings of Shareholders, available from
should not limit the participation of shareholders
the beginning of 2020 and in updated
in general meetings and the exercise of their
form from August 2020, in electronic
rights. Changes to the rules will take effect at the
earliest, starting with the next general meeting of
shareholders
YES
form on ELSA website in the section
Investors > Corporate Governance >
Corporate Policies and other documents.
Also, the rules of general meetings
of shareholders are mentioned
in
each convening notice, published in
accordance with the legal and statutory
requirements approximately 45 days
before each meeting.
D.5. The external auditors should attend the
External auditors attend each OGMS
general meetings of shareholders when their
reports are presented.
YES
in which the financial situations and
annual reports are approved.
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ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Section D
Building value through investors’ relations
D.6. The Board will present to the annual general
The directors’ annual report, presented
to the annual general meeting of
shareholders
together with
financial
statements, contains
the
the
meeting of shareholders a brief assessment of
BoD’s assessments on the systems of
the systems of internal control and significant
YES
internal controls and significant risk
risks management, as well as opinions on issues
management.
subject to the decision of the general meeting.
As a practice, all the documents subject
to the GSM approval are endorsed
by the BoD; this is clearly stated in
the documents presented
to
the
shareholders.
D.7. Any professional, consultant, expert, or
financial analyst may attend the shareholders’
In this respect, the agreement of the
meeting on the basis of a prior invitation from the
shareholders present at the General
Board. Accredited journalists may also attend the
YES
Meetings was requested each time it
general meeting of shareholders unless the Chair
was the case.
of the Board decides otherwise.
D.8. The quarterly and semi-annual financial
reports will include information in both Romanian
The quarterly and half-yearly financial
and English on key factors influencing changes in
reports can be consulted on
the
sales levels, operating profit, net profit, and other
YES
relevant financial indicators, both from quarter to
company’s website
Results
Investors>
in
and
the section
Reports>
quarter as well as from one year to another.
Financial results
D.9. A company will hold at least two meetings/
ELSA organizes quarterly teleconferences
teleconferences with analysts and
investors
with analysts and
investors and
each year. The information presented on these
publishes presentations and audio
occasions will be published
in the
investor
YES
recordings of the teleconference on the
relations section of the company’s website at the
ELSA website, in the section Investors >
date of the meetings/teleconferences.
Results and Reports > Presentations and
other information.
Information regarding the CSR activities
D.10. If a company supports different forms of
can be found online on the company’s
artistic and cultural expression, sports activities,
website, in the CSR section. The Grants
educational or scientific activities, and considers
Program
is annually reviewed and
their impact on the innovative character and
approved by the BoD.
competitiveness of the company part of its
YES
The projects and activities supported
mission and development strategy, it will publish
each year are presented in ELSA’s annual
the policy regarding its activity in this area.
Sustainability Reports, available on the
ELSA website, in the CSR section > Non-
financial Reporting.
119 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 4.10. Implementing action plans undertaken by signing
the framework agreement with EBRD
The company’s initial public offering and dual listing 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 regarding 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 2021 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 of their role within the organization;
updating the compliance framework - The Code of Ethics and Profesional Conduct, as well as, adopting The
Policy of preventing, combating, and sanctioning any form of harassment in the workplace;
informing, through the information channel available to all employees, about updating the compliance
framework – The Code of Ethics and Professional Conduct, as well as, about implementing, promoting, and
disseminating these documents at the level of all employees from the organization;
monitoring the compliance in relation to the framework defined by the Code of Ethics and Professional
Conduct and subsequent policies and procedures.
Having mainly a preventive role in relation to the risks to which the organization is exposed, compliance adds value
to each business, but, in order 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.
The information and awareness activities regarding the provisions of the compliance framework from the ethical
perspective of the organization’s staff were carried out exclusively through the online environment, due to the
restrictions generated by the existing health situation.
Regarding the organizational structures dedicated to ethics and compliance, these exist at each company level
from the Group.
Regarding the donations, in 2021 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.
120 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT As a result of the change of the European and
Articles of Association adopted since the listing of
national legal framework, according to the European
Directive no. 828/2017, transposed into national
the company is available on its website in the section
The group > About > Articles of Association.
legislation by Law no. 24/2017, as it was subsequently
amended and supplemented by Law no. 158/2020
(Art.92 ^ 1), in 2021 the Remuneration Policy for the
Administrators and Executive Directors of ELSA was
Clear
lines
responsibility
of
competence
and
submitted for the approval of the GMS.
To define the reporting system and to set
responsibilities and competencies at the level of the
Remuneration Policy approved by HAGOA no.
group and its’ companies, ELSA, and its subsidiaries
1 of 28 April 2021, does not change the limits of
carried out projects for processes’ mapping both
remuneration established by HAGOA no. 2 of 9 July
in distribution and in supply areas, benefiting from
2015, HAGOA no. 1 of 31 March 2016, and HAGOA 1 /
external consultancy in this regard. In the context
9 February 2018, but, based on the new legislative
of the 2018 – 2020 organizational transformation,
provisions, transparently presents the elements of
the applicable procedural framework, and the
fixed and variable remuneration, including financial
documentation of the Quality – Environment - OHS
and non-financial benefits, in any form, that may be
Integrated Management Systems implemented at
granted to Directors and ELSA Executive Directors.
each Group company level have been fully revised,
For details regarding the remuneration of the Board
members and the executive management of ELSA,
please see chapter 4.7.
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.
Advisory Committees of the Board of
Directors
Code of Conduct
EBRD requirements are covered by the Code of Ethics
In order to increase the effectiveness of its activity,
and Professional Conduct, which has been updated
ELSA’s Board of Directors has established the
in accordance with the new Strategy adopted by
following committees with an advisory role: the
the Electrica Group. Regarding the Whistleblowing
Nomination and Remuneration Committee, the
Policy, it has been updated and is available on the
Audit and Risk Committee, and the Strategy and
company’s website.
Corporate Governance Committee. For details,
please see chapter 4.5.
In 2021, 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
Internal Control and Audit Framework
version within the Group.
In 2021, the documentation governing the internal
audit activity at the Electrica Group level approved
in November 2019 was maintained and applied. This
Compliance with BSE
Governance Code
Corporate
documentation was approved in its first version by
On 4 January 2016, the new BSE Corporate
the BoD at the beginning of 2015 and includes the
Governance Code entered into force and, on this
Internal Audit Charter, the Audit Manual, and the
Auditor’s Code of Ethics, its last update dating from
occasion, ELSA published on 8 January 2016 the
„Corporate Governance Code Apply or Explain”
2019. The documents are available on ELSA’s website
statement according to the new provisions. ELSA
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
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
EBRD guidelines were included in the Articles of
Association of ELSA adopted on 4 July 2014.
corporate documents referred to by the Corporate
Governance Code of ELSA, are available on the
In 2021, ELSA’s Articles of Association were updated
company’s website in the Investors > Corporate
according to ELSA Board of Directors’ decisions
Governance section
(https://www.electrica.ro/en/
from 11 August 2021, following the increase of the
company’s share capital. All versions of the ELSA
investors/corporate-governance/).
For details, please consider chapters 4.9 and 4.1.
121 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Electrica Group continues to have a Market Abuse
installations (including cutting of protected tree
Policy adopted by all companies within the Group.
species), these must be developed to EU standards.
The Environmental and Social Action
Plan (ESAP)
Inform EBRD if any EIAs are carried out by sharing
the link on the DEER website. Include a summary
of the EIAs undertaken in the annual Electrica
Sustainability Report, also referring to the NTS’
In 2021 the Environmental and Social Action Plan
published on their website. Inform EBRD if CAPEX-
was updated by SAP as part of the Loan Agreement
related work would be carried out in Natura 2000
signed by DEER with EBRD and guaranteed by
Electrica S.A. for financing DEER’s CAPEX Plan 2021
sites and protected areas.
No environmental Impact studies were required for
– 2023. The revised ESAP includes the following
developing electrical distribution networks included
actions, their status of implementation being also
in CAPEX Plan, yet, according to law no. 292/2018
mentioned in the following section
Organogram of EHS management
structure and update certification
Annex 5E.
Permits
DEER to ensure needed permits are acquired
Develop an organogram presenting the EHS
from the Ministry of Culture, according to Building
management
structure
from
Group-level
Planning Permit, if works affect protected buildings,
management,
implementation
within DEER. Make this accessible on the Group
to County-level
and obtain
the environmental authorisations
according to the Building Planning Permit (including
intranet portal, alongside the existing E&S Policy,
cutting of protected trees, if needed) from Local
under their management systems page and shared
with all staff.
Organogram presenting the EHS management
Authorities.
All necessary permits were acquired for investment
projects
included
in CAPEX Plan according to
structure in course of elaboration due to delays in
Building Planning Permit
DEER transformation project; responsible persons
were appointed at the level of ELSA/DEER
Cascading of E&S requirement
DEER to gain ISO14001 certifications. Integrate the
management systems of the previous DSOs and
Construction Environmental Management Plans
gain certification as a single Company.
ISO 14001 Certificate for DEER was obtained in April
2021.
Project-Specific Risk Assessments
(CEMPs) should be developed by contractors
before they begin works, in line with Electrica risk
assessments and instructions. These CEMPs shall
then be cascaded to any sub-contractors engaged.
The CEMP shall include a measure to control noise
and dust emissions and wastewater during the
Develop and implement a standardized new H&S,
environment, and social risk assessments instrument
construction period.
The projects (technical execution documentation)
(methodology) and apply the methodology for
with E&S and H&S risks and mitigation measures
works categories/works included in the 2021-2023
included are part of the contract signed with the
CAPEX Plan, prior to construction commencement,
contractors mandatory to be respected.
if not launched.
E&S and H&S risks and mitigation measures are
included in all DEER projects (technical execution
Worker accommodation
documentation)
for
investment works;
the
Review accommodation provided for workers not
methodology is being developed for ensuring a
able to return home daily (where relevant), ensuring
unified approach for all projects
EIA Screening
it is of suitable quality and in line with EBRD/IFC
Guidance Note7.
Accommodation for own personnel
is reviewed
and controlled; DEER
is
reviewing
its H&S
Continue environmental screening of projects
Control Procedure in order to include reviewing
under the CAPEX Plan. If DEER must develop and
implement national EIAs for certain unforeseen
accommodation during its controls for contracted
work.
7 https://www.ebrd.com/downloads/about/sustainability/Workers_accomodation.pdf
122 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Gender-Based Violence and Harassment
(GBVH) Policy
with ISO 50001 and gain certification by the end of
2024.
The energy management system implementation
Update Code of Ethics and Professional Conduct to
is planned
for DEER after
the post-merger
include a GBVH Policy in line with international best
organizational transformation project in order to
practice.
The Policy for preventing combating and sanctioning
gain certification during 2024.
any form of harassment at work was adopted by
PCBs
ELSA and DEER and it is in process of approval for
the other companies within Electrica Group. Code
Electrica DSO
is currently
in the process of
of Ethics and Professional Conduct was reviewed in
eliminating PCBs from electrical installations in
order to include references to this policy.
operation. DEER to continue the process to meet the
Retrenchment
2028 deadline and report annually to EBRD.
The process of PCB - polychlorinated biphenyls -
elimination from operating electrical installations
The Company will develop and maintain corporate
continued in 2021. However, the number of operating
retrenchment provisions within Collective Bargaining
electrical equipment containing PCBs is relatively
Agreement and plan retrenchment initiatives in line
low for two of the DEER regions, and the rate of
with EBRD retrenchment guidelines to minimise
decrease for the third region is accelerated, which
the social and economic impact of staff reductions
if such is required. This will be developed in line with
ensures the comfort of the company in implementing
the national program of elimination within the term
best practices and will comply with relevant national
2028, according to the GD 1497/2008. The process
requirements. The Company will inform the Bank of
is monitored based on annual reports and the
any major retrenchment (over 500 staff) and submit
information is published in the Group’s Sustainability
a specific mitigation plan at least one month before
Report.
employees are actually terminated. Retrenchment
programmes affecting over 100 staff but less than
Health and Safety System and Policy
500 will be reported in the annual report.
The provisions
regarding
the
reorganization/
DEER to maintain ISO 45001:2018 certification.
restructuring activities inside the Group are part of
Revise the integrated HSE Policy to capture the
the Collective Bargaining Agreement signed with
the trade unions which is renegotiated every 2 years.
DSOs merger
DEER obtained ISO 45001:2018 certification in April
There
is no major
retrenchment programme
2021 and revised its Declaration of policy in order to
implemented
yet,
and
the
retrenchment
capture the DSOs merger during the first quarter of
programmes affecting staff during 2022 will be
2021.
reported in the 2022 Annual Report.
Asbestos
Greenhouse gas emissions analysis
Conduct an Asbestos-containing Materials (ACM)
Prepare a study on the greenhouse gas (GHG)
survey at the proposed substations and develop
emissions of Electrica Group operations and
an Asbestos Management Plan (AMP) for the sites
identify areas to cut emissions, with the results
to be published in the 2021 Sustainability Report.
included in the CAPEX Plan. In order to facilitate a
investigation, DEER should also
comprehensive
Yearly update on implementation and continuous
ensure that all electrical equipment is isolated and
improvement in the Sustainability Report.
The project for calculating greenhouse gas (GHG)
made safe for the surveys. The construction waste
management procedures within the CEMP for this
emissions of Electrica Group operations and
Project should incorporate preventive measures/
identifying areas to cut emissions was elaborated
approaches if asbestos is identified during the works
by Electrica and its implementation will start early
and should follow the AMP. Maintain a corporate
in 2022. The results will be published in the Group’s
Sustainability Report.
Energy management
Electrica Group and DEER to
implement an
integrated approach to energy management in line
asbestos risk assessment and elimination plan.
The majority of sites included in the CAPEX Plan are
Asbestos-free, but DEER is analysing all the sites in
order to develop an Asbestos Management Plan
(AMP), where necessary.
123 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Community Health & Safety
in emergencies; maintenance of fire protection
facilities and fire-fighting equipment and devices for
Following the CAPEX
implementation,
inspect
each location, with authorized companies; maintain
local distribution infrastructure and ensure that
free access to evacuation routes; supplementary
equipment is suitably installed and protects the
measures for fire prevention during the hot and the
community from harm (e.g. trips and electrocution),
cold seasons.
as part of the infrastructure maintenance plan. Any
unprotected equipment that could cause harm
Noise monitoring
to the local community should be reported and
repaired.
During maintenance plan implementation DEER
Monitor noise levels at highly sensitive receptor
areas that complain of ongoing noise from their
teams are constantly inspecting local distribution
equipment
(such as densely populated areas,
infrastructure and ensure that equipment is suitably
hospitals, and schools) and develop and implement
installed and protects the community from harm.
noise-canceling solutions if the monitoring shows
Any identified unprotected equipment that could
some exceedances (or other noise control measures
cause harm to the local community is instantly
such as the restriction of drilling during certain hours
repaired.
Working at Height and Lockout/
Grounding Instruction
if the exceedance is related to construction works).
The new instruction for environment controls that
includes monitoring noise
levels activities was
elaborated and approved by DEER.
Ensure H&S instruction for deactivating and properly
Electromagnetic Fields
grounding live power distribution lines complies
with national regulations. Finalise the new Working
Continue monitoring potential
impacts
from
at Height /Grounding instruction.
HSW
instruction for deactivating and properly
electromagnetic fields
(EMF) from transformer
stations and transmission lines. Ensure compliance
grounding live power distribution lines and for
working at height is in place and complies with
with National legislation concerning EMF.
There are studies regarding DEER’s distribution
national regulations.
Visual Impacts
infrastructure
(grids
and
power
plants)
electromagnetic fields
indicating complies with
the National legislation concerning EMF. DEER is
analysing options for including new project EMF
Assess the potential visual impacts of the new
measurements in the commissioning procedure and
lines and develop mitigation measures e.g. moving
for independent future studies.
the lines underground, altering the proposed line
alignment, taking into account local communities’
Land Acquisition Framework
sensitivities to their construction (through the SEP)
according to national legislation provisions.
During the designing phase, DEER adopts technical
If there is a need to acquire some land within
the CAPEX Plan, develop a Land Acquisition
solutions considering the visual impact of its future
Framework (LAF), presenting Electrica’s policy of fair
installations (replacing overhead power lines with
compensation and the acquisition process in line
subterrane power
lines) according to national
legislation provisions.
with national legislation and PR5. Ensure the CAPEX
Plan installations follow this Framework.
No new land acquisition was required for electrical
Emergency Preparedness and Response
distribution infrastructures included in CAPEX Plan,
yet.
Survey all offices and substations for their fire
extinguishers and emergency plans, ensuring that
Bird death monitoring
all are up to date, according to the legislation in force.
For all premises owned by DEER, there are Fire
Develop and implement a bird mortality monitoring
Safety Plans defined. Prevention measures were
system according to the relevant EU legislation that
implemented, consisting in control of compliance
with
legal
requirements by own authorized
provides yearly estimations of bird deaths.
DEER developed a bird mortality monitoring
personnel; periodic training for all categories of
instruction that is in the process of approval, based
staff, according to the approved training programs;
on SCADA systems alerts and local ground search
performing intervention and evacuation exercises
surveys with carcass detection.
124 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Avoiding and mitigating against bird
deaths
Stakeholder Engagement for the 2021-
2023 CAPEX Plan
Continue to install new lines with electrical insulating
Develop a CAPEX Plan-specific
stakeholder
sheaths in areas of significant bird activity defined by
engagement plan (for the overall CAPEX program) to
relevant NGOs and environmental authorities. DEER
ensure that all the necessary engagement activities
to continue to install special brackets (nests) on the
will be undertaken during the implementation of
pillars of the low and medium-voltage overhead
lines. Conduct biodiversity sensitivity mapping.
the upcoming works being financed by EBRD.
DEER has a Stakeholders Engagement Plan and
Where necessary, implement bird markers and
the section regarding the CAPEX program will be
reduce the risk of electrification of birds with the
published on the DEER website.
appropriate design of electric insulators. Ensure any
new lines or modernized lines include bird-friendly
designs.
During the designing phase DEER adopts technical
Integrate the public grievance processes
into one mechanism
solutions for biodiversity protection and considers
Develop and implement an IT system for logging,
replacing overhead power lines with subterrane
tracking, and solving grievances and revise the
power
lines,
replacing uninsulated conductors
response time according to regulations in force
with insulated conductors, mounting electrically
(ANRE). Complaints lodged with DEER directly to be
insulated sheaths for its new/modernise power lines.
A document regarding technical guidelines that
acknowledged and solved according to regulations
in force (ANRE) (15 days to 30 days to respond
will insure a unitary approach for designing power
lines is to be elaborated at the DEER level including
depending on the nature of the complaint).
The grievance mechanism is published on the DEER
standard protection measures for birds.
website and is in line with regulation in force. Records
Chance Find Procedure
of complaints are maintained and presented to the
regulator (ANRE) by request or during inspections.
Set up a Chance Find Protocol to effectively
Community H&S Guide
identify and manage any culturally significant
findings encountered unexpectedly during project
Develop a community guide for H&S around power
implementation. Such provisions shall
include
lines and distribution. This guide should include
an internal communication chain, notification of
other information for communities served by DEER,
relevant competent bodies of found objects or
including details of DEER emergency procedure for
sites, alerting project personnel to the possibility of
safe re-erection of fallen telegraph poles; details of
chance finds being discovered, and fencing off the
stakeholder engagement activities and the grievance
area of finds to avoid any further disturbance and
mechanism;
information on H&S concerning
destruction, where needed. This Protocol will be in
substations and transformers, and underground
line with the methodological norm for application of
cables; information on electromagnetic fields and
Law #50 dated 1991 regarding the authorisation of
health impacts; and information on risk related to
construction works.
Chance Finds Protocol has included all contracts/
electricity theft. In addition, consider other options
to
implement community awareness programs
agreements provisions as a distinct chapter/clause.
The contract/agreement section will be published on
the DEER website by the end of the first quarter of
2022.
Update Stakeholder Engagement Policy
(SEP)
regarding energy use and electricity safety (through
“Energy Saving”
the European Commission
(“Economie la energie”) programme for instance).
The community guide
included
in DEER
is
Communication Strategy and Plan and is intended
to be launched by the end of the first quarter of 2022.
Ensure disclosure and reporting in line with the EU
Non-Financial Disclosure Directive with relevant
Update the engagement methods used in the SEP
information on climate impacts in line with the
to align with what is currently being carried out and
EU guidance line July 20198. From 2022 include
update the whistleblowing and grievance section.
Considering the unbundling context, DEER is working
to finalise its own Stakeholder Engagement Policy
information on EU Green and Social Taxonomy in
annual ESG/Sustainability reporting.
Electrica Group yearly publishes its Sustainability
with all its relevant departments. The policy will be
Report in line with the EU Non-Financial Disclosure
published on the DEER website after obtaining all
Directive and will include information on EU Green
corporate approvals needed.
and Social Taxonomy starting with 2022.
8 https://ec.europa.eu/finance/docs/policy/190618-climate-related-information-reporting-guidelines_en.pdf
125 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 4.11. Internal audit activity report for 2021
The Internal Audit Department is responsible for conducting risk-based audit missions at 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 2021 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 2021, 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
human resources activity, fixed assets, occupational safety, and health & integrated system management, 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 2021, the internal audit department team consisted of four internal auditors, out of which one has a
management role and another 2 people with part-time work.
Among the most important audit missions carried out in 2021 are:
1.
Evaluation and audit of the activity of the human resource at ELSA and SERV. Two audit reports were prepared,
containing 18 findings regarding the activity of the human resource, of which 4 with high impact;
2.
Evaluation and audit of fixed assets management areas carried out at ELSA and SERV. Two audit reports were
prepared to contain 10 findings, of which 2 with high impact;
3.
Evaluation and audit of the activity regarding the physical security and integrated system management at
ELSA. An audit report was prepared to contain 3 findings, of which 0 with high impact;
4.
Three “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;
5.
Based on the procedure for analysing integrity warnings, 51 warnings were received through the “whistle-
blower” system. Out of the total number of warnings received during the year 2021, ELSA Internal Audit
Department analysed 7 warnings received in 2021, and the other 7 warnings received at the end of 2020.
The audit reports are submitted to and agreed upon 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 to 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.
126 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
5. Operating activity
of Electrica in 2021
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 (include DEER and activity performed by SERV
within distribution segment)
Electricity generation
Production of electricity from renewable sources (photovoltaic panels)
External electricity network services
Repairs, maintenance, and other services for electricity networks owned by
other distributors (includes Electrica SERV SA activity without the one menti-
oned above for the distribution segment)
Headquarters
Source: Electrica
Includes corporate services at the 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 2021
Network area of
Transilvania North
1.32 mn users
Network area of
Muntenia North
1.32 mn users
Network area of
Transilvania South
1.18 mn users
Electrica Furnizare
(EF)
3.5 mn consumption
places
Source: Electrica
Note: The figure refers to the company’s number of consumption places/users on 31 December 2021
128 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT DISTRIBUTION SEGMENT
on the principle of remunerating in tariffs the
justifiable costs recorded by the distribution system
Electrica Group’s distribution segment, starting with
operator, the main source of profit of the distribution
1 January 2021 refers to the activity of DEER (with
company is the rate of return of capital invested in
the following network areas: Transylvania North,
the distribution activity.
Transylvania South and Muntenia North) and SERV.
The tariffs are adjusted annually, taking
into
The electricity distribution segment is a regulated
account the operational performance achieved, the
area of activity, in which operations are conducted in
quantities of electricity distributed, the quantities
a geographically limited area in accordance with the
and the purchase price of electricity needed to cover
concession agreement, the nature of the services
network losses (NL), controllable and noncontrollable
provided, and the specific obligations are stipulated
costs, the change in reactive energy revenues from
in the license conditions of the concessionaire
forecasted values, the depreciation and carrying out
operator. Thus, the electricity distribution subsidiary
expected capitalizable expenses, the changes in
of Electrica Group is the energy distribution operator
actual gross profit from other activities compared
in Transylvania North
(Cluj, Maramures, Satu
to the forecasted one, as well as the corrections
Mare, Salaj, Bihor and Bistrita-Nasaud counties),
in previous periods, carried out according to the
Transylvania South (Brasov, Alba, Sibiu, Mures,
methodology.
Harghita and Covasna counties) and Muntenia
North (Prahova, Buzau, Dambovita, Braila, Galati and
As of 31 December 2021, the Group is in an estimated
Vrancea counties), operating electrical installation
with voltages between 0.4 kV and 110 kV.
under-recovery position of approximately (RON 273
mn (representing corrections related to the year
2021)), which will be recovered from the distribution
DEER holds the exclusive electricity distribution
tariffs of the following years.
license in these regions of network areas valid for
the next seven years with an extension clause for
The current regulatory period (the fourth regulatory
another 25 years. Within its service for distribution
period – RP4) began on 1 January 2019 and will
activity, SERV provides maintenance, repair, and
end on 31 December 2023. the rules on RAB and
various services to group companies (car rental,
distribution tariffs determination are expected to
rental of buildings, etc.) as well as repairs and other
remain unchanged until the end of 2023. ANRE sets
related services to third parties.
the annual level of distribution tariffs in RON per
MWh for each distribution company, respectively
The specific distribution tariffs are determined
on each network area in case of a merged DSO and
and approved by ANRE based on the “tariff basket
for each voltage level (high, medium, and low). The
cap” method as set out in ANRE Order no. 169/18
invoiced tariffs are summed up according to the
September 2018 regarding the approval of the tariff
related voltage level (e.g., the medium voltage tariff
setting methodology for the electricity distribution
includes the high voltage tariff, and the low voltage
service (applicable in the fourth regulatory period
tariff includes the high voltage and medium voltage
2019 - 2023), with subsequent amendments, and
tariff).
respectively GEO no. 1/15 January 2020 and ANRE
Order no. 75/6 May 2020 regarding the establishment
ANRE determines the regulated annual income
of RRR applied to the approval of tariffs for the
required for each year of the regulatory period based
electricity distribution service.
on projections submitted by distribution operators
in accordance with the methodology requirements,
The regulatory method “tariff basket cap” aims to
at the beginning of the regulatory period.
avoid significant fluctuations in the tariffs applied
to the users for electricity distribution. The model
The electricity distribution tariffs approved by ANRE
for determining the regulated income is based
for 2022 are as follows (RON/MWh):
Tariff (RON/MWh)
ANRE
Order no.
MN
TN
TS
Source: ANRE
119/25 November 2021
Applicable starting with 1 January 2022
High
Voltage
21.02
21.79
22.34
Medium
Voltage
43.54
48.13
45.49
Low
Voltage
140.68
122.78
127.04
129 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT SUPPLY SEGMENT
BRP Electrica - Balance Responsible
Party
Electrica Group operates on the electricity supply
segment through its subsidiary, EFSA, both on the
The activity of representation in the Balancing
regulated electricity market (as SoLR in the territorial
Market as the Balance Responsible Party (BRP) took
areas where the Group’s distribution subsidiaries
place within EFSA.
operate), and on the competitive market, at a national
level. EFSA holds an electricity supply license that
Starting with 1 April 2018, the client portfolio is
covers the entire Romanian territory, valid until 2021,
diversified, consisting of producers (hydro, thermal,
with the possibility of extension. Additionally, holds
wind, photovoltaic, biogas, biomass), suppliers,
a license for supplying natural gas, valid until 2022.
and distribution operators, ensuring the balancing
service of over 24% of total electricity consumption
The electricity market is split between the regulated
from Romania.
market (through suppliers of last resort) and the
competitive market. On both markets, electricity can
The distribution companies within Electrica Group
be sold/purchased wholesale or retail.
have delegated their responsibility to BRP EFSA.
Last resort suppliers market
Currently, EFSA is a supplier of last resort for
1.9mn
approximately
customers with
2mn
consumption places.
Competitive market
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
In 2021, the trading on the wholesale competitive
situation where the producer/supplier/distributor
market is transparent, public, centralized, and non-
would be itself a Balance Responsible Party.
discriminatory and takes place on OPCOM platforms;
prices can be freely negotiated by the parties on
ENERGY SERVICES SEGMENT
the competitive retail market. The participants on
the wholesale market can trade electricity based
The Group’s portfolio also includes the energy
on bilateral contracts concluded on the markets
services segment (equipment maintenance, repairs,
managed by OPCOM or on the spot markets also
and other additional services related to the network),
managed by OPCOM.
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.
130 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 5.2. Fixed assets
The number of users and volume of installations as of 31 December 2021 at the level of the three distribution regions
(North Transylvania area - TN area, South Transylvania area - TS area, and North Muntenia area - MN area) and total
DEER (Romania Electrical Energy Distribution) are quantified as follows:
Geographical coverage
The 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)
low voltage (LV)
out of which connections
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
in power stations
(HV/MV + MV/MV), out of which:
in HV/MV power stations
in MV/MV power stations
Switching stations/
Transformer stations
No. of substations, out of
which:
HV/MT power stations
MT/MT power stations
Number of switching stations
and transformer stations
Source: Electrica
UM
km²
no.
no.
no.
no.
km
km
km
km
km
km
km
km
km
km
MVA
MVA
MVA
MVA
MVA
pcs
pcs
pcs
pcs
TN
MN
TS
34,162
28,962
1,325,828
1,324,324
34
4,363
40
4,387
34,072
1,177,039
46
2,984
Total
97,196
3,827,191
120
11,734
1,321,431
1,319,897
1,174,009
3,815,337
53,146
59,548
45,850
158,544
2,196
11,906
39,044
18,280
17,505
30
4,234
13,241
7,772
6,269
3,760
3,712
48
2,509
121
92
29
2,146
12,647
44,754
24,340
12,297
17
3,537
8,743
2,329
8,810
5,770
5,421
349
3,040
213
125
88
3,149
10,502
32,200
17,455
12,736
63
3,636
9,037
2,921
6,819
4,143
4,075
69
2,676
105
101
4
7,491
35,055
115,999
60,075
42,538
110
11,407
31,021
13,023
21,898
13,673
13,208
466
8,226
439
318
121
9,280
10,710
9,548
29,538
Most of the distribution installations currently in the patrimony of the electricity distribution company (detailed
by geographical areas) within Electrica Group, about 80% 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 - 2000,
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 - 2000 (approximately 10%) gradually exceed the normal operating time.
131 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT A relatively small category, representing about 20% of the total installations, is represented by the new installations,
put into operation after 2000 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)
Medium voltage power lines
Low voltage power lines
Underground power lines
Overhead power lines
Underground power lines
Overhead power lines
Underground power lines
Overhead power lines
Substations
Transformers
Source: Electrica
Investments
Pole - mounted
Concrete enclosure
Pad - mounted
Underground
Concrete base
TN
25%
74%
48%
57%
52%
57%
69%
44%
50%
69%
15%
10%
MN
45%
64%
63%
58%
69%
63%
73%
48%
65%
75%
95%
8%
TS
50%
75%
65%
60%
75%
68%
60%
50%
75%
20%
85%
12%
The investments at the Electrica Group level have been prioritized considering especially the distribution company’s
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 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 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,
considering both the legal requirements regarding data protection and the positive effect on the quality of the
services provided.
132 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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
500
160
170
160
490
160
160
165
485
855
890
875
2.620
In 2021, Electrica Group companies realized the following investments, compared to the planned values:
Electrica Group subsidiary (RON mn)
Planned 2021
Achieved 2021
DEER, TN area
DEER, TS area
DEER, MN area
EFSA
SERV
SEM
ELSA
Total
Source: Electrica
214.7
222
202.2
51.2
11.6
-
10.7
712.4
182.1
158.2
160.0
9.4
1.5
-
4.5
515.9
At Electrica Group level, in 2021, the consolidated CAPEX plan was achieved at a rate of 72.4% compared to the plan
approved by the Board of Directors of ELSA in February 2021, and for the distribution subsidiary DEER, the average
degree of achievement is 96.9% compared to the approved plan.
The synthetic structure of investments achieved (CAPEX) by the distribution subsidiary in 2021 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, out of which:
Continuity of supply
Energy quality
Legal obligations (network extention/reinforcement,
new connection)
Other categories, out of which:
Endowment, Independent equipment (including vehicles & IT)
Studies and projects for the coming years
Total*
Sursa: Electrica
* Does not include additional CAPEX for connection
Total
195
132
63
212
89
69
53
77
65
12
484
The main investments of the Electrica Group were focused in 2021 on improving the quality of the distribution
service, as well as on increasing the energy and operational efficiency.
133 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Figure 22: The structure of CAPEX achievements for distribution operator within the Group, in 2021 (RON mn)
Studies and projects
for the coming years
12 mil.
3%
Endowment,
independent
equipment (incl.
vehicles & IT)
65 mil.
14%
Legal obligations
(network ext./
reinforcement, new
connections)
53 mil.
11%
Energy quality
69 mil.
14%
Energy efficiency/NL
132 mil.
27%
Operational efficiency
63 mil.
13%
Source: Electrica
* Does not include additional CAPEX for connection
Continuity of supply
89 mil.
18%
The approved plan of investments to be commissioned for 2021 was in the total amount of RON 662.5 mn (RON
558.6 mn without connections), this value also includes investments carried forward, for the year 2020 (RON 9.4
mn).
From the investment plan for 2021 the distribution company of Electrica group – DEER, carried out and commissioned
investments of RON 533.3 mn, and from the RON 9.4 mn of deferred investments related to 2020, carried out and
commissioned RON 8.2 mn.
Thus, the total value of the investments carried out and commissioned in 2021 is RON 541.1 mn, representing an
average percentage of 82% compared to the total planned value of RON 662.5 mn.
DEER (RON mn)
Total 2021 plan
Total achieved 2021
Total percentage of
achievement %
MN area
TS area
TN area
Total DEER
Source: Electrica
212.0
227.6
222.9
662.6
171.0
183.1
187.3
541.1
81%
80%
84%
82%
134 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT As a result of investments made during 2014-2021, 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)
20147
2015
1.331
1.333
1.486
1.420
1.377
1.543
2016
1.519
1.388
1.581
2017
1.624
1.475
1.679
2018
20198
20209
202110
1.728
1.856
1.521
1.769
1.691
1.913
1.952
1.778
2.022
1.847
2.035
2.098
Total
4.150
4.340
4.488
4.779
5.019
5.460
5.764
5.967
SDTN
SDTS
SDMN
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 22.9% in 2020 (2019: 24.2%), while the contribution of the supply
segment was 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.
Figure 23: Market share of distribution segment in 2020
12.51%
14.02%
13.10%
60.37%
DEER TN
DEER TS
DEER MN
Others
Source: ANRE Report for performance indicators’ monitoring 2020
7 In 2018, ANRE communicated the final value of the investments recognised for 2014, due to this reason starting with 2014 the RAB
values have been modified.
8 The values estimated as of 31 December 2019 may suffer corrections/changes, following ANRE’s analysis process.
9 The values estimated as of 31 December 2020 may suffer corrections/changes following ANRE’s analysis process.
135 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Regarding the supply segment, although it holds a strong position in the electricity supply market, EFSA is facing
growing competition in its market.
The figures below show Electrica market shares for the supply activity as of 30 November 2021 (based on the
quantities supplied):
Figure 24: Last Resort suppliers market, 2021
Figure 25: Competitive Market, 2021s
E.ON Energie Romania
14.84%
TINMAR
11.78%
CEZ Vanzare
12.69%
E.ON Energie Romania
7.80%
Getica 95 ROM
8.13%
ENEL
18.03%
ENEL
30.02%
CEZ Vanzare
7.04%
Tinmar Energy
8.15%
Engie Romania
4.07%
Electrica Furnizare
12.58%
Electrica Furnizare
30.67%
Others
34.20%
Source: ANRE monthly report (November 2021)
Source: ANRE monthly report, November 2021
Note: ʺOthersʺ category includes suppliers whose individual market shares are below 4%
Figure 26: Volume of electricity supplied on the retail
Figure 27: Evolution in the number of customers
market (TWh)
(thousand)
Competitive market
Regulated market
Competitive market
Regulated market
10.6
5.4
9.2
4.2
8.5
3.7
9.2
4.4
9.3
4.2
5.2
5.1
4.9
4.9
5.1
9.4
5.6
3.8
3,601
131
3,577
215
3,541
253
3,553
269
3,583
314
3,470
3,362
3,288
3,284
3,269
3,510
1,556
1,953
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
Source: Electrica
Source: Electrica
Figure 28: Customers by electricity supplied volume,
Figure 29: Customers by revenues, 2021
2021
Households -
Universal Service
35.57%
Households -
Universal Service
39.21%
Non-Household -
Competitive Market
41.63%
Non-Households -
Competitive Market
36.15%
Non-Households -
Universal Service
4.71%
Household -
Competitive Market
18.10%
Non-Households -
Universal Service
6.20%
Households -
Competitive Market
18.44%
Source: Electrica
Source: Electrica
136 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Major customers exposure
EFSA does not have a significant exposure/concentration to a particular customer or group of customers that
could have a major influence on its business. The leader position provides an inherent advantage to have a very
large portfolio of customers and to obtain the dispersion of risk, and as such, there is no risk concentration. This
advantage has been confirmed during the pandemic period, proving that the economic sectors impacted by
the pandemic, despite they generating significant exposures, cannot represent systemic dangers to the entire
company’s portfolio.
However, certain consumers, such as hospitals, ambulance stations, schools, kindergarten and nurseries, air
and maritime traffic services are considered to have special importance and they cannot be disconnected by
the electricity suppliers. Customers who fall under the insolvency law can benefit from its protection against its
creditors, and therefore possibly also from electricity suppliers for the electricity supply contracts in force at the
date of initiation of insolvency procedures.
BRP Electrica - Balance Responsible Party
The representation activity as Balance Responsible Party (“BPR”) on the Balancing Market was performed within
EFSA.
In 2021, all market participants (approx. 920) were established as Balance Responsible Parties at Transelectrica
S.A., out of which 68 participants assumed the responsibility of balancing in their own name as well as for other
licensees.
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 from Electrica Group, respectively respective SDEE Muntenia Nord SA, SDEE
Transilvania Sud SA, and SDEE Transilvania Nord SA, which gave delegated the responsibility to BRP EFSA, have
merged starting with 1st of January 2021, under the name of Distributie Energie Electrica Romania SA.
At the end of 2021, about 96 licensed participants have delegated their responsibility to EFSA, out of which:
8 suppliers, representing 8.33% out of total BRP;
6 distribution operators, representing 4.17% out of total BRP, and
84 producers, representing 87.5% out of total BRP;
compared to the end of 2020, when about 98 licensed participants were registered.
In 2021, the average number of customers was about 97, equal to the average of 2020, and an average number of
over 300 bilateral contracts, respectively exchanges with OPCOM, were notified. Starting with February 2021, the
settlement in EM is performed at an interval of 15 minutes using the methodology of unique price in accordance
with the ANRE Order no. 213/2020. These intervals with unique prices do not allow compensations, and those with
dual prices are reduced.
In the period February – December 2021, out of 32,064 intervals, a dual price was applied to 3,739 intervals (11.66%),
resulting in a compensation degree between positive and negative imbalances of approximately 47%.
In 2021, as a result of internal compensations of imbalances, within BRP EFSA, it resulted in an improvement of
surplus and deficit prices by 41.67 RON/Mwh compared to the imbalance prices calculated by OTS/OPCOM.
The year 2021
OPCOM Average surplus price
PRE EFSA Average surplus price
426.17
467.67
OPCOM Average deficit price
PRE EFSA Average deficit price
622.87
581.20
137 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Electrica Furnizare SA, through BRP service, has been acting on the Intraday market starting with February 2021 in
order to buy/sell electricity quantity not transacted on DAM (Day-Ahead Market).
For the period February – December 2021, the results for the trades in IM (Intraday Market) are the followings:
-
-
Buy – quantity of 56,468.07 MWh at an average price of 651.50 RON/MWh;
Sell - quantity of 51,924.38 MWh at an average price of 562.20 RON/MWh.
Out of total traded of 107,523.52 MWh (at an average price of 585.17 RON/MWh) on Buy in IM-OPCOM, EFSA traded a
quantity of 56.468,07 MWh, representing approx. 53%, and out of the total traded of 115,262.22 MWh (at an average
price of 481.22 RON/MWh) on Sell in IM-OPCOM, EFSA traded a quantity of 51.924,38 MW, representing approx. 45%.
In accordance with EU Regulation 943/2019 REGULATION (EU) 2019/943 OF THE EUROPEAN PARLIAMENT AND
OF THE COUNCIL of 5 June 2019 on the internal electricity market, ANRE approved many orders detailed in the
sub-chapter 1.2.
5.5. Personnel
On 31 December 2021, Electrica Group had 8,013 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 - DEER
DEER - MN
DEER - TN
DEER - TS
Services segment - SERV
Supply segment – EFSA
Services related to other distribution networks – SEM
(included in SERV starting December 2020)
Headquarters – ELSA
Total
2021*
6,454
2,156
2,259
2,039
612
838
0
109
8,013
2020*
7,213
2,184
2,248
2,087
694
793
0
120
8,126
2019
6,972
2,191
2,233
2,085
463
896
296
128
8,292
Source: Electrica
*According to the modified reporting methodology to INS, the employees number from 31 December 2021 also includes 23 persons who worked based on a
mandate agreement.
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 2021, approximately 52% of the Group’s employees represent directly productive staff, and 48%
represent indirectly productive staff, including technical, economic, social, and administrative personnel.
138 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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
Source: Electrica
31 December 2021
31 December 2010
0.00%
4.76%
16.06%
34.96%
41.44%
2.85%
100%
0.01%
4.60%
16.32%
36.99%
39.26%
2.82%
100%
As of 31 December 2021, about 98.5% of the
The Group is involved in the life of the communities
Group’s employees are union members and their
in which it operates, supporting children of families
employment conditions are governed by the
with modest material possibilities to remain in the
Collective Labor Agreement, which will expire on 3
education system, and at the same time, forming
April 2022 for ELSA and has expired on 31 December
a solid base of young electricians who will be able
2021 for the Group’s subsidiaries. According to
in the future to join the distribution company,
the legislative provisions, the negotiations for the
elaboration of a new CLA for DEER, FISE, and EFSA
depending on the workforce need.
have started; as well, the negotiations were extended
Both ELSA and its subsidiaries prepared and updated
in 2022.
policies, procedures, and internal regulations that
Electrica Group did not face union action in 2021.
contain provisions regarding employment, non-
discrimination, occupational health and safety,
In the same context of transformations, in 2021,
employer and employees’ rights and obligations, the
Group’s subsidiaries did not run a voluntary leave
procedure for solving the employees’ complaints, the
program with compensatory payments, these
labor discipline, disciplinary sanctions and deviations,
continuing the processes of identifying the personnel
rules regarding the disciplinary procedure, criteria
with expertise in order to ensure the performance
and procedures for the professional evaluation of
and efficiency of the activities at the level required
employees, succession and final provisions.
by the regulatory authorities and the energy market.
Achieving the best possible correlation between
the future needs of the organization and the
In alignment with the Group strategic objectives,
competencies, experience, and career aspirations of
one of the objectives that resulted from the Human
its members, led to the definition of the guidelines
Resources Strategy, is „Education and training to
of the succession in the company concept.
ensure the need for quality human resources”.
Thus, it was considered of major importance the
Also,
the
improvement
and
continuous
organization and operation of a formalized internal
development of the performance management
model, at the level of the Group, of professional
system contributes to the achievement of Electrica
and extra-professional training. One of the projects
related to the strategy was the creation of a team
of internal trainers for the companies within the
Electrica Group. The „Training of Trainers” courses
lasted 180 hours.
Group’s key objectives, set for the 2019-2023 period
(Improving operational performance to continuously
increase the quality of customer service, Increasing
performance, and strengthening the sustainability of
economic results). By adopting the human resources
strategy, the Group aims to ensure the qualified
One of the strategic objectives is the education and
resources necessary to support the initiatives for
training to ensure the necessary quality human
the next period, in the conditions of an accentuated
resources, with the expected result of creating a
dynamics of the labor market.
professional internal training system, that addresses
the main skills needed by the employees, to
Another desideratum, established by the strategic
enhance and maintain organizational and support
the performance. Throughout 2021, it continued
objective regarding modernization, is the increase of
the employees’ trust in the employer and the creation
the training program in the dual education system,
of a suitable working environment for collaboration
within the distribution branch, targeting classes in
and obtaining the envisaged performances. Thus,
high schools with an energy profile.
in order to improve the interactions of the Electrica
Group employees with the human resources
139 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT departments, to increase employee retention, and to
The training programs carried out at the Electrica
improve the perception of the organizational culture.
Group level took into account both the constant
Also, in order to improve the employer’s image and
evolution and the
improvement of the Group
the continuation of the pandemic context during
employees’ skills.
2021, the „work from home” system continued
The company’s management supports the principle
within the Electrica Group, following the authorities’
of development
through continuous
training
recommendations in the state of prolonging the
by involving employees in these programs, thus
alert context and complying with the internally
supporting
them
to effectively address their
defined processes, regarding workplace safety and
professional challenges.
human resources activity management.
The organizational culture modernization, having
HEALTH AND SAFETY AT WORK
as central elements „excellence” and „safety”, is one
The
Integrated
Quality-Environment-OSH
of the strategic objectives, and one of the projects
Management System, implemented, certified, and
in this area is represented by the program „Change
supervised at the level of each company within the
agents” in the distribution regions, with the role of
Electrica Group by the SRAC Cert certification body,
supporting organizational change that occurred
ensures the companies’ compliance with the legal
following the merger of the distribution companies.
requirements for occupational safety and health and
This program aims to promote openness to new
those of the SR ISO reference standard 45001: 2018,
challenges and to encourage employees to propose
solutions to solve the problems they face at work.
and enhances the providing of professional services
and safely conducting the business processes
Change agents are employees who not only accept
for the organization and contractor staff, but also
the change but seek solutions and support its
customers.
implementation.
Another objective of major interest is performance
management, as a coherent system that evaluates
as objectively as possible the activity of the
The work accidents situation and
specific indicators at the Electrica Group
level
employees, in close correlation with the system of
In 2021 there were no fatal work accidents at the
compensations and benefits and the professional
Electrica Group level.
development one.
The total number of work accidents at the group level
decreased by 20% compared with the previous year,
Thus, the Group’s Key Performance
Indicators
with 4 work accidents being recorded compared to
Catalogue was elaborated, as a tool that ensures the
5 accidents recorded in 2020.
objective and professional evaluation of Electrica’s
The complex of complementary causes and
strategic objectives achievement on each main area
favourable factors that determined the occurrence
of activity. Additionally, a framework methodology
of each of these accidents was analysed by legally
for the application of the KPIs Catalogue and
constituted commissions at the company level and
performance management according
to best
the investigation files include prevention measures
practices has been developed, which is to be adapted
that need to be implemented by the company. Two of
to each company. The project also included a series
the work accidents registered at the group level were
of applied workshops, training sessions on setting
and evaluating performance indicators, as well as
generated by the mechanical risk that materialised
during traffic accidents, one was caused by physical
other discussions aimed at transferring knowledge
aggression of a third party and another by stumbling
for methodological alignment at all hierarchical
and falling from the same level.
levels and expressing expectations to strengthen
An OSH event produced because of preexistent
internal teams.
health condition of the staff, without being
classified as a work accident according to the
Additionally, it was continued the methodological
DEER communication, took place in August 2021
and conceptual framework for the application
and resulted in the death of a DEER employee.
of international best practices was developed in
The investigation of the event is carried out by the
order to increase the maturity of the performance
management system within Electrica, which
competent authorities (ITM Galați) and depending
on the results of the research, the event could be
considers the continuous
improvement of the
reclassified as a work accident.
employee evaluation process and the development
of the necessary tools to build a solid performance-
based system.
140 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The frequency index (FI), expressed as the number of injured people returning to 1000 employees is for 2021 at
Electrica Group level 0.63 ‰, increasing compared to 2020 based on the sensible decrease of headcount in 2020 at
the Group level.
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2.12
1.06
0.72
2018
2.53
0.95
0.5
2019
1.84
0.66
0.4
2020
1.93
0.75
0.63
2021
Electrica Group
National
Industry
IF is a statistical indicator recommended by the International Labor Organization (ILO) through The Resolution on
Accidents at Work adopted in October 1998, as it correlates the number of accidents with the number of workers,
increasing the comparability of HSW organizations’ performance and eliminating distortions generated by the size
of these organizations (the number of staff in each organization).
Starting with 2018 and continued in the following years, the FI for the Electrica Group was constantly below the
national value of the indicator and well below the level registered for the industry in which it operates.
Aspects regarding the employees’ health
No occupational diseases were registered at the Electrica Group level, neither in the reference year nor in the
previous years.
Prevention, monitoring, and health security at the workplace were performed by doctors specialized in occupational
medicine based on dedicated service agreements and was watched by ELSA, for portfolio companies, through half-
yearly reports.
Actions to improve safety and health of employees at work place
A sustained effort by the HSW teams of each group’ company, coordinated by ELSA’s IMS&HSW Department was
needed throughout 2021 for ensuring the prevention and monitoring of SARS-CoV-2 infections in the context of the
COVID-19 pandemic, the main actions defined and managed by HSW professionals consisted in:
defining and constantly reviewing the regulatory framework necessary to prevent the new coronavirus
spread 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 the interest of service, 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, teleworking system,
etc.);
ensuring the equipment and services necessary for the personnel protection (hygienic-sanitary materials
and services, medical devices, markings and signals, testing services and kits, etc.).
In 2021 the total number of HSW training hours performed increased by 1%, reaching 315,295 hours from
312,100 HSW-ES training hours in 2020.
141 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Given the context of the COVID-19 pandemic, to avoid possible transmission of the virus from one area to another
because of differentiated developments at the regional level, for 2021 the HSW dropped the cross-control concept,
regardless of its proven effectiveness. The aforementioned causes have limited the total number of HSW inspections
to 2,085 performed at Electrica Group level by its staff, in order to identify deficiencies that could generate health
and safety risks for employees, these inspections being followed by the immediate treatment of irregularities found.
Although during the reference period there were numerous inspections performed by the Territorial Labor
Inspectorates and Inspectorates for Emergency Situations, some of them concerning the implementation and
compliance degree with the new legal regulations intended to limit the COVID-19 spread, in 2021 no sanctions were
imposed for any of the Group companies.
The year 2021 meant the alignment of safety and health activities and practices at work place between regions for
the distribution area, following the merger of the three operators, by unitary review and adoption of more than 100
HSW instructions, since the high-level alignment of the processes and subprocesses in the previous years.
During the year, all companies from Electrica Group have performed external audits carried out by the certification
body, either for the supervision or for the certification of the Integrated Quality - Environmental - OSH Management
System implemented in accordance with the new standard ISO 45001:2018, all companies obtained or maintained
their certification.
5.6. Environmental considerations
In 2021, Electrica Group invested in the field of environmental protection over RON 14.899 mn11, the value recording
an increase of almost 4% compared to the 2020 level of RON 14.36 mn.
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 30: PCB capacitors in operation at the end of 2021
1,756
1,876
1,179
1,215
2021
2020
Total
MN area
TS area
TN area
Source: Electrica
475
475
102
186
11 considering estimated value for December 2021
142 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Subsumed to the concern for reducing or limiting the impact of services and infrastructure on the environment,
at the Group’ distribution operator – DEER – level the program for PCBs (polychlorinated biphenyls) elimination
of from the operating electrical distribution infrastructure was continued in 2021, with results represented in the
left chart. The implementation pace ensures the comfort of finalizing the elimination program within the national
legislated term of 2028, according to GD no. 1497/2008, for the company.
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 authorised operators.
Figura 31: Waste processing
1,649.8
2,356.8
237.0
Source: Electrica
Recycling
Incineration
Final storage
Temporary storage
14,288.5
In this regard, all Group’s companies agreed on 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 2021 a total
amount of 18532,1812 tons of waste, most of them, over 77%, being recycled.
During 2021 there were no incidents with environmental impact, but there was a non-compliance with the
provisions of Law 211/2011 on waste regime caused by exceeding the perimeter of controlled waste storage properly
organized at the regional structure Sibiu in the South Transylvania area of DEER. This was reported to the National
Environmental Guard, which carried out two successive inspections. On the date of the first inspection carried out
on 18 February 2021, the findings indicated that the steps to release the unorganized space from the mixed waste
stored were started and the second inspection carried out on 22 February 2021 concluded that DEER - SR Sibiu
released and sanitized the perimeter notified for uncontrolled storage of mixt waste, proceeding also to waste
disposal or recycling with an authorized economic operator. As a result, no fines were applied by the authorities.
The measures implemented have ensured the fast and complete elimination of the effects of non-compliance.
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 2021, the amount allocated by Electrica Group in this regard
increasing to RON 8,846 mn.
Thus, during 2021, 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 authorisations are required, and the energy services
company within Electrica Group, have the environmental authorisations needed for the operation of more than
85% of the locations and in the case of three locations (15%) for which the authorisation had expired by the end of
2021, the documentation for re-authorization was already submitted, in accordance with the legislation in force.
Following external certification/ supervisory audits carried out by the certification body SRAC Cert, companies
within Electrica Group obtained or maintained in 2021 the certifications for their Integrated Management Systems
Quality – Environment – OHS through which the environmental aspects specific to the performed activities are
managed in a responsible and efficient manner, in accordance with the provisions of the international standard
ISO 14001:2015.
12 considering estimated values for December 2021
143 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 5.7. 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.
Thus, Electrica participated in the European inteGRIDY project „integrated Smart GRID Cross-Functional Solutions
for Optimized Synergetic Energy Distribution, Utilization Storage Technologies”, carried out within the research
and innovation program of the European Union „Horizon 2020”, which was successfully completed in the year 2021.
The inteGRIDy project aimed to integrate cutting-edge technologies, solutions, and mechanisms in a scalable Cross-
Functional Platform connecting energy networks with diverse stakeholders, facilitating the optimal and dynamic
operation of the Distribution Grid (DG), fostering the stability and coordination of distributed energy resources, and
enabling collaborative storage schemes within an increasing share of renewables.
The proposed solutions were tested in 10 demonstration sites across Europe (Lisboa, Xanthi, Ploiesti, Thessaloniki,
Isle of Wight, Terni, San Severino Marche, Barcelona, St-Jean, Nicosia).
Electrica’s participation was achieved through the Ploiești Pilot, where a demand response (DR) solution was
implemented in an EIIS system (Energy Integrated Information System) where building energy management and
control systems operate based on critical peak pricing and intelligent DR programs/algorithms.
By deploying the Ploiesti pilot, four major objectives of the project were achieved:
a)
DR solution based on intelligent algorithms and programs (focused on the residential area);
b)
c)
Smart grid readiness;
Energy management;
d)
For the consumer, educating and increasing awareness about energy consumption and energy behaviour.
Another important endeavor 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.
144 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 6. Electrica
financial reporting
for 2021
6. Electrica financial reporting for 2021
Prezentarea informatiilor financiare consolidate ale Grupului este bazata pe situatiile financiare consolidate
intocmite in conformitate cu Standardele Internationale de Raportare Financiara („IFRS”) adoptate de Uniunea
Europeana („IFRS-EU”). Aceste situatii financiare consolidate sunt prezentate in RON, aceasta fiind si moneda
functionala a tuturor companiilor din cadrul Grupului.
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 2021
31 December 2020
Variation
ASSETS
Non-current assets
Intangible assets related to concession
agreements
5,514.6
5,455.2
Other intangible assets
Property, plant and equipment
Investments in associates
Deferred tax assets
Other non-current assets
Right of use assets
9.0
505.4
25.8
83,5
1.7
20.9
7.2
508.1
-
19.7
1.2
27.1
Total non-current assets
6,160.9
6,018.5
1.1%
25.0%
-0.5%
-
323.9%
41.7%
-22.9%
2.4%
30.6%
49.5%
-61.1%
-100.0%
4.1%
78.6%
1,222.2%
-65.2%
-15.7%
1,344.6
48.6
221.8
-
73.0
5.0
23.8
5.4
1,029.8
32.5
570.9
320.0
70.1
2.8
1.8
15.5
1,722.2
2,043.4
7,883.1
8,061.8
-2.2%
3,464.4
3,464.4
103.0
(75.4)
102.8
408.4
950.2
103.0
(75.4)
116.4
392.3
1.759.5
-
-
-
-11.7%
4.1%
-46.0%
Current assets
Trade receivables
Other receivables
Cash and cash equivalents
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 reserves
Revaluation reserve
Legal reserves
Retained earnings
146 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Total equity attributable to
shareholders of the Company
Total equity attributable to
shareholders of the Company
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
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
31 decembrie 2021
31 decembrie 2020
Variatie 2021/2020
4,953.6
5,760.3
-14.0%
4,953.6
5,760.3
-14.0%
12.1
161.9
149.2
32.7
452.3
808.3
9.4
627.4
891.3
271.3
9.7
101.1
34.9
-
176.1
2,121.3
16.9
177.8
143.9
33.9
400.3
772.7
10.7
165.0
607.2
240.9
5.6
92.3
19.2
9.2
378.6
1,528.8
-28.3%
-8.9%
3.7%
-3.4%
13.0%
4.6%
-12.1%
280.3%
46.8%
12.6%
73.2%
9.5%
81.5%
-
-53.5%
38.8%
Total liabilities
2,929.6
2,301.5
27.3%
Total equity and liabilities
7,883.1
8,061.8
-2.2%
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
Non-current assets
The non-current assets increased with RON 142.4 mn in 2021, or 2.4%, from RON 6,018.5 mn as of 31 December 2020,
to RON 6,160.9 mn at 31 December 2021, this variation is the cumulated effect of:
-
Increase with RON 59.4 mn of network investments made by distribution subsidiaries (most relevant values
of investments and put into function are presented in Annex 2);
-
Increase of financial assets with RON 25.8 mn thanks to new investments in associate entities, which
develop renewable energy production capacities (Crucea Power Park S.R.L., Sunwind Energy S.R.L., New
Trend Energy S.R.L., Foton Power Energy S.R.L.) – see details in Chapter 1.2 Key events of this report.
-
Increase of deferred tax by RON 63.8 mil. in 2021, or 323.9% from RON 19.7 mil as of 31 December 2020, effect
generated in principal by fiscal position for 2021.
Current assets
In 2021, current assets decreased by RON 321,2 mn compared to 2020, or 15.7%, from RON 2,043.3 mn to RON 1,722.2
mn, this evolution being mainly the net effect of
-
Value of collateral deposits of RON 320 mn has decreased because the long term loan from BRD – Group
Societe Generale has been reimbursed;
147 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT -
Value of cash and cash equivalents decreased with RON 349.1 mn due to reduction of short term deposits
and cash at banks, both of them representing the impact of the increase of electricity prices as well as of
investments in associates and the cash pooling structure (liquidities are used in cash pooling system);
-
trade receivables have increased by RON 314.8 mn in 2021, mainly due to the supply segment correlated with
the increase in sales.
Trade receivables
Trade receivables increased by RON 314.8 mn during 2021, or 30.6%, to RON 1,344.6 mn, from RON 1,029.8 mn as of
31 December 2020. This variation is generated by the increase of sales, especially in the supply segment to which
the impact of COVID-19 on the receivables collection is added.
Cash and cash equivalents
Cash and cash equivalents include cash balances, call deposits, and bank accounts.
Their value decreased by RON 349.1 mn in 2021, or 61%, reaching RON 221.8 mn, from RON 571 mn in 2020, due to
the reduction of short term deposits and cash at banks, both of them representing the impact of the increase of
electricity prices as well as of investments in associates and the cash pooling structure (liquidities are used in cash
(RON mn)
31 December 2021
31 December 2020
pooling system).
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 consolidated
statement of cash flows
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
Restricted cash
167.8
53.9
0.1
221.8
(627.4)
(405.6)
179.4
391.5
0.1
571.0
(165.0)
406.0
As of 31 December 2021, the restricted cash balance previously presented as long-term, representing a guarantee
for the loan from BRD, reclassified in the category of current assets has a nil balance, as the loan was repaid in Q4
2021.
Share capital and share premium
The issued share capital in nominal terms consists of 346,443,597 ordinary shares on 31 December 2021 and 2020
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 2021.
Number of shares at 1 January
Shares issued during the year
Number of ordinary shares
2021
2020
346,443,597
346,443,597
-
-
Number of shares at 31 December
346,443,597
346,443,597
Source: Electrica
148 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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
improvements, and buildings
Balance at 31 December
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
Legal reserves
2021
116.4
-
(13.5)
-
102.8
2020
87.7
43.8
(7.2)
(7.9)
116.4
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 2020
Set-up of legal reserves
Balance at 31 December 2020
Set-up of legal reserves
Balance at 31 December 2021
371.8
20.4
392.3
16.1
408.4
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
Non-current liabilities
The non-current liabilities have considerably increased from RON 772.7 mn as of 31 December 2020 to the value of
RON 808.3 mn as of 31 December 2021.
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 increased due to withdraws performed in 2021 (RON 30.0 mn from BRD/2020
loan, RON 40.0 mn from BRD/2021 loan and RON 83 mn from BCR/2020 loan), mainly to finance the investments
in the distribution network on one hand, partially compensated with the decrease of leasing debts following the
reimbursement.
Current liabilities
In 2021, the current liabilities increased by RON 592.5 mn, to RON 2,121.3 mn, from RON 1,528.8 mn at the end of 2020,
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 decreased by RON 202.5 mn, following the reimbursement of
long-term loans, reclassified as such at the end of 2021.
Overdrafts
The overdrafts considerably increased in 2021 by RON 462.4 mn, reaching RON 627.4 mn, from RON 165.0 mn at the
end of 2020, as the Group has adapted its financing methods for working capital, including the implementation of
a cash pooling structure, according to operational activity priorities and emergencies.
Trade payables
As of 31 December 2021, the trade payables increased by approx. RON 284.1 mn, to RON 891.3 mn, from RON 607.2
mn on 31 December 2020, mainly due to an increase of suppliers’ balances following the changes in the electricity
market.
149 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 6.2. Consolidated statement of profit or loss
The following table presents the consolidated statement of profit or loss of Electrica Group for 2021 and 2020
(amounts in RON mn):
Revenue
Other income
2021
7,178.9
195.8
2020
Variation 2021/2020
6,501.1
165.4
Electricity and natural gas purchased
(5,694.7)
(3,905.7)
Construction costs related to concession
arrangements
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
(485.8)
(802.7)
(102.4)
(480.8)
(70.6)
(343.2)
(605.5)
-
2.6
(29.5)
(26.9)
(632.4)
79.5
(552.9)
(676.0)
(774.5)
(104.6)
(490.9)
62.2
(325.1)
451.9
7.5
9.7
(26.7)
(17.1)
442.3
(54.8)
387.5
Basic and diluted earnings per share (RON)
(1.63)
1.14
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
*the value is included in EBIT, is separated only for disclosure purposes
Key financial indicators for 2021 and their y-o-y evolution:
Revenues: RON 7.2 bn, an increase of RON 677.8 mn, or 10.4%;
EBITDA: loss RON 128.0 mn, a RON 1,081.1 mn decrease;s
EBIT: loss RON 605.5 mn, lower by RON 1,064.9 mn;
EBT: loss RON 632.4 mn, a decrease of RON 1,074.7 mn;
Net result: loss of RON 552.9 mn, lower with RON 940.4 mn.
10.4%
18.4%
45.8%
-28.1%
3.6%
-2.1%
-2.1%
-
5.6%
-
-
-73.1%
10.4%
57.3%
-
-
-
-
Revenues and other income
In 2021, Electrica recorded total revenues (including other income) of RON 7,374.6 mn, increasing by RON 708.2
mn or 10.6%, from RON 6,666.5 mn in 2020; the variation is generated mainly by the revenues’ evolution, the other
operating income recording only a slight increase of RON 30.4 mn.
150 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Revenues
Figure 32: Revenue for 2021/Q4 2021 and comparative information (RON mn)
4,2
6,501
557
5,944
1,725
148
1,577
7,179
585
6,594
Revenues (ex-
Green Certificates)
Revenues from
Green Certificates
2,161
127
2,034
Source: Electrica
2020
T4 2020
2021
T4 2021
The revenues increased by RON 677.8 mn, or 10.4%, being the net effect of the following main factors:
increase of RON 757.2 mn on the supply segment;
RON 20 mn decrease of the distribution segment’s revenues;
Increase with RON 137.8 mn of revenues from energy services, mainly due to presence of SERV revenues in
this segment starting with 2021, following the merger of SEM and SERV.
Electricity and natural gas purchased
In 2021, the expense for electricity purchased increased by RON 1,789.0 mn, or 45.8%, to RON 5,694.7 mn, from RON
3,905.7 mn in the comparative period.
This variation is mainly generated by the increase of electricity costs and natural gas needed for the supply activity
and 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)
Electricity purchased to cover network losses
Electricity and natural gas purchased for supply
Transmission and system services related to
supply activities
Green certificates
2021
1.087,1
3.750,0
275,9
581,7
2020
694,0
2.377,2
277,3
557,2
Total electricity and natural gas purchased
5.694,7
3.905,7
VAR %
56,6%
57,8%
-0,5%
4,1%
45,8%
Sursa: Electrica
Construction costs
In 2021, the network construction costs related to concession arrangements decreased by RON 190.2, mn or 28.1%,
to RON 485.8 mn, from RON 676.0 mn recorded in 2020, being correlated with the evolution of the investments
recognizable in RAB realized in 2021, which were at a lower level compared to 2020.
Employee benefits
The expenses for salaries and employee benefits increased by RON 28.2 mn, or 3.6%, reaching RON 802.7 mn in
2021, from RON 774.5 mn in the same period of the previous year.
Repairs, maintenance, and materials
In 2021, the expenses with repairs, maintenance, and materials recorded only a slight decrease of RON 2.2 mn, or
2.1%, reaching RON 102.4 mn from RON 104.6 mn.
151 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Reversal of impairment/(Impairment) for trade and other receivables, net
In 2021, the impairment adjustments for the depreciation of trade receivables had a net negative effect of RON 70.6
mn, reaching the value of RON 132.8 mn, from RON a positive impact of 62.2 mn, in 2020. This evolution is generated
mainly by:
-
impairment adjustments for the depreciation of trade receivables, with a negative impact of approx. RON
18 mn, recognized as a result of the receivables’ recoverability assessment for the supply and distribution
segments;
-
the positive impact of approx. RON 105 mn booked in 2020, following the reversal of the impairment
adjustments for uncollected VAT related to the uncertain receivables from Oltchim for which there is no
correspondent amount in 2021.
Other operating expenses
The other operating expenses increased in 2021 by RON 18.1 mn, or 5.6%, to RON 343.2 mn, from RON 325.1 mn in 2020,
mainly from the unfavourable impact of changes in net provisions, of about RON 16 mn, big impact representing
the provision recognized for the supply subsidiary’ obligations - compensations following the application of
Performance Standard for energy supply according to ANRE Order no. 6/2017, following the complete market
liberalization started at 1 January 2021, to which a slight increase of provisions for the distribution segment is added.
EBITDA and EBITDA margin
Figure 33: EBITDA and EBITDA margin for 2021/Q4 2021 and comparative information (RON mn and %)
15%
953
7%
124
-1.8%
(128)
2020
T4 2020
2021
Source: Electrica
-28%
(603)
T4 2021
Operating profit
The Group EBIT decreased by approx. RON 1,064.9 mn y-o-y, adding to the EBITDA evolution mainly the favorable
impact of the depreciation and amortization, e.g., its decrease of RON 10.1 mn, or 2.1%.
Figure 34: EBIT and EBIT margin for 2021/Q4 2021 and comparative information (RON mn and %)
459
7%
0%
2
2020
Source: Electrica
T4 2020
-8.5%
(606)
2021
-33%
(721)
T4 2021
152 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Net finance cost
The net finance cost at the group level increased by RON 9.8 mn in 2021 compared to 2020, 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 Group has registered a gross loss of RON 632.4 mn in 2021, compared with the gross profit of RON 442.3 mn in
2020, following the factors mentioned above.
Income tax expense
The income tax was revenue of RON 79.5 mn in 2021, generated by the incurred gross loss.
The net result for the year
As a result of the above-described factors, in 2021, the net result is a loss of RON 552.9 mn, representing a decrease
of RON 940.4s mn compared to RON 387.5 mn in 2020.
Figure 35: Net profit and Net profit margin for 2021/Q4 2021 and comparative information (RON mn and %)
6%
388
0%
(9)
2020
T4 2020
-7%
(553)
2021
-29%
(625)
T4 2021
Source: Electrica
Profit net Group
Profit Net margin
153 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT SEGMENT REPORTING - DISTRIBUTION
Key indicators - The distribution segment
Figure 36: Revenues w/o conso adjustments
Figure 37: EBITDA w/o conso adjustments
(RON mn)
(RON mn)
2,741
2,751
2,731
607
624
372
2019
2020
2021
2019
2020
2021
Source: Electrica
Source: Electrica
Figure 38: Net result - w/o consolidated adjustments
Figure 39: Net debt/(cash) (RON mn)
(RON mn)
106
77
2019
2020
(148)
2021
657
781
706
Source: Electrica
Source: Electrica
2019
2020
2021
The following table presents elements from the reporting of the statement of profit or loss of the Group’s
distribution segment, for the period 2021 – 2020:
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
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
2021
1,389.4
1,341.5
2,730.8
(153.0)
(73.5)
(451.9)
372.4
(139.0)
2020
1,486.6
1,264.2
2,750.8
95.1
(65.1)
(465.8)
624.0
77.1
154 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Revenues
In 2021, the revenues from the electricity distribution segment decreased by approx. RON 20.0 mn, or 0.7%, to RON
2,730.8 mn, from RON 2,750.8 mn in 2020, as a result of the following factors:
-
the favorable impact of approx. RON 197.7 mn, from the increase of distribution tariffs, compared to 2020,
and of the quantity of distributed electricity by approx. 5.7%;
-
the negative impact from the evolution of revenues from the construction of assets recognized in accordance
with 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 2021 by RON
195.9 mn, compared to 2020;
-
the negative impact from presenting SERV’s activity in the energy services segment, compared with 2020
when it was presented under distribution segment.
Electricity purchased
In 2021, the cost of the electricity purchased to cover network losses increased by RON 393.1 mn, or 56.7%, to RON
1,087.1 mn, from RON 694.0 mn, the evolution being mainly generated by the increase in the electricity purchase
prices (negative effect of RON 386.3 mn), as well as by the increase in the quantity of electricity needed to cover
network losses (positive impact of RON 6.9 mn).
Employee benefits
The expenses with employee benefits slightly increased by RON 10.2 mn, or 1.7%, to RON 622.5 mn in 2021, from
RON 612.3 mn in 2020.
Other operating expenses
The operating expenses on the distribution segment increased by RON 19.0 mn or 10% to RON 213.9 mn in 2021, from
RON 194.1 mn in 2020, being the cumulated effect of a slight increase of provisions for the distribution segment of
RON 9.6 mn and other operating expenses of RON 9.4 mn.
EBITDA
The increased expenses and especially the favorable variation of the operating expenses were the main elements
that negatively influenced EBITDA with a decrease of RON 251.6 mn or 40.3%.
Net finance cost
The net finance cost recorded an increase in 2021 of approx. RON 8.4 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 2021.
Net profit of the segment
The net profit is supplementarily influenced by the adjustments for the depreciation of tangible and intangible
assets, which generates a decrease of RON 216.1 mn.
155 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT SEGMENT REPORTING – SUPPLY
Key indicators - the supply segment
Figure 40: Revenues – supply segment (RON mn)
Figure 41: EBITDA - supply segment (RON mn)
4,768
518
4.250
5,015
557
4.458
5,772
582
5.190
265
5.3%
139
2.9%
2019
2020
2021
Revenues (w/o green certificates)
Revenues from green certificates
2019
2020
-7.6%
(440)
2021
EBITDA
EBITDA margin
Source: Electrica
Source: Electrica
Figure 42: Net profit – supply segment (RON mn)
Figure 43: Net debt/(cash) – supply segment
(RON mn)
214
4.3%
104
2.2%
242
(183)
(257)
2019
2020
-6.8%
(390)
2021
2019
2020
2021
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 2021 and 2020:
(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
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
2021
5,741.5
30.9
5,772.4
453.6
0.3
(14.2)
(439.7)
(389.7)
2020
4,980.6
34.5
5,015.1
255.9
4.2
(12.8)
265.5
214.2
156 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Revenues
The revenues from the electricity and natural gas supply activity increased in 2021 by approx. RON 757.2 mn, or
15.1%, to RON 5,772.8 mn, from RON 5,015.1 mn in 2020. The variation of the supply segment revenue is mainly driven
by the increase of the retail sale prices by 12.5% and of the volume of electricity supplied on the retail market by 1%.
The green certificate value included in the final consumer invoice, set by ANRE, increased from RON 62.88/MWh in
2020 to RON 63.96/MWh in 2021.
Electricity and natural gas purchased
The cost of electricity and natural gas purchased for the supply segment increased by RON 1,451.4 mn, or 36.8%, to
RON 5,397.7 mn in 2021, from RON 3,946.3 mn recorded in 2020.
The evolution is mainly determined by the increase of the cost of the electricity purchased for supply (including
transmission and system services) both on the free market but also as a last instance supplier, which in 2020 was a
regulated segment, and it was impacted by the recovery (positive corrections) of some of the losses from previous
years, when the ANRE tariffs were under the actual purchase prices, an effect which did not exist in 2021. There
was also a decrease of 5.9% of the purchased quantity of electricity from the market, compared with the previous
period.
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 2021, the cost of GC increased by RON 24.5 mn, or 4.4%, to RON 581.7 mn, from RON 557.2 mn in 2020.
The increase was mainly influenced by:
higher supplied volumes, for which there is an obligation to purchase green certificates, by 3.3% (negative
impact of RON 18.5 mn);
2.0% increase in the GC average purchase price from RON 139.5/GC in 2020 to RON 142.2/GC in 2021, (negative
impact of RON 9.9 mn);
the regularization impact – positive variance of RON 4.8 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 2021 compared
with 2020, of RON 27.8 mn, being mainly the effect of the receivables’ recoverability.
EBITDA
The above-presented factors led to an EBITDA decrease of RON 705.2 mn in 2021 compared with the previous
period.
Segment net profit
The net profit decreased by RON 603.8 mn compared to 2020, the evolution of EBITDA being mainly influenced by
the decrease of the corporate income tax by approx. RON 30 mn.
157 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 6.3. Consolidated cash flow statement
The following table presents the consolidated statement of cash flows of Electrica Group, for 2021 and 2020
(amounts in RON mn):
2021
2020
Variation
(552.9)
387.5
-
21.1
459.7
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortization
Impairment of property, plant, and equipment and intangible assets, net
(3.9)
Gain on disposal of property, plant and equipment, and intangible assets
2.7
Evaluation of fixed assets recognized in profit, net
(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
-
70.6
0.6
15.7
26.9
5.1
-
(79.5)
27.9
463.1
0.6
(0.3)
2.4
(62.2)
(0.2)
(0.3)
17.1
-
(7.5)
54.8
(33.9)
882.9
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
Net cash from operating activities
Cash flows from investing activities
(391.4)
(22.9)
(2.2)
(2.9)
274.8
32.5
3.2
4.0
(138.9)
(24.1)
(31.4)
(194.4)
Payments for purchases of property, plant, and equipment
(10.5)
Payments for network construction related to concession agreements
(483.8)
Payments for purchase of other intangible assets
Proceeds from the sale of property, plant, and equipment
(6.3)
1.5
158 | 2021 ANNUAL REPORT
ELECTRICA S.A.
(87.2)
3.8
0.6
4.3
(76.0)
(2.3)
14.7
(1.3)
739.5
(20.0)
(51.7)
667.9
(6.7)
(638.0)
(2.2)
5.0
-24.2%
-0.7%
-
-
-
-
-
-
57.3%
-
-
-
-
348.6%
-
-
-
-
-
-78.5%
-
-
20.8%
-39.3%
-
55.9%
-24.2%
183.3%
-70.7%
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Proceeds from deposits with a maturity of 3 months or longer
Interest received
Restricted cash
Net cash effect from the gain of control over the acquired
subsidiary
Payment for acquisition of associated
Payment for acquisition of subsidiaries
Net cash used in investing activities
Proceeds from long term bank borrowings
Repayment of long term bank loans
Payment of lease liabilities
Dividends paid
Net cash from/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
2021
-
1.8
320.0
-
(25.8)
-
(203.2)
234.7
(385.9)
(15.2)
(247.6)
(414.0)
(811.5)
406.0
(405.6)
2020
66.4
9.0
-
5.6
-
(8.0)
(568.9)
354.3
(29.1)
(29.3)
(245.8)
50.1
149.1
256.9
406.0
Variation
-
-80.3%
-
-
-
-
-64.3%
-33.8%
1,224.6%
-48.1%
-0.7%
-
-
58.0%
-
In 2021, the net decrease in cash and cash equivalents amounted to RON 811.5 mn.
The net cash generated by the operating activity was a loss of RON (138.9) mn. The net loss of the period was
RON (522.9) mn; the main net profit’s adjustments for non-monetary elements were: adding the depreciation and
amortization of RON 480.8 mn, eliminating the impact of the impairment of trade receivables of RON 70.6 mn,
adding the income tax of RON 79.5 mn and the net finance cost of RON 26.9 mn.
Changes in working capital had a negative effect, of RON 138.9 mn, the most significant impact being generated
by the negative change in trade and other receivables, in the amount of RON 414.3 mn, and in trade and other
payables of RON 314.5 mn (out of which, the change in employee benefits of RON 3.2 mn, having a positive impact).
Income tax paid and interest paid amounted to RON 55.5 mn.
For the investment activity, the cash used was of RON 203.2 mn, the most significant values being related to the
payments for the network construction in connection with the concession agreements of RON 483.9 mn, these
being reduced y-o-y, but also to the investments in associates of RON 25.8 mn.
The financing activity generated a decrease in cash and cash equivalents of RON 203.2 mn, the main factors being
the proceeds from long-term bank borrowings of RON 234.7 mn, reimbursement of loans of RON 385.9 mn, and the
dividends paid to the shareholders, of RON 247.6 mn.
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, adding the income tax of RON 54.8 mn, and deducting the impact of the change in employee
benefits obligations of RON 54.8 mn.
159 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Changes in working capital had a favorable effect, of RON 143.4 mn, the most significant impact being generated
by the change in trade and other receivables, having a negative impact, in the amount of RON 83.4 mn, and the
positive change in trade and other payables of RON 64.3 mn (out of which, the change in employee benefits of RON
14.7 mn). Income tax paid and interest paid amounted to RON 71.6 mn.
For the investment activity, the cash used was of 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
have recorded a slight increase y-o-y.
The financing activity generated an increase in cash and cash equivalents of RON 50.1 mn, the main factors being
the dividends paid to the shareholders, of RON 245.8 mn, withdraws from loans of RON 354.4 mn, and the payments
related to leasing contracts, as a result of IFRS 16 application.
6.4. The separate statement of the financial position
Financial information selected from the company’s separate statement of financial position (amounts in RON mn):
31 December
2021
31 December
2020
Variation
2021/2020
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Investments in associates
Loans granted to subsidiaries – long term
Right of use assets
Total non-current assets
Current assets
Cash and cash equivalents
Deposits with a maturity date more than three months
Restricted cash
Trade receivables
Other receivables
Inventories
Prepayments
Assets held for sale
Loans granted to subsidiaries – short term
Total current assets
100.1
0.1
2,285.2
25.8
1,276.3
0.5
96.9
0.3
2,284.9
-
1,030.0
1.4
3,688.0
3,413.5
5.8
-
-
0.9
584.8
-
0.8
0.3
30.0
622.5
193.5
-
320.0
0.4
180.8
-
0.4
-
-
3.3%
-66.7%
0.0%
-
23.9%
-65.9%
8.0%
-97.0%
-
-
124.8%
223.5%
-
79.0%
-
-
695.1
-10.4%
TOTAL ASSETS
4,310.5
4,108.6
4.9%
160 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
EQUITY AND LIABILITIES
Share capital
Share premium
Treasury shares reserve
Revaluation reserves
Legal reserves
Other reserves
Retained earnings
Total equity
Liabilities
Non-current liabilities
Lease liability – long term
Employee benefits
Total non-current liabilities
Current liabilities
Credit lines
Lease liability – short term
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
Total current liabilities
31 December
2021
31 December
2020
Variation
2021/2020
3,464.4
3,464.4
103.1
(75.4)
12.4
228.2
71.2
319.6
103.1
(75.4)
12.6
212.0
35.6
297.0
4,123.5
4,049.3
0.1
1.1
1.2
120.5
0.4
4.0
44.0
0.4
12.2
4.2
185.8
0.5
1.5
2.0
-
1.0
7.1
36.0
0.2
7.1
5.8
57.3
-
-
-
-1.6%
7.6%
-
7.6%
1.8%
-80.0%
-27.7%
-39.7%
-
-59.2%
-43.9%
22.2%
100.0%
69.6%
-27.2%
223.9%
Total liabilities
186.9
59.3
215.4%
Total equity and liabilities
4,310.5
4,108.6
4.9%
Source: Separate financial statements of ELSA as of 31 December 2021
Non-current assets
On 31 December 2021, as compared to 31 December 2020, fixed assets increased with RON 274.4 mn or 8.0%, from
RON 3,413.5 mn to RON 3,688.0 mn.
At the end of 2021, the land and buildings situation is similar to the previous period. They 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. The increase registered in 2021 in
the amount of 3.1 mil. RON is due to the modernizations and renovations made to the administrative headquarters.
Investments in associates
On 28 July 2021 and 7 December 2021, Electrica SA has concluded four contracts for sale – purchase of shares in four
project-based companies, having as main object the production of electricity from renewable resources. The sale
– purchases agreements mention that at the first stage, the Group received 30% from the share capital of the four
companies, following which, it will obtain the 70% difference after certain conditions mentioned in the contracts
are met.
161 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The cost of investment, at the acquisition date, the total value of RON 25.8 mn are detailed below:
Acquisition date
31.07.2021
31.07.2021
31.07.2021
31.12.2021
Crucea Power
Park S.R.L.
New Trend
Energy S.R.L.
Sunwind
Energy S.R.L.
Foton Power
Energy
S.R.L.
The percentage at the acquisition date
Net value at the acquisition date
Percentage of the Group from net (30%)
Goodwill
Investment cost at acquisition date
Other receivables
30%
(242)
(73)
12.6
12.5
30%
(5)
(2)
4.8
4.8
30%
(5)
(2)
2.2
2.2
30%
(7)
(2)
6.3
6.3
Cash-pooling receivables comprise the receivable of Electrica SA as of 31 December 2021 as cash pool leader in
the two cash-pooling systems set up at the Group level. The increase in 2021 is due to liquidity requirements of
subsidiaries included in the cash pooling scheme by the Company (correlate with the decrease of cash equivalent)
Trade receivables
As of 31 December 2021, the company’s trade receivables increased by RON 0.5 mn, or 124,8%, to RON 0.9 mn, from
RON 0.4 mn on 31 December 2020, mainly because of the revenues from AMR services are no longer obtained.
Cash, restricted cash, and short-term investments
As of 31 December 2021, the cash and cash equivalents decreased by RON 187.7 mn or 97.0%, to RON 5.7 mn from
RON 193.5 mn on 31 December 2020.
(RON mn)
31 December
2021
31 December
2020
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
Source: Separate financial statements of ELSA as of 31 December 2021
3
2.7
5.7
18.4
175.1
193.5
Value of cash and cash equivalents decreased by RON 187.7 mn due to the decrease of short-term deposits and cask
at banks, both coming from investment acquisitions in associates and the cash pooling structure (liquidities used
for cash pooling).
Loans granted to subsidiaries
(RON mn)
31 December
2021
31 December
2020
DEER (long term loan granted) *
EFSA
Total loans granted to subsidiaries
1,276
30
1,306
1,030
-
1,030
Source: Separate financial statements of ELSA as of 31 December 2021
(*)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 2021, the loan balance is RON 230 mn (31 December 2020: RON 230 mn);
162 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 2021, the loan balance is RON 160 mn (31 December 2020: 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 2021, the loan balance is RON 130 mn (31 December 2020: RON 130 mn);
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. 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 2021, the outstanding balance is RON 150 mn (31 December 2020: 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 2021, the outstanding balance is RON 200 mn (31 December 2020: 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 2021, the outstanding balance is RON 160 mn (31 December 2020: RON 160 mn);
Intragroup loan agreement on short term concluded with ELSA in December 2021 for financing the current
activity in the amount of RON 90.0 mn, out of which RON 60.0 mn have been reimbursed. As of 31 December
2021, the outstanding balance is RON 30.0 mn. Interest rate: 3,51% per year.
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, currently DEER SA), 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.; initial maturity: 16 March 2020, prolonged for
one year up to 16 March 2021, under the same terms. Repayment: in full, at maturity. As 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.
Purpose of the loan: financing the current activity; interest rate: 0.60% + ROBOR 1M p.a.; initial maturity: 16 March
2020, prolonged for one year up to 16 March 2021, under the same terms. Repayment: in full, at maturity. As of 31
December 2020, the outstanding balance of the facility for the Company is nil.
Intragroup loan contract with DEER SA was concluded on October 2021. Main provisions: loan amount: RON 246.3
mn; the purpose of the loan: to reimburse the loans from BRD obtained in 2016 for financing the investment
plan from 2016, which were due in 2021; interest rate: 3.51% p.a.; initial maturity: 96 months up to 12 October 2029.
Withdraws: 12 months. Repayment: in full, at maturity; advance reimbursement is allowed but no sooner than 12
months from utilization date. As of 31 December 2021, the outstanding balance of the loan is RON 246.3 mn.
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
163 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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 is 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 is 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 that 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 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 of 31 December 2021 (346,443,597
ordinary shares as of 31 December 2020) 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 2021 and 2020 (from previous years’ profits) were as follows:
Dividends distributed
(RON mn)
Source: Separate financial statements of ELSA as of 31 December 2021
2021
247.8
2020
246.1
164 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT On 28 April 2021, the General Meeting of Shareholders of ELSA approved the distribution of dividends in the amount
of RON 247.8 mn, legal reserves in the amount of RON 14.9 mn, and other reserves in the amount of RON 35.6 mn.
The value of dividends per share distributed to the shareholders of the Company were: RON 0.7248 per share (2020:
RON 0.7248 per share).
Out of the dividends distributed by the Company of RON 247.8 mn (2020: RON 246.1 mn) the dividends paid were
RON 246.6 mn (2020: RON 245.8 mn), the difference representing dividends uncollected by the shareholders.
Provisions
(RON mn)
Litigations and other risks
Balance at 1 January 2021
Provisions made
Provisions utilised
Provisions reversed
Balance at 31 December 2021
5.8
0.08
(1.1)
(0.5)
4.2
Source: Separate financial statements of ELSA as of 31 December 2021
The provisions in the amount of RON 4.2 mn as of 31 December 2021 (31 December 2020: RON 5.8 mn) refer mainly
to the benefits granted upon the termination of executive managers’ contracts.
6.5. The separate statement of profit or loss
Financial information selected from the company’s separate statement of profit or loss (RON mn):
Revenues
Other income
Employee benefits
Depreciation and amortization
Reversal of impairment of trade and other receivables, net
Impairment of property, plant and equipment, net
Impairment of assets held for sale
Change in provisions for legal cases and non-compete clauses, net
Other operating expenses
Profit/(loss) before financing result
Finance income
Finance costs
Share of results of associates
Net finance income
Profit before tax
Income tax benefit/(expense)
Profit for the year
2021
-
0.8
(39.2)
(2.3)
-
3.8
(0.5)
1.6
(19.9)
(55.6)
377.7
(0.3)
-
377.4
321.8
-
321.8
2020
3.3
14.5
(31.8)
(13.1)
98.6
(10)
-
(2.5)
(23.9)
35.1
260.3
(0.1)
-
260.2
295.3
3.1
298.4
Variation
2021/2020
-
-94.4%%
23.3%
-826%
-
-
-
-
-16.6%
-
45.1%
111.8%
0%
45.1%
9.0%
-98.6%
7.9%
Earnings per share
0.95
0.88
7.7%
Source: Separate financial statements of ELSA as of 31 December 2021
165 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Revenues
transforming business structures with specialized
During the year 2021, ELSA has no longer recorded
staff.
revenues compared with 2020 when it recorded
revenues of RON 3.3 mn. The revenues obtained
Impairment of
trade
receivables and other
by the Company are represented by revenues from
receivables
service agreements related to the AMR system
Impairment adjustments
for other receivables
concluded with
the distribution
subsidiaries
recognized during 2020 are in the amount of RON
that include automatic meter reading services,
98.6 mn and mainly represent the reversal of the
communications, and monitoring of the quality
impairment adjustments
for uncollected VAT
parameters of electricity services. Starting with 1 July
related to the uncertain receivables from Oltchim;
2020, the company no longer registered this type of
in the previous years, ELSA recognized impairment
revenue, as a result of the AMR system assets transfer
adjustments for the total amount of receivables from
to the distribution subsidiaries by contribution to
Oltchim, and based on the sentence opening for the
their share capital.
Other income
bankruptcy proceedings and the provisions of the
Fiscal Code, reversed the impairment adjustments
related to uncollected VAT, simultaneously with the
During the financial year ended 31 December 2021,
VAT adjustment.
the other income mainly includes income from
compensations/refunds of certain amounts as a
Impairment of property, plant, and equipment
result of favorable court sentences, to which rent
revenue and proceeds from the disposal of assets
Impairment adjustments recorded during 2021 for
property, plant, and equipment are in the amount
are added.
of RON 3.8 mn, compared to the amount of RON
Revenues from compensations consist mainly of the
10.0 mn in 2020. These mainly refer to impairment
amount of RON 12.8 mn collected in 2020 by ELSA
adjustment reversal recorded following the AMR
from the National Agency for Fiscal Administration
system assets reclassified as non-current assets held
(“NAFA”) as a result of the final civil sentence
for sale.
obtained in Court, which ordered the cancellation of
certain enforceable titles as well as fiscal decisions.
Other operating expenses
Depreciation and amortization of tangible and
in the amount of RON 19.9 mn, compared to the
intangible assets
amount of RON 23.9 mn in 2020. The evolution was
The depreciation and amortization expense is RON
mainly determined by the increase of consulting
2.3 mn in 2021, compared to RON 13.1 mn in 2020,
services expenses related to the projects carried out
In 2021, ELSA recorded other operating expenses
as a result of the assets related to the AMR system
at the company level.
transfer to the distribution subsidiaries in June 2020,
representing the assets for which it was recorded the
Profit/(loss) before financing result
most significant part of the depreciation expense at
As a result of the above-mentioned factors, ELSA
the company level.
Employee benefits
recorded in 2021 a loss before financing result in the
amount of RON 55.6 mn, while in 2020 it recorded a
profit amounting to RON 35.1 mn.
In 2021, employee benefits increased by RON 7.4
mn to RON 39.2 mn from RON 31.8 mn in 2020.
The variation is the result of several factors, mainly
Net finance income
ELSA’s main financial income is provided by the
changes in the structure of benefits granted to
dividends distributed by its subsidiaries.
employees, as a result of the provisions of the
During the financial year ended 31 December 2021,
Collective Labor Agreement entered into force on
ELSA recorded dividend income from its subsidiaries
1 April 2020, the payments related to the project
in the amount of RON 329.5 mn (2020: RON 215.0
to streamline the staff structure of the company,
mn), structured as follows:
the plan to change the organizational structure by
166 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT (RON mn)
SDMN
SDTS
SDTN
EFSA
SERV
Total
2021
33.3
10.2
52.7
233.3
-
329.5
2020
2.7
6.9
54.1
124.0
27.3
215.0
Source: Separate financial statements of ELSA as of 31 December 2021
Another category of financial income related to its subsidiaries is represented by interest income related to the
loans granted, which slightly increased to RON 41.2 mn in 2021 compared to RON 39.4 mn in 2020, according to the
(RON mn)
detail:
SDMN
SDTN
SDTS
SEM
Total
2021
15.7
11.5
14.0
-
41.2
2020
15.2
13.3
10.8
0.1
39.4
Source: Separate financial statements of ELSA as of 31 December 2021
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
2021
-
1.4
2.0
1.2
(0.6)
4.0
2020
0.6
2.1
1.3
(1.3)
(0.7)
2.0
Source: Separate financial statements of ELSA as of 31 December 2021
Profit before tax
In 2021, profit before tax increased by RON 26.5 mn or 9.0% to RON 321.8 mn from RON 295.3 mn in 2020.
Income tax benefit/(expense)
In 2021, the company recorded insignificant income tax benefit (2020: the expense of RON 3.1 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 2021 net profit recorded an increase of 7.9% compared to 2020, to
RON 321.8 mn from RON 298.4 mn.
167 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 6.6. Separate cash flow statement
Financial information selected from the cash flow statement of the company (RON mn):
Indicator
2021
2020
Variation
2021/2020
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
Reversal of impairment of trade and other receivables, net
321.8
298.4
7.9%
1.1
1.2
(3.8)
3.1
(0.1)
11.2
1.9
10.0
0.6
-90.0%
-39.5%
-
393.1%
(98.6)
-
Net finance income
(377.4)
(260.2)
45.1%
Changes in employee benefits obligations
Changes in provisions, net
Changes in:
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
5.1
(1.6)
-
(50.2)
(0.4)
3.0
(2.9)
0.3
(0.3)
(50.5)
(0.2)
(50.7)
Payments for purchases of property, plant, and equipment
(4.8)
Proceeds from the sale of property, plant and equipment
Proceeds from deposits with a maturity of 3 months or longer
Cash pooling net position
Loans granted to subsidiaries
Proceeds from loans given to subsidiaries
Payments for shares in associates
Payments for acquisition of subsidiaries
Restricted cash
Interest earned
0
0
(393.6)
(336.3)
60.0
(25.8)
(0.1)
320.0
42.2
(0.4)
2.5
(3.1)
(37.7)
103.2
4.3
1.8
(0.4)
1.9
73.1
-
73.1
(4)
0.2
66.4
(132.2)
-
0.0
0
0
-
41.4
-1,394.9%
-
-
33.1%
-
-26.5%
-
-
-169.1%
-
-169.4%
20.0%
-89.0
-83.5%
197.8%
-
100%
-
-
-
1.9%
168 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Indicator
Dividends received
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of share capital, net
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
Cash and cash equivalents at 31 December
2021
329.5
-
(247.6)
(1.0)
(248.6)
(308.3)
193.5
(114.8)
2020
215
-
(245.8)
(0.9)
(246.7)
13.2
180.5
193.5
Variation
2021/2020
53.3%
-
0.8%
9.5%
0.8%
-
7.3%
-
Source: Separate financial statements of ELSA as of 31 December 2021
In 2021, the net decrease in cash and cash equivalents amounted to RON 308.3 mn.
The net cash generated by the operating activity was of RON (50.5) mn. The net profit of the period was RON
321.8 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 2.3 mn, adding the impact of tangible assets
disposal in the net amount of RON 0.7 mn, reducing the variation of the change in provisions of RON 1.6 mn,
eliminating the impact of the impairment of trade receivables and deduction of the income tax benefit which were
immaterial. The net financial result of RON 377.4 mn was deducted.
Changes in working capital had a favorable effect, of RON 320.8 mn, the most significant impact being generated
by the restricted cash of RON 320.0 mn, positive change in trade and other receivables, in the amount of RON 2.7
mn, and in trade and other payables of RON 2.7 mn (out of which, a RON 0.3 mn positive impact from the change
in employee benefits).
For the investment activity, the cash used was RON 329.1 mn, the most significant values being related to the
dividends received in the amount of RON 329.5 mn, to the loans granted to affiliates in the amount of RON 336.3 mn,
to interest received in the amount of RON 41.4 mn, but also to the payments for purchases of shares in subsidiaries
in amount of RON 25.8 mn, but also cash received from loans given to subsidiaries in amount of RON 60.0 mn and
the amounts paid within the cash pooling scheme, implemented at the Group level, amounting to RON 393.6 mn.
The financing activity generated a decrease in cash and cash equivalents of RON 248.6 mn, mainly from the
dividends paid to the shareholders - RON 247.6 mn.
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 73.0 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 13.0 mn, impairment adjustments for tangible
assets of RON 10.0 mil. RON, eliminating the impact of the impairment of trade and other receivables of RON 99.0
mn and deduction of a net financial result of RON 260.2 mn.
Changes in working capital had a favorable effect, of RON 110.0 mn, the most significant impact being generated
by the positive change in trade and other receivables, in the amount of RON 107.0 mn, positive effect reduced by
the change on payable and other payables with a negative effect of RON 3.2 mn (out of which, a RON 1.9 mn from
the change in employee benefits). Interest paid was RON 0.2 mn.
The investment activity generated a decrease of cash and cash equivalents of RON 246.7 mn, the main factor being
the payment of dividends to the shareholders in the amount of RON 245.8 mn.
169 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 6.7. Risk management
For the Electrica Group, the year 2021, from a risk
DEER risk management team and were intended to
management perspective was one of consolidation
prepare, in two iterations, the evaluations, and the
of the previous year’s initiatives and new projects,
Energy Sector Risk Preparation Plan in accordance
initiated based on internal needs or at the request
with (EU) 2019/941 Regulation of the European
of third parties. This year also marks an important
Parliament and the Council. The methodology of
milestone for the risk management competence
the entire project was based on several scenarios
throughout the Electrica Group in that the first
developed and described by ENTSOE, with an impact
consultancy project in this area to be implemented
scale and the specific probabilities of transport and
outside the Group has been concluded.
distribution activities. The same category included
Thus, regarding consolidation, the Risk Management
the risk evaluation
initiative regarding relevant
Procedure was
implemented
throughout
the
infrastructure ownership risks for the safety of electric
Group, which allowed, for the first time to have
power supply, based on (EU) 2019/941 Regulation
homogeneous aggregate reporting, from the point
of the European Parliament and the Council, upon
of view of exposures at the Group level. Instructions
the request of the Competent Authority of Electric
and specific documentation were prepared for each
Power Supply under the Ministry of Energy.
branch office, the largest effort being allocated to
the risks to be managed in sales, receivables, and
The year 2021 also meant significant communication
efforts due to pandemic work conditions, as well as
treasury-related risks for supply activities.
significant internal training and consulting efforts,
Regarding internal needs, combined with applicable
legal requirements, the Policy on Knowing Your
(clients and suppliers) was
Business Partners
prepared and implemented for the most part.
at the group level
There were numerous risk management challenges
in 2021, in that the materialisation of certain risks,
such as market risk (electricity and natural gas
The purpose of this initiative is to fulfil the legal
prices,
in particular), regulatory risk (regarding
requirements in cases where the Group companies
client invoicing), operational risk (IT systems, electric
are designated as reporting entities under Law no
power theft), had multiple causes and sometimes
129/2019 and also to help the natural and necessary
unpredictable effects.
development of the counterparty default risk
For the next year, we aim to increase agility and, where
assessment in an aggregate manner, based on
possible, to automate the risk management system,
knowledge of the partners.
to transform this Group level competence into a
Under the same internal needs, a large project was
point of best practice, and to align and implement
implemented at Electrica Furnizare, moderated by
the necessary instruments of risk management with
the risk management team, with the principal aim of
and into the strategic and operational goals of the
analysing the causes and circumstances of market
Group.
risk exposure for several key processes, as well as
the controls that could be implemented. The project
FINANCIAL RISK MANAGEMENT
identified additional previously unrecorded risks
and a large number of actions to be analysed and
The Group is exposed to the following risks resulting
implemented by the relevant business lines.
In line with the needs that the market risk has raised
from the use of financial instruments: credit risk,
liquidity risk, and market risk.
throughout 2021, an initiative to evaluate the impact
of market risk upon the internal technological
consumption recorded under DEER was also
Credit risk
implemented. This was a multi-disciplinary project at
Credit risk is the risk that the Group will register a
the Group level, which produced risk management
financial loss if a customer or counterparty to a
observations and recommendations for dealing
financial instrument fails to meet its contractual
with risks in drafting the procurement/purchasing
obligations and arises principally from the Group’s
strategy.
Another internal project was implemented under
DEER, whereby
team
facilitated the Resilience Plan Update, resulting
in the final document “The Resilience Plan in the
risk management
the
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
Context of COVID 19 Outbreak and DEER Expansion”.
risk mainly from State-owned companies.
The projects implemented upon the request of third
Cash and bank deposits are placed in financial
parties were implemented with the assistance of the
institutions that are considered to have to have a low
risk of default.
170 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT The carrying amount of financial assets represents
the electricity supply contracts include termination
the maximum credit exposure.
clauses in certain circumstances.
Trade receivables
The Group establishes an allowance for impairment
that represents the number of expected credit
The Group’s credit risk in respect of receivables was
losses, calculated based on the expected loss rates.
concentrated in the past around state-controlled
companies and in recent years refers to clients that
Impairment
are facing financial difficulties in their industries
The following table provides information on the
due to specific changes in circumstances in their
exposure to credit risk and expected credit losses for
industry sector. The Group has set up a policy
trade receivables as of 31 December 2021:
regarding risk management and it has taken into
account the insurance of the trade receivables. Also,
(RON mn)
Expected
credit loss
rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit
impaired
31 December 2021
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%
5%
15%
38%
98%
1,080.1
228.5
36.7
15.4
964.7
2,325.4
(16.6)
(10.6)
(5.3)
(5.9)
(942.4)
(980.8)
1,063.5
217.9
31.4
9.5
22.3
1,344.6
Nu
Nu
Nu
Nu
Da
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
The following table provides information on the exposure to credit risk and expected credit losses for trade
receivables as of 31 December 2020: creante la 31 decembrie 2020:
(RON mn)
Expected
credit loss
rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit
impaired
31 December 2021
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%
1%
12%
33%
99%
812.9
163.4
49.0
17.5
936.6
1,979.4
(13.1)
(2.3)
(5.8)
(5.7)
(922.7)
(949.6)
799.8
161.1
43.2
11.8
13.9
1,029.8
Nu
Nu
Nu
Nu
Da
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
171 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
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 over 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 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 2021
Bank overdrafts
Lease liability
Long term bank borrowings
Trade payables
Total
31 December 2020
Bank overdrafts
Lease liability
Long term bank borrowings
Trade payables
Total
627.4
21.5
628,5
922.3
627.4
21.5
628,5
922.3
627.4
9.4
176,2
891.3
2,168.7
2,168.7
1,704.3
165.0
27.6
778.9
607.2
165.0
27.6
778.9
607.2
165.0
10.7
378.6
607.2
1,578.7
1,578.7
1,161.5
-
4.9
92,9
-
97.8
-
6.8
70.8
-
77.6
-
5.1
278,8
-
283.9
-
10.0
212.5
-
222.5
-
2.1
80,6
-
82.7
-
0.1
117.0
-
117.1
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
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 optimising 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.
172 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Exposure to currency risk
The summary of quantitative information on the Group’s exposure to currency risk is given below:
31 December 2021
EUR
31 December 2020
EUR
Cash and cash equivalents
Lease liability
Net statement of financial position exposure
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
0.8
(19.1)
(18.3)
The following significant exchange rates have been applied during the year:
Average rate
Year-end spot rate
EUR/RON
2021
4.9204
2020
4.8371
2021
4.9481
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
3.3
(24.4)
(21.1)
2020
4.8694
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 2020
EUR (5% movement)
(0.9)
(1.1)
0.9
(1.1)
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
(RON mn)
31 December 2021
31 December 2020
Fixed-rate instruments
Financial assets
Call deposits
Deposits with a maturity date more than three months
Financial liabilities
Financing for network construction related to concession
agreements
Long-term bank borrowings
Lease liability
Total
Variable-rate instruments
Financial liabilities
Lease liability
Long-term bank borrowings
Bank overdrafts
Total
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
53.9
391.5
-
-
(418.9)
(8.3)
(373.3)
(13.3)
(209.6)
(627.4)
(850.3)
-
-
(728.9)
(9.1)
(346.5)
(18.6)
(49.9)
(165.0)
(233.5)
173 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 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)
Profit before tax
50 bp increase
50 bp decrease
31 December 2021
Variable-rate instruments
31 December 2020
Variable-rate instruments
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
(4.3)
(1.2)
4.3
1.2
6.8. Description of the main features of internal control
and risk management systems concerning the
financial reporting process
The
internal control represents all measures,
that are required.
procedures, and policies adopted by ELSA
The internal control and the risk management
management and their implementation by the
systems have the following main goals:
employees, regarding the organizational structure,
protecting organizational resources against
applied procedures, methods, techniques, and
losses due to waste, negligence, abuses,
instruments, for the implementation of company
fraud, etc.;
strategy and objectives. The internal control includes
compliance with the applicable legislation
all control forms performed at the company level,
and the internal regulations;
such as preventive financial control, internal and
the reliability of financial reporting (accuracy,
managerial control, compliance control.
completeness, and correctness of
the
information);
The internal control activity represents a way of
ensuring
an
environment based
on
analysis of ELSA activities, of adopting and applying
the internal management, also associated with the
identifying, understanding, and controlling
risks, environment which will contribute to
knowledge activity, which allows the Company’s
achieving the organizational goals;
management to coordinate the activities within the
efficient and effective business operations
organization in an efficient manner.
and use of resources;
applying the BoD and executive management
In this respect, through the internal control, the
resolutions and follow-up.
monitoring and verification are carried out,
in
accordance with the legislation in force and the
The achievement of these goals was performed in
specific procedures, in compliance with the legal
2021 as follows:
framework that regulates the activities carried out
in the checked entities, according to the approved
control objectives and themes.
in order to ensure internally the compliance
with the competition and state aid rules,
there were held several training sessions and
Through
internal
control,
the
Company’s
practical verification;
management ascertains the deviations resulting
clear
definition
and
responsibilities
from the established objectives, analyzes the causes,
segregation for each person
involved
in
and orders the corrective or preventive measures
the organizational process; segregation
174 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
of duties regarding the carrying out the
out regarding major or critical risks, related
operations among the personnel, so that the
to particular activities for stimulating internal
approval, control, and registration duties are
control methods;
adequately assigned to different persons (as
per the Company’s organizational chart);
elaboration, update, and implementation of
Control activities meant to reduce the
risks – Control activities have different
forms (managerial control, general control,
regulations, policies, procedures, forms, etc;
preventive financial control, etc.) and they
the existence of a Guide for Accounting
are implemented and carried out with the
Policies, elaborated in accordance with the
purpose of reducing significant operational
requirements of the
legislation
in force,
and compliance risks;
approved by the Board of Directors;
the existence of a schedule and a well-
Information
Information helps all other components of the
communication
and
–
defined process regarding the elaboration
internal control system by communicating
of accounting and financial information in
to employees
their
responsibilities
for
accordance with the reporting requirements
controlling and providing
information
in
(financial
reports,
including
financial
an adequate and timely manner, so that all
statements, annual and
interim reports,
employees may be able to fulfill their duties.
budget, etc) and their appropriate verification
Internal communication occurs by means of
and approval by the Board of Directors, for
disseminating information to all levels, while
the purpose of endorsing and release for
publication.
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
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 together with the Internal Audit
Department assess the efficiency and the
effective
implementation of the
internal
efficient internal control system. It consists of
control system.
the commitment towards integrity and ethical
values (for this purpose, a series of policies on
The Company’s management monitors
the
zero tolerance towards corruption, anti-fraud
functioning of internal controls using periodical
and anti-money-laundering, avoidance and
analyzes; for instance, the execution of the budget,
fighting against conflicts of interest, gifts
the monitoring of security incidents, internal and
policy, protocol expenses, and forbidding
external audit reports, and internal control reports.
facilitating payments,
transparency, and
the involvement of stakeholders), as well
Deficiencies in the implementation or functioning
as organizational measures (policies on the
of internal controls are documented in the internal
delegation of authority and responsibilities);
Evaluation of risks – Generally, all processes
are within the scope of the internal control
control reports, respectively in internal audit reports
and briefing notes, and they are presented to the
management, with the purpose of issuing the
system. An identification process is carried
corrective actions.
175 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Appendix 1
Litigations
Electrica Group litigations in 2021:
1.
Disputes with ANRE
Crt. no.
Parties/Case file number
Subject matter
Court
Case status
1
2
3
4
5
6
7
Plaintiff: ELSA
Defendant: ANRE
192/2/2015
Plaintiff: ELSA;
Defendant: ANRE;
361/2/2015
Plaintiff: ELSA;
Defendant: ANRE;
360/2/2015
Plaintiff: ELSA;
Defendant: ANRE;
340/2/2016
Plaintiff: ELSA;
Defendant: ANRE;
342/2/2016
Plaintiff: ELSA; DEER
Defendant: ANRE;
7614/2/2018
Plaintiff: ELSA; DEER
Defendant: ANRE
7591/2/2018
Order
regarding
Cancellation of ANRE’s
President
no.
the
146/2014
establishment of the re-
gulated rate of return con-
sidered to the approval of
the tariffs for the electri-
city distribution service
provided by concessionary
DSOs starting with 1st Ja-
nuary 2015 and the abro-
gation of Art. 122 of the Ta-
riff 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 DEER (former
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 DEER (former.
SDTS).
Action for partial annul-
ment (regarding the spe-
cial tariffs) of the adminis-
trative act – ANRE Order
171/2015.
Action for partial annul-
ment (regarding the spe-
cial tariffs) of the adminis-
trative act – ANRE Order.
No. 172/2015.
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.
Action for the annulment
of the ANRE Order no.
168/2018 regarding the re-
gulatory rate of return and
obliging ANRE to issue a
new order.
High Court of Cassation
and Justice
Appeal – a
reinstatement
request was filed – term:
30.03.2022.
High Court of Cassation
and Justice
Suspended until the
settlement of the case
file no. 192/2/2015.
High Court of Cassation
and Justice
Suspended until the
settlement of the case
file no. 192/2/2015.
High Court of Cassation
and Justice
Appeal - Suspended
the
until
settlement
of the case file no.
192/2/2015.
High Court of Cassation
and Justice
Appeal - Suspended un-
til the settlement of the
case file no. 192/2/2015.
Bucharest Court of Appeal
In course of settlement.
Bucharest Court of Appeal
Suspended until de fi-
nal settlement of case
no. 541/36/2018 of the
of
Bucharest Court
Appeal.
178 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file number
Subject matter
Court
Case status
Plaintiff: Fondul
Proprietatea
Defendant: ANRE
Intervenient: ELSA;
DEER
4804/2/2020
(former 7341/2/2014)
Plaintiff: ELSA, DEER
Defendant: ANRE
434/2/2019
Plaintiff: ELSA, DEER
Defendant: ANRE
435/2/2019
Plaintiff: ELSA, DEER
Defendant: ANRE
436/2/2019
Plaintiff: DEER
Defendant: ANRE
184/2/2015
Plaintiff: DEER
Defendant: ANRE
309/2/2020
8
9
10
11
12
13
Legal action for the partial
annulment of ANRE Order
no. 112/2014 regarding the
amendment and comple-
tion of the tariff setting
methodology for the elec-
tricity distribution service,
approved by the ANRE
Order no. 72/2013.
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
electric energy for DEER
(former DMN).
regarding
Legal action for annul-
ment of ANRE Order
199/2018
the
approval of the specific ta-
riffs for the electricity dis-
tribution service and the
price for the reactive ener-
gy for DEER former SDTS).
regarding
Legal action for annul-
ment of ANRE Order
198/2018
the
approval of the specific ta-
riffs for the electricity dis-
tribution service and the
price for the reactive ener-
gy for DEER former SDTN).
regarding
Contentious administra-
tive litigation – Cancella-
tion of ANRE Order no.
146/2014
the
setting of the regulated
rate of return applied at
the approval of the tariffs
for the electricity distribu-
tion service provided by
the DSOs starting with 1st
January 2015 and the ab-
rogation of art. 122 of the
tariff setting methodology
for the electricity distri-
bution service, approved
by the ANRE order no.
72/2013.
Judicial 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 DEER (for-
mer. SDMN).
Bucharest Court of Appeal
Retrial – the action was
dismissed as unfoun-
ded. The decision is de-
finitive by non-appleal
by the plaintiff.
Bucharest Court of Appeal
In course of settlement.
High Court of Cassation
and Justice
On 9 June 2020, the co-
urt rejected the action
as unfounded. An appe-
al was filed, term on
09.03.2023.
Bucharest Court of Appeal
In course of settlement.
High Court of Cassation
and Justice
A reinstatement requ-
est was filed - term
15.02.2022.
Bucharest Court of Appeal
In course of settlement.
179 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file number
Subject matter
Court
Case status
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 1st 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.
Action for the cancellation
of ANRE’s President Order
no. 228/2019 regarding the
approval of the specific ta-
riffs for the electricity dis-
tribution service and the
price for the reactive ener-
gy for DEER (formerSDTN).
regarding
Cancellation of the AN-
RE’s President Order no.
156/2014
the
approval of the specific
tariffs for the electricity
distribution service and
the price for the reactive
energy for DEER (former
SDTS).
regarding
Cancellation of the AN-
RE’s President Order no.
146/2014
the
establishment of the regu-
lated rate of return applied
to the approval of the tari-
ffs for the electricity dis-
tribution service provided
by DSOs from 1st 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.
regarding
Cancellation of the AN-
RE’s President Order no.
229/2019
the
approval of the specific
tariffs for the electricity
distribution service and
the price for the reactive
energy for DEER (former.
SDTS).
High Court of Cassation
and Justice
–a
Appeal
reinstate-
ment request was filed
- term 24.02.2022.
Bucharest Court of Appeal
Action dismissed on
merits,
appealable
within 15 days from its
communication.
Bucharest Court of Appeal
Suspended until the se-
ttlement of the case file
no. 208/2/2015.
Bucharest Court of Appeal
A reinstatement requ-
est was filed.
Bucharest Court of Appeal
In course of settlement.
14
15
16
17
Plaintiff: DEER
Defendant: ANRE
213/2/2015
Plaintiff: DEER
Defendant: ANRE
305/2/2020
Plaintiff: DEER
Defendant: ANRE
371/2/2015
Plaintiff: DEER
Defendant: ANRE
208/2/2015
18
Plaintiff: DEER
Defendant: ANRE
303/2/2020
Source: Electrica
180 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 2.
Fiscal matter disputes
Crt. no.
Parties/Case file number
Subject matter
Court
Case status
1
2
3
Plaintiff: ELSA
Defendant: NAFA
17237/299/2017
Plaintiff: ELSA
Defendant: NAFA
9131/2/2017
Plaintiff: ELSA
Defendant: NAFA
6043/2/2018
4
Plaintiff: ELSA
Defendant: NAFA -
DGAMC
25091/299/2018
1. Suspension of forced execu-
tion initiated by NAFA-DGAMC
in the enforcement file no.
13267221 under the enforceable
order no. 13725/3rd May 2017
and of the no. 13739/3rd May
2017;
order
the en-
2. Cancellation of
forcement
no.
13725/3rd May 2017, of the no.
61/90/1/2017/263129 (which also
bears the No. 13739/3rd May
2017) issued by NAFA-DGAMC
for
the amount of RON
39,248,818 and all subsequent
execution orders issued in con-
nection with the forced exe-
cution of the amount of RON
39,248,818 in the execution file
no. 13267221.
Annulment of the tax decisi-
ons issued by NAFA and com-
municated to the company by
address no. 665/17 March 2017,
new accessories amounting to
RON 39,053,522.
1. Obligation of NAFA to correct
the evidence of tax receivables,
so that it reflects the decisi-
ons given 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
statement in the sense indica-
ted in paragraph 1, the NAFA
shall be obliged to draw up
those corrective administrative
acts or operations which:
a) to reflect in the fiscal file the
extinguishment by prescrip-
tion of the amount of RON
16,915,950 representing the pro-
fit tax registered 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 extinction
of all the accessories calcula-
ted by NAFA in the Main Claim
(extinguished by prescription)
and the removal from their tax
records (including the amount
of RON 30,777,354 included in
Decision no. 357/2008).
District 1 Court
Suspended until the
final settlement of case
no. 9131/2/2017.
High Court of Cassati-
on and Justice
Action
admitted on
merits. NAFA filed an
appeal, in course of se-
ttlement.
High Court of Cassati-
on and Justice
In the first
instance,
Electrica’s action was
admitted. NAFA filed an
appeal, dismissed it as
unfounded.
to
execution
and
Appeal
forced exe-
suspension of
cution - the cancellation of
the enforcement order no.
13566/22 June 2018 and the
notice 13567/22 June 2018, is-
sued in the execution file no.
13267221/61/90/1/2018/278530,
amounting to RON 10,024,825
(representing the partial fine
from the Competition Council).
District 1 Court
Suspended until
the
settlement of case no.
3889/2/2018.
181 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT
Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
5
Plaintiff: ELSA
Defendant: NAFA -
DGAMC
2444/2/2021
1. Obligation of NAFA to correct the evi-
dence of tax receivables, held according
to art. 153 FPC so that it reflects the deci-
sions given by the courts in the disputes
between the parties, through decisions
that have come into the power of the ju-
dicial work, respectively by a) Decision no.
1078/17.04.2015 issued by the Bucharest
Court of Appeal in case no. 5433/2/2013;
b) Decision no. 5154/26.06.2017
issu-
ed by Bucharest District 1 Court in case
no. 51817/299/2016*; c) Decision no.
624/06.03.2015 issued by the Bucharest
Court of Appeal in case no. 7614/2/2013;
Obligation of NAFA to draw up those acts
or administrative correction operations
which: - to reflect Electrica’s right to the
reimbursement of RON 5,860,080 repre-
senting fiscal obligation unlawfully rein-
stated in the fiscal evidence; - to reflect
Electrica’s right to the reimbursement of
RON 817,521 which was not objected of the
reimbursement made by NAFA on 22 Sep-
tember 2020, arising from the annulment
of the fiscal decision in case mentioned
in item 1 above, let. a); 2. The obligation of
NAFA to pay the legal interests related to
the period 12.12.2016 – 21.09.2020, calcula-
ted in a percentage of 0.02%/day of delay
for the debt amount of RON 18,687,515
reimbursed on 22.09.2020, in the total
amount of RON 5,161,491.64; 3. Establishing
a 15 days term from the decision so that
NAFA-DGAMC to settle the fiscal file as in-
dicated above, imposing late penalties of
RON 1,000/day of delay for exceeding this
term, due to Electrica by DGAMC.
Bucharest Co-
urt of Appeal
In course of settlement.
The court of first instan-
ce rejected the action as
unfounded. The plaintiff
filed an appeal, admit-
ted by the court, which
quashes the contested
decisions and, re-jud-
ging partially admits
the action. Partially an-
nuls Decision no. 462
/ 23.11.2015
issued by
A.N.A.F –DGSC, regar-
ding point 3. Obliges
the defendant A.N.A.F
–DGSC to settle on the
merits of the claim re-
garding the amount of
RON 10,091,323. It sends
for retrial to the same
court the request re-
garding the other fiscal
obligations retained by
the fiscal body, amoun-
ting to RON 13,886,492.
Final (file no. 1018/2/2016
*). In the retrial, case no.
1018/2/2016* was registe-
red with a new number,
359/2/2021 - in course of
settlement.
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 ac-
tion for annulment was
filed on 22.12.2020 (file
no. 641/42 / 2020).
6
Plaintiff: DEER
Defendant: NAFA -
DGAMC
359/2/2021 (former
1018/2/2016*)
Cancellation of administrative act – Deci-
sion no. 462/23 November 2015, litigation
amount of RON 7,731,693 (RON 4,689,686
income tax + RON 3,042,007 VAT) and
for the amount of RON 6,154,799 (RON
3,991,503 interests/penalties and late fees
related to income tax + RON 2,163,296 in-
terests/penalties and delay fees related to
the VAT).
Bucharest Co-
urt of Appeal -
retrial
182 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
7
8
Plaintiff: DEER
Defendant: DGAMC
– NAFA
641/42/2020
641/42/2020
Annulment of the administrative act of the
SettlementDecision 154/02.07.2020 for the
amount of RON 10,091,323 (point 3 of the
Decision no. 462 / 23.11.2015)
Plaintiff: DEER
Defendant: Galati
City Hall - DITVL
Galati
263/42/2020
Cancellation of administrative documents
issued by the fiscal bodies within the Ga-
lati City Hall - DITVL Galati, respectively
Fiscal inspection report, taxation decision,
and decision to resolve the appeal. Accor-
ding to the Fiscal Inspection Report, the
control team determined an additional
tax on buildings, together with the rela-
ted accessories, in a total amount of RON
24,831,293, for the 2012-2015 period.
Ploiesti Court of
Appeal
In course of settlement.
Ploiesti Court of
Appeal
In course of settlement.
Plaintiff: EL SERV
Defendant: NAFA
9
5786/2/2018
Cancellation of administrative 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 diminished; RON 7,563,561
was established as additional VAT for pay-
ment by the refusal to deduct the VAT +
related accessories.
High Court of
Cassation and
Justice
regarding
By decision 2145/2019
dated 03.07.2019, the co-
urt admits the request.
Partially annuls Decisi-
on no. 22 / 18.01.2018 re-
garding the settlement
of the appeal, Taxation
Decision no. F-MC 305
/ 30.05.2017, The pro-
the
vision
measures established
by the fiscal inspecti-
on bodies no. 115046 /
30.05.2017 and RIF no.
F-MC 177 / 30.05.2017,
regarding the amount
of RON 7,264,463 VAT
with the related ac-
cessories, illegally retai-
ned as non-deductible,
respectively
regarding
the amount of RON
37,083,657 with which
the financial loss was
illegally diminished. In
the case, an appeal was
filed by both parties, in
course of settlement.
Plaintiff: EL SERV
Defendant: NAFA
31945/3/2018
Cancellation of the administrative decisi-
on no. 221/19 July 2017 - the cancellation of
penalties related to decision no. 305/2017
from above, RON 118,215.
Bucharest
Court
Suspended until the fi-
nal settlement of case
no. 5786/2/2018.
Plaintiff: DEER
Defendant: MFP-
NAFA – DGRFP Cluj
– AJFP Maramures
371/33/2017
The appeal of tax decision no. F-MM-
180/2016 regarding additional tax and VAT,
as well as interest/late payment increases
and late payment penalties. Preliminary
administrative procedures were conduc-
ted in 2017, prior to the case filing. Amount:
RON 32,295,033.
Plaintiff: EFSA
Defendant: NAFA –
DGAMC
8709/2/2018
Cancellation of:
• DGSC Decision no. 325/26 June 2018
• Decision F-MC 678/28 December 2017
• Report F-MC 385/28 December 2017
• Decision no. 511/24 October 2018
• Decision no. 21095/24 July 2018
Value: RON 11,483,652
High Court of
Cassation and
Justice
Appeal – in course of se-
ttlement.
Bucharest Co-
urt of Appeal
In course of settlement.
10
11
12
Source: Electrica
183 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 3.
Other significant litigations (with a value higher than EUR 500 thousand)
Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
1
2
3
4
Plaintiff: SPEEH
Hidroelectrica S.A.
Defendant: ELSA
13268/3/2015*
The obligation of Electrica to pay to SPEEH
Hidroelectrica SA the amount of RON
5,444,761 (the
loss suffered by selling
energy at an average price per MWh un-
der the production cost of 1 MWh); partial
obligation to pay the unrealized benefit of
Hidroelectrica by selling the total amount
of 398,300 MWh, calculated according to
the ANRE regulations (RON 9,646,826, ac-
cording to the written instructions dated 5
May 2015/RON 5,444,761 according to the
applicant’s conclusions mentioned in the
Conclusion of 15 March 2017); ordering the
defendant to pay the legal interest from
the date of the decision until the effective
payment, court costs.
Bucharest
Court of Appeal
The court of the first in-
stance rejects the excep-
tion of the prescription of
the material right to the
action as unreasonable
and the action as unfoun-
ded.
Both parties have appe-
aled, dismissed it as un-
founded. Both parties filed
an appeal. Hidroelectrica’s
appeal was rejected. The
ELSA appeal was admitted,
the case being sent for re-
trial to the Bucharest Court
of Appeal. In the retrial, the
court admits ELSA appe-
al, changes the appealed
sentence in the sense that
it admits the exception
of the prescription of the
material right to action,
and rejects the action as
prescribed. With appeal
within 30 days from the
communication.
Creditor: ELSA
Debtor: Petprod
S.A.
47478/3/2012/a1
Creditor: ELSA
Debtor: CET Braila
S.A.
2712/113/2013
Insolvency proceedings, registering to the
list of creditors for the amount of RON
2,591,163
Bucharest
Court
Ongoing procedure.
Bankruptcy, registering to the list of
creditors in the amount of RON 3,826,035.
Braila
Court
Ongoing procedure.
Creditor: ELSA,
AAAS, BCR SA,
and others
Debtor: Oltchim
S.A.
887/90/2013
Bankruptcy, remaining amount to be re-
covered – RON 671,018,210.
Valcea Court
Ongoing procedure. On
15.12.2021, the Court of the
European Union ruled on
the appeal filed by the de-
btor Oltchim S.A. against
the Decision of the Eu-
ropean Commission of
17.12.2018 by which it was
established that Oltchim
S.A. benefited from ille-
gal state aid from several
Romanian companies, in-
cluding ELECTRICA S.A.
By its decision, the Court
of First Instance of the Eu-
ropean Union cancelled
Articles 1 letter a and c of
the Decision of the Euro-
pean Commission, as well
as articles 3-6 and art. 7
paragraph 2 of the same
Decision. Thus, the con-
sequence for ELSA is the
cancellation of the ELSA
claim representing state
aid, in the amount of RON
498,065,828.38 and
the
interest calculated on the
principal until the date of
bankruptcy, in the amount
of RON 56,893,843.59. The
decision is not final, it can
be challenged by the Eu-
ropean Commission. The
term of appeal expires,
according to the informa-
tion of the liquidators, on
01.03.2022.
184 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
5
6
7
8
9
Creditor: ELSA
Debtor: Romener-
gy Industry SRL
2088/107/2016
Bankruptcy, registering to the list of credi-
tors in the amount of RON 2,917,266.
Alba Court
Ongoing procedure.
Creditor: ELSA
Debtor: Transener-
go Com S.A.
1372/3/2017
Insolvency proceedings. Amount RON
37,088,830.
Bucharest
Court
Ongoing reorganization
procedure. On 03.02.2021,
the Debtor’s reorganiza-
tion plan was confirmed,
according to which unse-
cured receivables do not
participate in distributi-
ons. ELSA’s appeal again-
st the sentence confir-
ming the reorganization
plan was definitively dis-
missed.
Creditor: ELSA
Debtor: Electra
Management &
Supply SRL
41095/3/2016
Creditor: ELSA
Debtor: Fidelis
Energy SRL
3052/99/2017
Bankruptcy. Amount: RON 6,027,537.
Bucharest
Court
Ongoing procedure
Insolvency proceedings. Amount: RON
11,354,912.
Iasi Court
Ongoing procedure
Plaintiff: EL SERV
Defendant: ELSA
5930/3/2016*
Obligation to increase the share capital of
SEM, with the value of the lands located
in Dobroiesti, 71, Zorilor Street Ilfov Coun-
ty („Deposits land and Fundeni thermal
power station”), with an area of 6,480 sqm,
CADP M03 no. 10982/2008, respectively
from Bucharest, 104, Timisoara Boulevard.,
district 6 („Land for energy equipment
repair shop”, with an area of 8,745 sqm,
CADP M03 no. 12917/2014 – amounting to
RON 7,344,390.
Bucharest
Court of Appeal
Retrial: By the decision
of 20.10.2020, the court
dismissed SEM appeal,
as unfounded, so that
the sentence on merits
was maintained by whi-
ch the exception of pre-
scription was admitted.
With appeal within 30
days from the commu-
nication. Considering the
EGMS SEM Decision no. 9
/ 07.11.2019 by which the
share capital of SEM was
increased with these 2
lands, the request will re-
main without an object.
Decision no. 1369/2020
pronounced
21.10.2020
by the CAB by which the
appeal
formulated by
SEM was rejected, the
decision remained final
by not exercising the
appeal, considering the
lack of interest of SEM
(the share capital was in-
creased with the 2 lands).
10
Plaintiff: ELSA
Defendant: Com-
petition Council
3889/2/2018
Administrative litigation - annulment of
Competition Council Decision no. 77/20
December 2017, by which an ELSA char-
ge 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-individualizing
the alleged anticompetitive facts, with the
retention and full use of all mitigating
circumstances applicable to ELSA.
High Court of
Cassation and
Justice
The court dismissed
ELSA’s action as unfoun-
ded; ELSA filed an appeal
– in course of settlement.
185 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Plaintiff: ELSA
Defendant: EL
SERV
39968/3/2018
Plaintiff: ELSA
Defendant: Elite In-
surance Company
44380/3/2018
Plaintiff: ELSA
Transenergo Com
S.A.
Defendant: Zurich
Broker de Asigura-
re Reasigurare SRL
3310/3/2020
Plaintiff: ELSA
Defendant: former
directors and
administrators of
ELSA
35729/3/2019
Plaintiff: VIR Com-
pany International
S.R.L.
Defendant: DEER
7507/105/2017
Action for damages - request payment
of penalty interest in the amount of RON
6,782,891, related to the amount of RON
10,327,442.
High Court of
Cassation and
Justice
The first court partly ad-
mitted the action and
the payment
ordered
of the legal interest cal-
culated for the period
20.11.2015-22.05.2018. EL
SERV filed an appeal, dis-
missed as unfunded. EL
SERV filled a recourse, in
course of settlement.
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.
Bucharest
Court
Suspended based on
art. 307 Civil Procedure
Code.
Claims – RON 4,000,000 (ELSA) and RON
97,350 and the bearing of any damage
related to the non-fulfilment of its obliga-
tion (Transenergo Com) – regarding the
insurance policy issued to guarantee the
payment obligations of Trasenergo Com
Bucharest
Court
The court rejected the
request
as unfoun-
ded, and Transenergo
Com’s request as di-
rected against a per-
son without passive
procedural
capacity.
With appeal within 30
from communi-
days
cation. To this file was
case no.
connected
3474/299/2020.
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
Suspended until the
final settlement of case
2229/2/2017.
Claims - the amount requested by VIR
Company International SRL consists of:
- EUR 5,000,000, damage caused by de-
layed issuance of the connection certifi-
cate for the photovoltaic plant located in
Valea Calugareasca commune, Darvari
village;
- EUR 155,000, equivalent of the amount of
electricity produced by the plant during
the technological tests period;
- EUR 145,000, green certificates related
to the amount of energy produced by the
photovoltaic plant during the technologi-
cal tests period.
In addition, it requires DEER 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: DEER
Debtor: Transener-
go Com S.A.
1372/3/2017
Insolvency proceedings. Amount: RON
9,274,831.
Bucharest
Court
Ongoing proceedings.
On 3 February 2021, the
Debtor’s
reorganizati-
on plan was confirmed,
to which
according
receivables
unsecured
do not participate
in
distributions. The Debit
represents the accumu-
lated receivables as a
result of the distribution
subsidiaries’ merger.
Plaintiff: DEER
Debtor: ELSA
(18976/3/2020)
33763/3/2019
Claims, according to the Court of Accounts
Decision,
representing payments not
owed of RON 20,350,189 made by DEER
(former SDMN).
Bucharest
Court
Suspended until the
final settlement of case
no. 1677/105/2017.
11
12
13
14
15
16
17
186 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 18
19
20
21
22
23
Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Claims - the equivalent value of land re-
lated to the Galati Center Transformation
Station – RON 2,500,000.
Galati
Court
In course of settlement.
Plaintiff: Tutu
Daniel and Tudori
Ionel
Defendant: DEER
180/233/2020
Plaintiff: Sinaia City
Hall
Defendant: DEER
3719/105/2020
Plaintiff: DEER
Defendant: Rome-
nergy Industry S.A.
2088/107/2016
Action in „Obligation to do” administrative
litigation. Sinaia City Hall requests:
-mainly: obliging MN to comply with LCD
113/2015 in the sense of executing the wor-
ks regarding the underground location of
the technical-municipal networks for the
project „Energy efficiency and lighting ex-
tension of the historic area - Sinaia”
- in the alternative: in case MN will not exe-
cute the works in due time and the City
Hall will execute 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.
Bankruptcy - amount: RON 9,224,595.51.
Plaintiff: Asirom
Vienna Insurance
Group S.A.
Defendant: DEER
439/111/2017
Recourse claims – for RON 2,842,347, re-
presenting the compensation paid by the
plaintiff to the insured company SC Cioco-
rom SRL following a fire that occurred on
7 March 2013. DEER (former SDTN) fault is
invoked for the overvoltage after a power
outage.
Prahova
Court
In course of settlement.
Alba
Court
Ongoing proceedings. The
debit represents the accu-
mulated receivables as a
result of the distribution
subsidiaries’ merger.
Bihor Court
In course of settlement.
Plaintiff: Energo
Proiect SRL
Defendant: DEER
374/1285/2018
Claims of RON 2,387,357.
High Court of
Cassation and
Justice
Plaintiff: DEER
Defendant: Rome-
nergy Industry S.A.
3086/62/2016
Payment ordinance
- amount: RON
2,806,318.
Brasov
Court
In first court, the case was
dismissed. In the appeal,
the court admitted the
plaintiff’s appeal, partially
the sentence
annulling
on the merits by rejecting
the exception of the lack
of capacity to use the Ora-
dea Branch and retrying,
rejecting the exception
of illegality of ANRE De-
cision no. 1285/05.09.2017
invoked by the defendant
DEER. Dismisses as un-
founded the request for a
lawsuit filed by the plain-
tiff in contradiction with
DEER and the Oradea
Branch. The plaintiff filed
an appeal, which is in the
filter procedure.
Ceased under art. 75 para.
1 final thesis from Law no.
85/2014 (as a result of the
finality of the decision
to open the bankruptcy
procedure of Romener-
gy Industry S.A. (file no.
2088/107/2016).
187 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
24
25
26
27
28
29
30
31
32
33
Plaintiff: DEER
Defendant: ELSA
4469/62/2018
Claims according to the Courts of Account
findings – RON 8,951,811
Brasov
Court
First instance. The High
Court of Cassation and
Justice solved the nega-
tive competence conflict
between Brasov Court
and Bucharest Court, the
case being in course of se-
ttlement at Brasov Court.
Plaintiff: DEER
Defendant: direc-
tors and managers
342/62/2020*
Claims against the former general ma-
nagers 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
Suspended until the fi-
nal settlement of case
no. 4469/62/2018.
Plaintiff: EL SERV
Defendant: Best
Recuperare Crean-
te SRL
2253/3/2011 (former
58348/3/2010)
Plaintiff: EL SERV
Defendant: Nati-
onal Leasing IFN
S.A.
18711/3/2010
Plaintiff: EL SERV
Defendant: Servicii
Energetice Banat
S.A.
8776/30/2013 (joint
with 2982/30/2014)
Plaintiff: EL SERV
Defendant: SEO
2570/63/2014
Plaintiff: EL SERV
Defendant: SED
8785/118/2014
Plaintiff: EL SERV
Defendant: SE
Moldova
4435/110/2015
Plaintiff: EL SERV
Defendant: New
Koppel Romania
20376/3/2016
Plaintiff: Integrator
S.A.
Defendant: EL
SERV,
SAP Romania
34479/3/2016**
Insolvency – amount to be recovered:
RON 3,938,811.
Bucharest
Court
Procedure closed. It was
ordered the deregistra-
tion of the debtor from
ORC Bucharest.
Bankruptcy – amount admitted to the list
of creditors: RON 21,663,983.27 (guarante-
ed RON 17,580,203.48 and unsecured RON
4,083,779.79).
Bucharest
Court
Ongoing proceedings.
Bankruptcy - amount admitted to the list
of creditors RON 72,180,439.68.
Timis
Court
Ongoing proceedings.
Bankruptcy - amount admitted to the list
of creditors RON 26,533,446.
Dolj
Court
Ongoing proceedings.
Bankruptcy - amount admitted to the list
of creditors: RON 15,130,315.27.
Constanta
Court
Ongoing proceedings.
Bankruptcy – amount: admitted to the list
of creditors RON 73,708,082.90.
Bacau
Court
Ongoing proceedings.
Claims – EUR 655,164, equivalent of RON
3,210,305.75.
Bucharest
Court
Ongoing proceedings.
Claims – EUR 1.277.435,25 EUR license +
2.650.855,68 EUR maintenance – RON
equivalent 19,321,005.11
Bucharest Co-
urt of Appeal
The case was suspen-
ded on 12.06.2019 un-
til the jurisdiction was
established in case 3O
266/2017 registered with
the Karlsruhe Court and
declined in favor of the
Mannheim Court.
188 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Plaintiff: EL SERV
Defendant: SED
8785/118/2014/a1
Bankruptcy – opposition to the prelimi-
nary table - debt RON 3,025,622.
Constanta
Court
Plaintiff: EL SERV
Defendant: direc-
tors and adminis-
trators 2013-2014
35815/3/2019
Action in attracting the liability of direc-
tors and administrators - measure II.7 of
Decision no. 13/27.12.2016 issued by the Ro-
manian Court of Accounts– RON 7,165,549
+ legal interest of RON 4,485,340.29.
Bucharest Co-
urt of Appeal
Plaintiff: EL SERV
Defendant: direc-
tors and adminis-
trators 2010-2014
35828/3/2019
Action in attracting the liability of direc-
tors and administrators - measure II.8 of
Decision no.13/27.12.2016 issued by the Ro-
manian Court of Accounts for the amount
of RON 19,611,812 + Legal penalties of RON
14,475,832.43.
Bucharest
Court
admitted
Appeal
in
part, the court ordering
the registration of the
appellant in the preli-
minary table of the de-
btor’s obligations with
the amount of RON
18,807.37, representing
leasing rates and main-
tenance services. Defi-
nitively settled.
The court dismissed the
action as prescribed,
ordering the plaintiff to
pay the judicial costs.
The appeal in course of
settlement.
The court dismissed the
action as it has been
modified and specified,
as prescribed. Orders
the plaintiff to pay the
judicial costs. An appeal
was filed, no term was
established.
Creditor: EFSA
Debtor: Apaterm
S.A. Galati
4783/121/2011*
Creditor: EFSA
Debtor: Vegetal
Trading SRL Braila
1653/113/2014
Creditor: EFSA
Debtor: Ariesmin
S.A. Branch
7375/107/2008
Creditor: EFSA
Debtor: Zlatmin
S.A. Branch
6/107/2003
Creditor: EFSA
Debtor: Hidrome-
canica S.A.
3836/62/2009
Creditor: EFSA
Debtor: Nitramo-
nia S.A.
1183/62/2004
Bankruptcy – registering to the list of cre-
ditors for the amount of RON 2,547,551.
Galati
Court
Ongoing proceedings.
Insolvency proceedings - registering to
the list of creditors for the amount of RON
1,851,392.
Braila
Court
Ongoing proceedings.
Bankruptcy - registering to the list of cre-
ditors for the amount of RON 20,711,588.
Alba
Court
Ongoing proceedings.
Bankruptcy - registering to the list of cre-
ditors for the amount of RON 9,314,176.
Alba
Court
Ongoing proceedings.
Bankruptcy - registering to the list of cre-
ditors for the amount of RON 4,792,026.
Brasov
Court
Ongoing proceedings.
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.
Insolvency proceedings - registering to
the list of creditors for the amount of RON
71,443,402.
Timisoara
Court
Ongoing proceedings.
32/100/2009
Creditor: EFSA
Debtor: Oltchim
S.A.
887/90/2013
Bankruptcy - registering to the list of cre-
ditors for the amount of RON 56,533,826.
Valcea
Court
Ongoing proceedings.
34
35
36
37
38
39
40
41
42
43
44
189 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
45
46
47
48
49
50
51
52
Creditor: EFSA
Debtor: Energon
Power and Gas
S.R.L.
53/1285/2017
Creditor: EFSA
Debtor: CUG S.A.
2145/1285/2005
Plaintiff: EFSA
Defendant: ELSA
6665/3/2019
Plaintiff: EFSA
Defendant: natural
persons
Called in guaran-
tee:
ELSA
35647/3/2019
Plaintiff: EL SERV
Defendant: ENEL
DISTRIBUTIE
MUNTENIA S.A.
4233/2/2020
(former no.
24088/3/2015)
Plaintiff: IVAN
LAURA IONELA
IVAN COR-
NEL IONUT
IVAN VLADIMIR
MIHAI
Defendant: EL
SERV
34705/3/2015
Insolvency proceedings - registering to
the list of creditors for the amount of RON
2,421,236.
Cluj Specialized
Court
Ongoing proceedings.
Bankruptcy - registering to the list of
creditors for the amount of RON 7,880,857.
Cluj Specialized
Court
Ongoing proceedings.
Claims: request of payment regarding the
invoices paid without supporting docu-
ments, as it has been stated by the Court
of Account – RON 7,025,632.
Bucharest
Court
Claims according to art. 155 of Companies
Law no. 31/1990 for the amount of RON
7,128,509.
Bucharest
Court of Appeal
The First Instance Court
dismissed the claim of
EFSA. The Decision can be
appealed within 30 days
of its communication.
Dismisses as prescribed
the action filed by the pla-
intiff EFSA. and dismisses
as objectless the warran-
ty claims issued by the
defendants, two former
directors, and one former
general manager, again-
st ELSA. The amount for
which ELSA was called as
collateral is around RON
6,232,398,
representing
the main debit, to which
are added
interest and
payment of any other
amounts that the court
may charge. EFSA filed an
appeal, dismissed it as un-
founded. The decision can
be appealed
(recourse)
within 30 days of its com-
munication.
Claims. Late payment penalties regarding
the litigation with Autocourier S.R.L. in the
amount of RON 3,068,929.67 according to
the Agreement no. 1055/2002 as well as
delay penalties for the main debt of RON
5,605,351.26 calculated after 30.06.2015 un-
til the entire payment of the main debt.
High Court of
Cassation and
Justice.
Case admitted in a retri-
al on merits. The appeal
filed by Enel against the
decision favorable to SEM
was dismissed. E-Distri-
butie filed an appeal.
Civil liability - work accident resulting in
employee death (amount of compensati-
on claims – EUR 3 million).
Bucharest
Court
Case suspended accor-
ding to art. 413 alin. 1 par. 1
Civil Procedure Code. (cri-
minal case ongoing).
Plaintiff: CAZACU
MARIA
Defendant: DEER
7212/200/2020
Liability of the principal for the act of the
defendant- work accident resulting in the
death of an AISE employee (amount of
compensation claimed: EUR 510,000)
Buzau
Court
In course of settlement.
Plaintiff: PRICOPIE
STEFAN
Defendant: DEER
12807/231/2019
Faulty killing (art.192 NCP) - third party
electric shock (amount of damages clai-
med: EUR 500,000)
Focsani
Court
In course of settlement.
Decision on merits on
11.02.2022.
190 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Plaintiff: DEER
– Defendant: COS
Targoviste
1906/120/2013
Insolvency – bankruptcy – total amount:
RON 5,589,482.51 out of which RON
1,357,789.92 – amount at the list of credi-
tors and RON 4,231,692.59 - current recei-
vables.
Dambovita
Court
53
54
54
55
56
57
Source: Electrica
Plaintiff: DEER
Defendant: Prutul
SA
4798/121/2019**
Reclamant DEER
Parat: Prutul SA
4798/121/2019**
Plaintiff: Verta Tel
SRL
Defendant: DEER
4106/3/2021
Plaintiff: DEER
Defendant: Getica
95 SRL
1666/114/2021
Plaintiff: DEER
Defendant: AEM
S.A.
1347/119/2021
Ongoing
procedure.
From the total receiva-
bles, the amount of RON
3,255,350.39 represents
the current receivables,
for which a payment
request was formulated
which is the object of
the file 2478/120/2021,
admitted on merits; the
decision is not final.
La fond, instanta a ad-
mis exceptia
inadmi-
sibilitatii. Solutia a fost
mentinuta
in apel. In
cauza a fost declarat re-
curs.
On the merits, the court
admitted the exception
of
inadmissibility. The
solution was confirmed
in the appeal. A recour-
se was filed.
Case dismissed on
merits. The decision is
appealable.
Claims: RON 4,343,437
Pretentii: 4.343.437 RON
Inalta Curte de
Casatie si
Justitie
High Court of
Cassation and
Justice
Claims
– contractual
2,009,233
liability: RON
Bucharest
Tribunal
Insolvency – registration at the list of cre-
ditors for the amount of RON 26,283,220.67
Buzau
Tribunal
Ongoing proceedings.
Claims – contractual
liability – RON
2,851,297.30
Covasna
Court
In course of settlement.
191 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT 4.
Litigations against the Romanian Court of Accounts
Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Plaintiff: ELSA
Defendant: Ro-
manian Court of
Accounts
2268/2/2014*
Suspension and cancellation of the admi-
nistrative act: Decision no. 3/14 January
2014 and Resolution no. 23/17 March 2014.
High Court of
Cassation and
Justice
First court: the claim is
partly admitted, parti-
ally cancels Resolution
no. 23 of 17 March 2014
items 1 and
regarding
5 and Decision no. 3/14
January 2014 regarding
items 4 and 8. Dismisses,
as ungrounded the claim
regarding items 2, 3, and
4 in Resolution no. 23/17
March 2014 and items 5,
6, and 7 in the Decision no
3/14 January 2014. Rejects
the request to suspend
the execution of Decisi-
on no. 3/14 January 2014,
as unfounded. ELSA and
CCR filed an appeal, both
being admitted. The court
partly admitsELSA’s requ-
est and sent the case for
retrial to the first instance,
regarding the annulment
of point 5 of Decision no.
23/17 March 2014, related
to point 8 of Decision no.
3/14 January 2014. Retrial
phase: In the first instan-
ce, the court rejected the
plaintiff’s request for an-
nulment of point 5 of Re-
solution no. 23/17.03.2014,
with a correspondent in
point 8 of Decision no.
3/14.01.2014 issued by the
defendant. With appe-
al within 15 days from its
communication. ELSA has
appealed the case, with a
term on 25.03.2022.
Plaintiff: ELSA
Defendant: Ro-
manian Court of
Accounts
2229/2/2017
Partial annulment of Decision no. 12/27
December 2016, issued by the director of
the 2nd Direction from the IVth Depart-
ment of the Romanian Court of Accounts,
regarding the faults from point 1 to 8, with
the consequence of dismissing the acti-
ons from point 1, 3 to 9 inclusive, imposed
to ELSA by the disputed Decision; the par-
tial annulment of the conclusion no. 12/27
February 2017 of the Romanian Court 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 deadlines
for carrying out all the measures ordered
by ELSA through Decision no. 12/27 De-
cember 2016 with at least 12 months; the
suspension of the enforceability of Decisi-
on no. 12 until final settlement of the pre-
sent dispute.
Bucharest
Court of Appeal
In course of settlement.
Plaintiff: ELSA
Defendant: Ro-
manian Court of
Accounts
7780/2/2018
Administrative litigation for annulment
of Decision no. 38/9 October 2018, the an-
nulment of the conclusion by which the
appeal imposed by Decision no. 12/1 of 27
December 2016 was dismissed, the revoca-
tion of the Decision no. 12/1, and the cessa-
tion of any CCR control act.
High Court of
Cassation and
Justice
The court of first instan-
ce dismissed the action
as inadmissible. ELSA fi-
led an appeal, with term
on 26.05.2022.
1
2
3
192 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
4
5
6
Plaintiff: EFSA
Defendant: Ro-
manian Court of
Accounts
2213/2/2017
Plaintiff: EL SERV
Defendant: Ro-
manian Court of
Accounts
2098/2/2017
Plaintiff: DEER
Defendant: Ro-
manian Court of
Accounts
Intervenient: SERV
1677/105/2017
Disputes with the Romanian Court of Ac-
counts (Law no. 94/1992), action for the
annulment of Decision no. 11/2016, of De-
cision no. 23/2017, and the Control Report
no. 5799/2016.
High Court of
Cassation and
Justice
The court definitively
dismissed the request
filed by EFSA.
Litigations with the Romanian Court of
Accounts for the annulment of the admi-
nistrative act – Decision no. 11/27 February
2017.
Bucharest
Court of Appeal
In course of settlement.
Suspension and annulment of the mea-
sures imposed by the Decision of Prahova
Court of Accounts no. 45/2016, following
the Control Report of the Prahova Court of
Accounts no. 6618/11 November 2016.
Prahova
Court
In course of settlement.
Source: Electrica
5. Other litigations with significant impact
Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Plaintiff: Niculescu
Vladimir
Defendant: DEER,
City Hall Valenii de
Munte
1580/105/2008**
Claim under Law no. 10/2001 – for a land
of 1,558 sqm and a built area of 202 sqm,
located in Valenii de Munte, 129, N. Iorga
street and being used by the Exploitation
Center Valeni.
Prahova
Court
Plaintiff: DEER
Defendant: Local
Council of Oradea
City, RCS&RDS
3340/111/2015
Cancellation of Oradea LCD no. 108/17 Fe-
bruary 2014 regarding the organization of
the public auction for the concession of
the 100,000 sqm land area, in order to re-
alize underground sewerage for the place-
ment of electronic and electrical commu-
nications networks.
Bihor
Court
Plaintiff: Delalina
S.R.L.
Defendant: DEER
910/111/2016
The obligation to issue a technical permit
for connection in the favour of SC Delalina
SRL.
Bihor
Court
1
2
3
In the first instance, the
plaintiff’s action was
partly admitted, it is ac-
knowledged the right to
reparative measures by
equivalent for the land
of 1,402 sqm located in
Valenii de Munte, 129,
Boulevard. Nicolae Iorga
(currently no. 131), Pra-
hova County.
The Plaintiff and Valenii
de Munte Town Hall fi-
led an appeal. The Plain-
tiff’s appeal was admit-
ted and the case was
sent for retrial to the fir-
st instance. In the retrial,
the first instance court
admitted the right of
the plaintiff to compen-
satory measures under
the law regarding some
measures for comple-
ting the restitution pro-
cess of the buildings
taken over abusively, for
the land with an area of
1,402 sqm. With appeal
within 15 days from the
communication.
At the request of RCS-R-
DS, the case was sus-
pended until the case
file 2414/2/2016 was se-
ttled with Delalina SRL,
a file that is in the role of
the Bucharest Court of
Appeal.
The case file was sus-
pended until the se-
ttlement of case file no.
2414/2/2016 with Delali-
na SRL, case file on the
lawsuit of the Bucharest
Court of Appeal.
193 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Plaintiff: Carei City
and others
Defendant: DEER
15600/211/2016*
Claims - it is requested to grant
compensation in the form of
material and moral dama-
ges, caused, by interrupting
the supply of electricity to the
consumers, in the Carei mu-
nicipality, during 31.12.2014-
02.01.2015.
Cluj Specialized
Court
On 21.04.2021, the court rejects the ac-
tion of a plaintiff as a result of admit-
ting the exception of lack of capacity
to use, rejects the exception of lack of
active procedural quality of plaintiffs,
invoked by defendants, rejects the ex-
ception of lack of passive procedural
quality of defendant DEER, rejects the
exception of lack of procedural quality
liabilities of the defendant Electrica
Furnizare SA and admits in part the
action in contradiction with the de-
fendant ELECTRICA FURNIZARE SA.
Dismisses as unfounded the request
for formal proceedings by the appli-
cants in the preceding paragraph in
contradiction with DEER. Obliges the
defendant ELECTRICA FURNIZARE
S.A., to pay the moral damages in fa-
vor of the plaintiffs in a differentiated
way, in the amount of 500 RON for
some of the plaintiffs, 750 RON and
1000 RON for other plaintiffs, rejecting
at the same time the moral damages
for other plaintiffs. Appeal filed by
Electrica Furnizare – in course of se-
ttlement.
The first court has rejected the excep-
tions and the action filed by the pla-
intiffs, which have initiated an appeal;
On 22.03.2021, the court ruled in favor
of the company, stating that DEER’s
(former SDTN) incident appeal was
invalid and rejected as unfounded the
main appeal filed by Foto Distributie
SRL si Delalina SRL. The court rejec-
ted as unfounded the appeals filed
by E-Distributie Muntenia SA (former
Enel Distributie Muntenia), E-Distri-
butie Banat SA (former Enel Distri-
butie Banat) si E-Distributie Dobrogea
SA (former Enel Distributie Dobro-
gea). Dismisses, as unfounded, the
cross-appeal brought by the appellant
- defendant Ministry of Economy, En-
trepreneurship, and Tourism (Ministry
of Economy) and the cross-appeal fi-
led by the Ministry of Energy against
the same sentence. Final.
Cancellation of administrative
acts (Order 73/2014, Concessi-
on agreements).
High Court of
Cassation and
Justice
The cancellation of the ANRE
decision on refusal to give li-
censes for electricity distribu-
tion.
Court of Appeal
Bucharest
In course of settlement.
4
5
6
Plaintiff: Delalina
S.R.L., Foto Distri-
butie S.R.L.
Defendant: DEER,
ANRE, Romanian
Government, Mi-
nistry of Economy,
Commerce, and
Relationships
with the Business
Environment,
Ministry of Energy,
Banat Enel Distri-
bution, Muntenia
Enel Distribution,
Dobrogea Enel
Distribution
2414/2/2016
Plaintiff: Delalina
S.R.L., Foto Distri-
butie S.R.L.
Defendant: ANRE
Intervener: DEER
4013/2/2016
194 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
Plaintiff: ELSA
Defendant: E – Dis-
tributie Banat S.A.
30399/325/2018*
Obligation to do - Mainly obli-
ging the defendant to hand
over the documentation for
the land in Bocsa. In subsidi-
ary, the obligation to draw up
the CADP documentation and
payment of damages.
Timisoara Court
of Appeal
Plaintiff: ELSA
Defendant: Baile
Herculane City
4572/208/2018*
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, 1, Uzinei street and
FC rectification.
Caras
Severin
Court
Case rejected by the first and second
courts. ELSA filed an appeal, admit-
ted by the court. The appeal court
quashes the contested decision and,
re-judging admits the appeal, parti-
ally changes the sentence of the first
instance in the sense that it partially
admits the action and obliges the
defendant to fulfill the formalities
imposed by H.G. 834/1991 in order to
obtain the Certificate of Attestation of
the Property Right and to hand over
the documentation for obtaining the
certificate. Maintains the sentence re-
garding the rejection of the principal
claim regarding the obligation of the
defendant to hand over the prepared
documentation, as well as regarding
the obligation of the defendant to pay
the comminatory damages. Dismisses
the defendant’s cross-appeal against
the same judgment. Definitive.
The first court admits the exception
of the lack of active procedural qua-
lity of ELSA and dismisses the action.
ELSA filed an appeal, dismissed it as
unfounded. ELSA filed an appeal, ad-
mitted by the court, which sends the
case for retrial to Caras Severin Court.
Retrial – in course of settlement.
(i) ELSA’s compliance with the
obligation of not to do regar-
ding the share capital and the
AoA of the EDB and the termi-
nation of abusive actions con-
sisting of the requests addres-
sed to the ONRC to change the
structure of the share capital
and the articles of association
of the EDB by increasing the
share capital with the value of
the land in the Certificates of
attestation of the property ri-
ght held by ELSA on the land
used by EDB in order to carry
out the activity; (ii) Stating
the fact that Electrica does
not hold the quality of public
authority involved in the pri-
vatization process and, con-
sequently, acknowledging the
absence of the right of ELSA to
request ONRC to modify the
constitutive act of the EDB by
increasing the share capital
with the value of the land ow-
ned by ELSA based on CADP
on the used land from EDB; (iii)
As against to the abusive acti-
ons taken in the EDB’s opinion,
ELSA’s obligation to pay the
damages whose existence and
amount will be proved by the
deadline provided by law.
for
the annulment
Action
of Shareholders
resolution
5/06.12.2018 (share capital in-
crease for SAPE).
Bucharest
Court
In course of settlement.
Timis
Court
In course of settlement. At this
case was connected the case no.
988/30/2019.
Complaint against the resoluti-
on of the ORC director.
Timisoara Court
of Appeal
The request was rejected definitively.
E-Distributie Banat filed an appeal for
annulment (case. 793/59/2021), rejec-
ted. E-Distributie Banat filed a request
for review (case. 880/59/2021), dismis-
sed by the court.
195 | 2021 ANNUAL REPORT
ELECTRICA S.A.
Plaintiff: E-Distri-
butie Banat
Defendant: ELSA
12857/3/2019
Plaintiff: ELSA,
SAPE
Defendant: E-Dis-
tributie Banat
949/39/2019
Plaintiff: E-Distri-
butie Banat
Defendant: ELSA
1994/30/2019/a1
7
8
9
10
11
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
12
Plaintiff: ELSA
Defendant: UAT
Targu Neamt
122/321/2020
13
Plaintiff: ELSA
Defendant: UAT
Bicaz
91/188/2020
1. obliging the defendant to
leave us in full ownership and
possession of the land with an
area of 3,389 sqm, located in
Targu Neamt,
2. rectification of the entries
from the land book no. 55409
of the City of Targu Neamt, in
the sense of elimination of the
inappropriate
registrations
made in it, in order to agree to
the tabular status with the real
legal situation of the building,
respectively the cancellation
of the property right of the ta-
bular owner Targu Neamt City
and the registration of the pro-
perty 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 of the land in the
area of 10,524 sqm (from docu-
ments 22,265 sqm), located in
Bicaz, Neamt county.
2. rectification of the entries
from the land book no. 52954
of Bicaz City, in the sense of
elimination of
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 ri-
ght of the tabular owner Bicaz
City and the registration of the
property right of Societatea
Energetice Electrice Electrica
S.A.
3. Order the defendant to pay
the court costs.
1. obliging the defendants to
leave us in full ownership and
possession of the land surfaces
that overlap with the land loca-
ted in 1, Aleea FRE street, Vide-
le, Teleorman county, for which
we hold CADP.
2. the delimitation of the abo-
ve-mentioned properties, by
establishing the boundary line
according to the property dee-
ds of the parties;
3. rectification of the entries in
the land book and registration
of the property right of the pla-
intiff ELSA on this area of land
Bacau Court of
Appeal
The action was dismissed on merits.
ELSA filed an appeal, dismissed it as
unfounded. The decision was appea-
led.
The court of the first instance parti-
ally annuls the Decision of the Local
Council of Bicaz no. 94 / 25.08.2016,
respectively regarding the surface
of 10,524 sqm of urban land 3, Bicaz,
Energiei street (former Plant), loca-
ted at the last position of the table in
the Annex to HCL no. 94 / 25.08.2016,
following the admission of the excep-
tion of illegality, invoked by the plain-
tiff. Dismisses the action brought by
ELSA as unfounded. Admits in part
the action in the rectification of the
land book. It orders the rectification of
the Land Book no. 52954 of the City of
Bicaz, regarding the land with an area
of 10,524 sqm, located in Bicaz, 3, Ener-
giei street, Neamț County (former Uzi-
nei), in the sense of deleting the pro-
perty right of the defendant Bicaz city,
as a result of the partial annulment of
HCL no. 94 / 25.08.2016, regarding this
land. Rejects as unfounded the appli-
cant’s request to order the rectificati-
on of the Land Book no. 52954 of the
City of Bicaz, regarding the land with
an area of 10,524 sqm, located in Bicaz,
3, Energiei street, Neamț County (for-
mer Uzinei), in the sense of registering
the ELSA property right over the abo-
ve-mentioned land. ELSA appealed.
Admits in part the request for sum-
mons and consequently: establishes
the landline boundary of the plaintiff’s
property (ELSA) on the current boun-
dary lines, outlined on the situation
plan related to the completion of the
expert report, with the coordinates
indicated by the expert, land delimi-
ted points 1-2-3-4-5-6-7-8-9-10-11-12-13-
14-15-16-17-18-19-20-21-22-23. It orders
the rectification of the land book no.
23176 by repositioning, in order to eli-
minate any virtual overlap between
the land belonging to the plaintiff,
with the boundary line as previously
established, and the land registered in
this land book. Dismisses the action as
unfounded.
Neamt
Tribunal
Videle
Court
Plaintiff: DEER
Defendant: ANARC
(ANCOM) andTe-
lekom Romania
Communications
SA
7407/2/2020
Appeal against Decision no.
1177 / 13.11.2020 of the ANARC
President.
It was requested
the partial annulment of the
ANCOM decision and the com-
plete rejection of the Telekom
Romania request.
Bucharest
Court of Appeal
In course of settlement.
Plaintiff: ELSA
Defendant: Videle
City, through
Mayor
948/335/2020
14
15
196 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
16
17
18
19
Plaintiff: Valenii de
Munte City Hall
Defendant: DEER
2848/105/2020
Valenii de Munte City Hall requests
the obligation of DEER (Ploiesti) to
take over public lighting installations
and to pay their equivalent value of
RON 466,880.
Prahova
Court
In course of settlement.
Plaintiff: ELSA and
the subsidiaries
Defendant: Roma-
nian Government
3781/2/2020
Annulment of the administrative act:
Government Decision 1041/2003 on
some measures to regulate the fa-
cilities granted to pensioners in the
electricity sector.
High Court of
Cassation and
Justice
Case dismissed on merits; it
was filed an appeal, term on
23.02.2023.
Plaintiff: Grup 4
Instalatii
Defendant: DEER
375/1285/2021
Plaintiff: ELSA
Defendant: Kau-
fland Romania
SCS, Deva City,
through the Mayor
and Deva City
Council
156/221/2021
The obligation of DEER is to recog-
nize, to respect the property right of
G4Installatii regarding the buildings
located in Cluj Napoca, 28A, Ilie Ma-
celaru Street. and 2, Uzinei Electri-
ce Street. , registered in land book
297841 Cluj Napoca with no. 297841,
consisting of land with an area of
10720 sqm and constructions: con-
struction registered in land book
with no. 297841-C1, construction of
administrative headquarters with an
area of 1560 sqm; body A, construc-
tion no. 297841- C2 - 512 sqm, buil-
ding B, construction no. 297841 - C3
- 171 sqm, building C, construction
no. 297841 - C4 - 338 sqm, building
D, construction no.. 297841-C6 - 348
sqm - 110/10 kW Transformation Sta-
tion. It is requested the handing over
of the above buildings and the rec-
tification of the land book registrati-
ons in the sense of the annulment of
the tabulation conclusions by which
the DEER property right was regis-
tered, the deregistration of the land
book property right, the registration
of the property right in favor of G4I.
1. obliging the defendants to leave
us in full ownership and possession
of the land surfaces that overlap with
the ELSA land located in Deva muni-
cipality, 1, Dorobanți street, Hunedoa-
ra county, as follows: (a) Kaufland Ro-
mania SCS - land areas of 15 sqm and
50 sqm (part of the Kaufland Deva
parking lot), identified by IE 68452,
which overlap to the N-W with the
land owned by Electrica; (b) Deva
Municipality, through the Mayor and
the Local Council of Deva Municipa-
lity - land areas: (i) 2 sqm (part of the
“Playground for children”), identified
by IE 71851, which overlaps to the NE
with the land in the ownership of
Electrica and (ii) of 23 sqm (part of
“Calea Zarandului”), identified by IE
75973, which overlaps to the SW with
the land owned by Electrica; 2. the
delimitation of the above-mentioned
properties, by establishing the boun-
dary line according to the property
deeds of the parties; 3. rectification
of the entries in the land book regar-
ding the above-mentioned land are-
as, in the sense of eliminating the in-
appropriate entries made, in order to
reconcile the tabular status with the
real legal situation of the real estate,
respectively of the cancellation of
the property right tabular owners
and the registration of the property
right of the applicant ELSA over the-
se land areas.
Cluj
Tribunal
The court admits the exception
of the material incompetence
of the Cluj Specialized Tribunal,
an exception invoked ex offi-
cio, and consequently declines
the competence to resolve the
request for summons in favor
of the Cluj Tribunal-Civil Secti-
on. Pending settlement in this
court.
Deva
Court
In course of settlement.
197 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Crt. no.
Parties/Case file
number
Subject matter
Court
Case status
1. obliging the defendant to leave
us in full ownership and possessi-
on of the land with an area of 529
sqm identified with Cadastral no.
306526, registered in the land book
no. 306526 Of Chisineu Cris,. Coun-
ty Arad, located in Chișineu Criș, 63,
Înfrățirii street. , Arad county, as well
as the land with an area of 121 sqm,
identified with Cadastral no. 306527,
registered in the lank booj no. 306527
of Chisineu Cris,. County Arad, lo-
cated in Chișineu Criș, 63, Înfrățirii
street. , Arad County.
2. rectification of the entries in the
land books no. 306526 and 306527 of
the City of Chisinau Cris, in the sense
of eliminating the inappropriate en-
tries made, in order to reconcile the
tabular status with the real legal si-
tuation of the buildings, respectively
the cancellation of the property right
of the tabular owner Chisinau Cris
City and registration of the property
right of ELSA 3. Order the defendant
to pay the costs.
1. Obligation of the defendant to
pay to the plaintiff the amount of
166,738 lei, representing the percen-
tage of 55% of the OAVT package,
in accordance with the provisions
of Annex 3 to the mandate contract
no. 42/10.08.2015. 2. Obligation of the
defendant to pay the plaintiff dama-
ges for non-execution of the obliga-
tion to pay the percentage of 55%
of the OAVT package. 3. Obligation
of the defendant to pay the amount
of 11,973 lei, representing the annu-
al variable remuneration for 2018. 4.
Obligation of the defendant to pay
the amount of 24,756 lei, represen-
ting the annual variable remunera-
tion related to 2019. 5. Updating the
amounts provided in the preceding
items, with penalizing legal interest.
The asked damages should be cal-
culated as the legal penalty interest
plus 8% payable per each day of de-
lay as of the date of the registration
of the claim until the payment of the
55% of OAVT package by the defen-
dant. 6. The obligation of the defen-
dant to pay the expenses incurred by
the request for arbitration.
20
Plaintiff: ELSA
Defendant: UAT
Chisineu Cris
2143/210/2020
21
Plaintiff:
Alexandra
Borislavschi
Defendant:
ELSA
ARB - 5670
Source: Electrica
Arad
Tribunal
Case dismissed on merits. It
was filed an appeal – in course
of settlement.
Vienna
I n t e r n a t i o n a l
Arbitral Centre
No term was settled.
198 | 2021 ANNUAL REPORT
ELECTRICA S.A.
Appendix 2 –
Details of the main
investments of Electrica
Group during 2020
In 2021 the most significant investments of Electrica Group are the following:
Description
(RON mn)
MUNTENIA NORD
Modernization and SCADA system integration of 110/20 kV Ianca Substation
Modernization of pole mounted transformer substation, LV OHL equipment and LV connections
in Cobia commune, localities: Gherghitesti, Frasin Vale, Frasin Deal, Manastirea, Mislea, Capsuna,
Craciunesti, Closcani, Blidari
Voltage level improvements in Tudor Vladimirescu locality, Galati County
Upgrading of 110kV protection system and SCADA system integration for Ploiesti Sud Substation
Voltage level improvements for consumers in Mogosani commune, localities Mogosani, Meri, Chirca,
Cojocaru, Zavoiu
Modernization of electricity distribution installations belonging to Buzau branch, at blocks of flats in
Brosteni neighborhood, Buzau County
Extension and modernization of 110/20/6 kV Tecuci Substation, Galati County
Modernization of 20kV OHL by replacing the insulation and conductors (20kV OHL Urleasca - SR
Ramnicelu, 20kV OHL Lacu Sarat - SRPD 1-4, 20kV OHL Romanu - T. Vladimirescu and 20kV OHL
Gropeni – Tichilesti)
Modernization and SCADA system integration of 110/20 kV Magura Substation
Extension of SMART Metering System (SMS) in Vrancea county, localities Marasesti, Gologanu,
Slobozia Ciorasti, Jiliste, Balta Ratei, Liesti, Gura Calitei, Cocosari, Groapa Tufei, Rasca,
Sotarcari, Rachitosu, Bicestii de Jos, Vulturu, Popesti, Tamboiesti, nanesti, Vitanesti de sub
Magura, Urechesti, Sarbi, Biliesti, Mircestii NOi, Dragosloveni, Budesti, Valea Cotesti, Hangulesti,
Ciorasti, Codresti, Spatareasa, Ciuslea, Bordesti, Bordestii de Jos, Bordestii de Sus, Chiojdeni,
Maracini, Seciu, Lojnita, Martinesti, Jitia, Candesti, Candesti Deal, Candesti Vale, Precistanu,
Poiana Cristei, Mihalceni, Armeni, Belciugele, Coroteni, Balesti, Faurei, Bordeasca Veche
Modernization of distribution networks in the area of pole mounted transformer substations: 7087
no. 1, 7083 no. 2, 7084 no. 4, 7085 no. 5, 7088 no. 6, 7188 nr. 7 and 7082 SMA from Chiraftei locality,
Mastacani commune, Galati County
Modernization of distribution networks in Voetin, Sihlea, Vrancea County
Increasing the supply reliability of 20 kV OHL Petresti-Irigatii 2, from 110/20 kV Crovu Substation,
Arges river crossing
Modernization of LV OHL and LV connections for consumers of Stefan cel Mare Street, Braila city
Modernization of transformer substations powered from 20 kV Independenta underground cable
line, Unirii, 24 Ianuarie, Substatia Obor, Patinoar, in Buzau city
Modernization of 20 kV OHL by replacing insulation and conductors 20 kV OHL Pisc - SPP 4, 20kV
OHL Cuza Voda - Tufesti, 20kV OHL Maxeni Scortaru, 20kV OHL Romanu - Traianu
Modernization and integration in SCADA of 110/20/6 kV Buzau Est substation
Modernization of distribution Network in Gugesti locality, Vrancea county
Upgrading to 20kV the Transformer substation in Galati municipality - Cartier Traian Nord area,
Galati county;
Execution of coexistence conditions with the existing electrical networks necessary to obtain the
location permit for Traian Vuia street, H. Coanda street, G. Cosbuc boulevard, 1 Decembrie 1918 Street,
and Al. Butcher mun. Galati
Integration in SCADA of the Berceni 110/20 kV substation
Modernization of Transformer substation PTZ 0065 and 0.4 kV OHL in the related area, Campina city
Modernization pole mounted transformer substations (PTA), LV OHL, and connections in Morteni
commune, localities, Neajlov, Morteni, Florica.
Voltage level improvement for consumers in Dambovita county, commune Uliesti, localities Uliesti,
Croitori, Jugureni, Olteni, Manastioara, Stravapolia.
Voltage level improvement for consumers in commune Petresti – localities Coada Izvorului, Greci,
Puntea de Greci, Gherghesti, Ionesti, Potlogeni Deal
Voltage level improvement for consumers in commune Ciocanesti, localities Ciocanesti, Cretu,
Vizuresti
Voltage level improvement for consumers in Costesti Vale, Tomsani localities, Costesti Vale
commune, Dambovita county.
2.61
1.89
2.09
3.98
2.85
4.03
1.65
3.51
1.19
1.27
1.15
2.17
0.95
1.01
0.89
1.73
3.40
3.90
1.37
4.41
1.54
1.00
1.47
2.46
2.40
1.96
2.18
200 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Description
(RON mn)
Voltage level improvement for consumers in localities Dragodana, Straosti, Burduca, Cuparu,
commune Dragodana, Dambovita county
Voltage level improvement for consumers in villages Contesti, Savesti, Crangasi, Mereni,
Calugareni, Boteni
TRANSILVANIA SUD
Integration of substations from Alba 110 kV Operations Centre into the SCADA DMS system of
SDTS
Modernization of transformer substations by replacing MV cells, TDRIs (indoor network distri-
bution board for transformer stations), integration in SAD, and repairing buildings related to
transformer stations in Sacele municipality, Brasov County
Voltage level improvements and modernization of LV OHL and LV electrical connections in
Sancraiu de Mures and Nazna, Mures county
Modernization of LV OHL Marsa locality, Sibiu County
Modernization of LV OHL Hipodrom 1, 2, 3 area, Sibiu municipality, Sibiu County
Modernization of distribution network 20/0,4 kV, LV connection securing, locality Feldioara,
Brasov County - Stage 1 area related to transformer substations no.11 and 30
Modernization of LV OHL Bistra, Bistra commune, Alba County
Modernization of MV network and LV OHL, voltage level improvements and security and syste-
matization of LV connections - Doamna Stanca street and related streets, Fagaras municipality,
Brasov County
Works at 110 kV OHL South Sibiu - Ucea 1 + 2, Sibiu County
Voltage level improvements and modernization of electrical distribution network, LV OHL and
LV connections of Stejerisului, Cibinului, Calea Poienii streets, Brasov locality, Brasov County
Modernization of distribution networks on Dozsa Gyorgy, Belchiei, Pescarilor, Rozelor streets,
Gheorgheni municipality, Harghita County
Backup power 20 kV busbars - Sanpaul Station, Mures County
Modernization of distribution network 20kV Sovata - Oras 2, Sovata locality, Mures county
Modernization of the protection system, in order to reduce the number of consumers affected
in case of defects with grounding on the 20 kV distributors of (pole mounted transformer sub-
stations) PAs that supply electricity to users from Sibiu municipality, Sibiu County
Modernization of OHL 0,4 kV Blaj, str. Eroilor (partial), Fabricii, Locomotivei, Fochistilor, Ceferisti-
lor, Dr. V. Suciu, I.M. Klein, Gh. Sincai and A. Muresanu, Blaj municipality, Alba County – stage 3
Modernization of OHL 0,4 kV Blaj, streets. Eroilor Fabricii, Locomotivei, Fochistilor, Ceferistilor,
Dr. V. Suciu, I.M. Klein, Gh. Sincai si A. Muresanu, Blaj municipality, Alba county- stages 1,2 si 4
Modernization of electricity supply installations in Medias City – Vitrometan neighbourhood,
Sibiu County
Voltage level improvement and modernization of OHL 0.4 kV. streets. Avram Iancu and Motilor,
Aiud locality, Alba County
Decentralization of the MV network, voltage level improvement and conductors replacement
in LV network, modernization, and security of connections to Zarand, Cetinii, General Traian
Mosoiu streets, Brasov locality, Brasov County
Voltage level improving and modernization of OHL LV Parau, Brasov county
Voltage level improving area PTA 9 Harman, neighborhood Domnitorilor, Brasov County
Voltage level improving and securing connections Vatava locality, Mures county
Increasing safety of supply and voltage level in 20kV network Regin, Mures county
Voltage level improving and modernization of connections in Saulia de Campie, Mures county
Voltage level improving and modernization of LV OHL and connections Deda locality, Mures County
Implementation of Smart Metering System Brasov branch area
1.59
1.75
13.30
7.32
4.74
2.78
4.55
2.85
2.56
2.03
1.40
1.87
2.46
1.30
1.50
1.10
1.20
2.30
5.44
2.30
1.90
1.08
1.80
1.32
1.65
1.97
2.59
4.94
201 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Description
(RON mn)
TRANSILVANIA NORD
Integrated security, monitoring, and intervention System for the substations of SDTN
Construction of new MV underground cable line to increase the security of electricity supply in
the area of Cihei locality, Sanmartin commune
Modernization of transformer substations belonging to Cluj-Napoca branch, Cluj County - Vol.2
- Gherla area
Modernization of 110/20 kV Nistru Substation
Reservation of 20kV busbar for Satu Mare 2 Substation from Carpati Substation, Satu Mare
municipality
Modernization of 110/20/10 kV Baciu Substation
Modernization of Satu Mare 2 110 kV Substation and introduction of 20kV busbar
Modernization of the electrical distribution networks in the Municipality of Cluj-Napoca, 21
Decembrie 1989 boulevard area and the adjacent streets, Cluj County
Modernization of neutral treatment groups in Carei 1 Substation
Modernization OHL 20KV Pump between S.S. 6350 and FBT transformer substation -
reconstruction of pole mounted transformer station Moara Jibou and voltage level
normalization on Campului street, Jibou locality
Network decentralization and power injection in the area of Spicului street, Cluj Napoca
municipality, Cluj county
Modernization of pole mounted transformer substations (PTA) Oradea branch
Modernization of 20 kV OHL Palota - Cheresig
Power injection Bufet Expres area, Madach Imre street, Oradea locality, Bihor county
Increasing the safety of electricity supply in Coada Lacului area - Stana de Vale
Modernization of substation 110/20 kV SASAR
Modernization of substation 110/20/6 kV Prundu Bargaului
Modernization of OHL 110kV Nasaud- Rodna poles 79-128 Bistrita Nasaud county
Modernization of substation 110/20 KV Sarmasag
6.14
2.70
1.98
3.39
1.95
2.20
2.24
2.65
1.47
1.46
1.85
1.12
1.11
2.02
1.74
1.16
3.41
1.22
2.51
In anul 2021, cele mai mari transferuri din imobilizari corporale in curs la imobilizari corporale reprezentand, in
principal, punerea in functiune a obiectivelor de investitii, sunt urmatoarele:
Description
(RON mn)
MUNTENIA NORD
Extension and modernization of 110/20/6 kV Tecuci Substation, Galati County
Upgrading of 110kV protection system and SCADA system integration for Ploiesti Sud Substation
Modernization of transformer station equipment, LV OHL equipment, and LV connections in
Cobia commune, localities: Gherghitesti, Frasin Vale, Frasin Deal, Manastirea, Mislea, Capsuna,
Craciunesti, Closcani, Blidari
Increasing the network voltage from 6 kV to 20 kV in Tecuci city, stage III – neighbourhoods
N.Balcescu, Gh.Petrascu and Criviteni, Galati county
Increasing the supply reliability of 20 kV OHL Petresti-Irigatii 2, from 110/20 kV Crovu Substation,
Arges river crossing
Upgrading protections of 110 kV and 6 kV cells, installation of the second neutral earthing group by
the 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 kV Mizil Substation
Modernization and SCADA system integration of Magura Substation
3.68
7.12
1.95
1.90
1.83
2.68
2.39
1.41
202 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Description
(RON mn)
Modernization of electrical distribution networks in the area of pole mounted transformer sub-
stations: 7087 no. 1, 7083 no. 2, 7084 no. 4, 7085 no. 5, 7088 no. 6, 7188 nr. 7 and 7082 SMA from
Chiraftei locality, Mastacani commune, Galati County
Modernization of electricity distribution installations belonging to Buzau branch, at blocks of
flats in Brosteni neighborhood, Buzau County
Extension of SMART Metering System (SMS) in Vrancea county, localities Marasesti, Gologanu,
Slobozia Ciorasti, Jiliste, Balta Ratei, Liesti, Gura Calitei, Cocosari, Groapa Tufei, Rasca, Sotar-
cari, Rachitosu, Bicestii de Jos, Vulturu, Popesti, Tamboiesti, nanesti, Vitanesti de sub Magura,
Urechesti, Sarbi, Biliesti, Mircestii NOi, Dragosloveni, Budesti, Valea Cotesti, Hangulesti, Ciorasti,
Codresti, Spatareasa, Ciuslea, Bordesti, Bordestii de Jos, Bordestii de Sus, Chiojdeni, Maracini,
Seciu, Lojnita, Martinesti, Jitia, Candesti, Candesti Deal, Candesti Vale, Precistanu, Poiana Cris-
tei, Mihalceni, Armeni, Belciugele, Coroteni, Balesti, Faurei, Bordeasca Veche
Modernization and SCADA system integration of 110/20 kV Ianca Substation
Modernization of 20kV OHL by replacing the insulation and conductors (20kV OHL Urleasca -
SR Ramnicelu, 20kV OHL Lacu Sarat - SRPD 1-4, 20kV OHL Romanu - T. Vladimirescu and 20kV
OHL Gropeni – Tichilesti)
Modernization of LV OHL and LV connections for consumers of Stefan cel Mare Street, Braila city
Modernization of transformer substations powered from 20 kV Independenta underground
cable line, Unirii, 24 Ianuarie, Substatia Obor, Patinoar, in Buzau city
Modernization and integration in SCADA of 110/20/6 kV Buzau Est substation
Modernization of distribution networks in Voetin, Sihlea, Vrancea County
Modernization of distribution network in Gugesti locality, Vrancea county
Voltage level improvements in Tudor Vladimirescu locality, Galati County
Upgrading to 20kV the Transformer substation in Galati municipality - Cartier Traian Nord area,
Galati county
Realization of coexistence conditions with the existing electrical networks necessary to obtain
the location permit for Traian Vuia street, H. Coanda street, G. Cosbuc boulevard, 1 Decembrie
1918 Street, and Al. Macelaru street, Galati municipality
Modernization and SCADA integration substation 110/20 kV Valea Larga
Integration in SCADA of the Berceni 110/20 kV substation
Modernization pole mounted transformer substations (PTA), LV OHL, and connections in
Morteni commune, localities, Neajlov, Morteni, Florica.
Voltage level improvement for consumers in Dambovita county, commune Uliesti, localities
Uliesti, Croitori, Jugureni, Olteni, Manastioara, Stravapolia.
Voltage level improvement for consumers in commune Petresti – localities Coada Izvorului,
Greci, Puntea de Greci, Gherghesti, Ionesti, Potlogeni Deal
Voltage level improvement for consumers in commune Ciocanesti, localities Ciocanesti, Cretu,
Vizuresti
Voltage level improvements for consumers in Mogosani commune, localities Mogosani, Meri,
Chirca, Cojocaru, Zavoiu
Voltage level improvement for consumers in Costesti Vale, Tomsani localities, Costesti Vale
commune, Dambovita county.
Voltage level improvement for consumers in localities Dragodana, Straosti, Burduca, Cuparu,
commune Dragodana, Dambovita county
Voltage level improvement for consumers in localities Contesti, Savesti, Crangasi, Mereni,
Calugareni, Boteni, commune Contesti
Modernization of 20 kV OHL by replacing insulation and conductors 20 kV OHL Pisc - SPP 4,
20kV OHL Cuza Voda - Tufesti, 20kV OHL Maxeni Scortaru, 20kV OHL Romanu - Traianu
TRANSILVANIA SUD
Integration of substations from Alba 110 kV Operations Centre into the SCADA DMS system of
SDTS
Works at 110 kV OHL South Sibiu - Ucea 1 + 2, Sibiu County
Modernization of LV OHL Bistra, Bistra commune, Alba County
1.32
3.83
1.39
3.51
3.97
1.60
1.31
2.95
2.44
4.24
2.40
1.45
4.40
1.47
2.71
1.48
2.36
2.86
2.03
2.95
2.31
1.96
1.54
2.61
21.52
1.54
2.55
203 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Description
(RON mn)
Modernization of transformer substations by replacing MV cells, TDRIs (indoor network distri-
bution board for transformer stations), integration in SAD, and repairing buildings related to
transformer stations in Sacele municipality, Brasov County
Voltage level improvements and modernization of LV OHL and LV electrical connections in
Sancraiu de Mures and Nazna, Mures county
Increasing the security of electricity supply 20 kV OHL Gabud, by integration with the 20 kV
derivation Gheja, Mures county
Backup power 20 kV busbars - Sanpaul Station, Mures County
Modernization of distribution network 20kV Sovata - Oras 2, Sovata locality, Mures county
Modernization of OHL 0.4 kV and connections, Teius city, Alba county
Modernization of OHL 0.4 kV Blaj, streets. Eroilor Fabricii, Locomotivei, Fochistilor, Ceferistilor,
Dr. V. Suciu, I.M. Klein, Gh. Sincai si A. Muresanu, Blaj municipality, Alba county- stage 3
Modernization of OHL 0,4 kV Blaj, streets. Eroilor Fabricii, Locomotivei, Fochistilor, Ceferistilor,
Dr. V. Suciu, I.M. Klein, Gh. Sincai si A. Muresanu, Blaj municipality, Alba county- stages 1,2 end 4
Voltage level improvements and modernization of electrical distribution network, LV OHL and
LV connections of Stejerisului, Cibinului, Calea Poienii streets, Brasov locality, Brasov County
Modernization of MV network and LV OHL, voltage level improvements and security and syste-
matization of LV connections - Doamna Stanca street and related streets, Fagaras municipality,
Brasov County
Modernization of distribution network 20/0,4 kV, LV connection securing, locality Feldioara,
Brasov County - Stage 1 area related to transformer substations PT 11 and PT 30
Modernization of distribution network in Mediascity – Vitrometan neighbourhood, Sibiu county
Modernization of LV OHL Hipodrom 1, 2, 3 area, Sibiu municipality, Sibiu County
Modernization of LV OHL Marsa locality, Sibiu County
Voltage level improvement and modernization of OHL 0.4 kV Avram Iancu end Motilor streets,
Aiud locality, Alba county
Decentralization of the MV network, voltage level improvement and conductors replacement
in LV network, modernization, and security of connections to Zarand, Cetinii, General Traian
Mosoiu streets, Brasov locality, Brasov County
Voltage level improving and modernization of OHL LV Parau, Brasov county
Voltage level improving area PTA 27 Stupinii Harmanului - Salcamilor neighborhood, Izvor,
Tarlungeni locality, Brasov county
Modernization of 0.4 kV network Fundata, PTA 6 area, Brasov county
Modernization of distribution networks on Dozsa Gyorgy, Belchiei, Pescarilor, Rozelor streets,
Gheorgheni municipality, Harghita County
Voltage level improving and securing connections Vatava locality, Mures county
Voltage level and security of supply improving in 20 kV network Reghin, Mures county
Voltage level improving and modernization of connections in Saulia de Campie locality, Mures
county
Voltage level improving and modernization of LV OHL and connections Deda locality, Mures
County
Increasing distribution capacity and safety in the developing area, adjacent to the future objec-
tive Clinical Hospital BV: Construction of a 110/20 kV substation in the 110 kV OHL axis Barto-
lomeu-FS Rasnov joint circuit with 110 kV OHL ICA Ghimbav-Ghimbav in area poles no.54-56,
Brasov county
Implementation of Smart Metering System Brasov branch area
Backup infrastructure upgrade (Disk backup system)
Integration in SCADA-DMS of the transformer stations provided with preparation for UCMT
installation
TRANSILVANIA NORD
Regulating 110 kV OHL of Oradea metropolitan area
Modernization of 110/20/10 kV Baciu Substation
8.97
4.99
1.27
1.46
1.43
1.48
1.40
2.50
3.24
3.80
4.60
5.40
4.00
3.20
2.64
1.99
1.40
1.38
1.19
2.70
1.44
1.72
2.00
2.50
14.47
3.00
1.60
1.80
7.11
8.08
204 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Description
(RON mn)
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
Integrated security, monitoring, and intervention System for the substations of SDTN
Increasing the degree of security in the electricity supply, the Stana de Vale area
Modernization of transformer substations belonging to Cluj-Napoca branch, Cluj County - Vol.2
- Gherla area
Modernization of Satu Mare 2 110 kV Substation and introduction of 20kV busbar
Modernization of transformer substations belonging to Bistrita branch
Modernization of 110/20/6 kV Prundu Bargaului Substation
Modernization of pole mounted transformer substations Ciresoaia 1, Ciresoaia 3, Ciresoaia CAP
as well as modernization of LV OHL and LV connections in the area Ciresoaia PMTS 1,3, CAP,
Ciresoaia locality, Bistrita County
Construction of new MV underground cable line to increase safety in electricity supply, for the
area related to MV distributors - Dej1, Dej2, Dej3 powered from Dej Cuzdrioara Substation, Dej
locality, Cluj County
Modernization of pole mounted transformer substations belonging to Cluj-Napoca branch, Cluj
County - Vol.2 - Gherla area
Modernization of transformer substations in metal construction Sarmasag, Sarmasg Mine
Colony, LV OHL regulation, and LV connections in the Coloniei Minei area
Modernization of LV OHL and LV connection in Finteusu Mic locality, pole mounted
transformer substation no.1 and 2 area
Modernization of pole mounted transformer substations belonging to Oradea branch
Increasing the safety in the supply of electricity to consumers from S-axis Pericei, moderniza-
tion of pole mounted transformer substation no. 4, and power injection in Pericei locality, Salaj
county
Development of the SAP IT system to implement the regulations regarding the change of the
settlement interval of the load curves from 60 min to 15 min.
Integration in SCADA of the installations within the Oradea branch
Conductor replacements of OHL 0,4 kV and power injection OHL 0,4 kV in Viseul de Jos locality –
pole mounted transformer substation PTA 6 area
Modernization of 20 kV OHL Tg. Lapus – Lapusul Romanesc vol.I
Modernization of the electrical distribution networks in the Municipality of Cluj-Napoca, 21
Decembrie 1989 boulevard area and the adjacent streets, Cluj County
Modernization of transformation substations PTA1, PTA2, PTA3 Burzuc, LV network, and
connections Burzuc locality, Bihor county
Power injection and LV network modernization Rosia locality, area Curatura, Bihor county
Power injection Bufet Expres area, Madach Imre street, Oradea locality, Bihor county
Modernization of 110/20 kV Nistru Substation
Modernization of substation 110/20 kV SASAR
Modernization of neutral treatment groups in Carei 1 Substation
Reservation of 20kV busbar for Satu Mare 2 Substation from Carpati Substation, Satu Mare
municipality
Modernization of OHL 110kV Nasaud- Rodna poles 79-128 Bistrita Nasaud county
Power injection in LV OHL streets Compozitorilor, Enescu and Dinu Lipati, Bistrita locality,
Bistrita Nasaud county
Modernization OHL 20KV Pump between S.S. 6350 and FBT transformer substation - recon-
struction of pole mounted transformer station Moara Jibou and voltage level normalization on
Campului street, Jibou locality
3.98
7.15
2.62
2.35
6.07
1.66
4.08
1.36
1.35
1.31
1.29
1.25
1.40
1.21
1.16
1.14
1.13
1.01
1.79
1.67
1.35
3.60
2.01
4.2
1.57
3.28
1.55
1.05
1.48
205 | 2021 ANNUAL REPORT
ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT Separate Financial
Statements
as at and for the year ended
31 December 2021
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
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. Reporting entity and general information
2. Basis of accounting
3. Functional and presentation currency
4. Use of judgments and estimates
Accounting policies
5. Basis of measurement
6. Significant accounting policies
7. Adoption of new and revised standards
Performance for the year
8. Revenue
9. Other income and operating expenses
10. Net finance income
11. Earnings per share
Employee benefits
12. Short-term employee benefits
13. Post-employment and other long-term employee benefits
14. Employee benefit expenses
Income tax
15. Income tax
Assets
218
222
222
222
223
223
231
232
232
233
234
234
235
239
239
16. Trade receivables
17. Other receivables
18. Cash and cash equivalents
19. Property, plant and equipment
20. Intangible assets
21. Investments in subsidiaries
22. Investments in associates
23. Loans granted to subsidiaries
241
242
243
244
248
249
252
254
208 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. SEPARATE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021PREPARED IN ACCORDANCE WITH THE ORDER OF THE MINISTRY OF PUBLIC FINANCE NO. 2844/2016
Equity and liabilities
24. Capital and reserves
25. Trade payables
26. Other payables
27. Provisions
Financial instruments
256
258
258
259
28. Financial instruments - fair values and risk management
259
Other information
29. Related parties
30. Contingencies
31. Commitments
32. Subsequent events
263
269
270
271
209 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. SEPARATE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021PREPARED IN ACCORDANCE WITH THE ORDER OF THE MINISTRY OF PUBLIC FINANCE NO. 2844/2016
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
(All amounts are in RON, if not otherwise stated)
Note
31 December 2021
31 December 2020
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Investments in associates
Loans granted to subsidiaries – long term
Right of use assets
Total non-current assets
Current assets
Cash and cash equivalents
Restricted cash
Trade receivables
Other receivables
Prepayments
19
20
21
22
23
18
18
16
17
100,057,480
96,943,295
53,676
272,880
2,285,224,715
2,284,881,698
25,809,696
-
1,276,325,000
1,030,000,000
488,370
1,433,070
3,687,958,937
3,413,530,943
5,757,972
193,484,820
-
320,000,000
925,873
411,954
584,765,644 180,761,447
765,483
427,549
Loans granted to subsidiaries – short term
23
30,000,000
-
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
210 | 2021 ANNUAL REPORT
ELECTRICA S.A.
279,655
-
622,494,627
695,085,770
4,310,453,564
4,108,616,713
24
24
24
24
3,464,435,970 3,464,435,970
103,049,177 103,049,177
(75,372,435)
(75,372,435)
7,366
7,366
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
(All amounts are in RON, if not otherwise stated)
Note
31 December 2021
31 December 2020
24
24
24
12,397,647 12,605,266
228,156,226
212,027,639
71,213,362
35,644,469
319,621,087 296,938,104
4,123,508,400 4,049,335,556
Note
31 December 2021
31 December 2020
Revaluation reserves
Legal reserves
Other reserves
Retained earnings
Total equity
Liabilities
Non-current liabilities
Lease liability – long term
118,456
485,741
Employee benefits
13
1,050,299
1,453,187
Total non-current liabilities
1,168,755
1,938,928
Current liabilities
Bank overdrafts
18
120,541,354
-
Lease liability – short term
394,818
968,556
Trade payables
Other payables
Deferred revenue
25
26
4,034,356
7,199,932
44,022,468
36,034,414
384,578
152,559
Employee benefits
12,13
12,160,721
7,168,505
Provisions
27
4,238,114
5,818,263
Total current liabilities
185,776,409
57,342,229
Total liabilities
186,945,164
59,281,157
Total equity and liabilities
4,310,453,564
4,108,616,713
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
211 | 2021 ANNUAL REPORT
ELECTRICA S.A.
Revenues
Other income
Employee benefits
Note
2021
2020
8
9
14
-
3,250,787
808,081
14,516,325
(39,239,650)
(31,818,555)
Depreciation and amortization
19,20
(2,274,344)
(13,050,255)
Reversal of impairment of trade and other receivables,
16,17
70,195
98,583,335
net
Reversal of impairment/(Impairment) of property,
19
3,804,893
(9,979,491)
plant and equipment, net
Impairment of assets held for sale
(492,336)
-
Change in provisions for legal cases and non-compete
27
1,580,149
(2,510,794)
clauses, net
Other operating expenses
9
(19,897,208)
(23,870,825)
(Loss)/Profit before finance result
(55,640,220)
35,120,527
Finance income
Finance costs
10
10
377,682,973
260,305,358
(262,543)
(123,963)
Net finance income
377,420,430
260,181,395
Share of results of associates
22
(3,498)
-
Profit before tax
321,776,712
295,301,922
Income tax benefit
15
43,172
3,076,614
Profit for the year
Earnings per share
321,819,884
298,378,536
Basic and diluted earnings per share (RON)
11
0.95
0.88
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
212 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. SEPARATE STATEMENT OF PROFIT OR LOSSFOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in RON, if not otherwise stated)
Profit for the year
321,819,884
298,378,536
Note
2021
2020
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of property, plant and equipment
24
Tax related to revaluation of property, plant and equipment
15
-
-
11,901,253
(3,059,897)
Re-measurements of the defined benefit liability
13
269,825
104,482
Tax related to re-measurements of the defined benefit
15
(43,172)
(16,717)
liability
Other comprehensive income, net of tax
226,653
8,929,121
Total comprehensive income
322,046,537
307,307,657
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
213 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in RON, if not otherwise stated)
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214 | 2021 ANNUAL REPORT
ELECTRICA S.A.
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SOCIETATEA ENERGETICA ELECTRICA S.A.
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215 | 2021 ANNUAL REPORT
ELECTRICA S.A.
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SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in RON, if not otherwise stated)
Note
2021
2020
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortisation
321,819,884
298,378,536
19
20
1,114,306
11,133,444
1,160,038
1,916,811
(Reversal of impairment)/Impairment of
19
(3,804,893)
9,979,491
property, plant and equipment, net
Loss from the disposal of tangible assets
Loss from investments in subsidiaries
19
21
3,104,047
629,452
73
-
Reversal of impairment of trade and other
16,17
(70,195)
(98,583,335)
receivables, net
Impairment of assets held for sale
492,336
-
Net finance income
Share of loss of associates
10
22
(377,420,430)
(260,181,395)
3,498
-
Changes in employee benefits obligations
13
5,054,128
(390,301)
Changes in provisions, net
Income tax benefit
27
15
Changes in:
Trade receivables
Other receivables
Trade payables
Other payables
(1,580,149)
2,510,794
(43,172)
(3,076,614)
(50,170,529)
(37,683,117)
(443,724)
103,223,222
2,972,994
4,329,592
(2,874,463)
1,755,495
259,359
(419,871)
Employee benefits
(286,961)
1,888,495
Cash flow (used in)/ generated from
(50,543,324)
73,093,816
operating activities
Interest paid
(179,011)
(1,983)
Net cash (used in)/from operating
(50,722,335)
73,091,833
activities
216 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in RON, if not otherwise stated)
Note
2021
2020
Cash flows from investing activities
Payments for purchases of property, plant and equipment
(4,829,850)
(4,024,333)
Payments for purchase of intangible assets
-
(29,175)
Payments for purchase of interests in subsidiaries, net
(124,990)
Proceeds from sales of investments in subsidiaries
20
-
-
Proceeds from the sale of property, plant and equipment
21,001
191,996
Proceeds from loans granted to subsidiaries
60,000,000
Payment for acquisition of investment in associate
(25,813,194)
-
-
Proceeds from deposits with maturity of 3 months or
-
66,471,188
longer
Loans granted to subsidiaries
(336,325,000)
-
Cash used by subsidiaries under the cash pooling facility
23,29
(393,576,820)
(132,171,404)
Interest received
Dividends received
Restricted cash
42,172,401
41,385,917
10
329,543,644
214,969,717
320,000,000
-
Net cash (used in)/from investing activities
(8,932,788)
186,793,906
Cash flows from financing activities
Dividends paid
24
(247,626,657)
(245,779,724)
Payment of lease liabilities
(986,422)
(900,576)
Net cash used in financing activities
(248,613,079)
(246,680,300)
Net increase in cash and cash equivalents
(308,268,202)
13,205,439
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
18
18
193,484,820
180,279,381
(114,783,382)
193,484,820
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
217 | 2021 ANNUAL REPORT
ELECTRICA S.A.
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 2021.
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 restructuring
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 2021 and 31 December 2020, the major shareholder of Societatea Energetica Electrica S.A. is
the Romanian State, represented by the Ministry of Energy 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 2021 and 31 December 2020, the Company’s subsidiaries are the following:
Subsidiary
Activity
registration
Head Office
at 31 December
as at 31 December
Sole
% shareholding as
% shareholding
code
2021
2020
Electricity
distribution in
Distributie
geographical
Energie
Electrica
areas
Transilvania
14476722
Cluj-Napoca
99.99999929%
100%
Romania S.A.
Nord,
(“DEER”)
Transilvania Sud
and Muntenia
Nord
Electrica
Electricity and
Furnizare S.A.
natural gas
28909028
Bucuresti
99.9998415011992% 99.9998409513906%
17329505
Bucuresti
99.99998095%
100%
44854129
Bucuresti
99.9920%
-
29389861
Craiova
100%
100%
supply
Services in the
Electrica Serv
energy sector
S.A.
Electrica
Productie
Energie S.A
(maintenance,
repairs,
construction)
Electricity
generation
Servicii
Services in the
Energetice
energy sector
Oltenia S.A. (in
bankruptcy)
(maintenance,
repairs,
construction)
218 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Subsidiary
Activity
registration
Head Office
at 31 December
as at 31 December
Sole
% shareholding as
% shareholding
code
2021
2020
Servicii
Services in the
Energetice
energy sector
Moldova S.A.
(maintenance,
29386768
Bacau
100%
100%
(in bankruptcy)
repairs,
construction)
Servicii
Services in the
Energetice
energy sector
Banat S.A. (in
(maintenance,
29388211
Timisoara
100%
100%
bankruptcy)
repairs,
construction)
Servicii
Services in the
Energetice
energy sector
Dobrogea S.A.
(maintenance,
29388378
Constanta
100%
100%
(in bankruptcy)
repairs,
construction)
As at 31 December 2021, the Company’s associates are the following:
Associate
Activity
Sole registration code
Head Office
% shareholding as at
31 December 2021
Crucea Power
Electricity
25242042
Constanta
30%
Park SRL
generation
Sunwind Energy
Electricity
42910478
Constanta
30%
SRL
generation
New Trend
Energy SRL
Electricity
generation
Foton Power
Energy S.R.L.
Electricity
generation
42921590
Constanta
30%
43652555
Constanta
30%
As of 31 December 2020, the Company had no investments in associates.
The Company’s main activities
Currently, the core business of the Company, according to the Statute is “Activities of business and management
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 electricity
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), two energy production company from renewable
sources (Electrica Energie Verde 1 SRL in which Electrica SA has an indirect shareholding of 100% being acquired
on 31 August 2020 by the subsidiary Electrica Furnizare S.A.. and Electrica Productie Energie a new set up
Company).
On 6 September 2021, is set up a new legal entity, Electrica Productie Energie S.A., organized as a joint stock
company, in which Electrica SA holds a percentage of 99.9920% of the share capital and Electrica Serv S.A.
holds a percentage of 0.0080% of the share capital. The object of activity is the production of electricity from
renewable sources through the acquisition and development of projects, respectively the operation of electricity
generation parks from renewable sources, cumulated with the development and operation of independent
storage solutions that it intends to develop in the near future.
219 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) On 28 July 2021, Electrica SA signed, as buyer, with Mr. Emanuel Muntmark and with Mr. Catalin Mrejeru, as
sellers, three shares sales and purchase agreements (“SPAs”) in three project companies having as main activity
the production of energy from renewable sources, as follows:
i. A SPA regarding the acquisition of 100% of the shares held by the sellers in Crucea Power Park SRL
for an estimated total price of EUR 8,470,000. The final price will be determined by adjusting the total
estimated price depending on the production capacity, respectively the authorized storage, based on
a contractually established calculation formula. Crucea Power Park SRL develops the eolian project
“Crucea Est”, with a designed installed capacity of 121 MW and a projected electricity storage capacity of
60 MWh (15 MW x 4h), located outside the Crucea commune, Constanta county.
ii. A SPA regarding the acquisition of 100% of the shares held by the sellers in Sunwind Energy SRL for a
total estimated price of EUR 1,485,000. The final price will be determined by adjusting the total estimated
price according to the authorized production capacity, based on a contractually established calculation
formula. Sunwind Energy SRL is developing the photovoltaic project “Satu Mare 2” with a designed
installed capacity of 27 MW, located near Satu Mare.
iii. A SPA regarding the acquisition of 100% of the shares held by the sellers in New Trend Energy SRL
for a total estimated price of EUR 3,245,000. The final price will be determined by adjusting the total
estimated price according to the authorized production capacity, based on a contractually established
calculation formula.
New Trend Energy SRL develops the photovoltaic project “Satu Mare 3”, with a designed capacity of 59
MW, located near Satu Mare.
The total estimated value of the transaction is EUR 13,200 thousand. The sale purchase agreements concluded
as of 28 July 2021 stipulate that at the initial stage, the Company acquires 30% of the share capital of the
three Companies, and in the subsequent stages the remaining 70% of the share capital provided that certain
conditions stipulated in the sale purchase agreements are met.
On 7 December 2021, Electrica SA, signed, as buyer, with Mr. Emanuel Muntmark and with Mr. Catalin Mrejeru,
as sellers, a shares sales and purchase agreement (“SPAs”) in one project company having as main object of
activity the production of energy from renewable sources.
The SPA concerns the acquisition of 100% of the shares of Foton Power Energy S.R.L, wholly owned by the sellers,
for an estimated total price of EUR 4,262,500. The final price will be determined by adjusting the total estimated
price depending on the production capacity, respectively the authorized storage, based on a contractually
established calculation formula.
Foton Power Energy S.R.L. develops the photovoltaic project “Bihor 1”, with a designed installed capacity of 77.5
MW, located near Oradea city.
The SPAs stipulate the acquisition by Electrica SA of company’s shares and the payment of the corresponding
price in four stages, structured according to the development stage of the project and the fulfillment of certain
conditions precedent.
As of 31 December 2021, with a 30% shareholding, the Company has a significant influence over the four
companies, which are presented as investments in associates. The acquisition value of the 30% shares is RON
25,813,194. (for further details please refer to Note 22).
The establishment of the new subsidiary together with the investments in the four entities are part of the
Electrica Group’s strategy which aims to develop a portfolio of electricity generation capacities from renewable
sources (wind and photovoltaic) with a cumulative capacity of 400 MW, in parallel with electricity storage
capacities with an installed capacity of up to 100 MW.
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 Energiei
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 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.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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 National 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, 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 liquidation.
Consequently, all of its assets and liabilities were transferred through the effect of the merger by absorption
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 National
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
pandemic 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 visitors
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. The COVID-19 pandemic has persisted in 2021. The resulting impact of the pandemic
measures taken such as movement control and safe-distancing have continued to affect the economy.
In the fight against the COVID-19 pandemic, the Company has adopted all the necessary measures for the
activity 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
developed identifying essential activities and critical roles through scenario analysis and ensuring staff backup.
Moreover, Electrica SA promptly and transparently communicates 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
Electrica SA can be established, such information will be included in the future financial statements and will be
made available to investors.
Increase in Energy price impact
Following the total liberalization of the electricity market from 1 January 2021 for all types of consumers, the
international context of the energy markets characterized by an imbalance between supply and demand at
European level, corroborated with the energy policies developed both at EU and national level, has led to an
increase in electricity prices. Moreover, the strong increase in energy prices is both the result of external factors,
such as the exponential increase in the price of emission allowances, and of internal factors, such as the high
share of energy traded on the spot market (DAM). The entire energy sector was affected by the increased energy
price.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) The aforementioned difficult conditions led to an increase in operating expenses, mainly for the acquisition
of energy for network losses and for supplying activity, affecting two of the Company’s subsidiaries. For the
two subsidiaries the unstable economic environment, led to a decrease in financial performance for 2021, as
compared with the previous year but with no significant difficulties in receivables collection and consequently
payment of debts being noted.
Moreover, the state, through the adoption of Order no. 118/2021 with subsequent amendments approved by Law
no. 259/2021 with subsequent amendments and Order no. 226/2021 implemented measures under the form of
capping and compensating scheme in order to mitigate the effect of the price increase. The schemes aim in
reducing the liquidity risk by reducing difficulties in receivables collection and improve financial performance
during the unstable economic environment.
The Company actively implements strategies and takes measures in order to reduce any liquidity risk which
may appear within the Group among which: securing new overdrafts, prolonging the terms for reimbursments
of current overdrafts, increaseing the limits for current overdrafts, securing the prolonging of the cash pooling
facility.
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 Financial
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 application
of the international accounting standards.
These separate financial statements were authorized for issue by the Board of Directors on 28 February 2022
and will be submitted for shareholders’ approval in the general meeting scheduled on 20 April 2022.
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.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
prospectively recognised.
Judgements, assumptions and estimation uncertainties
Information about judgements made in applying accounting policies and assumptions and estimation
uncertainties 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 19 – assumptions regarding the revalued amount of property, plant and equipment;
• Note 21 – assumptions and estimates regarding the valuation of shareholdings in the subsidiaries;
• Note 15 - assumptions regarding the recognition of deferred tax asset;
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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 period
during which the change has occurred.
Further information about the assumptions used in measuring fair values is included in
• Note 19: 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 2021 do not have a significant impact over the Company separate financial statements.
(a) Going Concern
The standalone financial statements have been prepared on the going concern basis. In making this judgement
management considers current trading performance and access to finance resources. The Company depends
upon the trading and cash generation of its subsidiaries, which have been included in the Groups consolidated
forecast which includes the following assumptions:
• A return to positive operating cash flow from May 2022, following with the assumption that the effects
of the law 118/2021 will no longer continue past March 31, 2022. The consequence would be that the price
for the end customers will no longer be capped;
• The utilisation of confirmed debt facilities up to a limit of RON 2,537 million, including RON 1,830 million
total overdraft limits and RON 707 million long term loans;
• The utilisation of not yet confirmed facilities amounting to RON 840 million which would be drawn
down during the forecast period;
• The Group has received the waiver letter from EBRD on 24 February 2022, however this is subject
of obtaining the waiver letters also from EIB and BCR for which the Group was non compliant as at 31
December 2021; The management of the Group is of the opinion that based on the discussions with EIB
and BCR the waiver letter will be obtained also from these 2 banks;
At the present time the projections are based on the latest assumptions that include the ending of the Law
no. 118/2021 regarding the compensation and ceiling scheme in March 2022. At the date of issuance of these
separate financial statements the regulatory position is under review and there may be further laws enacted
which could adversely impact the Groups operating cash flows beyond the 1st of April 2022. Given the current
market uncertainties, the Group has outlined a proposal to be approved in the forthcoming annual shareholders
meeting regarding the approval of a total ceiling of short-term financing up to RON 1,500,000 thousand. In light
of the importance of the Group as the supplier and distributed of electricity on the Romanian market, having
39.6% (according to the latest ANRE report 2020 for the distribution segment) as market share on the electricity
distribution and 18.39% (according to the latest ANRE report November 2021 for the supply segment) as market
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) share on the electricity supply market and having as main shareholder of Electrica SA the Romanian State, the
management believes sufficient financing will be made available to cover any financing requirements arising
from this uncertainty and Group will be able to meet its obligations as they fall due.
Based upon the above projections and other information, given the measures already implemented and the
strategies to reduce the risks which may occur due to the instability of the economic environment, the Board
of Directors has, at the time of approving the separate financial statements, a reasonable expectation that the
Company has adequate resources to continue in operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in preparing the separate financial statements.
(b) 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 services
rendered, at the amount which reflects the price at which the Company 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.
(c) Commissions
The Company assesses its revenue arrangements based on specific criteria to determine if it is acting as principal
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.
(d) 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.
(e) 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-monetary 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 recognised 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) Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and are expensed as the related service
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 projected
unit credit method.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, are recognised
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.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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 Company
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.
(g) 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.
(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
transactions 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
differences 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 reporting
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.
(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 accumulated depreciation
and any accumulated impairment losses since the most recent valuation.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) The Company used the fair value as deemed cost for the tangible assets for the opening of the financial position.
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
accounted 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 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 reasonably
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) Intangible assets
(i) 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 goodwill
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.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) ( 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 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 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.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) (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 expected
credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument.
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 credit 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 recognition,
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 demonstrate
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 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 contractual cash flows
that are due to the Company in accordance with the contract and all the cash flows that the Company expects
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 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 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.
228 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) (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 accumulated
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 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.
(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.
(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 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 Company has approved a detailed and formal restructuring
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
(b) a present obligation that arises from past events that is not recognised because:
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.
229 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) (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
commencement 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 remeasured
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
under 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 discounting
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
asset. 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
income. Rental income is recognised on a straight-line basis over the term of the lease.
(r) Investment in associates
An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor
an interest in a joint venture. Significant influence is the power to participate in the financial and operating
policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the
equity method of accounting, except when the investment is classified as held for sale, in which case it is
accounted for in accordance with IFRS 5.
Under the equity method, an investment in an associate is recognised initially in the consolidated statement
of financial position at cost and adjusted thereafter to recognise the Company’s share of the profit or loss and
other comprehensive income of the associate.
When the Company’s share of losses of an associate exceeds the Company’s interest in that associate (which
includes any long-term interests that, in substance, form part of the Company’s net investment in the associate),
the Company discontinues recognising its share of further losses. Additional losses are recognised only to the
extent that the Company has incurred legal or constructive obligations or made payments on behalf of the
associate.
230 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) An investment in an associate is accounted for using the equity method from the date on which the investee
becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment
over the Company’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised
as goodwill, which is included within the carrying amount of the investment.
Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost
of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the
investment is acquired.
The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss
with respect to the Company’s investment in an associate. When necessary, the entire carrying amount of
the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying
amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the
carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS
36 to the extent that the recoverable amount of the investment subsequently increases.
The Company discontinues the use of the equity method from the date when the investment ceases to be an
associate.
(s) Subsequent events
Events occurring after the reporting date 31 December 2021, which provide additional information about
conditions 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 IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and
Measurement”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16
“Leases” - Interest Rate Benchmark Reform — Phase 2 adopted by the EU on 13 January 2021 (effective
for annual periods beginning on or after 1 January 2021),
• Amendments to IFRS 16 “Leases” - Covid-19-Related Rent Concessions beyond 30 June 2021 adopted by
the EU on 30 August 2021 (effective from 1 April 2021 for financial years starting, at the latest, on or after
1 January 2021);
The adoption of amendments to the existing standards has not led to any material changes in the Company’s
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 IAS 16 “Property, Plant and Equipment” - Proceeds before Intended Use adopted by
the EU on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
• Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Onerous Contracts
- Cost of Fulfilling a Contract adopted by the EU on 28 June 2021 (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 - adopted by the EU on 28 June 2021 (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.).
231 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Electrica SA 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
impact on the 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
standards, 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):
• 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 1 “Presentation of Financial Statements” - Disclosure of Accounting Policies
(effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” - Definition
of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 12 “Income Taxes” - Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (effective for annual periods beginning on or after 1 January 2023),
Electrica SA 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 Company in the period of initial
application.
8
Revenue
Revenues from services contracts related to the Automatic Meter Reading System -
3,250,787
2021
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 currently Distributie Energie Electrica Romania S.A.),
these assets being part of the distribution network (Note 19).
9
Other income and operating expenses
(a) Other operating income
Revenues from indemnities
2021
-
2020
12,827,435
Rental income
282,214
332,589
Other
Total
525,867
1,356,301
808,081
14,516,325
In 2020, revenues from indemnities consist of the amount of RON 12,827,435 collected 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 December
2020, the amount was entirely collected from the NAFA.
232 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) (b) Other operating expenses
2021
2020
Losses from disposal of assets
3,104,047
629,452
Legal assistance and consulting fees
1,867,407
2,990,741
Insurance premiums
574,058
408,692
Repair and maintenance expenses
487,714
630,721
Other taxes and duties
478,089
885,998
Consumables
Travel and transportation expenses
Postage and telecommunication
Donations and sponsorships
399,128
111,330
95,976
50,000
660,017
115,645
1,043,024
117,305
Other third party services
11,972,370
15,727,097
Other
Total
10
Net finance income
Dividends income
Interest income
757,089
662,133
19,897,208
23,870,825
2021
2020
329,543,644
214,969,717
47,504,909
44,852,139
Other finance income
634,420
483,502
Total finance income
377,682,973
260,305,358
Interest expense
(179,011)
(1,983)
Interest cost for employee benefits (Note 13)
(48,814)
(80,355)
Foreign exchange losses, net
(34,718)
(41,625)
Total finance costs
Net finance income
(262,543)
(123,963)
377,420,430
260,181,395
In 2021, the Company collected the entire amount of the total income of RON 329,543,644 received as dividends
from its subsidiaries (2020: RON 214,969,717).
233 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 11
Earnings per share
The calculation of basic and diluted earnings per share is based on the following profit attributable to
shareholders and weighted-average number of ordinary shares outstanding:
Profit attributable to shareholders
2021
2020
Profit for the year attributable to the shareholders of the
321,819,884
298,378,536
Company
Profit attributable to the shareholders of the Company
321,819,884
298,378,536
Number of ordinary shares (in number of shares)
2021
2020
Number of ordinary shares at 31 December
339,553,004
339,553,004
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)
12
Short-term employee benefits
2021
0.95
2020
0.88
31 December 2021
31 December 2020
Personnel payables
5,979,013
6,335,832
Current portion of defined benefit liability and other long-
5,150,498
48,477
term employee benefits
Social security charges
787,241
620,934
Tax on salaries
Total
243,969
163,262
12,160,721
7,168,505
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 incentives granted to employers for creating new jobs.
234 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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
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 Contract.
On 20 December 2021 the Board of Directors of Electrica SA approved the implementation of a reorganization
process of the Company’s personnel structure and the initiation of the collective dismissal procedure, formally
communicated to all employees on 23 December 2021. On 2 February 2022, the Board of Directors approved
the amendment of the Company’s organizational structure effective as of 1 March 2022 and the notification
of relevant authorities and of the Trade Union regarding the final decision of the Company to implement
the reorganization process and to carry out the collective dismissal of the employees who currently occupy
the positions to be cancelled, as well as the sending of all data and information provided by art. 72 of the
Labour Code, including the result of the process of information and consultation with the Trade Union. The
organizational measures provided in the Reorganization Plan have as objectives the resizing and the redefining
of the Company’s personnel structure, as well as of its organization and functioning mode, for the optimal
correlation between the number of employees and the functions performed, in accordance with the current
activity conditions on the energy market. As a result of this approach, the number of organizational entities
within the Company will be significantly reduced - a decrease of 19%, while the number of management /
coordination positions will be reduced even more - a decrease of 25%.
According to the Collective Labour Contracts, based on seniority, the employees who currently occupy the
positions to be cancelled are entitled to receive a number of gross average base salary (Note 13 b)). The estimated
termination benefit amounts to RON 5,054 thousand.
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
generated 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 2021 and 2020, employee benefit obligations were computed by an independent actuary using the projected
unit credit method with benefits calculated proportionally to the period of service.
31 December 2021
31 December 2020
Defined benefit liability
5,599,583
691,940
Other long-term employee benefits
601,214
809,724
Total
6,200,797
1,501,664
- Current portion*
5,150,498
48,477
- Non-current portion
1,050,299
1,453,187
*included in Personnel payables in Note 12
235 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) (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
2021
2020
Balance at 1 January
691,940
1,093,812
Included in profit or loss
Current service cost
107,066
76,681
Past service cost/(gain)
5,054,128
(390,301)
Interest cost
22,832
35,576
5,184,026
(278,044)
Included in other comprehensive income
Re-measurements gain
- Actuarial gain
(269,825)
(104,482)
Other
Benefits paid
(6,558)
(19,346)
Balance at 31 December
5,599,583
691,940
Other long-term employee benefits
2021
2020
Balance at 1 January
809,724
1,078,865
Included in profit or loss
Current service cost
72,968
112,553
Actuarial gain
Interest cost
Other
Benefits paid
Balance at 31 December
(268,743)
(226,090)
25,982
44,779
(38,717)
601,214
(200,383)
809,724
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.
236 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
(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
2021
2022
2023
2024
2025
2026+
Valuation date
Valuation date
31 December 2021
31 December 2020
7.5%
5.9%
3.2%
3.0%
2.8%
2.5%
2.5%
2.5%
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 5% for the year 2021 (2020: 3.3%);
• 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:
• Starting with 2022 the gross salaries’ growth was forecasted at the inflation level;
• 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
No. of gross monthly base salaries
31 December 2021
31 December 2020
1
2
3
4
5
1
2
3
4
5
237 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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
Termination benefits
No. of gross monthly base salaries
31 December 2021
31 December 2020
2
3
4
2
2
3
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
individual 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
employees 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 determined 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. Employees who are re-employed within the Company after layoff are not entitled to the above-
mentioned benefits.
238 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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. In 2021, there was no longer an agreement
in place for the voluntary redundancies.
14
Employee benefit expenses
Average number of employees
Number of employees at 31 December
2021
104
109
2020
107
120
2021
2020
Wages and salaries
31,429,153
29,896,689
Social security contributions
784,372
642,577
Meal tickets
442,500
379,780
Termination benefit for labour/mandate contracts
6,583,625
899,509
Total
39,239,650
31,818,555
The number or employees at 31 December 2021 includes also the 6 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 assumptions 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 determination is made.
(i) Amounts recognised in profit or loss
Deferred tax benefit
Total benefit related to income tax
2021
(43,172)
(43,172)
2020
(3,076,614)
(3,076,614)
239 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) (ii) Amounts recognised in other comprehensive income
2021
2020
Before tax
Tax benefit Net of tax Before tax Tax benefit Net of tax
Revaluation of property,
plant and equipment
-
-
-
11,901,253
(3,059,897)
8,841,356
Re-measurement of
defined benefit liability
269,825
(43,172)
226,653
104,482
(16,717)
87,765
Total
269,825
(43,172)
226,653
12,005,735
(3,076,614)
8,929,121
(iii) Reconciliation of effective tax rate
2021
2020
Profit before tax
321,776,712
295,301,922
Tax using Company’s domestic tax rate
16%
51,484,274
16%
47,248,308
Non-deductible expenses
3%
9,640,583
2%
5,540,066
Non-taxable income
-17%
(54,761,824)
-13%
(38,303,478)
Deductible legal reserve
-1%
(2,574,214)
-1%
(2,362,415)
Recognition of tax effect of previously
unrecognised tax losses
Other tax effects
Total benefit related to income tax
-1%
0%
0%
(3,831,991)
-6%
(18,163,352)
-
1%
2,964,257
(43,172)
-1%
(3,076,614)
Non-taxable income represents dividend income in amount of RON 329,543,644 (2020: RON 214,969,717).
(iv) Movement in deferred tax balances
Balance at 31 December 2021
Net balance
Recognised
in other
Deferred
at 1 January
in profit or
comprehensive
Deferred
tax
2021
2021
loss
income
Net
tax assets
liabilities
Recognised
Property, plant and
3,681,453
58,089
-
3,739,542
-
3,739,542
equipment
Employee benefits
(1,829,942)
(488,804) 43,172
(2,275,574)
(2,275,574)
(1,851,511)
387,543
-
(1,463,968)
(1,463,968)
-
(43,172)
43,172
-
(3,739,542) 3,739,542
-
-
Tax loss carried
forward
Tax (assets)/
liabilities
240 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
Balance at 31 December 2020
Net balance
Recognised
in other
Deferred
at 1 January
in profit or
comprehensive
Deferred
tax
2020
2020
loss
income
Net
tax assets
liabilities
Recognised
Property, plant and
2,188,192
(1,566,636)
3,059,897
3,681,453
-
3,681,453
equipment
Employee benefits
(1,356,886)
(489,773)
16,717
(1,829,942)
(1,829,942)
-
Tax loss carried
forward
(831,306)
(1,020,205)
-
(1,851,511)
(1,851,511)
-
Tax (assets)/
liabilities
-
(3,076,614)
3,076,614
-
(3,681,453) 3,681,453
(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
356,623,017
371,426,355
2021
2020
16
Trade receivables
31 December 2021
31 December 2020
Trade receivables, gross
582,938,825
582,495,101
Loss allowance
(582,012,952)
(582,083,147)
Total trade receivables, net
925,873
411,954
Receivables from related parties are presented in Note 29.
Trade receivables, gross, comprise:
31 December 2021
31 December 2020
Electricity receivables from clients in litigation,
493,474,169
493,018,184
insolvency or bankruptcy (mainly Oltchim, Transenergo)
Late payment penalties from clients in litigation,
88,968,313
88,968,313
insolvency or bankruptcy (Oltchim)
Other
496,343
508,604
Total trade receivables, gross
582,938,825
582,495,101
241 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
The reconciliation between the opening balances and the closing balances of the impairment for trade
receivables is as follows:
Loss allowance
2021
2020
Balance as at 1 January
582,083,147
679,778,904
Loss allowance recognized
Loss allowance used
Decrease in loss allowance
2,220
-
(72,415)
18
(41,527)
(97,654,248)
Balance as at 31 December
582,012,952
582,083,147
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
regarding 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
recovered 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 procedures,
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 separately in
computing the allowance according to IFRS 9.
17
Other receivables
31 December 2021
31 December 2020
Cash-pooling receivables
567,621,644
166,281,881
Interest receivable
Other receivables
18,319,302
15,380,004
9,870,962
10,145,826
Bad debt allowance
(11,046,264)
(11,046,264)
Total other receivables, net
584,765,644
180,761,447
242 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Cash-pooling receivables comprises the receivable of Electrica SA as at 31 December 2021 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
receivables is as follows:
Loss allowance
2021
2020
Balance as at 1 January
11,046,264
11,975,369
Loss allowance recognized
Loss allowance used
Decrease in loss allowance
-
-
-
-
-
(929,105)
Balance as at 31 December
11,046,264
11,046,264
18
Cash and cash equivalents
31 December 2021
31 December 2020
Bank current accounts
3,042,170
18,418,340
Call deposits
2,715,802
175,066,480
Total cash and cash equivalents
in the separate
5,757,972
193,484,820
statement of financial position
Overdrafts used for cash management purposes
(120,541,354)
-
Total cash and cash equivalents
in the separate
statement of cash flow
(114,783,382)
193,484,820
Restricted cash – short-term
-
320,000,000
On 16 October 2021, it was released the collateral deposits from BRD – Groupe Societe Generale following the
repayments of 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.
As at 31 December 2021, the overdraft amount was drawn from ING Bank N.V. overdraft facility to be used in
the cash pooling system. The outstanding balance of the overdraft facility as at 31 December 2021 is of RON
120,541,354 (31 December 2020: Nil).
243 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 19
Property, plant and equipment
The reconciliation between the initial balance and the final balance of property, plant and equipment in 2021
and 2020: was as follows:
Land and land
Vehicles,
Construction
improvement
Buildings
Equipment
furniture and
in progress
Total
office equipment
Gross carrying
amount
Balance at 1
January 2020
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
recognized
in other
comprehensive
income, net
Revaluation
recognized in
profit or loss, net
Gross book value
netted off against
6,880,612
5,020,641
166,490
-
the accumulated
-
(890,671)
depreciation at
revaluation
-
-
-
-
-
-
-
-
-
11,901,253
166,490
(890,671)
Disposals
(6,764,156)
(147,779)
(224,809,642)
(129,119)
(2,612,179)
(234,462,875)
Balance at 31
69,682,986
27,006,291
26,434,743
1,174,998
2,134,443
126,433,461
December 2020
Additions
Reclassification
to assets held to
sale
-
-
Disposals
(302,732)
-
-
-
205,413
50,460
4,282,864
4,538,737
(1,913,945)
-
(7,407,038)
(6,244)
-
-
(1,913,945)
(7,716,014)
Balance at 31
69,380,254
27,006,291
17,319,173
1,219,214
6,417,307
121,342,239
December 2021
Accumulated
depreciation
and impairment
losses
Balance at
1 January 2020
Depreciation
-
-
244 | 2021 ANNUAL REPORT
ELECTRICA S.A.
615,437
150,041,093
307,601
2,134,443
153,098,574
299,307
10,714,327
119,810
-
11,133,444
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Land and land
Vehicles,
Construction
improvement
Buildings
Equipment
furniture and
in progress
Total
office equipment
(24,073)
(143,843,969)
(129,120)
1,905,508
9,435,994
-
(1,195,521)
(890,671)
-
-
-
-
-
(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
371,863
595,392
147,051
-
-
-
(4,366,733)
(6,133)
(3,804,893)
(1,141,954)
-
-
-
-
-
-
1,114,306
(4,372,866)
(3,804,893)
(1,141,954)
2,277,371
16,433,736
439,209
2,134,443
21,284,759
-
-
-
-
-
-
-
-
-
-
Accumulated
depreciation of
disposals
Impairment of
property, plant
and equipment
Reversal of
impairment of
property, plant
and equipment,
net
Accumulated
depreciation
netted off against
gross book value
at revaluation
Balance at
31 December
2020
Depreciation
Accumulated
depreciation of
disposals
Reversal of
impairment of
property, plant
and equipment
Reclassification
to assets held for
sale
Balance at
31 December
2021
Net carrying
amounts
At 1 January 2020
37,164,672
20,503,155
100,918,076
475,765
2,557,949
161,619,617
At 31 December
2020
69,682,986
25,100,783
1,282,819
876,707
-
96,943,295
At 31 December
2021
69,380,254
24,728,920
885,437
780,005
4,282,864
100,057,480
245 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) As at 31 December 2021, 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..
As at 31 December 2021, additions refer mainly to the refurbishment and modernization of the administrative
headquarter of the Company.
In 2021, following the return from producers of reading meters, as well as the repair of reading meters that
appeared as faulty at the time when the Automatic Meter Reading was contributed in kind by Electrica SA to
the share capital of its distribution subsidiaries in June 2020, it resulted a number of 882 reading meters at a net
book value of RON 771,991 and fair value of RON 279,655 which the management of Electrica SA is committed
to sell in the following period.
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. An additional amount of RON 368,306 representing taxes paid for the acquisition of the land
was capitalized in the value of the land.
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.
In 2021, disposals from property, plant and equipment in the net amount of RON 302,732 refers to a plot of land
which was contributed in kind by Electrica SA to the share capital of its subsidiary Electrica Furnizare S.A.
In 2020, 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
16,521,690
June 20
SDEE Muntenia Nord S.A.
2 plots of land in surface of 28,696.79 sqm 1,497,132
June 20
SDEE Transilvania Nord S.A. AMR equipment
37,014,957
AMR license intangibles (see Note 21)
2,925,303
AMR construction in progress
763,741
June 20
SDEE Transilvania Sud S.A.
AMR equipment
27,409,181
AMR construction in progress
1,803,638
May 20
Electrica Serv S.A.
5 plots of land in surface of 23,474.07 sqm 5,103,471
Total
93,039,113
As at 31 December 2021 the Company reversed an impairment loss in amount of RON 3,804,893
(31 December 2020: 1,195,521) for the equipment part of the AMR system which was written off or reclassified to
held for sale.
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.
246 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
Measurement of fair value
The Company’s land and buildings are stated at their revalued amounts, being the fair value at the date of
revaluation, 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 by
Darian DRS S.A. an independent valuer not related to the Company. 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.
Category
Valuation technique
unobservable inputs
Significant
Inter-relationship
between key
unobservable
inputs and fair value
measurement
Land
Market approach
Adjustment for
The estimated fair
liquidity, location, size.
value would increase/
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
properties, and best use). The market price
is mainly based on recent transactions.
Buildings 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 information:
Market approach
The market approach is based on the selling
price per square meter for buildings with
similar characteristics(i.e. ownership, legal
limitations, financing and selling conditions,
(decrease) if:
Adjustment for liquidity,
location or size would
be lower/(higher).
Adjustment for liquidity,
location or size would
location, physical and economical
Adjustment for
be lower/(higher).
properties, and best use)., adjusted liquidity,
liquidity, location, size.
location, size etc.
The DCF method
Occupancy rates were
higher/(lower)
The valuation model based on the DCF
Occupancy rates (90%)
Yield rates were lower/
method estimates the present value of net
cash flows to be generated by a building
Yield rates (between 9%
and 10%)
(higher)
Annual rent per sqm
taking into account occupancy rate and
Annual rent per sqm
was higher/(lower)
annual rent. The discount rate estimation
(between 2 and 10 EUR/
considers, inter alia, the quality of a building
sqm), depending on
and its location.
location;
247 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 20
Intangible assets
Intangible assets include mainly licenses and costs of implementation of the accounting system SAP and
licenses for various software, as follows:
Software and licenses
Total
Gross carrying amount
Balance at 1 January 2020
8,886,791
8,886,791
Additions
Disposals
29,175
29,175
(5,093,287)
(5,093,287)
Balance at 31 December 2020
3,822,679
3,822,679
Disposals
(1,023,055)
(1,023,055)
Balance at 31 December 2021
2,799,624
2,799,624
Accumulated depreciation and impairment losses
Balance at 1 January 2020
4,655,502
4,655,502
Amortisation
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
Amortisation
219,204
219,204
Accumulated amortization of disposals
(1,023,055)
(1,023,055)
Balance at 31 December 2021
2,745,948
2,745,948
Net carrying amounts
At 1 January 2020
4,231,289
4,231,289
At 31 December 2020
At 31 December 2021
272,880
53,676
272,880
53,676
248 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 21
Investments in subsidiaries
The investments in subsidiaries are presented as follows:
31 December 2021
31 December 2020
Gross value
Impairment
Net
Gross value
Impairment Net
Distributie
Energie
Electrica
Romania S.A.
1,741,663,327
Electrica
Furnizare S.A.
226,001,553
-
-
Electrica Serv
1,741,663,327
1,741,663,339
226,001,553
225,783,453
-
-
1,741,663,339
225,783,453
S.A.
481,803,770
(164,368,925)
317,434,845
481,803,862
(164,368,956)
317,434,906
Servicii
Energetice
Oltenia S.A.
(in bankruptcy)
Servicii
Energetice
Moldova S.A.
82,033,220
(82,033,220)
-
82,033,220
(82,033,220)
-
(in bankruptcy)
106,162,492
(106,162,492)
-
106,162,492
(106,162,492)
-
Servicii
Energetice
Banat S.A.
(in bankruptcy ) 43,761,094
(43,761,094)
-
43,761,094
(43,761,094)
-
Servicii
Energetice
Dobrogea S.A.
(in bankruptcy)
23,822,124
(23,822,124)
-
23,822,124
(23,822,124)
-
Electrica
Energie
Productie S.A.
124,990
-
124,990
-
-
-
Total
2,705,372,570
(420,147,855)
2,285,224,715 2,705,029,584 (420,147,886) 2,284,881,698
Changes in Company’s subsidiaries structure in 2021
Establishment of a new Subsidiary
On 6 September 2021, is set up a new legal entity, Electrica Productie Energie S.A., organized as a joint stock
company, in which Electrica SA holds a percentage of 99.9920% of the share capital and Electrica Serv S.A.
holds a percentage of 0.0080% of the share capital. The object of activity is the production of electricity from
renewable sources through the acquisition and development of projects, respectively the operation of electricity
generation parks from renewable sources, cumulated with the development and operation of independent
storage solutions that it intends to develop in the near future.
249 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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 between
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..
On 14 October 2020, the Cluj Specialized Court admitted the request 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,
starting with 1 January 2021.
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.
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 liquidation.
Consequently, all of its assets and liabilities were transferred through the effect of the merger by absorption
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 ownership.
Movements in investments
During 2021, Electrica SA has increased, its investments in Electrica Furnizare S.A. subsidiary, by in kind
contribution to its share capital with one plot of land in surface of 335.20 mp for which it held property deeds
with the amount of RON 218,100. The value of the assets contributed to the share capital of the subsidiary was
established according to evaluation reports drawn up by the appointed valuation experts.
250 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) On 6 September 2021, is set up a new legal entity, Electrica Productie Energie S.A., organized as a joint stock
company, in which Electrica SA, holds a number of 12,499 shares in amount of 124,990 RON representing
99.9920% of the share capital of Electrica Productie Energie S.A..
During 2020, 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. 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 experts.
On 18 December 2019, through decision no. 11 of the General Extraordinary Shareholders Meeting of Servicii
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..
As regard to Electrica Serv S.A., the Company has recognized an impairment in prior years, based on a valuation
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 2021, the management has reassessed the recoverability of the net book value of the
investment in Electrica Serv S.A. and the consistency of the impairment as compared to 31 December 2020, 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 additionally impaired or that the impairment should be reversed.
Due to the current situation of Electica Furnizare SA, management has assessed the recoverability of the net
book value of the investment, by taking into account the cash flow projection and the measures taken to
mitigate the risks of liquidity and concluded that there is no indication that the investment may be impaired.
The main economic and financial indicators achieved by the Company’s subsidiaries on 31.12.2020
The main economic and financial indicators achieved by the Company’s subsidiaries as at 31 December 2020
(the last financial year for which the statutory financial statements were approved) are as follows:
Indicators
Share capital
Total equity
Distributie Energie
Electrica Romania S.A.
Electrica
Serv S.A.
Electrica
Furnizare S.A.
1,405,204,790
52,495,780
62,873,860
4,917,103,286
382,977,290
363,487,366
Non-current assets
8,979,749,495
324,840,831
97,267,046
Current assets
700,915,480
123,188,247
1,117,019,905
Current liabilities
1,101,696,030
35,367,897
787,966,539
Provisions
148,747,621
11,083,379
28,717,184
Deferred revenue
2,085,457,919
18,827,041
1,967,197
Non-current liabilities
1,430,296,551
-
33,873,216
251 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 22
Investments in associates
On 28 July 2021 and on 7 December 2021, Electrica SA concluded four agreements for the sale-purchase of
shares in four project companies having as main object of activity the production of electricity from renewable
sources. The sale-purchase agreements concluded, mention the fact that in the first stage Electrica SA acquires
30% of the share capital of the four companies, remaining that in the following stages, to acquire the remaining
70% of the share capital after the conditions provided in the sale-purchase agreements will be fulfilled.
The four companies are as follows:
- Crucea Power Park SRL, develops the wind project “Crucea Est”, with a projected installed capacity of
121 MW and a projected electricity storage capacity of 60 MWh (15 MW x 4h), located outside the Crucea
area, Constanta County. The estimated purchase price for the “Crucea Est” wind project is 70 thousand
EUR/MW for the aforementioned capacity, totalling the amount of 8,470 thousand EUR. On 28 July 2021,
Electrica SA paid the amount of EUR 2,541 thousand representing 30% of the project value, respectively
30% of the shares of Crucea Power Park SRL.
- Sunwind Energy SRL, develops the photovoltaic project “Satu Mare 2” with a designed installed
capacity of 27 MW, located near Satu Mare city. The estimated purchase price for the photovoltaic project
“Satu Mare 2” is 55 thousand EUR/MW for the aforementioned capacity, totalling the amount of 1,485
thousand EUR. On 28 July 2021, Electrica SA paid the amount of EUR 445.5 thousand representing 30%
of the project value, respectively 30% of the shares of Sunwind Energy SRL.
- New Trend Energy SRL, develops the photovoltaic project “Satu Mare 3”, with a projected capacity of 59
MW, located near Satu Mare city. The estimated purchase price for the photovoltaic project “Satu Mare 3”
is 55 thousand EUR/MW for the aforementioned capacity, totalling the amount of 3,245 thousand EUR.
On 28 July 2021, Electrica SA paid the amount of EUR 973.5 thousand representing 30% of the project
value, respectively 30% of the shares of New Trend Energy SRL.
- Foton Power Energy SRL, develops the photovoltaic project “Bihor 1”, with a projected capacity of 77.5
MW, located near Inand city, Bihor County. The estimated purchase price for the photovoltaic project
“Bihor 1” is 55 thousand EUR/MW for the aforementioned capacity, totalling the amount of 4,262.5
thousand EUR. On 7 December 2021, Electrica SA paid the amount of EUR 1,279 thousand representing
30% of the project value, respectively 30% of the shares of Foton Power Energy SRL.
Considering the holding percentage of 30%, as at 31 December 2021, the four entities are accounted for using
the equity method in these separate financial statements as provided in the Company’s accounting policies in
note 6.
The cost of the investments at acquisition date, totalling the amount of RON 25,813,194 is detailed as follows:
Crucea Power
New Trend
Sunwind Energy
Park S.R.L.
Energy S.R.L.
S.R.L.
Foton Power
Energy
S.R.L.
Acquisition date
31.07.2021
31.07.2021
31.07.2021
31.12.2021
Percentage ownership and
voting rights at acquisition
30%
date
Net assets at acquisition
30%
30%
30%
date
(241,682)
(5,023)
(5,055)
(7,016)
Company’s share of net
assets
Goodwill
Cost of investment at
(72,505)
(1,507)
(1,516)
(2,105)
12,572,700
4,790,543
2,193,109
6,334,475
acquisition date
12,500,195
4,789,036
2,191,593
6,332,370
252 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Summarised financial information in respect of each of the Company’s associates is set out below:
Crucea
Power Park
S.R.L.
Sunwind
Foton Power
New Trend
Energy S.R.L.
Energy
S.R.L.
Energy
S.R.L.
31.12.2021
31.12.2021
31.12.2021
31.12.2021
Non-current assets
7,077,834
248,925
160,968
Current assets
944,520
47,490
20,987
141,436
22,890
Non-current liabilities
(6,904,114)
(302,773)
(190,152)
(167,773)
Current liabilities
(1,364,020)
(2,433)
(650)
Net assets
(245,780)
(8,791)
(8,847)
Reconciliation to carrying amounts:
Opening net assets at
acquisition date
(241,682)
(5,023)
(5,055)
Loss for the period
(4,098)
(3,768)
(3,792)
(3,569)
(7,016)
-
-
Closing net assets 31.12.2021
(245,780)
(8,791)
(8,847)
(7,016)
Reconciliation of the above summarised financial information to the carrying amount of the interest in
associates recognised in the separate financial statements:
Crucea
Power Park
New Trend
Sunwind Energy
S.R.L.
Energy S.R.L.
S.R.L.
Foton Power
Energy
S.R.L.
Closing net assets of
associates 31.12.2021
(245,780)
(8,791)
(8,847)
(7,016)
Share in associates %
30%
30%
30%
30%
Company’s share of net
assets as at 31.12.2021
(73,734)
(2,638)
(2,654)
(2,105)
Goodwill
12,572,700
4,790,543
2,193,109
6,334,475
Carrying amount of interest
in associate 31.12.2021
12,498,966
4,787,905
2,190,455
6,332,370
The share loss in amount of RON 3,498 for the period was recognized in the separate statement of profit and
loss for the year ended as at 31 December 2021.
253 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 23
Loans granted to subsidiaries
(i) Loans granted to subsidiaries – long term
Loans granted to subsidiaries
31 December 2021
31 December 2020
Distributie Energie Electrica Romania S.A.
1,276,325,000
1,030,000,000
Total loans granted to subsidiaries – long term
1,276,325,000
1,030,000,000
The Company has entered into loan agreements as lender, as follows:
• 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:
maximum 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 2021, the outstanding balance is of RON 150,000,000 (31 December
2020: 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:
maximum loan amount: RON 200,000,000; 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 2021, the outstanding balance is of RON 200,000,000 (31 December
2020: 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:
maximum 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;
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 2021, the outstanding balance is of RON 160,000,000 (31 December
2020: RON 160,000,000).
• 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 2021, the outstanding balance is of RON 230,000,000 (31 December
2020: 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 2021, the outstanding balance is of RON 160,000,000 (31 December
2020: 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 2021, the outstanding balance is of RON 130,000,000 (31 December
2020: RON 130,000,000).
254 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) • Loans granted in 2021:
- Intragroup loan agreement with Distributie Energie Electrica Romania S.A. concluded in October 2021.
Main provisions are: maximum loan amount: RON 246,325,000, The purpose of granting this loan is the
partial repayment of loans contracted from BRD in 2016 to finance the investment plan for the year 2016
which reached the maturity in October 2021, Interest rate: 3.51% per annum, Maturity: 96 months until
12.10.2029, 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 2021, the
outstanding balance is of RON 246,325,000.
(ii) Loans granted to subsidiaries – short term
Loans granted to subsidiaries
31 December
31 December
2021
2020
ELectrica Furnizare S.A.
30,000,000
Total loans granted to subsidiaries – short term
30,000,000
-
-
On 23.12.2021 was concluded an intragroup loan agreement with Electrica Furnizare S.A.. Main provisions are:
maximum loan amount: RON 130,000,000, The purpose of granting this loan represents the financing of the
short term working capital needs, Interest rate: ROBOR 1M + 0.23 % per annum, Maturity: 30 days until 23.01.2022
with possibility of extension. The total amount drawn was of RON 90,000,000 out of which on 28.12.2021 it was
repaid the amount of RON 60,000,000. As at 31 December 2021, the outstanding balance is of RON 30,000,000.
(iii) 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 Transilvania
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. At the maturity date the revolving facility has not been extended.
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 Electrica
SA 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, until 16 March 2022 under the same terms and conditions.
Repayment: in full, at maturity. As at 31 December 2021, the outstanding balance of the facility for the Company
is nill.
(iv) Cash pooling system at Group level
On 20 December 2019, between ING Bank N.V., Electrica SA and its subsidiaries were concluded two agreements
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 automatically
extended at the maturity of the bank facility agreement 28.01.2022;
255 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) • a second system involving Electrica SA, as cash pool leader and its subsidiaries, Electrica Furnizare S.A.,
Electrica Serv S.A., Servicii Energetice Muntenia S.A (currently absorbed by Electrica Serv S.A.), Electrica
Energie Verde 1 SRL (starting with 30 December 2020) 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 10,000,000 for Electrica Energie Verde 1 SRL; RON 50,000,000 for Electrica
Serv S.A.. As at 30 November 2020 was in place the convention in amount to RON 2,000,000 with Servicii
Energetice Muntenia S.A. which was absorbed by Electrica Serv S.A. being integrated in the conventions
limits applicable for Electrica SERV S.A..
The credit facility offered by the pool leader to the participants is up to the amount of RON 245.000.000
(31 December 2020: 30,000,000 RON) for Electrica Furnizare S.A.; RON 15,000,000 (31 December 2020:
RON 15,000,000) for Electrica Energie Verde 1 SRL; RON 12,000,000 (31 December 2020: RON 10,000,000)
in the case of Electrica Serv S.A.. As at 30 November 2020 was in place the convention in amount to
RON 2,000,000 with Servicii Energetice Muntenia S.A. which was absorbed by Electrica Serv S.A. being
integrated in the conventions limits applicable for Electrica SERV S.A.
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 automatically extended at
the maturity of the bank facility agreement 28.01.2022;
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 participants, 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.
As of 31 December 2021, the credit facility has an outstanding balance of RON 120,541,354 (31 December 2020:0
RON). For the amounts drawn/transferred to the cash pooling systems between Electrica SA and the other
participants, please refer to Note 29.
24
Capital and reserves
(a) 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 2021 (31
December 2020: 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 diminished following
the Initial Public Offering, reaching a level of 0.7842% at the end of 2021 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 Company
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
Meeting 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
256 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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 recorded
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,
equivalent 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:
2021
2020
Balance at 1 January
12,605,266
5,851,829
Revaluation of property, plant and equipment
Deferred tax liability arising on revaluation of property, plant and
equipment
-
-
11,901,253
(3,059,897)
Release of revaluation reserve to retained earnings corresponding to
depreciation and disposals of property, plant and equipment
(207,619)
(2,087,919)
Balance at 31 December
12,397,647
12,605,266
(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 for
income tax purposes and are not distributable.
As at 31 December 2021, the legal reserves were in amount of RON 228,156,226 (31 December 2020: RON
212,027,639).
(e) Dividends
The dividends distributed by the Company in 2021 and 2020 (from the statutory profits of preceding years) were
as follows:
Distributed dividends
247,873,693
246,108,017
2021
2020
On 28 April 2021, the General Shareholders Meeting of the Company approved the net distributable profit of
2020 as follows:
• Dividends to be distributed to shareholders: RON 247,873,693;
• Legal reserve (5% from 2020 pre-tax profit): RON 14,935,950;
• Other reserves: RON 35,568,893.
257 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
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 2021 was of RON 247,873,693 (2020: RON
246,108,017). The value of dividends per share distributed to the shareholders of the Company were: RON 0.73
per share (2020: RON 0.7248 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 247,873,693 (2020: RON 246,108,017), the dividends paid
were RON 247,258,353 (2020: RON 245,779,724), the remaining difference represents dividends uncollected by
the shareholders.
25
Trade payables
31 December
2021
31 December
2020
Suppliers of goods and services
3,402,954
7,028,982
Capital expenditure suppliers
Suppliers – related parties (Note 29)
464,293
167,109
103,421
67,529
Total
4,034,356
7,199,932
Payables to related parties are detailed in Note 29.
26
Other payables
31 December 2021
31 December 2020
Current
Non-current
Current
Non-current
Cash-pooling payables
41,885,081
Dividends payable
1,715,724
VAT under settlement
18,302
Other payables to the state
budget
Other liabilities
6,659
396,702
Total
44,022,468
-
-
-
-
-
-
34,110,477
1,705,199
14,391
6,782
197,565
36,034,414
-
-
-
-
-
-
Cash-pooling payables comprises the payable of Electrica as at 31 December 2021 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.
258 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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.
27
Provisions
Balance at 1 January 2021
Provisions recognized
Provisions utilized
Provisions reversed
Balance at 31 December 2021
Litigations and other risks
5,818,263
81,627
(1,126,255)
(535,521)
4,238,114
The provisions in amount of RON 2,568,765 as at 31 December 2020 (31 December 2020: RON 4,140,732) 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
Financial instruments - fair values and risk management
(a) Accounting classifications and fair values
According to IFRS 9, financial assets are measured at amortized 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 financial
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 Company
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 creditworthiness.
The carrying amount of financial assets represents the maximum credit exposure.
259 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Trade receivables
The Company 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 trade
receivables for customers as at 31 December 2021:
31 December 2021
Expected
loss rates
Net trade
Credit
(“ECL”)
Gross value
Lifetime ECL
receivables
impaired
Neither past due nor impaired
0%
843,715
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
0%
0%
0%
78,107
-
-
-
-
-
-
843,715
78,107
-
-
No
No
No
No
Past due more than 90 days
100%
582,017,003
(582,012,952)
4,051
Yes
Total
582,938,825
(582,012,952)
925,873
Allowances for impairment are referring mainly to Oltchim in amount of RON 518,938,151 (31 December 2020:
RON 518,938,151), Transenergo Com in amount of RON 37,088,264 (31 December 2020: RON 37,088,830) and to
Fidelis Energy in amount of RON 11,220,386 (31 December 2020: RON 11,220,386). 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 2020, is as follows:
31 December 2020
Expected loss
Net trade
Credit
rates (“ECL”) Gross value
Lifetime ECL
receivables
impaired
Neither past due nor impaired 0%
411,954
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
0%
0%
0%
-
-
-
-
-
-
-
Past due more than 90 days
100%
582,083,147
(582,083,147)
411,954
-
-
-
-
No
No
No
No
Yes
Total
582,495,101
(582,083,147)
411,954
(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.
260 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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.
Carrying
amount
Total
less than 1 year
1-2 years
2-5 years
Contractual cash flows
Financial liabilities
31 December 2021
Bank overdrafts
120,541,354
120,541,354
120,541,354
Trade payables
4,034,356
4,034,356
4,034,356
-
-
-
-
Lease liability
513,274
513,274
394,818
62,647
55,809
Total
125,088,984
125,088,984
124,970,528
62,647
55,809
31 December 2020
Trade payables
7,199,932
7,199,932
7,199,932
-
-
Lease liability
1,454,297
1,454,297
968,556
365,389
120,352
Total
8,654,229
8,654,229
8,168,488
365,389
120,352
(iii) Market risk
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 hedging
instruments.
Exposure to currency risk
The summary of the quantitative data about the Company’s exposure to currency risk is as follows:
31 December 2021
31 December 2020
In RON
denominated in EUR
denominated in EUR
Cash and cash equivalents
262,918
898,585
Lease liability
(509,598)
(1,454,297)
Net statement of financial position exposure
(246,680)
(555,712)
261 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
The following significant exchange rates have been applied during the year:
RON
EUR 1
Sensitivity analysis
Average rate
Year-end spot rate
2021
4,9204
2020
2021
2020
4,8371
4,9481
4,8694
A reasonable possible appreciation (depreciation) of the EUR against RON at 31 December would have affected
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 especially the
interest rates, remain constant and ignores the impact of forecasted sales and purchases.
Effect
31 December 2021
Profit before tax
Appreciation
Depreciation
EUR (5% movement)
(12,334)
12,334
31 December 2020
EUR (5% movement)
(27,786)
27,786
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
interbank 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
Restricted cash
31 December 2021
31 December 2020
2,715,802
175,066,480
-
320,000,000
2,715,802
495,066,480
262 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
31 December 2021
31 December 2020
Variable-rate instruments
Financial assets
Cash pooling receivables (Note 23, Note 29)
567,621,644
166,281,881
Financial liabilities
Cash pooling payables (Note 23, Note 29)
(41,885,081)
(34,110,477)
Bank overdrafts (Note 18)
(120,541,354)
-
Lease liability
Total
(513,274)
(1,454,297)
404,681,935
130,717,107
Fair value sensitivity analysis for fixed-rate instruments
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.
Profit before tax
50 bp increase
50 bp decrease
31 December 2021
Variable-rate instruments
2,023,410
(2,023,410)
31 December 2020
Variable-rate instruments
653,586
(653,586)
29
Related parties
(a) Main shareholders
As at 31 December 2021 and 31 December 2020, the major shareholder of Societatea Energetica Electrica S.A. is
the Romanian State, represented by the Ministry of Energy with a share of ownership of 48.79% from the share
capital.
(b) Management and administrators’ compensation
2021
2020
Management compensation
6,833,228
6,042,695
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. The benefits paid for the termination of mandate contracts in 2021
was in amount of RON 3,136,800 (2020: Nil).
263 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated)
Compensations granted to the members of the Board of Directors were as follows:
2021
2020
Members of Board of Directors
3,887,254
2,468,177
Electrica SA’s Board of Directors comprises 7 members. According to the remuneration policy approved by the
General Meeting of Shareholders that took place 28 April 2021, the annual number of paid sessions is limited to
twelve for Board of Directors meetings and to six for each of the committees. Additional committee meetings
can be organized only in exceptional situations, upon the Chairs’ decision, who are responsible to efficiently
organize the agenda and activity. However, only one such additional meeting shall be remunerated, for each
committee.
No loans were granted to managers and administrators in 2021 and 2020.
(c) Transactions with the Group companies
(i) Balance of receivables and payables from/ to Group companies:
Trade Receivables/Trade Payables
Receivables from
Payables to
31 December 2021
31 December 2020 31 December 2021 31 December 2020
Distributie Energie
Electrica Romania S.A.
474,458
449,299
62,709
Electrica Serv S.A.
7,828
Electrica Furnizare S.A.
1,767
29,515
29,790
-
104,400
67,529
-
-
Total
484,053
508,604
167,109
67,529
As at 31 December 2021 and 31 December 2020, receivables from electricity distribution subsidiaries include
mainly other services reinvoiced.
Loans granted/interest receivable:
Loans granted to
Interest receivable from
31 December 2021 31 December 2020 31 December 2021 31 December 2020
Distributie Energie
Electrica Romania S.A.
1,276,325,000
1,030,000,000
15,439,712
13,518,378
Electrica Furnizare S.A.
30,000,000
-
30,400
-
Total
1,306,325,000
1,030,000,000
15,470,112
13,518,378
264 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Cash-pooling system 31 December 2021:
Amount drawn
contributed to
Amount
by participants
by participants
Net position
Interest
receivable
31 December
31 December
31 December
31 December
2021
2021
2021
2021
Distributie Energie
Electrica Romania S.A.
311,620,794
Electrica Furnizare S.A.
245,000,000
Electrica Energie Verde 1
S.R.L.
11,000,850
-
-
-
311,620,794
602,305
245,000,000
540,414
11,000,850
24,345
Electrica Serv S.A.
-
(41,873,420)
(41,873,420)
(105,541)
Total
567,621,644
(41,873,420)
525,748,224
1,061,523
Cash-pooling system 31 December 2020:
Amount drawn
contributed to
Amount
by participants
by participants
Net position
Interest
receivable/
(payable)
31 December
31 December
31 December
31 December
2020
2020
2020
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
Sales
in 2021
Sales
in 2020
Purchases
Purchases
in 2021
in 2020
Distributie Energie Electrica Romania S.A. 740,664
-
131,742
-
Societatea de Distributie a Energiei
Electrice Transilvania Nord S.A. (**)
Societatea de Distributie a Energiei
Electrice Transilvania Sud S.A. (**)
-
-
3,457,185
670,475
-
-
27,736
26,494
265 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Sales
in 2021
Sales
in 2020
Purchases
Purchases
in 2021
in 2020
Societatea de Distributie a Energiei
Electrice Muntenia Nord S.A. (**)
-
273,181
-
-
Electrica Furnizare S.A.
14,471
448,821
434,915
407,020
Electrica Serv S.A.
16,909
264,591
-
-
Total
772,044
5,114,253
566,657
461,250
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.).
(**) On 31 December 2020, Distributie Energie Electrica Romania SA was formed by the merger of the three
former electricity distribution companies (Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.;
Societatea de Distributie a Energiei Electrice Transilvania Sud S.A.; Societatea de Distributie a Energiei Electrice
Muntenia Nord S.A.). (Note 21)
Reimbursements / Borrowings
Borrowings
Borrowings
Reimbursements
Reimbursements
granted in 2021
granted in 2020
in 2021
in 2020
Distributie Energie Electrica
246,325,000
Romania S.A.
Electrica Furnizare S.A.
90,000,000
Servicii Energetice
-
Muntenia S.A. (*)
Total
336,325,000
-
-
-
-
-
-
60,000,000
-
5,500,000
60,000,000
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.
Interest income for loans
Interest income 2021
Interest income 2020
Distributie Energie Electrica Romania S.A.
41,127,404
-
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. (**)
-
-
-
15,244,917
13,318,333
10,750,233
266 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Interest income 2021
Interest income 2020
Electrica Furnizare S.A.
30,400
-
Servicii Energetice Muntenia S.A.(*)
-
101,750
Total
41,157,804
39,415,233
(*) 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 31 December 2020, Distributie Energie Electrica Romania SA was formed by the merger of the three former electricity
distribution companies (Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.; Societatea de Distributie a Energiei
Electrice Transilvania Sud S.A.; Societatea de Distributie a Energiei Electrice Muntenia Nord S.A.). (Note 21)
Dividends income
Dividends income
Dividends income
2021
2020
Electrica Furnizare S.A.
233,293,563
124,015,481
Distributie Energie Electrica Romania S.A.
96,250,081
-
Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.
(**)
Societatea de Distributie a Energiei Electrice Transilvania Sud S.A.
(**)
Societatea de Distributie a Energiei Electrice Muntenia Nord S.A.
(**)
Electrica Serv S.A.
Total
-
-
-
-
54,065,512
6,935,492
2,705,803
27,247,429
329,543,644
214,969,717
(**) On 31 December 2020, Distributie Energie Electrica Romania SA was formed by the merger of the three former electricity
distribution companies (Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.; Societatea de Distributie a Energiei
Electrice Transilvania Sud S.A.; Societatea de Distributie a Energiei Electrice Muntenia Nord S.A.). (Note 21)
Cash pooling system – interest income/(expense)
Interest income/
Interest income/
(expense)
(expense)
2021
Distributie Energie Electrica Romania S.A.
3,344,942
Societatea de Distributie a Energiei Electrice
Transilvania Sud S.A.(**)
Societatea de Distributie a Energiei Electrice
Transilvania Nord S.A. (**)
-
-
2020
-
2,132,479
1,256,996
267 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) Electrica Energie Verde 1 S.R.L.
Interest income/
Interest income/
(expense)
(expense)
2021
223,675
2020
862
Electrica Serv S.A.
(808,125)
(673,516)
Servicii Energetice Muntenia S.A.(*)
-
14
Electrica Furnizare S.A.
1,193,403
(1,282,859)
Total
3,953,895
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..
** On 31 December 2020, Distributie Energie Electrica Romania SA was formed by the merger of the three former electricity
distribution companies (Societatea de Distributie a Energiei Electrice Transilvania Nord S.A.; Societatea de Distributie a Energiei
Electrice Transilvania Sud S.A.; Societatea de Distributie a Energiei Electrice Muntenia Nord S.A.). (Note 21)
(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
ANCOM
Others
Total
Client
Oltchim
CET Braila
Total
Client
Oltchim
CET Braila
Total
Purchases (without VAT)
Balance (including VAT)
2021
2020
31 December 2021
31 December 2020
605,644
542,560
139,758
42,062
30,877
910
647,706
573,437
140,668
90,871
860
91,731
Sales
Balance, gross
Allowance
(without VAT)
(including VAT)
(including VAT)
Balance,
net
2021
31 December 2021
-
-
-
-
-
-
518,938,151
(518,938,151)
3,118,411
(3,118,411)
522,056,562
(522,056,562)
Sales
Balance, gross
Allowance
(without VAT)
(including VAT)
(including VAT)
2020
31 December 2020
518,938,151
(518,938,151)
3,118,411
(3,118,411)
522,056,562
(522,056,562)
Balance,
net
-
-
-
-
-
-
268 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 30
Contingencies
(a) Contingent Assets
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
additional 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 additional
interest and penalties are related to the prior enforcement orders received by Electrica SA in the prior years of
RON 72,460,387.
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
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.
Morevover, in November 2019, Electrica SA obtained one more favourable decision pronounced by the Bucharest
Court of Appeal in one of the disputes with NAFA, whereby the court obliges NAFA to cancel the administrative
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 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.
In April 2021, Electrica SA filed a new action in contradiction with NAFA - file no. 2444/2/2021, pending before
the Bucharest Court of Appeal, trail term 16.03.2022, having as object the obligation of NAFA to: correct Electrica
SA ‚s tax record in order to reflect the right to a refund for the amount of RON 5,860,080, amount paid by
Electrica SA in 2020 for the purpose of applying for the cancellation of ancillary fiscal obligations stipulated
by the Government Emergency Ordinance no. 69/2020, of an additional amount of RON 817,521 which was not
reflected in the payment made by NAFA in 2020, and payment of legal interest in amount of RON 5,161,492
computed for the amount returned by NAFA in 2020.
(b) Contingent Liabilities
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 management
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
269 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) 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 which
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 issued by the
Courts, or litigations which are in early stages and no preliminary ruling was issued so far).
(c) 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 changes 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.
(d) Transfer prices
According to the fiscal legislation, the fiscal assessment for a transaction with affiliates is based on the market
price 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
Commitments
(a) Contractual commitments
Contractual commitments as at 31 December 2021 and 31 December 2020 are as follows:
31 December 2021
31 December 2020
Purchase of property, plant and equipment, intangible
assets and other maintenance and repairs services
22,568
4,859,511
Purchase of investments
60,484,337
-
Total
60,506,905
4,859,511
(b) Investment program
The investment program approved for the year 2022 is as follows:
Investment program
The capital expenditures actually incurred may differ from the ones planned.
2022
10,633,000
270 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) (c) Guarantees and pledges
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 2021 is
RON 161,394,730 (31 December 2020: RON 171,870,774). The maturity of the facility is on 31 December 2029. Also,
the Company issued parenting guarantees for Electrica Furnizare S.A. in total amount of 203,464,672.
32
Subsequent events
Overdraft facility granted by ING Bank N.V
On 28 January 2022, 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: ROBOR
1M+0.8% p.a., was extended until 27.01.2023.
Geopolitical tensions
In February 2022 global geopolitical tensions significantly escalated following military interventions in Ukraine
by the Russian Federation. As a result of these escalations, economic uncertainties in energy and capital
markets have increased with global energy prices expected to be highly volatile for the foreseeable future. As
at the date of this report, management is unable to reliably estimate the effects on the Groups financial outlook
and cannot exclude adverse consequence on the business, operations, and financial condition. Management
believes it is taking all the necessary measures to support the sustainability and growth of the Group’s business
in the current circumstances and that the judgements taken in these financial statements remain appropriate.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
271 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in RON, if not otherwise stated) STANDALONE
AUDIT
REPORT
Tower
-98
Sector 1, 010735
Tel: +40 21 222 16 61
Fax: +40 21 222 16 60
INDEPENDENT AUDITOR’S REPORT
To the Shareholders,
SOCIETATEA ENERGETICA ELECTRICA S.A.
Report on the Audit of the Separate Financial Statements
Opinion
1.
2.
3.
t December 31, 2021, and the separate statement of
ch
Net assets/ Equity
RON 4,123,508,400
321,819,884
RON
year then ended in accordance with Order
1
Basis for Opinion
4.
5.
Accountants’ Code of Ethics for Professional Accountants (IESBA Code), in accordance with ethical requirements relevant for
nce we have
e
Numele
.
tructurii legale a
274 | 2021 ANNUAL REPORT
ELECTRICA S.A.
STANDALONE AUDIT REPORT
Going Concern
How our audit
have been prepared on the going concern basis. The key
judgement leading to this conclusion are set out in that
note.
•
the subsidiaries of the Company operate in the
cedures:
challenged the management and the Board of Directors
• We considered whether at the date of this report
rom the Romanian
enacted which could adversely impact the subsidiaries of the
capping and ceiling mechanism;
ay be further laws
forthcoming twelve months the subsidiaries will need to
• We have assessed the Group’s subsidiaries and
covenant waivers and newly
made available.
• We considered the Group’s subsidiaries and Company’s
The ability of the subsidiaries of the Group to
going concer
stabilizing of the regulatory regime on
• We assessed the adequacy of the disclosure of the basis
energy prices as described in note 6, which provides an
appropriate margin to support servicing of the subsidiaries
of the Group and
judgements adopted;
- Administrator’s Report
6.
the Administrator’s report
statements and our auditor’s report thereon, nor the non-
report.
ng presented in a separate
In
1, our responsibility is
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
20.
With respect to the Remunera
– 107.
275 | 2021 ANNUAL REPORT
ELECTRICA S.A.
STANDALONE AUDIT REPORT
a)
b)
c)
have been prepa
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
– 107
ovisions of Law
Moreover, based on our knowledge and understanding concerning the Company and its environment gained during the audit
material misstatement of this Administrator’s report
. We have nothing to report in this regard.
1, we are required t
s
7.
Financial
8.
In preparing the separate f
unless management either intends
so.
9.
10.
Separate Financial Statements
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,
11. As part of an audit in accordance with ISAs, we exercise professional
throughout the audit. We also:
error, design and perform audit procedures responsive to thos
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
Company's internal control.
disclosures made by management.
276 | 2021 ANNUAL REPORT
ELECTRICA S.A.
STANDALONE AUDIT REPORT
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
a going concern.
achieves fair presenta
12.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
audit.
to bear on our independence, and where applicable, related safeguards.
14.
report because the adverse
Report on Other Legal and Regulatory Requirements
15. We have been appointed by the General Assembly of Shareholders on April 28, 2021
4
1. The uninterrupted total
mber 31, 2018 and December 31, 2021.
have retained our independence from the
No non-audit services
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-
Bucharest, Romania
March 1, 2022
th Floor, District 1
277 | 2021 ANNUAL REPORT
ELECTRICA S.A.
STANDALONE AUDIT REPORT
Consolidated Financial
Statements
as at and for the year ended
31 December 2021
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. Reporting entity and general information
2. Basis of accounting
3. Functional and presentation currency
4. Use of judgments and estimates
Accounting policies
291
300
300
301
302
5. Basis of measurement
6. Significant accounting policies
302
7. Adoption of new and revised standards 314
Performance for the year
8. Operating segments
9. Revenue
10. Electricity and natural gas purchased
11. Other income and expenses
12. Net finance result
13. Earnings per share
Employee benefits
14. Short-term employee benefits
15. Post-employment and other long-term employee benefits
16. Employee benefit expenses
Income taxes
17. Income taxes
Assets
18. Trade receivables
19. Other receivables
20. Cash and cash equivalents
21. Assets held for sale
22. Inventories
23. Property, plant and equipment
24. Intangible assets
25. Investments in associates
316
321
321
322
323
323
324
324
329
329
332
334
334
335
335
336
340
343
280 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Equity and liabilities
26. Capital and reserves
27. Trade payables
28. Other payables
29. Provisions
30. Long-term bank borrowings
Financial instruments
31. Financial instruments - Fair values and risk management
Other information
32. Acquisition of subsidiaries
33. Related parties
34. Contingencies
35. Commitments
36. Subsequent events
345
347
347
348
348
352
356
358
361
363
364
281 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Note
31 December 2021
31 December 2020
ASSETS
Non-current assets
Intangible assets related
to concession arrangements
Other intangible assets
Property, plant and equipment
Investments in associates
Deferred tax assets
Other non-current assets
Right of use assets
24
24
23
25
17
5,514,557
5,455,185
8,983
505,419
25,810
83,531
1,661
20,945
7,213
508,130
-
19,666
1,173
27,091
Total non-current assets
6,160,906
6,018,458
1,344,619
1,029,775
48,600
Current assets
Trade receivables 18
Other receivables 19
Inventories
Prepayments
Cash and cash equivalents
20
221,830
Restricted cash
20
-
Current income tax receivable
Assets held for sale
21
22
72,958
5,034
23,777
5,412
32,460
570,929
320,000
70,066
2,817
1,837
15,476
Total current assets
1,722,230
2,043,360
Total assets
7,883,136
8,061,818
282 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Note
31 December 2021
31 December 2020
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
Total equity attributable
to the owners of the Company
26
26
26
26
26
26
3,464,436
3,464,436
103,049
(75,372)
7
102,829
408,405
103,049
(75,372)
7
116,372
392,276
950,228
1,759,506
4,953,582
5,760,274
Total equity
4,953,582
5,760,274
283 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Note
31 December 2021
31 December 2020
Liabilities
Non-current liabilities
Lease liability – long term
Deferred tax liabilities
Employee benefits
Other payables
Long-term bank borrowings
17
15
28
30
12,102
161,926
149,177
32,732
118,756
Total non-current liabilities
474,693
Current liabilities
Lease liability – short term
Bank overdrafts
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
20
27
28
14,15
29
9,442
627,402
891,335
9,662
101,102
34,922
16,875
177,787
143,876
33,873
400,296
772,707
10,747
164,966
607,195
5,629
92,292
19,238
9,211
271,263
240,946
Current income tax liability
-
Current portion of
long-term bank borrowings
30
509,733
378,613
Total current liabilities
2,454,861
1,528,837
Total liabilities
2,929,554
2,301,544
Total equity and liabilities
7,883,136
8,061,818
The accompanying notes are an integral part of these consolidated financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
284 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Revenue
Other income
Note
2021
2020
9
11
7,178,864
6,501,100
195,771
165,422
Electricity and natural gas purchased
10
(5,694,724)
(3,905,705)
Construction costs related
to concession agreements
Employee benefits
24
16
(485,813)
(675,967)
(802,676)
(774,501)
Repairs, maintenance and materials
(102,356)
(104,577)
Depreciation and amortization
23,24
(480,830)
(490,918)
(Impairment)/ Reversal of impairment
for trade and other receivables, net
18,19
(70,616)
62,167
Other operating expenses 11
(343,147)
(325,104)
Operating (loss)/ profit
(605,527)
451,917
Gain from bargain purchase of subsidiaries 32
-
Finance income
Finance costs
Net finance cost
Share of results of associates
(Loss)/ Profit before tax
Income tax benefit/(expense)
12
12
25
17
7,477
9,651
2,647
(29,528)
(26,736)
(26,881)
(17,085)
(3)
-
(632,411)
442,309
79,529
(54,766)
(Loss)/ Profit for the year
(552,882)
387,543
(Loss)/ Profit for the year attributable to:
-
owners of the Company
(552,882)
387,543
(Loss)/ Profit for the year
(552,882)
387,543
(Loss)/Earnings per share
Basic and diluted (loss)/earnings
per share (RON)
13
(1.63)
1.14
The accompanying notes are an integral part of these consolidated financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
285 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. CONSOLIDATED STATEMENT OF PROFIT OR LOSSFOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated)
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in THOUSAND RON, if not otherwise stated)
(Loss)/ Profit for the year
(552,882)
387,543
Note
2021
2020
Other comprehensive income
Items that will not be reclassified to profit or loss
Re-measurements of the defined benefit liability
15
(5,891)
(7,152)
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
17
23
17
(45)
572
-
-
43,823
(7,931)
Other comprehensive (loss)/income, net of tax
(5,936)
29,312
Total comprehensive (loss)/income
(558,818)
416,855
Total comprehensive (loss)/income attributable to:
-
owners of the Company
(558,818)
416,855
Total comprehensive (loss)/income
(558,818)
416,855
The accompanying notes are an integral part of these consolidated financial statements.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
286 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in THOUSAND RON, if not otherwise stated)
,
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287 | 2021 ANNUAL REPORT
ELECTRICA S.A.
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SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in THOUSAND RON, if not otherwise stated)
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288 | 2021 ANNUAL REPORT
ELECTRICA S.A.
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SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
2021
2020
Cash flows from operating activities
(Loss)/Profit for the year
(552,882)
387,543
Adjustments for:
Depreciation
Amortisation
23
24
21,118
27,850
459,712
463,068
(Reversal of impairment)/Impairment of property,
plant and equipment and intangible assets, net
23,24
(3,942)
3,025
Loss/(Gain) on disposal of property, plant
and equipment and intangible assets
23,24
2,651
(285)
Impairment/(Reversal of impairment)
of trade and other receivables, net
18,19
70,616
(62,167)
Impairment/(Reversal of impairment)
of assets held for sale
Change in provisions, net
Net finance cost
Changes due to employee benefits
Gain from bargain acquisition of subsidiaries
Share of loss of associates
Income tax (benefit)/expense
21
29
12
14
32
25
17
Changes in:
Trade receivables
Other receivables
Prepayments
Inventories
Trade payables
Other payables
Employee benefits
Deferred revenue
646
15,684
(188)
(320)
26,881
17,085
5,054
-
-
3
(7,477)
-
(79,529)
54,766
(33,988)
882,900
(391,401)
(87,249)
(22,904)
3,837
(2,217)
593
(2,892)
4,307
274,825
(76,010)
32,504
(2,331)
3,166
14,735
4,033
(1,289)
Cash (used in)/generated from operating activities
(138,874)
739,493
Interest paid
Income tax paid
Net cash flow (used in)/generated
from operating activities
(24,110)
(19,953)
(31,366)
(51,672)
(194,350)
667,868
289 | 2021 ANNUAL REPORT
ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
(All amounts are in THOUSAND RON, if not otherwise stated)
Cash flows from investing activities
Payments for purchases of property,
plant and equipment
Payments for network construction
Note
2021
2020
(10,490)
(6,730)
related to concession agreements
24
(483,808)
(637,996)
Payments for purchase of other intangible assets
(6,306)
(2,226)
Proceeds from sale of property,
plant and equipment
Proceeds from deposits with maturity
of 3 months or longer
Interest received
Net cash effect from gain of control
1,469
5,012
-
66,471
1,765
8,962
over the acquired subsidiary
32
-
5,577
Payment for acquisition of investment in associate 25
(25,813)
-
Payment for acquisition of subsidiaries
Restricted cash
Net cash flow used in investing activities
Cash flows from financing activities
Proceeds from long-term bank borrowings
Repayment of long-term bank loans
32
20
30
30
-
(8,006)
320,000
-
(203,183)
(568,936)
234,690
354,383
(385,851)
(29,130)
Payment of lease liabilities
(15,226)
(29,324)
Dividends paid
26
(247,615)
(245,780)
Net cash (used in)/ generated
from financing activities
(414,002)
50,149
Net (decrease)/ increase in cash and cash equivalents
(811,535)
149,081
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
20
20
405,963
256,882
(405,572)
405,963
The accompanying notes are an integral part of these consolidated financial statements.
The non-cash transactions are disclosed in Note 20.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
290 | 2021 ANNUAL REPORT
ELECTRICA S.A.
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 2021.
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 2021 and 31 December 2020, the major shareholder of Societatea Energetica Electrica S.A. is
the Romanian State, represented by the Ministry of Energy 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 2021 and 31 December 2020, the Company’s subsidiaries are the following:
Subsidiary
Activity
registration
Sole
Head
Office
% shareholding as
% shareholding as at 31
at 31 December
December 2020
code
2021
Electricity
distribution in
geographical
Distributie
areas
Energie Electrica
Transilvania
14476722
C l u j -
99.99999929%
100%
Romania S.A.
Nord,
(“DEER”)
Transilvania
Napoca
Sud and
Muntenia
Nord
Electrica
Electricity and
Furnizare S.A.
natural gas
28909028
Bucuresti
99.9998415011992% 99.9998409513906%
supply
Electrica Serv
energy sector
Services in the
S.A.
Electrica
Producție
Energie S.A
Electrica
Energie Verde
1 SRL* (“EEV1” –
formerly Long
Bridge Milenium
SRL)
17329505
Bucuresti
99.99998095%
100%
(maintenance,
repairs,
construction)
Electricity
generation
44854129
Bucuresti
99.9920%
-
Electricity
generation
19157481
Bucuresti
100%*
100%*
*indirect shareholding - Electrica Energie Verde 1 SRL is 100% owned by the subsidiary Electrica Furnizare S.A.
291 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) As at 31 December 2021, the Company’s associates are the following:
Associate
Activity
code
Head Office
at 31 December
Sole registration
% shareholding as
2021
Crucea Power Park SRL
Sunwind Energy SRL
New Trend Energy SRL
Electricity
generation
Electricity
generation
Electricity
generation
25242042
Constanta
30%
42910478
Constanta
30%
42921590
Constanta
30%
Foton Power Energy S.R.L.
Electricity
43652555
Constanta
30%
generation
As of December 31, 2020, the Company had no investments in associates.
Changes in Group structure during 2021
Establishment of a new Group’s subsidiary
On 6 September 2021, the Group set up a new legal entity, Electrica Productie Energie S.A., organized as a joint
stock company, in which Electrica SA holds a percentage of 99.9920% of the share capital and Electrica Serv S.A.
holds a percentage of 0.0080% of the share capital. The Company’s activity is the production of electricity from
renewable sources through the acquisition and development of projects, respectively the operation of electricity
generation parks from renewable sources, alongside with the development and operation of independent
storage solutions that it intends to develop in the near future.
Investment in associates
On 28 July 2021, Electrica SA signed, as buyer, with Mr. Emanuel Muntmark and with Mr. Catalin Mrejeru, as
sellers, three share sale and purchase agreements (“SPAs”) in three project companies having as their main
activity the production of energy from renewable sources, as follows:
i. A SPA regarding the acquisition of 100% of the shares held by the sellers in Crucea Power Park SRL
for an estimated total price of EUR 8,470,000. The final price will be determined by adjusting the total
estimated price depending on the production capacity, respectively the authorized storage, based on a
contractually established calculation formula. Crucea Power Park SRL develops the wind project “Crucea
Est”, with a designed installed capacity of 121 MW and a projected electricity storage capacity of 60 MWh
(15 MW x 4h), located outside the Crucea commune, Constanta county.
ii. A SPA regarding the acquisition of 100% of the shares held by the sellers in Sunwind Energy SRL for a
total estimated price of EUR 1,485,000. The final price will be determined by adjusting the total estimated
price according to the authorized production capacity, based on a contractually established calculation
formula. Sunwind Energy SRL is developing the photovoltaic project „Satu Mare 2” with a designed
installed capacity of 27 MW, located near Satu Mare.
iii. A SPA regarding the acquisition of 100% of the shares held by the sellers in New Trend Energy SRL
for a total estimated price of EUR 3,245,000. The final price will be determined by adjusting the total
estimated price according to the authorized production capacity, based on a contractually established
calculation formula. New Trend Energy SRL develops the photovoltaic project „Satu Mare 3”, with a
designed capacity of 59 MW, located near Satu Mare
The SPAs stipulate the acquisition by Electrica SA of shares in the three companies and the payment of the
corresponding price in four stages, structured according to the development stage of the project and the
fulfilment of certain conditions precedent.
The total estimated value of the transaction is EUR 13,200 thousand. The sale purchase agreements concluded
as of 28 July 2021 stipulate that at the initial stage, the Group acquires 30% of the share capital of the three
Companies, and in the subsequent stages the remaining 70% of the share capital provided that certain
conditions stipulated in the sale purchase agreements are met.
292 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) On 7 December 2021, Electrica SA, signed, as buyer, with Mr. Emanuel Muntmark and with Mr. Catalin Mrejeru,
as sellers, a share sales and purchase agreement (“SPAs”) in one project company having as their main activity
the production of energy from renewable sources.
The SPA concerns the acquisition of 100% of the shares of Foton Power Energy S.R.L, wholly owned by the sellers,
for an estimated total price of EUR 4,262,500. The final price will be determined by adjusting the total estimated
price depending on the production capacity, respectively the authorized storage, based on a contractually
established calculation formula.
Foton Power Energy S.R.L. develops the photovoltaic project “Bihor 1”, with a designed installed capacity of 77.5
MW, located near Oradea city.
The SPAs stipulate the acquisition by Electrica SA of company’s shares and the payment of the corresponding
price in four stages, structured according to the development stage of the project and the fulfilment of certain
conditions.
As of 31 December 2021, with a 30% shareholding in each company, the Group has a significant influence over
the four companies, which are presented as investments in associates. The acquisition value of the 30% shares
is RON 25,813 thousand. (for further details please refer to Note 25).
The establishment of the new subsidiary together with the investments in the four entities are part of the
Electrica Group’s strategy which aims to develop a portfolio of electricity generation capacities from renewable
sources (wind and photovoltaic) with a cumulative capacity of 400 MW, in parallel with electricity storage
capacities with an installed capacity of up to 100 MW.
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 between
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..
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.
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 liquidation.
Consequently, all of its assets and liabilities were transferred through the effect of the merger by absorption
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.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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.
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 (Prahova,
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 Electrice
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 consumers which have not exercised their
eligibility right – the right to choose their electricity supplier (hereinafter named captive consumers). Starting
from 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 consumers in the universal
service regime, but also with the possibility to take over in the supply of last resort regime the consumers 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 consumers left without a supplier.
Through the acquisition of the new subsidiary Electrica Energie Verde 1 S.R.L. (formerly Long Bridge Milenium
S.R.L.) as of 31 August 2020, establishment of a new legal entity Electrica Productie Energie S.A. and also the
four shares sales and purchase agreements in four project companies having as main activity the production
of energy from renewable sources the Group entered on the electricity generation segment, in particular from
renewable sources.
Electrica Energie Verde 1 S.R.L. is a producer of electricity from renewable sources, operating a photovoltaic
park in Stanesti, Giurgiu county, with an installed capacity of MW 7.5 (operating capacity limited MW to 6.8). In
2021 the operation of the plant was continuous, with no significant events leading to production shutdowns,
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) producing in total MWh 9,767 (2020: 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 from 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
methodologies used to set regulated prices and tariffs.
Electricity distribution
Electricity distribution is a monopoly activity. Distribution tariffs are established through a “tariff basket-price
cap” mechanism. The methodology for setting the electricity distribution tariffs applicable for the years ended
2020 and 2021 was approved by ANRE Order no. 169/2018 with subsequent amendments (Orders no. 193/2018,
no. 60/2019, no. 203/2019, no. 207/2020, no. 3/2021, no. 101/2021).
The specific distribution tariffs applicable for the three voltage levels (high, medium and low) by regions, for the
years 2020 and 2021, were approved by ANRE orders as follows (RON/MWh, presented cumulatively for medium
and low voltage levels):
SDEE Transilvania Nord S.A.
SDEE Transilvania Sud S.A.
SDEE Muntenia Nord S.A.
SDEE Transilvania Nord S.A.
SDEE Transilvania Sud S.A.
SDEE Muntenia Nord S.A.
Order 228,229,227/16.12.2019
1 January-15 January 2020
High voltage Medium voltage
Low voltage
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
18.77
20.31
16.68
64.31
61.34
53.16
168.91
165.90
177.06
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) Order 220,221,222/09.12.2020
1 January 2021-31 December 2021
High voltage
Medium voltage
Low voltage
19.23
22.23
18.72
66.35
67.47
56.87
173.93
178.78
184.75
Transilvania Nord Area
Transilvania Sud Area
Muntenia Nord Area
In 2019, a new regulatory period began, governed by the provisions of ANRE Order no. 169/2018 for the approval
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 distribution
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
establishes 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.
ANRE approved Order no. 101 / 30.09.2021 for changes of the Methodology for establishing the distribution tariffs
approved by ANRE Order no. 169/2018 with the date of entry into force 1 October 2021. Regarding the network
losses prices, ANRE has the right to correct the projection of distribution tariffs for a regulatory period or for
one year, if there have been significant variations in prices on the electricity market, which lead to a significant
change in distribution service costs; at the justified request of the Distribution Operator, the adjusted revenue
of year t + 1 may include a cost adjustment with the regulated network losses forecast for year t + 1, by changing
the reference price, depending on the evolution of prices on the electricity market and the result of the analysis
of the evolution of tariffs for the current regulatory period;
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) Energy law no. 123/2012 was amended by Order no. 143/2021, in force starting with 31 December 2021 stipulating
among others the followings:
• household connections - In the case of household consumers, upon commissioning of the connection
works performed, Distribution Operator will reimburse the applicant the effective value of the connection
design and execution works, up to an average value of a connection, established according to a
methodology approved by ANRE. The assets resulting from the connection works become the property
of the distribution operator from the moment of commissioning, through the effect of this law, to the
value reimbursed to the household consumer, being recognized by ANRE as part of the regulated assets
base.
• non-household connections - In the case of non-household consumer, the value of the connection
works, including those for the design of the connection / connection made, is fully borne by the
consumers. The assets resulting from the connection works enter the patrimony of the Distribution
Operator from the moment of commissioning, through the effect of the present law, without being
recognized by ANRE as part of the base of the regulated assets.
Starting with 16 March 2021, it was approved, by ANRE Order no. 17/2021, the Connection to the Electrical
Distribution Network Procedure regarding the connection of the consumption places belonging to the non-
household final consumers through connection installations with lengths up to 2,500 meters and household
consumers, through which the distribution operators have the obligation to finance and carry out the design
and execution works of the connection installation for household consumers with lengths up to 2,500 meters. By
referring to the Connection to the Electrical Distribution Network Procedure, ANRE approved the ANRE Order
no. 19/20.01.2021, in force on 19 March 2021, by which it modified the Investment Procedure approved by the
ANRE Order no. 204/2019 and established the obligation of distribution operators, to carry out the connection
works to the final consumers, in addition to the annual investment plan.
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
methodology 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, no. 3/2021 and no. 101/2021), 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”) includes
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 tangible
and intangible assets subsequently acquired through investments approved by ANRE. The RAB 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 compared
to the forecast; change in quantities and acquisition price for the regulated own technological consumption
(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 consumers. There were significant
migrations of domestic consumers 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 consumers
and consumers options for offers that combine electricity, natural gas and/or telecommunications services.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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
Government Emergency Ordinance (GEO) no. 114/2018. The new secondary legislation approved by ANRE has
reintroduced the regulated contracts with the electricity producers and modified the pricing methodology for
the household consumers in the regulated segment. Subsequently, by Government Emergency Ordinance no.
1/2020, the period of application of regulated tariffs to household consumers 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 consumers 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 consumers in the regulated market. Taking into
account 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 consumers
and 31 December 2020 for household consumers.
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
made at national level and not on network areas, as previously provided. SoLRs are designated for an indefinite
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 consumer as a last resort supplier will be the “lowest cost”, regardless of whether they are domestic or non-
domestic consumer. The lowest cost is established by ANRE monthly, for each network area, by consulting the
offers published by SoLR on their own web pages.
As of 1 January 2021, regulated end-user prices for electricity had been removed and the market fully liberalized
for all types of consumers. Therefore, both universal service prices and competitive prices are set freely by
suppliers.
Also, for 2021, ANRE had set a series of specific obligations concerning notification of consumers and the offers
sent to them for the suppliers of last resort which had regulated consumers at the end of 2020.
Competitive market
Transactions on the competitive wholesale market are transparent, public, centralised and non-discriminatory.
Participants to the wholesale market can trade electricity based on the bilateral contracts concluded on the
dedicated markets.
The supply of electricity to consumers 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 consumer.
Changes in legislation
Over 2021, several changes have been brought to the legislation, having a significant impact on the supply of
electricity, as follows:
• Enforcement of Order no. 143/2021 amending the Electricity and Gas Law no. 123/2012, which transposes
into national legislation Directive (EU) 944/2019 on common rules for the internal market for electricity
and brings new rights and obligations for the suppliers of electricity concerning inter alia: obligation to
supply universal service (US) to household consumer only; removal of the obligation to set up physical
customer care centers for US customers at max. 50 km; obligation to issue settlement bills for household
consumer once every 3 months at the least; right to conclude directly negotiated bilateral transactions
on the wholesale markets for any period of time; obligation to procure the electricity needed to cover
customers’ consumptions, whose breach shall be sanctioned with a fine calculated as a percentage of
the annual turnover;
• Implementation, from 1 November 2021 to 31 March 2022, due to the increase in energy price on the
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) international and national markets and the impact thereof on Romanian consumers, of the consumers
support schemes approved by Order no. 118/2021, as approved with amendments by Law no. 259/2021
and amended by Order no. 130/2021, Order no. 2/2022, and Order no. 3/2022. The following support
mechanisms have been put in place: compensation of household consumers for part of the costs
borne with the electricity invoices, exemption (until 31 January 2022) of several types of non-household
consumers from payment of regulated tariffs and other taxes/contributions, capping the selling price
for household and non-household consumers (until 31 January for certain types of non-household
consumers, as of 1 February 2022 for all non-household consumers), suspending the invoice payment
for vulnerable consumers. The amounts compensated will be received from the the National Agency
for Payments and Social Inspection for household consumers and a from the Ministry of Energy for
non-household consumers. The amounts will be recovered in 30 days after submitting the required
documentation to the National Agency for Payments and Social Inspection or Ministry of Energy. (for
further details please refer to Note 18)
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 electricity
purchased and supplied to final consumers. The cost of green certificates is invoiced to final consumers
separately from the tariffs for electricity.
For 2021, the mandatory estimated annual quota for green certificates was established by ANRE through Order
no. 237/2020 (0.4505 GC/MWh) following that until 1 March 2022, ANRE will establish also through another order,
the annual mandatory quota for the acquisition of green certificates related to 2021, based on the quantities
of electricity from renewable sources and the final consumption of electricity of the previous year. For 2020,
the mandatory quota of green certificates was established by ANRE through Order no. 9/2021, at the value of
0.45074 GC/MWh.
Electricity generation
Green certificates
Electricity producers are entitled by to receive a certain number of green certificates for each MWh of electricity
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) a minimum trading value of EUR 29.4/GC and
(b) a maximum trading value of EUR 35/GC.
For the year 2021 and 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
pandemic 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 visitors
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 Group has adopted all the necessary measures for the activity
of the companies within the Group 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
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 minimize 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 aforementioned 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 consumer.
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.
Increase in Energy price impact
Following the total liberalization of the electricity market from 1 January 2021 for all types of consumers, the
international context of the energy markets characterized by an imbalance between supply and demand at
European level, corroborated with the energy policies developed both at EU and national level, has led to an
increase in electricity prices. Moreover, the strong increase in energy prices is both the result of external factors,
such as the exponential increase in the price of emission allowances, and of internal factors, such as the high
share of energy traded on the spot market (DAM). The entire energy sector was affected by the increased energy
price.
The aforementioned difficult conditions led to an increase in operating expenses, mainly for the acquisition of
energy for network losses and for supplying activity. The unstable economic environment, led to a decrease
in financial performance for 2021, as compared with the previous year but with no significant difficulties in
receivables collection and consequently payment of debts being noted.
The Group actively reviews and implements policies and strategies to recover from the loss generated by the
increase in energy price, strategies which mainly aim in revising the method of generating the selling price
for final consumers, concluding agreements with specific clauses ensuring new financing facilities, closely
monitoring suppliers and consumers payment terms, monitoring daily cash flow and forecasted cash flow.
Therefore, considering the actions already implemented and the strategies which will be applied, the Group
anticipate a recovery on its financial performance and its operations in the foreseeable future. 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.
2
Basis of accounting
These annual consolidated financial statements have been prepared in accordance with International Financial
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 28 February 2022 and will be submitted for
shareholders’ approval in the meeting scheduled on 20 April 2022.
The Company also issues an original version of the consolidated financial statements prepared in accordance
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
accounting 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.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 underlying
assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
(a) Judgements
Information 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 principal
or an agent. In applying IFRS 15, the Group has identified that it acts in the capacity of an agent in case 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 December
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 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.
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 recognized
in the distribution tariff of 1/1000 of the revenues from electricity distribution. According to the concession
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
maintenance 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
separation of construction or upgrade services from operation services.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 construction services
establised by the Group. The 3% margin applied is determined based on the Group’s experience 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 l) – assumptions regarding the useful life of the intangible assets related to concession
arrangements;
• Nota 6 c) – assumptions regarding recognition of revenue from supply and distribution of electricity to
consumers 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 23 – assumptions regarding the revalued amount of property, plant and equipment;
• Notes 29 and 34 – recognition and measurement of provisions and contingencies;
• Notes 17 – recognition of deferred tax asset;
• Note 18 – assumptions and estimates of amounts to be received from the state following the application
of the compensation and capping scheme.
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 possible.
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:
• Note 31 – Financial instruments;
• Note 23 – Property, plant and equipment.
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
consolidated financial statements. The new amendments to existing standards that are effective starting with 1
January 2021 do not have a significant impact over the Group’s consolidated financial statements.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) (a) Going concern
The consolidated financial statements have been prepared on the going concern basis. In making this
judgement management considers current trading performance and access to finance resources. The Group
has prepared a forecast that includes the following assumptions:
• A return to positive operating cash flow from May 2022, following with the assumption that the effects
of the law 118/2021 will no longer continue past March 31, 2022. The consequence would be that the price
for the end customers will no longer be capped;
• The utilisation of confirmed debt facilities up to a limit of RON 2,537,223 thousand, including RON
1,830,000 thousand total overdraft limits (please see Note 20 and 36) and RON 707,223 thousand long
term loans (please see Note 30);
• The utilisation of not yet confirmed facilities amounting to RON 840,000 thousand which would be
drawn down during the forecast period;
• The Group has received the waiver letter from EBRD on 24 February 2022 (Note 36), however this is
subject of obtaining the waiver letters also from EIB and BCR for which the Group was non compliant as
at 31 December 2021; The management of the Group is of the opinion that based on the discussions with
EIB and BCR the waiver letter will be obtained also from these 2 banks;
At the present time the projections are based on the latest assumptions that include the ending of the Law
no. 118/2021 regarding the compensation and ceiling scheme in March 2022. At the date of issuance of these
consolidated financial statements the regulatory position is under review and there may be further laws
enacted which could adversely impact the Groups operating cash flows beyond the 1st of April 2022. Given the
current market uncertainties, the Group has outlined a proposal to be approved in the forthcoming annual
shareholders meeting regarding the approval of a total ceiling of short-term financing up to RON 1,500,000
thousand. In light of the importance of the Group as the supplier and distributed of electricity on the Romanian
market, having 39.6% (according to the latest ANRE report 2020 for the distribution segment) as market share
on the electricity distribution and 18.39% (according to the latest ANRE report November 2021 for the supply
segment) as market share on the electricity supply market and having as main shareholder of Electrica SA the
Romanian State, the management believes sufficient financing will be made available to cover any financing
requirements arising from this uncertainty and Group will be able to meet its obligations as they fall due.
Based upon the above projections and other information, given the measures already implemented and the
strategies to reduce the risks which may occur due to the instability of the economic environment, the Board
of Directors has, at the time of approving the consolidated financial statements, a reasonable expectation that
the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in preparing the consolidated financial statements.
(b) Basis of consolidation
(i) 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
subsidiary’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.
303 | 2021 ANNUAL REPORT
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) (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
investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same
way as unrealized gains, but only to the extent that there is no evidence of impairment.
(c) 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 services
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 delivered
to consumers (consumed by consumers), based on meter readings and based on estimates for electricity
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 (k)).
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 meaning
of Balancing Market cost reduction by comparison with the case where the producer/supplier/distributor 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 electricity
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 participants
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 electricity 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 electricity
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. Revenue
from green certificates is recognized in the profit or loss statement when the green certificates are sold on the
trading market.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 control of the goods has been transferred to a customer.
Control refers to the customer’s ability to direct the use of and obtain substantially all of the remaining benefits
from, an asset.
Service concession arrangement
Revenue related to construction or upgrade services under service concession arrangement is recognised
based on the stage of completion of the work performed, consistent with the accounting policy on recognising
revenue on construction contracts, as follows:
• Revenue in respect of variations to contracts and incentive payments is recognised when there is
an enforceable right to payment and it is highly probable it will be agreed by the customer. Variable
consideration is assessed on a contract by contract basis according to the facts, circumstances and
terms of each project and only recognised to the extent that it is highly probable not to significantly
reverse in the future. Revenue in respect of claims is recognised only if it is highly probable not to reverse
in future periods.
• If the outcome of a construction contract can be estimated reliably, then contract revenue is recognised
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.
(d) 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.
(e) 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.
(f) 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-monetary 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 recognised 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.
305 | 2021 ANNUAL REPORT
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) (g) Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and are expensed as the related
service 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 estimating
the amount of future benefit that employees have earned in the current and prior periods, discounting that
amount.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected
unit credit method.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, are recognised
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.
(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.
(h) 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 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 on the initial recognition of assets or liabilities in a transaction that is not a
business 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
differences 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.
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 uncertain
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) 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.
(b) 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.
(i) 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 electricity
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 as inventories when the producer has the right to receive as a result of energy
produced and delivered into the network, at nil nominal value. Recognition in the profit and loss account is
done at the time of their sale.
( j) 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”.
307 | 2021 ANNUAL REPORT
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated) (k) Property, plant and equipment
(i) 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 depreciation
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 impairment 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 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
accounted 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.
(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 reasonably
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
Buildings
Equipment
Motor vehicles and office equipment
Useful lives (years)
45-70
3-25
3-10
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(l) 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.
308 | 2021 ANNUAL REPORT
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SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated)
(ii) Amortization
The amortization method used is selected on the basis of the expected pattern of consumption of the expected
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 determined
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”.
(m) 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 choose
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
connection 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
station, 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, according to ANRE Order no. 17/2021 for the connection installations of all household
consumers and of the non-household 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.
(n) 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
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 goodwill
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.
(o) 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.
309 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised
or depreciated, and any equity-accounted investee is no longer equity accounted.
(p) 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 subsequently 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.
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 months
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 effective
interest method.
310 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 related
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
directly 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 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 recognition,
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.
(ii) Write-off policy
The Group writes off a financial asset after the finalization of the bankruptcy proceedings. Financial 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 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 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 contractual 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.
311 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 collateralised borrowing for the proceeds received.
(q) 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.
(r) 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.
(s) 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.
(t) Provisions
A provision is recognised if, as a result of a past event, the Group has a present, legal or constructive 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 publicly. Future operating losses are
not provided for.
(u) 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
(b) a present obligation that arises from past events that is not recognised because:
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.
312 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Contingent liabilities are not recognized in the Group’s financial statements, but disclosed unless the possibility
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.
(v) Leases
The Group applies IFRS 16 „Leases”.
(i) The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group 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 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
commencement 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 remeasured
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
under 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 discounting
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 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 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 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.
(w) Investment in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an
interest in a joint venture. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those policies.
313 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) The results and assets and liabilities of associates are incorporated in these consolidated financial statements
using the equity method of accounting, except when the investment is classified as held for sale, in which case
it is accounted for in accordance with IFRS 5.
Under the equity method, an investment in an associate is recognised initially in the consolidated statement of
financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other
comprehensive income of the associate.
When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes
any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group
discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the
Group has incurred legal or constructive obligations or made payments on behalf of the associate.
An investment in an associate is accounted for using the equity method from the date on which the investee
becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment
over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised
as goodwill, which is included within the carrying amount of the investment.
Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the
investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment
is acquired.
The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment
loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of
the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying
amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the
carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS
36 to the extent that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment ceases to be an
associate.
(x) Segment reporting
Segment results that are reported to the Company’s Board of Directors (the chief operating decision maker)
include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
(y) Subsequent events
Events occurring after the reporting date 31 December 2021, which provide additional information about
conditions prevailing at the reporting date (adjusting events) are reflected in the consolidated 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 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 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 IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and
Measurement”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16
“Leases” – Interest Rate Benchmark Reform — Phase 2 adopted by the EU on 13 January 2021 (effective
for annual periods beginning on or after 1 January 2021),
• Amendments to IFRS 16 “Leases” – Covid-19-Related Rent Concessions beyond 30 June 2021 adopted by
the EU on 30 August 2021 (effective from 1 April 2021 for financial years starting, at the latest, on or after
1 January 2021),
314 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) • 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).
The adoption of 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 IAS 16 “Property, Plant and Equipment” – Proceeds before Intended Use adopted by
the EU on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
• Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Onerous Contracts
– Cost of Fulfilling a Contract adopted by the EU on 28 June 2021 (effective for annual periods beginning
on or after 1 January 2022),
• Amendments to IFRS 3 “Business Combinations” – Reference to the Conceptual Framework with
amendments to IFRS 3 adopted by the EU on 28 June 2021 (effective for annual periods beginning on or
after 1 January 2022),
• IFRS 17 “Insurance Contracts” including amendments to IFRS 17 issued by IASB on 25 June 2020 –
adopted by the EU on 19 November 2021 (effective for annual periods beginning on or after 1 January
2023),
• 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 – adopted by the EU on 28 June 2021 (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 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
Accounting Standards Board (IASB) except for the following new standards and amendments to the existing
standards, 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,
• 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 1 “Presentation of Financial Statements” - Disclosure of Accounting Policies
(effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” - Definition
of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023),
• Amendments to IAS 12 “Income Taxes” - Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (effective for annual periods beginning on or after 1 January 2023),
• 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 IFRS 17 “Insurance contracts” - Initial Application of IFRS 17 and IFRS 9 – Comparative
Information (effective for annual periods beginning on or after 1 January 2023).
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.
315 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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.)
Until 31 December 2020, the electricity distribution service
included the former 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. (that covers the all three distribution areas:
Electricity distribution
Transilvania Sud, Transilvania Nord and Muntenia Nord), Electrica
Serv S.A. and the activity performed by Societatea Energetica
Electrica S.A. within the distribution network until June 2020.
Starting with 2021, the electricity distribution service includes the
activity of Societatea de Distributie Energie Electrica Romania
S.A. and the activity performed by Electrica Serv S.A within the
distribution network.
Electricity generation
panels) (includes Electrica Energie Verde 1 SRL and starting with
Production of electricity from renewable sources (photovoltaic
September 2021 includes Electrica Productie Energie S.A.).
External electricity network maintenance
activity of Servicii Energetice Muntenia S.A. (until 30 November
Repairs, maintenance and other services for electricity networks
owned by other distributors. Until 31 December 2020, included the
2020) and a part of Electrica Serv S.A..
Starting with 2021, includes the activity of Electrica Serv S.A.,
without the activity performed in the distribution network.
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 electricity distribution and shared
electricity network maintenance services. Inter-segment pricing policy is determined on an arm’s length basis.
All assets are allocated to reportable segments, except for investments in associates and deferred tax assets.
316 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) ,
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ELECTRICA S.A.
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(All amounts are in THOUSAND RON, if not otherwise stated)
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319 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
(c) Reconciliation of information on reportable segments to consolidated amounts
31 December 2021
31 December 2020
Total assets
Total assets for reportable segments
10,149,577
9,645,703
Elimination of inter-segment assets
(2,375,782)
(1,603,551)
Unallocated amounts
109,341
19,666
Consolidated total assets
7,883,136
8,061,818
Trade and other receivables
Trade and other receivables for reportable segments
2,436,080
1,596,251
Elimination of inter-segment trade and other receivables
(1,042,861)
(534,016)
Consolidated trade and other receivables
1,393,219
1,062,235
Trade and other payables and short term employee benefits
Trade and other payables and short term employee benefits for
2,312,761
1,489,755
reportable segments
Elimination of inter-segment trade and other payables and
(1,016,329)
(515,449)
short term employee benefits
Consolidated trade and other payables and short term
1,296,432
974,306
employee benefits
320 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 9
Revenue
2021
2020
Electricity distribution and supply
6,517,777
5,697,668
Supply of natural gas
98,503
42,362
Construction revenue related to concession agreements (Note 24)
500,387
696,246
Repairs, maintenance and other services rendered
59,854
54,472
Proceeds from sale of green certificates
Re-connection fees
Sales of merchandise
Total
1,138
1,205
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3,163
2,673
4,516
7,178,864
6,501,100
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 2,081 thousand (2020: RON 2,131 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
2021
2020
Electricity purchased
4,967,315
3,298,325
Green certificates purchased
Natural gas purchased
581,729
145,680
557,222
50,158
Total
5,694,724
3,905,705
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.
321 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 11
Other income and expenses
(a) Other operating income
Rental income
Late payment penalties from customers
Revenues from indemnities and compensations
Revenue from notices
Other
Total
2021
93,143
28,356
47,499
5,943
20,830
195,771
2020
93,753
26,872
17,153
6,018
21,626
165,422
Rental income refers mainly to the rental of the electricity poles by the distribution subsidiary to telecom
operators.
In 2021 revenues from indemnities and compensations consists mainly of compensations invoiced, following
the early termination of energy contracts by suppliers.
(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
Rent
Postage and telecommunication services
Call centre services
Marketing expenses for the supply activity
Cleaning expenses
Expenses with clients notified
Sponsorships and donations
Expenses with services from subcontractors
Cost of merchandise sold
2021
43,211
39,697
36,960
30,411
26,718
22,219
15,819
12,205
11,680
11,011
7,836
5,078
2,197
1,039
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2020
42,388
40,753
38,720
29,106
27,012
19,514
16,079
4,992
7,307
10,678
4,859
5,145
1,224
3,611
7,989
4,994
Other
Total
322 | 2021 ANNUAL REPORT
ELECTRICA S.A.
76,333
60,733
343,147
325,104
SOCIETATEA ENERGETICA ELECTRICA S.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2021(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
(Loss)/Earnings per share
2021
1,765
882
2,647
(24,110)
(5,007)
(411)
(29,528)
(26,881)
2020
8,962
689
9,651
(20,710)
(5,883)
(143)
(26,736)
(17,085)
The calculation of basic and diluted (loss)/earnings per share has been based on the following profit attributable
to Company’s shareholders and weighted-average number of ordinary shares outstanding:
(Loss)/Profit attributable to shareholders
(Loss)/Profit for the year attributable to the owners of the Company
(552,882)
387,543
Profit attributable to shareholders of the Company
(552,882)
387,543
2021
2020
Number of ordinary shares (in number of shares)
Number of ordinary shares at 31 December
339,553,004
339,553,004
2021
2020
For the calculation of basic and diluted earnings per share, treasury shares (6,890,593 shares) were not treated
as outstanding ordinary shares and were deducted from the number of issued ordinary shares.
(Loss)/Earnings per share
Basic and diluted (loss)/earnings per share (RON)
2021
(1.63)
2020
1.14
323 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 14
Short-term employee benefits
31 December 2021
31 December 2020
Personnel payables
52,419
Current portion of defined benefit liability and other employee
18,257
52,573
10,420
24,531
4,768
25,342
5,084
101,102
92,292
benefits
Social security charges
Tax on salaries
Total
For details of the related employee benefit expenses, see Notes 15 and 16.
In Romania, all employers and employees, as well as other persons, are contributors to the State social security
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.
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 Collective 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 granted 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 electricity,
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.
On 20 December 2021 the Board of Directors of Electrica SA approved the implementation of a reorganization
process of the Headquarters’ personnel structure and the initiation of the collective dismissal procedure, formally
communicated to all employees on 23 December 2021. On 2 February 2022, the Board of Directors approved the
amendment of the Headquarters’ organizational structure effective as of 1 March 2022 and the notification
of relevant authorities and of the Trade Union regarding the final decision to implement the reorganization
process and to carry out the collective dismissal of the employees who currently occupy the positions to be
cancelled. According to the Collective Labour Contract, based on seniority, the employees who currently occupy
the positions to be cancelled are entitled to receive a number of gross average base salary (Note 15 b)). The
estimated termination benefit amounts to RON 5,054 thousand.
In 2021 and 2020, employee benefit obligations were computed by an independent actuary using the projected
unit credit method with benefits calculated proportionally to the period of service.
324 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 31 December 2021
31 December 2020
Defined benefit liability
Other long-term employee benefits
79,078
88,356
68,101
86,195
Total
167,434
154,296
- Current portion*
- Non-current portion
*included in Personnel payables in Note 14
18,257
149,177
10,420
143,876
(i) Movement in the defined benefit liability and other long-term employee benefits
The following tables shows 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
2021
2020
Balance at 1 January
68,101
59,698
Included in profit or loss
Current service cost
Past service cost
Interest cost
Included in other comprehensive income
Remeasurements loss
- Actuarial loss
Other
Benefits paid
Balance at 31 December
5,158
5,054
2,194
4,519
(346)
2,493
5,891
7,152
(7,320)
79,078
(5,415)
68,101
Other long-term employee benefits
2021
2020
Balance at 1 January
86,195
80,547
Included in profit or loss
Current service cost
8,285
8,482
325 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Other long-term employee benefits
Past service cost
Actuarial (gain)/ loss
Interest cost
Other
Benefits paid
Balance at 31 December
2021
-
(1,859)
2,814
(7,079)
88,356
2020
767
1,645
3,390
(8,636)
86,195
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:
Valuation date
31 December 2021
Valuation date
31 December 2020
7.5%
5.9%
3.2%
3.0%
2.8%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
Year
2021
2022
2023
2024
2025
2026+
• 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 5% for the year 2021 (2020: 3.3%);
• the electricity price per KWh used for 2022 is RON 1.129673, for 2023 it was considered a tendency to
recover from the energy crisis, and starting with 2024 is adjusted with inflation (2020: RON/KWh 0.525110);
• 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 2022 were taken into consideration the salaries’ growth rates budgeted by the Group.
Starting with the year 2023, 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:
326 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Jubilee bonus based on years of service in the Group
Seniority
20 years
30 years
35 years
40 years
45 years
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 2021
31 December 2020
1
2
3
4
5
1
2
3
4
5
No of gross monthly base salaries
31 December 2021
31 December 2020
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
salaries
salaries
No of gross monthly base
No of gross monthly base
31 December 2021
31 December 2020
1 - 2 years
2 - 5 years
5 - 10 years
10 - 20 years
More than 20 years
2
3
4
5
8
2
3
4
5
8
327 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) (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
salaries
salaries
No of gross monthly base
No of gross monthly base
31 December 2021
31 December 2020
1 - 3 years
3 - 5 years
5 - 10 years
10 - 20 years
3
6
7
11
3
6
7
11
More than 20 years
16
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
restructuring. Employees who are re-employed within the Group after lay-off are not entitled to the above-
mentioned benefits.
(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 retirement
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.
(iii) Sensitivity analysis
Significant actuarial assumptions for the determination of the benefit obligation are the discount rate, expected
salary increase and retirement age. The sensitivity analysis below has been determined based on reasonably
possible changes of the respective assumptions occurring at the end of the reporting period, while holding all
other assumptions constant.
Increase by 1%
Decrease by 1%
2021
2020
2021
2020
Discount rate
(12,489)
(13,216)
12,489
13,216
Salary growth
12,957
13,561
(12,957)
(13,561)
Increase by 1 year
Decrease by 1 year
Retirement age
2021
3,677
2020
3,367
2021
2020
(3,677)
(3,367)
The sensitivity analysis presented above may not be representative of the actual change in the benefit
obligation 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.
328 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 16
Employee benefit expenses
Average number of employees
Number of employees at 31 December
2021
7,919
8,020
2020
8,053
8,126
2021
2020
Wages and salaries*
796,137
738,009
Social security contributions
Meal tickets
Termination benefits
19,486
33,585
6,135
17,133
27,080
25,751
Total employees benefits for the year
855,343
807,973
Capitalised employee benefit expenses
(52,667)
(33,472)
Total employees benefits in the statement of profit or loss
802,676
774,501
*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 uncertain
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
management taking into account various factors, including the interpretation of tax legislation and previous
experience. 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
2021
242
2020
53,928
Deferred tax (benefit)/expense
(79,771)
838
Total (benefit)/expense related to income tax
(79,529)
54,766
329 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) (ii) Amounts recognised in other comprehensive income
2021
2020
Before tax
Tax expense
Net of tax
Before tax
(expense)/
tax
Tax
Net of
benefit
Revaluation of land,
land improvements and
-
-
-
43,823
(7,931)
35,892
buildings
Remeasurement of
(5,891)
(45)
(5,936)
(7,152)
572
(6,580)
defined benefit liability
Total
(5,891)
(45)
(5,936)
36,671
(7,359)
29,312
(iii) Reconciliation of effective tax rate
(Loss)/Profit before tax
2021
(632,411)
2020
442,309
(Benefit)/Tax using Company’s domestic tax
16%
(101,186)
16%
70,769
rate
Non-deductible expenses
-7%
45,558
6%
Non-taxable income
3%
(15,878)
-5%
Deduction of legal reserves
0%
(2,574)
-1%
Other tax effects
0%
(1,607)
0%
Recognition of tax effect of previously unreco-
1%
(3,842)
-4%
gnised tax losses
27,453
(20,537)
(3,244)
(402)
(19,273)
Income tax (benefit)/expense
13%
(79,529)
12%
54,766
(iv) Movement in deferred tax balances
2021
at 1 January
in profit or
comprehensive
Deferred
tax
Net balance
Recognised
Recognised in other
Deferred
2021
loss
income
Net
tax assets
liabilities
Balance at 31 December 2021
Property, plant and
41,757
(1,919)
equipment
Intangible
assets related
171,712
15,788
to concession
agreements
-
-
39,838
-
39,838
187,500
-
187,500
Employee benefits
(22,603)
(1,382)
45
(23,940)
(23,940)
-
330 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Balance at 31 December 2021
2021
at 1 January
in profit or
comprehensive
Deferred
tax
Net balance
Recognised
Recognised in other
Deferred
2021
loss
income
Net
tax assets
liabilities
Tax loss carried
(7,765)
(88,207)
forward
Other items
(4,121)
(178)
-
-
(95,972)
(95,972)
(4,299)
(4,299)
-
-
Tax liabilities/
(assets) before
set-off
158,121
(79,771)
45
78,395
(148,943)
227,338
Set off of tax
Net tax liabilities/
(assets)
65,412
(65,412)
(83,531)
161,926
The Group recognised a deferred tax asset in amount of RON 88,207 thousand in relation to the suffered loss
from 2021. The recognition was based on the latest management assumptions and judgements in which the
subsidiaries for which a deferred tax asset was recognised, will generate future taxable profit in the next 7 years
will, against which the subsidiaries can use the benefits therefrom. The 7-year period is the maximum period in
which the Group is allowed to use the benefit in the current tax jurisdiction.
Net
Recognised
Recognised
Deferred
2020
balance at
in profit or
in other
Acquisition of
Net
Deferred
tax
1 January
loss
comprehensive
subsidiaries*
tax assets
liabilities
2020
income
Balance at 31 December 2020
Property, plant and
35,828
(4,876)
7,931
2,874
41,757
equipment
Intangible
assets related
to concession
agreements
162,923
8,789
-
Employee benefits
(20,203)
(1,828)
(572)
Impairment of trade
(19,402)
(1,457)
receivables
Tax loss carried
(6,959)
395
forward
Other items
(3,936)
(185)
-
-
-
Tax liabilities/
-
-
-
-
-
41,757
171,712
171,712
(22,603)
(22,603)
(20,859)
(20,859)
-
-
-
-
(1,201)
(7,765)
(7,765)
-
(4,121)
(4,121)
(assets) before
148,251
838
7,359
1,673
158,121
(55,348)
213,469
set-off
Set off of tax
35,682
(35,682)
331 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Net tax liabilities/
(assets)
(19,666)
177,787
*see Note 32
(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
18
Trade receivables
2021
356,623
2020
371,426
31 December 2021
31 December 2020
Trade receivables, gross
2,325,477
1,979,348
Bad debt allowance
(980,858)
(949,573)
Total trade receivables, net
1,344,619
1,029,775
Trade receivables from related parties are presented in Note 33.
Trade receivables, gross, comprise:
31 December 2021
31 December 2020
Electricity distribution and supply
1,323,732
1,026,525
Late payment penalties receivable
Customers with judicial execution titles
Repairs, maintenance and other services
Other
81,311
766,109
17,700
136,625
84,729
760,229
12,624
95,241
Total trade receivables, gross
2,325,477
1,979,348
Following the adoption of the Order no. 118/2021 with subsequent amendments approved by Law no. 259/2021
with subsequent amendments and Order no. 226/2021 concerning the capping and compensation mechanism,
part of the receivables due to the subsidiary Electrica Frunizare S.A. for the sale of electricity and gas are against
the Romanian State through National Agency for Payments and Social Inspection and Ministry of Energy. The
amounts estimated to be received are of RON 59,271 thousand from the National Agency for Payments and
Social Inspection for household consumers and of RON 11,420 thousand from the Ministry of Energy for non-
household consumers.
The amounts will be recovered in 30 days after submitting the required documentation to the National Agency
for Payments and Social Inspection or Ministry of Energy, depending on the case. The receivables are booked
under the caption “Electricity distribution and supply”.
The reconciliation between the opening balances and the closing balances of the impairment for trade
receivables in the form of lifetime expected credit losses is as follows:
332 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Lifetime expected credit losses
2021
2020
Balance as at 1 January
Loss allowance recognized
Decrease in loss allowance
Amounts written off
Balance as at 31 December
949,573
94,400
(22,944)
(40,171)
980,858
1,022,140
60,773
(121,176)
(12,164)
949,573
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 characteristics:
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 procedures,
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 insolvency
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. During 2021, receivable for Oltchim in amount of RON 29,329 thousand was written off
as it was not recognised in the final bankruptcy table. The bad debt allowance was also adjusted with the same
amount.
In the light of the impact generated by COVID-19 pandemic, the Group has identified the probability of default,
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 2021, the Group has considered
all the information available without undue costs (including forward looking information) that may affect the
credit risk of its receivables since original recognition, thus recording a bad debt allowance in amount of RON
94,400 thousand.
333 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 19
Other receivables
VAT receivable
Interest receivable
Other receivables
Lifetime expected credit losses
Total other receivables, net
31 December 2021
31 December 2020
12,566
18
56,140
(20,124)
48,600
12,565
77
40,782
(20,964)
32,460
Other receivables include mainly guarantees and receivables to be recovered from state authorities in respect
to medical leave indemnities.
The reconciliation between the opening balances and the closing balances of the impairment for other
receivables is as follows:
Loss allowance
2021
2020
Balance as at 1 January
20,964
22,728
Loss allowance recognized
Decrease in loss allowance
Balance as at 31 December
20
Cash and cash equivalents
-
(840)
20,124
237
(2,001)
20,964
Bank current accounts
Call deposits
Cash in hand
31 December 2021
31 December 2020
167,859
53,897
74
179,362
391,514
53
Total cash and cash equivalents in the consolidated
221,830
570,929
statement of financial position
Overdrafts used for cash management purposes
(627,402)
(164,966)
Total cash and cash equivalents in the consolidated
(405,572)
405,963
statement of cash flows
334 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 31 December 2021
31 December 2020
Restricted cash – short-term
-
320,000
On 16 October 2021 the long term borrowings from BRD – Groupe Societe Generale were repaid, so the amount
of the collateral deposits in amount of RON 320,000 thousand presented in the consolidated statement of
financial position as short-term restricted cash as at 31 December 2020, were released.
Until the authorization for issue of these Consolidated Financial Statements by the Board of Directors, the
Group has overdrafts from various banks (ING Bank N.V., Raiffeisen Bank, Banca Comerciala Romana, Banca
Transilvania, BNP Paribas, Intesa Sanpaolo Bank and BRD – Groupe Societe Generale S.A.) with a total overdraft
limit of up to RON 1,830,000 thousand and maturities ranging from January 2022 to December 2023 out of
which overdrafts in amount of RON 760,000 thousand were signed subsequently in the period between 31
December 2021 and 28 February 2022. (for further details please see Note 36)
The overdraft facilities are used for cash management purposes and are not financial in nature from the
perspective of presenting in the consolidated statement of cash flows. The outstanding balance of the overdraft
facilities as at 31 December 2021 is of RON 627,402 thousand (31 December 2020: RON 164,966).
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 5,941 thousand in 2021 (2020: RON 9,734
thousand).
21
Assets held for sale
Electrica Serv S.A.’s Board of Directors approved the selling plan of part of their available assets and accordingly,
those assets were presented as Assets held for sale, being expected to be sold in the following period. During
2021 were sold a number of 4 assets (8 in 2020) in amount RON 478 thousand (RON 1,735 thousand in 2020).
In November 2021, due to the fact that Electrica Serv S.A. did not managed to sell some of the assets approved in
the initial selling plan in 2019, the market conditions for selling being limited by the COVID pandemic resulting
in difficulties in finding an active buyer, a new plan was approved with the assets for which the sale is highly
probably, offers being received and are available for immediate sale in current conditions; the rest of the assets
in amount of RON 10,190 were reclassified to Property Plant and Equipment (Note 23).
The assets held for sale comprise:
Land and buildings
Equipment
Total assets held for sale
22
Inventories
31 December 2021
31 December 2020
5,132
280
5,412
15,476
-
15,476
As at 31 December 2021 and 31 December 2020, inventories are as follows:
Spare parts
Consumables and other materials
Natural gas
31 December 2021
31 December 2020
28,569
33,399
5,367
40,582
22,672
1,725
335 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 31 December 2021
31 December 2020
Other inventories
Allowance for impairment of inventories
Total inventories
13,938
(8,315)
72,958
23,868
(18,781)
70,066
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.
As at 31 December 2021, the remaining quantity of natural gas stored is of MWh 12,186 (31 December 2020: MWh
20,307), amounting to RON 5,367 thousand (31 December 2020: RON 1,725 thousand).
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 in the caption “Other inventories” when they energy is produced and injected
into the network, at Nil nominal value.
On 31 December 2021, Electrica Energie Verde 1 SRL holds a total of 181,850 green certificates (31 December
2020: 148,581), out of which 125,825 are postponed for trading (31 December 2020: 139,805) and the remaining
56,025 are tradeable green certificates (31 December 2020: 8,776). Starting with January 2021, the recovery of
the postponed green certificates began, in equal tranches of 1,165 green certificates on a monthly basis, for ten
years.
23
Property, plant and equipment
The movements in property, plant and equipment in 2021 and 2020 are as follows:
Land and land
Buildings Equipment
furniture
Construction
Total
improvements
and office
in progress
equipment
Vehicles,
Gross carrying
amount
Balance at 1
232,386
192,728
287,174
93,424
27,742
833,454
January 2020
Additions
85
157
1,997
1,259
2,986
6,484
Transfer from
construction in
-
progress
Transfer to
intangible
1,269
-
622
(1,891)
-
assets related
(1,442)
-
(213,590)
-
(2,567)
(217,599)
to concession
agreements
336 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Land and land
Buildings Equipment
furniture
Construction
Total
improvements
and office
in progress
equipment
Vehicles,
Disposals
(920)
(1,471)
(11,419)
(1,048)
(45)
(14,903)
Revaluation
recognized
in other
comprehensive
income
Revaluation
15,834
27,989
recognized in
(126)
(2,294)
profit or loss
Gross book
value netted
-
-
off against the
-
(26,563)
-
accumulated
depreciation at
revaluation
Acquisition of
-
-
-
subsidiary (Note
258
5,333
34,734
1,079
32)
-
-
-
-
43,823
(2,420)
(26,563)
41,404
Balance at 31
246,075
197,148
98,896
95,336
26,225
663,680
December 2020
Additions
Transfer from
construction in
progress
-
-
167
482
150
8,368
9,167
1,257
2,001
1,967
(5,225)
-
Disposals
(46)
(383)
(7,664)
(503)
(180)
(8,776)
Reclassification
from/(to) assets
6,769
4,368
(1,914)
-
-
9,223
held for sale
(Note 21)
Balance at 31
252,798
202,557
91,801
96,950
29,188
673,294
December 2021
Accumulated depreciation and impairment losses
Balance at 1
January 2020
Depreciation
-
-
24,152
163,883
82,446
18,875
289,356
5,922
17,058
4,870
-
27,850
337 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Land and land
Buildings Equipment
furniture
Construction
Total
improvements
and office
in progress
equipment
Vehicles,
(403)
(11,321)
(766)
1,905
-
-
(1,196)
(26,563)
-
-
-
-
-
(123,208)
-
-
-
(12,490)
1,905
(104)
(1,300)
-
-
(26,563)
(123,208)
5,013
45,216
86,550
18,771
155,550
7,532
8,865
4,721
(14)
(4,546)
(96)
-
(3,805)
947
(1,142)
-
-
-
-
21,118
(4,656)
(137)
(3,942)
-
(195)
13,478
44,588
91,175
18,634
167,875
Accumulated
depreciation of
disposals
Impairment loss
Reversal of
impairment loss
Accumulated
depreciation
netted off
against gross
book value at
revaluation
Transfer to
intangible
assets related
to concession
agreements
Balance at 31
December 2020
Depreciation
Accumulated
depreciation of
disposals
Reversal of
impairment loss
-
-
-
-
-
-
-
-
-
Reclassification
from/(to) assets
-
held for sale
(Note 21)
Balance at 31
-
December 2021
Net carrying
amounts
At 1 January
2020
232,386
168,576
123,291
10,978
8,867
544,098
At 31 December
2020
246,075
192,135
53,680
8,786
7,454
508,130
At 31 December
2021
252,798
189,079
47,213
5,775
10,554
505,419
338 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Tangible assets include mainly land, buildings and equipment.
In 2021, following the changes made in the in the selling plan for Electrica SERV there were reclassified from
assets held for sale to Property Plant and Equipment, land and buildings having as net book value RON 10,190
thousand. (see further details in Note 21).
In 2020 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 equipment
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 Transilvania
Nord S.A., SDEE Transilvania Sud S.A., SDEE Muntenia Nord S.A.), these assets being part of the distribution
network (see Note 24).
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 evaluator
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 value
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.
Category
Valuation technique
Significant unobservable
between key
Inter-relationship
inputs
unobservable inputs and
fair value measurement
Land and land
Market approach
Adjustment for liquidity,
The estimated fair
improvements
location, size.
value would increase/
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
properties and best use). The
market price is mainly based on
recent transactions.
(decrease) if:
Adjustment for liquidity,
location or size would be
lower/(higher)
339 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Category
Valuation technique
Significant unobservable
between key
Inter-relationship
inputs
unobservable inputs and
fair value measurement
Buildings
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
information:
Market approach
Adjustment for liquidity,
Adjustment for liquidity,
The market approach is based
location, size.
location or size would be
lower/(higher)
on the selling price per square
meter for buildings with similar
characteristics (i.e. ownership, legal
limitations, financing and selling
conditions, location, physical and
Office space rent
economical properties, and best
Occupancy rates
use), adjusted for liquidity, location,
size etc.
(between 80% and 90%)
Yield rates (between 7%
The DCF method
Annual rent per sqm
The valuation model based on
(between 9 and 19 EUR/
the DCF method estimates the
sqm), depending on
and 10%)
present value of net cash flows to
location;
Occupancy rates were
be generated by a building taking
higher/(lower)
into account occupancy rate and
Commercial space rent
Yield rates were lower/
annual rent. The discount rate
Occupancy rates
(higher)
estimation considers, inter alia,
(between 85% and 90%)
Annual rent per sqm was
the quality of a building and its
Yield rates (between
higher/(lower)
location.
7.25% and 11.5%)
Annual rent per sqm
(between 10 and 60 EUR/
sqm), depending on
location;
24
Intangible assets
Intangible assets include mainly intangible assets related to distribution service concession agreements
recorded 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
Software and
Intangible
concession agreements
licenses
assets in
progress
Total
Gross book value
Balance at 1 January
8,934,136
191,424
1,669
9,127,229
2020
Additions
598,930
2,226
-
601,156
340 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Transfers from
property, plant and
91,824
-
-
91,824
equipment
Transfers from
intangible assets in
-
progress
302
(302)
-
Transfers from
property, plant
and equipment in
progress
2,567
-
Reclassification to
intangible assets
4,503
related to concession
agreements
(4,503)
Disposals
-
(770)
-
-
-
2,567
-
(770)
Balance at 31
9,631,960
188,679
1,367
9,822,006
December 2020
Additions
500,387
5,730
576
506,693
Transfers from
intangible assets in
progress
Disposals
-
-
34
(34)
-
(1,042)
-
(1,042)
10,132,347
193,401
1,909
10,327,657
Balance at 31
December 2021
Accumulated
amortization and
impairment losses
Balance at 1 January
3,745,981
179,683
2020
Amortization
429,216
5,498
-
-
3,925,664
434,714
341 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Reclassification to
intangible assets
1,578
related to concession
agreements
Accumulated
amortization of
-
disposals
(1,578)
(770)
Balance at 31
4,176,775
182,833
December 2020
Amortization
441,015
Accumulated
amortization of
-
disposals
4,536
(1,042)
4,617,790
186,327
Balance at 31
December 2021
Net carrying
amounts
-
-
-
-
-
-
-
(770)
4,359,608
445,551
(1,042)
4,804,117
At 1 January 2020
5,188,155
At 31 December 2020 5,455,185
At 31 December 2021
5,514,557
11,741
5,846
7,074
1,669
1,367
1,909
5,201,565
5,462,398
5,523,540
The distribution subsidiaries (as operators) that merged into one single distribution operator as of 31 December
2020 concluded concession contracts with the Ministry of Economy concerning the operation of electricity
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 January
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(c) and 6(l)).
For the year ended 31 December 2021, the Group has recognized construction revenue related to the concession
agreements of RON 500,387 thousand (2020: RON 696,246 thousand) and construction costs of RON 485,813
thousand (2020: RON 675,967 thousand).
342 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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
Concession
Concession
Net carrying
carrying
distribution
Contract
areas
date
period
(years)
Contract expiry
period
Renewal
amount at 31
amount
date
remaining
option
December
at 31
Net
Muntenia
Nord area
2005
49
2054
Transilvania
2005
49
2054
Nord area
Transilvania
2005
49
2054
33
33
33
Sud area
Total
(years)
2021
December
2020
Yes
1,915,567
1,893,208
Yes
1,836,161
1,810,611
Yes
1,762,829
1,751,366
5,514,557
5,455,185
The concession contracts can be prolonged for a period up to half of the initial established period of 49 years.
The investments in relation to the development and modernization of the infrastructure incurred in 2021 refers
mainly to:
- Modernization of the current transformer points and stations, current underground and overhead
power lines in amount of RON 164,465 thousand (2020: RON 165,480 thousand);
- Investments related to improvements for electricity distribution network in amount of RON 143,965
thousand (2020: RON 51,190 thousand).
- Significant construction works of new transformer stations, new underground and overhead power
lines in amount of 2020: RON 97,449 thousand (2020: RON 36,470 thousand);
- Acquisition of own car fleet, including utilities vehicles and specialized vehicles in amount of RON
63,009 thousand; (2020: RON 56,220 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 2,430 thousand (2020: RON 78,980
thousand);
25
Investments in associates
On 28 July 2021 and on 7 December 2021, Electrica SA concluded four agreements for the sale-purchase of
shares in four project companies having as main activity the production of electricity from renewable sources.
The sale-purchase agreements concluded, mention the fact that in the first stage the Group acquires 30% of the
share capital of the four companies, remaining that in the following stages, to acquire the remaining 70% of the
share capital after the conditions provided in the sale-purchase agreements will be fulfilled.
The four companies are as follows:
- Crucea Power Park SRL, develops the wind project “Crucea Est”, with a projected installed capacity of
121 MW and a projected electricity storage capacity of 60 MWh (15 MW x 4h), located outside the Crucea
area, Constanta County. The estimated purchase price for the “Crucea Est” wind project is 70 thousand
EUR/MW for the aforementioned capacity, totalling the amount of 8,470 thousand EUR. On 28 July 2021,
Electrica SA paid the amount of EUR 2,541 thousand representing 30% of the project value, respectively
30% of the shares of Crucea Power Park SRL.
- Sunwind Energy SRL, develops the photovoltaic project “Satu Mare 2” with a designed installed capacity
of 27 MW, located near Satu Mare city. The estimated purchase price for the photovoltaic project “Satu
Mare 2” is 55 thousand EUR/MW for the aforementioned capacity, totalling the amount of 1,485 thousand
EUR. On 28 July 2021, Electrica SA paid the amount of EUR 445.5 thousand representing 30% of the
project value, respectively 30% of the shares of Sunwind Energy SRL.
343 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) - New Trend Energy SRL, develops the photovoltaic project “Satu Mare 3”, with a projected capacity of 59
MW, located near Satu Mare city. The estimated purchase price for the photovoltaic project “Satu Mare 3”
is 55 thousand EUR/MW for the aforementioned capacity, totalling the amount of 3,245 thousand EUR.
On 28 July 2021, Electrica SA paid the amount of EUR 973.5 thousand representing 30% of the project
value, respectively 30% of the shares of New Trend Energy SRL.
- Foton Power Energy SRL, develops the photovoltaic project “Bihor 1”, with a projected capacity of 77.5
MW, located near Inand city, Bihor County. The estimated purchase price for the photovoltaic project
“Bihor 1” is 55 thousand EUR/MW for the aforementioned capacity, totalling the amount of 4,262.5
thousand EUR. On 7 December 2021, Electrica SA paid the amount of EUR 1,279 thousand representing
30% of the project value, respectively 30% of the shares of Foton Power Energy SRL.
Considering the holding percentage of 30%, as at 31 December 2021, the 4 entities are accounted for using the
equity method in these consolidated financial statements as provided in the Group’s accounting policies in
note 6.
The cost of the investments at acquisition date, totalling the amount of RON 25,813 thousand, is detailed as
follows:
Crucea Power
New Trend
Sunwind Energy
Foton Power
Park S.R.L.
Energy S.R.L.
S.R.L.
Energy
S.R.L.
Acquisition date
31.07.2021
31.07.2021
31.07.2021
31.12.2021
Percentage ownership and voting
30%
30%
30%
30%
rights at acquisition date
Net assets at acquisition date
(242)
Group’s share of net assets
(73)
(5)
(2)
Goodwill
12,573
4,791
Cost of investment at acquisition
12,500
4,789
date
(5)
(2)
2,194
2,192
(7)
(2)
6,334
6,332
Summarised financial information in respect of each of the Group’s associates is set out below:
Crucea Power
New Trend
Sunwind Energy
Park S.R.L.
Energy S.R.L.
S.R.L.
Foton Power
Energy
S.R.L.
31.12.2021
31.12.2021
31.12.2021
31.12.2021
Non-current assets
7,078
Current assets
945
249
47
161
21
Non-current liabilities
(6,904)
(303)
(190)
Current liabilities
(1,364)
Net assets
(245)
Reconciliation to carrying amounts:
(2)
(9)
Opening net assets at
acquisition date
(242)
(5)
(1)
(9)
(7)
142
23
(168)
(4)
(7)
(7)
344 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Crucea Power
New Trend
Sunwind Energy
Park S.R.L.
Energy S.R.L.
S.R.L.
Foton Power
Energy
S.R.L.
Loss for the period
(3)
Closing net assets
31.12.2021
(245)
(4)
(9)
(4)
(11)
-
(7)
Reconciliation of the above summarised financial information to the carrying amount of the interest in
associates recognised in the consolidated financial statements:
Crucea Power
New Trend
Sunwind Energy
Park S.R.L.
Energy S.R.L.
S.R.L.
Foton Power
Energy
S.R.L.
Closing net assets of
associates 31.12.2021
(245)
(9)
Group’s share in associates
%
30%
30%
Group’s share of net assets
as at 31.12.2021
Goodwill
Carrying amount of
interest in associate
(74)
12,573
(3)
4,791
(11)
30%
(3)
2,194
(7)
30%
(2)
6,334
31.12.2021
12,499
4,788
2,191
6,332
The share loss in amount of RON 3 thousand for the period was recognized in the consolidated statement of
profit and loss for the year ended as at 31 December 2021.
26
Capital and reserves
(a) Share capital and share premium
The issued share capital in nominal terms consists of 346,443,597 ordinary shares as at 31 December 2021 (31
December 2020: 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 diminished following
the Initial Public Offering, reaching a level of 0.7842% at the end of 2021 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
Meeting 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.
345 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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 Company
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,
equivalent 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:
2021
2020
Balance at 1 January
Revaluation surplus of land, land improvements and buildings
116,372
-
Deferred tax liability arising on revaluation of land, land improvements
-
87,665
43,823
(7,931)
and buildings
Release of revaluation reserve to retained earnings corresponding to
(13,543)
(7,185)
depreciation and disposals of property, plant and equipment
Balance as at 31 December
102,829
116,372
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 23).
(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.
Balance at 1 January 2020
Set-up of legal reserves
Balance at 31 December 2020
Set-up of legal reserves
Balance at 31 December 2021
(e) Dividends
Legal reserves
371,833
20,443
392,276
16,129
408,405
Romanian companies may distribute dividends from statutory profits, according to the separate financial
statements prepared in accordance with Romanian accounting regulations.
346 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) The dividends declared by the Company in 2021 and 2020 (from the statutory profits of previous years) are as
follows:
Distribution of dividends
2021
2020
To the owners of the Company
247,874
246,108
Total
247,874
246,108
On 28 April 2021 the General Shareholders Meeting of the Company approved dividend distribution of RON
247,874 thousand (2020: RON 246,108 thousand). The dividend per share distributed is RON 0.73 per share (2020:
RON 0.7248 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 247,874 thousand (2020: RON 246,108 thousand),
the dividends paid were of RON 247,258 thousand (2020: RON 245,780 thousand) the remaining difference
represents dividends uncollected by the shareholders.
27
Trade payables
Electricity suppliers
Capital expenditure suppliers
Other suppliers
Total
31 December 2021
31 December 2020
619,653
156,546
115,136
891,335
373,563
138,391
95,241
607,195
Electricity suppliers are mainly state-owned electricity producers, as detailed in Note 33, but also other
participants to the electricity market.
Other suppliers include suppliers of services, materials, consumables, etc.
28
Other payables
31 December 2021
31 December 2020
Current
Non-current
Current
Non-current
VAT payable
Liabilities towards the State
133,833
7,148
-
-
128,450
6,820
-
-
Other liabilities
130,282
32,732
105,676
33,873
Total
271,263
32,732
240,946
33,873
347 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 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.
29
Provisions
Balance at 1 January 2021
1,200
18,038
19,238
Tax related
Other
Total
Provisions recognized
Provisions utilised
Provisions reversed
Balance at 31 December 2021
-
-
(116)
1,084
22,933
22,933
(2,286)
(2,286)
(4,847)
(4,963)
33,838
34,922
As at 31 December 2021, provisions refer mainly to benefits upon the termination of executive directors’ mandate
contracts in the form of a non-compete clause amounting to RON 3,971 thousand (31 December 2020: RON
6,139 thousand) and for various claims and litigations involving the Group companies in amount of RON 30,951
thousand (31 December 2020: RON 13,099 thousand).
During 2021, the Group set up a provision in connection with the supply subsidiary obligations in amount of
RON 10,584 thousand representing compensations arising from the application of the Performance Standard
for the electricity supply activity stipulated in the ANRE Order 6/2017, and of the Regulation for the supply of
electricity to final customers, approved by ANRE Order no. 235/2019 as a result of the total liberalization process
of the market which began on 1 January 2021.
30
Long-term bank borrowings
Drawings and repayments of borrowings during the year ended 31 December 2021 were as follows:
Balance at 1 January 2021
Drawings of borrowings during
the period, out of which:
EBRD
BCR
BRD
Total drawings
Accumulated interest
Payment of interest
Currency
Interest rate
Maturity
Amount (RON
year
thousand)
778,909
RON
RON
RON
Floating
rate
(1.15% +
interbank rate + ROBOR
spread)
2031
81,685
ROBOR 3M+1%
2028
82,793
3.85%
2028
70,212
234,690
1,536
(795)
348 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Currency
Interest rate
Maturity
Amount (RON
year
thousand)
Reimbursements, out of which:
BRD
BRD
BRD
Banca Transilvania
UniCredit Bank
BCR
Balance at 31 December 2021
RON
RON
RON
RON
RON
RON
0,02%
3,99%
3,85%
4.59%
3.85%
ROBOR 3M+1%
2021
2026
2026
2027
2026
2026
(320,000)
(20,800)
(12,857)
(17,857)
(9,600)
(4,737)
628,489
As at 31 December 2021, respectively 31 December 2020, the bank borrowings is as follows:
Lender
Borrower
Balance at
Balance at
31 December 2021
31 December 2020
BRD
Distributie Energie Electrica Romania
-
80,000
(former SDEE Muntenia Nord S.A.)
BRD
Distributie Energie Electrica Romania
-
114,000
(former SDEE Transilvania Nord S.A.)
BRD
Distributie Energie Electrica Romania
-
126,000
(former SDEE Transilvania Sud S.A.)
Banca
Distributie Energie Electrica Romania
98,227
116,086
Transilvania
(former SDEE Transilvania Sud S.A.)
UniCredit Bank
Distributie Energie Electrica Romania
48,498
58,201
(former SDEE Transilvania Nord S.A.)
BRD
Distributie Energie Electrica Romania
104,000
124,800
(former SDEE Muntenia Nord S.A.)
BRD
Distributie Energie Electrica Romania
(former SDEE Transilvania Nord S.A.)
92,857
69,584
BRD
Distributie Energie Electrica Romania
74,342
40,289
(former SDEE Transilvania Sud S.A.)
BCR
Distributie Energie Electrica Romania
128,243
49,949
(former SDEE Muntenia Nord S.A.)
EBRD
Total
Distributie Energie Electrica Romania 82,322
-
628,489
778,909
Less: current portion of the long-term bank borrowings
(508,197)
(377,818)
Less: accumulated interest
(1,536)
(795)
349 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Lender
Borrower
Balance at
Balance at
31 December 2021
31 December 2020
Total long-term borrowings, net of current portion
118,756
400,296
Bank Borrowings description
(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
Distributie a Energiei Electrice Transilvania Nord S.A., currently Distributie Energie Electrica Romania S.A.)
concluded long term loan contracts with BRD – Groupe Societe Generale, for which Electrica SA is the guarantor.
The loan was fully reimbursed at maturity (16 October 2021). The loans were subject to a fixed interest rate of
0.02% per annum. As at 31 December 2021, the outstanding balance is Nil (31 December 2020: RON 320,000
thousand) (see also see Note 20).
(b) Investment loan granted by Banca Transilvania
On 18 July 2019, Societatea de Distributie a Energiei Electrice Transilvania Sud S.A., currently Distributie Energie
Electrica Romania S.A., as a borrower, concluded with Banca Transilvania 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 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 2021, the
outstanding balance is of RON 98,227 thousand, of which RON 98,214 thousand principal and RON 13 thousand
accrued interest. (Outstanding balance as at 31 December 2020: RON 116,086 thousand)
(c) Investment loan granted by Unicredit Bank
On 13 November 2019, Societatea de Distributie a Energiei Electrice Transilvania Nord S.A., currently Distributie
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 2021,
the outstanding balance is of RON 48,498 thousand, of which RON 48,000 thousand principal and RON 498
thousand accrued interest. (Outstanding balance as at 31 December 2020: RON 58,201 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, according
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 months. As at 31
December 2021, the outstanding balance is of RON 104,000 thousand. (Outstanding balance as at 31 December
2020: RON 124,800 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, according
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 2021, the outstanding balance is of RON 92,857 thousand. (Outstanding balance as
at 31 December 2020: RON 69,584 thousand)
(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, according 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
350 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 31 December 2021, the outstanding balance is RON 74,342 thousand, of which RON 74,286 thousand principal
and RON 56 thousand accrued interest. (Outstanding balance as at 31 December 2020: RON 40,289 thousand)
(g) Investment loan granted by Banca Comerciala Romana (“BCR”)
On 17 September 2020, Societatea de Distributie a Energiei Electrica Muntenia Nord S.A., currently Distributie
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 2021, the outstanding balance is RON 128,243 thousand,
of which RON 127,911 thousand principal and RON 332 thousand accrued interest. (Outstanding balance as at 31
December 2020: RON 49,949 thousand)
(h) Investment loan granted by the European Bank for Reconstruction and Development (“BERD”)
On 2 July 2021, Societatea de Distributie Energie Electrica Romania SA, as a borrower, concluded with the
European Bank for Reconstruction and Development a credit agreement for investments in order to finance
investments in the electricity distribution network according to the 2021-2023 investment plan. The main
provisions are: The maximum value of the loan RON 195,136 thousand; Interest rate: agreed individually for
each tranche drawn; Repayments: 17 half-yearly installments until 31.07.2031; Grace period: 24 months. As at 31
December 2021, the outstanding balance is RON 82,322 thousand, of which RON 81,685 thousand principal and
RON 637 thousand accrued interest. The loan agreement is guaranteed by Electrica SA.
(i) Investment loan granted by the European Investment Bank (“BEI”)
On 14 July 2021, Societatea de Distributie Energie Electrica Romania SA, as a borrower, concluded with the
European Investment Bank an investment credit contract for the purpose of financing investments in the
electricity distribution network according to the 2021-2023 investment plan. The main provisions are: Maximum
value of the loan: EUR 120,000 thousand; Interest rate and Repayments will be agreed individually for each
tranche drawn. On 31 December 2021, the outstanding balance is Nil as no withdraw was made from the loan.
The loan agreement is guaranteed by Electrica SA.
Financial Covenants
The financial covenants specified in the agreements with BRD – Groupe Societe Generale and Unicredit Bank
have been fulfilled as at 31 December 2021, respectively as at 31 December 2020.
In the agreement with Banca Comerciala Romana there is stipulated one financial covenant: leverage ratio:
Net Consolidated Debt to Consolidated EBITDA for the 12 months period ending on the last day of the Group’s
financial year and each 12 months period ending on the last day of the first half of the Group’s financial year,
of not more than 3:1, which should be fulfilled by the Borrower. As at 31 December 2021 due to the breach in
the covenant, the Group reclassified the amount of RON 108.961 thousand from “Long term bank borrowings”
to “Current portion of long-term bank borrowings” on the Consolidated Statement of Financial Position. The
Group started the procedures of obtaining a waver for the loan to not be repayable on demand.
In the agreement with European Bank for Reconstruction and Development there are stipulated two financial
covenants: interest coverage ratio: EBITDA for the 12 months preceding the date of calculation to interest
payments on all Financial Debt due or accrued during such period, of not less than 3.00:1.00 which should
be fulfilled by the Borrower and Net Debt to Consolidated EBITDA for the 12 months preceding the date of
calculation, of not more than 3.00:1.00 to be fulfilled by the guarantor Electrica SA. Any breach in either of the
covenants would constitute non-compliance leading to a repayment of the loan on demand. As at 31 December
2021 due to the breach in the covenant related to the Guarantor, the Group presented the amount of RON
82,322 thousand in “Current portion of long-term bank borrowings” on the Consolidated Statement of Financial
Position. On 24 February 2022, the Group obtained a waver letter for the loan to not be repayable on demand
but it is subject to obtaining the waver letters for the other loans for which the Group is in non-compliance BCR
and BEI. (Note 36)
In the agreement with European Investment Bank there are stipulated two financial covenants: interest coverage
ratio: means the ratio of EBITDA to Net Finance Charges which shall not be less than 3x and net leverage ratio
- means the ratio of total Net Debt to EBITDA which shall not be more than 3x which must be fulfilled by the
guarantor Electrica SA. As at 31 December 2021 the Group is in breach with both covenants, bearing the risk to
not be able to make drawings from the loan. The Group has started the procedures of obtaining a waver in order
to be able to draw from the loan.
351 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) In the loan agreement with BRD-Groupe Societe Generale, due to the existence of the non-performance clause
with cross effect, whereby, the non-fulfillment of financial obligation resulting from other loan agreements
concluded with other credit institutions, constitutes a breach of current contractual terms having as possible
repayment effect. On request, the Group reclassified the amount of RON 224,629 thousand from “Long-term
bank loans” to “Current portion of long-term bank loans” in the consolidated statement of financial position.
When the Group obtains letters of exception for loans for which it has not complied with the contractual terms
regarding the fulfillment of the financial indications, it will reclassify the amount.
31
Financial instruments - fair values and risk management
(a) 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 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
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 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 trade
receivables for customers as at 31 December 2021:
352 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 31 December 2021
Expected credit loss
Net trade
Credit
rates (“ECL”)
Gross value
Lifetime ECL
receivables
impaired
Neither past due nor
2%
1,080,179
16,615)
1,063,564
No
impaired
Past due 1-30 days
5%
228,537
(10,598)
217,939
Past due 31-60 days
15%
36,646
(5,317)
31,329
Past due 61-90 days
38%
15,428
(5,930)
9,498
No
No
No
Past due more than
98%
964,687
(942,398)
22,289
Yes
90 days
Total
2,325,477
(980,858)
1,344,619
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 trade
receivables for customers as at 31 December 2020:
31 December 2020
Expected credit loss
Net trade
Credit
rates (“ECL”)
Gross value
Lifetime ECL
receivables
impaired
Neither past due nor
impaired
2%
812,855
(13,053)
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
99%
936,614
(922,734)
13,880
No
No
No
No
Yes
Total
1,979,348
(949,573)
1,029,775
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
managing 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 maintains overdrafts
(refer to Note 20).
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.
353 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Contractual cash flows
Carrying
amount
less than
More than
Total
1 year
1-2 years
2-5 years
5 years
Financial liabilities
31 December 2021
Bank overdrafts
627,402
627,402
627,402
-
-
-
Lease liability
21,544
21,544
9,442
4,874
5,071
2,157
Long term bank
borrowings
628,489
628,489
509,733
27,455
82,372
8,929
Trade payables
891,335
891,335
891,335
-
-
-
Total
2,168,770
2,168,770
2,037,912
32,329
87,443
11,086
31 December 2020
Bank overdrafts
164,966
164,966
164,966
-
-
-
Lease liability
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
(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 management
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 denominated
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.
Exposure to currency risk
The summary of quantitative data about the Group’s exposure to currency risk is as follows:
354 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
in thousands of RON
denominated in EUR
denominated in EUR
31 December 2021
31 December 2020
Cash and cash equivalents
Lease liability
812
(19,118)
Net statement of financial position exposure
(18,306)
3,347
(24,472)
(21,125)
The following significant exchange rates have been applied during the year:
RON
EUR 1
Sensitivity analysis
Average rate
Year-end spot rate
2021
2020
2021
2020
4.9204
4.8371
4.9481
4.8694
A reasonably possible strengthening (weakening) of the EUR against RON at 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.
Effect
31 December 2021
EUR (5% movement)
31 December 2020
EUR (5% movement)
Interest rate risk
Profit before tax
Strengthening Weakening
(915)
915
(1,056)
1,056
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 20, 30).
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating
interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating
rate borrowings (please see Notes 20, 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 interbank market.
355 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
31 December 2021
31 December 2020
Fixed-rate instruments
Financial assets
Call deposits
Financial liabilities
53,897
391,514
Long-term bank borrowings
(418,893)
(728,960)
Lease liability
(8,276)
(9,070)
(373,272)
(346,516)
Variable-rate instruments
Financial liabilities
Lease liability
(13,268)
(18,552)
Long-term bank borrowings
(209,596)
(49,949)
Bank overdrafts
(627,402)
(164,966)
(850,266)
(233,467)
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.
Profit before tax
50 bp increase
50 bp decrease
31 December 2021
Variable-rate instruments
(4,251)
4,251
31 December 2020
Variable-rate instruments
(1,167)
1,167
32
Acquisition of subsidiaries
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. (formerly 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.
356 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
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 December
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
outstanding 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
41,404
73
253
5,577
951
48,258
(12,509)
(1,673)
(120)
(14,302)
357 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Net assets acquired
Consideration paid
Gain from bargain purchase of subsidiaries
33,956
(26,479)
7,477
The bargain purchase resulted is due to the fact that the Group would obtain specific synergies by integrating
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 recognized in the consolidated statement of profit and loss for the year
ended as at 31 December 2020.
33
Related parties
(a) Main shareholders
As at 31 December 2021 and 31 December 2020, the major shareholder of Societatea Energetica Electrica S.A. is
the Romanian State, represented by the Ministry of Energy with a share of ownership of 48.79% from the share
capital.
(b) Management and administrators’ compensation
2021
2020
Executive Management compensation
34,429
29,072
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 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
2021
3,992
2020
2,568
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 28 April 2021, the annual number of paid sessions is limited
to twelve for Board of Directors meetings and to six for each of the committees. Additional committee meetings
can be organized only in exceptional situations, upon the Chairs’ committee decision, who are responsible to
efficiently organize the agenda and activity. However, only one such additional meeting shall be remunerated,
for each committee.
No loans were granted to directors or administrators in 2021 and 2020.
(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:
358 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated)
Supplier
OPCOM
Purchases (without VAT)
Balance (including VAT)
2021
2020
31 December 2021 31 December 2020
1,700,630
272,246
29,203
4,209
Transelectrica
756,925
680,258
155,931
113,059
Nuclearelectrica
512,915
528,652
43,343
Complexul Energetic Oltenia
396,072
304,218
31,502
Hidroelectrica
241,722
476,845
19,711
Electrocentrale Bucuresti
34,776
116,530
ANRE
10,320
10,882
SNGN Romgaz SA
10,727
3,741
Transgaz
Others
Total
8,958
1,782
7,889
3,824
-
132
3,305
1,226
1,332
61,848
37,350
34,471
-
176
1,245
176
358
3,680,934
2,398,978
285,685
252,892
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
Balance, gross
Allowance
(without VAT)
(including VAT)
(including VAT)
Balance, net
Client
2021
31 December 2021
OPCOM
162,855
28,468
Transelectrica
92,505
27,091
SNGN Romgaz SA
48,099
Hidroelectrica
CN Romarm
19,622
14,156
CFR Electrificare
10,410
C.N.C.F CFR SA
CNAIR
8,281
6,928
Municipiul Galati
4,568
Transgaz
CN Remin SA
2,249
700
1,664
2,638
1,093
507
701
962
12
1,571
71,216
-
-
-
-
-
-
(1)
-
(12)
-
(71,216)
C.N.C.A.F MINVEST SA
-
26,802
(26,802)
28,468
27,091
1,664
2,638
1,093
507
700
962
-
1,571
-
-
359 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Client
Oltchim
CET Braila
Termoelectrica
National Agency for
Payments and Social
Inspection
Ministry of Energy
Altii
Total
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
CN Remin SA
CET Braila
Termoelectrica
Oltchim
C.N.C.A.F. MINVEST SA
Sales
Balance, gross
Allowance
(without VAT)
(including VAT)
(including VAT)
Balance, net
2021
31 December 2021
-
9
-
-
-
32,956
536,156
(536,156)
3,361
1,206
59,271
11,420
2,204
(3,361)
(1,206)
-
-
(536)
-
-
-
59,271
11,420
1,668
403,338
776,343
(639,290)
137,053
Sales
Balance, gross
Allowance
(without VAT)
(including VAT)
(including VAT)
Balance, net
2020
31 December 2020
60,549
3,634
7,841
5,191
1,246
641
598
1,731
420
12
-
-
71,215
3,361
1,217
41,175
40,967
37,501
12,457
9,138
8,575
7,517
3,738
1,569
1,436
549
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(71,215)
(3,361)
(1,217)
3,634
7,841
5,191
1,246
641
598
1,731
420
12
-
-
-
-
-
-
-
565,484
(565,484)
26,802
(26,802)
Others
31,008
1,453
(493)
960
360 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Sales
Balance, gross
Allowance
(without VAT)
(including VAT)
(including VAT)
Balance, net
2020
31 December 2020
256,186
690,846
(668,572)
22,274
Client
Total
34
Contingencies
Contingent assets
Claim against 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 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 16,916 thousand representing
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.
Morevover, in November 2019, Electrica SA obtained one more favourable decision pronounced by the Bucharest
Court of Appeal in one of the disputes with NAFA, whereby the Court obliges NAFA to cancel the administrative
documents issued regarding the accessory fiscal obligations in the amount of RON 39,249 thousand 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 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.
In April 2021, Electrica SA filed a new action in contradiction with NAFA - file no. 2444/2/2021, pending before
the Bucharest Court of Appeal, trial term 16.03.2022, having as object the obligation of NAFA to: correct Electrica
SA ‘s tax record in order to reflect the right to a refund for the amount of RON 5,860 thousand, amount paid
by Electrica SA in 2020 for the purpose of applying for the cancellation of ancillary fiscal obligations stipulated
by the Government Emergency Ordinance no. 69/2020, of an additional amount of RON 818 thousand which
was not reflected in the payment made by NAFA in 2020, and payment of legal interest in amount of RON 5,162
thousand computed for the amount returned by NAFA in 2020.
361 | 2021 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 2021(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 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 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 litigations
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 Department
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. Against Galati City Hall,
SDEE Muntenia Nord S.A. filed a legal request registered at Ploiesti Court of Appeal, with the next term on 17
February 2022.
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 additional
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
solution, both NAFA and Electrica Serv SA filed an appeal, registered at the High Court of Cassation and Justice,
with the trial date of 6 October 2022.
As at 31 December 2021 and 31 December 2020, 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 management’s best
estimate is that Electrica Serv S.A. shall be able to obtain a favourable final Court decision in this case.
Other litigations and claims
The Group is involved in a series of litigations and claims (ie. with ANRE, NAFA, Court of Accounts, claims 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 management
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 possibility 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).
362 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 35
Commitments
(a) Contractual commitments
Contractual commitments as at 31 December 2021 and 31 December 2020 are as follows:
31 December 2021
31 December 2020
Purchase of electricity
3,200,154
2,067,439
Purchase of green certificates
132,937
402,341
Purchase of property, plant and equipment and intangible
assets
Purchase of investments
212,930
60,485
141,033
-
Total
3,606,506
2,610,813
(b) Investment program
The investment program at Group level approved for the year 2022 is as follows:
Distribution activity
Supply activity
Maintenance activity
Other/ shared
Total
2022
689,029
54,788
10,772
10,633
765,222
The capital expenditures actually incurred may differ from the ones planned.
(c) Guarantees and pledges
At 31 December 2021 and 31 December 2020, the Group has guarantees on its bank accounts opened at ING
Bank N.V., Raiffeisen Bank, Banca Comerciala Romana, Banca Transilvania and Intesa Sanpaolo Bank for the
overdrafts contracted (please see Note 20), and also on its bank accounts opened at BRD – Group Societe
Generale, Unicredit Bank, Banca Transilvania and Banca Comerciala Romana for the long-term borrowings
contracted (please see Note 30).
At 31 December 2021, the Group has outstanding bank letters of guarantee of RON 1,088,629 thousand (31
December 2020: RON 607,735 thousand) issued in favour of its suppliers.
363 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) 36
Subsequent events
Change in distribution tariffs starting 1 January 2022
According to the ANRE Order no 119/25.11.2021, the specific tariffs for the electricity distribution service for
applicable starting with 1 January 2022, Muntenia Nord area, Transilvania Nord area, Transilvania Sud area and
compared to those applicable starting with 1 January 2021 (the last time they were modified), are the following
(RON/MWh, presented cumulatively for medium and low voltage levels):
Order 119/25.11.2021
Order 221,222,220/09.12.2020
Starting with 01 January 2022
Starting with 01 January 2021
High
Medium
Low
voltage
voltage
voltage
High
voltage
Medium
voltage
Low
voltage
Transilvania Nord area
21.79
48.13
122.78
19.23
66.35
173.93
Transilvania Sud area
22.34
45.49
127.04
22.23
67.47
178.78
Muntenia Nord area
21.02
43.54
140.68
18.72
56.87
184.75
ANRE Order no. 119/25.11.2021 related to the approval of the specific tariffs for electricity distribution service and
of the price for reactive electricity for Societatea Distributie Energie Electrica Romania S.A. was published in the
Official Gazette of Romania, part I, No. 1148/2.12.2021.
Overdrafts facilities
In order to minimize any liquidity risks which might appear due to the current unstable economic environment
the Group secured the following overdrafts facilities:
1) Overdraft facility granted by Banca Transilvania
On 2 February 2022, Electrica Furnizare SA and Banca Transilvania signed an overdraft facility of up to
RON 190,000 thousand for financing the current activity, having the following characteristics: Interest rate:
ROBOR 1M+0.4% p.a., reimbursements: until 1 August 2022.
2) Overdraft facility granted by BRD - Groupe Societe Generale
On 4 February 2022, Electrica Furnizare SA and BRD - Groupe Societe Generale signed a revolving overdraft
facility of up to RON 220,000 thousand for financing the current activity, having the following characteristics:
Interest rate: ROBOR 1M+0.47% p.a., reimbursements: until 03 August 2022.
3) Overdraft facility granted by Banca Comerciala Romana
On 25 January 2022, Distributie Energie Electrica Romania and Banca Comerciala Romana signed an overdraft
facility of up to RON 180,000 thousand for financing the current activity, having the following characteristics:
Interest rate: ROBOR 1M+0.6% p.a., reimbursements: within 12 months from the withdrawal date, not later than
25 January 2023.
4) Overdraft facility granted by ING Bank N.V
On 28 January 2022, 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
concentration operations set-up within the Group and having the following characteristics: Interest rate: ROBOR
1M+0.8% p.a., was extended until 27.01.2023.
On 17 February 2022, Electrica Furnizare SA and ING Bank N.V. signed an overdraft facility of up to RON 170,000
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: ROBOR 1M+0.5% p.a., reimbursements:
not later than 6 months from contract date less 15 calendar days.
364 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) Compensation scheme
Electrica Furnizare S.A. submitted the requests no. 1341/17.02.2022 and no. 1339/17.02.2022 followed by request
no. 1363/18.02.2022 along with the supporting documents to the National Agency for Payments and Social
Inspection in order to receive the amounts compensated on the clients invoices for the period 1 November 2021
– 31 January 2022 in amount of RON 95.362 thousand for energy invoices and RON 247 thousand for gas invoices
out of which the amount of RON 59,271 thousand refers to amount to be received for the period 1 November
2021 – 31 December 2021. According to Order no. 118/2021 with subsequent amendments approved by Law no.
259/2021 with subsequent amendments and Order no. 226/2021 the amounts will be recovered in 30 days after
submitting the request.
Waver letter
On 24 February 2022, EBRD issued a waiver letter in respect to the Loan agreement dated 02 July 2021 for:
(a) the Guarantor’s Financial Ratio, but in respect of its financial year ending 31 December 2021 only;
(b) the Event of Default that has occurred and is continuing pursuant to Section 7.01(b) (Financial ratio) of
the Loan Agreement, but only in respect of the Guarantor’s failure to comply with the Guarantor’s Financial
Ratio for the financial year ending 31 December 2021.
The waiver issued by EBRD is conditional to the waivers which must be received from EIB and BCR for which
the Group is in default events. The Group has submitted the requests for obtaining waivers for EIB and BCR but
are still in progress at the authorization for issue of these Consolidated Financial Statements by the Board of
Directors.
Geopolitical tensions
In February 2022 global geopolitical tensions significantly escalated following military interventions in Ukraine
by the Russian Federation. As a result of these escalations, economic uncertainties in energy and capital
markets have increased with global energy prices expected to be highly volatile for the foreseeable future. As
at the date of this report, management is unable to reliably estimate the effects on the Groups financial outlook
and cannot exclude adverse consequence on the business, operations, and financial condition. Management
believes it is taking all the necessary measures to support the sustainability and growth of the Group’s business
in the current circumstances and that the judgements taken in these financial statements remain appropriate.
Chief Executive Officer
Georgeta Corina Popescu
Chief Financial Officer
Stefan Alexandru Frangulea
28 February 2022
365 | 2021 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 2021(All amounts are in THOUSAND RON, if not otherwise stated) CONSOLIDATED
AUDIT
REPORT
Sector 1, 010735
-98,
Tel: +40 21 222 16 61
Fax: +40 21 222 16 60
INDEPENDENT AUDITOR’S REPORT
To the Shareholders,
SOCIETATEA ENERGETICA ELECTRICA S.A.
Report on the Audit of the Consolidated Financial Statements
Opinion
1.
SOCIETATEA ENERGETICA ELECTRICA S.A. and its subsidiaries (the
consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement
1, and the
2.
3.
Net assets / Equity
Net loss
Basis for Opinion
1
1, and its
RON 4,953,582 thousand
RON 552,882 thousand
as adopted by EU.
4.
5.
Accountants’ Code of Ethics for Professional Accountants (IESBA Code), in accordance with ethical requirements relevant for
l
on
ard for
ng our opinion thereon, and we do not provide a separate opinion
.
368 | 2021 ANNUAL REPORT
ELECTRICA S.A.
CONSOLIDATED AUDIT REPORT
s
Going Concern
How our
have been prepared on the going concern basis. The key
judgement leading to this conclusion are set out in that note.
the
• We have
a
challenged the management and the Board of Directors and
on the assumptions used;
there may be further laws enacted which could adversely
•
end. In the forthcoming twelve months the group will need to
• We have assessed
, covenant waivers
,
• We considered the Group’s requirements
The ability of the Group to
on stabilizing of the regulatory regime on energy prices as
described in note 6 which provides an appropriate margin to
support servicing of the Group’s short and long term
ancing and
• We assessed the adequacy of the disclosure of the basis of
adopted;
d
households
•
Obtaining an understanding of the a
The group has a number of IT systems across the businesses and we
revenue cycle.
nature and included the following:
uncertainty reduces from one period to another, however
related to the househol
Regulatory Authority (“ANRE”) for the regulated supply market
Because of the signif
accrued revenue related to the households and the inability of
•
•
•
•
•
2
revenues related to electricity supplied to
customers on the universal service by means of independent
re-
2021.; and
for
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CONSOLIDATED AUDIT REPORT
How our audit
As presented in Note 34 to the
In
included the following:
or related
•
The
of whether a provision should be recorded
•
Obtaining
and the high level of professional judgement involved we
•
Discussing with the internal and external lawyers and assessing
the reasonability of the professional judgements used as a basis
roup is facing, the
lawyers for the cases presented;
•
Assessing the judgement performed by the Group management
lawyers;
•
– Administrator’s Report
6.
The administrators are
comprises the Administrator’s report
statements and our auditor’s report thereon.
Ou
our report, we do not express any form of assurance conclusion thereon.
tements for the year ended December 31, 2021, our
herwise 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
a)
ts, in
– 107.
t
b)
the administrators’ report has been prepared, in all material respects, in accordance with the provisions of Ministry
;
c)
the
– 107.
Moreover, based on our knowledge and understanding concerning the Group and its environment gained during the audit of
material misstatement of this Administrator’s report
. We have nothing to report in this regard.
1
370 | 2021 ANNUAL REPORT
ELECTRICA S.A.
CONSOLIDATED AUDIT REPORT
Responsi
with Order 2844/2016, with subse
due to fraud or error.
7.
8.
as a going concern, disclosing, as applicable
9.
Those charged with governance are
l statements that are free from material misstatement, whether
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
a whole are free
taken
throughout the audit. We also:
appropriate to provide a basis for our opinion. The risk o
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
internal control.
Evaluate the appropriateness of acc
disclosures made by management.
audit evidence obtained, whethe
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 o
going concern.
manner that achieves fair
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
10.
11.
12.
13. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicat
to bear on our independence, and where applicable, related safeguards.
371 | 2021 ANNUAL REPORT
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CONSOLIDATED AUDIT REPORT
14.
in e
Report on Other Legal and Regulatory Requirements
15. We have been appointed by the General Assembly of Shareholders April 28, 2021
4
most
1. The uninterrupted total
1.
e Company that we
No non-
provided.
Technical Standard“ or “ESEF”)
2019/815 applicable to the
(
213800P4SUNUM5AUDX61
.
of SOCIETATEA ENERGETICA ELECTRICA S.A.
Management is responsible for preparing Digital Files that comply with the ESEF. This responsibility includes:
the
appropriate iXBRL mark ups;
with Order 2844/2016 with subsequent amendments;
Those charged with governance are responsible for overseein
report complies in all material respects with the requirements of ESEF based on the evidence we have obtained. We conducted our
Ass
A reasonable assurance engagement in accordance with ISAE 3000 involves performing procedures to obtain evidence about
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 the Company’s
including relevant internal controls;
Company
evaluating
format;
the
e
iXbrl mark-ups, including the voluntary mark-ups comply with the requirements of ESEF.
372 | 2021 ANNUAL REPORT
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CONSOLIDATED AUDIT REPORT
We belie
in the Digital Files, comply in all materials respects with the requirements of ESEF.
1
December 2021
the Company for the year ended 31
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-
Bucharest, Romania
March 1, 2022
th Floor, District 1
373 | 2021 ANNUAL REPORT
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ELECTRICA S.A. - 2021 ANNUAL REPORT
DECLARATION OF THE
MANAGEMENT
We confirm to the best of our knowledge that the consolidated financial
in accordance with the applicable accounting
statements, prepared
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 2021,
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 uncertainties associated with the expected development
of the Group.
Iulian Cristian Bosoanca
non-executive director,
Chairman of the Board of Directors
George Cristodorescu
non-executive director
Radu Mircea Florescu
non-executive director
Gicu Iorga
non-executive director
Adrian-Florin Lotrean
non-executive director
Dragos-Valentin Neacsu
non-executive director
Cosmin Ion Petrescu
non-executive director
Georgeta Corina Popescu
General Manager
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ELECTRICA S.A. - 2021 ANNUAL REPORT
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ELECTRICA S.A.
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ELECTRICA S.A.
ELECTRICA S.A. - 2021 DIRECTOR’S REPORT